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Dr. Charles E. Willis, Ii; Ivan v. Peter G. Marshall; Peter Marshall & Company

April 24, 2013

DR. CHARLES E. WILLIS, II; IVAN
MOORHEAD; JOHN PLAIN; DR. RANEE GUMM, INDIVIDUALLY AND
AS TRUSTEE OF ELIZABETH ASHLEY GUMM LIVING TRUST AND WILLIAM
WILLEY GUMM LIVING TRUST; DR. WILLIAM GUMM, INDIVIDUALLY
AND AS TRUSTEE OF ELIZABETH ASHLEY GUMM LIVING TRUST AND § WILLIAM WILLEY GUMM LIVING TRUST; BREW PARTNERS, L.P.; KEN § 431ST GROSSNER; GEORGE AND SHARON TILLOTSON; AND GORDON AND §JEANETTE MARTIN, APPELLANTS,
v.
PETER G. MARSHALL; PETER MARSHALL & COMPANY, P.C., AND SUMMERS MARSHALL & COMPANY, P.C.,
APPELLEES.



Appeal from the District Court of Denton County, Texas (TC# 2008-30297-211)

The opinion of the court was delivered by: Guadalupe Rivera, Justice

OPINION

Appellants, Dr. Charles E. Willis, II, Ivan Moorhead, John Plain, Dr. Ranee Gumm, individually and as Trustee of Elizabeth Ashley Gumm Living Trust and William Willey Gumm Living Trust, Dr. William Gumm, individually and as Trustee of Elizabeth Ashley Gumm Living Trust and William Willey Gumm Living Trust, BREW Partners, L.P., Ken Grossner, George and Sharon Tillotson, and Gordon and Jeanette Martin, (Appellants) appeal the trial court's summary judgment in favor of Appellees, Peter G. Marshall, Peter Marshall & Company, P.C., and Summers Marshall & Company, P.C., ("Marshall").*fn1 We affirm.

BACKGROUND

Factual Background

In 1999, Danny Tuinei formed Imaging Specialists Group, Ltd. (ISG), a limited partnership. Imaging Specialists, Inc. (ISI) was the general partner of ISG, and Tuinei was a 50 percent owner and served as President of ISI. As a limited partner, ISG owned 99 percent of Diagnostic Imaging Specialists, Ltd. (DIS). ISG and DIS thus shared common ownership. However the ownership of ISG and DIS was not common to Tuinei's ownership interests in several other entities, which included Plano Oncology Center, Ltd. (POC), Plano Professional Building, Ltd. (PPB) and 3T Medical Imaging Management, Inc. (3T).

In a letter dated February 10, 2004, Tuinei requested and obtained permission from John R. Albers and Russ Melbye to make partnership financial information available to "a potential investor" who was possibly interested in acquiring the respective partnership interests of the Albers Family Partnership and Melbye & Associates, Inc. in ISG and DIS. Tuinei sought permission to disclose this information so that he could pursue "these investors" and in turn acquire the Albers and Melbye partnership interests. The potential investor or investors are not identified within the correspondence.

It is undisputed that in October 2004, Tuinei hired Marshall to perform accounting services for ISG and DIS. In November 2004, the Albers Family Partnership filed suit against Tuinei and ISI for breach of contract, breach of fiduciary duty, exemplary damages, injunctive relief and for an accounting of the partnership alleging in part that Tuinei, as managing partner, had failed to prepare an annual report detailing ISG's financial information and had diverted ISG's funds for personal use.*fn2 In December 2004, at Tuinei's request and for Tuinei's use, Marshall prepared reports of various financial scenarios involving the financing and buyout of the then-existing limited partnership interests in ISG and DIS. Marshall thereafter prepared two types of Combined Financial Statements and Accountant's Compilation Reports (statement and compilation reports) for periods ending December 31, 2002, December 31, 2003,*fn3 and October 31, 2004, utilizing both accelerated and straightline depreciation.*fn4 Each page of the combined financial statement bore the note, "See Accountant's Compilation Report." Each of the statements and compilation reports was accompanied by a disclaimer letter addressed from Marshall "To the Partners" of ISG and DIS.

In March 2005, Appellants executed agreements to become new limited partners in ISG and DIS. After Appellants became limited partners, Marshall continued providing accounting services for ISG and DIS.

Marshall prepared statements and compilation reports for the periods ending March 31 2005, December 31, 2005, and March 2006.*fn5 These statements and compilation reports also included Marshall's disclaimer letter "To the Partners." The December 2005 and March 2006 documents differed from the prior statements and reports because they included a current-asset line item denominated, "A/R-Other," rather than "Due from Partners." Each page of the combined financial statements for these periods again advised the reader to see the accountant's compilation report. The accountant's compilation reports for December 2005 included balance sheets containing a breakdown of the accounts receivable, which included Tuinei's entities, POC, PPB, and 3T.

Procedural Background

Appellants sued Marshall alleging negligence, negligent misrepresentation, fraudulent inducement and conspiracy, exemplary damages, violations of the Texas Securities Act, statutory fraud under the Texas Business and Commerce Code, and seeking attorneys' fees and other relief. Appellees filed a hybrid motion seeking a no-evidence summary judgment as to each cause of action and a traditional summary judgment on Appellants' negligence, negligent misrepresentation, fraudulent inducement, statutory fraud, and Texas Security Act causes of action. Finding no evidence to support Appellant's claims of "fraudulent inducement/statutory fraud" and Texas Security Act claims, the trial court granted Appellees' no-evidence summary judgment motion. Finding no genuine issue of material fact, the trial court also granted Appellees' motion for traditional summary judgment. On appeal, Appellants complain the trial court erred in granting summary judgment because probative evidence raised genuine issues of material fact on "issues of law."

STANDING

Appellee challenges Appellants' standing to bring suit. A plaintiff must have standing to bring a lawsuit. Austin Nursing Ctr., Inc. v. Lovato, 171 S.W.3d 845, 848 (Tex. 2005); City of Arlington v. Centerfolds, Inc., 232 S.W.3d 238, 244 (Tex. App. -- Fort Worth 2007, pet. denied). Standing is a component of a court's subject-matter jurisdiction and can be raised for the first time on appeal. Tex. Ass'n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 446 (Tex. 1993); Nauslar v. Coors Brewing Co., 170 S.W.3d 242, 248 (Tex. App. -- Dallas 2005, no pet.). The plaintiff has the burden of alleging facts that affirmatively demonstrate a court's jurisdiction to hear a cause. Tex. Ass'n of Bus., 852 S.W.2d at 446; Nauslar, 170 S.W.3d at 248. When considering jurisdictional issues for the first time on appeal, we construe the petition in favor of the party, and if necessary, we determine whether any evidence supports standing by reviewing the entire record. Tex. Ass'n of Bus , 852 S.W.2d at 446. Without standing, a court lacks subject matter jurisdiction to hear the case. Lovato, 171 S.W.3d at 849; Tex. Ass'n of Bus., 852 S.W.2d at 443; City of Arlington, 232 S.W.3d at 244.

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. Lovato, 171 S.W.3d at 848; City of Arlington, 232 S.W.3d at 244. Standing, therefore, focuses on who may bring an action, and is concerned with whether the claimant has a particularized injury distinct from that suffered by the general public. M.D. Anderson Cancer Ctr. v. Novak, 52 S.W.3d 704, 708 (Tex. 2001) (who may bring an action); Bland ISD v. Blue, 34 S.W.3d 547, 555-56 (Tex. 2000); City of Arlington, 232 S.W.3d at 244 (particularized injury). Standing requires that there be a real controversy between the parties that will actually be determined by the judicial declaration sought. Lovato, 171 S.W.3d at 849; City of Arlington, 232 S.W.3d at 244. This means that litigants must be "properly situated to be entitled to [a] judicial determination." Lovato, 171 S.W.3d at 849, quoting 13 CHARLES ALAN WRIGHT, ARTHUR R. MILLER, AND EDWARD H. COOPER, WRIGHT, MILLER &

COOPER, FEDERAL PRACTICE AND PROCEDURE: JURISDICTION 2d § 3531, at 338--39 (2d ed.1984).

A person who is personally aggrieved by the alleged wrong has standing to sue. Nootsie Ltd. v. Williamson County Appraisal Dist., 925 S.W.2d 659, 661 (Tex. 1996). A person has standing if (1) he has sustained, or is immediately in danger of sustaining, some direct injury as a result of the wrongful act of which he complains; (2) he has a direct relationship between the alleged injury and claim sought to be adjudicated; (3) he has a personal stake in the controversy;

(4) the challenged action has caused the plaintiff some injury in fact, either economic, recreational, environmental, or otherwise; or (5) he is an appropriate party to assert the public's interest in the matter, as well as his own. Nauslar, 170 S.W.3d at 249.

A plaintiff has no standing to litigate without a breach of a legal right belonging to the plaintiff. Nobles v. Marcus, 533 S.W.2d 923, 927 (Tex. 1976) ("Without breach of a legal right belonging to the plaintiff no cause of action can accrue to his benefit."); Nauslar, 170 S.W.3d at 249; Cadle Co. v. Lobingier, 50 S.W.3d 662, 669--70 (Tex. App. -- Fort Worth 2001, pet. denied); Brunson v. Woolsey, 63 S.W.3d 583, 587 (Tex. App. -- Fort Worth 2001, no pet.). Only the person whose primary legal right has been breached may seek redress for an injury. Nobles, 533 S.W.2d at 927. An individual stakeholder in a legal entity does not have a right to recover personally for harms done to the legal entity. Wingate v. Hajdik, 795 S.W.2d 717, 719 (Tex. 1990); Nauslar, 170 S.W.3d at 250, citing Cates v. Int'l Tel. & Tel. Corp., 756 F.2d 1161 (5th Cir. 1985) (a partner has no individual, separate cause of action for losses suffered by reason of tortious interference with a contract between the partnership and a third party: damages for loss in value of the partnership interest or employment losses are subsumed in the partnership's causes of action).

Application

The primary legal right to pursue a personal cause of action against Marshall for harms done to ISG belongs not to its limited partners but to ISG. Wingate, 795 S.W.2d at 719; Nobles, 533 S.W.2d at 927; Nauslar, 170 S.W.3d at 249; Cadle Co., 50 S.W.3d at 669--70; Brunson, 63 S.W.3d at 587. Thus, upon becoming limited partners of ISG in March 2005, Appellants were without standing to recover personally for any harms Marshall may have committed upon Appellants or ISG. See Nauslar, 170 S.W.3d at 250. Because Appellants have no standing as limited partners to pursue relief against Marshall for breach of any legal right belonging to ISG, no subject-matter jurisdiction exists to consider Appellants' personal causes of action based upon their partnership interests for harms allegedly accruing to them or to ISG. See Nauslar, 170 S.W.3d at 250-51; Tex. Ass'n of Bus., 852 S.W.2d at 446.

DISCUSSION

It is undisputed that Appellants were not limited partners of ISG before March 2005. We therefore consider the trial court's grant of summary judgment regarding Appellants' pre-investment claims.

Appellants assert the trial court erred in granting summary judgment in favor of Appellees because Appellants presented probative evidence raising genuine issues of material fact regarding Appellees' alleged: (1) negligence; (2) omissions and negligent misrepresentations; (3) fraudulent inducement and engagement in a common plan, device, scheme, or artifice to deceive Appellants into purchasing and retaining partnership interests; (4) willful, intentional, and reckless violations and aiding and abetting of Texas Securities Act violations; and (5) acts ...


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