Opinion issued August 30, 2012
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-10-01079-CV
———————————
BANKCARD PROCESSING INTERNATIONAL, L.L.C., MERCHANT
PROCESSING, INC., OLLIE S. ACKLEY, JEFF MAINE, KENNETH
MAINE, DIVERSIFIED CHECK SOLUTIONS, L.L.C., DIVERSIFIED
PAYMENT SOLUTIONS, L.L.C., ACHECK21, L.L.C., AND JEANINNE
MCCONNELL, Appellants
V.
UNITED BUSINESS SERVICES, L.P., Appellee
AND
UNITED BUSINESS SERVICES, L.P., Appellant
V.
BANKCARD PROCESSING INTERNATIONAL, L.L.C., MERCHANT
PROCESSING, INC., OLLIE S. ACKLEY, JEFF MAINE, KENNETH
MAINE, DIVERSIFIED CHECK SOLUTIONS, L.L.C., DIVERSIFIED
PAYMENT SOLUTIONS, L.L.C., ACHECK21, L.L.C., AND JEANINNE
MCCONNELL, Appellees
On Appeal from the 152nd District Court
Harris County, Texas
Trial Court Case No. 2006-30498
MEMORANDUM OPINION
United Business Services, L.P. (“UBS”) entered into a business relationship
with Bankcard Processing International, L.L.C. (“BPI”) and Merchant Processing,
Inc. (“MPI”) for the purpose of forming a joint venture to provide electronic check
imaging and processing services. After an unsuccessful test of the proposed
services, BPI and MPI ended their relationship with UBS, and their owners created
competing business entities. UBS filed suit and asserted claims for fraud, breach
of fiduciary duty, and breach of contract against BPI, MPI, and several related
entities and individuals.
After a jury trial, the court entered judgment in favor of UBS for
$1.5 million. On appeal, the appellants contend that the damages award is not
supported by legally sufficient evidence. Because the only evidence regarding
damages did not conform to the measure of damages submitted to the jury, we
conclude that there is no evidence to support the verdict. We reverse the trial
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court’s judgment, in part, and render judgment that UBS take nothing on its
affirmative causes of action.
UBS also appealed from the trial court’s judgment, arguing that the court
erred in its pretrial ruling that the parties’ confidentiality and nondisclosure
agreements were unenforceable. The court did not specify a basis for its ruling on
the motions for summary judgment, and on appeal, UBS did not address each
possible ground on which the trial court could have based its ruling. Thus, we
affirm the trial court’s ruling on the motions for summary judgment.
Finally, UBS contends that because it was the prevailing party with respect
to a counterclaim asserted against it by BPI for breach of contract, the trial court
erred by denying its motions for contractual attorney’s fees. UBS was entitled to
recover attorney’s fees under the parties’ contract, so we reverse the judgment as to
that issue, and we remand for further proceedings consistent with this opinion.
Background
UBS was a limited partnership that provided merchant-processing services.
BPI and MPI were similar businesses. BPI resold merchant-processing services,
primarily to utilities. MPI resold merchant-processing services, primarily to
municipalities. Kenneth Maine and Jeff Maine owned BPI. Ollie S. Ackley
owned MPI.
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In 2003, Congress passed the Check Clearing for the 21st Century Act
(“Check 21 Act”), which authorized the electronic imaging and processing of
checks. For approximately two years, UBS conducted research in contemplation
of possibly entering this market, and it eventually contracted with two payment-
processing software companies, U.S. Dataworks and Turbo Transactions.
The president of UBS met Jeff Maine at a golf tournament in mid-2004, and
the two men began to discuss the possibility of working together to sell Check 21
services. In August 2005, BPI entered into a sales agreement with UBS, which
provided that BPI would sell UBS’s products. Later, the president of UBS also
met with Ackley to discuss the prospect of MPI working with UBS and BPI to sell
Check 21 services.
Before sharing the information it had collected regarding the Check 21 Act,
the software needed to implement it, and the potential market for these services,
UBS required Ackley and both of the Maines to sign confidentiality and
nondisclosure agreements. In January 2006, UBS, BPI, and MPI signed a letter of
intent describing their intention to work together as a new venture, selling both
automatic clearing house (ACH) services and Check 21 services. Between January
and April 2006, UBS tested its Check 21 products and services at customers’
facilities. But the testing showed that the products failed to perform as anticipated.
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In mid-April 2006, BPI and MPI informed UBS that they were discontinuing
their relationship under the letter of intent, stating that their activities up to that
point had been due diligence and noting the fact that UBS’s products and services
did not work. Five days later, the owners of BPI and MPI created their own
companies to compete with UBS in the market for reselling Check 21 services.
These new companies were Diversified Check Solutions, L.L.C., Diversified
Payment Solutions, L.L.C., and ACheck21, L.L.C.
UBS sued BPI, MPI, their owners, and the companies they formed to
compete in the Check 21 market. The lawsuit also named as defendants a software
designer who had worked with UBS and provided information to BPI and MPI
when they worked together under the letter of intent. Among other things, UBS
alleged fraud and breach of fiduciary duty. BPI countersued for, among other
things, breach of the 2005 sales agreement.
Before trial, the parties filed competing motions for summary judgment on
the issue of the enforceability of the confidentiality and nondisclosure agreements.
UBS argued that the agreements were unambiguous and enforceable as a matter of
law. The defendants filed a cross-motion for partial summary judgment arguing
that the nondisclosure agreements were not enforceable because the “confidential
information” referenced by the agreements was equally available to the defendants
before they signed the nondisclosure agreements, and such information was
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already in the defendants’ possession prior to signing the nondisclosure
agreements. The defendants also argued that UBS had no possessory, proprietary,
or ownership interest in the disputed “confidential information,” which was not
secret but in the public domain. Thus, the defendants contended there was no
evidence of any improper disclosure or use of information that caused harm to
UBS. The trial court denied UBS’s motion for summary judgment and granted the
appellants’ motion without specifying the basis for its ruling.
At trial, UBS’s expert accounting witness, Greg Cowhey, testified that he
calculated a value for the proposed enterprise by projecting what its profits would
have been based on the parties’ own assumptions, i.e., that the product worked, the
market accepted the product, potential contracts would be realized, and overall
estimated levels of use of the product and growth in demand for their services
would occur. After estimating the lost future profits, Cowhey calculated their
present value using a discounted cash flow methodology. Cowhey testified that
UBS’s damages were approximately $3.7 to 4.2 million. He also testified that he
never calculated a value for UBS, L.P. and that he disregarded its historical
performance.
The damages question asked the jury to determine what sum of money
would compensate UBS for damages caused by the defendants’ wrongful acts.
The jury was specifically instructed to consider only one element of damages—the
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“benefit of the bargain”—and “none other.” The charge further instructed the jury
that “benefit of the bargain” means:
the difference, if any, between the value of UBS, L.P.’s business after
the individuals or entities committed the wrongful acts against UBS,
L.P., and the value of UBS, L.P.’s business if the individuals or
entities had not committed such wrongful acts against UBS, L.P.
The jury found in favor of UBS on its liability questions, finding that the appellants
committed fraud and breached their fiduciary duties. The jury awarded
$1.5 million in damages to UBS. The jury also found in favor of UBS on the
defendants’ counterclaim for breach of a 2005 sales agreement, finding that the
defendants should take nothing by way of their counterclaim.
UBS moved for an award of contractual attorney’s fees, arguing that it was
the prevailing party. The defendants also sought statutory attorneys’ fees based on
the pretrial ruling that a covenant not to compete in the 2005 sales agreement was
not enforceable. The trial court denied the motions for attorney’s fees, reasoning
that the awards of fees would cancel each other out.
The defendants appealed, raising three issues challenging the sufficiency of
the evidence to support the jury’s award of damages and one issue challenging
UBS’s standing to recover damages that the jury found were suffered by its general
partner, UBS II, Inc. UBS also appealed, challenging the trial court’s ruling on the
competing partial motions for summary judgment and the court’s ruling denying
contractual attorney’s fees.
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Analysis
I. Defendants’ appeal
In their first issue, the defendants challenge the legal sufficiency of the
evidence to support the damages award because it did not coincide with the
measure of damages submitted to the jury. The jury was given the following
question and instructions regarding damages:
What sum of money, if any, if paid now in cash, would fairly and
reasonably compensate Plaintiff UBS, L.P., for its damages, if any,
that resulted from or were proximately caused by the wrongful acts of
the listed individuals or entities?
....
Consider the following elements of damages, if any, and none other.
“Benefit of the bargain” means the difference, if any, between the
value of UBS, L.P.’s business after the individuals or entities
committed the wrongful acts against UBS, L.P., and the value of UBS,
L.P.’s business if the individuals or entities had not committed such
wrongful acts against UBS, L.P.
Neither party objected to this part of the jury charge.
In the absence of an objection to the court’s charge, we evaluate the
sufficiency of the evidence in light of the court’s charge as given to the jury.
Osterberg v. Peca, 12 S.W.3d 31, 55 (Tex. 2000). 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 credit
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favorable evidence if a reasonable fact-finder could, and we disregard contrary
evidence unless a reasonable fact-finder could not. Id. We consider the evidence
in the light most favorable to the finding under review and indulge every
reasonable inference that would support it. Id. at 822. 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.
Gregory Cowhey, an accounting expert, testified about UBS’s damages. His
testimony focused primarily on his credentials and experience, the methodology he
used to calculate UBS’s damages, and the assumptions, estimates, and information
he relied on in making his calculations. Cowhey testified that he determined “the
present value of the future profits lost by virtue of the termination of the joint
venture arrangement.” He calculated the venture’s lost future profits over a period
of five years beginning December 31, 2006. He relied on two sets of projections to
infer how the joint venture would have performed: one projection assumed the
businesses of U.S. Dataworks, Turbocheck, and U.S. Clearing Systems were joined
together, and the other projection was one prepared by the defendants in relation to
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the anticipated profitability of Diversified Check Solutions. Cowhey then used the
discounted cash flow methodology to calculate the present value of the projected
future earnings. He testified that this method was “generally relied upon by
experts” to “value businesses.”
Cowhey testified about his opinion of the total damages UBS sustained as a
result of the events that gave rise to the lawsuit. He said that the damages were
comprised of the capital invested and the “lost profits prospectively after the
formation of the joint venture.” He testified that UBS’s capital investment was
approximately $1,051,000 and UBS’s one-third share of the lost profits ranged
from $2,657,000 to $3,213,000. Thus, he opined that UBS’s total damages were
between $3,708,000 and $4,264,000.
As part of his valuation analysis, Cowhey did not calculate the value of
UBS’s business. This was made evident during Cowhey’s testimony at trial:
Q. Now, with all these numbers you have been talking about you
came [up] with between 2.6 and $3.2 million in damages, right?
A. For the future profit component, yes.
Q. And you came up with that by valuing a hypothetical joint
venture, right?
A. Yes.
Q. Okay. You did not value and didn’t try to value the Plaintiff in
this case, UBS Limited Partnership, did you?
A. I was not asked to do that.
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Q. You weren’t asked to and you didn’t?
A. That is correct.
Cowhey did testify that a value for UBS could be implied from a transaction
in which a UBS investor agreed to convert a $300,000 loan into a 7% ownership
interest in the partnership. Based on that October 2005 transaction, Cowhey
testified that a value of $4.26 million could be implied, but he emphasized that he
did not rely on this method to estimate a value for UBS:
A. That is not my valuation. I said this again this morning. That is
their—the investor put up $300,000 and got back 7 percent.
That’s factually what happened. . . . This 7 percent represents
300. Do the math. What does 100 represent? That is just a
fact.
Q. Okay. And, so, 4.26 million . . . value is a fact, right?
A. If you look at that transaction, that is what that tells you. That
is a mathematical fact. If 300,000 equals 7 percent, then 100
percent equals 41285 [sic] that is just a mathematical factor.
Q. And, so, UBS is worth $4.286 million in October of ’05. Did
you look at their value as to how it looked, say, December 31,
2005?
A. You asked me this before. My answer is, again, I was never
asked to value UBS at any date.
Q. Did you ever try to look at a value of UBS on January 19th,
2006?
A. You asked me that before and I said I was never asked to value
UBS at any date.
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Cowhey’s opinion of UBS’s damages was based solely upon his lost-profits
analysis. But Cowhey’s testimony does not support any amount of damages as
measured by the instructions submitted to the jury, which is the standard we use to
evaluate the sufficiency of the evidence. The jury was not asked to consider lost
profits as an element of damages. Rather, the jury was instructed to consider only
one potential element of damages, “and none other.” The sole element of damages
submitted to the jury was the “benefit of the bargain,” defined in the jury charge as
“the difference, if any, between the value of UBS, L.P.’s business after the
individuals or entities committed the wrongful acts against UBS, L.P., and the
value of UBS, L.P.’s business if the individuals or entities had not committed such
wrongful acts against UBS, L.P.”
Even to the extent that a reference to a company’s “business” might be
understood as a colloquial reference to its profits, that understanding of “business”
cannot be squared with the instruction given to the jury, which required a
comparison of two values of the “business”—one valuation “after the individuals
or entities committed the wrongful acts against UBS, L.P.,” and another valuation
of “UBS, L.P.’s business if the individuals or entities had not committed such
wrongful acts against UBS, L.P.” The only way the jury could have even
attempted to measure the benefit of the bargain, as defined by the jury instructions
and based upon Cowhey’s lost-profits analysis, would be to assume that the value
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of “UBS, L.P.’s business after the individuals or entities committed the wrongful
acts against UBS, L.P.” was zero. But Cowhey offered no opinion that UBS’s
“business” became utterly worthless upon the dissolution of the nascent joint
venture, and the record would not support any such conclusion in light of the fact
that UBS was an ongoing business concern separate and apart from the new
business opportunity it had hoped to exploit with BPI and MPI as its co-venturers.
To the extent that the instruction given to the jury is given its more natural
reading, which suggests that the jury should assess the value of UBS as a
“business” (as opposed to its mere expectation of profits from a new business
opportunity, projected over a fixed period of time), Cowhey’s opinion testimony
supplied no evidence upon which the factfinder could assess the value of UBS. In
particular, a reasonable factfinder could not disregard his repeated testimony that
he did not establish a value for UBS, L.P. at any time because he was never asked
to do so. See City of Keller, 168 S.W.3d at 822. Nothing in Cowhey’s testimony
proves the value of UBS’s business after the defendants’ wrongful acts or in the
absence of such wrongful acts.
No evidence supports the damages awarded in this case as measured against
the jury instruction. Accordingly, we conclude that, based on this record, no
reasonable and fair-minded factfinder could have found that UBS sustained
damages in the amount of $1.5 million. See id. at 827. We hold that the evidence
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is legally insufficient to support this part of the trial court’s judgment. We sustain
the defendants’ first issue, reverse the trial court’s judgment in part, and render
judgment that UBS take nothing by way of its lawsuit. In light of this disposition,
we do not reach the defendants’ three other appellate issues. See TEX. R. APP.
P. 47.1.
II. UBS’s appeal
UBS appeals two of the trial court’s pretrial rulings: the court’s ruling on the
parties’ competing motions for partial summary judgment and the court’s denial of
UBS’s motion for contractual attorney’s fees.
a. Enforceability of confidentiality and nondisclosure agreements
UBS moved for partial summary judgment on the enforceability of the
confidentiality and nondisclosure agreements signed by Ackley and the Maines. It
sought a ruling that the three nondisclosure agreements were not ambiguous and
were enforceable. UBS relied primarily on an express waiver of defenses in the
agreements, which stated:
Recipient hereby waives all claims and other allegations that could
otherwise be raised as related to Provider’s Confidential Information
including but not limited to allegations that said Confidential
Information (a) was in Recipient’s possession prior to Provider’s
disclosure to Recipient, (b) was in the public domain prior to
disclosure to Recipient, or (c) lawfully enters the public domain
through no violation of this Agreement after disclosure to Recipient.
This waiver is absolute and Recipient hereby agrees that all
Confidential Information provided by Provider is subject to this
absolute waiver such that no issues of fact exist whatsoever.
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Recipient agrees that Provider shall have the power to initiate
whatever legal proceedings it deems appropriate for a violation of this
Agreement and, further, that this absolute waiver shall be sufficient to
support a grant of summary judgment as related to Provider’s
disclosure of said Confidential Information. . . .
The defendants responded to UBS’s motion for summary judgment with a cross-
motion for partial summary judgment seeking a ruling that the nondisclosure
agreements were unenforceable as a matter of law because:
(1) the NDA Agmts improperly define “Confidential Information” to
include information: (a) that was equally available to Defendants
prior to the NDA Agmts; (b) that was already in Defendants’
possession prior to the NDA Agmts; (c) that was already in the
public domain prior to the NDA Agmts; and ([d]) that lawfully
entered the public domain after the NDA Agmts. A[] properly-
drafted NDA agreement specifically excludes such information
from the definition of “Confidential Information” because it is
impossible to prove improper disclosure of the information is
already in the public domain;
(2) UBS’s purported “Confidential Information” was not, and is not,
secret; and
(3) UBS had no possessory, proprietary, or ownership interest in the
information and there is no evidence of improper disclosure or use
causing harm to UBS.
The defendants argued that UBS’s information about Check 21 was in the public
domain, that UBS had no evidence that it owned the allegedly confidential
information, and that the evidence conclusively showed that the allegedly
confidential information was owned by other companies, specifically U.S.
Dataworks, Inc., which owned the Clearingworks software, and companies owned
15
by Dennis Foster, which owned the Turbotransactions/CheckData software. The
defendants relied on deposition testimony to show that UBS’s allegations of
improper disclosures pertained to information about Clearingworks software and
Turbotransactions/CheckData software.
The trial court denied UBS’s motion for summary judgment and granted the
defendants’ motion, without specifying the basis for its ruling. On appeal, UBS
reurges the argument that it made in the trial court that the defendants waived all
defenses to the enforceability of the nondisclosure agreement by the terms of that
agreement. UBS’s appellate briefing addresses the defendants’ argument that the
information that UBS sought to protect was in the public domain, but it does not
address the defendants’ arguments that the information actually belonged to other
companies and that there was no evidence of improper disclosure or use causing
harm to UBS.
An appellant may raise an issue that generally contends the trial court erred
in rendering summary judgment, see Malooly Brothers, Inc. v. Napier, 461 S.W.2d
119, 121 (Tex. 1970), but the appellant must also “present those arguments and
supporting authority in order to merit reversal.” McCoy v. Rogers, 240 S.W.3d
267, 272 (Tex. App.—Houston [1st Dist.] 2007, pet. denied); see Klentzman v.
Brady, 312 S.W.3d 886, 899 (Tex. App.—Houston [1st Dist.] 2009, no pet.)
(“Although we recognize that such a broad [Malooly] issue is authorized, an
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appellant must nevertheless also present argument and supporting authorities in
support of that issue.”). When multiple grounds for summary judgment exist and
the trial court does not specify the ground on which it granted summary judgment,
an appellant must negate on appeal all possible grounds, and if he fails to do so the
appellate court must uphold the summary judgment. See Star–Telegram, Inc. v.
Doe, 915 S.W.2d 471, 473 (Tex. 1995); Ellis v. Precision Engine Rebuilders, Inc.,
68 S.W.3d 894, 898 (Tex. App.—Houston [1st Dist.] 2002, no pet).
As authorized by Malooly Brothers, UBS’s brief includes a broad issue
challenging the trial court’s denial of its motion for summary judgment and grant
of the defendants’ motion. UBS briefed its argument that the nondisclosure
agreements were enforceable as a matter of law based on the defendants’ waiver,
lack of ambiguity, and a duty of confidentiality that it alleges the common law
imposes on the defendants. UBS mentions the defendants’ contention that the
information was not protected because it was in the public domain, which they
asserted in their competing motion for summary judgment. But UBS does not
provide citation to any authority or any meaningful analysis of why the court
would have erred in accepting that argument. UBS also did not address the
defendants’ alternative grounds for summary judgment, specifically that the
evidence conclusively showed that the information UBS sought to protect was
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owned by other companies and that there had been no showing of any breach of the
nondisclosure agreements.
Because UBS did not brief these alternative grounds for summary judgment,
we must overrule UBS’s first issue without considering the propriety of granting
summary judgment on the unchallenged grounds. See Ellis, 68 S.W.3d at 898;
McCoy, 240 S.W.3d at 272.
b. Contractual attorney’s fees
In its second issue, UBS challenges the trial court’s ruling on contractual
attorney’s fees. Both parties brought claims under the August 2005 sales
agreement. UBS sued the defendants for violation of a covenant not to compete,
and the defendants countersued UBS for breach of contract. The defendants
prevailed on a pretrial motion for partial summary judgment, which held that the
covenant not to compete was unenforceable. The defendants sought attorney’s
fees under the discretionary attorney’s fees provisions of section 15.51(c) of the
Texas Business and Commerce Code. The trial court denied the defendants’
statutory attorney’s fees.
At the time of trial, the defendants had a live counterclaim for breach of
contract pertaining to the sales agreement of August 22, 2005. The jury found that
UBS did not breach the sales agreement contract. UBS sought attorney’s fees,
arguing that it was the prevailing party under the contract, which provided:
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In the event that it is necessary for an Attorney to file suit or compel
arbitration for the enforcement of this Agreement, the prevailing Party
to such proceedings shall be entitled to recovery of its reasonable and
necessary Attorney’s Fees, expert’s fees and costs of
litigation/arbitration.
In a post-trial hearing, the trial court indicated that it believed there was no
prevailing party under the 2005 sales agreement. The trial court explained that
either both parties prevailed under the contract or neither party did because the
defendants defeated UBS’s claim of breach of covenant not to compete by way of
pretrial summary judgment and UBS won on the breach of contract claim when the
jury found that UBS did not breach the contract. The court stated,
The Noncompete was knocked out and then Sales Agreement there
was no violation of it. . . . And they prevailed under the Noncompete
aspect of it by getting it knocked out of the case. So, it is really my
belief that no one’s entitled to attorney’s fees under the Sales
Agreement issue.
....
So, you have an issue of attorney’s fees for the Covenant Not to
Compete. He has an issue for attorney’s fees under the Sales
Agreement because he could recover—he is going to argue that he can
recover attorney’s fees as the prevailing party under the Sales
Agreement. . . . I am saying that it balances each other out. . . . I
suspect it is going to balance each other out for the most part. And it
may not zero each other out, but I am not going to award attorney’s
fees on this.
UBS challenges this ruling on appeal.
Whether a party is entitled to attorney’s fees is a question of law that we
review de novo. Holland v. Wal-Mart Stores, Inc., 1 S.W.3d 91, 94 (Tex. 1999).
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Under Texas law, a court may award attorney’s fees only when they are authorized
by statute or by the parties’ contract. MBM Fin. Corp. v. Woodlands Operating
Co., 292 S.W.3d 660, 669 (Tex. 2009). Under Texas statutory law, a party may
recover reasonable attorney’s fees from an individual or corporation, in addition to
the amount of a valid claim and costs, if the claim is for breach of an oral or
written contract. See TEX. CIV. PRAC. & REM. CODE ANN. § 38.001(8) (West
2008). However, “[p]arties are free to contract for a fee-recovery standard either
looser or stricter than Chapter 38’s . . . .” Intercontinental Grp. P’ship v. KB Home
Lone Star L.P., 295 S.W.3d 650, 653 (Tex. 2009). When parties include such a
provision in a contract, the language of the contract, rather than the language of the
statute, controls. Id. at 654–56 (reviewing definition of “prevailing party” under
contract to determine whether plaintiff who had not recovered any actual damages
was entitled to recover attorney’s fees). When a contract does not define
“prevailing party,” we are to “presume the parties intended the term’s ordinary
meaning.” Id. at 653.
A prevailing party is the party who successfully prosecutes a cause of action
or defends against it. Silver Lion, Inc. v. Dolphin St., Inc., No. 01-07-00370-CV,
2010 WL 2025749, at *18 (Tex. App.—Houston [1st Dist.] May 20, 2010, pet.
denied) (mem. op.); Weng Enters., Inc. v. Embassy World Travel, Inc., 837 S.W.2d
217, 222–23 (Tex. App.—Houston [1st Dist.] 1992, no writ). To be a “prevailing
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party,” a party must be successful on the merits of the claim. Robbins v. Capozzi,
100 S.W.3d 18, 27 (Tex. App.—Tyler 2002, no pet.). A prevailing party is
vindicated by the court’s judgment. Id. Thus, a plaintiff who receives a finding of
liability but no damages is not a prevailing party for the purposes of attorney’s
fees. See Intercontinental Grp. P’ship, 295 S.W.3d at 653. But a defendant who
successfully defends a cause of action is a prevailing party. Silver Lion, Inc., 2010
WL 2025749, at *18; Robbins, 100 S.W.3d at 22–23, 27; Weng Enters., Inc., 837
S.W.2d at 822–23; see also Epps v. Fowler, 351 S.W.3d 862, 868-69 (Tex. 2011)
(holding that defendant is prevailing party for purposes of award of attorney’s fees
when plaintiff nonsuits case with prejudice).
As to the breach of contract claim regarding the 2005 sales agreement, UBS
was the prevailing party because it successfully defended this claim and the jury
found that it did not breach the contract. See Silver Lion, 2010 WL 2025749, at
*18; Robbins, 100 S.W.3d at 27; Weng Enters., 837 S.W.2d at 822–23. The
parties’ contract states that the prevailing party “shall” be entitled to recover
attorney’s fees. Under the parties’ contract, UBS was entitled to attorney’s fees,
and the trial court erred by denying them. See, e.g., Robinson v. Budget Rent-A-
Car Sys., Inc., 51 S.W.3d 425, 428 (Tex. App.—Houston [1st Dist.] 2001, pet.
denied) (observing that word “shall” is ordinarily construed to be mandatory).
Accordingly, we sustain UBS’s second issue.
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Conclusion
Having held that the damages award is not supported by legally sufficient
evidence, we reverse the trial court’s judgment, in part, and render judgment that
UBS take nothing on its suit. Further, having held that the trial court erred by
denying UBS’s request for attorney’s fees as the prevailing party on the
defendants’ breach of the 2005 sales agreement cause of action, we reverse the trial
court’s judgment insofar as it does not award attorney’s fees and remand for
further proceedings thereon. We affirm the judgment of the trial court in all other
regards.
Michael Massengale
Justice
Panel consists of Justices Jennings, Massengale, and Huddle.
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