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);
5 (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
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.
14 CERTIFICATE OF WORD COUNT
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