Court Opinion

ID: 4038858
Source: CourtListenerOpinion
Date Created: 2016-09-28 22:01:36.58447+00
Date Added: 2024-06-11T13:40:51.145368
License: Public Domain

ACCEPTED
                                                                                   05-10-01487-CV

                    01-14-00314-CV                                       FIRST COURT OF APPEALS
                                                                                 HOUSTON, TEXAS
                                                                             12/29/2014 9:35:14 AM
                                                                               CHRISTOPHER PRINE
                                                                                            CLERK
                           No. 05-10-01487-CV
        IN THE FIRST COURT OF APPEALS FOR THE STATE OF TEXAS

                        HASEEB A. BUTT, Appellant        FILED IN
                                                  1st COURT OF APPEALS
                                 v.                   HOUSTON, TEXAS
                                                  12/29/2014 9:35:14 AM
                                                  CHRISTOPHER A.
SAJID KHAN NIAZI, A YESHA KHAN, AMIRA SOUSSA AND DUNCANVILLE         PRINE
                                                                  REAL
                                                           Clerk
                          ESTATE, LLC, Appellees.

                   On appeal from the 113th District Court of
                             Harris County, Texas
                      Trial Court Cause No. 2011-22642

                                    Respectfully submitted:

                                    MATTHEWS I EASLEY I CHANEY

                                       ,/,/      -----                         ------
                                     !'
                                    J(EFFRE-y_R. MA
                                    stare--mrrNo. 00788824
                                    TOBY C. EASLEY
                                    State Bar No. 00787411
                                    Granite Tower
                                    13430 Northwest Freeway, Suite 990
                                    Houston, Texas 77040-6000
                                    Office:        (713) 223-4000
                                    Facsimile:     (281) 589-9000

                                    Attorneys for Defendants.

                                                                                   1
                                 CERTIFICATE OF SERVICE

       I certify that a true and correct copy of the foregoing document has been sent to the

following party of record by the manner indicated.

       Dated:     12/2- q   /1 i'
                --~~~~~~~~~~---------

Haseeb Butt
7201 Harwin Dr., Suite A
Houston, Texas 77036
Phone: (501) 256-2676
Fax: not provided
e-mail: chammeyvillecarwash@yahoo.com

_   CM, RRR; _Facsimile; _Hand Delivery;             ~ail

                                                                                               2
                                                    TABLE OF CONTENTS

INDEX OF AUTHORITIES ................................................................................................ 4

STATEMENT OF FACTS .................................................................................................. 5

SUMMARY OF THE ARGUMENT .................................................................................. ?

ARGUMENT ....................................................................................................................... ?

           Reply to Issue 1: Did the trial court err by refusing to grant a new trial
           because of perjury? .................................................................................................. 7

           Reply to Issue 2: Did the trial court err by refusing to grant a new trial
           because the evidence conclusively proved breach of contract and the
           covenant of good faith? ............................................................................................ 8

           Reply to Issue 3: Did the trial court err by refusing to grant a new trial
           because the evidence conclusively proved fraud? ................................................. 10

           Reply to Issue 4: Did the trial court err by refusing to grant a new trial
           because the defendants did not deny "a number of issues and circumstantial
           evidence?" .............................................................................................................. 13

PRAYER ............................................................................................................................ 14

                                                                                                                                          3
                                                INDEX OF AUTHORITIES

CASES

City ofEl Paso v. Arditti, 378 S.W.3d 661 (Tex.App.- El Paso, 2012) ...................... 12-13

Gonzalez v. VATR Const. LLC, 418 S.W.3d 777 (Tex. App. 2013) .............. 7, 8, 10-11, 14

Haggett v. Brown, 971 S.W.2d 472
      (Tex.App.-Houston [14 Dist.], 1997, review denied) ........................................... 10

ODL Servs., Inc. v. ConocoPhillips Co., 264 S.W.3d 399 (Tex. App. 2008) .................... 12

Ohrt v. Union Gas Corp., 398 S.W.3d 315
        (Tex.App.-Corpus Christi, August 31, 2012) .......................................................... 9

Peacock v. First Nationwide Bank FSB,
      not Reported in S.W.2d, 1998 WL 34193642
      (Tex.App.-Eastland, 1998, no pet.) ........................................................................ 10

Warrantech Corp. v. Computer Adapters Servs., Inc.,
      134 S.W.3d 516 (Tex. App.- Ft. Worth, 2004),
      case dismissed (June 25, 2004) ................................................................................ 7

RULES

TEX. R. CIV. P. 324 ......................................................................................................... 7, 12

Tex.R.App.P. 38.1(i) .................................................................................................. 7, 8, 11

                                                                                                                                      4
                                         Statement of Facts

       Mr. Butt, together with Mr. Sajid Khan, purchased a car wash in Duncanville, Texas.

Subsequently, they started a restaurant. The restaurant performed poorly and lost a lot of money.

The car wash business declined and lost a lot of money, too. (RR Vol. 2, Page 113, Line 10-

Page 114, Line 3); (RR Vol. 2, Page 132, Line 15- Page 137, Line 15); (RR Vol. 2, Page 153,

Line 7- Page 156, Line 13).

       As a result, tensions arose between Mr. Khan and Mr. Butt, to the point where Mr. Khan

told Mr. Butt to stop coming to the business premises and causing trouble in front of the

employees. (RR Vol. 2, Page 39, Line 20- Page 42, Line 7); (RR Vol. 2, Page 123, Line 11-

Page 124, Line 20). This inflamed Mr. Butt, and he sued the defendants for fraud in Dallas

County. The parties entered into a settlement agreement. Notably, the agreement, which Mr.

Butt drafted, provided that upon breach, the agreement would be voided and the parties would be

returned to their positions before its entry. (RR Vol. 4, Plaintiffs Exhibit 1); (RR Vol. 2, Page

152, Lines 7 - 22).

       The settlement agreement called for an audit to be performed. The business learned that

a full audit would be cost-prohibitive, and therefore, it was not done. (RR Vol. 2, Page 149,

Lines 9- 14). Mr. Butt then filed suit in Harris County to allege fraud, breach of contract,

perjury and other causes of action as stated in his brief.

       Mr. Butt alleged he was defrauded when he was listed as only a 15% owner of the

company, as opposed to a 50% owner. At trial, the evidence showed that Mr. Butt was unable to

qualify for the loan required to purchase the car wash. The lender, as part of its underwriting

standards, prohibited any non-qualified borrower from owning more than 15% ofthe debtor-

business. Therefore, Mr. Butt and the Khans agreed to state that Mr. Khan would be an 85%

owner and Mr. Butt would be a 15% owner. (RR Vol. 2, Page 114, Line 4- Page 119, Line 7);

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(RR Vol. 2, Page 126, Line 25- Page 127, Line 25). Mr. Butt was physically present at the

closing where all the documents were executed and submitted. (RR Vol. 2, Page 119, Line 24 -

Page 120, Line 15). Mr. Khan was required to personally guarantee the loan. Mr. Butt was not:

(RR Vol. 2, Page 112, Line 8 -Page 113, Line 9). The jury heard testimony, corroborated by an

e-mail from Mr. Butt, that Mr. Khan and Mr. Butt agreed to apply for the loan on an 85/15

ownership basis but have a side agreement that Mr. Butt would be a 50% owner for purposes of

sharing any profits upon the ultimate sale of the business. (RR Vol. 2, Page 108, Line 19 -Page

111, Line 9).

       The jury also heard testimony concerning three versions of "Minutes of LLC Meeting"

contained as Defendants' Exhibit 5. (RR, Volume 4, Defendants' Exhibit 5). The first version

showed the 50/50 split in ownership which the lender rejected. The second version showed the

85/15 split the lender approved. The third version showed the first version with a notary seal

added. Mr. Butt wanted the docuri:lent to be notarized to insure he had proof to support his rights

under the parties' side agreement that he would be entitled to 50% of the proceeds of any sale of

the business. (RR Vol. 2, Page 120, Line 16- Page 121, Line 17). The jury heard additional

evidence that Mr. Khan would be fine with a formal 50/50 arrangement if the lender would allow

it; however, the loan documents prohibit a change in ownership without the lender's approval.

(RR Vol. 2, Page 129, Line 24- Page 132, Line 14).

       Despite the evidence that Mr. Butt agreed to submitting themselves to the lender as 85/15

owners, Mr. Butt denied making this arrangement and claimed he was defrauded. The jury

rendered a verdict that the parties' settlement agreement was not breached and that there was no

fraud. Pursuant to the verdict, a take-nothing judgment was entered. Mr. Butt's motion for new

trial was denied.

                                                                                                   6
        Mr. Butt alleges peljury in seeking reversal ofthe trial court's judgment. He claims that

the Defendants committed perjury in connection with the procurement of an EIN from the IRS.

He says that the peljury is clear because the loan documents identify the LLC before it was

formed. In support of his position, he presented the certificate from the IRS showing an EIN was

assigned on October 1. (RR Vol. 4, Plaintiffs Exhibit 113). He then noted that the loan

application was dated September 26. Although, Mr. Butt claims these documents prove

"peljury," the company information was simply put into the loan application without changing

the date on the application. (RR Vol. 2, Page 11, Line 11- Page 22, Line 12); (RR Vol. 2, Page

121, Line 18- Page 122, Line 20).

                                       Summary of Argument

        Mr. Butt, as the appellant, raises 4 issues. In each of them, he claims the trial court erred

by denying him a new trial, which he contends should have been granted based on the fact that

he conclusively proved his claims at trial. He did not preserve any claim offactual insufficiency

or that the verdict is against the overwhelming weight of the evidence. Tex. R. Civ. P. 324.

        Appellees will show that (1) the jury's negative findings are amply supported in the

record, and (2) Mr. Butt has failed to preserve error by failing to provide "a clear and concise

argument for the contentions made, with appropriate citations to authorities and to the record."

Tex.R.App.P. 38.1(i); Gonzalez v. VATR Canst. LLC, 418 S.W.3d 777, 784 (Tex. App. 2013).

                                              Issue No. 1
             Did the trial court err by refusing to grant a new trial because of perjury?

       "A judgment is not procured by peljury unless the perjury prevented the injured party

from fully presenting its case at trial or resulted in the court or jury being deceived as to a

material issue." Warrantech Corp. v. Computer Adapters Servs., Inc., 134 S.W.3d 516, 528

(Tex. App.- Ft. Worth, 2004), case dismissed (June 25, 2004). During trial, Mr. Butt fully-

                                                                                                    7
attempted to impeach the credibility of Mr. Khan. He was not hampered in any way. (RR Vol.

2, Page 11, Line 11- Page 22, Line 12).

       The crux of the perjury claim is that Mr. Butt contends that it is somehow material that

the company's formation and acquisition of its EIN occurred after the date shown on the loan

application. See Appellant's Brief, Page 19, Paragraph 19. The materiality of this matter is not

apparent; however, the circumstances were sufficiently explained to the jury's satisfaction.

Although, Mr. Butt claims this proves "perjury," the company information was simply put into

the loan application without changing the date on the application. (RR Vol. 2, Page 11, Line 11

-Page 22, Line 12); (RR Vol. 2, Page 121, Line 18- Page 122, Line 20).

       For these reasons, there was no error in the trial court.

                                           Issue No.2
                     Did the trial court err by refusing to grant a new trial
  because the evidence conclusively proved breach of contract and the covenant of good faith?

       Mr. Butt has not briefed this issue and has cited no authority in support of any argument

along these lines. Accordingly, this point should be deemed waived. See Gonzalez v. VATR

Canst. LLC, 418 S.W.3d 777, 784 (Tex. App. 2013) ("Because appellants fail to provide 'a clear

and concise argument for the contentions made, with appropriate citations to authorities and to

the record,' their first issue has not been preserved for our review and is overruled. See

Tex.R.App.P. 38.1(i).).

       Appellees believe Mr. Butt is referring to his claim that the defendants breached the

settlement agreement made in the Dallas County lawsuit. See Appellant's Brief, Page 15,

Paragraph 10 through Page 18, Paragraph 14. The jury found that the defendants did not breach

the parties' settlement agreement. (Clerk's Record, Page 206).

       Mr. Butt drafted the settlement agreement. (RR Vol. 2, Page 152, Lines 7- 22).

Paragraph 11 states:

                                                                                                   8
        Failure of either party to comply with the terms of this Settlement Agreement will
        cause this agreement to become null and void and entitled [sic.] the non-breaching
        party to take legal action to protect his interests.

(RR Vol. 4, Plaintiffs Exhibit 1). Presumably, this provision was intended to place the parties

back in their pre-agreement positions to where their original claims would be restored without

being subjected to the defense of settlement and accord.

        Paragraph 11 is clear, unequivocal and unambiguous. When language in a contract is

capable of only a single, definite construction, a court is not permitted to reform it, and it must be

enforced according to its clear terms. See Ohrt v. Union Gas Corp., 398 S.W.3d 315, 323

(Tex.App.-Corpus Christi, August 31, 2012) (stating, "We enforce an unambiguous document as

it is written.").

        Giving effect to Paragraph 11, the result is that neither party can sue on the agreement

and that each may sue and defend on such grounds as existed prior to the making of the

agreement. Therefore, there is nothing in the settlement agreement to enforce. No claims can

arise out of it. !d. Even if the jury had found there was a breach of the settlement agreement, no

action for breach of contract could be maintained as a result of it. The parties were simply

restored to their earlier positions as intended by Paragraph 11.

        As a result, Mr. Butt brought his suit on the underlying case for fraud, but this time he

sued in Harris County. Notably, as intended by Paragraph 11, his claims for fraud were not

barred by settlement and accord.

        As regards Mr. Butt's claim for a breach of a covenant of good faith, to the extent such a

covenant was made, it would be subsumed as a contract provision as well. Therefore, when the

                                                                                                     9
contract became null and void, so must have any alleged covenant of good faith. However, there

was no such covenant, and the law does not imply one.

       There appears to be no authority in Texas which holds that an ordinary settlement

agreement to dispose of litigation between parties to a case gives rise to a duty of good faith. In

Peacock v. First Nationwide Bank FSB, not Reported in S.W.2d, 1998 WL 34193642 (Tex.App.-

Eastland, 1998, no pet.), the court held:

       Appellants also allege that appellees stood in a fiduciary relationship with them and
       also owed appellants a duty of good faith and fair dealing. This lawsuit arises out
       of a settlement agreement entered into to settle another lawsuit. We are not prepared
       to hold that such circumstances give rise to duties of good faith and fair dealing and
       create fiduciary relationships.

       As regards other contexts in which such a covenant might be alleged by Mr. Butt to have

existed, there is no duty of good faith between co-owners of a business. As held in Haggett v.

Brown, 971 S.W.2d 472,487-88 (Tex.App.-Houston [14 Dist.], 1997, review denied):

       No formal fiduciary relationship existed between Brown and Hoggett. Brown and
       Hoggett were not partners. Brown was a limited partner in Telescan, Ltd. and
       Hoggett merely an employee of the limited partnership. Brown and Hoggett were
       both directors and shareholders of Telescan. A director's fiduciary duty runs only
       to the corporation, not to individual shareholders or even to a majority of the
       shareholders. Gearhart Indus., Inc. v. Smith Int'l Inc., 741 F.2d 707, 721 (5th
       Cir.1984); Schautteetv. Chester State Bank, 707 F.Supp. 885,888 (E.D.Tex.1988).
       Similarly, a co-shareholder in a closely held corporation does not as a matter oflaw
       owe a fiduciary duty to his co-shareholder. Kaspar v. Thome, 7 55 S. W .2d 151, 15 5
       (Tex.App. -Dallas 1988, no writ);. Schoellkopfv. Pledger, 739 S.W.2d 914, 920
       (Tex.App.-Dallas 1987), rev'd on other grounds, 762 S.W.2d 145 (Tex.1988).

       Based on the foregoing, there was no error in the trial court.

                                             Issue No.3
                       Did the trial court err by refusing to grant a new trial
                        because the evidence conclusively proved fraud?

       Mr. Butt has not briefed this issue and has cited no authority in support of any argument

along these lines. Accordingly, this point should be deemed waived. See Gonzalez v. VATR

Canst. LLC, 418 S.W.3d 777, 784 (Tex. App. 2013) ("Because appellants fail to provide 'a clear

                                                                                                 10
and concise argument for the contentions made, with appropriate citations to authorities and to

the record,' their first issue has not been preserved for our review and is overruled. See

Tex.R.App.P. 38.1(i).).

       Mr. Butt alleged he was defrauded when he was listed as only a 15% owner ofthe

company, as opposed to a 50% owner. At trial, the evidence showed that Mr. Butt was unable to

qualify for the loan required to purchase the car wash. The lender, as part of its underwriting

standards, prohibited any non-qualified borrower from owning more than 15% of the debtor-

business. Therefore, Mr. Butt and the Khans agreed to state that Mr. Khan would be an 85%

owner and Mr. Butt would be a 15% owner. (RR Vol. 2, Page 114, Line 4- Page 119, Line 7);

(RR Vol. 2, Page 126, Line 25- Page 127, Line 25). Mr. Butt was physically present at the

closing where all the documents were executed and submitted. (RR Vol. 2, Page 119, Line 24-

Page 120, Line 15). Mr. Khan was required to personally guarantee the loan. Mr. Butt was not a

guarantor. (RR Vol. 2, Page 112, Line 8- Page 113, Line 9). The jury heard testimony, which

was also corroborated by an e-mail from Mr. Butt, that Mr. Khan and Mr. Butt agreed to apply

for the loan on an 85/15 ownership basis but have a side agreement that Mr. Butt would be a

50% owner for purposes of sharing any profits upon the ultimate sale of the business. (RR Vol.

2, Page 108, Line 19 - Page 111, Line 9).

        The jury also heard testimony concerning three versions of "Minutes of LLC Meeting"

contained as Defendants' Exhibit 5. (RR, Volume 4, Defendants' Exhibit 5). The first version

showed the 50/50 split in ownership which the lender rejected. The second version showed the

85/15 split the lender approved. The third version showed the first version with a notary seal

added. Mr. Butt wanted the document notarized to insure he had proof to support his rights

under the parties' side agreement. (RR Vol. 2, Page 120, Line 16- Page 121, Line 17). The

                                                                                                  11
jury heard additional evidence that Mr. Khan would be fine with a formal 50/50 arrangement if

the lender would allow it; however, the loan documents prohibit a change in ownership without

the lender's approval. (RR Vol. 2, Page 129, Line 24- Page 132, Line 14).

         Despite the evidence that Mr. Butt agreed to submitting themselves to the lender as 85/15

owners, Mr. Butt denied making this arrangement and claimed he was defrauded. The jury

rendered a verdict that the parties' settlement agreement was not breached and that there was no

fraud.

         Notably, Mr. Butt's point of error is based on a legal insufficiency standard (requiring

conclusive proof of his fraud allegation) because he failed to preserve any complaint offactual

insufficiency or that the verdict is against the overwhelming weight of the evidence. Tex. R.

Civ. P. 324.

         To determine whether there is some evidence to support a fmding of fact, "we must
         view the evidence in a light that tends to support the finding of disputed fact and
         disregard all evidence and inferences to the contrary." Wal-Mart Stores, Inc. v.
         Miller, 102 S.W.3d 706, 709 (Tex.2003). If more than a scintilla of evidence
         supports the finding of fact, we must uphold it. See id. 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. v. Ridgway,
         135 S.W.3d 598, 601 (Tex.2004)

ODL Servs., Inc. v. ConocoPhillips Co., 264 S.W.3d 399,417 (Tex. App. 2008).

         Based on the foregoing portions of the record, there was sufficient evidence to support

the jury's negative finding of fraud. The evidence showed that Mr. Butt was fully cognizant and

that he participated in the submission of the loan application listing the parties as 85/15 owners

in order to comply with the lender's underwriting criteria. The side agreement never was

disputed and still remains undisputed. Thus, as a matter of law, there could be no fraud, and the

issue is moot.

                                                                                                     12
          In City ofEl Paso v. Arditti, 378 S.W.3d 661,665 (Tex.App.- El Paso, 2012), the court

held:

          To constitute a justiciable controversy, there must exist a real and substantial
          controversy involving genuine conflict of tangible interests and not merely a
          theoretical dispute.' " Bonham State Bank v. Beadle, 907 S.W.2d 465, 467
          (Tex.1995), quoting Bexar-Medina-Atascosa Counties Water Control &
          Improvement Dist. No. 1 v. Medina Lake Protection Ass'n, 640 S.W.2d 778, 779-
          80 (Tex.App.-San Antonio 1982, writ refd n.r.e.); Boerschig v. Southwestern
          Holdings, Inc., 322 S.W.3d 752, 762-63 (Tex.App.-El Paso 2010, no pet.). When
          the nature of the case falls within the general category of cases that the court is
          empowered to adjudicate pursuant to applicable statutory and constitutional
          provisions, subject-matter jurisdiction exists. Cervantes v. Tyson Foods, Inc., 130
S.W.3d 152, 156 (Tex.App.-El Paso 2003, pet. denied).

          Texas courts have power only over litigants with justiciable interests.

As is apparent, no defendant is contesting Mr. Butt's claim of equal ownership, except that the

equality comes by way of a side-agreement which Mr. Butt disputes existed. The jury heard the

evidence, weighed the parties' testimony and concluded there was no fraud.

          There was no error in the trial court.

                                                Issue No.4
                         Did the trial court err by refusing to grant a new trial
        because the defendants did not deny "a number of issues and circumstantial evidence?"

          Mr. Butt has not briefed this issue in any meaningful way that would allow the Appellees

to respond. Other than with respect to the issues already addressed above, it is impossible to

discern what the nature of the complaint might be, the portions of the record which are relied

upon, and any applicable standards of law to apply.

          Mr. Butt does not identify with any specificity which "issues and circumstantial

evidence" are included in Issue No.4. It appears he is tacking Issue No.4 onto the previous

issues, without citing to any authority or otherwise demonstrating it to be a valid, separate issue,

rather than a non-substantive, splintered claim.

                                                                                                   13
      ... an appellant must provide such a discussion of the facts and the authorities relied
      upon as may be requisite to maintain the point at issue. Tesoro Petroleum Corp. v.
      Nabors Drilling USA, Inc., 106 S.W.3d 118, 128 (Tex.App.-Houston [1st Dist.]
      2002, pet. denied). "This is not done by merely uttering brief conclusory statements,
      unsupported by legal citations." !d. Appellate courts must construe briefing
      requirements reasonably and liberally, but a party asserting error on appeal still
      must put forth some specific argument and analysis showing that the record and the
      law support his contention. San Saba Energy, L.P. v. Crawford, 171 S.W.3d 323,
      338 (Tex.App.-Houston [14th Dist.] 2005, no pet.).

Gonzalezv. VATR Canst. LLC, 418 S.W.3d 777,784 (Tex. App. 2013)

Issue No.4 should be deemed waived.

                                              Prayer

      For the foregoing reasons, Appellees request that the trial court's judgment be affirmed.

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