Badmand Holdings, LLC v. Jimin Xie and Weiyan Jeanne Li
05-15-01379-CV
| Tex. App. | Nov 4, 2016Background
- Badmand Holdings, LLC (two 50% member-managers: Pejman Bady and Roger Farahmand) owned a Dallas condominium listed for sale by Bady.
- Buyers Jimin Xie and Weiyan Jeanne Li signed a purchase contract in April 2013; Bady initialed each page and signed the contract on behalf of Badmand.
- Buyers deposited earnest money and an option fee; closing was delayed after an appraiser was denied entry and the listing agent said the property was being taken off the market.
- Buyers refused return of the earnest money and insisted on enforcing the contract; closing did not occur and buyers sued for breach and specific performance.
- Farahmand testified Badmand’s operating agreement required unanimous member consent to sell and that he did not consent; Badmand claimed Bady lacked actual or apparent authority.
- The trial court ordered specific performance and attorneys’ fees; on appeal the court reviewed legal and factual sufficiency of evidence regarding Bady’s authority and affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Bady had authority to bind Badmand (actual or apparent) | Buyers: Bady was a member/governing person whose acts bind the LLC; no proof buyers knew he lacked authority | Badmand: operating agreement required unanimous consent; Bady lacked authority and buyers had duty to inquire | Court: Statute treats a governing person as an agent whose acts bind the LLC unless (1) no actual authority and (2) buyer knew that lack; buyers did not know — judgment affirmed |
| Whether evidence was legally/factually sufficient to support specific performance | Buyers: presented readiness, bank mortgage approval contingent on appraisal, and lack of knowledge of Bady’s lack of authority | Badmand: Farahmand's testimony about the internal agreement defeats authority; trial court should not infer authority | Court: Evidence legally and factually sufficient to support trial court's implied findings; buyers did not know of lack of actual authority, so act bound the LLC |
Key Cases Cited
- BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789 (Tex. 2002) (when trial court issues no findings, appellate court implies all fact findings supported by evidence)
- Jarvis v. K&E Re One, LLC, 390 S.W.3d 631 (Tex. App.—Dallas 2012) (party alleging agency bears the burden of proof)
- Graham Cent. Station, Inc. v. Pena, 442 S.W.3d 261 (Tex. 2014) (legal-sufficiency standard for reviewing adverse findings where appellant did not bear the burden)
- Dallas Nat’l Ins. Co. v. De La Cruz, 470 S.W.3d 56 (Tex. 2015) (instructions for legal-sufficiency review: credit evidence supporting finding and disregard contrary evidence unless no reasonable factfinder could)
- City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) (final test for legal sufficiency: whether evidence would enable reasonable people to reach the verdict)