Opinion
No. 05-07-00136-CV
Opinion Filed May 22, 2008.
On Appeal from the 401st District Court Collin County, Texas Trial Court Cause No. 401-3431-05.
Before Justices O'NEILL, RICHTER, and LANG.
MEMORANDUM OPINION
Appellant Larry Brown brought an action against John Bowers, appellee, for negligent misrepresentation, fraud, fraudulent misrepresentation, fraudulent inducement, breach of contract, and violations of the Deceptive Trade Practices Act based on the sale of a printing facility to Brown. See Footnote The trial court granted Bowers's plea in abatement and ordered Brown to replead. Then, the trial court granted Bowers's motion to dismiss after it determined Brown had not properly amended his petition in accordance with the order granting the plea in abatement. Brown appeals from the order of the trial court dismissing the case with prejudice.
The lawsuit was originally styled Larry Brown v. John Bowers. Brown amended his pleadings and styled the parties Larry Brown, individually and as representative of Forward Color, Ltd.., v. John Bowers, individually and as representative of Gigantic Color, Inc., John Bowers, individually and as representative of Creative Type Graphics, Inc. We will refer to the parties as Brown and Bowers.
In two issues, Brown argues the trial court abused its discretion by (1) dismissing his lawsuit when he had timely complied with the trial court's order to amend his pleadings to properly state the parties to the suit; and (2) granting Bowers's plea in abatement. Because the issues in this appeal involve the application of well-settled principles of law, we issue this memorandum opinion. See Tex. R. App. P. 47.2(a), 47.4. We vacate the trial court's order of dismissal, reverse the order granting the plea in abatement, and remand the case to the trial court for further proceedings.
I. FACTUAL AND PROCEDURAL BACKGROUND
In October 2001, Brown negotiated with Bowers for the purchase of assets comprising a printing business in Austin, Texas. According to Brown, Bowers represented that he "owned the business" and Brown "had no reason to believe otherwise." Also, Brown claimed Bowers provided "all financial documentation" which Brown relied upon in making his decision to purchase the assets. Brown asserts Bowers represented to him "that the business was `solid,' and `formidable' with a guaranteed monthly financial return and an infinite upside to earning potential." Brown's company, Forward Color, Ltd., purchased the assets comprising the printing facility from Creative Type and Graphics, Inc. ("CTG, Inc.") and Gigantic Color, Inc. ("GC, Inc.") pursuant to a written agreement. Appellee John Bowers signed the agreement as "Vice President" of both CTG, Inc. and GC, Inc. Appellant Larry Brown signed the agreement as "President" of Forward Color, Ltd. The business did not perform as Brown had expected and he closed the business in January 2004.
On October 7, 2005, Brown filed suit against Bowers for negligent misrepresentation, fraud, fraudulent misrepresentation, fraudulent inducement, breach of contract, and violations of the Deceptive Trade Practices Act based on the sale of the printing facility, naming only Bowers as a defendant. Bowers filed his first plea in abatement on January 20, 2006 in his Third Amended Original Answer and Counter-claims and included the same plea in his subsequently filed amended pleadings.
In the plea in abatement, Bowers asserted the suit was "improperly brought" against him because he, individually, was not the seller of the business. Bowers "specifically denie[d] that he sold the subject business to the plaintiff." Rather, Bowers argued, the sale was done through corporations and, "regardless of the facts alleged by appellant," he would not be able to recover against Bowers. In the plea, Bowers asked the trial court to abate the case until a "proper defendant" was before the trial court.
While the plea in abatement was pending with the trial court, Bowers continued to engage in discovery and bring discovery disputes before the trial court, including a motion for sanctions. The plea in abatement was not set for a hearing until October 17, 2006, at which time the trial court granted it. The order stated, ". . . this cause is abated for 14 days and if Plaintiff's suit is not amended to reflect the correct and proper parties within said period of time, this suit will be dismissed." Brown amended his pleadings on November 2, 2006, styling the case Larry Brown, individually and as representative of Forward Color, Ltd., v. John Bowers, individually and as representative of Gigantic Color, Inc., John Bowers, individually and as representative of Creative Type Graphics, Inc.
At a pretrial conference on January 30, 2007, Bowers asserted Brown had not complied with the trial court's order on the plea in abatement. Bowers argued there was still no proper defendant before the court and urged dismissal because Brown had named only John Bowers as a defendant, and not the corporations. In the January 30, 2007 order granting dismissal, the trial court stated Brown had not amended his pleadings "to reflect the correct and proper parties as provided for in this Court's October 17, 2006 Order," and "there is not now a proper and unabated Defendant before this Court." The trial court dismissed "Plaintiff's Original Petition and all subsequent pleadings, no matter how styled" with prejudice. This appeal followed.
II. STANDARD OF REVIEW
A trial court's decision on a plea in abatement is subject to review under an abuse of discretion standard. Wyatt v. Shaw Plumbing Co., 760 S.W.2d 245, 248 (Tex. 1988). A trial court's order of dismissal is also reviewed for abuse of discretion. KSNG Architects, Inc. v. Beasley, 109 S.W.3d 894, 897 (Tex.App.-Dallas 2003, no pet.). A trial court abuses its discretion if it acts in an arbitrary or unreasonable manner without reference to any guiding rules or principles. Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241-242 (Tex. 1985). Under an abuse of discretion review, an appellate court is not free to substitute its own judgment for the trial court's judgment. Bowie Mem'l Hosp. v. Wright, 79 S.W.3d 48, 52 (Tex. 2002). An error in analyzing or applying the law is an abuse of discretion. In re Bruce Terminix, 988 S.W.2d 702, 703-04 (Tex. 1998) (orig. proceeding).
III. DISCUSSION
Because Brown's second issue is dispositive, we address it first. In his second issue, Brown argues the trial court abused its discretion in granting Bowers's plea in abatement.
A. Applicable Law 1. Plea in Abatement
A plea in abatement challenges the plaintiff's pleading by asserting that facts outside the pleadings prevent the suit from going forward until the problem can be cured. KSNG Architects, Inc., 109 S.W.3d at 898; Morgan v. City of Alvin, 175 S.W.3d 408, 421 (Tex.App.-Houston [1st Dist.] 2004, no pet.). In a plea in abatement, the defendant must (1) identify any impediment to the continuation of the suit, (2) identify an effective cure, and (3) ask the court to abate the suit until the defect is corrected. Morgan, 175 S.W.3d at 421 (citing Truong v. City of Houston, 99 S.W.3d 204, 216 (Tex.App.-Houston [1st Dist.] 2002, no pet.)); Bryce v. Corpus Christi Area Convention Tourist Bureau, 569 S.W.2d 496, 499 (Tex.App.-Corpus Christi 1978, writ ref'd n.r.e.). When a plea in abatement is sustained, the trial court should abate the suit and give the plaintiff a reasonable opportunity to amend and remove the obstacle. Morgan, 175 S.W.3d at 421. "A plea in abatement may not be used to determine the merits of an action." KSNG Architects, Inc., 109 S.W.3d at 898.
2. Individual Liability of Corporate Representative
It is a longstanding rule in Texas that a corporate agent may be personally liable for his own fraudulent or tortious acts, even when acting within the course and scope of his employment. Miller v. Keyser, 90 S.W.3d 712, 717 (Tex. 2002); Cimarron Hydrocarbon Corp. v. Carpenter, 143 S.W.3d 560, 564 (Tex.App.-Dallas 2004, pet. denied); see also Wheeler v. Box, 671 S.W.2d 75, 79 (Tex.App.-Dallas 1984, no writ) (holding a corporate agent personally liable for misrepresentations made during the sale of a business). A corporate agent may also be personally liable under the Deceptive Trade Practices Act for his own misrepresentations. Miller, 90 S.W.3d at 717 ("If there is evidence that the agent personally made misrepresentations, then that agent can be held personally liable."); see also Cimarron Hydrocarbon Corp., 143 S.W.3d at 564; Guilbeau v. Anderson, 841 S.W.2d 517, 519 (Tex.App.-Houston [14th Dist.] 1992, no writ).
B. Application of Law to Facts
Bowers used the plea in abatement to assert he was not liable to Brown and, rather, it was the business entities who were the "correct parties" to the lawsuit. The trial court's dismissal order disposed of the entirety of Brown's claims and denied Brown any recovery against Bowers by determining Bowers was not a "correct and proper" party to the lawsuit. While some of Brown's claims were based solely on the contract between the business entities, Brown also pleaded fraudulent inducement, negligent misrepresentation and DTPA claims that allegedly exposed Bowers to individual liability. See Wheeler, 671 S.W.2d at 79 (misrepresentation); Miller, 90 S.W.3d at 717 (DTPA); see also Cimarron Hydrocarbon Corp., 143 S.W.3d at 564; Light, 663 S.W.2d at 815; Guilbeau, 841 S.W.2d at 519. The merits of these claims should not be addressed by a plea in abatement, but should be addressed in the normal course, on the merits, by a motion for summary judgment or at trial. See KSNG Architects, Inc., 109 S.W.3d at 898 ("A plea in abatement may not be used to determine the merits of an action."). We conclude the plea in abatement cannot be used in this instance to secure dismissal on the merits.
Accordingly, we conclude the trial court abused its discretion in granting Bowers's plea in abatement. We decide with Brown on his second issue. Because the basis for the trial court's order of dismissal was the failure to comply with the order granting the plea in abatement, the trial court's order of dismissal was likewise in error. Accordingly, we decide in appellant's favor on the first issue as well.
IV. CONCLUSION
The trial judge abused his discretion in granting Bowers's plea in abatement and in dismissing the case. Therefore, we vacate the trial court's order dismissing the case, reverse the order granting Bowers's plea in abatement, and remand to the trial court for further proceedings consistent with this opinion.