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Rush v. Johnson

Court of Appeals of Texas, Third District, Austin

August 27, 2019

Michael Steve Rush, Appellant
v.
Craig W. Johnson, Individually, and Craig W. Johnson Enterprises, Inc. d/b/a Texas Hydraulics and Pneumatics, Appellees

          FROM THE 353RD DISTRICT COURT OF TRAVIS COUNTY NO. D-1-GN-18-001656, THE HONORABLE DON R. BURGESS, JUDGE PRESIDING.

          Before Chief Justice Rose, Justices Triana and Smith.

          MEMORANDUM OPINION

          Gisela D. Triana, Justice.

         Michael Steve Rush appeals the district court's order granting summary judgment in favor of Craig W. Johnson, Individually, and Craig W. Johnson Enterprises, Inc. d/b/a Texas Hydraulics and Pneumatics (collectively, Appellees). After Appellees filed their amended motion for summary judgment, Rush filed an amended petition abandoning his previously pleaded causes of action and presenting a declaratory-judgment request that he contends was not addressed in Appellees' motion. On appeal, Rush contends that the district court erred by granting greater relief than Appellees sought in their amended motion for summary judgment. We will affirm the district court's order.

         BACKGROUND[1]

         Rush and Johnson discussed the possibility of going into the hydraulic-repair business together in the spring of 1999. Their original discussion contemplated that Johnson would run the business aspects of the operation and Rush would take care of the day-to-day repair work and training and supervision of service personnel for the business. Also in early 1999, Rush and Johnson, along with Rush's wife Liz Rush, Johnson's father Ronald "Pete" Johnson, Johnson's mother Caroline Johnson, and Johnson's brother Trey Johnson, attended a meeting at Johnson's parents' home to discuss creation of the new business. Pete and Caroline were to create the new entity and help run the new business in the capacity of directors. Trey would contribute financially by making purchases with his credit card and would be employed by the new entity as the outside salesman in the near future.

         Rush was offered a 20% stake in the new business in exchange for a monetary contribution of $15, 000 and his agreements to run the shop, be lead mechanic, and teach Johnson how to repair hydraulic components. Craig, Pete, Caroline, and Trey would hold the remaining 80% interest. However, because Rush did not want his name used on anything and did not want any liability if the new venture failed, he agreed to accept 20% of the net profit realized from the sale of the business, if and when it sold, in exchange for his $15, 000 contribution.[2]

         Rush began working for the new business, Caroline Johnson Hydraulics, Inc. (CJH) when it began operations in the summer of 1999. CJH did business under the assumed name of "Texas Hydraulics & Pneumatics, Inc." (Texas Hydraulics). Rush never declared to the Internal Revenue Service any alleged ownership interest in Texas Hydraulics.

         CJH's ownership changed over the years. Trey left CJH in 2003. In 2008, Pete and Caroline retired and sold their interest in CJH to Craig Johnson. Also in 2008, Craig Johnson formed Craig W. Johnson Enterprises, Inc. (Enterprises) and kept the assumed name of Texas Hydraulics.

         As of 2007, Rush was still working for CJH, as reflected in his W-2 Wage and Tax Statement, identifying his employer as "Caroline Johnson Hydraulics, Inc." Rush claimed that he learned about Johnson's formation of Enterprises "[w]hen the name showed up on my checks." Rush's W-2 statements for 2012, 2014, 2015, 2016, and 2017 show that he was working for Enterprises, which is identified as his employer for each of those years. On June 3, 2017, Rush was terminated from Enterprises.

         Rush's lawsuit against Appellees

         Rush sued Appellees on April 4, 2018, alleging causes of action for breach of contract, fraud in a stock transaction, and promissory estoppel, and requesting a declaratory judgment

[t]o declare the Parties' ownership interest in Craig W. Johnson Enterprises, Inc. d/b/a Texas Hydraulics and Pneumatics and issue an order requiring Defendants to issue a stock certificate to [Rush] consistent with the Court's determination.

         Appellees initially filed a general denial, followed by an amended answer alleging the affirmative defenses of accord and satisfaction, laches, payment, statute of limitations, and mitigation. The amended answer included a verified denial stating that "the agreements allegedly made by Rush were with CJH," not "Craig W. Johnson and Craig W. Johnson Enterprises d/b/a Texas Hydraulics and Pneumatics" who were not proper parties to the suit. The amended answer also pleaded a counterclaim for sanctions against Rush for filing a frivolous lawsuit. See Tex. Civ. Prac. & Rem. Code § 10.004(c); Tex.R.Civ.P. 13. Along with their amended answer, Appellees filed a motion for summary judgment on Rush's claims.

         Three weeks later, on October 25, 2018, Appellees filed an amended motion for summary judgment resulting in the order challenged here. The amended motion contended, among other things, that Rush's causes of action against Appellees were barred by the applicable four-year statutes of limitations. See Tex. Civ. Prac. & Rem. Code §§ 16.004(a)(4) (four-year limitations period for fraud claims), 16.051 (four-year residual limitations period); Stine v. Stewart, 80 S.W.3d 586, 592 (Tex. 2002) (stating that four-year residual limitations period is applicable to breach of contract claims); Prestige Ford Garland Ltd. P'ship v. Morales, 336 S.W.3d 833, 836 (Tex. App.-Dallas 2011, no pet.) (stating that four-year residual limitations period is applicable to promissory estoppel claims).

         Rush amends petition and responds to Appellees' amended summary-judgment motion

         Rush filed an amended petition on January 16, 2019, dropping all of his previously pleaded causes of action-i.e., for breach of contract, fraud in a stock transaction, and promissory estoppel-and presenting a revised request for declaratory judgment that no longer referenced Appellees ...


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