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In re Chong

Court of Appeals of Texas, Fourteenth District

June 25, 2019

IN RE HOWARD CHONG, Relator

          ORIGINAL PROCEEDING WRIT OF MANDAMUS 133rd District Court Harris County, Texas Trial Court Cause No. 2016-46251

          Panel consists of Justices Christopher, Bourliot, and Zimmerer.

          MEMORANDUM OPINION

          TRACY CHRISTOPHER, JUSTICE

         On May 3, 2019, Howard Chong ("Intervenor") filed a petition for writ of mandamus in this court. See Tex. Gov't Code Ann. § 22.221 (Supp.); see also Tex. R. App. P. 52. The real parties-in-interest include SMDCHOI, LLC ("Plaintiff"), and Euro General Construction, Inc., Hyung Kyu Yu, and Do Yeon Yu ("Defendants").

         In the petition, Intervenor asks this court to compel the Honorable Jaclanel McFarland, presiding judge of the 133rd District Court of Harris County, to vacate her order denying Intervenor's amended motion to expunge lis pendens and to grant such motion.

         We conditionally grant relief.

         Factual and Procedural Background

         Plaintiff and Defendants entered into a Construction Agreement on or about November 2013 to improve twenty-five (25) apartment units of Plaintiff. Plaintiff agreed to pay Defendants $1.5 million and Defendants agreed to furnish all labor and materials to improve the apartments by December 30, 2014.

         Plaintiff paid the $1.5 million over the course of construction. Defendant Euro General Construction, Inc. ("Euro"), acting as the general contractor, hired subcontractors to complete the project. Plaintiff alleges that Euro had a contractual and fiduciary obligation to use the payments it received from Plaintiff to pay the subcontractors.

         When the project was near completion, Plaintiff learned that there were several subcontractors who had not been paid and had asserted liens against the property totaling approximately $330, 000. These liens prevented Plaintiff from obtaining a certificate of occupancy from the county. To extinguish the subcontractor liens, Plaintiff loaned Defendants $330, 000 to pay the unpaid subcontractors. Defendants signed an agreement acknowledging that they were responsible to pay the subcontractors and agreed to repay the $330, 000 loan. Defendants gave Plaintiff a post-dated check in the amount of $330, 000 and an agreed judgment that Plaintiff could file if the check did not clear.

         The subcontractors were paid, and they released their liens. However, payment of the $330, 000 check was refused due to insufficient funds.

         Plaintiff filed suit on July 12, 2016, alleging Defendants failed to complete the apartments by the due date and breached their agreement to repay the $330, 000 loan. Plaintiff also filed a notice of lis pendens on August 3, 2016 on the properties that Defendants had purchased with funds which Plaintiff contends should have instead been used to pay subcontractors.

         On or about September 27, 2017, Intervenor filed a petition to intervene in the underlying suit to assert rights as to six real properties identified in the notice of the lis pendens. Intervenor alleges he loaned Defendants funds memorialized by promissory notes and secured by first-priority deeds of trust on all six properties and has obtained title to two of these properties through foreclosure.

         Intervenor filed an amended motion to expunge the lis pendens. On September 10, 2018, after hearing, the trial court ...


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