Terry McBride v. John James

COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 02-09-00320-CV
TERRY MCBRIDE APPELLANT
V.
JOHN JAMES APPELLEE
NO. 02-09-00446-CV
TERRY MCBRIDE APPELLANTS
AND RICHARD GUEST
V.
JOHN JAMES APPELLEE
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FROM THE 78TH DISTRICT COURT OF WICHITA COUNTY
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MEMORANDUM OPINION1
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I. Introduction
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See Tex. R. App. P. 47.4.
In this consolidated appeal,2 Appellants Terry McBride and Richard Guest
independently appeal from the trial court’s orders in this dispute over the
proceeds from the sale of an oil rig and related equipment (the Rig). We affirm.
II. Factual and Procedural History
In 2005, in a prior action in Parker County, McBride sued Lee C. ―Skip‖
Potts, seeking payment on the promissory note Potts signed related to the
purchase of the Rig (the Parker County Lawsuit). Potts was Appellee John
James’s business partner and coshareholder in the closely held corporation
Black Jack Exploration, Inc., an oil exploration and drilling services firm.
McBride’s petition in the Parker County Lawsuit stated that on June 14, 2005,
Potts (borrower) signed a promissory note agreeing to pay McBride (lender)
$215,000 plus interest. McBride’s petition alleged breach of contract and
included a claim based on a sworn account. McBride sought not only judgment
on the debt Potts owed but also a ―Judgment for Foreclosure of Plaintiff’s security
interest in the . . . [R]ig and its equipment . . . [and] issuance of an Order for Sale
on the collateral as provided by law.‖ The McBride-Potts promissory note lists
the Rig as security interest and McBride as the secured party.
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McBride appeals the trial court’s grant of summary judgment, which was
severed from trial court cause number 164,684-B into number 164,684-B-1.
Guest and McBride appeal the trial court’s grant of declaratory judgment (also
severed into 164,684-B-1). Guest also appeals the trial court’s termination and
failure to reinstate the parties’ mediated settlement agreement, which was
retained in cause number 164,684-B. The parties’ appeals were consolidated on
review.
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After Potts answered with a general denial, McBride invoked rule of civil
procedure 185 and moved for a no-evidence summary judgment based solely on
his sworn-account claim. In his petition, McBride stated that Potts had ―signed
and issued to [McBride] a Promissory Note dated July 14, 2005, whereby [Potts]
promised to pay to the order of [McBride] the principle sum of $215,000, with
interest . . . [] for drilling rights and drilling equipment.‖ [Emphasis added.]
McBride also stated that his ―claim is based upon and pled as a sworn account.‖
After a hearing, the Parker County trial court granted McBride summary judgment
and awarded him $215,000 plus interest.
In July 2006, James, individually and derivatively as Black Jack’s
shareholder, brought suit against McBride, Guest, and others 3 for damages and
injunctive relief claiming that because Black Jack and not Potts had purchased
the Rig, Black Jack was entitled to the proceeds from the Rig’s sale (the
McBride-James Lawsuit).
A. Mediated Settlement Agreement
In the McBride-James Lawsuit, in late November 2007, Guest filed a
Motion to Put (the) Rig to Work. At the hearing on Guest’s motion, a rule 11
agreement was read into the record wherein the parties granted Guest
possession of the Rig to put it into operation or to lease it out with the proceeds
remitted to a receiver pending the litigation’s outcome. On November 30, 2007,
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The other parties were nonsuited at various times in the proceedings.
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the trial court issued an order approving the parties’ rule 11 agreement. On
January 23, 2008, the parties reached a mediated settlement agreement wherein
they agreed to sell the drilling equipment for $600,000 and ―to cooperate in
efforts to sell the [R]ig.‖
On March 4, 2008, Guest, relying on the parties’ mediated settlement
agreement, filed a motion to dismiss James’s claims. A day later, James filed a
motion seeking sanctions and asking the trial court to declare the settlement
agreement ―null and void,‖ claiming that Guest’s failure to provide the Rig’s
location and his evasiveness had caused the parties to lose a $600,000 sales
opportunity. At the April 16, 2008 hearing on James’s motion, after hearing
testimony that Guest had not put the Rig into operation, had failed to disclose the
Rig’s location, and did not respond to telephone calls, and that James’s
independent efforts to locate the Rig had failed, the trial court terminated the
settlement agreement. After terminating the parties’ agreement, the trial court
ordered the Rig sold and the proceeds deposited in the court registry. On May
13, 2008, Guest filed objections to the trial court’s April 18, 2008 order. Guest
filed a motion to reinstate the settlement agreement, and requested a jury trial to
enforce the agreement. After a hearing, the trial court denied Guest’s motion.
Neither order contains provisions to sever the rulings from cause number
164,684-B.
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B. James’s Partial Summary Judgment
In May 2009, James, relying on the position McBride had taken in the
Parker County Lawsuit relative to the Rig—that of secured creditor—successfully
moved for partial summary judgment on the Rig’s ownership. In his response to
James’s motion for partial summary judgment, McBride indicated that the ―central
issue . . . [] is the ownership of [the] . . . [R]ig Defendant McBride sold to
Defendant Potts.‖ [Emphasis added.] The response also indicated that at the
time the trial court rendered its decision in the Parker County Lawsuit, ―McBride
had already peacefully repossessed the [R]ig.‖ In closing his response McBride
stated that he ―claims he purchased the . . . [R]ig and allowed Defendant Potts to
use said [R]ig and loaned him $215,000 to purchase drilling rights and maintain
the [R]ig.‖
McBride’s response includes excerpts from Potts’s, McBrides’s and
James’s depositions taken in the McBride-James Lawsuit. Both James and Potts
stated that they purchased the Rig from a third-party, Ronnie Cubine, and that
they paid Cubine with cash and a cashier’s check. James averred that McBride
provided the funds Black Jack used to purchase the Rig (a check made out to
Black Jack), that the check was advance payment for wells Black Jack
contracted to drill for McBride, and that Black Jack did drill two wells for McBride.
Potts indicated that McBride furnished the money for the Rig with the ―full
intention that [it] was [McBride’s] equipment,‖ but also noted that when he picked
up the check, McBride requested that Potts sign a promissory note.
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McBride averred that he was not aware of Black Jack until after the
company began drilling, that he bought a Rig that Potts took to drill wells with,
that Potts was supposed to pay him back, that he personally did not pay Cubine,
that he financed the purchase of the Rig for Potts, that he (McBride) owned the
Rig, and that once Potts paid McBride for the Rig, Potts would obtain title to it.
McBride agreed that the promissory note is the transaction’s only documentation.
McBride also admitted that after he peaceably foreclosed and took possession of
the Rig, he still pursued the Parker County Lawsuit against Potts—ultimately
ending up with both possession of the Rig and judgment against Potts for
$215,000. McBride indicated that he sold the Rig to Guest but that Guest had
not yet paid him anything for the Rig.
On July 2, 2009, without conducting a hearing, the trial court granted
James’s motion for partial summary judgment in the McBride-James Lawsuit. In
its order, the trial court concluded that:
1. Defendant Terry McBride’s prior judicial admissions bar Defendant
McBride from claiming he purchased the . . . [R]ig;
2. A judgment entered in Cause No. CV06-1218, styled Terry McBride v.
Skip Potts, pending in the 415[th] District Court of Parker County, Texas
bars Defendant Terry McBride from claiming through any security
interest in the . . . [R]ig; [and]
3. Defendant Guest has no right to recover funds deposited in the registry
of the Court.
The trial court then severed this ruling from James’s remaining causes of
action into cause number 164,684-B-1. On September 17, 2009, McBride filed
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notice of his intent to appeal the severed summary judgment. On November 12,
2009, the trial court granted a declaratory judgment, awarded Black Jack the
proceeds of the sale in the court registry, and severed the declaratory judgment
into cause number 164,684-B-1, the same cause number as its ruling on the
partial summary judgment. McBride’s and Guest’s appeals followed.
III. Mediated Settlement Agreement
Guest asserts two independent issues, alleging that the trial court erred by
terminating, and then failing to reinstate, the mediated settlement agreement,
actions the trial court took prior to granting the summary judgment. However,
there does not appear to be a final, appealable judgment or order as to these
issues, as the trial court did not sever these rulings out, and they remain in the
parent cause of action, cause number 164,684-B. Therefore, we dismiss these
issues for want of jurisdiction. See Tex. R. App. P. 43.2(f).
IV. Summary Judgment
In two issues, McBride argues that the trial court erred by granting James’s
motion for summary judgment and by issuing a declaratory judgment awarding
the proceeds from the sale of the Rig to Black Jack based on the summary
judgment. Guest adopts McBride’s issues.
A. Standard of Review
In a summary judgment case, the issue on appeal is whether the movant
met the summary judgment burden by establishing that no genuine issue of
material fact exists and that the movant is entitled to judgment as a matter of law.
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Tex. R. Civ. P. 166a(c); Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding,
289 S.W.3d 844, 848 (Tex. 2009). We review a summary judgment de novo.
Mann Frankfort, 289 S.W.3d at 848; Kaufman v. Islamic Soc’y of Arlington, 291
S.W.3d 130, 143–44 (Tex. App.—Fort Worth 2009, pet. denied).
We take as true all evidence favorable to the nonmovant, and we indulge
every reasonable inference and resolve any doubts in the nonmovant=s favor.
20801, Inc. v. Parker, 249 S.W.3d 392, 399 (Tex. 2008); Sw. Elec. Power Co. v.
Grant, 73 S.W.3d 211, 215 (Tex. 2002). We consider the evidence presented in
the light most favorable to the nonmovant, crediting evidence favorable to the
nonmovant if reasonable jurors could, and disregarding evidence contrary to the
nonmovant unless reasonable jurors could not. Mann Frankfort, 289 S.W.3d at
848. We must consider whether reasonable and fair-minded jurors could differ in
their conclusions in light of all of the evidence presented. See Wal-Mart Stores,
Inc. v. Spates, 186 S.W.3d 566, 568 (Tex. 2006); City of Keller v. Wilson, 168
S.W.3d 802, 822–24 (Tex. 2005).
The summary judgment will be affirmed only if the record establishes that
the movant has conclusively proved all essential elements of the movant=s cause
of action or defense as a matter of law. City of Houston v. Clear Creek Basin
Auth., 589 S.W.2d 671, 678 (Tex. 1979).
B. Applicable Law
Judicial estoppel precludes a party who successfully maintains a position
in one proceeding from later adopting a clearly inconsistent position in another
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proceeding to obtain an unfair advantage. Ferguson v. Bldg. Materials Corp. of
Am., 295 S.W.3d 642, 643 (Tex. 2009) (citing Pleasant Glade Assembly of God
v. Schubert, 264 S.W.3d 1, 6 (Tex. 2008)). The doctrine is not intended to
punish inadvertent omissions or inconsistencies but rather to prevent parties from
playing fast and loose with the judicial system for their own benefit. Id. (citing
Schubert, 264 S.W.3d at 7). The elements of judicial estoppel are (1) a sworn,
prior inconsistent statement made in a prior judicial proceeding; (2) the
successful maintenance of the contrary position in the prior action; (3) the
absence of inadvertence, mistake, fraud, or duress in the making of the prior
statement; and (4) the statement was deliberate, clear, and unequivocal.
DeWoody v. Rippley, 951 S.W.2d 935, 944 (Tex. App.—Fort Worth 1997, writ
dism’d by agr.).
A claim based on a sworn account is brought pursuant to Texas Rule of
Civil Procedure 185. Tex. R. Civ. P. 185. Rule 185 is a procedural tool that
limits the evidence necessary to establish a prima facie right to recovery on
certain types of accounts. Id. Rule 185 applies only ―to transactions between
persons, in which there is a sale upon one side and a purchase upon the other,
whereby title to personal property passes from one to the other, and the relation
of debtor and creditor is thereby created by general course of dealing . . . .‖ Bird
v. First Deposit Nat’l Bank, 994 S.W.2d 280, 282 (Tex. App.—El Paso 1999, pet.
denied); see also Hou-Tex Printers, Inc. v. Marbach, 862 S.W.2d 188, 190 (Tex.
App.—Houston [14th Dist.] 1993, no writ).
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C. Analysis
The record shows that in his 2005 Parker County Lawsuit against Potts,
McBride filed a petition claiming breach of contract and invoking rule 185 on a
sworn account claiming a security interest in the drilling equipment; that after
Potts answered with a general denial, McBride invoked rule 185 in his motion for
no-evidence summary judgment based solely on his sworn account claim; that
the trial court granted McBride summary judgment and awarded him $215,000
plus interest; that there is no evidence that McBride’s pleading resulted from
inadvertence, mistake, fraud, or duress; and that McBride made deliberate, clear,
and unequivocal statements in his summary judgment pleading. McBride’s
motion for summary judgment was his final pleading, and the trial court settled
the case on the basis of that pleading; therefore, even viewing the evidence
favorably to McBride, he is estopped from now claiming that he holds an
ownership interest, a position adverse to the security-interest-holder position he
successfully took in his motion for summary judgment in the Parker County
Lawsuit based on the same facts and concerning the same piece of property—
the Rig. See Dickson v. Stockman, 411 S.W.2d 610, 614 (Tex. App.—Fort Worth
1966, writ ref’d n.r.e.) (affirming judicial estoppel against appellant pleading
claims contradicting those made in prior successful summary judgment action);
Wall v. Young Cnty. Lumber Co., 368 S.W.2d 789, 792 (Tex. App.—Fort Worth
1963, no writ.) (concluding that appellant ―necessarily‖ taking a positive position
of creditor in prior sworn account action seeking repayment of advanced funds
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was ―judicially estopped‖ in later action from asserting title to the advanced funds
or title to the land purchased with the funds); see also Comerica Acceptance
Corp. v. Dallas Cent. Appraisal Dist., 52 S.W.3d 495, 497 (Tex. App.—Dallas
2001, pet. denied) (indicating that common definition of term ―owner‖ does not
include person in possession of personal property collateral for purpose of selling
it pursuant to a security agreement); Borg-Warner Acceptance Corp. v. Massey-
Ferguson, Inc., 713 S.W.2d 351, 354 (Tex. App.—Dallas 1985, writ ref’d n.r.e.)
(op. on reh’g) (noting that it is well settled in Texas law that an owner cannot
have a lien on his own property because they are inconsistent interests); cf.
Williams v. Unifund CCR Partners Assignee of Citibank, 264 S.W.3d 231, 234
(Tex. App.—Houston [1st Dist.] 2008, no pet.) (noting that passage of title is
required to invoke procedural rule on sworn account).
Therefore, we conclude that the trial court did not err by granting James
partial summary judgment, and we overrule McBride’s first issue.
In his second issue, McBride challenges the trial court’s declaratory
judgment awarding the proceeds of the sale to Black Jack.
We review declaratory judgments under the same standards as other
judgments and decrees. Lidawi v. Progressive County Mut. Ins. Co., 112 S.W.3d
725, 730 (Tex. App.—Houston [14th Dist.] 2003, no pet.). We look to the
procedure used to resolve the issue at trial to determine the standard of review
on appeal. Id. Generally, declaratory judgments decided by summary judgment
are reviewed under the same standards of review that govern summary
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judgments. See Tex. Civ. Prac. & Rem. Code Ann. § 37.010 (Vernon 2009);
Lidwai, 112 S.W.3d at 730.
McBride and Guest’s only argument on appeal is that because ―the
summary judgment is in error . . . the declaratory judgment is also in error.‖ The
trial court granted the declaratory judgment as a matter of law based on the
summary judgment, which we have already upheld. Therefore, based on our
resolution of his first issue, we overrule McBride’s second issue as well. See
Tex. R. App. P. 47.1.
V. Conclusion
Having overruled all of McBride’s issues, we affirm the trial court’s
judgment as to McBride. We dismiss for want of jurisdiction Guest’s two
mediated settlement agreement issues and affirm the trial court’s judgment as to
Guest on the two issues he adopted from McBride.
BOB MCCOY
JUSTICE
PANEL: WALKER, MCCOY, and GABRIEL, JJ.
WALKER and GABRIEL, JJ. concur without opinion.
DELIVERED: March 24, 2011
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