Marc R. Wein // William Sherman v. William Sherman and Eduardo Alarcon // Cross-Appellee, Marc R. Wein ( 2013 )

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-10-00499-CV
Appellant, Marc R. Wein // Cross-Appellant, William Sherman
v.
Appellees, William Sherman and Eduardo Alarcon // Cross-Appellee, Marc R. Wein
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 53RD JUDICIAL DISTRICT
NO. D-1-GN-06-001292, HONORABLE GISELA D. TRIANA, JUDGE PRESIDING
MEMORANDUM OPINION
This appeal arises from disputes among neighbors. Marc R. Wein appeals the district
court’s judgment incorporating its prior order awarding sanctions against him in favor of appellee
William Sherman and denying all other relief. Cross-Appellant Sherman appeals the district court’s
dismissal of his claims against Wein.1 For the reasons that follow, we affirm the trial court’s
final judgment.
FACTUAL AND PROCEDURAL BACKGROUND
The parties to this suit are neighbors who have a history of disputes, including prior
litigation. In 2004, Sherman and the parties’ neighborhood association obtained a money judgment
1
Eduardo Alarcon was a defendant and, after realignment of the parties, a plaintiff below
and is named as an appellee here. However, none of the issues before us involves claims by or
against Alarcon, and he has filed no briefs with this Court.
and a permanent injunction against Wein relating to his disputed activities and accessory structure.
Wein’s failure to comply with the temporary and permanent injunctions issued in that suit resulted
in his being found in contempt of court three times, fined, and confined to county jail.2 Following
the entry of judgment, Sherman filed an abstract of judgment in the Travis County real property
records. Upon Wein’s filing a supersedeas bond and Sherman’s receipt of notice from Wein’s
attorney, Sherman provided a partial release of the abstract of judgment, excluding Wein’s
homestead. This Court subsequently upheld the 2004 judgment.3
Litigation Commenced
Sherman contends that following the 2004 judgment he began to observe vandalism
to his property and suspected Wein was responsible. As a result, Sherman installed video cameras
at various locations on his property. In December 2005, one of the video cameras captured Wein
trespassing at the edge of Sherman’s property and damaging a sprinkler head. Sherman filed charges
against Wein, who was arrested and charged with criminal mischief in April 2006. Eight days later
Wein filed this suit against Sherman and Alarcon alleging invasion of privacy, wiretapping,4 and
trespass. Specifically, Wein alleged that Sherman and Alarcon had installed infrared cameras
2
In an ancillary proceeding to Wein’s appeal of the 2004 judgment, this Court, after ordering
that a show cause hearing be held in the trial court, found Wein in contempt of court and fined him
$2,000. See Wein v. Jenkins, No. 03-04-00568-CV (Tex. App.—Austin Feb. 15, 2005, order)
available at http://www.3rdcoa.courts.state.tx.us/opinions/Opinion.asp?OpinionID=13506. The
other contempt findings were made by the district court.
3
See Wein v. Jenkins, No. 03-04-00568-CV, 2005 Tex. App. LEXIS 7477 (Tex.
App.—Austin Sept. 9, 2005, no pet.) (mem. op.).
4
See Tex. Civ. Prac. & Rem. Code §§ 123.002, .004.
2
directed at the interior of Wein’s home and that Sherman had installed a listening device that would
allow him to intercept Wein’s telephone conversations. Wein further alleged that Sherman and
Alarcon intentionally directed irrigation devices to spray water on Wein, his family, and his guests
and painted a red stripe on the pavement in front of his home, which he contends was intended to
mark his home as the residence of a person of the Jewish faith.
In May 2006, the district court held a hearing on Wein’s request for injunctive relief.
Sherman contends that at the hearing both Wein and his expert testified that they did not know “what
the cameras are looking at.”5 The expert further testified that he did not know the make, model, or
zoom capabilities of the cameras but they did not appear to have infrared illuminators or night vision.
The district court denied the injunction.
Wein subsequently filed an amended petition adding a claim for slander of title
against Sherman, alleging that because Sherman filed an abstract of the 2004 judgment, Wein had
been unable to obtain a home equity loan. During discovery, Wein explained that he had needed the
loan to replenish his retirement account, from which he had borrowed money to supercede the 2004
judgment, and had been forced to secure a loan at a less favorable rate. Wein further asserted that
he had obtained a loan from his fiancé’s mother, Mary Richards, and had paid her $25,000 in
interest. Wein produced a check payable to Richards for $25,000 dated November 22, 2004. The
reverse side of the check indicated that it had been presented for payment on May 2, 2007.
5
The record does not contain a transcript of the injunction hearing.
3
Disposition of Wein’s Claims
In September 2007, Sherman served Wein with a notice of intent to take the oral
deposition of Richards. Two days later Wein nonsuited his slander of title claim and concurrently
filed a motion to quash the deposition. The next day Wein’s attorney filed a motion to withdraw.
The record does not contain an order on Wein’s motion to quash Richards’ deposition, but on
September 21, 2007, Richards was deposed. Richards testified that she loaned Wein money, he paid
her back, and she did not charge or receive any interest from him. She further testified that she did
not receive a check from Wein for $25,000 and did not recall signing or endorsing such a check.
Richards also stated that the loan was arranged through her daughter, Melissa Steffen, and she never
spoke to Wein about it.6 On the same day Richards was deposed, Wein’s attorney filed an
amended motion to withdraw, to which Wein agreed and which the district court granted on
September 27, 2007,7 and Sherman and Alarcon filed no-evidence motions for partial summary
judgment on Wein’s claims for invasion of privacy and trespass, which the district court granted in
October 2007.8
6
In her deposition, taken around the same time, Steffen testified that Wein and Richards
came up with the terms of the loan and Steffen was not involved.
7
Wein’s withdrawing counsel was his third attorney and second attorney of record in this
lawsuit. Wein continued pro se for a brief period and was subsequently represented by three
other attorneys. Although the record is unclear, there is reference to Wein’s representation by a
seventh attorney.
8
In his first deposition in August 2007, Wein testified that his expert “couldn’t find any
wiretapping” when he checked the lines “probably” before Wein filed suit. Referring to his claim
for wiretapping, he further testified, “I can withdraw that allegation.” Although the record is unclear,
Wein’s claim for wiretapping was either withdrawn by Wein’s deposition testimony, dismissed as
a portion of the invasion of privacy claim, or subsequently abandoned by Wein through his attorney.
4
After the dismissal of Wein’s claims, there remained pending counterclaims filed by
Sherman and Alarcon for attorney’s fees, trespass, nuisance, and violations of neighborhood
restrictions. Alleging that the $25,000 check Wein produced in discovery was fabricated and that
Wein, Richards, and Steffen conspired to defraud them, Sherman and Alarcon obtained leave to
redepose Wein, Richards, Steffen on the sole issue of fabrication of evidence.
Deposition Testimony on Fabrication of Evidence and Partial Settlement
In her second deposition in April 2008, Richards recanted her prior testimony, stating
that she did recall signing a $25,000 check from Wein and placing her thumbprint on it in 2007. She
testified that in February or March 2007, Wein asked her if she would sign a check for $25,000 to
help him and she agreed without further discussion. Richards also testified that on the day she
signed the check, she and Steffen were running errands in Richards’ car on the last day before
Richards moved out of state for the summer. She stated that they drove past Wein’s place of
business, he was standing outside, Steffen asked her to stop so she could talk to Wein, and when she
stopped, Wein got into the car. She added that when they got close to Chase Bank, Wein said he
needed to go to the bank and asked her to stop. Richards testified that when they arrived at the bank,
Steffen asked her to come inside to meet some people, and she agreed. She further testified that
when she got inside, Wein motioned for her to join him at a table, asked her to sign a check, and laid
the check face down on the table where she signed it. Richards further testified that Wein then
motioned for her to accompany him to the teller counter where she handed Wein the check and the
teller took her thumbprint. She stated that she did not recall whether she or Wein presented the
check to the teller and that she did not receive the $25,000.
5
Wein testified that he wrote Richards a check instead of wiring the interest payment,
as he had the repayment of the principal amount of the loan, because he wanted to pay her in person
and thank her. Wein also answered questions about his bank records. He explained that the check
he wrote to Richards in 2004 did not appear until his April–May 2007 statement because he has
numerous checkbooks which he does not keep in order sequentially and that the transfer of $25,000
into his account on May 23, 2007, was probably transferred from another of his accounts.
Steffen testified that Wein and Richards arranged to cash the check and she was not
involved, but it was her understanding that they were going to cash the check that Wein had given
her earlier. She stated that she and Wein rode together and met Richards at the bank. Steffen further
testified that after they cashed the check, Richards handed Steffen the money and asked her to keep
it for her. She also testified that she placed the money in her personal safe at home, began using it
to pay bills, and ultimately spent it all.
Following these depositions, the parties agreed to an order realigning the parties.
Sherman and Alarcon, proceeding as plaintiffs, filed an original petition reasserting the claims
against Wein they had originally asserted as counterclaims and adding Richards and Steffen as
defendants. Alarcon asserted causes of action for fraud, fraud by nondisclosure, conspiracy,
intentional infliction of emotional distress, and negligence against Richards and Steffen. Sherman
asserted the same causes of action against all three defendants and later added a claim for malicious
prosecution against Wein. In March 2009, the parties attended mediation, which resulted in
Sherman’s settlement with Richards. Under the terms of the settlement agreement signed at the
conclusion of the mediation, Richards agreed to pay Sherman $90,000 in return for her dismissal
6
with prejudice from the lawsuit. Subsequently, Sherman and Richards signed a second settlement
agreement allocating $2,488.24 of the settlement proceeds to payment of attorney’s fees and the
remaining $87,5111.76 to the payment of punitive damages. On May 13, 2009, Sherman filed a
dismissal with prejudice as to Richards.
Motion for Sanctions
In May 2009, Sherman filed a motion for sanctions against Wein, which the district
court heard over two days in June 2009. At the hearing, Sherman offered numerous exhibits,
including court records from the parties’ prior litigation, pleadings and transcripts from hearings in
this lawsuit, deposition excerpts, Wein’s bank records, bank surveillance photographs from the day
Wein and Richards cashed the $25,000 check, and an affidavit from Sherman’s attorney on
attorney’s fees. The bank photos showed that during the transaction in which the $25,000 check was
cashed, at one point Wein and Richards stood at the teller counter together, while later in the
transaction, Wein stood at the teller counter alone. The affidavit of Sherman’s attorney indicated
that Sherman had incurred $113,562.60 in attorney’s fees and expenses, after a deduction of
$2,488.24 for the settlement amount paid by Richards. Sherman’s attorney supplemented his
affidavit with testimony that Sherman had incurred an additional $3,445 in attorney’s fees in
preparing for and attending the hearing on the motion for sanctions.
Wein’s documentary evidence included correspondence between the parties’ attorneys
regarding the partial release of the abstract of judgment and photographs of Sherman and Alarcon,
Sherman’s cameras, and the red stripe painted in front of Wein’s home. Wein also called seven
witnesses. Linette Harris, who assisted Wein’s first attorney in this lawsuit, testified generally that
7
she and her co-counsel, after doing some investigation and relying on Wein’s representations, had
told Wein that there was some basis for the factual allegations made in his original petition. The
bank teller who cashed the $25,000 check testified that she properly identified Richards, obtained
her thumbprint, and handed the cash to her. She also testified that Wein and Richards were at her
counter together during the entire transaction and was unable to explain the bank photo showing
Wein standing at the counter alone. When shown Wein’s bank statement, the teller identified a
$25,000 deposit into Wein’s account three weeks later as an online deposit from Wein’s money
market account.
Wein testified that in filing this lawsuit, he had relied on his attorney who told him
he had a causes of action for invasion of privacy and trespass. When asked about his claims that
Sherman’s cameras could peer into his home and that Sherman could observe his family’s private
actions, Wein stated that the only definitive evidence he had was “still photos taken from
Mr. Sherman’s residence which absolutely peer into my home, back deck, and into my bedroom.”
Wein also stated that his attorney had the photographs, but they had not been admitted into
evidence.9 Wein further testified that he recalled testifying at the temporary injunction hearing that
he did not know what the cameras could see and stated that the only photographs he had were of the
cameras “clearly in a viewpoint or stance where they would have the ability to look into [his] house.”
He testified that he based his factual allegations regarding the cameras on his opinion and that of his
expert, but said he could not clearly remember his expert’s testimony at the temporary injunction
hearing. Wein also acknowledged that he maintained his cause of action for invasion of privacy
9
A review of the record reveals that Wein subsequently admitted photographs into evidence
However, none of them displayed a view into Wein’s home or deck.
8
based on the cameras in his amended petition.10 He also acknowledged that when he filed his
petition, he had no evidence to support his allegation of wiretapping.
Concerning his trespass claim, Wein testified that the sprinkler trespass began in
2004 and he filed suit in 2006 because “there’s a culmination of events.” He also testified that
Sherman’s sprinkler had sprayed water onto his property and driveway “for approximately five years,
four or five times a day, for 15 to 20 minutes at a time.” Wein subsequently denied testifying that
Sherman’s sprinklers sprinkle four or five times a day. He then stated that they sprinkled “[a]t least
every other day for a period of 20 or 30 minutes in the morning” and “intermittently every other day
or so,” and that he and his family and guests could not avoid getting wet. Wein acknowledged that
in deposition in August 2007 he stated he was not seeking damages related to the sprinkler trespass.
Wein also testified that “a red stripe was painted 1/16th of an inch off [his] property in front of [his]
home,” and “part of it was on [his] property as well.” He stated that it was painted on the
neighborhood common property, but there was “more than a splatter on [his] property.”
Regarding his claim for slander of title, Wein testified that he relied on his attorney
in the prior litigation and his first and second attorneys in this lawsuit. He also testified that he had
incurred special damages because he had borrowed money from his retirement funds to pay the prior
judgment, tried to obtain a home equity loan to repay the funds, had been forced to borrow the
money from Richards, paid her back in full, and gave her a check for $25,000 in interest. Wein
stated that check number 1540, payable to Richards for $25,000 and dated November 11, 2004,
10
When pressed for additional evidence, Wein stated that he had also seen Sherman
physically peering into his windows. He acknowledged that he had not made that assertion
previously and did not intend to sue for it.
9
which he disclosed in discovery, was a replacement check for the original, which Richards lost.
Wein also stated that he gave Richards the replacement check approximately “a year or so” after the
original check, but he is not sure of the exact date. He testified that he dated the replacement check
November 22, 2004, “because that was the date of the first original check that she had misplaced and
it corresponded to the payment in full of the loan less the interest” and he had no duplicate check or
bank record of the original check. Wein acknowledged that in his deposition in April 2008, he
testified that he gave check number 1540 to Richards “on or about the 22nd of ‘04” but stated he had
made a mistake in his prior testimony.
Wein further testified that in 2007, Richards mentioned the check and asked him if
he thought she would have trouble cashing it, to which Wein replied that he would go to the bank
with her, and if there were a problem, he would write another check. Wein stated that Richards and
Steffen arranged to go to the bank to cash the check on the day Richards was moving out of state for
the summer, and he decided to go so that he could tell Richards goodbye and to be available to write
another check if necessary. Wein also stated that when they cashed the check, the teller handed
Richards the cash, and he never saw it again. He then stated that Richards handed the money to
Steffen and he had no idea what Steffen did with it after she put it in her purse.
Wein acknowledged that he had no proof of payment of the $25,000 to Richards at
the time he filed his amended petition containing the slander of title claim alleging special damages,
had not produced check number 1540 in discovery in 2004, and did not remember that it had not
been produced in discovery until 2007. He denied nonsuiting his slander of title action after it
became obvious that check number 1540 was being circulated under false pretenses and stated that
10
his attorney who withdrew about the same time as the nonsuit “never gave [him] a reason” for
withdrawing but it “had nothing to do with” check number 1540. With regard to the subsequent
$25,000 transfer into his checking account from his money market account, Wein testified that he
transferred the money to pay for a building he was constructing but could not trace the exact source
of those funds.
Following the hearing, the district court ordered Wein to pay Sherman $100,000 for
reasonable and necessary attorney’s fees and expenses “and as a sanction against Defendant Marc
Wein for abuse of the discovery process, for violation of Chapter 10 of the Texas Civil Practices and
Remedies Code, and for violation of Rule 13, TRCP.” The district court further ordered Wein to pay
Sherman $7,500 “for collection of the sanctions award if the award is not paid to William Sherman
by July 6, 2009.” Finally, the district court ordered Wein to pay Sherman $10,000 and $15,000,
respectively, in the event of appeal to the court of appeals and supreme court.
The order stated that the sanctions were “just and made for good cause” and contained
“findings to explain the reason for imposing sanctions.” At Wein’s request, the district court also
entered findings of fact and conclusions of law. The findings in both the order and the subsequent
findings of fact included that each of Wein’s causes of action was “groundless, brought in bad faith
and with the improper purpose of obtaining a judgment against Sherman and causing Sherman to
incur significant attorney’s fees and costs.” The district court further found that the “$25,000
transaction was a fraudulent transaction entered into by Wein to manufacture evidence in this case”
and constituted abuse of the discovery process.
11
Disposition of Remaining Issues
In September 2009, Wein filed a motion for summary judgment on all of Sherman’s
and Alarcon’s claims, contending that Sherman and Alarcon were not seeking, and there was no
evidence to support, any damages other than attorney’s fees, that the causes of action asserted do not
support an award of attorney’s fees, and that there can be no award of attorney’s fees without actual
damages.11 In January 2010, without specifying the grounds on which it relied, the district court
granted Wein’s motion for summary judgment.
Following the entry of summary judgment dismissing Sherman’s and Alarcon’s
claims, the only issue remaining to be determined was Wein’s pending motion for settlement credit,
an issue that was expressly reserved in both the sanctions order and summary judgment dismissing
Sherman’s and Alarcon’s claims. In the motion, Wein sought a credit against the sanctions award
for Richards’ settlement payment. In March 2010, the district court denied Wein’s motion for
settlement credit. At Wein’s request, the district court entered corresponding findings of fact and
conclusions of law. The district court’s findings included that the sanctions award was based on
Wein’s abuse of discovery and violation of various statutes and not on a determination of liability
sounding in tort. The district court concluded that the settlement payment did not represent payment
for common damages between Wein and Richards, that “[t]he purpose of sanctions is to secure a
party’s compliance with the rules, punish those who violate the rules, and to deter other litigants
11
Wein also argued that there was no evidence to support an award of damages for mental
anguish and that Sherman’s claims could not be construed as claims for malicious prosecution
because such claims arise only after the underlying case is concluded.
12
from violating the rules” and that “Wein’s sanctions were assessed against him individually . . . and
. . . are not damages for which joint and several liability could attach.”
In May 2010, the district court rendered final judgment incorporating the sanctions
award, conditioning the award of appellate attorneys fees on Wein’s unsuccessful appeal, and
denying all other relief. Wein filed a motion to modify judgment, alternative motion for remittitur,
and alternative motion for new trial, which was overruled by operation of law. This appeal followed.
DISCUSSION
Award of Sanctions
Standard of Review
In his first issue, Wein contends that the district court erred in its determination of
sanctions. We review a trial court’s imposition of sanctions for abuse of discretion. Unifund CCR
Partners v. Villa, 299 S.W.3d 92, 97 (Tex. 2009) (per curiam). We will reverse the trial court’s
ruling only if it is arbitrary, unreasonable, or without reference to any guiding rules or principles.
American Flood Research, Inc. v. Jones, 192 S.W.3d 581, 583 (Tex. 2006) (per curiam). “The trial
court does not abuse its discretion if it bases its decision on conflicting evidence and some
evidence supports its decision.” Unifund, 299 S.W.3d at 97 (citing In re Barber, 982 S.W.2d 364,
366 (Tex. 1998)).
Under an abuse of discretion standard, legal and factual sufficiency challenges to the
evidence are not independent grounds of error but are relevant factors in assessing whether the trial
court abused its discretion. Zeifman v. Michels, 212 S.W.3d 582, 587 (Tex. App.—Austin 2006, pet.
denied). In reviewing the legal sufficiency of the evidence, we view the evidence in the light most
13
favorable to the judgment, crediting favorable evidence if a reasonable fact finder could, and
disregarding contrary evidence unless a reasonable fact finder could not. City of Keller v. Wilson,
168 S.W.3d 802, 807 (Tex. 2005). The test is “whether the evidence at trial would enable reasonable
and fair-minded people to reach the [judgment] under review.” Id. at 827. In reviewing factual
sufficiency of the evidence, we consider and weigh all of the evidence in the record, and we may
overturn a judgment only if it is so against the great weight and preponderance of the evidence as
to be clearly wrong and manifestly unjust. Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986).
In determining whether the trial court abused its discretion in awarding sanctions, we
must ensure that the sanctions were appropriate or just. American Flood, 192 S.W.3d at 583 (citing
TransAmerica Natural Gas Corp. v. Powell, 811 S.W.2d 913, 916 (Tex. 1991)). The supreme court
has articulated a two-part inquiry: First, we must ensure that there is a direct relationship between
the improper conduct and the sanction imposed; because the sanction should be directed toward the
true offender, the trial court must attempt to determine whether sanctions should be imposed on the
party, its attorney, or both. American Flood, 192 S.W.3d at 583–84; TransAmerican, 811 S.W.2d
at 917. Second, the sanction must not be excessive. American Flood, 192 S.W.3d at 583–84;
TransAmerican, 811 S.W.2d at 917. The sanction “should be no more severe than necessary to
satisfy its legitimate purposes.” TransAmerican, 811 S.W.2d at 917. In determining whether a
sanction is just, we must review the entire record, American Flood, 192 S.W.3d at 583, and confine
our review of the sanctions order to the grounds specified by the trial court. Id. at 583–84; Unifund,
299 S.W.3d at 94 n.1; Pool v. Diana, No. 03-08-00363-CV, 2010 Tex. App. LEXIS 2208, at *24
(Tex App.—Austin Mar. 24, 1010, pet. denied).
14
Sanctions Order
The district court imposed sanctions against Wein for violations of Chapter 10 of the
Texas Civil Practices and Remedies Code and Rule 13 of the Rules of Civil Procedure and for abuse
of discovery. See Tex. Civ. Prac. & Rem. Code §§ 10.001–.006; Tex. R. Civ. P. 13, 215.3 (Abuse
of Discovery Process in Seeking, Making, or Resisting Discovery). Chapter 10 allows sanctions for
filing a pleading or motion “for any improper purpose, including to harass or to cause unnecessary
delay or needless increase in the cost of litigation.” Tex. Civ. Prac. & Rem. Code §§ 10.001(1),
.004. Rule 13 provides that a court may impose sanctions upon a determination that a pleading or
motion is groundless and brought in bad faith or groundless and brought for the purpose of
harassment. Tex. R. Civ. P. 13. Rule 215.3 authorizes sanctions upon a finding that a party has
abused the discovery process. Tex. R. Civ. P. 215.3. Chapter 10 and Rules 13 and 215.3 all specify
attorney’s fees caused by the improper conduct as an appropriate sanction. See Tex. Civ. Prac. &
Rem. Code § 10.004(c)(3); Tex. R. Civ. P. 13 (incorporating sanction available under Rule
215.2(b)(8)), 215.3 (same).
The district court’s order states that “the sanctions awarded herein are just and made
for good cause,” and the corresponding findings of fact track the language of Chapter 10 and
Rules 13 and 215.3 in stating that Wein’s claims were groundless and brought in bad faith and with
an improper purpose. The findings also track the language of Rule 215.3 in stating that “the $25,000
transaction was a fraudulent transaction entered into by Wein to manufacture evidence in this case”
and “constitutes abuse of the discovery process.” Further, the district court’s conclusions of law
include that Wein violated Chapter 10 and Rule 13 and committed abuse of the discovery process.
15
If the district court’s imposition of sanctions is supported on one of these legal bases, we will uphold
the order. See Zeifman v. Nowlin, 322 S.W.3d 804, 809 (Tex. App.—Austin 2010, no pet.).
Appropriateness of Sanction
Reviewing the entire record, we conclude that there is ample evidence to support a
sanction against Wein under Rule 215.3 for abuse of discovery. See American Flood, 192 S.W.3d
at 583–84 (upholding monetary sanction award under Rule 215.3 for repeated refusal to appear for
deposition). The evidence showed that Wein’s testimony was inconsistent, both internally and with
that of other witnesses, as well as in conflict with documentary evidence. Wein admitted that he had
no evidence to prove his special damages of $25,000 in interest paid to Richards when he asserted
his claim for slander of title. As fact finder, the district court was entitled to evaluate the credibility
of the testimony and determine what weight to give it. Alpert v. Crain, Caton, & James, P.C.,
178 S.W.3d 398, 412 (Tex. App.—Houston [1st Dist.] 2005, pet. denied). Considering all of the
conflicting evidence, as well as the evolving nature of Wein’s testimony and the timing of his
nonsuit of his slander of title claim, the district court could have reasonably determined that the
$25,000 transaction was a fraudulent attempt to manufacture evidence. See Daniel v. Kelley Oil
Corp., 981 S.W.2d 230, 234 (Tex. App.—Houston [1st Dist.] 1998, pet. denied) (affirming sanction
of striking pleadings where trial court, based on conflicting evidence that included expert testimony
to the contrary, concluded that party had fabricated evidence); Response Time v. Sterling Commerce,
95 S.W.3d 656, 662 (Tex. App.—Dallas 2002, no pet.) (upholding death penalty sanction where
evidence showed party testified falsely and produced false documents); see also Werley v. Cannon,
344 S.W.3d 527, 535 (Tex. App.—El Paso 2011, no pet.) (upholding sanction award of attorney’s
16
fees for abuse of discovery resulting from ex parte contacts with witnesses in violation of protective
order and attempts to subvert testimony).
In addition, the evidence supports an imposition of sanctions under Chapter 10 and
Rule 13. The act of fabricating evidence strongly suggests that Wein had no legitimate evidence of
damages to support his slander of title claim. See Kelley Oil Corp., 981 S.W.2d at 235; see also
TransAmerica, 911 S.W.3d at 918 (noting party’s hindrance of discovery process may justify
presumption that its claims lack merit). The record also shows that Wein had little to no evidence
to support his claims for invasion of privacy and trespass when he instituted this lawsuit and that he
maintained those claims despite failing to develop supporting evidence during discovery. Wein’s
testimony regarding these claims was inconsistent, and he admitted he suffered no damages from the
alleged sprinkler trespass, seeks only “future damages” for the “more than a spatter” on his property
from the painting of the red stripe, and failed to produce any evidence of damages from the alleged
invasion of privacy. Moreover, his testimony revealed extreme hostility toward Sherman. In light
of this evidence and the parties’ multi-year battle, the district court could have reasonably determined
that Wein’s claims were groundless, brought in bad faith, and filed for the improper purpose of
incurring a judgment against Sherman and causing him to incur needless and unreasonable attorney’s
fees and expenses. See Tex. Civ. Prac. & Rem. Code §§ 10.001, .004; Tex. R. Civ. P. 13; Low
v. Thomas, 221 S.W.3d 609, 621 (Tex. 2007) (upholding award of sanctions under Chapter 10 when
pleading lacked evidentiary support but remanding for reconsideration of amount in absence of stated
basis by trial court); Daniels v. Indemnity Ins. Co., 345 S.W.3d 736, 742 (Tex. App.—Dallas 2011,
no pet.) (affirming sanctions under Chapter 10 and Rule 13 where trial court determined lawsuit
17
brought to circumvent adverse ruling in related litigation and increase cost of litigation for opposing
party); Zeifman, 322 S.W.3d at 811 (affirming sanctions under Rule 13 where trial court found
pleading had no basis and lacked evidentiary support).
Having concluded that the evidence supports the imposition of a sanction, we turn
to a determination of whether the sanction awarded was appropriate or just. American Flood,
192 S.W.3d at 583; TransAmerica, 811 S.W.2d at 917. Applying the two-part test articulated by the
supreme court, we must first determine whether there is a direct relationship between the
sanctionable conduct and the sanction imposed. American Flood, 192 S.W.3d at 583;
TransAmerica, 811 S.W.2d at 917. The evidence shows that Wein, rather than any of his numerous
attorneys, was the offender in bringing and maintaining groundless claims and committing discovery
abuse. The sanction of attorney’s fees is directed against the commission of groundless, bad faith
filings and discovery abuse and is an appropriate sanction under Chapter 10 and Rules 13 and 215.3.
See Tex. Civ. Prac. & Rem. Code § 10.004; Tex. R. Civ. P. 13, 215.3; American Flood, 192 S.W.3d
at 584; Daniels, 345 S.W.3d at 742. Because the record supports a finding that Wein’s conduct, and
not that of his attorneys, was sanctionable, there is a direct relationship between the improper
conduct and the sanction.12 See American Flood, 192 S.W.3d at 584; Werley, 344 S.W.3d at 534.
12
Wein contends that the fees awarded do not have a direct nexus to the sanctionable
conduct because they were not properly segregated. In support of this argument, Wein cites Low
v. Thomas, 221 S.W.3d 609 (Tex. 2007) and Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299
(Tex. 2006). These cases, however, do not support Wein’s argument. In Low, the supreme court
remanded an award of $50,000 in sanctions under Chapter 10 solely because the trial court failed to
state the basis of the amount awarded and the supreme court could not determine the basis from the
record. See id. at 621–22. Holding that a trial court should consider relevant factors in assessing the
sanction and that a determination of the amount of a sanction under Chapter 10 should begin with
an acknowledgment of the fees and costs incurred, the supreme court then remanded the case for
reconsideration of the amount of the sanction in light of those guidelines. Id. at 622. In doing so,
18
We next consider whether the sanction amount was excessive. Sherman’s attorney
presented itemized bills stating the work done and the time and amount billed for each entry. He
testified that Sherman had incurred $117,007.60 in reasonable and necessary attorney’s fees and
expenses. Considering the entire record, and in light of cases in which the courts have upheld the
death penalty sanction for fraudulent conduct, see, e.g., Kelley Oil Corp., 981 S.W.2d at 235–36;
Response Time, 95 S.W.3d at 661–62, we conclude that the district court’s award of $100,000 was
not excessive.13 See Werley, 344 S.W.3d at 534–35 (sanction of $12,660 not excessive
the supreme court cited Tony Gullo, 212 S.W.3d at 314–15. Id. However, the supreme court relied
on its prior holding in Tony Gullo for the proposition that remand was proper to allow the parties to
present evidence responsive to its guidelines and to allow the trial court to determine the appropriate
amount of the sanction, not for the proposition that attorney’s fees must be segregated for the
purpose of sanctions awards. Id. at 621–22.
Nor does Tony Gullo stand for the proposition that attorney’s fees must be segregated for
purposes of a sanction award. Rather, Tony Gullo states the general rule that a party seeking
attorney’s fees as part of its principal claims must segregate fees incurred in connection with a claim
that allows their recovery from fees incurred in connection with a claim for which no such
recovery is allowed. 212 S.W.3d at 313–14; see also Keys v. Litton Loan Servicing. L.P.,
No. 14-07-00809--CV, 2009 Tex. App. LEXIS 9017, at *22–23 (Tex. App.—Houston [14th Dist.]
Nov. 24, 2009, no pet.) (mem. op.). Thus, Wein cites no authority, and we have found none, to
support his contention that the concept of segregation of attorney’s fees applies to the award of
attorney’s fees as a sanction.
13
While Wein does not dispute that Sherman actually incurred more in fees than the amount
awarded, he argues that the sanction amount is nevertheless excessive because the majority of
Sherman’s fees were incurred in pursuit of his motion for sanctions after Wein’s claims were
dismissed. Wein contends that, in contrast with Rule 215.1(d), which authorizes attorney’s fees
incurred in bringing or opposing a motion to compel discovery, Chapter 10 and Rules 13 and 215.3
do not expressly provide for the recovery of attorney’s fees incurred in pursuing sanctions. We find
this argument unpersuasive. Chapter 10 allows as a sanction fees incurred “because of” the frivolous
filing. See Tex. Civ. Prac. & Rem. Code § 10.004(c)(3). Available sanctions under Rules 13 and
215.3, by reference to Rule 215.2, include expenses of discovery and attorney’s fees “caused by” the
“disobedient party.” See Tex. R. Civ. P. 215.2(b)(2), (8). Fees and expenses incurred “because of”
or “caused by” the “disobedient party” reasonably include those incurred in pursuing a motion for
sanctions.
Further, Wein does not cite any cases, and we have found none, in which the courts refused
19
where evidence showed party had incurred that amount in attorney’s fees); Sellers v. Gomez,
281 S.W.3d 108, 116 (Tex. App.—El Paso 2008, no pet.) (award of $80,000 sanction not excessive
where evidence showed attorney’s fees of $81,000–$82,000); Scott Bader, Inc. v. Sandstone Prods.,
248 S.W.3d 802, 817 (Tex. App.—Houston [1st Dist.] 2008, no pet.) (upholding sanction of
$68,000 in attorney’s fees where evidence showed discovery abuse justified that amount even in
absence of competent proof of necessity and reasonableness); In re M.I.L., No. 02-08-00349-CV,
2009 Tex. App. LEXIS 4645, at *18 (Tex. App.—Fort Worth June 18, 2009) (mem.op.), overruled
in part on other grounds by Iliff v. Iliff, 339 S.W.3d 74 (Tex. 2011) (sanction of $38,000 not
excessive where evidence showed party had incurred $38,362 in attorney’s fee and $2,071.23
in expenses).
While we acknowledge that the amount of the award is substantial, we conclude that
it is not excessive in light of the entire record and considering that it was intended not only to
reimburse Sherman but also to punish Wein and deter similar conduct in the future. See American
Flood, 192 S.W.3d at 583; Chrysler Corp. v. Blackmon, 841 S.W.2d 844, 849 (Tex. 1992)
(legitimate purposes of sanctions are to secure compliance with rules, deter similar misconduct, and
punish violators). On the record before us, we cannot say that the district court abused its discretion
to allow a sanction award to include fees and expenses incurred in obtaining the sanction. Rather,
the authority we have found supports the inclusion of the costs of pursing the motion for sanction.
See, e.g., Wythe II Corp. v. Stone, 342 S.W.3d 96, 109 (Tex. App.—Beaumont 2011, pet. denied)
(award of fees incurred in pursuing motion for sanctions under Chapter 10, Rule 13, and Rule 215
for submission of false testimony upheld but remanded for reconsideration of reasonableness of
amount); Werley v. Cannon, 344 S.W.3d 527, 534–35 (Tex. App.—El Paso 2011, no pet.)
(upholding sanction for attempt to subvert testimony which included amount for fees incurred on
sanctions matter).
20
in ordering Wein to pay Sherman $100,000 in attorney’s fees. See Unifund, 299 S.W.3d at 97;
American Flood, 192 S.W.3d at 583.14
Wein also challenges the district court’s award of $7,500 to Sherman “for collection
of the sanctions award, if the award is not paid to William Sherman by July 6, 2009.” Wein
contends that there is no legal basis for awarding this “collections” amount because it cannot
represent attorney’s fees incurred as a result of the sanctionable conduct and is simply a penalty,
which must be paid to the court, not to the litigants. However, the record shows that Sherman’s
attorney testified that reasonable and necessary attorney’s fees for collection of the sanctions, if
required, would be $7,500, and Wein did not challenge this testimony on cross-examination.
Further, the legitimate purposes of sanctions include the goals of securing compliance. See Chrysler
Corp., 841 S.W.2d at 849. The trial court could have reasonably determined that the “collections”
award would operate to ensure Wein’s compliance with the order and that, should collection efforts
become necessary, the fees and expenses incurred would be “caused by” the “disobedient party” and
“because of” Wein’s frivolous filing. See Tex. R. Civ. P. 13, 215.2(b)(2), (8); Tex. Civ. Prac.
& Rem. Code § 10.004(c)(3). Thus, there is some evidence that the award of $7,500 for collection
of the sanctions award was directly related to the sanctionable conduct and was not excessive, see
American Flood, 192 S.W.3d at 583; TransAmerica, 811 S.W.2d at 917, and we cannot say that the
trial court abused its discretion in awarding the “collections” sanction amount. See Unifund,
299 S.W.3d at 97.
14
Wein also requests this Court to enter a remittitur “to reduce the excessiveness of the
judgment.” We deny this request.
21
In his last complaint regarding the sanctions order, Wein challenges the district
court’s award of attorney’s fees conditioned upon unsuccessful appeals to this Court and to the
supreme court, contending that this amount also constitutes a penalty. However, while a trial court
may not penalize party for taking a successful appeal, a trial court may grant appellate attorney’s fees
as part of a sanctions order under Rule 215 if the court conditions the award on the outcome of the
appeal. In re Ford Motor Co., 988 S.W.2d 714, 721 (Tex. 1998, orig. proceeding); Hoefker
v. Elgohary, 248 S.W.3d 326, 332–33 (Tex. App.—Houston [1st Dist] 2007, no pet); Westech Eng'g,
Inc. v. Clearwater Constructors, Inc., 835 S.W.2d 190, 205 (Tex. App.—Austin 1992, no writ). A
conditional award of appellate fees is part of a sanctions award of trial court costs, designed to
compensate for the expense of defending the trial court award, see Loeffler v. Lytle I.S.D.,
211 S.W.3d 331, 351 (Tex. App.—San Antonio 2006, pet denied.), and the district court did not
abuse its discretion in awarding such appellate attorney’s fees. Therefore, we overrule Wein’s
first issue.
Settlement Credit
Standard of Review
In his second issue, Wein contends that the district court erred in failing to apply a
credit against the award of sanctions for Richards’ settlement payment. The parties disagree about
which standard of review we are to apply. Wein asserts that we should conduct a review for legal
and factual sufficiency of the evidence but cites no authority. Sherman contends that allocation of
settlement credits is reviewed for abuse of discretion, citing this Court’s decision in Utts v. Short,
No. 03-03-00512-CV, 2004 Tex. App. LEXIS 2874 (Tex. App.—Austin, Apr. 1, 2004, pet. denied)
22
(mem. op.) and Oyster Creek Fin. Corp. v. Richwood Invs. II, Inc., 176 S.W.3d 307 (Tex.
App.—Houston [1st Dist.] 2004, pet. denied.). In Utts, however, we noted that our analysis did not
include statutory construction, the defendant’s entitlement to a settlement credit was not in dispute,
and only the amount to be credited to each plaintiff was at issue. 2004 Tex. App. LEXIS 2874, at
*9–10. Similarly, in Oyster Creek, the court applied an abuse of discretion standard where there
were factual disputes concerning the character of the settlement and the allocation of the settlement
credit. 176 S.W.3d at 326. Here, our analysis turns on questions of statutory construction and
application of legal principles, and we do not reach the questions of disputed facts concerning the
settlement allocation.15 Therefore, we review the district court’s determination of the settlement
credit de novo. See Galle, Inc. v. Pool, 262 S.W.3d 564, 571 n.3 (Tex. App.—Austin 2008, pet.
denied); Sugar Land Props., Inc. v. Becnel, 26 S.W.3d 113, 119 (Tex. App.—Houston [1st Dist.]
2000, no pet.) (applying de novo standard where resolution of issue required interpretation of two
statutory provisions).
Wein also challenges the district court’s findings of fact and conclusions of law on
the issue of the settlement credit. A trial court’s findings of fact are subject to review for legal and
factual sufficiency of the evidence by the same standards applied to a jury verdict. Ortiz v. Jones,
917 S.W.2d 770, 772 (Tex. 1996). We review a trial court’s conclusions of law de novo and will
uphold the conclusions if the judgment can be sustained on any legal theory supported by the
evidence. BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002). Although a
15
Wein raises factual issues concerning his allegations that the settlement agreement
between Sherman and Richards allocating amounts to actual and punitive damages was a sham and
that there were no actual damages to support an award of punitive damages. However, because of
our disposition of this issue, we do not reach these factual issues.
23
trial court’s conclusions of law may not be challenged for factual sufficiency, we may review the
legal conclusions drawn from the facts to determine whether the conclusions are correct. Id.
One-satisfaction Rule
Wein seeks a settlement credit under the one-satisfaction rule. The one-satisfaction
rule is the longstanding proposition that precludes a plaintiff from recovering twice for the same
injury. Utts v. Short, 81 S.W.3d 822, 831 (Tex. 2002) (citing Crown Life Ins. Co. v. Casteel,
22 S.W.3d 378, 390 (Tex. 2000)); Galle, 262 S.W.3d at 573. The rule applies when several
defendants commit the same act and when multiple defendants commit technically different acts that
result in a single injury. Crown Life, 22 S.W.3d at 390; Galle, 262 S.W.3d at 573. The
one-satisfaction rule guards against a plaintiff’s “receiving a windfall ‘by recovering an amount in
court that covers the plaintiff’s entire damages, but to which a settling defendant has already
contributed.’” Galle, 262 S.W.3d at 573 (quoting Osborne v. Jauregui, 252 S.W.3d 70, 75 (Tex.
App.—Austin 2008, pet. denied) (en banc)).
Wein contends that Sherman is attempting to collect from Wein damages for the same
injury for which he has already collected from Richards by way of settlement. However, although
Richards paid a sum in settlement of Sherman’s claims against her, Sherman received no damages
in court for his claimed injuries; the district court dismissed his claims on summary judgment. The
attorney’s fees the district court ordered Wein to pay were as a sanction for Wein’s “wrongful
conduct,” not as compensation for Sherman’s alleged injuries. Sanctions are not damages for harm
alleged in the underlying lawsuit but are used to punish parties who file groundless, bad faith, or
frivolous pleadings, see Tex. R. Civ. P. 13; Tex. Civ. & Prac. & Rem. Code §§ 10.001, .004, or
24
violate discovery rules, see Tex. R. Civ. P. 215.3; Cire, 134 S.W.3d at 843. Thus, the sanctions
award did not constitute compensation for the same harm for which Sherman recovered in settlement
with Richards. Cf. Teel v. American Title Co., No. 14-00-00375-CV, 2001 Tex. App. LEXIS 6422,
at *7–8 (Tex. App. —Houston [14th Dist.] Sept. 20, 2001, pet. denied) (not designated for
publication) (one-satisfaction rule did not apply because appellant sought recovery for injury for
which she had not been previously compensated; prior recovery was for different damages under
different cause of action). Wein has cited no cases, and we have found none, in which a court has
applied the one-satisfaction rule to reduce a sanctions award. We decline to do so here.
Chapter 33
Wein also contends that, to the extent Sherman asserts tort claims, Wein is entitled
to a settlement credit under Chapter 33 of the Texas Civil Practices and Remedies Code. Chapter
33 governs settlement credits with respect to “any cause of action based on tort in which a defendant
. . . is found responsible for a percentage of the harm for which relief is sought.” Tex. Civ. Prac.
& Rem. Code §33.002(a)(1). Section 33.012 requires that, if a claimant has settled with one or more
persons, the court must reduce the amount of damages to be recovered by the claimant by the amount
of all settlements. Id. § 33.012(b). Chapter 33 does not define “settled” or “settlement” but defines
“settling person” as “a person who has . . . paid or promised to pay money or anything of monetary
value to a claimant in consideration of potential liability with respect to . . . harm for which recovery
of damages is sought.” Id. § 33.011(5) (West 2008). Read together, these provisions contemplate
that Chapter 33 applies if Sherman was compensated in the settlement with Richards for the same
harm for which he was compensated by the sanctions award. See Galle, 262 S.W.3d at 571.
25
Under this analysis, Wein’s argument under Chapter 33 fails for the same reasons that
his argument under the one-satisfaction rule fails. As we have already discussed, Richards paid a
sum to Sherman in an exchange for a release from all liability. In contrast, the district court ordered
Wein to pay attorney’s fees as a sanction for his improper conduct, not as a consequence of a
determination of his liability for damages to Sherman. The district court found that the sanctions
award was for abuse of discovery and statutory violations, not based on a determination of liability
sounding in tort. The district court concluded that Richards’ settlement payment did not represent
common damages between Richards and Wein, the sanction was assessed against Wein individually,
and the sanctions award was not damages for which joint and several liability could attach. There
is legally and factually sufficient evidence to support these findings, and the conclusions of law are
supported by Chapters 10 and 33 and Rules 13 and 215.3. See Tex. R. Civ. P. 13, 215.3; Tex. Civ.
Prac. & Rem. Code §§ 10.001(1), .004(b)(3); 33.002(a)(1), .011(5), .012(b). Thus, Sherman was not
compensated in the settlement with Richards for the same harm for which he was compensated by
the sanctions award, and Chapter 33 does not apply. We overrule Wein’s second issue.
Summary Judgment Dismissing Sherman’s Claims
Standard of Review
In his cross-appeal, Sherman challenges the district court’s summary judgment
dismissing his claims. We review the trial court’s decision to grant summary judgment de novo.
Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). When reviewing a
summary judgment, we take as true all evidence favorable to the nonmovant, and we indulge every
reasonable inference and resolve any doubts in the nonmovant’s favor. Mack Trucks, Inc. v. Tamez,
26
206 S.W.3d 572, 582 (Tex. 2006); Dorsett, 164 S.W.3d at 661. A motion for summary judgment
is properly granted when the movant establishes that there are no genuine issues of material fact and
that it is entitled to judgment as a matter of law. See Tex. R. Civ. P. 166a(c); Provident Life
& Accident Ins. Co. v. Knott, 128 S.W.3d 211, 216 (Tex. 2003). When the trial court does not
specify the grounds for its summary judgment, the appellate court must affirm the summary
judgment if any of the theories presented to the trial court and preserved for appellate review are
meritorious. Knott, 128 S.W.3d at 216.
Evidence of Damages to Support Claims
One of the grounds Wein asserted in his motion for summary judgment was that the
evidence showed Sherman had incurred no damages other than attorney’s fees and there can be no
award of attorney’s fees without actual damages. Sherman does not dispute that his only damages
were attorney’s fees but contends that the attorney’s fees are his actual damages. The issue then is
whether the district court erred in granting summary judgment when Sherman’s only damages were
attorney’s fees incurred as a result of Wein’s instigating and maintaining this suit.
Texas has long followed the “American Rule,” which prohibits an award of attorney’s
fees unless specifically provided by contract or statute. MBM Fin. Corp. v. The Woodlands
Operating Co., 292 S.W.3d 660, 6693d (Tex. 2009). Here, there is no contract between the parties,
and Sherman does not seek attorney’s fees under any statutory provision. Rather, he contends that
because Wein filed a fraudulent lawsuit against him, causing him to expend money in attorney’s fees
and expenses, he is entitled to recover those fees and expenses as actual damages.
27
Attorney’s fees, however, are ordinarily not recoverable as actual damages in and of
themselves. See Tana Oil & Gas Corp. v. McCall, 104 S.W.3d 80, 81–82, 83 (Tex. 2003) (attorney
plaintiffs who sought to recover damages based solely on value of time and costs incurred in
defending claims had not suffered actual damages and were not entitled to only damages
they claimed; plaintiffs should have pursued attorney’s fees as sanctions under Rule 13 or
Chapter 10); Worldwide Asset Purchasing, L.L.C. v. Rent-a-Center East, Inc., 290 S.W.3d 554, 570
(Tex. App.—Dallas 2009, no pet.) (attorney’s fees not recoverable as actual damages); Haden
v. David J. Sacks, P.C., 222 S.W.3d 580, 597 (Tex. App.—Houston [1st. Dist.] 2007) (same), rev’d
on other grounds, 266 S.W.3d 447 (Tex. 2008); Quest Commc’ns Int’l, Inc. v. AT&T Corp.,
114 S.W.3d 15, 35–36 (Tex. App.—Austin 2003) (damages measured by plaintiff’s attorney’s fees
recoverable only under certain exceptions not implicated here), rev’d in part on other grounds,
167 S.W.324 (Tex. 2005) (per curiam). Because Sherman neither sought nor proved any damages
other than attorney’s fees, there is no evidence to support the actual damage element of any of his
asserted claims, and the district court did not err in granting summary judgment in Wein’s favor.
We overrule Sherman’s cross-issue.
CONCLUSION
Having overruled Wein’s issues, we affirm the trial court’s judgment.
28
__________________________________________
Melissa Goodwin, Justice
Before Justices Puryear, Pemberton, and Goodwin
Affirmed
Filed: August 23, 2013
29