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Pak v. Ad Villarai, LLC

Court of Appeals of Texas, Fifth District, Dallas

May 4, 2018

CHAN IL PAK, Appellant
v.
AD VILLARAI, LLC, THE ASHLEY NICOLE WILLIAMS TRUST, VILLAS ON RAIFORD, LLC, AND VILLAS ON RAIFORD CARROLLTON SENIOR HOUSING, LLC, Appellees

          On Appeal from the 101st Judicial District Court Dallas County, Texas Trial Court Cause No. DC-13-06030

          Before Justices Francis, Evans, and Stoddart

          MEMORANDUM OPINION ON REMAND

          MOLLY FRANCIS JUSTICE

         Chan Il Pak was the majority member and co-manager of the ownership and management entities, respectively, of a low-income senior housing project until his removal for various acts of misconduct. Following a bench trial, the trial court affirmed Pak's removal as co-manager, enjoined Pak from engaging in management activities, found he breached his fiduciary duties and both company agreements, and awarded damages and attorney's fees. The trial court, however, found that Pak's removal as owner of the ownership entity was improper. Both sides appealed.

         On original submission, this Court reversed the case on procedural grounds without addressing the merits of the case. The Texas Supreme Court, however, reversed our decision and remanded with instructions to abate the appeal and request the former trial judge to file findings of fact and conclusions of law. AD Villarai, LLC v. Pak, 519 S.W.3d 132, 134 (Tex. 2017) (per curiam). We have received the former judge's findings of fact, and both sides have filed amended briefs.

         Pak, representing himself pro se, generally challenges his removal as co-manager of the management entity, the breadth of the injunction, and the award of damages and attorney's fees. In a cross-appeal, appellees AD Villarai, LLC, the Ashley Nicole Williams Trust, Villas on Raiford Carrollton Senior Housing, LLC, and Villas on Raiford, LLC challenge the trial court's finding that Pak's removal as a member/owner of the ownership entity was improper.

         For the reasons outlined below, we overrule Pak's issues and sustain appellees' issue. We reverse the trial court's judgment in part and render judgment that Pak was properly removed as a member of Villas on Raiford Carrollton Senior Housing (Villas CSH). We affirm in all other respects.

         The Villas on Raiford is a government-sponsored housing project in Carrollton, Texas. The project was developed using Texas grant money and financing guaranteed by the federal government through HUD. The Villas is owned by Villas CSH and is managed by Villas on Raiford, LLC (Villas-Manager). Pak is the majority member of both Villas entities and, with AD Villarai, is a co-manager of Villas-Manager. Terri Anderson controlled AD Villarai.

         Briefly, in 2010, Villas CSH hired RES ISD d/b/a Integrated Construction and Development as the general contractor of the project. The project was required to be completed at the end of 2011, but problems arose. HUD inspectors cited the project for thirty-five deficiencies and failures to complete work by the required date. Although the deficiencies were supposed to be corrected within thirty days, Pak refused to allow the deficiencies to be corrected and either delayed or blocked efforts to obtain engineering plans and bids for the needed repairs. Integrated did not complete the project, leaving behind about $1 million in required repairs and uncompleted work, and sued Villas CSH for full payment plus additional amounts for extra work. Pak refused to authorize Villas CSH to file any counterclaims against Integrated for the deficient work or permit it to retain experts to assist in the Integrated lawsuit. Instead, Pak secretly negotiated with Integrated's owner to sell his interest, disclosed confidential information regarding the lawsuit, and failed to inform other members about Integrated's offer to pay $500, 000 in repair costs to settle. In addition, Anderson (of AD Villarai, the co-manager) discovered Pak had forged members' signatures on corporate documents to secure the final tax credit program financing and moved members' ownership interests around, decreasing them or increasing them, depending on the situation. Pak also tried to take steps to create space for a private Korean Cultural Center on the property. He asked the management company to prefer the interests of Korean American applicants, including leasing to those younger than the required minimum age for a HUD senior housing project, even though making such preferences would have violated federal law and exposed Villas CSH to penalties and damages.

         Appellees attacked on two fronts. They sued Pak for breach of contract and sought declaratory and injunctive relief. And, on September 22, 2013, Villas-Manager removed Pak as co-manager and member by member consent. Three months later, Villas CSH expelled him as a member/owner, also by member consent. After a bench trial, the trial court issued an order of permanent injunction. The trial court confirmed Pak's removal as co-manager and enjoined him from participating or interfering with the management of Villas CSH. The court reserved issues regarding Pak's expulsion as a member of Villas CSH, damages, and attorney's fees for further consideration once the HUD loan on the property closed.

         Within five weeks of no interference by Pak, AD Villarai was able to settle the lawsuit with Integrated, make repairs, and close on the HUD loan in May 2014. After that, the trial court reopened the case and realigned Villas-Manager as a nominal plaintiff against Pak. Villas CSH filed an original and supplemental petition, asserting claims for breach of fiduciary duty and breach of contract against Pak.

         A second trial was held on the remaining issues. The trial court found (1) Pak breached his fiduciary duties to Villas CSH and Villas-Manager; (2) Pak materially breached the Villas CSH and Villas-Manager company agreement; and (3) Pak's prior material breaches of the Villas CSH agreement excused any obligation of AD Villarai and ANW Trust to respond to any buy-sell offers tendered by Pak.

         In its modified final judgment, the court declared Pak "has been and continues to be" removed as manager of Villas-Manager and enjoined him from (1) participating or interfering with the management of either Villas entity, (2) contacting the property manager regarding the housing project, (3) participating or interfering with the leasing of the units, and (4) attempting to sell the real property or assets owned by Villas CSH. Additionally, Pak was enjoined from any attempt to expel or remove AD Villarai as manager or member of Villas-Manager and ANW Trust as a member of Villas CSH.

         The trial court, however, found the December 31, 2013 Villas CSH Member Consent expelling Pak as a member did not comply with the terms of the company agreement and was not enforceable. But, the court also determined that should the December 31, 2013 Member Consent later be held to be enforceable, the value of Pak's membership interest as of the date of expulsion was zero.

         The trial court awarded damages to Villas CSH in the amount of $480, 313.59, offset by the balance of Pak's Member Loan Account, leaving a balance of $164, 070.95. Pak was also ordered to pay AD Villarai $275, 000 for attorney's fees through trial as well as conditional appellate attorney's fees. Both Pak and appellees appealed the trial court's judgment.

         Before turning to the merits of this appeal, we first address the briefing in this case. After the case was remanded, this Court abated the proceedings so that the former trial judge could make findings of fact and conclusions of law. Once we received those findings and conclusions, we reinstated the case and set a schedule to allow the parties to rebrief, if they so chose. Both sides elected to file amended briefs. Pak's amended brief was due on September 21, 2017 and, after three extensions, was ultimately filed on December 1, 2017.

         In his brief, citations to the record are sparse. Although there were two multi-day trials in this case, Pak does not cite to any testimony from those proceedings, either in his statement of facts or within the body of his arguments. Rather, when he does provide record citations, he generally relies on the company agreements to support his arguments. In addition, some of his issues fail to provide any legal authority or analysis.

         In their responsive brief, appellees complain about the sufficiency of Pak's briefing. Specifically, they complain he fails to (1) provide citations to the appellate record, (2) provide any meaningful citations to legal authority other than standard boilerplate language regarding the standards of review and contract construction, and (3) fails to provide any discussion of testimony that was weighed by the trial court in making its decision. At his request, we gave Pak additional time to file a reply brief. Although he acknowledges appellees' complaint of his "lack of proper briefing, " he made no attempt to correct any inadequacies and, as before, makes factual assertions without any citation to the trial testimony.

         We must construe the rules of appellate procedure reasonably, yet liberally, so that the right of appeal is not lost by imposing requirements not absolutely necessary to effect the purpose of the rule. Morton v. Nguyen, 412 S.W.3d 506, 509 (Tex. 2013). This includes how those rules apply to the pleadings and briefs of a pro se litigant. In re N.E.B., 251 S.W.3d 211, 211-12 (Tex. App.-Dallas 2008, no pet.). At the same time, however, we hold pro se litigants to the same standards as licensed attorneys and require them to comply with applicable laws and rules of procedure. To do otherwise would give a pro se litigant an unfair advantage over a litigant represented by counsel. Id.

         Rule 38 requires a party to provide us with such discussion of the facts and authorities relied upon as may be necessary to present the issue. Isaac v. Villas del Zocalo 3, No. 05-16-01338-CV, 2018 WL 360166, at *1 (Tex. App.-Dallas Jan. 11, 2018, no pet.) (mem. op.) Bare assertions of error, without argument or authority, waive error. Fredonia State Bank v. Gen. Am. Life Ins. Co., 881 S.W.2d 279, 284 (Tex. 1994) (explaining appellate court has discretion to waive point of error due to inadequate briefing). We have no right or obligation to search through the record to find facts or research relevant law that might support an appellant's position because doing so would "improperly transform this Court from neutral adjudicators to advocates." Lau v. Reeder, No. 05-14-01459-CV, 2016 WL 4371813, at *2 (Tex. App.-Dallas Aug. 16, 2016, pet. denied) (mem. op.). With these principles in mind, we turn to the issues in this appeal and, construing the rules reasonably yet liberally, address the merits of those issues that comply with this framework.

         Pak's Appeal

         In his first issue, Pak challenges his removal as co-manager of Villas-Manager. He argues that under the plain wording of the company agreement, he could not be removed as co-manager without his vote as a member of Villas-Manager. Pak argues that because he did not ...


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