Burton Kahn v. Helvetia Asset Recovery, Inc.
04-14-00569-CV
| Tex. App. | Feb 5, 2015Background
- Helvetia Asset Recovery, Inc. sued Burton Kahn (pro se) and Paradiv Corporation alleging Kahn breached fiduciary duties and misappropriated funds; jury returned a verdict and the trial court entered a June 11, 2014 final judgment awarding Helvetia damages, exemplary damages and attorney fees.
- Earlier, a March–April 2014 sanctions proceeding resulted in a Final Judgment and Order of Sanctions (April 1, 2014) that included findings about stock ownership (Puerto Verde as shareholder); that sanctions order was on appeal.
- Kahn contends the sanctions hearing judge expressly declined to resolve the stock-ownership issue (said it was a separate matter) and thus that the sanctions order did not fully litigate ownership.
- At trial the court instructed the jury that Puerto Verde Ltd. was the sole shareholder of Helvetia since 2007; Kahn argues the trial court improperly allowed collateral estoppel based on the sanctions order and excluded significant defense evidence and witnesses (disclosures, filings, and an amended answer were struck or excluded).
- Kahn moved for JNOV and other relief after the verdict, arguing the jury’s damage findings (misappropriation, lost profits, slander of title, fraudulent court record, exemplary damages, and attorney fees) lacked evidentiary support and were tainted by prior rulings and evidentiary exclusions.
Issues
| Issue | Plaintiff's Argument (Helvetia) | Defendant's Argument (Kahn) | Held (trial-court outcome) |
|---|---|---|---|
| 1. Collateral estoppel from sanctions order on ownership | Sanctions order determined Puerto Verde owned Helvetia shares and those findings are preclusive | Sanctions order was appealed and ownership was not fully litigated there; statute bars monetary sanctions against a represented party on certain grounds; collateral estoppel inappropriate | Trial court allowed use of the sanctions/final judgment findings at trial (preclusive effect applied) |
| 2. JNOV — insufficiency of evidence for damages | Evidence supported awards for misappropriation, lost profits, slander, fraudulent filings, exemplary damages, and fees | Jury answers were not supported by competent evidence; excluded witnesses and documents left defense unable to rebut; absent actual damages exemplary and fee awards improper | Trial court denied JNOV and entered final judgment for Helvetia with damages and fees |
| 3. Exclusion of defense witnesses for late disclosures | Plaintiff argued disclosures were untimely and vague; moved to exclude | Kahn says disclosures had been filed earlier and any alleged deficiency could be cured; exclusion prevented a fair trial (trial by ambush claim) | Court excluded certain defense witnesses and limited testimony based on disclosure inadequacy |
| 4. Striking of amended answer / procedural pleadings | Helvetia objected to defects and indispensability of Puerto Verde; sought special exceptions | Kahn contends special exceptions forced him to amend and the striking of his amended answer deprived him of defenses and third‑party claims | Court struck Kahn’s first amended answer as untimely and struck defenses/claims from the record |
| 5. Motions in limine / exclusion of evidence | Plaintiff sought in limine exclusions to prevent confusing/irrelevant material | Kahn contends many of his financial records and evidentiary bases were improperly excluded, prejudicing defense | Court granted large-scale exclusions and sustained Helvetia’s objections at trial |
Key Cases Cited
- Scurlock Oil Co. v. Smithwick, 724 S.W.2d 1 (Tex. 1986) (adopts Restatement (Second) of Judgments § 13 rule on finality for issue/claim preclusion and explains when an appeal constitutes de novo review)
- Parklane Hosiery Co. v. Shore, 439 U.S. 322 (U.S. 1979) (sets factors for offensive use of collateral estoppel)
- Baxter v. Palmigiano, 425 U.S. 308 (U.S. 1976) (civil adverse inference from a party’s invocation or wrongful nonproduction of evidence)
- Beaumont Bank, N.A. v. Buller, 806 S.W.2d 223 (Tex. 1991) (standard for abuse of discretion review)
- City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) (legal‑ and factual‑sufficiency standards for reviewing jury findings)
- Helena Chemical Co. v. Wilkins, 47 S.W.3d 486 (Tex. 2001) (requirements for proof of lost‑profits damages)