Cohen v. Hawkins, No. 14-07-00043-CV (Tex. App. 4/15/2008)
| Decision Date | 15 April 2008 |
| Docket Number | No. 14-07-00043-CV.,14-07-00043-CV. |
| Parties | URI COHEN, Appellant, v. DELORES HAWKINS, Appellee. |
| Court | Texas Court of Appeals |
On Appeal from the 334th District Court, Harris County, Texas, Trial Court Cause No. 2004-36442.
Affirmed.
Panel consists of Chief Justice HEDGES and Justices ANDERSON and SEYMORE.
Uri Cohen appeals the portions of a judgment that favor Delores Hawkins. Hawkins sued Cohen and Brian Culwell seeking, among other things, return of her real property, which Culwell sold to Cohen.1 Hawkins had signed a power of attorney authorizing Culwell to handle certain of her affairs including real estate transactions. Under color of this document, Culwell sold Hawkins' property to Cohen in exchange for credit on an antecedent debt Culwell owed to Cohen. In his response to Hawkins' lawsuit, Cohen raised claims for reimbursement of property taxes paid and indemnification among other things. After a bench trial, the trial court entered judgment setting aside the conveyance deed from Culwell to Cohen and holding that the power of attorney from Hawkins to Culwell was void. The court further found that Culwell committed fraud and breached his fiduciary duty to Hawkins. The court also denied all of Cohen's requests for relief, finding that he did not have clean hands in the underlying transaction. The court awarded the property to Hawkins and found Culwell liable for monetary damages.
On appeal, Cohen raises nine issues, contending: (1) Culwell was vested as Hawkins' agent with authority to convey the property and accept the proceeds; (2) the power of attorney was not rendered invalid as to Cohen simply because it may have resulted from fraud between Culwell and Hawkins; (3) Hawkins is estopped from denying the validity of the power of attorney; (4) the conveyance deed, conveying the property to Cohen, is not void; (5) the second corrected warranty deed, purporting to correct an error in the conveyance from a prior owner to Hawkins, is not void; (6) Cohen was a bona fide purchaser who took the property for value and without notice of another's claim of interest in the property; (7) Cohen is entitled to reimbursement for taxes he paid on the property; (8) Cohen is entitled to indemnification for costs he has incurred in defending title; and (9) Hawkins' negligence was more than 50% responsible for the damages incurred by all parties. We affirm.
Hawkins testified that in late 2002, she was having trouble buying a car because of her credit record. Culwell offered to help, drafted a document, and arranged for Hawkins to sign the document in front of a notary. The record contains a power of attorney apparently signed by Hawkins, granting Culwell the power to: "act in [her] name, place and stead in any way which [she herself] could do . . . with respect to the following matters . . . Real estate transactions . . . Claims and litigation . . . Records, reports and statements . . . [and granting authority] to delegate his powers to any other person." The document also required Culwell to act in Hawkins' "best interest." Sometime after signing the document, Hawkins began receiving mail from the City of Houston indicating that a piece of property she owned was now owned by Cohen. She went to see Culwell, who told her "that's no good," that he didn't do it, and that he would try to get her some money. She told him that she didn't want money, she wanted her property back. She testified that she knew nothing about the sale of the property until she received notice from the City. Subsequently, Hawkins and Culwell met again, and Culwell told Hawkins that someone wanted to give her $27,000. She said that was the last meeting she had with Culwell. Thereafter, a notice to vacate was stapled to the house located on the property. Hawkins was given the notice by Flora Binkley, the tenant who lived at the property. Hawkins denied that she ever gave Culwell written or oral authority to transfer her property for his benefit.
Cohen testified that he is in the business of buying and selling diamonds. He met Culwell sometime around 2002 when Culwell began buying diamonds from him. Eventually, Culwell came to owe Cohen about $190,000 for diamonds Cohen had given him. Cohen made repeated but unsuccessful requests for payment. Finally, Culwell offered Cohen several pieces of property against the amount owed. Apparently, two of the properties were in Culwell's name and the third was owned by Hawkins. Cohen said that he investigated the properties and chose the one owned by Hawkins. At the back of the property was what Cohen described as a "[s]hack, little small building in the back where the big building in front had been taken down." Cohen said that Culwell told him that he (Culwell) owned the property. Cohen further said that he believed Culwell owned the property because of the power of attorney signed by Hawkins.
In November, 2002, Culwell conveyed Hawkins' property to Cohen in exchange for a $55,000 credit against the outstanding debt and an extension of time to pay the remaining balance. In an effort to clear title, Cohen's attorney, Lana Dieringer, obtained a Second Corrected Warranty Deed from George Raft Washington, who had previously deeded the property to Hawkins. Cohen listed the property for sale approximately three months later.
In March 2004, Dieringer received a letter from an attorney representing Hawkins and claiming that Hawkins' property had been stolen. Several months later, Cohen received a letter from the Harris County District Attorney's office informing him that Hawkins had filed criminal charges against Culwell. The district attorney's office told Cohen that the property should be removed from the market until the issue was resolved. Cohen complied with the district attorney's request.
In her lawsuit against Culwell, Hawkins alleged fraudulent inducement, fraudulent transfer, conversion, breach of fiduciary duty, fraud, fraud in a real estate transaction, theft, and conspiracy to commit theft. Hawkins also alleged that Cohen conspired to commit theft and claimed that Cohen was a joint tortfeasor in Culwell's breach of fiduciary duty, fraud, real estate fraud, and theft. In response, Cohen filed a general denial and raised claims against Hawkins for proportionate responsibility, quasi-equitable estoppel, indemnification, conspiracy to defraud, recovery of rents collected, and reimbursement for taxes paid. Cohen further alleged that he was a bona fide purchaser.
After a bench trial, the trial court entered 45 findings of fact and 18 conclusions of law, giving multiple reasons for each of two core holdings: (1) Hawkins was entitled to get her property back because it was obtained by fraud, and (2) Cohen was not entitled to any requested relief because he had unclean hands in the transaction. Among the courts' specific findings of fact are the following:
• Hawkins came into possession of the property on April 14, 1979.
• Hawkins transferred the property to George Raft Washington on August 21, 1989, and he transferred it to the George and Dorothy Washington Family Partnership, Ltd. on August 23, 1995.
• On January 11, 1996, the property was transferred by warranty deed from George R. Washington to Hawkins. A Corrected Warranty Deed then issued on July 22, 1998, to correct the description of the property transferred.
• On October 18, 2007, a General Power of Attorney was signed in the name of "DM Hawkins" but not by Hawkins. This power of attorney was presented to Cohen or his attorney by Culwell and was subsequently produced by Cohen in discovery.
• Hawkins executed a power of attorney on November 8, 2002, authorizing Culwell to act for her in regard to real estate transactions and other matters. Hawkins signed based on Culwell's false representation that he would use it to clean up her credit. The power of attorney did not specifically authorize Culwell to use Hawkins' property for his own benefit.
• On November 14, 2002, Culwell transferred the property by deed to Cohen in exchange for a $55,000 credit against an antecedent debt totaling $192,712.65. Hawkins received no consideration for the transfer.
• Cohen knew that Culwell did not own the property, Cohen did not visit or inspect the property, and he did not acquire title insurance prior to the transfer.
• Culwell had given Cohen over $17,000 in bad checks prior to the property transfer.
• Flora Binkley lived at the property from February 2002 through the time of trial.
• On September 9, 2003, George Raft Washington executed a Second Corrected Warranty Deed to correct the name of the transferor. The draft deed was presented by Cohen's attorney, Lana Dieringer, to Washington's attorney, Alice Bonner, without Dieringer disclosing that she represented Cohen instead of Hawkins. Hawkins did not receive the corrected deed.
• Lana Dieringer knew that the property never belonged to Culwell.
• Culwell had a fiduciary duty to Hawkins that required him to place her interests above his own at any time when his self-interest may conflict with his duty to her.
• Cohen and agents acting on his behalf participated in Culwell's breach of his fiduciary duty.
• Culwell committed fraud and statutory fraud against Hawkins. Culwell was also convicted in criminal court of stealing Hawkins' property.
• Cohen did not obtain legal title to the property in good faith and did not rely on the power of attorney in good faith.
• Cohen had actual and constructive notice of Hawkins' interest in the property prior to the transfer.
• Cohen did not give consideration to Washington for the Second Corrected Warranty Deed.
• Cohen was not a bona fide purchaser.
• Cohen paid all the taxes on the property since the conveyance; however, he failed to establish that he had clean hands and thus is not entitled to an equitable lien for such taxes.
• Based on Culwell's...
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