KERWIN STEPHENS; THUNDERBIRD OIL & GAS, LLC; THUNDERBIRD RESOURCES, LLC; THUNDERBIRD LAND SERVICES, LLC; STEPHENS & MYERS, LLP; AND CHESTER CARROLL, Appellants
THREE FINGER BLACK SHALE PARTNERSHIP; TREK RESOURCES, INC.; TIBURON LAND & CATTLE, L.P.; L.W. HUNT RESOURCES, LLC; AND RICHARD RAUGHTON, Appellees and L.W. HUNT RESOURCES, LLC AND RICHARD RAUGHTON, INDIVIDUALLY AND AS SUCCESSOR IN INTEREST OF ARAPAHO ENERGY, LLC, Cross-Appellants
KERWIN STEPHENS; THUNDERBIRD OIL & GAS, LLC; THUNDERBIRD RESOURCES, LLC; THUNDERBIRD LAND SERVICES, LLC; STEPHENS & MYERS, LLP; AND CHESTER CARROLL, Cross-Appellees
Appeal from the 32nd District Court Fisher County, Texas
Trial Court Cause No. DC-2013-0016
consists of: Bailey, C.J., Willson, J., and Wright, S.C.J.
WRIGHT SENIOR CHIEF JUSTICE
December 31, 2018, we issued our original opinion and
judgment in this appeal. We now withdraw that opinion and
judgment. There are several reasons behind the withdrawal of
the opinion and judgment. First, after we had issued our
original opinion in this case, and while motions for
rehearing were pending, the Texas Supreme Court decided
Agar Corp. v. Electro Circuits Int'l, LLC, No.
17-0630, 2019 WL 1495211 (Tex. April 5, 2019). As a result of
the holding in that case, on our own motion, we find it
necessary to withdraw our prior opinion and judgment and
substitute a new opinion and judgment in which we analyze
Intervenors' civil conspiracy claims in accordance with
Agar. Furthermore, our Agar-informed
holding on the Intervenors' civil conspiracy claims
requires us to consider two additional matters pointed out by
Kerwin Stephens and Stephens & Myers, LLP in their motion
for rehearing: agency (course and scope) and the affirmative
defense of release. We have, in this substituted opinion,
considered those matters but overrule those portions of the
motion for rehearing. Additionally, Stephens and Stephens
& Myers, in their motion for rehearing, ask us to
reconsider that portion of our original opinion that pertains
to the disgorgement judgment against Stephens & Myers. We
grant that portion of the motion for rehearing. All other
portions of Stephens and Stephens & Myers' motion for
rehearing are overruled. Tiburon Land & Cattle, L.P.;
Trek Resources, Inc.; and the Three Finger Black Shale
Partnership have also filed a motion for rehearing. We
overrule that motion.
withdraw our opinion and judgment of December 31, 2018, and
the following is now the opinion of the court. We reverse and
render in part, affirm in part, and remand in part.
appeal is a continuation of the saga of a controversy that
surrounds a speculative project to buy oil and gas leases in
Fisher County and to subsequently sell, or flip, them at a
profit. Chester Carroll; Kerwin Stephens; Thunderbird Oil
& Gas, LLC; Thunderbird Resources, LLC; Thunderbird Land
Services, LLC; and Stephens & Myers, LLP appeal from an
adverse judgment entered against them after a jury trial. The
jury found against them on discrete theories and in various
amounts as to each Appellant in most of the questions that
the trial court submitted to the jury; the total amount of
the jury's award exceeded $96 million. The trial court
subsequently entered a judgment in the approximate amount of
$50 million. Part of the money judgment was in favor of Three
Finger Black Shale Partnership, some in favor of L.W. Hunt
Resources, LLC, and a portion in favor of Richard Raughton.
We reverse and render in part, affirm in part, and remand the
case finds its genesis in 2011 when Raughton discovered that
there were indications of significant interest in oil and gas
properties in Fisher County. This interest corresponded to
geological studies that Raughton had conducted. Raughton
holds a degree in geology with a concentration in
engineering. The record contains evidence that Raughton and
his son, Dustin, had performed geological studies of the
shale formation that became the target of the oil and gas
project that is the basis of this lawsuit.
addition to his degree in geology, Raughton also attended
medical school and practiced medicine until medical problems
prevented him from continuing that practice. During the time
that Raughton practiced medicine, he participated financially
and otherwise in oil and gas deals, including some deals with
Carroll. When he closed his medical practice, Raughton began
to focus on oil and gas related business opportunities. One
of the subjects of that focus was the Fisher County project
that is the subject of this lawsuit.
contacted his friend Lowry Hunt and asked Hunt to participate
with him in a project to profit from the Fisher County oil
play. Raughton and Hunt are somewhat related; Dustin is
married to Hunt's daughter, Kellye.
Hunt, Dustin, and Kellye were the original participants in
the project. Later, Raughton asked Carroll to join the
theretofore family group. Hunt also knew Carroll, and he and
Carroll had invested in wells together. Stephens, an
attorney, was also invited to participate in the project.
Stephens had performed various legal services for Raughton
and some of his entities in other matters, and they had also
done deals together, including some in the Barnett Shale oil
play. Stephens had also represented one of Hunt's
entities. Additionally, the record contains testimony that
Raughton and Hunt asked Stephens to join the group because he
had legal expertise and could perform title work.
Hunt, Carroll, and Stephens, with an eye toward ultimately
flipping Fisher County oil and gas leases for a profit, each
pledged to invest $125, 000 (the record contains testimony
that Raughton put up Carroll's share for him). They
continued to acquire oil and gas leases and options for oil
and gas leases in Fisher County. These parties did not enter
into a written agreement; they operated on a
October 2011, Raughton, Carroll, Hunt, and Stephens needed
additional money to continue the project. As a source of
additional funding, Carroll recruited Tom Taylor, an
letter agreement dated October 7, 2011, known as the
"Alpine Letter Agreement," Raughton, Carroll, Hunt,
Stephens, and Taylor set out the terms under which they or
their entities would proceed with the Fisher County project.
Those named in the Alpine Letter Agreement as members of the
"Alpine Group" (and those who signed for those
members) were (1) Alpine Petroleum (by Carroll); (2)
Thunderbird Oil & Gas, LLC (by its sole member,
Stephens); (3) Arapaho Energy, LLC (by its manager,
Raughton); and (4) L.W. Hunt Resources, LLC (by its manager,
Hunt). Paradigm Petroleum Corporation, acting by its
president, Taylor, was also a party to the Alpine Letter
Agreement, but was not a member of the "Alpine
Group." Paradigm and the members of the Alpine Group
"accepted and agreed to" the terms of the October 7
Alpine Letter Agreement at least by October 18, 2011.
Thunderbird Oil was the only Stephens entity that was a party
to the Alpine Letter Agreement.
Alpine Letter Agreement contained a provision that Paradigm
was to contribute $4, 500, 000 to the project and that the
Alpine Group was to contribute, collectively, $500, 000.
Paradigm's contribution was not to become due until after
the Alpine Group had contributed its share for lease and
option acquisitions and related expenses. The Alpine Group
agreed to transfer to Paradigm all the oil and gas leases and
options "that it holds" as described in exhibits to
the Alpine Letter Agreement. Future leases and options were
to be taken in Paradigm's name. Decisions as to future
leases and options, the scope of the project, and the terms
of any future leases and options were at Paradigm's sole
discretion and direction.
Alpine Letter Agreement contained provisions for the division
of the proceeds from sales. After payout, proceeds from sales
of oil and gas leases were to be paid 82% to Paradigm and 18%
to the "Alpine Group." Although Thunderbird Land
was not a named party to the Alpine Letter Agreement, the
named parties specified that Thunderbird Land, Stephens's
wholly owned landman entity, was to provide landman services
for the project and that it would "charge its normal
customary rates" for those services.
Alpine Letter Agreement contained the following provision:
It is not intended and it is agreed that the parties have not
entered into and do not enter into any partnership, joint
venture or agency relationship. None of the parties owe a
fiduciary duty or obligation to the other and the
relationship shall be considered as a normal customary
commercial relationship with the ownership interest of the
parties in and to the properties the subject of this letter
agreement as provided herein.
found investors who agreed to provide a portion of the $4,
500, 000 contribution that his company, Paradigm, had agreed
to furnish under the terms of the Alpine Letter Agreement.
The investors that Taylor recruited signed what they entitled
"Participation Agreement." The title to that
document reads as follows:
FINGER/BLACK SHALE PROSPECT FISHER COUNTY, TEXAS
Paradigm Petroleum Corporation and Partners Dated October 18,
Participation Agreement, the investors referred to themselves
in some places as "Parties" and at other places as
"Partners." The term "Parties," as
defined in the agreement, referred to "Paradigm and
Partners." Those persons or entities that were
designated in the agreement as "Partners" were the
"Parties" that signed the agreement as
"Partners." Paradigm was a "Party," not a
"Partner," as evidenced by (1) language such as,
"Should any Partner and/or Paradigm acquire . . .,"
and (2) the inclusion of Taylor's name in the signature
blocks of the Participation Agreement as president of
Paradigm, not as "Partner." Michael E. Montgomery,
as president of Trek Resources, Inc.; Collin Clark, for
Tiburon Land and Cattle; and Will Lett were among those whose
names appeared in the signature blocks in the October 18
Participation Agreement as "Partners." There were
eight named "Partners" to the Participation
Agreement, including Tiburon, Trek, and Lett. Ultimately,
Tiburon and Trek pleaded that the Participation Agreement
resulted in the creation of a partnership known as Three
Finger Black Shale Partnership. They pleaded that they
represented not only their own interests, but also Three
terms of the Participation Agreement, Paradigm was to
contribute $1, 000, 000; each of the additional parties
agreed to contribute $500, 000 each. The Participation
Agreement contained other terms by which the signatories
defined the relationship among the parties to the agreement.
Among those other terms was a provision that Paradigm was to
receive a 20% interest before payout and a 36% interest after
payout; each of the other parties was entitled to a 10%
interest before payout and an 8% interest after payout. Each
of the parties was also entitled to its percentage interest
in any overriding royalties that were reserved in sales of
two additional documents, various changes were made to the
Participation Agreement. One such change involved the
amendment of the Participation Agreement. Another of the
changes came in an addendum to the Participation Agreement
made necessary by the need for additional cash for the
project. Both the original Participation Agreement and the
amended one had effective dates of October 18, 2011.
one of Taylor's companies, was listed as a
"Party," but not a "Partner," in the
original Participation Agreement. In both the amended
Participation Agreement and in the addendum, Lazy T Royalty
Management, LTD, another of Taylor's companies, was
substituted for Paradigm. Furthermore, Paradigm's status
was reduced to one of "agent for the Parties." The
Alpine Group, although not listed as a party in the original
Participation Agreement, appeared as a "Party" in
the amended Participation Agreement and in the addendum to
the Participation Agreement. Although the basic nature of the
relationship-except for the changes relative to Lazy T and
Paradigm-was not altered by the terms of either the amended
Participation Agreement or the addendum to the Participation
Agreement, the composition of the participants changed; the
number of participants and the percentages of participation
remained the same.
record reveals that the Alpine Group did not make a $500, 000
contribution in addition to the one provided for in the
Alpine Letter Agreement; neither does the record show that
Carroll or Alpine Petroleum made any additional
contributions. The evidence also shows that Paradigm's
commitment was never fully funded.
January 2012, Devon Energy Production Company, L.P. agreed,
as evidenced by a purchase and sale agreement executed by
Devon and Paradigm, to buy 25, 000 net mineral acres of oil
and gas leases for $900 per acre. The Devon agreement was to
be effective as of January 27, 2012, and the agreement
included an "option" provision whereby Devon agreed
that it would not take oil and gas leases from Fisher County
mineral owners directly. In return, Devon was given the right
to purchase additional Fisher County acreage that Paradigm
and associates might acquire in the future.
the Participation Agreement and subsequent amendments
proposed that 25, 000 net mineral acres were involved in the
project, Devon's initial purchase comprised leases on 30,
000 net mineral acres, rather than 25, 000 net mineral acres
as initially discussed. As a part of the Devon transaction,
Devon was to make a down payment of $2, 500, 000. Devon was
to pay the balance of the $22, 500, 000 purchase price
(subject to adjustment for title defects) upon delivery of an
assignment of the leases from Paradigm and Carroll to Devon.
Devon had purchased 30, 000 net mineral acres, Devon
personnel told Taylor that Devon wanted more acreage. The
record reflects that Taylor told Stephens that his group of
investors was not interested in taking the project any
further. Taylor said, however, that he was interested.
before the initial Devon deal closed, Stephens, claiming that
his deal with the Alpine Group was not fair, renegotiated the
deal with the Alpine Group. Under the new deal, Stephens
received a larger share of the profits from the sale of the
oil and gas leases than initially agreed upon. Raughton and
Hunt allege that they later learned that the reasons that
Stephens gave them for needing a new agreement were false.
correspondence dated June 29, 2012, Taylor addressed a letter
to "Partners." In addition to various accounting
documents and other documents related to the project, the
correspondence contained a "Termination of Participation
Agreement," to be effective June 1, 2012. Basically, the
agreement contained provisions to the effect that the project
contemplated in the participation agreements was over, that
everyone was satisfied with the project, and that everyone
released everyone else from all claims. Tiburon, Trek, and
Lett did not sign the termination agreement; all others did.
evidence shows that Taylor, Stephens, and Carroll, knowing
that Devon was interested in acquiring leases of more mineral
acreage, continued to buy Fisher County oil and gas leases,
but they did so on their own, to the exclusion of the
"Partners" in the amended Participation Agreement
and, to some extent, Raughton and Hunt Resources. The record
contains evidence that initially, at least, Taylor, Stephens,
and Carroll used money from the initial sale to Devon-money
that belonged to Plaintiffs-to fund the acquisition of the
additional acreage. An exhibit in the record indicates that
an additional 27, 700 gross acres had been identified as what
was termed "Post Contract Acquired Leases." Devon
ultimately bought a total of 43, 602.79 acres.
point in time, it came to light that Taylor, Stephens, and
Carroll had sold leases on more than the initial 30, 000
acres but that the proceeds of those sales were not shared
with those involved in the participation agreements. When it
did not receive satisfactory responses to its inquiries about
the additional acreage, Tiburon filed this lawsuit.
was the only plaintiff named in the original petition. The
named defendants were Thomas J. Taylor; Lazy T Royalty
Management, LTD; Lazy T Royalty, LLC; Paradigm Petroleum
Corporation; and the Alpine Group.
second amended petition, Tiburon brought Trek into the
lawsuit as an additional plaintiff. In this petition, the
plaintiffs added Chester Carroll; Kerwin Stephens;
Thunderbird Oil & Gas, LLC; and Thunderbird Resources,
LLC as additional defendants.
and Hunt Resources intervened in the lawsuit and added
Thunderbird Land Services, LLC and Alpine Petroleum as
defendants. Raughton and Hunt Resources asserted claims
against the defendants for breach of fiduciary duty, fraud,
and breach of contract. In an amended plea in intervention,
Raughton and Hunt Resources added Sarah Kate Jones, as the
independent executrix of the Estate of Thomas J. Taylor,
deceased; they alleged that Taylor died on or about July 18,
2014. They also added Stephens & Myers, LLP; Snowmass
Energy Partners Ltd.; and Gail Goebel Stephens. Raughton and Hunt
added allegations of violations of fiduciary duties that they
claim were owed to them by Stephens and his law firm,
Stephens & Myers, as their attorneys.
and Trek filed various amended petitions. Three Finger, the
alleged partnership, was ultimately added as a plaintiff. The
live petition upon which the trial began was denominated
"Plaintiffs' Seventh Amended Petition."
seventh amended petition, Tiburon, Trek, and Three Finger
alleged that Three Finger was a partnership that was formed
pursuant to the Participation Agreement. Because the
plaintiffs ultimately elected to recover on claims due to
Three Finger, rather than their individual claims, we will
concentrate on the claims of Three Finger.
crux of one of the plaintiffs' complaints in this lawsuit
is that Devon's down payment was used to show that
Taylor, through his companies, had fully funded his
contributions under the participation agreements and the
addendum, when, in fact, he had not. The percentage interests
shown in the amended Participation Agreement were based upon
the percentage of contributions. Therefore, giving Taylor, or
his entities, credit as though he had fully funded his
contribution, when he had not, had the result of effectively
reducing the percentages that the other parties to the
Participation Agreement rightfully would have been entitled
to if Taylor, or his entities, had not received credit for
contributions never made.
Finger maintains that Lazy T and Paradigm failed to fully
fund their share of the required contributions and then
concealed that failure and that, in doing so, they breached
their fiduciary duties to Three Finger relative to the sale
of the initial 30, 000 acres to Devon. Three Finger
additionally contends that Carroll, Stephens, and the
Thunderbird entities knowingly participated in that breach
and additionally that they were a part of a conspiracy to
bring it about. Three Finger also claims that Thunderbird
Land wrongfully made charges to the initial project that
were, in fact, attributable to subsequent deals from which
the defendants wrongfully excluded Three Finger.
as the issues that control this appeal, Three Finger
basically claims that Taylor, through Paradigm and Lazy T,
breached fiduciary duties owed to Three Finger in connection
with the calculation and distribution of the proceeds from
the sale of leases on the initial 30, 000 acres. The
miscalculation and distribution were tied to Taylor's
entities' failure to fully fund their share in the
participation and were also tied to erroneous charges made by
Finger claims that through creative, albeit dishonest,
accounting, Taylor made it appear that he, through his
entities, had funded his required contribution when he had
not fully funded it. For instance, Three Finger says that the
Devon down payment was, in part, shown as contributions that
Taylor's entities were to have made under the
participation agreements and the addendum. As we have said,
Appellants argue that to give Taylor, or his entities, credit
for contributions never made would effectively reduce the
percentages that Three Finger rightfully would have been
entitled to if Taylor, or his entities, had not received
credit for contributions never made.
Finger also claims that Stephens, Thunderbird Oil,
Thunderbird Land, and Thunderbird Resources knowingly
participated in those breaches related to Three Finger.
Additionally, Three Finger claims that there was a conspiracy
to accomplish those breaches. There are other claims, but, at
this point, suffice it to say that Three Finger basically
takes the position that one or more of the appellants,
individually or collectively, had lied, cheated, and stolen
from them and overtly, covertly, silently, and via creative
accounting procedures had attempted to execute a cover-up of
their ill-intentioned activities. The result of those
activities, as well as overcharges by Thunderbird Land, was
that Three Finger did not receive its rightful share of the
profits from the sale of either the initial deal for 30, 000
acres or in connection with the sales of additional acreage.
died while this case was pending in the trial court. Before
the trial of this case commenced, Trek, Tiburon, Lett
(although not a party to the lawsuit), Three Finger, Hunt
Resources, and Raughton (individually and purportedly as
Trustee of Arapaho Energy LLC) settled their claims against
Taylor's estate and his entities for $4.4 million. The
settlement agreement contains a statement that the effective
date of the agreement was July 27, 2015.
rather extensive pretrial matters, this case went to trial
before a jury on July 28, 2015, the day after the Taylor
settlement. The clerk's record indicates that the clerk
of the trial court filed the court's charge to the jury
on August 19, 2015. At the conclusion of the three-week
trial, the trial court gave the jury a 69-page jury charge
that contained 54 questions, many of which contained multiple
parts. Subsequently, the jury returned its verdict, and on
March 30, 2016, the trial court entered its judgment.
judgment, the trial court reduced the award of the jury and
entered a final judgment of almost $50 million in favor of
Three Finger and Intervenors, including actual damages and
exemplary damages. The total of the exemplary damages, as
found by the jury and as awarded by the trial court, were as
follows: against Stephens in the amount of $10, 500, 000;
against Thunderbird Land in the amount of $9, 500, 000;
against Thunderbird Oil in the amount of $3, 000, 000;
against Thunderbird Resources in the amount of $3, 000, 000;
and against Carroll in the amount of $8, 000, 000, for a
total in exemplary damages of $34, 000, 000. Obviously, the
jury was not overly enamored with Appellants.
final judgment, the trial court awarded Three Finger actual
damages of $4, 560, 433 against Stephens, Thunderbird Oil,
Thunderbird Land, and Thunderbird Resources, jointly and
severally, specifically for, as stated by the trial court in
its judgment, "injuries sustained because of [A] the
contribution failures of entities affiliated with . . .
Taylor and [B] Thunderbird Land's role in determining and
charging expenses to the Project for the Initial 30, 000
Acres." The trial court did not specify how much of the
actual damage award was for contribution failures and how
much of the award represented actual damages suffered due to
expense overcharges. Alternatively, the trial court awarded
that identical sum of money in favor of Three Finger against
Stephens, Thunderbird Oil, Thunderbird Land, and Thunderbird
Resources under its equitable powers to award
"disgorgement and restitution."
in connection with the damages awarded to Three Finger in
that portion of its judgment related to the contribution
failures of the Taylor entities and Thunderbird Land's
role in determining and charging expenses to the project for
the initial 30, 000 acres, the trial court awarded exemplary
damages to Three Finger against Stephens, as found by the
jury, in the amount of $2, 500, 000 and also awarded $1, 500,
000 in exemplary damages to Three Finger against Thunderbird
Land, again, as found by the jury.
trial court also awarded Three Finger a judgment against
Stephens, Thunderbird Land, and Carroll, jointly and
severally, in the amount of $6, 584, 440 for damages that
related to its exclusion from transactions over and above the
initial 30, 000 acres. Alternatively, the trial court awarded
that identical sum of money in favor of Three Finger against
Stephens, Thunderbird Land, and Carroll under its equitable
powers to award "disgorgement and restitution."
Further, in connection with the damages awarded to Three
Finger against Stephens, Thunderbird Land, and Carroll as
related to the exclusion claim, the trial court awarded
exemplary damages to Three Finger against each of those
Appellants in the amount of $5, 000, 000, as found by the
jury also found the amounts that should be paid to Tiburon
and Trek, as individual entities, that resulted from damages
caused by Appellants. However, the trial court did not enter
a judgment for individual recovery because Tiburon and
Trek-purported members of Three Finger-elected to recover
damages that resulted from breach of fiduciary duties owed to
judgment, the trial court awarded other relief for claims
that pertained to Hunt Resources. It also entered a judgment
for Raughton, individually. We reserve our review of the
merits of those claims until later in this opinion.
original brief, Stephens categorizes his issues on appeal
under nine general headings. Each of those headings contains
subcategories. In those subcategories, Stephens has alleged
49 reasons why the trial court's judgment is, as to
various constituent parts, in error. In six issues on appeal,
Thunderbird Resources offers 29 reasons to reverse the trial
court. In eight issues on appeal, Thunderbird Land offers 47
reasons, and Thunderbird Oil & Gas, 39 reasons. In two
issues on appeal, Stephens & Myers offers six reasons.
Although the Thunderbird entities are Stephens's
wholly-owned entities, because some of the claims are unique
to a specific entity, Stephens and each Thunderbird entity
have filed separate briefs. Additionally, as is provided for
in this instance in Rule 9.7 of the Texas Rules of Appellate
Procedure, each of them has also incorporated, at least in
part, the other Stephens-related parties' briefs by
reference. Tex.R.App.P. 9.7.
has also filed a separate brief. In his brief, Carroll, under
eight stated issues on appeal, offers 20 reasons to reverse
the judgment of the trial court.
as a cross-appellant, in two issues, complains about the
trial court's summary judgment in which it ruled that he
did not have standing to recover damages to Arapaho, the
entity through which he participated in the project. Again,
we will discuss those issues later in this opinion.
it implicates subject-matter jurisdiction, we must first
resolve the issue raised by Stephens and the Stephens-related
entities that Three Finger did not have standing to sue for
any duties owed Paradigm and that Three Finger had no
standing to recover any "distributions" awarded in
connection with the sale of the initial 30, 000 acres Three
Finger counters that Stephens and his entities have confused
standing issues with capacity questions.
concerning subject-matter jurisdiction, such as standing, can
be raised in a motion for summary judgment. See Bland
Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 554 (Tex.
2000). A traditional motion for summary judgment can only be
granted if the defendant establishes as a matter of law that
the plaintiff lacks subject-matter jurisdiction. See
Tex. R. Civ. P. 166a(c). In a plea to the jurisdiction as
well as in a traditional motion for summary judgment, the
defendant bears the burden of proving the trial court's
lack of jurisdiction. See Nixon v. Mr. Prop. Mgmt.
Co., 690 S.W.2d 546, 548 (Tex. 1985) (holding
"movant for summary judgment has the burden of showing
that there is no genuine issue of material fact and that it
is entitled to judgment as a matter of law"). When
pleadings affirmatively negate the existence of jurisdiction,
a summary judgment based on jurisdictional grounds may be
granted without allowing an opportunity to amend. Green
Tree Servicing, LLC v. Woods, 388 S.W.3d 785, 793 (Tex.
App.-Houston [1st Dist.] 2012, no pet.).
must have both standing to sue and capacity to sue.
Austin Nursing Ctr., Inc. v. Lovato, 171 S.W.3d 845,
848 (Tex. 2005). Standing is a component of subject-matter
jurisdiction, and a plaintiff must have standing to maintain
a suit. Tex. Ass'n of Bus. v. Tex. Air Control
Bd., 852 S.W.2d 440, 445-47 (Tex. 1993). We review
standing issues de novo. Id. at 445. Parties may
raise a standing issue for the first time on appeal; it
cannot be waived. Lovato, 171 S.W.3d at 848. "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." Id. at 848-49
(quoting Nootsie, Ltd. v. Williamson Cty. Appraisal
Dist., 925 S.W.2d 659, 661 (Tex. 1996)). The controversy
between the parties must be real and one that will be
determined by the "judicial declaration" sought.
Lovato, 171 S.W.3d at 849 (quoting Nootsie,
925 S.W.2d at 662). When we review a standing issue for the
first time on appeal, we are to construe the petition in
favor of the party who files the petition. City of Laredo
v. R. Vela Exxon, Inc., 966 S.W.2d 673, 679 (Tex.
App.-San Antonio 1998, pet. denied).
Spurgeon, we referred to the following language from
the Texas Supreme Court in Lovato:
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, whereas the
issue of capacity "is conceived of as a
procedural issue dealing with the personal qualifications of
a party to litigate." 6A Charles Alan Wright, Arthur R.
Miller, and Mary Kay Kane, Wright, Miller & Kane, Federal
Practice and Procedure: Civil 2d § 1559, at 441 (2d ed.
Spurgeon v. Coan & Elliott, 180 S.W.3d 593, 597
(Tex. App.-Eastland 2005, no pet.) (quoting Lovato,
171 S.W.3d at 848).
court in Nauslar said this about standing:
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 v. Coors Brewing Co., 170 S.W.3d 242, 249
(Tex. App.-Dallas 2005, no pet.).
absence of a breach of some legal right belonging to a
plaintiff, that plaintiff has no standing to litigate.
Nauslar, 170 S.W.3d at 249. "Only the person
whose primary legal right has been breached may seek redress
for an injury." Hall v. Douglas, 380 S.W.3d
860, 873 (Tex. App.-Dallas 2012, no pet.).
opposed to standing, capacity involves the parties' legal
authority to go into court to prosecute or defend a suit.
El T. Mexican Rests., Inc. v. Bacon, 921 S.W.2d 247,
249-50 (Tex. App.-Houston [1st Dist.] 1995, writ denied).
Capacity must be challenged by a verified pleading, or it is
waived. Tex.R.Civ.P. 93; Spurgeon, 180 S.W.3d at
Allied Chemical Co. v. DeHaven, 824 S.W.2d 257, 264
(Tex. App.- Houston [14th Dist.] 1992, no writ), the court
held that one who was a partner at the time that a breach of
contract and conspiracy occurred had standing to sue on
behalf of the partnership involved there. Rule 28 of the
Texas Rules of Civil Procedure provides: "Any
partnership, unincorporated association, private corporation,
or individual doing business under an assumed name may sue or
be sued in its partnership, assumed or common name for the
purpose of enforcing for or against it a substantive right,
but on a motion by any party or on the court's own motion
the true name may be substituted." Tex.R.Civ.P. 28.
and Trek alleged that they were partners in Three Finger.
When we liberally construe the live petition, we conclude
that Tiburon and Trek had standing to pursue the causes of
action in the name of Three Finger. The right to pursue
claims does not automatically equate to an ultimately
successful pursuit. If we are incorrect that the issue is not
one of standing but, rather, is one of capacity, then
Appellants waived that issue when they failed to raise it in
the trial court. In either event, these parties were properly
before the court. We overrule Appellants' issues in which
they challenge the matter of standing as it relates to Three
contrary is true with respect to Raughton's standing to
assert claims for Arapaho's damages. In a partial summary
judgment, the trial court ruled that Raughton could not
recover for claims that belonged to Arapaho. In a
cross-appeal, Raughton claims that the trial ...