Opinion by: SANDEE BRYAN MARION, Justice.

This case arises from the trial court's denial of Griffin Industries' ("Griffin") motion for sanctions under sections 10.001,10.002, and 10.004 of the Texas Civil Practice and Remedies Code. In May 1996, a suit was filed by a class of land-owners ("plaintiffs"), in which plaintiffs alleged several "owner-operator" defendants operated unauthorized, illegal, and/or negligent waste management activities and that several "generator defendants" negligently disposed of various hazardous chemicals and waste. Griffin was named as one of the many "generator defendants" in plaintiffs' suit. On September 5, 1997, approximately a year and a half after the initiation of the lawsuit, Griffin filed a Rule 13 motion for sanctions against plaintiffs' attorney David Leibowitz ("Leibowitz"; "plaintiffs' counsel") arguing that plaintiffs brought their suit without proper investigation and named Griffin as a defendant without any basis for their allegations. On December 19, 2000, Griffin filed an amended motion arguing that sanctions were appropriate under sections 10.001,10.002, and 10.004 of the Texas Civil Practice and Remedies Code. After conducting a hearing, the trial court denied Griffin's amended motion.

Griffin now appeals, arguing plaintiffs' counsel violated section 10.001 because: 1) he failed to conduct a reasonable inquiry before filing suit against Griffin; 2) he filed a petition without any evidentiary support or likely to have evidentiary support after a reasonable opportunity for further investigation; and 3) he continued to prosecute the suit for an improper purpose. Griffin also claims that because plaintiffs' counsel did not demonstrate due diligence in investigating and handling plaintiffs' claims, it is entitled to attorneys' fees as well as costs for inconvenience and harassment. Finally, Griffin argues because we are to review a trial court's conclusions of law de novo, we are not bound by the erroneous conclusions issued by the trial court. We affirm the trial court's judgment.

Statement of Facts

The J.C. Pennco Waste Oil Service ("Pennco") is an inactive, used drum recycling and waste oil recycling facility occupying a five acre tract in San Antonio. The land is surrounded by residential and rural areas. The company's owner, Courtney Pennington ("Pennington"), purchased the site in 1984. Pennco's primary business was to transport, blend, and market waste oil and to recondition used drums for subsequent reuse.

In May and June 1991, anonymous complainants contacted the Texas Natural Resource Conservation Commission ("TNRCC"), regarding the discharge of contaminated water to the surface and ground water adjacent to the Pennco site. As a result, the TNRCC launched investigations into Pennco's waste disposal practices. The TNRCC found Pennco in violation of several state and federal environmental regulations, and it identified approximately three hundred companies, which had conducted business with Pennco, as potentially responsible parties ("PRPs"). On a tentative list issued by TNRCC, Griffin was identified as a PRP.

Pennington abandoned the site on April 23, 1992 and eventually filed for bankruptcy on May 20, 1992. At the time of abandonment, an estimated 7,050 tanks and drums were scattered throughout the site. These tanks and drums were overflowing with hazardous materials.

On August 30, 1992, Griffin's general manager, Rick Kellison ("Kellison"), called the TNRCC to explain that Griffin operated a meat rendering plant, and its only transaction with Pennco was to purchase empty food-grade barrels to store inedible food. Despite this call, the TNRCC issued a list on January 24, 1994 again identifying Griffin as a PRP.

On March 11, 1994, the TNRCC issued an order initiating immediate removal action at the Pennco site. The order also authorized the TNRCC's executive director to refer the matter to the Attorney General's office for cost recovery against PRPs, pursuant to Texas Health and Safety Code section 361.191(d). Tex. Health Safety Code Ann. § 361.191(d) (Vernon 2001). On August 9, 1994, the TNRCC informed Griffin, by letter, that based on its review of site records and information supplied by the agency, it was no longer a PRP. However, the letter also stated the TNRCC would continue to search for PRPs, and it would notify Griffin should new information implicating its company be discovered.

Sometime between 1994 and1995, plaintiffs hired Leibowitz to investigate potential claims regarding the Pennco site. Leibowitz and his associate Jeff Powless ("Powless"; "plaintiffs' counsel") conducted an investigation by interviewing landowners and residents living around the site, interviewing TNRCC representatives, and reviewing many of the TNRCC's documents compiled during the Pennco investigation. On May 1, 1996, plaintiffs filed suit, naming several defendants, including Pennco, Pennington, and Griffin.

On June 21, 1996, Mike Russell ("Russell"), Griffin's counsel, called plaintiffs' counsel to request an extension of time to answer the suit and to inform plaintiffs that Griffin was no longer a PRP. Russell said he would provide plaintiffs with documentation showing Griffin was not a liable party, and he threatened to file a frivolous suit counterclaim should plaintiffs pursue the suit. Griffin later answered the suit with a general denial.

On August 6, 1996, the trial court ordered all discovery to all parties abated until further order. However, the order specified that any party wishing to voluntarily answer discovery during the abatement period was not precluded from doing so. On January 9, 1997, while the abatement order was in effect, Griffin submitted Kellison's affidavit. In his affidavit, Kellison identified, by date and invoice number, seven transactions between Griffin and Pennco and stated the only transactions between the two companies involved Griffin's purchase of empty drums from Pennco.

On February 26, 1997, the trial court rescinded the abatement order to allow limited written discovery between plaintiffs and certain "barrel defendants," including Griffin. On May 14, 1997, Griffin served its responses to the discovery requests. On September 5, 1997, Griffin filed its first amended answer and counterclaim in which it alleged plaintiffs' suit was groundless, brought in bad faith, and brought for the purposes of harassment. That same day, Griffin filed its Rule 13 motion for sanctions and a motion for summary judgment. Attached to the summary judgment motion was a second affidavit from Kellison, dated August 8, 1997, which also stated that Griffin's only transaction with Pennco involved the purchase of 55-gallon drums. Kellison did not specifically identify transactions in the affidavit, but he did provide invoices and cancelled checks referencing the same transactions with Pennco he specifically identified in his January affidavit.

On December 8, 1997, plaintiffs filed notice to take Kellison's deposition, which was apparently conducted in January 1998. Plaintiffs insist the deposition revealed Kellison did not have sufficient knowledge to make the factual allegations in his affidavit. Plaintiffs contend the deposition also revealed Kellison and Pennington were personal friends, and Kellison actually operated the waste disposal site during Pennington's absence, or at the very least, watched Pennington's house, which was located at the site, during his absence.

On May 28, 1998, plaintiffs received an affidavit from Pennington stating he never removed oil or other waste products for Griffin, and in fact, the only transaction that transpired was Griffin's purchase of 55-gallon drums. Based on this affidavit, plaintiffs non-suited Griffin on June 11, 1998.

On December 6, 2000, more than two years after the non-suit, Griffin filed its first amended motion for sanctions, alleging plaintiffs' counsel filed a frivolous lawsuit in violation of section 10.001 of the Texas Civil Practice and Remedies Code. After holding a hearing on the motion, the trial court denied it on May 1, 2001. On May 13, 2001, the trial court issued an order severing the suit against Griffin. On August 13, 2002, the trial court entered Griffin's requested findings of fact and conclusions of law. Griffin now appeals the trial court's denial of its first amended motion for sanctions.

Standard of Review

We review a trial court's award or denial of sanctions under the abuse of discretion standard. Herring v. Welborn, 27 S.W.3d 132, 143 (Tex.App.-San Antonio 2000, pet. denied). When reviewing a trial court's finding under the abuse of discretion standard, we may not substitute our judgment for that of the trial court. Schlager v. Clements, 939 S.W.2d 183, 191 (Tex.App.-Houston [14th Dist.] 1996, writ denied). Rather, we are limited to determining whether the trial court abused its discretion by either acting arbitrarily and unreasonably, without reference to guiding rules or principles, or misapplying the law to the established facts of the case. Id. (citing Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241-42 (Tex. 1985)). A trial court abuses its discretion in imposing sanctions only if it based its order on an erroneous view of the law or a clearly erroneous assessment of the evidence. Monroe v. Grider, 884 S.W.2d 811, 816 (Tex.App.-Dallas 1994, writ denied).

In deciding whether the sanctions constitute an abuse of discretion, we examine the entire record. Herring, 27 S.W.3d at 143. We review the conflicting evidence in the light most favorable to the trial court's ruling and draw all reasonable inferences in favor of the court's judgment. Id. In reviewing the trial court's action in granting or denying sanctions, we ordinarily look to its formal findings of fact and conclusions of law. McCain v. NME Hosps., Inc., 856 S.W.2d 751, 756 (Tex.App.-Dallas 1993, no writ). We uphold the judgment on any applicable theory that finds support in the record. Seaman v. Seaman, 425 S.W.2d 339, 341 (Tex. 1968).

Discussion

Griffin moved for sanctions pursuant to sections 10.001(1) and 10.001(3) of the Texas Civil Practice and Remedies Code, which state that

[t]he signing of a pleading or motion as required by the Texas Rules of Civil Procedure constitutes a certificate by the signatory that to the signatory's best knowledge, information, and belief, formed after reasonable inquiry:

(1) the pleading or motion is not being presented for any improper purpose, including to harass or to cause unnecessary delay or needless increase in the cost of litigation;

* * *

(3) each allegation or other factual contention in the pleading or motion has evidentiary support or, for a specifically identified allegation or factual contention, is likely to have evidentiary support after a reasonable opportunity for further investigation or discovery. . . .

* * *

Tex. Civ. Prac. Rem. Code § 10.001(1), (3) (Vernon 2002). Under section 10.002, a party may file a motion for sanctions, describing the specific conduct that violates section 10.001. Id. § 10.002. If the trial court determines a person has signed a pleading or motion in violation of section 10.001, it may order the person to pay all reasonable expenses incurred by the movant because of the filing of the pleading or motion, including attorney's fees. Id. § 10.004. When determining whether sanctions are proper, the trial court must examine the circumstances existing when the litigant filed the pleading. Monroe, 884 S.W.2d at 817; Home Owners Funding Corp. of America v. Scheppler, 815 S.W.2d 884, 889 (Tex.App.-Corpus Christi 1991, no writ). The trial court considers the acts or omissions of the represented party or counsel, not merely the legal merit of a pleading or motion. New York Underwriters Ins. Co. v. State Farm Mut. Auto. Ins. Co., 856 S.W.2d 194, 205 (Tex.App.-Dallas 1993, no writ.). The court presumes parties and their counsel file all papers in good faith, and the party seeking sanctions must overcome that presumption. See GTE Communications Sys. Corp. v. Tanner, 856 S.W.2d 725, 731 (Tex. 1993) (orig. proceeding).

Failure to Conduct A Reasonable Inquiry

In its first issue, Griffin asserts plaintiffs' counsel failed to conduct a reasonable inquiry because he refused to investigate the available exonerating evidence. Although there are no cases defining "reasonable inquiry" in the context of section 10.001, case law interpreting Texas Rule of Civil Procedure 13 is instructive. Rule 13 and section 10.001 are similar. Both provide for sanctions where a pleading is filed without conducting a reasonable inquiry, is filed for an improper purpose, lacks evidentiary basis, or is not likely to have evidentiary support after a reasonable investigation. Tex.R.Civ.P. 13; Tex. Civ. Prac. Rem. Code Ann. §§ 10.001-10.002 (Vernon 2002). In the context of Rule 13, reasonable inquiry is defined as the amount of examination that is reasonable under the circumstances of the case. Monroe, 884 S.W.2d at 817. At his deposition, Powless described all the documents plaintiffs' counsel reviewed in making the decision. First, Powless noted that he and Leibowitz analyzed the TNRCC's tentative list and the list of PRPs dated January 24, 1994. On the tentative list, Griffin was identified as having dumped one hundred cut-out drums, fifty barrels, twenty 55-gallon open-top drums, and twenty open-top drums. Although Griffin contacted the TNRCC on August 30, 1992 to deny any involvement in dumping waste at the Pennco site, the TNRCC nevertheless included Griffin on its January 1994 PRP list.

In addition, plaintiffs' counsel relied on a November 1993 memorandum from the San Antonio Manufacturers' Association ("SAMA") and the attached charts prepared by Lloyd, Gosselink, Fowler, Blevine, and Mathews, P.C. ("Lloyd and Gosselink"). On one of those charts, entitled "Invoices by Quantity of Drums," Griffin was listed as a contributor of 314 drums of waste to the site. This list matched the TNRCC's description in its memoranda of the type of waste found at the Pennco site. In addition, Griffin was identified in these charts in the same manner the TNRCC identified dumpers of drums at the Pennco site in its TNRCC July 1991 memorandum. Another chart attached to the SAMA memorandum entitled, "Miscellaneous Invoices from J.C. Pennco," also described Griffin as a contributor of 314 drums of waste.

Next, Powless discussed the seven invoices and accompanying ledgers from Pennington, which allegedly corresponded to invoices issued by Pennco to Griffin. All of the invoices, which were pre-printed forms, documented a transaction involving an exchange of drums. Powless testified that Pennco used the same invoice for all transactions, including those in which it transported waste to its site. As a result, the appearance of the pre-printed words "Sold To" on the invoices could have applied to a transaction involving the sale of drums as well as a transaction involving dumping. Plaintiffs' counsel therefore had to consider the invoices with respect to other evidence suggesting Griffin's involvement with the dumping at the waste site. Also, plaintiffs' counsel discovered a discrepancy between the invoices and the transactions listed on the ledger. There were at least two transactions between Griffin and Pennco for which there were no invoices, and the notations in the ledger did not reveal the nature of the transactions. From this information, plaintiffs' counsel surmised that more than seven transactions had occurred, but there was no evidence ruling out the possibility that these transactions involved dumping at the Pennco site rather than buying empty drums.

Powless also testified about plaintiffs' counsel's interpretation of the August 9, 1994 letter from the TNRCC, which stated Griffin would be taken off the PRP list. The letter informed Griffin that the TNRCC had reviewed the materials Griffin had supplied, and based on that information the TNRCC made a preliminary decision to remove Griffin from the list. The letter also indicated the TNRCC's decision was based only on available information, and Griffin would be notified if new information was discovered and if that information required Griffin's additional involvement.

Plaintiffs' counsel argues that it could not necessarily rely on the language of the letter because the TNRCC based its decision on information from Griffin. Plaintiffs also argue that this letter was only an initial assessment of Griffin's involvement, and they were not bound by the TNRCC's conclusions. In addition, it is undisputed that the TNRCC's decisions regarding Griffin's involvement were not subject to a statute of limitations period; however, the statute of limitations was an important consideration for plaintiffs' counsel in deciding whether to include Griffin as a defendant.

The next document on which Griffin relies is a memorandum documenting a call made by Kellison to a TNRCC representative. That document shows that prior to being placed on the PRP list, Kellison contacted the TNRCC to explain Griffin only purchased drums from Pennco and did not dump at the site. Plaintiffs' counsel argues that this self-interested communication could not conclusively exonerate Griffin. This document reveals only Griffin's assertions; it does not document the transactions between Pennco and Griffin or show that those transactions only consisted of purchases of the drums. Also, this document predates the PRP list issued by the TNRCC.

We hold that under the circumstances of this case, the amount of examination by plaintiffs' counsel was reasonable. Given the statute of limitations concern and the information plaintiffs could and did discover before filing suit, we conclude the trial court did not abuse its discretion when it found plaintiffs' counsel engaged in a reasonable inquiry. Accordingly, we overrule Griffin's first issue.

No Evidentiary Support for Plaintiffs' Allegations in the Petition

In its second issue, Griffin insists plaintiffs violated section 10.001(3) because plaintiffs' counsel had no evidentiary support for allegations in the petition nor was there likely to be such support after a reasonable opportunity for further investigation or discovery. In order for a party seeking sanctions to prevail, there must be little or no basis for claims, no grounds for legal arguments, a misrepresentation of law or facts, or a legal action that is sought in bad faith. Herring, 27 S.W.3d at 143. It is the movant's burden to establish there was no evidentiary support for the allegations in plaintiffs' petition. See Id.

In their petition, plaintiffs designated Griffin as one of several "generator-defendants." Plaintiffs asserted several causes of action against those defendants. Specifically, plaintiffs asserted negligence, negligent entrustment, and negligence per se. Also, plaintiffs argued Griffin was strictly liable because it carried on abnormally dangerous business operations or activities. Further, plaintiffs asserted Griffin committed assault and battery because its activities caused various hazardous chemicals to come into contact with plaintiffs. Next, plaintiffs argued that as a result of Griffin's conduct it benefitted from the use of plaintiffs' real property by appropriating it for a disposal site. Finally, plaintiffs asserted private nuisance, public nuisance, and nuisance per se.

Based on the record discussed in detail above, we hold that plaintiffs had some evidentiary support for the causes of action asserted against Griffin. Although case law detailing the types of petitions that lack evidentiary support under section 10.001 is lacking, cases defining a "groundless" lawsuit under Rule 13 provide some guidance. A lawsuit is not "groundless" and therefore subject to sanctions under Rule 13 merely because a plaintiff chooses to pursue a "weak" case. See Monroe, 884 S.W.2d at 817. "Groundless," as used in Rule 13, means a suit brought without basis in law or fact and not warranted by a good faith argument for an extension, modification, or reversal of existing law. Herring, 27 S.W.3d at 143; see Falk Mayfield L.L.P. v. Molzan, 974 S.W.2d 821, 824 (Tex.App.-Houston [14th Dist.] 1998, pet. denied) (citing Attorney General of Texas v. Cartwright, 874 S.W.2d 210, 215 (Tex.App.-Houston [14th Dist.] 1994, writ denied). In this instance, we believe there was enough evidence in the TRNCC files to support a possible case against Griffin when the suit was filed. Moreover, because the TNRCC evidence raised questions about Griffin's activities related to the Pennco site, there was a reason to believe additional evidentiary support would be uncovered during the pre-trial discovery period. Accordingly, we overrule Griffin's second issue.

Prosecuting the Case for an Improper Purpose

In its third issue, Griffin insists the plaintiffs continued the suit for an improper purpose, in violation of section 10.001(1), because they waited two years before dismissing the suit. Griffin bases its arguments on the following facts: 1) Griffin "voluntarily" produced two affidavits by Kellison that allegedly exonerated it from wrongdoing; 2) Griffin "permitted" plaintiffs to take Kellison's deposition; and 3) Russell told plaintiffs' counsel that Griffin had documents that would exonerate it.

After reviewing the record and noting the chronology of events, we disagree with Griffin's argument. The record shows that for a significant period of time discovery was abated. Although Kellison submitted two different affidavits, they contained information inconsistent with the information already uncovered by plaintiffs. Within two weeks of receiving an affidavit from Pennington stating Pennco only sold drums to Griffin and Pennco never removed waste on behalf of Griffin, plaintiffs' counsel non-suited Griffin from the lawsuit. We hold the trial court did not abuse its discretion when it found plaintiffs' counsel did not continue the lawsuit for an improper purpose. Accordingly, we overrule Griffin's third issue.

Conclusion

We hold that the trial court did not abuse its discretion in denying Griffin's motion for sanctions and affirm the trial court's judgment.