ACCEPTED
04-14-00824-CV
FOURTH COURT OF APPEALS
SAN ANTONIO, TEXAS
2/24/2015 12:40:54 AM
KEITH HOTTLE
CLERK
NOS.: 04-14-00824-CV
04-15-00006-CV
FILED IN
4th COURT OF APPEALS
IN THE COURT OF APPEALS SAN ANTONIO, TEXAS
2/24/2015 12:40:54 AM
FOR THE KEITH E. HOTTLE
FOURTH DISTRICT OF TEXAS AT SAN ANTONIO
Clerk
ROBERT TYSON,
CARL AND KATHY TAYLOR,
LINDA AND RON TETRICK,
JIM AND NANCY WESCOTT, and
PAUL AND RUTHE NILSON,
Appellants/Plaintiffs,
-against-
ROBERT N. FREEMAN II,
DEMAR BOREN
And LORENA YEATES, Husband and
Wife,
Appellees/Defendants.
Appeal from the 198th Judicial District Court
Bandera County, Texas
BRIEF FOR APPELLANTS
CAROLE K. BOYD
Attorney for Plaintiffs/Appellants
15751 Highway 16 North
Medina, Texas 78055
(830) 589-7587
Fax: (830) 589-7598
E-mail: ckbesq@hctc.net
SBN: 00786793
ORAL ARGUMENT REQUESTED
IDENTITY OF PARTIES AND COUNSEL
Appellants/Plaintiffs
Robert Tyson
Carl and Kathy Taylor
Linda and Ron Tetrick
Jim and Nancy Wescott
Paul and Ruthe Nilson
Counsel for Appellants
Carole K. Boyd
15751 Highway 16 North
Medina, Texas 78055
Appellees/Defendants
Robert N. Freeman, II
Demar Boren
Lorena Yeates
Counsel for Appellees
C. Dixon Mosty
Mosty Law Firm
222 Sidney Baker South, Suite 400
Kerrville, Texas 78028
Counsel for Robert N. Freeman, II
Stephen B. Schulte
Stephen B. Schulte, P.C.
Main Plaza One
820 Main Street, Suite 100
Kerrville, Texas 78028
Counsel for Demar Boren and Lorena Yeates
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TABLE OF CONTENTS
Page
IDENTITY OF PARTIES AND COUNSEL …………………………………. 2
TABLE OF CONTENTS ………………………………………………………. 3
INDEX OF AUTHORITIES ……………………………………………………. 4
STATEMENT OF THE CASE ………………………………………………… 5
STATEMENT REGARDING ORAL ARGUMENT …………………………… 6
ISSUES PRESENTED ………………………………………………………… 6
STATEMENT OF FACTS ……………………………………………………. 7
SUMMARY OF THE ARGUMENT …………………………………………… 8
ARGUMENT ………………………………………………………………….. 9
I. The District Court Erred in Rejecting All of Appellants Summary
Judgment Evidence ………………………………………………… 9
II. The District Court Erred in Granting Summary Judgments to
Appellees Prior to Completion of Integral Discovery ……………... 11
III. The District Court Erred in Denying Appellants’ Motion for
Opportunity to Remedy and Rehearing ……………………………. 13
IV. The District Court Erred in Granting Appellees’ Motions
For Severance ……………………………………………………… 14
CONCLUSION AND PRAYER ……………………………………………….. 15
APPENDIX (All documents contained in Clerk’s Record and Reporters’ Records)
3
INDEX OF AUTHORITIES
CASES:
Dubois v. Harris County
866 S.W. 2d 787, 791 (Tex.App.-Houston[14th Dist.], 1993 ……….. 9
McConathy v. McConathy
869 S.W.2d, 341 (1994)……………………………………………… 10,13
Deerfield Land Joint Venture v. Southern Union Realty Co.
758 S.W.2d 608 (Tex.-App. – Dallas 1968, writ denied) …………… 10
Perry v. Houston Independent School District
902 S.W.2d 544 (Tex. App.-Houston, 1995) ……………………….. 10
Kingston v. Helm
82 S.W.3d 755 (Tex. App.-Corpus Christi 2002) …………………... 11
Leyendecker & Associates v. Wechter
683 S.W.2d 369, 375 (Tex. 1984) ………………………………….. 11
McInnis v. Mallia
261 S.W. 3d 197, 200 (Tex. App.-Houston [14th Dist.] 2008 ………. 11
Madison v. Williamson
241 S.W. 3d 145, 155 (Tex.App.-Houston [1s Dist.] 2007, pet. denied 12
Garcia v. Martinez
988 S.W. 2d 219, 222 (Tex. 1999) …………………………………… 12
. OAIC Commercial Assets, L.L.C. v. Stonegate Vil., L.P.
234 S.W.3d 726, 747 (Tex. App.- Dallas 2007, pet. filed) …………… 13
Lynette Miller v. Barry Keyser
90 S.W. 3d 712 (Tex. 2002) ………………………………………….. 13
Castleberry v. Branscum et al.
721 S.W.2d 270 (Tex.1986) ………………………………………….. 13
Morris v. Northrop Grumman Corp.
37 F.Supp.2d 556,580 (E.D.N.Y. 1999) ……………………………… 14
State Dep't of Highways & Pub. Transp. v. Cotner
845 S.W.2d 818, 819 (Tex. 1993) ……………………………………. 14
RULES:
Texas Rules of Civil Procedure, Rule 166(a)(i) ………………………………. 11
Texas Rules of Civil Procedure, Rule 166(a)(f) ………………………………. 13
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TO THE HNORABLE FOURTH COURT OF APPEALS:
Statement of the Case
Nature of the case Plaintiffs were life-time lease holders in a senior citizen retirement
Community originally called “Las Aves Retreat” and later, under
new ownership, “El Viaje.” CR 38. The leases were issued to
Plaintiffs by Demar Boren and Lorena Yeates, husband and wife
managers at the premises, under the authority of Robert N.
Freeman, II, attorney, manager and a prior owner of Medina
Livestock Sales Company, LTD. CR 38, 39. The new owners,
through Bankruptcy Court, had the leases declared unenforceable
and, under Texas law, deemed to be tenancies at will. CR 40, 293-
316. The Plaintiffs were issued letters of termination of their
leases and had to vacate the premises or face eviction. CR 42, 318.
Suit below is for violation of the DTPA, Common Law Fraud,
Statutory Fraud, Fraudulent Inducement, Negligent
Misrepresentation, Negligence and Gross Negligence against
individuals and the entity Medina Livestock Sales Company, LTD.
CR 36, Tab 10.
Trial Court 198th Judicial District Court, Bandera County
Hon. Rex Emerson
Trial Court’s
Disposition Plaintiffs’ summary judgment evidence was excluded (CR 328-
331, Tab 26), summary judgment granted to all individual
Defendants (CR 448 (Tab 30; CR 449, Tab 31) and
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individuals Defendants’/Appellees’ motions for severance were
granted. CR 490, Tab 40; CR 494,495. Plaintiffs’/Appellants
motion for Remedy and Rehearing was denied. CR 491, Tab 41.
Statement Regarding Oral Argument
Because of the several rulings, individual defendants motions having been
brought simultaneously but Orders being issued at different times, and the confusion that
has surrounding the identification of Appellees in this matter, as well as other
administrative issues which hopefully will be resolved shortly, it is felt for the Court to
have these matters clarified and put into time sequence, and to craft an opinion that is
consistent with the issues and facts, oral argument would be appropriate and helpful. The
issues here are important ones, worthy of the Court’s full consideration. The District
Court’s Orders denying summary judgment evidence, denying re-hearing and granting
severance in a case where clearly the case law and Rules dictate otherwise is erroneous
and should be corrected in the administration of justice.
Issues Presented
1. Did the District Court err in rejecting Plaintiffs’ Summary Judgment evidence?
2. Did the District Court err in granting Summary Judgment to all individual
Defendants before completion of discovery?
3. Did the District Court err in denying Plaintiffs’ Motion for Opportunity to
Remedy and for Rehearing?
4. Did the District Court err in granting severance of individual Defendants?
6
Statement of Facts
Appellants’ First Amended Petition alleges that Appellants were life-time leasees
of premises which they leased in a senior citizen community located in Medina, Texas,
then known as Las Aves Retreat, paying on average a lump sum of $25,000 per lot. On
the lot the Appellants were able to place a park model home, sheds, decks, or simply park
a motor home there. Each lot had utilities and became a permanent residence for
Appellants who were elderly veterans on social security incomes. Maintenance fees were
fixed at $500/year which enabled Appellants to know what their retirement expenses
would be to a great extent, for the remainder of their lives. CR 38-40, Tab 10.
Demar Boren and Lorena Yeates (hereinafter “Boren and Yeates”), husband and
wife, were the initial management team for the premises, hired by and under the
supervision and authority of Robert N. Freeman, II (hereinafter “Freeman”.) Boren and
Yeates marketed the lots and sold to the Appellants the lifetime leases on behalf of
Freeman and his company and at his direction, assuring Appellants that they were legal
and binding. CR 39, 42 (Tab 10). Freeman was represented to Appellants as a real estate
attorney from Laredo, and as owner of the premises. Appellants did not have legal
representation when they signed the lease agreements, but felt assured of the legality of
the documents since they knew Freeman to be a real estate attorney. Freeman visited the
property from time to time and met with some of the Appellants. CR 43-48, Tab 10.
Eventually, in or about 2008, Robert Freeman effected a sale of the premises to an entity
known as El Viaje Retreat, LLC, owned and operated by Susan Venus and Anne
Blankenship, taking back a purchase money mortgage. CR 39-40, Tab 10. He then
7
transferred title of the premises from Medina Livestock Sales, Company, LTD to Listo
Corporation, another of his entities.
In September 2012 the new owners filed for bankruptcy in order to try to avoid
the leases of Appellants and others who held lifetime leases at El Viaje. In July 2013
Judge Craig A. Gargotta held that the lifetime leases of Appellants and other residents of
the retreat were not legal in Texas, but were deemed to be tenancies at will and could be
rejected and terminated. CR 292-317, Tab 23. Shortly thereafter, the Appellants were
given written notice that their leases were terminated. CR 318, Tab 23. Appellants lost
their life’s savings as they could not get their investments back on their homes that they
had established over the years and found themselves forced to move from the retreat,
losing their investments and sustaining substantial damages. CR 42-48, Tab 10.
Appellants brought the instant litigation alleging violation of the Deceptive Trade
Practices Act, and for Common Law Fraud, Statutory Fraud, Fraudulent Inducement,
Negligent Misrepresentation, Negligence, and Gross Negligence. CR Tab 10
Summary of the Argument
Attorneys for individual Appellees both moved for summary judgment in District
Court, and moved to have Appellants’ summary judgment evidence excluded. Argument
was made by the attorney for Freeman, Dixon Mosty, that excerpts from deposition
transcripts were not authenticated and thus could not be summary judgment evidence. He
also objected to a Bankruptcy Court transcript and resultant Order, and an
unauthenticated letter from the attorney for the Debtor in Bankruptcy (the subsequent
owner of the premises then known as El Viaje Retreat, LLC) to residents at El Viaje
Retreat, including Appellants.
8
The Court, having heard argument from Mr. Mosty, having reviewed his
submission which was handed to the court and counsel at the start of the hearing, and
taking into account the case being cited by Mr. Mosty upon which his argument was
based, rejected Appellants’ evidence and thus granted summary judgments to all
individual plaintiffs.
The case relied upon by Mr. Mosty was a 1993 Court of Appeals case. In January
1994 the Texas Supreme Court, taking up the same issue, found authentication
unnecessary. Appellants then moved for an opportunity to cure (the unauthenticated
letter, a form defect) and re-hearing on having all evidence exclude. Appellants’ motion
was wrongfully denied.
Individual defendants, at the same hearing, had moved for severance; their
motions were wrongfully granted.
Appellants underlying matter was thus eviscerated, as it was the individuals who
have, pursuant to case law, the liability, and who also have the means to compensate
Appellants for the resultant damages at the hands of these individuals.
Argument
1. The District Court Erred in Rejecting all of Appellants’ Summary Judgment
Evidence.
The District Court ruled that all of Appellants’ Summary Judgment Evidence should
be rejected, presumably pursuant to Appellees’ argument. No explanation was offered by
the Court. By doing so, Appellants had virtually no means of opposing the summary
judgments. The argument of counsel for Freeman, C. Dixon Mosty, was based upon the
case of Dubois v. Harris County, 866 S.W. 2d 787, 791 (Tex.App.-Houston[14th Dist.],
1993.) which found unauthenticated excerpts from transcript to be inadmissible as
9
evidence for summary judgment proofs. In January, only a month after that decision, the
Supreme Court of Texas, in McConathy v. McConathy, 869 S.W.2d, 341 (1994) held
otherwise, overturning the underlying case of Deerfield Land Joint Venture v. Southern
Union Realty Co., 758 S.W.2d 608 (Tex.-App. – Dallas 1968, writ denied) relied upon by
Dubois. Thus, Appellees cited bad law and the District Court, without comment or
explanation, ruled against Appellants and dismissed all of their evidence. RR (Paula
Beaver) 10. Counsel for Appellees also argued that Appellants could not use their own
answers to discovery as summary judgment evidence. However, a non-movant may use a
movant’s own exhibit against the movant to establish the existence of a fact question.
Perry v. Houston Independent School District, 902 S.W.2d 544 (Tex. App.-Houston,
1995). Appellants had argued that they believed the corporate entity and Freeman to be
one and the same. Anything argued by counsel for Appellants after their Summary
Judgment evidence was excluded, though, was not able to be considered (Rule 166a[i]).
There were issues raised by Appellees’ counsel contesting individual liability and statute
of limitations. These issues were heard by the Judge, but no response by
Plaintiffs/Appellants’ counsel could be considered, and there were valid and important
responses to be considered. Although counsel attempted to address the issue of statute of
limitations, because the Appellants’ evidence was not considered, it remained to be
proven that Plaintiffs/Appellants only knew of the illegality of their leases when the
Bankruptcy Judge opined that they were not enforceable leases in Texas, but rather
tenancies at will and that they could be terminated and were unenforceable. This came
about well within the statute for Plaintiffs’ time frame to bring suit. Likewise, there was
case law stating that individuals had liability whether they knew or not that what they
10
were promoting was illegal. It is well established in Texas case law that a corporate
agent can be personally liable for tortious acts which he directs or participates in during
his employment. Kingston v. Helm, 82 S.W.3d 755 (Tex. App.-Corpus Christi 2002);
Leyendecker & Associates v. Wechter, 683 S.W.2d 369, 375 (Tex. 1984). This was not
able to be introduced or considered as Plaintiffs/Appellants had no admissible evidence,
and without such, Summary Judgments had to be granted against them.
Defendants/Appellees motions, also, were defective in that they were not
specifically address or labeled as No-Evidence Motions. Plaintiffs/Appellants therefore
had no notice of what their burden of proof was on going into the hearing, and assumed
that they were traditional motions for Summary Judgment. The Court, though, treated
them as No-Evidence Motions. This was an additional factor in the devastating effect of
excluding Plaintiffs/Appellants’ evidence.
2. The District Court Erred in Granting Summary Judgments to Appellees
prior to Completion of Integral Discovery.
Appellants, both in their opposition papers and in open Court, stated that Summary
Judgment was not ripe because the deposition of Freeman, a critical event to this matter,
had not yet been taken. CR 289, 290; RR (Paula Beaver) 16-18. Appellants did not
request a continuance because of reliance upon case law and Rules which denote when
summary judgment is appropriate. Texas Rules of Civil Procedure, Rule 166(a)(i) allows
for a summary judgment motion to be made after “adequate time for discovery.”
According to the comment to Rule 166(a)(i), “a discovery period set by pretrial order
should be adequate opportunity for discovery unless there is a showing to the contrary,
and ordinarily a motion under paragraph (i) would be permitted after the period but not
before.” McInnis v. Mallia, 261 S.W. 3d 197, 200 (Tex. App.-Houston [14th Dist.] 2008,
11
no pet. The trial court’s determination that there has been adequate time for discovery is
reviewed above for abuse of discretion. In the instant matter, there was no statement
whatsoever from the District Court as to whether summary judgment was ripe because of
adequate time for discovery having been had. A trial court abuses its discretion if it acts
in an arbitrary or unreasonable manner ‘‘without reference to any guiding rules or
principles.” Madison v. Williamson, 241 S.W. 3d 145, 155 (Tex.App.-Houston [1s Dist.]
2007, pet. denied (quoting Garcia v. Martinez, 988 S.W. 2d 219, 222 (Tex. 1999). When
Summary Judgment motions were made, Summary Judgment relief was not appropriate;
the discovery period had not run, and the deposition of Freeman was of upmost
importance to the determination of his liability and authority of his management. Until
these issues were clarified, it was impossible to determine which individual
defendants/Appellees might have liability, and to what extent. Additionally, when
depositions of Boren and Yeates where sought by counsel for Appellants, a motion was
made to quash. CR 81-90, Tag 19. Those depositions were sought prior to taking the
deposition of Freeman for strategic purposes, and the refusal for compliance with agreed
upon dates was based upon the statement by counsel that they would be a waste of time.
All other written discovery had been taken. When Appellants finally set a date when no
response came from Appellees as to a date, all individuals made a motion to quash. When
the Court asked if Appellants had requested a continuance by motion, it was answered
that, there was no formal request for a continuance in opposition papers, but it was
stressed that discovery was not complete and Summary Judgment, therefore, was not ripe
as there were facts in dispute that required the deposition of Freeman. RR (Paula Beaver)
16-28. In any event, no continuance was granted, and there was no factual determination
12
or further discussion by the Court as to why Summary Judgment would be granted
notwithstanding incomplete discovery.
3. The District Court Erred in Denying Appellants’ Motion for Opportunity to
Remedy and Rehearing.
By having rejected Appellants’ Summary Judgment evidence in its entirety, the
District Court had no evidence before it in opposition to the Summary Judgment motions
brought by the individual defendants. However, the Court had an opportunity upon the
return date of Appellants’ motion for Remedy and Rehearing to correct their mistake of
law, and allow Appellants a rehearing on the Appellees’ motions. OAIC Commercial
Assets, L.L.C. v. Stonegate Vil., L.P., 234 S.W.3d 726, 747 (Tex. App.- Dallas 2007, pet.
filed) (“The sole purpose of a motion for rehearing is to provide the court an opportunity
to correct any errors on issues already presented.”) At that time, Appellants made the
court aware of case law evidencing the fact that Appellants’ Summary Judgment
evidence was admissible (RR 4-5: McConathy v. McConathy, 869 S.W.2d 341 [Tex.
1994]) , as well as case law whereby Appellants had viable claims against individual
defendants for liability (RR 12: Lynette Miller v. Barry Keyser, 90 S.W. 3d 712 [Tex.
2002]) See also Castleberry v. Branscum et al., 721 S.W.2d 270 (Tex.1986.). In other
words, Appellants’ desire for a rehearing was not rhetorical in nature, but a valid
assertion that the individual defendants must remain in the case in chief. The Court also
had the opportunity to allow Appellants to remedy any defects of form. TRCP 166(a)(f).
The District Court Judge stated in Court on the motion that he had reviewed the
transcript of Lorena Yeats and that his holding still stood as previously Ordered. The
Judge did not state that he reviewed any other of the evidence submitted by Appellants
which was previously rejected, or give any rationale for his holding.
13
The mistake of law upon which Appellants’ evidence was excluded not only
denied Appellants the ability to defend the Summary Judgment motions, but highly
prejudiced the outcome of their subsequent motion for rehearing and remedy. The
District Court seemingly was not going to change its ruling no matter what evidence was
then set forth before it by Appellants. This amounted to a continued abuse of discretion
by the District Court in disregard of case law, Rules and procedure. Appellants should
have been granted a rehearing as counsel for Freeman’s admission that there was
subsequent case law which invalidated his own submission of case law was clearly the
deciding element in the Court’s holdings on Summary Judgment and on that basis alone a
rehearing should have been granted.
4. The District Court Erred in Granting Appellees’ Motions for Severance.
Severance should only be granted if it will further the administration of justice.
“Relevant considerations in determining whether to sever a party or claim may
include 1) whether the claims arise out of the same transaction or occurrence; 2)
whether the claims present common questions of law or fact; 3) whether judicial
economy would be served; 4) whether prejudice could be avoided through severance;
and 5) whether the separate claims require different witnesses and documentary
proof.” Morris v. Northrop Grumman Corp., 37 F.Supp.2d 556,580 (E.D.N.Y. 1999).
A claim may be properly severed only if: (1) the controversy involves more than one
cause of action, (2) the severed claim is one that would be proper if independently
asserted, and (3) the severed claim is not so interwoven with the remaining action that
they involve the same facts and issues. State Dep't of Highways & Pub. Transp. v.
Cotner, 845 S.W.2d 818, 819 (Tex. 1993). In this case the severance of the claims
14
against the individual defendants were not only inextricably interwoven with the
remaining action, but could not stand along, as all individuals were agents of the
corporate entity. The severance was only to make the summary judgments in favor of
the individuals instantly appealable and to divide the litigation into three separate
actions. In doing so, as was well known to opposing counsel and the Court, it placed
an insurmountable financial burden on Appellants. Appellees are fully aware that
Appellants have lost their life’s savings over this situation and have a financial
hardship which precludes such expenditures. Appellants are seeking justice on a
virtual shoestring, and to have multiple cases to be appealed at once would be
financially impossible for them. Appellants have alleged serious damages at the
hands these individual defendants which, by law, are compensable. However, if the
Court makes it untenable for them to proceed, then justice would go out the window,
and that is not the intention of the Rules, the law, or this judicial system. There was
no compelling reason for severance except to create a hardship for Appellants,
severance was an abuse of discretion, and should not have been granted.
Conclusion and Prayer
For these reasons, Appellants request that this Court reverse the District Court’s
Orders granting Appellee’s motions for Summary Judgment and for Severance and
specifically Deny Appellees Summary Judgment and Severance Motions.
In the alternative, if the Court does not specifically Deny these motion, Appellants
request that this Court reverse the District Court’s Order Denying Appellants’ Motion for
Remedy and Rehearing, and allow Appellants an opportunity to amend their evidence
15
and for a rehearing on the Summary Judgment motions. Appellants also request all other
relief to which they may show themselves justly entitled.
February 24, 2015 Respectfully Submitted,
/S/Carole K. Boyd
State Bar Number: 00786793
15751 Highway 16 North
Medina, Texas 78055
(830) 589-7587
Fax: (830) 589-7598
ATTORNEY FOR APPELLANTS
CERTIFICATE OF SERVICE
I certify that on February 24, 2015 the within Brief for Appellants was served
upon opposing counsel by e-filing and email as follows:
C. Dixon Mosty
Mosty Law Firm
Email: cdmosty@mostylaw.com
Stephen B. Schulte
Stephen B. Schulte PC
Email: sschulte@schultepc.com
/S/ Carole K. Boyd
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Robert Tyson, Carl and Kathy Taylor, Linda and Ron Tetrick, Jim and Nancy Wescott, and Paul and Ruthe Wilson v. Demar Boren and Lorena Yates
Combined Opinion