A. Lakhany International, Inc. v. JR United Industries, Inc.

• Court: Court of Appeals of Texas
• Decided: June 19, 2008
• Docket: 14-07-00138-CV
• Status: Published

Opinion

Affirmed and Memorandum Opinion filed June 19, 2008

Affirmed and Memorandum Opinion filed June 19, 2008.

In The

Fourteenth Court of Appeals

_______________

NO. 14-07-00138-CV

A. LAKHANY INTERNATIONAL, INC., Appellant

V.

JR UNITED INDUSTRIES, INC., Appellee

On Appeal from the 280th District Court

Harris County, Texas

Trial Court Cause No. 2004-62775

M E M O R A N D U M  O P I N I O N

In this suit on a sworn account and for quantum meruit, appellant, A. Lakhany International, Inc. (ALakhany@), challenges the trial court=s findings of fact and conclusions of law supporting a take-nothing judgment in favor of appellee, JR United Industries, Inc. (AJR@).  Because the dispositive issue is clearly settled in law, we issue this memorandum opinion and affirm.  Tex. R. App. P. 47.4.

I.  Factual and Procedural Background

Lakhany sued JR on a sworn account and for quantum meruit for damages allegedly arising from a transaction involving the alleged purchase of imported clothing manufactured in the United Arab Emirates.  By verified answer, JR alleged, among other matters, it was an improper party to the action because it did not purchase any goods or services from Lakhany. 

Trial was to the court, and two witnesses to the transaction testified:  Jaime Grosfeld, secretary of JR and of another company, South American Textiles (ASouth American@); and Hashim Lakhany, President and CEO of A. Lakhany International, Inc.^[1] Both parties also introduced documentary evidence.

According to Grosfeld, South American is a registered importer which buys goods, then resells them to JR, which, in turn, sells them to companies such as Kmart, Wal-Mart, Penney=s, and Target.  Grosfeld handles all the orders and does so through South American.^[2]  South American buys all goods and resells them to JR.

In May 2001, South American purchased men=s slacks and shorts from Ali Majeed, one of the principals of Nisar Corporation in the United Arab Emirates.  Grosfeld testified that he believed Nisar was the same company as Enrobe, whose name was on the invoice.  The purchase in question involved a series of deliveries.  After the first delivery, however, Kmart, who was to purchase the goods from JR, Ajust went crazy@ because the garments were a Adisaster.@  South American rejected the remaining deliveries.

Majeed, however, kept calling, insisting the remaining goods were perfect, but Grosfeld refused to do business with him.  Finally, Majeed, or a man Grosfeld believed to be Majeed, told Grosfeld the goods were in the United States, and Grosfeld was the person who could move them.^[3]  Grosfeld told Majeed he (Majeed) had to Amake good@ on the original shipment, and the two agreed on $150,000.

According to Grosfeld, Majeed told him that, in order to obtain the $150,000, Majeed wanted Grosfeld to take the goods that were in the United States because they were made for Kmart and it would be difficult selling them to anyone else.  In October 2001, Grosfeld agreed to take the goods, inspect them, and try to sell them.  The first $150,000 would belong to Grosfeld, with the remaining amount paid to Majeed.

Majeed then said he had a friend in Texas who would take care of Abringing the goods in, paying the duties, paying the demurrage charges, paying the G.O., paying all the expenses and he will deliver them to me.@^[4]  Grosfeld was to draft a purchase order for Lakhany at the prices Majeed had given Grosfeld.  Grosfeld responded that he needed to inspect the goods, and Majeed agreed.  Grosfeld issued the purchase order on October 26, 2001 and sent it to Lakhany.  Lakhany then informed Grosfeld he wanted Grosfeld to go to the G.O. warehouse to inspect the goods.  Grosfeld refused, and Lakhany finally agreed Grosfeld could inspect them in-house.  According to Grosfeld, A[T]hat was the condition that we issued a purchase order at no charge meaning I am not responsible to pay anything for these goods.@

The goods were delivered to South American in April 2002.  Grosfeld inspected a portion of the goods and found them to have the same defects as the initial shipment.  After trying innumerable ways, Grosfeld was unable to sell the goods.

Lakhany testified A. Lakhany International is a manufacturer and importer of textiles.  Enrobe had been one of Lakhany=s suppliers for fifteen years.  Lakhany=s agreement with a Mr. Nisar of Enrobe was that Lakhany would move the goods from the general order customs warehouse and find a buyer.^[5]  Enrobe/Nisar told Lakhany that JR was the buyer.

Lakhany contacted JR and talked with Grosfeld.  According to Lakhany, Grosfeld agreed to buy the goods and confirmed by means of the purchase order.  The purchase order was sent by facsimile on October 26, 2001 and described a purchase from Lakhany to be shipped to AS.A. United Industries.@  The purchase order specified door-to-door shipping (ADTD@) and Ano charge.@  The cover sheet for the transmission, signed by Gilda Castillo, contained JR=s name and address.  JR=s address on the cover sheet was the same as S.A. United Industries=s address on the purchase order.

According to Lakhany, Athey@ initially agreed to inspect the goods at the warehouse.  On November 23, 2001, however, Castillo, writing on JR letterhead, informed Lakhany:

Mr. Grosfeld has advised me to inform you, that he is not interested in doing an outside inspection, we do not have the time or personnel available to undertake an outside inspection. And this was not what he had agreed to.

Please feel free to dispose of the goods as you see fit.

Lakhany continued asking when there was going to be an inspection, and Athey@ said they would not do an inspection unless Lakhany sent a sample of the goods to them.  On May 9, 2002, Lakhany sent one pair of shorts, as a sample of the goods, to Rozario Dass at JR.  In mid-June 2002, Lakhany informed the three warehouses which were storing the goods that Lakhany had sold the goods to JR, and JR would arrange for transportation.  According to Lakhany, the goods were delivered to JR=s warehouse.

After the goods were delivered, Lakhany had no further conversations with anyone at JR.  Grosfeld also testified he did not inform Lakhany the goods were defective or attempt to return them.  After a thirty-day inspection period, Lakhany billed JR for the goods, and charges for duty, demurrage, and G.O. warehousing.

When he was unable to collect the outstanding balance after several attempts, Lakhany referred the account to a collection agency.  In response to correspondence from the collection agency, Alan Walters, house counsel for South American, informed the agency South American was the recipient of the goods and requested all future correspondence be sent to South American.

At the close of evidence, the trial court stated it found Lakhany=s position Avery confusing,@ and the court did Anot understand the transaction from his point of view and [did] not think that he had an agreement with either J.R. or C that other outfit.@  The court continued, AI just don=t believe Mr. Lakhany=s version . . . .@  Finally, the court stated, AI don=t think that he had the contract that he thought he had or that he claims he had.@

The court rendered judgment that Lakhany take nothing.  The court subsequently filed findings of fact and conclusions of law.

II.  Standard of Review

In fifteen issues, Lakhany challenges the legal and factual sufficiency of the evidence to support various of the trial court=s findings of fact.^[6]  In his remaining twelve issues, he challenges various of the trial court=s conclusions of law.

Findings of fact in a bench trial have the same force and dignity as a jury=s verdict on jury questions. Haas v. Ashford Hollow Cmty. Improvement Ass=n, 209 S.W.3d 875, 887 (Tex. App.CHouston [14th Dist.] 2006, no pet.).  We conduct a legal and factual sufficiency review of a trial court=s findings by the same standards we apply when reviewing evidence supporting a jury=s answer. Id.  However, the trial court=s findings are not conclusive when, as here, there is a complete reporter=s record.  Arrellano v. State Farm Fire & Cas. Co., 191 S.W.3d 852, 856 (Tex. App.CHouston [14th Dist.] 2006, no pet.).

If a party attacks legal sufficiency of the evidence supporting an adverse finding on an issue on which it did not have the burden of proof, the party must demonstrate on appeal that no evidence supports the adverse finding.  Haas, 209 S.W.3d at 887.  If there is any evidence of probative force to support the trial court=s findingCin other words, more than a mere scintillaCwe will overrule a challenge to legal sufficiency of the evidence.  Mladenka v. Mladenka, 130 S.W.3d 397, 402 (Tex. App.CHouston [14th Dist.] 2004, no pet.).

When a party attacks the factual sufficiency of the evidence supporting a finding, we set aside the finding only if it is so contrary to the overwhelming weight and preponderance of the evidence that it is clearly wrong and manifestly unjust.  Haas, 209 S.W.3d at 887.  The factfinder is the sole judge of the credibility of the witnesses and the weight of the evidence.  City of Keller v. Wilson, 168 S.W.3d 802, 819 (Tex. 2005).  We may not substitute our judgment for the trier of fact, even if we could reach a different answer on review of the evidence.  Daugherty v. Am. Motorists Ins. Co., 974 S.W.2d 796, 797 (Tex. App.CHouston [14th Dist.] 1998, no pet.).  The amount of evidence necessary to affirm a judgment is far less than that necessary to reverse.  GTE Mobilnet of S. Tex. Ltd. P=ship v. Pascouet, 61 S.W.3d 599, 616 (Tex. App.CHouston [14th Dist.] 2001, pet. denied).

We review conclusions of law de novo to determine whether they are correct.  Mladenka, 130 S.W.3d at 402. On appeal, we will uphold conclusions of law if we can sustain the judgment on any legal theory supported by the evidence. Id. at 403.  Thus, incorrect conclusions of law do not require reversal if the controlling findings of fact support the judgment under a correct legal theory.  Id.

III.  Analysis

In his second and thirteenth issues, Lakhany challenges legal and factual sufficiency of the evidence to support the trial court=s finding JR Awas not the correct party, as it did not send the purchase order that A. Lakhany, Inc. relied on in its belief that it had an agreement.@  In his twenty-first issue, Lakhany challenges the trial court=s conclusion that there was no valid, enforceable contract between Lakhany and JR.  In his twenty-fifth issue, Lakhany challenges the trial court=s conclusion that JR did not accept any services or materials from Lakhany.

Lakhany sued JR, not South American, on a sworn account and for quantum meruit.  JR defended, in part, on the ground of defect of parties.

If the evidence is legally and factually sufficient to support the trial court=s findings and conclusions that there was no agreement between Lakhany and South American, both Lakhany=s theories of recovery fail, and his remaining issues, directed primarily at findings and conclusions on the elements of his causes of action, would be rendered moot.  Accordingly, we turn first to Lakhany=s second, thirteenth, twenty-first, and twenty-fifth issues.

The following evidence supports the trial court=s finding that JR was not the correct party:

$                   Grosfeld=s testimony that A[a]ll goods are brought [sic] by S.A. Textile and resold to J.R. United@;

$                   Grosfeld=s testimony that South American originally purchased the goods from Majeed, who was an agent of Enrobe/Nisar;

$                   Grosfeld=s testimony indicating that his arrangement for the remaining goods with the man he believed was Majeed was structured around Majeed=s Amak[ing] good@ on the original shipment, i.e., Grosfeld=s recouping $150,000 before paying Majeed anything;

$                   The purchase order Grosfeld issued in October 2001 showing the shipment going to AS.A. United Industries@;

$                   Delivery of the goods to South American;

$                   The letter from South American=s house counsel to Lakhany=s collection agency in which house counsel stated South American was the recipient of the goods and all further correspondence should be directed to South American.

There is more than a mere scintilla of evidence to support the trial court=s finding that JR Awas not the correct party, as it did not send the purchase order that A. Lakhany, Inc. relied on in its belief that it had an agreement.@  Accordingly, we conclude the evidence  is legally sufficient to support this finding.  See Mladenka, 130 S.W.3d at 402.

To support a contrary finding, Lakhany relies primarily on his own testimony and on documents he sent to JR.  In addition, he refers to two pieces of correspondence he received under JR=s letterhead: the facsimile transmission sheet accompanying the October 26, 2001 purchase order and a November 2001 letter on JR letterhead, in which Castillo informed Lakhany that Grosfeld would not do an outside inspection of the goods.  Finally, Lakhany points to the fact the purchase order shows AS.A. United Industries,@ rather than ASouth American Textiles,@ as the recipient and to the fact the two entities have the same address.

It was for the trial court, as fact finder, to assess the credibility of the witnesses and the weight of the evidence.  See Wilson, 168 S.W.3d at 819.  The trial court specifically stated it did not believe Lakhany=s version.

We conclude the evidence is factually sufficient to support the trial court=s finding that JR was not the correct party.  This finding supports the trial court=s conclusions (1) there was no valid, enforceable contract between Lakhany and JR and (2) JR did not accept any services or materials from Lakhany.  Put differently, the evidence  is legally and factually sufficient to support JR=s defense of defect of parties in relation to both of Lakhany=s claims.  Accordingly, we overrule Lakhany=s second, thirteenth, twenty-first, and twenty-fifth issues, and do not address his remaining issues.  See Tex. R. App. P. 47.1 (stating court is to hand down written opinion that is as brief as practicable, but that addresses every issue raised and necessary to final disposition of appeal).

IV.  Conclusion

Having concluded that the evidence is legally and factually sufficient to support the trial court=s finding in favor of JR on its defect-of-parties defense, we overrule Lakhany=s second, thirteenth, twenty-first, and twenty-fifth issues. Because we hold the evidence is legally and factually sufficient to support the trial court=s findings and conclusions that there was no agreement between Lakhany and JR, both of Lakhany=s theories of recovery are unavailing.  Therefore, Lakhaney=s remaining issues, directed primarily at findings and conclusions on the elements of his causes of action, are rendered moot, and we need not address them.  Accordingly, the judgment of the trial court is affirmed.

/s/        Charles Seymore

Justice

Judgment rendered and Memorandum Opinion filed June 19, 2008.

Panel consists of Justices Fowler, Frost, and Seymore.

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^[1]  Unless necessary to distinguish between A. Lakhany International, Inc. and Hashim Lakhany, we refer to both as ALakhany.@  The third witness was attorney William Peterson, who testified on the question of Lakhany=s attorney fees.

^[2]  In its first amended original petition, Lakhany named South American as a defendant.  In its appellate brief, however, Lakhany admits it subsequently non-suited South American and was not seeking damages from South American at the time of trial.  The trial court=s judgment refers to JR as the sole defendant.  In its findings of fact and conclusions of law, the trial court stated Lakhany dropped its claims against South American in Lakhany=s third amended petition.

Although JR has included Lakhany=s third amended original petition in the appendix to its appellate brief, that petition is not part of the appellate record.  We therefore consider only Lakhany=s appellate admission, the final judgment, and the trial court=s findings of fact and conclusions of law in determining the parties to the suit at the time of trial.  See Cherqui v. Westheimer St. Festival Corp., 116 S.W.3d 337, 342 n.2 (Tex. App.CHouston [14th Dist.] 2003, no pet.) (A[I]n our review, we cannot consider documents attached as appendices to briefs and must consider a case based upon the record filed.@).

^[3]  As set forth below, Lakhany testified he spoke with Grosfeld.   Grosfeld, however, testified that AJ.R. United does not do business with A. Lakhany,@ and  South American Anever had any deal with Mr. Lakhany at all.@  Grosfeld testified he did not know Lakhany and he would not buy goods from people he does not know.  The person South American dealt with regarding the goods in question was Majeed on behalf of Enrobe/Nisar.

^[4]  Lakhany testified AG.O.@ refers to general order of customs, a warehouse containing goods not claimed by the importer.

^[5]   Lakhany denied that he knew Majeed.

^[6]  In his fifteenth issue, Lakhany argues, AIn so far as any of the Conclusions of Law are considered Findings of Fact, there is no evidence or factually insufficient evidence to support such Conclusions which may be determined to be Findings of Fact.@  Lakhany, however, does not state to which conclusions of law this issue may apply and presents no argument in support of this issue.  See Tex. R. App. P. 38.1(h) (requiring appellant=s brief to contain clear and concise argument for contentions made, with appropriate citations to authorities and the record); Sterling v. Alexander, 99 S.W.3d 793, 799 (Tex. App.CHouston [14th Dist.] 2003, pet. denied).