Robert G. Houle v. Casco Investments, Inc. and Jose Luis Casillas JLC Ventures, Inc.
This text of Robert G. Houle v. Casco Investments, Inc. and Jose Luis Casillas JLC Ventures, Inc. (Robert G. Houle v. Casco Investments, Inc. and Jose Luis Casillas JLC Ventures, Inc.) 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.
Opinion
COURT OF APPEALS EIGHTH DISTRICT OF TEXAS EL PASO, TEXAS
ROBERT G. HOULE, § No. 08-17-00189-CV Appellant, § Appeal from the v. § 210th District Court JOSE LUIS CASILLAS, CASCO § INVESTMENTS INC. AND JLC of El Paso County, Texas VENTURES, INC., § Appellees. (TC #2011-2614) §
OPINION
Appellant Robert G. Houle appeals from several different orders by the trial court which
were not subject to review until after the court finally disposed of all claims. After Appellee
Casco Investments, Inc. (Casco), filed suit against Appellant Houle, he returned fire by filing a
variety of causes of action against Casco, and asserted those same claims by cross-claim against
Casco’s sole owner, Jose Luis Casillas (Casillas), and against JLC Ventures, Inc. (JLC Ventures),
a second entity Casillas had also established. Ultimately, the trial court granted judgment in favor
of Casillas, individually, and as a corporate representative of Casco and JLC Ventures
(collectively, “Appellees”). The parties’ suit against each other stemmed from difficulties that
arose from a real estate investment and renovation project that failed to pan out as planned. For
the reasons set forth below, we affirm in part, and reverse and remand in part. FACTUAL AND PROCEDURAL BACKGROUND
The Parties’ Agreement
Most of the facts regarding when and how the parties first entered into their business
venture in the summer of 2009 are undisputed. At that time, Houle, an El Paso resident, and
Casillas, a resident of Mexico, had known each other for approximately 25 years. Houle was then
married to Casillas’ sister, Ana Casillas, although they were in the process of divorcing after 18
years of marriage. The venture began when Houle—who worked for a bank in El Paso and
harbored an interest in owning real estate—learned of a large, older home for sale in El Paso that
had already been divided into apartment units. The property was located at 3901 Pershing (the
“Pershing Property”). Eventually, Houle met with Casillas and the two orally agreed to purchase
the property. The parties initially intended to renovate the building for resale, but soon they
decided they would keep it instead and lease out the apartment units after they were renovated.
Before purchasing, the parties inspected the building during which Houle informed Casillas that
he believed renovations could be accomplished in three to four months, at a cost amounting
somewhere between $40,000 and $50,000.
In general, the parties agreed that Casillas would provide financing for purchasing and
renovating the property while Houle would apply his expertise in overseeing renovations;
thereafter, once Casillas had been reimbursed for his initial investment, the parties would split
profits equally regardless of whether profits arose from selling the property, or from rental income
generated from leasing units. Houle further claims that the parties agreed he would be entitled to
manage the property after renovations were completed.
2 In furtherance of their agreement, Houle suggested that they form a limited liability
corporation (LLC) to purchase the Pershing Property with the entity to be known as the Pershing
3901 LLC (“the Pershing LLC”).1 At Houle’s suggestion, Casillas formed a separate corporation
to shield himself from personal liability, which he named Casco Investments, Inc.2 Thereafter,
Houle and Casco were named as the two sole members of the Pershing LLC. The parties orally
agreed that Casillas, in his individual capacity, would fund the project by loaning $100,000 to the
Pershing LLC to purchase the property, and he would loan additional monies thereafter to fund
renovations as planned.
On July 27, 2009, the Pershing LLC purchased the property for $100,000, and with Houle’s
agreement, Casillas took back a promissory note from the Pershing LLC, secured by a deed of
trust on the property in the principal amount of $100,000 (the “original deed of trust”). The
promissory note, which was dated July 27, 2009, named Casillas as lender and the Pershing LLC
as borrower with the entire principal balance and all accrued unpaid interest being due and payable,
in a lump sum, on or before July 31, 2010. The note indicated that the annual interest rate “shall
be the daily Prime Interest Rate during the term of the Note, with interest calculated based on the
Prime Interest Rate in effect for each day during the term of the loan.” Prime Interest Rate is
further defined as “the annual rate of interest identified as the ‘prime rate’ in the ‘Money Rates’
column published in the Wall Street Journal.” After the note became due and payable, the interest
rate would rise to 18 percent on matured, unpaid amounts.
1 The documents forming the LLC simply stated that the LLC was formed for any “lawful purpose[.]” 2 Casco was formed on July 24, 2009, with Casillas as its president and only director. In turn, Casco, was wholly owned by another entity that Casillas had formed in Mexico as part of his farming business, along with his mother, known as Verduras Deliciosas.
3 The Year-Long Renovation Project
The renovations began shortly after the purchase and continued for a year, until July of
2010, with Houle overseeing the project. From time to time, Houle made purchases himself and
paid renovation workers using a credit card in the LLC’s name, but he sought reimbursement for
his expenses from Casillas. According to Houle, he submitted approximately 16 reimbursements
totaling $45,030.25 in the first year of the renovations. Although Houle admitted that the project
was not completed within the contemplated timeframe, he claimed that delays occurred because
he ran into unexpected plumbing, draining, and electrical issues which caused renovations to
require significantly longer time than he had initially estimated.
The July 6, 2010 Memo
On July 6, 2010, Casillas sent a detailed email to Houle outlining the parties’ original
agreement, i.e., to complete renovations in three to four months at cost expected to total $40,000.
Casillas complained that Houle had not fulfilled his commitment given that a year had already
passed, and the renovations remained incomplete despite Casillas having already spent around
$40,000, or the total amount originally expected. Casillas accused Houle of making unilateral
decisions, such as not hiring a general contractor, trying to do much of the work himself, and taking
unauthorized “draws” in return for his work, despite the fact that there was no agreement that
Houle would be reimbursed for his services. He further complained that none of the apartments
had been leased and that he had not yet received any return on his investment.3
3 We note, however, that evidence was presented showing that at least one unit was being rented out at that time. Moreover, in Casco’s original petition, it was alleged that three units had been leased out, two of which had been completely renovated, and one of which was apparently leased in its original condition. That pleading was verified by Casillas as president of Casco.
4 Expressing concern over the security of his investment, Casillas requested an accounting,
an updated projected budget and repair schedule, and an addendum to the promissory note to
increase the interest rate. Casillas expressed that if he felt more secure in his investment he would
not mind if Houle kept “delaying the project in a reasonable manner.” In addition, Casillas further
Free access — add to your briefcase to read the full text and ask questions with AI
COURT OF APPEALS EIGHTH DISTRICT OF TEXAS EL PASO, TEXAS
ROBERT G. HOULE, § No. 08-17-00189-CV Appellant, § Appeal from the v. § 210th District Court JOSE LUIS CASILLAS, CASCO § INVESTMENTS INC. AND JLC of El Paso County, Texas VENTURES, INC., § Appellees. (TC #2011-2614) §
OPINION
Appellant Robert G. Houle appeals from several different orders by the trial court which
were not subject to review until after the court finally disposed of all claims. After Appellee
Casco Investments, Inc. (Casco), filed suit against Appellant Houle, he returned fire by filing a
variety of causes of action against Casco, and asserted those same claims by cross-claim against
Casco’s sole owner, Jose Luis Casillas (Casillas), and against JLC Ventures, Inc. (JLC Ventures),
a second entity Casillas had also established. Ultimately, the trial court granted judgment in favor
of Casillas, individually, and as a corporate representative of Casco and JLC Ventures
(collectively, “Appellees”). The parties’ suit against each other stemmed from difficulties that
arose from a real estate investment and renovation project that failed to pan out as planned. For
the reasons set forth below, we affirm in part, and reverse and remand in part. FACTUAL AND PROCEDURAL BACKGROUND
The Parties’ Agreement
Most of the facts regarding when and how the parties first entered into their business
venture in the summer of 2009 are undisputed. At that time, Houle, an El Paso resident, and
Casillas, a resident of Mexico, had known each other for approximately 25 years. Houle was then
married to Casillas’ sister, Ana Casillas, although they were in the process of divorcing after 18
years of marriage. The venture began when Houle—who worked for a bank in El Paso and
harbored an interest in owning real estate—learned of a large, older home for sale in El Paso that
had already been divided into apartment units. The property was located at 3901 Pershing (the
“Pershing Property”). Eventually, Houle met with Casillas and the two orally agreed to purchase
the property. The parties initially intended to renovate the building for resale, but soon they
decided they would keep it instead and lease out the apartment units after they were renovated.
Before purchasing, the parties inspected the building during which Houle informed Casillas that
he believed renovations could be accomplished in three to four months, at a cost amounting
somewhere between $40,000 and $50,000.
In general, the parties agreed that Casillas would provide financing for purchasing and
renovating the property while Houle would apply his expertise in overseeing renovations;
thereafter, once Casillas had been reimbursed for his initial investment, the parties would split
profits equally regardless of whether profits arose from selling the property, or from rental income
generated from leasing units. Houle further claims that the parties agreed he would be entitled to
manage the property after renovations were completed.
2 In furtherance of their agreement, Houle suggested that they form a limited liability
corporation (LLC) to purchase the Pershing Property with the entity to be known as the Pershing
3901 LLC (“the Pershing LLC”).1 At Houle’s suggestion, Casillas formed a separate corporation
to shield himself from personal liability, which he named Casco Investments, Inc.2 Thereafter,
Houle and Casco were named as the two sole members of the Pershing LLC. The parties orally
agreed that Casillas, in his individual capacity, would fund the project by loaning $100,000 to the
Pershing LLC to purchase the property, and he would loan additional monies thereafter to fund
renovations as planned.
On July 27, 2009, the Pershing LLC purchased the property for $100,000, and with Houle’s
agreement, Casillas took back a promissory note from the Pershing LLC, secured by a deed of
trust on the property in the principal amount of $100,000 (the “original deed of trust”). The
promissory note, which was dated July 27, 2009, named Casillas as lender and the Pershing LLC
as borrower with the entire principal balance and all accrued unpaid interest being due and payable,
in a lump sum, on or before July 31, 2010. The note indicated that the annual interest rate “shall
be the daily Prime Interest Rate during the term of the Note, with interest calculated based on the
Prime Interest Rate in effect for each day during the term of the loan.” Prime Interest Rate is
further defined as “the annual rate of interest identified as the ‘prime rate’ in the ‘Money Rates’
column published in the Wall Street Journal.” After the note became due and payable, the interest
rate would rise to 18 percent on matured, unpaid amounts.
1 The documents forming the LLC simply stated that the LLC was formed for any “lawful purpose[.]” 2 Casco was formed on July 24, 2009, with Casillas as its president and only director. In turn, Casco, was wholly owned by another entity that Casillas had formed in Mexico as part of his farming business, along with his mother, known as Verduras Deliciosas.
3 The Year-Long Renovation Project
The renovations began shortly after the purchase and continued for a year, until July of
2010, with Houle overseeing the project. From time to time, Houle made purchases himself and
paid renovation workers using a credit card in the LLC’s name, but he sought reimbursement for
his expenses from Casillas. According to Houle, he submitted approximately 16 reimbursements
totaling $45,030.25 in the first year of the renovations. Although Houle admitted that the project
was not completed within the contemplated timeframe, he claimed that delays occurred because
he ran into unexpected plumbing, draining, and electrical issues which caused renovations to
require significantly longer time than he had initially estimated.
The July 6, 2010 Memo
On July 6, 2010, Casillas sent a detailed email to Houle outlining the parties’ original
agreement, i.e., to complete renovations in three to four months at cost expected to total $40,000.
Casillas complained that Houle had not fulfilled his commitment given that a year had already
passed, and the renovations remained incomplete despite Casillas having already spent around
$40,000, or the total amount originally expected. Casillas accused Houle of making unilateral
decisions, such as not hiring a general contractor, trying to do much of the work himself, and taking
unauthorized “draws” in return for his work, despite the fact that there was no agreement that
Houle would be reimbursed for his services. He further complained that none of the apartments
had been leased and that he had not yet received any return on his investment.3
3 We note, however, that evidence was presented showing that at least one unit was being rented out at that time. Moreover, in Casco’s original petition, it was alleged that three units had been leased out, two of which had been completely renovated, and one of which was apparently leased in its original condition. That pleading was verified by Casillas as president of Casco.
4 Expressing concern over the security of his investment, Casillas requested an accounting,
an updated projected budget and repair schedule, and an addendum to the promissory note to
increase the interest rate. Casillas expressed that if he felt more secure in his investment he would
not mind if Houle kept “delaying the project in a reasonable manner.” In addition, Casillas further
expressed his opinion that the property belonged to him, repeatedly referring to the property as
being “mine,” unless and until he received a reimbursement for his investment.4
The parties disagree over what occurred after the memo was sent. Houle claimed that he
provided some of the requested information, including a partial proposed budget, but that Casillas
refused to continue funding the renovations in July of 2010, and instead suggested that they have
a meeting in September of that year. Houle recalled that the parties met, but apparently did not
resolve the matter; he claims that he nevertheless did additional work on the project for which he
was never compensated.
According to Casillas, however, Houle did not provide him with the requested information,
and at their September 2010 meeting, Houle advised him that he no longer intended to work on
the project, and thereafter refused to communicate with him; he therefore faulted Houle for
breaching the agreement. Casillas recalled that he suggested they try to sell the building at that
time and split any profits they might receive after Casillas was reimbursed for his investment.
Casillas claimed that Houle refused to cooperate as he did not believe Casillas would get his money
back if the property was sold at that time.
4 At trial, Houle claimed that he hired laborers to perform work on the property, but he paid for their service by writing a check to himself, then cashed it, then paid cash to the laborer. Occasionally, he worked on the project himself. He further admitted that, although the parties never agreed to such, he did reimburse himself for some of the mileage that he had incurred in delivering parts to the project site, but claimed that he did not take any draws for the actual work that he did on the project.
5 The Second Promissory Note and Deed of Trust
Casillas thereafter contacted a law firm in El Paso (the “Gordon Law Firm”), to determine
how best to protect his investment. At that point, the parties agree that Casillas had the right to
foreclose on his original promissory note of $100,000. However, in order to protect his additional
investment for sums he had advanced for renovations, the law firm drafted a promissory note that
Casillas signed on November 15, 2010, to “memorialize” the advances that he had previously made
to the Pershing LLC.5 In addition, the law firm drafted a second deed of trust in which it identified
the Pershing, LLC, as the “borrower,” and Casillas as the “lender,” stating that the amount owed
to Casillas was $45,030.25. Marcelo Rivera, a member of the law firm, was designated as the
trustee on the deed of trust. The deed stated that in order to secure payment of the obligation, the
Pershing LLC, as grantor, conveyed the Pershing Property to the trustee (Rivera) in trust. The
note further stated that if the Pershing LLC failed to perform any of its obligations, the lender had
the right to declare any unpaid principal balance due and payable immediately, and to direct the
trustee to foreclose the lien through a duly noticed foreclosure sale. The deed was dated
November 15, 2010, and the maturity date was on that same date—in essence allowing Casillas to
immediately start foreclosure proceedings on the deed. Casillas signed the document on
December 6, 2010, in the capacity indicated as follows:
PERSHING 3901, L.L.C.
By: Casco Investments, Inc. Its: Manager
BY:____________________ Jose Luis Casillas, President
5 The second deed of trust references the promissory note, but the promissory note itself does not appear to be in the record. Nevertheless, both parties agreed that a promissory note was in fact executed.
6 According to Houle, Casillas signed this second deed of trust, as well as the promissory
note, without his knowledge or consent.
Shortly thereafter, on April 8, 2011, Casillas signed a substitute trustee instrument naming
another member of the Gordon Law Firm, Salena Ayoub, as substitute trustee. Casillas signed
the substitute trustee instrument in the same capacity as he did the deed of trust, i.e., in his capacity
as president and/or manager on behalf of either Pershing LLC or Casco Investments, Inc., rather
than in his individual capacity as the lender.
On April 9, 2011, Ayoub signed a Notice of Substitute Trustee’s Sale, dated April 8, 2011,
stating that pursuant to the default on the second deed of trust dated November 15, 2010, the
Pershing Property would be sold on May 3, 2011 at any time beginning at 10 a.m., up to three
hours later, in the El Paso County Courthouse. Houle acknowledges that he received actual notice
of the foreclosure sale from Casillas on or about March 14, 2011. Houle claims he sought a
temporary restraining order (TRO) to prevent the foreclosure sale from going through, but after a
hearing on April 8, 2011, his request was denied.6
On May 3, 2011, Ayoub signed a substitute trustee’s deed, stating that the foreclosure sale
took place on that same day at 11:55 a.m. in the designated area of the courthouse, for a sale price
of $50,000, and that the buyer was “JLC Ventures, Inc.,” with an address of 833 River Oaks Drive
in El Paso Texas, the same address that Casillas used as his address as the “lender” in the second
deed of trust. However, as Houle points out, and Casillas admits, JLC Ventures had not yet been
formed; instead, at that time, the Gordon Law Firm was in the process of forming the corporation
as the entity to hold title to the Pershing Property upon foreclosure. In addition, Houle claimed
6 We note that the appellate record does not contain any documents pertaining to the TRO proceedings.
7 that he was at the courthouse at the appointed time, but did not observe a sale take place, and
alleges that the sale was therefore a “fiction.”
The Parties’ Pleadings
On June 29, 2011, Casco, the corporate entity wholly owned by Casillas, filed suit against
Houle in his individual capacity. Casco alleged Houle had breached his fiduciary duties owed to
Casco and to the Pershing LLC, had engaged in wrongful, fraudulent, and unauthorized conduct,
and had impaired Casco with abusive self-dealing. In addition to damages, Casco sought a
declaratory judgment, inspection of corporate books and records, and an accounting, among his
many claims. Casco further asserted that it intended to wind up the Pershing LLC.
On September 22, 2011, Houle filed a denial of Casco’s claims along with a combined
counterclaim against Casco and third-party complaint against Casillas and JLC Ventures.
Seeking affirmative relief, Houle asserted a variety of claims to include breach of contract, breach
of fiduciary duty, and trespass. In addition to damages, Houle sought a constructive trust over the
subject property, an accounting of income and expenses, a partition of the property, and an award
of quantum meruit for the reasonable value of his unpaid labor. Thereafter, on November 15,
2013, Houle filed a first amended counterclaim and third-party petition, in which he reasserted his
original claims and added claims for “money had and received,” for “conversion,” and for a
“violation of Texas Business Organizations Code” arising from unilateral actions by Casillas,
Casco, and/or JLC Ventures, in procuring the second deed of trust used to foreclose on the
property. After he obtained a new attorney, Houle then filed a second amended counterclaim and
third-party petition on April 19, 2016, which remained the live pleading of Houle’s claims against
Appellees.
8 In his live pleading, Houle incorporated by reference paragraphs 5 through 76 of his first
amended pleading relating to his denial of Casco’s allegations and his affirmative defenses. The
second amended pleading alleged that Casillas and Houle were partners, and that Casillas—both
in his individual capacity and as president of Casco—owed him a fiduciary duty and duty of good
faith and fair dealing. Houle alleged that these duties were violated when Casillas ceased
advancing funds to him and when Casillas obtained the second deed of trust without notice to him,
leading to what Houle labelled as the “fraudulent” and “completely fictitious” foreclosure sale of
the property. Houle further alleged that Casillas controlled both Casco and JLC Ventures, and
that he used those entities “to perpetrate fraud and engage in unjust enrichment.” Although
Houle’s second amended pleading is somewhat vague about which causes of action are asserted,
when construed liberally Houle appears to allege a claim for breach of contract, breach of fiduciary
duty, breach of the implied covenant of good faith and fair dealing, fraud, and unjust enrichment.
Houle claimed that he was damaged as a result of the allegedly tortious and fraudulent
conduct of Casillas “and his corporate entities,” citing his loss of time, labor and “business
opportunity.” He asked for an accounting of “all receipts, expenses, and profits concerning the
Property since 2010,” and asked the trial court to “award the past receipt[s] and profits” from the
property to Houle as damages, together with attorney’s fees and punitive damages for the alleged
fraud. And finally, Houle asked the court for a “Declaratory Judgment declaring the rights of the
parties and imposing a constructive trust [on the subject property,] if necessary[,] and for such
other and further relief as to which Houle shall show himself justly entitled.”
The Parties’ Motions for Summary Judgment
9 Houle filed a motion for partial summary judgment (albeit on a request for relief not set
forth in his second amended pleading), asking that the trial court “set aside” the foreclosure sale
of the property based on his allegation that the purported conveyance was “fatally defective.” He
argued that the substitute trustee (Ayoub) had not been properly appointed given that Casillas had
made the appointment in his capacity as president/manager of Casco rather than as the original
lender of the outstanding debt.7 Following a hearing held on July 29, 2016, the trial court denied
Houle’s motion by written order signed on August 5, 2016, without elaboration.8
Thereafter, Casillas, as a third-party defendant, filed his first motion for summary
judgment, as both a no-evidence and traditional motion, arguing that Houle had no evidence to
support any of his causes of action, challenging all elements of Houle’s claims, and arguing that
Houle owed no fiduciary duties to Houle as a matter of law. In his motion, Casillas identified five
causes of action that Houle had alleged in his live pleading as follows: (1) fraud; (2) unjust
enrichment; (3) breach of contract; (4) breach of fiduciary duty; and (5) breach of the implied
covenant of good faith and fair dealing.9 Casillas also requested that the court sever Houle’s
claims and causes of action against him from the balance of the case, to create a final and
appealable order in the event the court granted Casillas’ motion.
7 As explained below, Houle filed a third amended pleading months later in which he requested that the foreclosure sale be set aside, but the trial court ultimately struck that pleading. 8 The reporter’s record of this hearing is not included in the appellate record. 9 In his motion, Casillas also stated that Houle had alleged a sixth cause of action, i.e., “criminal enterprise.” However, it does not appear that Houle ever raised that claim in any of his pleadings, and he does not address that claim on appeal. Moreover, in response to Casillas’ first motion for summary judgment, Houle expressly stated that he did not intend to raise a claim of “criminal enterprise,” but that he did intend to raise a civil RICO claim as the result of “the wire fraud (use of the internet and email) and mail fraud (sending notices of acceleration and foreclosure through the mails) and the existence of a criminal enterprise (CASCO INVESTMENTS, INC.) which is used to perpetrate those frauds.” Houle, however, never actually alleged a RICO claim in any of his pleadings, and also fails to discuss any purported RICO claim on appeal.
10 Houle filed his response to Casillas’ motion in which he attached as evidence (1) the memo
of July 6, 2010; and (2) his own affidavit. Houle asserted that a partnership had been formed
between himself and Casillas which gave rise to fiduciary duties owed to each other. Houle
asserted that Casillas had breached their agreement, had engaged in a fraudulent course of conduct
in foreclosing on the Pershing Property, and had been unduly enriched by taking sole control of
the property without any compensation to Houle. After a hearing, the trial court granted Casillas’
motion in part, dismissing Houle’s claims for unjust enrichment and for breach of fiduciary duty
and the implied covenant of good faith and fair dealing; but allowed Houle’s breach of contract
and fraud claims to proceed to trial.10
The Recusal and Mistrial
The matter then went to trial on Houle’s two remaining claims on February 21, 2017.
After hearing testimony from several witnesses, including Houle and Casillas, Houle’s attorney
made a motion to recuse the trial court contending that the court had exhibited “bias” throughout
the proceedings. After a conference held off the record, the trial court granted Houle’s motion to
recuse and his motion for a mistrial. On February 22, 2017, the trial court issued a written order
of recusal and the matter was assigned to a new judge.
Casillas’ Second Motion for Summary Judgment
Shortly thereafter, on March 15, 2017, Casillas filed his second motion for summary
judgment, seeking dismissal of Houle’s two remaining claims for breach of contract and fraud. In
the motion, Casillas challenged all elements of Houle’s fraud claim, arguing that Houle had no
10 At the hearing on Casillas’ motion, Casillas orally objected to Houle’s affidavit, alleging that it was not competent evidence, that it consisted solely of hearsay and unsupported opinions. However, it does not appear that the trial court ruled on that objection.
11 evidence to establish that Casillas had made a material and false representation upon which he
intended for Houle to rely. In addition, Casillas also contended that Houle had no evidence to
establish that he was “injured or damaged” as a result of Casillas’ allegedly fraudulent conduct.
With regard to the breach of contract claim, Casillas challenged only the element of damages,
claiming that the parties had agreed to sell the property following the renovations, and that the
undisputed evidence demonstrated that the property was now worth less than the amount that
Casillas was owed.
Houle responded to the motion attaching a more detailed affidavit setting forth how he
believed he was damaged, primarily arguing that the parties did not agree to sell the property, and
that instead, they had agreed to keep the property, lease out the apartment units, then split the
profits from the rental income; further, Houle averred that the parties had agreed that he would
serve as property manager at that time, thereby characterizing his damages as primarily being the
loss of a business opportunity. In addition, he claimed that he had been damaged by the fact that
he was not compensated for the work that he performed during the year-long renovation project.
In his affidavit, he provided a detailed assessment of what he believed the units in the apartment
would have rented for, the amount of money he would have received for managing the property,
and provided his estimate of the value of the work he performed on behalf of the alleged
partnership. He also attached a spreadsheet describing the work that had been performed on the
project.
Casillas’ Objections to Houle’s Second Affidavit
On April 26, 2017, Casillas filed objections to Houle’s second affidavit, and its
attachments, arguing in general, that Houle was an “interested witness,” and that his affidavit did
12 not provide testimony that was “clear, positive, direct, credible, free from contradiction, and
uncontroverted,” as required by TEX. R. CIV. P. 166a(c). On May 17, 2017, Casillas filed more
detailed objections to Houle’s affidavit, objecting with more particularity to each paragraph in the
affidavit, raising various objections to the affidavit, including hearsay objections, objections based
on the statute of frauds, objections based on Houle’s reference to documents not attached to the
affidavit, objections to statements considered to be uncorroborated and self-serving “opinions”
and/or impermissible “legal conclusions.”
After a hearing, the trial court issued two orders with both dated May 30, 2017. First, the
court issued evidentiary rulings granting and denying a variety of objections raised against Houle’s
affidavit. Second, the trial court granted Casillas’ second motion for summary judgment
dismissing Houle’s two remaining causes of action filed against Casillas, individually, and in his
representative capacity for Casco and JLC Ventures.
Houle’s Motion for New Trial
On June 28, 2017, Houle filed a motion for new trial, urging the trial court to reconsider
its order granting Casillas’ objections to his affidavit; the two orders granting Casillas’ motions
for summary judgment, and the trial court’s earlier order denying Houle’s motion for partial
summary judgment. In support of his motion, Houle attached his response to Casillas’ requests
for disclosure, in which he had identified himself as an expert witness who would testify as to the
“value of the real estate in issue in this case, knowledge of business procedures, and valuation of
damages,” together with his resume. The trial court held a hearing on Houle’s motion for new
trial on July 19, 2017, and at the close of the hearing denied the motion. Thereafter, the trial court
13 granted Casillas’ motion for non-suit, dismissing its claims against Houle, thereby leaving no
claims pending in the trial court. This appeal followed.
DISCUSSION
On appeal, Houle argues that the trial court erred by denying his motion for partial
summary judgment, and by granting two motions for summary judgment asserted by Casillas,
individually, and in his representative capacity on behalf of Casco and JLC Ventures (collectively,
Appellees). As well, Houle argues that the trial court erred by granting Casillas’ objections to his
second summary judgment affidavit, and by striking a third amended pleading that he attempted
to file after the mistrial was declared.
For clarity, we will number each argument then address each in turn. As a preliminary
matter, we first discuss the state of the parties briefing of this appeal.
BRIEFING ISSUES
Initially, Houle’s opening brief included inadequate citations to the record and few
citations, if any, to legal authorities relied on in support of his positions. Citing to Texas Rule of
Appellate Procedure 38.1, the responsive brief filed by Appellees Casillas, Casco, and JLC
Ventures, collectively, argued almost exclusively that Houle had waived error, if any, wholly based
on inadequate briefing.11 In reply, Houle requested permission to file an amended brief, which
he attached with his request. Appellees argued in response that the amended brief continued to
violate Rule 38.1, and, in any event, it would be unfair to allow Houle to file his amended brief as
11 Rule 38.1(g) provides that: “The brief must state concisely and without argument the facts pertinent to the issues or points presented. In a civil case, the court will accept as true the facts stated unless another party contradicts them. The statement must be supported by record references.” TEX. R. APP. P. 38.1(g). In addition, Rule 38.1(i) provides that: “The brief must contain a clear and concise argument for the contentions made, with appropriate citations to authorities and to the record.” TEX. R. APP. P. 38.1(i).
14 Appellees had based their own argument on briefing waiver. Over Appellees’ objection, we
granted Houle permission to file his Amended Appellant’s Brief on July 6, 2018. We note here
that Appellees never sought permission to file their own amended response to address the merits
of Houle’s arguments, nor did they ask for a reconsideration of our decision allowing amended
briefing by Houle. Accordingly, we proceed with our discussion without benefit of a response on
the merits from Appellees.
ISSUE ONE: THE DENIAL OF HOULE’S MOTION FOR PARTIAL SUMMARY JUDGMENT
On appeal, Houle argues first that the trial court erred in denying his motion for partial
summary judgment voiding the substitute trustee’s deed. Houle asserts that Ayoub’s appointment
as substitute trustee was unlawful and the foreclosure sale itself was “fatally defective.” Rather
than address the merits of these arguments, Appellees contend that the denial of Houle’s motion
is not reviewable on appeal given that Houle had failed to seek a final judgment in his motion for
partial summary judgment. We agree with Appellees.
Under Texas law, a cause of action for wrongful foreclosure has three elements: “(1) a
defect in the foreclosure sale proceedings; (2) a grossly inadequate selling price; and (3) a causal
connection between the defect and the grossly inadequate selling price.” See Sauceda v. GMAC
Mortgage Corp., 268 S.W.3d 135, 139 (Tex. App.—Corpus Christi 2008, no pet.); see also
University Sav. Ass’n v. Springwoods Shopping Ctr., 644 S.W.2d 705, 706 (Tex. 1982) (a plaintiff
seeking damages for wrongful foreclosure must show that (1) there was an irregularity in the
foreclosure sale and (2) the irregularity caused the plaintiff damages); Sotelo v. Interstate
Financial Corp., 224 S.W.3d 517, 523 (Tex. App.—El Paso 2007, no pet.) (“The elements of
wrongful foreclosure are (1) an irregularity at the sale; and (2) the irregularity contributed to an
15 inadequate price.”). “The purpose of a wrongful foreclosure action is to protect mortgagors
against those sales where, through mistake, fraud, or unfairness, the sale results in an inequitably
low price.” In re Keener, 268 B.R. 912, 921 (Bankr. N.D. Tex. 2001). To void a foreclosure
sale, there must be both grossly inadequate consideration, and evidence that there was an
irregularity in the sale that contributed to the inadequate sale price. Am. Sav. & Loan Ass’n of
Houston v. Musick, 531 S.W.2d 581, 587 (Tex. 1975). An individual who has been dispossessed
of property through a wrongful foreclosure may request that the sale be set aside, or in the
alternative, seek damages equal to the difference between the value of the property and the
indebtedness. See Pinnacle Premier Prop., Inc. v. Breton, 447 S.W.3d 558, 565 (Tex. App.—
Houston [14th Dist.] 2014, no pet.); Wells Fargo Bank, N.A. v. Robinson, 391 S.W.3d 590, 593–
94 (Tex. App.—Dallas 2012, no pet.); see also University Savings Ass’n, 644 S.W.2d at 706;
UMLIC VP LLC v. T & M Sales and Envtl. Sys., Inc., 176 S.W.3d 595, 610 (Tex. App.—Corpus
Christi 2005, pet. denied) (citing Univ. Sav. Ass’n, 644 S.W.2d at 706) (failure to properly
foreclose on property gives rise to a cause of action for either the return of the property or
damages).
Here, Houle’s petition neither raises a claim for wrongful foreclosure, expressly nor
impliedly, nor does he seek the remedy of setting aside the foreclosure sale. Unlike his motion,
his petition does not allege irregularities either in Ayoub’s appointment or in the foreclosure sale
itself. Moreover, Houle did not ask that the foreclosure sale be set aside. Instead, it appears that
Houle first raised a complaint about Ayoub’s appointment in his motion for partial summary
judgment. Even in his motion, however, Houle does not explain how Ayoub’s appointment—
16 whether improper or not—resulted in an inadequate selling price. This failure is significant in
several respects.
By the very nature of a summary judgment proceeding, a plaintiff may only move for
summary judgment on a cause of action that has been actually pleaded. See TEX. R. CIV. P.
166a(a) (“A party seeking to recover upon a claim, counterclaim, or cross-claim or to obtain a
declaratory judgment may, at any time after the adverse party has appeared or answered, move
with or without supporting affidavits for a summary judgment in his favor upon all or any part
thereof.”); see generally Cullins v. Foster, 171 S.W.3d 521, 530 (Tex. App.—Houston [14th Dist.]
2005, pet. denied) (recognizing that a plaintiff moving for summary judgment must conclusively
prove all essential elements of its claim) (citing MMP, Ltd. v. Jones, 710 S.W.2d 59, 60 (Tex.
1986); see Geiselman v. Cramer Fin. Group, Inc., 965 S.W.2d 532, 535 (Tex. App.—Houston
[14th Dist.] 1997, no writ)). Moreover, it is fundamental that the motion for summary judgment
must be supported by the pleadings on file, and the final judgment of the court must conform to
those pleadings. See, e.g., 68 Tex. Jur. 3d Summary Judgment § 60 n.4 (citing Galtex Property
Investors, Inc. v. City of Galveston, 113 S.W.3d 922 (Tex. App.—Houston 14th Dist. 2003, no
pet.); Elite Towing, Inc. v. LSI Financial Group, 985 S.W.2d 635 (Tex. App.—Austin 1999, no
pet.)). Therefore, a trial court’s order denying a motion for summary judgment on a claim that
was not raised by the pleadings in effect leaves nothing for this court to review. See generally
Morriss v. Enron Oil & Gas Co., 948 S.W.2d 858, 871–72 (Tex. App.—San Antonio 1997, no
writ) (where even the most liberal reading of the plaintiff’s petition supports the conclusion that
he has never asserted a claim for breach of contract, irrespective of the partial summary judgment
17 granted on that basis, thus, any complaint on appeal with regard to contractual breaches is
inappropriate, and presents nothing for review on appeal).
Moreover, as Appellees point out, the denial of a motion for summary judgment is not
typically considered reviewable as it is not considered a final judgment. See, e.g., Cincinnati Life
Ins. v. Cates, 927 S.W.2d 623, 625 (Tex. 1996) (citing Novak v. Stevens, 596 S.W.2d 848, 849
(Tex. 1980)). The only exception to this rule is when the parties have filed competing and/or
cross-motions seeking summary judgment, and the trial court grants one and denies the other; in
that instance, an appellate court may review both motions and render the judgment the trial court
should have rendered. See, e.g., Holmes v. Morales, 924 S.W.2d 920, 922 (Tex. 1996) (citing
Jones v. Strauss, 745 S.W.2d 898, 900 (Tex. 1988) (recognizing that when both parties move for
summary judgment, the non-prevailing party may appeal both the prevailing party’s motion as
well as its own)); see also Southern Crushed Concrete, LLC v. City of Houston, 398 S.W.3d 676,
678 (Tex. 2013) (when both parties move for summary judgment and the trial court grants one
motion and denies the other, an appellate court reviews both sides’ summary judgment evidence
and renders the judgment the trial court should have rendered); Lopez-Franco v. Hernandez, 351
S.W.3d 387, 391 (Tex. App.—El Paso 2011, pet denied) (when both sides move for summary
judgment and the trial court grants one motion and denies the other, the court of appeals reviews
the summary judgment proof presented by both sides and determines all questions presented).
Moreover, an appellate court must review all of the summary judgment grounds on which the trial
court actually ruled, whether granted or denied, which are dispositive of the appeal regardless of
whether the competing motions were filed at the same time. Baker Hughes, Inc. v. Keco R. & D.,
Inc., 12 S.W.3d 1, 5–6 (Tex. 1999).
18 Nevertheless, as Appellees point out, various courts have held that in order for this
exception to apply both parties must have sought a final judgment in their competing or cross-
motions for summary judgment, and the filing of a motion for partial summary judgment does not
bring the case within the scope of the exception. See Fair v. Arp Club Lake, Inc., 437 S.W.3d
619, 628 (Tex. App.—Tyler 2014, no pet.) (where appellant’s cross-motion for partial summary
judgment did not seek a final judgment, its denial was not reviewable) (citing In re D.W.G., 391
S.W.3d 154, 164 (Tex. App.—San Antonio 2012, no pet.)); see also Cowboy’s Retail & Wholesale
Beverage Distribution, LLC v. Davis, No. 12-14-00085-CV, 2015 WL 6165884, at *3 (Tex.
App.—Tyler Oct. 21, 2015, pet. denied) (mem. op.) (the denial of a cross-motion for summary
judgment is reviewable only if that cross-motion sought a disposition of all claims in the trial
court); Shaw v. Shaw, 835 S.W.2d 232, 235 (Tex. App.—Waco 1992, writ denied) (although the
partial summary judgment was merged into the final judgment and became appealable at that time,
the denial of appellant’s motion for a partial summary judgment was interlocutory and not
appealable). Moreover, the parties must have filed competing motions for summary judgment on
the same issue for the exception to apply. See generally CU Lloyd’s of Texas v. Feldman, 977
S.W.2d 568, 569 (Tex. 1998) (in order to come under the exception to the general rule that the
denial of a motion for summary judgment is not appealable, both parties must have sought final
judgment relief in cross-motions for summary judgment or moved for summary judgment on the
same issue) (citing Bowman v. Lumberton Indep. Sch. Dist., 801 S.W.2d 883, 889-90 (Tex. 1990)).
Here, Casillas did not file a competing motion for summary judgment with respect to a
claim of wrongful foreclosure, as Houle never raised such a claim in his pleadings. Instead,
Casillas moved for final summary judgment listing five causes of action he believed Houle had
19 raised in his live pleadings, and his motion did not include wrongful foreclosure among the causes
of action that he challenged. In his response, Houle did not correct Casillas’ assertion and
appeared to acquiesce to Casillas’ characterization of claims asserted. More importantly, the trial
court’s two orders addressing Casillas’ motions for summary judgment, taken together, only
addressed the five claims discussed in Casillas’ motions, and the trial court therefore never
rendered judgment on any claim for wrongful foreclosure. Therefore, we conclude that a claim
of wrongful foreclosure was not properly before the Court.12 Issue One is overruled.
ISSUE TWO: THE GRANTING OF APPELLEES’ FIRST MOTION FOR SUMMARY JUDGMENT
In Issue Two, Houle contends that the trial court erred in granting summary judgment on
his three claims for unjust enrichment, breach of fiduciary duty, and breach of the implied covenant
of good faith and fair dealing. In their brief, Appellees devote two sentences in responding to
Houle’s arguments. First, Appellees state in a single sentence that Houle “failed to produce more
than a scintilla of evidence as to unjust enrichment, breach of fiduciary duty and criminal
enterprise.” And second, Appellees argue that the trial court properly granted summary judgment
as there is no tort involving an implied covenant of good faith and fair dealing.
Standard of Review
12 We recognize that Houle did request that the foreclosure sale be set aside in his third amended pleading; however, the trial court later struck this pleading. Thus, the trial court did not consider Houle’s third amended counter-claim at the time it considered his motion for partial summary judgment, and on appeal, our review of the court’s ruling is limited to only what was before the trial court at the time it made its ruling. See generally Felhaber v. Pieper, No. 08-02-00351-CV, 2003 WL 22015551, at *3 (Tex. App.—El Paso Aug. 26, 2003, no pet.) (mem. op.) (in considering a motion for summary judgment, a trial court may consider only the evidence on file at the time of the hearing or filed thereafter and before judgment with permission of the court) (citing TEX. R. CIV. P. 166a(c); Leinen v. Buffington's Bayou City Service Co., 824 S.W.2d 682, 685 (Tex. App.—Houston [14th Dist.] 1992, no writ)).
20 On appeal, we review a trial court’s order granting both no-evidence and traditional
motions for summary judgment de novo. See Border Demolition & Envtl., Inc. v. Pineda, 535
S.W.3d 140, 151 (Tex. App.—El Paso 2017, no pet.) (citing Valence Operating Company v.
Dorsett, 164 S.W.3d 656, 661 (Tex. 2005)); see also Travelers Ins. Co. v. Joachim, 315 S.W.3d
860, 862 (Tex. 2010). When, as here, a party has moved for summary judgment on both no-
evidence and traditional grounds, we first review the no-evidence grounds. See Cmty. Health Sys.
Prof’l Services Corp. v. Hansen, 525 S.W.3d 671, 680 (Tex. 2017); Lightning Oil Co. v. Anadarko
E&P Onshore, LLC, 520 S.W.3d 39, 45 (Tex. 2017). If we conclude that the trial court properly
granted the no-evidence summary judgment motion, we need not address the traditional motion to
the extent that it addresses the same claims. See Lightning Oil Co., 520 S.W.3d at 45 (citing Ford
Motor Co. v. Ridgway, 135 S.W.3d 598, 600 (Tex. 2004)).
No-evidence motions for summary judgment are governed by Rule166a(i) of the Texas
Rules of Civil Procedure, which requires a movant to allege that adequate time for discovery has
passed and that the non-movant still has no evidence to support one or more essential elements of
a claim for which the non-movant would bear the burden of proof at trial. See Stierwalt v. FFE
Transp. Services, Inc., 499 S.W.3d 181, 194 (Tex. App.—El Paso 2016, no pet.) (citing KCM Fin.
LLC v. Bradshaw, 457 S.W.3d 70, 79 (Tex. 2015)); TEX. R. CIV. P. 166a(i). The motion must
specifically state the elements as to which the movant contends there is no evidence. TEX. R. CIV.
P. 166a(i); see also Timpte Industries, Inc. v. Gish, 286 S.W.3d 306, 310 (Tex. 2009); Wade Oil
& Gas, Inc. v. Telesis Operating Company, Inc., 417 S.W.3d 531, 540 (Tex. App.—El Paso 2013,
no pet.). The burden thereafter shifts to the non-movant to produce at least a scintilla of evidence
to raise a genuine issue of material fact regarding each challenged element. TEX. R. CIV. P.
21 166a(i); see also Lightning Oil Co., 520 S.W.3d at 45; Smith v. O'Donnell, 288 S.W.3d 417, 424
(Tex. 2009); Wade Oil & Gas, 417 S.W.3d at 540. More than a scintilla of evidence exists when
reasonable and fair-minded individuals could differ in their conclusions. King Ranch, Inc. v.
Chapman, 118 S.W.3d 742, 751 (Tex. 2003). Although the nonmoving party is not required to
marshal all of his proof in response to a summary judgment motion, he must present countervailing
evidence that raises a genuine fact issue on the challenged elements. Duchene v. Hernandez, 535
S.W.3d 251, 258 (Tex. App.—El Paso 2017, no pet.) (citing Sw. Elec. Power Co. v. Grant, 73
S.W.3d 211, 215 (Tex. 2002) (citing TEX. R. CIV. P. 166a)). The non-movant fails in their burden
of creating a fact issue when the evidence is so weak as to do no more than create a mere surmise
or suspicion of material fact. Wade Oil & Gas, 417 S.W.3d at 540; see also Lozano v. Lozano,
52 S.W.3d 141, 145 (Tex. 2001); see also Frost Nat’l Bank v. Fernandez, 315 S.W.3d 494, 508
(Tex. 2010).
The movant for traditional summary judgment bears the burden of proving there is no
genuine issue of material fact as to at least one essential element of the challenged cause of action.
Lightning Oil Co.,520 S.W.3d at 45 (citing TEX. R. CIV. P. 166a(c); Nassar v. Liberty Mut. Fire
Ins. Co., 508 S.W.3d 254, 257 (Tex. 2017)); see also Amedisys, Inc. v. Kingwood Home Health
Care, LLC, 437 S.W.3d 507, 511 (Tex. 2014). If the initial burden is met, the burden then shifts
to the non-movant to raise an issue of fact, and in order to do so, the non-movant must come
forward with more than a scintilla of evidence. Amedisys, Inc., 437 S.W.3d at 511; see also Chance
v. Elliot & Lillian, LLC, 462 S.W.3d 276, 283 (Tex. App.—El Paso 2015, no pet.); Ciguero v.
Lara, 455 S.W.3d 744, 747 (Tex. App.—El Paso 2015, no pet.). If the initial burden is not
satisfied, the non-movant need not respond or present any evidence. See Amedisys, Inc., 437
22 S.W.3d at 511; see also State v. Ninety Thousand Two Hundred Thirty–Five Dollars and No Cents
in U.S. Currency ($90,235), 390 S.W.3d 289, 292 (Tex. 2013) (citing M.D. Anderson Hosp. &
Tumor Inst. v. Willrich, 28 S.W.3d 22, 23 (Tex. 2000) (per curiam)).
In reviewing the granting of a traditional or a no-evidence motion for summary judgment,
we review the evidence in the light most favorable to the non-movant, crediting evidence favorable
to that party if reasonable jurors could do so, and disregarding contrary evidence unless reasonable
jurors could not. Pineda, 535 S.W.3d at 151 (citing Mack Trucks, Inc. v. Tamez, 206 S.W.3d 572,
582 (Tex. 2006)); see also Lightning Oil Co., 520 S.W.3d at 45. We further indulge every
reasonable inference in favor of the non-movant and resolve any doubts against the motion.
Lightning Oil Co.,520 S.W.3d at 45 (citing City of Keller v. Wilson, 168 S.W.3d 802, 824 (Tex.
2005)). If the trial court’s order does not specify the grounds on which the summary judgment
was granted, “we must affirm the summary judgment if any of the theories presented to the trial
court and preserved for appellate review are meritorious.” See Provident Life & Accident Ins. Co.
v. Knott, 128 S.W.3d 211, 216 (Tex. 2003); see also FM Properties Operating Co. v. City of Austin,
22 S.W.3d 868, 872–73 (Tex. 2000) (citing Star–Telegram, Inc. v. Doe, 915 S.W.2d 471, 473
(Tex. 1995)).
A. Houle’s Claims For Breach of Fiduciary Duty and the Implied Covenant of Good Faith and Fair Dealing
We first note that under Texas law not all contracts contain an implied covenant of good
faith and fair dealing. Saucedo v. Horner, 329 S.W.3d 825, 831–32 (Tex. App.—El Paso 2010,
no pet.) (citing City of Midland v. O'Bryant, 18 S.W.3d 209, 215 (Tex. 2000)); see also English v.
Fischer, 660 S.W.2d 521, 522 (Tex. 1983) (expressly rejecting the inclusion of a general implied
covenant of good faith and fair dealing in Texas contracts). Nonetheless, it is recognized that the
23 duty of “good faith and fair dealing” is one of many duties that fiduciaries owe to each other.
Saucedo, 329 S.W.3d at 831–32 (citing City of Midland, 18 S.W.3d at 215); see generally Fred
Loya Ins. Agency, Inc. v. Cohen, 446 S.W.3d 913, 919 (Tex. App.—El Paso 2014, pet. denied)
(citing Vogt v. Warnock, 107 S.W.3d 778, 782 (Tex. App.—El Paso 2003, pet. denied) (in general,
a fiduciary owes his principal a high duty of good faith, fair dealing, honest performance, and strict
accountability)). Therefore, we combine our discussion of Houle’s claim for breach of fiduciary
duty and his claim of breach of the implied covenant of good faith and fair dealing, as both involve
a threshold question of whether Casillas did in fact owe a fiduciary duty to Houle. See, e.g., First
United Pentecostal Church of Beaumont v. Parker, 514 S.W.3d 214, 220 (Tex. 2017) (the elements
of a claim for breach of fiduciary duty are: “(1) the existence of a fiduciary duty, (2) breach of the
duty, (3) causation, and (4) damages”).
In his response to Casillas’ motion for summary judgment, Houle argued that he and
Casillas were in a partnership, albeit an informal one, to purchase and renovate the Pershing
Property, and that under Texas law, partners owe each other a fiduciary duty. In support of his
argument, Houle attached a copy of the July 6, 2010 memo from Casillas, which chronicled the
history of the parties’ agreement and their relationship.13 In addition, Houle submitted his own
affidavit asserting facts about the parties’ agreement and intended partnership.14 In his affidavit,
Houle averred that he and Casillas had orally agreed to a partnership for the purpose of purchasing
13 Houle alternatively argued that this same fiduciary relationship and duty to each other would still be owed even if the court labeled the parties’ agreement as a “joint venture” rather than a partnership. Finding sufficient evidence of a partnership, we need not address this alternative argument. 14 At the hearing on Casillas’ motion, Casillas orally objected to Houle’s affidavit, alleging it was not competent evidence because it consisted solely of hearsay and personal opinions without supporting evidence. However, it does not appear that the trial court ruled on Casillas’ objection, and in any event, much of what Houle averred in his affidavit regarding the parties’ agreement was confirmed by the July 6, 2010 memo that Houle attached to his response.
24 and renovating the Pershing Property, and they further agreed they would form the Pershing LLC
to effectuate their agreement and partnership.
At a hearing held on January 20, 2017, Casillas argued there was no evidence of a
partnership or other relationship that would give rise to any such duties, arguing that any such
partnership was required to be in writing. In addition, Casillas pointed out that the parties had
formed an LLC, which it argued had taken the place of any pre-existing partnership, and he argued
that members of an LLC do not owe each other any fiduciary duties.
Fiduciary Duties Owed in Partnership Relationships
As a preliminary matter, we note that most informal relationships, such as friendships or
even familial relationships, will not necessarily give rise to any special relationship that imposes
fiduciary duties on the parties. Jones v. Thompson, 338 S.W.3d 573, 583–84 (Tex. App.—El Paso
2010, pet. denied) (mere subjective trust resulting from an informal and confidential relationship
does not create a fiduciary relationship) (citing Schlumberger Tech. Corp. v. Swanson, 959 S.W.2d
171, 177 (Tex. 1997) (Texas courts are reluctant to recognize informal fiduciary relationships)).
Nor does a fiduciary relationship exist in an ordinary lender-borrower relationship. Id. (citing
Wil–Roye Inv. Co. II v. Washington Mut. Bank, FA, 142 S.W.3d 393 (Tex. App.—El Paso 2004,
no pet.); Manufacturers Hanover Trust Co. v. Kingston Investors Corp., 819 S.W.2d 607, 610
(Tex. App.—Houston [1st Dist.] 1991, no writ)).
However, the Texas Supreme Court has recognized that in certain formal relationships,
including partnerships, a fiduciary duty arises as a matter of law. Ins. Co. of N. Am. v. Morris,
981 S.W.2d 667, 674 (Tex. 1998); Bohatch v. Butler & Binion, 977 S.W.2d 543, 545 (Tex. 1998).
As the Court explained, “[t]he relationship between ... partners ... is fiduciary in character, and
25 imposes upon all the participants the obligation of loyalty to the joint concern and of the utmost
good faith, fairness, and honesty in their dealings with each other with respect to matters pertaining
to the enterprise.” Fitz–Gerald v. Hull, 150 Tex. 39, 237 S.W.2d 256, 264 (1951) (quotation
omitted); Bohatch, 977 S.W.2d at 545; see also Home Comfortable Supplies, Inc. v. Cooper, 544
S.W.3d 899, 907 (Tex. App.—Houston [14th Dist.] 2018, no pet.) (partners share “the obligation
of loyalty to the joint concern and of the utmost good faith, fairness, and honesty in their dealings
with each other with respect to matters pertaining to the enterprise”).
It is less clear, however, whether members of an LLC owe each other a fiduciary duty.
Chapter 101 of the Texas Business Organizations Code, also known as the Limited Liability Act,
which establishes the existence of LLCs, is silent on whether such a duty is imposed, and at least
one of our sister courts has held that the Act does not itself impose a fiduciary duty upon members
of an LLC, and that it would be improper to impose such a duty as a matter of law. Suntech
Processing Sys., L.L.C. v. Sun Communications, Inc., No. 05-99-00213-CV, 2000 WL 1780236,
at *6–7 (Tex. App.—Dallas December 5, 2000, pet. denied). By analogizing LLCs to closely-
held corporations, Suntech concluded that such a duty may nevertheless arise between members
based, at least in part, in situations in which the members are in “unequal” positions of power, such
as when one member exercises superior control over the LLC. Id., at *6–7. In that instance, the
court held that the existence of a fiduciary relationship is a fact question. Id.; see also Kaspar,
755 S.W.2d at 155 (recognizing that except in limited circumstances, the existence of a fiduciary
relationship is a fact question); see generally In re Lau, 2013 WL 5935616, at 27 (Bankr. E.D.
Tex. 2013) (noting that Chapter 101 of the Texas Business Organizations Code does not directly
address duties owed by LLC managers and members but implies that certain duties may be owed
26 and allows contracting parties to address duties in their LLC agreement).15 Nevertheless, we note
that Houle does not appear to be arguing that Casillas owed him a duty as a fellow member of the
LLC, and instead, appears to find the fiduciary relationship in a pre-existing, albeit oral and
informal partnership, which he claims was formed when he and Casillas entered into their
agreement to purchase and renovate the Pershing Property, and that they formed the LLC simply
as a means of effectuating their pre-existing partnership. And to this extent, we agree with this
argument.
The fact that the parties agreed to form an LLC to effectuate their agreement does not
preclude the possibility that the parties already had a pre-existing—and continuing—partnership.
In this regard, the present case is similar to the facts set forth in Cielo Vista Bank v. McCutcheon,
719 S.W.2d 658 (Tex. App.—El Paso 1986, writ ref’d n.r.e.). In McCutcheon, two businessmen
agreed to open an automobile dealership and to share the profits. Id. at 661. The two men then
formed a corporation for the purpose of buying a piece of property on which to establish the car
lot. Id. at 659. From that point on, we concluded that the two businessmen were either “partners
or incorporators,” which in turn created a fiduciary relationship, and therefore, they owed “each
other the duty of utmost good faith.” Id. at 660-61. We noted that trust amongst businessmen
will not establish a fiduciary relationship, but the “agreement to purchase and the eventual
purchase of the property were within the scope of the duties arising from the prior relationship,”
and that this agreement was sufficient to create a fiduciary duty between the two men. Id. at 661
15 For example, section 101.401 of the Texas Business Organizations Code provides that a “company agreement of a limited liability company may expand or restrict any duties, including fiduciary duties, and related liabilities that a member, manager, officer, or other person has to the company or to a member or manager of the company[,]” thereby also suggesting the existence of a fiduciary duty between members. TEX. BUS. ORGS. CODE ANN. § 101.401.
27 (citing Winchester Oil Company v. Glass, 683 S.W.2d 35, 39 (Tex. App.—Texarkana 1984, no
writ)). As in McCutcheon, the relationship at issue here, between Houle and Casillas, predates
the creation of the LLC and continued long after its formation. We therefore must next determine
whether in fact the parties’ relationship can be considered a partnership.
In the trial court, Casillas argued that a partnership was not formed, primarily because the
parties did not sign a written agreement to that effect. The fact that a written agreement was not
signed, however, is not dispositive of the question of whether a partnership was actually formed,
as the law has long recognized the existence of oral partnership agreements.16 Malone v. Patel,
397 S.W.3d 658, 674–75 (Tex. App.—Houston [1st Dist.] 2012, pet. denied) (citing Ingram v.
Deere, 288 S.W.3d 886, 894-97 (Tex. 2009)). Under long-standing common law principles,
which have since been codified, a partnership agreement may be either express or implied from
the parties’ conduct. Ingram, 288 S.W.3d at 893-94 (citing Donald v. Phillips, 13 S.W.2d 74, 76
(Tex. 1929)). When an express agreement does not exist, the question of whether the parties
intended to enter into a partnership must be “determined by an examination of the totality of the
circumstances.” Ingram, 288 S.W.3d at 903-904.
Section 152.051 of the Texas Business Organizations Code, which was in effect in July of
2009 when the parties allegedly entered into their partnership, provides that: an “association of
two or more persons to carry on a business for profit as owners creates a partnership, regardless of
whether: (1) the persons intend to create a partnership; or (2) the association is called a
16 We note that the failure to reduce an agreement to writing (as well as any proffered explanation for that failure) is relevant for the jury’s consideration but is not dispositive of the existence of a partnership agreement. Malone v. Patel, 397 S.W.3d 658, 674–75 (Tex. App.—Houston [1st Dist.] 2012, pet. denied) (citing Ingram v. Deere, 288 S.W.3d 886, 894-97 (Tex. 2009).
28 ‘partnership,’ ‘joint venture,’ or other name.” TEX. BUS. ORGS. CODE ANN. § 152.051; see also
Ingram, 288 S.W.3d at 894-95.17 The Code sets forth five factors that a court should review in
determining whether a partnership exists: “(1) receipt or right to receive a share of profits of the
business; (2) expression of an intent to be partners in the business; (3) participation or right to
participate in control of the business; (4) agreement to share or sharing: (A) losses of the business;
or (B) liability for claims by third parties against the business; and (5) agreement to contribute or
contributing money or property to the business.” TEX. BUS. ORGS. CODE ANN. § 152.052(a); see
also Ingram, 288 S.W.3d at 894–95; Rojas v. Duarte, 393 S.W.3d 837, 841–46 (Tex. App.—El
Paso 2012, pet. denied) (discussing similar factors under the TRPA).
Under the Code, a party seeking to establish the existence of a partnership is not required
to provide evidence of all five factors; in particular, the Code expressly provides that an agreement
to share losses is not necessary to create a partnership. TEX. BUS. ORGS. CODE ANN. § 152.052(c).
The Code further provides that evidence of only one factor standing alone is not sufficient to
establish a partnership in a business. TEX. BUS. ORGS. CODE ANN. § 152.052. However, as the
Court in Ingram explained, evidence of all five factors establishes a partnership as a matter of law,
and therefore, the five-factor test is considered on a “continuum” between these two points.
Ingram, 288 S.W.3d at 893-94, 896; see also Rojas, 393 S.W.3d at 846 (noting that the evidence,
or lack thereof, in support of the five factors is considered on a continuum).
17 In Ingram, the reviewing court discussed the provisions of the TRPA, the predecessor statutes to the Texas Business Organizations Code; however, as Ingram noted, the provisions relating to the definition of a partnership and the factors to be used in determining whether a partnership exists are virtually identical under the TRPA and the Code. Ingram, 288 S.W.3d at 894 n.4. Therefore, we rely on the analysis of Ingram here, when applicable.
29 Based on this statutory framework, we next consider whether Houle presented more than
a scintilla of evidence to establish the factors indicative of a partnership.
1. Profit Sharing
With his affidavit supported by the memo dated July 6, 2010, Houle presented evidence
indicating that the parties had an agreement to share equally in profits after renovations were
completed and after Casillas was reimbursed for his investment. 18 Although the partnership
ended before any profits were shared, we find that the undisputed summary judgment evidence
demonstrated that the parties had agreed they would share profits when profits were earned. We
therefore conclude that this factor supports a finding that a partnership existed. See, e.g., Rojas,
393 S.W.3d at 841-42 (where the evidence demonstrated that the parties intended to share profits
in the future, this supported a finding that a partnership existed even though the parties had not yet
started sharing profits).
2. Expression of Intent to Be Partners
The Texas Business Organizations Code expressly provides that a partnership may be
found even though the parties may not have expressly intended to create a partnership, and
regardless of whatever name they use to describe their relationship. TEX. BUS. ORGS. CODE ANN.
§ 152.051; see also Ingram 288 S.W.3d at 894-95. Therefore, direct proof of the parties’ intent
to form a partnership is not needed. Ingram, 288 S.W.3d at 895-96; see also Tubb v. Aspect Int’l,
Inc., No. 12-14-00323-CV, 2017 WL 192919, at *9 (Tex. App.—Tyler Jan. 18, 2017, pet. denied)
(mem. op.) (citing TEX. BUS. ORGS. CODE ANN. §§ 152.051(b)(1) and 152.052(a)(2)).
18 In fact, the original petition filed by Casillas on behalf of Casco, indicated that the “rents would be split evenly between” Houle and Casco, after Casillas was reimbursed for his investment.
30 Nevertheless, the question of whether the parties made a direct expression of their intent is
one factor, albeit not a necessary one, which can be used to establish the existence of a
partnership. 19 Ingram, 288 S.W.3d at 900. In determining whether a direct expression was
made, a court may look to the “partners’ speech, writings, and conduct” to see if such an intent has
been expressed, although “there must be evidence that both parties expressed their intent to be
partners.” Id. at 899-900. The Court noted that, “[e]vidence of expressions of intent could
include, for example, the parties’ statements that they are partners, one party holding the other
party out as a partner on the business’s letterhead or name plate, or in a signed partnership
agreement.” Id. at 900 (citing Reagan v. Lyberger, 156 S.W.3d 925, 928 (Tex. App.—Dallas
2005, no pet.)); see also Rojas, 393 S.W.3d at 842 (finding evidence of an expression of intent
where three witnesses testified that they heard both parties introduce themselves as partners in
different business settings).
Here, we see only one mention of the term “partner” in the communications between the
parties. In the July 6, 2010 memo, Casillas complained that Houle was making unilateral
decisions regarding “how to do things” during the renovations, and he further asserted that he was
“not a ‘Silent Partner’ as [Houle] called [him] once.” Although this indicates that Houle—at some
point in their relationship—expressed to Casillas that he considered him to be a partner, there is
no evidence that Casillas similarly expressed any such intent to Houle or to anyone else. We
19 Ingram noted, “[r]eferring to a friend, employee, spouse, teammate, or fishing companion as a ‘partner’ in a colloquial sense is not legally sufficient evidence of expression of intent to form a business partnership.” Ingram, 288 S.W.3d at 900 (citing Murphy v. McDermott Inc., 807 S.W.2d 606, 613 (Tex. App.—Houston [14th Dist.] 1991, pet. denied) (explaining that although one party referred to the other party as his partner, this alone did not create a partnership)).
31 therefore conclude that the record does not contain evidence that both parties made a direct
expression of their intent to form a partnership.
3. Control
The third factor under the analysis is participation in or right to participate in control of the
business, which this Court has noted is one of the most important factors in determining whether
a partnership exists. Rojas, 393 S.W.3d at 843. As this Court has recognized, “[t]he right to
control a business is the right to make executive decisions.” Id. (citing Ingram, 288 S.W.3d at
901). As we have further recognized, “[s]everal sub-factors are relevant to concluding that a party
has the right to make executive decisions, including: (1) the exercise of authority over the
business’s operation; (2) the right to write checks on the business’s checking account; (3) control
over and access to the business’s books; and (4) the receipt of and management of all of the
business’s assets and monies.” Id. at 843 (citing Ingram, 288 S.W.3d at 901–02).
Here, Houle’s affidavit and Casillas’ July 6, 2010 memo indicate that the parties handled
their arrangement informally. We note additionally that there is no direct evidence that the
partnership maintained any “books” or a “checking account.” Nonetheless, we find clear
evidence that the parties both controlled various aspects of the business’s operation, and both
exercised control over its assets and monies. The undisputed summary judgment evidence
demonstrates that Houle and Casillas jointly made the decision to purchase the Pershing Property,
decided how to finance the property, and agreed to form an LLC for the purpose of protecting their
personal interests. In addition, the undisputed evidence demonstrates that the two men jointly
decided how they would divide up their responsibilities, with Casillas providing the financing for
the project, and Houle providing his expertise and management skills in overseeing the
32 renovations; moreover, the undisputed evidence establishes that for the first year of the project,
the parties communicated regularly, with Houle submitting requests for reimbursements, and
Casillas approving those requests.
On this record, we find there is more than a scintilla of evidence that the parties made
executive decisions together and exercised joint control over the operation of the partnership. See,
e.g., Nguyen v. Hoang, 507 S.W.3d 360, 373 (Tex. App.—Houston [1st Dist.] 2016, no pet.)
(finding that all parties participated in exercising control over the business of their partnership,
where they jointly made decisions regarding the purchase of property and the method of the
purchase, decided when to sell property and the terms of sale, and agreed upon who would operate
the property and who would receive salaries and how much salary each would receive); see also
Price v. Wrather, 443 S.W.2d 348, 351–52 (Tex. App.—Dallas 1969, writ ref’d n.r.e.) (noting that
a party could control a business by receiving and managing all of the business’s assets and monies);
Brown v. Cole, 155 Tex. 624, 291 S.W.2d 704, 710 (1956) (noting that evidence of control of a
business could be found in the exercise of authority over the business’s operations).
The fact that the parties may have effectively controlled different aspects of the business
operations does not foreclose a finding that they both had the right to make, and did in fact make,
executive decisions about those operations. See, e.g., Rojas, 393 S.W.3d at 843 (finding evidence
of “control” one party was considered “management,” but the two parties nevertheless made
decisions collaboratively, such as the decision to purchase a certain property, and both parties had
access to the business’s finances). We therefore conclude that this factor supports a finding that
a partnership existed.
4. Sharing of Losses and Liability for Third Party Claims
33 Under the Texas Business Organizations Code, an agreement to share losses although a
factor in the analysis, is not necessary to create a partnership. TEX. BUS. ORGS. CODE ANN. §
152.052(c); see also Ingram, 288 S.W.3d at 901. In the present case, while the parties did agree
to share profits equally after Casillas was reimbursed, there is nothing in the record to suggest that
they also agreed to share equally in the losses or liabilities of the partnership. Therefore, although
this factor is not necessary to the creation of a partnership, we conclude that it weighs against
finding a partnership.
5. Contribution of Money or Property
The final factor under the Texas Business Organizations Code, considers whether the
parties agreed to contribute money and/or property to the partnership. TEX. BUS. ORGS. CODE
ANN. § 152.052(A)(5); see also Ingram, 288 S.W.3d at 902 (noting that under the TRPA,
“property” was defined as “all property, real, personal, or mixed, tangible or intangible, or an
interest in that property”).
Here, the undisputed evidence demonstrated that the parties agreed that Casillas would
contribute money to fund the project by extending a loan to the LLC to purchase and renovate the
Pershing Property, while Houle would contribute by offering his skills and services. We have no
trouble finding that Casillas’ agreement to lend money to fund the project was the equivalent of
contributing money to the partnership. See generally Hoss v. Alardin, 338 S.W.3d 635, 647 (Tex.
App.—Dallas 2011, no pet.) (recognizing that loans of money can constitute contributions to the
business under the TRPA) (citing Reagan, 156 S.W.3d at 928).
Although not quite as clear, we also conclude that Houle’s agreement to lend his labor and
time to oversee or supervise the renovations of the Pershing Property, was the equivalent of
34 contributing money or property to the partnership. In reaching this conclusion, we recognize that
if Houle had simply been an employee of the company, and only contributed his services in that
capacity, this would not result in a finding that he contributed anything of value to the partnership
itself. See Ingram, 288 S.W.3d at 903 (noting that although employees may contribute to a
business endeavor by lending their time and reputation, this is not a contribution to the venture
indicative of a partnership interest). However, the undisputed summary judgment evidence
established that Houle was not serving in an employee capacity during the renovations, and that
he instead contributed his time and skills, or in other words his “sweat equity” in furtherance of
the partnership itself. We find this to be sufficient to constitute a contribution to the partnership
under the Code. See, e.g., Tubb, 2017 WL 192919, at *9 (finding that the agreement of a party to
lend his name and reputation to a business venture could be considered a contribution of property
to support the creation of a partnership); Estate Land Co. v. Wiese, No. 14-13-00524-CV, 2015
WL 1061553, at *7 (Tex. App.—Houston [14th Dist.] March 10, 2015, pet. denied) (mem. op.)
(upholding the trial court’s determination that a party’s contribution of “sweat equity” towards a
project was sufficient to support a finding of partnership); Malone, 397 S.W.3d at 678 (party’s
unpaid work, time and effort in starting up a company, which he considered to be his “sweat
equity,” could be considered as evidence of his contribution to the company); see generally Black
v. Redmond, 709 Fed. Appx. 766, 770 (5th Cir. 2017) (noting that a party’s contribution of “know-
how and sweat equity” to a partnership could be considered a contribution to the partnership for
which he was entitled to reimbursement). We therefore conclude that this factor supports a
finding that a partnership existed.
Conclusion
35 We conclude that the record contains more than a scintilla of evidence in support of three
of the five factors for establishing a partnership under the Texas Business Organizations Code: (1)
an agreement to share profits, (2) control over the enterprise, and (3) a contribution of money and
property to the enterprise by both parties. Given that these factors are generally recognized as
being the most dispositive and important factors of the analysis, we further conclude that there is
sufficient evidence to raise a factual question regarding the existence of a partnership between the
parties. Because partners owe each other fiduciary duties, we turn next to determine whether the
evidence also raises a question of fact on a breach of their fiduciary duties.
Breach of Fiduciary Duties and Duty of Good Faith and Fair Dealing
Assuming that a fiduciary relationship did exist, we must next determine whether Houle
presented more than a scintilla of evidence to raise a question of fact on the issue of whether
Casillas breached his fiduciary duties including his duty of good faith and fair dealing. Houle
argues that his affidavit, which chronicled Casillas’ conduct, starting with Casillas’ decision to
stop funding the renovations, his subsequent decision to sign a promissory note to himself and to
take out a second deed of trust on the Pershing Property, without notice to Houle, and his steps
taken to foreclose on the property, without considering any interest that Houle may have had in
the property, all raised a question of fact on whether Casillas breached his fiduciary duties.20 We
agree.
20 Houle argues that Casillas’ fraudulent intent or scheme can be found in his July 6, 2010 memo, in which he repeatedly states that he believed he owned the property, asserting that Casillas was in effect telegraphing his intent to obtain the property for himself. We do not necessarily read Casillas’ memo in such a harsh light, as it can be fairly read instead as Casillas expressing his concerns about the security of his investment in the property and otherwise reminding Houle that he held the original deed of trust on the property for which he was entitled to foreclose.
36 In general, partners owe each other a strict duty of good faith and candor, as well as a duty
to one another to make full disclosure of all matters affecting the partnership and to account for all
partnership profits and property. Zinda v. McCann St., Ltd., 178 S.W.3d 883, 890–91 (Tex.
App.—Texarkana 2005, pet. denied) (citing Brosseau v. Ranzau, 81 S.W.3d 381, 394 (Tex. App.—
Beaumont 2002, pet. denied)). The evidence that Casillas engaged in a course of conduct with
regard to clearly significant matters affecting the partnership, such as signing the promissory note
and deed of trust without notice to Houle, and subsequently foreclosing on the subject property,
without considering any of Houle’s interests, was sufficient to raise a question of fact with respect
to whether Casillas breached his fiduciary duties to Houle including his duty of good faith and fair
dealing.
In reaching this conclusion, we note that Casillas, at some point, could have taken steps to
foreclose on the original deed of trust and/or to end the partnership if he believed that Houle was
not fulfilling his obligations. See, e.g., Bohatch, 977 S.W.2d at 545 (quoting Gelder Med. Group
v. Webber, 41 N.Y.2d 680, 394 N.Y.S.2d 867, 870–71, 363 N.E.2d 573, 577 (1977)) (recognizing
that even though partners owe each other a fiduciary duty, they have “no obligation to remain
partners,” because, at the “heart of the partnership concept is the principle that partners may choose
with whom they wish to be associated”); see also Bendalin v. Youngblood & Associates, 381
S.W.3d 719, 738 (Tex. App.—Texarkana 2012, pet. denied); LG Ins. Mgmt. Services, L.P. v. Leick,
378 S.W.3d 632, 643 (Tex. App.—Dallas 2012, pet. denied). However, in exiting the partnership,
Casillas was required to do so in a manner that was consistent with fiduciary duties owed to Houle
and consistent with the terms of the parties’ partnership agreement. See generally Bohatch, 977
S.W.2d at 547 (holding that a partner who was expelled from a partnership was entitled to damages
37 where the partnership reduced her tentative distribution for that year to zero without requisite
notice to her in violation of the partnership agreement). We believe that a question of fact exists
on the issue of whether Casillas acted in accordance with his obligations by essentially terminating
the partnership agreement in the manner in which he did.
Evidence of an Injury Resulting from the Breach
And finally, we must next determine whether Houle provided sufficient evidence to
respond to Casillas’ claim in his motion that Houle had no evidence to support a finding that he
suffered “any injury” as a result of any alleged breach of fiduciary duties, and/or that Casillas
obtained a “benefit” as a result of any breach. Houle’s response was weakest on this issue, with
Houle’s affidavit asserting a general claim that he was injured when Casillas took control over the
Pershing Property for himself alone through his allegedly fraudulent course of conduct, thereby
depriving Houle of his “interest” in the property, and without compensating Houle for the work
that he performed in improving the property over the course of the year-long renovations. In his
affidavit, Houle provided no information regarding the amount of any damages he had suffered as
a result of the breach, and in particular, he did not provide any evidence of what he believed the
value of his “interest” in the property was and/or the value of the services he contributed to the
partnership for which he was not reimbursed.
Nevertheless, we conclude that Houle’s affidavit provides at least a scintilla of evidence to
raise a question of fact on the issue of whether he did in fact suffer an injury as a result of Casillas’
conduct. In reaching this conclusion, we find it significant that in his motion for summary
judgment, Casillas only argued in very general terms that Houle had no evidence to establish that
Houle had suffered any injury as a result of Casillas’ alleged breach or that Casillas benefitted
38 from such a breach. More importantly, we note that in his first motion for summary judgment—
unlike his second motion to be discussed next—Casillas did not challenge Houle to provide
evidence pertaining to the economic value of his alleged injury and/or the economic value of the
benefit that Casillas received.
As we recently discussed, it is critical for a party moving for summary judgment to provide
the non-movant with notice of the elements that are being challenged so that the non-movant will
know how to respond. See, e.g., Pineda, 535 S.W.3d at 156 (citing TEX. R. CIV. P. 166a(i); Timpte
Industries, Inc. v. Gish, 286 S.W.3d 306, 310 (Tex. 2009); Wade Oil & Gas, 417 S.W.3d at 540).
The requirement that a moving party identify the element upon which it is moving for summary
judgment “serves the purposes of providing adequate information to the opposing party by which
it may oppose the motion and defining the issues to be considered for summary judgment.” Id. at
157 (citing Gish, 286 S.W.3d at 311 (quoting Westchester Fire Ins. Co. v. Alvarez, 576 S.W.2d
771, 772 (Tex. 1978)). As Casillas only challenged Houle to come forward with evidence of an
alleged “injury,” we do not believe that this would have put Houle on notice that he needed to
provide an accounting of the monetary amount of the injury that he suffered. And as set forth
above, Houle simply responded in kind by providing evidence, albeit in general terms, regarding
the nature of his injury.
Moreover, we note that in the present case, Houle did not simply seek monetary damages
for Casillas’ alleged breach of fiduciary duty, and instead also requested equitable relief, such as
a “Declaratory Judgment declaring the rights of the parties and imposing a constructive trust” on
the subject property, based on Casillas’ allegedly fraudulent conduct in taking the property for
himself. In analogous situations, the Texas Supreme Court has held that when a plaintiff seeks
39 equitable relief for the breach of fiduciary duty, the plaintiff does not necessarily need to present
evidence of actual damages stemming from the breach. See, e.g., First United Pentecostal
Church of Beaumont v. Parker, 514 S.W.3d 214, 220-21 (Tex. 2017) (referring to laws on agency
and trust relationships, the Court held that a client of an attorney who allegedly took money from
the client’s trust fund account was not required to prove actual damages for the attorney’s breach
of his fiduciary duties, as the client was entitled to equitable relief, including the forfeiture or
disgorgement of any benefit obtained by the attorney as the result of his breach); see also Kinzbach
Tool Co. v. Corbett-Wallace Corp., 138 Tex. 565, 160 S.W.2d 509, 514 (1942) (holding that the
plaintiff, who established that the defendant breached a fiduciary duty and obtained a “secret gain
or benefit” from a third party while serving as the plaintiff’s agent, was entitled to equitable relief
requiring the defendant to account to his principal for all he has received).
Accordingly, for the reasons set forth above, we conclude that Houle provided at least a
scintilla of evidence to raise a question of fact regarding whether Casillas owed him a fiduciary
duty, whether that duty was breached, and whether he was injured by the breach and/or whether
he was entitled to the equitable relief requested in his pleadings. We therefore conclude that the
trial court erred by granting Casillas’ motion for summary judgment on Houle’s cause of action
for breach of fiduciary duty and the implied covenant of good faith and fair dealing.
B. Houle’s Claim for Unjust Enrichment
Houle next argues that the trial court erred by dismissing his claim for unjust enrichment.
And, as set forth above, in response to Houle’s argument, Appellees’ brief does no more than
proclaim, in a single sentence, that Houle did not come forward with evidence to support his claim
for unjust enrichment. We agree with Houle on this issue.
40 The Law on Unjust Enrichment
A claim for relief under a theory of “unjust enrichment” is an equitable concept that arises
in situations in which another person has “wrongfully secured a benefit or has passively received
one which it would be unconscionable to retain.” Eun Bok Lee v. Ho Chang Lee, 411 S.W.3d 95,
111–12 (Tex. App.—Houston [1st Dist.] 2013, no pet.) (citing Tex. Integrated Conveyor Sys., Inc.
v. Innovative Conveyor Concepts, Inc., 300 S.W.3d 348, 367 (Tex. App.—Dallas 2009, pet.
denied)); see also Kohannim v. Katoli, 440 S.W.3d 798, 813 (Tex. App.—El Paso 2013, pet.
denied), disapproved of on other grounds by Ritchie v. Rupe, 443 S.W.3d 856 (Tex. 2014) (citing
Heldenfels Brothers, Inc. v. City of Corpus Christi, 832 S.W.2d 39, 43 (Tex. 1992) (“Unjust
enrichment demands restitution when a party receiving property or benefits would be unjustly
enriched if it were permitted to retain the property or benefits at the expense of another.”). A
person is unjustly enriched when he obtains a benefit from another by fraud, duress, or the taking
of an undue advantage. Kohannim, 440 S.W.3d at 813 (citing Heldenfels Brothers, 832 S.W.2d
at 41).
Recovery under a theory of unjust enrichment is based on quasi-contract, and therefore,
when a valid, express contract covers the subject matter of the parties’ dispute, there can generally
be no recovery under this theory, as allowing such recovery would be inconsistent with the parties’
express agreement. See Fortune Prod. Co. v. Conoco, Inc., 52 S.W.3d 671, 683–84 (Tex. 2000);
see also In re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 740 (Tex. 2005) (“A party generally
cannot recover under quantum meruit when there is a valid contract covering the services or
materials furnished.”); Amoco Prod. Co. v. Smith, 946 S.W.2d 162, 164 (Tex. App.—El Paso 1997,
no writ) (the unjust enrichment doctrine applies the principles of restitution to disputes which are
41 not governed by a contract between the contending parties). However, when a person has been
unjustly enriched by the receipt of benefits in a manner not governed by contract, the law implies
a contractual obligation upon that person to restore the benefits to the plaintiff. Eun Bok Lee, 411
S.W.3d at 111–12 (citing Burlington N. R.R. Co. v. Sw. Elec. Power Co., 925 S.W.2d 92, 97 (Tex.
App.—Texarkana 1996), aff'd sub nom., Sw. Elec. Power Co. v. Burlington N. R.R. Co., 966
S.W.2d 467 (Tex. 1998)). A plaintiff may also recover under this equitable doctrine if a
contemplated agreement is unenforceable, impossible, not fully performed, thwarted by mutual
mistake, or void for other legal reasons. Id. (citing French v. Moore, 169 S.W.3d 1, 11 (Tex.
App.—Houston [1st Dist.] 2004, no pet.)).
As a preliminary matter, we note that in his live pleading, Houle pleaded both a claim for
breach of contract and a claim for equitable relief under the quasi-contract theory of unjust
enrichment. Therefore, as explained above, Houle would not be permitted to obtain relief on both
claims; nevertheless, we conclude that he was entitled to plead both claims for relief, in the
alternative, allowing him the opportunity to seek relief on his quasi-contract claim if a jury rejected
his claim for breach of contract. See generally 58 Tex. Jur. 3d Pleading § 129 (recognizing that a
pleader may set forth two or more statements of a claim, alternatively or hypothetically, either in
one count or in separate counts, and that a party may state as many separate claims as it has,
regardless of consistency, and whether based on legal or equitable grounds or both). Further, we
conclude that Houle provided at least a scintilla of evidence in response to Casillas’ motion for
summary judgment to raise a question of fact regarding whether Casillas was unjustly enriched by
his allegedly fraudulent conduct.
42 First, the evidence clearly supports a finding that Houle provided a substantial amount of
his time and effort toward renovating the Pershing Property pursuant to the parties’ agreement.
As described above, Houle’s affidavit, as well as Casillas’ July 6, 2010 memo, demonstrate that
Houle spent approximately one year contributing his time and efforts into renovating the property.
Second, Houle attached a spreadsheet to his affidavit, chronicling the various improvements that
were made to the property during the year-long renovation project. As well, although the parties’
dispute exactly how much improvements were made to the property, in his verified original
petition in this matter, which was filed on June 29, 2011, Casillas acknowledged that after Houle
worked on the project for a year, at least two of the units at the building had been completely
renovated and were being rented out. We consider this to be a judicial admission that the property
was in fact improved to some extent during the year-long project. See generally In re A.E.A., 406
S.W.3d 404, 410 (Tex. App.—Fort Worth 2013, no pet.) (factual allegations in live pleadings
constitute a judicial admission of the facts alleged and relieves the opposing party from the
requirement of putting on proof of the admitted fact); see also Trinity Drywall v. Toka Gen.
Contrs., 416 S.W.3d 201, 213 (Tex. App.—El Paso 2013, pet. denied) (in a party’s live pleadings,
assertions of fact that are not pleaded in the alternative are regarded as formal judicial admissions)
(citing Holy Cross Church of God in Christ v. Wolf, 44 S.W.3d 562, 568 (Tex. 2001)). Third,
although Casillas denied any wrongdoing, Houle’s affidavit provides support for his theory that
Casillas engaged in a fraudulent course of conduct by which he took sole possession of the
Pershing Property through the foreclosure sale, without compensating Houle for any of the work
that he performed in improving the property and/or without regard to any interest that Houle may
have had in the property.
43 Therefore, we conclude that there was sufficient evidence in the record to raise a question
of fact on the issue of whether Casillas, by taking the improved property without compensation to
Houle, “wrongfully secured a benefit or has passively received one which it would be
unconscionable to retain.” Eun Bok Lee, 411 S.W.3d at 111. Accordingly, we conclude that the
trial court erred by granting summary judgment in Appellees’ favor on Houle’s claim for unjust
enrichment. Issue Two is sustained.
ISSUE THREE: THE SECOND MOTION FOR SUMMARY JUDGMENT AND HOULE’S SECOND AFFIDAVIT
After the trial court declared a mistrial pertaining to Houle’s remaining two causes of action
for fraud and breach of contract, and after a new trial court judge was appointed to hear those
claims, Casillas filed a second motion for summary judgment seeking dismissal of remaining
claims, but this time primarily focusing on the element of damages. Although Houle responded
with a second affidavit providing more details on his factual allegations, including his claim for
damages, the trial court sustained Casillas’ objections to the affidavit, and struck substantial
portions of the affidavit, leaving him with little evidence to support his claim for damages.
Thereafter, the trial court granted Casillas’ motion for summary judgment, dismissing Houle’s two
remaining claims. In two separate, but related issues, Houle claims that the trial court erred in
granting Casillas’ objections to his affidavit, and contends that if the trial court had not granted the
objections, his affidavit would have provided sufficient summary judgment evidence to rebut the
motion for summary judgment.
Once again, Casillas does not address the merits of Houle’s arguments, and instead argues
that Houle did not adequately brief this issue, as Houle did not address each of the objections that
the trial court granted, and did not provide adequate record cites with respect to the objections.
44 We note, however, that in his amended brief, Houle did provide adequate record cites, and
addressed each category of objections that Casillas made to his affidavit. We find this sufficient
to enable our review on appeal.
We start our analysis by reviewing the summary judgment evidence that Houle presented
in support of his claim that he suffered damages as a result of Casillas’ alleged breach of contract.
A. The Breach of Contract Claim
The four elements of a breach of contract claim are: (1) the existence of a valid contract;
(2) performance by the plaintiff; (3) breach of the contract by the defendant; and (4) damages to
the plaintiff resulting from that breach. Velvet Snout, LLC v. Sharp, 441 S.W.3d 448, 451 (Tex.
App.—El Paso 2014, no pet.) (citing McCulley Fine Arts Gallery, Inc. v. “X” Partners, 860
S.W.2d 473, 477 (Tex. App.—El Paso 1993, no writ)). The last element encompasses a causation
requirement. Id. (citing Pagosa Oil and Gas, L.L.C. v. Marrs and Smith Partnership, 323 S.W.3d
203, 215 (Tex. App.—El Paso 2010, pet. denied)). Specifically, the evidence must show that the
damages are the “natural, probable, and foreseeable consequence” of the defendant’s conduct. Id.
(citing Prudential Securities, Inc. v. Haugland, 973 S.W.2d 394, 397 (Tex. App.—El Paso 1998,
pet. denied)).
Here, Casillas’ motion for summary judgment only challenged the damages element of
Houle’s claim for breach of contract. Casillas alleged that the parties had agreed to purchase and
renovate the property, with Casillas providing the funding and Houle supervising the renovation,
and to then sell the property, splitting any profits evenly after Casillas was reimbursed for his
investment. Casillas then argued that the undisputed evidence demonstrated that he was entitled
to be reimbursed for well over $150,000, and whereas the undisputed evidence demonstrated that
45 the value of the property would not exceed $150,000, if it were sold to a third party there would
have been no profits to split.
In support of his argument, Casillas attached multiple excerpts from Houle’s deposition
and trial testimony, in which Houle acknowledged that the parties had agreed that he would not be
entitled to receive any portion of the profits until after Casillas was reimbursed for his initial
investment of $100,000 to purchase the property, and advances that he made for renovations.
Casillas also provided a copy of the original promissory note and deed of trust, indicating that he
had loaned the LLC $100,000 to purchase the property, and that he was entitled to interest on the
loan. Next, Casillas provided excerpts from Houle’s testimony acknowledging that Casillas
thereafter funded the renovations, and that in all, Casillas had advanced over $45,000 for
renovations. In total, Casillas provided a spreadsheet in which he calculated that he was owed a
balance totaling $266,824.52 as of February of 2017. And finally, Casillas attached excerpts from
Houle’s deposition and trial testimony in which he acknowledged that the value of the Pershing
Property was approximately $150,000 at various times, beginning in 2011, together with a letter
that Houle wrote to the IRS in June of 2013, in which he argued that the value of the property was
worth that same amount. Based on this evidence, Casillas argued that the Pershing Property was
worth less than what he was owed, and that Houle therefore, by his own admissions, could not
prove that he suffered any damages by any alleged breach of contract.
In his response, Houle argued, among other things, that the value of the property was in
“flux,” and that at most, his prior testimony constituted an estimate of the property’s value, and
argued that prior to the mistrial, no “firm evidence” of the value of the property had been presented
46 by either party.21 More importantly, Houle pointed out that the parties’ agreement was not to sell
the property, and that the parties had instead decided to renovate the property and thereafter rent
out the apartment units, and split any profits from the rental income after Casillas had been
reimbursed for his investment. Houle therefore argued that he had suffered an entirely different
type of damage, i.e., the loss of a “business opportunity,” as outlined with more particularity in his
attached affidavit. In support of his response, Houle submitted a second, more detailed affidavit
outlining the parties’ agreement to renovate the Pershing Property and to thereafter keep it and rent
out the apartment units rather than sell the building, and to split the profits after Casillas was
reimbursed for his investment. In addition, Houle attached the July 6, 2010 memo from Casillas,
in which Casillas himself stated that the parties had in fact agreed not to sell the building after it
was renovated, and to instead lease out the apartment units and split any profits after expenses,
and after Casillas was reimbursed for his investment.
In his affidavit, Houle also addressed the issue of damages in great detail, expressing his
opinion that based on 2011 rental rates, the property, which had nine units, should be generating
income of approximately $63,000, less taxes and various expenses, for a total net annual income
that he estimated to be $52,750.22 Houle then multiplied that amount by 26.5 years to arrive at a
figure of $1,397,875 in “business damages” for this lost business opportunity. Houle also claimed
21 In his response, Houle also argued that he had evidence to support the elements of ALL of his causes of action, including those previously dismissed. However, since the second motion for summary judgment only addresses the breach of contract and fraud claims, we need not consider Houle’s arguments about his previously-dismissed claims for relief. 22 In particular, he stated that the three upstairs units in the building would generate monthly income of $1,600, the two full downstairs units would generate monthly income of $900, a garage studio unit would generate monthly income of $350, a ¾ downstairs space would generate monthly income of $700, a side storage/commercial unit would generate monthly income of $500, and a basement unit would generate monthly income of $500, for a monthly total of $5,250.
47 that by taking the property away from the partnership, Casillas had prevented him from managing
the property from May of 2011 until the day he signed his affidavit, a period of six years, and that
the “market rate” for property management in the area was approximately 6 percent of gross
receipts. Using the above-described figures, Houle calculated that he was deprived of
approximately $18,990 in property management fees during that time.
In addition, Houle claimed that he had spent approximately 836.75 hours over the course
of the year-long renovation in overseeing the work on the project. Valuing his work at $20 an
hour, he claimed that the total value of his “sweat equity” amounted to $16,375. In addition, he
claimed that he had contributed approximately 96.5 hours in accounting or bookkeeping work on
behalf of the partnership, which he valued at $30 an hour for a total of $2,895. As well, Houle
claimed that he had approximately $2,000 in unreimbursed expenses to date. In support of this
allegation, Houle attached a copy of the spreadsheet chronicling the work that had been performed
on the property over the course of the year-long renovation project. And finally, Houle claimed
that he had suffered lost wages, as he was unable to find work at a comparable salary to his former
positions because future employers were allegedly aware of the pending lawsuit that Casillas had
filed against him, which included various fraud allegations.
Damages Arising from a Lost Business Opportunity
As a preliminary matter, we note that a plaintiff is generally entitled to contract damages
based on lost profits, including lost rental income, from a business venture gone awry, if those
losses were the natural, probable and foreseeable consequence of the defendant’s conduct, and the
plaintiff is able to “show the loss by competent evidence and with reasonable certainty.” See,
e.g., Peterson Group, Inc. v. PLTQ Lotus Group, L.P., 417 S.W.3d 46, 64 (Tex. App.—Houston
48 [1st Dist.] 2013, pet. denied) (citing ERI Consulting Eng’rs, Inc. v. Swinnea, 318 S.W.3d 867, 876
(Tex. 2010); Tex. Instruments, Inc. v. Teletron Energy Mgmt., Inc., 877 S.W.2d 276, 279 (Tex.
1994)). If the business for which lost profits are sought is shown to be an ongoing business, then
evidence that the business was established and making a profit at the time when the tort was
committed is admissible to show lost profits. El Dorado Motors, Inc. v. Koch, 168 S.W.3d 360,
366–67 (Tex. App.—Dallas 2005, no pet.) (citing Turner v. PV Int’l Corp., 765 S.W.2d 455, 465
(Tex. App.—Dallas 1988, no pet.). However, a claim for lost profits will not be denied simply
because a business was new, where there are “firmer reasons to expect a business to yield a
profit[.]” See Fraud-Tech, Inc. v. Choicepoint, Inc., 102 S.W.3d 366, 381–82 (Tex. App.—Fort
Worth 2003, pet. denied).
A party seeking to recover lost profits must prove the loss through competent evidence
with reasonable certainty. Szczepanik v. First Southern Trust Co., 883 S.W.2d 648, 649 (Tex.
1994); VingCard A.S. v. Merrimac Hospitality Sys., Inc., 59 S.W.3d 847, 863 (Tex. App.—Fort
Worth 2001, pet. denied). The requirement of “reasonable certainty” is a flexible one in order to
accommodate the myriad circumstances in which claims for lost profits arise. Tex. Instruments,
Inc. v. Teletron Energy Mgmt., Inc., 877 S.W.2d 276, 279 (Tex. 1994); Szczepanik, 883 S.W.2d at
649; VingCard A.S., 59 S.W.3d at 863 (at a minimum, opinions or estimates of lost profits must
be based on objective facts, figures, or data from which the amount of lost profits can be
ascertained). Reasonable certainty is not demonstrated when the profits claimed to be lost are
largely speculative or a mere hope for success, as from an activity dependent on uncertain or
changing market conditions, on chancy business opportunities, or on promotion of untested
products or entry into unknown or unproven enterprises. Teletron Energy Mgmt., Inc., 877
49 S.W.2d at 279; VingCard A.S., 59 S.W.3d at 863. In general, “What constitutes reasonably certain
evidence of lost profits is a fact intensive determination.” Szczepanik, 883 S.W.2d at 649.
However, recovery for lost profits does not require that the loss be susceptible of exact calculation.
ERI Consulting Engineers, Inc. v. Swinnea, 318 S.W.3d 867, 876 (Tex. 2010).
We conclude that Houle’s affidavit was sufficient to raise a question of fact regarding
whether he was deprived of a lost business opportunity, as it provided his opinion and estimates
of what his losses were with reasonable certainty, and he explained the objective basis of his
estimates. Unlike many of the cases involving a lost business opportunity, this was a relatively
simple case involving two factors, i.e., rental rates for similar apartment units in the area, and the
market rates for property management. Calculating lost rent or lost wages does not require
speculation, and instead, can be calculated based on objective facts and data. As such, we
conclude that Houle’s affidavit provided a legitimate basis for calculating damages based on his
theory of a lost business opportunity.
However, as set forth above, the trial court sustained several objections that Casillas made
to the affidavit, and therefore much of the information that Casillas provided regarding his alleged
damages was stricken, which we assume led the trial court to grant Casillas’ motion for summary
judgment. Therefore, we must next determine whether the trial court erred in this regard.
1. The Law on Summary Judgment Affidavits
The Texas Rules of Civil Procedure provide that both “[s]upporting and opposing affidavits
shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence,
and shall show affirmatively that the affiant is competent to testify to the matters stated therein.”
TEX. R. CIV. P. 166a(f); see also Concierge Nursing Ctrs., Inc. v. Antex Roofing, Inc., 433 S.W.3d
50 37, 50 (Tex. App.—Houston [1st Dist.] 2013, pet. denied). In addition, to prove facts through the
affidavit testimony of an interested witness, the witness’s testimony must be uncontroverted, clear,
positive, direct, credible, free from contradiction, and susceptible to being readily controverted.
TEX. R. CIV. P. 166a(c). Testimonial statements by an interested witness that meet these
requirements may be the basis for a summary judgment. 23 Id.; see also Casso v. Brand, 776
S.W.2d 551, 558 (Tex. 1989).
However, conclusory statements are not credible or susceptible to being readily
controverted, and therefore will not support a summary judgment. See Ryland Group, Inc. v.
Hood, 924 S.W.2d 120, 122 (Tex. 1996); see also Concierge Nursing Ctrs., Inc., 433 S.W.3d at
50 (conclusory statements in affidavits are incompetent to support the rendition of summary
judgment as a matter of law). Similarly, affidavits consisting only of conclusions are insufficient
to raise an issue of fact in response to a motion for summary judgment. Brownlee v. Brownlee,
665 S.W.2d 111, 112 (Tex. 1984). A conclusory statement is one that does not provide the
underlying facts to support the conclusion. Residential Dynamics, LLC v. Loveless, 186 S.W.3d
192, 198 (Tex. App.—Fort Worth 2006, no pet.) (citing Haynes v. City of Beaumont, 35 S.W.3d
166, 178 (Tex. App.—Texarkana 2000, no pet.)); see also Concierge Nursing Ctrs., Inc., 433
S.W.3d at 50 (conclusory means expressing a factual inference without stating the underlying facts
in which the inference is based).
23 As a preliminary matter, Houle argues on appeal that Rule 166a does not apply to affidavits filed in opposition to motions for summary judgment, and that the Rule only applies to affidavits attached in support of motions for summary judgment. This, however, is not true. As we have previously recognized, affidavits, whether supporting or opposing the motion for summary judgment, must meet the requirements of Rule 166a. See, e.g., Felhaber, 2003 WL 22015551, at *1–3.
51 Parties may raise objections to the form of an affidavit, and in particular may raise the
following objections: (1) lack of personal knowledge; (2) hearsay; (3) statement of an interested
witness that is not clear, positive, direct, or free from contradiction; and (4) competence.
Rockwall Commons Associates, Ltd. v. MRC Mortg. Grantor Tr. I, 331 S.W.3d 500, 507 (Tex.
App.—El Paso 2010, no pet.) (citing Broadnax v. Kroger Texas, L.P., No. 05–04–01306–CV,
2005 WL 2031783, at *4 (Tex. App.—Dallas August 24, 2005, no pet.) (mem. op.) (citing Stewart
v. Sanmina Texas L.P., 156 S.W.3d 198, 207 (Tex. App.—Dallas 2005, no pet.) (lack of personal
knowledge and hearsay), Choctaw Properties, L.L.C. v. Aledo I.S.D., 127 S.W.3d 235, 241 (Tex.
App.—Waco 2003, no pet.) (interested witness, hearsay, and lack of personal knowledge), and
Rizkallah v. Conner, 952 S.W.2d 580, 585–86 (Tex. App.—Houston [1st Dist.] 1997, no pet.) (lack
of personal knowledge and competence)).
2. Houle’s Statements Regarding the Parties’ Agreement
In order to raise a claim for this lost business opportunity, i.e., the lost profits, the first thing
Houle was required to provide evidence to support his assertion that the parties had agreed to not
sell the Pershing Property, and to instead keep the property as an ongoing business, and lease out
the apartment units. Houle addresses this in his affidavit by describing his understanding of the
parties’ agreement. Casillas, however, objected to these paragraphs, contending that they
contained Houle’s “personal opinions,” which were not based on facts, and were “biased,” and
“wholly unsupported by competent facts, evidence or documents.” The trial court struck all but
one paragraph of Houle’s statements regarding his assessment of the parties’ agreement,
apparently agreeing with Casillas’ argument. We disagree with the trial court’s conclusion.
52 As set forth above, even though Houle was a party to the case, and therefore an “interested
witness,” he was entitled to provide testimony regarding factual matters within his personal
knowledge, if uncontroverted, clear, positive, direct, credible, free from contradiction, and
susceptible to being readily controverted. TEX. R. CIV. P. 166a(c). In his affidavit, Houle
provided clear and direct statements regarding the terms of the parties’ agreement, which could
have been easily controverted by Casillas. See generally Republic Nat. Leasing Corp. v.
Schindler, 717 S.W.2d 606, 607 (Tex. 1986) (statements in affidavit contending that plaintiff had
failed to make certain payments on a lease and stating the amount of damages claimed pertained
to factual matters that were readily controvertible). Moreover, we note that Casillas did not in
fact controvert these statements, and in fact appeared to agree with those terms in his own July 6,
2010 memo to Houle. We therefore conclude that the trial court erred in sustaining Casillas’
objection to Houle’s recitation of the parties’ agreement in his affidavit.
3. Houle’s Statements Regarding Casillas’ Alleged Breach of the Agreement
Second, Casillas objected to several of Houle’s statements, in which Houle expressed his
belief that Casillas had breached the parties’ agreement and acted in a fraudulent manner by
unilaterally stopping the funding of the project and thereafter taking steps to “take control of the
property.” However, the trial court in its order expressly refused to consider those objections, and
therefore did not strike any of those statements.
4. Houle’s Statements that he was Damaged by the Loss of the Pershing Property
The trial court, however, did sustain Casillas’ next objection to the paragraphs in which
Houle stated that the Pershing Property was the sole asset of the parties’ partnership and that he
was damaged when Casillas took that property for himself. In his objection, Casillas argued that
53 “[Houle’s] entire argument fails to overcome the statute of frauds in that no written contract exists
making the subject property a partnership asset.” We do not, however, believe that this is a valid
objection to the affidavit, as it does not go to the form of the affidavit, and is instead a legal
argument that goes to the merits of Houle’s theory of liability.24 While Casillas arguably could
have objected to the form of the affidavit by alleging that Houle was providing an improper legal
conclusion, this was not the basis of Casillas’ objection, and we therefore decline to address that
issue on appeal. See, generally, Rockwall Commons Associates, Ltd., 331 S.W.3d at 507 (defects
in the form of affidavits or attachments will not be grounds for reversal unless specifically pointed
out by objection by an opposing party with opportunity, but refusal, to amend).
5. Houle’s Detailed Estimates of his Damages
And finally, Casillas made multiple objections to Houle’s statements in which he provides
his estimate of the damages he suffered in terms of his lost business opportunity to receive rental
income from the property and/or management fees; his estimate of the value of the work that he
put into the renovations and the value of his unreimbursed business expenses; as well as his
estimate of his legal fees and other expenses. In particular, Casillas contended that Houle was not
an expert witness, and that as a “lay witness” he was “wholly unqualified to render his detailed
valuations of the damages which he alleges[;]” that his valuations were “nothing more tha[n] his
24 Casillas’ argument appears to be incorrect in any event. First, as set forth above, there is no requirement that a partnership agreement be in writing, and instead, the Texas Business Organizations Code clearly recognizes the existence of oral, informal partnerships. TEX. BUS. ORGS. CODE ANN. § 152.051. Second, the statute of frauds only requires “a contract for the sale of real estate” to be in writing. See TEX. BUS. & COM. CODE ANN. § 26.01. In the present case, Houle did not argue that the partnership actually purchased the partnership, and he instead recognizes that the Pershing LLC made the actual purchase and held the legal title to the property. However, as explained above, Houle’s theory is that the parties created the LLC simply as a means of effectuating the partnership and protecting them from personal liability, but that the Pershing Property itself was an asset that belonged to the partnership, and was inextricably tied to the partnership’s very purpose and existence.
54 biased, self-serving, personal opinions,” and his claim of damages was not supported by “any
documentation or other evidence[.]” The trial court granted all of these objections and struck the
entire portion of the affidavit in which Houle testified about the measure and amount of his
estimated damages.
As a preliminary matter, we note the Texas Rules of Evidence permit opinion testimony
from lay witnesses as well as expert witnesses. Health Care Serv. Corp. v. E. Texas Med. Ctr.,
495 S.W.3d 333, 338 (Tex. App.—Tyler 2016, no pet.) (citing TEX. R. EVID. 701, 702). The
personal experience and knowledge of a lay witness may establish that the witness is capable,
without qualification as an expert, of expressing an opinion on a subject outside the realm of
common knowledge. Id. (citing Hathcock v. Hankook Tire Am. Corp., 330 S.W.3d 733, 747 (Tex.
App.—Texarkana 2010, no pet.)). It is only where the fact finder may not fully understand the
evidence or be able to determine the fact in issue without the assistance of someone with
specialized knowledge that a witness must be qualified as an expert. Id.
Therefore, “Texas courts regularly allow business owners and company officers to testify
as lay witnesses, based on knowledge derived from their positions and any other relevant
experience.” Id. at 338-39 (citing Am. Heritage, Inc. v. Nev. Gold & Casino, Inc., 259 S.W.3d
816, 827 (Tex. App.—Houston [1st Dist.] 2008, no pet.) (former chief financial officer testified
about lost profits); Lamajak, Inc. v. Frazin, 230 S.W.3d 786, 797 (Tex. App.—Dallas 2007, no
pet.) (business owner testified about value of services he provided to retail chain); SAS & Assoc.,
Inc. v. Home Mktg. Servicing, Inc., 168 S.W.3d 296, 302 (Tex. App.—Dallas 2005, pet. denied)
(sole shareholder, director, and officer testified about reasonable cost of repairing company’s
damaged personal property)). However, such opinion testimony is limited to those opinions or
55 inferences that are rationally based on the lay witness’s perceptions and in situations in which the
testimony is helpful to clearly understanding their testimony or determining a fact in issue. Id.
(citing TEX. R. EVID. 701).
Here, as Houle points out, this issue was addressed, at least in part, by the first judge
hearing the case, who ruled prior to trial that even though Houle had not been designated as an
expert witness, he would be allowed to testify at trial as a lay witness on the issue of the value of
the Pershing Property and his damages. After the mistrial, we recognize that the newly appointed
judge was, of course, entitled to come to a different conclusion. Nonetheless, we believe it was
improper for the trial court to make the determination that Houle was not qualified to testify as a
lay witness based solely on Casillas’ bald statement that Houle was a “lay witness wholly
unqualified to render” his opinion on damages. Casillas provided no argument or legal authorities
for the proposition that Houle was not qualified to testify as a lay witness; in particular, he did not
explain why Houle, who averred that he had personal knowledge and experience in business and
real estate, could not testify on the question of how much an apartment that he himself renovated
would rent for, or why he could not express an opinion regarding the market rates for property
managers in the area. Further, Casillas did not explain why Houle would not have had personal
knowledge of the value of the work that he performed in renovating the project, the value of his
accounting and bookkeeping work, or the business expenses he incurred for which he had not been
reimbursed. We therefore conclude that the trial court erred by sustaining Casillas’ unsupported
objection to Houle’s statements in his affidavit.
We also note that Casillas alleged, and the trial court agreed, that Houle’s estimates of his
damages were improper because they were not supported by “documentation or other evidence.”
56 Casillas, however, did not cite any legal authority for the proposition that damages estimates must
in all instances be supported by documentary evidence, nor are we aware of any. To the contrary,
the Texas Supreme Court has held that when a witness testifies as to his estimate of the damages
suffered by the loss of a business opportunity, it is not necessary to produce in court the documents
supporting the opinions or estimates, although the lack of such documentation may affect the
weight of the testimony. See, e.g., Swinnea, 318 S.W.3d at 876 (citing Holt Atherton Indus., Inc.
v. Heine, 835 S.W.2d 80, 84 (Tex.1992)).
And finally, we note that Casillas objected to the spreadsheet that Houle attached to his
affidavit in which he set forth the amount of work that was done on the Pershing Property during
the year that he supervised the renovations, on the ground that Rule 166a(f) requires “sworn or
certified copies of all papers or parts of papers referred to in an affidavit.” Although it is not
entirely clear, it appears that the trial court sustained that objection as well. We find this decision
to be in error.
As the Supreme Court has recognized, “copies of documents which are attached to a
properly prepared affidavit are sworn copies within the meaning” of the Rule’s requirements.
Schindler, 717 S.W.2d at 607 (citing Zarges v. Bevan, 652 S.W.2d 368, 369 (Tex. 1983); Life
Insurance Company of Virginia v. Gar-Dal, Inc., 570 S.W.2d 378, 380 (Tex. 1978)). Thus, where
an affidavit states that the attached documents are true and correct copies of the originals, and the
affidavit itself is properly sworn, the trial court may consider the attached documents as proper
summary judgment evidence. Id.; see also Landry’s Seafood Restaurants, Inc. v. Waterfront
Cafe, Inc., 49 S.W.3d 544, 551 (Tex. App.—Austin 2001, pet. dism’d) (recognizing that copies of
documents attached to a properly prepared affidavit are sworn copies within the meaning of Rule
57 166a(f)). In his affidavit, Houle expressly stated that “[t]he facts stated herein and in Exhibits A
[the spreadsheet] and C are true and correct of my own personal knowledge.” As such, we
conclude that the trial court erred by sustaining Casillas’ objection to this exhibit.
In conclusion, we find that Houle provided clear and direct testimony explaining how he
arrived at his calculation of damages, explaining in detail the metrics he used in arriving at his
estimate. As well, his statements pertaining to the market rate for rents and property management,
as well as his estimates of the value of the work he performed, were all easily controvertible, and
therefore constituted admissible summary judgment evidence under TEX. R. CIV. P. 166a(c). We
therefore conclude that the trial court erred in striking these statements from Houle’s affidavit, and
as expressed above, we believe that the affidavit, as submitted by Houle in its original form,
provided at least a scintilla of evidence to support the damages element of his claim for breach of
contract. Accordingly, we conclude that the trial court erred in granting summary judgment on
Houle’s claim for breach of contract.
B. Actual and Constructive Fraud
Houle also argues that the trial court erred by granting Casillas’ motion for summary
judgment on his claim for fraud, arguing that his affidavit provided sufficient evidence of the
allegedly fraudulent course of conduct in which Casillas engaged. On appeal, Appellees do not
address the merits of Houle’s argument, and instead argue that Houle did not provide adequate
cites to the record and/or provide adequate citations to legal authorities in his original brief to
support his argument, and that Houle therefore waived this issue.
Texas law recognizes two types of common law fraud claims: actual fraud and
constructive fraud. In re Estate of Kuykendall, 206 S.W.3d 766, 770–71 (Tex. App.—Texarkana
58 2006, no pet.) (citing Chien v. Chen, 759 S.W.2d 484, 494–95 (Tex. App.—Austin 1988, no writ)).
The elements of a claim for actual fraud are: “(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.” See Italian Cowboy
Partners, Ltd. v. Prudential Ins. Co. of Am., 341 S.W.3d 323, 337 (Tex. 2011) (citing Aquaplex,
Inc. v. Rancho La Valencia, Inc., 297 S.W.3d 768, 774 (Tex. 2009) (per curiam)); see also Sprick
v. Sprick, 25 S.W.3d 7, 15 (Tex. App.—El Paso 1999, pet. denied) (citing Stone v. Lawyers Title
Insurance Corp., 554 S.W.2d 183, 185 (Tex. 1977)). A claim for actual fraud therefore involves
dishonesty of purpose or intent to deceive. See TransPecos Banks v. Strobach, 487 S.W.3d 722,
730 (Tex. App.—El Paso 2016, no pet.) (citing Castleberry v. Branscum, 721 S.W.2d 270, 273
(Tex. 1986)); see also Sprick, 25 S.W.3d at 15.
On the other hand, in a claim for constructive fraud, the actor’s intent is irrelevant.
Kuykendall, 206 S.W.3d at 770–71 (citing Sprick, 25 S.W.3d at 15); see also Chien, 759 S.W.2d
at 495 (citing Archer v. Griffith, 390 S.W.2d 735 (Tex. 1965)). Instead, constructive fraud is the
breach of some legal or equitable duty which, irrespective of moral guilt, the law declares
fraudulent because of its tendency to deceive others, to violate confidence, or to injure public
interests. Strobach, 487 S.W.3d at 730 (citing Castleberry, 721 S.W.2d at 273). As this Court
has recognized, constructive fraud occurs when a party violates a fiduciary duty or breaches a
confidential relationship. Holland v. Thompson, 338 S.W.3d 586, 598 (Tex. App.—El Paso 2010,
pet. denied) (citing Texas Integrated Conveyor Systems, Inc. v. Innovative Conveyor Concepts,
59 Inc., 300 S.W.3d 348, 366 (Tex. App.—Dallas 2009, pet. denied)); see also In re Estate of
Kuykendall, 206 S.W.3d at 770–71.
As set forth above, in his motion for summary judgment, Casillas challenged Houle to
come forward with evidence to support all elements of his fraud claim, primarily focusing on the
question of whether Houle had any evidence to establish that Casillas had made a material and
false representation to Houle upon which he intended for him to rely. We agree with Casillas that
Houle did not come forward with evidence of any actual misrepresentation that Casillas made to
him. Therefore, we conclude that there is no evidence to support a claim for actual fraud.
However, the evidence does raise a question of fact regarding whether Casillas committed
constructive fraud. As discussed above, Houle presented evidence in his affidavit to support a
conclusion that the parties had entered into an oral partnership agreement for which they owed
each other fiduciary duties to include a duty of good faith and fair dealing, a duty of candor, and a
duty to make full disclosures to each other. Zinda, 178 S.W.3d at 890–91. Houle included facts
in his affidavit, which the trial court did not strike, chronicling what he believed was a breach of
such fiduciary duties and assertion of conduct which was intended to deceive Houle. As such, we
conclude that Houle came forward with at least a scintilla of evidence to raise a question of fact
regarding whether Casillas engaged in constructive fraud.
Accordingly, we conclude that the trial court did not err in granting summary judgment on
Houle’s claim of actual fraud. However, we conclude the trial court erred in granting summary
judgment on Houle’s claim for constructive fraud. Houle’s Issue Three is overruled in part and
sustained in part.
ISSUE FOUR: HOULE’S THIRD AMENDED PLEADING
60 Shortly after the mistrial, on February 27, 2017, Houle filed a third amended pleading,
which, among other things, appeared to raise the same causes of action (i.e. unjust enrichment and
breach of fiduciary duty and duty of good faith and fair dealing), which the trial court had
dismissed by summary judgment, as well as a request that the trial court set aside the foreclosure
sale. On March 9, 2017, Casillas moved to strike the third amended pleading on the grounds that
Houle was seeking to raise previously dismissed causes of action. Ultimately, on May 24, 2017,
the trial court granted Casillas’ motion to strike the pleading and dismissed it with prejudice.
In his fourth argument, Houle contends that the trial court’s order striking his third
amended pleading was in error, as he believes the law allows him to file an amended pleading that
raises previously dismissed claims. Houle, however, does not cite any legal authority for this
proposition nor are we aware of any. To the contrary, as Houle points out, the trial court explained
at the hearing on Houle’s motion for new trial, that it had struck the third amended pleading
because it contained causes of action that were previously dismissed by summary judgment.
Houle’s only recourse once the trial court dismissed his claims was to raise a challenge to the
dismissal by way of direct appeal. We therefore conclude that the trial court did not abuse its
discretion in striking the third amended pleading. See generally Hardin v. Hardin, 597 S.W.2d
347, 349-50 (Tex. 1980) (holding that a trial court’s ruling on an amended pleading is reviewed
under an abuse of discretion standard). Houle’s Issue Four is overruled.
We affirm the trial court’s order to the extent it granted summary judgment to Appellees
on Houle’s cause of action for actual fraud. However, we reverse the trial court’s order to the
extent it granted summary judgment to Appellees on Houle’s causes of action for breach of
61 fiduciary duty, breach of the implied covenant of good faith and fair dealing, unjust enrichment,
breach of contract, and constructive fraud. We therefore remand to the trial court for further
proceedings consistent with this opinion.
GINA M. PALAFOX, Justice September 24, 2019
Before Rodriguez, J., Palafox, J., and Larsen, J. (Senior Judge) Larsen, J. (Senior Judge), sitting by assignment
Related
Cite This Page — Counsel Stack
Robert G. Houle v. Casco Investments, Inc. and Jose Luis Casillas JLC Ventures, Inc., Counsel Stack Legal Research, https://law.counselstack.com/opinion/robert-g-houle-v-casco-investments-inc-and-jose-luis-casillas-jlc-texapp-2019.