522 S.W.3d 524
Tex. App.2016Background
- In 2006 Mexican travel agencies (including Viajes Gerpa) bought World Cup tickets from The Ticket Company and many tickets/refunds were not delivered; suit followed and in April 2007 parties entered a Master Settlement Agreement (MSA) including a $1,176,500 agreed judgment in Viajes Gerpa’s favor and periodic net‑cash‑flow payments.
- The Ticket Company paid initial upfront MSA payments but default notices were sent (first in Oct. 2008); The Ticket Company later transferred domain names, trade name and accounts to Dubai Financial in 2010 for $10,000; The Ticket Company forfeited corporate privileges in July 2010.
- Viajes Gerpa sued in 2011 asserting: veil‑piercing/alter‑ego liability against Ali Fazeli under Tex. Bus. Orgs. Code §21.223, officer liability under Tex. Tax Code §171.255, breach of the MSA by Ali and The Ticket Company, fraudulent transfer to Dubai Financial, conspiracy, exemplary damages, and attorneys’ fees.
- At trial the jury found Ali was responsible for The Ticket Company, that both Ali and the company breached the MSA, awarded contract damages ($1,113,500), found the asset transfer to Dubai Financial fraudulent (damages $700,000 and $150,000), found no good faith purchase by Dubai Financial, found a conspiracy by Ali and Dubai Financial, awarded exemplary damages ($350,000) and attorneys’ fees ($173,250).
- The trial court initially entered judgment on the verdict against Ali, but later granted Ali’s and Dubai Financial’s post‑trial motions (JNOV/new trial/reconsider/modify), vacated that judgment, and rendered a final take‑nothing judgment. Viajes Gerpa appealed; the appellate court affirmed.
Issues
| Issue | Plaintiff's Argument (Viajes Gerpa) | Defendant's Argument (Ali / Dubai Financial) | Held |
|---|---|---|---|
| Whether Ali may be held personally liable for The Ticket Company’s debt via alter‑ego under §21.223 | Jury found Ali was responsible for the company; Viajes Gerpa says evidence shows Ali controlled assets, used company funds personally, and the fraud/transfer justify piercing the veil | §21.223 requires actual fraud perpetrated primarily for the officer’s direct personal benefit and fraud must relate to the transaction giving rise to the corporate obligation; defendants argued insufficient evidence on those points | Court: No reversible error in JNOV — evidence failed to show that any alleged fraud by Ali primarily and directly benefitted him in connection with the MSA/2007 judgment; affirmed no personal liability under §21.223 |
| Whether Ali is individually liable under Tex. Tax Code §171.255 because The Ticket Company forfeited privileges | Viajes Gerpa: debt (the 2007 judgment) was not created until mediation/ default process concluded after forfeiture, so §171.255 applies to make officers liable | Defendants: the debt was created/incurred (or related back) before forfeiture (event of default occurred in Oct. 2008), so officer liability under §171.255 does not apply | Court: Held the debt was created/incurred before the July 2010 forfeiture (event of default existed Oct. 2008), so Ali not liable under §171.255; affirm |
| Whether jury’s breach‑of‑contract damages against Ali ($1,113,500) were supported | Viajes Gerpa treated the 2007 judgment balance as the liquidated measure of damages for Ali’s breach and relied on jury findings to enforce that amount against Ali | Defendants: MSA limited remedies against individual defendants and did not make agreed corporate judgment the measure of individual breach damages; Viajes Gerpa presented no evidence of benefit‑of‑the‑bargain/net cash‑flow damages caused by Ali | Court: Held insufficient evidence that Ali’s breach caused $1,113,500 in compensable damages to Viajes Gerpa; jury answer on damages was legally insufficient/immaterial, so verdict against Ali on breach properly disregarded |
| Whether fraudulent‑transfer, good‑faith purchase, conspiracy, exemplary damages and related remedies were supported and could be enforced against Ali/Dubai Financial | Viajes Gerpa: transfer was fraudulent and Dubai Financial did not buy in good faith; Ali and Dubai Financial conspired—jury awarded compensatory and exemplary damages and equitable relief requests | Defendants: The Ticket Company (the transferor) was not served/defended; damages findings lacked evidentiary support and pleadings did not align with the damages awarded (Rule 301); conspiracy/punitive damages depend on underlying tort/damages | Court: Because Viajes Gerpa failed to challenge all JNOV grounds (including Rule 301 issues) and did not show legally sufficient damages, the trial court properly disregarded those jury findings; conspiracy and punitive claims fail without independent tort/damages; affirmed |
Key Cases Cited
- Tiller v. McLure, 121 S.W.3d 709 (Tex. 2003) (standards for JNOV and directed verdict review)
- City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) (legal‑sufficiency review framework and jury fact‑finding)
- Castleberry v. Branscum, 721 S.W.2d 270 (Tex. 1986) (alter‑ego / when corporate form may be disregarded)
- Solutioneers Consulting, Ltd. v. Gulf Greyhound Partners, Ltd., 237 S.W.3d 379 (Tex. App.—Houston [14th Dist.] 2007) (requirement to show direct personal benefit for alter‑ego liability)
- Tryco Enterprises, Inc. v. Robinson, 390 S.W.3d 497 (Tex. App.—Houston [1st Dist.] 2012) (alter‑ego/piercing applied where transfer occurred immediately to evade judgment)
- Taylor v. First Cmty. Credit Union, 316 S.W.3d 863 (Tex. App.—Houston [14th Dist.] 2010) (construction of §171.255 and whether a debt is "created or incurred" post‑forfeiture)
- Schwab v. Schlumberger Well Surveying Corp., 198 S.W.2d 79 (Tex. 1946) (historical treatment of whether debt existed before forfeiture)
- Green Int’l, Inc. v. Solis, 951 S.W.2d 384 (Tex. 1997) (trial court may disregard jury findings that are immaterial or unsupported)