2026 Tex. Bus. 44
FILED IN
BUSINESS COURT OF TEXAS
BEVERLY CRUMLEY, CLERK
ENTERED
7/15/2026
The Business Court of Texas,
Fourth Division
BRIK A. STRATTON §
Plaint·iff/Counter-Defendant§
§
v.
§ Cause No. 25-BC04B-0010
KENNETH M. HOGAN, STRATTON §
HOGAN CLINICS, INC., and §
STRATTON HOGAN REAL §
ESTATE,LLC §
Defendants/Counter-Plaintiff §
§
v.
§
CAREY PARSONS, STRATTON §
REHABILITATION CLINIC, INC., §
and JESUS "JESSE" B. GONZALES, §
CPA §
Third-Party Defendants §
MEMORANDUM OPINION AND ORDER
Cj[l Before the court is Defendant Hogan's Rule 9 la partial motion to dismiss
counterclaims, filed on June 9, 2026; Plaintiff Stratton and Third-Party
Defendants' response filed June 30, 2026; and Hogan's reply filed July 6, 2026.
The court heard argument on the Motion at a hearing held July 7, 2026. Having
considered the parties' briefing and oral argument, the pleadings, and the relevant
law, the court partially grants the motion for the reasons set forth below.
FACTUAL AND PROCEDURAL BACKGROUND
<jf 2 This case arises from the breakdown of a business relationship between
Stratton and Hogan, who jointly owned Stratton Hogan Clinics, Inc. ("SH Inc."), a
physical-therapy business, and Stratton Hogan Real Estate, LLC ("SHRE"), which
held the business's real estate. After negotiations to separate their business
interests failed, Stratton sued seeking judicial dissolution of SH Inc. and SHRE. By
the co-owners' joint request, the court appointed a wind-up supervisor in an order
entered June 13, 2025.
<jf 3 The co-owners have sued each other for breach of fiduciary duty and breach
of SH Inc. 's operating agreement. Hogan also brings claims against the third-party
Defendants, including against Stratton's separately owned business Stratton
Rehabilitation Clinic, Inc. ("Stratton Rehab"). In a recent amended pleading,
Stratton and Stratton Rehab Uointly, "the Stratton Parties") added new
counterclaims against Hogan, including joint claims for disparagement and business
disparagement; Stratton Rehab's claim for breach of contract based on failure to pay
on a $300,000 promissory note; and Stratton's claim for conversion of physicaltherapy equipment.
<j[4 By his Motion, Hogan sought dismissal of these new claims under Texas Rule
of Civil Procedure 91a. The Stratton Parties responded by seeking leave to amend
their counterclaims, adding factual allegations as to the latter two claims and
removing the disparagement and business-disparagement claims within Rule 9la's
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deadline. See TEX. R. Crv. P. 91a.5(a), (c) (requiring a ruling on the motion "unless
it has been withdrawn or the cause of action has been nonsuited" at least three days
before the hearing). By separate order, the court granted the Stratton Parties'
unopposed motion to amend their pleading. It now considers Hogan's motion to
dismiss the contract and conversion claims.
MOTION STANDARD
<jf 5 A motion under Rule 91a seeks dismissal of a claim "on the grounds that it
has no basis in law or fact." TEX. R. Crv. P. 91a.l. A claim lacks basis in fact "if no
reasonable person could believe the facts pleaded." Id. A claim lacks basis in law "if
the allegations, taken as true, together with inferences reasonably drawn from them,
do not entitle the claimant to the relief sought." Id.
<jf 6 To survive dismissal, the claimant must satisfy Texas's notice-pleading rules.
In re First Rsrv. Mgmt., L.P., 671 S.W.3d 653, 661-62 (Tex. 2023). Beyond giving
fair notice of the claims themselves, the pleading must contain "the essential factual
allegations supporting those claims, which must be sufficient to support a judgment
if ultimately proven." Id. at 662 (internal quotations omitted). Dismissal is required
if, "after applying the fair-notice pleading standard, the challenged claim is
foreclosed as a matter of law because the claim is not legally cognizable or is
negated, under settled law, by the alleged facts." Tall v. Vanderhoef, 2025 Tex. Bus.
15, <jf 6, 2025 WL 1165208, at *2 (8th Div.); Longhorn Creek Ltd. v. Gardens of
Connemara Ltd., 686 S.W.3d 418, 426 (Tex. App.-Dallas 2024, pet. denied)
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(holding a claim lacks basis in law if pleading lacks a legally cognizable cause of
action or if "the allegations in the plaintiff's own pleading establish a complete legal
bar to the plaintiff's claims by affirmatively negating entitlement to the relief
requested.").
ANALYSIS
I. The court grants Hogan's motion to dismiss the conversion claim.
917 Hogan moves to dismiss Stratton's claim that Hogan converted SH Inc. 's
physical-therapy equipment by transferring it from one SH Inc. clinic to another SH
Inc. clinic. The latter clinic is known to the parties as Alamo Ranch. Am. Pet. 919119,
40, 61. Stratton's petition explains that the parties had previously agreed through
counsel "in principle" to disentangle their physical-therapy practice by having
Hogan assume responsibilities for Alamo Ranch operations and expenses. Id. 91 36.
He claims that Hogan then, without Stratton's consent, moved the equipment for
use at the "prospective independent operation" Hogan planned to operate at Alamo
Ranch. Id. 91 40.
918 A conversion claim requires a showing that: (1) the plaintiff owned, had
possession, or entitlement to possession of property; (2) the defendant unlawfully
and without authorization assumed and exercised control over the property to the
exclusion of, or inconsistent with, the plaintiff's rights; and (3) the plaintiff
demanded the property's return, (4) which the defendant refused. Guillory v.
Dietrich, 598 S.W.3d 284, 292 (Tex. App.-Dallas 2020, pet. denied). A plaintiff
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also must establish it was injured by the conversion. See USAA Gas. Ins. Co. v. Letot,
690 S.W.3d 274, 285 (Tex. 2024) ("each claimant must prove entitlement to
damages before he can recover anything for conversion").
<jJ9 According to his own pleading, Stratton complains that Hogan converted SH
lnc.'s property rather than Stratton's own property. Am. Pet. <jJ<jJ 40, 61. Stratton
does not plead he was owner of the equipment or that he had rights to possess the
equipment, as would be required to satisfy the first element of a conversion claim.
<jJlO Under Texas law, "suits for injuries to a corporation ... ordinarily must be
brought by the corporation itself or derivatively on its behalf." In re UMTH Gen.
Servs., L.P., 725 S.W.3d 424, 430 (Tex. 2025). The pleadings describe Stratton as
co-owner of SH Inc. -but he sues only individually, not derivatively on behalf of the
corporation.
<Jill Stratton points out that SH Inc. is a closely held corporation, and he notes
that in such a case the court may treat a derivative action as a direct claim to allow
individual recovery. TEX. Bus. ORGS. CODE § 21.563 ("a derivative proceeding
brought by a shareholder of a closely held corporation may be treated by a court as a
direct action brought by the shareholder for the shareholder's own benefit."); Sneed
v. Webre, 465 S.W.3d 169, 188 (Tex. 2015) ("if justice requires, a court may treat a
derivative proceeding like a direct action and allow the shareholder to recover
directly"). In the case cited by Stratton, a party pleading both individual and
derivative claims was permitted to recover directly. Saden v. Smith, 415 S.W.3d
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450, 463 (Tex. App.-Houston [1st Dist.] 2013, pet. denied). But Stratton pleads no
derivative claim that this court could treat as a direct proceeding for the purpose of
allowing Stratton to recover for harm allegedly done to SH Inc. And Section 21.563
does not alter the requirement that, "to recover in an individual capacity for nonderivative claims, the shareholder must prove a personal cause of action and
personal injury." Sneed, 465 S.W.3d at 188. Stratton cites no other doctrine that
would permit him to stand in the shoes of SH Inc. to sue for conversion of the
corporation's property.
9112 Absent any pleading of ownership rights, Stratton's petition lacks an
allegation of harm he suffered from the alleged conversion. Instead, Stratton's
pleadings describe SH Inc. as owner of both clinic locations at the time the
equipment was moved-without factual allegations to show that even SH Inc. was
harmed. Further, Stratton concedes that SH Inc. 's equipment has now been divided
between Stratton and Hogan through the ongoing wind-up process that the courtappointed wind-up Supervisor is directing. In the course of accounting for and
allocating the joint entities' assets, the parties negotiated with the Supervisor to
assign SH Inc. 's equipment to Hogan's and Stratton's respective clinics. Stratton
pleads that "the Supervisor has not concluded an allocation or report of the accounts
by and between Stratton and Hogan for purposes of the true-up by and among
Stratton and Hogan," and seeks recovery only "to the extent these items (and any
others) are excluded from the true-up." Am. Pet. <if 61 (emphasis added). Stratton's
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own pleading thus recognizes that any harm has not yet occurred. Because his
pleading negates ownership and harm rather than providing facts to support those
elements, his pleading bars his claim as a matter oflaw. Hogan's motion to dismiss
the conversion claim is granted.
<j)l3 By agreed order, the Supervisor is in the process of rendering his final report,
which will contain his "recommendations as to the parties' respective liabilities or
obligations for final resolution by the Court." Agreed Order at 4 (June 13, 2025).
Dismissal of the conversion claim does not excuse the Supervisor from his duty to
account for the allocation of SH Inc. 's equipment to the parties when rendering his
report on Stratton's and Hogan's respective liabilities and assets. Id.
II. The court denies Hogan's motion to dismiss the contract claim.
<j)l4 Hogan also seeks dismissal of Stratton Rehab's claim for SHRE's failure to
pay on a $300,000 promissory note. A breach-of-contract claim requires a valid
contract, the claimant's performance or tendered performance, the respondent's
breach, and resulting damages. Pathfinder Oil & Gas) Inc. v. Great W. Drilling, Ltd.,
574 S.W.3d 882, 890 (Tex. 2019). Stratton Rehab pleads facts to support all
requisite elements of the claim.
<j)l5 Though Hogan argues that SHRE has not appeared in this suit, he cites no
authority permitting Rule 91a dismissal based on a defendant's failure to appear.
The court must "decide the motion based solely on the pleading of the cause of
action." TEX. R. Crv. P. 9la.6. Seeing that Stratton Rehab's claim, as pleaded, does
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not lack basis in law or fact, the court denies Hogan's motion to dismiss the contract
claim.
<j/16 By statute, the wind-up procedure requires that the entity's property be
applied toward discharging its liabilities. TEX. Bus. ORGS. CODE § 11.053 ("a
domestic entity in the process of winding up shall apply and distribute its property
to discharge, or make adequate provision for the discharge of, all of the domestic
entity's liabilities and obligations"). Here, the Supervisor did just that. Upon sale of
SHRE 's joint property, the Supervisor and Stratton Rehab jointly requested that the
court grant the Supervisor leave to apply funds from the sale to discharge SHRE's
debts owed to Stratton Rehab. The movants initially requested the note's payment
and related attorneys' fees, but they did not pursue the request for fees and
ultimately requested submission of the court's order that awarded full payment of
the promissory note and interest without a fee award. The wind-up process has
disposed of this claim. See Order (Apr. 17, 2026). Though the court finds no grounds
for Rule 91a dismissal, Stratton Rehab concedes its amended pleading includes the
contract claim only to avoid nonsuit by implication; it does not identify any issue
remaining to submit to the jury on that claim.
III. The court declines to award fees under Rule 91a.
<j/17 Rule 9 la permits, but does not require, an award of attorneys' fees to the party
who prevails on a motion to dismiss. TEX. R. Crv. P. 9la.7; Sanchez v. Striever, 614
S.W.3d 233,248 n.10 (Tex. App.-Houston [14th Dist.] 2020, no pet.) ("any award
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of fees and costs is discretionary, not mandatory"); see Montoya Frazier v. Maxwell,
734 S.W.3d 1, 16 (Tex. App.-Fort Worth 2025, pet. denied) (noting fee award
under Rule 91a is discretionary). The court exercises its discretion to decline to
award fees or costs to either party based on this partial grant of Hogan's Motion.
CONCLUSION AND ORDER
For these reasons, the court GRANTS Hogan's motion to dismiss Stratton's
conversion claim.
In all other respects, Hogan's motion is DENIED.
SO ORDERED.
Judge of e Texas Business Court,
Fourth Division
SIGNED ON: July 15, 2026
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