Speedemissions, Inc. v. Capital C Enterprises, Ltd (Tex.App.- Houston [1st Dist.]
Aug 28, 2008)(Radack) (summary judgment, tortious interference with business relationship,
breach of fiduciary duty)
AFFIRM TC JUDGMENT IN PART, REVERSE TC JUDGMENT IN PART, AND RENDER
Opinion by Chief Justice Radack
We reverse the portion of the portion of the judgment of the trial court that
rendered summary judgment against Speedemissions on its claim that Cobb
breached his fiduciary duty to Speedemissions and remand that claim for
trial. We affirm the judgment of the trial court in all other respects.
Before Chief Justice Radack, Justices Jennings and Bland
Speedemissions, Inc. v. Capital C Enterprises, Ltd., Capital C Management, L.L.C., and Jason B.
Appeal from 113th District Court of Harris County
Trial Court Judge: Hon. Patricia Hancock
Attorneys: Walter A. Boyd III, Bruce R. Moldovan | William C. Ferebee, Robert G. Miller
This is an appeal from a final summary judgment rendered in favor of appellees, Capital C
Enterprises, Ltd., Capital C Management, L.L.C., and Jason B. Cobb. (1) The trial court's order
does not state whether judgment was rendered on traditional or no-evidence grounds. See Tex.
R. Civ. P. 166a(c), (i). In three issues, appellant, Speedemissions, Inc., contends that the trial
court erred (1) by rendering summary judgment on claims by Speedemissions that Capital and
Cobb breached fiduciary duties owed to Speedemissions, tortiously interfered with its existing
and prospective business relationships, and misappropriated confidential information and (2) by
denying Speedemission's motion to compel discovery and for sanctions and its motion to
continue the summary-judgment proceeding. We affirm the summary judgment in part and
reverse the summary judgment in part, and we conclude that no reversible error arose from the
trial court's discretionary rulings.
Facts and Procedural History
This lawsuit concerns a business located on Veterans Memorial Drive in Houston, Texas, and the
real property on which the business is situated. Before the events that led to this litigation, Gary
Rose and Rose Enterprises (Rose) owned the real property and leased it to Grant and Jean
Smith (the Smiths), who ran a combined carwash and vehicle-inspection station known as "Mr.
Sticker" on the site for about 12 years. Cobb began working for Mr. Sticker in 1999.
In summer 2005, as part of its purchase of the Mr. Sticker business from the Smiths,
Speedemissions acquired the business at the Veterans Memorial Drive location. The purchase
did not include the real property, which Rose still owned, and Speedemissions continued to pay
the Smiths' obligations under the lease, which was due to expire on April 30, 2006.
Speedemissions chose to retain Cobb to manage that location and soon promoted him to
Program Manager. The Veterans Memorial Drive location was one of Speedemissions' most
By September 2005, Cobb's responsibilities had increased significantly. He was managing five
additional Speedemissions locations in Houston, including the Veterans Memorial Drive location.
Cobb noticed several other carwash locations in Houston that had been recently refurbished and
later discovered that the new owners of those businesses had purchased their properties from
Rose. Cobb located Rose and contacted him sometime in October about purchasing the real
property for the Mr. Sticker business on Veterans Memorial Drive.
On December 21, 2005, Cobb and Rose entered into an earnest-money contract for purchase of
that property. Shortly thereafter, Cobb formed the Capital entities to acquire the property, and on
February 3, 2006, Capital C Enterprises, Ltd. became the new owner of the Veterans Memorial
Drive real property where the Mr. Sticker business was located.
Cobb resigned from Speedemissions in late February or early March 2006. In a letter dated
March 27, 2006, Cobb notified Speedemissions that he had purchased the property on Veterans
Memorial Drive, and that Speedemissions had until April 30, 2006, the end of the lease term, to
vacate. It is undisputed that Speedemissions had not contacted Rose about renewing the lease
before that date. (2) On taking possession of the property after the lease expired, Cobb opened
a new business named "My Sticker" at the site.
Speedemissions filed suit on May 2, 2006 against Cobb and the Capital entities, who promptly
deposed Speedemissions' chief executive officer (CEO) Rich Palontieri. A series of discovery
disputes ensued, but Cobb was eventually deposed on December 19, 2006. Cobb and the
Capital entities then filed a joint motion for traditional summary judgment and a joint motion for
no-evidence summary judgment. While those motions were pending, Speedemissions filed a
motion to compel discovery, including responses to a number of questions certified during
Cobb's deposition, and also sought sanctions, including a stay of the proceedings, and
requested an oral hearing on the relief sought. On the same day, Speedemissions filed a verified
motion to continue the summary-judgment hearing. On February 5, 2007, Speedemissions filed a
combined response, subject to its pending motions, to Cobb's and the Capital entities' motions
for traditional and no-evidence motions for summary judgment.
On February 12, 2007, the trial court conducted a hearing on Cobb's and the Capital entities'
motions for summary judgment and Speedemissions' pending motions. A week later, the trial
court signed orders rendering summary judgment in favor of Cobb and the Capital entities and
denying Speedemissions' pending motions; on April 23, 2007, the trial court denied
Speedemissions' motion for new trial.
Summary Judgment in Favor of Cobb and Capital Entities
Speedemissions' first issue challenges the summary judgment rendered in favor of Cobb and the
Capital entities on Speedemissions' claims of breach of fiduciary duty, tortious interference with
business relationships, and misappropriation of trade secrets.
A. Standard of Review
We review summary judgments de novo. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661
(Tex. 2005). In conducting our review, we must indulge every reasonable inference in favor of the
nonmovant, take all evidence favorable to the nonmovant as true, and resolve any doubts in
favor of the nonmovant. Id. When, as here, a summary judgment does not specify the grounds
on which it was granted, the appealing party must demonstrate on appeal that no ground
presented to the trial court is sufficient to support the judgment. Rogers v. Ricane Enter., 772
S.W.2d 76, 79 (Tex. 1989); Tilotta v. Goodall, 752 S.W.2d 160, 161 (Tex. App.--Houston [1st
Dist.] 1988, writ denied). Accordingly, the appealing party must demonstrate that each ground for
summary judgment presented to the trial court is insufficient to support the judgment.
Star-Telegram, Inc. v. Doe, 915 S.W.2d 471, 473 (Tex. 1995). Conversely, we will affirm the
judgment if any single ground advanced in the motion is meritorious. Joe v. Two Thirty Nine Joint
Venture, 145 S.W.3d 150, 157 (Tex. 2004).
A party who relies on rule 166a(i) to seek summary judgment on no-evidence grounds has
essentially moved for a directed verdict in advance of trial. Mack Trucks, Inc. v. Tamez, 206
S.W.3d 572, 581 (Tex. 2006); see Tex. R. Civ. P. 166a(i). When the movant files a qualifying rule
166a(i) motion, the burden shifts to the nonmovant to defeat the motion by presenting evidence
that raises an issue of material fact regarding the elements challenged by the motion. Mack
Trucks, Inc., 206 S.W.3d at 582. Here, too, we review the evidence presented by the summary
judgment record in the light most favorable to the party against whom the summary judgment was
rendered, crediting evidence favorable to that party if reasonable jurors could, and disregarding
contrary evidence unless reasonable jurors could not. Id. (citing City of Keller v. Wilson, 168
S.W.3d 802, 827 (Tex. 2005); Johnson v. Brewer & Pritchard, P. C., 73 S.W.3d 193, 208 (Tex.
C. No Evidence of Recoverable Damages--Tortious Interference & Misappropriation of
Cobb's and the Capital entities' motion for no-evidence summary judgment enumerated each of
Speedemissions' claims--breach of fiduciary duty, tortious interference with business
relationships, and misappropriation of trade secrets--and then listed the requisite elements of
each of those claims. In moving for summary under rule 166a(i), Cobb and the Capital entities
argued that Speedemissions had to demonstrate recoverable damages in order to prevail on
each of these claims.
Speedemissions had to show actual damages to prevail on its claim that Cobb and the Capital
entities tortiously interfered with its existing and prospective business relationships. See KTRK
Television, Inc. v. Fowkes, 981 S.W.2d 779, 790 (Tex. App.--Houston [1st Dist.] 1998, pet.
denied), disapproved on other grounds, Turner v. KTRK Television, Inc., 38 S.W.3d 103, 115-16
(Tex. 2000). Speedemissions also had to show actual damages to prevail on its claim of
misappropriation of trade secrets. Trilogy Software, Inc. v. Callidus Software, Inc., 143 S.W.3d
452, 463 (Tex. App.--Austin 2004, pet. denied). Speedemission did not have to show actual
damages, however, in order to prevail on its breach-of-fiduciary-duty claim. See Burrow v. Arce,
997 S.W.2d 229, 238-39 (Tex. 1999). (3)
Having demonstrated that actual damages were an essential element of Speedemissions'
tortious-interference and misappropriation claims, Cobb and the Capital entities argued that no
evidence existed that Speedemissions had incurred actual damages and therefore could not
prevail on those claims. See Abdelnour v. Mid Nat'l Holdings, Inc., 190 S.W.3d 237, 240 (Tex.
App.--Houston [1st Dist.] 2006, no pet.) (noting that defendant moving for no-evidence motion for
summary judgment need cite only lack of proof on one element of plaintiff's case to prevail). 1.
Burden Shifted to Speedemissions
By specifying the elements as to which they claimed there was no evidence, Cobb and the
Capital entities satisfied their initial burden as movants under rule 166a(i) to contend that
Spedemissions had no evidence of actual damages to support its claims of tortious interference
with business relationships and misappropriation of trade secrets. See Tex. R. Civ. P. 166a(i);
Johnson, 73 S.W.3d at 207; Cmty. Initiatives, Inc. v. Chase Bank, 153 S.W.3d 270, 279-80 (Tex.
App.--El Paso 2004, no pet.).
Accordingly, the burden shifted to Speedemissions, as nonmovant, to provide "some evidence
raising a genuine issue of material fact" concerning the challenged damages elements of its
claims against Cobb and the Capital entities to avoid summary judgment in their favor. See Tex.
R. Civ. P. 166a(i); Mack Trucks, Inc., 206 S.W.3d at 581. Once the burden shifted to
Speedemissions, rule 166a(i) imposed a duty on the trial court to grant no-evidence summary
judgment in favor of Cobb and the Capital entities on Speedemissions' claims of tortious
interference with business relationships and misappropriation of trade secrets, unless
Speedemissions responded by producing more than a scintilla of evidence that raised a genuine
issue of material fact on the challenged element of actual damages. See Tex. R. Civ. P. 166a(i);
Sw. Elec. Power Co. v. Grant, 73 S.W.3d 211, 215 (Tex. 2002); see also Doe v. Boys Clubs, Inc.,
907 S.W.2d 472, 477 (Tex. 1995) (holding that defendant who demonstrates that plaintiff cannot
prevail on single, required element of claim for relief is entitled to summary judgment).
If Speedemissions presented evidence that we may credit or, alternatively, not disregard, Mack
Trucks, Inc., 206 S.W.3d at 582, and thus raised a genuine issue of material fact on the
challenged damages element of its claims for tortious interference with business relationships
and misappropriation of trade secrets, then the trial court erred by rendering no-evidence
summary judgment, and we must reverse, see Rueda v. Paschal, 178 S.W.3d 107, 109 (Tex.
App.--Houston [1st Dist.] 2005, no pet.), unless Cobb and the Capital established their right to
summary judgment on an alternative basis.
2. Speedemission's Response
To defeat the Cobb's and the Capital entities' no-evidence challenges, Speedemissions was not
required to "marshal its proof" on damages, but to "point out evidence that raises a fact issue" on
the challenged damages element of its causes of action. See Tex. R. Civ. P. 166a(i) (comment);
Johnson, 73 S.W.3d at 207 (citing same); Cmty. Initiatives, Inc., 153 S.W.3d at 280 (interpreting
comment as requiring nonmovant to point out some, but not all, evidence supporting challenged
elements). Speedemissions' combined, single-document response addressed each of its claims
in sequence, but generally attempted to respond simultaneously to Cobb's and the Capital
entities' traditional and no-evidence motions.
a. Tortious Interference with Existing and Prospective Relationships
Speedemissions claims that it had a relationship with Rose, the landlord, by virtue of the Smiths'
assignment of their lease for the property to Speedemissions as part of its acquisition of Mr.
Sticker. Speedemissions claims that Cobb interfered with that alleged relationship. In this portion
of its response, Speedemissions relied on the portion of Dickerson's affidavit in which he stated,
At all times relevant, Speedemissions had every indication that Rose would renew or re-lease the
Property to Speedemissions. These indications came from the Smiths directly and purportedly
from Rose as relayed by the Smiths. [Therefore], Speedemissions did not believe that it was
necessary to begin renewal or re-lease negotiations significantly prior to the end of the Rose
Dickerson further averred in his affidavit that Speedemissions would have willingly purchased the
property at the price paid by Cobb if Rose did not want to renew the lease. "Thanks to Cobb,"
Speedemissions argued in its response, "Speedemissions never had [that] chance. But for
Cobb's interference in those relationships, assisted by his sham entities, Speedemissions would
have remained on the property and not suffered damages."
Dickerson's sworn testimony shows that (1) Speedemissions derived its expectation that its lease
would continue from the Smiths--not from Rose--and that (2) Speedemissions did not inquire of
Rose about the lease after acquiring the leased premises, despite having received the lease by
assignment from the Smiths. But Dickerson's testimony does not attempt to substantiate the
value of the lease, for purposes of Speedemissions' allegations of "suffered damages," or to
quantify how the loss of the Veterans Memorial Drive location affected Speedemissions, for
purposes of those "suffered damages." Parlontieri's deposition testimony that the location was
"profitable" and "probably" among the three most profitable of Speedemissions' locations is
similarly lacking in specificity.
Speedemissions disagrees that its proof of lost profits lacked specificity, on the grounds that
Texas law does not require "precise calculation" of damages. Speedemissions relies on Orchid
Softwear, Inc. v. Prentice-Hall, Inc., 804 S.W.2d 208, 211 (Tex. App.--Austin 1991, writ denied).
We distinguish Orchid Softwear for several reasons. First, it resolved a traditional motion for
summary judgment based solely on rule 166a(b). Second, it predates Texas' adoption of rule
166a(i) and no-evidence summary-judgment practice in 1997 and thus involves a different
burden of proof. Third, Orchid Softwear involved a new business enterprise whose anticipated
profits were necessarily difficult to ascertain. Id., 804 S.W.2d at 210-11. This case, in contrast,
involves an established business with readily obtainable profit data, and Speedemissions has
never claimed that the data was not obtainable.
More importantly, though recovery for lost profits does not require that the loss be susceptible to
exact calculation, the supreme court has mandated that the injured party must do more than
show that it suffered "some" lost profits. Helena Chem. Co. v. Wilkins, 47 S.W.3d 486, 504 (Tex.
2001) (citing Tex. Instruments, Inc. v. Teletron Energy Mgmt., Inc., 877 S.W.2d 276, 279 (Tex.
1994)). Specifically, the injured party must prove the amount of the loss by competent evidence
with reasonable certainty. Id. (citing Szczepanik v. First State Trust Co., 883 S.W.2d 648, 649
(Tex. 1994); Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 84 (Tex.1992)). This is a
fact-intensive determination, but opinions or lost-profit estimates must, "at a minimum," be based
on objective facts, figures, or data from which the lost-profits amount may be ascertained. Id.
(citing Szczepanik, 883 S.W.2d at 649; Heine, 835 S.W.2d at 84).
Under the no-evidence standard, applied within the framework of settled law regarding proof of
lost profits, Speedemissions' summary-judgment showings--Parlontieri's statement that the
location was profitable and Dickerson's expressed willingness to purchase "but for
Cobb"--constitute mere speculation concerning "suffered damages" without any foundation in
objective facts, figures, or data. See id. As a matter of law, these statements, taken either
individually or together, do not constitute legally sufficient evidence to prevent no-evidence
summary judgment on grounds of lack of damages. See Mack Trucks, Inc., 206 S.W.3d at 583;
City of Keller, 168 S.W.3d at 827. (4)
b. Misappropriation of Confidential Information
Speedemissions's claim of misappropriation of confidential information is premised on the
contention that Cobb wrongfully misappropriated and disclosed Speedemissions' confidential
"strategic plan." Acknowledging its burden to demonstrate "some harm" in order to avoid
no-evidence summary judgment, see Trilogy Software, Inc., 143 S.W.3d at 463, Speedemissions
stated in its combined response to Cobb's and the Capital entities' motions for summary
The damage and injury suffered by Speedemissions from misappropriation and disclosure of its
confidential information by Cobb and now his attorneys is clearly present, though not necessarily
subject to exact quantification at this time. For purposes of a no[-]evidence summary judgment,
Speedemissions only need demonstrate that it has suffered some damage, it does not need to
quantify that damage other than to demonstrate that the damage is not nominal. There is no
doubt that Speedemissions['] confidential business data and strategic plan is now publicly filed,
by Defendants and their attorney, for all to see with the Harris County District Clerk, despite a
Rule 11 agreement having been in place to prevent just that.
We hold that this response, too, presents only bare legal contentions and, thus, no evidence
concerning "damage and injury suffered" that, though "clearly present," is not necessarily subject
to exact quantification" but "not nominal." Speedemissions also misplaces reliance on Cobb's and
the Capital entities' having filed the allegedly confidential information with the trial court, in
support of its motion for traditional summary judgment and in alleged violation of a rule 11
agreement; Speedemissions does not explain how that filing relates to its damages claim or
resulted in calculable damage to Speedemissions. (5)
Having failed to produce any evidence to substantiate its conclusory allegations of damages
arising from the alleged misappropriation of confidential information, Speedemissions failed to
defeat Cobb's and the Capital entities' no-evidence motion regarding Speedemissions' claimed
damages arising from that claim.
We therefore hold that Speedemissions did not meet its burden to defeat Cobb's and the Capital
entities' motion for no-evidence summary judgment contention that no evidence existed to
support the actual-damages elements of Speedemissions' claims that Cobb and the Capital
entities tortiously interfered with its relationship with Rose and misappropriated its confidential
information. Accordingly, summary judgment in favor of Cobb and the Capital entities on those
claims was proper.
We overrule Speedemissions' first issue as it pertains to its claims that Cobb and the Capital
entities tortiously interfered with Speedemissions' relationship with Rose and misappropriated
Speedemissions' confidential information.
Breach of Fiduciary Duty
The remaining portion of Speedemissions' first issue challenges Cobb's and the Capital entities'
entitlement to summary judgment on Speedemissions' claim of breach of fiduciary duty.
A. Cobb as Fiduciary
A "fiduciary" is "any person who occupies a position of peculiar confidence towards another."
Daniel v. Falcon Interest Realty Corp., 190 S.W.3d 177, 185 (Tex. App.--Houston [1st Dist.]
2005, no pet.) (quoting Kinzbach Tool Co. v. Corbett-Wallace Corp., 160 S.W.2d 509, 512
(1942)). The fiduciary relationship demands "integrity and fidelity" and contemplates "fair dealing
and good faith." Id. In addressing the scope of a fiduciary duty in the context of the relationship
between attorneys employed by a law firm and the firm, the supreme court has stated,
The agreement to act on behalf of the principal causes the agent to be a fiduciary, that is, a
person having a duty, created by his undertaking, to act primarily for the benefit of another in
matters connected with his undertaking. Among the agent's fiduciary duties to the principal is the
duty to account for profits arising out of the employment, the duty not to act as, or on account of,
an adverse party without the principal's consent, the duty not to compete with the principal on his
own account or for another in matters relating to the subject matter of the agency, and the duty
to deal fairly with the principal in all transactions between them.
Johnson, 73 S.W.3d at 200 (quoting RESTATEMENT (SECOND) OF AGENCY § 13, cmt. a
(1958)). To the extent that Cobb agreed to "act on behalf of" Speedemissions "in matters
connected with" his employment, Cobb would become a fiduciary with respect to
Speedemissions. See id. In the employer-agency context of agency relationships, courts take all
aspects of the relationship into consideration when determining the nature of fiduciary duties that
flow between the parties. Nat'l Plan Adm'rs, Inc. v. Nat'l Health Ins. Co., 235 S.W.3d 695, 700
When a fiduciary relationship is alleged to be premised on agency principles between an
employee and his employer, as here, the employee "must act primarily for the benefit of the
employer in matters connected with his agency." Daniel, 190 S.W.3d at 185 (quoting Abetter
Trucking Co. v. Arizpe, 113 S.W.3d 503, 510 (Tex. App.--Houston [1st Dist.] 2003, no pet.)). An
employee who serves as a fiduciary has a duty to deal fairly with his principal in all transactions
between them and to deal openly and to disclose fully to his employer information that affects the
employer's business; he may not compete with his principal in order to benefit himself in matters
that relate to the subject matter of his employment. See id.; see also Kinzbach Tool Co., 160
S.W.2d at 513 ("It is the duty of a fiduciary to deal openly, and to make full disclosure to the party
with whom he stands in [a fiduciary] relationship."). An employee-agent who uses his position to
gain a business opportunity belonging to the employer commits an actionable wrong. Id.; Abetter
Trucking Co., 113 S.W.3d at 510 (citing Bray v. Squires, 702 S.W.2d 266, 270 (Tex.
App.--Houston [1st Dist.] 1985, no writ)).
We recognize that an at-will employee like Cobb may plan to compete with his employer and take
active steps to compete with his employer while still employed, with no resulting duty to disclose
those plans while he is still employed. Abetter Trucking Co., 113 S.W.3d at 510. The employee
may not, however, "act for his future interests at the expense of his employer . . . by a course of
conduct designed to hurt the employer." Johnson, 73 S.W.3d at 202.
In moving affirmatively for summary judgment, Cobb argued that Cobb's responsibilities did not,
as a matter of law, extend to acquisition of property on Speedemissions' behalf. Relying on the
principle that the duties of a fiduciary extend only to "matters relating to the subject matter of the
agency," see id., Cobb argued that Cobb's responsibilities as an employee did not encompass
either leasing or acquisition of property and that he served only as a manager of his assigned
To support their contention, Cobb relied on deposition testimony by Parlontieri, who stated that
either he or Dickerson negotiated leases on behalf of Speedemissions and that Cobb's job
description did not include negotiating leases on any of Speedemissions' locations. Cobb also
argued that Cobb did not use his position to locate Rose, whom he had never met in his role as
manager, but located Rose through internet research. Because Cobb's duties did not include
negotiating leases, he argued that he was free to purchase the location he was managing for
Speedemissions and had no duty to Speedemissions to disclose his intent to purchase the
As Parlontieri stated in his deposition, however, in addition to hiring, training, operating,
purchasing stickers, and ensuring compliance with all DPS rules and regulations and that all
deposits mere made, Cobb's duties included "look[ing] for new sites for expansion" and
"build[ing] the Grant Road/Jones Road store," and that Cobb received additional "administrative
support" to carry out those duties. Cobb also defends his reasoning by relying on a portion of his
deposition testimony, in which he stated that any actions that were adverse to Speedemissions
were done "on his own time." Yet, Cobb frequently worked more than 50 hours a week and
conceded that he had no set hours, was on call 24 hours a day, seven days a week, and used
his company cell phone to negotiate the purchase with Rose.
The evidence presented by the summary-judgment record supports that Cobb did not negotiate
leases on behalf of Speedemissions as a matter of law. But this does not compel a conclusion
that Cobb was free to pursue his self-interest to compete with Speedemissions by contacting
Rose, its landlord, to propose purchasing one of Speedemissions' most profitable properties
without disclosing that intent to Speedemissions. Given the duty of an employee to deal openly
and to disclose fully to his employer information that affects the employer's business, Daniel, 190
S.W.3d at 185, and considering Cobb's managerial responsibilities, including the responsibility to
look out for new locations, the summary-judgment record raises a fact issue regarding whether
Cobb violated any fiduciary duties owed to Speedemissions. B. The Capital Entities as Fiduciaries
The Capital entities moved for summary judgment on the grounds that their only relationship with
Speedemissions was as landlord and tenant, that they committed no fraud, but, rather, acted
within their rights, that no fiduciary relationship existed between them as a matter of law, and that
Speedemissions' attempt to impose a constructive trust against them fails as a matter of law. We
will affirm if any one of these grounds merited judgment as a matter of law. See Joe, 145 S.W.3d
at 157. In response, Speedemissions argued that the Capital entities were "a sham" because
their "sole reason for existence" was "to do what [Cobb] cannot[,]" specifically, "to perpetrate
fraud, protect crime, evade existing legal duties, or justify wrongs." The response thus presented
the theory that the corporate identity of the Capital entities should be disregarded as the alter
ego of Cobb in order that a constructive trust be imposed against them for the protection of
Speedemissions. (6) See Procom Energy, L.L.A. v. Roach, 16 S.W.3d 377, 381 (Tex. App.--Tyler
2000, pet. denied) (citing Ginther v. Taub, 675 S.W.2d 724, 728 (Tex. 1984) (describing
constructive trust as "a legal fiction" and "creation of equity to prevent a wrongdoer from profiting
from his wrongful acts")).
Texas law, including some statutory provisions, permits piercing the veil of a corporation among
other avenues by which shareholders or others may be held liable for actions of the corporation.
See Howell v. Hilton Hotels Corp., 84 S.W.3d 708, 714 (Tex. App.--Houston [1st Dist.] 2002, pet.
denied) (statutory citation omitted); see Castleberry v. Branscum, 721 S.W.2d 270, 272 (Tex.
1986). When "a corporation is organized and operated as a mere tool or business conduit of
another," the alter-ego theory provides a basis on which to disregard the corporate fiction."
Castleberry, 721 S.W.2d at 272. The theory applies when the corporation and individual are so
unified that separateness of the corporation ceases. Id. (citing First Nat'l Bank v. Gamble, 132
S.W.2d 100, 103 (Tex. 1939)). Alter ego requires a showing of the "total dealings of the
corporation and the individual, including the degree to which . . . corporate and individual
property have been kept separately, the amount of financial interest, ownership and control the
individual maintains over the corporation, and whether the corporation has been used for
personal purposes." Howell, 84 S.W.3d at 714 (quoting Castleberry, 721 S.W.2d at 272).
To support its alter-ego allegations, Speedemissions focused on Cobb's having negotiated and
executed the earnest money contract for the Veteran's Memorial Drive location in his personal
capacity before the Capital entities were formed, but later amended that contract to reflect
ownership in Capital C Enterprises, Ltd. Speedemissions argues that this evidence shows that
Cobb's purpose was to "erect a fictional wall." But the conduct at issue pertains to Cobb and not
the Capital entities; nothing in the summary-judgment record addresses the totality of dealings
between Cobb and the Capital entities; there is but the fact of change of ownership from Cobb to
one of the Capital entities. Accordingly, the summary-judgment record reveal any triable issues
of fact regarding the alter-ego requirements stated in Howell. See id.
Though it is undisputed that Cobb crossed out his own name as purchaser on the
earnest-money contract and changed the purchaser's name to Capital C Enterprises, Ltd., this,
without more, does not give rise to triable issues of fact to support Speedemissions' late-asserted
claim that the Capital entities functioned as Cobb's alter-ego and should, therefore, be subject to
a constructive trust. See Ginther, 675 S.W.2d at 728.
For these reasons, we sustain the portion of Speedemissions' first issue that challenges the
summary judgment rendered in favor of Cobb on Speedemissions' claim that he violated a
fiduciary duty to Speedemissions. We overrule the portion of Speedemissions' first issue that
challenges the summary judgment rendered in favor of the Capital entities for breach of fiduciary
Denied Discovery and Continuance
Speedemissions' second and third issues challenge the denial of its motion to compel discovery
responses and for sanctions and the denial of its motion to continue the summary-judgment
hearing so that those responses might be considered. Speedemissions has not demonstrated
how these rulings by the trial court constitute reversible error. See Tex. R. App. P. 44.1(a)(1)-(2).
Rule 44.1(a) bars this Court from reversing the judgment in a civil case unless "the trial court
made an error or law" that (1) probably caused rendition of an improper judgment or (2) probably
prevented Speedemissions from presenting its case to this Court. See id.
Speedemissions' motion to compel and for sanctions sought responses to discovery requested of
Cobb on the following matters: (1) the source and amount of funds by Cobb, both to fund and to
continue the Capital entities; (2) the source and amount of financing for purchase of the
Veterans Memorial Drive real property from Rose; and (3) all documents referring to or
concerning both sets of funds, including the exhibit to the Capital entities limited partnership
agreement that identifies capital contributions. Speedemissions contends that the trial court's
refusals to compel the requested discovery and to continue the summary-judgment proceeding
prejudiced Speedemissions' ability to respond to Cobb's and the Capital entities' motions for
Yet, while Speedemissions' motion to compel and for sanction and its motion for continuance
were pending, Cobb and the Capital entities had already filed a motion for no-evidence summary
judgment on which they ultimately prevailed. As explained above, Speedemissions did not
respond to the no-evidence motion with competent summary-judgment evidence to create a fact
issue regarding its claimed actual damages--an element common to all of its claims--on which
Speedemissions would have the burden of proof at trial. Speedemissions has not shown that the
requested discovery that "Cobb and his entities had steadfastly and repeatedly refused" would
have produced any evidence on the issue of its claimed actual damages. Indeed,
Speedemissions confirms in its reply brief that the requested discovery is relevant to its
Speedemissions' request for punitive, rather than actual, damages, and that the issue of punitive
damages is "not necessarily germane to the summary judgment proceedings."
Speedemissions' requested discovery had no bearing, therefore, on whether Speedemissions
could raise a fact issue on the actual damages elements of its claims, the very issue on which the
Cobb and the Capital entities had prevailed. Accordingly, we cannot say that the trial court
committed reversible error by refusing to compel discovery requested on other elements of
Speedemissions claims or by refusing to continue the summary-judgment proceedings. Because
Cobb and the Capital entities were entitled to summary judgment under rule 166a(i), the trial
court's ruling neither caused rendition of an improper judgment nor prevented Speedemissions
from presenting its case to this Court. See Tex. R. App. P. 44.1(a)(1)-(2).
We overrule Speedemissions' second and third issues.
We reverse the portion of the portion of the judgment of the trial court that rendered summary
judgment against Speedemissions on its claim that Cobb breached his fiduciary duty to
Speedemissions and remand that claim for trial. We affirm the judgment of the trial court in all
Panel consists of Chief Justice Radack and Justices Jennings and Bland.
1. We refer to appellees jointly as "the Capital enterprises" and to Jason B. Cobb, individually, as
2. Speedemissions has consistently maintained that there was no reason to investigate renewing
the lease, having relied on the Smiths' assurances that Rose would renew the lease
3. Speedemissions could prevail on its claim for breach of a fiduciary duty either by showing that
it was damaged or that Cobb and the Capital entities had benefitted. See Burrow v. Arce, 997
S.W.2d 229, 238-39 (Tex. 1999). Accordingly, lack of evidence that Speedemissions incurred
actual damages would not warrant rendition of a no-evidence summary judgment against
Speedemissions. See id. (recognizing that showing of actual damages not required to prevail on
claim of breach of fiduciary duty) (relying on Kinzbach Tool Co. v. Corbett-Wallace Corp., 160
S.W.2d 509) (Tex. 1942), to reject lack of damage to plaintiff as negating recovery for breach of
fiduciary duty)). Imposition of a constructive trust, as Speedemissions sought here, is, like fee
forfeiture, one of several equitable remedies authorized for claim of breach of fiduciary duty. See
David R. Dow & Craig Smyser, 49 Texas Practice: Contract Law § 2.32 (2005); see also Procom
Energy, L.L.A. v. Roach, 16 S.W.3d 377, 381 (Tex. App.--Tyler 2000, pet. denied) (citing Ginther
v. Taub, 675 S.W.2d 724, 728 (Tex. 1984) (describing constructive trust as "a legal fiction" and
"creation of equity to prevent a wrongdoer from profiting from his wrongful acts")); Meadows v.
Bierschwale, 516 S.W.2d 125, 131 (Tex. 1974) (holding that plaintiff claiming breach of fiduciary
duty may impose constructive trust as remedy to redress wrong or prevent unjust enrichment);
Chien v. Chen, 759 S.W.2d 484, 494 n.6 (Tex. App.--Austin 1988, no writ) (recognizing equitable
remedies, including constructive trust, as remedy for breach of fiduciary duty); Hughes v.
Houston Nw. Med. Ctr., Inc., 680 S.W.2d 838, 843 (Tex. App.--Houston [1st Dist.] 1984, writ ref'd
n.r.e.) (recognizing constructive trust as remedy for breach of fiduciary duty that results in profit
or unjust enrichment to breaching party) (citing Omohundro v. Matthews, 341 S.W.2d 401, 410
4. Speedemissions argues in its reply brief that Cobb and the Capital entities waived any
deficiencies in the Dickerson affidavit by not objecting in the trial court, because their objections
relate to form, rather than substance. We disagree. See Clarendon Nat'l Ins. Co. v. Thompson,
199 S.W.3d 482, 490 n.7 (Tex. App.--Houston [1st Dist.] 2006, no pet.) (stating that "conclusory
statements in affidavits are errors of substance and not form," and thus "not waived on appeal by
failure to object in the trial court").
5. See Tex. R. Civ. P. 11. Speedemissions did not seek to enforce the agreement in the trial
court. See Exito Elec. Co., Ltd. v. Trejo, 142 S.W.3d 302, 306 (Tex. 2004) (stating that filing rule
11 agreement is not request for enforcement).
6. Speedemissions did not assert the alter-ego theory as an affirmative claim in its pleadings.
Yet, Cobb and the Capital entities did not object on that basis when Speedemissions asserted
this theory in response to their motions for summary judgment. Accordingly, we may treat the
theory as if raised by the pleadings. See Roark v. Stallworth Oil & Gas, Inc., 813 S.W.2d 492,
495 (Tex. 1991).