SPENCER & ASSOCIATES, P.C. D/B/A THE SPENCER LAW FIRM, Appellant
STEPHEN HARPER, VICKI HARPER AND ZO ENERGY, INC., Appellees
Appeal from the 189th District Court Harris County, Texas
Trial Court Case No. 2016-88479
consists of Justices Keyes, Higley, and Landau.
V. Keyes Justice.
case arises out of attempts by appellant Spencer &
Associates, P.C. d/b/a the Spencer Law Firm (the
Firm) to execute on a 1999 judgment rendered in its favor
against appellee Stephen Harper. After the Firm propounded
post-judgment discovery requests to Harper and appellees
Vicki Harper and ZO Energy, Inc. (collectively, the Harper
parties) and received interrogatory responses, the Firm sued
the Harper parties for common-law fraud, fraud by
nondisclosure, violation of the Texas Uniform Fraudulent
Transfer Act (TUFTA), and conspiracy to commit fraud. The
Harper parties moved for no-evidence summary judgment on all
of the Firm's claims. The trial court granted summary
judgment in favor of the Harper parties, rendering a
take-nothing judgment against the Firm. On appeal, the Firm
argues that the trial court erred in granting summary
judgment because it raised a genuine issue of material fact
on each element of its causes of action.
reverse and remand.
than two decades ago, an entity related to Stephen Harper
retained the Firm for legal representation. After the
representation concluded, the Firm sued Harper for unpaid
legal fees in the Harris County Civil Court at Law Number
One. In 1999, the county court rendered judgment in favor of
the Firm, awarding the Firm $33, 237.28 in damages and $5,
000 in attorney's fees, and it ruled that post-judgment
interest would accrue on this amount at a rate of 10% per
year. Harper did not appeal, and this judgment became final.
In the twenty years since the county court rendered its
judgment, Harper has resisted all attempts to execute on the
judgment, and the Firm has been unable to obtain satisfaction
of the judgment from Harper.
of its efforts to collect upon the county court judgment
awarded to it, the Firm engaged in extensive post-judgment
discovery and litigation. The Firm sought information
concerning the existence of Harper's nonexempt assets
from Harper himself, his wife Vicki Harper, and ZO Energy, an
oil and gas company for which Vicki owns 100% of the stock,
among other entities that are not parties to the underlying
proceeding or this appeal. During the course of this
discovery, the Firm issued requests for production and
interrogatories to all of the Harper parties, and it took the
depositions of Harper and Vicki.
December 2016, the Firm sued Harper, Vicki, and ZO Energy.
The Firm asserted causes of action for common-law fraud,
fraud by nondisclosure, negligent misrepresentation,
violations of TUFTA, conspiracy to commit fraud, and aiding
and abetting. The Firm alleged that Harper had
"consistently and purposefully evaded collection
efforts," serving as the president and director of ZO
Energy but reporting that he "has no income or money and
no non-exempt assets." The Firm also alleged that Vicki
had conspired with Harper to thwart the Firm's efforts to
collect its debt, claiming that she runs ZO Energy while, in
actuality, Harper "has significant involvement in
running ZO Energy but receives no compensation for his
services" and "ZO Energy and/or Mrs. Harper pay for
Mr. Harper's personal expenses and therefore can claim
that Mr. Harper has no income."
Firm alleged that the Harper parties "lied under oath
[and] made misrepresentations and omissions of material fact
in order to mislead Spencer and encumber its debt collection
efforts." The Firm alleged that, when responding to
post-judgment discovery requests, the Harper parties
"had a duty to provide truthful, complete and accurate
information" concerning Harper's financial
situation, but instead the Harper parties failed to provide
material information and purposefully misled the Firm. The
Firm also alleged that the Harper parties violated TUFTA by
making "several transfers . . . between the parties,
wherein Mr. Harper received little or no value for such
transfer" in an effort to place Harper's assets
beyond the reach of the Firm.
Harper parties moved for no-evidence summary judgment,
challenging each element of each cause of action asserted by
the Firm. The Harper parties characterized the Firm's
suit as "the next effort in a long line of harassing
legal proceedings aimed at Mr. Harper and every entity or
person with which he has any connection," and it noted
that a receiver had been appointed in the county court case
to assist in collection of the Firm's judgment against
Harper. The Harper parties argued that, throughout the years,
they had produced thousands of documents to the Firm,
"including income tax returns, bank statements,
corporate documents, and credit card statements," but
the Firm had been unable to produce any evidence that Harper
possesses assets to satisfy the judgment against him. The
Harper parties pointed out that the Firm did not allege any
specific misrepresentation or fraudulent transfer in its
response to the Harper parties' summary-judgment motion,
the Firm identified several misrepresentations allegedly made
by the Harper parties during the course of post-judgment
discovery that served as the basis for the Firm's fraud
claims. The Firm argued that, in sworn interrogatory answers
dated May 24, 2013, Harper misrepresented that he had only
one bank account with Broadway Bank that had a balance of
less than $1.00. However, Harper also had an account with
USAA Federal Savings Bank that "held non-exempt
securities and cash with a value of over $12, 000," but
Harper never identified this account during post-judgment
discovery or supplemented his interrogatory answers. As
summary judgment evidence, the Firm attached Harper's
interrogatory answers as well as bank statements from USAA
Federal Savings Bank indicating that, as of September 30,
2013, an account in the name of "Steve J Harper and
Vicki D Harper Com Prop" held "Small cap
stocks/funds" and "Cash/money market funds"
and had a portfolio value of $12, 117.52. The bank statement
included a graph depicting "Portfolio performance"
that displayed activity starting in late 2011. The Firm also
attached a bank statement indicating that, as of March 31,
2014, the value of the portfolio was $8, 079.54, a withdrawal
of $8, 079.39 then occurred, and, thus, as of June 30, 2014,
the value of the portfolio was $0.15.
Firm pointed to Harper's interrogatory answer that he
earned no income in 2012 or 2013 as an additional
misrepresentation. According to the Firm, Harper received $7,
355.68 in royalty income in 2012, and, in 2013, he reported
income of $799, 441 from a sole proprietorship and $130, 943
in royalty income. As evidence, the Firm attached a Form 1099
issued by Forest Oil Corporation to Harper, reflecting the
payment of $7, 355.68 in royalties during the 2012 tax year.
The Firm also attached the Harpers' 2013 tax return, in
which they reported receiving $109, 395 for "Rental real
estate, royalties, partnerships, S corporations, trusts,
etc." Their 2013 tax return also included a Schedule C
for "Profit or Loss from Business (Sole
Proprietorship)." This scheduled listed "Stephen J
Harper" as the proprietor, listed "working
interest" as the "Principal business or
profession," and listed $799, 441 for gross income. With
respect to the question "Did you 'materially
participate' in the operation of this business during
2013?" Harper checked the box for "Yes."
the Firm alleged that Vicki made misrepresentations during a
March 2015 deposition. Specifically, she represented that
Harper made no money, that he rarely consults with ZO Energy,
and that he is not affiliated with ZO Energy. As evidence
that these representations were false, the Firm pointed to
documents relevant to Harper's income taxes, as well as
evidence that Harper was the sole officer and director of ZO
Energy in 2015, and testimony from Vicki's 2018
deposition that both she and Harper run ZO Energy and that
Harper can withdraw money from ZO Energy at his discretion.
Firm argued that each of these misrepresentations was
material because Harper's financial status was
"important and would be relied upon by a judgment
creditor when deciding how to enforce and collect its
judgment." The Firm argued that if this information
about Harper's finances had been disclosed, it
"could and would have attached Stephen Harper's
hidden, nonexempt property to satisfy its judgment." It
further argued that Harper "knew, or had reason to
believe, that if he did not identify the existence and source
of his assets-especially easy-to-hide assets like cash-that
it would be virtually impossible for [the Firm] to locate and
execute upon those assets." The Firm argued that Vicki
that if she did not identify the existence and source of her
husband's income-especially in light of her 2015
testimony that her husband "makes no money" and
"is not affiliated with" her company ZO Energy-that
it would be virtually impossible for [the Firm] to discover
that Stephen Harper was in fact performing substantial
amounts of work for ZO Energy, was diverting all of his
income to his wife and ZO Energy, and was also earning money
to the tune of half-a-million-dollars per year at times.
Firm argued that it actually relied on these
misrepresentations "by failing to act toward attaching
Stephen Harper's nonexempt assets, by losing the
opportunity to so act, and by losing the opportunity to
obtain satisfaction of its judgment had the Defendants spoken
truthfully and disclosed the assets."
summary judgment evidence, the Firm attached the affidavit of
Bonnie Spencer, the principal of the Firm. She averred:
The Law Firm has a judgment against Stephen Harper. Over the
last two decades, The Law Firm has continuously attempted to
collect its judgment. The Law Firm sent post judgment
discovery requests to Stephen Harper and received answers
dated May 24, 2013, a true and correct copy of which is
attached to the Response at Exhibit D. The Law Firm also took
the deposition of Vicki Harper on March 23, 2015. The Law
Firm relied upon the statements made under oath in Stephen
Harper's answers to post-judgment Interrogatories and
relied upon Vicki Harper's testimony under oath. The Law
Firm remained unaware of the assets and, given Stephen and
Vicki Harper's statements and the nature of the assets,
the existence and location of these assets were virtually
However, the Law Firm later discovered that Stephen Harper
provided partial, false, and misleading answers in his
Interrogatories as described in the Response. Vicki Harper
provided partial, false, and misleading answers in her
deposition as described in the Response. The Harpers'
resistance to comply with discovery and their legal duties to
speak truthfully, have damaged the Law Firm. Specifically,
these false answers increased the time and effort the Law
Firm's attorneys have had to spend to locate nonexempt
assets of Stephen Harper. As a result of the Harpers'
deception, [the Firm] lost the opportunity to attach
nonexempt assets owned by Stephen Harper including, but not
limited to, the cash and stock in the USAA bank account.
Had Stephen Harper been honest in his Interrogatory answers,
[the Firm] could and would have obtained at least some
satisfaction of its judgment. Had Vicki Harper been honest in
her  deposition testimony, [the Firm] could and would
have taken the necessary steps to discover and attach Stephen
Harper's nonexempt assets to credit toward this judgment.
I have reviewed the hours worked by the Law Firm's
attorneys to collect the judgment. The value of the hours
worked at the time they were expended is $166, 194.18. These
hours were expended from June 1, 2013 (which is after the
Defendants' misrepresentations described herein) to
December 20, 2017 (which is the date a receiver was appointed
to aid in collecting the judgment against Harper). These fees
are reasonable given the circumstances of the case as
described above and within the Response.
respect to its claim for violation of TUFTA, the Firm argued
that the Harper parties violated Business and Commerce Code
sections 24.005(a) and 24.006. The Firm argued that the
relevant assets that Harper transferred were his income from
ZO Energy, his community property interest in ZO Energy, and
cash. It argued that Harper earned income from services he
performed for ZO Energy, but, instead of collecting that
income and depositing it in his own bank account, he allowed
ZO Energy to retain those funds. The Firm presented excerpts
from Harper's and Vicki's depositions in which both
testified that Harper does not maintain his own bank account
but instead pays his bills directly out of ZO Energy's
bank account. The Firm also presented records reflecting that
ZO Energy paid over $200, 000 of Harper's credit card
bills and his expenses. The Firm also presented evidence that
ZO Energy was wholly owned by Vicki and was formed after her
marriage, and therefore Harper had a community property
interest in ZO Energy, resulting in any shares or
distributions from ZO Energy being jointly-managed community
property. The Firm argued that Harper's act of allowing
ZO Energy and Vicki to retain his income constituted a
"transfer" under the terms of TUFTA, that Harper
intentionally kept his income in ZO Energy's bank account
instead of his own bank account, and that his actions were
intended to hinder, delay, or defraud the Firm in the
collection of its judgment against Harper.
March 19, 2018, the trial court granted the Harper
parties' no-evidence motion for summary judgment and
issued a take-nothing judgment against the Firm. This appeal
Firm argues that the trial court erred in granting
Harper's motion for no-evidence summary judgment because
the Firm raised a fact issue on its causes of action for
common-law fraud, fraud by nondisclosure, violation of TUFTA,
and conspiracy to commit fraud.
Standard of Review
review a trial court's ruling on a summary judgment
motion de novo. City of Richardson v. Oncor Elec.
Delivery Co., 539 S.W.3d 252, 258 (Tex. 2018). After
adequate time for discovery has passed, a party may move for
summary judgment on the basis that there is no evidence of
one or more essential elements of a claim on which the
adverse party would have the burden of proof at trial.
Tex.R.Civ.P. 166a(i). The burden then shifts to the nonmovant
to present evidence raising a genuine issue of material fact
on each of the challenged elements. Tex.R.Civ.P. 166a(i);
Mack Trucks, Inc. v. Tamez, 206 S.W.3d 572, 582
genuine issue of material fact exists if the evidence rises
to a level that enables reasonable and fair-minded people to
differ in their conclusions. First United Pentecostal
Church of Beaumont v. Parker, 514 S.W.3d 214, 220 (Tex.
2017) (quoting Merrell Dow Pharms., Inc. v. Havner,
953 S.W.2d 706, 711 (Tex. 1997)); Ford Motor Co. v.
Ridgway, 135 S.W.3d 598, 600 (Tex. 2004) ("A
genuine issue of material fact exists if more than a
scintilla of evidence establishing the existence of the
challenged element is produced."). Evidence does not
create a fact issue when it is so weak as to do no more than
create a mere surmise or suspicion that the fact exists.
Parker, 514 S.W.3d at 220 (quoting Kia Motors
Corp. v. Ruiz, 432 S.W.3d 865, 875 (Tex. 2014)). We
review the evidence presented in the motion and response in
the light most favorable to the nonmovant, crediting
favorable evidence if reasonable jurors could and
disregarding contrary evidence unless reasonable jurors could
not. Mann Frankfort Stein & Lipp Advisors, Inc. v.
Fielding, 289 S.W.3d 844, 848 (Tex. 2009) (citing
City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex.
2005)). We indulge every reasonable inference and resolve any
doubts in the nonmovant's favor. Helix Energy Sols.
Grp., Inc. v. Gold, 522 S.W.3d 427, 431 (Tex. 2017).
The Firm's Fraud Claims
The elements of common-law fraud are:
(1) that a material misrepresentation was made; (2) the
representation was false; (3) when the representation was
made, the speaker knew it was false or made it recklessly
without any knowledge of the truth and as a positive
assertion; (4) the speaker made the representation with the
intent that the other party should act upon it; (5) the party
acted in reliance on the representation; and (6) the party
thereby suffered injury.
Italian Cowboy Partners, Ltd. v. Prudential Ins. Co. of
Am., 341 S.W.3d 323, 337 (Tex. 2011); see Exxon
Corp. v. Emerald Oil & Gas Co., 348 S.W.3d 194, 217
(Tex. 2011). "Material means a reasonable person would
attach importance to and would be induced to act on the
information in determining his choice of actions in the
transaction in question." Italian Cowboy
Partners, 341 S.W.3d at 337. Common-law fraud requires a
showing of "actual and justifiable reliance" on the
misrepresentation at issue. Grant Thornton LLP v.
Prospect High Income Fund, 314 S.W.3d 913, 923 (Tex.
2010) (noting that courts must consider whether, given
plaintiff's individual characteristics, abilities, and
appreciation of facts and circumstances at or before time of
alleged fraud, it is extremely unlikely that there is actual
reliance and that person may not justifiably rely on
representation if "red flags" exist indicating such
reliance is unwarranted).
by nondisclosure is considered a subcategory of fraud.
Blankinship v. Brown, 399 S.W.3d 303, 308 (Tex.
App.-Dallas 2013, pet. denied) (citing Schlumberger Tech.
Corp. v. Swanson, 959 S.W.2d 171, 181 (Tex. 1997)). To
establish fraud by nondisclosure, the plaintiff must prove:
(1) the defendant failed to disclose facts to the plaintiff,
(2) the defendant had a duty to disclose those facts, (3) the
facts were material, (4) the defendant knew the plaintiff was
ignorant of the facts and the plaintiff did not have an equal
opportunity to discover the facts, (5) the defendant was
deliberately silent when it had a duty to speak, (6) by
failing to disclose the facts, the defendant intended to
induce the plaintiff to take some action or refrain from
acting, (7) the plaintiff ...