067-250449-11 FILED
TARRANT COUNTY
4/30/2015 5:03:18 PM
THOMAS A. WILDER
CAUSE NO. 067-250449-11 DISTRICT CLERK
ROBERT EDWARD LEE OSWALD, § IN THE DISTRICT COURT
FILED IN
§ 2nd COURT OF APPEALS
Plaintiff, § FORT WORTH, TEXAS
§ 5/4/2015 9:16:23 AM
TH
v. § DEBRA SPISAK
67 JUDICIAL DISTRICT
§ Clerk
BAUMGARDNER FUNERAL HOME, INC., §
ALLEN S. BAUMGARDNER, SR., AND §
NATE D. SANDERS, INC., §
§
Defendants. § TARRANT COUNTY, TEXAS
NOTICE OF APPEAL
Defendant Nate D. Sanders, Inc., herein, hereby gives notice of its appeal of the Judgment
of the Court signed and entered on January 30, 2015, and would show as follows:
1. This case was filed in the 67th Judicial District, Tarrant County, Texas, and assigned
case number 067-250449-11, and styled Robert Edward Lee Oswald v. Baumgardner Funeral Home,
Inc., Allen S. Baumgardner, Sr., and Nate D. Sanders, on January 30, 2015.
2. The Judgment of the Court was signed on January 30, 2015. Sanders’ Motion for
New Trial was filed February 17, 2015, and denied by Order signed April 23, 2015.
3. Defendant Nate D. Sanders, Inc., desires to appeal the Judgment of the Court entered
on January 30, 2015, insofar as it denies Sanders recovery of its reasonable and necessary attorneys’
fees.
4. Appeal is taken to the Second Court of Appeals, Fort Worth, Texas.
5. The party filing this notice is Defendant Nate D. Sanders, Inc., herein.
SIGNED this 30th day of April, 2015.
NOTICE OF APPEAL– Page 1
067-250449-11
Respectfully submitted,
LAW OFFICES OF LIPPE & ASSOCIATES
By: /s/ Emil Lippe, Jr.
Emil Lippe, Jr.
State Bar No. 12398300
emil@texaslaw.com
Plaza of the Americas, South Tower
600 N. Pearl Street, Suite S2460
Dallas, Texas 75201
Phone: 214-855-1850
Fax: 214-720-6074
ATTORNEYS FOR DEFENDANT
NATE D. SANDERS, INC.
NOTICE OF APPEAL– Page 2
067-250449-11
CERTIFICATE OF SERVICE
The undersigned hereby certifies that, pursuant to the Texas Rules of Civil Procedure, true
and correct copies of the above and foregoing instrument were served by facsimile upon counsel of
record on this 30th day of April, 2015, to the following:
Gant Grimes, Esq.
Gibson Davenport Anderson
807-8th St., 8th Floor
Wichita Falls, TX 76301-3368
Counsel for Plaintiff, Robert Edward Lee Oswald
Brett L. Myers, Esq.
Fox Rothschild LLP
Two Lincoln Centre
5420 LBJ Freeway, Suite 1200
Dallas, TX 75240
Counsel for Defendants Baumgardner Funeral Home, Inc.,
and Allen S. Baumgardner, Sr.
/s/ Emil Lippe, Jr.
NOTICE OF APPEAL– Page 3
067-250449-11
record on this 17th day of February, 2015, to the following:
Gant Grimes, Esq.
Gibson Davenport Anderson
807-8th St., 8th Floor
Wichita Falls, TX 76301-3368
Counsel for Plaintiff, Robert Edward Lee Oswald
Brett L. Myers, Esq.
Fox Rothschild LLP
Two Lincoln Centre
5420 LBJ Freeway, Suite 1200
Dallas, TX 75240
Counsel for Defendants Baumgardner Funeral Home, Inc.,
and Allen S. Baumgardner, Sr.
/s/ Emil Lippe, Jr.
MOTION FOR NEW TRIAL OF DEFENDANT NATE D. SANDERS, INC.– Page 9
Page 5
840 S.W .2d 124,067-250449-11
*; 1992 Tex. App. LEXIS 2650, **
enforcement is sought proves that he or she did not him to build a lake house on the lot. He would not obtain
execute the agreement voluntarily. [**12] TEX. FAM. any ownership rights to the land. Dwain hoped to move
CODE ANN. § 5.55(a)(1) (Vernon Supp. 1992). into the house with an employee with whom he had
Consequently, at the time of trial, Dwain had the burden developed a relationship.
of proving that his execution of the agreement was not
Dwain's bank informed him that it would not go
voluntary due to duress.
through with permanent financing on the lake house.
Dwain relies on the opinion in Matthews v. Someone involved in the construction of the house had a
Matthews, 725 S.W.2d 275, 279 (Tex. App.--Houston mechanics and materialmen's lien placed on the house.
[1st Dist.] 1986, writ ref'd n.r.e.) for his contention that Thereafter, approximately thirty days before his interim
Sharon had the burden of proof to prove by clear and financing was to lapse, the Fort W orth Boat Club sent
convincing evidence that his consent was not procured Dwain a letter stating that it would confiscate the house
by duress. W e first note that the issue as to the burden of if the lien were not lifted within thirty days.
proof was not directly at issue in that case but also note
Dwain's bank informed him that it would not provide
that the opinion in the case preceded the adoption of
permanent financing for the lake house as he had
section 5.55(a)(1) of the Texas Family Code.
understood that it would. W hen he went to another bank
W e construe Dwain's point of error as an assertion to seek permanent financing, bank officials informed him
that the trial court's finding of no duress is contrary to the that he would have to come up with a considerable
great weight and preponderance of the evidence. In amount of money and some [**15] collateral to obtain
reviewing such a point of error, [HN6] we must consider the financing because of the arrangement with the club
and weigh all of the evidence, both the evidence that that prohibited there being a lien on the house. The
tends to prove the existence of a vital fact as well as officials also informed him that the temporary orders that
evidence that tends to disprove its existence. See Cain v. Sharon had obtained in the divorce proceeding would
Bain, 709 S.W.2d 175, 176 (Tex. 1986) (per curiam). So make it difficult for Dwain to arrange the needed
considering the evidence, if the trial court's finding is so financing on his own.
contrary [**13] to [*129] the great weight and
Dwain informed Sharon about the lien and the
preponderance of the evidence as to be manifestly unjust,
possible forfeiture of the house. Subsequently, Dwain
the point should be sustained, regardless of whether there
obtained an agreement from Sharon that he could use $
is some evidence to support it. Watson v. Prewitt, 159
50,000 from his retirement plan and use other property
Tex. 305, 320 S.W.2d 815, 816 (1959) (per curiam).
covered by the temporary restraining order to obtain the
[HN7] There can be no duress unless there is a threat needed permanent financing. He said that his decision to
to do some act which the party threatening has no legal continue at that time without counsel was of his own
right to do. Such threat must be of such character as to volition, and that he did not know of the possibility of
destroy the free agency of the party to whom it is seeking court approval for what he wished to do rather
directed. It must overcome his will and cause him to do than reach an agreement with Sharon.
that which he would not otherwise do, and which he was
Following meetings of Tiffany, the parties, and
not legally bound to do. The restraint caused by such
occasionally others, Sharon agreed to approve of the
threat must be imminent. It must be such that the person
measures necessary to obtain the permanent financing on
to whom it is directed has no present means of
the lake house and Dwain agreed to sign the partition
protection.
agreement. The partition agreement was signed either on
the way to the bank to sign the papers for the permanent
Dale v. Simon, 267 S.W. 467, 470 (Tex. Comm'n App.
financing or at the bank itself. [**16] There was no
1924, judgm't adopted); Matthews, 725 S.W.2d at 278.
physical or other abuse by Sharon or anyone else prior to
According to the evidence, the parties during the the signing.
pendency of the divorce were in the process of
Sharon testified that Dwain was enthused to sign the
negotiating a property settlement agreement. Progress
partition agreement so that he could get his house. She
was being made in the negotiations. DeForrest Tiffany
also said that it was not really his motivation for signing
was acting as the attorney for Sharon, but Dwain had
it at that time, that the two things just coincided. She
known him longer than Sharon had.
said that she did not remember telling Dwain that she
W hile negotiations [**14] were proceeding toward could not agree to the measures necessary to obtain the
settling the property division issues in the pending permanent financing unless he signed the agreement.
divorce, Dwain was proceeding with the building of a
[*130] Dwain and Sharon left the bank together.
lake house at the Fort W orth Boat Club. Under the
Sharon testified that Dwain did not appear distressed, but
agreement he had with the club, he would have a long-
instead was smiling and friendly toward her. He said
term lease on a lot at the club, and the club would allow
nothing about her having pushed him into an unfair
EXHIBIT "B"
Page 6
840 S.W .2d 124,067-250449-11
*; 1992 Tex. App. LEXIS 2650, **
situation. She related that he thanked her for lifting the can find no evidence of $ 150,000 worth of certificates of
injunction so he could get his house and she thanked him deposit that might be considered to be divided by the
for signing the partition agreement. In response, he partition agreement, resulting [**19] in a share for
reminded her of his promise to always take care of her. Sharon in the amount of $ 75,000. W e have examined
the evidence that Sharon refers to in her brief but our
Dwain testified that he thinks that Sharon's actions
most careful analysis, and giving Sharon the benefit of
constituted extortion and that she did not deal with him
every question, shows that the amount due Sharon would
fairly. He said that he did not know whether Sharon had
be far short of the $ 75,000 found by the court. W e
threatened to do something she had no legal right to do.
sustain point of error number seven.
He inferred that she refused to sign the agreement [**17]
if he would not sign the partition agreement. He said he Dwain argues in point of error number eight that the
signed the agreement because he would have lost the trial court erred in awarding her attorney's fees. He
house and had to pay the bank back if he had not. points out that there was no testimony that the amount of
attorney's fees found by the court was reasonable. [HN9]
The partition agreement was signed on April 4,
In a trial before the court, the trial court may review the
1985. The divorce decree was not signed until
case file and take judicial notice of the amount of
September 22, 1986. During that time Dwain continued
reasonable attorney's fees, whether or not requested by a
to represent himself after voluntarily choosing not to
party to do so. Lacy v. First Nat. Bank, 809 S.W.2d 362,
obtain counsel. Dwain acknowledged that one of the
367 (Tex. App.--Beaumont 1991, no writ); TEX. CIV.
purposes of the divorce decree was to incorporate the
PRAC. & REM. CODE ANN. § 38.004 (Vernon 1986).
partition agreement into the decree. He indicated that he
W e overrule point of error number eight.
understood that he did not have to sign the decree.
Dwain contends in point of error number nine that
Although Tiffany had made it clear to Dwain that he
the trial court erred when it entered [*131] several of
was representing Sharon and could not represent him,
the trial court's findings of fact and conclusions of law
Dwain thought that Tiffany's actions in helping him to
because the evidence is legally insufficient, or,
obtain permanent financing for the lake house and on
alternatively, factually insufficient to support them. We
other matters were in his best interest.
have [**20] examined all sixteen findings and find that
W e hold that the trial court's finding that there was as to all except finding 6j none of these findings, if error,
no duress is not contrary to the great weight and is such a finding as was reasonably calculated to cause or
preponderance of the evidence, in view of the evidence probably did cause the rendition of an improper
indicating that Dwain signed the agreement because he judgment.
wanted to and that he was pleased with the arrangement.
In its finding 6j, the court found that Dwain was in
W e overrule point of error number six.
default by failing to transfer $ 75,000, representing 50%
Dwain urges in point of error number seven that the of the certificates of deposit in his corporate pension
[**18] evidence is legally and, in the alternative, plan. As previously noted, there is no evidence to support
factually insufficient to support the trial court's finding the trial court's finding. W e sustain point of error
that he was in default in paying retirement benefits to number nine as to this finding; otherwise we overrule
Sharon in the amount of $ 75,000. point of error number nine.
[HN8] We will first consider only the evidence and W e find that the issue of the amount of money, if
inferences that tend to support the trial court's finding any, due to Sharon with respect to the division of
and disregard all evidence and inferences to the contrary. certificates of deposit that were part of Dwain's corporate
See Larson v. Cook Consultants, Inc., 690 S.W.2d 567, pension plan, affects only a part of the matter in
568 (Tex. 1985); In re King's Estate, 150 Tex. 662, 244 controversy and is clearly separable without unfairness to
S.W.2d 660, 661-62 (1951) (per curiam). If there is any the parties. Consequently, we reverse and remand as to
evidence of probative force to support the finding, the that issue only. W e affirm the remainder of the
legal insufficiency point must be overruled and the judgment. Costs are charged 10% to Sharon Matelski, the
finding upheld. Id. appellee, and 90% to Dwain E. Matelski, the appellant.
The partition agreement provided that Dwain and JOHN G. HILL
Sharon were each to receive 50% of the certificates of
JUSTICE
deposit derived from Dwain's corporate pension plan,
with interest accrued from January 1, 1985. The PANEL B
agreement was to have an Exhibit E attached to it listing
HILL, AND FARRIS, JJ.
those certificates but the copy in our record has no such
exhibit attached. ASHW ORTH, J. (retired, sitting by assignment)
W e have examined the testimony of the parties and OCT 14 [**21] 1992
EXHIBIT "B"
lawyers performing the services; and (8) whether the fee attorney's fees for a claim of the type described in
067-250449-11
is fixed or contingent on results obtained or uncertainty Section 38.001 are reasonable." Tex. Civ. Prac. & Rem.
of collection before the legal services have been Code Ann. § 38.003 (W est 1997). Cox did not put forth
rendered. Arthur Andersen & Co. v. Perry Equip. Corp., any contrary evidence indicating that the fees W ilkins's
945 S.W.2d 812, 818, 40 Tex. Sup. Ct. J. 591 (Tex. 1997). attorney charged were excessive or unreasonable for
Not all of the factors must be considered in every case. Travis County. Nor did he attempt to rebut the
Petco Animal Supplies, Inc. v. Schuster, 144 S.W.3d 554, presumption that the usual and customary [*22]
567 (Tex. App.--Austin 2004, no pet.). They are general attorney's fees were reasonable. Cox merely argues that
guidelines that the supreme court has stated should be W ilkins failed to prove reasonableness and that the trial
taken into account when determining the reasonableness court's award of attorney's fees is excessive for this
of attorney's fees. Id. Evidence of attorney's fees that is simple and uncomplicated debt collection case.
clear, direct, and uncontroverted is taken as true as a
Ultimately, the trial court awarded W ilkins $ 8,535
matter of law, especially where the opposing party had
in attorney's fees, approximately $ 2,700 less than he
the means and opportunity of disproving the evidence but
requested. W e recognize that W ilkins did not put forth
did not. Ragsdale v. Progressive Voters League, 801
any evidence indicating that the legal fees requested were
S.W.2d 880, 882, 34 Tex. Sup. Ct. J. 254 (Tex. 1990).
similar to those customarily charged for equivalent legal
[HN19] In a challenge to legal sufficiency, we services provided in Travis County. However, [HN22] a
review the evidence in the light most favorable to the trial court need not consider every Arthur Andersen
challenged finding and indulge every reasonable factor when determining reasonableness of attorney's
inference that would support it. City of Keller v. Wilson, fees. Petco Animal Supplies, 144 S.W.3d at 567.
168 S.W.3d 802, 822, 48 Tex. Sup. Ct. J. 848 (Tex. 2005). Viewing the evidence in the light most favorable to the
[*20] W e credit favorable evidence if a reasonable fact trial court's award of attorney's fees, we find it sufficient
finder could do so and disregard contrary evidence unless to enable fair-minded people to reach a similar
a reasonable fact finder could not. Id. at 827. The conclusion. City of Keller, 168 S.W.3d at 822, 827
evidence is legally sufficient if it would enable fair- (summarizing legal sufficiency standard of review).
minded people to reach the verdict under review. Id. Moreover, after reviewing all of the evidence and
considering the Arthur Andersen factors we cannot
[HN20] In reviewing the factual sufficiency of the
conclude that the trial court's attorney's fees award is so
evidence, we consider and weigh all the evidence and
contrary to the overwhelming weight [*23] of the
should set aside the judgment only if it is so contrary to
evidence as to be clearly wrong and unjust. Cain, 709
the overwhelming weight of the evidence as to be clearly
S.W.2d at 176 (summarizing factual sufficiency standard
wrong and unjust. Cain v. Bain, 709 S.W.2d 175, 176, 29
of review). Accordingly, we hold that legally and
Tex. Sup. Ct. J. 214 (Tex. 1986). W e may not substitute
factually sufficient evidence supports the trial court's
our own judgment for that of the trier of fact, even if we
award of attorney's fees. Cox's fifth, sixth, seventh and
would have reached a different result on the evidence.
eighth issues are overruled.
M aritime Overseas Corp. v. Ellis, 971 S.W.2d 402, 407,
41 Tex. Sup. Ct. J. 683 (Tex. 1998). Therefore, we will
Erroneous judgment
reverse only if the overwhelming weight of the evidence
indicates the trial court's judgment was clearly wrong and In issues nine and ten, Cox claims that the trial court
unjust. erred in entering judgment against James E. Cox d/b/a
European Import Car Repair for actual damages and
Here, W ilkins requested $ 11,235.57 in attorney's
attorney's fees because there is either no evidence or
fees. In support, he admitted his attorney's detailed
insufficient evidence that the "party existed or was
invoice which explicitly described each task performed
liable."
while working on the case, the amount of time spent on
each task, whether the task was performed [*21] by the W ilkins sued Cox, individually, and the corporate
attorney or one of his paralegals, and the hourly rate entity European Import Car Repair, Inc. In his original
charged for each. W ilkins's attorney also testified that he petition, W ilkins alleged that he performed services for
spent more time than he would have expected on a "James E. Cox d/b/a European Import Car Repair."
collection case of this type because Cox acted pro se for W ilkins also alleged that European Import Car Repair,
much of the underlying proceedings. The record also Inc., was Cox's alter ego; however, he did not produce
indicates that Cox's behavior, such as lying to the court any evidence at trial in support of such an allegation.
in seeking a continuance, resulted in a waste of After reviewing the record, we find that there is no
resources. As stated earlier, the trial court may take evidence to support a corporate veil-piercing theory such
judicial notice of usual and customary attorney's fees as alter ego. Nor was there evidence that European
under these circumstances and that we may presume that Import Car Repair, Inc. [*24] , operated as any business
it did so. Tex. Civ. Prac. & Rem. Code Ann. § 38.004; entity other than a validly incorporated Texas
Lefton, 136 S.W.3d at 279-80. Additionally, civil corporation. Therefore, there was no basis upon which
practices and remedies code section 38.003 states, the trial court could render judgment against "James E.
[HN21] "It is presumed that the usual and customary Cox d/b/a European Import Car Repair."
EXHIBIT "D"
Page 9
067-250449-11
2006 Tex. App. LEXIS 2598, *
was rendered, the date the judgment was signed prevails
On appeal, neither Cox nor European Import Car
over a conflicting docket sheet entry." In re R.A.H., 130
Repair, Inc., challenges their own liability. Accordingly,
S.W.3d 68, 69-70, 47 Tex. Sup. Ct. J. 293 (Tex. 2004)
we modify the trial court's judgment to strike any
(quoting Garza, 89 S.W.3d at 7). Therefore, we hold that
reference to James E. Cox d/b/a European Import Car
the trial court's final judgment was rendered on
Repair. See Tex. R. App. P. 43.2(b).
November 30. Accordingly, we modify the judgment to
reflect that post-judgment interest begins to accrue on
Post-judgment interest
November 30, not November 3. Tex. R. App. P. 43.2(b).
In his eleventh issue, Cox asserts that the trial court The modified judgment should read as follows:
erred in ordering post-judgment interest at the annual rate
of five percent to run from November 3, 2004, because 1. Plaintiff shall have judgment against
the judgment was not signed until November 30, 2004. Defendant James E. Cox, individually, for
actual damages in the amount of $ 450,
In this case, the finance code governs the accrual of
and interest on that amount at the annual
post-judgment interest. See Office of the Attorney Gen.
rate of five (5%) percent from November
v. Lee, 92 S.W.3d 526, 528 n.2, 46 Tex. Sup. Ct. J. 221
30, 2004, until paid in full; and
(Tex. 2002). Finance code section 304.005 states that
[HN23] "post-judgment interest on a money judgment of 2. Plaintiff shall have judgment
a court in this state accrues during the period beginning against Defendant European Import Car
on the date the judgment is rendered and ending on the Repair, Inc., for actual damages in the
date the judgment is satisfied." Tex. Fin. Code Ann. § amount of $ 2,750, and interest on that
304.005(a) [*25] (W est Supp. 2005). [HN24] Generally, amount at the annual rate of five (5%)
a judgment is rendered when the decision is officially percent from November 30, 2004, until
announced orally in open court, by memorandum filed paid in full; and
with the clerk, or otherwise announced publicly. Garza
3. Plaintiff shall have judgment
v. Texas Alcoholic Beverage Comm'n, 89 S.W.3d 1, 6, 45
against Defendants James E. Cox [*27]
Tex. Sup. Ct. J. 1014 (Tex. 2002). An intent to render
individually European Import Car Repair,
judgment in the future does not satisfy this test. Woods
Inc. for reasonable and necessary
v. Woods, 167 S.W.3d 932, 933 (Tex. App.--Amarillo
attorney's fees in the amount of $ 8,535
2005, no pet.).
for which the Defendants are equally
The trial court's docket sheet entry on November 3 responsible.
notes, "COURT RULES IN FAVOR OF PLTF.
[W ilkins] ORDER FORTHCOMING. SENT BY FAX &
MAIL TO BOTH PARTIES." There is no indication on The stricken language has been removed from the
the docket sheet that the trial court filed with the clerk a judgment and the underlined language has been added in
copy of either the letter or the facsimile containing its response to Cox's ninth, tenth and eleventh issues.
decision. The trial court's decision was not orally
announced in open court and the only written reflection CONCLUSION
of the trial court's decision is the November 3 docket
W e modify the trial court's judgment and affirm the
entry. However, the November 3 docket entry explicitly
judgment as modified.
states that the order is forthcoming. This language
suggests that the court intended to render judgment in the
Bea Ann Smith, Justice
future. This suggestion is bolstered by the November 30
docket entry stating, "FINAL JUDGMENT AFTER
NON JURY TRIAL." In addition, the [*26] trial court
signed the final judgment on November 30. [HN25]
"W hen there is a question concerning the date judgment
EXHIBIT "D"
Page 1
809 S.W .2d 362,067-250449-11
*; 1991 Tex. App. LEXIS 1443, **
3 of 100 DOCUMENTS
DEW ITT L. LACY, Appellant v. FIRST NATIONAL BANK OF LIVINGSTON,
TEXAS, Appellee
No. 09-90-099 CV
COURT OF APPEALS OF TEXAS, Ninth District, Beaumont
809 S.W.2d 362; 1991 Tex. App. LEXIS 1443
M ay 9, 1991, Delivered
M ay 9, 1991, Filed
PRIOR HISTO RY: [**1] Appealed from the 9th
Judicial District Court of Polk County, Texas; Trial Civil Procedure > Pleading & Practice > Pleadings >
Cause No. 11,201; Erwin Ernst, Judge. Rule Application & Interpretation
[HN1] In a determination of whether issues and
DISPOSITION: AFFIRMED. pleadings and questions are supported by the pleadings at
the trial level, the trial court will supply omissions in the
CASE SUM M ARY: pleading of one party by referring to the allegations
contained in the pleadings of another party.
PROCEDURAL POSTURE: Appellant challenged a
judgment of the 9th Judicial District Court of Polk Civil Procedure > Trials > Bench Trials
County, Texas, that awarded a deficiency judgment, [HN2] The findings of fact of the trial judge, who has a
prejudgment interest, attorney fees, and costs and interest chance to observe the actual demeanor and actions, tone
to appellee bank. of voice and mannerism of all the witnesses, are of a very
high dignity. According to some decisional law, they are
OVERVIEW : Appellee bank filed suit against appellant, of an equal dignity with jury answers to special questions
seeking to obtain a judgment for a deficiency that or issues.
remained after the sale of collateral secured by a
promissory note. The trial court awarded appellee a
deficiency judgment, prejudgment interest, attorney fees, Civil Procedure > Appeals > Standards of Review
and costs and interest. On review, appellant raised seven [HN3] W hen an intermediate appellate court considers
points of error. The appellate court affirmed. The trial no evidence points or legal insufficiency points, the court
court properly admitted into evidence appellee's exhibit is permitted to consider only the evidence favorable to
containing a letter notifying appellant that he was in the findings below. If there is any probative evidence in
default on payment of the note. There was sufficient the record to support the trial judge's findings, the court
evidence to support the trial court's finding that the is not to overrule them. The acceptable and universally
collateral was disposed of in a commercially reasonable recognized standard for review of factual sufficiency
manner. The trial court properly awarded attorney fees points requires that the court consider the whole record.
and prejudgment interest. The trial court's findings of fact A trial court's findings should be sustained unless,
were supported by sufficient evidence, and its considering all evidence, the intermediate appellate court
conclusions of law were correct. determines that the findings are so against the great
weight and preponderance of the evidence as to be
OUTCOM E: The court affirmed the trial court's manifestly unjust and clearly wrong.
judgment awarding appellee bank a deficiency judgment,
plus interest, fees, and costs; the trial court did not err in
its evidentiary rulings or in awarding interest and fees, its Civil Procedure > Rem edies > Costs & Attorney Fees >
findings of fact were supported by sufficient evidence, Attorney Expenses & Fees > Reasonable Fees
and its conclusions of law were correct. Evidence > Judicial Notice > Adjudicative Facts >
Public Records
LexisNexis(R) Headnotes [HN4] Tex. Civ. Prac. & Rem. Code Ann. § 38.004
(1986) permits the trial court to take judicial notice of the
EXHIBIT "E"
067-250449-11
evidence of reasonableness to support an award of attorneys’ fees.
As one Court of Appeals has held, citing a Texas Supreme Court case in support of its
conclusion:
When section 38.001 applies, a trial court can take judicial notice of the case file and
of the usual and customary attorney's fees, and the usual and customary fees are
presumed to be reasonable. See id. §§ 38.003, .004(1). Taking judicial notice of
these two things is legally sufficient to support a determination that the
attorney's fees award was reasonable. Gill Sav. Ass'n, 797 S.W.2d at 32.
Kendrick v Seibert, 439 S.W.3d 408, 412 (Tex.App.-Houston [1st Dist.] 2014, no pet.)(emphasis
added).1
The Fort Worth Court of Appeals has held that, even in a case not governed by §38.001 of
the Texas Civil Practice and Remedies Code, the trial court may take judicial notice of the court file
and of what is a reasonable and necessary fee, and award attorneys’ fees on such basis alone.
Matelski v. Matelski, 840 S.W.2d 124, 130 (Tex.App.-Fort Worth 1992, no pet.).2
In The Long Trusts v . Atlantic Richfield Company, 893 S.W.2d 686, 688-689 (Tex.App.-
Texarkana 1995, no writ), the Court held that the trial court is presumed to have taken such judicial
notice, and that such judicial notice is in and of itself sufficient evidence to support an award of
attorneys’ fees.3
Furthermore, in Cox v. Wilkins, 2006 Tex.App. LEXIS 2598 (Tex.App.-Austin 2006, pet.
1
A copy of the decision in Kendrick v Seibert is attached hereto as Exhibit “A” and
incorporated by this reference.
2
A copy of the decision in Matelski v. Matelski is attached hereto as Exhibit “B” and
incorporated by this reference.
3
A copy of the decision in The Long Trusts v . Atlantic Richfield Company is attached
hereto as Exhibit “C” and incorporated by this reference.
MOTION FOR NEW TRIAL OF DEFENDANT NATE D. SANDERS, INC.– Page 4
067-250449-11
denied), the Court of Appeals emphasized that the trial court is not required to state that it was taking
judicial notice, and emphasized that in a case for breach of a contract under §38.001 of the Civil
Practice and Remedies Code, an award of attorneys’ fees was not discretionary.4
In Lacy v. First National Bank of Livingston, Texas, 809 S.W.2d 362, 238 (Tex.App.-
Beaumont 1991, no pet.), the Court was presented with a situation similar to that which occurred
herein. In Lacy, there was evidence presented of the amount of attorneys’ fees, but objection was
made when testimony was presented concerning attorneys’ fees on the basis that no expert had been
designated. There, the Court of Appeals held that the trial court is presumed to have taken judicial
notice of the reasonable and customary attorneys’ fee and the contents of the file, and that such
judicial notice in and of itself is sufficient to support an award of attorneys’ fees.5
II.
SANDERS’ CLAIM WAS PRESENTED UNDER §38.001 OF THE
TEXAS CIVIL PRACTICE AND REMEDIES CODE
There is a conflict among the Texas Courts of Appeals concerning whether or not the judicial
notice provisions discussed above apply to cases outside of §38.001 of the Civil Practice and
Remedies Code. One court has summarized the conflicting cases as follows:
Section 38.004 does not allow courts to take judicial notice of reasonableness; rather,
it allows a court to take judicial notice of "the usual and customary attorney's fee" in
a bench trial. See TEX. CIV. PRAC. & REM. CODE ANN. § 38.004. Because section
38.003 is limited to claims described in section 38.001, and because section 38.004
does not speak to judicial notice of reasonableness, this court has held that trial courts
4
A copy of the decision in Cox v. Wilkins is attached hereto as Exhibit “D” and
incorporated by this reference. See argument at section III below citing additional authorities.
5
A copy of the decision in Lacy v. First National Bank of Livingston, Texas is attached
hereto as Exhibit “E” and incorporated by this reference.
MOTION FOR NEW TRIAL OF DEFENDANT NATE D. SANDERS, INC.– Page 5
067-250449-11
may not use section 38.004 to take judicial notice of the reasonableness of attorney's
fees awarded under a statute other than section 38.001. London v. London, 94 S.W.3d
139, 147-49 (Tex. App.--Houston [14th Dist.] 2002, no pet.). Though there is
currently a split on this issue among the courts of appeals, this court, of course,
follows its own precedent. Compare London, 94 S.W.3d at 147-48 (rejecting
argument that trial court could take judicial notice of reasonable attorney's fees
recovered outside of section 38.001), In re T.L.K., 90 S.W.3d 833, 841 (Tex. App.--
San Antonio 2002, no pet.) (same), Valdez v. Valdez, 930 S.W.2d 725, 732-33 (Tex.
App.--Houston [1st Dist.] 1996, no writ) (same), Hasty, Inc. v. Inwood Buckhorn
Jt.V., 908 S.W.2d 494, 503 (Tex. App.--Dallas 1995, writ denied) (same), Richards
v. Mena, 907 S.W.2d 566, 573-74 (Tex. App.--Corpus Christi 1995, writ dism'd)
(same), with Matelski v. Matelski, 840 S.W.2d 124 (Tex. App.--Fort Worth 1992, no
writ) (holding that, under section 38.004, trial courts can take judicial notice of the
amount of reasonable attorney's fees, even when fees are recovered under the Family
Code), and In re Estate of Kidd, 812 S.W.2d 356, 359 (Tex. App.--Amarillo 1991,
writ denied) (applying sections 38.003 and 38.004 in a will-contest case).
Charette v. Fitzgerald, 213 S.W.3d 505, 514-515 (Tex.App.-Houston [14th Dist.] 2006, no pet.)
(Denying recovery of attorneys’ fees sought under certain sections of the Texas Property Code).
This conflict is inconsequential here, however, because the leading case in this Court of
Appeals is Matelski v. Matelski, which does not restrict recovery under the concept of judicial notice
alone to cases under §38.001 of the Civil Practice and Remedies Code.
Furthermore, in this case, Sanders’ claim for indemnity expressly plead that Baumgardner
had breached specific contractual provisions (First Amended Answer, Counterclaim, and Cross-
Claim at 6-7), and expressly plead for recovery of attorneys’ fees under §38.001 of the Civil Practice
and Remedies Code. (Id. at 8). Sanders presented proof of presentment (Sanders Trial Ex. 11), and
of the amounts of attorneys’ fees expended (Sanders Trial Exhibits 7 and 8). The Court found that
Baumgardner had breached its express contractual warranty to Sanders and that Sanders was entitled
to judgment for indemnity (Finding of Fact No.81). There can be no doubt whatsoever that Sanders
is seeking recovery, and is entitled to recovery, of its reasonable attorneys’ fees under §§38.001-
MOTION FOR NEW TRIAL OF DEFENDANT NATE D. SANDERS, INC.– Page 6
Page 3
154 S.W .3d 878,067-250449-11
*; 2005 Tex. App. LEXIS 543, **
matter, a zero award for attorney's fees is proper if the Civil Procedure > Appeals > Costs & Attorney Fees
evidence (1) failed to prove (a) that any attorney's Tax Law > State & Local Taxes > Administration &
services were provided, or (b) the value of the services Proceedings > Judicial Review
provided; or (2) affirmatively showed that no attorney's [HN15] Reading the plain language of both Tex. R. Civ.
services were needed or that any services provided were P. 139 and Tex. R. App. P. 43.4, it has been concluded
of no value. Uncontroverted testimony by an interested these rules can be harmonized to give effect to both. It is
witness concerning attorney's fees may establish a fact as clear that courts of appeals have considerable discretion
a matter of law. in taxing costs on appeal. W hile the first sentence of Rule
43.4 directs an appellate court to award costs on appeal
to the prevailing party, the second sentence gives an
Civil Procedure > Parties > Required Representation appellate court discretion to tax costs otherwise as
Civil Procedure > Rem edies > Costs & Attorney Fees > required by law or for good cause. Important to an
General Overview appellate court's decision is the language of the second
[HN10] To recover attorney's fees under Tex. Civ. Prac. sentence where it addresses taxation of costs, not simply
& Rem. Code Ann. ch. 38, a claimant (1) must be appellate costs. Also, the rule provides us the alternative
represented by an attorney; (2) he must present the claim of following other provisions of the law on taxing costs
to the opposing party or to a duly authorized agent of the or the appellate court may award costs for good cause.
opposing party; and (3) before the expiration of the This language allows an appellate court to exercise its
thirtieth day after the claim is presented, the opposing discretion to determine how costs shall be awarded for an
party must not tender payment for the just amount owed. appeal as well as for trial in recognition of the result on
Tex. Civ. Prac. & Rem. Code Ann. § 38.002 (1997). appeal.
COUNSEL: For APPELLANT: W ade L. McClure,
Torts > Business Torts > Com m ercial Interference > GIBSON, McCLURE, W ALLACE & DANIELS,
Contracts > Elem ents Jennifer P. Pulley, Dallas, TX.
[HN11] The elements of tortious interference with a
contract are: (1) the existence of a contract subject to F o r A P P E L L E E : J o h n Z a vitsa no s , A H M A D ,
interference; (2) willful and intentional interference; (3) ZAVITSANOS & ANAIPAKOS, P.C., Houston, TX,
interference that proximately caused damage; and (4) Jack Thomas Jamison, GODW IN & GRUBER, P.C.,
actual damage or loss. Dallas, TX.
JUDGES: Before Justices FitzGerald, Richter, and Lang
Torts > Business Torts > Fraud & Misrepresentation > Opinion By Justice Lang.
General Overview
[HN12] A cause of action for fraud requires proof of a OPINION BY: DOUGLAS S. LANG
material misrepresentation, which was false, and which
was either known to be false when made or was asserted OPINION
without knowledge of its truth, which was intended to be
[*881] OPINION ON REHEARING
acted upon, which was relied upon, and which caused
injury. Opinion By Justice Lang
Appellant's motion for rehearing is GRANTED in
part. The Court's opinion and judgment of September 1,
Civil Procedure > Appeals > Costs & Attorney Fees
2004 are withdrawn, and this opinion is substituted in its
[HN13] See Tex. R. Civ. P. 139.
place to state good cause for the allocation of costs on
appeal and to remand the issue of trial court costs. In all
other respects, appellants' motion for rehearing is
Civil Procedure > Appeals > Costs & Attorney Fees
DENIED.
[HN14] In a civil case, the court of appeal's judgment
should award to the prevailing party the appellate costs-- Beginning in 1992, Recognition Communications,
including preparation costs for the clerk's record and the Inc. (RCI) contracted with American Automobile
reporter's record--that were incurred by that party. But Association, Inc. (AAA) to act as a publisher's
the court of appeals may tax costs otherwise as required advertising representative soliciting and selling
by law or for good cause. Tex. R. App. P. 43.4. advertisements for AAA World, a magazine published by
AAA. After AAA terminated the publisher's advertising
agreement in 1997, RCI sued AAA for breach of the
Civil Procedure > Rem edies > Costs & Attorney Fees > agreement. RCI alleged that it had an exclusive contract
Costs > General Overview for advertisments that AAA received from RCI's
EXHIBIT "G"
Page 4
154 S.W .3d 878,067-250449-11
*; 2005 Tex. App. LEXIS 543, **
territory, it was entitled to commissions on certain individual members in the divisions. Among its methods
accounts pursuant [**2] to its agreement with AAA, and of selling advertising, AAA entered into contracts with
AAA failed to pay those commissions. RCI also alleged ad vertising re p re se n ta tiv e s, like R C I, to sell
that AAA fraudulently induced it to add territory by advertisements in AAA World.
representing those accounts were included in the new
b. RCI and AAA's Agreement
territory, but then AAA refused to pay commissions on
those accounts. RCI also sued AAA Club Services, Inc., In 1990, Matt Hamill was hired as national
a subsidiary of an AAA member club, for tortious advertising manager of AAA World. He was told to
interference with the agreement. RCI alleged that certain increase the amount of advertisements in the magazine.
agents of AAA Club Services, [*882] Inc. caused AAA Matt Kincaid contacted AAA soliciting business, and in
to terminate the agreement. early 1992, Hamill contacted Kincaid. In February 1992,
Hamill and Kinkaid signed the "Publisher's Advertising
The trial court submitted to the jury issues on
Representative Agreement" between RCI and AAA,
ambiguity and interpretation of the agreement, the claims
which is at issue here.
described above, and RCI's requests for attorney's fees.
The jury found against RCI on all issues. The trial court c. RCI and AAA Revised Agreement
entered a judgment that RCI take nothing. In nine issues,
The record reflects that possibly before, but certainly
RCI challenges (a) the submission of the question
after the initial contract was signed, Kincaid requested
regarding the ambiguity of certain paragraphs of the
Hamill to give RCI additional territory by making RCI
agreement and the factual sufficiency of the jury's failure
the national sales representative for AAA. At a meeting
to find that the accounts for which RCI sought payment
in December 1993, at [**5] which Kincaid discussed
were included in the agreement; (b) the trial court's ruling
adding additional territory with Hamill, AAA provided a
that certain paragraphs were ambiguous; (c) the
"Prepaid Commission Report" showing what accounts
sufficiency of the evidence supporting the jury's negative
were already producing income for the advertising
answer to RCI's request for attorney's fees incurred in
agency that held the account in the territory. According
[**3] obtaining a "termination fee"; and (d) the factual
to RCI, this report was provided by AAA so [*883] RCI
sufficiency of the evidence supporting the jury's negative
could see the "income stream" RCI could expect to
answers to the tort, damages, and attorney's fees for
acquire if it received additional territory. The report
breach of agreement questions. For the reasons that
includes several accounts labeled "In-house": Auto Plan,
follow, we reverse the trial court's judgment as to the
Auto Insider, and two other accounts. All accounts
award of attorney's fees for the "termination fee" and
showe d a " net" a m o unt and an advertising
render judgment in RCI's favor on that claim, and we
representative's identifying number. The previous
affirm the trial court's judgment in all other respects.
advertising representative had been paid commissions on
the "In-house" accounts.
I. FACTUAL AND PROCEDURAL BACKGROUND
Beginning in 1994, with AAA's agreement, RCI
a. RCI's and AAA's History
added the territory shown on the "Prepaid Commission
Matt Kincaid was the president of RCI. His brothers Report." Later in 1994, AAA decided to stop paying
Eric and Lance were also employed by RCI. RCI had commissions on the Auto Insider and Auto Plan
contracts with various magazine publishers to solicit and accounts. AAA labeled certain accounts, including Auto
sell advertisements. In turn, RCI had contracts with Insider and Auto Plan, "house accounts." The house
subrepresentatives to cover RCI's territory. accounts, which previously had been "commissionable"
were no longer "commissionable." RCI submitted claims
AAA, a not-for-profit corporation, was a federation
to AAA for Auto Insider and Auto Plan advertisements,
of independent member clubs. The member clubs
but AAA refused to pay. In January 1995, with AAA's
provided various automobile and travel-related services
agreement, RCI [**6] added New Jersey to its territory
to dues-paying members. The member clubs included
because RCI believed that New Jersey territory included
whole states, parts of states, or spanned several states.
the Hertz Rental Company, whose headquarters were in
The member clubs communicated with their members,
New Jersey.
usually through a travel magazine. AAA operated some
clubs as divisions. In 1996, AAA sold three divisions, Later in 1995, RCI began a "media buying program"
AAA Hawaii, [**4] AAA Texas, and AAA New by instituting a "travel planner." RCI provided the travel
M exico, to AAA Club Services, Inc., a wholly owned planner to AAA under an oral agreement separate from
subsidiary of the Automobile Club of Southern the 1992 publisher's advertising agreement. Under the
California (ACSC), an AAA member club. AAA Club travel planner, RCI purchased advertising space in AAA
Services, Inc. was formed in 1996 to be the parent of World, sold advertisements in the advertising space, and
these three new subsidiaries. then submitted the multi-advertisement copy to AAA.
AAA paid RCI a commission on this advertising. AAA
AAA published AAA World to communicate with the
EXHIBIT "G"
067-250449-11
record on this 17th day of February, 2015, to the following:
Gant Grimes, Esq.
Gibson Davenport Anderson
807-8th St., 8th Floor
Wichita Falls, TX 76301-3368
Counsel for Plaintiff, Robert Edward Lee Oswald
Brett L. Myers, Esq.
Fox Rothschild LLP
Two Lincoln Centre
5420 LBJ Freeway, Suite 1200
Dallas, TX 75240
Counsel for Defendants Baumgardner Funeral Home, Inc.,
and Allen S. Baumgardner, Sr.
/s/ Emil Lippe, Jr.
MOTION FOR NEW TRIAL OF DEFENDANT NATE D. SANDERS, INC.– Page 9
Page 12
154 S.W .3d 878,067-250449-11
*; 2005 Tex. App. LEXIS 543, **
recovered its attorney's fees. Therefore, pursuant to rule below, the adverse party shall recover the costs of
of appellate procedure 43.4, it contends since it was the both courts. If the judgment of the court above be
prevailing party on appeal, we must tax the costs on in favor of the party appealing and for more than
appeal against AAA. See TEX. R. APP. P. 43.4. Also, the original judgment, such party shall recover
relying on rule of civil procedure 139, RCI argues that the costs of both courts; if the judgment be in his
since it was the prevailing party we must award it all trial favor, but for the same or a less amount than in
court costs. See TEX. R. CIV. P. 139 (providing, in part: the court below, he shall recover the costs of the
"If the judgment of the court above be in favor of the court below, and pay the costs of the court above.
party appealing and for more than the original judgment,
TEX. R. CIV. P. 139.
such party shall recover the costs of both courts . . . .").
In support of its argument as to trial court costs, RCI [**39] [HN14] In a civil case, the court of appeal's
cites several cases in which the court of appeals applied judgment should award to the prevailing party the
rule 139 to award [**37] trial court costs to an appellant appellate costs--including preparation costs for the clerk's
since it recovered more on appeal than it had recovered record and the reporter's record--that were incurred by
at the trial court. 6 As to costs on appeal, AAA contends that party. But the court of appeals may tax costs
[*894] that costs should not be awarded to RCI since it otherwise as required by law or for good cause.
recovered on only a minor portion of the relief it
TEX. R. APP. P. 43.4.
requested and cannot be considered the prevailing party.
Additionally, AAA contends that the trial court's [HN15] W hen we read the plain language of both
assessment of costs against RCI cannot be disturbed rule of civil procedure 139 and rule of appellate
since the trial court has not been shown to have abused procedure 43.4, we conclude these rules can be
its discretion. harmonized to give effect to both. See Burke v. Union
Pac. Res. Co., 138 S.W.3d 46, 75 (Tex. App.-Texarkana
6 See, e.g., Stalcup v. Eastham, 330 S.W.2d 237, 2004, pet. filed). It is clear that courts of appeals have
240 (Tex. Civ. App.-El Paso 1959, writ ref'd considerable discretion in taxing costs on appeal. W hile
n.r.e.) ("Since by this opinion we have enlarged the first sentence of rule 43.4 directs an appellate court to
the judgment, costs in both courts shall be award costs on appeal to the prevailing party, the second
assessed against appellees."). sentence gives an appellate court discretion to "tax costs
otherwise as required by law or for good cause."
W e conclude that neither party has suggested the
Important to our decision is the language of the second
proper basis for our authority to award costs after an
sentence where it addresses taxation of "costs," not
appeal. Our research discloses that two rules direct how
simply "appellate costs." Also, the rule provides us the
we are to award costs after an appeal. Rule of civil
alternative of following other provisions of the law on
procedure 139, adopted in 1941, sets out four rules that
taxing costs "or" we [**40] may award costs "for good
direct how costs of both trial and appeal [**38] are to be
cause." W e conclude this language allows us to exercise
taxed, depending on the difference between the result for
our discretion to determine how "costs" shall be awarded
appellant on appeal and in the trial court. 7 However, rule
for an appeal as well as for trial in recognition of the
139 does not address fine distinctions which might occur
result on appeal.
in a complex case, where, as here, the appellant did not
prevail on any claims at the trial court, but prevailed on First, we address the award of costs on appeal. The
one discrete issue of attorney's fees on appeal. The more relief requested in the trial court by RCI includes
recently promulgated rule of appellate procedure 43.4 damages for breach of contract, the $ 10,000 termination
provides this Court with latitude within which to award [*895] fee, and attorney's fees. RCI did not recover on
costs in a fashion which is not "all or nothing." Rule 43.4 any claims in the trial court. W e have determined that
provides for judgment for costs in civil cases: RCI is not entitled to damages for breach of contract, but
RCI has prevailed on the right to attorney's fees based on
7 Rule 139 comes within section 6 of the rules recovery of the termination fee. RCI's attorney's fees
of civil procedure, which is titled "Costs & recovery is not insignificant in amount. However, it is
Security Therefor." Rule 139 is titled "On Appeal much less substantial than the many millions of dollars in
& Certiorari" and provides: relief RCI requested in its suit. Nevertheless, there is
good cause for RCI to recover some of its costs on
[HN13] When a case is appealed, if the
appeal. Accordingly, we have concluded that in this hard
judgment of the higher court be against the
fought case it is equitable and just and good cause exists
appellant, but for less amount than the original
to allocate the costs on appeal so that RCI recovers
judgment, such party shall recover the costs of the
twenty percent of those costs, which we have calculated
higher court but shall be adjudged to pay the costs
is $ 4,160 of the costs of the clerk's and reporter's
of the court below; if the judgment be against him
records. See TEX. R. APP. P. 43.4 [**41] ; In re A.B.B.,
for the same or a greater amount than in the court
EXHIBIT "G"
Page 3
421 S.W .3d 182, 067-250449-11
*; 2013 Tex. App. LEXIS 14474, **
On appeal, Kay contends she proved lost hog hunting however, if this case is not appealed to the
income in the amount of $42,000 as a matter of law. Kay court of appeals, One Hundred-Thirty
offered into evidence several hog hunting contracts from Thousand Dollars ($130,000) shall be
people who knew she and W illiam were getting a divorce remitted; provided further, if this case is
and who she knew "would love to come back on my side appealed to the Court of Appeals, but not
of the ranch." However, the contracts were from 1991 to to the Texas Supreme Court, Fifty
1997, years before the divorce. Kay admitted that no hog Thousand Dollars ($50,000) shall be
hunting had been conducted on the ranch for six to seven remitted.
years. W hen such hunts were conducted, she and
W illiam would schedule about six men for a three-day
hunt during January, February, and March. She said if
Contrary to Kay's contention on appeal that the trial
she could have done that again starting in January 2012,
court erred in not awarding her attorney, James Jones,
she would charge $200 per day per man. Kay calculated
any fees, the judgment does not award fees specific to
that at $600 per man per weekend, times four weekends a
any attorney. Instead, the judgment awards a net lump
month for three months, she would have earned $42,000.
sum to K ay for reasonable fees. Kay asserts she should
A report prepared by Kay's expert stated hunting have been awarded an additional $178,002.00, which is
operations were "substantially ceased due to concerns the amount of fees billed by Jones.
over legal liability issues." Kay stated the hunting and
The parties agreed to a bench trial only on the issues
cattle operations on the ranch were always profitable.
of whether W illiam breached the settlement agreement
However, the report [**5] stated the community estate
and attorney's fees. The court agreed with W illiam's
suffered tremendous losses from the hunting and cattle
lawyer that the agreement called for [**7] each party to
operations from 1996 through 2011, and after 2003 there
pay their own attorney's fees. Kay's attorneys argued they
was no revenue from hunting operations. Her expert's
were not seeking fees prior to the date of the settlement
report showing the ranch suffered a loss contradicts
agreement, but were instead, seeking fees resulting from
Kay's testimony. W illiam's expert acknowledged, after
W illiam's breach of the agreement. The court again stated
reviewing the report that the purpose of the report was to
Kay was responsible for her own fees, but allowed her
determine whether the community estate was entitled to
attorneys to make a bill of exception record.
an offset. W illiam's expert conceded whether the ranch
suffered a loss for the purpose of an offset had nothing to Kay's attorneys stated the breach of contract claim
do with whether Kay could have or should have gotten was first asserted in February 2012. Kay's three attorneys
any hog hunting revenue. then each testified in "bills of exception." Adan Gonzalez
testified his time was spent on both the divorce and the
Although Kay's testimony that she could have
breach of contract action, and he averaged about $10,000
earned $42,000 was not contradicted, this testimony was
per month in fees, from February 2012 to June 2012, for
based on her hope that hunters would have contracted
a total of approximately $50,000. Cheryl W ilson testified
with her in January, February, and/or March 2012.
she was retained in February or late March 2012, after
However, she also testified no hog hunting had been
W illiam b rea ch ed the a gre em en t. She billed
conducted on the ranch for six to seven years preceding
approximately $40,000. Jones testified his fee invoice
the divorce. In this case, the trial court was the sole judge
was dated "6/22" but it should be "9/22" for services
of the credibility of the witnesses and the weight to be
rendered since the date of the agreement. His fees totaled
given their testimony. Based on this record, we cannot
$178,002, at his hourly rate of $450.00 multiplied by
say Kay established, as a matter of law, her entitlement
395.56 hours.
to $42,000 in lost hog hunting income.
On appeal, Kay asserts W illiam never contested the
ATTORNEY'S FEES qualifications or invoices of any of her attorneys, and
Jones's testimony [**8] was uncontradicted. T his is true
In [**6] the divorce decree, the trial court awarded
in part because the trial court did not allow any cross-
Kay attorney's fees as follows:
examination during the bills of exception; however,
W illiam did raise an objection to Jones's Invoice No.
[*185] IT IS FURTHER ORDERED,
11084. Invoice 11084 indicates services for "Additional
ADJUDGED and DECREED that KAY
Charges" in the amount of $67,192.65, and "Professional
LYNN MAYNARD BOOTH recover
Services" in the amount of $178,002.00. W illiam
attorney's fees reasonably and necessarily
objected that the invoice did not segregate fees related to
incurred after October 12, 2011, for
the breach of contract claim from fees related to the
services rendered in the trial through June
divorce. The portion of the invoice related to
28, 2012, in the amount of Two Hundred
"Professional Services" states as follows:
Thousand Dollars ($200,000); provided
EXHIBIT "H"
Page 3
439 S.W .3d 408,067-250449-11
*; 2014 Tex. App. LEXIS 6391, **
appeal. ship. See T EX . F AM . C O D E A NN . §§ 153.007, 154.124
(Vernon 2014). For matters concerning the divorce and
Standard of Review determination of the marital estate, the agreement is en-
forceable as a contract. Allen v. Allen, 717 S.W.2d 311,
[HN1] "The final test for legal sufficiency must al-
313 (Tex. 1986); Schwartz v. Schwartz, 247 S.W.3d 804,
ways be whether the evidence at trial would enable rea-
806 (Tex. App.--Dallas 2008); see also [*411] Rich v.
sonable and fair-minded people to reach the verdict un-
Rich, No. 01-03-00078-CV, 2003 Tex. App. LEXIS 4027,
der review." City of Keller v. Wilson, 168 S.W.3d 802,
2003 WL 21027940, at *2 (Tex. App.--Houston [1st
827 (Tex. 2005). In performing a legal-sufficiency
Dist.] May 8, 2003, no pet.) (holding agreed divorce de-
review, we must credit favorable evidence if reasonable
cree is enforceable as contract and as judgment); Hicks v.
fact finders could credit it and disregard contrary
Hicks, 348 S.W.3d 281, 283 (Tex. App.--Houston [14th
evidence unless reasonable fact finders could not disre-
Dist.] 2011, no pet.) (holding, because parties entered
gard it. Id. "If the evidence . . . would enable reasonable
into agreed divorce decree, it is treated as contract be-
and fair-minded people to differ in their conclusions,
tween parties).
then [fact finders] must be allowed to do so." Id. at 822.
"A reviewing court cannot substitute its judgment for that [HN4] For matters concerning the parent-child rela-
of the trier-of-fact, so long as the evidence falls within tionship, terms of the agreement concerning conservator-
this zone of reasonable disagreement." Id. Although the ship, access to [**6] the child, or child support are not
reviewing court must consider evidence in the light most enforceable as a contract. See T EX . F AM . C O D E A NN . §§
favorable to the verdict, and indulge every reasonable 153.007(c), 154.124(c). Any other terms concerning the
inference that would support the verdict, if the evidence parent-child relationship can be enforced as a contract.
allows only one inference, neither fact finder nor the re- See In re W.R.B., No. 05-12-00776-CV, 2014 Tex. App.
viewing court may disregard the inference. Id. An appel- LEXIS 2004, 2014 WL 1008222, at *4 (Tex. App.--Dallas
lant attacking the legal sufficiency [**4] of an adverse Feb. 20, 2014, no pet. h.) (holding term concerning post-
finding on an issue for which she did not have the burden majority support is enforceable as contract).
of proof must demonstrate that there is no evidence to
The divorce decree was agreed to by the parties. It
support the adverse finding. Croucher v. Croucher, 660
was signed by Kendrick and Seibert, both of them ap-
S.W.2d 55, 58 (Tex. 1983).
proving the decree as to form and substance. The agree-
ment specifically provides, "To the extent permitted by
Attorney's Fees
law, the parties stipulate the agreement is enforceable as
In her three issues, Kendrick argues the evidence is a contract." The provision at issue--the passport
legally insufficient to support the award of attorney's fees provision--concerns the parent-child relationship, but it
because there is no evidence that the fees were reason- does not concern conservatorship, access to the child, or
able. Seibert acknowledges that there was no evidence of child support. Because the divorce decree was agreed to
the reasonableness of the attorney's fees presented at trial by the parties and the passport provision does not con-
but argues that such evidence was not necessary to sup- cern a matter that cannot be enforced as a contract, we
port the award. hold it is enforceable as a contract.
[HN2] Generally, attorney's fees are not recoverable [HN5] Section 38.001 provides, "A person may re-
from an opposing party unless authorized by statute or cover reasonable attorney's fees from an individual . . . in
contract. Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d addition to the amount of a valid claim and costs, if the
299, 310 (Tex. 2006). Critical to our inquiry, then, is the claim is for . . . [**7] an oral or written contract." T E X .
determination of under what authority Seibert sought and C IV . P RAC . & R EM . C O D E A NN . § 38.001(8). Kendrick ar-
obtained attorney's fees. Seibert argues that the agreed gues that Seibert did not present any evidence to estab-
decree is enforceable as a contract, and, accordingly, he lish that the $2,500 in attorney's fees was reasonable.
can recover attorney's fees pursuant to section 38.001 of Siebert acknowledges that he did not present any
the Texas Civil Practice and Remedies Code. See T EX . evidence of the reasonableness of the fees at trial but ar-
C IV . P R AC . & R EM . C O D E A NN . § 38.001 (Vernon 2008). gues the evidence is still legally sufficient. W e agree.
Kendrick argues that this section is inapplicable in this
[HN6] "The court may take judicial notice of the
case because, [**5] "[t]his is a suit to enforce court or-
usual and customary attorney's fees and of the contents
ders," not "a suit based on contract." W e hold that those
of the case file without receiving further evidence in a
two are not necessarily mutually exclusive.
proceeding before the court." T EX . C IV . P RAC . & R EM .
[HN3] In a divorce proceeding, the parties can enter C O D E A NN . § 38.004(1) (Vernon 2008). "It is presumed
into an agreement over the matters to be resolved in the that the usual and customary attorney's fees for a claim of
divorce. See T EX . F AM . C O D E A NN . § 7.006 (Vernon the type described in Section 38.001 are reasonable. The
2006). Similarly, the parties can enter into agreements presumption may be rebutted." T EX . C IV . P RAC . & R EM .
concerning matters affecting the parent-child relation- C O D E A NN . § 38.003 (Vernon 2008). "The trial court's
EXHIBIT "A"
own proceedings together with the fact that it may take 894 S.W.2d 806, 807 (Tex. App.--Corpus Christi
judicial notice of usual and customary fees constitute 067-250449-11 1994, no writ) for the proposition that a trial court
some evidence to support the award of appellate cannot determine reasonableness of attorney's
attorney's fees." Gill Sav. Ass'n v. Chair King, Inc., 797 fees based on judicial knowledge without the
S.W.2d 31, 32 (Tex. 1990). Appellate courts can presume benefit of an evidentiary hearing on the matter of
that the trial court took judicial notice of the case file and attorney's fees. Given that evidence of attorney's
of the usual and [**8] customary fees pursuant to fees was presented, we hold this case also has no
section 38.004. Vaughn v. Tex. Emp't Comm'n, 792 application here.
S . W . 2 d
Kendrick and Seibert's divorce decree was an agreed
139, 144 (Tex. App.--Houston [1st Dist.] 1990, no writ).
decree, making it both a contract and a judgment. See
W hen there is no evidence to rebut the presumption in
Schwartz, 247 S.W.3d at 806; Rich, 2003 Tex. App.
section 38.003, "no further evidence [is] required to
LEXIS 4027, 2003 WL 21027940, at *2. Kendrick
establish reasonableness of attorney's fees." Id.
violated the contract's terms concerning delivery of the
Kendrick argues that these statutory provisions do children's passports. Seibert filed suit seeking
not apply because the trial court can only take judicial e n f o r c e m e n t o f
notice of the case file and usual and customary fees in "a the passport provisions. Accordingly, Seibert's suit
proceeding before the court" or "a jury case in which the included a claim for a written contract. [HN7] Section
amount of attorney's fees is submitted to the court by 38.001 allows a party to recover reasonable attorney's
agreement." T EX . C IV . P RAC . & R EM . C O D E A NN . § fees for such a [**10] claim. T EX . C IV . P RAC . & R EM .
38.004. It is undisputed that there was no jury trial, so the C O D E A NN . § 38.001(8). W hen section 38.001 applies, a
second option is not applicable. See id. § 38.004(2). trial court can take judicial notice of the case file and of
Kendrick argues the first option is not available either, the usual and customary attorney's fees, and the usual
relying [*412] on cases establishing that these and customary fees are presumed to be reasonable. See
provisions do not apply to summary judgment id. §§ 38.003, .004(1). Taking judicial notice of these
p r o c e e d i n g s . two things is legally sufficient to support a determination
See Coward v. Gateway Nat'l Bank of Beaumont, 525 that the attorney's fees award was reasonable. Gill Sav.
S.W.2d 857, 858 (Tex. 1975); Gen. Elec. Supply Co. v. Ass'n, 797 S.W.2d at 32.
Gulf Electroquip, Inc., 857 S.W.2d 591, 601 (Tex. App.--
W e hold the evidence is legally sufficient to
Houston [1st D ist.] 1993, writ denied). Seibert did not
establish that the trial court's award of attorney's fees
obtain attorney's fees in a summary judgment
incurred in enforcing the passport provision. W e overrule
proceeding. Accordingly, these cases are inapplicable.
Kendrick's three issues.
Regardless [**9] of whether the proceeding below
is characterized as a hearing or a trial, it indisputable that Conclusion
it was "a proceeding before the court." There was no
W e affirm the judgment of the trial court.
jury. Evidence was presented.1 The trial court made
factual determinations and ruled accordingly. W e hold Laura Carter Higley
section 38.004 applies. See T EX . C IV . P RAC . & R EM . C O D E
Justice
A NN . § 38.004(1).
1 Kendrick also relies on Garcia v. Martinez,
EXHIBIT "A"
Page 1
840 S.W .2d 124,067-250449-11
*; 1992 Tex. App. LEXIS 2650, **
DW AIN E. M ATELSKI APPELLANT VS. SHARON M ATELSKI APPELLEE
NO. 2-91-273-CV
COURT OF APPEALS OF TEXAS, SECOND DISTRICT, FORT W ORTH
840 S.W.2d 124; 1992 Tex. App. LEXIS 2650
October 14, 1992, Decided
October 14, 1992, FILED
PRIOR HISTORY: [**1] FROM THE 231ST discretion in giving appellee more time to answer
DISTRICT COURT OF TARRANT COUNTY. TRIAL admissions or finding that appellant was not under duress
COURT JUDGE HON. MARYELLEN HICKS when he signed the agreement in question, there was no
error in award of attorney's fees, and the numerous
DISPOSITION: We find that the issue of the amount findings of fact and conclusions of law complained of
of money, if any, due to Sharon with respect to the were not, if in error, findings that were reasonably
division of certificates of deposit that were part of calculated to cause and probably did cause the rendition
Dwain's corporate pension plan, affects only a part of the of an improper judgment.
matter in controversy and is clearly separable without
unfairness to the parties. Consequently, we reverse and OUTCOM E: In an action to reverse judgment of a final
remand as to that issue only. W e affirm the remainder of decree of divorce, the court reversed the portion dealing
the judgment. Costs are charged 10% to Sharon Matelski, with how much money appellant husband owed through
the appellee, and 90% to Dwain E. Matelski, the certificates of deposit, but affirmed the remainder of the
appellant. judgment. The court found no abuse of discretion and no
error in the findings of fact or conclusions of law because
CASE SUM M ARY: the findings were not so contrary to the great weight and
preponderance of the evidence as to be manifestly unjust.
PROCEDURAL POSTURE: Appellant husband sought LexisNexis(R) Headnotes
review of a judgment of the 231st District Court of
Tarrant County (Texas), which enforced and clarified his
final divorce decree against appellee wife.
Civil Procedure > Appeals > Appellate Jurisdiction >
OVERVIEW : Appellant husband sought review of a Final Judgm ent Rule
judgment enforcing his final divorce decree. On appeal, Contracts Law > Defenses > Duress & Undue Influence
appellant argued allegations against the lower court's > General Overview
findings of fact and conclusions of law, error in applying [HN1] In order to be a final judgment, a judgment must
Tex. Fam. Code Ann. § 3.70 (1992), granting appellee dispose of all parties and of all issues involved in the
more time to answer admissions, finding no duress in suit. However, it is not essential that the judgment
execution of agreement, and awarding attorney's fees to expressly dispose of each issue. Rather, the disposition of
appellee. The court reversed the portion of the judgment a particular issue may be inferred from the other
dealing with the amount of money appellant owed provisions of the judgment, provided that the inference
appellee in certificates of deposit because of lack of follows as a necessary implication.
evidence to support the conclusion that appellant owed
appellee $ 75,000.00 for her interest. The court affirmed
the remainder of the judgment because the property Civil Procedure > Judgm ents > Entry of Judgm ents >
agreement was incident to a divorce and enforceable General Overview
under the Texas Family Code, there was no abuse of Civil Procedure > Judgments > Preclusion & Effect of
EXHIBIT "B"
Page 2
840 S.W .2d 124,067-250449-11
*; 1992 Tex. App. LEXIS 2650, **
Judgm ents > General Overview do some act which the party threatening has no legal
[HN2] Even if a trial court makes a docket entry on an right to do. Such threat must be of such character as to
oral order, the judgment will control over the docket destroy the free agency of the party to whom it is
entry. directed. It must overcome his will and cause him to do
that which he would not otherwise do, and which he was
not legally bound to do. The restraint caused by such
Fam ily Law > Marital Duties & Rights > Property threat must be imminent. It must be such that the person
Rights > Characterization > Com m unity Property to whom it is directed has no present means of
Fam ily Law > Marital Term ination & Spousal Support protection.
> Dissolution & Divorce > Jurisdiction > General
Overview
Fam ily Law > Marital Term ination & Spousal Support Civil Procedure > Appeals > Standards of Review >
> Dissolution & Divorce > Property Distribution > Substantial Evidence > General Overview
Characterization > Com m unity Property [HN8] An appellate court will first consider only the
[HN3] W hen the jurisdiction of a trial court is invoked in evidence and inferences that tend to support the trial
a divorce proceeding by the pleadings of either spouse, court's finding and disregard all evidence and inferences
the court must decree a division of the community to the contrary. If there is any evidence of probative force
property. to support the finding, the legal insufficiency point must
be overruled and the finding upheld.
Civil Procedure > Pleading & Practice > Pleadings >
Tim e Lim itations > Extensions Civil Procedure > Rem edies > Costs & Attorney Fees >
Civil Procedure > Discovery > Methods > Adm issions > General Overview
Responses Evidence > Judicial Notice > General Overview
[HN4] W here the plaintiff is not injured and the trial is [HN9] In a trial before the court, the trial court may
not delayed, even a slight excuse for the original failure review the case file and take judicial notice of the
to answer a request for admissions is sufficient. amount of reasonable attorney's fees, whether or not
requested by a party to do so. Tex. Civ. Prac. & Rem.
Code Ann. § 38.004 (1986).
Contracts Law > Defenses > Duress & Undue Influence
> General Overview COUNSEL: FOR APPELLANT: RICHARD C. PRICE,
Fam ily Law > Marital Term ination & Spousal Support FORT W ORTH, TEXAS.
> Dissolution & Divorce > Property Distribution >
General Overview FOR APPELLEE: CLARKE & TIFFANY , AND CARL
[HN5] A partition agreement is not enforceable if the T. CLARKE AND DEFORREST N. TIFFANY, FORT
party against whom enforcement is sought proves that he W ORTH, TEXAS.
or she did not execute the agreement voluntarily. Tex.
Fam. Code Ann. § 5.55(a)(1) (1992). JUDGES: PANEL B , HILL, AND FARRIS, JJ.
ASHW ORTH, J. (retired, sitting by assignment)
Civil Procedure > Appeals > Standards of Review OPINION BY: JOHN G. HILL
[HN6] An appellate court must consider and weigh all of
the evidence, both the evidence that tends to prove the OPINION
existence of a vital fact as well as evidence that tends to
[*125] OPINION
disprove its existence. So considering the evidence, if a
trial court's finding is so contrary to the great weight and Dwain E. Matelski appeals from a judgment
preponderance of the evidence as to be manifestly unjust, following the motion of Sharon M atelski, Dwain's ex-
the point should be sustained, regardless of whether there wife and the appellee, to enforce and clarify their final
is some evidence to support it. divorce decree.
Dwain contends in nine points of error that the trial
court erred: (1) in signing the judgment of August 8,
Civil Procedure > Pleading & Practice > Defenses,
1991 and the findings of fact and conclusions of [**2]
Dem urrers & Objections > Affirm ative Defenses >
law of August 8, 1991, because the August 8, 1991
General Overview
judgment was not a final judgment; (2) in allowing
Contracts Law > Defenses > Duress & Undue Influence
Sharon to proceed under TEX. FAM. CODE ANN. §
> General Overview
3.70 (Vernon Supp. 1992) because that section does not
[HN7] There can be no duress unless there is a threat to
EXHIBIT "B"
Page 3
840 S.W .2d 124,067-250449-11
*; 1992 Tex. App. LEXIS 2650, **
apply to the enforcement of a partition agreement; (3) conclusions of law complained of by Dwain are not, if in
when it entered its findings of fact and conclusions of error, findings that are reasonably calculated to cause and
law that the partition agreement dated April 4, 1985, was probably did cause the rendition of an improper
incorporated by reference into the decree of divorce judgment.
dated September 26, 1986, and [*126] that the partition
Dwain contends in points of error numbers one and
agreement therefore became part of the judgment of the
two that the trial court erred in signing [**5] the
court as set forth in the decree of divorce; (4) in granting
judgment of August 6, 1991, and the findings of fact and
Sharon's motion to extend time to answer his request for
conclusions of law of August 8, 1991, because the
admissions because she did not demonstrate good cause
August 8, 1991 judgment was not a final judgment.
for such relief; (5) in finding that there was no duress in
Sharon had previously filed her motion for enforcement
the execution of the partition agreement because it was
and clarification of final decree of divorce. An
contrary to the evidence; (6) when it entered its findings
instrument entitled a p artition agreement was
of fact that Dwain was in default in paying retirement
incorporated by reference into the decree, although
benefits in the amount of $ 75,000 because the evidence
apparently never attached to the decree. Sharon's motion
is legally, or, alternatively, factually insufficient to
was amended several times. D wain contended by way of
support the findings; (7) in awarding Sharon her
cross-action that he was under duress when he signed the
attorney's fees; and (8) when it entered its findings of fact
partition agreement. On August 8, 1991, the trial court
and conclusions of law because the [**3] evidence is
signed its judgment granting Sharon's motion. In that
legally insufficient, and, in the alternative, factually
judgment the trial court enforced the partition agreement.
insufficient to support the findings and conclusions.
It did not specifically refer to Dwain's cross-action.
W e reverse that portion of the judgment dealing with
[HN1] In order to be a final judgment, a judgment
the amount of money Dwain owes Sharon with respect to
must dispose of all parties and of all issues involved in
the partition of their interest in the certificates of deposit
the suit. Davis v. McCray Refrigerator Sales Corp., 136
in Dwain's corporate pension plan because there is no
Tex. 296, 150 S.W.2d 377 (Tex. 1941). As the supreme
evidence to support the trial court's conclusion that
court stated in Davis, however, it is not essential that the
Dwain owed Sharon $ 75,000 for her interest in those
judgment expressly dispose of each issue. Id. at 378.
certificates. W e affirm the remainder of the judgment
Rather, the disposition of a particular issue may be
because: (1) the judgment is a final judgment because it
inferred from the other provisions [*127] [**6] of the
necessarily disposes of all parties and issues involved in
judgment, provided that the inference follows as a
the suit; (2) those portions of the partition agreement that
necessary implication. Id. In this case, the trial court
do not constitute a partition of property may properly be
necessarily denied Dwain's claim that he was under
considered an agreement incident to divorce enforceable
duress when he signed the partition agreement when the
under the provisions of section 3.70 of the Texas Family
court signed the judgment enforcing that agreement.
Code; (3) Dwain makes no argument as to why those
portions of the agreement that did constitute a partition of Dwain points out that the trial court orally said that
property could not be enforced as an agreement there would be a later jury trial on the issue of duress.
independently of the divorce decree, relief that Sharon [HN2] Even if the trial court had made a docket entry to
alternatively sought; therefore, there is no showing that that effect, the judgment would control over the docket
any error of the trial court in determining that the portion entry. Hamilton v. Empire Gas & Fuel Co., 134 Tex.
of the [**4] agreement partitioning the property was 377, 110 S.W.2d 561, 566 (1937); Harrington v.
enforceable as part of the divorce decree was such an Harrington, 742 S.W.2d 722 (Tex. App.--Houston [1st
error as was reasonably calculated to cause and probably Dist.] 1987, no writ). W e assume that the same rule
did cause the rendition of an improper judgment; (4) the would apply as to oral pronouncements of the court.
trial court did not abuse its discretion in holding that
Dwain's contention that the trial court erred by
there was good cause in granting Sharon's request for an
prematurely making findings of fact and conclusions of
extension of time to answer Dwain's first request for
law is based upon the premise that the judgment of
admissions where they were not answered due to
August 8, 1991, was not final. W e overrule points of
confusion caused by a quick succession of requests and
error numbers one and two.
new, inexperienced office personnel; (5) the trial court's
finding that Dwain was not under duress when he signed Dwain urges in points of error numbers three and
the partition agreement is not contrary to the great weight four that the trial court erred in allowing Sharon to
and preponderance of the evidence; (6) the trial court did proceed under section 3.70 of the Texas Family Code
not err in awarding Sharon her attorney's fees because in because that section does not apply [**7] to enforcement
a trial before the court the trial court may review the file of a partition agreement, and that the trial court erred
and take judicial notice of the amount of reasonable when it entered its findings of fact and conclusions of
attorney's fees; and (7) numerous findings of fact and law that the partition agreement dated April 4, 1985, was
EXHIBIT "B"
Page 4
840 S.W .2d 124,067-250449-11
*; 1992 Tex. App. LEXIS 2650, **
incorporated by reference and became part of the divorce trial court abused its discretion in granting Sharon's
decree dated September 26, 1986. motion to extend time to answer Dwain's request for
admissions because Sharon did not demonstrate good
Dwain contends that because the agreement in
cause for such relief.
question was a partition agreement pursuant to TEX.
FAM. CODE ANN. § 5.52 (Vernon Supp. 1992) that it Dwain served requests for admissions on Sharon on
could not also be an agreement incident to divorce January 10, 1989, and another set on January 12, 1989.
enforceable under the provisions of section 3.70 of the Sharon answered both requests on Monday, February 13,
Family Code. An examination of the instrument styled 1989, the date that the response to the second set of
"partition agreement" shows that a portion is indeed a requests was due, but several days after the response to
partition agreement, but that a large portion of the the first set of requests would [**10] have been due.
instrument deals with matters, such as child support, She timely filed a motion to extend time to answer the
visitation, and alimony that would be part of an first set of requests. After the hearing, the trial court
agreement incident to divorce. granted her motion.
Dwain's argument that a partition agreement may not Sharon's attorney testified at the hearing on her
be enforced under the provisions of section 3.70 of the motion to extend the time to respond to the first request
Family Code is not effective as to those portions of the for admissions that the two sets of requests were
agreement that did not constitute a partition of the delivered while he was in trial, and that when he got back
Matelskis' property under section 5.52 of the Family out of trial, it was his impression, because the two sets
Code, but were instead provisions that would normally were received in such "close conjunction," that they had
be part of an agreement incident to a divorce. both been delivered at the same time. He also stated that
the person at the front desk of his office on the day the
[**8] Dwain is correct in stating that the portion of
first request was delivered was brand new and did not
the agreement that was a partition agreement divided the
know the correct procedures.
parties' property at the time of its execution and that the
trial court at the time of divorce had no jurisdiction over It has been held that [HN4] where the plaintiff is not
the division of separate property that had already been injured and the trial not delayed, even a slight excuse for
divided because the trial court only has the authority to the original failure to answer a request for admissions
divide the community estate of the parties. See Cameron will suffice. Esparza v. D iaz, 802 S.W.2d 772, 776 (Tex.
v. Cameron, 641 S.W.2d 210, 214 (Tex. 1982). [HN3] App.--Houston [14th Dist.] 1990, no writ). W e therefore
W hen the jurisdiction of a trial court is invoked in a hold that the trial court did not abuse its discretion in
divorce proceeding by the pleadings of either spouse, the holding that there was good cause in granting Sharon's
court must decree a division of the community property. request for an extension of time to answer Dwain's first
See Hailey v. Hailey, 160 Tex. 372, 331 S.W.2d 299, 302 request for admissions.
(1960); Whitehill v. Whitehill, 628 S.W.2d 148, 150 (Tex.
Dwain argues that a busy court [**11] schedule is
App.--Houston [14th Dist.] 1982, no writ). Of course,
not a sufficient reason to set aside deemed findings,
the lack of a community estate to be divided does not, as
relying on Curry v. Clayton, 715 S.W.2d 77 (Tex. App.--
claimed by Dwain, nullify a divorce. If this were not true,
Dallas 1986, no writ). In that case the trial court found
only persons owning property could ever be divorced.
that a showing that the late filing of a response to a
However, as to those portions of the agreement that request for admissions was due to an attorney's busy
do constitute a partition agreement, Sharon, as an schedule was, without more, insufficient to show good
alternative to enforcing the agreement as a part of the cause for the late filing. Id. at 79. W e hold that in this
divorce decree, sought enforcement of the agreement as case there was more because, not only was the attorney
an agreement [**9] independently of the divorce decree. busy, but there was confusion caused by a quick
Dwain makes no argument in his brief as to why the succession of requests and new, inexperienced office
agreement was not properly enforceable as an agreement personnel. We overrule point of error number five.
independently of the decree. Consequently, if the trial
Dwain insists in point of error number six that the
court erred by determining that the partition portions of
trial court erred in finding that there was no duress in the
the agreement were enforceable as part of the divorce
execution of the partition agreement because it was
decree, we hold that Dwain has failed to establish that
contrary to the evidence. W e must first determine which
such an error was reasonably calculated to cause and
party had the burden of proof at trial on the issue of
probably did cause an improper judgment. See TEX. R.
duress.
APP. P. 81(b)(1). The same rule would apply as to
Dwain's argument that the agreement was not attached to At the time of trial, the enforceability of a partition
the [*128] decree. W e overrule points of error numbers agreement was governed by section 5.55 of the Texas
three and four. Family Code. That section holds that such [HN5] an
agreement is not enforceable if the party against whom
Dwain urges in point of error number five that the
EXHIBIT "B"
Page 5
840 S.W .2d 124,067-250449-11
*; 1992 Tex. App. LEXIS 2650, **
enforcement is sought proves that he or she did not him to build a lake house on the lot. He would not obtain
execute the agreement voluntarily. [**12] TEX. FAM. any ownership rights to the land. Dwain hoped to move
CODE ANN. § 5.55(a)(1) (Vernon Supp. 1992). into the house with an employee with whom he had
Consequently, at the time of trial, Dwain had the burden developed a relationship.
of proving that his execution of the agreement was not
Dwain's bank informed him that it would not go
voluntary due to duress.
through with permanent financing on the lake house.
Dwain relies on the opinion in Matthews v. Someone involved in the construction of the house had a
Matthews, 725 S.W.2d 275, 279 (Tex. App.--Houston mechanics and materialmen's lien placed on the house.
[1st Dist.] 1986, writ ref'd n.r.e.) for his contention that Thereafter, approximately thirty days before his interim
Sharon had the burden of proof to prove by clear and financing was to lapse, the Fort W orth Boat Club sent
convincing evidence that his consent was not procured Dwain a letter stating that it would confiscate the house
by duress. W e first note that the issue as to the burden of if the lien were not lifted within thirty days.
proof was not directly at issue in that case but also note
Dwain's bank informed him that it would not provide
that the opinion in the case preceded the adoption of
permanent financing for the lake house as he had
section 5.55(a)(1) of the Texas Family Code.
understood that it would. W hen he went to another bank
W e construe Dwain's point of error as an assertion to seek permanent financing, bank officials informed him
that the trial court's finding of no duress is contrary to the that he would have to come up with a considerable
great weight and preponderance of the evidence. In amount of money and some [**15] collateral to obtain
reviewing such a point of error, [HN6] we must consider the financing because of the arrangement with the club
and weigh all of the evidence, both the evidence that that prohibited there being a lien on the house. The
tends to prove the existence of a vital fact as well as officials also informed him that the temporary orders that
evidence that tends to disprove its existence. See Cain v. Sharon had obtained in the divorce proceeding would
Bain, 709 S.W.2d 175, 176 (Tex. 1986) (per curiam). So make it difficult for Dwain to arrange the needed
considering the evidence, if the trial court's finding is so financing on his own.
contrary [**13] to [*129] the great weight and
Dwain informed Sharon about the lien and the
preponderance of the evidence as to be manifestly unjust,
possible forfeiture of the house. Subsequently, Dwain
the point should be sustained, regardless of whether there
obtained an agreement from Sharon that he could use $
is some evidence to support it. Watson v. Prewitt, 159
50,000 from his retirement plan and use other property
Tex. 305, 320 S.W.2d 815, 816 (1959) (per curiam).
covered by the temporary restraining order to obtain the
[HN7] There can be no duress unless there is a threat needed permanent financing. He said that his decision to
to do some act which the party threatening has no legal continue at that time without counsel was of his own
right to do. Such threat must be of such character as to volition, and that he did not know of the possibility of
destroy the free agency of the party to whom it is seeking court approval for what he wished to do rather
directed. It must overcome his will and cause him to do than reach an agreement with Sharon.
that which he would not otherwise do, and which he was
Following meetings of Tiffany, the parties, and
not legally bound to do. The restraint caused by such
occasionally others, Sharon agreed to approve of the
threat must be imminent. It must be such that the person
measures necessary to obtain the permanent financing on
to whom it is directed has no present means of
the lake house and Dwain agreed to sign the partition
protection.
agreement. The partition agreement was signed either on
the way to the bank to sign the papers for the permanent
Dale v. Simon, 267 S.W. 467, 470 (Tex. Comm'n App.
financing or at the bank itself. [**16] There was no
1924, judgm't adopted); Matthews, 725 S.W.2d at 278.
physical or other abuse by Sharon or anyone else prior to
According to the evidence, the parties during the the signing.
pendency of the divorce were in the process of
Sharon testified that Dwain was enthused to sign the
negotiating a property settlement agreement. Progress
partition agreement so that he could get his house. She
was being made in the negotiations. DeForrest Tiffany
also said that it was not really his motivation for signing
was acting as the attorney for Sharon, but Dwain had
it at that time, that the two things just coincided. She
known him longer than Sharon had.
said that she did not remember telling Dwain that she
W hile negotiations [**14] were proceeding toward could not agree to the measures necessary to obtain the
settling the property division issues in the pending permanent financing unless he signed the agreement.
divorce, Dwain was proceeding with the building of a
[*130] Dwain and Sharon left the bank together.
lake house at the Fort W orth Boat Club. Under the
Sharon testified that Dwain did not appear distressed, but
agreement he had with the club, he would have a long-
instead was smiling and friendly toward her. He said
term lease on a lot at the club, and the club would allow
nothing about her having pushed him into an unfair
EXHIBIT "B"
Page 6
840 S.W .2d 124,067-250449-11
*; 1992 Tex. App. LEXIS 2650, **
situation. She related that he thanked her for lifting the can find no evidence of $ 150,000 worth of certificates of
injunction so he could get his house and she thanked him deposit that might be considered to be divided by the
for signing the partition agreement. In response, he partition agreement, resulting [**19] in a share for
reminded her of his promise to always take care of her. Sharon in the amount of $ 75,000. W e have examined
the evidence that Sharon refers to in her brief but our
Dwain testified that he thinks that Sharon's actions
most careful analysis, and giving Sharon the benefit of
constituted extortion and that she did not deal with him
every question, shows that the amount due Sharon would
fairly. He said that he did not know whether Sharon had
be far short of the $ 75,000 found by the court. W e
threatened to do something she had no legal right to do.
sustain point of error number seven.
He inferred that she refused to sign the agreement [**17]
if he would not sign the partition agreement. He said he Dwain argues in point of error number eight that the
signed the agreement because he would have lost the trial court erred in awarding her attorney's fees. He
house and had to pay the bank back if he had not. points out that there was no testimony that the amount of
attorney's fees found by the court was reasonable. [HN9]
The partition agreement was signed on April 4,
In a trial before the court, the trial court may review the
1985. The divorce decree was not signed until
case file and take judicial notice of the amount of
September 22, 1986. During that time Dwain continued
reasonable attorney's fees, whether or not requested by a
to represent himself after voluntarily choosing not to
party to do so. Lacy v. First Nat. Bank, 809 S.W.2d 362,
obtain counsel. Dwain acknowledged that one of the
367 (Tex. App.--Beaumont 1991, no writ); TEX. CIV.
purposes of the divorce decree was to incorporate the
PRAC. & REM. CODE ANN. § 38.004 (Vernon 1986).
partition agreement into the decree. He indicated that he
W e overrule point of error number eight.
understood that he did not have to sign the decree.
Dwain contends in point of error number nine that
Although Tiffany had made it clear to Dwain that he
the trial court erred when it entered [*131] several of
was representing Sharon and could not represent him,
the trial court's findings of fact and conclusions of law
Dwain thought that Tiffany's actions in helping him to
because the evidence is legally insufficient, or,
obtain permanent financing for the lake house and on
alternatively, factually insufficient to support them. We
other matters were in his best interest.
have [**20] examined all sixteen findings and find that
W e hold that the trial court's finding that there was as to all except finding 6j none of these findings, if error,
no duress is not contrary to the great weight and is such a finding as was reasonably calculated to cause or
preponderance of the evidence, in view of the evidence probably did cause the rendition of an improper
indicating that Dwain signed the agreement because he judgment.
wanted to and that he was pleased with the arrangement.
In its finding 6j, the court found that Dwain was in
W e overrule point of error number six.
default by failing to transfer $ 75,000, representing 50%
Dwain urges in point of error number seven that the of the certificates of deposit in his corporate pension
[**18] evidence is legally and, in the alternative, plan. As previously noted, there is no evidence to support
factually insufficient to support the trial court's finding the trial court's finding. W e sustain point of error
that he was in default in paying retirement benefits to number nine as to this finding; otherwise we overrule
Sharon in the amount of $ 75,000. point of error number nine.
[HN8] We will first consider only the evidence and W e find that the issue of the amount of money, if
inferences that tend to support the trial court's finding any, due to Sharon with respect to the division of
and disregard all evidence and inferences to the contrary. certificates of deposit that were part of Dwain's corporate
See Larson v. Cook Consultants, Inc., 690 S.W.2d 567, pension plan, affects only a part of the matter in
568 (Tex. 1985); In re King's Estate, 150 Tex. 662, 244 controversy and is clearly separable without unfairness to
S.W.2d 660, 661-62 (1951) (per curiam). If there is any the parties. Consequently, we reverse and remand as to
evidence of probative force to support the finding, the that issue only. W e affirm the remainder of the
legal insufficiency point must be overruled and the judgment. Costs are charged 10% to Sharon Matelski, the
finding upheld. Id. appellee, and 90% to Dwain E. Matelski, the appellant.
The partition agreement provided that Dwain and JOHN G. HILL
Sharon were each to receive 50% of the certificates of
JUSTICE
deposit derived from Dwain's corporate pension plan,
with interest accrued from January 1, 1985. The PANEL B
agreement was to have an Exhibit E attached to it listing
HILL, AND FARRIS, JJ.
those certificates but the copy in our record has no such
exhibit attached. ASHW ORTH, J. (retired, sitting by assignment)
W e have examined the testimony of the parties and OCT 14 [**21] 1992
EXHIBIT "B"
Page 7
840 S.W .2d 124,067-250449-11
*; 1992 Tex. App. LEXIS 2650, **
EXHIBIT "B"
Page 1
067-250449-11
893 S.W .2d 686, *; 1995 Tex. App. LEXIS 47, **
2 of 100 DOCUMENTS
THE LONG TRUSTS, Appellants v. ATLANTIC RICHFIELD COM PANY, Appel-
lee
No. 06-94-00087-CV
COURT OF APPEALS OF TEXAS, SIXTH DISTRICT, TEXARKANA
893 S.W.2d 686; 1995 Tex. App. LEXIS 47
December 1, 1994, Submitted
January 12, 1995, Decided
January 12, 1995, Filed
PRIOR HISTO RY: [**1] On Appeal from the 4th than because of evidentiary insufficiency.
Judicial District Court. Rusk County, Texas. Trial Court
No. 88-07-233. OUTCOM E: The order awarding attorney's fees to
Atlantic Richfield Co. v. Long Trusts, 860 S.W.2d 439, appellee corporation in a breach of contract action was
1993 Tex. App. LEXIS 1203 (Tex. App. Texarkana, 1993) affirmed. The court ruled that the trial court did not err in
taking judicial notice of the usual and customary fees and
DISPOSITION: AFFIRMED the contents of the case file, and in setting the fees based
on judicial notice without receiving further evidence,
CASE SUM M ARY: because it constituted sufficient evidence on which to
base an award.
P R O C E D U R A L P O S T U R E : A p p e ll a n t t r usts LexisNexis(R) Headnotes
challenged an order of the 4th District Court (Texas),
awarding attorney's fees to appellee corporation in a
breach of contract action. Appellants contended the trial
court erred in awarding attorney's fees without taking Evidence > Judicial Notice > General Overview
evidence at the motion hearing, and that testimony about Governm ents > Legislation > General Overview
fees from the original trial constituted inadmissible Legal Ethics > Client Relations > Attorney Fees > Fee
hearsay at the hearing on remand. Agreem ents
[HN1] A party may recover reasonable attorney's fees on
OVERVIEW : This cause of action arose over disputes a contract claim and the court may presume that the usual
between appellant trusts and appellee corporation and customary charges for the work performed are
involving the parties' rights and obligations under six reasonable. The presumption may be rebutted. In a jury
joint operating agreements. On remand from the appeals case where the parties agree to submit the amount of
court, the trial court determined the proper amount of attorney's fees to the court, the court may take judicial
attorney's fees recoverable by appellee. Appellants notice of the usual and customary fees and of the
sought further review, arguing that the trial court erred in contents of the case file and set the fees based on such
awarding attorney's fees without taking evidence at the judicial notice without receiving further evidence. The
motion hearing and that testimony about fees from the statute permitting that procedure is to be liberally
original trial constituted inadmissible hearsay at the construed to promote its underlying purposes.
hearing on remand. The appeals court affirmed the order.
The court reasoned that the trial court acted in
compliance with Tex. Civ. Prac. & Rem. Code Ann. ch. Civil Procedure > Remedies > Costs & Attorney Fees >
38.004(2), which allows the court to take judicial notice General Overview
of the usual and customary fees and of the contents of the Civil Procedure > Appeals > General Overview
case file and set the fees based on such judicial notice Evidence > Judicial Notice > General Overview
without receiving further evidence, in cases where the [HN2] In the absence of other evidence supporting an
parties agree to submit the amount of attorney's fees to award of attorney's fees, the reviewing court will
the court. The court also ruled that appellants were not presume that the trial court took judicial notice of the
entitled to present new evidence at the hearing on remand usual and customary fees and of the contents of the case
because the reversal was because of legal error rather file in determining the amount of attorney's fees awarded.
EXHIBIT "C"
Judicial notice of the usual and customary fees
067-250449-11 This case has a long history. It originated with
constitutes some evidence on which the trial court may
several disputes among The Long Trusts, Atlantic
base an award.
Richfield Company (ARCO), B & A Pipeline Company,
and Ensearch, Inc. The disputes included various claims
for debt and alleged breaches of contract involving the
Civil Procedure > Rem edies > Costs & Attorney Fees >
parties' rights and obligations under six joint operating
General Overview
agreements governing the development of several gas
Civil Procedure > Appeals > Standards of Review >
units in Rusk County.
Abuse of Discretion
[HN3] A reviewing court will not overturn a trial court's At the original jury trial the, parties agreed to have
allowance of attorney's fees unless the award constitutes the court decide the attorney's fee issues. All issues were
a clear abuse of discretion. The test for whether the trial disposed of in the court's final judgment dated December
court abused its discretion is whether it acted without 18, 1991. This Court affirmed that judgment in all
reference to any guiding rules and principles, that is, respects except the failure to award attorney's fees to
whether the court's action was arbitrary or unreasonable. [**2] ARCO. W e held that ARCO was entitled to
recover its attorney's fees, and we remanded that portion
of the cause to the trial court to determine the proper
Civil Procedure > Rem edies > Costs & Attorney Fees > amount of those fees. Atlantic Richfield Co. v. Long
General Overview Trusts, 860 S.W.2d 439 (Tex. App.--Texarkana 1993,
Evidence > Judicial Notice > Dom estic Laws writ denied). After remand of that portion of the case,
[HN4] Taking judicial notice of the case file and of the ARCO filed a motion for judgment for attorney's fees,
usual and customary fees constitutes some evidence, and attaching to its motion a copy of some testimony on
no further evidence is needed. The trial court can also reasonable fees that was given at the original trial. The
apportion attorney's fees by judicial notice. Trusts filed a response and opposition to ARCO's motion
for judgment, and the trial court held a hearing on March
30, 1994. No evidence was offered at the hearing, but
Civil Procedure > Appeals > Frivolous Appeals ARCO asked the court to take judicial notice that $
[HN5] Where the reviewing court determines that the 304,000.00 was a reasonable amount for its attorney's
appellant has taken the appeal for delay and without fees. The court granted ARCO's motion and rendered
sufficient cause, it may award the appellee up to 10 times judgment for the attorney's fees in the amount of $
the total taxable costs as damages. An appellant's right of 303,759.00.
review will not be penalized unless there is a clear
On appeal the Trusts present eight complaints, most
showing that he had no reasonable ground to believe that
of which are based on their argument that the trial court
the judgment would be reversed. If the argument on
erred in awarding attorney's fees without taking evidence
appeal, even if it fails to convince the court, has a
at the March 30, 1994 hearing.
reasonable basis in law and constitutes an informed,
good-faith challenge to the trial court's judgment, T ex. R. [HN1] A party may recover reasonable attorney's
App. P. 84 damages are not appropriate. fees on a contract claim, TEX. CIV. PRAC. & REM.
CODE ANN. § [**3] 38.001(8) (Vernon 1986), and the
COUNSEL: Hon. F. Franklin Honea, Payne & Vendig, court may presume that the usual and customary charges
Dallas, TX. for the work performed are reasonable. The presumption
may be rebutted. TEX. CIV. PRAC. & REM. CODE ANN.
Hon. Rex. A. Nichols, Attorney at Law, Longview, TX. § 38.003 (Vernon 1986). In a jury case where the parties
agree to submit the amount of attorney's fees to the court,
Hon. Mike A. Hatchell, Ramey & Flock, Tyler, TX. as they did here, the court may take judicial notice of the
usual and customary fees and of the contents of the case
Hon. Bryant Boren, Jr., Baker & Botts, Dallas, TX. file and set the fees based on such judicial notice without
receiving further evidence. TEX. CIV. PRAC. & REM.
JUDGES: Before Cornelius, C.J., Bleil and Grant, JJ. CODE ANN. § 38.004(2) (Vernon 1986). The statute
Opinion by Chief Justice Cornelius permitting that procedure is to be [*688] liberally
construed to promote its underlying purposes. TEX. CIV.
OPINION BY: W illiam J. Cornelius PRAC. & REM. CODE ANN. § 38.005 (Vernon 1986).
OPINION [HN2] In the absence of other evidence supporting
an award of attorney's fees, the reviewing court will
[*687] OPINION presume that the trial court took judicial notice of the
usual and customary fees and of the contents of the case
Opinion by Chief Justice Cornelius
file in determining the amount of attorney's fees awarded.
The Long Trusts appeal from the trial court's order Bloom v. Bloom, 767 S.W.2d 463, 471 (Tex. App.--San
awarding attorney's fees to Atlantic Richfield Company. Antonio 1989, writ denied); Flint & Associates v.
EXHIBIT "C"
Page 3
067-250449-11
893 S.W .2d 686, *; 1995 Tex. App. LEXIS 47, **
Intercontinental Pipe & Steel, 739 S.W.2d 622 [**4] awarding and apportioning attorney's fees because the
(Tex. App.--Dallas 1987, writ denied). Judicial notice of testimony about fees from the original trial constituted
the usual and customary fees constitutes some evidence inadmissible hearsay at the hearing on remand. W e
on which the trial court may base an award. Coward v. disagree. The evidence was not hearsay. It was part of
Gateway Nat'l Bank of Beaumont, 525 S.W.2d 857 (Tex. the case file, of which the court took judicial notice.
1975); Superior Ironworks v. Roll Form Products, 789 Evidence that is judicially noticed does not constitute
S.W.2d 430 (Tex. App.--Houston [1st Dist.] 1990, no hearsay.
writ).
W e also disagree with the Trusts' contention that,
[HN3] A reviewing court will not overturn a trial because we severed the issue of attorney's fees and there
court's allowance of attorney's fees unless the award was no testimony at the hearing on remand, there was no
constitutes a clear abuse of discretion. Ross v. 3D Tower case record or testimony in this case for the trial court to
Ltd., 824 S.W .2d 270, 273 (Tex. App.--Houston [14th judicially notice. W hen the statute speaks of the contents
Dist.] 1992, writ denied). The test for whether the trial of the [**7] "case file," it means the file of the case for
court abused its discretion is whether it acted without which the attorney's fees were incurred and in which the
reference to any guiding rules and principles, that is, issue of attorney's fees was first joined, that is, the
whether the court's action was arbitrary or unreasonable. original trial. The trial court here had the record of that
Griggs v. Capitol Machine Works, Inc., 701 S.W.2d 238, trial available to it, even though some of that record may
241-42 (Tex. 1985). have still been physically located in another court.
The trial court here did not act without reference to Moreover, while that part of the case we severed and
guiding rules and principles. It took judicial notice of the affirmed is now considered a [*689] separate case with
contents of the case file and the usual and customary a final judgment, the part we remanded remained a part
attorney's fees, which are presumed to be reasonable. It of the original case. The testimony and record of that
exercised [**5] its discretion in setting the fees, and it original case also remained as the testimony and the
acted within the plain language of the statutes in Chapter record as far as the remanded portion is concerned.
38 of the Civil Practice & Remedies Code. Therefore, the trial court properly considered the
testimony and other matters in the case file.
The Trusts, however, argue that the evidence was
legally and factually insufficient to support the award of The Trusts also argue that the court erred in refusing
attorney's fees because there was no evidence adduced at to let them present evidence on the attorney's fees issue
the March 30 hearing. They also argue that, because we at the hearing on remand. W e overrule this contention.
severed the claim for attorney's fees from the main action
This Court reversed the failure to award ARCO
when we remanded it, and because the statement of facts
attorney's fees because of the trial court's legal error in
in the main action has remained in this Court, the trial
refusing to award them, not because there was
court had no case file available to judicially notice and,
insufficient evidence to sustain them. Since the reversal
for that additional reason, there was no evidence to
was because of a legal error rather than because of
support the award. They also contend that, even if the
evidentiary insufficiency, [**8] the remand did not
court could take judicial notice of the statement of facts
require a factual retrial of the issue, but only a
and the file of the original trial, there was no testimony
determination by the court of the proper fees based on
or other evidence in those papers that supported the
the evidence adduced at the original trial and a
amount of attorney's fees that should be awarded or the
consideration of the case file. Thus, the Trusts were not
manner in which they should be apportioned among the
entitled to present new evidence at the hearing on
claims involved in the original suit.
remand. The issue was to be decided on the evidence and
Most of the Trusts' arguments are based on their records that were before the court at the original trial. If
premise that there must have been some sort of the Trusts desired to put on additional evidence regarding
evidentiary hearing on remand and some evidence the proper amount of attorney's fees, they should have
produced at that hearing to support [**6] the attorney's done so at the original trial when the issue was first
fee award. The statutes and the case law, however, do not joined.
require that. [HN4] Taking judicial notice of the case file
The Trusts also challenge the award as being
and of the usual and customary fees constitutes some
excessive and supported by insufficient evidence in the
evidence, Bloom v. Bloom, supra, and no further
case file. Although because the matter had been
evidence is needed. Superior Ironworks v. Roll Form
submitted by agreement to the trial court it was not
Products, supra. The trial court can also apportion
necessary for ARCO to present testimony at the original
attorney's fees by judicial notice. See Flint & Associates
trial on the amount of reasonable attorney's fees, ARCO
v. Intercontinental Pipe & Steel, supra.
did present such testimony. That testimony dealt with the
The Trusts argue that the trial court erred in complexity of the case, with the time spent on it, with
EXHIBIT "C"
reasonable charges, and with the particular claims to even if it fails to convince the court, has a reasonable
which the work applied. T hat testimony, a copy of067-250449-11
which basis in law and constitutes an informed, good-faith
was attached to ARCO's motion for judgment on the challenge to the trial court's judgment, Rule 84 damages
remand hearing, is sufficient to support [**9] the court's are not appropriate. General Electric Credit Corp. v.
award, and we do not find the amount set by the court to Midland Central Appraisal Dist., 826 S.W.2d 124, 125
be excessive or to constitute an abuse of the trial court's (Tex. 1991). Considering the entire record and all of the
discretion. circumstances, we [**10] do not conclude that this
appeal was taken for delay or without sufficient cause,
ARCO in a cross-point complains that the Trusts
and we therefore decline to assess damages.
took this appeal for delay and without sufficient cause,
and it asks us to award damages as sanctions. [HN5] For the reasons stated, the judgment of the trial court
W here the reviewing court determines that the appellant is affirmed.
has taken the appeal for delay and without sufficient
W illiam J. Cornelius
cause, it may award the appellee up to ten times the total
taxable costs as damages. TEX. R. APP. P. 84. An Chief Justice
appellant's right of review will not be penalized unless
Date Submitted: December 1, 1994
there is a clear showing that he had no reasonable ground
to believe that the judgment would be reversed. Beago v. Date Decided: January 12, 1995
Ceres, 619 S.W.2d 293, 295 (Tex. Civ. App.--Houston
[1st Dist.] 1981, no writ). If the argument on appeal,
EXHIBIT "C"
Page 1
067-250449-11
2006 Tex. App. LEXIS 2598, *
6 of 100 DOCUMENTS
James E. Cox; James E. Cox d/b/a European Import Car Repair; and European Im-
port Car Repair, Inc., Appellants v. Doug W ilkins, CPA, Appellee
NO. 03-05-00110-CV
COURT OF APPEALS OF TEXAS, THIRD DISTRICT, AUSTIN
2006 Tex. App. LEXIS 2598
M arch 31, 2006, Filed
SUBSEQUENT HISTORY: [*1] that the final judgment was actually rendered on
Petition for review denied by Cox v. Wilkins, 2006 Tex. November 30, and thus post-judgment interest began to
LEXIS 760 (Tex., Aug. 25, 2006) accrue on November 30, for purposes of Tex. Fin. Code
Ann. § 304.005(a) (Supp. 2005), and the court modified
PRIOR HISTORY: FROM THE COU NTY COURT the judgment accordingly.
AT LAW NO. 2 OF TRAV IS COUNTY, NO. 278796,
HONORABLE ORLINDA L. NARANJO, JUDGE PRE- OUTCOM E: The court modified the judgment to reflect
SIDING. that post-judgment interest began to accrue on November
30, not November 3, and the court also struck any
DISPOSITION: Modified and, as M odified, Affirmed. reference to the president doing business as the company.
As modified, the court affirmed.
CASE SUM M ARY: LexisNexis(R) Headnotes
PROCEDURAL POSTURE: Appellants, a repair com-
pany and its president, challenge only that part of the de- Civil Procedure > Appeals > Standards of Review >
cision of the County Court at Law, No. 2 of Travis Abuse of Discretion
County (Texas), which awarded attorney fees to appellee Evidence > Testim ony > Presentation of Evidence
accountant. The trial court had awarded the accountant [HN1] Tex. R. Civ. P. 270 allows a trial court to permit
actual damages, plus post-judgment interest, and attorney additional evidence to be offered at any time when it
fees in his action against the owner and company for clearly appears to be necessary to the due administration
breach of contract, quantum meruit, and promissory of justice. Tex. R. Civ. P. 270. A trial court should
estoppel. exercise its discretion liberally in the interest of justice so
that both parties are permitted to fully develop their case.
OVERVIEW : A dispute arose over the accountant's fee Unless the trial court has clearly abused its discretion, an
for tax returns and he filed this action and was awarded appellate court should not disturb its refusal to reopen a
damages and attorney fees. On appeal, the court modified case for the purpose of admitting additional evidence.
the judgment and affirmed. The court was free to
presume that the trial court took judicial notice of the
usual and customary fees pursuant to Tex. Civ. Prac. & Civil Procedure > Appeals > Standards of Review >
Rem. Code Ann. § 38.004 (1997) even if the trial court General Overview
did not state that it was doing so, and the trial court was Evidence > Testim ony > Presentation of Evidence
not required by statute or rule to give notice that it was [HN2] In determining whether to permit additional
taking such judicial notice. There was sufficient evidence evidence, a trial court may consider the following
to support the award of attorney fees under Tex. Civ. factors: (1) the moving party's due diligence in obtaining
Prac. & Rem. Code Ann. § 38.001(8) (1997), which the evidence; (2) the decisiveness of the proffered
award was not discretionary. There was no basis for the evidence; (3) any undue delay the reception of the
trial court to render judgment against the president doing evidence could cause; and (4) any injustice the granting
business as the company and accordingly, the court of the motion could cause. W here these factors are
modified the judgment to strike any reference to the present, it may be a trial court's duty to grant a party's
president doing business as the company. The court held motion to offer additional evidence. These are just
EXHIBIT "D"
factors to be considered, and even if all of the factors are records were made by a person with knowledge who was
067-250449-11
not satisfied, a trial court's ruling on a party's motion to acting in the regular course of business.
reopen the evidence should not be disturbed.
Civil Procedure > Rem edies > Costs & Attorney Fees >
Evidence > Testim ony > Presentation of Evidence Attorney Expenses & Fees > Statutory Awards
[HN3] Tex. R. Civ. P. 270 does not explicitly set forth Evidence > Judicial Notice > General Overview
any factors necessary to reopen a case; instead it places [HN10] Generally, a trial court may take judicial notice
the decision to reopen within the trial court's discretion. of certain facts, whether requested or not. Tex. R. Evid.
Rule 270 provides that a court may permit additional 201(c). A party is entitled upon timely request to an
evidence to be offered at any time. opportunity to be heard as to the propriety of taking
judicial notice and the tenor of the matter noticed. Tex. R.
Evid. 201(e). Tex. Civ. Prac. & Rem. Code Ann. § 38.001
Civil Procedure > Appeals > Standards of Review > (1997) provides that a party may recover reasonable
Abuse of Discretion attorney's fees if the claim is for an oral or written
Evidence > Procedural Considerations > Rulings on contract. The Texas Civil Practice and Remedies Code
Evidence contains a more specific judicial notice provision.
[HN4] In reviewing a trial court's decision to admit
evidence, the appellate court utilizes an abuse of
discretion standard. A trial court abuses its discretion Civil Procedure > Remedies > Costs & Attorney Fees >
when it rules without regard for any guiding rules or Attorney Expenses & Fees > Statutory Awards
principles. The appellate court must uphold a trial court's Evidence > Judicial Notice > General Overview
evidentiary ruling if there is any legitimate basis for the [HN11] See Tex. Civ. Prac. & Rem. Code Ann. §
ruling. 38.004(1) (1997).
Evidence > Hearsay > Rule Com ponents > General Civil Procedure > Rem edies > Costs & Attorney Fees >
Overview Attorney Expenses & Fees > Statutory Awards
[HN5] See Tex. R. Evid. 801(d). Civil Procedure > Appeals > Standards of Review >
General Overview
Evidence > Judicial Notice > General Overview
Evidence > Hearsay > Exceptions > General Overview [HN12] The appellate court may presume that a trial
Evidence > Procedural Considerations > Burdens of court took judicial notice of the usual and customary fees
Proof > General Overview pursuant to Tex. Civ. Prac. & Rem. Code Ann. §
[HN6] The proponent of hearsay has the burden of 38.004(1) (1997) even if it did not state that it was doing
showing that the testimony fits within an exception to the so.
general rule prohibiting the admission of hearsay
evidence.
Civil Procedure > Rem edies > Costs & Attorney Fees >
Attorney Expenses & Fees > Statutory Awards
Evidence > Hearsay > Exceptions > Business Records > Evidence > Judicial Notice > General Overview
General Overview Governments > Legislation > Interpretation
[HN7] Tex. R. Evid. 803(6), the business records [HN13] Because Tex. Civ. Prac. & Rem. Code Ann. §
exception, provides that evidence meeting certain criteria 38.004 (1997) is more specific than Tex. R. Evid. 201, it
should not be excluded under the hearsay rule. controls in all claims for attorney's fees made under Tex.
Civ. Prac. & Rem. Code Ann. ch. 38. Specific statutes
control over general ones.
Evidence > Hearsay > Exceptions > Business Records >
General Overview
[HN8] See Tex. R. Evid. 803(6). Civil Procedure > Rem edies > Costs & Attorney Fees >
Attorney Expenses & Fees > Statutory Awards
Evidence > Judicial Notice > General Overview
Evidence > Hearsay > Exceptions > Business Records > [HN14] Tex. Civ. Prac. & Rem. Code Ann. § 38.004
General Overview (1997) explicitly informs litigants that a court may do so
[HN9] The foundation for the business records exception in a claim for attorney's fees brought under Tex. Civ.
has four requirements: (1) the records were made and Prac. & Rem. Code Ann. ch. 38.
kept in the course of a regularly conducted business
activity, (2) it was the regular practice of the business
activity to make the records, (3) the records were made at Civil Procedure > Rem edies > Costs & Attorney Fees >
or near the time of the event that they record, and (4) the Attorney Expenses & Fees > General Overview
EXHIBIT "D"
Page 3
067-250449-11
2006 Tex. App. LEXIS 2598, *
Civil Procedure > Appeals > Standards of Review > especially where the opposing party had the means and
Abuse of Discretion opportunity of disproving the evidence but did not.
Civil Procedure > Appeals > Standards of Review >
Substantial Evidence > Sufficiency of Evidence
[HN15] Generally, the appellate court reviews a trial Civil Procedure > Appeals > Standards of Review >
court's decision to grant or deny attorney's fees for an Substantial Evidence > Sufficiency of Evidence
abuse of discretion, and the appellate court reviews the [HN19] In a challenge to legal sufficiency, the appellate
amount awarded as attorney's fees under a sufficiency of court reviews the evidence in the light most favorable to
the evidence standard. A trial court abuses its discretion the challenged finding and indulges every reasonable
if its decision is arbitrary, unreasonable, and without inference that would support it. The appellate court
reference to guiding principles. It is an abuse of credits favorable evidence if a reasonable fact finder
discretion to award attorney's fees if there is no evidence could do so and disregards contrary evidence unless a
or insufficient evidence to support the award. reasonable fact finder could not. The evidence is legally
sufficient if it would enable fair-minded people to reach
the verdict under review.
Civil Procedure > Rem edies > Costs & Attorney Fees >
Attorney Expenses & Fees > Statutory Awards
[HN16] Statutes stating that a court "may" award Civil Procedure > Appeals > Standards of Review >
attorney's fees give courts the discretion to award Substantial Evidence > Sufficiency of Evidence
attorney's fees, but statutes stating that a party "may [HN20] In reviewing the factual sufficiency of the
recover," "shall be awarded," or "is entitled to" attorney's evidence, the appellate court considers and weighs all the
fees are not discretionary. evidence and should set aside the judgment only if it is so
contrary to the overwhelming weight of the evidence as
to be clearly wrong and unjust. The appellate court may
Civil Procedure > Rem edies > Costs & Attorney Fees > not substitute its own judgment for that of the trier of
Attorney Expenses & Fees > Statutory Awards fact, even if the appellate court would have reached a
[HN17] Because Tex. Civ. Prac. & Rem. Code Ann. § different result on the evidence. Therefore, the appellate
38.001(8) (1997) specifies that a party may recover court will reverse only if the overwhelming weight of the
reasonable attorney's fees if the claim is for an oral or evidence indicates the trial court's judgment was clearly
written contract, the award is not discretionary. wrong and unjust.
Civil Procedure > Rem edies > Costs & Attorney Fees > Civil Procedure > Rem edies > Costs & Attorney Fees >
Attorney Expenses & Fees > Reasonable Fees Attorney Expenses & Fees > Reasonable Fees
[HN18] The Texas Supreme Court has identified various [HN21] See Tex. Civ. Prac. & Rem. Code Ann. § 38.003
factors to consider when determining what a reasonable (1997).
award of attorney's fees should be. They include the
following: (1) the time and labor required, the novelty
and difficulty of the questions involved, and the skill Civil Procedure > Rem edies > Costs & Attorney Fees >
required to perform the legal service properly; (2) the Attorney Expenses & Fees > Reasonable Fees
likelihood that the acceptance of the particular [HN22] A trial court need not consider every factor of a
employment will preclude other employment by the certain list of factors when determining reasonableness of
lawyer; (3) the fee customarily charged in the locality for attorney's fees.
similar legal services; (4) the amount involved and the
results obtained; (5) the time limitations imposed by the
client or the circumstances; (6) the nature and length of Civil Procedure > Rem edies > Judgm ent Interest >
the professional relationship with the client; (7) the Postjudgm ent Interest
experience, reputation and ability of the lawyer or [HN23] See Tex. Fin. Code Ann. § 304.005(a) (Supp.
lawyers performing the services; and (8) whether the fee 2005).
is fixed or contingent on results obtained or uncertainty
of collection before the legal services have been
rendered. Not all of the factors must be considered in Civil Procedure > Judgm ents > Entry of Judgm ents >
every case. They are general guidelines that the supreme General Overview
court has stated should be taken into account when [HN24] Generally, a judgment is rendered when the
determining the reasonableness of attorney's fees. decision is officially announced orally in open court, by
Evidence of attorney's fees that is clear, direct, and memorandum filed with the clerk, or otherwise
uncontroverted is taken as true as a matter of law, announced publicly. An intent to render judgment in the
EXHIBIT "D"
future does not satisfy this test. substantially less. W ilkins explained to Cox that the
067-250449-11
corporation's books were not in order and consequently it
took extra time to prepare the forms. Cox acknowledged
Civil Procedure > Judgm ents > Entry of Judgm ents > that the bookkeeping discrepancies could [*3] have been
General Overview due to a recent fire at his business, or to the fact that a
[HN25] W hen there is a question concerning the date former employee had been embezzling funds from the
judgment was rendered, the date the judgment was corporation. Cox also asserted that W ilkins took time to
signed prevails over a conflicting docket sheet entry. teach the corporation's bookkeeper how to properly
categorize expenses so that the following year's taxes
COUNSEL: For APPELLANTS: Mr. John A. Mead, could be prepared more efficiently. Despite his
Mr. R. Robert W illmann, Jr., AGE DISCRIM INATION reservations, Cox paid W ilkins the amount billed for his
in EMPLOYMENT ACT, San Antonio, TX. services.
The following year, Cox again hired W ilkins to
For APPELLEE: Mr. J.P. Cody, THE LAW RENCE
prepare and file his individual and corporate income tax
FIRM, Austin, TX.
returns for 2002. W ilkins testified that he sent Cox a bill
for his services around the end of May 2003; W ilkins
JUDGES: Before Justices B. A. Smith, Puryear and
charged $ 3,200, $ 450 for preparation of the individual
Pemberton.
return and $ 2,750 for the corporate return. W hen Cox
did not respond, W ilkins sent a second invoice in August
OPINION BY: Bea Ann Smith
2003. On both bills, W ilkins noted that the "invoices are
seriously past due." Again, Cox failed to respond.
OPINION
In December 2003, W ilkins sent Cox two final
M EM ORANDUM OPINION demand notices, one for the individual return and the
other for the corporate return. Cox testified that in
Appellants James E. Cox and European Import Car
January 2004 the parties agreed to settle the dispute for $
Repair, Inc. (collectively "Cox"), challenge only the trial
1,950--$ 450 for the individual income taxes and $ 1,500
court's award of attorney's fees to appellee Doug
for the corporate income taxes. Cox [*4] then sent
W ilkins. Cox hired W ilkins to prepare income tax returns
W ilkins two checks, a personal check for $ 450 and a
for himself and his corporate business, but did not pay
corporate check for $ 1,500. W ilkins admits that Cox did
W ilkins for his services. After unsuccessful attempts at
tender these two checks to W ilkins's attorney, J.P. Cody,
collecting the debt and settling the dispute, W ilkins
who drafted a settlement agreement and sent it to Cox on
brought suit alleging breach of contract, quantum meruit
February 6, 2004. Cox insisted at trial that he signed the
and promissory estoppel. The trial court awarded W ilkins
agreement and faxed it back to W ilkins's attorney that
actual damages and attorney's fees. Cox does not appeal
day. Wilkins maintained that neither he nor Cody ever
the damages awarded, but in his first three issues on
received the signed agreement. Diana Anderson, Cody's
appeal he contends that the trial court erred by (1)
paralegal, testified that in early February 2004, Cox
allowing W ilkins to reopen his case to present evidence
telephoned to complain that the settlement agreement
of attorney's fees, (2) admitting a detailed invoice
was not in proper form and had to be renegotiated. On
describing W ilkins's time and charges in the matter, [*2]
February 11, Anderson e-mailed Cody that Cox had
and (3) awarding attorney's fees without taking judicial
called to say that the agreement incorrectly named the
notice of the usual and customary attorney's fees for this
parties, the time period for settlement had passed, and the
type of case. In issues four through eight, Cox challenges
settlement agreement had to be renegotiated. Anderson's
the sufficiency of the evidence supporting the trial court's
e-mail was admitted into evidence at trial. In response,
award of attorney's fees. In issues nine and ten, Cox
W ilkins filed suit.
insists that the trial court's final judgment assesses
liability against a non-existent party. In his final issue, Initially, Cox did not obtain counsel. Between
Cox claims that the trial court erroneously awarded post- January 2004 and August 2004, Cox made several phone
judgment interest prior to the date on which the final calls to Cody's office and sent a series of letters in which
judgment was rendered. W e will modify the judgment he accused W ilkins of overcharging him for the tax
and affirm it as modified. preparation services. He also threatened to file a
complaint with the Attorney [*5] General's office and a
BACKGROUND counter-suit alleging violations of the deceptive trade
practices act. W ilkins sought a temporary restraining
James Cox is the president of European Import Car
order to enjoin Cox from publicly disparaging his
Repair, Inc. In 2002, Cox hired Doug W ilkins, CPA, to
reputation.
prepare and file his individual income tax return and the
corporate income tax return for his business for 2001. On August 4, 2004, Cox was notified that the case
W ilkins charged Cox approximately $ 3,300 to complete had been set for trial on August 12. Cox filed a motion
both returns. Cox testified that he was surprised by the for continuance alleging inadequate notice. On August
amount of the bill because in the past he had paid 12, the trial court held a hearing only on W ilkins's
EXHIBIT "D"
Page 5
067-250449-11
2006 Tex. App. LEXIS 2598, *
application for a temporary restraining order. At that and interest on that amount at the annual
hearing, Cox claimed that he could not proceed because rate of five (5%) percent from November
his counsel, John Mead, was unavailable. However, the 3, 2004, until paid in full; and
trial judge telephoned Mead and discovered that he had
2. Plaintiff shall have judgment
not been hired to represent Cox. At the trial judge's
against Defendant James E. Cox dba
urging, Mead agreed to represent Cox from that date
European Import Car Repair & European
forward.
Import Car Repair, Inc., for actual
A bench trial was held in October 2004. After damages in the amount of $ 2,750, and
closing arguments, the trial judge asked the parties if interest on that amount at the annual rate
they had agreed to submit evidence of attorney's fees by of five (5%) percent from November 3,
affidavit, as had been suggested earlier in the trial. Cox's 2004, until paid in full; and,
attorney denied any such agreement. W ilkins asked to
3. Plaintiff shall have judgment
reopen on the issue of attorney's fees. Despite objection,
against Defendants James E. Cox dba
the trial court allowed W ilkins to reopen for the "limited
European Import Car Repair & European
purposes of offering the attorney's fees." Cody testified
Import Car Repair, Inc. for reasonable and
that he [*6] had spent a total of 54 hours on the case
necessary attorney's fees in the amount of
incurring fees of $ 11,235. He then produced a detailed
$ 8,535 for which the Defendants are
invoice which described each task performed, the amount
equally responsible.
of time spent, who performed the task (Cody or one of
his paralegals), and the rate charged. Cox objected that
Cody had not established that the document fell under the
Cox filed a motion [*8] for remittitur and for new trial.
business record exception to the hearsay rule. The trial
The trial court denied both motions. This appeal
judge overruled the objection and admitted the invoice.
followed.
Cody then testified:
DISCUSSION
This has been a more difficult case than
normally, I would expected. I've done a In eleven issues, Cox challenges the trial court's
lot of work with collection cases. I've award of attorney's fees. W e address each issue in turn.
never had to go through I can't even say
how may letters--I can, if you want me to M otion to reopen
count them--that I've had to write back
In his first issue, Cox argues that the trial court erred
and forth corresponding with the defense
by allowing W ilkins to reopen on the issue of attorney's
prior to obtaining an attorney. Once you
fees because he failed to show due diligence or any of the
did appoint an attorney, things did run
required factors to justify reopening. [HN1] Rule 270 of
smoothly, and we have, I think,
the Texas Rules of Civil Procedure allows a trial court to
cooperated with each other to that extent.
permit additional evidence to be offered at any time
I think, normally, I would not be asking
"when it clearly appears to be necessary to the due
for as high an attorney award, except for
administration of justice." Tex. R. Civ. P. 270. A trial
the conduct here of the Defendant.
court should exercise its discretion liberally in the
interest of justice so that both parties are permitted to
fully develop their case. Naguib v. Naguib, 137 S.W.3d
On cross-examination, Cox asked Cody three questions
367, 372 (Tex. App.--Dallas 2004, pet. denied). Unless
regarding the initials by each entry on the invoice, but
the trial court has clearly abused its discretion, an
did not controvert the amount or the reasonableness of
appellate court should not disturb its refusal to reopen a
the [*7] fees alleged. However, Cox continued to insist
case for the purpose of admitting additional evidence. Id.
that the evidence remained insufficient to support an
award of attorney's fees. The trial concluded and the [HN2] In determining whether to permit additional
court took the matter under advisement. [*9] evidence, a trial court may consider the following
factors: (1) the moving party's due diligence in obtaining
On November 3, 2004, the trial judge sent a letter to
the evidence; (2) the decisiveness of the proffered
the parties advising them of her decision. The final
evidence; (3) any undue delay the reception of the
judgment reflecting that decision was signed on
evidence could cause; and (4) any injustice the granting
November 30 and provided:
of the motion could cause. Id. at 373. W here these
factors are present, it may be a trial court's duty to grant a
1. Plaintiff shall have judgment against
party's motion to offer additional evidence. Id. These are
Defendant James E. Cox, individually, for
just factors to be considered, and even if all of the factors
actual damages in the amount of $ 450,
EXHIBIT "D"
are not satisfied, a trial court's ruling on a party's motion regularly conducted business activity, and
to reopen the evidence should not be disturbed. Id.067-250449-11 if it was the regular practice of that [*12]
b usiness a c tivity to m a k e the
Cox contends that W ilkins failed to present evidence
memorandum, report, record, or data
on any of the required factors to reopen under rule 270.
compilation, all as shown by the
However, [HN3] rule 270 does not explicitly set forth
testimony of the custodian or other
any factors necessary to reopen a case; instead it places
qualified witness, or by affidavit that
the decision to reopen within the trial court's discretion.
complies with Rule 902(10), unless the
See Tex. R. Civ. P. 270 (providing that court may permit
source of information or the method or
additional evidence to be offered at any time). W ilkins
circumstances of preparation indicate lack
requested attorney's fees in his original petition. He also
of trustworthiness. "Business" as used in
discussed attorney's fees in his opening statement at trial
this paragraph includes any and every
and Cox responded [*10] during his opening argument.
kind of regular organized activity whether
The trial judge noted that it should not come as a surprise
conducted for profit or not.
to Cox that W ilkins was seeking attorney's fees. The trial
judge limited the presentation of new evidence to the
issue of attorney's fees. Finally, the additional testimony
Thus, [HN9] the foundation for the business records
spanning only six pages of the reporter's record, caused
exception has four requirements: (1) the records were
no undue delay to the parties. Accordingly, we hold that
made and kept in the course of a regularly conducted
the trial court did not abuse its discretion by allowing
business activity, (2) it was the regular practice of the
W ilkins to reopen on the sole issue of attorney's fees.
business activity to make the records, (3) the records
were made at or near the time of the event that they
Business records
record, and (4) the records were made by a person with
In his second issue, Cox insists that the trial court knowledge who was acting in the regular course of
erred by admitting the invoice detailing the time spent on business. Powell v. Vavro, McDonald, & Assocs.,
the case by W ilkins's attorney or his paralegals, the tasks L.L.C., 136 S.W.3d 762, 765 (Tex. App.--Dallas 2004, no
performed, and the corresponding rate charged. Cox pet.); Daimler-Benz Aktiengesellschaft v. Olson, 21
claims that W ilkins failed to lay the proper predicate for S.W.3d 707, 716 (Tex. App.--Austin 2000, pet. dism'd
admission of the invoice as a business record. w.o.j.).
[HN4] In reviewing a trial court's decision to admit W ilkins's attorney, J.P. Cody, testified that (1) the
evidence, we utilize an abuse of discretion standard. See spreadsheet "is [*13] a printout of the records . . .
In re J.F.C., 96 S.W.3d 256, 285, 46 Tex. Sup. Ct. J. 328 prepared in the ordinary course of business;" (2) the
(Tex. 2002); National Liab. & Fire Ins. Co. v. Allen, 15 records "include data entries that I personally give to the
S.W.3d 525, 527-28, 43 Tex. Sup. Ct. J. 690 (Tex. 2000). administrative assistant who then enters them into the
A trial court abuses its discretion when it rules without record;" (3) "I personally have approved the entries;" and
regard for any guiding rules or [*11] principles. Owens- (4) "I have personal knowledge about the time and the
Corning Fiberglas Corp. v. Malone, 972 S.W.2d 35, 43, records that are listed because those are my descriptions,
41 Tex. Sup. Ct. J. 877 (Tex. 1998). W e must uphold a what I have done for each period of time." On this
trial court's evidentiary ruling if there is any legitimate record, we hold that the trial court did not abuse its
basis for the ruling. Id. [HN5] "'Hearsay' is a statement, discretion in finding that this testimony meets the
other than one made by the declarant while testifying at requirements of Texas Rule of Evidence 803(6).
the trial or hearing, offered in evidence to prove the truth
of the matter asserted." Tex. R. Evid. 801(d). [HN6] The Judicial notice
proponent of hearsay has the burden of showing that the
In his third issue, Cox contends that the trial court
testimony fits within an exception to the general rule
erred in awarding attorney's fees without taking judicial
prohibiting the admission of hearsay evidence.
notice of usual and customary fees prior to signing the
Volkswagen of Am., Inc. v. Ramirez, 159 S.W.3d 897,
final judgment. Cox claims that the trial court could not
908 n.5, 48 Tex. Sup. Ct. J. 256 (Tex. 2004).
have taken judicial notice here because it did not inform
[HN7] Rule 803(6) of the Texas Rules of Evidence, the parties it was doing so and that due process required
the business records exception, provides that evidence the trial court to notify the parties if judicial notice had
meeting the following criteria should not be excluded been taken.
under the hearsay rule:
[HN10] Generally, a trial court may take judicial
notice of certain facts, whether requested or not. Tex. R.
[HN8] A memorandum, report, record,
Evid. 201(c). A party is entitled [*14] upon timely
or data compilation, in any form, of acts,
request to an opportunity to be heard as to the propriety
events, conditions, opinions, or diagnoses,
of taking judicial notice and the tenor of the matter
made at or near the time by, or from
noticed. Id. at 201(e). However, W ilkins's claim was
information transmitted by, a person with
made under the civil practices and remedies code. See
knowledge, if kept in the course of a
EXHIBIT "D"
Page 7
067-250449-11
2006 Tex. App. LEXIS 2598, *
Tex. Civ. Prac. & Rem. Code Ann. § 38.001 (W est 1997) because W ilkins's attorney's invoice was
(providing that party may recover reasonable attorney's improperly admitted. W e have held that the trial
fees . . . if claim is for: . . . (8) an oral or written court did not abuse its discretion by admitting the
contract). The civil practices and remedies code contains invoice and need not address this issue.
a more specific judicial notice provision: [HN11] "The
[HN15] Generally, we review a trial court's decision
court may take judicial notice of the usual and customary
to grant or deny attorney's fees for an abuse of discretion,
attorney's fees and of the contents of the case file without
and we review the amount awarded as attorney's fees
receiving further evidence in a proceeding before the
under a sufficiency of the evidence standard. See
court." Id. § 38.004(1) (W est 1997). [HN12] W e may
Bocquet v. Herring, 972 S.W.2d 19, 21, 41 Tex. Sup. Ct.
presume that the trial court took judicial notice of the
J. 650 (Tex. 1998); EMC Mortgage Corp. v. D avis, 167
usual and customary fees pursuant to section 38.004 of
S.W.3d 406, 418 [*17] (Tex. App.--Austin 2005, pet.
the civil practices and remedies code even if it did not
filed). A trial court abuses its discretion if its decision "is
state that it was doing so. See Lefton v. Griffith, 136
arbitrary, unreasonable, and without reference to guiding
S.W.3d 271, 279-80 (Tex. App.--San Antonio 2000, no
principles." Goode v. Shoukfeh, 943 S.W.2d 441, 446, 40
pet.).
Tex. Sup. Ct. J. 487 (Tex. 1997) (quoting Mercedes-Benz
[HN13] Because civil practices and remedies code Credit Corp. v. Rhyne, 925 S.W.2d 664, 666, 39 Tex.
section 38.004 is more specific than evidence rule 201, it Sup. Ct. J. 1016 (Tex. 1996)). It is an abuse of discretion
controls in all claims for attorney's [*15] fees made to award attorney's fees if there is no evidence or
under chapter 38 of the civil practices and remedies code. insufficient evidence to support the award. Bocquet, 972
See Sultan v. Mathew, 178 S.W.3d 747, 751, 49 Tex. S.W.2d at 21.
Sup. Ct. J. 97 (Tex. 2005) (noting principle that specific
In Bocquet, the supreme court distinguished between
statutes control over general ones); Horizon/CMS
statutes that vest a trial court with the discretion to award
Healthcare Corp. v. Auld, 34 S.W.3d 887, 901, 43 Tex.
attorney's fees and statutes that require the court to award
Sup. Ct. J. 1151 (Tex. 2000). Accordingly, we hold that
attorney's fees. See id. at 20; compare Tex. Civ. Prac. &
the trial court was not required by statute or rule to give
Rem. Code Ann. § 37.009 (West 1997) (court may award
notice that it was taking judicial notice of usual and
reasonable and necessary attorney's fees), with Tex. Civ.
customary attorney's fees.
Prac. & Rem. Code Ann. § 38.001 (person may recover
W e may presume that the trial court took judicial attorney's fees). [HN16] Statutes stating that a court
notice of usual and customary attorney's fees. Lefton, "may" award attorney's fees give courts the discretion to
136 S.W.3d at 279-80. There is no due process concern in award attorney's fees, but statutes stating that a party
the failure of the trial court to inform the parties that it "may recover," "shall be awarded," or "is [*18] entitled
was taking judicial notice of such fees because [HN14] to" attorney's fees are not discretionary. Bocquet, 972
section 38.004 of the civil practices and remedies code S.W.2d at 20.
explicitly informs litigants that a court may do so in a
[HN17] Because section 38.001(8) of the civil
claim for attorney's fees brought under chapter 38.
practices and remedies code specifies that a party "may
Therefore, due process was not violated and the trial
recover reasonable attorney's fees . . . if the claim is for
court did not err by awarding attorney's fees on this
an oral or written contract," the award is not
record.
discretionary. Tex. Civ. Prac. & Rem. Code Ann. §
38.001(8); Bocquet, 972 S.W.2d at 20. W e need only
Attorney's fees
determine if there is sufficient evidence that the fees
In issues five through seven, Cox challenges the awarded were reasonable.
sufficiency of the evidence supporting the trial court's
[HN18] The supreme court has identified various
award of attorney's fees. 1 Specifically, [*16] he
factors to consider when determining what a reasonable
contends that W ilkins presented no evidence establishing
award of attorney's fees should be. They include the
that the attorney's fees were both reasonable and
following: (1) the time and labor required, the novelty
reasonable for Travis County. He avers further that even
and difficulty of the questions involved, and the skill
if the record contains some evidence pertaining to the
required to perform the legal service properly; (2) the
reasonableness of the attorney's fees, it is insufficient to
likelihood that the acceptance of the particular
support the trial court's award. In issue eight, Cox
employment will preclude other employment by the
contends that if there is sufficient evidence to support an
lawyer; (3) the fee customarily charged in the locality for
award of attorney's fees, the trial court's award is
similar legal services; (4) the amount involved and the
excessive.
results obtained; (5) the time limitations imposed by the
client or the circumstances; (6) the nature and length of
1 In issue four, Cox argues that there is no
the professional relationship [*19] with the client; (7)
evidence to support the award of attorney's fees
the experience, reputation and ability of the lawyer or
EXHIBIT "D"
lawyers performing the services; and (8) whether the fee attorney's fees for a claim of the type described in
067-250449-11
is fixed or contingent on results obtained or uncertainty Section 38.001 are reasonable." Tex. Civ. Prac. & Rem.
of collection before the legal services have been Code Ann. § 38.003 (W est 1997). Cox did not put forth
rendered. Arthur Andersen & Co. v. Perry Equip. Corp., any contrary evidence indicating that the fees W ilkins's
945 S.W.2d 812, 818, 40 Tex. Sup. Ct. J. 591 (Tex. 1997). attorney charged were excessive or unreasonable for
Not all of the factors must be considered in every case. Travis County. Nor did he attempt to rebut the
Petco Animal Supplies, Inc. v. Schuster, 144 S.W.3d 554, presumption that the usual and customary [*22]
567 (Tex. App.--Austin 2004, no pet.). They are general attorney's fees were reasonable. Cox merely argues that
guidelines that the supreme court has stated should be W ilkins failed to prove reasonableness and that the trial
taken into account when determining the reasonableness court's award of attorney's fees is excessive for this
of attorney's fees. Id. Evidence of attorney's fees that is simple and uncomplicated debt collection case.
clear, direct, and uncontroverted is taken as true as a
Ultimately, the trial court awarded W ilkins $ 8,535
matter of law, especially where the opposing party had
in attorney's fees, approximately $ 2,700 less than he
the means and opportunity of disproving the evidence but
requested. W e recognize that W ilkins did not put forth
did not. Ragsdale v. Progressive Voters League, 801
any evidence indicating that the legal fees requested were
S.W.2d 880, 882, 34 Tex. Sup. Ct. J. 254 (Tex. 1990).
similar to those customarily charged for equivalent legal
[HN19] In a challenge to legal sufficiency, we services provided in Travis County. However, [HN22] a
review the evidence in the light most favorable to the trial court need not consider every Arthur Andersen
challenged finding and indulge every reasonable factor when determining reasonableness of attorney's
inference that would support it. City of Keller v. Wilson, fees. Petco Animal Supplies, 144 S.W.3d at 567.
168 S.W.3d 802, 822, 48 Tex. Sup. Ct. J. 848 (Tex. 2005). Viewing the evidence in the light most favorable to the
[*20] W e credit favorable evidence if a reasonable fact trial court's award of attorney's fees, we find it sufficient
finder could do so and disregard contrary evidence unless to enable fair-minded people to reach a similar
a reasonable fact finder could not. Id. at 827. The conclusion. City of Keller, 168 S.W.3d at 822, 827
evidence is legally sufficient if it would enable fair- (summarizing legal sufficiency standard of review).
minded people to reach the verdict under review. Id. Moreover, after reviewing all of the evidence and
considering the Arthur Andersen factors we cannot
[HN20] In reviewing the factual sufficiency of the
conclude that the trial court's attorney's fees award is so
evidence, we consider and weigh all the evidence and
contrary to the overwhelming weight [*23] of the
should set aside the judgment only if it is so contrary to
evidence as to be clearly wrong and unjust. Cain, 709
the overwhelming weight of the evidence as to be clearly
S.W.2d at 176 (summarizing factual sufficiency standard
wrong and unjust. Cain v. Bain, 709 S.W.2d 175, 176, 29
of review). Accordingly, we hold that legally and
Tex. Sup. Ct. J. 214 (Tex. 1986). W e may not substitute
factually sufficient evidence supports the trial court's
our own judgment for that of the trier of fact, even if we
award of attorney's fees. Cox's fifth, sixth, seventh and
would have reached a different result on the evidence.
eighth issues are overruled.
M aritime Overseas Corp. v. Ellis, 971 S.W.2d 402, 407,
41 Tex. Sup. Ct. J. 683 (Tex. 1998). Therefore, we will
Erroneous judgment
reverse only if the overwhelming weight of the evidence
indicates the trial court's judgment was clearly wrong and In issues nine and ten, Cox claims that the trial court
unjust. erred in entering judgment against James E. Cox d/b/a
European Import Car Repair for actual damages and
Here, W ilkins requested $ 11,235.57 in attorney's
attorney's fees because there is either no evidence or
fees. In support, he admitted his attorney's detailed
insufficient evidence that the "party existed or was
invoice which explicitly described each task performed
liable."
while working on the case, the amount of time spent on
each task, whether the task was performed [*21] by the W ilkins sued Cox, individually, and the corporate
attorney or one of his paralegals, and the hourly rate entity European Import Car Repair, Inc. In his original
charged for each. W ilkins's attorney also testified that he petition, W ilkins alleged that he performed services for
spent more time than he would have expected on a "James E. Cox d/b/a European Import Car Repair."
collection case of this type because Cox acted pro se for W ilkins also alleged that European Import Car Repair,
much of the underlying proceedings. The record also Inc., was Cox's alter ego; however, he did not produce
indicates that Cox's behavior, such as lying to the court any evidence at trial in support of such an allegation.
in seeking a continuance, resulted in a waste of After reviewing the record, we find that there is no
resources. As stated earlier, the trial court may take evidence to support a corporate veil-piercing theory such
judicial notice of usual and customary attorney's fees as alter ego. Nor was there evidence that European
under these circumstances and that we may presume that Import Car Repair, Inc. [*24] , operated as any business
it did so. Tex. Civ. Prac. & Rem. Code Ann. § 38.004; entity other than a validly incorporated Texas
Lefton, 136 S.W.3d at 279-80. Additionally, civil corporation. Therefore, there was no basis upon which
practices and remedies code section 38.003 states, the trial court could render judgment against "James E.
[HN21] "It is presumed that the usual and customary Cox d/b/a European Import Car Repair."
EXHIBIT "D"
Page 9
067-250449-11
2006 Tex. App. LEXIS 2598, *
was rendered, the date the judgment was signed prevails
On appeal, neither Cox nor European Import Car
over a conflicting docket sheet entry." In re R.A.H., 130
Repair, Inc., challenges their own liability. Accordingly,
S.W.3d 68, 69-70, 47 Tex. Sup. Ct. J. 293 (Tex. 2004)
we modify the trial court's judgment to strike any
(quoting Garza, 89 S.W.3d at 7). Therefore, we hold that
reference to James E. Cox d/b/a European Import Car
the trial court's final judgment was rendered on
Repair. See Tex. R. App. P. 43.2(b).
November 30. Accordingly, we modify the judgment to
reflect that post-judgment interest begins to accrue on
Post-judgment interest
November 30, not November 3. Tex. R. App. P. 43.2(b).
In his eleventh issue, Cox asserts that the trial court The modified judgment should read as follows:
erred in ordering post-judgment interest at the annual rate
of five percent to run from November 3, 2004, because 1. Plaintiff shall have judgment against
the judgment was not signed until November 30, 2004. Defendant James E. Cox, individually, for
actual damages in the amount of $ 450,
In this case, the finance code governs the accrual of
and interest on that amount at the annual
post-judgment interest. See Office of the Attorney Gen.
rate of five (5%) percent from November
v. Lee, 92 S.W.3d 526, 528 n.2, 46 Tex. Sup. Ct. J. 221
30, 2004, until paid in full; and
(Tex. 2002). Finance code section 304.005 states that
[HN23] "post-judgment interest on a money judgment of 2. Plaintiff shall have judgment
a court in this state accrues during the period beginning against Defendant European Import Car
on the date the judgment is rendered and ending on the Repair, Inc., for actual damages in the
date the judgment is satisfied." Tex. Fin. Code Ann. § amount of $ 2,750, and interest on that
304.005(a) [*25] (W est Supp. 2005). [HN24] Generally, amount at the annual rate of five (5%)
a judgment is rendered when the decision is officially percent from November 30, 2004, until
announced orally in open court, by memorandum filed paid in full; and
with the clerk, or otherwise announced publicly. Garza
3. Plaintiff shall have judgment
v. Texas Alcoholic Beverage Comm'n, 89 S.W.3d 1, 6, 45
against Defendants James E. Cox [*27]
Tex. Sup. Ct. J. 1014 (Tex. 2002). An intent to render
individually European Import Car Repair,
judgment in the future does not satisfy this test. Woods
Inc. for reasonable and necessary
v. Woods, 167 S.W.3d 932, 933 (Tex. App.--Amarillo
attorney's fees in the amount of $ 8,535
2005, no pet.).
for which the Defendants are equally
The trial court's docket sheet entry on November 3 responsible.
notes, "COURT RULES IN FAVOR OF PLTF.
[W ilkins] ORDER FORTHCOMING. SENT BY FAX &
MAIL TO BOTH PARTIES." There is no indication on The stricken language has been removed from the
the docket sheet that the trial court filed with the clerk a judgment and the underlined language has been added in
copy of either the letter or the facsimile containing its response to Cox's ninth, tenth and eleventh issues.
decision. The trial court's decision was not orally
announced in open court and the only written reflection CONCLUSION
of the trial court's decision is the November 3 docket
W e modify the trial court's judgment and affirm the
entry. However, the November 3 docket entry explicitly
judgment as modified.
states that the order is forthcoming. This language
suggests that the court intended to render judgment in the
Bea Ann Smith, Justice
future. This suggestion is bolstered by the November 30
docket entry stating, "FINAL JUDGMENT AFTER
NON JURY TRIAL." In addition, the [*26] trial court
signed the final judgment on November 30. [HN25]
"W hen there is a question concerning the date judgment
EXHIBIT "D"
Page 1
809 S.W .2d 362,067-250449-11
*; 1991 Tex. App. LEXIS 1443, **
3 of 100 DOCUMENTS
DEW ITT L. LACY, Appellant v. FIRST NATIONAL BANK OF LIVINGSTON,
TEXAS, Appellee
No. 09-90-099 CV
COURT OF APPEALS OF TEXAS, Ninth District, Beaumont
809 S.W.2d 362; 1991 Tex. App. LEXIS 1443
M ay 9, 1991, Delivered
M ay 9, 1991, Filed
PRIOR HISTO RY: [**1] Appealed from the 9th
Judicial District Court of Polk County, Texas; Trial Civil Procedure > Pleading & Practice > Pleadings >
Cause No. 11,201; Erwin Ernst, Judge. Rule Application & Interpretation
[HN1] In a determination of whether issues and
DISPOSITION: AFFIRMED. pleadings and questions are supported by the pleadings at
the trial level, the trial court will supply omissions in the
CASE SUM M ARY: pleading of one party by referring to the allegations
contained in the pleadings of another party.
PROCEDURAL POSTURE: Appellant challenged a
judgment of the 9th Judicial District Court of Polk Civil Procedure > Trials > Bench Trials
County, Texas, that awarded a deficiency judgment, [HN2] The findings of fact of the trial judge, who has a
prejudgment interest, attorney fees, and costs and interest chance to observe the actual demeanor and actions, tone
to appellee bank. of voice and mannerism of all the witnesses, are of a very
high dignity. According to some decisional law, they are
OVERVIEW : Appellee bank filed suit against appellant, of an equal dignity with jury answers to special questions
seeking to obtain a judgment for a deficiency that or issues.
remained after the sale of collateral secured by a
promissory note. The trial court awarded appellee a
deficiency judgment, prejudgment interest, attorney fees, Civil Procedure > Appeals > Standards of Review
and costs and interest. On review, appellant raised seven [HN3] W hen an intermediate appellate court considers
points of error. The appellate court affirmed. The trial no evidence points or legal insufficiency points, the court
court properly admitted into evidence appellee's exhibit is permitted to consider only the evidence favorable to
containing a letter notifying appellant that he was in the findings below. If there is any probative evidence in
default on payment of the note. There was sufficient the record to support the trial judge's findings, the court
evidence to support the trial court's finding that the is not to overrule them. The acceptable and universally
collateral was disposed of in a commercially reasonable recognized standard for review of factual sufficiency
manner. The trial court properly awarded attorney fees points requires that the court consider the whole record.
and prejudgment interest. The trial court's findings of fact A trial court's findings should be sustained unless,
were supported by sufficient evidence, and its considering all evidence, the intermediate appellate court
conclusions of law were correct. determines that the findings are so against the great
weight and preponderance of the evidence as to be
OUTCOM E: The court affirmed the trial court's manifestly unjust and clearly wrong.
judgment awarding appellee bank a deficiency judgment,
plus interest, fees, and costs; the trial court did not err in
its evidentiary rulings or in awarding interest and fees, its Civil Procedure > Rem edies > Costs & Attorney Fees >
findings of fact were supported by sufficient evidence, Attorney Expenses & Fees > Reasonable Fees
and its conclusions of law were correct. Evidence > Judicial Notice > Adjudicative Facts >
Public Records
LexisNexis(R) Headnotes [HN4] Tex. Civ. Prac. & Rem. Code Ann. § 38.004
(1986) permits the trial court to take judicial notice of the
EXHIBIT "E"
contents of the official file before the trial court and the remained after the sale of collateral. The collateral had
usual, customary and reasonable attorney fees. The067-250449-11
usual been given to secure a certain promissory note. The
and customary fees are also presumed to be reasonable. briefs acknowledged that no jury had been demanded and
that all issues of fact as well as of law were affirmatively
submitted to the trial judge. After a full hearing on the
Civil Procedure > Rem edies > Costs & Attorney Fees > merits, First Bank was awarded a judgment against Lacy
General Overview for debt in the amount of $ 16,430.00, prejudgment
[HN5] A recovery of an attorney's fees may be awarded interest of $ 9,587.12, and attorney's fees of $ 675.00.
against a person, an individual or a corporation in Court costs and interest after the signing and entry of the
addition to the amount of the claim and costs if the judgment was also provided for. The trial court filed
litigation is based on an oral or written contract. Tex. Civ. certain findings of fact separate [**2] from certain
Prac. & Rem. Code Ann. § 38.001 (1986). conclusions of law, pursuant to the rule.
Lacy brought forward and argues seven points of
error. Point one is that the trial court committed
Civil Procedure > Trials > Bench Trials
reversible error in admitting into evidence the Plaintiff's
Civil Procedure > Rem edies > Costs & Attorney Fees >
Exhibit Number Two because the waiver of notice had
Attorney Expenses & Fees > Reasonable Fees
not been specifically pleaded by First Bank.
Evidence > Judicial Notice > General Overview
[HN6] Tex. Civ. Prac. & Rem. Code Ann. § 38.004 In the bench trial, one of the first offers of evidence
provides that the trial court may take judicial notice of was a request for admission that the document marked
the usual and customary attorney fees and of the contents Exhibit A and attached to the request for admissions was
of the case file without receiving further evidence in a and is a true and genuine copy of a promissory note
bench trial. The trial court may observe the efforts and executed by Lacy. The answer to that request was
work of the lawyers in front of it. "admitted". First Bank's Exhibit Number One, being the
same as Exhibit A, was admitted. No objection was
leveled. It was admitted that First Bank had delivered a
Civil Procedure > Rem edies > Costs & Attorney Fees > valuable exchange for the promissory note. It was
General Overview admitted that by the execution of the promissory note
[HN7] The entire chapter on attorney fees shall be Lacy unconditionally promised to pay $ 20,622.66 to the
liberally construed to promote its underlying purposes. order of First Bank. The final request for admission was
Tex. Civ. Prac. & Rem. Code Ann. § 38.005. Strong numbered five. It read in substance that except as alleged
authority exists that it is within a court's discretion to and set out in the First Bank's original petition in this
award attorney fees in the event of an appeal being taken suit, no payments had been made to retire the principal or
even though there was no evidence offered on that accrued interest on the promissory note. The answer was
matter. "yes, admitted".
[**3] The first contested piece of evidence was a
document identified as Plaintiff's Exhibit Number Two.
Evidence > Judicial Notice > General Overview
It was a letter signed by Dewitt Lacy dated April 15,
[HN8] The trial court may take judicial notice and is
1987. It was addressed to the First National Bank of
presumed to have taken judicial notice whether requested
Livingston in re Note Number 537142. The letter was not
to do so by a party or not. Judicial notice, of course, may
lengthy. The letter of April 15, 1987, stated that Lacy had
be taken at any stage of the proceedings.
been notified that he was in default on the payment of the
note and/or the security agreement, both of which were
COUNSEL: Bill Jones, Livingston, Texas, for appellant.
covered by certain following described property called
collateral. Generally, the property was a 1981 Ford 3/4
Tom Brown, Livingston, Texas, for appellee.
ton pick-up truck with identification number, a Triggs
horse trailer with a specific serial number, and a Klosel
JUDGES: Ronald L. W alker, C.J., Jack Brookshire and
horse trailer with a specific serial number. In the said
Don Burgess, JJ. Don Burgess, J., concurring.
letter, Lacy unequivocally and voluntarily gave up any
right that he might have to further notice and to a
OPINION BY: BROOKSHIRE
hearing. Lacy had recited in capital letters that he knew
he may have a constitutional right to a court hearing to
OPINION
determine whether he was in default and whether First
Bank was entitled to the possession of the collateral at
[*363] OPINION
the time of the letter. The letter recited that Lacy thereby
In the proceeding below, the First National Bank of delivered possession of the above described collateral to
Livingston, Texas (First Bank), as plaintiff, brought suit the bank. The collateral was described [**4] with
against Dewitt L. Lacy (Lacy), the defendant, seeking to intensive specificity. Further, Lacy wrote:
obtain a judgment for a certain deficiency which
I agree that you have the right to sell it totally and
EXHIBIT "E"
Page 3
809 S.W .2d 362,067-250449-11
*; 1991 Tex. App. LEXIS 1443, **
finally pursuant to the terms of the security agreement remedies:
between us without any further obligation from you [First
....
Bank] to me [Lacy]. I agree that I am responsible to you
for any part of the debt that remains unpaid after the sale (d) You may use any remedy you may have under
of this collateral. [**6] state or federal law.
[*364] I have removed all of my other personal (e) You may use any remedy given to you under any
property from the collateral. agreement securing this note.
Signed this 15th day of April, 1987. There is a separate and distinct paragraph in the
security agreement generally entitled "DEFAULT AND
/s/ Dewitt Lacy
REMEDIES". DEFAULT AND REMEDIES provides:
---------------
I will be in default on this agreement if any event
Dewitt Lacy specified in the "Default" paragraph of the note occurs. If
I am in default on this agreement or on any secured
The sole objection to the introduction of this
obligation, you have all of the remedies provided in the
Plaintiff's Exhibit Number Two was that it had not been
note or other obligation and all of the remedies provided
specifically pleaded. The execution of the letter was not
below and by law. You may:
challenged, nor was Lacy's complete knowledge of the
letter and the contents. The contents therein were not ....
disputed.
(c) take immediate possession of the property, but in
The letter waived any further obligations from First doing so you may not breach the peace or unlawfully
Bank to Lacy. An official of the bank personally saw enter onto my premises. You may then sell, lease or
Lacy execute the document, being the letter, Plaintiff's dispose of the property, as provided by law. . . . You may
Exhibit Number Two. The objection of Lacy was based obtain a deficiency judgment if the proceeds do not
on no specific pleadings. In First Bank's pleading, the satisfy the debt.
security agreement or note is referred to. Also, First Bank
W e conclude that the pleadings of First Bank,
alleged that it was authorized by the security agreement
including the Exhibit, was adequate to permit the
[**5] to repossess the collateral and that the collateral
introduction of Plaintiff's Exhibit Number Two, the letter
was sold on June 3, 1987. The resulting net sales
of April 15, 1987. Lacy knew of the letter he signed
proceeds of $ 3,600 were raised. Attached to the
directed to the bank. The pleadings are sufficient to state
Plaintiff's Original Petition was an Exhibit, being Exhibit
a cause of action. No special exceptions were leveled.
A. It was a security agreement and made a part of the
The pleadings [**7] set forth that First Bank could
Plaintiff's Original Petition. The note and security
pursue any remedy it had under the security agreement or
agreement provide as follows:
that it had by law. The First Bank's pleadings are entitled
DEFAULT - I will be in default on this note and any to all reasonable entendments. But we conclude that
agreement securing this note if any one or more of the resort to the entendment rule is not necessary. T he trial
following occurs: court below specifically found and held that the
pleadings would support the admission of the waiver
(a) I fail to make one or more payments on time on
document, Plaintiff's Exhibit Number Two. W e agree
in the amount due;
with the trial judge. W e view the pleadings and the
.... exhibits as giving fair notice of the claim involved.
Absent special exceptions, First Bank complied [*365]
(c) I fail to keep any promise contained in this note,
with TEX. R. CIV. P. 47. Again, we find no special
any agreement securing this note, or any other written
exceptions in the pleadings of Lacy.
agreement with you;
W e conclude that our immediately preceding ruling
....
is sufficient in and of itself. However, we point out that
(i) any fact appears or event occurs that causes you [HN1] in a determination of whether issues and
to consider yourself insecure, or the prospect of payment, pleadings and questions are supported by the pleadings at
performance, or realization on the collateral is impaired. the trial level, the trial court will supply omissions in the
pleading of one party by referring to the allegations
If any of us are in default on this note or any security contained in the pleadings of another party. Land Title
agreement, you may exercise your remedies against any Co. of Dallas v. F.M. Stigler, Inc., 609 S.W.2d 754 (Tex.
or all of us. 1980); Whittington v. Glazier, 81 S.W.2d 543 (Tex. Civ.
REMEDIES - If I am in default on the note or any App.--Texarkana 1935, writ ref'd). [**8] Point of error
agreement securing this note, you have the following number one is overruled.
EXHIBIT "E"
this record.
Appellant's points of error two and three are that
067-250449-11
there is no evidence in the record to support the verdict [HN2] The findings of fact of the trial judge, who
of the trial court that the plaintiff's sales of the goods had a chance to observe the actual demeanor and actions,
were commercially reasonable and, independently, that tone of voice and mannerism of all the witnesses, are of a
the evidence is insufficient to support the concept that the very high dignity. According to some decisional law,
plaintiff's sales of the goods were commercially they are of an equal dignity with jury answers to special
reasonable. Lacy briefs points of error two and three questions or issues. See National Pump Co., Inc. v. C &
together. There is evidence in the record of affirmative L Mach. Co., Inc. 565 S.W.2d 331 (Tex. Civ. App.--
probative force and valuation that the note matured in Amarillo 1978, no writ). [HN3] W hen an intermediate
middle M arch 1987, and therefore, the letter of April 15, appellate court considers [**11] [*366] no evidence
1987, was subsequent to the maturing of the note. The points or legal insufficiency points, we are permitted to
Appellant voluntarily surrendered the property to First consider only the evidence favorable to the findings
Bank. The property surrendered was the entirety of the below. If there is any probative evidence in the record to
three elements of collateral. After the voluntary surrender support the trial judge's findings, we are not to overrule
of all the collateral, the collateral was placed on the west them. See Ray v. Farmers State Bank of Hart, 576
side of the bank where there was a heavy traffic flow. S.W.2d 607 (Tex. 1979). The acceptable and universally
"For Sale" signs were placed on the collateral. Bids were recognized standard for review of factual sufficiency
taken. There were numerous bids taken. Probably at least points requires that we consider the whole record. W e
eight in number. Bids were taken for a period of time of have done so. A trial court's findings should be sustained
about a month and a half. The collateral was sold to the unless, considering all evidence, the intermediate
highest bidder. appellate court determines that the findings are so against
the great weight and preponderance of the evidence as to
There is definite [**9] evidence the truck was in
be manifestly unjust and clearly wrong. Garza v. Alviar,
bad shape. It had in excess of 100,000 miles of use and
395 S.W.2d 821 (Tex. 1965); In re King's Estate, 150
mileage on it. The two trailers were used trailers. They
Tex. 662, 244 S.W.2d 660 (1951); Potter v. Garner, 407
were not new trailers. They did not have a recent paint
S.W.2d 537 (Tex. Civ. App.--Tyler 1966, writ ref'd
job on them. The trailers had scratches and other defects.
n.r.e.); R. Calvert, "No Evidence" and "Insufficient
The highest bid received was $ 3,600.00 which was
Evidence" Points of Error, 38 TEXAS L. REV. 361
applied to the balance due on the note. After the
(1960); W . Garwood, The Question of Insufficient
deduction the record reflects cogent evidence that the
Evidence on Appeal, 30 TEXAS L. REV. 803 (1952).
remaining principal due and owing on the note was $
Following the accepted standards of intermediate review
16,430.00. After computation, the interest on the note as
and [**12] after reviewing the entire record, we overrule
of time of trial was $ 9,587.12. Hence, as of the date of
Appellant's points of error number two and three.
trial, there was affirmative probative evidence that the
total amount due and owing by Lacy to First Bank was $ Lacy testified for the defense. He said the horse
26,017.12. trailers were about six years old. He had not bought one
of them new. He did not know how many miles were
The First Bank was the present legal owner and
shown on the odometer of the pick-up truck. Lacy had
holder of the note. Other than the credit for the collateral,
seen the collateral on the lot next to the bank. He did not
there had not been any payments whatsoever made upon
complain to anyone in the bank about the way the
the principal of this note, according to the bank's records
collateral had been placed for the purpose of selling it or
and the record before us. The total amount immediately
obtaining bids on the collateral. He said, however, that he
stated above was still due and owing directly to First
did complain to himself, but that, nevertheless, he did not
Bank. Again, the collateral was placed in a position to
complain to anyone in the bank. Lacy acknowledged on
face a major highway. The highway was a major
cross-examination that he had signed the note and that he
thoroughfare through Livingston. The collateral was on a
had not made any payments on the principal of the note.
lot having [**10] the most exposure to the public and
Lacy had made the interest payments only. Lacy
the public traffic. Lacy saw the collateral on the lot. He
acknowledged that the note came due on M arch 15th and
made no protest. Interested persons would and could see
he did not pay it. Lacy was the only witness for the
the collateral and inspect the collateral. They were at
defense. The trial judge had the right and duty to weigh
liberty to come into the bank and make written bids. This
his testimony and credibility and to analyze his answers.
collateral was sold in the same manner as many other
The trial judge, sitting without a jury, could have
pieces of collateral had been sold by the bank. This
weighed the fact that Lacy, of course, was an interested
method of sale was used on all of the automobiles that
witness. This gave the trial judge very broad latitude in
the bank had apparently repossessed and sold. Again,
[**13] the weighing of Lacy's testimony.
there is testimony that the lot where the collateral was
placed had the most exposure. The method of sale of the It does not seem to us that the testimonies on the
collateral was the normal practice. attorney's fees issue was seriously challenged. The
amount of time employed and the other efforts of the
The trial court found that the collateral was disposed
attorney or attorneys for the First Bank, we perceive,
of in a commercially reasonable manner. W e agree under
EXHIBIT "E"
Page 5
809 S.W .2d 362,067-250449-11
*; 1991 Tex. App. LEXIS 1443, **
were not seriously questioned. The cross-examination on charges immediately payable.
this point was minimal.
You [the bank] may use any remedy given you
The record reflects clearly that the testimony under any agreement securing this note.
concerning the attorney's fees was not proffered as expert
Lacy agreed to pay any reasonable and/or
testimony. It was a mere recital of the hours and efforts
contractual amount that the bank incurred in collecting
expended on the case. The evidence was factual. W e
this note as and for attorney's fees if assessed by a court.
simply find no error in the awarding of the attorney's fees
The attorney's fees involved were assessed by the court
in this case which were also reasonable and necessary.
and Lacy had been served with a pleading that a
TEXAS CIVIL PRACTICE & REMEDIES CODE and
reasonable attorney's fee for attorney services rendered
portions thereof, especially Section 38.004, permit
and to be rendered would be in the amount of $ 5,000,
certain recoveries in a bench trial. See, [HN4] TEX. CIV.
although the judgment itself permits [**16] only $ 675.
PRAC. & REM. CODE ANN. § 38.004 (Vernon 1986).
See and compare Paramount Pipe & Supply Co., Inc. v.
This section permits the trial court to take judicial notice
Muhr, 749 S.W.2d 491 (Tex. 1988); Commercial Union
of the contents of the official file before the trial court
Ins. Co. v. La Villa Sch. D., 779 S.W.2d 102 (Tex. App.--
and the usual, customary and reasonable attorney's fees.
Corpus Christi 1989, no writ).
The usual and customary fees are also presumed to be
reasonable. TEX. CIV. PRAC. & REM. CODE ANN. § The trial judge may properly take into consideration
38.003 (Vernon 1986). In this record the Appellee's the file which is before him in his court as well as the
attorney offered himself [**14] as a lay, fact witness proceedings that are conducted in his presence. See and
only. He did not express an expert opinion. He did compare Carrington v. Hart, 703 S.W.2d 814 (Tex.
express specifically the time that he had expended and App.--Austin 1986, no writ). See also Lewis v. Deaf
for which he had billed First B ank. He did testify as a Smith Elec. Co-Op., Inc., 768 S.W.2d 511 (Tex. App.--
fact witness as to what had been paid to counsel. The Amarillo 1989, no writ). And the trial court under these
testimony offered was factual testimony. W e conclude circumstances is presumed to have taken judicial notice.
that if there was any error on the issue of attorney's fees The bank was represented by two attorneys in this case.
that such error was harmless under this entire record. TEX. CIV. PRAC. & REM. CODE ANN § 38.002
However, we wish to make it clear that we do not think (Vernon 1986). There exists a presumption that the usual
the trial court erred. W e further conclude that sufficient and customary attorney's fees for any type of claim that
evidence of strong probative force was presented to is set out in section 38.001 are reasonable. Section
allow the court to calculate the amount of prejudgment 38.003. [HN6] Section 38.004 provides that the trial
interest. court may take judicial notice of the usual and customary
attorney's fees and of the contents of the case file without
[*367] W e have reviewed and analyzed the
receiving further evidence in a bench trial. The trial court
findings of fact and the separately filed conclusions of
may observe the efforts and work of the lawyers in
law. The findings of fact are nine in number and the
[**17] front of it.
conclusions of law are four in number. They were signed
in the middle part of May of 1990. Findings of fact and [HN7] The entire chapter on attorney's fees shall be
conclusions of law were made, signed and filed in liberally construed to promote its underlying purposes.
response to a request from Appellant. From the entirety TEX. CIV. PRAC. & REM. CODE ANN. § 38.005. Strong
of the record before us we conclude that each of the authority exists that it is within a court's discretion to
findings of fact is supported by sufficient and ample award attorney's fees in the event of an appeal being
evidence of probative force and value. W e determine that taken even though there was no evidence offered on that
each of the conclusions [**15] of law is correct and matter. There is a viable, vital presumption that the trial
proper. court did take judicial notice of the full file in front of it
and the trial before it as well as the usual and customary
[HN5] A recovery of an attorney's fees may be
attorney's fees in awarding attorney's fees. See Bloom v.
awarded against a person, an individual or a corporation
Bloom, 767 S.W.2d 463 (Tex. App.--San Antonio 1989,
in addition to the amount of the claim and costs if the
writ denied, mand. overr.).
litigation is based on an oral or written contract. TEX.
CIV. PRAC. & REM. CODE ANN. § 38.001 (Vernon Of course, [HN8] the trial court may take judicial
1986). The suit was based on a rather lengthy contract in notice and is presumed to have taken judicial notice
writing. The attorney's fees were pleaded for in the whether requested to do so by a party or not. Judicial
original petition. Lacy had agreed to pay reasonable, notice, of course, may be taken at any stage of the
contractual attorney's fees. Under the remedies in Exhibit proceedings. A reasonable construction of TEX. R. CIV.
A which were before the court, Lacy promised this: P. 201(c) would be, we perceive, that since the court may
take judicial notice whether requested or not that the
You [the bank] may, without notice . . . make all
litigants would be aware of same. From the manner in
unpaid principal, earned interest and all other agreed
EXHIBIT "E"
which this case was tried, it certainly appears, the parties there were none) that took place at trial did not amount to
were aware that the trial court would take judicial 067-250449-11
[**18] such a denial of the rights of the Appellant as were
notice. The necessity of taking judicial notice, we reasonably calculated to cause and probably did cause
respectfully say, was brought about by or caused by the rendition of an improper judgment in the litigation.
Appellant. TEX. R. APP. P. 81(b)(1). In candor, under this record,
we opine that the bank's attorney's fees were modest.
[*368] Touching upon the reasonableness and
necessity of an attorney's fees in this matter, it appears W e overrule Appellant's points of error number four
from the transcript that at the very least an attorney of and five attacking the granting of attorney's fees. W e
record with an appropriate and proper bar number drew overrule also Appellant's points of error number six and
and filed a plaintiff's original petition with very seven attacking and challenging the granting of
important attachments with which he obviously prejudgment interest on the promissory note. W e
acquainted himself. W e glean this conclusion from the conclude the judgment entered below was correct. The
allegations of Appellee's pleadings. This defendant's said judgment is hereby affirmed.
original answer is not verified. W e perceive that TEX. R.
The concurring opinion insisted [**21] upon
CIV. P. 93 was not followed. Additionally, important and
publication.
cogent plaintiff's req uests for admissions and
interrogatories were drawn up and filed in behalf of the The writer of this opinion realistically pronounces
plaintiff bank by an attorney of record for the bank. It is that, in effect, we are making a favorable ruling to and
correct that a defendant's first amended answer was filed for Appellant Lacy by overruling his point of error
which was verified but complained that the bank failed to concerning the attorney's fees for the bank. It certainly
give notice of the intended disposition of the collateral appears that if the bank's attorney's fees question is
which was the subject of the suit. And further, the relitigated, then the able attorneys, having the benefit of
disposition of the collateral was not commercially these opinions, would then, in all probability, petition for
reasonable. an additional trial fee plus either one or two fees for
appellate work. Of course, the attorney's fees for
W e do not find any answers of defendant Lacy to the
appellate work vary; but the variance usually runs
request for admissions and interrogatories [**19] in the
between $ 1,500 to $ 2,500 or in some cases considerably
transcript which was applied for by the attorney of record
higher. Logically then, the Appellant Lacy would be
for Appellant Lacy. A trial was held on the merits of the
possibly, if not probably, subjected to additional
litigation on or about March 15, 1990. As we perceive
attorney's fees for [*369] the bank's attorneys in a very
the statement of facts, the objection to the attorney's fees
substantial amount. But we do not rule on Appellant's
made at trial was that there was a failure to identify any
point of error on this basis. Nevertheless, it is a very
experts as related to the question of attorney's fees. The
practical and favorable consideration for Appellant.
bank's trial attorney requested the trial judge to take
judicial notice of what was reasonable on this issue. The AFFIRMED.
bank's second attorney testified as a fact witness. As we
read the record we do not see that there was any CONCUR BY: BURGESS
objection made at trial to the trial court's taking judicial
notice. There was no cross-examination of the bank's trial CONCUR
attorney on the attorney's fees issue.
CONCURRING OPINION
W e perceive that the court was asked to take judicial
notice of the reasonableness and necessity on the issue of Don Burgess, Justice, concurring.
attorney's fees. But the note and its attachments clearly
I concur in the majority's holding regarding the
provide, we think, that in case of any default the bank
attorney's fees because appellant only attacked the
could without notice make all unpaid principal, earned
awarding of the attorney's fees by a no evidence [**22]
interest and any and all other agreed charges immediately
point. Our supreme court in Gill Sav. Ass'n. v. Chair
payable. And further, the bank could use any remedy
King, Inc., 797 S.W.2d 31, 32 (Tex. 1990) stated: "The
given to it under any agreement securing the note and
trial court's own proceedings together with the fact that it
Lacy agreed to pay [**20] reasonable amounts that the
may take judicial notice of usual and customary fees
bank incurred in the collection of this note as attorney's
constitute some evidence to support the award of
fees.
appellate attorney's fees." (emphasis mine). Since
In view of the entirety of the record before us, at appellant did not raise factual insufficiency, we cannot
least to the writer, it seems arbitrary and unreasonable to consider that issue. Therefore, I must concur in the
disallow the attorney's fees; and that there is no evidence affirmance.
on which to base the award of the attorney's fees.
I would, however, offer this additional analysis.
As a separate and distinct basis for our affirmance is W hile TEX. CIV. PRAC. & REM. CODE ANN. § 38.004
that after reviewing the entire record before us, as we (Vernon 1986) permits a trial court to take judicial notice
must do, we conclude that any irregularities (we decide of the usual and customary attorney's fees and the
EXHIBIT "E"
Page 7
809 S.W .2d 362,067-250449-11
*; 1991 Tex. App. LEXIS 1443, **
contents of a case file, one should then turn to TEX. R. implicit in subsection (e) is some type of notice to the
CIV. EVID. 201 to determine the correct procedure. parties that the court will or has taken judicial notice.
(emphasis mine) Basic fairness would seem to dictate such an action. See
1 R. RAY, TEXAS LAW OF EVIDENCE CIVIL AND
Rule 201(c) allows a court to take judicial notice,
CRIM INAL §§ 152-211 (Texas Practice 3d ed. 1980)
whether requested or not. Rule 201(d) requires a court to
and W ellborn, Judicial Notice Under Article II of the
take judicial notice if requested by a party and supplied
Texas Rules of Evidence, 19 ST. MARY'S L.J. 1 (1987).
with the necessary information. Rule 201(e) provides a
The Texas Supreme Court should re-examine Rule 201
party with the opportunity to be heard as to the propriety
in this context.
of taking judicial notice and, "In the absence of prior
notification, the request may be made after judicial notice
has [**23] been taken." W hile the rule is not explicit,
EXHIBIT "E"
Page 1
977 S.W .2d 662,067-250449-11
*; 1998 Tex. App. LEXIS 3352, **
W ORLD HELP, APPELLANT v. LEISURE LIFESTYLES, INC., APPELLEES
KINGDOM PROPERTIES, INC. AND TURNER CONSTRUCTION COM PANY
OF TEXAS, INC.
NO. 2-96-260-CV
COURT OF APPEALS OF TEXAS, SECOND DISTRICT, FORT W ORTH
977 S.W.2d 662; 1998 Tex. App. LEXIS 3352
June 4, 1998, Delivered
SUBSEQUENT HISTORY: [**1] Motion for Although defendant contractor's and developer's
Rehearing of Petition for Review Overruled May 27, evidence did not establish their entitlement to summary
1999. Petition for Review Denied March 25, 1999. judgment, the evidence raised factual issues regarding
the lender's fraud, harm to defendants, and the extent of
PRIOR HISTORY: FROM THE 355TH DISTRICT the harm that precluded the entry of summary judgment
COURT OF HOOD COUNTY. for plaintiff on the lien priority issue.
DISPOSITION: Ttrial court's judgment affirmed in OUTCOM E: The court affirmed in part, reversed and
part, reversed and remanded in part, and reversed and remanded in part, and reversed and rendered in part the
renderd in part. judgment. Plaintiff assignee failed to establish its
superior lien priorities as a matter of law in light of
CASE SUM M ARY: factual issues raised by defendant contractor's and
developer's evidence of lender's fraud, harm to
defendants, and the extent of the harm.
PROCEDURAL POSTURE: Plaintiff assignee sought
review of a judgment from the 355th District Court of LexisNexis(R) Headnotes
Hood County (Texas), contending that the trial court
erred in granting summary judgment for defendant
contractor and developer and denying summary judgment
for plaintiff on the issue of lien priority. Civil Procedure > Sum m ary Judgm ent > Appellate
Review > General Overview
OVERVIEW : In a suit involving lien priority and Civil Procedure > Sum m ary Judgment > Burdens of
breach of contract issues, plaintiff assignee moved for Production & Proof > Movants
summary judgment that vendor's and deed of trust liens Civil Procedure > Sum m ary Judgm ent > Standards >
acquired from a bankrupt lender had priority over Genuine Disputes
defendant contractor's and developer's mechanic's and [HN1] In a summary judgment case, the issue on appeal
materialman's liens. The trial court entered a partial is whether the movant met its summary judgment burden
summary judgment, ruling that defendant contractor's by establishing that no genuine issue of material fact
and developer's liens were superior to plaintiff's liens. In exists and that the movant is entitled to judgment as a
its final judgment, the trial court reaffirmed the lien matter of law. Tex. R. Civ. P. 166a(c). The burden of
priorities. On appeal, the court affirmed in part, reversed proof is on the movant and all doubts about the existence
and remanded in part, and reversed and rendered in part. of a genuine issue of a material fact are resolved against
The trial court's summary judgment granting defendant the movant. Therefore, appellate courts must view the
contractor and defendant developer superior lien status evidence and its reasonable inferences in the light most
was erroneous because defendants failed to establish that favorable to the nonmovant.
the lender's conduct was so inequitable as to warrant
subordination of its or plaintiff's mortgage lien rights.
EXHIBIT "F"
Page 2
977 S.W .2d 662,067-250449-11
*; 1998 Tex. App. LEXIS 3352, **
Civil Procedure > Sum m ary Judgm ent > Evidence Priorities
Civil Procedure > Sum m ary Judgm ent > Standards > [H N 7] B ecause equitable subordination is an
Materiality extraordinary remedy, courts have limited its application
[HN2] In deciding whether there is a material fact issue to three categories of cases: those in which a fiduciary of
precluding summary judgment, all conflicts in the the debtor misuses its position to the disadvantage of
evidence are disregarded and the evidence favorable to other creditors; those in which a third party, in effect,
the nonmovant is accepted as true. Evidence that favors controls the debtor to the disadvantage of others; and
the movant's position is not considered unless it is those in which a third party defrauds other creditors.
uncontroverted. The summary judgment is affirmed only
if the record establishes that the movant has conclusively
proved all essential elements of its cause of action or Bankruptcy Law > Claim s > Types > Unsecured
defense as a matter of law. Priority Claim s > Subordination
Evidence > Relevance > Spoliation
Real Property Law > Nonm ortgage Liens > Lien
Contracts Law > Secured Transactions > Perfection & Priorities
Priority > Priority > Liens > Mechanics' Liens [HN8] Although actual fraud need not be shown to
Real Property Law > Construction Law > Contractors obtain equitable subordination, cases in which no
& Subcontractors showing of fraud is required are generally bankruptcy
Real Property Law > Nonm ortgage Liens > Lien cases involving insider misconduct. In the bankruptcy
Priorities context, "insiders" include a corporate debtor's directors
[HN3] In a contest over rights or interests in property, and officers, persons in control of the corporation, and
ordinarily the party that is first in time is first in right. their relatives. If a claimant is not an insider, then
evidence of more egregious conduct, such as fraud,
spoliation, or overreaching is necessary.
Real Property Law > Nonm ortgage Liens > Lien
Priorities
[HN4] Equitable subordination is not a cause of action; it C o n tra c ts L a w > D e fen se s > F ra u d &
is a remedy. This remedy is not available absent a finding Misrepresentation > General Overview
that the party with a superior lien or claim engaged in Torts > Business Torts > Fraud & Misrepresentation >
false or inequitable conduct that conferred an unfair General Overview
advantage on itself or injured third parties. [HN9] The elements of fraud are: (1) a false, material
representation; (2) that was either known to be false
when made or was made without knowledge of its truth;
Real Property Law > Nonm ortgage Liens > Lien (3) that was intended to be acted upon; (4) that was relied
Priorities upon; and (5) that caused injury. The mere failure to
[HN5] W hether inequitable conduct has occurred perform a contract is not evidence of fraud. But a
sufficient to warrant equitable subordination is a fact promise of future performance is actionable if at the time
question. Thus, a trial court's decision to subordinate lien the promise was made the promisor intended to deceive
rights under this doctrine must be based upon fact and had no intention of performing.
findings that inequitable conduct occurred and that the
conduct was so inequitable that it warrants lien
subordination. Torts > Business Torts > Fraud & Misrepresentation >
General Overview
[HN10] Intent is a fact question uniquely within the
Bankruptcy Law > Claim s > Types > Unsecured realm of the trier of fact because it so depends upon the
Priority Claim s > Subordination credibility of the witnesses and the weight to be given to
Real Property Law > Nonm ortgage Liens > Lien their testimony. A party's intent is determined at the time
Priorities of the representation, but it may be inferred from the
[HN6] A lender's failure to fund a loan, without more, party's acts after the representation was made. Although
does not support equitable subordination. Rather, to the failure to perform, standing alone, is not evidence of
establish its entitlement to this remedy, an injured party a promisor's intent not to perform, it may be considered
must prove conduct so inequitable that it "shocks one's with other factors to establish intent.
good conscience."
Governm ents > Fiduciary Responsibilities
Governm ents > Fiduciary Responsibilities Torts > Business Torts > Fraud & Misrepresentation >
Real Property Law > Nonm ortgage Liens > Lien Nondisclosure > General Overview
EXHIBIT "F"
Page 3
977 S.W .2d 662,067-250449-11
*; 1998 Tex. App. LEXIS 3352, **
[HN11] False representations can arise from silence as [ H N 1 6 ] W h e re se v era l in stru m e n ts, e xe c ute d
well as affirmative statements. W hen the particular contemporaneously or at different times, pertain to the
circumstances impose on a person a duty to speak and he same transaction, they are read together although they do
deliberately remains silent, his silence is equivalent to a not expressly refer to each other.
false representation. A party has an affirmative duty to
disclose where there is a confidential or fiduciary
relationship or where a party later learns that a previous Civil Procedure > Appeals > Standards of Review >
affirmative representation was false or misleading. A Clearly Erroneous Review
duty to disclose also arises when one party knows that Civil Procedure > Appeals > Standards of Review >
the other party is relying on the concealed fact, provided Substantial Evidence > Sufficiency of Evidence
that he knows that the relying party is ignorant of the [HN17] Findings of fact entered in a case tried to the
facts and does not have an equal opportunity to discover court are of the same force and dignity as a jury's
the truth. In addition, when one voluntarily discloses answers to jury questions. The trial court's findings of
information, he has a duty to disclose the whole truth fact are reviewable for legal and factual sufficiency of
rather than making a partial disclosure that conveys a the evidence to support them by the same standards that
false impression. are applied in reviewing evidence supporting a jury's
answer.
Civil Procedure > Sum m ary Judgm ent > Appellate
Review > General Overview Evidence > Inferences & Presum ptions > General
Crim inal Law & Procedure > Appeals > Reviewability > Overview
Waiver > Adm ission of Evidence [HN18] In determining a "no-evidence" point, courts are
Evidence > Testim ony > Lay Witnesses > Personal to consider only the evidence and inferences that tend to
Knowledge support the finding and disregard all evidence and
[HN12] Courts may consider the uncontroverted inferences to the contrary. If there is more than a scintilla
testimonial evidence of an interested witness if the of such evidence to support the finding, the claim is
evidence is clear, positive and direct, otherwise credible sufficient as a matter of law, and any challenges go
and free from contradictions and inconsistencies, and merely to the weight to be accorded the evidence.
could have been readily controverted. Tex. R. Civ. P.
166a(c).
Civil Procedure > Sum m ary Judgment > Supporting
Materials > General Overview
Civil Procedure > Sum m ary Judgm ent > Appellate [HN19] An assertion that the evidence is "insufficient" to
Review > General Overview support a fact finding means that the evidence supporting
Civil Procedure > Sum m ary Judgm ent > Standards > the finding is so weak or the evidence to the contrary is
General Overview so overwhelming that the answer should be set aside and
Evidence > Inferences & Presum ptions > Inferences a new trial ordered. Courts are required to consider all of
[HN13] W hen reviewing summary judgment evidence, the evidence in the case in making this determination.
courts must view every reasonable inference in the light
most favorable to the nonmovant.
Com m ercial Law (UCC) > Negotiable Instrum ents
(Article 3) > Enforcement > Holders in Due Course >
Real Property Law > Nonm ortgage Liens > Lien General Overview
Priorities Com m ercial Law (UCC) > Negotiable Instrum ents
[HN14] Lien priorities should be subordinated only to the (Article 3) > Negotiation, Transfer & Indorsem ent >
extent necessary to offset the harm done by the Transfers
inequitable conduct. [HN20] Tex. Bus. & Com. Code Ann. § 3.203(b) (Supp.
1998) provides that a transferee of an instrument
ordinarily acquires the same rights to enforce payment of
Real Property Law > N onm ortgage Liens > Equitable the instrument that a transferor had.
Liens
[HN15] A party seeking an equitable lien must request
this remedy in its pleadings. Com m ercial Law (UCC) > General Provisions (Article
1) > Application & Construction > Variation by
Agreem ent
Contracts Law > Contract Interpretation > General Com m ercial Law (UCC) > General Provisions (Article
Overview 1) > Policies & Purposes > General Overview
EXHIBIT "F"
Page 4
977 S.W .2d 662,067-250449-11
*; 1998 Tex. App. LEXIS 3352, **
[HN21] Tex. Bus. & Com. Code Ann. § 1.102(c), (d) [HN27] Tex. R. Civ. P. 94 require a party to affirmatively
(1994) provides that the statutory provisions may indeed plead matters constituting an avoidance or an affirmative
be varied by agreement. defense.
Com m ercial Law (UCC) > Negotiable Instrum ents Insurance Law > Claim s & Contracts > Subrogation >
(Article 3) > Enforcement > Holders in Due Course > Voluntary Payment
General Overview Real Property Law > Financing > Mortgages & Other
C o n tracts L aw > N egotia b le In stru m en ts > Security Instrum ents > Mortgagee's Interests
Enforcem ent > Overdue Instrum ents Securities Law > Investm ent Com panies > Activities
[HN22] A purchaser of a note who knew at the time of [HN28] Subrogation to a creditor's rights is available
purchase that the notes were overdue does not qualify as only when a debtor was enriched unjustly; thus, the
a holder in due course. Tex. Bus. & Com. Code Ann. § payor who confers a benefit as a "mere volunteer" is not
3.302(a)(2)(C) (Supp. 1998). But the purchaser may still entitled to this remedy. A mortgagee who pays taxes that
recover on the indebtedness, subject to any claims or its mortgagor is under a duty to pay is not a volunteer
defenses available to the obligor. Tex. Bus. & Com. Code because of the mortgagee's interest in the security of the
Ann. § 3.305(a) (Supp. 1998). The obligor's defenses mortgage. A mortgagee may be subrogated to a taxing
include those that are available at common law against authority's lien to the extent necessary for its own
enforcement of a contract. Tex. Bus. & Com. Code Ann. § equitable protection. However, when not compelled by
3.305(a)(2). the equities of the situation, full subrogation to all special
privileges accompanying a taxing authority's lien is
denied.
Com m ercial Law (UCC) > Negotiable Instrum ents
(Article 3) > Enforcem ent > Holders in Due Course >
General Overview Real Property Law > Financing > M ortgages & Other
[HN23] A holder in due course takes an instrument free Security Instruments > Definitions & Interpretation
from most of the obligor's claims and defenses. Tex. Bus. Tax Law > State & Local Taxes > Administration &
& Com. Code Ann. §§ 3.305(b), 3.306 (Supp. 1998). Proceedings > Failure to Pay Tax
[HN29] If a mortgagor fails to pay taxes he has promised
to pay, the mortgagee may treat the amount owed for
Contracts Law > Breach > Causes of Action > General taxes as part of the mortgage debt. If the mortgagor fails
Overview to pay the taxes, the mortgagee may pay them and the
[HN24] Under Texas common law, a person who has amount paid for taxes is considered to be a part of the
breached a contract cannot recover on it. mortgage debt. Both the mortgagor's obligation to pay
the amount due on the purchase price and his obligation
to pay taxes are secured by the mortgage.
Com m ercial Law (UCC) > Sales (Article 2) > Form ,
Formation & Readjustm ent > General Overview
Contracts Law > Defenses > Am biguity & Mistake > Civil Procedure > Rem edies > Costs & Attorney Fees >
General Overview Attorney Expenses & Fees > Statutory Awards
[HN25] Ambiguity is an affirmative defense, and a [HN30] W hen a prevailing party in a breach of contract
person seeking to establish ambiguity in a written suit seeks attorney's fees, an award of reasonable fees is
contract must specifically plead it at the trial court level. mandatory under Tex. Civ. Prac. & Rem. Code Ann. §
The pleading must set out the alleged ambiguous portion 38.001 if there is proof of the reasonableness of the fees.
of the contract and the meaning or construction relied on A trial court has discretion to fix the amount of attorney's
by the party asserting ambiguity. fees, but it does not have the discretion to completely
deny attorney's fees if they are proper under § 38.001.
Contracts Law > Contract Interpretation > Parol
Evidence > General Overview Civil Procedure > Rem edies > Costs & Attorney Fees >
[HN26] The parol evidence rule is a rule of substantive Attorney Expenses & Fees > Reasonable Fees
law; it is not a rule of pleading. [HN31] W hat amount of attorney's fees is reasonable is a
question of fact. B ut where trial counsel's testimony
concerning attorney's fees for the trial of a case is clear,
Civil Procedure > Pleading & Practice > Defenses, positive and direct, and uncontroverted, it is taken as true
Dem urrers & Objections > Affirm ative Defenses > as a matter of law. This is especially true where the
General Overview opposing party had the means and opportunity to
EXHIBIT "F"
Page 5
977 S.W .2d 662,067-250449-11
*; 1998 Tex. App. LEXIS 3352, **
disprove the testimony, if it were not true, and failed to
do so. JUDGES: PANEL A: CAYCE, C.J.; LIVINGSTON and
BRIGHAM, JJ.
Civil Procedure > Rem edies > Costs & Attorney Fees > OPINION BY: JOHN CAYCE
Attorney Expenses & Fees > Reasonable Fees
Contracts Law > Secured Transactions > Perfection & OPINION
Priority > Priority > Liens > Attorneys' Liens
[HN32] Ordinarily, a party is required to segregate fees [*666] OPINION
incurred on claims allowing the recovery of fees from
those that do not. But when the claims are dependent I. Introduction and Background
upon the same set of facts or circumstances and thus are
This case raises numerous lien priority and breach of
intertwined to the point of being inseparable, the party
contract issues, primarily arising out of two loan
suing for attorney's fees may recover the entire amount
transactions between appellee Leisure Lifestyles, Inc.
covering all claims.
(Leisure) and appellant W orld Help's predecessor,
Church and Institutional Facilities Development
Corporation (C&I). W e affirm in part, reverse and
Civil Procedure > Rem edies > Costs & Attorney Fees >
remand in part, and reverse and render in part. W e set out
General Overview
the facts pertinent to the parties' points and cross points
[HN33] The award of appellate attorney's fees is a
under our discussions of those points, but an overview of
question for the fact finder. Appellate courts may not
the facts and this case's procedural history is also
initiate an award of appellate fees, since that would be an
necessary.
exercise of original rather than appellate jurisdiction.
In September 1988, Leisure and C&I closed on a
loan that allowed Leisure to purchase property in
Civil Procedure > Rem edies > Costs & Attorney Fees > Granbury, Texas known as Rylee's Landing (the
General Overview acquisition loan). The acquisition loan documents gave
[HN34] To be entitled to attorney's fees under Tex. Civ. C&I vendor's and deed of trust liens on Rylee's Landing
Prac. & Rem. Code § 38.001, a party is required to for the full amount of the acquisition loan. In June 1989,
prevail on at least a portion of its claims. Leisure and C&I closed on a second loan, the proceeds
[**2] of which were to be used to develop Rylee's
Landing as a retirement center (the development loan).
Civil Procedure > Rem edies > Costs & Attorney Fees > The development loan documents gave C&I a deed of
General Overview trust lien on Rylee's Landing for the full amount of the
[HN35] See Tex. Prop. Code Ann. § 53.156 (1995). development loan.
In May 1989, Leisure contracted with appellee
Turner Construction Company of Texas, Inc. (Turner) for
Civil Procedure > Rem edies > Costs & Attorney Fees >
Turner to construct improvements to Rylee's Landing.
Attorney Expenses & Fees > Statutory Awards
Turner began work on Rylee's Landing during the
Crim inal Law & Procedure > Counsel > Right to
summer of 1989. At some point, Leisure also entered into
Counsel > General Overview
a contract with appellee Kingdom Properties, Inc.
[HN36] An award of attorney's fees under Tex. Prop.
(Kingdom) for the actual development of the retirement
Code Ann. § 53.156 (1995) is not automatic, even to a
center. Kingdom advanced funds for the retirement
prevailing party.
center.
C O U N S E L : FO R A P P E LLA N T : B O U RLA N D , C&I fully funded the acquisition loan but funded
KIRKMAN, SEIDLER & EVANS AND DAVID L. only a fraction of the development loan before filing
EVANS AND THOMAS M. MICHEL, OF FORT bankruptcy in early October 1989. After C&I filed
W ORTH, TEXAS, bankruptcy, Leisure was unable to pay Turner's
ap plications for p rogress p ayments under the
FOR APPELLEES: FLOURNEY & DEATON AND construction contract. Because its pay applications went
R O B E R T L. FLO U RN E Y , A N D ZE LE SK E Y , unpaid, Turner filed mechanic's and materialman's liens
CORNELIUS, HALLMARK, ROPER & HICKS, AND against Rylee's Landing. T urner reduced the liens to
JAMES R. CORNELIUS OF LUFKIN, TEXAS, AND judgment in November 1993.
QUILLING, SELANDER, CUMMINSKY, CLUTTS &
LOW NDS, P.C. AND BRIAN W . ERIKSON OF Kingdom also filed mechanic's and materialman's
DALLAS, TEXAS. liens against Rylee's Landing because Leisure failed to
EXHIBIT "F"
Page 6
977 S.W .2d 662,067-250449-11
*; 1998 Tex. App. LEXIS 3352, **
pay Kingdom's [**3] development fees. Kingdom's liens interlocutory summary judgment;
were reduced to judgment in November 1993.
. denied W orld Help's claim to the rental proceeds
M eanwhile, in December 1992, W orld Help from Rylee's Landing (except to satisfy the claim for the
purchased the acquisition and development loan 1993 ad valorem taxes);
promissory notes, the corresponding deeds of trust, and
. granted Turner a lien of $ 195,220 against the
the warranty deed with vendor's lien (collectively, the
proceeds that W orld Help recovers from Leisure (a) after
Leisure documents) from C&I's bankruptcy trustee. In
W orld Help fully recovers the 1993 ad valorem taxes,
February 1993, H ood County Appraisal District (HCAD)
and (b) reduced by any amount Turner recovers on its
sued Leisure, C&I, Turner, and Kingdom for delinquent
liens;
ad valorem taxes due on Rylee's Landing for the years
1989 through 1992. HCAD amended its petition in . rendered judgment that W orld Help's lien for the
September 1993 to delete C&I as a party and add W orld 1993 ad valorem taxes survived the December 1995
Help as a party. In January 1994, W orld Help paid the foreclosure of Kingdom's liens;
delinquent taxes, as well as the 1993 taxes on Rylee's
. ordered Leisure and Kingdom to pay all pre- and
Landing.
post-foreclosure rental receipts to W orld Help on demand
In January 1995, W orld Help moved for summary until W orld Help recovers the full amount of the 1993 ad
judgment (1) that its vendor's and deed of trust liens on valorem taxes;
Rylee's Landing had priority over Turner's and
. awarded W orld Help pre- and post-judgment
Kingdom's liens, and (2) that because W orld Help had
interest on the judgment against Leisure for the 1993 ad
paid the 1989 through 1993 property taxes, it was
valorem taxes and on the promissory notes; and
equitably subrogated to HCAD's first priority tax liens.
. denied all requests for attorney's fees.
In June 1995, the trial court granted W orld Help's
motion to realign the parties and designated W orld Help
II. Summary of Appellate Issues
as plaintiff and Leisure, Turner, and Kingdom as
defendants. In July [**4] 1995, Turner and Kingdom In this appeal we must decide whether:
moved for summary judgment that their liens had priority
over W orld H elp's liens based on the doctrine of . the trial court properly granted summary judgment
equitable subordination. on the priorities of W orld Help's, [**6] Turner's, and
Kingdom's liens;
In October 1995, the trial court entered a partial
summary judgment, ruling that (1) W orld Help's liens . W orld H elp has a security interest in and is
were superior to Turner's and Kingdom's to the extent of therefore entitled to the rental proceeds from Rylee's
$ 34,860 (the amount of the 1993 property taxes), (2) Landing;
Turner's liens were superior to W orld Help's remaining . the trial court properly granted Turner an equitable
liens and Kingdom's liens, and (3) Kingdom's liens were lien on the rental proceeds;
superior to W orld Help's remaining liens. In December
1995, Kingdom foreclosed on its liens and purchased . the acquisition and development loans constituted a
Rylee's Landing at a sheriff's sale. single contract between Leisure and C&I;
[*667] In January 1996, the trial court entered an . sufficient evidence supports the trial court's
order denying the rest of W orld Help's motion for findings that C&I breached its agreement with Leisure
summary judgment. The remaining issues in the case when Leisure was not in default on its obligations to
were tried to the court. In its M ay 1996 final judgment, C&I;
the trial court: . the trial court properly ruled that W orld H elp is not
. rendered judgment for World Help against Leisure equitably subrogated to HCAD's lien position regarding
for $ 34,860 (the amount of the 1993 ad valorem taxes); the property taxes except for the 1993 taxes;
. denied W orld Help's claim to recover from Leisure . W orld Help can recover from Leisure for payment
for payment of the 1989 through 1992 ad valorem taxes; of the delinquent property taxes;
. rendered judgment for World Help against Leisure . W orld Help can enforce the promissory notes and
on the promissory notes in the amount of $ 2,101,937 deeds of trust against Leisure;
plus $ 31,673 in prejudgment [**5] interest ($ 2,133,610 . the trial court properly denied W orld Help
total); attorney's fees; and
. reaffirmed the priorities of W orld Help's, Turner's, . the trial court properly denied Turner attorney's
and Kingdom's liens as set forth in the October 1995 fees.
EXHIBIT "F"
Page 7
977 S.W .2d 662,067-250449-11
*; 1998 Tex. App. LEXIS 3352, **
court properly subordinated W orld Help's lien rights to
III. Equitable Subordination theirs because of C&I's inequitable conduct.
In its first point, W orld Help complains that the trial [HN4] Equitable subordination is not a cause of
court erred in granting summary judgment that W orld action; it is a remedy. See First Heights Bank, FSB v.
Help's vendor's and deed of trust liens on Rylee's Gutierrez, 852 S.W.2d 596, 613 (Tex. App.--Corpus
Landing are equitably subordinated to Turner's and Christi 1993, writ denied). This remedy is not available
Kingdom's [**7] liens. In point two, W orld Help absent a finding that the party with a superior lien or
complains that the trial court improperly rendered final claim engaged in false or inequitable conduct that
judgment on this issue. conferred an unfair advantage on itself or injured third
parties. See Farm Credit Bank v. Ogden, 886 S.W.2d
A. Standard of Review 305, 313 (Tex. App.--Houston [1st Dist.] 1994, no writ)
(equitable subordination not available because lien
[HN1] In a summary judgment case, the issue on
holder did nothing inequitable); First Heights Bank, 852
appeal is whether the movant met its summary judgment
S.W.2d at 602, 604, 613 (bank's lien rights subordinated
burden by establishing that no genuine issue of material
because its predecessor's president committed fraud); see
fact exists and that the movant is entitled to judgment as
also In re Fabricators, Inc., 926 F.2d 1458, 1464-65 (5th
a matter of law. See TEX. R. CIV. P. 166a(c); Cate v.
Cir. 1991) (applying equitable subordination to secured
Dover Corp., 790 S.W.2d 559, 562 (Tex. 1990); City of
creditor's claims in bankruptcy proceeding). "[A] prior
Houston v. Clear Creek Basin Auth., 589 S.W.2d 671,
lien gives a prior claim . . . unless the lien be . . .
678 (Tex. 1979). T he burden of proof is on the movant
displaced by some act of the party holding it, which shall
and all doubts about the existence of a genuine issue of a
postpone him in a court of law or equity to a subsequent
material fact are resolved against the movant. See Acker
claimant." First Heights Bank, [**10] 852 S.W.2d at 609
v. Texas Water Comm'n, 790 S.W.2d 299, 301-02 (Tex.
(quoting Rankin v. Scott, 25 U.S. 177, 179 (12 Wheat.
1990); Cate, 790 S.W.2d at 562; Great Am. Reserve Ins.
177), 6 L. Ed. 592 (1827)).
Co. v. [*668] San Antonio Plumbing Supply Co., 391
S.W.2d 41, 47 (Tex. 1965). Therefore, we must view the [HN5] Whether inequitable conduct has occurred
evidence and its reasonable inferences in the light most sufficient to warrant equitable subordination is a fact
favorable to the nonmovant. See Great Am., 391 S.W.2d question. See In re Herby's Foods, Inc., 2 F.3d 128, 130
at 47. (5th Cir. 1993); Fabricators, 926 F.2d at 1465. Thus, a
trial court's decision to subordinate lien rights under this
[HN2] In deciding whether there is a material fact
doctrine must be based upon fact findings that
issue precluding summary judgment, all conflicts in the
inequitable conduct occurred and that the conduct was so
evidence will be disregarded and the evidence favorable
inequitable that it warrants lien subordination.
to [**8] the nonmovant will be accepted as true. See
Harwell v. State Farm Mut. Auto Ins. Co., 896 S.W.2d
In their appellate brief, Turner and Kingdom assert that
170, 173 (Tex. 1995); Montgomery v. Kennedy, 669
we must determine whether it was appropriate for the
S.W.2d 309, 311 (Tex. 1984). Evidence that favors the
trial court to subordinate W orld Help's liens to theirs
movant's position will not be considered unless it is
"based on [C&I's] breach of contracts" -- its failure to
uncontroverted. See Great Am., 391 S.W.2d at 47. The
fund the development loan and its alleged breach of a
summary judgment will be affirmed only if the record
letter agreement with Turner. But [HN6] a lender's
establishes that the movant has conclusively proved all
failure to fund a loan, without more, does not support
essential elements of its cause of action or defense as a
equitable subordination. See In re CTS Truss, Inc., 868
matter of law. See City of Houston, 589 S.W.2d at 678.
F.2d 146, 149 (5th Cir. 1989). Rather, to establish its
The parties agree that C&I's vendor's and deed of entitlement to this remedy, the injured party must prove
trust liens on Rylee's Landing were prior in time to both conduct so inequitable that it "shocks one's good
Turner's and Kingdom's mechanic's and materialman's conscience." In re Orah Wall Fin. Corp., [**11] 84 B.R.
liens. [HN3] In a contest over rights or interests in 442, 444 (Bankr. W.D. Tex. 1986).
property, ordinarily the party that is first in time is first in
[HN7] Because equitable subordination is an
right. See Church v. Western Fin. Corp., 22 S.W.2d 1074,
extraordinary remedy, courts have limited its application
1075 (Tex. Civ. App.--San Antonio 1929, no writ).
to three categories of cases:
W orld Help acquired C&I's lien rights when it purchased
the Leisure documents from C&I's bankruptcy estate. . those in which a fiduciary of the debtor misuses its
Thus, absent an exception to the general rule, W orld position to the disadvantage of other creditors;
Help's lien rights would be superior to both Turner's and
. [*669] those in which a third party, in effect,
Kingdom's.
controls the debtor to the disadvantage of others; and
But Turner and Kingdom assert that the [**9] trial
. those in which a third party defrauds other
EXHIBIT "F"
Page 8
977 S.W .2d 662,067-250449-11
*; 1998 Tex. App. LEXIS 3352, **
creditors.See CTS Truss, 868 F.2d at 148-49; see also transferee, also could not recover from Leisure.
First Heights Bank, 852 S.W.2d at 613. This is a defense to a breach of contract claim,
not a basis for equitable subordination. The issue
[HN8] Although actual fraud need not be shown to
at summary judgment was not whether W orld
obtain equitable subordination, cases in which no
Help could recover in contract from Leisure but
showing of fraud is required are generally bankruptcy
whether C&I's misconduct was harmful to Turner
cases involving insider misconduct. See Herby's Foods, 2
and, if so, whether that conduct was so
F.3d at 133-34 (insiders of debtor undercapitalized
inequitable that Turner should be awarded the
debtor, thereby harming unsecured creditors); In re
remedy of equitable subordination.
Multiponics, Inc., 622 F.2d 709, 715, 720-21 (5th Cir.
1980) (founder, director, and substantial shareholder of Further, Turner did not assert, and the trial
debtor engaged in inequitable conduct). In the court did not find, that Turner was a party to the
bankruptcy context, "insiders" include a corporate Leisure-C&I contract. Therefore, Turner had no
debtor's directors and officers, persons in control of the standing to assert the breach of contract defense
corporation, and their relatives. See 11 U.S.C.A. § against W orld Help. Leisure also asserted this
101(31) (West 1993). If a [**12] claimant is not an defense against W orld Help, and we address
insider, then evidence of more egregious conduct, such Leisure's arguments in section VII.
as fraud, spoliation, or overreaching is necessary. See
[**14] In its cross-claim against W orld Help,
Fabricators, 926 F.2d at 1465.
Turner asserted a claim for "equitable subordination"
W e are not aware of any nonbankruptcy Texas case based on its contention that "C&I's breaches resulted
in which a court has equitably subordinated lien rights from fraud, negligence, and/or other culpable conduct. . .
absent a finding of fraud on the part of the superior lien ." Because T urner had to plead and prove fraud to obtain
holder or its predecessor. See First Heights Bank, 852 equitable subordination, we will treat this pleading as an
S.W.2d at 613 (jury found president of lien holder's allegation that C&I defrauded Leisure and Turner with
predecessor committed fraud); see also Young v. Terrace respect to the development loan and the letter agreement
Improvement Co., 62 S.W.2d 180, 184 (Tex. Civ. App.-- and that Turner was harmed as a result.
El Paso 1933, no writ) (holding that evidence that bond
[HN9] The elements of fraud are: (1) a false,
issuer intentionally mislead investors raised fact issues as
material representation; (2) that was either known to be
to fraud and whether bond holders were entitled to
false when made or was made without knowledge of its
equitable subordination).
truth; (3) that was intended to be acted upon; (4) that was
In this case, there is neither evidence nor allegation relied upon; and (5) that caused injury. See Formosa
that C&I was Leisure's fiduciary or that C&I controlled Plastics Corp. USA v. Presidio [*670] Eng'rs and
Leisure, i.e., was an insider. Thus, to prevail on their Contractors, Inc., 960 S.W.2d 41, 47 (Tex. 1998). The
motions for summary judgment, Turner and Kingdom mere failure to perform a contract is not evidence of
had to establish as a matter of law that C&I defrauded fraud. But a promise of future performance is actionable
them. if -- at the time the promise was made -- the promisor
intended to deceive and had no intention of performing.
B. Turner's M otion for Summary Judgment See id.; Spoljaric v. Percival Tours, Inc., 708 S.W.2d
432, 434 (Tex. 1986).
In its motion for summary judgment, Turner
contended that equitable subordination was proper
[HN10] Intent is a fact question "uniquely within the
because C&I induced Turner to work [**13] on Rylee's
realm of [**15] the trier of fact because it so depends
Landing by providing Turner written assurance that C&I
upon the credibility of the witnesses and the weight to be
would pay Turner for its work. Then C&I breached this
given to their testimony." Spoljaric, 708 S.W.2d at 434.
commitment to Turner and did not pay Turner's pay
A party's intent is determined at the time of the
applications. Also, because C&I breached its agreement
representation, but it may be inferred from the party's
with Leisure by failing to fund the development loan,
acts after the representation was made. Although the
Leisure could not pay Turner. C&I's conduct was so
failure to perform, standing alone, is not evidence of the
inequitable that it warranted subordination of C&I's lien
promisor's intent not to perform, it may be considered
rights. As C&I's assignee, W orld Help acquired no better
with other factors to establish intent. See id. at 434-35.
lien rights than C&I had; therefore, W orld Help's lien
rights should also be subordinated to Turner's. 1 [HN11] False representations can arise from silence
as well as affirmative statements. "W hen the particular
1 Turner also asserted the right to equitable circumstances impose on a person a duty to speak and he
subordination as follows: C&I could not recover deliberately remains silent, his silence is equivalent to a
from Leisure for breach of contract because C&I false representation." Id. at 435. A party has an
breached first; therefore W orld Help, as C&I's affirmative duty to disclose where there is a confidential
EXHIBIT "F"
Page 9
977 S.W .2d 662,067-250449-11
*; 1998 Tex. App. LEXIS 3352, **
or fiduciary relationship or where a party later learns that borrowers. C&I eventually issued a series of $ 20 million
a previous affirmative representation was false or worth of bonds. AM I sold C&I's bonds and also made
misleading. See Palm Harbor Homes, Inc. v. McCoy, 944 and administered loans on C&I's behalf.
S.W.2d 716, 722 (Tex. App.--Fort W orth 1997, orig.
May and Sanders considered four different plans for
proceeding); Formosa Plastics Corp. v. Presidio Eng'rs
financing the retirement center. [*671] May told
and Contractors, Inc., 941 S.W.2d 138, 147 (Tex. App.--
Sanders numerous times that C&I would finance, as one
Corpus Christi 1995), rev'd on other [**16] grounds,
complete deal, the acquisition of the land and the
960 S.W.2d 41 (Tex. 1998). A duty to disclose also arises
construction of the retirement center by lending Leisure $
when one party knows that the other party is relying on
10.4 million. Leisure -- through Sanders -- relied on
the concealed fact, provided that he knows that the
May's assurances and entered into the transaction to
relying party is ignorant of the facts and does not have an
acquire Rylee's Landing and complete the retirement
equal opportunity to discover the truth. See Libhart v.
center there. C&I loaned Leisure the money to buy
Copeland, 949 S.W.2d 783, 801 (Tex. App.--W aco 1997,
Rylee's Landing from Keechi in September 1988. AMI
no writ). In addition, when one voluntarily discloses
administered the acquisition loan for C&I.
information, he has a duty to disclose the whole truth
rather than making a partial disclosure that conveys a Between 1986 and September 1988, Kingdom
false impression. See Formosa Plastics, 941 S.W.2d at advanced $ 250,000 for the retirement center. Although
147. the acquisition loan funded the purchase of Rylee's
Landing and its then-existing improvements, it did not
To support its motion for summary judgment, Turner
provide cash so that Leisure could service its debt, fund
relied on the following evidence: Kingdom's wholly-
marketing costs, or reimburse Kingdom for the $ 250,000
owned subsidiary, Keechi Development Corporation
it had advanced towards the project. Sanders agreed to
(Keechi), owned Rylee's Landing. Rylee's Landing was
close on the acquisition loan in September 1988 only
situated on 5.748 acres of lake-front property in
because May had assured him that a [**19] second loan
Granbury, Texas. Improvements on the site in 1986
would provide for debt service, marketing costs, and
included a club house, three apartment buildings, a
Kingdom's development fees and would be funded by
swimming pool, tennis courts, and the 130-year-old
November 1988. After September 1988, Kingdom
Rylee Aiken House. Kingdom wanted to develop Rylee's
continued to manage the project and its development
Landing as a retirement center. In 1986, Kingdom
with M ay's consent and with the promise that C&I would
obtained architectural and marketing studies to determine
fund the cost for Leisure to pay Kingdom.
whether developing a retirement center was feasible.
Although May had promised to fund a second,
[**17] In early 1986, C. Frank Myer, a broker for
development loan by November 1988, he failed to do so
AMI Securities, Inc. (AMI), put Kingdom in touch with
and, despite Sanders's urging, kept postponing this
AM I. AMI specialized in debt instruments issued by
financing. On March 28, 1989, May told Sanders that
nonprofit corporations, primarily churches. AMI also
Trust Company of America (TCOA) was being
provided financial consulting services to nonprofit
investigated by the Texas Banking Commissioner.
issuers of financial securities. AMI wanted to market its
TCOA was the trust company for C&I's $ 20 million
services to issuers involved in the development of
bond issue, out of which C&I was to provide Leisure's
church-related facilities, such as retirement centers.
financing for the retirement center project. Also on
Kingdom and AM I investigated and negotiated potential
March 28, 1989, May told Sanders that another creditor
sources of financing for the retirement center at Rylee's
was in default on large amounts of money borrowed
Landing from early 1986 through late summer 1987.
through AMI, TCOA, or C&I. May told Sanders these
David Sanders conducted the negotiations on Kingdom's
defaults were the reason for the delay in financing
behalf and dealt primarily with AMI's president, W illard
construction of the retirement center but assured Sanders
May.
he should have full confidence that the entire transaction
Leisure was incorporated in June 1987 as a nonprofit would be financed.
Texas corporation to develop, own, and operate the
On M ay 15, 1989, with May's and C&I's full
planned retirement center. Kingdom continued to be
knowledge and consent, Leisure entered into a
respo nsible for the retirement center's actual
construction [**20] contract with Turner. The
development. Sanders supervised Leisure's corporate
construction contract provided that Turner would begin
organization and served as its president. Thus, Sanders
construction in June 1989 after C&I provided written
acted in two capacities -- as Leisure's president and as
assurance of adequate funding to make progress
Kingdom's representative.
payments to Turner under the contract. C&I and Leisure
In late summer 1987, May told Sanders that AM I finally closed on the development loan on June 8, 1989.
planned to form a new entity, C&I, to issue bonds and The loan was for $ 4,855,000. AM I administered the loan
make first [**18] mortgage loans to nonprofit for C&I.
EXHIBIT "F"
Page 10
977 S.W .2d 662,067-250449-11
*; 1998 Tex. App. LEXIS 3352, **
made his March 28 representations, the Texas Banking
Blaine Lee, the manager of Turner's Dallas office,
Commissioner was suing TCOA in federal court. On
wrote to AMI asking for assurance that adequate funds
March 21, 1989, the federal court had entered an agreed
had been set aside to make progress payments to Turner
temporary restraining order against TCOA that, among
under the construction contract. In response, C&I
other things, made it impossible for C&I to proceed with
provided Turner a letter dated June 21, 1989 that stated:
the $ 20 million bond issue it planned to use to finance
(1) $ 2,652,000 of the development loan proceeds had
the development of the retirement center. May did not
been allocated for progress payments to Turner; and (2)
tell Sanders about the cease and desist order, the federal
C&I would make periodic payments directly to Turner
lawsuit, or the temporary restraining order. If he had,
upon approval of Turner's pay applications. Lee signed
Sanders never would have signed the development loan
the letter agreement indicating Turner's acceptance and
documents on Leisure's behalf in June 1989. However,
returned it to C&I. 2
the summary judgment record does not affirmatively
show that May knew about the federal lawsuit or the
2 At trial, W orld Help objected to admission of
restraining order in March 1989 when he told Sanders
the June 1989 letter agreement because the copy
about the investigation of T COA or in June 1989 when
Turner offered was signed only by C&I's
C&I and Leisure closed on the development loan.
representative and not by Lee. But W orld Help
did not object to Lee's statement in his summary On April 27, 1990, Turner submitted pay application
judgment affidavit that he had signed and 7 for work performed from October 31, 1989 through
returned the letter. Accordingly, the objection is April 30, 1990. Turner requested $ 20,256 on that
waived on appeal as it pertains to the summary application. Although Leisure accepted and submitted the
judgment. See Utilities Pipeline Co. v. American application, C&I's bankruptcy estate did not pay it or
Petrofina Mktg., 760 S.W.2d 719, 722-23 (Tex. advance funds to pay it. Because Turner's pay
App.--Dallas 1988, no writ). [HN12] W e may applications 4 through 7 went [**23] unpaid, Turner
consider the uncontroverted testimonial evidence filed mechanic's and materialman's liens against Rylee's
of an interested witness if the evidence is clear, Landing for $ 153,961, the total amount of the unpaid
positive and direct, otherwise credible and free applications. Turner reduced the liens to judgment in
from contradictions and inconsistencies, and November 1993.
could have been readily controverted. See TEX.
This evidence does not establish each element of
R. CIV. P. 166a(c).
fraud as a matter of law. For instance, the evidence does
[**21] Leisure asked C&I to advance $ 600,000 of not conclusively establish that C&I promised to fund the
the development loan proceeds. C&I made advances development loan with no intention of performing that
totaling $ 402,591 during the summer of 1989. Also promise, or that C&I entered into the letter agreement
during the summer of 1989, Turner submitted pay with no intention of performing it. May's March 1989
applications 1 through 3 under the construction contract statements to Sanders, coupled with the entry of the
for $ 45,919. Leisure paid the applications out of the agreed temporary restraining order in the TCOA lawsuit,
advance from C&I. are some evidence that the development loan documents
and the letter agreement contained false representations
In September and October 1989, Turner submitted
that C&I knew to be false. 3 May had an affirmative duty
pay applications 4 through 6 for work completed from
to communicate what he knew about the TCOA lawsuit
August 26 through October [*672] 31, 1989. Turner
and C&I's ability to perform its commitments to Leisure
requested a total of $ 133,705 on those applications.
and Turner. See Libhart, 949 S.W.2d at 801; Formosa
Although Leisure accepted the applications and
Plastics, 941 S.W.2d at 147. But the summary judgment
submitted them to C&I for approval, C&I did not pay
evidence does not conclusively establish that May knew
them or advance funds to pay them. But the summary
about the TCOA lawsuit or the restraining order in
judgment record contains some evidence that Turner did
March 1989. There is no summary judgment evidence of
not satisfy all the prerequisites to payment listed in the
what relationship May [**24] had with TCOA. Also, the
letter agreement.
evidence does not show what May or C&I knew in June
The summary judgment record does not show that 1989.
Leisure or C&I paid Kingdom anything. C&I did not
advance Leisure any more funds under the development 3 C&I was formed sometime between late
loan. Instead, C&I filed bankruptcy on October 2, 1989. summer 1987 and September 1988, when it
closed on the acquisition loan. W e attribute May's
After C&I went into bankruptcy, Sanders learned
knowledge and conduct that occurred after C&I's
that, on M arch 7, 1989, the T exas B anking
inception to C&I because, as AMI's president,
Commissioner had issued a cease and desist order and an
May told Sanders that AMI planned to form C&I
order of supervision against TCOA. W hen May [**22]
to make first mortgage loans to nonprofit
EXHIBIT "F"
Page 11
977 S.W .2d 662,067-250449-11
*; 1998 Tex. App. LEXIS 3352, **
borrowers like Leisure and because AM I later summary judgment for Kingdom. As in Turner's case, the
made and administered loans on C&I's behalf. summary judgment evidence does not show as a matter
of law that C&I committed fraud that harmed Kingdom.
[HN13] When reviewing the summary judgment
In addition to the fact issue about C&I's intent, the
evidence, we must view every reasonable inference in the
summary judgment evidence does not conclusively
light most favorable to W orld Help, the nonmovant. See
establish that Kingdom's reliance on May's assurances of
Great Am., 391 S.W.2d at 47. One inference is that May
funding was reasonable. See American Tobacco Co. v.
only knew about the b anking commissioner's
Grinnell, [**27] 951 S.W.2d 420, 436 (Tex. 1997)
investigation of TCOA and not about the lawsuit or the
(holding that defrauded party must show that its reliance
restraining order. Absent uncontroverted evidence, we
on fraudulent representations or nondisclosure was
cannot infer that May knew in either M arch or June 1989
reasonable).
that C&I could not fund the development loan; therefore,
we cannot infer that C&I did not intend to fund the loan Because Sanders was Kingdom's agent as well as
or perform [**25] its contract with Turner. Leisure's, we will attribute his knowledge to Kingdom.
The summary judgment evidence shows that, by late
[*673] In addition, even if Turner had established
M arch 1989, Sanders knew of the investigation of
fraud as a matter of law, it did not conclusively establish
TCOA, which could negatively impact C&I's ability to
that all of its liens should take priority over W orld Help's
fund the development loan. At that time, Sanders also
liens. [HN14] Lien priorities should be subordinated only
knew that one of C&I's other borrowers had defaulted on
to the extent necessary to offset the harm done by the
its loans, forcing C&I to delay funding Leisure's loan.
inequitable conduct. 4 See CTS Truss, 868 F.2d at 149
There is no summary judgment evidence that May or
(citing In re Mobile Steel Co., 563 F.2d 692, 701 (5th
C&I ever provided information that either of these
Cir. 1977)). The summary judgment evidence shows that
situations had been resolved in a way that would allow
Turner submitted a pay application as late as April 1990
C&I to fully fund the development loan. Thus, we cannot
for work performed from October 31, 1989 through April
infer that, from M arch 1989 onward, Kingdom
30, 1990, even though C&I filed bankruptcy on October
reasonably relied on May's assurances that C&I would
2, 1989. Thus, a fact issue exists concerning whether
advance funds to pay Kingdom.
Turner is entitled to a superior lien position based on
work performed on the retirement center after it knew or Further, Kingdom did not put on any evidence that
should have known that C&I had filed bankruptcy. The its damages were caused by C&I's alleged fraudulent
fact finder must determine whether nonpayment for conduct. The summary judgment evidence shows only
Turner's continued work on the retirement center after that C&I may have defrauded Leisure with regard to the
C&I filed bankruptcy was harm caused by C&I's fraud, development loan, which closed in June 1989. Yet the
or whether it was merely a risk that Turner took with evidence also shows that [**28] Kingdom advanced $
knowledge that it might not be paid. 250,000 towards the retirement center project between
1986 and September 1988, when the acquisition loan
4 In this case, the only inequitable conduct that closed. There is no evidence that any of the $ 250,000
could support equitable subordination would be was advanced because of C&I's fraudulent conduct.
C&I's fraud. See slip op. at 10-11. Accordingly, there is no evidence that C&I's conduct
caused $ 250,000 of the damages Kindgom claims.
[**26] Because the summary judgment evidence
does not conclusively establish that C&I committed fraud In his summary judgment affidavit, Sanders stated
or the extent of the harm that the alleged fraud caused that, in hindsight, "it is now clear that May knew, before
Turner, the trial court erred in granting summary the first Note was [*674] signed, that C&I was in
judgment for Turner and in ruling that W orld Help's trouble, but he kept leading us to believe that they could
mortgage liens should be subordinated to the entire and would fund the entire acquisition and construction
amount of Turner's liens. package for the Rylee's Landing project." This statement
is a speculative, conclusory allegation. It is not supported
C. Kingdom's M otion for Summary Judgment by any summary judgment evidence and is not itself
summary judgment evidence. See Texas Division-
In its motion for summary judgment, Kingdom
Tranter, Inc. v. Carrozza, 876 S.W.2d 312, 314 (Tex.
adopted T urner's statement of facts and all of the exhibits
1994) (holding that plaintiff's statement of his subjective
Turner attached to its motion for summary judgment.
beliefs will not support motion for summary judgment);
Kingdom also adopted "the same position as Turner . . .
Anderson v. Snider, 808 S.W.2d 54, 55 (Tex. 1991)
as to the law and the facts . . . except Kingdom has
(holding that conclusions are not competent summary
agreed that Turner will be superior to Kingdom in
judgment evidence). Based on the summary judgment
payment," i.e., that Turner's liens would take priority
record, evidence that C&I might not have been able to
over Kingdom's.
fund [**29] the development loan first appeared when
W e hold that the trial court also erred in granting
EXHIBIT "F"
Page 12
977 S.W .2d 662,067-250449-11
*; 1998 Tex. App. LEXIS 3352, **
C&I did not close on the development loan in November W orld Help's equitable subrogation claim in section X.
1988 as initially promised. In addition, C&I was not even
Turner and Kingdom opposed a summary judgment
formed until late summer 1987, at the earliest. W e
establishing the superiority of W orld Help's vendor's and
question how C&I could be liable automatically for
deed of trust liens based on much of the same evidence
amounts that Kingdom invested in the retirement center
that we discussed under points one and two. Although
before C&I's existence.
Turner and Kingdom's evidence did not establish their
In short, Kingdom did not put on summary judgment entitlement to summary judgment as a matter of law, it
evidence to show what amount of its alleged damages did raise fact issues about whether C&I committed fraud
occurred as a result of C&I's conduct. Kingdom contends that harmed Turner and Kingdom and about the extent of
C&I's failure to fund the development loan caused that harm. Because of these fact issues, W orld Help, as
Leisure to be unable to pay Kingdom $ 503,747 C&I's assignee, did not establish its superior lien
(including the aforementioned $ 250,000) for priorities as a matter of law and was not entitled to
management and property development services. The summary judgment on that issue. T hus, the issue of who
summary judgment record does not contain any evidence is entitled to a final judgment on [*675] the lien priority
showing how Kingdom arrived at this figure. issue is premature; it must be decided after a trial on the
merits.
Likewise, K ingdom did not put on any evidence of
what amount of its alleged damages are secured by liens W e overrule point three.
against Rylee's Landing. The only summary judgment
evidence that Kingdom filed any liens against Rylee's IV. Turner's Equitable Lien
Landing is the November 1993 agreed judgment between
In its ninth [**32] point, W orld Help complains that
Turner, Kingdom, and Leisure. That judgment merely
the trial court improperly granted Turner a lien against
recites: (1) Kingdom obtained a judgment against Leisure
W orld Help because Turner had no right to such a lien.
for $ 503,747 for Leisure's breach of its development
In its final judgment, the trial court granted Turner a lien
[**30] and management contracts with Kingdom; and
of $ 195,220 5 against the rental proceeds that W orld
(2) Kingdom's liens against Rylee's Landing were
Help recovers from Leisure, (1) after W orld Help fully
judicially recognized but were secondary and inferior to
recovers the 1993 ad valorem taxes, and (2) reduced by
Turner's. The judgment does not state what amount of
any amounts Turner recovers on its liens against Rylee's
money was secured by Kingdom's liens. W hile Turner,
Landing.
Kingdom, and Leisure might agree on the facts
underlying the agreed judgment, we cannot accept them
5 This is the amount of the judgment Turner
as true for summary judgment purposes absent
obtained against Leisure in the Turner-Leisure
uncontroverted supporting evidence.
suit.
Because the summary judgment evidence does not
W orld Help and Turner agree that Turner's lien
conclusively establish that C&I's alleged fraud harmed
against the rental proceeds is not a common-law
Kingdom, the amount of Kingdom's damages, or that
possessory lien, a statutory lien, or an express contractual
Kingdom's damages are secured by liens against Rylee's
lien. However, Turner asserts that the trial court properly
Landing, the trial court erred in granting summary
granted Turner an equitable lien "to enforce the court's
judgment for Kingdom and in ruling that W orld Help's
priority of liens, and to atone for C&I's inequitable
liens should be subordinated to Kingdom's liens.
conduct in breaching its contracts with Turner and
W e sustain W orld Help's first and second points. Leisure in the first place."
W e have held that the trial court's summary
D. W orld Help's M otion for Summary Judgment
judgment granting Turner superior lien [**33] status was
In point three, W orld Help complains that the trial erroneous because Turner did not establish as a matter of
court erred by denying W orld Help's summary judgment law that C&I's conduct was so inequitable as to warrant
that its mortgage liens had priority over Turner's and subordination of its -- or W orld Help's -- mortgage lien
Kingdom's liens and in failing to incorporate that ruling rights. Thus, the trial court's summary ruling on lien
into the final judgment. priorities cannot be a proper basis for awarding Turner an
equitable lien against the rental proceeds.
W orld Help's motion for summary judgment
preceded Turner's [**31] and Kingdom's motions Moreover, [HN15] a party seeking an equitable lien
chronologically. In its motion, W orld Help sought must request this remedy in its pleadings. See Warner
summary judgment that its vendor's and deed of trust Communications, Inc. v. Keller, 888 S.W.2d 586, 598
liens had priority over Turner's and Kingdom's liens and (Tex. App.--El Paso 1994), rev'd on other grounds, 928
that W orld Help became equitably subrogated to HCAD's S.W.2d 479 (Tex. 1996); see also Hoarel Sign Co. v.
tax liens asserted against Rylee's Landing. W e discuss Dominion Equity Corp., 910 S.W.2d 140, 143 (Tex.
EXHIBIT "F"
Page 13
977 S.W .2d 662,067-250449-11
*; 1998 Tex. App. LEXIS 3352, **
App.--Amarillo 1995, writ denied). In its pleadings, 224, 228 (Tex. Civ. App.--San Antonio 1980, writ ref'd
Turner only asked that its mechanic's and materialman's n.r.e.) (construing as one contract two warranty [**36]
liens be given priority over W orld H elp's liens; Turner deeds dated August 22, 1960 and an option contract
did not plead for an equitable lien on the rental proceeds. executed "shortly thereafter").
Because Turner neither pleaded for nor established In this case, Leisure contends that all of the business
its entitlement to an equitable lien on the rental proceeds dealings between it and C&I had a single purpose: to
from Rylee's Landing, the trial court's judgment for create a retirement center at Rylee's Landing. W orld Help
Turner on this issue is erroneous. W e sustain point nine. agrees that Leisure was created to "develop, own and
operate a retirement community on a lake-front site in
V. The Leisure-C&I Contract Granbury, Texas." Further, W orld Help acknowledges
that C&I and Leisure entered into the acquisition loan so
In point eleven, W orld Help contends that the
that Leisure could purchase Rylee's Landing and into the
evidence is [**34] legally and factually insufficient to
development loan so that Leisure could develop Rylee's
support the trial court's finding that the two loans
Landing.
between Leisure and C&I constituted one contract.
However, because the documents in this case are The record shows:
unambiguous, their construction was -- and is -- a
. The acquisition loan between C&I and Leisure is
question of law, not of fact. See Westwind Expl., Inc. v.
evidenced by: (1) a promissory note from Leisure to C&I
Homestate Svgs. Ass'n, 696 S.W.2d 378, 381 (Tex. 1985);
for $ 2,579,690; (2) a deed of trust on Rylee's Landing;
Tubb v. Bartlett, 862 S.W.2d 740, 749 (Tex. App.--El
(3) a warranty deed with vendor's lien on Rylee's
Paso 1993, writ denied). In addition to a fact finding, the
Landing; and (4) a loan agreement between C&I and
trial court also made a conclusion of law that the
Leisure.
acquisition and development notes, deeds of trust, and
other documents between C&I and Leisure "constituted . Leisure used the proceeds from the acquisition loan
one contract in several phases." W e will review the to acquire Rylee's Landing.
conclusion of law and uphold it if it can be sustained on
. The development loan between C&I and Leisure
any legal theory applicable to the case. See Tubb, 862
consisted of: (1) a promissory note from Leisure to C&I
S.W.2d at 749.
for $ 4,855,000; (2) a loan agreement between C&I and
In reviewing the record and the parties' briefs, we Leisure; and (3) a deed of trust on Rylee's Landing.
find no dispute over the fact that, when C&I and Leisure
. The proceeds from [**37] the development loan
entered into the acquisition loan, they anticipated that a
were to be used primarily to develop Rylee's Landing. In
development loan would also be made -- which closed in
addition, $ 254,069 of the proceeds were to be applied
June 1989. T he dispute is over whether the acquisition
towards the principal and interest that had accrued on the
and development loans were two separate contracts or
acquisition note.
two parts of a single contract. Leisure contends that
[**35] the loans were a single contract; W orld Help W orld Help does not argue that the loans were made
asserts that each loan was a separate contract. The trial for any purpose other than to purchase and develop
court concluded that all the documents related to the two Rylee's Landing. Instead, W orld H elp seems to argue
loans between C&I and Leisure constituted a single that, because the loan-related documents did not
contract. W e agree. expressly refer to each other or state that the two loans
were part of a single transaction, the purchase of Rylee's
Texas courts have long applied the rule of statutory
Landing and the development of a retirement center at
construction that "[HN16] where several instruments,
Rylee's Landing were two completely separate,
executed contemporaneously or at different times, pertain
independent transactions. As we have previously noted,
to the same transaction, [*676] they will be read
instruments need not refer to each other to constitute a
together although they do not expressly refer to each
single transaction. Moreover, this argument does not
other." Board of Ins. Comm'rs v. Great Southern Life Ins.
make sense when applied to this case. If a company such
Co., 150 Tex. 258, 239 S.W.2d 803, 809 (1951). The
as Leisure is formed solely to "develop, own, and
court in Great Southern Life held that multiple insurance
operate" a retirement community, the purchase of real
policies, endorsements attached to the policies, a pension
estate, in and of itself, will not accomplish this goal. It is
trust agreement, and a fully executed commitment letter
but one step in a two-step process. The property must
were all part of the same transaction and should be
also be developed. T hus, under the facts of this case, the
construed together. See id.; see also U.S. Life Title Co. v.
purchase of Rylee's Landing and the development of the
Andreen, 644 S.W.2d 185, 189-90 (Tex. App.--San
retirement center [**38] were interdependent facets of a
Antonio 1982, writ ref'd n.r.e.) (holding that warranty
single transaction.
deed and repurchase agreement formed a single
contract); Estate of Griffin v. Sumner, 604 S.W.2d 221, W e hold that the trial court properly concluded that
EXHIBIT "F"
Page 14
977 S.W .2d 662,067-250449-11
*; 1998 Tex. App. LEXIS 3352, **
the acquisition and development loans between C&I and payment, C&I was never obligated to advance additional
Leisure were all part of the same transaction and should funds under the development loan. The promissory note
be construed as a single contract. W e overrule W orld for the development loan required Leisure to make
Help's eleventh point. monthly payments of accrued interest beginning one
month after the date of the note -- June 8, 1989. Thus,
VI. Breach of the Leisure-C&I Contract Leisure's first interest payment on the development loan
promissory note was due on July 8, 1989. But Leisure
In point twelve, W orld Help challenges the legal and
contends that it was not in default on the development
factual sufficiency of the evidence to support the trial
loan promissory note, despite the monthly interest
court's findings that:
payment requirement, because C&I did not follow the
. Leisure was not in default on its obligations to C&I provisions in the note governing default.
when C&I did not honor its financing commitment for
Regarding default, the promissory note provided:
the construction phase (i.e., development loan) and went
into bankruptcy; and Default. T he occurrence of any of the following
events shall be considered a default hereunder:
. C&I breached its agreement with Leisure when it
did not honor the balance of its financing commitment a. a default in the timely payment of any installment
for the construction phase and went into bankruptcy. of principal or interest due hereunder;
[HN17] Findings of fact entered in a case tried to the ....
court are of the same force and dignity [*677] as a
At the option of the holder of this note, upon the
jury's answers to jury questions. See Anderson v. City of
occurrence of any default, [**41] the entire principal
Seven Points, 806 S.W.2d 791, 794 (Tex. 1991). The trial
balance and all accrued, unpaid interest . . . shall at once
court's findings of fact are reviewable for legal and
become due and payable, without presentment, demand,
factual sufficiency of the evidence to support them by the
protest, notice or grace.
same standards that are applied in reviewing evidence
[**39] supporting a jury's answer. See O rtiz v. Jones, The failure to exercise the foregoing option upon the
917 S.W.2d 770, 772 (Tex. 1996). happening of one or more of the foregoing defaults shall
not constitute a waiver of the right to exercise the same at
[HN18] In determining a "no-evidence" point, we
any subsequent time in respect of the same default or any
are to consider only the evidence and inferences that tend
other default. . . .
to support the finding and disregard all evidence and
inferences to the contrary. See Leitch v. Hornsby, 935 ....
S.W.2d 114, 118 (Tex. 1996); In re King's Estate, 150
Notice and O pportunity to Cure. Notwithstanding
Tex. 662, 244 S.W.2d 660, 661-62 (1951). If there is
any other term or condition hereof, the Payee shall give
more than a scintilla of such evidence to support the
the undersigned (a) ten (10) days, after written notice
finding, the claim is sufficient as a matter of law, and any
("Notice") that an event has occurred that would be a
challenges go merely to the weight to be accorded the
monetary default hereunder . . . to cure same before
evidence. See Leitch, 935 S.W.2d at 118.
Payee declares a default hereunder . . . . The Notice shall
[HN19] An assertion that the evidence is be sent certified mail, return receipt requested, to the
"insufficient" to support a fact finding means that the undersigned at its address herein provided . . . . No
evidence supporting the finding is so weak or the default shall be deemed to have occurred unless the
evidence to the contrary is so overwhelming that the Notice is given and the matter referred to in the Notice
answer should be set aside and a new trial ordered. See remains unremedied at the end of the applicable period
Garza v. Alviar, 395 S.W.2d 821, 823 (Tex. 1965). W e for cure. . . . [Emphasis added.] 6
are required to consider all of the evidence in the case in
making this determination. See Jaffe Aircraft Corp. v. 6 The promissory note for the acquisition loan
Carr, 867 S.W.2d 27, 29 (Tex. 1993). also contained these provisions.
[**42] W orld Help does not contend that C&I --
A. Evidence of Leisure's Default
the Payee on the note -- gave Leisure notice that Leisure
W orld Help contends: Leisure was required to make was in default under the promissory [*678] note, nor
an interest payment on [**40] the development loan does World H elp direct us to any evidence that the
promissory note in July 1989 but did not; therefore, required notice was ever given. Accordingly, the
Leisure defaulted on the note. C&I's obligation to evidence is legally and factually sufficient to support the
advance additional funds under the development loan trial court's finding that Leisure was not in default on its
would have been triggered by Leisure's interest payment. obligations to C&I when C&I failed to honor its
Because Leisure did not make the July 1989 interest financing commitment for the construction phase and
EXHIBIT "F"
Page 15
977 S.W .2d 662,067-250449-11
*; 1998 Tex. App. LEXIS 3352, **
went into bankruptcy. honor the balance of its financing commitment for the
construction phase and went into bankruptcy. W e
B. Evidence of C&I's Breach overrule point twelve.
The loan agreement for the development loan VII. W orld Help's Claims Against Leisure
provided that Leisure, as borrower, had to satisfy certain
In three cross points, Leisure contends that the trial
conditions precedent before C&I would advance loan
court erred by:
proceeds: Leisure could not be in default, and it was
required to make "draw requests" "in form and content . rendering judgment for World Help against Leisure
approved by [C&I], accompanied by such lien waivers on the promissory notes;
and releases as [C&I] may require . . . ." The loan
. awarding W orld Help any rights in the rental
agreement does not specify what constituted "form and
proceeds from Rylee's Landing; and
content approved by C&I."
. rendering judgment for W orld Help against [**45]
Although C&I could "postpone the performance of
Leisure based on W orld Help's payment of the 1993 ad
any condition to any advance," C&I's advancement of
valorem taxes due on Rylee's Landing.
loan proceeds without requiring performance of the
conditions precedent did not waive the conditions or Leisure admits that the deeds of trust gave C&I a
prevent C&I from [**43] later declaring a default. lien against the rental proceeds from Rylee's Landing and
the right to pay delinquent ad valorem taxes and add the
The record shows that C&I funded between $
amount to the mortgage debt. But Leisure contends that
400,000 and $ 433,000 7 of the development loan
C&I would not be entitled to recover anything under the
between June 8 and July 18, 1989. O n September 25,
promissory notes or deeds of trust because C&I breached
1989, Leisure -- through Sanders -- requested an
the parties' agreement by not funding the development
additional $ 167,237. Leisure made this draw request
loan. Leisure further contends that W orld Help merely
using a form approved and provided by AM I. C&I never
stands in C&I's shoes [*679] and is therefore subject to
requested any additional information from Leisure
all of Leisure's defenses against C&I.
regarding the draw request.
W e have upheld the trial court's finding of fact that
7 The summary judgment evidence shows that C&I breached the parties' agreement because it failed to
C&I advanced just under $ 403,000, while fund Leisure's draw request even though C&I had not
evidence presented at trial indicates this figure given Leisure written notice that it was in default on the
may have been closer to $ 433,000. development loan promissory note. But our holding with
regard to that finding does not preclude World Help from
W illard May told Sanders that the request could not
enforcing the promissory notes and deeds of trust against
be funded because another borrower had defaulted on
Leisure.
several million dollars' worth of promissory notes. May
stated that C&I was expecting a large payment on the The promissory notes each contained a section
defaulting borrower's notes and would fund Leisure's governing default in general (the default provision) and a
request as soon as that payment was made. No one from section governing notice of default (the notice provision).
C&I ever told Sanders that Leisure's failure to perform 8
T he [**46] notice provision expressly required the
under the development loan agreement or promissory Payee of the notes to give Leisure written notice of
note was the reason C&I [**44] did not fund the draw default and an opportunity to cure before Leisure would
request. be in default on the notes. The notes named C&I, alone,
as the Payee. However, the notes did not require any
The July 1989 advance was the last advance that
holder of the notes except the Payee to perform the
C&I made under the development loan. C&I never
notice provision. Thus, under the express terms of the
funded Leisure's September 1989 draw request for $
promissory notes, only C&I was a Payee, and only C&I
167,237. Instead, it filed bankruptcy in October 1989.
could be bound by the notice provision's requirements.
C&I's bankruptcy estate never funded the draw request,
either.
8 See slip op. at 36-37 for the pertinent language
This evidence shows that, although Leisure satisfied of these provisions.
the conditions precedent to advancement of development
The default provision did not require written notice
loan proceeds, C&I did not make any advances after July
and an opportunity to cure before Leisure would be in
1989. Further, C&I's reason for not advancing loan
default on the notes. Instead, the default provision
proceeds was unrelated to Leisure's performance of its
allowed the holder of the notes to enforce full payment
obligations to C&I. W e hold the evidence is legally and
from Leisure at any time after Leisure failed to make a
factually sufficient to support the trial court's finding that
timely interest or principal payment. Thus, C&I and
C&I breached its agreement with Leisure when it did not
EXHIBIT "F"
Page 16
977 S.W .2d 662,067-250449-11
*; 1998 Tex. App. LEXIS 3352, **
Leisure agreed that C&I, as Payee, had to give Leisure instrument free from most of the obligor's claims
written notice of default and an opportunity to cure and defenses. See TEX. BUS. & COM. CODE
before Leisure would be in default [**47] on the notes ANN. §§ 3.305(b), 3.306 (Vernon Supp. 1998).
as to C&I, but that no such notice would be required
[HN24] Under Texas common law, a person who
from subsequent holders of the notes.
has breached a contract cannot recover on it. See D.E.W.,
Inc. v. Depco Forms, Inc., 827 S.W.2d 379, 382 (Tex.
[HN20] The Texas version of the Uniform Commercial
App.--San Antonio 1992, no writ); Dallas Mkt. Ctr. v.
Code (the UCC) provides that the transferee of an
The Swing, Inc., 775 S.W.2d 838, 842 (Tex. App.--Dallas
instrument (e.g., W orld Help) ordinarily acquires the
1989, no writ); Joseph v. PPG Indus., Inc., 674 S.W.2d
same rights to enforce payment of the instrument that the
862, 867 (Tex. App.--Austin 1984, writ ref'd n.r.e.). C&I
transferor (C&I) had. See TEX. BUS. & COM. CODE
breached the parties' agreement because it did not fund
ANN. § 3.203(b) (Vernon Supp. 1998); Siegler v.
Leisure's draw request at a time when Leisure was not
Ginther, 680 S.W.2d 886, 890 (Tex. App.--Houston [1st
formally in default on the promissory notes. Therefore,
Dist.] 1984, no writ). Thus, at issue is whether C&I and
C&I would not be able to enforce payment of the
Leisure could vary a transferee's rights by agreement,
promissory notes against Leisure. However, the
thereby giving subsequent holders of the promissory
promissory notes expressly provided that the notice
notes greater enforcement rights than C&I had.
provision was only enforceable against C&I; subsequent
[HN21] The UCC provides that its effect may indeed holders of the notes were not bound by [**50] it.
be varied by agreement. See TEX. BUS. & COM. CODE Consequently, Leisure could assert the no notice defense
ANN. § 1.102(c), (d) (Vernon 1994); Gasmark, Ltd. v. against C&I but it could not assert that defense against
Kimball Energy Corp., 868 S.W.2d 925, 928 (Tex. App.-- W orld Help.
Fort W orth 1994, no writ); see also TEX. BUS. & COM .
Because C&I and Leisure contracted to transfer to
CODE ANN. § 1.102 cmt. 2 ("But an agreement can
subsequent holders of the notes greater enforcement
change the legal consequences which would otherwise
rights than C&I had, and because Leisure could not
flow from the provisions of the Act."); Jon-T Chems.,
assert the no notice defense against W orld Help, we hold
Inc. v. Freeport Chem. Co., 704 F.2d 1412, 1416 (5th
that W orld Help could recover from Leisure on the
Cir. 1983).
promissory notes and deeds of trust.
Because the UCC's effect [**48] may be varied by
Leisure seems to argue that it was never in default
agreement, we hold that C&I and Leisure could and did
on the loans because it agreed with C&I that part of the
contract that subsequent holders of the promissory notes
development loan proceeds -- those allocated to
would not be held to performance of the notice
"contingency" and "working capital" -- would be applied
provision's written notice and cure requirements. The
towards interim interest payments on the notes. Thus, it
effect of this agreement is that C&I was required to give
was C&I's failure to fund the loan as agreed that caused
Leisure notice and an opportunity to cure before
Leisure to be unable to make the interest payments.
enforcing payment on the promissory notes, but W orld
Leisure asserts that parol evidence was admissible to
Help was not.
explain the intended use of the "contingency" and
Our holding is also dispositive of Leisure's breach of "working capital" listed in the parties' writings. W orld
contract defense. [HN22] The purchaser of a note who Help contends that this evidence, which the trial court
knew at the time of purchase that the notes were overdue excluded, was inadmissible because it pertained to an
does not qualify as a holder in due course. 9 See TEX. alleged ambiguity in the agreement, and Leisure did not
BUS. & COM. CODE ANN. § 3.302(a)(2)(C) (Vernon plead ambiguity.
Supp. 1998); Bailey, Vaught, Robertson and Co. v.
[HN25] Ambiguity is an affirmative defense, and a
Remington Inv., Inc., 888 S.W.2d 860, 868 (Tex. App.--
person [**51] seeking to establish ambiguity in a written
Dallas 1994, no writ); Lynd v. Wesley, 705 S.W.2d 759,
contract must specifically plead it at the trial court level.
763 (Tex. App.--Houston [14th Dist.] 1986, no writ). But
See Gulf & Basco Co. v. Buchanan, 707 S.W.2d 655, 656
the purchaser may still recover on the indebtedness,
(Tex. App.--Houston [1st Dist.] 1986, writ ref'd n.r.e.);
subject to any claims or defenses available to the obligor.
Covered Bridge Condo. Ass'n v. Chambliss, 705 S.W.2d
See TEX. BUS. & COM. CODE ANN. § 3.305(a)
211, 214 (Tex. App.--Houston [14th Dist.] 1985, writ
(Vernon Supp. 1998); Lynd, 705 S.W.2d at 763. The
ref'd n.r.e.). The pleading must set out the alleged
obligor's defenses include those that are [*680]
ambiguous portion of the contract and the meaning or
available at common law against enforcement of a [**49]
construction relied on by the party asserting ambiguity.
contract. See TEX. BUS. & COM. CODE ANN. §
See Gulf & Basco Co., 707 S.W.2d at 656.
3.305(a)(2).
Leisure contends that the parol evidence was not
9 [HN23] A holder in due course takes an offered to resolve an ambiguity but to define undefined
EXHIBIT "F"
Page 17
977 S.W .2d 662,067-250449-11
*; 1998 Tex. App. LEXIS 3352, **
terms and thus complete the contract. 1 0 Leisure urges that Help had a security interest in the rental proceeds from
the evidence was therefore admissible under the parol Rylee's Landing and that the security interest took
evidence rule. This argument begs the question. priority over [**54] Turner's and Kingdom's liens. The
trial court's judgment limits W orld Help's right to rental
10 Leisure makes this argument in its reply proceeds to the amount needed to satisfy its claim for the
brief, but in its appellee's brief Leisure asserts 1993 ad valorem taxes.
that "contingency" and "working capital" are
The deeds of trust for the acquisition and
ambiguous terms.
development loans granted C&I a security interest in the
[HN26] The parol evidence rule is a rule of rental proceeds from Rylee's Landing. In light of our
substantive law; [**52] it is not a rule of pleading. See holding that W orld Help may enforce the promissory
Maranatha Temple, Inc. v. Enterprise Prods. Co., 893 notes and deeds of trust against Leisure, we also hold that
S.W.2d 92, 101 (Tex. App.--Houston [1st Dist.] 1994, W orld Help has a security interest in all of the rental
writ denied); Southwest Airlines Co. v. Jaeger, 867 proceeds from Rylee's Landing, even after its claim for
S.W.2d 824, 831 (Tex. App.--El Paso 1993, writ denied). the 1993 ad valorem taxes is satisfied. W e hold that the
The question at issue is whether Leisure had to raise in security interest has the same priority as W orld Help's
its pleadings the need for parol evidence before offering mortgage liens because the security interest was granted
such evidence at trial. in the loan documents. W e sustain point four in part and
overrule it in part.
[HN27] The Texas Rules of Civil Procedure require
a party to affirmatively plead matters constituting an
X. Equitable Subrogation
avoidance or an affirmative defense. See TEX. R. CIV. P.
94. Leisure contends that it did not breach its agreement In point seven, W orld H elp contends that the trial
with C&I because the terms "contingency" and "working court improperly denied its motion for summary
capital" in the parties' writings "were provisions for judgment that it was equitably subrogated to HCAD's tax
interim interest" on Leisure's loans from C&I. Regardless liens on Rylee's Landing based on W orld Help's payment
of whether these terms are characterized as incomplete or of delinquent ad valorem taxes for 1989 through 1992.
ambiguous without the proffered parol evidence,
W orld Help purchased the Leisure documents in
Leisure's contention is a matter of avoidance, and Leisure
December 1992. At that time, ad valorem taxes of $
was required to plead it in the trial court. Because
218,031 [**55] were past due on Rylee's Landing for the
Leisure did not raise the issue in its pleadings, the trial
years 1989 through 1992. In January 1994, W orld Help
court properly excluded evidence of the terms' alleged
paid the delinquent property taxes and 1993 property
meanings, and we [*681] will not consider it on appeal.
taxes of $ 34,860.
W e overrule Leisure's cross points.
In conclusions of law 4 and 6, the trial court
[**53] VIII. Leisure's Offset concluded that:
In point ten, W orld Help contends that the trial court . W orld H elp is deemed to have accounted for the
erred in granting Leisure an offset against W orld Help's delinquent ad valorem taxes in the price it paid to
damages award from Leisure. W orld Help does not cite purchase the Leisure documents because W orld Help was
any legal authority to support this argument, nor does it charged with notice of the delinquent taxes at the time of
brief this complaint other than to challenge the trial purchase; and
court's findings of fact and conclusion of law addressed
. W orld Help has a first priority lien against Rylee's
in points eleven and twelve. Because W orld Help has not
Landing for $ 34,860 -- the amount of the 1993 ad
briefed this issue, we will not address it. See TEX. R.
valorem taxes that accrued after W orld Help purchased
APP. P. 38.1(h); Happy Harbor Meth. Home, Inc. v.
the Leisure documents.
Cowins, 903 S.W.2d 884, 886 (Tex. App.--Houston [1st
Dist.] 1995, no writ) (holding that failure to cite authority W orld Help contends that the deed of trust on the
to support contention on appeal waives contention); acquisition loan allowed it to pay the delinquent ad
Metzger v. Sebek, 892 S.W.2d 20, 45 (Tex. App.-- valorem taxes and add the tax amount to the mortgage
Houston [1st Dist.] 1994, writ denied) (same), cert. amount. W orld Help further contends that it is entitled to
denied, 516 U .S. 868, 133 L. Ed. 2d 124, 116 S. Ct. 186 be equitably subrogated to HCAD's tax liens on Rylee's
(1995). W e overrule point ten. Landing.
IX. W orld Help's Security Interest in the Rental W hen equitable subrogation is an issue, a case is
Proceeds usually controlled by its facts. See Providence Inst. for
Sav. v. Sims, 441 S.W.2d 516, 519 (Tex. 1969); Farm
In its fourth point, W orld Help asserts that the trial Credit Bank, 886 S.W.2d at 310. The purpose of the
court improperly failed to render judgment that W orld
EXHIBIT "F"
Page 18
977 S.W .2d 662,067-250449-11
*; 1998 Tex. App. LEXIS 3352, **
doctrine is to prevent the unjust enrichment of the [**56] payment of the taxes is irrelevant to the equitable
debtor who owed the debt that is paid. See First Nat'l subrogation issue. Rather, the inquiry is whether the
Bank v. O'Dell, 856 S.W.2d 410, 415 (Tex. 1993); Farm debtor would be unjustly enriched if subrogation does
Credit Bank, 886 S.W.2d at 310. not occur. See First Nat'l Bank, 856 S.W.2d at 415.
W orld Help does not contend that Leisure would be
[HN28] Subrogation to the creditor's rights is
unjustly enriched by the trial court's decision as to lien
available only when the debtor was enriched unjustly;
priorities. 1 1
thus, the payor who confers a benefit as a "mere
volunteer" is not [*682] entitled to this remedy. Smart
11 World Help does contend that Leisure was
v. Tower Land and Inv. Co., 597 S.W.2d 333, 337 (Tex.
unjustly enriched by World Help's payment of the
1980). A mortgagee who pays taxes that its mortgagor is
delinquent taxes. W e address that argument in our
under a duty to pay is not a volunteer because of the
discussion of World Help's eighth point.
mortgagee's interest in the security of the mortgage. See
id. at 338. The mortgagee may be subrogated to the W orld Help's bid amount would not have accounted
taxing authority's lien to the extent necessary for its own for taxes due for 1993, because W orld Help purchased
equitable protection. However, "when not compelled by the Leisure documents in 1992 -- before the 1993 taxes
the equities of the situation, full subrogation to all special were due. [**59] Thus, the trial court's ruling that
privileges accompanying the taxing authority's . . . lien W orld Help is equitably subrogated to HCAD's lien for
will be denied." Id. the 1993 taxes is proper under the circumstances of this
case.
In the Smart case, the mortgagee, Tower Land and
W e overrule W orld Help's seventh point.
Investment Company (Tower), purchased property at a
foreclosure sale. After the sale, Tower paid the
XI. W orld Help's Recovery of the Delinquent Tax
delinquent ad valorem taxes that had been assessed
Amount
against the property while the mortgagor, Smart, owned
it and then sought to recover them from Smart. See In point eight, W orld Help contends the trial court
[**57] 597 S.W.2d at 338. The Texas Supreme Court erroneously refused to render judgment for W orld Help
held that the equities of the suit did not entitle Tower to against Leisure based on W orld Help's payment of the
be subrogated to the taxing authority's lien. The court 1989 through 1992 ad valorem taxes. In conclusion of
reasoned that Tower could have accounted for the law 4, the trial court concluded that W orld Help has no
delinquent taxes in determining its bid amount; thus, valid claim against Leisure for the delinquent taxes.
Tower was considered to have purchased the property
Although W orld Help was not entitled to be
with reference to the tax liability. See id. at 339.
equitably subrogated to HCAD's tax liens on Rylee's
In this case, the trial court also determined that the Landing, it does not follow that W orld Help could not
equities of the situation did not entitle W orld Help to be recover from Leisure for payment of the delinquent
fully subrogated to HCAD's liens on Rylee's Landing. taxes. W hether Leisure was liable for nonpayment of the
ad valorem taxes is a separate question from what lien
Jimmy Neal Thomas, one of W orld Help's directors,
priority W orld Help should receive based on its payment
testified that he knew at the time of purchase that the
of the taxes.
Leisure notes were in "substantial and material default"
and that Rylee's Landing might be subject to liens for The deed of trust that secured the acquisition loan
unpaid property taxes. Thomas testified that W orld Help promissory note allowed C&I, as mortgagee, to pay
did no investigation regarding the unpaid taxes, the delinquent property taxes and add the amount of the
loans, or any other aspect of Rylee's Landing. taxes to the [*683] mortgage debt. Leisure
acknowledges that the deed of trust gave the [**60]
In light of World Help's knowledge at the time it
mortgagee of Rylee's Landing this right.
purchased the Leisure documents, we cannot say that the
equities of the situation entitle W orld Help to be Many Texas cases have held that [HN29] if a
subrogated to HCAD's liens for the 1989 through 1992 mortgagor fails to pay taxes he has promised to pay, the
taxes. Because W orld Help knew of the likelihood of the mortgagee may treat the amount owed for taxes as part of
tax liens, it could have [**58] ascertained the amount of the mortgage debt. . . . If the mortgagor fails to pay the
the delinquent taxes and accounted for that amount in its taxes, the mortgagee may pay them and the amount paid
bid for the Leisure documents. for taxes is considered to be a part of the mortgage debt.
Both the mortgagor's obligation to pay the amount due on
W orld Help contends that to deny it a first priority
the purchase price and his obligation to pay taxes are
lien on the entire amount of the paid ad valorem taxes
secured by the mortgage.
would be to grant Turner and Kingdom a windfall.
W hether Turner or Kingdom benefitted by W orld Help's
Smart, 597 S.W.2d at 336.
EXHIBIT "F"
Page 19
977 S.W .2d 662,067-250449-11
*; 1998 Tex. App. LEXIS 3352, **
trial about the reasonableness of his firm's attorney's fees.
As successor mortgagee, W orld Help was permitted
Korb listed the work he had performed in preparation and
to pay the delinquent ad valorem taxes on Rylee's
trial of the case. He testified that he had expended 300
Landing and add that amount to the mortgage debt.
hours on the case at $ 150 per hour; that two paralegals
W orld Help paid the taxes. Accordingly, W orld Help was
had expended a total of 233 hours at $ 55 per hour; and
entitled to recover the delinquent tax amount from
that other attorneys in his firm had worked a total of 18
Leisure, and the trial court erred by concluding
[**63] hours on the case at $ 120 per hour. The total of
otherwise. W e sustain W orld Help's eighth point.
these amounts is $ 59,975. Korb also testified that the
services provided and the hourly rates were reasonable
XII. W orld Help's Lien Priority for the Paid Taxes
based on the issues involved in the case. Finally, Korb
In point six, W orld Help contends that the trial court testified that $ 20,000 was a reasonable legal fee to
erred in granting Turner and K ingdom summary charge if the case was appealed to this court; $ 5,000
judgment subordinating W orld Help's liens for the paid would be a reasonable fee for filing an application for
ad valorem taxes to Turner's and Kingdom's liens. In its writ of error with the Texas Supreme Court; and $ 5,000
summary judgment order, the trial court [**61] ruled would be [*684] a reasonable fee if the supreme court
that W orld Help's "legal or equitable liens" are superior granted the application.
to Turner's and K ingdom's liens to the extent of $ 34,860
Korb's testimony was uncontroverted. On cross-
(the amount of the 1993 ad valorem taxes). The trial
examination, Leisure only asked whether W orld Help
court ruled that Turner's and Kingdom's liens are superior
had actually been charged the fees about which Korb
to all of W orld Help's other liens.
testified, or whether the case was being tried on a
In our discussion under point seven, we upheld the contingency fee basis. Korb responded that W orld Help
trial court's ruling that W orld H elp is not entitled to be was regularly paying legal fees on an hourly rate basis
equitably subrogated to HCAD's first priority lien for the and had "been charged $ 60,000 for the trial of the case."
delinquent property taxes on Rylee's Landing. See at Kingdom asked whether the fees had been paid, and
1998 Tex. App. LEXIS 3352, *54. But we ruled in point Korb testified that all fees had been paid except for those
eight that W orld Help was permitted to pay delinquent billed during January 1996 -- the month in which the
taxes and add that amount to the acquisition mortgage case was tried. Turner's attorney merely questioned Korb
debt. See at 1998 Tex. App. LEXIS 3352, *59. Because about whether $ 35,000 was a reasonable amount of
W orld Help's payment of the delinquent ad valorem taxes attorney's fees for trying Turner's claims in [**64] the
is secured by the deed of trust on the acquisition loan, case. No other evidence was offered regarding the
W orld H elp's lien priority on the now-paid delinquent amount or reasonableness of W orld Help's attorney's
taxes is the same as its mortgage lien priority. However, fees.
what that priority is must be determined on remand after
[HN31] W hat amount of attorney's fees is reasonable
a trial on the merits of the equitable subordination issue.
is a question of fact. See International Sec. Life Ins. Co.
W e sustain point six.
v. Spray, 468 S.W.2d 347, 349 (Tex. 1971). But where, as
here, trial counsel's testimony concerning attorney's fees
XIII. W orld Help's Attorney's Fees
for the trial of a case is clear, positive and direct, and
In its fifth point, W orld Help complains that the trial uncontroverted, it is taken as true as a matter of law. This
court improperly failed to award it attorney's fees against is especially true where the opposing party had the means
Leisure. [**62] W orld Help asserts that it is entitled to and opportunity to disprove the testimony, if it were not
attorney's fees because it won a portion of its breach of true, and failed to do so. See Ragsdale v. Progressive
contract claim against Leisure. See TEX. CIV. PRAC. & Voters League, 801 S.W.2d 880, 882 (Tex. 1990); Clary
REM. CODE ANN. § 38.001(8) (Vernon 1997). Corp. v. Smith, 949 S.W.2d 452, 469 (Tex. App.--Fort
W orth 1997, pet. denied); see also TEX. CIV. PRAC. &
[HN30] W hen a prevailing party in a breach of
REM. CODE ANN. § 38.003 (Vernon 1997) (stating
contract suit seeks attorney's fees, an award of reasonable
rebuttable presumption that usual and customary
fees is mandatory under section 38.001 if there is proof
attorney's fees are reasonable). Because none of the
of the reasonableness of the fees. See Atlantic Richfield
appellees questioned or controverted Korb's testimony,
Co. v. Long Trusts, 860 S.W.2d 439, 449 (Tex. App.--
even though they had the means and opportunity to do
Texarkana 1993, writ denied); Budd v. Gay, 846 S.W.2d
so, we hold that the testimony established W orld Help's
521, 524 (Tex. App.--Houston [14th Dist.] 1993, no
legal fees through trial of the case as a matter of law.
writ.). A trial court has discretion to fix the amount of
attorney's fees, but it does not have the discretion to
W orld Help also contends [**65] that it is entitled to
completely deny attorney's fees if they are proper under
attorney's fees against Turner and Kingdom with regard
section 38.001. See Budd, 846 S.W.2d at 524.
to the lien priorities issue. W hether W orld Help is
W illiam Korb, W orld Help's attorney, testified at entitled to those attorney's fees is undecided because we
EXHIBIT "F"
Page 20
977 S.W .2d 662,067-250449-11
*; 1998 Tex. App. LEXIS 3352, **
are remanding the lien priorities issue for trial on the but did not find that the breach caused Turner any
merits. [HN32] Ordinarily, a party is required to damages. Because Turner did not prevail on any claims
segregate fees incurred on claims allowing the recovery under section 38.001, it is not entitled to attorney's fees
of fees from those that do not. See Stewart Title Guar. based on that statute.
Co. v. Aiello, 941 S.W.2d 68, 73 (Tex. 1997). But when
Turner also contends that it is entitled to recover
the claims are dependent upon the same set of facts or
attorney's fees from W orld Help under section 53.156 of
circumstances and thus are intertwined to the point of
the Texas Property Code because it prevailed against
being inseparable, the party suing for attorney's fees may
W orld Help on the lien priorities issue, which is covered
recover the entire amount covering all claims. See id.
by the statute. [HN35] Section 53.156 provides:
Leisure does not contend that the attorney's fee award
should be segregated, and we believe the issues are so In any proceeding to foreclose a lien . . . or in any
intertwined that segregation would be impracticable. proceeding to declare that any lien or claim is invalid or
Accordingly, we hold that W orld Help may recover the unenforceable in whole [**68] or in part, the court may
full $ 60,000 in attorney's fees from Leisure. However, award costs and reasonable attorney's fees as are
the trial court should decide on remand whether W orld equitable and just.
Help is entitled to recover attorney's fees from Turner
TEX. PROP. CODE ANN. § 53.156 (Vernon 1995)
and K ingdom concerning the lien priorities issue. If the
(emphasis supplied).
trial court decides that an award of attorney's fees against
Turner and Kingdom [**66] is proper, then Leisure, This language indicates that a trial court's award of
Turner, and K ingdom will be jointly and severally liable attorney's fees under this statute is discretionary, not
for the $ 60,000 attorney's fee award. mandatory. See id.; see also Texas Constr. Assocs. v.
Balli, 558 S.W.2d 513, 522 (Tex. Civ. App.--Corpus
[HN33] The award of appellate attorney's fees is also
Christi 1977, no writ) (holding that trial court's award of
a question for the fact finder. See id. W e may not initiate
attorney's fees under predecessor statute was
an award of appellate fees, since that would be an
discretionary, not mandatory). Thus, [HN36] an award of
exercise of original rather than appellate jurisdiction. See
attorney's fees under section 53.156 is not automatic,
International Sec. Life Ins. Co., 468 S.W.2d at 349.
even to a prevailing party.
Korb's testimony as to appellate attorney's fees did not
establish the reasonableness of the requested amounts as Moreover, in light of our holding that the summary
a matter of law. Accordingly, we will remand this portion judgment on lien priorities is improper, Turner is not a
of the attorney's fees issue to the trial court for a prevailing party on the lien priority issue. Accordingly,
determination and an award. without deciding whether Turner's claims below fell
within the purview of section 53.156, we hold that
W e sustain W orld Help's fifth point as it pertains to
Turner is not, at this point, entitled to attorney's fees
W orld Help's attorney's fees claim against Leisure and
under section 53.156. W e overrule Turner's cross point.
decline to rule on the point as it pertains to W orld Help's
claim against Turner and Kingdom.
XV. Conclusion
XIV. Turner's Attorney's Fees W e affirm the trial court's judgment in part, reverse
and remand in part, and reverse and render in part as
In its sole cross point, Turner asserts that the trial
follows:
court erred in failing to award Turner attorney's fees.
. W e reverse the trial court's judgment that [**69]
Turner contends it is entitled to recover attorney's
Turner's and Kingdom's liens are superior to W orld
fees from both W orld Help and Leisure under section
Help's mortgage liens and remand the lien priorities issue
38.001 of the Texas Civil Practice and Remedies Code.
for trial on the merits.
W e [*685] disagree. [HN34] To be entitled to [**67]
attorney's fees under section 38.001, Turner was required . W e reverse the trial court's judgment granting
to prevail on at least a portion of its claims. See Atlantic Turner an equitable lien on the rental proceeds from
Richfield Co., 860 S.W.2d at 449. The final judgment in Rylee's Landing and render judgment that Turner does
this case does not award Turner any relief against Leisure not have an equitable lien on the rental proceeds.
because Turner did not sue Leisure in this case.
. W e affirm the trial court's judgment that the
Turner's only claim against W orld Help within the acquisition and development loans comprised a single
scope of section 38.001 was derivative of C&I's alleged contract, which C&I breached but Leisure did not.
breach of the June 1989 letter agreement. Turner did not
prevail on its claim that C&I breached the letter . W e reverse the trial court's judgment denying
agreement. In its findings of fact, the trial court found W orld Help recovery from Leisure for the $ 218,031 in
that C&I breached its "set-aside agreement" with Turner paid delinquent property taxes and render judgment that
EXHIBIT "F"
Page 21
977 S.W .2d 662,067-250449-11
*; 1998 Tex. App. LEXIS 3352, **
W orld Help recover that additional amount from Leisure priority as its mortgage liens because the paid delinquent
as part of the mortgage debt. W e reform the trial court's taxes are now part of the mortgage debt.
judgment awarding W orld Help damages from Leisure
. W e reverse the trial court's judgment denying
on the promissory notes to reflect the additional $
W orld Help's claim for attorney's fees against Leisure
218,031, or $ 2,319,968 in total damages and affirm the
and render judgment that W orld Help recover $ 60,000 in
damages award as reformed. W e remand to the trial court
attorney's fees from Leisure for trial of the underlying
for recalculation of interest on the reformed damages
case. W e remand to the trial court the issue of what is a
award.
reasonable amount of appellate attorney's fees. W e also
. W e reverse the trial court's judgment denying remand the issue of whether W orld Help can recover
W orld Help's claim to the rental proceeds from Rylee's attorney's fees from Turner and Kingdom related to the
Landing and render judgment that W orld Help has a lien priorities issue, in which case Leisure, Turner, and
security [**70] interest in the rental proceeds, which has Kingdom would [**71] be jointly and severally liable
the same priority as W orld Help's mortgage liens because for the attorney's fee award.
it was granted in the acquisition and development loan
. W e affirm the trial court's judgment denying
documents.
Turner's claim for attorney's fees.
. W e affirm the trial court's judgment that W orld
JOHN CAYCE
Help has a first priority lien against [*686] Rylee's
Landing for $ 34,860 -- the amount of the 1993 ad CHIEF JUSTICE
valorem taxes.
PANEL A: CAYCE, C.J.; LIVINGSTON and
. W e affirm the trial court's judgment that W orld BRIGHAM, JJ.
Help is not equitably subrogated to HCAD's tax liens for
DELIVERED JUNE 4, 1998
the 1989 through 1992 ad valorem taxes. W e render
judgment that W orld Help's lien priority with respect to
the delinquent tax amount ($ 218,031) has the same
EXHIBIT "F"
Page 1
154 S.W .3d 878,067-250449-11
*; 2005 Tex. App. LEXIS 543, **
RECOGNITION COM M UNICATIONS, INC., Appellant v. AM ERICAN
AUTOM OBILE ASSOCIATION, INC. & AAA CLUB SERVICES, INC., Appellees
No. 05-02-01619-CV
COURT OF APPEALS OF TEXAS, FIFTH DISTRICT, DALLAS
154 S.W.3d 878; 2005 Tex. App. LEXIS 543
January 26, 2005, Opinion Filed
SUBSEQUENT HISTO RY: Rehearing overruled by could have rejected the theory that the agreement was
Recognition Communs., Inc. v. AAA, Inc., 2005 Tex. App. exclusive. Plaintiff proved its entitlement to fees in that
LEXIS 829 (Tex. App. Dallas, Jan. 26, 2005) plaintiff sent letters to defendant complaining that it was
Petition for review denied by Recognition Communs., not being paid commissions on the house accounts in
Inc. v. AAA, 2005 Tex. LEXIS 945 (Tex., Dec. 9, 2005) plaintiff's territories and this was presentment under Tex.
Civ. Prac. & Rem. Code Ann. § 38.002. Because there
PRIOR HISTO RY: [**1] On Appeal from the 193rd was conflicting evidence as to the tortious interference
Judicial District Court. Dallas County, Texas. Trial Court with a contract and fraud, the issues were for the jury to
Cause No. 97-03140-L. decide. The court granted in part plaintiff's motion for
Recognition Communs., Inc. v. AAA, Inc., 2004 Tex. App. rehearing holding that plaintiff would recover 20 percent
LEXIS 8034 (Tex. App. Dallas, Sept. 1, 2004) of the costs of appeal.
DISPOSITION: Affirmed in part, reversed and OUTCOM E: The court affirmed the judgment of the
rendered in part, and remanded. trial court, but reversed as to costs. The court granted in
part plaintiff's motion for rehearing regarding attorney's
CASE SUM M ARY: fees and costs on appeal, holding that plaintiff should
recover 20 percent of the costs of appeal.
PRO CEDURAL PO STURE: Plaintiff advertising LexisNexis(R) Headnotes
company appealed a decision of the 193rd Judicial
District Court, Dallas County, Texas, which entered
judgment for defendant automobile club in plaintiff's
action for breach of contract alleging that the advertising Civil Procedure > Pleading & Practice > Defenses,
company had an exclusive contract for advertisements. Dem urrers & Objections > Affirm ative Defenses >
Plaintiff also filed a motion for rehearing of the court's General Overview
opinion regarding its trial and appellate costs. [HN1] W aiver is an intentional relinquishment of a
known right or intentional conduct inconsistent with that
OVERVIEW : Plaintiff alleged it was entitled to right. W aiver can be established by either an express
commissions on advertisement sold in plaintiff's territory renunciation of a known right or by silence or inaction
whether it sold the advertisement or not. Plaintiff pleaded for so long a period as to demonstrate an intention to
that some paragraphs of the agreement were ambiguous, yield that known right. Although waiver is generally a
and the court held that submitting to the jury the question fact issue, if facts and circumstances are admitted or
of ambiguity of more than those paragraphs was error, clearly established, it then becomes a question of law.
but harmless because the four paragraphs were discussed W aiver is largely a matter of intent, and for implied
extensively at trial. There was evidence that defendant waiver to be found through a party's actions, intent must
reassigned accounts within plaintiff''s territory and the be clearly demonstrated by the surrounding facts and
jury could have determined that the agreement did not circumstances.
prohibit account-by-account reassignment. The jury
EXHIBIT "G"
Page 2
154 S.W .3d 878,067-250449-11
*; 2005 Tex. App. LEXIS 543, **
Civil Procedure > Trials > Jury Trials > Jurors > [HN6] When a party attacks the legal sufficiency of an
Misconduct adverse finding on an issue on which it has the burden of
Civil Procedure > Trials > Jury Trials > Jury proof, it must demonstrate on appeal that the evidence
Instructions > General Overview establishes, as a matter of law, all vital facts in support of
Civil Procedure > Appeals > Standards of Review > the issue. In reviewing a "matter of law" challenge, the
Abuse of Discretion reviewing court must first examine the record for
[HN2] Generally, in reviewing a complaint of error in a evidence that supports the finding, while ignoring all
question submitted to the jury, the appellate court evidence to the contrary. If there is no evidence to
employs an abuse of discretion standard. A trial court support the finding, the reviewing court will then
abuses its discretion if its action is arbitrary, examine the entire record to determine if the contrary
unreasonable, and without reference to any guiding rules proposition is established as a matter of law. The point of
or principles. The trial court's clear failure to analyze or error should be sustained only if the contrary proposition
apply the law correctly constitutes an abuse of discretion. is conclusively established.
An appellate court may not reverse a judgment for error
in the submission of jury instructions or questions unless
an appellate court concludes the error probably caused Civil Procedure > Appeals > Standards of Review >
the rendition of an improper judgment. Tex. R. App. P. Substantial Evidence > General Overview
44.1(a)(1). To determine whether an improper jury [HN7] When a party attacks the factual sufficiency of an
charge constitutes reversible error, an appellate court adverse finding on an issue on which it has the burden of
considers the pleadings, the evidence, and the charge in proof, it must demonstrate on appeal that the adverse
its entirety. finding is against the great weight and preponderance of
the evidence. The court of appeals must consider and
weigh all of the evidence, and can set aside a verdict only
Civil Procedure > Trials > Jury Trials > Province of if the evidence is so weak or if the finding is so against
Court & Jury the great weight and preponderance of the evidence that
Civil Procedure > Appeals > Standards of Review > it is clearly wrong and unjust.
Abuse of Discretion
[HN3] A trial court may not submit a jury question that is
neither supported by the pleadings nor tried by consent. Civil Procedure > Appeals > Standards of Review >
Submitting a jury question that is not supported by the General Overview
pleadings or tried by consent is an abuse of discretion. [HN8] The factfinder is the sole judge of the credibility
of the witnesses and the weight to be given their
testimony. The factfinder may believe one witness and
Civil Procedure > Trials > Jury Trials > Province of disbelieve another and resolve inconsistencies in
Court & Jury testimony. W hen enough evidence is before the
Contracts Law > Contract Interpretation > Am biguities factfinder that reasonable minds could differ on the
& Contra Proferentem > General Overview meaning of the evidence, or the inferences and
Contracts Law > Defenses > Am biguity & Mistake > conclusions to be drawn from the evidence, the court of
General Overview appeals may not substitute its judgment for that of the
[HN4] W hether a contract is ambiguous is a question of factfinder. The court of appeals may not reverse merely
law for the court to decide. Only if the court makes the because it concludes that the evidence preponderates
determination that the contract cannot be given a certain toward a different answer.
and definite legal meaning, and is therefore ambiguous,
can a question of fact be submitted to the jury as to the
meaning of the contract. Civil Procedure > Rem edies > Costs & Attorney Fees >
Attorney Expenses & Fees > Statutory Awards
Governments > Agriculture & Food > General
Civil Procedure > Appeals > Standards of Review > Overview
Harmless & Invited Errors > General Overview [HN9] Tex. Civ. Prac. & Rem. Code Ann. § 38.001(8)
Contracts Law > Defenses > Am biguity & Mistake > permits a prevailing party to recover attorney's fees in a
General Overview suit on a contract. Tex. Civ. Prac. & Rem. Code Ann. §
[HN5] A party that asks for a certain type of relief cannot 38.001(8) (1997). W hen a prevailing party in a breach of
complain on appeal if that relief is granted. contract suit seeks attorney's fees, an award of reasonable
fees is mandatory under section 38.001 if there is proof
of the reasonableness of the fees. In such a case, a jury
Civil Procedure > Appeals > Standards of Review > does not have discretion to simply deny an award of
Substantial Evidence > General Overview attorney's fees if any were properly proven. As a factual
EXHIBIT "G"
Page 3
154 S.W .3d 878,067-250449-11
*; 2005 Tex. App. LEXIS 543, **
matter, a zero award for attorney's fees is proper if the Civil Procedure > Appeals > Costs & Attorney Fees
evidence (1) failed to prove (a) that any attorney's Tax Law > State & Local Taxes > Administration &
services were provided, or (b) the value of the services Proceedings > Judicial Review
provided; or (2) affirmatively showed that no attorney's [HN15] Reading the plain language of both Tex. R. Civ.
services were needed or that any services provided were P. 139 and Tex. R. App. P. 43.4, it has been concluded
of no value. Uncontroverted testimony by an interested these rules can be harmonized to give effect to both. It is
witness concerning attorney's fees may establish a fact as clear that courts of appeals have considerable discretion
a matter of law. in taxing costs on appeal. W hile the first sentence of Rule
43.4 directs an appellate court to award costs on appeal
to the prevailing party, the second sentence gives an
Civil Procedure > Parties > Required Representation appellate court discretion to tax costs otherwise as
Civil Procedure > Rem edies > Costs & Attorney Fees > required by law or for good cause. Important to an
General Overview appellate court's decision is the language of the second
[HN10] To recover attorney's fees under Tex. Civ. Prac. sentence where it addresses taxation of costs, not simply
& Rem. Code Ann. ch. 38, a claimant (1) must be appellate costs. Also, the rule provides us the alternative
represented by an attorney; (2) he must present the claim of following other provisions of the law on taxing costs
to the opposing party or to a duly authorized agent of the or the appellate court may award costs for good cause.
opposing party; and (3) before the expiration of the This language allows an appellate court to exercise its
thirtieth day after the claim is presented, the opposing discretion to determine how costs shall be awarded for an
party must not tender payment for the just amount owed. appeal as well as for trial in recognition of the result on
Tex. Civ. Prac. & Rem. Code Ann. § 38.002 (1997). appeal.
COUNSEL: For APPELLANT: W ade L. McClure,
Torts > Business Torts > Com m ercial Interference > GIBSON, McCLURE, W ALLACE & DANIELS,
Contracts > Elem ents Jennifer P. Pulley, Dallas, TX.
[HN11] The elements of tortious interference with a
contract are: (1) the existence of a contract subject to F o r A P P E L L E E : J o h n Z a vitsa no s , A H M A D ,
interference; (2) willful and intentional interference; (3) ZAVITSANOS & ANAIPAKOS, P.C., Houston, TX,
interference that proximately caused damage; and (4) Jack Thomas Jamison, GODW IN & GRUBER, P.C.,
actual damage or loss. Dallas, TX.
JUDGES: Before Justices FitzGerald, Richter, and Lang
Torts > Business Torts > Fraud & Misrepresentation > Opinion By Justice Lang.
General Overview
[HN12] A cause of action for fraud requires proof of a OPINION BY: DOUGLAS S. LANG
material misrepresentation, which was false, and which
was either known to be false when made or was asserted OPINION
without knowledge of its truth, which was intended to be
[*881] OPINION ON REHEARING
acted upon, which was relied upon, and which caused
injury. Opinion By Justice Lang
Appellant's motion for rehearing is GRANTED in
part. The Court's opinion and judgment of September 1,
Civil Procedure > Appeals > Costs & Attorney Fees
2004 are withdrawn, and this opinion is substituted in its
[HN13] See Tex. R. Civ. P. 139.
place to state good cause for the allocation of costs on
appeal and to remand the issue of trial court costs. In all
other respects, appellants' motion for rehearing is
Civil Procedure > Appeals > Costs & Attorney Fees
DENIED.
[HN14] In a civil case, the court of appeal's judgment
should award to the prevailing party the appellate costs-- Beginning in 1992, Recognition Communications,
including preparation costs for the clerk's record and the Inc. (RCI) contracted with American Automobile
reporter's record--that were incurred by that party. But Association, Inc. (AAA) to act as a publisher's
the court of appeals may tax costs otherwise as required advertising representative soliciting and selling
by law or for good cause. Tex. R. App. P. 43.4. advertisements for AAA World, a magazine published by
AAA. After AAA terminated the publisher's advertising
agreement in 1997, RCI sued AAA for breach of the
Civil Procedure > Rem edies > Costs & Attorney Fees > agreement. RCI alleged that it had an exclusive contract
Costs > General Overview for advertisments that AAA received from RCI's
EXHIBIT "G"
Page 4
154 S.W .3d 878,067-250449-11
*; 2005 Tex. App. LEXIS 543, **
territory, it was entitled to commissions on certain individual members in the divisions. Among its methods
accounts pursuant [**2] to its agreement with AAA, and of selling advertising, AAA entered into contracts with
AAA failed to pay those commissions. RCI also alleged ad vertising re p re se n ta tiv e s, like R C I, to sell
that AAA fraudulently induced it to add territory by advertisements in AAA World.
representing those accounts were included in the new
b. RCI and AAA's Agreement
territory, but then AAA refused to pay commissions on
those accounts. RCI also sued AAA Club Services, Inc., In 1990, Matt Hamill was hired as national
a subsidiary of an AAA member club, for tortious advertising manager of AAA World. He was told to
interference with the agreement. RCI alleged that certain increase the amount of advertisements in the magazine.
agents of AAA Club Services, [*882] Inc. caused AAA Matt Kincaid contacted AAA soliciting business, and in
to terminate the agreement. early 1992, Hamill contacted Kincaid. In February 1992,
Hamill and Kinkaid signed the "Publisher's Advertising
The trial court submitted to the jury issues on
Representative Agreement" between RCI and AAA,
ambiguity and interpretation of the agreement, the claims
which is at issue here.
described above, and RCI's requests for attorney's fees.
The jury found against RCI on all issues. The trial court c. RCI and AAA Revised Agreement
entered a judgment that RCI take nothing. In nine issues,
The record reflects that possibly before, but certainly
RCI challenges (a) the submission of the question
after the initial contract was signed, Kincaid requested
regarding the ambiguity of certain paragraphs of the
Hamill to give RCI additional territory by making RCI
agreement and the factual sufficiency of the jury's failure
the national sales representative for AAA. At a meeting
to find that the accounts for which RCI sought payment
in December 1993, at [**5] which Kincaid discussed
were included in the agreement; (b) the trial court's ruling
adding additional territory with Hamill, AAA provided a
that certain paragraphs were ambiguous; (c) the
"Prepaid Commission Report" showing what accounts
sufficiency of the evidence supporting the jury's negative
were already producing income for the advertising
answer to RCI's request for attorney's fees incurred in
agency that held the account in the territory. According
[**3] obtaining a "termination fee"; and (d) the factual
to RCI, this report was provided by AAA so [*883] RCI
sufficiency of the evidence supporting the jury's negative
could see the "income stream" RCI could expect to
answers to the tort, damages, and attorney's fees for
acquire if it received additional territory. The report
breach of agreement questions. For the reasons that
includes several accounts labeled "In-house": Auto Plan,
follow, we reverse the trial court's judgment as to the
Auto Insider, and two other accounts. All accounts
award of attorney's fees for the "termination fee" and
showe d a " net" a m o unt and an advertising
render judgment in RCI's favor on that claim, and we
representative's identifying number. The previous
affirm the trial court's judgment in all other respects.
advertising representative had been paid commissions on
the "In-house" accounts.
I. FACTUAL AND PROCEDURAL BACKGROUND
Beginning in 1994, with AAA's agreement, RCI
a. RCI's and AAA's History
added the territory shown on the "Prepaid Commission
Matt Kincaid was the president of RCI. His brothers Report." Later in 1994, AAA decided to stop paying
Eric and Lance were also employed by RCI. RCI had commissions on the Auto Insider and Auto Plan
contracts with various magazine publishers to solicit and accounts. AAA labeled certain accounts, including Auto
sell advertisements. In turn, RCI had contracts with Insider and Auto Plan, "house accounts." The house
subrepresentatives to cover RCI's territory. accounts, which previously had been "commissionable"
were no longer "commissionable." RCI submitted claims
AAA, a not-for-profit corporation, was a federation
to AAA for Auto Insider and Auto Plan advertisements,
of independent member clubs. The member clubs
but AAA refused to pay. In January 1995, with AAA's
provided various automobile and travel-related services
agreement, RCI [**6] added New Jersey to its territory
to dues-paying members. The member clubs included
because RCI believed that New Jersey territory included
whole states, parts of states, or spanned several states.
the Hertz Rental Company, whose headquarters were in
The member clubs communicated with their members,
New Jersey.
usually through a travel magazine. AAA operated some
clubs as divisions. In 1996, AAA sold three divisions, Later in 1995, RCI began a "media buying program"
AAA Hawaii, [**4] AAA Texas, and AAA New by instituting a "travel planner." RCI provided the travel
M exico, to AAA Club Services, Inc., a wholly owned planner to AAA under an oral agreement separate from
subsidiary of the Automobile Club of Southern the 1992 publisher's advertising agreement. Under the
California (ACSC), an AAA member club. AAA Club travel planner, RCI purchased advertising space in AAA
Services, Inc. was formed in 1996 to be the parent of World, sold advertisements in the advertising space, and
these three new subsidiaries. then submitted the multi-advertisement copy to AAA.
AAA paid RCI a commission on this advertising. AAA
AAA published AAA World to communicate with the
EXHIBIT "G"
Page 5
154 S.W .3d 878,067-250449-11
*; 2005 Tex. App. LEXIS 543, **
discontinued the travel planner effective January 1997. asserting that paragraph 1(E) was ambiguous. 2
Also, in 1995, the title of AAA World changed to Car
1 Paragraph 1(D) provided:
& Travel. W hen AAA Club Services, Inc. was formed in
1996, it continued to use Car & Travel as its member Advertising accounts located within the
publication. In mid-1996, Harold Yankelevitz replaced Territory's geographic area are assigned to [RCI].
Hamill as national advertising manager. In January 1997, The advertiser's name and location shall be
AAA Club Services, Inc. stopped using Car & Travel determined by the parties named and described on
and began publishing Journey. Bob Bradley and Mark the advertising contract or insertion order.
Titel, who were employees of ACSC, the parent of AAA
Paragraph 5(A) provided:
Club Services, Inc., acted as consultants on the
publication of Journey. Later in 1997, AAA stopped [AAA] agrees to pay [RCI] a twenty per cent
publishing [**7] Car & Travel. (20%) commission on the net dollar amount of
advertisements sold by [RCI] to advertisers in the
d. RCI's Breach of Contract Claim
Territory. The net shall be based on current
AAA canceled the contract with RCI effective published advertising rates less any [AAA's] rate
January 1997. Shortly thereafter, RCI sued AAA, AAA discounts, special services fees, and advertising
Club Services, Inc., and other parties not before us in this agency commission.
appeal. RCI alleged that AAA breached the agreement by [**9]
failing to pay commissions on "in house," "preferred 2 Paragraph 1(E) provided:
provider," and the Hertz accounts.
TEAM ACCOUNT RULE: In the event that
RCI's breach of contract theory was that under the any portion of the Territory's geographic area is
agreement, the territory assigned to RCI was exclusive also assigned to another representative, any
and all the accounts in each geographic area were account located in that portion will be designated
assigned to RCI. Therefore, according to RCI, no other a "Team Account" (see 5D). [RCI] agrees to
advertising agency had the right to sell any solicit and service Team Accounts in cooperation
advertisements, and RCI was entitled to receive with other assigned representatives.
commissions on every advertisement placed by any
g. The Jury Charge
advertiser or sold in RCI's territory, whether RCI sold the
advertisement or it was sold by another advertising Over RCI's objection, the jury charge submitted the
representative or by AAA itself. issue of the meaning of paragraphs 1(A), 1(D), 1(E),
1(F), 4, and 5(A) and whether the contested
e. RCI's Other Claims
advertisements were included in the agreement as
RCI also asserted a claim against AAA for modified, re-aligned, or re-assigned. 3 The charge also
fraudulent inducement for misrepresenting that the submitted RCI's contract claims, tort claims, and RCI's
"house accounts," "preferred provider accounts," and the requests for attorney's fees pursuant to the "termination
Hertz accounts were part of RCI's territory. As damages, fee" and breach of contract. The jury found that the
RCI claimed it was entitled to $ 10,000 as a termination contested accounts were not part of the agreement. The
fee plus unpaid sales commissions, which RCI estimated jury did not reach the issues relating to the breach of the
[**8] at trial to total about $ 2 million. RCI also agreement claim and found against RCI on all other
requested attorney's fees for both the "termination fee" issues.
and the breach of contract claim.
3 Paragraph 1(A) provided:
RCI asserted a claim for tortious interference with
contract against AAA Club [*884] Services, Inc. RCI [AAA] hereby contracts with [RCI] for the
alleged that Titel and Bradley, as agents of AAA Club purpose of soliciting and selling advertising space
Services, Inc., tortiously interfered with the RCI-AAA in the publication AAA World. [RCI] will solicit
agreement by demanding that AAA terminate the and service advertising as follows: a.) for specific
agreement. edition sections, and b.) in a geographic area, the
sum of "a" and "b" being hereafter referred to as
f. Pretrial
the "Territory" (see Attachment A).
Before trial, the trial court granted partial summary
Attachment A was a "rate card" that changed
judgment in RCI's favor by ruling that RCI was entitled
each year and listed the "designated advertising
to a "termination fee" under paragraph 2(B) of the
sales territories" effective at the beginning of the
agreement. Also before trial, the trial court ruled that
year.
paragraphs 1(D) and 5(A) of the agreement were
ambiguous. 1 Subsequently, RCI amended its pleading by Paragraph 1(F) provided:
EXHIBIT "G"
Page 6
154 S.W .3d 878,067-250449-11
*; 2005 Tex. App. LEXIS 543, **
statements, and if --whatever the jury defines, we will not
SPLIT ACCOUNT RULE: Should an
appeal.
advertising contract or insertion order determined
to be in the Territory also name an agency or The context of this statement shows that it relates to
agency's client located outside the Territory, the counsel's previous questions regarding the jury's decision
advertiser will be designated "Split Account" (see as to the location of the Hertz account, not to a waiver of
5D). [RCI] agrees to solicit and service Split appeal of the jury's verdict on the entire case. Thus, we
Accounts in cooperation with other assigned cannot agree that this statement is an intentional
representatives. relinquishment of RCI's known right to appeal or
intentional conduct inconsistent with RCI's right to
Paragraph 4 provided:
appeal. See Jernigan, 111 S.W.3d at 156; U.S. Fid. &
INVOICES. An advertisement is considered Guar. Co., 464 S.W.2d at 357.
sold only upon publication. [AAA] will invoice
advertisers for advertisements that [RCI] has sold III. JURY CHARGE ERROR
and will be responsible for collection activities
In its first issue, RCI contends that the trial court
and any uncollectible revenues (see 5C). Upon
erroneously submitted the question [**12] of ambiguity
request by [RCI], [AAA] shall provide a copy of
of paragraphs 1(A), 1(E), 1(F), and 4 of the agreement,
any invoice.
which the trial court had not found to be ambiguous and
[**10] RCI filed a motion for judgment for which ambiguity had neither been pleaded nor tried
notwithstanding the verdict and motion for new trial. by consent. RCI contends that the submission of these
Both were denied in a written order. This appeal paragraphs is a clear mistake of law which probably
followed. caused the rendition of an improper judgment.
a. Standard of Review
II. AAA CLAIM S RCI W AIVED R IGHT TO
APPEAL [HN2] G enerally, in reviewing a complaint of error
in a question submitted to the jury, we employ an abuse
Initially, we address AAA's assertion that Kincaid
of discretion standard. Dallas County Sheriff's Dep't v.
expressly waived RCI's [*885] right to appeal by certain
Gilley, 114 S.W.3d 689, 691 (Tex. App.-Dallas 2003, no
statements during cross-examination.
pet.) (citing Tex. Dep't of Human Servs. v. E.B., 802
[HN1] W aiver is an intentional relinquishment of a S.W.2d 647, 649, 34 Tex. Sup. Ct. J. 31 (Tex. 1990)). A
known right or intentional conduct inconsistent with that trial court abuses its discretion if its action is arbitrary,
right. Jernigan v. Langley, 111 S.W.3d 153, 156, 46 Tex. unreasonable, and without reference to any guiding rules
Sup. Ct. J. 1010 (Tex. 2003) (per curiam); U.S. Fid. & or principles. Id. The trial court's clear failure to analyze
Guar. Co. v. Bimco Iron & Metal Corp., 464 S.W.2d 353, or apply the law correctly constitutes an abuse of
357, 14 Tex. Sup. Ct. J. 251 (Tex. 1971). W aiver can be discretion. Downer v. Aquamarine Operators, Inc., 701
established by either an express renunciation of a known S.W.2d 238, 241, 29 Tex. Sup. Ct. J. 88 (Tex. 1985). W e
right or by silence or inaction for so long a period as to may not reverse a judgment for error in the submission of
demonstrate an intention to yield that known right. jury instructions or questions unless we conclude the
Jernigan, 111 S.W.3d at 156. Although waiver is error probably caused the rendition of an improper
generally a fact issue, if facts and circumstances are judgment. [**13] TEX. R. APP. P. 44.1(a)(1); Gilley,
admitted or clearly established, it then becomes a 114 S.W.3d at 691. To determine whether an improper
question of law. Jernigan, 111 S.W.3d at 156. W aiver is jury charge constitutes reversible error, we consider the
largely a matter of intent, and for implied waiver to be pleadings, the evidence, and the charge in its entirety.
found through a party's actions, intent must be clearly Gilley, 114 S.W.3d at 691.
demonstrated by the surrounding [**11] facts and
[HN3] A trial court may not submit a jury question
circumstances. Motor Vehicle Bd. v. El Paso Indep. Auto.
that is neither supported by the pleadings nor tried by
Dealers Ass'n, Inc., 1 S.W.3d 108, 111, 42 Tex. Sup. Ct.
consent. Tex. Indus., Inc. v. Vaughan, 919 S.W.2d 798,
J. 1128 (Tex. 1999).
803 [*886] (Tex. App.-Houston [14th Dist.] 1996, writ
To show waiver, AAA relies on the following denied). Submitting a jury question that is not supported
italicized statement by Kincaid during cross-examination by the pleadings or tried by consent is an abuse of
regarding the location of the Hertz account: discretion. Stephanz v. Laird, 846 S.W.2d 895, 902 (Tex.
App.-Houston [1st Dist.] 1993, writ denied); Eldridge v.
W e're agreed that they're in Virginia and New Jersey
Collard, 834 S.W.2d 87, 90 (Tex. App.-Fort Worth 1992,
and/or Florida. W e think there's three territories. W e've
no writ).
split it half and half. W e were just told it was in New
Jersey. That's all we're saying, it's on our commission [HN4] W hether a contract is ambiguous is a question
of law for the court to decide. Lopez v. Munoz, Hockema
EXHIBIT "G"
Page 7
154 S.W .3d 878,067-250449-11
*; 2005 Tex. App. LEXIS 543, **
& Reed, L.L.P., 22 S.W.3d 857, 861, 43 Tex. Sup. Ct. J. and for the benefit of the party. If a party so authorizes
806 (Tex. 2000). Only if the court makes the another to [**16] perform an act, that other party is also
determination that the contract cannot be given a certain authorized to do whatever else is proper, ususal, and
and definite legal meaning, and is therefore ambiguous, necessary to perform the act expressly authorized.
can a question of fact be submitted to the jury as to the
ii. Apparent authority exists if a party-
[**14] meaning of the contract. Gaulden v. Johnson,
801 S.W.2d 561, 564 (Tex. App.-Dallas 1990, writ [*887] (1) knowingly permits another to hold
denied). himself out as having authority or,
b. Discussion (2) through lack of ordinary care, bestows on
another such indications of authority that lead a
The two issues raised in this case were, first,
reasonably prudent person to rely on the apparent
whether the contract was exclusive, and, second, whether
existence of authority to his detriment.
RCI was entitled to commissions on advertisements from
its territory regardless of whether RCI actually sold the Only the acts of the party sought to be charged with
advertisements. RCI offered a jury question that asked responsibility for the conduct of another may be
whether the agreement "assigned RCI an exclusive considered in determining whether apparent authority
geographic area within which to solicit and service exists.
advertising . . . ." Thus, RCI's jury question did not
d. The parties' 1992 agreement is Plaintiff's Exhibit
address the issue of whether RCI had to sell the
15. All references to specific paragraphs ("P") are to
advertisements or whether any advertisements sold by
Plaintiff's Exhibit 15.
anyone else in the territory would result in a commission
to RCI. The trial court refused RCI's offered jury e. Notwithstanding paragraph 10 4 of Plaintiff's
question. Instead, the trial court submitted a broader Exhibit 15, [AAA] and [RCI] could agree to modify their
question that combined the two issues of whether RCI's agreement in writing or orally or a combination of both.
territory was exclusive and whether RCI needed to sell
an advertisement to obtain a commission and included 4 Paragraph 10 is titled "Revisions to the
instructions to the jury regarding its interpretation of the Agreement" and provided: "This Agreement may
two paragraphs RCI requested in its offered question and be altered at any time provided that all
the four additional paragraphs. Question 1 reads as modifications are in writing and agreed to by both
follows: parties."
Did the agreement between [**15] [AAA] and [**17] f. [AAA] could re-align or re-assign [RCI]'s
[RCI], as modified or re-aligned or re-assigned include territory (P 1(B)) 5 without [RCI]'s agreement, if [AAA]
any of the matters listed below? did so in an unequivocal notice. If [AAA] did not do so
in an unequivocal notice, the parties could have agreed to
a. In order for the parties to make an enforceable
re-align or re-assign the territory.
agreement, there must be an offer and acceptance, and
there must be a meeting of the minds on all essential
5 Paragraph 1(B) provided: "[AAA] establishes
terms of the agreement and a communication that each
the Territory and may re-align and re-assign
party has consented to the terms of the agreement. An
Territory at any time."
enforceable agreement may be oral or written.
g. It is your duty to interpret the following language
b. In deciding whether the parties reached an
of the agreement to decide whether the parties' agreement
agreement, you may consider what they said and did in
provided for RCI to receive a commission on advertising
light of the surrounding circumstances, including any
it did not participate in selling:
earlier course of dealing. You may not consider the
parties' unexpressed thoughts or intentions. [Paragraphs 1(A), 1(D), 1(E), 1(F), 4, 5(A) were
quoted.]
i. A "course of dealing" is previous conduct between
the parties that indicates the parties' understanding of You must decide the Agreement's meaning by
their contractual obligations. You may not consider determining the intent of the parties at the time of the
thoughts or intentions that the parties have not expressed agreement. Consider all the facts and circumstances
to each other. surrounding the making of the agreement, the whole
agreement, the interpretation placed on the agreement by
c. A party's conduct includes the conduct of another
the parties, and the conduct of the parties.
who acts with the party's authority or apparent authority.
Question 1 then listed nineteen separate, specifically
i. Authority for another to act for a party must arise
identified advertisements, [**18] beginning with the
from the party's agreement that the other act on behalf
Auto Plan advertisements in AAA World during 1994-95
EXHIBIT "G"
Page 8
154 S.W .3d 878,067-250449-11
*; 2005 Tex. App. LEXIS 543, **
and ending with the AAA Auto Club Cellular the agreement. AAA, not RCI, argued that no part of the
advertisements in Car & Travel during 1995-97. The jury agreement was ambiguous. W e conclude that Question 1
answered "no" to each separate advertisement. as submitted by the court tended to favor RCI, not hinder
it. Accordingly, we decide the first issue against RCI.
W e agree that the submission of paragraphs 1(A),
1(F), 1(E), and 4 to the jury for interpretation was error
IV. TRIAL COURT'S AM BIGUITY RULING
because RCI did not plead ambiguity as to 1(A), 1(F),
and 4, and the trial court did not rule these paragraphs In its second issue, RCI contends that the trial court
and 1(E) to be ambiguous. See Tex. Indus., Inc., 919 erred in its pretrial order that paragraphs 1(D) and 5(A)
S.W.2d at 803; Stephanz, 846 S.W.2d at 902; Eldridge, are ambiguous. However, RCI pleaded in its seventh
834 S.W.2d at 90. amended petition that these paragraphs were ambiguous.
RCI repeated this allegation in its eighth amended
RCI claims this error requires reversal since
petition, which was its live trial pleading. In addition,
Question 1 submitted a valid theory, that is, the jury's
RCI proposed a jury question regarding the interpretation
interpretation of two paragraphs that the trial court found
[**21] of paragraphs 1(D) and 5(A). [HN5] A party that
to be ambiguous, and other theories that were not valid.
asks for a certain type of relief cannot complain on
Because of the jury's negative answers to Question 1 as
appeal if that relief is granted. Nesmith v. Berger, 64
to interpretation of the agreement, the jury did not reach
S.W.3d 110, 119 (Tex. App.-Austin 2001, pet. denied)
the questions as to RCI's claim that AAA breached the
(citing Litton Indus. Prods., Inc. v. Gammage, 668
agreement, which were conditioned on an affirmative
S.W.2d 319, 321-22, 27 Tex. Sup. Ct. J. 166 (Tex. 1984)).
answer to Question 1. RCI relies on Crown Life Ins.
Accordingly, we conclude RCI waived its complaint on
Co.v. Casteel, 22 S.W.3d 378, 388-90, 43 Tex. Sup. Ct. J.
appeal that the trial court erred in ruling the contract
348 (Tex. 2000), to support its [**19] argument that it is
ambiguous by requesting this same ruling from the trial
impossible to determine whether the jury's negative
court. W e decide the second issue against RCI.
answers were based on the erroneous submission of the
ambiguity issue, a finding that the nineteen separate
V . SU F F IC IE N C Y O F T H E EVIDENCE
advertisements were not included in the agreement,
SUPPORTING JURY'S ANSW ERS
[*888] or a finding that the agreement was modified, re-
a lign e d , o r re -assigned . In C asteel, the In issues three and six, RCI contends the evidence is
appellant/defendant sought to set aside the jury's answer legally and factually insufficient to support the jury's
to a broad-form question that submitted both valid and award of zero attorney's fees for a "termination fee." In
invalid liability theories. Since a reviewing court could issue four, RCI contends the jury's failure find that the
not tell which theories the jury relied on to reach its agreement included the nineteen advertisements was
verdict, the submission was error and probably caused an against the great weight and preponderance of the
improper verdict. evidence. In issues five and seven through nine, RCI
contends the jury's negative answers to the questions
Casteel does not apply. Here, there was no harm
regarding RCI's claims for intentional interference with
from a broad-form submission. AAA argues that RCI
the agreement, fraud, attorney's fees for the breach of
presented evidence throughout the trial regarding the
contract claim, and damages were against the great
meaning of the four paragraphs, which RCI now
weight [**22] and preponderance of the evidence.
contends are not ambiguous. AAA contends that the
issue of the ambiguity of these four paragraphs was tried [*889] a. Standard of Review
by consent. RCI responds that the evidence merely
[HN6] W hen a party attacks the legal sufficiency of
explained how these paragraphs fit together to support
an adverse finding on an issue on which it has the burden
RCI's position.
of proof, it must demonstrate on appeal that the evidence
Assuming, without deciding, that the issue of establishes, as a matter of law, all vital facts in support of
ambiguity as to the four paragraphs was not tried by the issue. Dow Chem. Co. v. Francis, 46 S.W.3d 237,
consent, we still conclude there was no harm. [**20] 241, 44 Tex. Sup. Ct. J. 664 (Tex. 2001) (per curiam). In
Question 1 submitted the issue of whether RCI had to reviewing a "matter of law" challenge, the reviewing
actually sell an advertisement to obtain a commission (an court must first examine the record for evidence that
issue not addressed in RCI's offered question), along supports the finding, while ignoring all evidence to the
with the issue of exclusivity, so that the jury could contrary. Id. If there is no evidence to support the
consider both issues. Additionally, the four paragraphs finding, the reviewing court will then examine the entire
were discussed extensively in both sides' evidence. record to determine if the contrary proposition is
Question 1 simply allowed RCI to freely make its established as a matter of law. Id. The point of error
argument as to the contract provisions, consistent with its should be sustained only if the contrary proposition is
trial presentation, and allowed the jury to consider those conclusively established. Id.
paragraphs RCI argued were relevant to the meaning of
[HN7] When a party attacks the factual sufficiency
EXHIBIT "G"
Page 9
154 S.W .3d 878,067-250449-11
*; 2005 Tex. App. LEXIS 543, **
of an adverse finding on an issue on which it has the advertisement to receive a commission. It is undisputed
burden of proof, it must demonstrate on appeal that the that AAA paid RCI for some advertisements that were
adverse finding is against the great weight and from advertisers in RCI's territories, but which RCI did
preponderance of the evidence. Id. at 242. The court of not sell. It is undisputed that RCI did not [*890] sell any
appeals must consider and weigh all of the evidence, and of the nineteen advertisements. In 1994, RCI told its
[**23] can set aside a verdict only if the evidence is so subrepresentatives that AAA had designated Auto Plan,
weak or if the finding is so against the great weight and Auto Insider, and Hertz as "house accounts." Regarding
preponderance of the evidence that it is clearly wrong the Hertz account, there was evidence that the advertising
and unjust. Id. copy RCI submitted to AAA for publication in AAA
World, called an "insertion order," showed the
[HN8] The factfinder is the sole judge of the
advertisement originated from Virginia, which was not
credibility of the witnesses and the weight to be given
an RCI territory, and that Hertz was a "preferred supplier
their testimony. Golden Eagle Archery, Inc. v. Jackson,
account." There was evidence that Show Your Card and
116 S.W.3d 757, 761, 46 Tex. Sup. Ct. J. 1133 (Tex.
Save was a "preferred supplier account." These
2003). The factfinder may believe one witness and
advertisements were for services available to members
disbelieve another and resolve inconsistencies in
through deals negotiated with those companies. As to the
testimony. McGalliard v. Kuhlmann, 722 S.W.2d 694,
AAA entities, there was evidence that these
697, 30 Tex. Sup. Ct. J. 96 (Tex. 1986). W hen enough
advertisements were for AAA's own services. Regarding
evidence is before the factfinder that reasonable minds
the internal AAA ads, there was evidence that RCI
could differ on the meaning of the evidence, or the
claimed payment because AAA headquarters were in
inferences and conclusions to be drawn from the
Florida, an RCI territory. There was evidence that any
evidence, the court of appeals may not substitute its
payments amounts were actually bookkeeping entries
judgment for that of the factfinder. Herbert v. Herbert,
crediting transfers [**26] of payments between an AAA
754 S.W.2d 141, 144, 31 Tex. Sup. Ct. J. 453 (Tex. 1988).
department and the magazine.
The court of appeals may not reverse merely because it
concludes that the evidence preponderates toward a Even though house accounts and preferred provider
different answer. Id. accounts are not mentioned in the agreement, paragraph
5(A) provides that RCI would be paid "on the net dollar
b. Interpretation of the Agreement
amount of advertisements sold by the Representative
In its fourth issue, RCI contends that the jury's [that is, RCI] to advertisers in the Territory." Thus, the
negative answers to subparts (1) through (19) of jury could have rejected RCI's theory that "sold by the
Question 1, which specifically asked [**24] if various Representative" meant that RCI would receive a
advertisements for Hertz, Auto Plan, Auto Insider, and commission on the value of any advertisement published
other advertisements were included in the agreement, from an advertiser in RCI's territory and accepted AAA's
was contrary to the great weight and preponderance of theory that RCI had to actually sell the advertisement to
the evidence. be entitled to a commission or that RCI would not
receive a commission on an advertisement for which
Kincaid testified that RCI was entitled to payment
AAA itself received no payment.
for commissions on all the listed accounts because the
agreement was exclusive and included all advertising Because the evidence was conflicting on whether the
accounts located within RCI's territory. Kincaid also nineteen advertisements were included in the agreement,
testified that individual accounts were not considered according to the definitions and instructions in Question
"territory" and could not be re-aligned or re-assigned on 1, we conclude the jury's negative answer is not against
an account-by-account basis and that no accounts were the great weight and preponderance of the evidence. W e
ever specifically or properly excluded. decide adversely to RCI on its fourth issue. Because of
our disposition of the fourth issue, we need not address
There was evidence that AAA re-aligned and re-
the fifth issue, which challenges the factual sufficiency of
assigned accounts within RCI's territory, specifically the
the jury's [**27] answer of zero as to the reasonable
"house accounts" and "preferred provider accounts." The
attorney's fees related to RCI's breach of contract claim.
jury could have determined that, contrary to RCI's
theory, the agreement did not prohibit account-by- c. Attorney's Fees
account re-assignment. Accordingly, the jury could have
In its third issue, RCI contends that the trial court
rejected RCI's theory that the agreement was exclusive in
erred in entering judgment against RCI based on the
terms of preventing some accounts in RCI's territory
jury's answer of zero to Question 5 regarding attorney's
from being re-assigned.
fees because RCI proved its entitlement to attorney's fees
Moreover, RCI's argument under this issue and its as a matter of law. In its sixth issue, RCI argues that the
record references ignore the second issue addressed by jury's answer to Question 5 is contrary to the great
Question 1, that is, whether RCI [**25] had to sell an weight and preponderance of the evidence.
EXHIBIT "G"
Page 10
154 S.W .3d 878,067-250449-11
*; 2005 Tex. App. LEXIS 543, **
here. AAA produced no evidence that a lesser amount of
RCI moved for summary judgment on the issue of
fees was reasonable in this case. W e conclude that this
its entitlement to the $ 10,000 final commission, or
testimony established [**30] that attorney's services
termination fee, pursuant to paragraph 2(B) of the
were provided and the value of those services.
agreement. The trial court granted partial summary
judgment in RCI's favor by ruling that RCI was entitled Nevertheless, appellees contend that RCI is not
to $ 10,000 under paragraph 2(B). The trial court's order entitled to these attorney's fees because RCI failed to
also stated that RCI was "entitled to recover its prove presentment. [HN10] To recover attorney's fees
reasonable and necessary attorney's fees incurred in the under Chapter 38, a claimant (1) must be represented by
pursuit and/or collection of this breach of contract an attorney; (2) he must present the claim to the opposing
claim." party or to a duly authorized agent of the opposing party;
and (3) before the expiration of the thirtieth day after the
Question 5 asked: "W hat is a reasonable fee for the
claim is presented, the opposing party must not tender
necessary services of [RCI's] attorney in this case related
payment for the just amount owed. TEX. CIV. PRAC. &
to the P 2(b) 'termination fee' claim?" The question then
REM. CODE ANN. § 38.002 (Vernon 1997).
defined "reasonable and necessary attorney's [**28]
fees" and listed eight factors that should be considered The record shows that, beginning in 1994, RCI sent
when considering the reasonableness of a fee. The jury letters to AAA complaining that it was not being paid
answered zero. commissions on the "house accounts" in RCI's territories.
W e conclude that these communications constitute
[HN9] Section 38.001(8) of the civil practice and
presentment under section 38.002.
remedies code permits a prevailing [*891] party to
recover attorney's fees in a suit on a contract. TEX. CIV. W e conclude that RCI proved its entitlement to
PRAC. & REM. CODE ANN. § 38.001(8) (Vernon 1997); attorney's fees of $ 75,764 as a matter of law. See Cale's
Serv. Fin. v. Adriatic Ins. Co., 46 S.W.3d 436, 461 (Tex. Clean Scene Carwash, Inc., 76 S.W.3d at 787 & n.4.
App.-Waco 2001), judgm't vacated w.r.m., 51 S.W.3d 450 Accordingly, we decide RCI's third issue in its favor.
(Tex. App.-Waco 2001, no pet.), disapproved of on other Because RCI proved its entitlement to this amount of
grounds by Brown v. D e La Cruz, 156 S.W.3d 560, 2004 attorney's fees as a matter of [**31] law, we need not
Tex. LEXIS 1254, 48 Tex. Sup. Ct. J. 164, 168 n.40, 2004 address RCI's sixth issue.
WL 2754651, at *5 n.40 (Tex. Dec. 3, 2004). W hen a
d. Intentional Interference with the Agreement
prevailing party in a breach of contract suit seeks
attorney's fees, an award of reasonable fees is mandatory In its seventh issue, RCI challenges the jury's
under section 38.001 if there is proof of the negative answer to Question 6 regarding RCI's claim of
reasonableness of the fees. Id.; World Help v. Leisure intentional interference with the agreement, saying it is
Lifestyles, Inc., 977 S.W.2d 662, 683 (Tex. App.-Fort contrary to the great weight and preponderance of the
Worth 1998, pet. denied); Caldwell & Hurst v. Myers, evidence. Question 6 asked: "Did AAA Club Services,
714 S.W.2d 63, 65-66 (Tex. App.-Houston [14th Dist.] Inc. intentionally interfere with the agreement you found
1986, writ ref'd n.r.e.). In such a case, a jury does not in answer to Q uestion No. 1?" [*892] Question 6
have discretion [**29] to simply deny an award of included the following instruction: "Interference is
attorney's fees if any were properly proven. Cale's Clean intentional if committed with the desire to interfere with
Scene Carwash, Inc. v. Hubbard, 76 S.W.3d 784,787 n.4 the contract or with the belief that interference is
(Tex. App.-Houston [14th Dist.] 2002, no pet.). As a substantially certain to result." Question 6 also included
factual matter, a zero award for attorney's fees is proper an instruction regarding agency.
if the evidence (1) failed to prove (a) that any attorney's
[HN11] The elements of tortious interference with a
services were provided, or (b) the value of the services
contract are: (1) the existence of a contract subject to
provided; or (2) affirmatively showed that no attorney's
interference; (2) willful and intentional interference; (3)
services were needed or that any services provided were
interference that proximately caused damage; and (4)
of no value. Id. at 787. Uncontroverted testimony by an
actual damage or loss. Powell Indus., Inc. v. Allen, 985
interested witness concerning attorney's fees may
S.W.2d 455, 456, 42 Tex. Sup. Ct. J. 283 (Tex. 1998).
establish a fact as a matter of law. Id.
RCI contends that the testimony shows that Bradley
Tom Melsheimer, an attorney, testified that $ 76,764
and T itel acted as agents of AAA Club Services, Inc.
was a reasonable amount of attorney's fees for the $
They said they would "handle" the Kincaids and RCI
10,000 claim. He detailed the protracted procedural
shortly [**32] before the agreement was terminated.
history of RCI's claim. Cross-examination on this issue
However, the record reflects that this testimony about
consisted of questions whether RCI could have obtained
"handling" RCI related to RCI's submission of travel
the $ 10,000 through a simple procedure such a motion
planner advertisements for publication in Journey
f o r s u m m a r y j u d g m e n t . M e l s h e im e r a g r e e d
magazine. RCI did not have a contract regarding
hypothetically but disagreed that those facts occurred
EXHIBIT "G"
Page 11
154 S.W .3d 878,067-250449-11
*; 2005 Tex. App. LEXIS 543, **
Journey. There was evidence that RCI's travel planner within the knowledge of that party,
was published in the Texas/New Mexico edition of Car
b. The party knows that the other party is ignorant of
& Travel and that RCI expected travel planner to be
the fact and does not have an equal opportunity to
published in Journey after the sale of these divisions to
discover the truth,
ACSC. There was testimony that Bradley urged AAA to
discontinue the travel planner. There was also testimony c. The party intends to induce the other party to take
that the travel planner was unprofitable for AAA and some action by concealing or failing to disclose the fact,
Yankelevitz informed RCI in June 1996 that the travel and
planner would stop. Specifically, in a letter dated June 4,
d. The other party suffers injury as a result of acting
1996, Yankelevitz informed K incaid that travel planner
without knowledge of the undisclosed fact.
would "not be continued into 1997." Yankelevitz testified
that he and his predecessor alone decided to stop the [HN12] A cause of action for fraud requires proof of
travel planner program and that Bradley and Titel played a material misrepresentation, which was false, and which
no role in that decision. T hus, there was conflicting was either known to be false when made or was asserted
evidence as to Bradley's and Titel's actions in relation to without knowledge of its truth, which was intended to be
the termination of RCI's travel planner agreement with acted upon, which was relied upon, and which caused
AAA. injury. Formosa Plastics Corp. USA v. Presidio Eng'rs &
Contractors, Inc., 960 S.W.2d 41, 47, 41 Tex. Sup. Ct. J.
RCI argues that Bradley sent a letter to Yankelevitz
289 (Tex. 1998). [**35]
[**33] mere days before Yankelevitz terminated the
publisher's agreement, which is evidence of interference. RCI contends that the evidence shows that AAA
However, the evidence shows that Yankelevitz decided committed fraud when it promised certain commissions
to terminate the agreement in order to hire more to RCI when RCI assumed new territory under the
representatives, rather than rely on a three-person agreement. Specifically, RCI contends the Prepaid
company to cover the extent of RCI's territory. The jury Commission Report, which it reviewed in 1993 before
resolves any conflicts in the testimony. Accordingly, we accepting new territory, was a misrepresentation of the
cannot conclude that the jury's answer to Question 6 is commissions RCI would receive because AAA had
against the great weight and preponderance of the determined that it would not pay commissions on the
evidence. Issue seven is decided against RCI. house accounts. However, there was evidence that RCI
sought to add new territory by becoming AAA's national
e. Fraud
advertising representative before RCI reviewed the
In its eighth issue, RCI argues that the jury's Prepaid Commission Report. Accordingly, the evidence
negative answer to Question 11 regarding the fraud claim is c o n flic tin g w h e t h e r R C I r e l i e d o n a n y
was contrary to the great weight and preponderance of misrepresentation in that report in its decision to assume
the evidence. Question 11 asked: "Did [AAA] commit new territory under the agreement. The eighth issue is
fraud against [RCI] concerning commissions to be paid decided adversely to RCI.
for newly assigned Territories?" Question 11 included an
instruction regarding a corporation's responsibility for VI. CONCLUSION
fraud committed by an individual in a managerial
Because of our disposition of RCI's issues regarding
capacity. The charge gave two definitions of "fraud."
liability, we need not address RCI's ninth issue, in which
First, the charge defined "fraud" as:
it argues that the failure of the jury to award damages for
a. A party makes a material misrepresentation, the contract and tort claims is against the great weight
and preponderance of the evidence. Because of our
b. The misrepresentation is made with knowledge of
disposition of RCI's third issue, we reverse the final
its falsity or made recklessly without any [**34]
judgment of the trial court as to the issue of [**36]
knowledge of the truth and as a positive assertion,
attorney's fees for the "termination fee" and render
c. The misrepresentation is made with the intention judgment that RCI is entitled to $ 75,764 in attorney's
that it should be acted on by the other party, and fees. The final judgment is affirmed as to other claims by
RCI against AAA.
d. The other party acts in reliance on the
misrepresentation and thereby suffers injury.
VII. M OTION FOR REHEARING
"M isrepresentation" was defined as "a false
In its motion for rehearing, RCI contends that it
statement of fact of a promise of future performance with
should be awarded all of its trial and appellate costs. W e
an intent not to [*893] perform as promised." Second,
grant RCI's motion for rehearing in part and deny it in
the charged defined "fraud" as:
part.
a. A party conceals or fails to disclose material facts
First, RCI claims that it prevailed on appeal since it
EXHIBIT "G"
Page 12
154 S.W .3d 878,067-250449-11
*; 2005 Tex. App. LEXIS 543, **
recovered its attorney's fees. Therefore, pursuant to rule below, the adverse party shall recover the costs of
of appellate procedure 43.4, it contends since it was the both courts. If the judgment of the court above be
prevailing party on appeal, we must tax the costs on in favor of the party appealing and for more than
appeal against AAA. See TEX. R. APP. P. 43.4. Also, the original judgment, such party shall recover
relying on rule of civil procedure 139, RCI argues that the costs of both courts; if the judgment be in his
since it was the prevailing party we must award it all trial favor, but for the same or a less amount than in
court costs. See TEX. R. CIV. P. 139 (providing, in part: the court below, he shall recover the costs of the
"If the judgment of the court above be in favor of the court below, and pay the costs of the court above.
party appealing and for more than the original judgment,
TEX. R. CIV. P. 139.
such party shall recover the costs of both courts . . . .").
In support of its argument as to trial court costs, RCI [**39] [HN14] In a civil case, the court of appeal's
cites several cases in which the court of appeals applied judgment should award to the prevailing party the
rule 139 to award [**37] trial court costs to an appellant appellate costs--including preparation costs for the clerk's
since it recovered more on appeal than it had recovered record and the reporter's record--that were incurred by
at the trial court. 6 As to costs on appeal, AAA contends that party. But the court of appeals may tax costs
[*894] that costs should not be awarded to RCI since it otherwise as required by law or for good cause.
recovered on only a minor portion of the relief it
TEX. R. APP. P. 43.4.
requested and cannot be considered the prevailing party.
Additionally, AAA contends that the trial court's [HN15] W hen we read the plain language of both
assessment of costs against RCI cannot be disturbed rule of civil procedure 139 and rule of appellate
since the trial court has not been shown to have abused procedure 43.4, we conclude these rules can be
its discretion. harmonized to give effect to both. See Burke v. Union
Pac. Res. Co., 138 S.W.3d 46, 75 (Tex. App.-Texarkana
6 See, e.g., Stalcup v. Eastham, 330 S.W.2d 237, 2004, pet. filed). It is clear that courts of appeals have
240 (Tex. Civ. App.-El Paso 1959, writ ref'd considerable discretion in taxing costs on appeal. W hile
n.r.e.) ("Since by this opinion we have enlarged the first sentence of rule 43.4 directs an appellate court to
the judgment, costs in both courts shall be award costs on appeal to the prevailing party, the second
assessed against appellees."). sentence gives an appellate court discretion to "tax costs
otherwise as required by law or for good cause."
W e conclude that neither party has suggested the
Important to our decision is the language of the second
proper basis for our authority to award costs after an
sentence where it addresses taxation of "costs," not
appeal. Our research discloses that two rules direct how
simply "appellate costs." Also, the rule provides us the
we are to award costs after an appeal. Rule of civil
alternative of following other provisions of the law on
procedure 139, adopted in 1941, sets out four rules that
taxing costs "or" we [**40] may award costs "for good
direct how costs of both trial and appeal [**38] are to be
cause." W e conclude this language allows us to exercise
taxed, depending on the difference between the result for
our discretion to determine how "costs" shall be awarded
appellant on appeal and in the trial court. 7 However, rule
for an appeal as well as for trial in recognition of the
139 does not address fine distinctions which might occur
result on appeal.
in a complex case, where, as here, the appellant did not
prevail on any claims at the trial court, but prevailed on First, we address the award of costs on appeal. The
one discrete issue of attorney's fees on appeal. The more relief requested in the trial court by RCI includes
recently promulgated rule of appellate procedure 43.4 damages for breach of contract, the $ 10,000 termination
provides this Court with latitude within which to award [*895] fee, and attorney's fees. RCI did not recover on
costs in a fashion which is not "all or nothing." Rule 43.4 any claims in the trial court. W e have determined that
provides for judgment for costs in civil cases: RCI is not entitled to damages for breach of contract, but
RCI has prevailed on the right to attorney's fees based on
7 Rule 139 comes within section 6 of the rules recovery of the termination fee. RCI's attorney's fees
of civil procedure, which is titled "Costs & recovery is not insignificant in amount. However, it is
Security Therefor." Rule 139 is titled "On Appeal much less substantial than the many millions of dollars in
& Certiorari" and provides: relief RCI requested in its suit. Nevertheless, there is
good cause for RCI to recover some of its costs on
[HN13] When a case is appealed, if the
appeal. Accordingly, we have concluded that in this hard
judgment of the higher court be against the
fought case it is equitable and just and good cause exists
appellant, but for less amount than the original
to allocate the costs on appeal so that RCI recovers
judgment, such party shall recover the costs of the
twenty percent of those costs, which we have calculated
higher court but shall be adjudged to pay the costs
is $ 4,160 of the costs of the clerk's and reporter's
of the court below; if the judgment be against him
records. See TEX. R. APP. P. 43.4 [**41] ; In re A.B.B.,
for the same or a greater amount than in the court
EXHIBIT "G"
Page 13
154 S.W .3d 878,067-250449-11
*; 2005 Tex. App. LEXIS 543, **
785 S.W.2d 828, 834 (Tex. App.-Amarillo 1990, no writ) denied in part. RCI shall recover twenty percent of the
(applying percentage allocation of costs on appeal). costs of appeal, or $ 4,160. W e reverse the final
judgment as to costs of the trial court and remand the
Second, we conclude that some of the taxable costs
issue of allocation of trial court costs between the parties
at the trial court level should also be awarded to RCI in
to the trial court for the sole purpose of holding a hearing
view of our disposition of this appeal. W e have before us
to tax costs for good cause based upon the result on
in the record a listing of the taxable trial costs. However,
appeal. See TEX. R. APP. P. 43.4; TEX. R. CIV. P. 141
this record will not provide us with sufficient facts to
[**42] ; Price Constr., Inc. v. Castillo, 147 S.W.3d 431,
evaluate the proper taxation of costs at the trial court
443 (Tex. App.-San Antonio 2004, no pet.) (supplemental
level to reflect the result on appeal. As a general rule, this
opinion on motion for en banc consideration).
Court will not initially find facts. Accordingly, the trial
court must hear evidence and conclude how costs should DOUGLAS S. LANG
be taxed in view of the result on appeal.
JUSTICE
C ONCLUSION AS TO M OTION FOR
REHEARING
RCI's motion for rehearing is granted in part and
EXHIBIT "G"
Page 1
421 S.W .3d 182, 067-250449-11
*; 2013 Tex. App. LEXIS 14474, **
Kay Lynn M AYNARD f/k/a Kay Lynn M aynard Booth, Appellant v. W illiam
W illiam BOOTH, Appellee
No. 04-12-00585-CV
COURT OF APPEALS OF TEXAS, FOURTH DISTRICT, SAN ANTONIO
421 S.W.3d 182; 2013 Tex. App. LEXIS 14474
November 27, 2013, Delivered
November 27, 2013, Filed
SUBSEQUENT HISTORY: Petition for review denied Civil Procedure > Appeals > Standards of Review >
by Maynard v. Booth, 2014 Tex. LEXIS 324 (Tex., Apr. Substantial Evidence > Sufficiency of Evidence
25, 2014) [HN1] "No evidence" points require rendition of a
judgment in favor of the appealing party. The appellate
PRIOR HISTORY: [**1] court may construe an appellant's challenge as a legal
From the 111th Judicial District Court, W ebb County, sufficiency challenge where he asks the appellate court to
T exas. T rial C ourt N o. 2010-CV H -001376-D 2. render judgment in his prayer for relief.
Honorable Monica Z. Notzon, Judge Presiding.
DISPO SITION: AFFIRMED; MOTION TO Civil Procedure > Appeals > Standards of Review >
DISMISS DENIED. Substantial Evidence > Sufficiency of Evidence
Evidence > Procedural Considerations > Burdens of
CASE SUM M ARY: Proof > Allocation
Evidence > Procedural Considerations > Weight &
Sufficiency
OVERVIEW : HOLDINGS: [1]-On appeal of an action [HN2] When the party who had the burden of proof at
for breach of a settlement agreement in a divorce case, trial complains of the legal insufficiency of an adverse
the wife's prayer for relief requesting that the appellate finding, that party must demonstrate the evidence
court reverse the trial court's judgment and render in her establishes conclusively i.e., as a matter of law, all vital
favor was construed as a legal sufficiency challenge; [2]- facts in support of the finding sought. A reviewing court
The wife failed to prove she lost hog hunting income in must examine the record for evidence supporting the
the amount of $42,000 as a result of the delay between adverse finding, ignoring all evidence to the contrary. If
signing the settlement agreement and the divorce decree; more than a scintilla of evidence supports the adverse
[3]-W here the wife prevailed on the claim that her finding, the issue is overruled. If there is no evidence to
husband breached a settlement agreement, the trial court support the adverse finding, the entire record must be
did not err by awarding her less attorney's fees that she examined to determine whether the contrary proposition
requested under Tex. Civ. Prac. & Rem. Code Ann. § is established as a matter of law. The issue is sustained
38.001(8) (2008) because the trial court had discretion in only if the contrary proposition is conclusively
determining what amount of attorney's fees was established. The ultimate test for legal sufficiency is
reasonable. whether the evidence would enable a reasonable and fair-
minded fact finder to reach the verdict under review.
OUTCOM E: Judgment affirmed; motion to dismiss
denied.
Evidence > Procedural Considerations > Weight &
LexisNexis(R) Headnotes Sufficiency
Evidence > Testim ony > Credibility > General Overview
[HN3] The trier of fact is the sole judge of the credibility
EXHIBIT "H"
Page 2
421 S.W .3d 182, 067-250449-11
*; 2013 Tex. App. LEXIS 14474, **
of the witnesses and the weight to be given their the appeal. 1 K ay raises two issues on appeal: (1) in the
testimony. decree, she should have been awarded $42,000 in lost
[**2] hog hunting income instead of only $18,000 and
(2) the trial court should have awarded her an additional
Civil Procedure > Rem edies > Costs & Attorney Fees > $178,000 in attorney's fees. W e affirm.
Attorney Expenses & Fees > Reasonable Fees
Civil Procedure > Rem edies > Costs & Attorney Fees > 1 W illiam died after the appeal was filed and an
Attorney Expenses & Fees > Statutory Awards administrator was later appointed. W e deny the
Contracts Law > Breach > Causes of Action > General motion as moot.
Overview
[HN4] In an action for breach of an agreement, an award STANDARD OF REVIEW
of reasonable attorney's fees to the prevailing party is
Kay cites this court to both legal and factual
mandatory if there is proof of the reasonableness of the
sufficiency standards of review in her briefing. However,
fees. Tex. Civ. Prac. & Rem. Code Ann. § 38.001(8)
in her prayer for relief, Kay requested only that this court
(2008). However, the amount of the award lies within the
reverse the trial court's judgment and render in her favor.
discretion of the trial court. A meaningful review of the
Kay did not request, in the alternative, a remand for a
hours claimed is particularly important, because the usual
new trial. During oral argument, Kay's attorney stated
incentive to charge only reasonable attorney's fees is
Kay wanted a judgment rendered in her favor. Therefore,
absent when fees are paid by the opposing party.
we review the evidence only under a legal sufficiency
standard. Vista Chevrolet, Inc. v. Lewis, 709 S.W.2d 176,
176 (Tex. 1986) (per curiam) (reiterating well-settled rule
Civil Procedure > Rem edies > Costs & Attorney Fees >
that [HN1] "no evidence" points require rendition in
Attorney Expenses & Fees > General Overview
favor of appealing party); Elias v. Mr. Yamaha, Inc., 33
Legal Ethics > Client Relations > Attorney Fees >
S.W.3d 54, 59 & n.6 (Tex. App.--El Paso 2000, no pet.)
General Overview
(construing appellant's challenge as a legal sufficiency
[HN5] Attorneys are encouraged to use the lodestar
challenge because he asked appellate court to render
method to shift their fees to the opponent to keep
judgment in his prayer for relief).
contemporaneous records of their time as they would for
their own client. [HN2] W hen the party who had the burden of proof
at trial complains [**3] of the legal insufficiency of an
COUNSEL: For APPELLANT: James K. Jones Jr., adverse finding, that party must demonstrate the
Jones & Gonzalez, Laredo, TX; Adan Gonzalez, Jones & evidence establishes conclusively (i.e., as a matter of
Gonzalez, P.C., Laredo, TX; Cheryl L. W ilson, W ilson & law) all vital facts in support of the finding [*184]
Pennypacker, L.L.P., San Antonio, TX. sought. Dow Chem. Co. v. Francis, 46 S.W.3d 237, 241
(Tex. 2001). A reviewing court must examine the record
For APPELLEE: Dan Pozza, Law Offices of Dan Pozza, for evidence supporting the adverse finding, ignoring all
San Antonio, TX. evidence to the contrary. Id. If more than a scintilla of
evidence supports the adverse finding, the issue is
JUDGES: Opinion by: Sandee Bryan Marion, Justice. overruled. Id. If there is no evidence to support the
Sitting: Catherine Stone, Chief Justice, Sandee Bryan adverse finding, the entire record must be examined to
Marion, Justice, Patricia O. Alvarez, Justice. determine whether the contrary proposition is established
as a matter of law. Id. The issue is sustained only if the
OPINION BY: Sandee Bryan Marion contrary proposition is conclusively established. Id. The
ultimate test for legal sufficiency is whether the evidence
OPINION would enable a reasonable and fair-minded fact finder to
reach the verdict under review. City of Keller v. Wilson,
[*183] AFFIRM ED; MOTION TO DISMISS
168 S.W.3d 802, 827 (Tex. 2005). [HN3] The trier of fact
DENIED
is the sole judge of the credibility of the witnesses and
On September 22, 2011, in connection with their the weight to be given their testimony. Id. at 819.
divorce, Kay Lynn Maynard and W illiam Booth signed a
hand-written agreement dividing their marital assets ("the HOG HUNTING INCOM E
settlement agreement"). Later a dispute arose over
As a result of the delay between signing the
whether W illiam breached the settlement agreement. The
settlement agreement and the divorce decree, Kay
trial court found W illiam breached the agreement and
claimed [**4] she lost income because she was not able
signed a Final Judgment and Decree of Divorce on
to allow hog hunting on her side of the ranch. The trial
August 10, 2012. Kay has appealed the judgment, and
court awarded Kay $18,000 as lost hog hunting income.
W illiam filed a motion to dismiss that was carried with
EXHIBIT "H"
Page 3
421 S.W .3d 182, 067-250449-11
*; 2013 Tex. App. LEXIS 14474, **
On appeal, Kay contends she proved lost hog hunting however, if this case is not appealed to the
income in the amount of $42,000 as a matter of law. Kay court of appeals, One Hundred-Thirty
offered into evidence several hog hunting contracts from Thousand Dollars ($130,000) shall be
people who knew she and W illiam were getting a divorce remitted; provided further, if this case is
and who she knew "would love to come back on my side appealed to the Court of Appeals, but not
of the ranch." However, the contracts were from 1991 to to the Texas Supreme Court, Fifty
1997, years before the divorce. Kay admitted that no hog Thousand Dollars ($50,000) shall be
hunting had been conducted on the ranch for six to seven remitted.
years. W hen such hunts were conducted, she and
W illiam would schedule about six men for a three-day
hunt during January, February, and March. She said if
Contrary to Kay's contention on appeal that the trial
she could have done that again starting in January 2012,
court erred in not awarding her attorney, James Jones,
she would charge $200 per day per man. Kay calculated
any fees, the judgment does not award fees specific to
that at $600 per man per weekend, times four weekends a
any attorney. Instead, the judgment awards a net lump
month for three months, she would have earned $42,000.
sum to K ay for reasonable fees. Kay asserts she should
A report prepared by Kay's expert stated hunting have been awarded an additional $178,002.00, which is
operations were "substantially ceased due to concerns the amount of fees billed by Jones.
over legal liability issues." Kay stated the hunting and
The parties agreed to a bench trial only on the issues
cattle operations on the ranch were always profitable.
of whether W illiam breached the settlement agreement
However, the report [**5] stated the community estate
and attorney's fees. The court agreed with W illiam's
suffered tremendous losses from the hunting and cattle
lawyer that the agreement called for [**7] each party to
operations from 1996 through 2011, and after 2003 there
pay their own attorney's fees. Kay's attorneys argued they
was no revenue from hunting operations. Her expert's
were not seeking fees prior to the date of the settlement
report showing the ranch suffered a loss contradicts
agreement, but were instead, seeking fees resulting from
Kay's testimony. W illiam's expert acknowledged, after
W illiam's breach of the agreement. The court again stated
reviewing the report that the purpose of the report was to
Kay was responsible for her own fees, but allowed her
determine whether the community estate was entitled to
attorneys to make a bill of exception record.
an offset. W illiam's expert conceded whether the ranch
suffered a loss for the purpose of an offset had nothing to Kay's attorneys stated the breach of contract claim
do with whether Kay could have or should have gotten was first asserted in February 2012. Kay's three attorneys
any hog hunting revenue. then each testified in "bills of exception." Adan Gonzalez
testified his time was spent on both the divorce and the
Although Kay's testimony that she could have
breach of contract action, and he averaged about $10,000
earned $42,000 was not contradicted, this testimony was
per month in fees, from February 2012 to June 2012, for
based on her hope that hunters would have contracted
a total of approximately $50,000. Cheryl W ilson testified
with her in January, February, and/or March 2012.
she was retained in February or late March 2012, after
However, she also testified no hog hunting had been
W illiam b rea ch ed the a gre em en t. She billed
conducted on the ranch for six to seven years preceding
approximately $40,000. Jones testified his fee invoice
the divorce. In this case, the trial court was the sole judge
was dated "6/22" but it should be "9/22" for services
of the credibility of the witnesses and the weight to be
rendered since the date of the agreement. His fees totaled
given their testimony. Based on this record, we cannot
$178,002, at his hourly rate of $450.00 multiplied by
say Kay established, as a matter of law, her entitlement
395.56 hours.
to $42,000 in lost hog hunting income.
On appeal, Kay asserts W illiam never contested the
ATTORNEY'S FEES qualifications or invoices of any of her attorneys, and
Jones's testimony [**8] was uncontradicted. T his is true
In [**6] the divorce decree, the trial court awarded
in part because the trial court did not allow any cross-
Kay attorney's fees as follows:
examination during the bills of exception; however,
W illiam did raise an objection to Jones's Invoice No.
[*185] IT IS FURTHER ORDERED,
11084. Invoice 11084 indicates services for "Additional
ADJUDGED and DECREED that KAY
Charges" in the amount of $67,192.65, and "Professional
LYNN MAYNARD BOOTH recover
Services" in the amount of $178,002.00. W illiam
attorney's fees reasonably and necessarily
objected that the invoice did not segregate fees related to
incurred after October 12, 2011, for
the breach of contract claim from fees related to the
services rendered in the trial through June
divorce. The portion of the invoice related to
28, 2012, in the amount of Two Hundred
"Professional Services" states as follows:
Thousand Dollars ($200,000); provided
EXHIBIT "H"
Page 4
421 S.W .3d 182, 067-250449-11
*; 2013 Tex. App. LEXIS 14474, **
For services rendered from the date of not controverted, the trial court has discretion in
settlement by [Kay] including preparation determining what amount of attorney's fees is reasonable.
for and attendance of mediation of case; Jones stated he dictated the invoice a few days before
preparation for and attendance of multiple trial. At trial, to arrive at the number of hours he [**10]
meetings with client and client's parents expended on the case, Jones divided $178,002.00 by his
and witness[es]; preparation of settlement hourly rate of $450 to arrive at 395.56 hours. The invoice
documents; review of multiple drafts of does not indicate and Jones did not testify about any
same; preparation for and attendance of record of his time attributable to each of the various tasks
multiple hearings for entry of judgment; mentioned in the invoice. Nor did he segregate fees
preparation for and attendance of related to the breach of contract claim from any fees
depositions of Kay, W illiam, Mrs. Booth, related to the divorce. The trial court awarded fees of
Teresa M cComas, Dr. Jack Ferrel, $200,000 for services rendered after the date of October
Sterling, Redmond, and Hill; preparation 12, 2011 "provided however, if this case is not appealed
for and attendance of further hearings of to the court of appeals, One Hundred-Thirty Thousand
various motions by court; preparation for Dollars ($130,000) shall be remitted; provided further, if
trial; research of issues; analysis of [**9] this case is appealed to the Court of Appeals, but not to
evidence. the Texas Supreme Court, Fifty Thousand Dollars
($50,000) shall be remitted." On this record, we cannot
conclude the trial court abused its discretion in awarding
attorney's fees in the amount it did. See City of Laredo v.
[*186] The trial court determined W illiam [HN4]
Montano, No. 12-0274, 414 S.W.3d 731, 2013 Tex.
breached the settlement agreement; therefore, an award
LEXIS 890, 2013 WL 5763179, at *4 (Tex. Oct. 25, 2013)
of reasonable attorney's fees to the prevailing party was
([HN5] encouraging attorneys using lodestar method to
mandatory if there was proof of the reasonableness of the
shift their fees to opponent to keep contemporaneous
fees. See T E X . C IV . P RAC . & R EM . C O D E A NN . § 38.001(8)
records of their time as they would for their own client;
(W est 2008); Hassell Constr. Co. v. Stature Commercial
concluding attorney's testimony was "devoid of
Co., 162 S.W.3d 664, 668 (Tex. App.--Houston [14th
substance" because he did not [**11] itemize specific
Dist.] 2005, no pet.). However, the amount of the award
tasks or the time required for those tasks).
lies within the discretion of the trial court. Hassell
Constr. Co., 162 S.W.3d at 668. And, the trial court is the
CONCLUSION
sole judge of the credibility of the witnesses and the
weight to be given their testimony. City of Keller, 168 W e overrule Kay's issues on appeal, and affirm the
S.W.3d at 819. Finally, "[a] meaningful review of the trial court's judgment.
hours claimed is particularly important because the usual
Sandee Bryan Marion, Justice
incentive to charge only reasonable attorney's fees is
absent when fees are paid by the opposing party." El
Apple I, Ltd. v. Olivas, 370 S.W.3d 757, 762 (Tex. 2012).
Here, although Kay's attorney's fees evidence was
EXHIBIT "H"