Walnut Retail Center General Partner, LC v. LBL, Ltd. ( 2014 )

Fourth Court of Appeals
San Antonio, Texas
MEMORANDUM OPINION
No. 04-13-00878-CV
WALNUT RETAIL CENTER GENERAL PARTNER, LC,
Appellant
v.
LBL,
LBL, LTD.,
Appellee
From the 438th Judicial District Court, Bexar County, Texas
Trial Court No. 2012-CI-06410
Honorable Barbara Hanson Nellermoe, Judge Presiding
Opinion by: Sandee Bryan Marion, Justice
Sitting: Sandee Bryan Marion, Justice
Marialyn Barnard, Justice
Luz Elena D. Chapa, Justice
Delivered and Filed: October 29, 2014
AFFIRMED
Walnut Retail Center, Ltd. is a partnership that owns a shopping center in New Braunfels,
Texas. Appellant, Walnut Retail Center General Partner, LC (“Walnut GP”), is the general partner;
and appellee, LBL, Ltd. (“LBL”), is a limited partner. In the underlying lawsuit, LBL sued Walnut
GP to remove Walnut GP as general partner and to have the trial court appoint a temporary
receiver. LBL also requested attorney’s fees. Walnut GP filed a counterclaim against LBL,
alleging LBL breached the Partnership Agreement, requesting a declaratory judgment, and seeking
attorney’s fees.
04-13-00878-CV
Trial was to a jury, and, at the close of evidence, Walnut GP moved for a directed verdict
on LBL’s claims against it, which the trial court denied. LBL also moved for a directed verdict on
Walnut GP’s counterclaim for a declaratory judgment and for breach of contract; but the trial court
deferred ruling on the motion. The jury replied “No” to the question of whether Walnut GP
committed willful neglect of duty in its management of the Walnut Retail Center Limited
Partnership. Because the jury answered in the negative on this question, the only remaining
question was for the jury to determine a reasonable fee for the necessary services of Walnut GP’s
attorney. Walnut GP moved for entry of judgment on the award of attorney’s fees, and LBL
objected on several grounds. In its final judgment, the trial court ordered that (1) LBL take nothing
on its claims against Walnut GP; (2) Walnut GP take nothing on its claims against LBL; and (3)
each party bear its own costs and attorney’s fees. On appeal, Walnut GP asserts the trial court
erred by refusing to award it the attorney’s fees found by the jury. We affirm.
DISCUSSION
On appeal, Walnut GP asserts it is entitled to recover its attorney’s fees as the “prevailing
party” at trial because it obtained a complete defense to LBL’s causes of action. Walnut GP also
asserts the trial court erred by ruling that it did not prevail on its own claims against LBL because
no jury questions on those claims were submitted and, therefore, its claims were withdrawn and
waived.
A. Standard of Review
Walnut GP contends whether attorney’s fees are available under a contract is a question of
law reviewed de novo. However, there is no dispute that the Partnership Agreement in this case
allows for recovery of attorney’s fees to the prevailing party. A trial court has discretion to fix the
amount of attorney’s fees, but it does not have discretion to deny attorney’s fees entirely if an
award of fees is required under the terms of the parties’ agreement or by statute. See Fitzgerald v.
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Schroeder Ventures II, LLC, 345 S.W.3d 624, 627 (Tex. App.—San Antonio 2011, no pet.)
(parties’ agreement provided that “such party is entitled to recover from the non-prevailing parties
all costs of such proceeding and reasonable attorney’s fees”); World Help v. Leisure Lifestyles,
Inc., 977 S.W.2d 662, 683 (Tex. App.—Fort Worth 1998, pet. denied) (“When a prevailing party
in a breach of contract suit seeks attorney’s fees, an award of reasonable fees is mandatory under
[Texas Civil Practice and Remedies Code] section 38.001 if there is proof of the reasonableness
of the fees.”); see also Bocquet v. Herring, 972 S.W.2d 19, 20 (Tex. 1998) (Declaratory Judgment
Act does not require an award of attorney’s fees to prevailing party; rather, statute “affords the
trial court a measure of discretion in deciding whether to award attorney’s fees or not.”).
On appeal, Walnut GP asserts the trial court erred in failing to enforce the parties’
agreement, which, in Walnut GP’s opinion, mandated an award of fees to it as the prevailing party.
Walnut GP also contends the jury’s award of attorney’s fees was limited only to its successful
defense against LBL’s willful neglect claim, and, therefore, it was entitled to fees under the
Partnership Agreement.
The Partnership Agreement provides as follows:
17.10 Should the Partnership or any Partner(s) institute legal proceedings against
any other Partner or the Partnership to interpret or enforce any provision, right or
remedy under the Agreement, the Court shall, in its discretion, include all or part
of the prevailing party’s or parties’ attorney’s fees as a recoverable cost against
the losing party or parties. To so recover, it is not necessary that the prevailing
party prevail in each and every of its claims. Rather the amount of the award or
attorney’s fees shall, in the Court’s discretion, reflect the degree to which the
prevailing party or parties have prevailed in some of their claims. [Emphasis
added.]
We interpret the agreement’s use of the phrase “the Court shall” as unambiguously
requiring the trial court to award attorney’s fees to the prevailing party. See Bocquet, 972 S.W.2d
at 20 (Declaratory Judgments Act provides trial court “may” award attorney fees; thus affording
trial court “measure of discretion” in deciding whether to award attorney’s fees; while “[s]tatutes
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providing that a party ‘may recover,’ ‘shall be awarded,’ or ‘is entitled to’ attorney fees are not
discretionary”). However, the agreement unambiguously places the amount of those fees in the
trial court’s discretion. When, as here, the parties’ agreement requires an award of attorney’s fees,
the parties may agree on a fee-recovery standard “either looser or stricter” than the discretionary
provision in Texas Civil Practice and Remedies Code Chapter 38. 1 Intercontinental Grp. P’ship
v. KB Home Lone Star L.P., 295 S.W.3d 650, 653 (Tex. 2009); Miramar Dev. Corp. v. Sisk, No.
04-13-00777-CV, 2014 WL 1614290, at *3 (Tex. App.—San Antonio Apr. 23, 2014, pet. denied)
(mem. op.). In this case, the parties have done so, and the triggering event under the agreement is
that a party “prevail” in “legal proceedings against any other Partner or the Partnership to interpret
or enforce any provision, right or remedy under the Agreement.” See Intercontinental, 295 S.W.3d
at 653 (“triggering event under the contract is that a party prevail in an action ‘to enforce the terms
of this Contract or to declare rights hereunder’”). The agreement also states that “the amount of
the award or attorney’s fees shall, in the Court’s discretion, reflect the degree to which the
prevailing party or parties have prevailed in some of their claims.” Because the parties’ agreement
grants the trial court the discretion “to determine the degree to which the prevailing party or parties
have prevailed in some of their claims,” we review the trial court’s determination that neither party
here prevailed for an abuse of discretion.
B. Analysis
The trial court specifically found “[b]ased on the evidence presented and the jury’s answers
to the special questions presented, [] neither party is entitled to prevail on the claims it asserted
against the other.” Upon finding neither party to be the “prevailing party,” the trial court ordered
that “[a]ll costs and attorney’s fees shall be borne by the party incurring the same.” Walnut GP
1
“A person may recover reasonable attorney’s fees from an individual or corporation, in addition to the amount of a
valid claim and costs, if the claim is for . . . .” TEX. CIV. PRAC. & REM. CODE ANN. § 38.001 (West 2008).
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asserts it should have been awarded attorney’s fees, and the trial court erred by not finding it to be
the prevailing party at trial, or conversely, erred by finding that it did not prevail. Walnut GP cites
to a number of opinions as support for its argument that it was the sole prevailing party at trial
because the only claim submitted to the jury was LBL’s willful neglect claim against Walnut GP
on which the jury found in favor of Walnut GP. 2
When the contract provides that attorney’s fees will be awarded to the prevailing party, the
trial court must determine which party is “prevailing.” The parties’ agreement does not define
“prevailing party”; therefore, “we presume the parties intended the term’s ordinary meaning.” See
Intercontinental, 295 S.W.3d at 653. To prevail, a party “must obtain actual and meaningful relief,
something that materially alters the parties’ legal relationship.” Id. at 652. More simply, a party
prevails when it “prevails upon the court to award it something, either monetary or equitable.” Id.
at 655.
LBL went to trial on its claim that Walnut GP breached the Partnership Agreement, and
breached its fiduciary duty. LBL also went to trial on its request for a declaratory judgment that,
under the terms of the Partnership Agreement, it was entitled to remove Walnut GP as general
partner. Walnut GP went to trial on its counterclaim that LBL breached the Partnership
Agreement. Walnut GP also asked that the trial court enter a declaratory judgment that LBL and
all its agents, partners, employees, and representatives are barred from communicating with
counter-parties in business transactions with the partnership regarding such transactions and
2
Walnut GP relies on several cases for its argument that a prevailing defendant is entitled to attorney’s fees. Bhatia
v. Woodlands N. Houston Heart Ctr., 396 S.W.3d 658, 671-72 (Tex. App.—Houston [14th Dist.] 2013, pet. denied);
Goldman v. Olmstead, 414 S.W.3d 346, 367 (Tex. App.—Dallas 2013, pet. denied); Robbins v. Capozzi, 100 S.W.3d
18, 26-27 (Tex. App.—Tyler 2002, no pet.). However, in these cases the appellate court reviewed whether the trial
court erred in awarding fees. Here, we are faced with a different trial outcome, and therefore, a different procedural
posture: we must determine whether the trial court erred by not awarding fees.
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negotiations. Finally, Walnut GP alleged the claims made by LBL were groundless and brought
in bad faith, violating Texas Civil Practice and Remedies Code chapters 9 and 10.
At the close of evidence, but before closing arguments, both sides moved for a directed
verdict. First, Walnut GP asked for a directed verdict on liability, arguing there was no evidence
that it had breached any duty and there was no evidence of willful neglect. Walnut GP also asked
for a directed verdict against LBL’s claims. The trial court denied Walnut GP’s motion. Next,
LBL asked the trial court to deny Walnut GP’s request for a declaratory judgment on the grounds
there was no justiciable controversy as its own agent admitted he had violated the Partnership
Agreement by interfering in partnership business, and there was no dispute about what the
agreement provides. LBL also requested a directed verdict on Walnut GP’s breach of contract
claim, arguing that Walnut GP’s claim for breach of the Partnership Agreement belonged to the
partnership, and not the general partner. Finally, LBL argued there was no evidence of damages.
Walnut GP’s attorney responded to LBL’s arguments by stating it would not seek a jury
finding on breach of contract because “the breach of contract on behalf of LBL has been admitted
and so has the breach of the duty of loyalty.” But, Walnut GP asked that whether those admissions
had any impact on entry of a final judgment be reserved. Walnut GP also stated it would not
submit a damages question for breach of contract and that issue could be taken up later.
Accordingly, Walnut GP asked that LBL’s motion for a directed verdict be denied. Instead, the
trial court deferred ruling on LBL’s motion.
At the charge conference, Walnut GP objected to the jury question on whether it
“commit[ted] willful neglect of duty in its management of the Walnut Retail Center Limited
Partnership” on the grounds that there was no evidence to support submitting such a question to
the jury. The trial court overruled the objection. Walnut GP also objected to the damages question
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on the grounds that LBL had put on no evidence of any damages suffered with reasonable certainty.
Again, the trial court overruled the objection. LBL raised no objections to the charge.
The jury answered “no”—in favor of Walnut GP—to the only question on liability, which
asked “Did Walnut Retail Center General Partner, LC commit willful neglect of duty in its
management of the Walnut Retail Center Limited Partnership?” However, “[i]t is the judgment,
not the verdict, that we must consider in determining whether attorney’s fees are proper.”
Intercontinental, 295 S.W.3d at 656 (quoting Sw. Bell Mobile Sys. v. Franco, 971 S.W.2d 52, 56
(Tex. 1998) (per curiam)). In its Final Judgment, the trial court rendered a take-nothing judgment
against both parties, ordering that “LBL, Ltd. shall take nothing on its claims and causes of action
against Walnut GP, and that Walnut GP shall take nothing on its claims and causes of action against
LBL, Ltd.”
The parties’ agreement provides that “it is not necessary that the prevailing party prevail
in each and every of its claims. Rather the amount of the award or attorney’s fees shall, in the
Court’s discretion, reflect the degree to which the prevailing party or parties have prevailed in
some of their claims.” LBL did not prevail on its willful neglect claim against Walnut GP.
Although Walnut GP later withdrew its claims against LBL, it did not obtain its requested
declaratory judgment, nor did it obtain findings under Civil Practice and Remedies Code chapters
9 or 10. The trial court rendered a take-nothing judgment against all parties. On this record, we
cannot conclude the trial court abused its discretion in determining neither party prevailed. See
Intercontinental, 295 S.W.3d at 655 (KB Home was not prevailing party because it “got nothing
except a jury finding that Intercontinental violated the contract. It recovered no damages; it secured
no declaratory or injunctive relief; it obtained no consent decree or settlement in its favor; it
received nothing of value of any kind, certainly none of the relief sought in its petition.”); Bhatia,
396 S.W.3d at 671-72 (affirming award of fees to defendant as prevailing party because defendant
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obtained a take-nothing judgment in its favor); Fitzgerald, 345 S.W.3d at 630 (concluding that
because defendants obtained a judgment in their favor, they were entitled to recover costs and
attorney’s fees from the non-prevailing party). Therefore, we conclude the trial court did not abuse
its discretion by refusing to award attorney’s fees to either party.
Walnut GP also contends the jury “exercised its discretion in awarding such fees to Walnut
GP,” but the trial court failed and refused to include the award in its final judgment. However, a
jury’s finding on the amount of reasonable attorney’s fees is immaterial to the question of whether
such fees may be recovered. See Holland v. Wal-Mart Stores, Inc., 1 S.W.3d 91, 94 (Tex. 1999)
(holding that, because availability of attorney’s fees under a particular statute is a question of law
for the court, jury’s finding about amount of reasonable attorney’s fees is immaterial to ultimate
legal issue of whether such fees are recoverable under applicable statute as a matter of law); Allison
v. Fire Ins. Exch., 98 S.W.3d 227, 262 (Tex. App.—Austin 2002, review granted, judgment
vacated, and remanded by agreement) (“While we review the amount that the jury awarded under
a legal sufficiency standard, we review the trial court’s decision to grant or deny fees at all under
an abuse of discretion standard.”); Hunt v. Baldwin, 68 S.W.3d 117, 135 n.8 (Tex. App.—Houston
[14th Dist.] 2001, no pet.) (“while the decision to award attorney’s fees is reviewed under the
abuse of discretion standard, the fee, if awarded, is reviewed under the legal and factual sufficiency
standard”). Therefore, although the jury determined the amount of fees, we cannot conclude the
trial court abused its discretion in determining neither party prevailed; therefore, the trial court did
not err in refusing to award attorney’s fees to either party.
CONCLUSION
We overrule Walnut GP’s issues on appeal, and affirm the trial court’s judgment.
Sandee Bryan Marion, Justice
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