U.S. Kingking, LLC v. Precision Energy Servs., Inc.
555 S.W.3d 200
Tex. App.2018Background
- Amerril Energy LLC (operator) contracted with Weatherford entities for oilfield goods/services for the Seale 1H well; Amerril failed to pay multiple invoices and Weatherford filed a mineral lien and sued for breach of contract, foreclosure, fraud, declaratory relief, and fees.
- US KingKing LLC (KingKing) is a member/parent-related entity of Amerril; Ping He was president of both companies; Weatherford alleged KingKing exercised financial control over Amerril and provided a KingKing balance sheet during Amerril’s credit application.
- Weatherford moved for and obtained partial summary judgments against Amerril on breach and damages and later moved for final summary judgment against Amerril and KingKing on alter-ego, fraud, declaratory relief, foreclosure, and attorney’s fees; KingKing did not respond to the final summary-judgment motion.
- Trial court granted final summary judgment: held Amerril breached contracts, found Amerril was KingKing’s alter ego, made KingKing jointly and severally liable, awarded damages, attorneys’ fees, and foreclosure of Weatherford’s mineral lien against Amerril and KingKing; severed TUFTA claims.
- KingKing moved for new trial and attached additional deposition excerpts; trial court denied the motion. On appeal, the court reviewed whether Weatherford conclusively proved (via summary judgment) alter-ego and actual fraud necessary to pierce the LLC veil.
Issues
| Issue | Plaintiff's Argument (Weatherford) | Defendant's Argument (KingKing) | Held |
|---|---|---|---|
| Whether Amerril is KingKing's alter ego | Evidence shows centralized control: shared officers, common mailing address/website branding, KingKing-controlled bank funding, asset transfers — therefore alter ego as a matter of law | Evidence disputed centralized control and separateness: separate accounts, separate offices/suites, independent accounting/payroll, and absence of undocumented transfers; movant failed to conclusively prove alter-ego | Court: Weatherford did not conclusively prove alter ego on summary judgment; reversal and remand |
| Whether defendants perpetrated "actual fraud" (required by Tex. Bus. Orgs. Code §21.223(b)) to pierce veil | KingKing provided an overstated KingKing balance sheet used to obtain credit; that false financial statement shows dishonesty and intent to deceive | No evidence that Amerril/KingKing knowingly submitted or that Weatherford relied on the balance sheet; no proof timing, transmission, or reliance; no evidence of asset-stripping or intent to defraud for direct personal benefit | Court: Weatherford failed to conclusively establish actual fraud or illegitimate misuse of limited liability; vacated veil-piercing result |
| Validity of declaratory relief, recovery of attorney's fees, and foreclosure of KingKing property | Weatherford argues Agreement and lien support declarations, fees, and foreclosure against KingKing as alter ego | KingKing contends those remedies cannot be imposed absent a valid veil-piercing finding and Weatherford presented no evidence tying KingKing to the Agreement or to ownership of foreclosed property | Court: Because veil-piercing was not established, judgment holding KingKing liable for Amerril’s obligations, awarding fees against KingKing, declaring rights against KingKing, and foreclosing KingKing property was premature and reversed |
| Status of Weatherford's common-law fraud claims | Weatherford asserted fraud claims but sought summary judgment on fraud as well | KingKing noted trial court dismissed fraud claims; Weatherford did not cross-appeal | Court: Fraud claims were dismissed by the final judgment language; Weatherford did not preserve reversal of that dismissal; related relief predicated on veil-piercing fails |
Key Cases Cited
- Travelers Ins. Co. v. Joachim, 315 S.W.3d 860 (Tex. 2010) (standard of review for summary judgment)
- Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844 (Tex. 2009) (movant’s burden on traditional summary judgment)
- City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) (conclusive evidence standard)
- Tryco Enters., Inc. v. Robinson, 390 S.W.3d 497 (Tex. App.-Houston [1st Dist.] 2012) (definition of actual fraud and alter-ego factors)
- SSP Partners v. Gladstrong Invs. (USA) Corp., 275 S.W.3d 444 (Tex. 2008) (centralized control alone insufficient to pierce corporate veil)
- Castleberry v. Branscum, 721 S.W.2d 270 (Tex. 1986) (alter-ego doctrine and equitable considerations)
- Amedisys, Inc. v. Kingwood Home Health Care, LLC, 437 S.W.3d 507 (Tex. 2014) (nonmovant’s right to challenge sufficiency of movant’s summary-judgment proof)
- Metroplex Mailing Servs., LLC v. RR Donnelley & Sons Co., 410 S.W.3d 889 (Tex. App.-Dallas 2013) (alter-ego evidence distinct from proof of actual fraud)