Hydroscience Technologies, Inc v. Hydroscience, Inc, Whitehall Corp, Aviation Sales Company
401 S.W.3d 783
| Tex. App. | 2013Background
- HSI acquired 818,182 shares of HTI in 1996 via Asset Contribution Agreement; Whitehall approved the deal and issued stock to HSI.
- Stock certificate remains in HSI’s possession with transfer restrictions; no endorsement, no registration, and no attorney opinion obtained.
- In 2001 mediated settlement between HTI and Whitehall allegedly contemplated return of stock, but the Memorandum of Settlement omits stock transfer terms.
- HTI paid $100,000 under the 2001 memorandum, believing the stock had been transferred back; HTI later learned otherwise.
- HSI sued for ownership of the stock and to inspect HTI books; after multiple summary judgments, a final judgment incorporating three partial judgments awarded HSI ownership and fees.
- HTI appealed, challenging standing, the partial summaries, the final judgment, and attorneys’ fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether HSI had standing to seek a declaratory judgment | HSI pleaded ownership and possession of the stock certificate. | HTI contends ownership is in Whitehall/AVS rather than HSI. | HSI had standing; pleaded a real controversy and justiciable interest. |
| Whether HSI conclusively proved ownership of the stock as a matter of law | HSI’s possession, the 1996 Asset Contribution Agreement, and documents show ownership. | Possession and related evidence are insufficient due to mediation evidence. | HSI conclusively proved ownership as a matter of law; HTI failed to raise a genuine issue. |
| Whether mediation privilege bars use of HTI’s evidence regarding stock ownership | Mediation records can be used under certain circumstances to prove ownership. | HTI’s mediation evidence should be admissible to show stock transfer intent. | Mediation privilege applies; HTI may not rely on mediation evidence to create a fact issue about ownership. |
| Whether parol evidence could be used to contradict the consent judgment | Parol evidence may be used to interpret the settlement terms. | Parol evidence cannot attack a final consent judgment. | Parol evidence cannot collaterally attack the consent judgment; HTI could not rely on it to create a stock-ownership fact issue. |
| Whether HTI has other affirmative defenses (ambiguity, mutual mistake, fraud) to defeat summary judgment | HSI’s ownership is undisputed; defenses fail in light of mediation privilege and parol evidence rules. | HTI contends ambiguity, mutual mistake, and fraud create a fact issue. | All affirmative defenses failed; mediation and parol evidence rulings foreclose those defenses. |
Key Cases Cited
- Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547 (Tex. 2000) (standing prerequisite and jurisdictional inquiry)
- DaimlerChrysler Corp. v. Inman, 252 S.W.3d 299 (Tex. 2008) (standing must be determined before merits)
- Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440 (Tex. 1993) (general standing framework)
- Prize Energy Res., L.P. v. Cliff Hoskins, Inc., 345 S.W.3d 537 (Tex. App.—San Antonio 2011) (standing requirements and concrete injury)
- Avary v. Bank of America, N.A., 72 S.W.3d 779 (Tex. App.—Dallas 2002) (mediation confidentiality carve-out for independent torts)
- In re Empire Pipeline Corp., 323 S.W.3d 308 (Tex. App.—Dallas 2010) (mediation privilege bars discovery to enforce settlement terms)
- Flood v. Katz, 294 S.W.3d 756 (Tex. App.—Dallas 2009) (mediation privilege context and evidence rule)
- Heritage Life Ins. Co. v. Heritage Group Holding Corp., 751 S.W.2d 229 (Tex. App.—Dallas 1988) (final judgments and settlement context not to be collaterally attacked)