Valores Corporativos, S.A. De C v. v. McLane Co. ( 1997 )

OPINION

DUNCAN, Justice.

Valores Corporativos, SA. de C.V., Casa Chapa, SA. de C.V., and Chapa Trading Co., Inc. (collectively, “Valores”)² appeal the summary judgment against them in their suit against McLane Company, Inc. and Wal-Mart Stores, Inc. We hold the summary judgment proof does not conclusively establish the absence of an enforceable agreement between Valores and McLane Co., and Texas law does not preclude holding Wal-Mart ha-ble for tortiously interfering with the contractual relations of its wholly-owned subsidiary, McLane Co. Accordingly, we reverse the judgment and remand the case to the trial court for further proceedings consistent with this opinion.

PROCEDURAL BACKGROUND

Valores filed suit against Drayton McLane, McLane Co., and Wal-Mart on numerous causes of action. On Valores’ motion, however, ah of its causes of action against Drayton McLane and many of its causes of action against McLane Co. and Wal-Mart were dismissed with prejudice. As a result of these dismissals, Valores retained claims against McLane Co. for breach of contract, breach of a confidential or fiduciary relationship, and constructive fraud; Valores retained claims against Wal-Mart for tortiously interfering with Valores’ and McLane Co.’s agreement or prospective contractual relations and for knowingly participating in what it knew or should have known were breaches of fiduciary duty and constructive fraud by McLane Co. towards Valores.

On September 12, 1995, McLane Co. and Wal-Mart moved for partial summary judgment on Valores’ claims for breach of contract and tortious interference with contract or prospective contractual relations. The trial court granted this motion by order signed October 6, expressly noting that it was not granting the motion on the statute of frauds ground.³

On October 9, McLane Co. and Wal-Mart moved for partial summary judgment on Val-ores’ claims against McLane Co. for breach of a confidential or fiduciary relationship and constructive fraud and its claims against Wal-Mart for knowing participation. In line with the parties’ waivers of the appropriate deadlines, the trial court heard and granted this motion on October 11. This second partial summary judgment, coupled with Val-ores’ voluntary dismissals and the earlier October 6 partial summary judgment, comprised a final judgment. Accordingly, on October 11, 1995, the trial court signed a final judgment incorporating all of the pertinent orders. Valores appealed.

STANDARD OF REVIEW

We review a summary judgment de novo. Accordingly, we will uphold a summary judgment only if the summary judgment record establishes that there is no genuine issue of material fact, and the movant is entitled to judgment as a matter of law on a ground set forth in the motion. Travis v. City of Mesquite, 830 S.W.2d 94, 99-100 (Tex.1992); Tex.R. Civ. P. 166a(c). In deciding whether the summary judgment record establishes the absence of a genuine issue of material fact, we view as true all evidence favorable to the non-movant and indulge every reasonable inference, and resolve all doubts, in its favor. Nixon v. Mr. Property Mgmt. Co., 690 S.W.2d 546, 548-49 (Tex.1985).

Scope of Review

Before setting forth the factual background in this case, we must first decide an issue relating to the scope of review. In an objection and supplemental objection, Val-ores argues that we may not consider the summary judgment proof filed on October 9 as support for the trial court’s October 6 partial summary judgment, because it was not before the trial court at that time or for that purpose. McLane Co. and Wal-Mart disagree, arguing that we may consider their October 9 summary judgment proof in support of the October 6 partial summary judgment, because it was filed before the October 11 final judgment was signed. We initially overruled Valores’ objection and supplemental objection. However, after further reflection and for the reasons discussed below, we reverse our earlier ruling and now sustain Valores’ objection and supplemental objection.

As a general rule, the trial court may consider only that summary judgment proof that was properly on file at the time of the hearing. Jack B. Anglin Co., Inc. v. Tipps, 842 S.W.2d 266, 269 (Tex.1992). McLane Co. and Wal-Mart are correct, however, that the rule also permits the trial court to consider proof filed after the hearing but before judgment in some circumstances. Tex.R. Civ. P. 166a(c). But this provision, “before judgment,” has been “construed to mean before the summary judgment is signed by the trial court.” Timothy Patton, Summahy Judgments in Texas § 2.01[l][b] at 7 (2nd ed.1996). Moreover, “the record must affirmatively reflect that those late-filed documents were filed with leave of court.” Id.

In this case, the October 9 summary judgment proof was filed after the trial court signed the October 6 partial summary judgment, and the record does not reflect the trial court permitted this proof to be filed or considered as late-filed proof with respect to the October 6 partial summary judgment. Accordingly, we presume it was not considered by the trial court as support for the October 6 partial summary judgment. Cf., e.g., Benchmark Bank v. Crowder, 919 S.W.2d 657, 663 (Tex.1996); Goswami v. Metropolitan Sav. & L. Ass’n, 751 S.W.2d 487, 490 n. 1 (Tex.1988) (in the absence of order to the contrary, presume trial court did not consider late-filed proof). We therefore reverse our earlier ruling and sustain Val-ores’ objection and supplemental objection to consideration of the October 9 summary judgment proof as support for the October 6 partial summary judgment.

Factual Background

The summary judgment proof is voluminous and contradictory in many material respects.⁴ The following statement reflects the standard of review set forth above — that is, Valores’ summary judgment proof is assumed to be true, and all inferences are indulged, and all doubts are resolved, in its favor. To emphasize our point — in light of the standard of review, this statement of the factual background does not reflect McLane Co. and Wal-Mart’s substantial controverting proof.

In November 1990, Valores, a Mexican corporation, and McLane Co., a Texas corporation (and, as of December 10,1990, a wholly-owned subsidiary of Wal-Mart), began exploring a joint venture for the wholesale distribution of groceries in Mexico. During the negotiations that followed, Valores was represented by its chairman, Jose Chapa, and its chief executive officer, Gilberto De Hoyos, while McLane Co. was represented by its chief executive officer, Drayton McLane, and its vice president for international affairs, Robert Hudspeth.

On September 26, 1991, after ten months of meetings, analyses, and projections, a meeting was held in Monterrey. According to De Hoyos, this meeting was for the purpose of reaching, and resulted in, a final agreement on all essential terms, as reflected in Drayton McLane’s shaking hands with Chapa and De Hoyos and saying they had a deal, as well as media coverage and various correspondence, including Hudspeth’s September 27, 1991 letter to Valores “re Agreements and Understandings”; Hudspeth’s September 27 letter to De Hoyos congratulating him “for the leadership and vision of creating Chapa/McLane....”; Drayton McLane’s September 30 letter to Chapa stating that McLane Co. was “truly honored to be your partner _”; and Drayton McLane’s October 24 letter to Chapa stating that “[o]ur agreement in principle is all we really need, but as soon as the contract is completed, I look forward to coming to Monterrey to have a formal signing of this important document.” De Hoyos further testified that he was authorized to bind Valores, and Drayton McLane was authorized to bind McLane Co., to their agreement.

The essential terms of the parties’ agreement, according to De Hoyos and as substantially reflected in Drayton McLane’s September 27 letter to De Hoyos, were:

► The name of the joint venture would be “Chapa/McLane.”

► Chapa/McLane’s business purpose would be the wholesale distribution of groceries and the continuation of Val-ores’ home delivery service near Monterrey in northeastern Mexico.

► Valores would contribute its “know-who,” while McLane Co. would contribute its “know-how.”

► Chapa/McLane would “be owned and capitalized equally by Valores and McLane.” “Financing methods [would] be evaluated by Valores and recommendations made as to [the] best methods for [the] benefit of [the] joint venture.”

► The “[t]otal capital investment requirements [were] estimated at 10-12,000,-000.00 U.S.D.”

► Chapa/McLane’s “Board of Directors [would] consist of six members — three from each company with chairman from Valores. Alfonso Cordero [would] serve as General Manager of Chapa/McLane.”

► Valores would close its existing distribution centers, and Chapa/McLane would “reimburse [Valores] up to [a] maximum of 2,000,000 U.S.D. over five years for losses incurred as [a] result of facility closings. This 2,000,000.00 U.S.D. would be generated from operating profits and could be paid in a time frame shorter than five years at the discretion of McLane Company or longer if [the] profits generatefd] [were] not adequate to fund reimbursement.”

► “In depth [d]ata [s]ystems analysis,” “transportation analysis,” and “[t]raining orientation schedules” were to begin and be completed and finalized “as soon as practical.” “Alfonso Cordero [would] spend [a] minimum of four months at McLane divisions. David Chapa [would] receive extensive training in [the] McLane CPL Program.”

► Preliminary, capital expenditure, operating, and cash flow budgets were “to be completed.”

► A first draft of a written agreement was to be prepared by Valores and “forwarded to McLane.”

► The “[t]arget date for operation start-up” was “August 1992.”

In recognition of its new partner and the new company they would form, and in accordance with Mexican business custom, the following month Valores presented Drayton McLane with coins commemorating the discovery of America.

On November 1, 1991, Valores and McLane Co. issued joint press releases announcing their “agreement in principle.” This press release, unlike that issued earlier to announce Wal-Mart’s acquisition of McLane Co., did not state that the agreement was subject to legal documentation. After the November 1 press release, the parties began performing their agreement. For instance, David Chapa moved to Temple for management training; the “in depth systems analysis” and “transportation analysis” were begun; drafts of the written agreement were prepared, edited, and exchanged; and a site was selected for the Chapa/McLane distribution center, plans were drawn, and a groundbreaking date was set for July 1992. By the end of May 1992, McLane Co. knew virtually every aspect of Valores’ wholesale grocery distribution business in Mexico— from its customer profiles and detailed customer lists to the size and number of particular items it warehoused and distributed.

Meanwhile, however, a conflict was brewing. On July 9,1991, Wal-Mart had issued a press release announcing that it, in partnership with Direción Corporativa CIFRA, SA. de C.V., would develop the equivalent of Wal-Mart’s Sam’s Clubs in Mexico. In light of this partnership, on November 11, Rob Walton, Wal-Mart’s vice chairman, sent a copy of the November 1 Chapa/McLane press release to CIFRA CIFRA wrote back, stating that Chapa/McLane was an “unexpected surprise” and “raised some doubts as to how your new venture in Mexico might affect our present business relationship.” McLane Co. assured Wal-Mart, however, that no conflict existed; Wal-Mart and CIFRA were retailers, while Chapa/McLane would be a wholesale grocery distributor. Therefore, although Hudspeth mentioned CI-FRA’s objection to De Hoyos, Hudspeth also indicated it was Wal-Mart’s problem and would be worked out by Wal-Mart and CI-FRA Unknown to Valores, however, McLane Co.’s general counsel had been instructed to “slow play” the documents intended to memorialize the Chapa/McLane agreement. At no point, however, did anyone involved identify any “deal breakers.” Nonetheless, according to De Hoyos, Dray-ton McLane admitted to him following a late May 1992 meeting that the conflict with CI-FRA was probably affecting McLane Co.’s ongoing performance of its agreement with Valores. On May 29, 1992, Wal-Mart issued a press release announcing an expanded agreement with CIFRA Under this expanded agreement, Wal-Mart committed McLane Co. to do business in Mexico exclusively with CIFRA

On June 3, the top executives of Valores, McLane Co., and Wal-Mart met in Dallas. At that meeting, Drayton McLane apologized for the “embarrassing situation” and explained that when he began negotiations with Valores, he owned and controlled McLane Co. But, although Wal-Mart had approved the November 1 press release announcing their agreement in principle, Wal-Mart had decided there would be no Chapa/McLane. When the Valores representatives demanded that McLane Co. honor its agreement, Wal-Mart’s president, David Glass, stated that, although “this is not the way Wal-Mart does business,” “this is the way it is going to be.” In a subsequent letter, McLane Co.’s general counsel admitted to Valores’ attorney that “the Wal-Mart/CIFRA relationship has become the controlling force.”

Breach of Contract

In their first motion for summary judgment, McLane Co. and Wal-Mart contended their summary judgment proof conclusively established that McLane Co. and Valores never entered a binding contract because (1) a signed, written agreement was a precondition to the formation of an enforceable contract and (2) the purported agreement failed for indefiniteness. For convenience, we assume without deciding that McLane Co.’s and Wal-Mart’s motion and proof were legally sufficient to shift the burden to Valores to raise genuine issues of material fact on each ground. We hold, however, that Valores met this burden.

Requirement of a Written Agreement

Whether a signed, written agreement is a precondition to the formation of an enforceable contract depends upon the parties’ intent. Foreca, S.A. v. GRD Dev. Co., 758 S.W.2d 744, 745-46 (Tex.1988); Scott v. Ingle Bros. Pac., Inc., 489 S.W.2d 554, 555 (Tex. 1972). While the absence of an intent to be bound without a signed, written agreement may be established as a matter of law, it is generally a question of fact to be decided by a factfinder. Foreca, 758 S.W.2d at 746; Scott, 489 S.W.2d at 556-57. In Scott, for instance, the court held that whether a contractual provision referencing a non-existent subsidiary contract was enforceable was a triable question of fact. Scott, 489 S.W.2d at 557. Similarly, in Foreca, the court held that whether a signed, written agreement was a precondition to the formation of an enforceable contract was a question of fact properly submitted to the jury even though the memorandum of agreement there at issue expressly stated that it was “subject to legal documentation.” Foreca, 758 S.W.2d at 746; see also id. at 746 n. 2 (factors to consider); Scott, 489 S.W.2d at 556 (importance of substantial performance); accord Crest Ridge Constr. Group, Inc. v. Newcourt, Inc., 78 F.3d 146, 150 (5th Cir.1996) (applying Texas law) (“the parties’ conduct illustrated that they thought they had a deal”).

In this case, the summary judgment proof does not conclusively establish that Valores and McLane Co. intended that an enforceable contract would await a signed, written agreement. To the contrary, Valores’ summary judgment proof indicates that a signed, written agreement was intended merely to memorialize the agreement already reached on September 26. Unlike the press release in which Wal-Mart announced its acquisition of McLane Co. and the memorandum of agreement at issue in Foreca, the November 1 press release announcing Chapa/McLane did not state that it was subject to the execution of a definitive written agreement. Instead, it appears both parties intended and operated on the premise that “[their] agreement in principle is all [they] really need[ed],” as stated in Drayton McLane’s October 24 letter. For instance, two of Val-ores’ management personnel moved to Temple, Texas for training with McLane Co.; Valores provided McLane Co. with the names and addresses of all of its customers so that McLane Co. could determine the exact latitude and longitude of Valores’ customers for entry into McLane Co.’s proprietary TRUCKS routing software; and McLane Co.’s architects and engineers selected a site for, designed, and set a ground breaking date for the Chapa/McLane distribution center.

McLane Co. and Wal-Mart insist, however, that the summary judgment proof in this case conclusively establishes the necessity of a signed, written agreement just as it did in Continental Labs., Inc. v. Scott Paper Co., 759 F.Supp. 538 (S.D.Iowa 1990), aff'd, 938 F.2d 184 (8th Cir.1991). According to McLane Co. and Wal-Mart, “[i]n both instances, the parties claiming no contract believed that any agreement reached between the parties would be in a written form and that there would not be a binding agreement until the contract was executed by both parties.” We disagree. In Continental Labs, the summary judgment proof established that, while Continental believed the parties were bound by an oral contract, Scott Paper “never intended to be bound by an oral agreement, but only by a written contract executed by both parties.” Continental Labs, 759 F.Supp. at 539. In this case, on the other hand, Drayton McLane’s October 24 letter, as well as the parties’ performance of many aspects of the Chapa/McLane agreement, suggest that both Valores and McLane Co. believed an enforceable agreement resulted from the meeting on September 26. A signed, written agreement, while “an important document,” was not required.

We recognize that in a multi-million dollar, international transaction, such as that involved in this case, the parties may very well choose to condition the creation of an enforceable contract upon the execution of a definitive written agreement. However, the issue before us is not whether the parties in other cases have chosen this path or even whether, as a matter of fact, the parties did so in this case. Rather, the issue we must resolve is simply whether the summary judgment proof conclusively establishes this fact. We hold that it does not. Hudspeth’s September 27 letter, as interpreted in De Hoyos’ deposition testimony, coupled with the parties’ performance of many aspects of their agreement and Drayton McLane’s October 24 letter, are more than sufficient to raise a genuine issue of material fact as to whether the parties intended the formal signing of a written agreement as a precondition to the formation of an enforceable contract or merely as a memorial of the agreement reached on September 26. The trial court thus erred in granting summary judgment on this ground.

Indefiniteness

To be enforceable, an agreement must “be sufficiently definite in its terms so that a court can understand what the promisor undertook.” T.O. Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex. 1992). When a material or essential term is left unresolved and subject to future negotia tions, “there is no binding contract.” Id. “Each contract should be considered separately to determine its material terms.” Id. When the facts are not disputed, “whether an agreement fails for indefiniteness is a question of law to be determined by the court.” See id.; America’s Favorite Chicken Co. v. Samaras, 929 S.W.2d 617, 622 (Tex.App.—San Antonio 1996, n.w.h).

As noted above, the standard of review requires that we view Valores’ summary judgment proof as true. Accordingly, we assume, in accordance with De Hoyos’ deposition testimony, that Hudspeth’s September 27 letter sets forth all of the terms of the parties’ agreement. The question thus presented is whether these terms are sufficient for this court to determine the undertakings of Valores and McLane Co. We hold that they are.

Regardless of whether Chapa/McLane was a partnership or a joint venture, the essential elements are the same: (1) a community of pecuniary interest such that each partner or joint adventurer has a financial interest at stake in the alleged joint enterprise; (2) an agreement to share profits; (3) an agreement to share losses; and (4) a mutual right of control or management. E.g., Ben Fitzgerald Realty Co. v. Muller, 846 S.W.2d 110, 120 (Tex.App.—Tyler 1993, writ denied). If we assume Valores’ summary judgment proof to be true, as we must under the applicable standard of review, each of these essential elements is established in Hudspeth’s September 27 letter, as interpreted by De Hoyos in his deposition.

According to De Hoyos, Hudspeth’s September 27 letter reflects (1) Valores and McLane agreed that each party would contribute one-half of the required capitalization and, as a result, each would receive one-half of the profits and suffer one-half of the losses of Chapa/McLane; and (2) Valores and McLane agreed that each would enjoy a mutual right to control and manage Cha-pa/McLane through the persons each designated to sit on Chapa/McLane’s board of directors. Assuming these terms encompassed the parties’ agreement, as required by the standard of review, we have no difficulty determining Valores’ and McLane’s undertakings.

McLane Co. and Wal-Mart urge, nonetheless, that essential terms are not encompassed by the September 27th letter. They point, for instance, to the absence of buy-sell, licensing, and noncompetition agreements, as well as the failure to resolve the future of Valores’ home delivery enterprise, the components of Valores’ and McLane Co.’s capital contributions, the date Chapa/McLane would be formed as a Mexican corporation, the date Chapa/McLane would reimburse Valores for closing its existing distribution centers, and the means for resolving tie votes on the Chapa/McLane board of directors. We agree these items would be important for the parties to consider and resolve and were, in that sense, “material.” But “material,” when used in this context, means more than important; it means “essential.” And De Hoyos unequivocally stated in his deposition that all of the terms essential to either party were encompassed by Hudspeth’s September 27 letter, and this assertion is corroborated by the drafts of the agreement that circulated between September 1991 and May 1992, which covered few, if any, of these items, and the fact that none of these terms was identified at any time by any person as an essential term or, in the parties’ vernacular, as a “deal breaker.”

As noted above, we are required to view Valores’ summary judgment proof as true. Doing so necessarily leads to the conclusion that Hudspeth’s September 27 letter, as interpreted by De Hoyos, sets forth the terms of the parties’ September 26 agreement. We hold that this agreement was sufficiently definite to create a joint venture or partnership. Accordingly, the trial court erred in granting summary judgment on this ground.

In sum, the summary judgment record does not conclusively establish that Valores and McLane Co. did not enter an enforceable contract on September 26,1991. Rather, the record demonstrates that there is substantial evidence on each side of the issues, and they must therefore be decided by a trier of fact.

Tortious Interference

In its first motion for summary judgment, Wal-Mart asserted that it was entitled to summary judgment on Valores’ tortious interference claim because Wal-Mart was incapable of tortiously interfering with the contractual relations of its wholly-owned subsidiary, McLane Co. We disagree.

The Texas Supreme Court has not yet confronted the issue of whether a parent corporation is capable of tortiously interfering with the contractual relations of its wholly-owned subsidiary. Two of Texas’ fourteen courts of appeals have dealt with the issue, and they agreed with McLane Co. and Wal-Mart. See H.S.M. Acquisitions, Ins. v. West, 917 S.W.2d 872, 882-83 (Tex.App.—Corpus Christi 1996, writ denied); American Medical Int’l v. Giurintano, 821 S.W.2d 331, 336-37 (Tex.App.—Houston [14th Dist.] 1991, no writ) (impossible for parent to interfere with wholly-owned subsidiary’s contracts). The federal courts interpreting Texas law, on the other hand, have treated the issue as one of privilege, not capacity, but they have disagreed as to the extent of the privilege. See Deauville Corp. v. Federated Dept. Stores,

Inc., 756 F.2d 1183, 1196 (5th Cir.1985) (applying Texas law) (as a matter of law, parent privileged to interfere with wholly-owned subsidiary’s contracts because of superior financial interest arising out of stock ownership), cited in Holloway v. Skinner, 898 S.W.2d 793, 794 (Tex.1995); see also In re ContiCommodity Serv., Inc. Securities Litigation, 733 F.Supp. 1555, 1568 (N.D.Ill.1990) (applying Texas law) (parent that is not alter ego of wholly-owned subsidiary capable of tortiously interfering with subsidiary’s contracts but interference may be privileged if in good faith and without malice), rev’d in part on other grounds sub nom. Brown v. United States, 976 F.2d 1104 (7th Cir.1992) and aff'd in part on other grounds sub nom. ContiCommodity Servs. Inc. v. Ragan, 63 F.3d 438 (5th Cir.1995), cert. denied,-U.S. -, 116 S.Ct. 1318, 134 L.Ed.2d 471 (1996).⁵ Other jurisdictions have held that, while a parent corporation is legally capable of tor-tiously interfering with its subsidiary’s contracts, its interference may be privileged; they have disagreed, however, on the extent of the privilege and the placement of the burden of proof. See, e.g., Green v. Interstate United Mgmt. Serv. Corp., 748 F.2d 827, 831 (3rd Cir.1984) (applying Pennsylvania law); Phil Crowley Steel Corp. v. Sharon Steel Corp., 782 F.2d 781, 783 (8th Cir.1986) (applying Missouri law); Oxford Furniture v. Drexel Heritage Furnishings, 984 F.2d 1118, 1126 (11th Cir.1993) (applying Alabama law); Eckholt v. American Business Info., Inc., 873 F.Supp. 526, 532-33 (D.Kan.1994) (applying Kansas law); Shearin v. E.F. Hutton Group, Inc., 652 A.2d 578, 589-91 (Del.Ch. 1994); Sunamerica Financial v. 260 Peachtree Street, 202 Ga.App. 790, 415 S.E.2d 677, 684 , cert. denied, 202 Ga.App. 907 (1992); GHK Associates v. Mayer Group, Inc., 224 Cal.App.3d 856, 883, 274 Cal.Rptr. 168 (Cal. App.1990); T.P. Leasing Corp. v. Baker Leasing Corp., 293 Ark. 166, 732 S.W.2d 480, 483 (1987); Bendix Corp. v. Adams, 610 P.2d 24, 29-31 (Alaska 1980); Felsen v. Sol Cafe Mfg. Corp., 24 N.Y.2d 682, 301 N.Y.S.2d 610, 249 N.E.2d 459, 461 (1969).

We believe our resolution of this issue should be guided by our supreme court’s recent decision in Holloway, in which the issue presented was whether Holloway, the corporation’s president, director, and largest shareholder, was liable for tortiously interfering with the corporation’s contract with Skinner. Holloway, 898 S.W.2d at 794. Ultimately, the court held that he was not liable on “no evidence grounds.” Id. at 794. En route to its judgment, however, the court reasoned that, “to preserve the logically necessary rule that a party cannot tortiously interfere with its own contract,” “the alleged act of interference must be performed in furtherance of the defendant’s personal interests.” Id. at 796. Accordingly, the court held that a corporate officer will not be treated as a “stranger to the contract” unless the plaintiff shows, as a part of its prima facie case, “the defendant acted in a fashion so contrary to the corporation’s best interests that his actions could only have been motivated by personal interests.” Id. In so holding, the court expressly rejected the argument that this burden should be imposed on the defendant, id., as well as the notion that a corporate officer could not be held liable for tortiously interfering with the corporation’s contracts if the officer was acting within the scope of his corporate authority. Id. at 797.

The supreme court’s holding in Holloway recognizes and gives meaning to two principles that apply equally in the corporation-officer and parent-subsidiary contexts. First, the supreme court’s holding is consistent with the legal principle that a corporation is a legal entity separate and distinct from its officers. The same is true for a parent corporation and its subsidiaries. E.g., Gentry v. Credit Plan Corp., 528 S.W.2d 571, 573 (Tex.1975). Second, the supreme court’s holding in Holloway acknowledges, as a matter of fact, that, while a corporate officer’s personal interests may well be coterminous with those of the corporation, circumstances may arise in which the corporate officer pursues his personal interests to the detriment of those of the corporation. These same principles provide the foundation for the rule adopted in the jurisdictions cited above in the parent-subsidiary context — that is, a parent corporation is privileged to interfere with its subsidiary’s contractual relations “when the contract threatens a present economic interest of its wholly owned subsidiary,” and the parent does not “employ[] "wrongful means or act[] with an improper purpose.” T.P. Leasing Corp., 782 S.W.2d at 483; see also Phil Crowley Steel Corp., 782 F.2d at 783; Sunamerica Financial, 415 S.E.2d at 684; GHK Assoc., 224 Cal.App.3d at 883, 274 Cal. Rptr. 168. These jurisdictions recognize that, while the financial interests of a parent corporation and its subsidiary are identical, so that a parent’s interference with its subsidiary’s contractual relations is usually justified, circumstances may arise in which the financial interests of neither motivate the interference.

For these reasons, we believe the supreme court’s reasoning in Holloway also applies in the parent-subsidiary context and decline to follow our sister courts. Instead, we hold that a parent corporation is legally capable of tortiously interfering with its wholly-owned subsidiary’s contractual relations.⁶ The trial court thus erred in granting a summary judgment against Valores on its tortious interference claim on this ground. Valores’ first point of error is sustained.

Breach of Fiduciary Duty and Constructive Fraud

In their second motion for summary judgment, McLane Co. and Wal-Mart contended that the trial court’s October 6 partial summary judgment precluded Valores’ claim against McLane Co. for breach of fiduciary duty and its claim against Wal-Mart for knowing participation as a matter of law. If there were no binding agreement, they argued, there could be no fiduciary duty and therefore no breach of fiduciary duty by McLane Co. and, if there were no breach of fiduciary duty by McLane Co., Wal-Mart could not have knowingly participated.

On this record, therefore, the trial court’s second partial summary judgment rises or falls with its first. Accordingly, since we have held that fact issues regarding the existence of an enforceable agreement require the reversal of the trial court’s first partial summary judgment, we also necessarily hold that the trial court erred in granting the second partial summary judgment on Val-ores’ causes of action for breach of fiduciary duty, constructive fraud, and knowing participation. Valores’ second point of error is therefore sustained.

Conclusion

As the Texas Supreme Court has stated on numerous occasions, the underlying purpose of Texas’ summary judgment rule has always been a narrow one — the elimination of “patently unmeritorious claims” and “untenable defenses.” E.g., Casso v. Brand, 776 S.W.2d 551, 556 (Tex.1989); City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678 n. 5 (Tex.1979); Gulbenkian v. Penn, 151 Tex. 412, 252 S.W.2d 929, 931 (1952). This same narrow purpose was noted by Professor McDonald on passage of the rule:

The rule is intended to eliminate the delay and expense which result from paper issues which in truth are not factual issues. It has a dual thrust. It reaches groundless actions instituted by plaintiffs seeking to harass defendants into nuisance value settlements, as well as baseless defenses interposed by defendants to seize advantage of docket delays before they can be subjected to judgments establishing their unquestionable liability. The object of the rule, therefore, is to permit either party to brush aside groundless allegations in the pleadings and to obtain prompt disposition of the action where a trial would be an empty formality.

Roy W. McDonald, Summary Judgment, 30 Tex. L.Rev. 286,286 (1952).

A trial on the issue of whether Valores and McLane Co. entered an enforceable contract on September 26, 1991 will not be “an empty formality.” To the contrary, each party has substantial proof and convincing arguments to support its contention. In the face of this conflicting proof, neither we nor the trial court may decide this issue as matter of law. Nor do we believe it is appropriate to hold that Wal-Mart was legally capable of interfering with McLane Co.’s contractual relations in light of the supreme court’s recent opinion in Holloway, the law in other jurisdictions, and the rule adopted by this court in the conspiracy context in Metropolitan Life. Accordingly, we reverse the judgment and remand the case to the trial court for further proceedings consistent with this opinion.

2 . Valores is a holding company. Casa Chapa is a wholly-owned subsidiary of Valores, and Chapa Trading is a wholly-owned subsidiary of Casa Chapa. For convenience, we refer to all three entities as "Valores.”

3 . Until recendy, this statement would have precluded review on the statute of frauds ground. Cincinnati Life Ins. Co. v. Cates, 927 S.W.2d 623, 625 (Tex.1996). In Cates, however, the supreme court held that the courts of appeals should consider not only all those grounds the trial court rules on but also those grounds the trial court did not rule on but that are preserved for appellate review. Id. at 625-26. In this case, however, neither McLane nor Wal-Mart has sought to uphold the October 6 summary judgment on the statute of frauds ground. Accordingly, since this ground has not been preserved for appellate review, we will not consider it.

4 . We take this opportunity to express our appreciation to the parties and their attorneys for their excellent presentation of this case — from the separately-bound volumes of summary judgment proof to the outstanding briefs (including appendices of critical documents) and oral arguments. The attorneys' efforts have substantially lessened the work involved in considering the record and legal issues involved in this appeal.

5 . Neither the Fifth Circuit opinion nor the Seventh Circuit opinion deals with the claims against the parent corporation for tortiously interfering with its wholly-owned subsidiary's contracts.

6 . We note that our holding on this issue, while inconsistent with the Supreme Court’s opinion in Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 104 S.Ct. 2731, 81 L.Ed.2d 628 (1984), is consistent with our earlier holding that a parent corporation is capable of conspiring with its wholly-owned subsidiary for purposes of common law torts. See Metropolitan Life Ins. Co. v. La Mansion Hotels, 762 S.W.2d 646, 651-52 (Tex.App.—San Antonio 1988, writ dism’d) (recognizing that Copperweld limited to conspiracy claims under section 1 of the Sherman Antitrust Act and holding that corporation and wholly-owned subsidiary are separate legal entities for purposes of common law tort actions); accord Atlantic Richfield Co. v. Long Trusts, 860 S.W.2d 439, 447 (Tex.App.—Texarkana 1993, writ denied).

We also recognize our holding leaves the scope of the privilege open, as well as whether Texas law will impose this burden on Valores, as a part of its prima facie case, as it was in Holloway, or on Wal-Mart, as an affirmative defense of privilege or justification. We do not decide these issues in this case because Wal-Mart did not move for summary judgment on either ground. See, e.g., McConnell v. Southside Indep. Sch. Dist., 858 S.W.2d 337, 341 (Tex.1993).