Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Wallace Construction & Development Co. v. Madison Plaza, LP

Court of Appeals of Texas, Ninth District, Beaumont

September 26, 2019

WALLACE CONSTRUCTION & DEVELOPMENT COMPANY, Appellant
v.
MADISON PLAZA, LP, Appellee

          Submitted on May 30, 2019

          On Appeal from the 58th District Court Jefferson County, Texas Trial Cause No. A-195, 368

          Before McKeithen, C.J., Horton and Johnson, JJ.

          MEMORANDUM OPINION

          STEVE McKEITHEN CHIEF JUSTICE

         Appellant Wallace Construction & Development Company ("Wallace") appeals from the trial court's summary judgment in favor of appellee Madison Plaza, LP ("Madison"). In two issues, Wallace asserts that the trial court committed error in granting Madison's motion for summary judgment because (1) Wallace was never a terminated entity under the Texas Business Organizations Code, and its claim was not extinguished, and (2) Madison did not establish its affirmative defense of limitations as to its claims for fraud, fraudulent inducement, and breach of contract. We reverse the trial court's order granting summary judgment and remand the cause for further proceedings consistent with this opinion.

         PERTINENT BACKGROUND

         Wallace filed suit against Madison on February 24, 2014, seeking a declaratory judgment and asserting claims for fraud, fraudulent inducement, and breach of contract related to Wallace's alleged oral agreement to construct a retail and office complex, which was Madison's development project. Wallace explained that the agreement called for Wallace to construct the project at cost and to receive no cash consideration for its services. Wallace pleaded that it constructed the complex pursuant to the agreement and that Wallace's principal and sole stockholder "executed a personal guarantee of all debt incurred by [Madison] including an initial construction loan related to the project in the amount of $1, 904.000.00."

         According to Wallace's petition, the parties formed a joint venture or partnership, pursuant to which Wallace "was to receive a 25% ownership and profit interest in the Madison Plaza venture." Wallace asserted that despite the agreement and Wallace's performance, Madison refused "to acknowledge the existence of the joint venture or partnership between the parties[]" and refused to render an accounting to Wallace. According to Wallace, Madison failed to pay "any profits or proceeds from the joint venture or partnership." Wallace sought a declaratory judgment that the parties entered into an oral partnership or joint venture, in that Wallace has a 25% interest in the partnership or joint venture, and that Madison is required to provide an accounting for the partnership or joint venture. In addition, Wallace asserted causes of action for "simple fraud[, ]" fraudulent inducement, and breach of contract.

         Madison asserted a general denial and pleaded that Wallace's claims were barred by the statute of limitations, statute of frauds, laches, and Wallace's alleged violation of conditions precedent. Additionally, Madison denied under oath that it had any partnership or joint venture with Wallace. Madison also contended that it is entitled to "costs and expenses associated with correcting all deficiencies with the construction of the buildings in question." Madison later filed its second supplemental answer, in which it asserted, among other things, that the trial court lacked jurisdiction because, as a terminated filing entity, Wallace lacked standing to sue and did not have the "right to bring or prosecute a claim in a Texas court[.]" According to Madison's second supplemental answer, Wallace's claims were extinguished by operation of law on July 30, 2013. Madison later filed a third supplemental answer and a supplement to its motion for summary judgment, with which he provided a certified copy of the Secretary of State's forfeiture of Wallace.

         Madison filed a motion for traditional summary judgment, in which it asserted that because the Secretary of State had made Wallace a terminated entity, and Wallace had not been reinstated within three years of its termination, Wallace had no capacity to file suit. Madison asserted that section 11.001 of the Texas Business Organizations Code ("TBOC") defines a terminated entity as, inter alia, a domestic entity, the existence of which has been forfeited pursuant to the Tax Code, unless the forfeiture has been set aside, and the TBOC defines "terminated filing entity" as "a terminated entity that is a filing entity." Tex. Bus. Orgs. Code Ann. § 11.001(4)(B), (5) (West Supp. 2018). Madison also cited section 11.356 of the TBOC, which provides that a terminated filing entity continues until the third anniversary of the effective date of its termination for purposes of (1) prosecuting or defending a claim brought by or against the terminated entity or (2) permitting survival of an existing claim by or against the terminated filing entity. Id. § 11.356(a)(1), (2) (West 2012).

         As Madison stated in its motion, the TBOC provides that "an existing claim by or against a terminated filing entity is extinguished unless an action or proceeding is brought on the claim not later than the third anniversary of the date of termination of the entity." Id. § 11.359(a) (West 2012). Madison argued that because Wallace was terminated by the Secretary of State on July 30, 2010, and Wallace was not reinstated within three years, "any reinstatement will not be retroactive through the period of termination, including but not limited to for the purpose of filing suit on a claim." According to Madison, Wallace lacked capacity to bring suit because its existence had been terminated, and its corporate status was not reinstated within three years. Madison asserted that Wallace's causes of action were extinguished by operation of law on July 30, 2013, which is the third anniversary of its termination. In addition, Madison contended that Wallace's causes of action are barred by limitations because the discovery rule does not apply and there are no genuine issues of material fact regarding when Wallace discovered the nature of its alleged injury.[1]

         With respect to the limitations issue, Madison pointed to the testimony of Loddie Naymola, the president of the corporation that is Madison's general partner, during the 2006 divorce trial of Gary Wallace ("Gary"), the "principal and sole stockholder" of Wallace. According to Madison, Wallace's alleged claim was not inherently undiscoverable, and "the accrual of [Wallace]'s purported claim was . . . stated plainly and under oath and in the presence of Gary Wallace[.]"

         Madison also attached a certified notice of forfeiture from the Secretary of State, which stated that that the Comptroller had advised that grounds existed for forfeiture of Wallace and Wallace had not revived its forfeited privileges within 120 days after the date its privileges were forfeited. According to the document, the date of forfeiture was July 30, 2010. Also attached as evidence was Gary's 2015 deposition testimony.

         Madison argued that the discovery rule did not apply, and that Wallace's claims were therefore time-barred as a matter of law. According to Madison, Loddie Naymola's deposition testimony, as discussed with Gary in his deposition, demonstrated that "the accrual of [Wallace]'s purported claim was not only discoverable more than four years prior to the initiation of this case, but stated plainly and under oath in the presence of Gary Wallace, " making Wallace's contention that its claim was inherently undiscoverable "disingenuous." According to ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.