Opinion issued March 28, 2013

In The

Court of Appeals 

For The 

First District of Texas 

————————————

NO. 01-11-00296-CV

———————————

E-QUEST MANAGEMENT, LLC AND ODYSSEY ONESOURCE, INC., 

Appellants

V.

ROBBIE SHAW, Appellee

On Appeal from the 212th District Court

Galveston County, Texas

Trial Court Case No. 08CV0414

O P I N I O N

Appellants, E-Quest Management, LLC (“E-Quest”) and Odyssey 

OneSource, Inc. (“Odyssey”), challenge the trial court’s judgment, entered after a 

trial to the court, in favor of appellee, Robbie Shaw, in Shaw’s suit against them 
2

for successor liability. In five issues, E-Quest and Odyssey contend that they have 

been “prevented from proper presentment” of this appeal due to the trial court’s not 

making their requested findings of fact and conclusions of law; the trial court 

entered judgment against Odyssey in violation of the statute of limitations; the trial 

court’s judgment does not conform to Shaw’s pleadings; Shaw lacked standing to 

pursue any successor-liability claim; Texas statutory law precludes Shaw’s 

successor-liability claim; and the evidence is legally and factually insufficient to 

support the trial court’s findings of fact.

We reverse and render. 

Background

In her third amended petition,1 Shaw alleged that on December 4, 2001, 

Retirement Living Management, Inc. (“RLM”) terminated her employment and, 

while at RLM, she was “treated differently because of her race, such that the terms 

and conditions of her employment were . . . affected.” In October 2002, Shaw 

filed suit against RLM, and in May 2004, the district court entered a judgment 

against RLM, awarding Shaw $11,825 in damages, $54,365 in attorney’s fees, 

reinstatement of her employment, and $200 per month from the date of the 

judgment until her reinstatement. Shortly thereafter, RLM filed for bankruptcy

protection, and E-Quest and Odyssey “took over the assets of RLM and continued 

 1 In her first amended petition, filed on April 23, 2008, Shaw brought claims only 

against E-Quest. Shaw did not bring suit against Odyssey until December 9, 2009.
3

the daily operations of RLM.” In regard to her successor-liability claims, Shaw, in 

her petition, asserted,

Defendants E-Quest and Odyssey should be held responsible should it 

be determined that RLM does not have the financial capabilities to

pay a judgment. Defendants E-Quest and Odyssey have continued the 

operations and work force of the predecessor employers, and they also 

had notice of its predecessor’s legal obligation when the assets of 

RLM were transferred to them. Since RLM is liable, but does not 

have the financial capability to pay a judgment, then Defendants EQuest and Odyssey would have the ability and responsibility to 

provide adequate relief directly, including the required reinstatement 

of [Shaw].

At trial, Elmo Robinson testified that he was the president of RLM until he 

moved to Odyssey in May 2004. RLM managed retirement communities, hired

employees, performed “all the human resources services,” and provided 

administrative and record-keeping services. Robinson had been “involved” in

Shaw’s previous “discrimination lawsuit” against RLM, during which he was 

deposed. 

On March 26, 2004, after the jury returned its verdict in the RLM lawsuit,

but before the trial court signed its judgment, Robinson registered E-Quest as a 

limited liability corporation with the Texas Secretary of State. Robinson, EQuest’s registered agent, David Clement, and Sandra Paulson, jointly own EQuest. Clement, who had been vice president of RLM, is E-Quest’s vice president, 

and Paulson, who had been the secretary of RLM, is E-Quest’s secretary. 

Although RLM’s offices were located in a different suite, E-Quest’s offices are 
4

located in the same building. And Robinson admitted that E-Quest assumed some 

of the properties that had been previously managed by RLM and E-Quest and 

RLM shared “some” of the same employees and officers, but not all of them. On 

May 10, 2004, Odyssey and E-Quest signed an agreement to act as “co-employers” 

in their business. Specifically, regarding Carriage Inn, the property at which Shaw 

previously worked, Odyssey and E-Quest “essentially took over the responsibility 

that [RLM] had before.” However, at no time did RLM, Odyssey, or E-Quest have 

an ownership interest in the property; they only performed “property management” 

functions.

On cross-examination, Robinson conceded that he had participated in 

RLM’s bankruptcy proceedings, during which RLM’s assets, estimated to be worth 

between $50,000 and $100,000, were turned over to the bankruptcy trustee. And

RLM had “over 200” creditors, including Shaw, when it filed for bankruptcy. He 

explained that E-Quest and Odyssey did not “acquire anything” from RLM

because all of its assets were turned over to the bankruptcy trustee. Robinson 

further distinguished RLM from E-Quest by explaining,

[RLM] was to hire and provide employees for the retirement 

communities performing all of the human resource functions that a 

company would perform. E-Quest did none of that. E-Quest simply 

was a company that could contract with [Odyssey] and at the same 

time provide some record keeping, administrative services to 

retirement communities. It’s a pass through organization with no 

employees including myself. . . . E-Quest simply bills the retirement 
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communities, those funds are paid to E-Quest who in turn passes them 

through to [Odyssey].

Robinson had jointly owned RLM with Robert McKee, but McKee was not 

involved in either E-Quest or Odyssey. And no officer or shareholder of RLM was

ever an officer or shareholder of Odyssey. Robinson, along with Clement and 

Gibson, fronted the initial capital to start E-Quest. 

Mark Turner, an employee of Odyssey, explained that it was a “professional 

employer’s organization” that never had any contact with RLM. First Odyssey 

Group entered a contract with E-Quest on May 10, 2004 to provide “HR outsourcing, payroll, safety and loss control, . . . [and] worker’s compensation”; it

then assigned the contract to Odyssey on January 1, 2005. After entering the 

agreement, Odyssey enrolled any employee referred to it by E-Quest into its own 

payroll records and benefit programs, while E-Quest managed the “day to day 

operation of the employees” and had the most “direct control over the hiring and 

firing of employees.”

After hearing the evidence, the trial court awarded Shaw “all damages” to 

which she was “entitled as described, outlined or otherwise stated” in the previous 

judgment she received against RLM: $11,825.80 in damages, reinstatement 

“together with all seniority and other company benefits,” “$200 per month from 

May 14, 2004 until actual reinstatement,” $54,365 in attorney’s fees, and $3,240 in 

costs. In their initial briefing to this Court, E-Quest and Odyssey argued, among 
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other issues, that the trial court had erred in not entering findings of fact or 

conclusions of law despite their timely request. On agreement of the parties, we 

abated the appeal for the trial court to enter its findings of fact and conclusions of 

law, which it entered on September 22, 2011. 

The trial court concluded that “E-Quest and Odyssey are the successors-ininterest to [RLM] under the doctrine of successor liability” and “[RLM’s] 

bankruptcy does not deprive [Shaw] of the ability to assert her successor liability 

claim.” The trial court found that:

1. [Shaw] filed a lawsuit against [RLM], alleging race 

discrimination and retaliation.

2. [Shaw] obtained a jury verdict against [RLM].

. . . 

4. Shortly after [Shaw] obtained a jury verdict . . ., E-Quest was 

created.

5. Around the time that E-Quest was created, E-Quest and 

Odyssey began negotiations. Thereafter, E-Quest and Odyssey 

entered into a formal contractual relationship.

6. Prior to filing for bankruptcy, [RLM] failed to abide by the 

terms of the judgment, and [Shaw] was never compensated . . . .

7. [RLM] filed for Chapter 7 bankruptcy in the United States 

Bankruptcy Court for the Southern District of Texas.

8. [RLM’s] bankruptcy case is closed.

9. E-Quest and Odyssey had notices of [RLM’s] legal obligations, 

specifically, [Shaw’s] lawsuit, jury verdict, and/or judgment 
7

against [RLM], to [Shaw] when the assets of [RLM] were 

transferred to E-Quest and Odyssey.

10. At the time of its organization, E-Quest and [RLM] had the 

same corporate officers and maintained the same corporate 

office.

11. E-Quest and/or Odyssey also hired the majority of [RLM’s] 

prior employees.

12. Elmo Robinson, the former president of [RLM], is the current 

president of E-Quest.

13. Both Patricia Robinson, formerly known as Patricia Gibson, 

and David Clement, who were former officers of [RLM] are 

current officers of E-Quest.

14. E-Quest and Odyssey provide services for the properties served 

by [RLM]. . . .

15. The communities that E-Quest and Odyssey service require the 

same types or categories of employees as previously by [RLM].

16. After [RLM] filed for bankruptcy the services that were 

provided by [RLM] are not provided by Odyssey and E-Quest.

17. E-Quest and Odyssey are the successors-in-interest to [RLM] 

under the doctrine of successor liability.

18. [RLM] is [Shaw’s] predecessor employer.

19. [RLM] does not have the financial capability to pay [Shaw’s] 

judgment.

20. E-Quest and Odyssey have substantially continued the business 

operations of [RLM] as E-Quest and Odyssey either use the 

same plant, use the same or substantially the same workforce, 

use the same or substantially the same supervisory personnel, 

the same jobs exist under substantially the same working 
8

conditions, use the same machinery, equipment and methods of 

production and/or produce the same product as [RLM].

21. Defendants E-Quest and Odyssey are liable to [Shaw] for the 

satisfaction of [Shaw’s] judgment against predecessor [RLM] 

. . . .

After the trial court entered its findings of fact and conclusions of law, we 

reinstated this appeal. E-Quest and Odyssey then filed their supplemental brief, 

challenging the trial court’s conclusions of law and the legal and factual 

sufficiency of the evidence supporting the trial court’s findings of fact.

Standard of Review

We review a trial court’s conclusions of law de novo, and we will uphold the 

conclusions if the judgment can be sustained on any legal theory supported by the 

evidence. BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex.

2002); In re Moers, 104 S.W.3d 609, 611 (Tex. App.—Houston [1st Dist.] 2003, 

no pet.). Although a trial court’s conclusions of law may not be challenged for 

factual sufficiency, we may review the legal conclusions drawn from the facts to 

determine whether the conclusions are correct. Marchand, 83 S.W.3d at 794;

Holloway–Houston, Inc. v. Gulf Coast Bank & Trust Co., 224 S.W.3d 353, 357 

(Tex. App.—Houston [1st Dist.] 2006, no pet.). If we determine that a conclusion 

of law is erroneous, but the trial court nevertheless rendered the proper judgment, 

the error does not require reversal. Marchand, 83 S.W.3d at 794.
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Successor Liability

In their fourth issue, E-Quest and Odyssey argue that the trial court erred in 

concluding that Shaw can assert a successor-liability claim against them because,

under Texas law, such a claim is “legally barred.” See Act of May 4, 1979, 66th 

Leg., R.S., ch. 194, § 1, 1979 Tex. Gen. Laws 422, 422–23 (amended 1987, 1991, 

1993, and 1997, recodified 2002) (current version at TEX. BUS. ORGS. CODE ANN.

§ 10.254 (Vernon Supp. 2012)).

In support of her successor-reliability claim, Shaw relies, in large part, on 

Rojas v. TK Communications, Inc., 87 F.3d 745 (5th Cir. 1996). In Rojas, a female 

employee, who worked for a radio station owned by TK Communications, Inc. 

(“TK”), brought a sexual-harassment claim against TK under Title VII of the Civil 

Rights Act of 1964. Id. at 746. She later joined Tichenor Media Systems, Inc. 

(“Tichenor”), which had bought the radio station, under a theory of successor 

liability. Id. The United States Court of Appeals for the Fifth Circuit noted that, 

under “general contract principles,” it was undisputed that Tichenor, in its assetpurchase agreement, “expressly excepted” the discrimination claim. Id. at 749. 

However, the court recognized that successor liability “does not arise from 

contract” but “labor law principles enunciated in four Supreme Court cases.” Id.

(citing Fall River Dyeing & Finishing Corp. v. NLRB, 482 U.S. 27, 107 S. Ct. 2225 

(1987); Howard Johnson Co. v. Detroit Local Joint Exec. Bd., 417 U.S. 249, 94 S. 
10

Ct. 2236 (1974); NLRB v. Burns Int’l Sec. Servs., Inc., 406 U.S. 272, 92 S. Ct. 

1571 (1972); John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 84 S. Ct. 909 

(1964)). And the court explained that those labor law principles extended to 

“claims asserted under Title VII and related statutes” and supported the imposition 

of successor liability in such cases, explaining,

[T]he successor doctrine arises in the context of discrimination cases 

in situations where the assets of a defendant employer are transferred 

to another entity. Thus, the purpose of the doctrine is to ensure that an 

employee’s statutory rights are not “vitiated by the mere fact of a 

sudden change in the employer’s business.” The doctrine allows the 

aggrieved employee to enforce against the successor a claim he could 

have secured against the predecessor.

Thus, applicability of the doctrine hinges on the need to protect a 

plaintiff where the offending entity is substituted by another company.

Id. at 750 (quoting Brennan v. Nat’l Tel. Directory Corp., 881 F. Supp. 986, 992 

(E.D. Pa. 1995) (citations omitted)). The court then identified “nine factors to be 

considered in determining whether successor liability should be imposed in a 

discrimination case”:

(1) whether the successor company had notice of the charge or 

pending lawsuit prior to acquiring the business or assets of the

predecessor; (2) the ability of the predecessor to provide relief; (3) 

whether there has been substantial continuity of business operations; 

(4) whether the new employer uses the same plant; (5) whether he 

uses the same or substantially the same work force; (6) whether he 

uses the same or substantially the same supervisory personnel; (7) 

whether the same jobs exist under substantially the same working 

conditions; (8) whether he uses the same machinery, equipment, and 

methods of production; and (9) whether he produces the same 

product.
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Id. (quoting Musikiwamba v. ESSI, Inc., 760 F.2d 740, 750 (7th Cir. 1985)). Of 

these nine factors, the first two are critical, while the remaining seven simply 

“provide a foundation for analyzing the larger question of whether there is a 

continuity in operations and the work force of the successor and predecessor 

employers.” Id. (quoting Musikiwamba, 760 F.2d at 751). 

E-Quest and Odyssey assert that, despite the court’s reasoning in Rojas in 

regard to successor liability in the context of Title VII, this case is controlled by 

article 5.10 of the Texas Business Corporations Act, which provided,

B. A disposition of any, all, or substantially all, of the property and 

assets of a corporation, whether or not it requires the special 

authorization of the shareholders of the corporation . . . :

(1) is not considered to be a merger or conversion pursuant 

to this Act or otherwise; and

(2) except as otherwise expressly provided by another 

statute, does not make the acquiring corporation, foreign 

corporation, or other entity responsible or liable for any 

liability or obligation of the selling corporation that the 

acquiring corporation, foreign corporation, or other 

entity did not expressly assume.

Act of May 4, 1979, 66th Leg., R.S., ch. 194, § 1, 1979 Tex. Gen. Laws 422, 422–

23 (amended 1987, 1991, 1993, and 1997, recodified 2002) (emphasis added). 

Shaw notes that article 5.10 has been “repealed, and is no longer in effect.” 

However, article 5.10 in fact did not expire until January 1, 2010, over a year after 

Shaw filed the instant suit. See Act of May 13, 2003, 78th Leg., C.S., ch. 182, § 2, 
12

2003 Tex. Gen Laws 267, 595 (expired Jan. 1, 2010). And the relevant part of the 

statute has since been recodified in the Texas Business Organizations Code, which 

states similarly,

(a) A disposition of all or part of the property of a domestic entity, 

regardless of whether the disposition requires the approval of 

the entity’s owners or members, is not a merger or conversion 

for any purpose.

(b) Except as otherwise expressly provided by statute, a person 

acquiring property described by this section may not be held 

responsible or liable for a liability or obligation of the 

transferring domestic entity that is not expressly assumed by the 

person.

TEX. BUS. ORGS. CODE ANN. § 10.254 (Vernon Supp. 2012) (emphasis added).

As reflected in the above statutes, Texas “strongly embraces” a “nonliability” rule for corporate successors. See Lockheed Martin Corp. v. Gordon, 16 

S.W.3d 127, 139 (Tex. App.—Houston [1st Dist.] 2000, pet. denied). Texas law 

authorizes a successor to acquire the assets of a corporation without incurring any 

of the grantor corporation’s liabilities unless the successor expressly assumes those 

liabilities. C.M. Asfahl Agency v. Tensor, Inc., 135 S.W.3d 768, 780–81 (Tex. 

App.—Houston [1st Dist.] 2004, no pet.); Lockheed Martin, 16 S.W.3d at 139; see 

also McKee v. Am. Transfer and Storage, 946 F. Supp. 485, 487 (N.D. Tex. 1996) 

(“The Texas Business & Corporations Act eliminates the doctrine of implied 

successor liability.”). Thus, in Texas, there is no successor in interest when an

acquiring corporation does not expressly agree to assume the liabilities of the other
13

party to an agreement because “successor” has a specialized meaning “beyond 

simple acquisition.” Sitaram v. Aetna U.S. Healthcare of N. Tex., Inc., 152 S.W.3d 

817, 828 (Tex. App.—Texarkana 2004, no pet.).

Shaw cites to no Texas authority applying successor liability as discussed by 

federal courts in the context of Title VII or otherwise imposing liability on a 

successor company in spite of the Texas rule in support of non-liability. However, 

the reasoning supporting the federal application of successor liability is similar to 

the reasoning supporting the “mere continuation” exception to limited liability, an 

exception “even more liberal” than the de facto merger doctrine. See, e.g., 

Mudgett v. Paxson Mach. Co., 709 S.W.2d 755, 758 & n.4 (Tex. App.—Corpus 

Christi 1986, writ ref’d n.r.e.) (listing elements of “mere continuation” doctrine as 

whether “the buyer purchased the ‘good will’ and name of the seller, operated the 

business in the same place, with the same employees and continued to produce the 

same product”) (citing Cyr v. B. Offen & Co., 501 F.2d 1145, 1153 (1st Cir. 

1974)); see also Hollowell v. Orleans Reg’l Hosp. LLC, 217 F.3d 379, 390–91 (5th 

Cir. 2000) (applying “mere continuation” doctrine under Louisiana law and listing 

elements as: “(1) retention of the same employees; (2) retention of the same 

supervisory personnel; (3) retention of the same production facility in the same 

physical location; (4) production of the same product; (5) retention of the same 

name; (6) continuity of assets; (7) continuity of general business operations; and 
14

(8) whether the successor holds itself out as a continuation of the previous 

enterprise”). 

However, Texas courts have interpreted article 5.10 as expressly abrogating

the mere continuation doctrine as a means of imposing successor liability. See 

Motor Components, LLC v. Devon Energy Corp., 338 S.W.3d 198, 205 (Tex. 

App.—Houston [14th Dist.] 2011, no pet.) (“The Texas legislature rejected long 

ago the ‘continuation’ doctrine of implied successor liability . . . .”) (citing TEX.

BUS. ORGS. CODE ANN. § 10.254); Shapolsky v. Brewton, 56 S.W.3d 120, 137–38 

(Tex. App.—Houston [14th Dist.] 2001, pet. denied) (holding that just as liability 

cannot be transferred under “mere continuation” doctrine, company’s contacts 

cannot be imputed to successor for purposes of establishing personal jurisdiction), 

abrogated on other grounds by Michiana Easy Livin’ Country v. Holten, 168 

S.W.3d 777 (Tex. 2005); Mudgett, 709 S.W.2d at 758 (“Certainly if the de facto 

merger doctrine is contrary to the public policy of our state, so must be the mere 

continuation doctrine.”).

Here, it is undisputed that neither E-Quest nor Odyssey “expressly assumed” 

liability for Shaw’s judgment against RLM. Shaw argues that we should 

nevertheless extend the successor-liability doctrine from Rojas to the present case 

because the above cited Texas cases “do not involve employment discrimination 

claims.” She notes that in Rojas the Fifth Circuit stated that the doctrine of 
15

successor liability “has been extended to claims asserted under Title VII and 

related statutes.” Rojas, 87 F.3d at 750. As stated by the Texas Supreme Court, 

one of the purposes of the Texas Commission on Human Rights Act (“TCHRA”) is 

to “provide for execution of the policies of Title VII of the Civil Rights Act of 

1964 and its subsequent amendments.” Quantum Chem. Corp. v. Toennies, 47 

S.W.3d 473, 476 (Tex. 2001) (citing TEX. LABOR CODE ANN. § 21.001(1)). 

“Therefore, analogous federal statutes and cases interpreting them guide our 

reading of the TCHRA.” Id. (citing NME Hosps., Inc. v. Rennels, 994 S.W.2d 142, 

144 (Tex. 1999)).

However, as Shaw concedes in her brief, successor liability, as discussed by 

the federal courts, is a “common law” doctrine, like the “mere continuation” 

doctrine. It is not based on a statutory interpretation of Title VII, but rather 

“derived from equitable principles.” See, e.g., Brzozowski v. Correctional 

Physician Servs., Inc., 360 F.3d 173, 178 (3rd Cir. 2004); Ed Peters Jewelry Co. v. 

C & J Jewelry Co., 124 F.3d 252, 265 (1st Cir. 1997) (“[S]uccessor liability is an 

equitable doctrine, both in origin and nature.”). And, unlike in Rojas, where the 

plaintiff brought suit under Title VII and directly joined the defendants in that suit, 

Shaw brings her claim under neither Title VII or the TCHRA. Rather, Shaw seeks

to recover on a judgment entered long ago, presumably for violations of the 
16

TCHRA. And, again, Shaw cites us to no Texas authority imposing successor 

liability under such circumstances. 

Shaw does note that a federal district court has applied successor liability to 

claims brought under the TCHRA. See Mendez v. Ameri-Forge Corp., No. Civ.A. 

H-01-0523, 2005 WL 2241009, at *4 (S.D. Tex. Sept. 15, 2005). Although the

federal district court in Mendez did provide a brief analysis of the applicability of 

successor liability to the plaintiff’s claims brought under both Title VII and the 

TCHRA, it ultimately resolved the case by concluding that the plaintiff had failed 

to timely prosecute the action. Id. at *4–5; but see McKee, 946 F. Supp. at 487 

(declining to apply successor liability to Texas wrongful-termination claim, 

brought along with claim under Americans with Disabilities Act, because of Texas 

statute limiting successor liability to those expressly assumed); Schutze v. Fin.

Computer Software, No. 04-CV-0276-H, 2006 WL 2842008, at *9–10 & n.2 (N.D. 

Tex. Sept. 29, 2006) (concluding it “clearly true” that successor liability could not 

apply to plaintiff’s Texas discrimination claims and assuming, without deciding, 

that doctrine could not apply to plaintiff’s statutory discrimination claims brought 

under TCHRA). As a result, Mendez is inapplicable here.

In light of the express statutory mandate precluding the imposition of 

implied successor liability under Texas law, we conclude that Shaw’s successorliability claim is precluded by Texas statute. See Act of May 4, 1979, 66th Leg., 
17

R.S., ch. 194, § 1, 1979 Tex. Gen. Laws 422, 422–23 (amended 1987, 1991, 1993, 

and 1997, recodified 2002); TEX. BUS. ORGS. CODE ANN. § 10.254; see also Motor 

Components, LLC, 338 S.W.3d at 205 (“The Texas legislature rejected long ago 

the ‘continuation’ doctrine of implied successor liability . . . .”); Lockheed Martin, 

16 S.W.3d at 139. 

Accordingly, we hold that the trial court erred in concluding otherwise.

Conclusion

Having held that the trial court erred in concluding that Shaw’s successorliability claim is not barred by Texas law, we need not address the remaining issues 

of E-Quest and Odyssey. We reverse the judgment of the trial court and render a 

take-nothing judgment in favor of E-Quest and Odyssey.

Terry Jennings

Justice 

Panel consists of Justices Jennings, Higley, and Sharp.