Lost Creek Ventures, LLC D/B/A Happy Bulldog Management Stephan Epstein And Marilyn Roth Epstein v. Alan Pilgrim

Opinion issued June 30, 2016
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-15-00375-CV
———————————
LOST CREEK VENTURES, LLC D/B/A HAPPY BULLDOG
MANAGEMENT; STEPHAN EPSTEIN; AND MARILYN ROTH EPSTEIN,
Appellants
V.
ALAN PILGRIM, Appellee
On Appeal from the County Court at Law No. 2
Travis County, Texas
Trial Court Case No. C-1-CV-12-007660

The Supreme Court of Texas transferred this appeal from the Court of Appeals
for the Third District of Texas. See TEX. GOV’T CODE § 73.001 (authorizing
transfer of cases). We are unaware of any conflict between precedent of the
Court of Appeals for the Third District and that of this Court on any relevant
issue. See TEX. R. APP. P. 41.3.
MEMORANDUM OPINION
In this landlord-tenant dispute, Alan Pilgrim obtained a judgment against
Marilyn and Stephan Epstein and their property management company, Lost Creek
Ventures, LLC, doing business as Happy Bulldog Management. The trial court
found that the Epsteins and Happy Bulldog breached their residential lease
agreement with Pilgrim and violated provisions of the Texas Property Code. On
appeal, the Epsteins and Happy Bulldog contend that the trial court (1) based its
findings on insufficient evidence and failed to offset the amount of the judgment for
damage to the premises; (2) erred in awarding attorney’s fees; (3) erred in admitting
photographs into evidence; (4) erred in imposing joint and several liability; (5) erred
in refusing to disqualify Pilgrim’s counsel; and (6) erred in denying motions for
continuance and for a new trial.
We modify the trial court’s judgment to provide that Marilyn and Stephan
Epstein are not individually liable for the $118.82 in damages awarded to Pilgrim
for breach of the lease; we affirm the judgment as modified.
BACKGROUND
In May 2010, Pilgrim executed a residential real estate lease agreement with
Happy Bulldog Management for a one-year lease of a three-bedroom duplex on
Cuernavaca Street in Austin, Texas, for a monthly rental of $1,195 and a security
deposit of one month’s rent plus $250. The duplex shared a common laundry area
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with another duplex. The Epsteins own Happy Bulldog through Lost Creek
Ventures, their limited liability company. They also own the duplex rented to
Pilgrim.
The lease required that Happy Bulldog reimburse Pilgrim for expenses that
Pilgrim incurred in painting the duplex and that Happy Bulldog replace damaged
exterior window screens in connection with the rental. Despite presentation of the
receipts, Happy Bulldog refused to reimburse Pilgrim for painting the unit, nor did
it replace the windscreens. In addition, the unit was infested with rodents,
particularly in the laundry room, and Happy Bulldog’s attempt to remedy the
problem failed. Finally, the driveway was in poor condition, and Happy Bulldog’s
attempt to remedy the problem with sand and gravel failed after rain washed the sand
and gravel away.
In September, Pilgrim terminated the lease and vacated the property. When
the Epsteins notified Pilgrim that they would withhold his security deposit unless he
settled their dispute by accepting only a portion of his security deposit, Pilgrim sued
the Epsteins and Happy Bulldog Management in small claims court, alleging they
had breached the lease, failed to make repairs that affected his health and safety, and
wrongfully failed to refund his security deposit. He also requested that he be
awarded his attorney’s fees.
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The Epsteins contended that they were not proper parties to the suit, as they
did not sign the lease in their individual capacities. Happy Bulldog counterclaimed
for breach of the lease, alleging that Pilgrim had wrongfully terminated it and had
damaged the leased property’s driveway when he had attempted repairs. Pilgrim
failed to appear for trial in the small claims court. It subsequently entered a judgment
in favor of Happy Bulldog Management, and it dismissed the Epsteins from the suit
on the basis that they were not proper parties.
Pilgrim appealed de novo to the county court at law. In the county court, he
filed an amended petition, adding allegations that Happy Bulldog and the Epsteins
violated the landlord-tenant statute by refusing in bad faith to return his security
deposit or provide an accounting of deductions made from it. In addition to
damages, Pilgrim again requested attorney’s fees.
The case was tried to the bench. The trial testimony primarily consisted of
the parties’ conflicting accounts of Pilgrim’s repair requests and the Epsteins’
responses. Both sides’ attorneys also testified regarding their fees.
Pilgrim testified that the lease required the lessor to repair any condition
affecting his health or safety and repair or replace some screens, but the Epsteins did
not repair or replace the screens. He also testified that he requested that they have
the premises treated by an exterminator after he discovered rat droppings in the water
heater closet in the back bedroom. He described that area as “inundated with rat
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feces.” He noted that there was an associated odor problem. He could not use the
duplex’s common laundry area “because the smell of rat urine and feces” was “so
strong,” and there was “a stench inside the house” that caused his clothes to smell.
He also could not use a storage area, because it made “everything smell that’s stored
in there.” Pilgrim testified that Marilyn Epstein told him that the property had been
sprayed and disinfected, but he stated that he was still smelling “odors from raccoons
and rats” afterward. Pilgrim had two contractors out to the property to assess the
odor issue. One of these contractors provided an itemized estimate of $2,499 to
remedy the situation in late July 2010, and Pilgrim provided this estimate to the
Epsteins. He testified that he repeatedly raised these issues with the Epsteins, but
that they failed to resolve them. In late August 2010, he sent the Epsteins a letter
stating that he would terminate the lease if they did not promptly remedy these
issues. They failed to do so, and Pilgrim terminated the lease.
Marilyn was the principal witness on behalf of the defense. She testified that
she and Stephan owned the leased premises and that Happy Bulldog Management
was the name under which their property management company, Lost Creek
Ventures, operated. The Epsteins are the sole members of this limited liability
company. Marilyn testified that some of the screens were repaired or replaced in
June 2010, but that this project was not completed due to Pilgrim’s “continuous
barrage of requests for very expensive items.” She said that Pilgrim told her to
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concentrate on his other requests instead of the screens and also that he impeded
repair or replacement of the screens by obstructing access to the premises with a
sawhorse and sign he placed in the driveway that complained of the Epsteins’ alleged
refusal to repair the driveway. Marilyn testified that the Epsteins sent a pest control
service to the property in late May 2010. Snap traps were put in place as part of this
treatment, and the same pest control service came back to the property to retrieve
the dead rats. She claimed that the service specifically addressed the living areas
that Pilgrim complained about as well, and she claimed that the rodent problem had
been remedied before Pilgrim terminated the lease.
After Pilgrim moved out, the Epsteins sent him a letter regarding his security
deposit. In this letter, Stephan stated that Pilgrim had incurred charges in the
following amounts: $1,489 for repairs to the walls and repainting; $325 for pest
control; $130 for clean-up costs; and $600 for two weeks’ rent. Even allowing
Pilgrim a credit of $350 for painting costs he incurred when he moved in, the charges
and damages Pilgrim owed exceeded the amount of his security deposit. Stephan
Epstein nonetheless enclosed a check for $600. By way of explanation, he wrote:
“We have discounted charges dramatically and issued the enclosed refund of deposit
balance check in the amount of $600. Cashing this check is acknowledgment of
receipt in full of all deposit money owed, and settlement of any deposit and rent
issues in full by you.” Pilgrim returned the check.
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When asked how the Epsteins arrived at the $600 figure, Marilyn testified that
it “was basically something that I thought would reasonably just settle this for him
to go and go on his way.” When asked about the $1,489 damage figure, she testified
that it would cost this much to repair some bolt holes in the wall and repaint. Marilyn
testified that she “figured it would cost us [that amount to] repair it” based on her
experience. She agreed that the Epsteins did not deduct the charges and damages
stated in Stephan’s letter from Pilgrim’s deposit, but rather that these figures were
an indication of what they thought they could deduct under the circumstances.
According to Marilyn, the point of the charges and damages stated in the letter to
Pilgrim was to show him that the Epsteins were “being gracious” and giving him
more than they were obligated to refund.
The county court rendered judgment for Pilgrim. It found that the Epsteins
and Happy Bulldog:
● breached the lease, by failing to repair or replace the screens;
● violated the landlord-tenant statute by failing to make a diligent effort to
repair a condition materially affecting Pilgrim’s health and safety and that
Pilgrim properly terminated the lease based on this violation; and
● withheld Pilgrim’s entire security deposit in bad faith.
It also found in Pilgrim’s favor with respect to the breach of contract claims asserted
by the Epsteins and their management company regarding Pilgrim’s early
termination of the lease and alleged damage to the premises.
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The Epsteins and Happy Bulldog moved for a new trial and for a continuance
of the hearing on their motion. The county court denied both motions.
DISCUSSION
I. Sufficiency of the Evidence
The Epsteins contend that the evidence is legally and factually insufficient to
support the county court’s findings that they breached the lease by failing to repair
window screens; Pilgrim was justified in terminating the lease; and they retained
Pilgrim’s security deposit in bad faith. They also contend that the court failed to
offset the amount awarded to Pilgrim for property damage and stolen building
materials.
A. Standard of Review
To challenge the legal sufficiency of the evidence, the appealing party must
demonstrate a complete lack of evidence regarding the disputed issue, or that the
court is barred by rules of law or evidence from crediting the only evidence offered
on the subject, or that the evidence conclusively proves the opposite to be true.
Dallas Nat’l Ins. Co. v. De La Cruz, 470 S.W.3d 56, 57 (Tex. 2015) (per curiam);
C.C. Carlton Induss., Ltd. v. Blanchard, 311 S.W.3d 654, 659 (Tex. App.—Austin
2010, no pet.).
When reviewing the evidence for factual sufficiency, we consider all of the
relevant evidence in the record. See In re S.M.R., 434 S.W.3d 576, 586 (Tex. 2014).
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We examine both the proof supporting and contradicting the findings in a neutral
light. City of Austin v. Chandler, 428 S.W.3d 398, 407 (Tex. App.—Austin 2014,
no pet.). We defer to the fact finder’s “implicit determinations of credibility and
weight to be given to the evidence.” Id. When a party challenges the factual
sufficiency of an adverse finding on which it had the burden of proof, it must show
“that the adverse finding is against the great weight and preponderance of the
evidence.” Id. at 407–08.
B. Landlord-Tenant Law
Leases are contracts and are governed by the rules that apply to contracts
generally. Ferrari v. Bauerle, 519 S.W.2d 144, 146 (Tex. App.—Austin 1975, writ
ref’d n.r.e.). Chapter 92 of the Texas Property Code further governs residential
leases. Subject to notice requirements, Chapter 92 permits a residential tenant to
terminate a lease if a landlord does not make a diligent effort to repair or remedy a
condition that materially affects an ordinary tenant’s health or safety. TEX. PROP.
CODE ANN. § 92.056(b), (e)(1) (West Supp. 2015). A tenant who does so is entitled
to one month’s rent, plus $500 as a civil penalty, court costs, and attorney’s fees.
TEX. PROP. CODE. ANN. § 92.0563(a)(3), (5) (West 2014).
Once a tenant surrenders the premises, the landlord is obligated to refund any
security deposit. Id. § 92.103(a). The landlord may deduct charges and damages for
which a tenant is legally liable under the lease, excluding normal wear and tear, or
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any damages that result from breach of the lease. Id. § 92.104(a)–(b). But the
landlord must return the remainder of the deposit along with “a written description
and itemized list of all deductions” Id. § 92.104(c). These statutory obligations with
respect to security deposits are mandatory. See TEX. PROP. CODE ANN. § 92.006(a)
(West Supp. 2015) (providing that a “landlord’s duty or a tenant’s remedy
concerning security deposits” may not be waived); Hardy v. 11702 Mem’l, Ltd., 176
S.W.3d 266, 275 (Tex. App.—Houston [1st Dist.] 2004, no pet.) (applying plain
language of Section 92.104).
If a landlord retains the security deposit in bad faith, it is liable to the tenant
for $100, three times the portion wrongfully withheld, and reasonable attorney’s
fees. TEX. PROP. CODE ANN. § 92.109(a) (West 2014). If a landlord in bad faith
does not provide a written description and itemized list of the damages and
deductions withheld from the tenant’s deposit, it forfeits the right to withhold any
portion of the deposit or to bring suit against the tenant for damages to the premises.
Id. § 92.109(b). The landlord has the burden of proving that the retention of any
portion of a tenant’s deposit was reasonable. Id. § 92.109(c). Bad faith is presumed
if the landlord fails either to return the deposit or provide a written description and
itemization of deductions on or before the thirtieth day after tenant surrenders
possession of the premises. Id. § 92.109(d).
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C. Analysis
1. The proof supports the county court’s finding of breach of the lease
by failing to repair or replace screens.
Paragraph 26 of the lease (“Special Provisions”) provides that the landlord
will have “screens repaired or replaced that tenant has noted.” Pilgrim testified that,
contrary to this provision, the screens were not repaired or replaced. This evidence
alone is legally sufficient to support the county court’s finding that the Epsteins
breached the lease by failing to repair or replace screens. See, e.g., Ergon, Inc. v.
Dean, 649 S.W.2d 772, 778 (Tex. App.—Austin 1983, no writ) (testimony of single
witness held sufficient to support particular finding).
Pilgrim further testified that he verbally raised the issue of the screens with
Stephan. He had also complained about the “missing and broken screens” to the
Epsteins in two certified letters, which were admitted into evidence, as well as in
other letters and e-mails that also were in the evidence. Pilgrim testified that when
he sent his notice terminating the lease, the Epsteins had not fixed any of the broken
screens.
Marilyn testified that the Epsteins repaired or replaced some of the screens,
but did not get to the remainder due to “a continuous barrage of requests for very
expensive” repairs from Pilgrim. According to her, Pilgrim instructed the Epsteins
to focus on these other repair requests instead. She also claimed that a workman was
going to provide an estimate regarding the repair or replacement of the screens, but
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refused to do so because Pilgrim had blocked the access to the driveway with a
sawhorse and a sign stating “Unsafe Driveway” and “Landlord Refuses Repair.”
Deferring to the county court’s assessment of the credibility of the witnesses
and the weight to be afforded to their testimony, the evidence supporting the trial
court’s finding that the Epsteins breached the lease by failing to repair or replace
screens is not so weak as to make it clearly wrong and manifestly unjust. In
particular, we note that Marilyn did not dispute that not all of the screens had been
repaired or replaced, Pilgrim’s certified letters and other written communications
contradict her testimony that he told the Epsteins to focus on other issues instead of
the screens, and a bid for screen repair and replacement in the record undermines
Marilyn’s suggestion that Pilgrim’s behavior made it impossible to obtain an
estimate. Taken as a whole, the proof is legally and factually sufficient to support
the trial court’s finding. See Chandler, 428 S.W.3d at 407.
2. The proof supports the county court’s finding that Pilgrim
properly terminated the lease due to a health and safety issue.
The county court found that the Epsteins failed to make a diligent effort to
repair a condition materially affecting Pilgrim’s health and safety in violation of
landlord-tenant statute and that Pilgrim properly terminated the lease based on this
violation. See TEX. PROP. CODE ANN. § 92.056(b), (e)(1). It rested these findings
on an ongoing rodent infestation of the leased premises.
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Pilgrim testified that he asked the Epsteins to hire an exterminator after he
found rat droppings in the water closet in the back bedroom. He described that area
as “inundated with rat feces.” This produced an odor problem. Pilgrim stated that
he could not use the laundry or common area due to “the smell of rat urine and feces”
and that there was “a stench in the house.” The attic also showed evidence of
infestation. He testified that Marilyn told him the property had been sprayed and
disinfected, but he said the odor persisted and that he had two contractors out to the
property to assess the issue. One of these contractors provided an itemized estimate
of $2,499 to remedy the situation in late July, and Pilgrim provided this estimate to
the Epsteins.
As with the screen issue, Pilgrim repeatedly complained in writing to the
Epsteins about the presence of rats and the related odor problem. Two of these
writings were certified letters, in which Pilgrim explicitly characterized this issue as
a matter of health or safety. In the second letter, Pilgrim also stated that if this and
other issues were not promptly addressed, he would terminate the lease and exercise
his rights under Chapter 92 of the Texas Property Code. He subsequently sent the
Epsteins a third certified letter in which he invoked Chapter 92 and terminated the
lease. In light of this evidence, we conclude that there is legally sufficient proof to
support the county court’s finding that Pilgrim properly terminated the lease when
the Epsteins failed to repair a condition materially affecting his health and safety.
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Defense counsel cross-examined Pilgrim about an invoice for the rodent
treatment made in late May and another invoice from late August for the cleaning of
the attic and other activities. Pilgrim conceded that the Epsteins sprayed for the odor
and that the smell was not as bad afterward. Consistent with his written complaints,
he maintained on the stand that the odor still was not good after spraying. For
example, in an e-mail from late July, Pilgrim wrote, “There has been a noticeable
difference in the house after the spraying. The unpleasant smell in the house is not
as bad. There remains a strong ‘flat’ or stale odor that is slightly sour. The rodent
odors in the laundry area remain unchanged.” On re-direct, he testified that the rat
infestation was not confined to the laundry area.
Marilyn testified that she sent a pest control service provider to the leased
property in late May to address the rat droppings. The provider placed traps and
returned to retrieve rat carcasses. She said that the service provider also addressed
the living areas about which Pilgrim complained. Marilyn contended that Pilgrim
contributed to the rat infestation by leaving pet food outside. But she testified that
the rodent problem was resolved before Pilgrim terminated the lease.
Deferring to the county court’s assessment of the credibility of the witnesses
and the weight to be afforded to their testimony, the evidence supporting the trial
court’s findings that the Epsteins failed to adequately repair a condition materially
affecting Pilgrim’s health and safety in violation of the landlord-tenant statute and
14
that Pilgrim properly terminated the lease based on this violation is not so weak as
to make them clearly wrong and manifestly unjust. A third party contractor’s
estimate provided support for Pilgrim’s position that remedying the rodent
infestation was ongoing in late July. Taken as a whole, the proof is factually
sufficient to support the judgment on this issue. See Chandler, 428 S.W.3d at 407.
3. The proof supports the county court’s finding that the Epsteins
retained Pilgrim’s security deposit in bad faith.
The Epsteins challenge the county court’s finding that they withheld Pilgrim’s
security deposit in bad faith, an issue on which they bore the burden of proof. TEX.
PROP. CODE ANN. 92.109(c). Thus, they must show that the evidence conclusively
proves their reasonableness to establish legal insufficiency or that the finding of bad
faith is against the great weight and preponderance of the evidence to establish
factual insufficiency. See Dow Chem. Co. v. Francis, 46 S.W.3d 237, 241 (Tex.
2001); Chandler, 428 S.W.3d at 407–08.
The parties agree that Pilgrim’s total security deposit was $1,445. After he
terminated the lease and moved out, Stephan sent Pilgrim a letter declining to return
the deposit. In this letter, Stephan stated that Pilgrim had violated the lease and
damaged the property. Though he specified various dollars amounts for these
violations and damages—$1,489 for interior and wall repairs and repainting, $325
for pest control, $130 for cleaning, $325 for a number of lease violations, and $600
minimum for rent—he did not purport to apply these sums to the deposit. Instead,
15
Stephan wrote that the Epsteins had “discounted charges dramatically” and enclosed
a check for $600. Though characterized as a refund of the balance of the deposit, he
stated it was offered “in settlement of any deposit and rent issues in full” by Pilgrim.
Pilgrim returned the check.
Marilyn agreed on cross-examination that the Epsteins did not make the
deductions for charges and damages discussed in Stephan’s letter and that those
figures were just an indication of what they thought they could deduct under the
circumstances. In her own words, she did not base her numbers on any estimated
costs; the point of the charges and damages stated in the letter to Pilgrim was to show
him that the Epsteins were “being gracious” and giving him more than he was owed.
We conclude that the Epsteins did not conclusively prove their
reasonableness. The trial court could have credited the Epsteins’ use of a refund
figure that Marilyn agreed was pulled “out of the air” or their use of a seemingly
precise damage charge that was not based on an estimate or the actual cost of repairs
as some evidence of bad faith. See Alltex Constr., Inc. v. Alareksoussi, 685 S.W.2d
93, 96 (Tex. App.—Dallas 1984, writ ref’d n.r.e.) (proof that landlord charged an
arbitrary amount for damages, charges were not based on actual cost of repairs, and
itemized list was vague and ambiguous supported finding of bad faith). The Epsteins
did not do what Chapter 92 required—they did not deduct damages and charges for
which Pilgrim was liable under the lease or for its breach while returning the
16
remainder of his deposit with a written description and itemized list of the charges
and damages. TEX. PROP. CODE ANN. § 92.104(a)–(c). Rather, they made an offer
“in settlement of any deposit and rent issues in full,” and withheld a sum not based
on any itemization of damage. The law presumes that complete noncompliance with
Chapter 92’s security deposits provisions is in bad faith. Id. § 92.109(d).
The Epsteins bore the burden of proof to show that their refusal to
unconditionally refund any part of Pilgrim’s deposit was reasonable. TEX. PROP.
CODE ANN. § 92.109(c); Byler v. Garcia, 685 S.W.2d 116, 120 (Tex. App.—Austin
1985, writ ref’d n.r.e.) (“The burden of proof is on the landlord to show his retention
of the security deposit was reasonable, and the landlord must also carry the burden
of proof to rebut the presumption of bad faith that arises when the deposit is not
returned within thirty days.”). The county court reasonably could have found that
the Epsteins’ refusal to refund any portion of Pilgrim’s deposit unless he
relinquished his statutory rights and remedies reflected bad faith. See Reed v. Ford,
760 S.W.2d 26, 30 (Tex. App.—Dallas 1988, no writ) (jury could have interpreted
landlord’s suggestion that it would keep deposit absent renewal of lease as bad faith).
The proof is legally and factually sufficient to support the trial court’s findings.
4. The Epsteins’ claims for offsets or credits for property damage or
stolen materials are barred as a matter of law.
The Epsteins contend that any judgment entered in favor of Pilgrim must be
offset based on damage that Pilgrim did to smoke detectors, damage to the driveway,
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and stolen building materials.
The trial court found that the Epsteins did not comply with Chapter 92’s
directives to deduct charges and damages for which Pilgrim was liable under the
lease or for its breach and return the remainder of his deposit with a written
description and itemized list of the charges and damages. TEX. PROP. CODE ANN.
§ 92.104(a)–(c). Noncompliance is presumed to be in bad faith. Id. § 92.109(d).
Because the trial court impliedly concluded that the Epsteins failed to rebut this
statutory presumption, they are foreclosed from bringing suit against Pilgrim “for
damages to the premises.” Id. § 92.109(b).
With respect to stolen materials, the Epsteins’ live pleading at the time of trial
did not assert a cause of action for conversion or otherwise allege theft of building
materials. Nor did they seek a trial amendment to add such a claim. See TEX. R.
CIV. P. 66. The county court did not address this issue in its final judgment or in its
ruling from the bench. The Epsteins cannot appeal from a non-existent finding on a
claim they did not assert below. Coastal Liquids Transp., L.P. v. Harris Cty.
Appraisal Dist., 46 S.W.3d 880, 885 (Tex. 2001) (“Claims not made to the trial court
generally cannot be raised for the first time on appeal.”).
II. Attorney’s Fees
Citing Rule 574a of the Texas Rules of Civil Procedure, which was in effect
when Pilgrim filed his petition in small claims court and when he appealed from its
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judgment to the county court, the Epsteins contend that Pilgrim was barred from
seeking attorney’s fees in his appeal to the county court because he was without an
attorney in small claims court and therefore was ineligible to receive fees. See TEX.
R. CIV. P. 574a (repealed 2013) (providing that “no new ground of recovery shall be
set up by plaintiff” on appeal to county court). The Epsteins also rely on Hamby Co.
v. Palmer, 631 S.W.2d 589 (Tex. App.—Amarillo 1982, no writ), in which the court
held that a request for attorney’s fees qualified as a ground of recovery so that a pro
se plaintiff who did not include a request for fees in his justice court pleadings was
barred from seeking them on appeal to the county court. Id. at 592.
Hamby is distinguishable. Unlike the plaintiff there, Pilgrim requested
attorney’s fees in his small claims court petition. Moreover, our sister court in Jones
v. Falcon, 875 S.W.2d 29 (Tex. App.—Houston [14th Dist.] 1994, writ denied), has
held that, when a statute like Chapter 92 of the Texas Property Code provides for an
award of attorney’s fees, it overrides the more general rule stated in former Rule
574a. Id. at 31–32; accord Somers v. Aranda, 322 S.W.3d 342, 346 (Tex. App.—El
Paso 2010, no pet.); Crumpton v. Stevens, 936 S.W.2d 473, 476 (Tex. App.—Fort
Worth 1996, no writ); Richard v. Taylor, 886 S.W.2d 848, 851 n.4 (Tex. App.—
Beaumont 1994, writ denied). Following Falcon, we hold that Pilgrim was entitled
to seek fees in the county court on appeal.
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The Epsteins also contend that the county court exceeded its jurisdiction by
awarding attorney’s fees in the amount of $12,885. They maintain that this sum
exceeds the jurisdiction of the small claims court in which Pilgrim initially filed suit,
and that on appeal the county court had no more jurisdiction than could be conferred
on it be the court below. Alternatively, they contend the county court’s fee award
was excessive.
Whether the fees awarded exceed the jurisdictional limits of the trial court
presents a question of law, which we review de novo. See City of Ingleside v. City
of Corpus Christi, 469 S.W.3d 589, 590 (Tex. 2015) (per curiam) (jurisdiction
reviewed de novo); Tucker v. Thomas, 419 S.W.3d 292, 295 (Tex. 2013) (statutory
entitlement to fees reviewed de novo). The assertion that the fees awarded were
excessive is a challenge to the factual sufficiency of the proof. DeNucci v. Matthews,
463 S.W.3d 200, 214 (Tex. App.—Austin 2015, no pet.) (“The standard of review
for an excessive damages complaint is factual sufficiency of the evidence.”).
Small claims courts may entertain claims for “no more than $10,000,
excluding statutory interest and court costs but including attorney fees.” TEX. R.
CIV. P. 500.3; see also TEX. GOV’T CODE ANN. §§ 27.060(a), 27.031(a)(1) (West
Supp. 2015) (providing that justice courts shall preside over small claims and
limiting jurisdiction of justice courts to civil matters “in which the amount in
controversy is not more than $10,000, exclusive of interest”). Generally, “the county
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court’s appellate jurisdiction is confined within the limits of the justice court’s
jurisdiction.” Kendziorski v. Saunders, 191 S.W.3d 395, 406 (Tex. App.—Austin
2006, no pet.). But this general rule does not apply to additional sums that are
“sustained as a result of the passage of time, such as attorney’s fees.” Id. at 409. In
other words, the county court may award attorney’s fees in excess of the
jurisdictional limits of the small claims court on appeal, because fees increase as
litigation continues over time. Id.
Finally, with respect to the Epsteins’ contention that the fees awarded were
excessive, Pilgrim’s attorney testified about his experience, the reasonableness of
the hourly rates billed, and the estimated fees in the event of post-trial motions and
appeal. In support, he introduced into evidence his retention agreement, a summary
of Pilgrim’s fees, and 30 pages of itemized billing statements. He also explained
that the case was “document intensive” for its type and that it was necessary to
prepare for trial twice due to a continuance requested by the defense shortly before
the initial trial date. Defense counsel declined to cross-examine Pilgrim’s attorney.
Thus, the only proof in the record supports the fee award. We hold that sufficient
evidence supports the county court’s award of fees. See Smith v. Patrick W.Y. Tam
Trust, 296 S.W.3d 545, 547–48 (Tex. 2009) (when the evidence supporting a fee
award “is clear, direct, positive and free from contradiction, inaccuracies, and
circumstances tending to cast suspicion thereon,” a court as fact finder “may award
21
attorneys’ fees as a matter of law in such circumstances, especially when the
opposing party has the means and opportunity of disproving the testimony or
evidence and fails to do so”).
III. Admissibility of Evidence
The Epsteins contend that the county court erred in admitting Pilgrim’s
photographs of the rodent problem into evidence. They contend that the county court
should have excluded this evidence because Pilgrim failed to supplement or amend
his pretrial discovery responses to disclose the inaccuracy of the dates noted in the
photos, in violation of the discovery rules.
To preserve an evidentiary complaint for appellate review, a party must timely
object to the evidence or move to strike it from the record, state the specific ground
for doing so unless it is clear from context, and obtain a ruling. TEX. R. EVID.
103(a)(1); Bay Area Healthcare Group, Ltd. v. McShane, 239 S.W.3d 231, 235 (Tex.
2007); Smith v. East, 411 S.W.3d 519, 530 (Tex. App.—Austin 2013, pet. denied).
Pilgrim testified about the photographs of the premises, and the county court
admitted these photographs into evidence. Defense counsel did not object to their
admission. During cross-examination, Pilgrim testified that the date stamp on some
of these photographs was inaccurate due to an incorrect camera setting. He said that
this produced a date “discrepancy of two weeks or so” and affected the “first few
photographs” taken in June. The date stamp of any photograph taken in July or
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afterward was accurate. Given the Epsteins’ failure to object to this evidence at trial,
they have not preserved this issue for our review.
IV. Joint and Several Liability
The Epsteins contend that the county court erred in rendering judgment
against them and their management company jointly and severally. Marilyn and
Stephan maintain that they cannot be held liable for damages because the company
was the lessor and Pilgrim did not plead an alter ego theory of liability.
A. Standard of Review
When, as here, the pertinent facts are not in dispute, the applicability of joint
and several liability presents a pure issue of law, which we review de novo. See
Pacesetter Pools, Inc. v. Pierce Homes, Inc., 86 S.W.3d 827, 831 (Tex. App.—
Austin 2002, no pet.) (stating pure questions of law reviewed de novo and treating
right to contribution as pure question of law); see also Hardy, 176 S.W.3d at 275–
76 (holding joint and several liability established based in uncontradicted proof).
B. Applicable Law
Pilgrim sued the Epsteins for breach of the parties’ lease and violations of
Chapter 92 of the Texas Property Code. With respect to the lease, Pilgrim bore the
burden of proving the elements of his contract claim, including that the Epsteins
were parties to the lease or were liable under the contract on some other basis. See
Anderton v. Cawley, 378 S.W.3d 38, 60 (Tex. App.—Dallas 2012, no pet.) (plaintiff
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must prove that the defendant has obligated himself under the contract). Members
of limited liability companies generally are not liable on company contracts. See
TEX. BUS. ORG. CODE ANN. § 101.114 (West 2012) (“Except as and to the extent the
company agreement specifically provides otherwise, a member or manager is not
liable for a debt, obligation, or liability of a limited liability company, including a
debt, obligation, or liability under a judgment, decree, or order of a court.”).
Liability under Chapter 92, however, is a different matter. It imposes liability for
violations of the statute on any “landlord,” a term that includes an “owner, lessor, or
sublessor of a dwelling.” TEX. PROP. CODE ANN. § 92.001(2) (West 2014). Thus,
the owner of leased premises may be held liable under Chapter 92, even if he or she
is not a party to the lease. Id.
C. Analysis
The Epsteins contend that they are not liable for damages because they were
not parties to the lease. With respect to Pilgrim’s cause of action for breach of
contract, they are correct. The signatories to the lease are Happy Bulldog
Management and Pilgrim. It was undisputed at trial that Happy Bulldog was the
name under which Lost Creek Ventures, LLC managed the leased property, and that
the Epsteins were the company’s sole members. Lost Creek’s membership
agreement is not in the record, and no evidence suggests that the agreement provides
that its members are individually liable for company contracts. Hence, the Epsteins
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themselves—as opposed to the company—are not liable for breach of the lease.
TEX. BUS. ORG. CODE ANN. § 101.114.
But the county court awarded just $118.82 on Pilgrim’s contract claim. It
awarded the remaining $6,130 in damages for violations of Chapter 92. The
Epsteins are liable for this sum, as they were the owners of the leased property, and
their company likewise is liable for this sum, as it was the lessor. See TEX. PROP.
CODE ANN. § 92.001(2) (defining “landlord” to include both owners and lessors).
Thus, joint and several liability is appropriate with respect to this sum. The same is
true of the county court’s award of costs and fees, because Chapter 92 provides that
a tenant may recover his court costs and attorney’s fees from a landlord under the
circumstances of this case.1 Id. §§ 92.005(a), 92.0563(a)(5), 92.109(a). Thus, the
county court’s imposition of joint and several liability was appropriate with respect
to these portions of the judgment.
In conclusion, we hold that the county court’s judgment must be modified to
provide that only Lost Creek, doing business as Happy Bulldog, is liable for the
$118.82 awarded to Pilgrim for breach of contract. The Epsteins are not individually
1
When Pilgrim’s counsel testified about fees and offered billing records into
evidence, the Epsteins failed to object that this proof did not segregate fees
attributable to Pilgrim’s contract and statutory claims. Thus, they waived this
issue on appeal. Beard Family P’ship v. Comm. Indem. Ins. Co., 116 S.W.3d
839, 850 (Tex. App.—Austin 2003, no pet.) (“If a party does not object to the
failure to segregate, it waives any appellate complaint.”).
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liable for his sum. The Epsteins and their company, however, remain jointly and
severally liable for the remainder of the damages, court costs, and the attorney’s fees
awarded to Pilgrim by the county court in its judgment.
V. Disqualification of Counsel
The Epsteins contend that the county court erred in not disqualifying Pilgrim’s
trial counsel. They maintain that the court was obligated to disqualify Pilgrim’s
attorneys, because his lead trial counsel was previously employed by the court as a
staff attorney during the pendency of this lawsuit.
A. Standard of Review
We review a trial court’s ruling on attorney disqualification for abuse of
discretion. In re Doe, 19 S.W.3d 249, 253 (Tex. 2000); Smith v. Abbott, 311 S.W.3d
62, 73 (Tex. App.—Austin 2010, pet. denied). Because disqualification is a severe
remedy, a party seeking this relief “bears a high burden, and must establish with
specificity the basis for disqualification.” Smith, 311 S.W.3d at 73. Neither mere
allegations of ethical misconduct nor proof showing a remote possibility of
misconduct suffice to carry this high burden. Id. Though they are not binding, courts
traditionally consider the Texas Disciplinary Rules of Professional Conduct in
assessing whether disqualification is warranted. Id. Even if the proof shows a
violation of these rules, however, disqualification is appropriate only if the party
seeking it can demonstrate actual prejudice. Id.
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B. Applicable Law
The Texas Rules of Disciplinary Professional Conduct provide that a “lawyer
shall not represent anyone in connection with a matter in which the lawyer has
passed upon the merits or otherwise participated personally and substantially as an
adjudicatory official or law clerk to an adjudicatory official, unless all parties to the
proceeding consent after disclosure.” TEX. DISC. R. PROF’L CONDUCT 1.11(a).
“Substantial” is defined by the rules as “meaningful significance or involvement.”
TEX. DISC. R. PROF’L CONDUCT, Terminology. Thus, personal and substantial
participation does not include the exercise of purely administrative duties or
functions. TEX. DISC. R. PROF’L CONDUCT 1.11, cmt. 1.
C. Analysis
In their motion for new trial, the Epsteins contended that they learned for the
first time after trial that Pilgrim’s counsel had been employed by the county court as
a staff attorney while this case was on file. They acknowledged that they could not
show that Pilgrim’s counsel had personally and substantially been involved with the
case in her role as staff attorney for the court.
Pilgrim’s counsel submitted an affidavit in response to the Epsteins’
disqualification request. In her affidavit, counsel denied personal and substantial
participation in the case, noting that the county court neither held hearings nor
entered orders in the suit during her tenure as a staff attorney. Pilgrim’s counsel
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averred that she “never learned of, worked on, or discussed this action with any
member of the Court’s staff” during her tenure there. She further averred that she
informed the Epsteins’ attorney of her past employment with the court before trial.
Because the Epsteins’ request for disqualification is based on speculation that
is contradicted by the evidence, we hold that the county court did not abuse its
discretion in refusing to disqualify Pilgrim’s counsel. See Smith, 311 S.W.3d at 73.
VI. Motions for New Trial and Continuance
The Epsteins contend that the county court erred in not granting them a
continuance during trial based on Pilgrim’s introduction of false evidence. They
maintain that Pilgrim relied on misdated photographs at trial and failed to disclose
or correct the inaccuracy of these dates prior to trial, and that the unexpected
disclosure of this inaccuracy at trial prejudiced their defense.
The Epsteins also contend that the county court erred in not granting their
motion for new trial. They maintain that the admission of the misdated photographs
and Pilgrim’s failure to disclose driveway repairs prior to trial tainted the
proceedings and that newly discovered evidence shows that Pilgrim perjured himself
regarding the impact of his housing situation on unrelated child custody proceedings.
Finally, the Epsteins contend that the county court erred in not granting them
a continuance on the hearing of their motion for new trial. They maintain that they
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were unable to adequately prepare for this hearing because they retained new counsel
after trial and subsequently were involved in a debilitating car accident.
A. Standard of Review
We review a trial court’s denial of a continuance to determine whether it
“committed a clear abuse of discretion on a case-by-case basis.” Joe v. Two Thirty
Nine Joint Venture, 145 S.W.3d 150, 161 (Tex. 2004). To be an abuse of discretion
in this context, the trial court’s decision must be “so arbitrary and unreasonable as
to amount to a clear and prejudicial error of law.” BMC Software Belgium, N.V. v.
Marchand, 83 S.W.3d 789, 800 (Tex. 2002).
Similarly, we review a trial court’s denial of a motion for new trial for abuse
of discretion. Waffle House, Inc. v. Williams, 313 S.W.3d 796, 813 (Tex. 2010). In
general, the trial court abuses its discretion only “if it acts without reference to any
guiding principles or acts arbitrarily or unreasonably.” Beck v. Law Office of Edwin
J. (Ted) Terry, Jr., P.C., 284 S.W.3d 416, 445 (Tex. App.—Austin 2009, no pet.).
With respect to newly discovered evidence in particular, a party is not entitled to a
new trial if the evidence is “merely cumulative of that already presented” or tends
“only to impeach the testimony of the adversary.” Connell Chevrolet Co., Inc. v.
Leak, 967 S.W.2d 888, 894 (Tex. App.—Austin 1998, no pet.).
Finally, to preserve procedural issues like the denial of a new trial or
continuance for appellate review, a party must timely raise the issue below and
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secure a ruling. TEX. R. APP. P. 33.1(a)(1)–(2); e.g., Lemons v. EMW Mfg. Co., 747
S.W.2d 372, 373 (Tex. 1988) (per curiam) (point of error waived by party’s failure
to move for continuance or otherwise object); Markham v. Diversified Land &
Exploration Co., 973 S.W.2d 437, 441 (Tex. App.—Austin 1998, pet. denied) (party
failed to preserve issue for appellate review where it withdrew motion for
continuance). Procedural errors generally must be raised in the trial court, because
it usually can correct any error if the error is brought to its attention. Morris v.
O’Neal, 464 S.W.3d 801, 806–07 (Tex. App.—Houston [14th Dist.] 2015, no pet.).
B. Analysis
When it became apparent during trial that some of Pilgrim’s photographs were
misdated, the Epsteins did not seek a continuance, so they cannot complain that the
county court erred in not granting them one mid-trial. TEX. R. APP. P. 33.1(a)(1)–
(2). Nor did the trial court abuse its discretion in refusing to grant them a new trial
based on the misdated photographs, given that Epsteins did not object to the
admission of these photographs. See In re United Servs. Auto. Ass’n, 446 S.W.3d
162, 175 (Tex. App.—Houston [1st Dist.] 2014, orig. proceeding) (directing trial
court to vacate new trial order and holding that it could not grant new trial predicated
on admission of evidence to which party did not object at trial).
Nor did the county court abuse its discretion in refusing to grant the Epsteins’
motion for new trial based on Pilgrim’s alleged failure to disclose repairs he made
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to the driveway prior to trial. Neither the Epsteins’ discovery requests nor Pilgrim’s
responses are in the record. In their answer, the Epsteins counterclaimed for damage
to the driveway. Thus, their own pleading contradicts their claim of surprise at trial.
In addition, Marilyn testified at trial about the damage allegedly caused by Pilgrim’s
driveway repairs. Accordingly, we conclude that the county court did not act
arbitrarily or unreasonably in declining to grant a new trial on the basis of Pilgrim’s
alleged failure to disclose these repairs before trial.
The county court likewise did not abuse its discretion in refusing to grant the
Epsteins a new trial based on newly discovered evidence. At trial, Pilgrim testified
that he was scheduled to have custody of his daughters in 2010, but that they lived
with their mother after he terminated his lease. He also testified that he had to make
support payments to his ex-wife as a result of his daughters’ change in living
arrangements. The Epsteins contend that court records from Pilgrim’s divorce show
that he had joint custody of the children and therefore testified falsely. Even
assuming that this evidence could not have been obtained before the trial, it concerns
a collateral matter of remote relevance, if at all, only to witness credibility.
Accordingly, we hold that the county court did not act arbitrarily or unreasonably in
declining to grant a new trial on the basis of this evidence, which would have tended
only to impeach Pilgrim’s testimony. See Connell Chevrolet, 967 S.W.2d at 894.
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As none of their asserted errors requires reversal, we cannot conclude that the
county court’s refusal to delay consideration of the Epsteins’ new trial motion was
“so arbitrary and unreasonable as to amount to a clear and prejudicial error of law.”
BMC Software, 83 S.W.3d at 800.
CONCLUSION
We modify the county court’s judgment to provide that Marilyn and Stephan
Epstein are not individually liable for the $118.82 awarded to Pilgrim for breach of
the lease. We otherwise affirm the county court’s judgment. All pending motions
are dismissed as moot.
Jane Bland
Justice
Panel consists of Justices Higley, Bland, and Massengale.
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