Stephen Monteith Clarke v. Harris L. Kempner

Court of Appeals of Texas·Decided December 11, 2002·No. 10-01-00263-CV·Published

Opinion

Stephen Monteith Clarke v. Harris L. Kempner et al

WITHDRAWN

12-31-02



IN THE

TENTH COURT OF APPEALS


No. 10-01-263-CV


     STEPHEN MONTEITH CLARKE,

                                                                         Appellant

     v.


     HARRIS L. KEMPNER, ET AL.,

                                                                         Appellees


From the 133rd District Court

Harris County, Texas

Trial Court # 00-06086

O P I N I O N

      Stephen Clarke (Clarke) and Harris Kempner, III (Kempner) owned separate businesses in Houston that provided facilities and services for special events such as receptions, banquets, and parties. Clarke and Kempner had separate contracts with Dan Blasingame’s businesses to cater the food and alcoholic beverages served at the events. In the summer of 1997, after a restaurant project involving Clarke and Blasingame failed to develop as planned, they sued each other. There was a mediation which included Kempner, because a possible resolution of the disputes between Clarke and Blasingame might include a business arrangement among the three. The mediation was successful. To carry the settlement agreement into effect, documents were signed which resulted in (a) dismissal of the lawsuit, (b) establishment of a limited partnership between Kempner, Clarke, and 2840 GP, L.L.C. (L.L.C.), a limited liability company owned by Kempner, (c) execution of an “Exclusive Beverage Services Agreement” and a “Premier Catering Agreement” between Clarke, the limited partnership, and Blasingame’s companies, and (d) a mutual release. The limited partnership thus formed was named “2840 Chimney Rock, Ltd.” (the limited partnership). L.L.C. was the general partner and Clarke and Kempner were limited partners. Clarke’s interest was thirteen percent of the gross revenue and twenty percent in the capital of the limited partnership.

      The purpose of the limited partnership was to renovate a building—which had been purchased by Kempner in October 1997 and conveyed to 2840 Chimney Rock, Ltd. in January 1998—and turn it into another facility, to be called “La Bella Terraza,” for receptions, banquets, and parties. Under the partnership agreement, Clarke was to make an initial capital contribution of: (a) an assignment of his interest in a copyright to plans and drawings he had made; (b) a license to use, copy, and modify the “trade dress rights” which he had in the project; and (c) design assistance, as requested by the partnership, during construction of La Bella Terraza. Clarke provided no money for his interest in the partnership, but the partnership agreement valued his contributions at $166,035.

THE DISPUTE

      The work on La Bella Terraza lasted from June 1998 to January 1999. However, things did not go well between Clarke and Kempner, who accused Clarke of not providing his expertise in the design of the facility or assigning his design-concept to the partnership. Kempner also claimed that Clarke owed his share (twenty percent) of the 1997 taxes due on the building in the amount of $2,757.48. He made demand for payment on Clarke under specific provisions of the partnership agreement. Kempner said that on October 30, 1998, he sent Clarke a letter demanding payment in twenty days, and on November 24, 1998, he sent Clarke another letter informing him that his interest in the partnership had been “repossessed” under the terms of the partnership agreement. Kempner also claimed he sent a final letter, dated December 26, 1998, which informed Clarke that his interest had been “forfeited.” La Bella Terraza opened in February 1999 under the operation of Blasingame.

      In February 2000, Clarke sued Kempner, L.L.C., and the limited partnership. Among other claims, Clarke accused Kempner of only pretending to send the notice letters about the taxes by mailing empty envelopes to obtain mailing receipts, or, in the alternative, of burglarizing Clarke’s office to take the notice letters so Clarke would not see them. His requested relief included: (1) a declaration that he was still a partner in the partnership; (2) a receiver for the partnership, or an order removing L.L.C. as the general partner; (3) an accounting; (4) actual and punitive damages; (5) a “charging order” for amounts he was entitled to under the partnership agreement; and (6) attorney’s fees.

      Kempner and the partnership (but not L.L.C.) countersued, alleging that Clarke never intended to work on the La Bella Terraza project and that his real motive was to undermine the project so it would not compete with his own facility. They requested: (1) a declaration that Clarke no longer held an interest in the partnership and attorney’s fees associated therewith; (2) over $168,000 in damages for breach of contract because Clarke failed to fulfill duties under the partnership agreement; (3) over $166,000 in damages because Clarke defrauded them by making false representations about his abilities and the assignment of the “trade dress”; (4) over $500,000 in damages for breach of fiduciary duty; (5) over $500,000 in damages for violations of the Deceptive Trade Practices Act (DTPA); (6) repayment of a $15,000 loan made by Kempner to Clarke when the partnership was formed and attorney’s fees associated therewith; and (7) punitive damages.

      A jury trial was held in May 2001. The jury found:

          Kempner and “2840 Chimney Rock GP., L.L.C.” did not breach a fiduciary duty to Clarke by either (a) requesting the 1997 taxes or (b) failing to provide notices to Clarke of the forfeiture.

          Clarke failed to comply with the partnership agreement, but there were no damages as a result. Damages were defined as “[t]he market value of Clarke’s services and support to the Bella Terrazza that were not provided.”

          Clarke defrauded Kempner. As a result, damages to Kempner and the partnership were owed in the amount of $83,000.

          Clarke breached his fiduciary duty to Kempner and the partnership. As a result, damages were owed to Kempner and the partnership in the amount of $30,000.

          Clarke did not act with “malice.”

          Clarke made misleading representations to Kempner and the partnership (DTPA Claim). As a result, damages to Kempner and the partnership were $83,000.

      

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