Professional Documents
Culture Documents
03-17-00386-CV
19119847
THIRD COURT OF APPEALS
AUSTIN, TEXAS
8/28/2017 4:36 PM
JEFFREY D. KYLE
CLERK
NO. 03-17-00386-CV
__________________________________
RECEIVED IN
In the Court of Appeals 3rd COURT OF APPEALS
AUSTIN, TEXAS
Third District of Texas – Austin8/28/2017 4:36:11 PM
___________________________________ JEFFREY D. KYLE
Clerk
PEJMAN DARGAHI, KAMRAN DARGAHI, and
YEKK CONSTRUCTION SERVICES, LLC d/b/a
LAKEWAY CUSTOM HOMES AND RENOVATION September 8, 2017
Appellants/Defendants,
v.
ATTORNEYS FOR
APPELLEES/PLAINTIFFS
TABLE OF CONTENTS
INDEX OF AUTHORITIES......................................................................................4
APPENDIX ................................................................................................................6
STATEMENT REGARDING ORAL ARGUMENT ...............................................6
ISSUE PRESENTED .................................................................................................7
STATEMENT OF FACTS ........................................................................................8
A. Plaintiffs Discover Appellants’ Misuse of Construction Funds. ..........8
B. Appellants’ First Counsel Answers Plaintiffs’ Lawsuit and Engages in
Discovery Without Seeking Arbitration................................................9
C. Appellants’ Second Counsel Continues to Engage in Discovery
Without Demanding Arbitration—Until Plaintiffs File for Summary
Judgment. ............................................................................................11
SUMMARY OF THE ARGUMENT ......................................................................13
ARGUMENT ...........................................................................................................14
A. The Dargahis Are Not Parties to the Arbitration Clause, and They
Failed to Preserve Any Argument that an Agency Relationship Makes
Them Parties. .......................................................................................15
B. Appellants Waived Arbitration By Substantially Invoking the Judicial
Process to Plaintiffs’ Detriment. .........................................................21
1. Substantial Invocation of Judicial Process................................21
i. How long the party moving to compel waited to do so..23
ii. The reasons for the movant’s delay. ...............................25
iii. Strategic timing of appellants’ motion to compel on the
eve of summary judgment. .............................................26
iv. Whether and when the movant knew of the arbitration
agreement during the period of delay. ............................27
v. The extent of the movant’s engagement in pretrial
matters related to the merits............................................27
2
vi. The amount of time and expense the parties have
committed to the litigation. .............................................31
2. Prejudice to Plaintiffs. ...............................................................31
i. Costs Incurred. ................................................................32
ii. Appellants’ Affirmative Discovery. ...............................35
CONCLUSION AND PRAYER .............................................................................36
CERTIFICATE OF SERVICE ................................................................................38
CERTIFICATION ...................................................................................................38
CERTIFICATE OF COMPLIANCE .......................................................................38
3
INDEX OF AUTHORITIES
Cases
Baldwin v. Cavett,
2:10-CV-401-TJW-CE, 2011 WL 4591942 (E.D. Tex. Sept. 12, 2011) ......20
Bridas S.A.P.I.C. v. Gov’t of Turkmenistan,
345 F.3d 347 (5th Cir. 2003) .........................................................................19
Cent. Nat. Ins. Co. of Omaha,
856 S.W.2d 492, 494-95 (Tex. App.—Houston [1st Dist.] 1993,
no writ).................................................................................................... 29, 33
Electrostim Med. Services, Inc. v. Health Care Serv. Corp.,
CIV.A. H-11-2745, 2012 WL 5373462 (S.D. Tex. Oct. 30, 2012) ...............29
G.T. Leach Builders, LLC v. Sapphire V.P., LP,
458 S.W.3d 502 (Tex. 2015) .................................................................. 15, 30
In re Castro,
246 S.W.3d 756 (Tex. App.—Eastland 2008, no pet.).......................... passim
In re Christus Spohn Health Sys. Corp.,
231 S.W.3d 475 (Tex. App. 2007) ................................................................29
In re Hawthorne Townhomes, L.P.,
282 S.W.3d 131 (Tex. App.—Dallas 2009, no pet.) .............................. 18, 32
In re Kaplan Higher Educ. Corp.,
235 S.W.3d 206 (Tex. 2007) .........................................................................21
In re Kellogg Brown & Root, Inc.,
166 S.W.3d 732 (Tex. 2005) .........................................................................18
In re Merrill Lynch Trust Co. FSB,
235 S.W.3d 185 (Tex. 2007) .........................................................................20
Lyons v. Lindsey Morden Claims Mgmt., Inc.,
985 S.W.2d 86 (Tex. App.—El Paso 1998, no pet.) .....................................19
Marble Slab Creamery, Inc. v. Wesic, Inc.,
823 S.W.2d 436 (Tex. App.—Houston [14th Dist.] 1992, no writ) ..............33
Moore v. Brown,
408 S.W.3d 423 (Tex. App.—Austin 2013, pet. denied) ..............................14
4
Murdock v. Trisun Healthcare, LLC,
03-10-00711-CV, 2013 WL 1955767 (Tex. App.— Austin
May 9, 2013, pet. denied) ................................................................. 15, 16, 17
Okorafor v. Uncle Sam & Associates, Inc.,
295 S.W.3d 27 (Tex. App.— Houston [1st Dist.] 2009, pet. denied) ............25
Perry Homes v. Cull,
258 S.W.3d 580 (Tex. 2008) ................................................................. passim
PRSI Trading Co. LP v. Astra Oil Trading,
NV, 01-10-00517-CV, 2011 WL 3820817 (Tex. App.— Houston
[1st Dist.] Aug. 25, 2011, pet. denied) ................................................... 23, 24
Retamco Operating, Inc. v. Republic Drilling Co.,
278 S.W.3d 333 (Tex. 2009) .........................................................................14
Santander Consumer USA, Inc. v. Mata,
03-14-00782-CV, 2017 WL 1208767 (Tex. App.— Austin
Mar. 29, 2017, no pet.) ..................................................................... 14, 18, 32
SEB, Inc. v. Campbell,
No. 03– 10–00375–CV, 2011 WL 749292 (Tex. App.— Austin
March 2, 2011, no pet.).......................................................................... passim
Tuscan Builders, LP v. 1437 SH6 L.L.C.,
438 S.W.3d 717 (Tex. App.— Houston [1st Dist.] 2014,
review denied) ........................................................................................ 23, 31
Westmoreland v. Sadoux,
299 F.3d 462 (5th Cir. 2002) .........................................................................20
Ru les
5
APPENDIX
Plaintiffs’ App. ___. True and correct copies of the following items are included
Plaintiffs believe the facts and legal arguments are adequately presented in
the briefs and record, and, accordingly, oral argument is unnecessary. See Tex. R.
App. P. 39.1(c). Appellant has requested oral argument; if the Court should choose
6
ISSUE PRESENTED
In this case, in which (i) Appellants filed a motion to compel arbitration after
nearly nine months of engaging in the judicial process and only on the eve of the
district court’s consideration of Plaintiffs’ summary judgment motion and (ii) only
clause, the trial court denied Appellants’ motion to compel arbitration. Was this a
7
STATEMENT OF FACTS
with Appellant Yekk Construction Services, LLC, d/b/a Lakeway Custom Homes
of land located at 228 Sanostee Cove, Travis County, Texas, for a fixed contract
signed the Contract on behalf of Yekk Construction, but he has taken the position
Kamran Dargahi did not sign the Contract at all, nor is he referenced in the
construction lender paid Yekk Construction nearly $1.4 million to build Plaintiffs’
home.3 This represents 95% of the Contract price.4 However, in November 2015,
after they had completed only 90% of the work, Appellants halted work on the
1
See CR 282-307 (2014 Contract).
2
CR 309 (December 9, 2015 Letter from Appellants’ Counsel).
3
CR 452 & nn.6-7 (Plaintiffs’ Summary Judgment Motion).
4
Id. at CR 452 & n.6.
8
project, insisting that Plaintiffs pay more than the Contract price and more than
what Plaintiffs’ construction lender could approve.5 Even though they had already
It was only after Appellants abandoned the project that Plaintiffs discovered
that, all along, Appellants had been using Plaintiffs’ money for tens of thousands
Plaintiffs’ home, including not only different construction projects, but also
home, purchasing real estate, and attorneys’ fees.7 Plaintiffs also discovered that at
least seventeen of Appellants’ subcontractors had gone unpaid to the tune of over
mediation. That mediation took place on December 10, 2015, and Appellants and
5
Id. at CR 452-453 & nn. 8-11.
6
Id. at CR 453 & n.14.
7
Id. at CR 454 & nn. 30.
8
Id. at CR 453 & n.15-17.
9
CR 109 (Defendants’ Plea in Abatement and Motion to Compel Arbitration); CR at 308-
309(Kemp Gorthey letter to David King dated December 9, 2015).
9
Plaintiffs and Appellants was reached at that mediation or in the months that
followed. At no point during this time did Appellants invoke the arbitration clause
of the Contract.
Plaintiffs filed this lawsuit on March 24, 2016, alleging damages arising
the Contract, and other wrongdoing.10 On May 10, 2016, Appellants filed their
11, 2016,14 and signed a Rule 11 agreement regarding the scope and timing of
Appellants ever invoke the Contract’s arbitration clause or argue that they were not
10
Further, Appellants’ counsel also agreed (orally) to set the case for trial and
never indicated that Appellants would seek arbitration. The arbitration clause was
scope of damage to Plaintiffs’ home, and Plaintiffs disclosed their expert’s written
report to Appellants.17
only after retaining new counsel that Appellants, through their substituted counsel,
mentioned the Contract’s arbitration clause for the first time. However,
Appellants’ new counsel did not file a motion to compel arbitration. Instead, they
16
See CR 448 (Affidavit of David A. King, at ¶ 16).
17
CR 366-426 (Plaintiffs’ First Amended Petition) (Clawson report attached as Exhibit B).
18
Plaintiffs’ App. 1 (Defendants’ Motion to Substitute Counsel).
19
CR 427-428 (November 1, 2016 email from Appellants’ substituted counsel).
20
CR 429-445 (Defendants’ Notice of Intent to Take Deposition by Written Questions).
11
Having obtained what Plaintiffs believed to be sufficient discovery
wrongdoing, Plaintiffs filed their Motion for Partial Summary Judgment (the
then, with evidence against them set forth in Plaintiffs’ Summary Judgment
Motion and the prospect of a judgment looming, did Appellants file a motion to
alleged that “pursuant to the terms of the Contract, the parties have agreed to
resolve the dispute via binding arbitration,” and recited Texas’s general burden-
21
CR 18-107 (Plaintiffs’ Motion for Summary Judgment).
22
CR 108-125 (Defendants’ Plea in Abatement and Motion to Compel Arbitration).
23
Id. at CR 109.
12
SUMMARY OF THE ARGUMENT
the Contract’s arbitration clause. Appellants’ first legal counsel never signaled an
intent to arbitrate during that participation. Even after retaining new counsel over
six months into the litigation, Appellants still did not move to compel arbitration.
Instead they continued engaging in the judicial process by, for example, initiating
their own discovery under the Texas Rules. Appellants’ participation in the
judicial process did not change until Plaintiffs filed for summary judgment—a
proceeding which Appellants say constitutes a “trial” under the Texas rules. In
other words, after taking advantage of the judicial process for months, Appellants
only sought to switch from litigation to arbitration on the eve of trial when faced
with a potential judgment against them. Appellants’ tactic is not foreign to Texas
courts. Under these facts and under Texas law, Appellants’ belated and prejudicial
have no right to invoke the arbitration clause in the first place. In the court below,
to arbitration. Yet even if they had made this argument, Appellants presented no
evidence to carry their burden of proving that these non-signatories are bound to
13
ARGUMENT
Plaintiffs’ response presented two arguments to the district court: (i) that all three
and Kamran Dargahi—did not have a right to invoke the arbitration clause in the
first place because they are not parties to the underlying Contract.26
This Court must affirm the trial court’s denial of Appellants’ motion to
compel arbitration unless the trial court abused its discretion. See Santander
App.—Austin Mar. 29, 2017, no pet.). Further, because Appellants did not secure
findings of facts and conclusions of law, this Court must “presume that the district
court impliedly found facts as necessary to support its judgment on any legal
theory presented.” Moore v. Brown, 408 S.W.3d 423, 431 (Tex. App.—Austin
2013, pet. denied); see also Retamco Operating, Inc. v. Republic Drilling Co., 278
24
CR 269-539 (Plaintiffs’ Response to Defendants’ Plea in Abatement and Motion to Compel
Arbitration).
25
Id. at CR 273.
26
Id. at CR 277.
14
As described below, each of Plaintiffs’ arguments made to the district court
is amply supported by the record. Although argued in reverse order to the district
A. The Dargahis Are Not Parties to the Arbitration Clause, and They
Failed to Preserve Any Argument that an Agency Relationship Makes
Them Parties.
While all Appellants waived arbitration (as set forth in Subpart B below),
invoke the arbitration clause in the first place.27 This is because the individual
arbitration clause.28
agreement exists and that the claims at issue fall within the scope of that
agreement.” G.T. Leach Builders, LLC v. Sapphire V.P., LP, 458 S.W.3d 502, 524
(Tex. 2015); see also Murdock v. Trisun Healthcare, LLC, 03-10-00711-CV, 2013
to compel arbitration under the FAA, [movant] had the initial burden of
27
CR 277 (Plaintiffs’ Response to Defendants’ Plea in Abatement and Motion to Compel
Arbitration).
28
Id.
15
is undisputed that the Contract contains an arbitration clause, but that clause, on its
face, is only between two parties: Plaintiffs and Yekk Construction. By contrast, a
valid arbitration clause does not exist between Plaintiffs and the Dargahis.
whether a valid arbitration clause exists between specific parties, the Court must
look to the “intent of the parties, as expressed in the terms of the agreement.” Id.
Here, the plain language of the arbitration clause speaks for itself:
The intent of the parties is clear. The only parties bound by the clause are
Lakeway Custom Homes and Renovation (i.e., Yekk Construction) and Plaintiffs.
Indeed the Dargahis themselves have elsewhere argued that they are not bound by
the plain language of the Contract, the Dargahis should be considered parties to the
29
CR 474 (Contract Section XXIX) (emphasis in original).
30
CR 309 (December 9, 2015 Letter from Appellants’ Counsel).
16
arbitration clause.31 Appellants also completely failed to argue to the district court
arbitration clause. Indeed, in presenting their motion, Appellants did not even
mention the Dargahis.32 They merely recited and relied upon the same Contract
language noted above, which only refers to Yekk Construction and Plaintiffs—not
the Dargahis.33 After Appellees pointed out this fatal flaw in Appellants’ motion,34
that it would be “unfair” for the Dargahis “to have to defend themselves in this
the intent of the parties was to make the Dargahis parties to the arbitration clause.
Accordingly, they wholly failed to meet their burden of proving a valid arbitration
clause between Plaintiffs and the Dargahis. See Murdock, 03-10-00711-CV, 2013
WL 1955767, at *3.
For the very first time on appeal, Appellants now try to retroactively meet
their burden by raising a new argument (at 13) that, “as members and managers” of
31
CR 108-125 (Defendants’ Plea in Abatement and Motion to Compel Arbitration).
32
Reporter’s Record at 1-9 (May 24, 2017 Hearing on Motion to Compel).
33
Id. at 5:2-6:5.
34
Id. at 10:23-24 (“the arbitration clause, on its face, only applies to one of the defendants.”).
35
Id. at 24:17-18. Tangentially, Appellants brought a single case to the district court’s attention
in which a court held that plaintiffs’ claims under the Texas Trust Fund Statute fell within the
scope of an arbitration clause. See id. at 28:1-10. This case has nothing to do with the threshold
question of which Appellants were parties to and bound by the arbitration clause. Tellingly,
Appellants have omitted any reference to this case in their appeal.
17
Yekk Construction, the Dargahis are parties to the arbitration clause. Although
unclear from their briefing, it appears that Appellants now argue that the Dargahis
are parties under the arbitration clause through agency.36 In support of this new
agency theory, Appellants cite authorities (at 12-13) that they failed to raise in their
motion to compel and that they failed to present to the district court. Because
Appellants failed to present this new agency argument to the trial court, it may not
Townhomes, L.P., 282 S.W.3d 131, 140 (Tex. App.—Dallas 2009, no pet.)
arbitration, because appellant “did not present this ground for arbitration to the trial
agency theory Appellants never raised below, and Plaintiffs are therefore not
36
Although never argued by Appellants in the district court (or stated in their appellate brief for
that matter), the Texas Supreme Court has recognized “six theories, arising out of common
principles of contract and agency law, that may bind non-signatories to arbitration agreements:
(1) incorporation by reference; (2) assumption; (3) agency; (4) alter ego; (5) equitable estoppel,
and (6) third-party beneficiary.” In re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 739 (Tex.
2005). Of course, regardless of the theory, the burden is on the party moving to compel
arbitration to prove that the non-signatory is bound.
18
required to do so now (although, out of an abundance of caution, Plaintiffs
nonetheless do so below).
Appellants still failed to meet their burden, because they failed to present any
evidence to establish agency. See Lyons v. Lindsey Morden Claims Mgmt., Inc.,
985 S.W.2d 86, 90 (Tex. App.—El Paso 1998, no pet.) (“To prove agency,
evidence must establish that the principal has both the right: (1) to assign the
agent’s task; and (2) to control the means and details of the process by the which
the agent will accomplish that task.”); see also Bridas S.A.P.I.C. v. Gov’t of
Turkmenistan, 345 F.3d 347, 357 (5th Cir. 2003) (finding evidentiary findings
clause). This is, of course, no surprise, because Appellants never made an agency
argument in the court below in the first place. The only alleged evidence
Appellants now cite on appeal are two affidavits from the Dargahis, but those
affidavits do not set forth evidence of an agency relationship; indeed, they do not
37
The affidavit of Pejman Dargahi summarily states that he “was a member and manager of”
Yekk Construction without discussing the meaning of these titles or what activities they may
entail, while the affidavit of Kamran Dargahi says nothing about his relationship with Yekk
Construction. CR 262-263 (Affidavit of Pejman Dargahi); CR 112-113 (Affidavit of Kamran
Dargahi). Contrary to Appellants’ assertion, there is no evidence that Kamran was even a
“member” or “manager” of Yekk Construction, whatever those titles may entail.
19
Further, even if Appellants had argued to the district court that they were
agents and even if they had presented evidence in support thereof (although they
did neither), this would not entitle the non-signatory Dargahis to compel Plaintiffs
F.3d 462, 466 (5th Cir. 2002). The limited circumstances under which an agent
can compel arbitration, see id., are ignored by Appellants in their brief—just as
they were ignored (and not preserved) by Appellants in the court below.
fiduciary duty under the Texas Trust Fund Act, fraud, and unjust enrichment—all
relate to the Dargahis’ misuse of Plaintiffs’ funds for the Dargahis’ own personal
Plaintiffs’ money and other fraudulent activities were actions taken as “agents” of
Yekk Construction. Under Texas law, when “an employee’s actions are outside
the scope of the employee’s duties and cannot be attributed to his principal, an
2011) (citing In re Merrill Lynch Trust Co. FSB, 235 S.W.3d 185, 190 (Tex. 2007)
38
CR 146-257 (Plaintiffs’ Fourth Amended Petition)
20
App.—Austin March 2, 2011, no pet.)); see also In re Kaplan Higher Educ. Corp.,
235 S.W.3d 206, 210 (Tex. 2007) (“[O]wners may not be able to invoke a
subsidiary’s arbitration clause when they act on their own behalf rather than for
clause, all have waived arbitration by substantially invoking the judicial process in
ways that are fundamentally at odds with an arbitration proceeding and that
prejudice Plaintiffs’ right to a resolution of this dispute. See Perry Homes v. Cull,
258 S.W.3d 580, 589-90 (Tex. 2008) (holding that a party impliedly waives
arbitration “by [1] substantially invoking the judicial process [2] to the other
deliberate actions after a suit has been filed that are inconsistent with the right to
has substantially invoked the judicial process, including, among other factors:
21
• how long the party moving to compel arbitration waited to do so;
• the amount of time and expense the parties have committed to the
litigation;
• whether the discovery conducted would be unavailable or useful in
arbitration;
No single factor is required to show waiver, and “courts have found waiver
them as “smoke,” Appellants colorful language does not make these factors any
less applicable.
22
i. How long the party moving to compel waited to do so.
While “waiver must be decided on a case-by-case basis,” the Texas Supreme
Court has also observed that, in at least one case, substantial delay, standing alone,
was enough to establish waiver. Id. at 591 & n.58. Accordingly, while not
arbitration. It is not “nothing more than smoke,” as Appellants contend (at 16).
Appellants did not move to compel arbitration until nearly 9 months after
this lawsuit was filed. This delay is in line with the amount of time establishing
waiver in other cases. See, e.g., Perry Homes, 258 S.W.3d at 591 (waiver based on
14-month delay); Tuscan Builders, LP v. 1437 SH6 L.L.C., 438 S.W.3d 717, 720-
21 (Tex. App.—Houston [1st Dist.] 2014, review denied) (13 months); PRSI
*3 (Tex. App.—Houston [1st Dist.] Aug. 25, 2011, pet. denied) (11 months).
until December 8, 2016.39 It is also an undisputed fact that Plaintiffs filed their
compel arbitration by nearly nine months. In a bizarre effort to evade this nine-
month delay, Appellants accuse Plaintiffs (at 16) of offering a “shady” timeline.
There is, of course, nothing “shady” about these undisputed dates. These are
39
CR 108-125 (Defendants’ Plea in Abatement and Motion to Compel Arbitration).
40
CR 4-14 (Plaintiffs’ Original Petition and Request for Disclosure).
23
simply the dates Texas courts use to measure delay in filing for arbitration. See,
e.g., Perry Homes, 258 S.W.3d at 596 (14-month delay measured from date of
filing suit); PRSI Trading Co. LP, NV, 01-10-00517-CV, 2011 WL 3820817, *3
(11 month delay measured from date of petition to date motion was filed).
answer (May 10, 2016) to the date of their motion to compel arbitration (December
8, 2017). Appellants fail to explain why this Court should depart from the typical
measure of delay, nor do they cite any authority for their contention. More
troublingly, their argument insinuates that Appellants either did not know about
Plaintiffs’ claims or did not know about the Contract’s arbitration clause until they
filed their answer. This is, of course, wholly untrue, because, as Appellants
arguable that Appellants’ delay should be measured from a date earlier than March
24, 2016, when the lawsuit was filed (and when Appellants then-counsel also
41
CR 109 (Defendants’ Plea in Abatement and Motion to Compel Arbitration); CR at 308-309
(Kemp Gorthey letter to David King dated December 9, 2015).
24
received a courtesy copy of the lawsuit),42 there is no basis to measure Appellants’
any reason for Appellants’ nine-month delay. Nor do Appellants offer any reason
for the delay. Instead, the record suggests that, at best, the reason for the delay
may be traced to the fact that Appellants’ initial counsel chose not to pursue
arbitration, while Appellants’ new counsel, engaged in October 2016, over six
months after the lawsuit was filed,43 decided to change strategy in response to
The fact that Appellants chose not to invoke the arbitration clause when
represented by different counsel does not mean that those months of delay are
excusable. Nor are Appellants excused for the further delay between October 2016
and December 2016 under the representation of new counsel. Appellants’ decision
to switch from litigation to arbitration after Plaintiffs filed for summary judgment,
far from being an excuse, is the type of tactical “switch” that leads to waiver. See
Okorafor v. Uncle Sam & Associates, Inc., 295 S.W.3d 27, 38 (Tex. App.—
Houston [1st Dist.] 2009, pet. denied) (“In determining waiver of arbitration rights,
25
party’s attempt to have it both ways by switching between litigation and arbitration
waiver. Perry Homes, 258 S.W.3d at 584 (“[A] party cannot substantially invoke
the litigation process and then switch to arbitration on the eve of trial.”).
Appellants filed their motion to compel arbitration less than a week after Plaintiffs
filed their Summary Judgment Motion.44 Thus, it was only when Appellants faced
the imminent prospect of a judgment against them that they sought to delay that
Indeed, in their own briefing to this Court asking for a stay, Appellants
vigorously sought to prevent the district court from ruling on Plaintiffs’ Summary
Judgment Motion—both in this Court46 and in the court below47—proves that their
44
CR 18 (Plaintiffs’ Motion for Partial Summary Judgment), CR 108 (Defendants’ Plea in
Abatement and Motion to Compel Arbitration).
45
Plaintiffs’ App. 3, Appellants’ Emergency Motion for Temporary Relief to Stay Trial Court
Proceedings, at 7 (“Texas law considers a summary judgment proceeding as a trial . . . .”).
46
Id.; see also Appellants’ Motion to Expedite Consideration of Appellants’ Emergency Motion
for Temporary Relief to Stay Trial Court Proceedings (filed on June 19, 2017).
26
motion to compel arbitration marked a strategy shift aimed at halting the district
from the outset of the lawsuit. The Contract containing the arbitration clause was
Appellants’ initial counsel knew about and referenced the Contract well before the
“smoke,” the record evidence clearly shows that, for months, Appellants fully
engaged in pretrial matters without once mentioning the arbitration clause. During
much of that time, Appellants were represented by different counsel, but as noted
above, that does not excuse Appellants’ delay. The timeline below illustrates
47
CR 672-683 (Defendants’ Motion to Stay Proceedings & for Expedited Hearing).
48
CR 36, CR 282, CR 468 (2014 Contract).
49
CR 308-309 (Kemp Gorthey letter to David King dated December 9, 2015).
27
DATE EVENT
Dec. 10, 2015 Plaintiffs and Appellants Mediate; no
discussion of arbitration.50
Mar. 24, 2016 Plaintiffs file suit.51
28
Dec. 2, 2016 New counsel notices subpoena for
production of documents on Plaintiffs’
construction lender.61
Dec. 2, 2016 Plaintiffs file Summary Judgment
Motion.62
Dec. 8, 2016 Appellants file Motion to Compel
Arbitration.63
Numerous courts have found that pretrial activities such as these contribute
to invocation of the judicial process. See, e.g., Electrostim Med. Services, Inc. v.
Health Care Serv. Corp., CIV.A. H-11-2745, 2012 WL 5373462, at *8 (S.D. Tex.
Oct. 30, 2012) (Rosenthal, J.) (obtaining written discovery and filing amended
deposition); In re Christus Spohn Health Sys. Corp., 231 S.W.3d 475, 481-82 (Tex.
petition, and motion for contempt); Cent. Nat. Ins. Co. of Omaha, 856 S.W.2d 492,
discovery and filing general denial, motion for continuance, and counterclaim).
61
CR 429-445 (Subpoena Notice).
62
CR 18-107 (Plaintiffs’ Motion for Summary Judgment).
63
CR 108-125 (Defendants’ Plea in Abatement and Motion to Compel Arbitration).
29
In an attempt to downplay the many ways in which they participated in
litigation over nine months, Appellants cite two cases (at 17-18) in which courts
courts should look to the totality of the circumstances.” Perry Homes, 258 S.W.3d
at 591. No single one of the factors set forth in Perry Homes is required to show
waiver, and “courts have found waiver based on a few, or even a single one” of the
factors. Id. “Of course, all these factors are rarely presented in a single case.” Id.
Neither of the cases cited by Appellants reflect facts akin to the facts of this
case. For example, in neither of the cases did the movant affirmatively propound
discovery other than form requests for disclosure. See G.T. Leach Builders, LLC v.
Sapphire V.P., LP, 458 S.W.3d 502, 514 (Tex. 2015) (“The only discovery that
G.T. Leach actually propounded was a form request for disclosure that G.T. Leach
neither of the cases involved an “eve of trial” motion for arbitration strategically
filed in order to prevent the district court from ruling on a summary judgment
motion. Nor did these cases involve a motion filed by substitute counsel after the
30
movant’s original counsel engaged in litigation for months without any indication
Whether Appellants invoked the judicial process depends on the unique facts
of this case, not the facts of two very different cases. The facts of this case show
that Appellants’ engagement in pre-trial activity is only one of many Perry Homes
vi. The amount of time and expense the parties have committed
to the litigation.
Yet another factor weighing in favor of waiver is the significant time and
expense the parties have committed to this litigation. In the nearly nine months
before Appellants moved to compel arbitration, and with the Court’s resolution of
2. Prejudice to Plaintiffs.
have it both ways by switching between litigation and arbitration to its own
advantage.’” Tuscan Builders, LP, 438 S.W.3d at 721 (quoting Perry Homes, 258
S.W.3d at 597). The party opposing arbitration need only show “the fact of
64
CR 448 (Affidavit of David A. King, at ¶ 15).
31
As a threshold matter, Appellants failed to argue in the court below that
solely on the issue of invocation of the judicial process, and did not once challenge
Plaintiffs’ showing of prejudice.65 By laying behind the log, Appellants have “not
preserved this issue for [this Court’s] review.” Santander Consumer USA, Inc.,
arbitration was not preserved); see also In re Hawthorne Townhomes, L.P., 282
i. Costs Incurred.
“A party opposing arbitration may establish that it suffered actual prejudice
by showing that it incurred costs and fees due to the movant’s actions or delay.” In
re Castro, 246 S.W.3d at 762. Here, Plaintiffs have incurred significant time and
attorneys’ fees from pleading the case in this Court, participating in written
65
Reporter’s Record (May 24, 2017 hearing on motion to compel arbitration).
32
discovery, working with Plaintiffs’ expert, and preparing Plaintiffs’ Summary
Judgment Motion.66
Appellants do not dispute that Plaintiffs incurred these litigation costs before
Appellants argue (at 19) that, as a per se rule, litigation costs cannot establish
prejudice. But this argument was expressly rejected in Perry Homes, in which the
258 S.W.3d at 599. Accordingly, numerous courts have held that litigation costs
may establish prejudice. See In re Castro, 246 S.W.3d 762 (Tex. App.—Eastland
2008, no pet.) (finding prejudice because “the record demonstrated that [non-
movant] and his counsel had to prepare for trial because of [movant’s] delay in
filing the motion”); Cent. Nat. Ins. Co. of Omaha, 856 S.W.2d at 494–95 (“The
expenses incurred by the Glovers for attorney’s fees and discovery costs is also
evidence of harm and prejudice”); Marble Slab Creamery, Inc. v. Wesic, Inc., 823
S.W.2d 436, 439 (Tex. App.—Houston [14th Dist.] 1992, no writ) (“the expense to
Wesic for attorney’s fees and discovery costs in defending this suit is also evidence
Of course, Appellants’ proposed per se rule also flies in the face of the
66
CR 448 (Affidavit of David A. King, at ¶ 15)
33
basis, and . . . courts should look to the totality of the circumstances.” Perry
Homes, 258 S.W.3d at 591. The single case Appellants rely upon for their per se
rule presents very different facts from those present here. In contrast to the facts in
moved to compel arbitration only after Plaintiffs had incurred substantial costs in
trial proceeding, thus putting Plaintiffs in a very different position than the
plaintiffs in SEB. Had Appellants moved for arbitration sooner, Plaintiffs would
not have incurred these trial costs. See In re Castro, 246 S.W.3d 762 (Tex. App.—
Eastland 2008, no pet.) (finding prejudice because “the record demonstrated that
[non-movant] and his counsel had to prepare for trial because of [movant’s] delay
somehow flawed because it did not include “actual billings,” this is not what Texas
law requires, and Appellants cite no authority for this proposition. Without
34
connection with “time spent pleading the case in [the district court], participating
Motion for Summary Judgment.”68 This evidence goes well beyond what Plaintiffs
needed to prove in order to show prejudice. See Perry Homes, 258 S.W.3d at 599–
600 (“[B]oth dissents quibble with the Defendants’ proof of prejudice because it
was insufficiently detailed. This confuses proof of the fact of prejudice with proof
of its extent; the Defendants had to show substantial invocation that prejudiced
them, not precisely how much it all was. Referral to arbitration should be decided
summarily with the evidence limited to disputed facts; . . . requiring proof of each
[expense] would have merely made the referral hearing longer and more
expensive.”).69
Plaintiffs’ construction lender, Regions Bank, and obtained documents under the
68
CR 448 (Affidavit of David A. King, at ¶ 15)
69
In a truly misleading ploy to undermine Plaintiffs’ evidence, Appellants also knowingly
misrepresent Plaintiffs’ affidavit as “forecasting fees” through 2017. Contrary to Appellants’
intentional misreading, the affidavit expressly states that “Through December 8, 2016, when
Defendants moved to compel arbitration, the amount of time worked by timekeepers at Graves
Dougherty in connection with Plaintiffs’ claims totaled 150 hours for attorneys.” Id. (emphasis
added). Completely ignoring this language, Appellants seize upon a typo in the next sentence of
the affidavit to arrive at their intentional misreading. Because Plaintiffs have no obligation in the
first place to detail their exact expenses before Appellants moved to compel arbitration,
Appellants’ misreading is irrelevant. Nonetheless, Appellants’ ploy reveals the weakness of their
argument on the merits.
35
Texas Rules of Procedure that they may not have otherwise received in
Homes, this evidence is sufficient to show prejudice. See Perry Homes, 258
discovery without proof that the arbitrator would have prohibited it because
predict what they might do in advance”). These facts further set this case apart
from SEB because, in that case, the defendant had propounded none of its own
discovery other than a form request for disclosure. SEB, Inc., 2011 WL 749292, at
*6.
Appellants’ invocation of the judicial process and the prejudice it has caused to
Plaintiffs. Further, in addition to waiving arbitration, the Dargahis are not entitled
to arbitration in the first place because they are not parties to the arbitration clause.
Appellants did not present any argument in the court below to the contrary, and
70
Because Appellants failed to present any argument in the court below regarding prejudice,
Plaintiffs had no need to present additional evidence of Appellants’ affirmative discovery. It is
notable, however, that Appellants also performed, and Plaintiffs cooperated in connection with,
investigations of Plaintiffs’ home by Appellants and their expert, as discussed in the email
correspondence attached hereto as Plaintiffs’ App. 4.
71
CR 429-445 (Subpoena Notice).
36
they lack competent evidence on appeal. Plaintiffs respectfully request that this
Court hold that the trial court did not abuse its discretion in denying the motion to
compel arbitration, affirm the trial court’s order, and award Plaintiffs such other
Respectfully submitted,
37
CERTIFICATE OF SERVICE
The undersigned certifies that a true and correct copy of the foregoing has
been served by electronically via the e-filing system on counsel of record as listed
below on this the 28th day of August, 2017:
Carl J. Wilkerson
Bush Rudnicki Shelton, P.C.
200 N. Mesquite St., Suite 200
Arlington, Texas 76011
Telephone: (817) 274-5992
Facsimile: (817) 261-1671
CERTIFICATION
I certify that I have reviewed the foregoing brief and concluded that every
factual statement in the brief is supported by competent evidence included in the
appendix or record.
CERTIFICATE OF COMPLIANCE
I certify that the foregoing brief was prepared using Microsoft Word, and
that, according to its word-count function, the sections of the foregoing brief
covered by TRAP 9.4(i)(1) contain 6877 words.
Plaintiff,
v.
TRAVIS COUNTY,TEXAS
PEJMAN DARGAHI,KAMRAN
DARGAHI,and YEKK CONSTRUCTION
SERVICES,LLC,d/b/a LAKEWAY
CUSTOM HOMES AND RENOVATION,
Pursuant to Rule 10 of the Texas Rules of Civil Procedure, Defendants Pejman Dargahi,
Kamran Dargahi, and Yelck Construction Services, LLC, d/b/a Lakeway Custom Homes and
Renovation files this Unopposed Motion to Substitute Counsel, and would respectfully show unto
1. Defendant respectfully moves the Court to substitute Kemp Gorthey of The Gorthey Law
Firm be permitted to withdraw as attorney of record and that the following attorney be substituted:
James Rudnicki
State Bar No. 24006148
JRudnicici(cry,BRSTexas.com
Russell Clinage
State Bar No. 00790473
RClina~e cr,BRSTexas.coin
Tyler Hood
State Bar No. 24097846
THood(a~BRSTexas.com
Bush Rudnicki Shelton, P.C.
200 N. Mesquite St., Suite 200
Arlington, Texas 76011
Telephone: (817)274-5992
Facsimile: (817)261-1671
App. 1
2. Defendant specifically approves ofthis substitution and Plaintiff's counsel has been consulted
3. This substitution is not sought for delay only, but so thatjustice maybe done.
Respectfully submitted,
James R~ nicki
State Bar No. 24006148
JRudnicki(a,BRSTexas.com
Russell Clinage
State Bar No. 00790473
RClinage(a7BRSTexas.com
Tyler Hood
State Bar No. 24097846
THood(cr~BRSTexas.com
4025 Woodland Fark Boulevard, Suite 190
Arlington, Texas 76013
Telephone:(817)274-5992
Facsimile:(817)261-1671
CERTIFICATE OF SERVICE.
I certify that a true and correct copy of the foregoing has been forwarded to the following
known counsel of record as indicated below, on October 3, 2016:
Via E-file
David A. King, Counsel far Plaintiff
Graves, Dougherty, Hearon &Moody,P.C.
401 Congress Avenue, Suite 2200
Austin, Texas 78701
Via E-file
Kernp W. Gorthey ,Former Counsel
The Gorthey Law Fii7n
604 West 12~' Street
Austin,. Texas 78701
CAUSE NO.D-1-GN-16-001279
Plaiiztiff,
v.
TRAVIS COUNTY,TEXAS
PEJMAN DARGAHI,KAMRAN
DARGAHI,and YEKK CONSTRUCTION
SERVICES,LLC,d/b/a LAKEWAY
CUSTOM HOMES AND RENOVATION,
The Court hereby grants the Unopposed Motion to Substitute Counsel filed on behalf of
Defendant Pejman Dargahi, Kamran Dargahi, and Yekk Construction Services, LLC, d/b/a
Lakeway Custom Homes and Renovation. Kemp Gorthey of The Gorthey Law Firm is withdrawn
as attorney ofrecord for Pejman Dar~ahi, Kamran Dargahi, and Yekk Construction Services, LLC,
d/b/a Lakeway Custom Homes and Renovation and the following attorneys are substituted in their
place:
James Rudnicki
State Bar No. 24006148
JRudnicki(c~BRSTexas.com
Russell Clinage
State Bar No. 00790473
RClinage(c~BRSTexas.com
Tyler Hood
State Bar No. 24097846
THood(c~BRSTcxas.com
Bush Rudnicki Shelton, P.C.
200 N. Mesquite St., Suite 200
Arlington, Texas 76011
Telephone: (817)274-5992
Facsimile: (817)261-1671
SIGNED ,2016.
JUDGE PRESIDING
David A. King
512.480.5722
GD 512.536.9942 (fax)
HM dking@gdhm.com
Via Email
Mr. Kemp W. Gorthey
The Gorthey Law Firm
604 West 12"t Street
Austin, Texas 78701
kemp@gortheylaw.com
Dear Kemp:
The Handas cannot accept the builders' settlement offer of the LLC's assets plus $25,000. This
offer is too far below the $280,000+ in damages the Handas are expected to sustain.
Attached hereto is a copy of the Handas' petition filed in Travis County District Court today.
However, in a final attempt to avoid the need to pursue this dispute in court, the Handas are
willing to settle all existing disputes between the parties—including the outstanding defect
claims—in exchange for (i) conveyance of the 2 lots (or, if the builders want to sell the lots
themselves, payment within 3 months of $85,000) and (ii) payment of $100,000. As discussed,
we estimate that the net proceeds from the lots will be $70,000 to $80,000, thereby resulting in
recovery of no more than $180,000 of the Handas' damages (compared to the $240,000
originally sought by the Handas). Further, the LLC's bank statements show a balance of
$27,000, and we understand that the builders also settled a claim against their concrete
subcontractor. When these funds are taken into account, we believe the difference between the
Handas' offer above and the builders' offer may be less than $25,000. However, this $25,000 is
meaningful to the Handas, particularly because, under the proposed settlement structure, they
would be taking on the complete cost of finishing the builders' work and repairing the identified
defects.
If the builders will not agree to this offer within 30 days, or if no alternative agreement is
reached, we will effect service of process on the builders and seek all remedies available to the
Handas. The Handal will also seek recovery of all costs of court and attorney's fees, which are
excluded from the proposed settlement offer and which, as you know, will increase substantially
if litigation proceeds.
App. 2
March 24, 2016
Page 2
Please also note that, if settlement cannot be reached, we also intend to amend the petition to add
DTPA claims (in connection with both the builders' diversion of funds and construction defects)
and RCLA claims after the statutory notice periods have expired.
Please also note that, after last night's rain, additional water penetration was observed under the
basement stairwell. Qriginally, there were four areas of the basement that were leaking
(stairwell, bar area, home theater area, and kitchenette area). After the builders' attempted fixes,
water penetration was only observed in the kitchenette. However, now with the stairwell leak,
there are two areas that are compromised. The other two areas may fail over time. We will be
updating the Handas' inspection report with these latest findings. Further, these leaks continue
despite the Handas' reasonable mitigation efforts.
Kind Regards,
/s/David Kin
David A. King
401 Congress Ave. Suite 2200 Austin, Texas 78701 512.480.5600 www.gdhm.com
3/24/2016 11:38:09 AM
Velva L. Price
District Clerk
Travis County
D-1-G N-16-001279
Victoria Chambers
Cause Na.n'1-r'N-16-ooi279
v. § TRAVIS COUNTY,TEXAS,
PEJMAN DARGAIII, §
KAMRAN DARGAIII, and §
YEKK C nN5TRUC"I'lON SERVICES,
LL,C, D%B/A LAKFWAY CUSTOM
HOMES AND RENOVATION, §
~e:fendants. § 261st JUDICI'E1L I~IS7'IZTC'T
COME NOW Plaintiffs Dhiraj Handa and Ritu Handa, and ale this Original Petitio~i
cc~rnplaining of Defendants Pejma~a Dargahi, Kamran Dargah, and Yekk Constxuction Services,
LLC, d/h/a Lakeway Custom Hc~rnes and Renovation, and for cause of action would show as
Follows:
I.
BACKGROUND ANn OVERVIEW
1. This lawsuit seeks money ciarnages based nn the Defendants' wrongful and
~'laintiffs have paid. 95% of the Contract Price, the Defendants have improperly refused to move
forward with the work. Instead, the Taefendants are holding the project hostage by insisting upon
payment of additional amounts tI~at are not owed and that exceed the total Goritract Price,
Further, Defendants have railed to pay subcontractors, despite falsely representing to 1'laintifl`s
that all sti~bcontractors had been paid. llefendants have fraudulently diverted trust Fund payments
made by Plaintiffs to themselves and to rather purposes, leaving Plaintiffs exposed t~ the risk of
paying for the same completed work twice, while also having to pay new contractors to finish the
II.
DISCOVERY PLAN
2. Discovery in this action should prpceed under i.,eve13 pursuant to Rule 190.4 of
III.
PARTIES
3. Plaintiffs Dliiraj Handy and Ritu Handy ire residents of Travis.County, Texas.
County, Texas, and may be served with process at 6425 Old Harbor Lane, Austin, Tcx~s, 78739,
6. L7efezidant Yekk Gonstruetion Services, LLC, d/b1a Lakeway Custom Homes and.
Renovation is a ~'exas limited liability company with its principal office in Lakeway Travis
County, Texas, and may be served with process by serving its registered agent, I'ejman nargahi,
IV.
JURISDICTIQN AND VENUF.
7. This Cow-t kias subject matter jurisdiction over Plaintiffs' claims, and Plaintiffs'
claims are within the jtir sdictional limits of this Court. i'ursuant to Tex. R. Civ. P. 47(c)(4),
Plaintiffs seek monetary relief over $200,000 but not more than $1,000,000.
8. "I`ravis County is a county of proper venue under Section 15.002, Tex. Civ. Prac.
8c Rein. Cade. Each Defendant's residence or principal of~.ce is in Travis County and all or a
substantial part ~fthe events giving rise to Plaintiffs' claims occurred in Travis County.
Contract(the "Contract," attached hereto as exhibit A)under which "Lakeway Custom Homes
and Renovation" agreed to build a house on a piece of unimproved land located at 228 Sanostee
Cave, TY•avis County, Texas,fox a fixed contract prxee of $1,4GO,OOO.OQ (the "Project"). The
Contract was executed nn or around ~pri14, 2014, by pefendant Pejman Dargahi ("Dargahi").
1 U. The Contract did aiot disclose that Lakeway Custom Homes and Renovation was a
d/b/a for Defendant Yekk Construction Sezvices, LLC ("Yekk"), tior did the Contract disclose
that Dargahi was executing the Contract as the agent of Yekk or any other entity. In a November
19, 2015 email, Dargahi misrepr~s~nted to Plaintiffs that Che Contract was with "Lak~way
Custom Hoines LLC"(a non-existent entity), and Dargahi did not indicate that he signed fhe
Contract on behalt of Yekk. Dargahi has also indicated that he and 11is brother, Kamran Dargahi,
are "partners" in the non-existent I.,akeway Custom Flomes LLC. Although.not disclosed in the
Contract, upon inforrr~ation and belief, Dar~ahi is the sole member acid director of Ye]<k.
the construction lender(Regions Bank), Plaintiffs have made progress payments totaling
$1,387,750($660,000 of which was paid directly by Plaintiffs and $727,750 of which was paid
by the construction lender), This is 95% of the Contract price. FIowever, Dargahi has completed
less than 90°/a of the scheduled work at a value of $1,314,000. In other words, Dargahi leas been
paid for more than he has completed, and has been overfunded by at least $73,750.
13. Dargahi's last request for a payment, in the anao~inC of $90,520, was made in
November 2015. At that time, Dargahi was already overfunded by $29,950. Regions k3ank
approved a progress payment of$43,800 on T~riday, November 13, 2015, noting that this ftindin~
was an "exception to policy" and was "lhe rnaxim~im amount we could get approval to fund per
management." Regions Bank stressed that "there will be no further draws from the loan until the
project is completed."
]4. TIowever, the following Monday, November 16, Dargahi disclosed to Plaintiffs
that he was still. "$150,~OU +/- short to finish our contract." 'This despite the fact that, with the
$43,800 payment made the previous Friday, Dargahi was already overfunded by $73,750.
Dargahi also declared that "no more [coristzuctio~~] activities could be performed unless we are
financially comfortable." At ar around this same time, Dar~ahi abandoned the Project, leaving it
exposed to the elements, vandalism, and theft. Since that time, Dargahi has ceased all
construction work on the Yraject despite repeated requests from Plaintiffs to resume work.
15. In the weeks following Dargahi's refusal to complete his work on the Project i.n
accordance with t11e Contract, Plaintiffs learned That according to Dargahi's own estimate, it
would cost over $130,000 to complete the remaining work. on the Project. Despite Plaintiffs'
16. Plaintiffs also discovered that Dargahi owed more than $120,000 to at least
seventeen subcontractors fired by Dargahi to work on the Project, notwithstanding the fact that
Dargahi repeatedly represented t~ Plaintiffs prior to obtaining the last draw on November 13,
201.S that all subcontractors had been paid. With respect to a subcontractor responsible for
constructing a well for the Project,.Iaargahi had also obtained Flaintif:f's' a~~proval of a $2(},000
chari~e order after 1~ar~;ahi falsely represented that tl~e subcantraetor had already been paid fir
SL1CIi WOI'JC. Numerous subcontractors have filed liens an the I'raject or prodded notice ofintent
to file liens. Despite ~'laiYitiiTs' repeated ~iem~nds, Dargahi has refused to pay the outstanding
debts owed to the subcontractors, and llargahi has not discharged any subeontractars' liens..
17. Further, after Dargalii's cessation of work, Plaintiffs discovered that, all alnn~,
17ar~~illi and his brother, Kamran, had been systematically divert ilg substantial sums of money
from Plaintiffs' progress paymen:ls to other expenses unrelated to the Project. Specifically,
according to Defendants' own bank statements and upon ini'ormation and belief, the Dargahis
uscti Plaintiffs' money to .pay for the following: (i) other construction projects (as confirmed by
affidavits c~bt~ined from Defendants' subcontractoz•s, who worked on mt~itiple projects for
Defend its, but who were paid only out of Plaintiffs' fiends);(ii) advertising;(iii) web design;
(zv) plumbing work done on Pajeman Dargahi's personal house;(v) purchasing a car,(vi)
purchasing reat estate;(vii) attorney's fees in connection with multiple disputes.; and (viii)
personal expenses, including out-af-state trips, charged to an American Express credit card. As
Defendants' hank statements indicate, such. payments wire made directly from the bank accc~~int
18. Remarkably, the Uar~;ahis do not dispute that they systetnatically diverted and
spent such funds as ifthey hack been deposited in the Dargahis' own personal bank account.
Instead, now that their misappropriation offunds has been uncovered, the Dargaliis appear to
claim that they were entitled to divert Plaintiffs' payments based on the contention that they
expected to make a profit on the Project, and they therefore should have been able to deduct their
"expected" profits fca~xi Plaintiffs' progress payments before the Project was aclz~ally c~rnpleted.
01'course, this bafilirig contentio~~, which was only revealed after Plaintiffs' uncovered the
diversions, is contrary to Chapter 162 of'the Texas Property Code and ignores the plain language
ofthe Contract. Rather than promising Dargahi any type of profit, the Contract expressly
extracted from Plaintiffs before the Uar~ahis announced in November 2015 that they were
halting all work on the Project unless and until Plaintiffs personally paid them well in excess of
what the construction lender could release and well in excess of what Mr. and Mrs. ~-Tanda were
VI.
CAUSES OF ACTIN
contract for tl~e improvement of specific real property in Texas, and are therefore "trust fiYnds"
pursuant to Section 162.001, Tex. Prop. Code. Defendants Pajeman and Kamran Dargahi had
control and direction ovex Plaintiffs' progress payments for the Project. Plaintiffs are
progress payments without first fully paying all current or past due obligations Defendants
incurred. Defendants did so intentionally, knowingly, and with intent to defraud. Defendants'
22. Defendants' breaches of fiduciary duties. owed to Plaintiffs under Chapter 162
24, Defendants Pajernan and Kamran Dargahi represented to Plaintiffs that #:heir
progress payments and change order payments would be used to pa}~ fc~r the construction ~fthe
Project. F-Iowever, Defendants never intended to use Plaintiffs' payments solely for the Project,
use. Defendants' false representaxions induced Fl~.int ffs to enter the Contract and to make
progress payments and change order payments to Defendants under the Contract.
2S. Defendants Pajeman and Kamran Dar~;Ahi also represented to Plaintiffs that they
had fully paid the subcontractors hired to work an the Project knowing that seventeen
subcontractors had not, in fact, been paid—to t3ie tune of over $120,000. Defendants' false
28. llefendanis have wrongfully profited from their breaches of fiduciary duty
descriUed above, Plaintiffs seek the imposition of a constructive tr~.ist upon all assets, revenues,
and profits that Defendants have received and continue to receive as a result of their wrongful
30. Defendants unjustly received (by taking for themselves)the portion of Plaintirfs'
those benciits by taking undue advantage of Plaintiffs. Defendants are required to make
32. Tay fraudulently divertinb ~'laintifts' progress payments, Defendaalts h~lcl money
that belotlgs to Plaintiffs in equity and good conscience. Plaintiffs are entitled to recover such
money.
indivic{ually liable for any breaches of Yekk's obligations under the Contract, as described above
35. Under the Contract, Yekk and Pejmail Ua1•gahi are ovligated to "provide all labor
and materials far construction" ofthe Project "according to (the] Contract and the Plans," and
"pay all costs rzlated to the Wprk." Exhibit A,Sections TTI, XIV. Yekk and Pejman Dar~;ahi
have breached these contractual obligations, or to the extent such. breaches have not yet occurred,
ITekk and Pcjman I?argahi have anticpatorily breached th~cir obligations by static~g that they do
36. Yekk and ~'ejman Dargahr are further obligated under the Contract to "xnakc
payments to subcontractors or vendors supplying material for" the Project. Exhibit A,Section
XV. Yelck and Pejman Dargahi have breached their contractual obligation by failing to pay <~t
37. Yekk az~d Pcj~nan I~axgahi are further obligated to "deliver title to all the
materials, appliances and equipment used in the Wark free of all liens, claims, security interests
or encumbrances." lxhibt A,Section XV. Yekk and..~'ejmayi Dargahi have breached. their
3~3. Because of Yekk and Pejman Dargahi's breaches of ~:11e Contract, Plaintiffs have
VII.
~X~IVIPLARY DAMAGES
wrongful conduct pursuant to Chapter 41, Tex. Civ. Prac. &Rem. Code, or as otherwise allowed
by law.
VIII.
ATTORNEY'S FEES
42. Pursuant to Tex. Civ. Prac. & Rezn. Code § 38.001, or as otherwise allowed by
taw, PlainiifFs are entitled t~ recover reasonable and necessary attorney's fees and costs of court
IX.
CONDTI'ION'S PRECEDENT
~3. All conditions precedent have been perfarmec3 or have occurred, including all
X.
REQUEST FO t DISCLOSUI2~
44. Pursuant to Tex, R, Civ. P, 194, Plaintiffs request that Defetldants disclose within
5p days of service oCthis request all information or material described in Rule 194.2 (a)-(1).
PRAYER
WI-I~RE~'()RE, premises considered, Plaintiffs respectfully request that the Court enter
pursuant to Tex. Civ. Prac, & IZem. Code § 38.001, or as otlxerwise allowed by law; and
Respectfully submitted,
By: !~``"
G. Douglas ii k y
State 13ar N , U(' 7834
a~~ra~yC~~a~m.~o~
State Bar ID No. 24083310
dking~gdhm.coxn
v.
Services, LLC d/b/a Lakeway Custom Homes and Renovation ask this Court for
emergency temporary relief to stay trial court proceedings, including stay of the
trial court's hearing noticed for June 27, 2017 on PLAINTIFFS' TRADITIONAL
APPELLANTS'EMERGENCY MOTION FOR TEMPORARY RELIEF TO STAY TRIAL COURT PROCEEDINGS PAGE 1
App. 3
STATUTORY FRAUD,AND BREACH OF CONTRACT (hereafter "Plaintiffs'
Partial MSJ"),1 pending this Court's review of the trial court's May 30, 2017
29.3, 29.5, 29.6. Appellants also request this Court's review ofthe trial court's June
/~~~Mli►Z~Z11i1~ 1~~~~►i
Exhibit B.
z Exhibit D.
3 Exhibit G. See TEx. R. APP. P. 29.6(a).
4 Appellants name Judge Livingston because she is the presiding judge for the 261St Judicial
District Court. Judge Livingston did not enter any orders subject to this appeal.
5 Exhibit B, p.1.
APPELLANTS' EMERGENCY MOTION FOR TEMPORARY RELIEF TO STAY TRIAL COURT PROCEEDINGS PAGE 2
contains an arbitration agreement between Appellants and Appellees.b
Appellees filed the trial court case to resolve their dispute against
the trial court to stay its further proceedings against the Yekk
court heard and denied Appellants' request for stay by its June 16,
6 Exhibit C, p. 12,13.
Exhibit A.
8 Exhibits C,D.
9 Exhibit E.
'o Exhibit F.
APPELLANTS'EMERGENCY MOTION FOR TEMPORARY RELIEF TO STAY TRIAL COURT PROCEEDINGS PAGE 3
2017 ORDER ON DEFENDANTS' MOTION TO STAY
summary judgment hearing, while this Court reviews the trial court's
"Exhibit G.
'Z See Exhibit A, p. 4.
APPELLANTS'EMERGENCY MOTION FOR TEMPORARY RELIEF TO STAY TRIAL COURT PROCEEDINGS PAGE 4
B. ARGUMENT &AUTHORITIES
stay.13 See TEx. C~v. PRAC. &REM. CODE § 51.016 (authorizing appeal
the appellate court's jurisdiction over all parties to the trial court's
order concerning same subject matter and any interlocutory order that
APPELLANTS'EMERGENCY MOTION FOR TEMPORARY RELIEF TO STAY TRIAL COURT PROCEEDINGS PAGE 5
interferes with or impairs the effectiveness of the relief sought or that
clause they contracted for. Absent temporary stay, the trial court's
arbitration rights made the basis of this appeal; and risks a judgment
granted on appeal. See TEx. R. APP. P. 29.5 (b), 29.6 (a)(2). The trial
Arbitration Act. In re Merrill Lynch Trust Co. FSB, 235 S.W.3d 185, 195
APPELLANTS'EMERGENCY MOTION FOR TEMPORARY RELIEF TO STAY TRIAL COURT PROCEEDINGS PAGE 6
(i) all Defendants violated the Texas Construction Trust Fund Act,
Section 162.031(a), Tex. Prop. Code, and violated their fiduciary
duties to Plaintiffs thereunder, as described above;
(ii) all Defendants are liable for common law fraud and statutory fraud
for their misrepresentations and nondisclosures, as described above;
certain matters. See Ikb Industries (Nigeria), Ltd. v. Pro-Line Corp., 938
"Exhibit B, p. 15.
APPELLANTS' EMERGENCY MOTION FOR TEMPORARY RELIEF TO STAY TRIAL COURT PROCEEDINGS PAGE 7
agreement. See Jack B. Anglin Co., Inc. v. Tipps, 842 S.W.Zd 266, 272-
Supreme Court of Texas. See Weekley Homes, L.P. v. Rao, 336 S.W.3d
Merrill Lynch Trust Co. FSB, 235 S.W.3d 185, 195 (the Federal and
APPELLANTS'EMERGENCY MOTION FOR TEMPORARY RELIEF TO STAY TRIAL COURT PROCEEDINGS PAGE 8
439 (Tex. 1999)(court of appeals should have stayed trial court's class
becoming moot).
15, 2017):
APPELLANTS'EMERGENCY MOTION FOR TEMPORARY RELIEF TO STAY TRIAL COURT PROCEEDINGS PAGE 9
PRAYER
Appellants such further legal and equitable relief to which they are
entitled.
Respectfully submitted,
ATTORNEYS FOR
APPELLANTS
APPELLANTS' EMERGENCY MOTION FOR TEMPORARY RELIEF TO STAY TRIAL COURT PROCEEDINGS PAGE l0
VERIFICATION
STATE OF TEXAS
COUNTY OF TARRANT
I certify that: prior to June 16, 2017, I conferred with Appellees' counsel
David King by phone conference and email regarding Appellants' request to stay
the June 27 hearing and further trial court proceedings, including a potential
emergency motion to the Court of Appeals to stay trial court proceedings if
necessary; and, after the trial court entered its June 16, 2017 Order denying stay, I
personally conferred with Mr. King regarding Appellants' proposed emergency
motion to the Court of Appeals to stay the June 27 hearing and further trial court
proceedings. Mr. King opposed Appellants' requested stay.
CERTIFICATE OF SERVICE
David A. King
dking~~hdm.com
GRAVES,DOUGHERTY,HEARON &MOODY
401 Congress Ave., Suite 2200
Austin, Texas 78701
APPELLANTS'EMERGENCY MOTION FOR TEMPORARY RELIEF TO STAY TRIAL COURT PROCEEDINGS PAGE 12
From: Stephanie Lugo <SLugo@brstexas.com>
Sent: Wednesday, April 19, 2017 10:27 AM
To: King, David A.
Subject: RE: Yekk/Handa
Best regards,
Stephanie Lugo
Direct: 512.870.8133 | Main: 512.263.8408 | Fax: 512.263.2562
Austin | 2508 Ashley Worth Blvd., Suite 200, Austin, TX 78738
Please note our new Arlington (DFW) office address is:
DFW | 200 N. Mesquite Street, Ste. 200, Arlington, TX 76011
www.BRSTexas.com
The information contained in this e-mail message is legally privileged and confidential information which is intended only for the use
of the individual or entity named above. If the reader of this message is not the intended recipient, you are hereby notified that any
use, dissemination, distribution or reproduction of this message is strictly prohibited. If you have received this message in error,
please immediately notify us by return e-mail and then delete this e-mail from your system. Thank you.
Mr. Handa can only accommodate until 11:15. Please let your expert and clients know.
Thanks,
David A. King
Attorney
Best regards,
Stephanie Lugo
Direct: 512.870.8133 | Main: 512.263.8408 | Fax: 512.263.2562
Austin | 2508 Ashley Worth Blvd., Suite 200, Austin, TX 78738
Please note our new Arlington (DFW) office address is:
DFW | 200 N. Mesquite Street, Ste. 200, Arlington, TX 76011
www.BRSTexas.com
The information contained in this e-mail message is legally privileged and confidential information which is intended only for the use
of the individual or entity named above. If the reader of this message is not the intended recipient, you are hereby notified that any
use, dissemination, distribution or reproduction of this message is strictly prohibited. If you have received this message in error,
please immediately notify us by return e-mail and then delete this e-mail from your system. Thank you.
I am checking. The Handas planned for an hour, but I am asking them if they can accommodate.
David A. King
Attorney
Thanks David. I actually just talked to them again and someone has opened the gate, but our expert won’t be there until
about 10:30. Will 10:30-11:30 be possible?
Best regards,
2
Stephanie Lugo
Direct: 512.870.8133 | Main: 512.263.8408 | Fax: 512.263.2562
Austin | 2508 Ashley Worth Blvd., Suite 200, Austin, TX 78738
Please note our new Arlington (DFW) office address is:
DFW | 200 N. Mesquite Street, Ste. 200, Arlington, TX 76011
www.BRSTexas.com
The information contained in this e-mail message is legally privileged and confidential information which is intended only for the use
of the individual or entity named above. If the reader of this message is not the intended recipient, you are hereby notified that any
use, dissemination, distribution or reproduction of this message is strictly prohibited. If you have received this message in error,
please immediately notify us by return e-mail and then delete this e-mail from your system. Thank you.
David A. King
Attorney
David –
The Dargahis are at the Handa residence. They are still waiting on Tom, but also said that the gate is closed and they
don’t see anyone at the house. Can you please let me know if the Handas are there to let them in.
Thank you.
Best regards,
3
Stephanie Lugo
Direct: 512.870.8133 | Main: 512.263.8408 | Fax: 512.263.2562
Austin | 2508 Ashley Worth Blvd., Suite 200, Austin, TX 78738
Please note our new Arlington (DFW) office address is:
DFW | 200 N. Mesquite Street, Ste. 200, Arlington, TX 76011
www.BRSTexas.com
The information contained in this e-mail message is legally privileged and confidential information which is intended only for the use
of the individual or entity named above. If the reader of this message is not the intended recipient, you are hereby notified that any
use, dissemination, distribution or reproduction of this message is strictly prohibited. If you have received this message in error,
please immediately notify us by return e-mail and then delete this e-mail from your system. Thank you.
This electronic communication (including any attached document) may contain privileged and/or confidential information. If you are not an
intended recipient of this communication, please be advised that any disclosure, dissemination, distribution, copying, or other use of this
communication or any attached document is strictly prohibited. If you have received this communication in error, please notify the sender
immediately by reply e-mail and promptly destroy all electronic and printed copies of this communication and any attached document.
This electronic communication (including any attached document) may contain privileged and/or confidential information. If you are not an
intended recipient of this communication, please be advised that any disclosure, dissemination, distribution, copying, or other use of this
communication or any attached document is strictly prohibited. If you have received this communication in error, please notify the sender
immediately by reply e-mail and promptly destroy all electronic and printed copies of this communication and any attached document.
This electronic communication (including any attached document) may contain privileged and/or confidential information. If you are not an
intended recipient of this communication, please be advised that any disclosure, dissemination, distribution, copying, or other use of this
communication or any attached document is strictly prohibited. If you have received this communication in error, please notify the sender
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