

Opinion issued April 5, 2012

In The
Court of
Appeals
For The
First District
of Texas
————————————
NO. 01-10-00739-CV
———————————
Edward Malone, Appellant
V.
Firdosh
Patel, Appellee

 

 
On Appeal from the 55th District Court
Harris County, Texas

Trial Court Case No. 2008-18478
 

 
O P I N I O N
Appellee
Firdosh Patel sued appellant Edward Malone under contract and tort theories,
alleging that Malone reneged on their agreement to be equal partners with a
third person in a new company, Prescendo Consulting, LP.   The trial court entered judgment in favor of
Patel on the jury’s verdict, and Malone appeals that here.  By conditional cross-appeal, Patel challenges
the trial court’s granting directed verdict on his quantum meruit claim.  We affirm the trial court’s judgment.   
BACKGROUND
Patel came to the United States as
a student from India in 1994 at the age of 22 to study at Rice University,
where he earned an MBA degree.  After
completing his degree, he embarked on a career in the energy sector while
seeking permanent residency.  His
immigration status was a focus at trial because it was cited as a reason that
the parties’ disputed business relationship was not documented in writing
earlier.  Patel’s theory was that he and
Malone always agreed to be equal partners in Prescendo upon its inception, but
that Malone represented that until Patel completed the process of securing a
green card, they could not reduce that agreement to writing because he was
prohibited from owning equity.  Malone on
the other hand testified that there was never an agreement to be equal partners,
and that Patel was simply an at-will employee who had been told he might be
granted some ownership in the future.  
A.   Patel’s and Malone’s Relationship 
After graduating from Rice, Patel
first went to work for Coral Energy, a gas and power trading business that
initially sponsored his green card application through an H1B petition.  To gain permanent residency status, Patel
needed the Department of Labor to issue a certification approving him as an
eligible immigrant to fill a particular position with a sponsoring employer,
and then Patel could apply for residency. 
Once certification by the Labor Department was cleared and his green
card application was pending, Patel was portable, meaning that he could work
for any employer as long as he stayed in a similar position.  Although Patel did not receive his permanent
residency until December 2004, he was able to change employers several times
before then because he remained in similar positions.      
Malone was Patel’s boss at Coral
and became his close friend and mentor. 
Patel also recruited his Rice classmate, Meng Choo, to Coral where Choo
worked with Malone and Patel as a team. 
When Malone left Coral, Patel also left, taking a job with Sabre in
1998.  Although they worked in different
cities for different employers, Patel and Malone stayed in contact with monthly
telephone conversations.   
Within a year, Malone called Patel
with a job opportunity for them to provide consulting services on a project at
a Shell company, Equiva.  Malone worked
as a consultant through OpenLink Financial, and Patel became a direct OpenLink
employee.  At OpenLink, Patel earned a
$90,000 salary with a potential additional 10% bonus.  
Malone then left to become a
partner with MRE Consulting and continued to work on the same Shell
project.  He recruited Patel with the
promise of a potential future partnership position at MRE.  Choo joined them later.  Malone eventually left the Shell project, but
Patel continued his Shell work through MRE with an annual salary of $100,000
and potential additional 75% bonus.  
B.   Prescendo Consulting
After Malone had a falling out with
his partners at MRE, he began discussions with Patel and Choo about leaving
MRE.  Eventually the three started a new
business—Prescendo Consulting.  Patel and Choo testified that Patel, Malone,
and Choo agreed that the three would be equal owners of Prescendo.  When Patel left MRE, Shell asked Patel to
come to work for it directly, but Patel declined that offer and told Shell that
he was starting his own company and that Shell could contract with Prescendo
for Patel’s services.  In addition to the
job offer from Shell, Patel and Choo both had other lucrative job opportunities
at this juncture, including staying at MRE or going to work for OpenLink
Financial.  Patel turned down an offer
from Openlink because he was committed to building Prescendo.     
 
In December 2003, Patel signed a letter accepting a salary of $24,000 as
an at-will employee of Prescendo with a potential for a merit-based bonus
dependent on Prescendo’s overall performance. 
Choo signed a similar letter. 
Patel and Choo testified that they decided on this salary amount
together with Malone, and that it was so much lower than they would make
elsewhere because, as owners, they were more concerned about the company
building up cash reserves than drawing large salaries.  
According to Patel and Choo, Malone
told them that Patel’s and Choo’s ownership could not be documented in writing
until their green cards were finalized and that their employment letters were
necessary paperwork.  There was trial testimony by Ken
Harder, a board certified immigration lawyer, that Malone was actually mistaken
about this, as Patel could own his own company and file on his own behalf—rather
than rely on his employer to file for him—to maintain his status as a green
card candidate beginning March 25, 2003.[1]  Patel
and Choo both testified that they understood they were employees, but
understood the agreement to be that they also each owned one-third of
Prescendo.  Several documents were
introduced into evidence that reflected Malone as 100% owner of Prescendo,
including an insurance application and service mark application signed by
Patel.    Patel testified that he
followed Malone’s guidance when it came to documents related to starting the
business and how paperwork was filled out related to reflecting ownership
percentages.  Malone told him that such
documents had to reflect Malone as the owner “until we got a partnership in
writing.” 
Malone, Patel, and Choo at the
onset decided bring on an employee to Prescendo as well—Raymond Zhau—at a
salary of $62,500 a year.  All three also
agreed to make the commitment to sponsor Zhau’s green card—an approximately
three year process under which they basically guaranteed his employment and
salary.  Patel and Choo testified that
they drew a much smaller salary than Zhau, despite his being junior to them in
experience, because as owners of Prescendo they wanted to be conservative with
their own salaries so that the company could cover its expenses, prosper and
grow.  An email from mid-2004 was
introduced at trial in which Malone proposed raising their salaries to $50,000,
but Patel responded that he was fine leaving it at $24,000. 
Malone, Patel, and Choo split up
both the start-up and ongoing responsibilities at Prescendo.  Patel researched cellphone plans, 401(k)
plans, and was in charge of marketing and keeping timesheets for himself and
others from Prescendo working with him on particular projects.   Choo handled the website and technical
issues, such as setting up the computer server and e-mail accounts.    Malone was in charge of the paperwork for
setting up the company and also Prescendo’s banking and accounting, including
billing clients and paying bills.          

Prescendo did not have separate
office space.  Most work was done on site
at the clients’ offices, and they all worked sometimes from their homes.  Malone’s wife, Lisa Ehrlich, is a physician,
and Prescendo also set up some phone lines and a computer server at her medical
office, L. Ehrlich & Associates Medical Clinic.  Malone was the only Prescendo employee who
was based at Ehrlich’s office.  Ehrlich
billed Prescendo for use of the office space and equipment. 
From January 2004 through May 2006,
Patel, Choo, Zhau, and Ted Lao (a contractor Patel brought to work on the Shell
project through Prescendo) worked on site at Shell under the contract Patel had
set up for Prescendo to offer consulting services to Shell.  In 2004, Patel billed 2,814 hours for a total
revenue to Prescendo of $397,215; in 2005, he billed 2,730 hours for $394,305;
and for a partial year in 2006, he billed 2,187 hours for $302,484.  Choo billed 2,565 hours in 2004, bringing in
$308,338; 2,660 hours for $315,128 in 2005; and 1,209 hours for $161,000 for a
partial year in 2006.  Zhau billed 2,094
hours in 2004, bringing in $145,754; 1,980 hours in 2005 for $151,242; and 724
hours for $59,000 in 2006.    During
these years, Patel also performed many nonbillable tasks for Prescendo—work
such as recruiting additional clients that he did not do as an employee at
prior employers.  In April or May of
2006, Choo and Zhau rolled off their project at Shell and went “on the bench,”
meaning they did not have a billable project on which to work.  They did eventually do some work for other clients
while waiting to get back on the Shell project. 
Patel and Choo did not handle
Malone’s billing, but Malone represented to them that he was doing work for a
different client, National Energy Trading (NET).  They later discovered, after this dispute arose,
that Malone did not bill any hours at Prescendo in 2004 or the first half of
2005, when he began billing NET.  Malone
testified that during this time period he ran Prescendo, worked on a lawsuit he
had brought against MRE related to a dispute over their alleged failure to
honor an oral modification to their partnership agreement before he left, and
sought more clients.  He also ran his
wife’s medical office, but did not bill her office for his time.                   
At a point in 2004—when they were
all comfortable that Prescendo’s cash position had improved—Patel’s and Choo’s
salaries were raised to $50,000, and later $85,000.[2]  These compensation decisions were made
jointly by Malone, Patel, and Choo.  At
the end of 2004, Malone, Patel, and Choo agreed upon a bonus for each of them
of $44,700.  In 2004, Patel and Choo were
each paid total compensation (salary and bonus) of $116,020, and in 2005, they
were paid $166,000.  Patel testified that
his pay was lockstep with Choo’s—despite Patel billing more hours and bringing
in more revenue—because their agreement was that they were equal partners.  In his prior experience doing similar work as
an employee at other companies, their pay and bonuses would have varied based
on the difference in their production.  
In July 2004, Malone forwarded to
Patel and Choo a letter he wrote to an attorney seeking a legal opinion about
how to handle granting Patel and Malone equity. 
Specifically, he asked for authority about what laws or regulations
“disallow such grants prior to the receipt of the greencards” and the “legal
opinion or basis for granting equity following the receipt of the
greencard.”  He also asked the attorney
to address in a memorandum other ideas he had for documenting an equity grant
before the greencards were received, including “granting options which do not
vest until greencards [are] received (clearly if the option does not vest then
it cannot be exercised and thus the employee does not technically own equity),”
and he asked, “What about a contract committing the company to granting equity
following receipt of the greencard?” 
Patel responded by thanking Malone for looking into it and said, “As
I’ve stated before, I’m not in a hurry. 
Let’s wait for the green card to come, and we can then put the equity
program in place.”  
In December 2004, Patel and Choo
received their green cards.  They then
asked Malone about putting their partnership agreement in writing.  Patel testified that Malone told Patel and
Choo that they “should focus more on the upcoming lawsuit against MRE rather
than on the mere technicality of putting together the partnership in
writing.”  When that litigation concluded
in November 2005, Patel sent an email to Malone and Choo noting that, among
other things, they needed to address the “[n]ext steps on partnering
agreement.”  Choo similarly sent an email
to Malone listing one topic for an upcoming meeting as “partnership
agreement.”  Malone responded to that
email with “All good but I have new fires in the office.”  Patel and Choo continued to remind Malone
over the next few months of the need to reduce their agreement to writing, but
no writing was ever produced.
C.   The Dispute
The dispute over ownership of
Prescendo ultimately leading to this litigation came to a head in 2006.  According to Patel and Choo, on the evening
of September 29, 2006, they held a dinner to celebrate Malone’s birthday with
Patel, Choo, Zhau and his wife, and Malone and his wife.  The evening wore on and people left, with only
Malone and Patel remaining because Patel was supposed to give Malone a ride
home.  When walking to the car, Patel
reminded Malone again of the need to reduce their partnership agreement to
writing.  Malone responded that they
needed to put together a spreadsheet to figure out what would be the percentage
of Patel’s, Malone’s, and Choo’s ownership. 
Patel testified to being shocked and demanding to know why a spreadsheet
was needed when the three had always agreed that the three each owned one-third
of the company.  Patel testified that
Malone responded that “one-third of Prescendo was not fair to him.  He should get a bigger share of the
partnership.”  Malone further explained
that he was answerable to his wife Ehrlich, who had always just considered
Prescendo a continuation of MRE, and that the MRE litigation had not turned out
as beneficial as they had expected for him and his wife.  
Patel testified that he immediately
called Choo and drove Malone to Choo’s house, despite the late hour.  Patel and Choo testified that Choo demanded
to know why a spreadsheet was necessary as well.  According to Patel and Choo, for the first
time Malone told them he considered them only employees that he could fire
whenever he wanted—not partners—and and that Malone “even taunted [them] by
asking [them] what were we going to do, sue him?” 
Given the turn of events, Patel and
Choo made clear that they wanted to split up the pool of money that had been
earned previously.  They left the
conversation with an agreement that Choo would put together a spreadsheet the
next day showing what each partner was owed, and Malone was supposed to send
them the company’s financial information. 
Patel testified that until this point, they “never even checked the
books, we trusted Malone so much.”  According
to Patel, at that point “the trust had just gone between the three of us” so
the understanding was that the “only focus would be on splitting of the cash
pool –irrespective of whether we decided to continue working together or not,
because there was a big chance that we would not continue working together
after this incident.”  
The following day, rather than
forward the financial information to Choo, Malone sent an email to Patel and
Choo stating, “After thinking on this overnight, I will put the spreadsheet
together.”  Patel responded with
“Ted/Meng, since we are having discussions on splitting up the cash pool with
Prescendo, please hold off on any plans to invest this cash pool in the natural
gas related royalty trust that we were talking about a couple of weeks earlier.”  Malone responded with “Firdosh, at the end of
the day, I have the ultimate and complete authority over Prescendo funds and
investment decisions.”  According to
Patel, this response was inconsistent with how they had done business since
Prescendo’s inception; in the past, all decisions had been made by the three of
them.    
The next week, Patel filled out
paperwork he found on the Internet to form his own company “Glenrisk
Consulting.”  He testified this was in
response to his perception that Malone had turned on them and he needed to
protect himself in case Malone made good on his threat to fire him.  When Patel told his immediate supervisor at
Shell, Derrick Jones, that there was a strong possibility that he might not
remain with his current venture, Jones told Patel he wanted him to continue at
Shell and had Shell’s human resources department send him documents to
facilitate his continued working with them. 
He did not return the documents to Shell, because his hope was still
that something would work out with Prescendo so he would not have to walk away
from the company he started and where the majority of his savings were tied
up.  He also testified that he was
hesitant to walk away from the ten-year relationship he shared with Malone and
Choo.  During October, while he continued
to work at Shell, he convinced Shell to bring Choo and Zhau back on their
project through Prescendo.   
Malone finally produced a
spreadsheet and sent it to Patel and Choo on November 18, 2006 along with an
email that it was a “proposal, not an offer.” 
The transmittal email explained that it represented Malone’s “proposed
approach to allocating a portion of historical Prescendo retained earnings to
each of you” and listed other matters that would need to be resolved as well,
including robust releases, formal contracts, insurance for buy-out in case of
death, form of equity interest including exit/wind down/cash out provisions and
employment contracts or agreements for exclusive professional services
contracts dedicated to Prescendo.   
Malone’s billings were not reflected on the attached spreadsheet, and
Malone told them that his billing were “nonnegotiable” such that he expected to
share in Patel’s and Choo’s billings, but that they were not entitled to any of
his billings.  A week later, Malone asked
Patel to meet him without Choo.  After
getting Choo’s blessing for him to attend this meeting, Patel went and was
surprised to find Ehrlich there also. 
Ehrlich did most the talking, urging him to accept Malone’s new proposal
and telling him that Prescendo “could have only one king and that was Mr.
Malone.”  
The relationship deteriorated from
that point, and Patel decided to pull out of Prescendo.  He wrote an email to Malone to that effect,
resigning as of November 30, 2006.  He
returned home that night to find messages from Ehrlich on his answering
machine, which were played at trial. 
Ehrlich expressed anger and frustration that Malone “really feels badly”
and is “sitting down there trying to figure out how to do what is right by [you]
guys . . . figure out what is the fair dollar amount out of the money.”  She stated that she was “very happy about how
things are progressing along and . . . would like the relationship to be
terminated at some point.”  She stated
that she felt vindicated, was shocked by Patel’s lack of gratitude, felt he had
“just unprofessionally resigned,” and that she would “have no problem walking
away and not giving you a penny.”  Patel
testified that these messages were consistent with his understanding from what
Malone had told him that Malone was unable to give Patel and Choo their fair
share because it “was unsuitable to Dr. Ehrlich.”  
 On December 1, 2006, Patel signed a consulting
agreement between Glenrich and Shell, and continued on his project at
Shell.  Choo and Zhuo eventually left
Prescendo, with Choo later joining Glenrich. 
At trial, Malone disputed Patel’s
and Choo’s version of events.  He
testified that he never had an agreement to be partners with Patel or
Choo.  He posited that the start-up work
Patel and Choo did for Prescendo that they were not paid for was akin to
preparing for and interviewing with Malone for the opportunity to join
Prescendo as employees only.  Further, he
believed that they could not own “an interest in an entity that sponsored their
own green card.”  He claims to have
chosen the $24,000.00 as the salary for Patel and Choo because he was taking on
tremendous risk to fund the company and would be committing to pay their
salaries when their green cards were not finalized, which he understood could
take at least another year.  He did plan,
however, to raise their salaries when it was feasible, which he did.  He also disputed Patel’s claim that they all
made salary and other decisions together. 
He testified they “never discussed, you know, sharing equity after his
green card prior to, you know, that September 29 blow up.”    
On September 29, 2006, Malone did
not consider Patel “a partner in the sense of —of an ownership stake in a company I have.”  Malone testified that after Patel and Choo
pushed him so hard about partnership that night at Choo’s house, he told them
that if they wanted to see an “equity program in place at Prescendo,” they
needed to create a spreadsheet to “lay out how you think that computation model
should be structured in order to put, build or to properly incentivize a
professional services company.”  He was
“shocked, . . . literally was flabbergasted completely with the tone that Mr.
Patel, and to a degree, Mr. Choo, had” with him that night because, according
to Malone, there had never been a prior discussion about being partners.  At most, they had “discussions about, hey, I
will put an equity program in place at some point in the future.”  That would never have included, however, an
agreement to be equal partners.  He
changed his mind about having Choo do the spreadsheet and decided to do it
himself, but he was too busy for the next six weeks to get it done any
sooner.  He ultimately sent what he
considered to be a long term proposal that would define the relationships and
the obligate the parties going forward, while proposing to give Patel some
financial credit in the form of retained earnings for past “project delivery,
bringing in new business and recruiting and managing talent.”  His proposal was “rejected pretty
categorically,” and Patel left Prescendo a couple of weeks later. 
TRIAL COURT PROCEEDINGS
Patel sued Malone, Lisa Ehrilich, Dr. Ehrlich
& Associates, and Prescendo under numerous contract and tort theories.  Malone and Prescendo counterclaimed on a
breach of fiduciary duty theory.  
At the close of the evidence, the
trial court granted directed verdict on several claims and submitted others to
the jury.  All the jury questions were
predicated on the threshold question of whether the parties agreed to be equal
partners in Prescedno, which the jury answered affirmatively: 
Did Firdosh Patel and Ted
Malone agree that they would be equal partners in Prescedno Consulting, LP,
together with Meng Choo?  
Answer Yes or No                   Yes             
In deciding whether the
parties reached an agreement, you may consider what they said and did in light
of the surrounding circumstances, including any earlier course of dealing.  You may not consider the parties’ unexpressed
thoughts or intentions. 
As damages, the jury awarded to
Patel $495,000, representing the “amount of money Firdosh Patel would receive
as an equal partner in Prescendo, less the value of what he was paid,” as well
as attorneys’ fees.  The jury also found
that Malone did not “comply with his fiduciary duty to Firdosh Patel,” but no
separate damages question on that claim was answered by the jury.    
The jury rejected the remainder of
the Patel’s submitted claims, including his fraud claims against Malone and
Prescendo and his tortious interference claim against Malone’s wife,
Ehrlich.  The jury also rejected Malone’s
counterclaims against Patel for breach of Patel’s fiduciary duties to Malone
and Prescendo.   
The trial court entered a final
judgment on the jury’s verdict, awarding Patel $495,000 in actual damages,
prejudgment and post-judgment interest, and attorneys’ fees.  
THIS APPEAL
In his first issue, Malone argues
that the evidence is “legally and factually [in]sufficient to prove that Patel
and Malone were partners.”  In his second
issue, he contends that because there were documents showing Patel as an
employee, Patel should not be allowed to “alter his position now and claim to
be a partner.”  Finally, in his third
issue, Malone asserts that the evidence is “legally and factually
[in]sufficient to prove Patel’s case for breach of an oral promise that he and
Malone would become partners in the future.” 
By conditional cross-appeal, Patel
argues that “the trial court erred in granting a directed verdict in favor of
[defendants] on Patel’s quantum meruit claim.”[3]
EVIDENCE OF AGREEMENT
Malone argues that the trial
court’s judgment should be reversed because the evidence conclusively proves
that “Patel’s role in Prescendo was that of an at-will employee, not a
partner.”  He asserts that the supreme court’s
decision in Ingram v. Deer, 288 S.W.3d
886 (Tex. 2009) setting forth the “main circumstances that indicate the
creation of a partnership” is dispositive, and that the lack of evidence of
those circumstances is fatal to Patel’s claims. 
Additionally, Malone points to the documentary evidence—such as Patel’s INS papers, W-4 forms,
pleadings in another lawsuit, and insurance forms—indicating either that Patel was an employee or that Malone wholly owned
Prescendo.
Patel responds by noting that the
jury “was not asked whether a partnership existed”; rather, the jury “found
that Patel and Malone agreed to be equal partners.”  Thus, Patel argues, the issue is not whether
there are indices that a partnership existed as addressed in Ingram. 
Instead, the issue is whether there is evidence to support the jury’s
finding that the parties had an agreement. 
Patel argues that recovery under his breach-of-contract claim is amply
supported by evidence of the parties’ agreement to own Prescendo equally,
including (1) direct testimony from several witnesses about such an agreement,
(2) Pate’s and Choo’s free work for Prescendo, (3) Patel’s and Choo’s
acceptance of nominal salaries, and (4) references to the partnership in
various emails.  Patel further contends
that the documents reflecting Patel was an employee “do not conclusively prove
that the parties did not agree to be equal partners.”  He notes that an employee can own an interest
in his or her employer’s business, and argues that the jury could have
reasonably concluded that the documents did not yet reflect the parties’
partnership status because Malone had told Patel and Choo that the partnership
could not be put in writing until they had received their green cards.           
A.  
Standard of Review
In a legal sufficiency, or
“no-evidence” review, we determine whether the evidence would enable reasonable
and fair-minded people to reach the verdict under review.  City of
Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005).  In making this determination, we will sustain
a legal sufficiency challenge if the record shows one of the following: (1) a
complete absence of evidence of a vital fact, (2) rules of law or evidence bar
the court from giving weight to the only evidence offered to prove a vital
fact, (3) the evidence offered to prove a vital fact is no more than a
scintilla, or (4) the evidence establishes conclusively the opposite of the
vital fact.  Id. at 810.  We credit
favorable evidence if a reasonable fact-finder could, and we disregard contrary
evidence unless a reasonable fact-finder could not.  We consider the evidence in the light most
favorable to the finding under review and indulge every reasonable inference
that would support it.  Id.  So long as the evidence falls within the zone
of reasonable disagreement, we may not substitute our judgment for that of the
fact-finder.  Id.  The trier of fact is the
sole judge of the credibility of the witnesses and the weight accorded to their
testimony.  Id. at 819.  Although we
consider the evidence in the light most favorable to the challenged findings,
indulging every reasonable inference that supports them, we may not disregard
evidence that allows only one inference.  Id.
at 822.
In a factual-sufficiency review,
the court must examine both the evidence supporting and contrary to the
judgment.  See Dow Chem. Co. v. Francis, 46 S.W.3d 237, 242 (Tex. 2001);  Plas–Tex,
Inc. v. U.S. Steel Corp., 772 S.W.2d 442, 445 (Tex. 1989).  We may set aside the verdict only if the
evidence that supports the jury’s finding is so contrary to the overwhelming
weight of the evidence as to be clearly wrong or unjust.  Cain v.
Bain, 709 S.W.2d 175, 176 (Tex. 1986); Nip,
154 S.W.3d at 769.
An ultimate fact may be established
by circumstantial evidence. State v.
$11,014.00, 820 S.W.2d 783, 785 (Tex. 1991) (per curiam). “Circumstantial
evidence is the proof of collateral facts and circumstances from which the mind
arrives at the conclusion that the main facts sought to be established in fact
existed.”  Glover v. Davis, 360 S.W.2d 924, 928 (Tex. Civ. App.—Amarillo
1962), aff’d, 366 S.W.2d 227 (Tex. 1963).
 An ultimate fact may be established by
circumstantial evidence when the circumstances relied on are of such a
character as to be reasonably satisfactory and convincing, and are not equally
consistent with the nonexistence of the ultimate fact.  See
Marshall Field Stores, Inc., v. Gardiner, 859 S.W.2d 391, 401 (Tex. App.—Houston
[1st Dist.] 1993, writ dism’d w.o.j.).
The fact-finder is the sole judge
of the witnesses’ credibility and the weight to be given their testimony, and
the fact-finder may choose to believe one witness over another.  See
Golden Eagle Archery, Inc. v. Jackson, 116 S.W.3d 757, 761 (Tex. 2003).  Because it is the fact-finder’s province to
resolve conflicting evidence, we must assume that the fact-finder resolved all
evidentiary conflicts in accordance with its decision if a reasonable person
could have done so.  See id.  An appellate court
may not impose its own opinion to the contrary of the fact-finder’s implicit
credibility determinations. Id.
B.   Analysis
Malone urges us to conduct our sufficiency
review with reference to the factors in Ingram
v. Deere to determine whether the jury’s finding in response to Jury
Question No. 1 is supported by evidence that a “partnership existed.”  Patel on the other hand argues that the case
was tried and submitted on a contract theory; namely, whether Patel and Malone
had an agreement that they would be equal partners.  Thus, as a threshold matter, we must resolve
the relevant law against which the evidence should be measured to determine
sufficiency.
1.     Ingram v. Deere  
Ingram interpreted
the Texas Revised Partnership Act (TRPA), which governs partnerships formed
between January 1, 1994 and December 31, 2005—the same period during which Patel asserts a partnership with Malone and
Choo was formed.[4]  The TRPA provides that “an association of two
or more persons to carry on a business for profit as owners creates a
partnership,”  Tex. Rev. Civ. Stat. art 6132b–2.02(a), and articulates five factors that indicate the creation of a
partnership: 
(1)            
receipt or right to receive a share of profits of the business;
(2)            
expression of an intent to be partners in the business;
(3)            
participation or right to participate in control of the business;
(4)            
sharing or agreeing to share:
(A)          
losses of the business; or
(B)           
liability for claims by third parties against the business; and
(5)            
contributing or agreeing to contribute money or property to the business
Tex.
Rev. Civ. Stat. art 6132b–2.03(a).  It further provides that
one “of the following circumstances, by itself, does not indicate that a person
is a partner in the business”:
(1)            
the receipt or right to receive a share of profits: 
(A)          
as repayment of a debt, by installments or otherwise; 
(B)           
as payment of wages or other compensation to an employee or independent
contractor; 
(C)           
as payment of rent; 
(D)          
as payment to a former partner, surviving spouse or representative of a
deceased or disabled partner, or transferee of a partnership interest; 
(E)           
as payment of interest or other charge on a loan, regardless of whether
the amount of payment varies with the profits of the business, and including a
direct or indirect present or future ownership interest in collateral or rights
to income, proceeds, or increase in value derived from collateral; or 
(F)            
as payment of consideration for the sale of a business or other property
by installments or otherwise; 
(2)            
co-ownership of property, whether in the form of joint tenancy, tenancy
in common, tenancy by the entireties, joint property, community property, or
part ownership, whether combined with sharing of profits from the property; 
(3)            
sharing or having a right to share gross returns or revenues, regardless
of whether the persons sharing the gross returns or revenues have a common or
joint interest in the property from which the returns or revenues are derived;
or 
(4)            
ownership of mineral property under a joint operating agreement. 
Tex.
Rev. Civ. Stat. art 6132b–2.03(b).  
In Ingram, the plaintiff alleged that he
had an oral partnership agreement with the defendant providing him a one-third
ownership in a medical clinic.  288
S.W.3d at 891.  The jury found that the
plaintiff and defendant entered into a partnership agreement, and that the
defendant breached both that agreement and his fiduciary duty to the plaintiff.  Id.
at 892.    
The
relevant jury question in Ingram asked
whether the plaintiff and defendant “form[ed] a joint venture without giving it
a name for the purpose of a interdisciplinary pain clinic that included the
following terms: . . . [t]hat [plaintiff] and [defendant] would each own 50% of
the unnamed joint venture . . . . .”  Id. at 904 (Johnson, J.,
concurring).  The jury was further
instructed to consider the five TRPA factors quoted above in deciding whether
the joint venture was created.  Id.    

Resolving
an issue of first impression, the supreme court held that—unlike under the common law scheme that the
TRPA replaced—evidence in support of all
five TRPA factors is not required to support a jury’s finding that a
partnership exists.  Id. at 897.  Rather, the
court adopted a totality-of-the-circumstances approach, “considering all of the
evidence bearing on the TRPA partnership factors,” id. at 896, on a continuum:  
Evidence of none of the
factors under the Texas Revised Partnership Act will preclude the recognition
of  partnership, and even conclusive
evidence of only one factor will also normally be insufficient to establish the
existence of a partnership under TRPA. 
However, conclusive evidence of all five factors establishes a
partnership as a matter of law.
Id. at 904.  Because the court
concluded that the plaintiff had “not provided legally sufficient evidence of
any of the five TRPA factors” to prove the existence of a partnership, it
rendered judgment that the plaintiff take nothing.  Id.
The supreme court in Ingram identified several differences
between the TRPA and the prior common-law model, noting that the “TRPA
contemplates a less formalistic and more practical approach to recognizing the
formation of a partnership.”  Id. at 895.  For example, unlike under the common law,
where “intent to be partners was a ‘prime,’ although not controlling, element
in the creation of a partnership,” id.
at 896 (quoting Coastal Plains Dev. Corp.
v. Micrea, Inc., 572 S.W.2d 285, 287 (Tex. 1978), the “TRPA does not
require direct proof of the parties’ intent to form a partnership.” Id. (citing Tex. Rev. Civ. Stat. art 6132b–2.02) (stating two or more persons can form a partnership regardless of
“whether the persons intend to create a partnership”).  Similarly, while the sharing of profits and
losses was “essential” to prove a partnership under the common law, neither is
necessarily required to demonstrate a partnership under the TRPA.  Id.
at 896.
2.     Ingram
presented a different issue to the jury than this case.    
Our sufficiency review must begin
not with legal concepts, but with the jury’s charge.  E.g.,
Akin, Gump, Straus, Hauer & Feld,
L.L.P. v. Nat’l Dev. & Research Corp., 299 S.W.3d 106, 112 (Tex.
2009).  We agree with Patel that there
are meaningful differences between the jury submission in this case and the one
submitted in Ingram.  Ingram’s
analysis, therefore, is not directly on point.     
The charge in this case followed
the general Pattern Jury Charge format for submitting “the existence of an
agreement.” Tex. P.J.C. 101.1
cmt.[5]   In Ingram,
the broad-form submission inquired whether a joint-venture (i.e., partnership)
was formed and was accompanied by instructions to consider the five TRPA
factors.  Id. at 904 (Johnson, J., concurring); cf. Regal Fin. Co. v. Tex. Star Motors, Inc., 355 S.W.3d 595, 601
(Tex. 2010) (“[A] jury charge submitting liability under a statute should track
the statutory language as closely as possible.”).  In this case, the court submitted a more
discrete issue, “Did Firdosh Patel and Ted Malone agree that they would be
equal partners in Prescedno Consulting, LP, together with Meng Choo?”  Rather than instruct the jury on the TRPA
factors, the charge instructed the jury that “[i]n deciding whether the parties
reached an agreement, you may consider what they said and did in light of the
surrounding circumstances, including any earlier course of dealing.  You may not consider the parties’ unexpressed
thoughts or intentions.”  See Tex.
P.J.C. 101.3 (“submit[] with the question of the existence of a contract (PJC
101.1) to confine the jury’s deliberations on the issue of contract formation
to legally appropriate factors”).
The jury question in this case
focuses on an issue more narrow than the one in Ingram.  Under the Ingram charge, the existence of a
partnership could be found and supported without any evidence of the parties’
intent to form a partnership, as “expression of an intent to be partners in the
business” was only one factor submitted disjunctively to the Ingram jury, and the supreme court
specifically noted that a partnership could be found even with no evidence of
intent to form a partnership.  Ingram, 288 S.W.3d 895–96.  By
contrast, the only factual issue submitted in this case was whether the parties
agreed that they would be equal partners. 
We accordingly agree with Patel that our sufficiency review is not the
same as the Ingram court’s analysis
of the TRPA factors for finding a partnership exists, but rather is confined to
whether there is evidence of the parties’ agreement to be equal partners.    
3.    
There is
legally sufficient evidence to support the jury’s finding of agreement.
Malone challenges the sufficiency
of the evidence of agreement on two grounds. 
He contends that (1) there is legally insufficient evidence of a
partnership, as measured against the factors in Ingram, and (2) the documentary evidence conclusively disproves a
partnership.  In considering his legal
sufficiency challenge to the jury’s finding of agreement, we address first
whether there is evidence of an agreement, and then whether the documentary
evidence Malone points to conclusively disproves an agreement.
a.    
There is
evidence supporting the jury’s finding of an agreement.       
Arguing that the Ingram factors are the only
“circumstances” that the jury could consider to determine if a partnership
exists, Malone asserts that “the evidence as a whole shows that there was no
partnership.”  Specifically, he argues
that there is (1) no expression of intent to be partners, (2) no sign of
profit-sharing, (3) no sharing of losses, (4) no control, and (5) no
contribution of capital.  Patel responds
by pointing to evidence indicative of an agreement, including (1) direct
testimony about the agreement, (2) Patel’s and Choo’s free work, (3) Patel’s
and Choo’s nominal salaries, (4) and various emails indicating there was an
agreement. 
The ultimate question for us here
is whether “[c]onsidering the evidence in the light most favorable to the
challenged finding, indulging every reasonable inference that would support it,
crediting favorable evidence if reasonable jurors could, and disregarding
contrary evidence unless reasonable jurors could not, we conclude that the
trial evidence would enable reasonable and fair-minded people to find” that
Patel and Malone agreed that they would be equal partners in Prescendo. White Oak Operating Co., LLC v. BLR Const.
Cos., LLC, ___ S.W.3d ___, 2011 WL 4500840, at *5 (Tex. App.—Houston [14th
Dist.] Sep 29, 2011, no pet.) (citing City
of Keller, 168 S.W.3d at 823, 827)). 
In doing so, we “look at the totality of the known circumstances rather
than reviewing each piece of evidence in isolation.”  Felker
v. Petrolon, Inc., 929 S.W.2d 460, 464 (Tex. App.—Houston [1st Dist.] 1996,
writ denied) (citing Brinegar v.
Porterfield, 705 S.W.2d 236, 238 (Tex. App.—Texarkana), aff’d, 719 S.W.2d 558 (Tex. 1986)).  Any evidence has probative value if it contributes
to the proof of an issue. Id.  “A single factor standing alone may be
insufficient, but when joined by other factors constituting a significant
whole, the combination can justify a conclusion.”  Id.  “To sustain a finding of fact based upon
circumstantial evidence it . . . is necessary to show only that one conclusion
or inference is more probable than any other.” Id. (citing $56,700 in U.S.
Currency v. State, 730 S.W.2d 659, 660 (Tex. 1987).
In arguing that there was no
evidence of “expression of intent to be partners,” Malone states that there
must be evidence of “expressed intent,” which can include “the parties’
statement that they are partners, one party holding the other party out as a
partner on the business’s letterhead of name plate, or in a signed partnership
agreement.”  Four witnesses testified,
with varying degrees of specificity, that Malone expressed such an intention to
be partners with Patel and Choo.   
Patel testified that four people
who made up the core business consulting group at MRE—Patel, Malone, Choo, and Pallav Jain—had several meetings to discuss leaving MRE and
their future plans.  Patel testified that
ultimately “[t]hree of us, Mr. Meng Choo, myself and Mr. Malone, we decided to
create a new entity where we would be co-partners.  Mr. Pallav Jain, on the other hand, decided
to go and work for a company called McKinsey Consulting, which is another
consulting company.”  Patel further
testified that, “We all agreed we were equal partners” and that “Mr. Malone
told us that we just needed an oral agreement to have a partnership and the
three of us agreed to be equal partners; Mr. Meng Choo, Mr. Malone and
myself.”  His understanding was that
proceeds would be shared equally among the partners after they equally shared
overhead and other expenses. 
Choo similarly testified about
these meetings about leaving MRE when Malone, Patel, and Choo agreed to be
partners in Prescendo:
Q.      I want to focus on the latter quarter of 2003.  Did you have any meeting with Mr. Patel and
Mr. Malone?
A.      Yes.
Q.      And I want to focus on before Prescendo was formed.  Can you tell me what was — why you
were having these meetings?
A.      Around that point in time, there were disagreements between the
other partners at MRE and Mr. Malone. 
And we were getting quite concerned about, you know, if we can survive
inside of MRE, meaning if we can go on in that company.
Q.      What were some of the options you were considering?  And I want to talk — leaving
aside Prescendo, what other options did you consider?
A.      Just going out and getting a job at another company, yes.
Q.      Ultimately, was there a decision made between the three of you?
A.      Yes.
Q.      What was that decision?
A.      We decided to form a new company called Prescendo Consulting.
Q.      Did y’all form an agreement on that basis?
A.      Yes.
Q.      What was your agreement?
A.      We would own the company together.
Q.      When you say “together,” who were the members of this
agreement?
A.       It was Mr. Malone, Mr. Patel and myself.
Q.      Did anyone besides you three attend these meeting?
A.      On a couple of occasions, yes.
Q.      Who else attended?
A.      The gentleman’s name is Pallav Jain.
Q.      Did he enter into the agreement to become a member of
Prescendo?
A.      He left to go work for a different company.
Q.      Did Mr. Malone make any representation during these meetings
about — well any representation?
A.      We agreed that we would own the company together, meaning we
equally owned it.  We would, you know,
share in the profit and the loss of the company.
Choo further explained his understanding that the
parties had a verbal agreement that was not reduced to writing at the time
because Malone represented that until Choo’s and Patel’s green cards were
received, “we could not put it on paper.” 

Jain’s testimony about the early
meetings and the parties’ agreements was consistent with Patel’s and
Choo’s.  In addition, he testified that
he and Malone “kept in touch about Prescendo, [and] about the MRE lawsuit”
after Jain left MRE.  When asked whether
there was “any doubt in [his] mind who the owners of Prescendo were,” he
responded, “No. . . . They were Meng, Firdosh and Ted.  It was their company.”  Malone had earlier enticed Jain to accept a
job at MRE with the idea that the four could work at MRE for a while and then
split out and start a new company together.          
Finally, Terry Hirsch, Patel’s
former supervisor at Shell, testified that “Ted [Malone] also called me later
and basically told me the same thing that Firdosh [Patel] did, that they were
going to go out on their own, form their own company.”    
In arguing there is no evidence to
support the jury’s finding that Malone agreed to be equal partners with Patel,
Malone’s brief only acknowledges Hirsch’s testimony, which he claims is too
vague to evidence such intent.  Malone
then asserts that there is “no evidence to support the requisite expression of
an agreement among Patel, Choo, and Malone” because “there is no written
partnership agreement” and because “no writing supports the creation of the
partnership, and no writing from the following three years even mentions the
purported agreement.”  Malone’s brief
then chronicles a variety of ways that Malone and or Prescendo could have held
out Patel as a partner, but did not.    
Malone’s emphasis on the lack of a
written contract or other writings is misplaced.  The law recognizes oral agreements, see generally e.g., Ingram, 288 S.W.3d at 894–97; thus, the lack of a written agreement cannot conclusively establish
that an oral agreement does not exist. 
The failure to reduce an agreement to writing (as well as any proffered
explanation for that failure) is relevant for the jury’s consideration, but
does not negate the legal sufficiency of the direct evidence of Malone’s
expressions of agreement to be equal partners with Patel in Prescendo.[6]  The direct testimony of Patel, Choo, Jain,
and Hirsch is some evidence in support of the jury’s finding that Malone agreed
to be equal partners with Patel and Choo.
Malone next argues that there “is
no sign of profit sharing or a right to profit-sharing,” as “Patel never
receive any profits, a share of revenues, or any form of compensation that
would suggest the existence of a partnership.” 
Instead, Malone points out, Patel was paid a salary, and each December
received a letter “explaining the determination of the bonus to be paid in
addition to his salary.”  Because Patel
never “complain[ed] that he had not received his ‘share’ of profits” and
because, under Ingram, “a share of
profits paid as wages to an employee is not indicative of a partnership
interest,” Malone contends there is no evidence of this Ingram factor.  Malone
similarly contends that “Patel adduced no evidence of an agreement to share
losses or liabilities.”   
We agree that there is no evidence
that Patel actually received a share of profits other than to the extent
profits informed any bonus he received. 
There is evidence, however, of his right to share profits that supports
the jury’s finding of an agreement. 
Patel testified to his understanding that “the divisions of proceeds”
would be calculated by “tak[ing] what we make in the company, less all the
expenses, overhead, what it was, whatever was the balance, bank balance, you
just divide by one-third, one-third, one-third.”  Choo likewise testified that “our agreement
was to share the profit and the loss equally.”    
There is thus evidence through
Patel’s and Choo’s testimony of an agreement to share profits, and they both
testified to their understanding that, by virtue of their being partners, any
losses would be shared as well.  Patel
also explained that early on, the three of them agreed to sponsor Raymond
Zhuo’s application for a green card, which is an example of a three-year
financial commitment indicative of such an implicit agreement, in that “all
three of us were agreeing to share in any losses that Prescendo would take in
the event that Mr. Raymond’s rule [sic] was sitting on the bench.”  Patel’s and Choo’s testimony is some evidence
that the parties agreed to be equal partners.
There is also evidence that Patel
accepted a low salary and bonus with the understanding that profits in
Prescendo’s early years would be invested back the company, thereby increasing
the value of his ownership:  
[T]he $24,000 a [year] was — it was
just a nominal amount.  In the big scheme
of things, it did not mean a whole lot. 
I was one-third owner of the company. 
What mattered was the total value of the company.  We were building our own entity.  When you’re building your own entity, what
you take right up front does not matter a whole lot.
Choo testified to a similar
understanding:  
Q.      Well, if you were a partner and believed that you had a right
to a third, why didn’t you distribute all the money in Prescendo?
A.      Because at the time, you know, we were in this lawsuit with MRE
Consulting and we wanted to be at least on the conservative side, make sure
that there’s enough money around.  We
didn’t want to just take everything out.
Q.      Whose idea was it to leave money in Prescendo?
A.      I think it was the three of us. 

Patel argues that these nominal
salaries are also evidence that an agreement existed to be equal owners of
Prescendo.  They both agreed initially to
starting salaries at Prescendo of $15,000—a figure that they decided to raise
to $24,000 when Prescendo began operating in January 2004 after Patel landed
Shell as a client.  Had Patel not left
MRE, he would have made $175,000–$180,000.  Choo would have made
$150,000, a lower figure because he typically billed less hours than
Patel.  Raymond Zhau, on the other hand,
was “very junior” to Patel and Choo in terms of experience but had a starting
salary at Prescendo of $62,500, a figure much closer to what Zhau would have
made at MRE.  Patel testified that he
accepted this lower salary that was equivalent to Choo’s—despite his making
more than Choo at MRE—because “we were all equal partners.”  Zhau made more than Patel and Choo because he
“was not a partner.  He was a regular
employee in the company.”  Thus, he “was
not getting part of the value of the company.” 
An email was introduced in which
Malone, in 2003, proposed raising the base salaries of Patel and Choo from
$24,000 to $50,000.  Patel opted to leave
his salary at $24,000, responding “I’m okay with my salary — don’t need a raise right now.”  There was evidence that throughout 2003,
2004, and 2005, as revenues went up, Patel’s and Choo’s salaries increased, and
they received bonuses in amounts that Malone, Patel, and Choo agreed upon.  Despite Patel billing more hours and bringing
in significant more revenue, Patel’s and Choo’s compensation was always equivalent
because they considered themselves equal partners.  We agree with Patel that the evidence of his
and Choo’s nominal salaries with Prescendo (despite other lucrative job
opportunities), their declining Malone’s suggestion that their salaries be doubled,
and their lock-step compensation scheme is some evidence that they agreed to be
partners.
Malone next contends that there was
no evidence of a “participation or right to participate in control of the
business.”  He cites Ingram for the proposition that the “right to control a business is
the right to make executive decisions.” Ingram, 288 S.W.3d at 901.  He also asserts that Ingram supports the proposition that “mere knowledge of executive
decisions, or even input into those decisions, does not constitute
control.”  Thus, he contends, “Patel may
have been aware of various personnel decisions (such as sponsoring Rayonod Zhou
for his green card), and aware of Prescendo’s financial condition (even
participating in setting bonuses), but he has produced no evidence that he
actually made any executive decisions on behalf of the company.” 
In Ingram, the plaintiff argued that “he had control because [the
defendant] discussed with him how much the clinic made, the amounts paid to the
staff, and the need to hire [the defendant’s wife] as personnel director.”  Ingram,
288 S.W.3d at 901.   Noting that this was
the only evidence proffered to demonstrate a right of control, the supreme
court held this evidence fell short.  
[B]eing sporadically provided information
regarding the business does not indicate that [the plaintiff] had control of or
the right to control the business.  At
most, [his] evidence demonstrates that [the defendant] talked with [the
plaintiff] about the business.  But
owners talk with consultants, employees, accountants, attorneys, spouses, and
many others about their businesses, and these conversations do not establish
that these people have control of the businesses.  Likewise, those same classes of people may
have the opportunity to look at the businesses’ books, but once again, a review
of the books itself is not evidence of control. 
[The plaintiff] submitted no evidence that he made executive decisions
or had the right to make executive decisions and has shown no evidence of this
factor. 
Ingram, 288
S.W.3d at 902.  While Ingram holds that access to information
does not demonstrate control, we do not read Ingram so broadly as Malone to exclude evidence of input into
executive decisions as evidence of control. 

Malone was in charge of Prescendo’s
accounting and business functions, but the jury in this case heard evidence
that Malone did more than share information with Patel.  Malone, Patel, and Choo held weekly
“partnership meetings,” and many decisions were made collaboratively.  According to Patel, the “three would discuss
topics, and then defer to whoever we thought was the most experienced.”  Choo likewise testified that decisions were
made by all three.  When they decided to
form Prescendo, Malone, Patel, and Choo decided together to hire Raymond Zhau
and make the commitment to sponsor his permanent residency application.  Malone, Patel, and Choo together made the
decision about Patel’s, Choo’s, and Zhau’s salaries, and about the amounts of
bonuses to be paid.  When Malone wanted
to hire a ex-colleague from Coral, Patel vetoed that decision and he was not
hired.  An email was introduced in which
Malone consulted with Patel and Choo about raising their salaries—an idea they rejected.  The evidence that Patel had the right to
exercise, and did exercise, some control over executive decisions of Prescendo
supports the jury’s finding of an agreement to be equal partners.           
Finally, Malone argues that there
is no evidence that Patel contributed money or property to Prescendo.  He notes that Malone “contributed all of
Prescendo’s start-up capital” and that Patel only “used a few personal items in
his work, such as his car, cell phone, and personal computer.”  He points to the supreme court’s admonishment
in Ingram that “[a]t a minimum, the
putative partner would have to prove that any such value can be distinguished
from services rendered or property given as an employee.” Ingram, 288 S.W.3d at 903; see
also id. at 902 (“Employees may contribute to business endeavors by lending
their time and reputation, but that is not a contribution to the venture
indicative of a partnership interest.”).  According to Malone, Patel’s evidence “shows
mere use [of personal items], not a contribution” as a partner.    
Patel testified that he, Malone,
and Choo “split up the tasks . . . in getting the [Prescendo] up and running” during
the last quarter of 2003.  Patel
“researched cellphone plans, 401(k) plans, marketing brochures, what needed to
be done for [the] business logo, design, et cetra.”  Choo came up with the company name
“Prescendo” and “focused mostly on setting up [the] website and getting e-mail
accounts running.”  “Malone focused on
the paperwork for setting up the company and also in banking and
accounting.”  Patel testified that he did
this work without remuneration because “I thought that is something you just
had to do when you’re an owner of your own company.”  Patel also worked at bringing Shell on as the
first client of Prescendo in January 2004, turning down Shell’s request that he
come to work for it directly as an employee, instead telling Shell that he “was
committed to creating and building my own entity, Prescendo.”  As for equipment, he testified that he used
his own desktop, office supplies, printer, cellphone, car, and apartment as his
home office.  Patel testified that, in
2003, he would not have joined Prescendo if he was not a partner.  He further testified that, in addition to
more pay, if he had stayed at MRE or taken instead a job with Shell or
Openlink, he “would not even be working the additional unbillable hours just
building up the company.” 
Choo was not paid for his initial
work at Prescendo either, which he considered his “sweat equity” into the
company.  He similarly testified to
purchasing a computer and office supplies, which he considered his “contribution
to starting up the company.”  Patel’s and
Choo’s testimony here is some evidence of an agreement to be equal
partners.  
Finally, in support of the jury’s
finding, Patel also points to an email he sent to Malone—after his green card had been obtained but
before the September 29, 2006 argument—indentifying the need to discuss the “[n]ext steps on partnering
agreement” as a topic for their next meeting, and to an email that Choo sent
during the same period identifying as a meeting topic the “partnership
agreement.”  Despite Malone’s testimony
that he had never agreed to be partners with Patel and Choo and that they
“never discussed, you know, sharing equity after his green card prior to, you
know, that September 29th blow-up”—Malone did not question these reference to the “partnership agreement”
and in fact responded to Choo’s email with, “All good.”  We agree that the jury could have considered
these emails and the parties’ conduct as circumstances supporting the
conclusion that the parties had an agreement.       
b.   
Documents
reflecting Patel was an employee or reflecting that Malone was the owner of
Prescendo do not conclusively disprove an agreement to be equal owners of
Prescendo
Malone alternatively argues that
there is no evidence to support the jury’s finding of an agreement to be equal
partners because documentary evidence conclusively negates a partnership.  Specifically, he points to the letter signed
by Patel on December 15, 2003, in which he accepted an offer of at-will
employment at a $24,000 salary with a potential “merit-based” bonus “dependent
on Prescendo’s overall company performance.” 
Malone also points to Patel’s INS papers and tax forms where he signed
as an employee, and to a
customer proposal drafted by Patel that referred to Malone as “Partner” and
Choo as “Senior Business Analyst,” with Choo commanding a lower hourly rate as
evidence that “Malone was a partner and the owner of the business, whereas
Patel was merely its at-will employee.”  Finally, Malone points to other papers,
including an insurance application, application for a service mark, and a
pleading in the MRE lawsuit in which Patel indicated that Malone was
Prescendo’s owner.  
In response, Patel agrees that he and
Choo were employees but asserts that “Malone cites no authority establishing
that Patel’s and Choo’s status as employees negates the existence of the
agreement to be equal partners.”  Patel
also points out that Malone has not provided “any authority that establishes
that an employee cannot own an interest in his employer’s business.”  The at-will employment agreement was
consistent with Malone’s representation that the “partnership could not be in
writing” until the Patel’s and Choo’s green cards were received.  Thus, Patel argues, the at-will agreements
did not preclude Patel and Choo from performing the agreement and owning the
equity when their green cards were received. 
Patel also points to evidence that Malone actually directed how the
relationship was documented on the various papers, and that he trusted Malone’s
representation that the pending green card applications mandated that it be
filled out that way.  
Malone’s argument is two-fold: (1)
“proof of employment status necessarily makes partner status an impossibility,”
and (2) Patel’s execution or acquiescence in the preparing of documents for
various purposes indicating that Malone was the owner of Prescendo conclusively
negates the existence of an agreement that Malone, Patel, and Choo were equal
owners of Prescendo, despite other evidence of that intent.  We disagree.     
Malone has cited us no authority
for the proposition that an at-will employee, as a matter of law, cannot ever
own a partnership interest in his or her employer.  An at-will employee can be, and often is,
also an equity owner in his or her employer company.  E.g., Willis v. Bydalek, 997 S.W.2d 798, 802–03 (Tex. App. Houston [1st Dist.] 1999, pet.
denied) (holding minority shareholder who also managed business could be
discharged by corporation at will absent an employee contract).  While such a situation is more common with
corporations, Malone has not proven that status as an employee and partner are
mutually exclusive.  E.g., Woodruff v. Bryant,
558 S.W.2d 535, 540–41 (Tex. Civ.
App.—Corpus Christi 1977, writ ref’d n.r.e.) (recognizing that defendant began
relationship as a manager of company, was later made one-fourth partner and
designated managing partner while “retain[ing] her employee status ‘company
manager,’” and still later “discontinued her status as an employee and as
managing partner, [and] maintained her partner status as a silent partner”); Strebel v. Wimberly, No. 01-10-00227-CV,
2012 WL 112253, at *11 (Tex. App.—Houston [1st Dist.] Jan. 12, 2012, no pet.
h.) (recognizing that a person can serve both as an employee and limited
partner of an entity); Armstrong v.
Phinney, 394 F.2d 661, 664 (5th Cir. 1968) (recognizing that, for income
tax purposes, partner can “stand in any one of a number of relationships with
his partnership, including those of creditor-debtor, vendor-vendee, and
employee-employer.”).  
This Court has in fact resolved a
partnership claim by an at-will W2 employee with reference to the TRPA factors,
an analysis that is inconsistent with Malone’s position.  Brown
v. Swett & Crawford of Tex., Inc., 178 S.W.3d 373, 378–79 (Tex. App.—Houston [1st Dist.] 2005, no
pet.) (affirming summary judgment in employer’s favor because there was no
evidence of an agreement to share profits, which the Court (relying on pre-Ingram cases) characterized as “an
essential element of a partnership.”). 
Because we reject the premise of Malone’s argument—i.e. that an employer
cannot agree to share a partnership interest with an at-will employee—we conclude that Patel’s status as an at-will
employee does not establish that there is legally insufficient evidence to
support the jury’s finding of an agreement. 

We likewise reject Malone’s
argument that certain documents reflecting that he owned Prescendo, i.e., the
application for insurance, the application for a service mark, an MRE
litigation pleading, and a proposal prepared for a potential Prescendo client
establish as a matter of law that there was no agreement between Malone, Patel,
and Choo to be equal partners in Prescedo. 
Certainly these were relevant to the jury’s consideration, but the jury
heard—and accepted—an explanation for why each of these documents said what it
did.  
Patel testified that Malone
instructed him to designate Malone as the 100% owner on the insurance forms and
service mark application.  Malone told
him that he needed to be reflected as the owner until they were able to
document their partnership agreement in writing.  The jury likewise saw and heard testimony
about the MRE pleading.  The pleading was
filed in 2005, but the passage Malone points to is paraphrasing something that
Malone told to MRE in 2003 before Patel or Choo had left MRE—i.e., Malone notified MRE’s president “that he
would be terminating his relationship with MRE at once and that he would be
hiring Choo and Patel away from MRE to perform similar duties for a new
business which would be owned by Malone.” 
Given that this is not a representation by Patel, but only a recitation
of his understanding of something Malone stated to a third party, and given the
evidence that Patel and Choo were led by Malone to believe that there was a
legal impediment to documenting their agreement in writings, this pleading does
not negate as a matter of law the jury’s finding of an agreement to be equal
partners.  Finally, Malone points to
Patel’s preparation of a business proposal for a potential client that labeled
Malone as “Partner” and Choo as “Senior Business Analyst.”  The jury heard evidence that these
designations do not have to do with ownership structure but, rather, the level
of service being offered the client:
Q.      Are there titles or labels associated with those positions in
the consulting industry?
A.      Meaning at the client site, if you’re trying to do that kind of
work?
Q.      So if you're going to try to get work -- let me back up.  What would be a designation or title for a junior
consultant?
A.      It will probably be business analyst.
Q.      And what was the next level up from that?
A.      So we had business analyst, technical analyst.  We would have junior business analyst, senior
business analyst. Again, not much difference but it’s just business analyst.  And then there would be high-level advisory
work, which is not where most of the work was at the clients; but sometimes
clients like to put in folks for just a small number of hours doing some high-level
advisory stuff. That would be called partner level work.
Q.      Okay. Now, you just used the word “partner.”  And here we’ve used the word “partner.”  Is the phrases used in the analyst world, does
that denote the inner workings of whatever business you're coming from?
A.      Absolutely not. They’re two completely separate things.  
By way of example, Patel testified that while he was
an owner of Glenrisk at the time of trial, he is designated “business analyst”
on Shell’s project—not
“partner.”    The paperwork Patel
prepared for customers does not negate the existence of an agreement to be
equal partners.         
Malone’s insistence that the jury
could not conclude that there was an agreement in the face of this documentary
evidence is inconsistent with Texas law and the jury charge in this case, which
permitted the jury to “consider what [the parties] said and did in light of the
surrounding circumstances” in determining intent.  Cf.
King v. Evans, 791 S.W.2d 531, 533–34 (Tex. App.—San Antonio, 1990, writ denied) (affirming judgment on jury
verdict determining that partner was entitled to interest in land even though
title to land was recorded as jointly owned by another partner (individually)
and by a nonpartner, and explaining that the “fact that the deed the land was
taken in appellants’ names is not conclusive in determining whether the land
was a partnership asset” because ultimately whether “property used in the
partnership operation is owned by the partnership is a question of
intention”).  Malone would have us look
only at the documents without reference to the other evidence the jury heard
about the parties’ express agreement, about Patel’s and Choo’s trust in Malone
(who directed how the relationship was documented), and about Patel’s and
Choo’s belief that written documents could not reflect their agreement to be equal
owners until their received their green cards. 
Because a reasonable and fair-minded jury could have found the parties’
agreement to be equal partners based all the evidence in this case, its verdict
is supported by legally sufficient evidence. 

4.                
There is
factually sufficient evidence to support the jury’s finding of agreement.
Malone asserts alternatively that
the evidence is factually insufficient to support the jury’s finding of
agreement.  He “acknowledge[s] that Patel
and Choo used the word ‘partner’ or ‘partnership’ during the trial,” but
asserts that “their mere references to partnership deserve no credit because
the law looks at substance and not at form.” 
If, however, the Court “somehow disagrees and sees enough evidence to
beat a no-evidence challenge,” he urges us to “at least find the evidence
factually insufficient.”  
The jury in this case was presented
with two diametrically opposed fact scenarios—Patel claims Malone agreed they would be equal partners and Malone
asserts that there was no such agreement. 
We have already concluded that some evidence supports the jury’s finding
of an agreement, and that none of the evidence Malone points to disproves an
agreement as a matter of law.  Assessment
of the witnesses’ credibility was in the province of the jury and we cannot
disturb its determinations in that regard. 
Golden Eagle Archery, Inc.,
116 S.W.3d at 761.  The evidence supporting
the jury’s finding is not so contrary to the overwhelming weight of the
evidence as to be clearly wrong or unjust.  Cain,
709 S.W.2d at 176.  The evidence is thus
factually sufficient.  
We overrule Malone’s first
issue.  
QUASI-ESTOPPEL
Malone argues, for many of the same
reasons he contended that the evidence was legally insufficient, that “Patel
should be held to his documents, for reasons of quasi-estoppel.”  Malone requests that we reverse and render
judgment in his favor based on the doctrine of quasi-estoppel because “it is
intolerable for [Patel] to claim partnership status now, given his string of
representations to the contrary.”  
In response, Patel points out that
quasi-estoppel is an affirmative defense and Malone thus had the burden to
plead, prove, and obtain a jury finding on this theory.  According to Patel, because Malone “never
raised quasi-estoppel during trial” and “did not obtain a finding on
quasi-estoppel,” he “cannot raise quasi-estoppel now.”  Finally, Patel argues that the evidence does
not conclusively establish that quasi-estoppel applies because “Malone has not
shown that being an employee is the acceptance of a benefit inconsistent with
later becoming a partner based on an agreement that existed prior to the
employment relationship.”    
“Quasi-estoppel precludes a party
from asserting, to another’s disadvantage, a right inconsistent with a position
previously taken.”  Lopez v. Munoz, Hockema & Reed, L.L.P., 22 S.W.3d 857, 864
(Tex. 2000). “The doctrine applies when it would be unconscionable to allow a
person to maintain a position inconsistent with one to which he acquiesced, or
from which he accepted a benefit.” Id.
“Thus, quasi-estoppel forbids a party from accepting the benefits of a
transaction and then subsequently taking an inconsistent position to avoid
corresponding obligations or effects.”  Eckland Consultants, Inc. v. Ryder, Stilwell
Inc., 176 S.W.3d 80, 87 (Tex. App.—Houston [1st Dist.] 2004, no pet.).  “[T]here can be no estoppel from acceptance
of benefits by a person who did not have knowledge of all material facts.”  Lindley
v. McKnight, 349 S.W.3d 113, 133 (Tex. App.—Fort Worth 2011, no pet.)  (citing Frazier
v. Wynn, 472 S.W.2d 750, 753 (Tex. 1971)).
This equitable doctrine operates as
an affirmative defense. Hamilton v.
Morris Res., Ltd., 225 S.W.3d 336, 346 (Tex. App.—San Antonio 2007, pet.
denied).  Malone did not request that
this issue be submitted to the jury, and the jury did not make any findings on
this issue.  Moreover, the evidence does
not demonstrate that the doctrine of quasi-estoppel bars Patel’s recovery as a
matter of law.  Fasken Land & Minerals, Ltd. v. Occidental Permian Ltd., 225
S.W.3d 577, 594 (Tex. App.—El Paso, 2005, pet. denied).  We have already rejected the argument that
Patel status as an employee conclusively defeats any claim that the parties
agreed to be partners.  As for the other
documents cited by Malone, the jury heard evidence that (1) Patel trusted
Malone, (2) Malone was in charge of the business and accounting functions at
Prescendo, (3)  Malone represented to
Patel that their agreement to be partners could not be writing until Patel
received his green card, and (4) that Malone told Patel to fill out documents
reflecting that Malone owned Prescendo until their agreement could be reduced
to writing.  In light of this evidence,
as well as the evidence that Patel forewent other employment and accepted less
compensation at Prescendo based on the parties’ agreement, we cannot conclude, as a matter of law, that Patel accepted a benefit from being
designated as an employee that is inconsistent with his agreement with Malone
such that it would be unconscionable to enforce their agreement.  Malone’s position is in fact inconsistent
with the evidence that Patel accepted reduced
benefits as an employee precisely because of the additional benefits he
expected from the partnership. 
We overrule Malone’s second issue.
ORAL PROMISE
In his third issue, Malone
challenges what he characterizes as Patel’s “fall-back theory” and argues that
the evidence is “legally and factually insufficient to prove Patel’s case for
breach of an oral promise that he and Malone would become partners in the
future.”  Malone asserts that “[a]ssuming
for the sake of argument that Patel and Malone did in fact agree to be equal
‘partners’ as understood in the law[,] Patel still loses because he cannot show
causation of any damages.”  Rather,
according to Malone, “he caused his own predicament through his own deliberate
choices.”  
Malone begins by noting that any
partnership was “at-will.”  Then he
asserts that even if they agreed to be partners in October 2003, Patel signing a letter accepting at-will
employment with Prescendo on December 15, 2003 evidenced his “walking away from
any embryonic partnership and soldier[ing] on as an at-will employee instead of
as a partner.”  Thus, according to Malone,
Patel cannot recover any damages because no profits were generated during the
time the at-will partnership lasted from October 2003 when the agreement was
made until December 15, 2003 when Patel signed the letter.  Malone argues that, on December 15, 2003, Patel made
the conscious choice to terminate the at-will partnership and enter into an
at-will employment relationship instead that turned out to be a bad deal for
him.  The fact that “ended up putting
less money in his pocket during 2004-06 as an employee than he would have taken
home as a partner, that did not result from anything Malone did.”  Rather, it “resulted from Patel’s decision to
go forward as an employee instead of as a partner.” 
Patel responds that “Malone never
raised at-will partnership” and that there was never any evidence, as Malone
now contends, that “the deal changed from a partnership to a strict employer
employee relationship.”  We agree with
Patel.  The jury was presented with
Patel’s theory that Malone, Patel, and Choo agreed to be equal partners from
the beginning.  Patel testified that by
signing the letter accepting at-will employment for $24,000, he was not
intending to repudiate his agreement with Malone.  Rather, Malone represented that letter was
necessary paperwork and that their partnership could not be documented in
writing until his green card was received. 
Patel also maintains the position that his status as an at-will employee
does not negate an agreement for him to own equity.  
Malone’s theory on the other hand was
that he never agreed to be partners and that Patel’s signing the letter
accepting at-will employment was evidence that there was never an agreement to
be partners, not that it was evidence
that Patel walked away from a partnership agreement.   In any event, we have already concluded that
Patel’s status as an employee of Prescendo does not foreclose the jury’s
finding that an agreement existed with Malone for Patel to be an equal
partner.  For the same reasons, the
letter does not demonstrate that Patel changed his mind and terminated his
partnership agreement with Malone upon its signing.  
We overrule Malone’s third issue.
CONCLUSION  
Because we have overruled Malone’s
issues on appeal, we need not reach Patel’s cross-appeal.  We affirm the trial court’s judgment.    
 
 
 
                                                                   Sherry
Radack
                                                                   Chief
Justice 
 
Panel
consists of Chief Justice Radack and Justices Higley and Brown.
 




[1]
          Malone did not call the lawyer
he claims to have gotten the information from about Patel’s and Choo’s
inability to own equity in a firm to testify, nor did he present any other
testimony to contradict Harder’s testimony that Malone’s understanding was
mistaken.  
   


[2]
          Patel testified that it was his
and Choo’s understanding that Malone was receiving the same salary and bonus as
the three agreed upon.  Malone testified
at trial that he did not pay himself a salary as an employee of Prescendo.  He received funds from Prescendo in other
ways.  Some of Malone’s legal fees in the
MRE litigation were paid out of Prescendo. 
Prescendo also paid Malone’s family’s group health insurance and a
management fee to a company owned by he and his wife, ERIS, that was serving as
the general partner of Prescendo.  Malone
also received what he characterized as a “monthly draw” from Prescendo.  


[3]
          A brief discussion about the oral argument is warranted here.  Patel’s theory at trial and in his brief has
consistently been that Malone, Choo and he had all agreed from the onset of
their discussions to be equal partners in Prescendo as soon as it was
formed.  Malone’s position at trial was
that he never agreed, and in fact would never have agreed in the future, to be
equal partners with Patel and Choo.  His
briefing maintains that position, and makes the alternative argument that even if
Malone hypothetically had agreed to be equal partners at the onset, Patel’s
signing an employment letter weeks later shows that the parties changed their
mind.  Inexplicably, with no reference to
the actual contrary trial testimony, Patel’s counsel at oral argument instead
insisted repeatedly the parties agreed to be partners at some undefined time in the future.  In response, Malone’s lawyers argued that
there is a causal disconnect between that theory and the damages model
supporting the jury’s damages award.  
It is axiomatic that “[a]ttorneys who request
argument should arrive at oral argument ready to answer questions about both the
facts and the law of the case.”  El Paso Natural Gas Co. v. Strayhorn,
208 S.W.3d 676, 681 (Tex. App.—Texarkana 2006, no pet.).  Whatever tactical advantage Patel’s counsel
sought in presenting a new factual theory at oral argument that is inconsistent
with the theory presented to the jury, we confine our review the sufficiency of
the evidence to support the jury’s findings in light of the factual theories
actually presented at trial and the arguments made in the parties’ briefs.  Cf.
Nip v. Checkpoint Sys, Inc., 154
S.W.3d 767, 772 (Tex. App.—Houston [14th Dist.] 2004, no pet.).  For the same reasons, we decline to consider
Malone’s causation arguments raised for the first time at oral argument in
response to Patel’s counsel’s new argument. 
Id.


[4]
          The TRPA expired on January 1,
2010.  See Act of May 31, 1993, 73rd Leg., R.S., ch. 917, § 1, 1993 Tex Gen. Laws
3887, 3890 (expired January 1, 2010) (former Tex. Rev. Civ. Stat. art.
6132b-2.02(a), 6132b-2.03(a)).  After
that date, the Texas Business Organizations Code (TBOC) applies to all
partnerships, regardless of their formation date.  Ingram,
288 S.W.3d at 894 n.4.  Both the TRPA and
the TBOC identify the same factors as relevant to whether a partnership has
been formed.  Compare Tex. Bus. Orgs. Code
Ann §
152.052(a)(Vernon 2012), with Tex. Rev. Civ. Stat. art.
6132b-2.03.    


[5]           PJC 101.1 Basic Question—Existence
            Did Paul Payne and Don Davis agree [insert all disputed terms]? 
                        [Insert
instructions, if appropriate]
 


[6]
          To establish that there is “no
evidence” of his expressed intention to be partners with Patel, Malone also
points to documents Patel executed that he asserts conclusively disprove that
he and Patel were partners.  We address
this contention separately later in this opinion.  


