Morton Salt, Inc. v. Dennis H. Walker D/B/A Walker & Associates Surveying, Inc.

NO. 12-17-00036-CV
IN THE COURT OF APPEALS
TWELFTH COURT OF APPEALS DISTRICT
TYLER, TEXAS
MORTON SALT, INC., § APPEAL FROM THE
APPELLANT
V. § COUNTY COURT AT LAW
DENNIS H. WALKER D/B/A WALKER
& ASSOCIATES SURVEYING, INC., § VAN ZANDT COUNTY, TEXAS
APPELLEE
MEMORANDUM OPINION
Morton Salt, Inc. appeals the trial court’s judgment, rendered after a jury trial, in favor of
Dennis H. Walker, d/b/a Walker and Associates Surveying, Inc. In three issues, Morton Salt
challenges the legal sufficiency of the evidence to support the judgment. We vacate and dismiss
in part and affirm in part.
BACKGROUND
Morton Salt has operated a mine in a salt dome at Grand Saline in Van Zandt County
since 1929. In 1977, the federal Mine Safety and Health Administration began regulating
Morton Salt’s operation of the mine. The agency requires semiannual surveys to map Morton
Salt’s underground mining operations. The surveys establish a relationship between the location
of surface features and the mine features underground. Establishing this relationship between the
surface and underground mining operations helps Morton Salt avoid encroaching onto adjoining
properties, allows it to prevent any surface drilling operations from entering the mining area, and
if needed, would establish the location of an emergency shaft to reach an underground mining
tunnel that had collapsed.
At first, Morton Salt handled its own survey operations. In 1982, Don Yarbrough, rock
production manager for Morton Salt at the Grand Saline mine, hired Walker & Associates
Surveying, Inc. (the Corporation) to perform these semiannual surveys. Yarbrough testified that
the two companies had a very satisfactory relationship from 1982 until 2008, primarily due to the
expertise of Dennis H. Walker, the Corporation’s president.
Yarbrough testified that after 2008, errors began appearing in the surveys received from
the Corporation. Morton Salt had to correct these surveys. Morton Salt last ordered surveying
work from the Corporation in December of 2010. The evidence at trial showed that through
2010 all invoices presented to Morton Salt by the Corporation had been timely paid.
However, in December of 2011, the Corporation submitted an invoice for work allegedly
performed in 2011. Yarbrough instructed Morton Salt not to pay the invoice because the work
was never requested, and a purchase order was never issued. In 2012, Dennis H. Walker filed a
mechanic’s lien against Morton Salt. The following year, Dennis H. Walker, d/b/a Walker &
Associates Surveying, Inc., filed suit against Morton Salt asserting breach of contract and suit on
a sworn account. Morton Salt counterclaimed, alleging breach of contract and a claim for a
fraudulent lien pursuant to Texas’s false lien statute. The case was tried to a jury and, based on
its findings, the trial court rendered judgment in favor of Dennis H. Walker, d/b/a Walker &
Associates Surveying, Inc. against Morton Salt, awarding Walker $9,118.64, with interest,
attorney’s fees in the amount of $32,421, and costs in the amount of $1,958.49. The trial court
also ordered that Morton Salt take nothing on its claims against Walker. Morton Salt timely
appealed.
STANDING AND CAPACITY
In its first issue, Morton Salt contends that Walker sued in his individual capacity but
does not have standing to bring this suit as an individual. Therefore, it asserts that the trial court
lacked jurisdiction over Walker’s suit, and the judgment should be vacated. Walker responds
that his standing to bring suit is not the issue, but rather his capacity to bring suit. He asserts that
Morton Salt waived this complaint by failing to file a verified pleading contesting his capacity to
bring the suit.
Standard of Review
Because standing is a question of subject matter jurisdiction, we consider standing under
the same standard by which we review subject matter jurisdiction generally. Tex. Ass’n of Bus.
v. Air Control Bd., 852 S.W.2d 440, 446 (Tex. 1993). That standard requires the pleader to
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allege facts that affirmatively demonstrate the court’s jurisdiction to hear the cause. Id. We
review a challenge to a party’s standing de novo. Smith v. CDI Rental Equip., Ltd., 310 S.W.3d
559, 566 (Tex. App.—Tyler 2010, no pet.). The issue of standing may be raised for the first time
on appeal. Austin Nursing Ctr., Inc. v. Lovato, 171 S.W.3d 845, 849 (Tex. 2005).
Standing and Capacity Distinguished
The requirement of standing is implicit in the Texas Constitution’s open court’s
provision, which contemplates access to the courts only for those litigants suffering an injury.
M.D. Anderson Cancer Ctr. v. Novak, 52 S.W.3d 704, 708 (Tex. 2001). Standing focuses on
the question of who may bring an action. Id. The issue is whether a party has a sufficient
relationship with the lawsuit so as to have a “justiciable interest” in its outcome. Lovato, 171
S.W.3d at 848. The plaintiff has standing when it is personally aggrieved, regardless of whether
it is acting with legal authority. Id. at 848-49. In Texas, the standing doctrine requires that there
be (1) “a real controversy between the parties,” that (2) “will be actually determined by the
judicial declaration sought.” Id. (quoting Tex. Ass’n of Bus., 852 S.W.2d 443-44). If a plaintiff
lacks standing to assert his claims, the court must dismiss the whole action for want of
jurisdiction. Heckman v. Williamson Cty., 369 S.W.3d 137, 150-51 (Tex. 2012).
The issue of capacity “is conceived of as a procedural issue dealing with the personal
qualifications of a party to litigate.” Lovato, 171 S.W.3d at 848 (citing 6A CHARLES ALAN
WRIGHT, ARTHUR R. MILLER, AND MARY KAY KANE, FEDERAL PRACTICE AND PROCEDURE:
CIVIL 2D § 1559, at 441 (2d ed. 1990)). For example, minors and incompetents are considered to
be under a legal disability and are therefore unable to sue or be sued in their individual
capacities; such persons are required to appear in court, through a legal guardian, a “next friend,”
or a guardian ad litem. Id. at 849. A party has capacity when it has legal authority to act,
regardless of whether it has a justiciable interest in the controversy. Id. at 848-49. A plaintiff
must have both standing and capacity to bring a lawsuit. Id. at 848. Unlike standing, however,
which may be raised at any time, a challenge to a party’s capacity must be raised by a verified
pleading in the trial court. Id. at 849.
Requirements for Standing
A general rule is that only parties to a contract have the right to complain of a breach
thereof. Smith, 310 S.W.3d at 566. In contract actions, privity of contract is an essential
element of recovery. Id. In order to maintain an action to recover damages flowing from the
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breach of a written contract, there must be privity existing between the party damaged and the
party sought to be held accountable for the repudiations of the agreement. Id. Without a breach
of a legal right belonging to a plaintiff, that plaintiff has no standing to litigate. Hall v. Douglas,
380 S.W.3d 860, 873 (Tex. App.—Dallas 2012, no pet.). Only the person whose primary legal
right has been breached may seek redress for an injury. Id.
A cause of action against one who has injured a corporation belongs to the corporation
and not to the shareholder. Swank v. Cunningham, 258 S.W.3d 647, 661 (Tex. App.—Eastland
2008, pet. denied). A corporate stockholder cannot recover damages personally for a wrong
done solely to the corporation, even though he may be injured by that wrong. Id. (citing
Wingate v. Hajdik, 795 S.W.2d 717, 719 (Tex. 1990)). A plaintiff who seeks individual redress
based on allegations concerning wrongs done to a corporation lacks standing. Redmon v.
Griffith, 202 S.W.3d 225, 233 (Tex. App.—Tyler 2006, pet. denied). A cause of action for
injury to a corporation is vested in the corporation, as distinguished from its shareholders, even
though the damage may result indirectly in the loss of earnings to the shareholders. See id. Such
action must be brought by the corporation to avoid a multiplicity of suits by stockholders, and so
the damages that are recovered may be available for the payment of the corporation’s creditors,
and for proportional distributions to the stockholders, its dividends, or for such other purposes as
the directors may lawfully determine. Wingate, 795 S.W.2d at 719.
Discussion
Morton Salt introduced its purchase order showing the supplier as Walker & Associates
Surveying, Inc. Don Yarbrough, Morton Salt’s rock production manager, testified that the
purchase order, which requests surveying work for compensation, is a contract. The only invoice
admitted into evidence by the trial court for this sworn account action identified the service
provider as “Walker and Associates, Inc.” The plaintiff in the lawsuit was identified as “Dennis
H. Walker d/b/a Walker and Associates Surveying, Inc.” The invoice showed that corporate
employees had supposedly performed the work.
First, only a party to the contract has a right to bring a cause of action in a Texas court.
See Smith, 310 S.W.3d at 566. As an individual, Walker did not have privity with Morton Salt
and was thus unable to obtain a judgment against it. See id. Secondly, a corporate shareholder
cannot recover a judgment as an individual on a corporate invoice because he is not personally
aggrieved. See Wingate, 795 S.W.2d at 719. It was therefore a legal requirement that Walker
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and Associates Surveying, Inc., in its corporate form, bring suit against Morton Salt. See id. It
did not.
Accordingly, Walker, who was not a party to the transaction, did not have standing to sue
on the account individually, or to sue individually on behalf of the Corporation. See Smith, 310
S.W.3d at 566; Redmon, 202 S.W.3d at 233. Because Walker does not have a justiciable interest
in the lawsuit, Morton Salt correctly argued that Walker lacks standing to bring the cause of
action. See Lovato, 171 S.W.3d at 848-49. Therefore, the trial court did not have subject matter
jurisdiction to hear Walker’s cause. Tex. Ass’n of Bus., 852 S.W.2d at 446. We sustain Morton
Salt’s first issue. Due to our disposition of issue one, we do not reach Morton Salt’s third issue
on appeal. See TEX. R. APP. P. 47.1.
MECHANIC’S LIEN
In its second issue, Morton Salt contends the trial court erred in failing to grant its motion
for judgment notwithstanding the verdict (JNOV) on its claim for wrongful lien. It argues that
Walker filed a lien in his individual capacity alleging that Morton Salt owed him money pursuant
to a contract, but Morton Salt owed no money to Walker individually. Claiming that Walker
filed the lien with knowledge that it was fraudulent, Morton Salt argues that the evidence is
legally insufficient to support the jury’s finding in Walker’s favor on Morton Salt’s statutory
claim for wrongful lien.
Standard of Review
A trial court may disregard a jury’s findings and grant a motion for judgment
notwithstanding the verdict when a directed verdict would have been proper. TEX. R. CIV. P.
301; Tiller v. McLure, 121 S.W.3d 709, 713 (Tex. 2003) (per curiam); Fort Bend Cty. Drainage
Dist. v. Sbrusch, 818 S.W.2d 392, 394 (Tex. 1991). A motion for judgment notwithstanding the
verdict should be granted when (1) the evidence is conclusive and one party is entitled to recover
as a matter of law or (2) a legal principle precludes recovery. Mancorp, Inc. v. Culpepper, 802
S.W.2d 226, 227 (Tex. 1990); Hunter v. PriceKubecka, PLLC, 339 S.W.3d 795, 806 (Tex.
App.−Dallas 2011, no pet.). Thus, we review the denial of a motion for judgment
notwithstanding the verdict under a legal sufficiency standard. Ginn v. NCI Bldg. Sys., Inc., 472
S.W.3d 802, 843 (Tex. App.−Houston [1st Dist.] 2015, no pet.).
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When a party attacks the legal sufficiency of an adverse finding on which it had the
burden of proof, it must demonstrate on appeal that the evidence establishes, as a matter of law,
all vital facts in support of its proposed disposition. Dow Chem. Co. v. Francis, 46 S.W.3d 237,
241 (Tex. 2001) (per curiam). 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). In making this
determination, we must credit favorable evidence if a reasonable finder of fact could, and
disregard contrary evidence unless a reasonable finder of fact could not. Id. The finder of fact is
the sole judge of the credibility of the witnesses and the weight to be assigned to their testimony.
Id. at 819.
Applicable Law
To establish a claim for liability related to a fraudulent lien, the claimant must prove that
the party who obtained the lien did so with knowledge that it is fraudulent, that he intended the
document be given legal effect, and he intended to cause financial injury. TEX. CIV. PRAC. &
REM. CODE ANN. § 12.002 (West 2017); James v. Calkins, 446 S.W.3d 135, 149 (Tex.
App.−Houston [1st Dist.] 2014, pet. denied).
Discussion
The jury was asked if Walker filed the lien (1) with knowledge that it was fraudulent and
(2) with intent that it be given the same legal effect as if it had been created under the laws of
this state and intent to cause Morton Salt to suffer financial injury. The jury answered “No.” In
Morton Salt’s motion for JNOV, and again on appeal, it argued that Walker, individually, had no
contract with Morton Salt. Therefore, it asserted, Walker knew or should have known that the
lien, which sought to recover funds owed, if at all, to the Corporation, was fraudulent. Assuming
this is true, knowledge that the lien was fraudulent is only one of the elements Morton Salt had to
prove at trial. See TEX. CIV. PRAC. & REM. CODE ANN. § 12.002(a); James, 446 S.W.3d at 150.
Morton Salt did not argue, in its motion for JNOV or on appeal, that Walker filed the lien with
the requisite intent. Neither does it include appropriate citations to the record indicating where
we can find evidence showing the requisite intent as required by the rules of appellate procedure.
See TEX. R. APP. P. 38.1(i). This court is not required to sift through the record in search of facts
supporting a party’s position. Rubsamen v. Wackman, 322 S.W.3d 745, 746-47 (Tex. App.−El
Paso 2010, no pet.).
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Morton Salt has not shown that reasonable and fair minded people would not have
answered no to the question asking whether Walker violated the wrongful lien statute. See City
of Keller, 168 S.W.3d at 827. Accordingly, Morton Salt has not shown, as a matter of law, all
vital facts in support of its proposed disposition. See Dow Chem. Co., 46 S.W.3d at 241.
Therefore, the trial court did not err in denying Morton Salt’s motion for JNOV. We overrule
Morton Salt’s second issue.
DISPOSITION
Because the trial court lacked subject matter jurisdiction over Walker’s lawsuit, we
vacate the portion of the trial court’s judgment ordering that Walker recover from Morton Salt
damages, interest, costs, and attorney’s fees. We dismiss Walker’s case against Morton Salt for
want of jurisdiction. See Juarez v. Tex. Ass’n of Sporting Officials El Paso Chapter, 172
S.W.3d 274, 281 (Tex. App.—El Paso 2005, no pet.); see also Bynum v. Lewis, 393 S.W.3d 916,
920 (Tex. App.—Tyler 2013, no pet.).
We affirm the trial court’s take nothing judgment against Morton Salt on its claim for
wrongful lien.
JAMES T. WORTHEN
Chief Justice
Opinion delivered July 19, 2017.
Panel consisted of Worthen, C.J., Hoyle, J., and Neeley, J.
(PUBLISH)
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COURT OF APPEALS
TWELFTH COURT OF APPEALS DISTRICT OF TEXAS
JUDGMENT
JULY 19, 2017
NO. 12-17-00036-CV
MORTON SALT, INC.,
Appellant
V.
DENNIS H. WALKER D/B/A WALKER & ASSOCIATES SURVEYING, INC.,
Appellee
Appeal from the County Court at Law
of Van Zandt County, Texas (Tr.Ct.No. CV04950)
THIS CAUSE came to be heard on the appellate record and briefs filed
herein; and the same being considered, it is the opinion of this court that there was error in the
judgment of the court below. In accordance with this court’s opinion of this date, the judgment
of the trial court is modified as follows:
It is therefore ORDERED, ADJUDGED and DECREED by this Court that
the portions of the judgment of the trial court awarding Dennis H. Walker d/b/a Walker &
Associates Surveying, Inc. $9,118.64 in damages, and all awards for prejudgment interest,
postjudgment interest, attorney’s fees, and costs are hereby vacated and the case against Morton
Salt, Inc. is dismissed for want of jurisdiction;
It is further ORDERED, ADJUDGED, and DECREED that the judgment
of the trial court is affirmed in all other respects.
It is further ORDERED that all costs of this appeal are hereby adjudged
against the party incurring same; and that this decision be certified to the court below for
observance.
James T. Worthen, Chief Justice.
Panel consisted of Worthen, C.J., Hoyle, J., and Neeley, J.