Apex Katy Physicians LLC, Pankaj K. Shah MD, Bharati Shah and Indus Associates LLC v. Abeer Saqer and I Care International LLC

Opinion issued March 13, 2018

In The

Court of Appeals

For The

First District of Texas

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NO. 01-17-00197-CV

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APEX KATY PHYSICIANS LLC, PANKAJ K. SHAH, MD, BHARATI

SHAH, AND INDUS ASSOCIATES LLC, Appellants

V.

ABEER SAQER AND I CARE INTERNATIONAL LLC, Appellees

On Appeal from the 61st District Court

Harris County, Texas

Trial Court Case No. 2015-25588

MEMORANDUM OPINION

This is an appeal from a summary judgment dismissing claims for fraudulent

inducement and breach of a settlement agreement. The settlement agreement

occurred in an earlier lawsuit, in which Pankaj K. Shah, M.D., his wife, Bharati

Shah, their company, Indus Associates, LLC, and a company owned by Indus,

Apex Katy Physicians LLC (“Apex Landlord”) (collectively, “the Shahs”) sued

Abeer Saqer and numerous other parties. The Shahs’ claims arose from Apex

Landlord’s purchase and lease of real property for the operation of a hospital,

which employed Saqer as its interim chief executive officer, never actually opened,

and eventually filed for bankruptcy.

Before that case was tried, the Shahs entered into a settlement agreement

with Saqer and her company, I Care International, LLC. At the time of the

settlement, Saqer was also a potential witness in a separate lawsuit, in which a

group of physicians who had invested in the failed hospital brought claims against

Dr. Shah.

Several years later, the Shahs filed this lawsuit, alleging that Saqer

fraudulently induced them into entering into the settlement agreement by falsely

representing that she was insolvent and without knowledge of certain allegations

made by the physician-investors in their lawsuit against Dr. Shah. The Shahs

further alleged that Saqer then breached the settlement agreement’s provision that

she would not voluntarily testify against the Shahs by voluntarily testifying in a

deposition in the physician-investors’ lawsuit and at trial for the remaining

defendants in the underlying lawsuit.

Saqer filed a hybrid motion for summary judgment, arguing in part that the

Shahs had no evidence of damages. We hold that the Shahs failed to present more

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than a scintilla of evidence of damages for either claim in their response to Saqer’s

motion. Therefore, we affirm.

Background

The underlying dispute and litigation

In 2007, the owners of Prestige Consulting, Inc. d/b/a Turnaround

Management Group (“Prestige”), Adeel Zaidi and A.K. Chagla, believed that they

could interest investors in purchasing real property in northwest Houston and

operating a hospital there. Through Prestige, Zaidi and Chagla formed (1) Apex

Landlord to purchase the property; (2) Apex Long Term Acute Care–Katy, L.P.

(“Apex Tenant”) to lease the property for use as a hospital; and (3) Apex Katy

Physicians–TMG, LLC (“Apex TMG”) to act as the general partner in Apex

Tenant. Prestige was hired to staff and manage Apex Tenant, and one of Prestige’s

directors, Abeer Saqer, was hired to serve as Apex Tenant’s interim chief

executive officer.

Zaidi recruited a group of initial investors, including Dr. Shah, whose

company, Indus, became the majority owner of Apex Landlord. Dr. Shah served as

Apex Landlord’s managing member.

Apex Landlord agreed to buy the real property from Medistar Corporation

and to lease it to Apex Tenant. Shah, Zaidi, and the other initial investors then

recruited a group of physician-investors to operate Apex Tenant as a long-term

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acute-care hospital (“LTAC hospital”). In mid-2008, these physician-investors

purchased partnership units in Apex Tenant and became limited partners with the

initial investors, with Apex TMG acting as the general partner.

The enterprise was not a success. Apex Tenant never operated as an LTAC

hospital, never paid a full month’s rent, and eventually filed for bankruptcy. The

failure resulted in two lawsuits.

In the first lawsuit, the Shahs sued Zaidi, Apex Tenant, Apex TMG, and

Saqer (the “Zaidi Lawsuit”).1 The Shahs alleged that Apex Tenant had breached its

lease agreement with Apex Landlord by failing to pay rent and that the other

defendants had misappropriated Apex Tenant’s funds and made various

misrepresentations to the Shahs regarding Apex Tenant’s management and

finances.

In the second lawsuit, the physician-investors sued Shah, Zaidi, Chagla,

Prestige, and several other initial investors (the “Ahmed Lawsuit”). The physician-

investors alleged that Dr. Shah, on behalf of the initial investors, orally agreed to

segregate their investments in a separate bank account dedicated solely to

1

The Zaidi Lawsuit was a consolidation of two lawsuits. In the first, Dr. Shah, on

behalf of Apex Landlord, sued Zaidi, Apex Tenant, Apex TMG, Saqer, and

several other parties. In the second, Zaidi and several other initial investors sued

Dr. Shah, Mrs. Shah, and Indus. After the consolidation, Dr. Shah, Mrs. Shah, and

Indus asserted various counterclaims and crossclaims.

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development of Apex Tenant as an LTAC hospital and assured them that their

investments would be returned if the project did not come to fruition.2

The settlement agreement

In May 2011, while the Zaidi and Ahmed Lawsuits were both still pending,

the Shahs entered into a settlement agreement with Saqer and her company, I Care

International, LLC (collectively, “Saqer”). Under the settlement agreement, Saqer

agreed to pay the Shahs $45,000 in three installments and to refrain from

voluntarily testifying or providing evidence in any lawsuit brought against the

Shahs, and the Shahs agreed to dismiss their claims against Saqer.

In the recitals to the settlement agreement, Saqer acknowledged that she had

“no information” relating to the physician-investors’ allegations against Dr. Shah,

including specifically information relating to any of the alleged representations

made by Dr. Shah. Saqer further acknowledged that she had provided the Shahs

with a financial affidavit and that the Shahs had relied on the affidavit in agreeing

to settle their claims against her.

Saqer’s financial affidavit was attached as an exhibit to the settlement

agreement. In the affidavit, Saqer summarized her then-current financial status.

She stated that her average monthly expenses exceeded her average monthly

2

These representations did not appear in any of the written documents

memorializing the investments.

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income and that she had minimal assets. She further stated that she had already

incurred $30,000 in attorneys’ fees in defending herself in the Zaidi Lawsuit and

that some of the fees remained unpaid. The Shahs maintained that they settled with

Saqer for “less than a penny on the dollar” because it was “unlikely” they could

collect on a judgment.

After the parties executed the settlement agreement, the Shahs discovered

that Saqer had provided the physicians-investors with an affidavit to use in the

Ahmed Lawsuit.3 Saqer signed the affidavit about a month before she and the

Shahs signed the settlement agreement and a week before the physician-investors

filed the Ahmed Lawsuit. In it, she provided testimony that supported the

physician-investors’ allegations against Dr. Shah. She stated that, although Dr.

Shah had “represented” that the monies collected from the physician-investors

would be held in a separate bank account for the hospital’s operating expenses, the

monies were not actually held in such an account, and their “true use” was

“concealed” from the physician-investors.

During the negotiation of the settlement agreement, Saqer did not inform the

Shahs that she had provided the physician-investors with the affidavit, and the

3

The Shahs and Saqer dispute when the Shahs learned about the affidavit. In light

of our disposition below, we need not determine when the Shahs learned of the

affidavit’s existence and assume that it was after the parties executed the

settlement agreement.

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settlement agreement does not refer to or acknowledge the affidavit’s existence.

Through counsel, Saqer informed the Shahs that the recitals in the settlement

agreement were true and that some of the statements in the affidavit required

clarification. Saqer answered a set of interrogatories to clarify the statements made

in the affidavit.

After Saqer made her final payment under the settlement agreement, she

filed an unopposed motion to dismiss the Shahs’ claims with prejudice, which the

trial court granted.

Over the next several years, there were several important developments in

both the Zaidi and Ahmed Lawsuits. In the Ahmed Lawsuit, the parties continued

discovery, and Saqer was deposed. Shah then moved for summary judgment,

which the trial court granted, and we affirmed.4 In the Zaidi Lawsuit, the parties

went to trial, and Saqer testified as a witness for the defendants. The trial court

entered a multi-million-dollar judgment in favor of Dr. Shah and Apex Landlord,

which our sister court later reversed in part and remanded for a new trial.5

4

Ahmed v. Shah, No. 01-13-00995-CV, 2015 WL 222171 (Tex. App.—Houston

[1st Dist.] Jan. 15, 2015, no pet.) (mem. op.).

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Zaidi v. Shah, 502 S.W.3d 434 (Tex. App.—Houston [14th Dist.] 2017, pet.

denied).

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The current lawsuit

In May 2015, roughly four years after the parties entered into the settlement

agreement, the Shahs filed this suit against Saqer. The Shahs asserted claims for

fraud, fraudulent inducement, fraudulent nondisclosure, and negligent

misrepresentation, alleging that Saqer had induced them into entering into the

settlement agreement by failing to disclose that she had already prepared an

affidavit for the physician-investors in the Ahmed Lawsuit and by falsely

representing that she was insolvent and had “no information” relating to the

physician-investors’ allegations against Dr. Shah. The Shahs also asserted a claim

for breach of contract, alleging that Saqer breached the settlement agreement by

providing the affidavit to the physician-investors and by voluntarily testifying in

the Ahmed and Zaidi Lawsuits.

Saqer filed a hybrid motion for summary judgment, which asserted

numerous traditional and no-evidence grounds for dismissing the Shahs’ claims.

The Shahs then filed an amended petition, which dropped their claims for fraud,

fraudulent nondisclosure, and negligent misrepresentation. The Shahs also filed a

response to Saqer’s motion, in which they clarified that they were no longer

complaining about Saqer’s failure to disclose the affidavit from the Ahmed

Lawsuit.

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The trial court granted Saqer’s motion without specifying any ground. The

Shahs appeal.

No-Evidence Summary Judgment

A. Standard of review

When, as here, a party moves for summary judgment on both traditional and

no-evidence grounds, we first address the no-evidence grounds. Merriman v. XTO

Energy, Inc., 407 S.W.3d 244, 248 (Tex. 2013).

In a no-evidence motion for summary judgment, the movant contends that

there is no evidence of one or more essential elements of a claim or defense on

which the nonmovant would have the burden of proof at trial. TEX. R. CIV. P.

166a(i). The motion must state the specific elements for which there is no

evidence. Id.; Timpte Indus., Inc. v. Gish, 286 S.W.3d 306, 310 (Tex. 2009).

To defeat a no-evidence motion for summary judgment, the nonmovant must

produce more than a scintilla of evidence to raise a genuine issue of material fact

on each challenged element. TEX. R. CIV. P. 166a(i); Forbes Inc. v. Granada

Biosciences, Inc., 124 S.W.3d 167, 172 (Tex. 2003). If the nonmovant fails to do

so, the trial court grant the motion. TEX. R. CIV. P. 166a(i); KCM Fin. LLC v.

Bradshaw, 457 S.W.3d 70, 79 (Tex. 2015).

We review a no-evidence summary judgment de novo. Bradshaw, 457

S.W.3d at 79. We review the evidence presented by the no-evidence motion and

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response “in the light most favorable to the party against whom the summary

judgment was rendered, crediting evidence favorable to that party if reasonable

jurors could, and disregarding contrary evidence unless reasonable jurors could

not.” Gonzalez v. Ramirez, 463 S.W.3d 499, 504 (Tex. 2015) (per curiam) (quoting

Mack Trucks, Inc. v. Tamez, 206 S.W.2d 572, 582 (Tex. 2006)).

B. Breach of contract

In her no-evidence motion, Saqer argued that she was entitled to summary

judgment on the Shahs’ breach-of-contract claim because there was no evidence

that her alleged breaches of the settlement agreement caused the Shahs any

damages. See Dow Chem. Co. v. Francis, 46 S.W.3d 237, 242 (Tex. 2001) (no-

evidence motion challenging evidence of damages requires nonmovant to present

damages evidence to avoid summary judgment); B.Z.B., Inc. v. Clark, No. 14-11-

00056-CV, 2012 WL 353783, at *3 (Tex. App.—Houston [14th Dist.] Feb. 2,

2012, no pet.) (mem. op.) (affirming no-evidence summary judgment on breach-of-

contract claim when nonmovant’s evidence of damages was conclusory); Nelson v.

Regions Mortg., Inc., 170 S.W.3d 858, 862–63 (Tex. App.—Dallas 2005, no pet.)

(no-evidence summary judgment on breach-of-contract claim is proper when

nonmovant presents no evidence of damages).

In their response, the Shahs addressed Saqer’s no-evidence challenge to the

damages element of their breach-of-contract claim in one paragraph:

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As a result of the [affidavit Saqer provided the physician-investors]

and Saqer’s voluntary deposition testimony, the Ahmed Lawsuit

continued for more than two and one-half years. Eventually, the trial

court entered summary judgment on Shah’s motion, and the First

Court of Appeals affirmed that judgment in January 2015. During that

time, Shah incurred hundreds of thousands of dollars in attorney’s

fees defending against baseless claims propped up solely by Saqer’s

February Affidavit and voluntary deposition testimony.

However, none of the Shahs’ allegations in this paragraph were supported by

citation to evidence.6 The Shahs did not support their allegations with an affidavit

or deposition testimony from Dr. or Mrs. Shah, invoices received from their

attorneys, or any other competent summary-judgment evidence that they incurred

attorneys’ fees as a result of Saqer breaching the settlement agreement.

It is well-established that allegations contained in pleadings and motions are

not summary-judgment evidence. CHRISTUS Health Gulf Coast v. Carswell, 505

S.W.3d 528, 540 (Tex. 2016); Cardenas v. Bilfinger TEPSCO, Inc., 527 S.W.3d

391, 401 (Tex. App.—Houston [1st Dist.] 2017, no pet.). We hold that the Shahs

failed to present more than a scintilla of evidence that Saqer’s alleged breaches of

the settlement agreement caused them any damages and that the trial court

therefore properly granted summary judgment on the Shahs’ breach-of-contract

claim.

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The Shahs did not allege or present evidence that they were damaged as a result of

Saqer’s trial testimony in the Zaidi Lawsuit.

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C. Fraudulent inducement

In her no-evidence motion, Saqer argued that she was entitled to summary

judgment on the Shahs’ fraudulent-inducement claim because there was no

evidence that her allegedly fraudulent misrepresentations injured the Shahs. See

Dow Chem. Co., 46 S.W.3d at 242 (no-evidence summary judgment on fraud claim

is proper when nonmovant presents no evidence that fraud caused injury).

The Shahs did not directly respond to Saqer’s contention that there was no

evidence that they were injured by her allegedly fraudulent misrepresentations.

They did, however, allege that, had they known Saqer’s “actual financial

condition,” they would not have signed the settlement agreement.7

But like their allegations concerning the damages caused by Saqer’s breach

of the settlement agreement, the Shahs’ allegation here was not supported by

citation to any evidence. The Shahs did not produce an affidavit, deposition

testimony, or any other competent summary-judgment evidence that they were

injured by Saqer’s representation that she was insolvent. And as we noted above,

allegations contained in summary-judgment pleadings are not evidence. Carswell,

505 S.W.3d at 540; Cardenas, 527 S.W.3d at 401.

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The Shahs’ response did not address whether Dr. Shah would have signed the

settlement agreement had he known that Saqer had information relating to the

allegations made against him by the physician-investors in the Ahmed Lawsuit.

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On appeal, the Shahs argue that, had they not executed the settlement

agreement, Saqer would have been jointly and severally liable for at least a portion

of the judgment in the Zaidi Lawsuit. But the Shahs make no attempt to explain

why this is so. Just because the other defendants were found liable does not mean

that Saqer would have been found liable too—a point underscored by our sister

court’s opinion, which partially reversed the trial court’s judgment and remanded

the case for a new trial. Zaidi v. Shah, 502 S.W.3d 434, 448 (Tex. App.—Houston

[14th Dist.] 2016, pet. denied). Nor do the Shahs offer any evidence that Saqer had

nonexempt assets that could satisfy a judgment against her.

Notwithstanding their failure to present evidence of any injury caused by

Saqer’s alleged fraud, the Shahs argue that summary judgment was improper

because Saqer’s summary-judgment motion only addressed the claims asserted in

the Shahs’ original petition and not their amended petition. We disagree.

In their original petition, the Shahs asserted four claims based on the same

allegations—fraud, fraudulent inducement, fraudulent nondisclosure, and negligent

misrepresentation. In their amended petition, they dropped three of those claims—

fraud, fraudulent nondisclosure, and negligent misrepresentation—and kept only

the fraudulent-inducement claim. They did not add any new claims.

Although the Shahs filed their amended petition after Saqer filed her

summary-judgment motion, the fraudulent-inducement claim asserted in their

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amended petition was essentially the same as the one asserted in their original

petition. In both petitions, the Shahs alleged that Saqer fraudulently induced them

into entering into the settlement agreement by falsely representing that she was

insolvent and had “no information” relating to the physician-investors’ allegations

against Dr. Shah.

The Shahs themselves appear to recognize this. In their response to Saqer’s

motion, which they filed after their amended petition, the Shahs did not argue that

summary judgment was improper because they had asserted new claims. Instead,

they briefly summarized the claims asserted in their amended petition and then

argued why Saqer’s motion failed as to those claims.

The Shahs further argue that summary judgment was improper because

Saqer did not move for no-evidence summary judgment on their fraudulent-

inducement claim; rather, she moved for no-evidence summary judgment on their

claim for common-law fraud. But fraudulent inducement is a “category of

common-law fraud that shares the same elements” but adds “a promise of future

performance made with no intention of performing at the time it was made.”

Zorrilla v. Aypco Constr. II, LLC, 469 S.W.3d 143, 153 (Tex. 2015); see Hooks v.

Samson Lone Star, LP, 457 S.W.3d 52, 57 (Tex. 2015) (“Fraudulent inducement is

a subspecies of fraud; ‘with a fraudulent inducement claim, the elements of fraud

must be established as they relate to an agreement between the parties.’” (quoting

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Haase v. Glazner, 62 S.W.3d 795, 798–99 (Tex. 2001)). The Shahs’ dropped fraud

claim and live fraudulent inducement claim were based on the same allegations,

and Saqer moved for no-evidence summary judgment on the elements that the two

claims share.

We hold that the Shahs failed to present more than a scintilla of evidence

that Saqer’s alleged fraudulent misrepresentation caused them any injury and that

the trial court therefore properly granted summary judgment on the Shahs’

fraudulent-inducement claim. See Plotkin v. Joekel, 304 S.W.3d 455, 480–81 (Tex.

App.—Houston [1st Dist.] 2009, pet. denied) (holding that trial court did not err by

granting buyer’s no-evidence summary-judgment motion because sellers failed to

present evidence of damages arising from buyer’s alleged fraud).

Conclusion

We affirm.

Harvey Brown

Justice

Panel consists of Justices Keyes, Brown, and Lloyd.

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