Court Opinion

ID: 2880767
Source: CourtListenerOpinion
Date Created: 2015-09-07 15:08:13.643409+00
Date Added: 2024-06-11T11:36:00.357027
License: Public Domain

'4

                                 Court of Appeals
                        Jftftij M&ttxtt of Qtexao at Dallas

                                       JUDGMENT

SUNTECH PROCESSING SYSTEMS,                         Appeal from the 14th Judicial District Court
L.L.C , CASH DELIVERY SYSTEMS,                      of Dallas County, Texas. (Tr.Ct.No. 98-
L.L.C., UICI, INC., f/k/a UNITED                    01051-A).
INSURANCE COMPANIES, INC., and                      Opinion delivered by Justice Wright,
RONALD L. JENSEN, Appellants                        Justices Whittington and Roach,
                                                    participating.
No. 05-99-00213-CV            V.

SUN COMMUNICATIONS, INC. and
RICHARD SCHAPPEL, Appellees

        In accordance with this Court's opinion of this date, the judgment of the trial court in
AFFIRMED in part and REVERSED in part. The judgment of the trial court granting judgment
that Suntech Processing Systems, LLC. take nothing on its claims for conversion/misappropriation
against Richard Schappel is AFFKMED.

         The remainder ofthe trial court's judgment is REVERSED and this cause is REMANDED
to the trial court for new trial. It is ORDERED that appellants Suntech Processing Systems, L.L.C,
Cash Delivery Systems, L.L.C, UICI, INC, f/k/a United Insurance Companies, Inc., and Ronald
L. Jensen recover their costs of this appeal from appellees Sun Communications, Inc. and Richard
Schappel.

        The obligations of United States Fire Insurance Company as surety on appellants'
supersedeas bond are DISCHARGED.

Judgment entered August 1, 2000.
AFFIRM in part, REVERSE and REMAND in part and Opinion
Filed August 1,2000

                                                             In The

                                                Court of Appeals
                               JTtftl? SJtstrttt of Qtexas at Dallas
                                                   No. 05-99-00213-CV

                              SUNTECH PROCESSING SYSTEMS, L.L.C.,
                       CASH DELIVERY SYSTEMS, L.L.C., UICI, INC., f/k/a
                             UNITED INSURANCE COMPANTES, INC. and
                                  RONALD L. JENSEN, Appellants

                                                                 V.

          SUN COMMUNICATIONS, INC. and RICHARD SCHAPPEL, Appellees

                               On Appeal from the 14th Judicial District Court
                                                   Dallas County, Texas
                                         Trial Court Cause No. 98-01051-A

                                                         OPINION

                                 Before Justices Whittington, Wright, and Roach
                                           Opinion By Justice Wright

         SunTech Processing Systems, L.L.C (STP), Cash Delivery Systems, L.L.C. (CDS), UICI,

 Inc., f/k/a United Insurance Companies, Inc., and Ronald Jensen appeal a summary judgment
 rendered infavor of Sun Communications, Inc. (Sun) and Richard Schappel.1 Inseventeen issues,

 Jensen contends generally the trial court erred by: (1) declaring the parties' rights in accordance with

    ^TPand CDS filed ajoint brief. UICI and Jensen each filed aseparate brief. Many ofthe issues are overlapping.
Sun's interpretation ofthe second memorandum agreement; (2) granting summary judgment on
Sun's securities law claims; and (3) denying his counterclaims. In fifteen issues, UICI contends

generally the trial court erred by (1) granting summary judgment on Sun's securities law claim; and
(2) concluding that itowed afiduciary duty to Sun. In four issues, STP and CDS contend generally
the trial court erred by (1) denying their motion to disqualify one of Sun's attorneys; and (2)
granting summary judgment in favor ofSun on STP's claims for conversion and misappropriation
against Sun's president. We affirm in part and reverse in part. We overrule STP's fourth issue and
affirm the trial court's summary judgment that STP take nothing on its claims for conversion and

misappropriation against Schappel. Because we sustain Jensen's first, fourth, seventh, and eighth
issues, UICI's first, second, third, fourth, and tenth issues, and STP and CDS's second issue, we

reverse the trial court's final judgment and remand this case for a new trial.

                                           Background

        Sunwas created in 1991. It was involved in the automatic tellermachine (ATM) business.

Jensen, president ofUICI, was interested in investing in the ATM business. Jensen, UICI, and Sun
agreed to form Sun Network Technologies, L.L.C. (SNT) and Sun Network Acquisitions, L.L.C.
(SNA) for the purpose ofcarrying out that business. UICI invested $4 million and Jensen agreed
to fund a $6 million line of credit.

        In 1996, SNT was experiencing financial problems. Jensen agreed to invest funds in SNT

on the condition that SNT be restructured and divided into twocompanies. Theparties agreed and

 entered into the Second Memorandum Agreement (Agreement) in March 1997. Under the terms

 ofthe Agreement, the struggling ATM business remained in SNT and was renamed CDS. The
 profitable transaction processing services business was transferred to the new company, STP.

                                                 -2-
       As a result of the restructuring, Jensen owned one-hundred percent of the Class A

membership interest and eighty percent of the Class Bmembership interest of the ATM business,
CDS. Sun owned the remaining twenty percent ofthe Class Bmembership interest ofCDS. UICI
owned one-hundred percent ofSTP's Class Amembership interest and eighty percent ofSTP's
Class B membership interest in the transaction processing services business. Sun owned the
remaining twenty percent of STP's Class B membership interest. In sum, Jensen owned a
controlling interest in CDS and Jensen's company, UICI, owned acontrolling interest in STP.
       In February 1998, UICI, as controlling member ofSTP, voted to sell STP's assets in the
transaction processing services business to Transaction Network Services, Inc. After STP sold
substantially all ofits assets, ithad approximately $17,847,000 in cash remaining. Thereafter, over
Sun's objection, UICI voted to dissolve STP and wind up its operations. STP sought to transfer
$9,638,357 ofthe proceeds from the sale ofSTP to CDS to enable CDS to pay offits loan to Jensen.
        Seeking to prevent this transfer offunds to CDS, Sun filed alawsuit asking the trial court
to interpret the Agreement and, based on that interpretation, to award an appropriate distribution of
funds from the sale ofassets ofSTP. The trial court entered atemporary injunction preventing the
 transfer to CDS. The trial court also ordered that CDS and STP be judicially dissolved. On
 interlocutory appeal, this Court affirmed the temporary injunction but reversed the order ofjudicial
 dissolution.

        In the trial court, Sun raised the following causes of action: (1) breach of contract; (2)
 violation ofthe Texas Limited Liability Company Act; (3) fraudulent conveyance; (4) self-dealing,
 breach of fiduciary duty, constructive fraud, and constructive trust; (5) anticipatory breach; (6)
 violation ofboth state and federal securities laws; (7) judicial dissolution; and (8) attorney's fees.

                                                  -3-
       Jensen counterclaimed alleging causes of action for (1) declaratory judgment; (2)

reformation; (3) fraud; (4) negligent misrepresentation; (5) promissory estoppel; and (6) unjust
enrichment. UICI asserted the following counterclaims: (1) declaratory judgment; (2) reformation;

and (3) wrongful injunction.

       STP and CDS alleged counterclaims against Sun for (1) reformation; (2) recission; (3)
declaratory judgment; and (4) conversion. In the alternative, STP and CDS alleged counterclaims
for mutual mistake and misappropriation of company funds.

        Sun filed anamended motion forsummary judgment and appellants filed cross-motions for

summary judgment. The trial court granted Sun's second amended motion for summary judgment
and ordered judicial dissolution of STP and CDS and the appointment of a liquidator. The trial
court also ordered that STP's assets of approximately $19.1 million be deposited in the court's

registry.

        The case went totrial solely on the issue of Sun's attorney's fees. On January 5,1999, the

jury awarded Sun $1,721,240 in attorney's fees through trial and an additional $406,000 on appeal.
On May 4,1999, the trial court signed the Modified Judgment and Order ofDissolution. STP, CDS,
UICI, and Jensen filed this timely appeal.

                                          Standard of Review

        We review summary judgment using the following well-known standards:

            (1) The movant for summary judgment has the burden ofshowing that there is no
            genuine issue ofmaterial fact and that itis entitled to judgment as amatter oflaw;
            (2) In deciding whether there is a disputed material fact issue precluding summary
            judgment, evidence favorable to the non-movant will be taken as true; and
        (3) Every reasonable inference must be indulged in favor ofthe non-movant and any
        doubts resolved in its favor.

                                                   -4-
Nixon v. Mr. Property Mgmt Co., 690 S.W.2d 546, 548-49 (Tex. 1985). When both sides move for

summary judgment and the trial court grants one motion and denies the other, the reviewing court

should review both sides' summary judgment evidence and determine all questions presented.

Bradley v. State exrel. White, 990 S.W.2d 245, 247 (Tex. 1999).       When the defendant is the

movant, summary judgment is proper only if the plaintiff cannot, as a matter of law, succeed upon

any theory pleaded. See Pierce v. Sheldon Petroleum Co., 589 S.W.2d 849, 852 (Tex. Civ.

App.-Amarillo 1979, no writ). Thus, the defendant can prevail by conclusively establishing against

the plaintiffatleast one factual element ofeach theory pleaded. See Gibbs v. GeneralMotors Corp.,

450 S.W.2d 827, 828 (Tex. 1970). When a summary judgment order does not specify the ground

upon which the ruling was granted, we will affirm the judgment ifany one ofthe grounds advanced

in the motion are meritorious. See State Farm & Cos. Co. v. S.S., 858 S.W.2d 374,380 (Tex. 1993).

                             The Second Memorandum Agreement

       In issues one through three, Jensen contends the trial court erred by granting Sun's motion

forsummary judgment ontheAgreement. STP and CDS raise this same point intheir second issue.

The focus of the parties' controversy is the following provision of the Agreement:

        All parties agree that there will benodistributions toClass B members until all Class
        A preferred interests in both [STP] and [CDS] have been paid or redeemed in full.
        Should funds be available to any parties from either [CDS] or [STP] such funds will
        be loaned to the other company until the preferred interests are retired. The interest
        rate and terms should be the same as the $2,000,000 unsecured loan of [Jensen] to
        [CDS].

The proper distribution of the proceeds from the sale of STP iswidely disputed. On the one hand,

 Jensen contends that his interest must be paid prior to the interests of the Class A and Class B

 members. On the other hand, Sun contends that the above provision provides for a loan to pay the

 preferred interest. Sun contends that Jensen's interest cannot beretired by way of a loan because

                                                  -5-
there is no possibility that the loan will be repaid.

        STP, CDS, UICI, and Jensen filed a joint response to Sun's amended motion for partial

summary judgment. Attached tothe joint response was the affidavit ofVernon R. Woelke. Woelke

is the vice-president and treasurer of UICI. Woelke states in his affidavit that the minutes of the

February 25,1998 meeting reveal that Schappel agreed to the disposition as proposed byJensen. The

minutes state:

        Mr. Kittleson indicated that he neededto knowhow the proceedswould be distributed
        and how much Sun would receive. Mr. Schappel then described his understanding
        of how the distribution would be made based on the written agreements among the
        parties. First, all debt to Members would be repaid in full, including interest. Mr.
        Schappel and Mr. Kittleson calculated this amount to be approximately $5,577,000
        from [CDS] financial statements they had in their possession. Second, the Class A
        membership interests of $2,000,000 in [STP] and $4,000,000 in CDS would be
        retired. Third, the remaining assets of [STP] would be distributed 80%to UICI and
        20% to Sun. Mr. Schappel also observed the remaining assets of CDS would be
        distributed 80% to Ron Jensen and 20% to Sun. Again there was a discussion
        between the various parties at which time Mr. Howard suggested a short recess. All
        present agreed.

        Schappel disputes the minutes of the February 25, 1998 meeting. Attached to Schappel's

affidavit is a copy of Sun'swritten objections tothe minutes. In pertinent part, the objections state:

        The minutes, on Page 4, purport to summarize comments made by Mr. Schappel
        regarding the distribution ofproceeds following the sale of[STP]. This "summary,"
        andevery statement in it, is a complete fabrication andisfalse. Mr. Schappel did not
        inany way state, infer or imply any ofthe comments attributed to him inthis section
        ofthe minutes. Further, to the extentthat this sectionof the minutesstateor inferthat
        Sun, Mr. Shappel or [Mr. Kittleson] in any wayagreed withthe other parties present
        regarding any such distribution, it is also inaccurate and false. Sun objects to the
        minutes on these grounds.

A fact issue exits on the face of these opposing affidavits. UICI and Jensen contend that the funds

were to be distributed in accordancewith their view. Moreover,they contend that Sun agreed to their

 proposed distribution. Sun vigorously disputes that contention. Summary judgment is not proper

                                                    -6-
in the face of material issues of fact. We sustain Jensen's second issue and STP and CDS's second

issue.2

                                                          The Securities Act3

          In UICI's first through fourth issues and Jensen's fourth issue, they contend the trial court

erred in granting Sun's motion for summary judgment and denying their motion for summary
judgment on the violation of the Securities Act. To show that UICI and Jensen violated the
Securities Act, Sun had to prove that UICI and Jensen violated a provision of the Act and that

because of that violation, it is entitled to avoid the Agreement.

          In the trial court, Sun alleged that UICI and Jensen violated the following provision of the

Act:

          In connection with the sale, offering for sale or delivery of, the purchase, offerto
          purchase, invitation ofoffers to purchase, invitations ofoffers to sell, ordealing in
          any other manner in any security or securities, whether or not the transaction or
          security is exempt under Section 5 or6 ofthis Act, directly or indirectly:
           (3) knowingly make any untrue statement ofamaterial fact or omit to state amaterial
           fact necessary in order to make the statements made, in light of the circumstances
           under which they are made, not misleading;

TEX. Rev. Crv. Stat. Ann. art. 581-29(C)(3) (Vernon Supp. 2000). Contracts made in knowing

violation of any provision ofthe securities act are unenforceable by the violator. TEX. REV. Civ.
 STAT. ANN. art. 581-33(K) (Vernon Supp. 2000). Sun contends that UICI and Jensen cannot enforce
the Agreement because itwas not publicly disclosed in violation ofsecurities laws. The Securities
 and Exchange Act requires publicly traded companies to disclose certain transactions through filings
 with the Securities and Exchange Commission. See 15 U.S.C §78m (1997).

       2In light ofour disposition ofJensen's second issue, we do not address Jensen's first and third issues.

       3Tex. Rev. Civ. Stat. Ann. art. Art. 581-1 (Vemon 1964 &Supp. 2000).
          Sun contends UICI and Jensen violated article 581-29(C)(3) when they failed to publicly

disclose theAgreement and the preferential transfers. Although, UICI disclosed this information in

1998 through its filing ofschedule 14Awith the Securities and Exchange Commission, Sun contends

it should have been disclosed in 1996 and 1997.

          In response tothe motion for summary judgment, UICI and Jensen presented the affidavit of

Vernon Woelke, vice president and treasurer of UICI. Woelke testified that any failure to report

therelated party transactions consummated through the Agreement was anoversight. This summary

judgment evidence raises a fact issue as to whether UICI knowingly failed to report the Agreement

as required by the Securities and Exchange Commission. Accordingly, the trial court erred in

granting summary judgment on Sun's cause of action for securities violations. We sustain UICI's

first through fourth issues and Jensen's fourth issue.

                                                             Fiduciary Duty

          In its tenth issue, UICI contends the trial court erred in concluding that it owed a fiduciary

duty to Sun as a matter oflaw.4 Sun contends that UICI owed itafiduciary duty in light ofthe fact

that UICI was the majority shareholder, owning eighty percent of STP's shares.

           The limited liability company act provides:

           To the extentthat at lawor in equity, a member, manager, officer, or otherpersonhas
           duties (including fiduciary duties) and liabilities relating thereto to a limited liability
           company or to another member or manager, such duties and liabilities may be
           expanded or restricted by provisions in the regulations.

Tex. Rev. Crv. Stat. Ann. Art. 1528n, art. 2.20B (Vernon Supp. 2000). STP's articles of

 incorporation provide that "Members of this Company have a duty of undivided loyalty to this

     4In his fifth issue, Jensen contends the trial court erred in ruling that "as amatter oflaw," he owed afiduciary duty toSun. The trial court's
 judgment references the stipulation regarding the diminished value claim. UICI, STP, and Sun are the parties to the stipulation. The judgment
  states, "As amatter oflaw, there exists afiduciary duty supporting the Diminished Value Claim." The trial court ruled that UICI, not Jensen,
  owed a fiduciary duty to Sun.

                                                                         ~o—
Company in all matters affecting this Company's interests."
       There is no Texas case addressing fiduciary duties between members in a limited liability

company. This Court has addressed the existence offiduciary duties between co-shareholders in a
closely held corporation. Schoelkopfv. Pledger, 739 S.W.2d 914, 920 (Tex. App.-Dallas 1987),
rev'don other grounds, 762 S.W.2d 145 (Tex. 1988). We turn to our opinion in Schoelkopffox
guidance. Schoelkopf owned C&C Aircraft Services. Schoelkopf was also one ofthree equal
shareholders of Midway Aircraft Sales, Inc. C & C and Midway shared the same hangar. C & C

wanted tosell Cessna airplanes. However, Midway'slease gave itthe exclusive right tosell airplanes

atthe hangar.   Schoelkopf persuaded the other two shareholders to transfer Midway's loans to a
bank where hedid business. Hepromised theshareholders that hecould help Midway obtain better

lines of credit at the new bank. Midway's loans were transferred to the new bank and each

shareholder personally guaranteed the loans. Soon after, Schoelkoph withdrew his guarantee and
Midway went into bankruptcy. Id. at 916-17.

       One of Midway's shareholders sued Schoelkopf for, among other things, breach of his

fiduciary duty as a co-shareholder. This Court has held that although a fiduciary duty may exist
between co-shareholders in a closely held corporation, "we are unwilling to apply it as a matter of

law to all shareholders of closely held corporations." Schoelkopf 739 S.W.2d at 920, see also

Hoggettv. Brown, 971 S.W.2d 472, 488 (Tex. App.-Houston [14*Dist] 1997, no writ). Whether
 afiduciary relationship exists is aquestion offact dependent upon the unique circumstances ofeach
 case. Kasparv. Thome, 755 S.W.2d 151, 155 (Tex. App.-Dallas 1988, no writ).
        In its modified judgment and order ofdissolution, the trial court stated, "As amatter oflaw,
 there exists afiduciary duty supporting the Diminished Value Claim." The trial court made alegal

                                                 -9-
conclusion that UICI owed a fiduciary duty to Sun. Except in limited circumstances, the existence

of a fiduciary relationship is a fact question. SeeKaspar, 755 S.W.2d at 155. The statute governing

limited liability companies does not mandate a fiduciary relationship between members. STP's

regulations provide that its members owe a duty of undivided loyalty to the company. Neither the

statute nor STP's regulations give authority to the trial court to find a fiduciary duty between STP's

members as a matter of law.

       We recognize that SchoelkopfInvolved equal shareholders and Sun and UICI are not equal

shareholders. However, we do not think this fact changes this Court's holding that the existence of

a fiduciary relationship between co-shareholders is a fact question. This unequal stance is a fact to

be taken into consideration by the factfinder. We conclude the trial court erred in concluding that

UICI owed Sun a fiduciary duty as a matter of law. We sustain UICI's tenth issue to the extent that

the trial court erred in ruling on the fiduciary duty issue as a matter of law. We remand the fiduciary

duty issue to the trial court for a determination by the factfinder.

                                           Counterclaims

       In issuesseven and eight, Jensen contendsthe trial court erred in granting summaryjudgment

in favor of Sun on Jensen's counterclaims for fraud, negligent misrepresentation, quantum meruit,

promissory estoppel, and unjustenrichment. These counterclaims relateto the interpretation of the

Agreement. We have held that fact issues existon the properinterpretation ofthe Agreement. Thus,

the trial court erred in granting summary judgment on Jensen's counterclaims. We sustain Jensen's

seventh and eighth issues and remand these counterclaimsto the trial court.

                                     Attorney Disqualification

        In their first issue, STP and CDS argue that the trial court erred in denying their motion to

                                                  -10-
disqualify Douglas Kittleson, one ofSun's attorneys. They moved to disqualify Kittleson because

he was counsel for STP during the negotiation for the sale of STP's assets.

       We review a trial court's decision on a motion to disqualify under an abuse of discretion

standard. Spears v. Fourth Court ofAppeals, 797 S.W.2d 654, 656 (Tex. 1990). We will reverse

the trial court's decision only where the trial court acted without reference to any guiding rules or

principles, oracted inan arbitrary orunreasonable manner. Metropolitan Life Ins. Co. v. SynekFin.

Corp., 881 S.W.2d 319, 321 (Tex. 1994).

       Rule 1.09(a)(3) oftheTexas Disciplinary Rules ofProfessional Conduct provides: "Without

prior consent, a lawyer who personally has formerly represented a client in a matter shall not

thereafter represent another person in a matter adverse to the former client:... (3) if it is the same

or a substantially related matter." Tex. DisciplinaryR. Prof'l Conduct 1.09(a)(3), reprinted in

TEX. Gov't Code Ann. § tit. 2, subtit. G app. A (Vernon 1998). The Texas Disciplinary Rules of

Professional Conduct do not determine whether an attorney is disqualified, rather they provide

guidelines and suggest the relevant considerations. National Medical Enterprises, Inc. v. Godbey,

924 S.W.2d 123, 132 (Tex. 1996). The party seeking disqualification must prove a priorexistence

of anattorney-client relationship involving factual matters related to the present litigation and that

there is a genuine threat that confidences revealed to the attorney will be revealed to the present

adversary. National Bank v. Coker, 765 S.W.2d 398, 400 (Tex. 1989). Once the party meets this

burden, an irrebuttable presumption arises that confidences were revealed by the attorney. Id.

However, anattorney should not bedisqualified forviolating a disciplinary rule when the violation

has not resulted inactual harm to the party seeking disqualification. In reMeador, 968 S.W.2d 346,

 350 (Tex. 1998).

                                                  -11-
       STP and CDS contend that Kittleson, through his prior representation, obtained information

relevantto the valueof STP's assets. This information, STP and CDS further contend, bears directly

on Sun's diminished value claim. This information has been publicly disclosed. For this reason,

STP and CDS cannot meet their burden ofshowing the existence of a genuine threat that confidences

revealed to Kittleson will be revealed to Sun. Moreover, Sun and STP have stipulated as to the

diminished value. Thus, STP and CDS cannot show harm in light of the stipulation as to the

diminished value claim. See In reMeador, 968 S.W.2d at 350. We conclude the trial court did not

abuse its discretion in denying the motion to disqualify. We overrule STP and CDS's first issue.

                                            Conversion

       In issue four, STP contends the trial court erred by granting summary judgment that STP take

nothing on its claimfor conversion/misappropriation againstSchappel. STP claimedthat Schappel,

while president of STP, converted or misappropriated STP funds to pay premiums on his life

insurance policy with his wife as the beneficiary. Schappel moved for summary judgment on the

ground that the claim had been released.

       A facially valid release completely bars any later action on the matters the release covers.

Deer Creek Ltd v. North American Mortgage Co., 792 S.W.2d 198, 201 (Tex. App.-Dallas 1990,

no writ). A release binds only those parties named therein. Dwyer v. Sabine Mining Co., 890
S.W.2d 140, 143 (Tex. App.-Texarkana 1994, writ denied). However, the party does not have to

be specifically named in the release. A party that can be readily identified from the language of the

release is properly bound thereby. Winklerv.KirkwoodAtriumOfficePark,$16S.Vf.2dlll, 113-14

(Tex. App.-Houston [14th Dist.] 1991, writ denied).

       Schappel relied on a release executed by UICI and Schappel on October 27, 1997. That

                                                 -12-
release provides, in pertinent part:

               UICI, for good and valuable consideration, the receipt and adequacy
               of which are hereby acknowledged, does for itself, for its affiliates,
               and for its successors and assigns, forever release, discharge and
               acquitRichard Schappel and his respective agents, successors, assigns,
               representatives, affiliated corporations, affiliated partnerships,
               officers, employees, directors, attorneys, insurance carriers,
               subsidiaries, divisions, and each and every other person, partnership,
               firm orcorporation inprivity with Richard Schappel that are ormight
               be liable, directly or indirectly, fixed or contingent, of and from any
               and all claims, demands, liabilities, obligations, debts, agreements,
               liens, security interests, claims or causes of action, which have been
               or which might have been asserted, including and arising out of that
               certain letter agreement dated March 4,1997 from W. Brian Harrigan
               and/or UICI, which letteragreement is hereby terminated.

 As part of its summary judgment evidence, Schappel included the deposition testimony of Mark

Hauptman, personal financial assistant to Jensen. Hauptman played amajor role in negotiating and
drafting the release between Schappel and UICI. Hauptman testified thatthe term UICI "affiliates"

included STP and CDS. STP argues that the release does not apply to itbecause it is not specifically
named in the release. Affiliate means to join or become connected with. Ballentine's Law

Dictionary 45 (3d ed. 1969). UICI was a member of STP, owning eighty percent of itsstock. We

conclude that, atthe time ofthe Schappel/UICI release, STP was an affiliate corporation ofUICI,
and, thus, itwas covered under the release. The trial court properly granted summaryjudgment that
STP take nothing on its claims against Schappel for conversion/misappropriation. We overrule

STP's fourth issue.

       We affirm the trial court's summary judgment that STP take nothing on its claims for

conversion/misappropriation. As to the remainder of the claims, we reverse the trial court's

                                                -13-
judgment and remand this case for a new trial.5

Do Not Publish
Tex. R. App. P. 47
990213

      In issuethree, STPand CDScontendthe trial court erredin rendering summaryjudgmentdissolving STPand CDS. We reversethe trial
court'sjudgment, partlybecause of fact issues regarding the proper distribution of the proceeds from the saleof STP'sassets. Forthis reason,
the trial court's judgment dissolving STP and CDS is likewisereversed. Accordingly, we do not address STPand CDS's third issue.

                                                                   -14-