Billy O. Carter & Mike Sternberg v. JEB Lease Service, Inc. Midway Oil Field Constructors, Inc. & C.P. Bailey Construction Co., Inc. D/B/A Centex Supply

CourtCourt of Appeals of Texas
DecidedFebruary 4, 2004
Docket10-02-00034-CV
StatusPublished

This text of Billy O. Carter & Mike Sternberg v. JEB Lease Service, Inc. Midway Oil Field Constructors, Inc. & C.P. Bailey Construction Co., Inc. D/B/A Centex Supply (Billy O. Carter & Mike Sternberg v. JEB Lease Service, Inc. Midway Oil Field Constructors, Inc. & C.P. Bailey Construction Co., Inc. D/B/A Centex Supply) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Billy O. Carter & Mike Sternberg v. JEB Lease Service, Inc. Midway Oil Field Constructors, Inc. & C.P. Bailey Construction Co., Inc. D/B/A Centex Supply, (Tex. Ct. App. 2004).

Opinion

Billy O Carter et al v. JEB Lease Service Inc., eta l.


IN THE

TENTH COURT OF APPEALS


No. 10-02-034-CV


     BILLY O. CARTER

     AND MIKE STERNBERG,

                                                                              Appellants

     v.


     JEB LEASE SERVICE, INC.,

     MIDWAY OIL FIELD CONSTRUCTORS, INC.

     AND C.P. BAILEY CONSTRUCTION CO., INC.,

     D/B/A CENTEX SUPPLY,

                                                                              Appellees


From the 12th District Court

Madison County, Texas

Trial Court # 96-8156-012-06

                                                                                                                

MEMORANDUM OPINION

                                                                                                                

      In 1995, M.B. Properties, Inc. failed to pay debts owed to JEB Lease Service, Inc., Midway Oil Field Constructors, Inc., and C.P. Bailey Construction Co., Inc., d/b/a Centex Supply. Centex asked Carter for help with its unpaid invoice. JEB sent its unpaid invoice to Carter. Nothing was paid. In the meantime, M.B. took $50,000 from Tony Martin to construct a commercial saltwater disposal well. The money was spent, but no well was developed. Martin threatened to sue Carter and Sternberg individually for fraud. They settled with Martin using all the assets of M.B. and some of their personal assets. There was nothing left with which to pay the claims of the appellees.

      The appellees sued M.B. and Carter and Sternberg, individually, for the unpaid debts for services rendered and goods provided to M.B. They sued Carter and Sternberg individually under the theory of alter ego. After a bench trial, the trial court found M.B. was the alter ego of Carter and Sternberg. The court also found Carter and Sternberg liable to the appellees for the unpaid invoices. Carter and Sternberg appeal.

Alter Ego

      Disregarding the “legal fiction of corporate entity” is an exception to the general rule which forbids disregarding corporate existence. Lucas v. Texas Industries, Inc., 696 S.W.2d 372, 374 (Tex. 1984). Alter ego is but one basis for disregarding the corporate fiction. Castleberry v. Branscum, 721 S.W.2d 270, 272 (Tex. 1986). And the burden is on the plaintiff to prove alter ego. Lucas, 696 S.W.2d at 375.

Law-Disregarding the Corporate Entity

      Under the alter ego theory, courts disregard the corporate entity when there exists such unity between corporation and individual that the corporation ceases to be separate and when holding only the corporation liable would promote injustice. Mancorp, Inc. v. Culpepper, 802 S.W.2d 226, 228 (Tex. 1990); Castleberry, 721 S.W.2d at 272. An alter ego relationship may be shown from the total dealings of the corporation and the individual. Id. This showing may include evidence of "the degree to which corporate formalities have been followed and corporate and individual property have been kept separately, the amount of financial interest, ownership and control the individual maintains over the corporation, and whether the corporation has been used for personal purposes." Id. (quoting Castleberry, 721 S.W.2d at 272).

Law-Legal Sufficiency

      Carter and Sternberg only challenge the legal sufficiency of the court’s implied findings that M.B. was the alter ego of Carter and Sternberg. In conducting a legal sufficiency or no-evidence review, we must "view the evidence in a light that tends to support the finding of the disputed fact and disregard all evidence and inferences to the contrary." Excel Corp. v Apodaca, 81 S.W.3d 817, 820 (Tex. 2002); Bradford v. Vento, 48 S.W.3d 749, 754 (Tex. 2001). We will uphold the finding if more than a scintilla of evidence supports it. Burroughs Wellcome Co. v. Crye, 907 S.W.2d 497, 499 (Tex. 1995); Burleson State Bank v. Plunkett, 27 S.W.3d 605, 612 (Tex. App.—Waco 2000, pet. denied).

Evidence

      Carter and Sternberg operated M.B. Properties. All corporate paperwork was kept up to date. In 1995, M.B. incurred debts to the appellees. Those debts went unpaid. During the same time period, M.B. also owed Tony Martin a commercial saltwater disposal well for which Martin had paid M.B. $50,000. Martin threatened M.B., and Carter and Sternberg, individually, with a lawsuit for fraud over the disposal well. According to Carter, Carter and Sternberg put personal money into the corporation and then the corporation paid out that money for a settlement. However, Martin testified they transferred personal assets in the form of cash and M.B.’s interest in four wells for the settlement of Martin’s threatened claims against Carter and Sternberg and against M.B. After the settlement with Martin, there were no more assets in M.B. to pay the debts to the appellees. There was no evidence regarding the allocation of payments or transfer of assets made to settle the various claims against M.B. or individually against Carter and Sternberg.

Application

      Although Carter and Sternberg may have kept themselves apart from M.B. initially, there is some evidence they merged when Carter and Sternberg were threatened by, and settled with, Martin. It does not matter which description of the transfer of money was accurate. Under either version, the bottom line is that there is some evidence in the record that Carter and Sternberg disregarded the separation of the corporate entity by transferring all M.B.’s assets to settle claims that were, in part, against them personally.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Prince v. State
192 S.W.3d 49 (Court of Appeals of Texas, 2006)
Martin v. State
173 S.W.3d 463 (Court of Criminal Appeals of Texas, 2005)
Haley v. State
173 S.W.3d 510 (Court of Criminal Appeals of Texas, 2005)
Excel Corp. v. Apodaca
81 S.W.3d 817 (Texas Supreme Court, 2002)
Johnston v. State
145 S.W.3d 215 (Court of Criminal Appeals of Texas, 2004)
Wingfield v. State
197 S.W.3d 922 (Court of Appeals of Texas, 2006)
Renteria v. State
206 S.W.3d 689 (Court of Criminal Appeals of Texas, 2006)
State v. Mechler
153 S.W.3d 435 (Court of Criminal Appeals of Texas, 2005)
Powell v. State
189 S.W.3d 285 (Court of Criminal Appeals of Texas, 2006)
Powell v. State
63 S.W.3d 435 (Court of Criminal Appeals of Texas, 2001)
Rickerson v. State
138 S.W.3d 528 (Court of Appeals of Texas, 2004)
Mancorp, Inc. v. CULPEPPEER
802 S.W.2d 226 (Texas Supreme Court, 1990)
Walker v. State
201 S.W.3d 841 (Court of Appeals of Texas, 2006)
McDonald v. State
179 S.W.3d 571 (Court of Criminal Appeals of Texas, 2005)
Crank v. State
761 S.W.2d 328 (Court of Criminal Appeals of Texas, 1988)
Dickey v. State
646 S.W.2d 232 (Court of Criminal Appeals of Texas, 1983)
Albrecht v. State
486 S.W.2d 97 (Court of Criminal Appeals of Texas, 1972)
Syndex Corp. v. Dean
820 S.W.2d 869 (Court of Appeals of Texas, 1992)
Rogers v. State
991 S.W.2d 263 (Court of Criminal Appeals of Texas, 1999)
Molina v. State
971 S.W.2d 676 (Court of Appeals of Texas, 1998)

Cite This Page — Counsel Stack

Bluebook (online)
Billy O. Carter & Mike Sternberg v. JEB Lease Service, Inc. Midway Oil Field Constructors, Inc. & C.P. Bailey Construction Co., Inc. D/B/A Centex Supply, Counsel Stack Legal Research, https://law.counselstack.com/opinion/billy-o-carter-mike-sternberg-v-jeb-lease-service-inc-midway-oil-texapp-2004.