Victor Paul Hernandez v. Cudco Solutions, LLC Greg Merecka And Jeffery Merecka

Affirmed and Memorandum Opinion filed March 28, 2023.
In The
Fourteenth Court of Appeals
NO. 14-21-00605-CV
VICTOR PAUL HERNANDEZ, Appellant
V.
CUDCO SOLUTIONS, LLC; GREG MERECKA; AND JEFFERY
MERECKA, Appellees
On Appeal from the 55th District Court
Harris County, Texas
Trial Court Cause No. 2019-44107A
MEMORANDUM OPINION
The trial court granted the Rule 91a motion to dismiss filed by appellees
Cudco Solutions, LLC (“Cudco”), Greg Merecka (“Greg”), and Jeffery Merecka
(“Jeff”). See Tex. R. Civ. P. 91a.1. In a single issue on appeal, appellant Victor
Paul Hernandez (“Hernandez”) argues that the trial court erred by granting the
motion to dismiss. We affirm.
I. BACKGROUND
Hernandez alleges that on February 8, 2019, he was supervising the delivery
of concrete and work supplies on the property of EZ Werks Self Storage, LLC
(“EZ Werks”). According to his petition, while Hernandez was directing traffic he
was “violently struck on the leg” by a vehicle driven by Julio Rios Ortega
(“Ortega”) and owned by Solid Rock Ready Mix, LLC (“Solid Rock”); the vehicle
“drug [Hernandez] straight to the ground causing [him] to suffer severe,
excruciating, and painful debilitating injuries.”
The following timeline recounts the subsequent events relevant to this
appeal:
• June 27, 2019 – Hernandez filed his original petition against Solid Rock.
Hernandez’s petition included a request for disclosure.
• May 4, 2020 – Hernandez filed an amended petition, adding Ortega and
Gloria Zermeno—the alleged owner and manager of Solid Rock—as
defendants.
• December 28, 2020 – Hernandez filed his fifth amended petition, adding
EZ Werks as a defendant.1
• February 4, 2021 – EZ Werks was served.
• March 1, 2021 – EZ Werks filed an answer.
• April 21, 2021 – Hernandez filed his sixth amended petition, adding
Cudco, Greg, and Jeff as defendants.
1
The fifth amended petition included a request for disclosure to EZ Werks for “all the
information in Rule 194.2(a) through (l).” However, EZ Werks’ response was not due until fifty
days after the date of service of the petition, which was after the two-year statute of limitations
had expired.
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In his sixth amended petition, Hernandez asserted various claims against the
defendants, including premises liability, negligence, and gross negligence. Further,
according to Hernandez, EZ Werks was an alter ego of Cudco because the two
entities failed to observe corporate formalities, EZ Werks “signs contracts that
involve exposure to any significant risk of liability, regardless of which
corporation actually seeks or does the work,” and EZ Werks was “inadequately
capitalized.”
Also in his sixth petition, Hernandez alleged that Greg and Jeff were the
alter egos of EZ Werks. Hernandez averred that Greg and Jeff, who are brothers,
were the only managers and serve as the only two members of EZ Werks, that EZ
Werks was and is inadequately capitalized, and that EZ Werks’ corporate form had
been “used as part of an unfair device to achieve an inequitable result.”
Additionally, Hernandez asserted that Greg, individually, was the alter ego of
Cudco because he was the sole manager and director of Cudco, Greg and Cudco
did not maintain separate offices,2 Cudco was inadequately capitalized, and
Cudco’s corporate form had also been used as part of an unfair device to achieve
an inequitable result.
Hernandez additionally claimed that EZ Werks, Cudco, Greg, and Jeff were
liable for the negligent acts of one another under the theory of joint enterprise
because they had: “(1) either an express or implied agreement, (2) a common
purpose of building and operating a successful self-storage location, (3) a
community of pecuniary interest in that common purpose, and (4) an equal right to
direct and control the enterprise.”
On June 23, 2021, appellees filed a Rule 91a motion to dismiss, alleging that
all of Hernandez’s claims were barred by the statute of limitations because the
2
Hernandez alleged that Cudco’s office address is the same as Greg’s personal residence.
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claims were filed outside of the applicable two-year statute of limitations.
Appellees also argued that the petition alleged insufficient facts to support
appellant’s alter ego and joint enterprise theories.
On July 8, 2021, Hernandez filed his seventh amended petition, adding the
following allegations:
EZ Werks never responded to Hernandez’s requests for disclosure,
“which would have included other potential parties, such as Cudco
Solutions, Greg Merecka, and Jeffery Merecka”;
EZ Werks did not identify Cudco as a potential party until after the
statute of limitations had expired; and
The appellees’ actions were “fraudulent for statute of limitations
purposes.”
On July 11, 2021, Hernandez filed a response to appellees’ motion to
dismiss. In his response, Hernandez argued that dismissal was not appropriate
under Rule 91a because his “petition and exhibits give fair notice of his alter ego
liability and joint enterprise claims.”
On August 18, 2021, the trial court granted the motion to dismiss and
severed Hernandez’s claims against appellees from the claims against the other
defendants. Hernandez timely filed this appeal.
II. ANALYSIS
In his sole issue on appeal, Hernandez argues that the trial court erred in
granting appellees’ motion to dismiss.
A. STANDARD OF REVIEW
“Rule 91a allows a party to move to dismiss a cause of action on the ground
that it has no basis in law or in fact.” Triple P.G. Sand Dev., LLC v. Nelson, 651
S.W.3d 491, 495–96 (Tex. App.—Houston [14th Dist.] 2022, no pet.) (quoting San
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Jacinto River Auth. v. Brocker, No. 14-18-00517-CV, 2021 WL 5117889, at *3
(Tex. App.—Houston [14th Dist.] Nov. 4, 2021, no pet.)); see Tex. R. Civ. P.
91a.1. Dismissal is appropriate under Rule 91a “if the allegations, taken as true,
together with inferences reasonably drawn from them, do not entitle the claimant to
the relief sought.” Tex. R. Civ. P. 91a.1. “In ruling on a Rule 91a motion to
dismiss, a court may not consider evidence but ‘must decide the motion based
solely on the pleading of the cause of action, together with any [permitted]
pleading exhibits.’” In re Farmers Tex. Cty. Mut. Ins., 621 S.W.3d 261, 266 (Tex.
2021) (orig. proceeding) (quoting Tex. R. Civ. P. 91a.6). However, “[i]n deciding a
Rule 91a motion, a court may consider the defendant's pleadings if doing so is
necessary to make the legal determination of whether an affirmative defense is
properly before the court.” Bethel v. Quilling, Selander, Lownds, Winslett &
Moser, P.C., 595 S.W.3d 651, 656 (Tex. 2020).
We review the merits of a Rule 91a motion de novo because the availability
of a remedy under the facts alleged is a question of law, and the rule’s factual-
plausibility standard is akin to a legal-sufficiency review. City of Dallas v.
Sanchez, 494 S.W.3d 722, 724–25 (Tex. 2016) (citing Wooley v. Schaffer, 447
S.W.3d 71, 75–76 (Tex. App.—Houston [14th Dist.] 2014, pet. denied)). In
conducting our review, we must construe the pleadings liberally in favor of the
plaintiff, look to the pleader’s intent, and accept as true the factual allegations in
the pleadings to determine whether the cause of action has a basis in law or fact.
See Nelson, 651 S.W.3d at 495–96; Sanchez v. Striever, 614 S.W.3d 233, 239
(Tex. App.—Houston [14th Dist.] 2020, no pet.). However, while Rule 91a limits a
court’s factual inquiry to the plaintiff’s pleadings, it “does not so limit the court’s
legal inquiry. In deciding a Rule 91a motion, a court may consider the defendant’s
pleadings if doing so is necessary to make the legal determination of whether an
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affirmative defense is properly before the court.” Bethel, 595 S.W.3d at 656.
B. Application
According to Hernandez, the trial court erred in granting appellees’ motion
to dismiss because the facts alleged in his live petition demonstrated that the statute
of limitations had been tolled.
Hernandez does not dispute that he was aware of his injury on February 8,
2019, nor does he dispute that he did not add appellees Cudco, Greg, and Jeff to
the suit until April 21, 2021. Thus, unless some tolling principle applies,
Hernandez’s claims against appellees are barred by the two-year statute of
limitations applicable to personal injury claims. See Tex. Civ. Prac. & Rem. Code
Ann. § 16.003. Hernandez argues that he alleged sufficient facts to invoke the
tolling principles of alter ego, joint enterprise, and fraudulent concealment.
1. Fraudulent Concealment
Hernandez first argues that the statute of limitations was tolled due to
fraudulent concealment. In his petition, he alleged that appellees actions were
“fraudulent for statute of limitations purposes.”
Concerning the tolling effect of fraudulent concealment, the Supreme Court
of Texas has held that “if the plaintiff has ‘actual knowledge . . . of injury-causing
conduct,’ then this ‘starts the clock on the limitations period’ ‘[i]rrespective of the
potential effect of fraudulent concealment.’” Hooks v. Samson Lone Star, Ltd.
P’ship, 457 S.W.3d 52, 59 (Tex. 2015) (quoting Exxon Corp. v. Emerald Oil &
Gas Co., L.C., 348 S.W.3d 194, 209 (Tex. 2011)). The Supreme Court of Texas
has additionally affirmed that “whether the discovery rule applies turns on whether
the injured person is aware that she has an injury; and . . . [i]t does not turn on
whether the injured person knows the exact identity of the tortfeasor or all of the
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ways in which the tortfeasor was at fault in causing the injury.” Schlumberger
Tech. Corp. v. Pasko, 544 S.W.3d 830, 834 (Tex. 2018) (per curiam) (emphasis
added); see also In re Springs Condominiums, L.L.C., No. 03-21-00493-CV, 2021
WL 5814292, at *3 (Tex. App.—Austin Dec. 8, 2021, orig. proceeding) (mem.
op.) (observing that even if the plaintiff had raised some issue “affecting the
running of limitations, such as tolling or the discovery rule,” such principles would
be inapplicable and plaintiff’s claims would be barred by limitations because the
discovery rule does not turn on whether the injured person knows the exact identity
of the tortfeasor); Smith v. Myers, No. 09-98-481CV, 1999 WL 193433, at *1 (Tex.
App.—Beaumont Apr. 8, 1999, no pet.) (“The fraudulent concealment doctrine . . .
does not toll the statute of limitations to allow a plaintiff to search for the ‘true’
defendant.”).
Based on the facts alleged by Hernandez, we conclude that here, the
fraudulent concealment doctrine does not apply to toll the statute of limitations.
See Hooks, 457 S.W.3d at 59.
2. Alter Ego
Hernandez also argues that the alter ego principle tolled the statute of
limitations as to appellees.
Alter ego is an equitable doctrine, “based on the same equitable
considerations that allow for piercing the corporate veil, and its purpose is to
prevent use of the corporate entity as a cloak for fraud or illegality or to work an
injustice.” Draughon v. Johnson, 631 S.W.3d 81, 93 n.12 (Tex. 2021) (internal
citations and quotations omitted). “Generally, alter ego will not apply to disregard
the corporate form absent exceptional circumstances.” Richard Nugent & CAO,
Inc. v. Estate of Ellickson, 543 S.W.3d 243, 266 (Tex. App.—Houston [14th Dist.]
2018, no pet.) Alter ego applies to pierce the corporate veil only “(1) where a
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corporation is organized and operated as a mere tool or business conduit of
another; and (2) there is such unity between corporation and individual that the
separateness of the corporation has ceased and holding only the corporation or
individual liable would result in injustice.” Id. (internal quotations omitted). The
second element is particularly relevant in the present case because it requires a
specific injustice:
The second element examines whether the corporate form was
employed for illegitimate purposes such that holding only the
corporation or the individual liable would result in an injustice. The
“injustice” that gives rise to an application of alter ego liability
emanates from “the kinds of abuse . . . that the corporate structure
should not shield—fraud, evasion of existing obligations,
circumvention of statutes, monopolization, criminal conduct, and the
like.”
Id. at 266–67 (quoting SSP Partners v. Gladstrong Invs. (USA) Corp., 275 S.W.3d
444, 455 (Tex. 2008)).
Appellees rely on Matlock v. McCormick, 948 S.W.2d 308, 311 (Tex.
App.—San Antonio 1997, no writ) for the proposition that the alter ego tolling
principle was not available to Hernandez in this case. Although Matlock is not
binding, we note that it shares a similar fact pattern, and we consider the San
Antonio Court’s analysis to be insightful.
In Matlock, Karryn Matlock—a nightclub waitress—filed suit against Dallas
Nightclub—her employer—and Payroll Services Corporation d/b/a Associated
Club Management (“ACM”)—the corporation that managed the Dallas
Nightclub—for various tort claims, including slander, invasion of privacy, and
intentional infliction of emotional distress, related to her termination. Id. at 309.
More than two years after she was fired, she added two defendants to the suit: John
McCormick (“McCormick”), individually and as an alter ego of Dallas Nightclub,
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and Tina Wheeldon (“Wheeldon”), individually and as an alter ego of ACM. Id. at
310. The trial court granted McCormick’s and Wheeldon’s motion for summary
judgment on the basis of limitations. Id. 309–10. On appeal, Matlock argued that
application of the discovery rule and the fraudulent concealment doctrine
precluded summary judgment on limitations. However, the San Antonio Court of
Appeals rejected her argument:
Simply stated, Matlock tries to invoke the tolling provisions of the
discovery rule and the fraudulent concealment doctrine because she
was unable to discover within the limitations period that Wheeldon
and McCormick are the alter egos of ACM and Dallas Nightclub.
While we recognize the difficulties litigants may encounter when
trying to unravel a confusing web of corporate structures shielding a
defendant, we are unaware of any legal doctrine which tolls
limitations while the search continues for the “true” defendant. In the
instant case, whether Wheeldon and McCormick are alter egos
engaged in fraudulent transfers of corporate assets is a relevant issue
only after Matlock proves her causes of action against AMC. That
Matlock was unaware of the possibility of pursuing McCormick and
Wheeldon, individually and as alter egos, does not prevent the running
of the limitations period on her underlying causes of action since she
knew of her injuries and causes of action.
Id. at 311–12.
Hernandez attempts to distinguish his case from Matlock, asserting that a
“suit against a corporation tolls limitations as to the alter ego of the corporation.”
Matthews Const. Co., Inc. v. Rosen, 796 S.W.2d 692, 693 (Tex. 1990); West v.
Eller, No. 01-96-01044-CV, 1998 WL 608330, at *4 (Tex. App.—Houston [1st
Dist.] Aug. 27, 1998, no pet.) (not designated for publication) (“In general, a suit
against a corporation tolls limitations as to the alter ego of the corporation.”). We
recognize that alter ego is an equitable doctrine, “based on the same equitable
considerations that allow for piercing the corporate veil, and its purpose is to
prevent use of the corporate entity as a cloak for fraud or illegality or to work an
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injustice.” Draughon, 631 S.W.3d at 93 n.12. Here, as in Matlock, whether the
alter ego theory applies is only relevant after his causes of action are proved
against appellees.
Hernandez relies on Matthews Constr., 796 S.W.2d at 692 in support of his
argument that equitable principles, such as alter ego, can toll the statute of
limitations. In Matthews, the plaintiff secured a judgment against a corporation, but
the plaintiff could not collect on the judgment because the president of the
corporation stripped the corporation of all its assets to avoid paying the judgment.
Id. The supreme court used equitable principles to toll limitations against the
president—as an alter ego of the corporation—and allowed the plaintiff to collect
judgment on the timely-named corporation because the president had used the
corporate entity as a sham to visit an injustice on the plaintiff by stripping the
corporation of its assets in an attempt to avoid paying the judgment. Id.
While Hernandez has generally asserted that the appellees’ corporate
structure was “used as part of an unfair device to achieve an inequitable result,”
Hernandez has not provided any facts supporting this assertion, nor has he alleged
facts demonstrating that appellees committed any of the kinds of abuse that the
corporate structure should not shield. See Richard Nugent, 543 S.W.3d at 266–67.
Hernandez does not assert that the appellees used the alleged alter egos for the type
of activity contemplated by SSP Partners, i.e., monopolization, evasion of existing
obligations, to avoid paying a judgment, criminal conduct, and the like. See id.
More specifically, regarding the first element of alter ego, Hernandez
alleged numerous facts that might support a finding that the Greg and Jeff did not
follow corporate formalities and thus the corporate entities were organized and
operated as mere business conduits of one another, but Hernandez has not alleged
sufficient facts to support the second element of alter ego. The only real injustice
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that Hernandez refers to is the fact that EZ Werks and Cudco are “inadequately
capitalized.” However, Texas courts of appeal have rejected the theory that,
“undercapitalization, by itself and without reference to any other factors, is
sufficient to justify piercing the corporate veil.” Ramirez v. Hariri, 165 S.W.3d
912, 916 (Tex. App.—Dallas 2005, no pet.); see Durham v. Accardi, 587 S.W.3d
179, 186 (Tex. App.—Houston [14th Dist.] 2019, no pet.) (holding
undercapitalization alone is “insufficient to establish alter ego”); Endsley Elec.,
Inc. v. Altech, Inc., 378 S.W.3d 15, 26 (Tex. App.—Texarkana 2012, no pet.)
(noting “undercapitalization can be a factor in determining whether an individual is
the alter ego of the corporation, but alone is insufficient”); Tigrett v. Pointer, 580
S.W.2d 375 (Tex. Civ. App.—Dallas 1978, writ ref’d n.r.e.) (same); see also
Ledford v. Keen, 9 F.4th 335, 340 (5th Cir. 2021) (concluding—while making an
Erie guess—that “under Texas law, undercapitalization alone would not be
sufficient to pierce the corporate veil”).
Based on the facts alleged by Hernandez, we conclude that the equitable
principle of alter ego does not apply to toll the statute of limitations. See Hooks,
457 S.W.3d at 59.
3. Joint Enterprise
Hernandez acknowledges that Supreme Court of Texas has not recognized
joint enterprise theory as an equitable principle that serves to toll statutes of
limitations. See Draughon, 631 S.W.3d at 93 (mentioning other equitable
principles that can toll statutes of limitations, such as alter ego and fraudulent
concealment, but making no reference to joint enterprise). Additionally, Hernandez
has not cited, and we have not found, authority to support the proposition that joint
enterprise theory can toll the statute of limitations. Nevertheless, Hernandez argues
that it is “illogical to assume that a joint tortfeasor can claim that a plaintiff’s claim
11
against him is barred by limitations when his fellow tortfeasor has been timely
sued for the plaintiff’s claims related to the joint enterprise.” We disagree with
Hernandez.
In Draughon, the Supreme Court of Texas noted that “[m]any of the
defensive issues that avoid limitations even though it has run are equitable in
nature and appear in Rules 93 and 94 [of the Texas Rules of Civil Procedure].” Id.
at 92. The supreme court observed that fraudulent concealment and alter ego—
both of which are “rooted in fraud”—are two examples of equitable defensive
issues that can toll a statute of limitations. Another equitable principle that can toll
limitations is estoppel. Id. at 93. Joint enterprise, however, is not an equitable
principle; rather, it is a theory of finding and imposing liability. Tex. Dep’t of
Transp. v. Able, 35 S.W.3d 608, 613 (Tex. 2000). We reject Hernandez’s argument
that alleging joint enterprise tolled the statute of limitations.
In summary, based on the facts alleged in Hernandez’s live petition, the
court below correctly concluded that Hernandez’s claims were barred by the statute
of limitations. Bethel, 595 S.W.3d at 658. Accordingly, we conclude the trial court
did not err in dismissing Hernandez’s claims against Cudco, Greg, and Jeff. See
Sanchez, 494 S.W.3d at 724–25. We overrule Hernandez’s sole issue.
III. CONCLUSION
We affirm the judgment of the trial court.
/s/ Margaret “Meg” Poissant
Justice
Panel consists of Justices Zimmerer, Spain, and Poissant.
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