Court of Appeals of Texas, Thirteenth District, Corpus Christi-Edinburg
appeal from the 275th District Court of Hidalgo County,
Chief Justice Contreras and Justices Rodriguez and Benavides.
M. BENAVIDES JUSTICE.
Corporation, which was wholly owned by Godfrey Garza, Jr.,
was hired by Hidalgo County Drainage District No. 1 (HCDD),
to serve as HCDD's manager in 2000 and it held the
position until 2014. In 2017, HCDD sued Integ and Garza based
on events arising out of that relationship and also sued
Valley Data Collection Specialists, Inc. (Valley Data), Annie
Q. Garza, Godfrey Garza, III, and Jonathon Garza (the
individual defendants). Integ and Garza counterclaimed. The
trial court granted a plea to the jurisdiction filed by HCDD
and dismissed the counterclaim. The trial court also granted
summary judgment dismissing HCDD's claims.
single issue, Integ/Garza, appellants and cross-appellees,
appeal from the grant of HCDD's plea to the jurisdiction.
Cross-appellant and appellee HCDD appeals from the dismissal
of its claims against Integ/Garza, Valley Data and the
individual defendants for breach of fiduciary duty, fraud,
breach of contract, civil conspiracy, unjust enrichment, and
resolution of Integ/Garza's plea to the jurisdiction
depends in part on whether any of HCDD's claims against
Integ/Garza remain viable, we address HCDD's issues
first. By four issues and multiple sub-issues, HCDD
challenges the trial court's grant of the motions for
no-evidence and traditional summary judgment against it and
argues that the trial court abused its discretion by denying
its motions to continue the summary judgment hearings and
trial date. Cross-appellees Valley Data, and the individual
defendants responded to HCDD's challenge to the trial
court's grant of summary judgment but seek no affirmative
relief. We reverse and remand in part and affirm in part.
a division of local government that is operated by the
Hidalgo County Commissioners' Court, which sits as its
Board of Directors. See Tex. Water Code Ann.
§§ 49.001, 49.051, 49.054. Beginning in
approximately 1995, HCDD hired Garza as an employee manager
of HCDD, a position he held for four or five years. After
that time, Garza planned to leave because he wanted to make
more money in the private sector. Alternatively, he proposed
to the Commissioners' Court that they hire Integ to
become the manager and allow the company to take on outside
work. The Commissioners' Court agreed and simultaneously
accepted Garza's resignation and approved a management
consulting agreement (MCA) with Integ on October 3, 2000.
See id. § 49.057(a). Integ was paid a flat fee
on a monthly basis. That fee increased annually and came to
include a car and telephone allowance. In 2007, Garza
approached the Commissioners' Court with the idea of
increasing his work and pay to include construction
management for a project arising from a bond issue of
approximately $100, 000, 000 approved by the voters, the
Phase II drainage project. In exchange for the extra work,
Garza proposed that he be paid a fee of one and a half
percent based upon "actual construction costs,"
excluding land acquisition involved in the project. After a
discussion that included safeguards for HCDD finances, the
Commissioners' Court approved the new contract for a
continued to maintain his office at HCDD, his name remained
on HCDD's letterhead as District Manager, and Garza
continued to use HCDD's email address as before but Integ
was not mentioned. Integ's responsibilities for HCDD, as
enumerated in the MCA, included: to "perform the
services herein contemplated faithfully, diligently, to the
best of Integ's ability, consistent with all applicable
laws, and all applicable local, state and federal
regulations," to "perform management and compliance
of the programs as specified by local, state and federal
regulations," to "establish and maintain necessary
standards of performance to assure activities and projects of
the District comply with plans, applicable laws and
regulations," to "exercise discretion and judgment
in matters not covered by this Agreement and/or policies of
the District," and to "communicate with the
District's attorney on matters in litigation or potential
litigation except as otherwise directed by the Board of
Directors." Notably, the MCA was personal to Garza. HCDD
was entitled to terminate the MCA on the death of Garza or
injury or illness that would be reasonably likely to lead to
the inability of Integ to perform services for a period in
excess of thirty days. Three items were added to Integ's
list of duties in 2007 to encompass the broadened MCA.
employed only Garza and his wife Annie Garza who performed
office work for Integ intermittently. According to the terms
of the MCA, Integ was an independent contractor, not an
employee of HCDD. The MCA obligated HCDD to purchase general
liability and errors and omissions insurance to cover Integ.
Although the MCA permitted Integ to handle outside work, it
included a conflict of interest provision that required Integ
to advise the Board of the nature of Integ's outside work
and required Integ to turn down work if a majority of the
Board deemed it to be a conflict of interest and also
required that any outside work "not impair the
fulfillment of Integ's obligations under the [MCA]."
has two sons, Godfrey Garza, III (Trey) and Jonathon Garza,
who formed Valley Data in 2004. Although Valley Data did not
employ any licensed surveyors or licensed engineers, Valley
Data provided surveying, geotechnical, and field engineering
work for engineering companies that were doing work on
drainage projects. Beginning in approximately 2006, Valley
Data began doing large amounts of work for Tedsi
Infrastructure Group (Tedsi), a local engineering firm, as a
subcontractor for HCDD projects. Over time, Valley Data
performed the same kind of work for other engineering firms,
including Dannenbaum Engineering, who also held prime
contracts with HCDD. In 2012, Annie Garza acquired Valley
Data. Although Valley Data was not paid by HCDD, Valley Data
was paid by companies who were paid by HCDD.
Briones became the chief financial officer of HCDD in 2003.
She reported to Garza. Briones testified that the 2007
contract concerned her, especially since she was required to
compute the construction management fee.
also learned informally from a Dannenbaum employee in 2008
that Valley Data was subcontracted to Dannenbaum on a HCDD
contract but she did not know the extent of the work that
Valley Data was performing. In 2014, Briones came across
documentation of payments to Valley Data on HCDD contracts.
At that time, she brought the information to the attention of
county judge, Ramon Garcia. She also took the information to
the FBI and to the Texas Attorney General because she was
concerned about the undisclosed conflict of interest.
2007 and 2014, Integ and Valley Data were paid millions of
dollars from HCDD tax dollars. In October 2014, HCDD hired
the Lee Firm in Corpus Christi to investigate whether it had
claims against Integ/Garza. During the investigation, Michael
Lee interviewed Briones, Ray Eufracio, and Steve Crain
(HCDD's attorney). Lee gave a written report to the
Commissioners in 2015. In his report, Lee discussed a project
in which the federal Department of Homeland Security (DHS)
planned to build a border wall on top of levees that were
improved to protect Hidalgo County from flooding. Lee
concluded that in February 2007 when the Commissioners'
Court approved the MCA for construction management with
Integ, it did not contemplate the federal wall/levee project
which did not occur until later that year. As a result,
according to Lee, there could have been no meeting of the
minds that the federal project was part of the Phase II
drainage project. The federal government put up $178 million
for the DHS project. HCDD contributed an initial $28 million
from the HCDD bond issue that was approved by the
Commissioners' Court. Later on, according to the Lee report,
HCDD contributed another $30 million. Lee also concluded that
"actual construction costs" in the MCA meant
something less than "total construction costs" as
defined by the General Accounting Standards Boards Statement
34 which includes land acquisition and all preliminary
engineering work. From the context of the discussion between
the parties at the February 2007 Commissioners' Court
meeting and other research, Lee determined that the term
"actual construction costs" meant "direct
construction costs for labor, material, equipment, services,
contractors overhead and profit, not including compensation
to the architect, and engineer and consultants, the cost of
land, right-of-way, or other costs." Lee noted that
Crain disagreed and took the broader view that "actual
construction costs" included everything except land
acquisition costs. Crain also took the view that the 2007 to
2013 MCAs included construction management on the DHS
2017, HCDD filed suit against Integ, Garza, Valley Data and
the individual defendants. HCDD's original petition
alleged: breach of fiduciary duty, fraud, negligent
misrepresentation, breach of contract, civil conspiracy,
unjust enrichment, and constructive trust. Integ/Garza filed
a general denial, raised affirmative defenses of limitations,
estoppel, ratification, unclean hands, waiver, laches,
circuity of action doctrine, failure to exhaust
administrative procedures, and brought a counterclaim for
breach of contract for failure to carry insurance as
required. Valley Data and the individual defendants filed a
general denial to HCDD's claims and asserted the
affirmative defenses of limitations and estoppel.
two years of contentious discovery, Integ/Garza, Valley Data,
and the other defendants filed their motions for summary
judgment and HCDD filed its plea to the jurisdiction. HCDD
filed its fourth amended petition on January 24, 2018, in
which it first asserted civil claims under the federal
Racketeer Influenced and Corrupt Organizations Act (RICO).
See 18 U.S.C. § 1964(c). Ostensibly, as a
result of the civil RICO claims, the individual defendants
refused to appear for depositions that were scheduled for
January 26, 2018. Thus, HCDD had not taken the depositions of
the individual defendants at the time of the summary judgment
hearing on January 31, 2018.
trial court denied HCDD's motion to continue the summary
judgment hearing and the trial date and granted all of the
summary judgment motions and the plea to the jurisdiction on
February 5, 2018. HCDD nonsuited its civil RICO claims on
February 5, 2018, and the judgment became final. Integ/Garza
filed a notice of appeal from the grant of the plea to the
jurisdiction and HCDD filed a notice of appeal from the grant
of the motions for summary judgment.
Summary Judgments Against HCDD
Valley Data, and the individual defendants filed no-evidence
motions for summary judgment against HCDD seeking dismissal
of all of the claims against them on multiple grounds.
Integ/Garza also filed a traditional motion for summary
judgment on its affirmative defenses of collateral attack on
judgments, laches, and lack of fiduciary relationship.
Standard of Review and Applicable Law
review the trial court's granting of a motion for summary
judgment de novo. Cantey Hanger, LLP v. Boyd, 467
S.W.3d 477, 481 (Tex. 2015); Provident Life &
Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex.
2003). By a no-evidence motion, the movant alleges that no
evidence exists for one or more essential elements of a claim
on which the respondent bears the burden of proof at trial.
See Tex. R. Civ. P. 166a(i); Hamilton v.
Wilson, 249 S.W.3d 425, 426 (Tex. 2008) (per curiam).
The trial court must grant the motion unless the respondent
produces more than a scintilla of evidence for each of the
challenged elements of the claim. Hamilton, 249
S.W.3d at 426; Mack Trucks, Inc. v. Tamez, 206
S.W.3d 572, 582 (Tex. 2006). Evidence is more than a
scintilla where it "would enable reasonable and
fair-minded jurors to differ in their conclusions."
Hamilton, 249 S.W.3d at 426; see King Ranch,
Inc. v. Chapman, 118 S.W.3d 742, 751 (Tex. 2003).
reviewing a traditional motion for summary judgment, we must
determine whether the movant met its burden to establish that
no genuine issue of material fact exists, and that the movant
is entitled to judgment as a matter of law. Tex.R.Civ.P.
166a(c); Cantey Hanger, LLP, 467 S.W.3d at 481. The
movant bears the burden of proof, and all doubts about the
existence of a genuine issue of material fact are resolved
against the movant. See Nalle Plastics Fam. Ltd.
P'ship v. Porter, Rogers, Dahlman & Gordon,
P.C., 406 S.W.3d 186, 200 (Tex. App.-Corpus
Christi-Edinburg 2013, pet. denied). In reviewing the grant
of summary judgment under either traditional or no-evidence,
we must credit evidence favoring the non-movant, indulging
every reasonable inference and resolving all doubts in his or
her favor. Cantey Hanger, LLP, 467 S.W.3d at 481;
Randall's Food Markets, Inc. v. Johnson, 891
S.W.2d 640, 644 (Tex. 1995).
trial court's order granting summary judgment does not
specify the ground or grounds relied on for the ruling,
summary judgment will be affirmed on appeal if any of the
theories advanced are meritorious. Carr v. Brashear,
776 S.W.2d 567, 569 (Tex. 1989); Garcia v. Tex. Cable
Partners, L.P., 114 S.W.3d 561, 567 (Tex. App.-Corpus
Christi-Edinburg 2003, no pet.).
Valley Data, and the individual defendants moved for
no-evidence summary judgment on the following grounds: (1)
breach of fiduciary duty, (2) fraud, (3) negligent
misrepresentation,  (4) breach of contract, and (5) civil
conspiracy. HCDD responded with evidence and filed a
supplemental response. By its second issue, HCDD globally
challenges the trial court's grant of Garza and
Integ's motions for no-evidence summary judgment. By its
fourth issue, HCDD globally challenges the trial court's
grant of Valley Data and the individual defendants'
motions for no-evidence summary judgment.
alleged that Integ/Garza breached their fiduciary duty to
HCDD. Integ/Garza argue that because they were an independent
contractor for HCDD, as a matter of law, there could be no
fiduciary relationship between them and HCDD.
from 2007 through 2013 recites that Integ "shall perform
the duties of the manager of [HCDD]" and lists eighteen
specific functions. The MCA permitted Integ "to perform
consulting and other services for other firms, individuals or
local governments when such work does not impair the
fulfillment of Integ's obligations under this
Agreement." The MCA further provides that "Integ,
at all times will act as an independent contractor managing
and supervising [HCDD]'s operations and will not act or
hold itself out to third parties as an employee or agent of
Elements of Fiduciary Duty
elements of a breach of fiduciary duty claim are: (1) a
fiduciary relationship between the plaintiff and defendant,
(2) a breach by the defendant of his fiduciary duty to the
plaintiff, and (3) an injury to the plaintiff or benefit to
the defendant as a result of the defendant's
breach." Lundy v. Masson, 260 S.W.3d 482, 501
(Tex. App.- Houston [14th Dist.] 2008, pet. denied); see
also Wells Fargo Bank, N.A. v. Crocker, No.
13-07-00732-CV, 2009 WL 5135176, at *3 (Tex. App.-Corpus
Christi-Edinburg Dec. 29, 2009, pet. denied) (mem. op.).
law recognizes two types of fiduciary relationships.
Meyer v. Cathey, 167 S.W.3d 327, 330-31 (Tex. 2005)
(per curiam); Salas v. Total Air Servs,
LLC, 550 S.W.3d 683, 689 (Tex. App.-El Paso 2018, no
pet.) "The first is a formal fiduciary relationship,
which arises as a matter of law and includes the
relationships between attorney and client, principal and
agent, partners, and joint venturers." Abetter
Trucking Co. v. Arizpe, 113 S.W.3d 503, 508 (Tex.
App.-Houston [1st Dist.] 2003, no pet.) (citing Ins. Co.
of N. Am. v. Morris, 981 S.W.2d 667, 674 (Tex. 1998)).
"The second is an informal fiduciary relationship, which
may arise from 'a moral, social, domestic or purely
personal relationship of trust and confidence, generally
called a confidential relationship.'" Id.;
Schlumberger Tech. Corp. v. Swanson, 959 S.W.2d 171,
177 (Tex. 1997). Although "a fiduciary or confidential
relationship may arise from the circumstances of a particular
case, to impose such a relationship in a business
transaction, the relationship must exist prior to, and apart
from, the agreement made the basis of the suit."
Id. "[W]hile the existence of an informal
fiduciary relationship 'is ordinarily a question of fact,
when the issue is one of no evidence, it becomes a question
of law.'" Crim Truck & Tractor Co. v.
Navistar Int'l Transp. Co., 823 S.W.2d 591, 594
(Tex. 1992). A fiduciary relationship imposes a duty on the
fiduciary to render full and fair disclosure of facts
material to the relationship giving rise to the duty.
Willis v. Maverick, 760 S.W.2d 642, 645 & n.2
Evidence of Fiduciary Duty
was employed by HCDD for four years as its manager before
HCDD hired Integ pursuant to the MCA. The MCA stated that it
"recognize[d] the benefits of contracting with a party
who will employ the former manager of [HCDD]." The
evidence conclusively establishes that Garza had a
longstanding relationship with HCDD before the parties
executed the MCA. Garza's previous relationship with HCDD
was that of employee/employer, which is "a species of
the formal principal-agent relationship."
Salas, 550 S.W.3d at 690. "An agent generally
has a fiduciary duty to act for the benefit of his principal
in all matters connected with the agency." Johnson
v. Brewer & Pritchard, P.C., 73 S.W.3d 193, 200
(Tex. 2002). An "agent" is one who is authorized by
another to transact business or manage some affair for him.
See Neeley v. Intercity Mgmt. Corp., 732 S.W.2d 644,
646 (Tex. App.-Corpus Christi-Edinburg 1987, no writ);
Jorgensen v. Stuart Place Water Supply Corp., 676
S.W.2d 191, 194 (Tex. App.-Corpus Christi- Edinburg 1984, no
writ). The agency relationship does not depend upon express
appointment or agreement by the principal; but may be implied
from the conduct of the parties under the circumstances.
See Gibson v. Bostick Roofing & Sheet Metal Co.,
148 S.W.3d 482, 492 (Tex. App.-El Paso 2004, no pet.);
Jorgensen, 676 S.W.2d at 194.
Integ's tenure as manager of HCDD, Garza's name was
listed on HCDD's letterhead as District Manager; Integ
was not mentioned. Garza's emails use HCDD's system
and are signed the same way. Garza continued to interact with
the Commissioners' Court in the same way that he had
before he left HCDD's employ. There is more than a
scintilla of evidence that Garza held himself out as
HCDD's agent based upon the manner in which HCDD allowed
the use of its letterhead and email. There is also more than
a scintilla of evidence of a relationship of trust between
Garza and HCDD that preexisted Integ/Garza's and
HCDD's contractual relationship.
the MCA specified that the relationship was that of an
independent contractor, the MCA does not conclusively
establish that no fiduciary relationship was formed. An
independent contractor may serve as a fiduciary. See
Abetter Trucking Co., 113 S.W.3d at 507-08. When a
contract specifying an independent contractor relationship
exists and there is also evidence that the written contract
has been modified by a subsequent implied agreement, such as
Garza's apparent holding himself out as an agent of HCDD,
there is a fact issue on the existence of a fiduciary
relationship that precludes summary judgment. See Weidner
v. Sanchez, 14 S.W.3d 353, 374 (Tex. App.-Houston [14th
Dist.] 2000, no pet.); see also Perez v. Greater Houston
Transp. Co., No. 01-17-00689-CV, 2019 WL 3819517, at *4
(Tex. App.-Houston [1st Dist.] Aug. 15, 2019, pet. filed)
was more than a scintilla of evidence to support a finding
that Integ breached a fiduciary relationship by being less
than candid with HCDD. A prime example is Garza's
instruction that Integ's invoices be placed on the
consent agenda and not sent through the auditor, thus
avoiding any scrutiny that Integ construction management fees
for preliminary engineering work rather than "actual
construction costs" or against DHS projects. See
Willis, 760 S.W.2d at 645 & n.2 (holding that a
fiduciary owes a duty of full and fair disclosure). There was
competing expert opinion as to whether the DHS project was
part of the Phase II Drainage project and thereby part of the
MCA on which Integ was authorized to charge construction
conclude HCDD produced more than a scintilla of evidence on
every element of breach of fiduciary duty. Accordingly, the
trial court erred by granting the motions for no-evidence
summary judgment on breach of fiduciary duty.
argues that when Garza made his pitch to HCDD to pay him for
construction management of the Phase II drainage project that
he intentionally misrepresented the following material facts:
(1) that his fee would be based on actual construction costs,
(2) there would be checks and balances in processing the
amounts through the use of an outside auditor, and (3) Garza
would be paid only for that which was actually built. HCDD
allegedly relied on those misrepresentations by agreeing to
the 2007 MCA including construction management fees.
Valley Data, and the individual defendants moved for
no-evidence summary judgment on HCDD's fraud claim. The
record includes a transcript of the Commissioners' Court
meeting on February 6, 2007 in which the Commissioners'
Court approved the 2007 MCA. Commissioner Garza (unrelated to
Integ/Garza) commented that he was looking for checks and
balances on the financials so that someone other than Garza
would be involved. Integ/Garza represented that Briones, the
HCDD chief financial officer, would be handling the financial
end on behalf of the district. Integ/Garza then added,
One of the things [HCDD is] looking at, that's coming
before the board is hiring an independent auditor, to be
looking at all the bond issues . . . to provide the
transparency, per se, of the district itself, not monitoring
itself, even though we have an independent auditor, is to
hiring an auditing company that does the overview of all the
bond issue money that comes in place. That is the checks and
Garza responded, "By hiring an outside auditing
estimated that his eventual payout over a ten year period
would be $150, 000. He represented that he would be paid only
on what was actually built while Integ was HCDD's
manager. The Board adopted the 2007 MCA with the percentage
for construction management after that discussion.
Elements of Fraud
common-law fraud claim requires a material misrepresentation,
which was false, and which was either known to be false when
made or was asserted without knowledge of its truth, which
was intended to be acted upon, which was relied upon, and
which caused injury." Zorrilla v. Aypco Constr. II,
LLC, 469 S.W.3d 143, 153 (Tex. 2015) (internal
quotations omitted) (citing Formosa Plastics Corp. USA v.
Presidio Eng'rs & Contractors, Inc., 960 S.W.2d
41, 47 (Tex. 1998)).
Evidence of Fraud
the misrepresentations HCDD complained of was Garza's
statements to the Commissioners' that all of the
construction management payments would go through the
auditors, perhaps even bond money auditors. Yet after the MCA
was executed, Garza specifically directed that all of
Integ's payments be placed on the consent agenda and
never go to the auditors. Because Garza supervised the
district employees, he controlled the preparation of the
Commissioners' Court agenda the flow of paperwork. His
instructions regarding his first and all subsequent payments
not going through the auditors is more than a scintilla of
evidence that his statement to the Commissioners' Court
was false when it was made and was designed to be acted upon.
See Spoljaric v. Percival Tours, Inc., 708 S.W.2d
432, 434 (Tex. 1986).
addition, HCDD challenges Integ's right to recover
construction management fees on engineering work and contends
that Garza fraudulently misrepresented the contract to HCDD.
Integ's first invoice for construction management fees
submitted in April 2008 for over $100, 000, included fees on
preliminary engineering work for projects that were not yet
(1) preliminary engineering services, hydrology and hydraulic
analysis, final design, and preliminary engineering for the
Raymondville Drain project;
(2) construction and inspection of sluice gates at the
(3) preliminary engineering and right of way for Monte
(4) preliminary engineering and topographic, right of way,
preliminary engineering, control BMs for La Villa Drain;
(5) engineering and surveying, Geotech services, Penitas
drain PO for Penitas Drain Basin;
(6) preliminary engineering, field surveying, preliminary
engineering & schematics, topographic data & maps,
funding liaison, additional preliminary engineering, field
surveying, cultural resources, special services, on call
services, Penitas common levee, Penitas to common levee for
the Levee system;
(7) geotechnical engineering, preliminary engineering and
final design, channel final design, channel final ...