Opinion issued September 30, 2014
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-12-00984-CV
———————————
WALTER L. BOYAKI, RUBEN P. HERNANDEZ, AND MIRANDA &
BOYAKI, Appellants
V.
JOHN M. O’QUINN & ASSOCIATES, PLLC D/B/A THE O’QUINN LAW
FIRM, AND MUSSLEWHITE & ASSOCIATES, P.C., Appellees
On Appeal from the 190th District Court
Harris County, Texas
Trial Court Case No. 2008-75827
MEMORANDUM OPINION
Defendants/appellants Walter Boyaki, Ruben P. Hernandez, and Miranda &
Boyaki (collectively, “Boyaki group”) appeal (1) the trial court’s summary
judgment in favor of plaintiffs/appellees John M. O’Quinn & Associates, PLLC
d/b/a The O’Quinn Law Firm and Musslewhite & Associates, P.C. (collectively,
“O’Quinn group”), (2) the trial court’s order imposing sanctions on the Boyaki
group and another lawyer (who is not a party to this appeal), (3) the trial court’s
appointment of a special master, (4) the trial court’s failure to transfer the
underlying case to a different Harris County District Court, and (5) the Harris
County administrative judge’s refusal to recuse the trial judge. We reverse and
remand the attorneys’ fees awarded to the O’Quinn group in the trial court’s
summary judgment and affirm the trial court’s judgment and sanctions order in all
other respects.
Background
A. O’Quinn group’s lawsuit
On December 30, 2008, the O’Quinn group sued the Boyaki group, and that
suit was assigned to the 127th Harris County District Court. The O’Quinn group
pleaded a claim for breach of an “agreement as to the method for contingent
attorneys’ fees earned in the matter styled: Cause No. 199936433A, Vicente
Ramirez v. Gulf Technical Servs.; in the 190th Judicial District Court of Harris
County, Texas; SEVERED FROM: Cause No. 99-36433; Abel Rudolpho Esquivel,
et al v. Kellogg Brown & Root, Inc., et al.; In the 190th Judicial District Court of
Harris County, Texas.” (Ramirez case).
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1. The Ramirez case in the 190th
In the 1995/1996 time frame, the O’Quinn group began representing 180+
Mexican Nationals “who were victims of the DLB 269 Disaster.” The O’Quinn
group eventually filed a personal injury suit on behalf of these individuals that was
assigned to the 190th Harris County District Court. According to the O’Quinn
group, around 2004 the Boyaki group began interfering with the contractual
relations between the O’Quinn group and its Mexican National clients in that suit.
As a result of the dispute over which team of lawyers represented which
clients and what, if any, fees were owed to each team, Judge Jennifer Elrod (then
presiding over the 190th District Court) held a Rule 121 hearing. The O’Quinn
group asserts in its petition that “both teams of lawyers agreed, on the record, in
open court, to present this dispute to a Special Master to be appointed by Judge
Elrod.” The court entered an Agreed Order appointing the Honorable Retired
Justice Lee Duggan “to determine which lawyer represents which client and to
determine the percentage of fees, if any, owed by each Plaintiff to a particular
attorney.” The order states that, “[p]ursuant to the agreement of the parties, Judge
Duggan’s findings of fact and conclusions of law are final and non-appealable.”
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TEX. R. CIV. P. 12 (“A party in a suit or proceeding pending in a court of this state
may, by sworn written motion stating that he believes the suit or proceeding is
being prosecuted or defended without authority, cause the attorney to be cited to
appear before the court and show his authority to act. . . . ”).
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2. The O’Quinn Group’s suit against the Boyaki group in the 189th
The O’Quinn group filed a separate tortious interference/defamation lawsuit
that was assigned to the Harris County 190th. Judge Elrod recused herself, and
that case was transferred to the Harris County 189th.
3. The Boyaki group’s suit against the O’Quinn group in the 327th
The Boyaki group then filed a tortious interference/defamation lawsuit
against the O’Quinn group in the El Paso 327th district court. According to the
O’Quinn group’s petition in the underlying case here, this suit was a “mirror-
image” of their Harris County suit, and—over the years—the O’Quinn group
“ha[s] had to obtain approximately six separate TROs to keep the [Boyaki group]
from proceeding on various aspects of the El Paso case.”
4. Special Master Proceedings
In December 2004, Justice Duggan presided over several days of hearings
and determined which lawyers represented which of the clients in the Ramirez
case. The O’Quinn group and the Boyaki group agreed to defer requesting a ruling
about what actual fees, if any, were owed by the clients to each of the two groups
until the merits of the Ramirez case were ultimately resolved.
5. The Ramirez case settlement
In early 2005, the Ramirez case in the 190th court globally settled. Given
Justice Duggan’s familiarity with the claims, Judge Elrod appointed Justice
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Duggan to preside over the settlement. Justice Duggan reviewed each client’s file
and apportioned the global settlement among clients. Judge Elrod approved his
submitted findings. One of the defendants’ requirements of the settlement was that
settlement conferences be conducted with each client, on video, before a court
reporter and a judge. The parties agreed to conduct these settlement conferences
before Justice Duggan in Laredo and Judge Chew in the 327th court in El Paso.
During this settlement process, the Boyaki group challenged the expenses
charged to clients by the O’Quinn group. That dispute was submitted to binding
arbitration in Houston before Randy Butler.
B. The Boyaki group’s objection to the final attorneys’ fees resolution
On December 12, 2008, immediately after the arbitration on expenses
concluded, Justice Duggan was scheduled to begin the last round of hearings in
Houston on the attorneys’ fees issue. After hours on December 11, 2008, the
Boyaki group filed, in the El Paso 327th district court, a motion to recuse Justice
Duggan from presiding over the special master proceedings scheduled to begin the
next day. The O’Quinn group obtained a TRO from the ancillary Harris County
judge to prevent the Boyaki group from going forward with a hearing in the El
Paso 327th court.
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C. The Underlying proceedings
On December 30, 2008, the O’Quinn group filed the underlying proceeding,
alleging that the parties “agreed to proceed with the fee dispute before Judge
Duggan with no right of appeal,” and that the O’Quinn group fully performed its
contractual obligations and was prepared to enter the final round of hearings before
Justice Duggan on December 12, 2008 and abide by his ruling. This suit was
assigned to the Harris County 127th, and then the Civil Administrative Judge
transferred the case to the 190th on January 7, 2009 (Judge Patricia Kerrigan,
Judge Elrod’s successor, presiding).
The O’Quinn group set its request for a temporary injunction for hearing on
January 9, 2009 in the 190th court. Two days before that hearing date, on January
7, 2009, the Boyaki group filed a notice of removal in federal court, but—contrary
to the certificate of service indicating service was made on the O’Quinn group on
the day of filing—the O’Quinn group claims that it did not receive notice until
January 8, and that the Boyaki group did not file the notice with the 190th court
until after 5:00 p.m. on January 8. The 190th cancelled the hearing scheduled for
the 9th in response to the notice of removal.
The federal district court granted the O’Quinn group’s motion for remand.
In the remand order, the district court found the Boyaki group’s removal to be
frivolous and a violation of Federal Rule of Civil Procedure 11. The O’Quinn
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group then sought, and was awarded, sanctions against the Boyaki group (as well
as another lawyer on the removal pleadings, Heriberto Ramos) in the 190th based
upon its conduct with regard to the removal.
The Boyaki group then filed a motion to recuse Judge Kerrigan, arguing
that her sanctions order demonstrated that she will not rule impartially in the
underlying case. That motion was denied by the Presiding Judge of the Second
Administrative District, the Honorable Olen Underwood.
D. The Rule 11 settlement agreement and the trial court’s summary
judgment
In June 2009, the lawyers finally mediated and signed a “Settlement
Agreement,” which they filed in the 190th court on July 14, 2009 as a “Rule 11
Agreement entered into between John O’Quinn, Walter Boyaki, Charles B.
Musslewhite, Jr., Ruben Hernandez and Victor Cruz.” Pursuant to that agreement
and at the request of Justice Duggan, on June 30, 2009, the trial court signed an
order permitting distribution of $3,227,000 to the O’Quinn group from the court’s
registry, with $50,000 retained in the court registry for contingencies.
The parties continued to quibble over compliance with some terms of the
settlement, including the requirement that both sides sign mutual releases. Also,
one of the Boyaki group, Walter Boyaki, indicated to the Judge Kerrigan that he
was unwilling to state on the record that a final settlement had been reached unless
the trial court agreed to lift the sanctions order. The court refused.
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In December, 2011, the O’Quinn group filed a motion for summary
judgment to enforce the settlement agreement, arguing that it had materially
complied with the agreement’s terms, but that the Boyaki group had breached the
agreement. The motion also requested attorneys’ fees. The Boyaki group
responded that summary judgment was inappropriate because “there was only a
tentative agreement to settle” that was “not accomplished due to the actions” of the
O’Quinn group.
After several more hearings during which the court expressed the view that
the Rule 11 agreement was a valid settlement and urged the parties to move
forward with the agreement’s terms, the court granted the O’Quinn group’s motion
for summary judgment, awarded $145,350.00 in attorneys’ fees to the O’Quinn
group, and the Boyaki group timely appealed.
ISSUES ON APPEAL
The Boyaki group brings the following eight issues:
1. “The Trial Court failed to evaluate the evidence and failed to
recognize fact issues in granting Appellees’ motion for summary
judgment because as a matter of law there were numerous material
issues of facts in dispute and they were not legally sufficient to grant
summary judgment.”
2. “The Trial Court incorrectly applied the law and incorrectly evaluated
the law in finding an enforceable Rule 11 agreement when all that was
before the court was a tentative agreement to agree.”
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3. “The Trial Court had no jurisdiction to order sanctions against the
Appellants because only a U.S. District Judge could have ordered
sanctions for a failed attempt at removing a state case to federal
court.”
4. “The Trial Court erred in applying the law and abused its discretion in
awarding attorneys feels to the Appellees where there was no
evidence warranting attorneys’ fees, when the fees were not proved up
according to Texas Supreme Court standards and when Appellees
suffered no damage.”
5. “The Trial court abused its discretion in not finding the Appellees’
claims barred by quasi-estoppel for misconduct or inconsistent
positions on the part of Appellees.”
6. “The Trial court incorrectly applied the law when it appointed and
ordered the parties to proceed with their case before a special master
when the parties did not agree to a special master and the
circumstances of the case did not warrant a special master.”
7. “The Trial Court ignored the law and the local rules in not transferring
this case back to the 127th District Court or to the 189th District Court
because Appellees had the case ‘attracted’ to the wrong court under
the Harris County local rules of court.”
8. “The Trial Court abused its discretion in not recusing the Trial Judge
due to obvious bias and lack of impartiality.”
In addition to disputing the merits of the Boyaki group’s arguments, the
O’Quinn group objects to the Boyaki group’s “failure to make appropriate citations
to the record, failure to include necessary documents in the record, and failure to
include documents as proper parts of the record.”
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SPECIAL MASTER, TRANSFER, AND RECUSAL
The Boyaki group challenges the trial court’s summary judgment on several
grounds unrelated to the merits of the summary judgment, which we address first.
We conclude these complaints are either without merit or waived.
A. Special Master
The Boyaki group contends that the trial court erred by appointing a special
master that was not agreed to by the parties. Justice Duggan was originally
appointed in an “Agreed Order Appointing Special Master”—signed by Judge
Elrod, judge of the 190th, in the personal injury cause number 1999-36433A (the
Ramirez case), to determine “which attorney represents each of the Plaintiffs, and
specify the percentage or amount of fees, if any, to be received by each attorney in
connection with work on this case.” The crux of the Boyaki group’s argument here
is that Judge Duggan was appointed only in the Ramirez case cause number, and
that he could not continue his role in determining attorneys’ fees without the
Boyaki group’s consent, after his “term, as set out in the order expired, and the
190th finished and closed the case without extending the term of the Special
Master.”
The O’Quinn group responds that the Boyaki group consented to the
appointment and actually submitted to Justice Duggan’s authority to decide on the
distribution of attorneys’ fees, and agreed in writing to abide by his findings. The
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O’Quinn group also pointed out that the Boyaki group appeared in court on the
record to participate with Justice Duggan, and even volunteered to handle tax
issues for him in his role as special master. The Boyaki group also sought to
compel the O’Quinn group to “abide by” Justice Duggan’s findings and relied
upon an agreement in which they agreed “to be bound by Justice Duggan’s ruling.”
Finally, the O’Quinn group asserts that the Boyaki group’s complaint is barred by
laches and note that the Boyaki group does not specify what relief it seeks here
regarding Justice Duggan’s role in the case.
Rule 171 of the Texas Rules of Civil Procedure governs appointments of
special masters. Generally, “[t]he appointment of a master lies within the sound
discretion of the trial court and should not be reversed except for a clear abuse of
that discretion.” Simpson v. Canales, 806 S.W.2d 802, 811 (Tex. 1991). When
parties consent to appointment of a special master, the appointment is not subject
“to the same strictures as one imposed by the court” under Rule 171, and to “the
extent the parties consent to the reference it will ordinarily not be subject to
challenge.” Id.; see also Young v. Young, 854 S.W.2d 698, 701 (Tex. App.—
Dallas 1993, writ denied) (when agreement differs from what is provided under
Rule 171, “the parties are bound by the language in the agreed order”).
The agreed order in the Ramirez case, which the Boyaki group does not
dispute accurately reflected their agreement, delegated to Justice Duggan the task
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of determining the scope of representation and fees owed “to each attorney in
connection with work on this case,” i.e., the Ramirez case. The underlying suit
here—although brought under a new cause number—is premised on the O’Quinn
group’s claim that the Boyaki group reneged on its agreement to proceed before
Justice Duggan on the issue of attorneys’ fees for work on the Ramirez case. The
Boyaki group cites us no authority for the proposition that its consent to submit
that particular issue to a special master was only effective in the Ramirez cause
number, but not in a separate cause number brought to enforce that very consent.
The transcripts from the various hearings reflect that Justice Duggan
continued to be involved in this case, including helping the parties come to an
ultimate settlement. But—while the Boyaki group complains generally about
Justice Duggan’s continued role in resolving the parties’ dispute—there is no
indication in the record that the parties’ fee dispute was ultimately decided by
Justice Duggan; rather, the dispute was voluntarily resolved by the parties in a
Rule 11 mediated settlement agreement. The summary judgment order that is the
subject of the Boyaki group’s appeal here is premised on that Rule 11 agreement—
not on a decision by Justice Duggan. The Boyaki group in fact has not articulated
any impact that Justice Duggan had on the settlement that was ultimately reached
or on the trial court’s summary judgment that is the subject of this appeal. See
TEX. R. APP. P. 44.1(a) (no judgment may be reversed on appeal absent a showing
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of harm); see also Gann v. Anheuser-Busch, Inc., 394 S.W.3d 83, 89 (Tex. App.—
El Paso 2012, no pet.). Because we conclude the Rule 11 agreement is an
enforceable settlement agreement, the lawyers’ settlement of their fee dispute
renders any dispute over a special master’s role in the fee dispute before the
voluntary settlement moot. E.g., Scott-Richter v. Taffarello, 186 S.W.3d 182, 188
(Tex. App.—Fort Worth 2006, pet. denied).
We overrule the Boyaki group’s sixth issue.
B. Transfer
The underlying case was originally assigned to the 127th Harris County
court, and then transferred a week later under the Harris County Local Rules by
Judge Tracy Christopher, the Civil Administrative Judge, to the 190th. Judge
Kerrigan later made findings that the case should have originally been assigned to
the 190th and that the transfer was proper.
The Boyaki group contends that the underlying case was improperly
transferred to 190th for “no reason other than forum shopping” by the O’Quinn
group. According to the Boyaki group, the case should have been transferred back
to the 127th or, alternatively, the case should have instead tracked to the 189th.
The Boyaki group insists that it “is obvious on its face that the tracking system for
the Harris County District Clerk’s office was tampered with.” Accordingly, it
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argues, “[a]ll of the orders of the 190th should be voided as a violation of the
rules.”
The O’Quinn group contends that the transfer to the 190th was proper, and
argues that the Boyaki group has preserved nothing for review, as it cites nothing
in support of the accusations of forum shopping and document tampering in the
district clerk’s office. TEX. R. APP. P. 38.1(i). We agree.
The Ramirez case was in the 190th court when the issue arose about which
lawyers represented which clients and what fees were owed for that representation.
In the 190th, the lawyers agreed to submit these issues to a special master. The
underlying suit was brought to enforce that agreement to proceed before the special
master in determining attorneys’ fees due for work in the Ramirez case. The
Boyaki group has not demonstrated that the transfer of the underlying case to the
190th was improper and has not cited any authority in support of their accusations
of impropriety on behalf of the O’Quinn group and/or the clerk’s office staff.
We overrule the Boyaki group’s seventh issue.
C. Recusal
In the trial court, the Boyaki group filed a motion to recuse Judge Kerrigan,
citing one reason—i.e., that by sanctioning Heriberto Ramos for the improper
removal of the case, Judge Kerrigan had demonstrated bias against an important
witness. Specifically, the Boyaki group argued that Ramos (who is not counsel of
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record or a party, but who was counsel on pleadings removing the underlying
cause to federal court) is necessary to their defense in the underlying case.
Because Judge Kerrigan demonstrated alleged bias against Ramos, the Boyaki
group argued she would “not rule impartially concerning the testimony of Mr.
Ramos.”
In their brief here, the Boyaki group argues that “the presiding
administrative Judge erred in denying the motion to recuse the trial court judge”
because it was “subject to a series of abuses at the hands of the Trial Judge, all of
which called into question the impartiality of the Court.” In addition to the reason
cited in the trial court motion (i.e., alleged bias against Ramos), the Boyaki group
lists eighteen other reasons in its brief, which include complaints brought under
other points of error in its brief (i.e., the trial court’s refusal to transfer the case
back to the 127th and the trial court’s sanctioning lawyers in the Boyaki group for
removing the case), as well as numerous reasons unsupported by record citations
(i.e., the trial court “mak[ing] disparaging remarks about the Defendants that they
should get another mentor besides Boyaki,” “having them appear constantly in her
court knowing they were from out of town,” and “demonstrate[ing] a pattern which
indicates the 190th would rule against these Defendants on whatever issue the Trial
Court had before it.”).
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“A judge must recuse in any proceeding in which: (1) the judge’s
impartiality might reasonably be questioned; [or] (2) the judge has a personal bias
or prejudice concerning the subject matter or party.” TEX. R. CIV. P. 18b(b). “An
order denying a motion to recuse may be reviewed only for abuse of discretion.”
TEX. R. CIV. P. 18a(j)(1)(A). The erroneous denial of a motion for recusal does not
render the court’s orders void, but instead only reversible. In re Union Pac. Res.
Co., 969 S.W.2d 427, 428 (Tex. 1998) (orig. proceeding). Grounds for recusal can
be waived if not properly raised in a motion to recuse. Id.
Neither the administrative judge’s order denying the motion to recuse nor
the record from the hearing on the motion is included in the record.2 The only
reason for recusal cited in the motion filed in the trial court (i.e., the trial court’s
sanctions order) is not a proper basis for recusal. TEX. R. CIV. P. 18a(a)(3) (stating
that a motion for recusal “must not be based solely on the judge’s rulings in the
case”); Grider v. Boston Co., 773 S.W.2d 338, 346 (Tex. App.—Dallas 1989, writ
denied), disapproved on other grounds by Tex. Commerce Bank, N.A. v. Grizzle,
96 S.W.3d 240, 256 (Tex. 2002) (same).
2
A trial judge faced with a motion to recuse has two options: recuse herself or refer
the case to the administrative judge to assign another judge to hear the motion.
McLeod v. Harris, 582 S.W.2d 772, 773 (Tex. 1979). Judge Kerrigan referred the
motion to recuse to the Presiding Judge of the Second Administrative District, the
Honorable Olen Underwood. According to the O’Quinn group’s brief, Judge
Underwood held a hearing and denied the motion.
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There is no indication that any of the other reasons the Boyaki group cited in
their brief were presented to the trial court or administrative judge. We will not
address arguments in support of recusal that are not supported by citations to the
appellate record or that are presented here in the first instance. Evans v. Hoag, 711
S.W.2d 744, 746 (Tex. App.—Houston [14th Dist.] 1986, writ ref’d n.r.e.); see
also TEX. R. APP. P. 33.1(a), 38.1(i).
We overrule the Boyaki group’s eighth issue.
THE SUMMARY JUDGMENT
The Boyaki group lodges several challenges to the merits of the trial court’s
summary judgment. Specifically, it argues that the Rule 11 was not a contract, but
rather a “tentative agreement to agree” with too many uncertain terms, and thus
cannot support a breach of contract claim. It also contends that the O’Quinn group
should be barred by quasi-estoppel from relying on the Rule 11 agreement.
Finally, it argues that the trial court erred by awarding attorney’s fees.
A. Standard of Review
We review the trial court’s grant or denial of a traditional motion for
summary judgment de novo. Valence Operating Co. v. Dorsett, 164 S.W.3d 656,
661 (Tex. 2005); Branton v. Wood, 100 S.W.3d 645, 646 (Tex. App.—Corpus
Christi 2003, no pet.). When reviewing a traditional summary judgment, we must
determine whether the movant met its burden to establish that (1) no genuine issue
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of material fact exists and (2) the movant is entitled to judgment as a matter of law.
TEX. R. CIV. P. 166a(c); Provident Life and Accident Ins. Co. v. Knott, 128 S.W.3d
211, 215–6 (Tex. 2003) (citing Haase v. Glazner, 62 S.W.3d 795, 797 (Tex.
2001)); Sw. Elec. Power Co. v. Grant, 73 S.W.3d 211, 215 (Tex. 2002). In
reviewing a traditional summary judgment, we consider all the evidence in the
light most favorable to the nonmovant, indulging every reasonable inference and
resolving any doubts in favor of the nonmovant. Goodyear Tire & Rubber Co. v.
Mayes, 236 S.W.3d 754, 756 (Tex. 2007) (per curiam). “A party moving for
summary judgment must establish its right to summary judgment on the issues
expressly presented to the trial court by conclusively proving all elements of its
cause of action or defense as a matter of law.” Elliot–Williams Co. v. Diaz, 9
S.W.3d 801, 803 (Tex. 1999) (citations omitted); see also TEX. R. CIV. P. 166a(b),
(c). The summary judgment movant has conclusively established a matter if
reasonable people could not differ as to the conclusion to be drawn from the
evidence. See City of Keller v. Wilson, 168 S.W.3d 802, 816 (Tex. 2005).
B. The Rule 11 Agreement
“If the parties reach a settlement and execute a written agreement disposing
of the dispute, the agreement is enforceable in the same manner as any other
written contract.” TEX. CIV. PRAC. & REM. CODE ANN. § 154.071(a) (West 2011);
Martin v. Black, 909 S.W.2d 192, 195 (Tex. App.—Houston [14th Dist.] 1995,
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writ denied). An agreement is enforceable if it is “complete within itself in every
material detail, and [ ] contains all of the essential elements of the agreement.”
Padilla v. LaFrance, 907 S.W.2d 454, 460 (Tex. 1995). The intent of the parties to
be bound is an essential element of an enforceable contract, see Foreca, S.A. v.
GRD Dev. Co., 758 S.W.2d 744, 746 (Tex. 1988), and is often a question of fact.
Id. But where that intent is clear and unambiguous on the face of the agreement, it
may be determined as a matter of law. Cf. Padilla, 907 S.W.2d at 461–62.
Texas Rule of Civil Procedure 11 states that, “[u]nless otherwise provided in
these rules, no agreement between attorneys or parties touching any suit pending
will be enforced unless it be in writing, signed and filed with the papers as part of
the record, or unless it be made in open court and entered of record.” “To satisfy
the ‘in writing’ provision of Rule 11, the same contract principles apply that are
used to determine when a ‘writing’ satisfies the statute of frauds.” CherCo Props.,
Inc. v. Law, Snakard & Gambill, P.C., 985 S.W.2d 262, 265 (Tex. App.—Fort
Worth 1999, no pet.) (citing Padilla, 907 S.W.2d at 460). “Thus, a Rule 11
settlement agreement is not enforceable unless it is complete within itself as to
every material detail and contains all the essential elements of the agreement so the
contract can be ascertained from the writing, without resort to oral testimony.” Id.
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a. The trial court correctly determined that the parties had an
enforceable settlement agreement.
The document at issue is entitled “Settlement Agreement.” Among other
things, it provides for (1) dismissal with prejudice of suits between the parties in
various courts, (2) indemnity on behalf of clients and lawyers in favor of the
various lawyers, (3) an agreement for Boyaki, Hernandez, Ramos, Echegaray and
Victor Cruz to appear in the 190th under oath to attest that they have audited the
O’Quinn group’s fee statements and found no valid claims for overcharges against
the O’Quinn group, (4) mutual releases signed by both sides, (5) Boyaki’s
agreement to dismiss sanction allegations in the supreme court and sign a
statement “that allegations regarding sanctions motion before Judge Chew was
mistaken,” (6) certain clients to sign release and indemnification in favor of the
O’Quinn group by August 6, 2009, (7) the O’Quinn group and Boyaki group to
each sign releases on behalf of all the clients in favor of each other by July 15,
2009, (8) the O’Quinn group’s representation that they will not oppose Boyaki’s
motion for reconsideration of sanctions in 190th, (9) “The Boyaki Group to get
$300,000.00 from monies in the registry of the 190th Court to cover claims for fees
and expenses by Boyaki, Hernandez, Echegaray, Cruzes and Ramos which
represents a complete and final payment of all monies due to or ever claimed to be
due to each and every member of the Boyaki Group being Boyaki, Hernandez,
Echegaray, the Cruzes and Herberto Ramos,” (10) “John M. O’Quinn and Charles
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B. Musslewhite, Jr. to receive all remaining monies to the registry of the 190th
Court in the approximate amount of $3,270,000.00, upon approval of this
Settlement Agreement by Judge Duggan and Judge Kerrigan,” (11) “The parties
agree to recommend these amounts to Justice Duggan and abide by this findings,”
(12) Boyaki parties recommend $150,000.00 to Boyaki and Hernandez for
expenses and other $150,000.00 divided equally among Boyaki, Hernandez,
Echegaray, and Cruzes in fees, (13) the Boyaki parties will submit to Justice
Duggan for a final hearing regarding the division of fees between the lawyers on
their camp, and the Boyaki parties agree to pay Judge Duggan’s fees and be bound
by his ruling, (14) the O’Quinn group agree that any client who survived the DLB
269 disaster and paid a full 40% fee will be reimbursed according to an appended
schedule pursuant to Arbitrator Randy Butler’s order, (15) the O’Quinn group
agrees to pay two clients $4,000.00 in return for a full release and indemnification,
and Boyaki agrees to pay one of the clients an additional $1,000, and (16) the
O’Quinn group agrees to sign appropriate paperwork to release funds held in trust
for a client.
The agreement states that it is “binding as to all who sign even if not all
sign,” and is signed by O’Quinn, Musslewhite, Boyaki, Hernandez, and Victor
Cruz. An appendix labeled “Exhibit to Settlement Agreement” contains a schedule
of fees from the parties’ arbitration, and the additional clause providing, “Boyaki
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and Musslewhite agree to negotiate any payments to potentially 7 more claimants
in good faith but failure to agree does not abrogate the Settlement Agreement and
they agree to present the dispute to Justice Duggan for final adjudication.” That
exhibit is initialed by each of the agreement’s signatories.
Although the settlement agreement contains provisions for future
performance (such as the execution of releases and indemnity agreements), the
basic terms of the agreement are set forth and, more importantly, the agreement
does not contain any language indicating that final agreement is conditioned upon
anything in the future. This written agreement was filed in the 190th as a Rule 11
agreement on July 14, 2009.
In response to the O’Quinn group’s motion for summary judgment to
enforce this agreement, the Boyaki group argued that it reflected only a “tentative
agreement.” They argue the same thing in their brief here, pointing to the
following as evidence that the Settlement Agreement filed a Rule 11 was only a
tentative agreement that never materialized:
- their own characterization of the settlement in later correspondence as
“tentative,”
- the trial court’s July 29, 2011 order requesting the parties submit to the court
“a document that: 1) reflects the terms of the settlement, 2) which of the
terms of the settlement have been fulfilled, and 3) which settlement terms, if
any, have either not been fulfilled or have been waived.”
- the parties’ May 21, 2012 “Parties’ Joint Document of Current Status” in
which the parties identify which obligations under the Settlement Agreement
22
have been performed, which ones have been waived, which ones have not
been performed, and which ones the parties disagree about whether they have
been performed
- the O’Quinn group’s alleged objection to the Boyaki group’s fees being paid
- a reference during a June 8, 2012 hearing to 15 drafts of a proposed
confidential settlement agreement, and
- the trial court notices setting the case for trial.
According to the Boyaki group, these “facts show there was no agreement.”
It argues a jury should have been permitted to determine if there was an
agreement—a view they claim the trial court demonstrated it shared by setting the
case for trial. They further contend that an affidavit by Boyaki submitted as
evidence in response to the Houston lawyer’s motion for summary judgment
demonstrates that “the alleged agreement is legitimately disputed, because, as set
out in the record, many of the terms of the so-called agreement had not been
fulfilled by” the O’Quinn group.
In sum, they contend that (1) the “so-called agreement is missing essential
terms, i.e., dismissals, releases and indemnification,” (2) “there were numerous
aspects of the tentative agreement that still needed to be addressed,” and (3) the
“tentative agreement is filled with ambiguity.”
In response, the O’Quinn group points out that, in a December 31, 2009
filing, the Boyaki group acknowledged the validity of the Rule 11, stating in their
amended answer:
23
Since the filing of Plaintiffs’ Original Petition the parties have settled
all of their differences and therefore all of Plaintiffs claims are moot.
Plaintiffs, as a result of the settlement, have filed their Motion to
Dismiss this lawsuit. As all matters in controversy have been settled
there has been accord and satisfaction, and release.
The O’Quinn group also notes that much of what the Boyaki group relies
upon to demonstrate the alleged tentativeness of the agreement is either (1) not
contained in the summary judgment record, or (2) is taken out of context. They
further contend that the Boyaki group’s arguments are misguided because all of the
requirements under an agreement do not have to be performed for that agreement
to be enforceable.
We agree that the question is not whether the settlement agreement had been
fully performed, but instead whether the parties had reached a definitive agreement
to settle that was specific and inclusive enough to be enforceable. CherCo
Properties, Inc., 985 S.W.2d at 265–66. Under Texas law, a settlement agreement
can be binding premised upon promises for payments and actions in the future, so
long as the writing is sufficiently clear as to the terms. See, e.g., Padilla, 907
S.W.2d at 460–61 (“Steidley accepted Padilla’s agreement to pay the policy limits
as acceptance of his earlier offer. Moreover, the letters reflect all material terms of
the agreement; i.e., Padilla agreed to pay $40,000 in settlement of all claims, and
the La Frances agreed to pay the hospital lien out of those proceeds. We
24
accordingly hold that the parties entered into a binding settlement agreement,
evidenced by a writing sufficient to satisfy Rule 11.”).
Here, the trial court correctly concluded that the Rule 11 agreement was
sufficiently definite, memorialized the parties’ intent to be bound by a settlement,
and did not reflect that the parties conditioned the settlement upon future
performance. While the parties’ agreement did call for the future execution of
certain indemnity agreements and other obligations, nothing in the agreement
indicates the parties’ intentions that those be conditions precedent to an
enforceable agreement. Other courts have interpreted similar agreements to be
enforceable absent indication that future performance was a condition to be
enforceability. For example, in Hardman v. Dault, the San Antonio Court of
Appeals concluded that a deadline in a settlement agreement for signing “final
documents” was not evidence that the agreement was not effective upon execution:
The settlement memorandum in this case sets out the essential terms
of the agreement. No material or essential detail was left out. All that
remained were the “final documents” necessary to carry out the
agreement. Hardman claims the parties contemplated that signing
final documents by January 1, 1997 was a condition precedent to the
formation of an enforceable agreement. Since the documents were not
signed by the deadline, Hardman says there was no contract. The
issue, then, is whether the contemplated documentation was a
condition precedent to the formation of a contract or simply a
memorial of an already enforceable contract.
....
The “final documents” provision neither suggests nor infers that the
parties intended that the agreement was to be subject to any
subsequent action by the parties, or that the signing of documents was
25
to be a condition precedent to the formation of an enforceable
contract. Thus, since the settlement agreement contains all essential
terms, and there being no fact issue concerning whether the parties
intended the settlement agreement to be binding, the partial summary
judgment enforcing the written settlement agreement is affirmed.
2 S.W.3d 378, 380 (Tex. App.—San Antonio 1999, no pet.). Likewise, the
settlement agreement here providing for future performance did not render the
agreement unenforceable. And nothing else the Boyaki group cites here
demonstrates that the parties did not intend, at the time of execution, to be bound.
We overrule the Boyaki group’s first and second issues.
b. The trial court’s summary judgment was not barred by quasi-
estoppel.
The Boyaki group contends that “the trial court erred in not finding quasi-
estoppel to defeat plaintiffs’ claims.” See Lopez v. Munoz, Hockema & Reed,
L.L.P., 22 S.W.3d 857, 864 (Tex. 2000) (“Quasi-estoppel precludes a party from
asserting, to another’s disadvantage, a right inconsistent with a position previously
taken” and applies “when it would be unconscionable to allow a person to maintain
a position inconsistent with one to which he acquiesced, or from which he accepted
a benefit.”). Specifically, they argue that the O’Quinn group “failed to follow
through or complete their obligations under the so-called contract, from failing to
dismiss this case to opposing the lifting of sanctions, opposing payment to the
Defendant, and not paying the Mexican Nationals, etc.”
26
In response, the O’Quinn group contends that the evidence cited by the
Boyaki group in support—i.e., “the unsworn statement by Appellant Boyaki about
his views on the status of the case as of July 22, 2011 and an unsworn letter from
him to opposing counsel, dated August 8, 2011”—is not proper summary-
judgment evidence and, in any event, does not establish quasi-estoppel.
Other than reciting the law and the one-sentence argument quoted above, the
Boyaki group has not articulated how quasi-estoppel applies in this case. Even
assuming their assertions to be true and proper summary-judgment evidence, they
do not cite any cases applying quasi-estoppel on analogous facts or assertions, and
we have located none.
We overrule the Boyaki group’s fifth issue.
c. The trial court’s award of attorneys’ fees was not supported by
sufficient evidence.
The trial court’s summary judgment also awarded to the O’Quinn group
$145,350.00 in attorneys’ fees, as well as conditional appellate attorneys’ fees.
The Boyaki group argues that was improper, as the settlement agreement “does not
mention attorneys’ fees” and the O’Quinn group was not otherwise entitled to
attorneys’ fees under Chapter 38 of the Texas Civil Practice and Remedies Code.
The Boyaki group also challenges the reasonableness and necessity of the
attorneys’ fees awarded. In response, the O’Quinn group contends that the Boyaki
27
group has waived various arguments and that, in any event, it complied with
Chapter 38, and that the attorneys’ fee award is proper.
“To recover attorney’s fees under section 38.001, a . . . claimant must: (1)
plead and prevail on a claim for which attorney’s fees are permitted under section
38.001, (2) be represented by an attorney, (3) present the claim to the opposing
party or his agent, and (4) demonstrate that the opposing party did not tender
payment within thirty days after the claim was presented.” 1/2 Price Checks
Cashed v. United Auto. Ins. Co., 344 S.W.3d 378, 383 (Tex. 2011) (citing TEX.
CIV. PRAC. & REM. CODE §§ 38.001, .002). The contract itself need not provide for
attorneys’ fees. Helping Hands Home Care, Inc. v. Home Health of Tarrant
County, Inc., 393 S.W.3d 492, 516 (Tex. App.—Dallas 2013, pet. denied).
“No particular form of presentment of a claim is required.” Id. “ However,
neither the filing of a suit, nor the allegation of a demand in the pleadings can,
alone, constitute a presentment of a claim or a demand that the claim be paid,
within the meaning of section 38.002.” Id. (citing W. Cas. & Sur. Co. v. Preis, 695
S.W.2d 579, 589 (Tex. App.—Corpus Christi 1985, writ ref’d n.r.e.)).
If an agreement complies with Rule 11, then the party seeking to enforce the
agreement may amend its pleading and add a breach of contract claim on that
agreement. See Mantas v. Fifth Court of Appeals, 925 S.W.2d 656, 658 (Tex.
1996) (orig. proceeding) (per curiam). That is what happened here; the O’Quinn
28
group amended its pleading to plead a breach-of-contract claim, i.e., that the
Boyaki group breached the settlement agreement, that all conditions precedent to
their claims for relief have been performed or occurred, and that attorneys’ fees
should be awarded.
In its motion for summary judgment on that claim, the O’Quinn group
proffered affidavits that averred the Boyaki group “materially breached” the Rule
11 agreement by failing to execute Mutual Releases, and by
forcing [the O’Quinn group] to go to the needless time, effort and
expense of getting [the Boyaki group] to withdraw their motion for
new trial in the 327th; preparing for and appearing at multiple status
conferences and hearings before this Court; amending their petition;
and researching and preparing and filing this Motion for Summary
Judgment to enforce the mediated Rule 11 Settlement Agreement.
As supporting evidence, the O’Quinn group attached copies of the settlement
agreement, correspondence and transcripts related to various hearings,
correspondence between the parties, and two attorneys’ fees affidavits.
The trial court’s summary judgment stated that “the mediated Rule 11
Settlement Agreement was intended to resolve all pending litigation in all courts
involving the parties,” granted the O’Quinn group’s “Motion for Summary
Judgment to Enforce Rule 11,” and awarded $145,350.00 in “reasonable and
necessary attorneys’ fees . . . for services rendered through the summary judgment
of this suit,” as well as conditional appellate attorneys’ fees, costs and interest. No
29
other money damages were awarded, but the trial court ordered funds remaining in
the registry of the court to be disbursed and all claims dismissed with prejudice.
We consider two aspects of the fee award. First, we consider whether
Chapter 38 affords a recovery of attorneys’ fees when a party prevails in seeking
specific performance enforcing a Rule 11 agreement but not a money judgment.
Second, we determine whether the summary-judgment evidence in this case
conclusively proved the reasonable and necessary amount of recoverable attorneys’
fees. To the first question, we answer “yes”: when a party prevails in obtaining
enforcement by specific performance of a Rule 11 agreement, it has recovered
relief that will support an award of Chapter 38 attorneys’ fees. To the second, we
answer “no”: the O’Quinn group’s evidence did not establish its requested
attorneys’ fees were reasonable and necessary.
(a) Attorneys’ fees for enforcement of a settlement agreement
by order of specific performance
The availability of attorneys’ fees under a particular statute is a question of
law for the court. Holland v. Wal–Mart Stores, Inc., 1 S.W.3d 91, 94 (Tex. 1999).
We review the trial court’s decision to award attorneys’ fees de novo.
G.R.A.V.I.T.Y. Enters., Inc. v. Reece Supply Co., 177 S.W.3d 537, 546 (Tex.
App.—Dallas 2005, no pet.).
Section 38.001 authorizes an award of attorneys’ fees “in addition to the
amount of a valid claim” in a breach-of-contract case. TEX. CIV. PRAC. & REM.
30
CODE § 38.001(8) (West 2008). Thus, a threshold requirement for recovering
attorneys’ fees under Chapter 38 is a recovery that compensates for actual damages
sustained. MBM Financial Corp. v. Woodlands Operating Co., L.P., 292 S.W.3d
660, 666 (Tex. 2009) (“To recover fees under this statute, a litigant must do two
things: (1) prevail on a breach of contract claim, and (2) recover damages.”).
The courts of appeals are split on the issue of whether recovery of monetary
damages is necessary to support a claim for attorney’s fees under Chapter 38 or
whether prevailing on a breach-of-contract claim and recovering relief by an order
of specific performance of the contract is sufficient to support such an award. The
Austin and Texarkana courts have concluded that attorneys’ fees under Chapter 38
may not be awarded to the prevailing party in a breach-of-contract case absent a
monetary recovery. Haubold v. Medical Carbon Research Inst., 2014 WL
1018008 at *5–6 (Tex. App.—Austin March 14, 2014, no pet.) (mem. op.)
(concluding that specific performance in enforcing Rule 11 agreement was not a
recovery of actual damages and thus attorney’s fees incurred in enforcing the
agreement were not recoverable); Berg v. Wilson, 353 S.W.3d 166, 182 (Tex.
App.—Texarkana 2011, pet. denied) (concluding that “because Wilson did not
recover actual damages, she was not entitled to recover attorneys’ fees on her
[Rule 11] breach of contract claim,” but affirming award on alternative basis).
31
In contrast, this Court has held that relief in the form of specific performance
of the contract is a recovery that remedies actual damage for a valid claim. See
Albataineh v. Eshtehardi, 2013 WL 1858864, at *1–2 (Tex. App.—Houston [1st
Dist.] May 2, 2013, no pet.) (mem. op.) (holding that “an award of specific
performance of the parties’ settlement and of the restrictive covenant in the special
warranty deed” supported an award of Chapter 38 attorneys’ fees and rejecting the
argument that money damages in addition to relief by specific performance were
required); see also TEX. CIV. PRAC. & REM. CODE § 38.005 (“This chapter shall be
liberally construed to promote its underlying purposes.”).
Other courts of appeals have likewise recognized that a “valid claim” under
section 38.001(8) is not limited to a claim for monetary damages, but also
encompasses specific performance of the agreement to avoid actual damage.
Woody v. J. Black’s, L.P., 2013 WL 5744359, at *6 (Tex. App.—Amarillo Oct. 13,
2013, pet. denied) (mem. op.) (recognizing that an “injunction enforcing specific
performance of a contract is something of value” sufficient to support Chapter 38
attorneys’ fees and rejecting argument that an award of monetary damages were
required); Rasmusson v. LBC PetroUnited, Inc., 124 S.W.3d 283, 287 (Tex.
App.—Houston [14th Dist.] 2003, pet. denied) (holding that award of specific
performance of arbitration agreement permitted recovery of Chapter 38 attorneys’
fees and rejecting argument that monetary damages were required); Williams v.
32
Compressor Eng’g Corp., 704 S.W.2d 469, 474 (Tex. App.—Houston [14th Dist.]
1986, writ ref’d n.r.e.) (interpreting Chapter 38 to authorize an award of attorneys’
fees when a party “successfully prosecutes a claim founded on . . . written
contracts.”).
These cases reflect the courts’ recognition that an injunction to enforce
specific performance under a contract is of pecuniary value if that enforcement
prevents actual loss to the aggrieved party. Butler, 51 S.W.3d at 797 (quoting
Rodgers v. RAB Invs., Ltd., 816 S.W.2d 543, 551 (Tex. App.—Dallas 1991, no
writ) (recognizing that injunction enforcing covenant not to compete was
something of value)). This meaningful recovery of value in these cases renders
them distinguishable from cases denying recovery of attorneys’ fees because the
prevailing party had no recovery at all (or at most a nominal recovery) for breach
of the underlying contract. See MBM Fin. Corp., 292 S.W.3d at 663 (“[T]he
Woodlands’ fee award cannot be affirmed based on Chapter 38” because they “can
recover neither actual nor nominal damages.”); Green v. Solis, 951 S.W.2d 384,
390 (Tex. 1997) (reversing attorneys’ fees award because although jury found that
contract was breached, it awarded zero damages for breach).
The O’Quinn group obtained an award of specific enforcement of the
settlement agreement and an end to the ongoing litigation in the case. The trial
court heard evidence that the enforcement was necessary because the Boyaki group
33
refused to acknowledge the validity of the Rule 11 agreement, instead continuing
to litigate the case. A judgment “requiring specific performance of a material
contract right” in a Rule 11 agreement is an award of value that affords relief from
impending actual damage. Albataineh, 2013 WL 1858864, at *2. Thus, if the
evidence supports a finding that such relief is of more than nominal economic
value, we hold that Chapter 38 affords the O’Quinn group its attorneys’ fees,
provided that all other conditions to a right to recovery under that chapter are met.
Cf. Ganske v. WRS Group, Inc., 2007 WL 1147357, at *2–3 (Tex. App.—Waco
April 18, 2007, no pet.) (mem. op.) (permitting an award of attorneys’ fees from
prior litigation as actual damages for breach of settlement agreement).
(b) Attorneys’ fee evidence
We next turn to whether the O’Quinn group conclusively proved its
reasonable and necessary attorneys’ fees. Because they did not, we reverse the
award of attorneys’ fees and remand the case.
The supreme court has recently addressed the specificity required of an
affidavit supporting attorneys’ fees under the lodestar method.3 See Long v.
3
“Under the lodestar method, the determination of what constitutes a reasonable
attorney’s fee involves two steps.” El Apple I, Ltd. v. Olivas, 370 S.W.3d 757,
760 (Tex. 2012). “First, the court must determine the reasonable hours spent by
counsel in the case and a reasonable hourly rate for such work.” Id. (citing Dillard
Dep’t Stores, Inc. v. Gonzales, 72 S.W.3d 398, 412 (Tex. App.—El Paso 2002,
pet. denied)). “The court then multiplies the number of such hours by the
applicable rate, the product of which is the base fee or lodestar.” (citing La. Power
& Light Co. v. Kellstrom, 50 F.3d 319, 323–24 (5th Cir.1995)). The court may
34
Griffin, ___ S.W. 3d ___, No. 11-1021, 2014 WL 1643271 (Tex. April 25, 2014).
Under the supreme court’s analysis in Long, the O’Quinn group’s affidavits were
insufficient to support the trial court’s award.
In Long, the supreme court characterized the attorney affidavit at issue as
“only offer[ing] generalities”:
It indicates that one attorney spent 300 hours on the case, another
expended 344.50 hours, and the attorneys’ respective hourly rates.
The affidavit posits that the case involved extensive discovery, several
pretrial hearings, multiple summary judgment motions, and a four and
one-half day trial, and that litigating the matter required understanding
a related suit that settled after ten years of litigation. But no evidence
accompanied the affidavit to inform the trial court the time spent on
specific tasks. See El Apple [Ltd. v. Olivas], 370 S.W.3d [757,] 763
[(Tex. 2012).] The affidavit does claim that 30% of the aggregate
time was expended on the assignment claim (part of which the
Griffins prevailed on) and that the assignment issue was inextricably
intertwined with matters that consumed 95% of the two attorneys’
time on the matter. But without any evidence of the time spent on
specific tasks, the trial court had insufficient information to
meaningfully review the fee request. [City of Laredo v.] Montano,
414 S.W.3d [731,] 736–37[(Tex. 2013)]; El Apple, 370 S.W.3d at 764.
The two attorneys’ fees affidavits at issue here suffer the same deficiencies.
Neil McCabe’s affidavit described the litigation, set forth his experience, listed the
appropriate lodestar factors, and stated his view that the Boyaki group had, by
September 15, 2009, “breached a material term” of the Rule 11 agreement. It then
then adjust the base lodestar up or down (apply a multiplier), if relevant factors
indicate an adjustment is necessary to reach a reasonable fee in the case. Gonzales,
72 S.W.3d at 412. The attorneys’ affidavits in this case sought to prove up
attorneys’ fees under this lodestar method.
35
described his work in generalities similar to that rejected by the supreme court in
Long:
[S]ince September 15, 2009, I have attended several hearings,
prepared a Motion for Temporary Injunction, prepared for the hearing.
I have reviewed various drafts of letters and email correspondence to
opposing counsel. I have communicated to my client, The O’Quinn
Law Firm, the status of implementation of the settlement agreement,
reviewed Texas cases on the enforcement of Rule 11 settlement
agreements, reviewed Plaintiffs’ First Amended Original Petition,
reviewed Plaintiffs’ Motion for Summary Judgment to Enforce Rule
11 Settlement with supporting affidavits. I have also had a number of
additional conferences with representatives of my client and co-
counsel. Accordingly, since September 15, 2009, I have spent at least
98 hours in rendering the above-described necessary legal services . . .
in enforcement of the mediated Rule 11 Settlement Agreement.
Stacy Little, another attorney at a different law firm, proffered an affidavit
containing similar generalities about tasks and the time necessary to perform them:
[S]ince July 22, 2011, I have prepared various drafts of letters and
email correspondence to and for Charles Musslewhite, my co-counsel,
I have communicated to my client, The O’Quinn Law Firm the status
of implementation of the settlement agreement, researched and
reviewed Texas cases on the enforcement of Rule 11 settlement
agreements, drafted and edited Plaintiffs’ First Amended Original
Petition, drafted and edited Plaintiffs’ Motion for Summary Judgment
to Enforce Rule 11 Settlement, with supporting affidavits, and
prepared a proposed Final Summary Judgment. I have also had a
number of additional conferences with representatives of my client
and co-counsel. Accordingly, since July 22, 2011, I have spent at
least 215 hours in rendering the above-described necessary legal
services.
Because the O’Quinn group’s attorneys’ fees evidence is legally insufficient,
we sustain the Boyaki group’s fourth issue. Under Long, the appropriate remedy is
36
a “remand to the trial court for a redetermination of attorney’s fees.” Long, 2014
WL 163271 at *3 (“[U]nder the lodestar method, no legally sufficient evidence
supports the amount of attorney’s fees the trial court awarded because no evidence
indicates the time expended on the specific tasks for which attorney’s fees may be
recovered. Accordingly, . . . [we] reverse the court of appeals’ judgment and
remand to the trial court for a redetermination of attorney’s fees consistent with
this opinion.”).
SANCTIONS
On January 28, 2009, the 190th court issued an Order for Sanctions against
Walter Boyaki, Ruben Hernandez, and Heriberto Ramos for the frivolous removal
of the case to federal court. The following background facts are taken from the
court’s 10-page sanctions order, which included several findings of fact and
conclusions of law:
On December 30, 2008, the O’Quinn group sought and obtained a TRO
from the ancillary Harris County judge, and set a hearing for a related temporary
injunction in the 190th for January 9, 2008. The Boyaki group was represented at
the TRO hearing by Ramos. At the TRO hearing, Ramos threatened the O’Quinn
group that Boyaki would remove the case. The O’Quinn group sent the Boyaki
group a letter immediately after the hearing reflecting the view that there was no
basis for removal, any removal would be in bad faith, and putting it on notice that
37
the O’Quinn group would seek sanctions if the case were removed. The Boyaki
group did not respond.
On January 7, 2008, with notice of the injunction hearing set for January 9,
Boyaki, Hernandez, and Ramos signed and filed a notice of removal in district
court. On the afternoon of January 9, 2009, the federal district court, Judge
Kenneth Hoyt presiding, sua sponte remanded the cause to the 190th court, noting
that no diversity or federal question jurisdiction existed. The remand order also
stated: “This was a frivolous removal, violating FRCP, Rule 11.”
The trial court’s sanction order notes that the sanctions are “based on the
totality of the circumstances surrounding Boyaki, Hernandez and Ramos filing
Notice(s) of Removal in the federal court on January 7, 2009.” The court finds that
Boyaki, Hernandez, and Ramos “have engaged in a pattern of misconduct and
abuse of the judicial process,” and that the “sanctions in [the] Order are issued
pursuant to the Court’s inherent authority to sanction bad faith conduct during
litigation from the conduct outlined [in the order] and for violations of the Texas
Disciplinary Rules of Professional Conduct, the Texas Rules of Civil Procedure,
and the Texas Civil Practice and Remedies Code.” Specifically, the court
concluded that the removal was filed “for the purposes of harassment and/or delay
and to prevent this Court from proceeding with a scheduled hearing on a
Temporary Injunction request.” The order required Boyaki, Hernandez, and
38
Ramos to each (1) pay $1,200 to O’Quinn & Associates, (2) pay $1,200 to
Musslewhite & Associates, and (3) complete 10 hours of Continuing Legal
Education Courses in Ethics.
A. Applicable law
Rule 13 authorizes the sanctions listed in rule 215.2(b) of the Rules of Civil
Procedure against a party, a party’s attorney, or both, for filing pleadings, motions,
or other papers that are groundless and brought in bad faith, or filed to harass. TEX.
R. CIV. P. 13. Appropriate sanctions under rule 215.2(b) include attorneys’ fees, as
awarded here. TEX. R. CIV. P. 215(2)(b); see Koslow’s v. Mackie, 796 S.W.2d 700,
704 (Tex. 1990); Laub v. Pesikoff, 979 S.W.2d 686, 693 (Tex. App.—Houston [1st
Dist.] 1998, pet. denied). The party seeking sanctions must overcome the
presumption that papers are filed in good faith. See TEX. R. CIV. P. 13. In awarding
sanctions, the trial court must state, with particularity, the grounds that constitute
good cause for imposing sanctions. Id.; Gorman v. Gorman, 966 S.W.2d 858, 867
(Tex. App.—Houston [1st Dist.] 1998, pet. denied).
Texas courts have inherent judicial power that they may call upon to aid in
the preservation of their independence and integrity. Public Util. Comm’n of Texas
v. Coffer, 754 S.W.2d 121, 124 (Tex. 1988). This inherent judicial power
encompasses the inherent power to sanction for abuse of the judicial process that
may not be covered by rule or statute. Kutch v. Del Mar College, 831 S.W.2d 506,
39
510 (Tex. App.—Corpus Christi 1992, no writ). Inherent power to sanction exists
to the extent necessary to deter, alleviate, and counteract bad faith abuse of the
judicial process. Id.
We review the imposition of sanctions for abuse of discretion. See Am.
Flood Research, Inc. v. Jones, 192 S.W.3d 581, 583 (Tex. 2006) (per curiam). We
may reverse the trial court’s ruling only if the trial court acted without reference to
any guiding rules or principles, such that its ruling was arbitrary or unreasonable.
Cire v. Cummings, 134 S.W.3d 835, 838–39 (Tex. 2004). In conducting our
review, we are not limited to a review of the “sufficiency of the evidence” to
support the trial court’s findings; rather, we make an independent inquiry of the
entire record to determine if the court abused its discretion by imposing the
sanction. Daniel v. Kelley Oil Corp., 981 S.W.2d 230, 234 (Tex. App.—Houston
[1st Dist.] 1998, pet. denied) (op. on reh’g). To determine if the sanctions were
appropriate or just, the appellate court must ensure there is a direct nexus between
the improper conduct and the sanction imposed. Spohn Hosp. v. Mayer, 104
S.W.3d 878, 882 (Tex.2003).
B. Analysis
The Boyaki group first contends that the trial court’s sanctions order was
void. Specifically, it argues that the 190th district court lacks jurisdiction to
impose sanctions for invocation of federal jurisdiction because that power is
40
reserved to the federal court. It cites the federal removal statute for the proposition
that it was “within Judge Hoyt’s authority to assess attorneys’ fees in the event the
removal was improperly made.” See 28 U.S.C.A. § 1447(c) (“An order remanding
the case may require payment of just costs and any actual expenses, including
attorney fees, incurred as a result of the removal.”). It also cites Texas state court
authority for the proposition that “the only conduct the state district court could
sanction is pre-removal conduct.” See In re Bennett, 960 S.W.2d 35, 40 (Tex.
1997) (orig. proceeding) (per curiam) (“[W]e conclude that state courts retain
jurisdiction after removal of a case to federal court to sanction lawyers for pre-
removal conduct so long as the sanction does not operate upon the merits of the
underlying action.”).
We find this authority inapposite because reviewing the circumstances as a
whole reflects that the trial court’s sanctions are not limited to the merits of the
removal, but instead the improper motivation for the removal and the effect upon
the state court’s function. In Stratton v. Frankwell Inv. Service (Texas), Inc., we
affirmed post-remand sanctions based upon reasoning similar to that expressed by
the 190th court here. Nos. 01-99-00405-CV, 01-99-00459-CV, 2000 WL 233110,
at *3–4 (Tex. App.—Houston [1st Dist.] March 2, 2000, pet. denied) (mem. op.).
In that case, the sanctioned lawyer argued that because his name was not on filings
that effectuated what the trial court characterized as “wrongful removal,” he could
41
not be sanctioned for that removal. Id. We declined to take such a narrow view of
the trial court’s order, explaining,
As noted above, Stratton confines his arguments to the
“wrongful removal” finding in the order of December 10, 1998. In
narrowing his challenge in this manner, Stratton isolates this finding
from the remainder of the sentence in which it appears, which states:
“The Court finds that Defendant Erxleben and his
counsel wrongfully removed the case to federal court
without authority and without valid cause and for the sole
purpose of thwarting the Court’s notice that the case was
assigned for trial.”
The complete sentence clarifies that the trial court did not
confine its ruling to the “wrongful removal,” but considered a totality
of circumstances that resulted in the unnecessary postponement of the
trial. The trial court also determined that Erxleben and counsel acted
without authority, without valid cause, and with the sole purpose of
avoiding trial. These additional findings, which Stratton does not
challenge in this issue, further reflect that the trial court resolved
several controversies in awarding sanctions, and that the trial court
resolved significantly disputed facts in exercising its discretion under
rule 13. We are thus constrained by the standard of review to consider
the evidence before the trial court in the light most favorable to the
sanction award.
2000 WL 233110, at *3.
Similarly, here the court found in its sanctions order that Boyaki, Hernandez
and Ramos “filed their Notices of Removal in the U.S. District Court for the
purposes of harassment and/or delay and to prevent this Court from proceeding
with a scheduled hearing on a Temporary Injunction request.” While the federal
district court was in the best position to determine if federal jurisdiction existed—
which it found did not—the state court may determine if the circumstances
42
surrounding a removal indicate that it a filing was made for the purpose of
disruption and delay in the state court.4
The Boyaki group next contends that, in the alternative, “the sanctions
ordered by the Trial Court were unduly harsh.” It asserts that “it happens all the
time that a party to state court proceeding invokes federal jurisdiction to forestall
an unfavorable state court action.” It argues that “[w]hile this may lead to a
squandering of judicial resources, and is no doubt frustrating for state court judges,
there are limits of reason as to how a court should respond.” Because imposing the
cost of the O’Quinn group’s fees would have “been more than enough to teach the
[lawyers] any lesson and to compensate the other parties for any harm,” the Boyaki
group asks us to find that the trial court abused its discretion by also “ordering ten
hours of ethics education.”
Relatedly, the Boyaki group argues “no harm-no foul.” They contend that
we should presume that the removal was done in good faith, assume that the
federal district court would have sanctioned them if their removal was frivolous,
and be mindful of the fact that their removal of the case only caused a one-week
4
We contrast the facts here with those in Ricardo N. Inc. v. Turcios de Argueta, 907
S.W.2d 423, 429 (Tex. 1995). The defendant there removed a case to federal
court shortly before trial, and the federal court remanded four years later with
specific findings that the case had been removed in good faith and did not violate
FRCP 11. Id. The state trial court nonetheless sanctioned the defendant for
removing the case for purposes of delay. Id. The supreme court held that the
“trial court abused its discretion in sanctioning [the defendant] for removing the
case in bad faith when the federal court had already determined that the removal
was not in bad faith.” Id.
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delay over the temporary injunction hearing (at which no relief was granted to the
O’Quinn group anyway).5
The Boyaki group has cited no authority for its argument that requiring
attorneys to attend classes focused on ethics is unduly harsh or insufficiently
tailored to the sanctioned conduct. We thus reject the argument that compelling
attendance in ethics classes was excessive or unduly harsh. And we will not
presume that the Boyaki group’s removal was for a proper purpose when the
federal district court and the state trial court both found that it was not, and that
determination is supported by evidence in the record. The Boyaki group has not
established that the trial court’s determination that they acted in bad faith for the
purpose of delay was an abuse of discretion.
The Boyaki group next contends that the sanctions against Ramos were
particularly overreaching because the “most he did in the state case was indicate, at
the December 30 hearing, that Boyaki would attempt to remove the case,” and
“signed only the notice of removal to federal court.” Accordingly, it argues that
the sanctions against Ramos should be reversed.
The Boyaki group’s notice of appeal states “Notice is hereby given that
Defendants in the above named case Walter L Boyaki, Ruben Hernandez, and
5
They also contend, with no citation to authority, that the O’Quinn group lacked
“clean hands” such that “sanctions were inappropriate against one side when it
was raining on both sides of the field.”
44
Miranda & Boyaki hereby appeal the Summary Judgment [and] the Order of
Sanctions signed on January 28, 2009, to include the sanctions against Heriberto
Ramos, a non-party/non-attorney.” Ramos is not a party in the underlying case,
Ramos has not filed his own notice of appeal, see Tex. R. App. P. 25.1(c)(party
seeking to alter judgment must file notice of appeal) and the Boyaki group does not
purport to represent Ramos. Because the Boyaki group does not have standing to
challenge sanctions against Ramos, we do not consider their arguments challenging
sanctions against Ramos. See Bahar v. Lyon Fin. Serv., Inc., 330 S.W.3d 379, 388
(Tex. App.—Austin 2010, pet. denied) (party who is not harmed by sanctions
against another lacks standing to challenge sanctions on appeal).
Finally, the Boyaki group contends that it was afforded inadequate due
process with regard to the sanctions proceeding. It complains that, despite its
objection, the sanctions hearing went forward with twenty-one new complaints that
had been added that morning. No objection is found in the record where cited by
the Boyaki group. In any event, while the O’Quinn group did file an amended
motion for sanctions the morning of the sanctions hearing complaining of several
misrepresentations allegedly made in court filings by the Boyaki group, no one
disputes that the original motion—to which the Boyaki group had notice and
responded—complained about the removal. The trial court’s sanction order states,
After hearing arguments and reviewing the evidence, the Court,
without ruling on the alleged pattern of repeated and continuous
45
misrepresentations raised in the amended motion for sanctions, hereby
enters this Order awarding sanctions for counsel’s conduct with
regard to the removal.
Accordingly, assuming that the Boyaki group lacked sufficient notice of the
new complaints, and assuming that they properly challenged the lack of notice of
the new complaints, they cannot demonstrate they were harmed as the new
complaints did not form the basis of the trial court’s ruling.
We overrule the Boyaki group’s third issue.
CONCLUSION
We reverse and remand the trial court’s attorneys’ fees award. The trial
court’s judgment and sanctions order are otherwise affirmed.
Sherry Radack
Chief Justice
Panel consists of Chief Justice Radack and Justices Bland and Huddle.
46