Viajes Gerpa, S.A. v. Fazeli

• Decision Date: 29 December 2016
• Docket Number: NO. 14–15–00608–CV,14–15–00608–CV
• Citation: 522 S.W.3d 524
• Parties: VIAJES GERPA, S.A., Appellant v. Seyed Reza FAZELI and Dubai Financial, LLC, Appellees
• Court: Texas Court of Appeals

522 S.W.3d 524

VIAJES GERPA, S.A., Appellant

v.Seyed Reza FAZELI and Dubai Financial, LLC, Appellees

NO. 14–15–00608–CV

Court of Appeals of Texas, Houston (14th Dist.).

Opinion Filed December 29, 2016

Rehearing Overruled March 14, 2017

Kelley Maria Keller, Candace L. Smith, Houston, TX, for Appellant.

Tanya Nicole Garrison, Barney Louis Stagner Jr., Houston, TX, for Appellees.

Panel consists of Chief Justice Frost and Justices McCally and Brown.

OPINION

Marc W. Brown, Justice

After a trial involving allegations of corporate veil-piercing, breach of contract, fraudulent transfer of assets, and conspiracy, the jury returned a verdict in favor of plaintiff Viajes Gerpa, S.A. and against defendants Seyed (Ali) Reza Fazeli and Dubai Financial, LLC. The trial court originally rendered judgment in favor of Viajes Gerpa, awarding damages against Ali. The final judgment also ordered that Viajes Gerpa recover court costs from Ali and Dubai Financial. Ali and Dubai Financial filed a motion and supplemental motion to disregard jury findings and enter judgment notwithstanding the verdict (JNOV), and a motion for new trial, motion to reconsider, and motion to modify. The trial court granted these motions, vacated its judgment, and signed a new judgment that Viajes Gerpa take nothing on its claims against Ali and Dubai Financial.

On appeal, Viajes Gerpa argues that the trial court erred by disregarding all the jury findings involving Ali and Dubai Financial and by refusing to enter judgment on the verdict. Viajes Gerpa also contends that the trial court erred by refusing to enter judgment on its claim against Ali under section 171.255(a) of the Texas Tax Code. We affirm.

I. FACTUAL AND PROCEDURAL BACKGROUND

In 2006, certain Mexican travel agencies purchased tickets for the World Cup Soccer tournament in Germany from various ticket fulfillment websites, including Onlinetickets.com, operated by The Ticket Company.¹ After the travel agencies did not receive many of the tickets or refunds for them, the agency plaintiffs, including Viajes Gerpa,² brought suit against corporate defendants, including The Ticket Company,³ and individual defendants, including Ali.⁴

In April 2007, the agency plaintiffs, corporate defendants, and individual defendants entered into a Master Settlement Agreement and Release (MSA). Under the MSA, the corporate defendants agreed to pay $300,000 upfront in three $100,000 payments to the agency plaintiffs on a pro rata basis.⁵ In addition, the corporate defendants agreed to pay to the agency plaintiffs 50% of their net cash flow, also on a pro rata basis. Net cash flow payments were to continue until the earlier of (1) full payment of the agreed judgment amount, which for Viajes Gerpa was $1,176,500, or (2) four years and six months.

Pursuant to the MSA, the individual defendants⁶ executed employment agreements that covered the same four-year, six-month period and made the agency plaintiffs third-party beneficiaries. Under the MSA, the individual defendants "who execute employment agreements" represented and warranted that they would discharge their duties and responsibilities to the corporate defendants faithfully; use their best efforts to promote the interests of the corporate defendants and devote their full business time, energies, and skill to the corporate defendants; not voluntarily adopt any partial or complete liquidation or reorganization plan absent consent of a majority in the dollar amount of claims held by the agency plaintiffs; and comply with their employment agreements.

The corporate defendants were to execute agreed judgments in favor of the agency plaintiffs for the pro rata amounts listed in the MSA. Only in the event of default would such judgments be recorded or otherwise executed. The agency plaintiffs were to execute agreed orders dismissing their claims against the individual defendants with prejudice. In May 2007, the parties to the underlying action filed an agreed motion to dismiss with prejudice all claims made or asserted against the individual defendants. Also in May 2007, the trial court entered an agreed final judgment against The Ticket Company and the other corporate defendants in favor of Viajes Gerpa in the amount of $1,176.500 (the 2007 judgment).

The Ticket Company paid Viajes Gerpa its initial upfront payments totaling $63,000 under the MSA. The Ticket Company did not pay any additional amounts to Viajes Gerpa based on net cash flow under the MSA. In October 2008, and again in August, September, and October 2011, The Ticket Company received notice of default from Viajes Gerpa. In September 2011, Ali received notice of individual default from Viajes Gerpa. Upon the declaration of default, the parties were to submit to nonbinding mediation before taking any action, including to record or enforce the agreed judgments. Mediation was to take place within 30 days of the receipt of the notice of default by the defaulting party. If the meditation "failed," then the nondefaulting parties could take actions to enforce the MSA, including legal action to enforce the agreed judgments. In October 2011, Ali and The Ticket Company received notice that Viajes Gerpa demanded that The Ticket Company submit to mediation. No mediation ever took place.

In January 2010, The Ticket Company entered into an Asset Purchase Agreement, a Bill of Sale, and an Assignment and Assumption Agreement with Dubai Financial. Under these agreements, the Ticket Company transferred the domain names www.onlinetickets.com, www.onlineticket.com, and www.ticketcompany.com, the trade name of Onlinetickets.com, and four phone numbers to Dubai Financial for the purchase price of $10,000. The Ticket Company also assigned, and Dubai Financial assumed, interests and obligations in connection with real property leases in Houston and Las Vegas, and with a license agreement. These agreements were executed by Ali as President and Vice President of The Ticket Company and by Nezhat Malek Fazeli⁷ as Partner and Member of Dubai Financial.

Viajes Gerpa filed an abstract of the 2007 judgment in November 2011. In December 2011, Viajes Gerpa filed its original petition in this case. In its live petition, Viajes Gerpa alleged claims for breach of contract against Ali and Christopher Toy, and against The Ticket Company.⁸ Viajes Gerpa alleged that under section 171.255 of the Texas Tax Code Ali and Toy were liable individually for the 2007 judgment because The Ticket Company forfeited its good standing for nonpayment of franchise taxes. Viajes Gerpa further alleged that Ali was liable individually for the debts of The Ticket Company under section 21.223 of the Texas Business Organizations Code. Viajes Gerpa alleged that Ali, Nezhat, The Ticket Company, and Dubai Financial conspired to commit fraud in the transfer of assets from The Ticket Company to Dubai Financial, and sought to recover exemplary damages. Viajes Gerpa also alleged that it was entitled to a constructive trust on the assets of Dubai Financial or rescission of the sale of assets by The Ticket Company to Dubai Financial.

At trial, the jury found the following:

(1) Ali was responsible for the conduct of The Ticket Company, Inc.;

(2) Ali breached the MSA;

(3) The Ticket Company breached the MSA;

(4) Due to Ali's breach, Viajes Gerpa should be awarded $1,113,500 in damages (the difference that Viajes Gerpa would have received under the MSA if Ali had complied minus any amounts that Viajes Gerpa did receive);

(5) The transfer of The Ticket Company's assets to Dubai Financial was fraudulent as to Viajes Gerpa;

(6) Dubai Financial did not purchase the transferred assets from The Ticket Company in good faith;

(7) Due to the fraudulent transfer Viajes Gerpa should be awarded $700,000 in damages as the value for which The Ticket Company would have sold the assets in an arms'-length transaction; and $150,000 in damages as the amount necessary to satisfy Viajes Gerpa's claim;

(8) Ali and Dubai Financial, but not Nezhat, engaged in a conspiracy that damaged Viajes Gerpa;

(9) There was clear and convincing evidence that the harm to Viajes Gerpa resulted from the fraudulent transfer by The Ticket Company;

(10) A sum of $350,000 in exemplary damages should be assessed against The Ticket Company and awarded to Viajes Gerpa; and

(11) Viajes Gerpa should be awarded its reasonable and necessary attorney's fees in the amount of $113,250 for representation in the trial court; $15,000 for representation in the court of appeals; $15,000 for representation at the petition for review stage, $15,000 for representation at the merits briefing stage, and $15,000 for representation through oral argument and completion of proceedings in the Supreme Court of Texas.

Viajes Gerpa moved for entry of judgment on the verdict. Ali and Dubai Financial filed their opposition to judgment on the verdict, as well as a motion and a supplemental motion to disregard jury findings and enter judgment notwithstanding the verdict. The trial court rendered a judgment on the verdict, ordering that Viajes Gerpa recover damages against Ali in the amount of $1,113,500. Ali and Dubai Financial filed a motion for new trial, motion to reconsider, and motion to modify. After considering this motion and Ali's and Dubai Financial's motion and supplemental motion to disregard, the trial court vacated its prior judgment and rendered a judgment that Viajes Gerpa take nothing on its claims against Ali, Nezhat, Dubai Financial, and The Ticket Company. Viajes Gerpa filed a motion for new trial, which the trial court denied. Viajes Gerpa timely appealed.

II. ANALYSIS

A. Standard of review

A trial court may disregard a jury's verdict and render a JNOV if no evidence supports one or more of the jury's findings or if a directed verdict would have been proper. Tiller v. McLure , 121 S.W.3d 709, 713 (Tex. 2003). We review JNOVs for legal sufficiency of the evidence supporting the verdict, bearing in mind that it is the jury's sole province to evaluate witness...