Quality Hardwoods, Inc. v. Midwest Hardwood Corp

In Quality Hardwoods, Inc. v. Midwest Hardwood Corp, No. 02-05-00311-CV, 2007 WL 6194114 (Tex. App.--Fort Worth June 28, 2007, no pet.), Quality agreed to warehouse and sell Midwest's inventory to resolve a prior debt. Quality's registered agent Timothy Mills took a portion of Midwest's inventory and used it to make cabinets he installed in the home he shared with his wife Diane Mills. Id. Eventually, Midwest sued Quality, Timothy Mills, and Diane Mills asserting theories of conversion, fraud, breach of fiduciary duty, and breach of contract. Following entry of a default judgment against her, Diane Mills filed a restricted appeal challenging her liability. The court of appeals concluded that Midwest's petition stated a claim against Diane Mills for conversion because it included a factual allegation that Midwest's inventory was "used by Defendants Timothy S. Mills and Diane Mills personally to make and install cabinets in their home." To the extent the petition lacked other conversion elements, the court concluded they were not legally required. Id. However, the court of appeals held that the petition failed to sufficiently allege claims against Diane Mills for fraud, breach of fiduciary duty, or breach of contract. The fraud claim contained only general allegations that "the Defendants willfully and fraudulently used or sold Plaintiff's hardwoods without authority or Plaintiff's knowledge." Diane Mills emphasized that the petition failed to allege that she made a false representation that she knew to be false. The court of appeals concluded that Midwest's petition did not state a cause of action against Diane Mills for fraud and, consequently, that error was apparent on the face of the record. Id.