Full Opinion

Opinion issued October 30, 2026 In The Court of Appeals For The First District of Texas ———————————— NO. 01-24-00750-CV ——————————— ALTON THOMPSON, JINIQUE SEGNO, AND BRITTANY AUGUST, Appellants V. NUNN INVESTMENTS, LLC D/B/A ONCE UPON A CHILD, Appellee On Appeal from the 239th District Court Brazoria County, Texas Trial Court Case No. 122516-CV MEMORANDUM OPINION Appellants Alton Thompson, Jinique Segno, and Brittany August appeal the trial court’s summary judgment in favor of appellee Nunn Investments, LLC d/b/a Once Upon a Child, on appellants’ suit brought under 42 U.S.C. section 1981. We reverse and remand. Background Once Upon a Child buys used children’s items. Appellants, who are African American, sued Once Upon a Child alleging that they attempted to sell to the store children’s clothes and other items but the store refused to conduct business with them on the basis of their race in violation of 42 U.S.C. section 1981. Once Upon a Child answered and moved for combined traditional and no- evidence summary judgment, challenging the elements of appellants’ section 1981 claims. In response, appellants argued that the evidence is sufficient to create fact issues on the challenged elements. The trial court granted Once Upon a Child’s motion for summary judgment. Appellants now appeal. Discussion A. Standard of Review We review a trial court’s summary judgment de novo. Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009). When a party moves for both a traditional and no-evidence summary judgment, and the trial court’s order does not specify its reasons for granting summary judgment, we first review the propriety of the summary judgment under the no-evidence standard. See Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 600 (Tex. 2004); see also TEX. R. CIV. P. 166a(i). 2 To prevail on a no-evidence motion for summary judgment, the movant must demonstrate that no evidence supports an essential element of the non-movant’s claim on which the nonmovant would have the burden of proof at trial. TEX. R. CIV. P. 166a(i); Hahn v. Love, 321 S.W.3d 517, 523–24 (Tex. App.—Houston [1st Dist.] 2009, pet. denied). The burden then shifts to the nonmovant, here the appellants, to present more than a scintilla of evidence raising a genuine issue of material in order to defeat summary judgment. TEX. R. CIV. P. 166a(i); Ford Motor Co., 135 S.W.3d at 600. When determining if more than a scintilla of evidence has been produced in response to a Rule 166a(i) motion for summary judgment, we must review the evidence in the light most favorable to the appellants, crediting favorable evidence if reasonable jurors could do so, and disregarding contrary evidence unless reasonable jurors could not. Mann Frankfort, 289 S.W.3d at 848 (citing City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005)). More than a scintilla of evidence exists if the evidence “rises to a level that would enable reasonable and fair-minded people to differ in their conclusions.” Ford Motor Co., 135 S.W.3d at 601. 3 B. Section 1981 Discrimination Claim Section 1981 of Title 42 of the United States Code guarantees that persons of all races within the jurisdiction of the United States have equal rights to “make and enforce contracts.” 42 U.S.C. § 1981(a). The equal right of all persons “to make and enforce contracts” without regard to race “includes the making, performance, modification, and termination of contracts, and the enjoyment of all benefits, privileges, terms, and conditions of the contractual relationship.” Id. § 1981(b). “To succeed on a § 1981 claim, plaintiffs must show that (1) they are members of a protected class; (2) the defendant intended to discriminate on the basis of that protected class; and (3) the discrimination concerned one or more of the activities enumerated in the statute.” Abdallah v. Mesa Air Grp., Inc., 83 F.4th 1006, 1013 (5th Cir. 2023). A plaintiff may prove claims asserted under section 1981 using either direct evidence or circumstantial evidence. See, e.g., Hager v. Brinker Tex., Inc., 102 F.4th 692, 698–99 (5th Cir. 2024) (distinguishing analyses of direct and indirect (circumstantial) evidence of racial discrimination). Entitlement to relief under section 1981 requires an impaired “contractual relationship”—but the “contractual relationship need not already exist, because § 1981 protects the would-be contractor along with those who already have made contracts.” Domino’s Pizza, Inc. v. McDonald, 546 U.S. 470, 476 (2006). 4 Accordingly, “Section 1981 offers relief when racial discrimination blocks the creation of a contractual relationship . . . so long as the plaintiff has or would have rights under the existing or proposed contractual relationship.” Id. (recognizing that § 1981 imposes liability upon persons who, “for racially motivated reasons, . . . prevented individuals who ‘sought to enter into contractual relationships from doing so’” (internal quotation omitted)).1 “Disparate treatment [discrimination] describes ‘actions that treat [a plaintiff] worse than others based on [the plaintiff’s] race, color, religion, sex, or national origin.’” Abdallah, 83 F.4th at 1013 (quoting Pacheco v. Mineta, 448 F.3d 783, 787 (5th Cir. 2006)). Comparing a plaintiff’s experiences with those of a person outside of the protected class “is a sufficient but not necessary way of showing disparate treatment.” Id. at 1014–15. Rather, “[t]he test is whether the outcome would be different but for the protected class[.]” Id. 1 See Body by Cook, Inc. v. State Farm Mut. Auto. Ins., 869 F.3d 381, 391 (5th Cir. 2017) (noting section 1981 claim requires discrimination concerning existing or prospective contract). “[W]hen a merchant denies service or outright refuses to engage in business with a consumer attempting to contract with the merchant, that is a violation of § 1981.” Causey v. Sewell Cadillac-Chevrolet, Inc., 394 F.3d 285, 290 (5th Cir. 2004) (citing Morris v. Dillard Dep’t Stores, Inc., 277 F.3d 743, 752 (5th Cir. 2001) (internal citations omitted)). 5 C. Analysis Appellants contend that the trial court erred in granting summary judgment to Once Upon a Child because they raised a fact issue on their section 1981 claim. 1. Thompson and Segno With respect to Thompson and Segno, appellants assert that the store denied service and outright refused to engage in business with them due to race when the owner ordered them out of the store and threatened to call the police. In support of their assertion, appellants cite Causey v. Sewell Cadillac-Chevrolet, Inc., 394 F.3d 285 (5th Cir. 2004).2 In Causey, an African-American man took his vehicle to a service center for service that was covered under a warranty. See id. at 287. Upon initial inspection, a service member found that the vehicle needed repairs. Id. However, when he learned that the vehicle was under warranty, he changed his assessment and stated that no repairs were needed. Id. After the plaintiff complained to the service member’s superiors in person and on the telephone to no avail, one of the individuals whom the plaintiff saw in person signed a service receipt for the vehicle. Id. This same individual twice stated that “N*****s always want something for nothing,” yelled 2 Although Texas courts are obligated to follow only higher Texas courts and the United States Supreme Court, we may draw upon the precedents of the Fifth Circuit, or any other federal or state court, in determining the appropriate federal rule of decision. See Penrod Drilling Corp. v. Williams, 868 S.W.2d 294, 296 (Tex. 1993). 6 at a security guard to escort the plaintiff from the premises, and ordered the plaintiff not to return “ever again.” Id. The plaintiff filed suit against Sewell Cadillac-Chevrolet, Inc. under section 1981, alleging that he was subjected to racial discrimination while attempting to have his vehicle serviced. Id. at 287–88. Sewell moved to dismiss the plaintiff’s claims, and the district court granted the motion, concluding that because the initial refusal to perform the requested work was not accompanied by the racial slur, the refusal to perform the work was due to financial motives rather than racial animus. Id. at 288. The Fifth Circuit reversed. Id. at 291. It noted that after the service member refused to repair his car, the plaintiff persisted in requesting his car be repaired and took his complaints directly to supervisors. Id. at 289. The plaintiff and the “individual” then exchanged words, resulting in the offensive comment and the plaintiff’s removal from the premises. Id. Thus, the court reasoned, it could reasonably be inferred from the facts as pleaded that the “individual” was a supervisor. Id. Noting that a supervisor has the ultimate authority to overrule or affirm a subordinate’s decision, the court stated that the conclusion that the individual was a supervisor was buttressed by the fact that the individual had the authority to sign off on the service receipt, order the security guards to have the plaintiff thrown off the premises, and tell him never to return. See id. 7 The Fifth Circuit thus concluded that “[s]ince a reasonable inference can be drawn that the individual who uttered the pejorative comment was also the ultimate decision maker, the racial animus is causally connected to the adverse action,” and the court held that the plaintiff had pleaded discriminatory intent. Id. at 290. Here, appellants argue that they similarly went to Once Upon a Child to sell their items and purchase others but the store refused to accept them. Thompson specifically testified that when he and Segno entered the store and approached a clerk to sell his and Segno’s clothing which was in bags, the store owner came over saying, “no, no, no,” and “sorry, we can’t accept your things.” When Thompson asked why, the owner said, “I don’t need a reason” and “I’m not going to accept your things.” A white customer then walked up with her clothing in a bag, and it was accepted by the store. Thompson asked why the store accepted the white customer’s clothing but not his, and the clerk initially responded because Thompson had bags. When Thompson and Segno pointed out that the white customer was also using bags, the owner admonished the clerk and again said that she did not need to give any reason for rejecting Thompson’s and Segno’s clothing. Thompson then began video recording the situation and was told to leave the store. Thompson and Segno left and did not return. Thompson testified they were not given any opportunity to return to the store with their clothing in a bin. 8 We conclude that this testimony is sufficient to create a fact question as to whether Once Upon a Child denied service or outright refused to engage in business with Thompson and Segno based on their race in violation of section 1981. See Causey, 394 F.3d at 290. Once Upon a Child argues that because Thompson’s daughter testified the white customer’s clothing was in a bin, not a bag, that this overcomes Thompson’s testimony to the contrary. But such contradictory evidence merely creates a question of fact under our no-evidence summary judgment standard. See Mann Frankfort, 289 S.W.3d at 848; see, e.g., Randall v. Dallas Power & Light Co., 752 S.W.2d 4, 5 (Tex. 1988). Accordingly, we hold that the trial court erred in granting summary judgment against Thompson and Segno. 2. August Appellants next contend that a fact question exists regarding whether August’s section 1981 rights were violated. August testified that she entered the store with clothing in a tote bag and was told the store did not accept clothing in bags. August returned to her car, took the clothing out of the bags and re-entered the store with the clothing on hangers. The store clerk again refused to accept the clothing and told August to go across the street to Wal-Mart to buy a bin in which to place the clothing. August returned to her car and watched a white customer with clothing in a trash bag enter the store, exit after a time without the bag of clothes, 9 and drive away in her vehicle. August drove away and was able to sell her clothing at a different store. We conclude that this testimony is sufficient to create a fact issue on August’s section 1981 claim regarding the making of a contract. Indeed, she raised a question of fact as to whether the store imposed on her additional, more onerous conditions to engaging in negotiations than it did on a white customer. See 42 U.S.C. § 1981(a), (b); see also Arguello v. Conoco, Inc., 330 F.3d 355, 360–61 & n.11 (5th Cir. 2003) (under section 1981, the making of a contract “must include the opportunity to enter into negotiations on equal terms”). Accordingly, we hold that the trial court also erred in granting summary judgment against August.3 Conclusion For all of the reasons above, we reverse the trial court’s summary judgment in all things and remand for further proceedings consistent with this opinion. Terry Adams Chief Justice Panel consists of Chief Justice Adams and Justices Caughey and Johnson. 3 In light of our conclusion, we do not reach appellants’ additional issues. See TEX. R. APP. P. 47.1. 10