Douglas Moran, Royal Bodkin, LLC and Woolworth Interests, LLC v. Richard Williamson D/B/A Williamson Realty

498 S.W.3d 85, 2016 WL 2929084, 2016 Tex. App. LEXIS 5177
CourtCourt of Appeals of Texas
DecidedMay 17, 2016
DocketNO. 01-14-00928-CV
StatusPublished
Cited by10 cases

This text of 498 S.W.3d 85 (Douglas Moran, Royal Bodkin, LLC and Woolworth Interests, LLC v. Richard Williamson D/B/A Williamson Realty) 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
Douglas Moran, Royal Bodkin, LLC and Woolworth Interests, LLC v. Richard Williamson D/B/A Williamson Realty, 498 S.W.3d 85, 2016 WL 2929084, 2016 Tex. App. LEXIS 5177 (Tex. Ct. App. 2016).

Opinion

OPINION

Evelyn V. Keyes, Justice

Appellants, Douglas Moran, Royal Bodkin, LLC, and Woolworth Interests, LLC (collectively, “Moran”), sued appellee, Richard Williamson d/b/a Williamson Realty, for fraud and other torts related to the purchase of two multi-unit rental properties located in Houston. Williamson counter-claimed, also alleging various tort claims arising from the dispute regarding the properties. The trial court rendered judgment in favor of Williamson. In ten issues on appeal, Moran argues that the trial court erred because its judgment was not supported by the pleadings and because the evidence was insufficient to support its various findings of fact and conclusions of law. We conclude that the judgment favoring Williamson was not supported by the pleadings and was not tried by consent; we therefore set aside the judgment on those claims and modify the judgment accordingly. We affirm the judgment in all other respects.

Background

Moran is an attorney who was friends with Williamson, a real estate broker. In 2008, Williamson and Moran learned of an opportunity to purchase some distressed properties during foreclosure proceedings. One of the properties was a multi-unit complex consisting of twenty-six duplexes located on Woolworth Street (‘Woolworth Property”). The parties disagree about the exact events surrounding this endeav- or, but the end result was that in December 2008, they purchased the Woolworth Property for $235,000. They intended to “flip” the Woolworth Property by reselling it at a profit within a short period of time. Moran and a third party, Fred Urich, 1 each invested $50,000 in cash, and Williamson obtained a loan in the amount of $135,000 for the remainder of the purchase price. Williamson took title to the Wool *89 worth Property by a deed dated December 22, 2008. Also on December 22, 2008, Moran formed Woolworth Interests, LLC and filed the relevant documents with the Texas Secretary of State showing himself as the sole manager and member of Woolworth Interests. On January 10, 2009, Williamson conveyed title to the Woolworth Property to Woolworth Interests, LLC.

Williamson listed the Woolworth Property for sale but never found a buyer. In the meantime, Williamson collected rent from the property’s tenants and used the rent to maintain the property and make interest payments on the $135,000 note. Moran subsequently invested more money to pay for necessary insurance and taxes. When he was unable to locate a buyer for the Woolworth Property and the principal amount on the $135,000 note had come due, Williamson restructured the note and paid the monthly payments, at least in part, out of the rental incomes and with cash infusions from Moran and Urich. In 2011, Moran took over management of the Woolworth Property, stating that he had fired Williamson as the property manager. Moran and Urich retired the restructured note when it came due by making the final payments. Woolworth Interests, LLC continued to hold the Woolworth Property and operated it until October 2013, when it entered into a sale contract for approximately $350,000. Under the terms of that sale, Woolworth Interests, LLC received approximately $25,000 in cash and a $325,000 seller-financed note that was payable over a term of fifteen years. Moran subsequently bought out Uriah’s interest in the Woolworth Property.

In a separate transaction, Moran also purchased at foreclosure an investment property consisting of ten apartment units and nine single-family homes on Reid and Sayers Streets (“the Reid Property”). Moran purchased that property for $207,000 in cash and took title to the Reid Property through his corporation Royal Bodkin, LLC.

Moran filed this suit based on conflicts arising out the Woolworth Property. He asserted causes of action for fraud, fraud by misrepresentation, fraud by nondisclosure, negligent misrepresentation, breach of fiduciary duty, breach of an express warranty, and violations of the Deceptive Trade Practices Act (“DTPA”). Among other tort claims, Moran asserted that Williamson violated his fiduciary duties as a real estate broker and property manager, misrepresented the nature and expense of flipping the property, and failed to disclose the existence of the $135,000 note at the time he purchased the Woolworth Property.

Williamson filed a countersuit. His live pleading as of the time of trial asserted causes of action for breach -of fiduciary duty, rescission of the deed transferring title of the Woolworth Property to Woolworth Interests, LLC, violations of the DTPA, unjust enrichment, and fraud. Williamson also sought the imposition of a constructive trust and attorney’s fees.

The parties tried the case to the bench in April 2014. The trial court attempted to resolve the dispute between Moran and Williamson on the basis that it was an “oral partnership agreement gone bad.” At the outset of the bench trial, the trial court stated that it had viewed the pre-admitted exhibits and that, based on his “preliminary look at things,” he did not believe any of the tort claims had merit and that he had “to figure out what the terms of the partnership agreement were.” As the trial court sought evidence regarding who were members of the partnership that had bought the properties, Moran’s attorney answered, “Your Honor, until we walked in I had no contention of partner *90 ship. We had an agreement between two individuals. Whether that would be' a partnership I hadn’t quite thought that through. It would have been Doug Moran and [Urich LLC] to the extent that they held an interest in [Woolworth Interests LLC], if Woolworth was being held simply as a vessel to hold [the Woolworth Property].”

The trial court also sought evidence from .Moran regarding contributions to a partnership, and his attorney stated, “We started off; Your Honor, with determination of who has the ownership interest in the properties.' I did not come down here to discuss the capitalization of a partnership. That was not part of the case that we pled. It was who owns the ... the property.” Moran also disagreed on the record with the trial court’s characterization of the relationship between Moran and Urich as a partnership:

[The Court]: You agreed it was an oral partnership.
[Moran]:- I don’t—No, I don’t, Your Honor. I don’t agree with that as a principle.
[The Court]: I though you just told me a few minutes ago that there was an oral partnership agreement between Mr. Moran and Mr. [Urich]. • ’:
[Moran]: That there was an agreement between the two and there is— there’s—that is not an issue, Your Honor. The difference between Mr. Moran and Mr. [Urich] is not[—] I didn’t come to prove that case.
[The Court]: Is there a counterclaim? Are you claiming there was an oral partnership agreement?
[Williamson]: Yes, Your Honpr.

Thus, although Williamson represented at trial that he was asserting a claim for breach of contract and breach of a partnership agreement, Moran objected to that characterization of the case. Moreover, the pleadings did not reflect either a breach of, contract claim by Williamson or a claim by him for breach of a partnership agreement.

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Bluebook (online)
498 S.W.3d 85, 2016 WL 2929084, 2016 Tex. App. LEXIS 5177, Counsel Stack Legal Research, https://law.counselstack.com/opinion/douglas-moran-royal-bodkin-llc-and-woolworth-interests-llc-v-richard-texapp-2016.