David F. Longwood, D/B/A Designer's Furniture Manufacturing v. Sealy Northwest Houston L.P. ( 2023 )

Affirmed and Memorandum Opinion filed January 24, 2023.
In The
Fourteenth Court of Appeals
NO. 14-21-00247-CV
DAVID F. LONGWOOD, D/B/A DESIGNER’S FURNITURE
MANUFACTURING, Appellant
V.
SEALY NORTHWEST HOUSTON L.P., Appellee
On Appeal from the 127th District Court
Harris County, Texas
Trial Court Cause No. 2020-10187
MEMORANDUM OPINION
Appellant David F. Longwood d/b/a Designer’s Furniture Manufacturing
files this restricted appeal from a default judgment. Appellant argues the trial court
erred in granting default judgment because the lease agreement upon which the
default judgment is based shows that the lease agreement is with a corporation and
not Longwood individually. Appellant contends that the lease agreement
establishes on its face that Designer’s Furniture Manufacturing “was and remains a
valid corporate entity.” Finally, appellant argues the affidavit supporting the
default judgment was conclusory and therefore insufficient to support the default
judgment. We affirm.
RESTRICTED APPEAL STANDARD OF REVIEW
“When a party does not participate in person or through counsel in a hearing
that results in a judgment, she may be eligible for a restricted appeal.” Pike-Grant
v. Grant, 447 S.W.3d 884, 886 (Tex. 2014); see also Tex. R. App. P. 30. To
sustain a proper restricted appeal, the filing party must prove four things: (1) he
filed notice of the restricted appeal within six months after the judgment was
signed; (2) he was a party to the underlying lawsuit; (3) he did not participate in
the hearing that resulted in the judgment complained of, and did not timely file any
post-judgment motions or requests for findings of fact and conclusions of law; and
(4) error is apparent on the face of the record. Pike-Grant, 447 S.W.3d at 886.
“The fourth requirement derives from case law and is not included in the rule’s
requirements.” Ex parte E.H., 602 S.W.3d 486, 495 (Tex. 2020). The “face of the
record” includes the reporter’s record and the clerk’s record. See Pike-Grant, 447
S.W.3d at 886–87; see also Laas v. Williamson, 156 S.W.3d 854, 857 (Tex.
App.—Beaumont 2005, no pet.) (“[I]n a restricted appeal the ‘face of the record’
consists of all documents on file with the trial court at the time of judgment.”).
We focus on the fourth requirement—whether error is apparent on the face
of the record.
AGENCY LIABILITY
Appellant argues that as “a threshold matter, [appellee’s] default judgment
taken against an officer of a corporation for liability incurred by the corporation is
manifestly erroneous and cannot be sustained by a default judgment.” Appellant
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contends that this error is apparent on the face of the record because he executed
the lease agreement in his capacity as president of Designer’s Furniture
Manufacturing. Appellant contends that the president of a corporation is not
individually liable for the entity’s breach of lease when the president signs such
agreement in his capacity as a corporate officer. Appellant argues that absent fraud
or sham, he cannot be held liable individually. Appellant further contends that
appellee has failed to allege a basis for personal liability against him. We discuss
these two related issues together.
A. General Legal Principles
“Rules 45 and 47 of the Texas Rules of Civil Procedure require that
pleadings give fair notice of the claim asserted.” Paramount Pipe & Supply Co.,
Inc. v. Muhr, 749 S.W.2d 491, 495 (Tex. 1988). Pleadings shall “consist of a
statement in plain and concise language of the plaintiff’s cause of action . . . . That
an allegation be evidentiary or be of legal conclusion shall not be grounds for an
objection when fair notice to the opponent is given by the allegations as a whole.”
Tex. R. Civ. P. 45. An original petition shall contain “a short statement of the
cause of action sufficient to give fair notice of the claim involved.” Tex. R. Civ. P.
47. The “rules expressly countenance more general allegations . . . and the default
judgment will stand if the plaintiff has alleged a claim upon which the substantive
law will give relief, and has done so with sufficient particularity to give fair notice
to the defendant of the basis of his complaint, even though he has stated some
element or elements in the form of legal conclusions which will need to be revised
if attacked by special exceptions.” Stoner v. Thompson, 578 S.W.2d 679, 683
(Tex. 1979).
“Unless the parties have agreed otherwise, a person making or purporting to
make a contract with another as agent for a disclosed principal does not become a
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party to the contract.” A to Z Rental Ctr. v. Burris, 714 S.W.2d 433, 436 (Tex.
App.—Austin 1986, writ ref’d n.r.e.). If the principal remains undisclosed or if it
is known that the person is acting as an agent, but the principal’s identity is not
disclosed, then the agent is a party to the contract. Id. The duty to disclose the
principal lies with the agent. Id. “The party with whom the agent deals has no
duty to discover the principal.” Burch v. Hancock, 56 S.W.3d 257, 261 (Tex.
App.—Tyler 2001, no pet.). When the agent only discloses the trade or assumed
name of the principal, the agent is still personally liable because the agent “has the
duty to disclose the name of his principal, not just the principal’s assumed or trade
name.” Burris, 714 S.W.2d 437; see also Burch, 56 S.W.3d at 261–62 (“[T]he use
of a tradename is generally insufficient disclosure of the principal’s identity and
the fact of agency so as to protect the agent against personal liability.”).
B. Background
Appellee sued appellant for breach of a lease agreement. Appellee attached
the lease agreement to the petition. The lease agreement shows that “Designer’s
Furniture Manufacturing, a Texas Corporation” is a party to the lease agreement.
The lease agreement was signed by David F. Longwood, as president of Designer’s
Furniture Manufacturing. Appellee alleged in the petition that:
Defendant Designer’s Furniture Manufacturing was not a Texas
corporation when the Lease was executed. Designer’s Furniture
Manufacturing has never existed as a Texas corporation. Defendant
Longwood entered the Lease as an agent in the name of a non-existent
and/or fictitious corporation. Therefore, Longwood entered the Lease
with [appellee] individually and is individually liable on the Lease.
Appellee further alleged that appellant executed the lease agreement.
C. Analysis
Appellant argues that appellee failed to state a claim against appellant
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because it failed to define the terms “fictitious” or “non-existent,” arguing such
terms are “ambiguous” and “amorphous.” Appellant further contends that appellee
“does not indicate whether Designer’s ‘fictitious’ label was due to Designer’s lack
of corporate status, whether Designer’s has merely failed to maintain an assumed
name certificate, or that Designer’s corporate activities are allegedly so
intermingled with Longwood’s such that he should be considered Designer’s alter-
ego.” However, appellant fails to cite to any authority requiring such allegations to
be contained in the pleadings. Under the Rules of Civil Procedure, appellant is
entitled to fair notice of the claims against him. See Tex. R. Civ. P. 45, 47.
Appellee contends that appellant was given fair notice in the pleading of the
claim asserted against him and the pleading supports the trial court’s judgment.
See Paramount Pipe & Supply Co., Inc. v. Muhr, 749 S.W.2d 491, 495 (Tex.
1988). In Muhr, the court explained its basis for upholding a default judgment
against both parties:
In our cases, two oil and gas equipment suppliers sued Western
International and Ulrich Muhr for materials and services accepted by
Western International. The petitions alleged that Western
International acted “for itself and as agent for” Muhr; Western
International “acting for itself and for” Muhr accepted such materials
and services; demand was made on Western International; and
defendants refused to pay. The prayers were for judgments against
both defendants.
. . . . [W]e hold today that the original petitions at issue, each as a
whole, provided fair notice to Ulrich Muhr of the claims asserted.
While the petitions may have been subject to attack by special
exceptions, they satisfy the fair notice requirement.
Id. Similarly in this case, the petition alleges that at the time the lease was
executed that Designer’s Furniture Manufacturing did not exist and has never
existed as a Texas corporation. Appellee alleged that “Longwood entered the
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Lease as an agent in the name of a non-existent and/or fictitious corporation.
Therefore, Longwood entered the Lease with [appellee] individually and is
individually liable on the Lease.”1 See Burris, 714 S.W.2d 436 (“If Burris had
entered into any contracts with Rental before either corporation came into
existence, he would have been personally liable under the general rule that one
who contracts as an agent in the name of a nonexistent or fictitious principal, or a
principal without legal status or existence, renders himself personally liable on
those contracts.” (citing Carter v. Walton, 469 S.W.2d 462, 471 (Tex. App.—
Corpus Christi–Edinburg 1971, writ ref’d n.r.e.))).
Appellant contends that he cannot be held individually liable on the lease
agreement citing Ericsson v. Spectra Financial Corporation, 743 S.W.2d 763(Tex. App.—Houston [1st Dist.] 1998, no writ). However, Ericsson did not
discuss an agency theory of liability and is distinguishable on that basis. See id.There was no allegation in Ericsson that the corporate entity that executed the lease
agreement did not exist and never existed. See id.We conclude the pleadings gave appellant fair notice of the claim asserted
against him. See id.; Edwards Feed Mill, Inc. v. Johnson, 311 S.W.2d 232, 315–17
(Tex. 1958) (holding that pleading provided fair notice of alleged partnership
liability and affirming default judgment). Concluding that appellee asserted a
claim against appellant in his individual capacity, as an agent for a nonexistent
principal, and that appellant had fair notice of that claim, we overrule these issues.
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Appellant does not dispute that Designer’s Furniture Manufacturing has never been a
Texas corporation. Although not contained anywhere in the record, in his brief appellant states
that “Designer’s Furniture Manufacturing a Texas corporation also known as Regency
Purchasing, Inc. . . . . Regency Purchasing, Inc. registered the assumed name Designer’s
Furniture Manufacturing with the Texas Secretary of State.” Later in the brief, appellant
indicates that appellant “Longwood sold the stock of Regency Purchasing, Inc. d/b/a Designer’s
Furniture Manufacturing.” However, since error must be apparent on the face of the record in a
restricted appeal, these unverified statements cannot be considered.
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SUFFICIENCY OF AFFIDAVIT
Appellant next contends the affidavit to support appellee’s default judgment
motion is conclusory and cannot support the judgment against him. Appellant
argues that because the affidavit is conclusory, it is defective and cannot support a
default judgment as a matter of law.
Appellant cites cases to support his argument that the “legal conclusions” set
out in the affidavit are insufficient to establish appellant’s individual liability as a
matter of law. See Calderoni v. Vasquez, No. 03-11-00537-CV, 2012 WL
2509802 (Tex. App.—Austin June 26, 2012, no pet.) (mem. op.); C & H Transp.
Co. v. Wright, 396 S.W.2d 443 (Tex. App.—Tyler 1965, writ ref’d n.r.e.). In
Calderoni the court reviewed the pleadings and determined that the petition
“focused exclusively on the conduct” of two of the defendants and the plaintiff did
not allege “actual involvement” by the third defendant “in any fraudulent acts.” Id.
at *4. Even though the plaintiff pleaded the elements of its claims against all the
“defendants,” this was not enough to allege a cause of action against the third
defendant because there were no factual allegations to support that the third
defendant committed any fraud or participated in the fraud in any way. Id. at *5.
The court held “there is error on the face of the record because [the plaintiff’s]
petition does not contain sufficient factual allegations to state a cause of action
against [the third defendant], nor is there any evidence that could support an award
of unliquidated damages if liability was established.” Id. at *8.
Calderoni did not weigh the evidence and determine the sufficiency; instead
it merely looked to the petition to determine whether a claim was asserted against
the defaulting defendant. See id. at *4; see also Muhr, 749 S.W.2d at 496 (“[A]
petition providing fair notice of the claims asserted, absent other deficiencies, will
support a default judgment.”). Calderoni provides no support for appellant’s
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argument that error is apparent on the face of the record because the affidavit
supporting default judgment is alleged to be conclusory.
Because a non-answering party admits the facts properly pleaded, discussion
of appellee’s affidavit is unnecessary. See Muhr, 749 S.W.2d at 496 (“[A]s to
default judgments, the non-answering party has ‘admitted’ the facts properly
pleaded and the justice of the opponent’s claim.”); Morgan v. Compugraphic
Corp., 675 S.W.2d 729, 731 (Tex. 1984) (“[A] judgment taken by default on an
unliquidated claim admits all allegations of fact set out in the petition, except the
amount of damages. . . . if the facts set out in the petition allege a cause of action, a
default judgment conclusively establishes the defendant’s liability.”); see also
Herbert v. Greater Gulf Coast Enters., Inc., 915 S.W.2d 866, 872 (Tex. App.—
Houston [1st Dist.] 1995, no writ) (“A defendant admits all allegations of fact
except unliquidated damages.”).
Appellant admitted by default the existence of the contract, appellee’s
performance, appellant’s default in payment, that Designer’s Furniture
Manufacturing was not a Texas corporation at the time the lease was executed, that
Designer’s Furniture Manufacturing has never existed as a Texas corporation, that
appellant entered into the lease agreement as an agent of a non-existent
corporation, and that appellant signed the lease agreement. See Herbert, 915
S.W.2d at 872; see also Muhr, 749 S.W.2d at 496. These admissions are sufficient
to establish appellant’s individual liability on the lease agreement. See Burris, 714
S.W.2d at 437.
We overrule appellant’s third issue.
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CONCLUSION
Having overruled appellant’s issues on appeal, we affirm the trial court’s
judgment.
/s/ Ken Wise
Justice
Panel consists of Justices Wise, Poissant, and Wilson.
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