Robert O. Bell v. Northside Auto Service Center, Inc., Richard Bray, and Nancy Bray--Appeal from 225th Judicial District Court of Bexar County

MEMORANDUM OPINION

No. 04-03-00392-CV

Robert O. BELL,

Appellant

v.

NORTHSIDE AUTO SERVICE CENTER, INC., and Richard BRAY and Nancy Bray,

Appellees

From the 45th Judicial District Court, Bexar County, Texas

Trial Court No. 99-CI-11488

Honorable David Berchelmann, Judge Presiding

Opinion by: Sandee Bryan Marion, Justice

Sitting: Alma L. L pez, Chief Justice

Karen Angelini, Justice

Sandee Bryan Marion, Justice

Delivered and Filed: March 31, 2004

AFFIRMED

Appellant, Robert Bell, appeals the trial court's judgment in favor of appellees, Northside Auto Service Center, Inc., Richard Bray, and Nancy Bray. In two issues on appeal, appellant contends the trial court abused its discretion by rendering a take-nothing judgment when appellant produced evidence that demonstrated appellees (1) owed him a debt and (2) breached fiduciary duties they owed appellant. Finding no error, we affirm.

BACKGROUND

On July 21, 1994, Bell entered into a written contract for the purchase of forty-nine percent of the stock issued in Northside Auto Service Center, Inc. ("NASC") for $65,000 from appellee, the president of NASC, Richard Bray. Bell made an additional investment of $6,000 in December of 1997. Bell received regular monthly payments from NASC of $800 beginning in July 1994 until December 1997. However, NASC eventually suspended payments on January 1, 1998 due to decreased revenues. Bray notified Bell that payments would resume, revenues permitting, when the business became profitable again. In July 1998, Bell began receiving a lowered monthly payment from NASC of $400 which he continued to receive until July 1999. On August 10, 1999, Bell sued Bray individually seeking a corporate accounting. In his original petition, he claimed that he invested in Bray's corporation, NASC, in order to receive monthly dividends. Subsequently, Bell amended his original petition claiming the $65,000 and $6,000 were loans to NASC instead of an investment. Bell also added NASC and Nancy Bray, Richard's wife, as defendants. After a bench trial, the trial court rendered a take-nothing judgment in favor of appellees.

IMPLIED FINDINGS OF FACT AND CONCLUSIONS OF LAW

In his first issue on appeal, Bell argues the trial court abused its discretion when it granted a take-nothing judgment in favor of appellees. More specifically, he claims the trial court erred because Bell established Bray owed him a debt. Although Bell initially filed a request for findings of fact and conclusions of law, he did not file a timely "Notice of Past Due Findings of Fact and Conclusions of Law." See Tex. R. Civ. P. 296, 297. Because Bell failed to file a "Notice of Past Due Findings of Fact and Conclusions of Law," we will review the record as if he failed to make an initial request. See Las Vegas Pecan & Cattle Co., Inc. v. Zavala County, 682 S.W.2d 254, 255-56 (Tex. 1984). When a party neither files nor requests findings of fact or conclusions of law, the trial court's judgment implies all necessary findings of fact to support it. See Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 83 (Tex. 1992). When the evidence supports the implied findings of fact, we must uphold the judgment on any legal theory applicable to the case. Point Lookout W., Inc. v. Whorton, 742 S.W.2d 277, 278 (Tex. 1987). We consider only the evidence most favorable to the implied fact findings and disregard all opposing or contradictory evidence. Castano v. Wells Fargo Bank, 82 S.W.3d 40, 43 (Tex. App.--San Antonio 2002, no pet.).

Sale of Stock or Loan

In his First Amended Petition, Bell pled that he made two loans to Bray totaling $71,000 in exchange for (1) 24,900 shares of stock in NASC as collateral and (2) regular monthly payments as "dividends" on his loans. Bray claimed Bell purchased a forty-nine percent interest in NASC in exchange for $65,000. To support his position, Bray testified to, and offered into evidence, a written contract evidencing their agreement that Bell purchased a forty-nine percent interest in NASC and received 24,900 shares of stock. Bray testified that NASC made the $800 monthly payments as distributions in accordance with Bell's minority ownership in the corporation. Bray also testified that he asked Bell, as a minority shareholder in NASC, to invest an additional $6,000. During trial, Bell admitted that he originally described this transaction in his pleadings as a purchase of stock and not a loan. Bray also offered into evidence Bell's K-1 tax statements that reflect Bell's share of income, credits and deductions from the corporation. The K-1 tax statements show that Bell classified his receipt of monthly payments from NASC as profit distributions from a sub-chapter S corporation. In addition, Bell's K-1 tax statements listed him as a shareholder in the corporation. We conclude the forgoing evidence supports the trial court's implied finding that the parties entered into a transaction to sell stock rather than a loan agreement. Because of the standard of review, we disregard all opposing evidence. Castano, 82 S.W.3d at 43. Therefore, we overrule Bell's first issue on appeal.

Breach of Fiduciary Duties

In his second issue on appeal, Bell contends the trial court erred by rendering a take-nothing judgment in light of the evidence that Bray breached the fiduciary duties he owed to Bell. To recover for a breach of a fiduciary duty, appellant must establish appellee was appellant's fiduciary. Myer v. Cuevas, 119 S.W.3d 830, 836 (Tex. App.--San Antonio 2003, no pet.). Due to its extraordinary nature, the law does not recognize a fiduciary relationship lightly. Id. While corporate officers owe fiduciary duties to the corporations they serve, they do not owe fiduciary duties to individual shareholders unless a contract or special relationship exists between them in addition to the corporate relationship. Id.

Bell argued that Bray breached his fiduciary duties by: (1) using his position to receive profits and benefits from their agreement at Bell's expense; (2) operating the corporation in such a way "as to subvert or overpower [Bell's] mind at the time of the execution of the agreement"; (3) fraudulently diverting corporate funds and misrepresenting his intent to repay Bell; and (4) failing to fully disclose the corporation's accounting of funds. Bell testified that he reviewed the corporate records before investing in NASC to his satisfaction. Bell also testified that he attended only two shareholder meetings. Bray testified that the corporation did not hold shareholder meetings in certain years because he was recovering from a heart attack and bypass surgery. In addition, Bray testified that he was not trying to hide anything from Bell and that if Bell wanted a shareholder's meeting, all he had to do was ask. Bray also testified that Bell never asked to examine the corporate financial records. Bell did not offer any evidence of fraudulent inducement, misrepresentation, or any evidence of Bray's intent to receive profits and benefits at Bell's expense. Because we conclude sufficient evidence exists to support the trial court's implied finding that Bray did not breach his fiduciary duties and because we disregard any opposing evidence; we overrule Bell's second issue on appeal.

Because we overrule Bell's issues on appeal, he is not entitled to recover attorney's fees. See Tex. Civ. Prac. & Rem. Code Ann. 38.001(8) (Vernon Supp. 2003); Green Int'l, Inc. v. Solis, 951 S.W.2d 384, 390 (Tex. 1997).

CONCLUSION

We overrule appellant's issues on appeal and affirm the trial court's judgment.

Sandee Bryan Marion, Justice