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Vuong v. Luk

Court of Appeals of Texas, First District

December 19, 2013

DAVID VUONG AND TOMMY T. NGUYEN, Appellants
v.
TAIWAI LUK, Appellee

On Appeal from the 113th District Court Harris County, Texas Trial Court Case No. 2008-38471

Panel consists of Justices Keyes, Massengale, and Brown.

MEMORANDUM OPINION [1]

PER CURIAM

The trial court found appellant Tommy Nguyen liable for violating the Deceptive Trade Practices Act ("DTPA") in the course of selling a restaurant to appellee Taiwai Luk. The trial court further found appellant David Vuong, who drafted the bill of sale for Nguyen and Luk, liable for legal malpractice. The trial court entered judgment against Nguyen and Vuong, jointly and severally, for $62, 600, representing the amount Luk invested in the restaurant. The trial court further ordered Nguyen to pay $125, 200 in treble damages for a knowing violation of the DTPA and $25, 000 for Luk's legal fees relating to that claim. Both Nguyen and Vuong appeal.

In his sole issue, Nguyen challenges the sufficiency of the evidence to support the trial court's judgment. Specifically, he argues that Luk's incompetence led to his business failure, that he did not breach his contractual obligations, that Luk failed to establish his damages, and that the trial court erred in admitting "expert testimony from unqualified witnesses."

Vuong argues, in three issues, that: (1) the judgment against him is impermissible because it would award Luk a "double recovery"; (2) his actions were not the proximate cause of Luk's damages; and (3) the evidence is legally insufficient to support the trial court's findings of legal malpractice.

We affirm.

Background

On December 11, 2007, Gary Rosenbaum leased a restaurant space at 2118 Clinton Drive to Nguyen for the purpose of operating a Wild Wild Wings restaurant. The lease term was one year beginning on March 1, 2008. Specifically, the lease provided that Nguyen, as lessee, "shall use the leased premises for the purpose of operating a restaurant, titled 'Wild Wild Wings' and allied businesses connected therewith." Paragraph VI of the lease stated: "Lessee further covenants that he/she will not assign this lease or his/her rights under said lease, nor sublet the whole or any part of said premises . . . without the consent of the Lessor in writing and such consent shall not unreasonably be withheld."

In January 2008, Nguyen met Luk. Luk was interested in purchasing a restaurant and Nguyen showed him two restaurant locations, including the Wild Wild Wings restaurant, which was not yet open because Nguyen was remodeling. Luk decided to purchase the Wild Wild Wings restaurant from Nguyen.

On February 2, 2008, Luk agreed to pay Nguyen $60, 000 for the Wild Wild Wings restaurant. That same day, Nguyen and Luk visited the office of attorney David Vuong to complete the bill of sale and close the transaction. The bill of sale provided that the transferred business was the Wild Wild Wings Restaurant located at 2118 Clinton Drive, Galena Park, Texas. The bill of sale further provided that

Seller [Nguyen] shall sell, assign, transfer, convey, and deliver to Buyer [Luk], and Buyer shall purchase from Seller, on the Closing Date (defined herein), all of the right, title and interest in and to all of the assets of Seller, more particularly all the assets of Wild Wild Wings Restaurant located at 2118 Clinton Dr. Galena Park . . . as adjusted in the normal course of business prior to Closing, to include, but not limited to the following:
• Seller agrees to train Buyer for one month and to give recipes to Buyer; however Buyer promises not to give recipes to anyone else without the approval of Seller in writing. Exception, if in the future Buyer is to [sell] the restaurant Buyer is allowed to teach and train the new Buyers and give recipes to new Buyers.
• One Wok

The bill of sale did not define the term "Closing Date, " but it provided that "Buyer begins to move in as of February 2, 2008." The bill of sale also included an "as is" provision which stated:

WITH THE EXCEPTION OF THE WARRANTIES OF TITLE, INCLUDING THE WARRANTY THAT NO LIENS EXIST ON THE TRANSFERRED PROPERTIES EXCEPT AS RECITED, SELLER HAS MADE NO AFFIRMATION OF FACT OR PROMISE RELATING TO THE TRANSFERRED PROPERTIES THAT HAS BECOME ANY BASIS OF THIS BARGAIN, AND FURTHER, SELLER HAS MADE NO AFFIRMATION OF FACT OR PROMISE RELATING TO THE TRANSFERRED PROPERTIES THAT WOULD CONFORM TO ANY SUCH AFFIRMATION OR PROMISE. SELLER DISCLAIMS ANY WARRANTY OF FITNESS FOR ANY PARTICULAR PURPOSE WHATEVER WITH RESPECT TO THE TRANSFERRED PROPERTIES. THE TRANSFERRED PROPERTIES ARE SOLD ON AN "AS IS" BASIS.

Finally, the bill of sale contained the following representation, among others: "Seller has authority to convey the Property to Buyer. This contract is, and all documents required by this contract to be executed and delivered to Buyer at closing will be, duly authorized, and delivered by Seller."

Luk paid Nguyen $60, 000 in the form of a cashier's check. At Nguyen's direction, the cashier's check was made payable to Tra My Pham, an associate of Nguyen. Luk also paid Vuong $300 for his work in drafting the bill of sale.

Nguyen then helped Luk make sauces for one month, filed the proper paperwork with Harris County to withdraw himself as the owner of the restaurant as listed on an assumed name certificate, and gave Luk the recipes for the restaurant as agreed in the bill of sale. Luk also purchased a refrigerator and two stoves for use in the restaurant.

On February 25, 2008, Luk opened the restaurant. In late March, Nguyen and Luk met with Rosenbaum to discuss assigning the lease to Luk. Nguyen told Rosenbaum that Luk was his father and asked permission to "slide" the lease over to Luk while Nguyen was in Vietnam. Rosenbaum repeatedly refused this request. Rosenbaum later accepted payment of rent for the month of April 2008 from Luk, believing that Luk was paying on behalf of Nguyen because Nguyen had often paid in cash or had others pay for him.

On April 4, 2008, Luk informed Rosenbaum that he would no longer operate the restaurant, returned the keys to the leased space to Rosenbaum, and left the restaurant. This was the first time Rosenbaum was informed that Luk had been operating the restaurant and not Nguyen. Rosenbaum called Nguyen, who reopened the restaurant the next day and continued to operate the restaurant through the original lease term.

Luk filed suit against Nguyen and Vuong. He later amended his petition to include Tra My Pham and Chick & Wings, Inc., a company that Nguyen at some point claimed to represent in the transaction to sell the Wild Wild Wings restaurant. Pham and Chick & Wings, Inc. failed to appear, and the trial court entered default judgments against each of them in the amount of $61, 100, which included the cost of purchasing the restaurant, April 2008 rent, and the amount Luk paid to David Vuong for preparing the bill of sale. These judgments were severed from the suit against Nguyen and Vuong and became final.

Luk claimed that Nguyen had breached a contract with Luk by not properly training him and by not providing the correct recipes. He also claimed that Nguyen had made fraudulent misrepresentations; that he had made negligent misrepresentations concerning the ability to assign the lease when he stated that Rosenbaum would allow the assignment and would give Luk a lease for five years at $800 per month; and that Vuong and Nguyen had conspired to commit fraud against him. He also asserted the Vuong had committed legal malpractice.

At the bench trial, Nguyen testified that Rosenbaum had given him "a note saying that he—whoever want[s] to come in—as long as me or Mr. Luk who paid the lease—who paid the rent for the space, it should be okay." Nguyen testified that he gave this note to his attorney, but the attorney did not know what Nguyen was referring to. The note was never produced at trial. Nguyen again stated that both he and Luk went to Rosenbaum and that Rosenbaum's only concern was that he receive the rental payments. Nguyen agreed that he introduced Luk as his father when they met with Rosenbaum.

Regarding his ownership interest in the Wild Wild Wings restaurant, Nguyen originally testified that he was not an owner, that he just worked there doing construction, and that Tra My Pham was the owner. He testified that he was listed as an owner on the assumed name filing with Harris County because he was the one who spoke English, so he signed the form. On cross-examination, Nguyen testified that he was the legal owner of the restaurant, but he did not personally put any money into the business.

Regarding the deal with Luk, Nguyen testified that he understood that Luk was paying $60, 000 for everything in the restaurant, including the assignment of the lease. He testified that he and Luk signed a purchase agreement on the morning of February 2, 2008 that he had drafted himself, but Luk did not want to pay the $60, 000 until they had an attorney draw up the papers.[2] He testified that after Luk gave him the cashier's check made payable to Tra My Pham, Nguyen completed his obligation to train Luk and then did not visit the restaurant again.

Luk testified that Nguyen represented himself as the owner of Wild Wild Wings. Luk stated that he asked Nguyen to see the lease, but Nguyen never provided it, and Luk did not know that he needed the landlord's written permission before he opened the restaurant. Luk also testified that Nguyen assured him that Rosenbaum would allow Luk to operate the restaurant under Nguyen's lease for three months and would then give Luk a new lease for five years at the rate of $800 per month.

Luk testified that he went to Vuong's office because he wanted a lawyer to witness and memorialize the agreement between Nguyen and himself in order to show that he had purchased the restaurant. Vuong testified, however, that he acted as a scrivener in memorializing the transaction between Luk and Nguyen and that he did not give either of them legal advice. He also testified that he explained that the landlord was the most important person in the transaction and that Luk needed to have the assignment of the lease in writing. He also explained to Luk and Nguyen the details of how purchases of businesses that lease space usually occur. Vuong testified that he encouraged Luk to hire him to pursue obtaining a written assignment of the lease, for which he would charge Luk $1, 500, but Luk refused to engage his services for that purpose. According to Vuong, Luk was in a hurry to complete the transaction and did not have the money to pay an additional $1, 500 in legal fees. Nguyen testified that Vuong spoke privately with Luk at one point.

Vuong drafted the bill of sale using a form book and/or his knowledge and experience as an attorney and received $300 as payment from Luk. There was no written fee agreement or description of the scope of the relationship between himself and Luk.

Following the February 2, 2008 transaction, Luk acted as the owner of Wild Wild Wings. He obtained a business license to operate the restaurant, identifying himself as the owner. He opened the restaurant at the end of February 2008.

Rosenbaum testified that Nguyen first approached him about assigning the lease around March 24 or 25, 2008. Nguyen introduced Luk as his father and as the cook for the restaurant. Nguyen asked if he could "slide" the lease over to his father and Rosenbaum refused. Rosenbaum testified that he said no "at least 20 times" and "kept saying 'no' until they finally left." He testified that Nguyen could not have been mistaken that Rosenbaum refused to assign the leave and he "acted very disappointed."

Rosenbaum testified that Luk met with him once on his own, on April 1, 2008. Luk paid the April rent with a personal check, and Rosenbaum did not "remember him saying very much." However, Luk testified that when he delivered the April rent to Rosenbaum, he asked Rosenbaum about assigning the lease to him, and Rosenbaum refused. That was when Luk realized that Nguyen had lied to him about the lease. Rosenbaum did not know at that time that Nguyen had sold the restaurant to Luk. It was not until Luk returned on April 4, 2008 to inform him that he quit and to hand over the keys that Rosenbaum knew what had happened. He testified that he "would never accept Mr. Luk as a tenant" and that he would have evicted him if he had not already left.

Both Luk and Rosenbaum testified that the restaurant without a lease was worth nothing. Nguyen objected to this on the grounds that Rosenbaum's testimony was speculative and that Luk's testimony was in response to a leading question.

Finally, Frederick Dailey, an attorney, testified as an expert witness on Luk's behalf. He testified regarding the nature of the relationship between Vuong, Luk, and Nguyen, and he concluded that Vuong did more than merely write down Luk and Nguyen's agreement. Dailey testified that, in his opinion, Vuong and Luk had an attorney-client relationship, that Vuong breached the duties he owed to Luk in multiple ways, and that Vuong's acts or omissions were the cause of Luk's damages. Dailey testified that Vuong's negligence in drafting the bill of sale "without protecting against the potential of not having an approved assumption of the lease" caused Luk's damages. Dailey stated that Vuong could have protected against that potential situation in "a number of different ways" including conditioning the bill of sale on Rosenbaum's written approval to assign the lease or including a clause for refund of the purchase price in the event Rosenbaum refused the assignment.

The trial court concluded that Luk was a consumer under the DTPA; that he detrimentally relied upon Nguyen's false, misleading, or deceptive acts or practices as enumerated in Business and Commerce Code sections 17.46(b)(2), (5), (12), (20), and (24), which were a producing cause of Luk's damages; that Nguyen breached an expressed warranty, which was the producing cause of Luk's damages; and that Nguyen's violation of the DTPA was knowing. The trial court also concluded that Vuong formed an attorney-client relationship with Luk; that "Vuong stepped outside the role of a mere scrivener and into the role of an attorney with duties owed to the client"; and that Vuong "did not disclaim, waive, or limit the scope of the attorney-client relationship he formed with Luk." The court found that Luk did not waive or consent to the potential conflict of interest as a result of Vuong's preparation of the bill of sale between Nguyen and Luk and that Luk did not waive any duty or standard of care owed him by Vuong. The trial court concluded that Vuong committed legal malpractice that was the cause-in-fact and proximate cause of Luk's damages. The trial court also made numerous findings of fact in support of its conclusions of law.

The trial court held Nguyen and Vuong jointly and severally liable for $62, 600—which represented the amount paid for the restaurant pursuant to the bill of sale, the stoves and refrigerator Luk had purchased for the restaurant, and Vuong's fee for preparing the bill of sale. The court held Nguyen liable for an additional $125, 200 in treble damages based on the finding that Nguyen knowingly violated the DPTA. Finally, the trial court ordered Nguyen to pay Luk's attorney's fees related to the intertwined DTPA and breach of contract claims in the amount of $25, 000. Both Nguyen and Vuong appealed.

NGUYEN'S APPEAL

In his sole issue, Nguyen argues that the evidence is insufficient to support the judgment.

A. Standard of Review

A trial court's findings are reviewable for legal and factual sufficiency of the evidence by the same standards that are applied in reviewing evidence supporting a jury's answer. Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex. 1994). In a legal sufficiency, or "no-evidence" review, we determine whether the evidence would enable reasonable and fair-minded people to reach the verdict under review. City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005). In conducting this review, we credit favorable evidence if a reasonable fact-finder could, and we disregard contrary evidence unless a reasonable fact-finder could not. Id. We consider the evidence in the light most favorable to the finding under review and indulge every reasonable inference that would support it. Id. at 822. We must sustain a no-evidence contention only if (1) the record reveals a complete absence of evidence of a vital fact; (2) the court is barred by rules of law or of evidence from giving weight to the only evidence offered to prove a vital fact; (3) the evidence offered to prove a vital fact is no more than a mere scintilla; or (4) the evidence establishes conclusively the opposite of the vital fact. Id. at 810; Merrell Dow Pharm., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex. 1997). "Anything more than a scintilla of evidence is legally sufficient to support the finding." Formosa Plastics Corp. USA v. Presidio Eng'rs & Contractors, Inc., 960 S.W.2d 41, 48 (Tex. 1998).

In reviewing a challenge to the factual sufficiency of the evidence, we "must consider and weigh all the evidence and should set aside the judgment only if it is so contrary to the overwhelming weight of the evidence as to be clearly wrong and unjust." Arias v. Brookstone, L.P., 265 S.W.3d 459, 468 (Tex. App.—Houston [1st Dist.] 2007, pet. denied) (citing Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986) (per curiam)).

The fact-finder is the sole judge of witnesses' credibility; it may choose to believe one witness over another, and a reviewing court cannot impose its own opinion to the contrary. City of Keller, 168 S.W.3d at 819; Arias, 265 S.W.3d at 468. Because it is the fact-finder's province to resolve conflicting evidence, we must assume that it resolved all conflicts in accordance with the verdict if reasonable people could do so. City of Keller, 168 S.W.3d at 819; Arias, 265 S.W.3d at 468.

Several of Nguyen's arguments on appeal relate to Luk's allegations of breach of contract. Specifically, Nguyen contends that the evidence is insufficient to show that he breached the bill of sale. He argues that he was not required to deliver a warranty deed for the restaurant and that he complied with the other terms of the bill of sale. He further argues that he did not breach any oral agreement with Luk relating to the assignment of the lease because his obligation to perform had not yet come due, as Luk abandoned the property before the three-month period elapsed. However, the trial court did not make any findings that Nguyen breached the bill of sale or other contract, and the judgment against Nguyen was not based on a breach of ...


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