Forest Hills Improvement Association, Inc. v. Richard Flaim, Et Ux ( 2019 )

In The
Court of Appeals
Ninth District of Texas at Beaumont
__________________
NO. 09-18-00199-CV
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FOREST HILLS IMPROVEMENT ASSOCIATION, INC., Appellant
V.
RICHARD FLAIM, ET UX, Appellees
__________________________________________________________________
On Appeal from the 1A District Court
Jasper County, Texas
Trial Cause No. 33266
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MEMORANDUM OPINION
Forest Hills Improvement Association, Inc. (the Association) filed a
declaratory judgment action against Richard Flaim and his wife (the Flaims) to
enforce a setback provision included in the recorded deed restrictions for the
subdivision. The Association appeals the trial court’s denial of its attorney’s fees in
this declaratory judgment action. We affirm the trial court’s judgment.
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Background
This matter is before us for a second time. See Forest Hills Improvement
Association, Inc. v. Flaim, No. 09-15-00478-CV, 2017 WL 5179968, at *1 (Tex.
App.—Beaumont Nov. 9, 2017, no pet.) (mem. op.). In 2001, the Flaims obtained
permission from the Association to pour a concrete slab that extended within
approximately two feet of their rear property line, on which to park a boat. See id. at
*1. Some years later, the Association denied the Flaims’ request to construct a
carport over the slab. See id. The Flaims ultimately constructed the carport without
the written or express approval of the Association. See id at *2. The Association filed
a declaratory judgment action against the Flaims seeking to enforce a setback
provision in the deed restrictions for the Flaims’ property. See id. at *1–2. The
Association also sought its attorney’s fees pursuant to section 37.009 of the Texas
Civil Practices and Remedies Code. See id. at *5; see also Tex. Civ. Prac. & Rem.
Code Ann. § 37.009 (West 2015).
In the initial appeal, the Association challenged the legal and factual
sufficiency of the evidence to support the trial court’s findings of fact and
conclusions of law underlying the theory that it waived its right to enforce the deed
restrictions against the Flaims. See Forest Hills, 2017 WL 5179968, at *2. We
reversed and remanded with instructions that the trial court: (1) render an appropriate
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declaratory judgment consistent with our opinion that the Flaims’ carport, as
constructed, violated the setback provisions of the deed restrictions; (2) grant any
relief, injunctive or otherwise, appropriate to the ordered declaration; and (3)
consider the Association’s claim for attorney’s fees. See id. at *5.
The Association’s president testified in the hearing on remand about the
attorney fees the Association paid for counsel. The trial court admitted the bills for
the Association’s legal fees into evidence. The Association’s counsel testified the
firm’s fees were reasonable and necessary, and the Flaims stipulated that the
Association’s attorney fees were reasonable. The Flaims presented no evidence at
the hearing. However, the homeowners argued that requiring them to pay the
Association’s attorney’s fees would be very burdensome because they are elderly,
on a fixed income and suffer from various medical problems. Notably, the testimony
reports that Mr. Flaim suffers from early onset of dementia.
In its final declaratory judgment, the trial court denied the Association’s claim
for attorney’s fees, determining that “each party shall bear their respective
attorney[’s] fees[,]” but ordered the Flaims to pay all court costs. Subsequently, the
trial court issued separate findings of fact and conclusions of law. The trial court’s
findings of fact state that the Association filed a declaratory judgment action
pursuant to section 37.001 of the Texas Civil Practices and Remedies Code, and the
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Association’s recovery of attorney’s fees is not mandatory. See Tex. Civ. Prac. &
Rem. Code Ann. §§ 37.001, 37.009 (West 2015). The trial court’s conclusions of
law stated that attorney’s fees “on a Petition for Declaratory Judgment are
discretionary[,]” and the parties “should bear their respective attorney’s fees.” The
Association complains on appeal that there is no evidence, or alternatively, that the
great weight and preponderance of the evidence does not support the “finding” that
each party shall bear its respective attorney’s fees, and the “finding is an abuse of
discretion[.]” 1
Analysis
We review an award or denial of attorney’s fees under the Declaratory
Judgments Act for an abuse of discretion. See Preston State Bank v. Willis, 443
S.W.3d 428, 434 (Tex. App.—Dallas 2014, pet. denied) (citation omitted). The trial
court has broad discretion in determining whether to award fees in a declaratory
judgment action, and we will not reverse a trial court’s decision absent a clear
showing of an abuse of discretion. See Oake v. Collin Cty., 692 S.W.2d 454, 455
(Tex. 1985) (citations omitted).
1
Despite the Association’s characterization of this as a “finding,” it is listed
as a “conclusion of law.”
4
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 Ann. § 37.009; see also Bocquet v. Herring, 972 S.W.2d 19, 20 (Tex. 1998).
The Declaratory Judgments Act employs the word “may” in the statute, which
“affords the trial court a measure of discretion in deciding whether to award attorney
fees or not.” Bocquet, 972 S.W.2d at 20 (citations omitted). Attorney’s fee awards
in declaratory judgment actions are entrusted to the trial court’s discretion, “subject
to the requirements that any fees awarded be reasonable and necessary, which are
matters of fact, and to the additional requirements that fees be equitable and just,
which are matters of law.” Id. at 21. A trial court may not rule arbitrarily or without
reference to guiding legal principles, and it may not rule without supporting
evidence. Id. (citations omitted).
A court may determine that even fees shown to be reasonable and necessary
should not be awarded if such an award would not be equitable and just. Id.; Kings
River Trail Ass’n, Inc. v. Pinehurst Trail Holdings, L.L.C., 447 S.W.3d 439, 451–52
(Tex. App.—Houston [14th Dist.] 2014, pet. denied) (citations omitted). Whether it
is “equitable and just” to award less in attorney’s fees than a jury found was
reasonable and necessary is not a fact question, as such a determination is not
susceptible to direct proof; instead, it is a question of “fairness in light of all the
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circumstances.” Ridge Oil Co. v. Guinn Investments, Inc., 148 S.W.3d 143, 162
(Tex. 2004); Anglo-Dutch Petroleum Int’l, Inc. v. Greenberg Peden, P.C., 522
S.W.3d 471, 494 (Tex. App.—Houston [14th Dist.] 2016, pet. denied); see also In
re Estate of Kuykendall, 206 S.W.3d 766, 772 (Tex. App.—Texarkana 2006, no pet.)
(“The trial court’s decision whether to award attorney’s fees in a declaratory
judgment case depends on the court’s conclusion whether it is just and equitable to
do so under all the circumstances of the case, not on the quantum of proof as to the
amount incurred or the reasonableness and necessity of such fees.”). Even if
stipulated or the evidence is uncontroverted that the attorney’s fees incurred are
reasonable and necessary, a court may decide it is not equitable or just to award
them. In re Estate of Kuykendall, 206 S.W.3d at 772 (citing Bocquet, 972 S.W.2d at
21; Texstar N. Am, Inc. v. Ladd Petroleum Corp., 809 S.W.2d 672 (Tex. App.—
Corpus Christi 1991, writ denied); Carr v. Bell Sav. & Loan Ass’n, 786 S.W.2d 761
(Tex. App.—Texarkana 1990, writ denied)).
The Association argues that there was “no evidence” or “insufficient
evidence” to support the trial court’s denial of its claim for attorney’s fees. While
the evidence was undisputed that the attorney’s fees incurred by the Association
were reasonable and necessary, courts have recognized that the trial court’s ultimate
determination of an award of attorney’s fees must be equitable and just under the
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circumstances, and such a determination is not susceptible to direct proof. See Ridge
Oil Co., 148 S.W.3d at 162; Anglo-Dutch Petroleum Int’l, Inc., 522 S.W.3d at 494.
The trial court must make this determination after considering all the circumstances
of the case. Ridge Oil Co., 148 S.W.3d at 162; Anglo-Dutch Petroleum Int’l, Inc.,
522 S.W.3d at 494.
Here, the Association had the burden of establishing the trial court abused its
discretion in denying an award of attorney’s fees. See Sanchez v. AmeriCredit Fin.
Services, Inc., 308 S.W.3d 521, 526 (Tex. App.—Dallas 2010, no pet.) (citations
omitted). The trial court heard evidence in this case that the Association granted a
variance and approved the construction of a concrete slab in 2001 that technically
violated the setback provisions of the deed restrictions. The slab had been in
existence for over a decade before the Flaims constructed an aluminum carport over
the slab. As we noted in our prior opinion,
[t]he Flaims submitted a series of four written requests to the
Association dated: (i) August 20, 2011; (ii) April 28, 2012; (iii)
February 20, 2013; and (iv) May 12, 2013. The Association concedes
that it did not respond in writing to the Flaims’ requests until May 28,
2013, when its attorney sent the Flaims written notice that the
Association denied their request, but argues that it did verbally deny
each of the Flaims requests. The Flaims admit that they received verbal
denials from the Association to some, but not all, of their letters, and
they argue that they did not receive the May 28th letter.
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See Forest Hills, 2017 WL 5179968, at *2. Mr. Flaim is an 88-year-old veteran, who
has lived in the subdivision for many years and had served on the board of directors
of the Association in the past. The trial court heard the testimony and observed the
demeanor of the parties to this lawsuit. The findings of fact and conclusions of law
entered by the trial court on remand indicate the trial court considered that recovery
of attorney’s fees pursuant to section 37.001, et seq. of the Civil Practice and
Remedies Code is not mandatory. The trial court’s findings of fact and conclusions
of law do not show the trial court acted arbitrarily, unreasonably, or without
reference to any guiding principles in reaching its judgment. Rather, the record
shows that the trial court considered the Association’s pleadings, the evidence and
circumstances and actions of the parties, the arguments of counsel, the provisions
under which the Association sought relief, and the pertinent statutory provisions to
award attorney’s fees that are equitable and just under the circumstances of the case.
Under the circumstances of this case, the trial court’s denial of attorney’s fees was
within the zone of reasonable disagreement.
Conclusion
We conclude the record does not show a clear abuse of discretion by the trial
court when it denied the Association an award of any amount for attorney’s fees in
this declaratory judgment action. We affirm the trial court’s judgment.
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AFFIRMED.
_________________________
CHARLES KREGER
Justice
Submitted on May 14, 2019
Opinion Delivered September 19, 2019
Before McKeithen, C.J., Kreger and Horton, JJ.
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DISSENTING OPINION
Does an award of zero in attorney’s fees represent a just and equitable award
when the party opposing the fees presents no evidence to show the amount requested
is unfair? On this record, and in my opinion, the trial court abused its discretion by
ignoring all the evidence and awarding no fees.
The record from the trial court shows that in May 2018, the trial court
conducted a hearing to consider Forest Hills Improvement Association, Inc.’s claim
for attorney’s fees. Linda and Richard Flaim did not testify in the hearing. They
called no witnesses to contest the evidence the Association presented to support its
claim for attorney’s fees.
The Flaims had one additional opportunity to present evidence relevant to the
Association’s claim. That opportunity occurred during a bench trial in October 2015.
The same judge who presided over the 2015 bench trial presided over the 2018
hearing that addressed the Association’s claim for fees. In the 2018 hearing,
however, the Flaims’ attorney never asked the trial court to take judicial notice of
the Flaims’ testimony in the 2015 trial. See Tex. R. Evid. 201 (Judicial Notice of
Adjudicative Facts). Even had the trial court taken judicial notice of the testimony
from the 2015 trial, the Flaims never testified in that trial that they could (or could
not) afford to pay something toward the Association’s claim for fees. And the record
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from the hearing and the trial contains no testimony suggesting the Flaims are in
poor health or that they cannot afford anything in fees.
In this case, the only testimony relevant to a reasonable award of fees was
presented by the Association. That testimony is located in reporter’s records from
the 2015 trial and the 2018 hearing on remand. In the proceedings, the Flaims’
attorney never cross-examined the Association’s witnesses on the subject of the
reasonableness and necessity of the Association’s claim for attorney’s fees.
In closing argument in both proceedings, the Flaims’ attorney never argued
the Association should recover nothing on its claim. Instead, the Flaims’ attorney
argued in the 2018 hearing that “[t]here’s no dispute about the amount of time and
[the Association’s attorney’s] fees being reasonable and customary.” After that, the
Flaims’ attorney argued he did not believe it would be “equitable and just to assess
the full amount of attorney’s fees against the Flaims[.]” And he argued the Flaims
were “on a fixed income” and “assessing this amount of attorney’s fees against them
would be a tremendous financial burden[.]” His argument, however, is not supported
by any evidence in either the reporter’s record in the 2015 trial or the hearing on
remand.
The majority treats the argument of the Flaims’ attorney as evidence. Since
arguments of attorneys are not evidence, I disagree it can be treated as such. It is
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well-settled that “[n]ormally, an attorney’s statements must be under oath to be
considered evidence.” Banda v. Garcia, 955 S.W.2d 270, 272 (Tex. 1997); see also
United States Gov’t v. Marks, 949 S.W.2d 320, 326 (Tex. 1997). Because the Flaims’
attorney was never placed under oath, his argument cannot be treated as evidence. 2
I also disagree with the majority’s claim the equities in the case favor the
Flaims. As described in the Court’s opinion reversing the trial court’s refusal to
enforce the Flaims’ deed, the Flaims built the structure that violated their deed after
“the Association told them verbally on multiple occasions that they could not build
the carport.” Forest Hills Improvement Ass’n, Inc. v. Flaim, No. 09-15-00478-CV,
2017 WL 5179968, at *3 (Tex. App.—Beaumont Nov. 9, 2017, no pet.) (mem. op.).
Aware that building a carport on their property would violate the restrictions in their
deed, the Flaims built it anyway.
In this appeal, the majority points to the Association’s failure to notify the
Flaims of its decision to deny the Flaims’ request for a variance in writing. The
Flaims, however, presented no evidence to show the Association’s failure to notify
them in writing led them to reasonably believe they could build the carport without
2
While oaths of witnesses can be waived, the record from the trial and the
hearing does not show that the Association waived anyone’s oath.
3
first getting a variance. In my view, the equities lie with the Association, not the
Flaims.
In declaratory judgment actions, trial courts have broad discretion to
determine what amount represents a reasonable award for attorney’s fees. Bocquet
v. Herring, 972 S.W.2d 19, 21 (Tex. 1998) (“Unreasonable fees cannot be awarded,
even if the court believed them just, but the court may conclude that it is not equitable
or just to award even reasonable and necessary fees.”). But here, nothing in the
record shows a zero fee, which is the fee the trial court assessed, is a just and
equitable result. Instead, the evidence established the Association incurred fees and
was entitled to a reasonable award.
I would hold the trial court abused its discretion by failing to award fees and
reverse the trial court’s award. Because the majority affirms the trial court’s refusal
to award fees, I dissent.
___________________________
HOLLIS HORTON
Justice
Dissent Delivered
September 19, 2019
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