Majestic Cast, Inc. v. Khalaf
Dallas Court of Appeals, No. 05-12-00112-CV (August 26, 2013)
Justices FitzGerald, Lang-Miers (Opinion), and Lewis
Dallas Court of Appeals, No. 05-12-00112-CV (August 26, 2013)
Justices FitzGerald, Lang-Miers (Opinion), and Lewis
The Court of Appeals reversed in part a summary judgment for the defendant because his motion failed to address the plaintiff’s tort claims. With respect to the plaintiff’s claim for breach of contract, however, the court affirmed the summary judgment, concluding the defendant signed the contract on behalf of a corporation and therefore could not be held individually liable.
Plaintiff Majestic Cast hired ProCon Paving and Construction as a subcontractor on a school project. The parties entered into a contract, which Majed Khalaf signed on behalf of ProCon. Majestic Cast later sued Khalaf for theft, conversion, fraud, and breach of contract, alleging he absconded with payments made to ProCon instead of paying ProCon’s suppliers, leaving Majestic Cast with liens on its project. Khalaf filed a traditional and no-evidence motion for summary judgment in which he argued Majestic Cast had failed to plead or prove any basis for piercing the corporate veil and recovering from him individually. The trial court granted the motion.
Plaintiff Majestic Cast hired ProCon Paving and Construction as a subcontractor on a school project. The parties entered into a contract, which Majed Khalaf signed on behalf of ProCon. Majestic Cast later sued Khalaf for theft, conversion, fraud, and breach of contract, alleging he absconded with payments made to ProCon instead of paying ProCon’s suppliers, leaving Majestic Cast with liens on its project. Khalaf filed a traditional and no-evidence motion for summary judgment in which he argued Majestic Cast had failed to plead or prove any basis for piercing the corporate veil and recovering from him individually. The trial court granted the motion.
The Court of Appeals viewed Majestic Cast’s allegations of theft, conversion, and fraud as claims against Khalaf individually for his own tortious acts. Khalaf’s motion focused solely on piercing the corporate veil, which missed the point with respect to these tort claims because a plaintiff need not pierce the corporate veil to hold an agent liable for his own tortious conduct. The court concluded Khalaf’s motion failed to address Majestic Cast’s tort claims and reversed the summary judgment on those claims.
With respect to the breach-of-contract claim, Majestic Cast contended Khalaf signed the contract “as a partner along with ProCon,” not as a representative of ProCon, and therefore could be held individually liable on the contract. Majestic Cast relied on the contract’s signature page, which identified Khalaf as a “partner,” and on ProCon’s filings with the Texas Secretary of State, none of which identified Khalaf as an officer or director. But the court observed that the contract expressly identified Majestic Cast and ProCon as the parties to the contract; Khalaf was not mentioned as a party anywhere in the contract, and nothing in the contract otherwise indicated that any other party would be bound by it. Given what the rest of the contract said, the court did not view Khalaf’s identification as a “partner” in the signature block as sufficient to raise a fact question concerning the capacity in which he signed the contract. The court also rejected Majestic Cast’s argument regarding the filings with the Secretary of State, saying it was aware of no authority for the proposition that only individuals listed on such filings can act as agents for Texas corporations. The court concluded that Majestic Cast failed to raise a genuine issue of material fact regarding Khalaf’s individual liability for breach of contract, and it affirmed the summary judgment on that claim.
