Summary
In Gore Family Ltd. P'ship, Ltd. v. Gore, No. 01-17-00165-CV, 2018 WL 3384554, at *2 (Tex. App.-Houston [1st Dist.] July 12, 2018, no pet.)
Summary of this case from Kivowitz v. DorfmanOpinion
NO. 01-17-00165-CV
07-12-2018
GORE FAMILY LIMITED PARTNERSHIP, LTD., Appellant v. GARY GORE ET AL, Appellee
On Appeal from the 412th Judicial District Court Brazoria County, Texas
Trial Court Case No. 90228-CV
MEMORANDUM OPINION
Appellant Gore Family Limited Partnership ("GFLP") attempts to appeal the trial court's rendition of partial summary judgment in favor of appellees, Raymond and Gary Gore, on their declaratory judgment action against Wright Gore Jr. GFLP lacks standing to bring this appeal. GFLP has been severed from this lawsuit; it is no longer a party to it. Moreover, the declaratory judgment entered in this lawsuit against Wright Gore Jr. does not prejudice GFLP. GFLP may defend its position in the severed cause of action.
Background
This appeal arises out of a dispute over a family business and centers on the validity of an attempted stock transfer into a family limited partnership.
Western Seafood Company (not a party to this appeal) was formed in 1955 by the parents of Wright Jr., Raymond, and Gary Gore ("the Gore parents"). When the three children were old enough to participate in the family business, the Gore parents decided to make them shareholders in Western Seafood, and in 1991, all five Gores entered into a Stockholders' Agreement.
Years later, the Gore parents set up a family limited partnership—GFLP, appellant in this case. In 2000, the Gore parents signed a Stock Power that purported to transfer Western Seafood stock into GFLP, making it the 54.28302% owner of Western Seafood.
In July 2013, Western Seafood and Wright Jr. were sued on a guarantee that Wright Jr. allegedly entered into in Western Seafood's name. This appeal arises out of appellees' petition in intervention filed in that suit.
In their sixth amended petition in intervention, appellees sought a declaration that the Gore parents' attempted transfer of stock shares to GFLP was void. They brought this action against Wright Jr.—not GFLP.
On September 18, 2015, appellees moved for partial summary judgment against Wright Jr. (and not GFLP) on their declaratory judgment claim. They argued that the stock transfer was void under the Shareholders' Agreement, which prohibited (subject to two inapplicable exceptions) and declared void the transfer of shares outside the family or a family trust. At the time that appellees moved for summary judgment, GFLP was not a party to the case. GFLP had neither answered nor appeared, and it was not covered by the summary judgment motion.
As part of his response, Wright Jr. argued that the motion was procedurally defective because GFLP was not a party to the lawsuit.
On October 12, 2015, the trial court held a hearing on appellees' motion for summary judgment and orally granted it, declaring (as to Wright Jr.) the transfer of stock void.
On the very same day, appellees filed their seventh amended petition. In it, they added GFLP to the lawsuit and asserted their declaratory judgment claim against it in addition to Wright Jr. Notably, they did not seek leave to amend their partial summary judgment motion to add GFLP. Nor did they file any other motion for summary judgment against GLFP on this issue.
On October 13, 2015, trial commenced on the other claims in the case. Several days in, all parties except GFLP reached a settlement releasing all claims asserted in this action, except claims against GFLP.
On February 3, 2017, the trial court signed an Order of Severance and Final Judgment. In that order, the trial court severed "the cause of action" between GFLP and appellees from the remaining cause of action and from the issues resolved in the settlement agreement. In connection with the severance, the court ordered that copies of filings pertaining to that severed action be placed in a new file with a new cause number. The court also officially granted appellees partial summary judgment against Wright Jr., declaring the stock transfer void. And the court acknowledged the settlement and release of the remaining claims among the brothers and various family businesses including Western Seafood, but not GFLP.
Analysis
Before considering the merits of the appeal, we first consider our jurisdiction. See Tex. Dep't of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 228 (Tex. 2004).
On this record, we conclude that GFLP lacks standing to bring this appeal. Standing requires a concrete injury to the claimant and a real controversy between the parties. Heckman v. Williamson Cty., 369 S.W.3d 137, 154 (Tex. 2012); Menetti v. Chavers, 974 S.W.2d 168, 171 (Tex. App.—San Antonio 1998, no pet.) ("On appeal, a party may only complain of error that injuriously affects that party."). The Texas Supreme Court has explained that the issue of standing "focuses on whether a party has a sufficient relationship with the lawsuit so as to have a 'justiciable interest' in its outcome." Austin Nursing Ctr., Inc. v. Lovato, 171 S.W.3d 845, 848 (Tex. 2005). A controversy must exist between the parties at every stage of the legal proceedings. Williams v. Lara, 52 S.W.3d 171, 184 (Tex. 2001). If a controversy ceases to exist, the case becomes moot and the parties lose standing to maintain their claims. Id.
Generally, only parties of record may appeal a final judgment. See, e.g., NXCESS Motor Cars, Inc. v. JPMorgan Chase Bank, N.A., 317 S.W.3d 462, 465 (Tex. App.—Houston [1st Dist.] 2010, pet. denied). Moreover, for a party of record to have standing on appeal, its interests must be prejudiced by the trial court's decision. Id. at 465-66 (party of record had standing to appeal summary judgment to which it was not party because summary judgment order prejudiced its interests).
Because the trial court severed the declaratory judgment action against GFLP into its own cause of action, GFLP was not a party of record in this action at the time the trial court entered the final judgment at issue. See id.; Avni v. Dosohs I, Ltd., No. 01-15-00459-CV, 2016 WL 2745421, at *3 (Tex. App.—Houston [1st Dist.] May 10, 2016, no pet.) (mem. op.) ("Dov Avni filed this notice of appeal in the main cause number, not the severed cause number. Dov Avni's filing of his notice of appeal in a cause in which he is no longer a party (2012-07323) is ineffective."); N.H. Ins. Co. v. Tobias, 80 S.W.3d 146, 148 (Tex. App.—Austin 2002, order) (where all claims involving third-party defendant had been placed into severed cause, third-party defendant was no longer a party to the original cause and could not appeal from original cause).
See also Interfirst Bank-Houston, N.A. v. Quintana Petrol. Corp., 699 S.W.2d 864, 878 (Tex. App.—Houston [1st Dist.] 1985, writ ref'd n.r.e.) ("Neither Texas American Bank nor RepublicBank were parties to that severed action, and they assert no other valid basis for standing to complain of the dismissal. No appeal was timely perfected from the final order dismissing the guardian ad litem, and the severed cause no. 94,467-C, by any party entitled to bring such an appeal, and this court is therefore without jurisdiction to review that decision." (internal citation omitted)).
Moreover, after being severed, GFLP no longer had an interest in this action beyond any potential prejudice to it caused by the declaratory judgment entered against Wright Jr. But any conceivable concern of prejudice here is alleviated by the Declaratory Judgment Act's dictate that a declaratory judgment does not prejudice nonparties. TEX. CIV. PRAC. & REM. CODE § 37.006(a) ("A declaration does not prejudice the rights of a person not a party to the proceeding.").
The record makes clear that GFLP was a nonparty for these purposes. Appellees sought summary judgment against Wright Jr. on the declaratory judgment action that appellees brought against Wright Jr. Appellees did not move for summary judgment against GFLP (which was added to the lawsuit the day the court granted summary judgment), and the court did not enter summary judgment against GFLP. Under the circumstances, the Uniform Declaratory Judgment Act expressly prevents the declaratory judgment entered against Wright Jr. from prejudicing the rights of GFLP. See id.; see also Brooks v. Northglen Ass'n, 141 S.W.3d 158, 163 (Tex. 2004) ("Section 37.006(a) of the Declaratory Judgment Act, which provides that a trial court's declaration does not prejudice the rights of any person not a party to the proceeding, dispenses with the first of these concerns. Any non-joined homeowner would be entitled to pursue individual claims contesting Northglen's authority to raise assessments or impose fees, notwithstanding the trial court's judgment in the current case." (internal citation omitted)); Childress v. Dairyland Cty. Mut. Ins. Co., 636 S.W.2d 282, 283-84 (Tex. App.—Eastland 1982) (trial court erred in finding that plaintiffs were bound by a declaratory judgment to which they were not parties), aff'd sub nom. on other grounds, Dairyland Cty. Mut. Ins. Co. of Tex. v. Childress, 650 S.W.2d 770 (Tex. 1983).
It would have been error for the court to grant summary judgment against GFLP. See La China v. The Woodlands Operating Co., L.P., 417 S.W.3d 516, 524-25 (Tex. App.—Houston [14th Dist.] 2013, no pet.) ("In its judgment, the trial court disposed of the claims against the New Defendants when no summary-judgment motion sought such dismissal. In doing so, the trial court erred."); see also TEX. R. CIV. P. 166a(a), (c) ("A party seeking to recover upon a claim, counterclaim, or cross-claim or to obtain a declaratory judgment may, at any time after the adverse party has appeared or answered, move with or without supporting affidavits for a summary judgment . . . . Except on leave of court, with notice to opposing counsel, the motion and any supporting affidavits shall be filed and served at least twenty-one days before the time specified for hearing." (emphasis added)); Teer v. Duddlesten, 664 S.W.2d 702, 703 (Tex. 1984) (trial court erred in entering summary judgment in favor of party that "was not a party to the summary judgment proceedings"); S. Mgmt. Servs., Inc. v. SM Energy Co., 398 S.W.3d 350, 358 (Tex. App.—Houston [14th Dist.] 2013, no pet.) (disposition of third-party claims not addressed in summary judgment motion was error).
For the same reasons, GFLP cannot appeal under the doctrine of virtual representation. State v. Naylor, 466 S.W.3d 783, 789 (Tex. 2015) (A third party may file an appeal where the prospective appellant is "'deemed to be a party' under the doctrine of virtual representation. But to benefit from that doctrine, the prospective appellant must establish: '(1) it is bound by the judgment; (2) its privity of estate, title, or interest appears from the record; and (3) there is an identity of interest between the appellant and a party to the judgment.'" (internal citation omitted)).
GFLP accordingly lacks standing to pursue this appeal. It may defend the validity of the stock transfer in its severed cause of action, "notwithstanding the trial court's judgment in the current case." Brooks, 141 S.W.3d at 163.
We thus dismiss for lack of jurisdiction. See id.; Avni, 2016 WL 2745421, at *3; Tobias, 80 S.W.3d at 148; see also Aguirre v. Phillips Props., Inc., 111 S.W.3d 328, 335 (Tex. App.—Corpus Christi 2003, pet. denied) (en banc) (co-defendant lacked standing to appeal from summary judgment granted in favor of another defendant when co-defendant and defendant did not have any cross-claims filed against each other, summary judgment did not dispose of plaintiffs' claims against co-defendant, and judgment did not adjudicate any liability on co-defendant's part); Mobil Expl. & Producing U.S. Inc. v. McDonald, 810 S.W.2d 887, 889-90 (Tex. App.—Beaumont 1991, writ denied) (company that obtained oil lease but was not party to suit lacked standing to seek review by writ of error from declaratory judgment suit).
Conclusion
We dismiss the appeal for want of jurisdiction. We dismiss any other pending motions as moot.
Jennifer Caughey
Justice Panel consists of Justices Bland, Lloyd, and Caughey.