Albert Lujan D/B/A Texas Wholesale Flower Co. v. Navistar, Inc., Navistar International Corporation, Navistar International Transportation Corp., International Truck and Engine Corporation and Santex Truck Centers, Ltd.
503 S.W.3d 424
Tex. App.2016Background
- In 2005 Albert Lujan (sole proprietor doing business as Texas Wholesale Flower Company) purchased five Navistar CF600 trucks. He later incorporated Texas Wholesale Flower Co., Inc. and, by a 2006 §351 election on corporate tax forms, reported transferring business assets (including trucks) to the corporation in exchange for 100% stock. The corporation later had its charter forfeited in 2008 but was not shown to be formally dissolved.
- Lujan sued Navistar and related defendants in 2009 alleging repeated truck failures and asserting breach of express and implied warranties and coercion claims, seeking multimillion-dollar damages.
- The corporation attempted a late intervention asserting it (not Lujan individually) owned the business assets and damages claims; the trial court struck that intervention as untimely (not challenged on appeal).
- Defendants moved for summary judgment on two grounds relevant here: (1) Lujan lacked individual standing because he transferred the assets to the corporation; (2) warranty disclaimers barred the warranty claims. Defendants also filed a late reply attaching tax returns, bank documents, and transcripts showing the corporation’s tax filings and loans.
- Lujan filed an affidavit denying any transfer of trucks or business assets to the corporation. The trial court struck that affidavit as a sham (and as a sanction), accepted defendants’ late reply evidence, and granted summary judgment on standing (and on warranty disclaimers). The court of appeals affirms based on standing and the sham-affidavit ruling and does not reach the warranty merits.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Lujan had individual standing after the §351 tax election/asset transfer | Lujan: he never transferred legal title to the trucks or business; §351 election does not itself convey legal title under Texas law; his affidavit raises fact issue | Defendants: §351 election and corporate tax returns, counsel’s prior admissions, and corporate banking records prove the assets transferred and that the corporation (not Lujan) owns the claims | Held: Affirmed — evidence established transfer to the corporation; Lujan lacked individual standing and thus could not pursue corporate claims |
| Validity of striking Lujan’s affidavit as a “sham affidavit” | Lujan: affidavit does not contradict his deposition; other materials are unsworn or by counsel and cannot be used to brand his affidavit a sham; Randall controls (deposition not controlling) | Defendants: affidavit contradicted the corporation’s judicial admissions, tax filings, counsel’s in-court statements, and banking records; no explanation given for the change — sham affidavit doctrine applies | Held: Affirmed — trial court did not abuse discretion striking the affidavit under the sham-affidavit rationale |
| Whether the trial court could consider defendants’ late reply evidence and refuse a continuance | Lujan: reply and exhibits were untimely under Tex. R. Civ. P. 166a(d)/(e); hearing should have been reset 21 days | Defendants: reply evidence was responsive to Lujan’s changed position and the court allowed supplemental briefing; court reasonably considered the reply | Held: Affirmed — trial court did not abuse discretion in considering the late reply evidence and denying reset |
| Warranty-disclaimer defense (merits) | Lujan: warranty claims valid (alternative arguments raised) | Defendants: warranty limitations/disclaimers bar claims | Held: Not reached — appellate court disposed of the case on standing so did not decide the warranty merits |
Key Cases Cited
- Masterson v. Diocese of Nw. Tex., 422 S.W.3d 594 (Tex. 2013) (standard of review for summary judgment)
- Joe v. Two Thirty Nine Joint Venture, 145 S.W.3d 150 (Tex. 2004) (summary judgment burdens and review)
- M.D. Anderson Hosp. & Tumor Inst. v. Willrich, 28 S.W.3d 22 (Tex. 2000) (nonmovant’s burden after movant establishes right to summary judgment)
- Randall v. Dallas Power & Light Co., 752 S.W.2d 4 (Tex. 1988) (deposition does not control over an affidavit in summary judgment context)
- Farroux v. Denny’s Rests., Inc., 962 S.W.2d 108 (Tex. App.—Houston [1st Dist.] 1997) (sham-affidavit doctrine permitting disregard of post-deposition affidavit that contradicts earlier testimony without explanation)
- El T. Mexican Rests., Inc. v. Bacon, 921 S.W.2d 247 (Tex. App.—Houston [1st Dist.] 1995) (shareholder cannot sue individually on corporate causes of action)