in Re: Scott D. Martin ( 2012 )

In The
Court of Appeals
Sixth Appellate District of Texas at Texarkana
______________________________
No. 06-11-00005-CV
______________________________
HARDING COMPANY AND
HARDING ENERGY PARTNERS, LLC, Appellants
V.
SENDERO RESOURCES, INC., ET AL., Appellees
On Appeal from the 217th Judicial District Court
Angelina County, Texas
Trial Court No. CV-41879-08-11
Before Morriss, C.J., Carter and Moseley, JJ.
Opinion by Justice Carter
OPINION
This opinion on rehearing is issued as a substitute for our original opinion issued
January 26, 2012.
This is an appeal1 of a final summary judgment concerning contract and tort claims arising
out of an agreement between several companies to acquire oil and gas leases. Harding Company2
contracted with Sendero Resources, Inc., to acquire oil and gas leases in a region of East Texas
including parts of Nacogdoches, Angelina, San Augustine, Sabine, Jasper, and Newton Counties.
Ted Walters is the president and sole shareholder of Sendero. Walters is also the president and
sole shareholder of TWW Tyler, Inc., formerly Ted W. Walters & Associates, Inc. 3 The last
entity—Ted Walters and Associates, L.P.4—is a limited partnership, with Sendero as the general
partner and Walters as a limited partner.
Milton A. Surles, an independent consultant geologist, contacted Ted Walters with plans
for developing an area in Angelina County which the parties named the ―Star Prospect.‖ Michael
1
Originally appealed to the Twelfth Court of Appeals, this case was transferred to this Court by the Texas Supreme
Court pursuant to its docket equalization efforts. See TEX. GOV‘T CODE ANN. § 73.001 (West 2005). We are
unaware of any conflict between precedent of the Twelfth Court of Appeals and that of this Court on any relevant
issue. See TEX. R. APP. P. 41.3.
2
In September 2008, Harding Company assigned its leases to Harding Energy Partners, LLC, subject to the Harding
Sendero Agreement. Harding Energy Partners, LLC, is an affiliate of Harding Company and assumed all of Harding
Company‘s obligations. We will refer to Harding Company and Harding Energy Partners, LLC, collectively, as
Harding.
3
In 2005, Walters amended the articles of incorporation to change the name of Ted W. Walters & Associates, Inc., to
TWW Tyler, Inc. When we distinguish this entity name from its current name (TWW Tyler), we will refer to this
entity as ―Associates, Inc.‖
4
We will refer to this entity as ―Associates, L.P.‖
2
R. Boney, a landman employed by Associates, L.P., conducted research on land titles and existing
wells in the area of interest. Surles prepared cross-sections of well logs, and Sendero entered into
some oil and gas leases. Harding‘s representatives met with Walters, Surles, and Boney, and
eventually Harding decided to purchase the Star Prospect.
The parties prepared and signed an agreement. Walters e-mailed a sample agreement to
Harding. The sample agreement provided that Harding shall contract with ―Associates, Inc.‖5 for
landman services and pay rates ―as mutually agreed.‖ The parties negotiated changes, and
Harding put the final draft on its letterhead, signed it, and e-mailed6 it to Sendero. Walters,
Surles, and Boney signed the agreement. The signed agreement was returned to Harding on the
letterhead of ―Associates, L.P.‖7 Section 5 of the agreement contained a noncompete clause
prohibiting Sendero, Surles, Boney, and ―Walters‖8 from competing against Harding for oil and
gas leases in the area. In 2007, Harding paid $15,000.00 to Sendero, Surles, and Boney as the
―initial consideration‖ provided for in the agreement.
5
The name had already been changed to TWW Tyler, Inc.
6
Texas has adopted the Uniform Electronic Transactions Act (UETA). See TEX. BUS. & COM. CODE ANN.
§ 322.001–.021 (West 2009).
7
Walters alleges Associates, Inc., was renamed Associates, L.P., in their brief. However, the record establishes
Associates, Inc., was renamed TWW Tyler, Inc., and Associates, L.P., was a new entity created in 2005.
8
The agreement defined ―Walters‖ as Associates, Inc.
3
Either Associates, L.P., or TWW Tyler began researching land titles and acquiring leases
for Harding. 9 The new leases were nominally held by Sendero—at Harding‘s instruction to
prevent competitors from discovering who was actually acquiring the leases. The leases were to
be assigned to Harding once a target acreage was met. Harding argues TWW Tyler acquired
sixty-eight leases covering approximately 3,34610 mineral acres and Associates, L.P., invoiced
Harding for a lease bonus consideration of $761,797.42. The parties then agreed to expand the
area of interest, and the agreement was amended to include 2,287,300 acres in Nacogdoches,
Angelina, San Augustine, Sabine, Jasper, and Newton Counties. Harding obtained 142,905.539
mineral acres in the area of interest from Black Stone Mineral Company, L.P., and Sugarberry
Kirby, JV. Walters alleges 146,261.6208 acres were acquired by Harding and were subject to the
agreement. In total, Harding paid Associates, L.P., $2,169,850.23 for land and leasing services.
In April 2008, Harding and Walters agreed Harding could have until August 15, 2008, to
make any payments due under the contract.11 In July 2008, Boney informed Harding that TWW
Tyler had been assisting Harding‘s competitors—EOG Resources, Inc., and Devon Energy,
9
Harding alleges the work was performed by TWW Tyler and invoiced by Associates, L.P. Walter testified
Associates, Inc. (renamed TWW Tyler) performed the landmen services. Elsewhere, Walters testified Associates,
L.P., and TWW Tyler had merged for tax purposes and were actually the same entity. Linda Russell, an employee of
Associates, L.P., responsible for invoices, stated in her summary judgment affidavit that all of the landmen services
were performed by employees of Associates, L.P., and all invoices for the landmen services were sent to Harding from
Associates, L.P.
10
Walters argues Sendero assigned 520 acres already obtained to Harding and acquired 3,368.8133 acres.
11
Harding argues it was reorganizing after winding down a partnership with Exxon and beginning a partnership with
Chesapeake Energy Company. Walters argues Harding ran out of money. The parties have not directed us to record
cites.
4
Inc.—in acquiring leases in the area of interest.12 When confronted, Walters replied,
You made the allegation that TWWINC [Associates, Inc., TWW Tyler] violated
the non-compete provision of the Star Prospect Letter Agreement. I do not
remember signing that agreement on behalf of TWWINC. That agreement says
Harding will hire TWWINC to take leases in areas designated by Harding. To my
knowledge that is what occurred. It never occurred to me TWWINC was to be
bound under the non-compete provision of the Star Prospect AMI, and there was no
way I could have afforded to have all those brokers stop working over such a large
area for anyone but Harding.
Harding stopped making payments under the contract. On September 17, 2008, Walters wrote a
letter purporting to terminate the agreement for nonpayment. In his deposition, Walters admitted
that TWW Tyler or Associates, L.P., had done work for Devon Energy, Inc., but denied that they
had worked for EOG Resources, Inc. Walters admitted later in the deposition that they performed
landman work for another company working for EOG Resources, Inc.
Sendero, Surles, and Boney brought suit alleging Harding failed to perform under the
contract, and Harding brought suit against Sendero, TWW Tyler, Associates, L.P., and Walters
alleging breach of the noncompete clause of the contract and numerous torts. The two lawsuits
were consolidated in the trial court. Harding settled with Surles and Boney.13 Walters filed a
motion for partial traditional summary judgment14 and a motion for partial no-evidence summary
12
Prior to the agreement, Walters had been doing work for Hunt Oil Company in the area of interest and had Harding‘s
permission to continue this work.
13
The record on appeal includes notice of the settlement with Surles. Both sides concede a settlement was reached
with Boney as well.
14
To prevail on a traditional motion for summary judgment, a movant must establish that there is no genuine issue as to
any material fact and that the movant is entitled to judgment as a matter of law. TEX. R. CIV. P. 166a(c); Fort Worth
5
judgment alleging Associates, Inc., TWW Tyler, Associates, L.P., and Ted W. Walters, in his
personal capacity, were not parties to the written contract or its written amendment. The trial
court granted both of Walters‘ motions and denied Harding‘s motion. Walters then filed a second
motion for partial no-evidence summary judgment15 alleging there was no evidence of fraudulent
inducement, no evidence any party breached a fiduciary duty owed to Harding, no evidence the
statute of frauds applies, and other additional grounds not relevant in this appeal. The trial court
granted Walters‘ second motion for partial no-evidence summary judgment, awarded Sendero
$965,701.14 in actual damages, plus prejudgment interest and attorney‘s fees, and awarded
Associates, L.P., $680,245.22 in actual damages, plus prejudgment interest and attorney‘s fees.
Osteopathic Hosp., Inc. v. Reese, 148 S.W.3d 94, 99 (Tex. 2004); City of Houston v. Clear Creek Basin Auth., 589
S.W.2d 671 (Tex. 1979); Baubles & Beads v. Louis Vuitton, S.A., 766 S.W.2d 377 (Tex. App.—Texarkana 1989, no
writ). The defendant must conclusively negate at least one element of each of the plaintiff‘s theories of recovery or
plead and conclusively establish each element of an affirmative defense. Sci. Spectrum v. Martinez, 941 S.W.2d 910,
912 (Tex. 1997). Because the movant bears the burden of proof, all conflicts in the evidence are disregarded,
evidence favorable to the nonmovant is taken as true, and all doubts as to the genuine issues of material fact are
resolved in favor of the nonmovant. Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546 (Tex. 1985); see Limestone
Prods. Distrib., Inc. v. McNamara, 71 S.W.3d 308, 311 (Tex. 2002); Rhone-Poulenc, Inc. v. Steel, 997 S.W.2d 217,
223 (Tex. 1999).
15
To prevail on a no-evidence motion for summary judgment, the movant must first allege there is no evidence of one
or more specified elements of a claim or defense on which the nonmovant would have the burden of proof at trial.
Sudan v. Sudan, 199 S.W.3d 291, 292 (Tex. 2006); see TEX. R. CIV. P. 166a(i). A nonmovant will defeat a
no-evidence summary judgment motion if the nonmovant presents more than a scintilla of probative evidence on each
element of his or her claim. DR Partners v. Floyd, 228 S.W.3d 493, 497 (Tex. App.—Texarkana 2007, pet. denied);
Price v. Divita, 224 S.W.3d 331, 336 (Tex. App.—Houston [1st Dist.] 2006, pet. denied). The final test for legal
sufficiency must always be whether the evidence at trial would enable reasonable and fair-minded people to reach the
verdict under review. City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005). More than a scintilla of evidence
exists when the evidence ―rises to a level that would enable reasonable and fair-minded people to differ in their
conclusions.‖ Merrell Dow Pharms. v. Havner, 953 S.W.2d 706, 711 (Tex. 1997). ―Less than a scintilla of evidence
exists when the evidence is ‗so weak as to do no more than create a mere surmise or suspicion‘ of a fact.‖ King
Ranch, Inc. v. Chapman, 118 S.W.3d 742, 751 (Tex. 2003) (quoting Kindred v. Con/Chem, Inc., 650 S.W.2d 61, 63
(Tex. 1983)).
6
Harding raises six issues on appeal. Harding argues the trial court erred in concluding
TWW Tyler and Associates, L.P., were not parties to the contract and concluding Walters signed
the contract only as president of Sendero. In the alternative, Harding contends TWW Tyler and
Associates, L.P., breached a fiduciary duty each entity owed to Harding, which relieved Harding
from any duty to perform. Harding also argues the contract between Harding and Sendero is
unenforceable under the statute of frauds. Last, Harding claims the trial court erred in granting
summary judgment because genuine issues of material fact exist concerning whether Walters
committed fraud. Walters16 raises a cross-issue claiming, if this Court reverses, Harding is bound
by the trial court‘s unchallenged findings.
We conclude the trial court correctly held that Walters signed the contract only as an
officer of Sendero, but the trial court erred in granting a final summary judgment. A fact issue
exists as to whether TWW Tyler and Associates, L.P., acted as agents of Harding. Harding
presented some evidence TWW Tyler and Associates, L.P., breached any such fiduciary duties to
Harding. We overrule Harding‘s argument that the contract is unenforceable under the statute of
frauds; the statute of frauds does not apply to this contract. We conclude the trial court also erred
in granting summary judgment based on Harding‘s fraudulent inducement cause of action. Last,
we overrule Walters‘ cross-issue—Harding will not be bound by the unchallenged findings.
16
Unless otherwise specified, we will refer to the four Appellees—Sendero; TWW Tyler; Associates, L.P.; and Ted
Walters—collectively as Walters.
7
I. TWW Tyler and Associates, L.P., Were Not Parties to the Contract
Harding argues TWW Tyler and Associates, L.P., were parties to the contract. Walters
responds that Ted W. Walters signed the contract only on behalf of Sendero and that an oral
contract existed between Associates, L.P., and Harding. The agreement provides in pertinent
part:
Sendero Resources, Inc. (―Sendero‖), Michael R. Boney (―Boney‖), and Milton A.
Surles, Jr. (―Surles‖) on one hand and Harding Company (―Harding‖) on the other,
hereto enter into this certain Letter Agreement, dated January 17, 2007
(―Agreement‖). . . .
....
1. Harding shall contract with Ted W. Walters & Associates, Inc. (―Walters‖) for
the purposes of acquiring Leases. . . .
S, B, & S and Walters will use their best efforts to acquire Leases . . . .
....
5. S, B & S and Walters shall not compete directly or indirectly against Harding
for any oil and gas rights in the Star AMI while this Agreement is in force and
effect. S, B & S and Walters will assist Harding in acquiring oil and gas rights in
the Star AMI without first obtaining Harding‘s written consent. Harding has the
responsibility to determine the leasehold acreage to acquire in the Star AMI.
Walters signed the contract, which designated he was signing as the president of Sendero.
Harding argues the fact that Walters‘ signature reflects his corporate office is only
―descriptio personae‖ and does not limit the capacity in which the person can be held liable.
Harding cites a number of cases which have held a surety, who signed a personal guarantee of a
8
debt of the principal only in their official capacity, is still personally liable. 17 In Material
Partnerships v. Ventura, the Fourteenth District held ―a signature alone will not create an
ambiguity in otherwise clear guaranty language in the body of an instrument‖ and concluded that
―[i]n such case, the corporate office may be construed a descriptio personae of the signator rather
than indication of the capacity in which he signs.‖ 102 S.W.3d at 259. These cases, though, are
distinguishable from the current case. In these cases, the contract clearly contemplated personal
liability. In this case, the contract clearly contemplates an agreement with only the corporation.
The plain language of the agreement clearly indicates Walters signed the agreement only as
president of Sendero. First, the agreement states it is between Sendero, Boney, Surles, and
Harding. TWW Tyler and Associates, L.P., are omitted from this list. Although the agreement
later references former Associates, Inc., renamed TWW Tyler and defined as ―Walters‖ in the
contract, on six occasions, Associates, Inc., is not included in the list of parties to the agreement.18
Second, Walters signed the contract as ―president‖ under the heading ―Sendero.‖ While the title
only creates a presumption that Walters was acting in his corporate capacity for Sendero, there is
nothing in the agreement to rebut this presumption. We note Surles and Boney each signed the
agreement in their personal capacity. However, the agreement did not contain a blank for Ted W.
17
Material P’Ships v. Ventura, 102 S.W.3d 252, 259 (Tex. App.—Houston [14th Dist.] 2003, pet. denied); Gulf &
Basco Co. v. Buchanan, 707 S.W.2d 655, 657 (Tex. App.—Houston [1st Dist.] 1986, writ ref‘d n.r.e.); Am. Petrofina
Co. v. Bryan, 519 S.W.2d 484, 487 (Tex. Civ. App.—El Paso 1975, no writ); Marx v. Luling Co-op., 43 S.W. 596
(Tex. Civ. App.—Houston 1897, writ ref‘d); see Owens v. William H. Banks Warehouses, Inc., 202 F.2d 689, 693 (5th
Cir. 1953). Harding also cites Federal Deposit Insurance Corp. v. K-D Leasing Co., 743 S.W.2d 774, 776 (Tex.
App.—El Paso 1988, no writ), which found the promissory note was not signed in the appellees‘ personal capacities.
18
The agreement defines the term ―Parties‖ as Surles, Boney, Sendero, and Harding.
9
Walters in his personal capacity and, also, did not contain a blank for Associates, Inc. Unlike the
cases cited by Harding, the contract treated the corporate entities separately and does not clearly
indicate Ted W. Walters is liable in his personal capacity.
Harding argues that the Court must find that TWW Tyler and Associates, L.P., are parties
to the contract because any other conclusion would render provisions of the contract meaningless.
While the general rule is that a contract should be interpreted so that none of its provisions are
meaningless, this rule is qualified with the phrase ―if possible.‖ A general rule of contract
construction cannot be used to bind a party to a contract it did not sign. ―A person is not made a
party to a contract merely by being named and described in it or merely by the fact that such a
contract is referred to in a second instrument in a way to evidence that such person is a party in
another contract.‖ Lawrence v. United States, 378 F.2d 452, 461 (5th Cir. 1967). The case of
Willis v. Donnelly, 199 S.W.3d 262, 273 (Tex. 2006), is similar to this case. In Willis, the contract
named Willis in his personal capacity, but Willis crossed out the signature block for his personal
capacity and then signed only in his corporate capacity. Id. The Texas Supreme Court held
Willis signed only in his corporate capacity. Id. Because the contract named Willis in his
personal capacity, the effect of the Texas Supreme Court‘s conclusion that Willis did not sign in
his personal capacity was to render provisions of that contract meaningless. Thus, the general
rule that a contract should be interpreted so that none of its provisions are meaningless does not
control when a named party does not assent to a contract.
10
Harding argues that Walters, who had actual and apparent authority to bind all three
entities, drafted the original provisions and therefore should be held to have bound all three
corporations. But, merely being in a position to bind a corporation does not mean the person
actually bound the corporation. ―Where a corporation enters into a contract, the officer‘s
signature on the contract, with or without a designation as to his representative capacity, does not
render him personally liable under the contract.‖ Redmon v. Griffith, 202 S.W.3d 225, 239 (Tex.
App.—Tyler 2006, pet. denied). As discussed above, the plain language of the contract indicates
Walters signed in his corporate capacity as president of Sendero.
Next, Harding argues, because Sendero contracted with TWW Tyler and Associates, L.P.,
it is liable. Harding cites Seagull Energy E&P, Inc. v. Eland Energy, Inc., 207 S.W.3d 342, 346
(Tex. 2006), for the proposition that a party who assigns its contractual rights and duties to a third
party remains liable unless expressly or impliedly released by the other party to the contract.
Harding, though, has not presented any evidence that Sendero assigned any rights and duties to
TWW Tyler or Associates, L.P. The contract states, ―Harding shall contract with Ted W. Walters
& Associates, Inc. (Walters) for the purposes of acquiring Leases.‖ The only obligation exclusive
to Sendero in the contract was the obligation to hold title in its name for Harding. There is no
evidence this duty was assigned to TWW Tyler or Associates, L.P. We conclude the trial court
did not err in concluding TWW Tyler and Associates, L.P., were not parties to the contract.19
19
We note Walters argues the parol evidence rule bars admission of certain pieces of evidence concerning the contract.
Because we have found that TWW Tyler and Associates, L.P., were not parties to the contract, it is not necessary to
11
II. Fiduciary Duty
Harding‘s second and third issues contend TWW Tyler and/or Associates, L.P., breached
fiduciary duties they owed to Harding. Harding alleges two methods for the existence of
fiduciary duties: the existence of an agency relationship and a duty imposed by the code of
ethics of the American Association of Petroleum Landmen. Harding claims TWW Tyler agreed
to act as its agent for the purposes of performing land title research and leasing in the area of
interest. Harding claims, because the landman code of ethics requires a duty of loyalty, etc., an
agency relationship existed as a matter of law.20 Walters responds that no fiduciary duty existed
and the trial court correctly refused to consider the landman code of ethics, which was not
competent summary judgment evidence.
A. Were TWW Tyler and Associates, L.P., Harding’s Agents?
decide this issue. Harding argues, in its third issue, that Sendero performed no acts under the contract and therefore is
not entitled to recover. Harding argues Sendero merely held title in its name, which is a ministerial act and is not
entitled to compensation. Harding does not cite any authority for this argument. We are not aware of any authority
permitting us to rewrite the terms of a contract merely because one party only performs ministerial acts. Harding also
argues there was a failure of consideration. We disagree. Sendero holding title in its name is sufficient
consideration.
20
Even if the landman code of ethics was proper evidence, rules of professional conduct do not define standards of
civil liability. See Joe v. Two Thirty Nine J.V., 145 S.W.3d 150, 158 n.2 (Tex. 2004).
12
Harding argues TWW Tyler and Associates, L.P., owed it fiduciary duties, which were
breached. Harding first argues that the scope of this agency relationship was defined by the
agreement.21 Harding alternatively argues TWW Tyler and Associates, L.P., ―consented to act
for Harding, and in fact did act under HC‘s complete and direct control as Harding‘s exclusive
agent for all land services in the AMI.‖
Although an agency relationship cannot be presumed,22 an agency relationship may be
implied from the conduct of the parties or from the facts and circumstances surrounding the
transaction in question. See CNOOC Se. Asia Ltd. v. Paladin Res. (Sunda) Ltd., 222 S.W.3d 889,
899 (Tex. App.—Dallas 2007, pet. denied); Walker Ins. Servs. v. Bottle Rock Power Corp., 108
S.W.3d 538, 550 (Tex. App.—Houston [14th Dist.] 2003, no pet.).
―An agent is one who consents to the control of another, the principal, where the principal
manifests consent that the agent shall act for the principal.‖ First Nat’l Acceptance Co. v. Bishop,
187 S.W.3d 710, 714 (Tex. App.—Corpus Christi 2006, no pet.). This Court has noted:
An essential element of the principal-agent relationship is the alleged principal‘s
right to control the actions of the alleged agent. . . . This right includes not only the
right to assign tasks, but also the right to dictate the means and details of the process
by which an agent will accomplish the task.
21
According to Harding, because the contract required TWW Tyler and Associates, L.P., to act for Harding and did act
for Harding, an agency relationship existed. As discussed above, we have concluded TWW Tyler and Associates,
L.P., were not parties to the contract. Therefore, we reject this argument.
22
IRA Res., Inc. v. Griego, 221 S.W.3d 592, 597 (Tex. 2007).
13
Townsend v. Univ. Hosp.-Univ. of Colo., 83 S.W.3d 913, 921 (Tex. App.—Texarkana 2002, pet.
denied) (citations omitted).
Although TWW Tyler and Associates, L.P., were not parties to the above-mentioned
contract, 23 some evidence indicates they were operating under the control and direction of
Harding and for the benefit of Harding. It is uncontested that TWW Tyler and Associates, L.P.,
acquired leases in the area specified by Harding, in the manner specified by Harding, and for the
benefit of Harding. Harding paid Associates, L.P., $2,169,850.23 for lease bonuses to obtain the
leases and for land and leasing services. In this summary judgment proceeding, the facts were not
fully developed, but the evidence presented indicates a fact question exists as to whether Harding
exercised the requisite control in assigning tasks and dictating the means and details by which
TWW Tyler and Associates, L.P., would accomplish the task.24
Walters does not specifically deny the existence of an agency relationship with Harding,
but argues there is no evidence the relationship existed ―before and apart from‖ the business
23
We are not implying some form of contractual relationship did not exist. Walters testified a verbal contractual
relationship existed. It is not necessary for this Court to determine the exact nature of the contractual relationship
between the parties.
24
We note, if the facts are uncontroverted or otherwise established, the existence of an agency relationship is a pure
question of law. See First Nat’l Acceptance Co., 187 S.W.3d at 714; Ross v. Tex. One P’ship, 796 S.W.2d 206, 210
(Tex. App.—Dallas 1990), writ denied, 806 S.W.2d 222 (Tex. 1991); Cain v. Tennessee-Louisiana Oil Co., 382
S.W.2d 794, 798 (Tex. Civ. App.—Tyler 1964), aff’d, 400 S.W.2d 318 (Tex. 1966). These cases, though, involve
appeals following a trial. The facts in the above cases were fully developed. This is an appeal from a summary
judgment and the facts are not fully developed. While many of the facts are undisputed, multiple conclusions could
be inferred from those facts. Given that the facts are not fully developed, we conclude the ordinary summary
judgment standards should apply. See Painter v. Momentum Energy Corp., 271 S.W.3d 388, 404 (Tex.
App.—El Paso 2008, pet. denied) (agency is generally question of fact); Stanford v. Dairy Queen Prods., 623 S.W.2d
797, 800–01 (Tex. App.—Austin 1981, writ ref‘d n.r.e.) (―The status of agency is one of ultimate fact derived from
underlying facts . . . .‖ ).
14
relationship in dispute. The requirement that a special relationship of trust exist prior to and apart
from a contractual agreement is a requirement unique to informal fiduciary relationships. The
Texas Supreme Court has noted, ―[t]o impose an informal fiduciary duty in a business transaction,
the special relationship of trust and confidence must exist prior to, and apart from, the agreement
made the basis of the suit.‖ Meyer v. Cathey, 167 S.W.3d 327, 331 (Tex. 2005) (quoting
Associated Indem. Corp. v. Cat Contracting Corp., 964 S.W.2d 276, 288 (Tex. 1998)). The
fiduciary relationship in question is a formal fiduciary relationship, not an informal fiduciary
relationship. An agency relationship creates, as a matter of law, a fiduciary relationship. See
Johnson v. Brewer & Pritchard, P.C., 73 S.W.3d 193, 200 (Tex. 2002). A fiduciary relationship
alleged in this case would be created by an agency relationship, not by a special informal
relationship of trust and confidence that had previously existed. Harding was not required to
introduce evidence of a special relationship of trust before and apart from the business
relationship.
Walter cites National Plan Administrators, Inc. v. National Health Insurance Co., 235
S.W.3d 695, 700 (Tex. 2007), in support of its argument that no fiduciary relationship existed.
National Plan Administrators, though, is factually distinguishable from the current case.
National Plan Administrators concerned a case where the agency relationship was explicitly
created by a contract and the contract limited the scope of the agency relationship. Id. The
parties agreed the alleged agent ―shall act as an independent contractor in the performance of
15
responsibilities formed under this Agreement, and that [NPA‘s] services are not exclusive to
National Health and that [NPA] will provide services to third parties.‖ Id. Although noting a
special agency may have existed, the Texas Supreme Court concluded a general agency did not
exist as a matter of law based on the agreed contract terms. Id. In this case, the alleged agency
relationship is not defined and limited by a contract—if an agency relationship exists, it is based
upon the conduct of the parties.
Walters also cites a number of cases for the proposition that Texas courts have repeatedly
rejected a fiduciary relationship exists between parties in similar circumstances.25 None of these
cases, though, involve an agency relationship. As such, these cases are distinguishable from this
case.
A fact issue exists as to whether TWW Tyler and Associates, L.P., were acting as
Harding‘s agents when they acquired leases on Harding‘s behalf and in the manner specified by
Harding. If, on remand, the evidence sufficiently supports the finding of an agency relationship,
25
See Willis, 199 S.W.3d at 277 (rejecting argument that corporation acted as agent for its shareholders and rejecting
argument that fiduciary duty existed between shareholders based on relationship of trust and confidence);
Schlumberger Tech. Corp. v. Swanson, 959 S.W.2d 171, 176 (Tex. 1997) (no evidence of partnership or confidential
relationship between parties); Anglo-Dutch Petroleum Int’l, Inc. v. Smith, 243 S.W.3d 776, 781 (Tex. App.—Houston
[14th Dist.] 2007, pet. denied) (rejecting fiduciary duty based on relationship of trust and confidence between parties
to arms-length contractual arrangement); Scott v. Scruggs, 836 S.W.2d 278, 282 (Tex. App.—Texarkana 1992, writ
denied) (concluding no formal fiduciary relationship existed between cotenants and rejecting argument that informal
fiduciary relationship existed); Pickens v. Hope, 764 S.W.2d 256, 268 (Tex. App.—San Antonio 1988, writ denied)
(nonparticipating mineral owner owed duty of good faith and utmost fair dealing, not fiduciary duty); O’Shea v.
Coronado Transmission Co., 656 S.W.2d 557, 563 (Tex. App.—Corpus Christi 1983 writ ref‘d n.r.e.) (failed to raise
fact issue that dealings between parties have continued for such a period of time that one party was justified in relying
on other to act in his best interest); Grimes v. Walsh & Watts, Inc., 649 S.W.2d 724, 728 (Tex. App.—El Paso 1983,
writ ref‘d n.r.e.) (mere assignment of oil and gas lease does not create fiduciary relationship and no evidence one
existed based on relationship of trust and confidence).
16
then a fiduciary duty necessarily will be imposed.
B. Evidence of Breach of Fiduciary Duty by TWW Tyler and Associates, L.P.
Due to the special nature of the relationship, an agency relationship imposes certain
fiduciary duties on the parties. See Johnson, 73 S.W.3d at 200. These duties include the duty of
loyalty.26 Mathews v. Sun Oil Co., 425 S.W.2d 330, 337 (Tex. 1968); Hartford Cas. Ins. Co. v.
Walker County Agency, Inc., 808 S.W.2d 681, 688 (Tex. App.—Corpus Christi 1991, no writ).
The Texas Supreme Court has recently reaffirmed, ―Unless otherwise agreed, an agent is subject to
a duty to his principal to act solely for the benefit of the principal in all matters connected with his
agency.‖ Nat’l Plan Adm’rs, Inc., 235 S.W.3d at 700 (quoting Johnson, 73 S.W.3d at 199); see
RESTATEMENT (SECOND) OF AGENCY § 391 (LEXIS through 2011) (―Unless otherwise agreed, an
agent is subject to a duty to his principal not to act on behalf of an adverse party in a transaction
connected with his agency without the principal‘s knowledge.‖); RESTATEMENT (SECOND) OF
AGENCY § 387 (LEXIS through 2011) (―Unless otherwise agreed, an agent is subject to a duty to
his principal to act solely for the benefit of the principal in all matters connected with his
agency.‖); see also RESTATEMENT (THIRD) OF AGENCY § 8.04 (LEXIS through 2011)
(―Throughout the duration of an agency relationship, an agent has a duty to refrain from competing
26
We note that the Texas Supreme Court has held an employee does not owe his or her employer an absolute duty of
loyalty and that the duty of loyalty in this context must be ―tempered by society‘s legitimate interest in encouraging
competition.‖ Johnson, 73 S.W.3d at 201; see RESTATEMENT (THIRD) OF AGENCY § 8.04 (LEXIS through 2011)
(During the duration of an agency relationship, ―an agent may take action, not otherwise wrongful, to prepare for
competition following termination of the agency relationship.‖). Walters does not argue a public policy exists which
tempers the duty of loyalty owed under the circumstances presented here. Walters limits its argument to whether
fiduciary duties existed. Further, as discussed below, the actions of TWW Tyler and Associates, L.P., exceeded mere
preparation for competition.
17
with the principal and from taking action on behalf of or otherwise assisting the principal‘s
competitors.‖).
Assuming that an agency relationship existed, the record contains some evidence that
TWW Tyler and Associates, L.P., violated their alleged duty of loyalty to Harding. Walters
admitted TWW Tyler or Associates, L.P., had acquired leases for Devon Energy, Inc., in the area
of mutual interest and performed work for another landman company who was working for EOG
Resources, Inc. The record established Devon Energy, Inc., and EOG Resources, Inc., are
competitors of Harding. The trial court erred in granting a no-evidence summary judgment on
Harding‘s breach of fiduciary duty claims.
C. Harding Is Not Excused from Performing the Contract
We note Harding argues that the breach of fiduciary duty by TWW Tyler and Associates,
L.P., excused Harding‘s failure to perform the contract. Harding alleges (1) Sendero is liable
because Ted W. Walters owned all three entities; (2) Sendero assisted TWW Tyler and Associates,
L.P.; and (3) TWW Tyler and Associates, L.P., were Sendero‘s agents and, therefore, Sendero‘s
failure to control their behavior was a breach of the noncompete clause.
18
Since we have found Walters was not a party to the written contract, Walters‘ fiduciary
duty is imposed only if an agency relationship existed between the parties, not on the written
contract.
Harding has not provided this Court with any legal authority or legal theory for why
common ownership permits this Court to disregard the corporate entities. Although Harding pled
that the corporate veil should be pierced, the trial court did not disregard the corporate entities and
Harding does not complain about this failure on appeal. Harding has not provided this Court with
any authority that a breach of fiduciary duty by one distinct legal entity can excuse a party‘s failure
to perform its obligations under a contract to a different distinct legal entity.27
Harding additionally argues that Sendero assisted TWW Tyler and Associates, L.P., in
breaching their fiduciary duties to Harding and, therefore, Sendero violated the noncompete clause
of the contract. Harding cites Kinzbach Tool Co. v. Corbett-Wallace Corp. for the proposition
that a third party who knowingly assists in the breach of fiduciary duty is a joint tortfeasor and
liable for said breach. 160 S.W.2d 509, 511 (Tex. 1942). Harding, though, has not directed this
Court to evidence in the record that Sendero assisted TWW Tyler or Associates, L.P. The mere
fact that all three entities are owned by the same person is not evidence that Sendero assisted
TWW Tyler or Associates, L.P.
27
We note Harding‘s arguments are extremely similar to the single business enterprise theory. Under this theory,
corporations which are not operated as separate entities, ―but rather integrate their resources to achieve a common
business purpose,‖ are treated as the same entity for liability purposes. See Paramont Petroleum Corp. v. Taylor, 712
S.W.2d 534 (Tex. App.—Houston [14th Dist.] 1986, writ ref‘d n.r.e). The Texas Supreme Court has rejected the
single business enterprise theory. SSP Partners v. Gladstrong Invs. Corp., 275 S.W.3d 444, 456 (Tex. 2008).
19
Finally, Harding argues that TWW Tyler and Associates, L.P., acted as Sendero‘s agents.
Because these entities were Sendero‘s agents and acted under Sendero‘s control, Harding argues
Sendero violated the noncompete clause. The record does not contain any evidence of an
agreement for TWW Tyler or Associates, L.P., to act as Sendero‘s agent—either explicit or
implied. There is no evidence that Sendero assigned any of its duties under the contract to either
entity. Further, the record does not contain any evidence that Sendero had any right to control the
activities of TWW Tyler or Associates, L.P. The evidence establishes TWW Tyler and
Associates, L.P., acted for the benefit of Harding—not for the benefit of Sendero—and under
terms specified by Harding—not under terms specified by Sendero. An agency relationship will
not be presumed and there is no evidence TWW Tyler and Associates, L.P., were Sendero‘s
agents. We overrule Harding‘s argument that the alleged breach of fiduciary duty by TWW Tyler
and Associates, L.P., excused Harding‘s failure to perform contractual duties owed to Sendero.
III. Harding Cannot Raise the Statute of Frauds Defense
In its fourth issue, Harding argues the statute of frauds bars enforcement28 of the contract
because the writing contains an inadequate property description29 of the real property.30 Sendero
28
The statute of frauds merely renders such a contract voidable and unenforceable against an objecting party. Bass v.
Bass, 790 S.W.2d 113, 117 (Tex. App.—Fort Worth 1990, no writ).
29
The written contract relied on to satisfy the statute of frauds must be complete in every material detail and must
contain all the essentials of a contract so that the agreement may be ascertained from the writings without resort to oral
testimony. Cohen v. McCutchin, 565 S.W.2d 230, 232 (Tex. 1978); see Long Trusts v. Robert M. Griffin, 222 S.W.3d
412, 413 (Tex. 2006); Dixon v. Amoco Prod. Co., 150 S.W.3d 191 (Tex. App.—Tyler 2004, pet. denied).
30
The Statute of Frauds applies to
20
responds that the statute of frauds does not apply to joint acquisitions of land, citing Ganim v.
Alattar, No. 10-0592, 2011 Tex. LEXIS 454 (Tex. June 24, 2011), reh’g granted (Tex. Jan. 20,
2012) (publication status pending). It is not necessary for us to decide whether the statute of
frauds applies to joint acquisitions of land. Because Harding accepted assignment of the mineral
leases for which payment is being sought, Harding is prevented from raising the statute of frauds
as a defense. When a party accepts assignment of mineral leases, the statute of frauds cannot be
raised as a defense to payment. Eland Energy v. Rowden Oil & Gas, 914 S.W.2d 179, 186 (Tex.
App.—San Antonio 1995, pet. denied); Anderson v. Eliot, 333 S.W.2d 654, 656 (Tex. Civ.
App.—Eastland 1960, writ ref‘d); Osborn v. Cone, 234 S.W.2d 88, 90 (Tex. Civ. App.—Fort
Worth 1950, no writ); see 41 TEX. JUR. 3D Frauds, Statute of § 117 (2007) (―After the delivery and
acceptance of a conveyance in fulfillment for the transfer of land, the statute of frauds has no
application to the oral promise of the transferee and the purchase money may be collected,
....
(4) a contract for the sale of real estate;
....
(7) a promise or agreement to pay a commission for the sale or purchase of:
(A) an oil or gas mining lease;
(B) an oil or gas royalty;
(C) minerals; or
(D) a mineral interest; . . . .
TEX. BUS. & COM. CODE ANN. § 26.01(b) (West 2009). In general, because oil and gas interests are real property,
―contracts for the transfer or assignment of oil and gas interests are subject to the Statute of Frauds.‖ Long Trusts,
222 S.W.3d at 416; see Consol. Gas & Equip. Co. v. Thompson, 405 S.W.2d 333, 336 (Tex. 1966).
21
notwithstanding the absence of a promise in writing . . .‖). Harding has not contested that
Sendero assigned all of the mineral leases it acquired for Harding. 31 Indeed, Harding prepared a
spreadsheet acknowledging the mineral leases acquired by Sendero and transferred to Harding, as
well as calculating the amount Harding owed Sendero for the work performed. Harding has
acknowledged delivery and acceptance of the mineral leases, and therefore, the statute of frauds
has no application.
IV. Evidence of Fraudulent Inducement
Harding argues the trial court erred in finding there was no evidence of fraudulent
inducement.32 A fraudulent inducement claim requires a party to establish the elements of fraud
―as they relate to an agreement between the parties.‖ Haase v. Glazner, 62 S.W.3d 795, 798–99
(Tex. 2001). The elements of fraud are: (1) the speaker made a material representation that was
false; (2) the speaker knew the representation was false or made it recklessly as a positive assertion
without any knowledge of its truth; (3) the speaker intended to induce the other party to act upon
the representation; and (4) the other party actually and justifiably relied upon the representation
and thereby suffered injury. Ernst & Young, L.L.P. v. Pac. Mut. Life Ins. Co., 51 S.W.3d 573, 577
(Tex. 2001).
31
The assignments contained in the record contain a signature by a representative of Harding acknowledging the
transfer.
32
Harding also cites TEX. BUS. & COM. CODE ANN. § 27.01 (West 2009), for the proposition that Walters committed
statutory real estate fraud. Harding does not otherwise brief statutory real estate fraud. Because we concluded that
fact issues exist concerning fraudulent inducement, it is not necessary for us to address whether there is some evidence
of statutory real estate fraud.
22
The first issue is whether the speaker made a material representation that was false.
Harding argues the noncompete clause of the contract is a misrepresentation. As noted above,
Walters drafted the original agreement and later said he never intended TWW Tyler or Associates,
L.P., to be bound by that agreement even though the final agreement, which he signed for Sendero,
clearly states that ―Walters‖ (identified as Ted W. Walters & Associates, Inc.) which was renamed
TWW Tyler, would not compete against Harding. Walters argues, since TWW Tyler was not a
party, there was no misrepresentation. We disagree. A false representation must concern a
―material fact as distinguished from a mere matter of opinion, judgment, probability, or
expectation.‖ Hicks v. Wright, 564 S.W.2d 785, 791 (Tex. Civ. App.—Tyler 1978, writ ref‘d
n.r.e.). The express misrepresentation is that TWW Tyler would not compete, not that TWW
Tyler was a party to the contract.33 We further note a person could reasonably conclude Walters
could make such a promise given that Walters was the sole shareholder of TWW Tyler and also
TWW Tyler‘s principal. Walters also argues this fact was not material. Harding presented
evidence that it would not have entered the agreement without the noncompete clause and that it
even attempted to obtain noncompete agreements from all potential investors to whom Harding
33
On rehearing, Sendero argues Harding only argued, in the trial court, that Walters misrepresented whether TWW
Tyler was a party to the agreement. Sendero further argues, citing Fina Supply v. Abilene Nat’l Bank, 726 S.W.2d
537, 540 (Tex. 1987), that the legal effect of a document fails to qualify as a misrepresentation. We note that Harding
argued in its summary judgment response both that Walters misrepresented that TWW Tyler was a party to the
contract and misrepresented that TWW Tyler would not compete. We wish to emphasize that our opinion relies on
the misrepresentation that TWW Tyler would not compete—a statement of fact, not a claim about the legal effect of a
document.
23
showed the prospect. There is more than a scintilla of evidence the representation was false and
material.
Second, there is more than a scintilla of evidence that Walters knew the allegation was
false or acted recklessly without any knowledge of its truth. Walters argues he did not discover
the fact that the Agreement mistakenly referred to ―Ted W. Walters & Associates, Inc.,‖ until more
than a year after the Agreement was signed. The record, though, clearly establishes Walters knew
the contract mentioned one of his companies which did not sign the contract. The mistake
concerned the name of the company. Walters stated in an affidavit,
I sent Harding a form of an agreement that had been originally drafted before the
creation of Associates, LP on December 22, 2005, and before Associates Inc.
changed its name to TWW Tyler, Inc. on December 22, 2005 . . . . As a result this
form mistakenly referred to Associates Inc. instead of to Associates LP . . . . I did
not become aware of this mistake until sometime in 2008.
The express representation was that Associates, Inc. (TWW Tyler) would not compete against
Harding for oil and gas rights in the AMI. Walters signed the document containing this
representation and later indicated he never intended TWW Tyler to be bound by the noncompete
clause. There is more than a scintilla of evidence Walters knew the allegation was false or acted
recklessly as to the positive assertion without any knowledge of its truth.
The next issue is intent. Fraudulent intent may be established by either direct or
circumstantial evidence. Johnson & Higgins of Tex., Inc. v. Kenneco Energy, Inc., 962 S.W.2d
507, 526 (Tex. 1998); Formosa Plastics Corp., USA v. Presidio Engr’s & Contractors, Inc., 960
24
S.W.2d 41, 47–48 (Tex. 1998). ―Intent is a fact question uniquely within the realm of the trier of
fact because it so depends upon the credibility of the witnesses and the weight to be given to their
testimony.‖ Spoljaric v. Percival Tours, Inc., 708 S.W.2d 432, 434 (Tex. 1986). The
circumstances of this case are sufficient to create a fact issue concerning whether Walters had the
requisite intent.
Harding presented evidence of reliance and injury. Harding also presented evidence that
it would not have entered the agreement without the noncompete clause. A rational juror could
infer from the circumstantial evidence that Walters intended Harding to rely on the noncompete
clause. The fact that the original proposal did not contain the noncompete agreement by Walters,
but the final signed contract did supports the assertion that such provision was a result of
negotiation on which Harding relied.
Walters argues there was no evidence Harding suffered damages. Harding presented
more than a scintilla of evidence that it entered into a contract it would not have agreed to absent
the misrepresentations.34 This is some evidence Harding suffered an injury. Further, Walters
did not make this argument in its second motion for a no-evidence partial summary judgment.35
On rehearing, Sendero argues, as a distinct legal entity, it cannot be liable for any
misrepresentations, if any, made by Walters and argues Harding never asserted this defense
34
Harding alleges the initial $15,000.00 payment it made under the contract establishes damages.
35
On appeal, our review is limited to the grounds presented to the trial court in the motion for summary judgment and
response. Stephens v. City of Reno, 342 S.W.3d 249, 253 (Tex. App.—Texarkana 2011, no pet.).
25
against Sendero.36 We disagree. ―The acts of a corporate agent on behalf of the principal are
ordinarily deemed to be the corporation‘s acts.‖ Walker v. Anderson, 232 S.W.3d 899, 918 (Tex.
App.—Dallas 2007, no pet.). When Walters made the alleged misrepresentations, he was acting
on behalf of Sendero. Thus, any misrepresentations made by Walters are deemed to be Sendero‘s
acts.
Harding presented some evidence of each element of fraudulent inducement. The trial
court erred in granting the no-evidence summary judgment.
V. Harding Is Not Bound by the Unchallenged Findings
Walters argues Harding will be bound by the unchallenged findings of the trial court if we
do reverse the summary judgment. The cases cited by Walters do not support his argument. In
Spin Doctor Golf, Inc. v. Paymentech, L.P., the Dallas court stated,
When an appellant fails to brief one of the grounds for summary judgment, any
error is waived as to the granting of that ground for summary judgment. Smith v.
Tilton, 3 S.W.3d 77, 83, 87 (Tex. App.—Dallas 1999, no pet.). Accordingly, Spin
Doctor has waived review of summary judgment on its tort and forgery claims.
296 S.W.3d 354, 362 (Tex. App.—Dallas 2009, pet. denied). In Heard v. Moore, this Court
stated,
When a party raises a contention as an issue on appeal, the party‘s brief must
contain argument or authority to support it. TEX. R. APP. P. 38.1(h). In order to
maintain a point on appeal, an appellant must provide a discussion of the facts and
authorities on which it relies. A failure to discuss relevant facts and authority
36
Sendero argues that Harding only pled fraudulent inducement against Walters in his personal capacity. Harding
specifically pled that fraudulent inducement excused its performance under the contract in its second amended
pleading and argued fraudulent inducement excused performance in its summary judgment response.
26
results in a waiver of the point on appeal.
101 S.W.3d 726, 730 (Tex. App.—Texarkana 2003, pet. denied). Both cases merely hold the
issues have been waived ―on appeal.‖ Neither case says the issues will be binding on remand.
We further note the Texas Supreme Court has held, if a summary judgment is reversed, the parties
are not limited to the theories in the original summary judgment at a later trial on the merits.
Hudson v. Wakefield, 711 S.W.2d 628, 630–31 (Tex. 1986).
We note the law of the case doctrine is similar to the argument being advanced by Walters.
Under the law of the case doctrine, a court of appeals is ordinarily bound by its initial decision if
there is a subsequent appeal in the same case. Briscoe v. Goodmark Corp., 102 S.W.3d 714, 716
(Tex. 2003). The law of the case doctrine provides as follows:
The ―law of the case‖ doctrine is defined as that principle under which questions of
law decided on appeal to a court of last resort will govern the case throughout its
subsequent stages. By narrowing the issues in successive stages of the litigation,
the law of the case doctrine is intended to achieve uniformity of decision as well as
judicial economy and efficiency. The doctrine is based on public policy and is
aimed at putting an end to litigation.
Id. (quoting Hudson, 711 S.W.2d at 630 (citations omitted)). The law of the case doctrine only
applies to claims fully litigated and determined in a prior interlocutory appeal; it does not apply to
claims that have not been fully litigated and determined. Id. Thus, the unchallenged findings are
not binding on Harding under the law of the case doctrine.
VI. Conclusion
We affirm the judgment of the trial court in part, reverse the judgment of the trial court in
27
part, and remand to the trial court for further proceedings consistent with this opinion.
We affirm a partial summary judgment on Harding‘s breach of contract claims against
TWW Tyler and Associates, L.P. Walters signed the contract only in his corporate capacity as
president of Sendero. TWW Tyler and Associates, L.P., did not expressly assent to the contract
and were not parties to the contract. We also affirm a partial summary judgment that the statute of
frauds does not apply to the contract between Harding and Sendero. We affirm the trial court‘s
holding on these two limited issues.37
We reverse the trial court‘s order granting a final summary judgment. Harding introduced
more than a scintilla of evidence concerning breach of fiduciary duty and fraudulent inducement.
We conclude that a fact issue exists as to whether TWW Tyler and Associates, L.P., acted as
Harding‘s agents and thereby owed Harding fiduciary duties, including the duty of loyalty.
Harding presented some evidence TWW Tyler and Associates, L.P., breached any such fiduciary
duties. Harding also presented some evidence Walters fraudulently induced Harding to sign the
contract. The trial court erred in granting a no-evidence summary judgment on the breach of
fiduciary duty and fraudulent inducement claims. Because one remedy for fraudulent inducement
37
These issues have been fully litigated and are binding under the law of the case doctrine on remand. We note,
though, that the law of the case doctrine only binds the parties concerning claims fully litigated and decided in this
opinion. The law of the case doctrine does not apply to issues which have not been challenged in this appeal.
28
is rescission of the contract,38 the trial court erred in granting summary judgment on the breach of
contract claims.
We remand this case to the trial court for further proceedings consistent with this opinion.
Jack Carter
Justice
Date Submitted: November 16, 2011
Date Decided: February 29, 2012
38
Italian Cowboy Partners, Ltd. v. Prudential Ins. Co. of Am., 341 S.W.3d 323, 331 (Tex. 2011).
29