Justice Alex Yarbrough
The Amarillo Court of Appeals affirmed a judgment based on a jury finding that a real estate developer created corporate entities to shield him from liability for misusing investors’ funds.
Boone Nerren, AMZ Equity Partners, LLC, Ridgmar Condos, LLC, and Ranchito Sapient, LLC v. Narendra Krishnamurthy, et al. (No. 07-25-00066-CV; January 16, 2026) arose from a failed real estate investment deal. Nerren and a non-party formed Sapient in 2015 for the purpose of acquiring and developing residential and commercial properties. They solicited invetments for the purchase of an apartment complex in Tarrant County and raised $500,000 from Investors. After getting the money, Nerren created Ranchito and AMZ, which he controlled. He put Investors’ money in Ranchito’s bank account without their consent and bought the apartment complex. After two years (and many payments of management fees to themselves), Nerren and the non-party found a buyer for the complex and told Investors they intended to use the proceeds to buy a new property in a “1031 exchange.” They gave Investors the option of pulling out but gave them no dealine and didn’t tell them when the 1031 exchange would happen. When Investors requested the return of their money, it had already been used to effect the exchange. Nerren created Ridgmar to buy a townhome development. Ridgmar sold it two years later and paid Nerren and his affiliates $200,000 out of the closing of the sale. Investors got nothing, and Nerren ignored their request for book and records. Investors sued on a number of theories.
A jury returned a verdict finding Defendants liable for breach of fiduciary duty, aiding and abetting a breach of fiduciary duty, fraud in a stock transaction, aiding and abetting fraud, fraudulent transfer, and money had and received. It further found that AMZ, Ranchito, and Ridgmar acted as Nerren’s alter egos under a veil-piercing theory. Defendants moved for JNOV, which the trial court denied as to all theories except aiding and abetting. The trial court entered judgment against each Defendant, jointly and severally, for damages, punitive damages, and attorney’s fees. Defendants appealed.
In an opinion by Justice Yarbrough, the court of appeals affirmed in part and reversed in part. Defendants challenged each of the jury findings based upon insufficient evidence and argued that their JNOV motion should have been granted in its entirety. As the court observed, the jury awarded the same amount of damages for each claim, so “because the investors could only recover once, only one of the claims needs to be viable in order to uphold the judgment” (citation omitted). Taking up the statutory fraud claim first (because it was the only one permitting recovery of both punitive damages and attorney’s fees), the court agreed with Defendants that since Investors didn’t identify a misrepresentation or false promise that induced them to enter into a contract, they didn’t prove up the elements of statutory fraud under § 27.01, Business & Commerce Code. “The inducement to refrain from legal action or the impermissible carrying on of the investment of the investment against the express wishes of the Investors,” the court stated, “did not result in a modified or new contract by which real estate or stock was conveyed.” Here there was no statutorily required “new contract” at all, so Investors’ evidence that they refrained from enforcing their legal rights based on Defendants’ misrepresentations didn’t support the jury’s finding of statutory fraud. The court thus ruled that the trial court erred in failing to grant their JNOV claim on that issue. And without statutory fraud, the jury’s award of punitive damages had to fall as well.
The only other claim permitting attorney’s fees was Investors’ TUFTA claim (Ch. 24, Business & Commerce Clause). Defendants argued that TUFTA didn’t apply because they weren’t “debtors” and Investors were not “creditors” under the Act. As the court observed, however, “[t]he Act broadly defines ‘creditor’ as an individual who ‘has a claim.’” § 24.002(4), (9). Claim is likewise broadly defined. Here the evidence showed that the apartment complex was, as the court put it, “self-liquidating” and that Investors were due their money when it was sold. Instead, the money went into Nerren’s bank account for the 1031 exchange. When Investors decided to opt-out and get their money back, their “claim” to a share of the proceeds arose. The jury thus had enough evidence to determine that Investors were indeed creditors under TUFTA. By the same token, Defendants became “debtors” when they were obliged to pay back the Investors. The court declined to second-guess the jury’s finding of Defendants’ “fraudulent intent,” ruling that the evidence supported several of the statutory “badges of fraud.” Consequently, the jury “could have determined that Developers purposefully hindered or delayed the return of the Investors’ money in order to facilitate the 1031 exchange, because the transaction could not move forward without Investors’ money.”
Turning to the veil-piercing theory, the court found sufficient evidence to support the jury’s finding that Nerren’s entities were used as a sham to perpetuate a fraud. The jury heard evidence that: (1) Nerren owned each of the entities; (2) he was the sole or one of two managers of each entity; (3) he made all the decisions for the entities, including where the money went; (4) he created AMZ to shield himself from personal liability; (5) he admitted to conducting the 1031 transaction without Investors’ consent; (6) testimony revealed that Nerren loaned himself money without permission from Investors; (7) he unilaterally chose to divert proceeds from the sale of the apartment complex into the 1031 exchange without approval; and (8) he admitted he couldn’t pay back the Investors while maintaining the 1031 exchange transaction. The court concluded that the evidence established that “the business entities were organized and operated as ‘mere tool[s]’ or ‘business conduit[s]’ of Nerren; and holding only the entities responsible would be unjust.”
Finally, Defendants challenged the award of attorney’s fees. Here Investors submitted the question of attorney’s fees to the trial court rather than the jury. The trial court awarded $148,854.50. Because the jury found in favor of Investors on their fraudulent transfer claim, the trial court had discretion to award reasonable and necessary attorney’s fees. Investors supported their attorney’s fees claim with billing statements and applied the Lodestar method for determining the appropriate amount. The statement detailed the date the work was performed, the person who performed it, the hourly rate, and the details of the work, thus making a primar facie case under Rohrmoos Venture. The court rejected Defendants’ argument that lead counsel increased his fee as the case went on, observing that the trial court, as finder of fact, was free to assess the credibility of the parties’ witnesses. As to Defendants’ failure to segregate fees, the court determined that the facts were identical for each theory liability and that Investors could only recover attorney’s fees on the TUFTA and statutory fraud claims. There was thus no need to segregate here, and the court determined that the evidence supported the trial court’s attorney’s fees award.
