Court Opinion

ID: 3128927
Source: CourtListenerOpinion
Date Created: 2015-10-16 16:12:43.10055+00
Date Added: 2024-06-11T07:38:27.200920
License: Public Domain

Opinion
issued March 10, 2011

In The
Court
of Appeals
For The
First
District of Texas
————————————
NO.
01-09-00590-CV
————————————
Calvin harris, madelyn harris,
and Kalvin guyton,
Appellants
V.
houston livestock show & Rodeo,
inc.
and corral club, inc.,
Appellees
 

 

 
On Appeal from the 152nd District Court
Harris County, Texas

Trial
Court Cause No. 2006-35541-A
 

 
O
P I N I O N
          The
case underlying this appeal concerns an off-duty police officer who drank free
beer at a private, after-hours party and then caused serious injuries to two
people when he rear-ended a stalled SUV. 
The injured parties, appellants, Calvin and Madelyn Harris and Kalvin
Guyton, brought suit under the Dram Shop Act[1] against Corral Club, Inc.
(“Corral Club”) and Houston Livestock Show & Rodeo, Inc.
(“HLS&R”).  The Harrises and Guyton
separately appeal summary judgment granted in favor Corral Club and HLS&R.  In their first two issues, appellants each
contend that summary judgment is improper because Corral Club was the
“provider,” as defined by the Dram Shop Act, of the beer and that HLS&R is
vicariously liable based on a joint enterprise theory.[2]  We conclude that the Corral Club failed to
show conclusively that it, acting through its agents, was not the “provider” of
the beer.  We reverse that portion
of the summary judgment and remand for further proceedings.  We also determine that HLS&R conclusively
established that there was no joint enterprise between it and Corral
Club.  We affirm the summary judgment rendered in favor of HLS&R.
Background
          Each
year, HLS&R operates an entertainment and livestock exhibition (the
“Rodeo”) at Reliant Stadium.  In the 1980s,
HLS&R entered into a written agreement with Corral Club, a separate legal
entity.  In the agreement, HLS&R
agreed to allow Corral Club to sell and dispense alcoholic beverages during the
Rodeo.  In exchange, Corral Club agreed
to pay HLS&R a percentage of the total revenue.  In addition, Corral Club agreed to “pay for
the cost of all liquor obtained for sale” and to reimburse HLS&R for any
expenses it incurred for Corral Club’s benefit. 
The agreement “contemplate[s] that [HLS&R] may use the Areas [where
alcoholic beverages are sold or dispensed] in support of its fund-raising
activities . . . provided, however . . . [HLS&R] shall
not sell or dispense alcoholic beverages.” 
The agreement further states that “Corral Club is encouraged to utilize
staff of [HLS&R] provided, however, it is understood that any staff member
. . . or any other person used to operate the Areas for the sale or
dispensing of alcoholic beverages shall be under the exclusive control,
supervision and care of Corral Club.”
          HLS&R
organizes its thousands of volunteers into various committees, which assist the
Rodeo in different ways.  In 2006, the
volunteers assigned to the Corral Club Committee (the “Club Committee”) were
responsible for the day-to-day operations of the Club East Bar, located on the
third floor of Reliant Stadium.  All
alcoholic beverages, including mixed beverages, wine, and beer, at the Club
East Bar were purchased by Corral Club. 
Unlike Corral Club, HLS&R was not authorized, under a Texas
Alcoholic Beverages Commission (TABC) license or permit, to sell alcoholic
beverages.  When the Rodeo was open to
the public, only bartenders paid by Corral Club sold and served alcohol at the
Club East Bar.  Volunteers with the Club
Committee, however, assisted by carrying out functions other than dispensing
alcohol.  Club Committee volunteers
monitored the entrances and exits to bar areas, ensuring that alcoholic
beverages did not come in or out.  Other Club
Committee volunteers stocked the bars with alcoholic beverages and other supplies
as needed.  At the close of business each
night, Club Committee volunteers were responsible for balancing out, that is,
determining and recording the quantity of alcohol dispensed.  
The Club Committee was divided
into three teams, each composed of about 60 volunteers.  One of the teams was managed by assistant
club chairman W. Wayne Haston.  In turn,
Haston reported to the general chairman of the Club Committee.  While Haston and the general chairman were
volunteers, they ultimately reported to Mike Demarco.  Demarco simultaneously served as HLS&R’s
executive director of operations and Corral Club’s president.
          A
small, private party for Haston’s team of Club Committee volunteers and their
guests was scheduled to be held at the Club East Bar after the close of
business on the second-to-last day of the Rodeo.  At 7:30 p.m., the Rodeo ended, and the public
was cleared out of Reliant Stadium.  At
the same time, the Club East Bar was also closed to the public, and Club
Committee volunteers balanced out the bar. 

Earlier that day, Ramiro Olivares,
an off-duty police officer employed by HLS&R to work security, was invited
to attend the Club Committee party.  At
9:30 p.m., Olivarez arrived at the party sober.  Although he was not a member of the
Committee, he was acquainted with several members.  Haston and other Club Committee volunteers
were serving free mixed beverages, wine, and beer from behind the bar.  Although no bartender paid by Corral Club
served alcoholic beverages during the meeting, all alcoholic beverages were
from stock paid for by Corral Club, which would have been sold to
customers attending the Rodeo if it had not been dispensed at the private party.  Olivares sat at the bar, socializing for
about two hours.  During that time,
Olivares was served five or six free cans of beer, which he drank.  After the party, Club Committee volunteers
again balanced out the bar, thus recording the specific quantity of alcohol
dispensed during the party.  After
leaving the party, Olivares collected his belongings, got in his truck, and
drove directly to a dance club.  After
four more cans of beer, he left around 2:00 a.m. and headed home.
It was raining lightly as Olivares
drove northbound on East 610 Loop, traveling at about 55 mph.  As he began to dial a friend’s phone number
on his cell phone, Olivares was coming over the crest of an overpass when he
noticed a stalled SUV in front of him. 
Olivares pressed the brake, but his truck collided with the SUV.  At the moment of impact, Kalvin Guyton, the
owner of the SUV, and Calvin Harris, who had stopped to assist, were leaning
against the front of the SUV, looking under the hood.  The momentum of Olivares’s truck pushed the
SUV forward, which then knocked Guyton and Harris over the railing, after which
they fell approximately 30 feet to the ground below.  The SUV continued forward and collided with
Harris’s parked car.  The resulting
explosion and fire wholly consumed all three vehicles.  Although they lived, Guyton and Harris
suffered serious injuries.  Calvin’s
wife, Madelyn, saw the truck push the parked vehicles, the ensuring fire, and
her husband lying on the ground below. 
Olivares was arrested, and approximately three hours after the accident,
his blood alcohol level was .22—almost three times the level establishing
intoxication per se.  
          The Harrises sued Corral Club and
HLS&R under the Dram Shop Act.  The
Harrises contended that Corral Club was directly liable pursuant to the Dram
Shop Act and that HLS&R was vicariously liable based on the assertion that
the Club East Bar was operated as a joint enterprise.  Guyton intervened in the suit, asserting the
same claims.  
          Corral Club and HLS&R filed a
motion for traditional summary judgment on grounds that (1) Corral Club
was not a “provider,” as defined by the Dram Shop Act, of the beer because none
of its employees sold or served the beer to Olivares and (2) HLS&R was not
vicariously liable based on a joint enterprise theory because it did not share
a community of pecuniary interest with Corral Club.  The trial court granted Corral Club and
HLS&R’s motion for summary judgment. 
The trial court severed Corral Club and HLS&R from the lawsuit,
making this judgment final and appealable.[3]
Dram
Shop Liability
 
          The
Harrises and Guyton assert the trial court erred by rendering summary judgment
in favor of Corral Club and HLS&R.
          A.      Standard of Review
An appellate court reviews de novo a trial court’s ruling on
a summary judgment motion.  Mann Frankfort Stein & Lipp Advisors,
Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009).  To succeed on a summary judgment motion under
Texas Rule of Civil Procedure 166a(c), a movant must establish that there is no
genuine issue of material fact so that the movant is entitled to judgment as a matter
of law.  Tex. R. Civ. P. 166a(c); Randall’s
Food Mkts., Inc. v. Johnson, 891 S.W.2d 640, 644 (Tex. 1995).  To conclusively establish a matter, the
movant must show that reasonable minds could not differ as to the conclusion to
be drawn from the evidence.  Henry v. Masson, No. 01-07-00522-CV, ---
S.W.3d ---, 2010 WL 5395640, at *16 (Tex. App.—Houston [1st Dist.] Dec. 30,
2010, no pet.) (citing City of Keller v.
Wilson, 168 S.W.3d 802, 814 (Tex. 2005)). 
The evidence is reviewed in the light most favorable to the non-movant,
crediting favorable evidence if reasonable jurors could and disregarding
contrary evidence unless reasonable jurors could not.  Mann
Frankfort Stein, 289 S.W.3d at 848 (citing City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005)).  An appellate court may not affirm the summary
judgment on a ground not presented specifically in the motion for summary
judgment.  Travis v. City of Mesquite, 830 S.W.2d 94, 100 (Tex. 1992); see State Farm Lloyds v. Page, 315
S.W.3d 525, 532 (Tex. 2010).
B.      Applicable Law
In pertinent part,
section 2.02(b) of the Texas Alcoholic
Beverage Code states:
Providing, selling, or serving
an alcoholic beverage may be made the basis of a statutory cause of action
under this chapter . . . upon proof that: 
 
(1)       at the time the provision occurred[,] it was apparent to the
provider that the individual . . . was obviously intoxicated to the
extent that he presented a clear danger to himself and others; and
 
(2)       the intoxication of the recipient of the alcoholic beverage
was a proximate cause of the damages suffered.
 
Tex. Alco. Bev. Code Ann. § 2.02(b) (West 2007).  Only a “provider,” as defined by the Dram
Shop Act, is liable under section 2.02(b). 
Smith v. Merritt, 940 S.W.2d
602, 605 (Tex. 1997) (noting that section 2.02(b) “creates a statutory cause of
action against commercial providers
only”) (emphasis in original); Graff v.
Beard, 858 S.W.2d 918, 919 (Tex. 1993) (holding Dram Shop Act applies only
to commercial providers).  The Dram Shop
Act broadly defines “provision” by stating that it “includes, but is not
limited to, the sale or service of an alcoholic beverage.”  Tex.
Alco. Bev. Code Ann. § 2.01(2) (West 2007).  In contrast, the Act defines “provider” as
a person who sells or serves an
alcoholic beverage under authority of a license or permit issued under the
terms of this code or who otherwise sells an alcoholic beverage to an
individual. 
 
Id. § 2.01(1) (West 2007).  The Texas Alcoholic Beverage Code defines a “person” as “a
natural person or association of natural persons, trustee, receiver,
partnership, corporation, organization, or the manager, agent, servant, or
employee of any of them.”  Id. § 1.04(6) (West Supp. 2010).  Likewise, a “permittee” is defined as “a
person who is the holder of a permit provided for in this code, or an agent,
servant, or employee of that person[,]” and a “licensee” is defined as “a
person who is the holder of a license provided in this code, or any agent,
servant, or employee of that person.”  Id. § 1.04(11), (16).  
C.      Analysis
Because it is undisputed that the beer served to Olivares
was free, Corral Club can be a “provider” only if it “serves an alcoholic
beverage under authority of a license or permit issued under the terms of” the
Texas Alcoholic Beverage Code.  See id. § 2.01(1).  Additionally, because in its motion for
summary judgment, Corral Club admits that it “was licensed as a commercial
provider of alcohol . . . on the night in question[,]” the
disposition of this case depends solely on the evidence concerning (1) whether Corral Club served the
beer to Olivares and (2) if so, whether HLS&R is vicariously liable.  See
id. 

          1.       Corral Club
          In its entirety, Corral Club’s motion
for summary judgment concerning whether it was the “provider” of the beer
served to Olivares states:
While Corral Club, Inc. was licensed as a commercial
provider of alcohol, no employee of Corral Club, Inc. sold or served alcohol to
Ramiro Olivares on the night in question. 
The timesheets show that the servers and bartenders working for Corral
Club, Inc. were off work by no later than 8 o’clock p.m.  The committee party where Olivares was
allegedly served did not begin until around 8:30 p.m.  Olivares testified he did not start drinking
at Reliant that evening until about 9:30 p.m. or 9:45 p.m.  Further, volunteer members of the Corral Club
Committee of the HLS&R were serving alcohol at the time Olivares was
drinking at Reliant and not paid employees of Corral Club, Inc.  The summary judgment establishes no employee
of Corral Club, Inc. served Olivares alcohol on the night in question.  Therefore, Corral Club, Inc. is not a
“provider” for purposes of the Dram Shop Act and cannot be held liable for [the
Harrises’] and [Guyton’s] injuries under the Act.
(internal
citations omitted).  The motion asserts
Corral Club is not liable as a “provider” under the Dram Shop Act only on the
theory that the volunteers were not employees of Corral Club.  Although the employees of a corporation are
one way for a corporation to be liable under the Dram Shop Act, a corporation
may be held liable also for the acts of its agents.  See
Tex. Alco. Bev. Code Ann.
§§ 1.04(6), (11), (16), 2.01(1);
20801, Inc. v. Parker, 249 S.W.3d 392, 397 n.6
(Tex. 2008) (Dram Shop “Act authorizes vicarious liability [that]
. . . is in some ways similar to liability arising from the common
law doctrine of respondeat superior, under which an employer [or principal] is
vicariously liable for the negligence of an agent or employee acting within the
scope of his or her agency or employment, although the principal or employer
has not personally committed a wrong.” (internal quotation omitted)).[4] 

          Corral Club’s motion for summary
judgment fails to assert a challenge based on the ground that the volunteers were
not acting as its agents.  We do not
decide the merits of this argument because we may affirm on a ground only if it
is presented specifically in the motion for summary judgment.  See
State Farm Lloyds, 315 S.W.3d at 532; Travis,
830 S.W.2d at 100.  Here, Corral Club’s
motion is confined to the theory that the volunteers were not employees; it
asserts no challenge to the theory that the volunteers were agents of Corral
Club.  
          We note that at oral argument, Corral
Club suggested that its motion for summary judgment addresses only the employee
theory because that was the only theory pleaded by the Harrises and
Guyton.  While neither the Harrises nor
Guyton pleaded specifically that Corral Club was a provider based on an agency
theory, they both pleaded that Corral Club was a licensed provider of alcohol
beverages and that it provided alcoholic beverages to Olivares on the night in
question.[5]  Because corporations can act only through
their agents or employees, the Harrises’ and Guyton’s pleadings provide fair
notice of the agency theory.  See Low v. Henry, 221 S.W.3d 609, 612
(Tex. 2007) (pleading is sufficient if it provides “fair notice,” in that
opposing party can ascertain nature, basic issues, and type of evidence that
might be relevant to controversy); GTE
Sw., Inc. v. Bruce, 998 S.W.2d 605, 618 (Tex. 1999).  Additionally, in his response to Corral
Club’s motion for summary judgment, Guyton contends that Corral Club can be
liable as a “provider” if its agent or employee served the beer.[6]  Guyton explains that the volunteers were
agents of Corral Club based on Corral Club’s statutory duty and right to
control the service of its alcohol, its distinct interest in how that service
was performed, and the benefit it received by utilizing free staff.  Guyton also explains that under the
borrowed-servant doctrine, “[w]hen the volunteers were volunteering that night,
they were volunteering for Corral Club, Inc.” 
Guyton’s response points to some evidence that the volunteers may have
been acting on behalf of Corral Club. 
Although they were its paid employees, Corral Club failed to negate the
allegation that the volunteers acted as its agents.  Accordingly, we hold that the trial court
erred by granting summary judgment for Corral Club because, by not challenging
the agency theory, Corral Club failed to show conclusively that it was not a
“provider.”  See Tex. R. Civ. P.
166a(c); State Farm Lloyds, 315
S.W.3d at 532; Randall’s Food Mkts,
891 S.W.2d at 644; Travis, 830 S.W.2d
at 100.
          We sustain the first issue.
                   2.       HLS&R
            The elements of a joint enterprise
are (1) an agreement (express or implied) among the members of the group, (2) a
common purpose to be carried out by the group, (3) a community of pecuniary
interest among the members in that common purpose, and (4) an equal right to
direct and control the enterprise.  St. Joseph Hosp. v. Wolff, 94 S.W.3d
513, 525, 530 (Tex. 2003).  An appellate
court first looks to the evidence of an agreement or agreements among the
members of the group to ascertain their possible common purposes, and then it
considers if the evidence supports a finding of a joint enterprise with respect
to each possible common purpose.  Id. at 531.  “An enterprise or project is most commonly
defined by the common purpose of goal of its members.”  Id.  
          It its motion
for summary judgment, HLS&R challenges only element three, a community of
pecuniary interest among the members in the common purposes.  This element requires proof of a monetary
interest that is “shared without special or distinguishing
characteristics.”  Id.  An indirect, potential
financial interest, such as the interest of a franchisor concerning the success
of its franchisee, is insufficient to constitute a community of pecuniary
interest in the common purpose.  Id. at 532.  The Texas Supreme Court has explained the
difference between the interests of a franchisee and its franchisor as
follows:  “[A] franchisee benefits from
receiving the income and any resulting profits generated by its sales and by
the market value of his or her franchise resulting from its profitability.  The franchisor benefits by receiving royalty
payments from its franchisee based on those sales and by the enhanced value
accruing to its franchise opportunities resulting from the financial success of
the existing franchises.”  Id. at 527.  Although a franchisee stands to benefit
financially from the successful downstream marketing of its goods and services,
this alone fails to establish a community of pecuniary interest between it and
its franchisor.  Id. at 528.  The interests of
a franchisee and its franchisor “are not held in ‘community’ . . .
because [their interests] are not shared ‘without special or distinguishing
characteristics.’”  Id.  
          Like the
franchisor–franchisee
situation discussed in St. Joseph
Hospital, HLS&R benefited by receiving from Corral Club a portion of
the revenues from the drinks sold at the Club Bar East, and Corral Club
benefited by retaining all remaining revenue not paid to HLS&R.  While HLS&R stands to benefit from Corral
Club’s success, its interest in the running of Club Bar East—a percentage of total revenue
regardless of costs—differs from Corral Club’s interest—profits minus the fee paid to
HLS&R.  As it points out in its
motion, HLS&R did not reimburse Corral Club for the cost of the drinks
served.  We conclude that the trial court
properly granted summary judgment for HLS&R because it showed conclusively
that it was not engaged in a joint enterprise with Corral Club.  See
Tex. R. Civ. P. 166a(c); Randall’s Food Mkts, 891 S.W.2d at 644; St. Joseph Hosp., 94 S.W.3d at 525, 531.
          We overrule the second issue.
Conclusion
 
We affirm the judgment of the trial
court as to HLS&R and reverse the judgment as to Corral Club.  We remand the cause for further proceedings.
 
                                                                   Elsa
Alcala
                                                                   Justice

 
Panel
consists of Chief Justice Radack and Justices Alcala and Bland.

[1]           Chapter
2 of the Texas Alcoholics Beverage Code, Tex.
Alco. Bev. Code Ann. §§ 2.01–.03 (West 2007), is commonly known as
the Dram Shop Act.  20801, Inc. v. Parker, 249 S.W.3d 392, 395 n.2 (Tex. 2008).
 

[2]           In their third and fourth issues,
the Harrises separately contend that exemplary damages are recoverable under
the Dram Shop Act and that the trial court erred by denying their motion for
reconsideration.  Because exemplary damages have been neither awarded nor denied,
we do not reach the question of whether they are recoverable under the
Act.  See
Pub. Util. Comm’n v. Houston Lighting & Power Co., 748 S.W.2d 439, 442
(Tex. 1987) (“A court has no jurisdiction to render an advisory opinion on a
controversy that is not yet ripe.”); Texas
Natural Res. Conservation Comm’n v. McDill, 914 S.W.2d 718, 725 (Tex.
App.—Austin 1996, no writ) (declining to reach question of availability of
exemplary damage when cause was remanded for new trial).

[3]           The
Harrises’ and Guyton’s claims against other parties are not before us on
appeal.

[4]           See also Schmidt v. Centex Beverage, Inc., 825 S.W.2d 791, 794–94 (Tex. App.—Austin 1992, no writ)
(corporate wholesale beer distributor that sold beer to non-profit annual music
festival, which then served free beer to its volunteers, was not “provider” as
defined by Dram Shop Act where its agents did not serve alcohol despite fact
that they attended festival); Sewell v. Smith,
819 S.W.2d 565, 566, 568 n.5, 569 (Tex. App.—Dallas 1991), aff’d, 858 S.W.2d 350 (Tex. 1993) (owner and manager of property on
which was located bar that sold beer to its patron was not “provider” as
defined by Dram Shop Act where it had no duty to
control bar owner’s actions and had not retained bar owner to operate the bar
on its behalf).

[5]           Specifically,
the Harrises pleaded in their third amended petition:
 
CORRAL
CLUB, INC., is a licensed provider of alcoholic beverages, and . . .
[it] provided alcoholic beverages to RAMIRO OLIVARES, during the period of time
that he was at Reliant Stadium following the [Rodeo] . . . .  During the meeting he was provided alcohol by
[HLS&R’s] committee personnel and
by CORRAL CLUB, INC.’S personnel and became intoxicated.  . . . When CORRAL CLUB’S personnel provided the alcoholic
beverages to RAMIRO OLIVARES it was apparent to CORRAL CLUB, INC.’S personnel that RAMIRO OLIVARES was
obviously intoxicated and presented a clear danger to himself and to others.
(emphasis added.)  Guyton pleaded in his second amended
petition:
CORRAL
CLUB, Inc. . . . [is a] licensed provider[] of alcoholic beverages,
and . . . [it] gave alcoholic beverages to RAMIRO
OLIVARES . . . .  When
. . . CORRAL CLUB . . . employees provided the alcoholic
beverages to RAMIRO OLIVARES it was apparent to . . . CORRAL CLUB
. . . employees that RAMIRO OLIVARES was obviously intoxicated and
presented a clear danger to himself and to others.

[6]           When asked
at oral argument, the Harrises and Guyton confirmed that they adopt each
other’s arguments in the alternative.