Nelson v. Vernco Construction, Inc., 406 S.W.3d 374

Vernco Construction sued David Nelson and E.E. Hood & Sons asserting numerous contract and tort claims and sought damages and injunctive relief; judgment below favored Vernco.
Defendants argued at trial (and on appeal) that Vernco lacked standing because Vernco had executed a post-default forbearance agreement assigning its receivables, including the lawsuit, to Jefferson State Bank.
The forbearance agreement (executed after default) expressly identified the bank as owner of Vernco’s receivables and the pending litigation, provided for the bank’s prosecution/funding of the case, and allocated any recovery principally to the bank and guarantor Claflin (with Vernco limited to reimbursement of certain fees/advances).
Vernco referenced, but did not introduce at trial, a supposed supplement to the forbearance agreement it claimed affected ownership; the supplement was not in the record on appeal and the court granted defendants’ motion to strike it from Vernco’s brief.
The trial court denied defendants’ motion to dismiss for lack of subject-matter jurisdiction; on appeal the court reviewed whether Vernco retained a justiciable interest/standing to pursue the claims.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Vernco had standing / whether the trial court had subject-matter jurisdiction after the forbearance agreement	Vernco argued that even if the bank technically owned the suit, Vernco could proceed in its name and asserted a supplement (not admitted) restored rights	Defendants argued the forbearance agreement assigned the litigation to the bank under UCC Article 9, leaving Vernco with no legal or equitable interest and no right to litigate	Court held Vernco assigned its claims to the bank, retained no justiciable interest, lacked standing, and therefore the trial court lacked subject-matter jurisdiction; judgment vacated and case dismissed
Admissibility / evidentiary effect of the forbearance agreement and supplement	Vernco sought to rely on a supplement to show rights were retained or reassigned back to Vernco	Defendants sought admission of the forbearance agreement to show bank ownership and bias; they objected to reliance on the supplement because it was not in the record	Court treated the forbearance agreement (in record) as unambiguous and dispositive; supplement was not admitted at trial or preserved for appeal and was struck from the brief

Tex. Natural Res. Conservation Comm’n v. IT-Davy, 74 S.W.3d 849 (Tex. 2002) (standard for reviewing subject-matter jurisdiction and consideration of evidence)
Tex. Ass’n of Business v. Tex. Air Control Bd., 852 S.W.2d 440 (Tex. 1993) (standing as component of subject-matter jurisdiction)
Bland Ind. School Dist. v. Blue, 34 S.W.3d 547 (Tex. 2000) (court may consider evidence when resolving jurisdictional facts)
State Bar of Texas v. Gomez, 891 S.W.2d 243 (Tex. 1994) (requirements for standing and justiciability)
River Consulting, Inc. v. Sullivan, 848 S.W.2d 165 (Tex. App.—Houston [1st Dist.] 1992) (assignor who parts with all interest cannot maintain suit absent retained interest or representative authority)
Coker v. Coker, 650 S.W.2d 391 (Tex. 1983) (contract interpretation focuses on parties’ objective intent)
Nat’l Union Fire Ins. Co. v. CBI Indus., 907 S.W.2d 517 (Tex. 1995) (no extrinsic evidence to interpret an unambiguous contract)
DeWitt County Elec. Co-op. v. Parks, 1 S.W.3d 96 (Tex. 1999) (plain grammatical meaning given to unambiguous contract language)