Sharifi v. Steen Auto., LLC

• Decision Date: 14 June 2012
• Docket Number: No. 05–10–01150–CV.,05–10–01150–CV.
• Citation: 370 S.W.3d 126
• Parties: Shideh SHARIFI, as Independent Executor of the Estate of Gholamreza Sharifi, also known as George Sharifi, Individually and d/b/a AAMCO Transmission Repair Center, Appellant, v. STEEN AUTOMOTIVE, LLC, Appellee.
• Court: Texas Court of Appeals

370 S.W.3d 126

Shideh SHARIFI, as Independent Executor of the Estate of Gholamreza Sharifi, also known as George Sharifi, Individually and d/b/a AAMCO Transmission Repair Center, Appellant,

v.STEEN AUTOMOTIVE, LLC, Appellee.

No. 05–10–01150–CV.

Court of Appeals of Texas,

Dallas.

June 14, 2012.

Shideh Sharifi, Shafari Law Firm, P.C., Dallas, TX, pro se.

John J. Diggins, John J. Diggins, P.C., Dallas, TX, for Appellee.

Before Justices BRIDGES, FITZGERALD, and LANG.

OPINION

Opinion by Justice LANG.

In this contract case, appellant (“Sharifi”) ¹ appeals from a judgment granted in favor of appellee Steen Automotive, LLC (“Steen LLC”). Steen LLC claimed damages arising from breach of an agreement to sell Steen LLC Sharifi's transmission repair business. The trial court granted Steen LLC's motion for summary judgment as to liability. Following a bench trial as to damages and attorney's fees, the trial court signed a final judgment awarding Steen LLC $111,878 in damages and $135,000 in attorney's fees.²

In five issues on appeal, Sharifi challenges the trial court's summary judgment ruling and the awards of damages and attorney's fees. For the reasons below, we modify the trial court's judgment and affirm the judgment as modified.

I. FACTUAL AND PROCEDURAL BACKGROUND

In its “Second Amended Original Petition,” ³ Steen LLC asserted it was suing “in its own right and as Assignee of JOHN F. STEEN, an Individual and STEEN AUTOMOTIVE, INC.” (“Steen, Inc.”) (emphasis original). Steen LLC alleged that on approximately January 13, 2005, Steen, Inc., a Texas corporation, entered into a contract (the “Agreement”) to purchase a transmission repair business in Dallas, Texas, that was owned and operated by George Sharifi pursuant to a franchise agreement with AAMCO Transmissions, Inc. (“ATI”). Under the Agreement, Sharifi agreed to sell to Steen, Inc. “all of the fixtures, stock in trade, good will and other assets” of the business for a purchase price of $350,000. Of that purchase price, $250,000 was to be paid in cash and $100,000 was to be financed by a secured note payable to Sharifi over five years at 6% interest. The Agreement stated it was contingent upon ATI's approval of Steen, Inc. as a franchisee.

Several provisions of the Agreement are of particular relevance in this appeal.

1. Paragraph 3 of the Agreement, titled “Closing Date,” stated

Subject to the conditions precedent in this Agreement having been satisfactorily performed and the preparation and attachments of the referenced exhibits, Closing shall take place no later than March 25th, 2005 (Closing Date”). BOTH PARTIES AGREE TO USE A

THIRD PARTY, LAWYERS ESCROW & TRUST COMPANY, OF DALLAS TEXAS, AS THE CLOSING ATTORNEY TO CREATE THE CLOSING DOCUMENTS PROVIDED SAID CLOSING DOCUMENTS SHALL COMPLY WITH THE EXHIBITS HERETO.

The exact time, date and place of closing shall be determined by BUYER upon seven (7) days advance written notice to SELLER.

(emphasis original).

2. Paragraph 12(d) of the Agreement provided that as a “condition precedent to the sale,” Steen, Inc. agreed to complete, at its own expense, a required training course conducted by ATI.

3. Paragraph 19(c) of the Agreement stated

SALE IS CONTENGENT [sic] ON THE PARTIES HERETO REACHING AGREEMENT ON A PROPERTY LEASE FOR FIVE (5) YEARS. SAID LEASE SHALL BE, IN ADDITION TO OTHER TO BE AGREED MATTERS, A TRIPLE NET–LEASE OF THE LAND AND BUILDING, (THE “FACILITY”), WITH TWO ADDITIONAL FIVE(5) YEAR OPTIONS TO RENEW. THE RENT FOR THE FIRST TWO (2) YEARS OF THE LEASE SHALL BE NO MORE THAT [sic] $5,670 PER MONTH AND THEN INCREASED TO $6,000 PER MONTH FOR THE NEXT THREE(3) YEARS. THE RENT FOR EACH OF THE TWO SUCCESSIVE FIVE(5) YEAR OPTIONS WILL BE AT THE THEN PREVAILING MARKET RENT FOR SIMILAR USE FACILITIES IN THE SAME AREA, WHICH IF INCREASED WILL NOT EXCEED TEN PERCENT OF THE PREVIOUS BASE OR OPTION PERIOD.

(emphasis original).

4. Paragraph 20 of the Agreement stated, “EXHIBITS A, B, C, D, E, F, AND G ARE BY THIS REFERENCE INCORPORATED HEREIN BY REFERENCE.” (emphasis original).

Steen LLC asserted that “Plaintiff John. F. Steen fulfilled all the requirements set forth in the [Agreement],” obtained all requisite training, and received ATI's approval as a franchisee. Further, Steen LLC contended it and Sharifi “agreed that the closing would be on March 25, 2005 at 10:00 a.m. at the offices of Lawyers Escrow & Trust Co. in Dallas, Texas.” According to Steen LLC, “John Steen as President of Steen Automotive, LLC and Laser Automotive, Inc. (Successor in interest by name change to Steen Automotive, Inc.) appeared at the closing on March 25, 2005 at 10:00 a.m., signed all the closing documents and tendered the requisite purchase price in the form of cash and a promissory note.” ⁴ Steen LLC asserted that Sharifi “failed to appear at the Closing” and thus “breached the [Agreement] and is in default.” Additionally, Steen LLC asserted in its petition that (1) all conditions precedent have been performed or have occurred and (2) “any notice requirement by Plaintiff to Defendant regarding Closing has been performed or has been waived.”

Pursuant to its claim for breach of contract, Steen LLC contended it is entitled to recover (1) “lost profits from failure to obtain a viable, profitable Aamco franchise under the benefit of the bargain rule of damages”; (2) “reliance and consequential damages”; and (3) “reasonable and necessary attorney's fees.”

In his “First Amended Answer,” Sharifi asserted a general denial and the following affirmative defense:

Defendant asserts the affirmative defense that conditions precedent have not been performed by Plaintiff's failure to reveal to the Court other material and relevant conditions precedent and contingencies in the Agreement, which are:

(i) Paragraph 2, manner of payment of Purchase Price, last paragraph on page 1 of the Agreement: “Provided, however that all payments due hereunder shall be placed in escrow until SELLER complies in full with the provisions of paragraphs 8(f), 8(g), and 12(b) hereof.”

(ii) Paragraph 3: “The exact time, date and place of closing shall be determined by BUYER upon seven (7) days advance written notice to SELLER.”

(iii) Paragraph 8(f): Inter Shop and Warranty Program: “SELLER agrees to pay all outstanding money owed under [ATI's] Inter shop Warranty Program as of the Closing Date. SELLER further agrees to pay all outstanding money owed to ATI or its representative under the AAMCO Warranty program.”

(iv) Paragraph 12: Contingencies: “(b) It is further understood and agreed that in no event shall ATI issue a Franchise Agreement to BUYER until all the indebtedness of SELLER to ATI, National Creative Committee, Bell Agency, and other AAMCO dealers is paid in full, as well as, all liabilities owed to SELLER'S local advertising pool and advertising agency.”

(emphasis original).

Steen LLC filed a traditional motion for summary judgment on its breach of contract claim in which it contended in relevant part that the “notice provision” as to closing in paragraph 3 of the Agreement “is not a condition precedent but rather a covenant” and, regardless, such provision “was waived by Defendant as well as complied with by Plaintiff.” Further, Steen LLC asserted in its motion for summary judgment that it had “performed all conditions precedent, covenants and obligations” under the Agreement.

The evidence attached to Steen LLC's motion for summary judgment included, in part, (1) a purported copy of the Agreement; (2) an August 19, 2006 affidavit of John F. Steen and exhibits attached thereto, including assignments pertaining to this cause of action; and (3) an August 10, 2006 affidavit of Bob McDowell, owner of McDowell Business Associates, and exhibits attached thereto. John F. Steen stated in relevant part in his affidavit that he formed Steen, Inc. in January 2005 for the purpose of acquiring and operating the business to be purchased from Sharifi. Additionally, John F. Steen testified in his affidavit

10. ... Shortly thereafter it occurred to me that a Limited Liability Company would be more beneficial for this business purpose so I decided to change the business forum from a Corporation to a LLC.... Then I formed Steen Automotive, LLC with a view to using it to purchase and operate my anticipated new AAMCO franchise. I then ask [sic] the Defendant's agent, Bob McDowell to obtain Mr. Sharifi's approval to this minor change in our Agreement. Mr. McDowell stated that initially Mr. Sharifi objected to the change, but when he (Bob McDowell) reminded Mr. Sharifi that nothing would change with regard to the personal guarantee of the note and lease, Mr. Sharifi told Mr. McDowell that the change would be acceptable and that he would initial the change from “Inc.” to “LLC” at closing....

11. On or about July 6, 2006 I individually and as president of the former companyknown as Steen Automotive, Inc. assigned all our right title and interest in this litigation to Steen Automotive, LLC.

(citations to exhibits omitted).

McDowell testified in his affidavit that he was Sharifi's “broker and agent” for the sale of the business in question. Further, McDowell stated

On or about January 30, 2005, John Steen advised me that he wanted to change the form of the purchasing or buying entity from a Corporation to a LLC.... He asked me to have George Sharifi initial the changes on the Agreement to reflect this. I immediately contacted Mr. Sharifi by telephone and discussed this change with him.... Mr. Sharifi stated it would not be a problem. Mr. Sharifi advised me he did not want me to have to come down to the business to initial the change, rather “we could initial the adjustments to the Agreement of Sale at the closing.”

Additionally, McDowell testified (1) “[o]n or about March l0, 2005 Mr. Sharifi specifically agreed that the closing of the sale of his AAMCO franchise would occur on March 25, 2005” at 10:00 a.m. at “Lawyers Escrow and Trust” and (2) “I, as Mr. Sharifi's agent, had...