Mike Yardeni and Mike Yardeni Family Investments, L.P. v. Maria Lourdes Luna Torres and Kids View Zargosa Center, L.L.C.

COURT OF APPEALS
EIGHTH DISTRICT OF TEXAS
EL PASO, TEXAS
MIKE YARDENI AND MIKE YARDENI §
FAMILY INVESTMENTS, L.P., No. 08-13-00067-CV
§
Appellants, Appeal from the
§
v. 448th Judicial District Court
§
MARIA LOURDES LUNA TORRES of El Paso County, Texas
AND KIDS VIEW ZARAGOSA §
CENTER, L.L.C., (TC# 2012-DCV06385)
§
Appellees.
OPINION
Appellants Mike Yardeni and Mike Yardeni Family Investments, L.P., seek interlocutory
review of the trial court’s grant of an amended temporary injunction in favor of Maria Lourdes
Luna Torres and Kids View Zaragosa Center, L.L.C., Appellees, which prevents Appellants from
inter alia locking Appellees out of property located on 1777 North Zaragosa Road in El Paso,
Texas (“the Zaragosa Property”). This temporary injunction, granted on October 1, 2013, revived
a previous injunction that expired by its own terms on August 6, 2013.
On appeal, Appellants argue in two issues that the trial court abused its discretion by
granting the temporary injunction order because (1) Appellants lacked standing to obtain the
injunction, and (2) the order did not account for the monthly ad valorem tax payments Appellees
purportedly owed under their lease. Appellants ask in a third issue that this Court find that
Torres’ contractual claim to a 50 percent ownership interest in the Zaragosa Property is barred by
the Statute of Frauds. For the following reasons, we affirm the amended temporary injunction
order and dismiss Issue Three for presenting a matter that is not justiciable on interlocutory appeal.
Factual Background
In 2004, Maria Lourdes Luna Torres sought a business loan from Capital Savings Bank in
order to expand her child care business and open a daycare center called the Kids View Zaragosa
Center on the premises of the Zaragosa Property. Torres approached Capital Savings Bank Board
Member Mike Yardeni to assist her in getting the funding. Yardeni told her that if she applied for
a loan from Capital Savings Bank, the bank would likely deny the loan because Torres was
overextended in her financial commitments. However, Yardeni offered to enter into a business
partnership with Torres and said he would personally obtain a loan for her from Citibank. Torres
accepted the offer. Under the terms of their verbal partnership agreement, Yardeni would provide
the down payment for the building, the equipment, and the mortgage financing. Torres would
operate the facility, provide her expertise in running other daycare centers, and hold the necessary
licenses to operate the business.
Torres claimed that Yardeni told her he would make the down payment for the Zaragosa
Property out of his own personal funds, but that he first needed to provide Citibank with a written
lease in order to obtain the loan for the remaining balance. As such, Yardeni executed a lease in
2004 with an entity referred to in the record as “Kids View Seven.” There is also apparently a
second lease in existence naming “Kids View, Inc.” as the tenant. The Court is unable to find a
written copy of any leases or the loan applications in the record. Torres testified that she and Kids
View Zaragosa Center, L.L.C. are the current tenants in fact and alleges in her brief that Yardeni
2
executed the leases to Kids View Seven and Kids View, Inc. as a “ruse” to obtain a loan from
Citibank that would have otherwise been denied if Yardeni had executed the lease with Kids View
Zaragosa Center, L.L.C. Torres purports that there exists a third lease from 2006, which was
executed when she attempted to buy Yardeni out of the partnership, that names Kids View
Zaragosa Center, L.L.C., as the current legal tenant.
Eventually, Yardeni obtained financing from Citibank, the Zaragosa Property was
purchased, and the Kids View Zaragosa Center opened to the general public. Following a period
of initial business success, Torres and Yardeni sought to expand the Kids View Zaragosa Center
by building an annex to the daycare center on an empty portion of the Zaragosa Property. Yardeni
again obtained financing from Citibank to build the annex and business continued.
In 2006, an apparent dispute over ownership of Zaragosa Property arose between Torres
and Yardeni. Torres claims that she and Yardeni entered into an oral agreement that they would
each own 50 percent of the Zaragosa Property. Yardeni apparently disputed that arrangement.
Consequently, Torres and Yardeni entered into a written agreement which recited that (1) Yardeni
was the sole owner of the Zaragosa Property, and (2) Torres had the option to purchase a 50
percent share in the Zaragosa Property if she paid Yardeni $130,767, the amount he purportedly
invested in the property out-of-pocket The Court again notes that this written agreement is not in
the record before us. In 2008, upon advice of counsel, Torres sought to buy out Yardeni from the
partnership, and a new agreement was signed. Under the 2008 agreement, Torres agreed to sign a
$235,000 promissory note to Yardeni in exchange for 50 percent of the Zaragosa Property.
Torres did not make all of the scheduled payments under this promissory note.
Eventually, Torres reviewed Yardeni’s financial records. Torres allegedly discovered
3
that Yardeni had not actually paid the down payment for the Zaragosa Property from his own
funds. Instead, Yardeni obtained a $650,000 loan in his name from Citibank secured by the
Zaragosa Property and used that loan money to purchase the $475,000 Zaragosa Property and
some equipment for the daycare center. Torres testified that she had asked Yardeni for an
accounting from the first loan in order to determine how the remaining $175,000 in loan money
had been spent, but she has not yet received one. She also discovered that at the time the annex
had been built, Yardeni obtained a second loan from Citibank in his own name for $253,000, also
apparently secured by the Zaragosa Property. Torres determined that the annex’s structural
improvements had only cost “[a]pproximately $150,000.” She claims that she personally
contributed about $130,000 toward construction costs on the annex improvements.
Procedural History
Torres filed suit against Yardeni, bringing claims for common law fraud, fraudulent
inducement, fraud by nondisclosure, breach of fiduciary duty, unjust enrichment, and breach of
contract. She alleges that Yardeni used the unaccounted for loan money from the Kid’s View
deal to fund his other business ventures. She also argues that she is not liable for the agreements
she made with Yardeni because he committed fraud, and that she does not need to continue paying
rent because by virtue of the original 2004 oral partnership agreement, Yardeni granted Torres a 50
percent interest in the Zaragosa Property, making her a co-owner and not his tenant. Yardeni
generally denied the allegations and filed counterclaims for various breaches of contract.
Torres seeks damages, an accounting, and attorney’s fees from Yardeni. She also sought
the temporary injunction which is at the heart of this appeal, alleging that her business eviction
from the Zaragosa Property would result in immediate harm to the business and to the children and
4
families the business served, many of whom are on government assistance. Kids View Zaragosa
Center, L.L.C. recently entered into Chapter 11 bankruptcy.
At the first temporary injunction hearing in February 2013, Torres testified that Yardeni
told her she needed to pay him monthly payments of $10,076 under the lease, plus the cost of
insurance and taxes, which amount in total to “approximately $12,000” a month. She testified
that she would be willing to pay $6,772 a month, the amount of payments on the two Citibank
liens, into the court registry pending trial. She also admitted that she and the business do not have
enough assets to buy out Yardeni or to pay him demanded rent for the Zaragosa Property.
Yardeni alleged that Torres and the daycare center agreed in the lease to pay ad valorem taxes on
the building. Those taxes are currently in arrears, and the Zaragosa Property is subject to a tax
lien in addition to the two Citibank liens.
The trial court granted the initial order for a temporary injunction on February 5, 2013, and
set the injunction to expire on August 6, 2013, with the handwritten annotation that this was the
“day of trial.” The temporary injunction prevented Yardeni from locking Appellees out of the
Zaragosa Property, filing a forcible detainer action, communicating with Appellee’s clients about
the pending litigation, and selling or encumbering the Zaragosa Property. Yardeni appealed to
this Court. During the pendency of his appeal, the trial date was continued indefinitely, and the
temporary injunction expired by its own terms. Before we had the opportunity to dismiss the
appeal for mootness, Torres moved to amend and renew her initial temporary injunction order,
which the trial court granted pending trial on June 16, 2014. The new temporary injunction
reinstates the same restrictions as the previous injunction order, but changes the amount Torres
must pay from $6,772 a month to $7,651 a month. Yardeni appealed the amended temporary
5
injunction order.
Discussion
This Court may take interlocutory appeals only when specifically authorized by statute.
Jack B. Anglin Co., Inc. v. Tipps, 842 S.W.2d 266, 272 (Tex. 1992). TEX.CIV.PRAC.&REM.CODE
ANN. § 51.014(a)(4)(West Supp. 2013) provides for limited interlocutory review of any order that
“grants or refuses a temporary injunction . . . .” Id. Because the grant of a temporary injunction
forms the core of this case, we have jurisdiction to review issues necessary to the resolution of the
injunction’s propriety. Id. To the extent that any party raises issues outside the scope of the
injunction order, we are without jurisdiction to decide those issues unless authorized to do so by
another provision of TEX.CIV.PRAC.&REM.CODE ANN. § 51.014(a) et seq.
Temporary Injunction Standard
Appellants challenge the grant of Torres’ amended temporary injunction on two grounds.
In Issue One, Appellants contend that the trial court abused its discretion by granting the
temporary injunction because Torres and Kids View Zaragosa Center, L.L.C. has no rights or
causes of action under the current lease, which names Kids View, Inc. as the tenant. In Issue
Two, Appellants also contend that the trial court abused its discretion by granting the temporary
injunction when the tenant was in arrears on the ad valorem taxes purportedly owed under the
lease.
“A temporary injunction’s purpose is to preserve the status quo of the litigation’s subject
matter pending a trial on the merits.” Butnaru v. Ford Motor Co., 84 S.W.3d 198, 204 (Tex.
2002). To establish eligibility for a temporary injunction, an applicant must prove three elements:
“(1) a cause of action against the defendant; (2) a probable right to the relief sought; and (3) a
6
probable, imminent, and irreparable injury in the interim.” Id. We review temporary injunction
grants for abuse of discretion, drawing all inferences in favor of the trial court’s judgment. See
Walling v. Metcalfe, 863 S.W.2d 56, 58 (Tex. 1993); Valenzuela v. Aquino, 763 S.W.2d 43, 44
(Tex.App.--Corpus Christi 1988, no writ). “When, as here, the trial court does not make findings
of fact or conclusions of law, we must uphold the court’s order on any legal theory supported by
the record.” City of McAllen v. McAllen Police Officers Union, 221 S.W.3d 885, 893
(Tex.App.--Corpus Christi 2007, pet. denied). Every temporary injunction order must strictly
comply with all formal requirements outlined in TEX.R.CIV.P. 683. InterFirst Bank San Felipe,
N.A. v. Paz Const. Co., 715 S.W.2d 640, 641 (Tex. 1986). Any variance from those requirements
may render the injunction void. Id.
Failure to State a Cause of Action against Yardeni
In Issue One, Appellants contend that the trial court abused its discretion in entering the
temporary injunction orders because neither Torres nor Kids View Zaragosa Center, L.L.C. are
named as tenants in the lease to the Zaragosa Property. As such, Appellees cannot establish a
cause of action against Yardeni under prong one of Butnaru that would justify the injunction.
Appellants cast this action too narrowly. Appellees filed suit not only for breach of
contract, but for common law fraud, fraudulent inducement, fraud by nondisclosure, breach of
fiduciary duty, and unjust enrichment. Torres has provided some evidence that would support a
finding on several of these theories. For example, Torres testified that Yardeni made numerous
misrepresentations about investing his own money in the project when he instead allegedly entered
into a partnership with Torres solely to obtain favorable, inflated personal loans from Citibank to
use in other business ventures, earmarking only a portion of those loans to pay for daycare center
7
expenses. Torres contends that but for Yardeni’s representations, she would not have entered into
a business relationship with him, would not have agreed to pay him anything as reimbursement
during the buyout, and would not have signed a lease where the payments funded Yardeni’s other
business ventures. She also contends that Yardeni had a duty to disclose his financial
arrangements and provide her with an accounting as a business partner and fiduciary. This is
enough evidence, if taken as true, to show a reasonable likelihood of success on at least some of the
fraud and breach of fiduciary duty claims. See Sands v. Estate of Buys, 160 S.W.3d 684, 687
(Tex.App.--Fort Worth 2005, no pet.)(temporary injunction applicant “need not establish that it
will finally prevail” at trial, but it must provide “some evidence” that “tends to support” its cause
of action). As such, the temporary injunction with regard to her is proper.
Further, we also find that the trial court did not abuse its discretion in implicitly
determining that Kids View Zaragosa Center, L.L.C. also had standing to seek the injunction
order. Torres testified that there may exists up to three separate leases for the Zaragosa Property,
including one that lists Kids View Zaragosa Center, L.L.C. as the current tenant. Neither side has
presented any written confirmation of any lease, whatsoever, and Appellants do not offer any
affirmative evidence demonstrating that Torres was untruthful. The trial court, sitting as fact
finder, has the discretion to believe or disbelieve Torres’ testimony, and we may not disturb that
finding so long as the issue of Kids View Zaragosa Center, L.L.C.’s status as a tenant fell within
the “zone of reasonable disagreement.” See City of Keller v. Wilson, 168 S.W.3d 802, 822 (Tex.
2005)(holding that “[a] reviewing court cannot substitute its judgment for that of the trier-of-fact”
where facts are disputed). If the trial court believed Kids View Zaragosa Center, L.L.C. was a
tenant, then it could have also believed that the eviction may have been in breach of contract, and
8
that there was a likelihood of success on that claim on the merits. Even absent the contract, the
trial court could have also found that Torres was a 50 percent owner of the Zaragosa Property,
entitling her to allow Kids View Zaragosa Center, L.L.C. to occupy the space as tenants in the
absence of an agreement with Yardeni.
Both Torres and Kids View Zaragosa Center, L.L.C. provided some evidence that would
establish the necessary elements under Butnaru. Issue One is overruled.
Failure to Provide for Ad Valorem Tax Payments as Abuse of Discretion
In Issue Two, Appellants argue that the trial court abused its discretion when it failed to
include the cost of the ad valorem taxes on the Zaragosa Property purportedly owed under lease
terms in the monthly sum it ordered Torres to pay into the court registry. “A trial court abuses its
discretion if it acts in an arbitrary or unreasonable manner without reference to any guiding rules or
principles.” Walker v. Gutierrez, 111 S.W.3d 56, 62 (Tex. 2003). Here, we do not find that the
trial court abused its discretion in ordering Torres to pay $7,651 a month. Torres testified that the
payments for the Citibank liens were $6,772, and that she felt that was all she should pay since she
is purportedly a co-owner of the Zaragosa Property and not Yardeni’s tenant. The initial
temporary injunction ordered Torres to pay $6,772 a month. At the hearing for the amended
temporary injunction, counsel for Torres informed the trial court that Torres would voluntarily
increase the amount of money tendered to the court per month based on a change in lien payment
information related by Yardeni’s counsel. Thus, the trial judge did not act “without reference to
any guiding rules or principles” but instead entered a temporary injunction order reflecting the
change in payment on the Citibank liens. The judge had wide discretion to tailor the temporary
injunction order to the situation at hand. On these facts, we will not second-guess the trial court’s
9
determination that $7,651 a month is a fair amount for Torres to pay Yardeni while the temporary
injunction is in place. Issue Two is overruled.
Statute of Frauds
In Issue Three, Appellants contend that evidence of the 2004 oral agreement between
Yardeni and Torres is barred by the Statute of Frauds, or, in the alternative, by the Statute of
Limitations. We note that the subject matter of this claim falls outside the scope of the temporary
injunction order. “An order granting a temporary injunction should not adjudicate the issues.”
See Univ. of Tex. Medical School at Houston v. Than, 834 S.W.2d 425, 428 (Tex.App.--Houston
[1st Dist.] 1992, no writ). As such, interlocutory review of this issue on the merits is improper.
See Tipps, 842 S.W.2d at 272. We decline Appellants’ invitation to stray beyond our statutory
mandate and render an advisory opinion on his Statute of Frauds and Statute of Limitations claims,
and dismiss this portion of the appeal for lack of jurisdiction. Issue Three is dismissed.
Having overruled Appellants’ Issues One and Two, we affirm the trial court’s judgment.
December 19, 2013
YVONNE T. RODRIGUEZ, Justice
Before McClure, C.J., Rivera, and Rodriguez, JJ.
10