Court Opinion

ID: 4176058
Source: CourtListenerOpinion
Date Created: 2017-06-09 13:16:44.669165+00
Date Added: 2024-06-11T14:38:33.743631
License: Public Domain

IN THE
                           TENTH COURT OF APPEALS

                                  No. 10-14-00274-CV

CLINTON W. (BUDDY) PIKE, SR., DANIEL
L. WALKER, W. TOBIN WILSON, VHSC
CEMENT, LLC AND FEW READY MIX
CONCRETE CO.,
                                                               Appellants
v.

TEXAS EMC MANAGEMENT, LLC, TEXAS
EMC PRODUCTS, LP AND EMC CEMENT, BV,
                                                               Appellees

                            From the 77th District Court
                             Limestone County, Texas
                              Trial Court No. 30,023-A

                            DISSENTING OPINION

       The Court resolves this appeal, which has more moving parts than a VBM, in a 63

page memorandum opinion. This would seem to indicate that it does not involve any

novel legal issues or the application of settled law to new or different facts. I respectfully

disagree with the Court’s analysis and disposition of the issues, and dissent to the Court’s

judgment.
        No useful purpose will be accomplished by an extended dissenting opinion. I

recently spent the time necessary to write such an opinion and thereby delayed the

disposition of an appeal for an extended period of time. See Tafel v. State, Nos. 10-14-

00019-CR, 10-14-00020-CR, ___ S.W.3d ___, 2016 Tex. App. LEXIS 9703 (Tex. App.—Waco

Aug. 31, 2016, pet ref’d). I will not do that in this appeal. The parties are entitled to a

disposition, and I will not delay the disposition as I did in Tafel by writing an extensive

dissenting opinion. I will only make a few observations that might assist further review

or allow those that follow us to dig into the issues and distinguish the holding in

subsequent cases.

STANDING

        I begin with the perennial issue of standing. This issue can arise in many contexts

and forms and is frequently confused with capacity. The analysis of this issue in the

Court’s opinion is somewhat difficult to follow since it is a memorandum opinion and

the very complex ownership interest of the parties, alignment of the parties, pleadings,

and cross-claims was not discussed. In summary, the partners in EMC-Production (EMC-

P) were EMC-Cement (EMC-C), EMC-Management (EMC-M), Walker et al., and Wilson.

The standing issue has substantive implications because of the need to determine who, if

anyone, has the proper interest to be the representative behind EMC-P’s claims and bring

suit as the partnership to recover on the claims of the partnership as distinguished from

the claims of the various partners. The collateral issues cascade down from the resolution

of this issue, flow through the damages analysis, and ultimately pool in the judgment.

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        There are claims of EMC-C and EMC-M against Walker and Wilson; thus partners

vs. partners. EMC-P is also a party to the litigation whose “interest” has been “aligned,”

for purposes of pursuing this litigation, with EMC-C and EMC-M. Thus, the recovery on

claims made by or on behalf of EMC-P will necessarily benefit all the EMC-P partners,

including Walker and Wilson. But EMC-P’s claim that EMC-C breached the partnership

agreement, is obviously not being presented by EMC-C, but rather is being presented and

pursued by Walker and Wilson. No one has suggested that EMC-P was dissolved. As

noted above, EMC-P is purported to be a party to the litigation. The problem is further

complicated in this proceeding because the assets of the partnership, EMC-P, were

foreclosed upon. So there is a question of whether the partnership’s several claims for

breach of the partnership agreement, as raised by different partners, were assets of the

partnership sold as part of the foreclosure.

        The Court resolves the issue of standing, partially under the theory that as a

partner, EMC-C is authorized to represent EMC-P, and partially upon the determination

that there was no sworn denial of the ability of EMC-C to recover in the capacity that suit

was brought. If there is a pleading problem due to the capacity issue, I believe it was

tried by implied consent. The issue, however, does not seem to be a capacity issue

because Walker and Wilson are not challenging whether EMC-C can recover in a certain

capacity, but rather whether EMC-C has the necessary interest in the recovery to be the

mouthpiece for EMC-P and thus, to selectively assert claims against Walker and Wilson.

        To some extent, I believe the Court misapprehends the issue as briefed.

Nevertheless, this is an area that cries out for guidance from the State’s high court;

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whether a partnership’s competing interest against and between its partners allows the

first partner to get to the courthouse the ability to be the representative behind the

partnership’s claims and thus to sue as the partnership and thereby insulate itself from

its own breach of the partnership agreement, a breach which the other partners

established in this proceeding. In effect, who has the necessary and proper independent

interest in the outcome to pursue all of the claims of the partnership and to thus sue for

all of its claims, if any, against all the various partners.

ILLEGALITY

        Next I turn to another area that could use some high court guidance; the nature of

the “illegal” act that will support a conspiracy. The lynchpin of the liability of the

appellants is the alleged conspiracy. The lynchpin of the conspiracy is the illegal act. In

the hundreds of pages of briefing and the thousands of pages of the record, I have been

unable to find the illegal act to support a conspiracy, remembering that it is not illegal to

breach a contract, even if done maliciously, or to commit a common law tort. So out here

in the trenches, it would be helpful to have some articulation of what acts will support a

conspiracy claim that can convert an ordinary tort or breach of contract claim from one

for damages caused by one’s own conduct into joint and several liability for the conduct

of anyone that was in the area when the “conspiracy” went down.

        Guidance in this area would be particularly helpful in a case such as this where it

is clear that there was a falling out between the parties that provided the idea, the parties

that provided the financing, and the parties that were supposed to make the idea work

in production and the marketplace. When the venture falls apart, people search for legal

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solutions that are clearly not what they went into the partnership thinking or intending.

One partner takes an unreasonable position never contemplated by anyone, for example

that the partnership agreement requires some of the partners to provide an infinite stream

of funding until PozzoSlag and CemPozz penetrate the market for cement, which is a

position that is unsupported by any reasonable construction of the partnership

agreement. The other partners, who think they have already put more than enough

money into the business venture for it to be a success, if it is ever going to succeed, begin

to look for a way to stop the financial losses of a business enterprise that will obviously

never work. One party or the other may choose to breach the contract and suffer the

consequences. In hindsight, it looks bad but it is not illegal and the trial court must give

the appropriate guidance in the charge in the form of questions and instructions to the

jury to instruct them on the law of what “illegal” conduct will support a conspiracy that

may lead to joint and several liability under conspiracy claims for the actions of other

parties.

DAMAGES

        And while I will not elaborate extensively on the conclusory testimony that

purports to be a damages analysis which was based on no history of profitability and

based on projections of earnings and growth that have no basis in reality (19% annual

increase in the volume of tons of cement sold while also increasing prices 19% annually,

both of which occur uninterrupted and compounded for a 10 year run), it is clear to me

that Lygren had no idea what he was testifying about by his discussion of “Federal

Pike, et. al v. Texas EMC Management, LLC, et. al                                      Page 5
Accounting Standards and Procedures.” Accounting for the Federal Government has no

application to the valuation of a privately owned business.

        Moreover, after spending a good deal of time and effort in analysis of the damage

model used by the plaintiffs in this case, I would hold the testimony of the “experts” are

no more than unsupported conclusions with an ipsi dixit connection to the facts of the

case. There is simply, in the words of the high court, too great of an analytical gap to

support the damages awarded, much of which appears to be a double recovery for

alleged damages to EMC-P, and also to EMC-C for the damage to its investment in EMC-

P (especially when EMC-C purported to pull out its contribution to EMC-P which would

destroy the value of EMC-P but for which EMC-C is then awarded damages, thus

rewarding EMC-C’s own conduct in breaching the partnership agreement as determined

by the jury but not reflected in the judgment). And because you cannot retry only the

issue of damages, and in the interest of justice, I would reverse the trial court’s judgment

and remand the entire proceeding for a new trial.               Because the Court does not, I

respectfully dissent.

                                                TOM GRAY
                                                Chief Justice

Dissenting opinion delivered and filed June 7, 2017

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