Arent Fox litigation partner Michael Turrill recently secured a significant victory in the Texas Court of Appeals for firm client Apartment Investment and Management Company (AIMCO) and its corporate affiliates in the case National Corporate Tax Credit, Inc, VIII v. JNP Properties, Inc.

In August 2007, AIMCO received an adverse jury verdict in Travis County, Texas, arising out of a dispute with two of its operating general partners in a partnership located in Austin, Texas. After the operating general partners defaulted under the terms of an amended partnership agreement, and AIMCO sought to remove them from the partnership, the operating general partners filed suit against AIMCO for declaratory relief, and other claims, including an allegation added on the eve of trial that AIMCO had procured the amendment to the partnership agreement through duress or “economic coercion.”

AIMCO counterclaimed for breach of the amended agreement and for a declaration of removal of the operating general partners. At trial, the court directed verdicts in favor of AIMCO on all issues other than the question of duress, which the trial judge sent to the jury. The jury found the amendment to the partnership agreement was entered under duress, and the court therefore found that AIMCO had breached the partnership agreement by attempting to remove the operating general partners from their positions in the partnership. The trial court accordingly entered judgment in favor of the operating general partners, allowed them to remain in control of the partnership, and awarded them prevailing party attorneys' fees.

Following the adverse judgment at trial, AIMCO retained Arent Fox to handle the appeal before the Texas Court of Appeals, Third District. On February 11, 2009, Mr. Turrill appeared before the appellate court in Austin on behalf AIMCO, arguing there was no legally sufficient evidence to support a finding of duress, which under Texas law requires that the offending party take some action that it had no legal right to take, and that therefore the duress question should not have been submitted to the jury. Even if the duress question was properly submitted, Mr. Turrill argued, the jury's finding was in error.

On April 30, the Texas Court of Appeals issued its decision finding unanimously in favor of AIMCO, reversing the trial court and rendering judgment in favor of AIMCO. In a memorandum opinion by Chief Justice J. Woodfin Jones, Justices David Puryear and Justice Diane Henson, the appellate court concluded: “The evidence is legally insufficient to support [the operating general partners'] claim that [they] executed the [amendment to the partnership agreement] under duress, thereby excusing its breach of the partnership agreements. Accordingly, we reverse the judgment of the trial court, render judgment that [appellees] take nothing by their claims against [AIMCO].”

To read the full opinion, click here.

The justices remanded the case to the trial court for a determination of the amount of attorneys' fees to be awarded in favor of AIMCO as the now-prevailing party.

For additional information about Texas Court of Appeals, Third District decision and related topics, please contact Michael Turrill.