Court Opinion

ID: 4454721
Source: CourtListenerOpinion
Date Created: 2019-11-09 01:13:34.018449+00
Date Added: 2024-06-11T14:53:15.378319
License: Public Domain

Opinion filed November 7, 2019

                                       In The

        Eleventh Court of Appeals
                                    __________

                                 No. 11-17-00294-CV
                                     __________

                      JOSEPH B. ROE, JR., Appellant
                                        V.
  MIKE MCQUITTY, DAVID DECKER, AND C. BOYD FINCH,
                     Appellees

                    On Appeal from the 142nd District Court
                            Midland County, Texas
                       Trial Court Cause No. CV-52,446

                     MEMORANDUM OPINION
      This is an appeal from a summary judgment granted in favor of Mike
McQuitty, David Decker, and C. Boyd Finch in a suit in which Appellant, Joseph B.
Roe, Jr., sought to recover damages for fraudulent transfer in violation of the
Uniform Fraudulent Transfer Act. See TEX. BUS. & COM. CODE ANN. § 24.005
(West 2015). In two issues, Appellant argues that the trial court erred (1) when it
denied his motion for summary judgment and (2) when it granted Appellees’
motions for summary judgment. We affirm.
                                      Background Facts
       On March 22, 2011, Appellant was injured while in the scope of his
employment at Lajitas Holdings, LLC. On April 2, 2012, Lajitas Holdings filed a
certificate of termination of a domestic entity with the Texas secretary of state, which
had the effect of “winding up” the entity. 1 Several months later, on August 24, 2012,
Appellant filed suit against Lajitas Holdings to recover damages related to his 2011
injuries. After failing to appear, the trial court entered a default judgment against
Lajitas Holdings. The judgment consisted of $352,512 for actual and compensatory
damages and an additional $70,502.40 in prejudgment interest.
       Appellant filed the present suit seeking to recover assets from Lajitas
Holdings, which, he alleges, were fraudulently transferred to Appellees. After
litigation began, the parties filed the following motions for summary judgment:
   • Appellant filed a traditional motion for summary judgment;
   • Appellee Finch filed traditional and no-evidence motions for summary
     judgment;
   • Appellees McQuitty and Decker filed a no-evidence motion for partial
     summary judgment;
   • Appellees McQuitty and Decker filed a traditional motion for summary
     judgment.
After hearing each summary judgment motion, the trial court denied Appellant’s
motion for summary judgment and granted summary judgment in favor of all
Appellees. This appeal followed.
                                       Issues Presented
       In Appellant’s two issues on appeal, he argues (1) that his motion for summary
judgment should have been granted and (2) that Appellees’ motions for summary
judgment should have been denied. For clarity, these issues will be analyzed jointly.

       1
        See TEX. BUS. ORGS. CODE ANN. § 11.101 (West 2012); see also id. §§ 11.001, .051–.056 (West
2012 & Supp. 2018).
                                                 2
                          Uniform Fraudulent Transfer Act
      Before we determine the appropriateness of granting summary judgment in
this case, we must first review the elements of a fraudulent transfer claim under
Section 24.005 of the Texas Business and Commerce Code.               According to
Section 24.005(a):
             A transfer made or obligation incurred by a debtor is fraudulent
      as to a creditor, whether the creditor’s claim arose before or within a
      reasonable time after the transfer was made or the obligation was
      incurred, if the debtor made the transfer or incurred the obligation:
                  (1) with actual intent to hinder, delay, or defraud
            any creditor of the debtor; or
                  (2) without receiving a reasonably equivalent value
            in exchange for the transfer or obligation, and the debtor:
                            (A) was engaged or was about to
                     engage in a business or a transaction for
                     which the remaining assets of the debtor were
                     unreasonably small in relation to the business
                     or transaction; or
                           (B) intended to incur, or believed or
                     reasonably should have believed that the
                     debtor would incur, debts beyond the
                     debtor’s ability to pay as they became due.
BUS. & COM. § 24.005(a); see Doyle v. Kontemporary Builders, Inc., 370 S.W.3d
448, 453 (Tex. App.—Dallas 2012, pet. denied). The burden of proving these
elements is on the creditor. Doyle, 370 S.W.3d at 453.
                                 Summary Judgment
      We review grants of summary judgment de novo. Cantey Hanger, LLP v.
Byrd, 467 S.W.3d 477, 481 (Tex. 2015). In our review, we take as true all evidence
favorable to the nonmovant, indulge every reasonable inference in favor of the
nonmovant, and resolve any doubts in the nonmovant’s favor. Valence Operating
Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005).
                                           3
        In this case, Appellees filed both no-evidence and traditional motions for
summary judgment. When parties move for both no-evidence and traditional
summary judgments, we first consider the no-evidence motions. Ford Motor Co. v.
Ridgway, 135 S.W.3d 598, 600 (Tex. 2004). If the nonmovant fails to overcome the
no-evidence motions, there is no need to address the challenges to the traditional
motions. Merriman v. XTO Energy, Inc., 407 S.W.3d 244, 248 (Tex. 2013).
Accordingly, we first review claims under the no-evidence standard, and any claims
that survive the no-evidence review will then be reviewed under the traditional
standard.
        To defeat a no-evidence motion, the nonmovant must produce evidence
raising a genuine issue of material fact as to the challenged elements. See Ridgway,
135 S.W.3d at 600. A genuine issue of material fact exists if the evidence “rises to
a level that would enable reasonable and fair-minded people to differ in their
conclusions.” Merrell Dow Pharm., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex.
1997) (quoting Burroughs Wellcome Co. v. Crye, 907 S.W.2d 497, 499 (Tex. 1995)).
The evidence does not create an issue of material fact if it is “so weak as to do no
more than create a mere surmise or suspicion” that the fact exists. Kia Motors
Corp. v. Ruiz, 432 S.W.3d 865, 875 (Tex. 2014) (quoting Ridgway, 135 S.W.3d at
601).
        In their no-evidence motions, Appellees properly asserted, among other
things, that there was no evidence that Appellees “made any transfer of assets . . .
concerning Lajitas Holdings, LLC.” In response, Appellant continuously points out
that Appellees filed a certificate of termination with the Texas secretary of state.
Indeed, Appellant fails to mention a single asset that was supposedly transferred
from Lajitas Holdings to Appellees.      Winding up an entity, however, is not
evidence of a transfer of assets as required under Section 24.005. See BUS. & COM.
§ 24.002(12) (West Supp. 2018).

                                         4
        The Texas Business and Commerce Code defines a transfer as “every mode,
direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of
or parting with an asset or an interest in an asset, and includes payment of money,
release, lease, and creation of a lien or other encumbrance.” Id. To be sure, it is
easy to imagine a scenario in which an entity winds up, but no assets are
transferred—for instance, when no assets remain.                          Nevertheless, Appellant’s
argument rests on the assumption that, during or after the winding up of Lajitas
Holdings, its assets were transferred to Appellees for the purpose of defrauding
Appellant. Because there is no evidence to support this assumption, we overrule
Appellant’s second issue.              Further, because Appellant failed to conclusively
establish each of the essential elements of his cause of action, we overrule
Appellant’s first issue.
                                         This Court’s Ruling
        We affirm the judgment of the trial court.

                                                           KEITH STRETCHER
                                                           JUSTICE

November 7, 2019
Panel consists of: Bailey, C.J.,
Stretcher, J., and Wright, S.C.J.2

Willson, J., not participating.

        2
          Jim R. Wright, Senior Chief Justice (Retired), Court of Appeals, 11th District of Texas at Eastland,
sitting by assignment.
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