In The
Court of Appeals
Sixth Appellate District of Texas at Texarkana
______________________________
No. 06-07-00022-CV
______________________________
KAREN ARSENAULT, INDIVIDUALLY AND
AS NEXT FRIEND OF MICHAEL LOWRANCE
(THEN A MINOR), AND MICHAEL LOWRANCE, Appellant
V.
ORTHOPEDICS SPECIALIST OF TEXARKANA AND
JOHN P. YOUNG, M.D., Appellees
On Appeal from the 202nd Judicial District Court
Bowie County, Texas
Trial Court No. 05C1788-202
Before Morriss, C.J., Carter and Moseley, JJ.
Memorandum Opinion by Justice Carter
MEMORANDUM OPINION
Karen Arsenault and Michael Lowrance (collectively, Lowrance) bring this accelerated appeal from the dismissal, for failure to serve an expert's report, of their healthcare liability (HCL) claim. See Tex. Civ. Prac. & Rem. Code Ann. §§ 51.014(a)(9), 74.351 (Vernon Supp. 2007). (1) At issue in this appeal are two of the defendants: Dr. John P. Young (an orthopedist) and Orthopedic Specialists of Texarkana (OST) (Young's practice). Lowrance appeals, raising one point of error: that it is error to dismiss a HCL case for failure to serve an expert report when the report was served on an alter ego codefendant. (2) We need not reach the question of whether service of a HCL expert report via alter ego is permissible since there is no basis for concluding OST was an alter ego of Dr. Young.
Factual and Procedural History
A single attorney originally represented both Young and OST, who filed a joint answer. Shortly after Young and OST filed their joint answer, the trial court granted OST's motion to substitute counsel. Lowrance then timely served the expert report via fax and mail to the substituted counsel, but not to the original counsel, who still represented Young. After Young filed his motion to dismiss, Lowrance amended his petition to assert that Young and OST were alter egos and that each was "d/b/a" the other.
The court expressly found that, "It is clear in reviewing the pleadings and related documents that up until the filing deadline the Plaintiff had treated Dr. Young and OST as separate parties." The court granted Young's motion to dismiss for Lowrance's failure to serve an expert report.
Standard of Review
We review a dismissal pursuant to a challenged HCL expert report for abuse of discretion. See Am. Transitional Care Ctrs. of Tex., Inc. v. Palacios, 46 S.W.3d 873, 877 (Tex. 2001) (standard applied to predecessor statute); Intracare Hosp. N. v. Campbell, 222 S.W.3d 790, 794 (Tex. App.--Houston [1st Dist.] 2007, no pet.). The test for abuse of discretion is not whether, in the opinion of the reviewing court, the facts present an appropriate case for the trial court's action, but whether the court acted without reference to any guiding rules or principles; the mere fact that a trial court may decide a matter within its discretionary authority differently than an appellate judge does not demonstrate such an abuse. Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238 (Tex. 1985). A court does not have discretion to determine what the law is, which law governs, or how to apply the law. See Walker v. Packer, 827 S.W.2d 833, 840 (Tex. 1992).
Expert Report Requirement
Lowrance concedes that, in this HCL suit, service of an expert report and curriculum vitae is mandatory within 120 days. See Tex. Civ. Prac. & Rem. Code Ann. § 74.351(a). The statute requires that the claimant "shall . . . serve on each party or the party's attorney" the required report. Id. As mentioned above, Lowrance timely served OST, but did not separately serve Young with the report. Should a claimant fail to serve the required report "as to a defendant physician or health care provider," the statute requires that the trial court shall dismiss the claim with respect to that defendant. Tex. Civ. Prac. & Rem. Code Ann. § 74.351(b). The dismissal is mandatory. See Thoyakulathu v. Brennan, 192 S.W.3d 849, 853 (Tex. App.--Texarkana 2006, no pet.).
"Alter Ego" or "Single Business Enterprise"
Lowrance asks us to find that Young was served by virtue of the service on OST since, as Lowrance asserts, the two are alter egos or a single business enterprise. Presuming, without deciding, that serving an expert report on an alter ego or single business enterprise codefendant satisfies the HCL expert report requirement, we have no factual basis for concluding that Young and OST are alter egos or a single business enterprise.
The Texas Supreme Court has set forth when regarding two entities as alter egos is appropriate:
A subsidiary corporation will not be regarded as the alter ego of its parent merely because of stock ownership, a duplication of some or all of the directors or officers, or an exercise of the control that stock ownership gives to stockholders. On the other hand where management and operations are assimilated to the extent that the subsidiary is simply a name or conduit through which the parent conducts its business, the corporate fiction may be disregarded to prevent fraud or injustice.
Gentry v. Credit Plan Corp., 528 S.W.2d 571, 573 (Tex. 1975); see also BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 799 (Tex. 2002) (requiring evidence of alter ego under Gentry). Evidence as proof of an alter ego includes: (1) the payment of alleged corporate debts with personal checks or other commingling of funds; (2) representations that the individual will financially back the corporation; (3) the diversion of company profits to the individual for the individual's personal use; (4) inadequate capitalization; and (5) other failure to keep corporate and personal assets separate. See Mancorp, Inc. v. Culpepper, 802 S.W.2d 226, 229 (Tex. 1990).
The "single business entity" approach is similar. Factors to be considered in determining whether entities operate as a single business enterprise include: (1) common employees; (2) common offices; (3) centralized accounting; (4) payment of wages by one corporation to another corporation's employees; (5) common business name; (6) services rendered by the employees of one corporation on behalf of another corporation; (7) undocumented transfers of funds between corporations; and (8) unclear allocation of profits and losses between corporations. See Hoffman v. Dandurand, 180 S.W.3d 340, 348 (Tex. App.--Dallas 2005, no pet.).
No factual basis is presented either in Lowrance's pleading or evidence on any of the alter ego or single business enterprise features listed above. Lowrance, however, directs us to the following "evidence" of alter ego or single business enterprise: (1) Lowrance's assertions, in plaintiffs' amended petition filed after Young's motion to dismiss, that Dr. Young and OST are "d/b/a" each other, alter egos, and a single business enterprise; (2) Lowrance's statement, in his original petition, that Young and OST could be served by the same agent; (3) Lowrance's statement, in his original petition, that Young is "an orthopedic surgeon of Orthopedic Specialists of Texarkana"; (4) the affidavit of Lowrance's attorney that he served the expert report on OST "d/b/a John Young" to OST's substituted counsel; and (5) OST's "acknowledgment" of alter ego in its motion to dismiss.
Lowrance's conclusory allegations--that Young and OST are alter egos, a single business enterprise, "d/b/a" as each other, or "of" the other--in his petition, amended petition, and affidavit do not suffice. The party seeking to subject the alter ego to the court's jurisdiction or ruling must plead and present some, usually significant, facts of the close relationship, as per the considerations above, between the alleged alter ego entities. (3) The burden of pleading and proving alter ego is Lowrance's; the burden does not shift to Young and OST to negate alter ego until Lowrance has met his burden. See id. at 350; Wolf v. Summers-Wood, L.P., 214 S.W.3d 783, 791 (Tex. App.--Dallas 2007, no pet.) (in personal jurisdiction posture, general allegation of alter ego, without pleading or offering evidence of underlying facts, insufficient). In Hoffman, the court found pleadings that alleged alter ego and single enterprise but which were unsupported by record evidence to be insufficient. Id. at 350-51; see also Laidlaw Waste Sys. (Dallas), Inc. v. City of Wilmer, 904 S.W.2d 656, 660 (Tex. 1995) (rejecting, in summary judgment context, conclusory pleadings not stating facts since, generally, "pleadings are not competent evidence, even if sworn or verified").
Similarly, Lowrance's assertion that Young and OST could be served through the same agent is insufficient. (4) See, e.g., James v. Gruma Corp., 129 S.W.3d 755 (Tex. App.--Fort Worth 2004, pet. denied) (finding insufficient evidence of alter ego on evidence of only shared business address and fact of one entity's acceptance of service for the other). Moreover, we disagree that OST acknowledged an alter ego status. OST, in its motion to dismiss, asserted that Lowrance's vicarious liability claim against OST, premised on Young's actions, must be dismissed for failure to serve Young. We see no reason, and Lowrance provides none, to view this legal argument as an admission of alter ego.
Finally, the trial court had before it controverting evidence: an affidavit by OST's attorney that Lowrance had never corresponded to OST "d/b/a" Young; the fax cover sheet alleged to have been addressed to OST "d/b/a" Young but which shows no "d/b/a" designation or other representation that more than one party was being served; OST's attorney's affidavit that OST does not do business as Young; and OST's answers which state that its correct name is "Orthopedic Specialists of Texarkana, PLLC." See Tex. Bus. Orgs. Code Ann. § 301.003(6) (Vernon 2007) (defining professional limited liability company). We cannot say the court abused its discretion in crediting this evidence in its determination that Lowrance's attempt to characterize Young and OST as alter egos was inconsistent with its earlier pleadings. Cf. Univ. of Tex. Health Sci. Ctr. v. Gutierrez, No. 01-07-00455-CV, 2007 WL 2963689, at *5 (Tex. App.--Houston [1st Dist.] Oct. 11, 2007, no pet. h.) (separate HCL claims against separate defendants requires separate service of expert report).
Conclusion
There is no pleading or evidence of any factual matter that Young and OST are alter egos of each other, a single business enterprise, or doing business as the other entity. We need not answer the question of whether service on an alter ego satisfies the expert report requirement since alter ego has not been shown. As Lowrance failed to serve an expert report on Young, and dismissal is mandatory for failure to serve an expert report, the trial court did not abuse its discretion in dismissing the claim.
Accordingly, we affirm the judgment.
Jack Carter
Justice
Date Submitted: October 24, 2007
Date Decided: November 14, 2007
1. Because Lowrance's cause of action accrued before September 1, 2005, the prior statute
applies. However, the changes in the current version are not at issue in this appeal and for
simplicity, we cite to the current version of the statute.
2. 3. 4. Even if the two shared an agent, Lowrance actually served Young and OST separately.
Lowrance served the pre-suit notice and citation on Young in Birmingham, Alabama, and served
OST in Texarkana; Lowrance served his amended petition (after the allegation of alter ego)
separately on Young and OST, through their separate attorneys, as required by the rules. See Tex.
R. Civ. P. 8.
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In The
Court of Appeals
Sixth Appellate District of Texas at Texarkana
______________________________
No. 06-11-00117-CR
______________________________
TIMOTHY ANDREW HORNSBY, Appellant
V.
THE STATE OF TEXAS, Appellee
On Appeal from the Fourth Judicial District Court
Rusk County, Texas
Trial Court No. CR09-271
Before Morriss, C.J., Carter and Moseley, JJ.
Memorandum Opinion by Justice Carter
MEMORANDUM OPINION
Timothy Andrew Hornsby appeals his conviction for possession of a controlled substance, methamphetamine, in an amount of four grams or more but less than 200 grams. Hornsby signed a stipulation of the evidence, a waiver of his right to a jury trial, and written admonishments. Hornsby pled guilty before the court without a negotiated plea agreement.[1] The trial court found Hornsby guilty and sentenced him to ten years imprisonment. Hornsbys issue on appeal is a request that we reform the judgment to be consistent with the trial courts oral pronouncement. The State filed a letter with this Court declining to file a brief and commenting that the State did not oppose an order that the defendant receive drug treatment.
At the sentencing hearing, the following colloquy occurred:
[Defense Counsel]: Now, you have a lot of health problems.
[Hornsby]: Yes, sir.
. . . .
[Hornsby]: I have COPD real bad. You know, I have a hard time breathing. Ill have to take breathing treatments several days. I have a bad back, a bad left knee, and bad right ankle.
[Defense Counsel]: Are you on disability?
[Hornsby]: Yes, sir.
[Defense Counsel]: And you were selling drugs out of your house?
[Hornsby]: Yes, sir.
[Defense Counsel]: Why were you doing that?
[Hornsby]: To help supplement my income and all.
The trial court pronounced sentence as follows:
THE COURT: . . . Timothy Andrew Hornsby, defendant in Cause Number CR2009-271, the Court having found you guilty of the offense of possession of a controlled substance, a second degree felony, which the Court finds occurred on April 7, 2009, the Court having found you guilty of the same on that date in Rusk County, Texas, as alleged in the indictment, hereby assesses your sentence at ten years confinement in the Institutional Division of the Texas Department of Criminal Justice with credit for time served. And I will order, if possible, because of any health problems that he be sentenced to the - - its not SAFPF - - what is it? Medical Wing?
. . . .
THE COURT: Ill find that he has health problems that significantly contribute[d] to the commission of the offense and order him to the health care wing, if possible.
The trial courts written judgment omits any reference to the health care wing.
A trial courts pronouncement of sentence is oral, while the judgment, including the sentence assessed, is merely the written declaration and embodiment of that oral pronouncement. Ex parte Madding, 70 S.W.3d 131, 135 (Tex. Crim. App. 2002). When there is a conflict between the oral pronouncement of sentence in open court and the sentence set out in the written judgment, the oral pronouncement controls. Thompson v. State, 108 S.W.3d 287, 290 (Tex. Crim. App. 2003). When the matter has been called to an appellate courts attention by any source, an appellate court has the authority to modify a judgment to make the record speak the truth. French v. State, 830 S.W.2d 607, 609 (Tex. Crim. App. 1992); see Tex. R. App. P. 43.2(b).
We find no inconsistency between the trial courts oral and written pronouncement. We note the trial court stated that Hornsby should be placed in the health care wing of the Texas Department of Criminal Justice if possible. We interpret that as a recommendation by the trial judge, but not an order attempting to require the Department to do so. There was no mention of drug treatment in the oral pronouncement.
Medical treatment is provided by the Texas Department of Criminal Justice to inmates as needed. It is the purview of the executive branch of government to determine if medical treatment is required and whether treatment given is medically necessary. Tex. Govt Code Ann. § 501.051(e) (West 2004); see Hernandez v. State, No. 03-07-00161-CR, 2008 Tex. App. LEXIS 5810 (Tex. App.Austin Aug. 1, 2008, no pet.) (mem. op., not designated for publication) (boot camp recommendation subject to TDCJ-CID determination of eligibility for program). We decline to modify the judgment as requested.
We note that the judgment provides the Statute for Offense: 418 HSC. We modify the judgment to reflect that the statute for the offense is Section 481.115(d) of the Texas Health and Safety Code. See Tex. Health & Safety Code Ann. § 481.115(d) (West 2010); see also Tex. Health & Safety Code Ann. § 481.102(6) (West 2010).
We modify the judgment as specified above and affirm the judgment as modified.
Jack Carter
Justice
Date Submitted: October 21, 2011
Date Decided: October 27, 2011
Do Not Publish
[1]We note that the trial courts certification of Hornsbys right to appeal specifies that Hornsby pled guilty pursuant to a plea bargain, but the trial court had granted permission to appeal. The judgment and the reporters record, however, establish that Hornsby pled guilty without a negotiated plea agreement. During the plea hearing, Hornsby replied, Yes, sir, when the trial court inquired, Do you understand, and it is my understanding, that theres no plea bargain agreement in place; is that correct? There is no evidence in the record that the State agreed to reduce the charges in exchange for Hornsbys plea of guilty.