Hassan Dandachli v. Active Motorwerks, Inc. and Mario Garcia ( 2021 )

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-19-00494-CV
Hassan Dandachli, Appellant
v.
Active Motorwerks, Inc. and Mario Garcia, Appellees
FROM THE 200TH DISTRICT COURT OF TRAVIS COUNTY
NO. D-1-GN-17-002153, THE HONORABLE CATHERINE MAUZY, JUDGE PRESIDING
MEMORANDUM OPINION
This is an appeal from final judgment disposing of a suit arising from a business
partnership between Hassan Dandachli and Mario Garcia. Dandachli, awarded $30,621.87 in
damages and possession of certain equipment once used by the partnership, raises multiple issues
on appeal. We will affirm in part, reverse in part, and remand the case.
BACKGROUND
The facts material to the disposition of this appeal are largely undisputed. In early
2013, Dandachli and Garcia, who were both well-respected professionals in the Austin
automotive industry, decided to join forces to own and operate “a high-end automotive repair
shop” known as Active Motorwerks, Inc. To memorialize this decision, Dandachli drafted a
Partnership Agreement requiring that each partner “provide their full-time services and best
efforts on behalf of the partnership” and indicating that the partners would “each have a 50%
share of Active Motorwerks and a 50% share of net profits.” The Partnership Agreement further
stipulated that the partnership would “commence on February 5th, 2013[,] and [would] end
only on mutual agreement between the parties involved or mutual dissolution.” Although not
included in the Partnership Agreement, the partners had apparently reached an understanding
that Garcia would oversee the work in the garage while Dandachli would oversee front-office
operations, including handling administrative matters and bookkeeping.
Dandachli was the primary financial contributor to the partnership, lending Active
Motorwerks money when necessary and obtaining reimbursement when possible. In early 2015,
Active Motorwerks began operating out of a facility that Dandachli owned and had remodeled, at
his own expense, to suit the purpose. Later in 2015, Active Motorwerks and Dandachli executed
a Lease Purchase Agreement providing that Active Motorwerks would lease certain equipment
from Dandachli for a sum of $2,895 per month. When Active Motorwerks failed to make its
monthly payments, Dandachli sold approximately $40,000 of the equipment in December of
that year.
In March of 2017, Dandachli moved to Lebanon. Although Dandachli had assured
Garcia that Dandachli could and would satisfy his obligations under the Agreement from abroad,
his move strained the partnership. Garcia felt as though he had been “abandon[ed]” and “was
doing more than [he] bargained for,” while Dandachli was frustrated by an increasing number of
customer complaints that the business was no longer operating efficiently or professionally. The
two partners began negotiations for Garcia to buy out Dandachli’s share of the partnership but
never reached an agreement.
The dispute between the partners reached a breaking point in May of 2017. Early
in the month, Dandachli learned that Garcia had moved equipment owned by Active Motorwerks
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and Dandachli to an unknown location. On May 10, in an apparent attempt to prevent any
further loss, Dandachli asked his agents in Austin to change the locks on the Dandachli-owned
facility from which Active Motorwerks was operating. Dandachli then refused to allow Garcia
access to the facility or to any equipment or vehicle therein. Later the same day, Dandachli
attempted to redirect $22,000 in Active Motorwerks funds to his personal bank account. Garcia
received notice of the attempted transfer, stopped payment, and then removed all remaining
funds to an account that only he could access.
By May 15, Garcia was still without access to the Active Motorwerks facility and
had eliminated Dandachli’s digital access to the accounting and administrative software used to
manage Active Motorwerks. Garcia then used Active Motorwerks’s email account to contact over
800 current and former Active Motorwerks customers, notifying them that “technical issues”
necessitated a change in the business’s phone number and email address. The notice provided
Garcia’s cell phone number and his personal email address as the only means of contacting
Active Motorwerks. Garcia also revised Active Motorwerks’s social media to reflect the change.
Meanwhile, and unbeknownst to Dandachli, Garcia had made plans to operate a
new automotive shop, which Garcia would ultimately register as Active Euroworks, LLC, from a
facility in Pflugerville. When customers or potential customers would attempt to contact or
locate Active Motorwerks, Garcia or Active Motorwerks’s online materials would direct them
to the Active Euroworks location. Garcia later designed a logo for Active Euroworks nearly
identical to the one used by Active Motorwerks.
On May 17, at Garcia’s direction, Active Motorwerks sued Dandachli for breach
of contract and violations of the Texas Property Code provisions governing commercial landlord-
tenant relationships. See Tex. Prop. Code § 93.002(c) (enumerating limited circumstances
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allowing for lock out). Active Motorwerks also sought a temporary restraining order prohibiting
Dandachli from interfering with Garcia’s access to the facility. A week later, the district court
issued a temporary injunction ordering Garcia to return all equipment and monies belonging
to Active Motorwerks and prohibiting him from using the name “Active Motorwerks” in
association with his operation of his Pflugerville automotive shop.
Dandachli filed a counterpetition on his own behalf and derivatively on behalf
of Active Motorwerks, naming both Garcia and Active Euroworks as defendants. On his own
behalf and against Garcia, Dandachli alleged breach of the Partnership Agreement and breach of
fiduciary duty. On behalf of Active Motorwerks and against Garcia, Dandachli alleged money
had and received, breach of fiduciary duty, and tortious interference with business relations. On
behalf of Active Motorwerks and against both Garcia and Active Euroworks, Dandachli alleged
tortious interference with contract, misappropriation of trade secrets, trademark infringement,
and unfair competition. Also on behalf of Active Motorwerks, Dandachli pleaded aiding and
abetting breach of fiduciary duty against Active Euroworks. As relief, Dandachli and Active
Motorwerks sought damages, exemplary damages, pre- and post-judgment interest, attorney’s fees
and costs, and an injunction prohibiting “the further self-dealing, trade secret misappropriation,
and service mark infringement by Garcia and Active Euroworks.”
In response to the counterpetition, Active Motorwerks amended its petition to add
Garcia as a plaintiff, to delete the claim brought under the Property Code, and to allege theories
of breach of contract, breach of fiduciary duty, and unjust enrichment against Dandachli. As
relief, Garcia and Active Motorwerks sought damages, pre- and post-judgment interest, attorney’s
fees and costs, and a declaration “that Dandachli has withdrawn as partner under the Partnership
Agreement, that the Partnership Agreement is terminated, and that the assets and cash of the
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partnership shall be used to pay all creditors, with any remaining amounts to be distributed to
the partners.”
The case was tried to the bench. On the first day of trial, Dandachli nonsuited
the tortious interference, misappropriation, and trademark-infringement claims. After Garcia
rested, the district court granted a directed verdict for Danchachli on Garcia’s claim of unjust
enrichment. At the end of trial, the district court then rendered final judgment finding:
• that Dandachli breached Section 2.3 of the Agreement by “failing to keep and
maintain accurate records, and for [the] actions taken in May 2017”;
• that Dandachli breached Section 3.1 of the Agreement “in March 2017 when
Dandachli moved to Lebanon”;
• that Dandachli breached his fiduciary duty to Active Motorwerks by failing to
“maintain accurate records”;
• that Garcia breached Section 5.2 of the Agreement “when Garcia transferred funds in
the Active Motorwerks’ bank account to an account controlled solely by Garcia”; and
• that Garcia breached the Agreement through his “actions taken in May 2017.”
In accordance with those findings, the district court ordered:
• that Dandachli should recover from Garcia $30,621.87, an amount the district court
derived from the sum of: (1) $21,732, reflecting “50% of the amounts loaned by
Dandachli to Active Motorwerks, less 50% of the $5,500 owed on the Active
Motorwerks credit card for which Garcia is responsible”; (2) $5,762, reflecting “50%
of the $11,524 paid by Hassan Dandachli for payments on the Equipment Lease
between September and December 2016”; (3) $2,750, reflecting “50% of the rent
payable to Hassan Dandachli for the month of June 2017”; (4) $373.85, reflecting
“50% of the balance of the Active Motorwerks bank account”;1
• that Dandachli should recover “all remaining equipment in Mr. Dandachli’s
possession covered by the Equipment Lease, specifically, the five (5) Nussbaum
1
Although this portion of the judgment awards $30,621.87 in damages, the delineated
sums that make up that award do not appear to total $30, 621.87. The reason for this discrepancy
is not clear from the record.
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SPL10000MXL3s 10,0000LB 2 post lift racks with 3 stage arms, 80.5' lifting height,
the Lorex Cam kit, the Ventamatic Air Fan, the Leonardo Diagnostic Tool, and all
improvements to the property”;
• that Dandachli should recover “the 2005 BMW 325i, 2006 BMW 325i, 2008 BMW
328i, and 1999 Toyota truck located at 808 McPhaul St., Austin Texas 78758”;
• that Garcia should recover “the $747.73 remaining balance held in the bank account
opened by Mario Garcia to hold funds of Active Motorwerks shall [sic] be closed”;
• that Garcia should “recover the Autologic scanner, Autel scanner, the Rosstech
scanner, and the Star scanner in the possession of Mr. Chris Smith, attorney for
Mr. Garcia”; and
• that the parties would “take nothing on all their other claims.”
Dandachli requested findings of fact and conclusions of law, which the district
court issued, and then filed a combined motion for new trial and for amended findings of fact.
That motion was denied by operation of law. Dandachli timely filed this appeal. Garcia, who is
not represented before this Court, has not filed a brief in response to Dandachli’s appeal.
DISCUSSION
Attorney’s Fees
In his first issue, Dandachli argues that, because he prevailed on his theory of
breach of contract, the district court abused its discretion by failing to award him the attorney’s
fees he incurred in pursuing the claim. We agree.
Attorney’s fees are recoverable only if authorized by contract or statute. See
Tucker v. Thomas, 419 S.W.3d 292, 295 (Tex. 2013); MBM Fin. Corp. v. The Woodlands
Operating Co., 292 S.W.3d 660, 669 (Tex. 2009). Here, the asserted basis for recovery of fees is
Subsection 38.001(8) of the Civil Practice and Remedies Code, which provides that a person
“may recover reasonable attorney’s fees from an individual or corporation, in addition to the
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amount of a valid claim and costs, if the claim is for . . . an oral or written contract. See Tex.
Civ. Prac. & Rem. Code § 38.001(8). To recover fees under this provision, a party must prevail
on his claim under the contract and recover damages or other meaningful relief. See Rohrmoos
Venture v. UTSW DVA Healthcare, LLP, 578 S.W.3d 469, 486 (Tex. 2019); In re Nalle
Plastics Fam. Ltd. P’ship, 406 S.W.3d 168, 172–73 (Tex. 2013) (orig. proceeding); MBM Fin.,
292 S.W.3d at 666; Mustang Pipeline Co. v. Driver Pipeline Co., 134 S.W.3d 195, 201 (Tex.
2004). In addition, the party seeking the award must provide evidence of the fees arising from
the contract claim. See Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1, 10–11 (Tex. 1991);
Beard Fam. P’ship v. Commercial Indem. Ins., 116 S.W.3d 839, 850 (Tex. App.—Austin 2003,
no pet.). If a party prevails on his contract claim, recovers damages or other meaningful relief,
and provides sufficient evidence of the associated fees, an award of fees is mandatory. See
Hassell Constr. Co. v. Stature Com. Co., 162 S.W.3d 664, 668 (Tex. App.—Houston [14th Dist.]
2005, no pet.); Wallace Roofing, Inc. v. Benson, No. 03-11-00055-CV, 2013 WL 6459757, at *13
(Tex. App.—Austin Nov. 27, 2013, pet. denied) (mem. op.). Under the circumstances presented
here, we review the trial court’s decision on attorney’s fees for an abuse of discretion. See Ridge
Oil Co. v. Guinn Invs., Inc., 148 S.W.3d 143, 163 (Tex. 2004) (describing discretionary review);
Holland v. Wal-Mart Stores, Inc., 1 S.W.3d 91, 94 (Tex. 1999) (explaining that question of
whether asserted statutory basis affords right to recovery is reviewed de novo).
Because Dandachli seeks an award of fees under Section 38.001(8), we must
determine whether he “prevailed” on his claim of breach. The supreme court has instructed
us that, for the purposes of evaluating a claim for fees under Section 38.001, “[w]hether a
party prevails turns on whether the party prevails upon the court to award it something, either
monetary or equitable.” See Ventling v. Johnson, 466 S.W.3d 143, 154 (Tex. 2015) (citing
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Intercontinental Grp. P’ship v. KB Home Lone Star L.P., 295 S.W.3d 650, 655 (Tex. 2009)). In
other words, a party prevails “when actual relief on the merits of his claim materially alters the
legal relationship between the parties . . . .” See id. (citing Farrar v. Hobby, 506 U.S. 103, 111
(1992)). In this case, breach of contract was the only one of Dandachli’s counterclaims the
trial court resolved in his favor. Specifically, the court found that Garcia had breached the
Agreement when he “transferred funds in the Active Motorwerks bank account” and removed
equipment from Active Motorwerks’ location to an unknown site. As compensation for this
breach, the trial court awarded Dandachli over $30,000 in damages, four vehicles, certain
automotive equipment, and all improvements to the property. Because Dandachli successfully
litigated the claim and obtained relief from the breach, and notwithstanding the fact that Garcia
prevailed on his own theory of breach, Dandachli has shown himself a “prevailing party” entitled
to an award of fees under Section 38.001(8). See Green Int’l, Inc. v. Solis, 951 S.W.2d 384, 390
(Tex. 1997) (affirming award of fees to defendant and explaining, where plaintiff and defendant
had each successfully litigated theories of breach, and where both claimed attorney’s fees under
Section 38.001(8), that plaintiff was not entitled to fees only because it had failed to recover
damages); Besteman v. Pitcock, 272 S.W.3d 777, 793 (Tex. App.—Texarkana 2008, no pet.)
(contemplating, under Section 38.001, an award of fees to both parties); Murrco Agency, Inc. v.
Ryan, 800 S.W.2d 600, 602 (Tex. App.—Dallas 1990, no writ) (holding, under predecessor
to Section 38.001, that both parties were entitled to attorney’s fees even though one party’s
recovery was entirely offset by opposing party’s claim); Satellite Earth Stations E., Inc. v. Davis,
756 S.W.2d 385, 387 (Tex. App.—Eastland 1988, writ denied) (allowing recovery of attorney’s
fees by both parties and explaining that “attorneys’ fees under the DTPA or Article 38.001 are
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recoverable by a successful claimant regardless of whether he received a net recovery . . . the
recovery of attorneys’ fees by both parties should be offset”).
In addition, Dandachli provided uncontroverted evidence regarding the amount of
fees incurred in litigating the contract claim and counterclaim in the amount of $115,852.07.
Moreover, counsel testified that he had segregated these fees from those incurred pursuing and
defending against other claims which do not give rise to an award of fees. On this record, an
award of fees is mandatory. See Hassell Constr., 162 S.W.3d at 668. And because Dandachli
has prevailed on this issue on appeal, he is also entitled to the appellate fees conditionally
requested at trial. See Ventling, 466 S.W.3d at 155. We therefore sustain Dandachli’s first
subissue, reverse the court’s ruling on fees, and remand for a determination of the amount of fees
incurred at trial and on appeal.2
Costs
Also in his first issue, Dandachli argues that the district court abused its discretion
by failing to award the $4,646.80 in costs he incurred during the litigation of the case. We
disagree.
“The successful party to a suit shall recover of his adversary all costs incurred
therein, except where otherwise provided.” Tex. R. Civ. P. 131. However, “[t]he court may, for
good cause, to be stated on the record, adjudge the costs otherwise than as provided by law
or these rules.” Id. R. 141. We review an award or a failure to award costs for an abuse of
discretion. See Furr’s Supermarkets, Inc. v. Bethune, 53 S.W.3d 375, 376 (Tex. 2001).
2
Because Garcia has not filed a brief in this Court, we do not address his own
entitlement, if any, to an award of fees.
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Here, Dandachli cannot show an entitlement to costs on appeal. When “neither
party was wholly successful” on the merits, “it [i]s within the trial court’s discretion to order
each party to bear its own costs.” Niemeyer v. Tana Oil & Gas Corp., 39 S.W.3d 380, 390 (Tex.
App.—Austin 2001, pet. denied). In this case, Dandachli prevailed on his theory of breach of
contract but did not prevail with any of his other theories. Garcia, meanwhile, prevailed with
theories of breached contract and breached fiduciary duty. It was therefore within the discretion
of the district court to require the parties to bear their own costs, and we overrule Dandachli’s
second subissue.
Pre-judgment Interest
In a relatively cursory argument, Dandachli contends the district court abused its
discretion by declining to award pre-judgment interest. Texas recognizes two legal sources for
an award of pre-judgment interest: 1) general principles of equity, and 2) an enabling statute. See
Citizens Nat’l Bank v. Allen Rae Invs., Inc., 142 S.W.3d 459, 486–87 (Tex. App.—Fort Worth
2004, no pet.) (citing Johnson & Higgins, Inc. v. Kenneco Energy, Inc., 962 S.W.2d 507,
530 (Tex. 1998)). In support of his argument, Dandachli points only to Matthews v. DeSoto,
721 S.W.2d 286, 287 (Tex. 1986), as an authority supporting an award of pre-judgment interest.
Yet Dandachli has not explained how Matthews or other common law precedent requires an
award in this instance. See id.; Cavnar v. Quality Control Parking, Inc., 696 S.W.2d 549, 554
(Tex. 1985) , abrogated by Johnson & Higgins, 962 S.W.2d 507; and holding modified by C & H
Nationwide, Inc. v. Thompson, 903 S.W.2d 315 (Tex. 1994). Nor has Dandachli cited any
statutory authority allowing the award of pre-judgment interest sought here. “Where no statute
controls the award of prejudgment interest, the decision to award prejudgment interest is left to
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the sound discretion of the trial court, which should rely upon equitable principles and public
policy in making this decision.” See Citizens Nat’l Bank, 142 S.W.3d at 487 (citing Miga v.
Jensen, 25 S.W.3d 370, 381 (Tex. App.—Fort Worth 2000), aff’d in part and rev’d in part,
96 S.W.3d 207 (Tex. 2002)). Because Dandachli has not identified any statutory source of an
award of pre-judgment interest, and because he has not identified any abuse of discretion on the
part of the district court in denying an award of fees under the common law, we overrule the
subissue. See Tex. R. App. P. 38.1(i).
Findings Regarding Garcia and Active Euroworks
In issues III through V,3 Dandachli challenges the district court’s take-nothing
judgment on three of his claims. Specifically. Dandachli contends that the district court erred by:
(1) failing to find that Garcia breached his fiduciary duties to Active Motorwerks, (2) failing to
find that Active Euroworks engaged in unfair competition, and (3) failing to find that certain
actions by Garcia constituted a breach of the Partnership Agreement. Because it is unclear
whether Dandachli challenges the legal or factual sufficiency of the evidence to support the
district court’s findings, we will evaluate both.
“When a party attacks the legal sufficiency of an adverse finding on an issue
on which []he has the burden of proof, []he must demonstrate on appeal that the evidence
establishes, as a matter of law, all vital facts in support of the issue.” Dow Chem. Co. v. Francis,
46 S.W.3d 237, 241 (Tex. 2001) (per curiam). In assessing a legal-sufficiency challenge, we
consider whether the evidence presented at trial would enable a reasonable and fair-minded
3
We postpone analysis of Dandachli’s second issue, which challenges the calculation of
damages, because our disposition of that issue turns in part on our analysis of Dandachli’s other
issues. See Tex. R. App. P. 47.1.
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factfinder to reach the verdict under review. See City of Keller v. Wilson, 168 S.W.3d 802, 827
(Tex. 2005). In doing so, we view the evidence in the light most favorable to the finding,
indulging every reasonable inference that would support it and disregarding contrary evidence
unless a reasonable factfinder could not. See id.“When a party attacks the factual sufficiency of an adverse finding on an issue on
which []he has the burden of proof, []he must demonstrate on appeal that the adverse finding
is against the great weight and preponderance of the evidence.” Dow Chem. Co., 46 S.W.3d
at 242. “When reviewing an assertion that the evidence is factually insufficient to support a
finding, a court of appeals sets aside the finding only if, after considering and weighing all of
the evidence in the record pertinent to that finding, it determines 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.” Crosstex N. Tex. Pipeline, L.P. v.
Gardiner, 505 S.W.3d 580, 615 (Tex. 2016). When conducting a factual-sufficiency review,
a court must not substitute its judgment for that of the factfinder, who “is the sole judge of
the credibility of witnesses and the weight to be given to their testimony.” See Golden Eagle
Archery, Inc. v. Jackson, 116 S.W.3d 757, 761 (Tex. 2003).
Garcia’s Alleged Breach of Fiduciary Duty
In his third issue, Dandachli contends the district court erred in entering a take-
nothing judgment on his claim that Garcia had breached his fiduciary duties to Dandachli and to
Active Motorwerks. We disagree.
“[T]he elements of a claim for breach of fiduciary duty are (1) the existence of a
fiduciary duty, (2) breach of the duty, (3) causation, and (4) damages.” First United Pentecostal
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Church v. Parker, 514 S.W.3d 214, 220 (Tex. 2017) (citing ERI Consulting Eng’rs, Inc. v.
Swinnea, 318 S.W.3d 867, 873 (Tex. 2010); Jones v. Blume, 196 S.W.3d 440, 447 (Tex. App.—
Dallas 2006, pet. denied)). “Generally, fiduciaries owe the following duties . . . the duty of
loyalty and utmost good faith; duty of candor; duty to refrain from self-dealing; duty to act
with integrity; duty of fair, honest dealing; and the duty of full disclosure.” Wolf v. Ramirez,
622 S.W. 3d 126, 142 (Tex. App.—El Paso Aug. 31, 2020, no pet.) (footnotes and citations
omitted). “Texas law undeniably recognizes that partners owe one another a fiduciary duty.”
Bohatch v. Butler & Binion, 905 S.W.2d 597, 602 (Tex. App.—Houston [14th Dist.] 1995, writ
granted), aff’d, 977 S.W.2d 543 (1998) (citing Fitz–Gerald v. Hull, 237 S.W.2d 256, 264–65
(1951); Johnson v. Peckham, 120 S.W.2d 786, 787–88 (1938); Kunz v. Huddleston, 546 S.W.2d
685, 688 (Tex. App.—El Paso 1977, writ ref’d n.r.e.)).
Given certain unchallenged findings of fact, Dandachli satisfied his burden to
show that Garcia breached his fiduciary duties to Dandachli and to Active Motorwerks. The
district court found that Dandachli and Garcia entered into a partnership in February of 2013.
The court further found that, while the two were still partners, Garcia “took partnership property
from the location where Active Motorwerks conducted business and took steps to delete
Defendant Dandachli’s access to the Active Motorwerks QuickBooks system.” At trial, Garcia
himself conceded that he used that property in conjunction with his new automotive shop in
Pflugerville, and it is undisputed that Garcia took steps to redirect over 800 Active Motorwerks
customers to Active Euroworks. In addition, the district court found that Garcia, without
Dandachli’s knowledge or approval and while the two were still partners, “transferred the funds
in the Active Motorwerks bank account on which both he and Defendant Dandachli were
authorized signers into an account controlled solely by Plaintiff Garcia.” These actions reflect a
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lack of candor and loyalty, a failure to act in good faith, and an attempt at self-dealing. See
Lifshutz v. Lifshutz, 199 S.W.3d 9, 18 (Tex. App.—San Antonio 2006, pet. denied) (explaining
that “fiduciary is under an obligation not to usurp corporate opportunities for personal gain”).
Abetter Trucking Co. v. Arizpe, 113 S.W.3d 503, 510–11 (Tex. App.—Houston [1st Dist.]
2003, no pet.) (summarizing fiduciary limitations on plans to launch competing enterprise and
specifying that fiduciary may not solicit customers or appropriate equipment); Hawthorne v.
Guenther, 917 S.W.2d 924, 934 (Tex. App.—Beaumont 1996, writ denied) (holding partner had
breached duty when she “loaned herself large sums of money from the partnership's funds
without informing the other partners”).
Yet while Dandachli may have satisfied his burden with respect to the elements of
existence of and breach of the duty, it does not necessarily follow that he is entitled to relief
from that grievance. Texas law affords an aggrieved individual several remedies for breach of
fiduciary duty. These include, inter alia, actual damages, exemplary damages, disgorgement, and
recission of contract. See Kahn v. Seely, 980 S.W.2d 794, 799 (Tex. App.—San Antonio 1998, pet.
denied) (actual damages); McCullough v. Scarbrough, Medlin & Assocs., 435 S.W.3d 871, 911
(Tex. App.—Dallas 2014, pet. denied) (exemplary damages); ERI Consulting Eng’rs, 318 S.W.3d
at 873 (disgorgement); Johnson v. Brewer & Pritchard, P.C., 73S.W.3d 193, 2000 (same);
Archer v. Griffith, 390 S.W.2d 735, 738–39 (Tex. 1964) (rescission). In this case, as compensation
for the breach of fiduciary duties, Dandachli sought an additional $71,778.40 in damages.
Dandachli derives this sum from evidence of monies Garcia obtained while operating Active
Euroworks and from his theory that “all of the profits and payments would have been split
between Garcia and Dandachli” had Garcia not breached his fiduciary duty by opening and
operating the competing enterprise. However, the district court made no finding regarding
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Garcia’s profits from the operation of Active Euroworks. Moreover, Dandachli presumes that all
of Garcia’s profits were made while the two men were still partners, but the district court made
no finding regarding the date the partnership ended. Nor did either party specifically request any
findings regarding the alleged breach of fiduciary duty or any profit Garcia might have made
while operating Active Euroworks. As an appellate court, we must assume that any omitted,
unrequested findings support the judgment. See Tex. R. Civ. P. 299; Roberson v. Robinson,
768 S.W.2d 280, 281 (Tex. 1989); Williams v. Milliger, 352 S.W.2d 794, 795 (Tex. App. 1961,
writ ref’d n.r.e.) (“It is implied in support of the judgment that the court found against the
defendant on this issue since the court made no specific finding on such issue and none was
requested.”). In other words, we must infer that the district court concluded: (1) that the fiduciary
relationship had already ended when Garcia began earning profits from Active Euroworks,
(2) that Dandachli was not harmed by Garcia’s operation of Active Euroworks, or (3) that
Dandachli simply failed to prove any damages incurred. We overrule Dandachli’s third issue.
Unfair Competition by Active Euroworks
In his fourth issue, Dandachli contends, “The district court erred in failing to
conclude that Active Euroworks unfairly competed.” Although it is not entirely clear from his
brief, given the authorities Dandachli cites, Dandachli appears to argue that Active Euroworks
unfairly competed by engaging in misappropriation of trade secrets. See U.S. Sporting Prods., Inc.
v. Johnny Stewart Game Calls, Inc., 865 S.W.2d 214, 218 (Tex. App.—Waco 1993, writ denied)
(setting forth elements of trade-secret misappropriation and explaining that misappropriation is a
15
form of unfair competition). Yet Dandachli expressly nonsuited his misappropriation theory on
the first day of trial. We therefore overrule this issue.4
Garcia’s Alleged Breach of Contract
In his fifth issue, Dandachli contends that the district court erred by failing to find
that Garcia had “breached the partnership agreement by requiring a salary and requiring that he
be paid more than a 50% share of the net profits.” We disagree.
In support of his contention, Dandachli argues that “[i]t is undisputed that Garcia
required that he be paid a salary” and that Garcia “was paid approximately $40,000” more
than Dandachli over the course of 40 months. Yet Garcia, while testifying, repeatedly disputed
Dandachli’s characterization of Garcia’s salary expectations and any profit Garcia had made
during his time at Active Motorwerks. Moreover, the district court found that Dandachli’s
failure “to maintain the books and records of the Partnership ma[de] it impossible to establish the
amounts [sic] of distributions paid to each partner.” And while Dandachli contests whether it
was his obligation to handle the accounting for Active Motorwerks, there is no dispute that the
partners failed to maintain accurate financial records. Indeed, Dandachli himself spent much of
the five-day trial revising his own calculation of damages due to bookkeeping discrepancies
and other accounting errors. Thus, on this record, Dandachli cannot establish this alleged breach
as a matter of law. See, e.g., Balli v. Shiery, No. 05-95-00103-CV, 1996 WL 457447, at *2
(Tex. App.—Dallas Aug. 9, 1996, no writ) (op.) (holding that appellants could not prevail on
sufficiency challenge to award of no damages where evidence of damages was “controverted” at
4
To the extent Dandachli intends to argue that Garcia or Active Euroworks engaged in
unfair competition in some other respect, we would deem that argument inadequately briefed for
failure to provide and apply the governing authorities. See Tex. R. App. P. 38.1(i).
16
trial). Nor can he show that the failure to find such a breach contradicts the great weight of the
evidence. See id. As a consequence, he cannot prevail on appeal, and we overrule the issue.
Findings Regarding Dandachli
In what he styles as his sixth issue, Dandachli contends, “The evidence was
neither factually nor legally sufficient to support the finding that Dandachli breached any
contract or his fiduciary duties.” We disagree with both arguments.
When the party challenging the legal sufficiency of the evidence supporting a
finding did not have the burden of proof on that issue at trial, the party must show “that no
evidence supports the adverse finding.” Graham Cent. Station, Inc. v. Peña, 442 S.W.3d 261,
263 (Tex. 2014) (per curiam). There is no evidence to support a finding if: (1) the record bears
no 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 conclusively establishes the opposite of
a vital fact. Shields Ltd. P’ship v. Bradberry, 526 S.W.3d 471, 480 (Tex. 2017). More than a
scintilla of evidence exists if the evidence rises to a level that would enable reasonable and fair-
minded people to differ in their conclusions. See Ford Motor Co. v. Ridgway, 135 S.W.3d 598,
601 (Tex. 2004). We will consider evidence favorable to the challenged finding if the factfinder
could reasonably do so and disregard evidence contrary to the finding unless a reasonable
factfinder could not disregard it. Shields, 526 S.W.3d at 480.
“When a party attacks the factual sufficiency of an adverse finding on an issue on
which the opposing party has the burden of proof, we should set aside the verdict only if the
evidence supporting the . . . finding is so weak as to be clearly wrong and manifestly unjust.”
17
Bechtel Corp. v. CITGO Prod. Pipeline Co., 271 S.W.3d 898, 916 (Tex. App. Austin—2008,
no pet.) (citing Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986)). We may not substitute our own
judgment for that of the factfinder, even if the evidence would support a different result.
Maritime Overseas Corp. v. Ellis, 971 S.W.2d 402, 407 (Tex. 1998).
Breach of Contract
On this record, Dandachli cannot show the evidence legally or factually
insufficient to support the district court’s finding that Dandachli breached the contract. The
district court found that Dandachli had breached the contract by, inter alia, moving to Lebanon
and thereby failing to “provide [his] full-time services and best efforts on behalf of the
partnership,” by “fail[ing] to maintain accurate records,” and by locking Garcia out of the facility.
Dandachli challenges the characterization of his actions as breach of contract—asserting that
the contract does not address these matters—and argues that Garcia presented no evidence
of damages arising from any alleged breach. But to whatever extent there was any silence or
ambiguity regarding Dandachli’s obligations under the contract, it fell within the province of
the district court, as factfinder, to resolve that silence or ambiguity. See Williams v. Williams,
246 S.W.3d 207, 211 (Tex. App.—Houston [14th Dist.] 2007, no pet.); Arredondo v. City of
Dallas, 79 S.W.3d 657, 668 (Tex. App.—Dallas 2002, pet. denied). Moreover, Garcia testified
that he lost access to “close to 70-80,000 [dollars] total” in equipment that he personally
owned when Dandachli locked him out of the facility and that Dandachli prevented him
from “us[ing] any of the other company equipment.” Garcia further testified—and Dandachli
conceded—that little or no automotive work could be undertaken without this equipment. The
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evidence is therefore both legally and factually sufficient to support the findings, Peña,
442 S.W.3d at 263; Cain, 709 S.W.2d at 176, and we overrule the subissue.
Breach of Fiduciary Duty
Similarly, Dandachli cannot show the evidence legally or factually insufficient to
support the district court’s finding that Dandachli breached his fiduciary duties to his partner.
Undisputed aspects of the record reflect that Dandachli changed the locks on the facility without
Garcia’s knowledge or approval, deprived Garcia of the equipment necessary to carry out the
business, and attempted to redirect nearly every dollar left in the partnership’s bank account
to his own personal account. On this record, we cannot say there is no evidence of breach of
fiduciary duty. See Peña, 442 S.W.3d at 263. Nor can we say the finding is clearly wrong or
manifestly unjust. See Cain, 709 S.W.2d at 176. We therefore overrule the issues.
Calculation of Damages
In his second issue, Dandachli contends the district court, in calculating the
damages arising from Garcia’s breach of contract, “erred in awarding only part of the amounts
owed to Dandachli.” Specifically, Dandachli argues that Section 2.3 of the Partnership Agreement
requires that Dandachli recover 100% of the payments he personally made on the Equipment
Lease and 100% of Dandachli’s loan to Active Motorwerks, rather than the 50% of those
respective amounts awarded by the district court. We review the interpretation of an unambiguous
contract de novo. See URI, Inc. v. Kleberg County, 543 S.W.3d 755, 763 (Tex. 2018). Whether
a contractual provision is ambiguous is a question of law that is also subject to de novo review.
See id. If a contract is ambiguous, we will defer to the factfinder to determine what the parties
intended. Williams, 246 S.W.3d at 211; Arredondo, 79 S.W.3d at 668.
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We begin with the district court’s relevant findings of fact. With respect to the
Equipment Lease, the district court found:
On July 21, 2015, Defendant Dandachli, as lessor, and the Partnership, as lessee,
executed a Lease Purchase Agreement. The terms of the Lease Purchase
Agreement required the Partnership to make monthly payments of $2895 to
Defendant Dandachli for the lease of certain equipment, beginning September 1,
2015. . . . The Partnership did not make all the required monthly $2895 payments.
The district court further found5 that Dandachli had personally made the payments required by
the Lease Purchase Agreement in a total amount of $11,524 “between September and December
2015.” With respect to the loan, the district court found that Dandachli had loaned $43,464 to
the partnership. Because these findings are supported by the record and not challenged on
appeal, they are binding on this Court. See McGalliard v. Kuhlmann, 722 S.W.2d 694, 696 (Tex.
1986) (“When findings of fact are filed and are unchallenged, as here, they . . . are binding on an
appellate court unless the contrary is established as a matter of law, or if there is no evidence to
support the finding.” (citing Swanson v. Swanson, 228 S.W.2d 156 (Tex. 1950))).
Dandachli contends he should recover 100% of these sums pursuant to Section
2.3 of the Partnership Agreement, which provides:
The Partnership shall maintain a capital account record for each partner. All
initial capital contributions and subsequent capital contributions made by Hassan
Dandachli and Mario Garcia into the Partnership shall remain the property of each
and shall be reimbursed to them at any time as per their request and or/upon
withdrawal/dissolution of the Partnership.
5
The district court included the remaining findings set forth in this paragraph as
conclusions of law, but we will construe them as findings of fact. See Ray v. Farmers State Bank
of Hart, 576 S.W.2d 607, 608 n.1 (Tex. 1979); Antrim v. State, 868 S.W.2d 809, 812 (Tex.
App.—Austin 1993, no writ).
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Characterizing the lease payments and the loan as “capital contributions” and arguing that “there
was no question that Garcia withdrew from the partnership,” he reasons that “those amounts
were due in full.” We disagree with his reasoning.
The lease is governed by the Lease Purchase Agreement in conjunction with the
Partnership Agreement. The Lease Purchase Agreement provides that the partnership—not
Garcia—would be responsible for any payments due on the lease. And the Partnership
Agreement provides that Garcia and Dandachli each have a 50% share in the partnership. Thus,
if the partnership had followed through with its obligations under the Lease Purchase Agreement,
Dandachli would have been responsible for half of that sum. Accordingly, Dandachli has not
satisfied his burden to show how the district court erred by awarding Dandachli half of the
amount he paid toward the sums due and owing under the Lease Purchase Agreement.
It is unclear from the record what terms governed Dandachli’s $43,464 loan to the
partnership. Dandachli argues that the capital-contribution provision of the Partnership Agreement
governs but provides no evidence or authority in support of that argument. The Partnership
Agreement itself does not define “capital contribution,” and the district court made no specific
findings regarding the meaning of that term, the timing of the loan, or what the loan was used
for. Ambiguous terms of a contract must be discerned by the factfinder. See, e.g., Holmes v.
Newman, No. 01-16-00311-CV, 2017 WL 2871786, at *4 (Tex. App.—Houston [1st Dist.]
July 6, 2017, no pet.) (mem. op.) (“[T]he court cannot determine from the face of this contract
what the parties meant when they agreed that [the plaintiff] would be entitled to the ‘first return
of capital.’” (quoting the contract)); In re P.C.S., 320 S.W.3d 525, 539 (Tex. App.—Dallas 2010,
pet. denied) (disagreeing with dissent as to meaning of undefined phrase “return of . . . capital”
(quoting Tex. Fam. Code 154.062(c))); cf. Dimock Operating Co. v. Sutherland Energy Co.,
21
No. 07-16-00230-CV, 2018 WL 2074643, at *4 (Tex. App.—Amarillo Apr. 24, 2018, pet.
denied) (mem. op.) (looking to definition in contract to resolve dispute over meaning of “capital
costs”). On this record, because the phrase is ambiguous and because neither party proposed
findings regarding its meaning, we must defer to the district court’s construction of the
Partnership Agreement and its implicit rejection of Dandachli’s arguments regarding
reimbursement of the loan as a “capital contribution.” See Tex. R. Civ. P. 299. We therefore
overrule the issue.
Award of Certain Equipment to Garcia
In his final issue on appeal, Dandachli contends that “[t]he trial court also erred
by awarding injunctive relief to Garcia that was neither pleaded nor requested.” Yet Dandachli
has not identified any injunctive relief afforded to Garcia. An injunction is an order “commanding
or preventing an action.” See Injunction, Black’s Law Dictionary (11th ed. 2019). As the Supreme
Court has explained, an injunction operates to force or restrain an act by a party. See Qwest
Commc’ns Corp. v. AT&T Corp., 24 S.W.3d 334, 336 (Tex. 2000). Here, Dandachli complains
only of Garcia’s recovery of certain equipment used by Active Motorwerks. Dandachli provides
no support for his implicit assertion that the recovery of personal property constitutes an award
of injunctive relief. We therefore overrule the issue. See Tex. R. App. P. 38.1(i).
CONCLUSION
For the reasons stated herein, we affirm the judgment in part, reverse in part, and
remand the matter for further proceedings consistent with this opinion.
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__________________________________________
Edward Smith, Justice
Before Justices Goodwin, Kelly, and Smith
Affirmed in Part, Reversed and Remanded in Part
Filed: July 23, 2021
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