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Corley v. Hendricks

Court of Appeals of Texas, Second District, Fort Worth

April 27, 2017






         Appellant Don Corley Jr.[2] appeals from the trial court's granting of a no-evidence motion for summary judgment in favor of Appellees Dan Hendricks and Gaylan Hendricks on his cause of action for theft under the Texas Theft Liability Act (the TTLA). He argues in one issue that the trial court erred by granting no-evidence summary judgment for the Hendrickses, denying his motion for reconsideration, and awarding attorney's fees to the Hendrickses under the TTLA. Because we hold that the trial court erred by granting summary judgment and abused its discretion by denying the motion for reconsideration, we reverse and remand.

         I. Background

         Corley and Dan began operating an insurance brokerage company called Senior Security Benefits, Inc. (SSBI) in 2003.[3] They later gave shares to Dan's wife Gaylan, splitting SSBI's ownership among the three. For several years, they ran the business together as directors and officers.

         In 2014, Gaylan, acting as SSBI's CEO, informed Corley that SSBI was terminating his employment and that he would no longer receive the profit distributions from SSBI. The Hendrickses also removed Corley as an officer and director of SSBI and denied him access to SSBI's books and records.

         Corley then filed this lawsuit against the Hendrickses. By amended petition, he asserted claims for breach of fiduciary duty, theft under the TTLA, fraud, and civil conspiracy, as well as a shareholder's derivative action under Texas Business Organizations Code section 21.563. Tex. Bus. Orgs. Code Ann. § 21.563 (West 2012).

         During the course of the lawsuit, Corley hired an expert to conduct a forensic audit of SSBI's Quicken accounting records, which Gaylan initially refused to provide to Corley, producing them only after the intervention of Corley's attorney. The expert discovered that Gaylan had moved $2.4 million from SSBI's retained earnings account to Gaylan's personal account. The entry was made on February 12, 2014 but backdated to appear on SSBI's books on December 24, 2013, which was before Corley's termination.

         The expert also discovered that on the same day as the $2.4 million transfer, other entries were made in the records that recharacterized commission distributions made to Gaylan from sales of insurance products to an SSBI customer, Countrywide Healthcare Solutions, Inc. (Countrywide), as repayments on a personal loan from Gaylan to SSBI. The sales to Countrywide had been made by SSBI employees, the commissions were paid to SSBI, and no documentation showed an agreement that Gaylan would receive the commissions individually for such sales. The Hendrickses, however, contended that the $2.4 million was Gaylan's property because it arose from a separate arrangement she had made with Countrywide.

         In pretrial discovery, Corley also learned the Hendrickses had used corporate funds to pay for family vacations. He further discovered that Gaylan had appropriated commissions under a "letter of understanding" with another SSBI customer, Central United Life Insurance Company (CUL). Gaylan, as a representative of SSBI, signed an agreement with CUL under which SSBI would earn commissions on sales by SSBI staff on CUL insurance products plus a two percent override on "all new premium[s] written on CUL's Affordable Choice insurance product." Gaylan had the override commissions paid under that agreement deposited into her personal bank account, having given CUL a direct deposit form for that account to use to deposit the commissions.

         The Hendrickses filed a motion for no-evidence summary judgment on Corley's theft claim under the TTLA, asserting that there was no evidence that they acted without the consent of SSBI regarding the Countrywide and CUL transactions or the use of SSBI funds to pay for family vacations. They argued that because Gaylan and Dan were officers and directors of SSBI at the time of Gaylan's actions, her actions had the effective consent of SSBI. In his summary judgment response, Corley attached:

• His own affidavit, in which he stated that he was a member of SSBI's board at the time of the complained-of transactions and that he had no ...

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