Court of Appeals of Texas, Sixth District, Texarkana
Submitted: January 18, 2017
Appeal from the 87th District Court Freestone County, Texas
Trial Court No. 10-030-B-1
Morriss, C.J., Moseley and Burgess, JJ.
K. Burgess Justice
Automotive LP d/b/a Bossier Dodge (Automotive) sued
RLJ-McLarty-Landers Automotive Group (RLJ) for tortious
interference with a franchise agreement, interference with
prospective business relations, unfair competition by
misappropriation, quantum meruit, unjust enrichment, fraud,
and civil conspiracy. RLJ filed a motion for summary
judgment, claiming it lacked the legal capacity to be sued.
The trial court agreed and granted RLJ summary judgment.
Automotive appeals, claiming (1) RLJ waived the right to
assert absence of legal capacity, (2) RLJ did not establish
entitlement to summary judgment as a matter of law, and (3)
the trial court erred in implicitly denying RLJ's motion
for a continuance of the summary judgment.
RLJ did not waive its right to assert the absence of legal
capacity, RLJ failed to prove its entitlement to summary
judgment as a matter of law. We, therefore, reverse the trial
court's summary judgment order and remand to the trial
court for further proceedings.
2010, Automotive sued RML Waxahachie Dodge, LLC (Waxahachie
Dodge), RML Waxahachie Ford, LLC, (Waxahachie Ford) RML
Waxahachie GMC, LLC (Waxahachie GMC), RML-McLarty-Landers
Automotive Holdings, LLC (RML), and RLJ-McLarty-Landers
Automotive Group (RLJ) in the 87th Judicial District Court of
Freestone County,  claiming that Waxahachie Dodge breached an
asset purchase agreement between it and Automotive and that
all defendants tortiously interfered with Automotive's
franchise agreements with Chrysler and with prospective
business and contractual relations. Automotive also claimed that
the various defendants committed civil conspiracy and were
guilty of unfair competition by
misappropriation. Automotive alleged that RLJ "is a
partnership with offices at 425 West Capitol, Suite 3810,
Little Rock, Arkansas 72201, " and further alleged that
"[defendants are all part of an automotive dealership
conglomerate known as the RLJ-McLarty-Landers Automotive
Group, which is run by Arkansas car dealer Steve Landers. . .
. The principals of this Landers partnership group are
Landers himself, Robert Johnson . . . and Thomas
'Mack' McLarty. . . ." Third party defendants
Scott Bossier and W. Randy Pretzer also filed counterclaims
against all defendants, including RLJ.
RML, Waxahachie Ford, Waxahachie Dodge, Waxahachie GMC, and
RLJ jointly filed a general denial answer to the lawsuit and
asserted what were termed "affirmative
defenses." RLJ also filed a verified denial of its
existence as a separate legal entity:
Defendant also specifically denies that the named Defendant
"RLJ-McLarty-Landers Automotive Group" is a
separate entity. The Defendants have, in the past, referred
to RLJ-McLarty-Landers Automotive Holdings, LLC as
"RLJ-McLarty-Landers Automotive Group" to reflect
the separate auto dealership entities in which
RLJ-McLarty-Landers Automotive Holdings, LLC holds an
ownership interest, but it is nothing more than an informal
reference to several limited liability companies with a
this verified answer was filed on October 7, 2010.
the defendants also filed a verified answer to Automotive and
Pretzer's counterclaims specifically denying RLJ's
status as a partnership or separate entity and containing the
same language included in RLJ's October 2010 verified
answer. Those verified answers were filed in September 2010.
Thereafter, each of the defendants filed verified answers to
Automotive's amended petition in October 2010, again
specifically denying RLJ's status as a partnership or
October, 2010, RML, Waxahachie Ford, Waxahachie GMC, and
Waxahachie Dodge (the Answering Defendants) responded to
Automotive's discovery requests. In a footnote to their
collective response, the Answering Defendants explained that
each "filed a verified denial denying that [RLJ] is a
separate legal entity with the capacity to be sued. No
answers to this discovery request are on behalf of the party
named [RLJ]." Automotive then filed a motion to compel
discovery in which it complained, among other things, that
"[RLJ] has unreasonably refused to respond to any
discovery, despite it being a valid party to this case and
despite it having already answered the Original
Answering Defendants filed a motion for protective order,
seeking to have the discovery purportedly served on RLJ
quashed and to prohibit any future discovery against RLJ. The
substance of the argument-made in January 2011-is almost
identical to the argument set forth in the motion for summary
judgment filed by RLJ in 2015. After a hearing on
Automotive's motion to compel discovery, the trial court
entered a protective order in February 2011 precluding any
discovery on RLJ and denied Automotive's motion as to any
requested relief from RLJ.
March 2011, the trial court granted the summary judgment
motions of defendants Waxahachie Dodge, Waxahachie Ford,
Waxahachie GMC, and RML. Those defendants thereafter filed a
motion to sever Plaintiffs' claims against RLJ, which
motion was granted by the trial court. After the severance,
RLJ filed a traditional and no-evidence motion for summary
judgment in November 2011, claiming that the trial
court's summary judgment against the severed defendants
applied with equal force and effect to it. RLJ specifically
stated that, by filing the motion, it did not admit that it
is a partnership or entity with the capacity to be sued and
that it did not waive any argument that it is not a
partnership with the capacity to be sued. The motion
otherwise did not mention RLJ's capacity to sue or to be
sued. The trial court granted RLJ's traditional motion
for summary judgment in December 2011.
filed its traditional motion for partial summary judgment in
July 2015, asking the court to find that it is not an entity
with the capacity to be sued, claiming that it did not exist
as a separate legal entity apart from RLJ-McLarty-Landers
Automotive Holdings, LLC. Concurrent with the filing of that
motion, RLJ filed a verified denial stating that it is not an
entity with the capacity to be sued.
August 2015, Automotive filed its verified motion for
continuance of the summary judgment motion and sought to
enlarge the discovery period in order to secure discovery to
properly respond to RLJ's motion for summary judgment.
Specifically, Automotive requested the opportunity to depose
Robert Johnson and Paul Hart,  the individuals who executed
affidavits in support of RLJ's motion for summary
judgment. In May 2016, the trial court entered its
"Order Granting Defendants' Traditional Motion for
Partial Summary Judgment Regarding Capacity of [RLJ],
" thereby implicitly overruling
Automotive's motion for continuance.
RLJ Did Not Waive the Right to Assert Absence of Legal
contends that, because RLJ did not file a verified denial of
its legal capacity to be sued until July 2015-over five years
after the litigation began-it has waived its right to assert
lack of capacity. It therefore contends that, because RLJ
waived its capacity claim, the trial court erred in granting
summary judgment. We disagree.
relies on Sixth RMA Partners, L.P. v. Sibley, 111
S.W.3d 46 (Tex. 2003), in support of this assertion. In that
case, however, the court held that a party may waive the
argument that an opposing party lacks capacity if it does not
raise that issue in the trial court. Id. at 56.
Because the issue of capacity was unquestionably raised in
the trial court, Sibley does not support
Automotive's waiver argument.
the law is clear that a party who fails to file a verified
denial waives any capacity defense. See Werner v.
Colwell, 909 S.W.2d 866, 870 (Tex. 1995) (holding that
party who fails to file verified denial waives any complaint
of judgment rendered in capacity in which party was sued);
W.O.S. Const. Co. v. Hanyard, 684 S.W.2d 675, 676
(Tex. 1985) (in failing to file verified denial, party can be
held liable in either capacities in which he was
sued). Here, there is no question that RLJ
filed a verified denial. We cannot conclude that the verified
denial was untimely filed, or that the filing of such denial
prejudiced Automotive's rights.
Farms, Inc. v. Gibralter Savings Association, 618 S.W.2d
81 (Tex. App.- Houston [1st Dist.] 1980, writ ref'd
n.r.e.), addresses the reverse of this issue. In that case,
Bluebonnet sued Gibraltar for breach of a loan commitment
contract. Id. at 82. Gibraltar filed a general
denial answer. Four years later, Gibraltar filed an amended
verified answer alleging lack of Bluebonnet's capacity to
sue. Id. at 83. Accompanying that answer was a
motion for summary judgment in which Gibraltar alleged
Bluebonnet had forfeited its corporate charter by failing to
pay franchise taxes. Gibraltar further alleged that more than
four years had elapsed since the alleged breach of contract
and Bluebonnet's loss of corporate status, thus barring
Bluebonnet's claim by limitations. Id. The trial
court granted the motion for summary judgment. Id.
appellate court reversed, finding that Gibraltar had waived
its plea in abatement. This decision was based on an implied
finding that Bluebonnet was prejudiced by the plea in
abatement, because the "shareholders of the corporation
could have carried on this litigation and had every right to
do so, once the corporation knew that appellee questioned its
status." Id. at 84. Basically, Gibraltar's
strategy was to wait until limitations ran to file the plea
in abatement. The court found that strategy inherently unfair
and in derogation of "the purpose for the Texas Rules of
Civil Procedure and the special purpose of a plea in
abatement, " both of which are designed to aid the
speedy disposition of litigation on the merits. Id.
therefore, called on to examine the equities of the situation
to determine whether RLJ's verified plea was timely
filed. See Develo-cepts, Inc. v. City of Galveston,
668 S.W.2d 790, 793 (Tex. App-Houston [14th Dist] 1984, no
pet.) (finding that plea in abatement filed two and one-half
years after suit was filed was not waived because parties
conducted discovery which provided information necessary to
urge plea and defect could not have been cured with amended
pleadings) (citing Bluebonnet Farms, 618 S.W.2d at
examination of the equities in this context includes
consideration not only of the passage of time, but also the
actions of the party seeking to rely on the plea in abatement
or verified plea and whether any delay in the filing of the
plea was harmful or prejudicial to the opposing party.
See In re Luby's Cafeterias, Inc., 979 S.W.2d
813, 817-18 (Tex. App-Houston [14th Dist.] 1998, no pet.);
Develo-cepts, Inc., 668 S.W.2d at 793;
Bluebonnet Farms, 618 S.W.2d at 84; Howell v.
Mauzy, 899 S.W.2d 690, 698 (Tex. App-Austin 1994, writ
denied.) (plea seeking abatement of lawsuit properly denied
when plaintiffs in first-filed suit affirmatively represented
to court in second-filed suit that it had jurisdiction).
filed a verified plea alleging its lack of capacity in 2010.
Thereafter, in response to Automotive's amended petition
in October 2010, each of the defendants filed a verified plea
alleging RLJ's lack of capacity. The opening paragraph of
RLJ's verified answer avers that
"RLJ-McLarty-Landers Automotive Holdings, LLC, also
incorrectly listed as a separate defendant under the name
'RLJ-McLarty-Landers Automotive Group, ' . . .
submits the following Answer. . . ."
addition to those verified answers, which specifically denied
RLJ's capacity to be sued, Automotive was advised that
RLJ would not answer discovery because it was not a legal
entity. The trial court agreed with that position and entered
a protective order in early 2011 precluding Automotive from
propounding any further discovery on RLJ. Finally, after the
case was remanded to the trial court, RLJ filed yet another
verified denial stating that it was not an entity with the
capacity to be sued, a position it had consistently
maintained since 2010.
Automotive was on notice from 2010 forward that RLJ and the
remaining defendants claimed that RLJ lacked the legal
capacity to be sued. RLJ filed three verified pleas stating
as much-two in 2010 and a third in 2015. Automotive,
therefore, cannot claim that it was prejudiced by the passage
of time or by any delay by RLJ in filing a verified plea
denying the legal capacity to be sued. This is especially
true in light of the trial court's 2011 protective order.
further contends, though, that RLJ waived the right to assert
lack of legal capacity because RLJ already let the issue of
its capacity to sue and be sued go to final judgment and to
an appeal. Although it does not elaborate on this statement,
it apparently is based on the fact that RLJ filed a
traditional and no-evidence motion for summary judgment after
the severance in November 2011 on the basis of collateral
estoppel. The issue of capacity was not raised in that
motion. The trial court granted the motion for summary
judgment in December 2011. Automotive again relies on
Sibley in support of this claim. Sibley is
not on point and merely holds that "any challenge that
[appellant's] failure to file an assumed name certificate
precludes its suit was waived because it was not properly
raised in the trial court." Sibley, 111 S.W.3d
the issue of capacity was raised in the trial court. The
question of whether this issue was waived by the filing of a
motion for summary judgment on the issue of collateral
estoppel was not briefed. See Tex. R. App. P. 38.1.
Moreover, RLJ specifically stated that, by filing the motion
for summary judgment, it did not admit that it is a
partnership or entity with the capacity to be sued and that
it did not waive any argument that it is not a partnership
with the capacity to be sued. We overrule this point of
RLJ Failed to Establish Entitlement to Summary Judgment as a
Matter of Law
Summary Judgment Standard of Review
conduct a de novo review of an order granting a traditional
motion for summary judgment. Provident Life &
Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex.
2003); Miers v. Tex. A&M Univ. Sys. Health Sci.
Ctr., 311 S.W.3d 577, 578 (Tex. App-Waco 2009, no pet).
In our review, we deem as true all evidence which is
favorable to the nonmovant, indulge every reasonable
inference to be drawn from the evidence, and resolve any
doubts in the nonmovant's favor. Valence Operating
Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). When
the trial court does not specify the basis for its ruling, we
must affirm a summary judgment if any of the grounds on which
judgment is sought are meritorious. Merriman v. XTO
Energy, Inc., 407 S.W.3d 244, 248 (Tex. 2013).
entitled to traditional summary judgment, a movant must
establish that there is no genuine issue of material fact so
that the movant is entitled to judgment as a matter of law.
Tex.R.Civ.P. 166a(c); Mann Frankfort Stein & Lipp
Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex.
2009). Once the movant produces evidence entitling it to
summary judgment, the burden shifts to the nonmovant to
present evidence raising a genuine issue of material fact.
Walker v. Harris, 924 S.W.2d 375, 377 (Tex. 1996). A
defendant who conclusively negates a single essential element
of a cause of action is entitled to summary judgment on that
claim. Frost Nat l Bank v. Fernandez, 315 S.W.3d
494, 508-09 (Tex. 2010).
motion for summary judgment attached certain evidence in
support of its lack of capacity claim. That evidence included
each of the above-described verified denials, as well as the
affidavits of Robert Johnson, one of the purported
participants in the partnership, and Paul Hart, CEO of RLJ
McLarty-Landers-Automotive Holdings, LLC. The
affidavits attempt to explain certain deposition testimony
given by the affiants which supports Automotive's claim
that RLJ is a legal entity. Beyond that, Hart and Johnson
both testified that:
(1) "RLJ-McLarty-Landers Automotive Group" does not
maintain a separate set of books and records, does not have
its own accounts, and does not file separate tax returns.
(2) "RLJ-McLarty-Landers Automotive Group" does not
exist as a separate legal entity apart from
RLJ-McLarty-Landers Automotive Holdings, LLC.
"RLJ-McLarty-Landers Automotive Group" is not a
separate entity from RLJ-McLarty-Landers Automotive Holdings,
LLC. Some officers and directors of RLJ-McLarty-Landers
Automotive Holdings, LLC, including myself, have, in the
past, internally referred to RLJ-McLarty-Landers Automotive
Holdings, LLC as "RLJ-McLarty-Landers Automotive
Group" to reflect the separate auto dealership entities
in which RLJ-McLarty-Landers Automotive Holdings, LLC holds
an ownership interest, but it is nothing more than an
informal reference to several limited liability companies
with a common member.
this evidence, Automotive claims that summary judgment should
have been denied because genuine fact issues exist regarding
the type and the scope of RLJ's "corporate
structure." This argument is based on Automotive's
contention that RLJ's previous admissions, testimony, and
documentary evidence show that it is a partnership and was,
therefore, a proper party to Automotive's lawsuit.
Automotive contends that this evidence-outlined below-raises
a genuine issue of material fact as to RLJ's status under
the Arkansas Uniform Partnership Act (Act).
RLJ's Answer to Automotive's Adversary
Complaint in the Bankruptcy Court
contends that RLJ's answer to the complaint in the
bankruptcy court raises a genuine issue of material fact
regarding RLJ's existence as a partnership sufficient to
defeat summary judgment. That answer, unlike the answer filed
in state court, includes a specific admission of partnership:
"The Non-Contracting Defendants admit that
RLJ-McLarty-Landers Automotive Group is an Arkansas based
in trial pleadings are judicial admissions in the case in
which the pleadings are filed; the facts judicially
admitted require no proof and preclude the introduction of
evidence to the contrary." In re A.E.A., 406
S.W.3d 404, 410 (Tex. App -Fort Worth 2013, no pet.)
(emphasis added); see also Hous. First Am. Sav. v.
Musick, 650 S.W.2d 764, 767 (Tex. 1983). A judicial
admission is conclusive upon the party making it, relieves
the opposing party's burden of proving the admitted fact,
and bars the admitting party from disputing it.
A.E.A., 406 S.W.3d at 410 (citing Hennigan v.
IP. Petroleum Co., 858 S.W.2d 371, 372 (Tex. 1993)).
"[p]leadings in another case that are inconsistent with
a party's position in a present case, unlike judicial
admissions, are not always conclusive on the admitter, but
may be considered evidence which the admitter may explain,
contradict, or deny." Louviere v. Hearst Corp.,
269 S.W.3d 750, 754 (Tex. App-Beaumont 2008, no pet.);
see also Velco Chems., Inc. v. Polimeri Europa Am.,
Inc., No. 14-03-00395-CV, 2004 WL 1965643, at *4-5 (Tex.
App - Houston [14th Dist] Sept. 7, 2004, no pet.) (mem. op.).
Although they are generally not conclusive, Cameron Cty.
v. Velasquez, 668 S.W.2d 776, 782-83 (Tex. App-Corpus
Christi 1984, writ ref d n.r.e.) (op. on reh'g)
(citations omitted),  such pleadings are treated as
"some evidence." Daimler-Benz
Aktiengesellschaft v. Olson, 21 S.W.3d 707, 718 (Tex.
App-Austin 2000, pet. dism'd w.o.j.).
we need not decide whether RLJ's admission of partnership
status in its answer to the complaint in the bankruptcy court
is a judicial admission, or merely a quasi-admission.
Regardless of the category into which this admission falls,
it constitutes some evidence of RLJ's partnership
Paul Hart's Testimony
to his affidavit filed in support of RLJ's motion for
summary judgment, Hart is the Chief Financial Officer of
RLJ-McLarty-Landers Automotive Holdings, LLC. In March
2010, Hart gave deposition testimony in connection with the
adversary case filed in the bankruptcy matter. Automotive
relies on the following testimony given by Hart in that
Q. The RLJ-McLarty-Landers Automotive Group of which you are
the CFO is a partnership, isn't it?
A. It is.
Q. Between the RLJ companies. Correct?
Q. And McLarty-Landers Automotive. Right?
Q. And the RLJ companies are associated with someone named
Robert Johnson. ...