Erwin Cruz and the Erwin A. Cruz Family Limited Partnership, Both of Them Individually and on Behalf of North Dallas Medical Imaging, LP, Plano AMI, LP, and Ghani Medical Investments, Inc. v. Mehrdad Ghani

Affirm in part, reverse in part, remand; Opinion Filed December 13, 2018.

In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-17-00566-CV

ERWIN CRUZ AND THE ERWIN A. CRUZ FAMILY LIMITED PARTNERSHIP,
BOTH OF THEM INDIVIDUALLY AND ON BEHALF OF NORTH DALLAS
MEDICAL IMAGING, LP, PLANO AMI, LP, AND GHANI MEDICAL INVESTMENTS,
INC., Appellants
V.
MEHRDAD GHANI, Appellee

On Appeal from the 101st Judicial District Court
Dallas County, Texas
Trial Court Cause No. DC-10-16274

MEMORANDUM OPINION ON REHEARING
Before Justices Francis, Myers, and Stoddart
Opinion by Justice Stoddart
We deny appellants’ and appellee’s motions for rehearing. On the Court’s own motion,

we withdraw our opinion issued on August 20, 2018 and vacate our judgment of that date. The

following is now the opinion of this Court.

This lawsuit involves the interests of two medical imaging centers, North Dallas Medical

Imaging, LP (“NDMI”) and Plano AMI, LP. Appellant Dr. Erwin Cruz was involved in the

formation of both businesses with appellee Mehrdad Ghani. After NDMI was dissolved and Cruz

was expelled from Plano AMI, he filed this lawsuit in his own name and on behalf of the Erwin

A. Cruz Family Limited Partnership, NDMI, Plano AMI, and Ghani Medical Investments, Inc.

(collectively as appellants, “Cruz”). Following a multi-day trial, the jury resolved most questions
in Cruz’s favor and awarded actual and punitive damages. The trial court granted Ghani’s motion

for judgment notwithstanding the verdict (“JNOV”) and entered judgment for Ghani on all claims,

including his counterclaim. In three primary issues, Cruz argues the trial court erred by entering

JNOV because the evidence supports the jury’s findings and entitled him to judgment; the trial

court erred by entering judgment on Cruz’s claim that Ghani improperly paid himself

compensation; and the trial court failed to provide due process before entering judgment on

Ghani’s counterclaim. Cruz also asserts four contingent issues in the event the Court does not find

in his favor on his JNOV arguments. In twenty cross-issues, Ghani argues the evidence is

insufficient to support several of the jury’s answers and many of the jury’s answers are against the

great weight and preponderance of the evidence. We affirm the trial court’s judgment in part and

we reverse the trial court’s judgment in part. We remand for the trial court to enter judgment in

favor of appellants on those portions of the jury’s verdict we conclude are supported by the

evidence, to consider Cruz’s request for equitable relief, and to conduct further proceedings on

Ghani’s counterclaim.

BACKGROUND

Ghani and Cruz were friends. Ghani owned and operated businesses in the clothing

industry and Cruz is a neurologist. They decided to open a medical imaging business, primarily

offering MRI scans, in which they would be majority owners. They planned to offer financial

incentives to doctors interested in buying into the business. The doctors would refer their patients

for medical imaging and receive a share of the proceeds from the business.

A. Formation of NDMI and Plano AMI

In April 2002, Ghani, Cruz, and Mark Mendes formed NDMI. They each owned a 30.33%

limited partner interest. Each partner performed a specific function: Cruz referred his patients for

scans and persuaded other doctors to refer patients; Ghani managed the business; and Mendes had

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a technical role. Cruz’s office was in the same building as NDMI and he was a primary referral

source. The corporate general partner, MCG Group, Inc. (“MCG”), held a 1% limited partner

interest and the remaining 8% was held by physician investors. Limited partner investors who

bought interests in NDMI included Dr. Michael Taba (an orthopedic surgeon), Debra Brown (a

physician’s assistant), Drs. Robert Ippolito and Henry Raroque, and Adam Hardison (a lawyer).

Taba, Ippolito, and Raroque all referred patients to NDMI. NDMI borrowed approximately $1.5

million to start the business and Ghani, Cruz, and Mendes personally guaranteed the loan.

Shortly after NDMI opened, Cruz and Mendes had a dispute, which ultimately led to Cruz

and Ghani exercising a corporate protection or “bad boy” provision in the limited partnership

agreement to expel Mendes from NDMI. Mendes sued Cruz, Ghani, NDMI, and MCG and they

ultimately reached a settlement. Cruz and Ghani split Mendes’s limited partner interest between

themselves.

NDMI became profitable and, in 2004, Cruz, Ghani, and Taba created Ghani Medical

Investments, Inc. (“GMI”) and Plano AMI, LP to operate a second imaging center. Taba sent most

of his patients to Plano AMI because his primary practice was in Plano and he only maintained a

small satellite office in Dallas. At trial, the parties disputed the ownership structure of GMI and

Plano AMI. However, they agreed Cruz, Ghani, and Taba owned equal interests in Plano AMI,

directly or indirectly through GMI.

The businesses relied on physicians referring patients for scans and, without such referrals,

they were not sustainable. Ghani testified that as long as the doctors referred patients, they were

financially strong.

B. Operation and Management of the Centers

Other than a brief period in 2005-2006, Ghani managed the day-to-day operation of both

centers. Taba explained Ghani was to consult Cruz and himself “if there was any issue or anything

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else that had to be decided by the three of us.” Otherwise, Taba trusted Ghani. Ghani testified:

“[B]asically, everybody trusted me and . . . I didn’t have anybody to question me.”

There were common expenses shared by NDMI and Plano AMI, and Ghani moved money

between the two entities. For example, the businesses shared a single software system, which was

purchased by NDMI for approximately $100,000; some employees worked for both entities but

were on the payroll of only one; and the centers shared a management office. The businesses hired

a third-party certified public accountant, Hossein Zamanian, who worked for both entities. One

of his employees, Tammy Boynton, testified Ghani determined how to allocate expenses between

the entities and NDMI often transferred money to Plano AMI. Boynton believed Ghani used

money transfers to even-out income between the partners because NDMI performed better than

Plano AMI; she believed Ghani was “trying to redistribute the money so there was enough money

there to pay the Plano partners and shareholders.” Frequently, at the end of the month, Ghani

instructed Boynton to transfer a specific amount of money from NDMI to Plano AMI, but Boynton

never saw reports supporting these transfers. Cruz testified Ghani began “running both businesses

together,” inferring Ghani comingled funds from the two businesses.

C. Selling the Businesses

In the spring of 2007, Cruz, Taba, and Ghani decided to sell the businesses. They hired a

broker, Steve Denn Company & Associates (“Denn”), to market NDMI and Plano AMI to potential

buyers. Cruz, Ghani, and Taba decided on an asking price of $5.9 million. Although there were

numerous interested potential buyers, including some who provided letters of intent, they did not

close a sale. Ghani testified he wanted to sell but, over time, realized this type of business “cannot

be sold, because most of the referral[s] . . . come from the investor, and the minute you buy out

those investors, they have no incentive to sell the business anymore.” Ghani created an

impediment for potential buyers by requiring interested parties to pay a $50,000 nonrefundable

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earnest money deposit as a condition to examine the businesses’ books. Denn considered Ghani’s

condition, which he had not seen in another transaction, to be an unreasonable barrier that would

“scare off everyone.”

On July 25, 2008, Denn emailed Ghani and Cruz stating: “I have raised the asking price,

based on revenues trending up by !5% [sic] or better as you had told me!” When asked about the

email at trial, Denn testified Ghani informed him revenue was up by 15 to 20% so they should

raise the asking price.

Denn began finding Ghani increasingly unresponsive when he sought updated financial

documents about the businesses. On July 29, 2008, Denn emailed Ghani and Cruz with a list of

financial documents he needed and noted he received no response from Zamanian. On August 21,

2008, Denn emailed Cruz because his “calls and emails to Mike Ghani go unanswered.”

Approximately two weeks later, Ghani unilaterally terminated Denn’s contract without consulting

Cruz or Taba. Denn forwarded Ghani’s termination email to Cruz and Taba, stating: “In my

opinion, there is a conflict of interest here. Mike is unwilling to share information, and had [sic]

decided on his own, that he does not want to Sell [sic].” Cruz replied: “It has always been obvious

[Ghani’s] lack of respect and fiduciary responsibilities not to communicate or consider our

opinions on these important issues.”

D. Dissolution of NDMI

As 2008 progressed, the relationship between Cruz and Ghani became increasingly tense.

In December 2008 or January 2009, a decision was made to dissolve NDMI. The dissolution forms

the basis of some of the claims in this lawsuit, and Cruz and Ghani provided the jury with different

accounts of what occurred.

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 1. Ghani’s Account

Ghani believed NDMI should be dissolved because reimbursement rates from insurance

companies were falling, which reduced profitability; key referring physicians, including Taba and

Raroque, were relocating and wanted to redeem their partnership shares; NDMI was unable to

recruit other physicians to refer business; the MRI machine was nearing the end of its

recommended life; and the lease was expiring and the renewal term was five years. Ghani testified

he and Cruz agreed it was better to have one thriving business rather than two weak ones. Because

their referral base was moving to Plano, they decided to keep the Plano location and close the

Dallas one, NDMI.

In September 2008, Ghani stopped making distributions to the NDMI partners. Ghani

testified he and Cruz believed this strategy would allow them to “pay the loan very aggressively”

in less than a year. From December 2008 until April 2010 when NDMI closed, they used the

revenue to pay off debt on which they were personally liable. Ghani stated: “All the decision was

[sic] made between Dr. Cruz and I [sic].”

Taba testified Ghani explained the reduced distributions to him as being necessary to pay

down NDMI’s debt. Ghani told Taba referrals had declined and he believed they would continue

to do so, which would adversely impact the financial profitability of NDMI.

2. Cruz’s Account

Cruz believed NDMI was profitable. However, because Ghani no longer wanted to operate

NDMI, Ghani stopped providing Cruz with financial information so that Cruz would believe

NDMI faced financial problems and agree to close the businesses. Cruz was concerned that Ghani

was misusing his management authority, including comingling money between the businesses. In

September 2008, Ghani stopped providing financial reports to him and Cruz did not receive

financial reports for September, October, November, or December 2008 even though he requested

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them from Ghani and Zamanian. Cruz testified: “So there was no way to get financials to see the

veracity, the truth, behind what Mike was saying.”

Cruz knew Taba and Raroque intended to reduce their referrals to NDMI, but testified this

would impact NDMI “minimally” because the business could recruit other doctors. Cruz

attempted to discuss marketing plans and new business strategies with Ghani, but Ghani refused

to consider them. Ghani told Cruz: “[I]t’s too late. I already committed the machines.” Cruz

asked Ghani for clarification and Ghani told Cruz he committed to selling NDMI’s machines.

When Boynton left her employment with Zamanian on August 30, 2008, she was not

concerned about NDMI’s financial ability to pay distributions. Although her desk was outside

Ghani’s office, she did not hear him express any concerns about financial matters. She stated: “He

was just saying that he felt that he wanted out of that company because he didn’t take it on to do

that job for his entire life.”

Cruz stated that if he had known the true financial status of NDMI, he would not have

agreed to close it. But he believed Ghani who told him “there was no money in 2008. . . that the

business was losing money.” Ghani asked Cruz to consent to closing NDMI and, eventually after

being pressured by Ghani and Doug Brady, a lawyer hired by Ghani, Cruz agreed.

3. NDMI is Dissolved

Cruz and Ghani, acting as directors of NDMI’s general partner, executed a resolution dated

December 5, 2008, authorizing Ghani to oversee the dissolution of NDMI. NDMI continued

operating as a business until April 2010, during which time Cruz, Taba, and Raroque continued

sending patients to NDMI. Cruz believed the business was busy.

Net revenue for NDMI in 2007 was approximately $1.7 million, it was approximately $1.8

million in 2008 and approximately $1.75 million in 2009. Of those three years, taxable income

for NDMI was the highest in 2009. Ghani explained that 2009 numbers were “healthy” because

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he reduced expenses by $230,000. He conceded that “if the business is making that kind of an

income, you don’t close. But that’s not the only reason we decided to close down.”

E. Debra Brown Lawsuit

Debra Brown, a physician’s assistant who was a limited partner in NDMI, sued Ghani,

Taba, and Cruz in August 2009 for breach of contract and breach of fiduciary duty. Brown

believed Ghani did not disclose relevant information and there “was no transparency.” Brown

testified Ghani stopped paying her distributions from NDMI in September 2008 without providing

an explanation even though NDMI was profitable. She alleged NDMI was mismanaged and

money was improperly moved from NDMI to Plano AMI.

In December 2008, Brown began communicating with Adam Hardison, another NDMI

limited partner and a lawyer. During discovery in the Brown lawsuit, Brown produced documents

showing Cruz sent approximately ninety-five emails to Hardison in September 2008 (before

Brown filed her lawsuit), which included tax returns from NDMI and Plano AMI. Hardison and

Brown were not limited partners in Plano AMI and were not entitled to financial information about

the entity. Cruz acknowledged he shared the information with Hardison and explained he sought

legal consultation from Hardison as part of selling the businesses through Denn.

Ghani, Cruz, and Taba hired a lawyer, Shawn Tuma, to represent them in Brown’s lawsuit.

Ghani asked Tuma to convene a meeting in Tuma’s office. Ghani was “extremely upset” at the

meeting and stated he discovered emails showing Cruz was communicating with Brown “behind

the scenes.” According to Cruz, during the meeting, Ghani threatened him, saying: “Dr. Cruz, you

are a traitor. You’re a traitor, and I’m going to hire my attorneys. I’m going to destroy you, and

I’m going to take your license away.” Cruz then left the meeting. Taba felt betrayed by Cruz’s

actions and said it was “dishonest[], disloyal toward the rest of the partners.” After the meeting in

Tuma’s office, Taba and Ghani consulted with Doug Brady about removing Cruz from Plano AMI

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and GMI. Ghani believed removing Cruz was necessary because Cruz shared confidential

information about Plano AMI with Debra Brown and Adam Hardison.

F. Plano Open

In 2007 or 2008, Cruz, Ghani, and Taba discussed acquiring an open MRI machine to

create an additional revenue stream for Plano AMI. Although Plano AMI could have acquired an

open MRI machine, Ghani and Taba created new two new entities in January 2010: Plano Open

MRI, LP and its general partner Ghani Medical Investment #2, LLC. Taba testified Ghani made

the decision to create new entities rather than extending Plano AMI or GMI, but they planned to

eventually “bring[] all the limiteds on board with an open.” Cruz was not invited to join or

informed about the venture. In May 2010, Taba apologized to Cruz for not including him and said:

“Look, Mr. Ghani had said he doesn’t want to [do] any business with you and you had said you

don’t want to do any business with him.” Taba testified it was impossible for Ghani and Cruz to

form another business venture together.

Plano Open was located across the parking lot from Plano AMI, and Ghani managed both

entities. When Plano Open began operating, Taba’s referrals to Plano AMI declined. Plano Open

was profitable and, because the open MRI machine was not expensive, margins were high. In the

first year, Ghani and Taba made over $100,000 each in profit.

Cruz asserts Ghani breached his fiduciary duties to Plano AMI and GMI by pursuing Plano

Open. Ghani testified he discussed Plano Open with attorney Doug Brady who looked at the

partnership documents and told him he could pursue Plano Open.

G. Jury Verdict and JNOV

The jury returned a verdict nearly entirely favorable to Cruz. It determined Ghani failed

to comply with his fiduciary duties to NDMI with respect to the dissolution, that failure was not

excused, and it damaged NDMI. The jury likewise concluded Ghani breached his fiduciary duties

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to Plano AMI and GMI with respect to the pursuit of Plano Open, those breaches were not excused,

and they caused damages. The jury found Cruz was a limited partner in Plano AMI; Ghani directed

or participated in GMI’s conversion of Cruz’s shares in Plano AMI and GMI1; and Cruz suffered

damages.

Ghani filed a motion for JNOV challenging most of the jury’s findings. The trial court

granted the motion in its entirety and entered judgment favorable to Ghani. This appeal followed.

LAW & ANALYSIS

In his first issue, Cruz argues the trial court erred by granting Ghani’s motion for JNOV

because the evidence supports the jury’s findings and entitles him to judgment. In twenty cross-

issues, Ghani argues the evidence is insufficient to support several of the jury’s answers and many

of the jury’s answers are against the great weight and preponderance of the evidence.

A. Standard of Review

We review a trial court’s decision to grant JNOV under a no–evidence standard, examining

whether any evidence supports the jury’s findings. Gharda USA, Inc. v. Control Solutions, Inc.,

464 S.W.3d 338, 347 (Tex. 2015); see also City of Keller v. Wilson, 168 S.W.3d 802, 823 (Tex.

2005) (test for legal sufficiency is same for summary judgment, directed verdict, JNOV, and

appellate no–evidence review). No evidence exists when there is:

(a) a complete absence of evidence of a vital fact; (b) the court is barred by rules of
law or of evidence from giving weight to the only evidence offered to prove a vital
fact; (c) the evidence offered to prove a vital fact is no more than a mere scintilla;
(d) the evidence establishes conclusively the opposite of a vital fact.

Gharda USA, Inc., 464 S.W.3d at 347 (quoting City of Keller, 168 S.W.3d at 810). We uphold the

jury’s finding if more than a scintilla of competent evidence supports it. Id. More than a scintilla

of evidence exists when the evidence supporting the finding “rises to a level that would enable

1
The conversion of Cruz’s interests in Plano AMI and GMI are discussed below.

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reasonable and fair-minded people to differ in their conclusions.” Id. (quoting Burroughs

Wellcome Co. v. Crye, 907 S.W.2d 497, 499 (Tex. 1995)). We review only the evidence tending

to support the jury’s verdict and “must disregard all evidence to the contrary.” Id. (quoting

Mancorp, Inc. v. Culpepper, 802 S.W.2d 226, 227 (Tex. 1990)). We consider the evidence and

possible inferences in the light most favorable to the finding under review and indulge every

reasonable inference that would support it. Id.; City of Keller, 168 S.W.3d at 822. When a party

attacks the legal sufficiency of an adverse finding on an issue on which it had the burden of proof,

the party must demonstrate on appeal that the evidence establishes, as matter of law, all vital facts

in support of the issue. Dow Chem. Co. v. Francis, 46 S.W.3d 237, 241 (Tex. 2001) (per curiam).

When a party complains about the factual sufficiency of the evidence, it must show the

adverse finding is against the great weight and preponderance of the evidence. Id. at 242; PopCap

Games, Inc. v. MumboJumbo, LLC, 350 S.W.3d 699, 722 (Tex. App.—Dallas 2011, pet. denied).

We consider and weigh all of the evidence and set aside the verdict only if the supporting evidence

is so weak or the finding is so against the great weight and preponderance of the evidence that it

is clearly wrong and unjust. Dow Chem., 46 S.W.3d at 242; PopCap Games, 350 S.W.3d at 722.

We measure the sufficiency of the evidence by the jury charge as it was submitted. Romero

v. KPH Consol., Inc., 166 S.W.3d 212, 221 (Tex. 2005). When conducting our review of both

legal and factual sufficiency of the evidence, we are mindful that the jury, as fact finder, was the

sole judge of the credibility of the witnesses and weight to be given their testimony. City of Keller,

168 S.W.3d at 819; Wash Techs. of Am. Corp. v. Pappas, No. 05-16-00633-CV, 2018 WL 718550,

at *5 (Tex. App.—Dallas Feb. 6, 2018, pet. denied) (mem. op.). The jury is free to believe some,

all, or none of a witness’s testimony. Pappas, 2018 WL 718550, at *5. We may not substitute

our judgment for that of the fact finder’s. Id.

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B. NDMI Claim

The jury found Ghani failed to comply with his fiduciary duties to NDMI with respect to

the dissolution of NDMI and that failure was not excused. The trial court granted Ghani’s motion

for JNOV as to these findings. In his first issue, Cruz argues, in part, the trial court erred by

entering JNOV on his NDMI claim. In his first and third cross-issues, Ghani asserts the evidence

is insufficient to support the jury’s answers to Questions 1 and 3, respectively, and in his second

cross-issue, he argues the jury’s answer to Question 2 is against the great weight and

preponderance of the evidence.

1. Jury Charge, Jury’s Findings, and JNOV

Question 1 of the jury charge states MCG owed fiduciary duties as the general partner of

NDMI. To the extent Ghani exercised a degree of control over MCG such that he directed MCG’s

conduct as the general partner regarding the dissolution of NDMI, Ghani owed fiduciary duties to

NDMI. To show Ghani failed to comply with his fiduciary duties to NDMI, Cruz was required to

show:

a. The dissolution transaction was not fair and equitable to NDMI;
b. Ghani did not make reasonable use of the confidence that NDMI placed in him;
c. Ghani did not act in the utmost good faith or exercise the most scrupulous
honesty toward NDMI;
d. Ghani placed his own interests before the interests of NDMI, used the advantage
of his position to gain a benefit for himself at the expense of NDMI, or placed
himself in any position where his self-interest might conflict with his
obligations to NDMI; or
e. Ghani failed to fully and fairly disclose all important information to NDMI.

The jury answered “yes,” finding Ghani failed to comply with his fiduciary duties to NDMI with

respect to the dissolution.

In Questions 2 and 3, the jury determined Cruz did not waive Ghani’s failure to comply

with his fiduciary duties and $2.075 million would fairly and reasonably compensate NDMI for

the damages caused by Ghani’s breach of fiduciary duty. Ghani moved for JNOV on the grounds

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there is no evidence to support the jury’s answer to Question 1, the jury’s answer to Question 2

should be disregarded because he established waiver as a matter of law, and there is no evidence

to support the jury’s answer to Question 3 awarding damages. Ghani’s motion for JNOV did not

challenge that he owed fiduciary duties to NDMI.

2. Background Facts

Evidence, including Ghani’s own testimony, shows Ghani exercised control over NDMI

and directed the day-to-day operations. Ghani explained NDMI needed to be closed because the

referral stream from doctors was declining and not being replaced, Ghani and Cruz were personally

liable for debt on the equipment, and insurance reimbursement rates were dropping. However,

ample evidence shows NDMI was not facing a financial crisis and could have continued operating

successfully, but Ghani wanted to end his partnership with Cruz. There is evidence showing Ghani

withheld financial information while misrepresenting the status of NDMI to induce Cruz to agree

to close NDMI.

a. Access to Financial Data

Ghani and Cruz presented contradictory evidence about whether Cruz had access NDMI’s

complete financial data before he agreed to the dissolution.

i. GHANI’S EVIDENCE

NDMI’s financial information was maintained on a computer using the software

QuickBooks. Zamanian testified the computer was maintained in NDMI’s office and

approximately twenty to thirty steps outside of Cruz’s personal office. Ghani explained one of the

reasons they employed Zamanian, a third-party CPA, was to provide all partners access to financial

information. Cruz and Taba also used Zamanian for personal tax returns and had relationships

with him. Ghani stated that “everybody felt comfortable with him.”

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 According to Ghani, in August or September 2008, Cruz began complaining about access

to financial information even though he “always had access” through Zamanian and Tammy

Boynton. Ghani testified: “I never sent [Cruz] any financials, because I didn’t want to be

responsible for that financial [sic]. That’s why we had the CPA. . . . So we had all the same source

where we get our information from.” Ghani testified that in late 2008 he sent an email to Zamanian

(copying Cruz) stating Cruz was entitled to all financial information and Zamanian needed to make

sure Cruz had what he needed. The email was not shown at trial.

Boynton testified that while she worked for Zamanian, she provided Cruz with any

financial information he requested about NDMI and Plano AMI, but she did not believe Cruz

reviewed it. Zamanian and Ghani knew she provided this information. Before she stopped

working for Zamanian in August 2008, she gave CDs containing backup copies of QuickBooks

records for the businesses to Cruz.

Taba testified the financial information “was always there to be looked at, if someone

wanted to look at it” and the information was always available through Ghani or Zamanian.

Zamanian testified financial information was timely provided to any client who requested it,

“especially for someone who is so close to me. His office was next door to me. How could I not

do this?”

ii. CRUZ’S EVIDENCE

Cruz testified he stopped receiving financial information about the businesses in September

2008 when Boynton stopped working for Zamanian. Taba also testified that although Ghani

provided “all the documents” to Cruz and himself when the business started, he stopped doing so

in later years. On January 5, 2009, Cruz emailed Taba asking if Taba received his Schedule K-1,

a tax document, or “financial [sic] for 2008.” Cruz’s email states he left a multitude of messages

for Zamanian, but did not receive any response. He stated “[i]t is like hitting a wall.” Taba replied

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he had not. When asked whether a person could expect to receive a Schedule K-1 by January 5,

Zamanian replied “absolutely not” because the entire year’s financial data must be compiled before

a Schedule K-1 can issue and, at best, that would not be finished before the end of January.

Zamanian testified the Schedule K-1 usually issued in the summer.

On April 3, 2009, Cruz emailed Zamanian and Ghani “requesting again the detailed

financial reports of Plano and Dallas MRI business, P and L and everything you agreed to provide

me this past Monday.” Cruz testified he was concerned about the financial status of the

partnerships. When asked about the same email, Zamanian stated he provided all information and

did not know what Cruz was seeking. Zamanian recalled an instance when he had to deliver the

same information to Cruz’s office two or three times. Cruz emailed Zamanian and Ghani again

on April 16, 2009 stating: “Despite multiple verbal and written communications, you both have

decided not to give me the information I requested for my tax return. Because of that I have to

request an extension. You both have provided me with partial information which has not helped

me at all. My K-1s do not match my records and I am at an impasse. As a general partner I have

the right to have such documents. I should not even have to ask for them.” Although Cruz testified

he needed tax information and he was trying to determine how Ghani spent money, Zamanian

believed this information was provided to Cruz.

On July 2, 2009, Doug Brady wrote a letter on Cruz’s behalf to Ghani and Zamanian

requesting numerous financial reports for NDMI and Plano AMI. The letter states Cruz, a limited

partner, is entitled to the information. Cruz testified that when this letter was sent, he had not

received financials for nearly one year.

Kimberly Ault Robinson worked for NDMI in the summer of 2008. When asked whether

Ghani instructed her not to share information with Cruz, she answered affirmatively and explained:

“[I]t was a very broad instruction. It was to never discuss anything that I heard in any of the

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facilities regarding business to Dr. Cruz. If I were to go in his office and market to him or check

on how referrals were, I was just not to talk or discuss anything business related with Dr. Cruz. . .

. it was very vague. There was some talks about that the Dallas location was going to close down

and the partners were not going to ask Dr. Cruz to go to the new investment. They were doing it

hush-hush without his knowledge.”

William Meier, an attorney who drafted some documents for NDMI, testified that several

NDMI limited partners voiced concerns about the lack of timely information from Ghani. Cruz

frequently called Meier and complained he was not receiving access to basic information about

NDMI. During board meetings, Meier, Cruz, and Ghani discussed that Ghani needed to be more

transparent and make information available to Cruz so he could have meaningful input as a

member of the board.

Adam Hardison, a lawyer and NDMI limited partner, testified Ghani did not provide

sufficient financial information. On September 3, 2008, Hardison sent a letter to Ghani to force

Ghani “to be transparent to the partners, to comply with the fiduciary duty that we all have, to

provide this information to potential buyers, and why it’s not happening.” The letter requested

Ghani provide numerous pieces of information about NDMI.

While the evidence shows that until approximately September 1, 2008, Cruz had ready

access to financial data through Zamanian and Boynton, some evidence, including Cruz’s

testimony, indicates access to financial information stopped once Boynton left Zamanian’s

employment. Additionally, although the decision to dissolve NDMI was made in December 2008

or January 2009, evidence shows Cruz’s difficulty obtaining financial information continued into

2009. Cruz’s assertion that it was difficult to obtain financial information from Ghani and

Zamanian was confirmed by Denn’s, Hardison’s, and Meier’s testimony.

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 b. NDMI Financially Sound

Scott Hakala, Ph.D., testified as Cruz’s damages expert. Hakala works for a firm that

values businesses and business interests. To value NDMI, he focused on the “market approach”

to valuation, meaning he looked at how much a buyer would pay for the business based on its

present value. The first step in performing the analysis is to identify the value of similar businesses

in the market. He looks for transactions involving companies of similar size and type to determine

which multiple of earnings, multiple of revenue, or other measure that the businesses are being

bought and sold for. Hakala testified the market for MRI centers was active from 2005 through

2012. It was a “very active acquisition market” with private groups looking to buy imaging

practices of “a certain size and type and profitability, and they were paying a certain known rate

for those businesses.”

He noted there were several indications of interest or offers to purchase NDMI along with

Plano AMI. He testified: “we had a number of offers that we could look at and see what people

were offering and then compare that with what we were seeing in reported general stories of what

these firms were being bought, as well as specific identifiable transactions.” He considered the

offers “conservative but reasonable offers consistent with what we were seeing in the imaging

business.” He testified acquiring companies were generally paying “somewhere between three and

six, sometimes a little more than six times EBITDA,2 so they would look at EBITDA as their

primary focus.”

When determining which EBITDA multiple to use, one consideration is the life of the MRI

machine. If the machine is nearing the end of its useable life, then the multiple is lower because a

buyer will need to retrofit the existing machine or purchase a new unit. However, if the MRI

machine has more than half its life remaining and the practice is still growing, a buyer may pay

2
EBITDA is an acronym for the calculation of earnings before interest, taxes, depreciation, and amortization.

–17–
four or five times EBITDA. Other considerations are the referral base and the extent a buyer thinks

it could expand that base and the level of competition among MRI service providers in the area.

Hakala looked at the referral base for NDMI and its historic performance from the time of its

inception until the date he valued the business. He also examined tax returns, portions of the

general ledger in QuickBooks, partnership and organizational documents, and deposition

transcripts of “various individuals” taken during the litigation to ensure he understood how the

business operated as well as its “unique factors.”

Hakala opined NDMI would fall in the “lower middle part” of the EBITDA multiplier

range. He testified it had a “good base of revenue, a good history, a good trend, but they appeared

to have . . . basically leveled out.” The machines would be good for four and a half to five years.

On the conservative side, he estimated “about four times EBITDA was about what we would

typically expect NDMI to be sold for.”

Hakala attempted to determine annual earnings for NDMI by analyzing historical financial

statements. An exhibit used during his testimony shows:

C.

D.

E.

F.

Hakala explained net revenue declined for NDMI from 2006 to 2007 because the MRI

reimbursement rates were reduced. Net revenue from 2007 through 2009 was stable. It fell again

in 2010, which Hakala attributed to NDMI closing its operation in early 2010. The EBITDA,

which Hakala testified is a “pretty good measure of the true profitability of the business,” also fell

from 2006 to 2007 but remained relatively stable in 2007, 2008, and 2009, increasing slightly from

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2008 to 2009. Once Hakala had these numbers, he conducted a “normalizing process” to show

how much profit the business actually generated.

Hakala testified that at the end of 2008, the owners could have sold NDMI for

approximately $3.5 million. Once the net debt of $561,773 was subtracted, the equity value of

NDMI at the end of 2008 was about $2.95 million. Based on his calculations, Hakala did not

believe the decision to dissolve NDMI was justified. NDMI’s value was not maximized by

dissolving the business and, unless the business was sold, a better strategy would have been to

continue operating until it became unprofitable to do so.

When asked whether doctors referring fewer patients to NDMI would affect the future

financial viability of NDMI, Hakala testified: “Some, but not that much.” The potential for

reduced referrals was one of the reasons he used a lower multiplier range for NDMI. Looking at

the net revenue numbers for NDMI in 2008 and 2009, Hakala stated NDMI was not teetering on

the “brink of financial viability.” He believed NDMI “would probably have to lose half or more

of its revenue before you can really start seeing it get to a negative EBITDA where you’d no longer

continue to try and operate it.”

Hakala also used an income-valuation approach to value NDMI, which produced a value

about 30 to 50 percent higher. Hakala testified: “Basically, you get more value if you continue to

own and run it than if you try and sell it to somebody else, because they’re going to discount it for

the risks.” Generally, he explained, the value to the existing owner is higher than to a potential

buyer in the MRI business.

c. Ghani motivated to close NDMI

Some evidence shows Ghani no longer wanted to operate NDMI and was entering into a

new MRI business venture that did not include Cruz. Kimberly Ault Robinson, a former employee,

testified: “There was some talks [sic] about that the Dallas location was going to close down and

–19–
the partners were not going to ask Dr. Cruz to go to the new investment. They were doing it hush-

hush without his knowledge.” Boynton stated Ghani “was just saying that he felt that he wanted

out of that company because he didn’t take it on to do that job for his entire life.”

Additionally, in December 2008, Ghani formed a new business venture, Mesquite AMI,

with his friend Reza Nabavi. Cruz testified Ghani created Mesquite AMI at the same time he

sought to close NDMI by telling Cruz: “We’ve got to close. There is no money, no business going

on.” When Cruz wanted to discuss marketing plans for NDMI so the business would not need to

close, Ghani told Cruz: “[I]t’s too late. I already committed the machines.” Cruz asked Ghani for

clarification, and Ghani told Cruz he committed to selling NDMI’s machines. Cruz testified: “And

that’s the exact time he was in the business, or he’s registered this business with our machines.”

NDMI eventually closed in April 2010 and Nabavi came to NDMI to collect the MRI

machine. Nabavi told Cruz he was going into business with “Mike.” The record includes a service

price quote given to “SASAN, Ltd. or assignee Reza Nabavi, Partner” and made to the attention

of Mike Ghani to de-install an MRI machine located in Dallas and re-install it at a location within

20 miles. The date on the invoice is April 23, 2010.

Ghani testified Cruz gave him authority to sell all of the equipment. Nabavi was interested

in buying the MRI machine and offered to pay more than any other potential buyers. Nabavi

bought the machine and opened a business that Ghani is not part of. The Mesquite AMI proposal

never came to fruition. Ghani denied he planned to open an MRI facility with Nabavi in 2010.

3. Analysis of NDMI Claim

Although Ghani provided an explanation about why NDMI needed to be dissolved and

why the dissolution was not a breach of his fiduciary duties, evidence presented at trial allowed

jurors to reach the opposite conclusion. Some evidence shows Ghani withheld financial

information from Cruz immediately before seeking Cruz’s consent to close the business. That

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information would have shown NDMI was not in financial straits and could continue operating as

a profitable entity. Although Ghani stated the financial problems were due, in part, to declining

reimbursement rates, Hakala testified that occurred in 2006-2007 and the businesses had recovered

financially. Further, although Ghani asserted referrals were declining because Taba and Raroque

were moving their practices away from Dallas, Hakala testified a change would have “some, but

not that much” impact on future financial viability and Cruz stated the impact would be minimal.

A jury could reasonably infer that Ghani acted as he did because he no longer wanted to be

in business with Cruz and wanted to pursue an opportunity with Nabavi. To accomplish this goal,

Ghani falsely told Cruz there was “no money coming in, and we have big debt” to scare him into

agreeing to close NDMI. Even as Ghani testified he was concerned about reimbursement rates

going down and the medical imaging industry becoming less profitable, he formed a new MRI

entity with Nabavi to invest in and pursue opportunities in the same industry and in the same

geographic area. Based on the contradictory evidence, the jury could have disregarded Ghani’s

explanation in favor of the one provided by Cruz.

This is some evidence Ghani placed his own interests before the interests of NDMI, used

the advantage of his position to gain a benefit for himself at the expense of NDMI, or placed

himself in a position where his self-interest might conflict with his obligations to NDMI. Thus,

we conclude there is some evidence to support the jury’s answer to Question 1 that Ghani failed

to comply with his fiduciary duties to NDMI.

Additionally, Hakala’s testimony is sufficient to support the jury’s answer to Question 3

awarding $2.075 million for Ghani’s breach. Hakala testified that the equity value of NDMI at the

end of 2008 was about $2.95 million. Hakala provided a step-by-step process explaining his

methodology to the jury. He stated buyers of medical imaging businesses were paying between

three and six times EBITDA. He explained why, for NDMI, he used a lower multiplier, which

–21–
included some of the concerns raised by Ghani. However, Hakala also explained to the jury how

to reach its own calculation if it believed his numbers were too low or high. He testified: “So it’s

simply multiplication. You have an earnings number, a multiplier to apply the earnings. That

gives you the value of the business.” From that, the jurors could subtract the debt to find the net

equity value of the business, meaning what the business is worth to the partners.

The jury’s damages award is approximately three times EBITDA, which is within the range

of the evidence presented at trial. See Basic Capital Mgmt., Inc. v. Dynex Commercial, Inc., 402

S.W.3d 257, 265 (Tex. App.—Dallas 2013, pet. denied) (jury has discretion to award damages

within range of evidence presented at trial so long as there is a rational basis for calculation). We

conclude there is some evidence to support the jury’s answer to Question 3.

In response to Question 2, the jury determined Ghani’s failure to comply with his fiduciary

duties to NDMI was not excused. The charge instructed the jury that failure to comply is excused

if Cruz waived compliance. The charge defined waiver as the “intentional surrender of a known

right or intentional conduct inconsistent with claiming it.” Although Cruz consented to closing

NDMI, Cruz testified he relied on Ghani’s representations there was “no money coming in, and

we have big debt,” which “came out to be not true.” Cruz stated: “[B]asically, if I would have

known the financial status of the North Dallas Medical Imaging, which was shut down from Mr.

Ghani explaining to me that there was no money in 2008,” he would not have agreed to dissolution.

Cruz also testified he did not know about Mesquite AMI or that this potential venture was a reason

Ghani sought to close NDMI.

From this evidence, the jury could have concluded that, although Cruz consented to closing

NDMI, he did not intentionally surrender a known right. He relied on false information from

Ghani, at the same time Ghani withheld accurate financial information, and he would not have

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consented had he known NDMI was profitable. The evidence does not conclusively establish Cruz

intentionally surrendered a known right.

4. Conclusion

Because more than a scintilla of competent evidence supports the jury’s answers to

Questions 1, 2, and 3, we conclude the trial court erred by disregarding the jury’s answers and

entering JNOV in Ghani’s favor on these questions. Additionally, the jury’s answers to these

questions are not against the great weight and preponderance of the evidence. We sustain Cruz’s

first issue to this extent and we overrule Ghani’s first, second, and third cross-issues.

C. Plano Open Claim

In his first issue, Cruz argues, in part, the trial court erred by granting Ghani’s motion for

JNOV on his Plano Open claim. In his fourth through seventh cross-issues, Ghani asserts the

jury’s answers to Questions 4A, 4B, 5A, and 5B are against the great weight and preponderance

of the evidence. Ghani’s eighth, ninth, and nineteenth cross-issues state the evidence is insufficient

to support the jury’s answers to Questions 6A, 6B, and 22.

1. Jury Charge, Jury’s Findings, and JNOV

Question 4A asked the jury whether Ghani failed to comply with his fiduciary duties, if

any, owed to Plano AMI with respect to the pursuit of Plano Open. The charge stated that, as the

general partner of Plano AMI, GMI owed fiduciary duties to Plano AMI, and, to the extent Ghani

exercised a degree of control over GMI such that he directed GMI’s conduct as a general partner

regarding the pursuit of Plano Open, Ghani “also owed the fiduciary duties.” The charge quoted

paragraphs 6.1(a) and (f) of the Plano AMI Limited Partnership Agreement (“Plano AMI

Agreement”), which are discussed below.

To prove he complied with his fiduciary duties to Plano AMI, Question 4A required Ghani

to show that:

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 a. the transactions were fair and equitable to Plano AMI;
b. Ghani made reasonable use of the confidence that Plano AMI placed in him;
c. Ghani acted in the utmost good faith and exercised the most scrupulous honesty
toward Plano AMI;
d. Ghani did not place his own interests before the interests of Plano AMI, did not
use the advantage of his position to gain a benefit for himself at the expense of
Plano AMI, and did not place himself in any position where his self-interest
might conflict with his obligations to Plano AMI; and,
e. Ghani fully and fairly disclosed all important information to Plano AMI.

The jury answered “No,” meaning Ghani did not comply.

In Question 4B, the jury concluded that failure to comply was not excused. The jury was

instructed that the failure to comply was excused if compliance was waived by Plano AMI.

Question 5A asked the jury whether Ghani complied with his fiduciary duties to GMI with respect

to the pursuit of Plano Open. To prove he complied with his fiduciary duties to GMI, Question

5A required Ghani to show that:

a. the transactions were fair and equitable to GMI;
b. Ghani made reasonable use of the confidence that GMI placed in him;
c. Ghani acted in the utmost good faith and exercised the most scrupulous honesty
toward GMI;
d. Ghani did not place his own interests before the interests of GMI, did not use
the advantage of his position to gain a benefit for himself at the expense of GMI,
and did not place himself in any position where his self-interest might conflict
with his obligations to GMI; and,
e. Ghani fully and fairly disclosed all important information to GMI.

The jury answered “No,” meaning Ghani did not comply. In response to Question 5B, the jury

found the failure to comply was not excused.

In Questions 6A and 6B, the jury was asked what sum of money would compensate

appellants for the damages caused by the breaches of fiduciary duty found in response to Questions

4A and 5A. The jury provided the same response to both Questions 6A and 6B: $1.657 million.

Finally, in response to Question 22, the jury found by clear and convincing evidence that the

injuries found in response to Question 6 resulted from malice or fraud by Ghani.

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 Ghani moved for JNOV on the grounds the jury’s answers to Question 4A, 4B, 5A, and 5B

should be disregarded because the issues were established as a matter of law by the undisputed

evidence. He asserts there is no evidence to support the jury’s answers to Questions 6A, 6B, and

22. Ghani’s motion for JNOV does not challenge that he owed a fiduciary duty to Plano AMI and

GMI. The trial court granted Ghani’s motion for JNOV as to these findings.

2. Fiduciary Duties Owed to Plano AMI

Cruz asserts Ghani breached his fiduciary duties to Plano AMI and GMI by pursuing Plano

Open. Ghani maintains the Plano AMI Agreement expressly permitted him to open and operate

Plano Open. Paragraph 6.1 of the Plano AMI Agreement includes the following two provisions:

(a) Management. . . . [T]he General Partner shall have the full power and
authority, except as otherwise expressly provided in this Agreement, to do all things
deemed necessary or desirable by it to conduct the business of the Partnership,
including, without limitation: (i) the determination of the activities in which the
Partnership will participate. . . .

(f) Outside Activities and Conflicts of Interest. The General Partner or
any Affiliate thereof and any director, officer, employee, agent, or representative
of the General Partner or any Affiliate thereof shall be entitled to and may have
business interests and engage in business activities in addition to those relating to
the Partnership, including business interests and activities in direct competition
with the Partnership. Neither the Partnership nor any of the Partners shall have any
rights by virtue of this Agreement or the partnership relationship created hereby in
any business ventures of the General Partner, any Affiliate thereof, or any director,
officer, employee, agent, or representative of either the General Partner or any
affiliate thereof.

Ghani asserts paragraph 6.1(f) expressly permitted any of the partners, officers, directors, or

employees to open competing businesses. Therefore, Ghani argues, this paragraph expressly

allowed him to pursue Plano Open, a competing business. Cruz disagrees paragraph 6.1(f) gave

Ghani such authority because Ghani owed fiduciary duties to Plano AMI and GMI.

Chapter 153 of the Texas Business Organizations Code governs limited partnerships.

Section 153.152 is titled “General Powers and Liabilities of General Partner” and states in part:

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 Except as provided by this chapter, the other limited partnership provisions, or a
partnership agreement, a general partner of a limited partnership: (1) has the rights
and powers and is subject to the restrictions of a partner in a partnership without
limited partners; and (2) has the liabilities of a partner in a partnership without
limited partners to the partnership and to the other partners.

TEX. BUS. ORGS. CODE ANN. § 153.152(a) (emphasis added). While chapter 153 does not directly

address the extent to which duties and liabilities of general partners in a limited partnership may

be altered by agreement, the italicized language indicates a limited partnership agreement may

modify the liabilities of a general partner.

Section 153.003 states that “in the case not provided for by this chapter and the other

limited partnership provisions, the provisions of Chapter 152 governing partnerships that are not

limited partnerships and the rules of law and equity govern.” Id. § 153.003; see also Doctors

Hosp. at Renaissance, Ltd. v. Andrade, 493 S.W.3d 545, 547 (Tex. 2016). With exceptions, a

“partnership agreement governs the relations of the partners and between the partners and the

partnership.” TEX. BUS. ORGS. CODE ANN. § 152.002(a). The partnership agreement may not

eliminate the duty of loyalty, duty of care, and obligation of good faith. Id. § 152.002(b)(2)-(4).

However, by agreement, the partners “may identify specific types of activities or categories of

activities that do not violate the duty of loyalty if the types or categories are not manifestly

unreasonable.” Id. § 152.002(b)(2). A partner’s duty of loyalty includes refraining from

competing or dealing with the partnership in a manner adverse to the partnership. Id. § 152.205(3).

Additionally, Texas has a strong policy favoring freedom of contract. ConocoPhillips Co.

v. Koopmann, 547 S.W.3d 858, 877 (Tex. 2018) (quoting Phila. Indemnity Ins. Co. v. White, 490

S.W.3d 468, 471 (Tex. 2016)). “Absent compelling reasons, courts must respect and enforce the

terms of a contract the parties have freely and voluntarily entered.” Id. (quoting Phila. Indemnity

Ins. Co., 490 S.W.3d at 471). Generally parties may contract as they wish so long as their

agreement “does not violate positive law or offend public policy.” Id. (quoting Phila. Indemnity

–26–
Ins. Co., 490 S.W.3d at 475). “In certain contexts where the Legislature sets certain rights and

obligations between parties, it has explicitly allowed parties to contract around those rights to a

certain extent.” Id. (citing TEX. BUS. ORGS. CODE § 152.002 (detailing the rights and duties a

partnership agreement can and cannot waive); TEX. PROP. CODE § 92.061). Courts honor the

contractual terms parties use to define the scope of their obligations and agreements, including

limiting fiduciary duties that might otherwise exist. See Strebel v. Wimberly, 371 S.W.3d 267, 284

(Tex. App.—Houston [1st Dist.] 2012, pet. denied) (citing Nat'l Plan Adm'rs, Inc. v. Nat'l Health

Ins. Co., 235 S.W.3d 695, 703 (Tex.2007)); see also Harrison v. Harrison Interests, Ltd., No. 14-

15-00348-CV, 2017 WL 830504, at *4 (Tex. App.—Houston [14th Dist.] Feb. 28, 2017, pet.

denied) (“we must balance the principle that fiduciary duties arise as a matter of law with our

obligation to honor the contractual terms that parties use to define the scope of their obligations

and agreements, including limiting fiduciary duties that might otherwise exist.”).

Here, paragraph 6.1(f) of the Plano AMI Agreement expressly permitted GMI or any of its

directors, officers, employees, agents, or representatives to “engage in business activities in

addition to those relating to the Partnership, including business interests and activities in direct

competition with the Partnership.” Through paragraph 6.1(f), the Plano AMI Agreement identified

a specific type of activity or category of activities that do not violate the duty of loyalty. See TEX.

BUS. ORGS. CODE ANN. § 152.002(b)(2). Cruz does not argue the type of activity or category of

activities identified in paragraph 6.1(f) are manifestly unreasonable. See id. We will honor the

contractual terms the parties used to define the scope of their obligations and agreements, including

limiting fiduciary duties that might otherwise exist. See Strebel, 371 S.W.3d at 284 (citing Nat'l

Plan Adm'rs, Inc., 235 S.W.3d at 703).

Ghani, an officer or director of GMI, pursued Plano Open, which was a business interest

in direct competition with Plano AMI. The parties, through the Plano AMI Agreement, expressly

–27–
allowed Ghani to engage in a business in direct competition with Plano AMI. Because Ghani’s

actions about which Cruz complains were expressly permitted by the Plano AMI Agreement, we

conclude the express limitation of fiduciary duties in the Plano AMI Agreement forecloses Cruz’s

Plano Open claim. Therefore, we conclude the trial court did not err by granting Ghani’s motion

for JNOV on Question 4A.

3. Fiduciary Duties Owed to GMI

In its response to Question 5A, the jury found Ghani failed to comply with his fiduciary

duties owed to GMI with respect to the pursuit of Plano Open. Cruz argues Ghani breached his

fiduciary duty to GMI by creating GMI #2 and usurping the Plano Open opportunity from GMI.

The jury was instructed that as an officer or director of GMI, Ghani owed fiduciary duties

to GMI. The charge required Ghani to establish he, among other things, made reasonable use of

the confidence GMI placed in him, acted in the utmost good faith and exercised the most

scrupulous honesty toward GMI, did not place his own interests before those of GMI, and did not

place himself in any position where his self-interest might conflict with his obligations to GMI in

order to show he complied with his fiduciary duties to GMI. The jury found he did not, and there

is some evidence to support that conclusion.

Cruz, Ghani, and Taba discussed acquiring an open MRI machine to create an additional

revenue stream for Plano AMI. Although the parties would have needed to lease additional space

to add another machine, some evidence shows the open MRI could have been added to the existing

business. Instead of pursuing the open MRI opportunity through GMI, Ghani and Taba created a

new entity, GMI #2. For Ghani and Taba, because the open MRI machine was not expensive and

margins were high, the venture was profitable. This is some evidence Ghani placed his own

interests before the interests of GMI or placed himself in a position where his self-interest might

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conflict with his obligations to GMI. Thus, we conclude there is some evidence to support the

jury’s answer to Question 5A that Ghani failed to comply with his fiduciary duties to GMI. 3

In response to Question 5B, the jury concluded the failure was not excused. The jury was

instructed that the “[f]ailure to comply is excused if compliance is waived by Cruz.” The evidence

does not show Cruz waived compliance, that he intentionally surrendered a known right or

intentionally engaged in conduct inconsistent with claiming it. Rather, there is some evidence

Cruz was interested in adding an open MRI machine to Plano AMI. Ghani, Taba, and Cruz

discussed adding an open MRI machine several times because they considered it a potential

additional revenue stream. Cruz testified he never stated he was against the idea of an open MRI

machine or would veto it. Instead, he explained, Ghani and Taba took the open MRI opportunity

from him. Taken together, this is some evidence Cruz did not waive Ghani’s compliance with his

fiduciary duties and there is some evidence to support the jury’s answer to Question 5B.

Question 6B asked the jury what sum of money would fairly and reasonably compensate

Cruz for the damages proximately caused by the breach of fiduciary duty found in response to

Question 5A. The jury was instructed to consider the following elements of damages and none

other: “The fair market value of Plano Open as of December 31, 2011, plus the total distributions

that Ghani and Taba had received from Plano Open before that date.” The jury answered: $1.657

million.

Hakala testified the value of Plano Open at the end of 2011 was between $1.4 million and

$1.75 million. The jury’s damages award is within the range of the evidence presented at trial.

See Basic Capital Mgmt., 402 S.W.3d at 265 We conclude there is some evidence to support the

jury’s answer to Question 6B.

3
We do not conclude Ghani was required to use GMI as the general partner for the new open MRI entity as a matter of law. We only conclude
that, in light of the jury charge as given, Ghani did not show he complied with his fiduciary obligations to GMI.

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 In Question 22, the jury was asked: “Do you find by clear and convincing evidence that

the injuries, if any, you found in response to Question 6 resulted from malice or fraud by” Ghani?

The jury answered “Yes.” Question 22 was part of the jury’s determination of punitive damages.

See Transp. Ins. Co. v. Moriel, 879 S.W.2d 10, 16 (Tex. 1994) (punitive damages are damages

assessed to punish a defendant for outrageous, malicious, or otherwise morally culpable conduct).

When reviewing the legal sufficiency of the evidence to support a finding that must be proven by

clear and convincing evidence, we look at all the evidence in the light most favorable to the finding

to determine whether a reasonable trier of fact could have formed a firm belief or conviction that

its finding was true.” Horizon Health Corp. v. Acadia Healthcare Co., Inc., 520 S.W.3d 848, 866

(Tex. 2017). We assume the finder of fact resolved disputed facts in favor of its finding if a

reasonable fact finder could do so. Id.

The evidence shows Ghani pursued Plano Open after consulting with legal counsel who

informed Ghani he could pursue the opportunity based on paragraph 6.1(f) of the Plano AMI

Agreement. Additionally, Taba testified that by the time Plano Open was established, neither Cruz

nor Ghani wanted to pursue new businesses together. Although Cruz testified he wanted to add

an open MRI machine to the services offered by Plano AMI in 2007 or 2008, that was before his

relationship with Ghani became acrimonious. Reviewing the evidence under the applicable

standard of review, we conclude there is not clear and convincing evidence that the injuries resulted

from malice or fraud by Ghani.

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 4. Conclusion

We conclude the trial court did not err by granting Ghani’s motion for JNOV on the jury’s

answers to Questions 4A and 22. We overrule Cruz’s first issue to this extent and we sustain

Ghani’s fourth and nineteenth cross-issues. Because the jury should not have considered whether

Ghani’s failure to comply with his fiduciary duty to Plano AMI was excused (Question 4B) or

what amount of damages would compensate for his failure to comply (Question 6A), we do not

consider Cruz’s first issue to this extent or Ghani’s fifth and eight cross-issues.

Because the evidence is sufficient to support the jury’s answers to Questions 5A, 5B, and

6B, we conclude the trial court erred by disregarding the jury’s answers to and entering JNOV in

Ghani’s favor on these questions. We sustain Cruz’s first issue to this extent and we overrule

Ghani’s sixth, seventh, and ninth cross-issues.

D. Plano AMI & GMI Claims

In his first issue, Cruz argues, in part, the trial court erred by entering JNOV in Ghani’s

favor on his Plano AMI and GMI claims. In his tenth through sixteenth cross-issues, Ghani argues

the evidence is insufficient to support the jury’s answers to Question 7, 8, 9A, 9B, 10, and 12, and

the jury’s answer to Question 11 is against the great weight and preponderance of the evidence.

1. Plano AMI Claim: Jury Charge, Jury’s Findings, and JNOV

Question 7 asked the jury whether Ghani actively directed or participated in GMI’s

conversion of the GMI shares belonging to Cruz. The jury answered “Yes.” In response to

Question 8, the jury determined $8,000 would compensate Cruz for his damages proximately

caused by the conversion. Questions 9A and 9B asked the jury whether there was an agreement

that Cruz would be a limited partner in Plano AMI and, if so, what percentage interest he owned.

The jury concluded Cruz possessed a 24% limited partnership interest in Plano AMI as of August

2010. Question 10 asked the jury whether Ghani actively directed or participated in GMI’s

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conversion of Cruz’s limited partnership interest in Plano AMI and the jury answered “Yes.”

Question 11 asked the jury whether Ghani complied with his fiduciary duties to Cruz with respect

to treatment of Cruz as a limited partner in Plano AMI after August 11, 2010. The jury answered

“No,” meaning Ghani failed to comply with his fiduciary duties. In response to Question 12, the

jury determined $617,000 would compensate Cruz for his damages proximately caused by the

conduct found in response to Question 10 or 11. Ghani’s motion for JNOV asserted there is no

evidence to support the jury’s answers to Questions 7, 8, 9A, 9B, and 10, and the jury’s answer to

Question 11 should be disregarded because the issue was established as a matter of law.

2. Plano AMI Claim: Background Facts & Analysis

The parties disputed the ownership structure of GMI and Plano AMI. Cruz maintained he

was a limited partner in Plano AMI and held stock in GMI while Ghani asserted Cruz only owned

stock in GMI. Some evidence shows Cruz was a limited partner in Plano AMI, owned stock in

GMI, and Ghani directed or participated in the conversion of both interests.

a. Cruz Owned a Limited Partnership Interest in Plano AMI

Cruz testified he was a limited partner in Plano AMI. Cruz claimed he, Ghani, and Taba

each owned a 24% limited partnership interest directly in Plano AMI; GMI owned 1% as the

corporate general partner; and physician investors owned the remainder. The Plano AMI limited

partnership agreement lists GMI as the general partner and Ghani, Taba, and Cruz as limited

partners. Ghani signed the Plano AMI Agreement as president of GMI and individually as a

limited partner. Taba and Cruz each signed individually as limited partners. Exhibit A to the

Plano AMI Agreement is titled “List of Partners and Percentage Interest.” It lists GMI as the

general partner owning a 60% interest. Ghani is listed as a limited partner, but no percentage

interest is given. Taba and Cruz are not listed on Exhibit A. Likewise, Exhibit B titled

“Description of Property Contributed by the Partners” lists GMI as the general partner, but does

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not provide the amount of property GMI contributed. Ghani, individually, is listed as a limited

partner, but, again, no amount of property is provided. Taba and Cruz are not listed on Exhibit B.

From 2004 to 2010, Plano AMI made distributions directly to Cruz and Taba, but they did not

receive distributions from GMI. The tax returns for those six years, which Ghani signed, show

Cruz was a limited partner in Plano AMI.

In contrast, Ghani asserted GMI owned 60% of Plano AMI and physician investors owned

the remaining 40%. Cruz, Ghani, and Taba each owned one-third of the GMI stock, but were not

limited partners in Plano AMI. According to Ghani, Cruz and Taba preferred this structure because

holding their ownership interests through GMI concealed their large interests from physician

investors. Cruz was particularly concerned because he would be referring fewer patients to Plano

AMI than he did to NDMI.

Ghani explained Doug Brady, a lawyer hired by Plano AMI, discovered in 2010 that the

tax returns filed for Plano AMI incorrectly showed Cruz and Taba were limited partners in Plano

AMI. Brady instructed Zamanian to file amended tax returns for 2004 through 2010, and the

amended returns only changed the designations reflecting which people were shareholders in GMI

and limited partners in Plano AMI. The amended tax returns show Cruz was a shareholder in GMI

rather than a limited partner in Plano AMI. Ghani explained the error in the tax return occurred

because Zamanian assumed the corporate structure for GMI and Plano AMI mirrored the structure

of MCG and NDMI when it did not.

Although Ghani asserts the documents showing Cruz was a limited partner in Plano AMI

were inaccurate and reflect a series of mistakes, the jury was free to disbelieve this testimony and

instead credit the substantial contradicting evidence. Documentary evidence and Cruz’s testimony

constitute more than a scintilla of competent evidence to support the jury’s answers to Questions

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9A and 9B, in which it concluded there was an agreement for Cruz to be a limited partner in Plano

AMI and he owned a 24% interest as of August 2010.

b. Conversion of Cruz’s Plano AMI Limited Partnership Interest

It is uncontested that Ghani was president of GMI and exercised full control over Plano

AMI. By the summer of 2010, there was conflict between Ghani and Cruz and they no longer

wanted to be business partners. Over the next eighteen months, Ghani dissolved NDMI after

inducing Cruz’s consent by withholding financial information and misrepresenting the status of

the business. Additionally, Ghani started Plano Open, which siphoned customers from Plano AMI.

Two former employees claimed Ghani and his wife, Rona, 4 were looking for a way to exclude

Cruz from the partnerships. One former employee testified she heard Rona talk about their plans

to “get [Cruz] out of the business.” When asked about her understanding of the plan, the former

employee responded: “[T]hey were just going to get him out of the partnership. How that was

going to take place, I don’t know.” The other former employee testified she knew the Ghanis were

unhappy with Cruz and wanted him out of the business. Rona expressed her displeasure that Cruz

“wasn’t carrying his weight, he wasn’t bringing enough business, and [Rona] didn’t feel that he

earned or deserved to have any part of the [distribution] checks or any of the money of the

shareholders.”

At a meeting in June 2010, Ghani was angry with Cruz. According to Cruz, Ghani

threatened him, saying: “Dr. Cruz, you are a traitor. You’re a traitor, and I’m going to hire my

attorneys. I’m going to destroy you, and I’m going to take your license away.” After this meeting,

Ghani and Taba consulted Brady about removing Cruz.

In July 2010, after Cruz sued Ghani, Ghani realized the Plano AMI tax returns erroneously

showed Cruz was a limited partner and no dividends had been declared from GMI. Ghani

4
Because Rona Ghani has the same surname as her husband who is a party to this appeal, we will call her by her first name.

–34–
instructed Zamanian to amend the tax returns and he began recognizing dividends for GMI. Once

the tax returns were amended, they showed Cruz owned his interest only in GMI. Cruz no longer

held any interest in Plano AMI.

Taken together, there is some evidence showing Ghani actively directed or participated in

GMI’s conversion of Cruz’s limited partnership interest in Plano AMI. Because there is sufficient

evidence to support the jury’s answer to Question 10 and it was instructed to consider damages

based on its answer to Question 10 or Question 11, we need not consider the evidence supporting

the jury’s response to Question 11. See TEX. R. APP. P. 47.1.

c. Damages for conversion of Plano AMI Interest

The jury concluded $617,000 would compensate Cruz for his damages proximately caused

by the conversion of his interest in Plano AMI. Ghani’s motion for JNOV asserted there is no

evidence to support this amount.

Hakala performed a similar valuation for Plano AMI as he did for NDMI and used a similar

exhibit during his testimony.

Plano AMI’s revenue and profitability steadily increased in 2008 and 2009. Hakala used the

adjusted EBITDA for Plano AMI and, based on the offers from potential buyers, multiplied it by

four. A high-end multiplier of five would reflect Plano, Texas, as a “premium area” with a good

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growth trend. The product would be between about $6 million and $7.5 million. He testified the

net equity value was between $5.65 million and $7.15 million.

However, by August 2010, the EBITDA “had been reduced substantially.” Hakala testified

“some of the referrals went down and there was a clinic opened really close by called Plano Open

AMI that began to draw revenue off and also incur expenses.” He used a lower multiplier of 3.5

and 4.0 because “they were now facing direct competition nearby, and they had suffered a

significant decline in revenue, so a buyer would be concerned about that.” He estimated the value

was between $2.8 million and $3.2 million. He concluded the net equity was $2.275 million to

$2.675 million. Cruz was a 24% limited partner, meaning his share was worth $546,000 to

$642,000. Ghani argues these calculations fail to account for Cruz’s status as a limited partner

with a minority interest.

Hakala was asked: “If you wanted to find out . . . just what Dr. Cruz’s interest in Plano

AMI was worth, could you take these numbers to do that calculation?” Hakala stated he could and

would do so by multiplying Cruz’s percentage interest by the value of his net equity. “He would

get a pro rata share of his net equity.” When asked why he could calculate Cruz’s share in that

manner, he testified:

The discounts for lack of marketability and some of the other factors,
minority interest discounts, are already built into the prices that are paid for these.
So to this extent, a lot of that’s already factored in.
We are also assuming in a fair market value sense, a willing buyer, willing
seller, and neither under duress. So . . . if Dr. Cruz is not in a financial position
where he has to sell his interests, he doesn’t really want to sell the interest, this is
an awful lot of good income that’s throwing off of [Plano AMI]. He’s getting 30
percent of this income every year. He’s getting a lot of value out of Plano AMI for
his money. He wouldn’t ordinarily want to or need to sell, so the question is what
do I have to offer to entice him to sell to me? Because he’s not openly saying, I
want to sell.

Hakala’s testimony shows he considered Cruz’s status as a limited partner and determined, in this

situation, the minority interest discount was “already built into the prices.”

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 The jury’s damages award is within the range of evidence presented at trial. See Basic

Capital Mgmt., 402 S.W.3d at 265. We conclude there is more than a scintilla of competent

evidence to support the jury’s answer to Question 12.

d. Malice or Fraud in the Conversion of Cruz’s Interest in Plano AMI

Question 23 asked, in part, whether the jury found by clear and convincing evidence the

injuries it found in response to Question 12 resulted from malice or fraud by Ghani.5 Malice is

defined as “a specific intent by Ghani to cause substantial injury or harm to Cruz.” Evidence

shows Ghani converted Cruz’s interest in Plano AMI after telling him: “Dr. Cruz, you are a traitor.

You’re a traitor, and I’m going to hire my attorneys. I’m going to destroy you, and I’m going to

take your license away.” He then had the tax returns for six years amended to show Cruz only

owned an interest in GMI, thereby converting Cruz’s shares in Plano AMI.

Viewing the evidence in the light most favorable to the jury’s finding, a reasonable fact

finder could have formed a firm belief that Ghani had a specific intent to cause substantial injury

or harm to Cruz. We conclude the evidence is legally sufficient to support the jury’s answer to

Question 23.

3. Conclusion: Plano AMI Claim

Because the evidence is legally sufficient to support the jury’s answers to Questions 9A,

9B, 10, 12, and 23, we conclude the trial court erred by disregarding the jury’s answers to and

entering JNOV in Ghani’s favor on these questions. We sustain Cruz’s first issue to this extent

and we overrule Ghani’s twelfth, thirteenth, fourteenth, sixteenth, and twentieth cross-issues. We

need not consider whether the evidence is sufficient to support the jury’s answers to Question 11

5
Question 23 was premised on the jury’s response to Question 8 or Question 12. As discussed below, we conclude no evidence supports the
jury’s response to Question 8. Therefore, we limit our analysis of Question 23 to Question 12.

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and, thus, we do not consider Cruz’s first issue to this extent or Ghani’s fifteenth cross-issue. See

TEX. R. APP. P. 44.1.

4. Conversion of Cruz’s Shares of GMI

The jury found Ghani participated in the conversion of Cruz’s shares in GMI (Question 7)

and $8,000 would compensate him for the conversion (Question 8). Ghani’s motion for JNOV

asserted there is no evidence to support the jury’s answers to Questions 7 and 8. Because we

conclude there is no evidence to support the jury’s answer to Question 8, the damages question,

we need not consider whether the evidence supports its answer to Question 7.

It is uncontested that Cruz was removed as a shareholder from GMI and was paid nothing

for his shares. The parties dispute whether Ghani and Taba were justified in removing Cruz.

Assuming, as the jury found, that they were not justified, Cruz presented no evidence of his

damages. Hakala testified about the value of NDMI, Plano AMI, and Plano Open. He offered no

testimony about the value of GMI and, more specifically, the value of Cruz’s interest in GMI. We

have found no other evidence in the record that would show the value of Cruz’s interest in GMI

on August 11, 2010, the date provided in the jury charge. In his brief, Cruz makes no argument in

support of the jury’s response to Question 8. Based on our review of the record, we conclude there

is no evidence supporting the jury’s answer to Question 8. We overrule Cruz’s first issue to this

extent and sustain Ghani’s eleventh cross-issue. We need not consider Ghani’s tenth cross-issue

asserting the evidence is insufficient to support the jury’s answer to Question 7. See TEX. R. APP.

P. 47.1.

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E. Ault Claims

In his first issue, Cruz argues, in part, the trial court erred by entering JNOV in Ghani’s

favor on his claims arising from litigation filed by Kimberly Ault Robinson,6 a former employee.

In his seventeenth and eighteenth cross-issues, Ghani argues the jury’s answer to Question 19 is

against the great weight and preponderance of the evidence and the evidence is insufficient to

support the jury’s answer to Question 20.

1. Jury Charge, Jury’s Findings, and JNOV

Question 19 asked the jury whether Ghani failed to comply with his fiduciary duties to

NDMI with respect to payments made concerning the Ault litigation on behalf of Rona Ghani.

The charge states that Ghani had to show:

a. the payments were fair and equitable to NDMI;
b. Ghani made reasonable use of the confidence that NDMI placed in him;
c. Ghani acted in the utmost good faith and exercised the most scrupulous honesty
toward NDMI;
d. Ghani did not place its [sic] own interests before the interests of NDMI, did not
use the advantage of his position to gain a benefit for himself at the expense of
NDMI, and did not place himself in any position where his self-interest might
conflict with his obligations to NDMI; and,
e. Ghani fully and fairly disclosed all important information to NDMI.

The jury answered “No,” meaning Ghani did not comply with his fiduciary duties and, in response

to Question 20, determined the amount of $95,000 would compensate NDMI for its damages.

2. Background Facts

Rona Ghani worked as the marketing director for NDMI and Plano AMI. Ault was hired

to work with Rona and she worked for NDMI for approximately 90 days in 2008. After leaving

NDMI, Ault sued Rona and NDMI alleging Rona forged her name on a non-compete agreement

and sent the forged document to her new employer, causing her new employment to be terminated.

6
At the time Kimberly Ault Robinson filed her lawsuit, she was known as Kimberly Ault. At the time of trial in this matter, her name was
Kimberly Ault Robinson. Because all parties refer to the underlying litigation as the Ault claims or Ault litigation, we will do so as well and, for
purposes of this analysis, we will refer to Kimberly Ault Robinson as “Ault.”

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NDMI paid legal fees on behalf of Rona and itself to defend the lawsuit and paid to settle the

lawsuit. NDMI did not seek indemnification from Rona.

Cruz testified Ghani did not inform him about the Ault litigation and he did not participate

in the decision to pay expenses related to the litigation or settlement. Ghani testified he did inform

Cruz who replied: “I want you to handle it. I don’t have time.” Taba testified Ghani told him that

Rona contacted all of the NDMI partners and told them NDMI was paying the defense costs.

3. Law & Analysis

Cruz argues Ghani breached his fiduciary duties by not causing NDMI to seek

indemnification from Rona. Under Texas law, the availability of common law indemnity is

extremely limited. Mahrouq Enterprises Intern. (MEI), Inc. v. Griffin, No. 05-10-00071-CV, 2012

WL 1537460, at *4 (Tex. App.—Dallas May 1, 2012, no pet.) (mem. op.) (citing Affordable

Power, L.P. v. Buckeye Ventures, Inc., 347 S.W.3d 825, 833 (Tex. App.—Dallas 2011, no pet.)).

Common law indemnity survives in Texas only in products liability actions to protect an innocent

retailer in the chain of distribution and in negligence actions to protect a defendant whose liability

is purely vicarious in nature. Id. (citing Affordable Power, 347 S.W.3d at 833). Vicarious liability

is liability placed upon one party for the conduct of another, based solely upon the relationship

between the two. Id. (citing Affordable Power, 347 S.W.3d at 833). In a case in which one

defendant’s liability is premised solely on respondeat superior, that defendant’s liability is purely

vicarious, and a claim for common law indemnity exists. Id. (citing Affordable Power, 347 S.W.3d

at 833). There is no right of indemnity against a defendant who is not liable to the plaintiff. Id.

(citing Affordable Power, 347 S.W.3d at 833).

When a party seeking indemnity, as Cruz argues NDMI should have, settles the claim of

the potential indemnitor (Rona) without a judicial determination of the indemnitor’s liability to the

plaintiff (Ault), the party “must satisfy three elements in order to be entitled to indemnity: 1) that

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it was potentially liable to the plaintiffs; 2) that the settlement was made in good faith; and 3) that

the settlement was a reasonable amount under the circumstances.” Id. at *5 (citing St. Anthony’s

Hosp. v. Whitfield, 946 S.W.2d 174, 179–80 (Tex. App.—Amarillo 1997, writ denied)). Upon such

a showing, the indemnitee may recover the amount paid in settlement of the claim. Id. (citing St.

Anthony’s Hosp., 946 S.W.2d at 179–80).

There was no judicial determination of Rona’s liability to Ault. There is no evidence that

in this record showing NDMI could have met the three elements listed above that are required to

be entitled to indemnity. See id. at *4. Even if we assume NDMI was potentially liable to Ault,

there is no evidence the settlement was made in good faith or the amount of the settlement was

reasonable.

Because we conclude there is no evidence NDMI was entitled to indemnification against

Rona, we also conclude there is no evidence Ghani breached his fiduciary duty by not seeking that

indemnification. Additionally, the jury’s finding that Ghani breached his fiduciary duty by not

seeking indemnification from Rona is against the great weight and preponderance of the evidence.

To the extent Cruz argues in his brief that the trial court erred by excluding evidence

concerning Ault’s allegations of forgery, Cruz provides no explanation of how the trial court’s

decision was an abuse of discretion, see In re J.P.B., 180 S.W.3d 570, 575 (Tex. 2005), or caused

reversible error, see TEX. R. APP. P. 44.1(a). Having reviewed Cruz’s offer of proof of the evidence

excluded by the trial court, we cannot conclude the trial court abused its discretion or the exclusion

of evidence resulted in reversible error.

4. Conclusion

We conclude the trial court did not err by granting Ghani’s motion for JNOV on the jury’s

answers to Questions 19 and 20. We overrule Cruz’s first issue to this extent. We sustain Ghani’s

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seventeenth cross-issue and we need not consider his eighteenth cross-issue challenging the

damages awarded by the jury based on its finding of breach of fiduciary duty.

F. Salary Claims

In his second issue, Cruz argues the trial court erred by refusing to enter judgment on his

claim that Ghani improperly paid a salary to himself.

1. Background Facts

Ghani believed he should be compensated for managing the businesses because he

performed the same functions as a management company, which would be paid for its services.

Cruz opposed paying Ghani because he believed the partners were compensated through

distributions.

The NDMI partnership agreement precludes the general partner from receiving

compensation for services rendered on behalf of the partnership. However, the Plano AMI

partnership agreement permits the general partner to receive compensation. Ghani wrote a letter

dated November 1, 2007, to Taba and himself, stating GMI, the general partner of Plano AMI and

manager of its business affairs, would begin paying compensation to Ghani and Taba. Ghani

would receive $8,000 per month for acting as GMI’s president and overseeing the day-to-day

affairs of Plano AMI on behalf of GMI. Taba would receive $2,500 per month for providing

contrast services for patients. The minutes of the annual meeting of the GMI board of directors

reflect Ghani, Taba, and Cruz were present at a meeting held on November 15, 2007. Cruz

disputed he was present and Taba’s testimony indicates Cruz may not have been. The meeting

minutes state: “IT IS FURTHER RESOLVED, that the compensation agreement entered into by

the officers of the Corporation on or about November 1, 2007, a copy of which is attached hereto,

is hereby adopted, approved and ratified by the Board of Directors of the Corporation.” The

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minutes are signed by Taba as the secretary and Ghani as the chairman. Taba testified the

November 1, 2007 letter may have been created after September 1, 2008.

From December 2008 through April 2010, Plano AMI paid $8,000 per month to MG

International. The record shows MG stands for Mike Ghani. Ghani told Taba that the salary was

less than a management company would be paid and Taba did not consider the salary unfair.

2. Jury’s Findings

The jury found Ghani failed to comply with his fiduciary duties to Plano AMI with respect

to the payments made to himself (Question 13), but awarded $0 in damages (Question 14). Ghani

did not move for JNOV on the liability question and, thus, has not challenged the finding he

breached his fiduciary duties by making payments to himself. The trial court did not award

damages to Cruz on this claim. On appeal, Cruz argues the trial court should have entered

judgment ordering disgorgement of Ghani’s compensation.

3. Law & Analysis

Courts may fashion equitable remedies such as disgorgement and forfeiture to remedy a

breach of a fiduciary duty. Cooper v. Campbell, No. 05-15-00340-CV, 2016 WL 4487924, at *10

(Tex. App.—Dallas Aug. 24, 2016, no pet.) (mem. op.) (citing ERI Consulting Eng’r, Inc. v.

Swinnea, 318 S.W.3d 867, 874, 873-75 (Tex. 2010); Burrow v. Arce, 997 S.W.2d 229 (Tex. 1999);

Dernick Resources, Inc. v. Wilstein, 471 S.W.3d 468, 482 (Tex. App.—Houston [1st Dist.] 2015,

pet. denied)). Disgorgement is an equitable forfeiture of benefits wrongfully obtained. Id. (citing

In re Longview Energy Co., 464 S.W.3d 353, 361 (Tex. 2015) (orig. proceeding); Swinnea v. ERI

Consulting Eng’r, Inc., 481 S.W.3d 747, 752 (Tex. App.—Tyler 2016, no pet.)). A party may be

required to forfeit benefits when a person rendering services to another in a relationship of trust

breaches that trust. See In re Longview Energy Co., 464 S.W.3d 361.

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 “We have said that such equitable forfeiture ‘is not mainly compensatory . . . nor is it

mainly punitive’ and ‘cannot . . . be measured by . . . actual damages.’” Id. (quoting Burrow, 997

S.W.2d at 240). Disgorgement is compensatory in the same sense attorney fees, interest, and costs

are, but it is not damages. Id. As a result, equitable forfeiture is distinguishable from an award of

actual damages incurred as a result of a breach of fiduciary duty. Cooper, 2016 WL 4487924, at

*10 (citing Burrow, 997 S.W.2d at 240; McCullough v. Scarbrough, Medlin & Assocs., Inc., 435

S.W.3d 871, 905 (Tex. App.—Dallas 2014, pet. denied); Swinnea, 481 S.W.3d at 753). A claimant

need not prove actual damages to succeed on a claim for forfeiture because they address different

wrongs. Id. (citing Burrow, 997 S.W.2d at 240; Swinnea, 481 S.W.3d at 753). In addition to

serving as a deterrent, forfeiture can serve as restitution to a principal who did not receive the

benefit of the bargain due to his agent’s breach of fiduciary duty. Id. (citing Swinnea, 481 S.W.3d

at 753 (citing Burrow, 997 S.W.2d at 237–38)). However, forfeiture is not justified in every

instance in which a fiduciary violates a legal duty because some violations are inadvertent or do

not significantly harm the principal. Cooper, 2016 WL 4487924, at *10 (citing Burrow, 997

S.W.2d at 241; Dernick, 471 S.W.3d at 482; Miller, 142 S.W.3d at 338).

Whether a forfeiture should be imposed must be determined by the trial court based on the

equity of the circumstances. Cooper, 2016 WL 4487924, at *10 (citing Burrow, 997 S.W.2d at

245; Swinnea, 481 S.W.3d at 753; Dernick, 471 S.W.3d at 482). However, certain matters may

present fact issues for the jury to decide, such as whether or when the alleged misconduct occurred,

the fiduciary’s mental state and culpability, the value of the fiduciary’s services, and the existence

and amount of harm to the principal. Id. (citing Dernick, 471 S.W.3d at 482; Miller, 142 S.W.3d

at 338). Once the factual disputes have been resolved, the trial court must determine: (1) whether

the fiduciary’s conduct was a “clear and serious” breach of duty to the principal; (2) whether any

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monetary sum should be forfeited; and (3) if so, what the amount should be. Id. (citing Swinnea,

481 S.W.3d at 753 (citing Burrow, 997 S.W.2d at 245–46); Dernick, 471 S.W.3d at 482).

The record shows Ghani failed to comply with his fiduciary duties to Plano AMI with

respect to the payments made to himself. The jury found the injury resulted from Ghani’s malice

(Question 24). Although Cruz, in his sixth amended petition, sought “disgorgement/fee forfeiture”

for Ghani’s misconduct and the issue was argued by counsel at the hearing on Ghani’s motion for

JNOV, the record does not show whether the trial court considered an equitable forfeiture award.

Because Cruz requested the remedy and it was timely brought to the trial court’s attention, we

conclude the request for equitable relief should be remanded to the trial court for consideration of

the factors described by the Texas Supreme Court in ERI Consulting Engineers, Inc. v. Swinnea,

318 S.W.3d 867, 875 (Tex. 2010). We sustain Cruz’s second issue to this extent.

G. Ghani’s Counterclaim

In his third issue, Cruz argues the trial court denied his right to due process when it awarded

judgment on Ghani’s counterclaim without any adjudicatory proceeding. In 2012, Cruz obtained

a judgment against Ghani for over $4 million. See Plano AMI v. Cruz, No. 05-12-01480-CV, 2015

WL 128592 (Tex. App.—Dallas Jan. 9, 2015, no pet.). Ghani appealed, but did not supersede the

judgment. While Ghani’s appeal was pending, Cruz obtained a writ of execution and caused a

condominium owned by Ghani to be sold for $25,000. After the execution sale, this Court reversed

the judgment on which execution issued. On remand, Ghani asserted a counterclaim for wrongful

execution, which Cruz generally denied. The trial court rendered judgment that Ghani recover

$217,500, the stipulated fair market value of Ghani’s condominium at the time of the execution

sale, on his counterclaim. The trial court also awarded Ghani prejudgment interest, post-judgment

interest, and costs. See Cruz v. Ghani, No. 05-17-00566-CV, 2018 WL 446425, at *1 (Tex. App.—

Dallas Jan. 17, 2018, no pet.).

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 Cruz asserts the trial court conducted no adjudication on Ghani’s right to relief, either

through a trial or motion for summary judgment, before entering judgment in Ghani’s favor. Thus,

Cruz argues, judgment on Ghani’s counterclaim is improper and, by entering the judgment, the

trial court denied his right to due process. Ghani responds the parties presented their legal and

factual arguments on the condominium issue to the trial court.

Before trial began, Ghani’s counsel informed the court there were two “administrative

issues” the parties “agreed to put off until after [the] verdict. One is we have a claim for wrongful

foreclosure with respect to a condominium that was foreclosed on judgment. We’ve agreed to just

hold that and deal with that in the future.” Five months after the trial concluded, the trial court

held a hearing on Ghani’s motion for JNOV. During the hearing, the trial court stated:

THE COURT: Let’s talk about the condominium. Defendants argue that
they should be awarded judgment on the counterclaim for the levy of execution on
the condominium. Help me. . . . I don’t remember hearing about this during trial.
[Counsel for Ghani]: You didn’t. . . . That’s the reason . . . you wouldn’t
remember. . . . [W]hat you may recall faintly at this point was before the trial started
in one of the final pretrial conferences, [counsel for both parties] agreed to reserve
the condominium issue until after the trial was over.

The parties then presented brief arguments on the condominium issue. No evidence was admitted.

Six months after the hearing, the trial court entered its final judgment which states, in part:

By stipulation of the parties, the issues raised by defendant Ghani’s counterclaim
were reserved for future determination by the Court. The parties have stipulated
that on February 4, 2012, a condominium located at . . . , belonging to defendant
Ghani was sold at execution sale pursuant to this Court’s judgment of August 7,
2012, which was later reversed on appeal, and that the fair market value of the
condominium on the date of sale was $217,500. Plaintiff Cruz has deposited in the
registry of the Court the $25,000 received from the execution sale. The Court
concludes that defendant Ghani is entitled to restitutionary remedies to recover
what was taken from him pursuant to a judgment later reversed.

Cruz filed a motion to modify the judgment or for new trial on Ghani’s counterclaim.

Due process requires that a party receive “reasonable notice” of trial. Boateng v.

Trailblazer Health Enterprises, L.L.C., 171 S.W.3d 481, 492 (Tex. App.—Houston [14th Dist.]
–46–
2005, no pet.) (quoting Peralta v. Heights Med. Ctr., Inc., 485 U.S. 80, 84 (1988)). The record

shows the trial court ruled on the merits of Ghani’s counterclaim without giving notice that the

JNOV hearing would also be a trial on the counterclaim. Rather, the trial judge raised the issue of

the counter-claim at the JNOV hearing and the parties then briefly presented arguments. There

was no opportunity to present evidence. The purpose of the hearing was to determine the merits

of the motion for JNOV, not to adjudicate the merits of Ghani’s counterclaim. Thus, we conclude

that the trial court erred by considering the JNOV hearing a trial on the merits of Ghani’s counter-

claim and entering judgment on the claim. See Knutson v. Friess, No. 09-08-00181-CV, 2009 WL

1331100, at *4 (Tex. App.—Beaumont May 14, 2009, no pet.) (citing Mocega v. Bradford

Urquhart M.D., 79 S.W.3d 61, 64–65 (Tex. App.—Houston [14th Dist.] 2002, pet. denied)

(reversing dismissal of medical malpractice action because trial court did not give notice of hearing

on motion to dismiss); Green v. McAdams, 857 S.W.2d 816, 819 (Tex. App.—Houston [1st Dist.]

1993, no writ) (holding trial court erred by rendering post-answer default judgment after party

failed to appear at trial because trial court gave defaulting party no notice of trial setting); Seckers

v. Ocean Chems., Inc., 845 S.W.2d 317, 318–319 (Tex. App.—Houston [1st Dist.] 1992, no writ)

(holding trial court erred in dismissing case as a discovery sanction because trial court gave no

notice of sanctions hearing to the sanctioned party); Palmer v. Cantrell, 747 S.W.2d 39, 41 (Tex.

App.—Houston [1st Dist.] 1988, no writ) (same as Seckers)). We sustain Cruz’s third issue.

CONCLUSION

In accordance with this opinion, we affirm the trial court’s judgment in favor of Ghani on

Cruz’s claim Ghani failed to comply with his fiduciary duty to Plano AMI by pursuing Plano Open,

Cruz’s GMI claim, and the Ault claim. We reverse the trial court’s judgment in favor of Ghani on

Cruz’s claim Ghani failed to comply with his fiduciary duties to GMI by pursuing Plano Open,

Cruz’s NDMI claim, the Plano AMI claim, and his salary claim. We reverse the trial court’s

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judgment in favor of Ghani on his counterclaim. We remand for the trial court to enter judgment

in favor of appellants on the NDMI claim, Plano AMI claim, salary claim, and claim Ghani failed

to comply with his fiduciary duties to GMI by pursuing Plano Open; to consider Cruz’s request

for equitable relief on the salary claim; and to conduct further proceedings on Ghani’s

counterclaim.

/Craig Stoddart/
CRAIG STODDART
JUSTICE

170566HF.P05

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 Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT

ERWIN CRUZ AND THE ERWIN A. On Appeal from the 101st Judicial District
CRUZ FAMILY LIMITED Court, Dallas County, Texas
PARTNERSHIP, BOTH OF THEM Trial Court Cause No. DC-10-16274.
INDIVIDUALLY AND ON BEHALF OF Opinion delivered by Justice Stoddart.
NORTH DALLAS MEDICAL IMAGING, Justices Francis and Myers participating.
LP, PLANO AMI, LP, AND GHANI
MEDICAL INVESTMENTS, INC.,
Appellants

No. 05-17-00566-CV V.

MEHRDAD GHANI, Appellee

In accordance with this Court’s opinion of this date, the judgment of the trial court is
AFFIRMED in part and REVERSED in part.

We REVERSE that portion of the trial court’s judgment in favor of appellee Mehrdad
Ghani on his counterclaim.

We REVERSE that portion of the trial court’s judgment in favor of appellee Ghani on
the claims by appellants Erwin Cruz and the Erwin A. Cruz Family Limited Partnership, both of
them individually and on behalf of the North Dallas Medical Imaging, L.P. (“NDMI”), Plano
AMI, LP (“Plano AMI”), and Ghani Medical Investments, Inc. (“GMI”) that Ghani failed to
comply with his fiduciary duties to GMI by pursuing Plano Open, failed to comply with his
fiduciary duties to NDMI, the failure was not excused, and NDMI suffered damages; that Cruz
was a 24% limited partner of Plano AMI, Ghani actively directed or participated in GMI’s
conversion of Cruz’s Plano AMI limited partnership interest, and Cruz suffered damages as a
result; and that Ghani failed to comply with his fiduciary duties to Plano AMI with respect to
salary payments made to himself.

We AFFIRM that portion of the trial court’s judgment in favor of appellee Ghani on the
claims by appellants that Ghani failed to comply with his fiduciary duties to Plano AMI by
pursuing Plano Open, Ghani actively directed or participated in GMI’s conversion of shares
belonging to Cruz, which caused damages to Cruz; and Ghani failed to comply with his fiduciary

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duties to NDMI with respect to payments made concerning the Ault Litigation on behalf of Rona
Ghani.

We REMAND this cause to the trial court for further proceedings consistent with this
opinion.

It is ORDERED that each party bear its own costs of this appeal.

Judgment entered this 13th day of December, 2018.

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