J.W. Garrett & Sons, Inc. D/B/A G & G Enterprises, Inc. v. Wyatt D. Snider, Jack Koch, and John Thomasson ( 2015 )

In The
Court of Appeals
Ninth District of Texas at Beaumont
____________________
NO. 09-14-00306-CV
____________________
J.W. GARRETT & SONS, INC. D/B/A G&G ENTERPRISES, INC.,
Appellant
V.
WYATT D. SNIDER, JACK KOCH, AND JOHN THOMASSON,
Appellees
_______________________________________________________ ______________
On Appeal from the 60th District Court
Jefferson County, Texas
Trial Cause No. B-187,307
________________________________________________________ _____________
MEMORANDUM OPINION
In this appeal, we consider whether the trial court properly granted a take-
nothing summary judgment on a builder’s claims alleging negligence, fraud,
misrepresentation, theft of services, and misapplication of trust funds against three
board members of the Young Men’s Christian Association of Beaumont, Texas
(BYMCA). The claims of the builder, J.W. Garrett & Sons, Inc. (G&G), arose after
1
the BYMCA defaulted on its obligation to make progress payments toward
completing a new building, which was intended to be the BYMCA’s principal
location. In four issues, G&G argues that the final judgment should be reversed,
and that its claims should be remanded for trial. We conclude the issues that G&G
raises in the appeal do not require the judgment to be reversed, and the trial court’s
judgment is affirmed.
Background
The background facts are provided in light of the summary judgment
standard of review, which requires that we view the summary judgment evidence
in the light most favorable to G&G as the party that opposed the motion for
summary judgment. See Henkel v. Norman, 441 S.W.3d 249, 250 (Tex. 2014). In
2008, the BYMCA hired G&G on a cost-not-to-exceed basis to manage the
construction of a new facility to house the BYMCA. At a meeting in January 2009,
prior to the date that G&G agreed to manage the project, Wyatt D. Snider told
G&G’s president, Colin Garrett, that “the [BYMCA] had designated $4,500,000.00
to complete the project.” When the meeting occurred, Snider was a member of the
BYMCA’s board, and in 2009, he became the board’s chair. Jack Koch, the
BYMCA’s Chief Executive Officer, was present during the meeting.
2
At another meeting in February 2009, Garrett presented G&G’s suggestions
that were designed to reduce the cost of completing the proposed project to Koch
and John Thomasson, who was at the time the meeting occurred serving as the
BYMCA’s chair. During this meeting, G&G agreed to reduce various costs for the
proposed project, reducing the maximum projected cost to build the facility to
$4,008,862.
Between February 2009 and February 2010, G&G performed a substantial
amount of work to construct the facility, but on February 11, 2010, Snider
informed G&G that the BYMCA did not have sufficient funds to complete the
project. When G&G sued the defendants, G&G had been paid $3,229,755 for its
work on the project; G&G claimed that the BYMCA owed an additional $728,325
for the work that had been completed. In addition to its claims for unpaid work,
G&G claimed in its suit that it would have earned an additional $437,410 under its
contract with the BYMCA had the project been completed.
According to an affidavit that Garrett filed to oppose the motion for
summary judgment, G&G would not have started the job had Garrett known that
the BYMCA “did not have the money to complete the construction, or that a
capital campaign or fundraising campaign would be required to raise the money to
complete the construction.” According to Garrett’s affidavit, G&G acted
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reasonably in relying on Snider’s statement that the BYMCA had designated
$4,500,000 to pay for the project, and he asserted that in deciding whether to agree
to the BYMCA’s proposal that G&G build the new facility, G&G relied on
Snider’s statements. In his affidavit, Garrett stated that before Snider told him to
stop work, “I was not aware of how the [BYMCA] had arranged to pay for the
construction.”
In July 2010, G&G sued the BYMCA, Snider, Koch, and Thomasson on
claims that relate to the BYMCA’s failure to fully pay for the work G&G
completed and the profit it would have earned if the project had been completed.
While G&G later voluntarily dismissed BYMCA 1 from the suit, it did not dismiss
its claims against Snider, Koch, and Thomasson. In its First Amended Petition, its
1
In May 2013, Snider, Koch, and Thomasson filed a motion for partial
summary judgment on all of G&G’s claims against them, but the BYMCA never
filed a motion seeking summary judgment on G&G’s claims against it. Therefore,
because the motion did not dispose of all of the issues in the case against all
parties, the trial court’s June 2013 order granting summary judgment was
interlocutory. Tex. R. Civ. P. 301 (“Only one final judgment shall be rendered in
any cause except where it is otherwise specially provided by law.”). In June 2014,
G&G filed a motion to dismiss the claims that it was pursuing against the BYMCA
without prejudice; its motion was granted on June 4, 2014. Subsequently, G&G
filed a motion for new trial, followed by a timely-filed notice of appeal. See Tex.
R. App. P. 26.1 (providing that a party must file a notice of appeal within 90 days
of the date a judgment becomes final if any party timely files a motion for new
trial). The dismissal made the June 2013 order operate as a final judgment,
effective as of the day the trial court dismissed G&G’s claims against the
BYMCA.
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live pleading for the purpose of our review, G&G claimed that Snider, Koch, and
Thomasson were liable to it for misusing construction trust funds under chapter
162 of the Texas Property Code, alleged they were negligent, that they committed
fraud, and that they had stolen G&G’s services in violation of chapter 134 of the
Texas Civil Practice and Remedies Code and section 31.04 of the Texas Penal
Code. See Act of May 26, 1983, 68th Leg., R.S., ch. 576, § 1, sec. 162.001(a), (b),
1983 Tex. Gen. Laws 3269, 3720-721, Act of May 28, 1997, 75th Leg., R.S., ch.
1018, § 1, sec. 162.001(c), 1997 Tex. Gen. Laws 3721, 3721 (amended 2009)
(current version at Tex. Prop. Code Ann. § 162.001 (West 2014)), Tex. Prop. Code
Ann. §§ 162.002-.033 (West 2014); Tex. Civ. Prac. & Rem. Code Ann. §§
134.001-.005 (West 2011 & Supp. 2014); Tex. Penal Code Ann. § 31.04 (West
Supp. 2014). 2
On May 17, 2013, Snider, Koch, and Thomasson filed their traditional
motion for summary judgment. In the motion, they asked the trial court to enter a
take-nothing judgment on G&G’s four claims. The motion is supported by Snider’s
affidavit; the parties’ contract (signed by Koch, for the BYMCA, and Garrett, for
2
For purposes of this appeal, we cite to the current version of this statute, as
the statute’s subsequent amendment is not relevant to the issues raised on appeal.
5
G&G); and a copy of G&G’s unsecured proof of claim, which G&G filed in
connection with the BYMCA’s Chapter 7 bankruptcy. 3
G&G filed a response, which includes Garrett’s affidavit, copies of several
electronic messages between Garrett and Snider about the proposed project, copies
of G&G’s proposed and approved bids, the BYMCA’s notice to proceed from the
BYMCA’s architect to G&G, excerpts from the depositions of Snider and Don
Grimes, a loan officer in charge of the loan the BYMCA obtained for the project,
and various exhibits from the depositions taken during the discovery phase of the
case. In reply to G&G’s summary judgment response, Snider, Koch, and
Thomasson moved to strike four of the twelve paragraphs contained in Garrett’s
affidavit.
In June 2013, the trial court granted Snider, Koch, and Thomasson’s motion
for partial summary judgment. The trial court also granted Snider, Koch, and
Thomasson’s motion to strike, and ruled that it would not consider the four
paragraphs in Garrett’s affidavit to which Snider, Koch, and Thomasson objected
3
We are unable to determine the date that the BYMCA declared bankruptcy
from the record before us. However, the record includes Garrett’s affidavit of May
2013, in which he indicates that G&G received a payment from BYMCA’s
bankruptcy trustee, and he states the payment reduced the balance that the
BYMCA owed G&G. Garrett indicates that after crediting BYMCA for the
payment by the trustee, $381,675 remains unpaid on the work that G&G performed
before it stopped working on the project.
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on the basis that the paragraphs did not constitute proper summary judgment
evidence.
G&G raises four issues in its appeal. In issue one, G&G argues that the
summary judgment evidence raises fact issues on each of the elements of its four
claims. In issue two, G&G argues the trial court erred by striking the four
paragraphs in Garrett’s affidavit that were the subject of Snider, Koch, and
Thomasson’s motion to strike. In issue three, G&G argues that the trial court erred
by refusing to consider other paragraphs in Garrett’s affidavit that were not the
subject of Snider, Koch, and Thomasson’s motion to strike. In issue four, G&G
argues that because Snider, Koch, and Thomasson’s motion for summary judgment
was filed after the March 2013 deadline established in the docket control order for
dispositive motions, the trial court erred by ruling on the motion for summary
judgment.
Standard of Review
We review a summary judgment de novo. Mann Frankfort Stein & Lipp
Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009). We consider the
evidence presented in the summary judgment proceedings in the light most
favorable to the party against whom the summary judgment was rendered,
crediting evidence favorable to that party if reasonable jurors could, and we
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disregard contrary evidence unless reasonable jurors could not. Id.; see City of
Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005). In reviewing the summary
judgment evidence, we take as true all evidence favorable to the nonmovant,
indulging every reasonable inference and resolving any doubts in the nonmovant’s
favor. See City of Keller, 168 S.W.3d at 824; Joe v. Two Thirty Nine Joint Venture,
145 S.W.3d 150, 157 (Tex. 2004).
The party that files a traditional motion for summary judgment has the
burden to show that no genuine issue of material fact exists and that it is entitled to
judgment as a matter of law. Tex. R. Civ. P. 166a(c); Mann Frankfort, 289 S.W.3d
at 848. Generally, a defendant is required to conclusively negate at least one
essential element of each of the plaintiff’s causes of action or to conclusively
establish each element of an affirmative defense to succeed on a traditional motion
for summary judgment. Sci. Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 911 (Tex.
1997). “Evidence is conclusive only if reasonable people could not differ in their
conclusions . . . .” City of Keller, 168 S.W.3d at 816. Once the party moving for
summary judgment has established its right to summary judgment as a matter of
law, the party opposing the motion must present evidence that raises a genuine
issue of material fact on the elements of the claims that are challenged to avoid the
motion being granted. See City of Houston v. Clear Creek Basin Auth., 589 S.W.2d
8
671, 678-79 (Tex. 1979). “A defendant who conclusively negates at least one of
the essential elements of a cause of action or conclusively establishes an
affirmative defense is entitled to summary judgment.” Frost Nat’l Bank v.
Fernandez, 315 S.W.3d 494, 508-09 (Tex. 2010) (citing Randall’s Food Markets,
Inc. v. Johnson, 891 S.W.2d 640, 644 (Tex. 1995)).
Consideration of Motion filed after the Docket Control Deadline
First, we address the complaint that G&G raises in its fourth issue, which
concerns whether the trial court could properly consider a motion filed after the
deadline established for the filing of all dispositive motions. The record in the case
reflects that in November 2012, the trial court signed a docket control order. The
docket control order required that all dispositive motions be filed by March 8,
2013. The record also reflects that Snider, Koch, and Thomasson’s motion for
partial summary judgment was filed on May 17, 2013, more than two months after
the deadline for such motions. The docket control order set the case for trial on
April 8, 2013, and it states that the deadlines established by the docket control
order “shall remain in effect even though the case is not tried as scheduled above.”
While the case was not tried in April, the record does not indicate that the trial
court ever formally amended the docket control order.
9
In their motion for summary judgment, Snider, Koch, and Thomasson did
not request that the trial court alter the docket control order’s deadlines. However,
before the trial court acted on the motion, G&G failed to timely object to the trial
court’s consideration of the motion based on the fact that the motion was filed after
the deadline established in the docket control order. 4 See Tex. R. Civ. P. 166a(c)
(explaining that without leave of the court, an adverse party must file any response
not later than seven days prior to a hearing).
Rule 166 of the Texas Rules of Civil Procedure allows a trial court to create
various deadlines to control the disposition of the various phases of a case, and
provides that “such order . . . shall control the subsequent course of action[.]” Tex.
R. Civ. P. 166(p). Using Rule 166, trial courts are to dispose of cases “without
undue expense or burden[,]” and courts may modify orders “to prevent manifest
injustice.” Id.; Trevino v. Trevino, 64 S.W.3d 166, 170 (Tex. App.—San Antonio
2001, no pet.). A court may modify a docket control order in many ways, and it
may do so implicitly by setting a hearing after a deadline. See Trevino, 64 S.W.3d
4
The docket sheet indicates that the trial court conducted a hearing on
Snider, Koch, and Thomasson’s motion on May 31, 2013. On the morning of June
6, 2013—the day the trial court granted the motion—G&G filed a supplemental
response to the motion; in the supplemental response, G&G objected to the trial
court considering the motion based on the fact that it was filed after the deadline
the trial court established for filing all dispositive motions. Nevertheless, the record
does not show that G&G secured a ruling on the objection that it raised for the first
time in its supplemental response.
10
at 170; Ocean Transp., Inc. v. Greycas, Inc., 878 S.W.2d 256, 262 (Tex. App.—
Corpus Christi 1994, writ denied). Here, by hearing and ruling on Snider, Koch,
and Thomasson’s motion, the trial court implicitly modified the docket control
order. G&G did not request a continuance of the hearing, and it has not complained
that it was otherwise prejudiced by Snider, Koch, and Thomasson’s failure to
comply with the docket control order’s deadlines.
In our opinion, G&G’s objection that the trial court should not consider the
motion because it was not filed before the docket control deadline date was not
properly preserved for appeal. Tex. R. App. P. 33.1(1)(A), (2)(A). The objection
was not timely, and G&G never secured the trial court’s ruling on the objection
that it raised in its supplemental response. Id. Nevertheless, even had G&G’s
objection been timely and its right to complain about the violation of the docket
deadline been preserved, the docket control order was an interlocutory order that
the trial court could modify. See Tex. R. Civ. P. 306a. We overrule G&G’s fourth
issue.
Fact Issues on All Elements of Each Claim
In issue one, G&G argues that the summary judgment evidence raises fact
issues on each of the elements of its four claims. According to G&G, had the trial
court not granted the motion to strike portions of Garrett’s affidavit, the trial court
11
would have been faced with a record that contained some evidence on each of the
elements of its claims. However, in its brief, G&G does not point out the elements
of its claims, nor does it point to the specific evidence in the summary judgment
record that supports each of the elements of its four claims. Instead, G&G argues
globally, claiming that the summary judgment record contains evidence creating a
fact issue on all of the elements of all of its four claims. Additionally, G&G does
not identify the elements of its four claims.
We are not required to make G&G’s arguments for it, nor are we required to
brief the argument on its behalf. See Tex. R. App. P. 38.1(i) (“The brief must
contain a clear and concise argument for the contentions made, with appropriate
citations to authorities and to the record.”); see also George v. Houston Eye
Assocs., No. 14–02–00629–CV, 2003 WL 22232651, at *3 (Tex. App.—Houston
[14th Dist.] Sept. 30, 2003, pet. denied) (“It is not the appellate court’s
responsibility to create the appellant’s argument.”). In the absence of a concise
argument as to each claim, with appropriate citations to authorities, and a succinct,
clear, and accurate argument, along with references to the record, G&G has failed
to preserve its claim that the trial court erred in granting Snider, Koch, and
Thomasson’s motion for summary judgment. See Tex. R. App. P. 38.1(i).
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However, even if G&G had properly preserved its right to complain about
the trial court’s ruling, its arguments are without merit. For purposes of analyzing
G&G’s first issue, we will consider all of the paragraphs in Garrett’s affidavit and
all of the summary judgment evidence that was before the trial court, including the
entirety of Garrett’s affidavit.
G&G asserted four claims against Snider, Koch, and Thomasson, claiming
Texas Trust Fund Act violations, fraud, negligence, and theft, all of which are
related to the BYMCA’s failure to pay G&G for its work. With respect to G&G’s
misuse of trust funds claim, chapter 162 of the Property Code provides that a
“trustee” who intentionally, knowingly, or with the intent to defraud, directly or
indirectly retains, uses, disburses, or otherwise diverts trust funds without first
fully paying all current or past due obligations misapplies trust funds. Tex. Prop.
Code Ann. § 162.031(a) (West 2014). 5 A “trustee” includes an officer or director
of a contractor who has control or direction of trust funds. Id. § 162.002 (West
2014). A contractor who furnishes labor or material for the construction on specific
real property is a beneficiary of trust funds. Id. § 162.003(a) (West 2014). Trust
funds are defined as payments made to a contractor under a construction contract
5
Unless cited otherwise, we cite the current version of the statutes in chapter
162 of the Texas Property Code, as any amendments that occurred after G&G and
the BYMCA signed the contract are not relevant to the issues in G&G’s appeal.
13
for the improvement of real property, as are loan receipts borrowed by an officer or
director of an owner for the purpose of improving specific real property, if the loan
is secured in whole or part by a lien on the property. Act of May 26, 1983, 68th
Leg., R.S., ch. 576, § 1, sec. 162.001(a), (b), 1983 Tex. Gen. Laws 3269, 3720-721
(current version at Tex. Prop. Code Ann. § 162.001(a), (b) (West 2014)).
With respect to the amounts paid to G&G as costs of construction, 6 Garrett
stated in his affidavit that G&G submitted applications for payment to the
BYMCA’s architect, which once approved, were paid. However, Garrett claims
that he did not know whether the payments G&G received came from the proceeds
of the BYMCA’s construction loan.
In this case, the summary judgment evidence conclusively shows that the
BYMCA was loaned $2,000,000 and that G&G received payments on BYMCA’s
project that totaled $3,229,755. The summary judgment evidence does not show
that any of the loan proceeds were used for purposes other than to pay for the
construction of the new facility, and G&G points to no summary judgment
6
We note that G&G could not maintain a Trust Fund Act claim with respect
to the percentage that it earned as a contractor fee, which was based on the material
and labor spent on the project. See Act of May 28, 1997, 75th Leg., R.S., ch. 1018,
§ 1, sec. 162.001(c), 1997 Tex. Gen. Laws 3721, 3721 (amended 2009) (current
version at Tex. Prop. Code Ann. § 162.001(c) (West 2014)) (providing that where
the contract provides the owner will pay the costs of construction and a reasonable
fee, the “fee payable to the contractor is not considered trust funds”).
14
evidence showing the loan proceeds were used for any other purpose. We conclude
that G&G’s summary judgment evidence fails to raise a fact issue proving that the
construction loan proceeds were misdirected for purposes other than constructing
the BYMCA’s new facility. There is also no evidence in the record showing that
Snider, Koch, or Thomasson acted knowingly, intentionally or with the intent to
defraud with respect to the BYMCA’s use of the loan proceeds, as the loan
proceeds appear to have been used to pay for the BYMCA’s new building.
Concerning G&G’s fraud claim, G&G was required to prove that Snider,
Koch, or Thomasson (1) made a material representation that was false, (2) knew
the representation was false, (3) intended to induce G&G to act upon the
representation, and that (4) G&G acted in reliance on the representation and
thereby suffered injury. See Italian Cowboy Partners, Ltd. v. Prudential Ins. Co. of
Am., 341 S.W.3d 323, 337 (Tex. 2011). In contract cases, a promise of future
performance is actionable in fraud only if the defendant, at the time he made the
promise, made it with no intention that the promise would be performed. Formosa
Plastics Corp. USA v. Presidio Eng’rs & Contractors, Inc., 960 S.W.2d 41, 48
(Tex. 1998). In other words, “the mere failure to perform a contract is not evidence
of fraud.” Id.
15
G&G’s complaints involve Snider’s representations to Garrett “that the
YMCA had designated $4,500,000 to complete the project” and “that there would
be sufficient funds to pay G&G for its work.” Garrett claims these statements were
material and false, and that they induced him to sign the contract.
In our opinion, the two statements are not statements regarding existing
facts. Snider’s statement that the BYMCA had “designated” funds for the project is
not tantamount to a statement that the BYMCA had funds on hand that were
segregated for use solely on the new building. Instead, Snider’s statements reflect
the amount that the BYMCA had budgeted for the project. Snider’s statements
about the BYMCA having designated funds cannot reasonably be interpreted as
meaning that the BYMCA placed any funds into a trust for G&G’s benefit.
Snider’s statement that there would be sufficient funds to pay G&G for its work is
a statement predicting the BYMCA’s future solvency, which is a matter of opinion,
not fact. Statements predicting what will occur in the future are not statements of
fact, and as such, these types of statements cannot serve as evidence of fraud. See
Italian Cowboy Partners, 341 S.W.3d at 337-38. We conclude that G&G has not
demonstrated in its appeal that a fact issue exists on its claims for fraud.
Snider’s statements are also the basis of G&G’s fraud claims against Koch
and Thomasson. According to G&G, Koch and Thomasson never advised it that
16
Snider’s statements were false. However, in the absence of a duty to disclose, a
failure to disclose generally cannot serve as evidence of fraud. Bradford v. Vento,
48 S.W.3d 749, 755 (Tex. 2001). In its brief, G&G fails to explain how Koch and
Thomasson owed it a duty to correct any of Snider’s statements, nor has G&G
explained in its brief how Snider’s statements could otherwise form the basis of its
claims against Koch and Thomasson.
With respect to G&G’s negligence claim, G&G was required to prove that
Snider, Koch, and Thomasson, respectively, owed it a legal duty, that each of
them, respectively, had breached that duty, and that their breaches caused G&G to
be damaged. IHS Cedars Treatment Ctr. of DeSoto, Tex., Inc. v. Mason, 143
S.W.3d 794, 798 (Tex. 2004). Whether a duty exists—a threshold question in a
negligence case—is a question of law. Tri v. J.T.T., 162 S.W.3d 552, 563 & f.25
(Tex. 2005); Centeq Realty, Inc. v. Siegler, 899 S.W.2d 195, 197 (Tex. 1995). “The
nonexistence of a duty ends the inquiry into whether negligence liability may be
imposed.” Van Horn v. Chambers, 970 S.W.2d 542, 544 (Tex. 1998).
In this case, it is undisputed that G&G contracted with the BYMCA and that
it had no contract with Snider, Koch, or Thomasson. In its brief, G&G fails to
explain how Snider, Koch, and Thomasson owed it duties that were separate from
those owed to it by the BYMCA, the party with whom it contracted. The trial court
17
properly granted the motion on the negligence claim because G&G failed to
demonstrate that an issue of material fact existed to prove that Snider, Koch, and
Thomasson, respectively, breached any duties they owed in their individual
capacities to G&G.
Last, we turn to G&G’s claims alleging theft, which are based on section
31.04 of the Texas Penal Code and chapter 134 of the Texas Civil Practice and
Remedies Code. See Tex. Civ. Prac. & Rem. Code Ann. §§ 134.001-.005; Tex.
Penal Code Ann. § 31.04. With respect to these claims, the evidence in the
summary judgment record does not raise an issue of material fact to show that
G&G’s services were obtained by Snider, Koch, and Thomasson with the intent to
avoid payment. Tex. Penal Code Ann. § 31.04.
The summary judgment evidence conclusively establishes that the BYMCA
paid G&G over three millions dollars for G&G’s work, including two payments
that occurred after the BYMCA recognized that it did not have sufficient funds to
complete the new building. When the BYMCA recognized that it would not have
sufficient funds, the BYMCA halted G&G’s work. Nothing in the summary
judgment evidence raises an issue of material fact to show that Snider, Koch, and
Thomasson, as officers of the BYMCA, secured G&G’s services with the intent to
allow the BYMCA to avoid paying for G&G’s work. Instead, the record shows that
18
after the BYMCA secured the contract, they worked in their capacity as officers to
arrange the BYMCA’s affairs so that the organization could pay G&G for its work.
We hold that G&G waived its right to our review of issue one by failing to
comply with Rule 38.1 of the Texas Rules of Appellate Procedure. We further hold
that even if G&G’s issue one arguments were not waived, G&G has not
demonstrated, on appeal, that material issues of fact existed as to the elements of
its four claims. Issue one is overruled.
In light of our resolution of issue one, we need not resolve issues two and
three, both of which concern whether the trial court properly considered all parts of
Garrett’s affidavit in resolving Snider, Koch, and Thomasson’s summary judgment
motion. See Tex. R. App. P. 47.1. Given our disposition of issues one and four, we
affirm the trial court’s final take-nothing judgment.
AFFIRMED.
_________________________
HOLLIS HORTON
Justice
Submitted on December 9, 2014
Opinion Delivered October 1, 2015
Before McKeithen, C.J., Horton and Johnson, JJ.
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