Callaway v. Robert Lee State Bank

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ROY CALLAWAY, Appellant v. ROBERT LEE STATE BANK, Appellee

No. 11-20-00047-CV

Court of Appeals of Texas, Eleventh District

January 13, 2022

On Appeal from the 441st District Court Midland County, Texas Trial Court Cause No. CV46686

Panel consists of: Bailey, C.J., Trotter, J., and Williams, J.

MEMORANDUM OPINION

W BRUCE WILLIAMS JUSTICE

This appeal arises from a dispute about the sale of a drilling rig. The case involves a claim that a bank holding a security interest in the drilling rig committed a conversion or conspired with others to defeat the plaintiff's alleged ownership interest in the rig.

Appellant Roy Callaway, sued multiple parties under conversion and civil conspiracy theories. One of these parties was Robert Lee State Bank (the Bank), the appellee in this case. The Bank filed a no-evidence motion for summary judgment (the Motion). In response to the Motion, Appellant failed to raise a genuine issue of material fact by responding with evidence demonstrating any alleged conversion, by the Bank. The trial court granted the Motion, and this appeal followed. Appellant raises fourteen issues on appeal. In the first and second issues, he alleges that the trial court erred in granting the no-evidence motion for summary judgment with respect to the conversion and civil conspiracy claims. In the remaining issues, Appellant alleges errors in the exclusion of evidence and globally asserts that those errors were harmful. We affirm.

Factual and Procedural History

A. Purchase and Repair of Used Drilling Rig

Appellant had an agreement with Latigo Pipe and Equipment (Latigo), which was owned by Tommy Parr (Tommy), to repair a drilling rig for either future sale or use. Latigo purchased the drilling rig, and the rig became part of Latigo's pledged collateral on a loan from the Bank.

B. Agreed Ownership of Rig

Appellant and Tommy signed an agreement on September 30, 2005, which contained all pertinent details about the purchase and ownership of the drilling rig- along with 3, 000 feet of drilling pipe and a mud pump.^[1] Per the agreement, Latigo would own the drilling rig until all investments and expenses for the rig were paid. Following the payment of all expenses, the listed equipment would belong to Latigo and Appellant as equal partners (50% each). The equipment was to be stored in Appellant's yard, and Appellant was to make all necessary repairs. Latigo would hold title to the equipment until such time when all expenses were recouped by both parties. Appellant and Tommy also agreed that no mechanics liens would be filed.

Finally, the agreement laid out the terms of how expenses, repairs, and profits would be divided, should Appellant and Tommy, on behalf of Latigo, agree to work the equipment.^[2] Tommy's wife, Sharilyn Parr (Sharilyn), served as a witness to this agreement. Tommy, Sharilyn, and Appellant are all listed as being involved in the company known as Wild West Drilling (WWD), a company they formed to work the rig. All three are similarly listed as signatories on the WWD account they opened at the Bank on March 28, 2006.

C. Negotiation for Purchase of Rig

At some point following the signing of this agreement and the opening of the bank account, Appellant and Tommy began to work the rig. They did so until Tommy's death on June 10, 2006. In the four months following his death, several events occurred. Sharilyn, along with Tommy's son Auston, visited Appellant and discussed the possibility of selling the drilling rig to Appellant. Appellant was interested in purchasing the rig and continuing to use it for work. Sharilyn represented to Appellant that the Bank had given a loan to Latigo and had called the note, making the entire balance due. Part of the agreement was that the Bank would have a lien on equipment that Latigo had in its possession, should the company be unable to repay the loan. Later, Sharilyn told Auston that the Bank had not called the note and that she merely wanted to sell the equipment. The Bank confirmed that, in July 2006, it had not called the note and that the loan term was not set to end until September 2006. The Bank discovered that Sharilyn had misled Appellant and indicated that Appellant made several phone calls to the Bank between July 15 and August 11, 2006, in an effort to stop Sharilyn from selling the drilling rig.

D. Sale of Rig and Payoff of Bank Note

Appellant was aware that the loan had not been paid off and that Latigo had title to the rig: he offered to pay off the loan in exchange for the rig, and when he attempted to reclaim the rig, it was represented by both Sharilyn and the Midland County Sheriff that the rig had a lien on it. Appellant's attorney sent a letter to the Bank on August 11, 2006, outlining his complaints, and the Bank's attorney responded on August 15, 2006, requesting Appellant's attorney to direct all future communications to him as the Bank's attorney. Following this exchange, Sharilyn sold the drilling rig and other equipment to CrossTex Services, L.L.C. (CrossTex), represented by Mark Burkett (Burkett). Using these funds, and funds transferred from a WWD bank account, Sharilyn paid off the money owed by Latigo to the Bank.

The Bank released the lien it had on Latigo's equipment, including the drilling rig, and there is no evidence that the Bank questioned Sharilyn as to where she received the funds to settle the loan. Sharilyn had no discussion with anyone at the Bank with respect to the source of the funds or any details concerning the sale of the rig.

Appellant brought a civil suit against the Bank, Sharilyn, Latigo, Burkett, and CrossTex.^[3] This appeal follows a hearing on October 25, 2019, regarding a no-evidence motion for summary judgment filed by the Bank.^[4] The motion was confined to Appellant's claims against the Bank. The pivotal appellate issue around which his other issues revolve is whether a genuine issue of material fact regarding conversion by the Bank was raised by Appellant. Following the order granting the motion in favor of the Bank, Appellant settled with the remaining parties, including Sharilyn.

Standard of Review

We review the trial court's grant of summary judgment de novo. Lujan v. Navistar, Inc., 555 S.W.3d 79, 84 (Tex. 2018) (citing Provident Life & Accident Ins Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003)). However, a trial court's decision to exclude or admit summary judgment evidence is reviewed for an abuse of discretion. Id. at 84-85 (citing Starwood Mgmt., LLC v. Swaim, 530 S.W.3d 673, 678 (Tex. 2017)). When the trial court's order does not specify the grounds for its summary judgment, we will affirm it if any of the theories are meritorious. Knott, 128 S.W.3d at 216. If an appellant fails to challenge all grounds on which the summary judgment may have been granted, the appellate court must uphold the summary judgment. Heritage Gulf Coast Props., Ltd. v. Sandalwood Apartments, Inc., 416 S.W.3d 642, 653 (Tex. App.-Houston [14th Dist.] 2013, no pet.).

Under the Texas Rules of Civil Procedure, a no-evidence motion for summary judgment is required to "state the elements as to which there is no evidence." Tex.R.Civ.P. 166a(i). The nonmovant has the entire burden to produce evidence raising a genuine issue of material fact once the movant files a no-evidence motion. Tex.R.Civ.P. 166a(i); see Town of Dish v. Atmos Energy Corp., 519 S.W.3d 605, 608 (Tex. 2017) (summary judgment was proper when the nonmovant did not respond to no-evidence motion).

For a no-evidence motion for summary judgment, the standard of review is identical to the standard used in reviewing a directed verdict. Amwins Specialty Auto, Inc. v. Cabral, 582 S.W.3d 602, 607 (Tex. App.-Eastland 2019, no pet.) (citing Merriam v. XTO Energy, Inc., 407 S.W.3d 244, 248 (Tex. 2013)); see also King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 750-51 (Tex. 2003). "A no evidence point will be sustained when (a) there is a complete absence of evidence of a vital fact, (b) the court is barred by the rules of law or evidence from giving weight to the only evidence offered to prove a vital fact, (c) the evidence offered to prove a vital fact is no more than a mere scintilla, or (d) the evidence conclusively establishes the opposite of the vital fact." King Ranch, Inc., 118 S.W.3d at 751 (quoting Merrell Dow Pharm., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex. 1997)).

The burden is on the nonmovant to raise a genuine issue of material fact about the elements challenged in the no-evidence motion for summary judgment. Tex.R.Civ.P 166a(i); First United Pentecostal Church v. Parker, 514 S.W.3d 214, 220 (Tex. 2017). A fact is "material" only if it affects the outcome of the suit under the governing law; a material fact issue is "genuine" only if the evidence is such that a reasonable jury could find the fact in favor of the nonmovant. Rayon v. Energy Specialties, Inc., 121 S.W.3d 7, 11-12 (Tex. App.-Fort Worth 2002, no pet.). The nonmovant must produce more than a scintilla of evidence to raise a genuine issue of material fact on the challenged elements. First United Pentecostal Church, 514 S.W.3d at 220. A nonmovant produces more than a scintilla of evidence when the evidence rises to a level that would enable reasonable and fair-minded people to differ in their conclusions. Ford Motor Co. v. Ridgeway, 135 S.W.3d 598, 601 (Tex. 2004). A nonmovant produces no more than a scintilla of evidence when the evidence is "so weak as to do no more than create a mere surmise or suspicion of a fact." Forbes, Inc. v. Granada Biosciences, Inc., 124 S.W.3d 167, 172 (Tex. 2003) (quoting King Ranch, Inc., 118 S.W.3d at 751). We consider the evidence "in the light most favorable to the non-movant, disregarding all contrary evidence and inferences." King Ranch, Inc.,...