In The
Court of Appeals
For The
First District of Texas
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NO. 01-02-00689-CV
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TEXAS GULF RESOURCES, INC., Appellant
V.
DANNY S. DAVIS AND ESCOPETA OIL & GAS CORP., Appellees
On Appeal from the 61st District Court
Harris County, Texas
Trial Court Cause No. 99-63370
MEMORANDUM OPINION
This is an appeal from the grant of a summary judgment. Texas Gulf Resources, Inc. (Texas Gulf) sued Escopeta Oil and Gas Corporation and Danny S. Davis (collectively, Escopeta) for causes of action stemming from an oil and gas venture. Escopeta moved for a summary judgment, and it was granted as to all claims. In two issues, Texas Gulf appeals the trial court’s grant of the summary judgment. We affirm.
Background
In March 1997, Texas Gulf and Escopeta leased 6,000 acres of land in Brazos County for the purpose of producing oil. The two companies agreed that Escopeta would operate the lease and that Texas Gulf and Escopeta would halve all working interests in the lease. After representatives from both companies learned that other oil companies in the region were profiting from oil production, Texas Gulf and Escopeta decided to lease additional acreage in Brazos County in hopes of enticing larger oil companies to drill and develop the land. The companies agreed that the leases would be combined or “pooled” with other leases and that the acreage would then be transferred or “flipped” to large oil and gas operators for development.
Texas Gulf and Escopeta received capital from several investors to fund the project. In addition, Texas Gulf and Escopeta partnered with Falcon Seaboard Oil and Gas (Falcon Oil) to gain financial stability. The three companies eventually leased approximately 15,000 acres in Brazos County.
In January 1998, oil prices began to drop, and the market became less profitable. As a result, Texas Gulf and Escopeta were unsuccessful in their efforts to find oil companies that were willing to drill and develop the land. By December 1998, Texas Gulf and Escopeta had sustained substantial losses in the project. Thereafter, Texas Gulf sued Escopeta for (1) breach of the March 1997 lease agreement, (2) breach of fiduciary duty, (3) statutory fraud, and (4) common law fraud. The trial court subsequently granted Escopeta’s summary judgment motion as to all Texas Gulf’s claims, and this appeal timely followed.
No-Evidence Motion for Summary JudgmentEscopeta filed a no-evidence motion for summary judgment under Tex. R. Civ. P. 166a(i). A movant seeking a no-evidence summary judgment need only allege that there is no evidence of an essential element of a claim on which a nonmovant would have the burden of proof at trial. Tex. R. Civ. P. 166a(i); Southwestern Elec., 73 S.W.3d at 215. However, the movant’s summary judgment motion must state the specific elements of the nonmovant’s causes of action as to which there is no evidence before the movant can be entitled to judgment. Macias v. Fiesta Mart, Inc., 988 S.W.2d 316, 317 (Tex. App.—Houston [1st Dist.] 1999, no pet.). Once that occurs, the burden shifts to the nonmovant to bring forth evidence that raises a fact issue on the challenged elements. Id. The nonmovant will defeat a no-evidence motion by presenting more than a scintilla of evidence to raise a genuine issue of material fact. Id. More than a scintilla of evidence exists when the evidence rises to a level that would enable fair-minded people to differ in their conclusions. Burroughs Wellcome Co. v. Crye, 907 S.W.2d 497, 499 (Tex. 1995).
In two issues, Texas Gulf contends that the trial court erred in granting Escopeta’s no-evidence motion because (1) Escopeta did not specify in its motion the particular elements of Texas Gulf’s causes of actions as to which there was no evidence or, alternatively, (2) to the extent that Escopeta did specify particular elements, Texas Gulf responded with sufficient evidence of those elements to defeat summary judgment. We review each of Texas Gulf’s claims in turn.
A. Breach of Contract
In its amended petition, Texas Gulf alleged that Escopeta breached the March 1997 lease agreement by failing to distribute Texas Gulf’s full interest in the lease and by attempting to sell Texas Gulf’s interest without consent. A plaintiff must prove the following elements to prevail on a breach of contract claim: (1) the existence of a valid contract; (2) performance or tendered performance by the plaintiff; (3) breach of contract by the defendant; and (4) damages to the plaintiff resulting from the breach. Wright v. Christian & Smith, 950 S.W.2d 411, 412 (Tex. App.—Houston [1st Dist.] 1997, no pet.).
In its no-evidence motion, Escopeta did not challenge existence of the contract, performance on behalf of Texas Gulf, or damages. Rather, Escopeta contended that Texas Gulf could provide no evidence to show that Escopeta “breached any contractual obligation.” From this language, Escopeta plainly alleged that there was no evidence of the element of breach. Thus, we conclude that Escopeta satisfied the specificity requirement of rule 166a(i) by challenging a specific element of Texas Gulf’s breach of contract claim, namely, breach of the 1997 lease agreement. Tex. R. Civ. P. 166a(i). Accordingly, the burden was on Texas Gulf to produce evidence that raised a fact issue concerning breach of the 1997 lease agreement.
Texas Gulf’s summary-judgment response presented the affidavit of its president, Joe Amberson, along with attached exhibits, as its sole summary-judgment evidence. Texas Gulf argues that the affidavit shows that Escopeta breached the lease contract by failing to account for funds and by divesting portions of Texas Gulf’s interest without consent. However, careful review of Amberson’s affidavit reveals that it does not raise a fact issue regarding breach. Instead of setting out facts showing that Escopeta breached the March 1997 lease agreement, Amberson’s affidavit merely states that Escopeta did not account for monies owed to Texas Gulf. The affidavit does not detail any specific conduct by Escopeta that suggests a breach of the March 1997 lease agreement. An affidavit that purports to raise fact issues, but contains only containing conclusory statements unsupported by facts, does not raise evidence of a material fact issue and is insufficient to survive a no-evidence summary judgment challenge. See Burroughs Wellcome Co., 907 S.W.2d at 499. Accordingly, we hold that the trial court did not err in granting summary judgment in favor of Escopeta on Texas Gulf’s breach-of-contract claim.
B. Breach of Fiduciary Duty
In its amended petition, Texas Gulf alternatively alleged that Escopeta breached a fiduciary duty owed to Texas Gulf by not accounting for funds received under the lease agreement and by attempting to sell part of Texas Gulf’s interest without consent. A fiduciary duty arises when one party places special confidence in another, which binds the second party to act in good faith and with due regard to the interests of the one placing the confidence. Brewer & Pritchard, P.C. v. Johnson, 7 S.W.3d 862, 867 (Tex. App.—Houston [1st Dist.] 1999, no pet.).
In its no-evidence motion, Escopeta did not challenge the existence of a special relationship between Escopeta and Texas Gulf or the existence of a duty on behalf of Escopeta to act in good faith and with due regard to the interests of Texas Gulf. Rather, Escopeta asserted that “there has been no breach of fiduciary duty by [Escopeta].” We conclude from this statement that Escopeta asserted that there was no evidence to show that Escopeta had breached its duty to act in good faith and with due regard to the interests of Texas Gulf. Thus, Escopeta’s motion satisfied the specificity requirement of rule 166a(i), and the burden shifted to Texas Gulf to produce evidence that raised a fact issue concerning breach of the duty to act in good faith and with due regard to the interests of Texas Gulf.
Texas Gulf’s summary-judgment response alleged that Escopeta breached a duty of loyalty owed to Texas Gulf by excluding Texas Gulf from dealings with the bank, failing to account for funds, failing to repay funds, seeking bank financing arrangements, secretly acquiring bank leases, and failing to report certain business ventures. We again conclude, however, that Texas Gulf, through Amberson’s affidavit and attached exhibits, did not raise a fact issue regarding Escopeta’s alleged breach of fiduciary duty. The affidavit does not outline any facts that illustrate a breach of Escopeta’s duty to act in good faith. As addressed above, the affidavit is deficient because it contains only conclusory statements on Anderson’s behalf. See Burroughs Wellcome Co., 907 S.W.2d at 499. Texas Gulf presented no evidence that prove the allegations in its response. We therefore hold that the trial court did not err in granting summary judgment in favor of Escopeta on Texas Gulf’s breach-of-fiduciary-duty claim.
C. Fraud
Texas Gulf’s amended petition also asserted statutory and common law fraud claims against Escopeta. Texas Gulf alleged that Escopeta made false representations intended to induce Texas Gulf into the lease agreement. Both statutory fraud and common law fraud require a false representation as an element to recovery. See Tex. Bus. Com. Code Ann. § 27.01(a) (Vernon Supp. 2003); In re First Merit Bank, N.A., 52 S.W.3d 749, 758 (Tex. 2001).
In its no-evidence motion, Escopeta contended that “there have been no misrepresentations or concealments” by Escopeta that “would support a cause of action for common law fraud or statutory fraud.” This statement satisfies the specificity requirement of rule 166a(i) by challenging a specific element of Texas Gulf’s fraud claims—namely that a false representation had occurred. Thus, the burden was on Texas Gulf to produce evidence that raised a fact issue concerning the alleged false representations.
On appeal, Texas Gulf asserts that Esopeta committed fraud when it falsely represented to Texas Gulf that (1) funds would be distributed from the sale of properties, (2) Texas Gulf would be half owner in the lease bank, and (3) certain investors would not be investing in the lease bank. Furthermore, Texas Gulf asserts that Escopeta mortgaged properties without Texas Gulf’s consent. However, in responding to the no-evidence motion, Texas Gulf merely asserted that “the continued denial of an obligation to repay Texas Gulf . . . is prima facie evidence of . . . promissory fraud.” Amberson’s affidavit and attached exhibits did not specifically delineate any of Escopeta’s alleged fraudulent conduct. Here again, Texas Gulf provided a conclusory statement without evidentiary support. Accordingly, Texas Gulf failed to raise more than a scintilla of evidence. See Burroughs Wellcome Co., 907 S.W.2d at 499. We hold that the trial court did not err in granting summary judgment in favor of Escopeta on Texas Gulf’s fraud claims.
We overrule issues one and two.
Conclusion
We affirm the judgment of the trial court.
Elsa Alcala
Justice
Panel consists of Justices Hedges, Jennings, and Alcala.