Phap v. Nguyen, Andy Ngo and Dung T. Vu v. Manh Hoang and Dung Le

ACCEPTED
01-15-00352-CV
FIRST COURT OF APPEALS
HOUSTON, TEXAS
7/29/2015 1:38:52 PM
CHRISTOPHER PRINE
CLERK

NO. 1-15-00352-CV

______________________________
FILED IN
1st COURT OF APPEALS
IN THE HOUSTON, TEXAS
FIRST COURT OF APPEALS 7/29/2015 1:38:52 PM
AT HOUSTON, TEXAS CHRISTOPHER A. PRINE
Clerk
______________________________

PHAP V. NGUYEN, ANDY NGO, and DUNG T. VU,
Appellants

VS.

MANH HOANG and DUNG LE,
Appellees

______________________________

Appealed from the 55th Judicial District Court of
Harris County, Texas

______________________________

APPELLANTS’ BRIEF
______________________________

TOM RORIE
State Bar No. 17238000
210 North Street
Nacogdoches, TX 75961
(936) 559-1188
FAX (936) 559-0099

ATTORNEY FOR APPELLANTS

ORAL ARGUMENT REQUESTED
 IDENTITY OF PARTIES AND COUNSEL

In accordance with Rule 38.1(a) of the TEXAS RULES OF APPELLATE PROCEDURE , Appellants
Phap V. Nguyen, Andy Ngo, and Dung T. Vu provide the following list of all parties, and the names
and addresses of all counsel:

Appellants: Phap V. Nguyen
Andy Ngo
Dung T. Vu

Counsel: Tom Rorie
Attorney at Law
210 North Street
Nacogdoches, TX 75961
(936) 559-1188
FAX (936) 559-0099
Email: trorie@sbcglobal.net

Appellees: Manh Hoang
Dung Le

Counsel: Scott K. Bui
Robert B. Pham
Bui, Pham & Nhan, PLLC
3921 Ocee
Houston, TX 77063
(713) 783-2466
FAX (713) 783-0787
email: sbui@buinhanlaw.com

ii
 TABLE OF CONTENTS

Page
Identity of Parties and Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii

Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii

Index of Authorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vi

Statement of the Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix

Statement of Facts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi

Summary of the Argument . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xv

Points of Error . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Point of Error No. 1:

There is insufficient evidence as a matter of law to establish a partnership
between the parties; therefore, there is no liability for breach of a partnership
agreement.

Point of Error No. 2:

The evidence is legally insufficient to establish that appellants breached a
contract with appellees.

Point of Error No. 3:

The evidence is insufficient to show any damages for breach of a
partnership agreement.

Point of Error No. 4:

The evidence is insufficient to show any damages for breach of a contract.

Point of Error No. 5:

The trial court erred in awarding judgment for damages for both breach
of a partnership agreement and breach of contract when both causes of
action arose from the same facts or events.

iii
 Point of Error No. 6:

The evidence is insufficient to establish any liability by Appellee Dung Vu
because there is insufficient evidence that she engaged in any conduct for
which Appellees complain.

Arguments and Authorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Standard of Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Point of Error No. 1 Restated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Receipt or Right to Receive a Share of Profits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Expression of Intent to Be Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Right to Control the Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Sharing or Agreeing to Share in Any Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Contributing or Agreeing to Contribute Money or Property to the Business . . . . . . . . . 14

Summary: The Totality of the Evidence Shows that Appellees were not
Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Point of Error No. 2 Restated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Point of Error No. 3 Restated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Point of Error No. 4 Restated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Payment of 20% of Net Profits to Appellants a Breach of a Partnership
Agreement or Contract? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Is Withholding Money from a Distribution of Profits to pay Federal Taxes a
Breach of a Partnership Agreement Or Contract? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Was It a Breach of a Partnership Agreement or Breach of Contract to Divide
Proceeds between Appellant Le and Tuan Ngo Rather than Pay All the Proceeds
to Appellee Le? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Point of Error No. 5 Restated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

iv
Point of Error No. 6 Restated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Certificate of Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Certificate of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

v
 INDEX OF AUTHORITIES

Cases Page

Baldwin v. Smith . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
586 S.W.2d 624 (Tex.Civ.App.–Tyler 1979), reversed on other grounds 611 S.W.2d 611
(Tex.1980)

Big Easy Cajun Corp. v. Dallas Galleria Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
293 S.W.3d 345 (Tex.App.–Dallas 2009, pet.rev.den’d.)

Black Lake Pipe Line Company v. Union Construction Company . . . . . . . . . . . . . . . . . . . . . . . 19
538 S.W.2d 80 (Tex. 1976)

Brown v. Keel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2012 Tex.App. LEXIS 1854 (Tex.App.–Houston [1st] 2012, no writ hist.)

Cintrin Holdings, LLC v. Minnis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2013 Tex.App. LEXIS 5723 (Tex.App.–Houston [14th] 2013, pet.rev.den’d.)

Crown Life Ins. v. Casteel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
22 S.W.3d 378 (Tex. 2000)

Gannon v. Baker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
830 S.W.2d 706 (Tex.App.–Houston (1st] 1992, writ den’d)

Greenberg Traurig, LLP v. National American Insurance Company . . . . . . . . . . . . . . . . . . . . . 23
448 S.W.3d 115 (Tex.App.–Houston [14th] 2014)

Guerrero v. Salinas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2006 Tex.App. LEXIS 8562 (Tex.App.–Corpus Christi 2006, no pet.)

Hoss v. Alardin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
338 S.W.3d 635 (Tex.App.–Dallas 2011, no pet.)

Ingram v. Deere . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,6,7,8,9
288 S.W.3d 886 (Tex. 2009)

Knowles v. Wright . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
288 S.W.3d 136 (Tex.App.–Houston [1st] 2009, pet.rev.dism’d.)

Malone v. Patel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
397 S.W.3d 658 (Tex.App.–Houston [1st] 2012, pet.rev.den’d.)

vi
Murphy v. Canion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
797 S.W.2d 944 (Tex.App.–Houston [14th] 1990, no writ hist.)

Murphy v. Seabarge, Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,25
868 S.W.2d 929 (Tex.App.–Houston [14th] 1994, aff’d.)

Prime Prods, Inc. v. S.S.I. Plastics, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
97 S.W.3d 631 (Tex.App.–Houston [1st] 2002, pet. denied)

Rankin v. Naftalis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
557 S.W.3d 940 (Tex.1977)

Reagan v. Lyberger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
156 S.W.3d 925, 928 (Tex.App.–Dallas 2005, no pet.)

Schuhardt Consulting Profit Sharing Plan v. Double Knobs Mt. Ranch, Inc. . . . . . . . . . . . . . . 23
2014 Tex.App. LEXIS 13417 (Tex.App.–San Antonio 2014, rev’d. in part; aff’d. as
modified)

Sewing v. Bowman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,7,10
371 S.W.3d 321 (Tex.App.–Houston [1st] 2012, pet.rev.dism’d.)

Southern County Mutual Insurance Company v. First Bank & Trust . . . . . . . . . . . . . . . . . . . . . 24
750 S.W.2d 170 (Tex. 1988)

Stewart Title Guaranty Co. v. Sterling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
822 S.W.2d 1 (Tex. 1991)

Tierra Sol Joint Venture v. City of El Paso . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
155 S.W.3d 503 (Tex.App.–El Paso 2004, pet.den’d.)

Truly v. Austin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
744 S.W.2d 934 (Tex. 1988)

Vortt Exploration Company v. Chevron . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
787 S.W.2d 942 (Tex. 1990)

Westside Wrecker Service v. Skafi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,7
361 S.W.3d 153 (Tex.App.–Houston [1st] 2011, pet.rev.den’d.)

vii
Codes, Rules and Statutes Page

TEXAS BUSINESS ORGANIZATION CODE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Texas Deceptive Trade Practices Act, TEXAS BUSINESS AND COMMERCE CODE § 17.41,
et. seq. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

TEXAS FAMILY CODE § 3.201(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

TEXAS FAMILY CODE § 3.201(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Texas Revised Partnership Act (now repealed) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,6

TEXAS RULE OF APPELLATE PROCEDURE 9.4(i)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

TEXAS RULES OF APPELLATE PROCEDURE , Rule 38.1(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii

viii
 STATEMENT OF THE CASE

Appellees brought suit contending that Appellants had breached a partnership agreement with

them, had breached a contract with them, and had committed fraud. They sought actual damages

for the breaches of the partnership agreement and contract, and exemplary damages as well.

At the close of Appellee’s evidence Appellants moved for an instructed verdict on the

following claims :

1. Those against Appellant Dung Vu for the reason that there was no evidence that she

had participated in any decision about which Appellees complained, that she made

any representation, withheld any information, or assumed any duty to them;

2. Those based on a theory of partnership because there was no evidence of an

agreement to share losses or of joint management and control;

3. Those based on a theory of fraud because there was no evidence of any representation

by Appellants that was false.

The trial judge granted the motion as to the fraud theory, but otherwise denied the motion. (RR Vol.

151-163).

In the Court’s Charge Conference Appellants objected the charge as follows:

1. Again objected to submitting the issues as to Appellant Dung Vu because of a lack

of any evidence that she participated in any decision that Appellees complained of;

2. Objected to the submission of a damages issue for breach of partnership because

there is no evidence of the value of the partnership;

3. Objected to the submission of partnership issues without an adequate definition of

ix
 what constitutes “control.”

The jury found that a partnership existed and that Appellants had breached a duty of loyalty.

It awarded damages to both Appellees for breach of that duty. The jury also found a breach of

contract and awarded damages for that breach. The jury did not award exemplary damages.

After return of the jury verdict Appellants filed motions to disregard jury findings and for a

judgment notwithstanding the jury verdict. That motion was denied. The court signed a judgment

for both Appellees for the damages found by the jury and for pre-judgment interest.

Appellants then filed a motion for new trial, which was denied. This appeal followed.

x
 STATEMENT OF FACTS

All the parties to this case are members of Vietnamese families who have a strong sense of

family and a tradition of helping each other. Appellants were interested in some type of business in

which they could prosper through diligent work, and learned through friends that one could make

a living by owning and operating a chicken farm, raising chickens for a chicken producer. They

worked on chicken farms to learn the business, and then decided to go into business themselves.

Appellants learned of a farm in Georgia which was for sale. They were approved as a grower

by the chicken producer which provided the chickens for the farm, Sanderson Farms.1

With a grower contract in hand Appellants were able to secure a loan to purchase the farm

they found. But they needed additional funding. So they contacted Appellees and other family

members and offered them the opportunity to invest in exchange for the right to receive a

proportionate part of any profits made.

Appellee Manh Hoang invested $80,000. Appellee Dung Le, together with her live-in

boyfriend Tuan Ngo, invested $50,000. Other family members invested as did Appellants

themselves. Appellants secured a loan from a bank in their names only for approximately one and

one-half million dollars.

With the needed funds in hand Appellants then closed on the purchase of the Georgia chicken

farm and Sanderson placed chickens on the farm. Appellants and Appellant Nguyen’s family all

lived in what was referred to as a “garage.” The farm had only six chicken houses which limited its

income, and times were hard. Appellant Vu, the wife of Appellant Nguyen, worked in her design

1
The Reporter’s Record refers to the producer as “Anderson Farms,” but the correct name is Sanderson
Farms, and that name will used in this brief.

xi
business in New Orleans and helped pay the expenses of the farm with her income. Appellants were

paying themselves a minimal draw or salary as laborers, as they worked in the houses along with

their employees. They knew that they needed to expand the farm and Sanderson authorized them

to add two additional houses. None of the investors had any money to contribute for those houses,

so Appellants drew no wages for a year and used the wages they would normally have paid

themselves to build two additional houses. All the investors benefitted from the additional houses.

After operating the Georgia farm for some time Appellants decided they would like to move

to Texas, where most of their family members were located. They decided to sell the Georgia farm,

and told the investors of their plans. They sold the farm for a profit, deferred the capital gains taxes

on the sale, and then moved to Texas.

While staying in Houston Appellants began searching for some land in central Texas that

could be approved by Sanderson Farms for a chicken farm. They spent approximately a year

searching for land in several counties and got approval from Sanderson for a tract in Robertson

County. Appellants secured a loan, in their names only, for approximately four and one-half million

dollars based on their contract with Sanderson, purchased a tract in Robertson County, and built a

chicken farm with 16 houses. Appellants secured a contractor for the houses, had a water well

drilled, utilities installed, and provided all management of the farm as well as working on the farm.

Appellants received no income for approximately a year while they were searching for the land and

constructing the chicken farm in Texas.

Appellants learned that Sanderson would provide them chickens for eight additional houses.

Appellant Nguyen personally borrowed $400,000 to secure the funds to build those houses. All the

investors benefitted from the income earned by those houses, although none of the other investors

xii
had any liability for the loan.

Appellants successfully operated the farm in Texas. They worked hard. According to

Appellee Vu her husband worked from 6:30 a.m. to 9:00 or 10:00 p.m. each day. Appellee Hoang

worked as a laborer in the farm, but was “fired” by Appellants because of his poor work habits and

one event in which he left the farm unattended when it was his duty to be present. Appellee Le never

worked on either of the farms and seldom was present. Appellants decided to sell the farm, in part

because they no longer wanted to continue any type of business relationship with Appellees.

Appellants then offered the farm for sale, sold it, and several months later called a meeting

with the investors, including Appellees, to distribute the profits made. Appellees insisted on being

paid in cash, and in order to protect themselves Appellants recorded the meeting on a video camera.

At the meeting Appellant Ngo provided the investors with a worksheet in which he showed the

profits made and any deductions from profits. At trial a certified public accountant testified that in

his opinion the worksheet was a reasonable and fair accounting of the chicken farm business.

The worksheet that Appellants provided the investors showed that Appellants were

withholding from the distribution of profits 20% of those profits as compensation to them for their

services and contributions to the venture. They also deducted the amount of capital gains taxes that

Appellant Ngo calculated would be due and the taxes on ordinary income they would owe due to

depreciation recapture and withheld those amounts from the distribution. While the other investors

did not object, Appellees objected to both of these deductions. Appellee Le also objected to the

division of the distribution of profits between her and Tuan Ngo. Appellees took the money despite

their objections.

After all the business affairs of the farm were completed, Appellants distributed a final

xiii
additional amount to each investor out of the funds accumulated. The final tally on the investments

of Appellees was that Hoang invested $80,000 and realized about $400,000 from his investment

while Le invested $50,000 and Appellants paid back over $200,000.

xiv
 SUMMARY OF THE ARGUMENT

The judgment by the trial court cannot stand because there is insufficient evidence to support

the jury’s finding that a partnership was created between the parties. The totality of the evidence

shows no competent evidence to create a partnership, no agreement to share losses or be liable to

third parties for debts of the business, and a complete lack of control, the ability to make “executive

decisions” by Appellees.

There is also legally insufficient evidence of a breach of a partnership agreement or breach

of contract. Any payment by Appellants to themselves for their uncompensated services over four

years are compensable through the theory of quantum meruit. There is no express agreement for

their compensation for those services.

The withholding of funds to pay the Internal Revenue Service on the profits earned cannot

be a basis for a breach of a partnership agreement or contract between the parties for the reason that

a party has no legal right to compel another to violate the laws that apply to the transaction.

The division of the payment of proceeds to Appellant Le and her former boyfriend, Tuan

Ngo, is not a breach of an implied contract to pay only her because the evidence is insufficient to

show any such implied contract. That division is likewise not a breach of any express contract to

pay only Appellant Le because there is no evidence of any express contract.

The “contract” claim and “partnership” claim of Appellees are in fact the same. The only

contract was the same agreement Appellees call an agreement to be partners. The damages that

Appellee claim arise out of the same operative facts. Therefore, the trial court erred in awarding

what are the same damages twice, which is not permitted because of the one satisfaction rule.

xv
 The evidence is insufficient to show the participation by Appellant Vu in any act or omission

which was a cause of injury or damages to Appellants, and it was error for the trial court to award

a judgment against her as well as against Appellants Nguyen and Ngo.

xvi
 POINTS OF ERROR

POINT OF ERROR NO. 1:

THERE IS INSUFFICIENT EVIDENCE AS A MATTER OF LAW TO
ESTABLISH A PARTNERSHIP BETWEEN THE PARTIES;
THEREFORE, THERE IS NO LIABILITY FOR BREACH OF A
PARTNERSHIP AGREEMENT.

POINT OF ERROR NO. 2:

THE EVIDENCE IS LEGALLY INSUFFICIENT TO ESTABLISH THAT
APPELLANTS BREACHED A CONTRACT WITH APPELLEES.

POINT OF ERROR NO. 3:

THE EVIDENCE IS INSUFFICIENT TO SHOW ANY DAMAGES FOR
BREACH OF A PARTNERSHIP AGREEMENT.

POINT OF ERROR NO. 4:

THE EVIDENCE IS INSUFFICIENT TO SHOW ANY DAMAGES FOR
BREACH OF A CONTRACT.

POINT OF ERROR NO. 5:

THE TRIAL COURT ERRED IN AWARDING JUDGMENT FOR
DAMAGES FOR BOTH BREACH OF A PARTNERSHIP AGREEMENT
AND BREACH OF CONTRACT WHEN BOTH CAUSES OF ACTION
AROSE FROM THE SAME FACTS OR EVENTS.

POINT OF ERROR NO. 6:

THE EVIDENCE IS INSUFFICIENT TO ESTABLISH ANY LIABILITY
BY APPELLEE DUNG VU BECAUSE THERE IS INSUFFICIENT
EVIDENCE THAT SHE ENGAGED IN ANY CONDUCT FOR WHICH
APPELLEES COMPLAIN.

1
 ARGUMENTS AND AUTHORITIES

Most people who receive a return of several times their investment without any effort on their

part are grateful. Appellee Manh Hoang invested $80,000 with Appellants in their purchase,

operation and sale of chicken farms in Georgia and Texas, and received in return approximately

$400,000. Appellee Dung Le invested $50,000 and received in return approximately $200,000. But

instead of gratitude, they felt resentment.

It bothered them that Appellants received some income in which they did not share.

Oblivious of the critical importance of management in making a successful business venture, or

simply resentful that Appellants received money when they did not, they objected when Appellants

told them they were taking part of the profits earned as their compensation for several years of work,

risk, and sacrifice. Appellees brought suit because they wanted all the profits distributed to the

investors strictly in accordance with their monetary contribution.

Appellees also objected when Appellants withheld funds from the distribution to the

investors to pay the Internal Revenue Service for capital gains taxes and taxes they expected to owe

because of depreciation recapture. To Appellees payment of taxes was abstract or hypothetical, and

they would worry about that later, but the money on the table was real, and they wanted all of it

distributed.

Appellee Le also complained that Appellants divided the profit on what she called her

investment to between her and a brother of Appellant Ngo, Tuan Ngo, who lived with her for several

years, including the time that monies were invested to buy each of the chicken farms.

This case is complicated by the absence of any written agreement between the parties. While

2
not explicitly stated at trial, it appears there is a custom among families of Vietnamese descent to

consider written agreements either unnecessary or undesirable. Therefore, much of the trial of this

case consisted of the parties recounting what each said, or in many cases, their interpretation or

understanding of what was said.

The case was submitted to the jury inquiring about two primary causes of action. First,

Appellees claimed that a partnership existed, and that Appellants breached that partnership agreement.

Second, they claimed that a contract existed between the parties and Appellants breached that

contract. As will be shown the contract was actually the same as what Appellees call an agreement

to create a partnership. In this case, the “contract” is the same thing as the “partnership.”

All the damages found by the jury are based on claims that arose at the same time and from

the same event, i.e. when Appellants distributed the proceeds from the chicken house investment. The

jury found damages arising from both a breach of partnership and from a breach of contract, but did

not award any exemplary damages. There is no way to separate damages arising from a breach of

partnership from those arising from a breach of contract, and Appellants will show that the court

granted Appellees an impermissible double recovery.

3
 STANDARD OF REVIEW

This court has already set out the standard of review in a case of this nature, where an

appellant attacks jury findings on issues on which he did not have the burden of proof, in Westside

Wrecker Service v. Skafi, 361 S.W.3d 153 (Tex.App.–Houston [1st] 2011, pet.rev.den’d.), and in

Sewing v. Bowman, 371 S.W.3d 321 (Tex.App.–Houston [1st] 2012, pet.rev.dism’d.).

4
Point of Error No. 1 Restated: THERE IS INSUFFICIENT EVIDENCE AS A MATTER OF LAW
TO ESTABLISH A PARTNERSHIP BETWEEN THE PARTIES; THEREFORE, THERE IS NO
LIABILITY FOR BREACH OF A PARTNERSHIP AGREEMENT.

Partnership law in Texas has evolved over the past several years in light of the adoption of

the Texas Revised Partnership Act and the later adoption of the TEXAS BUSINESS ORGANIZATION

CODE. None of the parties to this suit have ever argued that the TRPA does not control. The

agreement of the parties was made in 2006 and the last farm was sold in 2010.

Any analysis of a partnership claim must begin with a review of Ingram v. Deere, 288 S.W.3d

886 (Tex. 2009). That case involved a psychiatrist, Deere, who agreed to serve as the medical

director of a pain clinic and who claimed that he became a partner with a psychologist, Ingram.

Initially they had no written agreement. Fourteen months later Ingram presented to Deere a

“Physician Contractual Employment Agreement” which Deere refused to sign because he contended

he was to be a partner. Deere brought suit claiming he was entitled to damages as a partner.

The Court applied the TRPA, which provides that “an association of two or more persons to

carry on a business as owners creates a partnership,” and then enunciates the elements of a

partnership. Those elements are:

(1) receipt or right to receive a share of profits of the business;

(2) expression of an intent to be partners in the business;

(3) participation or right to participate in control of the business;

(4) sharing or agreeing to share:

(A) losses of the business, or

5
 (B) liability for claims by third parties against the business; and

(5) contributing or agreeing to contribute money or property to the business.

The elements that control under the TRPA vary somewhat from the common law requirements, as

the court noted. Ingram, p. 895-896. Instead of requiring proof of all elements, the Court held that

a “totality-of-the-circumstances test” would be the measure by which courts would determine the

existence of a partnership. If none of the elements exist, then a partnership cannot be created.

Conversely, if conclusive evidence on all the factors is found, a partnership exists as a matter of law.

This case now before the court falls in between the two ends of the spectrum: there is evidence on

some factors and none on others. Each element will be considered in the order listed in Ingram.

Receipt or Right to Receive a Share of Profits:

No dispute exists that the parties agreed to share profits. It was uncontradicted that Appellant

Ngo contacted his brother, Tuan Ngo, who lived with Appellee Le, and told him if they contributed

money toward Appellants’ purchase of a chicken farm in Georgia that they would share in any profits

made. Appellants made the same offer to Appellee Hoang. There is no dispute that Appellee Hoang

contributed $80,000 and that he received in return approximately $400,000. There is a disagreement

as to whether Appellee Le alone, or she together with Tuan Ngo, made a contribution, but no dispute

that a contribution of $50,000 was made which resulted in a return of over $200,000.

Expression of Intent to Be Partners:

The expression by the parties of their intent to be partners can be shown in several ways.

Some examples noted by the Court in Ingram are “statements that they are partners, one party holding

the other party out as a partner on the business’s letterhead or name plate, or in a signed partnership

6
agreement.” Ingram, p. 900. Another indication might be a party referring to another as his partner

in a conversation with a third party. An example of such a reference to another as his “partner” is

found in Cintrin Holdings, LLC v. Minnis, 2013 Tex.App. LEXIS 5723 (Tex.App.–Houston [14th]

2013, pet.rev.den’d.).

There must be some evidence that both parties expressed their intent to be partners. Reagan

v. Lyberger, 156 S.W.3d 925, 928 (Tex.App.–Dallas 2005, no pet.); Hoss v. Alardin, 338 S.W.3d 635,

641 (Tex.App.–Dallas 2011, no pet.); Brown v. Keel, 2012 Tex.App. LEXIS 1854

(Tex.App.–Houston [1st] 2012, no writ hist.).

The court must inquire separately whether there exists evidence of an intent to be partners,

and a court should “only consider evidence not specifically probative of the other factors.” Sewing

v. Bowman, 371 S.W.3d 321, 333-334 (Tex.App.–Houston [1st] 2012, pet.rev.dism’d.), citing Ingram.

Thus the court can only look to the expressions of intent by the parties or to their representations to

third parties.

This case involves a purely oral agreement, which creates other issues. The terms of an oral

contract must be “clear, certain, and definite.” Knowles v. Wright, 288 S.W.3d 136

(Tex.App.–Houston [1st] 2009, pet.rev.dism’d.); Gannon v. Baker, 830 S.W.2d 706, 709

(Tex.App.–Houston (1st] 1992, writ den’d). Reliance on what one party says does not establish what

both agreed to. There must be evidence that “both parties expressed their intent to be partners.” Hoss

v. Alardin, p. 644. The opinion of a lay witness that a partnership has been created is not competent

evidence of a partnership. Westside Wrecker Service v. Skafi, 361 S.W.3d 153, 169

(Tex.App.–Houston [1st] 2011, no writ hist.).

7
 There is absolutely no documentary evidence of a partnership in this case. No document ever

referred to any of the parties as partners. All documents executed in connection with the purchase,

improvement, operation and sale of the two chicken farms show Appellants only as the owners. All

loan documents executed with financial institutions were executed solely in Appellants’ names. All

contracts and correspondence with the chicken producer, Sanderson Farms, name Appellants alone

as owners. No bank account or record showed or referred to the names of Appellees, but instead

showed Appellants as owners of the account.

There is likewise no testimony by any third party that any of the parties represented to them

that they were partners nor is there is any evidence that any of the partners referred to themselves as

partners.

The only evidence in this case of an intent to be partners is by Appellee Hoang. He testified

that “we all agreed we are owners.” (RR Vol. 2, p. 118). Yet there is no evidence of that intent being

expressed to anyone any time, to a lender, contractor, chicken producer, employee, or to anyone.

Another portion of Appellee Hoang’s testimony really says what the parties agreed to. His counsel

asked him if he wanted to be a “partner” and his response was “we agreed at the first time if we make

it, everybody will make it.” (RR Vol. 3, p.126). That testimony is consistent with Appellants’. They

testified that if they made profits all would share in them. But an agreement to share profits alone is

not evidence of an intent to be partners. Appellant Ngo made the distinction when he said Appellees

were not owners or partners, but that “they invest–what I call is they put in money in there to earn the

profit.” (RR Vol. 3, p. 27).

The court noted in Ingram that “[t]he Legislature does not indicate that it intended to spring

surprise or accidental partnerships on independent business persons” (p. 898). The intent to be

8
partners must be mutual, and the evidence in this case lacks evidence of mutual intent to be partners.

Right to Control the Business:

The right to control is generally considered one of the most important of the factors considered

in evaluating whether a partnership existed. Big Easy Cajun Corp. v. Dallas Galleria Ltd., 293

S.W.3d 345, 348 (Tex.App.–Dallas 2009, pet.rev.den’d.). The court in Ingram said that the right

involves “the right to make executive decisions.” So a review of the evidence in this case of the right

of the parties to make those “executive decisions” is in order.

One of the first “executive decisions” a party makes is controlling access to the business’s

books and records. In Ingram the court cited Tierra Sol Joint Venture v. City of El Paso, 155 S.W.3d

503 (Tex.App.–El Paso 2004, pet.den’d.), as holding that a party cannot be in control of a business if

he does not have control over and access to its books. In this case, there is no evidence that Appellees

had any control over the books and records of the chicken farms. Instead, Appellants kept the books

themselves and were the only parties who even knew whether the chicken farms had made a profit.2

Another of the “executive decisions” made by those who are partners is to have the right to

write checks on the business checking account. Guerrero v. Salinas, 2006 Tex.App. LEXIS 8562

(Tex.App.–Corpus Christi 2006, no pet.), cited by the court in Ingram. Appellees failed to show they

even knew where Appellants had a bank account, much less had access to it.

There is some evidence that Nguyen and Ngo talked to Hoang and Le on a few occasions about

2
W hen Appellees came to the final distribution of profits they had no idea of what would be distributed or
what profit, if any, was made from the chicken farms. Appellee Hoang testified that he knew the farm was paid when
batches of chicken were sold, but those payments are not income. Income is what is left after payment of fixed
expenses such as servicing the debt on the farm and variable expenses such as labor costs, the cost of utilities, costs
of upkeep and management, etc. Deere, p. 898. Since Appellee Hoang had no knowledge of the amount of those
expenses he had no knowledge of the income from the farms.

9
their plans, i.e. deciding to sell the farm in Georgia, the decision to buy property and build a farm in

Robertson County in Texas, but the decision to sell the Texas farm and distribute the proceeds was

made by Appellants alone. (RR Vol. 3, p. 186-187). In Malone v. Patel, 397 S.W.3d 658, 676

(Tex.App.–Houston [1st] 2012, pet.rev.den’d.), this court addressed the claim by one party that he had

“control” because the other discussed with him decisions that were made, and the financial condition

of the business, and concluded that this was no evidence that he actually made any executive decisions

and had control. To phrase it differently, conversation does not equal control. Sewing v. Bowman, 371

S.W.3d 321 (Tex.App.–Houston [1st] 2012, pet.rev.dism’d.).

What does the evidence show in this case? It shows first that it was the decision of Appellants

to go into the chicken business. They first worked on farms owned by friends to learn how to operate

a chicken farm and found a farm to purchase, negotiated an agreement with Sanderson Farms, the

chicken producer, and qualified as a grower for Sanderson before they ever talked to Appellees about

investing. According to Appellants’ testimony they could have found the money to make the purchase

elsewhere, so the Appellees’ participation was not critical to the venture. (RR Vol. 4, p 78). Further,

neither of the Appellees had any knowledge or experience that was necessary to operate a chicken

farm: they were investors only.

Appellants also made all the arrangements for financing, to borrow over a million dollars to

purchase the Georgia farm. There is no evidence that Appellees chose the lender, investigated the loan

terms to decide if the loan was suitable, or discussed the loan with the lender. In fact, no evidence

exists that the lender even knew that Appellees existed.

When Appellants decided to buy land and build a chicken farm in Texas it was their decision

where to purchase property. (RR Vol. 2, p. 110). There is no evidence that the approval of Appellees

10
or any other investor was either sought or acquired. In this farm as well as in Georgia, Appellants

decided who would work on the farm and what they would be paid. Appellee Hoang’s own testimony

testimony makes clear his lack of control. (RR Vol. 2, pp. 132-142). He had nothing to do with any

of the negotiations for the land, the construction of the farm, the grower contract, or the bank loan

required to purchase the land and build chicken houses. He did not even meet the contractors who

prepared the site and built the chicken houses. He did not keep the bank account nor did he pay any

bills for the business. Appellants handed the checkbook and signed checks.

In responses to questions about the relationship between the chicken farm and Sanderson

Farms, the producer, Appellee Hoang testified that he had no dealings with Sanderson, that “The

chicken company they only deal with the owners of the company” (emphasis added). (RR Vol. 2,

p.140). Those “owners” were Appellants, not him. He also testified that “I just do whatever Phap

Nguyen and Andy Ngo tell me to do.” (RR Vol. 2, p.141).

When asked “what you did without talking to Andy and Phap first” Hoang responded:

A When I drive the tiller to prepare the road, and I just drive the
lawnmower. I do not need to talk to them or ask them. As to the
anything need to be done, I do it.

Q Can you tell me anything else that you ever did on the farm without
asking them first?

A Many things, but I cannot.

Q Tell me what they are.

A This cleaning the ditches to make the road so that the vehicle can
drive in. Pave the cement. Do the flooring for the mobile home.

From his testimony it is apparent that Appellee Hoang made no executive decisions in operating the

chicken farm. Actually the evidence showed that Appellee Hoang worked as a laborer in the chicken

11
houses and that Appellants “fired” him as an employee because of their dissatisfaction with his job

performance and his lack of responsibility. (RR Vol. 3, pp 185-186; Vol. 3, p. 34-36).

Finally, one of the most telling admissions by Appellee Hoang of a lack of control over the

venture was this response:

Q The chicken farm in Texas, who made the decision to sell it?

A Those two, because of their name on the document.

Further, when asked about the sale of the chicken farm in Georgia Appellee Hoang stated “ the deal

was handled by those two people.” (RR Vol. 3, p. 131). Appellee Nguyen testified that the decision

to sell the farm in Georgia was his and Appellee Ngo’s, and they did not talk to Appellees about selling

it before they made the decision. (RR Vol. 3, p. 176). There can be no executive decision more

important to a business venture than to sell the business itself and cease all operations. A sale of the

chicken farm would end the venture and the relationship of the parties. One who has no say in such

a decision cannot claim he had the right to make executive decisions.

There is no evidence at all that Appellee Le ever participated in any decision necessary in the

purchase, operation or sale of the chicken farms in Georgia and Texas. She was present at the final

distribution of funds from the venture, but there is no evidence that she participated in any of the

business decisions that were made.

Sharing or Agreeing to Share in Any Losses:

An agreement to share losses of a business or to pay debts to third parties is a good indicator

of an ownership status. This case lacks any evidence that either Appellee ever paid, or expected to

pay, any losses of the business or to pay a debt of the chicken farm to a third party. It was clear from

12
the beginning that only Appellants stood to lose if the venture failed. (RR Vol. 2, p. 63). Appellee

Ngo understood at all times that if the business failed he would lose everything, his time, for the

liability for the bank loans, everything. But he did not expect Appellees to be responsible for any

losses. (RR Vol. 2, p. 81).

At every stage it was Appellants who made up any shortfall. For example, in Georgia, when

the farm with its initial six chicken houses was not producing enough income to even pay the farm

utilities and operating expenses, it was Appellants who came up with the funds. For a time the needed

funds came from the income of Appellant Dung Vu, earned in her decorating business in New Orleans.

(RR, Vol. 3, pp 170-171). Appellees contributed nothing.

When Appellants realized that building two more chicken houses on the farm in Georgia was

necessary to make the farm economically viable, they invested back into the farm what they would

normally have paid themselves as labor expense (they paid themselves and all employees an amount

whenever a batch of chickens was sold to defray their basic living expenses ) in order to have the funds

necessary to build the additional houses. (RR Vol. 2, p. 84-85; Vol 3, p. 171). Appellees contributed

nothing.

In both Georgia and Texas it was Appellants who assumed the full legal liability for bank loans

to purchase and/or build the farm. (RR Vol. 2, p. 81).

After Appellants made the decision to move to Texas and build a farm in Robertson County,

they learned that Sanderson Farms would allow them to add another eight chicken houses, expanding

from 16 to 24 and increasing the farm’s profitability. It was Appellant Nguyen who borrowed

$400,000 from family or friends to come up with the necessary funds. (RR Vol. 3, p. 87-88).

Appellees incurred no legal liability.

13
 Appellants never told a creditor of the chicken farms that Appellees had anything to do with

the farm, much less that they would be liable for debts incurred. Likewise, there is no evidence that

Appellees ever told a creditor or third party that they were liable for debts of the business. In this case

it is clear that evidence does not exist on this element of a partnership.

Contributing or Agreeing to Contribute Money or Property to the Business:

It is not contested that Hoang invested $80,000 and Le (with Tuan Ngo) $50,000 to purchase

the chicken farm in Georgia.

Summary: The Totality of the Evidence Shows that Appellees were not Partners:

Appellees satisfy two of the elements necessary to the creation of a partnership. They both

contributed money and were entitled by agreement to a portion of the profits earned. But in many

critically important ways there is no evidence of a partnership. No evidence exists that the parties

referred to themselves as partners or represented to others that a partnership existed. There is no

evidence that Appellee’s ever lost or stood to lose anything other than their investment. And most

important of all, Appellee’s had no control over the executive decisions made in the business, a clear

indicator that they were investors but not partners.

Point of Error No. 2 Restated: THE EVIDENCE IS LEGALLY INSUFFICIENT TO ESTABLISH
THAT APPELLANTS BREACHED A CONTRACT WITH APPELLEES.

Point of Error No. 3 Restated: THE EVIDENCE IS INSUFFICIENT TO SHOW ANY DAMAGES
FOR BREACH OF A PARTNERSHIP AGREEMENT.

Point of Error No. 4 Restated: THE EVIDENCE IS INSUFFICIENT TO SHOW ANY DAMAGES
FOR BREACH OF A CONTRACT.

14
 As the breach of partnership and breach of contract claims are based on the same operative

facts and the same damages were claimed for both alleged breaches, Appellants will address the issue

of damages in a combined argument applicable to both claims.

Appellee Hoang was asked what he claimed that Appellants had done to harm or injure him.

His answer was that (1) they had paid themselves 20% of the profits made from purchase,

management, and sale of the chicken farms as compensation for their management of the chicken

farms, and (2) they had held out funds from the distribution made after the farm in Texas was sold to

pay the Internal Revenue Service.

Appellee Le’s testimony is somewhat confusing. She is clear that she objected to Appellants

paying themselves any compensation for their services, about withholding any funds to pay taxes, and

about the division between the distribution between her and her former boyfriend. (RR Vol. 2, p. 57-

58).

On the issue of labor, she seems to assert that Appellants were already paid for their services.

(RR Vol. 2, p.20). She testifies that they were paid $3,500 per month. Later, it becomes clear that this

testimony is incorrect. She admits that they were paid $3,500 per batch of chickens sold and that five

batches a year were sold (RR Vol. 2, p. 47-48), which means that Appellants received only $17,500

per year, paltry compensation for working 12-14 hours a day, going without pay for nearly two years,

and assuming personal liability for about $7,000,000 in bank loans.

With respect to Appellants’ withholding of funds to pay taxes she testified that “the tax money

had been deducted before giving this money to me.” (RR Vol. 2, p. 51). She said she had not reported

the gain she received because “Andy said he had already paid tax for that portion already. When asked

what she wanted, she said “I just want Andy to pay me the tax back to me so I can report to the IRS.

15
(RR Vol. 2, p. 54). Of course, the problem with that position, as explained by Appellants’ accounting

expert, is that the IRS considers Appellants as the taxpayer because Appellants were the purchasers

and sellers of the farms.

Le also complains that Appellants should not have divided the profits from the chicken farm

operations with Tuan Ngo. (RR Vol. 2, p. 57). Her testimony fails to show that Appellants should

have known that only she was entitled to profits. She admitted that when the money was sent to

Appellant Ngo that there was nothing with the money “that said whose money its was.” (RR Vol. 2,

p. 42). She likewise admitted that she never gave anything that said that “this is my part and this is

Tuan’s part.” (RR Vol. 2, p. 42). Other evidence shows that Tuan Ngo’s paycheck from working on

the chicken farm went to Appellee Le and that distribution of funds made by Appellants on another

occasion was divided between Appellee Le and Tuan Ngo.

Payment of 20% of Net Profits to Appellants a Breach of a Partnership Agreement or Contract?:

It was uncontradicted that when Appellants made a final distribution of profits from the sale

of the chicken farm in Robertson County that they deducted from the amount distributed to the

investors 20% of the profits as compensation to them for their services provided. It is uncontradicted

that the parties did not discuss at the beginning of the business that Appellants would charge for their

services. Counsel for Appellee Hoang asked Appellant Ngo why he should be entitled to

compensation out of profits while Appellee should not, when he also worked on the farm. Appellant

Ngo clearly explained the difference between one who is a common laborer and can be replaced, and

one if has overall responsibility for managing the business. (RR Vol. 2, p. 106-107).

Appellants believe that the basic source of error in the jury verdict in this case was a

16
presumption by the jury that a party is only entitled to be paid for services rendered if there is an

express agreement to that effect, while the law in Texas is actually that a party is entitled to

compensation unless an express agreement establishes the compensation due for those same services.

There is a fundamental difference in compensation to Appellants for a return on the monies

they invested, and the services they provided. They are entitled to be paid a return on their monetary

investment just as are Appellees. But Appellees refused to accept that Appellants were also entitled

to be paid for their management services, additional investments, sacrifices, and assumption of debts

on the business. Appellee Hoang’s opinion at trial was that “we are all the same,” meaning that a

return on investment is all anyone is entitled to receive. (RR Vol 3, p. 129).

His opinion is incorrect under Texas law. Texas recognizes that a party may have a claim for

services rendered even when there is no contract providing for that compensation. Truly v. Austin, 744

S.W.2d 934, 936 (Tex. 1988). The underlying theory is that it would be unjust for a party to receive

benefits as the result of the efforts of another without paying the value of those benefits to the party

who did the work. Baldwin v. Smith, 586 S.W.2d 624, 632 (Tex.Civ.App.–Tyler 1979), reversed on

other grounds 611 S.W.2d 611 (Tex. 1980); Murphy v. Canion, 797 S.W.2d 944 (Tex.App.–Houston

[14th] 1990, no writ hist.).

The elements of a claim in quantum meruit are as follows:

1. valuable services were rendered;

2. for the person sought to be charged;

3. the services were accepted by the person sought to be charged, used and enjoyed by
him;

4. under circumstances as reasonably notified the other person that there was an
expectation of being paid.

17
 Vortt Exploration Company v. Chevron, 787 S.W.2d 942 (Tex. 1990).

There is no doubt that Nguyen and Ngo rendered valuable services. They spent uncompensated

time learning the chicken business before deciding to enter it, secured grower contracts, financed the

construction of two chicken houses in Georgia by foregoing any payment of even basic living expenses

to themselves so that the farm could build the houses; assumed debt in excess of seven million dollars;

went months without compensation in Georgia while they operated a chicken farm there (they

reinvested their wages for their farm labor, while no other investor did so); worked long hours (RR

Vol. 3, p. 209) while the other investors were free to engage in other gainful employment; went

without compensation for a year after selling the Georgia farm while they purchased and constructed

the farm in Texas (RR Vol. 3, p. 180); and then operated the farm in Texas on a full-time basis and

negotiated a sale of it at a substantial profit to all investors.

The services were rendered for all investors, not just Appellees. While Appellants also

received a distribution of profits, their proportionate part of those profits on their monetary investment

was no greater than that of the other investors. And the amount of the return they received on their

monetary investment was only a small fraction of what they earned for all investors.

Appellants’ services were accepted by all the investors, including Appellees. While Appellees

were not in control of the operations of the chicken farms, they were aware that the farms had been

purchased by Appellants; that Appellants were living on the farms and operating them; that Appellants

received no compensation for long periods of time while they put together the deals; that Appellants

put in many, many hours managing the farms; that Appellants had over the time the farms were

operating assumed personal liability for approximately seven million dollars in debt; and that the farms

would never have been purchased and would have never earned any return to the investors without

18
Appellants’ management skill and effort.

Finally, was there anything about what Appellants did that would put Appellees on notice that

they expected to be compensated for their services? Appellees were free to run their own businesses

or seek other employment but Appellants were committed to full-time operation of the farms.

Appellees knew that for substantial periods of time Nguyen and Ngo were working without any

compensation at all for their services. That knowledge alone was sufficient to put anyone on notice

that a return on their monetary investment alone would not fully compensate Appellants and at some

point they expected to be compensated by something more.

An agreement to divide any return on a monetary investment in the chicken houses would not

preclude Appellants from claiming compensation for their management services and labor. In Black

Lake Pipe Line Company v. Union Construction Company, 538 S.W.2d 80 (Tex. 1976), the court held

that even if the parties have an express contract that provides compensation for some services a party

can recover the reasonable value of other services which were rendered and accepted that were not

covered by the express contract.

This case is in an unusual posture. It is not a suit by Appellants seeking a judgment that

Appellees should be ordered to pay them reasonable compensation, but instead a suit by Appellees to

recover damages because Appellants already paid themselves that compensation. Since the

compensation has already been paid, Appellants contend they had no duty at trial to prove that their

compensation was reasonable, but that Appellees had a burden to show it was unreasonable.

When the agreement between the parties was silent on the question of compensation by

Appellants for their services there is no evidence that by charging for their efforts they breached any

partnership agreement. If the jury found a breach of a partnership agreement or contract because

19
Appellants were paid for their services, it is not supported by any evidence because it is presumes that

Appellants were only entitled to be paid for their services if they expressly contracted to be paid.

Is Withholding Money from a Distribution of Profits to pay Federal Taxes a Breach of a Partnership
Agreement Or Contract?:

Appellees also contended at trial that Appellants breached their “partnership agreement” by

withholding monies to pay the Internal Revenue Service for taxes on capital gains arising from the

purchase and sale of the chicken farms and for taxes on ordinary income as a result of recapture of

depreciation expense deductions taken on the farms. Appellees claimed that Appellants should instead

give them the amount of money withheld for payment of taxes and it would be up them whether to

report the income and pay taxes on it.

Those taxes were explained by Michael Halls, a C.P.A. called by Appellants as an expert. He

testified that there would be a capital gains tax liability on the sale of the chicken farm(s), and in his

opinion the Internal Revenue Service would assess that liability against Appellants because they were

shown as the owners of the farm. (RR Vol. 4, p. 21).

Halls also testified that there would be a tax liability in the form of a “recapture” of depreciation

expensed on the farm. (RR Vol. 4, p. 15). His testimony was that Appellants would be responsible for

payment of those taxes. He further testified that while the methodology used by Appellant Ngo to

calculate the expected tax liability was not the same as a certified public accountant would use, it was

a reasonable method of calculating the tax liability. (RR Vol. 4, p. 21).

The issue here is whether one can be in breach of a contract by compliance with the Internal

Revenue Code. Appellants argued that any tax liability from the sale of the chicken farm will fall on

them, so they are justified in withholding the amount of that tax liability from the proceeds distributed.

20
In other words, they take the funds because they will owe the taxes. Appellants had no way of

compelling Appellees to pay the IRS if they distributed all the profits to them. Appellants did not trust

Appellees. That Appellees insisted on being paid in cash at the time of the final distribution contributed

to Appellants’ doubt Appellees would report and pay taxes on any profits distributed to them. (RR Vol.

3, p. 59). It was not unreasonable for Appellants to hold the money that would be owed.

Appellees questioned whether the sale of the chicken farm in Robertson County and the

reinvestment by Appellants properly qualified as what was referred to as a “Section 1031 exchange,”

in an attempt to raise doubt with the jury as to whether a tax liability actually existed. If the

transaction does not qualify as a Section 1031 exchange, Appellants will be liable immediately for the

taxes. (RR Vol. 4, p. 71). Deferring payment of the capital gain taxes in no way injures Appellees:

they have what was distributed to them free and clear of any tax liability because Appellants assume

payment of any taxes due.

Was It a Breach of a Partnership Agreement or Breach of Contract to Divide Proceeds between
Appellant Le and Tuan Ngo Rather than Pay All the Proceeds to Appellee Le?:

In addition to those claims on which she joins Appellee Hoang, Appellee Le makes an additional

claim, i.e. that Appellants breached their agreement with her by paying part of the distribution of profits

to Tuan Ngo. She claims she contributed $50,000 and she alone is entitled to a return on the investment

of that amount. To understand this issue requires reviewing the facts and circumstances under which

the investment was made.

There is no evidence that Appellants ever represented to anyone that they would pay a

proportionate part of any distribution solely to Appellee Le. If there is any basis for that claim, it must

be an implied promise. The evidence shows, however, that the investment Appellee Le claims to have

21
solely made was actually made as the result of a conversation between Tuan Ngo and Appellant Ngo,

not as the result of a conversation between Appellee Le and Appellant Ngo.

Tuan Ngo and Appellee Le lived together for seven years. (RR Vol. 2, p. 41). Appellant Ngo’s

uncontradicted testimony was that he contacted Tuan Ngo about investing in the purchase of the farm.

Tuan Ngo told him he would talk to Appellee about it. Tuan Ngo, not Appellee Le, then contacted

Appellant Ngo and said that “they” would invest in the farm.

Appellant Ngo then received a check in the agreed amount of the investment drawn on an

account solely in Appellee Le’s name. Neither Appellee Le nor Tuan Ngo gave anything to Appellant

Ngo that said whose money was being invested. (RR Vol. 2, p. 42). Appellant Ngo later learned other

information that confirmed the investment was made jointly. Tuan Ngo worked on the farm for a

period of time as a laborer and instructed Appellant Ngo to make his paychecks payable to Appellee

Le and those checks were sent to her. When asked how Appellant Ngo “is supposed to know that Tuan

is not supposed to get any of the money?” Appellee Le responded “Because of my money.” (RR Vol.

2, p. 42).

A distribution of some accumulated profits was made at one time to Appellee Le in the amount

of $14,000: she told Appellee Ngo that she divided those funds with Tuan Ngo. (RR Vol. 2, p. 113).

At the time of the distribution of the funds Appellant Ngo put the money down on the table to pay

Appellee Le and then she told him to give Tuan Ngo his part, and he did so. (RR Vol. 2, p. 117).

Is the evidence sufficient to show the existence of an implied agreement to pay only Appellee

Le? To put the question another way, should Appellant Ngo have known from the facts and

circumstances that only she was to be paid at the time of the final distribution of the proceeds from the

sale? Given the circumstances, the answer is “no.” Appellee Le’s real complaint is not that Appellant

22
disregarded any agreement or understanding, but rather that she and Tuan Ngo have parted ways and

she did not want to split the profit from the investment with her ex-boyfriend.

An implied agreement may arise out of the regular course of conduct between the parties.

Schuhardt Consulting Profit Sharing Plan v. Double Knobs Mt. Ranch, Inc., 2014 Tex.App. LEXIS

13417 (Tex.App.–San Antonio 2014, rev’d. in part; aff’d. as modified). There must exist a meeting of

the minds. Prime Prods, Inc. v. S.S.I. Plastics, Inc., 97 S.W.3d 631, 636 (Tex.App.–Houston [1st] 2002,

pet. denied).

In this case there is insufficient evidence to support a finding that an implied agreement between

Appellee Le and Appellants existed that only she should be paid any proceeds from the investment

made by her and Tuan Ngo. She cannot hold Appellants liable on an implied agreement to pay only

her because there was no meeting of the minds that she alone would be paid. Prime Prods, Inc. There

is no basis for a finding of breach of an agreement because of the payment of the proceeds from an

investment to both investors.

Counsel for Appellee also alluded several times during the trial that there was some duty by

Appellants, either by contract or by implication, to include Appellees as owners on the chicken farms

they owned at the time of trial. (RR Vol. 2, p. 100). This argument is essentially that once someone

is partner he has a right to be a partner thereafter in any venture and to participate in other ventures of

Appellants. As a matter of law that claim is not valid. Rankin v. Naftalis, 557 S.W.3d 940 (Tex.1977);

Greenberg Traurig, LLP v. National American Insurance Company, 448 S.W.3d 115

(Tex.App.–Houston [14th] 2014). Appellants agreed to participate with Appellees in one venture, a

chicken farm, and when that farm was sold no continuing business relationship continued. (RR Vol.

2, p. 100). Further, there is no competent evidence of the value of Appellants’ farms or any other basis

23
upon which the jury could have calculated Appellee’s damages based on that argument.

Point of Error No. 5 Restated: THE TRIAL COURT ERRED IN AWARDING JUDGMENT FOR
DAMAGES FOR BOTH BREACH OF A PARTNERSHIP AGREEMENT AND BREACH OF
CONTRACT WHEN BOTH CAUSES OF ACTION AROSE FROM THE SAME FACTS OR
EVENTS.

Texas long ago adopted what is called the “one recovery rule.” Southern County Mutual

Insurance Company v. First Bank & Trust, 750 S.W.2d 170 (Tex. 1988); Stewart Title Guaranty Co.

v. Sterling, 822 S.W.2d 1, 7 (Tex. 1991); Crown Life Ins. v. Casteel, 22 S.W.3d 378, 390 (Tex. 2000).

This means that generally when a party recovers damages under two different theories or causes of

action that arise from the same operative facts he must elect one but cannot recover on both.

That rule was illustrated in a partnership case, Murphy v. Seabarge, Ltd., 868 S.W.2d 929

(Tex.App.–Houston [14th] 1994, aff’d.). One party claimed that the other had paid himself more than

their partnership agreement allowed. Those payments became an issue, because unlike this case, the

partnership was unable to service its debt and funds were not available to pay a management fee. The

jury found that the payments made were self-dealing, a breach of the partnership agreement and a

breach of fiduciary duty. The court noted there was no distinction between the acts that constituted self-

dealing, a breach of fiduciary duty, or violations of the Partnership Agreement: all were based on the

same actions. The court held that the plaintiff was only entitled to recover one compensation for its loss

as the result of the conduct of the defendant, and that since the jury questions inquired about damages

for the same conduct the judgment resulted in an impermissible double recovery. Murphy p. 937.

Appellants recognize that in some situations, when there is an additional basis for damages

together with actual damages, that a party may recover additional damages arising from the same fact

24
situation. For example, one could be found to have committed a violation of a common law duty and

also to have violated the Texas Deceptive Trade Practices Act, TEXAS BUSINESS AND COMMERCE CODE

§ 17.41, et. seq. In that case it is possible to recover additional damages allowed by statute. But in the

case before the court, the jury did not award any exemplary damages and only awarded actual damages.

Murphy is on all fours with the case before this court. In this case there is only one contract,

according to Appellees, which they say was an agreement to form a partnership. The acts they complain

of are the payment by Appellees to themselves of compensation for their management and labor,

withholding funds to pay taxes, and for Appellee Le, a complaint that someone else received funds she

was entitled to solely receive. All of these complaints arise out of the same event, i.e. the distribution

of funds by Appellees. And the “contract” is the “partnership agreement.” Therefore, awarding

damages both for “breach of contract” and for “breach of a partnership agreement” is a double recovery

of damages for the same conduct.

Point of Error No. 6 Restated: THE EVIDENCE IS INSUFFICIENT TO ESTABLISH ANY
LIABILITY BY APPELLEE DUNG VU BECAUSE THERE IS INSUFFICIENT EVIDENCE THAT
SHE ENGAGED IN ANY CONDUCT OF WHICH APPELLEES COMPLAIN.

All the evidence shows regarding Appellant Vu is that she is married to Appellant Nguyen, she

provided financial support to the chicken farm in Georgia with funds she earned in her business, and

she was a signatory on the title documents for the farms and on the loan documents with the lenders.

There is no evidence that she calculated the amounts that Appellants Nguyen and Ngo decided to

withhold from the final division of proceeds and there is no evidence that she made the decision to

withhold funds from the distribution to the investors.

25
 A wife is not automatically liable for any obligations created by her spouse. TEXAS FAMILY

CODE § 3.201(a). A spouse is only liable for the acts of her spouse if the spouse acts as her agent or

if the debt is created for “necessaries.” There is no evidence that Appellees provided Appellant Vu’s

family “necessaries.” There is no evidence that Appellant Nguyen was acting as an agent for Appellant

Vu.

TEXAS FAMILY CODE § 3.201(c) explicitly states that a spouse is not automatically considered

an agent because parties are married. Some evidence of an agency relationship is required. Appellee

Vu signed the title documents and loan papers herself. There is no evidence that her spouse acted for

her under a power of attorney or delegation of authority. There is no basis for an award of damages

against Appellant Vu.

26
 CONCLUSION

Appellants request that this court reverse the judgment of the trial court and render judgment

that Appellees take nothing by way of this suit.

If this court rules that the evidence is insufficient to show the parties were partners it should

render judgment that no partnership existed between the parties and reverse the award of damages for

breach of partnership against Appellants.

If the court affirms the judgment of the trial court that the parties were partners, the award of

damages for breach of partnership should be reversed as there is legally insufficient evidence of such

a breach.

The court should reverse the award of damages for breach of contract for the reason that the

evidence of breach is legally insufficient to support that award.

If the court affirms the judgment of the trial court that the parties were partners and that both

a breach of the partnership agreement and a breach of contract occurred, the court should require

Appellees to elect which damages they choose to retain, as the award of damages on both claims is an

impermissible double recovery of damages arising from the same facts.

The court should reverse any judgment against Appellant Dung Vu as the evidence is

insufficient that she committed any act or omission which Appellees claim was a cause of injury to

them resulting in damages.

The court should award all costs of this appeal to Appellants.

27
 Respectfully submitted,

Tom Rorie
State Bar No. 17238000
210 North Street
Nacogdoches, TX 75961
(936) 559-1188
FAX (936) 559-0099

ATTORNEY FOR APPELLANTS

CERTIFICATE OF COMPLIANCE

Pursuant to TEXAS RULE OF APPELLATE PROCEDURE 9.4(i)(3), I hereby certify that this brief
contains 10,743 words (excluding any caption, identity of parties and counsel, statement regarding oral
argument, table of contents, index of authorities, statement of the case, statement of issues presented,
statement of jurisdiction, statement of procedural history, signature, proof of service, certification,
certificate of compliance, and appendix). This is a computer-generated document created in
WordPerfect, using 12-point typeface for all text. In making this certificate of compliance, I am relying
on the word count provided by the software used to prepare the document.

Tom Rorie

CERTIFICATE OF SERVICE

I certify that a copy of the foregoing document has been served on counsel for Appellees this
th
29 day of July, 2015, by e-file service.

Tom Rorie

28
 NO. 1-15-00352-CV

______________________________

IN THE
FIRST COURT OF APPEALS
AT HOUSTON, TEXAS

______________________________

PHAP V. NGUYEN, ANDY NGO, and DUNG T. VU,
Appellants

VS.

MANH HOANG and DUNG LE,
Appellees

______________________________

Appealed from the 55th Judicial District Court of
Harris County, Texas

______________________________

APPENDIX TO APPELLANTS’ BRIEF
______________________________

TOM RORIE
State Bar No. 17238000
210 North Street
Nacogdoches, TX 75961
(936) 559-1188
FAX (936) 559-0099

ATTORNEY FOR APPELLANTS

ORAL ARGUMENT REQUESTED
 APPENDIX

No. Document

1 Plaintiffs’ Original Petition

2 Charge of the Court

3 Final Judgment

4 Motion for Judgment Notwithstanding Verdict, Motion to Disregard Jury Findings,
and Objections to Proposed Final Judgment

5 Motion for New Trial

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3
4
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5

6

include listed
14

15
16

MAcRs deductions for assets pla.ea tn su*icu'frG-
v*rs o;fiffi_. zoog
18 lf you are fo.group any essers olacad in senrico during the laxyoar into one or mor€ general
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.

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h Rosldenlihl rentat
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Form 4562 (a0og)
\nctrnP-fu*
 CidB rt:. ilrt-i:r,li
F Onh
.. Deprcciation and Arnodization
(lncluding Informatlon on Listed property)
ffim#-fslff*'Y 201 0
Atladvrlcnl
namc{t) sho,rrr on rehm tax return. Seq€rEc l{.J 67
ldcriltyl4g r*nnbtr
AND
arltress ol aatvfy ioffiG-to.rn ranr*
Sch.gdu]e It / Form 4B3S -

1
2 500 000
3
4 2,000, 000:
5
6

Total otected cost of s€cton r79 properry. ruo urnorit
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I:yy.lg5ion. Enreru,usln*r.roiiin";;,;';*8..... ...,.....,....
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l6
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not

17

18 100,581-.

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propor{y
I Nonresidential is*
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2
23
0, 58
BAA

Form 4562 (2010)
 ROBArr.f B. ITHAM & ASSOC-ATES, P.C.
Attorneys and. Cclunrclors at La'iv
9999 Bellalrc Blvd,, Suire # I122
Tel: (?f 3) 7'16-33J3
Hous(orr, 'l'exas 71036
Irax: (? l3) '176-3335
rsbcd$sD@pdsdd
Junc 30,201 1

YIA CERTIFIED MAIL, Rzur ?OO4 25IO O(}OO 6496 I4SIAND REGULAR MAIL
Phat V. Nguycn
Dung T. Vu
l8722Timber'I'wisr
Humblg Tsxas 77346

Rer our clients: Manh lloang & Dung l,e

Dear Mr. Nguycn and Ms, Vu:

Plcaso be advised that I am rcpresenting the above-mentioned clicnts
-,- regarding
--o'--.----Q thoir partnerships in your
farms in Texas and Georgia
I have roviewed your profit.sharing calculations (see
attached Bxhibit A) and apparontly, per my clients, it
does not rcflect the true division oi in"ome

fl-tl':^iiT", ploase accept this lctter a,s a formal denrand for additional $250,000 per
$250,000.00 for Ms. Le.
Mr. I{oang and

If I do not recoive tho said $500,000.00 for my
olicnts as.of July 31, 2011, I will file a lawsuit against you
and will ask for attimey fees.

Ifyou have any questions, please contact nre at the addross
listed above,

Sinccrelv ,./
./// ,/ /7r//
/^'4/{*l-...--
Robert Pham
Attorney at Law

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 RO,BN T B. ]3HAM & ASSOC I,'TES, P-C.
A;ttoflreys And Counselore at La\y
99V) Dellafue Blvd., Sufte #l I22
Houston, Tcxas ?7036 Tcl: (713)77G3333
Fax: (713) 776.3335
rclcqdiam@pds,lcl
Jme 30,201I
WA CEITTIFIED MAIL, RRR 7OO4 2510 OOOO 6496 94?4 AND REGULAI{ MAIL
Andy Ngo
I8722 Timber Trvist
Humble, iexa,s 7ii4d

Re: Our Clicnts: Manh Hoang & Dung Le

Dear Mr. Ngo;

Pleasc be advised that I anr ropresenting
the above-mentioned clients regarding their partnerships
fanns in T'exas and Georgia. in your

I have rovierued vour pro.fit.sharing calculations
(see attaohed Exhibit A) and apparontly, per
docs not reflect t-hc true division nly clients, it
oiin*nrc
At this time. olease a&ept this retter as a rvrrrrqr
$250,000.00'for Ms. Lc. ' fo,,nar uvr'rurru tul iarlditio.ar $2i0,000 per Mr, Hoang
domand for
and

If I do not receive the said $500,000.00 for
my clicnts as of July 3r,201r, t witt file a lawsuit against you
and rvill ask for attomcy fees.

Sirrcerolv

Robcrt Phanr
"W
If yo, havc any questiorrs, prease contacrr
rne at tho address listed atrovo.

Attor:rey at Law

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 CAUSE NO. 2A11.72"1L9

RECE],I]T NO. 1-3801. 0.00 cl-v
09-28-2012 - TR#72830822-
PIJAINTIFF: HOANG, MANTI
In The ssLh
.rudlcial oistrict Court
DEFENDANT: NGUYEN' PHAP V
of Harris County' T'cxas
55TTI D:I:STRICT COURT
HousLon' TX
CITATION
THE STATE OI.' TEXAS
County of Harris

TOr NGUYEN, PLIAP V
832 COUNTY ROAD 4849 TIMPSON \X'159'15

ALLaclred ,i.s a copy of pLATNTIFF'S-QBI-C:IIA!-!E'IM9N
,I.his lnstrunent was fi.l.ed on tlre 28th-d4y of ,9ept-elrnber, 201'2, in Lhe above clted cause nunilcer
you'
and. cour:h. The insLrument, abtached describes t-he claint against'

YOU HAVE BEEN SUED, You may employ an attorney' If you ol: your aLtol:ney do noL' fite a
writ-Len ansvier wil.h t-he DisLricL clerk riho,issued this citati,on by 10r00 a'm' and peL-'i'tion'
on t-he Monday
next foLlowiDg i-he explration of 20 days after you were served this cibaLion
a defaulL junly a very lirnited e{te,nt. Slhe
e

joined the other defendants in applying for and securing finiencinlg to purchase bpth of tde
chickrn
ffic

farms involved in this case. She executed clocuments to sell each of the two farms. She li.{red on the
farm in Georgia, traveling back anLd .forth to New Orleans to eiarn inco.me to support her fan{il'y. None
yO

of those acts form the basis for arLy of the plaintiffs' breach of contra.ct claims; in fact, th{ plaintilfs
benefitted from those acts.
op

There is no evidence that Dung Vu made any decisic,n as to omployment of and phyment to
C

any of the participants nor made decisions regarding the nLanagernent of the faims. The! evidence
ial

shows, and is uncontradicted, that the decision to charge connpensation for services (20% of profits
fic

from the farm sales) was made by Andy Ngo; that the calculaticns of capitaX gains rfa;