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Texienne Oncology Centers, PLLC and Asit Choksi v. Steven Chon

Citation: Not availableDocket: 09-19-00356-CV

Court: Court of Appeals of Texas; October 28, 2021; Texas; State Appellate Court

Original Court Document: View Document

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Asit Choksi appeals a jury verdict that found him liable for fraudulently inducing Dr. Steven Chon to sign a Binding Memorandum of Understanding with Greater Houston Physicians Medical Association, PLLC (now Texienne Oncology Centers, PLLC). Choksi challenges the sufficiency of evidence supporting the verdict, his individual liability, and the damages awarded against him personally. 

The background reveals that GHPMA, employing over 140 doctors, including Chon, was led by Choksi as CEO. Chon, employed from 2007 to 2016, testified that in 2014, he was approached by Choksi to manage a subcenter, leading to an addendum to his employment agreement that promised a higher salary, a discretionary bonus, and absolved Chon of prior debts. Effective January 1, 2015, this agreement was set to last one year, with Choksi allegedly agreeing to pay Chon 100% of the subcenter's profits starting in 2016.

In October 2016, during negotiations for CHI Texas Health Network, LLC to acquire GHPMA, Chon sought to discuss reimbursement checks with Choksi. Choksi withheld the checks until Chon signed the employment contract with CHI, leading to a contentious meeting. After Chon refused to sign without addressing his outstanding payments, Choksi later offered a deal where GHPMA would pay Chon $250,000 within two months of signing a new contract. This contract, signed on October 17, 2016, included Chon releasing all liabilities related to his employment with GHPMA. The court ultimately affirmed the jury's verdict against Choksi.

Chon signed an employment contract with CHI after the October GHPMA Addendum, which stipulated that his employment would commence only upon the closing of the GHPMA sale to CHI. Prior to the sale's closing, GHPMA requested Chon to sign a mutual termination agreement, which noted that both GHPMA and CHI had a purchase agreement, leading to the termination of Chon’s contract with GHPMA effective at closing. Chon signed this agreement, and the sale occurred on November 10, 2016. Following the sale, Chon was contacted by Choksi’s executive assistant for a meeting on November 17, 2016, which Chon believed would be regarding his $250,000 payment.

During the meeting, Choksi presented a new contract titled "Binding Memorandum of Understanding (MOU)" that outlined Chon's payment of $250,000, subject to various deductions. Chon modified the MOU, removing certain deductions and changing the payment timeline to two months, which both he and Choksi initialed. Chon signed the MOU, based on Choksi's assurance of an immediate $125,000 payment, which Chon received in check.

Chon had subsequent discussions with Choksi regarding the remaining $125,000. In December 2016, Chon was offered half of the remaining amount instead, which he refused to sign for. In January 2017, Chon was presented with a new contract proposing $10,000 for January and the remainder contingent on certain conditions, which he also declined. Chon subsequently filed a lawsuit in March 2017.

Choksi testified that he did not pay the remaining $125,000 due to Chon's failure to provide necessary paperwork after his employment ended, asserting that the MOU was contingent on such submissions, which he was unaware Chon was withholding at the time of the agreement.

Choksi asserts that the November Memorandum of Understanding (MOU) stipulates his obligation to complete work for GHPMA but does not condition payment on this completion. He testified that both the October GHPMA Addendum and the November MOU were based on Chon’s financial performance in 2015, indicating he needed to be informed of any withheld charges before signing these agreements. Choksi acknowledged that the contract did not state that Chon’s payment of $250,000 was contingent on his charges and collections while employed, nor did it mention any exceptions which were not discussed at the signing. He realized that Chon was withholding billable charges only after signing the November MOU and admitted he could have requested financial reports prior to the signing but chose not to. Despite his belief that Chon needed to perform work for GHPMA, this requirement was not part of the contract, and he expressed a firm intention to pay Chon based on trust in Chon’s assertions of good performance.

Regarding the initial payment of $125,000 to Chon in November, Choksi explained that he wanted to verify financial details before making the second payment. He pushed Chon for documentation after learning from Raymond that charges were not submitted, but Chon refused to provide the necessary medical records and charge information. In an affidavit, Choksi noted that GHPMA estimated the $250,000 payment based on a projected consistency in Chon’s collections from mid-2016 compared to earlier months; had Chon disclosed a decline in charges, GHPMA would not have agreed to the $250,000 payment. Choksi informed the jury that Chon received the full payment, which included a sign-on bonus from CHI.

After hearing evidence, the jury concluded that GHPMA did not adhere to the November MOU and that Choksi fraudulently induced Chon to sign it. The jury awarded Chon $275,000 in damages, which the trial court later reduced to $125,000, including interest, following Choksi's post-trial motion and Chon’s agreement to the reduction. Choksi has since filed a timely appeal.

Choksi contests the legal and factual sufficiency of evidence supporting the jury's verdict regarding his individual liability. The legal sufficiency review evaluates whether reasonable jurors could have reached the verdict based on the trial evidence. A verdict lacks legal support if there is a complete absence of evidence for a vital fact, legal restrictions prevent consideration of evidence, the evidence is merely a scintilla, or the evidence conclusively establishes the opposite of a vital fact. The factual sufficiency review assesses whether reasonable individuals could reach the same verdict based on the evidence presented, while deferring to the jury's evaluation of the evidence's weight and witness credibility.

In his first issue, Choksi disputes the jury's finding that he fraudulently induced Chon to sign the November MOU, arguing insufficient evidence to prove he intended GHPMA not to comply with the MOU at the time of execution. Fraud requires a material misrepresentation made with knowledge of its falsity, intent for the other party to rely on it, and resulting injury. The court states that a promise made without intention to perform constitutes actionable fraud. Intent can be inferred from a party's subsequent actions, and while non-performance alone does not prove intent, it can be considered alongside other circumstances.

Trial evidence indicated Chon was reluctant to sign a contract with CHI without compensation from GHPMA and had refused to sign until his issues were resolved. Under pressure, Choksi agreed to pay Chon $250,000 to settle his claim, leading to Chon signing both the GHPMA Addendum and the CHI employment contract on the same night. After Chon’s employment ended, he sought the promised payment from Choksi, who instead presented the MOU, which required Chon to release claims and outlined payment terms contingent upon the closing of the CHI St. Luke’s Hospital transaction. Chon testified he signed the MOU only after Choksi promised him $125,000 that same night.

Choksi testified that he intended to pay $250,000 to Chon upon signing the November MOU, trusting Chon's honesty regarding billings and profits. Although the contract lacked a provision for conditional payment based on billings, Choksi asserted there was an understanding that billings would be submitted before the remaining $125,000 was paid. He stated that this payment would only occur if Chon's 2016 collection numbers matched those from 2015. In subsequent meetings, Choksi refused to pay the remaining amount and sought to have Chon sign new agreements that added conditions for payment, including submission of billings and medical records. Choksi’s affidavit indicated that GHPMA would not have agreed to the $250,000 payment had they known about Chon’s withheld billings. His admission of not intending to pay until reviewing Chon’s billing records and his attempts to impose new conditions suggest he may have never intended to fulfill the original contract, indicating potential fraudulent inducement. Texas law allows for a tort claim of fraud if a promise is made without intent to keep it, and courts can consider breach of contract and subsequent actions as circumstantial evidence. The jury could reasonably interpret Choksi's actions as indicative of fraudulent intent, supported by evidence that he believed Chon had received a signing bonus from CHI, further implying a lack of intent to perform the contract fully. Regarding Choksi's claim of insufficient evidence for individual liability, he argued that as an agent of GHPMA without personal benefit from the sale to CHI, he should not be held individually liable, referencing section 21.223 of the Texas Business Organizations Code for protection against individual liability.

Section 21.223 stipulates that shareholders, beneficial owners, subscribers, or affiliates cannot be held liable to a corporation or its creditors for obligations related to shares, except for the duty to pay the full consideration for shares issued. They are also not liable for corporate contractual obligations based on alter ego theories, fraud, or failure to observe corporate formalities. However, they can be held liable if it is proven that they used the corporation to commit actual fraud for their personal benefit. Choksi argues that he should not be liable under this section because there is insufficient evidence of personal benefit from the transaction. The Fort Worth Court of Appeals has previously indicated that Section 21.223 does not apply to common law fraud, highlighting a legal divide on whether it preempts individual direct tort liability alongside vicarious liability theories. Texas law traditionally holds that corporate employees can be personally liable for tortious acts performed in their employment. The court in Spicer affirmed that Section 21.223 does not prevent a finding of direct liability for tortious behavior. In this case, Chon sued Choksi for fraud, seeking personal liability rather than attempting to pierce the corporate veil, which led the court to overrule Choksi's argument against liability.

Choksi contends that the evidence supporting damages against him individually is insufficient due to the jury charge's broad form question, which did not differentiate between claims of breach of contract and fraud. The jury found GHPMA liable for failing to comply with a Memorandum of Understanding and determined that Choksi fraudulently induced Dr. Chon to sign it. The jury awarded $275,000 for damages, which the trial court subsequently reduced to $125,000 in actual damages for fraud committed by Choksi, along with pre-judgment interest of $21,886.99, leading to a total of $146,886.99. The judgment also included court costs and post-judgment interest at 5.5% until fulfilled. Choksi filed a Motion to Disregard Jury Findings, arguing that the jury's answers were unsupported by sufficient evidence and that the damage award was improperly structured, but Chon countered that the evidence was adequate and agreed to the reduction of damages to $125,000. The court overruled Choksi's motion for a new trial, which claimed the jury's award failed to attribute damages to either defendant properly.

The trial court has substantial discretion in formulating jury questions, provided they accurately reflect the disputed issues. It must submit controlling questions if raised by the pleadings and evidence. Under Texas Rule of Civil Procedure 274, a party objecting to a jury charge must clearly identify the objection and its basis; failure to do so results in waiving any complaints regarding defects or omissions. If objections are obscured by excessive or trivial complaints, they may be deemed untenable by an appellate court. Choksi did not propose a jury charge for question four and failed to object to it during the charge conference. Regarding jury question three, the evidence supported its submission. Merely submitting a proposed question does not preserve error without a proper objection to the submitted question. Appellants did not specifically challenge question four for its broad language or lack of liability distinction between GHPMA and Choksi, nor did they explain why this language was defective. Consequently, Choksi did not preserve his objections, leading to the conclusion that all his issues were overruled, and the trial court's judgment was affirmed.