DANNY O. WATSON, Appellant v. LARRY HENDERSON, JENNIFER HENDERSON, AND PREMIER MOLDING, INC., Appellees

REVERSE and REMAND; Opinion issued January 20, 2010
 
 
 
In The
Court of Appeals
Fifth District of Texas at Dallas
............................
No. 05-08-01158-CV
............................
DANNY O. WATSON, Appellant
V.
LARRY HENDERSON, JENNIFER HENDERSON, AND
PREMIER MOLDING, INC., Appellees
.............................................................
On Appeal from the 15th District Court
Grayson County, Texas
Trial Court Cause No. 08-1446-015
.............................................................
MEMORANDUM
OPINION
Before Chief Justice Wright and Justices Bridges and Francis
Opinion By Justice Bridges
        Danny O. Watson appeals the trial court's summary judgment in favor of Larry Henderson, Jennifer Henderson, and Premier Molding, Inc. on the grounds that the statute of limitations barred Watson's claims. In five issues, Watson argues his claims were brought within the two-year limitations period, appellees' summary judgment motion on limitations grounds should have been denied for various reasons, and the trial court improperly allowed Henderson to use his own interrogatory answers in support of his motion for summary judgment. We reverse the trial court's judgment and remand for further proceedings.
        In July 2001, Watson filed suit “as an injured shareholder” against Danny L. Henderson, Telcom of Texas, Inc., Premier Mold & Mfg., Inc., and North Texas Utility Service, Inc. Watson did not name Larry Henderson or Jennifer Henderson as defendants. Watson claimed he owned a “47.5% interest in Telcom and Premier” and alleged he had served as “a Director and Vice-President of Telcom.” In June 1997, Telcom had started a division called Premier Mold & Manufacturing, Inc., with Danny Henderson, Larry Henderson, and Watson as its “initial directors.” Watson alleged he was terminated by “Henderson” after he “questioned Henderson about Henderson's self dealing.” Since his termination, Watson alleged, he had not been given notice of director or shareholder meetings of Telcom or Premier, had been denied access to the corporate books and records of Telcom or Premier, and received no dividends from Telcom or Premier. Watson asserted causes of action for fraud, breach of fiduciary duty, oppressive conduct, wrongful termination, unjust enrichment, conversion, negligence, breach of contract, conspiracy, and declaratory relief. In addition, Watson sought a temporary restraining order and a temporary injunction to prevent further transfer of Telcom's and Premier's assets or removal of their corporate documents.
        After entering a temporary restraining order in July 2001, on August 29, 2001, the trial court entered an order on Watson's application for a temporary injunction. The order stated Watson would “probably prevail on the trial of this cause.” The order enjoined Danny Henderson, Telcom, Premier Mold & Mfg., Inc., and North Texas Utility Service, Inc. from transferring any of the assets or issuing additional stock of Telcom or Premier. The order also enjoined the removal, alteration, or destruction of any of Telcom's or Premier's corporate documents.
        On April 1, 2002, Larry Henderson filed responses to Watson's interrogatories. Among other things, Larry Henderson's responses stated he was “president and [had] 100% ownership of Premier,” and Watson's ownership interest in Premier was “None.” Further, the responses indicated there was “No agreement” concerning Watson's ownership interest in Premier “because Danny Watson has no ownership interest.”
        According to Watson's affidavit filed in May 2008, Danny and Larry Henderson “were continually refusing to cooperate with [Watson's] attorney's efforts to obtain information regarding the finances, assets, and operations of” Telcom and Premier. At “some point in 2005,” Watson found the Premier Mold and Manufacturing facility abandoned. Watson's search outside the abandoned facility uncovered “some financial statements” and a January 25, 2005 letter from Larry Henderson to Premier's customers. The letter stated Premier was “building a new building in Whitewright, Texas and hope[d] to be moved in by the end of February.” According to the letter, the new name of the company was “Premier Molding, Inc.” The record contains Larry Henderson's deposition testimony taken in July 2006 that Jennifer Henderson was made the sole stockholder of Premier Molding, Inc.
        Danny Henderson died during the pendency of the underlying action. On January 25, 2007, Watson filed his second amended petition reasserting his claims against Danny Henderson, Telcom, and Premier, and “joining herein as additional Defendants, LARRY WAYNE HENDERSON, JENNIFER HENDERSON and PREMIER MOLDING, INC.” Watson alleged Jennifer Henderson and Larry Henderson had changed Premier Mold & Manufacturing by forming it into the new corporation, Premier Molding, moved the business as an ongoing concern to Whitewright, Texas, and issued all of Premier's stock to Jennifer Henderson. Watson alleged Larry Henderson was aware of the pending litigation and of the trial court's injunction preventing the transfer of Premier's assets. Nevertheless, Watson alleged Jennifer Henderson and Larry Henderson intentionally excluded Watson from “every connection with Premier” and breached the duty of utmost good faith and loyalty to Watson by converting all of Premier's assets and conveying them to the new entity, “Premier Molding.” Watson demanded an accounting of Telcom's and Premier's financial records to determine the amounts diverted to Danny Henderson, Larry Henderson, and Jennifer Henderson as a result of their fraud, breach of fiduciary duty, unjust enrichment, conversion, negligence, and breach of contract. Watson also requested the appointment of a receiver to “bring about a corporate rehabilitation” of Telcom and Premier.
        On April 8, 2008, Larry Henderson, Jennifer Henderson, and Premier Molding filed a motion for summary judgment on the grounds that Watson's claims against them were barred by limitations. The motion characterized Watson's claim in his original petition as a “complain[t] that Danny L. Henderson deprived him of certain rights of ownership in Premier Mold & Mfg, Inc. and other companies.” The motion quoted Larry Henderson's April 2002 response to interrogatories stating Larry Henderson was president and had 100% ownership of Premier. The motion did not address Watson's claims based on the actions of Larry Henderson and Jennifer Henderson in shifting Premier's assets into a new entity and moving the “new” Premier to Whitesboro, Texas.
        On May 9, 2008, Watson filed his third amended petition reasserting his prior claims and adding causes of action against Larry Henderson and Jennifer Henderson for fraudulent transfer of Premier's assets and for conversion, conspiracy, and unjust enrichment related to the transfer. The petition also added a cause of action for aiding and abetting breach of fiduciary duty against Jennifer Henderson.
        The trial court subsequently granted summary judgment in favor of Larry Henderson, Jennifer Henderson, and Premier on the basis that limitations barred Watson's claims against them. The trial court then entered an order severing Watson's claims against Larry Henderson, Jennifer Henderson, and Premier from Watson's claims against the other defendants and making the summary judgment final and appealable. This appeal followed.
        We first address Watson's arguments, raised in his first, second, fourth, and fifth issues, that Larry Henderson's claim to full ownership of Premier in answers to interrogatories in 2002 could not be used in his favor and did not commence any limitations period applicable to Watson's claims of fraudulent transfer, and summary judgment on limitations was improper because Watson sued Larry Henderson, Jennifer Henderson, and Premier within two years of the Hendersons' “transformation of Premier Manufacturing into Premier Molding.” The standard of review for summary judgment is well settled. Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548 (Tex.1985). A defendant moving for summary judgment on the affirmative defense of limitations has the burden to conclusively establish that defense. KPMG Peat Marwick v. Harrison County Hous. Fin. Corp., 988 S.W.2d 746, 748 (Tex.1999). A matter is conclusively established if ordinary minds cannot differ as to the conclusion to be drawn from the evidence. Triton Oil & Gas v. Marine Contractors & Supply, Inc., 644 S.W.2d 443, 446 (Tex.1982). Thus, the defendant must conclusively prove when the cause of action accrued and negate the discovery rule if pleaded or otherwise raised. KPMG, 988 S.W.2d at 748. If the movant establishes that limitations bars the action, the nonmovant must then adduce summary judgment proof raising a fact issue to avoid limitations. Id. A cause of action accrues, and the limitations period begins to run, from the time the wrongful conduct occurs even though the damages are not fully developed during the limitations period. Haidar v. Nortex Foundation Designs, Inc., 239 S.W.3d 924, 926 (Tex. App.-Dallas 2007, no pet.).
        Here, Watson sued Danny Henderson, Telcom, and Premier in July 2001, alleging he had been wrongfully terminated and denied access to the corporate books and records of Telcom or Premier. In April 2002, Larry Henderson filed responses to interrogatories claiming he was president of Premier and owned Premier completely. Larry Henderson contends only that these responses constituted notice to Watson that Larry Henderson excluded Watson from ownership of Premier, and limitations began to run on Watson's claims against Larry Henderson at that time. We disagree.
        Generally, answers to interrogatories may be used only against the party answering the interrogatories, rather than as self-serving statements for the party making them. Tex. R. Civ. P. 197.3; Morgan v. Anthony, 27 S.W.3d 928, 929 (Tex. 2000); Yates v. Fisher, 988 S.W.2d 730, 731 (Tex. 1999); Keever v. Hall & Northway Advertising, Inc., 727 S.W.2d 704, 705 (Tex. App.-Dallas 1987, no writ). Interrogatory answers are incompetent summary judgment evidence. Garcia v. Nat'l Eligibility Express, 4 S.W.3d 887, 890 (Tex. App.-Houston [1st Dist.] 1999, no pet.) (citing Yates, 988 S.W.2d at 731). Answers to interrogatories cannot be considered even if no one objects in the trial court or challenges their use on appeal until rehearing. Garcia, 4 S.W.3d at 890. Thus, Larry Henderson's 2002 responses to interrogatories were incompetent summary judgment evidence, and he could not use them to support his argument that limitations barred Watson's claims. See id.; Keever, 727 S.W.2d at 705.
        Even assuming Watson was on notice in 2002 that Larry Henderson claimed 100% ownership of Premier, the record shows Watson initially sued Danny Henderson, claiming Danny Henderson excluded him from ownership of Premier and Telcom. Watson obtained an injunction prohibiting the transfer of Premier's assets. Nevertheless, sometime after January 25, 2005, Larry Henderson moved Premier's offices and changed its name, and Jennifer Henderson became Premier's sole shareholder. On January 25, 2007, Watson filed his second amended petition stating claims based on Larry Henderson's and Jennifer Henderson's actions in fraudulently transferring and converting Premier's assets. A four-year statute of limitations applies to claims of fraud. Tex. Civ. Prac. & Rem. Code Ann. § 16.004(4) (Vernon 2002). A two-year statute of limitations applies to claims of conversion. Tex. Civ. Prac. & Rem. Code Ann. § 16.003(a) (Vernon Supp. 2009). Watson's claims against Larry Henderson, Jennifer Henderson, and the new Premier corporation all relate to “wrongful conduct” that occurred less than two years before Watson's second amended petition. See Haidar, 239 S.W.3d at 926. Watson asserted no cause of action against Larry Henderson or Jennifer Henderson relating to Larry Henderson's claim he had “100% ownership of Premier” in response to interrogatories in 2002.
        Accordingly, summary judgment was improper on the basis that limitations barred Watson's claims. See Nixon, 690 S.W.2d at 548. We sustain Watson's first, second, fourth, and fifth issues. Because of our disposition of these issues, we need not address Watson's third issue arguing whether his claims against Jennifer Henderson and Premier were derivative of his claims against Larry Henderson.
        We reverse the trial court's summary judgment and remand for further proceedings.
 
 
                                                          
                                                          DAVID L. BRIDGES
                                                          JUSTICE
 
081158F.P05