Court Opinion

ID: 3089670
Source: CourtListenerOpinion
Date Created: 2015-10-16 03:49:38.946555+00
Date Added: 2024-06-11T12:46:52.345398
License: Public Domain

In The
                                  Court of Appeals
                         Seventh District of Texas at Amarillo
                                 ________________________

                                      No. 07-11-00199-CV
                                 ________________________

                     American Star Energy and Minerals Corporation, Appellant

                                                 v.

                   Richard W. “Dick” Stowers, Individually, Richard W. Stowers,
                     Jr., Individually, Frank K. Stowers, Individually, and Linda
                                 Sue Jasurda, Individually, Appellees

                               On Appeal from the 84th District Court
                                     Hutchinson County, Texas
                   Trial Court No. 39,255, Honorable William D. Smith, Presiding

                                          May 14, 2013

                                           OPINION
                      Before QUINN, C.J., and CAMPBELL and PIRTLE, JJ.

      “All cats are gray in the dark.” 1

      Contrary to popular belief, little in the law is black and white. Shades of gray

latently course between and within the words written by legislators and judges. Those

      1
       J. Ponto.
shades may spark hardy discussion among members of the legal community, or simply

supply reason for the day's headache. Both effects were encountered here.

      The dispositive issue before us concerns partnerships, partners therein, and the

statute of limitations. We have been asked to decide if the trial court erred in concluding

that American Star Energy and Minerals Corporation (American) waited too long before

suing Richard “Dick” Stowers, Richard W. Stowers, Jr., Frank K. Stowers, and Linda

Sue Jasurda (the Stowers), who were partners of S&J Investments (S&J), a Texas

general partnership.

      American had recovered a judgment against S&J. When that judgment could not

be satisfied through the assets of the partnership, the individual partners were then

sued. No one disputes that the cause of action upon which judgment against S&J was

founded accrued more than four years before the partners were sued individually. Nor

does anyone deny that those same partners were sued individually well within four

years of the date the judgment against the partnership was signed.             And, while

American asserted below that it acted timely by suing the partners within four years of

the judgment's execution, the Stowers argued otherwise. They contended that they had

to be sued within the same limitations period American had to commence an action

against S&J. The trial court agreed with them, as does a majority here.

      Our conclusion is based upon sections 152.304, 305 and 306 of the Texas

Business Organizations Code. They state that “. . . all partners are jointly and severally

liable for all obligations of the partnership . . . ,” TEX. BUS. ORGS. CODE ANN. §

152.304(a) (West 2012), “[a]n action may be brought against a partnership and any or

all of the partners in the same action or in separate actions,” id. § 152.305 and, while a

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judgment against a partnership is not by itself a judgment against a partner, a “judgment

may be entered against a partner who has been served with process in a suit against

the partnership.” Id. § 152.306(a). To the extent statute provides that individual

partners are jointly and severally liable for partnership obligations, that individual

partners may be sued in the same proceeding initiated against the partnership, and a

judgment may be entered against an individual partner who is a party in the same action

initiated against the partnership, the majority must logically deduce that those same

provisions recognize both the existence of a chose-in-action against the individual

partners and its accrual at the same time the claim accrues against the

partnership. Holding otherwise contradicts the general and longstanding truism that one

cannot legitimately sue another before a cause of action accrues or is ripe. See Luling

Oil & Gas Co. v. Humble Oil & Refining Co., 144 Tex. 475, 191 S.W.2d 716, 721 (1945);

Spicewood Summit Office Condominiums Ass’n, Inc. v. America First Lloyd’s Ins. Co.,

287 S.W.3d 461, 465 (Tex. App.–Austin 2009, pet. denied). And, we cannot reasonably

construe the foregoing provisions as evincing any type of legislative intent to reject that

established legal truism. So, American was obligated to sue the partners of S&J (i.e.

the Stowers) within the same limitations period it had to sue S&J, the partnership.

Because, it did not, the trial court correctly held that limitations ran.

       American would have us hold otherwise since it purported to sue upon the

judgment entered against the partnership, not the claim upon which that judgment was

founded. And since it commenced suit against the Stowers within four years from the

judgment’s execution, limitations allegedly barred nothing.         Admittedly, two opinions

appear to support that notion. The first, In re Jones, 161 B.R. 180, 183 (Bankr. N.D.

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Tex. 1993), was rendered by a federal bankruptcy court located in Texas while the

other, Evanston Ins. Co. v. Dillard Dep’t Stores, Inc., 602 F.3d 610, 617-18 (5th Cir.

2010) (per curiam), was rendered in per curiam format by the United States Court of

Appeals for the Fifth Circuit.         However, neither control since they neglected to address

provisions of the Texas Business Organizations Code applicable here.                               One such

provision is § 152.306(b). It provides the sole means by which a creditor may hold a

partner responsible for partnership debt and mandates that the creditor may so hold the

partner individually responsible “only if” a judgment is obtained against the partner and

another is obtained against the partnership “based on the same claim . . . .” TEX. BUS.

ORGS. CODE ANN. § 152.306(b)(1) & (2) (emphasis added).                               In other words, the

judgment against the partners must be founded upon the identical claim or cause of

action giving rise to the judgment against the partnership. That statute says nothing

about simply enforcing the latter judgment against the partners through a suit wherein

the judgment forms the cause of action against the partners, as American attempted

here. 2 Rather, the statute required American to sue the Stowers upon the same claim

that it sued and recovered a judgment against S&J.                        It did not do that within the

applicable limitations period.

        Accordingly, the trial court’s judgment is affirmed.

                                                            Brian Quinn
                                                            Chief Justice

        2
         Incidentally, recovering a judgment merges the underlying cause of action into the judgment.
Barr v. Resolution Trust Corp. ex rel. Sunbelt Federal Sav., 837 S.W.2d 627, 628 n.1 (Tex. 1992). This
suggests that the underlying cause of action goes away. See 50 C.J.S., Judgments § 705 (1997) (stating
that as a general rule the recovery of a judgment “creates a new debt or liability, distinct from the original
claim” and “is not merely the evidence of the creditor’s claim, but is . . . the substance of the claim itself”).

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