Tami Donald, Jerry Moore, and Summit Spring Water Company, Inc. v. Brian Rhone, BMR Distributing, Inc., Chris Rhone, and Rhone Water Company, Inc. D/B/A Frosty's Water, 06-15-00052-CV

Background

Sellers Tami Donald and Jerry Moore (and plaintiff corporation Summit Spring Water Co., Inc.) executed a 2007 asset purchase agreement selling bottling assets for $240,000 payable $5,000/month. The APA names Donald and Moore as “Seller”; it does not mention Summit Spring.
Buyers Brian and Chris Rhone (and related entities) made some payments in 2007 but largely defaulted; plaintiffs repossessed remaining assets in 2008 and sold them. Plaintiffs sued in October 2008 for unpaid purchase price and related relief.
At the start of the 2015 bench trial, before plaintiffs presented witnesses, defendants moved and the trial court granted a directed verdict disposing of plaintiffs’ claims (judgment: plaintiffs take nothing). The court then tried defendants’ counterclaim under Tex. Bus. & Com. Code ch. 9 and awarded $1,000 in statutory damages plus attorneys’ fees and costs.
Defendants’ counterclaim invoked chapter 9 (UCC Article 9) remedies for alleged failures in disposition of collateral (notice and calculation requirements). The trial court found plaintiffs violated sections including 9.610 and 9.616 and treated the APA as creating a security interest governed by Article 9.
Plaintiffs appeal arguing (1) the directed verdict was premature and deprived them of presenting their case; (2) chapter 9 does not apply because the APA was not a secured-transaction/security-interest; and (3) section 9.625 does not authorize an award of attorneys’ fees, so the fee award was improper.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
1. Premature directed verdict	The court erred by granting a directed verdict before plaintiffs had an opportunity to present evidence; no pleading limited damages to nonrecoverable amounts.	Directed verdict was justified because Summit Spring’s charter had been forfeited, so plaintiffs (as individual sellers) lacked standing or otherwise were not proper parties.	Trial court granted directed verdict; on appeal plaintiffs argue reversible error under Texas precedent (Tana Oil).
2. Applicability of UCC ch. 9	The APA did not create a security interest or secured transaction; defendants repeatedly admitted there was no security interest; thus chapter 9 remedies do not apply.	The court found the APA’s seller repossession remedy constituted a secured transaction/collateral subject to Article 9 and that plaintiffs failed required notice duties.	Trial court concluded the APA created a security interest and awarded statutory damages under §9.625; plaintiffs contest sufficiency of evidence and legal basis.
3. Attorneys’ fees under §9.625	§9.625 does not authorize recovery of attorneys’ fees; plaintiffs contend fees cannot be awarded absent express statutory or contractual authorization.	Defendants pleaded and the court awarded attorneys’ fees citing §9.625(b).	Plaintiffs argue the fee award was improper because Texas precedent (Guex) rejects implying fee recovery from §9.625(b) language; trial court nonetheless awarded fees.
4. Sufficiency/credibility findings re: ownership transfer	Plaintiffs contend the APA names them as sellers and they intended to show prior transfer of assets from Summit Spring to them; the court’s adverse credibility/findings lacked evidentiary basis given timing of directed verdict.	Court relied on plaintiffs’ prior affidavits, pleadings, and judicial admissions to find Summit Spring was the seller and that plaintiffs’ liquidation transfer claim was not credible.	Court concluded Summit Spring was the true seller and rejected plaintiffs’ transfer narrative; plaintiffs challenge those factual findings and timing of adjudication.

Key Cases Cited

Tana Oil & Gas Corp. v. McCall, 104 S.W.3d 80 (Tex. 2003) (directed verdict before plaintiff rests is improper absent narrow pleading-based exception)
First City Bank-Farmers Branch v. Guex, 677 S.W.2d 25 (Tex. 1984) (statutory language awarding "any loss" does not imply recovery of attorney's fees absent express authorization)
In re Nalle Plastics Family Ltd. P'ship, 406 S.W.3d 168 (Tex. 2013) (reiterating American Rule: attorneys’ fees allowed only by statute or contract)
Claxton v. Upper Lake Fork Water Control & Improvement Dist. No. 1, 246 S.W.3d 381 (Tex. App.—Texarkana 2008) (summary-judgment standards and reversible-error principles)
Drew v. Harrison County Hosp. Ass’n, 20 S.W.3d 244 (Tex. App.—Texarkana 2000) (no-evidence summary-judgment standard)
Fin & Feather Club v. Leander, 415 S.W.3d 548 (Tex. App.—Texarkana 2013) (de novo review of directed verdict)
John v. Marshall Health Servs., Inc., 91 S.W.3d 446 (Tex. App.—Texarkana 2002) (standard of review for directed verdict)
State Office of Risk Mgmt. v. Martinez, 300 S.W.3d 9 (Tex. App.—San Antonio 2009) (directed-verdict reversal where plaintiff not allowed to present case)
Smith v. Deneve, 285 S.W.3d 904 (Tex. App.—Dallas 2009) (party pleading a specific ground for fees is limited to that ground)