Preview
Defendant's Motion to Dismiss for Lack of Jurisdiction. Filed: 5/13/2020 4:19 PM
JOHN D. KINARD - District Clerk
Galveston County, Texas
Envelope No. 42960328
By: Shailja Dixit
5/13/2020 4:38 PM
19-CV-1003
Cited
As of: May 12, 2020 11:33 PM Z
Pennington v. Cypress Aviation, LLC
Court of Appeals of Texas, Fifth District, Dallas
April 9, 2020, Decided; April 9, 2020, Opinion Filed
No. 05-19-00345-CV
Reporter
2020 Tex. App. LEXIS 3037 *
dismissal, so that the cause could be suspended under Tex.
Bus. & Com. Code Ann. § 71.201 while the defect was
PAT PENNINGTON, INDIVIDUALLY AND
corrected; [2]-Because a capacity issue could be waived by
AERONAUTICAL TECH SERVICES, INC. D/B/A AERO
failure to properly raise the issue in the trial court, a failure to
TECH SERVICES, Appellants v. CYPRESS AVIATION,
file a verified plea in abatement prior to trial or to request that
LLC, WILLIAM S. MONTGOMERY, AND DONAL R.
the trial court suspend the case waived the complaint
SCHMIDT, JR., Appellees
regarding failure to file an assumed name certificate.
Prior History: [*1] On Appeal from the 44th Judicial
District Court, Dallas County, Texas. Trial Court Cause No.
DC-15-04263. Opinion delivered by Justice Osborne; Justices
Outcome
Schenck and Reichek participating.
Reversed and remanded.
Core Terms LexisNexis® Headnotes
certificate, assumed name, trial court, waived, plea in
abatement, lack standing, failure to file, new trial, appellants',
parties
Civil Procedure > Trials > Bench Trials
Case Summary Civil Procedure > Appeals > Standards of
Review > Clearly Erroneous Review
Overview Civil Procedure > Appeals > Standards of Review > De
Novo Review
HOLDINGS: [1]-Noncompliance with the requirements for
filing an assumed name certificate under Tex. Bus. & Com. HN1[ ] Trials, Bench Trials
Code Ann. § 71.101 and former Tex. Bus. & Com. Code Ann.
§ 71.103 did not deprive a corporation of standing to maintain In an appeal from a bench trial, the trial court's findings of
a cause of action for breach of contract because a failure to fact have the same weight as a jury verdict. An appellate court
have a valid assumed name certificate on file was not a reviews a trial court's findings of fact under the same legal
jurisdictional issue but, rather, was a capacity issue that was and factual sufficiency of the evidence standards used when
properly raised in a plea in abatement, not a motion for determining if sufficient evidence exists to support an answer
Daniel Barrera EXHIBIT - B
Page 2 of 6
Pennington v. Cypress Aviation, LLC
to a jury question. The appellate court considers all the where the entity is doing business. Former Tex. Bus. & Com.
evidence supporting and contradicting the finding, and sets Code Ann. § 71.103.
aside the finding for factual insufficiency only if it is so
contrary to the evidence as to be clearly wrong and manifestly
unjust. A trial court's conclusions of law are reviewed de
Business & Corporate Law > ... > Corporate
novo.
Names > Fictitious Names > Consequences of
Noncompliance
Civil Procedure > Preliminary HN5[ ] Fictitious Names, Consequences of
Considerations > Justiciability > Standing Noncompliance
Constitutional Law > The Judiciary > Case or Although a corporation's failure to comply with Tex. Bus. &
Controversy > Standing Com. Code Ann. §§ 71.101 or 71.103 does not impair the
validity of any contract or prevent the corporation from
HN2[ ] Justiciability, Standing defending any action or proceeding in any court of the State
of Texas, the corporation may not maintain in a court of the
Standing is a constitutional prerequisite to suit. Standing State of Texas an action or proceeding arising out of a
requires that there is a real controversy between the parties contract or act in which an assumed name was used until an
that will be actually determined by the judicial declaration original, new, or renewed certificate has been filed as required
sought. A court has no jurisdiction over a claim made by a by this chapter. Tex. Bus. & Com. Code Ann. § 71.201.
plaintiff who has no standing to assert it. Because standing is
jurisdictional, it cannot be waived.
Business & Corporate Law > ... > Corporate
Names > Fictitious Names > Consequences of
Civil Procedure > Parties > Capacity of Parties Noncompliance
Civil Civil Procedure > Parties > Capacity of Parties
Procedure > ... > Justiciability > Standing > Personal
Stake HN6[ ] Fictitious Names, Consequences of
Noncompliance
HN3[ ] Parties, Capacity of Parties
Tex. Bus. & Com. Code Ann. § 71.201 authorizes a court to
In addition to standing, a plaintiff must have the capacity to abate an action until the certificate is filed. Failure to file an
pursue a claim. A plaintiff has standing when it is personally assumed name certificate does not render a plaintiff's claim
aggrieved, regardless of whether it is acting with legal void, but rather affects a plaintiff's capacity to bring suit.
authority; a party has capacity when it has the legal authority
to act, regardless of whether it has a justiciable interest in the
controversy. Unlike standing, the assertion of a lack of
Civil Procedure > Parties > Capacity of Parties
capacity is procedural and can be waived.
Civil Procedure > Appeals > Reviewability of Lower
Court Decisions > Preservation for Review
Business & Corporate Law > ... > Corporate
Names > Fictitious Names > Registration Requirements HN7[ ] Parties, Capacity of Parties
HN4[ ] Fictitious Names, Registration Requirements An argument that an opposing party does not have the
capacity to participate in a suit can be waived by a party's
A corporation must file an assumed name certificate if it failure to properly raise the issue in the trial court.
regularly conducts business in Texas under an assumed name.
Tex. Bus. & Com. Code Ann. § 71.101. Before 2019, the
assumed name statute required every corporation operating
Civil Procedure > Parties > Capacity of Parties
under an assumed name to file an assumed name certificate
with the Texas Secretary of State and with the county clerk Civil Procedure > ... > Responses > Defenses, Demurrers
Daniel Barrera EXHIBIT - B
Page 3 of 6
Pennington v. Cypress Aviation, LLC
& Objections > Waiver & Preservation of Defenses Opinion by Justice Osborne.
HN8[ ] Parties, Capacity of Parties
A plaintiff's failure to have a valid assumed name certificate Opinion by: LESLIE OSBORNE
on file is not a jurisdictional issue but, rather, a capacity issue
that is properly raised in a plea in abatement so that the cause
may be suspended while the defect is corrected. By failing to
file a verified plea in abatement prior to trial, defendants
waive the complaint.
Opinion
Civil Procedure > Parties > Capacity of Parties MEMORANDUM OPINION
Civil Procedure > ... > Responses > Defenses, Demurrers Opinion by Justice Osborne
& Objections > Waiver & Preservation of Defenses
In this dispute over the cost of repairs made to an airplane, the
HN9[ ] Parties, Capacity of Parties trial court rendered judgment for appellees after concluding
that appellants lacked standing to assert their claim. We
A plaintiff's right to maintain the suit in the capacity in which reverse the trial court's judgment and remand for a new trial.
he sues is properly raised by a plea in abatement, not by a
motion for dismissal. The effect of Tex. Bus. & Com. Code
Ann. § 71.201 is to authorize the court to abate an action until BACKGROUND
the required certificate has been filed. A plea in abatement not
The facts of this dispute are well-known to the parties and we
relating to matters of jurisdiction must be urged before the
do not repeat them here except as necessary to advise the
trial on the merits begins; otherwise it is waived.
parties of the reasons for our decision. TEX. R. APP. P. 47.4.
Although Cypress Aviation, LLC was the original plaintiff in
this suit, the parties were later realigned with appellants as
Civil Procedure > Appeals > Remands plaintiffs and appellees as defendants. Appellants pleaded that
appellees breached a contract for repair and maintenance
HN10[ ] Appeals, Remands work done on a Cessna T201 aircraft. In their verified answer
to appellants' claim, appellees pleaded that Aeronautical Tech
An appellate court may remand a case when further Services, Inc. ("Aeronautical") "does not have the legal
proceedings, such as reweighing evidence or finding facts, are capacity to sue in this action," citing [*2] civil procedure rule
necessary. 93(1). TEX. R. CIV. P. 93(1) (pleading that plaintiff does not
have legal capacity to sue shall be verified by affidavit).
Appellees did not, however, file a plea in abatement or obtain
a ruling regarding Aeronautical's lack of capacity prior to
trial. Appellees did not raise the issue until the second day of
Counsel: For Pat Pennington, et al., Appellant: Mark H. How, the trial before the court.
Lead counsel, How Frels & Duke, P.C., Dallas TX.
The trial court rendered judgment that appellants take nothing
on their claims. The trial court also made findings of fact and
For Cypress Aviation, LLC, Appellee: Terry Lee Jarvis, Lead
conclusions of law, including the following:
counsel, Law Office of Terry Jarvis, PC, Dallas TX.
Donal R. Schmidt, Jr., Appellee, Pro se, The Law Firm of I. Findings of Fact
Donal R. Schmidt, Jr. Pllc, Dallas TX. ...
2. Aeronautical Tech Services, Inc. ("Aeronautical") is a
Texas corporation in the business of supplying
mechanical services to aircraft owners. Pat Pennington is
Judges: Before Justices Schenck, Osborne, and Reichek. the President of Aeronautical.
Daniel Barrera EXHIBIT - B
Page 4 of 6
Pennington v. Cypress Aviation, LLC
3. Pat Pennington, individually, as owner, filed an findings of fact have the same weight as a jury verdict.
assumed name record for Aero Tech Services ("Aero Fulgham v. Fischer, 349 S.W.3d 153, 157 (Tex. App.—Dallas
Tech") on April 3, 2003, in Dallas County, Texas. 2011, no pet.). We review a trial court's findings of fact under
the same legal and factual sufficiency of the evidence
4. Aeronautical filed an assumed name certificate with standards used when determining if sufficient evidence exists
the Secretary of State for Aero Tech Services on April to support an answer to a jury question. Id. We consider all
26, 2016, after suit was filed, during the pendency of the evidence supporting and contradicting the finding, and set
these proceedings but before trial on the merits. After the aside the finding for factual insufficiency only if it is so
close of all evidence, in post-trial briefing, without leave contrary to the evidence as to be clearly wrong and manifestly
of court, Aeronautical attached the assumed [*3] name unjust. Id. We review de novo a trial court's conclusions of
certificate for Aero Tech filed in Dallas County, on law. Id. at 157-58.
December 6, 2017.
... The trial court concluded that appellants lacked standing to
maintain their cause of action for breach of contract. HN2[ ]
Standing [*5] is a constitutional prerequisite to suit. Heckman
II. Conclusions of Law v. Williamson Cty., 369 S.W.3d 137, 150 (Tex. 2012).
... Standing requires that there is a real controversy between the
12. Aeronautical was statutorily required to file the parties that will be actually determined by the judicial
assumed name certificate in the office of the secretary of declaration sought. Nootsie, Ltd. v. Williamson Cty. Appraisal
state and the office where the registered or principal Dist., 925 S.W.2d 659, 662 (Tex. 1996). A court has no
office is located. Aeronautical is not able to maintain a jurisdiction over a claim made by a plaintiff who has no
court proceeding until the certificate has been filed as standing to assert it. Heckman, 369 S.W.3d at 150. Because
statutorily required. Failure to timely file the certificate standing is jurisdictional, it cannot be waived. See Austin
in Dallas County prior to the close of evidence in the Nursing Ctr., Inc. v. Lovato, 171 S.W.3d 845, 849 (Tex. 2005).
trial on the merits deprived Aeronautical of legal
standing to maintain a cause of action arising out of a HN3[ ] In addition to standing, a plaintiff must have the
contract. capacity to pursue a claim. Id. The court in Nootsie, Ltd.
13. At all relevant times, Aero Tech Services was the explained, "[a] plaintiff has standing when it is personally
d/b/a of its owner Pat Pennington. Mr. Pennington had aggrieved, regardless of whether it is acting with legal
no claims against any of the parties and therefore is not authority; a party has capacity when it has the legal authority
entitled to recover the damages sought. to act, regardless of whether it has a justiciable interest in the
... controversy." Nootsie, Ltd., 925 S.W.2d at 661. Unlike
standing, the assertion of a lack of capacity is procedural and
Apparently concluding that only Aeronautical, not Pennington can be waived. See id. at 662.
or Aero Tech, could recover amounts due for repairs to the
aircraft, and that Aeronautical lacked standing, the trial court HN4[ ] A corporation must file an assumed name certificate
ruled that none of the appellants could recover damages from if it regularly conducts business in Texas under an assumed
any of the appellees. The trial court denied appellants' motion name. TEX. BUS. & COM. CODE § 71.101. Before 2019, the
for new trial. assumed name statute required every corporation operating
under an assumed name to file an assumed name certificate
This appeal followed. In five issues, appellants [*4] contend
with the Secretary of State and with the county clerk where
the trial court erred by (1) concluding that Aeronautical
the entity is doing business. [*6] See Act of May 15, 2007,
lacked standing to maintain its claims, (2) failing to conclude
80th Leg., R.S., Ch. 885, § 2.01, 2007 TEX. GEN. LAWS
that appellees waived their claims regarding Aeronautical's
1906, 1933 (amended 2009 and 2019) (current version at
failure to file an assumed name certificate in Dallas County, 1
TEX. BUS. & COM. CODE § 71.103). HN5[ ] Although
(3) concluding that Schmidt and Montgomery are not
the corporation's failure to comply with section 71.101 or
individually liable for appellants' claims, (4) not awarding
appellants damages and attorney's fees, and (5) not awarding
attorney's fees to Pennington.
1
In 2019, the Legislature amended section 71.103. The requirement
to file a certificate in the office of the secretary of state was retained,
STANDARD OF REVIEW AND APPLICABLE LAW but the Legislature deleted the requirement to file a certificate in the
office of the county clerk of the county in which the entity's principal
HN1[ ] In an appeal from a bench trial, the trial court's office is located.
Daniel Barrera EXHIBIT - B
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Pennington v. Cypress Aviation, LLC
section 71.103 "does not impair the validity of any contract" that the cause may be suspended while the defect is
or prevent the corporation from "defending any action or corrected." Eckman v. Northgate Terrace Apartments, LLC,
proceeding in any court of this state," the corporation "may No. 03-18-00254-CV, 2018 Tex. App. LEXIS 4794, 2018 WL
not maintain in a court of this state an action or proceeding 3150845, at *2 (Tex. App.— Austin June 28, 2018, pet.
arising out of a contract or act in which an assumed name was denied) (mem. op.). By failing to file a verified plea in
used until an original, new, or renewed certificate has been abatement prior to trial, appellees waived their complaint.
filed as required by this chapter." Tex. Bus. & Com. Code § Schlien v. Griffin, No. 01-14-00799-CV, 2016 Tex. App.
71.201. LEXIS 3715, 2016 WL 1456193, at *7 (Tex. App.—Houston
[1st Dist.] Apr. 12, 2016, pet. denied) (mem. op.); see also
The supreme court has explained that HN6[ ] section STS Gas Servs., Inc. v. Seth, No. 13-05-463-CV, 2008 Tex.
71.201 "authorizes a court to abate an action until the App. LEXIS 366, 2008 WL 152229, at *13-14 (Tex. App.—
certificate is filed." Sixth RMA Partners, L.P. v. Sibley, 111 Corpus Christi-Edinburg Jan. 17, 2008, no pet.) (mem. op.)
S.W.3d 46, 55 (Tex. 2003). "[F]ailure to file an assumed name (same; also noting that failure to file assumed name certificate
certificate does not render a plaintiff's claim void," but rather affects plaintiff's capacity to bring suit but does not render
"affects a plaintiff's capacity to bring suit." Id. HN7[ ] "An plaintiff's claim void).
argument that an opposing party does not have the capacity to
participate in a suit can be waived by a party's failure to In Continental Contractors, Inc. v. Thorup, 578 S.W.2d 864,
properly raise the issue in the trial court." Id. at 56. 866 (Tex. App.—Houston [1st Dist.] 1979, no writ), as here,
"the defendants waited until the second day of the trial to
bring [the plaintiff's failure to file an assumed [*8] name
Discussion certificate] to the trial court's attention." Explaining that
HN9[ ] "[a] plaintiff's right to maintain the suit in the
In their first and second issues, appellants challenge the trial capacity in which he sues is properly raised by a plea in
court's conclusion of law that Aeronautical lacked standing to abatement, not by a motion for dismissal," the court noted that
maintain its claims, and argue that appellees waived their the effect of the statute "is to authorize the court to abate an
complaint that appellants failed to file an assumed [*7] name action until the required certificate has been filed." See id.
certificate in Dallas County for Aeronautical. Appellants do The court continued, "[a] plea in abatement not relating to
not dispute that the assumed name certificate for Aeronautical matters of jurisdiction must be urged before the trial on the
was filed only in the Secretary of State's office and not in merits begins; otherwise it is waived." Id. The court
Dallas County at the time appellants filed their claims against concluded that the trial court did not err by overruling the
appellees. But they contend that appellees waived their defendants' motion to dismiss the plaintiff's claims for failure
objection to the failure to file the certificate in Dallas County to file an assumed name certificate. See id. at 865-66.
because appellees did not present their objection to the trial
2
court before trial and obtain a ruling. We agree. HN8[ ] Appellees established at trial that Pennington, not
"[A] plaintiff's failure to have a valid [assumed name] Aeronautical, had filed an assumed name certificate in Dallas
certificate on file is not a jurisdictional issue but, rather, a County for "Aero Tech Services." But appellees never filed a
capacity issue that is properly raised in a plea in abatement so plea in abatement or requested that the trial court suspend the
case for correction of the defect. Instead, they argued that the
trial court lacked jurisdiction over Aeronautical because the
2 certificate had not been filed. But if Aeronautical performed
The panel requested additional briefing from the parties at oral
the work on the aircraft, then it had standing to maintain
argument submission of this appeal on the question when an
assumed name is so similar to the name of an incorporated entity that the [*9] suit against appellees. See Eckman, 2018 Tex. App.
filing of an assumed name certificate is not required. Only counsel LEXIS 4794, 2018 WL 3150845, at *2 (owners of premises
for appellants appeared at argument, and he subsequently gave had standing to maintain suit for possession even though they
counsel for appellees notice of our request as we had directed him to had permitted assumed name certificate to elapse for name
do. Counsel for appellants timely filed a letter brief on the requested listed on lease as "owner" of premises). Consequently, we
issue. Instead of filing their own letter brief on the issue, appellees conclude the trial court erred by ruling that Aeronautical
filed a motion for leave to file a response to appellants' letter, lacked standing to maintain its cause of action for breach of
requesting an extension for ten days after the deadline set by the contract.
panel. Because our request, communicated to appellees' counsel
shortly after submission, was for additional briefing filed by all We sustain appellants' first issue. Given its erroneous legal
parties within ten days, we deny appellees' motion. In any event, conclusion, the trial court made no findings of fact regarding
counsel for appellants was not able to locate case authority on the amounts, if any, Aeronautical may recover from appellees on
question.
Daniel Barrera EXHIBIT - B
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Pennington v. Cypress Aviation, LLC
its claims. Consequently, we must remand the cause for new
trial. See, e.g., Van Heerden v. Van Heerden, 321 S.W.3d 869,
874 (Tex. App.— Houston [14th Dist.] 2010, no pet.)
(HN10[ ] appellate court may remand a case when further
proceedings, such as reweighing evidence or finding facts, are
necessary). Because of our disposition of appellants' first and
second issues, we need not address appellants' remaining
issues.
CONCLUSION
We reverse the trial court's judgment and remand the case for
new trial. TEX. R. APP. P. 43.2(d).
/s/ Leslie Osborne
LESLIE OSBORNE
JUSTICE
JUDGMENT
In accordance with this Court's opinion of this date, the
judgment of the trial court is REVERSED and this cause is
REMANDED to the trial court for a new trial.
It is ORDERED that appellants Pat Pennington,
Individually [*10] and Aeronautical Tech Services, Inc. d/b/a
Aero Tech Services recover their costs of this appeal from
appellees Cypress Aviation, LLC, William S. Montgomery,
and Donal R. Schmidt, Jr.
Judgment entered April 9, 2020
End of Document
Daniel Barrera EXHIBIT - B
Preview
Defendant's Motion to Dismiss for Lack of Jurisdiction. Filed: 5/13/2020 4:19 PM JOHN D. KINARD - District Clerk Galveston County, Texas Envelope No. 42960328 By: Shailja Dixit 5/13/2020 4:38 PM 19-CV-1003 Cited As of: May 12, 2020 11:33 PM Z Pennington v. Cypress Aviation, LLC Court of Appeals of Texas, Fifth District, Dallas April 9, 2020, Decided; April 9, 2020, Opinion Filed No. 05-19-00345-CV Reporter 2020 Tex. App. LEXIS 3037 * dismissal, so that the cause could be suspended under Tex. Bus. & Com. Code Ann. § 71.201 while the defect was PAT PENNINGTON, INDIVIDUALLY AND corrected; [2]-Because a capacity issue could be waived by AERONAUTICAL TECH SERVICES, INC. D/B/A AERO failure to properly raise the issue in the trial court, a failure to TECH SERVICES, Appellants v. CYPRESS AVIATION, file a verified plea in abatement prior to trial or to request that LLC, WILLIAM S. MONTGOMERY, AND DONAL R. the trial court suspend the case waived the complaint SCHMIDT, JR., Appellees regarding failure to file an assumed name certificate. Prior History: [*1] On Appeal from the 44th Judicial District Court, Dallas County, Texas. Trial Court Cause No. DC-15-04263. Opinion delivered by Justice Osborne; Justices Outcome Schenck and Reichek participating. Reversed and remanded. Core Terms LexisNexis® Headnotes certificate, assumed name, trial court, waived, plea in abatement, lack standing, failure to file, new trial, appellants', parties Civil Procedure > Trials > Bench Trials Case Summary Civil Procedure > Appeals > Standards of Review > Clearly Erroneous Review Overview Civil Procedure > Appeals > Standards of Review > De Novo Review HOLDINGS: [1]-Noncompliance with the requirements for filing an assumed name certificate under Tex. Bus. & Com. HN1[ ] Trials, Bench Trials Code Ann. § 71.101 and former Tex. Bus. & Com. Code Ann. § 71.103 did not deprive a corporation of standing to maintain In an appeal from a bench trial, the trial court's findings of a cause of action for breach of contract because a failure to fact have the same weight as a jury verdict. An appellate court have a valid assumed name certificate on file was not a reviews a trial court's findings of fact under the same legal jurisdictional issue but, rather, was a capacity issue that was and factual sufficiency of the evidence standards used when properly raised in a plea in abatement, not a motion for determining if sufficient evidence exists to support an answer Daniel Barrera EXHIBIT - B Page 2 of 6 Pennington v. Cypress Aviation, LLC to a jury question. The appellate court considers all the where the entity is doing business. Former Tex. Bus. & Com. evidence supporting and contradicting the finding, and sets Code Ann. § 71.103. aside the finding for factual insufficiency only if it is so contrary to the evidence as to be clearly wrong and manifestly unjust. A trial court's conclusions of law are reviewed de Business & Corporate Law > ... > Corporate novo. Names > Fictitious Names > Consequences of Noncompliance Civil Procedure > Preliminary HN5[ ] Fictitious Names, Consequences of Considerations > Justiciability > Standing Noncompliance Constitutional Law > The Judiciary > Case or Although a corporation's failure to comply with Tex. Bus. & Controversy > Standing Com. Code Ann. §§ 71.101 or 71.103 does not impair the validity of any contract or prevent the corporation from HN2[ ] Justiciability, Standing defending any action or proceeding in any court of the State of Texas, the corporation may not maintain in a court of the Standing is a constitutional prerequisite to suit. Standing State of Texas an action or proceeding arising out of a requires that there is a real controversy between the parties contract or act in which an assumed name was used until an that will be actually determined by the judicial declaration original, new, or renewed certificate has been filed as required sought. A court has no jurisdiction over a claim made by a by this chapter. Tex. Bus. & Com. Code Ann. § 71.201. plaintiff who has no standing to assert it. Because standing is jurisdictional, it cannot be waived. Business & Corporate Law > ... > Corporate Names > Fictitious Names > Consequences of Civil Procedure > Parties > Capacity of Parties Noncompliance Civil Civil Procedure > Parties > Capacity of Parties Procedure > ... > Justiciability > Standing > Personal Stake HN6[ ] Fictitious Names, Consequences of Noncompliance HN3[ ] Parties, Capacity of Parties Tex. Bus. & Com. Code Ann. § 71.201 authorizes a court to In addition to standing, a plaintiff must have the capacity to abate an action until the certificate is filed. Failure to file an pursue a claim. A plaintiff has standing when it is personally assumed name certificate does not render a plaintiff's claim aggrieved, regardless of whether it is acting with legal void, but rather affects a plaintiff's capacity to bring suit. authority; a party has capacity when it has the legal authority to act, regardless of whether it has a justiciable interest in the controversy. Unlike standing, the assertion of a lack of Civil Procedure > Parties > Capacity of Parties capacity is procedural and can be waived. Civil Procedure > Appeals > Reviewability of Lower Court Decisions > Preservation for Review Business & Corporate Law > ... > Corporate Names > Fictitious Names > Registration Requirements HN7[ ] Parties, Capacity of Parties HN4[ ] Fictitious Names, Registration Requirements An argument that an opposing party does not have the capacity to participate in a suit can be waived by a party's A corporation must file an assumed name certificate if it failure to properly raise the issue in the trial court. regularly conducts business in Texas under an assumed name. Tex. Bus. & Com. Code Ann. § 71.101. Before 2019, the assumed name statute required every corporation operating Civil Procedure > Parties > Capacity of Parties under an assumed name to file an assumed name certificate with the Texas Secretary of State and with the county clerk Civil Procedure > ... > Responses > Defenses, Demurrers Daniel Barrera EXHIBIT - B Page 3 of 6 Pennington v. Cypress Aviation, LLC & Objections > Waiver & Preservation of Defenses Opinion by Justice Osborne. HN8[ ] Parties, Capacity of Parties A plaintiff's failure to have a valid assumed name certificate Opinion by: LESLIE OSBORNE on file is not a jurisdictional issue but, rather, a capacity issue that is properly raised in a plea in abatement so that the cause may be suspended while the defect is corrected. By failing to file a verified plea in abatement prior to trial, defendants waive the complaint. Opinion Civil Procedure > Parties > Capacity of Parties MEMORANDUM OPINION Civil Procedure > ... > Responses > Defenses, Demurrers Opinion by Justice Osborne & Objections > Waiver & Preservation of Defenses In this dispute over the cost of repairs made to an airplane, the HN9[ ] Parties, Capacity of Parties trial court rendered judgment for appellees after concluding that appellants lacked standing to assert their claim. We A plaintiff's right to maintain the suit in the capacity in which reverse the trial court's judgment and remand for a new trial. he sues is properly raised by a plea in abatement, not by a motion for dismissal. The effect of Tex. Bus. & Com. Code Ann. § 71.201 is to authorize the court to abate an action until BACKGROUND the required certificate has been filed. A plea in abatement not The facts of this dispute are well-known to the parties and we relating to matters of jurisdiction must be urged before the do not repeat them here except as necessary to advise the trial on the merits begins; otherwise it is waived. parties of the reasons for our decision. TEX. R. APP. P. 47.4. Although Cypress Aviation, LLC was the original plaintiff in this suit, the parties were later realigned with appellants as Civil Procedure > Appeals > Remands plaintiffs and appellees as defendants. Appellants pleaded that appellees breached a contract for repair and maintenance HN10[ ] Appeals, Remands work done on a Cessna T201 aircraft. In their verified answer to appellants' claim, appellees pleaded that Aeronautical Tech An appellate court may remand a case when further Services, Inc. ("Aeronautical") "does not have the legal proceedings, such as reweighing evidence or finding facts, are capacity to sue in this action," citing [*2] civil procedure rule necessary. 93(1). TEX. R. CIV. P. 93(1) (pleading that plaintiff does not have legal capacity to sue shall be verified by affidavit). Appellees did not, however, file a plea in abatement or obtain a ruling regarding Aeronautical's lack of capacity prior to trial. Appellees did not raise the issue until the second day of Counsel: For Pat Pennington, et al., Appellant: Mark H. How, the trial before the court. Lead counsel, How Frels & Duke, P.C., Dallas TX. The trial court rendered judgment that appellants take nothing on their claims. The trial court also made findings of fact and For Cypress Aviation, LLC, Appellee: Terry Lee Jarvis, Lead conclusions of law, including the following: counsel, Law Office of Terry Jarvis, PC, Dallas TX. Donal R. Schmidt, Jr., Appellee, Pro se, The Law Firm of I. Findings of Fact Donal R. Schmidt, Jr. Pllc, Dallas TX. ... 2. Aeronautical Tech Services, Inc. ("Aeronautical") is a Texas corporation in the business of supplying mechanical services to aircraft owners. Pat Pennington is Judges: Before Justices Schenck, Osborne, and Reichek. the President of Aeronautical. Daniel Barrera EXHIBIT - B Page 4 of 6 Pennington v. Cypress Aviation, LLC 3. Pat Pennington, individually, as owner, filed an findings of fact have the same weight as a jury verdict. assumed name record for Aero Tech Services ("Aero Fulgham v. Fischer, 349 S.W.3d 153, 157 (Tex. App.—Dallas Tech") on April 3, 2003, in Dallas County, Texas. 2011, no pet.). We review a trial court's findings of fact under the same legal and factual sufficiency of the evidence 4. Aeronautical filed an assumed name certificate with standards used when determining if sufficient evidence exists the Secretary of State for Aero Tech Services on April to support an answer to a jury question. Id. We consider all 26, 2016, after suit was filed, during the pendency of the evidence supporting and contradicting the finding, and set these proceedings but before trial on the merits. After the aside the finding for factual insufficiency only if it is so close of all evidence, in post-trial briefing, without leave contrary to the evidence as to be clearly wrong and manifestly of court, Aeronautical attached the assumed [*3] name unjust. Id. We review de novo a trial court's conclusions of certificate for Aero Tech filed in Dallas County, on law. Id. at 157-58. December 6, 2017. ... The trial court concluded that appellants lacked standing to maintain their cause of action for breach of contract. HN2[ ] Standing [*5] is a constitutional prerequisite to suit. Heckman II. Conclusions of Law v. Williamson Cty., 369 S.W.3d 137, 150 (Tex. 2012). ... Standing requires that there is a real controversy between the 12. Aeronautical was statutorily required to file the parties that will be actually determined by the judicial assumed name certificate in the office of the secretary of declaration sought. Nootsie, Ltd. v. Williamson Cty. Appraisal state and the office where the registered or principal Dist., 925 S.W.2d 659, 662 (Tex. 1996). A court has no office is located. Aeronautical is not able to maintain a jurisdiction over a claim made by a plaintiff who has no court proceeding until the certificate has been filed as standing to assert it. Heckman, 369 S.W.3d at 150. Because statutorily required. Failure to timely file the certificate standing is jurisdictional, it cannot be waived. See Austin in Dallas County prior to the close of evidence in the Nursing Ctr., Inc. v. Lovato, 171 S.W.3d 845, 849 (Tex. 2005). trial on the merits deprived Aeronautical of legal standing to maintain a cause of action arising out of a HN3[ ] In addition to standing, a plaintiff must have the contract. capacity to pursue a claim. Id. The court in Nootsie, Ltd. 13. At all relevant times, Aero Tech Services was the explained, "[a] plaintiff has standing when it is personally d/b/a of its owner Pat Pennington. Mr. Pennington had aggrieved, regardless of whether it is acting with legal no claims against any of the parties and therefore is not authority; a party has capacity when it has the legal authority entitled to recover the damages sought. to act, regardless of whether it has a justiciable interest in the ... controversy." Nootsie, Ltd., 925 S.W.2d at 661. Unlike standing, the assertion of a lack of capacity is procedural and Apparently concluding that only Aeronautical, not Pennington can be waived. See id. at 662. or Aero Tech, could recover amounts due for repairs to the aircraft, and that Aeronautical lacked standing, the trial court HN4[ ] A corporation must file an assumed name certificate ruled that none of the appellants could recover damages from if it regularly conducts business in Texas under an assumed any of the appellees. The trial court denied appellants' motion name. TEX. BUS. & COM. CODE § 71.101. Before 2019, the for new trial. assumed name statute required every corporation operating under an assumed name to file an assumed name certificate This appeal followed. In five issues, appellants [*4] contend with the Secretary of State and with the county clerk where the trial court erred by (1) concluding that Aeronautical the entity is doing business. [*6] See Act of May 15, 2007, lacked standing to maintain its claims, (2) failing to conclude 80th Leg., R.S., Ch. 885, § 2.01, 2007 TEX. GEN. LAWS that appellees waived their claims regarding Aeronautical's 1906, 1933 (amended 2009 and 2019) (current version at failure to file an assumed name certificate in Dallas County, 1 TEX. BUS. & COM. CODE § 71.103). HN5[ ] Although (3) concluding that Schmidt and Montgomery are not the corporation's failure to comply with section 71.101 or individually liable for appellants' claims, (4) not awarding appellants damages and attorney's fees, and (5) not awarding attorney's fees to Pennington. 1 In 2019, the Legislature amended section 71.103. The requirement to file a certificate in the office of the secretary of state was retained, STANDARD OF REVIEW AND APPLICABLE LAW but the Legislature deleted the requirement to file a certificate in the office of the county clerk of the county in which the entity's principal HN1[ ] In an appeal from a bench trial, the trial court's office is located. Daniel Barrera EXHIBIT - B Page 5 of 6 Pennington v. Cypress Aviation, LLC section 71.103 "does not impair the validity of any contract" that the cause may be suspended while the defect is or prevent the corporation from "defending any action or corrected." Eckman v. Northgate Terrace Apartments, LLC, proceeding in any court of this state," the corporation "may No. 03-18-00254-CV, 2018 Tex. App. LEXIS 4794, 2018 WL not maintain in a court of this state an action or proceeding 3150845, at *2 (Tex. App.— Austin June 28, 2018, pet. arising out of a contract or act in which an assumed name was denied) (mem. op.). By failing to file a verified plea in used until an original, new, or renewed certificate has been abatement prior to trial, appellees waived their complaint. filed as required by this chapter." Tex. Bus. & Com. Code § Schlien v. Griffin, No. 01-14-00799-CV, 2016 Tex. App. 71.201. LEXIS 3715, 2016 WL 1456193, at *7 (Tex. App.—Houston [1st Dist.] Apr. 12, 2016, pet. denied) (mem. op.); see also The supreme court has explained that HN6[ ] section STS Gas Servs., Inc. v. Seth, No. 13-05-463-CV, 2008 Tex. 71.201 "authorizes a court to abate an action until the App. LEXIS 366, 2008 WL 152229, at *13-14 (Tex. App.— certificate is filed." Sixth RMA Partners, L.P. v. Sibley, 111 Corpus Christi-Edinburg Jan. 17, 2008, no pet.) (mem. op.) S.W.3d 46, 55 (Tex. 2003). "[F]ailure to file an assumed name (same; also noting that failure to file assumed name certificate certificate does not render a plaintiff's claim void," but rather affects plaintiff's capacity to bring suit but does not render "affects a plaintiff's capacity to bring suit." Id. HN7[ ] "An plaintiff's claim void). argument that an opposing party does not have the capacity to participate in a suit can be waived by a party's failure to In Continental Contractors, Inc. v. Thorup, 578 S.W.2d 864, properly raise the issue in the trial court." Id. at 56. 866 (Tex. App.—Houston [1st Dist.] 1979, no writ), as here, "the defendants waited until the second day of the trial to bring [the plaintiff's failure to file an assumed [*8] name Discussion certificate] to the trial court's attention." Explaining that HN9[ ] "[a] plaintiff's right to maintain the suit in the In their first and second issues, appellants challenge the trial capacity in which he sues is properly raised by a plea in court's conclusion of law that Aeronautical lacked standing to abatement, not by a motion for dismissal," the court noted that maintain its claims, and argue that appellees waived their the effect of the statute "is to authorize the court to abate an complaint that appellants failed to file an assumed [*7] name action until the required certificate has been filed." See id. certificate in Dallas County for Aeronautical. Appellants do The court continued, "[a] plea in abatement not relating to not dispute that the assumed name certificate for Aeronautical matters of jurisdiction must be urged before the trial on the was filed only in the Secretary of State's office and not in merits begins; otherwise it is waived." Id. The court Dallas County at the time appellants filed their claims against concluded that the trial court did not err by overruling the appellees. But they contend that appellees waived their defendants' motion to dismiss the plaintiff's claims for failure objection to the failure to file the certificate in Dallas County to file an assumed name certificate. See id. at 865-66. because appellees did not present their objection to the trial 2 court before trial and obtain a ruling. We agree. HN8[ ] Appellees established at trial that Pennington, not "[A] plaintiff's failure to have a valid [assumed name] Aeronautical, had filed an assumed name certificate in Dallas certificate on file is not a jurisdictional issue but, rather, a County for "Aero Tech Services." But appellees never filed a capacity issue that is properly raised in a plea in abatement so plea in abatement or requested that the trial court suspend the case for correction of the defect. Instead, they argued that the trial court lacked jurisdiction over Aeronautical because the 2 certificate had not been filed. But if Aeronautical performed The panel requested additional briefing from the parties at oral the work on the aircraft, then it had standing to maintain argument submission of this appeal on the question when an assumed name is so similar to the name of an incorporated entity that the [*9] suit against appellees. See Eckman, 2018 Tex. App. filing of an assumed name certificate is not required. Only counsel LEXIS 4794, 2018 WL 3150845, at *2 (owners of premises for appellants appeared at argument, and he subsequently gave had standing to maintain suit for possession even though they counsel for appellees notice of our request as we had directed him to had permitted assumed name certificate to elapse for name do. Counsel for appellants timely filed a letter brief on the requested listed on lease as "owner" of premises). Consequently, we issue. Instead of filing their own letter brief on the issue, appellees conclude the trial court erred by ruling that Aeronautical filed a motion for leave to file a response to appellants' letter, lacked standing to maintain its cause of action for breach of requesting an extension for ten days after the deadline set by the contract. panel. Because our request, communicated to appellees' counsel shortly after submission, was for additional briefing filed by all We sustain appellants' first issue. Given its erroneous legal parties within ten days, we deny appellees' motion. In any event, conclusion, the trial court made no findings of fact regarding counsel for appellants was not able to locate case authority on the amounts, if any, Aeronautical may recover from appellees on question. Daniel Barrera EXHIBIT - B Page 6 of 6 Pennington v. Cypress Aviation, LLC its claims. Consequently, we must remand the cause for new trial. See, e.g., Van Heerden v. Van Heerden, 321 S.W.3d 869, 874 (Tex. App.— Houston [14th Dist.] 2010, no pet.) (HN10[ ] appellate court may remand a case when further proceedings, such as reweighing evidence or finding facts, are necessary). Because of our disposition of appellants' first and second issues, we need not address appellants' remaining issues. CONCLUSION We reverse the trial court's judgment and remand the case for new trial. TEX. R. APP. P. 43.2(d). /s/ Leslie Osborne LESLIE OSBORNE JUSTICE JUDGMENT In accordance with this Court's opinion of this date, the judgment of the trial court is REVERSED and this cause is REMANDED to the trial court for a new trial. It is ORDERED that appellants Pat Pennington, Individually [*10] and Aeronautical Tech Services, Inc. d/b/a Aero Tech Services recover their costs of this appeal from appellees Cypress Aviation, LLC, William S. Montgomery, and Donal R. Schmidt, Jr. Judgment entered April 9, 2020 End of Document Daniel Barrera EXHIBIT - B