Burk Collins, Fountain Mall, Inc., and Mall Group, Ltd. v. Tex Mall, L.P. and Michael Kest, Individually

CourtCourt of Appeals of Texas
DecidedAugust 20, 2009
Docket02-07-00370-CV
StatusPublished

This text of Burk Collins, Fountain Mall, Inc., and Mall Group, Ltd. v. Tex Mall, L.P. and Michael Kest, Individually (Burk Collins, Fountain Mall, Inc., and Mall Group, Ltd. v. Tex Mall, L.P. and Michael Kest, Individually) 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
Burk Collins, Fountain Mall, Inc., and Mall Group, Ltd. v. Tex Mall, L.P. and Michael Kest, Individually, (Tex. Ct. App. 2009).

Opinion

                                      COURT OF APPEALS

                                       SECOND DISTRICT OF TEXAS

                                                   FORT WORTH

                                       NO.  2-07-370-CV

BURK COLLINS, FOUNTAIN MALL,                                        APPELLANTS

INC., AND MALL GROUP, LTD.

                                                   V.

TEX MALL, L.P. AND MICHAEL                                               APPELLEES

KEST, INDIVIDUALLY

                                              ------------

            FROM THE 67TH DISTRICT COURT OF TARRANT COUNTY

                                             OPINION


This is an arbitration case.  The primary issue before us is whether a trial court may review and confirm a Apartial final@ arbitration award that does not dispose of all matters submitted to arbitration or a separate independent claim of the parties.  We hold, as a matter of first impression, that it may not.  We, therefore, reverse and vacate the trial court=s orders and remand the case for further proceedings.

I.    Background

Burk Collins and Michael Kest formed several partnerships for acquiring, developing, and operating shopping centers and malls in north Texas.  Among these partnerships was North Hills Creek Mall, LP (ANHCM@), formed for the sole purpose of owning the North Hills Mall property and operating the mall (AMall@).  Two Collins‑related entities were involved in NHCM:  Fountain Mall, Inc., which served as NHCM=s general partner; and Mall Group, Ltd., a limited partner.  Collectively, Collins‑related entities ultimately owned 50% of NHCM. The NHCM partnership agreement contained a mandatory arbitration clause, requiring the parties to submit Aall disputes between and among them@ to the American Arbitration Association in Los Angeles County, California.

When NHCM bought the Mall in 1999, it assumed an $8 million loan.  The lender threatened to foreclose on the Mall in early 2003.  To forestall foreclosure, Kest agreed to pay $1 million on the existing note.  Collins prepared a memorandum of understanding (AMOU@) memorializing this agreement, which also included, among other provisions, the following paragraph:


5.     In the event Michael Kest or any of his entities purchase the Mall note or purchase the property at foreclosure then Burk Collins will retain all of his ownership in the Mall property . . . under the new entity.

Kest wrote the word ANO@ next to this paragraph on Collins=s MOU and sent Collins a different MOU that did not contain language about Collins retaining an interest in the Mall if Kest bought it at foreclosure.

Kest=s MOU contained an arbitration clause, which provided that A[a]ny controversy or claim arising out of or relating to this MOU or the breach hereof . . . shall be settled by binding arbitration in Los Angeles, California.@  Kest=s MOU also contained an integration clause, declaring that A[t]his MOU contains the Parties= entire agreement and understanding . . . and supersedes and replaces all prior and contemporaneous negotiations, all proposed agreements[,] and all agreements, written and oral, regarding the claims, the Note[,] and the Mall.@

Collins signed Kest=s MOU, but in a separate memorandum he sent to Kest with the signed MOU, he wrote that his acceptance of the MOU was conditioned on Kest=s agreement to Agive [him] back [his] 50%@ interest in the Mall after foreclosure:


I want an understanding that we have an agreement that if . . . you decide to foreclose or acquire the Mall property off the Courthouse steps that you will give me back my 50% interest after foreclosure.  This Memo is a condition to my signature on the [MOU].  If you do not agree then the document is null and void.

If I do not hear back from you then I will consider that we have an agreement.

The parties avoided foreclosure in the first half of 2003, but the lender reposted the Mall for foreclosure in October 2003.  Tex Mall, L.P.Can entity formed shortly beforehand by KestCbought the Mall at a public foreclosure sale.  Kest did not give Collins an interest in the Mall property or in Tex Mall.

Some months after the foreclosure,  Kest and several Kest‑related entities  sued Collins and several Collins‑related entities, alleging that Collins had retained about $450,000 in sale proceeds for himself.  At Kest=

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Burk Collins, Fountain Mall, Inc., and Mall Group, Ltd. v. Tex Mall, L.P. and Michael Kest, Individually, Counsel Stack Legal Research, https://law.counselstack.com/opinion/burk-collins-fountain-mall-inc-and-mall-group-ltd--texapp-2009.