Cellular Sales of Knoxville Inc. v. Martin E. McGonagle ( 2014 )

REVERSE, RENDER, and AFFIRM; and Opinion Filed July 15, 2014.
S In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-13-00246-CV
CELLULAR SALES OF KNOXVILLE, INC., Appellant
V.
MARTIN E. MCGONAGLE, Appellee
On Appeal from the 160th Judicial District Court
Dallas County, Texas
Trial Court Cause No. 11-02647
MEMORANDUM OPINION
Before Justices Lang-Miers, Myers, and Lewis
Opinion by Justice Lang-Miers
Appellee Martin E. McGonagle as landlord and appellant Cellular Sales of Knoxville,
Inc. as tenant were parties to a commercial lease. A jury found that McGonagle “fail[ed] to
comply with the Lease Agreement by failing to make access to the premises leased by Cellular
Sales ADA compliant” and awarded Cellular Sales $30,242 in damages. The jury also found
that the amount of reasonable attorney’s fees for Cellular Sales was $57,500 and additional
attorney’s fees through appeal and that the amount of reasonable attorney’s fees for McGonagle
was $23,000 and additional attorney’s fees through appeal. The trial court (1) granted
McGonagle’s motion for judgment notwithstanding the verdict as to his liability, Cellular Sales’s
damages, and Cellular Sales’s attorney’s fees and (2) granted Cellular Sales’s motion for
judgment notwithstanding the verdict as to McGonagle’s attorney’s fees. The judgment ordered
that both parties would take nothing.
We reverse the portion of the trial court’s judgment that granted McGonagle’s motion for
judgment notwithstanding the verdict, and reinstate and render judgment in accordance with the
jury’s findings on McGonagle’s liability, $30,242 in damages to Cellular Sales, and $57,500 for
Cellular Sales’s attorney’s fees in the trial court and additional attorney’s fees through appeal.
We affirm the portion of the judgment granting Cellular Sales’s motion for judgment
notwithstanding the verdict concerning McGonagle’s attorney’s fees. Because all dispositive
issues are settled in law, we issue this memorandum opinion. TEX. R. APP. P. 47.2(a), 47.4.
BACKGROUND
In May 2010, Cellular Sales and McGonagle agreed to a lease for retail space. The lease
defined “Demised Premises” as “a store unit in the Shopping Center which is deemed to contain
approximately 3,047 square feet in area, located at 3323 Oak Lawn Avenue, Dallas, Texas
75219, and being described or shown on Exhibit ‘A’ attached to this Lease.” Section 6.1 of the
lease stated:
The term “Common Area” is defined for all purposes of this Lease as that
part of the Shopping Center intended for the common use of all tenants, including
among other facilities . . . parking areas, private streets and alleys, . . . curbs,
loading area, sidewalks, malls and promenades[.]
Section 6.3 of the lease provided that McGonagle, as landlord, “shall be responsible for
the operation, management and maintenance of the Common Area, the manner of maintenance
and the expenditures therefore to be in the sole discretion of Landlord, but to be generally in
keeping with similar shopping centers within the same geographic area as the Shopping Center.”
In addition, section 8.10 of the lease provided that “Tenant shall be responsible for
compliance with the Americans with Disabilities Act of 1990, as amended from time to time (the
‘ADA’), and related state and municipal laws and regulations, including without limitation the
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Texas Accessibility Standards (‘TAS’) . . . in all matters regarding both the configuration of the
Demised Premises (the interior as well as all public and/or employee door entrances) and
Tenant’s business operations at the Demised Premises.” Cellular Sales leased the premises “in
‘AS IS’ condition” and agreed that McGonagle “shall not be obligated to perform any
construction, remodeling work, or other improvements of any kind in connection with Tenant’s
commencement and/or operation of business in the Demised Premises[.]” In June 2010,
McGonagle and Cellular Sales agreed to a first amendment to the lease that generally contained
the same “as is” provision and likewise generally provided that McGonagle would not be
obligated to make improvements in connection with Cellular Sales’s commencement and
operation of business in the Demised Premises. 1
The City of Dallas would not give Cellular Sales a certificate of occupancy to begin
business operations in the Demised Premises until the property complied with the ADA, which
required handicap accessible ramps leading to the front and back of the store to be built and the
front parking lot to be re-striped for handicap parking. Cellular Sales asked McGonagle to make
these changes but McGonagle refused. Cellular Sales contracted with third parties and paid them
$30,242 to construct and install the required ramps and re-stripe the parking lot.
Cellular Sales sued McGonagle for breach of contract, quantum meruit, and money had
and received seeking actual damages, lost profits, and attorney’s fees. Cellular Sales’s breach of
contract claim alleged that “[d]espite Plaintiff’s full performance, Defendant has failed to
comply with its obligations under the lease, namely its obligation to operate and maintain the
Leased Premises’ Common Areas.” Cellular Sales also asked for attorney’s fees under chapter
38 of the civil practice and remedies code. See TEX. CIV. PRAC. & REM. CODE ANN. § 38.001
1
An exhibit to the lease and the first amendment stated certain improvements that McGonagle was required to make prior to the
commencement of the lease that are not applicable here.
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(West 2008). McGonagle filed a general denial with numerous affirmative defenses and asked
for attorney’s fees. In his first amended answer, McGonagle also asked for declaratory relief. 2
The court submitted only Cellular Sales’s breach of contract claim to the jury. The jury
found that McGonagle “fail[ed] to comply with the Lease Agreement by failing to make access
to the premises leased by Cellular Sales ADA compliant[,]” Cellular Sales’s damages were
$30,242, and Cellular Sales’s reasonable attorney’s fees were $57,500 and an amount for
additional attorney’s fees through appeal. The jury also found that McGonagle’s reasonable
attorney’s fees were $23,000 and an amount for additional attorney’s fees through appeal.
McGonagle filed a motion for judgment notwithstanding the verdict asking the court to
disregard the verdict against him and Cellular Sales filed a motion for entry of final judgment
asking the court to enter judgment based on the verdict against McGonagle and a motion for
judgment notwithstanding the verdict asking the court to disregard the verdict concerning
McGonagle’s attorney’s fees. The trial court granted McGonagle’s motion for judgment
notwithstanding the verdict and also granted Cellular Sales’s motion for judgment
notwithstanding the verdict, resulting in a take nothing judgment for both parties. Cellular Sales
and McGonagle both appeal the trial court’s judgment.
WAS THE GRANT OF JUDGMENT NOTWITHSTANDING THE VERDICT
TO MCGONAGLE ON LIABILITY AND DAMAGES PROPER?
In two issues, Cellular Sales argues that the trial court erred in denying its motion for
entry of judgment and in granting McGonagle’s motion for judgment notwithstanding the verdict
setting aside the jury’s verdict against McGonagle.
2
Issue two below concerns McGonagle’s request for declaratory judgment and attorney’s fees.
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Standard of Review and Applicable Law
A trial court may disregard a jury’s finding and grant a motion for judgment
notwithstanding the verdict when there is no evidence to support the jury’s finding. TEX. R. CIV.
P. 301; Helping Hands Home Care, Inc. v. Home Health of Tarrant Cnty., Inc., 393 S.W.3d 492,
515 (Tex. App.—Dallas 2013, pet. denied). We review a trial court’s decision to grant a
judgment notwithstanding the verdict under the legal sufficiency standard of review. Helping
Hands Home Care, 393 S.W.3d at 515. We credit evidence favoring the jury verdict if
reasonable jurors could and disregard contrary evidence unless reasonable jurors could not.
Tanner v. Nationwide Mut. Fire Ins. Co., 289 S.W.3d 828, 830 (Tex. 2009); see City of Keller v.
Wilson, 168 S.W.3d 802, 823, 827 (Tex. 2005). If more than a scintilla of competent evidence
supports the jury’s finding, we will uphold it. Tanner, 289 S.W.3d at 830. To uphold the trial
court’s judgment notwithstanding the verdict, the party supporting the judgment was required to
show that there was no evidence to support the jury’s findings. See id.
Arguments of the Parties
Cellular Sales’s Arguments
Cellular Sales argues that the lease was unambiguous and that, as a matter of law,
McGonagle breached the lease because he did not make the leased premises ADA compliant and
did not adequately operate, manage, and maintain the Common Area as required by section 6.3
of the lease. Cellular Sales also argues that the evidence at trial was sufficient to uphold the
jury’s verdict and that McGonagle did not demonstrate that there was not at least a scintilla of
evidence to support the jury’s verdict.
Cellular Sales argues that the Demised Premises was only the interior area that Cellular
Sales leased from McGonagle and that the Demised Premises and the Common Area were
“defined separately” in the lease: Common Area included parking areas, curbs, loading area, and
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sidewalks and excluded “space in buildings (now or hereafter existing) designated for rental for
commercial purposes[.]” Cellular Sales’s regional manager, Jeff Bowers, and former
construction manager, Chris Warwick, both testified that the Demised Premises was the area
from the front threshold of Cellular Sales’s store to the rear threshold of the store. Cellular Sales
contends that the area outside the space that Cellular Sales leased from McGonagle—which was
where the construction at issue took place—was part of the Common Area.
Cellular Sales contends that McGonagle’s discretion to determine how to maintain the
Common Area did not allow him to shift the responsibilities for operation, management, and
maintenance of the Common Area to his tenants and section 6.3 limited his discretion by
requiring that he maintain the Common Area consistent with other similar shopping centers,
which included compliance with the ADA. Additionally, it argues that section 8.10 was in a part
of the lease entitled “Use and Care of Demised Premises” and provided that Cellular Sales was
responsible for complying with the ADA in the Demised Premises, not the Common Area. It
also contends that McGonagle’s argument that Cellular Sales leased the Demised Premises “as
is” under section 3.1 does not apply to the Common Area.
Cellular Sales argues that McGonagle admitted during trial that the work was done in the
Common Area and not in the Demised Premises, that all of the damages it sought were for work
McGonagle refused to complete in the Common Area, 3 and that there was no evidence disputing
Cellular Sales’s evidence concerning the amount of costs that Cellular Sales incurred in making
the needed repairs and that the jury awarded to Cellular Sales.
3
Cellular Sales notes that it spent over $150,000 to make the Demised Premises ADA compliant but that it did not ask McGonagle to pay
for the work to the Demised Premises.
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McGonagle’s Arguments
McGonagle argues that there is no evidence that McGonagle did not comply with the
lease because the lease did not require him to “make the premises leased by Appellant ADA
compliant.” McGonagle relies on section 8.10 of the lease and contends that the lease “clearly
and unambiguously provides” that Cellular Sales was responsible for complying with the ADA
and similar laws both for purposes of the configuration of the Demised Premises and of Cellular
Sales’s business operations at the Demised Premises. McGonagle argues that Cellular Sales sued
him “for matters regarding its business operations and for matters which are clearly stated to be
the responsibility of” Cellular Sales.
McGonagle also states that both parties stipulated on the record that the contract was not
ambiguous and, as a result, the trial court correctly construed the contract as a matter of law and
granted McGonagle’s judgment notwithstanding the verdict.
In addition, McGonagle contends that Cellular Sales “misapplies the facts” by relying on
a portion of section 6.3 to establish that the lease required McGonagle to make the repairs.
McGonagle stresses that section 6.3 states “Landlord shall be responsible for the operation,
management and maintenance of the Common Area, the manner of maintenance and the
expenditures therefore to be in the sole discretion of Landlord[.]” And McGonagle contends that
he was responsible for maintenance of the Common Area and “[n]ew construction is not
maintenance.” McGonagle cites Lewis v. Vitol, S.A. for the propositions that “sole discretion” is
defined as “[a]n individual’s power to make decisions without anyone else’s advice or consent”
and that a contract provision that provides for an action to be in a party’s sole discretion does not
create a contractual entitlement for the other party. No. 01-05-00367-CV, 2006 WL 1767138, at
*5 (Tex. App.—Houston [1st Dist.] June 29, 2006, no pet.) (mem. op.) (quoting BLACK’S LAW
DICTIONARY 499 (8th ed. 2004)).
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McGonagle also argues that the lease “clearly and unambiguously provides” that Cellular
Sales leased the premises “as is” and that McGonagle was not required to make any
improvements of any kind in connection with Cellular Sales’s commencement or operation of
business in the premises. 4
Analysis
Liability
At trial, the sole liability question submitted to the jury was whether “McGonagle fail[ed]
to comply with the Lease Agreement by failing to make access to the premises leased by Cellular
Sales ADA compliant[.]” The evidence before the jury included the lease and the first
amendment to the lease. The lease defined the Demised Premises to be a store unit in a shopping
center comprising approximately 3,047 square feet. The Common Area under the lease was
“that part of the Shopping Center intended for the common use of all tenants” and included
“parking areas . . . curbs, loading area, sidewalks, malls and promenades[.]” Section 6.3 of the
lease provided that McGonagle, as landlord, “shall be responsible for the operation, management
and maintenance of the Common Area” and that he had “sole discretion” to determine “the
manner of maintenance and the expenditure therefore” but that it was “to be generally in keeping
with similar shopping centers within the same geographic area as the Shopping Center.” Section
8.10 stated that Cellular Sales “shall be responsible for compliance with the Americans with
Disabilities Act of 1990 . . . in all matters regarding both the configuration of the Demised
Premises (the interior as well as all public and/or employee door entrances) and Tenant’s
business operations at the Demised Premises.”
4
McGonagle quotes the deposition testimony of Cellular Sales’s “corporate representative” Christopher Warwick who stated that Cellular
Sales knew that it was leasing the premises “as is” which meant Cellular Sales accepted “the demise[d] premises in its current condition at the
time of signing.” In response, citing Johnson by Johnson v. Li, 762 S.W.2d 307, 308 (Tex. App.—Fort Worth 1988, writ denied), Cellular Sales
argues that Warwick’s deposition is not properly before this Court because it was not introduced into evidence at trial and made a part of the
transcript.
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In addition, the lease provided that—with the exception of certain specified work that
McGonagle agreed to perform (that is not at issue here)—Cellular Sales accepted the Demised
Premises in “AS IS, WHERE AS” condition and that McGonagle would “not be obligated to
perform any construction, remodeling work, or other improvements of any kind in connection
with [Cellular Sales’s] commencement and/or operation of business in the Demised Premises.”
And the first amendment to the lease likewise stated that, with the exception of certain work that
McGonagle agreed to perform and a finish-out allowance that McGonagle provided to Cellular
Sales, Cellular Sales “accept[ed] the Demised Premises [in] ‘AS IS, WHERE AS’ condition” and
McGonagle was not obligated to perform any construction or remodeling work “in connection
with Tenant’s commencement and/or operation of its business in the Demised Premises.”
The record also included the following testimony by McGonagle:
Q: Now, you understand, you’ve heard some testimony today that Cellular Sales
did in fact do some work on the front of the store and the rear of the store,
correct?
A: Correct.
Q: And that was all done outside of the 3,050 square feet that’s defined in the
demised premises, correct?
A: Correct.
Then he later testified:
Q: And we’ve already agreed that the demised premises does not include the
parking lot in the front, the ramp in the front, or the ramp in the rear, correct?
A: Correct.
McGonagle further testified that the parking lot and walkways in front of the building
were shared by the tenants in the shopping center and described the walkways as “commonly
common.”
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Christopher Warwick, formerly a construction manager for Cellular Sales, testified that
his “understanding of the demised premises, as most leases state, it’s threshold-to-threshold
within the confines of the building.” And Jeffrey Bowers, a Cellular Sales employee who had
negotiated twenty-seven commercial leases for Cellular Sales, testified that the “demised
premises is from threshold-to-threshold, which is where we conduct business.” Warwick also
testified that the front parking lot, front ramp, and the rear of the store were in the Common Area
as it was defined in section 6.1.
In addition, Warwick testified that the City of Dallas inspector informed Cellular Sales
that, in order to obtain a certificate of occupancy, “ramps had to be constructed in the front of the
building from the parking spots onto the City sidewalk, as well as an accessibility ramp from the
rear parking into the back of the building.”
Damages
Three of Cellular Sales’s exhibits admitted at trial were invoices and checks showing it
paid three vendors a total of $30,242: $24,500 to Fleetwood Commercial Concrete for installing
ramps at the back and front of the store, $4,782 to Ace Decor & Finishes, Inc. for fabricating and
painting handicap railings, 5 and $960 to Magnum Power Wash LLC for removing parking space
stripes, power-washing, and re-striping the parking lot. When asked whether he had any
evidence to demonstrate that the $30,242 of expenses that Cellular Sales incurred in completing
the work were not the actual damages that Cellular Sales incurred, McGonagle testified that he
had “no idea in regard to the costs, whether they incurred them or not.”
We conclude that more than a scintilla of evidence supports the jury’s finding that
McGonagle failed to comply with the lease by failing to make access to the premises leased by
5
The evidence showed that Ace Decor submitted an invoice and was paid for $4,782 for fabrication and installation of the railings,
although the check issued to Ace Decor was for a higher amount.
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Cellular Sales compliant with the ADA and supports the jury’s award of $30,242 in damages.
As a result, we also conclude that the record supports the jury’s award of attorney’s fees to
Cellular Sales. See TEX. CIV. PRAC. & REM. CODE ANN. § 38.001(8) (West 2008) (providing that
a party may recover reasonable attorney’s fees if the claim is for an oral or written contract);
Smith v. Patrick W.Y. Tam Trust, 296 S.W.3d 545, 547 (Tex. 2009) (“If attorney’s fees are
proper under section 38.001(8), the trial court has no discretion to deny them.”); Sharifi v. Steen
Auto., LLC, 370 S.W.3d 126, 152 (Tex. App.—Dallas 2012, no pet.) (stating that, to recover
under section 38.001(8), a party must (1) prevail on his cause of action and (2) recover
damages).
We sustain Cellular Sales’s two issues.
DID THE TRIAL COURT ABUSE ITS DISCRETION BY DENYING
MCGONAGLE’S REQUEST FOR ATTORNEY’S FEES?
In a cross-appeal, McGonagle argues that the trial court abused its discretion by granting
Cellular Sales’s motion for judgment notwithstanding the verdict and denying him attorney’s
fees in accordance with the jury’s findings.
Background on Attorney’s Fees
In McGonagle’s first amended answer, he added a request for declaratory relief. His
request for attorney’s fees and declaratory relief stated:
IV. Attorney’s Fees and Expenses
It was necessary for Defendant to secure the services of the Law Firm of
Gagnon, Peacock, Shanklin & Vereeke, P.C., licensed attorneys to prepare and
defend this suit. Plaintiff should be ordered to pay reasonable attorney’s fees and
expenses through trial and appeal; and a judgment should be rendered in favor of
Defendant’s attorneys and against Plaintiff; or, in the alternative, Defendant
requests that reasonable attorney’s fees and expenses through trial and appeal be
taxed as costs and be ordered paid directly to Defendant’s attorneys, who may
enforce the order for fees in the attorney[’]s own name.
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V. Declaratory Relief
Pursuant to Chapter 37 of the Texas Civil Practice and Remedies Code,
Defendant requests that this Court consider the terms of the Lease Agreement
contract and find that Defendant has no duty to pay for the ramp constructed by
Plaintiff, and find that Defendant is entitled to recover reasonable and necessary
attorney fees that are equitable and just.
Cellular Sales filed “Special Exceptions to Defendant’s Converse Declaratory Judgment
Claim” and argued that McGonagle’s declaratory judgment counterclaim was unnecessary and
duplicated Cellular Sales’s breach of contract claim. Cellular Sales argued that McGonagle
“requests the Court examine the same agreement over which Plaintiff has sued Defendant, i.e.
the lease agreement, and determine whether Defendant is obligated to pay Plaintiff for the
construction expenses Plaintiff incurred and for which Plaintiff seeks to recover from
Defendant.” Cellular Sales asserted that McGonagle’s “declaratory judgment claim is the exact
converse of Plaintiff’s breach of contract claim” and that McGonagle’s “apparent purpose in re-
styling” Cellular Sales’s breach of contract claim as a declaratory judgment counterclaim was “a
thinly-veiled attempt to recover attorney’s fees through the Declaratory Judgments Act.”
Cellular Sales asked the court to dismiss McGonagle’s “converse declaratory judgment claim.”
McGonagle responded that declaratory judgment was appropriate because (1) he sought
“a declaration as to whose duty it [was] to pay for the ramp” that Cellular Sales constructed and
that determination “would settle the dispute and put an end to the controversy” and (2) he did not
plead his request for declaratory relief as a counterclaim.
The court granted Cellular Sales’s special exception and gave McGonagle the
opportunity to replead. McGonagle’s second amended answer included the same request 6 for
declaratory relief and attorney’s fees and added one sentence: “Defendant also requests that the
Court determine whether ‘common maintenance’ as defined in the Lease, includes ADA
6
The minor differences between the first and second amended original answers were grammatical and a change to the law firm name.
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compliance or any other construction necessary for Plaintiff to obtain a certificate of occupancy,
or to keep a certificate of occupancy.” Cellular Sales then moved to strike McGonagle’s
declaratory judgment counterclaim with prejudice on the grounds that it was not a proper
declaratory judgment claim because McGonagle was “merely trying to recover his attorney’s
fees by seeking a declaration of non-liability on the very contract Cellular Sales has sued upon.” 7
During the charge conference, Cellular Sales renewed its motion to strike McGonagle’s
counterclaim for declaratory relief. The trial court overruled the motion to strike “at this time.”
Also during the charge conference, the following exchange took place:
THE COURT: So that leaves the attorneys fees. If you’re asking for
declaratory judgment, what judgment, what’s it going to say? What do you hope
to get out of your declaratory judgment action?
[MCGONAGLE’S COUNSEL:] Your Honor, let me turn to my pleading.
Let’s see, this is item number 2.
Well, number one, that Dr. McGonagle had no duty to pay for the ramps
constructed by the Plaintiff. That—
THE COURT: How is that not going to be resolved by the Plaintiff’s
lawsuit?
[MCGONAGLE’S COUNSEL:] I think that one will be.
THE COURT: Okay.
[MCGONAGLE’S COUNSEL:] The way I understood your question
what will it say.
THE COURT: Right.
[MCGONAGLE’S COUNSEL:] The second part of that is whether—
whether the common maintenance as defined in the lease includes ADA
compliance or any other construction necessary for the Plaintiff to obtain a
certificate of occupancy.
7
Cellular Sales also moved to strike McGonagle’s second amended original answer because it was untimely.
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THE COURT: How is that an existing dispute that’s not covered by their
loss? In other words, they’re not trying to get certification of occupancy in the
future, right?
[MCGONAGLE’S COUNSEL:] None that I am aware of.
THE COURT: So the ramps, all of that is resolved, they got their CO,
they’re in. Not going to come up in the future, don’t really need that for any
future relationship.
[MCGONAGLE’S COUNSEL:] I agree with that.
THE COURT: Okay.
....
THE COURT: Here is what I’m inclined to do. I don’t know whether or
not you’re entitled to a Jury decision on your attorneys fees. In the event you’re
entitled to any, but even if it’s my duty to decide your attorney fee question in the
event you get a declaratory judgment, I know that it’s not—it’s not improper for
the Court to allow the Jury to give an advisory verdict with respect to attorneys
fees that the Court can either use or not use.
So what I’m inclined to do is go ahead and submit the attorneys fees, and
then you can argue to me whether or not as a matter of law you’re entitled to
some declaratory judgment action that’s independent from the issues that are
going to be resolved by the Plaintiff’s case.
And if there isn’t any, then you won’t get your attorneys fees. If there is
one, then I have to decide whether or not it would be equitable or just to even
award attorneys fees.
So you may have some homework after this is all over with.
Does that make sense?
[MCGONAGLE’S COUNSEL:] It does, Your Honor.
Cellular Sales objected to submitting the question concerning McGonagle’s attorney’s
fees to the jury because McGonagle had not segregated his attorney’s fees and “declaratory relief
is not appropriate” and “no reasonable jury could find” that McGonagle was entitled to
attorney’s fees. The court overruled Cellular Sales’s objection.
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The charge included the question: “What is a reasonable fee for the necessary services of
McGonagle’s attorneys, stated in dollars and cents?” The jury found that a reasonable fee was
$23,000 for representation in the trial court and additional amounts for representation through
appeal. The court subsequently granted Cellular Sales’s motion for judgment notwithstanding
the verdict on the jury’s answer to the question concerning McGonagle’s attorney’s fees.
McGonagle then appealed that portion of the final judgment.
Standard of Review and Applicable Law
A party may not use the declaratory judgments act to obtain otherwise impermissible
attorney’s fees. MBM Fin. Corp. v. Woodlands Operating Co., L.P., 292 S.W.3d 660, 669 (Tex.
2009); City of Carrollton v. RIHR Inc., 308 S.W.3d 444, 454 (Tex. App.—Dallas 2010, pet.
denied). A defendant may not use the declaratory judgments act as a vehicle “to obtain
attorney’s fees merely for resisting the plaintiff’s right to recover.” Owens v. Ousey, 241 S.W.3d
124, 132 (Tex. App.—Austin 2007, pet. denied). However, the grant or denial of attorney’s fees
in a declaratory judgment action lies within the discretion of the trial court. Oake v. Collin Cnty.,
692 S.W.2d 454, 455 (Tex. 1985). And the trial court’s decision will not be reversed on appeal
absent a clear showing that it abused that discretion. Id. “It is an abuse of discretion to award
attorney’s fees under the Uniform Declaratory Judgments Act when the statute is relied upon
solely as a vehicle to recover attorney’s fees.” City of Carrollton, 308 S.W.3d at 454.
Arguments of the Parties
McGonagle’s Arguments
McGonagle argues that he is entitled to attorney’s fees under section 37.009 of the civil
practice and remedies code because he “brought a cause of action under the Declaratory
Judgment Act and prevailed in the district court.” See TEX. CIV. PRAC. & REM. CODE ANN.
§ 37.009 (West 2008). He argues that he presented sufficient evidence at trial, through the
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testimony of his attorney as his designated expert, to establish the reasonableness and necessity
of his attorney’s fees under section 37.009. He also contends that the jury’s findings awarding
him attorney’s fees further show that his fees were reasonable and necessary. And he argues that
the court abused its discretion by not awarding him attorney’s fees “given the posture and facts
of this case.”
Cellular Sales’s Arguments
Cellular Sales argues that this Court should overrule McGonagle’s cross-point because
McGonagle has not demonstrated that the trial court abused its discretion when it denied
McGonagle an award of attorney’s fees under chapter 37 of the civil practice and remedies code.
It contends that McGonagle’s request for declaratory relief was a “naked” attempt to recover
attorney’s fees under the declaratory judgments act when an award of attorney’s fees to
McGonagle would otherwise not be available. Cellular Sales argues that McGonagle asserted an
“improper, converse declaratory judgment claim” because “[n]otwithstanding Cellular Sales’
already pending breach of contract claim, McGonagle sought a declaration that he did not breach
the parties’ contract.” And Cellular Sales maintains that it would have been an abuse of
discretion if the trial court had awarded attorney’s fees to McGonagle because he had relied upon
the declaratory judgments act solely to recover attorney’s fees. Cellular Sales also contends that,
in exchanges between McGonagle’s attorney and the trial judge during the charge conference,
McGonagle’s attorney admitted that his claim would be resolved by the determination of
Cellular Sales’s breach of contract claim and, as a result, McGonagle has waived his complaint
on appeal.
Cellular Sales also argues that the jury did not decide that McGonagle was entitled to an
award of attorney’s fees. Instead, the trial court sought only an advisory verdict concerning the
reasonableness and necessity of McGonagle’s attorney’s fees. And Cellular Sales states that the
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trial court, not the jury, possesses the discretion to award attorney’s fees under the declaratory
judgments act. 8
Analysis
Cellular Sales pleaded a claim for breach of contract, claiming that “[d]espite Plaintiff’s
full performance, Defendant has failed to comply with its obligations under the Lease, namely its
obligation to operate and maintain the Leased Premises’ Common Areas.” In his second
amended original answer, McGonagle requested declaratory relief “that this Court consider the
terms of the Lease Agreement contract and find that Defendant had no duty to pay for the ramps
constructed by Plaintiff, and find that Defendant is entitled to recover reasonable and necessary
attorney fees that are equitable and just.” McGonagle also asked “that the Court determine
whether ‘common maintenance’ as defined in the Lease, includes ADA compliance or any other
construction necessary for Plaintiff to obtain a certificate of occupancy, or to keep a certificate of
occupancy.” And McGonagle’s counsel admitted at trial that the issues raised in his declaratory
judgment action would be resolved by Cellular Sales’s lawsuit.
We conclude that McGonagle’s declaratory judgment claim duplicated issues already
before the court in Cellular Sales’s live pleadings. See BHP Petroleum Co. Inc. v. Millard, 800
S.W.2d 838, 841 (Tex. 1990) (“The Declaratory Judgments Act is ‘not available to settle
disputes already pending before a court.’” (quoting Heritage Life v. Heritage Grp. Holding, 751
S.W.2d 229, 235 (Tex. App.—Dallas 1988, writ denied))). McGonagle’s declaratory judgment
pleadings address the same controversy pleaded by Cellular Sales, namely whether McGonagle
breached the lease by not making repairs needed to make the common areas of the leased
premises comply with the ADA.
8
Cellular Sales argues that, because McGonagle did not request findings of fact and conclusions of law that would establish the basis for
the trial court’s exercise of discretion, this Court cannot conclude that the trial court abused its discretion. Given our disposition of this issue, we
do not address this argument.
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As a result, this case “falls squarely” within the rule that a party cannot use the
declaratory judgments act merely as a vehicle to obtain otherwise impermissible attorney’s fees.
Tanglewood Homes Ass’n, Inc. v. Feldman, Nos. 14-11-01088-CV, 14-11-01089-CV, 2014 WL
1711198, at *18 (Tex. App.—Houston [14th Dist.] April 20, 2014, no pet. h.). We conclude that
the trial court did not abuse its discretion by granting Cellular Sales’s motion for judgment
notwithstanding the verdict and in denying McGonagle attorney’s fees under the declaratory
judgments act. We overrule McGonagle’s issue on cross-appeal.
CONCLUSION
We reverse the portion of trial court’s judgment granting McGonagle’s motion for
judgment notwithstanding the verdict, and reinstate and render judgment in accordance with the
jury’s finding of McGonagle’s liability and findings awarding Cellular Sales $30,242 in
damages, $57,500 in attorney’s fees, and additional attorney’s fees through appeal. We affirm
that portion of the judgment granting Cellular Sales’s motion for judgment notwithstanding the
verdict requesting the trial court to disregard the jury’s findings concerning McGonagle’s
attorney’s fees.
/Elizabeth Lang-Miers/
ELIZABETH LANG-MIERS
JUSTICE
130246F.P05
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S
Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
CELLULAR SALES OF KNOXVILLE, On Appeal from the 160th Judicial District
INC., Appellant Court, Dallas County, Texas
Trial Court Cause No. 11-02647.
No. 05-13-00246-CV V. Opinion delivered by Justice Lang-Miers,
Justices Myers and Lewis participating.
MARTIN E. MCGONAGLE, Appellee
In accordance with this Court’s opinion of this date, we REVERSE that portion of the
trial court's judgment granting appellee Martin E. McGonagle's motion for judgment
notwithstanding the verdict, and RENDER judgment in accordance with the jury's finding of
Martin E. McGonagle's liability and findings awarding appellant Cellular Sales of Knoxville,
Inc. $30,242 in damages, $57,500 in attorney’s fees, and additional attorney’s fees through
appeal. We AFFIRM that portion of the trial court’s judgment granting Cellular Sales of
Knoxville, Inc.’s motion for judgment notwithstanding the verdict requesting the trial court to
disregard the jury’s findings concerning Martin E. McGonagle’s attorney’s fees.
It is ORDERED that appellant Cellular Sales of Knoxville, Inc. recover its costs of this
appeal from appellee Martin E. McGonagle.
Judgment entered this 15th day of July, 2014.
–19–