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Borain Capital, LLC v. Hashmi

Court of Appeals of Texas, Fourth District, San Antonio

July 19, 2017

BORAIN CAPITAL, LLC, Appellant
v.
Syed HASHMI, Appellee

         From the 225th Judicial District Court, Bexar County, Texas Trial Court No. 2014-CI-11798 The Honorable Barbara Hanson Nellermoe, Judge Presiding

          Sitting: Karen Angelini, Justice, Marialyn Barnard, Justice, Luz Elena D. Chapa, Justice

          OPINION

          Karen Angelini, Justice

         REVERSED AND RENDERED

         Syed Hashmi sued BoRain Capital, LLC for breach of contract. Although a jury found that Hashmi failed to prove the existence of an agreement between Hashmi and BoRain, the trial court granted judgment against BoRain notwithstanding the jury's verdict. BoRain appealed. We conclude the trial court erred in granting judgment notwithstanding the verdict, and therefore, reverse the trial court's judgment and render judgment that Hashmi take nothing.

         Factual and Procedural Background

         Hashmi owned a note in the amount of $122, 400.00 that he wanted to sell.[1] Hashmi contacted Susan Rogers, vice president of Chaminade Capital Corporation, who brokered a deal between Hashmi and Northeastern Capital. Under the deal, Northeastern would buy the note from Hashmi for $83, 477.00. Hashmi and Northeastern entered into a purchase agreement. Shortly thereafter, Northeastern entered into a deal with BoRain for BoRain to buy the note for $93, 283.71.

         West and West, a firm in San Antonio, Texas, handled the closing. BoRain and Northeastern each paid as agreed. However, no documents were prepared to show the transfer of the note from Hashmi to Northeastern. The closing documents showed only the transfer of the note from Hashmi to BoRain.

         Hashmi provided West with his bank routing number and account information via email so that the funds owed him from the sale could be directly deposited into his account at a local bank. However, Hashmi's email account was hacked and the hacker, posing as Hashmi, sent an email to West instructing it to wire the funds to a bank account in Malaysia. Unaware that Hashmi's email account had been hacked, West followed the instructions in the email and wired the funds from the sale of the note to the bank account in Malaysia, instead of to Hashmi's local bank account. By the time the parties realized that Hashmi's email account had been hacked and the funds diverted, the banks were unable to reverse the transaction. The hacker made off with the sale proceeds due to Hashmi.

         Hashmi sued West for breach of fiduciary duty and BoRain for breach of contract. The case was tried to a jury. In Question No. 4 of the jury charge, the jury was asked, "Did BoRain Capital, LLC agree to buy Mr. Hashmi's note?" The jury answered, "No." Because of this finding, the jury did not answer Question No. 5, which stated, "Did BoRain Capital, LLC fail to comply with its agreement to pay Mr. Hashmi for the note in question?" Additionally, the jury found West failed to comply with its duties as escrow/closing agent by wiring funds to the wrong account and attributed one hundred percent of the responsibility for the harm to West. The jury also made findings regarding the amount of reasonable attorney's fees.

         During trial, Hashmi and West reached a high-low settlement agreement. West ultimately paid Hashmi $81, 500.00 in accordance with the parties' agreement.

         After trial, Hashmi moved for judgment notwithstanding the verdict, asserting there was no evidence that Northeastern was the seller of the note as argued by BoRain. Hashmi argued that the evidence conclusively established an implied-in-fact contract between Hashmi and BoRain. Hashmi further argued that the evidence conclusively established that West was BoRain's agent for the delivery of funds to Hashmi and that, once West diverted the funds to the hacker, BoRain remained liable to him for the purchase price of the note. Based on these arguments, Hashmi asserted that the evidence conclusively established that the answers to Questions 4 and 5 were "Yes."

         The trial court agreed with Hashmi, granted his motion for judgment notwithstanding the verdict, and rendered judgment that Hashmi recover from BoRain the sum of $81, 362.66 plus prejudgment interest, $41, 101.00 in attorney's fees for trial, and additional attorney's fees for appeal. The trial court then reduced the amount of the judgment by $81, 500.00, the amount Hashmi recovered under the settlement agreement with West. BoRain appeals from this judgment.[2]

         Issues ...


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