Royal Food & Gas, Inc. D/B/A Honey Stop II, Hoa Truong and Ali Husainat v. Petrofuels Corporation

In The Court of Appeals Ninth District of Texas at Beaumont ____________________ NO. 09-07-001 CV ____________________ ROYAL FOOD & GAS, INC. d/b/a HONEY STOP II, HOA TRUONG, AND ALI HUSAINAT, Appellants V. PETROFUELS CORPORATION, Appellee On Appeal from the 136th District Court Jefferson County, Texas Trial Cause No. D-173,447-A MEMORANDUM OPINION This appeal arises from a summary judgment granted in favor of Petrofuels Corporation ("Petrofuels") and against the appellants, Royal Food & Gas, Inc. (doing business as Honey Stop II), Hoa Truong, and Ali Husainat. Appellants sued Valley Star, Inc. ("Valley Star") and Petrofuels for breach of contract and negligence arising from soil contamination allegedly caused by underground storage tanks owned and maintained by Valley Star. (1) We affirm the trial court's judgment. Background Appellants Truong and Husainat own the property at issue and also own the corporate appellant, Royal Food & Gas, Inc. Appellant Royal owns and operates the Honey Stop II, a convenience store located on the property. The relationship between appellants and Valley Star is governed by a 1982 lease agreement between Royal's predecessor, Nell Durbin (doing business as Honey Stop II) and Valley Star's predecessor, Reed Distributing Company ("Reed"). The lease gave Reed the right to install and maintain self-service fuel dispensing equipment on the property. The lease further allowed the convenience store's owner to operate the equipment and receive a portion of the revenue generated from gasoline sales. Subsequently, Reed assigned its rights under the lease to Valley Star, which also bought the underground storage tanks on the convenience store's property. Appellants contended that Valley Star and Petrofuels were engaged in a joint enterprise and that both were responsible for the alleged contamination at the Honey Stop II. The relationship between Valley Star and Petrofuels arises from shared office space, common principals, and business dealings between the two corporations. Valley Star uses office space at Petrofuels' headquarters. John Weitzel owns shares of stock in both Valley Star and Petrofuels and is the president of both companies. John and Deborah Weitzel own all of the shares of Petrofuels, while John Weitzel and Willis Reed own all the shares of Valley Star. Willis Reed is the majority shareholder of Valley Star, owning eighty percent. Petrofuels owns no Valley Star shares and Valley Star owns no Petrofuels shares. Petrofuels sells fuel on a wholesale basis to companies, including Valley Star, and arranges for transporters to deliver the fuel to locations specified by those companies. Valley Star specified the Honey Stop II as a location to which Petrofuels was to deliver fuel. Petrofuels filed a motion for summary judgment based on lack of duty and lack of joint enterprise. Petrofuels supported its motion with John Weitzel's affidavit and additional summary judgment evidence. Appellants filed a response to Petrofuels' motion for summary judgment and also filed objections to Weitzel's affidavit. Without ruling on the objections, the trial court granted summary judgment to Petrofuels. Appellants raise two issues. First, they contend the trial court erred in granting summary judgment because the court considered improper affidavit evidence, namely, Weitzel's affidavit. Second, appellants contend the trial court erred in granting summary judgment because a material fact issue exists regarding whether Valley Star and Petrofuels were engaged in a joint enterprise. Standard of Review We review summary judgments de novo. Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). Traditional summary judgment, such as that obtained here, is proper if the movant establishes there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. See Tex. R. Civ. P. 166a(c); Knott, 128 S.W.3d at 215-16. When reviewing a traditional summary judgment under Rule 166a(c), the appellate court indulges every reasonable inference in favor of the nonmovant, takes all evidence favorable to the nonmovant as true, and resolves any doubts in the nonmovant's favor. Knott, 128 S.W.3d at 215. "A defendant who conclusively negates at least one of the essential elements of the plaintiff's cause of action is entitled to summary judgment." Little v. Tex. Dep't of Criminal Justice, 148 S.W.3d 374, 381 (Tex. 2004). If the movant establishes a right to summary judgment, the burden shifts to the nonmovant to present controverting evidence that raises a genuine issue of material fact. Huckabee v. Time Warner Entm't Co. L.P., 19 S.W.3d 413, 420 (Tex. 2000). Affidavit In issue one, appellants contend the trial court erroneously considered Weitzel's affidavit because it contains particular statements that are conclusory and are made by an interested party. Petrofuels maintains that Weitzel's affidavit is proper summary judgment evidence and that the trial court did not err in relying upon it. Specifically, appellants complain that Weitzel's affidavit improperly attempts to controvert a 1999 document they assert supports their joint enterprise theory. The document contains a single paragraph on a sheet of paper that has Petrofuels' name and address as a heading. The document states: Petrofuels Corporation P.O. Box 23000 Beaumont, Texas 77720-3000 This letter authorizes Ali Husainat to become the commission operator of the convenience store self service gasoline facility located at 4790 Magnolia, Beaumont, Texas, 77703 until August 24, 1999, subject to paragraph 15 of the lease between Nell Durbin Dba The Honey Stop, lessor and Reed Distributing Co., Lessee, dated August 24, 1982. Executed this 13th day of January, 1999. Lessor: signed by Ali Husainat Lessee: signed by John C. Weitzel Appellants claim the following statements in Weitzel's affidavit are not competent summary judgment evidence: (1) the document's drafter made a mistake; (2) Petrofuels' name should not have been typed at the top of the document; (3) Petrofuels had no involvement in the agreement; and (4) Petrofuels has no interest or involvement with the commission agreement between appellants and Valley Star, or the underlying lease between the parties. We first consider whether the affidavit contains conclusory statements constituting improper summary judgment evidence. "Statements are conclusory if they fail to provide underlying facts to support their conclusions." LeBlanc v. Lamar State College, No. 09-06-340 CV, 2007 WL 2127051, at *5 (Tex. App.-Beaumont July 26, 2007, no pet.); see Chaney v. Corona, 103 S.W.3d 608, 611 (Tex. App.-San Antonio 2003, pet. denied) (finding that affidavit supporting summary judgment was not conclusory despite asserting that a party acted in good faith because affidavit provided underlying facts). We may not consider an affidavit's conclusory statements offered as summary judgment proof when there are no facts to support the conclusions. Rizkallah v. Conner, 952 S.W.2d 580, 587 (Tex. App.-Houston [1st Dist.] 1997, no writ). However, affidavits containing "statements that are incompetent as summary judgment proof may support a motion for summary judgment if the remaining statements contain sufficient factual information to sustain the movant's burden of proof." Id. at 588; see First Nat'l Bank in Munday v. Lubbock Feeders, L.P., 183 S.W.3d 875, 881 (Tex. App.- Eastland 2006, pet. denied). In his affidavit, Weitzel stated numerous facts. He swore that: (1) He is the president of Petrofuels and of Valley Star; (2) Petrofuels sells fuel on a wholesale basis to Valley Star; (3) Petrofuels (a) does not own, operate, or maintain the underground storage tanks located at Honey Stop II, (b) does not lease land from the appellants, and (c) has never entered into an oral or written agreement with any of the appellants; (4) Valley Star uses office space at Petrofuels' headquarters, but the two companies are separate and distinct; Valley Star owns no shares of Petrofuels' stock and Petrofuels owns no shares of Valley Star's stock; (5) Deborah Weitzel and John Weitzel own all of the shares of Petrofuels, while Willis Reed and John Weitzel own all of the shares of Valley Star and Reed is the majority shareholder of Valley Star; and (6) Weitzel signed the document in question on behalf of Reed Distributing Company, the lessee. Weitzel concluded that he was not acting on behalf of Petrofuels when he signed the agreement and that Petrofuels' name should not have been typed at the top of the document. He further concluded that the drafter of the agreement made a mistake in putting Petrofuels' name there and that Petrofuels had no involvement in the agreement. Petrofuels contends that Weitzel's conclusions are supported by his factual statements. We agree. The affidavit established facts to show that Weitzel held a position with each of the two corporate entities and that he would have personal knowledge of the capacity in which he acted when he signed the document in question. Weitzel's statement that he signed the document on behalf of Reed Distributing supports his conclusion that the drafter mistakenly put Petrofuels' name at the top of the document. Further, Weitzel stated that Petrofuels does not own, operate, or maintain the underground storage tanks located at Honey Stop II, and that Petrofuels has never entered into an oral or written agreement with any of the appellants. Thus, we find that Weitzel provided sufficient supporting facts to support his conclusory statements; therefore, the trial court could consider them as summary judgment evidence. See Rizkallah, 952 S.W.2d at 587. Next, we consider appellants' argument that Weitzel's affidavit is improper summary judgment evidence because it contains self-serving statements made by an interested party. "Summary judgment based on the uncontroverted affidavit of an interested witness is proper if the evidence is clear, positive, direct, otherwise credible, free from contradictions and inconsistencies, and could have been readily controverted." Trico Techs. Corp. v. Montiel, 949 S.W.2d 308, 310 (Tex. 1997); see also Tex. R. Civ. P. 166a(c). "'Could have been readily controverted' does not mean that the summary judgment evidence could have been easily and conveniently rebutted, but rather indicates that the testimony could have been effectively countered by opposing evidence." Id. Appellants contend that Weitzel's affidavit contradicts his deposition testimony and that it could not be readily controverted. In particular, appellants assert that his affidavit's claim that the drafter of the document made an error conflicts with his deposition testimony, from which the "factual conclusion of drafter error[] was conspicuously absent. . . ." A comparison of Weitzel's affidavit and the deposition does not reveal any conflict. Weitzel testified in deposition and swore in his affidavit that he signed the document on behalf of Reed Distributing. Appellants do not claim that counsel asked Weitzel at his deposition about who drafted the agreement or why there was a conflict between the heading of the document and the text and signature lines. The record does not support appellant's assertion that Weitzel's statements were inconsistent. Further, we note that Weitzel's deposition provides facts that support the trial court's decision to grant Petrofuels' motion for summary judgment. Weitzel testified that Reed Distributing Company was the lessee under the questioned agreement, that he signed the instrument on behalf of Reed Distributing Company, and that he did not sign the agreement on behalf of Petrofuels. Moreover, by conducting additional discovery, appellants could have sought to controvert Weitzel's claim of drafter error. See Montiel, 949 S.W.2d at 310. Nothing in the record shows that appellants sought discovery after they were served with Weitzel's affidavit. On this record, we conclude that the "interested witness" rule does not render Weitzel's affidavit unreliable summary judgment evidence. We overrule issue one. Joint Enterprise In issue two, appellants maintain a genuine issue of material fact exists about whether Petrofuels and Valley Star were engaged in a joint enterprise. A joint enterprise exists only if the parties involved have (1) either an express or implied agreement regarding the enterprise among the members of the group, (2) a common purpose for the group to be carried out by the parties, (3) a community of pecuniary interest in the common purpose among the members of the group, and (4) an equal right to direct the enterprise and control it. See Tex. Dep't of Transp. v. Able, 35 S.W.3d 608, 613-15 (Tex. 2000). Petrofuels contends that as a matter of law, Petrofuels and Valley Star have no community of pecuniary interest in a common purpose. We agree. In 2003, the Texas Supreme Court clarified the "community of pecuniary interest" requirement. See St. Joseph Hosp. v. Wolff, 94 S.W.3d 513, 527-28 (Tex. 2003). In Wolff, the plaintiffs sued the hospital for a resident's negligent treatment of a patient. Id. at 517. The negligence allegedly occurred while the hospital's resident received training at a different hospital and was under the immediate supervision of another medical institution's agent. Id. The Wolff Court held that the trial court's jury charge misstated the "community of pecuniary interest" requirement by using the language "common business or pecuniary interest." Id. at 529. The Court concluded that "whether parties have a 'common business or pecuniary interest' (as the court's charge inquired) is not the same as whether they have a 'community of pecuniary interest,' as required by Shoemaker and the Restatement." (2) Id. at 528. The Court found that the plaintiff failed to establish a "community of pecuniary interest" necessary to find the hospital liable under a joint enterprise theory. Id. at 534. The Court specifically noted there was no evidence that the defendant hospital and the other medical institution shared any income with each other from the operation of the residency program. (3) Id. at 531, 534. As the Wolff Court explained: Parties to an agreement may have a "common business interest," "a common pecuniary interest," or both, despite lacking a community of pecuniary interest in the purpose of their agreement. For example, both a franchisor and its franchisee may be said to have a common business and pecuniary interest in the retail marketing or sales of the franchised product or service. The franchisee benefits from receiving the income and any resulting profits generated by its sales and by the market value of his or her franchise resulting from its profitability. The franchisor benefits by receiving royalty payments from its franchisee based on those sales and by the enhanced value accruing to its franchise opportunities resulting from the financial success of the existing franchises. Similarly, wholesalers and retailers may also be said to have a common business or pecuniary interest in the retail marketing and sales of their products. Without retail demand for the product they distribute, neither the wholesaler nor the retailer will stay in business very long. And the same could also be said of a retailer's supplier--both the baker and the owner of a hot dog stand benefit financially from the latter's hot dog sales--although the baker's benefit is indirect. However, a franchisor, wholesaler, or supplier usually does not have a "community of pecuniary interest" in the retail sales of its respective franchisees, retailers, or customers. Although the former entities stand to benefit financially from the successful downstream marketing of their goods or services, their interests in those activities are not held in "community" with the members of the latter group because they are not shared "without special or distinguishing characteristics." Id. at 527-28 (citing Ely v. Gen. Motors Corp., 927 S.W.2d 774, 779 (Tex. App.-Texarkana 1996, writ denied) ("When one party is selling vehicles wholesale to another to sell retail, there is not a pecuniary interest in a common purpose.")). In this case, Petrofuels' summary judgment evidence established that it had a wholesale relationship with Valley Star. At his deposition, Weitzel testified that Petrofuels sold fuel to Valley Star and that Valley Star retailed the fuel through a consignment agreement with appellants. Further, Weitzel testified that Valley Star paid Petrofuels for the fuel Valley Star received. Valley Star then collected money from appellants for their retail sale of the fuel and paid appellants a commission based upon sales. In his affidavit, Weitzel stated that Petrofuels sold fuel on a wholesale basis to Valley Star. Petrofuels' summary judgment evidence negated the "community of pecuniary interest" required to show that two parties are engaged in a joint enterprise. See Ely, 927 S.W.2d at 779. Thus, the summary judgment burden shifted to appellants to present controverting evidence. See Huckabee, 19 S.W.3d at 420. Appellants argue that the existence of common owners and officers is evidence sufficient to create a fact issue under a theory of "joint enterprise." We disagree and "reject the mere existence of common owners, officers, and employees as proof of community of pecuniary interest." Omega Contracting, Inc. v. Torres, 191 S.W.3d 828, 850 (Tex. App.-Fort Worth 2006, no pet.). "To hold otherwise would tend to subject companies to joint venture liability whenever they shared an employee, an officer, or even a shareholder." Id. Finally, appellants contend that the 1999 document signed by Weitzel shows the existence of "joint enterprise" between Petrofuels and Valley Star. While the instrument's heading refers to Petrofuels, the heading is not controlling. "No single provision taken alone will be given controlling effect; rather, all the provisions must be considered with reference to the whole instrument." SAS Inst., Inc. v. Breitenfeld, 167 S.W.3d 840, 841 (Tex. 2005) (quoting Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983) and construing a contract). Most importantly, appellants do not explain how the 1999 document is relevant to proving that Valley Star and Petrofuels shared their respective revenues with the other. See Wolff, 94 S.W.3d at 531, 534. Further, the summary judgment evidence showed that Weitzel signed the 1999 document in his capacity as an officer for Reed Distributing Company, Valley Star's predecessor. In summary, Petrofuels presented sufficient evidence to shift the burden of proof on its joint enterprise theory to appellants, and appellants, in their response, failed to demonstrate that a genuine issue of material fact existed regarding whether Petrofuels and Valley Star had a community of pecuniary interest. Thus, we overrule issue two and affirm the trial court's judgment. AFFIRMED. ____________________________ HOLLIS HORTON Justice Submitted on June 28, 2007 Opinion Delivered October 11, 2007 Before McKeithen, C.J., Gaultney and Horton, JJ. 1. Valley Star settled with the appellants and is not a party on appeal. 2. See Shoemaker v. Estate of Whistler, 513 S.W.2d 10, 16-17 (Tex. 1974); Restatement (Second) of Torts § 491 cmt. c (1965). 3. The hospital received Medicare funds based on the number of residents in the program, but no evidence shows it shared this money with the other medical institution. See St. Joseph Hosp. v. Wolff, 94 S.W.3d 513, 531 (Tex. 2003). Further, the hospital and institution did not share any income generated from the operation of the residency program. Id. at 534. Instead, the institution billed for the residents' services and kept all of the revenue. Id.