Joseph and Jamie Schwartzott v. Maravilla Owners Association, Inc. ( 2012 )

Affirmed as Modified and Opinion filed January 5, 2012.
In The
Fourteenth Court of Appeals
NO. 14-10-01151-CV
JOSEPH AND JAMIE SCHWARTZOTT, Appellants
V.
MARAVILLA OWNERS ASSOCIATION, INC., Appellee
On Appeal from the County Court at Law No. 2
Galveston County, Texas
Trial Court Cause No. 61,345
OPINION
In this case, condominium owners challenge a summary judgment in favor of a
condominium owners’ association in a suit to collect allegedly past-due assessments as
well as attorney’s fees and costs. We conclude that the trial court erred in awarding the
association certain fees and costs. Accordingly, we modify the trial court’s judgment to
delete these fees and costs and affirm the judgment as modified.
I. FACTUAL AND PROCEDURAL BACKGROUND
Appellants/defendants Joseph and Jamie Schwartzott (the ―Schwartzotts‖) own a
unit in the Maravilla Condominiums in Galveston, Texas. Appellee/plaintiff Maravilla
Owners Association, Inc. (the ―Association‖) is the governing body of the Maravilla
Condominiums (the ―Condominiums‖). The Association filed suit against the
Schwartzotts in county court to recover monthly assessments and late fees the
Association claimed were owing in connection with the Schwartzotts’ ownership of a unit
in the Condominiums. The Association also sought to recover attorney’s fees, costs of
collection, prejudgment interest, and postjudgment interest.
Pursuant to Texas Rule of Civil Procedure 93, the Schwartzotts included in their
answer to the suit a verified denial of the account that was the foundation of the
Association’s action. The Schwartzotts also asserted the defenses of offset and credit,
accord and satisfaction, promissory estoppel, waiver, and payment.
The Association moved for a traditional summary judgment, asserting that there
was no genuine issue of material fact regarding each element of their claim and that the
Association was entitled to judgment as a matter of law. The Association attached to its
summary-judgment motion (1) a certified copy of the Third Amended and Restated
Declaration of Condominium Regime for the Condominiums (the ―Declaration‖), (2) an
affidavit of Cathleen Comeaux-Bach, the Association’s accounts receivable manager, (3)
a statement of what Comeaux-Bach stated was an account for amounts owed by the
Schwartzotts as a result of their ownership of a unit in the Condominiums, (4) an
attorney’s fees affidavit, and (5) a billing statement from the Association’s trial attorney.
The Schwartzotts did not file a response to the Association’s summary-judgment motion,
nor did they appear at the summary-judgment hearing.
The trial court granted summary judgment, awarding $5,930 as the principal
amount due, prejudgment and postjudgment interest, $4,609.25 for attorney’s fees and
costs of collection in the past, and ―any additional attorney’s fees or costs of collection
incurred after August 11, 2010 until the date the judgment is paid.‖
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II. ISSUES PRESENTED
In three appellate issues, the Schwartzotts assert that (1) the trial court erred in
granting summary judgment based upon the sworn account procedure under Texas Rule
of Civil Procedure 185, because this procedure is not available in a claim for
homeowner’s association dues; (2) the trial court erred in awarding the Association a ten
percent collection fee as part of the attorney’s fees as well as in awarding attorney’s fees
for services regarding a different lawsuit; and (3) the trial court erred by awarding the
Association an unspecified amount of attorney’s fees and collection costs incurred after
the Association filed its summary-judgment motion and before payment of the judgment.
III. STANDARD OF REVIEW
In a traditional motion for summary judgment, if the movant’s motion and
summary-judgment evidence facially establish its right to judgment as a matter of law,
the burden shifts to the nonmovant to raise a genuine, material fact issue sufficient to
defeat summary judgment. M.D. Anderson Hosp. & Tumor Inst. v. Willrich, 28 S.W.3d
22, 23 (Tex. 2000). In our de novo review of a trial court’s summary judgment, we
consider all the evidence in the light most favorable to the nonmovants, crediting
evidence favorable to the nonmovants if reasonable jurors could, and disregarding
contrary evidence unless reasonable jurors could not. Mack Trucks, Inc. v. Tamez, 206
S.W.3d 572, 582 (Tex. 2006). The evidence raises a genuine issue of fact if reasonable
and fair-minded jurors could differ in their conclusions in light of all of the summary-
judgment evidence. Goodyear Tire & Rubber Co. v. Mayes, 236 S.W.3d 754, 755 (Tex.
2007). When, as in this case, the order granting summary judgment does not specify the
grounds upon which the trial court relied, we must affirm the summary judgment if any
of the independent summary-judgment grounds is meritorious. FM Props. Operating Co.
v. City of Austin, 22 S.W.3d 868, 872 (Tex. 2000).
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IV. ANALYSIS
A. Did the trial court err because the sworn-account procedure under Texas
Rule of Civil Procedure 185 was not available to the Association in this case?
In their first issue, the Schwartzotts assert that the trial court erred in granting
summary judgment because the only basis for the Association’s recovery was its suit on a
sworn account under Texas Rule of Civil Procedure 185, which the Schwartzotts argue is
unavailable to collect homeowners association dues.
1. Texas Rule of Civil Procedure 185
Rule 185, entitled ―Suit on Account‖, outlines a procedure available ―when any
action or defense is founded upon an open account or other claim for goods, wares and
merchandise, including any claim for a liquidated money demand based upon written
contract or founded on business dealings between the parties, or is for personal services
rendered, or labor done or labor or materials furnished, on which a systematic record has
been kept, and is supported by [an affidavit having certain specified characteristics].‖
Tex. R. Civ. P. 185. When the procedure is followed, the affidavit is taken as prima facie
evidence of the claim unless the opposing party filed a verified denial. Id.
2. The Association’s Ground for Summary Judgment
The Schwartzotts argue that the Association only sought summary judgment based
upon ―a sworn account claim.‖ The Schwartzotts emphasize one sentence from the
summary-judgment motion in which the Association states that ―[The Association’s]
cause of action is for funds owed on a sworn account: Schwartzotts’ account for
assessment of common area expenses.‖ This sentence does include the words ―sworn
account.‖ But, in the motion, the Association also asserted that its ―motion embraces the
entire claim stated in [the Association’s] pleadings‖ and that ―there is no genuine issue as
to any material fact regarding each and every element of [the Association’s] claim, and
[the Association] is entitled to a judgment as a matter of law.‖ In its motion, the
Association did not specify the claim or claims asserted in its petition. But the
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Association asserted as a ground that the summary-judgment evidence conclusively
proved its entitlement to judgment on the claim asserted in its petition. This raises the
issue of what claim or claims the Association asserted in its petition.
3. The Association’s Petition
Because the trial court sustained no special exceptions against this petition, this
court must construe that pleading liberally in the Association’s favor to include all claims
that reasonably may be inferred from the language used therein. See Horizon/CMS
Healthcare Corp. v. Auld, 34 S.W.3d 887, 897 (Tex. 2000). Under this liberal
construction, we conclude that a claim for account stated reasonably may be inferred
from the language in the Association’s petition. A party is entitled to relief under a claim
for account stated when (1) transactions between the parties give rise to indebtedness of
one to the other; (2) an agreement, express or implied, between the parties fixes an
amount due; and (3) the one to be charged makes a promise, express or implied, to pay
the indebtedness. See Busch v. Hudson & Keyse, L.L.C., 312 S.W.3d 294, 299 (Tex.
App.—Houston [14th Dist.] 2010, no pet.); Butler v. Hudson & Keyse, L.L.C., No. 14-07-
00534-CV, 2009 WL 402329, at *2 (Tex. App.—Houston [14th Dist.] Feb. 19, 2009, no
pet.) (mem. op.). Such a claim may be asserted and successfully prosecuted without
satisfying the prerequisites for the Rule 185 procedure. See Butler, 2009 WL 402329, at
*2–3 & n.1.
The Schwartzotts argue that the Association’s claim does not fall within the scope
of Rule 185.1 We presume, without deciding, that the Schwartzotts are correct in this
regard. Nonetheless, we note that the Schwartzotts filed a verified denial, and the trial
court did not grant summary judgment based upon an alleged failure of the Schwartzotts
to file a verified denial. The Association did not seek summary judgment based upon the
Rule 185 procedure. Therefore, even if this procedure were inapplicable, there would be
1
The Schwartzotts rely upon Northwest Park Homeowners Ass’n, Inc. v. Brundrett, in which the court
held that Rule 185 did not apply to a claim by a homeowners association seeking to recover maintenance
assessments against homeowners. See 970 S.W.2d 700, 701–03 (Tex. App.—Amarillo 1998, pet.
denied).
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no error in the trial court’s ruling.
4. Conclusive Proof of the Association’s Claim
The Schwartzotts have not argued that the summary-judgment evidence fails to
conclusively prove an account-stated claim on the Association’s behalf. Even if the
Schwartzotts had asserted this argument, we would conclude that the summary-judgment
evidence conclusively proved (1) transactions between the Association and the
Schwartzotts giving rise to the indebtedness of the Schwartzotts to the Association, (2) an
agreement, express or implied, fixed the amount that the Schwartzotts owe the
Association, and (3) a promise, express or implied, by the Schwartzotts to pay the
indebtedness. Without addressing the Schwartzotts’ second and third issues, in which
they challenge some of the attorney’s fees and costs awarded by the trial court, we
conclude that the Association conclusively proved these three elements of an account-
stated claim. See Busch, 312 S.W.3d at 299–300 (holding evidence was legally sufficient
to support account-stated claim in credit-card collection suit); Butler, 2009 WL 402329,
at *2–4 (holding summary judgment was properly granted as to account-stated claim in
credit-card collection suit).
The summary-judgment evidence included a certified copy of the Declaration,
which requires owners like the Schwartzotts to pay assessments levied by the Board of
Directors of the Association. Under their first issue, the Schwartzotts complain that the
summary-judgment evidence did not contain specific evidence that the assessments in
question were levied by the Association’s Board of Directors. Comeaux-Bach testified as
records custodian and accounts receivable manager for the Association that the
Schwartzotts owned a unit in the Condominiums and that the Schwartzotts owed the
Association $5,930 for unpaid assessments pursuant to the governing documents of the
Condominiums. Comeaux-Bach testified that the Association had made repeated
demands upon the Schwartzotts to pay the account and that the Schwartzotts had failed
and refused to pay the amounts owing on this account. She also stated that the
Association had allowed all just and lawful offsets and credits and that the amounts
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charged were due, owing, just, and correct. Comeaux-Bach stated that the facts
contained in the attached statement of the account were within her personal knowledge
and were just, true, and correct. Though Comeaux-Bach could have testified more
specifically that the Association’s Board of Directors levied the assessments, her
testimony and the Declaration conclusively prove a promise, express or implied, by the
Schwartzotts to pay the indebtedness.2 See Butler, 2009 WL 402329, at *2–4 (holding
summary-judgment evidence that credit-card holder accepted and used credit card for
purchases conclusively proved implied promise by card holder to pay the indebtedness
incurred under the credit card). For the foregoing reasons, we overrule the Schwartzotts’
first issue.
B. Did the trial court err in awarding certain fees and unspecified future costs
and fees?
In their second issue, the Schwartzotts challenge the trial court’s attorney’s–fees
award to the extent it was based upon (1) a ―collection fee‖ of $593 calculated based
upon ten percent of the principal amount owed by the Schwartzotts, and (2) $682.50 in
attorney’s fees incurred in defending a lawsuit filed by the Schwartzotts against the
Association in a different court. In their third issue, the Schwartzotts assert the trial court
erred by awarding the Association an unspecified amount of attorney’s fees and
collection costs incurred after the Association filed its summary-judgment motion and
before payment of the judgment.
The billing statement reflects that $682.50 of the attorney’s fees that the
Association’s counsel testified were reasonable and necessary were incurred for the
review of a separate lawsuit by the Schwartzotts against the Association and the
2
The Schwartzotts rely upon Northwest Park Homeowners Ass’n, Inc., a case that did not involve an
account-stated claim. See 970 S.W.2d at 703–04. In that case, the homeowners association appealed a
take-nothing judgment and challenged the trial court’s adverse fact findings against it that the assessments
were not properly imposed. See id. The Schwartzotts also rely upon Powers v. Adams, but that case did
not involve an account-stated claim either. See 2 S.W.3d 496, 499 (Tex. App.—Houston [14th Dist.]
1999, no pet.). We conclude that the Northwest Park Homeowners Ass’n, Inc. and Powers cases are not
on point.
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preparation of an answer to the Schwartzotts’ petition in this lawsuit. The summary-
judgment evidence does not show how these attorney’s fees were reasonable fees for the
collection of the assessments owed by the Schwartzotts to the Association. Accordingly,
we conclude that the trial court erred in awarding fees based upon this amount, and we
sustain the second issue to this extent.3
In testifying that the Association’s attorney’s fees were reasonable and necessary,
the Association’s attorney relied upon a statement of the hours worked multiplied by a
billable rate for most of the fees, but $593 of the attorney’s fees were based upon a flat
fee of ten percent of the principal amount owed. On appeal, the Schwartzotts complain
that this ten-percent flat fee is not mentioned in the Declaration and that the Association
unilaterally chose to impose this fee. The Schwartzotts assert that the trial court erred in
awarding reasonable fees based upon expert testimony regarding reasonable fees that
includes both a flat fee and a component based upon hourly billing rates.
In Arthur Andersen & Company v. Perry Equipment Corporation, the Supreme
Court of Texas held that, to recover attorney’s fees under the Texas Deceptive Trade
Practices Act, the plaintiff must prove that the amount of fees is both reasonably incurred
and necessary to the prosecution of the case at bar, and must ask the factfinder to award
the fees in a specific dollar amount, not as a percentage of the judgment. See 945 S.W.2d
812, 819 (Tex. 1997). The Schwartzotts have not cited any cases holding that a party
cannot recover a requested dollar amount of attorney’s fees because the party’s expert
opined that this amount is reasonable and necessary based upon a flat fee combined with
a billable hours calculation. We conclude that the trial court did not err in awarding
reasonable fees based upon expert testimony regarding reasonable fees that includes both
3
The Association asserts that by failing to respond to the Association’s summary-judgment motion, the
Schwartzotts waived any complaint regarding the Association’s failure to segregate recoverable from
nonrecoverable fees. But, the Schwartzotts are not complaining of a failure to segregate; they are
asserting that the evidence of reasonable attorney’s fees from the other lawsuit does not support the trial
court’s summary judgment awarding reasonable attorney’s fees in this lawsuit. This complaint can be
raised for the first time on appeal. See M.D. Anderson Hosp. & Tumor Inst. v. Willrich, 28 S.W.3d 22, 23
(Tex. 2000) (per curiam). Indeed, the Association segregated its attorney’s fees proof.
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a flat fee and a component based upon hourly billing rates. Accordingly, we overrule the
remainder of the second issue.
In their third issue, the Schwartzotts challenge the trial court’s award of ―any
additional attorney’s fees or costs of collection incurred after August 11, 2010 until the
date the judgment is paid.‖ First, the trial court did not require that the additional fees be
reasonable, a requirement under the Declaration and any potentially applicable statute.
Second, even if attorney’s fees will accrue after filing of the motion for summary
judgment or after judgment, Texas law requires proof of the amount of any such
reasonable fees before they can be recovered. See Varner v. Cardenas, 218 S.W.3d 68,
69–70 (Tex. 2007) (per curiam). The Association provided no evidence of the amount of
any reasonable fees that might be incurred in the future, and the trial court rendered a
blanket award of all fees incurred, even if unreasonable. The trial court erred in awarding
future fees and costs. Accordingly, we sustain the Schwartzotts’ third issue.
V. CONCLUSION
Presuming that the Rule 185 procedure is not available in the case under review,
the trial court did not rely upon this procedure, so such a conclusion would not show any
error by the trial court. The Schwartzotts have not argued that the summary-judgment
evidence fails to conclusively prove an account-stated claim on the Association’s behalf.
Even if the Schwartzotts had asserted this argument, we would conclude that the
summary-judgment evidence conclusively proves the essential elements of an account-
stated claim supporting the trial court’s judgment. The trial court did not err in awarding
reasonable fees based upon expert testimony regarding reasonable fees that includes both
a flat fee and a component based upon hourly billing rates. But, the trial court did err in
(1) basing its fee award in part on fees for the Association’s defense of a separate lawsuit
filed by the Schwartzotts, and (2) awarding unspecified fees incurred after the filing of
the summary-judgment motion. Accordingly, we modify the trial court’s judgment to
change the total fees and costs awarded to $3,926.75 and to delete the award of additional
fees and costs incurred after August 11, 2010.
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As modified, the trial court’s judgment is affirmed.
/s/ Kem Thompson Frost
Justice
Panel consists of Justices Frost, Jamison, and McCally.
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