Court Opinion

ID: 3111276
Source: CourtListenerOpinion
Date Created: 2015-10-16 06:54:48.960515+00
Date Added: 2024-06-11T12:46:58.813011
License: Public Domain

Opinion issued December 10, 2013.

                                    In The

                           Court of Appeals
                                    For The

                       First District of Texas
                        ————————————
                           NO. 01-12-00443-CV
                        ———————————
    THE HOUSTON AERONAUTICAL HERITAGE SOCIETY, INC.,
                       Appellant
                                      V.
JOHN L. GRAVES, HARPER TRAMMELL, OSCAR NIPPER, BERNARD
 MORRIS, MARJORIE EVANS, A.J. HIGH, AND MEGAN LICKLITER-
                    MUNDON, Appellees

                 On Appeal from the 334th District Court
                          Harris County, Texas
                    Trial Court Case No. 2011-63921

                       MEMORANDUM OPINION

     This appeal involves a dispute over the governance of the Houston

Aeronautical Heritage Society, Inc. (HAHS), a Texas non-profit corporation
formed for the purpose of the preservation and restoration of the City of Houston’s

original air terminal at Hobby Airport. The trial court rendered judgment against

HAHS and in favor of some of its corporate directors—John Graves, Harper

Trammell, Oscar Nipper, Marjorie Evans, A.J. High, and Bernard Morris

(collectively, the “Graves group”)—and the administrator for its civil air

museum—Megan Lickliter-Mundon. In four issues, HAHS contends that the trial

court erred in (1) denying a motion to compel arbitration, (2) dismissing HAHS’s

declaratory-judgment claim, (3) granting a traditional summary judgment for the

Graves group on its declaratory-judgment counterclaim, and (4) granting a

no-evidence summary judgment for the Graves group on HAHS’s tort and contract

claims. We affirm in part, reverse in part, and remand.

                                   Background

      The operation and governance of HAHS through its Board of Directors has

been the subject of multiple lawsuits and appellate proceedings. 1 At the time the

underlying lawsuit commenced, the HAHS Board had nine directors: George

Coats, Kristen Coats, Gary Evans, A.J. High, Oscar Nipper, Harper Trammell,

Marjorie Evans, John Graves, and Bernard Morris. These nine directors splintered

into two groups competing for control of HAHS. The first group included George

1
      Three proceedings are pending in this Court: (1) an interlocutory appeal bearing
      case number 01-12-1032-CV, (2) an original proceeding bearing case number 01-
      12-01066-CV, and (3) this appeal bearing case number 01-12-00443-CV. Today,
      we issue our opinions in all three proceedings.
                                          2
Coats, Kristen Coats, and Gary Evans. The second group included the six members

of the Graves group.

      George and Kristen Coats and Gary Evans have a long history with HAHS.

George Coats founded HAHS and volunteered on a full-time basis as president and

chairman of the HAHS Board for thirteen years. He performed pro-bono legal

services, including “advocacy, negotiation, drafting contracts, dispute resolution,

litigation, [and] risk management,” and secured funding for the organization

through his personal and professional relationships. Kristen Coats, who is married

to George Coats, served as a director and the HAHS treasurer. She also maintained

the HAHS website and coordinated corporate fundraisers. Gary Evans co-founded

HAHS, served as its vice president, and volunteered as a pilot and pro-bono legal

counsel. Collectively, the Coatses and Evans contributed more than $100,000 in

services to HAHS.

      The Coatses and Evans attribute the split within the HAHS Board to John

Graves. Graves, a director and the HAHS museum collections manager, “began a

correspondence course with a university in the United Kingdom with the stated

goal of obtaining a master’s degree in museum studies.” Graves received

permission to “interview the [HAHS] board members as part of his research for his

master’s thesis” on the condition that he would make his thesis available to HAHS

when complete. As alleged by the Coatses and Evans, the HAHS Board

                                        3
“descended into acrimony and chaos” almost immediately after Graves began his

interviews. Graves’s thesis was critical of HAHS’s governance. Believing the

thesis posed an “imminent threat of harm” to HAHS, Evans acted unilaterally to

terminate Graves from his positions as director and collections manager.

The Lawsuit

      In October 2011, the Graves group called a special board meeting for the

purpose of nominating, electing, and installing new officers and directors. All six

directors in the Graves group signed the special meeting notice. The Coatses and

Evans, who were aware that they might be ousted at the special meeting, filed a

lawsuit seeking to enjoin the special meeting; to have the trial court declare the

rights and responsibilities of the current HAHS officers and directors and the terms

of HAHS’s governance; and to recover damages against the Graves group under a

variety of tort and contract theories, including breach of fiduciary duty, breach of

contract,   tortious   interference,    conspiracy,   defamation,   and    business

disparagement. The lawsuit was filed in HAHS’s name only and not by any of the

directors in his or her individual capacity.

      The Graves group answered the lawsuit and filed a declaratory-judgment

counterclaim seeking determinations that (1) the bylaws attached to its

counterclaim were the “current applicable and effective bylaws that govern the

affairs of HAHS”; (2) the members of the Graves group were all current members

                                           4
of the HAHS Board; and (3) the October 2011 special meeting was a validly called

meeting at which officer and director elections could take place.

      On the parties’ agreement, the trial court enjoined the October 2011 special

meeting pending trial on the merits. HAHS then moved to compel arbitration under

its bylaws. The trial court denied the motion.

      After some time for discovery, the Graves group moved for a traditional

summary judgment on its declaratory-judgment counterclaim and for a no-

evidence summary judgment on HAHS’s contract and tort claims. The trial court

granted the Graves group’s summary judgment motions and rendered a final

judgment declaring that (1) HAHS take nothing on any of its claims against the

Graves group; (2) the bylaws presented by the Graves group were the “current,

applicable, and effective bylaws that govern[ed] the affairs of [HAHS]”; (3) all of

the members of the Graves group were members of the HAHS Board; and (4) the

October 2011 special meeting was a meeting authorized by HAHS’s bylaws at

which officer and director elections could have taken place. The final judgment

also dismissed HAHS’s declaratory-judgment claim and dissolved the agreed

temporary injunction.

      What occurred after the trial court rendered its judgment is, in pertinent part,

undisputed; the parties’ disagreement is over the legal consequence of the

post-judgment events. Two separate special meetings were called with two

                                          5
different results. First, the Graves group noticed a special directors meeting for

April 20, 2012, at which a majority of the Board voted to remove the Coatses and

Evans from their officer and director positions, to elect new officers, and to amend

the bylaws. Then, Evans noticed a special members meeting for the following day.

The purported result of the second meeting on April 21 was the election of a new

board consisting of Stephen Holmes, Debbie Holmes, Clinton Holmes, Dana

Atkinson, Gregory Evans, Christopher Gilbert, Amy Rogers, Tyler Hall, and Jerry

Smith. We refer to the group purporting to be directors of HAHS as a result of the

April 21 special members meeting as the “Holmes group.”

      The Graves group challenged the validity of the April 21 meeting and sought

injunctive relief to enforce the trial court’s judgment. The trial court granted the

relief and entered an order affirming that the special meeting noticed in October

2011 “was a validly noticed special meeting of the HAHS Board of Directors

during which officer and director elections could have taken place” and ruling that

the special meeting held on April 20 was consistent with the final judgment. The

trial court enjoined “Messrs. Coats and Evans, and persons acting at the direction

or in concert with them, including Steve Holmes, Debbie Holmes, Jerry Smith,

Dana Atkinson, Greg Evans, Penny Evans, and Clinton Holmes . . . and each of

their respective agents, employees, servants, and attorneys . . . from undertaking

                                         6
any actions based on the purported election of directors at the April 21 [ ] special

meeting of members.”

      Stephen Holmes and Dana Atkinson―purportedly as directors elected at the

April 21 special meeting―appealed the trial court’s final judgment on HAHS’s

behalf.2 The appeal is brought in HAHS’s name only and not on behalf of any

current or former director in his or her individual capacity.

                           Motion to Compel Arbitration

      In its first issue, the Holmes group contends that the trial court erred in

denying HAHS’s motion to compel arbitration. The Graves group does not dispute

that the HAHS bylaws contained a valid arbitration clause, 3 but responds that

HAHS’s claims fell outside the scope of that clause. The Graves group

alternatively argues that HAHS waived its right to arbitrate by substantially

2
      The Graves group contends that this Court lacks jurisdiction over this appeal
      because the individuals pursuing the appeal—Holmes and Atkinson—lack
      standing or authority or both to act on HAHS’s behalf and because the individuals
      who filed the lawsuit—the Coatses and Evans—are no longer HAHS officers or
      directors. The trial court’s judgment, in effect, authorized the change in control of
      HAHS and ouster of the Coatses and Evans. Thus, the issue of standing and
      authority is intertwined with the propriety of the trial court’s judgment. Because
      this Court has jurisdiction to determine its own jurisdiction, we will consider the
      merits of Holmes and Atkinson’s appeal. United States v. Ruiz, 536 U.S. 622, 628,
      122 S. Ct. 2450, 2454 (2002); Houston Mun. Employees Pension Sys. v. Ferrell,
      248 S.W.3d 151, 158 (Tex. 2007); In re Washington, 7 S.W.3d 181, 182 (Tex.
      App.—Houston [1st Dist.] 1999, no pet.).
3
      It is undisputed that the Graves group purported to amend the bylaws at the April
      20 special directors meeting. We do not address the amended bylaws, however,
      because the original bylaws were in effect at the time the trial court made its ruling
      on the motion to compel arbitration.
                                            7
invoking the litigation process. We do not reach the waiver issue because we agree

that HAHS’s claims were beyond the arbitration clause’s scope.

A.    Legal standards

      It is not enough for a party demanding arbitration to show that a valid

arbitration clause exists; the party must also show that its claims fall within the

scope of the clause. Rachal v. Reitz, 403 S.W.3d 840, 843 (Tex. 2013); In re

AdvancePCS Health L.P., 172 S.W.3d 603, 605 (Tex. 2005) (per curiam). Whether

an arbitration clause encompasses a claim is a matter of contract interpretation and

a question of law for the court. Kline v. O’Quinn, 874 S.W.2d 776, 782 (Tex.

App.—Houston [14th Dist.] 1994, writ denied). In making this legal determination,

we focus on the movant’s factual allegations rather than the causes of action

asserted. See In re FirstMerit Bank, N.A., 52 S.W.3d 749, 754 (Tex. 2001) (orig.

proceeding); Jack B. Anglin Co., Inc. v. Tipps, 842 S.W.2d 266, 271 (Tex. 1992).

Any doubts as to which claims fall within the scope of an arbitration clause must

be resolved in favor of arbitration. Prudential Sec. Inc. v. Marshall, 909 S.W.2d
896, 899 (Tex. 1995).

B.    Denial of motion to compel arbitration was not abuse of discretion

      Given the parties’ agreement as to the existence of a valid arbitration clause,

the only matter presented for our review is whether the arbitration clause covers

                                         8
the claims asserted in this litigation. The arbitration clause, which appears in that

part of the HAHS bylaws entitled “Members,” provides:

      In any dispute between members relating to the activities of the
      Corporation, all parties involved shall cooperate in good faith to
      resolve the dispute. If the parties cannot resolve the dispute between
      themselves, they shall cooperate to select one or more mediators to
      help resolve the dispute. If no timely resolution occurs through
      mediation, any party may demand binding arbitration as described in
      the Revised Civil Statutes Article 238–20 or the Revised Civil
      Statutes Article 224 et seq. only if the parties have met together with a
      mediator. This paragraph shall not apply to a dispute involving the
      Corporation as a party relating to the sanctioning, suspension or
      expulsion of a member from the Corporation. The Board of Directors
      shall have the discretion to authorize the use of the Corporation’s
      funds for mediation or arbitration of dispute as described in this
      paragraph.

The clause’s first sentence dictates its scope. Thus, to determine whether the trial

court erred in refusing to order arbitration, we must determine whether HAHS’s

petition or the Graves group’s counterclaim alleged a “dispute between members

relating to the activities of the Corporation.”

      HAHS’s petition asserts various theories of liabilities against the six

directors in the Graves group. Even though the bylaws provide that all directors of

the corporation shall also be members, the lawsuit is not a dispute between

members. The factual allegations supporting HAHS’s causes of action relate

exclusively to the Graves group member’s acts and omissions as directors.

Likewise, the Graves group’s counterclaim relates solely to the operation and

governance of HAHS through its board of directors. Thus, this is a dispute between
                                           9
directors for control of HAHS, not a dispute between members relating to

corporate activities. We conclude that the claims asserted in this litigation fall

outside the scope of the arbitration clause.

      Our conclusion is buttressed by this Court’s holding in an analogous case. In

Texas Private Employment Ass’n v. Lyn-Jay International, Inc., 888 S.W.2d 529

(Tex. App.—Houston [1st Dist.] 1994, no writ), the defendant association’s bylaws

called for arbitration of disputes between members—specifically, “any controversy

. . . arising between any two or more members of the association.” The association

moved to compel arbitration of a suit brought by its members against the

association, its officers, and its directors. The trial court denied the motion to

compel, and this Court affirmed. In affirming, the Court held that because the plain

language of the arbitration clause required arbitration between members, it did not

apply to a dispute between the association and its members. The same result is

required here where the lawsuit, as filed and pleaded, is between HAHS and six of

its directors. For these reasons, we hold that the trial court did not err by denying

HAHS’s motion to compel arbitration, and we overrule HAHS’s first issue.

                         Traditional Summary Judgment

      In its second and third issues, HAHS challenges the trial court’s traditional

summary judgment for the Graves group on its declaratory-judgment counterclaim.

Specifically, HAHS argues that (1) the counterclaim was not the proper subject of

                                          10
a declaratory judgment and (2) genuine fact issues precluded summary judgment

on the counterclaim. HAHS further argues that its own declaratory-judgment claim

should not have been dismissed as part of the trial court’s summary judgment

ruling because it was not the subject of the Graves group’s motion.

A.    Counterclaim was proper subject of declaratory judgment

      We turn first to whether, as HAHS contends, the Graves group could not

properly assert a declaratory-judgment counterclaim because HAHS’s claim for the

same relief was already pending in the trial court.

      HAHS correctly states the general rule that a declaratory judgment is not

available to settle disputes already pending before a court. See BHP Petroleum Co.,

Inc. v. Millard, 800 S.W.2d 838, 841 (Tex. 1990); Indian Beach Prop. Owners’

Ass’n v. Linden, 222 S.W.3d 682, 701−02 (Tex. App.—Houston [1st Dist.] 2007,

no pet.); Howell v. Mauzy, 899 S.W.2d 690, 706 (Tex. App.—Austin 1994, writ

denied). While this rule precludes a counterclaim that presents nothing more than a

denial of the plaintiff’s claim, a court may allow a declaratory-judgment

counterclaim if it states a claim for affirmative relief. See Millard, 800 S.W.2d at

841 (instructing that “Texas trial courts should decline to exercise jurisdiction

seeking a declaration of non-liability in a tort action,” but acknowledging that “[i]n

certain instances . . . a defensive declaratory judgment may present issues beyond

those raised by the plaintiff.”); Hitchcock Props., Inc. v. Levering, 776 S.W.2d
11
236, 239 (Tex. App.—Houston [1st Dist.] 1989, writ denied) (same); Howell, 899
S.W.2d at 706 (same). “‘To qualify as a claim for affirmative relief, a defensive

pleading must allege that the defendant has a cause of action, independent of the

plaintiff’s claim, on which he could recover benefits, compensation or relief, even

though the plaintiff may abandon his cause of action or fail to establish it.’” Gen.

Land Office v. OXY U.S.A., Inc., 789 S.W.2d 569, 570 (Tex. 1990) (quoting

Weaver v. Jock, 717 S.W.2d 654, 657 (Tex. App.—Waco 1986, writ ref’d n.r.e.)).

      We look to the Texas Supreme Court’s opinion in BHP Petroleum Co., Inc.

v. Millard for guidance in determining when a defensive declaratory judgment

presents issues beyond those raised by the plaintiff. 800 S.W.2d at 841. There, the

plaintiff sued the defendant for breach of a gas-purchase contract’s “take-or-pay”

provisions. Id. at 842. The defendant counterclaimed for a declaratory judgment

“[t]hat events have occurred which constitute force majeure, as the parties agreed

to define the term, or other causes not reasonably within the control of ANR and its

customers, which have affected and will continue for the foreseeable future to

affect ANR’s takes of natural gas under the Contracts[.]” Id. The defendant thus

sought an interpretation of the gas purchase contract that would define the parties’

future contractual obligations. Because the gas purchase contract represented an

ongoing relationship, the Court held that the defendant’s declaratory-judgment

                                        12
counterclaim was proper as a cause of action on which the defendant could recover

relief if the plaintiff abandoned or failed to establish its claims. Id.

      In contrast, the court of appeals in Newman Oil Co. v. Alkek, 614 S.W.2d
653, 655 (Tex. App.—Corpus Christi 1981, writ ref’d n.r.e.) held a counterclaim

was improper, where the plaintiffs sued the defendants for fraudulent

misrepresentations, breach of contract, and violations of the Deceptive Trade

Practices Act. Id. at 653–55. The defendants counterclaimed for declaratory relief

and moved for summary judgment on the basis that they had not committed fraud,

engaged in common law tort or deceptive trade practices, or breached any contracts

with the plaintiffs. Id. at 654–55. Even though the defendants framed the

counterclaim as a request for declaratory relief, the court of appeals held that the

defendants did not plead facts upon which affirmative relief could be granted. Id.

at 655. Thus, the counterclaims were improper as mere denials of the plaintiffs’

causes of action. Id.

      In this case, HAHS asserted claims for breach of fiduciary duty, breach of

contract, conspiracy, defamation and libel, business disparagement, and tortious

interference. Its original petition also sought a declaration of the “rights,

responsibilities and obligations of the parties,” specifically, with respect to “the

current officers and directors of [the corporation] and [ ] the terms of its

                                            13
organizational governance.” The Graves group’s counterclaim sought a declaration

that:

        i.     the bylaws attached [to their original counterclaim] as Exhibit
               A [were] the current applicable and effective bylaws and
               govern[ed] the affairs of HAHS;

        ii.    . . . John L. Graves, Harper Trammell, Oscar Nipper, Marjorie
               Evans, Bernard Morris, and Captain A.J. High [were] all
               current members of the HAHS Board of Directors; and

        iii.   . . . the special meeting called for October 24, 2011 by the
               [Graves group] was a validly called special meeting and that the
               [Graves group] ha[d] the right to call such a special meeting to
               hold officer and/or director elections.

After the Graves group filed its counterclaim, HAHS amended its declaratory-

judgment claim to request more specific relief, including determinations that the

members of the Graves group had “constructively abandoned their positions as

Directors of [HAHS], that [their] terms as directors ha[d] expired, that the

Members of [HAHS] [were] entitled to elect the next board of directors of

[HAHS], . . . and that [the Graves group’s] proposed and contemplated actions

constitute[d] a fundamental action, as defined by the Texas Business Organizations

Code, which must be approved by a vote of [HAHS’s] members.”

        We conclude that although it sought determinations about the operation and

governance of HAHS, which are matters HAHS put before the trial court in its

claim for declaratory relief, the Graves group stated a cause of action on which it

could recover relief if HAHS abandoned or failed to prove its claims. See Millard,

                                          14
800 S.W.2d at 842. The declaration sought by the Graves group in its counterclaim

would have the effect of defining the future rights and obligations of HAHS and its

various officers, directors, and members. Thus, the counterclaim was more than a

mere denial of liability on HAHS’s claims and was the proper subject of a

declaratory judgment. Compare Millard, 800 S.W.2d at 841 (holding that

defendant’s counterclaim was claim for affirmative relief and declaratory judgment

was proper), and Georgiades v. Di Ferrante, 871 S.W.2d 878, 880–81 (Tex.

App.―Houston [14th Dist.] 1994, writ denied) (same), with Nat’l Enter., Inc. v.

E.N.E. Props., 167 S.W.3d 39, 43–44 (Tex. App.―Waco 2005, no pet.) (holding

that defendant’s counterclaim was not claim for affirmative relief and declaratory

judgment was improper), Anderson v. New Prop. Owners’ Ass’n of Newport, Inc.,

122 S.W.3d 378, 391 (Tex. App.—Texarkana 2003, pet. denied) (same), Howell,
899 S.W.2d at 706–07 (same), and HECI Exploration Co. v. Clajon Gas Co., 843
S.W.2d 622, 639 (Tex. App.―Austin 1992, writ denied) (same).

B.    Trial court did not err in granting summary judgment on
      declaratory-judgment counterclaim

      Having concluded that the Graves group could properly request declaratory

relief in its counterclaim, we turn now to whether the trial court erred in granting

such relief. HAHS argues that the trial court erred in granting summary judgment

because genuine issues of material fact exist as to whether (1) “any or all of the

provisions of HAHS’[s] Bylaws were waived and/or acquiesced by the actions and
                                        15
inactions of the Board” and (2) Oscar Nipper resigned and John Graves was

removed from their positions as directors.

      1.    Standards of review

      We review the trial court’s traditional summary judgment de novo. Ferguson

v. Bldg. Materials Corp. of Am., 295 S.W.3d 642, 644 (Tex. 2009). The standard of

review for a traditional summary judgment is well established: (1) the movant has

the burden of showing that no genuine issue of material fact exists and that it is

entitled to summary judgment as a matter of law; (2) in deciding whether there is a

disputed material fact issue precluding summary judgment, evidence favorable to

the nonmovant will be taken as true; and (3) every reasonable inference must be

indulged in favor of the nonmovant and any doubts resolved in the nonmovant’s

favor. See, e.g., Nixon v. Mr. Property Mgmt. Co., 690 S.W.2d 546, 548–49 (Tex.

1985); Richards v. Transocean, 333 S.W.3d 326, 331 n.5 (Tex. App.—Houston

[1st Dist.] 2010, no pet.); Goston v. Hutchison, 853 S.W.2d 729, 731 (Tex. App.—

Houston [1st Dist.] 1993, no writ).

      Our review also involves interpretation of HAHS’s bylaws. To that end, we

apply ordinary principles of contractual interpretation. See, e.g., MCI Telecomms.

Corp. v. Tex. Utils. Elec. Co., 995 S.W.2d 647, 650−51 (Tex. 1999); In re Aguilar,

344 S.W.3d 41, 49−50 (Tex. App.—El Paso 2011, orig. proceeding). We construe

written instruments, like bylaws, as a whole in an effort to harmonize and give

                                        16
effect to all the provisions of the instrument so that none will be rendered

meaningless. Shell Oil Co. v. Khan, 138 S.W.3d 288, 292 (Tex. 2004). No single

provision taken alone will be given controlling effect; rather, all the provisions

must be considered with reference to the whole instrument. Id.

      2.     No fact issue exists concerning waiver or abandonment of any
             bylaw

      In its summary judgment motion, the Graves group requested a declaration

that the bylaws attached to its motion were the “current applicable and effective

bylaws and govern[ed] the affairs of HAHS.” HAHS did not dispute in the trial

court that the bylaws presented by the Graves group were the bylaws adopted by

HAHS; that is, HAHS did not contest the bylaws’ authenticity or contend that the

bylaws were inaccurate or incomplete. Instead, HAHS argued that certain

bylaws―namely, the provision for the removal of officers and directors at a

special meeting called by either the president or two directors and the provision for

two-year director term limits―had been amended or waived by the Board’s actions

and omissions.

      Although the HAHS bylaws expressly provide that they “govern the affairs

of [HAHS]” and may be altered, amended, or repealed by a majority vote of the

Board, HAHS cites this Court’s opinion in Keating v. K-C-K Corp. for the

proposition that the bylaws are subject to amendment by acts evidencing a uniform

course of proceeding, or usage and acquiescence. 383 S.W.2d 69, 71 (Tex. Civ.
                                         17
App.―Houston [1st Dist.] 1964, no writ) (stating that when the corporate charter

and applicable corporate statutes are silent as to formalities to be observed in

enacting or amending bylaws, “no particular mode of enactment or formality is

necessary” and, “[u]nder such circumstances, it is a general rule that by-laws may

be adopted, or amended, orally or by acts evidenced by a uniform course of

proceeding, or usage and acquiescence”).

       Keating involved a contest over management of a closely held corporation.

Id. at 69. The primary dispute was whether the corporation’s stockholders should

elect three or four directors at the stockholders’ meeting. Id. at 69−70. The

appellant alleged that a bylaw requiring the corporation to have at least three

directors had been amended by the conduct of the shareholders and directors to

require the election of four directors. Id. at 71. Two things persuaded the court to

hold as a matter of law that the bylaws had been amended to require four directors:

(1) while the corporation’s bylaws allowed amendment only by the affirmative

vote of not less than three-fourths of the shareholders, they did not specify any

formalities to be observed for such a vote; and (2) there was undisputed evidence

that for the four years preceding the meeting in question four directors were

elected. Id. at 71.

       In support of its contention that it has raised a fact issue under Keating,

HAHS has provided this Court with only a general citation to three summary

                                        18
judgment exhibits―the affidavits of George Coats, Kristen Coats, and Gary Evans.

HAHS has not provided any substantive discussion of the statements contained in

the affidavits and has not explained how the affidavits or their attachments create

fact issues on amendment or waiver. Nevertheless, in our independent review of

the affidavits, we note the following assertions contained in all three affidavits that

are relevant to a Keating analysis:

      • [HAHS’s] by-laws were drafted in 1998, prior to its incorporation
        and long before it began actual operation of the Museum. [HAHS]
        has amended its bylaws on a few occasions. In actual practice,
        [HAHS] and its Board have generally complied with some
        provisions of the bylaws, but have generally ignored others.

      • The bylaws contain an express two year term for directors and
        annual re-election of officers. If the bylaws are followed to the
        letter, [HAHS] has neither officers nor directors. The Officer
        Directors, Defendants Trammell, High, Nipper, and Evans were
        last re-elected in 2006. Defendant Graves was elected to the Board
        in 2007 and Defendant Morris was elected to the Board on
        September 4, 2009.

      • Until [ ] Graves’[s] removal, no director had ever been removed
        from the board, nor has any director ever stood for reelection and
        been defeated. There was no motion or formal request to conduct
        board elections at any time between 2006 and the [Graves group’s]
        notice of special meeting in October 2011.

      • Prior to [the Graves group’s] October 14, 2011 notice of special
        meeting (which is the mechanism set forth in the bylaws for
        removal of directors), no special meeting had ever been requested,
        noticed or conducted at any point in [HAHS’s] existence.
      Considering this evidence in the appropriate light, we conclude that it does

not raise a fact issue as to the amendment or waiver of special board meetings as a
                                          19
mechanism for the removal of officers and directors. The affidavits assert only that

“no special meeting had ever been requested” before the Graves group’s October

2011 notice. They are not evidence that the Board uniformly used a different

course of proceeding to remove officers and directors. Therefore, this case is

distinct from Keating in which the appellant showed an affirmative course of

conduct to elect more than three directors on at least four prior occasions. See id. at

71. Our conclusion that a fact issue does not exist is buttressed by the general law

of waiver, which would require evidence of an intentional relinquishment of a

known right or intentional conduct inconsistent with claiming that right. See Sun

Exploration & Prod. Co. v. Benton, 728 S.W.2d 35, 37 (Tex. 1987); Mass.

Bonding & Ins. Co. v. Orkin Exterm.. Co., 416 S.W.2d 396, 401 (Tex. 1967).

      HAHS’s assertions regarding abandonment or waiver of the two-year

director term limits, however, require closer examination. Neither side disputes on

appeal that, although director elections had not occurred in the two years before the

Graves group noticed the October 2011 special meeting, there were at least seven

current directors of HAHS (specifically, George Coats, Kristen Coats, Gary Evans,

Harper Trammell, A.J. High, Bernard Morris, and Marjorie Evans) and no director

had ever been removed on expiration of a two-year term. 4 If the bylaw stating that

4
      Although HAHS asserts in its statement of facts that A.J. High resigned with
      Oscar Nipper at a meeting in November 2010, HAHS has not challenged the trial
      court’s finding in its final judgment that High was still a director. HAHS’s
                                          20
“[e]ach director shall serve for a term of two (2) years” is considered in isolation, a

fact issue might exist as to whether HAHS had any directors. As argued by the

Graves group, however, the undisputed evidence of director service beyond two

years is not evidence of amendment or waiver of any term limit; rather, it is

evidence that demonstrates conduct consistent with a reading of the bylaws as a

whole. See Khan, 138 S.W.3d at 292 (instructing that courts should construe

written instruments as a whole and attempt to harmonize and give effect to all

provisions). The stated two-year term does not include a cap or otherwise limit the

number of terms a director may serve. When read together with another provision

requiring directors to “hold office until a successor is elected and qualified,” the

two-year term establishes only a minimum time of service that expires upon the

election of a successor. We do not read the provision to establish fixed term limits.

Consequently, the assertions in the Coatses’ and Evans’s affidavits regarding the

lack of director elections in the years preceding this lawsuit do not create a fact

issue as to amendment or waiver of the bylaws. Because there was no fact issue as

to the amendment or waiver, the trial court did not err in finding that the bylaws

governed the affairs of HAHS or that a special meeting could be called for the

removal of directors.

      challenge to the declaration in the final judgment regarding the composition of the
      Board is limited to Oscar Nipper’s and John Graves’s status.

                                          21
      3.     A fact issue does exist as to the HAHS Board’s composition

      In its final challenge to the traditional-summary-judgment ruling, HAHS

contends that the trial court erred by declaring that Oscar Nipper and John Graves

were directors. More specifically, HAHS asserts that the summary-judgment

evidence raises genuine issues of material fact as to whether (1) John Graves’s

term limit expired or he abandoned his positions by acting in a manner harmful to

HAHS and thereby opened himself up to termination by Evans and (2) Oscar

Nipper voluntarily resigned at a Board meeting.

      Graves’s status as a director is certain. We have already rejected HAHS’s

contention that the trial court could not declare Graves a director because his term

limit had expired. And HAHS’s contention that Graves effectively resigned or

made himself subject to removal by Evans, acting as President, by “sowing discord

and strife within [HAHS], and his insistence on not only writing but widely

disseminating his paper (which poses such a grave risk to the Society)” is

unsupported by legal authority. Indeed, Evans’s purported unilateral removal of

Graves from the HAHS Board is contrary to section 22.211 of the Texas Business

Organizations Code, which establishes two methods for removal of a director:

(1) “any procedure provided by the . . . bylaws of the corporation” and (2) in the

absence of such a provision, “by the persons entitled to elect, designate, or appoint

the director. If the director was elected to office, removal requires an affirmative

                                         22
vote equal to the vote necessary to elect the director.” TEX. BUS. ORGS. CODE ANN.

§ 22.211 (West 2012). Because the bylaws provide for removal of a director by

majority vote of a quorum of the directors at a special directors’ meeting and

because the bylaws do not provide the HAHS President with authority to elect,

designate, or appoint directors, we conclude that no genuine issue of fact exists as

to Graves’s status as a director at the time the trial court rendered judgment.

      Regarding Nipper, we note the bylaws’ silence about the proper procedures

for the resignation of directors. Section 22.2111 of the Texas Business

Organizations Code provides that “a director of a corporation may resign at any

time by providing written notice to the corporation.” TEX. BUS. ORGS. CODE ANN.

§ 22.2111 (West 2012). However, the permissive term “may” in the statute

indicates that a writing is one possible method of resignation, not that it is the sole

method permitted by law. See Inwood N. Homeowners’ Assoc., Inc. v. Meier, 625
S.W.2d 742, 743 (Tex. App.—Houston [1st Dist.] 1981, no writ) (“(T)he ordinary

meaning of ‘may’ is merely permissive in character.”) (quoting Mitchell v.

Hancock, 196 S.W. 694, 700 (Tex. Civ. App. 1917, no writ)).

      It is undisputed that Nipper did not resign in writing. We agree with HAHS,

however, that the summary-judgment record establishes a fact issue as to whether

Nipper orally resigned at a board meeting. Graves averred in an affidavit that, “[t]o

[his] knowledge, Oscar Nipper never resigned from the HAHS Board of Directors,

                                          23
either orally or in writing, at any time.” His notes from the board meeting at which

HAHS alleges Nipper resigned, however, recall that a “major attempt to railroad

[him] was stopped. Two board members got up, said ‘you are trying to railroad this

man!’, and resigned.” Although Graves’s notes do not name Nipper specifically,

the allegations in the trial court regarding resignations at the meeting concerned

only two directors—A.J. High and Nipper. We conclude that the inconsistencies

between Graves’s affidavit and his notes create a fact issue as to Nipper’s status as

a director, and consequently, the trial court erred in declaring that Nipper was a

member of the HAHS Board. 5 The trial court’s other declarations are not in error.

                        No-evidence Summary Judgment

      In its fourth issue, HAHS argues that the trial court erred in granting a

no-evidence summary judgment on HAHS’s contract and tort claims because there

was inadequate time for discovery and genuine issues of material fact exist. In

response, the Graves group disputes that the no-evidence summary judgment ruling

5
      HAHS also argues that the trial court erred in dismissing HAHS’s declaratory-
      judgment claim because the Graves group did not move for summary judgment on
      that claim. The trial court’s partial summary judgment order on the traditional
      motion dismissed HAHS’s declaratory judgment claim. The final judgment, which
      incorporates the partial summary judgment order, provides both that HAHS take
      nothing on its claims and that HAHS’s declaratory-judgment claim is dismissed.
      The court did not err because the opposing declaratory actions by the two sides
      were intertwined to the extent that the trial court’s ruling granting the Graves
      group’s claim was effectively a denial of HAHS’s claim. In any event, any error
      was harmless because HAHS acknowledges in its briefing that the trial court could
      have ordered that HAHS take nothing on the claim (so the dismissal and take
      nothing provisions are effectively duplicative relief).
                                         24
was premature and argues that the trial court’s ruling should stand because HAHS

did not present any evidence of damages and has not addressed each challenged

element of its claims on appeal. We agree.

A.    No error in refusing to continue the summary-judgment proceedings

      We turn first to the timing of the summary-judgment proceedings. The trial

court may order a continuance of a summary-judgment hearing if it appears “from

the affidavits of a party opposing the motion that he cannot for reasons stated

present by affidavit facts essential to justify his opposition.” TEX. R. CIV. P.

166a(g). But a party cannot simply complain that additional discovery is required

and describe in conclusory fashion the additional discovery that it believes is

needed; the party must also explain how the discovery would aid him in

responding to the summary judgment motion. Retzlaff v.Mendieta-Morales, 356
S.W.3d 676, 681 (Tex. App.—El Paso 2011, no pet.); Brown v. Brown, 145
S.W.3d 745, 749 (Tex. App.—Dallas 2004, pet. denied) (affirming denial of

request for continuance where appellant failed to explain need for further

discovery); Crofton v. Amoco Chem. Co., No. 01-01-00526-CV, 2003 WL
21297588, at *7 (Tex. App.—Houston [1st Dist.] May 30, 2003, pet. denied). We

review the grant or denial of a motion for continuance for an abuse of discretion.

BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 800 (Tex. 2002).

                                        25
      HAHS failed to explain the need for additional discovery or how the

additional discovery would aid in the preparation of a summary-judgment response

in its motion for continuance or supplemental motion or at the summary-judgment

hearing. The only reason submitted for the continuance was that the Graves

group’s responses to discovery already propounded were not complete—in other

words, that discovery had not concluded. In the absence of an explanation of the

need for additional discovery, the trial court did not err in denying HAHS’s motion

for a continuance of the summary-judgment proceedings. See Retzlaff, 356 S.W.3d

at 681; Brown, 914 S.W.3d at 749; Crofton, 2003 WL 21297588, at *7.

B.    HAHS failed to raise an issue of fact as to damages for any of its
      contract or tort claims against the Graves group members

      The members of the Graves group filed three separate no-evidence

summary-judgment motions: Lickliter-Mudon filed one motion, Graves filed

another, and the remaining directors filed their own motion. Collectively the three

motions challenged every element of HAHS’s contract and tort claims, including

the common element of damages. We therefore turn to the issue of whether HAHS

raised a fact issue on the challenged elements of its contract and tort claims so as to

defeat the Graves group’s motion for no-evidence summary judgment on the same.

      1.     Standard of review

      A no-evidence summary judgment is equivalent to a pretrial directed verdict.

                                          26
West v. SMG, 318 S.W.3d 430, 437 (Tex. App.—Houston [1st Dist.] 2010, no

pet.); Rangel v. Lapin, 177 S.W.3d 17, 20 (Tex. App.—Houston [1st Dist.] 2005,

pet. denied). Therefore, we apply the same legal sufficiency standard of review.

Rangel, 177 S.W.3d at 20; see also West, 318 S.W.3d at 437; Zapata v. Children's

Clinic, 997 S.W.2d 745, 747 (Tex. App.—Corpus Christi 1999, pet. denied). In an

appeal of a no-evidence summary judgment, we review the evidence in the light

most favorable to the nonmovant, disregarding all contrary evidence and

inferences. Merrell Dow Pharms., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex.

1997); Burroughs Wellcome Co. v. Crye, 907 S.W.2d 497, 499 (Tex. 1995); West,
318 S.W.3d at 437; Rangel, 177 S.W.3d at 20. If the nonmovant produces evidence

to raise a genuine issue of material fact, summary judgment is improper. TEX. R.

CIV. P. 166a(i). All that is required of the non-movant is to produce a scintilla of

probative evidence to raise a genuine issue of material fact. Zapata, 997 S.W.2d at

747. “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.” Id. (citing Moore v.

K Mart Corp., 981 S.W.2d 266, 269 (Tex. App.—San Antonio 1998, pet. denied)

(quoting Kindred v. Con/Chem Inc., 650 S.W.2d 61, 63 (Tex. 1983)). Conversely,

more than a scintilla exists when the evidence in support of a challenged element

“rises to a level that would enable reasonable and fair-minded people to differ in

their conclusions.” Transp. Ins. Co. v. Moriel, 879 S.W.2d 10, 25 (Tex. 1994). The

                                        27
burden of producing evidence is entirely on the nonmovant; the movant has no

burden to attach any evidence to the motion. TEX. R. CIV. P. 166a(i).

      2.     The only evidence of HAHS’s alleged damages was not before the
             trial court at the time it ruled

      With respect to damages, HAHS alleged that Graves’s conduct and the

discord it caused impaired HAHS’s ability to raise funds for its future operations

by distracting the directors from conducting capital campaigns. HAHS also alleges

that it “would have raised $500,000.00 for much needed facilities, improvements,

staff and board development.” In support of these allegation on appeal, HAHS

cites testimony from Harper Trammell purportedly identifying a $50,000 donation

that was lost as a result of strife on the HAHS Board. But that testimony was

submitted by HAHS as part of a bill of exceptions long after the trial court ruled on

the no-evidence summary-judgment motions, and the trial court was not obligated

to consider it. See Benchmark Bank v. Crowder, 919 S.W.2d 657, 663 (Tex. 1996)

(“Summary judgment evidence may be filed late, but only with leave of court.”);

Mathis v. RKL Design/Build, 189 S.W.3d 839, 843 (Tex. App.—Houston [1st

Dist.] 2006, no pet.) (“If a party files late summary judgment evidence, and no

order appears in the record granting leave to file, the evidence will not be

considered as being before the court.”). Likewise, HAHS’s allegations about the

$500,000 capital campaign are unsupported by evidence in the summary-judgment

record; indeed, HAHS does not even cite to any supporting evidence in its briefing
                                         28
on appeal. In the absence of such evidence, the lost $500,000 capital campaign is

speculative and not a valid ground for defeating the no-evidence summary

judgment motions. See Pink v. Goodyear Tire & Rubber Co., 324 S.W.3d 290, 297

(Tex. App.—Beaumont 2010, pet. dism’d) (“A party may not avoid a no-evidence

summary judgment by presenting speculation.”). Because HAHS did not raise an

issue of fact on damages, we hold that the trial court did not err in granting the no-

evidence summary judgments.

        Accordingly, we overrule HAHS’s fourth issue.

                                        Conclusion

        Having concluded that a fact issue exists as to Oscar Nipper’s status as a

member of the HAHS Board of Directors but having found no error with respect to

any other ruling by the trial court made the subject of this appeal, we affirm in part,

reverse in part, and remand. Specifically, we reverse that part of the trial court’s

final judgment declaring Oscar Nipper a member of the HAHS Board and remand

for further proceedings to determine Oscar Nipper’s status. The trial court’s

judgment is affirmed in all other respects. All outstanding motions are dismissed as

moot.

                                               Harvey Brown
                                               Justice

Panel consists of Justices Jennings, Sharp, and Brown.
                                          29