Troy Tucker v. Raymond Bubak, Edde Management, Inc., Edde Ventures, L.P., Edde Drilling Services, LLC, and Titan Oilfield, LLC ( 2019 )

NUMBERS 13-18-00427-CV AND 13-18-00613-CV
COURT OF APPEALS
THIRTEENTH DISTRICT OF TEXAS
CORPUS CHRISTI - EDINBURG
TROY TUCKER, Appellant,
v.
RAYMOND BUBAK, EDDE MANAGEMENT,
INC., EDDE VENTURES, L.P., EDDE DRILLING
SERVICES, LLC, AND TITAN OILFIELD, LLC, Appellees.
On appeal from the 267th District Court
of Victoria County, Texas.
MEMORANDUM OPINION
Before Chief Justice Contreras and Justices Benavides and Hinojosa
Memorandum Opinion by Chief Justice Contreras
In two appeals, appellant Troy Tucker challenges the trial court’s granting of
summary judgment in favor of appellees, Raymond Bubak, Edde Management, Inc. (EM),
Edde Ventures, L.P. (EV), Edde Drilling Services, LLC (EDS), and Titan Oilfield, LLC
(Titan), in a suit seeking the winding up and termination of business entities under the
Texas Business Organizations Code. See TEX. BUS. ORGS. CODE ANN. §§ 11.054,
11.314. Tucker raises nine total issues arguing generally that the trial court erred by: (1)
improperly considering late-filed summary judgment evidence; (2) granting summary
judgment on grounds not specified in the motion; (3) granting equitable relief without
statutory authorization; (4) “improperly using the Summary Judgment to award equitable
relief”; and (5) granting summary judgment without competent evidence. We affirm in
part and reverse and render in part.
I. BACKGROUND
In 1997, Tucker and others formed Edde Drilling Company, LLC (EDC), a firm
engaged in the drilling of wells for oilfield operators. Since 2007, Tucker and Bubak have
each owned forty-five percent of EDC, and another investor, Michael Best, owned the
remaining ten percent. In 2010, Tucker and Bubak formed several other entities,
including EV, a limited partnership. EV owns 100% of EDS, another well-drilling concern,
and Titan, which handles trucking operations. Tucker and Bubak each own forty-nine
percent of EV and are that entity’s sole limited partners. The remaining two percent of
EV is owned by EM, which is EV’s sole general partner. EM, in turn, is owned equally by
Tucker and Bubak. EDC and EDS each own two drilling rigs which they use cooperatively
for both “turnkey” and “daywork” drilling projects.1 All of the entities are referred to
1 A “turnkey” drilling contract is
[a] type of financing arrangement for the drilling of a wellbore that places considerable risk
and potential reward on the drilling contractor. Under such an arrangement, the drilling
contractor assumes full responsibility for the well to some predetermined milestone such
as the successful running of logs at the end of the well, the successful cementing of casing
in the well or even the completion of the well. Until this milestone is reached, the operator
owes nothing to the contractor. The contractor bears all risk of trouble in the well, and in
extreme cases, may have to abandon the well entirely and start over. In return for
assuming such risk, the price of the well is usually a little higher than the well would cost if
2
collectively as “Edde Drilling.”
Bubak also owns Lauson Energy (Lauson), a company that provides engineering
services. A conflict arose between Tucker and Bubak regarding, in part, compensation
paid by Edde Drilling to Lauson for engineering services. Tucker and Bubak entered into
a mediated settlement agreement in 2016 which, among other things, set a compensation
schedule for engineering services provided by Lauson to Edde Drilling.
Tucker claims that Bubak then “set on a course of conduct to coerce Edde Drilling
and Tucker to pay Bubak a larger share of the profits” earned by the Edde entities. In
particular, Tucker asserts that Bubak “wanted [Lauson] to retain all of the profits for
providing the engineering component” of turnkey contracts entered into by Edde Drilling.
Under this proposal, Edde Drilling would be compensated only for “day-rate work for
putting its rigs in service.”
According to Tucker, after he refused to assent to Bubak’s proposal, Bubak’s two
sisters and his brother-in-law started a new company, SDS Drilling Services, LLC (SDS),
to compete with Edde Drilling. According to Tucker, Bubak purchased two drilling rigs
through Lauson, and then sold them to SDS. He also assisted various SDS employees
and executives throughout 2017. Tucker asserts that SDS lured away several Edde
Drilling customers and hired several Edde Drilling employees, all while Bubak “terminated
all but four Edde Drilling employees.”
relatively trouble free. Therefore, if the contractor succeeds in drilling a trouble-free well,
the fee added as contingency becomes profit.
SCHLUMBERGER OILFIELD GLOSSARY, https://www.glossary.oilfield.slb.com/en/Terms/t/turnkey.aspx (last
visited June 19, 2019). On the other hand, under a “daywork” contract, the operator pays the contractor a
fixed price per day to drill the well and generally assumes the risks of the drilling operation except as
expressly otherwise provided. Painter v. Sandridge Energy, Inc., 511 S.W.3d 713, 721 (Tex. App.—El Paso
2015, pet. denied) (citations omitted). A daywork contract is similar to the contractor’s lease of a rig, related
equipment, and crew to the operator. Id.
3
Bubak—in his individual capacity and as an officer of the other appellees—filed
the instant suit against Tucker in April 2017, seeking (1) court supervision of the winding
up process of the entities under Texas Business Organizations Code § 11.054,2 or (2) in
the alternative, a court order involuntarily winding up EV and EDC under Texas Business
Organizations Code § 11.314. See id. §§ 11.054, 11.314. Bubak’s suit also sought
damages for breach of contract and breach of fiduciary duty, as well as an injunction
preventing Tucker from (1) interfering with Bubak’s exercise of various duties as president
of EM, or (2) disbursing any funds from the Edde Drilling entities without Bubak’s written
consent. Tucker answered the suit and filed counterclaims for breach of contract, breach
of fiduciary duty, and tortious interference with contractual relationships. Tucker’s
pleading also named SDS and Lauson as a third-party defendants.
Bubak filed a “Motion for Partial Summary Judgment” on December 6, 2017,
contending that he was entitled to judgment as a matter of law because, due to Tucker’s
conduct, “Bubak and Tucker are unable to manage the entities together,” “[t]he economic
purpose of the entities is likely to be unreasonably frustrated,” and “it [is] not reasonably
practicable to carry on business in conformity with [the entities’] governing documents.”
See id. §§ 11.054, 11.314. The motion additionally argued that Bubak was entitled to
judgment under Texas Business Organizations Code § 11.404 because “Bubak and
Tucker, as the governing persons of the entities are deadlocked in the management of
the entities’ affairs . . . [,] are unable to break the deadlock, and irreparable injury to the
entities is being suffered or is threatened because of the deadlock.” See id. § 11.404
2 The petition stated: “Plaintiffs file this action primarily under the above referenced code to avail
itself of court supervision regarding the winding up of the companies. Plaintiffs intend to submit a plan to
the court and obtain court approval of the plan.”
4
(“Appointment of Receiver to Rehabilitate Domestic Entity”). In its prayer for relief,
Bubak’s motion requested an order “w[inding] up and dissolv[ing the entities] under court
supervision” and appointing a receiver “to accomplish this winding up of the entities.” See
id.
Tucker filed a response to the motion arguing in part that “[his] extensive summary
judgment evidence shows that there is, at a very minimum, a question for the jury as to
whether Bubak breached his agreements and fiduciary duties regarding the destruction
of Edde Drilling and the concurrent establishment of SDS, a direct competitor of Edde
Drilling.” Tucker’s response further contended that: (1) the appointment of a receiver is
not permitted by § 11.404 because Bubak does not seek to “rehabilitate” the Edde Drilling
entities; (2) the appointment of a receiver is not permitted by § 11.054; and (3) “[a]ny order
requiring the winding up and dissolution of Edde Drilling would not dispose of all claims
and parties, meaning it cannot be enforced.” Tucker attached various pieces of evidence
to his response.
At a hearing on April 18, 2018, Bubak withdrew his request for a receiver. He also
withdrew his request for the winding up and dissolution of EDC and instead confined that
request to the remaining entities. The trial court heard argument on the partial summary
judgment motion and took the matter under advisement. On April 24, 2018, it issued a
memorandum order stating in its entirety as follows:
As to [Bubak’s] Motion For Partial Summary Judgement [sic] as to [EM],
[EV], [EDS], and [Titan] (hereinafter referred to as “the entities”), the Court
finds that there is no genuine issue as to any material fact that the
“economic purposes of the entities is likely to be frustrated.” Therefore, in
accordance with Section 11.314(1)(A) [sic], Tex. Bus. Org. Code, the Court
orders the involuntary winding up and termination of “the entities,” having
found that the Plaintiffs’ Motion For Partial Summary Judgement [sic] as to
“the entities” should be granted.
5
The parties are ordered to attempt to reach an agreement as to how “the
entities” should be wound up and terminated. If the parties are unable to
reach an agreement, then each party is ordered to submit to the Court their
detailed plan on how “the entities” should be wound down [sic] and
terminated. The Court will then issue its own plan as to how to wind up and
terminate “the entities.”
The Court further orders that all causes of action by either party against the
other party/parties shall be severed from this Partial Summary Judgement
[sic] Order.
[Bubak’s counsel] is ordered to prepare appropriate orders to comply with
this Court’s rulings.
Tucker filed a motion for new trial which was denied.
Bubak then filed a “Motion for Entry of an Order Granting [Bubak’s] Motion for
Partial Summary Judg[men]t” (the Motion for Entry of Order) stating that “[t]he parties
have conferred but have been unable to agree on an order that complies with the Ruling
of the Court.” The motion contained an affidavit by Bubak establishing the Edde entities’
assets and liabilities, as well as a proposed order.3 Tucker responded to the motion.
After a hearing on July 16, 2018, the trial court signed the order proposed by
Bubak.4 The July 16 order stated:
After considering the Motion and the arguments of counsel, the Court finds
that there is no genuine issue as to any material fact that the “economic
purposes of the entities is likely to be frustrated.” Therefore, in accordance
with Section 11.314 (1)(A) [sic], Tex. Bus. Org. Code, the Court orders the
involuntary winding up and termination of “the entities” [EM, EV, EDS, and
Titan]. The Co-Plaintiff’s Motion for Partial Summary Judgment as to “the
entities” is hereby GRANTED.
The Court Orders that the entities be wound up as follows:
1. Appoint Raymond Bubak to manage and effectuate the winding up
3 According to Bubak’s affidavit, the Edde entities’ current liabilities include “[i]nternal disputes
between the parties, including those pled in this lawsuit.”
4 The trial court first rendered an order containing a blank space where “14” appears under item 5;
later on July 16, 2018, it rendered a “Nunc Pro Tunc” order which filled in the blank. For purposes of this
opinion, we will refer to the latter, corrected order as the “July 16 order.”
6
of the entities including but not limited to:
a. Handle distribution the assets of the entities [sic]. Property
and equipment shall be distributed pursuant to Exhibit A;
b. Control and distribute cash accounts;
c. Assign Ricochet Bankruptcy Receivable 50%/50% to Tucker
and Bubak;
d. Assign all working interests in wells and oil and gas leases
50% to Tucker and 50% to Bubak;
e. Complete final windup and tax reporting paperwork;
f. Raymond Bubak will hold sufficient cash in reserve to pay final
accounting bills pending final resolution of this case.
2. Raymond Bubak will be the sole signatory on all bank accounts.
3. Litigant Tucker will turn over the computer of the entities to Raymond
Bubak for use in conducting final office and accounting functions;
4. Litigant Tucker turnover to Raymond Bubak all keys to all vehicles
owned by the entities; and
5. Litigant Tucker will allow Raymond Bubak full access to the Yard and
Office for a period of 14 days to remove all property of the entities.
The Court further ORDERS that all remaining causes of action by any party
against the other party/parties shall be severed from this Partial Summary
Judgment Order and that this order be final.
“Exhibit A” to the July 16 order was an “Equipment Asset List and Distribution Plan” (the
Asset List), which had been prepared by Bubak and was attached to his proposed order.
The Asset List detailed the market value of the companies’ assets and proposed how they
should be distributed to the parties. According to the Asset List, $722,528 worth of assets
would be distributed to Tucker and $723,466 worth of assets would be distributed to
Bubak.
Following the July 16 order, Tucker filed a notice of interlocutory appeal (the first
7
appeal).5 He also filed another motion for new trial which was denied.
On August 24, 2018, the trial court rendered an “Order Granting Stay and Setting
Supersedas [sic] Bond” which stated in part that the July 16 order “is “final, and the Order
is hereby stayed and no party can execute on or enforce the Order until this Court loses
its plenary power and jurisdiction.” The August 24 order contained a finding that “the fair
market value of the personal property owned by the Entities that [is] subject to the Order
is $722,997” and it set a supersedeas bond in that amount. See TEX. R. APP. P. 24.1,
24.2(a)(3). Tucker again filed a motion for new trial and to reconsider the supersedeas
order, which was denied by operation of law. See TEX. R. CIV. P. 329b(c). Tucker again
perfected an appeal (the second appeal).6
II. DISCUSSION
The parties have filed briefs in both appeals. Although the records, facts, and
matters in dispute appear to be identical in both appeals,7 Tucker’s briefs raise different
issues and arguments, only some of which overlap. In an abundance of caution and in
our sole discretion, we will accept the briefs in both appeals and endeavor to address
every issue fairly raised therein.8
5 Appellate cause number 13-18-00427-CV.
6 Appellate cause number 13-18-00613-CV.
7 Tucker’s notice of appeal in appellate cause number 13-18-00427-CV purports to challenge the
trial court’s initial order on July 16, 2018, whereas his notice of appeal in appellate cause number 13-18-
00613-CV purports to challenge the nearly-identical July 16, 2018 “Nunc Pro Tunc” order. Both of Tucker’s
briefs were filed subsequent to the trial court’s August 24, 2018 order declaring the July 16 order final and
setting a supersedeas bond amount.
8 We note that, under Texas Rule of Appellate Procedure 27.3, if a trial court amends an order from
which an appeal has already been perfected, we “must treat the appeal as from the subsequent order or
judgment and may treat actions relating to the appeal of the first order or judgment as relating to the appeal
of the subsequent order or judgment.” TEX. R. APP. P. 27.3. Still, “[a]ny party may nonetheless appeal from
the subsequent order or judgment.” Id. The second appeal was authorized under this rule.
8
A. Appellate Jurisdiction
On our own volition, we first address whether we have jurisdiction over the
“interlocutory” appeal in cause number 13-18-00427-CV. See M.O. Dental Lab v. Rape,
139 S.W.3d 671, 673 (Tex. 2004) (“[W]e are obligated to review sua sponte issues
affecting jurisdiction.”). Generally, we have jurisdiction only over an appeal taken from a
final judgment, except where an interlocutory appeal is permitted by statute. See
Lehmann v. Har-Con Corp., 39 S.W.3d 191, 195 (Tex. 2001). “[W]hen there has not been
a conventional trial on the merits, an order or judgment is not final for purposes of appeal
unless it actually disposes of every pending claim and party or unless it clearly and
unequivocally states that it finally disposes of all claims and all parties.” Id. at 205.
Tucker does not address our jurisdiction in any of his briefs. We observe that the
trial court’s initial July 16, 2018 order, which is the subject of the first appeal, states in
part: “The Court further ORDERS that all remaining causes of action by any party against
the other party/parties shall be severed from this Partial Summary Judgment Order and
that this order be final.” The trial court’s August 24, 2018 order confirmed that the July
16 order “grant[ed] Bubak’s Motion for Partial Summary Judgment,” “sever[ed] the
judgment rendered,” and “is final.” A judgment is not final merely because it states that it
is final, id., but because the July 16 order unambiguously severed all of the causes of
action which it did not dispose of, it demonstrated an unequivocal intent to “actually
dispose[] of every pending claim and party.” Therefore, it is final and appealable. See
id. (noting that an order is final and appealable if the “intent to finally dispose of the case”
is “unequivocally expressed in the words of the order itself”). We have jurisdiction over
Tucker’s first appeal.
9
B. Applicable Law
Under § 11.314 of the Texas Business Organizations Code, a trial court may
order the winding up and termination of [a] domestic partnership or limited
liability company on application by an owner of the partnership or limited
liability company if the court determines that:
(1) the economic purpose of the entity is likely to be unreasonably
frustrated;
(2) another owner has engaged in conduct relating to the entity’s
business that makes it not reasonably practicable to carry on the
business with that owner; or
(3) it is not reasonably practicable to carry on the entity’s business in
conformity with its governing documents.
TEX. BUS. ORGS. CODE ANN. § 11.314.
Additionally, upon application by an owner or member of a domestic entity, 9 and
subject to other provisions of the business organizations code, a court may: “(1)
supervise the winding up of [a] domestic entity; (2) appoint a person to carry out the
winding up of the domestic entity; and (3) make any other order, direction, or inquiry that
the circumstances may require.” Id. § 11.054.
C. Consideration of Asset List
By the third issue in his first appeal and the first two issues in his second appeal,
Tucker argues that the trial court erred by considering the Asset List as summary
judgment evidence. The Asset List was filed by Bubak as an exhibit to his proposed
summary judgment order, which was in turn attached to his Motion for Entry of Order.
Tucker contends that the Asset List was improperly considered because it was filed within
9“Domestic entity” means a corporation, limited or general partnership, limited liability company, or
other business organization formed under, or the internal affairs of which are governed by, the business
organizations code. TEX. BUS. ORGS. CODE ANN. § 1.002(18), (62).
10
twenty-one days prior to rendition of summary judgment. See TEX. R. CIV. P. 166a(c)
(“Except on leave of court, with notice to opposing counsel, the motion and any supporting
affidavits shall be filed and served at least twenty-one days before the time specified for
hearing.”). He argues in the alternative that, if the Motion for Entry of Order is not
considered a summary judgment motion, summary judgment was improper because it
was granted on grounds not specified in the actual motion. See id. (providing that a court
may grant summary judgment only if “the moving party is entitled to judgment as a matter
of law on the issues expressly set out in the motion”). In particular, Tucker notes that
Bubak’s motion for partial summary judgment did not request that Bubak himself be
appointed as the person to carry out the winding up of the entities. See TEX. BUS. ORGS.
CODE ANN. § 11.054(2).
We disagree with both arguments. The trial court’s April 24, 2018 order granted
Bubak’s motion for partial summary judgment, and it directed the parties to “attempt to
reach an agreement” as to how the entities should be wound up. The order further stated
that, if the parties are unable to reach such an agreement, then “each party is ordered to
submit to the Court their detailed plan” on how the winding up should be accomplished.
Bubak asserted in his Motion for Entry of Order that he was unable to reach an agreement
with Tucker as contemplated in the April 24 order, and Tucker does not dispute this fact.
The Asset List—with its valuations and proposed distribution of assets—constituted
Bubak’s “detailed plan” on how to wind up the entities. Though he responded to Bubak’s
Motion for Entry of Order and objected to Bubak being appointed the “person to carry out”
the winding up, Tucker did not submit any plan on how to wind up the entities. Moreover,
Tucker has never disputed the accuracy of the valuations contained in the Asset List, nor
11
has he ever disputed the propriety of the distribution proposed therein.
Importantly, at the time Bubak filed his Motion for Entry of Order and proposed
order with the Asset List, the trial court had already granted his motion for partial summary
judgment by its memorandum order of April 24, 2018. It logically follows that the Asset
List could not have been submitted by Bubak—nor could it have been considered by the
trial court—for the purpose of establishing Bubak’s entitlement to judgment as a matter
of law on the claims raised in his petition. In particular, the Asset List is not probative as
to the elements required for the involuntary winding up and termination of a domestic
business entity under either § 11.054 or § 11.314 of the business organizations code.
See id. §§ 11.054, 11.314.
Similarly, although Bubak requested to be appointed as the person “to carry out
the winding up” of the entities for the first time in his Motion for Entry of Order, the trial
court had already granted summary judgment as of that time. Like the Asset List, Bubak’s
request to be appointed as the person “to carry out the winding up” of the entities did not
implicate any element of his statutory claims. It was not a ground for summary judgment
which needed to be expressly set out in the summary judgment motion. See TEX. R. CIV.
P. 166a(c). Instead, the trial court’s appointment of Bubak was authorized by § 11.054
of the business organizations code, which gives the trial court broad authority, upon
application by “an owner” of an entity, to “appoint a person to carry out the winding up” of
the entity and to “make any other order, direction, or inquiry that the circumstances may
require.” See TEX. BUS. ORGS. CODE ANN. § 11.054(2), (3).
For the foregoing reasons, the trial court did not err by considering the Asset List
in making its July 16, 2018 judgment or by explicitly incorporating the Asset List in that
12
judgment. Tucker’s issues contending otherwise are overruled.
D. Award of Equitable Relief Via Summary Judgment
By the fourth issue in his second appeal, Tucker contends that summary judgment
is an “inappropriate vehicle through which to award equitable relief” such as the winding
up and termination of a business entity.10 He cites case law establishing that “dissolution
proceedings are equitable in nature” and that, “[w]hen contested fact issues must be
resolved before a court can determine the expediency, necessity, or propriety of equitable
relief, a party is entitled to have a jury resolve the disputed fact issues.” CBIF Ltd. P'ship
v. TGI Friday’s Inc., No. 05-15-00157-CV, 2017 WL 1455407, at *9 (Tex. App.—Dallas
Apr. 21, 2017, pet. denied) (mem. op.) (citing M.R. Champion, Inc. v. Mizell, 904 S.W.2d
617, 618 (Tex. 1995); State v. Tex. Pet Foods, Inc., 591 S.W.2d 800, 803 (Tex. 1979)).
Tucker also cites In re Spiritas, in which the Dallas Court of Appeals granted mandamus
relief and vacated the trial court’s summary judgment ordering the winding up of a limited
liability partnership. No. 05-16-00791-CV, 2017 WL 1281394, at *3 (Tex. App.—Dallas
Apr. 6, 2017, orig. proceeding) (mem. op.).
We disagree that there is anything improper about granting an application for the
winding up of a business entity pursuant to summary judgment procedure. The rule
governing summary judgments states that “[a] party seeking to recover upon a claim,
counterclaim, or cross-claim or to obtain a declaratory judgment may” move for summary
judgment “at any time after the adverse party has appeared or answered . . . .” TEX. R.
CIV. P. 166a(a). The rule does not restrict the type of “claim” which may be disposed of
10 To the extent Tucker argues the merits of the summary judgment by this issue, we address that
infra Section II.F.
13
in this manner. Instead, summary judgment may be granted ordering the winding up and
termination of a business entity. See Hill v. Hill, 460 S.W.3d 751, 760 (Tex. App.—Dallas
2015, pet. denied) (affirming a summary judgment ordering the winding up and
termination of a limited liability company under § 11.314).
The cases Tucker cites are inapposite or distinguishable. CBIF merely restated
the rule that summary judgment may not be granted if there are disputed issues of
material fact. See CBIF Ltd. P’ship, 2017 WL 1455407, at *9; see also TEX. R. CIV. P.
166a(c). The order at issue in In re Spiritas was vacated only because it “allowed
execution” despite not being final or appealable. See In re Spiritas, 2017 WL 1281394,
at *3 (“The May 12, 2016 winding up order appoints a representative to begin winding up
SRE and sell its real property. In other words, the winding up order permits execution of
a non-final order because it puts into immediate effect the February 16, 2016 order
declaring that an event requiring the winding up of SRE had occurred. But neither order
is a final, appealable judgment because the orders do not dispose of all parties and all
claims. . . . A court abuses its discretion by allowing the execution of a non-final order.”).
That is not a concern here because the trial court’s order is final and is therefore subject
to supersedeas under Texas Rule of Appellate Procedure 24.
We overrule Tucker’s fourth issue in the second appeal.
E. Statutory Authority to Order Winding Up
By the second issue in his first appeal and the third issue in his second appeal,
Tucker argues that Bubak “cannot meet the statutory requirements” for the court-ordered
winding up of a business entity, and therefore, Bubak failed to establish his entitlement to
judgment as a matter of law. See TEX. R. CIV. P. 166a(c).
14
Tucker first contends that the sections of the business organizations code cited by
Bubak in his petition—i.e., §§ 11.054 and 11.314—do not allow for the appointment of a
receiver to wind up an entity. But Bubak abandoned his claim for the appointment of a
receiver, and the trial court did not order one in this case.
Tucker next complains that the trial court cited a non-existent portion of the statute,
“subparagraph 11.314(A)(1),” in its July 16 order. In actuality, the non-existent subsection
cited by the trial court in its order was “Section 11.314(1)(A),” not “subparagraph
11.314(A)(1).” In any event, it is clear that the trial court intended to refer to subsection
11.314(1), because it referenced the language of that subsection in its order. See TEX.
BUS. ORGS. CODE ANN. § 11.314 (allowing winding up and termination if “the economic
purpose of the entity is likely to be unreasonably frustrated”).
Finally, Tucker argues in these issues that the statute which the trial court specified
as the basis for its order, business organizations code § 11.314, does not permit an order
compelling the involuntary winding up of a corporation, such as EM. We agree.
Involuntary winding up and termination under § 11.314 is restricted to partnerships and
limited liability companies. See id. (entitled “Involuntary Winding Up and Termination of
Partnership or Limited Liability Company”). Bubak does not dispute this, but instead
contends that the order as to EM was authorized by § 11.054, which allows a court to
“supervise the winding up” or “appoint a person to carry out the winding up” of any
“domestic entity,” a term which includes corporations. See id. § 11.054; see also id.
§ 1.002(18), (62).11
11 Even though the trial court’s order cited only § 11.314 as a basis for its ruling, we may affirm
summary judgment on other grounds if they are preserved by the movant and supported by the record.
See Cincinnati Life Ins. Co. v. Cates, 927 S.W.2d 623, 626 (Tex. 1996) (“[T]he appellate court may consider
other [summary judgment] grounds that the movant preserved for review and trial court did not rule on in
15
We cannot agree that the trial court’s order as to EM is authorized by § 11.054.
That statute, entitled “Court Supervision of Winding Up Process,” explicitly states that the
powers it grants are “[s]ubject to the other provisions of this code . . . .” Id. § 11.054. In
those other provisions, “winding up” is defined as “the process of winding up the business
and affairs of a domestic entity as a result of the occurrence of an event requiring winding
up.” Id. § 11.001(8). “An event requiring winding up” of a domestic entity includes “a
decree by a court requiring the winding up, dissolution, or termination of the domestic
entity, rendered under this code or other law.” Id. § 11.051(5). But although § 11.054
allows a court to “supervise” the winding up of a corporation and to “appoint a person to
carry out” that process, it does not explicitly allow a trial court to “requir[e] the winding up,
dissolution, or termination” of a corporation. See id. §§ 11.051 (emphasis added),
11.054(a), (b).
Further, although § 11.054 allows a trial court to “make any other order, direction,
or inquiry that the circumstances may require,” that authority is also “[s]ubject to the other
provisions” of the business organizations code. See id. § 11.054(3). We do not believe
§ 11.054(3) was intended to serve as a judicial carte blanche that would allow a trial court
unfettered authority to take actions—such as the rendition of an order requiring the
involuntary termination of a corporation—that are not explicitly permitted elsewhere in the
code. Instead, we construe § 11.054(3) as granting the trial court broad authority to make
appropriate orders in cases where “[a]n event requiring winding up” has already occurred.
See id. §§ 11.054(3); see also id. § 11.051.12
the interest of judicial economy.”); Thomas v. Farris, 175 S.W.3d 896, 898 (Tex. App.—Texarkana 2005,
pet. denied) (“An appellate court may affirm the judgment on any grounds properly raised before the trial
court, even when the trial court grants summary judgment specifically on fewer than all grounds asserted.”).
12 Bubak did not specify any “event requiring winding up” of the Edde entities, either in his petition
16
We conclude that the trial court erred by ordering the involuntary termination and
winding up of EM, a corporation. Tucker’s issues raising this argument are sustained.
Moreover, because Bubak’s pleadings do not offer any legally cognizable basis for the
trial court to order the involuntary termination and winding up of a corporation, we render
judgment denying Bubak’s requests for the winding up and dissolution of EM.
F. Summary Judgment Merits
Tucker’s remaining issues address the merits of the summary judgment ruling. We
will address these issues only insofar as they concern the entities other than EM which
were affected by the trial court’s July 16 order—i.e., EV, EDS, and Titan.
1. Standard of Review
The denial of summary judgment is reviewed de novo. Neely v. Wilson, 418
S.W.3d 52, 59 (Tex. 2013). A movant for traditional summary judgment has the burden
to establish that no genuine issue of a material fact exists and that it is entitled to judgment
as a matter of law. TEX. R. CIV. P. 166a(c); Amedisys, Inc. v. Kingwood Home Health
Care, LLC, 437 S.W.3d 507, 511 (Tex. 2014). A fact issue exists if there is more than a
scintilla of probative evidence to support each element of the plaintiff’s claim. Neely, 418
S.W.3d at 59. We review the summary judgment evidence in the light most favorable to
the non-movant, indulging every reasonable inference and resolving any doubts against
the motion. Buck v. Palmer, 381 S.W.3d 525, 527 (Tex. 2012) (per curiam); City of Keller
v. Wilson, 168 S.W.3d 802, 824 (Tex. 2005).
2. Analysis
By the fourth issue in his first appeal and the fifth issue in his second appeal,
or in his summary judgment motion.
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Tucker contends that summary judgment was improper because Bubak did not produce
any competent summary judgment evidence. By the first issue in his first appeal, Tucker
contends that summary judgment was improper because he produced “extensive
evidence reflecting Bubak’s wrongful conduct.”
Bubak attached three items to his motion for partial summary judgment: (1) an
affidavit in which Bubak attested to the truth of the factual statements made in the motion;
(2) a series of emails between Tucker and Bubak; and (3) a transcript from a temporary
injunction hearing on October 5, 2017, at which Tucker and Bubak testified, along with
exhibits from the hearing. Tucker argues that Bubak’s affidavit cannot be considered as
summary judgment evidence because it merely verified allegations made in the motion
and did not independently assert any facts. See City of Hous. v. Clear Creek Basin Auth.,
589 S.W.2d 671, 678 (Tex. 1979) (“Pleadings do not constitute summary judgment
proof.”). He contends that the email exchange between Tucker and Bubak is not
competent summary judgment evidence because it was not authenticated. See TEX. R.
EVID. 901(a). And he argues that the temporary injunction hearing transcript cannot be
considered because Bubak did not, in his summary judgment motion, direct the trial court
to any particular portion of the 202-page document.13
As noted, § 11.314 of the Texas Business Organizations Code allows a trial court
to “order the winding up and termination” of a partnership or limited liability company if
the court finds that “the economic purpose of the entity is likely to be unreasonably
frustrated.” TEX. BUS. ORGS. CODE ANN. § 11.314(1). Bubak alleged this ground for relief,
13 Tucker further contends by these issues that the Asset List was not competent summary
judgment evidence because it was not authenticated. We have already held, however, that the Asset List
was not submitted as evidence supporting any of the alleged grounds for summary judgment.
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among others, in his summary judgment motion. As the basis for its summary judgment
order, the trial court found that “there is no genuine issue as to any material fact” that “the
“economic purposes of the entities is likely to be frustrated.”14
Tucker argued in response to the summary judgment motion that his “extensive
summary judgment evidence shows that there is, at a very minimum, a question for the
jury as to whether Bubak breached his agreements and fiduciary duties regarding the
destruction of Edde Drilling and the concurrent establishment of SDS, a direct competitor
of Edde Drilling.” But Bubak did not move for summary judgment on Tucker’s breach of
contract and breach of fiduciary duty counterclaims; those claims remain pending in the
severed proceeding. And crucially, Tucker’s summary judgment response did not
challenge Bubak’s assertion that the “economic purpose” of EV, EDS, and Titan “is likely
to be unreasonably frustrated” due to the ongoing disagreements between the parties as
to how the companies are managed.
Our inquiry here is limited to the question of whether the trial court erred in
rendering summary judgment on grounds that the “economic purpose” of EV, EDS, and
Titan “is likely to be unreasonably frustrated.” The business organizations code plainly
permits a trial court to order winding up and dissolution if it makes this finding. TEX. BUS.
ORGS. CODE ANN. § 11.314(1). Here, Bubak alleged these grounds in his summary
judgment motion but Tucker did not deny them in his response. We therefore cannot
reverse the judgment on this basis as Tucker urges. See TEX. R. CIV. P. 166a(c) (“Issues
not expressly presented to the trial court by written motion, answer or other response
14 The trial court’s order did not specify that the likely frustration would be “unreasonabl[e],” as
required for a winding up order under § 11.314(1). See TEX. BUS. ORGS. CODE ANN. § 11.314(1). Tucker
does not take issue with this oversight. In any event, given the state of the pleadings and arguments, it is
clear that § 11.314(1) was the basis for the trial court’s order.
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shall not be considered on appeal as grounds for reversal.”).
Further, in light of the fact that Tucker never disputed Bubak’s § 11.314(1)
allegation, Bubak was arguably under no obligation to produce any evidence to support
it. See TEX. R. CIV. P. 166a(a) (noting that a plaintiff may “move with or without supporting
affidavits for a summary judgment in his favor”). And even if all of Bubak’s summary
judgment evidence is considered incompetent, the evidence attached to Tucker’s
summary judgment response constituted more than a scintilla to show that the “economic
purpose” of EV, EDS, and Titan “is likely to be unreasonably frustrated.” For example,
Tucker attached deposition testimony by Bubak in which he stated that the Edde
companies suffered from “[d]ysfunctional management” and elaborated:
[I]t started some years back, but we can’t—you know, Troy and I can’t work
together on how best to work with the company, expand the·company, if I
have certain ideas that I thought would help the company schedule more,
and he disagrees.· And·then we got into issues with, you know, the turnkey
process and how best to manage it, the wheels fell off, couldn’t get the
wheels back on.
We went into mediation, tried that, came out with some answers that I didn’t
think were in the best interest of the overall health of the company but that
may work to at least get the wheels back on.
That didn’t last very long, and the wheels fell off again.· And it just seemed
like there just wasn’t any way that we were ever going to be able to—to get
the wheels back on.
Although Tucker disagrees that the companies should be wound up and
terminated, he has never disputed that the “economic purpose” of the entities “is likely to
be unreasonably frustrated,” and the evidence supports that conclusion. Accordingly, the
trial court did not err by granting summary judgment ordering the winding up and
dissolution of EV, EDS, and Titan. Tucker’s issues concerning the merits of the summary
judgment motion are overruled.
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III. CONCLUSION
We reverse the trial court’s July 16, 2018 judgment as to EM, and we render
judgment denying Bubak’s petition for winding up and termination of that corporation
under the business organizations code. The remainder of the judgment is affirmed.
DORI CONTRERAS
Chief Justice
Delivered and filed the
20th day of June, 2019.
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