Court Opinion

ID: 2652090
Source: CourtListenerOpinion
Date Created: 2014-02-04 06:04:45.584157+00
Date Added: 2024-06-11T09:10:38.998981
License: Public Domain

Case: 11-11140        Document: 00512520144          Page: 1    Date Filed: 02/03/2014

           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                    Fifth Circuit

                                                                              FILED
                                                                           February 3, 2014

                                        No. 11-11140                        Lyle W. Cayce
                                                                                 Clerk

ART MIDWEST INCORPORATED, a Nevada Corporation; AMERICAN
REALTY TRUST INCORPORATED, a Georgia Corporation

                Plaintiffs-Intervenor Defendants - Appellants

v.

ATLANTIC LIMITED PARTNERSHIP XII, a Michigan Limited Partnership;
REGIONAL PROPERTIES LIMITED PARTNERSHIP, a Michigan Limited
Partnership,

                Intervenor Plaintiffs - Appellees

v.

DAVID M. CLAPPER; ATLANTIC MIDWEST L.L.C., a Michigan Limited
Liability Company; ATLANTIC XIII L.L.C., a Michigan Limited Liability
Company,

                Defendants - Appellees

                     Appeal from the United States District Court
                          for the Northern District of Texas

Before ELROD and HIGGINSON, Circuit Judges, and JACKSON, District
Judge.*

      *
          Chief District Judge of the Middle District of Louisiana, sitting by designation.
     Case: 11-11140       Document: 00512520144         Page: 2    Date Filed: 02/03/2014

                                      No. 11-11140

HIGGINSON, Circuit Judge:
       The fifteen-year history of this case, arising from the collapse of a real
estate transaction, both complicates and clarifies this appeal. It complicates
because the record exceeds 10,000 pages, and spans a trial, an appeal, a remand,
and a second trial. It clarifies because more than a decade of litigation has
narrowed the issues open to us.
       One issue in particular dominated the parties’ briefs and oral argument:
whether the decision by ART Midwest, Inc. and American Reality, Inc.
(collectively “Plaintiffs-Appellants” or “ART entities”) not to cross-appeal a jury’s
finding that David Clapper (“Clapper”), Atlantic Midwest LLC, and Atlantic
XIII, LLC (collectively “Defendants-Appellees” or “Clapper entities”) did not
commit fraud prevented them from later raising the same fraud claims. We hold
that it did. We also reject, with the exception of a double counting of damages,
the ART entities’ other claims of error.
                           FACTS AND PROCEEDINGS
       In 1998, the ART entities agreed to acquire eight apartment complexes
from the Clapper entities. The parties structured the deal so that an
intermediary, ART Midwest LP (the “Partnership”), would be the nominal buyer
of the properties.
       The agreement provided that the Partnership could “terminate” the
transaction under certain circumstances, including a “title or survey problem.”1
The agreement also provided that, if the ART entities “default[ed] in any of
[their] obligations,” then “the Partnership shall be deemed to have defaulted” on
all of them, and that, “[i]n such case,” the Clapper entities “shall have the right
. . . to terminate” the agreement.

       1
        A patchwork of contracts governed the transaction. For ease of reference, we refer to
the contracts, collectively, as the “agreement.” The parties do not dispute that, under the
terms of the agreement, Texas law applies.

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      Upon conducting due diligence, the ART entities purported to discover that
two of the apartment complexes, Concord East and Country Squire, needed
repairs before winter to avoid weather damage. The parties amended the
agreement to expedite the transfer of the two properties into the Partnership.
      After the Partnership acquired the Concord East and Country Squire
properties, but before it secured the remaining properties, the ART entities sent
a letter to the Clapper entities purporting to terminate the deal. In the letter,
dated March 22, 1999, the ART entities wrote that, on behalf of the Partnership,
they “elect[ed] to terminate” the agreement because the Clapper entities “fail[ed]
to cure the Partnership’s title objection regarding the non-conforming uses
relating to” one of the remaining properties. The ART entities wrote that “in
keeping with the ‘all or nothing’ spirit of this transaction, it is our . . .
expectation that David Clapper will repurchase the [Concord East and Country
Squire] properties.”
      The Clapper entities responded that they “did not default in any of their
obligations,” and that the Partnership was “not entitled” to terminate the
agreement. They also declined to repurchase the properties.
      The ART entities initiated this lawsuit, alleging that Clapper defrauded
them by representing that “there were no title problems,” and seeking a
declaratory judgment that they “properly terminated” the deal. The Clapper
entities countersued, alleging that the ART entities breached the agreement by
purporting to terminate the deal. A jury found that the ART entities properly
terminated the deal, but that the Clapper entities did not commit fraud.
      The Clapper entities appealed, among other things, the jury’s finding that
the ART entities had a right to terminate the deal. See Notice of Appeal, No. 04-

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                                      No. 11-11140

10010, Docket No. 58, at 6-7 (June 15, 2004).2 The ART entities did not cross-
appeal the jury’s adverse fraud finding or otherwise address the issue of fraud.
       A panel of this court held that “the legal non-conforming zoning use at
issue . . . is neither a violation nor a restriction of record on title,” and therefore
did “not render the title to the . . . property unmarketable.” Art Midwest, Inc. v.
Clapper, 242 F. App’x 130, 132 (5th Cir. 2007) (per curiam).                   The panel
concluded: “Because there was no failure to tender marketable title, there was
no default by the [Clapper entities]. It follows that a determination of liability
and damages must be decided anew.” Id.
       On remand, the district court granted, in part, summary judgment for the
Clapper entities, holding that the ART entities defaulted on the agreement by
wrongfully terminating the transaction in their March 22, 1999 letter. The
district court also held, among other things, that the mandate rule—that is, the
rule that “bars litigation of issues decided by the district court but foregone on
appeal or otherwise waived, for example because they were not raised in the
district court,” United States v. Lee, 358 F.3d 315, 321 (5th Cir.
2004)—prevented the ART entities from asserting claims of fraud against the
Clapper entities. In a separate summary judgment order, the district court held,
among other things, that, by defaulting on the deal, the ART entities owed
capital contributions to the Partnership under section 4.02(d) of the agreement.3

       2
        The Clapper entities noted that they “do not claim an appeal from those portions of
the Court’s Instruction to the Jury/the Jury Verdict related to Question 1-Fraud [and]
Question 2-Fraud damages.” Notice of Appeal, No. 04-10010, Docket No. 58, at 7.
       3
         Section 4.02(d) provides:
       Annual Appraisal. Commencing on the second anniversary of the Final Effective
       Date, the Managing General Partner shall obtain an appraisal of the Property
       (in accordance with Section 10.02(c)) on an annual basis, and if the appraised
       value of the Property is less than the sum of (i) all outstanding liens on the
       Property and other Partnership indebtedness plus (ii) the Outstanding Class A
       Limited Partnership Unit Equity then outstanding, ART shall contribute
       additional assets, whose value will be determined by appraisal as provided in

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                                       No. 11-11140

After this court denied interlocutory review, the district court put the remaining
issues—including whether the ART entities owed and breached a fiduciary duty
to the Clapper entities, and the amount of damages owed by the ART
entities—before a jury.
       The jury found in a special verdict that the ART entities owed and
breached fiduciary duties to the Clapper Entities. The jury also found that, by
defaulting on the agreement, the ART entities owed the Partnership capital
contributions of $7.4 million as of February 1, 2001 and $10.6 million as of
February 1, 2002. The district court combined the $10.6 million and $7.4 million
amounts and, accounting for interest, awarded “Atlantic Midwest, on behalf of
the Partnership,” $34.4 million. After accounting for additional damages and
interest, the total award exceeded $50 million. The ART entities appeal.
                                        ANALYSIS
1. The Fraud Claims
       The district court found that it “is undisputed that the jury found against
the ART Entities on their independent fraud claims—a result which neither
party appealed and which, therefore, remains decided against the ART Entities.”
The district court therefore found that the ART entities “waived [the issue of
fraud] by failing to cross-appeal the jury’s rejection of their fraud claims.”4 The

       Section 10.02(c), to the Partnership such that the value of all assets of the
       Partnership equal or exceed the sum of (i) all outstanding liens on the Property
       and other partnership indebtedness plus (ii) the Outstanding Class A Limited
       Partnership Unit Equity then outstanding. Any amounts so contributed shall
       be deemed an Additional Capital Contribution to the Partnership by ART.

       4
          The district court also found that the ART entities waived these “additional fraud-
based justifications for backing out of the deal” because they “failed to advance them at any
time before in this case’s lengthy history.” To the extent the ART entities attempted to raise
“additional fraud-based justifications for backing out of the deal,” (emphasis added), we agree
that they waived these claims by not raising them in the first district court proceeding. See
Lee, 358 F.3d at 321 (noting that the mandate rule “bars litigation of issues decided by the
district court but foregone on appeal or otherwise waived, for example because they were not

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                                        No. 11-11140

ART entities now argue that “[t]here was no need to appeal their affirmative
defense of fraud” because they “won at the first trial on their breach of contract
claims.” The parties agree that we review de novo the district court’s decision
not to consider the ART entities’ fraud claims on remand.
(A) The Cross-Appeal Rule
       “[T]his circuit follows the general rule that, in the absence of a
cross-appeal, an appellate court has no jurisdiction to modify a judgment so as
to enlarge the rights of the appellee or diminish the rights of the appellant.”
Amazing Spaces, Inc. v. Metro Mini Storage, 608 F.3d 225, 250 (5th Cir. 2010)
(alteration in original) (quoting Borrego Springs Bank, N.A. v. Skuna River
Lumber, L.L.C. (In re Skuna River Lumber, L.L.C.), 564 F.3d 353, 356 (5th Cir.
2009)); see Greenlaw v. United States, 554 U.S. 237, 244-45 (2008) (“This Court,
from its earliest years, has recognized that it takes a cross-appeal to justify a
remedy in favor of an appellee.”). Even a “party who prevails in the district
court is permitted to conditionally raise issues in a cross-appeal because if the
appellate court decides to vacate or modify the trial court’s judgment, the
judgment may become adverse to the cross-appellant’s interest.” Cook v.
Rockwell Int’l Corp., 618 F.3d 1127, 1153 (10th Cir. 2010); see Council 31, Am.
Fed’n of State, Cnty. & Mun. Employees, AFL-CIO v. Ward, 978 F.2d 373, 380
(7th Cir. 1992) (“This court . . . together with most of the other circuits, treats
conditional cross-appeals differently from unconditional appeals. Nominally
prevailing parties are entitled to file such cross-appeals against the contingency
that this court will reverse an otherwise thoroughly satisfactory judgment.”);
Warfield v. Alaniz, 569 F.3d 1015, 1019 n.3 (9th Cir. 2009) (“A protective cross-
appeal is permissible once an initial appeal is filed, raising the possibility of
reversal.”). This “inveterate and certain” cross-appeal rule, Morley Constr. Co.

raised in the district court”) (emphasis added) (internal citations omitted). As discussed below,
however, we find that the ART entities’ fraud allegations were the same in each proceeding.

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v. Md. Cas. Co., 300 U.S. 185, 191 (1937), is “meant to protect institutional
interests in the orderly functioning of the judicial system, by putting opposing
parties and appellate courts on notice of the issues to be litigated and
encouraging repose of those that are not.” El Paso Natural Gas Co. v. Neztsosie,
526 U.S. 473, 481-82 (1999).
       The parties do not identify, and we could not find, a case in which this
court has addressed whether a party that declines to cross-appeal an adverse
ruling in an initial district court proceeding may raise the claim on remand from
the resulting appeal. However, other circuit courts have found that “[i]t is
elementary that where an argument could have been raised on an initial appeal,
it is inappropriate to consider that argument on a second appeal following
remand.” Nw. Ind. Tel. Co. v. F.C.C., 872 F.2d 465, 470 (D.C. Cir. 1989) (“This
widely-accepted rule furthers the important value of procedural efficiency . . . .”);
see Crocker v. Piedmont Aviation, Inc., 49 F.3d 735, 739 (D.C. Cir. 1995) (“We
have several times said that appellate courts are precluded from revisiting not
just prior appellate decision but also those prior rulings of the trial court that
could have been but were not challenged on an earlier appeal.”); Munoz v. Cnty.
of Imperial, 667 F.2d 811, 817 (9th Cir. 1982) (“We need not and do not consider
a new contention that could have been but was not raised on the prior appeal.”);
Fogel v. Chestnutt, 668 F.2d 100, 109 (2d Cir. 1981) (“It would be absurd that a
party who has chosen not to argue a point on a first appeal should stand better
as regards the law of the case than one who had argued and lost.”); Kessler v.
Nat’l Enters., Inc., 203 F.3d 1058, 1059 (8th Cir. 2000) (“The general rule is that,
where an argument could have been raised on appeal, it is inappropriate to
consider that argument on a second appeal following remand.”) (internal
quotation marks omitted).5

       5
         There is uncertainty as to whether the cross-appeal requirement is a subset of the
law-of-the-case doctrine or an application of waiver doctrine. See, e.g., Crocker, 49 F.3d at 739-

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       We hold that the ART entities’ decision not to cross-appeal the jury’s fraud
findings in the first district court proceeding prevented them from raising the
same rejected fraud claims in the second district court proceeding. Even though
they prevailed on many of their claims in the first district court proceeding, the
consensus of circuit authority supports that the ART entities could have filed a
“protective” or “conditional” cross-appeal of the adverse fraud finding. See Cook,
618 F.3d at 1153; Ward, 978 F.2d at 380; Warfield, 569 F.3d at 1019 n.3. The
consensus of circuit authority also supports that, by not cross-appealing the
fraud finding, the ART entities could not raise the same fraud claims on remand.
See Nw. Ind. Tel., 872 F.2d at 470; Crocker, 49 F.3d at 739; Munoz, 667 F.2d at
817; Fogel, 668 F.2d at 109; Kessler, 203 F.3d at 1059. The issue therefore
narrows to whether the ART entities raised the “same” fraud claims. Our
comparison of the ART entities’ complaints in the first and second district court
proceedings indicates that they alleged the same fraud claims—that Clapper
misrepresented a nonconforming zoning use as to one of the remaining
properties—in each proceeding. The ART entities acknowledged as much in
their briefs, noting that, on remand, they “sought to pursue fraud claims and
defenses that have been alleged since this case began” (emphasis added).6 This
acknowledgment, coupled with the language in the complaints, supports that the
fraud claims advanced by the ART entities on remand were within the scope of,
and therefore decided by, the jury’s adverse fraud finding. Accordingly, the ART
entities did not satisfy the cross-appeal rule.
       The ART entities imply that the panel’s “liability and damages must be
decided anew” language overrode any cross-appeal requirement, and compelled

40. We need not resolve this uncertainty to decide this appeal.
       6
        As discussed above, to the extent the ART entities raised new fraud claims on remand,
they waived these claims by not raising them in the first district court proceeding. See Lee, 358
F.3d at 321.

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the district court on remand to consider their fraud claims “anew” under the
mandate rule. However, we first must determine whether the cross-appeal rule
is “‘jurisdictional,’ and therefore exceptionless, or a ‘rule of practice,’ and thus
potentially subject to judicially created exception.” Greenlaw, 554 U.S. at 245.7
Although the circuits have split on this issue, compare, e.g., Johnson v.
Teamsters Local 559, 102 F.3d 21, 28 (1st Cir. 1996) (noting that the cross-
appeal rule “is mandatory and jurisdictional”) (internal quotation marks
omitted) with Kessler, 203 F.3d at 1059 (noting that the rule is “prudential, not
jurisdictional”), and the Supreme Court has “declined to decide the ‘theoretical
status’ of the cross-appeal rule,” Greenlaw, 554 U.S. at 245; see Neztsosie, 526
U.S. at 480, this circuit has characterized the cross-appeal rule as
“jurisdiction[al].” Amazing Spaces, 608 F.3d at 250. This “jurisdiction[al]”
characterization prevents us from deciding whether the panel’s “decide[ ] anew”
language warrants an exception to the rule.
       We note that, even if we could consider this argument, we would not
exercise discretion to allow the ART entities to pursue their fraud claims on
remand. “The mandate rule requires a district court on remand to effect our
mandate and to do nothing else.” Gen. Universal Sys., Inc. v. HAL, Inc., 500 F.3d
444, 453 (5th Cir. 2007) (quoting United States v. Castillo, 179 F.3d 321, 329 (5th
Cir. 1999), rev’d on other grounds, 530 U.S. 120 (2000)). Although the panel’s
“decide[ ] anew” language is broad, in interpreting this language, we must
“tak[e] into account the appellate court’s opinion and the circumstances it
embraces.” Lee, 358 F.3d at 321 (alteration in original) (quoting Sobley v. S.
Natural Gas Co., 302 F.3d 325, 333 (5th Cir. 2002)). The ART entities did not
raise their fraud claims on initial appeal, and the panel opinion did not address
the issue of fraud. See Art Midwest, 242 F. App’x at 130-32.                          These

       7
        Although the parties do not brief this issue, “[w]e have jurisdiction to determine our
own jurisdiction.” Martin v. Halliburton, 618 F.3d 476, 481 (5th Cir. 2010).

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                                   No. 11-11140

“circumstances” indicate that the panel required the district court to “decide[ ]
anew” only issues implicated by its holding that Clapper tendered marketable
title. Yet the panel’s marketable title holding did not implicate, but instead
reinforced, the jury’s finding that Clapper did not defraud the ART entities by
misrepresenting title. Thus, the “decide[ ] anew” language did not require the
district court to consider the ART entities’ fraud claims. See Lee, 358 F.3d at 321.
      In sum, we hold that the district court did not err in finding that the ART
entities’ decision not to cross-appeal the jury’s adverse fraud findings in the first
district court proceeding prevented them from raising the same rejected fraud
claims in the second district court proceeding.
2. The Damages Calculation
      On remand, the district court held that, by purporting to terminate the
deal in a March 22, 1999 letter, the ART entities defaulted under the agreement.
The district court also found that, by defaulting, the ART entities violated
section 4.02(d) of the agreement, and owed “capital contributions” to the
Partnership. The district court instructed the jury in its Question No. 5 charge
to determine the amount of contributions owed as of February 1, 2001 and
February 1, 2002. The jury found that, as of February 1, 2001, the ART entities
owed $7.4 million, and that, as of February 1, 2002, the ART entities owed $10.6
million. The district court then combined the amounts, awarding “Atlantic
Midwest, on behalf of the Partnership” almost $18 million before interest. The
ART entities challenged the district court’s decision to combine the amounts in
post-judgment motions. The district court denied the motions. The ART entities
renew their argument that the $7.4 million and $10.6 million amounts “are not
independent of each other—the contribution amount as of February 2002
includes the February 2001 contribution amount.” The ART entities maintain,
and the Clapper entities do not dispute, that “[t]he calculation of damages in the
form of contributions under section 4.02(d) of the Partnership Agreement is an

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interpretation of contract issue,” and that, therefore, de novo review applies. See
Gonzalez v. Denning, 394 F.3d 388, 392 (5th Cir. 2004) (per curiam).
       We agree that the amounts overlap. The district court wrote in its
September 2009 summary judgment order: “[I]t is not clear from the summary
judgment record whether the amount claimed for 2002 . . . is cumulative and
assumes the amount claimed for 2001 . . . was never paid. If so, awarding both
would be double counting.” The parties do not identify, and we could not find,
further explanation by the district court as to why, if it had concerns that the
2001 and 2002 totals overlapped, it nonetheless decided to combine the
amounts.8 However, demand letters sent by Clapper entities in 2001 and 2002,
which correspond to the jury’s contribution amount findings, validate the district
court’s initial concerns about “double counting.” The 2001 letter demanded that
the ART entities contribute $7.4 million to the Partnership. The letter indicates,
and accompanying documents confirm, that this $7.4 million figure comprised,
in part, accounts payable of $861,000, and loans payable of $5.4 million. The
2002 letter demanded that the ART entities contribute $10.6 million to the
Partnership. The letter indicates that this $10.6 million figure comprised, in
part, accounts payable of $1.2 million and loans payable of $9.8 million, which
were then reduced by the value of the property. Although only some of the
accompanying documents are legible, they suggest that this increase resulted
from interest payments that had accrued in the past year. Thus, the letters and

       8
         The Clapper entities maintained at oral argument that the district court explained
its decision to combine in an October 7, 2011 order. We could not identify in the record an
order dated October 7, 2011. To the extent the Clapper entities meant to refer to the district
court’s October 11, 2011 order awarding damages, we also could not identify in that order an
explanation by the district court as to why it combined the amounts. Although the district
court wrote that it was “sensitive to ART’s argument that these sums are a windfall and
detached from the economic realities underlying the transaction,” it did so in reference to the
19% prejudgment interest rate levied on the contribution amounts, not the decision to combine
the amounts.

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accompanying documents indicate that the $10.6 million total encompassed, and
was not independent of, the $7.4 million amount.
       The Clapper entities confirmed that the amounts overlapped in district
court and at oral argument. The Clapper entities told the jury in their closing
argument: “[Y]ou will determine the amount as of [the 2001] date and you will
determine the amount as of the 2002 date. That doesn’t mean that we are getting
both. . . . The Court . . . will . . . sort out as a matter of law . . . which amounts
overlap or don’t overlap . . . .” (emphasis added). The Clapper entities then
acknowledged at oral argument that “certain elements, particularly with respect
to the two [demand] notes . . . are the same,” and that the “2002 numbers would
encompass, because it was cumulative . . . the ones from 2001.”9 Thus, by the
Clapper entities’ acknowledgment, the amounts overlapped.
       In sum, because the contribution amounts overlap, and because the parties
neither identify language in the agreement nor an explanation from the district
court supporting this double counting of damages, we hold that the district
court’s decision to combine the amounts was in error. We therefore VACATE the
combined award, and REMAND so that the district court can decide whether the
2001 or 2002 amount is the appropriate measure of damages, and then, taking
into account interest, recalculate the award.10

       9
          At oral argument, counsel for the Clapper entities was commendably candid
responding to inquiry: “If we take away your damages to take them down to 10.5$ million, you
can’t really object to that, can you?” Counsel forthrightly answered: “If this appeal concluded
at this point . . . we would not pursue the issue further.”
       10
          The ART entities also argued that the Question No. 5 charge was defective because
“it requested the contribution amount from an incorrect point in time.” However, the ART
entities do not argue, and the record does not support, that they challenged the Question No.
5 charge in district court. “[W]here no timely objection is made to a jury instruction, the
claimed error cannot be reviewed on appeal unless giving the instruction was ‘plain error’ so
fundamental as to result in a miscarriage of justice.” Middleton v. Harris Press & Shear, Inc.,
796 F.2d 747, 749 (5th Cir. 1986). We find that the district court did not plainly err by giving
the instruction because the charge did not ask the jury to aggregate the amounts, only to
assess them.

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3. Miscellaneous Issues
         The ART entities advance additional claims of error. Because we find that
these claims are ancillary to the crux of the ART entities’ appeal and also
unavailing, we have grouped them in this section.11
(A) The Guarantee of the Deposit Notes
          The parties agreed that the ART entities would pay $5.5 million to
facilitate the transaction: a $500,000 cash deposit, which was placed in escrow;
an initial $2 million promissory note to Clapper; and an additional $3 million
promissory note to Clapper in exchange for Clapper extending the deal’s closing
date. The district court found that, by defaulting on the agreement, the ART
entities breached their guaranty of the deposit notes. The ART entities argue
that it was instead the Partnership, a separate legal entity, that guaranteed the
notes.
         We find that the ART entities waived the argument that they did not
guarantee the notes by not raising the issue in district court. The Clapper
entities wrote in an October 2007 motion for summary judgment that the ART
entities guaranteed the notes. The parties do not identify, and we could not find,
record evidence showing that the ART entities disputed this characterization or
otherwise argued in district court that they did not guarantee the notes.
Further, the ART entities acknowledged in their brief in the first appeal that:
“As the parties worked toward closing the remaining properties, the Partnership
provided certain deposit notes and extension notes . . . to Defendants, totaling
$5 million. . . . ART guaranteed these notes” (emphasis added). Thus, because
“this court cannot decide disputed issues of material fact,” and because the ART
entities “faile[d] to set forth specific facts, by affidavits or otherwise, to show

         11
         With the exception of the ART entities’ challenges to the jury’s fiduciary duty findings
and the Question No. 5 Instruction, we review the following issues of contract interpretation
de novo. See Gonzalez, 394 F.3d at 392.

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                                  No. 11-11140

there is a genuine issue for trial,” Topalian v. Ehrman, 954 F.2d 1125, 1131-32
(5th Cir. 1992), they waived the argument that they did not guarantee the notes.
(B) The Partnership’s Dissolution Date
      The agreement provides that “the Partnership shall be dissolved upon . . .
[t]he passage of 90 days after the sale or other disposition (other than an
exchange), in either case for cash, of all or substantially all of the assets of the
Partnership.” In the first proceeding, the district court found that the ART
entities’ March 22, 1999 letter purporting to terminate the deal dissolved the
Partnership. On remand, the district court found that the Partnership instead
dissolved on May 20, 2002. The ART entities argue that the district court’s
initial March 22, 1999 finding was correct.
      We find that the plain language of the agreement supports the district
court’s finding that the Partnership dissolved on May 20, 2002. The agreement
provides that “the Partnership shall be dissolved” ninety days after the
“disposition . . . of all or substantially all of the assets of the Partnership.”
Merriam-Webster defines “dispose” to mean “transfer or part with, as by selling.”
MERRIAM-WEBSTER’S II NEW RIVERSIDE DICTIONARY 202 (rev. ed. 1996). The
district court found that “all or substantially all Partnership assets were
disposed of as a result of the consent judgment and decree of foreclosure” entered
by a state court on February 19, 2002. The ART entities do not dispute that this
decree of foreclosure, which provided that “any person who may be in possession
of the Real Estate . . . shall forthwith surrender the Real Estate,” removed “all
Partnership assets.”     Because the ART entities do not dispute that the
Partnership did not “part with” its assets until the February 19, 2002 foreclosure
decree, and because the plain language of the agreement provides that the
Partnership shall be dissolved ninety days after the Partnership parts with its
assets, the district court did not err in finding that the Partnership dissolved
ninety days after the foreclosure decree, or May 20, 2002.

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                                        No. 11-11140

       The ART entities argue that the district court’s initial March 22, 1999
dissolution date finding bound the district court on remand. However, the
district court based this finding on its conclusion that the ART entities’ March
22, 1999 letter terminated the deal. The panel’s holding that the Clapper entities
tendered marketable title implicated the district court’s initial March 22, 1999
dissolution date finding—the ART entities could not terminate the deal through
a letter claiming that title was bad if title was in fact marketable—and required
the district court to decide the Partnership’s dissolution date anew.12
        The ART entities also argue that a “Certificate of Cancellation” filed with
the Texas secretary of state, confirms under the Texas Revised Limited
Partnership Act (“TRLPA”) that the Partnership dissolved on March, 22, 1999.
Although a certificate of cancellation can cancel a partnership, see TEX. REV. CIV.
STAT. ANN. art. 6132a-1 (West 2006), the plain language of the agreement, and
not the TRLPA, controls. See TEX. REV. CIV. STAT. ANN. art. 6132b § 8.01(c)(2)
(“In a partnership in which the partnership agreement provides for winding up
on a specified event, winding up is required on . . . the occurrence of the specific
event . . . .”). As discussed above, this plain language supports that the
Partnership dissolved on May 20, 2002.13
       Finally, the ART entities argue that the district court’s May 20, 2002
dissolution date finding “revived a Partnership that has, for all intents and
purposes, been dead for nearly a decade” in violation of the equitable mootness
doctrine. The equitable mootness doctrine is a “recognition by the appellate

       12
          The ART entities argue that it was inconsistent for the district court to treat the
jury’s fraud verdict as binding while deciding the dissolution date anew. As discussed above,
however, the panel’s holding implicated the district court’s dissolution date finding; it did not
implicate, but rather reinforced, the jury’s fraud verdict.
       13
          Even if the plain language of the agreement did not control, the ART entities do not
dispute the district court’s finding that the certificate was “filed without authority and was
ineffective to terminate the Partnership.”

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                                  No. 11-11140

courts that there is a point beyond which they cannot order fundamental
changes in reorganization actions.” Manges v. Seattle-First Nat’l Bank (In re
Manges), 29 F.3d 1034, 1039 (5th Cir. 1994). However, courts “have employed
the concept of ‘mootness’ to address equitable concerns unique to bankruptcy
proceedings.” Id. at 1038. The ART entities do not identify a persuasive reason
to apply this bankruptcy-specific doctrine to this case. Thus, the district court’s
May 20, 2002 dissolution date finding did not violate the equitable mootness
doctrine.
(C) The Fiduciary Duty Verdict
      The mortgage on the Country Squire property was held by Inland
Mortgage Corp. (“Inland”).      After the deal collapsed, Inland obtained a
foreclosure decree, and the Country Squire property was sold to TacCo Falcon
Point, Inc. The Clapper entities argued in district court that the ART entities
“breached the fiduciary duties they owed [as] partners” by using TacCo to obtain
the property. The jury found in a special verdict that the ART entities owed, and
breached, a fiduciary duty to the Clapper entities. The ART entities do not
dispute, and Texas law supports, see Fitz-Gerald v. Hull, 237 S.W.2d 256, 264
(Tex. 1951), that, as partners, the ART entities owed a fiduciary duty to the
Clapper entities. Instead, the ART entities contend that they did not breach this
duty because “[t]here was no evidence at trial that ART or ART Midwest
obtained the Country Squire property” through TacCo. We “will reverse” the
jury’s breach of fiduciary duty finding “only if no reasonable jury could have
arrived at the verdict.” Miss. Chem. Corp. v. Dresser-Rand Co., 287 F.3d 359, 365
(5th Cir. 2002) (internal quotation marks omitted).
      We find that a reasonable jury could have determined that the ART
entities breached the fiduciary duty it owed the Clapper entities. The Clapper
entities introduced into evidence a state court judgment, affirmed by a state
appellate court, finding that the ART entities used TacCo as their “strawman”

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                                  No. 11-11140

to buy the Country Squire property. The Clapper entities also introduced
testimony that confirmed details underlying the state judgment. This testimony,
coupled with the state court judgment, provided sufficient evidence to support
a “reasonable jury’s” finding that the ART entities breached fiduciary duties
owed to the Clapper entities by using a “strawman” to acquire the Country
Squire property.
(D) Section 4.02(d)
      Finally, the ART entities advance three arguments relating to section
4.02(d) of the agreement.
(i) Standing
      The ART entities argue that the Clapper entities lacked standing to “bring
a claim for loss of Partnership property” under section 4.02(d). However, “a
partner may individually sue for the benefit of the partnership and other
partners.” R & R White Family Ltd. P’ship v. Jones, 182 S.W.3d 454, 458 (Tex.
App.—Texarkana 2006, no pet.). The parties do not dispute that Atlantic
Midwest, a Clapper entity, was a partner, and the record indicates that, since
the inception of this case, Atlantic Midwest has argued that the ART entities
owed contributions to the Partnership under section 4.02(d). Thus, the Clapper
entities “sue[d] for the benefit of the partnership and other partners,” see Jones,
182 S.W.3d at 458, and therefore have standing.
(ii) The Appraisal Requirement
      Section 4.02(d) provides that “the Managing General Partner”—as
discussed above, Clapper entity Atlantic Midwest—“shall obtain an appraisal of
the Property . . . on an annual basis.” The district court found that, by sending
the March 22, 1999 letter purporting to terminate the deal, the ART entities
defaulted on the agreement, thereby excusing Atlantic Midwest from obtaining
the annual appraisal. The ART entities argue that the Clapper entities violated
section 4.02(d) by not conducting the appraisal.

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                                        No. 11-11140

       To the extent that the ART entities preserved the issue,14 we find that the
ART entities’ default excused Atlantic Midwest from conducting an appraisal.
The ART entities defaulted on the agreement on March 22, 1999, and section
4.02(d) did not obligate the Clapper entities’ to conduct an appraisal until
February 1, 2002. Because the ART entities defaulted on the agreement two
years before the Clapper entities were obligated to perform the appraisal, and
because a “[d]efault by one party excuses performance by the other party,” Mead
v. Johnson Grp., Inc., 615 S.W.2d 685, 689 (Tex. 1981), the ART entities’ default
excused the Clapper entities from conducting the appraisal.
(iii) The Concord East Loan
       After the deal collapsed, the Concord East property was sold for $1.5
million. The ART entities argue that “[n]o part of the sales proceeds was applied
to reduce the underlying debt on the Concord East apartments.”15
       We find that proceeds from the sale were applied to reduce the underlying
debt. Accountant Thomas Frazee, a Clapper entities expert, testified that the
contribution amount owed by the ART entities was “reduced for the fact that the
[Concord East] property was sold and roughly a million dollars was taken and
applied against that note.” Clapper testified that “a portion of the sales price was
credited against the note.” The ART entities do not persuasively rebut this
testimony. Thus, we cannot say that “[n]o” proceeds from the sale were applied
to reduce the debt.

       14
           The parties submitted cross-motions for summary judgment as to liability under
section 4.02(d). The district court granted summary judgment for the Clapper entities on the
basis that the ART entities breached section 4.02(d). Then, at trial, the ART entities argued
that the Clapper entities’ failure to obtain an appraisal excused their breach of section 4.02(d).
The district court found that the ART entities waived this appraisal argument by not raising
it at the summary judgment stage.
       15
          The ART entities also note that they “paid the Inland loan in full.” However, the
district court’s judgment took this into consideration.

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                                  No. 11-11140

      The ART entities also argue that the Concord East loan was non-
recourse—that is, a loan in which “the maker does not personally guarantee
repayment of the note and will, thus, have no personal liability,” Fein v. R.P.H.,
Inc., 68 S.W.3d 260, 266 (Tex. App.—Houston [14th Dist.] 2002, pet.
denied)—and that, therefore, the sale of the property “full satisfied” the loan.
However, an amendment to the agreement provided that “[t]he Partnership shall
assume at Closing, with full recourse, the First Lien Loans,” (emphases added),
and Thomas Popplewell, an expert for the ART entities, explained that“the
[Concord East] loan . . . is a first lien loan” that “would be binding on the
partnership.” Thus, because the amendment provided that the Concord East
loan was a recourse obligation, the sale of the property did not “full[y] satisf[y]”
the obligation.
                                 CONCLUSION
      Accordingly, we VACATE the award of combined contribution amounts,
and REMAND for further proceedings consistent with this opinion.                We
otherwise AFFIRM.

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