Houston Appeals Court Says Corporate Officer Not Responsible for Debt

HOUSTON – The Court of Appeals for the First District of Texas in Houston has found that a Harris County trial court erred by holding a corporate officer responsible for the debts of a failed local spa.

In a July 23 opinion, a three-judge panel from the appeals court found that Francie Willis, a corporate officer of Urban Retreat of Houston Inc., does not have to pay $38,327 for unpaid rent to landlord BPMT, LLC. The appellate panel also found that Ms. Willis is not jointly and severally liable for $20,000 in trial attorneys’ fees or a conditional $45,000 in appellate attorney’s fees.

Ms. Willis was represented in the appeal by attorneys from Houston’s AZA, or Ahmad, Zavitsanos & Mensing, including Jane Langdell Robinson, Tiffany Joudi and Reed Smith.

The appellate court said the issue was whether the debt in question was incurred before or after the Urban Retreat corporation was effectively dissolved when its franchise taxes were not paid. The court found that the debt was incurred when the lease was signed and while the corporate structure was still in place, which exempted a corporate officer such as Ms. Willis from individual liability.

The case is Francie Willis v. BPMT, LLC, No. 01-14-00537-CV. First District Justice Michael Massengale delivered the opinion, which reversed an earlier finding issued by the 164^th District Court in Houston.

AZA, or Ahmad, Zavitsanos & Mensing, is a Houston-based law firm that is home to true courtroom lawyers with a formidable track record in complex commercial litigation, including energy, intellectual property, and business dispute cases. AZA is recognized in Chambers USA 2015 among the best in Texas commercial law; U.S. News & World Report and The Best Lawyers in America as one of the country’s best commercial litigation firms in 2014; and Law360 as a Texas Powerhouse law firm. National corporate counsel named AZA one of the country’s best in client service among law firms serving the Fortune 1000. Read more at https://azalaw.com.