Zinda v. McCann Street, Ltd., 06-04-00137-CV.

• Decision Date: 09 November 2005
• Docket Number: No. 06-04-00137-CV.,06-04-00137-CV.
• Citation: 178 S.W.3d 883
• Parties: John ZINDA, Appellant, v. McCANN STREET, LTD., McCann Street General, Inc., C. Kyle Smith, G.P. Smith, III, and Cheyene Smith, Appellees.
• Court: Texas Supreme Court

178 S.W.3d 883

John ZINDA, Appellant, v. McCANN STREET, LTD., McCann Street General, Inc., C. Kyle Smith, G.P. Smith, III, and Cheyene Smith, Appellees.

No. 06-04-00137-CV.

Court of Appeals of Texas, Texarkana.

Submitted October 5, 2005.

Decided November 9, 2005.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Frank Supercinski, Longview, for appellant.

Stephen R. Patterson, Merriman, Patterson, Connolly & Hughes, LLP, Longview, for appellee.

Before MORRISS, C.J., ROSS and CARTER, JJ.

OPINION

Opinion by Justice ROSS.

John Zinda appeals from a judgment in a jury trial. Zinda had been a limited partner in McCann Street, Ltd. (the partnership). The other limited partners were brothers and sister, C. Kyle Smith, G.P. Smith, III, (Trey) and Cheyene Smith. McCann Street General, Inc.—of which Kyle¹ and Trey were the controlling shareholders—was the corporate general partner. The partnership owned and operated a restaurant, the McCann Street Bar and Grill, which was managed by Zinda. On learning Zinda had taken substantial sums out of the business coffers for his own use, the other partners foreclosed on his partnership interest and sold that interest. Zinda sued the partnership, its general partner, and the other limited partners, individually, for excluding (or evicting) him from the business and for a number of other wrongs allegedly resulting from their actions. Zinda did not prevail at trial on any of his allegations.

In response to Zinda's suit against them, the partnership and partners, Kyle and Trey, sued Zinda for unpaid rent on the property, for failure to repay a personal note to Kyle and Trey, and for money allegedly due to Kyle on Zinda's sale of a separate piece of property.

At the close of the evidence, the trial court granted a directed verdict in favor of Cheyene. The jury found in favor of the partnership and partners, Kyle and Trey, on all of their issues. Zinda appeals and names Cheyene as an appellee, even though Zinda does not appeal the directed verdict Cheyene was granted. Therefore, "appellees" in this opinion refers to the partnership, its general partner (McCann Street General, Inc.), and the other limited partners, Kyle and Trey (the Smiths).

Background Facts

The evidence shows that Zinda had owned and managed the restaurant individually until 1998. It burned, and the partnership was formed which borrowed money to rebuild the restaurant. It reopened in 2000. Zinda leased the building from the partnership for twenty years at $7,500.00 per month.

Zinda continued as the manager and paid rent (the $7,500.00 each month) to the partnership, while taking his salary from the business income. By August 2001, Zinda was two months behind on rent and went to the Smiths asking for help because of stock market problems emanating from his options trading. The Smiths personally loaned Zinda over $33,000.00, interest free, so he could pay the back rent and $17,000.00 in delinquent sales taxes. Zinda made two payments on that loan, but none thereafter. As collateral for that note, he pledged his partnership interest in the partnership.

The Smiths later learned that, at the same time Zinda obtained the loan from them, he had deposited $54,000.00 into his options trading account. The evidence shows that, at about the same time, the Smiths encouraged Zinda to obtain help for his gambling problem, and the Smiths also suggested an increase in salary for Zinda so he could stop making draws from the operating account. The Smiths also learned that Zinda had not paid the Internal Revenue Service over $75,000.00 in payroll taxes and that Zinda had used money from the payroll taxes, sales taxes, and rental funds for his personal benefit. There was also evidence he had written checks to McCann entities, but then endorsed the checks and deposited them in his personal account.

The Smiths and the partnership officially notified Zinda January 28, 2002, that he was delinquent on his note and a month and a half behind on his rent. Although he did thereafter make partial payments, he did not bring the rent current. The Smiths were added as signatories to the operating account, and they then paid the suppliers as Zinda brought the invoices to them and, when money was available, made partial payments of rent from that account. In March 2002, the Texas Comptroller froze the operating account because of another delinquency, this time of over $23,000.00, in unpaid sales taxes. At that point, it became clear Zinda had been taking money from that account for his own use. By April 2, Zinda accumulated enough funds to pay the levied amount.

The Smiths evidently began to discuss with Zinda acquiring a fifty-one percent interest in the partnership until payments for the building were complete. While negotiating that matter, they discovered that Zinda again owed over $60,000.00 in unpaid payroll taxes, that he had used that money himself, and that checks written on the alcoholic beverage replacement account were bouncing because Zinda had been skimming from that account. On April 10, the Smiths began the process of foreclosure. The evidence shows that Zinda arrived while the locks were being changed and that Zinda and the Smiths, at that point, discussed options that might keep the restaurant open. The Smiths proposed Zinda turn over operation of the restaurant, but continue as a host with a salary of $4,500.00 per month. The outstanding bills of suppliers were to be paid by the Smiths up to a maximum of $27,000.00, but with the amount of those bills to be taken off the back end of what was owed Zinda in salary. Zinda agreed to this arrangement and urged Fritz Kirl, the restaurant's long-time assistant manager, and his wife, Barbie, a waitress, to stay with the operation. There is evidence Zinda apologized to the Kirls for "it happening," which he attributed to his gambling and options trading.

Zinda remained as host of the restaurant for a few weeks, but when the Smiths received the alcoholic beverage replacement statement, it showed that, on April 10, Zinda had withdrawn another $2,500.00. According to the appellees, this was "the final straw."

The case was tried to a jury. At the close of Zinda's case, the court directed a verdict against Zinda's claims for defamation, intentional interference with contracts between Zinda and his employees and suppliers, and that Zinda take nothing on his claim for malice. At the close of all evidence, the jury found (on the counterclaims) that the partnership was due $15,675.00 for past-due rentals and late charges under the lease, that Kyle was due $18,000.00 on the sale of the "Bless Your Heart" property, and that the Smiths were entitled to $29,377.78 for the balance of a $33,050.00 note. The trial court granted judgment pursuant to the jury's verdict and ordered the Smiths' security interest in Zinda's limited partnership interest be foreclosed.

Directed Verdict and Denial of Judgment Notwithstanding the Verdict

Zinda raises a series of arguments based on his contention the court erred by granting a directed verdict and by failing to grant a judgment notwithstanding the verdict on his allegations of (1) wrongful eviction; (2) breach of the covenant of quiet enjoyment; (3) breach of fiduciary duty; (4) conversion of the lease and his personal property; and (5) tortious interference with contract.

1. Wrongful eviction/breach of the covenant of quiet enjoyment

We first address Zinda's contentions concerning wrongful eviction and breach of the covenant of quiet enjoyment.² Zinda contends the court erred by failing to submit an issue to the jury on wrongful eviction because there was some evidence he was wrongfully evicted. His follow-up argument is that he proved, as a matter of law, he was wrongfully evicted and that the court thus also erred by overruling his motions for instructed verdict and judgment notwithstanding the verdict.³

Rule 277 requires a trial court to submit instructions and definitions to the jury as are necessary to enable the jury to render a verdict. See Tex.R. Civ. P. 277; Elbaor v. Smith, 845 S.W.2d 240, 243 (Tex.1992). The complaining party must establish that the error amounts to such a denial of rights as was reasonably calculated to cause and probably did cause the rendition of an improper judgment. Tex.R.App. P. 44.1; Island Recreational Dev. Corp. v. Republic of Tex. Sav. Ass'n, 710 S.W.2d 551, 555 (Tex.1986); Autry v. Dearman, 933 S.W.2d 182, 188 (Tex.App.-Houston [14th Dist.] 1996, writ denied). A judgment must be reversed when a party is denied proper submission of a valid theory of recovery or a vital defensive issue raised by the pleadings and evidence, if timely raised and properly requested as part of the charge. Exxon Corp. v. Perez, 842 S.W.2d 629, 631 (Tex.1992); Mayes v. Stewart, 11 S.W.3d 440, 455 (Tex.App.-Houston [14th Dist.] 2000, pet. denied). The test is whether the request was reasonably necessary to enable a jury to render a proper verdict. However, if a court's charge fairly and fully presents all controlling questions, it is not error to refuse to submit additional instructions that are mere shades or variations of the questions submitted. Carr v. Weiss, 984 S.W.2d 753, 766 (Tex.App.-Amarillo 1999, pet. denied).

Even assuming there was some evidence Zinda's eviction was wrongful, we recognize the jury charge in this case contained a question asking whether the partnership had failed to comply with the terms of the lease. The jury found the partnership did not fail to comply. This necessarily covers the issue of whether Zinda was wrongfully evicted pursuant to the terms of the lease: if Zinda did not prove the partnership failed to comply with the terms of the lease, then Zinda did not prove the eviction was wrongful. The court therefore did not err by failing to submit the requested questions.

We now turn to Zinda's contention the court should have rendered judgment notwithstanding the...