Caprock Investment Corp. v. Montgomery First Corp. and Elton Montgomery ( 2005 )

Opinion filed November 17, 2005

Opinion filed November 17, 2005

                                                                        In The

    Eleventh Court of Appeals

                                                                   __________

                                                          No. 11-04-00097-CV

                                                    __________

                          CAPROCK INVESTMENT CORP., Appellant

                                                             V.

    MONTGOMERY FIRST CORP. AND ELTON MONTGOMERY, Appellees

                                          On Appeal from the 29th District Court

                                                      Palo Pinto County, Texas

                                                   Trial Court Cause No. 39,500

                                              M E M O R A N D U M  O P I N I O N

This case arises out of a dispute between Caprock Investment Corp. (Caprock) and Montgomery First Corp. and Elton Montgomery (MFC and Montgomery) concerning a promissory note.^[1]  The trial court granted partial summary judgment in favor of MFC and Montgomery. The trial court subsequently entered a final judgment, and Caprock appealed.  We reverse and render judgment for Caprock.

In a lawsuit filed in Nolan County in 2001, Caprock obtained summary judgment against MFC and Montgomery.  Caprock filed abstracts of this judgment in Palo Pinto and Young Counties.  This court, however, reversed the summary judgment and remanded the case for further proceedings. Montgomery First Corp. v. Caprock Investment Corp., 89 S.W.3d 179, 187 (Tex.App. - Eastland 2002, no pet=n).  As a result of this court=s decision, Caprock released the judgment liens that it had filed against MFC and Montgomery.

MFC and Montgomery were not satisfied with the language that Caprock used in its releases and demanded that Caprock amend them.  On December 9, 2002, MFC and Montgomery filed this suit for declaratory judgment seeking to remove cloud on title to their property.  On the same day, Caprock filed amended releases.  On December 20, 2002, still not satisfied with the language in the releases, MFC and Montgomery made another demand that Caprock unconditionally and unequivocally release the judgment liens. On March 10, 2003, Caprock again filed amended releases.  MFC and Montgomery found the language in these final releases to be satisfactory.

Caprock=s final releases did not, however, end the present lawsuit.  On May 9, 2003, MFC and Montgomery filed their First Amended Motion for Partial Summary Judgment.  In their motion, MFC and Montgomery sought declarations from the trial court that (1) Caprock=s original releases and first amended releases were not unconditional and unequivocal, (2) the lawsuit was necessary to compel Caprock to file the final releases, and (3) MFC and Montgomery were entitled to recover the attorney=s fees incurred in obtaining the final releases.

The trial court granted the motion, declaring that Caprock=s original and first amended releases were not unconditional and unequivocal and that MFC and Montgomery were entitled to recover reasonable and necessary attorney=s fees incurred in obtaining unconditional and unequivocal releases.  Pursuant to a TEX.R.CIV.P. 11 agreement, the parties stipulated to the amount of reasonable and necessary attorney=s fees. On December 29, 2003, the trial court rendered final judgment against Caprock.  This appeal followed.

In its first issue on appeal, Caprock argues that the trial court should not have awarded attorney=s fees to MFC and Montgomery because recovery of attorney=s fees is not available in a suit to quiet title. We agree.

As a general rule, the burden of proof on attorney=s fees is on the party seeking to recover them.  Stewart Title Guaranty Company v. Sterling, 822 S.W.2d 1, 10 (Tex.1991).  To recover attorney=s fees, a party must prove entitlement by contract or statute.  Holland v. Wal-Mart Stores, Inc., 1 S.W.3d 91, 95 (Tex.1999).  Because recovery of attorney=s fees is penal in nature, statutes providing for such recovery must be strictly construed.  See Musquiz v. Marroquin, 124 S.W.3d 906, 913 (Tex.App. - Corpus Christi 2004, pet=n den=d).

MFC and Montgomery brought their lawsuit under the Texas Declaratory Judgments Act, Chapter 37 of the Texas Civil Practice and Remedies Code.  The statute provides that, in any proceeding under the Act, Athe court may award costs and reasonable and necessary attorney=s fees as are equitable and just.@ TEX. CIV. PRAC. & REM. CODE ANN. ' 37.009 (Vernon 1997).   However, 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.  Southwest Guaranty Trust Company v. Hardy Road 13.4 Joint Venture, 981 S.W.2d 951, 956 (Tex.App. - Houston [1st Dist.] 1998, pet=n den=d). Attorney=s fees are not available in a suit to quiet title or to remove cloud on title.  Southwest Guaranty Trust Company v. Hardy Road 13.4 Joint Venture, supra at 957.

MFC and Montgomery brought this lawsuit against Caprock because they were concerned that Caprock=s initial releases would cloud title to their property. In their original petition for declaratory judgment, MFC and Montgomery stated: AThe abstracts of judgment and the notice of lis pendens which remain in effect in Palo Pinto and/or Young Counties are wrongful and constitute encumbrances and clouds on the title of MFC and Montgomery.@  Further, in their prayer for relief, MFC and Montgomery asked the trial court to declare that Aany and all notices of lis pendens and abstracts of judgment filed by Caprock...are unauthorized, void, and constitute a cloud on the title of the real property of Montgomery and MFC.@  Such language is indicative of a suit to quiet title.  See, e.g., Sani v. Powell, 153 S.W.3d 736 (Tex.App. - Dallas 2005, pet=n filed); Southwest Guaranty Trust Company v. Hardy Road 13.4 Joint Venture, supra.  Recovery of attorney=s fees is not allowed in such an action, whatever its form.  See Hawk v. E.K. Arledge, Inc., 107 S.W.3d 79, 84 (Tex.App. - Eastland 2003, pet=n den=d). We sustain appellant=s first issue on appeal.

We need not address Caprock=s remaining issues on appeal which concern whether Caprock=s initial and first-amended releases constituted a cloud on MFC and Montgomery=s title.  The final releases filed by Caprock supersede the other releases, and MFC and Montgomery have stated that the final releases are satisfactory.  The only remaining controversy in this case is whether MFC and Montgomery were entitled to recover their attorney=s fees.  We hold that they were not.        The judgment of the trial court is reversed, and we render judgment that MFC and Montgomery take nothing in their suit for attorney=s fees.

JIM R. WRIGHT

CHIEF JUSTICE

November 17, 2005

Not designated for publication. See TEX.R.APP.P. 47.2(a).

Panel consists of: Wright, C.J., and McCall, J.

Strange, J., not participating.

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^[1]The details of this dispute, which are not relevant to this appeal, are discussed fully in Montgomery First Corp. v. Caprock Investment Corp., 89 S.W.3d 179, 181-84 (Tex.App. - Eastland 2002, no pet=n).