DAS Investments Corp. v. Emric & Thelma Nowak ( 2004 )

Opinion issued March 4, 2004

  In The

Court of Appeals

For The

First District of Texas

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  NO. 01-03-00140-CV

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DAS INVESTMENT CORPORATION, DAS INVESTMENTS, ILABEN M.

PATEL, INDIVIDUALLY AND AS HEIR TO THE ESTATE OF MANUBHAI G. PATEL, DECEASED, AND MONTU PATEL, REPRESENTATIVE OF THE

ESTATE OF MANUBHAI G. PATEL, DECEASED, Appellants

V.

EMRIC NOWAK AND THELMA NOWAK, Appellees

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On Appeal from County Civil Court at Law No. 1

Harris County, Texas

Trial Court Cause No. 758,157-002

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MEMORANDUM OPINION

           Appellants, DAS Investment Corporation, DAS Investments, Ilaben M. Patel, Individually and as Heir to the Estate of Manubhai G. Patel, Deceased, and Montu Patel, Representative of the Estate of Manubhai G. Patel, Deceased (appellants), appeal the summary judgment, rendered in favor of appellees, Emric Nowak and Thelma Nowak, which denyed the award of attorney’s fees to appellants as a matter of law. We affirm.

BACKGROUND

           In 1990, the Nowaks entered into an agreement with appellants in which the Nowaks agreed to sell certain real property to appellants and appellants agreed to assume payment of an outstanding loan secured by the property and to pay $30,000, secured by a deed of trust on the property, to the Nowaks upon demand. The parties also agreed that the Nowaks would continue to live on the property and would not make a demand for the $30,000 payment until they vacated the property. The Nowaks vacated the property in 1997 and demanded payment of the $30,000 note in January 2000. Appellants did not pay the note. In June 1997, Thelma Nowak had filed two liens against the property in the property records of Harris County, and, in August 2000, she filed two additional liens in Harris County.

           In August 2001, the Nowaks sued on the note. Appellants answered the suit and, on July 8, 2002, counterclaimed, alleging that one of the 1997 liens had been released and that the remaining three liens constituted a cloud on the title to the property. In the counterclaim, appellants pleaded, “This is a suit for Declaratory Judgment that Liens set out in Exhibits Two, Three and Four above are a Cloud on the title to the . . . real property . . . .” Appellants admitted that they had sustained no damages, but requested exemplary damages and reasonable and necessary attorney’s fees. Appellants prayed “for Judgment determining [the three liens] be declared of no force and effect; canceling [the liens]; removing them as Cloud on [appellants’] Title . . . .”

           On July 25, 2002, the Nowaks filed releases of the three liens. Appellants then filed a motion to dismiss the counterclaim as moot and requested reasonable attorney’s fees under the Declaratory Judgments Act. The Nowaks filed a motion for summary judgment in which they argued that the counterclaim was not a declaratory judgment, but a suit to remove a cloud on the title of the property, and that attorney’s fees may not be awarded in such a suit. The trial court granted the motion for summary judgment and decreed that appellants were “not entitled to attorney’s fees as a matter of law.” In appellants’ sole issue on appeal, they contend that the trial court erred in granting the motion for summary judgment and holding that appellants are not entitled to attorney’s fees as a matter of law.

DISCUSSION

Standard of Review

           Summary judgment under rule 166a(c) is proper only when the movant establishes that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c); Randall’s Food Mkts., Inc. v. Johnson, 891 S.W.2d 640, 644 (Tex. 1995); Lawson v. B Four Corp., 888 S.W.2d 31, 34 (Tex. App.—Houston [1st Dist.] 1994, writ denied). The facts are not disputed in this case, and the only issue is whether the Declaratory Judgments Act applies to grant the trial court the discretion to award attorney’s fees.

Appellants’ Cause of Action

           Appellants contend that their cause of action was brought under the Declaratory Judgments Act and is not simply a suit to remove a cloud from their title. Appellants rely in part on Jackson v. City of McKinney, which, they contend, establishes a precedent. See No. 05-00-00062-CV, 2001 WL 946811 (Tex. App.—Dallas, Aug. 22, 2001, no pet.) (not designated for publication).

           Jackson is not precedential, see Tex. R. App. P. 47.7, nor is it on point. Jackson involved a challenge to the constitutionality of a city ordinance that allowed the city to make paving assessments against residents’ property and to place liens on the property so assessed. Id. at *1. The plaintiffs alleged that the ordinance was unconstitutional, the assessments were invalid, and the liens clouded their titles. Id. Thus, the lawsuit was not brought merely to remove a cloud from the titles.

           Appellants also cite Industrial Structure & Fabrication, Inc. v. Arrowhead Industrial Water, Inc. to support their claim for attorney’s fees. See 888 S.W.2d 840 (Tex. App.—Houston [1st Dist.] 1994, no writ). In Industrial Structure, one of the defendants, Air Products, sought a declaratory judgment to remove the cloud on title created by a mechanic’s lien, which it alleged to be invalid. Id. at 842. The trial court granted Air Products’ motion for summary judgment and awarded attorney’s fees to Air Products. Id. Industrial Structure appealed the summary judgment, which declared the lien null, void, and unenforceable. Id. Industrial Structure did not complain about the application of the Declaratory Judgments Act or the award of attorney’s fees. Thus, those issues were not before this Court in that case.

           The application of the Declaratory Judgments Act to a suit to remove a cloud on title and the award of attorney’s fees in such a suit were brought before this Court in Southwest Guaranty Trust Co. v. Hardy Road 13.4 Joint Venture. 981 S.W.2d 951 (Tex. App.—Houston [1st Dist.] 1998, pet. denied). In Southwest Guaranty, the joint venture sued for a declaration that a lien was invalid and for negligence, gross negligence, intentional wrongdoing, fraud, breach of and conspiracy to breach fiduciary duties, statutory fraud, tortious interference with a contract, conversion, conspiracy to convert, and quieting of title. Id. at 952-53. The trial court’s judgment, rendered on a jury verdict for the joint venture, removed cloud of title, declared the lien unenforceable and invalid, and awarded damages, but denied attorney’s fees. Id. at 953. On appeal, we noted that declaratory judgment was the only claim for which attorney’s fees could be recovered and stated:

A declaratory judgment action may not be used solely to obtain attorney’s fees that are not otherwise authorized by statute or to settle disputes already pending before a court.

Id. at 956. We examined the joint venture’s pleading, which alleged that the filed Deed of Trust created a cloud on the title to the property and that the bank’s lien on the property was invalid. Id. The joint venture prayed for a declaratory judgment that the Deed of Trust and lien were invalid. Id. at 957. We concluded that the joint venture’s declaratory judgment claim was really a claim to quiet title. Id. We determined that the suit for declaratory judgment was no more than a suit to quiet title, and we affirmed the trial court’s denial of attorney’s fees. Id.

           In the present case, appellants’ counterclaim alleged that three liens were a cloud on their title to the property at issue and that the liens were unenforceable and prevented appellants from having good and marketable title to the property. Like the joint venture in Southwest Guaranty, appellants did not seek to construe any terms of the liens. See id. Appellants prayed that the three liens “be declared of no force and effect; canceling said instruments; removing them as Cloud on Counter-Plaintiff’s Title, and for all other relief” to which they were justly entitled. Appellants also requested attorney’s fees.

           We hold that appellants’ claim was one to quiet title and, therefore, appellants were not entitled to attorney’s fees. We overrule appellants’ sole issue and affirm the judgment.

                                                                  Sam Nuchia

                                                                  Justice

Panel consists of Justices Nuchia, Alcala, and Hanks.