The Bank of San Antonio and Texas Express Funding, LLC v. Dewey Bryant and Paul Weaver ( 2024 )

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
ON MOTION FOR REHEARING
NO. 03-22-00311-CV
The Bank of San Antonio and Texas Express Funding, LLC, Appellants
v.
Dewey Bryant and Paul Weaver, Appellees
FROM THE 274TH DISTRICT COURT OF COMAL COUNTY
NO. C2022-1752C, THE HONORABLE DIB WALDRIP, JUDGE PRESIDING
MEMORANDUM OPINION
We withdraw our previous opinion and judgment issued on November 29, 2023,
and substitute the following opinion and judgment in their place. We deny appellants’ motion
for rehearing.
Appellants The Bank of San Antonio (BOSA) and Texas Express Funding, LLC
(TEF) appeal from the district court’s order granting summary judgment in favor of appellees
Dewey Bryant and Paul Weaver. In two issues on appeal, appellants assert that the district court
erred in granting summary judgment and abused its discretion in sustaining appellees’ objections
to their summary-judgment evidence. We will affirm the district court’s order.
BACKGROUND
The parties to this appeal are in the business of factoring, i.e., the “process by
which a business sells to another business, at a small discount, its right to collect money before
the money is paid.” Houston Lighting & Power Co. v. City of Wharton, 101 S.W.3d 633, 636
(Tex. App.—Houston [1st Dist.] 2003, pet. denied). According to the summary-judgment
evidence admitted in the court below, representatives of BOSA met with Wayne Schroeder in
June 2019 to discuss the formation of a new factoring company, TEF, that would be a wholly
owned subsidiary of BOSA. At the time of their meeting, Schroeder was an employee of another
company in the business of factoring, Southwest Bank Factoring, LLC (Southwest Factoring).
Appellees Bryant and Weaver were corporate officers in Southwest Factoring and its parent
company, Southwest Bank. 1 In an affidavit attached to appellees’ motion for summary
judgment, Bryant averred:
On or about July 2, 2019, Schroeder informed me that he had found “new
investors” to form a new factoring company, and that certain of Southwest
Factoring’s customers with whom he had a personal relationship had already
decided to become customers of the new entity. On that date, Schroeder proposed
that the new entity he represented would payoff and acquire the accounts of
Southwest Factoring’s customers, and requested a release from his Employment
Agreement with Southwest Factoring. Prior to that discussion, I had no
discussions with Schroeder about his forming a new company or seeking
investors to purchase any receivables from Southwest Factoring.
Bryant continued,
1
Bryant was the President of Southwest Factoring and the CEO of Southwest Bank;
Weaver was the Vice-President of Southwest Factoring and the Odessa Market President and
Chief Lending Officer of Southwest Bank.
2
After our initial conversation where the terms of the payoff and transfer of
accounts were proposed by Schroeder, Schroeder effectively stopped all work on
behalf of Southwest Factoring, and began representing the newly formed entity,
Texas Express Funding, LLC (“TEF”) in the payoff and transfer of the accounts
of the Factored Clients.
Weaver, who also attended the July 2 meeting with Bryant and Schroeder, made similar
statements in his summary-judgment affidavit.
On July 9, 2019, appellants filed with the Texas Secretary of State a Certificate of
Formation for TEF that named Schroeder as a manager of TEF. The following day, Schroeder
accepted an employment offer from BOSA, effective August 1, 2019, or “as soon as possible,”
and began working on the payoff and transfer to TEF of accounts and loans owed to Southwest
Factoring for several Southwest Factoring clients. On July 31, 2019, Schroeder executed an
agreement with Southwest Factoring releasing Schroeder from his employment with Southwest
Factoring and providing for TEF’s purchase of several Southwest Factoring client accounts,
pursuant to the further execution of separate buyout agreements for each client account that was
being transferred to TEF.
Approximately one year later, appellants sued Schroeder, Southwest Factoring,
Southwest Bank, Bryant and Weaver individually, and others for fraud. According to the
allegations in appellants’ third amended petition, “the overwhelming majority of all of the client
invoices they purchased were either fraudulently prepared, hopelessly aged and uncollectable,”
or “worthless,” resulting in over thirteen million dollars in damages to appellants. More
specifically, appellants alleged that Schroeder made significant misrepresentations and omissions
regarding the value of the transferred accounts and that TEF was fraudulently induced by those
misrepresentations to enter into the July 31, 2019 purchase agreement and the corresponding
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buyout agreements, “whereby Plaintiff TBOSA paid millions of dollars (in anticipation of TEF
receiving regulatory approval) to unwittingly assume loans and to purchase the accounts
receivable and underlying invoices of seven (7) various businesses from Defendants Southwest
Bank Factoring, LLC and/or Southwest Bank.” Appellants further alleged that “[h]ad the
Defendants disclosed the truth about what Plaintiffs were induced to purchase, Plaintiffs would
have never agreed to go forward, and none of these damages would have ever been incurred.”
BOSA’s claims against Bryant and Weaver individually were for fraudulent concealment, i.e.,
fraud by nondisclosure, and vicarious liability for the tortious acts of Schroeder, under the
doctrine of respondeat superior.
Appellees filed a traditional motion for summary judgment arguing, among other
grounds, that appellants’ claims for vicarious liability should be dismissed because Schroeder
was never an employee or agent of appellees individually, and that appellants had not pled and
could not establish that appellees owed them any “duty of disclosure,” an essential element of
their “fraudulent concealment” claim. They attached evidence to their motion, including the
affidavits of appellees mentioned above. Appellants filed a response to the motion with attached
evidence. Appellees filed numerous written objections to this evidence. Following a hearing,
the district court sustained many of appellees’ evidentiary objections, granted their motion for
summary judgment in its entirety, and ordered that appellants take nothing by way of their causes
of action for fraud and under the doctrine of respondeat superior as against either appellee. The
district court also ordered that all claims and causes of action against appellees be severed into a
separate cause, making the summary judgment in their favor final and appealable.
Appellants filed a joint motion for new trial. In addition to challenging the merits
of the district court’s summary-judgment ruling, appellants also argued, for the first time, that
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their summary-judgment evidence that had been excluded was admissible. The district court
overruled the motion by written order and explained in its order that it would not consider
appellants’ arguments regarding the admissibility of the evidence because those arguments had
not been raised at any time before the court’s ruling:
Before the date of the [summary-judgment] hearing, counsel for Bryant and
Weaver filed a substantial number of objections to the equally substantial volume
of evidence sought by Plaintiffs (Bank of San Antonio and Texas Express
Funding, LLC) to be admitted into the summary judgment record. From the
Court’s recollection, Counsel for the Plaintiffs, when given the opportunity on the
record to respond to those objections, did not do so; rather, Plaintiffs’ counsel
acceded, at the very least, to simply allow the Court to review the specific
objections to certain proffered exhibits and to rule thereon. At no time did
Plaintiffs’ counsel refer the Court generally to any source of information nor
specifically to any exhibit in support of the admission of the Bank of San
Antonio’s/Texas Express Funding, LLC’s summary judgment evidence to attempt
to refute any of the Defendants’ objections. After argument, the Court took the
matter under advisement, and both sides submitted post-hearing briefs at the
direction of the Court regarding its consideration of the evidence or application of
the law. Nothing within Plaintiffs’ post-hearing brief responds to any of the
Defendants’ evidentiary objections to the proffered exhibits.
In the absence of any information, direction, or reference by counsel to look
elsewhere in support of proper admission into the summary judgment evidentiary
record, the Court completed a thorough review of the objections as compared to
the specific exhibits proffered by Plaintiffs, and the Court made rulings thereon
accordingly. Considering the existing pleadings along with the evidence that was
admitted into the summary judgment evidentiary record, the Court granted the
Defendants’ motion as the record reflects.
Subsequently, counsel for Plaintiffs filed a “Joint Motion for New Trial” (on
behalf of both Plaintiffs). In the motion, counsel for the Plaintiffs, for the very
first time and at such late date, seeks to amend the record with purported reasons
why the Defendants’ objections are not meritorious. . . . Regardless of the merits
(or lack thereof) to any such reason, it is too late. The Court has ruled on the
objections as well as ruled on the motion for summary judgment based,
respectively, upon the timely presented evidentiary arguments and the existing
pleadings.
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Nonetheless, the Court reviewed the Joint Motion for New Trial. Any leave of
Court sought to re-open the evidentiary considerations and rulings thereon is
DENIED, and the Motion is, in all other things, OVERRULED without the
necessity of any hearing thereon.
This appeal followed.
STANDARD OF REVIEW
“We review summary judgments de novo, taking as true all evidence favorable to
the nonmovant, and indulging every reasonable inference and resolving any doubts in the
nonmovant’s favor.” Energen Res. Corp. v. Wallace, 642 S.W.3d 502, 509 (Tex. 2022). “When
the trial court does not specify the grounds for its ruling, a summary judgment must be affirmed
if any of the grounds on which judgment is sought are meritorious.” Merriman v. XTO Energy,
Inc., 407 S.W.3d 244, 248 (Tex. 2013).
“A party moving for traditional summary judgment bears the burden of proving
there is no genuine issue of material fact as to at least one essential element of the cause of action
being asserted and that it is entitled to judgment as a matter of law.” Lightning Oil Co.
v. Anadarko E&P Onshore, LLC, 520 S.W.3d 39, 45 (Tex. 2017). “[T]he burden then shifts to
the non-movant to disprove or raise an issue of fact as to at least one of those elements.”
Amedisys, Inc. v. Kingwood Home Health Care, LLC, 437 S.W.3d 507, 511 (Tex. 2014).
“The non-movant has no burden to respond to or present evidence regarding the
motion until the movant has carried its burden to conclusively establish the cause of action or
defense on which its motion is based.” State v. Ninety Thousand Two Hundred Thirty-Five
Dollars & No Cents in U.S. Currency ($90,235), 390 S.W.3d 289, 292 (Tex. 2013). “On appeal,
the movant still bears the burden of showing that there is no genuine issue of material fact and
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that the movant is entitled to judgment as a matter of law.” Rhone-Poulenc, Inc. v. Steel,
997 S.W.2d 217, 223 (Tex. 1999).
DISCUSSION
Merits of summary judgment
In their first issue, appellants assert that the district court erroneously granted
summary judgment in favor of appellees. According to appellants, there are genuine issues of
material fact as to whether Schroeder was an agent of appellees, thereby triggering the doctrine
of respondeat superior, and whether appellees had a duty to disclose information regarding “the
true status of the factoring invoices to be acquired by TEF.”
“Under the common-law doctrine of respondeat superior, or vicarious liability,
‘liability for one person’s fault may be imputed to another who is himself entirely without fault
solely because of the relationship between them.’” Painter v. Amerimex Drilling I, Ltd.,
561 S.W.3d 125, 130 (Tex. 2018) (quoting St. Joseph Hosp. v. Wolff, 94 S.W.3d 513, 540 (Tex.
2002) (plurality op.)). “The doctrine has been explained as ‘a deliberate allocation of risk’ in
line with ‘the general common law notion that one who is in a position to exercise some general
control over the situation must exercise it or bear the loss.’” Id. at 130-31 (quoting Wolff,
94 S.W.3d at 540). “Respondeat superior thus constitutes an exception to the general rule that a
person has no duty to control another’s conduct.” Id. at 131 (citing Goodyear Tire & Rubber Co.
v. Mayes, 236 S.W.3d 754, 757 (Tex. 2007)).
In the employment context, an employer may be vicariously liable for its
employee’s tortious acts if those acts are committed within the course and scope of that
employee’s employment. Id.; Bank of Texas, N.A. v. Glenny, 405 S.W.3d 310, 317 (Tex. App.—
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Dallas 2013, no pet.). However, when the employer is a corporation, it is the corporation itself
that is vicariously liable for the actions of corporate employees, rather than corporate officers or
other corporate agents, unless the corporation is an “alter ego” of the corporate officer, which
appellants do not allege here, or the corporate officer owes some independent duty to the injured
party. See Leitch v. Hornsby, 935 S.W.2d 114, 117 (Tex. 1996); see also Corley v. American
Well Control, Inc., No. 09-11-00147-CV, 2012 WL 4466361, at *5 (Tex. App.—Beaumont
Sep. 27, 2012, no pet.) (mem. op.) (“Generally, duties owed by corporations are not considered
to be obligations owed by corporate officers in their individual capacities.”).
Here, the summary-judgment evidence established that at all relevant times
alleged in the petition, Schroeder’s employer was either Southwest Factoring, TEF, or BOSA.
Bryant and Weaver were corporate officers in Southwest Factoring, and each averred that
Schroeder “was not and has never been [his] agent.” They each explained:
Any authority I had to direct [Schroeder’s] work arose solely in my capacity as
[corporate officer] of Southwest Factoring, who was Schroeder’s employer during
the time periods at issue, prior to his becoming an employee and agent of TEF and
BOSA. I never directed or hired Wayne Schroeder to perform services for me
personally, Schroeder did not ever in fact perform any services for me personally,
and I did not ever have any right to control his work in my individual capacity. I
have never made any personal payment to Schroeder for the performance of work
or delivery of any goods or services, nor represent to any third party that he was
my individual employee, agent or representative.
Thus, to the extent Southwest Factoring might be vicariously liable for Schroeder’s actions (a
question we do not address in this appeal), that liability would not extend to Bryant and Weaver
individually, unless either of them owed an independent duty to appellants.
Appellants contend that Bryant and Weaver owed them such a duty here,
specifically a duty of disclosure regarding the value of the accounts that appellants purchased,
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which is an essential element of their claim for fraudulent concealment. See Blankinship
v. Brown, 399 S.W.3d 303, 308 (Tex. App.—Dallas 2013, pet. denied) (listing elements of
fraudulent concealment, including duty of defendant to disclose facts); see also Schlumberger
Tech. Corp. v. Swanson, 959 S.W.2d 171, 181 (Tex. 1997) (“Fraud by non-disclosure is simply a
subcategory of fraud because, where a party has a duty to disclose, the non-disclosure may be as
misleading as a positive misrepresentation of facts.”).
“As a general rule, a failure to disclose information does not constitute fraud
unless there is a duty to disclose the information.” Bradford v. Vento, 48 S.W.3d 749, 755 (Tex.
2001). “Whether such a duty exists is a question of law.” Id. “Generally, no duty of disclosure
arises without evidence of a confidential or fiduciary relationship.” Insurance Co. of N. Am.
v. Morris, 981 S.W.2d 667, 674 (Tex. 1998). Such relationships seldom arise in arms-length
commercial transactions between sellers and buyers, and appellants do not allege that a
confidential or fiduciary relationship arose here. See id. Absent that, a duty to speak may arise
in an arms-length transaction in three situations: “(1) when one voluntarily discloses information,
he has a duty to disclose the whole truth; (2) when one makes a representation, he has a duty to
disclose new information when the new information makes the earlier representation misleading
or untrue; and (3) when one makes a partial disclosure and conveys a false impression, he has the
duty to speak.” Playboy Enters., Inc. v. Editorial Caballero, S.A. de C.V., 202 S.W.3d 250, 260
(Tex. App.—Corpus Christi-Edinburg 2006, pet. denied). Each of these situations requires the
seller to make either an “affirmative disclosure or representation” or “some partial disclosure that
triggered a duty to say more.” Mercedes-Benz USA, LLC v. Carduco, Inc., 583 S.W.3d 553, 561
(Tex. 2019).
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Here, however, neither Bryant nor Weaver made any such affirmative
representation or partial disclosure regarding the transferred accounts. They each averred that
from July 9 to July 31, 2019, the period when Schroeder was working on the payoff and transfer
of accounts from Southwest Factoring to TEF:
I did not personally speak to any person employed by or otherwise representing
TEF or the Bank of San Antonio, nor to my knowledge, did any other person from
TEF or the Bank of San Antonio make any attempt to communicate with me
personally during that time. To be specific, I did not ever disclose any
information or make any representations whatsoever about the Factored Clients to
anyone associated with TEF or Bank of San Antonio, except for Wayne
Schroeder, who was the person at Southwest Factoring with the most knowledge
of these Factored Clients—including any representations to anyone at TEF or
Bank of San Antonio about the “aged” status of the invoices for these Clients or
the validity of and prospects for collection of the accounts and loans outstanding.
Because Bryant and Weaver had no confidential or fiduciary relationship with appellants and
made no representations to them regarding the transferred accounts, no duty to disclose the value
of those accounts arose under Texas law. See Mercedes-Benz, 583 S.W.3d at 561.
In sum, appellants failed to raise a genuine issue of material fact regarding
whether Bryant and Weaver individually were vicariously liable for Schroeder’s actions and
whether they had a duty to disclose the value of the accounts transferred to appellants.
Accordingly, the district court did not err in granting summary judgment in favor of appellees.
We overrule appellants’ first issue. 2
2
Also in this issue, appellants argue briefly that their claims for “unjust enrichment
and/or money had and received,” which were equitable claims brought against defendants
Southwest Factoring and Southwest Bank, are not barred by summary judgment. Because the
summary-judgment order at issue in this appeal does not apply to those defendants or those
claims, we do not address that contention here.
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Evidentiary objections
In their second issue, appellants assert that the district court abused its discretion
by sustaining appellees’ objections to their summary-judgment evidence and by failing to
consider appellants’ responses to those objections. According to appellants, their responses,
which they raised for the first time in their motion for new trial, were timely and thus should
have been considered by the district court. 3
Assuming without deciding that appellants preserved error in the court below by
responding to the evidentiary objections for the first time in their motion for new trial, and
further assuming without deciding that the district court abused its discretion by sustaining the
evidentiary objections, we cannot conclude on this record that the exclusion of the challenged
evidence, even if erroneous, entitles appellants to reversal of the summary judgment.
“To reverse a judgment based on the erroneous exclusion of evidence, the
appellant must demonstrate that the exclusion probably resulted in an improper judgment.”
Chandler v. CSC Applied Techs., LLC, 376 S.W.3d 802, 824 (Tex. App.–Houston [1st Dist.]
3
There is a split in authority as to whether a non-movant in a summary-judgment
proceeding, to preserve error in the exclusion of the non-movant’s summary-judgment evidence,
is required to first respond in the court below to the movant’s objections and explain why the
evidence is admissible. See, e.g., Miller v. Great Lakes Mgmt. Serv., Inc., No. 02-16-00087-CV,
2017 WL 1018592, at *2 n.4 (Tex. App.—Fort Worth, Mar. 16, 2017, no pet.) (concluding that
response is not required); Community Initiatives, Inc. v. Chase Bank, 153 S.W.3d 270 (Tex.
App.—El Paso 2004, no pet.) (concluding that response is required); Brooks v. Sherry Lane Nat’l
Bank, 788 S.W.2d 874, 878 (Tex. App.—Dallas 1990, no writ) (same); see also David Hittner &
Lynne Liberato, Summary Judgments in Texas: State and Federal Practice, 60 S. Tex. L. Rev. 1,
63 (2019) (recognizing split in authority). The El Paso Court of Appeals has subsequently
concluded that the response may be raised for the first time in a motion for new trial. See
Hawxhurst v. Austin’s Boat Tours, No. 08-19-00257-CV, 2020 WL 5094673, at *2 (Tex. App.—
El Paso Aug. 28, 2020, no pet.) (mem. op.). This Court has concluded that the response may not
be raised for the first time on appeal, see Dees v. Thomas, No. 03-18-00372-CV, 2019 WL
2847438, at *4 (Tex. App.—Austin July 3, 2019, no pet.), but has not decided whether the
response may be raised for the first time in a motion for new trial. We need not decide that
question today.
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2012, pet. denied) (citing Interstate Northborough P’ship v. State, 66 S.W.3d 213, 220 (Tex.
2001)); see Tex. R. App. P. 44.1(a)(1). “A successful challenge to the trial court’s evidentiary
rulings generally requires the complaining party to demonstrate that the judgment turns on the
particular evidence excluded.” Id. “Ordinarily, we will not reverse a judgment due to the
erroneous exclusion of evidence when the evidence in question is cumulative and not controlling
on a material issue dispositive to the case.” Id.The excluded evidence in this case consisted mostly of emails and other
documents sent by Schroeder containing representations regarding the accounts that Schroeder
was selling; affidavits by a BOSA officer and a BOSA lawyer describing the history of BOSA’s
involvement with Schroeder, TEF, and Southwest Factoring; and direct deposits and other
documents showing Schroeder’s employment history. None of this evidence would have raised a
genuine issue of material fact regarding the issues dispositive to this case, specifically whether
Bryant and Weaver, individually, were vicariously liable for the actions of Schroeder and
whether Bryant and Weaver owed a duty of disclosure regarding the value of the accounts that
appellants purchased from Schroeder.
The evidence that comes closest to raising a genuine issue of material fact is the
affidavit of Schroeder, who explained that he had discussions with Bryant and Weaver regarding
the accounts he was selling and that they told him that he was “authorized to offer and sell these
accounts to a third party.” However, Schroeder goes on to state that these discussions and
authorizations all occurred while he was employed by Southwest Factoring and that Bryant and
Weaver told him that he was “authorized to act as the agent and representative of Southwest
Bank Factoring, LLC, for the purpose of finding a potential buyer and to consummate the sale of
these accounts.” Nothing in Schroeder’s affidavit contradicts the statements made by Bryant and
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Weaver in their affidavits, recited above, that Bryant and Weaver were corporate officers in
Southwest Factoring, that Schroeder “was not and has never been [their] agent” personally, that
“any authority [they] had to direct [Schroeder’s] work arose solely in [their] capacity as
[corporate officers] of Southwest Factoring,” and that Schroeder did not perform any services for
or receive any payment from Bryant or Weaver personally. Nor does anything in Schroeder’s
affidavit raise a genuine issue of material fact regarding whether Bryant or Weaver had a duty to
disclose the value of the accounts that appellants purchased from Schroeder. On this record, we
cannot conclude that the district court’s exclusion of appellants’ summary-judgment evidence,
even if erroneous, probably caused the rendition of an improper judgment.
We overrule appellants’ second issue.
CONCLUSION
We affirm the district court’s order granting summary judgment.
__________________________________________
Gisela D. Triana, Justice
Before Chief Justice Byrne, Justices Triana and Theofanis
Affirmed on Motion for Rehearing
Filed: July 3, 2024
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