I-10 Colony, Inc. v. Chao Kuan Lee, Li Yang Lee, and Li Hsiang Chang ( 2015 )

Opinion issued April 23, 2015
In The
Court of Appeals
For The
First District of Texas
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NO. 01-14-00465-CV
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I-10 COLONY, INC., Appellant
V.
CHAO KUAN LEE, LI YANG LEE, AND LI HSIANG CHANG, Appellees
On Appeal from the 151st District Court
Harris County, Texas
Trial Court Case No. 2014-08459
and
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NO. 01-14-00718-CV
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I-10 COLONY, INC., Appellant
V.
CHAO KUAN LEE, LI YANG LEE, AND LI HSIANG CHANG, Appellees
On Appeal from the 151st District Court
Harris County, Texas
Trial Court Case No. 2014-08459
MEMORANDUM OPINION
In this opinion, we resolve two interlocutory appeals arising from a lawsuit
related to the parties’ co-ownership of a hotel property. Chao Kuan Lee, Li Yang
Lee, and Li Hsiang Chang (collectively “Lee”) sued I-10 Colony, Inc. for partition
of the property, fraud, and damages. Both Lee and I-10 requested the appointment
of a receiver to manage the sale of the property, although they disagreed about the
proper scope of the receiver’s authority. The trial court appointed a receiver, and
in the first interlocutory appeal, I-10 challenges the order creating the receivership
on the basis that the order unconstitutionally confers excessive power on the
receiver.
In the second interlocutory appeal, I-10 challenges the trial court’s denial of
I-10’s motion to dismiss Lee’s fraud claim pursuant to the Texas Citizens
Participation Act (TCPA). Lee’s fraud claim was based on allegations that I-10’s
lawyer represented to Lee that I-10 would pay Lee 50% of the income generated
by the hotel as required by the 2010 judgment, when I-10 had no intention of doing
so. I-10 argued that Lee’s fraud claim was based on, related to, or in response to I-
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10’s exercise of free speech because it was based on communications made by I-
10’s lawyer, and a lawyer’s services are an issue of public concern.
We affirm both the trial court’s order creating the receivership and the order
denying I-10’s motion to dismiss Lee’s fraud claim under the TCPA.
Background
The 1999 lawsuit
In 1999, Lee sued I-10 and Henry Wu, I-10’s owner, seeking a declaration
that Lee and I-10 each owned an undivided 50 percent interest in the hotel
property. See I-10 Colony, Inc. v. Lee, 393 S.W.3d 467, 470 (Tex. App.—Houston
[14th Dist.] 2012, pet. denied). I-10 and Lee each had held notes collateralized by
the property that stated they were of “equal dignity.” See id. at 471. When the
debtor defaulted on the notes, I-10 foreclosed on the property, bought the property
at the foreclosure sale, and claimed that doing so extinguished Lee’s interest in the
property. See id.
In 2010, after a jury trial, the trial court entered a declaratory judgment that
Lee and I-10 each owned an undivided 50 percent interest in the property. See id.
at 472. The trial court’s judgment also awarded Lee $608,000 as his share of the
income from the property through the date of the judgment. See id. The
Fourteenth Court of Appeals modified the award of prejudgment interest but
otherwise affirmed, and the Texas Supreme Court denied review. See id. at 480.
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The underlying lawsuit
In February 2014, Lee sued I-10 for partition and fraud, alleging that 1-10
had fraudulently represented that it would treat Lee as a 50% owner as required by
the 2010 judgment and wrongfully excluded Lee from the property and withheld
his share of the income from the property since 2010. I-10 counterclaimed for
partition and requested that the trial court appoint a receiver to sell the property.
Later, Lee also moved for appointment of a receiver.
Although the parties agreed that a receiver should be appointed, they
disagreed about the proper scope of the receiver’s authority. Specifically, I-10
argued that the receiver should not have authority over the hotel’s operations or
employees.
The trial court held two oral hearings on the parties’ requests for a receiver,
at which Lee testified that I-10 had failed to provide any accounting of the hotel
operations, had pledged the hotel as collateral without Lee’s consent, had
concealed information about the hotel, and had excluded Lee from the hotel. I-10
cross-examined Lee, but did not present any controverting evidence. After the
hearings, the trial court entered an order appointing a receiver. The receivership
order set forth the “objectives” of the receivership:
• Secure and inventory all assets of the hotel and ascertain the nature
and extent of all assets and liabilities,
• Secure the assets and satisfy the liabilities of the hotel,
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• Assess the assets and report to the trial court periodically on the
status of the hotel,
• Manage and operate the hotel and maintain the assets during the
receivership’s tenure,
• Obtain an accounting and appraisal, and then oversee the marketing
and sale of the hotel, and
• Perform all other matters as necessary to effectuate the “objectives”
of the receivership.
I-10 then brought the first interlocutory appeal. See TEX. CIV. PRAC. & REM. CODE
ANN. § 51.014(a)(1) (West 2015) (authorizing interlocutory appeal from order
appointing receiver).
Four months later, the trial court entered an agreed “Order Modifying Order
Appointing Receiver” authorizing the receiver to sell the hotel. It stated:
After ascertaining all assets and liabilities of the Hotel and obtaining
an appraisal of the Hotel, [the receiver] may hire the appropriate
parties to seek to market and sell the Hotel or may use his reasonable
discretion to negotiate and enter into a contract to sell the Hotel at a
price higher than that of the appraisal without marketing same.
The order also provided that, “with regard to the sale of the Hotel, Court-
Appointed Receiver may at his discretion enter into real estate sales contracts for
the sale of the Property at a price Court-Appointed Receiver deems reasonable
(and higher than the appraisal obtained for the Hotel).”
After the trial court appointed the receiver, I-10 moved to dismiss Lee’s
fraud claim under the TCPA. I-10 argued that Lee’s fraud claim was based on its
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exercise of the right of free speech because the claim was based on representations
made by I-10’s lawyer after the 2010 judgment, and the “subject” of the
communications was its lawyer’s services, a “matter of public concern” under the
TCPA. See TEX. CIV. PRAC. & REM. CODE ANN. § 27.001(3) (West Supp. 2014)
(exercise of the right of free speech means a communication made in connection
with a matter of public concern), § 27.001(7)(E) (West Supp. 2014) (a “matter of
public concern” includes an issue related to “a good, product, or service in the
marketplace”); § 27.005(b) (West Supp. 2014) (trial court shall dismiss a legal
action if movant shows by preponderance of the evidence that action is based on,
relates to, or is in response to movant’s exercise of the right of free speech). The
trial court denied the motion, and I-10 filed its second interlocutory appeal
challenging that ruling. See TEX. CIV. PRAC. & REM. CODE ANN. § 51.014(a)(12)
(West 2015) (authorizing interlocutory appeal from order denying motion to
dismiss pursuant to TCPA).
Receivership
I-10 contends that the trial court erred in (1) appointing a receiver and (2)
giving the receiver authority over I-10 Colony, its personal property, and
employees. I-10 also contends that the receivership order is unconstitutional.
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A. Standard of Review and Applicable Law
Under section 64.001 of the Texas Civil Practice and Remedies Code, a
court may appoint a receiver “in an action between partners or others jointly
owning or interested in any property . . . .” on the application of the plaintiff or any
other party. TEX. CIV. PRAC. & REM. CODE ANN. § 64.001(a)(3), (b) (West 2008).
The movant “must have a probable interest in or right to the property or fund, and
the property or fund must be in danger of being lost, removed, or materially
injured.” Id. § 64.001(b).
We review a trial court’s interlocutory order appointing a receiver for an
abuse of discretion. Benefield v. State, 266 S.W.3d 25, 31 (Tex. App.—Houston
[1st Dist.] 2008, no pet.) (citing Mueller v. Beamalloy, Inc., 994 S.W.2d 855, 858
(Tex. App.—Houston [1st Dist.] 1999, no pet); Abella v. Knight Oil Tools, 945
S.W.2d 847, 849 (Tex. App.—Houston [1st Dist.] 1997, no writ)). A trial court
abuses its discretion when it rules arbitrarily, unreasonably, without regard to
guiding legal principles, or without supporting evidence. See Bocquet v. Herring,
972 S.W.2d 19, 21 (Tex. 1998); Pickens v. Pickens, 62 S.W.3d 212, 214 (Tex.
App.—Dallas 2001, pet. denied). Under the abuse-of-discretion standard, the
sufficiency of the evidence is a relevant factor in assessing whether the trial court
abused its discretion. Pickens, 62 S.W.3d at 214. The trial court does not abuse its
discretion when its decision is based on conflicting evidence and some evidence in
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the record reasonably supports it. Butnaru v. Ford Motor Co., 84 S.W.3d 198, 211
(Tex. 2002). Our review focuses on whether the pleadings and evidence are
sufficient to justify a receivership. Benefield, 266 S.W.3d at 31 (citing Covington
Knox, Inc. v. State, 577 S.W.2d 323, 325 (Tex. Civ. App.—Houston [14th Dist.]
1979, no pet.)).
B. Analysis
I-10 complains about the appointment of a receiver and argues that, even if
the trial court did not err in appointing a receiver, it abused its discretion by
conferring excessive authority upon him. Specifically, I-10 complains that the
receiver should not exercise authority over the personal property, agents, or
employees of I-10.
Under the invited error doctrine, “a party cannot complain on appeal that the
trial court took a specific action that the complaining party requested . . . .” See
Tittizer v. Union Gas Corp., 171 S.W.3d 857, 862 (Tex. 2005). Here, I-10 was the
first party to move for appointment of a receiver over the property. In its original
answer and counterclaim for partition, I-10 requested that the trial court “appoint a
receiver for the purpose of selling the Property.” A month after filing its
counterclaim, I-10 gave notice that a hearing on its application for appointment of
a receiver would be held in two weeks. Lee filed his own application for a receiver
only after I-10 gave notice of the hearing on its own application. Moreover, after
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I-10 appealed from the receivership order, it requested that the trial court enter the
agreed “Order Modifying Order Appointing Receiver,” which stated that the
receiver would “ascertain[] all assets and liabilities” of the hotel and market and
sell the hotel. Ascertaining all assets and liabilities of the hotel and marketing and
selling the hotel necessarily requires the receiver to have authority over I-10’s
property and employees to the extent that they relate to the hotel operations.
The receivership order gave the receiver authority over I-10 and its property
and employees only to the extent necessary for the proper management of the
property and hotel during the pendency of the receivership. This was necessary in
order for the receiver to achieve the objectives of the receivership—including the
sale of the hotel—which was what I-10 asked for. To the extent that I-10 has
commingled its separately-owned personal property with jointly-owned hotel
assets, I-10 may not complain that the receivership order authorizes the receiver to
exercise de facto control over I-10’s separately-owned personal property.
We conclude that I-10 has waived its complaints, including its constitutional
complaints, regarding the appointment of a receiver and the scope of the receiver’s
authority by requesting the appointment and agreeing to confer upon the receiver
the authority about which it now complains. See Tittizer, 171 S.W.3d at 862 (“a
party cannot complain on appeal that the trial court took a specific action that the
complaining party requested . . . .”); City of San Antonio v. Schautteet, 706 S.W.2d
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103, 104 (Tex. 1986) (“Even constitutional challenges not expressly presented to
the trial court by written motion, answer or other response to a motion for
summary judgment will not be considered on appeal as grounds for reversal.”);
see, e.g., Sentinel Integrity Sols., Inc. v. Mistras Grp., Inc., 414 S.W.3d 911, 919–
20 (Tex. App.—Houston [1st Dist.] 2013, pet. denied) (invited error doctrine
prevented party who agreed that trial court should enter order from complaining
about order on appeal); Keith v. Keith, 221 S.W.3d 156, 164 (Tex. App.—Houston
[1st Dist.] 2006, no pet.) (party who asked trial court to take certain action could
not complain on appeal that action was wrong).
We overrule I-10’s three issues in appeal number 01-14-00465-CV.
Motion to Dismiss under the TCPA
I-10 contends that the trial court erred in denying its motion to dismiss Lee’s
fraud claim under the TCPA because it showed by a preponderance of the evidence
that the fraud claim is “based on, relate[s] to, or [is] in response to” I-10’s exercise
of the right of free speech, and Lee failed to establish by clear and specific
evidence a prima facie case for each essential element of the claim.
A. Standard of Review and Applicable Law
To obtain dismissal under the TCPA, a defendant must show “by a
preponderance of the evidence that the legal action is based on, relates to, or is in
response to the party’s exercise of the right of free speech; the right to petition; or
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the right of association.” TEX. CIV. PRAC. & REM. CODE ANN. § 27.005(b). We
review this determination de novo. See Better Bus. Bur. of Metro. Houston, Inc. v.
John Moore Servs., Inc., 441 S.W.3d 345, 353 (Tex. App.—Houston [1st Dist.]
2013, pet. denied); see also Rehak Creative Servs., Inc. v. Witt, 404 S.W.3d 716,
725 (Tex. App.—Houston [14th Dist.] 2013, pet. denied).
Under the TCPA, the exercise of the right of free speech “means a
communication made in connection with a matter of public concern.” TEX. CIV.
PRAC. & REM. CODE ANN. § 27.001(3). A “matter of public concern,” includes,
among other things, “an issue related to a good, product, or service in the
marketplace.” Id. § 27.001(7)(E). If the movant meets its burden to show that a
claim is covered by the TCPA, to avoid dismissal of that claim, a plaintiff must
establish “by clear and specific evidence a prima facie case for each essential
element of the claim in question.” Id. § 27.005(c).
B. Analysis
We conclude that I-10 did not show that Lee’s fraud claim is based on,
relates to, or is in response to its exercise of its right of free speech so as to fall
within the scope of the TCPA. Lee’s fraud claim is based on allegations that I-10’s
lawyer fraudulently represented to Lee that I-10 would pay Lee 50% of the income
from the hotel as required by the 2010 judgment, when I-10 had no intention of
doing so. I-10 argues that, because these alleged representations were made by its
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lawyer, the “subject” of the communications was its lawyer’s services. According
to I-10, because a lawyer’s services are a “service in the marketplace,” and
therefore a “matter of public concern,” the fraud claim is based on its exercise of
the right of free speech. See TEX. CIV. PRAC. & REM. CODE ANN. § 27.001(3),
(7)(E).
In the motion to dismiss and on appeal, I-10 relies upon Avila v. Larrea, 394
S.W.3d 646 (Tex. App.—Dallas 2012, pet. denied). In Avila, Larrea, a lawyer,
sued Univision Television Group, Inc. and its reporter, Avila, for defamation based
on reports concerning Larrea’s former client’s allegations regarding Larrea’s work
on the client’s case. Id. at 658. The reporting included, among other things, the
former client’s wife’s claim that Larrea did not visit the client in jail and did not
utilize available conclusive evidence that would have caused the client’s case to be
dismissed. Id. Larrea also argued that the reporting “suggested” that he was
responsible for his former client’s “nightmare” experience, and misled viewers to
believe that complaints forwarded to the State Bar of Texas confirmed professional
misconduct. Id. The defendants moved to dismiss the case pursuant to the TCPA,
and on appeal, the Dallas Court of Appeals held that the subject of the reporting
was Larrea’s legal services, which was “a matter of public concern” because
Larrea’s services constituted a “service in the marketplace.” Id. at 655; TEX. CIV.
PRAC. & REM. CODE ANN. § 27.001(3), (7)(E). Thus, the lawsuit was “based on,
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relat[ed] to, or [was] in response to” the movants’ exercise of the right to free
speech, and was subject to the TCPA. Avila, 394 S.W.3d at 655; TEX. CIV. PRAC.
& REM. CODE ANN. § 27.005(b).
Here, by contrast, Lee’s fraud claim is not based on communications about
I-10’s lawyer’s services. Instead, Lee alleges that I-10’s lawyer fraudulently
represented that I-10 would comply with the 2010 judgment on a going-forward
basis, when I-10 had no intention of doing so. Because the subject of this
communication is not I-10’s lawyer’s services, the communication is not related to
a “service in the marketplace,” and the communication therefore was not one made
in connection with a matter of public concern. See TEX. CIV. PRAC. & REM. CODE
ANN. § 27.001(3) (exercise of the right of free speech “means a communication
made in connection with a matter of public concern”), (7)(E) (matter of public
concern includes “an issue related to a good, product, or service in the
marketplace”); cf. John Moore, Inc., 441 S.W.3d at 353 (Better Business Bureau’s
reviews and ratings of plaintiff company’s services “related to” a matter of public
concern because the subject of ratings and reviews was a good, product, or service
in the marketplace); Better Bus. Bur. of Metro. Dallas, Inc. v. BH DFW, Inc., 402
S.W.3d 299, 308 (Tex. App.—Dallas 2013, pet. denied) (same); Avila, 394 S.W.3d
at 655 (communications about lawyer’s handling of former client’s case “related
to” a matter of public concern because the subject of the communications was a
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“service in the marketplace”—the lawyer’s services). Accordingly, we conclude
that the trial court did not err in denying I-10’s motion to dismiss Lee’s fraud claim
under the TCPA.
We overrule I-10’s sole issue in appeal number 01-14-00718-CV.
Conclusion
We affirm the trial court’s receivership order and the order denying I-10’s
motion to dismiss Lee’s fraud claim under the TCPA.
Rebeca Huddle
Justice
Panel consists of Justices Jennings, Higley, and Huddle.
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