Khalaf v. Williams

814 S.W.2d 854, 1991 Tex. App. LEXIS 2110, 1991 WL 160447
CourtCourt of Appeals of Texas
DecidedAugust 22, 1991
Docket01-88-00174-CV
StatusPublished
Cited by23 cases

This text of 814 S.W.2d 854 (Khalaf v. Williams) 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
Khalaf v. Williams, 814 S.W.2d 854, 1991 Tex. App. LEXIS 2110, 1991 WL 160447 (Tex. Ct. App. 1991).

Opinion

OPINION ON REMAND FROM THE TEXAS SUPREME COURT

DUNN, Justice.

The appellant, George Khalaf, appeals the judgment awarding him nothing and awarding the appellee, William Williams, $181,229.85 plus attorney’s fees of $15,000.

In a previous opinion, this Court reversed that part of the judgment awarding Williams damages for fraud and rendered judgment that Williams take nothing on that cause of action. Khalaf v. Williams, 763 S.W.2d 868, 871-72 (Tex.App.—Houston [1st Dist.] 1988), rev’d, 802 S.W.2d 651 (Tex.1990) (op. on reh’g). This Court affirmed the remainder of the judgment. 763 S.W.2d at 871. This Court held that Williams’ cause of action for fraud was barred, as a matter of law, by the statute of limitations; therefore, Khalaf was entitled to a judgment non obstante verdicto on Williams’ cause of action for fraud. 763 S.W.2d at 870. This Court also found that the evidence did not establish that the partnership was terminated as a matter of law. 763 S.W.2d at 871. In addition, this Court found that Khalaf failed to preserve any error in the failure to instruct the jury to determine the date of termination of the partnership. 763 S.W.2d at 871.

The Texas Supreme Court reversed the judgment of this Court and remanded the case to this Court. Williams v. Khalaf, 802 S.W.2d 651, 659 (Tex.1990) (op. on reh’g). The supreme court held that this Court erroneously applied the two-year statute of limitations to Williams’ cause of action for fraud. 802 S.W.2d at 653-54. The supreme court found that the four-year statute of limitations applied to Williams’ cause of action for fraud, and his cause of action was not barred by the statute of limitations. 802 S.W.2d at 658. The supreme court then found that there was some evidence to support the jury findings of damages based on fraudulent representations made by Khalaf and remanded to this Court to determine whether the evidence was factually sufficient to support those jury findings. 802 S.W.2d at 659.

Khalaf and Williams entered into a partnership agreement to construct and operate a country and western club. Under the agreement, Williams was to build the club at cost, and Khalaf was to finance the construction. Williams was to receive 30 percent of the ownership of the club, and Khalaf was to receive 70 percent of the ownership. In the latter part of September, after construction had begun, Williams discovered that Khalaf had incorporated the business on September 17, 1980, and excluded Williams from ownership. Williams left the job site saying he had been fired. Khalaf claimed Williams had wrongfully quit.

In October 1980, Khalaf filed suit against Williams for breach of contract, fraud, constructive fraud, conversion, and breach of fiduciary duty. In October 1983, Williams filed a counterclaim for breach of contract. In September 1986, Williams amended his counterclaim to include a cause of action for fraud.

In answering special issues, the jury found that Williams did not breach his contract with Khalaf. However, the jury found that Khalaf did breach his contract with Williams, but the jury also found that Williams sustained no damages as a result of the breach of contract. The jury found that a fiduciary relationship existed between Williams and Khalaf, and that Williams breached his fiduciary duty to Khalaf resulting in damages of $3,802.15. Additionally, the jury found that Khalaf made a fraudulent misrepresentation to Williams resulting in damages of $185,032.

After the jury returned its answers to the special issues, Khalaf moved for a judgment non obstante verdicto. Among other things, Khalaf claimed he was entitled to judgment non obstante verdicto because Williams failed to plead and prove actual damages for his cause of action for fraud. The trial court denied Khalaf’s motion and entered judgment that Khalaf take nothing and Williams recover $181,229.85 plus attorney’s fees of $15,000.

In his fourth point of error, Khalaf contends that the evidence was insufficient to *857 support the jury’s finding of actual damages of $185,032 for Williams’ cause of action for fraud.

In determining whether the evidence was sufficient to support a jury finding, an appellate court should consider and weigh all evidence before the jury. Cain v. Bain, 709 S.W.2d 175, 176 (Tex.1986); Glockzin v. Rhea, 760 S.W.2d 665, 666 (Tex.App.—Houston [1st Dist.] 1988, writ denied). Only if the jury finding is so against the great weight and preponderance of the evidence as to be manifestly unjust should the appellate court set the finding aside. Cain, 709 S.W.2d at 176; Glockzin, 760 S.W.2d at 666. The appellate court cannot substitute its opinion for that of the trier of fact and determine that it would reach a different conclusion. Glockzin, 760 S.W.2d at 666.

Williams alleged that Khalaf fraudulently induced Williams to begin construction of the club by representing that Williams would receive ownership of 30 percent of the club. Williams alleged that at the time Khalaf induced Williams to begin construction, Khalaf had formed a corporation for ownership of the club and excluded Williams.

Actual damages recoverable in a cause of action based on fraud are the losses suffered directly because of the fraudulent conduct. C & C Partners v. Sun Exploration & Prod. Co., 783 S.W.2d 707, 719 (Tex.App.—Dallas 1989, writ denied); Kneip v. Unitedbank —Victoria, 734 S.W.2d 130, 134-35 (Tex.App.—Corpus Christi 1987, no writ).

At trial, Khalaf testified that when Williams left the site of the club, construction had just begun; the steel structure was up, rough plumbing was in place, and beams had been ordered. Khalaf admitted that he agreed to give Williams 30 percent of the profits and assets of the club, but Williams was never given a share. Khalaf stated that the club lost approximately $300,000 before it closed in December 1986.

Williams testified that he agreed to build the club without making a profit or receiving a salary because he was to receive 30 percent of the ownership of the club. Williams claimed that if he had built the club for profit, he would have received $50,000 to $60,000. In addition, Williams asserted that he lost $60,000 to $100,000 while working on the club.

Donald Anthis, a certified public accountant, testified that he reviewed the tax returns for the club for the years 1980 to 1984. He also reviewed a financial statement, dated October 1985, for the club. Based on his review of the documents, Anthis determined that the value of 30 percent of the income of the club was $90,-000 to $450,000. Anthis also determined that the value of 30 percent of the assets of the club was $250,000.

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Bluebook (online)
814 S.W.2d 854, 1991 Tex. App. LEXIS 2110, 1991 WL 160447, Counsel Stack Legal Research, https://law.counselstack.com/opinion/khalaf-v-williams-texapp-1991.