Willie James Haynes, II, Sky Group Management Company, LLC, and Brita Michelle Haynes A/K/A Brita Hinkle-Haynes v. Richard Frank Gay

REVERSE and RENDER; and Opinion Filed February 8, 2018.
In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-17-00136-CV
WILLIE JAMES HAYNES, II
AND BRITA MICHELLE HAYNES A/K/A BRITA HINKLE-HAYNES, Appellants
V.
RICHARD FRANK GAY, Appellee
On Appeal from the County Court at Law No. 5
Dallas County, Texas
Trial Court Cause No. CC-16-01275-E
MEMORANDUM OPINION
Before Justices Lang-Miers, Fillmore, and Stoddart
Opinion by Justice Lang-Miers
This is a restricted appeal. Appellants Willie James Haynes, II and Brita Michelle Haynes
a/k/a Brita Hinkle-Haynes (the Hayneses) seek reversal of the trial court’s judgment in favor of
appellee Richard Frank Gay, asserting there was error on the face of the record. We conclude that
the Hayneses are not individually liable for a limited liability company’s debt that was created or
incurred prior to forfeiture of the company’s charter. We reverse the trial court’s judgment and
render judgment for the Hayneses.
BACKGROUND
Appellee Richard Gay filed a petition in justice court against the Hayneses, alleging that
they were indebted to him in the amount of $1257.40 under a terminated property management
agreement. The justice court rendered judgment for Gay, but not against the Hayneses. Instead,
the court’s February 3, 2016, judgment recites that “Skygroup, LLC should have been the named
defendant, and the parties both agree to an oral motion to amend the petition to substitute
Skygroup, LLC as defendant.” The Hayneses were dismissed from the suit. Gay appealed the
dismissal to the county court at law, the Hayneses filed an answer, and the case was set for trial.
The case proceeded to trial on August 4, 2016. Although they had notice of the setting, the
Hayneses did not appear.
At trial, Gay testified that he entered into a property management agreement with Sky
Group, LLC. A copy of the agreement was admitted into evidence at trial. Sky Group was to collect
rents “and any other revenue due” to Gay, the owner of the property. Sky Group was required to
deposit the funds it collected in a bank account designated by Gay. Gay testified that Sky Group
failed to deposit funds as the agreement required on several occasions between August 2013 and
February 2014. Gay gave 30 days’ notice that the agreement would be terminated on February 24,
2014, and Sky Group accepted the notice.
Gay offered evidence that the Hayneses were the members of Sky Group, and that Sky
Group forfeited its certificate or charter on August 7, 2015. Gay also offered evidence that the
Texas Real Estate Commission suspended Brita Haynes’s broker’s license on October 31, 2015.
Gay testified that he sought damages of $1257.40, offering several exhibits to support the
amount claimed. Gay’s attorney testified to his fees. The trial court rendered judgment for Gay
and against the Hayneses in the amount of $1257.40 in actual damages, $3,431.25 in attorney’s
fees, and $500 in court costs, as well as attorney’s fees in the event of unsuccessful appeals. The
Hayneses did not file any post-trial motions.
In this restricted appeal, the Hayneses contend the trial court erred by rendering judgment
against them individually because Gay’s contract was with Sky Group only, and Sky Group’s
contractual obligations arose long before its charter was forfeited.
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DISCUSSION
1. Restricted Appeal
Parties who do not participate in person or through counsel in a hearing that results in a
judgment may be eligible for a restricted appeal. Pike–Grant v. Grant, 447 S.W.3d 884, 886 (Tex.
2014); TEX. R. APP. P. 30. To sustain a proper restricted appeal, the Hayneses must prove: (1) they
filed notice of the restricted appeal within six months after the judgment was signed; (2) they were
parties to the underlying lawsuit; (3) they did not participate in the hearing that resulted in the
judgment complained of, and did not timely file any post-judgment motions or requests for
findings of fact and conclusions of law; and (4) error is apparent on the face of the record.
Alexander v. Lynda’s Boutique, 134 S.W.3d 845, 848 (Tex. 2004). Only the fourth element is at
issue in this appeal.
The face of the record includes all papers on file in the appeal, including the clerk’s record
and any reporter’s record. See Ulusal v. Lentz Eng’g, L.C., 491 S.W.3d 910, 914 (Tex. App.—
Houston [1st Dist.] 2016, no pet.). In a restricted appeal, we afford the appellant the same scope
of review as an ordinary appeal, that is, review of the entire case, with the restriction that the error
must appear on the face of the record. Norman Commc’ns v. Tex. Eastman Co., 955 S.W.2d 269,
270 (Tex. 1997) (per curiam). A review of the entire case includes review of legal and factual
insufficiency claims. Id.
2. Individual liability for debt of limited liability company
Unless the company agreement concerning the affairs or conduct of the business
specifically provides otherwise, a member or manager of a limited liability company “is not liable
for a debt, obligation, or liability of a limited liability company, including a debt, obligation, or
liability under a judgment, decree, or order of a court.” TEX. BUS. ORGS. CODE ANN. § 101.114
(West 2012); see also Metroplex Mailing Servs., LLC v. RR Donnelley & Sons Co., 410 S.W.3d
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889, 896 (Tex. App.—Dallas 2013, no pet.) (same). If a limited liability company’s charter is
forfeited for failure to file a report or pay a tax or penalty, however, a member 1 is “liable for each
debt of the corporation that is created or incurred in this state after the date on which the report,
tax, or penalty is due and before the corporate privileges are revived.” TEX. TAX CODE ANN.
§ 171.255(a) (West 2015); see also Hovel v. Batzri, 490 S.W.3d 132, 135–36 (Tex. App.—
Houston [1st Dist.] 2016, pet. denied) (discussing application of § 171.255(a) to manager of
limited liability company).
The record reflects that Sky Group breached its contract with Gay in 2013 and 2014, and
that Sky Group’s charter was forfeited in 2015. The trial court’s judgment was not rendered until
2016, after forfeiture of the charter. If Sky Group’s debt to Gay was “created or incurred” when
judgment was rendered, then the Hayneses are liable individually under section 171.255(a). But
we have concluded that where a debt arises out of the performance or implementation of the
provisions of a contract, the debt was “created or incurred” when the parties entered into the
contract. Rossman v. Bishop Colo. Retail Plaza, L.P., 455 S.W.3d 797, 804 (Tex. App.—Dallas
2015, pet. denied); see also Hovel, 490 S.W.3d at 138–44 (discussing judicial interpretations of
“created or incurred” from 1946 to date).
Although the date of Gay’s contract with Sky Group is not apparent on the face of the
record, the dates of Sky Group’s breaches and its charter forfeiture were established at trial and
are included in the record. See Alexander, 134 S.W.3d at 848 (in restricted appeal, error must be
apparent on the face of the record). Because Sky Group’s debt to Gay was created or incurred prior
to the forfeiture of Sky Group’s charter, the Hayneses are not liable for the debt. See Rossman, 455
1
The Hayneses do not dispute that § 171.255(a)’s imposition of liability on “each director or officer of the corporation” extends to them as
“members” of a limited liability company. See TEX. BUS. ORGS. CODE ANN. § 101.251 (West 2012) (governing authority of limited liability
company consists of managers, if any, or members); TEX. TAX CODE ANN. § 171.0002(a) (West 2015) (limited liability corporation included in
definition of “taxable entity”); id. § 171.001(a) (imposition of franchise tax on “taxable entity”). Their sole challenge is to their liability for a debt
“created or incurred” prior to the forfeiture of Sky Group’s charter. See TEX. TAX CODE ANN. § 171.255(a).
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S.W.3d at 804. Gay did not offer evidence to support any basis for the Hayneses’ individual
liability other than the forfeiture of Sky Group’s charter. We decide the Hayneses’ sole issue in
their favor.
CONCLUSION
We reverse the trial court’s judgment and render judgment for the Hayneses.
/Elizabeth Lang-Miers/
ELIZABETH LANG-MIERS
JUSTICE
170136F.P05
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Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
WILLIE JAMES HAYNES, II AND On Appeal from the County Court at Law
BRITA MICHELLE HAYNES A/K/A No. 5, Dallas County, Texas
BRITA HINKLE-HAYNES, Appellants Trial Court Cause No. CC-16-01275-E.
Opinion delivered by Justice Lang-Miers;
No. 05-17-00136-CV V. Justices Fillmore and Stoddart,
participating.
RICHARD FRANK GAY, Appellee
In accordance with this Court’s opinion of this date, the judgment of the trial court is
REVERSED and judgment is RENDERED that appellee Richard Frank Gay take nothing from
appellants Willie James Haynes, II and Brita Michelle Haynes a/k/a Brita Hinkle-Haynes.
It is ORDERED that appellants Willie James Haynes, II and Brita Michelle Haynes a/k/a
Brita Hinkle-Haynes recover their costs of this appeal from appellee Richard Frank Gay.
Judgment entered this 8th day of February, 2018.
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