REVERSE and REMAND and Opinion Filed May 27, 2021
S In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-20-00749-CV
STILLWATER CAPITAL, CLAY ROBY, AND STILLWATER CAPITAL
INVESTMENTS, LLC, Appellants
V.
HKS, INC., Appellee
On Appeal from the 191st Judicial District Court
Dallas County, Texas
Trial Court Cause No. DC-19-09019
MEMORANDUM OPINION
Before Justices Molberg, Goldstein, and Smith
Opinion by Justice Smith
Stillwater Capital, Clay Roby, and Stillwater Capital Investments, LLC,
appeal the trial court’s order dismissing their counterclaim with prejudice for failing
to file a certificate of merit in the underlying lawsuit. In three issues, appellants
argue they were not required to file a certificate of merit; HKS, Inc., is not a licensed
or registered professional; and the trial court mistakenly dismissed appellants’
claims with prejudice. We reverse the trial court’s order dismissing appellants’
counterclaims and remand for further proceedings consistent with this opinion.
On June 24, 2019, HKS filed its original petition seeking, among other things,
payment for professional services HKS provided to appellants pursuant to a written
contract. Under the “compensation and payment terms” section of the contract, the
contract provided, “Compensation to HKS for the architectural services only shall
be a stipulated sum in the amount of $950,000.” HKS’ chief legal officer, Robin
Craig Williams, filed an affidavit stating that HKS received payments totaling
$500,000 but invoiced appellants a total of $976,668.59, leaving $476,668.59 due
and owing under the terms of the contract.
In June 2020, appellants filed their first amended answer and original
counterclaim alleging one or more appellants entered into an “alleged contract” with
HKS in January 2018 under the terms of which HKS agreed to provide “extensive
market services” and “ancillary architectural services” related to a project in Frisco,
Texas. Appellants alleged HKS breached the contract by failing to perform the
entire scope of work detailed in the contract and delivering work product that was
not performed in accordance with the contract. Appellants also alleged fraudulent
misrepresentation and fraudulent inducement claims and violations of the DTPA.
HKS filed a motion to dismiss appellants’ counterclaims based on their failure
to file a certificate of merit with their original counterclaim as required by chapter
150 of the Texas Civil Practice and Remedies Code. On July 29, 2020, the trial court
signed an order granting HKS’ motion to dismiss and dismissing appellants’
counterclaim with prejudice. This appeal followed.
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We first address appellants’ second issue in which they argue there were no
pleadings to support the proposition that a licensed or registered professional
provided professional services. Civil practice and remedies code section 150.002
provides that, in any action for damages arising out of the provision of professional
services by a licensed architect or professional engineer, the claimant must file a
“certificate of merit” with the complaint. See TEX. CIV. PRAC. & REM. CODE
§150.002(a); see also id. §150.001(1-c).
Appellants concede that, in the parties’ contract, HKS agreed to provide
“ancillary architectural services”; however, they emphasize HKS’ provision of
“marketing services” and assert their counterclaims “are based on HKS’ provision
of incomplete or unsatisfactory marketing services.” Appellants argue the
complained-of marketing services are not “professional services” that trigger the
certificate of merit statute. We note that, under the terms of the contract between
appellants and HKS, the fees HKS seeks to recover are compensation for
“architectural services only.” The contract does not refer to “marketing services” as
appellants argue. Under these circumstances, we conclude the trial court did not
abuse its discretion in determining appellants’ counterclaim arose out of the
provision of professional services by a licensed architect. See id. §150.002(a). We
overrule appellants’ second issue.
In their first issue, appellants argue the trial court abused its discretion in
disregarding section 150.002(h) and dismissing their counterclaims for failure to file
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a certificate of merit. Specifically, appellants assert the underlying suit is “an action
for the payment of fees arising out of the provision of professional services,” and
therefore no certificate of merit was required. See id. §150.002(h). Section
150.002(h) provides that “this statute does not apply to any suit or action for the
payment of fees arising out of the provision of professional services.” See id.
Stated generally, a certificate of merit is a sworn written statement certifying
that the defendant’s actions were negligent or erroneous and stating the factual basis
for the opinion. CBM Eng’rs, Inc. v. Tellepsen Builders, L.P., 403 S.W.3d 339, 346
(Tex. App.—Houston [1st Dist.] 2013, pet. denied). The function of a certificate of
merit is to provide a “substantive hurdle that helps ensure frivolous claims are
expeditiously discharged.” LaLonde v. Gosnell, 593 S.W.3d 212, 216 (Tex. 2019).
To satisfy section 150.002, the claimant must file an affidavit from a third-
party professional, who is competent to testify, is licensed or registered in the State
of Texas, holds the same license or registration as the defendant, is actively engaged
in the same practice area as the defendant, and offers testimony based on the affiant’s
knowledge, skill, experience, education, training, and practice. See TEX. CIV. PRAC.
& REM. CODE §150.002(a), (b). The expert’s affidavit must:
set forth specifically for each theory of recovery for which damages are
sought, the negligence, if any, or other action, error, or omission of the
licensed or registered professional in providing the professional
service, including any error or omission in providing advice, judgment,
opinion, or a similar professional skill claimed to exist and the factual
basis for each such claim . . . .
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Id. §150.002(b). A claimant’s failure to file a certificate of merit in accordance with
section 150.002 “shall result in dismissal of the complaint against the defendant,”
and such dismissal “may” be with prejudice. Id. §150.002(e).
We review a trial court’s order on a motion to dismiss under section 150.002
for an abuse of discretion. CBM Eng’rs, 403 S.W.3d at 342. When the outcome of
a case turns on a question of statutory interpretation, however, we review those
questions de novo. Pedernal Energy, LLC. v. Bruington Eng’g, Ltd., 536 S.W.3d
487, 491 (Tex. 2017). In construing a statute, our goal is to determine and give effect
to the legislature’s intent. Id. “We look to and rely on the plain meaning of a
statute’s words as expressing legislative intent unless a different meaning is
supplied, is apparent from the context, or the plain meaning of the words leads to
absurd or nonsensical results.” Id. Words and phrases must be “read in context and
construed according to the rules of grammar and common usage.” Id. We construe
statutes so that no part is surplusage, but so that each word has meaning. Id.
Appellants argue that the exclusion in section 150.002(h) encompasses the
entire underlying action, including their counterclaim. As a result, appellants argue,
because the “action” originated as a suit by HKS for the “payment of fees,” section
150.002 in its entirety, including the certificate of merit provision, does not apply to
this entire “action.”
In support of this argument, appellants cite Kniestedt v. Southwest Sound &
Electronics, Inc., 281 S.W.3d 452 (Tex. App.—San Antonio 2007, no pet.). In
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Kniestedt, the court agreed that the version of section 150.002 in effect at the time
only applied in an action alleging negligence and did not apply to the tortious
interference with an existing contract claims at issue. See Kniestedt, 281 S.W.3d at
455. The court went on to note that “the statute specifically states that this statute
does not apply to ‘any suit or action for the payment of fees arising out of the
provision of professional services’” and that the architects in that case “admit[ted]
that this lawsuit stem[med] from an ‘alleged failure to pay for work performed.’”
Id.
Both appellants and HKS, in their arguments relative to this issue, cite Jaster
v. Comet II Const., Inc., 438 S.W.3d 556, 562–63 (Tex. 2014). Section 150.002
formerly required “the plaintiff” in “any action or arbitration proceeding” to file a
certificate of merit. See id. at 562–63. In Jaster, the court addressed whether parties
asserting third-party claims and counterclaims could be “the plaintiffs” within the
meaning of section 150.002 in an underlying “action,” when they were not the parties
who initiated the suit. See id. at 565.
Turning to the meaning of the term “plaintiff,” the court observed that,
throughout the civil practice and remedies code, the definitions and usage of the term
“plaintiff,” as opposed to the term “claimant,” were consistent with its common
meaning. Id. at 567. The court noted that, when addressing frivolous pleadings and
claims in chapter 9, for example, the statute uses the term “claimant,” rather than the
term “plaintiff,” and expressly defines the term “claimant” to include “a plaintiff,
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counterclaimant, cross-claimant, third-party plaintiff, or intervenor, seeking
recovery of damages.” Id. (citing TEX. CIV. PRAC. & REM. CODE § 9.001(1)).
The court reasoned that, when the Legislature wants to use a term that includes
only a party who initiates a lawsuit, thus excluding third-party plaintiffs, cross-
claimants, and counter-claimants, it uses the term “plaintiff,” rather than the term
“claimant.”1 Id. at 568. The court in Jaster therefore concluded the certificate-of-
merit requirement in section 150.002 applied to “the plaintiff” who initiates an action
for damages arising out of the provision of professional services by a licensed or
registered professional and did not apply to a defendant or third-party defendant who
asserts such claims. Id.
Similarly, in this case, if the Legislature wanted to limit the applicability of
the exception in section 150.002(h), they could have done so. Instead, the
Legislature provided an exception stating the statute does not apply to any suit or
action for the payment of fees arising out of the provision of professional services.
The exception to filing a certificate of merit does not simply benefit the provider of
engineering or architectural services while at the same time requiring all
counterclaimants in the suit to file a certificate of merit. The exception is broad in
its statement that section 150.002 does not apply to “any suit or action” for the
1
We note that, in 2019, the Legislature amended section 150.002 to delete the reference to “plaintiff” and
substitute the term “claimant.” Act of May 23, 2019, 86th Leg., R.S., ch. 661, § 2, sec. 150.002, 2019 Tex. Sess. Law
Serv. 661 (codified at TEX. CIV. PRAC. & REM. CODE § 150.002).
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payment of fees. Appellants contend the exception only applies to a professional
services provider attempting to collect a debt. We disagree. We conclude the
exception in section 150.002(h), when read in connection with the entirety of section
150.002, makes it unnecessary for any party to file a certificate of merit in an action
for the payment of fees arising out of the provision of professional services. See
Pedernal Energy, 536 S.W.3d at 491. Otherwise, counterclaimants and defendants
sued by a provider of professional services seeking fees would not only face the
burden of raising a defense to the claims for fees but would also have to muster a
certificate of merit to file with their counterclaims to avoid dismissal of their
counterclaims. Section 150.002’s purpose is to ensure frivolous claims are
expeditiously discharged, not to put defendants at risk of having their claims
dismissed. See LaLonde, 593 S.W.3d at 216.
We conclude the trial court abused its discretion by disregarding section
150.002(h) and dismissing appellants’ counterclaims for failure to file a certificate
of merit. See Jaster, 438 at 568; CBM Eng’rs, 403 S.W.3d at 342. We sustain
appellants’ first issue. Because of our disposition of appellants’ first and second
issues, we need not address appellants’ third issue.
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We reverse the trial court’s order dismissing appellants’ counterclaims and
remand for further proceedings consistent with this opinion.
/Craig Smith/
CRAIG SMITH
JUSTICE
200749F.P05
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S
Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
STILLWATER CAPITAL, CLAY On Appeal from the 191st Judicial
ROBY, AND STILLWATER District Court, Dallas County, Texas
CAPITAL INVESTMENTS, LLC, Trial Court Cause No. DC-19-09019.
Appellants Opinion delivered by Justice Smith.
Justices Molberg and Goldstein
No. 05-20-00749-CV V. participating.
HKS, INC., Appellee
In accordance with this Court’s opinion of this date, the judgment of the trial
court is REVERSED and this cause is REMANDED to the trial court for further
proceedings consistent with this opinion.
It is ORDERED that appellants STILLWATER CAPITAL, CLAY ROBY,
AND STILLWATER CAPITAL INVESTMENTS, LLC recover their costs of this
appeal from appellee HKS, INC.
Judgment entered May 27, 2021.
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