Kakabadze v. M5 International Company Inc et al
Filing
36
MEMORANDUM OPINION AND ORDER denying 29 MOTION for Summary Judgment and Memorandum of Law in Support, denying 30 MOTION for Summary Judgment and/or MOTION to Dismiss. Defendants' fraud counterclaim is dismissed with prejudice. (Signed by Judge Sim Lake) Parties notified. (aboyd, 4)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
MAMUKA KAKABADZE,
§
§
§
§
§
§
§
§
§
§
Plaintiff,
v.
M5 INTERNATIONAL COMPANY,
INC. and ZLATAN STOYANOV,
Defendants.
CIVIL ACTION NO. H-12-3701
MEMORANDUM OPINION AND ORDER
Plaintiff
defendants M5
Mamuka
Kakabadze
brought
International Company
this
("M5")
action
against
and Zlatan Stoyanov1
(collectively "Defendants") alleging six causes of action related
to the purchase of armaments and munitions for the Ministry of
Internal
Affairs
of
Georgia.
Pending
before
the
court
are
Plaintiff, Mamuka Kakabadze's Motion for Summary Judgment Against
Defendants
M5
International
Company,
Inc.
("Kakabadze's Motion for Summary Judgment")
and
Zlatan
Stoyanov
(Docket Entry No. 29)
and Defendants M5 International Company, Inc. and Zlatan Stoyanov's
Motion for Summary Judgment and/or Motion to Dismiss ("Defendants'
Motion for Summary Judgment")
(Docket Entry No.
30)
For the
reasons explained below, both motions will be denied.
lStoyanov is also known as Zlatan Stoyanov Kharalampiev.
----------,---""_.-,,----
Background
I .
A.
Undisputed Facts
Kakabadze is "an authorized buyer of certain arms, munitions,
and equipment for the Ministry of Internal Affairs of the Republic
of
Georgia"
("the
Ministry,,).2
The
Ministry
"is
the
law
enforcement agency in the Republic of Georgia and is responsible
for
police
executed
rifles,
the
a
and
related
contract
ammunition,
"BUYER"
and
matters. ,,3
for
the
purchase
and equipment. 4
M5
was
In
and
Kakabadze
delivery
of
and
M5
certain
Kakabadze was identified as
designated
Stoyanov is M5's president. 6
2008
the
"Purchase
Manager."s
The contract obligated M5 to obtain
the designated goods on behalf of Kakabadze, obtain the necessary
export licenses and other authorizations, and ship the goods to the
Ministry in return for a 10% commission on the purchase price of
2Kakabadze's Motion for Summary Judgment, Docket Entry No. 29,
p. 9; see also Defendants' Motion for Summary Judgment, Docket
Entry No. 30, p. 10.
(Page citations are to the pagination
imprinted at the top of the page by the federal court's electronic
filing system.)
3Plaintiff's Original Complaint ("Original Complaint") , Docket
Entry No.1, p. 2 ~ 7; Defendants M5 International Company, Inc.
and Zlatan Stoyanov's First Amended Answer, Affirmative Defenses,
and First Amended Counterclaims ("First Amended Answer"), Docket
Entry No. 19, p. 2 ~ 7.
4Contract, Docket Entry No. 35.
SId. at 1; see also id. at 6.
6Kakabadze's Motion for Summary Judgment, Docket Entry No. 29,
p. 9; Defendants' Motion for Summary Judgment, Docket Entry No. 30,
p. 1.
-2-
the goods before shipment. 7
contract as "Consignee."8
The Ministry is identified in the
Kakabadze paid the purchase price of the
goods, all freight, shipping, and export fees, and M5's commission
using
his
personal
funds. 9
He
was
later
reimbursed
by
the
Ministry.10
M5 continued to purchase and ship to the Ministry certain
armaments, munitions, and other equipment on behalf of Kakabadze
through early 2012. 11 Sometimes these transactions were facilitated
by the assistance of Ievgen Pugach.12
M5 billed Kakabadze for at
7Contract, Docket Entry No. 35, pp. 1-3.
BId.
at 2.
9Kakabadze's Motion for Summary Judgment, Docket Entry No. 29,
p. 1; Defendants' Motion for Summary Judgment, Docket Entry No. 30,
p. 2; Kakabadze Deposition Transcript, Exhibit 1 to Defendants'
Motion for Summary Judgment, Docket Entry No. 30-1, p. 2;
Plaintiff, Mamuka Kakabadze's Memorandum of Law in Opposition to
Defendants M5 International Company, Inc. and Zlatan Stoyanov's
Motion for Summary Judgment and/or Motion to Dismiss ("Kakabadze's
Response"), Docket Entry No. 31-1, p. 6.
10Kakabadze Deposition Transcript, Exhibit 2 to Defendants M5
International Company, Inc. and Zlatan Stoyanov's Response to
Plaintiff Mamuka Kakabadze's Motion for Summary Judgment on
Liability ("Defendants' Response"), Docket Entry No. 32-2, pp. 5-8,
24-25; Defendants' Motion for Summary Judgment, Docket Entry
No. 30, p. 2.
110r iginal Complaint, Docket Entry No.
I,
p. 5 ~ 35;
Kakabadze's Motion for Summary Judgment, Docket Entry No. 29,
pp. 9-10; Defendants' Motion for Summary Judgment, Docket Entry
No. 30, p. 6.
12See Defendants' Motion for Summary Judgment, Docket Entry
No. 30, pp. 1-2; Kakabadze Deposition Transcript, Exhibit 2 to
Defendants' Response, Docket Entry No. 32-2, pp. 8-9, 22-23; Pugach
Deposition Transcript, Exhibit 4 to Defendants' Response, Docket
Entry No. 32 -4, pp. 10-20.
Pugach is also known as Evgenii.
(continued ... )
-3-
least some of these transactions at prices higher than it paid to
the original suppliers,13 and sometimes altered original suppliers'
invoices
to
indicate that
it paid more
for
the goods
than it
actually did. 14
B.
Procedural History
Kakabadze brought
this action on December 21,
2012. 15
On
February 13, 2013, Defendants filed a motion to dismiss for lack of
standing
under
Federal
Rule
of
Civil
Procedure
12 (b) (1) .16
Defendants' motion was denied on March 18, 2013. 17
On April 1, 2013, Defendants filed an answer to Kakabadze's
Original Complaint in which they alleged a counterclaim for fraud
against Kakabadze. 1B
On April 23, 2013, Defendants filed an amended
12 ( ... continued)
Kakabadze's Motion for Summary Judgment, Docket Entry No.
p. 12. The exact role of Pugach is disputed by the parties.
29,
13See Kakabadze' s Motion for Summary Judgment, Docket Entry
No. 29, pp. 16-18; Defendants' Response, Docket Entry No. 32,
pp. 7-8.
l40riginal Complaint, Docket Entry No.1, p. 4 ~~ 26-28, pp. 7-8
51- 5 2 , P . 11 ~ ~ 71-72, P . 2 0 ~ ~ 129 - 30 , pp . 23 - 2 4 ~ ~ 151- 5 2 ;
First Amended Answer, Docket Entry No. 19, pp. 3-4 ~~ 26-28, p. 5
~~ 51-52, p. 6 ~~ 71-72, p. 9 ~~ 129-30, p. 10 ~~ 151-52.
~~
150riginal Complaint, Docket Entry No.1.
16Defendants M5 International Company,
Inc.
and Zlatan
Stoyanov's Motion to Dismiss for Lack of Standing, Docket Entry
No.6.
l7Order, Docket Entry No. 12.
1BDefendants M5
International Company,
Stoyanov's
Original
Answer,
Affirmative
Counterclaims, Docket Entry No. 14.
-4-
Inc.
and Zlatan
Defenses,
and
answer 19
in
order
to
plead
their
fraud
allegations
with
the
specificity required under Federal Rule of Civil Procedure 9(b)
.20
Kakabadze filed an answer to Defendants' counterclaim on May 14,
2013. 21
On September 27, 2013, Kakabadze filed a motion for summary
judgment.22
On October 17,
2013,
Defendants filed a motion for
continuance to respond to Kakabadze's motion. 23
the court granted Defendants'
After a hearing,
Motion for Continuance and denied
Kakabadze's motion for summary judgment without prejudice. 24
On February 21, 2014, Kakabadze filed his pending motion for
summary judgment. 25
Defendants
filed
summary judgment the same day. 26
their pending motion for
On March 14,
2014,
each party
19First Amended Answer, Docket Entry No. 19.
20See
Stipulation
to
Extend
Time
for
Defendants,
M5
International Company, Inc. and Zlatan Stoyanov, to File an Amended
Counterclaim, Docket Entry No. 17.
21Response of Plaintiff Mamuke Kakabadze to First Amended
Counterclaims and Alleged Facts Relevant Thereto of Defendants,
Docket Entry No. 20.
22Plaintiff, Mamuka Kakabadze' s Motion for Summary Judgment
Against Defendants M5 International Company, Inc. and Zlatan
Stoyanov, Docket Entry No. 22.
23Defendants M5 International
Stoyanov's Motion for Continuance
Docket Entry No. 24.
Company,
Inc.
and Zlatan
( "Motion for Continuance"),
24Hearing Minutes and Order, Docket Entry No. 28.
25Kakabadze's Mot ion for Summary Judgment, Docket Entry No. 29.
26Defendants' Motion for Summary Judgment, Docket Entry No. 30.
-5-
----------------------------_ _-,,--•..
filed a response to the other's motion. 27
Kakabadze filed his reply
on March 26, 2014,28 and Defendants filed their reply on March 28,
2014. 29
II.
Rule
56 of
the
Standard of Review
Federal
Rules of Civil
Procedure mandates
summary judgment "if the movant shows that there is no genuine
dispute as to any material fact
and the movant
Fed. R.
judgment as a matter of law."
Civ.
P.
is entitled to
56(a).
A party
moving for summary judgment "bears the burden of identifying those
portions of the record it believes demonstrate the absence of a
genuine issue of material fact."
Lincoln Gen. Ins. Co. v. Reyna,
401 F.3d 347, 349 (5th Cir. 2005)
When the nonmoving party would
bear the ultimate burden of proof at trial, the moving party may
satisfy its
summary judgment burden by
,,\ showing'
that
is,
pointing out to the district court -- that there is an absence of
evidence to support the nonmoving party's case."
Celotex Corp. v.
27Plaintiff, Mamuka Kakabadze's Response in Opposition to
Defendants M5 International Company, Inc. and Zlatan Stoyanov's
Motion for Summary Judgment and/or Motion to Dismiss, Docket Entry
No. 31; Kakabadze's Response, Docket Entry No. 31-1; Defendants'
Response, Docket Entry No. 32.
28Plaintiff, Mamuka Kakabadze's Reply Brief in Support of His
Motion for Summary Judgment Against Defendants M5 International
Company, Inc. and Zlatan Stoyanov, Docket Entry No. 33.
29Defendants M5 International Company,
Inc.
and Zlatan
Stoyanov's Reply to Plaintiff's Response to Defendants' Motion for
Summary Judgment, Docket Entry No. 34.
-6-
---------------------------------------_.__....__--..
Catrett, 106 S. Ct. 2548, 2554
such a movant
Rule 56 does not require
(1986).
to negate the elements of
the nonmovant' s
case.
Boudreaux v. Swift Transp. Co., 402 F.3d 536, 540 (5th Cir. 2005).
Where the moving party would bear the burden of proof at trial, it
must present evidence that would require "a directed verdict if the
evidence went uncontroverted at trial."
Int'l Shortstop, Inc. v.
Rally's, Inc., 939 F.2d 1257, 1264-65 (5th Cir. 1991).
A defendant
moving for summary judgment based on an affirmative defense "'must
establish each element
of
that
Shanks v. AlliedSignal.
Inc.,
defense
as
169 F.3d 988,
a
matter of
992
(5th Cir.
law.'"
1999)
(quoting Crescent Towing & Salvage Co., Inc. v. M/v Anax, 40 F.3d
741, 744 (5th Cir. 1994))
Once the movant has carried this burden the nonmovant must
show that material facts exist over which there is a genuine issue
for trial.
2553-54).
Reyna, 401 F.3d at 349 (citing Celotex, 106 S. Ct. at
The parties may support the existence or nonexistence of
a genuine fact issue by either (1) citing to particular parts of
the record, including depositions, documents, electronically stored
information,
affidavits
or
declarations,
admissions,
and
interrogatory answers, or (2) showing that the materials cited do
not establish the absence or presence of a genuine dispute or that
an adverse party cannot produce admissible evidence to support the
fact.
Fed. R. Civ. P. 56(c) (1) (A)-(B)
In reviewing this evidence
"the court must draw all reasonable inferences in favor of the
nonmoving party, and it may not make credibility determinations or
-7-
weigh the evidence."
Reeves v.
120 S. Ct. 2097,
(2000).
III.
2110
Sanderson Plumbing Prods.
I
Inc.,
Defendants' Motion for Summary Judgment
Kakabadze alleges six causes of action against Defendants in
his Original Complaint:
fraudulent
(3 )
(5)
inducement, 32
conversion, 34 and
Act.35
Defendants
(1) breach of fiduciary duty,
of
breach
(2) fraud, 31
contract, 33
violation of the Texas Theft Liabil i ty
(6)
have
(4 )
3D
moved
for
summary
judgment
on
all
of
Kakabadze's claims.
Defendants argue
bring
his
claims
Ministry.36
that
because
Kakabadze does not
he
was
acting
as
have
an
standing to
agent
for
the
Under Texas law \\ [t] he general rule is that one who
contracts as agent cannot maintain an action, in his own name and
right,
upon the contract."
(Tex. 1894).
Tinsley v. Dowell,
26 S.W.
946,
948
However, the Texas Supreme Court has recognized four
exceptions to the general rule:
3DOriginal Complaint, Docket Entry No. 1, pp. 6-10 ~~ 43-66.
31Id. at 10-13 ~~ 67-86.
32Id. at 13-17 ~~ 87-109.
33Id. at 17-19 ~~ 110-120.
34Id. at 19-23 ~~ 121-144.
35Id. at 23-26
~~
145-164.
36Defendants' Motion for Summary Judgment, Docket Entry No. 30,
pp. 10-12.
-8-
First, where the agent contracts in his own name; second,
where the agent does not disclose his principal, who is
unknown; third, where, by the usages of trade, the agent
is authorized to act as owner of the property; fourth,
where the agent has an interest in the subject-matter of
the contract.
rd.
Kakabadze has produced a
contract between himself
and M5
wherein he is identified as the "BUYER" and M5 is identified as his
"Purchase Manager.,,37
parties
Dripping
Kakabadze
Springs
Thus, in at least one transaction between the
contracted
Water
in his
Supply
Cf.
own name.
Corp.,
No.
Carter v.
03-03-00753-CV,
WL 121867, at *6 (Tex. App.-Austin Jan. 21, 2005, no pet.)
2005
("Even
assuming [Plaintiff] acted as an agent, an agent may sue in his own
name
when
the
agent
contracts
in
his
own
name.
[Plaintiff]
contracted in his own name as evidenced by the contract at issue in
this case, which defines
omitted)
(citing
Perry
[Plaintiff]
v.
Breland,
as the seller."
16
S.W.3d
182,
(citations
187
(Tex.
App.-Eastland 2000, pet denied))); Perry, 16 S.W.3d at 187 (holding
that the plaintiff's acceptance of the contract "by giving his own
draft drawn on his own bank account" constituted contracting in his
own name for purposes of the first Tinsley exception); Covington v.
Sloan, 124 S.W. 690, 690 (Tex. Civ. App.-San Antonio 1910, no writ)
(holding that a partner who contracted in his own name "as an agent
for the partnership" could sue in his own name (citing Cleveland v.
Heidenheimer, 46 S.W. 30
(Tex. 1898); Tinsley v. Dowell, 26 S.W.
946 (Tex. 1894))).
37Contract, Docket Entry No. 35.
-9-
Moreover,
it
is
undisputed
that
Kakabadze
armaments and munitions from his own funds. 38
paid
for
the
Accordingly, even if
Kakabadze was acting as an agent for the Ministry, he has standing
to assert his claims because he has an interest in the subject
matter
of
the
(" [Plaintiff's]
See
contract.
16
Perry,
at
S.W.3d
furnishing of the money to pay
187-88
[Defendant]
gave
[Plaintiff] an interest in the subject matter of the contract.") .
Defendants also allege that Kakabadze lacks standing because
he
has
suffered
Kakabadze
was
no
inj ury. 39
"fully
Defendants
reimbursed
by
argue
the
that
Ministry
because
for
the
transactions, "40 the Ministry is the party "with a personal stake"41
in
this
litigation
and
"only
the
independent
actions
Ministry could hypothetically lead to
injury to
Defendants
are
similarly
argue
that
they
of
the
[Kakabadze]. "42
entitled
to
summary
judgment on all of Kakabadze's claims because Kakabadze has not
suffered any damages. 43
Defendants point out
that
in order to
recover on any of his alleged claims for relief Kakabadze must
adequately
allege
that
he
suffered
damages
related
to
the
38Defendants' Motion for Summary Judgment, Docket Entry No. 30,
p. 2; Kakabadze's Response, Docket Entry No. 31-1, p. 6.
39Defendants' Motion for Summary Judgment, Docket Entry No. 30,
pp. 10-12.
4°Id. at 10.
41Id. at 12.
42Id. at 10-11.
43Id. at 5-8.
-10-
complained-of
conduct. 44
Defendants
argue
that
Kakabadze
has
suffered no damages because he was reimbursed by the Ministry for
all monies that he paid to Defendants. 45
A Texas court of appeals addressed a similar argument in Texas
Utilities Fuel Co. v. Marathon Oil Co., No. 11-98-00079-CV, 2000
WL
34234653
(Tex.
App.-Eastland March
designated for publication).
9,
2000,
no
pet.)
(not
In Marathon Texas Utilities Fuel
Company ("TUFCO") entered into a take-or-pay contract to purchase
natural gas from several sellers who were represented by Marathon.
Id. at *1.
a
TUFCO, identified as the "Buyer" in the contract, was
sister corporation of
Electric") .
Id.
Texas
Utili ties
Electric
Company
("TU
"TUFCO was formed for the purpose of acquiring
and transporting natural gas, as well as other fuels, for use by TU
Electric
in
Marathon
alleging
increased
its
the
production of
that
when
sellers'
electricity."
natural
delivery
gas
capacity
prices
in bad
TUFCO
sued
declined
it
faith
"in an
attempt to 'exploit' the high prices under the contract."
Id. at
*1-2.
Marathon brought a motion for summary judgment alleging, inter
alia, that "TUFCO suffered no damages in that TUFCO was reimbursed
by TU Electric
Electric."
44Id.
for
Id. at *9.
all
of
its
costs
in
supplying
gas
to
TU
The court of appeals noted that "TUFCO, by
at 5-6.
45Id. at 6-8.
-11-
agreement,
was
reimbursed
by
TU
Electric
for
all
of
its
gas
acquisition costs, including the purchase price" and that "although
TUFCO acted in its own name, by agreement, it was acting on behalf
of TU Electric."
as
to
whether
Id.
TUFCO
The court held that there was "a fact issue
purchased
gas
under
the
contract
as
TU
Electric's agent" but further held that "[i]f it did purchase the
gas as an agent
for TU Electric,
TUFCO could still bring this
lawsuit [because]
\ [a]n agent who is a party promisee on a contract
made by him on behalf of his principal may bring suit on that
contract in his own name. '"
Id.
(quoting Lubbock Feed Lots, Inc.
v. Iowa Beef Processors, Inc., 630 F.2d 250, 258 (5th Cir. 1980)).
The court finds the reasoning of the Texas court of appeals in
Marathon persuasive.
Defendants' arguments regarding Kakabadze's
reimbursement from the Ministry are not materially distinguishable
from the arguments advanced in Marathon.
Accordingly,
the court
concludes that Defendants have failed to establish the absence of
a genuine issue of material fact regarding their arguments that
Kakabadze has not suffered any damages and does not otherwise have
standing to assert his claims.
Defendants
also
argue
that
"[t] his
case
is
not
ripe
for
adjudication because it rests upon the contingent future event that
the Ministry will agree that an overcharge has occurred and make a
claim against Plaintiff.,,46
The court finds Defendants' argument
46Id. at 8-9.
-12-
unpersuasi ve.
The court has already concluded that Defendants have
failed to establish the absence of a genuine issue of material fact
as to whether Kakabadze suffered any damages.
Furthermore, all of
the conduct of which Kakabadze complains has already occurred.
Accordingly,
the court concludes that Defendants have failed to
meet their initial burden to demonstrate the absence of a genuine
issue of material fact with regard to any of Kakabadze's claims,
and their motion for summary judgment will therefore be denied.
IV.
Kakabadze's Motion for Summary Judgment
Kakabadze has moved for summary judgment on his fraud claim. 47
To prevail on a fraud claim under Texas law a plaintiff must prove
that
(1)
false;
the defendant made a material
representation that was
(2) the defendant knew the representation was false or made
it recklessly as a positive assertion without any knowledge of its
truth;
(3)
the defendant intended to induce the plaintiff to act
upon the representation; (4) the plaintiff actually and justifiably
relied upon
the
representation;
suffered an injury.
and
Ernst & Young,
(5)
the
L.L.P. v.
plaintiff
thereby
Pacific Mut. Life
Ins. Co., 51 S.W.3d 573, 577 (Tex. 2001).
Because Kakabadze would carry the burden of proof at trial, he
must present evidence that would require "a directed verdict if the
evidence went uncontroverted at trial."
Int'l Shortstop, 939 F.2d
47Kakabadze's Motion for Summary Judgment, Docket Entry No. 29,
pp. 11, 14.
-13-
---------------------------------------_...,,--,,-----
at 1264-6S.
Kakabadze alleges that "Defendants agreed to act as
[his] purchasing agent in the United States in exchange for a 10%
commission of the purchase price on all goods purchased" 48 and that
"Defendants
agreed
to
bill
Kakabadze
at
cost
for
freight
and
shipping of the goods and equipment purchased with no mark-up or
commission on freight and shipping charges." 49
Kakabadze further
alleges that "[i]n order to artificially increase the commissions
paid to Defendants under the parties' agreements.
. Defendants
manually and/or electronically manipulated original invoices and
related documents by increasing the price for certain items above
what Defendants were actually charged.
1150
Kakabadze has produced invoices that evidence the alterations
made by Stoyanov. 51
Taken together,
inference
parties
48Id.
that
the
had
these
agreed
to
invoices
a
10%
support an
commission
at IS.
49Id.
SOld.
at 16.
51See Original Desert Tactical Arms Sales Order, Exhibit 4 to
Kakabadze's Motion for Summary Judgment, Docket Entry No. 29-3,
p. 2; Altered Desert Tactical Arms Sales Order, Exhibit 6 to
Kakabadze's Motion for Summary Judgment, Docket Entry No. 29-3,
p. 6; see also M5 International Company Inc Invoice Dated 12/11/09,
Exhibit S to Kakabadze's Motion for Summary Judgment, Docket Entry
No. 29-3, p. 4.
Kakabadze has also produced invoices to demonstrate that Stoyanov billed him for shipping charges and export
fees at prices higher than MS's cost.
See Falcon Defense Group
Export Service Invoice, Exhibit 9 to Kakabadze's Motion for Summary
Judgment, Docket Entry No. 29-3, p. 12; MS International Company
Inc Invoice Dated 4/23/2009, Exhibit 10 to Kakabadze's Motion for
Summary Judgment, Docket Entry No. 29-3, p. 14.
-14 -
------_._--------------------------------,....--, .._".-----
structure
as alleged by Kakabadze. 52
l
Kakabadze has also produced
a contract dated May 16 1 2008 1 wherein Stoyanov agrees to a 10%
commission for the purchase of certain armaments and munitions / 53
and e-mails in which Stoyanov references a 10% commission for M5. 54
Kakabadze further alleges that Defendants
l
admission that Stoyanov
altered supplier and manufacturer invoices is sufficient to meet
his initial burden for summary judgment.55
Defendants contend that there are disputed issues of material
Defendants allege that after the May 16 1 2008 1
fact for trial.
contract was completed
l
"Stoyanov indicated M5 would not work under
the same terms as the prior contract as the commission rate of 10%
was
insufficient
for
the
amount
of
work
that
was
required. 1156
52The price charged by M5 to Kakabadze is approximately 10%
higher than the price shown on the altered supplier invoice.
Compare M5 International Company Inc Invoice Dated 12/11/09 1
Exhibit 5 to Kakabadze/s Motion for Summary Judgment Docket Entry
No. 29-3 1 p. 41 with Altered Desert Tactical Arms Sales Order 1
Exhibit 6 to Kakabadze/s Motion for Summary Judgment Docket Entry
No. 29-3 1 p. 6.
l
l
53Contract
1
Docket Entry No. 35.
54E-mail from Zlatan Stoyanov to Evgenii re: Prices OS/21/09
(May 221 2009 1 3:32 am) 1 Exhibit 12 to Kakabadze/s Motion for
Summary Judgment Docket Entry No. 29-3 p. 26; E-mail from Zlatan
Stoyanov to Evgenii re: Prices for McMillan 25 x 50 and 10 x 338
06/28/2010 (June 28 1 2010 1 7:35 pm) 1 Exhibit 13 to Kakabadze/s
Motion for Summary Judgment Docket Entry No. 29-3 p. 28.
l
1
1
1
55Kakabadze 1 s Motion for Summary Judgment 1 Docket Entry No. 29 1
pp. 14-15
19; see, e.g'
First Amended Answer
Docket Entry
No. 19 pp. 3-4 ~~ 26-28.
1
l
l
1
56Defendants 1 Response 1 Docket Entry No. 32 1 p. 2; see also id.
at 7-8; Stoyanov Deposition Transcript Exhibit 1 to Defendants
(continued ... )
1
1
-15-
---------------------------------------------,--_.,,-,.-----
Defendants contend that Pugach acknowledged that Defendants were no
longer bound by the 10% commission structure after the initial
contract
and
instructed
them
subsequent transactions. 57
to
only provide
M5' s
invoice
in
Defendants allege that although they
were permitted to bill at a higher rate, Pugach "indicated that any
manufacturer's invoice that was forwarded to him would need to be
altered to account for the agreed upon total price inclusive of M5
fees but appear that only a 10% commission was charged. 1158
56 ( ... continued)
Response, Docket Entry No. 32-1, pp. 7-10; First Amended Answer,
Docket Entry No. 19, pp. 12-14 ~~ 167-71.
57First Amended Answer, Docket Entry No. 19, p. 14 ~ 171; see
also Defendants' Response, Docket Entry No. 32, p. 7; Stoyanov
Deposition Transcript, Exhibit 1 to Defendants' Response, Docket
Entry No. 32-1, p. 11; Stoyanov Deposition Transcript, Exhibit 3 to
Kakabadze's Motion for Summary Judgment, Docket Entry No. 29-2,
pp. 25-26.
58First Amended Answer, Docket Entry No. 19, p. 14 ~ 171; see
also Stoyanov Deposition Transcript, Exhibit 3 to Kakabadze's
Motion for Summary Judgment, Docket Entry No. 29-2, pp. 5, 24-30.
The following exchange took place at Stoyanov's deposition:
[by Kakabadze's
invoice?
Q.
A.
[by Stoyanov]
wanted to do it.
Q.
counsel]
Why did
you
alter
Because this is the way Mr.
the
Pugach
For what purpose?
A. So, the prices that indicate -- he said, "We can give
you increase in prices of what you charge only if the
prices from the manufacturer is higher."
So, he said,
"The way to do it, do it this way, please."
Q.
He told you to alter an invoice of a supplier?
(continued ... )
-16-
------------------------------------------,--_.,-_.".-----
Defendants further allege that Pugach was Kakabadze's agent. 59
The summary judgment evidence supports an inference that Pugach was
Kakabadze's agent with regard to the transactions at issue. 6o
Under
58 ( ... continued)
A.
Yes.
Q.
You are telling me that the blame came to you for
falsifying those invoices and you have testified that you
did so at the instruction of Mr. Pugach?
A.
Agreement.
Not Instruction.
Q.
With the agreement of Mr. Pugach.
A.
No.
Q.
Whose idea was it?
A.
Mr. Pugach.
Q.
Did he instruct you to do it?
Was it your idea?
A.
He said that this is the form and shape [it]
be done.
should
Q.
And what was the reason for altering the invoices
instead
of
simply
increasing
your
percentage
of
commission?
A. Because this is basically Mr. Pugach wanted it to be
done this way.
Stoyanov Deposition Transcript, Exhibit 3 to Kakabadze's Motion for
Summary Judgment, Docket Entry No. 29-2, pp. 27-28, 29, 63-64.
59Defendants' Response, Docket Entry No. 32, pp. 2, 9.
60See Kakabadze Deposi tion Transcript, Exhibit 2 to Defendants'
Response, Docket Entry No. 32-2, pp. 8-9, 18-19, 22-23i Pugach
(continued ... )
-17-
--------------------------------_..---
_
......•.
-
Texas
law
"an
principal."
agent's
knowledge
is
generally
imputed
to
its
Grant Thornton LLP v. Prospect High Income Fund, 314
S.W.3d 913, 924 (Tex. 2010).
A party with actual knowledge of the
falsity of a representation cannot establish the reliance element
of a fraud claim.
See Koral Indus., Inc. v. Security-Connecticut
Life Ins. Co., 788 S.W.2d 136, 146
knowledge
is
inconsistent
with
(Tex. App.-Dallas)
the
claim
that
the
(" [A] ctual
allegedly
defrauded party has been deceived, and it negatives the essential
element
of
reliance
upon
the
truth
of
the
representations."
(citing John Hancock Mut. Life Ins. Co. v. Brennan, 324 S.W.2d 610,
614 (Tex. Civ. App.-San Antonio 1959, writ ref'd n.r.e.); Allen v.
Lasseter,
35
S.W.2d
753,
ref'd))),
writ denied,
757
(Tex.
802 S.W.2d 650
Civ.
App.-Waco
(Tex.
1990)
1931,
writ
(per curiam);
Thrower v. Brownlee, 12 S.W.2d 184, 186-87 (Tex. Comm'n App. 1929,
judgm't adopted)
("Where false representations or promises are made
to induce another to act,
and,
before such other does act,
he
learns of
such representations or promises,
it
the
falsity of
cannot of course be said that he relied upon them believing them to
be true, for, knowing their falsity, he has not been deceived.") .
However,
principal
"when
the
the
agent
is
agent's
acting
knowledge
fraudulently
is
not
toward
his
binding on the
continued)
Deposition Transcript, Exhibit 4 to Defendants' Response, Docket
Entry No. 32-4, pp. 10-11, 19-20; Stoyanov Deposition Transcript,
Exhibit 3 to Kakabadze's Motion for Summary Judgment, Docket Entry
No. 29-2, pp. 17, 39.
60 ( • • •
-18-
principal and one who avails himself of the fraudulent services of
the agent cannot claim that the agent's acts or knowledge bind the
defrauded principal."
586
S. w. 2d 610,
n.r.e.)
Cir.
i
Crisp v. Southwest Bancshares Leasing Co.,
615
(Tex.
Ci v.
App. -Amarillo 1979,
see also United States v. Aubin,
1996)
(" [T] he
rule
of
Texas
writ
87 F.3d 141,
that
law
an
147
ref' d
(5th
agent's
knowledge is imputed to his principal[] does not protect those who
collude with an agent to defraud the principal.")
In reviewing the summary judgment evidence "the court must
draw all reasonable inferences in favor of the nonmoving party, and
it may not make credibility determinations or weigh the evidence."
Reeves, 120 S. Ct. at 2110.
Drawing all reasonable inferences in
favor of Defendants, the court concludes that a genuine issue of
material fact exists as to whether Pugach was Kakabadze's agent
with regard to the transactions at issue.
Furthermore, if Pugach
was Kakabadze's agent, a fact issue exists regarding whether Pugach
knew of the complained-of conduct and acted fraudulently toward
Kakabadze.
Kakabadze's Motion for Summary Judgment will therefore
be denied.
Conclusions and Order
For the reasons explained above,
the court concludes that
neither party has established the absence of a genuine issue of
material fact for trial on any of Kakabadze's alleged claims for
relief.
Accordingly,
Plaintiff,
-19-
Mamuka Kakabadze' s
Motion for
Summary Judgment Against Defendants M5 International Company, Inc.
and
Zlatan
Stoyanov
International
Company,
(Docket
Inc.
Entry
and
No.
Zlatan
29)
and
Defendants
Stoyanov's
Motion
Summary Judgment and/or Motion to Dismiss (Docket Entry No.
M5
for
30)
are
counterclaim
for
DENIED.
Defendants
fraud. 61
have
moved
to
dismiss
their
Accordingly, Defendants' fraud counterclaim (Docket Entry
No. 19, pp. 16-17) is DISMISSED with prejudice.
SIGNED at Houston, Texas, on this the 5th day of June, 2014.
SIM LAKE
UNITED STATES DISTRICT JUDGE
61See Defendants' Response, Docket Entry No. 32, p. 11
("Defendants filed a Counterclaim against Plaintiff alleging fraud.
Defendant will voluntarily dismiss that claim. As such, there is
no need to address the summary judgment argument related
thereto.") .
-20-
----------"--------------------------------,,---, "--",,.- - - -
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