Masoud Sanati v. Kamran Arbab Nka Kamran, Armani Azar

Opinion issued July 2, 2019
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-18-00325-CV
———————————
MASOUD SANATI, Appellant
V.
KAMRAN ARAB N/K/A KAMRAN ARMANI AZAR, Appellee
On Appeal from the County Civil Court at Law No. 1
Harris County, Texas
Trial Court Case No. 1091270
MEMORANDUM OPINION
Appellee Kamran Arab N/K/A Kamran Armani Azar (“Kamran”) sued
appellant Masoud Sanati for $50,000, the principal amount due on a promissory
note. Sanati maintained that the case was more complicated than a typical suit on a
promissory note because the men had known each other for decades and had been
involved in other business ventures. Sanati pleaded the affirmative defense of
offset, arguing that he had made excess monthly payments to Kamran related to the
$50,000 promissory note and that the overpayment should have been applied to the
principal indebtedness. Sanati also asserted counterclaims for breach of contract,
quantum meruit, and fraud, all relating to other alleged dealings between the men.
The trial court granted summary judgment in favor of Kamran, and Sanati
appealed.
Sanati raises three issues on appeal, arguing that the trial court erred by
granting traditional summary judgment on Kamran’s claim (issues 1 and 2), and
that the court erred by granting a no evidence summary judgment as to his
counterclaims (issue 3).
We reverse the trial court’s summary judgment for Kamran because Sanati’s
summary judgment evidence raised a genuine question of material fact on his
affirmative defense of offset. We affirm the trial court’s no evidence summary
judgment on Sanati’s counterclaims because his summary judgment evidence did
not support each element of each cause of action.
Background
Sanati and Kamran had been acquainted for 40 years in 2012, when Kamran
transferred $50,000 to Sanati. According to the terms of a promissory note dated
May 20, 2012, the $50,000 was a one-year loan from Sanati’s “old friend” Kamran
2
to be used in his “business venture.” The promissory note required Sanati to pay
$475 in monthly interest payments for twelve months and a balloon payment of the
principal amount of the loan, $50,000, on May 19, 2013. Sanati is identified as the
borrower in the signature block, which also identified two witnesses and provided
spaces for their signatures.
Sanati began making $475 monthly payments in June 2012. These monthly
payments continued through February 2017, but Sanati did not make a lump sum
payment of $50,000. In March 2017, Kamran sued Sanati for breach of contract,
breach of implied contract, and unjust enrichment. Kamran also sought attorney’s
fees and pre- and post-judgment interest.
Sanati answered, pro se, with a general denial and verified denials,
specifically denying that he had signed the promissory note and that there was no
consideration for the note. Sanati also pleaded the following affirmative defenses:
(1) official mistake; (2) election of remedies; (3) res judicata and collateral
estoppel; (4) statute of limitations and laches; (5) offset; (6) offset by counterclaim;
(7) waiver; and (8) accord and satisfaction.
In September 2017, Kamran filed a traditional motion for summary
judgment on his claims. His summary judgment evidence included his affidavit
and an unsigned copy of the promissory note. The trial court did not rule on this
3
motion for summary judgment, and in November, Sanati filed counterclaims for
breach of contract, fraud, and quantum meruit.
Sanati alleged that in May 2012, Kamran asked him for assistance in making
investments of at least $500,000 in the United States so that he could qualify for
permanent residency. Sanati maintained that he offered Kamran an opportunity to
buy his 50% interest in a restaurant and negotiated with his partner to allow the
sale to proceed. However, the sale did not proceed because, according to Sanati,
Kamran “insisted on a 51% interest for no additional consideration.”
Sanati also alleged that he offered Kamran a real estate investment
opportunity. Sanati stated that he owned a building company that had successfully
developed unimproved property into profitable residential units. He averred that he
found an unimproved parcel of land on Anita Street in Houston, and he offered to
develop it into three townhouses and share the profit with Kamran. Sanati alleged
that Kamran paid for the land by giving his brother Kambiz Aubon money to pay
for it. Kambiz then acquired the property in the name of Aubon Property, an entity
created by Kambiz’s daughter, Delara Aubon, for the purpose of the project.
According to Sanati, Kambiz and Delara “represented themselves as agents” for
Kamran. Sanati alleged that after he had expended time and money on preliminary
development work, Kamran decided not to proceed. He alleged a lost opportunity
of approximately $78,000.
4
In January 2018, Kamran filed another traditional motion for summary
judgment as to his claims and a no evidence motion for summary judgment as to
Sanati’s counterclaims. His summary judgment evidence consisted of: (1) his
affidavit, in which he averred that Sanati had not made the $50,000 balloon
payment that was due in April 2013 and that after “allowing all offsets, credits, and
payments, there is due and owing to me on the contract $50,000.000 plus interest;”
(2) a signed copy of the May 2012 promissory note; (3) an email chain from May
2012 regarding Sanati’s receipt of the money; (4) bank records showing the
monthly $475 payments that Sanati made from June 2012 through February 2017;
and (5) an attorney’s fees affidavit. In the no evidence motion, Kamran specifically
challenged each element of each of Sanati’s counterclaims.
In response, Sanati argued that material questions of fact precluded summary
judgment because the parties’ dispute was “not a simple case of a promissory note
and the loan of $50,000.00.” Rather, he characterized it as “a five year course of
dealing” and asserted that Kamran actually was liable to him. Sanati’s summary
judgment evidence included his affidavit in which he averred:
As for the $50,000.00, I do not recall signing the note attached
to Plaintiff’s Petition. I was not given a copy of that document. I
therefore cannot verify the authenticity of that document. I did agree
to compensate Plaintiff for holding his money, and paid him $5,700
dollars for that purpose. I also paid him additional funds, totaling
$28,000.00. I was under the understanding that $22,000.00 was to be
applied to principal.
5
Sanati’s affidavit also addressed the other investment opportunities that he
had discussed with Kamran: the purchase of an interest in a restaurant and the
Anita Street real estate development. Sanati also provided an email chain relating
to the proposed Anita Street real estate development and an investment agreement,
which was not signed by Kamran. Sanati attached an email from Kamran that
referenced the Anita Street real estate investment and requested payment of the
$50,000 or alternatively offered to extend the terms of the loan.
Sanati also attached an affidavit from Kamran’s brother, Kambiz, who
averred that he, Delara, Kamran, and Sanati had discussed jointly participating in
the Anita Street real estate development opportunity. He averred that Kamran gave
him $120,000 to invest in the project. Kambiz, Delara, and Sanati began work on
the project and incurred expenses. However, according to Kambiz, Kamran
“refused to sign any contracts, refused paying of any expenses, and demanded the
property be deeded to him personally.” Finally, Sanati attached letters from two
nonparties regarding Kamran’s personal reputation and the failed restaurant sale.
The trial court granted summary judgment in favor of Kamran, awarding
him $50,000 plus pre- and post-judgment interest and attorney’s fees. The court
also impliedly granted the no evidence motion for summary judgment as to
Sanati’s counterclaims.
6
Analysis
Sanati raises three issues on appeal. In his first two issues he challenges the
granting of Kamran’s traditional motion for summary judgment. He argues that
there were genuine issues of material fact and that the court did not view the
evidence in a light favorable to him as the nonmovant. In his third issue, he
contends that the trial court erred by granting Kamran’s no evidence motion for
summary judgment because there were genuine issues of material fact.
I. Sanati’s summary judgment evidence raised a question of fact about the
amount owed on the $50,000 loan.
We review summary judgments de novo. Tex. Workforce Comm’n v. Wichita
Cty., 548 S.W.3d 489, 492 (Tex. 2018). A movant for traditional summary
judgment must establish that there is no genuine issue of material fact and that he
is entitled to judgment as a matter of law. See TEX. R. CIV. P. 166a(c); Nixon v. Mr.
Prop. Mgmt. Co., 690 S.W.2d 546, 548 (Tex. 1985); Wendt v. Sheth, 556 S.W.3d
444, 448 (Tex. App.—Houston [1st Dist.] 2018, no pet.). To determine whether
there is a genuine question of material fact, disputed evidence that is favorable to
the nonmovant will be taken as true, and every reasonable inference will be
indulged and any doubt resolved in favor of the nonmovant. See Nixon, 690
S.W.2d at 548–49.
“When the plaintiff moves for summary judgment, the plaintiff must
conclusively prove all elements of its cause of action as a matter of law.” Lujan v.
7
Navistar Fin. Corp., 433 S.W.3d 699, 704 (Tex. App.—Houston [1st Dist.] 2014,
no pet.). A matter is conclusively proved if ordinary minds could not differ as to
the conclusion to be drawn from the evidence. Id. A nonmovant can defeat a
plaintiff’s motion for summary judgment on his own claim by coming forward
with evidence that creates a genuine question of material fact as to an affirmative
defense that has been pleaded by the nonmovant. Id.
The affirmative defense of offset, which is sometimes called “payment” or
“credit,” refers to a debtor’s right to have payments to the obligee credited against
the total amount owed. Brown v. Am. Transfer & Storage Co., 601 S.W.2d 931,
936 (Tex. 1980); Mathis v. Benavides, No. 04-15-00555-CV, 2016 WL 3020893,
at *5 (Tex. App.—San Antonio May 25, 2016, pet. denied) (mem. op.). The party
asserting offset has the burden of proving facts necessary to support it. Brown, 601
S.W.2d at 936; Mathis, 2016 WL 3020893, at *5. To raise the defense, evidence
must include factual allegations showing specific amounts paid and that the
payments were made in satisfaction of the debt sued upon. See Colony Flooring &
Design, Inc. v. Regions Bank, No. 01-13-00210-CV, 2014 WL 2021823, at *5
(Tex. App.—Houston [1st Dist.] May 15, 2014, no pet.) (mem. op.); see, e.g., Life
Ins. Co. of Va. v. Gar–Dal, Inc., 570 S.W.2d 378, 381–82 (Tex. 1978) (conclusory
affidavit stating that payments had not been credited toward a debt did not raise
fact issue regarding offset); Stucki v. Noble, 963 S.W.2d 776, 781–82 (Tex. App.—
8
San Antonio 1998, pet. denied) (checks showing payments of amount owed under
note did not raise fact issue regarding offset because the checks were not properly
authenticated).
Kamran’s summary judgment evidence included the promissory note, which
specifically provided that Sanati would pay “interest of $475” “on the 20 th day of
each month, every month until 19 May 2013, when I will include the principal loan
of $50,000 to clear our account.” The note itself was silent as to monthly payments
after May 2013 and in the absence of the final balloon payment. Kamran’s
summary judgment evidence also included bank records and his affidavit, both of
which showed that Sanati paid $475 each month from June 2012 through February
2017.
Sanati did not dispute that he had not made a final balloon payment of
$50,000, but he did dispute that he still owed Kamran $50,000. In addition to
pleading a general denial and verified denials that he had signed the promissory
note, he also pleaded several affirmative defenses, including offset, waiver, and
accord and satisfaction. After Kamran filed his second motion for summary
judgment, Sanati responded, arguing that there were material issues of fact that
precluded summary judgment and that the parties’ dispute went beyond the
promissory note due to the parties’ five years of business dealings. Although he
denied signing the promissory note, he acknowledged having received the $50,000,
9
and he argued that he had paid Kamran $28,000 in “interest and reimbursement”
related to the $50,000. Sanati’s sworn affidavit was notarized and based on his
personal knowledge. In it, he specified that he had paid $28,000 in regard to the
$50,000 indebtedness and that he understood that $22,000 would be applied to the
principal. This is some evidence of offset, and it raises a question of fact as to the
amount owed on the $50,000 debt. Because Sanati’s summary judgment evidence
raised a question of fact on his affirmative defense to Kamran’s claim, the trial
court erred by granting final summary judgment. See Lujan, 433 S.W.3d at 704.
We sustain the first issue, and we do not need to rule on the second issue. See TEX.
R. APP. P. 47.1.
II. Sanati’s summary judgment evidence did not raise a question of fact on
his counterclaims.
A no evidence motion for summary judgment is essentially a directed verdict
granted before trial. Mack Trucks, Inc. v. Tamez, 206 S.W.3d 572, 581–82 (Tex.
2006). A party may move for no evidence summary judgment if, after adequate
time for discovery, there is no evidence of one or more essential elements of a
claim or defense on which the nonmovant would have the burden of proof at trial.
TEX. R. CIV. P. 166a(i). The motion must state the elements as to which there is no
evidence. Id. “The court must grant the motion unless the respondent produces
summary judgment evidence raising a genuine issue of material fact.” Id. “We
review the evidence presented by the motion and response in the light most
10
favorable to the party against whom the summary judgment was rendered,
crediting evidence favorable to that party if reasonable jurors could, and
disregarding contrary evidence unless reasonable jurors could not.” Mack Trucks,
206 S.W.3d at 582.
Sanati asserted counterclaims for breach of contract, common law fraud, and
quantum meruit. These causes of action arise from the investment deals that Sanati
alleged he had worked on for or with Kamran to help him establish permanent
residency. But his summary judgment evidence did not support each element of
each of these causes of action. For example, although Sanati’s summary judgment
affidavit discusses the inception of their working relationship, it does not establish
that the men had a contract. See B & W Supply, Inc. v. Beckman, 305 S.W.3d 10,
16 (Tex. App.—Houston [1st Dist.] 2009, pet. denied) (elements of breach of
contract include existence of a valid contract); cf. Sewing v. Bowman, 371 S.W.3d
321, 329 (Tex. App.—Houston [1st Dist.] 2012, pet. dism’d) (citing TEX. BUS. &
COM. CODE § 26.01(a), (b)(4)) (“The statute of frauds requires that a promise,
agreement, or contract for the sale of real property be in writing and signed by the
party to be charged with the promise or agreement.”).
Similarly Sanati’s fraud claim was not supported by his summary judgment
evidence because he did not aver that Kamran made any material false
representation on which he relied to his detriment. See In re FirstMerit Bank,
11
N.A., 52 S.W.3d 749, 758 (Tex. 2001) (citing Formosa Plastics Corp. v. Presidio
Eng’rs & Contractors, Inc., 960 S.W.2d 41, 47 (Tex. 1998)) (elements of fraud
include the making of a false and material representation). Sanati averred that he
offered an investment opportunity to Kamran, that Kamran agreed to a profit-
sharing split, that Kamran gave money to his brother, and that Kamran later
decided not to proceed with the project after preliminary work had been done.
Whether Kamran agreed to go forward with this opportunity is not specifically
mentioned. Sanati averred that he accepted Kambiz and Delara’s representations
that they were operating on behalf of Kamran due to their familial ties, but he did
not aver that Kamran represented that Kambiz and Delara were his agents. Thus,
there was no evidence that Kamran made a false and material representation on
which Sanati relied to his detriment.
Finally Sanati’s summary judgment evidence did not support his claim for
quantum meruit. A claimant seeking to recover under a theory of quantum meruit
must prove that: (1) valuable services were rendered or materials furnished; (2) for
the person sought to be charged; (3) those services and materials were accepted by
the person sought to be charged, and were used and enjoyed by him; and (4) the
person sought to be charged was reasonably notified that the plaintiff performing
such services or furnishing such materials was expecting to be paid by the person
sought to be charged. Hill v. Shamoun & Norman, LLP, 544 S.W.3d 724, 733
12
(Tex. 2018). Sanati averred that he performed valuable services toward
development of the Anita Street project. Yet his affidavit describes a joint venture
in which he would share in profits above the costs of development, not a
circumstance in which he expected to be paid for his services. Sanati averred:
“Plaintiff further agreed that I could have 50% of the profit above cost as a
compensation for finding the project, as well as architectural, engineering platting
services and necessary permitting.” Taking Sanati’s affidavit as true, all that
Kamran could have agreed to do was to share the profits with Sanati, not to pay
him for labor and services rendered.
Because Sanati’s summary judgment proof was not sufficient to raise a
question of fact on each element of each of his counterclaims, the trial court did
not err by granting Kamran’s no evidence summary judgment motion on Sanati’s
counterclaims. See TEX. R. CIV. P. 166a(i). We overrule the third issue.
13
Conclusion
We affirm the no evidence motion for summary judgment as to Sanati’s
counterclaims. We reverse the summary judgment in favor of Kamran because a
genuine issue of material fact as to Sanati’s affirmative defense of offset exists. We
remand Kamran’s claims to the trial court for further proceedings consistent with
this opinion.
Peter Kelly
Justice
Panel consists of Justices Lloyd, Kelly, and Hightower.
14