Carr v. Weiss

• Decision Date: 15 January 1999
• Docket Number: No. 07-97-0406-CV,07-97-0406-CV
• Citation: 984 S.W.2d 753
• Parties: James T. CARR and 7615 Associates, Ltd., Appellants, v. Larry D. WEISS, Appellee.
• Court: Texas Court of Appeals

Page 753

984 S.W.2d 753

James T. CARR and 7615 Associates, Ltd., Appellants, v. Larry D. WEISS, Appellee.

No. 07-97-0406-CV

Court of Appeals of Texas Amarillo.

Jan. 15, 1999.

Rehearing Overruled Feb. 18, 1999.

Jack McClendon, Montgomery McClendon, McClendon Law Firm, Lubbock, for appellant.

Gary Bellair, Donald M. Hunt, Carr, Hunt, Wolfe & Joy, Lubbock, for appellee.

Before BOYD, C.J., and REAVIS and JOHNSON, ^* JJ.

JOHN T. BOYD, Chief Justice.

From a judgment in favor of appellee Larry D. Weiss, appellants James T. Carr (Carr) and 7615 Associates (Associates), an Oklahoma Limited Partnership, bring this appeal. The judgment arises out of a suit in which Weiss sought the recovery of various damages and, in addition, to impose a constructive trust. The underlying suit was based upon an alleged oral agreement between Weiss and Carr to purchase and jointly own an apartment complex known as the Wellington Apartments (the Wellington), located on 34th Street in Lubbock. In its judgment, the trial court imposed a constructive trust upon an undivided one-half interest in the property, ordered a conveyance of that interest to Weiss, ordered an accounting to Weiss of one-half of the profits on the property, found Associates to be the alter ego of Carr, and found Associates, as Carr's alter ego, jointly and severally liable for the performance of the judgment and the payment of all sums ordered to be paid in the judgment. Weiss was also awarded the sum of $270,000 and prejudgment interest for lost profits, $25,000 and prejudgment interest for past mental pain and suffering, and $250,000 in exemplary damages together with post-judgment interest. The judgment also recited that appellants were estopped to assert the statutes of fraud and limitations. For reasons hereinafter stated, we reform the judgment of the trial court, and as reformed, affirm the judgment.

In mounting their challenge, appellants raise eleven points of error. In the first three of those points, they argue the trial court erred in refusing to grant their motion for summary judgment or their motion for directed verdict because Weiss's case is barred as a matter of law 1) by limitations; 2) by the statute of frauds; and 3) by the Doctrine of Merger and the Parol Evidence Rule.

In point four, they argue the trial court erred in admitting evidence of the personal relationship between the parties and submitting jury questions and instructions which misstate the law relating to fiduciary duty and in entering judgment on such questions and instructions. In points five through eleven, they contend the trial court erred in submitting jury questions and instructions and in entering judgment related to: 5) Weiss's fraud allegations; 6) Weiss's negligent misrepresentation allegations; 7) Weiss's exemplary damage allegations; 8) Weiss's damage issues; 9) Weiss's alter-ego allegations; 10) the jury's answers to jury questions 10 and 11 because such questions follow the Pattern Jury Charge related to promissory estoppel and have no relation to the statute of limitations; and 11) the jury's answer to jury question 12 because there was no evidence or insufficient evidence to support the jury's finding on the statute of limitations issue.

In response to questions submitted, the jury found:

1. There was a fiduciary relationship between Carr and Weiss in connection with the Wellington transaction.

2. Carr breached his fiduciary duties to Weiss.

3. Carr committed fraud against Weiss.

4. Carr made a negligent misrepresentation upon which Weiss justifiably relied.

5. $270,000 was the amount of lost profits to which Weiss was entitled because of his interest in the Wellington. ¹

6. $25,000 would compensate Weiss for the mental anguish suffered as a result of Carr's fraud or breach of fiduciary duty.

7. A constructive trust should be imposed upon the Wellington for Weiss's benefit.

8. Weiss was entitled to $250,000 as exemplary damages because of Carr's conduct.

9. Associates was the alter ego of Carr.

10. Weiss delayed the filing of suit because of his reliance upon Carr's representations.

11. Because of his reliance upon Carr's representations as to his interest in the property and the documentation of that interest, Weiss delayed the filing of this suit.

12. In September 1993, Weiss had knowledge of facts that would cause a reasonable person to make inquiries to determine his rights to the Wellington.

Because of the nature of the questions presented in this appeal, and to properly understand our discussion of those questions, it is necessary to recap some relevant portions of the extensive testimony of Weiss and Carr. Additional references to evidence will be made as it may become necessary to the discussion.

Weiss testified that he was born and raised in the Bronx, New York, went to college in West Virginia, where he received a B.A. with a major in physical education. He worked for awhile as an athletic director but then decided to further his education and enrolled in Texas Tech University. In attempting to pay his educational expenses, Weiss worked for a carpet cleaning business. However, he quit graduate school before completing his degree and formed Vann-Weiss Carpet Cleaning, Inc.

While on vacation in 1981, Weiss and his wife met Carr. During the course of their conversations, Weiss learned that Carr was a graduate of the University of Oklahoma with a major in accounting and finance and later worked for companies that operated in the development and management of commercial real estate ventures. The two couples became fast friends. During the course of their friendship, Weiss and Carr discussed investment opportunities that might result from the savings and loan crisis which was in existence at the time. In those conversations, Weiss discovered that Carr was "pretty knowledgeable" about those matters and that he "knew probably as much as anybody else in that field relating to real estate and investments." They became such good friends that when Weiss was having some financial difficulties and needed to buy a car for his daughter, Carr borrowed $3,500 and loaned it to Weiss for that purpose.

As a result of their conversations, and because of their friendship, the pair discussed acquiring a real estate investment. In those conversations, both personally and in long distance calls, ² they decided to acquire a property in Lubbock because, in Weiss's words, "he can put it together and I was the one who was here to kind of keep an eye on it." According to Weiss, it was always understood that they would be equal owners in any property they acquired. As a result of their conversations, in 1985, Weiss began looking for investment opportunities and in doing so, talked to bankers, real estate operators, and brokers. From an employee of State Savings & Loan Association, Weiss learned that the organization hoped to liquidate the Wellington and informed Carr.

By 1990, Carr had gathered financial data indicating that income from the Wellington would be sufficient to service a million dollar debt, cover its operating expenses, and net its owners at least $70,000 per year. Through the use of that information, Carr obtained a financing commitment using the name of Capitol Devcor, Inc. Shortly after Weiss learned of that loan commitment from Carr, he received a letter of instruction from Carr directing him to make a purchase offer of $900,000 for the Wellington in the name of Vann-Weiss. In the letter, Carr, then employed by Merabank, who had acquired the Wellington, instructed Weiss not to mention his name because if he did so, Merabank would not approve the deal. Even though nothing was said about the necessity of a written agreement to show Carr's interest in the property if the offer was accepted, Weiss said they both understood that the property would be owned jointly. Parenthetically, in their conversations, Carr never said anything to Weiss about the necessity for him to make any down payment in order to own his half interest. That particular offer was not accepted by MeraBank.

However, for about the next year and a half, Weiss continued to explore the possibility of acquiring the Wellington with realtors and with Carr. Eventually, Carr called Weiss and told him that MeraBank had accepted an offer to sell the property for "around a million dollars." Carr never explained to Weiss about how the money would be raised to close the deal, but he did tell Weiss to attend the closing and stayed at Weiss's home in Lubbock when he came to close the purchase. According to Weiss, Carr never mentioned to him that Carr would not convey his half interest to him until Carr got back all of the money he put in the down payment on the Wellington. Although he attended the closing, Weiss averred that he "really didn't have a whole lot of knowledge of what was happening." According to Weiss, he did not learn that title was being taken in Carr's name alone until he attended the closing and examined the closing documents. When he asked Carr why that was done, he was told it was so they could "get more money out of it than what was in it."

Weiss testified that after the closing, as he and Carr returned to Weiss's home, Carr told him "we are now property owners," they "were quite excited" and to celebrate, the two couples went out to dinner. Although Weiss did aver that Carr never told him that he was not or would not be an owner of the property, he did testify that shortly after the deal was closed, Carr told Weiss that before Weiss would get any money out of the apartments, Carr wanted to get back the money he had put into it, which was agreeable to him.

Even so, not long after the closing, Weiss said he told Carr that because Carr was taking some money out of the Wellington, he wanted to get some money out himself. Carr responded to this request by telling him that they could handle it by executing a "maintenance agreement" in which it could be shown as an income tax deduction....