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LLC v. Multi Service Corp.

Court of Appeals of Texas, Fifth District, Dallas

June 28, 2018

6200 GP, LLC, Appellant
v.
MULTI SERVICE CORPORATION, MULTI SERVICE TECHONOLOGY SOLUTIONS, INC., AND WORLD FUEL SERVICES CORPORATION, Appellees

          On Appeal from the 116th Judicial District Court Dallas County, Texas Trial Court Cause No. DC-13-13014

          Before Justices Francis, Brown, and Stoddart.

          MEMORANDUM OPINION

          MOLLY FRANCIS JUSTICE.

         6200 GP, LLC sued Multi Service Corporation (MSC), Multi Service Technology Solutions, Inc., and World Fuel Services Corporation for breach of agreements to which it was not a party. Appellees moved for summary judgment on the grounds that 6200 lacked capacity to sue and standing. The trial court granted appellees' motion and dismissed 6200 GP's claims with prejudice. In three issues, 6200 GP challenges the trial court's substantive and evidentiary rulings. Because we conclude 6200 GP raised a material fact issue on its right to sue, we reverse the trial court's summary judgment and remand for further proceedings consistent with this opinion.

         6200 GP is one of many wholly owned subsidiaries of Realty Advisor, Inc. (RAI). In its second amended petition, 6200 GP alleged that another RAI subsidiary, Prime Income Asset Management, Inc. (Prime), became involved as an investor with Resurgent Software, Inc. (RSI) in creating a maritime fueling system program that involved a product "designed to act like a credit card for ocean going vessels around the world" to buy bunker fuel. Because of "previous associations" with MSC and because MSC was already involved in maritime fueling, Prime "engaged MSC in discussions to create a joint venture to take advantage of the commercial market opportunity" and demonstrated to MSC the capabilities of the RSI software. In May 2010, Prime and MSC signed a preliminary memorandum of understanding to collaborate to form a joint venture to secure financing for and develop a software package based on the RSI software. Subsequently, Prime and its affiliates and MSC and its affiliates entered into a second Memorandum of Understanding and a Revised Memorandum of Understanding, both dated December 23, 2010 and both of which are at the heart of this dispute.

         According to 6200 GP's allegations, in the "non-binding" Revised MOU, Prime and MSC agreed to form a joint venture. Rather than base the software platform upon RSI's system, they agreed they would integrate the RSI platform into MSC's software platform as deemed necessary by MSC. Additionally, MSC agreed to form a new entity that would be owned 75% by MSC and 25% by Prime. Under the second MOU, MSC agreed that if it abandoned the joint venture but continued to operate in the maritime environment using assets contributed by Prime or RSI, it would pay a consulting fee. At the time of these agreements, 6200 GP did not exist; it was subsequently formed in April 2012.

         In December 2012, MSC was sold to World Fuels.[1] 6200 GP alleged that Prime was initially told the impact of the sale on their maritime program was "unknown" and that "business would continue as usual." But, by May 2013, Prime had been notified the MSC appellees would no longer pursue opportunities in the "maritime space." 6200 GP alleged, however, that World Fuels remained "heavily involved in fueling in the maritime space," including portions of the program that mimicked those proposed by RSI. 6200 GP alleged that rather than forming the joint venture or otherwise compensating Prime, the MSC appellees took the joint venture assets and misappropriated them "for their own ends." 6200 GP alleged it was an affiliate and successor-in-interest to Prime "relative to the project" and thus had standing to sue for injuries caused by the MSC appellees' wrongful acts and omissions, include the breaches of the agreements with Prime related to the maritime fueling payment system and software developed by RSI.

         Appellees filed verified denials of 6200 GP's capacity to sue and also pleaded lack of standing. MSC served discovery requests for documents related to "6200 GP's succeeding to the interest of Prime . . . or any other entity with interest relevant to" the claims in this case. When 6200 GP failed to produce responsive documents, MSC filed a motion to compel. After a hearing, the trial court granted the motion and ordered 6200 GP to produce "documents sufficient to clearly demonstrate any basis of Plaintiff's alleged right or standing (by ownership, assignment or otherwise) to assert the claims made by Plaintiff in this case, including any claimed right to [do] so as any 'affiliate' or 'successor' of Prime . . . or any other entity."

         In response, 6200 GP produced (1) a single-page "accounting summary" that shows the reclassification of an $847, 678.48 "Inv. In Resurgence" moving from Prime to other RAI entities, ending with 6200 GP, and (2) three sets of RAI unanimous corporate consent documents, each signed by RAI's sole director Mickey Ned Phillips, which "recognize, ratify, and approve" intercompany transactions that resulted in "Maritime Venture" being "contributed" to 6200 GP. The consents state the "Maritime Venture" includes Prime's interest in Resurgence and its agreements with MSC. It is undisputed the accounting summary and the corporate consent documents were created post-litigation in response to the trial court's order.

         After receiving the documents and deposing Phillips and Gene Bertcher, the corporate representative, appellees filed a traditional motion for summary judgment asserting 6200 GP lacked standing or capacity to sue for Prime's interests. Appellees argued 6200 GP did not have a legally binding assignment of Prime's rights against them, in part, because the only documents on which 6200 GP relied did not constitute assignments, did not exist before the lawsuit, and could not retroactively provide standing or capacity at the time 6200 GP filed suit. In support of their motion, appellees attached excerpts of the depositions of Phillips and Bertcher; Phillips' declaration in which he avers he has no personal knowledge of the transactions underlying the three unanimous consent documents; the three consent documents; an organizational chart; the accounting summary; the Revised MOU; and the second MOU.

         6200 GP filed a response, asserting that through a series of internal transfers, Prime transferred the underlying agreements and claims to 6200 GP. 6200 GP attached the affidavit of Daniel J. Moos, president of 6200 GP, Prime, RAI, and other RAI entities relevant to this appeal. Attached to Moos's affidavit were the same accounting summary, consent documents, MOU, and Revised MOU relied upon by appellees. 6200 GP asserted Moos's affidavit proved up the "chain of title" and demonstrated the claims in this suit were assigned to it in 2012. Moos testified the terms "Inv. In Resurgence" and "Maritime Venture" were synonymous, included the MSC agreements, and referred to the claims in this lawsuit. Moos also testified to the intercompany transactions that moved the "Maritime Venture" from Prime to 6200 GP. He further explained the transactions were documented in the accounting system as reflected in the accounting summary.

         In reply, appellees asserted 6200 GP's response contained no "contemporaneous evidence" that Prime assigned its interest in the MSC agreements at any time before the lawsuit was filed. Additionally, appellees objected to several paragraphs of Moos's affidavit as unsupported conclusions or legal conclusions.

         A hearing was held on appellees' motion. After the hearing, 6200 GP filed a motion for leave to supplement the evidence and attached two new pieces of evidence: (1) six pages of journal entries from RAI's computerized accounting system of general ledgers of the accounts referenced in the previously offered accounting summary and (2) a redacted work page from RAI's 2012 tax return showing 6200 GP had an $847, 678 investment as an asset. The transaction referenced in the journal entries is "Rcls Inv In Resurgence" in the amount of $847, 678.48. Like the accounting summary, the entries showed the asset moved from Prime ultimately to 6200 GP.

         The trial court granted appellees' motion and dismissed 6200 GP's claims with prejudice. Although the trial court did not separately rule on 6200 GP's motion for leave, the judgment states the trial court included the supplemental evidence in its review of the evidence. The day following the trial court's ruling, appellees filed written objections to the supplemental evidence. In part, they contended the journal entries at most provided evidence RAI "reclassified" Prime's $847, 678.48 investment in Resurgence, not Prime's ...


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