Subodh Naik and Hema Naik v. Suhas Naik

438 S.W.3d 166, 2014 WL 3672961, 2014 Tex. App. LEXIS 7970
CourtCourt of Appeals of Texas
DecidedJuly 23, 2014
Docket05-12-01547-CV
StatusPublished
Cited by14 cases

This text of 438 S.W.3d 166 (Subodh Naik and Hema Naik v. Suhas Naik) 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
Subodh Naik and Hema Naik v. Suhas Naik, 438 S.W.3d 166, 2014 WL 3672961, 2014 Tex. App. LEXIS 7970 (Tex. Ct. App. 2014).

Opinion

*169 OPINION

Opinion by

Justice BRIDGES.

Subodh Naik (Subodh) appeals the trial court’s judgment in favor of Suhas Naik (Suhas) in this suit to recover the balance due on a note. In four issues, Subodh contends the trial court erred by (1) entering judgment against him personally based on a nonrecourse note, (2) finding the parties agreed to modify the note to remove the restriction regarding personal liability, (8) entering judgment based on a claim that had been released, and (4) denying his request for attorney’s fees. We affirm the trial court’s judgment.

Background

Subodh and his nephews, Suhas and Ni-lesh Saik, were partners in the Strandian Partnership, which owned the Windjammer Apartments. In 1998, Subodh agreed to purchase Suhas’s and Nilesh’s partnership interests. Using a “template,” Su-bodh drafted a Transfer and Sale of Partnership Interest and a Promissory Note and forwarded the documents to an attorney for comment. 1 Subodh incorporated some of the attorney’s suggested changes into the documents, and the parties signed the documents on June 18,1998.

Subodh agreed to pay $225,000 for Su-has’s and Nilesh’s partnership interests. At the time the transaction closed, Subodh wrote two checks for $37,500, one to Suhas and one to Nilesh. Subodh and his wife, Hema Saik, signed a promissory note for the $150,000 balance owed on the purchase price (the Note). Section 2 of the Note stated:

RESPONSIBILITY. There is no personal or corporate liability for the repayment of this loan. Lender shall only have recourse to the extent of the value of the Interest in the event of non payment when the Note is due.

Interest accrued on the loan balance “at the rate of 8.0% per year” until the Note was fully paid. Subodh was required to pay the balance due on the Note when the Windjammer Apartments were sold or refinanced. However, if Subodh did not refinance the Windjammer Apartments before June 18, 1999, he was required to pay the balance “in monthly installments amortized at 8% over 15 years, with first payment due 7/18/99.”

In 1999, Subodh, Suhas, Jim DePetris, and Sidney Goldstein formed a partnership, the Santa Fe Lofts IV L.P., to purchase and develop the Santa Fe Building in downtown Dallas (the Santa Fe project). Subodh refinanced the Windjammer Apartments in July 1999. From the funds he obtained through the refinancing, Su-bodh paid Suhas an additional $75,000 on the Note and invested in the Sante Fe project. The only payment Subodh made on the Note after July 1999 was a payment for $17,000 in February 2001. Although Suhas testified he credited this payment to the Note, Subodh testified the money was a loan to help Suhas and Nilesh purchase a house.

In August 2000, Goldstein withdrew as a partner in the Santa Fe project, and Ajay Kothari joined the partnership. At that time, the ownership interests in Santa Fe Lofts IV were the general partner, Loft Properties, Inc., with 1%, Subodh with 39.5%, Suhas with 24.5%, Kothari with 25%, and DePetris with 10%. In 2001, DePetris was having financial difficulties and wanted to withdraw from the partnership. According to Suhas, he told Subodh *170 that he did not want to purchase DePe-tris’s interest, but Subodh insisted the partners purchase DePetris’s interest. Suhas and Kothari were forced to borrow money to finance their share of the purchase. After DePetris left the Santa Fe project, the partnership interests were Loft Properties with 1%, Subodh with 42.83%, Suhas with 27.84%, and Kothari with 28.83%.

On the Santa Fe project’s 2001 tax return, the partnership interests were listed as Loft Properties with 1%, Subodh with 39.5%, Suhas with 29.5%, and Kothari with 30%. According to Suhas, the partnership interests were changed to compensate him and Kothari for the additional burden of borrowing money to purchase DePetris’s interest. Suhas testified that Subodh agreed with the change at the time it was made. Subodh testified he first learned of the change in the partnership interests when he saw the partnership’s tax return in September of 2002. According to Su-bodh, he questioned Suhas about the change and was told it was to pay the balance due on the Note. Subodh could not explain why Kothari’s partnership interest was adjusted based on the payment of the Note and admitted that Nilesh was not a participant in the Santa Fe project.

Subodh sold the Windjammer Apartments in 2003, but did not pay the balance of the Note. According to Suhas, he repeatedly requested that Subodh pay the Note, but Subodh indicated he did not have the funds to do so. Suhas testified he and Subodh agreed that Subodh would pay the balance on the Note when he received funds from the Santa Fe project. Under questioning at trial from'Subodh’s attorney, Suhas affirmed that he agreed he “would wait until [Subodh] got his money out of the Santa Fe project before getting paid the rest of’ the Note. Suhas also affirmed that, because Subodh “had no funds,” he agreed that his recovery from the Note “would be based upon [Subodh’s] recovery from the Santa Fe partnership.” Subodh denied that he had any discussions with Suhas about payment on the Note not being due until he received funds from the Santa Fe project.

At some point, Hamilton Properties Corporation became involved in the Santa Fe project and the decision was made to develop the building as a hotel. Subodh decided he no longer wanted to be a part of the Santa Fe project and requested that Suhas and Kothari purchase his interest for two million dollars. Suhas and Kothari were willing to pay approximately one million dollars for the interest. The parties agreed to mediate the dispute.

Approximately fifteen days before the mediation, Suhas sent an email to Subodh requesting confirmation that the outstanding balance on the Note was $75,000, the interest rate on the Note was eight percent, and one payment of $15,000 had been made in 2001. Suhas indicated that he “expect[ed] this to be paid whenever Santa Fe closes. 7/8 years should be fair? Hopefully this doesn’t become part of mediation.” Subodh responded “the amount is $17,000” and that he would “sort ot [sic] this & others within ten days of the closing.” Subodh testified at trial that he meant in his email that “[a]t the mediation you would come up with a figure. And when I got the money, that’s when I would pay it.” Suhas responded by email that he would “prefer this to be part of the closing statement as I’m borrowing against the WJ note, so lets [sic] sort out now.” Su-has then listed a number of other items for which he was seeking repayment from Su-bodh. Subodh testified he did not claim during the email exchange that the Note had already been paid because he did not want to “muddle” anything prior to the mediation.

*171 The parties mediated the dispute on October 5, 2007. Subodh testified he thought “everything was on the table” at the mediation. He gave the mediator the email exchange he had with Suhas and raised the issue of the Note with the mediator. He admitted, however, that no demands or offers were made to settle the Note during the mediation.

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Bluebook (online)
438 S.W.3d 166, 2014 WL 3672961, 2014 Tex. App. LEXIS 7970, Counsel Stack Legal Research, https://law.counselstack.com/opinion/subodh-naik-and-hema-naik-v-suhas-naik-texapp-2014.