Opinion
No. 10-03-00118-CV.
Opinion delivered and filed May 12, 2004.
Appeal from the 249th District Court, Johnson County, Texas, Trial Court # C200300135.
Reversed and remanded.
Before Chief Justice GRAY, Justice VANCE, and Justice REYNA, (Chief Justice Gray concurring).
MEMORANDUM OPINION
United Heritage Corporation ("UHC") and Walter Mize filed suit against First Savings Bank, FSB (the "Bank") alleging claims for violation of the Deceptive Trade Practices-Consumer Protection Act (the "DTPA") and for negligent misrepresentation. The court granted Mize's request for a temporary injunction to prevent the Bank from foreclosing on a stock certificate he had pledged to secure a loan from the Bank to UHC. The Bank presents three issues in this interlocutory appeal: (1) whether Mize established a probable right to recovery; (2) whether Mize established probable, imminent, and irreparable injury; and (3) whether Mize has standing.
BACKGROUND
Mize is the majority shareholder and president of UHC, a company engaged primarily in the oil and gas business. The Bank provided UHC a $2 million line of credit in April 2000. In connection with the line of credit, UHC executed a promissory note with a maturity date of April 25, 2001. Mize, in his individual capacity, executed a third-party pledge agreement, pledging a stock certificate representing 20 million shares of UHC stock as collateral for the loan and any renewals.
According to Mize, the parties began negotiating for an additional loan of $1.75 million in September 2000. Mize contends that the Bank verbally agreed to extend this additional loan in October 2000. UHC sought these additional monies to fund a drilling project in New Mexico and four recompletion projects. The Bank never made this additional loan. Another company owned by Mize, ALMAC Financial Corporation, loaned UHC $1.5 million to pay for the costs of these operations. Mize contends that he loaned $1 million of this sum to ALMAC and that the remaining $500,000 was loaned to ALMAC by his son and others.
UHC and the Bank agreed to renew the $2 million note in April 2001 for an additional year. UHC executed a renewal note with a new maturity date of April 25, 2002. After the renewal note matured, the parties explored alternatives by which UHC could repay the loan. Ultimately, the Bank advised UHC and Mize in March 2003 that it intended to foreclose.
STANDING
The Bank argues in its third issue that Mize does not have standing.
When we review a challenge to a plaintiff's standing, we generally look only to the factual allegations of the plaintiff's pleadings and construe those allegations in the plaintiff's favor. See Brown v. Todd, 53 S.W.3d 297, 305 n. 3 (Tex. 2001); MET-Rx USA, Inc. v. Shipman, 62 S.W.3d 807, 809-10 (Tex. App.-Waco 2001, pet. denied). "However, we are `not required to look solely to the pleadings but may consider evidence and must do so when necessary to resolve the jurisdictional issues raised.'" MET-Rx USA, 62 S.W.3d at 810 (quoting Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 555 (Tex. 2000)).
To establish standing, a plaintiff must show: (1) an injury personal to the plaintiff; (2) which is "fairly traceable to the defendant's allegedly unlawful conduct"; and (3) "which . . . will be actually determined by the judicial declaration sought." Brown, 53 S.W.3d at 305 (quoting Raines v. Byrd, 521 U.S. 811, 818, 117 S.Ct. 2312, 2317, 138 L.Ed.2d 849 (1997); Tex. Workers' Compen. Commn. v. Garcia, 893 S.W.2d 504, 517-18 (Tex. 1995)); MET-Rx USA, 62 S.W.3d at 810. An injury is not "fairly traceable" to the defendant's conduct when it is the result of a plaintiff's personal choice. See McConnell v. Fed. Election Commn., ___ U.S. ___, ___, 124 S.Ct. 619, 709, 157 L.Ed.2d 491 (2003) ("[Plaintiffs'] alleged [injury] stems not from the operation of [the challenged statute], but from their own personal `wish' not to solicit or accept large contributions, i.e., their personal choice. Accordingly, the . . . plaintiffs fail here to allege an injury in fact that is `fairly traceable' to [the challenged statute].").
The factual allegations pertinent to the standing inquiry are that because of the alleged agreement by the Bank to loan an additional $1.75 million to UHC:
I. Mize agreed to execute another pledge agreement; and
I. UHC commenced drilling operations in New Mexico and four recompletion projects on existing wells at a total cost of $1,562,500.
UHC and Mize allege that because the Bank failed to loan the additional money:
I. UHC had to borrow $1.5 million from ALMAC;
I. UHC has been unable to complete these projects; and
I. UHC has experienced a substantial loss of profits.
UHC and Mize assert in their DTPA allegations that UHC detrimentally relied on the Bank's alleged promise to loan the additional money because: (1) it entered a $1.375 million drilling contract to begin drilling operations in New Mexico; (2) it commenced the four recompletion projects at a cost of $187,500; and (3) the ALMAC loan to fund these operations carried "a substantially higher interest rate" than the Bank had allegedly promised.
Under the negligent misrepresentation allegations, UHC asserts that it sustained economic and actual damages as a result of the Bank's alleged misrepresentation. Mize separately alleges that "he suffered pecuniary loss" as a proximate cause of his reliance on the alleged misrepresentation. Mize alleges that he agreed to execute a second pledge agreement because of the alleged misrepresentation. However, it is undisputed that he never did so.
Nowhere in the petition does Mize specifically allege the nature of the pecuniary loss he personally suffered. He provided testimony in the injunction hearing to describe the pecuniary losses he contends he has suffered as a result of the alleged misrepresentation. He testified that "all [his] personal funds are tied up in that ALMAC note" because UHC has not repaid the loan. In addition, he testified that, if the Bank forecloses, UHC would probably have to offer additional shares to raise revenue and he would lose his status as majority shareholder.
The only injuries alleged in connection with the DTPA claim are injuries to UHC. Mize does not have standing in his individual capacity to assert this claim on behalf of UHC. See City of Laredo v. R. Vela Exxon, Inc., 966 S.W.2d 673, 679 (Tex. App.-San Antonio 1998, pet. denied); El T. Mexican Rests., Inc. v. Bacon, 921 S.W.2d 247, 251 (Tex. App.-Houston [1st Dist.] 1995, writ denied); see also Wingate v. Hajdik, 795 S.W.2d 717, 719 (Tex. 1990) ("A corporate stockholder cannot recover damages personally for a wrong done solely to the corporation, even though he may be injured by that wrong.").
Nor does Mize have standing to assert the negligent misrepresentation claim. Mize's contention that his liquid assets are "tied up" does not state a pecuniary loss. Rather, it reflects his own decision to convert $1 million into the form of a note payable to him by ALMAC. We hold as a matter of law that the potential diminution of his ownership interest in UHC in the event of foreclosure is not actionable because that too reflects his own decision in April 2000 to put his ownership interest at risk by pledging the stock certificate as collateral for UHC's note.
These "injuries" were not caused by the Bank's refusal to loan UHC additional money. Rather, they were caused by Mize's actions in response to: (1) the need for collateral to secure the original loan; and (2) the need for additional funds to finance the drilling operation in New Mexico and the recompletion projects. Accordingly, Mize's alleged injuries are not "fairly traceable" to the Bank's refusal to loan UHC additional money. See McConnell, ___ U.S. at ___, 124 S.Ct. at 709.
The Bank's third issue is sustained. We need not address the remainder of the Bank's issues. See TEX. R. APP. P. 47.1.
We reverse the order granting the temporary injunction, dissolve the injunction, and remand this cause to the trial court with instructions to dismiss Mize's claims for want of jurisdiction. See Warren v. Aldridge, 992 S.W.2d 689, 691 (Tex. App.-Houston [14th Dist.] 1999, no pet.); Letson v. Barnes, 979 S.W.2d 414, 419 (Tex. App.-Amarillo 1998, pet. denied).
This is an appeal from a temporary injunction stopping the foreclosure on a stock certificate owned by Mize. To prevail on such an injunction, Mize must establish he will suffer irreparable injury. Butnaru v. Ford Motor Co., 84 S.W.3d 198, 204 (Tex. 2002). If this foreclosure is ultimately determined to be wrongful, Mize will have suffered damages. I find, however, no damages that cannot be restored by some amount of money. An injury is irreparable only if the injured party cannot be adequately compensated in damages or if the damages cannot be measured by any certain pecuniary standard. Id. The amount may require proof by expert testimony, but it can certainly be calculated. For example, if, as the result of a wrongful foreclosure, Mize loses control of the corporation, there is nothing to suggest that he would be unable to go into the marketplace and purchase the shares necessary to restore his percentage ownership in the company at some price.
Accordingly, I concur in the determination that the trial court erred in rendering an injunction preventing the foreclosure of the stock certificate.