Amerjin Co., LLC, Amerijin Energy, LLC and Xi "Peter" Zhu v. Ashby LLP

CourtCourt of Appeals of Texas
DecidedMarch 31, 2020
Docket01-18-00231-CV
StatusPublished

This text of Amerjin Co., LLC, Amerijin Energy, LLC and Xi "Peter" Zhu v. Ashby LLP (Amerjin Co., LLC, Amerijin Energy, LLC and Xi "Peter" Zhu v. Ashby LLP) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Amerjin Co., LLC, Amerijin Energy, LLC and Xi "Peter" Zhu v. Ashby LLP, (Tex. Ct. App. 2020).

Opinion

Opinion issued March 31, 2020

In The

Court of Appeals For The

First District of Texas ———————————— NO. 01-18-00231-CV ——————————— AMERJIN CO., LLC, AMERJIN ENERGY, LLC, AND XI “PETER” ZHU, Appellants V. ASHBY LLP, Appellee

On Appeal from the 334th District Court Harris County, Texas Trial Court Case No. 2015-41401

MEMORANDUM OPINION

Appellants, Amerjin Co., LLC (“Amerjin”), Amerjin Energy, LLC (“Amerjin

Energy”), and Xi “Peter” Zhu (collectively, “appellants”), challenge the trial court’s

judgment, entered after a jury trial, in favor of appellee, Ashby LLP, on its claim

against appellants for breach of contract and appellants’ counterclaim for breach of fiduciary duty. In three issues, appellants contend that the trial court erred in denying

their motion for summary judgment and their motions to disregard jury findings and

for a judgment notwithstanding the verdict (“JNOV”).

We affirm.

Background

In its original petition, Ashby LLP alleged that in July 2010, Amerjin signed

a contract—a contingency-fee agreement (“Contract 1”)—under which Ashby LLP

agreed to represent Amerjin in a suit against Sandia Drilling Co., Ltd, LLP

(“Sandia”), then pending in the 113th Judicial District Court of Harris County, Texas

(the “Sandia lawsuit”). In exchange for Ashby LLP’s representation, Amerjin

assigned and agreed to pay Ashby LLP a percentage of any recovery obtained by

Amerjin. Contract 1 stated:

In consideration of the services rendered by [Ashby LLP], [Amerjin] hereby ASSIGNS and CONVEYS to Ashby LLP, as compensation for its service, the following interest in any and all recovery obtained on behalf of [Amerjin]:

40% if settled at any time before entry of judgment; 45% of any settlement or recovery made after entry of a judgment.

[Amerjin] understands that the interest hereinabove conveyed and assigned is calculated on gross recovery, prior to the deduction of expenses or taxes of any kind.

In accordance with Contract 1, Ashby LLP “took on representation of Amerjin

in the [Sandia] [l]awsuit” by providing legal services, trying the case to a jury,

2 prosecuting Amerjin’s case against Sandia, and defending Amerjin against Sandia’s

counterclaims. Ultimately, the trial of the Sandia lawsuit ended in a mistrial.

Ashby LLP further alleged that after the mistrial, Amerjin sought to file

bankruptcy and hired another law firm, Tow & Koenig, PLLC (“Tow & Keonig”),

to do so. While Amerjin’s bankruptcy proceeding was pending, Ashby LLP, helped

by Julie Koenig, Amerjin’s bankruptcy attorney, negotiated a settlement of the

Sandia lawsuit. Because of Contract 1, Ashby LLP was thus entitled to forty percent

of what Amerjin recovered in the settlement of the Sandia lawsuit. Later, Amerjin

refused to pay Ashby LLP the amount owed under Contract 1.

Ashby LLP sued Amerjin for breach of contract, quantum meruit, unjust

enrichment, fraud, tortious interference with a contract, fraudulent transfer, and

conspiracy. As for its breach-of-contract claim, Ashby LLP alleged that under

Contract 1, Ashby LLP agreed to provide legal services to Amerjin, Ashby LLP

provided such services to Amerjin, and Amerjin breached Contract 1 by failing to

pay Ashby LLP after it settled the Sandia lawsuit. Ashby LLP sought damages and

attorney’s fees.

In their second amended answer and counterclaims, appellants generally

denied the allegations in Ashby LLP’s petition and asserted various affirmative

defenses. Appellants also brought certain counterclaims against Ashby LLP,

alleging that on July 9, 2010, Amerjin and Ashby LLP entered into Contract 1—a

3 contingency-fee agreement—under which Ashby LLP agreed to represent Amerjin

in the Sandia lawsuit. Ashby LLP also entered into a separate contract—an

hourly-fee agreement—with Zhu, the owner of Amerjin and Amerjin Energy

(“Contract 2”). Under Contract 2, Ashby LLP was to represent and defend Zhu, in

his personal capacity, in response to the counterclaim that Sandia had filed against

him. According to appellants, on April 18, 2011, the trial of the Sandia lawsuit

ended in a mistrial and “[n]o settlement or recovery was obtained.”

Following the mistrial, Ashby LLP advised Amerjin to contact Tow & Koenig

about filing for bankruptcy. Amerjin then signed a contract with Tow & Koenig to

represent it in its bankruptcy proceeding in federal bankruptcy court. On June 9,

2011, Amerjin filed for bankruptcy. Because Ashby LLP was never listed as a

creditor in Amerjin’s bankruptcy proceeding, appellants alleged that it “thereby

waiv[ed] any and all rights as a creditor.”

Appellants further alleged that on August 2, 2011, “Amerjin settled its

bankruptcy case with . . . who it understood to be its two main creditors,

Sandia . . . and JP Morgan Chase Bank.” Under that settlement agreement, Amerjin

paid $508,551.39 to Sandia “to obtain a release of any claims from the facts

underlying the Sandia [lawsuit] and $357,937 to JP Morgan Chase Bank.” After

finalizing the settlement agreement, Amerjin moved to dismiss the bankruptcy

proceeding, identifying Sandia and JP Morgan Chase Bank as its two largest

4 creditors. On October 13, 2011, the bankruptcy court dismissed Amerjin’s

bankruptcy proceeding. And on March 26, 2012, the trial court in the Sandia lawsuit

dismissed the entire suit.

Appellants asserted counterclaims against Ashby LLP for fraud, breach of

fiduciary duty, breach of contract, and legal malpractice. As for their claim for

breach of fiduciary duty, appellants asserted that Ashby LLP owed Amerjin a

fiduciary duty and it breached that duty by “misrepresenting the nature

of . . . [C]ontract [1], self-dealing, and taking advantage of [appellants’] trust.”

Ashby LLP further failed to inform Amerjin or Zhu that it intended to take a

contingency fee “from anything beyond any recovery that resulted from the Sandia

[lawsuit].” (Emphasis omitted.) According to appellants, the behavior by Ashby

LLP directly and proximately caused injury to appellants.

Appellants moved for summary judgment, arguing, in part, that they were

entitled to judgment on Ashby LLP’s breach-of-contract claim as a matter of law

because Ashby LLP did not “achieve a ‘recovery’ or ‘judgment’ in the Sandia

[lawsuit].” Although Ashby LLP responded to appellants’ summary-judgment

motion, the record does not reflect a ruling by the trial court.

At trial, the trial court admitted into evidence a copy of Contract 1, signed on

July 9, 2010 by Christopher Ashby (“Ashby”) and Zhu, on behalf of Amerjin.

Contract 1 states that it is between Ashby LLP and Amerjin related to “Cause No.

5 2009-21712; Amerjin Co., LLC vs. Sandia Drilling Co., Ltd, LLP; in the 113th

Judicial District Court of Harris County, Texas.” And it provides:

In consideration of the services rendered by [Ashby LLP], [Amerjin] hereby ASSIGNS and CONVEYS to Ashby LLP, as compensation for its service, the following interest in any and all recovery obtained on behalf of [Amerjin]:

40% if settled at any time before entry of judgment; 45% of any settlement or recovery made after entry of a judgment.

[Amerjin] understands that the interest hereinabove conveyed and assigned is calculated on gross recovery, prior to the deduction of expenses or taxes of any kind.

The trial court also admitted into evidence a copy of Contract 2, signed on

July 9, 2019 by Ashby and by Zhu, personally, on his own behalf.

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