Super Ventures, Inc. and Abu Tuarb Tariq v. Saiqa S. Chaudhry , 501 S.W.3d 121 ( 2016 )

COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 02-14-00157-CV
SUPER VENTURES, INC. AND ABU APPELLANTS
TUARB TARIQ
V.
SAIQA S. CHAUDHRY APPELLEE
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FROM THE 355TH DISTRICT COURT OF HOOD COUNTY
TRIAL COURT NO. C2012437
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OPINION
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Appellants Super Ventures, Inc. and Abu Tuarb Tariq appeal from the trial
court’s judgment against them jointly and severally and in favor of Appellant
Saiqa S. Chaudhry. In what we construe as four issues, Super Ventures and
Tariq argue that the evidence is legally and factually insufficient to support the
judgment. We affirm.
I. Background
Tariq is the president of Super Ventures, which owned “J-Mart,” a
convenience store and gas station located at 4505 Highway 377 East, Granbury,
Texas. In December 2007, Super Ventures, acting by and through Tariq, entered
into a written lease agreement whereby Super Ventures leased to Chaudhry
“[t]hat certain property located at 4505 Highway 377 East, Granbury, Texas
76049 . . . together with all furniture, fixtures[,] and equipment located thereon”
(the property). The lease term ended on December 11, 2012. The base rent
was $12,300 per month from December 12, 2007, though June 30, 2008, and
starting July 1, 2008, increased to $13,300 per month for the remainder of the
term. At the time, the property was encumbered by a deed of trust securing a
note payable by Super Ventures to Zions First National Bank in the original
principal amount of $930,000.
In March 2008, Chaudhry executed a promissory note in the original
principal amount of $30,000 payable to Super Ventures. The note was payable
in fourteen monthly installments of $1,000 due on the first day of the month
beginning April 1, 2008. These payments were in addition to the rental
payments. The remaining principal, together with all accrued but unpaid interest,
was due on or before June 1, 2009.
On August 26, 2009, Chaudhry and Super Ventures executed a first
amendment to the lease agreement (the lease amendment), which gave
Chaudhry the option to purchase the property for $1,270,000. The option expired
2
on July 31, 2011, and could only be exercised upon the payment of a $180,000
option fee, $30,000 of which was due on or before October 31, 2009; the
remaining $150,000 was payable in twenty-four monthly installments of $6,250
due on the first of the month beginning September 1, 2009. The option fee was
in addition to rent and other amounts due under the lease, was nonrefundable,
and was to be applied to the purchase price as a down payment at closing.
Super Ventures agreed to provide financing for the remaining $1,090,000
purchase price for two years at nine percent interest, with monthly installments of
$13,300. The financing was to be secured by a lien on the property. The
remaining balance was due at the end of two years, and Super Ventures had no
obligation to renew or to extend financing.
The lease amendment further provided that once the option fee was paid
in full, Chaudhry could exercise the option by giving Super Ventures written
notice that she was exercising the option. Chaudhry and Super Ventures were
then to arrange a mutually acceptable closing date to occur within thirty days of
Chaudhry exercising the option. At closing, Super Ventures was to deliver a
special warranty deed conveying the property to Chaudhry “free and clear of all
liens.” The parties also agreed to execute and deliver any other written
documentation reasonably required to close on the sale of the property, including
but not limited to, Chaudhry’s execution of a promissory note and deed of trust
evidencing financing by the seller.
3
Over time, disputes arose between the parties over the amounts paid and
the amounts due on the lease, the promissory note, and the option fee. In a
letter dated June 16, 2011, Super Ventures informed Chaudhry that it had
deposited $160,543.78 towards the option and that $19,456.22 remained due in
order to invoke the option to purchase the property. On July 29, 2011, Chaudhry
sent to Super Ventures a letter stating that she was exercising her option to
purchase the property. She also enclosed a $30,456.87 check payable to Super
Ventures. The check was intended to pay the remainder of the option fee plus
some of the other money Chaudhry owed Super Ventures. On August 16, 2011,
Super Ventures notified Chaudhry by letter that it applied the check towards the
outstanding option fee balance,1 and it deposited the check on August 25, 2011.
The parties attempted to negotiate the terms of the sale of the property
and to resolve the amounts due under the lease and the promissory note, but
they never closed on the sale of the property. The lease term ended on
December 11, 2012, and Chaudhry vacated the property. Zions First National
Bank foreclosed on the property in November 2013.
Chaudhry filed suit against Super Ventures and Tariq, alleging that Super
Ventures breached and abandoned the lease amendment by failing and refusing
to close on the sale of the property. She further claimed that the option to
1
According to the August 16, 2011 letter, Super Ventures and Tariq
claimed that the outstanding balance on the option was $21,829.18 before the
application of the check.
4
purchase the property was void and unenforceable under the statute of frauds
because the legal description of the property in the lease amendment was
insufficient as a matter of law. She also asserted claims against Super Ventures
and Tariq for fraud in the inducement and for violations of the Texas Deceptive
Trade Practices Act (DTPA) based on Tariq’s alleged failure to disclose two tax
liens, a judgment lien, and deeds of trust executed in favor of Bank United, Zions
First National Bank, and JP Morgan Chase Bank that had been filed against the
property. Chaudhry claimed that Super Ventures and Tariq were jointly and
severally liable and sought rescission of the lease amendment, return of the
$180,000 option fee, and attorney’s fees.
In their answer, Super Ventures and Tariq alleged, among other things,
that Tariq was not liable to Chaudhry in the capacity in which he was sued and
that the DTPA did not apply to Chaudhry’s claims. Super Ventures and Tariq
also counterclaimed, alleging, among other things, that Chaudhry breached the
lease, the promissory note, and the lease amendment by failing to pay the sums
due thereunder; that she breached the lease amendment by failing to close on
the property; and that she breached the lease and the lease amendment by
failing to maintain the property in good condition, by failing to continue to operate
and keep the business open to the public, and by failing to return the furniture,
fixtures, equipment, and the property to Super Ventures in the same condition as
she received them.
5
After a bench trial, the trial court found that judgment should be rendered
for Chaudhry on all of her causes of action. The trial court entered judgment in
favor of Chaudhry and against Super Ventures and Tariq, jointly and severally,
for $180,000, plus $22,500 in prejudgment interest, and ordered that Super
Ventures and Tariq’s counterclaims be denied. The trial court also entered
judgment in favor of Chaudhry and against Super Ventures and Tariq, jointly and
severally, for $16,000 in trial attorney’s fees, a total of $17,500 in conditional
appellate attorney’s fees, and costs. The trial court filed findings of fact and
conclusions of law. Super Ventures and Tariq appealed.
II. Standards of Review
A trial court’s findings of fact have the same force and dignity as a jury’s
answers to jury questions and are reviewable for legal and factual sufficiency of
the evidence to support them by the same standards. Catalina v. Blasdel, 881
S.W.2d 295, 297 (Tex. 1994); Anderson v. City of Seven Points, 806 S.W.2d
791, 794 (Tex. 1991); see also MBM Fin. Corp. v. Woodlands Operating Co., 292
S.W.3d 660, 663 n.3 (Tex. 2009). When the appellate record contains a
reporter’s record, findings of fact on disputed issues are not conclusive and may
be challenged for the sufficiency of the evidence. Sixth RMA Partners, L.P. v.
Sibley, 111 S.W.3d 46, 52 (Tex. 2003); Allison v. Conglomerate Gas II, L.P., No.
02-13-00205-CV, 2015 WL 5106448, at *6 (Tex. App.—Fort Worth Aug. 31,
2015, no pet.) (mem. op.). We defer to unchallenged findings of fact that are
6
supported by some evidence. Tenaska Energy, Inc. v. Ponderosa Pine Energy,
LLC, 437 S.W.3d 518, 523 (Tex. 2014).
We may sustain a legal sufficiency challenge only when (1) the record
discloses a complete absence of evidence of a vital fact, (2) the court is barred
by rules of law or of evidence from giving weight to the only evidence offered to
prove a vital fact, (3) the evidence offered to prove a vital fact is no more than a
mere scintilla, or (4) the evidence establishes conclusively the opposite of a vital
fact. Ford Motor Co. v. Castillo, 444 S.W.3d 616, 620 (Tex. 2014); Uniroyal
Goodrich Tire Co. v. Martinez, 977 S.W.2d 328, 334 (Tex. 1998), cert. denied,
526 U.S. 1040 (1999). In determining whether there is legally sufficient evidence
to support the finding under review, we must consider evidence favorable to the
finding if a reasonable factfinder could and disregard evidence contrary to the
finding unless a reasonable factfinder could not. Cent. Ready Mix Concrete Co.
v. Islas, 228 S.W.3d 649, 651 (Tex. 2007); City of Keller v. Wilson, 168 S.W.3d
802, 807, 827 (Tex. 2005).
When reviewing an assertion that the evidence is factually insufficient to
support a finding, we set aside the finding only if, after considering and weighing
all of the evidence in the record pertinent to that finding, we determine that the
credible evidence supporting the finding is so weak, or so contrary to the
overwhelming weight of all the evidence, that the answer should be set aside and
a new trial ordered. Pool v. Ford Motor Co., 715 S.W.2d 629, 635 (Tex. 1986)
(op. on reh’g); Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986); Garza v. Alviar,
7
395 S.W.2d 821, 823 (Tex. 1965). An opinion reversing for factual insufficiency
must detail the evidence relevant to the issue or point in consideration and
clearly state why the finding is factually insufficient (in other words, why the
evidence supporting the finding is so weak or is so against the great weight and
preponderance of the evidence as to be manifestly unjust, why it shocks the
conscience, or why it clearly demonstrates bias). Pool, 715 S.W.2d at 635.
We review the trial court’s legal conclusions de novo. BMC Software
Belg., N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002). We may review
conclusions of law to determine their correctness based upon the facts, but we
will not reverse because of an erroneous conclusion if the trial court rendered the
proper judgment. City of Austin v. Whittington, 384 S.W.3d 766, 779 n.10 (Tex.
2012) (citing BMC Software, 83 S.W.3d at 794); H.E.B., L.L.C. v. Ardinger, 369
S.W.3d 496, 513 (Tex. App.—Fort Worth 2012, no pet.). That is, because a trial
court’s conclusions of law are not binding on us, we will not reverse a trial court’s
judgment based on an incorrect conclusion of law when the controlling findings of
fact support the judgment on a correct legal theory. Wise Elec. Coop., Inc. v.
Am. Hat Co., 476 S.W.3d 671, 679 (Tex. App.—Fort Worth 2015, no pet.).
III. Super Ventures’s Capacity
In the first part of what we construe as the third issue, Super Ventures
argues that the trial court erred by concluding that it did not have the capacity to
8
assert its counterclaims or to defend against Chaudhry’s claims.2 Super
Ventures contends the evidence was insufficient to support conclusion of law
number eight, which was as follows:
8. Super Ventures, Inc. does not have the capacity to defend or to
bring this Counterclaim pursuant to Section 171.25[2] of the Texas
Tax Code, which denies the right of a corporation to sue or defend in
court in the State of Texas if corporate privileges were forfeited.
Super Ventures argues that the evidence was insufficient to support this
conclusion because “[t]he evidence and testimony produced at trial conclusively
showed that . . . Super Ventures had reinstated its corporate existence as of the
trial date.” Under the tax code, a corporation without corporate privileges is
“denied the right to sue or defend in a court of this state.” See Tex. Tax Code
Ann. § 171.252(1) (West 2015). Despite this clear language, courts of this state
have concluded that this provision does not prevent a corporation that has
forfeited its corporate privileges from defending claims against it. See, e.g.,
Cruse v. O’Quinn, 273 S.W.3d 766, 770 (Tex. App.—Houston [14th Dist.] 2008,
pet. denied) (holding law firm’s forfeiture of corporate charter did not strip it of its
right to appeal, in spite of provisions in section 171.252); Mello v. A.M.F. Inc., 7
S.W.3d 329, 331 (Tex. App.—Beaumont 1999, pet. denied) (stating that, despite
clear language of section 171.252, “the statute has historically been limited to
2
Although Super Ventures and Tariq have filed a joint brief, we construe
the first part of the third issue, which challenges Super Ventures’s capacity to sue
and to be sued, as pertaining only to Super Ventures. We construe the latter part
of the third issue, which challenges Tariq’s individual liability and is addressed
later in the opinion, as pertaining only to Tariq.
9
prohibit defendants from bringing cross actions, not from merely defending
lawsuits”). And, as this court has explained, federal and state courts have long
interpreted section 171.252 to preclude entities only from filing suit after forfeiting
their right to do business, not to prohibit them from continuing an action filed
before their privileges had been forfeited. See, e.g., 1 Lincoln Fin. Co. v. Am.
Family Life Assur. Co. of Columbus, No. 02-12-00516-CV, 2014 WL 4938001, at
*3 (Tex. App.—Fort Worth Oct. 2, 2014, no pet.) (mem. op.); Waterway Ranch,
LLC v. City of Annetta, 411 S.W.3d 667, 673 (Tex. App.—Fort Worth 2013, no
pet.) (citing Tex. Clinical Labs, Inc. v. Leavitt, 535 F.3d 397, 403–04 (5th Cir.
2008)); Mossler v. Nouri, No. 03-08-00476-CV, 2010 WL 2133940, at *5–6 (Tex.
App.—Austin May 27, 2010, pet. denied) (mem. op.).
Evidence adduced at trial showed that Super Ventures’s right to transact
business was forfeited on December 4, 2009, for failure to satisfy franchise tax
requirements. On April 9, 2010, the Texas Secretary of State forfeited Super
Ventures’s registration. Super Ventures’s registration was reinstated on August
18, 2011. Chaudhry filed this suit in December 2012. Super Ventures’s right to
transact business was forfeited again in March 2013 for failure to satisfy
franchise tax requirements. On August 2, 2013, its registration was forfeited.
The case was tried on March 28, 2014.
At trial, Tariq testified that Super Ventures applied for reinstatement, and a
letter dated March 13, 2014, from the comptroller’s office stating that Super
Ventures had “met all franchise tax requirements and is eligible for reinstatement
10
through May 15, 2015,” was admitted into evidence. When Tariq was asked
whether Super Ventures’s corporate charter had been reinstated, he responded
that it had. Chaudhry immediately objected, and the trial court sustained the
objection. Super Ventures does not complain on appeal about the trial court’s
evidentiary ruling.
Under the cases cited above, however, it is irrelevant whether Super
Ventures’s right to transact business was reinstated as of the time of trial. Either
way, Super Ventures had the capacity to defend claims against it. Thus, the trial
court erred by concluding that Super Ventures lacked capacity to defend claims
against it.3
We need not address the trial court’s conclusion that Super Ventures did
not have capacity to bring its counterclaims as it is unnecessary for the
disposition of this appeal because Super Ventures does not seek relief from the
trial court’s judgment that Super Ventures take nothing on its counterclaims. See
3
In a supplemental brief filed upon leave of this court before submission,
Super Ventures and Tariq assert that the trial court erred in reaching the
conclusion that Super Ventures did not have the capacity to defend Chaudhry’s
suit because she failed to properly plead the issue of Super Ventures’s lack of
capacity to defend the lawsuit by filing a verified pleading. See Tex. R. Civ. P.
93(1) (requiring that a pleading asserting that a defendant does not have the
legal capacity to be sued be verified). Super Ventures and Tariq argue that,
therefore, Chaudhry was precluded from claiming at trial that Super Ventures
lacked capacity to defend against her lawsuit. But because we have determined
that the trial court erred by concluding that Super Ventures did not have the
capacity to defend against Chaudhry’s lawsuit, we need not address this
argument. See Tex. R. App. P. 47.1.
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Tex. R. App. P 47.1. Accordingly, we sustain the third issue as it relates to Super
Ventures’s capacity to defend against Chaudhry’s claims.
IV. Breach of Contract
In what we construe as their first issue, Super Ventures and Tariq argue
that the evidence was legally and factually insufficient to support the trial court’s
judgment against them on Chaudhry’s breach of contract claim. They contend
the evidence was insufficient to support findings of fact one, two, twelve, fifteen
and twenty-three, and conclusion of law one, which were as follows:
1. On August 29, 2009, Super Ventures, Inc. by and through its
President, Abu Tuarb Tariq, entered into a First Amendment to
Lease Agreement with Saiqa S. Chaudhry, granting her an option to
purchase premises “commonly known as 4505 Hwy 377E Granbury,
Texas 76049” (“Property”) for $1,270,000.00. The option fee of
$180,000.00 was to be applied to the purchase price as a down
payment. The Seller, in the Amendment, agreed to finance the
balance for two (2) years at nine percent (9%) interest per annum
and monthly installments of $13,300.00. The Property was to be
conveyed free and clear of all liens.
2. Saiqa S. Chaudhry, relying on the terms of the First Amendment
to Lease Agreement, executed same, and on July 29, 2011
exercised the option and paid the balance due on the $180,000.00
fee/down payment.
....
12. Neither Super Ventures, Inc., nor Abu Tuarb Tariq had the
ability to pay the balance due on the first lien on the Property or
convey the Property free and clear of all liens in August 2009 or
August 2011.
....
12
15. Super Ventures, Inc., and Abu Tuarb Tariq abandoned the
contractual obligations set forth in the First Amendment to Lease
Agreement.
....
23. Reasonable attorney’s fees through trial are $16,000.00; in the
event of an appeal to the Court of Appeals $10,000.00; if a Petition
[for] Review is filed before the Supreme Court $7,500.00.
...
1. Super Ventures, Inc., and Abu Tuarb Tariq, abandoned the
contract contained in the First Amendment to Lease Agreement and
Saiqa S. Chaudhry is allowed rescission and a return of all monies
paid as a result of said abandonment; said conduct also constitutes
a breach of contract.
Super Ventures and Tariq only challenge the portions of the findings and
conclusions dealing with breach and abandonment of the lease amendment.
They argue that they did not breach the lease amendment because neither of
them—particularly Tariq because he was a stranger to the lease amendment—
was required to convey the property free and clear of all liens until closing on the
sale of the property. Because Super Ventures and Chaudhry never closed on
the sale of the property, they contend they were not obligated to covey the
property free and clear of all liens. They assert that after Chaudhry paid the
option fee in full, Super Ventures “worked exhaustively to move the transaction
forward” and by assisting Chaudhry in finding third-party financing, even though it
was not required to do so. For these reasons, Super Ventures and Tariq contend
that they did not breach or abandon the lease amendment. They counter that
Chaudhry breached and abandoned the lease amendment by not purchasing the
13
property, by not scheduling the closing, by failing to make the final option
payment timely, and by failing to maintain the property.
“A breach [of contract] occurs when a party fails or refuses to do
something he has promised to do.” Mays v. Pierce, 203 S.W.3d 564, 575 (Tex.
App.—Houston [14th Dist.] 2006, pet. denied). While Super Ventures and Tariq
do not complain that the trial court erred by granting rescission of the lease
amendment as a remedy for their breach, the question of whether Super
Ventures and Tariq abandoned the lease amendment was relevant to the trial
court’s decision to award rescission because “[a] partial breach can be sufficient
to grant rescission in only two instances: 1) if it affects a material part of the
agreement going to the essence of the contract, or 2) it clearly evidences an
intention by the party in default to rescind or abandon the agreement.”
Benavides v. Benavides, No. 04-12-00864-CV, 2014 WL 235281, at *2 (Tex.
App.—San Antonio Jan. 22, 2014, pet. denied) (mem. op.) (quoting In re
Marriage of Smith, 115 S.W.3d 126, 134 (Tex. App.—Texarkana 2003, pet.
denied)); see Atkins v. Beasley, 544 S.W.2d 505, 507 (Tex. Civ. App.—Waco
1976, no writ). For the acts of a party to constitute abandonment, the acts must
be positive, unequivocal, and inconsistent with the existence of a contract. Law
Offices of Windle Turley, P.C. v. French, 140 S.W.3d 407, 411 (Tex. App.—Fort
Worth 2004, no pet.) (op. on reh’g) (citing Campbell v. Hart, 256 S.W.2d 255,
260–61 (Tex. Civ. App.—Fort Worth 1953, writ ref’d n.r.e.)).
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A. Super Ventures’s Breach
The trial court’s findings regarding the terms of the lease amendment are
consistent with the terms of the lease amendment admitted into evidence at trial.
Evidence adduced at trial showed that on July 29, 2011, Chaudhry sent to Super
Ventures a letter stating that she was exercising her option to purchase the
property and enclosed a check payable to Super Ventures that was intended to
pay the balance owed on the option fee. On August 16, 2011, Super Ventures
notified Chaudhry by letter that it had applied the check towards the outstanding
option fee balance, and it deposited the check on August 25, 2011. Even though
Super Ventures did not deposit the option fee check until August 25, 2011, the
evidence was sufficient to support the trial court’s finding that Chaudhry
exercised the option on July 29, 2011.
The lease amendment provided that the closing date for the sale of the
property was to occur within thirty days of the option, but no closing occurred.
Over the next several months, the parties attempted to resolve the amounts due
under the lease and the promissory note. In a letter dated November 18, 2011,
Super Ventures sent Chaudhry a letter stating that it was agreeable to move
forward with the sale of the property and temporarily put aside the issue of the
amounts owed on the promissory note,4 enclosing a proposed contract for sale
4
Tariq admitted at trial that the promissory note was separate from the
lease amendment and that payment on the promissory note did not affect
Chaudhry’s ability to exercise the option in the lease amendment.
15
that required the remaining $1,090,000 purchase price to be paid in “cash,
cashier’s check[,] or other immediately available funds at closing.”
On March 16, 2012, Super Ventures sent Chaudhry another proposed
contract for sale, which required Chaudhry to sign a two-year, second lien wrap
note in the amount of $1,090,000. Tariq testified that Super Ventures offered
Chaudhry owner financing in the form of a second lien wrap and that he told her
that Super Ventures was not able to provide financing for longer than two years.
Tariq also testified that he had also offered to help Chaudhry find third-party
financing. He admitted, however, that in August 2011, Super Ventures was
unable to execute a warranty deed, i.e. transfer the property, free and clear of all
liens because it did not have enough money to pay off the first lien and the State
of Texas.5
Both of the proposed sales contracts were inconsistent with Super
Ventures’s obligations under the lease amendment. The first proposed contract
did not provide for owner financing; the second proposed contract provided for
owner financing, but it would not have enabled Super Ventures to convey the
property to Chaudhry free and clear of all liens because the first lien on the
property would have remained in place. This, coupled with the fact that in August
2011, Super Ventures lacked the money to satisfy the liens encumbering the
property, supports the trial court’s findings and conclusion that Super Ventures
5
As discussed later in the opinion, the property was encumbered by
significant state tax liens at that time.
16
breached and abandoned the lease amendment because the evidence showed
that Super Ventures failed or refused to go through with the sale of the property
in accordance with the terms of the lease amendment.
B. Chaudhry’s Breach
Super Ventures and Tariq also complain that Chaudhry breached and
abandoned the lease amendment by not purchasing the property, by not
scheduling the closing, and by failing to maintain the property, which Super
Ventures claims resulted in over $250,000 in damages. With the exception of its
finding that Chaudhry timely exercised the option, the trial court made no express
findings related to the issue of Chaudhry’s breach or abandonment of the lease.
It is presumed that all fact findings needed to support the judgment were made
by the trial court. See Tex. R. Civ. P. 299; Carter v. William Sommerville & Son,
Inc., 584 S.W.2d 274, 276 (Tex. 1979). After the trial court files its original
findings of fact and conclusions of law, any party may file a request for specified
additional or amended findings or conclusions with the clerk of the court. Tex. R.
Civ. P. 298. The failure of a party to request additional or amended findings or
conclusions waives the party’s right to complain on appeal about the presumed
finding. See Lewis v. Dallas Soundstage, Inc., 167 S.W.3d 906, 915 (Tex.
App.—Dallas 2005, no pet.); Dallas Morning News Co. v. Bd. of Trs. of Dallas
ISD, 861 S.W.2d 532, 538 (Tex. App.—Dallas 1993, writ denied).
Super Ventures and Tariq requested additional findings on Chaudhry’s
failure to purchase the property and her failure to schedule the closing. They did
17
not request additional or amended findings on Chaudhry’s failure to maintain the
property. Thus, we conclude Super Ventures and Tariq have failed to preserve
their right to complain on appeal about this presumed finding. See Gentry v.
Squires Const., Inc., 188 S.W.3d 396, 410 (Tex. App.—Dallas 2006, no pet.)
(citing Lewis, 167 S.W.3d at 915; Dallas Morning News, 861 S.W.2d at 538).
With respect to the court’s implied findings related to Chaudhry’s failure to
schedule the closing and her failure to purchase the property, we conclude that
the trial court could have impliedly found that these failures were excused by
Super Ventures’s breach and abandonment of the lease amendment. See
Mustang Pipeline Co. v. Driver Pipeline Co., 134 S.W.3d 195, 196 (Tex. 2004)
(“It is a fundamental principle of contract law that when one party to a contract
commits a material breach of that contract, the other party is discharged or
excused from further performance.”); Bernal v. Garrison, 818 S.W.2d 79, 86
(Tex. App.—Corpus Christi 1991, writ denied) (“In a bilateral contract, where
promises have been exchanged for an exchange of performances and the
contract is executory on both sides, one party’s repudiation of a duty to perform,
or a breach of the contract of such materiality indicating an intention to repudiate
the contract, excuses or discharges the other party’s remaining obligation to
perform.”); Grp. Life & Health Ins. Co. v. Turner, 620 S.W.2d 670, 673 (Tex. Civ.
App.—Dallas 1981, no writ) (“[Repudiation] is conduct which shows a fixed
intention to abandon, renounce, and refuse to perform the contract.”). Super
Ventures and Tariq do not challenge this implied finding on appeal.
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C. Tariq’s Breach
Turning to the trial court’s findings as to Tariq, individually, it was
undisputed that the lease amendment was between Chaudhry and Super
Ventures. It was also undisputed that Tariq signed the lease amendment in his
capacity as a corporate officer. There is no evidence that Tariq, individually,
entered into or breached any contract with Chaudhry. See Holloway v. Skinner,
898 S.W.2d 793, 795 (Tex. 1995) (“As a general rule, the actions of a corporate
agent on behalf of the corporation are deemed the corporation’s acts.”).
Therefore, the trial court erred by finding and concluding that Tariq, individually,
abandoned and breached the contract. See id.; cf. Reyna v. First Nat’l Bank in
Edinburg, 55 S.W.3d 58, 70 (Tex. App.—Corpus Christi 2001, no pet.) (“An
officer or director may not be held liable in damages for inducing the corporation
to violate a contractual obligation, provided that the officer or director acts in
good faith and believes that what he does is for the best interest of the
corporation.”).
D. Attorney’s Fees
Super Ventures also challenges the trial court’s finding of fact twenty-three
regarding the amount of Chaudhry’s legal fees, asserting that Chaudhry is not
entitled to attorney’s fees and court costs because Super Ventures did not
breach or abandon the lease amendment. Super Ventures offers no additional
argument or authority to support its contention, and it does not challenge the
sufficiency of the evidence to support the reasonableness and necessity of these
19
fees. Because of our holding regarding the trial court’s findings and conclusions
regarding Super Ventures’s abandonment and breach of the lease amendment,
we conclude the trial court did not err by awarding attorney’s fees and court costs
to Chaudhry.
For these reasons, we conclude and hold that the evidence was legally
and factually sufficient to support findings one, two, twelve,6 fifteen, and twenty-
three and that the trial court did not err by concluding in conclusion of law one
that Super Ventures—but not Tariq, individually—abandoned and breached the
lease amendment.7 Accordingly, we sustain the first issue to the extent that the
trial court found and concluded that Tariq, individually, abandoned and breached
the lease amendment. We overrule the remainder of the first issue.
6
Because it is unnecessary to the disposition of this issue, we do not
address here the sufficiency of the evidence to support the portion of the trial
court’s finding twelve that neither Super Ventures nor Tariq had the ability to pay
the balance due on the first lien on the property or convey the property free and
clear of all liens in August 2009.
7
Super Ventures and Tariq also point out that the lease amendment stated
that the option fee was nonrefundable and that “[i]n the event that [Chaudhry]
does not exercise [her] option, fails to purchase the Premises for any reason,
fails to pay the entire Option Fee or defaults under the Lease, [Super Ventures]
shall be entitled to retain all amounts paid by [Chaudhry] to [Super Ventures].”
The trial court, however, ordered rescission of the lease agreement as a remedy
for Super Ventures’s abandonment of the lease amendment. Rescission works
to avoid the contract, to return any consideration paid, and to return the parties to
their earlier positions as if no contract had existed. See, e.g., Ardinger, 369
S.W.3d at 509. Super Ventures and Tariq do not complain that the trial court
erred by concluding that Chaudhry was entitled to rescission based on her claims
that Super Ventures abandoned the lease amendment. Thus, we conclude that
Super Ventures and Tariq cannot rely on this provision to avoid Chaudhry’s claim
for return of the $180,000.
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V. Tariq’s Personal Liability
In the remainder of what we construe as the third issue, Tariq asserts that
the trial court erred by determining that he was liable to Chaudhry in his
individual capacity. Tariq contends the evidence was insufficient to support
findings of fact three, five, and twenty-two and conclusion of law nine, which were
as follows:
3. Prior to August 29, 2009, Abu Tuarb Tariq had represented to
Saiqa S. Chaudhry that there was a mortgage against the Property
owed to Zion Bank.
....
5. Super Ventures, Inc., during the period of January 1, 2008 to
December 31, 2008, failed to pay franchise taxes of $1,798.08; on
which the State of Texas filed a lien in the Deed Records of Hood
County, Texas on August 17, 2008.
....
22. Super Ventures, Inc.’s right to transact business in Texas was
forfeited December 4, 2009; its registration was forfeited on April 9,
2010. The cause of the forfeiture occurred on November 15, 2008
when the tax payment was due and not made.
....
9. Abu Tuarb Tariq, an officer of Super Ventures, Inc., is personally
liable for the $180,000.00 claim of Saiqa S. Chaudhry pursuant to
Section 171.252(1) (2) which holds the officer personally liable for
debts created the day after the report or taxes was due or the tax
was due.
Tariq argues the trial court erred by concluding that he was personally
liable under tax code section 171.252 as an officer of Super Ventures. Under
section 171.251, the comptroller is required to forfeit the corporate privileges of a
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corporation on which the franchise tax is imposed if the corporation does not file
a required report, does not pay the tax imposed or a penalty relating to that tax,
or does not permit the comptroller to examine its corporate records. See Tex.
Tax Code Ann. § 171.251 (West 2015). If the corporate privileges of a
corporation are forfeited, each director or officer of the corporation is liable for a
debt of the corporation as provided by tax code section 171.255. Id.
§ 171.252(2). Section 171.255(a) provides,
If the corporate privileges of a corporation are forfeited for the failure
to file a report or pay a tax or penalty, each director or officer of the
corporation is liable for each debt of the corporation that is created
or incurred in this state after the date on which the report, tax, or
penalty is due and before the corporate privileges are revived.
Id. § 171.255(a) (West 2015). Section 171.255(b) provides that “[t]he liability of a
director or officer is the same manner and to the same extent as if the director or
officer were a partner and the corporation were a partnership.” Id. § 171.255(b)
(West 2015); see Tex. Bus. Orgs. Code Ann. § 152.304 (West 2012) (stating
that, in general, “all partners are jointly and severally liable for all obligations of
the partnership unless otherwise provided . . . by law”); U.S. Rest. Props.
Operating L.P. v. Motel Enters., Inc., 104 S.W.3d 284, 293 (Tex. App.—
Beaumont 2003, pet. denied) (stating that partners are jointly and severally liable
for debts of general partnership).
Section 171.255 is intended to hold those directors and officers liable who
“have abused the corporate privilege by continuing to create and incur debts after
the franchise tax is delinquent (ultimately leading to forfeiture of those privileges)
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and are, therefore, ‘culpable.’” PACCAR Fin. Corp. v. Potter, 239 S.W.3d 879,
883 (Tex. App.—Dallas 2007, no pet.); see also In re Trammell, 246 S.W.3d 815,
822 (Tex. App.—Dallas 2008, orig. proceeding) (“[I]t is the director’s or officer’s
consent to and approval of the corporate debts that leads to their personal
liability.”). But because section 171.255 is penal in nature, it should be “strictly
construed to protect those individuals against whom liability is sought.” Rossman
v. Bishop Colo. Retail Plaza, L.P., 455 S.W.3d 797, 802 (Tex. App.—Dallas
2015, pet. denied) (quoting PACCAR, 239 S.W.3d at 882).
Tariq contends that the evidence was insufficient to establish that Super
Ventures’s corporate privileges were forfeited in December 2009 for failure to file
a report or to pay a tax or penalty, and therefore, the trial court erred by
concluding that Tariq was personally liable. An affidavit from a custodian of
records for the Texas Comptroller of Public Accounts admitted into evidence
states that the extended due date for Super Ventures’s 2008 franchise tax report
was November 17, 2008, that Super Ventures’s right to transact business was
forfeited on December 4, 2009, for failure to satisfy franchise tax requirements,
and that Super Ventures’s registration was forfeited on April 9, 2010. Another
affidavit from a custodian of records for the Texas Comptroller of Public Accounts
admitted into evidence states that the extended due date for the 2008 franchise
tax report was November 15, 2008, and that Super Ventures’s right to transact
business was forfeited on December 4, 2009. There is no evidence that Super
Ventures’s franchise taxes were due on November 15, 2008 or November 17,
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2008, or that Super Ventures’s failure to pay its taxes by those dates was the
cause of the forfeiture. Thus, the evidence is legally insufficient to support the
trial court’s finding that “[t]he cause of the forfeiture occurred on November 15,
2008[,] when the tax payment was due and not made.”
However, if at least one of the elements of a ground of recovery or defense
has been included in the findings, any omitted unrequested elements that are
supported by the evidence are supplied by a presumption in support of the
judgment. See Tex. R. Civ. P. 299. The affidavits of the custodian of records for
the Texas Comptroller of Public Accounts admitted into evidence state that the
extended due date for Super Ventures’s 2008 franchise tax report was in mid-
November 2008 and that Super Ventures’s right to transact business was
forfeited on December 4, 2009, for failure to satisfy franchise tax requirements.
We conclude this was some evidence that Super Ventures’s right to transact
business was forfeited for failure to file a franchise tax report in November 2008.
Tariq next contends that even if he is personally liable for Super Ventures’s
debt to Chaudhry under section 171.255, he is not liable for the entire $180,000
option fee but is only liable for the amount of the option fee paid before August
18, 2011, which was the date Super Ventures’s registration was reinstated. He
contends that the “alleged final payment of the option fee of $30,456.87 was not
agreed to by the parties to be paid toward the option fee until August 25, 2011—
that is after . . . Super Ventures’[s] corporate protections were restored.”
Chaudhry contends that Tariq is liable for the entire $180,000 option fee because
24
it was paid during the time period between November 17, 2008, the date the
report was due, and August 18, 2011, when its registration was reinstated.
Personal liability under section 171.255 hinges upon when the debt was
created or incurred. See Tex. Tax Code Ann. § 171.255(a); see Hovel v. Batzri,
No. 01-14-00305-CV, 2016 WL 802070, at *19 (Tex. App.—Houston [1st Dist.]
Mar. 1, 2016, no pet. h.) (stating that “[t]he questions of what constitutes a ‘debt’
of the corporation and when the debt is ‘created or incurred’ are of paramount
importance in construing section 171.255.”). The relief Chaudhry sought to
recover is based upon the lease amendment. Cases interpreting section
171.255(a) as it relates to a breach of contract claim have held that a debt is
created or incurred when the contract in question was executed. See, e.g., Bon
Amour Int’l, LLC v. Premier Place of Dallas, LLC, No. 05-14-00816-CV, 2015 WL
4736784, at *3 (Tex. App.—Dallas Aug. 11, 2015, no pet.) (mem. op.); Rossman,
455 S.W.3d at 802–04; McCarroll v. My Sentinel, L.L.C., No. 14-08-01171-CV,
2009 WL 4667403, at *3 (Tex. App.—Houston [14th Dist.] Dec. 10, 2009, no pet.)
(mem op.) (citing Williams v. Adams, 74 S.W.3d 437, 443 n.2 (Tex. App.—
Corpus Christi 2002, pet. denied) (collecting cases)). Thus, in order for Tariq to
be personally liable under section 171.255, Chaudhry was required to prove that
the lease amendment was created or incurred after the date on which Super
Ventures’s report, tax, or penalty was due and before the corporate privileges
were revived.
25
The lease amendment was signed in August 2009. Thus, the debt was
created or incurred in August 2009. Because this debt was created or incurred
after the date Super Ventures’s report was due (November 2008) and before its
corporate privileges were revived (August 2011), Tariq is personally liable for the
debt under section 171.255(a) of the tax code. Thus, the trial court did not err in
making conclusion of law nine and subsequently entering judgment against
Super Ventures and Tariq, jointly and severally.
Accordingly, we overrule the remaining portion of the third issue.
VI. Super Ventures and Tariq’s Remaining Issues
In cases in which the judgment rests on multiple theories of recovery, an
appellate court need not address all causes of action if any one theory is valid.
See, e.g., ACCI Forwarding, Inc. v. Gonzalez Warehouse P’ship, 341 S.W.3d 58,
68 (Tex. App.—San Antonio 2011, no pet.); Checker Bag Co. v. Washington, 27
S.W.3d 625, 634 (Tex. App.—Waco 2000, pet. denied); George Grubbs Enters.,
Inc. v. Bien, 881 S.W.2d 843, 851 n.7 (Tex. App.—Fort Worth 1994), rev’d on
other grounds, 900 S.W.2d 337 (Tex. 1995). Super Ventures and Tariq’s
remaining two issues concern their complaints with respect to Chaudhry’s statute
of frauds, fraudulent inducement, and DTPA theories of recovery, all of which
sought rescission of the lease amendment and return of the option fee. Because
the trial court’s findings and conclusions on Super Ventures’s capacity,
Chaudhry’s breach of contract and abandonment claims, and Tariq’s personal
26
liability are sufficient to support the trial court’s judgment, we need not address
Super Ventures and Tariq’s remaining issues.
VII. Conclusion
For the reasons stated above, we affirm the trial court’s judgment.
/s/ Anne Gardner
ANNE GARDNER
JUSTICE
PANEL: LIVINGSTON, C.J.; GARDNER and MEIER, JJ.
DELIVERED: June 23, 2016
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