Apex Katy Physicians LLC, Pankaj K. Shah MD, Bharati Shah and Indus Associates LLC v. Abeer Saqer and I Care International LLC ( 2018 )

Opinion issued March 13, 2018
In The
Court of Appeals
For The
First District of Texas
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NO. 01-17-00197-CV
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APEX KATY PHYSICIANS LLC, PANKAJ K. SHAH, MD, BHARATI
SHAH, AND INDUS ASSOCIATES LLC, Appellants
V.
ABEER SAQER AND I CARE INTERNATIONAL LLC, Appellees
On Appeal from the 61st District Court
Harris County, Texas
Trial Court Case No. 2015-25588
MEMORANDUM OPINION
This is an appeal from a summary judgment dismissing claims for fraudulent
inducement and breach of a settlement agreement. The settlement agreement
occurred in an earlier lawsuit, in which Pankaj K. Shah, M.D., his wife, Bharati
Shah, their company, Indus Associates, LLC, and a company owned by Indus,
Apex Katy Physicians LLC (“Apex Landlord”) (collectively, “the Shahs”) sued
Abeer Saqer and numerous other parties. The Shahs’ claims arose from Apex
Landlord’s purchase and lease of real property for the operation of a hospital,
which employed Saqer as its interim chief executive officer, never actually opened,
and eventually filed for bankruptcy.
Before that case was tried, the Shahs entered into a settlement agreement
with Saqer and her company, I Care International, LLC. At the time of the
settlement, Saqer was also a potential witness in a separate lawsuit, in which a
group of physicians who had invested in the failed hospital brought claims against
Dr. Shah.
Several years later, the Shahs filed this lawsuit, alleging that Saqer
fraudulently induced them into entering into the settlement agreement by falsely
representing that she was insolvent and without knowledge of certain allegations
made by the physician-investors in their lawsuit against Dr. Shah. The Shahs
further alleged that Saqer then breached the settlement agreement’s provision that
she would not voluntarily testify against the Shahs by voluntarily testifying in a
deposition in the physician-investors’ lawsuit and at trial for the remaining
defendants in the underlying lawsuit.
Saqer filed a hybrid motion for summary judgment, arguing in part that the
Shahs had no evidence of damages. We hold that the Shahs failed to present more
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than a scintilla of evidence of damages for either claim in their response to Saqer’s
motion. Therefore, we affirm.
Background
The underlying dispute and litigation
In 2007, the owners of Prestige Consulting, Inc. d/b/a Turnaround
Management Group (“Prestige”), Adeel Zaidi and A.K. Chagla, believed that they
could interest investors in purchasing real property in northwest Houston and
operating a hospital there. Through Prestige, Zaidi and Chagla formed (1) Apex
Landlord to purchase the property; (2) Apex Long Term Acute Care–Katy, L.P.
(“Apex Tenant”) to lease the property for use as a hospital; and (3) Apex Katy
Physicians–TMG, LLC (“Apex TMG”) to act as the general partner in Apex
Tenant. Prestige was hired to staff and manage Apex Tenant, and one of Prestige’s
directors, Abeer Saqer, was hired to serve as Apex Tenant’s interim chief
executive officer.
Zaidi recruited a group of initial investors, including Dr. Shah, whose
company, Indus, became the majority owner of Apex Landlord. Dr. Shah served as
Apex Landlord’s managing member.
Apex Landlord agreed to buy the real property from Medistar Corporation
and to lease it to Apex Tenant. Shah, Zaidi, and the other initial investors then
recruited a group of physician-investors to operate Apex Tenant as a long-term
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acute-care hospital (“LTAC hospital”). In mid-2008, these physician-investors
purchased partnership units in Apex Tenant and became limited partners with the
initial investors, with Apex TMG acting as the general partner.
The enterprise was not a success. Apex Tenant never operated as an LTAC
hospital, never paid a full month’s rent, and eventually filed for bankruptcy. The
failure resulted in two lawsuits.
In the first lawsuit, the Shahs sued Zaidi, Apex Tenant, Apex TMG, and
Saqer (the “Zaidi Lawsuit”).1 The Shahs alleged that Apex Tenant had breached its
lease agreement with Apex Landlord by failing to pay rent and that the other
defendants had misappropriated Apex Tenant’s funds and made various
misrepresentations to the Shahs regarding Apex Tenant’s management and
finances.
In the second lawsuit, the physician-investors sued Shah, Zaidi, Chagla,
Prestige, and several other initial investors (the “Ahmed Lawsuit”). The physician-
investors alleged that Dr. Shah, on behalf of the initial investors, orally agreed to
segregate their investments in a separate bank account dedicated solely to
1
The Zaidi Lawsuit was a consolidation of two lawsuits. In the first, Dr. Shah, on
behalf of Apex Landlord, sued Zaidi, Apex Tenant, Apex TMG, Saqer, and
several other parties. In the second, Zaidi and several other initial investors sued
Dr. Shah, Mrs. Shah, and Indus. After the consolidation, Dr. Shah, Mrs. Shah, and
Indus asserted various counterclaims and crossclaims.
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development of Apex Tenant as an LTAC hospital and assured them that their
investments would be returned if the project did not come to fruition.2
The settlement agreement
In May 2011, while the Zaidi and Ahmed Lawsuits were both still pending,
the Shahs entered into a settlement agreement with Saqer and her company, I Care
International, LLC (collectively, “Saqer”). Under the settlement agreement, Saqer
agreed to pay the Shahs $45,000 in three installments and to refrain from
voluntarily testifying or providing evidence in any lawsuit brought against the
Shahs, and the Shahs agreed to dismiss their claims against Saqer.
In the recitals to the settlement agreement, Saqer acknowledged that she had
“no information” relating to the physician-investors’ allegations against Dr. Shah,
including specifically information relating to any of the alleged representations
made by Dr. Shah. Saqer further acknowledged that she had provided the Shahs
with a financial affidavit and that the Shahs had relied on the affidavit in agreeing
to settle their claims against her.
Saqer’s financial affidavit was attached as an exhibit to the settlement
agreement. In the affidavit, Saqer summarized her then-current financial status.
She stated that her average monthly expenses exceeded her average monthly
2
These representations did not appear in any of the written documents
memorializing the investments.
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income and that she had minimal assets. She further stated that she had already
incurred $30,000 in attorneys’ fees in defending herself in the Zaidi Lawsuit and
that some of the fees remained unpaid. The Shahs maintained that they settled with
Saqer for “less than a penny on the dollar” because it was “unlikely” they could
collect on a judgment.
After the parties executed the settlement agreement, the Shahs discovered
that Saqer had provided the physicians-investors with an affidavit to use in the
Ahmed Lawsuit.3 Saqer signed the affidavit about a month before she and the
Shahs signed the settlement agreement and a week before the physician-investors
filed the Ahmed Lawsuit. In it, she provided testimony that supported the
physician-investors’ allegations against Dr. Shah. She stated that, although Dr.
Shah had “represented” that the monies collected from the physician-investors
would be held in a separate bank account for the hospital’s operating expenses, the
monies were not actually held in such an account, and their “true use” was
“concealed” from the physician-investors.
During the negotiation of the settlement agreement, Saqer did not inform the
Shahs that she had provided the physician-investors with the affidavit, and the
3
The Shahs and Saqer dispute when the Shahs learned about the affidavit. In light
of our disposition below, we need not determine when the Shahs learned of the
affidavit’s existence and assume that it was after the parties executed the
settlement agreement.
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settlement agreement does not refer to or acknowledge the affidavit’s existence.
Through counsel, Saqer informed the Shahs that the recitals in the settlement
agreement were true and that some of the statements in the affidavit required
clarification. Saqer answered a set of interrogatories to clarify the statements made
in the affidavit.
After Saqer made her final payment under the settlement agreement, she
filed an unopposed motion to dismiss the Shahs’ claims with prejudice, which the
trial court granted.
Over the next several years, there were several important developments in
both the Zaidi and Ahmed Lawsuits. In the Ahmed Lawsuit, the parties continued
discovery, and Saqer was deposed. Shah then moved for summary judgment,
which the trial court granted, and we affirmed.4 In the Zaidi Lawsuit, the parties
went to trial, and Saqer testified as a witness for the defendants. The trial court
entered a multi-million-dollar judgment in favor of Dr. Shah and Apex Landlord,
which our sister court later reversed in part and remanded for a new trial.5
4
Ahmed v. Shah, No. 01-13-00995-CV, 2015 WL 222171 (Tex. App.—Houston
[1st Dist.] Jan. 15, 2015, no pet.) (mem. op.).
5
Zaidi v. Shah, 502 S.W.3d 434 (Tex. App.—Houston [14th Dist.] 2017, pet.
denied).
7
The current lawsuit
In May 2015, roughly four years after the parties entered into the settlement
agreement, the Shahs filed this suit against Saqer. The Shahs asserted claims for
fraud, fraudulent inducement, fraudulent nondisclosure, and negligent
misrepresentation, alleging that Saqer had induced them into entering into the
settlement agreement by failing to disclose that she had already prepared an
affidavit for the physician-investors in the Ahmed Lawsuit and by falsely
representing that she was insolvent and had “no information” relating to the
physician-investors’ allegations against Dr. Shah. The Shahs also asserted a claim
for breach of contract, alleging that Saqer breached the settlement agreement by
providing the affidavit to the physician-investors and by voluntarily testifying in
the Ahmed and Zaidi Lawsuits.
Saqer filed a hybrid motion for summary judgment, which asserted
numerous traditional and no-evidence grounds for dismissing the Shahs’ claims.
The Shahs then filed an amended petition, which dropped their claims for fraud,
fraudulent nondisclosure, and negligent misrepresentation. The Shahs also filed a
response to Saqer’s motion, in which they clarified that they were no longer
complaining about Saqer’s failure to disclose the affidavit from the Ahmed
Lawsuit.
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The trial court granted Saqer’s motion without specifying any ground. The
Shahs appeal.
No-Evidence Summary Judgment
A. Standard of review
When, as here, a party moves for summary judgment on both traditional and
no-evidence grounds, we first address the no-evidence grounds. Merriman v. XTO
Energy, Inc., 407 S.W.3d 244, 248 (Tex. 2013).
In a no-evidence motion for summary judgment, the movant contends that
there is no evidence of one or more essential elements of a claim or defense on
which the nonmovant would have the burden of proof at trial. TEX. R. CIV. P.
166a(i). The motion must state the specific elements for which there is no
evidence. Id.; Timpte Indus., Inc. v. Gish, 286 S.W.3d 306, 310 (Tex. 2009).
To defeat a no-evidence motion for summary judgment, the nonmovant must
produce more than a scintilla of evidence to raise a genuine issue of material fact
on each challenged element. TEX. R. CIV. P. 166a(i); Forbes Inc. v. Granada
Biosciences, Inc., 124 S.W.3d 167, 172 (Tex. 2003). If the nonmovant fails to do
so, the trial court grant the motion. TEX. R. CIV. P. 166a(i); KCM Fin. LLC v.
Bradshaw, 457 S.W.3d 70, 79 (Tex. 2015).
We review a no-evidence summary judgment de novo. Bradshaw, 457
S.W.3d at 79. We review the evidence presented by the no-evidence motion and
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response “in the light most favorable to the party against whom the summary
judgment was rendered, crediting evidence favorable to that party if reasonable
jurors could, and disregarding contrary evidence unless reasonable jurors could
not.” Gonzalez v. Ramirez, 463 S.W.3d 499, 504 (Tex. 2015) (per curiam) (quoting
Mack Trucks, Inc. v. Tamez, 206 S.W.2d 572, 582 (Tex. 2006)).
B. Breach of contract
In her no-evidence motion, Saqer argued that she was entitled to summary
judgment on the Shahs’ breach-of-contract claim because there was no evidence
that her alleged breaches of the settlement agreement caused the Shahs any
damages. See Dow Chem. Co. v. Francis, 46 S.W.3d 237, 242 (Tex. 2001) (no-
evidence motion challenging evidence of damages requires nonmovant to present
damages evidence to avoid summary judgment); B.Z.B., Inc. v. Clark, No. 14-11-
00056-CV, 2012 WL 353783, at *3 (Tex. App.—Houston [14th Dist.] Feb. 2,
2012, no pet.) (mem. op.) (affirming no-evidence summary judgment on breach-of-
contract claim when nonmovant’s evidence of damages was conclusory); Nelson v.
Regions Mortg., Inc., 170 S.W.3d 858, 862–63 (Tex. App.—Dallas 2005, no pet.)
(no-evidence summary judgment on breach-of-contract claim is proper when
nonmovant presents no evidence of damages).
In their response, the Shahs addressed Saqer’s no-evidence challenge to the
damages element of their breach-of-contract claim in one paragraph:
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As a result of the [affidavit Saqer provided the physician-investors]
and Saqer’s voluntary deposition testimony, the Ahmed Lawsuit
continued for more than two and one-half years. Eventually, the trial
court entered summary judgment on Shah’s motion, and the First
Court of Appeals affirmed that judgment in January 2015. During that
time, Shah incurred hundreds of thousands of dollars in attorney’s
fees defending against baseless claims propped up solely by Saqer’s
February Affidavit and voluntary deposition testimony.
However, none of the Shahs’ allegations in this paragraph were supported by
citation to evidence.6 The Shahs did not support their allegations with an affidavit
or deposition testimony from Dr. or Mrs. Shah, invoices received from their
attorneys, or any other competent summary-judgment evidence that they incurred
attorneys’ fees as a result of Saqer breaching the settlement agreement.
It is well-established that allegations contained in pleadings and motions are
not summary-judgment evidence. CHRISTUS Health Gulf Coast v. Carswell, 505
S.W.3d 528, 540 (Tex. 2016); Cardenas v. Bilfinger TEPSCO, Inc., 527 S.W.3d
391, 401 (Tex. App.—Houston [1st Dist.] 2017, no pet.). We hold that the Shahs
failed to present more than a scintilla of evidence that Saqer’s alleged breaches of
the settlement agreement caused them any damages and that the trial court
therefore properly granted summary judgment on the Shahs’ breach-of-contract
claim.
6
The Shahs did not allege or present evidence that they were damaged as a result of
Saqer’s trial testimony in the Zaidi Lawsuit.
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C. Fraudulent inducement
In her no-evidence motion, Saqer argued that she was entitled to summary
judgment on the Shahs’ fraudulent-inducement claim because there was no
evidence that her allegedly fraudulent misrepresentations injured the Shahs. See
Dow Chem. Co., 46 S.W.3d at 242 (no-evidence summary judgment on fraud claim
is proper when nonmovant presents no evidence that fraud caused injury).
The Shahs did not directly respond to Saqer’s contention that there was no
evidence that they were injured by her allegedly fraudulent misrepresentations.
They did, however, allege that, had they known Saqer’s “actual financial
condition,” they would not have signed the settlement agreement.7
But like their allegations concerning the damages caused by Saqer’s breach
of the settlement agreement, the Shahs’ allegation here was not supported by
citation to any evidence. The Shahs did not produce an affidavit, deposition
testimony, or any other competent summary-judgment evidence that they were
injured by Saqer’s representation that she was insolvent. And as we noted above,
allegations contained in summary-judgment pleadings are not evidence. Carswell,
505 S.W.3d at 540; Cardenas, 527 S.W.3d at 401.
7
The Shahs’ response did not address whether Dr. Shah would have signed the
settlement agreement had he known that Saqer had information relating to the
allegations made against him by the physician-investors in the Ahmed Lawsuit.
12
On appeal, the Shahs argue that, had they not executed the settlement
agreement, Saqer would have been jointly and severally liable for at least a portion
of the judgment in the Zaidi Lawsuit. But the Shahs make no attempt to explain
why this is so. Just because the other defendants were found liable does not mean
that Saqer would have been found liable too—a point underscored by our sister
court’s opinion, which partially reversed the trial court’s judgment and remanded
the case for a new trial. Zaidi v. Shah, 502 S.W.3d 434, 448 (Tex. App.—Houston
[14th Dist.] 2016, pet. denied). Nor do the Shahs offer any evidence that Saqer had
nonexempt assets that could satisfy a judgment against her.
Notwithstanding their failure to present evidence of any injury caused by
Saqer’s alleged fraud, the Shahs argue that summary judgment was improper
because Saqer’s summary-judgment motion only addressed the claims asserted in
the Shahs’ original petition and not their amended petition. We disagree.
In their original petition, the Shahs asserted four claims based on the same
allegations—fraud, fraudulent inducement, fraudulent nondisclosure, and negligent
misrepresentation. In their amended petition, they dropped three of those claims—
fraud, fraudulent nondisclosure, and negligent misrepresentation—and kept only
the fraudulent-inducement claim. They did not add any new claims.
Although the Shahs filed their amended petition after Saqer filed her
summary-judgment motion, the fraudulent-inducement claim asserted in their
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amended petition was essentially the same as the one asserted in their original
petition. In both petitions, the Shahs alleged that Saqer fraudulently induced them
into entering into the settlement agreement by falsely representing that she was
insolvent and had “no information” relating to the physician-investors’ allegations
against Dr. Shah.
The Shahs themselves appear to recognize this. In their response to Saqer’s
motion, which they filed after their amended petition, the Shahs did not argue that
summary judgment was improper because they had asserted new claims. Instead,
they briefly summarized the claims asserted in their amended petition and then
argued why Saqer’s motion failed as to those claims.
The Shahs further argue that summary judgment was improper because
Saqer did not move for no-evidence summary judgment on their fraudulent-
inducement claim; rather, she moved for no-evidence summary judgment on their
claim for common-law fraud. But fraudulent inducement is a “category of
common-law fraud that shares the same elements” but adds “a promise of future
performance made with no intention of performing at the time it was made.”
Zorrilla v. Aypco Constr. II, LLC, 469 S.W.3d 143, 153 (Tex. 2015); see Hooks v.
Samson Lone Star, LP, 457 S.W.3d 52, 57 (Tex. 2015) (“Fraudulent inducement is
a subspecies of fraud; ‘with a fraudulent inducement claim, the elements of fraud
must be established as they relate to an agreement between the parties.’” (quoting
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Haase v. Glazner, 62 S.W.3d 795, 798–99 (Tex. 2001)). The Shahs’ dropped fraud
claim and live fraudulent inducement claim were based on the same allegations,
and Saqer moved for no-evidence summary judgment on the elements that the two
claims share.
We hold that the Shahs failed to present more than a scintilla of evidence
that Saqer’s alleged fraudulent misrepresentation caused them any injury and that
the trial court therefore properly granted summary judgment on the Shahs’
fraudulent-inducement claim. See Plotkin v. Joekel, 304 S.W.3d 455, 480–81 (Tex.
App.—Houston [1st Dist.] 2009, pet. denied) (holding that trial court did not err by
granting buyer’s no-evidence summary-judgment motion because sellers failed to
present evidence of damages arising from buyer’s alleged fraud).
Conclusion
We affirm.
Harvey Brown
Justice
Panel consists of Justices Keyes, Brown, and Lloyd.
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