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ACCEPTED

03-17-00386-CV
19119847
THIRD COURT OF APPEALS
AUSTIN, TEXAS
8/28/2017 4:36 PM
JEFFREY D. KYLE
CLERK
NO. 03-17-00386-CV
__________________________________
RECEIVED IN
In the Court of Appeals 3rd COURT OF APPEALS
AUSTIN, TEXAS
Third District of Texas – Austin8/28/2017 4:36:11 PM
___________________________________ JEFFREY D. KYLE
Clerk
PEJMAN DARGAHI, KAMRAN DARGAHI, and
YEKK CONSTRUCTION SERVICES, LLC d/b/a
LAKEWAY CUSTOM HOMES AND RENOVATION September 8, 2017
Appellants/Defendants,

v.

DHIRAJ HANDA and RITU HANDA
Appellees/Plaintiffs.
__________________________________________________________________
APPELLEES’ BRIEF
__________________________________________________________________
David A. King
State Bar No. 24083310
Brian T. Cumings
State Bar No. 24082882
Graves, Dougherty, Hearon & Moody
A Professional Corporation
401 Congress Avenue, Suite 2200
Austin, Texas 78701-3744
Telephone: (512) 480.5722
Facsimile: (512) 536.9942
dking@gdhm.com
bcumings@gdhm.com

ATTORNEYS FOR
APPELLEES/PLAINTIFFS
TABLE OF CONTENTS

INDEX OF AUTHORITIES......................................................................................4
APPENDIX ................................................................................................................6
STATEMENT REGARDING ORAL ARGUMENT ...............................................6
ISSUE PRESENTED .................................................................................................7
STATEMENT OF FACTS ........................................................................................8
A. Plaintiffs Discover Appellants’ Misuse of Construction Funds. ..........8
B. Appellants’ First Counsel Answers Plaintiffs’ Lawsuit and Engages in
Discovery Without Seeking Arbitration................................................9
C. Appellants’ Second Counsel Continues to Engage in Discovery
Without Demanding Arbitration—Until Plaintiffs File for Summary
Judgment. ............................................................................................11
SUMMARY OF THE ARGUMENT ......................................................................13
ARGUMENT ...........................................................................................................14
A. The Dargahis Are Not Parties to the Arbitration Clause, and They
Failed to Preserve Any Argument that an Agency Relationship Makes
Them Parties. .......................................................................................15
B. Appellants Waived Arbitration By Substantially Invoking the Judicial
Process to Plaintiffs’ Detriment. .........................................................21
1. Substantial Invocation of Judicial Process................................21
i. How long the party moving to compel waited to do so..23
ii. The reasons for the movant’s delay. ...............................25
iii. Strategic timing of appellants’ motion to compel on the
eve of summary judgment. .............................................26
iv. Whether and when the movant knew of the arbitration
agreement during the period of delay. ............................27
v. The extent of the movant’s engagement in pretrial
matters related to the merits............................................27

2
vi. The amount of time and expense the parties have
committed to the litigation. .............................................31
2. Prejudice to Plaintiffs. ...............................................................31
i. Costs Incurred. ................................................................32
ii. Appellants’ Affirmative Discovery. ...............................35
CONCLUSION AND PRAYER .............................................................................36
CERTIFICATE OF SERVICE ................................................................................38
CERTIFICATION ...................................................................................................38
CERTIFICATE OF COMPLIANCE .......................................................................38

3
INDEX OF AUTHORITIES

Cases

Baldwin v. Cavett,
2:10-CV-401-TJW-CE, 2011 WL 4591942 (E.D. Tex. Sept. 12, 2011) ......20
Bridas S.A.P.I.C. v. Gov’t of Turkmenistan,
345 F.3d 347 (5th Cir. 2003) .........................................................................19
Cent. Nat. Ins. Co. of Omaha,
856 S.W.2d 492, 494-95 (Tex. App.—Houston [1st Dist.] 1993,
no writ).................................................................................................... 29, 33
Electrostim Med. Services, Inc. v. Health Care Serv. Corp.,
CIV.A. H-11-2745, 2012 WL 5373462 (S.D. Tex. Oct. 30, 2012) ...............29
G.T. Leach Builders, LLC v. Sapphire V.P., LP,
458 S.W.3d 502 (Tex. 2015) .................................................................. 15, 30
In re Castro,
246 S.W.3d 756 (Tex. App.—Eastland 2008, no pet.).......................... passim
In re Christus Spohn Health Sys. Corp.,
231 S.W.3d 475 (Tex. App. 2007) ................................................................29
In re Hawthorne Townhomes, L.P.,
282 S.W.3d 131 (Tex. App.—Dallas 2009, no pet.) .............................. 18, 32
In re Kaplan Higher Educ. Corp.,
235 S.W.3d 206 (Tex. 2007) .........................................................................21
In re Kellogg Brown & Root, Inc.,
166 S.W.3d 732 (Tex. 2005) .........................................................................18
In re Merrill Lynch Trust Co. FSB,
235 S.W.3d 185 (Tex. 2007) .........................................................................20
Lyons v. Lindsey Morden Claims Mgmt., Inc.,
985 S.W.2d 86 (Tex. App.—El Paso 1998, no pet.) .....................................19
Marble Slab Creamery, Inc. v. Wesic, Inc.,
823 S.W.2d 436 (Tex. App.—Houston [14th Dist.] 1992, no writ) ..............33
Moore v. Brown,
408 S.W.3d 423 (Tex. App.—Austin 2013, pet. denied) ..............................14

4
Murdock v. Trisun Healthcare, LLC,
03-10-00711-CV, 2013 WL 1955767 (Tex. App.— Austin
May 9, 2013, pet. denied) ................................................................. 15, 16, 17
Okorafor v. Uncle Sam & Associates, Inc.,
295 S.W.3d 27 (Tex. App.— Houston [1st Dist.] 2009, pet. denied) ............25
Perry Homes v. Cull,
258 S.W.3d 580 (Tex. 2008) ................................................................. passim
PRSI Trading Co. LP v. Astra Oil Trading,
NV, 01-10-00517-CV, 2011 WL 3820817 (Tex. App.— Houston
[1st Dist.] Aug. 25, 2011, pet. denied) ................................................... 23, 24
Retamco Operating, Inc. v. Republic Drilling Co.,
278 S.W.3d 333 (Tex. 2009) .........................................................................14
Santander Consumer USA, Inc. v. Mata,
03-14-00782-CV, 2017 WL 1208767 (Tex. App.— Austin
Mar. 29, 2017, no pet.) ..................................................................... 14, 18, 32
SEB, Inc. v. Campbell,
No. 03– 10–00375–CV, 2011 WL 749292 (Tex. App.— Austin
March 2, 2011, no pet.).......................................................................... passim
Tuscan Builders, LP v. 1437 SH6 L.L.C.,
438 S.W.3d 717 (Tex. App.— Houston [1st Dist.] 2014,
review denied) ........................................................................................ 23, 31
Westmoreland v. Sadoux,
299 F.3d 462 (5th Cir. 2002) .........................................................................20
Ru les

Tex. R. App. P. 38(a)(2) ..........................................................................................15
Tex. R. App. P. 39.1(c) ..............................................................................................6

5
APPENDIX

Citations to materials in the Appendix to Appellees’ Brief will be to

Plaintiffs’ App. ___. True and correct copies of the following items are included

in the attached Appendix:

App. 1 Defendants’ Motion to Substitute Counsel.

App. 2 March 24, 2016 Letter to Appellants’ Counsel.

App. 3 Appellants’ Emergency Motion for Temporary Relief (without
exhibits).
App. 4 April 19, 2017 Email Correspondence with Appellants’ Counsel.

STATEMENT REGARDING ORAL ARGUMENT

Plaintiffs believe the facts and legal arguments are adequately presented in

the briefs and record, and, accordingly, oral argument is unnecessary. See Tex. R.

App. P. 39.1(c). Appellant has requested oral argument; if the Court should choose

to hear argument, Plaintiffs request to participate.

6
ISSUE PRESENTED

In this case, in which (i) Appellants filed a motion to compel arbitration after

nearly nine months of engaging in the judicial process and only on the eve of the

district court’s consideration of Plaintiffs’ summary judgment motion and (ii) only

one of the Appellants is a signatory of the contract containing the arbitration

clause, the trial court denied Appellants’ motion to compel arbitration. Was this a

clear abuse of discretion?

7
STATEMENT OF FACTS

A. Plaintiffs Discover Appellants’ Misuse of Construction Funds.
On April 4, 2014, Plaintiffs/Appellees Dhiraj Handa and Ritu Handa

(“Plaintiffs”) entered into a Residential Construction Contract (the “Contract”)

with Appellant Yekk Construction Services, LLC, d/b/a Lakeway Custom Homes

and Renovation (“Yekk Construction”) for the construction of a house on a piece

of land located at 228 Sanostee Cove, Travis County, Texas, for a fixed contract

price of $1,460,000.00 (the “Project”).1 Appellant Pejman Dargahi purportedly

signed the Contract on behalf of Yekk Construction, but he has taken the position

that he is not individually bound by or liable under the Contract.2 Appellant

Kamran Dargahi did not sign the Contract at all, nor is he referenced in the

Contract. Contrary to Appellants’ assertion in their brief, there is also no record

evidence that Kamran Dargahi is a “member/manager” of Yekk Construction.

Between April 2014 and November 2015, Plaintiffs and Plaintiffs’

construction lender paid Yekk Construction nearly $1.4 million to build Plaintiffs’

home.3 This represents 95% of the Contract price.4 However, in November 2015,

after they had completed only 90% of the work, Appellants halted work on the

1
See CR 282-307 (2014 Contract).
2
CR 309 (December 9, 2015 Letter from Appellants’ Counsel).
3
CR 452 & nn.6-7 (Plaintiffs’ Summary Judgment Motion).
4
Id. at CR 452 & n.6.

8
project, insisting that Plaintiffs pay more than the Contract price and more than

what Plaintiffs’ construction lender could approve.5 Even though they had already

been overfunded by $73,750, Appellants declared that “no more [construction]

activities could be performed unless we are financially comfortable.”6

It was only after Appellants abandoned the project that Plaintiffs discovered

that, all along, Appellants had been using Plaintiffs’ money for tens of thousands

of dollars’ worth of expenses that have nothing to do with the construction of

Plaintiffs’ home, including not only different construction projects, but also

personal expenses such as plumbing work on Appellant Pejman Dargahi’s personal

home, purchasing real estate, and attorneys’ fees.7 Plaintiffs also discovered that at

least seventeen of Appellants’ subcontractors had gone unpaid to the tune of over

$120,000, while another $130,000 or more was needed to complete construction.8

B. Appellants’ First Counsel Answers Plaintiffs’ Lawsuit and Engages in
Discovery Without Seeking Arbitration.
Prior to the initiation of this lawsuit, Plaintiffs and Appellants engaged in

mediation. That mediation took place on December 10, 2015, and Appellants and

Plaintiffs were represented by counsel.9 No resolution of the dispute between

5
Id. at CR 452-453 & nn. 8-11.
6
Id. at CR 453 & n.14.
7
Id. at CR 454 & nn. 30.
8
Id. at CR 453 & n.15-17.
9
CR 109 (Defendants’ Plea in Abatement and Motion to Compel Arbitration); CR at 308-
309(Kemp Gorthey letter to David King dated December 9, 2015).

9
Plaintiffs and Appellants was reached at that mediation or in the months that

followed. At no point during this time did Appellants invoke the arbitration clause

of the Contract.

Plaintiffs filed this lawsuit on March 24, 2016, alleging damages arising

from Appellants’ misappropriation of construction fund payments, fraud, breach of

the Contract, and other wrongdoing.10 On May 10, 2016, Appellants filed their

Original Answer generally denying Plaintiffs’ allegations. Appellants’ Answer

makes no reference to the Contract’s arbitration clause.11

In June 2016, Plaintiffs propounded written discovery, including numerous

requests for production.12 Although Appellants initially delayed responding to

discovery, thereby forcing Plaintiffs to file a motion to compel production,13

Appellants eventually served responses to Plaintiffs’ discovery requests on August

11, 2016,14 and signed a Rule 11 agreement regarding the scope and timing of

production of documents.15 At no time during this agreed-to discovery process did

Appellants ever invoke the Contract’s arbitration clause or argue that they were not

obligated to respond to discovery based on the arbitration clause.
10
CR 4-14 (Plaintiffs’ Original Petition and Request for Disclosure).
11
CR 15-16 (Defendants’ Original Answer).
12
CR 323-333 (Plaintiffs’ First Request for Production).
13
CR 334-337 (Plaintiffs’ Motion to Compel Discovery Responses and Production of
Documents).
14
CR 338-351 (Defendants’ Response to Plaintiffs’ First Request for Production of Documents).
15
CR 352 (Rule 11 Agreement Re: Plaintiffs’ Motion to Compel).

10
Further, Appellants’ counsel also agreed (orally) to set the case for trial and

provided dates of availability.16 During these discussions, Appellants’ counsel

never indicated that Appellants would seek arbitration. The arbitration clause was

not even mentioned.

With litigation underway, Plaintiffs also engaged an expert to investigate the

scope of damage to Plaintiffs’ home, and Plaintiffs disclosed their expert’s written

report to Appellants.17

C. Appellants’ Second Counsel Continues to Engage in Discovery Without
Demanding Arbitration—Until Plaintiffs File for Summary Judgment.
On October 3, 2016, over six months after Plaintiffs filed their lawsuit and

with litigation underway, Appellants filed a motion to substitute counsel.18 It was

only after retaining new counsel that Appellants, through their substituted counsel,

mentioned the Contract’s arbitration clause for the first time. However,

Appellants’ new counsel did not file a motion to compel arbitration. Instead, they

continued to engage in discovery by producing additional documents and

scheduling depositions,19 and by issuing a discovery subpoena to Plaintiffs’

construction lender, Regions Bank.20

16
See CR 448 (Affidavit of David A. King, at ¶ 16).
17
CR 366-426 (Plaintiffs’ First Amended Petition) (Clawson report attached as Exhibit B).
18
Plaintiffs’ App. 1 (Defendants’ Motion to Substitute Counsel).
19
CR 427-428 (November 1, 2016 email from Appellants’ substituted counsel).
20
CR 429-445 (Defendants’ Notice of Intent to Take Deposition by Written Questions).

11
Having obtained what Plaintiffs believed to be sufficient discovery

evidencing Appellants’ misappropriation of Plaintiffs’ construction funds and other

wrongdoing, Plaintiffs filed their Motion for Partial Summary Judgment (the

“Summary Judgment Motion”) against Appellants on December 2, 2016.21 Only

then, with evidence against them set forth in Plaintiffs’ Summary Judgment

Motion and the prospect of a judgment looming, did Appellants file a motion to

compel arbitration, on December 8, 2016.

Appellants’ motion to compel arbitration consisted of only three paragraphs

of argument.22 Those three paragraphs quoted the Contract’s arbitration clause,

alleged that “pursuant to the terms of the Contract, the parties have agreed to

resolve the dispute via binding arbitration,” and recited Texas’s general burden-

shifting rules with respect to motions to compel arbitration.23 Appellants raised no

other arguments in support of their motion to compel arbitration.

21
CR 18-107 (Plaintiffs’ Motion for Summary Judgment).
22
CR 108-125 (Defendants’ Plea in Abatement and Motion to Compel Arbitration).
23
Id. at CR 109.

12
SUMMARY OF THE ARGUMENT

For months, Appellants engaged in the judicial process despite knowledge of

the Contract’s arbitration clause. Appellants’ first legal counsel never signaled an

intent to arbitrate during that participation. Even after retaining new counsel over

six months into the litigation, Appellants still did not move to compel arbitration.

Instead they continued engaging in the judicial process by, for example, initiating

their own discovery under the Texas Rules. Appellants’ participation in the

judicial process did not change until Plaintiffs filed for summary judgment—a

proceeding which Appellants say constitutes a “trial” under the Texas rules. In

other words, after taking advantage of the judicial process for months, Appellants

only sought to switch from litigation to arbitration on the eve of trial when faced

with a potential judgment against them. Appellants’ tactic is not foreign to Texas

courts. Under these facts and under Texas law, Appellants’ belated and prejudicial

tactical shift on the eve of trial constitutes waiver.

In addition, the individual Appellants, as non-signatories to the Contract,

have no right to invoke the arbitration clause in the first place. In the court below,

Appellants made no argument as to how or why these non-signatories have a right

to arbitration. Yet even if they had made this argument, Appellants presented no

evidence to carry their burden of proving that these non-signatories are bound to

the arbitration clause.

13
ARGUMENT

In stark contrast to Appellants’ tellingly thin motion to compel arbitration,

Plaintiffs filed a detailed response supported by hundreds of pages of evidence.24

Plaintiffs’ response presented two arguments to the district court: (i) that all three

Appellants waived arbitration by “substantially invoking the judicial process,”25

and (ii) that, in addition to waiving arbitration, the individual Appellants—Pejman

and Kamran Dargahi—did not have a right to invoke the arbitration clause in the

first place because they are not parties to the underlying Contract.26

This Court must affirm the trial court’s denial of Appellants’ motion to

compel arbitration unless the trial court abused its discretion. See Santander

Consumer USA, Inc. v. Mata, 03-14-00782-CV, 2017 WL 1208767, at *2 (Tex.

App.—Austin Mar. 29, 2017, no pet.). Further, because Appellants did not secure

findings of facts and conclusions of law, this Court must “presume that the district

court impliedly found facts as necessary to support its judgment on any legal

theory presented.” Moore v. Brown, 408 S.W.3d 423, 431 (Tex. App.—Austin

2013, pet. denied); see also Retamco Operating, Inc. v. Republic Drilling Co., 278

S.W.3d 333, 337 (Tex. 2009).

24
CR 269-539 (Plaintiffs’ Response to Defendants’ Plea in Abatement and Motion to Compel
Arbitration).
25
Id. at CR 273.
26
Id. at CR 277.

14
As described below, each of Plaintiffs’ arguments made to the district court

is amply supported by the record. Although argued in reverse order to the district

court, Plaintiffs respond to Appellants’ points in the order presented by Appellants

in accordance with TRAP 38.2(a)(2).

A. The Dargahis Are Not Parties to the Arbitration Clause, and They
Failed to Preserve Any Argument that an Agency Relationship Makes
Them Parties.
While all Appellants waived arbitration (as set forth in Subpart B below),

only one of the Appellants—Yekk Construction—would have had any right to

invoke the arbitration clause in the first place.27 This is because the individual

Appellants—Pejman and Kamran Dargahi (the “Dargahis”)—are not parties to the

arbitration clause.28

“A party seeking to compel arbitration must establish that a valid arbitration

agreement exists and that the claims at issue fall within the scope of that

agreement.” G.T. Leach Builders, LLC v. Sapphire V.P., LP, 458 S.W.3d 502, 524

(Tex. 2015); see also Murdock v. Trisun Healthcare, LLC, 03-10-00711-CV, 2013

WL 1955767, at *3 (Tex. App.—Austin May 9, 2013, pet. denied) (“To be entitled

to compel arbitration under the FAA, [movant] had the initial burden of

establishing as a matter of law the existence of a valid arbitration agreement.”). It

27
CR 277 (Plaintiffs’ Response to Defendants’ Plea in Abatement and Motion to Compel
Arbitration).
28
Id.

15
is undisputed that the Contract contains an arbitration clause, but that clause, on its

face, is only between two parties: Plaintiffs and Yekk Construction. By contrast, a

valid arbitration clause does not exist between Plaintiffs and the Dargahis.

“As a general rule, an arbitration clause cannot be invoked by a non-party to

the arbitration contract.” Id. (internal quotation marks omitted). To determine

whether a valid arbitration clause exists between specific parties, the Court must

look to the “intent of the parties, as expressed in the terms of the agreement.” Id.

Here, the plain language of the arbitration clause speaks for itself:

If a dispute arises between LAKEWAY CUSTOM HOMES AND
RENOVATION and Owner, . . . both parties agree to submit the
dispute to binding arbitration . . . . The decision of the arbitrator shall
be final and binding upon both Owner and LAKEWAY CUSTOM
HOMES AND RENOVATION and judgment may be entered upon
it in any court with proper jurisdiction. [emphasis in original]29

The intent of the parties is clear. The only parties bound by the clause are

Lakeway Custom Homes and Renovation (i.e., Yekk Construction) and Plaintiffs.

Indeed the Dargahis themselves have elsewhere argued that they are not bound by

any of the contract’s terms.30

Appellants’ motion to compel arbitration was silent as to why, contrary to

the plain language of the Contract, the Dargahis should be considered parties to the

29
CR 474 (Contract Section XXIX) (emphasis in original).
30
CR 309 (December 9, 2015 Letter from Appellants’ Counsel).

16
arbitration clause.31 Appellants also completely failed to argue to the district court

why or on what grounds the Dargahis should be considered parties to the

arbitration clause. Indeed, in presenting their motion, Appellants did not even

mention the Dargahis.32 They merely recited and relied upon the same Contract

language noted above, which only refers to Yekk Construction and Plaintiffs—not

the Dargahis.33 After Appellees pointed out this fatal flaw in Appellants’ motion,34

Appellants—without citation to any authority or legal theory—vaguely asserted

that it would be “unfair” for the Dargahis “to have to defend themselves in this

Court.”35 Appellants presented no evidence—and no argument was made—that

the intent of the parties was to make the Dargahis parties to the arbitration clause.

Accordingly, they wholly failed to meet their burden of proving a valid arbitration

clause between Plaintiffs and the Dargahis. See Murdock, 03-10-00711-CV, 2013

WL 1955767, at *3.

For the very first time on appeal, Appellants now try to retroactively meet

their burden by raising a new argument (at 13) that, “as members and managers” of

31
CR 108-125 (Defendants’ Plea in Abatement and Motion to Compel Arbitration).
32
Reporter’s Record at 1-9 (May 24, 2017 Hearing on Motion to Compel).
33
Id. at 5:2-6:5.
34
Id. at 10:23-24 (“the arbitration clause, on its face, only applies to one of the defendants.”).
35
Id. at 24:17-18. Tangentially, Appellants brought a single case to the district court’s attention
in which a court held that plaintiffs’ claims under the Texas Trust Fund Statute fell within the
scope of an arbitration clause. See id. at 28:1-10. This case has nothing to do with the threshold
question of which Appellants were parties to and bound by the arbitration clause. Tellingly,
Appellants have omitted any reference to this case in their appeal.

17
Yekk Construction, the Dargahis are parties to the arbitration clause. Although

unclear from their briefing, it appears that Appellants now argue that the Dargahis

are parties under the arbitration clause through agency.36 In support of this new

agency theory, Appellants cite authorities (at 12-13) that they failed to raise in their

motion to compel and that they failed to present to the district court. Because

Appellants failed to present this new agency argument to the trial court, it may not

be considered on appeal. See Santander Consumer USA, Inc. v. Mata, 03-14-

00782-CV, 2017 WL 1208767, at *3 (Tex. App.—Austin Mar. 29, 2017, no pet.)

(declining to consider defendant’s incorporation-by-reference argument aimed at

compelling non-signatories to arbitration because defendant “did not raise the

argument in the trial court that it now raises no appeal”); In re Hawthorne

Townhomes, L.P., 282 S.W.3d 131, 140 (Tex. App.—Dallas 2009, no pet.)

(declining to consider equitable estoppel theory that non-signatory could compel

arbitration, because appellant “did not present this ground for arbitration to the trial

court”). Plaintiffs had no reason to present argument or evidence rebutting an

agency theory Appellants never raised below, and Plaintiffs are therefore not

36
Although never argued by Appellants in the district court (or stated in their appellate brief for
that matter), the Texas Supreme Court has recognized “six theories, arising out of common
principles of contract and agency law, that may bind non-signatories to arbitration agreements:
(1) incorporation by reference; (2) assumption; (3) agency; (4) alter ego; (5) equitable estoppel,
and (6) third-party beneficiary.” In re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 739 (Tex.
2005). Of course, regardless of the theory, the burden is on the party moving to compel
arbitration to prove that the non-signatory is bound.

18
required to do so now (although, out of an abundance of caution, Plaintiffs

nonetheless do so below).

Even if Appellants’ agency argument were preserved (although it was not),

Appellants still failed to meet their burden, because they failed to present any

evidence to establish agency. See Lyons v. Lindsey Morden Claims Mgmt., Inc.,

985 S.W.2d 86, 90 (Tex. App.—El Paso 1998, no pet.) (“To prove agency,

evidence must establish that the principal has both the right: (1) to assign the

agent’s task; and (2) to control the means and details of the process by the which

the agent will accomplish that task.”); see also Bridas S.A.P.I.C. v. Gov’t of

Turkmenistan, 345 F.3d 347, 357 (5th Cir. 2003) (finding evidentiary findings

insufficient to establish agency relationship binding non-signatory to arbitration

clause). This is, of course, no surprise, because Appellants never made an agency

argument in the court below in the first place. The only alleged evidence

Appellants now cite on appeal are two affidavits from the Dargahis, but those

affidavits do not set forth evidence of an agency relationship; indeed, they do not

state that the Dargahis were agents of Yekk Construction at all.37

37
The affidavit of Pejman Dargahi summarily states that he “was a member and manager of”
Yekk Construction without discussing the meaning of these titles or what activities they may
entail, while the affidavit of Kamran Dargahi says nothing about his relationship with Yekk
Construction. CR 262-263 (Affidavit of Pejman Dargahi); CR 112-113 (Affidavit of Kamran
Dargahi). Contrary to Appellants’ assertion, there is no evidence that Kamran was even a
“member” or “manager” of Yekk Construction, whatever those titles may entail.

19
Further, even if Appellants had argued to the district court that they were

agents and even if they had presented evidence in support thereof (although they

did neither), this would not entitle the non-signatory Dargahis to compel Plaintiffs

claims to arbitration because “a nonsignatory cannot compel arbitration merely

because he is an agent of one of the signatories.” Westmoreland v. Sadoux, 299

F.3d 462, 466 (5th Cir. 2002). The limited circumstances under which an agent

can compel arbitration, see id., are ignored by Appellants in their brief—just as

they were ignored (and not preserved) by Appellants in the court below.

Finally, Plaintiffs primary claims against the Dargahis—e.g., breach of

fiduciary duty under the Texas Trust Fund Act, fraud, and unjust enrichment—all

relate to the Dargahis’ misuse of Plaintiffs’ funds for the Dargahis’ own personal

enrichment.38 Appellants do not contend that the Dargahis’ misappropriation of

Plaintiffs’ money and other fraudulent activities were actions taken as “agents” of

Yekk Construction. Under Texas law, when “an employee’s actions are outside

the scope of the employee’s duties and cannot be attributed to his principal, an

employee is not entitled to invoke its principal’s arbitration provision.” Baldwin v.

Cavett, 2:10-CV-401-TJW-CE, 2011 WL 4591942, at *5 (E.D. Tex. Sept. 12,

2011) (citing In re Merrill Lynch Trust Co. FSB, 235 S.W.3d 185, 190 (Tex. 2007)

and SEB, Inc. v. Campbell, No. 03–10–00375–CV, 2011 WL 749292, at *4 (Tex.

38
CR 146-257 (Plaintiffs’ Fourth Amended Petition)

20
App.—Austin March 2, 2011, no pet.)); see also In re Kaplan Higher Educ. Corp.,

235 S.W.3d 206, 210 (Tex. 2007) (“[O]wners may not be able to invoke a

subsidiary’s arbitration clause when they act on their own behalf rather than for

their subsidiary.”). Accordingly, even ignoring Appellants’ preservation failures

and lack of evidence, Plaintiffs’ claims targeting the Dargahis’ self-interested

wrongdoing cannot be compelled to arbitration.

B. Appellants Waived Arbitration By Substantially Invoking the Judicial
Process to Plaintiffs’ Detriment.
Regardless of which Appellants are parties to the Contract’s arbitration

clause, all have waived arbitration by substantially invoking the judicial process in

ways that are fundamentally at odds with an arbitration proceeding and that

prejudice Plaintiffs’ right to a resolution of this dispute. See Perry Homes v. Cull,

258 S.W.3d 580, 589-90 (Tex. 2008) (holding that a party impliedly waives

arbitration “by [1] substantially invoking the judicial process [2] to the other

party’s detriment or prejudice”).

1. Substantial Invocation of Judicial Process.

A party substantially invokes the judicial process by “taking specific and

deliberate actions after a suit has been filed that are inconsistent with the right to

arbitrate.” In re Castro, 246 S.W.3d 756, 761 (Tex. App.—Eastland 2008, no

pet.). Courts consider a “wide variety of factors” in determining whether a litigant

has substantially invoked the judicial process, including, among other factors:

21
• how long the party moving to compel arbitration waited to do so;

• the reasons for the movant’s delay;

• whether and when the movant knew of the arbitration agreement
during the period of delay;

• how much discovery the movant conducted before moving to compel
arbitration, and whether that discovery related to the merits;

• whether the movant requested the court to dispose of claims on the
merits;

• whether the movant asserted affirmative claims for relief in court;

• the extent of the movant’s engagement in pretrial matters related to
the merits (as opposed to matters related to arbitrability or
jurisdiction);

• the amount of time and expense the parties have committed to the
litigation;
• whether the discovery conducted would be unavailable or useful in
arbitration;

• whether activity in court would be duplicated in arbitration;

• when the case is to be tried.
Perry Homes, 258 S.W.3d at 591.

No single factor is required to show waiver, and “courts have found waiver

based on a few, or even a single one” of the above-described factors. Id.

In the court below, Appellees presented evidence supporting many of these

factors. While Appellants attempt to minimize those factors by describing each of

them as “smoke,” Appellants colorful language does not make these factors any

less applicable.

22
i. How long the party moving to compel waited to do so.
While “waiver must be decided on a case-by-case basis,” the Texas Supreme

Court has also observed that, in at least one case, substantial delay, standing alone,

was enough to establish waiver. Id. at 591 & n.58. Accordingly, while not

dispositive, delay is an important factor in evaluating whether a party has waived

arbitration. It is not “nothing more than smoke,” as Appellants contend (at 16).

Appellants did not move to compel arbitration until nearly 9 months after

this lawsuit was filed. This delay is in line with the amount of time establishing

waiver in other cases. See, e.g., Perry Homes, 258 S.W.3d at 591 (waiver based on

14-month delay); Tuscan Builders, LP v. 1437 SH6 L.L.C., 438 S.W.3d 717, 720-

21 (Tex. App.—Houston [1st Dist.] 2014, review denied) (13 months); PRSI

Trading Co. LP v. Astra Oil Trading, NV, 01-10-00517-CV, 2011 WL 3820817,

*3 (Tex. App.—Houston [1st Dist.] Aug. 25, 2011, pet. denied) (11 months).

It is an undisputed fact that Appellants did not move to compel arbitration

until December 8, 2016.39 It is also an undisputed fact that Plaintiffs filed their

lawsuit on March 24, 2016.40 Accordingly, Appellants delayed filing a motion to

compel arbitration by nearly nine months. In a bizarre effort to evade this nine-

month delay, Appellants accuse Plaintiffs (at 16) of offering a “shady” timeline.

There is, of course, nothing “shady” about these undisputed dates. These are
39
CR 108-125 (Defendants’ Plea in Abatement and Motion to Compel Arbitration).
40
CR 4-14 (Plaintiffs’ Original Petition and Request for Disclosure).

23
simply the dates Texas courts use to measure delay in filing for arbitration. See,

e.g., Perry Homes, 258 S.W.3d at 596 (14-month delay measured from date of

filing suit); PRSI Trading Co. LP, NV, 01-10-00517-CV, 2011 WL 3820817, *3

(11 month delay measured from date of petition to date motion was filed).

Contrary to Texas law, Appellants go on to argue (at 17) that a more

“appropriate” measure of Appellants’ delay should be the date of Appellants’

answer (May 10, 2016) to the date of their motion to compel arbitration (December

8, 2017). Appellants fail to explain why this Court should depart from the typical

measure of delay, nor do they cite any authority for their contention. More

troublingly, their argument insinuates that Appellants either did not know about

Plaintiffs’ claims or did not know about the Contract’s arbitration clause until they

filed their answer. This is, of course, wholly untrue, because, as Appellants

acknowledged in their motion to compel arbitration, Appellants—represented by

counsel—participated in a mediation with Plaintiffs on December 10, 2015,

months before Plaintiffs filed their lawsuit.41 Accordingly, while it is perhaps

arguable that Appellants’ delay should be measured from a date earlier than March

24, 2016, when the lawsuit was filed (and when Appellants then-counsel also

41
CR 109 (Defendants’ Plea in Abatement and Motion to Compel Arbitration); CR at 308-309
(Kemp Gorthey letter to David King dated December 9, 2015).

24
received a courtesy copy of the lawsuit),42 there is no basis to measure Appellants’

delay from a later date.

ii. The reasons for the movant’s delay.
This factor weighs in favor of waiver, because the record does not reflect

any reason for Appellants’ nine-month delay. Nor do Appellants offer any reason

for the delay. Instead, the record suggests that, at best, the reason for the delay

may be traced to the fact that Appellants’ initial counsel chose not to pursue

arbitration, while Appellants’ new counsel, engaged in October 2016, over six

months after the lawsuit was filed,43 decided to change strategy in response to

Plaintiffs’ filing of their Summary Judgment Motion on December 2, 2016.

The fact that Appellants chose not to invoke the arbitration clause when

represented by different counsel does not mean that those months of delay are

excusable. Nor are Appellants excused for the further delay between October 2016

and December 2016 under the representation of new counsel. Appellants’ decision

to switch from litigation to arbitration after Plaintiffs filed for summary judgment,

far from being an excuse, is the type of tactical “switch” that leads to waiver. See

Okorafor v. Uncle Sam & Associates, Inc., 295 S.W.3d 27, 38 (Tex. App.—

Houston [1st Dist.] 2009, pet. denied) (“In determining waiver of arbitration rights,

detriment or prejudice to the opponent means ‘inherent unfairness caused by “a
42
Plaintiffs’ App. 2, March 24, 2016 letter to Appellants’ counsel.
43
CR 17 (Order Granting Unopposed Motion to Substitute Counsel).

25
party’s attempt to have it both ways by switching between litigation and arbitration

to its own advantage.”‘) (citing Perry Homes, 258 S.W.3d at 597).

iii. Strategic timing of appellants’ motion to compel on the eve
of summary judgment.
Seeking arbitration on “the eve of trial” is a crucial factor in determining

waiver. Perry Homes, 258 S.W.3d at 584 (“[A] party cannot substantially invoke

the litigation process and then switch to arbitration on the eve of trial.”).

Appellants filed their motion to compel arbitration less than a week after Plaintiffs

filed their Summary Judgment Motion.44 Thus, it was only when Appellants faced

the imminent prospect of a judgment against them that they sought to delay that

judgment by seeking to compel arbitration.

Appellants’ tactic is identical to seeking arbitration on the eve of trial.

Indeed, in their own briefing to this Court asking for a stay, Appellants

characterized Plaintiffs’ summary judgment proceedings as “a trial” which

threatened a “judgment against Appellants.”45 The fact that Appellants have

vigorously sought to prevent the district court from ruling on Plaintiffs’ Summary

Judgment Motion—both in this Court46 and in the court below47—proves that their

44
CR 18 (Plaintiffs’ Motion for Partial Summary Judgment), CR 108 (Defendants’ Plea in
Abatement and Motion to Compel Arbitration).
45
Plaintiffs’ App. 3, Appellants’ Emergency Motion for Temporary Relief to Stay Trial Court
Proceedings, at 7 (“Texas law considers a summary judgment proceeding as a trial . . . .”).
46
Id.; see also Appellants’ Motion to Expedite Consideration of Appellants’ Emergency Motion
for Temporary Relief to Stay Trial Court Proceedings (filed on June 19, 2017).

26
motion to compel arbitration marked a strategy shift aimed at halting the district

court’s proceedings on the eve of what they admittedly considered a trial.

iv. Whether and when the movant knew of the arbitration
agreement during the period of delay.
Appellants do not dispute that they knew about the arbitration agreement

from the outset of the lawsuit. The Contract containing the arbitration clause was

attached to various pleadings through the course of the litigation.48 Indeed,

Appellants’ initial counsel knew about and referenced the Contract well before the

lawsuit in connection with the parties’ mediation held in December 2015.49

v. The extent of the movant’s engagement in pretrial matters
related to the merits.
Despite Appellants’ attempt (at 17) to characterize yet another factor as

“smoke,” the record evidence clearly shows that, for months, Appellants fully

engaged in pretrial matters without once mentioning the arbitration clause. During

much of that time, Appellants were represented by different counsel, but as noted

above, that does not excuse Appellants’ delay. The timeline below illustrates

Appellants’ full participation in litigation, at least until Plaintiffs filed their

Summary Judgment Motion:

47
CR 672-683 (Defendants’ Motion to Stay Proceedings & for Expedited Hearing).
48
CR 36, CR 282, CR 468 (2014 Contract).
49
CR 308-309 (Kemp Gorthey letter to David King dated December 9, 2015).

27
DATE EVENT
Dec. 10, 2015 Plaintiffs and Appellants Mediate; no
discussion of arbitration.50
Mar. 24, 2016 Plaintiffs file suit.51

May 10, 2016 Appellants file answer without requesting
arbitration.52
May 27, 2016 Plaintiffs file amended petition with expert
report.53
June 2016 Plaintiffs serve discovery requests.54

July 2016 Parties’ counsel discuss trial settings;
Appellants’ counsel agrees to trial setting
in 2017.55
August 8, 2016 Plaintiffs move to compel discovery
responses and production of documents.56
August 11, 2016 Appellants respond to discovery requests
without mentioning arbitration clause.57
August 12, 2016 Parties enter Rule 11 agreement regarding
discovery; no mention of arbitration.58
October 3, 2016 Appellants file motion to substitute
counsel.59
Nov. 2016 New counsel continues to engage in
discovery by producing additional
documents and scheduling depositions.60
50
CR 308-309 (Kemp Gorthey letter to David King dated December 9, 2015).
51
CR 4-14 (Plaintiffs’ Original Petition)
52
CR 15-16 (Defendants’ Original Answer)
53
CR 353-426 (Plaintiffs’ First Amended Petition)
54
CR 323-333 (Plaintiffs’ First Request for Production of Documents to All Defendants)
55
CR 448 (Affidavit of David A. King, at ¶ 16).
56
CR 334-336 (Plaintiffs’ Motion to Compel Discovery Responses and Production of
Documents).
57
CR 338-351 (Defendants’ Response to Plaintiffs’ First Request for Production of Documents).
58
CR 352 (Rule 11 agreement).
59
Plaintiffs’ App. 1.
60
CR 427-428 (November 1, 2016 Email).

28
Dec. 2, 2016 New counsel notices subpoena for
production of documents on Plaintiffs’
construction lender.61
Dec. 2, 2016 Plaintiffs file Summary Judgment
Motion.62
Dec. 8, 2016 Appellants file Motion to Compel
Arbitration.63

Numerous courts have found that pretrial activities such as these contribute

to invocation of the judicial process. See, e.g., Electrostim Med. Services, Inc. v.

Health Care Serv. Corp., CIV.A. H-11-2745, 2012 WL 5373462, at *8 (S.D. Tex.

Oct. 30, 2012) (Rosenthal, J.) (obtaining written discovery and filing amended

answer, joint discovery/case management plan, and motion to dismiss); In re

Castro, 246 S.W.3d at 761-62 (filing motion to reinstate stricken answer,

requesting entry of docket control order, requesting extension to file dispositive

motions, serving discovery requests, filing motion to compel, and taking

deposition); In re Christus Spohn Health Sys. Corp., 231 S.W.3d 475, 481-82 (Tex.

App. 2007) (filing motion for continuance, substantive discovery, third-party

petition, and motion for contempt); Cent. Nat. Ins. Co. of Omaha, 856 S.W.2d 492,

494-95 (Tex. App.—Houston [1st Dist.] 1993, no writ) (obtaining written

discovery and filing general denial, motion for continuance, and counterclaim).

61
CR 429-445 (Subpoena Notice).
62
CR 18-107 (Plaintiffs’ Motion for Summary Judgment).
63
CR 108-125 (Defendants’ Plea in Abatement and Motion to Compel Arbitration).

29
In an attempt to downplay the many ways in which they participated in

litigation over nine months, Appellants cite two cases (at 17-18) in which courts

held that single activities—such as responding to discovery or signing a Rule 11

agreement regarding scheduling—did not establish invocation of the judicial

process. Appellants’ argument ignores, however, the standard by which waiver is

considered—namely, “waiver must be decided on a case-by-case basis, and . . .

courts should look to the totality of the circumstances.” Perry Homes, 258 S.W.3d

at 591. No single one of the factors set forth in Perry Homes is required to show

waiver, and “courts have found waiver based on a few, or even a single one” of the

factors. Id. “Of course, all these factors are rarely presented in a single case.” Id.

Neither of the cases cited by Appellants reflect facts akin to the facts of this

case. For example, in neither of the cases did the movant affirmatively propound

discovery other than form requests for disclosure. See G.T. Leach Builders, LLC v.

Sapphire V.P., LP, 458 S.W.3d 502, 514 (Tex. 2015) (“The only discovery that

G.T. Leach actually propounded was a form request for disclosure that G.T. Leach

included in its answer in the case.”); SEB, Inc. v. Campbell, 03-10-00375-CV,

2011 WL 749292, at *6 (Tex. App.—Austin Mar. 2, 2011, no pet.). Further,

neither of the cases involved an “eve of trial” motion for arbitration strategically

filed in order to prevent the district court from ruling on a summary judgment

motion. Nor did these cases involve a motion filed by substitute counsel after the

30
movant’s original counsel engaged in litigation for months without any indication

that Appellants intended to seek arbitration.

Whether Appellants invoked the judicial process depends on the unique facts

of this case, not the facts of two very different cases. The facts of this case show

that Appellants’ engagement in pre-trial activity is only one of many Perry Homes

factors weighing on the side of waiver.

vi. The amount of time and expense the parties have committed
to the litigation.
Yet another factor weighing in favor of waiver is the significant time and

expense the parties have committed to this litigation. In the nearly nine months

before Appellants moved to compel arbitration, and with the Court’s resolution of

Plaintiffs’ Summary Judgment Motion looming, the parties—and particularly

Plaintiffs—committed substantial time and expense to seeking a resolution of the

case on the merits.64

2. Prejudice to Plaintiffs.

“Prejudice refers to the inherent unfairness caused by ‘a party’s attempt to

have it both ways by switching between litigation and arbitration to its own

advantage.’” Tuscan Builders, LP, 438 S.W.3d at 721 (quoting Perry Homes, 258

S.W.3d at 597). The party opposing arbitration need only show “the fact of

prejudice,” not “its extent.” Perry Homes, 258 S.W.3d at 599.

64
CR 448 (Affidavit of David A. King, at ¶ 15).

31
As a threshold matter, Appellants failed to argue in the court below that

Plaintiffs were not prejudiced by Appellants’ delay. Instead, Appellants focused

solely on the issue of invocation of the judicial process, and did not once challenge

Plaintiffs’ showing of prejudice.65 By laying behind the log, Appellants have “not

preserved this issue for [this Court’s] review.” Santander Consumer USA, Inc.,

2017 WL 1208767, at *3 (argument opposing denial of motion to compel

arbitration was not preserved); see also In re Hawthorne Townhomes, L.P., 282

S.W.3d 140 (same).

Even if Appellants’ point were preserved, however, Plaintiffs demonstrated

prejudice in two separate ways.

i. Costs Incurred.
“A party opposing arbitration may establish that it suffered actual prejudice

by showing that it incurred costs and fees due to the movant’s actions or delay.” In

re Castro, 246 S.W.3d at 762. Here, Plaintiffs have incurred significant time and

expense in connection with discovery and in connection with preparing Plaintiffs’

Summary Judgment Motion. Specifically, the record reflects that before

Appellants moved to compel arbitration, Plaintiffs incurred over $35,000 in

attorneys’ fees from pleading the case in this Court, participating in written

65
Reporter’s Record (May 24, 2017 hearing on motion to compel arbitration).

32
discovery, working with Plaintiffs’ expert, and preparing Plaintiffs’ Summary

Judgment Motion.66

Appellants do not dispute that Plaintiffs incurred these litigation costs before

Appellants moved to compel arbitration. Instead, relying on a single case,

Appellants argue (at 19) that, as a per se rule, litigation costs cannot establish

prejudice. But this argument was expressly rejected in Perry Homes, in which the

Court refused to adopt an “irretrievable-loss standard” for prejudice. Perry Homes,

258 S.W.3d at 599. Accordingly, numerous courts have held that litigation costs

may establish prejudice. See In re Castro, 246 S.W.3d 762 (Tex. App.—Eastland

2008, no pet.) (finding prejudice because “the record demonstrated that [non-

movant] and his counsel had to prepare for trial because of [movant’s] delay in

filing the motion”); Cent. Nat. Ins. Co. of Omaha, 856 S.W.2d at 494–95 (“The

expenses incurred by the Glovers for attorney’s fees and discovery costs is also

evidence of harm and prejudice”); Marble Slab Creamery, Inc. v. Wesic, Inc., 823

S.W.2d 436, 439 (Tex. App.—Houston [14th Dist.] 1992, no writ) (“the expense to

Wesic for attorney’s fees and discovery costs in defending this suit is also evidence

of harm and prejudice.”).

Of course, Appellants’ proposed per se rule also flies in the face of the

Texas Supreme Court’s instruction that “waiver must be decided on a case-by-case

66
CR 448 (Affidavit of David A. King, at ¶ 15)

33
basis, and . . . courts should look to the totality of the circumstances.” Perry

Homes, 258 S.W.3d at 591. The single case Appellants rely upon for their per se

rule presents very different facts from those present here. In contrast to the facts in

SEB, Inc. v. Campbell, 03-10-00375-CV, 2011 WL 749292, Appellants here

moved to compel arbitration only after Plaintiffs had incurred substantial costs in

preparing for and filing their Summary Judgment Motion. As Appellants

themselves have argued,67 Plaintiffs’ Summary Judgment Motion is, in essence, a

trial proceeding, thus putting Plaintiffs in a very different position than the

plaintiffs in SEB. Had Appellants moved for arbitration sooner, Plaintiffs would

not have incurred these trial costs. See In re Castro, 246 S.W.3d 762 (Tex. App.—

Eastland 2008, no pet.) (finding prejudice because “the record demonstrated that

[non-movant] and his counsel had to prepare for trial because of [movant’s] delay

in filing the motion”).

As for Appellants’ suggestion that Plaintiffs’ evidence showing prejudice is

somehow flawed because it did not include “actual billings,” this is not what Texas

law requires, and Appellants cite no authority for this proposition. Without

objection from Appellants’ counsel, Plaintiffs submitted affidavit evidence

demonstrating that “[t]hrough December 8, 2016, when Appellants moved to

compel arbitration” Plaintiffs had incurred “over $35,000 in attorneys’ fees” in
67
See Plaintiffs’ App. 3, Appellants’ Emergency Motion for Temporary Relief to Stay Trial
Court Proceedings, at7-8.

34
connection with “time spent pleading the case in [the district court], participating

in written discovery, working with Plaintiffs’ experts, and preparing Plaintiffs’

Motion for Summary Judgment.”68 This evidence goes well beyond what Plaintiffs

needed to prove in order to show prejudice. See Perry Homes, 258 S.W.3d at 599–

600 (“[B]oth dissents quibble with the Defendants’ proof of prejudice because it

was insufficiently detailed. This confuses proof of the fact of prejudice with proof

of its extent; the Defendants had to show substantial invocation that prejudiced

them, not precisely how much it all was. Referral to arbitration should be decided

summarily with the evidence limited to disputed facts; . . . requiring proof of each

[expense] would have merely made the referral hearing longer and more

expensive.”).69

ii. Appellants’ Affirmative Discovery.
Further, Appellants ignore the second way in which Plaintiffs were

prejudiced by Appellants’ delay: Appellants issued a discovery subpoena to

Plaintiffs’ construction lender, Regions Bank, and obtained documents under the

68
CR 448 (Affidavit of David A. King, at ¶ 15)
69
In a truly misleading ploy to undermine Plaintiffs’ evidence, Appellants also knowingly
misrepresent Plaintiffs’ affidavit as “forecasting fees” through 2017. Contrary to Appellants’
intentional misreading, the affidavit expressly states that “Through December 8, 2016, when
Defendants moved to compel arbitration, the amount of time worked by timekeepers at Graves
Dougherty in connection with Plaintiffs’ claims totaled 150 hours for attorneys.” Id. (emphasis
added). Completely ignoring this language, Appellants seize upon a typo in the next sentence of
the affidavit to arrive at their intentional misreading. Because Plaintiffs have no obligation in the
first place to detail their exact expenses before Appellants moved to compel arbitration,
Appellants’ misreading is irrelevant. Nonetheless, Appellants’ ploy reveals the weakness of their
argument on the merits.

35
Texas Rules of Procedure that they may not have otherwise received in

arbitration.70 Evidence in support of this prejudice was presented in the court

below without objection.71 As the Texas Supreme Court explained in Perry

Homes, this evidence is sufficient to show prejudice. See Perry Homes, 258

S.W.3d at 599 (rejecting argument that no prejudice should be found from

discovery without proof that the arbitrator would have prohibited it because

“arbitrators have almost unbridled discretion regarding discovery, so no one can

predict what they might do in advance”). These facts further set this case apart

from SEB because, in that case, the defendant had propounded none of its own

discovery other than a form request for disclosure. SEB, Inc., 2011 WL 749292, at

*6.

CONCLUSION AND PRAYER

Appellants’ motion to compel is meritless as to all Appellants in light of

Appellants’ invocation of the judicial process and the prejudice it has caused to

Plaintiffs. Further, in addition to waiving arbitration, the Dargahis are not entitled

to arbitration in the first place because they are not parties to the arbitration clause.

Appellants did not present any argument in the court below to the contrary, and

70
Because Appellants failed to present any argument in the court below regarding prejudice,
Plaintiffs had no need to present additional evidence of Appellants’ affirmative discovery. It is
notable, however, that Appellants also performed, and Plaintiffs cooperated in connection with,
investigations of Plaintiffs’ home by Appellants and their expert, as discussed in the email
correspondence attached hereto as Plaintiffs’ App. 4.
71
CR 429-445 (Subpoena Notice).

36
they lack competent evidence on appeal. Plaintiffs respectfully request that this

Court hold that the trial court did not abuse its discretion in denying the motion to

compel arbitration, affirm the trial court’s order, and award Plaintiffs such other

relief to which they may be entitled.

Respectfully submitted,

GRAVES, DOUGHERTY, HEARON &
MOODY
A Professional Corporation
401 Congress Avenue, Suite 2200
Austin, TX 78701-3790
(512) 480-5722 Telephone
(512) 536-9942 Telecopier

By: /s/ David A. King
David A. King
State Bar ID No. 24083310
dking@gdhm.com
Brian T. Cumings
State Bar ID No. 24082882
bcumings@gdhm.com

ATTORNEYS FOR APPELLEES
DHIRAJ HANDA AND RITU HANDA

37
CERTIFICATE OF SERVICE

The undersigned certifies that a true and correct copy of the foregoing has
been served by electronically via the e-filing system on counsel of record as listed
below on this the 28th day of August, 2017:

Carl J. Wilkerson
Bush Rudnicki Shelton, P.C.
200 N. Mesquite St., Suite 200
Arlington, Texas 76011
Telephone: (817) 274-5992
Facsimile: (817) 261-1671

ATTORNEYS FOR APPELLANTS

/s/ David A. King
David A. King

CERTIFICATION

I certify that I have reviewed the foregoing brief and concluded that every
factual statement in the brief is supported by competent evidence included in the
appendix or record.

/s/ David A. King
David A. King

CERTIFICATE OF COMPLIANCE

I certify that the foregoing brief was prepared using Microsoft Word, and
that, according to its word-count function, the sections of the foregoing brief
covered by TRAP 9.4(i)(1) contain 6877 words.

/s/ David A. King
David A. King
38
10/3/2016 3:49:39 PM
Velva L. Price
District Clerk
Travis County
CAUSE NO.D-1-GN-16-001279 D-1-GN-16-001279
Terri Juarez
DHIRAJ HANDA and RITU HANDA IN THE DISTRICT COURT QF

Plaintiff,

v.
TRAVIS COUNTY,TEXAS
PEJMAN DARGAHI,KAMRAN
DARGAHI,and YEKK CONSTRUCTION
SERVICES,LLC,d/b/a LAKEWAY
CUSTOM HOMES AND RENOVATION,

Defendants. 261sT JUDICIAL DISTRICT

UNOPPOSED MOTION TO SUBSTITUTE COUNSEL

TO THE HONORABLE JUDGE OF THIS COURT:

Pursuant to Rule 10 of the Texas Rules of Civil Procedure, Defendants Pejman Dargahi,

Kamran Dargahi, and Yelck Construction Services, LLC, d/b/a Lakeway Custom Homes and

Renovation files this Unopposed Motion to Substitute Counsel, and would respectfully show unto

the Court the following:

1. Defendant respectfully moves the Court to substitute Kemp Gorthey of The Gorthey Law

Firm be permitted to withdraw as attorney of record and that the following attorney be substituted:

James Rudnicki
State Bar No. 24006148
JRudnicici(cry,BRSTexas.com
Russell Clinage
State Bar No. 00790473
RClina~e cr,BRSTexas.coin
Tyler Hood
State Bar No. 24097846
THood(a~BRSTexas.com
Bush Rudnicki Shelton, P.C.
200 N. Mesquite St., Suite 200
Arlington, Texas 76011
Telephone: (817)274-5992
Facsimile: (817)261-1671

App. 1
2. Defendant specifically approves ofthis substitution and Plaintiff's counsel has been consulted

and has no objection.

3. This substitution is not sought for delay only, but so thatjustice maybe done.

WHEREFORE,PREMISES CONSIDERED,Defendant respectfully prays that the Court

grant this Unopposed Motion for Substitution of Counsel.

Respectfully submitted,

BUSH,Ru ~ ,S [, c~v, P.C.

James R~ nicki
State Bar No. 24006148
JRudnicki(a,BRSTexas.com
Russell Clinage
State Bar No. 00790473
RClinage(a7BRSTexas.com
Tyler Hood
State Bar No. 24097846
THood(cr~BRSTexas.com
4025 Woodland Fark Boulevard, Suite 190
Arlington, Texas 76013
Telephone:(817)274-5992
Facsimile:(817)261-1671

ATTORNEYS FOR DEFENDANT,
PEJMAN DARGAHI,KAMRAN DARGAHI,
and YEKK CONSTRUCTION SERVICES,
LLC,d/b/a LAKEWAY CUSTOM HOMES
ANll 12ENOVATION

APPROVED AS TO FORM AND SUBSTANCE:
~~

Kemp W. Gorthey ,Former Counsel ~ i
The Gorthey Law Firm ~,`t
604 West 12~~' Street
Austin, Texas 7$701
1L

Tyle o d;C nsel for Defendant
Bush Rudnicki Shelton, P.C.
200 N. Mesquite St., Suite 200
Arlington, Texas 76011
f ~.~"

David A. Kai g,fCouns 1 far Plaintiff
Graves, Dougherty, Hearon &Moody,P.C.
401 Congress Avenue, Suite 2200
Austin, Texas 78701

CERTIFICATE OF SERVICE.

I certify that a true and correct copy of the foregoing has been forwarded to the following
known counsel of record as indicated below, on October 3, 2016:

Via E-file
David A. King, Counsel far Plaintiff
Graves, Dougherty, Hearon &Moody,P.C.
401 Congress Avenue, Suite 2200
Austin, Texas 78701

Via E-file
Kernp W. Gorthey ,Former Counsel
The Gorthey Law Fii7n
604 West 12~' Street
Austin,. Texas 78701
CAUSE NO.D-1-GN-16-001279

DHIRAJ HANDA and RITU HANDA IN THE DISTRICT COURT OF

Plaiiztiff,

v.
TRAVIS COUNTY,TEXAS
PEJMAN DARGAHI,KAMRAN
DARGAHI,and YEKK CONSTRUCTION
SERVICES,LLC,d/b/a LAKEWAY
CUSTOM HOMES AND RENOVATION,

Defendants. 261ST JUDICIAL DISTRICT

ORDER GRANTING UNOPPOSED MOTION TO SUBSTITUTE COUNSEL

The Court hereby grants the Unopposed Motion to Substitute Counsel filed on behalf of

Defendant Pejman Dargahi, Kamran Dargahi, and Yekk Construction Services, LLC, d/b/a

Lakeway Custom Homes and Renovation. Kemp Gorthey of The Gorthey Law Firm is withdrawn

as attorney ofrecord for Pejman Dar~ahi, Kamran Dargahi, and Yekk Construction Services, LLC,

d/b/a Lakeway Custom Homes and Renovation and the following attorneys are substituted in their

place:

James Rudnicki
State Bar No. 24006148
JRudnicki(c~BRSTexas.com
Russell Clinage
State Bar No. 00790473
RClinage(c~BRSTexas.com
Tyler Hood
State Bar No. 24097846
THood(c~BRSTcxas.com
Bush Rudnicki Shelton, P.C.
200 N. Mesquite St., Suite 200
Arlington, Texas 76011
Telephone: (817)274-5992
Facsimile: (817)261-1671

SIGNED ,2016.

JUDGE PRESIDING
David A. King
512.480.5722
GD 512.536.9942 (fax)
HM dking@gdhm.com

GRAVES DOUGHERTY HEARON &MOODY MAILING ADDRESS:
P.O. Box 98
A Professional Corporation Austin, TX 78767-9998

March 24, 2016

Via Email
Mr. Kemp W. Gorthey
The Gorthey Law Firm
604 West 12"t Street
Austin, Texas 78701
kemp@gortheylaw.com

Re: Rule 408 Settlement and Compromise Communication
Residential Construction Contract (the "Contract") concerning 228 Sanostee
Cove, Austin, Texas 78733(the "Project")

Dear Kemp:

The Handas cannot accept the builders' settlement offer of the LLC's assets plus $25,000. This
offer is too far below the $280,000+ in damages the Handas are expected to sustain.

Attached hereto is a copy of the Handas' petition filed in Travis County District Court today.
However, in a final attempt to avoid the need to pursue this dispute in court, the Handas are
willing to settle all existing disputes between the parties—including the outstanding defect
claims—in exchange for (i) conveyance of the 2 lots (or, if the builders want to sell the lots
themselves, payment within 3 months of $85,000) and (ii) payment of $100,000. As discussed,
we estimate that the net proceeds from the lots will be $70,000 to $80,000, thereby resulting in
recovery of no more than $180,000 of the Handas' damages (compared to the $240,000
originally sought by the Handas). Further, the LLC's bank statements show a balance of
$27,000, and we understand that the builders also settled a claim against their concrete
subcontractor. When these funds are taken into account, we believe the difference between the
Handas' offer above and the builders' offer may be less than $25,000. However, this $25,000 is
meaningful to the Handas, particularly because, under the proposed settlement structure, they
would be taking on the complete cost of finishing the builders' work and repairing the identified
defects.

If the builders will not agree to this offer within 30 days, or if no alternative agreement is
reached, we will effect service of process on the builders and seek all remedies available to the
Handas. The Handal will also seek recovery of all costs of court and attorney's fees, which are
excluded from the proposed settlement offer and which, as you know, will increase substantially
if litigation proceeds.

App. 2
March 24, 2016
Page 2

Please also note that, if settlement cannot be reached, we also intend to amend the petition to add
DTPA claims (in connection with both the builders' diversion of funds and construction defects)
and RCLA claims after the statutory notice periods have expired.

Please also note that, after last night's rain, additional water penetration was observed under the
basement stairwell. Qriginally, there were four areas of the basement that were leaking
(stairwell, bar area, home theater area, and kitchenette area). After the builders' attempted fixes,
water penetration was only observed in the kitchenette. However, now with the stairwell leak,
there are two areas that are compromised. The other two areas may fail over time. We will be
updating the Handas' inspection report with these latest findings. Further, these leaks continue
despite the Handas' reasonable mitigation efforts.

Please feel free to contact me if you would like to discuss.

Kind Regards,

/s/David Kin

David A. King

cc: Dhiraj Handa
Ritu Handa
G. Douglas Kilday (Firm)
Rick Triplett(Firm)

401 Congress Ave. Suite 2200 Austin, Texas 78701 512.480.5600 www.gdhm.com
3/24/2016 11:38:09 AM
Velva L. Price
District Clerk
Travis County
D-1-G N-16-001279
Victoria Chambers
Cause Na.n'1-r'N-16-ooi279

17HTRAJ HANDA and RITU HANDA, ~ IN TIDE I7IS"1'IZICT COURT OF
Plaintiffs, §

v. § TRAVIS COUNTY,TEXAS,

PEJMAN DARGAIII, §
KAMRAN DARGAIII, and §
YEKK C nN5TRUC"I'lON SERVICES,
LL,C, D%B/A LAKFWAY CUSTOM
HOMES AND RENOVATION, §
~e:fendants. § 261st JUDICI'E1L I~IS7'IZTC'T

PLAINTIFFS' ORIGINAL PETIT.ION AND REQUEST FOR DISCLOSURE

"I"Q I'HE HONORA,BI,E JUDCI OT' SAID CnUit'T';

COME NOW Plaintiffs Dhiraj Handa and Ritu Handa, and ale this Original Petitio~i

cc~rnplaining of Defendants Pejma~a Dargahi, Kamran Dargah, and Yekk Constxuction Services,

LLC, d/h/a Lakeway Custom Hc~rnes and Renovation, and for cause of action would show as

Follows:

I.
BACKGROUND ANn OVERVIEW

1. This lawsuit seeks money ciarnages based nn the Defendants' wrongful and

fraudulent actions in connection with afixed-price resideitiral c~nstructi~n project. Although

~'laintiffs have paid. 95% of the Contract Price, the Defendants have improperly refused to move

forward with the work. Instead, the Taefendants are holding the project hostage by insisting upon

payment of additional amounts tI~at are not owed and that exceed the total Goritract Price,

Further, Defendants have railed to pay subcontractors, despite falsely representing to 1'laintifl`s

that all sti~bcontractors had been paid. llefendants have fraudulently diverted trust Fund payments

made by Plaintiffs to themselves and to rather purposes, leaving Plaintiffs exposed t~ the risk of
paying for the same completed work twice, while also having to pay new contractors to finish the

work that the X)ei'end~nts are reltising to perfoxin,

II.
DISCOVERY PLAN

2. Discovery in this action should prpceed under i.,eve13 pursuant to Rule 190.4 of

the Texas Rules of Civil Procedure.

III.
PARTIES

3. Plaintiffs Dliiraj Handy and Ritu Handy ire residents of Travis.County, Texas.

4. Defendant Fejman :nargah is a resident. of rI`ravis County, Texas, and nay be

served with ~racess at 125 Schoo~ier Drive, Lakeway, Texas, 78.738.

5. Upon information and belief, I7eferadant Kamran Dargahi is a resident of'Travis

County, Texas, and may be served with process at 6425 Old Harbor Lane, Austin, Tcx~s, 78739,

6. L7efezidant Yekk Gonstruetion Services, LLC, d/b1a Lakeway Custom Homes and.

Renovation is a ~'exas limited liability company with its principal office in Lakeway Travis

County, Texas, and may be served with process by serving its registered agent, I'ejman nargahi,

at 125 Schooner Drive, Lakeway, Texas, 78738

IV.
JURISDICTIQN AND VENUF.

7. This Cow-t kias subject matter jurisdiction over Plaintiffs' claims, and Plaintiffs'

claims are within the jtir sdictional limits of this Court. i'ursuant to Tex. R. Civ. P. 47(c)(4),

Plaintiffs seek monetary relief over $200,000 but not more than $1,000,000.

8. "I`ravis County is a county of proper venue under Section 15.002, Tex. Civ. Prac.

8c Rein. Cade. Each Defendant's residence or principal of~.ce is in Travis County and all or a

substantial part ~fthe events giving rise to Plaintiffs' claims occurred in Travis County.

Pi,n1NTIFFS' ORIGINAL PE'I'IT[ON AND REQUEST P'OR DISCLOSURE
2
V.
FACTS

9. On or around Apri14, 2014, Plaintiffs entered into a Residential Construction

Contract(the "Contract," attached hereto as exhibit A)under which "Lakeway Custom Homes

and Renovation" agreed to build a house on a piece of unimproved land located at 228 Sanostee

Cave, TY•avis County, Texas,fox a fixed contract prxee of $1,4GO,OOO.OQ (the "Project"). The

Contract was executed nn or around ~pri14, 2014, by pefendant Pejman Dargahi ("Dargahi").

1 U. The Contract did aiot disclose that Lakeway Custom Homes and Renovation was a

d/b/a for Defendant Yekk Construction Sezvices, LLC ("Yekk"), tior did the Contract disclose

that Dargahi was executing the Contract as the agent of Yekk or any other entity. In a November

19, 2015 email, Dargahi misrepr~s~nted to Plaintiffs that Che Contract was with "Lak~way

Custom Hoines LLC"(a non-existent entity), and Dargahi did not indicate that he signed fhe

Contract on behalt of Yekk. Dargahi has also indicated that he and 11is brother, Kamran Dargahi,

are "partners" in the non-existent I.,akeway Custom Flomes LLC. Although.not disclosed in the

Contract, upon inforrr~ation and belief, Dar~ahi is the sole member acid director of Ye]<k.

11. Article V of the Contract describes the following payment protocol:

Progress Payments: During construction, LAKEWAY CUSTOM I-I4M~S AND
RENOVl1.TION shall present Owner wit11 requests for Progress Payments based
upon the allocated cost ofthe completed portions and/or phases of construction
performed to the date of each request. Each Progress Payment request shalt be
made in normal constn~ction phases as agreed upon by Owner,LAKEWAY
CUSTOM HOMES AND RF.,NOVATION, and the interim construction Lender,
if any, and shall be paid according to the draw schedule .initialed by Owner and
LAKEWAY CUSTOM HOMES AND RENOVATION and attached to this
Agreement ~s an exhibit. LAKEWAY CUSTpM HOMES AND
RENOVATION agrees that progress payment to them will be made only
after the inspector front the financial institution that the Builder has an
agreement with passes ttnd approves the completed portion of the
construction for which payment is being requested. [emphasis added]

PLAlNT1FPS' ORIGWAL PE'I'1'fION AND REQUEST FOR DISCLUSU2E
3
12. In accordance with Article V, and as reflected in the Draw Schedule prepared by

the construction lender(Regions Bank), Plaintiffs have made progress payments totaling

$1,387,750($660,000 of which was paid directly by Plaintiffs and $727,750 of which was paid

by the construction lender), This is 95% of the Contract price. FIowever, Dargahi has completed

less than 90°/a of the scheduled work at a value of $1,314,000. In other words, Dargahi leas been

paid for more than he has completed, and has been overfunded by at least $73,750.

13. Dargahi's last request for a payment, in the anao~inC of $90,520, was made in

November 2015. At that time, Dargahi was already overfunded by $29,950. Regions k3ank

approved a progress payment of$43,800 on T~riday, November 13, 2015, noting that this ftindin~

was an "exception to policy" and was "lhe rnaxim~im amount we could get approval to fund per

management." Regions Bank stressed that "there will be no further draws from the loan until the

project is completed."

]4. TIowever, the following Monday, November 16, Dargahi disclosed to Plaintiffs

that he was still. "$150,~OU +/- short to finish our contract." 'This despite the fact that, with the

$43,800 payment made the previous Friday, Dargahi was already overfunded by $73,750.

Dargahi also declared that "no more [coristzuctio~~] activities could be performed unless we are

financially comfortable." At ar around this same time, Dar~ahi abandoned the Project, leaving it

exposed to the elements, vandalism, and theft. Since that time, Dargahi has ceased all

construction work on the Yraject despite repeated requests from Plaintiffs to resume work.

15. In the weeks following Dargahi's refusal to complete his work on the Project i.n

accordance with t11e Contract, Plaintiffs learned That according to Dargahi's own estimate, it

would cost over $130,000 to complete the remaining work. on the Project. Despite Plaintiffs'

PLAINTIFFS' ORIUINAI.I'Ii'CI"1'IQN AND R}:QUE:?ST FOR DISCI.OSI.IRF,
4
repeated demands, Dargahi has refused to complete the at~tstanding work on the Project in

acco~•dance; with the Contract.

16. Plaintiffs also discovered that Dargahi owed more than $120,000 to at least

seventeen subcontractors fired by Dargahi to work on the Project, notwithstanding the fact that

Dargahi repeatedly represented t~ Plaintiffs prior to obtaining the last draw on November 13,

201.S that all subcontractors had been paid. With respect to a subcontractor responsible for

constructing a well for the Project,.Iaargahi had also obtained Flaintif:f's' a~~proval of a $2(},000

chari~e order after 1~ar~;ahi falsely represented that tl~e subcantraetor had already been paid fir

SL1CIi WOI'JC. Numerous subcontractors have filed liens an the I'raject or prodded notice ofintent

to file liens. Despite ~'laiYitiiTs' repeated ~iem~nds, Dargahi has refused to pay the outstanding

debts owed to the subcontractors, and llargahi has not discharged any subeontractars' liens..

17. Further, after Dargalii's cessation of work, Plaintiffs discovered that, all alnn~,

17ar~~illi and his brother, Kamran, had been systematically divert ilg substantial sums of money

from Plaintiffs' progress paymen:ls to other expenses unrelated to the Project. Specifically,

according to Defendants' own bank statements and upon ini'ormation and belief, the Dargahis

uscti Plaintiffs' money to .pay for the following: (i) other construction projects (as confirmed by

affidavits c~bt~ined from Defendants' subcontractoz•s, who worked on mt~itiple projects for

Defend its, but who were paid only out of Plaintiffs' fiends);(ii) advertising;(iii) web design;

(zv) plumbing work done on Pajeman Dargahi's personal house;(v) purchasing a car,(vi)

purchasing reat estate;(vii) attorney's fees in connection with multiple disputes.; and (viii)

personal expenses, including out-af-state trips, charged to an American Express credit card. As

Defendants' hank statements indicate, such. payments wire made directly from the bank accc~~int

PLAIN'C'IFFS' OItIGINA[,PI;"PITION AND R.F..QUFST FUR DISCLbSIJktG
5
created far the Froject, which contained no funds other than those paid by P1ainCif~'s and the

construction lender for completion ofthe Project.

18. Remarkably, the Uar~;ahis do not dispute that they systetnatically diverted and

spent such funds as ifthey hack been deposited in the Dargahis' own personal bank account.

Instead, now that their misappropriation offunds has been uncovered, the Dargaliis appear to

claim that they were entitled to divert Plaintiffs' payments based on the contention that they

expected to make a profit on the Project, and they therefore should have been able to deduct their

"expected" profits fca~xi Plaintiffs' progress payments before the Project was aclz~ally c~rnpleted.

01'course, this bafilirig contentio~~, which was only revealed after Plaintiffs' uncovered the

diversions, is contrary to Chapter 162 of'the Texas Property Code and ignores the plain language

ofthe Contract. Rather than promising Dargahi any type of profit, the Contract expressly

provides for a fixed payment of$1,460,400-95% of which ($1,387,750) was fraudulently

extracted from Plaintiffs before the Uar~ahis announced in November 2015 that they were

halting all work on the Project unless and until Plaintiffs personally paid them well in excess of

what the construction lender could release and well in excess of what Mr. and Mrs. ~-Tanda were

obligated to pay under the CoYrtract.

VI.
CAUSES OF ACTIN

A. Breach of FiduciAry Duty Uncier Trust Fund Act(Against All Defendants)

19. Plaintiffs incorporate by reference the preccdiiig paragraphs herein.

20. Plaintiffs' progress payments to Defendants were made under a construction

contract for tl~e improvement of specific real property in Texas, and are therefore "trust fiYnds"

pursuant to Section 162.001, Tex. Prop. Code. Defendants Pajeman and Kamran Dargahi had

control and direction ovex Plaintiffs' progress payments for the Project. Plaintiffs are

PLA[N7'll'T'S' ORIGINAL PF,TITION AND RL•'QUES'P POR DISCLOSUKCS
6
beneficiaries ofsuch funds pursuant to Section 162.003, and Defendants are trustees of such

fiends pursuant to Section 162.QQ2.

21, As described.above,I,7efendants engaged in the systematic diversion ofPlaintiffs'

progress payments without first fully paying all current or past due obligations Defendants

incurred. Defendants did so intentionally, knowingly, and with intent to defraud. Defendants'

misapplication.oftrust funds is in violation Qf Sectzon 162.p31, and is a breach of Defendants'

duties as trustees, for which they may be held civilly liable.

22. Defendants' breaches of fiduciary duties. owed to Plaintiffs under Chapter 162

caused I'laintiff~ damages within the jurisdictional limits oP this Court.

B. Common Law Fraud (Against All Defendants)

23. Plaintiffs incorporate by reference the preceding parlgraphs herein.

24, Defendants Pajernan and Kamran Dargahi represented to Plaintiffs that #:heir

progress payments and change order payments would be used to pa}~ fc~r the construction ~fthe

Project. F-Iowever, Defendants never intended to use Plaintiffs' payments solely for the Project,

as demonstrated by their systematic diversion of Plaintiffs' payments for Defendants' personal

use. Defendants' false representaxions induced Fl~.int ffs to enter the Contract and to make

progress payments and change order payments to Defendants under the Contract.

2S. Defendants Pajeman and Kamran Dar~;Ahi also represented to Plaintiffs that they

had fully paid the subcontractors hired to work an the Project knowing that seventeen

subcontractors had not, in fact, been paid—to t3ie tune of over $120,000. Defendants' false

representations induced Plaintiffs to make progress payments and change order.payrncnts to

Defendants under the Contract.

FLAIN7`II~E~5' ORi~INAL PETITION AND ~tEQUE3T FOR DISCLdSURE
7
26. Plaintiffs' reasonable reliance on Defenelants' false representations caused

Plaintiffs to incur damages in excess of $280,000.

C. Cunstractive Trust (A.gaii~st All Defendants)

27. Plaintiffs incorporate by reference the preceding paragra~~hs herein,

28. llefendanis have wrongfully profited from their breaches of fiduciary duty

descriUed above, Plaintiffs seek the imposition of a constructive tr~.ist upon all assets, revenues,

and profits that Defendants have received and continue to receive as a result of their wrongful

cond~ict and breaches o~ fduciazy duty.

D. Restitution and Unjust Enrichment(Against All Defendants)

29, Plaintiffs incorporate by reference the preceding paragraphs herein.

30. Defendants unjustly received (by taking for themselves)the portion of Plaintirfs'

progress payments which Defendants diverted. to non-Project expenses, D~fendatlts obtained

those benciits by taking undue advantage of Plaintiffs. Defendants are required to make

restittrlian ofi}ae benefits they unjustly received at the expense of Plaintiffs.

F.. Money Had and Received (Against All Defendants)

31. Plaintiffs incorporate by referertice the precedic~g paragraphs hereiY~.

32. Tay fraudulently divertinb ~'laintifts' progress payments, Defendaalts h~lcl money

that belotlgs to Plaintiffs in equity and good conscience. Plaintiffs are entitled to recover such

money.

F. 13reaeh of Contract(Against Pejman Uargahi and Yekk)

33. Plaintiffs incorporate by reference the preceding paragraphs herein.

PLAlN'PIFF~' QRICiINAL PL'I'1'C10N ANll RI:QUNS'!'1'OR DISCLOSURE
g
34. Yekk and Plaintiffs are parties to the Conract, anti Pejman Dargahi is

indivic{ually liable for any breaches of Yekk's obligations under the Contract, as described above

and as shown in the Contract itself.

35. Under the Contract, Yekk and Pejmail Ua1•gahi are ovligated to "provide all labor

and materials far construction" ofthe Project "according to (the] Contract and the Plans," and

"pay all costs rzlated to the Wprk." Exhibit A,Sections TTI, XIV. Yekk and Pejman Dar~;ahi

have breached these contractual obligations, or to the extent such. breaches have not yet occurred,

ITekk and Pcjman I?argahi have anticpatorily breached th~cir obligations by static~g that they do

not intend to complete construction ofthe Project.

36. Yekk and ~'ejman Dargahr are further obligated under the Contract to "xnakc

payments to subcontractors or vendors supplying material for" the Project. Exhibit A,Section

XV. Yelck and Pejman Dargahi have breached their contractual obligation by failing to pay <~t

least seventeen subcontractors.

37. Yekk az~d Pcj~nan I~axgahi are further obligated to "deliver title to all the

materials, appliances and equipment used in the Wark free of all liens, claims, security interests

or encumbrances." lxhibt A,Section XV. Yekk and..~'ejmayi Dargahi have breached. their

contractrxal ob13~;ation by Failing to deliver title free pf mechanics' liens.

3~3. Because of Yekk and Pejman Dargahi's breaches of ~:11e Contract, Plaintiffs have

suffered actual and consequential damages in excess of $280,000.

VII.
~X~IVIPLARY DAMAGES

39. 1'laintifl's inca~~orate by reference the preceding paragraphs herein.

PLA1N'1'IT't~S' OR1GlNA1,PF,TiTION AND RF,QLIEST FOR DISCI.,OSURE
40. Plaintiffs are entitled to recover exemplary damages in light of Defendants'

wrongful conduct pursuant to Chapter 41, Tex. Civ. Prac. &Rem. Code, or as otherwise allowed

by law.

VIII.
ATTORNEY'S FEES

41. Plaintiff`s ncgrpprate by reference the. preccdn~ paragraphs l~.erein.

42. Pursuant to Tex. Civ. Prac. & Rezn. Code § 38.001, or as otherwise allowed by

taw, PlainiifFs are entitled t~ recover reasonable and necessary attorney's fees and costs of court

incurred in bringing this actin,

IX.
CONDTI'ION'S PRECEDENT

~3. All conditions precedent have been perfarmec3 or have occurred, including all

conditions precedent to Plaintiffs' rights to recover as set forth herein.

X.
REQUEST FO t DISCLOSUI2~

44. Pursuant to Tex, R, Civ. P, 194, Plaintiffs request that Defetldants disclose within

5p days of service oCthis request all information or material described in Rule 194.2 (a)-(1).

PRAYER

WI-I~RE~'()RE, premises considered, Plaintiffs respectfully request that the Court enter

judgment awarding them:

1. Actual damages in such amount as nay be shaven by tl~c evidence;

2. Exemplary damages in such amount as may be shown by the evzdence;

3. Plaintiffs' reasonable and necessary attorney's fees and costs ofcourt

pursuant to Tex. Civ. Prac, & IZem. Code § 38.001, or as otlxerwise allowed by law; and

PI,AINT[FFS' ORIGINAL I~ETITION AND R~ QUCST FOR DISCLOSURE
10
4. Such other end further relief, at law ox zn equity, t~ which Plaintiffs may

show thei~nselves t~ k~e justly entitled.

Respectfully submitted,

GRAVES,DOUGHERTY,I~EA~ZON & MOQDY
E1 Professional Corporation
4U 1 Congress Aventzc, Suite 220Q
Austin, TX 78701-3'790
(512)4$Q-S722 Tele hone
(S12)53~=9942 T icy .icr

By: !~``"
G. Douglas ii k y
State 13ar N , U(' 7834
a~~ra~yC~~a~m.~o~
State Bar ID No. 24083310
dking~gdhm.coxn

A'1"I"OKNLYS 1~OR PLAINTIFFS
DI~IRAJ 1-IANDA AND RI'I"Y1 IIANDA

PLAIN'fIFF~S' ORIGINAI.PETITION AND REQUEST POR UISCLO5U[2~
11
ACCEPTED
03-17-00386-CV
17708203
THIRD COURT OF APPEALS
AUSTIN, TEXAS
6/19/2017 4:59 PM
JEFFREY D. KYLE
CLERK
NO.03-17-00386-CV

IN THE COURT OF APPEALS
THIRD DISTRICT OF TEXAS

PEJMAN DARGAHI,KAMRAN DARGAHI,and
YEKK CONSTRUCTION SERVICES,LLC d/b/a
LAKEWAY CUSTOM HOMES AND RENOVATION,Appellants

v.

DHIRAJ HANDA and RITU HANDA,Appellees

Accelerated Appeal from the 261St Judicial District Court
Travis County,Texas
The Hon. Lora Livingston, Presiding
Trial Court Cause No. D-1-GN-16-001279

APPELLANTS' EMERGENCY MOTION FOR TEMPORARY
RELIEF TO STAY TRIAL COURT PROCEEDINGS

TO THE HONORABLE COURT OF APPEALS:

Appellants Pejman Dargahi, Kamran Dargahi, and Yekk Construction

Services, LLC d/b/a Lakeway Custom Homes and Renovation ask this Court for

emergency temporary relief to stay trial court proceedings, including stay of the

trial court's hearing noticed for June 27, 2017 on PLAINTIFFS' TRADITIONAL

MOTION FOR PARTIAL SUMMARY JUDGMENT ON CLAIMS FOR

VIOLATION OF TRUST FUND ACT, COMMON LAW FRAUD,

APPELLANTS'EMERGENCY MOTION FOR TEMPORARY RELIEF TO STAY TRIAL COURT PROCEEDINGS PAGE 1

App. 3
STATUTORY FRAUD,AND BREACH OF CONTRACT (hereafter "Plaintiffs'

Partial MSJ"),1 pending this Court's review of the trial court's May 30, 2017

ORDER ON DEFENDANTS' MOTION TO COMPEL ARBITRATIONz

denying Appellants' motion to compel arbitration. TEx. R. APP. P. 10.1,10.3 (a)(3),

29.3, 29.5, 29.6. Appellants also request this Court's review ofthe trial court's June

16, 2017 ORDER ON DEFENDANTS' MOTION TO STAY PROCEEDINGS &

FOR EXPEDITED HEARING.3

/~~~Mli►Z~Z11i1~ 1~~~~►i

1. Appellants are homebuilder Yekk Construction Services,

LLC d/b/a Lakeway Custom Homes and Renovation and its

members/managers Pejman Dargahi and Kamran Dargahi. Appellees

are property owners Dhiraj Handa and Ritu Handa.

2. The trial court is the 261St Judicial District Court of Travis

County, Texas, the Honorable Lora Livingston, presiding.4

3. Appellants are "general contractors hired to build

[Appellees'] home under a fixed-price contract. "5 That contract

Exhibit B.
z Exhibit D.
3 Exhibit G. See TEx. R. APP. P. 29.6(a).
4 Appellants name Judge Livingston because she is the presiding judge for the 261St Judicial
District Court. Judge Livingston did not enter any orders subject to this appeal.
5 Exhibit B, p.1.

APPELLANTS' EMERGENCY MOTION FOR TEMPORARY RELIEF TO STAY TRIAL COURT PROCEEDINGS PAGE 2
contains an arbitration agreement between Appellants and Appellees.b

Appellees filed the trial court case to resolve their dispute against

Appellants.' The trial court heard and denied Appellant's PLEA IN

ABATEMENT AND MOTION TO COMPEL ARBITRATION by its

May 30, 2017, ORDER ON DEFENDANT'S MOTION TO COMPEL

ARBITRATION.$ Appellees now seek to resolve their dispute in the

trial court via Appellees' traditional motion for partial summary

judgment on the trial court's June 27, 2017 hearing docket.9

4. Regarding the trial court's ORDER DENYING

DEFENDANT'S MOTION TO COMPEL ARBITRATION, Appellants

perfected accelerated appeal by timely filing their NOTICE OF

ACCELERATED APPEAL on June 7, 2017. Appellants first requested

the trial court to stay its further proceedings against the Yekk

Defendants, including the June 27 hearing, pending this Court's

review and judgment on Appellants' accelerated appeal.10 The trial

court heard and denied Appellants' request for stay by its June 16,

6 Exhibit C, p. 12,13.
Exhibit A.
8 Exhibits C,D.
9 Exhibit E.
'o Exhibit F.

APPELLANTS'EMERGENCY MOTION FOR TEMPORARY RELIEF TO STAY TRIAL COURT PROCEEDINGS PAGE 3
2017 ORDER ON DEFENDANTS' MOTION TO STAY

PROCEEDINGS &FOR EXPEDITED HEARING.11

5. Appellants request this Court's emergency consideration

and issuance of a temporary order to stay further trial court

proceedings against the Yekk Defendants, including the June 27

summary judgment hearing, while this Court reviews the trial court's

denials of Appellants' motions to compel arbitration and to stay

further trial court proceedings. Appellants also request that this

Court's order except stay of trial court proceedings necessary to this

Court's consideration of Appellants' accelerated appeal, including but

not limited to:

• Trial court's issuance of findings of fact and conclusions
of law regarding the ORDER DENYING
DEFENDANT'S MOTION TO COMPEL
ARBITRATION, requested on June 7, 2017; 12

• Preparation of Reporter's Records) necessary for this
appeal; and

• Preparation of Clerk's Records) necessary for this
appeal.

"Exhibit G.
'Z See Exhibit A, p. 4.

APPELLANTS'EMERGENCY MOTION FOR TEMPORARY RELIEF TO STAY TRIAL COURT PROCEEDINGS PAGE 4
B. ARGUMENT &AUTHORITIES

6. This Court possesses jurisdiction over the trial court's

interlocutory order denying Appellant's motion to compel arbitration

and the trial court's interlocutory order denying Appellant's motion to

stay.13 See TEx. C~v. PRAC. &REM. CODE § 51.016 (authorizing appeal

of interlocutory order under the same circumstances that an appeal

from a federal district court's order would be permitted by Federal

Arbitration Act § 16); 9 U.S.C. § 16(a)(1)(A) & (B) (authorizing

appeal of order refusing a stay and appeal of order denying

arbitration); TEx. R. APP. P. 25.1 (b) (filing of notice of appeal invokes

the appellate court's jurisdiction over all parties to the trial court's

order appealed from); TEx. R. APP. P. 29.3 (upon perfection of appeal

of interlocutory order, appellate court may make any temporary orders

necessary to preserve the parties' rights until disposition of the

appeal); TEx. R. APP. P. 29.6 (a) (pending appeal of interlocutory

order, appellate court may review a further appealable interlocutory

order concerning same subject matter and any interlocutory order that

'3 Exhibits D,G.

APPELLANTS'EMERGENCY MOTION FOR TEMPORARY RELIEF TO STAY TRIAL COURT PROCEEDINGS PAGE 5
interferes with or impairs the effectiveness of the relief sought or that

may be granted on appeal).

7. The trial court's denial of Appellants' motion to compel

arbitration and the trial court's denial to stay litigation proceedings

against Appellants deprive Appellants of the benefits of the arbitration

clause they contracted for. Absent temporary stay, the trial court's

June 27 summary judgment hearing: infringes upon Appellants'

arbitration rights made the basis of this appeal; and risks a judgment

against Appellants that will directly interfere or impair the jurisdiction

of this Court or the effectiveness of any requested relief that may be

granted on appeal. See TEx. R. APP. P. 29.5 (b), 29.6 (a)(2). The trial

court's refusal to stay litigation of issues subject to arbitration is

directly contrary to the Federal Arbitration Act and the Texas

Arbitration Act. In re Merrill Lynch Trust Co. FSB, 235 S.W.3d 185, 195

(Tex. 2007). The Federal Arbitration Act was passed precisely to

overcome such judicial hostility. Id.

8. Appellees seek to obtain the trial court's judgment against

Appellants at the June 27 summary judgment hearing. Specifically:

Plaintiffs respectfully pray that the Court enter a partial summary
judgment in Plaintiffs' favor and against Defendants as follows:

APPELLANTS'EMERGENCY MOTION FOR TEMPORARY RELIEF TO STAY TRIAL COURT PROCEEDINGS PAGE 6
(i) all Defendants violated the Texas Construction Trust Fund Act,
Section 162.031(a), Tex. Prop. Code, and violated their fiduciary
duties to Plaintiffs thereunder, as described above;

(ii) all Defendants are liable for common law fraud and statutory fraud
for their misrepresentations and nondisclosures, as described above;

(iii) Defendants Pejman Dargahi and Yekk Construction Services,
LLC, d/b/a Lakeway Custom Homes and Renovation breached the
Contract, as described above;

(iv) Plaintiffs shall recover their reasonable and necessary attorney's
fees, expert witness fees, and costs of court incurred in bringing this
action as provided under Tex. Civ. Prac. &Rem. Code § 38.001 and
Tex. Bus &Comm.Code § 27.01(e);

(v) Plaintiffs shall recover prejudgment interest on the judgment at the
highest rate allowed by law; and

(vi) such other and further relief, at law or in equity, to which
Plaintiffs may show themselves to be entitled.la

Texas law considers a summary judgment proceeding as a trial for

certain matters. See Ikb Industries (Nigeria), Ltd. v. Pro-Line Corp., 938

S.W.2d 440, 441 (Tex. 1997) (summary judgment proceeding is a trial

within the meaning of TRCP 63). A trial and judgment against

Appellants on the same claims subject to the parties' arbitration

agreement will "vitiate and render illusory the subject matter of an

appeal" and deprive Appellants the benefits of their arbitration

"Exhibit B, p. 15.

APPELLANTS' EMERGENCY MOTION FOR TEMPORARY RELIEF TO STAY TRIAL COURT PROCEEDINGS PAGE 7
agreement. See Jack B. Anglin Co., Inc. v. Tipps, 842 S.W.Zd 266, 272-

273 (Tex. 1992).

9. This Court has granted an emergency motion for temporary

relief to stay a trial pending its review of a district court's order

denying a motion to compel arbitration. See Eneri~est Operating, L.L.C.

v. Molett, 2012 WL 1647991 (Tex. App. -Austin 2012) (per curiam)

(granting emergency motion for temporary relief to stay trial pending

disposition of interlocutory appeal of district court's order denying

motion to compel arbitration). Here, a similar order specifically

staying the June 27 trial is authorized under TEx. R. APP. P. 29.5(b)

and 29.6(a)(2). An order specifically staying further trial court

proceedings is also encouraged by other appellate courts, including the

Supreme Court of Texas. See Weekley Homes, L.P. v. Rao, 336 S.W.3d

413 (Tex. App. -Dallas 2011, pet. denied)(granting emergency motion

to stay trial court proceedings pending interlocutory appeal of order

denying plea in abatement and motion to compel arbitration); In re

Merrill Lynch Trust Co. FSB, 235 S.W.3d 185, 195 (the Federal and

Texas Arbitration Acts require courts to stay litigation of issues that

are subject to arbitration); H ~ R Block, Inc. v. Haese, 992 S.W.2d 437,

APPELLANTS'EMERGENCY MOTION FOR TEMPORARY RELIEF TO STAY TRIAL COURT PROCEEDINGS PAGE 8
439 (Tex. 1999)(court of appeals should have stayed trial court's class

action order pending review to prevent a portion of the appeal from

becoming moot).

10. In support of this Motion, the following copies of trial court

records are attached hereto and incorporated herein as Exhibits A - G,

pending preparation and filing of the Clerk's Record (requested June

15, 2017):

Exhibit A: Clerk's June 12, 2017 email transmittal of
courtesy copy of the trial court's docket sheet of
filings, as of June 7, 2017;

Exhibit B: PLAINTIFFS' TRADITIONAL MOTION FOR
PARTIAL SUMMARY JUDGMENT ...;

Exhibit C: DEFENDANTS ... PLEA IN ABATEMENT
AND MOTION TO COMPEL ARBITRATION;

Exhibit D: ORDER ON DEFENDANTS' MOTION TO
COMPEL ARBITRATION;

Exhibit E: NOTICE OF HEARING OF PLAINTIFFS'
PARTIAL MOTION FOR SUMMARY
JUDGMENT;

Exhibit F: DEFENDANTS' MOTION TO STAY
PROCEEDINGS & FOR EXPEDITED
HEARING;

Exhibit G: ORDER ON DEFENDANTS' MOTION TO
STAY PROCEEDINGS & FOR EXPEDITED
HEARING.

APPELLANTS'EMERGENCY MOTION FOR TEMPORARY RELIEF TO STAY TRIAL COURT PROCEEDINGS PAGE 9
PRAYER

WHEREFORE, PREMISES CONSIDERED, Appellants pray that

this Court: order a temporary stay of further trial court proceedings

against the Yekk Defendants, including stay of the June 27 summary

judgment hearing; except the trial court's issuance of findings of fact

and conclusions of law, preparation of Reporter's Record(s), and

preparation of Clerk's Records) from its stay order; and grant

Appellants such further legal and equitable relief to which they are

entitled.

Respectfully submitted,

BUSH RUDNICKI SHELTON~ P.C.

/sl Carl J. Wilkerson
Carl J. Wilkerson
State Bar No. 21478400
cwilkerson(q)brstexas.com
200 N. Mesquite St., Suite 200
Arlington, Texas 76011
Telephone:(817)274-5992
Fax:(817) 261-1671

ATTORNEYS FOR
APPELLANTS

APPELLANTS' EMERGENCY MOTION FOR TEMPORARY RELIEF TO STAY TRIAL COURT PROCEEDINGS PAGE l0
VERIFICATION

STATE OF TEXAS

COUNTY OF TARRANT

On this day Carl J. Wilkerson personally appeared before me, the
undersigned Notary Public, and after being duly sworn stated under oath that he is
attorney of record for Appellants Pejman Dargahi, Kamran Dargahi, and Yekk
Construction Services, LLC d/b/a Lakeway Custom Homes and Renovation in the
Court of Appeals and in the trial court; that he read the foregoing APPELLANTS'
EMERGENCY MOTION FOR TEMPORARY RELIEF TO STAY TRIAL
COURT PROCEEDINGS; and that the facts contained therein are shown by the
trial court records attached hereto as Exhibits A - G or are within his personal
knowledge and are true and correct.

SUBSCRIBED AND SWORN TO BEFORE ME on July 19, 2017.

;~tiPpY P~e~~ C Z LINNETTE LACKEY
/~~ ~--~ r
(
/ j
~_~' ;,=Notary Public, State of Texas
~~•~.
' ,
} Q~ Comm. Expites 07-24-2020 No ry ublic, State o Texas ,
~ ,,,~„~~ Notary ID 10688367

APPELLANT'S EMERGENCY MOTION FOR TEMPORARY
RELIEF TO STAY TRIAL COURT PROCEEDINGS PAGE ll
CERTIFICATE OF CONFERENCE

I certify that: prior to June 16, 2017, I conferred with Appellees' counsel
David King by phone conference and email regarding Appellants' request to stay
the June 27 hearing and further trial court proceedings, including a potential
emergency motion to the Court of Appeals to stay trial court proceedings if
necessary; and, after the trial court entered its June 16, 2017 Order denying stay, I
personally conferred with Mr. King regarding Appellants' proposed emergency
motion to the Court of Appeals to stay the June 27 hearing and further trial court
proceedings. Mr. King opposed Appellants' requested stay.

Certified to on June 19, 2016.

/s/ Carl J. Wilkerson
Carl J. Wilkerson

CERTIFICATE OF SERVICE

I certify that a copy of APPELLANT'S EMERGENCY MOTION
FOR TEMPORARY RELIEF TO STAY TRIAL COURT
PROCEEDINGS was served on the following parties through their
counsel of record by electronic delivery on June 19, 2017:

David A. King
dking~~hdm.com
GRAVES,DOUGHERTY,HEARON &MOODY
401 Congress Ave., Suite 2200
Austin, Texas 78701

/s/ Carl J. Wilkerson
Carl J. Wilkerson

APPELLANTS'EMERGENCY MOTION FOR TEMPORARY RELIEF TO STAY TRIAL COURT PROCEEDINGS PAGE 12
From: Stephanie Lugo <SLugo@brstexas.com>
Sent: Wednesday, April 19, 2017 10:27 AM
To: King, David A.
Subject: RE: Yekk/Handa

Thank you, will do.

Best regards,

Stephanie Lugo
Direct: 512.870.8133 | Main: 512.263.8408 | Fax: 512.263.2562
Austin | 2508 Ashley Worth Blvd., Suite 200, Austin, TX 78738
Please note our new Arlington (DFW) office address is:
DFW | 200 N. Mesquite Street, Ste. 200, Arlington, TX 76011
www.BRSTexas.com

The information contained in this e-mail message is legally privileged and confidential information which is intended only for the use
of the individual or entity named above. If the reader of this message is not the intended recipient, you are hereby notified that any
use, dissemination, distribution or reproduction of this message is strictly prohibited. If you have received this message in error,
please immediately notify us by return e-mail and then delete this e-mail from your system. Thank you.

From: King, David A. [mailto:DKing@gdhm.com]
Sent: Wednesday, April 19, 2017 10:23 AM
To: Stephanie Lugo <SLugo@brstexas.com>
Subject: RE: Yekk/Handa

Mr. Handa can only accommodate until 11:15. Please let your expert and clients know.

Thanks,

David A. King
Attorney

Direct Phone: 512-480-5722
Direct Fax: 512-536-9942
www.gdhm.com

401 Congress Ave., Suite 2200
Austin, TX 78701

From: Stephanie Lugo [mailto:SLugo@brstexas.com]
Sent: Wednesday, April 19, 2017 10:19 AM
1
App. 4
To: King, David A.
Subject: RE: Yekk/Handa

Thank you – I apologize.

Best regards,

Stephanie Lugo
Direct: 512.870.8133 | Main: 512.263.8408 | Fax: 512.263.2562
Austin | 2508 Ashley Worth Blvd., Suite 200, Austin, TX 78738
Please note our new Arlington (DFW) office address is:
DFW | 200 N. Mesquite Street, Ste. 200, Arlington, TX 76011
www.BRSTexas.com

The information contained in this e-mail message is legally privileged and confidential information which is intended only for the use
of the individual or entity named above. If the reader of this message is not the intended recipient, you are hereby notified that any
use, dissemination, distribution or reproduction of this message is strictly prohibited. If you have received this message in error,
please immediately notify us by return e-mail and then delete this e-mail from your system. Thank you.

From: King, David A. [mailto:DKing@gdhm.com]
Sent: Wednesday, April 19, 2017 10:16 AM
To: Stephanie Lugo <SLugo@brstexas.com>
Subject: RE: Yekk/Handa

I am checking. The Handas planned for an hour, but I am asking them if they can accommodate.

David A. King
Attorney

Direct Phone: 512-480-5722
Direct Fax: 512-536-9942
www.gdhm.com

401 Congress Ave., Suite 2200
Austin, TX 78701

From: Stephanie Lugo [mailto:SLugo@brstexas.com]
Sent: Wednesday, April 19, 2017 10:14 AM
To: King, David A.
Subject: RE: Yekk/Handa

Thanks David. I actually just talked to them again and someone has opened the gate, but our expert won’t be there until
about 10:30. Will 10:30-11:30 be possible?

Best regards,

2
Stephanie Lugo
Direct: 512.870.8133 | Main: 512.263.8408 | Fax: 512.263.2562
Austin | 2508 Ashley Worth Blvd., Suite 200, Austin, TX 78738
Please note our new Arlington (DFW) office address is:
DFW | 200 N. Mesquite Street, Ste. 200, Arlington, TX 76011
www.BRSTexas.com

The information contained in this e-mail message is legally privileged and confidential information which is intended only for the use
of the individual or entity named above. If the reader of this message is not the intended recipient, you are hereby notified that any
use, dissemination, distribution or reproduction of this message is strictly prohibited. If you have received this message in error,
please immediately notify us by return e-mail and then delete this e-mail from your system. Thank you.

From: King, David A. [mailto:DKing@gdhm.com]
Sent: Wednesday, April 19, 2017 10:10 AM
To: Stephanie Lugo <SLugo@brstexas.com>
Subject: RE: Yekk/Handa

I am trying to get in touch with them now.

David A. King
Attorney

Direct Phone: 512-480-5722
Direct Fax: 512-536-9942
www.gdhm.com

401 Congress Ave., Suite 2200
Austin, TX 78701

From: Stephanie Lugo [mailto:SLugo@brstexas.com]
Sent: Wednesday, April 19, 2017 10:07 AM
To: King, David A.
Subject: Yekk/Handa

David –

The Dargahis are at the Handa residence. They are still waiting on Tom, but also said that the gate is closed and they
don’t see anyone at the house. Can you please let me know if the Handas are there to let them in.

Thank you.

Best regards,

3
Stephanie Lugo
Direct: 512.870.8133 | Main: 512.263.8408 | Fax: 512.263.2562
Austin | 2508 Ashley Worth Blvd., Suite 200, Austin, TX 78738
Please note our new Arlington (DFW) office address is:
DFW | 200 N. Mesquite Street, Ste. 200, Arlington, TX 76011
www.BRSTexas.com

The information contained in this e-mail message is legally privileged and confidential information which is intended only for the use
of the individual or entity named above. If the reader of this message is not the intended recipient, you are hereby notified that any
use, dissemination, distribution or reproduction of this message is strictly prohibited. If you have received this message in error,
please immediately notify us by return e-mail and then delete this e-mail from your system. Thank you.

This electronic communication (including any attached document) may contain privileged and/or confidential information. If you are not an
intended recipient of this communication, please be advised that any disclosure, dissemination, distribution, copying, or other use of this
communication or any attached document is strictly prohibited. If you have received this communication in error, please notify the sender
immediately by reply e-mail and promptly destroy all electronic and printed copies of this communication and any attached document.

This electronic communication (including any attached document) may contain privileged and/or confidential information. If you are not an
intended recipient of this communication, please be advised that any disclosure, dissemination, distribution, copying, or other use of this
communication or any attached document is strictly prohibited. If you have received this communication in error, please notify the sender
immediately by reply e-mail and promptly destroy all electronic and printed copies of this communication and any attached document.

This electronic communication (including any attached document) may contain privileged and/or confidential information. If you are not an
intended recipient of this communication, please be advised that any disclosure, dissemination, distribution, copying, or other use of this
communication or any attached document is strictly prohibited. If you have received this communication in error, please notify the sender
immediately by reply e-mail and promptly destroy all electronic and printed copies of this communication and any attached document.

4