Capitol Aggregates, Inc. v. R.E.G. Enterprises, Inc. and Robert E. Gilfillan--Appeal from 21st District Court of Bastrop County

cv0-080 IN THE COURT OF APPEALS, THIRD DISTRICT OF TEXAS,
AT AUSTIN
NO. 3-90-080-CV
CAPITOL AGGREGATES, INC.,

APPELLANT

 
vs.
R.E.G. ENTERPRISES, INC. AND ROBERT E. GILFILLAN,

APPELLEES

 
FROM THE DISTRICT COURT OF BASTROP COUNTY, 21ST JUDICIAL DISTRICT
NO. 19,222, HONORABLE JOHN L. PLACKE, JUDGE

A creditor brought a collection suit against a corporation and its sole shareholder and president. The defendants counterclaimed, alleging that the creditor had breached the Deceptive Trade Practices Act and the duty of good faith and fair dealing. The trial court rendered judgment for the defendants. We will reverse and render a take nothing judgment.

 
BACKGROUND

This suit arises from Capitol Aggregates, Inc.'s continued attempt to collect a $9,400 debt after it had been paid. The suit resulted in judgment against Capitol for over $1.2 million because Capitol allegedly caused the financial ruin of the debtor and its sole shareholder.

When R.E.G. Enterprises, Inc. failed to pay Capitol's $9,416.86 gravel bill, Capitol filed a materialman's lien against the subdivision R.E.G. was developing and for which it had purchased the gravel. Three months later, Capitol sued R.E.G. to collect the debt and foreclose its lien. In the same lawsuit, Capitol alleged that R.E.G. and its president, Robert Gilfillan, had violated the contractor's trust fund statute, Tex. Prop. Code Ann. 162.001 - .033 (1984 & Supp. 1991). Capitol immediately served interrogatories and a request for admissions.

In an attempt to settle the dispute, R.E.G. directly paid Capitol the principal amount of its claim in return for a release. The parties dispute the scope of this release. However, appellees allegedly believed that all of Capitol's claims against them were settled, so they disregarded Capitol's discovery requests.

Capitol's attorney, Geoffrey Price, apparently did not realize that R.E.G. had paid Capitol. One month after the attempted settlement, he filed a motion for summary judgment as to all of Capitol's claims, arguing that the allegations in Capitol's request for admissions were deemed admitted due to appellees' failure to respond.

Only R.E.G. replied to Capitol's motion, pleading payment and release and requesting dismissal of the suit. R.E.G. also moved for sanctions against Capitol and Price, complaining that they continued to prosecute a claim that had been paid. Price then supplemented Capitol's motion for summary judgment to acknowledge payment of its principal claim. However, Price continued to demand $3,150 in attorney's fees and $2,500 in exemplary damages and costs. The trial court denied both Capitol's motion for summary judgment and R.E.G.'s motion for sanctions.

Several months later, appellees counterclaimed against Capitol in the same lawsuit. Appellees contended that, by pursuing its claim after R.E.G. had paid it, Capitol had breached a duty of good faith and fair dealing and the Deceptive Trade Practices Act, Tex. Bus. & Com. Code Ann. 17.41 - .63 (1987 & Supp. 1991) ("DTPA"). At trial, appellees claimed that Capitol's lawsuit had created a cloud on R.E.G.'s title to its subdivision. Appellees asserted that Capitol's conduct caused R.E.G. to lose sales and appellees' lenders to foreclose on R.E.G.'s subdivision and on Gilfillan's residence.

The jury found that Capitol, in its dealings with Gilfillan, had breached the DTPA and a duty of good faith and fair dealing. There were no issues as to R.E.G. The jury found the following damages as to Gilfillan: $562,165 for loss of the subdivision, $15,000 for loss of his house, $115,000 for damage to his credit, $100,000 for mental anguish, $300,000 for exemplary damages, and $28,783.02 for attorneys' fees. The trial court rendered judgment for both Gilfillan and R.E.G. for the amount of the verdict, plus treble damages under the DTPA and $115,287.75 in prejudgment interest.

 
THE CONTROVERSY

Capitol brings eighteen points of error, relating to the jury charge, the sufficiency of the evidence, the procedure at trial and appellees' failure to respond to discovery. We will address Capitol's contentions that: (1) the verdict does not support the judgment as to R.E.G.; and (2) the evidence is insufficient to support the verdict as to Gilfillan.

 
DISCUSSION AND HOLDINGS

I. CAPITOL'S LIABILITY TO R.E.G.

First, Capitol complains that the verdict does not support the judgment as to R.E.G. because the jury did not find Capitol liable to R.E.G. We agree.

A plaintiff waives a claim if he fails to request jury issues as to that claim. Martin v. McKee Realtors, Inc., 663 S.W.2d 446, 448 (Tex. 1984); Wilhite v. Adams, 640 S.W.2d 875, 877 (Tex. 1982). In this case, R.E.G. wholly failed to request any issues regarding its claims against Capitol. Therefore, R.E.G. has waived its claims.

Appellees contend that Capitol did not preserve its complaint because Capitol failed to request an issue regarding its liability to R.E.G. A defendant has no duty to request issues as to the plaintiff's cause of action, however. See Martin, 663 S.W.2d at 448. Accordingly, Capitol did not need to request issues as to R.E.G. to preserve its error.

 

I. THE VERDICT AS TO GILFILLAN

Capitol next complains about Gilfillan's judgment. In its answers to the only issues dealing with liability, the jury found that, as to Gilfillan, Capitol violated the DTPA and breached the duty of good faith and fair dealing. Capitol contends that there was no evidence to support these findings. (1) We agree.

 

A. Gilfillan's Deceptive Trade Practices Claim

Only a "consumer" may bring a private action for deceptive trade practices. Tex. Bus. & Com. Code Ann. 17.50(a) (1987); Flenniken v. Longview Bank & Trust Co., 661 S.W.2d 705, 706 (Tex. 1983). The term "consumer" includes an individual "who seeks or acquires by purchase or lease, any goods or services." Tex. Bus. & Com. Code Ann. 17.45(4). There are two elements of "consumer" status: (1) the plaintiff must have sought or acquired goods or services by purchase or lease; and (2) the goods or services purchased or leased must form the basis of the plaintiff's complaint. Melody Home Mfg. Co. v. Barnes, 741 S.W.2d 349, 351-352 (Tex. 1987). The plaintiff carries the burden of proving that he satisfies both elements of this test. Farmers & Merchants State Bank v. Ferguson, 617 S.W.2d 918 (Tex. 1981).

Gilfillan has not satisfied the first element of the consumer status test. (2) In this respect, Gilfillan does not contend that he is a consumer as to the gravel transaction between Capitol and R.E.G. Rather, Gilfillan relies solely on the release Capitol executed when R.E.G. paid its principle claim. However, a release of a claim is not a transaction in goods or services if the complaining party was not involved in the underlying transaction in goods or services.

Gilfillan insists that a party to an instrument may sue under the DTPA for misrepresentations associated with that instrument. Gilfillan cites Aetna Casualty & Surety Co. v. Marshall, 724 S.W.2d 770 (Tex. 1987), in support of his argument. Marshall does not establish, however, that a party to an instrument is a consumer under the DTPA. Rather, Marshall holds that a plaintiff who sues under article 21.21 of the Texas Insurance Code need not satisfy the DTPA's consumer status test. Marshall, 724 S.W.2d at 772.

In this case, Gilfillan sued under the DTPA. Accordingly, he had the burden of proving that he was a consumer. Because no evidence exists that Gilfillan was a consumer, he cannot recover for Capitol's alleged breach of the DTPA.

Gilfillan also argues that Capitol has waived its complaint that Gilfillan is not a consumer. First, Gilfillan argues that Capitol judicially admitted that he is R.E.G.'s alter ego because Capitol prayed for joint and several relief in its petition. Second, Gilfillan contends that Capitol failed to preserve error because it did not timely object to the issues regarding its liability to Gilfillan or tender issues of its own.

Capitol's prayer for joint and several relief is not a judicial admission that Gilfillan is R.E.G.'s alter ego. It is true that allegations in a petition constitute formal judicial admissions which are conclusive against the pleader. Beta Supply, Inc. v. G.E.G. Power Cooling Systems, Inc., 748 S.W.2d 541, 542 (Tex. App. 1988, writ den'd). An assertion may not be a judicial admission, however, unless it is deliberate, clear and unequivocal. Catherman v. First State Bank, 796 S.W.2d 299, 302 (Tex. App. 1990, n.w.h.); Kirby Forest Industries v. Kirkland, 772 S.W.2d 226, 233 (Tex. App. 1989, writ den'd); American Casualty Co. v. Conn, 741 S.W.2d 536, 539 (Tex. App. 1987, no writ). We must evaluate the allegation in its context to determine whether it is a judicial admission. See Blieden v. Greenspan, 751 S.W.2d 858, 859 (Tex. 1988).

In this case, the prayer for joint and several relief in Capitol's petition does not rise to the level of a judicial admission. The petition alleges an action on a debt only as to R.E.G. The petition also alleges an action under the contractor's trust fund statute against both R.E.G and Gilfillan. A fair reading of the prayer, in the context of the entire petition, indicates that Capitol requested joint and several relief only as to the trust fund action. At the very least, the petition is unclear and equivocal as to whether Capitol sought relief against Gilfillan on the gravel debt. We hold, therefore, that the prayer for joint and several relief is not an admission that Gilfillan is the alter ego of R.E.G.

Further, Capitol properly preserved error as to this point. Gilfillan contends that Capitol should have specifically objected, before the charge was read to the jury, that there was no evidence of Gilfillan's consumer status. We disagree.

Capitol presents a "no evidence" point of error. A party may preserve a "no evidence" point in one or more of the following ways: (1) a motion for instructed verdict; (2) an objection to submission of the issue to the jury; (3) a motion to disregard the jury's answer to a vital fact issue; (4) a motion for judgment notwithstanding the verdict; or (5) a motion for new trial. Steves Sash & Door Co. v. Ceco Corp., 751 S.W.2d 473, 477 (Tex. 1988). Capitol filed a motion for judgment notwithstanding the verdict, specifically stating that there was no evidence to support the jury's findings. Capitol need not have also specifically objected to the issues prior to submission. See Anderson Machinery Co. v. Harber, 584 S.W.2d 480, 482 (Tex. Civ. App. 1979, no writ).

 

B. Duty of Good Faith and Fair Dealing

The next issue is whether Gilfillan may recover for breach of a duty of good faith and fair dealing. Generally, a duty of good faith and fair dealing does not exist in every contract. English v. Fischer, 660 S.W.2d 521, 522 (Tex. 1983). The duty may arise, however, from "a special relationship between the parties governed or created by a contract." Arnold v. Nat'l County Mutual Fire Ins. Co., 725 S.W.2d 165, 167 (Tex. 1987).

No evidence exists of a special relationship between Capitol and Gilfillan that would justify implication of the duty in this case. The only relationship here existed between Capitol and R.E.G. -- R.E.G. was the entity that purchased the gravel from Capitol, incurred the debt to Capitol, and then defaulted on that debt. Consequently, Gilfillan cannot recover for breach of the duty of good faith and fair dealing.

 

C. Gilfillan's Relationship to R.E.G.

In support of his judgment, Gilfillan contends that he is R.E.G.'s alter ego and that he can recover personally because he was indirectly injured by Capitol's actions. We disagree.

First, we do not agree that Gilfillan may recover as R.E.G.'s alter ego. When a corporation is merely the alter ego of a shareholder, the law will disregard the corporate fiction and treat the shareholder and the corporation as a single entity. Mancorp, Inc. v. Culpepper, 34 Sup. Ct. J. 157, 158 (December 12, 1990); Castleberry v. Branscum, 721 S.W.2d 270, 271 (Tex. 1986). A shareholder may not, however, choose for himself when to disregard the corporate shield. Delta Pipe Fabricators, Inc. v. Bullock, 638 S.W.2d 652, 653 (Tex. App. 1982, writ ref'd n.r.e.); Texaco, Inc. v. Calvert, 526 S.W.2d 630, 634 (Tex. Civ. App. 1975, writ ref'd n.r.e.). Accordingly, Gilfillan may not opt to disregard the corporate shield merely because that would benefit him. Even if he could do so, he has waived that option because he failed to request a finding that he is R.E.G.'s alter ego. See Martin v. McKee Realtors, Inc., 663 S.W.2d 446, 448 (Tex. 1984)

Second, we do not agree that Gilfillan may recover because he was indirectly injured by Capitol's alleged misconduct. A shareholder cannot recover damages personally for a wrong done solely to the corporation, even though he may be injured by that wrong. Wingate v. Hajdik, 795 S.W.2d 717, 719 (Tex. 1990). Rather, the law requires the corporation to bring its own actions in order to avoid multiple recovery and to protect the corporation's creditors' claims against the corporation's assets. Id. Thus, Gilfillan may not recover for his injuries resulting from R.E.G.'s downfall.

 
CONCLUSION

The trial court erred in granting judgment for R.E.G. because the jury did not find Capitol liable to R.E.G. in any respect. The trial court further erred in granting judgment for Gilfillan because no evidence exists to support the verdict for him. Gilfillan was not a consumer under the DTPA in this case. Moreover, Capitol did not owe Gilfillan a duty of good faith and fair dealing. Finally, Gilfillan cannot recover for Capitol's alleged wrongs to R.E.G. in this case.

Capitol's points of error one, two, five, and seven are sustained. Because we determine this appeal on these points, we will not address Capitol's remaining points of error. We reverse the trial court's judgment and render a take nothing judgment against R.E.G. and Gilfillan.

 

Jimmy Carroll, Chief Justice

[Before Chief Justice Carroll, Justices Powers and Jones]

Reversed and Rendered

Filed: January 30, 1991

[Do Not Publish]

1. In deciding a "no evidence" point, we consider only the evidence which, viewed in its most favorable light, supports the fact finding. Glover v. Texas General Indemnity Co., 619 S.W.2d 400, 401 (Tex. 1982). We must reject all evidence contrary to the verdict. Glover, 619 S.W.2d at 401. If no evidence exists as to a material element of the plaintiff's case, we must reverse and render judgment unless justice requires that we remand for new trial. Mobil Oil Corp. v. Frederick, 621 S.W.2d 595, 596 (Tex. 1981).

2. In his brief, Gilfillan focuses on the second part of the consumer status test, citing Flenniken, 661 S.W.2d 705, for the proposition that the DTPA applies to legal proceedings that arise from a transaction involving goods or services. We express no opinion as to whether the DTPA applies to collection suits.