Heritage Gulf Coast Properties, Ltd. v. Sandalwood Apartments, Inc.

416 S.W.3d 642, 2013 WL 5323983, 2013 Tex. App. LEXIS 11953
CourtCourt of Appeals of Texas
DecidedSeptember 24, 2013
DocketNos. 14-11-00976-CV, 14-11-00980-CV
StatusPublished
Cited by67 cases

This text of 416 S.W.3d 642 (Heritage Gulf Coast Properties, Ltd. v. Sandalwood Apartments, Inc.) 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
Heritage Gulf Coast Properties, Ltd. v. Sandalwood Apartments, Inc., 416 S.W.3d 642, 2013 WL 5323983, 2013 Tex. App. LEXIS 11953 (Tex. Ct. App. 2013).

Opinion

OPINION

JOHN DONOVAN, Justice.

Appellants, Heritage Gulf Coast Properties, Ltd. (“Heritage”) and Sumer S. Ping-lia (“Pinglia”), appeal certain portions of a judgment in favor of appellees, Sandalwood Apartments, Inc. (“Sandalwood”), Jaikishin S. Bhagia (“Jacky Bhagia”) and Nanik S. Bhagia (“Nick Bhagia”), on appellants’ claims arising out of transactions involving certain apartment complexes. By cross-appeal, Sandalwood contends it is entitled to recover attorney’s fees, and Woodbridge Properties, LLC (“Wood-bridge”) (a cross-appellant only) seeks its litigation expenses. We affirm.

I. Background

The parties have a history of involvement together in multiple transactions regarding various apartment complexes — as joint owners or in a buyer/seller relationship. Appellants’ claims in the present [647]*647case were based on transactions concerning two such complexes.

A. The Taft Circle Apartments 2

In March 2003, Pinglia and the Bhagias purchased the Taft Circle Apartments at a tax foreclosure sale. Pinglia presented evidence the three individuals agreed to share equally in the purchase price, expenses, profits, and losses. Subsequently, Pinglia and the Bhagias formed Wood-bridge and transferred the Taft Circle Apartments to that entity. Woodbridge operated under the same agreement to share expenses, profits, and losses equally among its members. Woodbridge sold the Taft Circle Apartments in April 2006.

Pinglia alleges the Bhagias committed the following wrongful actions relative to the Taft Circle Apartments: (1) overcharged Pinglia by $9,514.93 for his share of the property taxes; (2) failed to inform Pinglia that the Bhagias received a payment when the former owner redeemed a portion of the property and withheld Ping-lia’s share in the amount of $27,954.24; (3) withheld $25,600 from Pinglia’s share of the proceeds after Woodbridge sold the Taft Circle Apartments because the Bhagi-as believed Pinglia had improperly taken the same amount as a broker’s commission on the sale. Pinglia pleaded claims against the Bhagias for breach of fiduciary duty and under the Texas Theft Liability Act (“TLA”).

The trial court submitted a jury question on breach of fiduciary duty but refused to submit a question under TLA. The jury (1) found a relationship of trust and confidence existed between Pinglia and the Bhagias, (2) found the Bhagias did not prove they complied with their fiduciary duties to Pinglia, and (3) assessed $12,800 against each Bhagia party for Pinglia’s resulting damages.

B. The Sandalwood Apartments3

At relevant times, Pinglia was managing member of the general partner of Heritage. The Bhagias were officers, directors, and shareholders of Sandalwood. On March 1, 2005, Heritage agreed by written contract to purchase the Sandalwood Apartments from Sandalwood for $2.3 million, via a down payment plus third-party financing. When Heritage could not obtain the third-party financing, the parties amended the contract to reduce the requisite down payment and provide for Sandalwood to finance the remainder.

The transaction first closed on February 17, 2006: Heritage signed a note in the amount of $1.85 million; Pinglia guaranteed the note; Heritage signed a Deed of Trust with Sandalwood as beneficiary; and Sandalwood signed a Special Warranty Deed. A second closing, with identical loan documents, occurred on April 26, 2006, to correct the name of the buyer.4

[648]*648Appellants’ complaints concerning the Sandalwood Apartments transaction can be categorized into two areas.

First, appellants complain that appellees failed to facilitate the subordination of Sandalwood’s first lien. Specifically, appellants allege the following. The property was derelict at the time of the sale, and Heritage needed a construction loan for rehabilitation. The day before the first closing, Pinglia told Jaeky Bhagia during a verbal conversation that Heritage decided not to consummate the sale because Ping-lia was concerned about the inability to obtain a construction loan. During the conversation, Bhagia replied that, if the sale closed, Sandalwood would subordinate its lien to enable Heritage to obtain a construction loan, and Bhagia asked for no material consideration in return.5 Thus, appellants proceeded with the first closing. Thereafter, Heritage obtained a third-party commitment for a $1.4 million construction loan, contingent on that lender having a first lien and Sandalwood signing a subordination agreement. However, Sandalwood refused to subordinate unless Heritage paid considerably more of a down payment, which it could not afford. Thus, Heritage could not obtain the construction loan. After this refusal to subordinate, appellants proceeded with the second closing. Pinglia was forced to personally fund the repairs which delayed the project, causing damages in excess of $1.2 million.

Second, appellants allege appellees (1) failed to disclose the fact an insurance company sued the Bhagias for a fraudulent claim concerning the property, (2) made misrepresentations about the occupancy rate of the complex, and (3) actively concealed plumbing and sewer problems on the property. Appellants alleged they would have further investigated before closing, or refrained from closing, if they had known of these issues that required Pinglia to spend more than $300,000 on repairs.

Appellants asserted claims for breach of fiduciary duty, statutory fraud in a real estate transaction, common-law fraud, and conspiracy based on all of the above alleged actions. Appellants also asserted a claim for breach of contract based only on the alleged promise to subordinate Sandalwood’s lien.

The trial court ultimately heard three motions for summary judgment filed by appellees: (1) a traditional motion attacking the breach-of-contract claim on certain grounds; (2) another traditional motion attacking the breach-of-contract claim on additional grounds and all fraud claims; and (3) a no-evidence motion on all claims.

On the day trial began, the trial court signed an order granting the motions with respect to the following claims: (1) all claims based on appellees’ alleged promise to subordinate Sandalwood’s lien; (2) breach of fiduciary duty based on the allegation that appellees failed to disclose, made misrepresentations about, or actively concealed, pre-existing insurance claims, the occupancy rate, and certain conditions; and (3) conspiracy based on the foregoing dismissed claims.

After the summary judgment, fraud claims remained pertaining to appellees’ alleged failure to disclose certain conditions of the property. The trial court granted a directed verdict on statutory fraud but submitted a jury question on [649]*649common-law fraud. The jury failed to find Jacky Bhagia, while acting on behalf of Sandalwood, committed fraud.

C. Post-Trial Proceedings with Re-? spect to All Claims

By agreement of the parties, the trial court heard issues concerning attorney’s fees after trial. In a post-trial motion, Sandalwood requested attorney’s fees for successfully defending against appellants’ claims concerning the Sandalwood Apartments, and Woodbridge requested litigation expenses concerning the Taft Circle Apartments. The trial court signed an order denying the requests.

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Cite This Page — Counsel Stack

Bluebook (online)
416 S.W.3d 642, 2013 WL 5323983, 2013 Tex. App. LEXIS 11953, Counsel Stack Legal Research, https://law.counselstack.com/opinion/heritage-gulf-coast-properties-ltd-v-sandalwood-apartments-inc-texapp-2013.