IQ Holdings, Inc., Yohanne Gupta and Saroj Gupta v. Villa D'Este Condominium Owner's Association, Inc. and Lee Blask

509 S.W.3d 367, 2014 WL 982844, 2014 Tex. App. LEXIS 2857
CourtCourt of Appeals of Texas
DecidedMarch 13, 2014
Docket01-11-00914-CV
StatusPublished
Cited by11 cases

This text of 509 S.W.3d 367 (IQ Holdings, Inc., Yohanne Gupta and Saroj Gupta v. Villa D'Este Condominium Owner's Association, Inc. and Lee Blask) 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
IQ Holdings, Inc., Yohanne Gupta and Saroj Gupta v. Villa D'Este Condominium Owner's Association, Inc. and Lee Blask, 509 S.W.3d 367, 2014 WL 982844, 2014 Tex. App. LEXIS 2857 (Tex. Ct. App. 2014).

Opinion

OPINION

REBECA HUDDLE, Justice.

The parties to this appeal executed a Rule 11 settlement agreement at mediation in which they agreed, among other things, to (1) execute final settlement documents to be drafted after the conclusion of the mediation and (2) return to the mediator to have her arbitrate, resolve and render a final decision in disputes “regarding the drafting of the [final settlement] agreement and interpretation of the intent of the parties.” A dispute regarding the intent of the parties arose during the drafting of the final settlement agreement, and the parties submitted it to the arbitrator, who issued a final award regarding the meaning of the disputed terms and directed the parties to sign final settlement documents incorporating them.

Appellants IQ Holdings and Yohane and Saroj Gupta (collectively “Gupta Parties”) moved to vacate and modify portions of the award. The Gupta Parties complained that the arbitrator ascribed too broad a meaning to the term “Covenant of Mutual and Peaceable enjoyment” and that the Covenant she directed the parties to sign acted as a prior restraint on speech. They also objected that the arbitrator did not require the parties to “expunge” a lis pen-dens and instead ruled that the parties would satisfy the Rule 11 agreement by having the lis pendens “terminated, released and cancelled” such that it would “have no further legal force or effect.”

Appellees Villa D’Este Condominium Association and Lee Blask (collectively “the Association”) moved to confirm the award and asserted a claim for breach of the Rule 11 agreement, seeking specific performance (the execution of the final settlement documents in accordance with the arbitrator’s award) and attorney’s fees.

The trial court confirmed the award. It also granted summary judgment in favor of the Association on its breach of contract claim, ordering specific performance (the execution of the final settlement documents), but denying the Association’s request for attorney’s fees.

Both sides appealed. We modify portions of the judgment and affirm the judgment as modified.

Background

IQ Holdings bought a condominium unit at the Villa D’Este Condominiums in 2006. In 2009, IQ Holdings sold the unit to Yo-hanne Gupta, who is its shareholder and CEO, and Saroj Gupta, who is Yohanne’s mother. That same year, IQ Holdings sued the Association to obtain access to its books and records. The Association coun-tersued, challenging the sale of the unit by IQ Holdings to the Guptas on the basis that IQ Holdings failed to provide proper notice of the sale, and thus deprived the Association of the opportunity to exercise its right of first refusal. The Association filed a notice of lis pendens on the condominium unit in the Harris County real property records.

The parties mediated the case on January 31, 2011. In the early morning hours of February 1, they executed a one-page *371 Rule 11 settlement agreement, the relevant terms of which are:

The Parties have agreed to the material terms of a settlement that shall be documented in formal settlement documents that will be prepared in draft form by the Association’s counsel. The material terms are:
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3. Covenant of Mutual and Peaceable enjoyment.
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6. Dismissal with prejudice and ex-pungement of the lis pendens.
7. The Parties agree to return to [the mediator] to Arbitrate and resolve any disputes regarding the drafting of the agreement and interpretation of the intent of the Parties. [The arbitrator’s] decisions shall be final.

After the mediation, a dispute arose regarding the drafting of the final settlement documents. Counsel for the Association proposed a draft final settlement agreement, but the Gupta Parties rejected it as inconsistent with the Rule 11 agreement. The Association requested that the arbitrator resolve the dispute, and the Gupta Parties consented, submitting to the arbitrator a set of proposed draft final settlement documents.

Between February 28 and April 9, 2011, the arbitrator received evidence and written submissions from the parties and conducted telephonic hearings with the parties and counsel. On April 9, 2011, the arbitrator issued an award, attaching the version of the final settlement documents she determined should be executed by the parties, which incorporated portions of both sets of competing settlement documents, along with various exhibits. Exhibit D was the Mutual Covenant of Peaceable Enjoyment (“Covenant”), while Exhibit E was the Agreed Motion for Dismissal with Prejudice and for Termination, Release and Cancellation of Notice of Lis Pendens, with a proposed Order.

On April 12, the Gupta Parties requested that the arbitrator “modify, correct, or clarify the initial award,” because, according to them, the arbitrator (1) included a Covenant that acted as a prior restraint on their speech- and (2) incorrectly failed to “expunge” the lis pendens as required by the Rule 11 agreement.

On April 13, 2011, the arbitrator made a “Final Arbitration Award.” She noted that some of the Gupta Parties’ points regarding the use of the word “communication” in the Covenant were well taken, that she had made some of the requested revisions to the Covenant, and that the documents should be further revised to omit Saroj Gupta as a signatory. With respect to' the lis pendens, the arbitrator ruled that the parties did not intend, at the time they entered into the Rule 11, to seek a formal expungement and that their intention was merely to extinguish the lis pendens, as contemplated by the Agreed Motion for Dismissal with Prejudice and for Termination, Release' and Cancellation of Lis Pendens, Exhibit E to her award. The' arbitrator directed the parties to sign the final settlement documents reflecting her revisions by 1 p.m. on April 15, 2011. Mr. Gupta and IQ Holdings did not sign.

The Association moved the trial court to confirm the Final Arbitration Award. It also supplemented its pleadings, adding a claim that Mr. Gupta and IQ Holdings breached the Rule 11 agreement by refusing to sign the final settlement documents as directed by the.arbitrator. The Association moved for summary judgment on its breach of contract claim, seeking (1) specific performance in the form of a judgment requiring Mr. Gupta and IQ Holdings to sign the final settlement documents and (2) attorney’s fees. The Gupta Parties *372 timely moved to vacate or modify the award on the grounds that the arbitrator exceeded her powers and acted in manifest disregard of the law by imposing a prior restraint on speech and by failing to require expungement of the lis pendens.

After conducting a hearing on the various motions, the trial court denied the motion to partially vacate or modify the award and granted the motion to confirm. The trial court also granted the Association’s motion for summary judgment on the basis that the Gupta Parties breached the Rule 11 agreement.

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Bluebook (online)
509 S.W.3d 367, 2014 WL 982844, 2014 Tex. App. LEXIS 2857, Counsel Stack Legal Research, https://law.counselstack.com/opinion/iq-holdings-inc-yohanne-gupta-and-saroj-gupta-v-villa-deste-texapp-2014.