anambra-state-community-in-houston-inc-anasco-inc-v-christian ( 2013 )

Affirmed in Part, Reversed and Remanded in Part, and Opinion filed
September 19, 2013.
In The
Fourteenth Court of Appeals
NO. 14-12-00107-CV
ANAMBRA STATE COMMUNITY IN HOUSTON, INC. (ANASCO, INC.),
Appellant
V.
CHRISTIAN CHINWUBA ULASI, INDIVIDUALLY AND AS THE
FORMER PRESIDENT OF ANASCO, AND VINCENT N. NWEKE D/B/A
ANAMBRA STATE COMMUNITY HOUSTON, Appellees
On Appeal from the 80th District Court
Harris County, Texas
Trial Court Cause No. 2010-68898
OPINION
On its own motion the trial court signed an order in which the court stated
that it appeared this case presents no justiciable controversy within the court’s
subject-matter jurisdiction and that, to the extent there is such a controversy, the
court declined to exercise jurisdiction over these claims because they deal with the
internal affairs of a non-profit organization. The trial court dismissed the
plaintiff’s claims. Except as to one claim, we conclude there is a justiciable
controversy within the trial court’s subject-matter jurisdiction. We further
conclude that the trial court did not abuse its discretion by declining to exercise
jurisdiction as to one issue, but that the trial court abused its discretion by declining
to exercise jurisdiction over the other claims and issues. Accordingly, we affirm in
part and reverse and remand in part.
I. FACTUAL AND PROCEDURAL BACKGROUND
Appellant/plaintiff Anambra State Community in Houston, Inc. (ANASCO,
Inc.) (hereinafter “the Corporation”), is a Texas non-profit corporation that filed
this lawsuit against appellees/defendants “Christian Chinwuba Ulasi, Individually
and as the former president of ANASCO,” and “Vincent N. Nweke d/b/a Anambra
State Community, Houston, (‘ANASCO’)” (hereinafter, collectively the
“Individuals”). In its live petition, the Corporation made the following allegations:
Anambra is a state in the southeastern part of Nigeria. To be a
member of the Corporation, an individual must be originally from
Anambra.
The Corporation was formed as an avenue for the citizens of Anambra
to promote family values, to uphold truth and integrity among
members in Houston, Texas, and to promote unity and peace among
its members.
The Corporation has a constitution that sets out the form, manner, or
procedure in which the organization should be run. The constitution
has been in effect since October, 2002.
Appellee Christian Chinwuba Ulasi was the president of the
Corporation before he was removed from office in 2010.
During a July 2010 meeting of the Board of Directors of the
Corporation, the members of the Board instructed Ulasi to incorporate
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the association as required by the Corporation’s constitution.
When Ulasi failed to do so, the members of the Board of Directors
instructed Sylvester Arubaleze, the Chairman of the Board, “to
incorporate the Association” and file an assumed name certificate
under the name “Anambra State Community in Houston” and the
acronym “ANASCO.”
On October 1, 2010, Arubaleze filed a certificate of incorporation for
the Corporation with the Texas Secretary of State. On October 15,
2010, Arubaleze filed an assumed name certificate with the Harris
County Clerk.
On October 15, 2010, the members of the Corporation decided
unanimously to “dissolve the executive,” apparently meaning that
President Ulasi was removed from office. Ulasi was not at the
meeting; Vice-President John Okafor presided over the meeting.
At the October 15, 2010 meeting, the members of the Corporation
found that (1) the Corporation had no operating bank account, and that
funds were being deposited by the executives into “an unknown
account called Anambra State Citizens of Houston, Inc., with Bank of
America”; (2) the executive failed to incorporate the entity “Anambra
State Community in Houston, Inc.” in Texas as required by the
constitution; (3) the Corporation did not have a tax identification
number, never filed a tax return, and was never registered as a tax-
exempt association under section 501(c) with the Internal Revenue
Service; (4) the executives failed to submit the accounts of the
association for audit when the request was made; and (5) the
executives scheduled meetings irregularly, without considering that
the official meeting dates must be on the third Friday of every month.
On October 19, 2010, appellee Vincent N. Nweke filed and received
an assumed name certificate from the Harris County Clerk under the
name “Anambra State Community, Houston,” a name similar to the
Corporation’s name. When he filed this certificate, Nweke “was
aware that the same name was incorporated with the Secretary of
State of Texas.” Nweke sought this name from the Texas Secretary of
State and was informed that the name was unavailable. Alternatively,
the Corporation alleges that Nweke filed this certificate to confuse the
public.
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On November 19, 2010, Nweke filed a suit in Harris County district
court against the members of the Corporation, using the assumed
name “Anambra State Community, Houston,” knowing that he had no
standing to bring the suit.
To avoid confusion, it is necessary for the ousted executives to refrain
from acting in their former capacities.
The Corporation asserts claims for breach of fiduciary duty, fraudulent
misrepresentation, invasion of privacy by appropriation of the Corporation’s name
and likeness, and criminal liability based upon the Individuals’ alleged violation of
section 71.203 of the Texas Civil Practice and Remedies Code. The Corporation
seeks actual damages based upon the alleged loss of funds, loss of good name, and
loss of exclusive use of the Corporation’s name. The Corporation also seeks
nominal damages, attorney’s fees, court costs, and injunctive relief restraining the
Individuals from acting on behalf of the Corporation in executing contracts, and
from filing suits in the name of the Corporation or as a representative of the
Corporation.
The Corporation moved for summary judgment. In its summary-judgment
motion, the Corporation argued that injunctive relief is necessary, in part, because
the Anambra State Association, USA (hereinafter, “Anambra USA”) has
recognized the Corporation as the authentic affiliate chapter of Anambra USA in
Houston. The Corporation also asserted that Ulasi breached his fiduciary duty as
President by withdrawing the Corporation’s funds from a bank account for his
personal use. The Corporation also alleged that Ulasi committed fraud relating to
Ulasi’s alleged embezzlement of the Corporation’s funds resulting in damages of
$8,667.37. It appears based upon the Corporation’s pleadings that most of the
Individuals’ allegedly actionable conduct occurred before the formation of the
Corporation, which allegedly occurred on October 1, 2010. The Corporation,
however, asserts that it is the successor to a prior unincorporated association that
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was formed at least by October 2002 (hereinafter “the Association”).
The Individuals deny the Corporation’s allegations. They assert that the
Corporation is not a continuation of the Association. Ulasi asserts that he has been
president of the Association since 2008. According to Ulasi, the name of the
Association is Anambra State Community, Houston, a non-profit association which
has been in existence since “around 1998.” Ulasi states that he has never been a
member of the Corporation. Ulasi asserts that the Association’s treasurer
“colluded with [s]ome unhappy members and formed a similarly named entity in
October 2010 and withdrew the funds in the [Association’s bank account], without
authorization.” The Individuals filed a motion for summary judgment arguing that
the crux of this lawsuit was the Corporation’s contention that the Association had
dissolved and that only the Corporation existed. The Individuals argued that this
issue had become moot because (1) Anambra USA has recognized both the
Corporation and the group led by Ulasi (hereinafter “the Community”) as authentic
Houston chapters of Anambra USA, and (2) it is uncontroverted that the two
entities exist and are unrelated. The Individuals asserted that, as a matter of law,
the Corporation was not entitled to the relief it sought.
The trial court granted the Individuals’ summary-judgment motion. The
Corporation timely filed a motion for new trial. The trial court then signed an
order, in which the court stated that (1) it inadvertently had granted the
Individuals’ summary-judgment motion, (2) it appeared to the court that the case
presented no justiciable controversy within the court’s subject-matter jurisdiction,
and (3) to the extent that the case presented a justiciable controversy within the
court’s subject-matter jurisdiction, the court declined to exercise jurisdiction over
the internal affairs of a private, non-profit organization. The trial court cited in its
order this court’s opinion in Stevens v. Anatolian Shepherd Dog Club of America,
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Inc., 231 S.W.3d 71 (Tex. App.—Houston [14th Dist.] 2007, pet. denied). The
trial court vacated its prior summary-judgment order, declined to rule on the
competing summary-judgment motions, and dismissed all of the Corporation’s
claims on the court’s own motion.
II. ISSUES AND ANALYSIS
On appeal, in its first issue, the Corporation asserts that the trial court erred
in dismissing its claims.1 In its second issue, the Corporation asserts that the trial
court erred in refusing to rule on the Corporation’s summary-judgment motion and
argues that this court should grant its summary-judgment motion.2
A. Did the trial court err in dismissing the claim in which the Corporation
attempted to impose criminal liability on the Individuals?
In one of its claims, the Corporation seeks to impose criminal liability on the
Individuals for allegedly committing the criminal offense set forth in section
71.203(a) of the Texas Civil Practice and Remedies Code. See Tex. Civ. Prac. &
Rem. Code Ann. § 71.203 (West 2013). In a civil case, a court lacks jurisdiction to
impose criminal liability on a defendant. See State v. Morales, 869 S.W.2d 941,
947 (Tex. 1994); Ryan v. Rosenthal, 314 S.W.3d 136, 143 (Tex. App.—Houston
[14th Dist.] 2010, pet. denied); Trantham v. Isaacks, 218 S.W.3d 750, 753–54
1
In the trial court, the Corporation did not object to the trial court’s dismissal of its claims on the
court’s own motion or request an opportunity to present or submit evidence or be heard
regarding the basis for the trial court’s dismissal. The Corporation has not raised any such issues
on appeal. Therefore, the propriety of the trial court acting on its own motion is not before us.
2
The Individuals argue that, though the Corporation has appealed, the Corporation was never a
party in the trial court because the “Anambra State Community in Houston a/k/a ANASCO”
rather than the Corporation filed the original petition. Thus, the Individuals ask this court to
dismiss this appeal as being improperly filed by an entity that was not a party in the trial court.
This argument is based upon a false premise because an amended petition was filed in the trial
court denominating the Corporation as the plaintiff; therefore, the Corporation was the plaintiff
when the trial court dismissed its claims.
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(Tex. App.—Fort Worth 2007, pet. denied). Thus, as to this claim, the trial court
did not err in concluding that there is no justiciable controversy within the court’s
subject-matter jurisdiction and in dismissing this claim. See Morales, 869 S.W.2d
at 947; Ryan, 314 S.W.3d at 143; Trantham, 218 S.W.3d at 753–54.
B. Do the remaining claims present a justiciable controversy within the
trial court’s subject-matter jurisdiction?
In the Corporation’s remaining claims, it seeks a money judgment based on
alleged breach of fiduciary duty, fraudulent misrepresentation, and invasion of
privacy by appropriation of the Corporation’s name and likeness. The Corporation
also seeks injunctive relief. We first address whether these claims present a
justiciable controversy within the trial court’s subject-matter jurisdiction. For a
justiciable controversy to exist, there must be a real and substantial controversy
involving a genuine conflict of tangible interests and not merely a theoretical
dispute. Bonham State Bank v. Beadle, 907 S.W.2d 465, 467 (Tex. 1995).
The record reflects that a real and substantial controversy exists between the
Corporation and the Individuals as to many issues relevant to the remaining claims,
including (1) whether the Corporation is the successor to the Association, (2)
whether the Community is the same organization as the Association, (3) whether
the Corporation may assert the Association’s claims and property rights regarding
conduct that occurred before formation of the Corporation, (4) whether the
Individuals owed the Corporation or the Association a fiduciary duty when they
allegedly engaged in their allegedly actionable conduct, (5) whether the Individuals
committed fraud, (6) whether the Individuals improperly withdrew the
Corporation’s or the Association’s funds from a bank account for their personal
use, (7) whether the Individuals appropriated the Corporation’s name or likeness
for their own use or benefit, (8) whether the Corporation is entitled to a money
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judgment based on its claims for breach of fiduciary duty, fraudulent
misrepresentation, and invasion of privacy by appropriation of the Corporation’s
name and likeness, and (9) whether the Corporation is entitled to injunctive relief.3
The Corporation and the Individuals dispute these issues and many of the facts
relating to them. In addition, the remaining claims for breach of fiduciary duty,
fraudulent misrepresentation, and invasion of privacy are within the subject-matter
jurisdiction of the trial court. See Tex. Const. art. V, § 8; Tex. Gov’t Code Ann. §
24.007 (West 2013).
In their motion for summary judgment, the Individuals asserted that the
Corporation’s claims had become moot because (1) Anambra USA has recognized
both the Corporation and the Community as authentic Houston chapters of
Anambra USA, and (2) it is uncontroverted that the two entities exist and are
unrelated. But, the record reflects that a real and substantial controversy remains
between the Corporation and the Individuals as to these issues. The Individuals
assert that Anambra USA has recognized both the Corporation and the Community
as authentic Houston chapters of Anambra USA. But, in its summary-judgment
motion, the Corporation asserted that Anambra USA has recognized only the
Corporation as the authentic Houston chapter of Anambra USA and that, as far as
Anambra USA is concerned, the Community does not exist. In addition, the
Corporation asserts that there is a relationship between the Association and the
Corporation. The Corporation asserts that it is the successor of the Association and
may assert the claims and right of the Association, as it seeks to do in its live
petition.
The remaining claims present bona fide, concrete controversies ripe for
3
In determining whether these claims present a justiciable controversy within the trial court’s
subject-matter jurisdiction, we do not address the merits of these claims.
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judicial resolution. The record reflects real and substantial controversies involving
a genuine conflict of tangible interests and not merely a theoretical dispute. We
conclude that the remaining claims present justiciable controversies within the trial
court’s subject-matter jurisdiction. See Bonham State Bank, 907 S.W.2d at 467–
69; WesternGeco, L.L.C. v. Input/Output, Inc., 246 S.W.3d 776, 781–82 (Tex.
App.—Houston [14th Dist.] 2008, no pet.). Thus, the trial court erred to the extent
it concluded to the contrary.
C. Did the trial court err to the extent it declined to exercise jurisdiction
over the Corporation’s remaining claims?
To the extent that the Corporation’s claims present justiciable controversies
within the trial court’s subject-matter jurisdiction, the trial court declined to
exercise jurisdiction over these claims under the rule in Stevens v. Anatolian
Shepherd Dog Club of America, Inc. See 231 S.W.3d 71, 74–77 (Tex. App.—
Houston [14th Dist.] 2007, pet. denied). Therefore, we now address whether the
trial court erred in declining to exercise jurisdiction over the Corporation’s
remaining claims.
Texas courts are not disposed to interfere with the internal management of a
voluntary association. See id. at 74. A member of such an association is subject to
the organization’s power to make and administer its rules, including rules
regarding membership in the association. See id. at 74–75. Despite this general
rule, courts will interfere in the inner dealings of a private association if a valuable
right or property interest is at stake or if the association fails to give its members
something similar to due process. See id. at 75. This rule of judicial non-
interference is not a jurisdictional rule; we review the trial court’s decision
declining to exercise jurisdiction over the remaining claims for an abuse of
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discretion.4 See id. at 75–76.
The record shows that Anambra USA, the Corporation, and the Community
are all voluntary associations. In its remaining claims, the Corporation asserts in
part that it is the only authentic affiliate chapter of Anambra USA in Houston. The
Corporation has not shown or argued that the determination of this issue involves a
valuable right or property interest or that Anambra USA has failed to provide the
Corporation with something similar to due process. We conclude that the trial
court did not abuse its discretion by declining to exercise jurisdiction over the
remaining claims to the extent that the Corporation seeks an adjudication of
whether it is the only authentic affiliate chapter of Anambra USA in Houston. See
id. at 76–77.
In the remainder of its suit, the Corporation seeks a money judgment and
injunctive relief based upon claims for breach of fiduciary duty, fraudulent
misrepresentation, and invasion of privacy by appropriation of the Corporation’s
name and likeness. The Corporation asserts that Ulasi breached his fiduciary duty
as President by withdrawing the Corporation’s funds from a bank account for his
personal use. The Corporation also alleges that Ulasi committed fraud relating to
Ulasi’s alleged embezzlement of the Corporation’s funds resulting in damages of
$8,667.37. Whether the Corporation’s claims have merit is not an issue before this
court; however, the record reflects that these claims involve a valuable right or
property interest. Therefore, we conclude that the trial court abused its discretion
4
In Swonke v. First Colony Community Servs. Assoc., this court held that, if such a decision is
made in a summary-judgment order, we review this decision de novo. See No. 14-09-00019-CV,
2010 WL 2361691, at *6, n.3 (Tex. App.—Houston [14th Dist.] June 15, 2010, pet. granted,
judgm’t vacated w.r.m.) (mem. op.). In the case under review, the trial court did not decline to
exercise jurisdiction in a summary-judgment order, and we review this decision for an abuse of
discretion consistent with this court’s opinion in Stevens. See Stevens, 231 S.W.3d at 75–76.
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to the extent it declined to exercise jurisdiction over these claims. See Swonke v.
First Colony Community Servs. Assoc., No. 14-09-00019-CV, 2010 WL 2361691,
at *10–11 (Tex. App.—Houston [14th Dist.] June 15, 2010, pet. granted, judgm’t
vacated w.r.m.) (mem. op.); Owens Entertainment Club v. Owens Community Imp.
Club, 466 S.W.2d 70, 72 (Tex. App.—Eastland 1971, no pet.).
III. CONCLUSION
Regarding the claim in which the Corporation seeks to impose criminal
liability on the Individuals for allegedly committing the criminal offense set forth
in section 71.203(a) of the Texas Civil Practice and Remedies Code, the trial court
did not err in concluding that there is no justiciable controversy within the court’s
subject-matter jurisdiction and in dismissing this claim. But, the Corporation’s
remaining claims present justiciable controversies within the trial court’s subject-
matter jurisdiction, and the trial court erred to the extent it concluded otherwise.
The trial court did not abuse its discretion by declining to exercise
jurisdiction over the remaining claims to the extent that the Corporation seeks an
adjudication of whether it is the only authentic affiliate chapter of Anambra USA
in Houston. But, because the Corporation’s other claims involve a valuable right
or property interest, the trial court abused its discretion to the extent it declined to
exercise jurisdiction over them.
Accordingly, we sustain the Corporation’s first issue in part and overrule it
in part. We affirm the trial court’s judgment to the extent the trial court dismissed
(1) the claim in which the Corporation seeks to impose criminal liability on the
Individuals, and (2) the claims to the extent that the Corporation seeks an
adjudication of whether it is the only authentic affiliate chapter of Anambra USA
in Houston. We reverse the remainder of the trial court’s judgment and remand for
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further proceedings.5
/s/ Kem Thompson Frost
Justice
Panel consists of Justices Frost, Brown, and Busby.
5
In its second issue, the Corporation asserts that the trial court erred by refusing to rule on the
Corporation’s motion for summary judgment, and the Corporation requests that we grant this
summary-judgment motion. Given the trial court’s conclusion that it either lacked jurisdiction or
declined to exercise jurisdiction over all of the Corporation’s claims, it was not appropriate for
the trial court to rule on the pending summary-judgment motions. In the posture of this appeal, it
is not appropriate for this court to address whether the Corporation is entitled to summary
judgment. As to the claims that we remand to the trial court, the Corporation and the Individuals
are free to assert entitlement to summary judgment on remand. Accordingly, we overrule the
second issue.
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