U.S. Capital Investments, LLC and Massood Daneshpajooh v. Shawn Shahbazi, Shell on Western, Inc. and Royal West Investments LLC, Series E ( 2014 )

COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 02-12-00417-CV
U.S. CAPITAL INVESTMENTS, LLC APPELLANTS
AND MASSOOD DANESHPAJOOH
V.
SHAWN SHAHBAZI, SHELL ON APPELLEES
WESTERN, INC. AND ROYAL WEST
INVESTMENTS LLC, SERIES E
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FROM THE 96TH DISTRICT COURT OF TARRANT COUNTY
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MEMORANDUM OPINION1
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I. INTRODUCTION
Appellants U.S. Capital Investments, LLC and Massood Daneshpajooh
(Pajooh) conducted a number of commercial real estate transactions with
Appellees Shawn Shahbazi; Shell on Western, Inc.; and Royal West Investments
1
See Tex. R. App. P. 47.4.
LLC, Series E (RWI, Series E). The parties later became embroiled in litigation
with each other over claims that the transactions were induced by and tainted
with fraud and misrepresentations. In this appeal following a jury trial, Appellants
argue in five issues that the trial court erred by granting a directed verdict,
refusing to submit jury questions, and disregarding a jury answer related to their
fraud and misrepresentation claims; that the trial court abused its discretion by
admitting an exhibit related to Appellees’ damages; and that the evidence is
legally and factually insufficient to support the jury’s damages finding. We will
affirm.
II. BACKGROUND
Pajooh is a commercial real estate developer and investor from Houston.
He obtains loans, builds shopping centers, and leases the space, and he buys,
sells, swaps, and owns commercial properties. Pajooh is the principal owner or
member of several entities that he uses to carry out his business dealings,
including U.S. Capital and County Investment LP.
Shahbazi is a commercial real estate investor from Los Angeles. He buys,
sells, and leases primarily multi- and single-tenant properties, and, like Pajooh,
he is the principal owner or member of several entities that he uses to conduct
his business, including Shell on Western and RWI, Series E.
In late 2007, Shahbazi contacted Pajooh to inquire about a number of
properties that Pajooh owned in Houston and had listed on the Internet.
Thereafter, Shahbazi traveled to Houston several times, viewed Pajooh’s
2
properties, and expressed interest in some of them, including one located at 675
West Rankin that had a monthly revenue of approximately $18,500. At some
point during their discussions about 675 West Rankin, Shahbazi told Pajooh
about a property that Shahbazi owned in Fort Worth—a gas station and
convenience store located on Western Center Boulevard that had a Church’s
Chicken franchise operating inside. According to Pajooh, Shahbazi (i) gave him
a document (Plaintiff’s Exhibit 1) showing that the “Shell on Western” had an
average net operating income of $33,050 per month and (ii) represented that he
owned the Church’s Chicken franchise. Relying on Shahbazi’s representations,
Pajooh agreed to swap his 675 West Rankin property plus $200,000 for
Shahbazi’s Fort Worth convenience store, including the real property on which
the store was located. Pajooh, however, was unable to acquire financing for the
deal, so he and Shahbazi entered into an Asset Sale and Purchase Contract
whereby U.S. Capital paid $400,000 for Shell on Western’s assets. Pajooh
traded equity in his 675 West Rankin property to cover the $400,000 (which did
not include the charge for the store’s inventory), and he owner-financed
Shahbazi’s purchase of 675 West Rankin for $1.8 million, which closed on the
same day as the asset purchase. The Bill of Sale and one other document that
Pajooh and Shahbazi executed in relation to the asset purchase contain what
Appellants refer to as “disclaimer of reliance provisions”—confirmations that U.S.
Capital did not rely on any representations made by Shell on Western in
determining to proceed with the asset purchase.
3
In addition to purchasing Shell on Western’s assets, U.S. Capital agreed to
lease the convenience store from RWI, Series E for two years, with an option to
purchase the real property for $2 million. Pajooh personally guaranteed U.S.
Capital’s performance under the lease agreement. Unlike the asset purchase
documents, neither the lease agreement nor the guaranty contain any disclaimer-
of-reliance provisions.2 The parties signed the asset purchase documents, the
lease agreement, and the guaranty on the same day—May 21, 2008—at the
office of the attorney who prepared the asset purchase documents.
U.S. Capital operated the convenience store for over two-and-a-half years.
Within the first few weeks or months of ownership, Pajooh noticed that the
business was not generating monthly net operating income of $33,050. He had
also thought that the asset purchase included the Church’s Chicken franchise,
but he soon discovered that Nazih Bayaa, Shell on Western’s owner before
Shahbazi, owned the franchise. Pajooh took steps to take over the franchise, but
he was ultimately unsuccessful. During his ownership of the convenience store,
Pajooh upgraded the gas pumps, installed a surveillance system, obtained a
liquor license, retained the same management and vendors that Shahbazi had
used when he had owned the business, and used some of his own money to
2
The lease agreement does contain a provision stating that U.S. Capital
did not rely upon any representation made by RWI, Series E, but the provision
concerns “matters related to the use of the leased premises or Property,” not
representations regarding net operating income.
4
cover expenses, but the business never earned net operating income of $33,050
per month.
U.S. Capital vacated the convenience store in January 2011 and sued
Appellees for fraud and misrepresentations in the asset purchase, lease
agreement, and guaranty transactions. Appellees asserted counterclaims and
sued Pajooh individually, seeking damages for, among other things, unpaid rent,
inventory that Pajooh never paid for, and expenses incurred upon taking
possession of the convenience store. Pajooh asserted counterclaims for fraud
and misrepresentation against Appellees.
At the jury trial, Pajooh testified that he developed a close relationship with
Shahbazi during their dealings and that he thought Shahbazi was an honest
person. Pajooh explained that he had reasonably relied on Shahbazi’s
representations about the convenience store’s net operating income and the
Church’s Chicken franchise; that the representations were false; and that he
would not have agreed to the asset purchase, lease agreement, and guaranty
had he been aware of Shahbazi’s misrepresentations.
Shahbazi denied ever giving Pajooh the document showing that the
convenience store had a net operating income of $33,050 per month. Instead,
Shahbazi testified that he had given Pajooh Defendant’s Exhibit 28—a “Business
Profit Analysis” reflecting that the Shell on Western had a net operating income
5
of $19,700.3 Nevertheless, Shahbazi said that Pajooh had requested and
reviewed numerous financial documents before executing the agreements and
that he did not even believe the $19,700 figure; Pajooh concluded that the
business was making approximately $8,000 per month. Shahbazi also explained
that if the convenience store had netted approximately $33,000 per month, then
Pajooh would have had a 99% return on his $400,000 investment in only one
year. Shahbazi opined that he would not have sold a business that produced
that amount of income for less than $1.4 or $1.5 million. Shahbazi testified that
he had told Pajooh early in their conversations that he did not own the Church’s
Chicken franchise and that Pajooh had failed to pay numerous debts that the
store had incurred before vacating the property and to properly maintain or repair
numerous pieces of equipment at the store.
After Appellees rested, the trial court granted a directed verdict in favor of
Appellees on Appellants’ fraud and misrepresentation claims, with the exception
of those relating to the guaranty, concluding that the disclaimer-of-reliance
provisions contained in the asset purchase documents conclusively negated the
reliance element of Appellants’ claims. The jury then found that U.S. Capital
failed to comply with the Asset Sale and Purchase Contract but that Shell on
3
In preparing Defendant’s Exhibit 28, Shahbazi essentially adopted the
form of a similar document that was used by a broker who had helped Shahbazi
purchase the Shell on Western. There are other noticeable differences between
Defendant’s Exhibit 28 and Plaintiff’s Exhibit 1, including the insertion of a
disclaimer at the bottom of the document.
6
Western had sustained damages in the amount of $0; that U.S. Capital failed to
comply with its lease agreement with RWI, Series E and that RWI, Series E had
sustained damages in the amount of $352,380; that Pajooh failed to perform his
obligations under his guaranty of the lease agreement but that the guaranty was
procured by fraud that excused his performance thereunder; and that Shell on
Western and RWI, Series E were entitled to recover attorneys’ fees for
representation in the trial court, the court of appeals, and the supreme court. The
trial court later granted Appellees’ motion to disregard the jury’s finding that
Pajooh’s guaranty of the lease agreement was procured by fraud. Consequently,
the trial court signed a final judgment in favor of RWI, Series E and against U.S.
Capital and Pajooh jointly and severally in the amount of $352,380 plus
attorneys’ fees.
III. ENFORCEABILITY OF DISCLAIMER-OF-RELIANCE PROVISIONS
Appellants argue in their first and second issues that the trial court erred by
granting a directed verdict and abused its discretion by not submitting jury
questions on Appellants’ fraud and misrepresentation claims and affirmative
defenses, and they argue in their third issue that the trial court erred by
disregarding the jury’s finding that Pajooh’s guaranty of the lease agreement was
procured by fraud. All three issues implicate the trial court’s conclusion that the
disclaimer-of-reliance provisions contained in the Asset Sale and Purchase
Contract are enforceable and, therefore, negated as a matter of law the reliance
element of the fraud and misrepresentation claims that Appellants alleged in
7
connection with their execution of the Asset Sale and Purchase Contract, the
lease agreement, and the guaranty. We therefore address these three issues
together.
A. Standards of Review
A directed verdict is proper when the evidence conclusively establishes the
right of the movant to judgment or negates the right of the opponent. See
Prudential Ins. Co. of Am. v. Fin. Review Servs., Inc., 29 S.W.3d 74, 77 (Tex.
2000); Farlow v. Harris Methodist Fort Worth Hosp., 284 S.W.3d 903, 919 (Tex.
App.—Fort Worth 2009, pet. denied). Likewise, the trial court may disregard a
jury finding if there is no evidence to support the finding or if it is immaterial.
GuideOne Lloyds Ins. Co. v. First Baptist Church of Bedford, 268 S.W.3d 822,
831 (Tex. App.—Fort Worth 2008, no pet.). We follow the standards for
assessing legal sufficiency of the evidence. See City of Keller v. Wilson, 168
S.W.3d 802, 823 (Tex. 2005). We review the trial court’s submission of jury
questions for an abuse of discretion. Bedford v. Moore, 166 S.W.3d 454, 458
(Tex. App.—Fort Worth 2005, no pet.).
B. Disclaimer-of-Reliance Law and Provisions
“As a rule, a party is not bound by a contract procured by fraud.” Formosa
Plastics Corp. USA v. Presidio Eng’rs & Contractors, Inc., 960 S.W.2d 41, 46
(Tex. 1998). However, contracting parties have the power to craft provisions that
disclaim reliance on prior representations, and reliance, of course, is an element
common to both fraud and misrepresentation claims. Schlumberger Tech. Corp.
8
v. Swanson, 959 S.W.2d 171, 179 (Tex. 1997); see Grant Thornton LLP v.
Prospect High Income Fund, 314 S.W.3d 913, 923 (Tex. 2010). Juxtaposing
these well-established doctrines leads to controversies like the one in this case,
in which one side claims that the contractually embodied intent of the parties was
to disclaim reliance on prior representations, and the other complains that it
would not have assented to the agreement had it known of a particular
misrepresentation.
Addressing this issue, our supreme court has reasoned that “[t]he contract
and the circumstances surrounding its formation determine whether the
disclaimer of reliance is binding.” Schlumberger, 959 S.W.2d at 177‒81; see
Italian Cowboy Partners, Ltd. v. Prudential Ins. Co. of Am., 341 S.W.3d 323,
331–36 (Tex. 2011); Forest Oil Corp. v. McAllen, 268 S.W.3d 51, 60 (Tex. 2008).
Specifically, the threshold requirement for an effective disclaimer of reliance is
that the contractual language be “clear and unequivocal” in its expression of the
parties’ intent to disclaim reliance. Italian Cowboy, 341 S.W.3d at 336;
Schlumberger, 959 S.W.2d at 179. If the provision is clear and unequivocal, the
court should then consider the circumstances surrounding the contract’s
formation. Italian Cowboy, 341 S.W.3d at 337 n.8. Factors that are relevant to
that inquiry include whether the terms of the contract were negotiated, rather
than boilerplate; whether during negotiations the parties specifically discussed
the issue which has become the topic of the subsequent dispute; whether the
complaining party was represented by counsel; whether the parties dealt with
9
each other in an arm’s-length transaction; whether the parties were
knowledgeable in business matters; and whether the release language was
clear. Id.; see Forest Oil, 268 S.W.3d at 60; Matlock Place Apartments, L.P. v.
Druce, 369 S.W.3d 355, 369‒73 (Tex. App.—Fort Worth 2012, pet. denied). An
enforceable disclaimer-of-reliance provision will conclusively negate the reliance
necessary for a fraud and misrepresentation claim. Forest Oil, 268 S.W.3d at 60,
62. The question of whether an adequate disclaimer of reliance exists is a
question of law. Italian Cowboy, 341 S.W.3d at 333.
Here, the Bill of Sale for the Asset Sale and Purchase Contract provides in
relevant part as follows:
WITH THE EXCEPTION OF THE WARRANTIES OF TITLE,
INCLUDING THE WARRANTY THAT NO LIENS EXIST ON THE
TRANSFERRED PROPERTIES EXCEPT AS RECITED, [Shell on
Western] HAS MADE NO AFFIRMATION OF FACT OR PROMISE
RELATING TO THE TRANSFERRED PROPERTIES THAT HAS
BECOME ANY BASIS OF THIS BARGAIN, AND FURTHER, [Shell
on Western] HAS MADE NO AFFIRMATION OF FACT OR
PROMISE RELATING TO THE TRANSFERRED PROPERTIES
THAT WOULD CONFORM TO ANY SUCH AFFIRMATION OR
PROMISE.
Pajooh, on behalf of U.S. Capital, and Shahbazi, on behalf of Shell on Western,
signed the document. Pajooh and Shahbazi also signed an “Acknowledgment
and Hold Harmless Agreement,” another part of the Asset Sale and Purchase
Contract, that stated in relevant part,
The Buyer [U.S. Capital] hereby acknowledges that it has
done its own due diligence in making its determination to proceed
with its purchase of the business and has not relied on any
representations by the Seller in making its determination. Buyer
10
acknowledges that it has made an independent determination as to
the feasibility of the profitability of the operation of said business,
and after careful evaluation has determined to move forward and
purchase the business according to the terms of the contract. . . .
Buyer hereby releases and holds the Seller harmless of any
and all liability regarding the sale of the business within the limits of
the law.[4]
C. Enforceability of Disclaimer-of-Reliance Provisions as to Asset
Sale and Purchase Contract
The asset purchase documents that Pajooh signed on behalf of U.S.
Capital thus contain not one, but two disclaimer-of-reliance provisions confirming
that U.S. Capital did not rely on any representations made by Shell on Western in
deciding to sign the Asset Sale and Purchase Contract. The disclaimers are
unconditional and easy to understand. The disclaimer contained in the three-
page Bill of Sale is written in capital letters and located just above where Pajooh
signed the document; it is not buried among dozens of other provisions in a
lengthy document. And while the disclaimer in the Acknowledgment and Hold
Harmless Agreement is not written in capital letters, the document is only a half-
page long. We hold that the disclaimer provisions clearly and unequivocally
4
The parties additionally signed a “Closing Acknowledgement,” pursuant to
which each party acknowledged that it had conducted an independent
investigation or assessment of the material facts relied upon in the transaction.
But the document, when read in its entirety, is primarily meant to confirm that the
law firm responsible for preparing the asset purchase documents provided no
legal advice and that neither U.S. Capital nor Shell on Western relied upon any
representations by the law firm.
11
express the parties’ intent to disclaim reliance on prior representations. See id.
at 336; Schlumberger, 959 S.W.2d at 179.
Regarding the circumstances surrounding the formation of the agreement,
Shahbazi testified that he chose Julia Barth, a real estate attorney who owns a
law firm and a title company, to prepare the documents and that he and Pajooh
met at Barth’s office to sign the documents. Barth explained, and Pajooh and
Shahbazi signed a document confirming, that she acted as a neutral third party
whose only role was to prepare the documents for Pajooh and Shahbazi to
review and sign. Indeed, she testified that she did not give any legal advice to
either party, that neither side was represented by an attorney, and that she
“papered [the] transaction and did the escrow services on [the] transaction.”
Barth explained where she obtained the information to prepare the documents:
[Barth]: I had done, I think, three transactions for these same
parties. And, typically, they would call me and give me instructions
on what the terms of their deal was, and then I would draft
documents, send them out to the parties, and then they would call
me or come into my office and explain what they want to change,
and I would change them on the spot, hand them back out until
documents were in the form that the parties agreed on.
[Shahbazi’s counsel]: Is that probably what you did in this
particular case?
[Barth]: I’m sure that’s what I did in this particular case.
Pajooh testified that the disclaimer-of-reliance provisions were not
negotiated or discussed and that he did not review the documents before signing
12
them, but Barth had a different recollection of Pajooh’s participation in the
process:
[Barth]: Danesh is pretty sophisticated. And both . . . parties
instructed me on changes to make to the documents. They argued
a lot amongst themselves. They tied up my conference room for a
full day, I think, on this transaction arguing about the terms of the
deal. Because . . . [m]y policy is I don’t get in the middle of it. I wait
for them to come to their agreement and then let me know what it is
they want me to do. So both of them are heavily involved in making
sure these documents were how they wanted them to be.
[Shahbazi’s counsel]: If Mr. Pajooh had represented to this
jury that he was inexperienced in this kind of thing, would that be
your observation?
[Barth]: No.
[Shahbazi’s counsel]: And if Mr. Pajooh represented to this
jury that he didn’t have a chance to read the documents you
prepared, would that be your recollection?
[Barth]: No.
[Shahbazi’s counsel]: Okay. To your knowledge, did you
observe Mr. Pajooh actively participating in various drafts of these
documents?
[Barth]: Yes.
....
[Shahbazi’s counsel]: Would you ever personally close a
transaction with someone who had not had an opportunity to read
the papers?
[Barth]: No.
[Shahbazi’s counsel]: Okay. If someone asked you -- For
example, if Mr. Pajooh had asked you in this case, “I’m not ready to
close. I need to take these papers to a lawyer,” would you have
postponed the closing?
13
[Barth]: Yes.
[Shahbazi’s counsel]: If he had said, “I need to have my CPA
consulted on this, and I’m not ready to sign them until I talk to my
CPA,” would you have postponed the closing?
[Barth]: Yes.
[Shahbazi’s counsel]: Can you force anybody to sign papers
at a closing?
[Barth]: No. And I didn’t during this transaction.
Barth elaborated even further during what was apparently a particularly heated
cross-examination,
[Barth]: And I just also want you to know I’m not here because
I want to be, and I don’t really care about either one of these two
guys. But this guy came into my office and negotiated all day long
with this guy until they came up with an agreement they both were
happy with and they both signed their name to.
[Pajooh’s counsel]: And the provisions that we’ve talked about
are none of the things they evidently negotiated, because none of
them got changed.
[Barth]: I wouldn’t know. I wasn’t there.
[Pajooh’s counsel]: I asked you if these were your -- was this
your wording, and you said “yes.”
[Barth]: This is my wording, --
....
[Barth]: -- but these two parties reviewed the documents, read
the documents, signed the documents, because they agreed to the
language in the documents. I don’t understand --
14
Are you trying to make it look like -- It seems like you want me
to say like I pushed this guy or this guy to sign something. I don’t
care. People can sign or not sign. They can close or not close.
This guy and this guy, these are the terms they asked me to
prepare. I prepared them and they signed them, and they went
away happy campers until later somebody clearly wasn’t happy.
And that’s why I prepared all these documents, because I see this all
the time as a real estate attorney and a business attorney. People
buy stores and then they can’t run them and then they run them into
the ground and they get pissed because the seller supposedly
misrepresented.
A primary underlying consideration in evaluating the enforceability of a
disclaimer-of-reliance provision is the sophistication of the parties involved. See
Italian Cowboy, 341 S.W.3d at 332‒36. Shahbazi described Pajooh as a “very
good negotiator” and further testified,
He’s a very smart businessman. He’s very intelligent. He
knows real estate very well. He knows all the contract. He
understands the part -- each part of the contract. He knows it better
than me. He taught me a lot of stuff even in the lease and contract.
He said he has bachelor’s degree in engineering. He said he has
master’s degree in economy, I believe. And he also told me he went
to law school. So he -- he could read and write very nice, better than
me, maybe.
Barth described Pajooh as sophisticated no fewer than three times during her
testimony and also said that he had told her that he went to law school. Pajooh
has an engineering degree and a master’s degree in industrial management.
Even in the absence of Shahbazi’s and Barth’s testimony, the record
reveals that Pajooh is an experienced real estate investor who knows his craft
well—he owns multiple properties, he is the principal owner or member of
multiple entities that he uses to operate his business, he understands and has
15
the ability to utilize financial documents related to his business transactions, and
he is skilled in negotiating real estate business deals. The trial court denied
Shahbazi’s motion for a directed verdict as to Pajooh’s fraud and
misrepresentation claims after Pajooh rested, but it changed course and granted
the motion after Shahbazi had presented his evidence and rested. The trial
court’s reasoning for doing so is apparent—the evidence considered as a whole
overwhelmingly demonstrates that Pajooh is a sophisticated business player who
knew precisely what he was doing when he executed the asset purchase
documents on behalf of U.S. Capital. Neither Pajooh nor Shahbazi were
represented by counsel, and there is conflicting evidence regarding whether the
disclaimer-of-reliance provisions were specifically negotiated; but there is
considerable evidence that an arm’s-length transaction occurred on May 21,
2008, between two individuals who are experienced and knowledgeable in
business matters, particularly Pajooh. Accordingly, having concluded that the
disclaimer provisions clearly and unequivocally express the parties’ intent to
disclaim reliance on prior representations, and having considered the
circumstances surrounding the contract’s formation, we hold that, as to the Asset
Sale and Purchase Contract, the disclaimer-of-reliance provisions are
enforceable.
16
D. Enforceability of Disclaimer-of-Reliance Provisions as to Lease
Agreement and Guaranty
Appellants additionally argue that “it cannot be genuinely disputed that” the
disclaimer-of-reliance provisions relate “at most” to the Asset Sale and Purchase
Contract and not to the lease agreement and the guaranty. Appellants point out
that the disclaimer-of-reliance provisions are contained in only the asset
purchase documents, that neither the lease agreement nor the guaranty has any
disclaimer language similar to that found in the asset purchase documents, and
that RWI, Series E and Pajooh were not parties to the Asset Sale and Purchase
Contract. Because the disclaimer provisions do not apply to the lease agreement
or the guaranty, and because Appellants pleaded and presented evidence of
Appellees’ fraud and misrepresentations in relation to the lease agreement and
the guaranty, Appellants argue that the trial court erred by directing a verdict as
to those claims, abused its discretion by refusing to submit jury questions as to
those claims, and erred by disregarding the jury’s finding that Pajooh’s guaranty
of the lease agreement was procured by fraud.
In directing a verdict and disregarding the jury’s finding, the trial court
implicitly concluded that the disclaimer provisions contained in the Asset Sale
and Purchase Contract applied to the lease agreement and the guaranty.
Appellants argued at the hearing on their motion for new trial that the disclaimer
provisions did not relate to the lease agreement or the guaranty—the same
argument that they raise on appeal—but the trial court declined to alter its ruling.
17
During the hearing on Appellees’ motion to disregard the jury’s finding,
Appellees’ counsel acknowledged that the guaranty does not contain any
disclaimer-of-reliance language, but he argued that the disclaimers contained in
the asset purchase documents applied to “everything,” which would include the
lease agreement and the guaranty. The argument was no model of clarity, but
we understand what counsel meant.
In this and numerous other jurisdictions, there is a well-established line of
authority “that instruments pertaining to the same transaction may be read
together to ascertain the parties’ intent, even if the parties executed the
instruments at different times and the instruments do not expressly refer to each
other.” Fort Worth ISD v. City of Fort Worth, 22 S.W.3d 831, 840 (Tex. 2000);
see Veal v. Thomason, 138 Tex. 341, 348, 159 S.W.2d 472, 475 (1942) (“It is the
settled rule in this State, as well as the rule generally, that written contracts
executed in different instruments whereby a single transaction or purpose is
consummated are to be taken and construed together as one contract.”).
Moreover, “instruments may be construed together or treated as one contract
even though they are not between the same parties.” Jones v. Kelley, 614
S.W.2d 95, 98 (Tex. 1981). Consequently, “[i]n appropriate instances, courts
may construe all the documents as if they were part of a single, unified
instrument.” Fort Worth ISD, 22 S.W.3d at 840.
Several cases are demonstrative. In one well-cited opinion, the Second
Circuit held that the district court had properly construed together an asset
18
purchase agreement and a lease agreement—documents similar to those
involved in this case. See Commander Oil Corp. v. Advance Food Serv. Equip.,
991 F.2d 49, 52‒53 (2nd Cir. 1993). The court reasoned,
[T]he Asset Purchase Agreement relates to the assets and
business that Slater sold to PSI, while the Lease involves PSI’s
rental from Slater of the Glen Cove and Elizabeth premises.
However, the two transactions were intertwined. They were
component parts of a single business transaction whereby PSI
would purchase Slater’s business and lease the premises from
Slater on which to operate it. Each depended on the other; neither
stood alone.
Id. at 53.
The Fifth Circuit used similar reasoning in determining whether an
arbitration provision contained in one agreement applied to claims arising under
a different agreement. See Pers. Sec. & Safety Sys. Inc. v. Motorola Inc., 297
F.3d 388, 391‒95 (5th Cir. 2002). Like Appellants’ argument in this case, the
appellant in Motorola argued that the arbitration provision contained in a product
development agreement was inapplicable to its claims under a separate stock
purchase agreement. Id. at 393. The Fifth Circuit disagreed:
[T]he Stock Purchase Agreement and the Product Development
Agreement were both key elements of a transaction in which
Motorola agreed to provide financing in return for a stake in PSSI
and access to PSSI’s technology. Although the Stock Purchase
Agreement and the Product Development Agreement govern
different facets of the parties’ relationship, the agreements must be
construed together because they were executed at the same time as
part of the same overall transaction.
Id.
19
Here, Pajooh and Shahbazi had originally agreed to swap Pajooh’s 675
West Rankin property plus $200,000 for Shahbazi’s Fort Worth convenience
store, including the real property, but Pajooh was unable to acquire financing, so
he purchased Shell on Western’s assets, leased the property, and signed a
personal guaranty. The Asset Sale and Purchase Contract, the lease
agreement, and the guaranty were executed on the same day, at the same
place, by the same two individuals (albeit on behalf of several different entities),
and as part of a single business transaction. Indeed, the lease agreement
provides that U.S. Capital may use the leased premises only for the “operation of
[a] gas station and convenience store, Church’s Chicken, and Car Wash.” And
the Asset Sale and Purchase Contract states that U.S. Capital desires to
purchase all of the business assets located at “3605 Western Center, Fort Worth,
Texas,” which is the same property that U.S. Capital agreed to lease from RWI,
Series E. Pajooh testified extensively about his negotiations with Shahbazi and
agreed that he had relied upon Shahbazi’s representations when entering into
the “contracts” and that he would not have signed “anything” if he had been
aware that the representations were not true. Pajooh thus described the overall
process in terms of one transaction between him and Shahbazi, not three
separate agreements. Like the courts in Commander Oil and Motorola treated
the agreements in those cases, we are compelled under these circumstances to
construe the Asset Sale and Purchase Contract, the lease agreement, and the
20
guaranty as if they are a single instrument. See Fort Worth ISD, 22 S.W.3d at
840.
We have already held that the disclaimer-of-reliance provisions are
enforceable as to the Asset Sale and Purchase Contract. Because we construe
that agreement along with the lease agreement and the guaranty, we hold that
the disclaimer provisions are also enforceable against those agreements.
Accordingly, Appellees negated as a matter of law the reliance element of
Appellants’ fraud and misrepresentation claims and affirmative defenses as they
pertain to the Asset Sale and Purchase Contract, the lease agreement, and the
guaranty. See Schlumberger, 959 S.W.2d at 181. The trial court did not err or
abuse its discretion by granting a directed verdict, refusing to submit jury
questions, and disregarding the jury’s findings as to those claims and defenses.
We overrule Appellants’ first, second, and third issues.
IV. ISSUES RELATED TO DAMAGES FINDING
A. Defendant’s Exhibit 78
In their fourth issue, Appellants argue that the trial court abused its
discretion by admitting Defendant’s Exhibit 78, a summary of Appellees’
damages. Appellants objected that the documents attached to the summary—
invoices and other documents establishing Appellees’ damages—were
inadmissible hearsay.
We review a trial court’s decision to admit or exclude evidence for an
abuse of discretion. In re J.P.B., 180 S.W.3d 570, 575 (Tex. 2005). The
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erroneous admission of evidence requires reversal only if the error probably
(though not necessarily) resulted in an improper judgment. Tex. R. App. P. 44.1.
Defendant’s Exhibit 78 contains a summary of (i) the expenses that
Shahbazi incurred for the numerous debts and fees that he paid and the repairs
that he made upon retaking possession of the convenience store and (ii) the
amounts due and owing under the lease agreement. To the extent that the
summary was inadmissible because the documents attached to it were hearsay,
the erroneous admission of the exhibit was harmless because Shahbazi provided
his own testimony about much, if not all, of the same items and figures that are
set out in Defendant’s Exhibit 78. See Owens-Corning Fiberglass Corp. v.
Malone, 916 S.W.2d 551, 559 (Tex. App.—Houston [1st Dist.] 1996) (“When
erroneously admitted evidence is merely cumulative, any error in its admission is
harmless.”), aff’d, 972 S.W.2d 135 (Tex. 1998); Welder v. Welder, 794 S.W.2d
420, 430 (Tex. App.—Corpus Christi 1990, no writ) (holding that error in
admitting summaries was harmless because they were cumulative of witness’s
testimony). We overrule Appellants’ fourth issue.
B. Evidentiary Sufficiency of Damages Finding
Appellants argue in their fifth issue that the evidence is legally and factually
insufficient to support the jury’s finding awarding RWI, Series E damages in the
amount of $352,380 for U.S. Capital’s failure to comply with the lease agreement.
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
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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. Uniroyal Goodrich Tire Co. v. Martinez, 977 S.W.2d 328, 334 (Tex. 1998),
cert. denied, 526 U.S. 1040 (1999); Robert W. Calvert, “No Evidence” and
“Insufficient Evidence” Points of Error, 38 Tex. L. Rev. 361, 362–63 (1960). 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,
395 S.W.2d 821, 823 (Tex. 1965).
As a general rule, the jury has broad discretion to award damages within
the range of evidence presented at trial, so long as a rational basis exists for its
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calculation. Gulf States Utils. Co. v. Low, 79 S.W.3d 561, 566 (Tex. 2002).
Shahbazi testified that Appellees sustained damages in the amount of $565,930
(1) due to U.S. Capital’s failure to pay amounts due and owing under the lease
agreement ($282,380) and (2) resulting from the debts and fees that he paid and
repairs that he made after retaking possession of the convenience store
($283,550). Appellants take issue with a number of items that contribute to the
$283,550 figure, arguing that some amounts are not evidence of damages, that
some are amounts that RWI, Series E would have incurred irrespective of when
U.S. Capital vacated the store, and that some amounts were merely for ordinary
maintenance, but Appellants do not complain about Shahbazi’s testimony that
RWI, Series E sustained damages of over $282,000 for U.S. Capital’s failure to
pay all or some rent from February 2010 through January 2011, nor do they
complain about Shahbazi’s testimony that he was never paid $130,000 for the
convenience store’s inventory.5 Those two figures alone (adding up to over
$400,000) account for much more than what the jury actually awarded as
damages. Applying the appropriate standards of review, we hold that the
evidence is legally and factually sufficient to support the jury’s damages finding.
We overrule Appellants’ fifth issue.
5
Pajooh testified that he paid the $130,000 inventory debt by reducing the
price by that same amount of yet another property that he sold to Shahbazi after
the transaction on May 21, 2008, but the jury could have chosen to believe
Shahbazi’s testimony. See City of Keller, 168 S.W.3d at 819.
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V. CONCLUSION
Having overruled all of Appellants’ issues, we affirm the trial court’s
judgment.6
/s/ Bill Meier
BILL MEIER
JUSTICE
PANEL: GARDNER, WALKER, and MEIER, JJ.
DELIVERED: May 1, 2014
6
To the extent that Appellees make a request regarding conditional
appellate attorneys’ fees, the trial court’s final judgment addresses that issue.
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