Western Securities Corp. v. Eternal Technologies Group, Inc.

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
December 12, 2008
No. 07-20883
Charles R. Fulbruge III
Clerk
WESTERN SECURITIES CORPORATION
Plaintiff-Appellee
v.
ETERNAL TECHNOLOGIES GROUP, INC.
Defendant-Appellant
Appeal from the United States District Court
for the Southern District of Texas
USDC No. 4:05-CV-2504
Before BENAVIDES, SOUTHWICK, and HAYNES, Circuit Judges.
PER CURIAM:*
Defendant-Appellant Eternal Technologies Group, Inc. (“Eternal”) appeals
the district court’s judgment, following a bench trial, in favor of Plaintiff-
Appellee Western Securities Corp. (“Western”) in this suit on a promissory note.
After reviewing the record in this case and considering the briefs of the parties
and arguments of counsel, we affirm the district court’s judgment.
Eternal raises the following five arguments on appeal: 1) the district court
erred in allowing Western to employ the “equitable defense” of ratification as the
plaintiff; 2) the district court erred in applying the doctrines of de facto
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion
should not be published and is not precedent except under the limited
circumstances set forth in 5TH CIR. R. 47.5.4.
corporation and corporation by estoppel to a limited liability company (“LLC”)
under Florida law; 3) the district court’s factual findings were clearly erroneous;
4) the district court erred in concluding that any defects in the note were ratified
because the original payee had unclean hands; and 5) as a matter of law, there
was no evidence that Eternal had full knowledge of the material facts.
We affirm for the following reasons: 1) Texas courts regularly allow
plaintiffs to invoke the doctrine of ratification in contract actions, see, e.g., Stable
Energy, L.P. v. Newberry, 999 S.W.2d 538, 547 (Tex. App.—Austin 1999, pet.
denied); 2) Florida law permits the application of de facto corporation and
corporation by estoppel to LLCs, see Ruggio v. Vining, 755 So. 2d 792, 795 (Fla.
Dist. Ct. App. 2000) (holding that “traditional defenses” apply to LLCs despite
statutory silence); 3) the district court’s factual findings were not clearly
erroneous; 4) the district court did not find that the original payee had unclean
hands, and, in any case, the district court’s finding of ratification eliminated the
element of fraud underlying Eternal’s assertion of unclean hands, see Steubner
Realty 19, Ltd. v. Cravens Rd. 88, Ltd., 817 S.W.2d 160, 165 (Tex.
App.—Houston [14th Dist.] 1991, no writ); and 5) there is sufficient evidence in
the record to support the conclusion that Eternal had full knowledge of the
material facts.
AFFIRMED.