Texas Causes of Action & Affirmative Defenses

Texas Causes of Action & Affirmative Defenses

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Thursday, May 3, 2012

Capacity to sue and standing are distinct, and also have different procedural implications

 
CORPORATIONS’ CAPACITY TO SUE VS. STANDING
   
A corporation's authority to bring a lawsuit on a claim is an issue of capacity, not standing to sue. See El T. Mexican Rests., Inc. v. Bacon, 921 S.W.2d 247, 249 (Tex. App.-Houston [1st Dist.] 1995, writ denied) (capacity is a party's legal authority to go into court to prosecute or defend a suit). A party must challenge a corporation's capacity to file suit by a verified denial under rule 93. See id.; see also Sixth RMA Partners v. Sibley, 111 S.W.3d 46, 56 (Tex. 2003) (“When capacity is contested, Rule 93 requires that a verified plea be filed unless the truth of the matter appears of record.”).
  
SOURCE:  DALLAS COURT OF APPEALS - 05-10-00725-CV – 4/27/12
  
Gutierrez's first three issues claim TWLF could not recover on the contract because its corporate privileges were forfeited by the secretary of state in 2004 for non-payment of franchise taxes. Gutierrez did not raise these arguments in a verified denial under rule 93; instead he raised them for the first time in a supplemental motion for new trial filed more than thirty days after the judgment was signed. Thus, the issues were not timely raised in the trial court and are not preserved for appeal. See Tex. R. Civ. P. 93(1), (2), (6), 329b(b); Tex. R. App. P. 33.1(a).
   
Gutierrez argues this is an issue of standing to sue and can be raised at any time. We disagree.

3 comments:

  1. When the Secretary of State of Texas certified that the status of the Assumed Name Certificate of a certain corporation was “EXPIRED”, any legal actions taken and Orders/Judgments obtained under that invalid Assumed Name have been VOID ab initio since its expiration date.

    Said corporation has been violating the BUSINESS AND COMMERCE CODE: Sec. 71.201 (Civil Sanction: it may not maintain in a court of this state an action or proceeding arising out of a contract or act until an original, new, or renewed certificate has been filed.) & Sec. 71.202 (Criminal Penalty: the offense is a Class A misdemeanor).

    The corporation would have no standing to sue until an original, new, or renewed certificate has been filed. Standing is a component of subject matter jurisdiction. Douglas v. Delp, 987 S.W.2d 879, 882 (Tex.1999). If a party is found to lack standing, the court is without subject matter jurisdiction to determine the action. See Pele Defense Fund v. Puna Geothermal Venture, 77 Hawai'i 64, 67, 881 P.2d 1210, 1213 (1994). "[i]f a court lacks jurisdiction over the subject matter of a proceeding, any judgment rendered in that proceeding is invalid." Bush v. Hawaiian Homes Comm'n, 76 Hawai'i 128, 133, 870 P.2d 1272, 1277 (1994).

    Thus, any orders or judgments rendered in favor of the corporation while it was factually and legally non-existent are VOID ab initio.

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  2. I believe the May 4 poster has misinterpreted the legal ramifications of the terms "may not maintain" in the statute. Similar constructions appear to indicate a possible affirmative defense, that must be raised in its proper moment -- as I read it the judgment is not "void" but "voidable".

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  3. A MOTION STATES THAT THE CORPORATION CHANGED ITS NAME, AND THAT IS ALL, THEREFORE THEY DO NOT HAVE TO PROVE THE NAME CHANGE.

    I think the old entity dies and the next second the new one exists, if process is properly done. Therefore they do have to prove that the old one died, and the new one is in effect?

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