Court Opinion

ID: 9765452
Source: CourtListenerOpinion
Date Created: 2023-08-29 04:03:12.277736+00
Date Added: 2024-06-11T07:30:10.066737
License: Public Domain

O’CONNOR, Justice,
dissenting.
The jury found that Culpepper Properties, Inc. was the alter ego of John C. Culpepper, Jr. The trial court granted a motion to disregard the finding of alter ego, and entered judgment for Mancorp against Culpepper Properties, Inc. only. In reviewing the trial court’s action, the majority holds there was no evidence to support the jury’s finding of alter ego. I respectfully disagree.
The majority holds that nothing in this case resembles the gross fraud that justified piercing the corporate veil in Castleberry v. Branscum, 721 S.W.2d 270 (Tex.1986). The majority also holds there is no evidence that holding only the corporation liable would result in injustice or that the corporate defendant is unable to pay this judgment. Slip op. at 5. The majority ignores what this Court said in Rose v. Intercontinental Bank, N.A., 705 S.W.2d 752, 755 (Tex.App.—Houston [1st Dist.] 1986, writ ref’d n.r.e.), that the use or misuse that a shareholder makes of the corporate form determines whether he will be insulated from personal liability.
A trial court cannot disregard the jury’s finding of alter ego unless there was no evidence to support it. We must engage in the same analysis of the evidence that the trial court is required to make, and search the record to see if there is any evidence to support the jury’s finding of alter ego. There are two steps to this analysis. First, we must segregate the evidence that is contrary to the finding from the evidence that supports the finding. Then, putting aside all evidence that is contrary to the finding, if we find more than a scintilla of evidence that supports the jury’s finding, we must uphold the finding. James v. Vigilant Ins. Co., 674 S.W.2d 925, 926 (Tex.App.—Amarillo 1984, writ ref’d n.r.e.). In this process, we must consider the evidence in the light most favorable to the jury’s finding. Dowling v. NADW Marketing, Inc., 631 S.W.2d 726, 728 (Tex.1982). We must also draw every reasonable inference from the evidence to support the jury’s finding. Id.
In analyzing the evidence, the majority makes all reasonable inferences in favor of the judgment, not the verdict. The inferences should be made to support the verdict, not the judgment. For example, the majority considers that there was “no evidence” that the bank account was used for any non-corporate purpose. In fact, there *629was no evidence the account was used for any corporate purpose. Making the reasonable inferences from the evidence, we should infer that the account was a personal account, not that it was a corporate account.
For purposes of the issue of alter ego, there are three entities here: (1) Culpepper Properties, Inc., the corporation; (2) John Culpepper, Jr.; and (3) “Culpepper Properties,” under which John Culpepper did business. We must assume, on this record, that when Culpepper operated under Cul-pepper Properties (with no designation of corporation), he was operating for himself, not the corporation.
The jury answered the following question:
Do you find that Defendant Culpepper Properties, Inc. was the alter ego of John C. Culpepper, Jr. during the relevant times of this lawsuit?
INSTRUCTION: “Alter ego”:' You are instructed that the corporation is the alter ego of an individual when there is such a unity between corporation and individual that the separateness of the corporation has ceased and holding only the corporation liable would result in injustice.
ANSWER: Yes
The majority said that “as a matter of law,” the seven checks, “standing alone,” constituted no evidence that the corporation was Culpepper’s alter ego. I do not think the seven checks stand alone. On this record, I believe there is more than a scintilla of evidence to support the jury’s finding that the corporation was the alter ego of John C. Culpepper, Jr. Here, in summary form, is that evidence:
1. John Culpepper did business under the corporate name of Culpepper Properties, Inc., and personally under the name Culpepper Properties.
2. Culpepper used a business card that said: “Culpepper Properties, John C. Cul-pepper, Jr., his self.”
3. Culpepper owned 100% of Culpepper Properties, Inc. and was its president and one of its three directors. Culpepper’s wife was one of the other directors.
4. Ryan Mortgage made the loan for the building to both Culpepper Properties, Inc. and Culpepper individually. Culpepper signed the construction loan agreement with Ryan Mortgage for Cul-pepper Properties, Inc. both as president of the corporation and individually. Cul-pepper personally guaranteed the loan.
5. Culpepper told Mancorp he was personally behind Culpepper Properties, Inc.’s project. Mancorp asked Ryan Mortgage, the lender, to confirm that Culpepper was personally behind the project, which Ryan Mortgage did.
6. Mancorp thought it was doing business with Culpepper, personally, and that Culpepper was personally paying for the job.
7. Mancorp submitted the proposal for the bank project to “Culpepper Properties,” not Culpepper Properties, Inc. This supports Mancorp’s contention that Culpepper was personally behind the project.
8. Culpepper signed five checks to pay Mancorp for the work on the project, totaling $1,727,469, on his personal account in the name of “John C. Culpepper, Jr.” The second line on the cheek, in smaller print under Culpepper’s name, said: “Bank Tower Project.” Mancorp could reasonably conclude this was a personal account, not a corporate account, confirming that Culpepper was personally liable on the contract.
9. Culpepper was a licensed lawyer and, therefore, knew the consequences of not maintaining the corporate formalities for Culpepper Properties, Inc.
10. Culpepper did not hold formal board meetings for Culpepper Properties, Inc.; he just discussed matters in the office. Culpepper did not sign any formal resolution for Culpepper Properties, Inc. to enter into a contract to borrow money.
11. The only shareholders’ meeting Cul-pepper held was to change officers or directors. Culpepper Properties, Inc. held four shareholders’ meetings in 18 years.
*63012. Culpepper did not recall how often the corporate documents required shareholders’ or board of directors’ meetings.
13. Culpepper did not recall who holds which office in Culpepper Properties, Inc.
14. Culpepper develops some projects as Culpepper Properties, Inc. and others personally. Culpepper personally developed another large project in Bryan.
15. Culpepper signed orders for changes in the construction documents for Culpepper Properties, Inc. personally. Culpepper signed one change order that was in the name of “Culpepper Properties,” not “Culpepper Properties, Inc.” These change orders are the debt on which Mancorp brought this suit.
16. Culpepper Properties, Inc. did not pay Mancorp on the last draw request even though it had the funds to do so at one time.
17. Ryan Mortgage foreclosed on the bank building during the trial.
On this record, I would reinstate the finding of alter ego and amend the judgment to render it against John C. Culpep-per, Jr.