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Chandni I, Inc. v. Patel

Court of Appeals of Texas, Eighth District, El Paso

December 13, 2019

CHANDNI I, INC., A Texas Corporation; HARSHAD PATEL, An Individual; ASHWIN PATEL, An Individual;SUNIL PATE, An Individual; MANISH VANMALI, An Individual; EL PASO HOSPITALITY, LLC; MANDEEP, LLC; CHANDNI VENTURE OF TEXAS, INC., A Texas Corporation; and UJASHIV MANAGEMENT, INC., A Texas Corporation, Appellants,

          Appeal from the 34th District Court of El Paso County, Texas (TC# 2014DCV0779)

          Before Rodriguez, J., Palafox, J., and McClure, Senior Judge



         This case involves an interlocutory appeal from the trial court's denial of Appellants' motion to dismiss under the Texas Citizens Participation Act (TCPA). In five issues, Appellants contend: (1) the trial court erred in denying their timely-filed motion to dismiss because Appellee's claims for theft and fraud are based on, relate to, or are in response to Appellants' exercise of their right of free speech or association and thus fell within the scope of the TCPA; (2) Appellee failed to establish by clear and specific evidence a prima facie case on each essential element of his claims; (3) Appellee's shareholder inspection claim was based on, related to, or was made in response to Appellants' exercise of the right of petition because the complained-of communications were made during or pertained to a judicial proceeding; (4) Appellants met their burden of proof in establishing each essential element of the valid defense of effective consent; and (5) Appellants are entitled to costs, attorney's fees, and expenses.[1] We affirm.


         This appeal arises out of a shareholder derivative suit brought by Dharmesh Patel against the managers and directors of Chandni I, Inc., a corporation that owns and manages a Quality Inn & Suites in El Paso, Texas. The facts are mostly procedural. Dharmesh filed his original petition on March 10, 2014, asserting claims for fraud and conversion, among other causes. He amended his petition four times. In his Third Amended Petition, filed on February 15, 2017, he included causes of action for fraud against several of the managers and directors individually, including Harshad Patel, Sunil Patel, Ashwin Patel, and Manish Vanmali. He also asserted claims for conversion against all defendants, except for Chandni I, individually and derivatively. In his Fourth Amended Petition, filed on November 13, 2017, he again asserted causes of action for fraud against Harshad, Sunil, Ashwin, and Manish individually but modified his conversion claims against the defendants by bringing them only in a derivative capacity. His fifth and final amended petition was filed on February 21, 2018 and included causes for theft and conversion against the named defendants, fraud against Harshad, and a new claim for shareholder inspection. Two months later on April 20, 2018, Appellants filed a motion to dismiss under the Texas Citizens Participation Act (TCPA), asserting that the claims for fraud, theft, and shareholder inspection were made in response to their exercise of freedom of speech, association, and petition. The trial court denied the motion and set a hearing for the purpose of assessing fees, costs, expenses, and sanctions against Appellants as required under the TCPA. Appellants then filed this interlocutory appeal.


         Timeliness Under the TCPA

         In their first issue, Appellants contend the trial court erred in denying their timely-filed motions to dismiss under the TCPA. Appellee contends Appellant's motions to dismiss his fraud and theft claims were untimely because those claims had already been raised in previous petitions and therefore the 60-day deadline for filing for dismissal under the TCPA had already expired. Because further analysis of the issue is unnecessary if the motions were untimely, we address timeliness first.[2]

         Standard of Review

         We review a trial court's ruling on a motion to dismiss de novo. MVS International Corporation v. International Advertising Solutions, LLC, 545 S.W.3d 180, 190 (Tex.App.-El Paso 2017, no pet.).

         Applicable Law

         The Texas Citizen's Participation Act (TCPA) authorizes a party to file a motion to dismiss if the claim against him relates to his exercising his right of free speech, petition, or association. Tex.Civ.Prac.& Rem.Code Ann. § 27.003. A defendant wanting to take advantage of the statute must file a motion to dismiss within 60 days after the date of service of the "legal action" he seeks to have dismissed. Tex.Civ.Prac. & Rem.Code Ann. § 27.003(b).

         The Legislature has defined "legal action" in the context of the TCPA to mean "a lawsuit, cause of action, petition, complaint, cross-claim, or counterclaim or any other judicial pleading or filing that requests legal, declaratory or equitable relief." Tex.Civ.Prac.& Rem.Code Ann. § 27.001(6). Thus, an amended petition asserting new claims based upon new factual allegations will reset a TCPA deadline as to the new legal action. Jordan v. Hall, 510 S.W.3d 194, 198 (Tex.App.-Houston [1st Dist.] 2016, no pet.). But an amended petition, by itself, does not reset the 60-day clock if it adds no new claims and relies upon the same factual allegations underlying the original petition. Id. Additional factual details in a subsequent petition also do not reset the TCPA clock if the essential factual allegations as to the claim were present in the prior petition. In re Estate of Check, 438 S.W.3d 829, 837 (Tex.App.-San Antonio 2014, no pet.)(acknowledging that to hold otherwise would negate the early dismissal envisioned by the statute); see also Paulsen v. Yarrell, 455 S.W.3d 192, 198 (Tex.App.-Houston [1st Dist.] 2014, no pet.)(plaintiff filed suit over an allegedly defamatory fax, then in subsequent petition added an additional claim for defamation regarding information on the cover letter of the defamatory fax; court held that despite plaintiff's attempt to divide his defamation claims into two, the amended petition relied on the same essential factual allegations as the original petition), superseded by ...

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