SHAWN IBRAHIM, INC., MAHMOOD AKHTAR AND MUHAMMAD AMIN V. HOUSTON-GALVESTON AREA LOCAL DEVELOPMENT CORPORATION AND SUNNYLAND DEVELOPMENT, INC appellants brief

ACCEPTED
01-18-00195-CV
FIRST COURT OF APPEALS
HOUSTON, TEXAS
7/13/2018 8:31 PM
CHRISTOPHER PRINE
CLERK

No. 01-18-00195-CV

_________________________________________________________________
FILED IN
IN THE FIRST COURT OF APPEALS 1st COURT OF APPEALS
HOUSTON, TEXAS

7/13/2018 8:31:24 PM
CHRISTOPHER A. PRINE
Clerk
SHAWN IBRAHIM, INC., MAHMOOD AKHTAR AND MUHAMMAD AMIN
Appellants

HOUSTON-GALVESTON AREA LOCAL DEVELOPMENT
CORPORATION AND SUNNYLAND DEVELOPMENT, INC.

Appellees

__________________________________________________________________

On Appeal from the 113th Judicial District Court
Harris County, Texas
Trial Court Cause No. 2016-40070
Honorable Michael Landrum, Judge Presiding

_________________________________________________________________

APPELLANTS’ BRIEF
__________________________________________________________________

Howard L. Close
State Bar No. 04406500
Michael Choyke

State Bar No. 00793504
WRIGHT CLOSE & BARGER, LLP
One Riverway, Suite 2200
Houston, Texas 77056
Telephone: (713) 572-4321
Facsimile: (713) 572-4320
close@wrightclosebarger.com

choyke@wrightclosebarger.com

ATTORNEYS FOR APPELLANTS

SHAWN IBRAHIM, INC., MAHMOOD AKHTAR, AND MUHAMMAD AMIN

Oral Argument Requested

IDENTITY OF PARTIES AND COUNSEL

Appellants:

Shawn Ibrahim, Inc.
Mahmood Akhtar

Muhammad Amin

Counsel for Appellants:

Howard L. Close
Michael Choyke

WRIGHT CLOSE & BARGER, LLP
One Riverway, Suite 2200
Houston, Texas 77056

Additional counsel for Appellants:

Herbert W. Fortson III
Micah B. Fortson

FORTSON, FRAZER & SIEGRIST, P.C.
2702 Jackson Street
Houston, Texas 77004

Appellees:

Houston-Galveston Area Local

Development Corporation
Sunnyland Development, Inc.

Counsel for H-GALDC:

Ramon G. Viada III
Stefanie S. Strayer

VIADA & STRAYER
17 Swallow Tail Court, Suite 100

The Woodlands, Texas 77381

Counsel for Sunnyland:

Joe Yardas

YARDAS LAW FIRM
100 I-45 North, Suite 200, Box 200

Conroe, Texas 77301

TABLE OF CONTENTS
Page

IDENTITY OF PARTIES AND COUNSEL 2

TABLE OF CONTENTS 3

INDEX OF AUTHORITIES 5

STATEMENT OF THE CASE 7

STATEMENT REGARDING ORAL ARGUMENT 8

ISSUES PRESENTED 9

STATEMENT OF FACTS 10

STANDARD OF REVIEW 15

SUMMARY OF THE ARGUMENT 15

ARGUMENT 17

I. The trial court erred in granting summary judgment to CDC. 17

A. Fact issues preclude summary judgment on Ibrahim’s
claims against CDC. 18

1. CDC failed to establish as a matter of law that it
made no contractual promises or representations. 18

2. The summary-judgment evidence established
Ibrahim’s reasonable reliance on CDC’s conduct. 21

3. CDC’s contractual obligations were not precluded
by an alleged assignment. 22

4. The summary-judgment evidence did not conclusively establish any of CDC’s affirmative

defenses. 23

a. CDC did not conclusively establish Ibrahim
waived its claims 24

b. CDC did not conclusively establish Ibrahim 3

failed to mitigate all its damages. …………………………….. 25
c. CDC did not conclusively establish a prior
material breach by Ibrahim that excused
CDC’s performance. ………………………………………………. 26

5. There is no authority for CDC’s assertion that
implied promises cannot support a claim for fraud
or negligent misrepresentation. …………………………………………. 27
B. CDC is not entitled to a no-evidence summary judgment. …………….. 27

II. The trial court erred in granting summary judgment for
Sunnyland. 29

A. Ibrahim’s claims against Sunnyland in this lawsuit were
not mature at the time of the first lawsuit. 32

B. Ibrahim’s claims do not arise out of the same transaction
or occurrence as Sunnyland’s claim in the first lawsuit. 32

PRAYER 34

CERTIFICATE OF COMPLIANCE 35

CERTIFICATE OF SERVICE 35

INDEX OF AUTHORITIES
Page
Cases
Barr v. Resolution Trust Corp.,
837 S.W.2d 627 (Tex. 1992) …………………………………………………………………….. 33
Coker v. Coker,
650 S.W.2d 391 (Tex. 1983) …………………………………………………………………….. 20
Coleman v. Ammons,
249 S.W.2d 1014 (Tex. Civ. App.—Dallas 1952, no writ) ………………………….. 27
D.S.A. Inc. v. Hillsboro Independent School District,
973 S.W.2d 662 (Tex. 1998) …………………………………………………………………….. 29
Geotech Energy Corp. v. Gulf States Tel. & Info. Sys., Inc.,
788 S.W.2d 386 (Tex. App.—Houston [14th Dist.] 1990, no writ) ……………….. 25
Goodyear Tire & Rubber Co. v. Mayes,
236 S.W.3d 754 (Tex. 2007) …………………………………………………………………….. 15
Hall v. Harris County Water Control & Imp. Dist. No. 50,
683 S.W.2d 863 (Tex. App.—Houston [14th Dist.] 1984, no writ) ……………….. 21
In re Gen’l Elec. Capital Corp.,
203 S.W.3d 314 (Tex. 2006) …………………………………………………………………….. 24
Ingersoll-Rand Co. v. Valero Energy Corp.,
997 S.W.2d 203 (Tex. 1999) ………………………………………………………………. 31, 32
Jernigan v. Langley,
111 S.W.3d 153 (Tex. 2003) …………………………………………………………………….. 24
Johnson v. Brewer & Pritchard, P.C.,
73 S.W.3d 193 (Tex. 2002) ………………………………………………………………………. 15
M.D. Anderson Hosp. & Tumor Inst. v. Willrich,
28 S.W.3d 22 (Tex. 2000) ………………………………………………………………………… 15
Mack Trucks, Inc. v. Tamez,
206 S.W.3d 572 (Tex. 2006) …………………………………………………………………….. 15
Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding,
289 S.W.3d 844 (Tex. 2009) ………………………………………………………………. 21, 27
Seagull Energy E&P, Inc. v. Eland Energy, Inc.,
207 S.W.3d 342 (Tex. 2006) …………………………………………………………………….. 23
Taylor Foundry Co. v. Wichita Falls Grain Co.,
51 S.W.3d 766 (Tex. App.—Fort Worth 2001, no pet.) ……………………………….. 23
Tenneco Inc. v. Enter. Prods. Co.,
925 S.W.2d 640 (Tex. 1996) …………………………………………………………………….. 23
Travelers Ins. Co. v. Joachim,
315 S.W.3d 860 (Tex. 2010) …………………………………………………………………….. 30
5

Triton 88, L.P. v. Star Elec., L.L.C.,
411 S.W.3d 42 (Tex. App.—Houston [1st Dist.] 2013, no pet.) 23, 26
Ulico Cas. Co. v. Allied Pilots Ass’n,
262 S.W.3d 773 (Tex. 2008) 24

Van Indep. Sch. Dist. v. McCarty,
165 S.W.3d 351 (Tex. 2005) 24
Vu v. ExxonMobil Corp.,
98 S.W.3d 318 (Tex. App.—Houston [1st Dist.] 2003, pet. denied) 24

Rules

TEX. R. CIV. P. 94 30

TEX. R. CIV. P. 166a(i) 29

Other Authorities

11 Richard A. Lord, Williston on Contracts § 31:7 (4th ed. 1999) 20
2 Joseph M. Perillo & Helen Hadjiyannakis Bender,
Corbin on Contracts § 5.27 (rev. ed. 1995) 20

STATEMENT OF THE CASE

Nature of the case:

Suit for breach of estoppel/detrimental reliance,

contract,

fraud

promissory and negligent

misrepresentation. (CR 234)

Trial Court:

113th Judicial District Court, Harris County, Texas; the Honorable Michael Landrum, presiding.

Trial Court Disposition: The trial court granted both appellees’ motions for summary judgment and dismissed all of appellants’ claims with prejudice. (CR 1096)

STATEMENT REGARDING ORAL ARGUMENT

Appellants Shawn Ibrahim, Inc., Mahmood Akhtar, and Muhammad Amin respectfully request oral argument. This appeal has a complicated factual and procedural history, including another lawsuit and appeal involving many of the same parties. Appellants believe that oral argument will allow the Court to ask about the issues it considers most important and will assist the Court in its determination.

ISSUES PRESENTED

1. Did the trial court err by granting Houston-Galveston Area Local Development Corporation’s (CDC’s) motion for summary judgment?

a. Did CDC establish as a matter of law that it did not make any express or implied promises to Appellants?

b. Did CDC establish as a matter of law that Appellants did not reasonably rely on any conduct by CDC?

c. Did CDC establish as a matter of law all elements of its affirmative defenses of waiver, failure to mitigate damages, prior material breach, and assignment?

d. Does the summary-judgment evidence raise genuine issues of fact on the essential elements of Appellants’ claims for breach of contract, promissory estoppel/detrimental reliance, fraud, and negligent misrepresentation?

2. Did the trial court err by granting Sunnyland Development, Inc.’s motion for summary judgment?

a. Did Sunnyland establish as a matter of law that all of Appellants’ claims are barred by the doctrine of res judicata?

TO THE HONORABLE FIRST COURT OF APPEALS:

Appellants Shawn Ibrahim, Inc., Mahmood Akhtar, and Muhammad Amin file this Brief and respectfully shows this Court as follows:

STATEMENT OF FACTS

In connection with a project to construct a truck stop and restaurant complex in LaPorte, Texas, Shawn Ibrahim, Inc. applied for and obtained a loan guarantee from the Small Business Administration (SBA) through its 504 Loan Program.1 (CR

235) This project had an anticipated total cost of just over $3.7 million. (Id.) Accordingly, in 2005, the SBA prepared and signed an Authorization for Debenture Guarantee (“Authorization”) setting forth the terms of the underlying loan and the SBA’s guarantee of that loan. (CR 248) The SBA agreed to guarantee approximately 26% of the total project costs, which was to be funded by the issuance of 20-year bonds by the Houston-Galveston Area Local Development Corporation, the selected

Certified Development Company (CDC) for the LaPorte project.2 (CR 249) Ibrahim was required to contribute $874,000 to the project, or approximately 24% of the total

Under the 504 Loan Program, the SBA partners with a local Certified Development Company, or CDC, to assist an approved small business to obtain financing for projects such as the one in this case. According to the SBA’s website, the typical structure of a 504 Loan provides that the CDC (backed by a guarantee from the SBA) will finance 40% of a project’s costs, a participating bank will finance 50%, and the remaining 10% is provided by the business itself. See https://www.sba.gov/offices/headquarters/ofa/resources/4049.

For brevity and convenience, this brief will refer to the Houston-Galveston Area Local Development Corporation as “CDC.”

project cost. (CR 251) A third-party lender (Sterling Bank) would provide financing

for the remaining 50%, as well as an interim loan that would be paid off by the bond

proceeds. (CR 250)

The Authorization was signed by both Ibrahim and CDC, both of whom

expressly agreed “to comply fully with the terms and conditions” of the

Authorization. (CR 262) In addition to Ibrahim’s initial contribution, Ibrahim was

required to execute a 20-year note in favor of the CDC in an amount of just over $1

million, secured by the property in LaPorte and a security interest in Ibrahim’s

equipment. (CR 251–53)

To meet its $874,000 contribution requirement, Ibrahim also needed to obtain

a gap-financing loan of $200,000 from the project developer, Sunnyland

Development, Inc. (CR 236) The Authorization contemplated Ibrahim’s need for

additional financing, and it provided for the subordination of this additional loan to

CDC’s loan. First, the Authorization contained the following general provision:

If any of [Ibrahim’s] contribution is borrowed and secured by any of the Project Property, the resulting obligation must be expressly subordinate to the liens securing the Promissory Note (“Note”) in favor of CDC, and may not be repaid at a faster rate than the Note unless prior written approval is obtained from SBA. (CR 251 [Authorization ¶ B(4)(a)(3)])

In addition, the Authorization expressly acknowledged the anticipated loan

from Sunnyland and specifically required CDC to obtain a Standby Creditor’s

Agreement from Sunnyland:

At or prior to 504 Loan Closing, CDC to obtain Standby Creditor’s Agreement from Sunnyland Development, Inc., for $200,000.00, plus all accrued and future interest (Standby Debt). No payment of principal or interest is to be made on Standby Debt during the term of the Loan. Standby Creditor must subordinate any lien rights in collateral securing the Loan to CDC’s rights in the collateral, and take no action against Borrower or any collateral securing the Standby Debt without CDC’s consent. (CR 257 [Authorization ¶ E(5)])

In December 2005, Ibrahim executed a promissory note with Sunnyland for

$200,000, payable in monthly installments. (CR 263) Mahmood Akhtar (the

president of Ibrahim) and Muhammad Amin also signed the Sunnyland note as

guarantors. (CR 265)

Ibrahim and CDC entered into the 504 Loan Agreement on January 24, 2008,

through which CDC agreed to a $1,128,000 loan to Ibrahim to finance the LaPorte

project. (CR 271) The same day, Sunnyland and CDC entered into the Standby

Creditor’s Agreement referenced in the Authorization with respect to Sunnyland’s

$200,000 loan to Ibrahim. (CR 266) Sunnyland, as the “Standby Creditor”

referenced in the Authorization, expressly agreed it would accept no further

payments on that debt “except as permitted in the Authorization” and that it would

“take no action to enforce claims against [Ibrahim] on the Standby Debt, without

written consent from CDC, until the CDC Loan is satisfied.” (Id.) The Standby

Creditor’s Agreement further provided that CDC had discretion to take certain

actions “without affecting this Agreement.” (CR 267)

In January 2011, Ibrahim filed a lawsuit against Sunnyland and several related entities, alleging breach of contract and other claims relating to Sunnyland’s work on the construction project. (See CR 415) Sunnyland filed a counterclaim seeking the full amount of its $200,000 note plus interest, late fees, and attorney’s fees. (Id.) Sunnyland later amended its counterclaim to add Akhtar and Amin as counter-defendants. (Id.) Following the close of evidence, Ibrahim settled its affirmative claims, leaving only Sunnyland’s claim on the note. (Id.) The trial court entered judgment for Sunnyland against Ibrahim, Akhtar, and Amin for $453,667.59, plus attorney’s fees. (CR 433) Ibrahim and the guarantors appealed, arguing (among other things) that Sunnyland’s right to enforce the note was barred by the Standby Creditor’s Agreement. (See CR 413) The court of appeals rejected this argument, concluding that Ibrahim, Akhtar, and Amin did not present evidence about “whether the [Standby Creditor’s Agreement] had been breached or whether [CDC] had consented to Sunnyland’s suit.” (CR 421) The trial court’s judgment was affirmed. (CR 428)

Ibrahim3 then filed this suit against CDC and Sunnyland, alleging the following: (1) CDC breached the Authorization and the 504 Loan by refusing to enforce the Standby Creditor’s Agreement; (2) both CDC and Sunnyland breached

3 For convenience, when referring to the present lawsuit, this brief will refer to Appellants/Plaintiffs Shawn Ibrahim, Inc., Mahmood Akhtar, and Muhammad Amin collectively as “Ibrahim.”

the Standby Creditor’s Agreement, on which Ibrahim relied as the intended third-party beneficiary of that agreement; (3) alternatively, Ibrahim relied to its detriment on the promises made by CDC and Sunnyland in the Authorization, the 504 Loan, and the Standby Creditor’s Agreement; and (4) CDC and Sunnyland committed fraud or negligent misrepresentation through representations made in the Authorization, the 504 Loan, and the Standby Creditor’s Agreement. (CR 234) As a result of these actions, Ibrahim (and the guarantors) suffered damages because Sunnyland was able to sue Ibrahim and recover a judgment on the $200,000 note. (See CR 240–44) In the alternative, Ibrahim sought a declaration that the full amount of the judgment owed to Sunnyland be paid into the court’s registry and credited to the 504 Loan. (CR 244–45)

CDC initially filed a plea to the jurisdiction or, alternatively, motion for summary judgment. (CR 29) That motion was denied. (CR 776) CDC later filed a “Second Motion for Summary Judgment,” asserting numerous traditional and no-evidence grounds. (CR 817) Sunnyland also filed a motion for summary judgment, asserting as its sole ground that all of Ibrahim’s claims were barred by res judicata. (CR 401) The trial court granted CDC’s second motion and Sunnyland’s motion and signed a final judgment on February 12, 2018. (CR 1096) Ibrahim timely filed a notice of appeal. (CR 1103)

STANDARD OF REVIEW

An order granting summary judgment is subject to de novo review. Mack Trucks, Inc. v. Tamez, 206 S.W.3d 572, 582 (Tex. 2006). The Court must consider all evidence in the light most favorable to the nonmovant (Ibrahim), crediting evidence favorable to Ibrahim if reasonable jurors could, and disregarding contrary evidence unless reasonable jurors could not. Id. The evidence raises a genuine issue of fact if reasonable and fair-minded jurors could differ in their conclusions in light of all the summary-judgment evidence. Goodyear Tire & Rubber Co. v. Mayes, 236 S.W.3d 754, 755 (Tex. 2007).

In a traditional motion for summary judgment, the movant’s motion and summary-judgment evidence must facially establish its right to judgment as a matter of law. M.D. Anderson Hosp. & Tumor Inst. v. Willrich, 28 S.W.3d 22, 23 (Tex. 2000). If that burden is met, the nonmovant may still defeat summary judgment by raising a genuine, material fact issue. Id. A no-evidence summary judgment must be reversed if the nonmovant points out summary-judgment evidence raising a genuine issue of fact as to the essential elements attacked in the no-evidence motion. Johnson v. Brewer & Pritchard, P.C., 73 S.W.3d 193, 206–08 (Tex. 2002).

SUMMARY OF THE ARGUMENT

This Court should reverse the trial court’s order granting CDC’s and Sunnyland’s motions for summary judgment. CDC failed to establish its entitlement

to judgment as a matter of law on Ibrahim’s claims. Texas law recognizes that a party may be responsible under contract law or tort law for a promise that is implied as an expression of that party’s intent. CDC’s promise to obtain an agreement from Sunnyland that Sunnyland would not sue to enforce its $200,000 promissory note until Ibrahim satisfied its loan from CDC (unless CDC consented) at least raises fact issues whether CDC impliedly promised to enforce that standby agreement and whether Ibrahim reasonably and detrimentally relied on that promise. CDC also failed to establish as a matter of law all elements of its affirmative defenses—waiver, failure to mitigate damages, excuse due to a prior material breach, and assignment of the contract. Nor is CDC entitled to a no-evidence summary judgment, because the summary-judgment evidence raises genuine issues of material fact on the essential elements of Ibrahim’s affirmative claims.

Sunnyland likewise failed to establish it was entitled to judgment as a matter of law on its sole ground for summary judgment, res judicata. Because Ibrahim was defending against Sunnyland’s claim in the first lawsuit, res judicata only applies to bar Ibrahim’s claims in this suit if all of these claims were compulsory counterclaims in the first suit. They are not, because the claims in this suit did not mature until Sunnyland successfully obtained a judgment against Ibrahim, and because the claims arise out of different events and a different transaction.

ARGUMENT

I. The trial court erred in granting summary judgment to CDC.

The trial court erroneously granted CDC’s Second Motion for Summary

Judgment and dismissed all of Ibrahim’s claims against CDC. (CR 1096) CDC’s

motion combined a traditional motion and a no-evidence motion. (See CR 818–19)

In its traditional motion, CDC asserted the following grounds for summary

judgment:

(1) CDC was entitled to summary judgment on all of Ibrahim’s claims for breach of contract, estoppel, fraud, and misrepresentation because CDC did not make a promise or representation in the contractual documents that it would enforce the Standby Creditor Agreement. Therefore, as a matter of law, there was no breach of contract, act of misrepresentation, or reasonable reliance.

(2) Any obligation created under the contractual documents was assigned by CDC to SBA.

(3) Ibrahim’s claims are defeated by the defenses of waiver and failure to mitigate damages.

(4) Ibrahim’s claims for breach of contract are subject to defenses of prior material breach and assignment of the contract to SBA.

(5) Ibrahim’s claims for fraud and negligent misrepresentation are based on implied promises, which are non-actionable.

(6) Ibrahim’s claims for declaratory judgment are non-justiciable as to CDC.

(7) Ibrahim’s claims for declaratory judgment fail as a matter of law because Ibrahim was not entitled to pre-pay the 504 Loan without consent or penalty.

(CR 818–19) For its no-evidence motion, CDC asserted the following grounds:

(1) On Ibrahim’s claim for breach of contract, there is no evidence of (a) the existence of a valid contract; (b) any breach of a contractual promise by CDC; and (c) damages to Ibrahim as the natural, probable, and foreseeable consequence of CDC’s breach. (CR 830–31)

(2) On Ibrahim’s claim for promissory estoppel/detrimental reliance, there is no evidence of (a) a promise by CDC to Ibrahim; (b) foreseeable reliance by Ibrahim on the promise; and (c) substantial, detrimental reliance by Ibrahim. (CR 839–40)

(3) On Ibrahim’s claim for fraud, there is no evidence of (a) a false, material representation made by CDC to Ibrahim; (b) a representation made that CDC either knew was false or made recklessly without knowledge of the truth; (c) CDC’s intent to induce Ibrahim to act to its detriment on the misrepresentation; and (d) substantial, detrimental reliance by Ibrahim. (CR 841–42)

(4) On Ibrahim’s claim for negligent misrepresentation, there is no evidence that (a) CDC supplied false information for the guidance of Ibrahim; (b) CDC failed to exercise reasonable care in supplying information to Ibrahim; (c) Ibrahim justifiably relied on CDC’s information; and (d) CDC’s negligent misrepresentation proximately caused injury to Ibrahim that is distinct, separate, and independent from the economic losses recoverable for breach of contract. (CR 843–44)

A. Fact issues preclude summary judgment on Ibrahim’s claims against CDC.

1. CDC failed to establish as a matter of law that it made no contractual promises or representations.

It is undisputed that CDC and Ibrahim entered into a contract. Under the initial Authorization between CDC, Ibrahim, and the SBA, CDC agreed to issue a 20-year debenture that would be used to fund a loan to Ibrahim. (CR 248) The Authorization acknowledges that Ibrahim might obtain a separate loan for a portion of its initial 18

contribution, and the Authorization provides that “the resulting obligation must be

expressly subordinate to the liens securing the Promissory Note (‘Note’) in favor of

CDC.” (CR 251) The Authorization expressly refers to the need for CDC to obtain

a Standby Creditor’s Agreement from Sunnyland to ensure that the 504 Loan would

be paid first:

Borrower or any collateral securing the Standby Debt without CDC’s consent. CDC must attach a copy of the Standby Note evidencing the Standby Debt to the Standby Creditor’s Agreement. (CR 257) (emphasis added)

Thus, CDC agreed that it would obtain a Standby Creditor’s Agreement from

Sunnyland providing that Sunnyland would take no action against Ibrahim on the

$200,000 note without CDC’s consent.

It is also undisputed that CDC never consented to Sunnyland taking action

against Ibrahim on the note. Instead, CDC takes the position that it “had no

obligations under the loan documents to enforce the standby creditor’s agreement

against Sunnyland.” (CR 326) As a result, Sunnyland successfully sued Ibrahim on

that $200,000 note and recovered a judgment against Ibrahim.

CDC argues that, while it expressly agreed to (and did) obtain a Standby

Creditor’s Agreement from Sunnyland that required Sunnyland to “take no action

against” Ibrahim, CDC made no agreement or promise to enforce that agreement.

But courts should avoid interpreting a contract in a manner that renders a provision

meaningless. See Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983). In essence,

CDC contends that it made a meaningless promise—it agreed to obtain an agreement

that prohibited Sunnyland from enforcing its note without consent, but now CDC

claims it had no obligation to actually provide its consent or to enforce that provision.

The Court should reject this interpretation.

Ibrahim alleges that, as a necessary extension of CDC’s express promise to

obtain Sunnyland’s agreement to take no action against Ibrahim on the $200,000

loan, CDC made an implied promise to enforce that agreement. CDC asserts such

implied promises cannot exist as a matter of law. To the contrary, the Texas Supreme

Court has recognized that an implied promise may exist in the context of a written

agreement. Relying on two of the leading treatises on contract law, the court

acknowledged the existence of implied promises and stated that circumstances under

which such terms may be implied:

As one treatise states the rule: “[t]erms are implied not because they are just or reasonable, but rather for the reason that the parties must have intended them and have only failed to express them . . . or because they are necessary to give business efficacy to the contract as written.” 2 Joseph M. Perillo & Helen Hadjiyannakis Bender, Corbin on Contracts

§ 5.27 (rev. ed. 1995); see also 11 Richard A. Lord, Williston on Contracts § 31:7 (4th ed. 1999) (“[T]erms are to be implied in contract, not because they are reasonable, but because they are necessarily involved in the contractual relationship, such that the parties must have intended them and must have failed to express them only because of

sheer inadvertence or because they are too obvious to need expression.”).

Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 850 (Tex. 2009). At a minimum, the evidence raises a fact issue as to whether the contract contains an implied promise by CDC that it will enforce its agreement with Sunnyland—an agreement it expressly promised Ibrahim in the Authorization that it would obtain, and one which is intended to benefit Ibrahim. It defies logic and the parties’ expectations to hold that CDC was required to obtain an agreement from Sunnyland that it was under no obligation to enforce.

2. The summary-judgment evidence established Ibrahim’s reasonable reliance on CDC’s conduct.

Ibrahim unquestionably relied on the Standby Creditor’s Agreement and the promise by CDC that Sunnyland would be unable to collect or take action on its note until the 504 Loan was satisfied. Ibrahim did not make the required payments to Sunnyland; as a result, Sunnyland successfully sued Ibrahim on the Sunnyland note and obtained a significant judgment against Ibrahim. (CR 433) Meanwhile, Ibrahim continued to make timely payments to CDC on the 504 Loan. (CR 326) At a minimum, CDC has not shown as a matter of law that Ibrahim did not reasonably rely on CDC’s conduct. See Hall v. Harris County Water Control & Imp. Dist. No. 50, 683 S.W.2d 863, 868 (Tex. App.—Houston [14th Dist.] 1984, no writ) (“Whether [a party’s] reliance was reasonable is generally a question of fact and not

a question of law.”). The trial court erred in granting CDC’s motion for summary judgment.

3. CDC’s contractual obligations were not precluded by an alleged assignment.

CDC next argues that it owes no obligations to Ibrahim under the contractual agreements because it allegedly assigned any duties it owed to the SBA. (CR 831) As an initial matter, CDC failed to present summary-judgment evidence establishing as a matter of law that it validly assigned any of its obligations to SBA. The Authorization between Ibrahim and CDC contains the following provision:

Assignment to SBA. CDC must execute a satisfactory written assignment to SBA of its interest in the Note, lease and all collateral documents executed by the Borrower [Ibrahim] and guarantors. (CR 254)

The 504 Loan similarly provides in Article 2.3 that “the Note and all liens on the Collateral securing the Note will be assigned by Lender [CDC] to the SBA.” (CR 277 (emphasis added)) CDC presented no summary-judgment evidence that it actually executed a “satisfactory written assignment” of the Authorization, the 504 Loan, or any of its obligations to Ibrahim thereunder.

In addition, the mere assignment of a contract to a third party does not automatically release the assigning party from all obligations under that contract. The Texas Supreme Court addressed this argument in Seagull Energy E&P, Inc. v. Eland Energy, Inc.:

Generally speaking, a party cannot escape its obligations under a contract merely by assigning the contract to a third party. Thus, as a general rule, a party who assigns its contractual rights and duties to a third party remains liable unless expressly or impliedly released by the other party to the contract.

207 S.W.3d 342, 346–47 (Tex. 2006) (citations omitted). There is no evidence in the

summary-judgment record that Ibrahim released CDC from any of its obligations,

either impliedly or expressly. CDC is not entitled to summary judgment on this

ground.

4. The summary-judgment evidence did not conclusively establish any of CDC’s affirmative defenses.

CDC next asserts that Ibrahim’s claims are “defeated by the defenses of

waiver and failure to mitigate damages” and that they are “subject to defenses of

prior material breach.” (CR 819) Waiver, failure to mitigate, and prior material

breach are all affirmative defenses. See Taylor Foundry Co. v. Wichita Falls Grain

Co., 51 S.W.3d 766, 774 (Tex. App.—Fort Worth 2001, no pet.) (“Mitigation of

damages is an affirmative defense that is designed to preclude the plaintiff’s

recovery if the plaintiff could have avoided damages by his or her own reasonable

efforts and at slight expense.”); Tenneco Inc. v. Enter. Prods. Co., 925 S.W.2d 640,

643 (Tex. 1996) (“The affirmative defense of waiver can be asserted against a party

who intentionally relinquishes a known right or engages in intentional conduct

inconsistent with claiming that right.”); Triton 88, L.P. v. Star Elec., L.L.C., 411

S.W.3d 42, 58 (Tex. App.—Houston [1st Dist.] 2013, no pet.) (“The contention that

a party to a contract is excused from performance because of a prior material breach by the other contracting party is an affirmative defense.” (cleaned up)). Thus, summary judgment would be proper only if CDC establishes each element of its affirmative defense as a matter of law. See Vu v. ExxonMobil Corp., 98 S.W.3d 318, 320 (Tex. App.—Houston [1st Dist.] 2003, pet. denied).

a. CDC did not conclusively establish Ibrahim waived its claims.

To establish waiver, a party must prove (1) an existing right, benefit, or advantage held by a party; (2) the party’s actual knowledge of its existence; and (3) the party’s actual intent to relinquish the right, or intentional conduct inconsistent with the right. Ulico Cas. Co. v. Allied Pilots Ass’n, 262 S.W.3d 773, 778 (Tex. 2008). Waiver requires intent, either the intentional relinquishment of a known right or intentional conduct inconsistent with claiming that right. In re Gen’l Elec. Capital Corp., 203 S.W.3d 314, 316 (Tex. 2006). Because waiver is “largely a matter of intent,” waiver is “ordinarily a question of fact,” and it only becomes a question of law when “the surrounding facts and circumstances are undisputed.” Jernigan v. Langley, 111 S.W.3d 153, 156–57 (Tex. 2003). “While waiver may sometimes be established by conduct, that conduct must be unequivocally inconsistent with claiming a known right.” Van Indep. Sch. Dist. v. McCarty, 165 S.W.3d 351, 353 (Tex. 2005).

CDC is not entitled to summary judgment on its affirmative defense of waiver. CDC’s waiver argument relies on Ibrahim’s conduct during the first lawsuit between Ibrahim and Sunnyland. (See CR 837–39) Specifically, CDC’s argument is based on Ibrahim’s failure to act—CDC claims that Ibrahim waived its affirmative claims in this lawsuit because it did not implead CDC or notify CDC about the Sunnyland lawsuit. (Id.) Ibrahim’s alleged inactions in the Sunnyland lawsuit are insufficient to establish as a matter of law that Ibrahim intended to relinquish its affirmative claims against CDC for failing to enforce the Standby Creditor’s Agreement and for Ibrahim’s detrimental reliance on CDC’s promises to procure and enforce that agreement.

b. CDC did not conclusively establish Ibrahim failed to mitigate all its damages.

The affirmative defense of failure to mitigate damages requires a determination that the plaintiff’s damages could have been avoided by reasonable efforts. Failure to mitigate requires proof of two elements: (1) Ibrahim’s lack of diligence, and (2) the amount by which the damages were increased as a result of the failure to mitigate. See Geotech Energy Corp. v. Gulf States Tel. & Info. Sys., Inc., 788 S.W.2d 386, 390 (Tex. App.—Houston [14th Dist.] 1990, no writ). The summary-judgment evidence is insufficient to establish either element as a matter of law.

CDC argues that Ibrahim failed to mitigate its damages because it failed to raise the Standby Creditor’s Agreement as a defense against Sunnyland’s claims. (CR 834–36) However, this Court expressly held that the Standby Creditor’s Agreement had been raised in the first lawsuit. (CR 420) Moreover, this argument is belied by the fact that CDC asserts it owed no obligations to Ibrahim. (See CR 831–

34) CDC cannot argue both that it owes no duty to Ibrahim and that Ibrahim’s damages would have been avoided had it asserted a claim against CDC in a different lawsuit.

c. CDC did not conclusively establish a prior material breach by Ibrahim that excused CDC’s performance.

The materiality of a breach—the question of whether a party’s breach of contract will render the contract unenforceable—generally presents a dispute for resolution by the trier of fact. Triton 88, 411 S.W.3d at 58. In its motion, CDC alleges that Ibrahim committed “several” prior breaches of the 504 Loan. (CR 836) The motion identifies two: (1) Ibrahim allegedly made payments to Sunnyland during the term of the 504 Loan, and (2) Ibrahim allegedly failed to timely notify CDC of the lawsuit with Sunnyland. (CR 836–37) CDC makes no effort to identify how or why these breaches are material, much less present summary-judgment evidence that establishes as a matter of law that Ibrahim materially breached either the Authorization or the 504 Loan.

5. There is no authority for CDC’s assertion that implied promises cannot support a claim for fraud or negligent misrepresentation.

CDC argues that it is entitled to summary judgment on Ibrahim’s claims for fraud and negligent misrepresentation because those claims “are based on implied promises, which are non-actionable.” (CR 819) CDC’s sole Texas authority for this proposition is Coleman v. Ammons, a 1952 opinion from the Dallas Court of Appeals. (CR 842) However, the quote on which CDC relies comes from the dissenting opinion in that case, and the dissenting justice cites no other authority for the statement. See 249 S.W.2d 1014, 1019 (Tex. Civ. App.—Dallas 1952, no writ) (Bond, C.J., dissenting). Moreover, the quoted language would not support summary judgment here, as it merely states that fraud “generally” cannot be based on an implied promise. Id. As the supreme court stated in Mann Frankfort, courts may imply the existence of contractual promises “for the reason that the parties must have intended them and have only failed to express them.” 289 S.W.3d at 850.

B. CDC is not entitled to a no-evidence summary judgment.

CDC also moved for a no-evidence summary judgment on Ibrahim’s claims for breach of contract, detrimental reliance, fraud, and negligent misrepresentation. (CR 819) The summary-judgment evidence raises an issue of fact on each of the elements of those claims challenged by CDC:

– Breach of Contract. As noted above, the summary-judgment evidence establishes (1) the existence of valid contracts (the Authorization and the 504 Loan) between CDC and Ibrahim, (2) CDC breached express or implied promises made in those contracts, and (3) Ibrahim suffered damages in the form of Sunnyland’s lawsuit and resulting damages as a foreseeable consequence of those breaches. At a minimum, the summary-judgment evidence establishes the existence of genuine fact issues on each of these elements.

– Promissory Estoppel/Detrimental Reliance. As shown above, the summary-judgment evidence establishes (1) the existence of express or implied promises made by CDC, (2) foreseeable reliance by Ibrahim on those promises, and (3) a detriment to Ibrahim as a result of its reliance on those promises. At a minimum, the summary-judgment evidence establishes the existence of genuine fact issues of each of these elements.

– Fraud. As shown above, the summary-judgment evidence establishes, at a minimum, that there are genuine fact issues precluding summary judgment on the following elements: (1) CDC made express or implied representations in the Authorization and the 504 Loan that were false, (2) CDC knew its representations were false or made the representations recklessly without

knowledge of their truth, (3) CDC intended to induce Ibrahim to act on the representations (by, among other things, entering into the Authorization and the 504 Loan), and (4) Ibrahim suffered damages because of its detrimental reliance on those representations.

– Negligent Misrepresentation. As shown above, the summary-judgment evidence establishes, at a minimum, that there are genuine fact issues precluding summary judgment on the following elements: (1) CDC made express or implied representations in its transactions with Ibrahim for Ibrahim’s guidance, (2) CDC failed to exercise reasonable care in making those representations, and (3) Ibrahim justifiably relied on those representations, causing injury to Ibrahim.4

II. The trial court erred in granting summary judgment for Sunnyland. The trial court also erred by granting Sunnyland’s motion for summary

judgment and dismissing Ibrahim’s claims against Sunnyland. (CR 1096)

4 CDC also asserts there is no evidence that the injury to Ibrahim is “distinct, separate, and independent from the economic losses recoverable under a breach of contract claim.” (CR 843– 44) Because this is not an essential element of Ibrahim’s negligent-misrepresentation claim, this is not a proper basis for a no-evidence summary judgment. See TEX. R. CIV. P. 166a(i). Moreover, D.S.A. Inc. v. Hillsboro Independent School District, on which CDC relies, merely stands for the proposition that a claim for negligent misrepresentation will not support benefit-of-the-bargain damages that could otherwise be recovered for a breach of contract. 973 S.W.2d 662, 664 (Tex. 1998). Finally, to the extent CDC asserts there is no valid contract between CDC and Ibrahim (or Akhtar or Amin) (see CR 830), CDC cannot also contend that the economic loss rule precludes recovery under a negligent-misrepresentation claim.

Sunnyland’s sole ground for summary judgment was res judicata. (CR 403–08) According to Sunnyland, all of Ibrahim’s claims are barred as a result of the judgment entered in the original lawsuit between Sunnyland and Ibrahim.
Res judicata is an affirmative defense. See TEX. R. CIV. P. 94 (identifying res judicata as an affirmative defense). A party relying on the affirmative defense of res judicata must prove (1) a prior final determination on the merits by a court of competent jurisdiction, (2) identity of parties or those in privity with them, and (3) a second action based on the same claims as were or could have been raised in the first action. Travelers Ins. Co. v. Joachim, 315 S.W.3d 860, 862 (Tex. 2010). Ibrahim does not dispute the first two elements: the earlier judgment was a final determination on the merits, and the same parties to that judgment are in this case. However, Sunnyland fails to establish the third element, because the claims in this lawsuit are not the same claims that the first action was based on, nor are they claims that were required to have been raised in that lawsuit.

In the first lawsuit, Ibrahim initially sued Sunnyland and related entities and individuals for breaching the construction contract. (See CR 415) Those claims ultimately settled. (Id.) Sunnyland brought a counterclaim for breach of contract, alleging that Ibrahim failed to pay the $200,000 note. (Id.) In defending itself against Sunnyland’s counterclaim, Ibrahim argued that the Standby Creditor’s Agreement barred Sunnyland from enforcing the note. Sunnyland now claims that Ibrahim is

barred from asserting any affirmative claims relating to (1) Sunnyland’s breach of the Standby Creditor’s Agreement by pursuing collection on the $200,000 note without CDC’s consent, and (2) Sunnyland’s fraud or negligence in making representations (relied on by Ibrahim) that its note would be subordinate to the CDC loan and that Sunnyland would not take action to collect on its note before the 504 Loan was paid.

Res judicata does not bar a former defendant in an earlier action from stating a claim in a later action that could have been filed as a cross-claim or counterclaim in the earlier action, unless the claim was compulsory in the earlier action. Ingersoll-Rand Co. v. Valero Energy Corp., 997 S.W.2d 203, 207 (Tex. 1999). A counterclaim is compulsory only if: (1) it is within the court’s jurisdiction, (2) it is not at the time of filing the answer the subject of a pending action, (3) the claim is mature and owned by the defendant at the time of filing the answer, (4) it arose out of the same transaction or occurrence that is the subject matter of the opposing party’s claim, (5) it is against an opposing party in the same capacity, and (6) it does not require the presence of third parties over whom the court cannot acquire jurisdiction. Id. As the party moving for summary judgment, Sunnyland had the burden to prove that all of Ibrahim’s claims satisfied each of these elements. Id.

A. Ibrahim’s claims against Sunnyland in this lawsuit were not mature at the time of the first lawsuit.

Ibrahim’s claims against Sunnyland in this lawsuit were not compulsory in the first lawsuit because there were not mature until the first lawsuit was complete. Ibrahim argues that it suffered damages as a result of Sunnyland’s breaches of the Standby Creditor’s Agreement and its false promise not to enforce its note until after the 504 Loan was satisfied. Ibrahim did not incur injury from this conduct until Sunnyland successfully obtained a judgment against Ibrahim on its claim for breach of the $200,000 note. As the Texas Supreme Court recognized in Ingersoll-Rand, a claim cannot be compulsory if the injury does not arise until liability is established. 997 S.W.2d at 208 (reversing summary judgment based on res judicata for indemnity claims because those claims were not mature at the time of the first lawsuit). As the defendant against Sunnyland’s claim for payment on its promissory note, Ibrahim had no obligation to assert its claims for breach of a different contract, fraud, or negligent misrepresentation. Accordingly, those claims are not barred in this suit.

B. Ibrahim’s claims do not arise out of the same transaction or occurrence as Sunnyland’s claim in the first lawsuit.

Ibrahim’s claims in this lawsuit are substantively distinct from Sunnyland’s claim in the first lawsuit, and they arise from a different transaction. The first lawsuit concerned performance of the $200,000 note between Ibrahim and Sunnyland that was signed in December 2005. Ibrahim raised the Standby Creditor’s Agreement,

but only as a defense to its alleged obligations under the Sunnyland note. This case concerns the formation and performance of that Standby Creditor’s Agreement, signed in January 2008, and specifically whether, in entering that agreement, Sunnyland made promises on which Ibrahim justifiably relied but which Sunnyland did not keep.

Texas courts apply a transactional approach in determining whether claims are sufficiently related to support a finding of res judicata. See Barr v. Resolution Trust Corp., 837 S.W.2d 627, 631 (Tex. 1992). Among other things, courts should consider whether the facts are related in time, space, origin, or motivation; whether they form a convenient trial unit; and whether their treatment as a trial unit conforms to the parties’ expectations or business understanding or usage. Id. Ibrahim’s claims relating to the formation and Sunnyland’s performance of the Standby Creditor’s Agreement are not related in time, space, or origin with the facts surrounding Ibrahim’s performance of the $200,000 Sunnyland note. And Sunnyland has not and cannot demonstrate that the two claims form a convenient unit for trial purposes or that trying them together would have conformed to the parties’ expectations. Accordingly, the Court should reverse the summary judgment granted in favor of Sunnyland.

PRAYER

For the foregoing reasons, Appellants Shawn Ibrahim, Inc., Mahmood Akhtar,

and Muhammad Amin respectfully request that the Court reverse the trial court’s

judgment and remand this case for a new trial. Appellants also request all such

further relief to which they are justly entitled.

Respectfully submitted,

/s/ Michael Choyke
Howard L. Close

State Bar No. 04406500
Michael Choyke
State Bar No. 00793504

WRIGHT CLOSE & BARGER, LLP
One Riverway, Suite 2200
Houston, Texas 77056
Telephone: (713) 572-4321
Facsimile: (713) 572-4320
close@wrightclosebarger.com
choyke@wrightclosebarger.com

Counsel for Appellants Shawn Ibrahim,
Inc., Mahmood Akhtar, and Muhammad
Amin

CERTIFICATE OF COMPLIANCE

I hereby certify that this document was generated by a computer using Microsoft Word which indicates that the total word count of this document is 5,914 words and that it is in compliance with TEX. R. APP. P. 9.4.

/s/ Michael Choyke
Michael Choyke

CERTIFICATE OF SERVICE

I hereby certify that a copy of the above and foregoing document has been forwarded to all counsel of record by electronic service on this the 13th day of July, 2018.

Ramon G. Viada III
Stefanie S. Strayer

VIADA & STRAYER
17 Swallow Tail Court, Suite 100
The Woodlands, Texas 77381
Appellee Houston-Galveston Area Local Development Corporation’s Counsel

Joe Yardas
YARDAS LAW FIRM
100 1-45 North, Suite 200, Box 200
Conroe, Texas 77301
Appellee Sunnyland Development, Inc.’s Counsel

/s/ Michael Choyke
Michael Choyke

APPENDIX

Appendix A: Final Judgment (CR 1096–97)

Appendix B: Defendant CDC’s Second Motion for Summary Judgment (CR 817–46)

Appendix C: Sunnyland Development, Inc.’s Motion for Summary Judgment (CR 401–10)

APPENDIX A

APPENDIX B

APPENDIX C

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5/3/2017 3:34:01 PM
Chris Daniel – District Clerk Harris County
Envelope No. 16817519
By: DELTON ARNIC
Filed: 5/3/2017 3:34:01 PM

CAUSE NO. 2016-40070

SHAWN IBRAHIM, INC., MAHMOOD § IN THE DISTRICT COURT
AKHTAR, and MUHAMMAD AMIN §
Plaintiffs §
§
V. § OF HARRIS COUNTY, TEXAS
§
HOUSTON-GALVESTON AREA §
LOCAL DEVELOPMENT §
CORPORATION §
Defendants § 113TH JUDICIAL DISTRICT

SUNNYLAND DEVELOPMENT, INC.’S

MOTION FOR SUMMARY JUDGMENT

TO THE HONORABLE JUDGE OF SAID COURT:

COMES NOW, Sunnyland Development, Inc., Defendant, (hereinafter referred to as “Sunnyland”) and files this Motion for Summary Judgment and moves this Court grant this motion for dismissal of this case against Sunnyland and for judgment that Shawn Ibrahim, Inc., Mahmood Akhtar and Muhammad Amin (hereinafter referred to collectively as “Plaintiffs”) take nothing in this case against Sunnyland. Sunnyland also requests this court to award Sunnyland attorney’s fees and all costs incurred in this frivolous lawsuit initiated for the sole purpose of harassment of Sunnyland, and would show the Court as follows:

POSITION OF LAWSUIT

1. Plaintiffs filed this lawsuit against Houston-Galveston Area Local Development Corporation (and agent of the “CDC” and hereinafter referred to as “Houston”) on or about June 10, 2016. The basis of Plaintiff’s claim is to recover a judgment amount equal to the amount awarded to Sunnyland against Plaintiffs in Cause No. 2011-02593

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in the 61st Judicial District of Harris County, Texas on April 14, 2014. Sunnyland was added to this lawsuit as a Defendant on or about November 29, 2016. Sunnyland answered the lawsuit December 22, 2016 with a general denial and affirmative defenses of Lack of Standing and Res Judicata. Plaintiff’s sole agenda is to nullify the judgment awarded to Sunnyland against Plaintiffs. Although discovery has been initiated between the parties, the suit remains alive at this time.

II.

FACTS

Cause No. 2011-02593;

61st Judicial District Court, Harris County, Texas

2. On January 14, 2011, Plaintiffs filed a lawsuit for construction defects against Sunnyland. On September 21, 2011, Sunnyland filed a compulsory counter-suit for payments on a Note owed to Sunnyland by Plaintiffs. Sunnyland had no choice but to enter its claim against Plaintiffs for payment on the Note because the claim is compulsory according to TRCP 97(a) requiring Sunnyland to either enter its counter suit or lose its right to collect on the note. Plaintiffs claimed, as an affirmative defense, that Sunnyland’s claim was barred by a standby creditor agreement, (Exhibit B) as long as Plaintiffs owed money to the CDC. Although Plaintiffs argued vigorously that the standby creditor agreement (Exhibit B) prohibited Sunnyland collecting on the note, Plaintiffs lost.
3. On April 14, 2014, the 61st District Court issued the Final Judgment found in (Exhibit C pg. 1):
It is ordered that Sunnyland Development, Inc. have and recover from Shawn Ibrahim, Inc. and/or Mahmood Akhtar, individually, and Muhammad Amin, individually, judgment for the note to Sunnyland Development, Inc. in the amount of $453,667.59.

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It is ordered that Sunnyland Development, Inc. have and recover from Shawn Ibrahim, Inc. and/or Mahmood Akhtar, individually, and/or Muhammad Amin, individually, judgment for Sunnyland Development, Inc.’s attorney fees in the principal amount of $63,591.79.

4. On July 9, 2014, Plaintiffs filed their Notice of Appeal. The 1st Court of Appeals published its Memorandum Opinion on Rehearing (Exhibit A) on July 2, 2015. On August 17, 2015, Plaintiffs submitted a Petition for Review to the Texas Supreme Court which was disposed of on November 20, 2015.

III.

SUMMARY JUDGMENT EVIDENCE

Exhibit “A” Memorandum Opinion on Rehearing, Court of Appeals of Texas, 1st District

Exhibit “B” Stand-by Creditor Agreement

Exhibit “C” Certified copy of the Final Judgment

Exhibit “D” Abstract of Final Judgment

Exhibit “E” Certified copy of the Findings of Fact

Exhibit “F” Affidavit – Joe S. Yardas

IV.

AUTHORITIES AND ARGUMENTS

RES JUDICATA

5. According to the Supreme Court of Texas, Travelers Ins. V. Joacham 315 S. W.

3d 860,862 (Tex 2010) and Tex R. Civ P 94:

“A party relying on the affirmative defense of res judicata must prove the following elements: (1) a prior final judgment on the merits by a court of competent jurisdiction; (2) identity of parties in privity with them; and (3) a second action based on the same claims that were raised or could have been raised in the first action. Travelers Ins. v. Joachim, 315 S.W.3d 860, 862 (Tex. 2010); see also Tex. R. Civ. P. 94 (identifying res judicata as an affirmative defense).”

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6. As to satisfying element (1): The following provide proof of a prior judgment on the merits of a final judgment by a court of competent jurisdiction:
Exhibit “C” Certified copy of the Final Judgment Exhibit “D” Abstract of Final Judgment Exhibit “E” Certified copy of the Findings of Fact

7. That the 61st Judicial District is a court of competent jurisdiction is qualified in that it is the jurisdiction in which Plaintiffs filed their claim.
8. As to satisfying element (2): The Plaintiffs/Counter Defendants in the former case were Shawn Ibrahim, Inc., Mahmood Akhtar, and Muhammad, Amin and the Defendant/Counter Plaintiff was Sunnyland Development, Inc. The parties in the current case are identical in name and representation. (Exhibits C, D and E and Plaintiff’s First Amended Petition in the present case)
9. As to satisfying element (3): Sunnyland will demonstrate that this current action is based on the same claims that were raised, or could have been raised, in the former action.

“Res judicata generally bars claims or defenses that, through diligence, could have been litigated in the earlier suit, but were not.” Ingersoll–Rand Co., 997 S.W.2d. at 206–07; Getty Oil v. Insurance Co. of N. Am., 845 S.W.2d 794, 798 (Tex. 1992).

“A final judgment is one that disposes of all pending parties and claims.” See Lehmann v. Har-Con Corp., 39 S.W.3d 191, 195 (Tex. 2001).

10. The facts regarding the present suit are regarding the sole issue that Sunnyland was attempting to get a judgment on a $200,000 delinquent note executed by Plaintiffs. Plaintiff’s defense relies on a standby creditor agreement (Exhibit B) executed by Sunnyland in connection with financing of a service station and restaurant facilities. In

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the former lawsuit as demonstrated in the attached judgment, (Exhibit C), the 61st District Court ruled that Sunnyland take judgment against Plaintiffs for the note and the interest, plus attorney’s fees and cost of court, notwithstanding that fact that Plaintiff’s argument that the standby creditor agreement should not permit it. This present case is attempting to re-litigate those same set of facts.

“Res judicata prevents parties and those in privity with them from re-litigating a case that a competent tribunal has adjudicated to finality.” Ingersoll–Rand Co. v. Valero Energy Corp., 997 S.W.2d 203, 206 (Tex. 1999).

9. In the current case, Plaintiffs are attempting to recover damages in the amount

that was awarded Sunnyland by the 61st District (Exhibit E). Since the facts of the former case are the same facts as this present case, Plaintiffs could have alleged in the former case that, should they lose, Sunnyland should be estopped from collecting on that judgment because of the standby creditor agreement (Exhibit B). In fact, that would be a mandatory TRCP 82 counter-suit which is now estopped from being brought because it involves the same set of facts. And the case involves the same litigants (ie Shawn Ibrahim, Inc. Mahmood Akhtar, and Muhammad Amin and Sunnyland Development, Inc.

10. Exhibit A pgs. 4-5 from the appeals court discusses the vigorous defense against collection of the note by arguing that the standby creditor agreement bars recovery on the same note as discussed in this case. Although this affirmative defense was not plead but rather introduced during the trial, it was tried by consent as noted by the appeals court (Exhibit A pgs. 9, 10 and 11).

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11. In Plaintiff’s current petition, the primary complaint is that Sunnyland should not have been awarded a judgment against Plaintiffs because of the standby creditor agreement. Plaintiffs are complaining that they are damaged by the judgment that was
decided in the 61st District court of Harris County and should be reimbursed or paid for by Houston Galveston Area Local Development Corporation and Sunnyland. The exact

same issues were litigated by the 61st and a final judgment was issued. Plaintiff’s petition in the present case alleges that because Sunnyland committed fraud, breach of contract and detrimental reliance by trying to collect on the note in violation of the standby creditor agreement, Plaintiffs should be protected from Sunnyland collecting on the note (Exhibit C).

“Determining the scope of the “subject matter” or “transaction” of the prior suit requires “an analysis of the factual matters that make up the gist of the complaint, without regard to the form of action.” Id. at 630. “This should be done pragmatically,” ‘giving weight to such considerations as whether the facts are related in time, space, origin, or motivation, whether they form a convenient trial unit, and whether their treatment as a trial unit conforms to the parties’ expectations or business understanding or usage.’

” Id. at 631 (quoting RESTATEMENT (SECOND) OF JUDGMENTS § 24(2) (1982)). “Any cause of action which arises out of those same facts should, if practicable, be litigated in the same lawsuit.” Id. at 630.

Citizens Ins. Co. of America v. Daccach, 217 S.W.3d 430 (2007)

12. As can be seen from a review of the petition filed in this case, the allegations are the same subject matter litigated in the prior suit, (i.e. the same note and the same standby agreement, the same parties, and the same transaction) (Exhibit A pgs. 9, 10 and 11). The facts are the same as well as the arguments. The only distinguishing fact is tactic; Plaintiffs are currently trying to recover the entire amount of the judgment awarded to Sunnyland in the previous trial.

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“Under the transactional approach followed in Texas, a subsequent suit is barred if it arises out of the same subject matter as the prior suit, and that subject matter could have been litigated in the prior suit.” Barr, 837 S.W.2d at 631. “We explained in Barr that “a final judgment on an action extinguishes the right to bring suit on the transaction, or series of connected transactions, out of which the action arose.” Id. at 631 (citing Restatement (Second) of Judgments § 24(1) (1982)).

13. The 61st Judicial District had jurisdiction for the former case in that the matter in controversy was over $500.00 and a district court has jurisdiction over Texas corporations and individuals who reside in Texas. See Sec. 24.007. JURISDICTION.

“(a) The district court has the jurisdiction provided by Article V, Section 8,
–
of the Texas Constitution.

(b) A district court has original jurisdiction of a civil matter in which the amount in controversy is more than $500, exclusive of interest.”

The below excerpt from the Memorandum of Rehearing from the 1st Court of

Appeals demonstrates that the former case was argued in the 61st Judicial District,

Harris County, Texas (Exhibit A pgs. 9, 10 and 11):

“I. Effect of the Standby Creditor Agreement

Ibrahim first contends that Sunnyland did not meet the conditions precedent required by the standby creditor agreement before it sued, which in turn bars it from enforcing the note. Ibrahim further contends that Sunnyland had the burden to show conditions precedent that the HGAC loan was satisfied and that HGAC gave its written consent for Sunnyland to enforce the note

Sunnyland responds that Ibrahim did not plead an affirmative defense that the standby creditor agreement precluded enforcement of the note. See Tex. R. Civ. P. 94. But the parties tried the issue by consent. The standby creditor agreement was introduced at trial and discussed multiple times during witness testimony, without an objection from Sunnyland; thus, Sunnyland’s challenge to the pleadings was waived. …

… Because the reporter’s record is a partial record, we presume that the trial court heard evidence to support its judgment that the standby agreement does not bar a recovery on the note…”

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B. The above excerpt proves that the 61st District court heard Plaintiff’s’ argument regarding standby creditor agreement. It also proves that the court decided that the standby creditor agreement did not bar recovery. This major complaint by Plaintiffs in the current case is that the standby creditor agreement either bars recovery or the amount of the judgment should be reimbursed by Sunnyland. This would nullify the

judgment issued in the 61st District Court on the same issue; the standby creditor agreement. The proper place to reverse a judgment is the appeals court which has already decided that the judgment stands. This argument could have been raised and should have been raised, if at all, in the previous action. Consequently, it cannot be tried again. It is barred by CPRC 92 (a) of jurisdiction, the place where Plaintiff filed its original lawsuit in the 61st District Court. (Exhibit D)

ATTORNEY’S FEES AND COST

2. Plaintiff’s current lawsuit is frivolous. It was initiated by a more than competent lawyer who was licensed on February 14, 1977 and should readily recognize when a lawsuit is barred by res judicata. It is classic harassment. As a result, Sunnyland has, by necessity, had to retain the attorney whose name is subscribed to this Motion for Summary Judgment. Sunnyland is therefore entitled to recover from Plaintiffs all damages incurred plus any additional sums to compensate Sunnyland for all costs of litigation, a reasonable fee for such attorney’s services in the preparation and defense and this counterclaim in this action and a reasonable fee for any and all appeals to other courts.

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VI.

CONCLUSION AND PRAYER

3. WHEREFORE, PREMISES CONSIDERED, Sunnyland prays the Court, after notice and hearing or trial, enters judgment in favor of Sunnyland, awards Sunnyland the amount of the costs of court if any, attorney’s fees, and such other and further relief as Sunnyland may be entitled to in law or in equity.

Respectfully submitted,

Yardas Law Firm

By: Joe Yardas

Joe Yardas

Texas Bar No. 24011228
100 I-45 North, Suite 200, Box 200
Conroe, Texas 77301
Tel. (936)756-1020
Fax. (936)494-1232
joeyardas@gmail.com
Attorney for Sunnyland Development, Inc.,

CERTIFICATE OF SERVICE

I certify that on this the ______ day of May 2017 a true and correct copy of Defendants’ Motion for Summary Judgment was served to each person listed below via eservice and/or facsimile.

Joe Yardas

Herbert W. Fortson III
Micah B. Fortson
2702 Jackson St.
Houston, Texas 77004
4. (713) 533-1520
5. (713) 533-1571 herb@fortson-co.com micah@fortson-co.com eservice@fortson-co.com

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The Woodlands, TX 77381
b. (281) 419-6338
c. (281) 661-8887 rayviada@viadasStrayer.com

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