BoRain Capital, LLC v. Syed Hashmi

Fourth Court of Appeals
San Antonio, Texas
OPINION
No. 04-16-00501-CV
BORAIN CAPITAL, LLC,
Appellant
v.
Syed HASHMI,
Appellee
From the 225th Judicial District Court, Bexar County, Texas
Trial Court No. 2014-CI-11798
The Honorable Barbara Hanson Nellermoe, Judge Presiding
Opinion by: Karen Angelini, Justice
Sitting: Karen Angelini, Justice
Marialyn Barnard, Justice
Luz Elena D. Chapa, Justice
Delivered and Filed: July 19, 2017
REVERSED AND RENDERED
Syed Hashmi sued BoRain Capital, LLC for breach of contract. Although a jury found that
Hashmi failed to prove the existence of an agreement between Hashmi and BoRain, the trial court
granted judgment against BoRain notwithstanding the jury’s verdict. BoRain appealed. We
conclude the trial court erred in granting judgment notwithstanding the verdict, and therefore,
reverse the trial court’s judgment and render judgment that Hashmi take nothing.
04-16-00501-CV
FACTUAL AND PROCEDURAL BACKGROUND
Hashmi owned a note in the amount of $122,400.00 that he wanted to sell. 1 Hashmi
contacted Susan Rogers, vice president of Chaminade Capital Corporation, who brokered a deal
between Hashmi and Northeastern Capital. Under the deal, Northeastern would buy the note from
Hashmi for $83,477.00. Hashmi and Northeastern entered into a purchase agreement. Shortly
thereafter, Northeastern entered into a deal with BoRain for BoRain to buy the note for $93,283.71.
West and West, a firm in San Antonio, Texas, handled the closing. BoRain and
Northeastern each paid as agreed. However, no documents were prepared to show the transfer of
the note from Hashmi to Northeastern. The closing documents showed only the transfer of the note
from Hashmi to BoRain.
Hashmi provided West with his bank routing number and account information via email
so that the funds owed him from the sale could be directly deposited into his account at a local
bank. However, Hashmi’s email account was hacked and the hacker, posing as Hashmi, sent an
email to West instructing it to wire the funds to a bank account in Malaysia. Unaware that Hashmi’s
email account had been hacked, West followed the instructions in the email and wired the funds
from the sale of the note to the bank account in Malaysia, instead of to Hashmi’s local bank
account. By the time the parties realized that Hashmi’s email account had been hacked and the
funds diverted, the banks were unable to reverse the transaction. The hacker made off with the sale
proceeds due to Hashmi.
Hashmi sued West for breach of fiduciary duty and BoRain for breach of contract. The
case was tried to a jury. In Question No. 4 of the jury charge, the jury was asked, “Did BoRain
Capital, LLC agree to buy Mr. Hashmi’s note?” The jury answered, “No.” Because of this finding,
1
Hashmi had acquired the real estate lien note from the sale of real property.
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the jury did not answer Question No. 5, which stated, “Did BoRain Capital, LLC fail to comply
with its agreement to pay Mr. Hashmi for the note in question?” Additionally, the jury found West
failed to comply with its duties as escrow/closing agent by wiring funds to the wrong account and
attributed one hundred percent of the responsibility for the harm to West. The jury also made
findings regarding the amount of reasonable attorney’s fees.
During trial, Hashmi and West reached a high-low settlement agreement. West ultimately
paid Hashmi $81,500.00 in accordance with the parties’ agreement.
After trial, Hashmi moved for judgment notwithstanding the verdict, asserting there was
no evidence that Northeastern was the seller of the note as argued by BoRain. Hashmi argued that
the evidence conclusively established an implied-in-fact contract between Hashmi and BoRain.
Hashmi further argued that the evidence conclusively established that West was BoRain’s agent
for the delivery of funds to Hashmi and that, once West diverted the funds to the hacker, BoRain
remained liable to him for the purchase price of the note. Based on these arguments, Hashmi
asserted that the evidence conclusively established that the answers to Questions 4 and 5 were
“Yes.”
The trial court agreed with Hashmi, granted his motion for judgment notwithstanding the
verdict, and rendered judgment that Hashmi recover from BoRain the sum of $81,362.66 plus
prejudgment interest, $41,101.00 in attorney’s fees for trial, and additional attorney’s fees for
appeal. The trial court then reduced the amount of the judgment by $81,500.00, the amount Hashmi
recovered under the settlement agreement with West. BoRain appeals from this judgment. 2
2
West is not involved in this appeal.
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ISSUES PRESENTED ON APPEAL
BoRain presents three issues on appeal. In its first two issues, BoRain argues the trial court
erred in granting judgment notwithstanding the verdict on Hashmi’s breach of contract claim. In
its third issue, BoRain argues that, even if the trial court did not err in granting judgment
notwithstanding the verdict, it erred in awarding attorney’s fees to Hashmi. Because our resolution
of the first issue is dispositive, we do not reach BoRain’s second and third issues.
EXISTENCE OF AN AGREEMENT BETWEEN HASHMI AND BORAIN
In its first issue, BoRain argues the trial court erred in disregarding the jury’s adverse
finding concerning the existence of an agreement between Hashmi and BoRain.
Standard of Review
Generally, a trial court may disregard a jury’s findings and grant a judgment
notwithstanding the verdict when there is no evidence upon which a jury could have based its
findings. Mancorp, Inc. v. Culpepper, 802 S.W.2d 226, 227 (Tex. 1990). Stated another way, a
trial court may grant a motion for judgment notwithstanding the verdict if a directed verdict would
have been proper. TEX. R. CIV. P. 301; Fort Bend Cnty. Drainage Dist. v. Sbrusch, 818 S.W.2d
392, 394 (Tex. 1991).
When a party with the burden of proof complains from an adverse jury finding on the basis
that the matter was established as a matter of law, appellate courts apply a two-step analysis.
Sterner v. Marathon Oil Co., 767 S.W.2d 686, 690 (Tex. 1989). First, we examine the record for
evidence supporting the finding and ignore all evidence to the contrary. Id.; Walker v. Ricks, 101
S.W.3d 740, 745 (Tex. App.—Corpus Christi 2003, no pet.). In conducting this review, we must
consider the evidence and inferences not as they support the judgment, but as they tend to support
the verdict. Mancorp, 802 S.W2d at 228. If there is more than a scintilla of evidence to support the
jury’s finding, then we must reverse the judgment notwithstanding the verdict. Walker, 101 S.W.3d
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at 745; see Tanner v. Nationwide Mut. Fire Ins. Co., 289 S.W.3d 828, 830 (Tex. 2009). More than
a scintilla of evidence exists when the evidence supporting the finding rises to a level that would
enable reasonable and fair-minded people to differ in their conclusions. Gharda USA, Inc. v.
Control Solutions, Inc., 464 S.W.3d 338, 347 (Tex. 2015). Second, if we find no evidence supports
the jury’s finding, we determine from the record whether the contrary proposition is established as
a matter of law. Sterner, 767 S.W.2d at 690; Walker, 101 S.W.3d at 745.
Applicable Law
To recover on a breach of contract claim, the plaintiff must prove (1) the existence of a
valid contract; (2) the plaintiff performed or tendered performance; (3) the defendant breached the
contract; and (4) the plaintiff was damaged as a result of the breach. McLaughlin, Inc. v. Northstar
Drillling Tech., Inc., 138 S.W.3d 24, 27 (Tex. App.—San Antonio 2004, no pet.).
To create an enforceable contract, there must be (1) an offer, (2) acceptance in strict
compliance with the terms of the offer, (3) a meeting of the minds, (4) each party’s consent to the
terms, and (5) execution and delivery of the contract with the intent that it be mutual and binding.
2001 Trinity Fund, LLC v. Carrizo Oil & Gas, Inc., 393 S.W.3d 442, 449 (Tex. App.—Houston
[14th Dist.] 2012, pet. denied); Copeland v. Alsobrook, 3 S.W.3d 598, 604 (Tex. App.—San
Antonio 1999, pet. denied). To prove that an offer was made, a party must show (1) the offeror
intended to make an offer; (2) the terms of the offer were clear and definite; and (3) the offeror
communicated the essential terms of the offer to the offeree. Domingo v. Mitchell, 257 S.W.3d 34,
39 (Tex. App.—Texarkana 2008, pet. denied). An acceptance must be identical to the offer. Id. A
“meeting of the minds” is a mutual understanding and assent to the expression of the parties’
agreement. Id. at 40. Mutual assent concerning material, essential terms is a prerequisite to the
formation of a binding contract. 2001 Trinity, 393 S.W.3d at 449.
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A contract can be express or implied-in-fact. The difference between express contracts and
implied contracts is the means by which the contracts are formed. Mann Frankfort Stein & Lipp
Advisors, Inc. v. Fielding, 289 S.W.3d 844, 850 (Tex. 2009). An express contract arises when the
contractual terms are stated by the parties. Haws & Garrett General Contractors, Inc. v. Gorbett
Bros. Welding Co., 480 S.W.2d 607, 609 (Tex. 1972). A contract implied-in-fact arises from the
acts and conduct of the parties. Id. In the case of an implied contract, mutual assent is inferred
from the circumstances; a “meeting of the minds” is inferred from and evidenced by the parties’
conduct and course of dealing. Id. “An inference is but a deduction which the trier of fact makes
from the facts proved, the drawing of which is essentially the exercise of a fact finding function.”
Id. at 610.
The Parties’ Arguments
On appeal, BoRain argues the jury’s adverse finding was supported by some evidence.
BoRain further argues that, even if the jury’s adverse finding was not supported by some evidence,
Hashmi failed to conclusively establish the existence of an agreement between himself and
BoRain. BoRain points out that there was no evidence of any contact or discussions between
Hashmi and BoRain, much less evidence of the elements necessary to form a contract, that is,
offer, acceptance, and a meeting of the minds.
Hashmi counters that there was no evidence to support the jury’s failure to find the
existence of an agreement between himself and BoRain. Additionally, Hashmi asserts that the
evidence conclusively established the existence of either an express or an implied-in-fact contract
between himself and BoRain.
Analysis
Here, the jury found that Hashmi failed to prove the existence of an agreement between
him and BoRain. Under the applicable standard of review, we must begin our analysis by
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examining the evidence to determine whether the jury’s adverse finding is supported by more than
a scintilla of evidence. In this step of our analysis, we examine the record for evidence supporting
the jury’s adverse finding and ignore all evidence to the contrary. See Walker, 101 S.W.3d at 745.
Again, we consider the evidence and the inferences not as they support the judgment, but as they
tend to support the verdict. Mancorp, 802 S.W.2d at 228.
At trial, Hashmi testified that he received an email from Rogers telling him that
Northeastern had offered to buy the note for $84,788.00. Hashmi agreed to sell the note and he
entered into a written purchase agreement with Northeastern to sell the note to Northeastern for
$84,788.00. When Hashmi signed the purchase agreement with Northeastern for $84,788.00, he
had no idea about any negotiations between Northeastern and BoRain concerning the note. Hashmi
was aware that Northeastern could resell the note under the terms of the purchase agreement. By
the time the transaction occurred, Hashmi had some knowledge of negotiations with another party
concerning the note, but he did not know that these negotiations involved BoRain. Hashmi was
not bothered by Northeastern’s negotiations with a third party because he had agreed to sell the
note for $84,788.00. Hashmi had no communications with BoRain when he signed the purchase
agreement or when the closing took place. Hashmi further testified that he did not have an
agreement with BoRain.
Rogers, the vice-president of Chaminade Capital, testified that Hashmi contacted her to see
if she was interested in purchasing a real estate note and lien from him. Rogers did not purchase
the note, but instead brokered the sale of the note to Northeastern. Rogers obtained an offer from
Northeastern to buy Hashmi’s note for $84,788.00, communicated the offer to Hashmi, and
Hashmi accepted it. Hashmi signed a purchase agreement with Northeastern. Rogers further
testified that after Northeastern purchased the note and lien from Hashmi, BoRain purchased the
note and lien from Northeastern.
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The evidence includes several emails between Hashmi and Rogers in which Hashmi
informs Rogers that he would like to sell the note, and Rogers informs Hashmi that she has “an
offer of $84,788.00 to purchase the whole note.” The evidence also includes the purchase
agreement between Northeastern and Hashmi. The purchase agreement, which identifies Hashmi
as the “seller” and Northeastern as the “buyer,” states that Hashmi agrees to sell the note to
Northeastern Capital for $84,788.00. BoRain is not mentioned in the purchase agreement.
Additionally, BoRain’s chief operating officer, Tommy Lee, testified that he never had any
contact with Hashmi or Chaminade concerning the note and lien. According to Lee, BoRain
purchased the note and lien from Northeastern; BoRain had no knowledge of any other
negotiations concerning the note. Lee was not aware of the negotiations between Northeastern and
Hashmi, nor was he aware of Chaminade Capital’s involvement. There was no written agreement
between BoRain and Northeastern; however, BoRain agreed to pay Northeastern $93,283.71 for
the note and lien, and BoRain performed its obligation under this agreement by wiring the purchase
funds to Northeastern’s attorney. Lee was not aware that Northeastern was buying the note for
approximately $84,000.00. Lee added that BoRain would have liked to have purchased the note
for $84,000.00 instead of for $93,283.71.
The evidence also includes several documents that tend to show that BoRain purchased the
note from Northeastern. One of these documents is an email from Northeastern’s attorney to Lee,
explaining that he would be working with Northeastern on the purchase of the note, confirming
that the purchase price is $93,283.71, and providing wiring instructions for the funds. In another
email, Lee responds, “BoRain [f]unding for today, $93,283.71. Please see attached wiring
instructions.” In another document, BoRain instructs its bank to “wire transfer $93,283.71 pursuant
to the attached wire instructions from BoRain.”
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Finally, West’s expert, Sarah Dysart, testified that she had reviewed all of the documents
in this case. Dysart agreed that it was fair to characterize the transfer of the note as two separate
transactions: one in which Hashmi agreed to sell the note to Northeastern for one price, and a
separate transaction and agreement in which BoRain agreed to purchase the note from
Northeastern for a different, higher price. During Dysart’s cross-examination, the following
exchange took place:
Counsel: But Northeastern never actually obtained the note, as we have
discussed?
Dysart: Well, that is true. There was no transfer directly unto Northeastern,
but Northeastern controlled the transaction and paid $84,000 for a
note that it appears they resold for 93—.
Counsel: Well—but they didn’t ever acquire it, so they didn’t resell it. It just
got sold one time, right?
Dysart: You know, there is a confusion in this transaction because
somebody directed West [and] West to transfer the documents
directly to BoRain. But if you follow the money, BoRain pays
Northeastern for the note, and then Northeastern sends the money to
West [and] West.
Counsel: Right.
Dysart: And, you know, there are situations where, you know, I can buy a
piece of property, sell it, and direct my seller to convey the property
to that buyer; but I’m the intermediary buyer. I’m not a broker. So I
think, you know, the facts support either situation . . . . the stronger
of which is that Northeastern bought the note and resold it, because
I think—if Northeastern brokered the note, I think Mr. Hashmi
should have some knowledge of the brokerage fees that were paid.
In sum, the evidence showed that Hashmi agreed to sell the note to Northeastern and
Northeastern paid for the note as agreed. Additionally, the evidence showed that Northeastern
agreed to sell the note to BoRain and BoRain paid for the note as agreed. In light of this evidence,
the jury could have concluded that BoRain acquired the note by virtue of an agreement with
Northeastern, and not by virtue of an agreement with Hashmi. We conclude the jury’s failure to
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find the existence of an agreement between Hashmi and BoRain was supported by more than a
scintilla of evidence. Because more than a scintilla of evidence existed to support the jury’s adverse
finding, we need not reach the second step of the analysis, that is, whether the evidence
conclusively established the existence of a contract between Hashmi and BoRain. See Walker, 101
S.W.3d at 745.
Because the evidence supports the jury’s failure to find the existence of a contract between
Hashmi and BoRain, it was error for the trial court to grant Hashmi’s motion for judgment
notwithstanding the verdict. We sustain BoRain’s first issue.
CONCLUSION
In the absence of an agreement between Hashmi and BoRain, Hashmi could not recover
on his breach of contract claim against BoRain. We, therefore, reverse the trial court’s judgment
and render judgment that Hashmi take nothing.
Karen Angelini, Justice
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