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Vertical North America, Inc. v. Vopak Terminal Deer Park, Inc.

Court of Appeals of Texas, Fourteenth District

September 21, 2017

VERTICAL NORTH AMERICA, INC. N/K/A RAIZEN NORTH AMERICA, INC., Appellant
v.
VOPAK TERMINAL DEER PARK, INC., Appellee

         On Appeal from the 61st District Court Harris County, Texas Trial Court Cause No. 2012-33666

          Panel consists of Justices Jamison, Donovan, and Jewell.

          SUBSTITUTE MEMORANDUM OPINION

          John Donovan, Justice.

         We issued our opinion in this case on May 23, 2017. Thereafter, appellee Vopak Terminal Deer Park, Inc. ("Vopak") filed a motion for rehearing and motion for en banc reconsideration. Appellant Vertical North America, Inc., n/k/a Raizen North American, Inc. ("Vertical NA") filed a response. We withdraw our previous opinion, vacate our previous judgment, and issue this substitute opinion and judgment. We deny Vopak's motion for rehearing and deny as moot Vopak's motion for en banc reconsideration.

         Vertical NA brings this appeal from an order in favor of Vopak dismissing Vertical NA's suit for want of jurisdiction. We reverse and remand.

         Vertical NA, a Houston-based ethanol trader and distributor, entered into a series of contracts with Vopak, a terminaling company that provides bulk tank storage service. At the time those agreements were signed, Vertical NA was a corporate subsidiary of Vertical UK LLP. On August 25, 2011, Vertical UK entered into a Purchase and Sale Agreement ("PSA"), selling all shares of Vertical NA to Raizen Trading LLP. Vertical NA filed suit against Vopak in June 2012 for breach of contract and fraud. In July 2015, Vopak moved to dismiss the suit on the basis Vertical NA lacked standing "because it does not own the claims it is asserting." The trial court granted Vopak's motion and dismissed the suit for want of jurisdiction.

         In its first issue, Vertical NA contends the trial court erred in concluding it lacked standing. In the trial court, Vopak asserted Vertical NA lacked standing to assert its claims because after execution of the PSA those claims were owned by Vertical UK. Vertical NA countered that Vopak's complaint was one of capacity rather than standing. In the hearing on Vopak's motion to dismiss, Vertical NA again urged this argument, stating "there is a very serious issue as to whether this is a question of standing or a question of capacity. . . . It's an issue of capacity. And they've long since waived their right to raise an issue of capacity." In its brief, Vertical NA notes that if the issue were treated as a question of capacity, rather than standing, the trial court's judgment must be vacated because Vopak did not file a verified answer challenging Vertical NA's capacity to bring this suit. See Tex. R. Civ. P. 93.

         A plaintiff must have both standing and capacity to bring a lawsuit. Austin Nursing Ctr., Inc. v. Lovato, 171 S.W.3d 845, 848 (Tex. 2005). "A plaintiff has standing when it is personally aggrieved, regardless of whether it is acting with legal authority; a party has capacity when it has the legal authority to act, regardless of whether it has a justiciable interest in the controversy." Lovato, 171 S.W.3d at 848-49 (quoting Nootsie, Ltd. v. Williamson Cty. Appraisal Dist., 925 S.W.2d 659, 661 (Tex. 1996) (emphasis in the original)). A plaintiff may have capacity even if it has no legally cognizable interest in the outcome of the case. AVCO Corp., Textron Lycoming Reciprocating Engine Div. of AVCO Corp. v. Interstate Sw., Ltd., 251 S.W.3d 632, 649 (Tex. App.-Houston [14th Dist.] 2007, pet. denied).

         A challenge to who owns a claim raises the issue of capacity, not standing, and requires compliance with Rule 93, including the requirement to file a verified pleading. Tex.R.Civ.P. 93(1); Pledger v. Schoellkopf, 762 S.W.2d 145, 145-46 (Tex. 1988) (concluding contention that corporation rather than plaintiff shareholder owned fraud and tortious interference claims challenged capacity to sue and was waived); Town Ctr. Mall, L.P. v. Dyer, No. 02-14-00268-CV, 2015 WL 5770583, *3 (Tex. App.-Fort Worth Oct. 1, 2015, pet. denied) (mem. op.) ("[a] challenge to who owns a claim raises the issue of capacity, not standing."); Rhey v. Redic, 408 S.W.3d 440, 456 (Tex. App.-El Paso 2013, no pet.); Dakil v. Lege, 408 S.W.3d 9, 11 (Tex. App.-El Paso 2012, no pet.); Haase v. GIM Res., Inc., No. 01-09-00696-CV, 2010 WL 3294247, *3 (Tex. App.-Houston [1st Dist.] Aug. 19, 2010, no pet.) (mem. op.); Prostok v. Browning, 112 S.W.3d 876, 921 (Tex. App.-Dallas 2003), aff'd in part, rev'd in part on other grounds, 165 S.W.3d 336 (Tex. 2005); Southwest Indus. Inv. Co. v. Berkeley House Inv'rs, 695 S.W.2d 615, 617 (Tex. App.-Dallas 1985, writ ref'd n.r.e.) (appellant waived issue of whether plaintiff owned the asserted contract claim by failing to comply with Rule 93). In Pledger, the plaintiff was an individual shareholder who sued other shareholders of the same company. Pledger, 762 S.W.2d at 145. The defendants contended the claims belonged to the company, not to the individual plaintiff. Id. at 145-46. Although the Supreme Court did not decide who owned the claims, it nonetheless held that the defendant's argument was foreclosed by their failure to comply with Texas Rule of Civil Procedure 93(2). Id. at 146. Like the defendants in Pledger, Vopak is contending that Vertical NA cannot assert claims that allegedly belong to someone else.

         Although standing can never be waived, the issue of capacity to sue is waived both at trial and on appeal if it is not challenged by a verified pleading. See Tex. Ass'n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 445-46 (Tex. 1993); see also Nootsie, 925 S.W.2d at 662. "The Texas Rules of Civil Procedure require that a defendant challenging a plaintiff's capacity to sue raise the matter by verified pleading, if lack of capacity is not evident from the petition." Intracare Hosp. N. v. Campbell, 222 S.W.3d 790, 793 n. 2 (Tex. App.-Houston [1st Dist.] 2007, no pet.)); Tex.R.Civ.P. 93. The defendant bears the burden to challenge a plaintiff's capacity to sue. Lovato, 171 S.W.3d at 853 n. 7; Intracare Hosp. N., 222 S.W.3d at 793 n. 2.

         Vertical NA's lack of capacity, if any, is not evident from its first amended petition. The record does not reflect, and Vopak does not assert, that it satisfied the requirements of Rule 93. Accordingly, we do not address that issue on its merits. See Fitness Evolution, L.P. v. Headhunter Fitness, L.L.C., No. 05-13-00506-CV, 2015 WL 6750047, at *1, 18 (Tex. App.-Dallas Nov. 4, 2015, no pet.) (mem. op.).

         Vopak's sole challenge to Vertical NA's standing was its lack of ownership of the claims brought. Because Vopak's ownership argument goes to capacity, not standing, it does not raise a question of subject matter jurisdiction. See Prostok, 112 S.W.3d at 921.

         Ultimately, whether Vopak's argument that the claims are owned by Vertical UK presents an issue of capacity or standing is not outcome determinative because we conclude that Vertical NA retains a sufficient interest in the suit to confer standing. Because standing is a component of subject matter jurisdiction and may be raised at any time, we address the question of Vertical NA's standing. See Tex. Ass'n of Bus., 852 S.W.2d at 443. The question of standing centers 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. The standing doctrine in Texas requires a real controversy between the parties that will be actually determined by the judicial declaration sought. Nootsie, 925 S.W.2d at 662 (citing Tex. Ass'n of Bus. 852 S.W.2d at 443-44). A plaintiff has standing when it is personally aggrieved, Lovato, 171 S.W.3d at 848, or has a personal stake in the controversy. Nootsie, 925 S.W.2d at 661.

         To determine Vertical NA's standing, and hence the trial court's jurisdiction, we consider the facts alleged in the petition and any evidence submitted to the trial court which is pertinent to the jurisdictional issue. See Tex. Natural Res. Conservation Comm'n v. White, 46 S.W.3d 864, 868 (Tex. 2001). Vertical NA's pleadings claim that it was the party injured by Vopak's alleged breach of contract and fraud because it entered into a contractual relationship with Vopak in reliance upon Vopak's alleged misrepresentations. Vopak has not disputed that it entered into contracts with Vertical NA. As the personally aggrieved party, Vertical NA has standing to assert the claims against Vopak unless the record shows that it is completely divested of any justiciable interest. See Lovato, 171 S.W.3d at 848; see generally River Consulting, Inc. v. Sullivan, 848 S.W.2d 165, 169 (Tex. App.- Houston [1st Dist.] 1992, writ denied) ("An assignee may maintain in its own name any action that the assignor may have ...


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