Court Opinion

ID: 3093526
Source: CourtListenerOpinion
Date Created: 2015-10-16 04:16:12.516828+00
Date Added: 2024-06-11T11:20:20.804832
License: Public Domain

COURT OF APPEALS
                             EIGHTH DISTRICT OF TEXAS
                                  EL PASO, TEXAS

 DR. CHARLES E. WILLIS, II; IVAN            §
 MOORHEAD; JOHN PLAIN; DR.
 RANEE GUMM, INDIVIDUALLY AND               §
 AS TRUSTEE OF ELIZABETH ASHLEY
 GUMM LIVING TRUST AND WILLIAM              §
 WILLEY GUMM LIVING TRUST; DR.
 WILLIAM GUMM, INDIVIDUALLY                 §              No. 08-11-00207-CV
 AND AS TRUSTEE OF ELIZABETH
 ASHLEY GUMM LIVING TRUST AND               §                Appeal from the
 WILLIAM WILLEY GUMM LIVING
 TRUST; BREW PARTNERS, L.P.; KEN             §              431st District Court
 GROSSNER; GEORGE AND SHARON
 TILLOTSON; AND GORDON AND                   §           of Denton County, Texas
 JEANETTE MARTIN,
                                            §             (TC# 2008-30297-211)
                           Appellants,
                                            §
 v.
                                            §
 PETER G. MARSHALL; PETER
 MARSHALL & COMPANY, P.C., AND              §
 SUMMERS MARSHALL & COMPANY,
 P.C.,                                       §

                           Appellees.
                                         OPINION

       Appellants, Dr. Charles E. Willis, II, Ivan Moorhead, John Plain, Dr. Ranee Gumm,

individually and as Trustee of Elizabeth Ashley Gumm Living Trust and William Willey Gumm

Living Trust, Dr. William Gumm, individually and as Trustee of Elizabeth Ashley Gumm Living

Trust and William Willey Gumm Living Trust, BREW Partners, L.P., Ken Grossner, George and
Sharon Tillotson, and Gordon and Jeanette Martin, (Appellants) appeal the trial court’s summary

judgment in favor of Appellees, Peter G. Marshall, Peter Marshall & Company, P.C., and

Summers Marshall & Company, P.C., (“Marshall”).1 We affirm.

                                                BACKGROUND

                                               Factual Background

          In 1999, Danny Tuinei formed Imaging Specialists Group, Ltd. (ISG), a limited

partnership. Imaging Specialists, Inc. (ISI) was the general partner of ISG, and Tuinei was a 50

percent owner and served as President of ISI. As a limited partner, ISG owned 99 percent of

Diagnostic Imaging Specialists, Ltd. (DIS). ISG and DIS thus shared common ownership.

However the ownership of ISG and DIS was not common to Tuinei’s ownership interests in

several other entities, which included Plano Oncology Center, Ltd. (POC), Plano Professional

Building, Ltd. (PPB) and 3T Medical Imaging Management, Inc. (3T).

          In a letter dated February 10, 2004, Tuinei requested and obtained permission from John R.

Albers and Russ Melbye to make partnership financial information available to “a potential

investor” who was possibly interested in acquiring the respective partnership interests of the

Albers Family Partnership and Melbye & Associates, Inc. in ISG and DIS. Tuinei sought

permission to disclose this information so that he could pursue “these investors” and in turn

acquire the Albers and Melbye partnership interests. The potential investor or investors are not

identified within the correspondence.

          It is undisputed that in October 2004, Tuinei hired Marshall to perform accounting services

for ISG and DIS. In November 2004, the Albers Family Partnership filed suit against Tuinei and

ISI for breach of contract, breach of fiduciary duty, exemplary damages, injunctive relief and for
1
    Appellants nonsuited defendant Joan K. Summers as to all claims and she is not a party to this appeal.
                                                          2
an accounting of the partnership alleging in part that Tuinei, as managing partner, had failed to

prepare an annual report detailing ISG’s financial information and had diverted ISG’s funds for

personal use.2 In December 2004, at Tuinei’s request and for Tuinei’s use, Marshall prepared

reports of various financial scenarios involving the financing and buyout of the then-existing

limited partnership interests in ISG and DIS.                 Marshall thereafter prepared two types of

Combined Financial Statements and Accountant’s Compilation Reports (statement and

compilation reports) for periods ending December 31, 2002, December 31, 2003,3 and October 31,

2004, utilizing both accelerated and straightline depreciation. 4 Each page of the combined

financial statement bore the note, “See Accountant’s Compilation Report.”                           Each of the

statements and compilation reports was accompanied by a disclaimer letter addressed from

Marshall “To the Partners” of ISG and DIS.

        In March 2005, Appellants executed agreements to become new limited partners in ISG

and DIS. After Appellants became limited partners, Marshall continued providing accounting

services for ISG and DIS.

        Marshall prepared statements and compilation reports for the periods ending March 31

2005, December 31, 2005, and March 2006.5 These statements and compilation reports also

included Marshall’s disclaimer letter “To the Partners.” The December 2005 and March 2006

documents differed from the prior statements and reports because they included a current-asset

2
   The Albers Family Partnership also alleged that Tuinei had taken salary in excess of that authorized by ISG’s
limited partners, had diverted ISG’s funds for personal use, and had transferred approximately $17,000 from ISG’s
bank account to his own personal bank account without documentation or approval. It further alleged that ISI, with
Tuinei serving as ISI’s managing partner, failed to keep adequate records of the business purpose of various
expenditures, allowed some of ISG’s books and records to be removed from its principal office, and allowed Tuinei to
withdraw large sums of money even while ISG was not paying equipment leases and other business obligations of the
partnership.
3
   The statements and reports ending December 31, 2002, and December 31, 2003, were prepared January 14, 2005.
4
   The statements and reports ending October 31, 2004, were prepared January 10, 2005.
5
   Compilation reports for March 2006 are not present in the record.
                                                         3
line item denominated, “A/R-Other,” rather than “Due from Partners.”           Each page of the

combined financial statements for these periods again advised the reader to see the accountant’s

compilation report. The accountant’s compilation reports for December 2005 included balance

sheets containing a breakdown of the accounts receivable, which included Tuinei’s entities, POC,

PPB, and 3T.

                                      Procedural Background

         Appellants sued Marshall alleging negligence, negligent misrepresentation, fraudulent

inducement and conspiracy, exemplary damages, violations of the Texas Securities Act, statutory

fraud under the Texas Business and Commerce Code, and seeking attorneys’ fees and other relief.

Appellees filed a hybrid motion seeking a no-evidence summary judgment as to each cause of

action    and   a   traditional   summary judgment     on   Appellants’   negligence,   negligent

misrepresentation, fraudulent inducement, statutory fraud, and Texas Security Act causes of

action. Finding no evidence to support Appellant’s claims of “fraudulent inducement/statutory

fraud” and Texas Security Act claims, the trial court granted Appellees’ no-evidence summary

judgment motion.       Finding no genuine issue of material fact, the trial court also granted

Appellees’ motion for traditional summary judgment. On appeal, Appellants complain the trial

court erred in granting summary judgment because probative evidence raised genuine issues of

material fact on “issues of law.”

                                           STANDING

         Appellee challenges Appellants’ standing to bring suit. A plaintiff must have standing to

bring a lawsuit. Austin Nursing Ctr., Inc. v. Lovato, 171 S.W.3d 845, 848 (Tex. 2005); City of

Arlington v. Centerfolds, Inc., 232 S.W.3d 238, 244 (Tex. App. – Fort Worth 2007, pet. denied).

                                                 4
Standing is a component of a court’s subject-matter jurisdiction and can be raised for the first time

on appeal. Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 446 (Tex. 1993); Nauslar

v. Coors Brewing Co., 170 S.W.3d 242, 248 (Tex. App. – Dallas 2005, no pet.). The plaintiff has

the burden of alleging facts that affirmatively demonstrate a court’s jurisdiction to hear a cause.

Tex. Ass’n of Bus., 852 S.W.2d at 446; Nauslar, 170 S.W.3d at 248.                 When considering

jurisdictional issues for the first time on appeal, we construe the petition in favor of the party, and

if necessary, we determine whether any evidence supports standing by reviewing the entire record.

Tex. Ass’n of Bus , 852 S.W.2d at 446. Without standing, a court lacks subject matter jurisdiction

to hear the case. Lovato, 171 S.W.3d at 849; Tex. Ass’n of Bus., 852 S.W.2d at 443; City of

Arlington, 232 S.W.3d at 244.

       The issue of standing focuses on whether a party has a sufficient relationship with the

lawsuit so as to have a justiciable interest in its outcome. Lovato, 171 S.W.3d at 848; City of

Arlington, 232 S.W.3d at 244. Standing, therefore, focuses on who may bring an action, and is

concerned with whether the claimant has a particularized injury distinct from that suffered by the

general public. M.D. Anderson Cancer Ctr. v. Novak, 52 S.W.3d 704, 708 (Tex. 2001) (who may

bring an action); Bland ISD v. Blue, 34 S.W.3d 547, 555-56 (Tex. 2000); City of Arlington, 232
S.W.3d at 244 (particularized injury). Standing requires that there be a real controversy between

the parties that will actually be determined by the judicial declaration sought. Lovato, 171
S.W.3d at 849; City of Arlington, 232 S.W.3d at 244. This means that litigants must be “properly

situated to be entitled to [a] judicial determination.” Lovato, 171 S.W.3d at 849, quoting 13

CHARLES ALAN WRIGHT, ARTHUR R. MILLER, AND EDWARD H. COOPER, WRIGHT, MILLER &

COOPER, FEDERAL PRACTICE AND PROCEDURE: JURISDICTION 2d § 3531, at 338–39 (2d ed.1984).

                                                  5
        A person who is personally aggrieved by the alleged wrong has standing to sue. Nootsie

Ltd. v. Williamson County Appraisal Dist., 925 S.W.2d 659, 661 (Tex. 1996). A person has

standing if (1) he has sustained, or is immediately in danger of sustaining, some direct injury as a

result of the wrongful act of which he complains; (2) he has a direct relationship between the

alleged injury and claim sought to be adjudicated; (3) he has a personal stake in the controversy;

(4) the challenged action has caused the plaintiff some injury in fact, either economic, recreational,

environmental, or otherwise; or (5) he is an appropriate party to assert the public’s interest in the

matter, as well as his own. Nauslar, 170 S.W.3d at 249.

        A plaintiff has no standing to litigate without a breach of a legal right belonging to the

plaintiff.   Nobles v. Marcus, 533 S.W.2d 923, 927 (Tex. 1976) (“Without breach of a legal right

belonging to the plaintiff no cause of action can accrue to his benefit.”); Nauslar, 170 S.W.3d at

249; Cadle Co. v. Lobingier, 50 S.W.3d 662, 669–70 (Tex. App. – Fort Worth 2001, pet. denied);

Brunson v. Woolsey, 63 S.W.3d 583, 587 (Tex. App. – Fort Worth 2001, no pet.). Only the

person whose primary legal right has been breached may seek redress for an injury. Nobles, 533
S.W.2d at 927. An individual stakeholder in a legal entity does not have a right to recover

personally for harms done to the legal entity. Wingate v. Hajdik, 795 S.W.2d 717, 719 (Tex.

1990); Nauslar, 170 S.W.3d at 250, citing Cates v. Int’l Tel. & Tel. Corp., 756 F.2d 1161 (5th Cir.

1985) (a partner has no individual, separate cause of action for losses suffered by reason of tortious

interference with a contract between the partnership and a third party: damages for loss in value of

the partnership interest or employment losses are subsumed in the partnership’s causes of action).

                                            Application

        The primary legal right to pursue a personal cause of action against Marshall for harms

                                                  6
done to ISG belongs not to its limited partners but to ISG. Wingate, 795 S.W.2d at 719; Nobles,
533 S.W.2d at 927; Nauslar, 170 S.W.3d at 249; Cadle Co., 50 S.W.3d at 669–70; Brunson, 63
S.W.3d at 587. Thus, upon becoming limited partners of ISG in March 2005, Appellants were

without standing to recover personally for any harms Marshall may have committed upon

Appellants or ISG. See Nauslar, 170 S.W.3d at 250. Because Appellants have no standing as

limited partners to pursue relief against Marshall for breach of any legal right belonging to ISG, no

subject-matter jurisdiction exists to consider Appellants’ personal causes of action based upon

their partnership interests for harms allegedly accruing to them or to ISG. See Nauslar, 170
S.W.3d at 250-51; Tex. Ass’n of Bus., 852 S.W.2d at 446.

                                           DISCUSSION

       It is undisputed that Appellants were not limited partners of ISG before March 2005.

We therefore consider the trial court’s grant of summary judgment regarding Appellants’

pre-investment claims.

       Appellants assert the trial court erred in granting summary judgment in favor of Appellees

because Appellants presented probative evidence raising genuine issues of material fact regarding

Appellees’ alleged:      (1) negligence; (2) omissions and negligent misrepresentations; (3)

fraudulent inducement and engagement in a common plan, device, scheme, or artifice to deceive

Appellants into purchasing and retaining partnership interests; (4) willful, intentional, and reckless

violations and aiding and abetting of Texas Securities Act violations; and (5) acts constituting

statutory fraud in violation of Texas Business and Commerce Code Section 27.01 TEX. BUS. &

COM. CODE ANN. § 27.01 (West 2009).

                                                  7
                                        Standard of Review

       We review a trial court’s summary judgment de novo. Mann Frankfort Stein & Lipp

Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009).             Our review is limited to

consideration of the evidence presented to the trial court. Mathis v. Restoration Builders, Inc.,

231 S.W.3d 47, 52 (Tex. App. – Houston [14th Dist.] 2007, no pet.). When a summary judgment

does not state or specify the grounds upon which it relies, we may affirm the judgment if any of the

grounds presented in the summary judgment motion are meritorious. Dow Chemical Co. v.

Francis, 46 S.W.3d 237, 242 (Tex. 2001); Carr v. Brasher, 776 S.W.2d 567, 569 (Tex. 1989);

Prize Energy Resources, L.P. v. Cliff Hoskins, Inc., 345 S.W.3d 537, 556 (Tex. App. – San

Antonio 2011, no pet.).

Hybrid Summary Judgment Motion

       When a party files a hybrid summary judgment motion on both no-evidence and traditional

grounds, we first review the trial court’s judgment under the no-evidence standard of review.

Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 600 (Tex. 2004); All American Telephone, Inc. v.

USLD Communications, Inc., 291 S.W.3d 518, 526 (Tex. App. – Fort Worth 2009, pet. denied);

East Hill Marine, Inc. v. Rinker Boat Co., 229 S.W.3d 813, 816 (Tex. App. – Fort Worth 2007, pet.

denied). If the non-movant failed to produce more than a scintilla of evidence under the standards

of Rule 166a(i), then there is no need to analyze whether the movant’s summary judgment proof

satisfied the less stringent burden set forth for traditional summary judgment under Rule 166a(c).

TEX. R. CIV. P. 166a(c) & (d); East Hill Marine, Inc., 229 S.W.3d at 816. “When the evidence

offered to prove a vital fact is so weak as to do no more than create a mere surmise or suspicion of

its existence, the evidence is no more than a scintilla and, in legal effect, is no evidence.” Jelinek

                                                  8
v. Casas, 328 S.W.3d 526, 532 (Tex. 2010), quoting Kindred v. Con/Chem, Inc., 650 S.W.2d 61,

63 (Tex. 1983).

No-Evidence Summary Judgment Motion

       A no-evidence motion for summary judgment under Rule 166a(i) is essentially a motion

for a pretrial directed verdict. TEX. R. CIV. P. 166a(i); Timpte Industries, Inc. v. Gish, 286 S.W.3d
306, 310 (Tex. 2009). After an adequate time for discovery, a party without the burden of proof

may, without presenting evidence, seek summary judgment on the ground that there is no evidence

to support one or more essential elements of the non-movant’s claim or defense. TEX. R. CIV. P.

166a(i); All American Telephone, Inc., 291 S.W.3d at 526. The motion must specifically state

the elements for which there is no evidence. TEX. R. CIV. P. 166a(i); Timpte Industries, Inc., 286
S.W.3d at 310; All American Telephone, Inc., 291 S.W.3d at 526. The Supreme Court has

explained that Texas Rule of Civil Procedure 166a(i) does not permit conclusory or general

no-evidence challenges. Timpte Industries, Inc., 286 S.W.3d at 310. This requirement serves

the purposes of providing adequate information to the opposing party by which it may oppose the

motion and defining the issues to be considered for summary judgment. Id. at 311, quoting

Westchester Fire Ins. Co v. Alvarez, 576 S.W.2d 771, 772 (Tex. 1978). The trial court is required

to grant the motion unless the nonmovant produces summary judgment evidence that raises a

genuine issue of material fact. TEX. R. CIV. P. 166a(i).

       In conducting our no-evidence summary judgment review, we will review the evidence

presented by the motion and response in the light most favorable to the party against whom the

summary judgment was rendered, crediting evidence favorable to that party if reasonable jurors

could, and disregarding contrary evidence unless reasonable jurors could not. Timpte Industries,

                                                 9
Inc., 286 S.W.3d at 310, quoting Mack Trucks, Inc. v. Tamez, 206 S.W.3d 572, 582 (Tex. 2006).

When a nonmovant presents more than a scintilla of probative evidence that raises a genuine issue

of material fact, a no-evidence summary judgment is improper. Smith v. O’Donnell, 288 S.W.3d
417, 424 (Tex. 2009).

Traditional Summary Judgment Motion

       The party moving for traditional summary judgment bears the burden of showing that no

genuine issue of material fact exists and that he is entitled to judgment as a matter of law. TEX. R.

CIV. P. 166a(c). To determine if the non-movant raises a fact issue, we review the evidence in the

light most favorable to the non-movant, crediting favorable evidence if reasonable jurors could do

so, and disregarding contrary evidence unless reasonable jurors could not. See Fielding, 289
S.W.3d at 848 (citing City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005)). A moving

party who conclusively negates a single essential element of a cause of action or conclusively

establishes an affirmative defense is entitled to summary judgment on that claim. Frost Nat.

Bank v. Fernandez, 315 S.W.3d 494, 508-09 (Tex. 2010). Issues not expressly presented to the

trial court by written motion, answer, or other response shall not be considered on appeal as

grounds for reversal. TEX. R. CIV. P. 166a(c).

                                              Analysis

Negligent Misrepresentation

       The trial court granted Marshall traditional summary judgment on Appellants’

negligent-misrepresentation claim.     The theory of negligent misrepresentation allows plaintiffs

who are not parties to a contract for professional services to recover from the contracting

professionals. McCamish, Martin, Brown & Loeffler v. F.E. Appling Interests, 991 S.W.2d 787,

                                                 10
792 (Tex. 1999).         Accountants are among those professionals against whom a

negligent-misrepresentation cause of action can be brought. Grant Thornton LLP v. Prospect

High Income Fund, ML CBO IV, 314 S.W.3d 913, 919 (Tex. 2010) (citing McCamish, 991 S.W.2d

at 791).

       The elements of a negligent-misrepresentation cause of action consist of: (1) defendant’s

representation to a plaintiff in the course of defendant’s business or in a transaction in which the

defendant had an interest; (2) defendant’s providing false information for the guidance of others;

(3) defendant’s failure to exercise reasonable care or competence in obtaining or communicating

information; (4) plaintiff’s justifiable reliance on defendant’s representation; and (5) defendant’s

negligent misrepresentation proximately causing the plaintiff’s injury. Miller v. LandAmerica

Lawyers Title of El Paso, 362 S.W.3d 842, 845 (Tex. App. – El Paso 2012, no pet.). These

elements arise from the American Law Institute’s 1977 Restatement (Second) of Torts Section

552, “Information Negligently Supplied for the Guidance of Others,” which Texas has embraced

for more than twenty years, and those cases interpreting the provisions of Section 552. Grant

Thornton LLP, 314 S.W.3d at 919, citing RESTATEMENT (SECOND) OF TORTS § 552.           Section 552

of the Restatement (Second) of Torts provides that:

                [o]ne who, in the course of his business, profession or employment, or in
       any other transaction in which he has a pecuniary interest, supplies false
       information for the guidance of others in their business transactions, is subject to
       liability for pecuniary loss caused to them by their justifiable reliance upon the
       information, if he fails to exercise reasonable care or competence in obtaining or
       communicating the information . . . . [T]he liability stated . . . is limited to loss
       suffered

                   (a) by the person or one of a limited group of persons for whose benefit
                       and guidance he intends to supply the information or knows that the
                       recipient intends to supply it; and

                                                11
                      (b) through reliance upon it in a transaction that he intends the
                          information to influence or knows that the recipient so intends or in
                          a substantially similar transaction.

Id.
         A cause of action under Section 552 is available only when information is transferred by a

professional to a known party for a known purpose. Grant Thornton LLP, 314 S.W.3d at 920;

McCamish, 991 S.W.2d at 794. The Texas Supreme Court has declared that a known party is one

within the limited class of potential claimants “‘for whose benefit and guidance [the professional]

intends to supply the information or knows that the recipient intends to supply it.’” Grant

Thornton LLP, 314 S.W.3d at 920, citing McCamish, 991 S.W.2d at 794 (quoting RESTATEMENT

(SECOND) OF TORTS § 552). Under this formulation, liability is limited to circumstances in which

the professional providing the information is both aware of the non-client and intends that the

non-client rely on the information.                Id.    A defendant cannot be liable for negligent

misrepresentation unless a plaintiff is within this scope of liability. Id.

         In its motion, Marshall asserted that summary judgment should be granted on Appellants’

negligent misrepresentation and fraudulent inducement causes of action because Appellants’

reliance upon the financial documents Marshall prepared was not justifiable. We agree.

         In fraud and negligent-misrepresentation causes of action, a plaintiff must show actual

reliance and that plaintiff’s reliance is justifiable.6 Id. at 923 (citing Ernst & Young v. Pacific

Mutual Life Ins. Co., 51 S.W.3d 573, 577 (Tex. 2001)). When determining whether the

justifiable-reliance element of negligent misrepresentation has been met, we consider the nature of

the relationship between the professional, his client, and the non-client. McCamish, 991 S.W.2d

at 794. The professional must invite the non-client’s reliance. Id.

6
 The Supreme Court has noted that a lack of justifiable reliance in a fraud claim necessarily bars a negligent
misrepresentation claim. Grant Thornton LLP, 314 S.W.3d at 923, n.15.
                                                         12
       Each of the statements and compilation reports Marshall prepared and directed “To the

Partners” was accompanied by a disclaimer letter that warned the user:

       We have compiled the accompanying combined balance sheet of Imaging
       Specialists Group, Ltd. (a limited partnership) and Diagnostic Imaging Specialists,
       Ltd. (a limited partnership) as of [specified date], and the related combined
       statements of income and changes in partners’ equity for the [specified period] then
       ended, in accordance with Statements on Standards for Accounting and Review
       Services issued by the American Institute of Certified Public Accountants.

       A compilation is limited to presenting in the form of financial statements
       information that is the representation of management. We have not audited or
       reviewed the accompanying combined financial statements and, accordingly, do
       not express an opinion or any other form of assurance on them.

       Management has elected to omit substantially all of the disclosures and the
       statement of cash flows required by generally accepted accounting principles. If
       the omitted disclosures and statement of cash flows were included in the financial
       statements, they might influence the user’s conclusions about the Company’s
       financial position, results of operations, and cash flows. Accordingly, these
       financial statements are not designed for those who are not informed about such
       matters.

       We are not independent with respect to Imaging Specialists Group, Ltd nor
       Diagnostic Imaging Specialist, Ltd.

       Summers, Marshall & Company, P.C.

       The Supreme Court has recognized that where there are “red flags” indicating that reliance

upon a representation is unwarranted, a person may not justifiably rely thereon. Grant Thornton

LLP, 314 S.W.3d at 923 (quoting Lewis v. Bank of Am. NA, 343 F.3d 540, 546 (5th Cir. 2003)).

Marshall’s disclaimer letters surpass the “red flag” analogy and directly warn the user that the

financial reports were not prepared in accordance with generally-accepted accounting principles,

that information is missing from those reports, and that the inclusion of the missing information

might influence the user’s conclusions about the financial position and cash flows of ISG and DIS.

Moreover, the disclaimer letters are addressed to the partners of ISG and DIS.

                                               13
          We conclude that the disclaimer letters show that Marshall did not invite the Appellants’

reliance upon the statements and compilation reports. See McCamish, 991 S.W.2d at 794. To

the contrary, Marshall warned that if the omitted items were included, they might influence the

user’s conclusions. For this reason, we also conclude that Appellants have failed to show that

their reliance upon Marshall’s financial reports was justifiable. Grant Thornton LLP, 314 S.W.3d

at 923.

          Because no less than one element of negligent misrepresentation has been conclusively

negated, the trial court did not err in granting summary judgment. Frost Nat. Bank, 315 S.W.3d at

509.       Appellants’ issue challenging the trial court’s summary judgment on their

negligent-misrepresentation cause of action is overruled. See Grant Thornton LLP, 314 S.W.3d

at 923; Dow Chemical Co., 46 S.W.3d at 242.

Negligence

          A cause of action for negligence has three elements: (1) the existence of a legal duty; (2) a

breach of that duty; and (3) damages proximately resulting from the breach. Praesel v. Johnson,

967 S.W.2d 391, 394 (Tex. 1998). The threshold question, of course, is the existence of a duty.

Id. The existence of duty is a question of law. Joseph E. Seagram & Sons, Inc. v. McGuire, 814
S.W.2d 385, 387 (Tex. 1991). If no duty exists, our inquiry into whether negligence liability may

be imposed ends. Van Horn v. Chambers, 970 S.W.2d 542, 544 (Tex. 1998).

          Marshall’s motion for summary judgment asserts that a finding that Marshall owed a duty

to Appellants in the context of their simple negligence claim is untenable because the Supreme

Court has declined to find that a professional owes a duty to unknown third persons in the context

of a negligent-misrepresentation claim. See Grant Thornton LLP, 314 S.W.3d at 920. To hold

                                                   14
otherwise, Marshall argues, would be inconsistent with the Supreme Court’s holding in Grant

Thornton that a negligent-misrepresentation action may be pursued against a professional when

the professional transfers information and is both aware of the non-client and intends that the

non-client rely upon that information.       Grant Thornton LLP, 314 S.W.3d at 920, citing

McCamish, 991 S.W.2d at 794 (quoting RESTATEMENT (SECOND)              OF   TORTS § 552); see also

Scottish Heritable Trust, PLC. v. Peat Marwick Main & Co., 81 F.3d 606, 613 (5th Cir. 1996)

(interpreting Texas law and determining that the objective of Section 552 of the Restatement

(Second) of Torts is to restrict accountants’ liability to a prescribed group and not permit recovery

for all foreseeable users of an accountant’s audit report). Marshall also asserts that Appellants

have not shown and cannot show that each defendant owed a legal duty to each plaintiff, a breach

by each defendant of any duty, or that such breach caused injury to each plaintiff.

       The entirety of Appellants’ response to these arguments consists of a complaint that

Marshall failed to specify the deficient elements of Appellants’ negligence claim, a global

assertion that Appellants produced probative evidence raising a genuine issue of material fact as to

each negligence element, and a contention that Appellants’ evidence establishes that the Marshall

defendants “failed to uphold their duty to ISG and its partners to provide competent accounting

services to the Partnership from the beginning of their professional relationship in 2004.”

       A contract for professional accounting services “gives rise to a duty by the professional [to

his client] to exercise the degree of care, skill, and competence that reasonably competent

members of the profession would exercise under similar circumstances.”                    Averitt v.

PriceWaterhouseCoopers L.L.P., 89 S.W.3d 330, 334 (Tex. App. – Fort Worth 2002, no pet.)

(citing Southwestern Bell Tel. Co. v. DeLanney, 809 S.W.2d 493, 494 n.1 (Tex. 1991) and

                                                 15
Greenstein, Logan & Co. v. Burgess Mktg., Inc., 744 S.W.2d 170, 185 (Tex. App. – Waco 1987,

writ denied) (certified public accountants owe such duty to their clients).         We agree that

Appellants have failed to identify and show the existence of a legal duty owed by Marshall to

Appellants as non-client pre-investors in support of their negligence cause of action. Both in their

response to the summary judgment motion and in their briefs on appeal, Appellants have failed to

direct the trial court and this Court to any authority imposing a duty of an accountant to a

pre-investor non-client third party under the facts before us, and we have found none. See Joseph

E. Seagram & Sons, Inc., 814 S.W.2d at 387; Praesel, 967 S.W.2d at 394. Because the element of

duty has been conclusively negated, the trial court did not err in granting summary judgment on

Appellants’ negligence cause of action. Frost Nat. Bank, 315 S.W.3d at 509. Appellants’ issue

challenging the trial court’s summary judgment on their negligence cause of action is overruled.

Fraudulent Inducement and Statutory Fraud

       Under the heading “Fraudulent Inducement and Statutory Fraud,” Appellants contend the

trial court erred when it granted Marshall’s no-evidence summary judgment motion on

Appellants’ fraudulent-inducement cause of action.        Appellants have failed to present any

argument or citation to authority challenging the trial court’s summary judgment on their

statutory-fraud cause of action. Thus, we find Appellants’ have waived their statutory-fraud issue

on appeal and restrict our analysis to Appellants’ fraudulent-inducement issue. TEX. R. APP. P.

38.1(i); see Valadez v. Avitia, 238 S.W.3d 843, 845 (Tex. App. – El Paso 2007, no pet.).

       In both its summary judgment motion and on appeal, Marshall argues that Appellants

cannot show the elements for fraudulent inducement because the requisite element that Marshall

made a representation with intent to induce each Appellant to rely upon it was negated in the trial

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court. We agree that the summary judgment evidence fails to show that Marshall made a

representation with the intent to induce Appellants to rely upon or act upon it.

       Fraudulent inducement is a species of fraud that requires the plaintiff and defendant to have

entered into an enforceable contract. Bohnsack v. Varco, L.P., 668 F.3d 262, 273 (5th Cir. 2012),

citing Formosa Plastics Corp. USA v. Presidio Eng. & Contractors, 960 S.W.2d 41, 49 (Tex.

1998). To prevail on a fraud claim, a plaintiff must prove that: (1) the defendant made a material

misrepresentation; (2) the defendant knew the representation was false or made the representation

recklessly without any knowledge of its truth; (3) the defendant made the representation with the

intent that the other party would act on that representation or intended to induce the party’s

reliance on the representation; and (4) the plaintiff suffered an injury by actively and justifiably

relying on that representation. Exxon Corp. v. Emerald Oil & Gas Co., L.C., 348 S.W.3d 194,

217 (Tex. 2011).

       Because of its intent-to-deceive element, fraud is more difficult to prove than negligent

misrepresentation. Richter, S.A. v. Bank of America Nat. Trust and Savings Ass’n, 939 F.2d 1176,

1185 (5th Cir. 1991). The intent-to-deceive element of a fraud cause of action “imports a

significantly greater degree of purposeful conduct than does the ‘foreseeability’ element of a

negligence action,” and “[t]he mere fact that it should be known that another will rely upon a

misrepresentation does not, of itself, establish that the misrepresentation was made with the intent

to induce reliance.” Blue Bell, Inc. v. Peat, Marwick, Mitchell & Co., 715 SW.2d 408, 415 (Tex.

App. – Dallas 1986, writ ref’d n.r.e.) (emphasis in original). Instead, a defendant accused of fraud

“must have information that would lead a reasonable man to conclude that there is an especial

likelihood that it will reach those persons and will influence their conduct.” Ernst & Young,

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L.L.P. v. Pacific Mut. Life Ins. Co., 51 S.W.3d 573, 581 (Tex. 2001).

       The trial court had before it evidence that Marshall had prepared financial scenarios in

December 2004 for use by Tuinei. Those scenarios included possible private investor financing,

investor-group financing of a buyout, investor-group equity purchase, and suggestions for making

investment more enticing such as offering higher payout distributions. However, there is no

evidence which supports a finding that, in its preparation of the financial documents, Marshall

intended to induce Appellants’ reliance thereon or had reason to expect that there was an “especial

likelihood” that the information in those financial documents would reach Appellants or influence

their conduct.   Rather, the financial documents upon which Appellants have based their

fraudulent-inducement cause of action were in all cases accompanied by a disclaimer letter

demonstrating that the documents were directed to the attention of the then-existing partners of

ISG and DIS.     Appellants’ issue challenging the trial court’s summary judgment on their

fraudulent-inducement cause of action is overruled.

Conspiracy

       The trial court granted Marshall’s traditional motion for summary judgment on Appellants’

conspiracy cause of action. On appeal, Appellants assert that the trial court found that they had

successfully raised evidence of Marshall’s participation in a conspiracy and argue that “it is

nonsensical” that the trial court granted summary judgment as a matter of law. To be clear, the

trial court’s summary judgment did not grant a no-evidence summary judgment on Appellants’

conspiracy cause of action. Rather, the trial court found that there was no genuine issue of

material fact and that the Marshall defendants were entitled to summary judgment as a matter of

law.

                                                18
       In its summary judgment motion, Marshall asserted that Appellants could not show any of

the elements of a conspiracy cause of action, which include: (1) two or more persons; (2) an

object to be accomplished; (3) a meeting of the minds on the object or course of action; (4) one or

more unlawful, overt acts; and (5) damages proximately resulting therefrom. See Chon Tri v.

J.T.T., 162 S.W.3d 552, 556 (Tex. 2005). To be actionable, a civil-conspiracy cause of action

requires specific intent to agree to accomplish an unlawful purpose or a lawful purpose by

unlawful means. ERI Consulting Engineers, Inc. v. Swinnea, 318 S.W.3d 867, 881 (Tex. 2010);

Juhl v. Airington, 936 S.W.2d 640, 644 (Tex. 1996) (merely proving joint intent to engage in the

conduct that resulted in the injury is insufficient to sustain a civil-conspiracy cause of action). A

meeting of the minds exists when there is an agreement among conspirators and each conspirator

has the specific intent to commit the act. Juhl, 936 S.W.2d at 644 (citations omitted).

       On appeal, Marshall specifically complains that Appellants have failed to allege or show

evidence that Marshall conspired to accomplish an object through an unlawful purpose or a lawful

purpose by unlawful means. Marshall also asserts that multiple facts demonstrate Marshall had

no meeting of the minds with Tuinei regarding Tuinei’s use of ISG’s funds. Marshall’s assertions

are supported by evidence including: (1) the emails in which a Marshall employee questioned

Tuinei’s transactions and requested that Tuinei identify why funds were being transferred out of an

ISG account; (2) Peter Marshall’s deposition testimony that he had multiple conversations with

Tuinei in which he informed Tuinei that he should not be using ISG funds for third-party entities;

and (3) Marshall’s written correspondence to Robert Petty of ISG detailing what Marshall

considered to be Tuinei’s questionable transactions, which primarily included Tuinei’s failure to

provide backup documentation in support of his transactions and Tuinei’s coding instructions,

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which Marshall identified as suspicious.

       The summary judgment evidence also includes the report of Appellants’ expert, Mr. Bryan

Rice, C.P.A., who opined that Peter Marshall had limited knowledge of his client as evidenced by

Marshall’s inability to correctly recite the ownership attributes of DIS or to recall ever receiving

ISG and DIS governance documents as well as Marshall’s ignorance of the fact that the outgoing

ISG partners had sued Tuinei. While Mr. Rice was critical of Marshall’s accounting practices and

failure to act affirmatively on its suspicions and questions regarding Tuinei’s transactions

involving funds, Mr. Rice merely concluded that it was difficult to reconcile Marshall’s concerns

with its inaction in keeping ISG’s limited partners informed of Tuinei’s activities. Although Mr.

Rice disapproved of Marshall’s presentation of the information contained in the financial reports

and coding of transactions, he does not assert that Marshall provided false financial information.

We again note that each report was accompanied by disclaimer letters addressed to the partners

who were warned that the reports were prepared as directed by management, that is, without the

information required by generally-accepted accounting principles, and advised that the inclusion

of the informatio2n omitted by management may influence the user’s conclusions. Because we

find the summary judgment evidence conclusively negates the meeting-of-the-minds element of

Appellants’ conspiracy cause of action, the trial court did not err in granting summary judgment on

that claim. See Frost Nat. Bank, 315 S.W.3d at 509. Appellants’ issue challenging the trial

court’s summary judgment on their conspiracy cause of action is overruled.

Texas Securities Act

       Appellants challenge the trial court’s no-evidence summary judgment on Appellants’

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Texas Securities Act (TSA) cause of action.7 Appellants’ assert that the Marshall defendants

were aiders under the TSA. To prove aider-and-abettor liability under the Texas Securities Act

(TSA), the plaintiff must demonstrate:               (1) that a primary violation of the securities laws

occurred; (2) that the alleged aider had general awareness of its role in this violation; (3) that the

alleged aider rendered substantial assistance in this violation; and (4) that the alleged aider either

(a) intended to deceive plaintiff or (b) acted with reckless disregard for the truth of the

representations made by the primary violator. Navarro v. Grant Thornton, LLP, 316 S.W.3d 715,

720-21 (Tex. App. – Houston [14th Dist.] 2010, no pet.).                        The Securities Act’s “reckless

disregard for the truth or the law” standard means that an alleged aider can be held liable only if it

rendered assistance “in the face of a perceived risk” that its assistance would facilitate untruthful or

illegal activity by the primary violator. Id. at 721 n.5; See Sterling Trust Co. v. Adderley, 168
S.W.3d 835, 842 (Tex. 2005). In order to perceive such a risk, the alleged aider must possess a “

‘general awareness that his role was part of an overall activity that is improper.’ ” See id.

         As Marshall noted in its summary judgment motion and in its brief, aider liability is

derivative and the liability of the primary violator must be established before liability will attach to

a secondary violator. TEX. REV. CIV. STAT. ANN. art. 581-33(F)(2) (West 2010); see Kastner v.

Jenkens & Gilchrist, P.C., 231 S.W.3d 571, 579 (Tex. App. – Dallas 2007, no pet.). Tuinei is not

a defendant in this suit and no evidence has been presented to show that Tuinei has been found to

be liable as a primary violator.

         Marshall also asserts that Appellants failed to present evidence showing Marshall rendered

7
  In reviewing Appellants’ petition, response to the summary judgment motion, brief and reply brief on appeal, we
observe with dissatisfaction that Appellants have provided a single citation to article 581-33 of the Texas Securities
Act in their petition. Nowhere in those documents do Appellants specifically cite to any provisions of the Act which
they allege the Marshall defendants have violated, nor do Appellants address the applicability of specific provisions of
the TSA to Marshall’s conduct or omissions. TEX. REV. CIV. STAT. ANN. art. 581-33 (West 2010).
                                                          21
substantial assistance in a primary violation of the TSA. We agree. The evidence clearly shows

that Marshall’s disclaimer letters to the partners warned: (1) that it had not audited or reviewed

the financial statements comprising compilation, and explained that a compilation is the mere

presentation of information that is the representation of management, upon which it did not

express an opinion or any other form of assurance; (2) that management had elected to omit

substantially all of the disclosures and the statement of cash flows required by generally-accepted

accounting principles; and (3) that the inclusion of the information omitted by management may

influence the user’s conclusions about the company’s financial condition. Moreover, there is no

evidence that Marshall knew that Tuinei was selling securities to Appellants before March 2005.

       Because Appellants have failed to provide more than a scintilla of evidence raising a

genuine issue of material fact, the trial court did not err in granting a no-evidence summary

judgment on Appellants’ TSA-violation claim. TEX. R. CIV. P. 166a(i); Smith, 288 S.W.3d at

424; Timpte Industries, Inc., 286 S.W.3d at 310; Navarro, 316 S.W.3d at 720-21. Appellants’

TSA challenge to the trial court’s summary judgment is overruled.

Exemplary Damages

       Appellants argue that they were entitled to exemplary damages but fail to cite to any legal

authority in support thereof as required by Rule 38.1(i). TEX. R. APP. P. 38.1(i) (the brief must

contain citations to authorities).      Appellants have failed to adequately brief this issue.

Accordingly, Appellants’ exemplary damages issue is overruled. Lozada v. Farrall & Blackwell

Agency, Inc., 323 S.W.3d 278, 287 (Tex. App. – El Paso 2010, no pet.) (appellant waived issue by

failing to analyze rules or law and failing to attempt to apply them to the facts at issue).

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                                        CONCLUSION

       The trial court’s judgment is affirmed.

                                             GUADALUPE RIVERA, Justice
April 24, 2013

Before McClure, C.J., Rivera, and Antcliff, JJ.
Antcliff, J., not participating

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