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Sky Station Holdings I, LP v. Fidelity National Title Insurance Co.

Court of Appeals of Texas, Third District, Austin

August 13, 2019

Sky Station Holdings I, LP, Appellant
v.
Fidelity National Title Insurance Company, Boris Serebro, and Serebro Law PLLC, Appellees

          FROM THE 98TH DISTRICT COURT OF TRAVIS COUNTY NO. D-1-GN-15-005849, THE HONORABLE TIM SULAK, JUDGE PRESIDING

          Before Chief Justice Rose, Justices Goodwin and Kelly

          MEMORANDUM OPINION

          JEFF ROSE, CHIEF JUSTICE.

         Appellant Sky Station Holdings I, LP, appeals from the trial court's orders granting summary judgment in favor of appellees Boris Serebro and his law firm, Serebro Law PLLC (collectively Serebro), and Fidelity National Title Insurance Company. Those interlocutory orders were made final when they were severed into a separate cause. We will affirm the trial court's granting of summary judgment.[1]

         PROCEDURAL BACKGROUND AND SUMMARY OF THE EVIDENCE[2]

         In 2006, Interim-HZ Funding, LLC, Sky Station's predecessor in interest, [3] loaned $11 million to a company called Waterfall Gallery of Austin, LP. Waterfall used the money to buy approximately 200 acres from J&T Development Group, LP. Fidelity acted as closing agent, escrow agent, and title insurer; Vitaly Zaretsky was listed on the promissory note as Waterfall's "authorized representative" and elsewhere as its manager; Serebro was Waterfall's attorney; and Jeff Turner signed documents as J&T's manager. Interim's attorney sent Fidelity escrow instructions, which among other things provided that Waterfall and Fidelity were required to sign a Closing Statement approved by Interim; that Fidelity "must disburse the Loan Proceeds . . . as specified in the Closing Statement"; and that "[f]urther instructions regarding disbursement will be forthcoming from" Interim or its attorney. The loan's "Final Closing Statement" states that the property was being bought for $17, 600, 000 and that the "BALANCE DUE TO SELLER" after certain payments were deducted was $1, 578, 765.57. The seller, J&T, sent a letter instructing Fidelity to "wire the entire balance of the purchase price due to Seller" to Serebro's escrow account and providing wiring instructions to that account. A Disbursements Statement prepared by Fidelity states that $1, 578, 765.57 was disbursed to Serebro.

         In December 2006, Alexandra and Alexander Krot, III filed suit against Zaretsky, Gennady Borokovich, Waterfall, Jeff Turner, and a number of other entities. The Krots alleged that Zaretsky and another individual had approached them about investing in land in Austin, asserting that they were partners with Borokovich. The Krots further contended that in 2006, acting on Zaretsky's instructions, they provided funds to buy the same property that Waterfall later bought in October 2006. The Krots' petition stated that J&T was "a company organized by Zaretsky's attorney" and that it "fraudulently conveyed the above-described real property" to Waterfall, "a newly formed limited partnership created by Zaretsky and Borokovich." The petition also included allegations of forged contracts and fraud. The Krots filed a notice of lis pendens against the property on December 15, 2006.

         In April 2007, Waterfall was notified that it was in default on the loan. Foreclosure proceedings were eventually started, and in that process the Krots' lis pendens was discovered by Sky Station. Waterfall filed for bankruptcy in June 2008, the day before the foreclosure sale was to take place. Sky Station, as Interim's assignee, filed a notice of appearance and asked to be served with all papers filed in the bankruptcy. Gennady Borokovich, who was Zaretsky's partner in Waterfall, filed an emergency motion to dismiss the bankruptcy proceeding, providing a copy of the motion to Sky Station and Waterfall's other creditors. In the motion, Borokovich asserted that Zaretsky had "engaged in a pattern of fraud and perjury." He stated that Waterfall was formed with the purpose of buying 200 acres from J&T for $17, 600, 000, noting that the property was carved out of the larger 367-acre tract J&T had bought three months earlier for $11, 700, 000. Borokovich alleged that J&T was related to Waterfall, that its partners included Zaretsky and Borokovich, and that in November 2006, "Zaretsky pulled off a trifecta of fraud, (i) representing to the lender that there was a sale for $17, 600, 000; (ii) trying to represent to the partners and the federal government that there was no sale and thus no taxable event; and (iii) representing to potential investors that the 200 acres was worth $27, 500, 000." Borokovich asserted that the transfer of the 200 acres was not actually a sale but instead:

was nothing more than the second of a two-step preplanned sequence of events: (i) the distribution, without any consideration, of the 200 acres from J&T to its two largest beneficial equity owners, Zaretsky and Borokovich; followed immediately by (ii) the contribution by Zaretsky and Borokovich of that same property to a new entity, [Waterfall], which they would co-own and co-manage.

         The Krots also involved themselves in the bankruptcy proceeding, asserting interests in the property and referring to the allegations they had made in their lawsuit. During the bankruptcy proceeding, Sky Station had the property appraised by John Coleman, who reported that the property was worth $8, 100, 000. He further stated that J&T had bought about 367 acres, including the property in question, about three months before it sold the 200-acre tract to Waterfall; that J&T bought the larger tract for $11, 576, 975; and that J&T's sale of the 200 acres to Waterfall "was not believed to have been an arms-length sale as Mr. Vitaly Zaretsky is noted as the Manager of both entities." In mid-2008, Sky Station obtained an order from the bankruptcy court lifting the stay, and it foreclosed on the property in November 2008.

         About four years later, in April 2012, Interim filed a Pre-Suit Petition to Take Deposition to Investigate Potential Lawsuit under rule 202, see Tex. R. Civ. P. 202, seeking to depose a Fidelity corporate representative. At a hearing on the motion, Fidelity's attorney explained that although he did not believe rule 202 permitted the production or subpoenaing of documents, if Interim "were to give us the closing file numbers, which as a lender they should have access to . . ., we would give them [the closing file] under a protective order." The trial court signed an order in July 2012 requiring the production of the file, and Fidelity provided the file thirty days later.

         In December 2012, Sky Station filed its first original petition against Fidelity and Jeff Turner, who is not a party to this appeal. It added Serebro as a defendant in August 2013. Against Fidelity, Sky Station asserted claims for breach of fiduciary duty, common law fraud, constructive fraud, fraudulent inducement, negligence, negligence per se, and breach of contract; it sued Serebro for knowing participation in breach of fiduciary duty; and it sued both Fidelity and Serebro for conspiracy to commit breach of fiduciary duty, fraud in connection with a real estate transaction, conspiracy to commit fraud, and beneficiary of fraud.

         Serebro and Fidelity filed motions for summary judgment asserting that Sky Station's claims were subject to statutes of limitations of, at most, four years. See Tex. Civ. Prac. & Rem. Code §§ 16.003 (two-year limitations period for claims of injury to property or conversion), .004 (four-year limitations period for fraud and breach of fiduciary duty), .051 (residual four-year limitations period for claims "for which there is no express limitations period"); Hendricks v. Thornton, 973 S.W.2d 348, 364 n.19 (Tex. App.-Beaumont 1998, pet. denied) (two-year limitations period for negligent misrepresentation, negligence, and gross negligence); see also Agar Corp. v. Electro Circuits Int'l, LLC, S.W.3d, No. 17-0630, 2019 WL 1495211, at *5-6 (Tex. Apr. 5, 2019) (civil-conspiracy limitations is that of underlying tort). Appellees argued that no later than July 2008-by which point Sky Station had, among other things, learned of the Krots' lis pendens against the property, received Coleman's report, and received Borokovich's emergency motion asserting fraud by Zaretsky in the sale of the property-Sky Station was on notice that it should conduct an inquiry that ...


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