No CV IN THE FIFTH DISTRICT COURT OF APPEALS DALLAS, TEXAS
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1 No CV IN THE FIFTH DISTRICT COURT OF APPEALS DALLAS, TEXAS 5th Court of Appeals FILED: 7/11/11 14:00 Lisa Matz, Clerk SHIDEH SHARIFI, as Independent Executor of the ESTATE OF GHOLAMREZA SHARIFI, also known as GEORGE SHARIFI, Individually and d/b/a AAMCO TRANSMISSIONS REPAIR CENTER, Appellant/Defendant v. STEEN AUTOMOTIVE, LLC, Appellee/Plaintiff. Appeal from the 298 th Judicial District Court of Dallas County, Texas APPELLANT S REPLY BRIEF SHIDEH SHARIFI Sharifi Saumier, P.C Cole Avenue Dallas, Texas Telephone: Facsimile: i
2 TABLE OF CONTENTS TABLE OF CONTENTS ii INDEX OF AUTHORITIES iii INTRODUCTION ARGUMENT ISSUE I: Summary Judgment A. Standard of Review B. To Prove the Existence of A Valid Contract, STEEN Was Required to Produce the Entire Contract Into the Record and STEEN s Failure to Do So Was Fatal to Its Summary Judgment C. STEEN Failed to Conclusively Establish That the Real Party to the Contract, Steen Automotive, Inc., Performed Under the Contract D. The Contract Is Not Enforceable Because It Was Contingent Upon SHARIFI and Steen Automotive, Inc., Reaching An Agreement on A Certain Property Lease, Which Agreement Was Never Reached ISSUES II, III, and IV: Damages A. STEEN s Misrepresentations of Record Evidence on Lost Profits ISSUE V: Attorney Fees PRAYER CERTIFICATE OF SERVICE ii
3 INDEX OF AUTHORITIES CASES Barnett v. Coppell N. Tex. Ct., Ltd, 123 S.W.3d 804, 815 (Tex.App.-Dallas 2003, pet. denied) Curlee Mfg. Co., Inc. v. Charter Oak Fire Ins. Co., Inc., No. B CV, 1994 WL , at *6 (Tex.App.-Houston [14th Dist.] May 26, 1994, writ denied) (not designated for publication) James M. Clifton, et al v. Premillenium, LTD, 229 S.W.3d 857, 859 (Tex.-App.-Dallas 2007) M.D. Anderson Hosp, and Tumor Inst. V. Willrich, 28 S.W.3d 22, (Tex. 2000) Miller v. Head, 283 S.W. 886, 887 (Tex.Civ.App.-Eastland 1926, no writ) Nixon v. Mr. Prop. Mgm t Co., 690 S.W.2d 546, (Tex. 1985) Smith v. Tam Trust, 296 S.W.3d 545 (Tex. 2009) iii
4 INTRODUCTION Appellant s Initial Brief has clearly stated in detail Appellant s arguments and authorities as to how the trial court erred in its ruling while properly and accurately citing to the record and the law. Inappositely, Appellee s Brief has misquoted, mischaracterized and misstated or ignored the record on a number of occasions, which discrepancies will be addressed more specifically in the Argument section of this Reply Brief. I. Case Summary This appeal was filed by the Appellant/Defendant ( SHARIFI ) in a breach of contract action, whereby Appellee/Plaintiff s ( STEEN ) traditional motion for summary judgment was granted on liability only, despite the fact that STEEN failed to meet its summary judgment burden of conclusively establishing its cause of action. Namely, STEEN failed to produce the Agreement of Sale (the Contract ) in its entirety as summary judgment evidence by STEEN s own admissions in Appellee s Brief, at least three of the seven Exhibits incorporated by reference into the Contract could not be identified and/or located in the record. Additionally, STEEN failed to conclusively establish that the only actual party to the Contract -- other than SHARIFI namely Steen Automotive, Inc., performed under the terms of the contract. As a matter of fact, per STEEN s own admissions in Appellee s Brief, the actual party to the contract, Steen Automotive, Inc., no longer existed as a legal entity at the alleged time of closing and therefore could not have entered into any further contracts to effectuate the closing and/or perform under the terms of the contract. Furthermore, the contract which was for the sale of a business located on real property owned by SHARIFI, was contingent upon the parties reaching an 1
5 agreement on a property lease. STEEN did not conclusively establish that the parties ever reached any such agreement. The Lease Agreement introduced as summary judgment evidence by STEEN was blank as to such material terms as, the name of the lessee, the monthly rental income, and the monthly common area maintenance charges. The Lease Agreement was never signed by either party to the contract! This appeal is also from the judgment of the trial court on the issue of damages. The trial court awarded STEEN $106, in lost profits, $5, in out-of-pocket training expenses, and $135, in attorney fees, all without applying the proper legal standards for calculating net lost profits, for determining the amount of attorney fees award, and also giving the STEEN double recovery by awarding both benefit of the bargain damages and out of pocket expenses. STEEN has misrepresented in its Brief that the trial court did not specify the nature of the foregoing damages, quoting partially from the trial court s judgment, while ignoring the Findings of Fact and Conclusions of Law which were prepared and filed of record by STEEN per the trial court s request. Said Findings of Fact and Conclusions of Law identify the nature of damages awards as stated earlier in this paragraph. ARGUMENT ISSUE I: Summary Judgment A. Standard of Review STEEN has misstated the standard of review of a trial court s decision pertaining to a traditional summary judgment. STEEN spends pages 8 to 11 of Appellee s Brief discussing the state of the parties petitions, amended petitions, answers and amended 2
6 answers at the time of the summary judgment hearing all of which are irrelevant to the standard of review and to STEEN s burden of proof on summary judgment, and now the issues on appeal. Since STEEN failed to conclusively prove the elements of its breach of contract action in its Motion for Summary Judgment, SHARIFI did not even have the burden to respond to STEEN s motion, and therefore what affirmative defenses or counterclaims SHARIFI had on file at the time of the summary judgment hearing is irrelevant to this Court s de novo review. This Court in James M. Clifton, et al v. Premillenium, LTD, 229 S.W.3d 857, 859 (Tex.-App.-Dallas 2007), citing Barnett v. Coppell N. Tex. Ct., Ltd, 123 S.W.3d 804, 815 (Tex.App.-Dallas 2003, pet. denied), stated that the elements of a breach of contract claim are (1) the existence of a valid contract between plaintiff and defendant, (2) the plaintiff performed, (3) the defendant breached the contract, and (4) the plaintiff was damaged as a result. Further, this Court has stated that A motion for summary judgment must stand on its own merits. Citing Nixon v. Mr. Prop. Mgm t Co., 690 S.W.2d 546, (Tex. 1985), and that A nonmovant has no burden to respond to a summary judgment motion unless the movant conclusively establishes its cause of action. Citing M.D. Anderson Hosp, and Tumor Inst. V. Willrich, 28 S.W.3d 22, (Tex. 2000). STEEN failed to conclusively establish each element of its breach of contract action and therefore, although SHARIFI timely and properly filed a response to STEEN s MSJ, STEEN s MSJ did not stand on its merits and even without a response from SHARIFI should have been denied by the trial court. B. To Prove the Existence of A Valid Contract, STEEN Was Required to Produce the Entire Contract Into the Record and STEEN s Failure to Do So Was Fatal to Its Summary Judgment 3
7 STEEN argues that it was unnecessary to produce the entire contract as summary judgment evidence, because the missing parts of the contract were not material. On page 16 of Appellee s Brief STEEN admits that at least three of the seven Exhibits incorporated into the contract by reference either could not be identified or did not exist. STEEN admits that Exhibits C and G were never prepared, and that Exhibit D could not be identified. Additionally, STEEN refers to Exhibit A which was purported to be a list of inventory to be included in the sale price, but erroneously cites to page 489 of Clerk s Record which is actually the listing for the business and not the purported inventory. In fact, after a diligent search of the record, Appellant determined that Exhibit A was not contained in the record. Without the entire contract and all if its terms on record, the court cannot determine its validity, its terms, and therefore its breach and therefore cannot grant STEEN s summary judgment on its breach of contract claim. Curlee Mfg. Co., Inc. v. Charter Oak Fire Ins. Co., Inc., No. B CV, 1994 WL , at *6 (Tex.App.-Houston [14th Dist.] May 26, 1994, writ denied) (not designated for publication) (op. on reh'g) (holding that because the entire policy was not in the record, the trial court erred by granting summary judgment on the appellant's right to recover under the insurance contract); Miller v. Head, 283 S.W. 886, 887 (Tex.Civ.App.-Eastland 1926, no writ) (reversing a judgment for breach of contract on an insurance policy where the statement of facts showed neither the policy nor the substance thereof). The burden of proof is on STEEN to conclusively establish the existence of a valid contract. Without presenting the entire contract, the trial court was precluded from determining the validity of said contract and erred as a matter of law in granting STEEN s summary judgment. C. STEEN Failed to Conclusively Establish That the Real Party to the 4
8 Contract, Steen Automotive, Inc., Performed Under the Contract. Appellee did not conclusively establish that Steen Automotive, Inc. performed under the contract. Steen Automotive, Inc., was the only entity which entered into the contract with SHARIFI. (CR 437). However, none of the closing documents attached to Plaintiff s Motion for Summary Judgment, and Plaintiff s Reply to Defendant s Response to Plaintiff s Motion for Summary Judgment, (CR and CR ) were signed by Steen Automotive, Inc. Moreover, less than two weeks after Steen Automotive, Inc. entered into the contract with SHARIFI, Steen Automotive, Inc. changed its name to Laser Automotive, Inc. (Appellee s Brief at 3). The entity which ultimately signed the closing documents was Steen Automotive, LLC, not the actual party to the Contract. (CR ). Recognizing each entity as a separate and distinct person, STEEN failed to prove that Steen Automotive, Inc. performed under the contract by executing the closing documents. STEEN argues that if SHARIFI had appeared at closing and objected to Steen Automotive, LLC signing the closing documents, Steen Automotive, Inc. would have signed the closing documents instead. However, Steen Automotive, Inc. was no longer in existence at the time of closing, (Appellee s Brief at 3). Additionally, STEEN s burden is to conclusively establish that Steen Automotive, Inc., performed at the alleged closing. The promise and/or speculation as to whether Steen Automotive, Inc. would have performed if asked by SHARIFI does not meet the required burden of summary judgment proof. D. The Contract Is Not Enforceable Because It Was Contingent Upon SHARIFI and Steen Automotive, Inc., Reaching An Agreement on A Certain Property Lease, Which Agreement Was Never Reached STEEN misstated in Appellee s Brief on page 5, that the parties to the contract had reached an agreement regarding the property lease as required under Section 19C of the 5
9 Contract. (CR 442). However, the lease agreement attached to STEEN s Motion for Summary Judgment, is blank as to all material terms, including the amount of monthly rent, the amount of common area maintenance charges, insurance charges, and the amount of property tax charges. Additionally, Steen Automotive, LLC, and not Steen Automotive, Inc., delineated its own name in the lease and signed the lease without the agreement or signature of SHARIFI. (CR ). As a contingency to the contract, failure of the parties to reach an agreement on the property lease was fatal to STEEN s breach of contract claim and precluded the trial court from granting STEEN s summary judgment. ISSUES II, III, and IV: Damages STEEN has misrepresented in its Brief at page 23 that the trial court did not specify the nature of the damages awards, quoting trial court s judgment, while ignoring the Findings of Fact and Conclusions of Law which were prepared and filed of record by STEEN per the trial court s request! (CR 3310). Said Findings of Fact and Conclusions of Law identify the nature of damages awards as addressed in detail in Appellant s Initial Brief. The trial court awarded STEEN $106, in lost profits, $5, in out-of-pocket training expenses, and $135, in attorney fees, all without applying the proper legal standards for calculating net lost profits, for determining the amount of attorney fees award, and also giving STEEN double recovery by awarding it both benefit of the bargain damages and out of pocket expenses. A. STEEN s Misrepresentations of Record Evidence on Lost Profits STEEN misrepresents on page 26 of Appellee s Brief that the Bob McDowell, the broker, had testified that the advertised profits for SHARIFI s business were based on four years of actual data, and in support thereof cites to RR Vol 2, 18&19. However, on page 19, line 8 of the Reporters Record, Bob McDowell states that the advertised profits were 6
10 based on only one year of actual records. (RR Vol. 2, 19). STEEN again misrepresents to the court on pages 2 and 5 of Appellee s Brief that SHARIFI was making an additional unreported sum of cash each week which amount STEEN used in its calculations for pump up the potential lost profits numbers. STEEN cited to its own Affidavit on record at CR 448. However, STEEN ignored the excerpt from SHARIFI s deposition testimony included in the record at STEEN s request as the Reporters Supplemental Record, Deposition pages 64 and 65, whereby SHARIFI denies any unreported cash earnings. (RSR at 64-65). STEEN on page 26 of Appellee s Brief refers to trial Exs. 1, 2, 3, 4, 5, and 6, claiming that said Exhibits somehow support the award of lost profits being appealed. Exhibits 1, 2, and 3 are the business listing and figures of weekly sales for just a few weeks during Exhibit 4 is a patchy spreadsheet kept by SHARIFI showing revenue and expenses for years 2001 to 2004 which demonstrate the cyclical and uncertain nature of the business and its profits. And Exhibits 5 and 6 are s from the broker to STEEN containing highly speculative statements regarding potential for future profits which had no basis in fact. None of the foregoing Exhibits alone or collectively are sufficient to show with reasonable certainly that the subject business could make a profit of over $400, in its first year under STEEN ownership and management, which is what STEEN is asking this Court to accept. STEEN further misrepresented the record evidence in this case on page 28 of Appellee s Brief, by stating that the evidence showed that the lost profits for the business for the first year would have equaled $442, STEEN does not cite to the record to support the foregoing statement. After diligent review and search of the record, SHARIFI has determined that the foregoing statement is not contained in the record. The breakdown of the evidence offered and whether the evidence was admitted or excluded is addressed in 7
11 detail in Appellant s Initial Brief. Appellant s Initial Brief demonstrates that there are no conceivable damages theories or record evidence that could possibly support the $106, award in lost profits. ISSUE V: Attorney Fees SHARIFI, in its Appellant s Initial Brief, has relied on Smith v. Tam Trust, 296 S.W.3d 545 (Tex. 2009), among a number of other cases on the issue of reasonability of attorney fees and the relationship between requested relief and the actual damages recovered. SHARIFI has submitted to this Court that the $135, award of attorney fees to STEEN is unreasonable under Tam Trust. If the trial court applied the Tam Trust standards to the case at bar, the court would have had to consider the fact that STEEN prosecuted its suit against SHARIFI for total damages of approximately $1.9 Million Dollars -- all of which was for lost profits from a business that made only $106, in its best year and ended up with an award of $111, in actual damages. STEEN s only rebuttal to the foregoing is that the case at bar is distinguishable and the relative success measure should not be applied to STEEN s attorney fees, simply because this case has taken five years to litigate. Following STEEN s logic, any plaintiff and their attorney can pursue any claim, no matter how nominal, and over litigate the matter for as long as the parties schedules and the court s docket will allow and collect a hefty and disproportionate sum for attorney fees at the end just because the case went on for a few years. Tam Trust is intended to keep attorney fees in check and take away the plaintiff s incentive to run up litigation cost. In the case at bar, STEEN was in fact the Plaintiff in the lower court proceedings and for the most part controlled the pace of the case and determined the amount of defense work required. STEEN should not be awarded attorney fees which are well in excess of its ultimate recovery and entirely disproportionate to its relative success in this case. 8
12 PRAYER For the foregoing reasons, and those set forth in Appellant s Initial Brief, the court should reverse the ruling of the trial court on summary judgment and reverse the trial court s rulings on damages and attorney fees, and remand the case for determination of liability. Respectfully submitted, _ Shideh Sharifi Texas Bar No.: SHARIFI SAUMIER, P.C Cole Avenue Dallas, Texas Telephone: Facsimile: Certificate of Service I certify that a true copy of the foregoing Appellant s Reply Brief was served on attorney of record John Diggins, 7920 Beltline Road, Suite 760, Dallas, Texas 75254, in accordance with the Texas Rules of Civil Procedure on the 21st day of July, Shideh Sharifi 9
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