Brogan, Ltd. v. Brogan, No. 07-05-0290-CV (Tex. App. 10/11/2007), 07-05-0290-CV.

• Court: Texas Court of Appeals
• Writing for the Court: Patrick A. Pirtle
• Decision Date: 11 October 2007
• Docket Number: No. 07-05-0290-CV.,07-05-0290-CV.
• Citation: Brogan, Ltd. v. Brogan, No. 07-05-0290-CV (Tex. App. 10/11/2007), No. 07-05-0290-CV. (Tex. App. Oct 11, 2007)
• Parties: BROGAN, LTD., A Partnership, and TINA MARIE BROGAN, Appellants, v. W. CHARLES BROGAN, III, M.D., PH.D, P.A., A Professional Corporation, and WALTER CHARLES BROGAN, III, Individually, Appellees

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BROGAN, LTD., A Partnership, and TINA MARIE BROGAN, Appellants, v. W. CHARLES BROGAN, III, M.D., PH.D, P.A., A Professional Corporation, and WALTER CHARLES BROGAN, III, Individually, Appellees

No. 07-05-0290-CV.

Court of Appeals of Texas, Seventh District, Amarillo.

October 11, 2007.

Appeal from the 99th District Court of Lubbock County, No. 2002-518,696, Honorable Mackey K. Hancock, Judge.

Panel E: Before PIRTLE, J., and BOYD and REAVIS, SJJ.¹

MEMORANDUM OPINION

PATRICK A. PIRTLE, Justice.

Appellants, Brogan Ltd. and Tina Marie Brogan, appeal from a judgment rendered in favor of W. Charles Brogan III, M.D., Ph.D., P.A., a Professional Corporation (Brogan P.A.), and Walter Charles Brogan, III, individually, (Dr. Brogan), in a breach of contract and tort action related to their partnership interests in Brogan Ltd. Appellants assert three issues: (1) they are entitled to judgment as a matter of law denying Dr. Brogan's claim for capital contributions in 2003; (2) they are entitled to a new trial because no jury question was submitted to determine the correctness of the partners' capital accounts and/or Dr. Brogan's capital contribution in 2003; and (3) the trial court erred in granting Appellees' motion for a directed verdict on Appellants' promissory estoppel claim. We affirm.

BACKGROUND

This appeal concerns a dispute arising from the dissolution of a family limited partnership following divorce. Adequate consideration of the issues raised in this appeal necessitates a review of the factual and procedural history of the parties' dispute.

I. Factual

Dr. Brogan is a medical doctor who conducted his medical practice as a professional association, Brogan P.A. Dr. Brogan and Tina Brogan were husband and wife until their marriage was dissolved by divorce on December 6, 2002.

In 1999, the Brogans established Brogan Ltd. as a family limited partnership. The Limited Partnership Agreement was between husband and wife, both as general and limited partners. As general partners, the Brogans were authorized to acquire, sell, convey, operate and maintain, mortgage, encumber or otherwise deal with any real property without the necessity of joinder of the other general partner.

Capital accounts for each partner were established in accordance with IRS Treasury regulations related to partnerships. Their capital accounts were credited with the fair market value of each partner's capital contribution and subsequently debited with the fair market value of distributions to each partner. The initial capital contributions of stock and cash were allocated identically to Tina Brogan and Dr. Brogan: one percent (1%) to each as a general partner and forty-nine percent (49%) to each as a limited partner. Later that year, Dr. Brogan made a gift to Tina of forty percent (40%) of his limited partnership interest altering the ownership interests in their capital accounts. The end result was that Dr. Brogan owned, as his separate property, 1% as a general partner and nine percent (9%) as a limited partner, and Tina owned, as her separate property, 1% as a general partner and 89% as a limited partner. The percentages of ownership remained the same through the Brogans' divorce.

Under the Partnership Agreement, the percentage of the capital account owned by each partner affected their relative ownership interests in the partnership assets. Subsequent capital contributions or distributions also affected a partner's ownership interest. For instance, if the percentages of ownership for each partner started at seventy percent (70%) and thirty percent (30%), and there were no withdrawals or contributions, then their percentage of ownership stayed the same throughout the life of the partnership. However, if the partner with a thirty percent (30%) interest contributed additional capital, then their thirty percent (30%) interest would increase and the other partner's seventy percent (70%) interest would decrease proportionately. If the partner with seventy percent (70%) interest took money out of the partnership, then their seventy percent (70%) interest would decrease and the other partner's thirty percent (30%) interest would increase proportionately. Partnership losses were applied to the capital accounts according to the partners' ownership interests.

In 2000, the Brogans decided to purchase a building from which Dr. Brogan would conduct his medical practice. The Brogans contacted Cindy Snell, a real estate agent, to assist them in their search for property. They eventually settled on a building in Lubbock, and acquired a loan from Clay Leaverton, a loan officer at American State Bank, to purchase and remodel the building. In August 2000, the Brogans closed on a note and at the suggestion of Neriman Guven, the partnership's accountant, the building was placed in the name of Brogan Ltd.

Dr. Brogan subsequently moved his practice into the building where he continued his practice until the Brogans were divorced. Shortly thereafter, Dr. Brogan moved out of the building and ceased paying rent to Brogan Ltd. In August 2002, Tina signed a listing agreement with Snell to sell the building. Snell entered into negotiations with an orthopedic group. The group signed a contract contingent on a successful feasibility study. The feasibility study failed, but the parties continued to negotiate. In order to make the deal more attractive for the buyer, Dr. Brogan agreed to include the x-ray equipment and telephone system used in his practice.

In December 2002, Dr. Brogan requested that his attorney send a letter to Tina's attorney indicating the orthopedic group's contract was dependent on the successful outcome of a second feasibility study based upon an assumption that Dr. Brogan would contribute his x-ray equipment and telephone system to the building's sale.² The letter also indicated that, if the sale was completed using his contribution, he would consider the contribution to be a personal capital contribution to Brogan Ltd., thereby crediting his capital account. He received no response to his letter.

On February 14, 2003, the sale of the building closed, and the x-ray equipment and telephone system were contributed toward the sale and accepted by the buyers. Brogan Ltd. suffered a loss on the sale of the building. After the closing, Dr. Brogan went to the Bank and signed papers to purchase and transfer the leased equipment. Dr. Brogan testified that he waited until the building sold because he was concerned the orthopedic group might back out. BancLeasing calculated the value of the leased equipment and agreed to transfer ownership to Brogan P.A. for $243,574.02. Brogan P.A. transferred the equipment to Dr. Brogan and he transferred the equipment to Brogan Ltd. as a personal capital contribution.

Guven subsequently conducted an accounting to determine the effect of the loss incurred on the building's sale and Dr. Brogan's subsequent capital contribution on the capital accounts of Tina Brogan and Dr. Brogan. In conformance with the sequence in which the transactions occurred, she first deducted the losses from the sale of the building from the partners' capital accounts, and then added Dr. Brogan's capital contribution to his individual capital account. Accordingly, the $444,904.94 loss on the sale of the building was charged to the capital accounts of the partners in accordance with the percentages as they existed prior to the sale. Guven then valued the leased equipment at $243,574.02 and credited the capital account of Dr. Brogan in accordance therewith. According to Guven, BancLeasing's valuation supplied the fair market value of the leased equipment because the sale was an arm's length transaction between unrelated parties, neither of which was under an obligation to purchase or to sell.

II. Procedural

The case below involved two parts: Appellants' action seeking damages for breach of contract, fraud, conversion, promissory estoppel, partial performance and breach of partnership fiduciary duties and Appellees' counterclaim seeking an accounting of Brogan Ltd.'s capital accounts, distribution of its partnership assets, and dissolution.

In 2003, Appellants filed motions for a final accounting to determine their respective partnership interests in Brogan Ltd. and a final distribution of the partnership assets. Appellants specifically requested that the trial court enter an order directing the disposition of Brogan Ltd.'s remaining assets in accordance with the Brogans' ownership interests. Appellees filed similar motions. Per the parties' agreement, the trial court ordered that an accounting be conducted by Guven.³

Guven conducted an accounting of the Brogans' capital accounts from Brogan Ltd.'s inception to April 30, 2003. She determined the status of the capital accounts and the partners' ownership interests. In her opinion, the accounting complied with the terms of the Partnership Agreement, IRS Treasury Regulations, and generally accepted accounting practices. She also opined that the accounting fairly and accurately stated the position of the capital accounts as of April 30, 2003.

In January 2004, Judge Sam Medina held a two-day hearing on the parties' motions. The Brogans and Guven testified. Guven's accounting was accepted into evidence without objection. In October 2004, Judge Medina sent a letter to the parties indicating that he intended to dissolve the partnership and order a distribution of its assets based upon Guven's testimony and accounting. In December 2004, Judge Medina issued an order distributing the partnership assets. In apparent recognition of Dr. Brogan's capital contribution of the leased equipment in 2003 of $243,574.02, the trial court distributed $318,695.22 to Dr. Brogan, and Tina received the remaining assets. Judge Medina's order indicated that it was not a final judgment on the merits insofar as the assets were concerned, but a preliminary order pending a final resolution of Appellants'...