Pirani v. Baharia (In Re Pirani), 824 F.3d 483

Background

Brothers Abdul Karim Pirani and Nasim Aziz formed Circle Sherman, LLC to buy/renovate a Days Inn; three investors (Baharia, Gilani, Lalani) bought 50% through HNM Partners, LLC.
The parties borrowed ≈$2.5M from One World Bank; all six individuals signed a guaranty guaranteeing full payment.
A 2009 settlement between the brothers and HNM provided that the Company would seek to obtain releases from the bank for the three individual investors’ personal guaranties, or the investors would remain guarantors only until July 9, 2012 and then be released by refinancing or sale.
Circle Sherman defaulted; bank foreclosed leaving an $828,190.13 deficiency. The bank later assigned the note/guaranty to an entity controlled by Pirani, who paid $300,000 for them.
Pirani filed for bankruptcy; adversary proceedings followed. Bankruptcy court found Pirani breached the settlement (he was obligated to secure releases), barred his breach-of-guaranty claims against the three individual investors but not against HNM, and awarded attorney’s fees to the HNM parties. District court affirmed in part; this appeal follows.

Issues

Issue	Pirani's Argument	HNM's / Plaintiffs' Argument	Held
Whether res judicata barred HNM’s breach-of-settlement counterclaim	The counterclaim arises from the same settlement and could have been litigated in the earlier state-court action, so it is precluded	The release claim was filed and preserved in the original bank action and then severed for later adjudication, so not precluded	Not barred: severance preserved the claim (Ingersoll‑Rand principle)
Whether the phrase “the Company” in §3.2 bound Pirani personally to secure releases	§3.2 refers only to Circle Sherman (entity), not to Pirani personally	The settlement’s opening definition expressly defines the Company to include Pirani (and Aziz); §3.2 therefore binds Pirani	Bound Pirani: opening-paragraph definition controls; §3.1(a)’s limited definition applies only within §3.1
Whether §3.2’s language made release contingent on refinancing or sale (i.e., condition precedent)	The release was subject to conditions precedent (refinancing or sale) and thus impossible after foreclosure, so obligation never triggered	Language ("shall... be released") and lack of conditional words shows a covenant to release by July 9, 2012, not a condition precedent	Covenant, not condition: parties intended mandatory release by July 9, 2012; refinancing/sale described means of release
Scope of recovery and attorney’s fees: (a) amount Pirani may recover from HNM; (b) sufficiency/segregation of fee evidence	(a) As assignee Pirani may pursue full deficiency; (b) fee award supported	(a) Assignee-guarantor limited to co-guarantor contributive share of what purchaser paid; (b) fee proof OK under traditional method but fees must be segregated or remanded	(a) Recovery against HNM limited to its contributive share of the $300,000 Pirani paid (i.e., $50,000); (b) Fee award remanded for segregation/evidence on what portion was attributable to recoverable contract claim

Key Cases Cited

In re Bayhi, 528 F.3d 393 (5th Cir. 2008) (standard of review for bankruptcy factual findings and legal conclusions)
Weaver v. Tex. Capital Bank N.A., 660 F.3d 900 (5th Cir. 2011) (Texas preclusion law applied by federal courts)
Igal v. Brightstar Info. Tech. Grp., Inc., 250 S.W.3d 78 (Tex. 2008) (elements of claim preclusion under Texas law)
Ingersoll‑Rand Co. v. Valero Energy Corp., 997 S.W.2d 203 (Tex. 1999) (severance preserves claims filed while summary judgment interlocutory)
Kachina Pipeline Co., Inc. v. Lillis, 471 S.W.3d 445 (Tex. 2015) (contract interpretation principles; ascertain party intent from the whole writing)
Byrd v. Estate of Nelms, 154 S.W.3d 149 (Tex. Ct. App. 2004) (assignee‑guarantor recovery limited to contributive share based on payment)
Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299 (Tex. 2006) (attorney’s fees recoverable under Texas Civil Practice & Remedies Code § 38.001 for contract claims; segregation requirement)