Vinson v. Texas Commerce Bank-Houston, National Ass'n

880 S.W.2d 820, 1994 Tex. App. LEXIS 2087, 1994 WL 316832
CourtCourt of Appeals of Texas
DecidedJune 27, 1994
Docket05-93-01549-CV
StatusPublished
Cited by73 cases

This text of 880 S.W.2d 820 (Vinson v. Texas Commerce Bank-Houston, National Ass'n) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Vinson v. Texas Commerce Bank-Houston, National Ass'n, 880 S.W.2d 820, 1994 Tex. App. LEXIS 2087, 1994 WL 316832 (Tex. Ct. App. 1994).

Opinion

OPINION

ROSENBERG, Justice.

This is an interlocutory appeal from an order refusing to certify a class action under rule 42 of the Texas Rules of Civil Procedure. See Tex.R.Giv.P.- 42. Appellants M.C. Vinson, Larry C. Brooks, Winfree L. Brown, and D-Bar Ranch and Livestock, Ltd. complain that the trial court abused its discretion in (i) denying certification to the plaintiff-class and (ii) denying their request for findings of fact and conclusions of law. We overrule appellants’ points of error and affirm the trial court’s order.

On March 15, 1990, Carl F. Lawrence & Associates, Inc. (CFL), an oil and gas operator, borrowed $15,775 million from Texas Commerce banks in Midland and Houston. Within six months, CFL defaulted. On September 28, 1990, Texas Commerce and CFL executed an amendment to the March 15 loan agreement to handle the delinquency. This amendment directed purchasers of hydrocarbons from CFL properties to forward their payments to a lock box account at a Texas *822 Commerce Bank in Dallas. Once Texas Commerce verified the payments, it transferred the funds to a restricted access account enabling Texas Commerce to directly withdraw loan payments from CFL’s revenues before turning them over to CFL. According to the agreement, Texas Commerce would release to CFL only the balance remaining after Texas Commerce’s withdrawals. However, CFL owned only sixty-three percent of the net revenue interest in its properties. The remainder was working interests, royalty interests, and overriding royalty interests held by other corporations, businesses, and individuals. Eventually, CFL filed for bankruptcy on May 29, 1992.

Appellants brought this lawsuit against the three Texas Commerce Banks (Banks), alleging conversion of funds, tortious interference with contractual obligations, breach of fiduciary duties of good faith and fair dealing, and fraud. The named plaintiffs asserted a class-action suit as the representatives of all owners of overriding royalty interests in CFL’s revenue. Appellants sought class certification under rule 42(b)(1)(B) or 42(b)(4) of the rules of civil procedure.

At the certification hearing, appellants proposed a class of overriding royalty interest owners (override owners) entitled to proceeds from CFL’s oil and gas well production. Appellants alleged that the Banks took possession of the revenue funds without differentiating between proceeds owned by CFL and those due to other revenue interest owners. Appellants complain that the Banks (i) knew that the override owners had prior, perfected security interests in the proceeds from production; 1 (ii) exercised exclusive control over the proceeds belonging to the named plaintiffs and other override owners; and (in) knowingly used such proceeds to repay debts owed by CFL.

Appellants alleged that all CFL revenue passed through the restricted account. The Banks asserted that during the existence of this account, the purchasers of CFL’s hydrocarbons deposited a total of $12.7 million, and the Banks withdrew $5.7 million to make payment on their loans to CFL. According to the Banks, approximately $7 million was turned over to CFL’s operations account. The Banks also alleged that another $16 million did not pass through the restricted account but was deposited directly into CFL’s operations account. The Banks claimed that an additional $5 million was deposited into CFL’s Bank One account without passing through the restricted account.

Nevertheless, appellants claimed that the Banks did not earmark or designate funds received into the restricted account to accommodate the interests of other parties who had an interest in CFL’s revenue. Appellants further stated that no override owner consented to the restricted-account arrangement. Based on CFL’s internal records, appellants approximated the class at 370 override owners who reside inside and outside of Texas. The Banks claimed that this class definition is improper because it includes all override owners, not just owners who did not receive payments from CFL during the alleged time period. The Banks deposed each named plaintiff.

Winfree Brown alleged that he owned a .00092024 overriding royalty interest in several wells in Crockett County, Texas. Brown alleged that he received no payment from CFL between October 1990 and July 1991. He claimed that he is owed $200 to $300. Brown had the lease and assignment documents but did not know whether the wells in which he had an interest produced in 1990 to 1992 or whether any of his revenue was deposited in the restricted account. He did not know about the restricted-account agreement nor did he demand payment from the Banks.

Larry Brooks alleged that he owned a .00130200 overriding royalty interest in several wells in Irion County, Texas. He received regular payments until October 1991. After that point, Brooks made claims on CFL for missed payments in October and December 1991 and payments due between January and April 1992. In 1992, Brooks and his attorney demanded and collected some of the outstanding amounts due from CFL. Brooks believed that he is owed *823 $5,331.55. At the time of his deposition, he did not have the lease and assignment documents, but had a division order dated July 14,1983. Brooks does not know whether the Banks had transferred any of his interest into the restricted account. He neither demanded payment from the Banks nor informed the Banks of his interest.

Morty C. Vinson alleged that he owns a .0225000 overriding royalty interest in certain wells in Crockett County, Texas and another .01968700 overriding royalty interest in other Crockett County wells. CFL paid him $392.12 in 1990 and $39.19 in 1991. He could not recall exactly when he stopped receiving payments from CFL. He believes that he is owed at least $207.86 for production between October 1990 and July 1991. He did not know if the Banks ever received any of his interest into the restricted account.

D-Bar Ranch and Livestock, Ltd. alleged that it owns a .00229500 and a .000862 overriding royalty interests in various wells in Irion County, Texas. It did not know if any of its interest was deposited into the restricted account.

At the close of the hearing, the trial court denied class certification. Although requested by appellants, the trial court did not file findings of fact or conclusions of law.

CLASS ACTION

In point of error one, appellants contend that the trial court abused its discretion in denying class certification. Appellants assert that they met the prerequisites of rule 42(a) and satisfied rule 42(b) of the rules of civil procedure.

In a class action, the complained-of wrong is allegedly committed against a class of individuals, and the judgment in the case binds the entire class, not merely the named parties. Wente v. Georgia-Pacific Corp., 712 S.W.2d 253, 254 (Tex.App.—Austin 1986, no writ). Consequently, the plaintiffs must establish the right to maintain the suit as a class action. Life Ins. Co. of Southwest v. Brister, 722 S.W.2d 764, 770 (Tex.App.—Fort Worth 1986, no writ); see National Gypsum Co. v. Kirbyville Indep.

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Bluebook (online)
880 S.W.2d 820, 1994 Tex. App. LEXIS 2087, 1994 WL 316832, Counsel Stack Legal Research, https://law.counselstack.com/opinion/vinson-v-texas-commerce-bank-houston-national-assn-texapp-1994.