Daniel v. Travis and Travis Brothers Building Automation Texas, LLC v. Tommy Travis
09-20-00116-CV
| Tex. App. | Apr 21, 2022Background
- In 2007 brothers Daniel and Tommy formed Travis Brothers Building Automation Texas, LLC and executed an Operating Agreement allocating initial capital contributions of $6,000 (Daniel) and $5,000 (Tommy) and tying membership interests to those contributions.
- Tommy sued in 2018 seeking involuntary dissolution, appointment of a receiver, and injunctive relief, alleging (among other things) a 50/50 ownership, deadlock, mismanagement, and improper use of company funds.
- Appellants (Daniel and the LLC) responded that the Operating Agreement shows Daniel owns 6/11 (54.55%) and Tommy 5/11 (45.45%), so no deadlock exists; they also disputed Tommy’s evidentiary submissions.
- Tommy moved for traditional summary judgment to wind up the company under Tex. Bus. Orgs. Code § 11.314; the trial court overruled evidentiary objections, found the members each held 50%, found a managerial deadlock, and ordered winding up.
- On appeal the Ninth Court of Appeals held that genuine fact issues remain about ownership percentages and the three statutory bases for involuntary winding up, and therefore reversed and remanded.
Issues
| Issue | Plaintiff's Argument (Tommy) | Defendant's Argument (Daniel) | Held |
|---|---|---|---|
| 1. Trial court abused discretion by overruling appellants’ objections to Tommy’s summary‑judgment evidence | Tommy relied on his petition, bank and AmEx records, tax lien notices, and hearing transcript to support summary judgment | Daniel argued much of Tommy’s evidence was inadmissible or untimely and objected to reliance on pleadings and certain documents | Court assumed admissibility for argument’s sake but held that even if admissible, summary judgment still failed on the merits; did not find reversible error on objections alone because genuine fact issues remain |
| 2. Whether Tommy proved entitlement to involuntary winding up under Tex. Bus. Orgs. Code § 11.314 (three statutory prongs) | Tommy argued one or more statutory grounds were met: economic purpose likely frustrated; another owner’s conduct made business impracticable with him; impossible to carry on in conformity with governing documents | Daniel (and evidence) showed company profitable, taxes current or liens released, Controller’s affidavit and operating agreement indicate majority ownership and procedures to address disputes; argued statute not satisfied as a matter of law | Court held Tommy failed to conclusively prove any § 11.314 ground; genuine issues of material fact exist on all three prongs, so summary judgment improper |
| 3. Whether each brother owns 50% and deadlock exists | Tommy asserted 50/50 ownership (tax returns, testimony of nonmonetary contributions) and that Daniel’s actions created deadlock | Daniel pointed to Operating Agreement and Controller testimony showing ownership based on $6,000/$5,000 contributions (6/11 vs 5/11) and that tax returns were erroneous | Court held genuine fact issues exist about ownership percentages and whether a deadlock exists; trial court erred in finding 50/50 ownership as a matter of law |
Key Cases Cited
- Starwood Mgmt., LLC v. Swaim, 530 S.W.3d 673 (Tex. 2017) (standard for reviewing exclusion of summary‑judgment evidence and expert affidavit principles)
- Shell Oil Co. v. Writt, 464 S.W.3d 650 (Tex. 2015) (de novo review of summary judgment; view evidence in light most favorable to nonmovant)
- City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) (court must indulge every reasonable inference and resolve doubts against movant)
- JLB Builders, L.L.C. v. Hernandez, 622 S.W.3d 860 (Tex. 2021) (movant’s burden in traditional motion for summary judgment)
- FM Props. Operating Co. v. City of Austin, 22 S.W.3d 868 (Tex. 2000) (when trial court fails to specify grounds, appellate court will affirm if any ground meritorious)
- Buck v. Palmer, 381 S.W.3d 525 (Tex. 2012) (undisputed evidence is conclusive only if reasonable people could not differ)