Phap v. Nguyen, Andy Ngo and Dung T. Vu v. Manh Hoang and Dung Le
01-15-00352-CV
Tex. App.Jul 29, 2015Background
- Appellants (Nguyen, Ngo, Vu) purchased and operated chicken farms in Georgia and Texas, financing purchases in their names; several family members (including Hoang and Le) contributed money and received profit shares.
- No written partnership agreement; parties exchanged oral understandings and investors expected profit distributions proportionate to cash contributions.
- Appellants managed, operated, financed additional construction, assumed loan liability, and worked for extended periods with little or no pay; they later sold the Texas farm and prepared a worksheet allocating net proceeds.
- At final distribution Appellants deducted (1) 20% of net profits as compensation for their services and (2) estimated federal tax obligations; Appellees objected but accepted payments and later sued.
- Plaintiffs (Hoang, Le) asserted breach of partnership agreement, breach of contract, and fraud (fraud dismissed at trial); jury found a partnership existed and awarded damages for breach of fiduciary duty and breach of contract; defendants appeal urging insufficiency of evidence and double recovery.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held / Trial-court ruling (for context) |
|---|---|---|---|
| Existence of a partnership | Hoang/Le: investors were owners entitled to partnership protections because they contributed money and shared profits | Nguyen/Ngo/Vu: no mutual intent to be partners, no control, no obligation to share losses or creditors; only investors | Jury found a partnership; defendants argue evidence insufficient under Ingram totality test |
| Breach of partnership / fiduciary duty (20% payment) | Plaintiffs: Appellants improperly paid themselves management/”partner” compensation | Defendants: no express prohibition; quantum meruit supports compensation for services; payment was reasonable | Jury found breach; defendants contend payment was lawful compensation and not a breach |
| Withholding funds for taxes | Plaintiffs: withholding deprived them of distributable proceeds | Defendants: taxes legally owed by listed owners (Appellants); withholding avoids forcing an investor to violate tax law and protects defendants’ liability | Jury awarded damages including tax-related sums; defendants argue withholding complied with tax law and was not breach |
| Allocation to third person (Le’s claim re Tuan Ngo) | Le: distribution improperly split between her and Tuan Ngo (she invested) | Defendants: record shows joint contribution/understanding between Le and Tuan; no agreement that only Le would receive funds | Jury awarded Le damages; defendants argue evidence fails to show express or implied exclusive entitlement |
| Double recovery (contract vs partnership remedies) | Plaintiffs recovered both contract and partnership damages arising from same conduct | Defendants: awarding both duplicative; one-satisfaction rule prevents double recovery | Jury awarded both; defendants argue post-trial that duplicative awards require reversal or election |
| Liability of Vu (spouse) | Plaintiffs included Vu as liable party | Defendants: Vu’s role limited to signing documents and providing funds; no evidence she participated in challenged decisions; spouse not automatically liable | Defendants moved for instructed verdict as to fraud (granted) and urged JNOV for contract/partnership claims against Vu |
Key Cases Cited
- Ingram v. Deere, 288 S.W.3d 886 (Tex. 2009) (sets TRPA/BOC factors and adopts totality-of-the-circumstances test for partnership existence)
- Black Lake Pipe Line Co. v. Union Constr. Co., 538 S.W.2d 80 (Tex. 1976) (party may recover reasonable value for services not covered by an express contract)
- Murphy v. Seabarge, Ltd., 868 S.W.2d 929 (Tex. App.—Houston [14th] 1994), aff’d (illustrates one-recovery/double-recovery rule where same acts underlie multiple claims)
- Baldwin v. Smith, 586 S.W.2d 624 (Tex. Civ. App.—Tyler 1979), rev’d on other grounds (discusses unjust enrichment/quantum meruit principles)
- Tierra Sol Joint Venture v. City of El Paso, 155 S.W.3d 503 (Tex. App.—El Paso 2004) (access to books/records relevant to control element in partnership analysis)