Pat Pennington, Individually and Aeronautical Tech Services, Inc. D/B/A Aero Tech Services v. Cypress Aviation, LLC, William S. Montgomery, and Donal R. Schmidt, Jr.

REVERSE and REMAND and Opinion Filed April 9, 2020
S In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-19-00345-CV
PAT PENNINGTON, INDIVIDUALLY AND AERONAUTICAL TECH
SERVICES, INC. D/B/A AERO TECH SERVICES, Appellants
V.
CYPRESS AVIATION, LLC, WILLIAM S. MONTGOMERY,
AND DONAL R. SCHMIDT, JR., Appellees
On Appeal from the 44th Judicial District Court
Dallas County, Texas
Trial Court Cause No. DC-15-04263
MEMORANDUM OPINION
Before Justices Schenck, Osborne, and Reichek
Opinion by Justice Osborne
In this dispute over the cost of repairs made to an airplane, the trial court
rendered judgment for appellees after concluding that appellants lacked standing to
assert their claim. We reverse the trial court’s judgment and remand for a new trial.
BACKGROUND
The facts of this dispute are well-known to the parties and we do not repeat
them here except as necessary to advise the parties of the reasons for our decision.
TEX. R. APP. P. 47.4. Although Cypress Aviation, LLC was the original plaintiff in
this suit, the parties were later realigned with appellants as plaintiffs and appellees
as defendants. Appellants pleaded that appellees breached a contract for repair and
maintenance work done on a Cessna T201 aircraft. In their verified answer to
appellants’ claim, appellees pleaded that Aeronautical Tech Services, Inc.
(“Aeronautical”) “does not have the legal capacity to sue in this action,” citing civil
procedure rule 93(1). TEX. R. CIV. P. 93(1) (pleading that plaintiff does not have
legal capacity to sue shall be verified by affidavit). Appellees did not, however, file
a plea in abatement or obtain a ruling regarding Aeronautical’s lack of capacity prior
to trial. Appellees did not raise the issue until the second day of the trial before the
court.
The trial court rendered judgment that appellants take nothing on their claims.
The trial court also made findings of fact and conclusions of law, including the
following:
I. Findings of Fact
...
2. Aeronautical Tech Services, Inc. (“Aeronautical”) is a Texas
corporation in the business of supplying mechanical services to aircraft
owners. Pat Pennington is the President of Aeronautical.
3. Pat Pennington, individually, as owner, filed an assumed name
record for Aero Tech Services (“Aero Tech”) on April 3, 2003, in
Dallas County, Texas.
4. Aeronautical filed an assumed name certificate with the Secretary of
State for Aero Tech Services on April 26, 2016, after suit was filed,
during the pendency of these proceedings but before trial on the merits.
After the close of all evidence, in post-trial briefing, without leave of
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court, Aeronautical attached the assumed name certificate for Aero
Tech filed in Dallas County, on December 6, 2017.
...
II. Conclusions of Law
...
12. Aeronautical was statutorily required to file the assumed name
certificate in the office of the secretary of state and the office where the
registered or principal office is located. Aeronautical is not able to
maintain a court proceeding until the certificate has been filed as
statutorily required. Failure to timely file the certificate in Dallas
County prior to the close of evidence in the trial on the merits deprived
Aeronautical of legal standing to maintain a cause of action arising out
of a contract.
13. At all relevant times, Aero Tech Services was the d/b/a of its owner
Pat Pennington. Mr. Pennington had no claims against any of the parties
and therefore is not entitled to recover the damages sought.
...
Apparently concluding that only Aeronautical, not Pennington or Aero Tech,
could recover amounts due for repairs to the aircraft, and that Aeronautical lacked
standing, the trial court ruled that none of the appellants could recover damages from
any of the appellees. The trial court denied appellants’ motion for new trial.
This appeal followed. In five issues, appellants contend the trial court erred
by (1) concluding that Aeronautical lacked standing to maintain its claims,
(2) failing to conclude that appellees waived their claims regarding Aeronautical’s
failure to file an assumed name certificate in Dallas County, (3) concluding that
Schmidt and Montgomery are not individually liable for appellants’ claims, (4) not
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awarding appellants damages and attorney’s fees, and (5) not awarding attorney’s
fees to Pennington.
STANDARD OF REVIEW AND APPLICABLE LAW
In an appeal from a bench trial, the trial court’s findings of fact have the same
weight as a jury verdict. Fulgham v. Fisher, 349 S.W.3d 153, 157 (Tex. App.—
Dallas 2011, no pet.). We review a trial court’s findings of fact under the same legal
and factual sufficiency of the evidence standards used when determining if sufficient
evidence exists to support an answer to a jury question. Id. We consider all the
evidence supporting and contradicting the finding, and set aside the finding for
factual insufficiency only if it is so contrary to the evidence as to be clearly wrong
and manifestly unjust. Id. We review de novo a trial court’s conclusions of law. Id.
at 157–58.
The trial court concluded that appellants lacked standing to maintain their
cause of action for breach of contract. Standing is a constitutional prerequisite to
suit. Heckman v. Williamson Cty., 369 S.W.3d 137, 150 (Tex. 2012). Standing
requires that there is a real controversy between the parties that will be actually
determined by the judicial declaration sought. Nootsie, Ltd. v. Williamson Cty.
Appraisal Dist., 925 S.W.2d 659, 662 (Tex. 1996). A court has no jurisdiction over
a claim made by a plaintiff who has no standing to assert it. Heckman, 369 S.W.3d
at 150. Because standing is jurisdictional, it cannot be waived. See Austin Nursing
Ctr., Inc. v. Lovato, 171 S.W.3d 845, 849 (Tex. 2005).
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In addition to standing, a plaintiff must have the capacity to pursue a claim.
Id. The court in Nootsie, Ltd. explained, “[a] plaintiff has standing when it is
personally aggrieved, regardless of whether it is acting with legal authority; a party
has capacity when it has the legal authority to act, regardless of whether it has a
justiciable interest in the controversy.” Nootsie, Ltd., 925 S.W.2d at 661. Unlike
standing, the assertion of a lack of capacity is procedural and can be waived. See id.
at 662.
A corporation must file an assumed name certificate if it regularly conducts
business in Texas under an assumed name. TEX. BUS. & COM. CODE § 71.101. Before
2019, the assumed name statute required every corporation operating under an
assumed name to file an assumed name certificate with the Secretary of State and
with the county clerk where the entity is doing business. See Act of May 15, 2007,
80th Leg., R.S., Ch. 885, § 2.01, 2007 TEX. GEN. LAWS 1906, 1933 (amended 2009
and 2019) (current version at TEX. BUS. & COM. CODE § 71.103).1 Although the
corporation’s failure to comply with section 71.101 or section 71.103 “does not
impair the validity of any contract” or prevent the corporation from “defending any
action or proceeding in any court of this state,” the corporation “may not maintain
in a court of this state an action or proceeding arising out of a contract or act in which
1
In 2019, the Legislature amended section 71.103. The requirement to file a certificate in the office of
the secretary of state was retained, but the Legislature deleted the requirement to file a certificate in the
office of the county clerk of the county in which the entity’s principal office is located.
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an assumed name was used until an original, new, or renewed certificate has been
filed as required by this chapter.” TEX. BUS. & COM. CODE § 71.201.
The supreme court has explained that section 71.201 “authorizes a court to
abate an action until the certificate is filed.” Sixth RMA Partners, L.P. v. Sibley, 111
S.W.3d 46, 55 (Tex. 2003). “[F]ailure to file an assumed name certificate does not
render a plaintiff’s claim void,” but rather “affects a plaintiff’s capacity to bring
suit.” Id. “An argument that an opposing party does not have the capacity to
participate in a suit can be waived by a party’s failure to properly raise the issue in
the trial court.” Id. at 56.
DISCUSSION
In their first and second issues, appellants challenge the trial court’s
conclusion of law that Aeronautical lacked standing to maintain its claims, and argue
that appellees waived their complaint that appellants failed to file an assumed name
certificate in Dallas County for Aeronautical. Appellants do not dispute that the
assumed name certificate for Aeronautical was filed only in the Secretary of State’s
office and not in Dallas County at the time appellants filed their claims against
appellees. But they contend that appellees waived their objection to the failure to file
the certificate in Dallas County because appellees did not present their objection to
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the trial court before trial and obtain a ruling.2 We agree. “[A] plaintiff’s failure to
have a valid [assumed name] certificate on file is not a jurisdictional issue but, rather,
a capacity issue that is properly raised in a plea in abatement so that the cause may
be suspended while the defect is corrected.” Eckman v. Northgate Terrace
Apartments, LLC, No. 03-18-00254-CV, 2018 WL 3150845, at *2 (Tex. App.—
Austin June 28, 2018, pet. denied) (mem. op.). By failing to file a verified plea in
abatement prior to trial, appellees waived their complaint. Schlien v. Griffin, No. 01-
14-00799-CV, 2016 WL 1456193, at *7 (Tex. App.—Houston [1st Dist.] Apr. 12,
2016, pet. denied) (mem. op.); see also STS Gas Servs., Inc. v. Seth, No.
13-05-463-CV, 2008 WL 152229, at *13–14 (Tex. App.—Corpus Christi-Edinburg
Jan. 17, 2008, no pet.) (mem. op.) (same; also noting that failure to file assumed
name certificate affects plaintiff’s capacity to bring suit but does not render
plaintiff’s claim void).
In Continental Contractors, Inc. v. Thorup, 578 S.W.2d 864, 866 (Tex.
App.—Houston [1st Dist.] 1979, no writ), as here, “the defendants waited until the
second day of the trial to bring [the plaintiff’s failure to file an assumed name
2
The panel requested additional briefing from the parties at oral argument submission of this appeal
on the question when an assumed name is so similar to the name of an incorporated entity that filing of an
assumed name certificate is not required. Only counsel for appellants appeared at argument, and he
subsequently gave counsel for appellees notice of our request as we had directed him to do. Counsel for
appellants timely filed a letter brief on the requested issue. Instead of filing their own letter brief on the
issue, appellees filed a motion for leave to file a response to appellants’ letter, requesting an extension for
ten days after the deadline set by the panel. Because our request, communicated to appellees’ counsel
shortly after submission, was for additional briefing filed by all parties within ten days, we deny appellees’
motion. In any event, counsel for appellants was not able to locate case authority on the question.
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certificate] to the trial court’s attention.” Explaining that “[a] plaintiff’s right to
maintain the suit in the capacity in which he sues is properly raised by a plea in
abatement, not by a motion for dismissal,” the court noted that the effect of the
statute “is to authorize the court to abate an action until the required certificate has
been filed.” See id. The court continued, “[a] plea in abatement not relating to matters
of jurisdiction must be urged before the trial on the merits begins; otherwise it is
waived.” Id. The court concluded that the trial court did not err by overruling the
defendants’ motion to dismiss the plaintiff’s claims for failure to file an assumed
name certificate. See id. at 865–66.
Appellees established at trial that Pennington, not Aeronautical, had filed an
assumed name certificate in Dallas County for “Aero Tech Services.” But appellees
never filed a plea in abatement or requested that the trial court suspend the case for
correction of the defect. Instead, they argued that the trial court lacked jurisdiction
over Aeronautical because the certificate had not been filed. But if Aeronautical
performed the work on the aircraft, then it had standing to maintain the suit against
appellees. See Eckman, 2018 WL 3150845, at *2 (owners of premises had standing
to maintain suit for possession even though they had permitted assumed name
certificate to elapse for name listed on lease as “owner” of premises). Consequently,
we conclude the trial court erred by ruling that Aeronautical lacked standing to
maintain its cause of action for breach of contract.
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We sustain appellants’ first issue. Given its erroneous legal conclusion, the
trial court made no findings of fact regarding amounts, if any, Aeronautical may
recover from appellees on its claims. Consequently, we must remand the cause for
new trial. See, e.g., Van Heerden v. Van Heerden, 321 S.W.3d 869, 874 (Tex. App.—
Houston [14th Dist.] 2010, no pet.) (appellate court may remand a case when further
proceedings, such as reweighing evidence or finding facts, are necessary). Because
of our disposition of appellants’ first and second issues, we need not address
appellants’ remaining issues.
CONCLUSION
We reverse the trial court’s judgment and remand the case for new trial. TEX.
R. APP. P. 43.2(d).
/Leslie Osborne/
LESLIE OSBORNE
JUSTICE
190345F.P05
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S
Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
PAT PENNINGTON, On Appeal from the 44th Judicial
INDIVIDUALLY AND District Court, Dallas County, Texas
AERONAUTICAL TECH Trial Court Cause No. DC-15-04263.
SERVICES, INC. D/B/A AERO Opinion delivered by Justice
TECH SERVICES, Appellants Osborne; Justices Schenck and
Reichek participating.
No. 05-19-00345-CV V.
CYPRESS AVIATION, LLC,
WILLIAM S. MONTGOMERY,
AND DONAL R. SCHMIDT, JR.,
Appellees
In accordance with this Court’s opinion of this date, the judgment of the trial
court is REVERSED and this cause is REMANDED to the trial court for a new
trial.
It is ORDERED that appellants Pat Pennington, Individually and
Aeronautical Tech Services, Inc. d/b/a Aero Tech Services recover their costs of
this appeal from appellees Cypress Aviation, LLC, William S. Montgomery, and
Donal R. Schmidt, Jr.
Judgment entered April 9, 2020
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