Stewart Beach Condominium Homeowners Association, Inc. v. Gili N Prop Investments, LLC Barak Resheff and Rami Barnea

Opinion issued November 17, 2015

In The

Court of Appeals
For The

First District of Texas
————————————
NO. 01-15-00169-CV
———————————
STEWART BEACH CONDOMINIUM
HOMEOWNERS ASSOCIATION, INC., Appellant
V.
GILI N PROP INVESTMENTS, LLC;
BARAK RESHEFF; BARYO INVESTMENTS, LLC;
SIMCA HELED; AHUVA HALED; PAVEL
(LEONID) GORBULSKY; AND RAMI BARNEA, Appellees

On Appeal from the 122nd District Court
Galveston County, Texas
Trial Court Case No. 14-CV-1266

OPINION

Four condominium owners obtained temporary injunctions to prohibit

Stewart Beach Condominium Homeowners Association from foreclosing on their
condominiums. Stewart Beach appeals the trial court’s denial of its motion to

dissolve the four temporary injunctions.1 Stewart Beach argues: (1) the temporary

injunction orders do not meet the requirements of Texas Rule of Civil Procedure

683; (2) Gili N Prop Investments, LLC, Baryo Investments LLC, Rami Barnea,

Simca and Ahuva Heled, and Pavel Gorbuslski (collectively referred to as the

“homeowners”) did not meet their burden to prove the elements of a temporary

injunction; and (3) the homeowners had “unclean hands” and thus were barred

from seeking temporary injunctions. The homeowners argue that we do not have

jurisdiction over this appeal. We affirm.

Background

Stewart Beach is a homeowner’s association. It charged the homeowners

assessments for community maintenance ranging from $3,500 to $6,200—

assessments that the homeowners admit they owe. Stewart Beach’s demand

included an amount for its attorney’s fees incurred during its assessment-collection

efforts. The homeowners contest the amount of the attorney’s fees demanded,

claiming the fees were excessive, unconscionable, and unauthorized by the

association agreement. They paid neither the assessment nor the attorney’s fee

demand. Because the homeowners did not pay the amount demanded, Stewart

1
See TEX. CIV. PRAC. & REM. CODE ANN. § 51.014(a)(4) (West 2015) (granting
courts of appeals jurisdiction over interlocutory appeals of orders “grant[ing] or
overrul[ing] a motion to dissolve a temporary injunction”)
2
Beach attempted to foreclose on their condominiums. The homeowners sought,

and the trial court granted, temporary injunctions to avoid foreclosure.

A. Attorney fee agreement

The engagement letter between Stewart Beach and its attorney provides for a

hybrid attorney fee consisting of three parts: (1) a flat fee of $75 for “[c]ollection

cure letters” and $225 for filing notices of liens; (2) a contingency fee “equal to

20% on all collections”; and (3) an hourly fee of $195 for the attorney’s work and

$65 for his paralegal’s work.

B. Attorney’s work on the case

Stewart Beach’s attorney mailed a form collection cure letter to each of the

homeowners. The boilerplate, form letter merely plugged in information he

received from his client, Stewart Beach. The attorney also filed liens—again using

boilerplate forms—against each of the homeowners. His paralegal prepared these

two documents, which the attorney reviewed.

Stewart Beach’s attorney demanded in the “collection cure” letter that the

homeowners pay his attorney’s fees ranging from $1,600 to $2,150. No calculation

or description of the time or services was included in the demand letter. Testimony

during the temporary-injunction hearing revealed that the fee included: (1) $300

for the two documents prepared by the paralegal, (2) $585 for hourly charges, and

3
(3) an amount that represents 20% of the uncollected assessments. For all four

homeowners, the total demanded for attorney’s fees was over $16,000.

C. Lawsuit against homeowners

Stewart Beach sued the homeowners for breach of contract and attempted to

foreclose on their condominiums. In the homeowners’ answer to Stewart Beach’s

lawsuit, they admitted they owe some assessments but argued that the attorney’s

fees were excessive. They raised counterclaims for fraudulent liens 2 and excessive

demand. 3

2
Texas law imposes liability for a fraudulent lien when a person files a lien with:
(1) knowledge that the document or other record is a fraudulent
court record or a fraudulent lien or claim against real or
personal property or an interest in real or personal property;
(2) intent that the document . . . be given the same legal effect as a
court record . . . evidencing a valid lien or claim against real or
personal property or an interest in real or personal property; and
(3) intent to cause another person to suffer:
(A) physical injury;
(B) financial injury; or
(C) mental anguish or emotional distress.
TEX. CIV. PRAC. & REM. CODE ANN. § 12.002 (West Supp. 2014).
3
The excessive demand doctrine tempers the right of the claiming party to recover
attorney’s fees. Wayne v. A.V.A. Vending, Inc., 52 S.W.3d 412, 417–18 (Tex.
App.—Corpus Christi 2001, pet. denied); Allstate Ins. Co. v. Lincoln, 976 S.W.2d
873, 878 (Tex.App.—Waco 1998, no writ). This doctrine recognizes that, “[i]f the
claiming party makes an unreasonable demand, the other party should not be
forced to pay the demand or else risk suffering the opposing party’s attorney’s
fees.” Wayne, 52 S.W.3d at 417–18; see Fire & Cas. Ins. Co. of Connecticut v.
Buslease, Inc., No. 08-01-00277-CV, 2002 WL 1301570, at *2 (Tex. App.—El
Paso June 13, 2002, pet. denied) (mem. op., not designated for publication). If the
trial court determines that the attorney’s fees Stewart Beach demanded were
excessive and therefore “unreasonable” or demanded “in bad faith,” the trial court
could limit the award of attorney’s fees. Oyster Creek Fin. Corp. v. Richwood
4
D. Temporary injunction

After an evidentiary hearing, which included testimony by Stewart Beach’s

attorney on his fees and testimony by the homeowners’ expert that the fees were

“clearly excessive,” “unreasonable,” and “unconscionable,” the trial court granted

four temporary injunctions, one for each of the four units.

Each of the orders granting a temporary injunction found that “there are

unpaid assessments against the property” and that the “reasonable and necessary

attorney’s fees and costs . . . are $300”—the amount set forth in the engagement

letter for the demand letter and lien. The orders also found that the “owner will

suffer imminent and irreparable harm if this Court does not enjoin the foreclosures

of the Property.” The orders set a bond at the amount of the assessment plus the

$300 in attorney’s fees.

Invs. II, Inc., 176 S.W.3d 307, 318 (Tex. App.—Houston [1st Dist.] 2004, pet.
denied); Alford v. Johnston, 224 S.W.3d 291, 298–99 (Tex. App.—El Paso 2005,
pet. denied); Pennington v. Gurkoff, 899 S.W.2d 767, 772 (Tex. App.—Fort
Worth 1995, writ denied). But, if the trial court does not find the original fee
demand to be excessive, this continuing controversy subjects the homeowners to
claims for the additional attorney’s fees in this appeal and for the continued
proceedings in the trial court. Thus, the ultimate recovery for attorney’s fees could
potentially be higher than the original claimed amount because of the
accumulating attorney’s fees. See Thomas v. Lake Cove Cmty. Ass’n, Inc., No. 14-
13-00173-CV, 2014 WL 1004525 (Tex. App.—Houston [14th Dist.] Mar. 13,
2014, no pet.) (mem. op.) (noting that association initially spent $2,314 in
attorney’s fees but after trial recovered $4,952 in attorney’s fees because of
additional services).

5
 Stewart Beach then filed a motion to dissolve the temporary injunctions,

which the trial court denied. Stewart Beach now appeals the trial court’s denial of

its motion to dissolve.

Standard of Review

We review a trial court’s decision to grant or deny a motion to dissolve a

temporary injunction under an abuse of discretion standard. Conlin v. Haun, 419

S.W.3d 682, 686 (Tex. App.—Houston [1st Dist.] 2013, no pet.). A trial court has

broad discretion in denying or granting such a motion. Id. “A trial court abuses its

discretion only if it reaches a decision so arbitrary and unreasonable that it amounts

to a clear and prejudicial error of law or if it clearly fails to correctly analyze or

apply the law.” Id. (citing Intercontinental Terminals Co. v. Vopak N. Am., Inc.,

354 S.W.3d 887, 892 (Tex. App.—Houston [1st Dist.] 2011, no pet.)). We only

review the validity of the temporary injunction order; we do not review the merits

of the underlying case. INEOS Grp. Ltd. v. Chevron Phillips Chem. Co., 312

S.W.3d 843, 848 (Tex. App.—Houston [1st Dist.] 2009, no pet.). We review the

evidence in the light most favorable to the district court’s ruling, drawing all

legitimate inferences from the evidence and deferring to the district court’s

resolution of conflicting evidence. Id. A district court abuses its discretion if it

misapplies the law to established facts. Id. There is no abuse of discretion as long

6
as some evidence reasonably supports the district court’s decision. Butnaru v. Ford

Motor Co., 84 S.W.3d 198, 211 (Tex. 2002).

When a party challenges a finding of fact, like Stewart Beach does here, the

finding is not determinative unless it is supported by the record. Brejon v. Johnson,

314 S.W.3d 26, 30 (Tex. App.—Houston [1st Dist.] 2009, no pet.). We review the

sufficiency of the evidence to determine whether the trial court abused its

discretion in making the finding. Id. The “legal and factual sufficiency of the

evidence are not independent grounds for asserting error, but they are relevant

factors in assessing whether the trial court abused its discretion.” Dunn v. Dunn,

177 S.W.3d 393, 396 (Tex. App.—Houston [1st Dist.] 2005, pet. denied). “A trial

court does not abuse its discretion when there is some evidence of a substantive

and probative character to support the trial court’s judgment.” Miles v. Peacock,

229 S.W.3d 384, 389 (Tex. App.—Houston [1st Dist.] 2007, no pet.).

Jurisdiction

The homeowners argue, “The Court of Appeals is without Jurisdiction . . .

because the Notice of Appeal was filed more than 20 days after the Orders

complained of, and the subsequent Motion to Dissolve the Injunctions raised [no]

new grounds and was ineffective to renew appellate jurisdiction.”

“The interlocutory appeal of an order denying a motion to dissolve a

temporary injunction is an accelerated appeal, and accordingly, the notice of appeal

7
must be filed within 20 days of the date of the order denying the motion.” Conlin,

419 S.W.3d at 685. The statute granting us jurisdiction to hear an interlocutory

appeal allows an appeal from either an order that “grants or refuses a temporary

injunction” or one that “grants or overrules a motion to dissolve a temporary

injunction.”4 TEX. CIV. PRAC. & REM. CODE ANN. § 51.014. An appeal “must be

filed within 20 days after the judgment or order is signed.” TEX. R. APP. P. 26.1(a).

The 20-day time period to appeal an order granting or overruling the motion to

dissolve a temporary injunction starts on the day of the order appealed—even if

that order is not the first order granting or denying such a motion in the lawsuit.

See Conlin, 419 S.W.3d at 685 (holding appeal was timely because within time

period for second—but not first—motion to dissolve).

Stewart Beach appeals the trial court’s denial of its motion to dissolve the

temporary injunction. It filed the notice of appeal three days after the trial court

denied its motion to dissolve—well within the 20-day limit.

4
The homeowners argue that the statute’s wording, “grants or refuses a temporary
injunction or grants or overrules a motion to dissolve a temporary injunction as
provided by Chapter 65,” indicates the statute only grants us appellate jurisdiction
over dissolution of injunctions for damages. TEX. CIV. PRAC. & REM. CODE ANN.
§ 51.014 (West 2015). We disagree. While the one subsection of Chapter 65 the
homeowners cite deals with “injunction[s] enjoining the collection of money,” the
entirety of the chapter gives a trial court jurisdiction to grant injunctions “of equity
. . . if not in conflict with this chapter or other law.” TEX. CIV. PRAC. & REM.
CODE ANN. §§ 65.001, 65.031 (West 2008). Thus the language “as provided by
Chapter 65” refers to any injunction “of equity” and grants us jurisdiction to hear
an appeal of any such injunction or of a motion to dissolve such an injunction.
8
 The homeowners claim that the motion to dissolve the temporary injunction

was “pro forma” and “merely reiterates” the arguments against the temporary

injunction that Stewart Beach made at the temporary injunction hearing. They cite

City of Houston v. Estate of Jones in arguing that “merely reiterating” such

arguments is “not effective” to “extend the appellate deadline” and contend that the

20 days commenced with the granting of the temporary injunction. 388 S.W.3d

663 (Tex. 2012).

Estate of Jones does not support the homeowners for two reasons. First, it

dealt with a plea to the jurisdiction. In that case, the City of Houston, two years

after it filed its original plea to the jurisdiction, filed a second plea to the

jurisdiction containing the same arguments as the original plea. Id. at 665. The

Texas Supreme Court agreed with the trial court in construing the new “plea” as a

motion to reconsider. Id. at 666. Because the statute allowing interlocutory appeals

did not provide for an appeal of a motion to reconsider a plea to the jurisdiction,

the Texas Supreme Court held it did not have jurisdiction over an appeal of the

denial of the motion. Id. at 667. An order denying a motion to dissolve a temporary

injunction is different: the statute authorizing interlocutory appeals specifically

allows appeal of such an order—unlike a motion to reconsider a plea to the

jurisdiction.

9
 Second, unlike Estate of Jones, the motion here raised new grounds for

relief. The motion to dissolve argues that the temporary injunction order does not

meet the requirements of the Rules of Civil Procedure, specifically the requirement

that the order “set forth the reasons for its issuance,” and thus, the order is “void”

and the trial court had “no discretion to deny a motion to dissolve.” These

arguments were not raised at the temporary injunction hearing; indeed, such

arguments could not have been raised there because Stewart Beach could not

challenge the form of the order before it was issued.

Thus, Stewart Beach’s appeal is timely and we have jurisdiction over it.

The Temporary Injunction Order Satisfies the Requirements
of Texas Rule of Civil Procedure 683

Stewart Beach argues that the four temporary injunction orders “do not set

out the reasons for entry or identify the harm [the homeowners] will suffer if not

entered” and thus violate the requirements of Texas Rule of Civil Procedure 683.5

That rule requires: “Every order granting an injunction . . . shall set forth the

reasons for its issuance; shall be specific in terms; shall describe in reasonable

detail . . . the act or acts sought to be restrained; and
5
Stewart Beach also argues that the orders violated Rule 684, which requires the
court to “fix the amount of security to be given by the applicant” for a temporary
injunction, but Stewart Beach does not give any detail on how that Rule is
violated. This “[f]ailure to cite legal authority or to provide substantive analysis of
the legal issues presented results in waiver of the complaint.” Canton-Carter v.
Baylor Coll. of Med., 271 S.W.3d 928, 931 (Tex. App.—Houston [14th Dist.]
2008, no pet.).
10
. . . shall include an order setting the cause for trial on the merits with respect to the

ultimate relief sought.” TEX. R. CIV. P. 683.

The four orders granting the temporary injunctions, which are identical

except for the name of the homeowner and the amount of the assessment and bond,

meets the four requirements of Rule 683. First, the orders set forth the reasons for

their issuance. The order states “After considering[] the pleadings, testimony,

exhibits, [and] other evidence properly before the Court, legal authorities, and the

argument of counsel, the Court: FINDS there are unpaid assessments against the

Property [and] FINDS the reasonable and necessary attorney’s fees and costs

incurred by the Association to make the demand to the Owner and file the lien

against the Property are $300.00.”

Second, the orders identify the harm that the homeowners would suffer if

Stewart Beach foreclosed on the condominiums. It states that the trial court

“FINDS the Owner will suffer imminent and irreparable harm if this Court does

not enjoin the foreclosures of the Property, currently scheduled to occur on

Tuesday, January 6, 2015 at 10:00 a.m.” The harm of losing one’s home “is

obvious”; a homeowner would “probably be injured if the property were foreclosed

and sold.” Franklin Sav. Ass’n v. Reese, 756 S.W.2d 14, 15–16 (Tex. App.—

Austin 1988, no writ).

11
 Third, the order sets out the act to be restrained: it “ORDERS [that Stewart

Beach be] . . . TEMPORARILY ENJOINED from conducting any foreclosure by

private sale or otherwise of the Property until and pending signature and entry of

final resolution of this suit or until further order of this Court.”

Fourth, the order sets a date for the trial on the merits. 6 Thus, the orders

granting the temporary injunctions in this case meet the requirements of Rule 683.

We overrule Stewart Beach’s first issue.

Temporary Injunction

A temporary injunction “preserve[s] the status quo of the litigation’s subject

matter pending a trial on the merits.” Butnaru, 84 S.W.3d at 204. The “status quo”

is the “last, actual, peaceable, noncontested status which preceded the pending

controversy.” In re Newton, 146 S.W.3d 648, 651 (Tex. 2004) (internal quotation

marks omitted). “To obtain a temporary injunction, the applicant must plead and

prove three specific elements: (1) a cause of action against the defendant; (2) a

6
This differs from the cases Stewart Beach cites in which the appeals court held
that the temporary injunction order did not meet the requirements of Rule 683
because the order did not set a date for the trial on the merits. See Interfirst Bank
San Felipe v. Paz Constr. Co., 715 S.W.2d 640, 641 (Tex. 1986) (holding order
violated Rule 683 because it did not set date for trial on merits); Conlin, 419
S.W.3d at 687 (same). The two other cases Stewart Beach cites are not helpful to
deciding this issue because neither discusses the requirements of Rule 683. See
Qwest Commc’ns Corp. v. AT&T Corp., 24 S.W.3d 334 (Tex. 2000) (holding that
order granting temporary injunction is appealable); Tex. State Optical v. Wiggins,
882 S.W.2d 8 (Tex. App.—Houston [1st Dist.] 1994, no writ) (holding trial court
applied wrong law to facts in case).
12
probable right to the relief sought; and (3) a probable, imminent, and irreparable

injury in the interim.” Butnaru, 84 S.W.3d at 204.

Stewart Beach challenges the second and third elements: it argues that it is

“impossible” for the homeowners to obtain relief and that the homeowners would

not suffer an irreparable injury if the foreclosures were to proceed because other

remedies exist for them.

A. Probable right to the relief sought

Stewart Beach argues, “It is impossible for [the homeowners] to show they

will succeed on the merits of the case because they confess in their pleadings they

owe . . . the amount [Stewart Beach] pled.”

When a trial court holds a hearing on a temporary injunction, the only

question “is whether the applicant is entitled to preservation of the status quo of the

subject matter of the suit pending trial on the merits. The ruling on the temporary

injunction may not be used to obtain an advance ruling on the merits.” Iranian

Muslim Org. v. City of San Antonio, 615 S.W.2d 202, 208 (Tex. 1981) (internal

citations omitted). On appeal, the question “is whether the trial court abused its

discretion in granting or denying the temporary injunction.” Id. Because the trial

court cannot give an advance ruling on the merits, “the applicant is not required to

establish that she will prevail on final trial . . . .” Walling v. Metcalfe, 863 S.W.2d

56, 58 (Tex. 1993) (internal citations omitted).

13
 “[C]ourts are often particularly careful when it comes to the element of

‘probable right of recovery,’ sometimes referred to as ‘likelihood of success on the

merits’ . . . .” Intercontinental Terminals, 354 S.W.3d at 897. This element “seems

to infringe upon two well-engrained judicial prohibitions: against advisory

opinions and against forming opinions about the merits of the case before the

conclusion of the evidence.” Id. The “probable right of recovery” is a “term of art”

in the law of temporary injunctions. Id. “[T]he applicant for [a] temporary

injunction [need not] offer evidence and persuade the judge to find from that

evidence the adjudicative facts necessary for the applicant to prevail on the merits,

based on probabilities.” Id. (internal citations omitted). A temporary injunction

hearing is not a “mini trial” in which “the judge predicts the applicant’s chances of

success at the real trial, based upon the judge’s estimate of where the truth

probably lies concerning the adjudicative facts and the law made applicable thereto

by the pleadings in the case.” Id. (internal citations omitted). “[T]o show a

probable right of recovery,” the party applying for a temporary injunction, “must

plead a cause of action and present some evidence that tends to sustain it. The

evidence must be sufficient to raise a bona fide issue as to the applicant’s right to

ultimate relief.” Id. (internal citations and quotation marks omitted).

Thus, to “show a probable right of recovery,” the homeowners must “present

some evidence that tends to sustain” their excessive-demand claim that the

14
attorney’s fees were excessive and were either sought in bad faith or were

unreasonable. Cameron v. Bell, No. 13-01-767-CV2003, WL 253609, at *2 (Tex.

App.—Corpus Christi Feb. 6, 2003, no pet.); Intercontinental Terminals, 354

S.W.3d at 897. The trial court made a finding that, at the time the demand letter

was sent to the homeowners, “reasonable and necessary attorney’s fees and costs

. . . [were] $300.” The testimony at the temporary-injunction hearing provided

substantial support for this finding and no contrary evidence was presented.

When a contract between a lawyer and his client contains a provision setting

the amount of attorney’s fees, that provision establishes a presumption that the

amount is reasonable between the client and the attorney—but this presumption

does not apply to a third party from whom fees are sought, like the homeowners.

See Leal v. Leal, 628 S.W.2d 168, 170–71 (Tex. App.—San Antonio 1983, no

writ) (holding that agreement between plaintiff and attorney did not establish

presumption of reasonableness when plaintiff attempted to recover attorney’s fees

from defendant).

Expert testimony on attorney’s fees is necessary if the fees are disputed. The

homeowners presented expert testimony that the original demanded attorney’s fees

were unreasonable. Stewart Beach’s attorney offered factual testimony regarding

his fees. But, other than the attorney’s misinterpretation of a Fourteenth Court of

Appeal’s decision, which we discuss below, Stewart Beach offered no expert

15
testimony on the reasonableness of the demanded attorney’s fee or the number of

hours expended on the tasks. In most cases, the attorney who testifies in support of

the requested fees should quantify the number of hours and describe the tasks

performed, supported by appropriate billing records or other documentary

evidence. El Apple I, Ltd. v. Olivas, 370 S.W.3d 757, 763 (Tex. 2012). In

determining the reasonableness of the fee, the trial court must consider (1) the

number of hours the attorney reasonably worked on the claim and (2) the

reasonable hourly rate for that work. Id.

At the hearing, however, Stewart Beach’s attorney generally described the

work necessary to complete the demand letter and lien notice and work he did after

sending the demand letter. This evidence does not support the original fee demand

in excess of the flat fee. He did not provide any timesheets or other evidence of the

number of hours he reasonably worked on the demand letters. To the extent the

work corresponded to any aspect of the hybrid fee arrangement, it appears to

correspond to the flat fees that would be charged, which is the amount found by the

trial court to be the reasonable amount of fees through the date the demand letter

was sent.

1. Combination of hybrid fee

The homeowners’ expert used the attorney’s fee demand sent to one of the

four homeowners, Simca and Ahuva Heled, to illustrate the unreasonableness of

16
Stewart Beach’s attorney’s hybrid fee.7 The Heleds owed Stewart Beach $3,616.33

in assessments. In addition to the amount due for assessments, Stewart Beach’s

demand letter demanded $1,665.27 in attorney’s fees (roughly 44% of the

assessments owed) without any supporting calculation. During the temporary-

injunction hearing, the homeowners’ attorney asked Stewart Beach’s attorney how

much of that $1,665.27 was for his hourly fees. He responded, “I don’t know. . . . It

was $75 for the standard cure notice. I bill $225 for liens . . . . Then there’s 20

percent of the delinquent amount collection fee . . . .” That testimony leaves about

$642 of remaining fees. 8

2. Flat Fee

The only evidence presented to the trial court regarding the reasonableness

of Stewart Beach’s fees when it issued the temporary injunction is the flat fee of

$75 for writing the collection letter and $225 for filing the lien. The homeowners’

7
The chart below summarizes the demanded fees:

Flat Fee Contingent Fee Remaining Total
(20% of $3,616.33) Fees
$300 $723.27 $642 $1,665.27

8
Even if we assume the flat fee was only intended to cover the paralegal’s time and
that the attorney would also charge an hourly fee on top of the flat fee (a fee
arrangement that is not clearly set forth in the engagement letter), to justify this
amount at his $195 hourly rate, Stewart Beach’s attorney would have to present
evidence that he spent 3.25 hours reviewing a two-page form letter and a two-page
notice of lien and did so for each form letter sent to the homeowners. No such
evidence was presented.
17
expert testified that these flat fees were “reasonable.” The trial court set the

reasonable attorney’s fees in the bond at $300—presumably to cover Stewart

Beach’s attorney’s flat fee. But Stewart Beach demanded attorney’s fees much

higher than that. Therefore, we look to the other portions of the hybrid fee

arrangement for support.

3. Hourly fee

Stewart Beach’s attorney testified that he charges $195 an hour. The

homeowners did not challenge the attorney’s hourly rate. Their expert did,

however, testify that charging an hourly rate on top of the flat fee and on top of the

contingency fee was “clearly excessive,” not “reasonable,” and “unconscionable.”

Stewart Beach offered no testimony or billing records to substantiate an hourly-fee

charge beyond the flat fee already charged for the work the attorney described he

performed.

Based on this lack of evidence, the trial court did not abuse its discretion in

finding that the homeowners had a likelihood of success on the merits of their

challenge to Stewart Beach’s attorney’s hourly-rate fees over and above the flat

fee.

4. Contingency Fee

If the contract between the attorney and the client provides for a contingency

fee, attorney’s fees cannot be recovered based solely on the evidence of the fee

18
agreement. Arthur Andersen & Co. v. Perry Equip. Corp., 945 S.W.2d 812, 818

(Tex. 1997). Instead, the factfinder must determine the reasonableness of a

contingency fee in a specific dollar amount. Id. at 819. When the factfinder

determines the reasonableness of the fee, it must consider, among other factors, the

uncertainty of collection before the legal services have been rendered. Id. at 818.

Even if the contingent fee is reasonable from the standpoint of the client and the

attorney, the fee is not necessarily reasonable when the attorney attempts to collect

from a third party, like the homeowners. Id.

Stewart Beach’s attorney provided no evidence that the specific dollar

amount collected on the basis of the 20% contingency fee is reasonable. 9 Instead,

the attorney offered two rationales for the fee: (1) it was the fee set forth in his

engagement letter and (2) it was the same percentage contingency fee approved by

the Court of Appeals in Schwartzott v. Marvilla, 390 S.W.3d 15 (Tex. App.—

Houston [14th Dist.] 2012, pet. denied).

The first rationale is not persuasive: as previously discussed, the attorney’s

fee contract is not binding on a third party.

9
Although Stewart Beach argues that the 20% fee is not a contingency fee, the
engagement letter suggests otherwise. The attorney’s contract reads that he “will
be entitled to a flat fee equal to 20% on all collections.” If a homeowner does not
pay the assessment, no collection occurs and thus Stewart Beach would not owe
their attorney the 20%. Thus, the fee is contingent on collection and is a
contingency fee. See Arthur Andersen, 945 S.W.2d at 818 (referring to
contingency fees as fees that “compensate the attorney for the risk that the
attorney will receive no fee whatsoever if the case is lost”).
19
 The second rationale is based on a misinterpretation of Schwartzott on three

levels. First, the attorney’s fee there was 10%—not 20%. Id. at 21. Second, it was

part of a two-fold—not three-fold—hybrid agreement that included a flat and

contingency, but not hourly, fee. Id. Third and most importantly, the court did not

“approve” the fee; it held, based on the limited record and expert testimony before

it, that the trial court did not err in awarding the attorney’s fees. Id.

In contrast, the homeowners provided expert testimony that Stewart Beach’s

attorney’s contingency fee was unreasonable. The expert testified that charging a

contingency fee in addition to the hourly rate constituted an excessive fee. Their

expert testified that this fee arrangement was particularly unreasonable given that

the homeowner association assessments were comparatively small dollar amounts

compared to the value of the condominiums and were secured by a lien on the

condominium. This testimony indicates that the “uncertainty of collection” (one of

the Arthur Andersen 10 factors for determining the reasonableness of contingency

fees) was relatively low, weighing against the reasonableness of a contingency fee

on top of the flat fee and the hourly fee.

Based on the testimony at the hearing, the homeowners presented evidence

in support of their claims of a fraudulent lien and excessive demand and

established a “bona fide issue as to the applicant’s right to ultimate relief.”

10
945 S.W.2d at 818.
20
Intercontinental Terminals, 354 S.W.3d at 897. This “bona fide issue” justified the

trial court’s decision to grant the temporary injunction to “maintain the status quo”

until a trial on the merits could determine whether the attorney’s fees were

reasonable.

Stewart Beach argues that the homeowners’ failure to pay the assessments

that they admit they owe precludes them from benefiting from a temporary

injunction to stop foreclosure. It is true that “claimed confusion concerning the

amount of the payment required to avoid foreclosure is not in itself grounds for an

injunction. . . . [A] debtor seeking equitable relief from a foreclosure sale must first

tender the full sum of the admitted debt.” Ginther-Davis Ctr., Ltd. v. Houston Nat’l

Bank, 600 S.W.2d 856, 864 (Tex. Civ. App.—Houston [1st Dist.] 1980, writ ref’d

n.r.e). If a party admits to owing part of a debt, it must make “an unconditional

offer . . . [of] a sum not less in amount than that due.” Baucum v. Great Am. Ins.

Co. of New York, 370 S.W.2d 863, 866 (Tex. 1963).

The requirement for a debtor to tender the amount owed, however, does not

require “that the money was to be brought into Court, or tendered as a condition

precedent to the granting of relief;” the debtor must show only “a readiness and

willingness to pay” and act “in good faith.” Poff v. Rollinsford Sav. Bank, 105

S.W.2d 782, 783 (Tex. Civ. App.—Amarillo 1937, no writ). In Poff, the debtor

“asked the court to determine their indebtedness to appellees and offered to pay the

21
amount thereof when determined.” Id. This offer to pay the full amount determined

by the factfinder constituted a sufficient offer “of the full amount owed.” Id.

Here, the homeowners explicitly state in their pleading that they did not

“dispute their obligation to pay appropriate assessments”; 11 they disputed the

amount of the attorney’s fees. During the temporary injunction hearing, one of the

homeowners testified that he, representing the other homeowners with delinquent

assessments, offered to pay Stewart Beach “the assessments and on top of it [ ]

would add 20 percent of [the attorney’s] fees.” This amount was more than the

amount the trial court found was reasonable.12 In addition to the offer the

homeowners made to Stewart Beach, the homeowners posted a bond—“brought

[the money] into Court”—for the amount they admit they owed in assessments and

the amount the trial court found was a reasonable attorney’s fee as a condition of

11
There is an additional dispute over the amount of assessments that are due. The
homeowners argue that “previous assessments may [ ] not have been properly
credited” and may have been “improperly applied to [attorney’s] fees or otherwise
handled in violation of the Bylaws.” No evidence was provided at the temporary-
injunction hearing to support this claim so the temporary injunction cannot be
based on this allegation in the pleadings. See Bay Fin. Sav. Bank, FSB v. Brown,
142 S.W.3d 586, 589–90 (Tex. App.—Texarkana 2004, no pet.) (“No temporary
injunction may issue unless the applicant offers competent evidence in support of
his or her application to the trial court at the hearing on the temporary injunction . .
. .”).
12
For example, 20% of the $1,665.27 in attorney’s fees that Stewart Beach’s
attorney attempted to charge the Heleds would be $333.06—greater than the $300
that the trial court found was reasonable.
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the temporary injunction. Poff, 105 S.W.2d at 783. This bond protected Stewart

Beach’s interests.

While the homeowners have not tendered the assessments that they admit

they owe to Stewart Beach, the actions taken by the homeowners of

(1) offering to pay the admitted debt due and (2) posting a bond as a condition of

the temporary injunction satisfy the requirements of Texas law. We hold that the

homeowners met the element of “probable right to the relief sought” to obtain the

temporary injunction.

B. Irreparable Injury

Stewart Beach argues that the homeowners are not irreparably harmed

because they are “protected from wrongful foreclosure by the redemption

provision of the [Texas Uniform Condominium Act] . . . [and] the legal remedy of

a lawsuit for wrongful foreclosure . . . .”

A trial court cannot issue an injunction when the party seeking the injunction

has a plain and adequate legal remedy. Int’l Harvester Credit Corp. v. Rhoades,

363 S.W.2d 397, 399 (Tex. Civ. App.—Austin 1962, no writ). A temporary

injunction is, however, appropriate to block foreclosure of real property. Irving

Bank & Tr. Co. v. Second Land Corp., 544 S.W.2d 684, 688 (Tex. Civ. App.—

Dallas 1976, writ ref’d n.r.e.). “[I]t is obvious that [the property owner] would

23
probably be injured if the property were foreclosed and sold . . . . ” Franklin Sav.

Ass’n, 756 S.W.2d at 15–16.

The right to monetary damages in a lawsuit for wrongful foreclosure is not

an adequate remedy because “every piece of real estate is unique, and if

foreclosure were allowed before a full determination” of the underlying claim, the

homeowner “would be irreparably harmed.” Perales v. Riviera, No. 13-03-002-

CV, 2003 WL 21705740, at *3 (Tex. App.—Corpus Christi July 24, 2003, no pet.)

(mem. op.); El Paso Dev. Co. v. Berryman, 729 S.W.2d 883, 888 (Tex. App.—

Corpus Christi 1987, no writ). Thus the availability of a remedy, like a claim for

wrongful foreclosure, that provides monetary damages does not negate the element

of “irreparable harm.” Guardian Sav. & Loan Ass’n v. Williams, 731 S.W.2d 107,

108–09 (Tex. App.—Houston [1st Dist.] 1987, no writ); Perales, 2003 WL

21705740, at *3.

The right of redemption is also not an adequate remedy for the homeowners.

A foreclosure can, itself, be a substantial burden to the property owner—even if the

property owner can recover the property. For example, a foreclosure can “ruin [the

owner’s] reputation, prevent him from borrowing money at any other financial

institution in the United States.” Guardian Sav. & Loan Ass’n, 731 S.W.2d at 108.

Neither a lawsuit for monetary damages for wrongful foreclosure nor the

statutory right of redemption is an adequate remedy for the homeowners. The

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homeowners established that they would suffer “irreparable harm” if Stewart

Beach foreclosed on their properties.

Accordingly, we overrule Stewart Beach’s second issue.

Unclean Hands

Stewart Beach next argues that “[a]sking the trial court to enjoin [Stewart

Beach’s] statutory and contractual rights while [the homeowners] confess to

material breach flies in the face of equitable principles. . . . [The homeowners]

confess they owe the debt for delinquent assessments, the court found they owed

the debt and included the findings in the injunction Orders.”

The doctrine of “unclean hands” allows a court to “refuse to grant equitable

relief, such as an injunction, sought by one whose conduct in connection with the

same matter or transaction has been unconscientious, unjust, or marked by a want

of good faith, or one who has violated the principles of equity and righteous

dealing.” Park v. Escalera Ranch Owners’ Ass’n, Inc., 457 S.W.3d 571, 597 (Tex.

App.—Austin 2015, no pet.) (internal quotation marks and citations omitted). “A

party seeking to invoke this equitable doctrine must show that he has been

seriously harmed and the wrong complained of cannot be corrected without

applying the doctrine.” City of Fredericksburg v. Bopp, 126 S.W.3d 218, 221 (Tex.

App.—San Antonio 2003, no pet.).

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 Admitted breach of a contract is not necessarily sufficient to invoke the

doctrine of unclean hands. 13 See David v. Bache Halsey Stuart Shields, Inc., 630

S.W.2d 754, 758 (Tex. App.—Houston [1st Dist.] 1982, no writ) (refusing to apply

unclean-hands doctrine to prevent party who admitted to breaching arbitration

provision from seeking temporary injunction); Spring v. Walthall, Sachse & Pipes,

Inc., No. 04-05-00228-CV, 2005 WL 2012669, at *2 (Tex. App.—San Antonio

Aug. 24, 2005, no pet.) (mem. op.) (affirming trial court’s order granting

temporary injunction and rejecting argument that moving party had unclean hands

because of breach of contract). Thus, the homeowners’ admission that they did not

pay the assessments does not bar them from seeking a temporary injunction.

In addition, Stewart Beach does not show that it is “seriously harmed” or

that any “wrong complained of cannot be corrected without applying the doctrine.”

City of Fredericksburg, 126 S.W.3d at 221. The trial court’s requirement that the

homeowners post a bond in the amount of the assessments and reasonable

13
None of the cases cited by Stewart Beach held that an admission of a breach of
contract automatically bars a party from seeking an injunction under the unclean-
hands doctrine. In three of the cases cited by Stewart Beach, the courts upheld the
temporary injunctions, holding that the moving party did not have unclean hands.
LDF Constr., Inc. v. Bryan, 324 S.W.3d 137, 149–50 (Tex. App.—Waco 2010, no
pet.); In re Jim Walter Homes, Inc., 207 S.W.3d 888, 899 (Tex. App.—Houston
[14th Dist.] 2006, no pet.); Thomas v. McNair, 882 S.W.2d 870, 881 (Tex. App.—
Corpus Christi 1994, no pet). The fourth case, City of Fredericksburg v. Bopp, did
find that the party seeking the injunction had unclean hands because the party’s
actions were “marked by a want of good faith.” 126 S.W.3d at 222. That case is
not analogous to this case, however, because Stewart Beach has not presented any
allegation or proof of bad faith by the homeowners.
26
attorney’s fees they admit are due protects Stewart Beach’s interests, and, thus any

“wrong complained of” has been “corrected” without applying the unclean-hands

doctrine. Id. Accordingly, we overrule Stewart Beach’s third and final issue.

Conclusion

We affirm the order of the trial court.

Harvey Brown
Justice

Panel consists of Justices Jennings, Higley, and Brown.

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