PER CURIAM.
In this complex commercial dispute, Vernco Construction, Inc., obtained a multi-million dollar breach-of-contract and tort judgment against E.E. Hood & Sons, Inc., and David Nelson, individually and d/b/a Collective Contracting (collectively, the Respondents). The Respondents appealed the judgment on various grounds, but the only issue before this Court is whether Vernco lacked standing to maintain the lawsuit because it assigned the claims to
The standing issue involves construction of the forbearance agreement Vernco executed with its commercial lender and an addendum to that agreement. After filing the underlying lawsuit, Vernco; its president, Jack Claflin, as Guarantor; and its lender, Jefferson State Bank, executed an agreement in which the Bank promised to abstain from foreclosing on Vernco's defaulted promissory notes. Among other things, the forbearance agreement states that "pursuant to applicable law, [the Bank] is the owner of all of [Vernco's] receivables (and proceeds therefrom), including. . . the receivables and claims (including commercial tort claims)" in the underlying litigation. When the forbearance agreement was produced to the Respondents, they jointly filed a motion to dismiss for lack of jurisdiction, alleging that Vernco had no standing to pursue the litigation because it had assigned the claims to the Bank in the forbearance agreement. They requested and scheduled an evidentiary hearing on the dismissal motion.
In response, Vernco asserted that the Respondents' standing argument failed as a matter of fact and law. Vernco alleged that, as a matter of fact, no foreclosure had occurred and the purpose of the forbearance agreement was to establish precise terms under which Vernco could avoid foreclosure of the lawsuit, as a corporate asset. Vernco also submitted an addendum to the forbearance agreement. The addendum, executed in response to the motion to dismiss, explains:
The addendum was authenticated by affidavits executed by signatories to both the forbearance agreement and the addendum. Although disputing that the claims had been assigned, Vernco alternatively alleged standing to maintain the lawsuit as the assignor in a representative capacity.
Pursuant to the Bexar County central docket system, the motion to dismiss was assigned to a judge for disposition. After what was evidently a lengthy pretrial hearing, the judge expressly found that Vernco had standing and that the trial court had subject-matter jurisdiction. There is no reporter's record of the hearing on the motion to dismiss.
Shortly thereafter, the case was assigned to a different judge for a jury trial on the merits, which occurred over several
Claflin authenticated the forbearance agreement in the offer of proof and testified that the agreement had been supplemented but was still in effect as supplemented. In response to the Respondents' offer, Vernco reiterated that the issue had already been resolved before trial and argued that admitting the forbearance agreement would "reopen all kinds of things in terms of additional evidence that we'd have to put on if [the agreement] was allowed to be tendered." Although Vernco's counsel requested that the addendum be included under the rule of optional completeness, neither side introduced the addendum as part of an offer of proof. The trial court overruled the Respondents' offer of proof.
After the trial court rendered judgment of more than $6 million in Vernco's favor on favorable jury findings, the Respondents appealed, raising numerous complaints and challenging the trial court's denial of their motion to dismiss for lack of standing. The court of appeals, relying solely on the four corners of the forbearance agreement, concluded that Vernco assigned all of its interest in the claims to the Bank and therefore had no standing to maintain an action for damages on those claims. 406 S.W.3d at 380. The court therefore vacated the trial-court judgment and dismissed the case for want of jurisdiction. Id.
The court refused to consider the addendum as part of the standing analysis because it had not been included in an offer of proof during the trial on the merits. Id. The court further intimated that the addendum was not in the appellate record at all and had merely been appended to Vernco's appellate brief. Id. (declaring that the addendum "was not before the trial court and is not before this Court" because "Vernco did not make an offer of proof of the [addendum] to the trial court and the [addendum] was not admitted into evidence but is merely appended to Vernco's brief"). The court further rejected Vernco's claim to possess standing in a representative capacity, noting the absence of evidence that the Bank had authorized Vernco to pursue the claims against the Respondents on its behalf. Id. The court never mentioned the hearing on the motion to dismiss or the existence of the addendum as an exhibit to Vernco's response to the motion to dismiss.
In declining to consider the addendum, the court of appeals appears to have overlooked the addendum in the record and misunderstood when the substantive jurisdictional ruling occurred. According to the court, "[t]he trial court `denied the bill,' and thereafter, in its written order, denied the motion to dismiss and found Vernco had standing and the trial court had subject[-]matter jurisdiction." 406 S.W.3d at 377. In fact, the trial court ruled on the motion to dismiss following a pretrial hearing, and the ruling was not reconsidered. There was no substantive ruling on the merits of the standing issue after the pretrial
The standing inquiry "focuses on the question of who may bring an action." Patterson v. Planned Parenthood, 971 S.W.2d 439, 442 (Tex. 1998). Courts lack subject-matter jurisdiction to adjudicate disputes initiated by parties lacking standing. The M.D. Anderson Cancer Center v. Novak, 52 S.W.3d 704, 708 (Tex. 2001); Tex. Ass'n of Business v. Tex. Air Control Bd., 852 S.W.2d 440, 443-44 (Tex. 1993). Whether a court has subject-matter jurisdiction is a question of law. Tex. Dep't of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex. 2004).
"Because standing is a component of subject[-]matter jurisdiction, we consider [standing issues] as we would a plea to the jurisdiction." Brown v. Todd, 53 S.W.3d 297, 305 n.3 (Tex. 2001). The trial court can rule on a jurisdictional plea by submission or after an evidentiary hearing: "[A] court deciding a plea to the jurisdiction is not required to look solely to the pleadings but may consider evidence and must do so when necessary to resolve the jurisdictional issues." Bland Indep. School Dist. v. Blue, 34 S.W.3d 547, 555 (Tex. 2000) (trial court determined jurisdictional issue after an evidentiary hearing at which witnesses testified); see State v. Lueck, 290 S.W.3d 876, 884 (Tex. 2009) (jurisdictional challenge may be asserted in a motion for summary judgment). When a jurisdictional issue is not intertwined with the merits of the claims, which is the case here, disputed fact issues are resolved by the court, not the jury.
The Respondents filed a pretrial motion to dismiss for want of jurisdiction, alleging the absence of standing. The pleading and response were supported by evidence, which included both the forbearance
The judge presiding over the trial-court proceedings had discretion to consider the jurisdictional matter in a pretrial hearing rather than awaiting further development of the case. Id. Furthermore, when the successor judge was assigned to preside over the jury trial, she had discretion to reconsider the pretrial judge's interlocutory ruling but was not required to do so. Cf. Velez v. DeLara, 905 S.W.2d 43, 45 (Tex.App.-San Antonio 1995, no writ) (under Bexar County's central docket system "the jurisdiction to reconsider an interlocutory ruling is vested in the court rather than the individual judge, and since one district judge may hold court for another district judge," the successor judge has the right to reconsider a previously entered interlocutory order). After reviewing the pertinent pleadings, the trial judge declined to reconsider the ruling.
This matter presents two issues concerning the contents of the appellate record. First, the court of appeals erroneously concluded that the addendum was not before the trial court and not part of the appellate record. Both the forbearance agreement and the addendum are included with the pleadings germane to the motion to dismiss, which were before the pretrial judge when he determined the standing issue. The court of appeals should have considered all the evidence presented for the pretrial judge's consideration.
The second issue is that there is no record of the plea to the jurisdiction hearing, which may or may not have been evidentiary. "If all the evidence is filed with the clerk and only arguments by counsel are presented in open court, the appeal should be decided on the clerk's record alone." Michiana Easy Livin' Country, Inc. v. Holten, 168 S.W.3d 777, 782 (Tex. 2005). A reporter's record is required, however, to preserve evidentiary complaints for appellate review when evidence is introduced in open court. Id. at 782, 783. Absent a specific indication or assertion to the contrary, we generally presume that pretrial hearings are nonevidentiary. Id. at 782-83. But, "[i]f the proceeding's nature, the trial court's order, the party's briefs, or other indications show that an evidentiary hearing took place in open court, then a complaining party must present a record of that hearing to establish harmful error." Id.
Clearly, however, the addendum is part of the clerk's record before the trial court and certainly must be considered if the matter was determined on the pleadings. If evidence was introduced at the motion-to-dismiss hearing, no reporter's record of that hearing has been included with the appellate record.