in Re Dean Davenport, Dillon Water Resources, Ltd. ( 2015 )

Fourth Court of Appeals
San Antonio, Texas
MEMORANDUM OPINION
No. 04-14-00666-CV
IN RE Dean DAVENPORT, Dillon Water Resources, Ltd., 5D Drilling and Pump Service, Inc.
f/k/a Davenport Drilling & Pump Service, Inc., 5D Water Resources, LLC f/k/a Davenport
Oper., LLC, Water Exploration Co., Ltd., WAD, Inc., Water Investment Leasing Company,
LLC, Blue Gold Resources Management, LLC, Blue Gold Properties, LLC and Blue Gold
Development, LLC
Original Mandamus Proceeding 1
Opinion by: Rebeca C. Martinez, Justice
Sitting: Karen Angelini, Justice
Rebeca C. Martinez, Justice
Patricia O. Alvarez, Justice
Delivered and Filed: March 11, 2015
PETITION FOR WRIT OF MANDAMUS CONDITIONALLY GRANTED IN PART
On September 23, 2014, relators filed this petition for writ of mandamus complaining of
the trial court’s order setting aside the judgment rendered on a jury’s verdict and granting a new
trial in the underlying breach of contract dispute between attorneys and their former clients.
Because we conclude the trial court’s order is insufficient to meet the standards articulated by the
Texas Supreme Court for orders granting a new trial after a jury verdict, we conditionally grant
1
This proceeding arises out of Cause No. 2012-CI-03086, styled Tom Hall, Thomas C. Hall, P.C. as Successor in
Interest to Hall & Bates, L.L.P., Blake Dietzmann, Tim Patton and Timothy Patton, P.C. v. Dillon Water Resources,
Ltd., 5D Drilling and Pump Service, Inc. f/k/a Davenport Drilling & Pump Service, Inc., 5D Water Resources, LLC
f/k/a Davenport Oper., LLC, Dean Davenport, WAD, Inc., Water Exploration Co., Ltd., Water Investment Leasing
Company, LLC, Blue Gold Resources Management, LLC, Blue Gold Properties, LLC and Blue Gold Development,
LLC, pending in the 225th Judicial District Court, Bexar County, Texas, the Honorable Peter A. Sakai presiding.
04-14-00666-CV
the petition for writ of mandamus in part and deny it in part. See In re United Scaffolding, Inc.,
377 S.W.3d 685, 688-89 (Tex. 2012) (orig. proceeding).
FACTUAL AND PROCEDURAL BACKGROUND
Tom Hall, Blake Dietzmann, Tim Patton, and their respective law firms (collectively “the
Attorneys”) sued Dean Davenport, Dillon Water Resources, Ltd., and several related entities
(collectively “Davenport”) in 2012 alleging, among other things, that the former clients had
breached a contingency fee agreement which the attorneys claimed entitled them to ownership
interests in Water Exploration Co., Ltd. (“WECO”) and WAD, Inc., two water exploration
companies.
WECO was formed as a limited partnership in 1999 by Dean Davenport, James Allen and
Mark Wynne, with each partner owning a 33% interest. The remaining 1% interest was owned by
WAD, Inc., a general partnership involving all three partners. Davenport hired Hall, Dietzmann,
and Patton in 2008 to bring claims against Allen and Wynne for allegedly attempting to convert
Davenport’s interests in WECO, limiting his involvement in the company. In January 2009, a jury
found that Allen and Wynne had converted Davenport’s interest in WECO, and valued the interest
at the time and place of conversion at $70 million.
In April 2009, Davenport entered into a post-verdict settlement agreement with Allen under
which Davenport acquired all of Allen’s interest in WECO and WAD in exchange for a take-
nothing judgment as to Davenport’s claims against Allen. In August 2010, Davenport entered into
a separate settlement agreement with Wynne under which Davenport similarly acquired all of
Wynne’s interest in WECO and WAD. As a result of these two agreements, Davenport became
the sole owner of WECO and WAD.
The Attorneys filed suit in 2012 alleging, in relevant part, that Davenport breached their
contingent fee agreement by failing to transfer ownership interests in WECO and WAD to the
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Attorneys after Davenport had purchased or acquired the interests from Allen and Wynne as part
of the settlement of the underlying suit for conversion.
The trial court in the fee dispute litigation declined to find the parties’ contingent fee
agreement unambiguous and to construe it as a matter of law. Accordingly, the jury was asked in
Question 1 to interpret the following language contained in the contingent fee agreement:
Client agrees to sell, transfer, assign and convey to HALL & BATES, L.L.P.
AND BLAKE DIETZMANN an undivided interest in the above claim to be
calculated as follows:
Forty percent (40%) of the gross amount recovered
Except that Attorneys will not take a fee out of the ownership of 5D Water
Resources and Dillon Water Services
Any recovery of Attorney’s fees that have been incurred as of the date of this
contract shall be on a contingency of 25%
By “GROSS AMOUNT” is meant the total sums recovered.
The jury was asked to decide whether this language entitled the Attorneys to an interest in WECO
and WAD in addition to a percentage of any cash Davenport recovered in his suit against Allen
and Wynne. The jury answered “no” to Question 1. The jury also found, in response to other
questions in its charge, that Davenport had failed to reimburse all of the Attorneys’ expenses as
agreed; the Attorneys were estopped from seeking any ownership interest in WECO; and the
Attorneys had waived their right, if any, to seek an ownership interest in WECO. The Attorneys
filed a motion for judgment notwithstanding the jury’s verdict, which was denied, and the trial
court rendered judgment on the verdict.
The Attorneys then filed a motion for new trial on three grounds: (1) the fee agreement is
unambiguous and should have been construed by the court as a matter of law, rather than by the
jury; (2) the jury’s findings of estoppel and waiver are against the great weight and preponderance
of the evidence; and (3) the defendants must be afforded an opportunity to present an
unconscionability defense to the unambiguous agreement that entitles the Attorneys to an interest
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in the companies. The motion for new trial was overruled by operation of law and both sides filed
notices of appeal. 2
Before the end of its plenary power, the trial court signed an order vacating the judgment
in its entirety, and granting the Attorneys’ motion for new trial. Davenport filed this mandamus
proceeding seeking an order directing the trial court to withdraw its order granting a new trial and
reinstate the judgment on the jury’s verdict.
ANALYSIS
Mandamus relief is an extraordinary remedy and will issue only to correct a clear abuse of
discretion when the relator has no other adequate remedy by appeal. See In re Reece, 341 S.W.3d
360, 364 (Tex. 2011) (orig. proceeding); In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 135-
36 (Tex. 2004) (orig. proceeding). A trial court abuses its discretion if it reaches a decision so
arbitrary and unreasonable that it constitutes a clear and prejudicial error of law, or if it clearly
fails to correctly analyze or apply the law. In re Cerberus Capital Mgmt., L.P., 164 S.W.3d 379,
382 (Tex. 2005) (orig. proceeding).
Rule 320 of the Texas Rules of Civil Procedure gives the trial court broad discretion to
grant a new trial “for good cause, on motion or on the court’s own motion.” TEX. R. CIV. P. 320.
This discretion, however, is not without limits and does not, “permit a trial judge to substitute his
or her own views for that of the jury without a valid basis.” In re Columbia Med. Ctr. of Las
Colinas, Subsidiary, L.P., 290 S.W.3d 204, 212 (Tex. 2009) (orig. proceeding). The trial court
must provide an understandable, reasonably specific explanation of its reasons for setting aside a
jury verdict. Id. at 213; In re C.R.S., 310 S.W.3d 897, 898 (Tex. App.—San Antonio 2010, orig.
proceeding).
2
Appeal No. 04-14-00581-CV, styled Davenport, et al. v. Hall, et al., remains pending in this court.
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A trial court does not abuse its discretion so long as its stated reasons for granting a new
trial are both legally appropriate and specific enough to indicate that the trial court derived its
articulated reasons from the particular facts and circumstances present in the case. United
Scaffolding, 377 S.W.3d at 688-89. If the trial court’s articulated reasons are facially valid, an
appellate court may conduct a merits-based review of the reasons on mandamus. In re Toyota
Motor Sales, U.S.A., Inc., 407 S.W.3d 746, 755-59 (Tex. 2013) (orig. proceeding). If the articulated
and reasonably specific reasons are not supported by the law and the record, mandamus relief is
appropriate. Id. at 761.
As an initial matter, we must determine whether the trial court’s order meets the threshold
requirements established in United Scaffolding. United Scaffolding, 377 S.W.3d at 688-89.
The order granting new trial in the fee dispute case states:
(1) Looking at the parties’ Contract of Employment and Power of Attorney (the
“Contract”) as a whole, in light of the circumstances present when the parties
entered into the contract, the Court finds the Contract is unambiguous.
(2) The Court notes with great deference the answer of the jury in regards to
Question 1 wherein the jury answered negatively to the issue of whether the
Defendants agreed that Plaintiffs’ attorney fees could include an ownership interest
in Defendant’s corporations. Notwithstanding the answer to Question 1, the Court
takes note of the jury’s answers [to the remaining questions].
After merely reciting the jury’s remaining answers and findings, the new trial order goes on to
state:
Therefore, the Court does not make a specific finding that any of the jury answers
or findings, in themselves, justifies the granting of the new trial, but rather the Court
finds that the Court findings, as stated herein, the admissible testimony of the trial
and the jury’s answers be taken, in totality, in determining that the verdict is against
the great weight and preponderance of the admissible evidence.
The trial court’s post-verdict finding that “the Contract is unambiguous” does not, by itself,
provide an adequate explanation of the trial court’s reasoning for granting a new trial. See, e.g.,
Salinas v. Rafati, 948 S.W.2d 286, 288 (Tex. 1997) (jury finding is immaterial if the question
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should not have been submitted); see also Hall v. Hubco, Inc., 292 S.W.3d 22, 27 (Tex. App.—
Houston [14th Dist.] 2006, pet. denied) (trial court may disregard finding on an immaterial jury
question without a motion).
While the trial court’s second stated reason, the finding that the jury’s answers are against
the great weight and preponderance of the admissible evidence, is a legally sound reason for
granting a new trial, that statement alone is not specific enough to indicate that the trial court based
its determination on the particular facts and evidence in this case. United Scaffolding, 377 S.W.3d
at 688-89. The Texas Supreme Court has directed:
[M]andamus may lie if the order, though rubber-stamped with a valid new-trial
rationale, provides little or no insight into the judge’s reasoning. Usually, the mere
recitation of a legal standard, such as a statement that a finding is against the great
weight and preponderance of the evidence, will not suffice. The order must indicate
that the trial judge considered the specific facts and circumstances of the case at
hand and explain how the evidence (or lack of evidence) undermines the jury’s
findings. A trial court abuses its discretion if its new-trial order provides no more
than a pro forma template rather than the trial judge’s analysis.
Id. at 689.
While the new trial order in this instance provides a general rationale for the court’s
decision, it does not discuss any evidence, reference any specific facts, or explain how any
particular set of facts, evidence or testimony undermines the jury’s specific findings, thus
warranting a new trial. See United Scaffolding, 377 S.W.3d at 689. A new trial order must
“elaborate, with reference to the evidence adduced at trial, how the jury’s answers are contrary to
the great weight and preponderance of the evidence.” Id. Given the requirements outlined by the
Texas Supreme Court, the trial court’s stated reasons for granting a new trial in this instance are
not sufficiently specific, and thus the order granting a new trial constitutes an abuse of the trial
court’s discretion. See Columbia Med. Ctr., 290 S.W.3d at 212-13.
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CONCLUSION
Davenport requests that this court issue a writ of mandamus directing the trial court to
vacate the new trial order and reinstate the judgment entered on the jury’s verdict. However, an
order directing the trial court to enter judgment on the verdict is not appropriate where the trial
court does not adequately state its reasons for granting the new trial. See, e.g., United Scaffolding,
377 S.W.3d at 690 (trial court not required to enter judgment on the verdict where trial court’s
reasoning for new trial is unclear); Columbia Med. Ctr., 290 S.W.3d at 214 (declining to order
judgment on the verdict where trial court had not stated grounds for new trial); see also In re City
of Houston, 418 S.W.3d 388, 397-98 (Tex. App.—Houston [1st Dist.] 2013, orig. proceeding)
(ordering judgment on verdict where merits review revealed invalid reasons for new trial).
Therefore, we deny mandamus relief to the extent that Davenport seeks an order directing
reinstatement of judgment on the verdict at this time. Because we conclude that the new trial order
is insufficient to meet the standards articulated by the Texas Supreme Court for orders granting a
new trial after a jury verdict, we conditionally grant mandamus relief and direct the trial court to
vacate its new trial order and issue a new order, specifying its reasons for disregarding the jury
verdict and entering a new trial order in compliance with United Scaffolding. See United
Scaffolding, 377 S.W.3d at 689. The writ will only issue if we are advised the trial court has failed
to comply with this court’s order.
Rebeca C. Martinez, Justice
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