Nolana Open MRI Center, Inc. v. Guillermo R. Pechero M.D.Ruben D. Pechero M.D. Maplestar Orthopedics, P. A.

NUMBER 13-13-00552-CV

COURT OF APPEALS

THIRTEENTH DISTRICT OF TEXAS

CORPUS CHRISTI - EDINBURG

NOLANA OPEN MRI CENTER, INC., Appellant,

v.

GUILLERMO R. PECHERO, M.D.,
RUBEN D. PECHERO, M.D., AND
MAPLESTAR ORTHOPEDICS, P.A., Appellees.

On appeal from the 93rd District Court
of Hidalgo County, Texas.

MEMORANDUM OPINION

Before Justices Benavides, Perkes, and Longoria
Memorandum Opinion by Justice Perkes

Nolana Open MRI Center, Inc. (“Nolana”) attempts to appeal a judgment rendered

against it in favor of appellees, Guillermo R. Pechero, M.D., Ruben D. Pechero, M.D.,

and Maplestar Orthopedics, P.A. (“Maplestar”), following a bench trial. On February 27,
2014, appellees filed a motion to show authority through which they contend that counsel

for appellant lacks the authority to bring this appeal. On March 13, 2014, Nolana filed a

response to the motion, and, on March 19, 2014, appellees filed a reply brief in support

of their motion to show authority. This Court abated and remanded this matter to the trial

court in order for it to consider the foregoing matters regarding the legal authority of

Nolana’s counsel to act as attorney of record for Nolana and to file a notice of appeal on

its behalf. After reviewing the trial court’s findings of fact and conclusions of law, we

dismiss this appeal for lack of jurisdiction.

I. BACKGROUND

According to the live pleadings, on or about February 1, 2008, Jose Castro d/b/a

JD Surgical Associates purchased the assets of Nolana, a medical facility that performed

magnetic resonance imaging (“MRI”) tests, from appellees, Ruben Pechero, M.D. and

Guillermo Pechero, M.D. The assets included the goods, furniture, fixtures, equipment,

all existing contracts, the center, license, accounts receivable, names and client lists, the

name, and company stock. The only asset that was specifically excluded from the

purchase was the magnetic resonance imaging (“MRI) machine, and it appears that

Castro agreed to rent the MRI machine from Ruben and Guillermo. According to Castro,

Ruben and Guillermo promised to refer their patients to Nolana and represented that the

revenue from these referrals would be more than sufficient to cover the costs to rent the

MRI Machine. Shortly thereafter, Castro made Agustin "Gus" Garcia an equal partner in

the business.

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 After the sale, Ruben and Guillermo began referring worker's compensation

patients, attorney-referred patients, and Medicare/Medicaid patients to Nolana in accord

with the alleged agreement. For patients that had been referred by attorneys, Nolana

entered into letters of protection with the attorneys that represented the injured patients.

Nolana asserted that Ruben and Guillermo contacted the referring attorneys and

instructed them that payments owed to Nolana be paid to them. Nolana did not receive

any payments for the attorney-referred patients and questioned Ruben; Ruben responded

"that is my money." In November 2010, Ruben and Guillermo stopped referring patients

to Nolana.

In July 2008, the MRI machine became non-functional. That same month, Nolana

and Maplestar, an entity owned and operated by Guillermo, entered into an agreement

whereby Maplestar would lease a MRI machine to Nolana for $20,000.00 to $25,000.00

a month. After signing the lease agreement, Castro and Garcia became concerned that

the agreement might be “invalid” and did not pay the lease price for the machine, but

instead paid “approximately $60,000.00 which it believed would be a more accurate

estimate of the true rental value of the MRI Equipment.”

Nolana brought suit against Guillermo, Ruben, and Maplestar alleging that they

had engaged in a civil conspiracy, or were jointly and severally liable, for fraudulent

inducement, conversion, violations of the Theft Liability Act, see TEX. PEN. CODE ANN.

§ 31.03 (West, Westlaw through 2013 3d C.S.), and tortious interference with contract.

Nolana sought declaratory judgment regarding its rights under the equipment rental

agreement with Maplestar and further sought actual and exemplary damages.

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 Maplestar answered and counterclaimed against Nolana on grounds that Nolana

failed to pay Maplestar the rental payments for the leased MRI machine. Maplestar

brought causes of action for breach of contract, quantum meruit, unjust enrichment,

promissory estoppel, conversion, and negligence. Maplestar asserted that Nolana’s

lawsuit was frivolous.

Ruben filed a third party petition against Agustin “Gus” Garcia and Joe Castro

alleging that he served as a guaranty for their “purchase” of an MRI machine and that,

despite their promises, they failed to pay for the MRI machine.

Guillermo and Ruben also filed a counterclaim against Nolana. According to their

counterclaim, Ruben owned the office space occupied by Nolana. Ruben thus

counterclaimed against Nolana for breach of lease and quantum meruit. Both Guillermo

and Ruben alleged that Nolana’s lawsuit was frivolous and brought in bad faith and for

the purpose of harassment.

The case was originally set for trial on April 15, 2013, but was reset until April 18,

2013. The transcript of the hearing held on April 15, 2013 shows that the defendants

had filed an emergency motion to show authority on grounds that Nolana was

unrepresented by counsel and was not in good standing with the State of Texas. At the

hearing, Castro testified that he and Garcia each owned fifty percent of Nolana and that

they were the two directors for Nolana. Castro testified that he had settled his claims

with the defendants and, as part of that agreement, agreed to grant the defendants a

limited power of attorney authorizing and directing the defendants to vote Castro’s 50

percent interest in Nolana to oppose the prosecution or defense of the lawsuit.

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 On April 18, 2013, Guillermo, Ruben, and Maple Star filed a “Bench Brief in

Support of Emergency Motion to Show Authority” alleging:

1. On April 15, 2013, the above matter was called for final trial on the
merits. Defendants were present and appeared by and through their
attorneys. Jose Castro ("Castro") and Agustin Garcia ("Garcia"), the
principals of Plaintiff Nolana Open MRI Center, Inc. ("Nolana Open MRI"),
were present in the courtroom when the case was called. Castro and Garcia
each claim to own a 50 percent interest in Nolana Open MRI and that they
are the only directors of the company. At the time the case was called,
Garcia announced to the Court that his attorney, Jesus Villalobos, would be
arriving in the courtroom shortly to make an appearance in this matter. Mr.
Villalobos represents Garcia, individually, in other pending lawsuits
involving claims by Garcia against Defendants Guillermo R. Pechero and
Ruben D. Pechero. At that time, Defendants' counsel announced that
Nolana Open MRI had not complied with its franchise tax requirements and
was not in good standing with the Texas Comptroller's Office meaning that
Nolana Open MRI could not prosecute or defend its claims in this cause
and that Nolana Open MRI had no authority to retain new counsel. The
Court decided to recall the case once Mr. Villalobos arrived in the
courtroom.

2. At that time the case was re-called, Mr. Villalobos announced that
he had just been contacted by Garcia to represent Nolana Open MRI in the
matter and that he needed additional time to get acquainted with the case.
Counsel for Defendants again announced to the Court that Nolana Open
MRI was not in good standing for failure to meet its franchise tax
requirements. Counsel also announced that Castro had settled with
Defendants and, as part of the settlement agreement, had granted
Defendants a limited power of attorney to vote his 50 percent interest in the
company on any litigation matters, including: (i) opposing the prosecution
or defense of the Lawsuit by Nolana Open MRI; (ii) opposing Nolana Open
MRI's retention of new counsel in the Lawsuit; (iii) opposing any request for
a continuance by Nolana Open MRI of any hearing and/or the trial in the
Lawsuit; (iv) opposing the filing of any post-judgment motions, appeals,
mandamus petitions and bills of review by Nolana Open MRI of matters in
the Lawsuit; (v) opposing reinstatement of Nolana Open MRI with the Texas
Secretary of State or Texas Comptroller's Office; and (vii) in any other
manner Defendants may desire as it relates in any way to the Lawsuit. At
that time, Defendants also filed their Emergency Motion to Show Authority
and presented it to the Court. Mr. Villalobos then requested a brief recess
to review the motion and the settlement agreement and to discuss the

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 matter with Garcia and Castro. Defendants incorporate herein by reference
their Emergency Motion to Show Authority filed April 15, 2013.

3. After the recess, the case was re-called and Mr. Villalobos
announced that he was appearing as counsel for Nolana Open MRI. Mr.
Villalobos also announced that the company had been reinstated by Garcia,
who purportedly used his personal credit card to pay the amounts owed on
the franchise taxes. No evidence of the transaction was offered to the Court.
Defendants' counsel again urged the Emergency Motion to Show Authority
on grounds that Mr. Villalobos had not shown that he was authorized to
represent Nolana Open MRI because there were no resolutions, minutes or
contracts approving his representation; there was no documentation
showing that Nolana Open MRI was in good standing to prosecute or
defend its claims; and that pursuant to the Settlement Agreement between
Defendants and Castro, Garcia could not unilaterally act on behalf of Nolana
Open MRI and retain Mr. Villalobos as counsel and/or reinstate the
company. Counsel also pointed out that Mr. Villalobos had not filed a Notice
of Appearance or any other written pleading appearing on behalf of Nolana
Open MRI.

4. Mr. Villalobos requested additional time in which to research and
brief the issue of whether he could represent Nolana Open MRI in this
cause. Before the conclusion of the hearing, the attorneys were allowed to
examine Castro regarding his settlement agreement with the Defendants.
Castro confirmed that he had granted Defendants a limited power of
attorney on litigation matters. Exhibit "B", Transcript of Hearing on April 15,
2013. The Court reset the trial in the cause to April 18, 2013 and ordered
that Defendant's Emergency Motion to Show Authority be considered at that
time.

5. On April 16, 2013, attorney Raul Medina filed an Appearance of
Counsel on behalf of Nolana Open MRI. The appearance is signed by Mr.
Medina and on behalf of Jesus Villalobos of the law firm of Villalobos &
Villalobos. See Exhibit "C", Appearance of Counsel. For the same reasons
that Mr. Villalobos cannot show his authority to represent Nolana Open MRI,
Mr. Medina cannot show he is authorized to represent the company in this
cause. Defendants submit this Brief in Support of its Emergency Motion to
Show Authority for the Court's consideration.

On April 18, 2013, the trial court convened. Counsel for Nolana stated on the

record that he concurred with opposing counsel that Garcia was “not involved in this case

in any manner,” and “[h]e’s not an owner.” Because he is not an owner, “he can’t hire

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someone.” “And as a result, Mr. Medina and I are asking the Court to allow us to

withdraw from this.” Medina confirmed that they had concluded that the Pecheros did

not sell Nolana and there was never a transfer of ownership. “Mr. Garcia has no

business here. And he has no business in hiring us to represent another corporation.

So, we mistakenly filed a notice of appearance believing that there was authority. I agree

with them. There isn’t, and we’re asking to be allowed to withdraw, both myself and Mr.

Medina.” The trial court granted counsel’s motion to withdraw and dismissed the motion

to show authority as moot.1

On April 18, 2013, the Texas Comptroller of Public Accounts issued a “Certificate

of Account Status” showing the Nolana Open MRI Center, Inc. was “not in good standing

as it has not satisfied all franchise tax requirements.” This document shows the taxpayer

number as 17428864056.

The Final Judgment rendered on April 18, 2013 in this case provides:

On April 15, 2013, this case was called for trial. After hearing
arguments of counsel, the Court recessed the trial and reconvened the trial
on April 18, 2013. Defendants/Counter-Plaintiffs Guillermo R. Pechero,
M.D. ("Guillermo Pechero"), Ruben D. Pechero, M.D. ("Ruben Pechero"),
and Maple Star Orthopedics, P.A. appeared by and through their counsel
of record, having announced ready for trial. Plaintiff/Counter-Defendant
Nolana Open MRI Center, Inc., although given proper and adequate notice
of trial, failed to appear. Although Nolana Open MRI Center, Inc.
requested a jury, the jury fee has not been paid and the Court proceeded to
determine all fact questions. The record contains conflicting information
whether Nolana Open MRI Center, Inc. is in good standing with the State of
Texas. The Court resolves the conflict by finding Nolana Open MRI
Center, Inc. was not in good standing as of April 15, 2013, when this case
was called for trial. The Court determined it had jurisdiction over the
subject matter and the parties in this proceeding. The Court took judicial

1 Upon appeal, counsel for Nolana stated that “Nolana did not participate in the trial of this case

on April 18, 2013 because the trial court erroneously ruled without hearing evidence that Appellant had
lost its right to do business in Texas and would not allow [its] counsel to participate.”
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notice of all documents in its file and of all proceedings in this cause and—
after considering the pleadings and official records on file in this cause and
the evidence presented by Guillermo Pechero, Ruben Pechero, and Maple
Star Orthopedics, Inc. on liability, actual damages, exemplary damages and
attorney's fees—finds that judgment should be rendered for Guillermo
Pechero, Ruben Pechero, and Maple Star against Nolana Open MRI
Center, Inc.

It is, therefore, ORDERED, ADJUDGED and DECREED that Maple
Star Orthopedics, P.A. have and recover judgment against Nolana Open
MRI Center, Inc. in the amount of Five Hundred Forty Seven Thousand
Three Hundred Dollars and 00/100 ($547,300.00); and

It is further ORDERED, ADJUDGED and DECREED that Maple Star
Orthopedics, P.A. have and recover judgment against Nolana Open MRI
Center, Inc. exemplary damages in the amount of Five Hundred Thousand
Dollars and 00/100 ($500,000.00) based on clear and convincing evidence
that Nolana Open MRI Center, Inc., acting through its principals, collected
and converted for personal use thousands of dollars of accounts receivable
in repeated violation of this Court's Temporary Restraining Order,
Temporary Injunction Order, and Amended Temporary Injunction Order and
the Texas Civil Theft Act; and

It is further ORDERED, ADJUDGED and DECREED that Ruben
Pechero have and recover judgment against Nolana Open MRI Center, Inc.
in the amount of Three Hundred Seventy Three Thousand Eight Hundred
Ninety-One Dollars and 81/100 ($373,891.81); and

It is further ORDERED, ADJUDGED and DECREED that Ruben
Pechero have and recover judgment against Nolana Open MRI Center, Inc.
exemplary damages in the amount of Five Hundred Thousand Dollars and
00/100 ($500,000.00) based on clear and convincing evidence that Nolana
Open MRI Center, Inc. converted tangible personal property belonging to
Ruben Pechero in violation of the Texas Civil Theft Act; and

It is further ORDERED, ADJUDGED and DECREED that Guillermo
Pechero have and recover judgment against Nolana Open MRI Center, Inc.
in the amount of Eighty-Nine Thousand Nine Hundred Twenty Five and
81/100 ($89,925.81); and

It is further ORDERED, ADJUDGED and DECREED that Guillermo
Pechero, Ruben Pechero, and Maple Star Orthopedics, Inc. each have and
recover judgment against Nolana Open MRI Center, Inc. pre-judgment

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interest on their respective awards at the rate of 5% per year from February
25, 2011, until rendition of this judgment; and

It is further ORDERED, ADJUDGED and DECREED that Guillermo
Pechero, Ruben Pechero, and Maple Star Orthopedics, Inc. have and
recover judgment against Nolana Open MRI Center, Inc. Three Hundred
Sixty Thousand Eight Hundred Eighty One Dollars and 55/100
($360,881.55) as reasonable and necessary attorney's fees and expenses;
and

It is further ORDERED, ADJUDGED and DECREED that Guillermo
Pechero, Ruben Pechero, and Maple Star Orthopedics, Inc. have and
recover judgment against Nolana Open MRI Center, Inc. a conditional
award of Ten Thousand Dollars and 00/100 ($10,000.00) as reasonable and
necessary attorney's fees in the event of Nolana Open MRI Center, Inc.'s
unsuccessful motion for new trial to the trial court; and

It is further ORDERED, ADJUDGED and DECREED that Guillermo
Pechero, Ruben Pechero, and Maple Star Orthopedics, Inc. have and
recover judgment against Nolana Open MRI Center, Inc. a conditional
award of Thirty Thousand Dollars and 00/100 ($30,000.00) as reasonable
and necessary attorney's fees in the event of Nolana Open MRI Center,
Inc.'s unsuccessful appeal to the Court of Appeals; and

It is further ORDERED, ADJUDGED and DECREED that Guillermo
Pechero, Ruben Pechero, and Maple Star Orthopedics, Inc. have and
recover judgment against Nolana Open MRI Center, Inc. a conditional
award of Thirty Thousand Dollars and 00/100 ($30,000.00) as reasonable
and necessary attorney's fees in the event of Nolana Open MRI Center,
Inc.'s further unsuccessful appeal to the Texas Supreme Court; and

It is further ORDERED, ADJUDGED and DECREED that Guillermo
Pechero, Ruben Pechero, and Maple Star Orthopedics, Inc. have and
recover judgment for court costs against Nolana Open MRI Center, Inc.;
and

It is further ORDERED, ADJUDGED and DECREED that Guillermo
Pechero, Ruben Pechero, and Maple Star Orthopedics, Inc. have and
recover judgment against Nolana Open MRI Center, Inc. post-judgment
interest at the rate of 5% per year on the total judgment from the date of
judgment until paid; and

It is further ORDERED, ADJUDGED, AND DECREED that all claims
and causes of action asserted by Nolana Open MRI Center, Inc.'s against

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Guillermo Pechero, Ruben Pechero, and Maple Star Orthopedics, Inc. are
frivolous and brought in bad faith and for purposes of harassment in
violation of Rule 13, Texas Rules of Civil Procedure, and Chapter 9, Texas
Civil Practice & Remedies Code, and that Nolana Open MRI Center, Inc.
take nothing on its claims and causes of action against Guillermo Pechero,
Ruben Pechero, and Maple Star Orthopedics, Inc.; and

It is further ORDERED, ADJUDGED and DECREED that Maple Star
Orthopedics, Inc. shall have all rights, title and interest in Nolana Open MRI
Center, Inc.'s accounts receivables; and

It is further ORDERED, ADJUDGED and DECREED that Nolana
Open MRI Center, Inc. and its principals, officers, directors, agents,
employees, representatives, attorneys, and all those acting in concert
therewith, including without limitation Jose "Joe" Castro and Agustin "Gus"
Garcia, are hereby permanently enjoined from collecting, using, converting,
wasting, concealing, or otherwise disposing of any of Nolana Open MRI
Center, Inc.'s accounts receivables. Any and all of Nolana Open MRI
Center, Inc.'s accounts receivables received by Nolana Open MRI Center,
Inc. and/or its principals, officers, directors, agents, employees,
representatives, attorneys, and all those acting in concert therewith shall be
immediately delivered to Maple Star Orthopedics, Inc., Attn: Guillermo
Pechero. M.D. at 1005 E. Nolana Loop, McAllen, Texas 78504. Maple Star
Orthopedics, Inc. and its designated agents, representatives, and/or
attorneys may contact any person or entity owing any monies on Nolana
Open MRI Center, Inc.'s accounts receivables and direct such persons or
entities to pay any and all amounts owed to Nolana Open MRI Center, Inc.
directly to Maple Star Orthopedics, Inc. pursuant to this Final Judgment; and

It is further ORDERED, ADJUDGED and DECREED that the District
Clerk shall refund the cash bond deposited into the registry of the Court
pursuant to the Temporary Restraining Order entered April 12, 2012, and
issue one check payable to KITTLEMAN, THOMAS & GONZALES, PLLC-
TRUST ACCOUNT, in the amount of $1,000.00 and release said check to
counsel, Kittleman, Thomas & Gonzales, PLLC; and

It is further ORDERED, ADJUDGED and DECREED that Guillermo
Pechero, Ruben Pechero, and Maple Star Orthopedics, Inc. are awarded
any and all other injunction bonds and/or cash bonds filed by Nolana Open
MRI Center, Inc. in this cause and the District Clerk is ordered to issue any
checks for such amounts payable to KITTLEMAN, THOMAS & GONZALES,
PLLC TRUST ACCOUNT and release said check to counsel, Kittleman,
Thomas & Gonzales, PLLC; and

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 It is further ORDERED, ADJUDGED and DECREED that Guillermo
Pechero, Ruben Pechero, and Maple Star Orthopedics, Inc. shall have all
writs of execution and other process necessary to enforce this judgment.

This judgment disposes of all parties and all claims in this cause, and
is final and appealable. All relief not expressly granted herein is denied.

This appeal ensued. On February 27, 2014, appellees filed a motion to show

authority alleging that Nolana’s appellate counsel lacked the authority to bring this appeal.

According to their motion, Nolana’s appellate counsel informed the trial court that they

were not authorized to represent Nolana in the underlying suit. On March 13, 2014,

appellant filed a response stating that Garcia was an officer, director, and part owner of

Nolana, and that Garcia and Castro authorized the bringing of this lawsuit. “The fact that

Mr. Castro who was never a party to this case in the trial court, but settled his personal

claims without the benefit of counsel . . . has no bearing on the right of appellant to go

forward with this restricted appeal. . . .” On March 19, 2014, appellees filed a reply to

the response.

In light of the foregoing sequence of events, this Court abated and remanded this

matter to the trial court for findings of fact and conclusions of law regarding the authority

of counsel for Nolana to prosecute this appeal. At the hearing, Garcia testified that he

owned Nolana equally with Castro and that Nolana was in good standing with the State

of Texas. Garcia confirmed that he had retained counsel to represent Nolana to

prosecute this appeal.

Exhibits introduced into evidence at the abatement hearing indicate that Nolana

Open MRI Center, Inc. had its authority to transact business in Texas revoked on

February 21, 2014 for failing to pay a franchise tax return and/or pay state franchise tax;

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Garcia as “director” applied for reinstatement and, on April 23, 2014, was reinstated to

active status and was eligible for reinstatement through May 15, 2015.

Counsel for Nolana further introduced a “Partnership Agreement” made by “Nolana

Open MRI Inc. DBA Nolan Open MRI Services; a Texas Limited Partnership (Company)

and its members Agustin G. Garcia and Joe Castro (JD Surgical Associates).” This

agreement provides:

The Members have the right to manage the Company's business.
The Members may delegate to another person the authority to perform
specified acts on behalf of the Company. If a Member dies or is unable to
act, the Company will be managed by the remaining member or by the
person the deceased Member last designated in writing to manage the
Company. That person will have full authority to jointly manage the
Company.

Counsel for Nolana contended that this agreement illustrated Garcia’s authority to retain

counsel; however, the actual entity involved in this lawsuit and appeal is Nolana Open

MRI Center, Inc. Upon abatement, the trial court entered an order stating, in pertinent

part, as follows:

FINDINGS OF FACT

1. Nolana MRI is a Texas corporation. There exists a question as to
the corporation’s standing with the State of Texas.

2. On March 20, 2013, the Court permitted Javier Villalobos to withdraw
as counsel for Nolana MRI. At the time the motion to withdraw was
granted, no substitute attorney appeared to represent Nolana MRA.

3. Jose Castro has a 50% ownership interest in Nolana MRI, a Texas
corporation.

4. Jose Castro did not consent to Counselors filing a notice of appeal
or prosecuting an appeal on Nolana MRI’s behalf.

5. Agustin Garcia did have a 50% ownership in Nolana MRI.

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6. On April 11, 2013, Jose Castro entered into a valid and enforceable
agreement with Movants entitled, Settlement Agreement and Mutual
Release (“the Settlement”). Under the Settlement, Castro
irrevocably granted Movants a limited power of attorney to vote his
interest in Nolana MRI for the purpose of (1) opposing Nolana MRI’s
prosecution or defense in this proceeding; (2) opposing Nolana
MRI’s retention of new counsel in this proceeding; and (3) opposing
any appeal by Nolana MRI in this proceeding. Movants did not
authorize Counselors to either file a notice of appeal or prosecute an
appeal on Nolana MRI’s behalf. Agustin Garcia did.

7. On April 15, 2013, Movants filed a verified motion to show authority.
The Court permitted Counselors to make appearances on Nolana
MRI’s behalf on this date.

8. On April 16, 2013, Raul Medina formally filed a notice to appear as
co-counsel for Nolana MRI. In this notice, Medina represented that
his co-counsel would be Jesus Villalobos Jr.

9. On April 18, 2013, the Court permitted Counselors to appear on
Nolana MRI’s behalf. On the same date, the Court granted
Counselor’s request to withdraw as Nolana MRI’s attorneys and
forewent deciding the merits of Movants’ motion to show authority
because the motion had been rendered moot.

10. On October 14, 2013, Counselors filed a Notice of Restricted Appeal,
wherein they asserted that the Court did not permit them to
participate at the April 18 trial in this case. In fact, Counselors asked
to withdraw and their request was granted.

11. On March 13, 2014, Counselors filed a Response to Motion to Show
Authority with the Thirteenth Court of Appeals, wherein Counselors
asserted that this Court did not permit them to appear on Nolana
MRI’s behalf on April 15, 2013. In fact, Counselors did appear on
behalf of Nolana MRI and then requested to withdraw.

12. On April 29, 2014, pursuant to an order form the Thirteenth Court of
Appeals, the Court held a hearing (“the abatement hearing”) where
it heard argument and received evidence relating to the motion to
show authority. At this hearing, Counselors marked as “Exhibit 3” a
document that they purported was Nolana MRI’s operating
agreement (“the Agreement”).

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 CONCLUSIONS OF LAW

1. The Court concludes that it has an insufficient basis for finding that
the Agreement is applicable to Nolana MRI and that the Agreement
is ambiguous as to whether one member may unilaterally retain legal
counsel for Nolana MRI.

2. The Court concludes that the Agreement is ambiguous as to whether
a member with a non-majority interest in Nolana MRI can make
management and delegation decisions for Nolana MRI. The
conclusion is that there is a 50-50 split in ownership of this
corporation. Therefore, it would be a draw with respect to authority
to appeal on behalf of Nolana MRI.

4. On April 18, 2013, Counselors repeatedly stated to the Court that
Garcia was incapable of authorizing Counselors to represent Nolana
MRI in this proceeding (“the subject statements”). In considering
the ambiguity in the agreement and Counselors’ statements that
Agustin Garcia was incapable of authorizing Counselors to represent
Nolana MRI, the Court concludes that is the “tie breaker” as the Court
has been given no justification to disregard these admissions.

II. JURISDICTION

We are obligated to review sua sponte issues affecting our jurisdiction over an

appeal. M.O. Dental Lab v. Rape, 139 S.W.3d 671, 673 (Tex. 2004). Standing is a

component of subject-matter jurisdiction. Douglas v. Delp, 987 S.W.2d 879, 882 (Tex.

1999); Martin v. Clinical Pathology Labs., Inc., 343 S.W.3d 885, 887–88 (Tex. App.—

Dallas 2011, pet. denied); see also DaimlerChrysler Corp. v. Inman, 252 S.W.3d 299, 304

(Tex. 2008) ("A court has no jurisdiction over a claim made by a plaintiff without standing

to assert it.") (footnote omitted). The issue of standing cannot be waived, and we may

examine standing sua sponte if necessary. See Martin, 343 S.W.3d at 888; see also

Tex. Ass'n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 445–46 (Tex. 1993) (noting

that standing "may be raised for the first time on appeal by the parties or by the court").

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When an appellate court concludes that it does not have jurisdiction over an appeal, it

must dismiss the appeal. M.O. Dental Lab, 139 S.W.3d at 673.

III. MOTION TO SHOW AUTHORITY

There is a general presumption that an attorney is acting with authority; however,

that presumption is rebuttable. Breceda v. Whi, 187 S.W.3d 148, 152 (Tex. App.—El

Paso 2006, no pet.); Kelly v. Murphy, 630 S.W.2d 759, 761 (Tex. App.—Houston [1st

Dist.] 1982, writ ref’d n.r.e.). Rule 12 of the Texas Rules of Civil Procedure permits any

party to challenge an attorney's authority to prosecute or defend a lawsuit:

A party in a suit or proceeding pending in a court of this state may,
by sworn written motion stating that he believes the suit or proceeding is
being prosecuted or defended without authority, cause the attorney to be
cited to appear before the court and show his authority to act. The notice
of the motion shall be served upon the challenged attorney at least ten days
before the hearing on the motion. At the hearing on the motion, the burden
of proof shall be upon the challenged attorney to show sufficient authority
to prosecute or defend the suit on behalf of the other party. Upon his failure
to show such authority, the court shall refuse to permit the attorney to
appear in the cause, and shall strike the pleadings if no person who is
authorized to prosecute or defend appears. The motion may be heard and
determined at any time before the parties have announced ready for trial,
but the trial shall not be unnecessarily continued or delayed for the hearing.

TEX. R. CIV. P. 12; see Kindle v. Wood Cnty. Elec. Co-op, Inc., 151 S.W.3d 206, 210 (Tex.

App.—Tyler 2004, pet. denied). The Rule's primary purpose is to enforce a party's right

to know who authorized the suit. Angelina Cnty. v. McFarland, 374 S.W.2d 417, 422–23

(Tex. 1964); In re Sassin, No. 08-12-00308-CV, 2014 WL 3385106, at *3 (Tex. App.—El

Paso July 11, 2014, orig. proceeding). Rule 12's purpose is also to discourage and

cause the dismissal of suits brought without authority so as to protect parties from

groundless suits. See In re Gravitt, 371 S.W.3d 465, 469 (Tex. App.—Houston [14th

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Dist.] 2012 [mand. denied], orig. proceeding).

The challenged attorney must appear before the trial court to show his authority to

act on behalf of his client. TEX. R. CIV. P. 12; R.H. v. Smith, 339 S.W.3d 756, 762 (Tex.

App.—Dallas 2011, no pet.); Boudreau v. Fed. Trust Bank, 115 S.W.3d 740, 741 (Tex.

App.—Dallas 2003, pet. denied). At the hearing on the motion, the challenged attorney

bears the burden of proof to show the requisite authority. Smith, 339 S.W.3d at 762;

Boudreau, 115 S.W.3d at 741. When resolving the motion, the trial court considers and

weighs the evidence presented at the hearing. In re Guardianship of Benavides, 403

S.W.3d 370, 376 (Tex. App.—San Antonio 2013, pet. denied); Smith, 339 S.W.3d at 762–

63. Typically, a challenged attorney satisfies his burden if he produces an affidavit or

testimony from his client indicating the attorney was retained to provide representation in

the case. See Boudreau, 115 S.W.3d at 742; Spigener v. Wallis, 80 S.W.3d 174, 184

(Tex. App.—Waco 2002, no pet.).

Appellate courts review a trial court’s ruling on a motion to show authority for an

abuse of discretion. Urbish v. 127th Jud. Dist. Court, 708 S.W.2d 429, 432 (Tex. 1986);

In re Guardianship of Benavides, 403 S.W.3d at 373; Smith, 339 S.W.3d at 762. A trial

court abuses its discretion when it acts arbitrarily or unreasonably, without reference to

guiding rules or principles. Iliff v. Iliff, 339 S.W.3d 74, 78 (Tex. 2011). A trial court also

abuses its discretion by failing to analyze or apply the law correctly. Iliff, 339 S.W.3d at

78; Walker v. Packer, 827 S.W.2d 833, 840 (Tex. 1992) (orig. proceeding). With respect

to factual findings, an appellate court may not substitute its own judgment for that of the

trial court. City of Dallas v. Vanesko, 189 S.W.3d 769, 771 (Tex. 2006); In re

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Guardianship of Benavides, 403 S.W.3d at 373. Instead, a party challenging those

findings must establish that the trial court could have reached only one decision. See id.

(citing Walker, 827 S.W.2d at 840); In re Guardianship of Benavides, 403 S.W.3d at 373.

IV. ANALYSIS

The fundamental issue in dispute is whether Garcia had the authority to hire

counsel to represent Nolana in this appeal. Garcia and Castro are equal owners of

Nolana, and Castro did not consent to hiring counsel or prosecuting this appeal. Given

that the equal owners did not agree, there was neither unanimous consent nor a majority

vote to authorize this litigation. The partnership agreement introduced into evidence at

the hearing on abatement references a different entity than that involved in this lawsuit,

but even so, does not address the situation here, where the two owners and members of

the entity disagree regarding a business matter. The record is effectively devoid of

evidence or argument regarding application of the Texas Business Organizations Code.2

There was no proof in this case of any of the provisions of the corporate charter or by-

laws, and there was no attempt to prove that one or the other member of the corporation,

as member or officer or shareholder, had invested Garcia with the authority to hire counsel

and conduct litigation on the part of Nolana where its members were in conflict. In this

regard, we note that, generally, the pursuit of litigation is not considered to fall within the

parameters of the ordinary course of business so as to authorize one member of a

2 As recently stated by the Texas Supreme Court, ordinarily, a corporation must be managed by a
board of directors. Ritchie v. Rupe, 443 S.W.3d 856, 869 n.12 (Tex. 2014) (citing TEX. BUS. ORGS. CODE
ANN. § 21.401(a) (West, Westlaw through 2013 3d C.S.)). Under certain circumstances, however,
corporations may be managed directly by shareholders. See id. (citing TEX. BUS. ORGS. CODE ANN. §§
21.101(a)(2), 21.714(b)(1),(2) (West, Westlaw through 2013 3d C.S.)). In such cases, the persons or
entities managing the corporation act in the capacity of directors and are treated as directors. Id. (citing
TEX. BUS. ORGS. CODE ANN. §§ 21.106(a)–(b), 21.725–.726(a) (West, Westlaw through 2013 3d C.S.)).
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corporation to direct the action of filing suit or appeal. Kiepfer v. Beller, 944 F.2d 1213,

1218 (5th Cir. 1991); Harrison v. City of San Antonio, 695 S.W.2d 271, 275 (Tex. App.—

San Antonio 1985, no writ); Robert Nanney Chevrolet Co. v. Evans & Moses, 601 S.W.2d

411, 413 (Tex. Civ. App.—Beaumont 1980, no writ); Capital Bank v. Am. Eyewear, Inc.,

597 S.W.2d 17, 20 (Tex. Civ. App.—Dallas 1980, no writ); Valley Int’l Props., Inc. v.

Brownsville Sav. and Loan Ass'n, 581 S.W.2d 222, 227 (Tex. Civ. App.—Corpus Christi

1979, no writ); Square 67 Dev. Corp. v. Red Oak State Bank, 559 S.W.2d 136, 138 (Tex.

Civ. App.—Waco 1977, writ ref'd); Templeton v. Nocona Hills Owners Ass'n, Inc., 555

S.W.2d 534, 538 (Tex. Civ. App.—Texarkana 1977, no writ); see In re CorrLine Int'l, LLC,

516 B.R. 106, 138 (Bankr. S.D. Tex. 2014); see also St. Star Designs, LLC v. Gregory,

No. H–11–0915, 2011 WL 3925070, at *3 (S.D. Tex. Sept. 7, 2011). The same is true

of equal shareholders. See Kaspar v. Thorne, 755 S.W.2d 151, 154 (Tex. Civ. App.—

Dallas 1988, no writ).

As stated previously, we generally presume that an attorney is acting with

authority. See Breceda, 187 S.W.3d at 152. However, in this case, the presumption

that Nolana’s counsel had the authority to represent Nolana on appeal has been rebutted

by the trial court's multiple findings of fact and conclusions of law, which are supported

by the record, that Garcia did not have the authority to unilaterally retain counsel to

represent Nolana. We hold, therefore, that counsel for Nolana lacked standing to bring

this appeal. See id.

IV. CONCLUSION

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 Based on the foregoing, we grant appellees’ motion to show authority insofar as it

requests that we determine whether or not Nolana’s counsel possessed authority to

prosecute this appeal and to dismiss this appeal for lack of jurisdiction. Accordingly, we

dismiss this cause for lack of jurisdiction.

GREGORY T. PERKES
JUSTICE

Delivered and filed the
12th day of February, 2015.

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