The Texas N atura l Re source Conservation Commi ssion is the prede cessor ag ency to the 1 T e x a s C o m m i s s i o no nE n v i r o n m e n t a l Q u a l i t y. 

### TEXA S C OU R T OF A PPEAL S, THIR D DIST R ICT , AT AU STIN

NO. 03-02-00601- CV

H. A . La c e y, App e lla nt

v. State of Texas, Appellee

F ROM THE DISTRICT CO URT OF TRAVIS COUNTY , 201ST JUDICI AL DISTRICT NO. 96-1 4460 , HO NORAB LE CHARLES F . CAMP B ELL, JR., JUDGE PRESIDI NG

M E M O R

A N D U M O P I N I O N Appellant H.A. L ace y

(L ace y ) appe als a summary

judgme nt gr anted a gainst L ace y and Hollis Pe t rol eum, I nc. (L &H P) and its office rs and dire ctors individually for c ivil and administrat i v e p enalties re sulting fr om violations of an Ag ree d Orde r (the O rder ) betwe en L &H P and the Texas N atura l Re source Conservation Commissi on reg ardingthe oper ation of under g round 1 sto ra g e tank s. L a c e y a sse rt s th a t th e tr ia l c ourt e rr e d in g ra nti ngthe summa

ry jud g me nt a g a ins t hi m beca use the e vidence prese nted a fac t issue of whether or not he was an officer or direc tor of L &H P
a t th e tim e of the Or de r or any tim e the re a ft e r. He re qu e sts that th e summa ry jud g me nt a g a ins t hi m individually be reve rsed and that the case be rema nded to the trial court. We re verse and re mand the
case to the district court for further proce eding s.The Or der w as agree d to and sig ned by Wil liam Perkins, L &H P’s lawy er, a s an authorized 2 repr esentative of the c orporation. 2 BACK GR OUND On Novembe r 29, 1995, L &H P entere d into an Ag ree d Orde r with the State of Texas 2
re la ti n g t o t h e u p gr a d e , r e mov a l, a

nd re g ist ratio n o f u nd e rg ro un d s tor a g e tank s ma int a ine d b y L & HP. Th e Or de r p ro vid e d f

or pe na lti e s unle ss c e rt a in a c tio ns re latin g to the tank s we re c omp le te d w ith in a spec ified time period. On N ovember 27, 1996, the Sta t e o f Texas filed a la wsuit alleg ing that L &H P had not complied with the terms and c onditions of the Order and soug ht the damag es and penalties provide d for in the Or der. The State also soug ht to hold H.A. L ace y , H.E. L ace y , and B .T. Hollis joi ntly

and seve rally

liable with L &H P based on their se rvice as the officer s and dire ctors of L &H P at the time of the Orde r and there afte r. The S tate relied on the public information report filed by L &H P in 1992 as t he basis for determining the officers and direc tors of L &H P and on Texas Tax Code section 171.255 as the statutory basis for individual liability
. Corporations t hat ar e cha rtere d or doing business in Texas are r equire d to file an a nnual public information re port listi ng the name, title, and addre ss of eac h office r and direc tor. Tex. Tax Code Ann. § 171.203 (West 2004-05). A corpor ation failing to file the re port forf eits its corporate privileg es and “ eac h direc tor or off icer of the c or po ratio n [be c ome s] liab le fo r e a c h d e bt o f t he c or po ra tio n th a t is c re a te d o r i nc ur re d in thi s state af ter the date on which the r eport, tax, or penalty is due and be fore the cor porate privileg es ar e
re v i v ed
. . . . ” Id. § 1 71 .2 55 (a ) ( Wes t 20 04 -0 5) . L & HP l a st f ile d a pu bli c inf or matio n r e po rt

in 1992. As a re sult of L &H P’s failure to f ile a re port in 1993 as re quired by the Tax Code, the corpor ate pr ivilege s of L &HP we re fo rf eit ed on August 16, 1994, and the off icer s and direc tors be c a me lia

ble fo r e a c h d e bt c re a te d o r i nc ur re d b y L & HP. Id. The trial c ourt gra n t ed summary3

judgme nt ag ainst L &H P and each of the offic ers in their individual ca pacity for the violations of the Orde r. L ace y

appea ls the judgme nt arguing that the trial court e rre d in gr anting traditional summary judgme nt ag ainst him because a genuine issue of mater ial fac t exi sts reg ardingwhether or not he was a

n office r or dire ctor of L &H P after D ece mber 1993. We hold that a ge n u ine issue of materia l fac t does exist reg ard i n g his positi on in the company and re verse the summary judgme nt and re mand the ca

use for further proce eding s.
DI SCU SSIO N The standard of revie w for a traditional summary judgme nt is well established: (1) the mov ant b e ars the burd e n o f c on c lus ive ly sh ow ingthat no g e nu ine is su e of mate ri a l f

a c t e xists and that it is entitled to judgme nt as a matter of law; (2) in deciding whether there is a g enuine issue of mater ial fac t prec luding summary judgme nt, evidenc e favorable to the non-movant will be take n as true; a nd (3) ever

y rea sonable infe renc e must be indulg ed in its favor. Nix on v . Mr . Pro p. Mg mt
. Co. , 690 S.W .2d 546, 548-49 (Te x . 1985)

. I f t he mov ant e sta

bli sh e s a ri g ht t o s umm ary

jud g me nt, the burde n shifts to the non-movant who must pre sent summary judgme nt evidence to the trial court raising a gen u i n e i s s ue of material fa ct to prec lude summary judgme nt. Cannon v. Texas Inde p. Bank, 1 S.W .3d 218, 223 (Tex. App.—Texarkana 1999, pet. denied) . I f the e vidence raises no more than a surmise or

suspicion o f a fa ct i n issue, no g enuine issue of fac t exi sts to defeat summary judgme nt. Selz v. Friendly Chevrolet, Ltd. , 152 S.W .3d 833, 837 (Tex. A pp.—Dallas 2005, no pet.) ( citing W iggins v. Ove rstreet , 96 2 S. W.2 d 1 98 , 2 00 (T e x. Ap p. —H ou sto n [14 th Dist .] 19 98, w ri tAs e vid e nc e of his re sig natio n, L a c e y

int ro du c e d h is a ff

ida vit , w hic h r e a ds in r e le va

nt p art : 3
4 d e n ie d ) )
. We r e v ie w th e tr ia l c o u rt’ s d e c is io n to g r a n t s u mm ar

y ju d g me nt de novo. Natividad v. Al e x sis , 875 S.W .2d 695, 699 (Tex. 1994).

T h e State, as mova

nt, bore the bur den of e stablishing its entitlement to a summary judgme nt by

conclusively

establishing that L ace y

was a n o ff

i ce r of L &H P when the Or der w as violated. Nixon , 690 S.W .2d at 548; Missouri-Kansas-Texas R.R. Co. v. City of Dallas , 623 S.W .2d 296, 298 (Tex. 1981). The State a sserts that L &H P’s 1992 public information report, which listed L ace y as an office r of the c orporation, conclusively establishes his role a s office r fr om 1995-1996. F o r s u p p o rtt h e S t a t e c i t e s o n l y J on ne t v . S tate , a fa ctually

simil ar case in which we held that two old reports, a

n expired public information report and a repor t filed wit h the Railroad Commission, prese nted convincingevidenc e of the identity of the dire ctors of a

corpor ation. 877 S.W .2d 520, 524 (Tex. App.—Austin 1994, writ denied). Howeve r, there are two substantial differ ence s betwee n the evidenc e pre sented in Jonnet and the e vid e nc e the State pr e se nte d a g a ins t L a c e y . F ir st, the Jonn e ts “produc ed no evidenc e that they resig ned or w ere otherwise r em o v ed as corpor ate of fice rs or direc tors of [the corp o ration]. [ T]he only evidenc e in the re cord [an expired public information repor t a nd a Railroad Commi ssion f orm P-5] indicate[d] that the J onnets wer e off icer s and direc tors when the Commission iss ued its order .” Id . at 524 (e mphasis added) . L ace y , in contrast, pre sented
e vid e nc e tha

t he wa s not

an off icer or direc tor at the re levant time. L ace y introduced his own aff idavit in which he states that in De cembe r of 1993 he told a nother office r of L &H P that he was “re signingas an of

fice r and dire ctor a

nd separ ating [hi m] self from all aff iliations wit h [L &H P] ,” and that he then moved to Nor th Carolina and ha d no further contac t with the corpor ation. A “dire ct and 3I n Dec ember 1993 Itold B .T. Hollis, who was an off icer and dire ctor of L ace y and Hollis Petroleum, I nc., that I and my family wer e moving to North Carolina and tha t I wa s r e signin g a s an of

fi c e r a nd dir e c tor and se pa ratin g my se lf

fr om a ll aff iliations w i t h L ac ey

and Hollis Petroleum, I nc. . . . . In Dec ember 1993 I mov e d t o North C aro lin a and purc ha se d a

ho me and

wa s e mpl oy e d in

No rt h Carolina and c ontinue to reside in Nor th Ca ro l i n a throug h this date . . . . Since Dec ember 1 9 9 3 I have not attended any meeting s, signe d any

documents, or take n p art

in a ny de c ision s, op e ratio ns or

a c tio ns re late d to L a c e y and Ho lli s Pe tr ole um, I nc ., oth e r t

ha n my inv olv e me nt wi th t

his laws uit

. . . . Iwa s n ot t old about or c onsulted with by any person r eg ardingthe Ag ree d Orde r (c opy attache d as part of Ex hibit 1 to the State’s Motion for Summary J udg ment) either

befor e or a ft e r D e c e mbe r 1 1, 19 95 , an d h a d n o k no wl e dg e of

that A g re e d O rd e r u

nti l I wa s se rv e d w ithPla int if

f’ s O ri g ina l Pe tit ion

in t his laws uit
. 5 unequivoca l” af

fidavit from an i n tere sted party that specific ally

states fa cts within the aff iant’s persona l knowledg e ca

n be sufficie nt to raise a fac t issue. Brownlee v. Brownlee , 665 S.W .2d 111, 112 (Tex . 1984); Tex. R. C iv. P. 166(a). Second, the Railroad Commissi on form P-5, the sec ond document on which w e re lied in Jonnet , r e qu ir e s mo re str ing e nt r e po rt ingtha n do es the pu

bli c inf or ma tio n r e po rt

on wh ic h L a c e y ’s lia

bil ity is be ing ba se d. Th e P- 5 mu st b e a me nd e d im me diate ly if there are any

substantive chang es, such a s resig nation of off icer s and if no new office rs are named, it is presu m ed t h at t he old offic ers c ontinue. Id. (citing 16 Tex. Admin. C ode § 3.1 (1993) ). Although the tax code require s that corpor ations update the public infor mation report annually , there is no require ment that all chang es be noted immediately and no pre sumption of continuity of off icer s is raised if late r re port s are not filed. Tex. Tax Code Ann. §§ 171.203-171.255. F urther, the information i n the L &H P repor t, which ex pired three y ear s befor e the Or der w as violated, is more likely to be outdated than the information in the J on ne t repor

ts w hich had expired less than a y ear befor e the e vent in question. Id. The 1992 re port filed by L &H P is notconclusive summar y6

judgme nt evidence of L ace y ’s status as an of fice r or dire ctor of L &H P at the time that the company violated the orde r.

Th e State argue s th a t L a c e y fa ile d to pr od

uc e a ny c or ro bo ra tin g e vid e nce of h is
re sig natio n a

nd thu s f a ile d to ra ise a

fa c t iss ue that wo uld pr e c lud e summa ry jud g me nt a g a ins t hi m. Howeve r, L ace y

had no duty

to produce corr oboratingdocuments; rathe r, the burde n rested on the State, as movant, to conc lusively establish that no issue of fa ct exist s. Missouri-Kansas-Texas R.R. Co. , S. W.2 d at 29 8; Nixon , 690 S.W .2d at 548. The St ate did not meet this burden. A s stated above , the 1992 re port is not conclusive evidence of L ace y ’s position as an offic er or direc tor of L &H P at the re levant time, and the State presente d no other evidence controve rting L ace y ’s s tatement that he resig ned fr om the corpor ation in 1993. Howeve r, even if the 1992 repor t had ra ised a pre sumption that L ace y was an office r or direc tor of L &H P in 1995-96, L ace y ’s aff idavit w ould r aise an issue of fac t sufficient to pre clude summary judgme nt on the issue. An aff idavit f rom an interested pa

rty can be su ff ic ie nt t o r a ise a

qu e sti on of fa c t if it s e ts f or th d ir e c t and un equ iv ocal fa c ts, a dmi ssi ble in evidenc e, that show the e x istence of a dispute as to a material issue of f act, a nd i f p er jury can be assig ned to it. Brownlee , 665 S.W .2d at 112; Tex. R. C iv. P. 166(a). L ace y sets out clear

and specific fac ts relating to his re signation a nd subsequent move to Nor th Carolina. L ace y

aver s that he re signe d by

telling a nother off icer of L &H P that he “w as re signingas an of fice r and dire ctor a

nd
se pa ratin g [him ]se lf

fr om al l af

fi liatio ns wi th [L & HP], ” and that “ sin c e De c e mbe r 1 99 3 [he ] ha [s] not attended a

ny meetings , signe d any

documents, or take n part in any decisions, oper ations or actions related to [L &H P] , other than [hi s] involvement with this lawsuit;” A ve rb al resignation from his offic e in 1993 would be suff icient to rele ase him from li ability for violations of the Or derUnder the cur rent business cor

poration ac t, “unless otherw ise provided by the ar ticles of 4 inc orpo ratio n, a

dir e c tor may re sig n at any

tim e by g ivi ngno tic e in wri tin g or by e le c tr on ic tr ans mis sio n to the c or

po ratio n.” Te x. B us . Co rp . A c t art . 2 .3 2( A) (We st 2 00 4- 05 ). Ho we ve r, in 1993, at the time L ace y claims to ha ve resig ned from L &H P, the Act did not addre ss proper me thods of re signation from a cor poration. See Act of Ma y 25, 1991, 72d L eg ., R.S., ch. 901, § 10. The case law g overningat that time permitted ver bal re signations. Bell v. T exas Em ployers’ Assoc

. , 43 S.W .2d 290, 293 (Tex. Civ. App.—Dallas 1931, writ dismissed). 7 in 1995-96. “Resig nation from a c orporate pos ition is not require d to be in writing , nor is it required to be in any

specia l form . . . .” Bell v. Tex as Employers’ Assoc. , 43 S.W .2d 290, 2 9 3 (T ex . Civ. App.—Dallas 1931, w rit dismis sed). Whether L ace y actua lly t o l d the other of

fice r that he w as 4 resig ning a s office r and dire ctor is an issue a ppropriate for a

fac t-finder
. Afte r re v i ew ing a ll of the evidenc e and taking a ll evidence favor able to the nonmovant as true, w e conc lude that the State fa iled to meet its burden to conc lusively establish that L ace y was a n office r or director of L &H P at t he ti me of the violations, and there fore hold that the issue should be tried bef

ore a fac t-finder
.

CO NC LU SION Havingsustained the appe llant’s sole issue, we r ever se the district cour t’s summary jud g me nt a

nd re mand c a us e fo r f ur the r p ro c e e din g s.

__________________________________________ David Pury ear , J ustice Be fore J ustices B . A. Smith, P ury ear and Pember

ton Reverse d and Remande d Filed: September

21, 20058