Darrin Winner, Derivatively on Behalf of Land Guardian, Inc., and Darrin Winner, Individually v. Ayman Jarrah ( 2020 )

Opinion issued January 30, 2020
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-19-00115-CV
———————————
DARRIN WINNER, INDIVIDUALLY AND DERIVATIVELY ON BEHALF
OF LAND GUARDIAN, INC., Appellant
V.
AYMAN JARRAH, Appellee
On Appeal from the 55th District Court
Harris County, Texas
Trial Court Case No. 2017-04100
OPINION
This is an appeal from the trial court’s summary judgment dismissing claims
asserted by Darrin Winner individually and derivatively on behalf of Land
Guardian, Inc. (“LGI”). LGI is an entity formed by Ayman Jarrah to own and
operate a bar in Houston, Texas. This suit arises from Jarrah’s alleged breach of a
stock purchase agreement between him and Winner. In the course of the
proceedings below, Winner judicially admitted that, under the agreement, Jarrah
promised to transfer 10% of LGI’s stock to Winner in exchange for Winner’s
promise, among other consideration, to allow LGI to use his company’s liquor
license. But because Texas law prohibits the holder of a liquor license from
allowing another person to use the license, the trial court ruled that the agreement
was void and unenforceable due to illegal consideration and accordingly dismissed
Winner’s claims.
In two issues, Winner contends that the trial court (1) erred in granting
summary judgment and (2) abused its discretion in awarding Jarrah attorney’s fees.
We affirm.
Background
The Stock Purchase Agreement
Darrin Winner and Clifford Kitten are life partners who met at the Brazos
River Bottom (“the Bar”), located at 2400 Brazos in Houston, Texas (“the
Property”). Winner eventually became the owner of the Brazos River Bottom Club,
Inc. (“the BRB”), the entity that owned the Bar. And Kitten, through his family
limited partnership, eventually became the owner of the Property.
For roughly seven years, Kitten leased the Property to the BRB, which
owned and operated the Bar. But as the area changed and the Property fell into
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disrepair, the Bar became less profitable, and Winner and Kitten began looking for
a new tenant.
In the late summer of 2012, Winner and Kitten met Ayman Jarrah. Jarrah
wanted to open a new club in the area and had formed a closely held corporation,
Land Guardian, Inc. (“LGI”), to be the owner and holder of the lease. Jarrah
decided that the Property was the ideal location for the new club, and he began
negotiating with Winner, who acted on behalf of both Kitten and himself.
Ultimately, Winner and Jarrah settled on a deal whereby Winner would
become a minority shareholder in LGI (“the Stock Purchase Agreement”). Under
the Stock Purchase Agreement, Jarrah promised to transfer 10% of LGI’s stock to
Winner, and Winner promised to (1) terminate BRB’s lease with Kitten so that
Kitten could enter into a new lease with LGI, (2) allow LGI to use BRB’s liquor
license until LGI acquired its own, and (3) allow LGI to use an adjacent parking lot
owned by Winner for customer and employee parking. The one caveat was that
Winner would not begin to receive his share of the profits until Jarrah recouped his
expenses from renovating the Property. The parties did not memorialize their
agreement in writing.
BRB terminated its lease with Kitten; Kitten entered into a new lease with
LGI; and a new club, the Gaslamp, opened at the Property. At some point, Jarrah
and Winner’s relationship deteriorated, with Winner accusing Jarrah of failing to
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fairly distribute LGI’s profits, refusing to allow Winner to inspect LGI’s books and
records, and engaging in various other related misconduct.
The first lawsuit
In October 2015, Winner filed suit against Jarrah, asserting claims both
individually and derivatively on behalf of LGI. Jarrah filed a no-evidence motion
for summary judgment, arguing in part that there was no evidence that Winner was
a shareholder of LGI. Winner responded that he “paid consideration” for LGI stock
and that the consideration included his “allowing LGI to temporarily use the liquor
license [he] controlled until it received its own.” Winner supported his response
with an affidavit in which he described BRB’s liquor license as having “substantial
value.” Winner also filed an amended petition, which alleged that he agreed to
allow LGI to use BRB’s liquor license as partial consideration for the LGI stock.
The trial court denied Jarrah’s no-evidence motion for summary judgment.
Winner filed a notice of nonsuit, and the trial court dismissed Winner’s claims
without prejudice.
The current lawsuit
Shortly after the dismissal of the first lawsuit, Winner initiated the current
lawsuit, filing an original petition that asserted claims derivatively on behalf of
LGI. Jarrah answered and filed a third-party petition, seeking a declaratory
judgment that Winner is not a shareholder in LGI. Winner then filed an original
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counterclaim, asserting individual claims for breach of contract and fraud.
Winner’s original and live pleadings (his second amended petition and second
amended counterclaim) continued to allege that he agreed to allow LGI to use
BRB’s liquor license as partial consideration for 10% ownership in LGI.
Trial was set for the August 20, 2018 docket, and the parties were assigned
an August 29 trial date. The parties were called for trial and appeared at an August
13 docket call.
Among other pre-trial motions, Jarrah filed a Rule 166(g) motion, arguing
that the Stock Purchase Agreement was based on illegal consideration—Winner’s
promise to allow LGI to use BRB’s liquor license. Jarrah also filed a motion for
summary judgment, which further developed the argument made in his Rule
166(g) motion. In his motions, Jarrah explained that the Texas Alcoholic Beverage
Code prohibits the holder of a liquor license from sharing its license with another
person. See, e.g., TEX. ALCO. BEV. CODE § 11.05 (“A permittee may not consent to
or allow the use or display of the permittee’s permit by a person other than the
person to whom the permit was issued.”). Thus, Jarrah argued, the Stock Purchase
Agreement was based on illegal consideration and therefore void and
unenforceable. As a result, Jarrah concluded, Winner did not have viable claims.
On August 28, the trial court held a telephone hearing on Jarrah’s motions.
The trial court set the motions for hearing on September 27 and granted Winner
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leave to file a response. The trial court did not, however, grant leave for the parties
to amend their pleadings or take any other action.
Nevertheless, after the telephone hearing, on September 13, 2018, Winner
filed a third amended petition and third amended counterclaim. Both amended
pleadings omitted Winner’s former (and repeated) allegation that part of the
consideration he paid for the LGI stock included LGI’s temporary use of BRB’s
liquor license.
In addition to the third amended pleadings, Winner also filed a response to
Jarrah’s motion for summary judgment. Winner argued that there was no evidence
that the Stock Purchase Agreement was illegal because his third amended
pleadings no longer alleged that the use of BRB’s liquor license was part of the
consideration paid for the stock. Winner supported his response with an affidavit.
In the affidavit, Winner explained that, when Kitten and he began negotiating the
new lease with Jarrah, they told Jarrah that they could not allow him to use BRB’s
liquor license because they planned to reopen the Bar in a new location. Thus,
BRB’s liquor license was not part of the consideration Winner paid for the LGI
stock. According to Winner, it was only after they had determined that they would
not be able to reopen the Bar in a new location—and after the parties had executed
the new lease and Stock Purchase Agreement—that they agreed to allow LGI to
use BRB’s liquor license until it obtained its own.
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Jarrah filed a motion to strike Winner’s third amended petition and third
amended counterclaim. Jarrah observed that throughout the entire first case Winner
had repeatedly and consistently alleged that the consideration he paid for the shares
included his “allowing LGI to temporarily use [BRB’s] liquor license” and had
even described the liquor license as having “substantial value.” Jarrah further
observed that Winner had maintained the same position throughout the entire
second case, including after Jarrah asserted illegality as an affirmative defense in
his answer, after Jarrah explained the basis of the defense in his responses to
Winner’s interrogatories, and after the parties were called for trial and appeared for
their docket call. It was not until after Jarrah filed his pre-trial Rule 166(g) motion
and motion for summary judgment that Winner changed his position and alleged
that the only consideration he had paid for the LGI stock was his promise to
terminate BRB’s lease so that LGI and Kitten could enter into a new one. Jarrah
therefore argued that Winner’s amended pleadings should be struck because they
were filed without leave of court, were calculated to surprise and prejudice Jarrah,
and, if permitted, would reshape the nature of the suit.
Winner responded by filing an amended affidavit. In the amended affidavit,
Winner stated that consideration is a legal concept that he had misunderstood and
misused in his previous affidavits:
I am not a lawyer. I generally understand consideration to mean that
one party provides something of value. As explained further below
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and in my September 17, 2018 affidavit, after I owned an interest in
[LGI], I allowed [LGI] to operate with the BRB liquor license. Based
on my understanding of what consideration means, I do not
understand why the 2016 testimony may conflict with the testimony in
my September 17, 2018 affidavit.
In three orders, the trial court (1) struck Winner’s third amended petition and
third amended counterclaims, finding that they were filed after the date scheduled
for trial without leave of court, (2) struck Winner’s amended affidavit under the
sham affidavit rule, finding that it conflicted with his prior sworn testimony
without providing a sufficient explanation for the conflict, (3) ruled that the Stock
Purchase Agreement was supported by illegal consideration and therefore void,
(4) declared that Winner is not an LGI shareholder and therefore lacks standing to
sue derivatively on LGI’s behalf, (5) dismissed Winner’s individual and derivative
claims with prejudice, and (6) awarded Jarrah attorney’s fees under the Declaratory
Judgment Act. See TEX. CIV. PRAC. & REM. CODE § 37.009.
Winner appeals.
Summary Judgment
In his first issue, Winner argues that the trial court erred in granting
summary judgment because Jarrah failed to prove as a matter of law that the Stock
Purchase Agreement is supported by illegal consideration and therefore void.
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A. Standard of review
We review the trial court’s grant of summary judgment de novo. Lujan v.
Navistar, Inc., 555 S.W.3d 79, 84 (Tex. 2018). A traditional motion for summary
judgment requires the moving party to show that no genuine issue of material fact
exists and that it is entitled to judgment as a matter of law. TEX. R. CIV. P. 166a(c);
Lujan, 555 S.W.3d at 84. If the movant carries this burden, the burden shifts to the
nonmovant to raise a genuine issue of material fact precluding summary judgment.
Lujan, 555 S.W.3d at 84. In reviewing the grant of summary judgment, we must
credit evidence favoring the nonmovant, indulging every reasonable inference and
resolving all doubts in his favor. Id.
B. Analysis
1. Winner judicially admitted that the Stock Purchase Agreement
was based in part on illegal consideration.
Under the TABC, the holder of a liquor license is prohibited from allowing
another person to use its license. TEX. ALCO. BEV. CODE § 11.05 (“A permittee
may not consent to or allow the use or display of the permittee’s permit by a
person other than the person to whom the permit was issued.”).1 And under Texas
contract law, a contract that requires a violation of the TABC is void and
unenforceable. Merry Homes, Inc. v. Chi Hung Luu, 312 S.W.3d 938, 946 (Tex.
1
See also TEX. ALCO. BEV. CODE § 109.53 (“No person shall . . . consent to the use
of or allow his permit to be displayed by or used by any person other than the one
to whom the permit was issued.”).
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App.—Houston [1st Dist.] 2010, no pet.) (“Any contract or lease that requires a
violation of this statute [the TABC] is void.”). A contract supported by illegal
consideration is likewise generally considered void. In re Kasschau, 11 S.W.3d
305, 313 (Tex. App.—Houston [14th Dist.] 1999, orig. proceeding) (“As a general
rule, where part of the consideration for an agreement is illegal, the entire
agreement is void if the contract is entire and indivisible.”). Thus, if Winner
promised to allow LGI to use BRB’s liquor license as partial consideration for LGI
stock, then the Stock Purchase Agreement is supported by illegal consideration and
therefore void and unenforceable.
Here, Jarrah contends, and the trial court found, that Winner judicially
admitted that he promised to allow LGI to use BRB’s liquor license as partial
consideration for a 10% interest in LGI. We therefore consider whether Winner
made such a judicial admission.
A judicial admission occurs when a party makes a statement of fact that
conclusively disproves a right of recovery or defense he currently asserts. H2O
Sols., Ltd. v. PM Realty Grp., LP, 438 S.W.3d 606, 617 (Tex. App.—Houston [1st
Dist.] 2014, pet. denied). A judicial admission has conclusive effect and bars the
admitting party from later disputing the admitted fact. Holy Cross Church of God
in Christ v. Wolf, 44 S.W.3d 562, 568 (Tex. 2001). A party can make a judicial
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admission in pleadings, motions, responses, and affidavits. See id. (motions and
responses); H2O Sols., 438 S.W.3d at 616–21 (pleadings and affidavits).
A statement qualifies as a judicial admission if: (1) it is made in the course
of a judicial proceeding, (2) it is contrary to an essential fact or defense asserted by
the party, (3) it is deliberate, clear, and unequivocal, (4) it is not destructive of the
opposing party’s theory of recovery or defense, and (5) enforcing it as a judicial
admission would be consistent with public policy. H2O Sols., 438 S.W.3d at 617.
Throughout the course of both lawsuits, Winner repeatedly and consistently
stated that he agreed to allow LGI to use BRB’s liquor license as partial
consideration for the LGI stock.
In the first lawsuit, Winner made the allegation in his live pleading: “In
exchange for BRB agreeing to terminate its lease and allow LGI to lease the
Premises in its stead and allowing LGI to use its liquor license, Mr. Winner
received 10% of LGI.” He made the allegation in his response to Jarrah’s no-
evidence motion for summary judgment: “Winner paid consideration for the shares
by: a. releasing the lease Winner controlled on the property to LGI so that LGI
could operate its business on the premises; b. allowing LGI to temporarily use the
liquor license Winner controlled until it received its own; c. allowing LGI to
temporarily control an adjacent parking lot Winner controlled which allowed LGI
customers parking; and d. allowing LGI employees to park in the adjacent parking
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lot Winner controlled for free.” And he made the allegation in the affidavit
attached to his response: “I paid consideration for the shares by a) releasing the
lease I controlled on the property to LGI so that LGI could operate its business on
the premises, b) allowing LGI to temporarily use the liquor license I controlled
until it received its own, c) allowing LGI to temporarily control an adjacent
parking lot I controlled which allowed LGI customers parking, and d) allowing
LGI employees to park in the adjacent parking lot I controlled for free.” In his
affidavit, he even described the liquor license as having “substantial value.”
In the second and current lawsuit, Winner made the allegation in his original
pleadings, his first amended pleadings, and his live pleadings. In his second
amended petition, Winner alleged: “In exchange for BRB agreeing to terminate its
lease and allow LGI to lease the Premises in its stead and allowing LGI to use its
liquor license, Defendant promised Mr. Winner 10% of LGI.” In his second
amended counterclaim, Winner likewise alleged: “Among other consideration, in
exchange for BRB agreeing to terminate its lease, allowing LGI to lease the
Premises in its stead, allowing LGI to use BRB’s liquor license, and allowing LGI
to use a parking lot Oaks Ranch LLC has under lease, Winner received 10% of
LGI.”
Winner’s statements were made in the course of judicial proceedings.
Winner’s statements are contrary to a fact essential to his theory of recovery, i.e.,
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that the parties entered into a valid and enforceable Stock Purchase Agreement.
Winner’s statements were deliberate, made under the guidance of counsel in
furtherance of his claims. Winner’s statements are clear and unequivocal about
what he paid in consideration for the LGI stock. Winner’s statements are not
destructive of Jarrah’s defense. In fact, they support it. Finally, enforcing Winner’s
statements as judicial admissions is consistent with public policy. See TEX. ALCO.
BEV. CODE § 1.03 (“This code is an exercise of the police power of the state for the
protection of the welfare, health, peace, temperance, and safety of the people of the
state.”); Merry Homes, 312 S.W.3d at 946 (“[W]e must not enforce
an illegal contract, ‘particularly where the contract involves the doing of an act
prohibited by statutes intended for the protection of the public health and
welfare.’” (quoting Peniche v. Aeroméxico, 580 S.W.2d 152, 155 (Tex. App.—
Houston [1st Dist.] 1979, no writ)). We hold that Winner’s statements qualify as
judicial admissions.
Thus, Winner’s statements conclusively prove that, in exchange for a 10%
interest in LGI, Winner promised, among other consideration, to allow LGI to use
BRB’s liquor license. See Holy Cross Church of God in Christ, 44 S.W.3d at 568.
Because the TABC prohibits the holder of liquor license from allowing another
person to use the license, TEX. ALCO. BEV. CODE §§ 11.05, 109.53, Winner’s
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statements further prove that the Stock Purchase Agreement was supported by
illegal consideration.
2. The illegal consideration is not severable from the rest of the
agreement.
Winner argues that the Stock Purchase Agreement is still enforceable
because the illegal consideration can be severed from the rest of the agreement. We
disagree.
The severability doctrine only applies when the original consideration for
the contract is legal. In re Kasschau, 11 S.W.3d at 313 (“The doctrine of
severability is an exception that applies in circumstances in which the original
consideration for the contract is legal, but incidental promises within the contract
are found to be illegal.”); see also Seligman-Hargis v. Hargis, 186 S.W.3d 582,
587 (Tex. App.—Dallas 2006, no pet.) (same); Montgomery v. Browder, 930
S.W.2d 772, 778 (Tex. App.—Amarillo 1996, writ denied) (same). That is not the
case here. Because the illegal portion of the Stock Purchase Agreement was part of
the original consideration Winner paid for the stock, it is not severable from the
remainder of the agreement.
3. The trial court did not abuse its discretion in striking Winner’s
third amended pleadings and amended affidavit.
Winner further contends that the trial court abused its discretion in striking
his third amended pleadings and his amended affidavit. Winner insists that these
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amended filings clarified that the use of BRB’s liquor license was not, in fact, part
of the consideration he paid for the LGI stock, thereby rebutting the basis of
Jarrah’s dispositive motions. See Lujan, 555 S.W.3d at 84 (trial court’s refusal to
consider evidence under sham affidavit rule reviewed for abuse of discretion); Air
Prods. & Chems., Inc. v. Odfjell Seachem A/S, 305 S.W.3d 87, 92 (Tex. App.—
Houston [1st Dist.] 2009, no pet.) (trial court’s decision whether to allow
amendment of pleadings reviewed for abuse of discretion). We consider each type
of amended filing in turn.
We begin with Winner’s third amended pleadings. Under our procedural
rules, a trial court may strike an amended pleading upon a showing of surprise or
prejudice to the other party. Air Prods. & Chems., Inc., 305 S.W.3d at 92; see TEX.
R. CIV. P. 63 (“Parties may amend their pleadings . . . as they may desire by filing
such [pleadings] with the clerk at such time as not to operate as a surprise to the
opposite party . . . .”). Here, the trial court could have struck Winner’s third
amended pleadings on either of these grounds.
Winner filed his third amended pleadings on September 13, 2018—after the
date scheduled for trial, after the parties appeared for a docket call, and, tellingly,
after Jarrah filed his dispositive motions. Up until then, Winner had consistently
and repeatedly stated that the use of BRB’s liquor license was part of the
consideration he paid for the LGI stock. Winner maintained this position over the
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course of two lawsuits for nearly three years. Even when the parties were set to go
to trial in the second lawsuit, Winner made no attempt to amend. It was not until
after Jarrah filed his dispositive motions that Winner sought to amend his
pleadings to modify the material terms of the Stock Purchase Agreement.
Under these circumstances, the trial court could have reasonably concluded
that Winner’s third amended pleadings were calculated to surprise and would have
prejudiced Jarrah, who had already filed dispositive motions based on Winner’s
judicial admissions concerning the consideration paid for the LGI stock. See Air
Prods. & Chems., Inc., 305 S.W.3d at 95 (holding that trial court did not abuse
discretion in striking amended pleadings when trial court “could have reasonably
concluded that the amended pleadings . . . would have reshaped the litigation,
prejudicing [opposing party] and possibly delaying the trial”); Tex. Black Iron, Inc.
v. Arawak Energy Int’l Ltd., 566 S.W.3d 801, 827–28 (Tex. App.—Houston [14th
Dist.] 2018, pet. denied) (holding that trial court did not abuse discretion in striking
supplier’s amended pleadings filed 10 days before original trial setting when
opposing party’s summary-judgment motion had already been filed and was
pending before court and new allegations were not based on newly-discovered
facts); Perez v. Embree Constr. Grp., Inc., 228 S.W.3d 875, 883 (Tex. App.—
Austin 2007, pet. denied) (holding that trial court did not abuse discretion in
striking amended pleadings more than three years after case was filed, more than
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nine months after amendment deadline, and around two months before trial). We
hold that the trial court did not abuse its discretion in striking Winner’s third
amended pleadings.
We now turn to Winner’s amended affidavit, which the trial court struck as a
sham. Under the sham affidavit rule, if a party submits an affidavit that conflicts
with the affiant’s prior sworn testimony and does not provide a sufficient
explanation for the conflict, a trial court may disregard the affidavit when deciding
whether the party has raised a genuine fact issue to avoid summary judgment.
Lujan, 555 S.W.3d at 82. Here, the trial court made the following written findings
in determining that Winner’ amended affidavit was a sham:
In an effort to explain this inconsistency, [Winner] executed yet a
third Affidavit on September 23, 2018, which states that the problem
is merely that “consideration” is a legal concept which was
misunderstood or misused by him in his first affidavit. This
explanation does not explain away that Mr. Winner has consistently
listed use of the license as one of the deal points; in fact, one which he
previously said had “substantial value.” It matters not at all that it was
referred to as “consideration.” There was never any statement that it
was not a deal point. At paragraph 6 the story changes yet again with
the additional testimony that Winner only allowed LGI to use his
license after he was already a 10% owner. No explanation is offered
for this change. . . . Clearly, Winner’s story, affidavit and pleadings
changed when the Rule 166(g) Motion was filed. The Lujan Court
directs the trial court to look at the explanation offered. The best
Winner offers is that the license only came up after he was 10%
owner, but just because the facts played out over months does not
change the clear statement made several times for and by Winner that
the 10% for the license swap, with other consideration, was the deal.
The pleadings constitute judicial admissions and support the first
affidavit. The first affidavit is supplemented with deposition
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testimony. Winner’s later affidavits to the contrary are shams as
defined in the case law. The fact at issue is material and relevant.
Explanations are offered but they do not explain away what is obvious
to the Court.
Given Winner’s consistent and repeated statement that he promised to allow
LGI to use BRB’s liquor license in exchange for LGI stock, and Winner’s
disavowal of that statement immediately after Jarrah observed that the promise
violated the TABC, we cannot say that the trial court abused its discretion in
disregarding Winner’s amended affidavit under the sham affidavit rule.
4. The trial court did not err in dismissing Winner’s claims.
In sum, Winner judicially admitted that the Stock Purchase Agreement was
supported by illegal consideration. As a result, the Stock Purchase Agreement is
void. Winner does not have standing to assert derivative claims on behalf of LGI,
as he never became an LGI shareholder. And Winner’s individual claims fail as
well, as a plaintiff cannot predicate a claim on his illegal act.
Accordingly, we overrule Winner’s first issue.
Attorney’s Fees
In his second issue, Winner argues that the trial court should not have
awarded Jarrah attorney’s fees under the Declaratory Judgments Act because (1)
the subject of Jarrah’s declaratory-judgment action was already before the trial
court and (2) an award of attorney’s fees is not equitable and just under the
circumstances.
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A. Applicable law and standard of review
Under the Declaratory Judgments Act, the trial court “may award costs and
reasonable and necessary attorney’s fees as are equitable and just.” TEX. CIV.
PRAC. & REM. CODE § 37.009. But because the Declaratory Judgments Act is not
available to settle disputes already pending before the trial court, BHP Petrol. Co.
v. Millard, 800 S.W.2d 838, 841 (Tex. 1990), a mirror-image counterclaim for
declaratory relief generally will not support an award of attorney fees, Save Our
Springs All., Inc. v. Lazy Nine Mun. Util. Dist. ex rel. Bd. of Directors, 198 S.W.3d
300, 318 (Tex. App.—Texarkana 2006, pet. denied).
An exception to the mirror-image rule is when the plaintiff requests
declaratory relief. Id. If the plaintiff requests declaratory relief, the mirror-
image rule does not prohibit the trial court from awarding attorney fees, even if the
defendant’s counterclaim for declaratory relief merely duplicates the claims
already raised by the plaintiff. Id.; see Castille v. Serv. Datsun, Inc., No. 01-16-
00082-CV, 2017 WL 3910918, at *11 (Tex. App.—Houston [1st Dist.] Sept. 7,
2017, no pet.) (mem. op.) (“[A] trial court is not prohibited from awarding
attorney’s fees to a defendant that asks the court to make a corresponding contrary
declaration in a case where the plaintiffs have also brought a claim for declaratory
relief.”). This is because the Declaratory Judgments Act authorizes trial courts to
determine that it is equitable and just to award attorney’s fees to either party, so a
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defendant who raises a mirror-image counterclaim in response to a plaintiff’s
declaratory-judgment claim cannot be said to have raised the counterclaim solely
to pave the way for an award of otherwise-impermissible attorney’s fees. Castille,
2017 WL 3910918, at *11.
Whether attorney’s fees are available under the Declaratory Judgments Act
is a question of law, which we review de novo. See Holland v. Wal-Mart Stores,
Inc., 1 S.W.3d 91, 94 (Tex. 1999); Indian Beach Prop. Owners’ Ass’n v. Linden,
222 S.W.3d 682, 705–06 (Tex. App.—Houston [1st Dist.] 2007, no pet.). But we
review the attorney fee award itself for an abuse of discretion. Feldman v. KPMG
LLP, 438 S.W.3d 678, 686 (Tex. App.—Houston [1st Dist.] 2014, no pet.). An
award is an abuse of discretion if it was made arbitrarily, unreasonably, or without
regard to guiding legal principles. Id. In determining whether an award was an
abuse of discretion, we view the evidence in the light most favorable to the trial
court’s ruling, indulging every presumption in its favor. Id.
B. Analysis
Winner argues that the trial court erred in awarding attorney’s fees because
the subject of Jarrah’s declaratory-judgment action was already before the trial
court, which made fees unavailable under the mirror-image rule. We disagree.
As discussed above, when, as here, the plaintiff requests declaratory relief,
the mirror-image rule does not prohibit the trial court from awarding attorney fees.
20
See Castille, 2017 WL 3910918, at *11; Save Our Springs All., 198 S.W.3d at 318.
Because Winner asserted a declaratory-judgment action first, and Jarrah responded
by requesting a corresponding contrary declaration, the mirror-image rule did not
prohibit the trial court from awarding Jarrah attorney’s fees.
Winner further argues that the trial court abused its discretion in awarding
attorney’s fees because such an award was not equitable and just under the
circumstances. He emphasizes the many instances where Jarrah recognized that he
agreed to transfer 10% of LGI to Winner and contends that Jarrah should not be
allowed to further profit from an illegal deal. We agree with Jarrah that Winner’s
argument fails to apply the applicable standard of review and instead attempts to
re-argue the disputed facts and substitute his judgment for that of the trial court.
Viewing the evidence in the light most favorable to the trial court, we cannot say
the trial court abused its discretion in awarding attorney’s fees when Winner filed
suit in an attempt to enforce an illegal contract and then attempted to prolong the
litigation by filing a sham affidavit.
Accordingly, we overrule Winner’s second issue.
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Conclusion
We affirm.
Gordon Goodman
Justice
Panel consists of Justices Keyes, Goodman, and Countiss.
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