Court Opinion

ID: 4355648
Source: CourtListenerOpinion
Date Created: 2019-01-03 01:46:17.571411+00
Date Added: 2024-06-11T14:46:22.222786
License: Public Domain

Opinion filed December 31, 2018

                                     In The

        Eleventh Court of Appeals
                                   __________

                              No. 11-16-00177-CV
                                  __________

   KERWIN STEPHENS; THUNDERBIRD OIL & GAS, LLC;
  THUNDERBIRD RESOURCES, LLC; THUNDERBIRD LAND
 SERVICES, LLC; STEPHENS & MYERS, LLP; AND CHESTER
                  CARROLL, Appellants
                                       V.
   THREE FINGER BLACK SHALE PARTNERSHIP; TREK
  RESOURCES, INC.; TIBURON LAND & CATTLE, L.P.; L.W.
   HUNT RESOURCES, LLC; AND RICHARD RAUGHTON,
                       Appellees

                                  ———and———

 L.W. HUNT RESOURCES, LLC AND RICHARD RAUGHTON,
   INDIVIDUALLY AND AS SUCCESSOR IN INTEREST OF
        ARAPAHO ENERGY, LLC, Cross-Appellants
                                       V.
   KERWIN STEPHENS; THUNDERBIRD OIL & GAS, LLC;
  THUNDERBIRD RESOURCES, LLC; THUNDERBIRD LAND
 SERVICES, LLC; STEPHENS & MYERS, LLP; AND CHESTER
                CARROLL, Cross-Appellees

                     On Appeal from the 32nd District Court
                             Fisher County, Texas
                      Trial Court Cause No. DC-2013-0016

                                    OPINION
      This appeal is a continuation of the saga of a controversy that surrounds a
speculative project to buy oil and gas leases in Fisher County and to subsequently
sell, or flip, them at a profit. Chester Carroll; Kerwin Stephens; Thunderbird Oil &
Gas, LLC; Thunderbird Resources, LLC; Thunderbird Land Services, LLC; and
Stephens & Myers, LLP appeal from an adverse judgment entered against them after
a jury trial. The jury found against them on discrete theories and in various amounts
as to each Appellant in most of the questions that the trial court submitted to the jury;
the total amount of the jury’s award exceeded $96 million.              The trial court
subsequently entered a judgment in the approximate amount of $50 million. Part of
the money judgment was in favor of Three Finger Black Shale Partnership, some in
favor of L.W. Hunt Resources, LLC, and a portion in favor of Richard Raughton.
We reverse and render in part, affirm in part, and remand the cause.
      This case finds its genesis in 2011 when Raughton discovered that there were
indications of significant interest in oil and gas properties in Fisher County. This
interest corresponded to geological studies that Raughton had conducted. Raughton
holds a degree in geology with a concentration in engineering. The record contains
evidence that Raughton and his son, Dustin, had performed geological studies of the
shale formation that became the target of the oil and gas project that is the basis of
this lawsuit.

                                           2
      In addition to his degree in geology, Raughton also attended medical school
and practiced medicine until medical problems prevented him from continuing that
practice. During the time that Raughton practiced medicine, he participated
financially and otherwise in oil and gas deals, including some deals with Carroll.
When he closed his medical practice, Raughton began to focus on oil and gas related
business opportunities. One of the subjects of that focus was the Fisher County
project that is the subject of this lawsuit.
      Raughton contacted his friend Lowry Hunt and asked Hunt to participate with
him in a project to profit from the Fisher County oil play. Raughton and Hunt are
somewhat related; Dustin is married to Hunt’s daughter, Kellye.
      Raughton, Hunt, Dustin, and Kellye were the original participants in the
project. Later, Raughton asked Carroll to join the theretofore family group. Hunt
also knew Carroll, and he and Carroll had invested in wells together. Stephens, an
attorney, was also invited to participate in the project. Stephens had performed
various legal services for Raughton and some of his entities in other matters, and
they had also done deals together, including some in the Barnett Shale oil play.
Stephens had also represented one of Hunt’s entities. Additionally, the record
contains testimony that Raughton and Hunt asked Stephens to join the group because
he had legal expertise and could perform title work.
      Raughton, Hunt, Carroll, and Stephens, with an eye toward ultimately flipping
Fisher County oil and gas leases for a profit, each pledged to invest $125,000 (the
record contains testimony that Raughton put up Carroll’s share for him). They
continued to acquire oil and gas leases and options for oil and gas leases in Fisher
County. These parties did not enter into a written agreement; they operated on a
“handshake.”

                                               3
      By October 2011, Raughton, Carroll, Hunt, and Stephens needed additional
money to continue the project. As a source of additional funding, Carroll recruited
Tom Taylor, an oil-and-gas investor.
      In a letter agreement dated October 7, 2011, known as the “Alpine Letter
Agreement,” Raughton, Carroll, Hunt, Stephens, and Taylor set out the terms under
which they or their entities would proceed with the Fisher County project. Those
named in the Alpine Letter Agreement as members of the “Alpine Group” (and those
who signed for those members) were (1) Alpine Petroleum (by Carroll);
(2) Thunderbird Oil & Gas, LLC (by its sole member, Stephens); (3) Arapaho
Energy, LLC (by its manager, Raughton); and (4) L.W. Hunt Resources, LLC (by
its manager, Hunt). Paradigm Petroleum Corporation, acting by its president,
Taylor, was also a party to the Alpine Letter Agreement, but was not a member of
the “Alpine Group.” Paradigm and the members of the Alpine Group “accepted and
agreed to” the terms of the October 7 Alpine Letter Agreement at least by
October 18, 2011. Thunderbird Oil was the only Stephens entity that was a party to
the Alpine Letter Agreement.
      The Alpine Letter Agreement contained a provision that Paradigm was to
contribute $4,500,000 to the project and that the Alpine Group was to contribute,
collectively, $500,000. Paradigm’s contribution was not to become due until after
the Alpine Group had contributed its share for lease and option acquisitions and
related expenses. The Alpine Group agreed to transfer to Paradigm all the oil and
gas leases and options “that it holds” as described in exhibits to the Alpine Letter
Agreement. Future leases and options were to be taken in Paradigm’s name.
Decisions as to future leases and options, the scope of the project, and the terms of
any future leases and options were at Paradigm’s sole discretion and direction.
      The Alpine Letter Agreement contained provisions for the division of the
proceeds from sales. After payout, proceeds from sales of oil and gas leases were to
                                          4
be paid 82% to Paradigm and 18% to the “Alpine Group.” Although Thunderbird
Land was not a named party to the Alpine Letter Agreement, the named parties
specified that Thunderbird Land, Stephens’s wholly owned landman entity, was to
provide landman services for the project and that it would “charge its normal
customary rates” for those services.
      The Alpine Letter Agreement contained the following provision:
             It is not intended and it is agreed that the parties have not entered
       into and do not enter into any partnership, joint venture or agency
       relationship. None of the parties owe a fiduciary duty or obligation to
       the other and the relationship shall be considered as a normal
       customary commercial relationship with the ownership interest of the
       parties in and to the properties the subject of this letter agreement as
       provided herein.
      Taylor found investors who agreed to provide a portion of the $4,500,000
contribution that his company, Paradigm, had agreed to furnish under the terms of
the Alpine Letter Agreement. The investors that Taylor recruited signed what they
entitled “Participation Agreement.” The title to that document reads as follows:
                           PARTICIPATION AGREEMENT
                  THREE FINGER/BLACK SHALE PROSPECT
                           FISHER COUNTY, TEXAS
               Between Paradigm Petroleum Corporation and Partners
                              Dated October 18, 2011
      In the Participation Agreement, the investors referred to themselves in some
places as “Parties” and at other places as “Partners.” The term “Parties,” as defined
in the agreement, referred to “Paradigm and Partners.” Those persons or entities that
were designated in the agreement as “Partners” were the “Parties” that signed the
agreement as “Partners.” Paradigm was a “Party,” not a “Partner,” as evidenced by
(1) language such as, “Should any Partner and/or Paradigm acquire . . . ,” and (2) the
inclusion of Taylor’s name in the signature blocks of the Participation Agreement as
president of Paradigm, not as “Partner.” Michael E. Montgomery, as president of
                                           5
Trek Resources, Inc.; Collin Clark, for Tiburon Land and Cattle; and Will Lett were
among those whose names appeared in the signature blocks in the October 18
Participation Agreement as “Partners.” There were eight named “Partners” to the
Participation Agreement, including Tiburon, Trek, and Lett. Ultimately, Tiburon
and Trek pleaded that the Participation Agreement resulted in the creation of a
partnership known as Three Finger Black Shale Partnership. They pleaded that they
represented not only their own interests, but also Three Finger’s interest.
      By the terms of the Participation Agreement, Paradigm was to contribute
$1,000,000; each of the additional parties agreed to contribute $500,000 each. The
Participation Agreement contained other terms by which the signatories defined the
relationship among the parties to the agreement. Among those other terms was a
provision that Paradigm was to receive a 20% interest before payout and a 36%
interest after payout; each of the other parties was entitled to a 10% interest before
payout and an 8% interest after payout. Each of the parties was also entitled to its
percentage interest in any overriding royalties that were reserved in sales of the
leases.
      Through two additional documents, various changes were made to the
Participation Agreement.     One such change involved the amendment of the
Participation Agreement. Another of the changes came in an addendum to the
Participation Agreement made necessary by the need for additional cash for the
project. Both the original Participation Agreement and the amended one had
effective dates of October 18, 2011.
      Paradigm, one of Taylor’s companies, was listed as a “Party,” but not a
“Partner,” in the original Participation Agreement.          In both the amended
Participation Agreement and in the addendum, Lazy T Royalty Management, LTD,
another of Taylor’s companies, was substituted for Paradigm.            Furthermore,
Paradigm’s status was reduced to one of “agent for the Parties.” The Alpine Group,
                                          6
although not listed as a party in the original Participation Agreement, appeared as a
“Party” in the amended Participation Agreement and in the addendum to the
Participation Agreement. Although the basic nature of the relationship—except for
the changes relative to Lazy T and Paradigm—was not altered by the terms of either
the amended Participation Agreement or the addendum to the Participation
Agreement, the composition of the participants changed; the number of participants
and the percentages of participation remained the same.
      The record reveals that the Alpine Group did not make a $500,000
contribution in addition to the one provided for in the Alpine Letter Agreement;
neither does the record show that Carroll or Alpine Petroleum made any additional
contributions. The evidence also shows that Paradigm’s commitment was never
fully funded.
      In January 2012, Devon Energy Production Company, L.P. agreed, as
evidenced by a purchase and sale agreement executed by Devon and Paradigm, to
buy 25,000 net mineral acres of oil and gas leases for $900 per acre. The Devon
agreement was to be effective as of January 27, 2012, and the agreement included
an “option” provision whereby Devon agreed that it would not take oil and gas leases
from Fisher County mineral owners directly. In return, Devon was given the right
to purchase additional Fisher County acreage that Paradigm and associates might
acquire in the future.
      Although the Participation Agreement and subsequent amendments proposed
that 25,000 net mineral acres were involved in the project, Devon’s initial purchase
comprised leases on 30,000 net mineral acres, rather than 25,000 net mineral acres
as initially discussed. As a part of the Devon transaction, Devon was to make a
down payment of $2,500,000. Devon was to pay the balance of the $22,500,000
purchase price (subject to adjustment for title defects) upon delivery of an
assignment of the leases from Paradigm and Carroll to Devon.
                                          7
         Although Devon had purchased 30,000 net mineral acres, Devon personnel
told Taylor that Devon wanted more acreage. The record reflects that Taylor told
Stephens that his group of investors was not interested in taking the project any
further. Taylor said, however, that he was interested.
         Just before the initial Devon deal closed, Stephens, claiming that his deal with
the Alpine Group was not fair, renegotiated the deal with the Alpine Group. Under
the new deal, Stephens received a larger share of the profits from the sale of the oil
and gas leases than initially agreed upon. Raughton and Hunt allege that they later
learned that the reasons that Stephens gave them for needing a new agreement were
false.
         By correspondence dated June 29, 2012, Taylor addressed a letter to
“Partners.” In addition to various accounting documents and other documents
related to the project, the correspondence contained a “Termination of Participation
Agreement,” to be effective June 1, 2012. Basically, the agreement contained
provisions to the effect that the project contemplated in the participation agreements
was over, that everyone was satisfied with the project, and that everyone released
everyone else from all claims. Tiburon, Trek, and Lett did not sign the termination
agreement; all others did.
         The evidence shows that Taylor, Stephens, and Carroll, knowing that Devon
was interested in acquiring leases of more mineral acreage, continued to buy Fisher
County oil and gas leases, but they did so on their own, to the exclusion of the
“Partners” in the amended Participation Agreement and, to some extent, Raughton
and Hunt Resources. The record contains evidence that initially, at least, Taylor,
Stephens, and Carroll used money from the initial sale to Devon—money that
belonged to Plaintiffs—to fund the acquisition of the additional acreage. An exhibit
in the record indicates that an additional 27,700 gross acres had been identified as

                                             8
what was termed “Post Contract Acquired Leases.” Devon ultimately bought a total
of 43,602.79 acres.
        At some point in time, it came to light that Taylor, Stephens, and Carroll had
sold leases on more than the initial 30,000 acres but that the proceeds of those sales
were not shared with those involved in the participation agreements. When it did
not receive satisfactory responses to its inquiries about the additional acreage,
Tiburon filed this lawsuit.
        Tiburon was the only plaintiff named in the original petition. The named
defendants were Thomas J. Taylor; Lazy T Royalty Management, LTD; Lazy T
Royalty, LLC; Paradigm Petroleum Corporation; and the Alpine Group.
        In the second amended petition, Tiburon brought Trek into the lawsuit as an
additional plaintiff. In this petition, the plaintiffs added Chester Carroll; Kerwin
Stephens; Thunderbird Oil & Gas, LLC; and Thunderbird Resources, LLC as
additional defendants.
        Raughton and Hunt Resources intervened in the lawsuit and added
Thunderbird Land Services, LLC and Alpine Petroleum as defendants. Raughton
and Hunt Resources asserted claims against the defendants for breach of fiduciary
duty, fraud, and breach of contract. In an amended plea in intervention, Raughton
and Hunt Resources added Sarah Kate Jones, as the independent executrix of the
Estate of Thomas J. Taylor, deceased; they alleged that Taylor died on or about
July 18, 2014. They also added Stephens & Myers, LLP; Snowmass Energy Partners
Ltd.; and Gail Goebel Stephens.1 Raughton and Hunt added allegations of violations

        1
         In a footnote to a settlement agreement with Taylor and his entities, which we will discuss later,
reference is made to a merger whereby Lazy T Royalty Management, Ltd. was merged into Snowmass
Energy Partners, LP on January 2, 2013; Lazy T did not survive the merger. Gail Stephens was Stephens’s
wife at the time, and she and Stephens were undergoing a divorce. Before the trial began, the trial court
ruled that, as to Gail Stephens, “I’ll grant the Motion as to Separate Trials.”
                                                    9
of fiduciary duties that they claim were owed to them by Stephens and his law firm,
Stephens & Myers, as their attorneys.
        Tiburon and Trek filed various amended petitions. Three Finger, the alleged
partnership, was ultimately added as a plaintiff. The live petition upon which the
trial began was denominated “Plaintiffs’ Seventh Amended Petition.”
        In the seventh amended petition, Tiburon, Trek, and Three Finger alleged that
Three Finger was a partnership that was formed pursuant to the Participation
Agreement. Because the plaintiffs ultimately elected to recover on claims due to
Three Finger, rather than their individual claims, we will concentrate on the claims
of Three Finger.
        The crux of one of the plaintiffs’ complaints in this lawsuit is that Devon’s
down payment was used to show that Taylor, through his companies, had fully
funded his contributions under the participation agreements and the addendum,
when, in fact, he had not.       The percentage interests shown in the amended
Participation Agreement were based upon the percentage of contributions.
Therefore, giving Taylor, or his entities, credit as though he had fully funded his
contribution, when he had not, had the result of effectively reducing the percentages
that the other parties to the Participation Agreement rightfully would have been
entitled to if Taylor, or his entities, had not received credit for contributions never
made.
        Three Finger maintains that Lazy T and Paradigm failed to fully fund their
share of the required contributions and then concealed that failure and that, in doing
so, they breached their fiduciary duties to Three Finger relative to the sale of the
initial 30,000 acres to Devon. Three Finger additionally contends that Carroll,
Stephens, and the Thunderbird entities knowingly participated in that breach and
additionally that they were a part of a conspiracy to bring it about. Three Finger also
claims that Thunderbird Land wrongfully made charges to the initial project that
                                          10
were, in fact, attributable to subsequent deals from which the defendants wrongfully
excluded Three Finger.
      As far as the issues that control this appeal, Three Finger basically claims that
Taylor, through Paradigm and Lazy T, breached fiduciary duties owed to Three
Finger in connection with the calculation and distribution of the proceeds from the
sale of leases on the initial 30,000 acres. The miscalculation and distribution were
tied to Taylor’s entities’ failure to fully fund their share in the participation and were
also tied to erroneous charges made by Thunderbird Land.
      Three Finger claims that through creative, albeit dishonest, accounting, Taylor
made it appear that he, through his entities, had funded his required contribution
when he had not fully funded it. For instance, Three Finger says that the Devon
down payment was, in part, shown as contributions that Taylor’s entities were to
have made under the participation agreements and the addendum. As we have said,
Appellants argue that to give Taylor, or his entities, credit for contributions never
made would effectively reduce the percentages that Three Finger rightfully would
have been entitled to if Taylor, or his entities, had not received credit for
contributions never made.
      Three Finger also claims that Stephens, Thunderbird Oil, Thunderbird Land,
and Thunderbird Resources knowingly participated in those breaches related to
Three Finger. Additionally, Three Finger claims that there was a conspiracy to
accomplish those breaches. There are other claims, but, at this point, suffice it to
say that Three Finger basically takes the position that one or more of the appellants,
individually or collectively, had lied, cheated, and stolen from them and overtly,
covertly, silently, and via creative accounting procedures had attempted to execute
a cover-up of their ill-intentioned activities. The result of those activities, as well as
overcharges by Thunderbird Land, was that Three Finger did not receive its rightful

                                           11
share of the profits from the sale of either the initial deal for 30,000 acres or in
connection with the sales of additional acreage.
      Taylor died while this case was pending in the trial court. Before the trial of
this case commenced, Trek, Tiburon, Lett (although not a party to the lawsuit), Three
Finger, Hunt Resources, and Raughton (individually and purportedly as Trustee of
Arapaho Energy LLC) settled their claims against Taylor’s estate and his entities for
$4.4 million. The settlement agreement contains a statement that the effective date
of the agreement was July 27, 2015.
      After rather extensive pretrial matters, this case went to trial before a jury on
July 28, 2015, the day after the Taylor settlement. The clerk’s record indicates that
the clerk of the trial court filed the court’s charge to the jury on August 19, 2015. At
the conclusion of the three-week trial, the trial court gave the jury a 69-page jury
charge that contained 54 questions, many of which contained multiple parts.
Subsequently, the jury returned its verdict, and on March 30, 2016, the trial court
entered its judgment.
      In its judgment, the trial court reduced the award of the jury and entered a
final judgment of almost $50 million in favor of Three Finger and Intervenors,
including actual damages and exemplary damages. The total of the exemplary
damages, as found by the jury and as awarded by the trial court, were as follows:
against Stephens in the amount of $10,500,000; against Thunderbird Land in the
amount of $9,500,000; against Thunderbird Oil in the amount of $3,000,000; against
Thunderbird Resources in the amount of $3,000,000; and against Carroll in the
amount of $8,000,000, for a total in exemplary damages of $34,000,000. Obviously,
the jury was not overly enamored with Appellants.
      In its final judgment, the trial court awarded Three Finger actual damages of
$4,560,433 against Stephens, Thunderbird Oil, Thunderbird Land, and Thunderbird
Resources, jointly and severally, specifically for, as stated by the trial court in its
                                          12
judgment, “injuries sustained because of [A] the contribution failures of entities
affiliated with . . . Taylor and [B] Thunderbird Land’s role in determining and
charging expenses to the Project for the Initial 30,000 Acres.” The trial court did
not specify how much of the actual damage award was for contribution failures and
how much of the award represented actual damages suffered due to expense
overcharges. Alternatively, the trial court awarded that identical sum of money in
favor of Three Finger against Stephens, Thunderbird Oil, Thunderbird Land, and
Thunderbird Resources under its equitable powers to award “disgorgement and
restitution.”
       Further, in connection with the damages awarded to Three Finger in that
portion of its judgment related to the contribution failures of the Taylor entities and
Thunderbird Land’s role in determining and charging expenses to the project for the
initial 30,000 acres, the trial court awarded exemplary damages to Three Finger
against Stephens, as found by the jury, in the amount of $2,500,000 and also awarded
$1,500,000 in exemplary damages to Three Finger against Thunderbird Land, again,
as found by the jury.
       The trial court also awarded Three Finger a judgment against Stephens,
Thunderbird Land, and Carroll, jointly and severally, in the amount of $6,584,440
for damages that related to its exclusion from transactions over and above the initial
30,000 acres. Alternatively, the trial court awarded that identical sum of money in
favor of Three Finger against Stephens, Thunderbird Land, and Carroll under its
equitable powers to award “disgorgement and restitution.” Further, in connection
with the damages awarded to Three Finger against Stephens, Thunderbird Land, and
Carroll as related to the exclusion claim, the trial court awarded exemplary damages
to Three Finger against each of those Appellants in the amount of $5,000,000, as
found by the jury.

                                          13
      The jury also found the amounts that should be paid to Tiburon and Trek, as
individual entities, that resulted from damages caused by Appellants. However, the
trial court did not enter a judgment for individual recovery because Tiburon and
Trek—purported members of Three Finger—elected to recover damages that
resulted from breach of fiduciary duties owed to Three Finger.
      In its judgment, the trial court awarded other relief for claims that pertained
to Hunt Resources. It also entered a judgment for Raughton, individually. We
reserve our review of the merits of those claims until later in this opinion.
      In his original brief, Stephens categorizes his issues on appeal under nine
general headings.     Each of those headings contains subcategories.            In those
subcategories, Stephens has alleged 49 reasons why the trial court’s judgment is, as
to various constituent parts, in error. In six issues on appeal, Thunderbird Resources
offers 29 reasons to reverse the trial court. In eight issues on appeal, Thunderbird
Land offers 47 reasons, and Thunderbird Oil & Gas, 39 reasons. In two issues on
appeal, Stephens & Myers offers six reasons. Although the Thunderbird entities are
Stephens’s wholly-owned entities, because some of the claims are unique to a
specific entity, Stephens and each Thunderbird entity have filed separate briefs.
Additionally, as is provided for in this instance in Rule 9.7 of the Texas Rules of
Appellate Procedure, each of them has also incorporated, at least in part, the other
Stephens-related parties’ briefs by reference. TEX. R. APP. P. 9.7.
      Carroll has also filed a separate brief. In his brief, Carroll, under eight stated
issues on appeal, offers 20 reasons to reverse the judgment of the trial court.
      Raughton, as a cross-appellant, in two issues, complains about the trial court’s
summary judgment in which it ruled that he did not have standing to recover
damages to Arapaho, the entity through which he participated in the project. Again,
we will discuss those issues later in this opinion.

                                          14
      Because it implicates subject-matter jurisdiction, we must first resolve the
issue raised by Stephens and the Stephens-related entities that Three Finger did not
have standing to sue for any duties owed Paradigm and that Three Finger had no
standing to recover any “distributions” awarded in connection with the sale of the
initial 30,000 acres Three Finger counters that Stephens and his entities have
confused standing issues with capacity questions.
      Matters concerning subject-matter jurisdiction, such as standing, can be raised
in a motion for summary judgment. See Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d
547, 554 (Tex. 2000). A traditional motion for summary judgment can only be
granted if the defendant establishes as a matter of law that the plaintiff lacks subject-
matter jurisdiction. See TEX. R. CIV. P. 166a(c). In a plea to the jurisdiction as well
as in a traditional motion for summary judgment, the defendant bears the burden of
proving the trial court’s lack of jurisdiction. See Nixon v. Mr. Prop. Mgmt. Co., 690
S.W.2d 546, 548 (Tex. 1985) (holding “movant for summary judgment has the
burden of showing that there is no genuine issue of material fact and that it is entitled
to judgment as a matter of law”). When pleadings affirmatively negate the existence
of jurisdiction, a summary judgment based on jurisdictional grounds may be granted
without allowing an opportunity to amend. Green Tree Servicing, LLC v. Woods,
388 S.W.3d 785, 793 (Tex. App.—Houston [1st Dist.] 2012, no pet.).
      A party must have both standing to sue and capacity to sue. Austin Nursing
Ctr., Inc. v. Lovato, 171 S.W.3d 845, 848 (Tex. 2005). Standing is a component of
subject-matter jurisdiction, and a plaintiff must have standing to maintain a suit. Tex.
Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 445–47 (Tex. 1993). We
review standing issues de novo. Id. at 445. Parties may raise a standing issue for
the first time on appeal; it cannot be waived. Lovato, 171 S.W.3d at 848. “A plaintiff
has standing when it is personally aggrieved, regardless of whether it is acting with
legal authority; a party has capacity when it has the legal authority to act, regardless
                                           15
of whether it has a justiciable interest in the controversy.” Id. at 848–49 (quoting
Nootsie, Ltd. v. Williamson Cty. Appraisal Dist., 925 S.W.2d 659, 661 (Tex. 1996)).
The controversy between the parties must be real and one that will be determined by
the “judicial declaration” sought. Lovato, 171 S.W.3d at 849 (quoting Nootsie, 925
S.W.2d at 662). When we review a standing issue for the first time on appeal, we
are to construe the petition in favor of the party who files the petition. City of
Laredo v. R. Vela Exxon, Inc., 966 S.W.2d 673, 679 (Tex. App.—San Antonio 1998,
pet. denied).
         In Spurgeon, we referred to the following language from the Texas Supreme
Court in Lovato:
         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, whereas the issue of capacity “is conceived of as a
         procedural issue dealing with the personal qualifications of a party to
         litigate.” 6A Charles Alan Wright, Arthur R. Miller, and Mary Kay
         Kane, Wright, Miller & Kane, Federal Practice and Procedure: Civil
         2d § 1559, at 441 (2d ed. 1990).
Spurgeon v. Coan & Elliott, 180 S.W.3d 593, 597 (Tex. App.—Eastland 2005, no
pet.) (quoting Lovato, 171 S.W.3d at 848).
         The court in Nauslar said this about standing:
         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 v. Coors Brewing Co., 170 S.W.3d 242, 249 (Tex. App.—Dallas 2005, no
pet.).

                                             16
      In the absence of a breach of some legal right belonging to a plaintiff, that
plaintiff has no standing to litigate. Nauslar, 170 S.W.3d at 249. “Only the person
whose primary legal right has been breached may seek redress for an injury.” Hall v.
Douglas, 380 S.W.3d 860, 873 (Tex. App.—Dallas 2012, no pet.).
      As opposed to standing, capacity involves the parties’ legal authority to go
into court to prosecute or defend a suit. El T. Mexican Rests., Inc. v. Bacon, 921
S.W.2d 247, 249–50 (Tex. App.—Houston [1st Dist.] 1995, writ denied). Capacity
must be challenged by a verified pleading, or it is waived. TEX. R. CIV. P. 93;
Spurgeon, 180 S.W.3d at 597.
      In Allied Chemical Co. v. DeHaven, 824 S.W.2d 257, 264 (Tex. App.—
Houston [14th Dist.] 1992, no writ), the court held that one who was a partner at the
time that a breach of contract and conspiracy occurred had standing to sue on behalf
of the partnership involved there. Rule 28 of the Texas Rules of Civil Procedure
provides: “Any partnership, unincorporated association, private corporation, or
individual doing business under an assumed name may sue or be sued in its
partnership, assumed or common name for the purpose of enforcing for or against it
a substantive right, but on a motion by any party or on the court’s own motion the
true name may be substituted.” TEX. R. CIV. P. 28.
      Tiburon and Trek alleged that they were partners in Three Finger. When we
liberally construe the live petition, we conclude that Tiburon and Trek had standing
to pursue the causes of action in the name of Three Finger. The right to pursue
claims does not automatically equate to an ultimately successful pursuit. If we are
incorrect that the issue is not one of standing but, rather, is one of capacity, then
Appellants waived that issue when they failed to raise it in the trial court. In either
event, these parties were properly before the court. We overrule Appellants’ issues
in which they challenge the matter of standing as it relates to Three Finger.

                                          17
      The contrary is true with respect to Raughton’s standing to assert claims for
Arapaho’s damages. In a partial summary judgment, the trial court ruled that
Raughton could not recover for claims that belonged to Arapaho. In a cross-appeal,
Raughton claims that the trial court erred when it held that he did not have standing
to recover those claims.
      The trial court’s partial summary judgment contained this language: “The
Court hereby dismisses with prejudice to refiling all claims brought by Intervenor
Richard Raughton in his capacity as alleged successor in interest to Arapaho Energy,
LLC” (emphasis added).           Raughton asserts that the supplemental motion for
summary judgment that Appellants filed was based on standing, not capacity, and
that because the order refers to capacity and not standing, the trial court entered the
summary judgment on a ground not specified in the motion. Therefore, Raughton
argues, the trial court erred.
      Raughton correctly states the rule that a trial court cannot grant a summary
judgment on grounds that the movant did not specify in his motion. See Stiles v.
Resolution Tr. Corp., 867 S.W.2d 24, 26 (Tex. 1993) (a summary judgment cannot
be affirmed on grounds not expressly set out in the motion or response).
      Stephens and the Thunderbird entities counter that the trial court used the term
“capacity” generically, and not as a legal concept, to “mirror Raughton’s own
pleadings, and functions to identify the claims to which Raughton lacks standing.”
Stephens and the Thunderbird entities also call it to our attention that standing was
the only argument presented at the hearing on the motion for summary judgment and
that, at the end of the hearing, the trial court granted the summary judgment based
on the “arguments,” “motions,” and “response”—all of which pertained exclusively
to standing. They further maintain that the “successor in interest” reference in the
summary judgment refers to “how Raughton pled his case—seeking recovery for
Arapaho’s claims as a ‘successor in interest’—and was carefully worded to reflect a
                                           18
dismissal of only those claims.” They say that the language was necessary to protect
Raughton’s individual claims related to an alleged oral partnership and his claims
related to a purported attorney–client relationship between himself, Stephens, and
Stephens and Myers. Carroll agrees with the substance of the argument presented
by Stephens and the Thunderbird entities. We agree with Stephens, the Thunderbird
entities, and Carroll. The trial court did not grant summary judgment on a ground
not raised in the supplemental motion for summary judgment.
      In any event, standing is a component of subject-matter jurisdiction. Because
standing is jurisdictional and cannot be waived, it may be raised for the first time on
appeal by the parties or by the court. Tex. Air Control Bd., 852 S.W.2d at 445–46;
Martin v. Clinical Pathology Labs., Inc., 343 S.W.3d 885, 887–88 (Tex. App.—
Dallas 2011, pet. denied).
      We hold that “capacity,” as used by the trial court, was merely a reference to
the nature in which Raughton pleaded the claims that the trial court dismissed and
was not a reference to the character of the challenge made by Appellants. We
overrule Raughton’s first issue on his cross-appeal.
      We now proceed to the merits of the standing issue as it pertains to Raughton.
As the Fisher County project developed, Raughton and his wife, Lisa (later Lisa
Burdick), were involved in divorce proceedings in Parker County. The trial court
there entered a decree of divorce on February 17, 2012. In addition to other
properties divided between the parties, the trial court awarded Richard Raughton
“[a]ll the parties’ interest in any royalty or mineral interest acquired by Richard
Raughton from and after September 1, 2011 using the funds he removed from First
Western Securities in September 2011 (West Texas properties).” It is that portion
of the divorce decree through which Raughton claims to be the “successor in
interest” to any potential causes of action that Arapaho might have in connection
with the Fisher County project.
                                          19
      As we have said, Arapaho Energy, LLC was the entity through which
Raughton participated in the Fisher County project. In the divorce decree, Burdick
was ordered to dissolve, in addition to other companies, Arapaho Energy, LLC.
When Burdick attempted to dissolve Arapaho, she discovered that the charter under
which it was formed in the State of Nevada had been forfeited for failure to pay dues.
      In 2012, and after Raughton and Burdick were divorced, Arapaho, by various
assignments, transferred one-half of its interests in certain oil and gas leases to
Raughton and one-half to Burdick. Raughton signed for Arapaho, as a member, in
the transfer of interests to Burdick, and Burdick signed for Arapaho, as a member,
in the transfer of interests to Raughton. These assignments did not convey any
causes of action that might be owned by Arapaho, nor did they assign the oil and gas
interests that are at issue in this case. Raughton claimed, however, that he did not
need any assignments from Arapaho or Burdick on the “West Texas project” because
Burdick “gave that up in the divorce.” On May 1, 2015, Burdick, as a member of
Arapaho Energy, LLC, transferred, to herself, basically all rights in any causes of
action owned by Arapaho that were related to deals in Fisher, Stonewall, and Scurry
Counties.
      The interests with which we are concerned in this appeal that were purportedly
awarded to Raughton in the divorce were not property of the community; the
property belonged to Arapaho Energy, a limited liability corporation.           Assets
belonging to a third party are not part of the marital estate. See Vallone v. Vallone,
644 S.W.2d 455, 458 (Tex. 1982) (absent circumstances showing that a corporation
is a spouse’s alter ego, a court may only award a spouse’s interest in the corporation,
not specific corporate property); McKnight v. McKnight, 543 S.W.2d 863, 867–68
(Tex. 1976) (trial court had no authority to divide spouse’s partnership assets; court
could only divide spouse’s partnership interest). The divorce court awarded “the

                                          20
parties” interests; the parties owned no interest in the Fisher County project—
Arapaho did.
      The divorce court attempted to divide the assets belonging to Arapaho in a
suit to which Arapaho was not a party; it did not divide the interest in the corporation.
See Vallone, 644 S.W.2d at 458. The cause of action for injury to Arapaho belonged
to Arapaho. A cause of action for injury to a corporation’s business lies with the
corporation, not a shareholder. Faour v. Faour, 789 S.W.2d 620, 622 (Tex. App.—
Texarkana 1990, writ denied).
      Corporate stockholders cannot recover personally for a wrong done only to
the corporation. That is true even if the stockholder may be injured by the wrong.
Linegar v. DLA Piper LLP (US), 495 S.W.3d 276, 279 (Tex. 2016). Until a
corporation is dissolved, it maintains legal title to its assets. Shareholders have
beneficial title only and cannot bring a corporate action in their own name. El T.,
921 S.W.2d at 253.
      However, when a corporate charter is forfeited, a shareholder may sue upon a
cause of action belonging to the corporation. Id. at 251. But the suit must be a
derivative one; the shareholder must file it on behalf of the corporation, not in his
own name. Id. at 253. Bacon, the plaintiff in El T., sought to recover as the successor
in interest to a corporation whose charter had been forfeited for failure to pay
franchise taxes. The court held that Bacon had no standing to bring the suit
individually. Id. Because its charter had merely been forfeited, the corporation had
standing but no capacity to bring the suit. The court opined that the best that Bacon
could do would be to sue on behalf of the corporation; he did not do that. Id.
      The outcome is different in those cases in which the plaintiff alleges that the
wrongdoer owed individual duties to him and that those duties were breached and
caused him damages. Linegar is such a case. There, Linegar sued DLA Piper for
legal malpractice, negligent misrepresentation, breach of fiduciary duty, breach of
                                           21
contract, unjust enrichment, and deceptive trade practices. Linegar, 495 S.W.3d at
278. Linegar pleaded, tried, and submitted the case to the jury upon the theory that
DLA Piper individually wronged him when it advised him personally. Id. at 282.
The concept was that DLA Piper owed him duties personally, that it breached those
duties, and that it thereby caused him individual damage. Id. at 281. The jury
findings were in favor of Linegar individually. Because he was asserting his own
cause of action, Linegar had standing to bring the lawsuit. Id. at 277.
          Gonzalez involved a corporation whose charter had been forfeited. Two
sisters who were involved in the corporation hired a third sister as company manager
to handle billings, payouts, and deposits. Gonzalez v. Gonzalez, No. 05-16-00238-
CV, 2017 WL 3599773, at *1 (Tex. App.—Dallas Aug. 22, 2017, no pet.) (mem.
op.). That did not work out well, and the two non-managing sisters sued the third
sister.     They filed the lawsuit derivatively on behalf of the corporation, not
individually. The court held that the plaintiff sisters had standing to assert the
corporation’s cause of action as representatives of the corporation. Id. at *2. The
corporation no longer had the legal right to assert its causes of action, but, as
beneficial owners, the plaintiff sisters could assert those claims for the corporation.
Id.
          In Linegar, the plaintiff clearly pursued his own causes of action independent
of any claim that the corporation might have had. In Gonzalez, the plaintiffs plainly
sought relief not for an independent wrong done to them, as Linegar did, but
derivatively on behalf of the corporation. Bacon, on the other hand, specifically
sought relief as the successor in interest to his corporation. As the court in El T.
held, Bacon had no standing to do that.
          In the case before us, Raughton states in his live pleading: “Richard Raughton
. . . is an individual . . . . Richard Raughton is the successor in interest to Arapaho
Energy, LLC with respect to the claims being asserted herein.” Arapaho is not a
                                            22
party to this lawsuit, and Raughton does not bring the suit as a derivative one on
Arapaho’s behalf. Under the authorities cited, Raughton did not have standing to
assert Arapaho’s claims individually, and the trial court did not err in so holding.
We overrule the second issue raised by Raughton in his cross-appeal.
       We now turn our attention to claims raised by Appellants as to the merits of
this appeal. First, we will address concerns related to Three Finger, and then we will
discuss issues directed at the Hunt Resources and Raughton claims.
       As we have stated, Tiburon and Trek elected to recover for Three Finger rather
than individually. Although the parties have, through their attorneys, presented
many arguable issues to us, we believe that there is a core issue that we need to
decide first. That issue is one in which Appellants claim that there is no evidence,
or factually insufficient evidence, to prove that Three Finger was a partnership.
Insofar as this issue is concerned, the first question that the trial court asked the jury
in its jury charge was as follows: “Was the Three Finger Black Shale Group a
partnership?” The jury answered this question in the affirmative.
       Appellants maintain that, if Three Finger is not a partnership, then it cannot
recover as such and that we should, therefore, render a take-nothing judgment
against Three Finger. Alternatively, Appellants claim that the evidence is factually
insufficient to prove that Three Finger was a partnership and that we should remand
the case to the trial court.
       We will first examine the legal sufficiency of the evidence. When we review
a legal sufficiency or no-evidence challenge, we must determine whether the
evidence at trial would enable reasonable and fair-minded people to reach the verdict
under review. City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005). We must
review the evidence in the light most favorable to the challenged finding and credit
any favorable evidence, if a reasonable factfinder could, and disregard any contrary
evidence unless a reasonable factfinder could not. Id. at 821–22, 827. We will
                                           23
sustain a no-evidence or legal sufficiency challenge only when (1) the record
discloses a complete absence of a vital fact, (2) the court is barred by rules of law or
evidence from giving weight to the only evidence offered to prove a vital fact, (3) the
only evidence offered to prove a vital fact is no more than a mere scintilla, or (4) the
evidence conclusively establishes the opposite of a vital fact. Id. at 810 (citing
Robert W. Calvert, “No Evidence” and “Insufficient Evidence” Points of Error, 38
TEX. L. REV. 361, 362–63 (1960)); Pendergraft v. Carrillo, 273 S.W.3d 362, 365–
66 (Tex. App.—Eastland 2008, pet. denied). More than a scintilla of evidence exists
when the evidence supporting the finding, as a whole, 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). Less than a scintilla
of evidence exists when the evidence is so weak as to do no more than create a mere
surmise or suspicion of a fact. King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 751
(Tex. 2003).
      Chapter 152 of the Texas Business Organizations Code now governs the
nature and creation of partnerships in Texas. TEX. BUS. ORG. CODE ANN. ch. 152
(West 2012 & Supp. 2018). A partnership is defined in the Code as “an association
of two or more persons to carry on a business for profit as owners . . . regardless of
whether: (1) the persons intend to create a partnership; or (2) the association is called
a ‘partnership,’ ‘joint venture,’ or other name.” Id. § 152.051(b).
      In Section 152.052 of the Code, the legislature has provided a guide for use in
making a determination as to whether the parties created a partnership under the
facts of a particular case:
            (a) Factors indicating that persons have created a partnership
      include the persons’:
                     (1) receipt or right to receive a share of profits of the
               business;

                                             24
                      (2) expression of an intent to be partners in the
                business;
                      (3) participation or right to participate in control of
                the business;
                        (4) agreement to share or sharing:
                                 (A) losses of the business; or
                              (B) liability for claims by third parties
                        against the business; and
                      (5) agreement to contribute or contributing money
                or property to the business.
Id. § 152.052. The trial court’s charge included these factors in the jury question in
which the trial court asked the jury whether the Three Finger Black Shale Group was
a partnership.
        When we review these factors, we apply a totality-of-the-circumstances test.
See Ingram v. Deere, 288 S.W.3d 886, 897–98 (Tex. 2009).2 The question of
whether a partnership exists under the Code should be answered only after we
consider all the evidence that bears on all the partnership factors. Id. “No single
fact may be stated as a complete and final test of partnership.” Id. at 896 (quoting
Justice Jack Pope’s opinion in Davis v. Gilmore, 244 S.W.2d 671, 673 (Tex. Civ.
App.—San Antonio 1951, writ ref’d)).
        Three Finger relies on the Participation Agreement as the document that
birthed it as a partnership. We will examine that agreement, as well as other
evidence that bears on the partnership issue, in accordance with the well-established
standard for a legal sufficiency review that we have set out above.
        Appellants challenge whether the parties received or had a right to receive
profits from the business. They argue that Three Finger, as an entity, never received

        2
           The court in Ingram reviewed that case under the Texas Revised Partnership Act, which was in
effect at the time relevant to that case. See former TEX. REV. CIV. STAT. art. 6132b (1993). The court noted
that the rules for forming a partnership under Chapter 152 of the Texas Business Organizations Code and
those in the TRPA “are substantially the same.” Ingram, 288 S.W.3d at 894 n.4.
                                                    25
any profits to share. All distributions came directly from Paradigm to the individuals
listed as Parties, not to a partnership first and then distributed to its partners.
       “A partnership is an entity distinct from its partners.” BUS. ORG. § 152.056.
As provided in the participation agreements, if an individual party listed in the
agreement paid the amount shown in the agreement, then that individual would own
its percentage interest in the leases rather than the alleged partnership. Additionally,
that individual party would also own its interest in any overriding royalty interests
and carried working interests that might be reserved when the leases were sold.
Within ten days after a sale of leases, Paradigm was to “reimburse the Participants
their Before Payout Interest share of the Acquisition Costs.” Paradigm was also to
“pay the Parties their After Payout Interest share of any profits” and to assign
overriding royalty interests and carried working interests to “each Partner.” The
individual “Parties” earned the interests and received the money and the
assignments, not a partnership.
       Three Finger’s position is not enhanced by the fact that Paradigm was named
as an agent in the agreement. There, the parties specifically provided for Paradigm
to act as an agent for the “Parties,” not a partnership. Per the agreement, Paradigm
was to take the leases in its name and to “contract for and facilitate the sale of the
Leases for and on behalf of the Parties,” not for an unnamed partnership. The record
reveals that is in fact what happened. In accordance with the agreement that the
parties made, distributions were not made to a partnership, but to the individual
parties, and the overriding royalty interests were also made directly to individuals—
not to a partnership as partnership property.
       Carroll takes the position that, to prove that a partnership exists, there must be
evidence that the parties were to participate in the profits and share them as
principals of the business, as opposed to sharing in the interest as compensation
under an agreement to share profits. Here, he argues, the parties to the participation
                                            26
agreements did not participate in the profits as principals or joint owners. We agree.
Although the evidence to which we have referred shows that the parties were
investors in the project, it does not show that the parties participated in the profits as
owners or principals of a business. See Gutierrez v. Yancey, 650 S.W.2d 169, 172
(Tex. App.—San Antonio 1983, no writ) (parties must participate in the profits and
share them as principals rather than under a profit-sharing agreement).
      As they have with the other factors set forth in the Code, Appellants argue that
there has been no showing of any expression of an intent to be partners. Ingram is
instructive of the boundaries that we are to observe in a review of this issue. Those
boundaries are the following: the question is separate and apart from a review of the
other factors; we are to consider only that evidence that is not specifically probative
of other factors; and the terms used by the parties do not control—except that we
consider the terminology used by “the putative partners,” and the context in which
any statements were made, as well as who made the statements and to whom the
statements were made. Ingram, 288 S.W.3d at 899–900.
      In the participation agreements, the Parties (excluding Lazy T) refer to
themselves as “Partners.” In Ingram, the court noted that the term “partner” is a
term that “is regularly used in common vernacular and may be used in a variety of
ways.” Id. (citing WEBSTER’S NEW UNIVERSAL UNABRIDGED DICTIONARY 1626 (1st
ed. 1996)). When a person refers to another as “partner,” that fact alone does not
signal the expression of an intent to form a partnership. Id. Terms used by the
parties in an agreement are not necessarily dispositive when we determine the
substance of the relationship; those terms do not control the nature of the
relationship. Coastal Plains Dev. Corp. v. Micrea, Inc., 572 S.W.2d 285, 288 (Tex.
1978).
      In his brief, when Carroll discusses the use of the word “Partner” in the
participation agreements, he directs us to testimony by Lett. In his testimony, Lett
                                           27
said that when his company, Ventex Oil and Gas, “put[s] together a deal and go sell
it” his key employees get ten percent of the profit. He refers to them as “partners”
even though they are merely getting a percent of the profits, but they are not owners.
      The context and circumstances surrounding the conduct of the project
contradicts a claim that the parties expressed an intent to form a partnership. Here,
as pointed out by Carroll and by Stephens and his related entities, there is no
evidence that the alleged partnership ever had a bank account, that any of the putative
partners ever wrote checks on behalf of a partnership—or for that matter had a right
to write checks, that any formal filings were made to the State of Texas in connection
with the formation of a partnership, that any partnership tax returns were filed, that
any K-1s were ever provided by the alleged partnership, or that the alleged
partnership ever executed any operating agreements. Carroll refers us to a part of
Lett’s testimony. Lett was asked: “Did the joint venture have a bank account?” He
responded that he did not know. He further testified that he had “no idea” whether
it filed a federal tax return. He admitted that, if that were the case, he would have
received a K-1, but he said that he did not receive one. Lett also testified that he was
not aware of any filings with the Texas Secretary of State “on behalf of this joint
venture.” In Hoss v. Alardin, the Dallas Court of Appeals noted that the absence of
partnership tax returns, a separate federal tax identification number for the alleged
partnership, or K-1 tax forms for the alleged partners were evidentiary items
contradicting the existence of a partnership that a jury could not reasonably
disregard. 338 S.W.3d 635, 649 (Tex. App.—Dallas 2011, no pet.) (citing Wilson,
168 S.W.3d at 827, for the proposition that courts must “disregard contrary evidence
unless reasonable jurors could not”).
      The evidence also shows that the parties made various assignments of a part
of their interests in the project. For instance, Appellants point to one such transfer
by Tiburon. Tiburon transferred part of its interest, and in the assignment, it referred
                                          28
to the interest as “investment” or “participation investment.” The assignment does
not contain the designation “partner” or “partnership” but, rather, purports to be
made by an individual entity, Tiburon. We note, however, that in a subsequent, post-
lawsuit “memorandum of understanding” between Tiburon and its assignees,
Tiburon changed course and referred to the prior assignment as a transfer of its
“partnership interest.”
      Next, Carroll, Stephens, and the Thunderbird entities contend that the Parties
had no right to participate in the control of Three Finger. Stephens and the
Thunderbird entities cite to Ingram for the proposition that “[t]he right to control a
business is the right to make executive decisions.” Ingram, 288 S.W.3d at 901. They
argue that the parties listed in the participation agreements had no control and that
Taylor had exclusive control.
      In Ingram, the court referred to some of the factors that may be considered on
the issue of control: the exercise of authority over business operations; the right to
write checks on the business checking account; access to the books of the business;
and the receipt of assets and monies of the business. Id. at 901–02 (citing Brown v.
Cole, 291 S.W.2d 704, 710 (Tex. 1956); Guerrero v. Salinas, No. 13-05-00323-CV,
2006 WL 2294578, at *11 (Tex. App.—Corpus Christi Aug. 10, 2006, no pet.)
(mem. op.); Tierra Sol Joint Venture v. City of El Paso, 155 S.W.3d 503, 508 (Tex.
App.—El Paso 2004, pet. denied); Price v. Wrather, 443 S.W.2d 348, 351–52 (Tex.
Civ. App.—Dallas 1969, writ ref’d n.r.e.)).
      Lett, one of the Parties to the Participation Agreement, testified that he did not
know whether he had any rights to determine the acreage that would be bought, that
he had no right to direct the amount of acreage that Taylor could buy, that he could
not tell Taylor what to pay for acreage that he acquired, that he could not tell Taylor
who to sell the acreage to, and that he had no right to write checks for the group (as
far as he knew).      Michael Montgomery, another Party to the Participation
                                          29
Agreement, testified that he “[d]idn’t want to” control the leases that Taylor
acquired. He also testified that those matters were within Taylor’s control.
      There is no evidence in the record that any of the signatories to the
participation agreements could write checks in connection with the project, that they
received any of the assets or monies related to the project from Three Finger, or that
they had access to the books related to the project except for sporadic reports
furnished them—in fact they had accounting questions that went unanswered. The
receipt of sporadic information is not an indication of control. Ingram, 288 S.W.3d
at 902.
      As a matter of control, in accordance with the agreement, neither Lazy T nor
Paradigm could sell any leases to third parties for less than the acquisition costs
without the approval of the “Partners.” We believe that this one provision does not
show that the “Partners” had the right to make executive decisions in the operation
of the project; the signatories to the agreement lodged control of the project solely
in Taylor through his entities. We hold that the Appellees have not established that
the parties either participated in or had the right to participate in the control of the
project contemplated in the participation agreements.
      Appellants point out that the evidence in the record fails to show that there
was an agreement to share losses and to share liabilities from claims by third parties
against the business. The Business Organizations Code specifically provides that an
agreement to share losses is not necessary to the creation of a partnership. BUS. ORG.
§ 152.052(c).     However, the existence of such an agreement, although not
dispositive, would be some support for Appellees’ claims. See Ingram, 288 S.W.3d
at 902. Here, Appellants contend that, as a matter of law, there was no such
agreement and that, in accordance with the specific terms of the participation
agreements, the investors were at risk of losing only the amount of their investment.

                                          30
      Lett was asked: “Besides that $600,000 total going down the drain because
the joint venture just didn’t work out, besides that, did you see any other capital that
Ventex stood to lose under the joint venture?” Lett responded that he did not.
Similarly, Montgomery testified that he could not lose more money than his
$600,000 investment. There is no evidence of an agreement to share in the losses
that might arise in connection with the project. There is no evidence that the parties
ever discussed liability to third parties, and the subject is not covered in the
participation agreements. These considerations do not assist Appellees in meeting
their burden to establish the existence of a partnership.
      Finally, Appellants contend that the parties did not contribute to the project as
partners. Some of those named as “Parties” did make contributions to the project;
those funds were to be contributed by the various investors directly to Paradigm by
wire transfer. The Participation Agreement provides: “Each Partner must execute
this Agreement and wire its respective sum of money to Paradigm, as agent
($500,000) no later than Noon on October 19, 2011 or it shall not be a Party to
this Agreement.” The possibility of exclusion upon failure to contribute is evidence
more akin to contributions as investors, not partners. Also, as noted by Carroll, no
additional contributions were made by the Alpine Group or Carroll under the
participation agreements; any contributions that they made were made pursuant to
the Alpine Letter Agreement. If we are wrong, and if Appellants have established
the contribution element, as stated in the following paragraph, even conclusive proof
of one element is generally not enough to prove the existence of a partnership.
Ingram, 288 S.W.3d at 904.
      The court in Ingram noted the difficulty encountered in the application of the
totality-of-the-circumstances test and set forth a continuum along which the cases
might fall. Id. at 898. Normally, proof of more than one factor is necessary to
establish a partnership. Id. at 904. As we have said, in general, even conclusive
                                          31
evidence of only one factor will be insufficient to establish the existence of a
partnership. At the other end of the spectrum, a partnership is established as a matter
of law if there is conclusive evidence of all five factors. Id. But when there is no
evidence of any of the factors, recognition of a partnership is precluded. Id. Of the
five factors, the first and third factors (the receipt or right to receive a share in the
profits and the participation or right to participate in the control of the business) are
the most important. Id. at 896; Shafipour v. Rischon Dev. Corp., No. 11-13-00212-
CV, 2015 WL 3454219, at *6 (Tex. App.—Eastland May 29, 2015, pet. denied)
(mem. op.). Consequently, depending on the facts developed in it, each case falls
somewhere along the continuum.
      Regardless of the version of the document that underlies Three Finger’s
lawsuit, they all bear the title “Participation Agreement” as opposed to “Partnership
Agreement.” We believe that the agreement is just what its title purports it to be: an
agreement whereby the parties agree to participate in a project as investors, not
partners. Headings and titles can supply context and can also inform meaning. The
title of an instrument “like every other portion of a contract, may be looked to in
determining its meaning.” RSUI Indem. Co. v. The Lynd Co., 466 S.W.3d 113, 121
(Tex. 2015) (quoting E.H. Perry & Co. v. Langbehn, 252 S.W. 472, 474 (Tex.
1923)).
      Although there may be some evidence of one or more of the factors that we
are to consider, that evidence in and of itself, when we consider the totality of the
circumstances, is no more than a scintilla to support a finding that a partnership
exists. Accordingly, we sustain Appellants’ issues on appeal wherein they challenge
the claim that Three Finger was a partnership because we determine that there is no
evidence of a partnership.
      The trial court’s judgment, at the election of Appellees, was in favor of Three
Finger, not the individual parties. Because the trial court’s judgment was in favor
                                           32
of a partnership to which Appellants could owe no fiduciary duties because, as a
matter of law, it did not exist, we reverse the judgment of the trial court insofar as
Three Finger is concerned and render judgment that Three Finger take nothing in its
suit against Stephens, Thunderbird Land, Thunderbird Oil and Gas, Thunderbird
Resources, and Carroll. See AVCO Corp., Textron Lycoming Reciprocating Engine
Div. of AVCO Corp. v. Interstate Sw., Ltd., 251 S.W.3d 632, 662 (Tex. App.—
Houston [14th Dist.] 2007, pet. denied) (citing TEX. CIV. PRAC. & REM. CODE ANN.
§ 41.004(a) (Vernon Supp. 2007); Fed. Express Corp. v. Dutschmann, 846 S.W.2d
282, 284 (Tex. 1993) (per curiam)).
      In its judgment, when the trial court awarded damages to Three Finger in the
amount of $4,560,433 in connection with “[A] the contribution failures of entities
affiliated with Thomas J. Taylor and [B] Thunderbird Land’s role in determining
and charging expenses to the Project for the Initial 30,000 Acres,” it awarded that
amount “as actual damages . . . or, in the alternative, as amounts subject to
disgorgement and restitution pursuant to the equitable powers of this Court.”
Additionally, the trial court awarded $6,584,440 in damages to Three Finger related
to its exclusion from deals related to the sales of leases on acreage in excess of the
initial 30,000 acres. The trial court awarded that amount “either as actual damages
. . . or, in the alternative, as amounts subject to disgorgement and restitution pursuant
to the equitable powers of this Court.”
      The purpose of the equitable remedy of disgorgement is to protect
relationships of trust. ERI Consulting Eng’rs, Inc. v. Swinnea, 318 S.W.3d 867, 873
(Tex. 2010); Burrow v. Arce, 997 S.W.2d 229, 241 (Tex. 1999). Here, in the absence
of proof of such a relationship, and a breach of the duties arising from it, we hold
that the trial court erred when it awarded Three Finger damages in the form of
disgorgement.

                                           33
      We must reverse the alternative award of disgorgement to Three Finger for
another reason. A trial court is without authority to award disgorgement contingent
upon a reversal of the award of actual damages. In Braly, the trial court entered a
judgment in which it provided: “In the event such awards of attorneys fees should
be reversed or reduced on appeal, for any reason, the Court finds that plaintiff should
recover exemplary damages, from defendant, as an alternative to the award of
attorneys fees, in an amount equal to such award of attorneys fees.” Braly v. Wade,
No. 06-98-00057-CV, 1999 WL 356064, at *5 (Tex. App.—Texarkana May 13,
1999, no pet.) (not designated for publication).
      On appeal, the Texarkana court reformed the trial court’s judgment to delete
the alternative award of exemplary damages. In its opinion, the court relied upon
and quoted from Ferguson:
             The jurisdiction of courts of appeals to review causes tried in the
      lower courts includes the authority to reverse the judgments of those
      courts, if harmful error is found, and the specific duty in such instances
      to render the judgment that the court below should have rendered,
      except when it is necessary to remand. Since the appellate jurisdiction
      of courts of appeals has been defined to include that duty, district courts
      cannot also have authority to perform the same function. [TEX. CONST.
      art. V, § 8.] In granting appellee a specific award of damages “in the
      event an appellate court of final review reverses the judgment of
      rescission,” the trial court sought to exercise the duty and authority
      expressly granted to courts of appeals as part of their appellate
      jurisdiction. The court below was without authority to do so, and that
      portion of its judgment is erroneous.

Id. (alteration in original) (quoting Ferguson v. DRG/Colony North, Ltd., 764
S.W.2d 874, 880 (Tex. App.—Austin 1989, writ denied)).
      We find that the “alternative” disgorgement portions of the trial court’s
judgment are void. We sustain Appellants’ issues on appeal wherein they challenge
these alternative disgorgement awards. Therefore, we reverse the judgment of the
trial court wherein it imposes the equitable relief of disgorgement in favor of Three
                                          34
Finger and reform the judgment to delete all awards of disgorgement to Three
Finger.
      Because we have found the partnership issue to be dispositive as to the claims
of Three Finger, we need not address the myriad of other arguments that Appellants
have made insofar as matters that are related to Three Finger’s claims. In its
judgment, the trial court inserted the following language: “Nothing herein is
intended as a waiver of the individual Plaintiffs’ rights to seek an individual recovery
should it later be determined that the Three Finger Black Shale Partnership is not
entitled to the recovery awarded herein.” We note that the jury made numerous
findings in favor of Trek and Tiburon, individually.          However, based on the
plaintiffs’ election to take the recoveries in favor of Three Finger, the trial court did
not enter judgment in favor of Trek or Tiburon. We, therefore, express no opinion
as to those matters at this point.
      We will now address the claims made by Hunt Resources and Raughton. The
trial court noted in its judgment that Hunt Resources and Raughton, like the
plaintiffs, elected to recover on their claims for breach of fiduciary duties. Because
we have held that the participation agreements did not give rise to the existence of a
partnership, any fiduciary duties (except for those related to an alleged attorney–
client relationship, which we will address later) must arise, if at all, from the Alpine
Letter Agreement or from some agreement that existed before the Alpine Letter
Agreement.
      In answer to Question No. 5A, the jury found that the Alpine Group was a
partnership. Appellants deny that it was. Even if we assume, for the sake of
argument, and without finding so, that the Alpine Letter Agreement created a
partnership known as the Alpine Group, which was made up of Alpine Petroleum;
Thunderbird Oil & Gas, LLC; Arapaho Energy, LLC; and L.W. Hunt Resources,

                                           35
LLC, the parties expressly disclaimed any partner-related fiduciary duties that might
otherwise exist under that agreement.
      As we stated earlier, the signatories to the Alpine Letter Agreement agreed to
the following language in the letter agreement:
             It is not intended and it is agreed that the parties have not entered
      into and do not enter into any partnership, joint venture or agency
      relationship. None of the parties owe a fiduciary duty or obligation to
      the other and the relationship shall be considered as a normal customary
      commercial relationship with the ownership interest of the parties in
      and to the properties the subject of this letter agreement as provided
      herein.
      In asserting their claim that the Alpine Letter Agreement did give rise to a
partnership, Intervenors take the position that, even though five parties signed it, the
Alpine Letter Agreement was between two parties: (1) Paradigm and (2) the Alpine
Group. Therefore, they contend, the disclaimer controls the relationship between
Paradigm on the one hand and Alpine Group on the other, but does not control the
relationship among the signatories.
      We take Intervenors’ position to be based, at least in part, upon the use of the
term “party” in the singular throughout the letter agreement and upon the concept
that it must, then, be used consistently in each instance of its use throughout.
Intervenors refer to a sentence that contains the words “[t]he Alpine Group is the
only party who has any interest in those properties described on the attached
Exhibit.” They also point to the consistent referral to “it” instead of “they” when
reference is made to the Alpine Group, to the use of singular verbs rather than plural
ones when paired with the Alpine Group, and to the use of the dual-focused word
“between” as opposed to the multifaceted word “among” when the parties addressed
a division of profits.
      But, Carroll says, even if Intervenors are correct in their grammatical
assessment, a different word is used in connection with the disclaimer. Carroll
                                          36
quotes from the Alpine Letter Agreement: “None of the parties owe a fiduciary duty
or obligation to the other . . . .” According to Carroll’s argument, then, the shift in
vocabulary indicates an intent to disclaim any fiduciary duty that might otherwise
exist between any individual or entity in the Alpine Group and another individual or
entity in the Alpine Group or between any individual or entity in the Alpine Group
and Paradigm. We agree. Otherwise, as Carroll implies, if the disclaimer were to
be effective only between the Alpine Group as one party and Paradigm as one party,
the word “neither,” or some other such limiting word, would have been used to
observe the internal consistency to which Intervenors refer. A reading of the
portions of the agreement set out by Intervenors informs us that the parties certainly
knew how to maintain that consistency, if they intended to.
      Additionally, Carroll points out that separate individuals or someone for each
individual entity signed the agreement; there was not merely one signature for
Paradigm and another for the Alpine Group. If the Alpine Group were a partnership,
there would be no need for individual signatures. Carroll also refers to the use of
the singular as a “singular collective” and argues that the singular term is merely a
term used for ease of reference.
      Carroll also presents the argument that, to escape the effects of the fiduciary
duty disclaimer, Intervenors attempt to claim that the original parties—those in the
deal before the Alpine Letter Agreement was signed—formed a partnership that was
not evidenced by a writing but, rather, was sealed with a handshake. Further, Carroll
asserts that Intervenors have not met their burden of proof to show that the parties
formed a “handshake” partnership that came before the Alpine Letter Agreement.
He maintains that Intervenors did not prove any of the elements that are set forth in
the Business Organizations Code as proof of the creation of a “handshake”
partnership. Carroll takes the position that, except for Intervenors’ reference to
testimony from Carroll and Stephens that the original four participants agreed to split
                                          37
profits equally, Intervenors’ only references to any of the elements set forth in the
Code are “married to the Alpine Letter Agreement and the terms provided therein.”
We note that those terms came later.
      We have, in our discussion of the partnership claims of Three Finger, set forth
in detail the evidence that is necessary to prove the existence of a partnership. We
see no need to repeat that review here. If Intervenors, to establish a breach of
fiduciary duty, rely upon a position that the Alpine Group was a partnership that
existed by handshake prior to the Alpine Letter Agreement, then they have failed to
present any evidence to prove that, and we have found none. Thus, under the well-
recognized standard of review for a no-evidence challenge, we hold that there is no
evidence beyond a scintilla that the Alpine Group was a partnership that existed
before the date of the Alpine Letter Agreement.
      The record in this case reflects that those named in the Alpine Letter
Agreement were sophisticated businessmen. We must honor the terms that they used
when they made their contract, including those that define the scope of their
obligations and agreements, even those that limit fiduciary duties that might
otherwise exist. Strebel v. Wimberly, 371 S.W.3d 267, 284 (Tex. App.—Houston
[1st Dist.] 2012, pet. denied). Accordingly, we hold that any fiduciary duty that
might have existed as a result of an alleged partnership growing out of the Alpine
Letter Agreement was expressly disclaimed in that agreement and that no recovery
may be had by Hunt Resources in relation to those alleged fiduciary duties. We have
already dealt with Raughton’s inability to recover Arapaho’s damages that are
connected to the Alpine Letter Agreement. We sustain Appellants’ issues on appeal
wherein they assert that the disclaimer contained in the Alpine Letter Agreement
insulates them from liability for any breach of disclaimed fiduciary duties. We also
sustain Appellants’ issues related to any partnership created by a “handshake” prior
to the Alpine Letter Agreement.
                                         38
      We will now examine the trial court’s judgment as to Hunt Resources and
Raughton in light of the foregoing observations. Part B of the trial court’s judgment
pertains to Hunt Resources and Raughton. In the opening sentence of that portion
of the judgment, the trial court notes that “Intervenors have elected to take the
recoveries based on their claims for breach of fiduciary duty.” There are two
separate fiduciary claims at work here. One of the claims involves the breach of
fiduciary duties related to a partnership, and the other involves the breach of
fiduciary duties related to an alleged attorney–client relationship. We have already
held that there was no partnership to which fiduciary duties could attach. Therefore,
under the restrictions of the trial court’s judgment, and the election made by
Intervenors, the only theory of recovery that remains available to Hunt Resources or
to Raughton—as far as this appeal is concerned—is one connected to an alleged
attorney–client relationship with Stephens and with Stephens & Myers.
      Among other findings, for which the trial court made no awards, the jury
found that such attorney–client relationships did exist; the jury found damages of
$1,089,636 in favor of Raughton. It found damages of $1,200,083 in favor of Hunt
Resources.
      The trial court awarded Raughton $739,636 ($1,089,636 [as found by the jury]
less $350,000 credit for the Taylor-related settlement). Further, the trial court
ordered that Carroll, Thunderbird Oil, Thunderbird Land, Thunderbird Resources,
and Stephens were jointly and severally liable for those damages.
      To Hunt Resources, the trial court awarded damages in the amount of
$850,083 ($1,200,083 [as found by the jury] less $350,000 for the Taylor-related
settlement). As with the award in favor of Raughton, the trial court ordered that
Carroll, Thunderbird Oil, Thunderbird Land, Thunderbird Resources, and Stephens
were jointly and severally liable for those damages.

                                         39
      In addition to the actual damage awards, the trial court awarded Raughton, as
found by the jury, exemplary damages in the amount of $1,000,000 each against
Carroll, Thunderbird Oil & Gas, Thunderbird Land, Thunderbird Resources, and
Stephens. The trial court also awarded Hunt Resources, in accordance with the jury
verdict, exemplary damages in the amount of $2,000,000 each against Carroll,
Thunderbird Oil, Thunderbird Land, Thunderbird Resources, and Stephens.
      In its judgment in favor of Raughton, the trial court also ordered Stephens to
disgorge $1,764,938 “in the alternative to the [actual] damages . . . conditioned upon
a determination that Intervenor Raughton is not entitled to recover the damages
awarded herein.” The trial court did not enter a judgment for actual damages against
Stephens & Myers. It did, however, order that Stephens & Myers pay to Raughton
and L.W. Hunt, jointly, disgorgement in the amount of $1,600,000. The trial court
specifically named L.W. Hunt, not Hunt Resources. This order of disgorgement was
not conditioned upon failure of actual damages because the trial court did not award
any actual damages against Stephens & Myers. As stated in its judgment, the trial
court had earlier granted summary judgment in favor of Stephens & Myers on
Intervenors’ claims that involved breach of contract and civil conspiracy.
      We will first address the awards to Raughton and Hunt Resources, insofar as
the attorney–client claims are concerned, against Carroll, Thunderbird Oil,
Thunderbird Land, and Thunderbird Resources. As this case is presented to us, the
only grounds upon which those defendants would be jointly and severally liable for
any attorney–client related damages would be the conspiracy theory that the trial
court submitted to the jury. We will review the question of whether the conspiracy
submission will support the judgment of the trial court against those defendants.
      To the extent that the judgment depends upon the conspiracy finding in
Question No. 45, it cannot find support there for several reasons. In Question
No. 45, the trial court asked the jury whether Carroll, Thunderbird Oil, Thunderbird
                                         40
Land, Thunderbird Resources, Stephens, and Paradigm were “part of a conspiracy
that damaged L.W. Hunt Resources and/or Raughton.”              The trial court then
proceeded to submit, in the same question, three different scenarios for the jury to
consider: a conspiracy to commit the breach of fiduciary duties related to the
attorney–client relationship; a breach of fiduciary duties to Hunt Resources that
arose from purported fiduciary duties related to the Alpine Group; and, finally, a
conspiracy to commit fraud. The jury found that the named parties engaged in a
conspiracy as to each of the three grounds submitted to them.
      A conspiracy theory will not, under the facts of this case, support a joint and
several judgment against Carroll, Thunderbird Oil, Thunderbird Land, Thunderbird
Resources, and Stephens (Paradigm had been dismissed as a part of the Taylor-
related settlement). First, the trial court made no awards based upon a fraud theory
of recovery. Second, we held above that any fiduciary duty that might have existed
as a result of an alleged partnership growing out of the Alpine Letter Agreement was
expressly disclaimed in that agreement and that no recovery may be had by Hunt
Resources in relation to those alleged fiduciary duties.
      Third, even with respect to the remaining scenario—conspiracy related to the
breach of the fiduciary duty owed by an attorney to his client, there is a fundamental
reason why a conspiracy theory will not support the trial court’s order for joint and
several liability against the alleged conspirators. There was no separate jury finding
as to the amount of any damages specifically related to the conspiracy. Citing to
Juhl, we noted in Paschal that one element of conspiracy was proof of damages that
resulted as a proximate result of the conspiracy. Paschal v. Great W. Drilling, Ltd.,
215 S.W.3d 437, 450 (Tex. App.—Eastland 2006, pet. denied) (citing Juhl v.
Airington, 936 S.W.2d 640, 644 (Tex. 1996)).
      In their brief, Hunt Resources and Raughton would have us to read Paschal
to say that “the damage was caused by the fiduciary breach; the conspiracy did not
                                          41
cause separate damages, but was simply the liability question that made [the
defendant] derivatively liable for them.” That is neither the law nor what we meant
in Paschal. We did not use the word “recovery” as related to damages but, rather,
in the sense that there can be no cause of action in the absence of an underlying tort.
Perhaps we could have said, “There can be no recovery on a conspiracy claim in the
absence of an underlying tort.”
      So that we might better explain our conspiracy holding, we will refer to a
claim made by Three Finger, but not decided here, that certain defendants knowingly
participated in breaches of fiduciary duties committed by other defendants (the latter
being the underlying tort). If one knowingly participates in some other party’s
breach of fiduciary duty, then the knowing participant has not committed a separate
tort but has participated in the underlying tort; he is a joint tortfeasor and steps into
the shoes of the one who committed the tort. Heat Shrink Innovations, LLC v. Med.
Extrusion Technologies-Tex., Inc., No. 02-12-00512-CV, 2014 WL 5307191, at *8
(Tex. App.—Fort Worth Oct. 16, 2014, pet. denied) (mem. op.). The knowing
participant is jointly and severally liable because he is a joint tortfeasor, not because
of some other theory of joint and several liability; he has joined in the commission
of the underlying tort and stands alongside his joint tortfeasor. Therefore, there is
no need to submit either a separate damage issue or a proportionate responsibility
issue as to a knowing participation finding. Id. at *8, 12; see TEX. CIV. PRAC. &
REM. CODE ANN. § 33.001–.017 (West 2015) (proportionate responsibility).
      On the other hand, conspiracy is a tort of its own.             Like a knowing
participation claim, a conspiracy cause of action is also derivative in the sense that
it is not actionable in the absence of some underlying tort. Unlike a knowing
participation claim, however, “it does not automatically follow that whatever
damages were caused by the fraud were also attributable to the ‘conspiracy’ [that]
the jury found.” THPD, Inc. v. Cont’l Imports, Inc., 260 S.W.3d 593, 605 (Tex.
                                           42
App.—Austin 2008, no pet.). There is no presumption that damages automatically
result from the existence of a conspiracy. Heat Shrink, 2014 WL 5307191, at *11;
see Belz v. Belz, 667 S.W.2d 240, 243 (Tex. App.—Dallas 1984, writ ref’d n.r.e.)
(the mere fact that the existence of a conspiracy is proved is not enough to recover
in a conspiracy cause of action).     A claimant must prove the damages that
proximately resulted from the conspiracy, not the underlying tort. Swinnea, 318
S.W.3d at 881.
      Intervenors direct us to the Pattern Jury Charges and, in support of their
position that no separate damages question is necessary on a conspiracy finding,
assert that, in that publication, there is no damage question that accompanies the
conspiracy question. See Comm. on Pattern Jury Charges, State Bar of Tex., Texas
Pattern Jury Charges: Business, Consumer, Insurance, & Employment PJC 109.1
(2016). The Texas Pattern Jury Charges are not binding on the courts. “The Texas
Pattern Jury Charges are nothing more than a guide to assist the trial courts in
drafting their charges; they are not binding on the courts.” Keetch v. Kroger Co.,
845 S.W.2d 276, 281 (Tex. App.—Dallas 1990), aff’d, 845 S.W.2d 262 (Tex. 1992).
As we have said, we believe that the law requires that a damage issue is to be
submitted whereby the jury can assess the damages, if any, that were proximately
caused by the conspiracy. THPD, 260 S.W.3d at 605.
      Again, here, the trial court did not submit a discrete issue whereby the jury
could find separate damages that were proximately caused by the conspiracy that the
jury found. In Heat Shrink, the trial court asked the jury, “Was KEVIN WOLFE
part of a conspiracy that damaged [METT]?” Heat Shrink, 2014 WL 5307191, at
*11. Here, the jury question is almost identical: “Were the Defendants part of a
conspiracy that damaged L.W. Hunt Resources and/or Raughton?”
      Because there was no finding relative to damages that were proximately
caused by the conspiracy, Hunt Resources and Raughton have failed to prove an
                                         43
essential element of their conspiracy cause of action as to any of the matters
submitted to the jury in the conspiracy question, Question No. 45. Appellants did
not waive that omission, as Intervenors argue. Furthermore, there was no finding
that Carroll, Thunderbird Oil, Thunderbird Land, or Thunderbird Resources
knowingly participated in a breach of a fiduciary duty owed by Stephens or
Stephens & Myers with respect to an attorney–client relationship. The burden was
upon Intervenors to obtain findings that would support a judgment. The issue is not
one of waiver but of failure to obtain findings that will support the judgment as to
conspiracy. See id. at *12 (in the absence of a finding on damages caused by
conspiracy, claimant fails to prove an element of cause of action for conspiracy); see
also Belz, 667 S.W.2d at 243.
      We sustain Appellants’ issues insofar as they complain of the trial court’s
judgment as it pertains to Intervenors’ claims of conspiracy. We reverse that part of
the trial court’s judgment wherein it orders that Carroll, Thunderbird Oil,
Thunderbird Land, Thunderbird Resources, and Stephens are jointly and severally
liable to Hunt Resources and Raughton upon a conspiracy theory. We render
judgment that Hunt Resources and Raughton take nothing against those defendants
under a conspiracy cause of action.
      We now direct our attention to direct claims that Hunt Resources and
Raughton assert against Stephens. Those claims are based on Stephens’s breach of
fiduciary duties related to an alleged attorney–client relationship with Hunt
Resources and with Raughton.
      The jury found that Hunt Resources and Raughton were clients of Stephens
and Stephens & Myers in matters related to the project and that they breached their
fiduciary duties to their clients. The jury found that $1,200,083 would fairly and
reasonably compensate Hunt Resources for its damages proximately caused by
Stephens’s and Stephens & Myers’ breaches of the attorney–client relationship and
                                         44
that $1,089,636 would compensate Raughton for those damages. The trial court did
not award actual damages against Stephens & Myers in connection with Intervenors’
claims relative to the attorney–client relationship. Again, the only award that the
trial court entered against Stephens & Myers was to order disgorgement “pursuant
to the equitable powers” of the trial court. We will discuss that award later in this
opinion.
      Stephens and Stephens & Myers contend that the evidence is legally and
factually insufficient to support a finding that an attorney–client relationship existed
between either of them and Hunt Resources and Raughton.
      We have previously detailed the well-recognized standard under which we are
to review a legal sufficiency issue. We see no benefit in repeating that standard here.
In a factual sufficiency challenge, we must consider and weigh all of the evidence
and should set aside the verdict only if the evidence is so weak or the finding is so
against the great weight and preponderance of the evidence that it is clearly wrong
and unjust. Pool v. Ford Motor Co., 715 S.W.2d 629, 635 (Tex. 1986). We will
apply those standards in our review of the issues related to the existence of the
attorney–client relationship.
      Hunt Resources and Raughton each had the burden to prove that there was an
attorney–client relationship between them and Stephens and Stephens & Myers.
Yaklin v. Glusing, Sharpe & Krueger, 875 S.W.2d 380, 383 (Tex. App.—Corpus
Christi 1994, no writ). The attorney–client relationship is a contractual relationship
in which an attorney agrees to render professional services for a client. Mellon
Service Co. v. Touche Ross & Co., 17 S.W.3d 432, 437 (Tex. App.—Houston [1st
Dist.] 2000, no pet.). The relationship may be one that is expressly created by
contract, or the relationship may be implied from the actions of the parties. Id. For
the relationship to be established, “the parties must explicitly or by their conduct
manifest an intention to create it. To determine whether there was a meeting of the
                                          45
minds, we use an objective standard examining what the parties said and did and do
not look at their subjective states of mind.” Roberts v. Healey, 991 S.W.2d 873, 880
(Tex. App.—Houston [14th Dist.] 1999, pet. denied) (citation omitted). Evidence
must exist that both parties intended to create an attorney–client relationship.
Kiger v. Balestri, 376 S.W.3d 287, 291 (Tex. App.—Dallas 2012, pet. denied).
      There was no express agreement between Hunt Resources or Raughton and
Stephens or Stephens & Myers that would create an attorney–client relationship
between them as to this project. Therefore, we must look at what the parties said
and did but not at what their subjective thoughts were about the relationship. We
cannot consider the parties’ unspoken subjective beliefs about the parties’
relationship. In re Baytown Nissan Inc., 451 S.W.3d 140, 146 (Tex. App.—Houston
[1st Dist.] 2014, no pet.).
      Stephens and Stephens & Myers refer us to the disclaimer in the Alpine Letter
Agreement as evidence that there was no attorney–client relationship. However, we
point out that neither Stephens nor Stephens & Myers were parties to that contract.
      Hunt testified that he met Stephens years before the start of the Fisher County
project when Stephens represented Raughton in a lawsuit in which Hunt was also
involved. Stephens did not represent Hunt; he had other attorneys. Hunt also knew
Stephens from Raughton’s and Stephens’s involvement in a previous oil play, the
Barnett Shale. Stephens had negotiated a deal with Chesapeake, and Hunt asked
Stephens to “share some of those documents. And [Stephens] would send them
over.” Hunt also testified that he had used Stephens “maybe six to ten times.” “It
wasn’t much, but I know that we communicated.” Years before the project involved
in this appeal, Stephens represented Hunt in a matter that concerned one of Hunt’s
companies, Circle Energy. Hunt also told the jury: “And if I had a troubled lease or
whatever, I would send it to him and he would advise me on it. It was a friendly,
open relationship.” Stephens also “would send me letter agreements or contracts
                                         46
that maybe I [was having] trouble with.” Stephens sent “stuff over kind of as a favor
because he was buddies with [Raughton].” Stephens occasionally gave Hunt forms
such as leases or subordination agreements.
      When the Fisher County project began, and before the parties entered into the
Alpine Letter Agreement, Stephens sent various forms for use in the Fisher County
project. Before that, the last time that Stephens gave Hunt any forms would have
been in 2005 to 2006. Hunt also testified that he did not think that he ever got a bill
from Stephens or Stephens & Myers. Hunt said that he had used several other
lawyers between 2004 and the time that the parties entered the 2011 Alpine Letter
Agreement.     When the Fisher County deal originally began, Hunt was using
LegalZoom.com to form Black Pearl, a new company that he was thinking about
using in the deal.
      According to Hunt, he and Raughton brought Stephens into the deal because
of Stephens’s expertise in title and legal work. “That was his part of the project.”
Additionally, Hunt testified: “I thought we had somebody in there we trusted.” Hunt
also testified that there was an agreement that preceded the Alpine Letter Agreement;
that agreement was oral and covered the Fisher County deal. As a part of that
agreement, Stephens “was going to negotiate for us and write our agreements.” He
was “our legal guy.”
      On cross-examination, Hunt agreed that he joined this lawsuit on January 31,
2014. He further agreed that it was not until June 11, 2014, five months later, that
he first claimed that Stephens was his lawyer in the project.
      Raughton testified that he first used Stephens as his lawyer upon the
recommendation of Raughton’s former wife. Stephens had previously represented
her in a divorce. In his testimony, Raughton laid out the matters in which Stephens
had represented him beginning in 2004. Stephens represented Raughton in what the
parties refer to as the Sabre lawsuit, a lawsuit that was pending, but dormant, at the
                                          47
time that the Fisher County project was ongoing. Other testimony reflects that, per
an engagement letter, the Sabre representation was explicitly limited to the Sabre
lawsuit. According to Raughton, Stephens had also acted as Raughton’s lawyer in
“representation and document formation and negotiations with Chesapeake Energy
on a portion of the Barnett Shale, representation and documentation of a second
portion of the Barnett Shale, a second scheduled area that we did . . . . So, he was
busy with representation and documentation on two fronts there.”
      Raughton also told the jury that, in 2007, Stephens “drafted my Last Will and
Testament and my - - my advanced or medical directive. And then in - - I believe in
2010, he looked over . . . a real estate contract for me there.” Stephens may have
reviewed other real estate contracts for him, but Raughton specifically remembers
that one. Stephens had also represented him in the lawsuit in which Hunt was
involved, and to which we have referred. Stephens and Raughton had also done
some deals together. Raughton trusted Stephens because Stephens had already
represented him in two significant instances. Raughton agreed with Hunt that
Stephens was also brought into the Alpine Group because of Stephens’s legal
expertise. When the original participants agreed to include Taylor in the project,
Stephens prepared the Alpine Letter Agreement.
      In his testimony, Stephens denied that he had ever worked as an attorney for
Hunt. He did admit that he had done some work for one of Hunt’s companies, Circle
Energy, but his client was Circle Energy, the company, not Hunt. Although he dealt
with Hunt during the representation, he testified that his client was Circle Energy.
Additionally, although he had worked for Raughton in several matters—much the
same as Raughton testified—he did not consider himself to be Raughton’s attorney;
Raughton had several other lawyers who did work for him.
      Stephens had been involved in prior business deals in which Raughton was
involved. However, Stephens testified that he had never been involved in a deal
                                         48
with Hunt or any of his companies. In addition to his denial that he was serving as
attorney for Hunt, Raughton, or Arapaho in this project, Stephens also denied that
he was the attorney for the Alpine Group. The extent of the relationship was that his
company, Thunderbird Oil had a business arrangement with Hunt Resources and
Arapaho Energy, not Hunt or Raughton individually.
      Stephens points out that, in accordance with the Alpine Letter Agreement,
Thunderbird Land was to provide “its landmen and expertise to verify mineral title
ownership, prepare the leases and assist with taking and negotiating the leases from
the mineral owners.” Stephens contends that his work in performing title work,
drafting documents, and negotiating deals “during the Project is consistent with his
undisputed role as principal of Thunderbird Oil, who was an investor and party to
the Alpine Letter, and Thunderbird Land, who the Alpine Letter designated to”
perform certain leasing functions.
      Stephens also contends that any attorney–client relationship that he might
have had with Hunt or any of Hunt’s entities had ended by the time that the Fisher
County deal started. Except for the ongoing, but dormant, Sabre lawsuit (with its
engagement letter limits), Stephens makes the same argument with respect to
Raughton and his entities. Stephens maintains that, if he had any fiduciary duties
arising from an attorney–client relationship, a claim that he denies, those duties
would be due to Arapaho, not Raughton.
      Raughton and Hunt Resources presented Randy Johnston to the jury as an
expert witness on professional responsibility and legal ethics. Johnston testified that,
in his opinion, an attorney–client relationship existed as to the project between
Stephens and Hunt Resources and between Stephens and Raughton. Johnston also
testified that Stephens breached the fiduciary duties that arose out of those
relationships.

                                          49
      Johnston is an attorney with a specialized practice. That specialty involves
cases centered on legal malpractice, other fiduciary breach matters, and fraud. He
is board certified in Civil Trial Law. He has been a frequent speaker on the subject
of professional responsibility. Also, Johnston has authored many papers about legal
ethics and has also written a section on professional responsibility in Texas Business
Litigation. At the time of the trial, Johnston was about to begin teaching a class on
professional responsibility at the University of North Texas School of Law in Dallas.
In various years previously, Texas Monthly had named Johnston one of the top 100
lawyers in Texas. Johnston also had authored a book about ethical responsibility:
Robbed at Pen Point.
      To prepare to opine on the ethical issues in this case, Johnston reviewed thirty
or forty of the core documents; at different times, met with the plaintiffs’ attorneys
and staff; met with the Intervenors; attended “part of or one” of Stephens’s
depositions; sat in court for two days; and listened to Stephens’s testimony. He
heard no other witnesses.
      Johnston referred to several facts that informed his opinion. He attached some
significance to the fact that, when Raughton went to see Stephens about the project,
he went to a building that had the name of Stephens’s law firm on it. Johnston
acknowledged that Stephens’s other entities were located within the same building,
but said that a person who enters the building cannot know with which entity he
might be dealing—which “hat” Stephens might be wearing.
      There were other factors that Johnston considered. When he got to Stephens’s
law office, Raughton, an existing client, presented the Fisher County project to
Stephens. After Stephens agreed to the deal, and as part of the project, he performed
a series of tasks that are uniquely suited for lawyers. Stephens also took on the role
of lawyer when he advised Raughton to use Arapaho as his vehicle to participate in
the Fisher County project. According to Johnston, that “is the kind of thing that
                                         50
lawyers do.” In addition, Johnston noted that his understanding was that Stephens
said that he would get them the best deal possible. Those things “are the classic
signs of an attorney–client relationship.”
      When questioned about the interconnection between landman work and
attorney work, Johnston agreed that one does not have to be a lawyer to look at titles.
Many landmen are not lawyers, but their work is almost always reviewed by a
lawyer. In this case, he said, the project was so big that “[i]t required the expertise
that a landman candidly would not have.” Johnston commented that this was the
kind of deal one would consult a lawyer about to be sure that the paperwork was
correct.
      On cross-examination, Johnston was asked if it would be important to him to
know whether Intervenors had employed several other lawyers over a period of time,
whether legal bills were sent to them for past representation, and similar pieces of
information. Although Johnston acknowledged that those things were important to
an assessment such as this, he never changed his opinion that Stephens was in an
attorney–client relationship with Hunt and Raughton. “[E]verything about it to me
screams that they went to him for legal help and they got it.”
      We agree with Stephens that an attorney–client relationship terminates when
the purpose of the employment has come to an end. Kiger, 376 S.W.3d at 295.
However, even if we assume that whatever attorney–client relationships might have
existed in the past had terminated, another may arise. We believe that the existence
of former attorney–client relationships, although not conclusive, can inform the
answer to the question of whether the parties have formed a new one.
      We agree with Stephens that many of the activities that he performed are
duties that landmen perform “all the time” and are not necessarily indicative of the
existence of an attorney–client relationship. We cannot agree, however, as Stephens
claims, that all the activities that he undertook were non-attorney, landman type
                                             51
activities. For instance, as the parties were in the process of preparing the Alpine
Letter Agreement, Stephens advised Hunt and Raughton to use Hunt Resources and
Arapaho Energy as the vehicles for their involvement in the project. Raughton
testified that Stephens advised him to form Arapaho as a Nevada corporation and
that he recommended a Nevada attorney to accomplish that. We do not believe that
advising persons as to the types of entities to use in a business proposition involves
the type of assistance that a landman would or should give.
      We also partially agree with Stephens that his activities were “equally
consistent with . . . non-attorney roles in the Project.” Such activities include those
related to Stephens’s role as the principal of Thunderbird Oil, an investor in the
project, and to his role as the sole owner of Thunderbird Land.
      We have already addressed Stephens’s position as to the overlap in landman
and lawyer duties. In connection with his claim that his activities were related to his
position as the sole owner of Thunderbird Oil, as investor, Stephens relies on
LeBlanc. There, the court held that the attorney services were performed for a
business enterprise rather than for another party who was involved in that enterprise.
LeBlanc v. Lange, 365 S.W.3d 70, 81 (Tex. App.—Houston [1st Dist.] 2011, no
pet.). That might be the case with Stephens’s actions as the project proceeded, and
we express no opinion about that. Here, however, as Raughton argues, Stephens
gave legal advice at the outset to two individuals who, either individually or through
their entities, had previously been his clients; he advised his clients about how to
best proceed, legally, with the Fisher County project that they had brought to him.
He also prepared the legal document, the Alpine Letter Agreement, that would
govern their future in the project, and then he had them sign it. Even though one of
Stephens’s entities was a party to the Alpine Letter Agreement and even though
another of his entities was to receive a direct financial benefit from the transaction,
Stephens included a disclaimer of liability in the contract. We do not believe that
                                          52
this is the type of advice that would be given to a client by an attorney–participant
in a business enterprise under the guise that he was solely representing the enterprise
rather than the alleged client.
      In his testimony before the jury, Johnston said that, if the facts are such that a
lawyer should know that a person reasonably believes that the lawyer is going to
protect that person’s interest, the lawyer should tell that person if that is not the case.
He should also give them the opportunity to seek counsel who will look after their
interest. If the lawyer does not inform them of that fact, then the lawyer is bound by
the same ethical rules as if he were their lawyer. Stephens neither informed them
that he was not acting as their attorney nor gave them an opportunity to seek other
counsel.
      In Kiger, a breach of fiduciary duty lawsuit, the court noted that the claimant
had not shown that the attorney ever agreed to serve as the claimant’s attorney or
that the attorney “reasonably should have known [the claimant] was relying on him
to provide legal services.” Kiger, 376 S.W.3d at 295. In the case before us, we
believe that the combined history of the attorney services that Stephens provided to
Hunt and Raughton, or their entities; the nature of the advice and direction that he
gave them at the outset, confirmed by his actions throughout the project; and their
reasonable expectation that he was representing their interest constitute some
evidence of the existence of an attorney–client relationship between Stephens and
both Hunt Resources and Raughton.
      When we consider the evidence in the light most favorable to the verdict and
indulge every reasonable inference that supports it, we hold that the evidence is such
that reasonable and fair-minded people could reach the verdict that the jury reached.
We hold that the evidence furnishes a reasonable basis for differing conclusions by
reasonable minds about the existence of vital facts and that there is, therefore, more
than a scintilla of evidence to support the verdict of the jury that an attorney–client
                                            53
relationship existed between Stephens and both Hunt Resources and Raughton. We
overrule Stephens’s and Stephens & Myers’ legal insufficiency issues as the same
pertain to Intervenors’ direct liability claims against Stephens based on his attorney–
client relationship with them. We have also reviewed all the evidence, as we have
detailed above, and have determined that the evidence is not so weak as to be against
the great weight and preponderance of the evidence to the extent that the verdict is
clearly wrong and manifestly unjust. We overrule Stephens’s and Stephens &
Myers’ factual insufficiency issues as the same pertain to Intervenors’ direct liability
claims against Stephens based on his attorney–client relationship with them.
      Because we have held that the evidence is legally and factually sufficient to
support the finding that an attorney–client relationship did exist between Stephens
and Hunt Resources and Raughton, we will consider issues as to whether Stephens
breached his fiduciary duties related to those relationships.
      Johnston also offered his expert opinion that Stephens breached the fiduciary
duties associated with the attorney–client relationships that he felt existed. He based
his opinion on multiple facts. For example, if this were strictly a business deal, and
not one based on an attorney–client relationship, then Stephens should have told
Raughton and Hunt that fact, and he should have given them an opportunity to seek
other legal advice.
      Johnston also found concern in the fact that Stephens drafted the Alpine Letter
Agreement that included his clients, but, in the contract, Stephens provided for a
disclaimer of fiduciary duties of a company solely owned by him. Johnston was also
troubled by the fact that Stephens presented releases to his clients wherein they
released all liability related to the project, including liability that potentially could
involve Stephens’s own companies.

                                           54
      Johnston testified that perhaps his biggest concern was that Stephens
renegotiated the Alpine Group deal to his benefit at the expense of his clients. His
opinion was that Stephens had taken advantage of them.
      The evidence shows that the initial Devon deal had a closing date of on “or
before March 12, 2012.” Hunt testified about a letter that Stephens sent to Hunt,
Raughton, and Carroll. The letter was dated March 5, 2012. In the letter, Stephens
basically informed Hunt, Raughton, and Carroll that he would no longer participate
in the group after 5:00 p.m. on March 12, 2012, unless they could rework the deal
among the four of them. Stephens wrote in the letter that Carroll was willing to
renegotiate, that Raughton had indicated that he did not dispute Stephens’s position,
and that Hunt seemed to feel that they should continue as the deal was originally
structured but that they should have a meeting. Hunt testified that, by the time that
he received the letter, he, Raughton, and Raughton’s son had, either by option or
lease, already brought in two-thirds of the property that ever came into the project.
      The four parties met on Sunday, March 11, 2012, in Stephens’s office. Hunt
did not know at that time that the first of the Devon closings was to take place the
next day according to the Devon contract; he had never seen the contract and did not
see it until long after March 11, 2012.
      Raughton testified that, at that Sunday night meeting, Stephens “painted a
really bleak picture about being able to sell any more acreage to Devon.” Even
though, unbeknownst to Hunt and Raughton, Devon had indicated that it wanted
more acreage, Stephens told the group that no more acreage would be sold.
According to Raughton, Stephens told them that, “if there was [more acreage], it was
all the acreage that had failed title and that . . . it would take months and months if
not years to get that title cleared.” Hunt and Raughton both testified that Stephens
never told them that Devon wanted more acreage.

                                          55
       The meeting resulted in the execution, on March 11, 2012, of a letter
agreement that some of the parties have called “the Reduction Agreement.” That
letter agreement is signed by Stephens for Thunderbird Oil. In the letter agreement,
Stephens wrote that Paradigm “has more than completed its funding obligations and
has sold to Devon . . . the leases.” Stephens stated in the letter agreement that
Thunderbird Oil and Thunderbird Land had given notice that they were not willing
to continue under the prior arrangement “since the Paradigm obligation has been
concluded.”       Stephens indicated that it had yet to be determined whether
Thunderbird Oil could make a deal with Paradigm but that, if a deal could be made
on any acreage over the initial 30,000 acres in the Paradigm buy area, the following
parties would receive a 1.5% share of any cash and overrides: Carroll (Alpine
Petroleum), Arapaho Energy (or Carolina Oil & Gas, LLC), Dustin Raughton, and
Hunt Resources. The agreement had the result of reducing each of the parties’ 4.5%
interest, as under the old agreement, to 1.5%, except for Thunderbird Oil. Under the
new agreement, Thunderbird Oil was to receive the “Remainder of any cash and any
Override.”
       Hunt said that, after the Reduction Agreement was prepared in Stephens’s
office that Sunday night, Carroll signed it first, then Raughton, and then Hunt.
According to the terms of the Reduction Agreement, Carroll’s share was also being
reduced the same as that of Hunt Resources and Raughton. However, Thunderbird
Resources, through Stephens, and Carroll executed a subsequent document whereby
they agreed that Thunderbird Resources and Carroll would each own 50% of any
overriding royalty interests connected with the Fisher County leases described in
that document. Hunt testified that, although it was made to appear that Carroll’s
interest was being reduced, “later, we found out he was being increased.” Hunt
testified that he would not have signed the agreement if Carroll and Stephens had
told the truth.
                                         56
      Stephens never told Hunt or Raughton that he was not their lawyer. He also
never advised them that they should get other counsel because his companies were
involved in the deal. Stephens drafted the Alpine Letter Agreement and provided
for a disclaimer of liability and fiduciary duties for his own company. He drafted
the Alpine Letter Agreement, and although no principal was to receive payment for
labor, he created a monopoly by which his company Thunderbird Land would
perform all landman activities and be paid for it. Some evidence indicated that
Stephens was aware of Taylor’s underfunding and that Stephens recommended that
the earnest money from Devon be used to fulfill the remainder of the financial
obligations from the Participation Agreement. Stephens also threatened to quit the
project unless the others, including his clients, agreed to give him a larger piece of
the deal by cutting their own shares. The evidence also shows that Stephens made
it appear that Carroll’s interest was being reduced the same as the others, when it
was being increased. Further, Stephens told Hunt and Raughton that they could not
sell any more acreage to Devon because of title difficulties, and there is evidence
that Stephens knew this statement to be inaccurate. Finally, after the reduction
agreement was signed, Stephens was involved in selling additional acreage to
Devon, even though he had said that such a sale was not possible.
      Johnston’s ultimate opinion was that Stephens “violated the fiduciary duty
that he owed to these two gentlemen and their business entities that they chose to do
this business venture in.” Johnston volunteered that, although he normally charged
for his court time and travel time, because he felt that this case was so important to
the State Bar of Texas, not just to these clients, he was not charging for court time
or travel time. Johnston testified that, in his forty years of practice, Stephens’s
conduct was “the worst case I have ever seen in terms of lack of understanding for
and respect for the interest of the public and clients in connection with doing
business with clients.”
                                          57
      We believe that the evidence that we have just outlined is, under the well-
established standards of review applicable to evidentiary sufficiency issues, both
legally and factually sufficient to support the verdict of the jury. Stephens’s issues
in which he urges otherwise are overruled.
      In its second issue, Stephens & Myers claims that the trial court erred when it
allowed Johnston to testify as to matters that “included pure questions of law and
was unreliable.” Johnston testified about the duties of agents and lawyers and about
the rules that govern lawyers.
      Stephens & Myers objected to the testimony but did not object on the grounds
that the testimony “included pure questions of law and was unreliable”; the only
objection went to a failure to disclose. To preserve error for appeal, the argument
made in the trial court must comport with the argument made on appeal. See TEX. R.
APP. P. 33.1(a); Santander Consumer USA, Inc. v. Mata, No. 03-14-00782-CV, 2017
WL 1208767, at *3 (Tex. App.—Austin Mar. 29, 2017, no pet.). Stephens & Myers
has waived its complaint that Johnston’s testimony “included pure questions of law
and was unreliable.” As to its objection that the testimony had not been disclosed,
the point is waived under Rule 38.1(i) of the Texas Rules of Appellate Procedure.
We overrule Stephens & Myers’ second issue.
      We will now examine the issue of damages found by the jury with respect to
Stephens’s breach of his fiduciary duties as an attorney to Hunt Resources and to
Raughton. With respect to these damages, the jury was asked to find “[t]he
additional amounts that would have been paid to L.W. Hunt Resources and/or
Raughton that were not paid as a result of the breach of fiduciary duty” by Stephens
and Stephens & Myers to their clients. The jury answered $1,200,083 with respect
to Hunt Resources and $1,089,636 with respect to Raughton. Stephens argues that
Intervenors failed to present legally or factually sufficient evidence of their damages,

                                          58
that the amount of damages awarded was based on speculation, and that the
calculation of lost profits failed to account for the cost of acquiring the leases.
      The record reflects that Intervenors called Gary Durham—a certified public
accountant, chartered financial analyst, and certified insolvency and restructuring
advisor with a certification in distressed business valuation—to testify about
Intervenors’ damages. The trial court did not permit Durham to testify as to
Raughton’s damages because Durham had figured Raughton’s damages as a
successor to Arapaho. Durham did, however, testify as to damages suffered by Hunt
Resources. He calculated those damages at $1,200,083. This amount represented
what Durham determined to be Hunt Resources’ share of net profits after
reallocation and after a deduction of $1,010,886 that Hunt Resources had already
received as a share of the project’s net profits. Contrary to Stephens’s assertion,
Durham indicated in his testimony that he had deducted the costs associated with the
leases. He explained that the figures that he had calculated as damages applied to,
and were owed by, Stephens and Stephens & Myers.
      Raughton later testified regarding his damages. Using the same method that
Durham had used to calculate Hunt Resources’ damages, Raughton calculated the
additional amount owed to him. Raughton testified that that amount was $1,089,625.
      Applying the well-recognized sufficiency standards of review set forth
previously in this opinion, we hold that the amount of damages as found by the jury
was supported by legally and factually sufficient evidence. Furthermore, we cannot
hold, based on the record before us, that those damages were based on mere
speculation.
      Nor can we hold that the jury’s damage finding in favor of Raughton was
improper for the reason suggested by Stephens with respect to Arapaho. Raughton
was permitted to testify regarding the damages he suffered, individually, as a result
of Stephens’s and Stephens & Myers’ breach of a duty owed to Raughton as
                                           59
Raughton’s attorney. In this case, Raughton alleged that Stephens and Stephens &
Myers owed individual duties to him as their client and that those duties were
breached and caused him damages personally. Following the reasoning of Linegar,
we cannot hold that Raughton is prohibited from recovering damages for such a
breach of fiduciary duty. See Linegar, 495 S.W.3d at 277–82. We overrule the
issues in which Stephens complains of the damages found by the jury with respect
to the breach of duties owed by Stephens and Stephens & Myers to their clients.
      Stephens also challenges the exemplary damages awarded to Hunt Resources
and Raughton. The jury found by clear and convincing evidence that the harm to
Hunt Resources and Raughton from the breach of fiduciary duties owed to them as
clients of Stephens and Stephens & Myers resulted from malice or fraud. The jury
found that $2,000,000 in exemplary damages should be paid by Stephens to Hunt
Resources and that $1,000,000 should be paid by Stephens to Raughton. The trial
court entered judgment against Stephens based on those jury findings. Stephens
complains on appeal that the award of exemplary damages against him and in favor
of Intervenors was improper because he owed no fiduciary duty to them—a
contention that we addressed above and on which we ruled against Stephens.
Stephens also contends that the evidence was legally and factually insufficient to
support the submission of the jury questions relating to exemplary damages.
      Exemplary damages may be awarded if a claimant proves by clear and
convincing evidence that the harm upon which the claimant seeks recovery of
exemplary damages resulted from fraud or malice. TEX. CIV. PRAC. & REM. CODE
ANN. § 41.003(a)(1)–(2) (West 2015). The evidence regarding Stephens’s conduct
and the breach of his fiduciary duties as an attorney supported both the submission
of and the jury’s answers to questions related to exemplary damages. We note,
again, that an expert with many years of experience in this field testified that

                                        60
Stephens’s conduct was “the worst” he had ever seen. Stephens’s issues relating to
Intervenors’ exemplary damages are overruled.
      Next, we address Stephens & Myers’ issue with respect to the trial court’s
award against Stephens & Myers and in favor of Intervenors. We note that the jury
found that Stephens & Myers breached a duty that it owed to its clients, Intervenors,
and that Stephens & Myers should have to pay $3,000,000 in exemplary damages to
Intervenors. When the trial court entered the judgment in this cause, the only
damage award that it entered against Stephens & Myers is the one disgorgement
award that the trial court did not enter as an alternative award. The trial court ordered
Stephens & Myers to pay Intervenors, jointly, $1,600,000 “as amounts subject to
disgorgement pursuant to the equitable powers of” the trial court. Stephens & Myers
argues that this award was improper for various reasons, including three on which
we have already ruled: legal and factual sufficiency of the evidence with respect to
the existence of an attorney–client relationship; the breach of a duty owed as a result
of that relationship; and Raughton’s ability to recover damages individually.
Stephens & Myers also asserts (1) that Intervenors failed to plead or obtain a finding
that Stephens acted in the course and scope of his employment with the firm and
(2) that Stephens & Myers did not receive profits or fees to disgorge. We disagree.
      Disgorgement is an equitable remedy in which benefits wrongfully obtained
are forfeited. In re Longview Energy Co., 464 S.W.3d 353, 361 (Tex. 2015) (orig.
proceeding). Disgorgement may be awarded if a person renders a service to another
and, in doing so, breaches a fiduciary relationship. Id. All ill-gotten profits may be
disgorged, and all fees may be forfeited. Swinnea, 318 S.W.3d at 873. The purpose
of the equitable remedy of disgorgement is to protect relationships of trust by
discouraging agents from acting in a disloyal manner. Id.; Arce, 997 S.W.2d at 241.
The trial court, not the jury, must first determine whether disgorgement is an
appropriate remedy based on the equity of the circumstances, and if so, the trial court
                                           61
must then determine the appropriate amount to be forfeited or disgorged. Arce, 997
S.W.2d at 245. Factors for the trial court to consider include the gravity and timing
of the breach, the level of intent or fault, the benefit received by the principal from
the fiduciary, the centrality of the breach to the scope of the fiduciary relationship,
any other threatened or actual harm to the principal, the adequacy of other remedies,
and the goal to protect relationships of trust. Swinnea, 318 S.W.3d at 875. On
appeal, this court is to review the trial court’s disgorgement award as we would “any
other legal issue.” Arce, 997 S.W.2d at 246.
      Here, the jury found that Stephens & Myers breached the fiduciary duties that
it owed to Intervenors. Among other questionable conduct, Stephens, through
Thunderbird Land, billed the project for work performed by employees of Stephens
& Myers, including a secretary and a secretary/bookkeeper. The work performed
by these Stephens & Myers’ employees was billed as if it had been performed by
well-paid landmen. Checks were then made out as payable to these employees;
however, those checks were voided rather than given to Stephens & Myers’
employees, and the money remained in Thunderbird Land’s account. Thunderbird
Land subsequently transferred $1,600,000 to Stephens & Myers: the same amount
that the trial court ordered to be disgorged. This is also the same amount that the
jury found to be Stephens & Myers’ profit from the transactions that resulted from
the breach of the duties owed by the law firm to its clients. We hold that the trial
court acted within its discretion when, pursuant to the equitable powers of the trial
court, it ordered Stephens & Myers to disgorge that amount. See Swinnea v. ERI
Consulting Eng’rs, Inc., 481 S.W.3d 747, 755–59 (Tex. App.—Tyler 2016, no pet.)
(upholding actual, exemplary, and disgorgement awards). Stephens & Myers’ issue
related to the disgorgement awarded against Stephens & Myers and in favor of
Intervenors is overruled.

                                          62
      We mentioned earlier that, obviously, the jury in this case was not overly
enamored with Appellants. Our job here is neither to condone nor to condemn.
Rather, the task set before us is to examine the evidence, the verdict, and the
judgment, as those things come to us, against the law as we understand it, and to
render an opinion accordingly.
      We reverse the portions of the trial court’s judgment in favor of Three Finger
and render judgment that Three Finger take nothing in this lawsuit. We remand this
cause to the trial court so that Trek and Tiburon may make an election to recover
based upon other jury findings in favor of Trek and Tiburon and upon which
alternative theories this court has not had an opportunity to rule. See Morton v.
Nguyen, 412 S.W.3d 506, 512 (Tex. 2013) (citing Boyce Iron Works, Inc. v. Sw. Bell
Tel. Co., 747 S.W.2d 785, 787 (Tex. 1988), for the proposition that the prevailing
party may seek recovery under an alternative theory if the judgment is reversed on
appeal). We also reverse those portions of the trial court’s judgment by which the
trial court awarded any relief to Hunt Resources or Raughton that is based upon the
existence of any partnership or conspiracy.      We render judgment that Hunt
Resources and Raughton take nothing by virtue of those causes of actions. We
likewise remand this cause to the trial court so that Hunt Resources and Raughton
may, if they desire, make an election to recover based upon other jury findings in
their favor and on which we have not ruled in this opinion. See id. We affirm those
portions of the trial court’s judgment against Stephens in favor of Hunt Resources
and Raughton that pertain to the attorney–client relationship: namely, $850,083 and
$739,636 in actual damages, respectively, and $2,000,000 and $1,000,000 in
exemplary damages, respectively. We also affirm the $1,600,000 disgorgement
award against Stephens & Myers. We do note that the award of disgorgement
against Stephens & Myers is in favor of Raughton and L.W. Hunt, not Hunt
Resources. Because L.W. Hunt was not a party to this lawsuit and because the
                                        63
headings in the judgment list only L.W. Hunt Resources, we assume that his
inclusion in the judgment individually was inadvertent. We overrule both issues
raised in Raughton’s cross-appeal, and we affirm the trial court’s summary judgment
that Raughton could not recover individually for injuries suffered by Arapaho.
        This cause is remanded to the trial court for proceedings consistent with this
opinion.

                                                                   JIM R. WRIGHT
                                                                   SENIOR CHIEF JUSTICE

December 31, 2018
Panel consists of: Bailey, C.J.,
Willson, J., and Wright, S.C.J.3

Willson, J., not participating.

        3
          Jim R. Wright, Senior Chief Justice (Retired), Court of Appeals, 11th District of Texas at Eastland,
sitting by assignment.

                                                     64