Opinion
No. 05-07-01564-CV
Opinion Filed February 9, 2009.
On Appeal from the 416th Judicial District Court, Collin County, Texas, Trial Court Cause No. 416-03625-07.
Before Justices BRIDGES, FITZGERALD, and LANG.
Opinion By Justice FITZGERALD.
MEMORANDUM OPINION
The trial court granted a no-evidence summary judgment motion in this cause in favor of appellees. AFE Oil and Gas, L.L.C. ("AFE Oil Gas"), Jason Dvorin, and Sanford Dvorin (collectively "AFE") appeal, arguing the trial court erroneously granted summary judgment (1) for a party who had not moved for that relief, and (2) when AFE produced more than a scintilla of evidence in response to the motion. Because all dispositive issues are clearly settled in law, we issue this memorandum opinion pursuant to Texas Rule of Appellant Procedure 47.4. We affirm in part and reverse and remand in part.
Background
The cause before us has been severed from a long-pending complex lawsuit. Our record is limited to the summary judgment proceeding, which is based on the Seventh Amended Petition. In reviewing a no-evidence summary judgment motion, we examine the record in the light most favorable to the non-movant; if the non-movant presents more than a scintilla of evidence supporting the disputed issue, summary judgment is improper. Forbes Inc. v. Granada Biosciences, Inc., 124 S.W.3d 167, 172 (Tex. 2003). The relevant summary judgment record here is appellees' motion and AFE's response, with the evidence attached to the latter. AFE states this case involves "the deliberate financial mismanagement of certain oil and gas wells by Appellees to the economic detriment of Appellants." According to the live petition, AFE Oil Gas was the operator of a number of wells and held an overriding royalty interest in those wells. AFE Oil Gas (whose principals were Jason Dvorin and Sanford Dvorin) entered into a series of agreements with Foundation Exploration and Drilling, Inc. (whose principals were Lance Weissman and James Syme) concerning the drilling and operation of the wells. A time came when the wells were placed in receivership. Ultimately, Gerald Hess was appointed operator of the wells; he performed his operating function through his company, Jerry Hess Operating Company. AFE alleged below that Hess failed to operate and maintain the well leases in effect. AFE further alleged that Hess, Weissman, Syme, and a class of unknown persons conspired to create Foundation Shale, a "corporate fiction" that entered into top leases on the wells in an effort to deprive AFE of its interest in the wells. Certain parties to the cause below filed Counter-Defendant's Motion For No Evidence Summary Judgment (the "Motion") against AFE Oil Gas, Jason Dvorin, and Sanford Dvorin, seeking dismissal of all claims against the counter-defendants. Those claims included breach of fiduciary duty, fraud, conspiracy to defraud, breach of contract, quantum meruit, and unjust enrichment. Counter-defendants urged that AFE lacked evidence of each element of these claims. AFE filed a response and attached its summary judgment evidence. The trial court's Order on Counter-Defendant's Motion For No-Evidence Summary Judgment made three rulings: (1) it granted the motion as to all causes of action against (a) the Class of Similarly Situated Persons, (b) Hess, (c) Hess Operating Company, and (d) Foundation Shale; (2) it granted the motion as to claims of breach of fiduciary duty, fraud, and conspiracy against the remaining movants; and (3) it denied the motion as to claims of breach of contract and unjust enrichment against the remaining movants.
Appellees filed objections to the evidence attached to AFE's response, but did not obtain a ruling on those objections. Accordingly, the objections are not preserved for our review. See Tex. R. App . P. 33.1(a)(2).
The record indicates the trial court granted a severance and then signed a take-nothing final judgment in favor of the Class, Hess, Hess Operating Company, and Foundation Shale. AFE appeals that judgment, raising two issues in this Court. Appellees did not file a brief.
Summary Judgment For the Class
In its first issue, AFE contends the trial court erred by granting no-evidence summary judgment relief to a party who did not request that relief. Specifically, AFE argues the Class did not move for summary judgment and so should not have been included in the trial court's judgment. We agree. The Motion begins with the following identification of the moving parties:
Counter-defendant's [sic] are Jerry Hess Operating Company, Foundation Shale, L.L.C. ., Foundation Exploration and Drilling, Inc., and Gerald Hess, James Syme, and Lance Weisman individually (Hereafter referred to as "counter-defendant").
The Motion continues, referring to movants throughout collectively as "counter-defendant" and never mentioning the Class. No reasonable reading of the Motion supports the argument the Class moved for summary judgment. Summary judgment cannot be granted to a party that does not properly move for it by motion. See Teer v. Duddlesten, 664 S.W.2d 702, 703 (Tex. 1984). The trial court erred in granting summary judgment on the Class's behalf. We decide AFE's first issue in its favor.
Summary Judgment For Remaining Movants
In its second issue, AFE contends the trial court erroneously concluded that AFE did not produce a scintilla of evidence in response to the Motion. Of course the trial court concluded AFE did provide sufficient evidence against movants Symes, Weisman, and Foundation Exploration and Drilling, Inc. to avoid summary judgment on AFE's claims for breach of contract and unjust enrichment against those parties. And we have concluded the Class was not properly considered a movant in the summary judgment proceedings. As to the remaining movants-Hess, Hess Operating, and Foundation Shale-AFE argues in this Court that it produced more than a scintilla of evidence in support of its claims for breach of fiduciary duty, fraud, and conspiracy to commit fraud. We disagree.
We look first at AFE's response itself. The significant portions of the response are: (1) a seven-paragraph "Introduction," which does not mention Hess, Hess Operating, or Foundation Shale in any way; and (2) fourteen paragraphs under the heading "Arguments Authorities," only one of which refers to any of these three defendants. Paragraph 21.1 of the response states in its entirety:
g. Hess
Jerry Hess and Jerry Hess Operating failed to initiate operations as operator on the Armentrout #1 well. Further Defendant Hess entered into a tacit agreement with Defendants to take the over riding royalty interest that was lost by Plaintiff AFE as a condition of becoming the Court appointed Operator of the subject wells[.] [S]ee the attached deposition excerpts of Lance Weissmann and the Affidavit of Jason Dvorin.
The response makes absolutely no mention of Foundation Shale. The following summary judgment evidence is attached to AFE's response to the Motion.
*
Affidavit of Jason Dvorin . The bulk of the Dvorin Affidavit relates that AFE and Foundation entered into agreements concerning payment of the costs of drilling the wells relevant to this action. Dvorin testifies that Weismann and Symes affirmatively represented that Foundation would timely pay the drilling costs required by the agreements. Dvorin testified further that Foundation did not pay those expenses in a timely manner and, as a result, AFE lost the wells. None of this evidence implicates appellees or the conduct of appellees in any way. The final paragraph of the affidavit states the following in its entirety:
18. My office is contiguous is contiguous [sic] to the property which is the situs of the Armentrout #1 Well. Contrary to the representations made to Judge Sandoval no operations were effected by Defendant Hess on or about January 31st 2003. There by placing the lease in jeopardy. I was present during that time period and no operations were conducted.
*
Affidavit of Carlos Sandoval . Sandoval testifies that his company EXPLO acquired the leases at issue by purchasing them from Patterson Energy, Inc., AFE's judgment creditor. This affidavit does not implicate appellees or the conduct of appellees in any way.
*
Leases . The record contains three lease documents indicating the Godfrey, Cook, and Armentrout well owners granted one-year lease terms to Foundation Shale.
*
Putative Excerpt From Weissmann Deposition . The record contains a photocopy of page 54 of a deposition that cannot otherwise be identified. Because the response refers to "attached deposition excerpts of Lance Weissmann," we treat this page as an excerpt from appellant Weissman's deposition. The excerpt begins with a discussion of an objection, presumably found on an earlier page of the deposition. The remainder of the excerpt states:
Objections filed by the summary judgment movants referred only to the Dvorin Affidavit, not to any other evidence attached to the response.
Q. (By Mr. Gill) Does Jerry or Gerald Hess have any ownership interest in any of your Foundation entities?
A. Well, as of right now, no. Hopefully when this — if it gets straightened out, and hopefully there does come a time when it does, but right now no.
Q. So do you and Jerry Hess have an understanding on that subject?
A. There is an understanding.
Q. What is [sic] the terms of that understanding?
A. That his — the fee he would get for operating would be the same that Foundation got for operating — not Foundation, I'm sorry, AFE got for operating.
Q. What was that?
A. I'm not sure. In different wells it was different amounts.
Q. But in any event, it was an interest in the wells and the leases, correct?
A. Yes, sir.
No other summary judgment evidence was offered by AFE that related to these three defendants.
To defeat appellees' motion on breach-of-fiduciary-duty grounds, AFE needed to produce more than a scintilla of evidence on each of the following elements: (1) that AFE and appellees had a fiduciary relationship; (2) that appellees breached their fiduciary duty to AFE; and (3) that appellees' breach resulted in (a) injury to AFE, or (b) benefit to appellees. See Burrow v. Arce, 997 S.W.2d 229, 237 (Tex. 1999). There is less than a scintilla of evidence when the evidence can do no more than create a mere surmise or suspicion of a fact. Forbes Inc., 124 S.W.3d at 172. AFE makes no legal argument, and we can think of none, establishing that Foundation Shale owed it a fiduciary duty. If we assume without deciding that Hess (acting individually or through his eponymous company) owed such a duty to AFE in Hess's capacity as court-ordered receiver, the summary judgment evidence must still raise a genuine issue of material fact concerning a breach of that duty. The sole fact urged by AFE that is supported by summary judgment evidence is Jason Dvorin's charge that his office was nearby and "no operations were effected by Defendant Hess on or about January 31st 2003." This observation of what Dvorin claims to have seen during a limited time period amounts to less than a scintilla of evidence of breach. It cannot raise a genuine issue of material fact concerning whether Hess operated the wells appropriately in his capacity as receiver.
To avoid summary judgment on its fraud claim, AFE had to present more than a scintilla of evidence on each of the elements of a cause of action for fraud:
(1) that a material representation was made; (2) the representation was false; (3) when the representation was made, the speaker knew it was false or made it recklessly without any knowledge of the truth and as a positive assertion; (4) the speaker made the representation with the intent that the other party should act upon it; (5) the party acted in reliance on the representation; and (6) the party thereby suffered injury.
Johnson v. Brewer Pritchard, P.C., 73 S.W.3d 193, 211 n. 44 (Tex. 2002) (citing In re FirstMerit Bank, N.A., 52 S.W.3d 749, 758 (Tex. 2001)). Our review of the summary judgment evidence has shown absolutely no evidence of any material representation by Hess, his company, or Foundation Shale, let alone any material false representation. Even AFE's response-which overstates what the summary judgment evidence shows-does not identify any material false representation made by any of these defendants. We conclude the trial court correctly granted the no-evidence summary judgment on AFE's claim against these defendants for fraud.
We are left finally with AFE's claim for conspiracy to commit fraud. In civil law, a conspiracy involves "a combination of two or more persons with an unlawful purpose or a lawful purpose to be accomplished by unlawful means." Ernst Young, L.L.P. v. Pacific Mut. Life Ins. Co., 51 S.W.3d 573, 583 (Tex. 2001). Fraud is the unlawful purpose or means that forms the basis of AFE's conspiracy allegations. See id. We have already concluded the trial court correctly granted the no-evidence summary judgment in favor of Hess, Hess Operating, and Foundation Shale on AFE's claim of fraud. The trial court also granted the summary judgment motion in favor of the non-appealing defendants on the claim of fraud. These conclusions on the fraud issue necessarily dispose of the conspiracy to commit fraud claims as well: if no defendant is liable for fraud, then no defendant can be liable for conspiracy to commit fraud.
A party may be liable for conspiracy to commit a tort even if he is not personally liable for the underlying tort. But there must be an underlying tort committed by at least one of the named defendants, and the party must have participated in that tort. See Cotten v. Weatherford Bancshares, Inc., 187 S.W.3d 687, 701 (Tex.App.-Fort Worth 2006, pet. denied).
We conclude the trial court correctly granted summary judgment on behalf of Hess, Hess Operating, and Foundation Shale. We decide AFE's second issue against it.
We reverse the trial court's judgment in favor of the Class of Similarly Situated Persons, and we remand all claims against the Class for further proceedings. As to all other parties, we affirm the trial court's judgment.