Carter v. Harvey

525 S.W.3d 420, 2017 WL 2806319, 2017 Tex. App. LEXIS 5977
CourtCourt of Appeals of Texas
DecidedJune 29, 2017
DocketNO. 02-16-00153-CV
StatusPublished
Cited by10 cases

This text of 525 S.W.3d 420 (Carter v. Harvey) 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
Carter v. Harvey, 525 S.W.3d 420, 2017 WL 2806319, 2017 Tex. App. LEXIS 5977 (Tex. Ct. App. 2017).

Opinions

OPINION

TERRIE LIVINGSTON, CHIEF JUSTICE

In this dispute related to a partition of real property, appellant Jay Warne Carter,, Jr. appeals the trial court’s order appointing a receiver and authorizing a public sale of the property, of which he owns a 1/8 fee simple interest. He argues that the trial court erred by granting summary judgment against his claim for an equitable adjustment and by concluding that the property was incapable of an in-kind partition as an alternative to the sale. He also contends that the trial court’s order is void because appellee Erwin Lee Harvey, Sr. did not join a necessary party — Carter’s son Matthew — to the partition suit. We [422]*422reject each of Carter’s arguments, so we affirm the trial court’s judgment.

Background Facts

Carter owns a 1/8 fee simple interest in a parcel of real property in Wichita County. He acquired that interest in 1982 when his mother died. Harvey owns the remaining 7/8 fee simple interest. He bought it from some of Carter’s relatives for $185,000 in September 2014. The property contains several longstanding buildings, and it once served as the location for Carter Wind Systems, Inc. (CWS), a wind turbine company whose shares were owned by Carter and several other individuals. CWS dissolved in 1994. Since then, the property has also been used (but not owned) by Carter Wind Energy, LLC (CWE), a company formed by Carter and his son in approximately 1991 that likewise manufactures and sells wind turbines.

CWE placed a turbine on the property, and the turbine provides electricity to the buddings. Neither Carter nor Harvey .own the turbine; Matthew owns it. The turbine sits on a 160-foot-tall tower. The property has road access only toward the northern part of its western side. The trial court admitted the following photograph of the property at trial (with the outlined rectangular shape in the center of the photograph representing the property):

[423]*423[[Image here]]

In October 2014, Harvey filed a petition for a partition of the real property.1 He pled that the property was not susceptible to a partition in kind because it contained substantial improvements and “valuable industrial fixtures.” He asked the trial court to appoint someone to sell the property. Carter answered with a general denial.

During discovery, Carter raised a claim for equitable adjustment. He argued that the improvements on the property (the buildings) had been constructed by CWS [424]*424and that although CWS had dissolved in 1994, he owned a 27.9526 percent interest in CWS upon dissolution and could therefore assert an equitable adjustment claim. In a response to a request for disclosure, Carter wrote,

[Carter] claims a credit for improvements he made through a corporation. More specifically, the property has significant improvements consisting of a 20,000 sq. ft. manufacturing facility, a 1,800 sq. ft. outbuilding, and a 192 sq. ft. outbuilding.... The improvements were constructed by [CWS].... CWS voluntarily dissolved in 1994.... [Carter] is entitled to a credit of 27.9526% of the improvements.

Harvey filed a motion for partial summary judgment with respect to Carter’s claim for equitable adjustment. In the motion, Harvey contended that Carter could not raise an equitable adjustment claim based on CWS’s improvements to the property because (1) Harvey was a bona fide purchaser for value without notice of the alleged claim for CWS’s improvements, (2) the equitable claim for construction of improvements by CWS was a corporate claim that a Texas statute required to be brought within three years of CWS’s dissolution, (3) the claim was barred by the general four-year statute of limitations governing actions on a debt, and (4) laches barred the claim because Carter failed to notify Harvey of the claim during Harvey’s purchase of his interest.

Carter responded to the motion. He contended that because CWS had distributed its assets to shareholders in 1994 and because he was one of the shareholders (and the largest one), he could bring an equitable adjustment claim for the value of improvements that CWS had contributed to the property. Carter also argued, in part, that Harvey had actual knowledge that he was not purchasing all the property and that a partition suit was likely and therefore could not assert his status as a bona fide purchaser, that limitations is not a defense to an equitable adjustment claim, and that laches could not bar the claim because he asserted the claim soon after Harvey filed the partition suit.

To his response, Carter attached evidence showing that he owned 27.9526 percent of CWS until its dissolution and that he had told Harvey of his claim for equitable adjustment before Harvey bought the property. He also attached CWS’s articles of dissolution, which stated that he was the president of the corporation and that the corporation’s assets had been “distributed to its shareholders in accordance with their respective rights and interests.”

The trial court granted Harvey’s motion for partial summary judgment against Carter’s claim for equitable adjustment. The court found “that the claim in question [was] a corporate claim of [CWS] that was required to have been brought within three years of [CWS’s] dissolution ... [and] was not. The claim is barred by the statute of limitations.”

Later, the trial court conducted a bench trial on the remaining issues related to Harvey’s partition petition. The court heard testimony from Carter, Harvey, and Jim Henderson, a real estate appraiser. After considering the parties’ evidence and the written arguments they presented after the trial, the trial court found that the property was not subject to a partition in-kind because such a partition “would impair significantly the value of the tract [of land].” Thus, the court’s judgment2 or[425]*425dered the property to be publicly sold and for the net proceeds to be divided between Harvey and Carter in accordance with their respective interests. The court also appointed a realtor as a receiver to execute the sale. The court described the turbine as a removable trade fixture and stated that Carter had not. pled a claim for equitable adjustment concerning the turbine.3

In a motion for new trial, Carter argued that the trial court had erred by “summarily dismissing his claims for equitable adjustment and by ordering a partition [of] sale.” He also contended for the first time that the trial court’s judgment was rendered without jurisdiction- because Harvey had failed to join Matthew as a necessary party. He argued that Matthew owned the wind turbine that was affixed to the property, that it would cost $75,000 to remove the wind turbine, that complete and just relief could not be given in Matthew’s absence, and that Matthew should have therefore been made a party. The motion for new trial was overruled by operation of law,4 and Carter brought this'appeal.

Equitable Adjustment Claim

In Carter’s first issue, he contends that the trial court erred by granting summary judgment against his claim for an equitable adjustment. We review a summary judgment de novo. Travelers Ins. Co. v. Joachim, 315 S.W.3d 860, 862 (Tex. 2010).

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Bluebook (online)
525 S.W.3d 420, 2017 WL 2806319, 2017 Tex. App. LEXIS 5977, Counsel Stack Legal Research, https://law.counselstack.com/opinion/carter-v-harvey-texapp-2017.