ACCEPTED
01-15-00604-cv
FIRST COURT OF APPEALS
HOUSTON, TEXAS
11/4/2015 3:31:39 PM
CHRISTOPHER PRINE
CLERK
CAUSE NO. 01-15-00604-CV
FILED IN
1st COURT OF APPEALS
IN THE COURT OF APPEALS HOUSTON, TEXAS
FOR THE FIRST DISTRICT OF TEXAS11/4/2015 3:31:39 PM
HOUSTON, TEXAS CHRISTOPHER A. PRINE
Clerk
D & R CONSTRUCTORS, et al,
Appellants,
vs.
TEXAS GULF ENERGY, INC., et al,
Appellees.
Appeal from the 270th District Court of Harris County, Texas
Trial Court Cause No. 2013-00543 - Hon. Brent Gamble, Presiding
APPELLEES’ BRIEF FOR
TEXAS GULF ENERGY, INC, CS BANKERS V, LLC
AND TIMOTHY CONNOLLY
CHRISTIAN, SMITH & JEWELL, LLP
Gary M. Jewell
State Bar No. 10664800
gjewell@csj-law.com
Adam L. Tepper
State Bar No. 24079445
atepper@csj-law.com
2302 Fannin, Suite 500
Houston, Texas 77002
Counsel for Appellees Texas Gulf Energy, Inc.,
CS Bankers V, LLC and Timothy Connolly
Oral Argument Conditionally Requested November 4, 2015
IDENTITY OF PARTIES AND COUNSEL
Appellants:
Michael Rushing.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . George W. Gore
Stephanie Rushing The Gore Law Firm, P.C.
Penn Rushing 6200 Savoy, Suite 1150
Florence Rushing Houston, Texas 77036
D&R Constructors, Inc. (713) 224-2000
1
George W. Gore
Appellees:
Texas Gulf Energy, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gary M. Jewell
CS Bankers V, LLC Adam L. Tepper
Timothy Connolly Christian, Smith & Jewell, LLP
2302 Fannin, Suite 500
Houston, Texas 77002
(713) 659-7617
Texas Gulf Fabricators, LLC. . . . . . . . . . . . . . . . . . . . . . . . . . . Paul Dobrowski
Brian Hendry Cody Stafford
Lester Smith Dobrowski, Larkin & Johnson, LLP
4601 Washington Ave, Suite 300
Houston Texas 77007
(713) 659-2900
Trial Court:
Hon. Brent Gamble. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 270th District Court
Harris County Civil Courthouse
201 Caroline, 13th Floor
Houston, Texas 77002
(713) 368-6400
1
Although not a party to the underlying litigation, Gore has inserted himself as an
appellant due to the fact that monetary sanctions were awarded joint and severally
against him and his clients for the frivolous action against Appellee Lester Smith.
-i-
TABLE OF CONTENTS
IDENTITY OF PARTIES AND COUNSEL. . . . . . . . . . . . . . . . . . . . . . . . i
TABLE OF CONTENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii
INDEX OF AUTHORITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iv
RECORD REFERENCES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix
STATEMENT OF THE CASE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix
STATEMENT REGARDING APPELLANTS’ BRIEF. . . . . . . . . . . . . . . x
ISSUE PRESENTED FOR REVIEW.. . . . . . . . . . . . . . . . . . . . . . . . . . . . xi
STATEMENT REGARDING ORAL ARGUMENTS. . . . . . . . . . . . . . xii
STATEMENT OF FACTS & PROCEDURAL HISTORY. . . . . . . . . . . . 1
SUMMARY OF THE ARGUMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
STANDARD OF REVIEW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARGUMENT AND AUTHORITIES.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1. Reply Point 1.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
In Response to Point of Error 1 and 2: The foreclosure complied
with the Texas Property Code and the terms of the operative
Deed of Trust.
2. Reply Point 2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
In Response to Points of Error 3 and 5: The letter of intent is not
an enforceable contract.
-ii-
2. Reply Point 3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
In Response to Points of Error 3 and 5: In response to the no-
evidence motions for summary judgment, the appellants failed
to bring forth credible evidence to support each element of their
causes of action.
2. Reply Point 4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
In Response to Point of Error 4: The appellants were provided
adequate time to conduct discovery and failed to show that
additional discovery would be material.
2. Reply Point 5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
In Response to Point of Error 7: An award of attorney’s fees by a
trial judge in a declaratory judgment action following summary
judgment is proper.
CONCLUSION AND RELIEF REQUESTED. . . . . . . . . . . . . . . . . . . . 45
CERTIFICATE OF SERVICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
CERTIFICATE OF COMPLIANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
-iii-
INDEX OF AUTHORITIES
Cases
A.G. Edwards & Sons, Inc. v. Breyer,
235 S.W.3d 704 (Tex. 2007). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Adebo v. Litton Loan Serv., L.P.,
No. 01-07-00708-CV, 2008 WL 209703
(Tex. App.—Houston [1st Dist.] May 29, 2008, no pet.). . . . . . . . . . . . . 10
Allied Vista, Inc. v. Holt,
987 S.W.2d 138 (Tex. App.—Houston [14th Dist.] 1999, pet. denied). 33
Arthur Andersen & Co. v. Perry Equip. Corp.,
945 S.W.2d 812 (Tex. 1997). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Bocquet v. Herring,
972 S.W.2d 19 (Tex. 1998). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Boeker v. Syptak,
916 S.W.2d 59, 61 (Tex.App.–Houston [1st Dist.] 1996, no writ). . . . . . 25
Citrin Holdings, LLC v. Minnis,
No. 14-11-00644-CV, 2013 WL 1928652
(Tex. App.—Houston [14th Dist] May 9, 2013, no pet.). . . . . . . . . . . . . 22
City of Houston v. Howard,
786 S.W.2d 391 (Tex. App.—Houston [14th Dist.] 1990, writ denied). 34
Charter Nat. Bank-Houston v. Stevens,
781 S.W.2d 368 (Tex. App.—Houston [14th Dist.] 1989, writ denied). . . 8
Chessher v. Sw. Bell. Tel. Co.,
658 S.W.2d 563 (Tex. 1983).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
-iv-
Coble v. Adams,
No. 01-13-00562-CV,
2014 WL 6602480, 2-3 (Tex.App. Houston [1st Dist.] 2014). . . . . . . . 24
Coffey v. Johnson,
142 S.W.3d 414 (Tex. App.—Eastland 2004, no pet.).. . . . . . . . . . . . . . 35
Dubose v. Worker’s Med., P.A.,
117 S.W.3d 916 (Tex. App.—Houston [14th Dist.] 2003, no pet.). . . . . 32
Elder v. Bro,
809 S.W.2d 799 (Tex. 1991).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
English v. Fischer,
660 S.W.2d 521 (Tex. 1983).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
FM Props. Operating Co. v. City of Austin,
22 S.W.3d 868 (Tex. 2000). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Fiduciary Fin. Servs. Sw., Inc. v. Corilant Fin., L.P.,
376 S.W.3d 253 (Tex. App.—Dallas 2012, pet. denied).. . . . . . . . . . . . . 23
Figueroa v. Davis,
318 S.W.3d 53 (Tex. App.—Houston[1st Dist.] 2010, no pet.). . . . . . . . 37
Fuqua v. Oncor Elec. Delivery Co.,
315 S.W.3d 552 (Tex. App.—Eastland 2010, pet. denied).. . . . . . . . . . . 39
Gaughan v. Nat’l Cutting Horse Ass’n,
351 S.W.3d 408 (Tex. App.—Fort Worth 2011, pet. denied). . . . . . 38, 42
Goodyear Tire & Rubber Co. v. Mayes,
236 S.W.3d 754 (Tex. 2007) (per curiam). . . . . . . . . . . . . . . . . . . . . . . . . 8
Guthrie v. Suiter,
934 S.W.2d 820, 826 (Tex.App.–Houston [1st Dist.] 1996, no writ). . 25
-v-
Haden v. David J. Sacks, P.C.,
332 S.W.3d 503 (Tex. App.—Houston [1st Dist.] 2009, pet. denied). . 40
Henry S. Miller Mgmt. Corp. v. Houston State Assocs.
792 S.W.2d 128, 134 (Tex.App.–Houston [1st. Dist.] 1990, writ denied).xi
Intertex, Inc. v. Cowden,
728 S.W.2d 813 (Tex. App.—Houston [1st District] 1986, no writ.). . . . . 41
Kainer v. ABMC Corp.,
No. 01-05-00338-CV,
2006 WL 407794 (Tex. App.—Houston [1st Dist.] 2006, no pet.). . . . . . 11
Lampasas v. Spring Center, Inc.,
988 S.W.2d 428 (Tex. App.—Houston [14th Dist.] 1999, no pet.).. . . . 32
Lentino v. Cullen Ctr. Bank & Trust
No 14-00-00692-CV,
2002 WL 220421 (Tex. App.–Houston [14th Dist.] 2002, pet. denied).. xi
Lundy v. Masson,
260 S.W.3d 482 (Tex. App.—Houston [14th Dist.] 2008, pet. denied). 33
Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding,
289 S.W.3d 844 (Tex. 2009). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Marquis Acquisitions, Inc. v. Steadfast, Ins.,
409 S.W.3d 808, 813 (Tex.App.–Dallas 2013, no pet.). . . . . . . . . . . . . 30
M.D. Anderson Hosp. & Tumor Inst. v. Willrich,
28 S.W.3d 22 (Tex. 2000) (per curiam). . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Oake v. Collin Co.,
692 S.W.2d 454 (Tex. 1985).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Onwuteaka v. Cohen
846 S.W.2d 889, 893 (Tex.App.–Houston [1st Dist.] 1993, write den.). 11
-vi-
Owen Elec. Supply, Inc. v. Brite Day Constr., Inc.,
821 S.W.2d 283 (Tex. App.—Houston [1st Dist.] 1991, writ denied).. . 38
Petrello v. Prucka,
415 S.W.3d 420 (Tex. App.—Houston [1st Dist.] 2013, no pet.). 39, 40, 41
Provident Life & Accident Ins. Co. v. Knott,
128 S.W.3d 211 (Tex. 2003). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Rodarte v. Investco Grp., L.L.C.,
299 S.W.3d 400 (Tex. App.—Houston [14th Dist.] 2009, no pet.). . . . 10
Rogers v. Ricane Enters., Inc.,
772 S.W.2d 76 (Tex. 1989). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Science Spectrum, Inc. v. Martinez,
941 S.W.2d 910 (Tex. 1997). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Smith v. Heard,
980 S.W.2d 693 (Tex. App.—San Antonio 1998, pet. denied). . . . . . . . 32
Stoner v. Thompson,
578 S.W.2d 679 (Tex. 1979).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Specialty Retailers, Inc. v. Fuqua,
29 S.W.3d 140, 145 (Tex.App.–Houston [14th Dist.] 2000, pet. den.). 35
Tony Gullo Motors I, LP v. Chapa,
212 S.W.3d 299 (Tex. 2006). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Triad Home Renovators v. Dickey,
15 S.W.3d 142, 145 (Tex.App.–Houston [14th Dist.] 2000, no pet.).. . . 35
Vortt Exploration Co., Inc. v. Chevron U.S.A., Inc.,
787 S.W.2d 942 (Tex. 1990).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Wal-Mart Stores, Inc. v. Lopez,
93 S.W.3d 548 (Tex. App—Houston [14th Dist.] 2002, no pet.). . . . 18, 21
-vii-
Statutes
Tex. Civ. Prac. & Rem. Code § 18.001. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Tex. Civ. Prac. & Rem. Code § 37.009 .. . . . . . . . . . . . . . . . . . . . . . . . . . 41, 42
Tex. Prop. Code Ann. § 51.002. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9, 10, 12, 13
Rules
Tex. R. App. P. 9.4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . x
Tex. R. App. P. 38.1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . x
Tex. R. App. P. 39.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xii
Tex. R. Civ. P. 45. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Tex. R. Civ. P. 166a(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
-viii-
RECORD REFERENCES
This brief uses the following format for citation to the Record:
1 CR ___ Clerk’s Record (Vol. 1)
2 CR ___ Clerk’s Record (Vol. 2)
STATEMENT OF THE CASE
Nature of the case: This case arises from the foreclosure on a debt
owed by D&R, secured by real property in
Baytown, Texas. CS Bankers foreclosed on the
debt, acquired the real property, and later
transferred the property to TGF. Despite
agreeing to the terms of the transaction, D&R
and the Rushings want that property back.
Course of proceedings: Ultimately TGE and CS Bankers sought
declaratory relief against the Rushings and D&R
relative to the foreclosure of the subject
property and the enforceability of a letter of
intent. In addition to their competing
declaratory action on the foreclosure, the
Rushings and D&R pursued a myriad of claims
against not only TGE and CS Bankers, but also
third-party defendants Connolly, TGF, Hendry,
and Smith.
Disposition below: The entire matter was disposed by motion
practice when the trial court—over an eight
month briefing process—granted multiple
summary judgments in favor of the appellees.
-ix-
STATEMENT REGARDING APPELLANTS’ BRIEF
These appellees, TGE, CS Bankers and Connolly, have attempted to
provide a concise brief in response to a wholly inadequate appellant brief.
Here, the appellants essentially invite this Court to perform a tedious and time
consuming review of the record and then determine whether they preserved
error and, if so, was the error reversible.
In sum, the appellants’ brief does not comply with Rule 38.1 of the Texas
Rules of Appellate Procedure.2 An appellant’s brief must contain a clear and
concise argument for the contentions made, with appropriate citations to
authorities and to the record. Tex. R. App. P. 38.1.
To start, the appellants’ “Statement of the Case” and “Statement of
Facts” combine to over eight pages of misconstrued argument that does not
contain a single proper citation to the record. Further, a few points of
error—such as the appellants’ points of error 3, 4 and 7—do not properly cite
to the correct record or appropriate legal authority. Simply inviting this Court
to “see all summary judgment motions” and “see affidavits” is an invitation
this Court should decline. See Appellants at 23 and 27.
2
Among other defects, the appellants’ “Statement of Case” violates Rule 38.1(d) of the
Texas Rules of Appellate Procedure. In addition, although a minor point, the
appellants failed to include a certificate of compliance pursuant to Rule 9.4 of the
Texas Rules of Appellate Procedure.
-x-
As such, these appellees respectfully request that this Court follow the
guidance it set forth in Henry S. Miller Mgmt. Corp. v. Houston State Assocs.
and that of the Fourteenth Court of Appeals’ in Lentino v. Cullen Ctr. Bank &
Trust. See Henry S. Miller Mgmt. Corp. v. Houston State Assocs., 792 S.W.2d
128, 134 (Tex. App.—Houston [1st Dist.] 1990, writ denied) and Lentino v.
Cullen Ctr. Bank & Trust, No. 14-00-00692-CV, 2002 WL 220421 (Tex.
App.—Houston [14th Dist.] Feb. 14, 2002, pet. denied).
REPLY ISSUES PRESENTED FOR REVIEW
1. The foreclosure complied with the Texas Property Code and the terms
of the operative Deed of Trust.
2. The letter of intent is not an enforceable contract.
3. In response to the no-evidence motions for summary judgment, the
appellants failed to bring forth credible evidence to support each
element of their causes of action.
4. The appellants were provided adequate time to conduct discovery and
failed to show that additional discovery would be material.
5. An award of attorney’s fees by a trial judge in a declaratory judgment
action following summary judgment is proper.
-xi-
STATEMENT REGARDING ORAL ARGUMENT
Pursuant to Rule 39 of the Texas Rules of Appellate Procedure, the
appellants do not have a right to oral argument. As a result of the defective
nature of the appellants’ briefing, their entire appeal could be considered
frivolous. Considering, the briefing presented and argued before the trial
court, the dispositive issues have already been “authoritatively decided” by an
experienced jurist that devoted a substantial amount of the trial court’s energy
and time unwinding the tangled pleadings and motion practice of the
appellants. Tex.R.App.P. 39.
Here, the facts and legal arguments were adequately briefed at the trial
court level and are now a part of this Court’s record. As the trial court
disposed of this entire case pursuant to an exhaustive motion practice, this
Court’s decisional process would not be significantly aided by oral argument.
Tex.R.App.P. 39.
The only possible reason for oral argument would be to provide the
appellants a generous gift—specifically, a chance to “clarify the written
arguments” in their brief. If this Court permits oral argument, these appellees
respectfully request an opportunity to be heard.
-xii-
STATEMENT OF FACTS AND PROCEDURAL HISTORY
In the Summer of 2012, D&R Constructors, Inc. (“D&R”) had fallen on
hard times, owed the IRS approximately $600,000 in back taxes3 and was
looking for a way out of its obligations at the fabrication facility located at 6314
Wade Road, Baytown, Texas (the “Property”), including the promissory note
it owed Comerica Bank (the “Note”). After it was introduced to Comerica
Bank by D&R, CS Bankers V, LLC (“CS Bankers”) purchased the Note that was
secured by the Property.4 1 CR 391–438. CS Bankers subsequently foreclosed
on the Property in September of 2012. 1 CR 439–440; 449–450.
Additionally, at or about the time CS Bankers acquired the Note from
Comerica Bank, Texas Gulf Energy, Inc. (“TGE”) and members of the Rushing
family (some of which owned shares in D&R) entered into a non-binding term
sheet outlining the basic framework of a to-be-formed, future “marketing joint
venture to develop new fabrication and manufacturing business for a startup
company, Texas Gulf Fabrication, Inc.”5 2 CR 1079–1080. The parties agreed
3
Penn Rushing was also personally liable to the IRS for this debt. 2 CR 1145-1146 (pg.
24: ln. 25 - pg. 25: ln. 3).
4
Not only did D&R introduce CS Bankers to Comerica, it joined in the Loan Sale
Agreement. 1 CR 399.
5
Texas Gulf Fabrication, Inc. should not be confused with Third-Party Defendant
Texas Gulf Fabricators, LLC, which is a separate, distinct and unrelated entity.
-1-
that they would work towards a further refined, comprehensive agreement
which would be entered into in the future and which would contain all the
material terms of the marketing joint venture. 2 CR 1079–1090, ¶ 8.
Unfortunately, the parties reached an impasse relative to the additional,
material terms and litigation ensued.
On January 4, 2013, TGE on behalf of CS Bankers filed this action and
was granted a TRO based on certain appellants, Michael Rushing, Stephanie
Rushing, Penn Rushing and Florence Rushings’ (collectively the “Rushings”),
conversion of property owned by CS Bankers following the foreclosure.6 1 CR
3–23.
On February 26, 2013, the Rushings filed “Defendants’ Notice of Filing
Motion for Removal” removing this matter to federal court. 1 CR 73–74.
On April 19, 2013, the federal court remanded this matter to the trial
court. 1 CR 75–79. Upon remand, the Rushings forced TGE and CS Bankers
into protracted motion practice relating to defects in the Rushings’ pleadings
and lack of diligence in service of process on certain third-party defendants.
On December 4, 2013, D&R intervened in this action and, along with the
Rushings, filed new claims against TGE, CS Bankers, Tim Connolly
6
The subject parties subsequently entered into an Agreed Temporary Injunction.
-2-
(“Connolly”), Texas Gulf Fabricators, LLC (“TGF”), Brian Hendry (“Hendry”),
Lester Smith (“Smith”) and a number of other individuals who were never
served in connection with this suit. 1 CR 196–215. The new pleading only
served to provide the Rushings and D&R with further excuse for their dilatory
tactics. The trial court, however, provided the Rushings and D&R with ample
opportunity to complete service, resetting the docket control deadlines and
trial three times. The trial court’s accommodation only resulted in
unnecessary delay and a waste of time and money, as the Rushings and D&R
ultimately failed to properly serve four third-party defendants.
On July 16, 2014, TGE and CS Bankers filed their First Amended
Petition seeking declaratory relief from the court, pursuant to Chapter 37 of
the Texas Civil Practice and Remedies Code, on the issue of foreclosure and
the Letter of Intent executed by and between TGE and the “Rushing Family.”
1 CR 371–377. D&R countered with a competing declaratory action on the
issue of foreclosure. Shortly thereafter, in an effort to streamline the
litigation, the parties agreed to file cross-motions for summary judgment on
the foreclosure issue.7
7
At that time, it is undisputed that the Rushings and D&R agreed in writing that they
did not need any written or oral discovery from TGE, CS Bankers or Connolly prior
to moving on the foreclosure. 2 CR 1907, ¶ 2; 2 CR 1913.
-3-
On August 28, 2014, the trial court entered an order granting CS
Bankers’ motion for summary judgment on the issue of foreclosure (the
“Order on Foreclosure”). 1 CR 593. The Order on Foreclosure also dismissed
the Rushings and D&R’s claims of wrongful foreclosure and quiet title against
TGF and Hendry. See Id.
On September 16–18, 2014, the appellees deposed Michael Rushing and
Penn Rushing for the second time. Based on that testimony, TGF, Hendry,
and Smith immediately moved for final summary judgment—both traditional
and no-evidence—on the Rushings and D&R’s remaining claims. 1 CR
643–718; 1 CR 816–840.
On October 31, 2014, the trial court entered a “Final Summary
Judgment” dismissing with prejudice the Rushings and D&R’s claims of fraud
and conspiracy against Smith. 2 CR 1580.
On November 19, 2014, the trial court entered a “Final Summary
Judgment” dismissing with prejudice the Rushings and D&R’s claims of fraud,
negligent misrepresentation, breach of contract, breach of fiduciary duty,
tortious interference, conversion, quantum meruit, and conspiracy against
TGF and Hendry. 2 CR 1967.
On December 17, 2014, the trial court signed an order granting TGE’s
-4-
motion for partial summary judgment on the “Letter of Intent,” declaring that
the document entitled “Letter of Intent” dated July 11, 2012 is not a binding,
valid or enforceable contract and that TGE has no obligation, monetary or
otherwise, to the Rushings or D&R. 2 CR 1972.
On January 30, 2015, the trial court held an evidentiary hearing on
Smith’s motion for sanctions against the Rushings, D&R, and their attorney,
George Gore, for repeatedly filing pleadings in bad faith. After the hearing,
the trial court assessed sanctions in the amount of $33,250 (the amount of
Smith’s attorney’s fees). 2 CR 2025–2026.
On February 3, 2015, the trial court granted TGE, CS Bankers and
Connolly’s no-evidence motions for summary judgment, dismissing the
Rushings and D&R’s remaining claims of fraud, breach of contract, quantum
meruit, negligent misrepresentation, breach of fiduciary duty, conversion,
conspiracy, and tortious interference with prejudice. 2 CR 2027.
On March 6, 2015, TGE and CS Bankers filed their motion for summary
judgment on attorney’s fees and motion for entry of final judgment. 2 CR
2696–2872. In response, the Rushings and D&R filed at least five motions for
new trial and a second motion for summary judgment on the foreclosure—in
-5-
an apparent attempt to have the trial court reconsider its prior rulings.8 2 CR
2192–2319; 2 CR 2320–2420; 2 CR 2421–2445; 2 CR 2446–2597; 2 CR
2905–3020.
On April 6, 2015, the trial court denied the Rushings and D&R’s second
motion for summary judgment on the issue of foreclosure. 2 CR 976.
On April 13, 2015, the trial court entered the Final Judgment in this
matter, awarding attorney’s fees to TGE and CS Bankers. 2 CR 977.
On June 23, 2015, the trial court denied the Rushings and D&R’s five
motions for new trial and the supplements filed in connection therewith,
disposing of this matter in its entirety. 2 CR 1009.
SUMMARY OF ARGUMENT
CS Bankers was forced to file its suit for declaratory relief because the
Rushings and D&R claimed they still owned the subject real property, even
though D&R agreed to, and had actual knowledge of, the foreclosure.
Similarly, the Rushings forced TGE’s declaratory action by attempting to hold
TGE to the “Letter of Intent” even though the Rushings themselves did not
agree to many of its terms. In sum, the Rushings and D&R’s groundless
8
The five motions for new trial and second motion for summary judgment on
foreclosure offered nothing new and contained almost 700 pages of regurgitated
argument from previous motions and exhibits already on file. In the process, the
Rushings and D&R also attached new objectionable affidavits that could have been
presented within their previous briefing.
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arguments forced TGE and CS Bankers into this costly matter. Written
discovery, depositions, countless motions and hundreds of hours of time were
required to disprove the Rushings and D&R’s untenable factual and legal
positions. Ultimately, TGE, CS Bankers and Connolly (along with the other
appellees, Smith, Hendry and TGF) exposed the meritless claims asserted by
the Rushings and D&R which were properly dismissed by motion practice.
STANDARD OF REVIEW
This matter involved both traditional and no-evidence motions for
summary judgment. Summary Judgments are reviewed de novo. Provident
Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). When both
parties move for summary judgment on the same issues and the trial court
grants one motion and denies the other, the reviewing court reviews both
sides’ summary judgment evidence and determines all questions presented.
See FM Props. Operating Co. v. City of Austin, 22 S.W.3d 868, 872 (Tex.
2000). When a trial court’s order granting summary judgment does not
specify the grounds relied upon, the reviewing court must affirm if any of the
summary judgment grounds are meritorious. Id.
A traditional motion for summary judgment is properly granted only
when the movant establishes that there are no genuine issues of material fact
and that it is entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c);
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Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848
(Tex. 2009). Once the movant has established a right to summary judgment,
it is the non-movant’s burden to then respond and present the trial court with
any issues that would preclude summary judgment. M.D. Anderson Hosp. &
Tumor Inst. v. Willrich, 28 S.W.3d 22, 23–24 (Tex. 2000) (per curiam).
A no-evidence summary judgment motion is essentially a pretrial
motion for directed verdict. Goodyear Tire & Rubber Co. v. Mayes, 236
S.W.3d 754, 755 (Tex. 2007) (per curiam). By filing a proper no-evidence
summary judgment motion, the movant forces the nonmovant to present
evidence creating a fact issue as to each element contested in the motion. Id.
ARGUMENT
Reply Point 1 in Response to Points of Error 1 and 2: The
foreclosure complied with the Texas Property Code and
the terms of the operative Deed of Trust.
The trial court properly granted CS Bankers’ motion for summary
judgment on the issue of foreclosure. One essential element of a cause of
action for wrongful foreclosure is the existence of a defect in the foreclosure
sale proceeding. Charter Nat. Bank-Houston v. Stevens, 781 S.W.2d 368, 371
(Tex. App.—Houston [14th Dist.] 1989, writ denied). At the time of filing CS
Bankers’ motion, the only defects claimed by the Rushings and D&R were that
(1) there was a failure of posting the foreclosure notice as required, (2) there
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was a failure of service of the notice of foreclosure on the Rushings and D&R,
and (3) certain appellees conspired to interfere with service of the notice. 1 CR
330–352.
CS Bankers made the required postings.
The Texas Property Code requires posting notice of the foreclosure sale
at the courthouse door of each county in which the property is located,
designating the county in which the property will be sold. Tex. Prop. Code
Ann. § 51.002(b)(1). Additionally, the notice of foreclosure sale must be filed
in the office of the county clerk of each county in which the property is located.
Tex. Prop. Code Ann. § 51.002(b)(2). Both the requirements in § 51.002(b)(1)
and (2) must be completed at least twenty-one (21) days before the date of the
sale.
In the present case, on August 14, 2012, twenty-one days prior to the
foreclosure sale held on September 4, 2012, Robert Schlanger, CS Bankers’
foreclosure attorney, posted the Notice of Substitute Trustee’s Sale in the
designated area of the Harris County Family Law Center, a Harris County
Courthouse, located at 1115 Congress Street, Houston, Texas, setting the
foreclosure sale of the Property at that same location. 1 CR 439–440;
441–442. On the very same day, August 14, 2012, Schlanger also filed the
Notice of Substitute Trustee’s Sale in the Harris County Clerk’s office at 12:52
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p.m., completing the requirements of Tex. Prop. Code Ann. § 51.002(b)(1) and
(2) and the Deed of Trust. 1 CR 439–440; 443–444.
CS Bankers properly served notice on D&R.
Moreover, the Texas Property Code requires only notice of foreclosure
“by certified mail on each debtor who, according to the records of the
mortgage servicer of the debt, is obligated to pay the debt.” Rodarte v.
Investco Grp., L.L.C., 299 S.W.3d 400, 409 (Tex. App.—Houston [14th Dist.]
2009, no pet.); Tex. Prop. Code Ann. § 51.002. Additionally, the operative
Deed of Trust states that notice must be given to each debtor who, according
to the records of the Beneficiary, is obligated to pay the Note. 1 CR 429, ¶
14(c). Such notice is to be sent via certified mail and is complete and effective
when the notice is deposited in the United States Mail, postage prepaid and
addressed to the debtor at the debtor’s last known address as shown by the
records of the beneficiary. 1 CR 429, ¶ 14(c).
In analyzing a debtor’s denial that he received notice of foreclosure, this
Court has already held that “[t]he dispositive inquiry under section 51.002,
however, is not receipt of notice, but, rather, service of notice.” See Adebo v.
Litton Loan Serv., L.P., No. 01-07-00708-CV, 2008 WL 209703, *4 (Tex.
App.—Houston [1st Dist.] May 29, 2008, no pet.) (emphasis added). In
Adebo, this Court held that in order to create a triable issue of fact, the debtor
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must establish that “its notices had not been deposited in the mail, by certified
mail, postage prepaid and addressed to [the debtor]” at the debtor’s last
known address. Id. There is no requirement that the debtor actually receive
the notice of foreclosure. See Kainer v. ABMC Corp., No. 01-05-00338-CV,
2006 WL 407794, *5 (Tex. App.—Houston [1st Dist.] 2006, no pet.).
The purpose of the foreclosure statute is to provide a minimum level of
protection for the debtor, and the statute provides this by calling for only
constructive notice of the foreclosure. Id. Wrongful foreclosure on the basis
of failure to provide notice is only shown where the debtor proves that the
holder of the debt had in its records the most recent address of the debtor and
failed to send the notice of foreclosure sale by registered mail to that address.
See Onwuteaka v. Cohen, 846 S.W.2d 889, 893 (Tex. App.—Houston [1st
Dist.] 1993, writ denied). Thus, a debtor’s mere denial of receiving foreclosure
notices is insufficient to create a genuine issue of material fact.
It follows, therefore, that the only inquiry needed to be made by the trial
court was whether CS Bankers deposited the notice of foreclosure in the mail,
by certified mail, postage prepaid and addressed to D&R at its last known
address. It is undisputed that the last known address of D&R was at the
Property, 6314 Wade Rd., Baytown, Texas. 1 CR 421; , 439–440; , 445–447;
453; 456: 3–7. On August 14, 2012, the requisite foreclosure notice was sent
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to D&R at the Property by Schlanger. 1 CR 439–440, 445–447. Per the Texas
Property Code and the terms of the Deed of Trust, notice was complete and
effective when Schlanger deposited the foreclosure notice in the United States
Mail on August 14, 2012, twenty-one days prior to the Substitute Trustee’s
Sale on September 4, 2012. See Tex. Prop. Code Ann. § 51.002; see 1 CR
439–440.
The affidavit of Robert Schlanger is prima facie evidence of service.
Tex. Prop. Code Ann. § 51.002(e) provides that an “affidavit of a person
knowledgeable of the facts to the effect that service was completed is prima
facie evidence of service.” The record contains a copy of the Affidavit of
Robert Schlanger, the attorney retained by CS Bankers to foreclose on the
property, which states, among other, that he deposited the required notice to
“D&R in the United States mail, postage prepaid completing service pursuant
to Section 51.002(b) and (e) of the Texas Property Code and the terms of the
Deed of Trust.” 1 CR 440. Schlanger further states in the affidavit, “In
connection with the foreclosure of 6314 Wade Rd., Baytown, Texas 77521, all
required statutory and contractual notices were provided to the only debtor,
D&R Constructors, Inc.,” and that he “sold the property located at 6314 Wade
Rd. at a Substitute Trustee’s Sale held in accordance with the laws of the State
of Texas.” 1 CR 439–440. Schlanger’s affidavit is prima facie evidence that
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the notice of foreclosure was sent in compliance with Tex. Prop. Code Ann. §
51.002.
D&R offered no evidence to create a genuine issue of material fact on
this point. Summary judgment may not be thwarted by conclusory allegations
and unsupported assertions.
Accordingly, D&R’s general allegation that the “attachments” were not
included in Schlanger’s letter entitled “Notice of Posting”9 is not sufficient
evidence to establish the existence of a dispute to a genuine issue of material
fact for summary judgment purposes. First, this argument is nothing more
than a red herring. The simple basis for D&R’s argument is that the Notice of
Substitute Trustee’s sale is attached as Exhibits B-1 and B-2 of Schlanger’s
affidavit, while the Notice of Posting letter, which references the Notice of
Substitute Trustee’s Sale as an enclosure, is a attached at Exhibit B-3. In other
words, because Schlanger’s affidavit first references the Notice of Substitute
Trustee’s Sale when it was an enclosure to the later-referenced Notice of
Posting, there is a defect in the foreclosure. D&R has failed, however, to
explain how the order of exhibits has any bearing on the foreclosure itself.
Schlanger clearly states that he sent the Notice of Posting. 1 CR
9
The Notice of Posting is the standard “cover letter” that Schlanger has routinely sent
in connection with the hundreds of foreclosures he has handled in his twenty years
of practice. Enclosed in the Notice of Posting, was the Notice of Substitute Trustee’s
Sale, setting forth the time and place of the foreclosure.
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439–440. The Notice of Posting positively references the enclosed Notice of
Substitute Trustee’s Sale:
YOU ARE FURTHER NOTIFIED THAT A NON-JUDICIAL
FORECLOSURE SALE HAS BEEN SCHEDULED FOR THE
FIRST TUESDAY IN SEPTEMBER, 2012 (SAID DATE BEING
SEPTEMBER 4, 2012). THE FORECLOSURE SALES HAVE
BEEN SCHEDULED AT THE LOCATION(S) SPECIFIED IN THE
NOTICES OF SUBSTITUTE TRUSTEE’S SALES WHICH ARE
ENCLOSED. A COPY OF THE NOTICE OF SUBSTITUTE
TRUSTEE’S SALE IS ENCLOSED WHICH DESIGNATES
THE TIME AND FURTHER DESCRIBES THE LOCATION
OF EACH SALE [emphasis added].
1 CR 445–446. The Notice of Substitute Trustee’s Sale that was delivered as
an enclosure to the Notice of Posting clearly states:
...I will, in accordance with the request of said legal owner and
holder, on SEPTEMBER 4, 2012 to commence at the hour of 1:00
o’clock p.m., or within three (3) hours thereafter, on said day,
sell the above described property to the highest bidder for cash at
the following location...
1 CR 441. In sum, the evidence of service on D&R in the record is clear.
Second, D&R takes the position that it never received the certified mail
sent by Schlanger. See, eg., Brief of Appellants at 15. As such, it is impossible
for D&R to offer any evidence contradicting Schlanger’s sworn statements or
showing that the Notice of Posting did not contain the Notice of Substitute
Trustee’s Sale as an enclosure. D&R’s argument is simply a misrepresentation
of the actual evidence in the record.
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D&R offered no credible evidence that anyone wrongfully interfered
with service.
In support of their position that “Texas Gulf Energy personnel working
at the Property refused to sign for the letter and falsely advised the postman
that D&R no longer was there,” the Rushings and D&R globally cite to 1 CR
464–536, which is the entirety of their response to CS Bankers’ motion.
Within the response, D&R solely directed the trial court to the Affidavit of
William P. Rushing and the Domestic Mail Manual of the United States Postal
Service to show wrongful interference. 1 CR 470–471. Upon review, both are
clearly void of any facts supporting the allegation of wrongful interference.
In addition to D&R presenting no evidence in support of its claim for
wrongful interference, it is undisputed that D&R was receiving mail at the
Property during the time period when the notice of foreclosure was delivered
and that the Rushings, the owners of D&R, were working at the Property. See,
eg., Brief of Appellants at 15.
Lastly, although not dispositive on the issue of foreclosure, the trial
court had evidence before it that D&R received actual notice of the foreclosure
via email from CS Bankers. Specifically, almost two weeks prior to the
foreclosure, Penn Rushing, President of D&R, was emailed copies of the
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Notices by CS Bankers’ representative, Craig Crawford. 1 CR 131–132.10 Penn
Rushing acknowledged receipt and stated he would put the notices in D&R’s
file. 1 CR 131. This evidence impeaches both the Rushings and D&R on the
issue of whether they were aware of the foreclosure and calls into serious
question the validity of any arguments set forth by the Rushings and D&R. It
further disproves D&R’s theory of wrongful interference, as it would seem
illogical for CS Bankers (or any appellee) to interfere with service by certified
mail only to email the notice to D&R at a later date.
The guarantors were not entitled to notice of the foreclosure.
The Deed of Trust did not require CS Bankers to serve notice of the
foreclosure on the guarantors. Service of the notice only had to be served on
the “debtor,” D&R. 1 CR 429, ¶ 14(c). Further, Texas courts have interpreted
the term “debtor” in the context of a foreclosure to specifically exclude
guarantors. See generally Long v. NCNB-Texas Nat. Bank, 882 S.W.2d 861,
864–67 (Tex. App.—Corpus Christi 1994, no writ) (discussing construction of
§ 51.002 of the Texas Property Code and its legislative history). Lastly, the
guarantors specifically waived the right to receive notice of any kind, which
10
It appears that the entirety of Exhibit A beginning at 1 CR 132 was not included in
the Clerk’s Record. As such, CS Bankers respectfully directs this Court to the
entirety of the Clerk’s Record located at the 270th District Court, Harris County,
Texas. Missing from the record is the email thread wherein Penn Rushing
acknowledges receipt of the foreclosure notice.
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includes any notices relating to the foreclosure. See 1 CR 408; 1 CR 413.
Schlanger did not exercise any power beyond that afforded to him.
The Rushings & D&R also argue - without attaching any evidence or
authority - that the foreclosure is invalidated because Schlanger performed
duties beyond those afforded to a Substitute Trustee, in violation of Sections
51.0074(b)(1) and 51.0075(b) of the Texas Property Code. Specifically, that
Schlanger could not have a “dual role” as debt collector and substitute trustee.
The Rushings & D&R misconstrue the law and the facts. Nothing prevented
Schlanger from sending the Notice of Posting letter to D&R and subsequently
serving as the substitute trustee and the person who would conduct the
foreclosure sale.
The loan to D&R was overdue and in default.
At the outset of their brief, D&R alleges that it owed approximately
$435,000 on the Note when CS Bankers entered into the Loan Sale Agreement
with Comerica Bank. Appellant’s Brief at 2. Yet, D&R somehow attempts to
set aside the foreclosure by claiming that no amount was due. Appellant’s
Brief at 22. The simple fact is that D&R joined in the Loan Sale Agreement,
which included a schedule of the loan and showed an outstanding balance of
$415,064.47 in July of 2012. 1 CR 401. In sum, the loan was nine months
overdue and in default. 1 CR 412. As such, this alleged defect is of no merit.
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Further, D&R sets forth yet another baseless argument in that payment
on the Note could not be made because D&R did not have CS Bankers’ contact
information. The Loan Sale Agreement executed by D&R clearly lists the
address of CS Bankers. 1 CR 394-395. As such, D&R could have simply
looked in the very agreement to which it is a party for CS Bankers’ address.
Moreover, Schlanger identified himself as a CS Bankers representative in the
Notice of Posting letter, and directed D&R to contact him regarding the same.
1 CR 445-447.
Reply Point 2 in Response to Points of Error 3 and 5:
The letter of intent is not an enforceable contract.
The trial court’s grant of summary judgment on the “Letter of Intent”
(“LOI”) was proper because the LOI fails to meet the elements of a binding
contract, including: an acceptance in strict compliance with the terms of the
offer; a meeting of the minds; each party’s consent to the terms and execution
and delivery of the contract with the intent that it be mutual and binding.
Wal-Mart Stores, Inc. v. Lopez, 93 S.W.3d 548, 555–56 (Tex. App—Houston
[14th Dist.] 2002, no pet.).
To date, the Rushings have yet to address exactly how they believe the
LOI is a binding contract, simply claiming that the “Binding Letter of Intent
stands to show the Contract.” 2 CR 1721. Nothing could be further from the
truth.
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The Rushings did not accept TGE’s offer in strict compliance.
TGE presented the LOI to Michael Rushing in an attempt to have an
agreement as to the basic framework for a marketing joint venture between
TGE and the Rushings. As set forth in paragraph 8 of the LOI, the parties
would agree to a further refined, comprehensive agreement. 2 CR 1080.
Based on the deposition testimony of Michael Rushing and Penn Rushing, it
is a complete mystery as to why Michael Rushing executed the LOI. To begin,
there was not even an agreement as to the purpose of the proposed joint
venture. Additionally, the Rushings do not agree with paragraphs 1, 4 or 5 of
the LOI, and claim that the LOI was missing a number of material terms.
Paragraph 1, sentence 1 of the LOI states that “Texas Gulf Energy, Inc.
and the Rushing Family agree to form a Marketing Joint Venture to
develop new Fabrication and Manufacturing business for Texas
Gulf Fabrication, Inc.” (emphasis added). 2 CR 1079. Although it was TGE’s
intent to create a joint venture to market business for the operations being run
out of the Fabrication Facility located at the Property (the “Facility”), the
Rushings believed the joint venture was the actual business at the Facility and
that they were not going to be responsible for any marketing. 2 CR 1172
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(deposition pg. 129: ln. 24 - pg. 130: ln. 8, pg. 130: ln. 20 - pg. 130: ln. 2211);
2 CR 1174 (137:17–138:33); 2 CR 1183 (173:18–173:24).
In other words, although Michael Rushing on behalf of the Rushings
executed the LOI, the Rushings did not agree to form a marketing joint
venture. Paragraph 4 of the LOI sets forth the proposed number of shares of
TGE common stock that would be issued in the name of the marketing joint
venture. 2 CR 1079. According to the Rushings, they did not agree with
paragraph 4 and claim that portions of the paragraph were “waived.” 2 CR
1095 (57:23–58:9); 2 CR 1176 (145:6–145:25).
In regard to Paragraph 5 of the LOI, the Rushings claim that it does not
accurately set forth their understanding with TGE. Specifically, that the 2%
commission was not going to be limited to the development of new business,
and was going to be 2% “on everything that goes through the doors of the shop
over there.” 2 CR 1095 (58:15–59:7, 59:11–59:20); 2 CR 1176 (146:17–147:6).
In addition to the Rushings’ claim that paragraphs 1, 4 and 5 of the LOI
were incorrect, they claim that there were many material terms missing from
the LOI, including a payoff of an IRS debt of approximately $600,000 on
behalf of D&R, employment contracts for the Rushings valued at over
11
Moving forward, the parenthetical citations represent the page and line for the
depositions of Michael Rushing and Penn Rushing.
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$600,000 over the course of 3 years, a car allowance, insurance benefits for
the Rushings, and a cell phone plan, among others. 2 CR 1094 (55:3–56:4);
2 CR 1174 (139:13–139:20); 2 CR 1179 (159:20–160:11).
Further, the Rushings admit they only signed the LOI as a type of
placeholder until the comprehensive agreement containing all the material
terms would be agreed to and consummated at a future time, and that they
never signed a definitive agreement that embodied the entire agreement of the
parties. 2 CR 1098 (69:13–70:3); 2 CR 1174 (138:10–138:25, 140:23–141:1).
There was never a meeting of the minds.
Based on the foregoing evidence, it is impossible to find a “meeting of
the minds” between TGE and the Rushing Family. Without a meeting of the
minds, there cannot be a binding contract. See Wal-Mart Stores, Inc. v.
Lopez, 93 S.W.3d at 556.
The Rushings did not intend on being bound by the LOI.
The Rushings repeatedly state that the LOI is not the agreement they
reached with TGE, and that the real agreement was to be agreed upon at a
future time:
Q. It’s a real simple question. Yes or no –
A. Okay.
Q. – did your brother sign a document that contained terms that you
disagreed with?
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A. That I disagreed with, yeah.
Q. Okay. Did your brother sign a document that did not contain certain
material terms that you wanted?
A. That had been agreed upon, yes.
Q. Okay. Did you and your brother anticipate or contemplate that the
– did you guys expect more documents?
A. Yes, sir.
Q. Okay.
A. There were several meetings.
Q. That were going to be the definitive deal, correct?
A. Yeah. What the lawyers were working on, yeah.
2 CR 1308 (215:2–215:19); 2 CR 1098 (69:13–70:3); 2 CR 1174–1175
(140:23–141:1). As a result, there was never an intent to be bound by the LOI.
Terms included in the LOI are not sufficiently definite.
Lastly, a contract is legally binding only if its terms are sufficiently
definite to enable a court to understand the parties’ obligations. Citrin
Holdings, LLC v. Minnis, No. 14-11-00644-CV, 2013 WL 1928652 (Tex.
App.—Houston [14th Dist] May 9, 2013, no pet.).
Notwithstanding the disagreement as to the terms, the LOI is not
sufficiently definite to memorialize the parties’ obligations. The LOI is silent
as to the parties. 2 CR 1079–1080; 2 CR 1094 (53:16–54:1). The LOI clearly
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states that TGE is a party, but fails to state which of the “Rushing Family” are
a party. 2 CR 1079–1080. Michael, Penn, Stephanie, and Florence Rushing
are parties to this suit, but based on the express terms of the LOI, only
Michael, as the signatory, has standing to maintain any claims that may arise
from the LOI.
Based on the four corners of the LOI, it is impossible to determine if all,
none or a combination of the Rushings are parties to the LOI. Additionally,
it is possible that the “Rushing Family” contemplated that another one of its
family members, who is not named in this suit, could be a party to the LOI.
Michael Rushing even stated in his deposition that D&R is a party to the LOI.
2 CR 1093 (51:12–52:1). Without having an agreement as to something so
fundamental as the parties, the LOI lacks material terms and is unenforceable.
Moreover, when an agreement is silent as to the work to be done or the
services to be rendered, it will be deemed fatally indefinite. Fiduciary Fin.
Servs. of Sw., Inc. v. Corilant Fin., L.P., 376 S.W.3d 253, 257 (Tex.
App.—Dallas 2012, pet. denied). The court in Fiduciary Fin. Servs. of Sw.,
Inc. ruled a letter of intent was unenforceable because it created no specific
duties to be performed by a party to the contract for his $250,000 salary. Id.
In the present case, the LOI is silent as to the specific duties and
responsibilities of the “Rushing Family.” The LOI does not state what work
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the “Rushing Family” will do to be compensated with cash and stock from
TGE. 2 CR 1079–1080. As such, the LOI is unenforceable on its face.
Reply Point 3 in Response to Points of Error 3 and 5: In
response to the no-evidence motions for summary
judgment, the appellants failed to bring forth credible
evidence to support each element of their causes of
action.
An appellant’s brief must contain a clear and concise argument for the
contentions made, with appropriate citations to authorities and to the record.
Coble v. Adams, No. 01-13-00562-CV, 2014 WL 6602480, *2-3 (Tex.App.
Houston [1st Dist.] 2014). This requirement is not satisfied by conclusory
statements. Id. A failure to provide substantive analysis of an issue or cite
appropriate authority waives the complaint. Id.
The Rushings and D&R have failed to provide this Court with a clear and
concise argument or substantive analysis with appropriate citations to the
record or authorities. The Rusings and D&R begin their Point of Error of Five
by simply stating there was “evidence creating a fact issue” and directing this
Court to their response to TGE, CS Bankers and Connolly’s no-evidence
motions for summary judgment. Brief of Appellants at 25.
The response presented the same issues to the trial court. The trial court
correctly ruled that the Rushings and D&R did not carry their burden. To
determine whether a summary judgment respondent successfully carried its
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burden, the trial court is not required to wade through a voluminous record
to marshal respondent’s proof. See Rogers v. Ricane Enters., Inc., 772 S.W.2d
76, 81 (Tex. 1989). When presenting summary-judgment proof, a party must
specifically identify the supporting proof on file that it seeks to have
considered by the trial court. See Boeker v. Syptak, 916 S.W.2d 59, 61 (Tex.
App.—Houston [1st Dist.] 1996, no writ). Attaching entire documents and
depositions to a motion for summary judgment or to a response and
referencing them only generally does not relieve the party of pointing out to
the trial court where in the documents the issues set forth in the motion or
response are raised. See Guthrie v. Suiter, 934 S.W.2d 820, 826 (Tex.
App.—Houston [1st Dist.] 1996, no writ).
In response to TGE, CS Bankers’ and Connolly’s no-evidence motions
for summary judgment, the Rushings and D&R attached 3 affidavits and 15
exhibits. The repeated generic citations to the affidavits and exhibits simply
invited the trial court to “find the fact issue.” For example, D&R and the
Rushings claim TGE and Connolly “provided Claimants with various deal
offers and met with them discussing their Facility.” As authority, they cite to
“Exhibits E, H, I; Affidavits.” 2 CR 1599. The issue is that Exhibits E, H and
I total several pages, including correspondence between many parties. 2 CR
1649–1651; 2 CR 1666–1674. Additionally, there are 3 affidavits from 3
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different individuals that total 5 single-spaced pages. 2 CR 1726–1730. This
pattern of general, unspecified citations is repeated throughout the response.
This is improper, and failed to raise a fact issue.
The Rushings do not appropriately identify the individual claimant
and liable party for each cause of action.
Additionally, the Rushings and D&R have an issue relating to the
parties. Throughout their collective responses, each of the appellants – Penn
Rushing, Michael Rushing, Stephanie Rushing, Florence Rushing and
Intervenor D&R – refer to themselves collectively as “Claimants,” and argue
that “Claimants” have been wronged by either TGE, CS Bankers and/or
Connolly. The issue is that Rushings and D&R have no evidence to support all
of the required elements of their respective causes of action.
For instance, in support of their fraud claim the Rushings and D&R
state, “Crawford, Mathews and Connolly, on behalf of themselves as well as
TGE and CSB, made direct representations to the Claimants which were either
totally false—or so far fetched that he knew that what he was promising was
impossible and those promises led to the Claimants losing their Assets which
were taken for the benefit of Connolly, CSB and TGE.” 2 CR 1599–1560. The
statement, and mostly all of the Rushings and D&R’s allegations, left the trial
court and the appellees guessing as to who made the alleged
misrepresentation and to whom it was made. Was it Connolly making the
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representation to Stephanie Rushing, or was it some other combination of the
parties? Additionally, there is no evidence that each of the Rushings and
D&R relied on any representations. There is also no evidence that each of the
Rushings and D&R were injured and “lost Assets,” as alleged.
Moreover, the Rushings and D&R claimed in their Response that Tim
Connolly is the mastermind negotiating the proposed deal. 2 CR 1595–1560.
However, that argument directly contradicts the testimony of Penn Rushing:
Q. All right. Let’s look at the next one. And pay attention to the names.
“Craig Crawford, Tim Connolly and David Mathews promised the
Rushings and D&R” – D&R – “that Texas Gulf Energy, Inc. and/or
Texas Gulf Fabricators, Inc. would purchase the debt and
subsequently forgive it as part of their contribution/obligations in
their venture – within one year.”
First of all, did Tim Connolly have anything to do with this promise?
A. No. We didn’t negotiate with Tim Connolly.
Q. Okay. And this business about subsequently forgiving it, that’s not
in writing anywhere, right? This is just another discussion point
between you and Dave Mathews and Craig Crawford?
A. Okay. Yes, sir.
Q. Is that yes?
A. Yeah.
2 CR 1203 (253:21–254:13).
Because the Rushings and D&R’s response fails to specifically identify
the liable parties and damaged parties for each of their causes of action, the
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response is inadequate. Additionally, since the response contradicts the
testimony of Penn Rushing and Michael Rushing, summary judgment should
be granted in TGE, CS Bankers and Connolly’s favor.
The Rushings did not provide any evidence of their causes of action.
Moreover, the Rushings and D&R failed to provide any evidence to
support their claims of fraud, negligent misrepresentation, breach of contract,
quantum meruit, breach of fiduciary duty, conversion, tortious interference
and conspiracy. Without a binding contract or a joint venture between the
parties, it is simply impossible for the Rushings and D&R to satisfy the
elements of the above-listed causes of action. Specifically, the Rushings and
D&R did not ever (a) demonstrate any reliance to satisfy the elements of fraud
or negligent misrepresentation, (b) prove the existence of a fiduciary
relationship between the parties, or (c) prove any elements of tortious
interference against TGE, CS Bankers or Connolly. As a result, the Rushings
and D&R’s claims of fraud, negligent misrepresentation, breach of fiduciary
duty and tortious interference were properly dismissed.
In regard to conversion, to date, the Rushings and D&R have failed to
produce evidence of their ownership or right to immediate possession of the
alleged converted property. As such, the Rushings and D&R’s conversion
claim against TGE, CS Bankers and Connolly was properly dismissed.
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To recover under quantum meruit, a claimant must render valuable
services or furnish materials. See, e.g., Vortt Exploration Co., Inc. v. Chevron
U.S.A., Inc., 787 S.W.2d 942, 944 (Tex. 1990). In support of their quantum
meruit claim, the Rushings and D&R globally cite to the entirety of their
response to the no-evidence motions for summary judgment, which is
completely void of any evidence that the Rushings or D&R rendered any
services or furnished any materials. See Brief of Appellants at 29. Further,
they claim that quantum meruit is applicable because D&R lost the Property
in foreclosure. See, eg., Brief of Appellants at 30. The trial court correctly
ruled, however, that the Rushings and D&R’s claim of quantum meruit
relating to the Property is not supported by law.12 Therefore, the Rushings
and D&R’s claim of quantum meruit against TGE, CS Bankers and Connolly
was also properly dismissed.
Lastly, the Rushings and D&R look to the LOI in support of their claim
of breach of contract. See Brief of Appellants at 27. To prevail on their breach
of contract cause of action the Rushings and D&R must show that: (1) there is
a valid, enforceable contract; (2) each of the Rushings and D&R are a proper
12
In support of their claim of quantum meruit, the Rushings and D&R filed their “Note
on Quantum Meruit” on November 3, 2014. 2 CR 1581–1587. As TGF and Hendry
stated in their November 4, 2014, response to the “Note on Quantum Meruit,” the
Rushings and D&R failed to cite any cases supporting their claim of quantum meruit.
2 CR 1588–1592. In fact, the cases cited in the “Note on Quantum Meruit” hold
precisely the opposite position taken by the Rushings and D&R.
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party to sue for breach of contract; (3) the Rushings and D&R performed,
tendered performance of, or were excused from performing their contractual
obligations; (4) TGE breached the contract; and (5) TGE’s breach caused the
Rushings and D&R injury. See Marquis Acquisitions, Inc. v. Steadfast Ins.,
409 S.W.3d 808, 813 (Tex. App.—Dallas 2013, no pet.).
The LOI is not a valid, enforceable contract. The Rushings and D&R
therefore have not, and cannot, provide any evidence of the remaining
elements of a breach of contract claim.
With the dismissal of fraud, negligent misrepresentation, breach of
fiduciary duty, tortious interference, quantum meruit, conversion and breach
of contract, all that would remain is conspiracy. The claim of conspiracy was
properly dismissed because it was not supported by an underlying tort.
The Rushings and D&R never presented credible evidence of damages.
Additionally, the only damages the Rushings and D&R claim they have
suffered is the (1) complete loss of D&R, (2) the subject real property located
at Wade Road in Baytown, Texas and (3) and personal property located
thereon. First, D&R is still an active corporation registered with the Secretary
of State that is owned and operated by certain members of the Rushing
Family:
Q. Okay. D&R still exists, correct?
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A. Yes, sir.
2 CR 1142 (12:21–12:22)
Q. Okay. Currently, who are the officers of D&R?
A. Me and my brother, Mike Rushing.
Q. So Mike Rushing is what? Is he a vice?
A. Vice, yes, sir.
Q. Okay. Does your mother retain any interest in D&R?
A. Just my dad’s stock.
Q. Okay. Does - is she the shareholder - the sole shareholder?
A. Yeah.
2 CR 1143 (14:16–14:25). As such, it is impossible for the Rushings and D&R
to claim they have lost their business.
In regard to the real and personal property, the problem is that the
Rushings and D&R do not have evidence of a cause of action that entitles them
to those damages. The foreclosure by CS Bankers on the Property was valid
and proper. In regard to their personal property, the Rushings have no
evidence that any personal property left at the Property and subject to the
operative Deed of Trust was actually owned by them. As a result, they are not
entitled to recover the value of any of that property.
The Rushings do not have a claim of promissory estoppel or breach of
lease.
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The Rushings and D&R claim the summary judgments did not dispose
of a purported promissory estoppel claim. They are incorrect for numerous
reasons.
First, the Rushings and D&R’s supposed promissory estoppel claim was
properly dismissed via summary judgment. As a general rule, a motion for
summary judgment must stand or fall on the grounds presented in the motion.
Science Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 912 (Tex. 1997).
Typically, the trial court may not grant summary judgment as a matter of law
on a cause of action not addressed in the summary judgment proceeding.
Chessher v. Sw. Bell. Tel. Co., 658 S.W.2d 563, 564 (Tex. 1983).
There is, however, a significant caveat to that general rule: summary
judgment is proper where a defendant has conclusively disproven
an element central to all causes of action or an unaddressed cause
of action derivative of the addressed causes of action. Smith v.
Heard, 980 S.W.2d 693, 697–98 (Tex. App.—San Antonio 1998, pet. denied);
see also Lampasas v. Spring Center, Inc., 988 S.W.2d 428, 435–36 (Tex.
App.—Houston [14th Dist.] 1999, no pet.); Dubose v. Worker’s Med., P.A., 117
S.W.3d 916, 922–23 (Tex. App.—Houston [14th Dist.] 2003, no pet.).
Here, TGE, CS Bankers, and Connolly indisputably moved for—and
obtained—summary judgment on the Rushing Defendants’ cause of action for
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fraud (misrepresentation). To recover on an action for fraud, a party must
prove that (1) a material representation was made, (2) the representation was
false, (3) when the speaker made the representation, he knew it was false or
made it recklessly without knowledge of the truth and as a positive assertion,
(4) the speaker made it with the intention that it should be acted upon by the
party, (5) the party acted in reliance upon it, and (6) the party thereby suffered
injury. Lundy v. Masson, 260 S.W.3d 482, 492 (Tex. App.—Houston [14th
Dist.] 2008, pet. denied) (citing cases). In their response, the Rushings and
D&R failed to provide any evidence of TGE, CS Bankers and/or Connolly’s
fraud.
Similar to a fraud claim, the requisites of promissory estoppel are: (1) a
promise; (2) foreseeability of reliance thereon by the promisor; and (3)
substantial reliance by the promisee to his detriment. See English v. Fischer,
660 S.W.2d 521, 524 (Tex. 1983); Allied Vista, Inc. v. Holt, 987 S.W.2d 138,
141 (Tex. App.—Houston [14th Dist.] 1999, pet. denied). For either fraud or
promissory estoppel, a defendant must make a representation (or promise) to
the plaintiff that is relied on to the plaintiff’s detriment; they are common
elements to both causes of action.
By failing to provide any evidence of fraud in response to TGE, CS
Bankers and Connolly’s no-evidence motions for summary judgment, the
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Rushings and D&R have failed to establish that they have any evidence of
promissory estoppel as to those parties.
Second, the alleged promissory estoppel claim is not properly pleaded.
A proper pleading must “consist of a statement in plain and concise language
of the plaintiff’s cause of action . . . .” Tex. R. Civ. P. 45. Rule 45 requires that
a petition give fair notice of the plaintiff’s claims. The test of fair notice is
whether an opposing attorney of reasonable competence, with the pleadings
before him, can determine the nature of the controversy and the testimony
that would probably be relevant. City of Houston v. Howard, 786 S.W.2d 391,
393 (Tex. App.—Houston [14th Dist.] 1990, writ denied). A court must be able,
from an examination of the plaintiff’s pleadings alone, to ascertain with
reasonable certainty the elements of a cause of action and the relief sought
with sufficient particularity upon which a judgment may be based. Stoner v.
Thompson, 578 S.W.2d 679, 683 (Tex. 1979).
Here, the Rushings and D&R’s petition fails to adequately set forth the
elements of a cause of action for promissory estoppel. 1 CR 641–642. The
Rushings and D&R do not allege any promise made by the appellees that they
relied on to their detriment. 1 CR 642. Thus, the mere inclusion of the words
“promissory estoppel”—under the heading of quantum meruit and in a
paragraph discussing quantum meruit—is insufficient to properly allege a
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cause of action. See, e.g., Coffey v. Johnson, 142 S.W.3d 414, 417 (Tex.
App.—Eastland 2004, no pet.).
These appellees were not a party to a lease with the Rushings or D&R.
Lastly, it is difficult at this juncture for these appellees to properly
respond to the Rushings and D&R’s allegation that the trial court “never
addressed” the “breach of the lease agreement.” The Rushings and D&R have
never had a claim for a breach of any lease. See 1 CR 624–642. Further, these
appellees are unsure as to what lease the Rushings and D&R are referring.
Neither TGE, CS Bankers nor Connolly were parties to a lease agreement with
either the Rushings or D&R.
Reply Point 4 in Response to Point of Error 4: The
appellants were provided adequate time to conduct
discovery and failed to show that additional discovery
would be material.
The standard of review for whether there has been an adequate time for
discovery is abuse of discretion. Specialty Retailers, Inc. v. Fuqua, 29 S.W.3d
140, 145 (Tex. App.—Houston [14th Dist.] 2000, pet. denied). To begin, when
contending that it has not had an adequate time for discovery, a party must
file either an affidavit or verified motion explaining why there is a need for
additional discovery. Triad Home Renovators v. Dickey, 15 S.W.3d 142, 145
(Tex. App.—Houston [14th Dist.] 2000, no pet.). Neither the Rushings nor
D&R made the required filings, and they have therefore failed to preserve this
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issue for appeal.
Moreover, throughout the first year of litigation, the Rushings and D&R
did not make one request for written or oral discovery from TGE, CS Bankers
or Connolly. Further, the Rushings and D&R agreed that they did not need
any discovery from any appellee prior to cross-motions for summary
judgment on the issue of foreclosure—which was approximately 17 months
after litigation began. 2 CR 1913. Finally, 19 months after the commencement
of this suit, the Rushings and D&R served 12 sets of written discovery on TGE,
CS Bankers and Connolly. 2 CR 954. Due to the trial court’s prior rulings, the
majority of the requests were irrelevant and appropriate objections were filed,
along with a motion for protection.13 Id. Further, contrary to their assertions,
responsive documents were produced to the Rushings and D&R. Id.
ReplyPoint5inResponsetoPointofError7:Anawardofattorney’sfeesbyatrialjudgeinadeclaratory
judgment action following summary judgment is proper.
In their final point of error (without a single citation to either the clerk’s
or reporter’s record), the Rushings and D&R make two sweeping
generalizations: 1) that a “jury trial” is always required to determine attorney’s
fees—even in the absence of a fact issue; and 2) that there was no segregation
of attorney fees in this case. The Rushings and D&R misconstrue case law and
13
It should be undisputed that at this juncture the trial court specifically instructed the
parties that it would take up the pending motions for summary judgment first and
then determine what discovery would be appropriate.
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fail to mention that their counsel never filed a controverting affidavit to the
reasonableness of attorney’s fees even though he had the opportunity to do
so—twice.
There is no fact issue for any fact finder.
On February 6, 2015, pursuant to Tex. Civ. Prac. & Rem. Code § 18.001,14
counsel for TGE and CS Bankers—Adam Tepper—served the Rushings and
D&R with an affidavit stating that the amount of $422,022.92 charged by the
law firm of Christian, Smith & Jewell, LLP to TGE and CS Bankers in
prosecution and defense of the claims in this matter was reasonable and
necessary. 2 CR 2706–2872.
The Rushings and D&R failed to meet the requirements of C.P.R.C. §
18.001 and file a counter-affidavit within thirty (30) days controverting the
claims reflected in Mr. Tepper’s affidavit. Figueroa v. Davis, 318 S.W.3d 53,
61 (Tex. App.—Houston[1st Dist.] 2010, no pet.) (holding that a party which
fails to file a counter-affidavit pursuant to § 18.001 shall be barred from
offering evidence challenging the reasonableness and necessity of the offering
party’s attorney’s fees.) Since the Rushings and D&R failed to file a
14
“Unless a controverting affidavit is filed, an affidavit that the amount a person
charged for a service was reasonable at the time and place that the service was
provided and that the service was necessary is sufficient evidence to support a
finding of fact by judge or jury that the amount charged was reasonable or that the
service was necessary.” Tex. Civ. Prac. & Rem. Code § 18.001.
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controverting affidavit, Mr. Tepper’s affidavit was sufficient evidence that the
fees referenced were reasonable and necessary. Id.
On March 6, 2015, TGE and CS Bankers attached as Exhibit A to their
Motion for Summary Judgment on Attorney’s Fees the affidavit of their
attorney, Gary M. Jewell. 2 CR 2701–2705. Mr. Jewell’s affidavit offers
evidence of his qualifications and the reasonable and necessary nature of both
TGE and CS Bankers’ respective, and segregated, claims for attorney’s fees
under the factors identified in the Texas Supreme Court decision of Arthur
Andersen & Co. v. Perry Equip. Corp.15 and the Texas Disciplinary Rule of
Professional Conduct 1.04. Id.
Yet again, the Rushings and D&R failed to offer any evidence to create
a fact issue on the reasonable and necessary nature of the fees sought by TGE
and CS Bankers. An attorney’s affidavit in support of reasonable attorney’s
fees is expert opinion testimony. Owen Elec. Supply, Inc. v. Brite Day
Constr., Inc., 821 S.W.2d 283, 288 (Tex. App.—Houston [1st Dist.] 1991, writ
denied). An affidavit filed by a summary judgment movant’s attorney that
“sets forth [her] qualifications, [her] opinion regarding reasonable attorney’s
fees, and the basis for [her] opinion will be sufficient to support summary
judgment, if uncontroverted.” Gaughan v. Nat’l Cutting Horse Ass’n, 351
15
945 S.W.2d 812, 819 (Tex. 1997).
-38-
S.W.3d 408, 422 (Tex. App.—Fort Worth 2011, pet. denied) (quoting
Cammack the Cook, L.L.C. v. Eastburn, 296 S.W.3d 884, 894 (Tex.
App.—Texarkana 2009, pet. denied)).16
This Court has repeatedly rejected saving counsel from their own
conduct under very similar situations before. Petrello v. Prucka, 415 S.W.3d
420, 424 (Tex. App.—Houston [1st Dist.] 2013, no pet.); see also Elder v. Bro,
809 S.W.2d 799, 801 (Tex. 1991).
The Rushings and D&R’s briefing on the issue of attorney’s fees shows
a further disregard for the rules of this Court as they authoritatively cite case
law for propositions which are clearly inapposite. The Rushings and D&R
state in their brief that “no attorney’s fees should be granted without a trial”
because attorney’s fees are a fact issue; and they cite for authority the cases of:
Bocquet v. Herring, 972 S.W.2d 19 (Tex. 1998), and Fuqua v. Oncor Elec.
Delivery Co., 315 S.W.3d 552 (Tex. App.—Eastland 2010, pet. denied).
Appellants’ Brief, 40. As decided by this Court just two years ago—and as
16
In Garcia v. Gomez, the supreme court took a broad view of the level of specificity
required by an attorney testifying on the reasonableness of his fees. Garcia v.
Gomez, 319 S.W.3d 638, 641 (Tex. 2010). The supreme court held that “[w]hile the
attorney’s testimony lacked specifics, it was not, under these circumstances, merely
conclusory. It was some evidence of what a reasonable attorney’s fee might be in this
case.” Id. at 641. Significantly, the court noted that the nonmovant “had the means
and opportunity to contest the attorney’s testimony on what a reasonable
attorney[’s] fee would be in [the] case, but failed to do so.”Id. at 642. The court
therefore determined that the nonmovant conceded the reasonableness of the fees
as a matter of law. Id.
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would have been revealed to the Rushings and D&R had they done a simple
search of the case history—this is simply not true. In fact, when presented
with a case with almost the exact factual scenario, this Court dismissed the
exact same argument by writing the following:
In this case, the defendants included a prayer for attorney’s fees
in their summary-judgment motion, and they submitted affidavits
supporting the award. Petrello did not file a counter-affidavit
challenging these fees as unreasonable. Instead, he argues that the
issue of the reasonableness and necessity of Declaratory
Judgment Act attorney's fees must be submitted to the jury,
relying upon Bocquet v. Herring, 972 S.W.2d 19 (Tex. 1998), and
Fuqua v. Oncor Elec. Delivery Co., 315 S.W.3d 552 (Tex.
app.—Eastland 2010, pet. denied) . Petrello’s cases do not stand
for the proposition he advances. While attorney’s fees are an issue
for the jury in cases in which the jury is the factfinder, Bocquet,
972 S.W.2d at 21, an affidavit can establish the reasonableness of
attorney’s fees for summary judgment purposes. Gaughan, 351
S.W.3d at 423. When no controverting affidavit is filed, mere
criticism of the amount of attorney’s fees sought does not create
a fact issue and the trial court may grant summary judgment on
the amount of attorney’s fees.
Petrello, 415 S.W.3d at 431-32.
An award of attorney’s fees may be appropriate in a summary judgment
proceeding. Haden v. David J. Sacks, P.C., 332 S.W.3d 503, 512 (Tex.
App.—Houston [1st Dist.] 2009, pet. denied). Further, the Declaratory
Judgment Act provides that “the court may award costs and reasonable and
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necessary attorney's fees as are equitable and just.” Tex. Civ. Prac. & Rem.
Code § 37.009 (emphasis added). In fact, the trial court is given broad
discretion in awarding attorney’s fees in a declaratory judgment action.
Intertex, Inc. v. Cowden, 728 S.W.2d 813, 819 (Tex.App.—Houston [1st
District] 1986, no writ.). The grant of attorney’s fees in such an action will not
be reversed absent a clear showing that the trial court abused its discretion.
Oake v. Collin Co., 692 S.W.2d 454, 455 (Tex. 1985).
In Petrello, this Court recognized the common sense rule that on
summary judgment, if the opposing party does not contest the issue, than they
cannot later complain about it. Petrello, 415 S.W.3d at 431. The Rushings and
D&R’s summary judgment proof was nothing more than “mere criticism of the
amount” without any expert testimony to support. Appellees proved up their
attorney’s fees affirmatively twice by affidavit and Appellants had the
opportunity to object—the Rushings and D&R cannot not now ask this Court
to save them from their self-inflicted wounds at the trial court.
TGE and CS Bankers segregated their attorney’s fees.
The Rushings and D&R have also pushed forth the contention that the
affidavits are insufficient as a matter of law because they do not properly
segregate fees.
As an initial matter, TGE and CS Bankers would contend that by never
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filing a controverting affidavit, the Rushings and D&R waived any right to
complain about the substance of the affidavits—including whether or not
attorney’s fees were necessary to a particular claim which allowed for them or
whether they were only necessary to a cause of action which did not. As stated
before, an affidavit filed by a summary judgment movant’s attorney that “sets
forth [her] qualifications, [her] opinion regarding reasonable attorney’s fees,
and the basis for [her] opinion will be sufficient to support summary
judgment, if uncontroverted.” Gaughan, 351 S.W.3d at 422. Further, in a
Declaratory Judgment Action “the court may award costs and reasonable and
necessary attorney’s fees as are equitable and just.” Tex. Civ. Prac. & Rem.
Code § 37.009.
Further, TGE and CS Bankers established at the trial court that the fees
were segregated to the extent mandated by law. Segregation of fees is only
necessary if: 1) the plaintiff pursues any claims for which attorney’s fees are
not recoverable; and 2) those fees are separable from the work provided for
which attorney’s fees are allowed. A.G. Edwards & Sons, Inc. v. Breyer, 235
S.W.3d 704, 710 (Tex. 2007). The need to segregate fees is a question of law.
Tony Gullo Motors I, LP v. Chapa, 212 S.W.3d 299, 312 (Tex. 2006). If the
Court determines that fees were in fact separable, than the party asking for
attorney’s fees must distinguish between attorney’s fees from those causes of
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action which allow recovery from those which don’t. Id.
First, the Rushings and D&R’s argument that “there is no division of
claims” is not true. TGE and CS Bankers met the segregation requirements,
as evidenced by paragraphs 11–13 of the Affidavit of Gary M. Jewell. 2 CR
2703–2704. As such, the attorney’s fees affidavit of Mr. Jewell established the
reasonableness, necessity, and the recoverability (as a matter of law) of the
attorneys fees in this case and should not be overturned.
Second, the law does not require segregation to the extent that the
Rushings and D&R contend that it does so in the present case. Both TGE and
CS Bankers sought declaratory relief from each and every one of the Rushings
and D&R. In response, the Rushings and D&R globally answered the suits for
declaratory relief and made the exact same allegations in their defense. In
sum, the prosecution of the declaratory actions and the Rushings and D&R’s
defense of the same, was so inexplicably intertwined that segregation as to
each Rushing Defendant is both impossible and not required. The Rushings
and D&R are not correct in their contention that Appellees must segregate the
work done against every individual defendant when all defendants were
asserting the same interest in the land and contract and when such separation
is practically impossible.
Therefore, in light of all the preceding, Appellants’ Point of Error
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Number Seven should be denied because equity demands that TGE and CS
Bankers be awarded their reasonable and necessary attorney’s fees in light of
Appellants’ clear waiver.
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RELIEF REQUESTED
For the reasons state above, Texas Gulf Energy, Inc., CS Bankers V, LLC
and Timothy J. Connolly respectfully request that this Court affirm the trial
court’s judgment.
Respectfully submitted,
CHRISTIAN, SMITH & JEWELL, LLP
By: //s// Gary M. Jewell
GARY M. JEWELL
State Bar No. 10664800
gjewell@csj-law.com
ADAM L. TEPPER
State Bar No. 24079445
atepper@csj-law.com
2302 Fannin, Suite 500
Houston, Texas 77002
Telephone: (713) 659-7617
Facsimile: (713) 659-7641
ATTORNEYS FOR APPELLEES
TEXAS GULF ENERGY, INC.,
CS BANKERS V, LLC AND
TIMOTHY CONNOLLY
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CERTIFICATE OF SERVICE
Pursuant to the Texas Rules of Civil Procedure, I hereby certify that on
this 4th day of November, 2015, a true and correct copy of the above and
foregoing document has been duly served upon all attorneys of record via e-
Service as follows:
George W. Gore Cody W. Stafford
6200 Savoy, Suite 1150 Paul J. Dobrowski
Houston, Texas 77036 DOBROWSKI, LARKIN & J OHNSON, LLP
Telephone: (713) 224-2000 4601 Washington Avenue, Suite 300
Facsimile: (713) 224-2004 Houston, Texas 77002
Telephone: (713) 659-2900
ATTORNEY FOR APPELLANTS Facsimile: (713) 659-2908
ATTORNEYS FOR APPELLEES
LESTER H. SMITH, BRIAN
HENDRY AND TEXAS GULF
FABRICATORS, LLC
By: //s// Gary M. Jewell
GARY M. JEWELL
ADAM L. TEPPER
CERTIFICATE OF COMPLIANCE
Pursuant to Tex. R. App. P. 9.4(i)(3), I hereby certify that Appellees’ Brief
contains less than 15,000 words (counting every word and every part of the
document without exception). Specifically, this brief was prepared using
WordPerfect and according to its word-count function, this document contains
12,467 words. Further, the typeface used in this brief is no smaller than
14-point, except for footnotes, which are no smaller than 12-point.
By: //s// Gary M. Jewell
GARY M. JEWELL
ADAM L. TEPPER
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