Brauss v. Triple M Holding GMBH
| Decision Date | 13 August 2013 |
| Docket Number | No. 05–11–00271–CV.,05–11–00271–CV. |
| Citation | 411 S.W.3d 614 |
| Court | Texas Court of Appeals |
| Parties | W. Eric BRAUSS; Christine Martin; Texas Horseshoe; Droege Investment Gbr; Wolf Heimerdinger; Sandy Marks; T.H. Song–Winkler; Michele Roelcke; and Susan Brauss, Appellants v. TRIPLE M HOLDING GMBH; 2 M GMBH; FRN Product Marketing GMBH; ASN Immobilien GMBH; Renate Nixdorf GMBH & Co. KG; Michael Nixdorf Verwaltungs GMBH; SDI, Inc.; SDI Grand Cayman, L.L.C.; SGC Management, L.L.C.; SDI Paradise Island, L.L.C.; SPI Management, L.L.C.; NDF/TRA Grand Cayman, L.P.; Watercrest Partners, L.P.; and RMB Investments, Inc., Appellees. |
OPINION TEXT STARTS HERE
Barbara L. Emerson, Bellinger & Dewolf L.L.P., Kimberly M.J. Sims, Palter Stokley Sims Wright PLLC, Lawrence J. Friedman, Friedman & Feiger, LLP, Matthew Muckleroy, John T. Palter, Palter Stokley, et al., Dallas, TX, Bryan Burg, Seibman, Burg, Phillips & Smith, LLP, Plano, TX, for Appellants.
Todd J. Harlow, Lynn, Tillotson & Pinker, LLP, Dallas, TX, for Appellees.
Before Justices MOSELEY, FILLMORE, and MYERS.
This case results from the downfall of a real estate empire built by W. Eric Brauss through a complex web of real estate limited partnerships involving hundreds of investors and creditors. When some of the investors began to realize the empire was crumbling, Brauss fired all the employees at his management company, Today Realty Advisors, Inc. (TRA), and left the country. Several lawsuits were filed by various parties against the management company, Brauss, and his former wife, Christine Martin. Brauss and Martin asserted their Fifth Amendment right against self-incrimination in response to discovery requests in one of the other lawsuits. Martin later withdrew her assertion of the privilege.
The structure of the real estate projects followed a similar pattern, consisting of multiple layers of limited partnerships with corporate general partners. The real property would be owned by limited partnership with a corporate general partner. The limited partners themselves were also limited partnerships with a corporate general partner. This structure was then repeated with the limited partner being owned by another limited partnership. Some of the projects involved four or more levels of these limited partnerships. In general, Brauss and TRA owned and controlled the general partners of each level of the limited partnerships involved in this lawsuit.
Brauss and Martin were not originally named as defendants in this lawsuit. Instead, a group of eight investors claiming to be limited partners, on behalf of themselves,certain limited partnerships, and “all other limited partners similarly situated,” filed this lawsuit against TRA and several of the general partners controlling some of the real estate investment properties. 1 The plaintiffs 2 alleged claims for breach of contract, breach of fiduciary duty, alter ego and veil piercing. They sought injunctive relief, damages, the appointment of a receiver, and declaratory relief. The trial court granted a temporary restraining order and appointed a receiver for several of the partnerships.
The plaintiffs later reached a settlement agreement with Brauss and Martin. In general, the settlement provided that Brauss and Martin would agree to a judgment against themselves and their interests in all the partnerships and corporations in exchange for an agreement not to execute the judgment against them personally and an affidavit of non-prosecution. Brauss and Martin indicated that all of their non-exempt North American assets would be subject to the judgment. The receiver would administer the assets and pay the individual investors according to a formula set out in the settlement agreement. After the settlement was reached, Brauss and Martin, individually and on behalf of several partnerships and corporations in which Brauss had an ownership interest, filed a petition in intervention in the lawsuit for purposes of effectuating the settlement agreement.
The plaintiffs obtained approval from the trial court to send notice of the right to opt-in to the settlement agreement to all investors in the various partnerships. Afterwards, a large group of investors were granted leave to intervene as plaintiffs to join in the settlement.3 However, two other groups (referred to as the Nixdorf Appellants and the Song–Winkler Appellants) objected to the settlement and intervened as plaintiffs to assert claims for debt and return of capital against the defendants and defendant-intervenors. On the receiver's motion, the trial court later struck the Song–Winkler Appellants' intervention.
The claims of the Nixdorf Appellants against the defendants were tried to the court in a bench trial. The damages for the plaintiffs were also tried to the court. The trial court rendered a final judgment approving the settlement; awarding damages in excess of $65 million to the plaintiffs against Brauss, Martin, TRA, and other entities; awarding damages in excess of $48 million to the Nixdorf Appellants against Brauss, Martin, TRA, and another entity; appointing a permanent receiver; and declaring the ownership of certain general partnership interests and the division of proceeds from a project known as Sugar Land. The trial court was not requested to and did not file written findings of fact and conclusions of law.
Only a few of the parties to the trial court's judgment have appealed to this Court. They can be broken down into the following groups:
(1) appellants W. Eric Brauss and Christine Martin,4 intervening defendants in the trial court;
(2) appellants Texas Horseshoe, Inc., Droege Investment Gbr, Wolf Heimerdinger, and Sandy Marks (the Horseshoe Appellants), four of the original plaintiffs in the trial court;
(3) appellants T.H. Song–Winkler, Michele Roelcke, and Susan Brauss (the Song–Winkler Appellants), intervening plaintiffs who were stricken from the suit;
(4) appellees and cross-appellants Triple M Holding GmbH, 2 M GmbH, FRN Product Marketing GmbH, ASN Immobilien GmbH, Renate Nixdorf GmbH & Co. KG, 5 Michael Nixdorf Verwaltungs GmbH, SDI, Inc., SDI Grand Cayman, L.L.C., SGC Management, L.L.C., SDI Paradise Island, L.L.C., SPI Management, L.L.C., and NDF/TRA Grand Cayman, L.P. (collectively the Nixdorf Appellants), intervening plaintiffs in the trial court;
(5) appellee Watercrest Partners, L.P. (Watercrest), intervening plaintiff in the trial court; and
(6) appellee RMB Investments, Inc. (RMB), the receiver appointed in the final judgment.
With the exception of Watercrest and RMB, each of these groups has filed issues on appeal. Those issues necessary for resolution of this appeal will be discussed below. SeeTex.R.App. P. 47.1.
On appeal from a nonjury trial without findings of fact and conclusions of law, it will be implied that the trial court made all findings necessary to support its judgment. Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 83–84 (Tex.1992). Without findings of fact and conclusions of law, the trial court's judgment will be affirmed if it can be upheld on any legal theory that finds support in the evidence. Worford v. Stamper, 801 S.W.2d 108, 109 (Tex.1990) (per curiam); In re W.E.R., 669 S.W.2d 716, 717 (Tex.1984) (per curiam).
When a reporter's record is brought forward, these implied findings may be challenged on appeal by legal or factual sufficiency issues. Holt Atherton, 835 S.W.2d at 83. In a nonjury trial, a complaint about the legal or factual sufficiency of the evidence may be made for the first time on appeal. Tex.R.App. P. 33.1(d); Office of Atty. Gen. of Tex. v. Burton, 369 S.W.3d 173, 175 (Tex.2012) (per curiam).6
In evaluating the legal sufficiency of the evidence to support a finding, we credit favorable evidence if a reasonable factfinder could, and disregard contrary evidence unless a reasonable factfinder could not. City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex.2005). In reviewing the factual sufficiency of evidence, we review all the evidence and will set aside the finding only if the evidence is so weak or if the finding is so against the great weight and preponderance of the evidence that it is clearly wrong and unjust. See Dow Chem. Co. v. Francis, 46 S.W.3d 237, 242 (Tex.2001) (per curiam); Cain v. Bain, 709 S.W.2d 175, 176 (Tex.1986) (per curiam). In a bench trial, the trial court is the sole judge of the credibility of the witnesses and may believe one witness over another and resolve any conflicts or inconsistencies in the testimony. Shaw v. County of Dallas, 251 S.W.3d 165, 169 (Tex.App.-Dallas 2008, pet. denied); Sanders v. Total Heat & Air, Inc., 248 S.W.3d 907, 917–18 (Tex.App.-Dallas 2008, no pet.).
A. Sufficiency of the Evidence1. The Nixdorf Appellants' Judgment Against Brauss and Martin
In their second issue, Brauss and Martin challenge the sufficiency of the evidence to support the judgment against them in favor of the Nixdorf Appellants.
The Nixdorf Appellants asserted claims for breach of contract, fraud, fraudulent inducement, and breach of fiduciary duty. The judgment awards the Nixdorf Appellants damages against Brauss and Martin, jointly and severally, relating to four projects known as Grand Cayman, Paradise Island, Riverwalk, and Pelican Point. The damages represent the equity invested by the Nixdorf Appellants in each of these projects and the principal balance of several loans made by some of the Nixdorf Appellants on the projects.
Brauss and Martin argue there is no evidence to support the damage award in favor of the Nixdorf Appellants because they relied on a single page summary as evidence. However, the underlying documents supporting the amounts shown in the summary were also admitted in evidence. Those documents included the partnership agreements showing the Nixdorf Appellants' initial investments; a Renate Nixdorf letter to Brauss attaching a project summary showing total capital contributions on each project including additional...
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