Court Opinion

ID: 9669500
Source: CourtListenerOpinion
Date Created: 2023-08-24 02:57:38.648874+00
Date Added: 2024-06-11T18:15:57.352392
License: Public Domain

OPINION
Opinion by
Chief Justice VALDEZ.
This is an appeal from a no-evidence *868summary judgment. The appellants1 raise two points of error: 1) the trial court erred in rendering a no-evidence summary judgment because the motion filed by the appellee was legally insufficient, and 2) the trial court erred in rendering a no-evidence summary judgment because the appellants met their burden by bringing forth more than a scintilla of evidence. We reverse the trial court’s granting of a no-evidence summary judgment and remand this cause for further proceedings consistent with this opinion.

Facts

Appellants purchased tracts of land from Tejas Building and Development Co., Inc. (Tejas), believing that the tracts were subject to use restrictions. Upon recognizing that other lots were being used as mobile home sites, they sued Tejas, Eddie Torres, the sales representative, and Edwin Payne, the majority shareholder, for misrepresentation, recision, and return of their payments. Payne filed a no-evidence motion for summary judgment, claiming that he could not be held personally liable to appellants for acts allegedly committed by Tejas’s agent.

Legal Sufficiency

The appellants argue in their first point of error that Payne’s motion for summary judgment was legally insufficient as a matter of law because it failed to specifically challenge the evidentiary support needed. Payne argues that the allegations plead were legally sufficient to negate an element of appellant’s claims.
In a no-evidence motion for summary judgment the movant should specifically state the elements as to which there is no evidence. Tex.R. Civ. P. 166a(i); Ethridge v. Hamilton County Elec. Coop., 995 S.W.2d 292, 295 (Tex.App.-Waco 1999, no pet.). The rule requires a motion to be “specific in challenging the evidentiary support for an element of a claim or defense.” Tex.R. Civ. P. 166a, cmt. It does not, however, require that the motion specifically attack the “evidentiary components that may prove an element of the cause of action.” In re Mohawk Rubber Co., 982 S.W.2d 494, 497-98 (TexApp.-Texarkana 1998, orig. proceeding). As such, the specificity which is inherent in Texas Rule of Civil Procedure 166a(i) deals with evidentiary support for an element of a claim or defense, not for “evidentiary components.” Baker v. Gregg County, 33 S.W.3d 72, 76 (TexApp.-Texarkana 2000, no pet.). In Baker, the court held that the motion for no-evidence summary judgment before it conformed with rule 166a(i) because it stated the elements that were lacking. Id. at 76-77. That court reasoned that specificity in evidentiary components is not required. Id. (citing Mohawk, 982 S.W.2d at 497-98).
Appellants argue that Payne’s motion for no-evidence summary judgment was insufficient. In his motion, Payne asserted that appellants failed to provide credible evidence as to hold Payne personally hable in his capacity as a shareholder, director or officer. More specifically, Payne listed the following elements of appellants’ claims requiring evidence:
A. That E.M. Payne committed or actively participated [in] any of the acts or omissions alleged by Plaintiffs to support their causes of action;
B. That the corporate status of Tejas Building and Development Co., Inc. *869is used as a means of perpetrating] a fraud;
C. That Tejas Building & Development Co., Inc. operates as [a] tool or business conduit of E.M. Payne;
D. That Tejas Building & Development Co., Inc.’s corporate status is used to evade an existing legal obligation;
E. That Tejas Building & Development Co., Inc.’s corporate status is used to achieve or perpetuate a monopoly;
F. That Tejas Building & Development Co., Inc.’s corporate status is used to circumvent a statute;
G. That Tejas Budding & Development Co., Inc.’s corporate status is relied on as a protection of crime or to justify a wrong.
Upon examination of the record, we find that Payne’s motion for no-evidence summary judgment adequately addresses the necessary elements needed to be proven by appellants in order to hold Payne personally liable. As such, Payne raised issues of no-evidence as to essential elements needed to hold him personally liable.
Appellants’ first point of error is overruled.

Non-Movant's Burden in a No-Evidence Summary Judgment

Appellants argue in their second point of error that the trial court erred in rendering the no-evidence summary judgment because they provided sufficient evidence showing that Payne should be held individually hable under the theories of alter ego and ratification of fraudulent activity. The second point of error also argues that appellants purchased the lots as a result of fraud committed by Tejas and/or its agent Torres.
Texas Rule of Civil Procedure 166a(i) provides that a no-evidence summary judgment is properly granted if the non-movant fails to bring forth more than a scintilla of probative evidence to raise a genuine issue of material fact. Merrell Dow Pharm., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex.1997). If the evidence supporting a finding rises to a level that would enable reasonable, fair-minded persons to differ in their conclusions, then more than a scintilla of evidence exists. Id. 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, and the legal effect is that there is no evidence. Kindred v. Con/Chem, Inc., 650 S.W.2d 61, 63 (Tex.1983).
Appellants assert that alter ego is one basis for disregarding the corporate entity, and therefore Payne may be held personally liable.
Alter ego is a basis for disregarding the corporate fiction, “where a corporation is organized and operated as a mere tool or business conduit of another corporation.” Castleberry v. Branscum, 721 S.W.2d 270, 272 (Tex.1986)2 (quoting Pac.Am. Gasoline Co. of Texas v. Miller, 76 S.W.2d 833, 851 (Tex.Civ.App.-Amarillo 1934, writ ref'd)). It applies “when there is such unity between corporation and individual that the separateness of the corporation has ceased and holding only the corporation liable would result in injustice.” Id. (citing First Nat’l Bank in Canyon v. Gamble, 134 Tex. 112, 132 S.W.2d 100, 103 (1939)). Alter ego “is shown from the total dealings of the corporation and *870the individual, including the degree to which ... corporate and individual property have been kept separately, the amount of financial interest, ownership and control the individual maintains over the corporation, and whether the corporation has been used for personal purposes.” Id. (citing Lucas v. Texas Indus., Inc., 696 S.W.2d 872, 874 (Tex.1984)). Because disregarding the corporate fiction is an equitable doctrine, Texas takes a flexible fact-specific approach focusing on equity. Id. (citing Gentry v. Credit Plan Corp. of Houston, 528 S.W.2d 571, 575 (Tex.1975)).
In this ease, Payne owned two-thirds of Tejas’s stock, with the other one-third owned by his elderly father who was not active in Tejas’s business. Since 1993, Payne and his father have been the only directors. The record also raises other fact questions as to alter ego; for example, in Payne’s deposition testimony (which was offered in the motion to deny summary judgment) Payne testified that he neither knew his specific title nor who the other directors were. Tejas’s corporate meetings were held at Payne’s car dealership office. The record also shows that Payne used some of his personnel from the dealership to handle bookkeeping functions for Tejas. Moreover, the record reveals that of the $379,510.13 fisted as accounts receivable in Tejas’s balance sheet, $292,162.00 of that amount is allocated as accounts receivable payable to “EM Payne.” See Castleberry, 721 S.W.2d at 272 (holding that alter ego is shown from the total dealings of the corporation).
Payne argues that these facts are not enough to pierce the corporate veil. He points to numerous cases that support the merits of his argument, such as the fact that if a majority or even all of the stock in a corporation is owned by a single individual, that, in and of itself, does not make the corporation the alter ego of the individual. Massachusetts v. Davis, 140 Tex. 398, 168 S.W.2d 216, 224 (1942). Payne also correctly notes that merely because a single person owns the vast majority of shares in a corporation, that evidence alone is not sufficient to establish that the corporation was the alter ego of an individual. Aztec Mgmt. & Inv. Co., Inc., 709 S.W.2d 237, 239 (Tex.App.-Corpus Christi 1986, no writ). These arguments, persuasive as they are, address the merits of the case at the trial level, and while they may afford Payne a stronger argument in front of a jury, that still does not change the fact that reasonable, fair minds could differ on their conclusions. Havner, 953 S.W.2d at 711.
As such, appellants brought forth more than a scintilla of probative evidence, and the trial judge erred in rendering the motion for no-evidence summary judgment. Whalen v. Condo. Consulting & Mgmt. Serv., Inc., 13 S.W.3d 444, 446 (Tex.App.-Corpus Christi 2000, pet. denied).
Appellants also argue in their second point of error that they met their burden of producing more than a scintilla of evidence regarding actions taken by Torres and Tejas. They cite extensive evidence showing that Torres misrepresented the use restrictions of the lots that the appellants purchased. This portion of appellants’ brief, although detailed and extensive in its description of the alleged misrepresentation that took place, does not refer to Payne’s individual liability in its analysis. As such it does not address the no-evidence summary judgment that was rendered in favor of Payne. Accordingly, we need not address the details of this portion of appellants’ brief.
We REVERSE the trial court’s granting of a no-evidence summary judgment and remand this cause for further proceedings consistent with this opinion.
Concurring and Dissenting opinion by Justice HINOJOSA.

. The appellants include Pascual Dominguez, Veronica Dominguez, Jaime Perez, Nora Perez, Juan Landeros, Leticia Tamez, Jose Alfredo Gonzalez, Margarita Gonzalez, Rumaldo Lozano, Pedro Lopez, and Blanca Lopez.

. Castleberry was overruled by the business corporation act to the extent that failure to observe corporate formalities is no longer a factor in proving alter ego. Tex Bus. Corp. Act Ann. art 2.21(A)(3) (Vernon Supp.2003).