Hung Tan Phan v. an Dinh Le, Tan Minh Cao, and Huy Dinh Truong

Opinion issued August 30, 2012
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-10-00218-CV
———————————
HUNG TAN PHAN, Appellant
V.
AN DINH LE, TAN MINH CAO, HUY DINH TRUONG, Appellees
On Appeal from the 125th District Court
Harris County, Texas
Trial Court Case No. 2008-61891
OPINION
Appellant, Hung Tan Phan, appeals the trial court’s grant of summary
judgment for lack of standing on his claims against appellees, An Dinh Le, Tan
Minh Cao, and Huy Dinh Troung and its award of damages against Phan on Cao’s
and Truong’s counterclaims. In two issues, Phan argues (1) Phan had standing to
bring his claims against the defendants and (2) the evidence is legally insufficient
to support the trial court’s determination of liability.1
We reverse and render.
Background
Phan was the president of an association known as LDNNA from 2004 to
2007. The association is composed of Vietnamese “frogmen”—that is, certain
members of the Vietnamese military that served the south Vietnamese government
during the Vietnamese war. The purpose of the association, at least in part, is to
raise money for disabled frogmen still in Vietnam and for families of deceased
frogmen still in Vietnam.
In 2004, Phan assigned Le the authority to organize a fundraising event in
Houston, Texas. The LDNNA gave Le money to put together the event. That
money, along with all profits obtained from the fundraiser, was to be returned to
the LDNNA after the fundraiser.
In October 2008, Phan filed suit, pro se, against Le and the other defendants,
who had also been involved in the Houston fundraiser. Phan asserted claims of
fraud and breach of fiduciary duty. Phan alleged that the defendants operated the
1
Appellant raised three issues in his original brief. Following a correction in the
record, however, appellant filed a supplemental brief and abandoned the third
issue as moot.
2
fundraiser in a manner that caused a net loss. He pleaded that he brought his suit
as “an individual, a private party,” but sought recovery for “[t]he monetary
damages of the LDNNA.”
Defendants answered and asserted counterclaims for breach of fiduciary
duty, embezzlement, “illegal representation of the association,” and “frivolous
lawsuit and harassment.” The next month, defendants filed a motion for summary
judgment, arguing that Phan lacked standing to bring his claims.
The defendants asserted in their motion for summary judgment that Phan
was bringing his claims on behalf of the LDNNA, that Phan was no longer
president or on the board of directors, and that Phan admitted in discovery that he
did not have standing to sue on behalf of the LDNNA. In support of this ground,
the defendants attached Phan’s response to their requests for admissions. In the
response to their requests for admissions, Phan admitted that he was no longer
president or a board member for the LDNNA, that he did not have the authority to
represent the LDNNA, and that he did not have standing to file suit on behalf of
the LDNNA.
The defendants also asserted that summary judgment was proper on the basis
that Phan lacked personal knowledge of the events concerning the Houston
fundraiser. The only evidence they presented in support of this claim was an
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affidavit by Truong asserting that “Phan was not in the Organizing Committee [for
the Houston fundraiser], he did not have any personal knowledge.”
Finally, the defendants asserted that summary judgment was proper on the
basis that there was no material fact issue “about the harms done to [Phan]
individually.” The defendants did not present any evidence on this matter.
Instead, they relied on the portion of Phan’s petition where he prayed for “$34,000
to pay back to the LDNNA.”
In his response to the motion for summary judgment, Phan argued he was
not bringing his claims against defendants on behalf of the LDNNA. Instead, Phan
argued, that he was liable to the LDNNA for the losses incurred. Accordingly, he
claimed that he was suing in his individual capacity to recover the losses for which
he was liable. To support his argument, he included a letter from the then-current
president of the LDNNA. The letter was written in Vietnamese, and Phan included
a copy of his own translation of the letter. In the translated copy, the letter asserts,
“You were the Association President at the time of the fundraising party. Pursuant
to the Association BYLAWS, . . . the Association President is still liable for the
Association treasury.” It also stated that “the Association is asking you to do
anything in your power (even taking legal action) to try to recover the lost
fundraising money.”
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The trial court granted the defendants’ motion for summary judgment. Phan
later filed a motion for new trial on the issue of whether he lacked standing. Phan
attached to the motion for summary judgment, among other things, portions of the
LDNNA’s bylaws that he asserts supports his claim that he is liable for the losses
he alleged to have been incurred by the defendants. The motion for new trial was
denied as well.
Le subsequently nonsuited his counterclaims against Phan. Cao and Truong
did not. At trial, Cao and Truong called Phan and Truong to testify in addition to
the defendants’ attorney on fees. Phan called only himself. At the conclusion of
the trial, the trial court awarded the defendants $8,000 in actual damages, $10,000
in punitive damages, and $2,000 in attorneys’ fees.2
On appeal, Phan filed a brief arguing (1) Phan had standing to bring his
claims against the defendants and (2) the evidence is legally insufficient to support
the trial court’s determination of liability. Le filed a brief arguing that summary
judgment on Phan’s standing was proper. Cao and Truong did not file a brief.
2
The judgment does not specifically identify the defendants that were awarded the
damages rendered against Phan. Instead, the judgment refers only to the
“Defendants/CounterPlaintiffs.” Because it was acknowledged by everyone at
trial that Le had nonsuited his claims against Phan, we do not read the judgment to
include Le as a recipient of the award or to suggest that any claims he had have
been disposed with prejudice.
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Subject-Matter Jurisdiction
In his second issue, Phan argues that the trial court erred by determining that
he lacked standing to assert his claims.
A. Standard of Review
A defendant can challenge the plaintiff’s standing in a motion for summary
judgment. Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 554 (Tex. 2000). The
summary-judgment movant must conclusively establish its right to judgment as a
matter of law. See MMP, Ltd. v. Jones, 710 S.W.2d 59, 60 (Tex. 1986). Because
summary judgment is a question of law, we review a trial court’s summary
judgment decision de novo. Mann Frankfort Stein & Lipp Advisors, Inc. v.
Fielding, 289 S.W.3d 844, 848 (Tex. 2009).
To prevail on a “traditional” summary-judgment motion asserted under Rule
166a(c), a movant must prove that there is no genuine issue regarding any material
fact and that it is entitled to judgment as a matter of law. See TEX. R. CIV. P.
166a(c); Little v. Tex. Dep’t of Criminal Justice, 148 S.W.3d 374, 381 (Tex. 2004).
A matter is conclusively established if reasonable people could not differ as to the
conclusion to be drawn from the evidence. See City of Keller v. Wilson, 168
S.W.3d 802, 816 (Tex. 2005).
To determine if there is a fact issue, we review the evidence in the light most
favorable to the nonmovant, crediting favorable evidence if reasonable jurors could
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do so, and disregarding contrary evidence unless reasonable jurors could not. See
Fielding, 289 S.W.3d at 848 (citing City of Keller, 168 S.W.3d at 827). We
indulge every reasonable inference and resolve any doubts in the nonmovant’s
favor. Sw. Elec. Power Co. v. Grant, 73 S.W.3d 211, 215 (Tex. 2002). When the
trial court’s summary judgment order does not state the basis for the trial court’s
decision, we must uphold the order if any of the theories advanced in the motion
are meritorious. Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 216
(Tex. 2003).
B. Standing
Standing is a necessary component of subject-matter jurisdiction and cannot
be waived. Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 445 (Tex.
1993). If a party lacks standing, the trial court does not have jurisdiction to hear
the case. Bland, 34 S.W.3d at 553–54.
Standing “requires that the controversy adversely affect the party seeking
review.” McAllen Med. Ctr., Inc. v. Cortez, 66 S.W.3d 227, 234 (Tex. 2001). In a
standing analysis, we focus on whether the “party has a sufficient relationship with
the lawsuit so as to have a ‘justiciable interest’ in its outcome.” Austin Nursing
Ctr. v. Lovato, 171 S.W.3d 845, 848 (Tex. 2005). The general test for standing in
Texas requires that there “(a) shall be a real controversy between the parties, which
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(b) will be actually determined by the judicial declaration sought.” Tex. Ass’n of
Bus., 852 S.W.2d at 446.
The defendants presented three grounds for summary judgment: (1) Phan
lacked standing to bring his claims, (2) Phan lacked any personal knowledge, and
(3) Phan did not suffer any harm.
On the issue of standing, the defendants argued that Phan was no longer
president of the LDNNA and could not assert claims on its behalf. Their summary
judgment evidence consisted of Phan’s acknowledgements in his response to the
defendants’ requests for admissions that he was no longer president or a board
member for the LDNNA, that he did not have the authority to represent the
LDNNA, and that he did not have standing to file suit on behalf of the LDNNA.
Phan responded, arguing that he was not bringing the lawsuit in any
representative capacity on behalf of the LDNNA. Instead, he argued he was suing
in his individual capacity. He asserted that the LDNNA’s bylaws made him liable
for the loss incurred as a result of the defendants’ actions because the event
occurred while he was president. To support his argument, he included a letter
from the then-current president of the LDNNA. The letter was written in
Vietnamese, and Phan included a copy of his own translation of the letter. In the
translated copy, the letter asserts, “You were the Association President at the time
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of the fundraising party. Pursuant to the Association BYLAWS, . . . the
Association President is still liable for the Association treasury.”
In his brief on the merits, Le argues that Phan’s translation of the letter is not
admissible because Phan did not comply with rule 1009 of the Texas Rules of
Evidence. See TEX. R. EVID. 1009(a) (requiring, for purposes of admissibility,
translation of foreign language document to be served on parties 45 days prior to
trial along with affidavit of qualified translator). There was no objection in the
trial court to Phan’s evidence, however. Nor was there a ruling by the trial court
excluding the evidence.
Defects to the form of evidence are waived without an objection and ruling
by the trial court. See Vice v. Kasprzak, 318 S.W.3d 1, 11 (Tex. App.—Houston
[1st Dist.] 2009, pet. denied) (holding defects to form of evidence are waived
without securing a ruling). Rule 1009 concerns when a translated document must
be admitted into trial and whether the accuracy of the translation can be submitted
to the factfinder. See TEX. R. EVID. 1009(a)–(d). It is not, then, a rule concerning
the substance of the translated document. Accordingly, any defects in the form of
Phan’s translation have been waived. See Vice, 318 S.W.3d at 11.
The letter from the current president of the LDNNNA asserted that Phan is
liable for the LDNNA’s treasury for the period of time he was president. Phan
alleges that the LDNNA suffered a loss due to the defendant’s actions during that
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same time. Viewing the evidence in the light most favorable to the non-movant,
indulging every reasonable inference, and resolving any doubts in the non-
movant’s favor, we hold that Phan’s liability to the LDNNA for the defendants’
actions create a real controversy between the parties, which could be actually
determined by the judicial declaration sought. See Texas Ass’n of Bus., 852
S.W.2d at 446.
We sustain Phan’s second issue.
C. Ripeness
Nevertheless, the facts of this case compel us to address the issue of
ripeness. Ripeness is an element of subject-matter jurisdiction and, accordingly,
can be raised sua sponte by this Court on appeal. Mayhew v. Town of Sunnyvale,
964 S.W.2d 922, 928 (Tex. 1998).
While standing focuses on the question of who may bring an action, ripeness
examines when that action may be brought. Patterson v. Planned Parenthood of
Hous. & Se. Tex., Inc., 971 S.W.2d 439, 442 (Tex. 1998). Ripeness is determined
based on the facts that exist at time suit was filed. See id. The inquiry concerns
“whether the case involves ‘uncertain or contingent future events that may not
occur as anticipated, or indeed may not occur at all.’” Id. (citing 13A CHARLES
ALAN WRIGHT ET AL., FEDERAL PRACTICE AND PROCEDURE § 3532 (2d ed. 1984)).
“A case is not ripe when determining whether the plaintiff has a concrete injury
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depends on contingent or hypothetical facts, or upon events that have not yet come
to pass.” Waco Indep. Sch. Dist. v. Gibson, 22 S.W.3d 849, 852 (Tex. 2000). “To
establish that a claim is ripe based on an injury that is likely to occur, the plaintiff
must demonstrate that the injury is imminent, direct, and immediate, and not
merely remote, conjectural, or hypothetical.” City of Hous. v. Mack, 312 S.W.3d
855, 862 (Tex. App.—Houston [1st Dist.] 2009, no pet.) (citing Gibson, 22 S.W.3d
at 852).
Phan acknowledged to the trial court that the LDNNA had not sued the
defendants for the injury they allegedly caused the LDNNA. Nor has the LDNNA
filed suit against Phan or in any other way sought to recover from him any of the
alleged damages. In other words, while the LDNNA may seek to recover from
Phan, it has not chosen to do so yet. While Phan may potentially face liability for
the alleged losses, depending on the actions of the LDNNA, he currently has not
suffered any injury. See id. (plaintiff must show injury is imminent, direct, and
immediate); cf. Ingersoll-Rand Co. v. Valero Energy Corp., 997 S.W.2d 203, 210
(Tex. 1999) (holding “and indemnity claim does not accrue until all of the potential
liabilities of the indemnitee become fixed and certain”).
We hold that Phan’s claims against the defendants are not ripe. When the
evidence shows that the trial court lacks subject-matter jurisdiction, we vacate the
trial court’s judgment and dismiss the action. TEX. R. APP. P. 43.2(e); Brooks v.
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Northglen Ass’n, 141 S.W.3d 158, 164 (Tex. 2004) (vacating trial court’s judgment
and dismissing causes of action); see also Ab-Tex Beverage Corp. v. Angelo State
Univ., 96 S.W.3d 683, 686 (Tex. App.—Austin 2003, no pet.) (holding order that
dismisses lawsuit for want of jurisdiction is not res judicata of merits and does not
bar plaintiff from bringing same cause again once impediment to jurisdiction has
been removed).
Legal Sufficiency
In his second issue, Phan argues the evidence is legally insufficient to
support the trial court’s determination of liability on Cao and Truong’s claims
against him.
A. Standard of Review
In conducting a legal-sufficiency review of the evidence, we consider all of
the evidence in a light favorable to the verdict and indulge every reasonable
inference that supports it. City of Keller, 168 S.W.3d at 824. We consider
evidence favorable to the finding if a reasonable factfinder could consider it, and
disregard evidence contrary to the finding unless a reasonable factfinder could not
disregard it. Id. at 827. In an appeal of a judgment rendered after a bench trial, we
may “not invade the fact-finding role of the trial court, who alone determines the
credibility of the witnesses, the weight to give their testimony, and whether to
accept or reject all or any part of that testimony.” Volume Millwork, Inc. v. W.
12
Hous. Airport Corp., 218 S.W.3d 722, 730 (Tex. App.—Houston [1st Dist.] 2006,
pet. denied).
B. Analysis
Cao and Truong asserted claims against Phan for breach of fiduciary duty,
embezzlement, “illegal representation of the association,” and “frivolous lawsuit
and harassment.” The trial court rendered judgment against Phan on the claims of
breach of fiduciary duty, embezzlement, and filing a frivolous lawsuit and
harassment. Phan argues the evidence is legally insufficient to support any of
these claims.
Phan begins by noting that the trial court awarded $8,000 in actual damages.
Phan argues that there is no evidence to support this damage amount under any of
the claims identified in the judgment.
The only testimony at trial that touches on damages suffered is a portion of
Truong’s testimony about his mental suffering from Phan’s actions.
Q. So you suffer[ed] mentally, right?
A. Yes, sir, very much so.
Q. And emotionally too, right?
A. Yes, sir. Not just me, a lot of people. He hurt a lot of people
emotionally.
Q. And your Frogmen—your friends also [got] scared, right?
13
A. They [were ] scared because, just like me, even [though] I’m
[an] engineer I only know the numbers but the law I know
nothing, zero.
Phan argues in his brief, “Even assuming that mental anguish and emotional
distress can be recovered for breach of fiduciary duty, embezzlement, or filing a
frivolous or harassing lawsuit, this testimony does not . . . rais[e] a fact issue.” We
agree.
An award of mental anguish damages will survive a legal sufficiency
challenge when a plaintiff has introduced direct evidence of the nature, duration,
and severity of their mental anguish, thus establishing a substantial disruption in
the plaintiff’s daily routine. Parkway Co. v. Woodruff, 901 S.W.2d 434, 444 (Tex.
1995); Rice Food Markets, Inc. v. Williams, 47 S.W.3d 734, 738–39 (Tex. App.—
Houston [1st Dist.] 2001, pet. denied). When a plaintiff does not present evidence
of the nature, duration, or severity of mental anguish, the reviewing court must
determine whether there is “any evidence of a high degree of mental pain and
distress that is more than mere worry, anxiety, vexation, embarrassment, or anger
to support any award of damages.” Parkway Co., 901 S.W.2d at 444.
There is no evidence of any emotional distress suffered by Cao, and Truong
did not present evidence of the nature, duration, or severity of his mental anguish.
His testimony regarding his emotional and mental distress does not reveal a high
degree of mental pain and distress that is more than mere worry, anxiety, vexation,
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embarrassment, or anger. We hold there is no evidence to support any damages for
Cao and Truong’s claims for breach of fiduciary duty and embezzlement.
We are left, then, with Cao and Truong’s claim of frivolous lawsuit and
harassment. The trial court ordered Phan to pay $10,000, of which $8,000 were
“actual damages” and $2,000 were “attorneys’ fees.” The trial court awarded
another $10,000 for “exemplary damages.” Because the judgment includes an
award not based on expenses, court costs, or attorneys’ fees, our analysis is
controlled by section 10.001 of the Texas Civil Practices and Remedies Code. See
TEX. CIV. PRAC. & REM. CODE ANN. § 10.001 (Vernon 2002); Low v. Henry, 221
S.W.3d 609, 614 (Tex. 2007) (analyzing sanctions including award not based on
expenses, court costs, or attorney’s fees under section 10.001).
Chapter 10 provides that the signature of attorneys or parties on a pleading
or motion constitutes a certificate by them that, to the best of their knowledge,
information, and belief formed after a reasonable inquiry, the instrument is not
being presented for an improper purpose, is warranted by existing law or by a
nonfrivolous argument for the extension, modification, or reversal of existing law
or the establishment of new law, and there is evidentiary support for each
allegation or contention. TEX. CIV. PRAC. & REM. CODE ANN. § 10.001. To award
sanctions under chapter 10, it must be shown that (1) the pleading or motion was
brought for an improper purpose; (2) there were no grounds for the legal arguments
15
advanced; or (3) the factual allegations or denials lacked evidentiary support. Dike
v. Peltier Chevrolet, Inc., 343 S.W.3d 179, 183 (Tex. App.—Texarkana 2011, no
pet.); see also TEX. CIV. PRAC. & REM. CODE ANN. §§ 10.001, .004 (Vernon 2002).
There is a presumption that pleadings are filed in good faith and the burden
is on the party moving for sanctions to overcome this burden. See TEX. R. CIV. P.
13; R.M. Dudley Constr. Co. v. Dawson, 258 S.W.3d 694, 709 (Tex. App.—Waco
2008, pet. denied). “The party moving for sanctions must prove the pleading
party’s subjective state of mind. In the case of section 10.001(1), the movant must
show, and the court must describe and explain, that the pleading was filed for the
improper purpose of harassment.” R.M. Dudley Constr., 258 S.W.3d at 710. The
pleading alone is not sufficient to establish that the pleading was filed in bad faith
or to harass. Id.
At trial, the parties discussed a defamation lawsuit filed by Phan in
California against a number of frogmen. It is unclear from the record whether Cao
and Phan are relying on the California lawsuit or this suit to support their claim of
filing a frivolous lawsuit. Regardless, neither can support a determination of
liability under Cao and Truong’s claim.
By the plain terms of the statute, the California lawsuit cannot be the basis
for an award of sanctions under section 10.001. That statute only applies to “[t]he
signing of a pleading or motion as required by the Texas Rules of Civil Procedure
16
. . . .” TEX. CIV. PRAC. & REM. CODE ANN. § 10.001 (emphasis added). No
pleading or motion filed in the California lawsuit would meet this requirement.
For the current lawsuit, there is no evidence that Phan’s suit was brought for
an improper purpose, that there were no grounds for the legal arguments, or that
the allegations lacked factual support. See Dike, 343 S.W.3d at 183 (listing bases
for awarding sanctions under section 10.001). There is evidence to support Phan’s
standing to file suit. While we have determined that Phan’s claim is not ripe, this
is not synonymous with lacking merit. We hold that the record does not support a
determination that the current suit was frivolous or harassing.3
Finally, Phan correctly argues that, because none of the claims against him
are viable, the award of exemplary damages cannot stand. Under Texas law,
exemplary damages are not recoverable absent an award of actual damages.
Nabours v. Longview Sav. & Loan Ass’n, 700 S.W.2d 901, 904 (Tex. 1985); Hong
Kong Dev., Inc. v. Nguyen, 229 S.W.3d 415, 451 (Tex. App.—Houston [1st Dist.]
2007, no pet.).
3
Even if we were to consider the sanctions award under Rule 13 of the Texas Rules
of Civil Procedure—that is, even if we were to exclude the portion of the
judgment not based on expenses, court costs, or attorneys’ fees from our
consideration—the result would be the same. The California case could not be the
basis for an award under the Texas Rules of Civil Procedure. See TEX. R. CIV. P.
2 (explaining, “These rules shall govern the procedure in the justice, county, and
district courts of the State of Texas . . . .”). And, for the same reasons given
above, there is no indication that Phan’s pleading was groundless. See TEX. R.
CIV. P. 13 (establishing signatures of parties to constitute certificate that the
instrument is not groundless and creating presumption that pleadings are filed in
good faith).
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We sustain Phan’s second issue.
Conclusion
We vacate the trial court’s grant of summary judgment against Phan on his
claims against the defendants and dismiss those claims without prejudice.
Additionally, we reverse the trial court’s award of damages in favor of Cao and
Truong and against Phan and render a take-nothing judgment on those claims.
Laura Carter Higley
Justice
Panel consists of Justices Higley, Sharp, and Huddle.
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