Case Information

*0 FILED IN 4th COURT OF APPEALS SAN ANTONIO, TEXAS 2/24/2015 12:40:54 AM KEITH E. HOTTLE Clerk *1 ACCEPTED 04-14-00824-CV FOURTH COURT OF APPEALS SAN ANTONIO, TEXAS 2/24/2015 12:40:54 AM KEITH HOTTLE CLERK NOS.: 04-14-00824-CV

04-15-00006-CV IN THE COURT OF APPEALS

FOR THE FOURTH DISTRICT OF TEXAS AT SAN ANTONIO ROBERT TYSON,

CARL AND KATHY TAYLOR,

LINDA AND RON TETRICK,

JIM AND NANCY WESCOTT, and

PAUL AND RUTHE NILSON,

Appellants/Plaintiffs,

-against-

ROBERT N. FREEMAN II,

DEMAR BOREN

And LORENA YEATES, Husband and

Wife,

Appellees/Defendants.

Appeal from the 198 th Judicial District Court

Bandera County, Texas BRIEF FOR APPELLANTS

CAROLE K. BOYD Attorney for Plaintiffs/Appellants 15751 Highway 16 North Medina, Texas 78055 (830) 589-7587 Fax: (830) 589-7598 E-mail: ckbesq@hctc.net SBN: 00786793 ORAL ARGUMENT REQUESTED

IDENTITY OF PARTIES AND COUNSEL

Appellants/Plaintiffs

Robert Tyson

Carl and Kathy Taylor

Linda and Ron Tetrick

Jim and Nancy Wescott

Paul and Ruthe Nilson

Counsel for Appellants

Carole K. Boyd

15751 Highway 16 North

Medina, Texas 78055

Appellees/Defendants

Robert N. Freeman, II

Demar Boren

Lorena Yeates

Counsel for Appellees

C. Dixon Mosty

Mosty Law Firm

222 Sidney Baker South, Suite 400

Kerrville, Texas 78028

Counsel for Robert N. Freeman, II

Stephen B. Schulte

Stephen B. Schulte, P.C.

Main Plaza One

820 Main Street, Suite 100

Kerrville, Texas 78028

Counsel for Demar Boren and Lorena Yeates

TABLE OF CONTENTS Page IDENTITY OF PARTIES AND COUNSEL …………………………………. 2

TABLE OF CONTENTS ………………………………………………………. 3

INDEX OF AUTHORITIES ……………………………………………………. 4

STATEMENT OF THE CASE ………………………………………………… 5

STATEMENT REGARDING ORAL ARGUMENT …………………………… 6

ISSUES PRESENTED ………………………………………………………… 6

STATEMENT OF FACTS ……………………………………………………. 7

SUMMARY OF THE ARGUMENT …………………………………………… 8

ARGUMENT ………………………………………………………………….. 9

I. The District Court Erred in Rejecting All of Appellants Summary Judgment Evidence ………………………………………………… 9 II. The District Court Erred in Granting Summary Judgments to Appellees Prior to Completion of Integral Discovery ……………... 11 III. The District Court Erred in Denying Appellants’ Motion for Opportunity to Remedy and Rehearing ……………………………. 13 IV. The District Court Erred in Granting Appellees’ Motions For Severance ……………………………………………………… 14 CONCLUSION AND PRAYER ……………………………………………….. 15

APPENDIX (All documents contained in Clerk’s Record and Reporters’ Records)

INDEX OF AUTHORITIES

CASES:

Dubois v. Harris County

866 S.W. 2d 787, 791 (Tex.App.-Houston[14th Dist.], 1993 ……….. 9 McConathy v. McConathy

869 S.W.2d, 341 (1994)……………………………………………… 10,13 Deerfield Land Joint Venture v. Southern Union Realty Co.

758 S.W.2d 608 (Tex.-App. – Dallas 1968, writ denied) …………… 10 Perry v. Houston Independent School District

902 S.W.2d 544 (Tex. App.-Houston, 1995) ……………………….. 10 Kingston v. Helm

82 S.W.3d 755 (Tex. App.-Corpus Christi 2002) …………………... 11 Leyendecker & Associates v. Wechter

683 S.W.2d 369, 375 (Tex. 1984) ………………………………….. 11 McInnis v. Mallia

261 S.W. 3d 197, 200 (Tex. App.-Houston [14th Dist.] 2008 ………. 11 Madison v. Williamson

241 S.W. 3d 145, 155 (Tex.App.-Houston [1s Dist.] 2007, pet. denied 12 Garcia v. Martinez

988 S.W. 2d 219, 222 (Tex. 1999) …………………………………… 12 . OAIC Commercial Assets, L.L.C. v. Stonegate Vil., L.P.

234 S.W.3d 726, 747 (Tex. App.- Dallas 2007, pet. filed) …………… 13 Lynette Miller v. Barry Keyser

90 S.W. 3d 712 (Tex. 2002) ………………………………………….. 13 Castleberry v. Branscum et al .

721 S.W.2d 270 (Tex.1986) ………………………………………….. 13 Morris v. Northrop Grumman Corp.

37 F.Supp.2d 556,580 (E.D.N.Y. 1999) ……………………………… 14 State Dep't of Highways & Pub. Transp. v. Cotner

845 S.W.2d 818, 819 (Tex. 1993) ……………………………………. 14 RULES:

Texas Rules of Civil Procedure, Rule 166(a)(i) ………………………………. 11

Texas Rules of Civil Procedure, Rule 166(a)(f) ………………………………. 13

TO THE HNORABLE FOURTH COURT OF APPEALS:

Statement of the Case

Nature of the case Plaintiffs were life-time lease holders in a senior citizen retirement

Community originally called “Las Aves Retreat” and later, under new ownership, “El Viaje.” CR 38. The leases were issued to Plaintiffs by Demar Boren and Lorena Yeates, husband and wife managers at the premises, under the authority of Robert N. Freeman, II, attorney, manager and a prior owner of Medina Livestock Sales Company, LTD. CR 38, 39. The new owners, through Bankruptcy Court, had the leases declared unenforceable and, under Texas law, deemed to be tenancies at will. CR 40, 293- 316. The Plaintiffs were issued letters of termination of their leases and had to vacate the premises or face eviction. CR 42, 318. Suit below is for violation of the DTPA, Common Law Fraud, Statutory Fraud, Fraudulent Inducement, Negligent Misrepresentation, Negligence and Gross Negligence against individuals and the entity Medina Livestock Sales Company, LTD. CR 36, Tab 10. 198 th Judicial District Court, Bandera County

Trial Court

Hon. Rex Emerson

Trial Court’s

Disposition Plaintiffs’ summary judgment evidence was excluded (CR 328-

331, Tab 26), summary judgment granted to all individual Defendants (CR 448 (Tab 30; CR 449, Tab 31) and *6 individuals Defendants’/Appellees’ motions for severance were granted. CR 490, Tab 40; CR 494,495. Plaintiffs’/Appellants motion for Remedy and Rehearing was denied. CR 491, Tab 41.

Statement Regarding Oral Argument Because of the several rulings, individual defendants motions having been brought simultaneously but Orders being issued at different times, and the confusion that

has surrounding the identification of Appellees in this matter, as well as other

administrative issues which hopefully will be resolved shortly, it is felt for the Court to

have these matters clarified and put into time sequence, and to craft an opinion that is

consistent with the issues and facts, oral argument would be appropriate and helpful. The

issues here are important ones, worthy of the Court’s full consideration. The District

Court’s Orders denying summary judgment evidence, denying re-hearing and granting

severance in a case where clearly the case law and Rules dictate otherwise is erroneous

and should be corrected in the administration of justice.

Issues Presented 1. Did the District Court err in rejecting Plaintiffs’ Summary Judgment evidence? 2. Did the District Court err in granting Summary Judgment to all individual Defendants before completion of discovery?

3. Did the District Court err in denying Plaintiffs’ Motion for Opportunity to Remedy and for Rehearing?

4. Did the District Court err in granting severance of individual Defendants? *7 Statement of Facts

Appellants’ First Amended Petition alleges that Appellants were life-time leasees of premises which they leased in a senior citizen community located in Medina, Texas,

then known as Las Aves Retreat, paying on average a lump sum of $25,000 per lot. On

the lot the Appellants were able to place a park model home, sheds, decks, or simply park

a motor home there. Each lot had utilities and became a permanent residence for

Appellants who were elderly veterans on social security incomes. Maintenance fees were

fixed at $500/year which enabled Appellants to know what their retirement expenses

would be to a great extent, for the remainder of their lives. CR 38-40, Tab 10.

Demar Boren and Lorena Yeates (hereinafter “Boren and Yeates”), husband and wife, were the initial management team for the premises, hired by and under the

supervision and authority of Robert N. Freeman, II (hereinafter “Freeman”.) Boren and

Yeates marketed the lots and sold to the Appellants the lifetime leases on behalf of

Freeman and his company and at his direction, assuring Appellants that they were legal

and binding. CR 39, 42 (Tab 10). Freeman was represented to Appellants as a real estate

attorney from Laredo, and as owner of the premises. Appellants did not have legal

representation when they signed the lease agreements, but felt assured of the legality of

the documents since they knew Freeman to be a real estate attorney. Freeman visited the

property from time to time and met with some of the Appellants. CR 43-48, Tab 10.

Eventually, in or about 2008, Robert Freeman effected a sale of the premises to an entity

known as El Viaje Retreat, LLC, owned and operated by Susan Venus and Anne

Blankenship, taking back a purchase money mortgage. CR 39-40, Tab 10. He then

transferred title of the premises from Medina Livestock Sales, Company, LTD to Listo

Corporation, another of his entities.

In September 2012 the new owners filed for bankruptcy in order to try to avoid the leases of Appellants and others who held lifetime leases at El Viaje. In July 2013

Judge Craig A. Gargotta held that the lifetime leases of Appellants and other residents of

the retreat were not legal in Texas, but were deemed to be tenancies at will and could be

rejected and terminated. CR 292-317, Tab 23. Shortly thereafter, the Appellants were

given written notice that their leases were terminated. CR 318, Tab 23. Appellants lost

their life’s savings as they could not get their investments back on their homes that they

had established over the years and found themselves forced to move from the retreat,

losing their investments and sustaining substantial damages. CR 42-48, Tab 10.

Appellants brought the instant litigation alleging violation of the Deceptive Trade Practices Act, and for Common Law Fraud, Statutory Fraud, Fraudulent Inducement,

Negligent Misrepresentation, Negligence, and Gross Negligence. CR Tab 10

Summary of the Argument Attorneys for individual Appellees both moved for summary judgment in District Court, and moved to have Appellants’ summary judgment evidence excluded. Argument

was made by the attorney for Freeman, Dixon Mosty, that excerpts from deposition

transcripts were not authenticated and thus could not be summary judgment evidence. He

also objected to a Bankruptcy Court transcript and resultant Order, and an

unauthenticated letter from the attorney for the Debtor in Bankruptcy (the subsequent

owner of the premises then known as El Viaje Retreat, LLC) to residents at El Viaje

Retreat, including Appellants.

The Court, having heard argument from Mr. Mosty, having reviewed his submission which was handed to the court and counsel at the start of the hearing, and

taking into account the case being cited by Mr. Mosty upon which his argument was

based, rejected Appellants’ evidence and thus granted summary judgments to all

individual plaintiffs.

The case relied upon by Mr. Mosty was a 1993 Court of Appeals case. In January 1994 the Texas Supreme Court, taking up the same issue, found authentication

unnecessary. Appellants then moved for an opportunity to cure (the unauthenticated

letter, a form defect) and re-hearing on having all evidence exclude. Appellants’ motion

was wrongfully denied.

Individual defendants, at the same hearing, had moved for severance; their motions were wrongfully granted.

Appellants underlying matter was thus eviscerated, as it was the individuals who have, pursuant to case law, the liability, and who also have the means to compensate

Appellants for the resultant damages at the hands of these individuals.

Argument 1. The District Court Erred in Rejecting all of Appellants’ Summary Judgment Evidence.

The District Court ruled that all of Appellants’ Summary Judgment Evidence should be rejected, presumably pursuant to Appellees’ argument. No explanation was offered by

the Court. By doing so, Appellants had virtually no means of opposing the summary

judgments. The argument of counsel for Freeman, C. Dixon Mosty, was based upon the

case of Dubois v. Harris County, 866 S.W. 2d 787, 791 (Tex.App.-Houston[14 th Dist.],

1993.) which found unauthenticated excerpts from transcript to be inadmissible as

evidence for summary judgment proofs. In January, only a month after that decision, the

Supreme Court of Texas, in McConathy v. McConathy, 869 S.W.2d, 341 (1994) held

otherwise, overturning the underlying case of Deerfield Land Joint Venture v. Southern

Union Realty Co., 758 S.W.2d 608 (Tex.-App. – Dallas 1968, writ denied) relied upon by

Dubois. Thus, Appellees cited bad law and the District Court, without comment or

explanation, ruled against Appellants and dismissed all of their evidence. RR (Paula

Beaver) 10. Counsel for Appellees also argued that Appellants could not use their own

answers to discovery as summary judgment evidence. However, a non-movant may use a

movant’s own exhibit against the movant to establish the existence of a fact question.

Perry v. Houston Independent School District, 902 S.W.2d 544 (Tex. App.-Houston,

1995). Appellants had argued that they believed the corporate entity and Freeman to be

one and the same. Anything argued by counsel for Appellants after their Summary

Judgment evidence was excluded, though, was not able to be considered (Rule 166a[i]).

There were issues raised by Appellees’ counsel contesting individual liability and statute

of limitations. These issues were heard by the Judge, but no response by

Plaintiffs/Appellants’ counsel could be considered, and there were valid and important

responses to be considered. Although counsel attempted to address the issue of statute of

limitations, because the Appellants’ evidence was not considered, it remained to be

proven that Plaintiffs/Appellants only knew of the illegality of their leases when the

Bankruptcy Judge opined that they were not enforceable leases in Texas, but rather

tenancies at will and that they could be terminated and were unenforceable. This came

about well within the statute for Plaintiffs’ time frame to bring suit. Likewise, there was

case law stating that individuals had liability whether they knew or not that what they

were promoting was illegal. It is well established in Texas case law that a corporate

agent can be personally liable for tortious acts which he directs or participates in during

his employment. Kingston v. Helm, 82 S.W.3d 755 (Tex. App.-Corpus Christi 2002);

Leyendecker & Associates v. Wechter, 683 S.W.2d 369, 375 (Tex. 1984). This was not

able to be introduced or considered as Plaintiffs/Appellants had no admissible evidence,

and without such, Summary Judgments had to be granted against them.

Defendants/Appellees motions, also, were defective in that they were not specifically address or labeled as No-Evidence Motions. Plaintiffs/Appellants therefore

had no notice of what their burden of proof was on going into the hearing, and assumed

that they were traditional motions for Summary Judgment. The Court, though, treated

them as No-Evidence Motions. This was an additional factor in the devastating effect of

excluding Plaintiffs/Appellants’ evidence.

2. The District Court Erred in Granting Summary Judgments to Appellees prior to Completion of Integral Discovery.

Appellants, both in their opposition papers and in open Court, stated that Summary Judgment was not ripe because the deposition of Freeman, a critical event to this matter,

had not yet been taken. CR 289, 290; RR (Paula Beaver) 16-18. Appellants did not

request a continuance because of reliance upon case law and Rules which denote when

summary judgment is appropriate. Texas Rules of Civil Procedure, Rule 166(a)(i) allows

for a summary judgment motion to be made after “adequate time for discovery.”

According to the comment to Rule 166(a)(i), “a discovery period set by pretrial order

should be adequate opportunity for discovery unless there is a showing to the contrary,

and ordinarily a motion under paragraph (i) would be permitted after the period but not

before.” McInnis v. Mallia, 261 S.W. 3d 197, 200 (Tex. App.-Houston [14 th Dist.] 2008,

no pet. The trial court’s determination that there has been adequate time for discovery is

reviewed above for abuse of discretion. In the instant matter, there was no statement

whatsoever from the District Court as to whether summary judgment was ripe because of

adequate time for discovery having been had. A trial court abuses its discretion if it acts

in an arbitrary or unreasonable manner ‘‘without reference to any guiding rules or

principles.” Madison v. Williamson, 241 S.W. 3d 145, 155 (Tex.App.-Houston [1s Dist.]

2007, pet. denied (quoting Garcia v. Martinez, 988 S.W. 2d 219, 222 (Tex. 1999). When

Summary Judgment motions were made, Summary Judgment relief was not appropriate;

the discovery period had not run, and the deposition of Freeman was of upmost

importance to the determination of his liability and authority of his management. Until

these issues were clarified, it was impossible to determine which individual

defendants/Appellees might have liability, and to what extent. Additionally, when

depositions of Boren and Yeates where sought by counsel for Appellants, a motion was

made to quash. CR 81-90, Tag 19. Those depositions were sought prior to taking the

deposition of Freeman for strategic purposes, and the refusal for compliance with agreed

upon dates was based upon the statement by counsel that they would be a waste of time.

All other written discovery had been taken. When Appellants finally set a date when no

response came from Appellees as to a date, all individuals made a motion to quash. When

the Court asked if Appellants had requested a continuance by motion, it was answered

that, there was no formal request for a continuance in opposition papers, but it was

stressed that discovery was not complete and Summary Judgment, therefore, was not ripe

as there were facts in dispute that required the deposition of Freeman. RR (Paula Beaver)

16-28. In any event, no continuance was granted, and there was no factual determination

or further discussion by the Court as to why Summary Judgment would be granted

notwithstanding incomplete discovery.

3. The District Court Erred in Denying Appellants’ Motion for Opportunity to Remedy and Rehearing.

By having rejected Appellants’ Summary Judgment evidence in its entirety, the District Court had no evidence before it in opposition to the Summary Judgment motions

brought by the individual defendants. However, the Court had an opportunity upon the

return date of Appellants’ motion for Remedy and Rehearing to correct their mistake of

law, and allow Appellants a rehearing on the Appellees’ motions. OAIC Commercial

Assets, L.L.C. v. Stonegate Vil., L.P., 234 S.W.3d 726, 747 (Tex. App.- Dallas 2007, pet.

filed) (“The sole purpose of a motion for rehearing is to provide the court an opportunity

to correct any errors on issues already presented.”) At that time, Appellants made the

court aware of case law evidencing the fact that Appellants’ Summary Judgment

evidence was admissible (RR 4-5: McConathy v. McConathy , 869 S.W.2d 341 [Tex.

1994]) , as well as case law whereby Appellants had viable claims against individual

defendants for liability (RR 12: Lynette Miller v. Barry Keyser, 90 S.W. 3d 712 [Tex.

2002]) See also Castleberry v. Branscum et al ., 721 S.W.2d 270 (Tex.1986.). In other

words, Appellants’ desire for a rehearing was not rhetorical in nature, but a valid

assertion that the individual defendants must remain in the case in chief. The Court also

had the opportunity to allow Appellants to remedy any defects of form. TRCP 166(a)(f).

The District Court Judge stated in Court on the motion that he had reviewed the transcript of Lorena Yeats and that his holding still stood as previously Ordered. The

Judge did not state that he reviewed any other of the evidence submitted by Appellants

which was previously rejected, or give any rationale for his holding.

The mistake of law upon which Appellants’ evidence was excluded not only denied Appellants the ability to defend the Summary Judgment motions, but highly

prejudiced the outcome of their subsequent motion for rehearing and remedy. The

District Court seemingly was not going to change its ruling no matter what evidence was

then set forth before it by Appellants. This amounted to a continued abuse of discretion

by the District Court in disregard of case law, Rules and procedure. Appellants should

have been granted a rehearing as counsel for Freeman’s admission that there was

subsequent case law which invalidated his own submission of case law was clearly the

deciding element in the Court’s holdings on Summary Judgment and on that basis alone a

rehearing should have been granted.

4. The District Court Erred in Granting Appellees’ Motions for Severance. Severance should only be granted if it will further the administration of justice. “Relevant considerations in determining whether to sever a party or claim may include 1) whether the claims arise out of the same transaction or occurrence; 2) whether the claims present common questions of law or fact; 3) whether judicial economy would be served; 4) whether prejudice could be avoided through severance; and 5) whether the separate claims require different witnesses and documentary proof.” Morris v. Northrop Grumman Corp., 37 F.Supp.2d 556,580 (E.D.N.Y. 1999). A claim may be properly severed only if: (1) the controversy involves more than one cause of action, (2) the severed claim is one that would be proper if independently asserted, and (3) the severed claim is not so interwoven with the remaining action that they involve the same facts and issues. State Dep't of Highways & Pub. Transp. v. Cotner, 845 S.W.2d 818, 819 (Tex. 1993). In this case the severance of the claims *15 against the individual defendants were not only inextricably interwoven with the remaining action, but could not stand along, as all individuals were agents of the corporate entity. The severance was only to make the summary judgments in favor of the individuals instantly appealable and to divide the litigation into three separate actions. In doing so, as was well known to opposing counsel and the Court, it placed an insurmountable financial burden on Appellants. Appellees are fully aware that Appellants have lost their life’s savings over this situation and have a financial hardship which precludes such expenditures. Appellants are seeking justice on a virtual shoestring, and to have multiple cases to be appealed at once would be financially impossible for them. Appellants have alleged serious damages at the hands these individual defendants which, by law, are compensable. However, if the Court makes it untenable for them to proceed, then justice would go out the window, and that is not the intention of the Rules, the law, or this judicial system. There was no compelling reason for severance except to create a hardship for Appellants, severance was an abuse of discretion, and should not have been granted. Conclusion and Prayer

For these reasons, Appellants request that this Court reverse the District Court’s Orders granting Appellee’s motions for Summary Judgment and for Severance and

specifically Deny Appellees Summary Judgment and Severance Motions.

In the alternative, if the Court does not specifically Deny these motion, Appellants request that this Court reverse the District Court’s Order Denying Appellants’ Motion for

Remedy and Rehearing, and allow Appellants an opportunity to amend their evidence

and for a rehearing on the Summary Judgment motions. Appellants also request all other

relief to which they may show themselves justly entitled.

February 24, 2015 Respectfully Submitted,

/S/Carole K. Boyd State Bar Number: 00786793 15751 Highway 16 North Medina, Texas 78055 (830) 589-7587 Fax: (830) 589-7598 ATTORNEY FOR APPELLANTS CERTIFICATE OF SERVICE

I certify that on February 24, 2015 the within Brief for Appellants was served upon opposing counsel by e-filing and email as follows:

C. Dixon Mosty

Mosty Law Firm

Email: cdmosty@mostylaw.com

Stephen B. Schulte

Stephen B. Schulte PC

Email: sschulte@schultepc.com

/S/ Carole K. Boyd