Vernco Construction, Inc. v. David Nelson, Individually and D/B/A Collective Contracting, a Sole Proprietorship And E.E. Hood & Sons, Inc., 460 S.W.3d 145

Background

Vernco sued E.E. Hood & Sons and David Nelson for multi-million dollar breach-of-contract and tort claims; jury returned verdict and judgment for Vernco.
After suit was filed, Vernco, its president (Guarantor), and Jefferson State Bank executed a forbearance agreement stating the Bank “is the owner of all of [Vernco’s] receivables (and proceeds therefrom), including . . . receivables and claims (including commercial tort claims)” in the litigation.
Respondents moved pretrial to dismiss for lack of standing, arguing Vernco had assigned its claims to the Bank; they sought an evidentiary hearing and relied on the forbearance agreement.
Vernco produced an addendum (authenticated by affidavit) clarifying that the parties never intended the Bank to acquire legal ownership of the lawsuit claims and that Vernco remained the owner; the addendum was part of the pleadings for the motion to dismiss.
A pretrial judge held an evidentiary hearing, found Vernco had standing and denied the motion to dismiss; a successor judge presided over the trial and declined to revisit the ruling; no reporter’s record of the pretrial hearing exists in the appellate record.
The court of appeals relied solely on the four corners of the forbearance agreement (declining to consider the addendum), held Vernco lacked standing, vacated the judgment, and dismissed for want of jurisdiction; the Supreme Court of Texas reversed and remanded for reconsideration because the addendum and pretrial evidence were part of the record before the trial court.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Vernco lacked standing because it assigned claims to the Bank in the forbearance agreement	Vernco: no foreclosure occurred; forbearance intended to preserve the lawsuit as Vernco’s asset; addendum clarifies Bank never acquired legal ownership	Respondents: forbearance language makes Bank the owner of receivables and claims, so Vernco lacks standing	Court: pretrial judge heard evidence and found Vernco had standing; court of appeals erred by ignoring addendum and record evidence; remand for reconsideration
Whether the addendum was part of the appellate record and properly considered	Vernco: addendum was filed and authenticated as part of response to motion to dismiss and before the pretrial judge	Respondents: addendum was not offered in an offer of proof at trial and thus not properly before appellate court	Court: addendum was in the clerk’s record before the pretrial judge and must be considered when reviewing the jurisdictional ruling
Whether the lack of a reporter’s record of the pretrial evidentiary hearing precludes review of the standing ruling	Vernco: pretrial order and pleadings show evidence was filed and hearing occurred; addendum in clerk’s record controls if hearing non-evidentiary	Respondents: absence of reporter’s record undermines appellate review of evidentiary matters	Court: posture suggests an evidentiary hearing occurred but transcript may not exist; nonetheless court of appeals should have considered documents in clerk’s record; remand for further proceedings
Whether Vernco could proceed in a representative capacity for the Bank	Vernco: alternatively alleged standing as assignor acting in representative capacity	Respondents: no evidence Bank authorized Vernco to prosecute claims on its behalf	Court: court of appeals correctly noted absence of evidence of Bank authorization but remand required to consider proper record on standing generally

Key Cases Cited

Patterson v. Planned Parenthood, 971 S.W.2d 439 (Tex. 1998) (standing focuses on who may bring an action)
M.D. Anderson Cancer Center v. Novak, 52 S.W.3d 704 (Tex. 2001) (courts lack jurisdiction to adjudicate disputes brought by parties without standing)
Tex. Ass’n of Business v. Tex. Air Control Bd., 852 S.W.2d 440 (Tex. 1993) (standing and justiciability principles)
Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217 (Tex. 2004) (subject-matter jurisdiction is a question of law; courts may consider evidence on jurisdictional pleas)
Bland Indep. School Dist. v. Blue, 34 S.W.3d 547 (Tex. 2000) (trial courts may hold evidentiary hearings on pleas to the jurisdiction and resolve disputed jurisdictional facts)
Michiana Easy Livin’ Country, Inc. v. Holten, 168 S.W.3d 777 (Tex. 2005) (when all evidence is in clerk’s record and hearing is non-evidentiary, appeal may be decided on clerk’s record alone)
Nootsie, Ltd. v. Williamson Cnty Appraisal Dist., 925 S.W.2d 659 (Tex. 1996) (distinguishing standing from capacity)
Schafer v. Conner, 813 S.W.2d 154 (Tex. 1991) (appellant challenging sufficiency of evidence must present a sufficient record; omissions presumed to support judgment)
Guthrie v. Nat’l Homes Corp., 394 S.W.2d 494 (Tex. 1965) (absence of reporter’s record leads to presumption that evidence supported trial court’s findings)