Rancho La Valencia, Inc. v. Aquaplex, Inc.
| Decision Date | 02 November 2007 |
| Docket Number | No. 07-06-0157-CV.,07-06-0157-CV. |
| Citation | 253 S.W.3d 728 |
| Parties | RANCHO LA VALENCIA, INC. and Charles R. "Randy" Turner, Appellants, v. AQUAPLEX, INC. and James Edward Jones, Jr., Appellees. |
| Court | Texas Court of Appeals |
Craig Enoch, James G. Ruiz, Elliot Clark, Winstead, PC, Austin, for appellants.
D. Douglas Brothers, Ben J. Cunningham, Gary L. Lewis, George & Brothers, LLP, Austin, for appellees.
Before QUINN, C.J., and CAMPBELL and HANCOCK, JJ.
In 2000, appellant, Rancho La Valencia (Rancho), acquired real estate in Travis County, Texas, known as the Tumbleweed property. Appellant, Charles R. Turner (Turner), was the president of Rancho. In 2002, Rancho began developing the property by obtaining a Site Development Plan Permit from the City of Austin. Original plans called for the building of 89 condominium units. Fifty-four of these units were to be detached units, while the remaining 35 units were to be located in a 12 story building. Development financing to install water and sewer lines, streets, and other infrastructure was obtained through OmniBank, N.A. The Tumbleweed property was pledged as collateral for the developmental financing and Turner also personally guaranteed the debt.
By 2002, the property was plagued by delays and cost overruns. OmniBank required Rancho and Turner to hire a new project manager to oversee the project. By 2003, OmniBank had stopped advancing any new funds for the project and indicated that no new money would be forthcoming unless Rancho and Turner were able to infuse the project with additional capital. An employee of Rancho began discussions with appellee James Edwards Jones, Jr. (Jones) regarding his interest in becoming part of the project. Ultimately, Jones made a decision to invest $400,000 for a 51 percent interest in a joint venture with Rancho to complete the project. Thereafter, a formal Joint Venture Agreement (JVA) was entered into and Jones assumed management of the project. Prior to signing the JVA, Jones completed a due diligence review of the project. The thoroughness of Jones's due diligence review was a hotly contested issue during the trial. Jones entered into the joint venture through a corporate entity, appellee Aquaplex, Inc. (Aquaplex), that had been formed for the specific purpose of entering into the joint venture.
After the JVA was executed, the relationship between the parties quickly became acrimonious. There was an attempt by Rancho to purchase Aquaplex's interest in the joint venture. Later, Aquaplex made a cash call under the terms of the JVA. However, Rancho and Turner did not contribute any additional cash for the cash call. Litigation commenced in November 2003 when Rancho and Turner filed suit against Aquaplex and Jones alleging a number of causes of action. Aquaplex and Jones subsequently filed counterclaims against Rancho and Turner. By December 2004, the OmniBank loan was in default. On March 11, 2005, the parties entered into mediation, which resulted in the signing of a Memorandum of Settlement Agreement (MSA).
The MSA had a number of requirements for both parties, but, for purposes of this opinion, two are of significance. First, the MSA required that Rancho and Turner establish an account at OmniBank for $100,000 to be used to pay six months worth of interest to OmniBank and property taxes on the JVA property. Second, the MSA contemplated the subsequent execution of a formal settlement agreement. The OmniBank account was never established and the formal settlement agreement was never executed. Negotiations regarding the formal settlement agreement broke down due to the parties' inability to agree on additional terms not covered by the MSA. Because no formal settlement agreement could be reached, the lawsuits were set for trial in March 2005. Shortly before trial was to commence, appellants' counsel filed a motion to withdraw alleging that his services had been used to perpetrate a fraud. The trial court permitted counsel to withdraw three days before trial and denied appellants' request for a continuance. Rancho then filed a bankruptcy in the Dallas division of the Northern District of Texas and all matters pending in state court were stayed.
During the pendency of the bankruptcy, a $4,050,000 offer to purchase the JVA property was received from a third party. This offer became known as the Greenberg contract. Appellants did not consider the contract price to be sufficient and advised appellees of this fact. At or about this time, a notice of lis pendens was filed in the deed records of Travis County identifying the JVA property as property related to an adversarial action pending in the United States Bankruptcy Court for the Northern District of Texas. Subsequently, the bankruptcy was dismissed by the bankruptcy judge as a "bad faith" filing. Concurrent with the dismissal of the bankruptcy, the adversarial action was remanded to state court. The Greenberg contract never closed.
The trial court commenced pre-trial hearings regarding whether appellants' previous counsel would be subject to examination by way of deposition regarding certain communications with his clients. The trial court ruled that the communications between appellants and their prior counsel were not privileged, citing the crime-fraud exception to the attorney-client privilege. During other pre-trial matters, the trial court ruled that appellants had, as a matter of law, breached the MSA.
The trial commenced on November 28, 2005, and, on December 1, 2005, the trial court directed a verdict against all of appellants' claims. Following the trial, the jury returned a verdict finding that appellants had breached both the JVA and the MSA and committed fraud in connection with both agreements. Additionally, the jury found the lis pendens to have been wrongfully filed. The jury awarded damages to appellees for injuries suffered as a result of appellants' conduct. After hearings on the verdict, during which appellees elected to recover damages for appellants' fraud relating to the MSA, the trial court granted judgment in favor of appellees and awarded them actual and punitive damages. The trial court also granted appellees declaratory relief, injunctive relief, and attorney fees in connection with Rancho's breach of the JVA. It is from this judgment that appellants appeal.
By eight issues, with multiple sub-parts, appellants contend that: 1) appellees were allowed a double recovery because the judgment awarded relief for both the MSA fraud finding and the JVA breach finding; 2) the fraud finding should be reversed for legal insufficiency; 3) the evidence was legally insufficient to sustain a finding that appellants breached either the MSA or JVA; 4) the trial court erred, as a matter of law, in finding that Rancho had forfeited its rights under the JVA; 5) the evidence was legally and factually insufficient to support a finding that Rancho's interest in the joint venture was zero; 6) the trial court committed reversible error in finding joint and several liability against Turner; 7) as a matter of law, there is no cause of action for wrongful lis pendens, therefore, such an alleged cause of action cannot support a judgment; and 8) the trial court committed a number of errors that should result in remand, if this court does not render judgment in favor of appellants. We reverse and render.
By their first issue, appellants contend that the judgment of the trial court awarded appellees a double recovery by allowing damages under the fraud in the inducement allegations relating to the MSA and declaratory and injunctive relief, plus attorney fees, under the breach of the JVA cause of action. Appellees counter by contending that the relief granted redresses very specific and distinct injuries and is, therefore, not double recovery.
That a party is allowed but one recovery for an injury is axiomatic in Texas law. Bradshaw v. Baylor Univ., 126 Tex. 99, 84 S.W.2d 703, 705 (1935). This single injury rule has been applied when defendants commit the same act as well as when defendants commit technically differing acts which result in a single injury. Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1, 7 (Tex.1991). Accordingly, the inquiry begins by assessing the nature of the injury for which appellees are seeking redress.
The record reflects that, prior to the execution of the MSA, appellees' live pleading alleged fraud in connection with the execution of the JVA, breach of contract and warranty in connection with the JVA, and negligent misrepresentation in connection with execution of the JVA. Appellees also requested declaratory relief and attorney fees. Following execution of the MSA and remand from the bankruptcy court, appellees filed their Amended Third Party Petition, Counterclaim For Declaratory Judgment, Application for Temporary Restraining Order and Temporary Injunction, and Motion to Void Lis Pendens. In this amended pleading, appellees alleged the same causes of action and requests for relief as before, but added claims that appellants breached the MSA or, alternatively fraudulently induced appellees to enter into the MSA. However, by all their claims, appellees complain of appellants' interference with and prevention of appellees operating the joint venture profitably, selling their interest in the joint venture, or selling the joint venture property and recouping their investment.
Appellees contend that the recoveries they sought were based on separate agreements executed on separate dates and the breach of each resulted in separate and distinct injuries. In support of this contention, appellees cite Birchfield v. Texarkana Mem'l Hosp., 747 S.W.2d 361, 367 (Tex.1987), for the proposition that separate recoveries are allowed in the same lawsuit. However, the Birchfield case holds that only one recovery is available to redress one injury, even if the cause of the injury is actionable under...
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