Abdullatif v. Ali Choudhri & Mokaram Latif W. Loop, Ltd., 14-16-00116-CV

• Decision Date: 30 March 2018
• Docket Number: NO. 14-16-00116-CV,14-16-00116-CV
• Parties: Osama ABDULLATIF and Ali Mokaram, Appellants v. Ali CHOUDHRI and Mokaram Latif West Loop, Ltd., Appellees
• Court: Texas Court of Appeals

561 S.W.3d 590

Osama ABDULLATIF and Ali Mokaram, Appellants

v.Ali CHOUDHRI and Mokaram Latif West Loop, Ltd., Appellees

NO. 14-16-00116-CV

Court of Appeals of Texas, Houston (14th Dist.).

Opinions filed March 30, 2018

Rehearing Denied December 6, 2018

OPINION

Kem Thompson Frost, Chief Justice

This appeal arises out of a dispute among the parties concerning the percentage of interest, if any, a purported assignee owns in a limited partnership and in the limited partnership’s general partner. Following a jury trial, the trial court disregarded the jury’s finding in response to one question, signed a judgment making various declarations as to the purported assignee’s interests in the two entities, and awarded trial and appellate attorney’s fees to the purported assignee. We conclude that the trial court did not err in disregarding the jury finding. As for the declarations, we conclude that the trial court erred in making some and did not err in making others. We reverse the trial court’s judgment and remand for rendition of a new judgment containing declarations consistent with today’s opinion. Because our disposition on appeal substantially affects the trial court’s judgment, we also reverse and remand the attorney’s-fees awards.

I. FACTUAL AND PROCEDURAL BACKGROUND

Appellant Ali Mokaram is an attorney who sometimes invests in real estate. Appellant Osama Abdullatif ("Latif") is involved in commercial-real-estate investment and other ventures. Mokaram and Latif knew each other through friends and family. Mokaram asked Latif to join him in investing in the Beal Bank Building located at 2500 West Loop South in Houston, and Latif agreed. Mokaram and Latif became equal limited partners in appellee Mokaram Latif West Loop, Ltd. ("ML Partnership"), a limited partnership. The general partner in ML Partnership is Mokaram-Latif General, LLC ("ML General"). Mokaram and Latif signed the Company Agreement for ML General, under which Mokaram and Latif are equal members and managers of the limited liability company. ML General, Mokaram, and Latif signed ML Partnership’s Agreement of Limited Partnership. Each agreement places restrictions on the transfer of ownership interests and sets forth procedures for admitting new members or limited partners.

ML General owned 1% of ML Partnership and managed ML Partnership. Originally, Mokaram and Latif each owned 49.5% of ML Partnership, and each was a limited partner. Originally, Mokaram and Latif each held a 50% interest in ML General, and they were the only members and only managers of ML General.

Though Mokaram stated that ML Partnership "bought the Beal Bank Building," Mokaram also indicated in his testimony that ML Partnership actually bought an assignment of a 99-year ground lease of the real property on which the Beal Bank Building was constructed.¹ Because Latif lacked cash to fund the down payment for this purchase, Mokaram funded the full down payment.² At the time of the purchase, appellee Ali Choudhri leased office space in the Beal Bank Building. Latif introduced Mokaram to Choudhri. Mokaram and Choudhri became friends. They also loaned each other money and engaged in business transactions. Mokaram and Choudhri handled business in an imprecise way.

A. The 2008 Transaction

In 2008, Choudhri purchased a shopping center through Texas REIT, LLC. Choudhri testified that he understood Mokaram and Choudhri to have agreed that Choudhri would give Mokaram a 30% interest in the shopping center owned by Texas REIT in exchange for the following from Mokaram: (1) a 12.5% interest in another real estate venture called 2606 Fannin, LLC ("2606 Fannin"), which allegedly was half of Mokaram’s interest in 2606 Fannin, (2) a 25% interest in another property located at 7115 Clarewood Drive (the "Clarewood Property"), which allegedly was half of Mokaram’s interest in that property, (3) a 15% interest in the Beal Bank Building, (4) $400,000 in cash, and (4) a one-half interest in Mokaram’s Lamborghini Murcielago, an expensive automobile. They sketched out the exchange on a piece of paper that Mokaram and Choudhri each signed on the same day they signed the documents for the transaction:

At Choudhri’s instruction, Choudhri’s attorney, Bruce Merwin, prepared formal documents for the deal. Merwin created four separate purchase agreements: (1) an agreement under which Mokaram purports to assign, sell, and convey to Choudhri a limited partnership interest in ML Partnership; (2) an agreement under which Mokaram purports to assign, sell, and convey to Choudhri a 12.5% membership interest in 2606 Fannin; (3) an agreement under which Choudhri purports to assign, sell, and convey to Mokaram a 15% membership interest in Texas REIT, LLC; and (4) another agreement under which Choudhri purports to assign, sell, and convey to Mokaram a 15% membership interest in Texas REIT, LLC. Each document contains a merger clause. Mokaram, who did not retain an attorney to represent him in this matter, signed the documents on June 18, 2008. Choudhri also signed the four agreements.

In the agreement under which Mokaram purports to assign, sell, and convey to Choudhri a limited partnership interest in ML Partnership, the parties do not specify how much of a limited partnership interest is being conveyed, but they state that the interests assigned, sold, and conveyed "equal to" the following:

the ownership of 15% of the [the land and improvements located at 2500 West Loop South, Houston, Texas], out of the 30%³ limited partnership interest in [ML Partnership] owned by [Mokaram], and said [i]nterests equal to the ownership of 25% of the "Clarewood Property" (hereafter defined) out of the 30% limited partnership interest in [ML Partnership] owned by [Mokaram].

The document further recites that the "intended economic effect of this transaction is that the interest owned by [Choudhri] in [ML Partnership] provides for a 15% ownership in [the land and improvements located at 2500 West Loop South, Houston, Texas] and a 25% ownership interest in the Clarewood Property. By way of example, the document illustrates the intended economic effect using a hypothetical sale of the Clarewood Property: "[I]f the Clarewood Property sells for $1 million with debt of $500,000 and closing costs and expenses of $100,000, then the funds distributable to [Choudhri] from the sale would be $100,000 (25% of $400,000)."

B. The 2010 Transaction

By October 2010, the relationship between Latif and Choudhri had deteriorated due to a dispute about a different matter. Latif testified that he did not learn about the 2008 transaction until the fall of 2009 (which Choudhri disputed). Latif refused to acknowledge Mokaram’s alleged sale and conveyance of an interest in the ML Partnership to Choudhri in 2008.

Mokaram testified at trial to the events outlined in this paragraph. According to Mokaram, Latif presented Mokaram with an offer to either buy Mokaram’s and Choudhri’s interests in ML Partnership for $750,000 or sell his own 49.5% interest to Mokaram and Choudhri for $750,000. Mokaram discussed Latif’s offer with Choudhri. Mokaram and Choudhri agreed that $750,000 for 50% of the partnership was a good deal because they believed that the Beal Bank Building was worth more than $1.5 million. But, Mokaram lacked the cash to fund the purchase, and Choudhri could not deal with Latif because their relationship was so poor. Mokaram testified that he and Choudhri agreed that Choudhri would give Mokaram $750,000, Mokaram would use the money to buy Latif’s 50% interest in ML Partnership, and then they would divide the interest between them (35% to Choudhri and 15% to Mokaram) so that Choudhri and Mokaram would become 50/50 partners.⁴ Choudhri would not give Mokaram the cashier’s check for $750,000, however, unless Mokaram provided "collateral" by signing four assignments to Choudhri of Mokaram’s interests in ML Partnership and ML General.

Choudhri presented Mokaram with four one-page documents (prepared by Merwin) purporting to sell, assign, and transfer to Choudhri the following percentages of Mokaram’s interests in ML Partnership and ML General: (1) a 35% limited-partnership interest in ML Partnership; (2) a 35% interest in ML General; (3) a 15% limited-partnership interest in ML Partnership; and (4) a 15% interest in ML General.⁵ In each document, Mokaram represents and warrants to Choudhri that the interest "shall be fully and completely transferred to [Choudhri] upon execution of [the assignment], and [Choudhri] shall hereinafter have and possess all beneficial rights and interests incident to the [i]nterest." Each document contains a statement that [a]ll requirements applicable to the transfer of the [i]nterest have been satisfied or, if not satisfied, waived." None of the documents mention any condition precedent. Mokaram signed these four assignment documents on October 29, 2010, as assignor. Mokaram also signed the two assignments of interests in ML Partnership on behalf of ML General, consenting to these two assignments as the general partner of ML Partnership. Mokaram testified that the four assignments (collectively the "Four Assignments") were contingent on Mokaram buying Latif’s entire interest in ML Partnership.

According to Mokaram, he communicated the offer to buy Latif’s entire interest in ML Partnership for $750,000 to Latif on Sunday, October 31, and Latif said he would get back to them. The next day, Monday, November 1, Mokaram deposited the $750,000 cashier’s check from Choudhri into his account. Mokaram claims that, on November 1, Latif told him that he had decided to work things out with Choudhri, that he had changed his mind, and that he did not want to sell his interest in ML Partnership.

Mokaram testified that he returned to Choudhri and told him they did not have a deal with Latif. Mokaram claims that he and Choudhri agreed the Four Assignments were "null and void" and that there were no assignments. Mokaram claims that, at Choudhri’s request, Mokaram returned...