George Fleming and Fleming & Associates, LLP v. the Kirklin Law Firm, P.C., Charles Kirklin and Stephen Kirklin

Affirmed and Memorandum Opinion filed November 17, 2015.
In The
Fourteenth Court of Appeals
NO. 14-14-00202-CV
GEORGE FLEMING AND FLEMING & ASSOCIATES, LLP, Appellants
and Cross-Appellees
V.
THE KIRKLIN LAW FIRM, P.C., CHARLES KIRKLIN, AND STEPHEN
KIRKLIN, Appellees and Cross-Appellants
On Appeal from the 164th District Court
Harris County, Texas
Trial Court Cause No. 2008-02102
MEMORANDUM OPINION
This case concerns agreements to refer Fen-Phen cases to Fleming &
Associates, L.L.P. (the Fleming Firm) in exchange for a fee and the Fleming
Firm’s payment of certain expenses. Appellees/cross-appellants The Kirklin Law
Firm, P.C., Charles Kirklin, and Stephen Kirklin (collectively the Kirklins) sued
appellants/cross-appellees the Fleming Firm and George Fleming, alleging that the
Fleming parties breached the agreements and committed fraud by deducting a
share of other expenses from the Kirklins’ referral fees. After granting a directed
verdict against the Kirklins’ fraud claim, the trial court submitted the Kirklins’
claims for breach of contract against the Fleming Firm to the jury, which returned a
verdict in favor of the Kirklins. The trial court signed a judgment on the verdict,
and both sides appealed.
In its appeal, the Fleming Firm initially asserts that the trial court erred when
it determined that the referral agreements underlying the Kirklins’ lawsuit were
ambiguous. The Fleming Firm goes on to argue that because the referral
agreements are not ambiguous, parol evidence should not have been admitted , and
once that evidence is disregarded, the evidence is legally insufficient to support the
final judgment. Because the referral agreements are susceptible of more than one
reasonable interpretation, we conclude that the trial court did not err when it held
them ambiguous. Further, because the referral agreements are ambiguous, the trial
court did not abuse its discretion when it admitted parol evidence to prove the
parties’ intent. Finally, because we have determined that parol evidence was
admissible, we need not reach the Fleming Firm’s sufficiency challenge.
In their cross-appeal, the Kirklins argue that the trial court erred when it
refused to hold Fleming individually liable for the Fleming Firm’s contractual
obligations. We disagree because the Kirklins failed to establish, as a matter of
law, that the Fleming Firm did not meet the statutory requirements to qualify as a
limited liability partnership. The Kirklins also assert that the trial court erred in
refusing to include an award of attorneys’ fees in the final judgment. Under this
Court’s precedent, however, section 38.001 of the Civil Practices and Remedies
Code does not authorize an award of attorneys’ fees against a limited liability
partnership. We therefore affirm the trial court’s judgment.
2
BACKGROUND
In the mid-1990s, American Home Products (now known as Wyeth, and
referred to by that name) began selling a weight-loss drug known as Fen-Phen.
The Food and Drug Administration eventually ordered a mandatory recall of Fen-
Phen as a result of the drug being linked to serious and often fatal medical side-
effects. Thousands of Fen-Phen users filed suit against Wyeth in the first phase of
Fen-Phen litigation. The Fleming Firm settled several hundred cases on behalf of
plaintiffs it represented during that first phase.
Soon after the first phase of Fen-Phen litigation ended, the Fleming Firm
decided to seek out more Fen-Phen clients. During the second phase of Fen-Phen
litigation, the Fleming Firm sought additional Fen-Phen clients through referrals
from other attorneys. George Fleming, the managing partner of the Fleming Firm,
authorized Jim Doyle, an attorney employed by the Fleming Firm, to negotiate
referral agreements with attorneys interested in referring their Fen-Phen clients.
The Kirklins were among the attorneys interested in referring Fen-Phen
clients to the Fleming Firm. At first, they referred a small number of clients to the
Fleming Firm in cooperation with another attorney, Mike Pohl, who had reached a
referral agreement with the Fleming Firm in May 2001. Prior to these referrals,
Stephen and Charles Kirklin went to the Fleming Firm’s office, where they met
with Doyle and discussed how the referrals would work.
The Kirklins later decided to stop working with Pohl and instead refer
additional Fen-Phen clients to the Fleming Firm directly. The Kirklins prepared a
proposed agreement to document the referral deal and went a second time to the
Fleming Firm’s office. The Kirklins’ proposed agreement resembled the Pohl
agreement signed in May 2001. During the October 2001 meeting, the Kirklins
presented Doyle with the proposed referral agreement. They also discussed the
3
terms again with Doyle. According to Stephen Kirklin, they “wanted to confirm –
make sure everybody was straight on exactly what was going to happen, how this
was going to work.” After discussing every clause with Doyle, both sides “were in
full agreement.” Both Stephen Kirklin and Doyle signed the proposed agreement
during the second meeting.1
The October referral agreement provides, in its entirety:
The purpose of this letter is to confirm our new agreement regarding
the joint prosecution of Fen-Phen claims. As agreed, we will refer the
Fen-Phen clients that we have to the Fleming law firm in exchange for
a forty percent (40%) referral fee and the Fleming firm’s payment of
the cost of echocardiograms. The Fleming firm will have the right to
accept or reject any tendered cases and will have the right to select the
medical personnel to perform echocardiograms.
After signing the October referral agreement, the Kirklins referred about 500
Fen-Phen clients to the Fleming Firm. The Fleming Firm then prosecuted its Fen-
Phen cases for five years until Wyeth agreed to pay an aggregate of $339 million to
settle all of the Fleming Firm’s approximately 8,000 cases. Wyeth began funding
the settlements and the Fleming Firm began distributing funds to the clients. The
Fleming Firm also began distributing attorneys’ fees to the referring attorneys,
including the Kirklins. The Fleming Firm paid the Kirklins over $2 million as their
net share of attorneys’ fees.
Soon thereafter the Kirklins contested the amount of attorneys’ fees they had
received under the May and October referral agreements. The Kirklins alleged that
the Fleming Firm calculated the payments incorrectly and the payments were
significantly less than required by the terms of the referral agreements. The
1
The two referral agreements are nearly identical. On appeal, the parties focus on the
language of the October referral agreement but include both the October and May agreements
within their arguments. We follow the parties’ lead and address the agreements together while
focusing on the specific language found in the October referral agreement.
4
dispute arose out of the Fleming Firm’s handling of litigation expenses it incurred
prosecuting the second-phase Fen-Phen cases. The Fleming Firm based its
calculation of attorneys’ fees owed to the Kirklins on its belief that the referral
agreements created a joint venture and the Kirklins were therefore responsible for a
portion of all litigation expenses incurred during the second phase of Fen-Phen
litigation. The Kirklins, on the other hand, argued that the Fleming Firm was
responsible for paying not only the echocardiogram expenses but also for all
litigation expenses incurred after the clients had been referred to, and accepted by,
the Fleming Firm.
When efforts to resolve the dispute failed, the Kirklins filed suit, alleging
causes of action against the Fleming Firm and Fleming for breach of contract and
fraud. The Kirklins also sought to hold Fleming individually liable for the Fleming
Firm’s contractual debt. During the ensuing litigation, the trial court denied the
parties’ cross-motions for summary judgment on breach of contract, ruling that the
October referral agreement was ambiguous. The trial judge who made that ruling
later recused himself, and the case was transferred to the 164th Judicial District
Court. The Kirklins filed another motion for summary judgment on breach of
contract, to which the Fleming parties responded by taking the position that the
referral agreements were ambiguous. The new trial judge declined to revisit the
ruling that the referral agreements were ambiguous. As a result, parol evidence
concerning the parties’ intentions was admitted during the trial.
Three witnesses testified during the trial: (1) Stephen Kirklin, (2) Jim Doyle,
and (3) George Fleming. Stephen Kirklin testified that during their initial meeting
at the Fleming Firm, Doyle told them: “you guys go and find the clients. You’re
going to have to expend everything necessary to find the clients. We’re not going
to pay your expenses . . . to find these clients.” Doyle explained that the Kirklins
5
should also get proof that a client took Fen-Phen and get an echocardiogram to see
whether the client had been injured, but that the Fleming Firm would “pay for that”
echocardiogram. According to Kirklin, Doyle told them that once the Kirklins
brought the Fleming Firm an injured client’s case, the Fleming Firm would “do
everything necessary to handle the case, take care of any litigation, and we will pay
any expenses that we incur from that point forward, until the conclusion of the
case.”
Doyle testified that he signed the October referral agreement on behalf of the
Fleming Firm while still employed at the firm. Doyle agreed almost entirely with
Kirklin’s account of the conversations leading up to the signing of the October
referral agreement. Doyle testified that he believed the Fleming Firm had assumed
the contractual responsibility to pay all costs and expenses starting at the point
when the Kirklins referred a Fen-Phen client to the Fleming Firm. Doyle admitted
that the October referral agreement did not speak expressly about the Fleming
Firm’s payment of any expenses other than echocardiograms, but testified that he
and the Kirklins had discussed that issue before he signed the agreement.
Doyle also testified about a Fleming Firm meeting that occurred around the
time Wyeth agreed to settle the firm’s second-phase Fen-Phen cases. According to
the minutes of that meeting, Fleming “said that he would discuss expense splits
with the referring attorneys and allow them to experience the price of litigating
with 60 million in expenses.” Doyle admitted that Fleming later terminated him,
and Doyle testified that Fleming did so because Doyle would not go along with
Fleming’s decision to charge litigation expenses to the referring firms.
Fleming was the final witness. He testified that Doyle was authorized to
make the agreement with the Kirklins. Fleming admitted that he was not present
during the meetings between Doyle and the Kirklins and therefore could not testify
6
about the discussions that occurred during those meetings. According to Fleming,
he received the October referral agreement after it was signed and he read it at that
point. Fleming testified that the referral agreement speaks for itself. When asked
if the October referral agreement obligated the Fleming Firm to pay the Kirklins a
40-percent referral fee, Fleming responded that was what the agreement said.
At the conclusion of the Kirklins’ case, the trial court granted the Fleming
Firm’s motion for directed verdict on the Kirklins’ fraud claim. The Fleming Firm
then rested and the case was submitted to the jury. The jury found that the Fleming
Firm had failed to comply with the October referral agreement and determined that
the Kirklins’ damages were $633,000. The jury also found that the Fleming Firm
failed to comply with the May referral agreement, resulting in damages of $27,000.
The jury was asked whether the Fleming Firm and the Kirklins formed a joint
venture, and it failed to find a joint venture. Finally, the jury awarded the Kirklins
attorneys’ fees of $150,000 for trial and $75,000 in the event of an appeal.
The court signed a judgment in favor of the Kirklins based on the jury’s
verdict. The judgment did not hold Fleming individually liable for the contract
debt. The trial court later signed a modified final judgment deleting the award of
attorneys’ fees because section 38.001 of the Civil Practice and Remedies Code
makes fees available only when the defendant is an “individual or corporation,” not
when it is a limited liability partnership. See Tex. Civ. Prac. & Rem. Code Ann.
§ 38.001.
ANALYSIS
Both sides have appealed the judgment. We address the Fleming Firm’s
issues first and then turn to the issues raised by the Kirklins in their cross-appeal.
The Fleming Firm’s Issues
7
I. The trial court did not err when it determined that the referral
agreements were ambiguous and admitted parol evidence.
The Fleming Firm raises two issues on appeal, which we address together. It
argues that the trial court erred when it determined that the referral agreements
were ambiguous and then admitted parol evidence of intent during the trial based
on that decision. The Fleming Firm goes on to assert that when the improperly
admitted parol evidence is disregarded, the evidence is legally insufficient to
support the full amount awarded in the modified final judgment.2
A. Standard of review and contract interpretation
Whether a contract is ambiguous is a question of law for the court to decide
by examining the agreement as a whole in light of the circumstances present when
the contract was entered. Lane-Valente Indus. (Nat’l), Inc. v. J.P. Morgan Chase
Bank, N.A., 468 S.W.3d 200, 205 (Tex. App.—Houston [14th Dist.] 2015, no pet.)
(citing Coker v. Coker, 650 S.W.2d 391, 394 (Tex. 1983)). A court may conclude
that a contract is ambiguous even though the parties did not plead ambiguity or
argue on appeal that it is ambiguous. See id. (citing Sage St. Assocs. v. Northdale
Constr. Co., 863 S.W.2d 438, 445 (Tex. 1993); see also Phil Watkins, P.C. v. The
Krist Law Firm, No. 14-02-00291-CV, 2003 WL 21786173, at *3 (Tex. App.—
Houston [14th Dist.] Aug. 5, 2003, pet. dism’d) (mem. op.) (stating that agreement
between parties that contract at issue was not ambiguous does not prevent appellate
court from concluding that it is ambiguous).
A contract is unambiguous if it can be given one certain or definite legal
interpretation. Lane-Valente Indus. (Nat’l), Inc., 468 S.W.3d at 205 (citing Coker,
650 S.W.2d at 393). A contract is ambiguous if it is susceptible of more than one
2
The Fleming Firm concedes on appeal that it owes the Kirklins $100,000 for
unreimbursed echocardiogram charges.
8
reasonable interpretation. Id. (citing National Union Fire Ins. Co. of Pittsburgh,
PA v. CBI, 907 S.W.2d 517, 520 (Tex. 1995)). The fact that the parties disagree
about a contract’s meaning does not necessarily show that it is ambiguous. Id.
(citing Lopez v. Munoz, Hockema & Reed, L.L.P., 22 S.W.3d 857, 861 (Tex.
2000)). In addition, parol evidence is not admissible for the purpose of creating an
ambiguity. Material Partnerships, Inc. v. Ventura, 102 S.W.3d 252, 258 (Tex.
App.—Houston [14th Dist.] 2003, pet. denied) (citing Columbia Gas Transmission
Corp. v. New Ulm Gas, Ltd., 940 S.W.2d 587, 592 n. 2 (Tex. 1996)). A court need
not, however, embrace strained rules of construction that would avoid ambiguity at
all costs. Lenape Res. Corp. v. Tenn. Gas Pipeline Co., 925 S.W.2d 565, 574 (Tex.
1996). Once a court determines that a contract is ambiguous, the parties’
interpretations and extraneous evidence are admissible to enable the factfinder to
determine the true meaning of the contract. Id.
B. The referral agreements are ambiguous and parol evidence was
admissible to prove the parties’ intent.
The Fleming Firm’s argument that the referral agreements are unambiguous
begins with the first sentence of each: “[t]he purpose of this letter is to confirm our
new agreement regarding the joint prosecution of Fen-Phen claims.” The Fleming
Firm then points out: (1) the phrase obligating it to pay the cost of the referred
clients’ echocardiograms; (2) the fact that no other litigation expenses are
specifically apportioned by the referral agreements to the Fleming Firm; and (3)
the lack of any language expressly excusing the Kirklins from paying litigation
expenses other than the cost of the echocardiograms. In the Fleming Firm’s view,
the referral agreements created a joint venture wherein the only expense falling
exclusively on the Fleming Firm was the cost of the echocardiograms. All other
litigation expenses incurred in the case were a joint-venture burden to be shared
proportionately by all participating law firms, including the Kirklins.
9
The Kirklins also contend that the referral agreements are not ambiguous.
Their interpretation varies dramatically from that of the Fleming Firm, however.
The Kirklins assert that the referral agreements are unambiguous because they: (1)
specifically obligated the Fleming Firm to pay a forty percent referral fee with no
mention of any deductions from that amount; and (2) did not specifically obligate
the Kirklins to pay or reimburse the Fleming Firm for anything. The Kirklins also
contend that the first sentence of the referral agreements is a recital with no
operative effect that should, in essence, be disregarded when construing the referral
agreements.
We turn to the Kirklins’ last contention first. A contract recital is a
preliminary statement explaining the background of the transaction or the reasons
for entering into the contract.3 Recitals generally are not part of a contract unless
the parties intend them to be, and they will not control a contract’s operative
clauses unless those clauses are ambiguous. All Metals Fabricating, Inc. v. Ramer
Concrete, Inc., 338 S.W.3d 557, 561 (Tex. App.—El Paso 2009, no pet.). Recitals
may be considered, however, in determining the proper construction of a contract
and the parties’ intent. Id. We need not decide whether the first sentence of each
referral agreement is a recital because even if it is, we may consider that sentence
in construing the referral agreements and should, if at all possible, reconcile it with
the operative clauses and give it effect. Id.
Examining the complete text of the referral agreements, we conclude that
they are ambiguous because, when viewed from a utilitarian standpoint and
bearing in mind the particular business activity sought to be served, their meaning
3
Furmanite Worldwide, Inc. v. NextCorp, Ltd., 339 S.W.3d 326, 336 (Tex. App.—Dallas
2011, no pet.); see also McMahan v. Greenwood, 108 S.W.3d 467, 484 (Tex. App.—Houston
[14th Dist.] 2003, pet. denied) (stating that a recital is a formal statement or setting forth of some
matter of fact that explains the reasons behind the contract or writing).
10
is uncertain and each side’s proposed construction is reasonable. Although a
reference to joint prosecution alone could imply sharing of expenses in some
fashion, the Kirklins’ forty percent contingent fee mentions no deductions.4 In
addition, joint prosecution is not an unambiguous indication that the parties agreed
to share expenses because it leaves many questions necessary to calculate the
Kirklins’ fee unanswered, including what percentage of expenses would be borne
by each party, whether any shared expenses would be limited to a particular time
frame (e.g., pre- or post-referral), how client-chargeable versus non-chargeable
expenses would be treated, and how expenses that also benefitted clients not
referred by the Kirklins would be apportioned. Finally, the agreement’s specific
provision that the Fleming Firm will pay the echocardiogram costs (which were
incurred by the Kirklins) leaves the agreement’s silence regarding other expenses
ambiguous as to whether those expenses would be shared or borne by the firm
incurring them. We therefore hold the trial court did not err when it concluded that
the referral agreements are ambiguous. See generally Phil Watkins, P.C., 2003
WL 21786173, at *5 (concluding agreement between two law firms dividing
contingent fee was ambiguous); A.W. Wright & Assoc., P.C. v. Glover, Anderson,
Chandler & Uzick, L.L.P., 993 S.W.2d 466, 470 (Tex. App.—Houston [14th Dist.]
1999, pet. denied) (holding referral contracts between two law firms ambiguous
because meaning of phrase “day-to-day handling” was uncertain); Great Nat’l
4
We note that the 2001 referral agreements’ reference to joint prosecution could have
been intended to satisfy the disciplinary rule regarding fee division in effect at the time, which
was silent regarding the division of expenses. See Tex. Disciplinary Rules Prof’l Conduct R.
1.04(f), reprinted in 777-778 S.W.2d (Texas Cases) xxxi, xlv (adopted Oct. 17, 1989, effective
Jan. 1, 1990, superseded 2005) (providing that one type of “agreement for division of a fee
between lawyers who are not in the same firm” that may be made is an agreement in which “the
division is . . . made, by written agreement with the client, with a lawyer who assumes joint
responsibility for the representation . . . .” (emphasis added)). Whether client-chargeable
expenses are deducted before or after a contingent fee is calculated must be stated in the
agreement between the lawyer and the client. See id. R. 1.04(d). Those agreements are not in
our record.
11
Corp. v. Campbell, 687 S.W.2d 450, 452 (Tex. App.—Dallas 1982, writ ref’d
n.r.e.) (concluding joint venture agreement was ambiguous due to use of word
“including”); Gibson v. Bentley, 605 S.W.2d 337, 338–39 (Tex. App.—Houston
[14th Dist.] 1980, writ ref’d n.r.e.) (holding condition in contract triggering
provision for sharing amounts to be recovered in lawsuit was susceptible of two
irreconcilable interpretations and was ambiguous).
Once a contract is determined to be ambiguous, parol evidence is admissible
to establish the parties’ intent. Lenape Res. Corp., 925 S.W.2d at 574. Because
the referral agreements are ambiguous, we hold that the trial court did not abuse its
discretion when it admitted parol evidence during the ensuing trial. See id. We
need not address the Fleming Firm’s legal sufficiency challenge because it is based
entirely on the premise that the referral agreements are unambiguous and that parol
evidence was thus not admissible during trial. We therefore overrule the Fleming
Firm’s issues on appeal.
The Kirklins’ Issues on Appeal
II. The trial court did not err when it refused to hold Fleming individually
liable in the Modified Final Judgment.
In the second issue of their cross-appeal, the Kirklins argue that the trial
court erred when it refused to hold Fleming individually liable for the Fleming
Firm’s contractual obligations.5 According to the Kirklins, Fleming should be
individually liable for the contract debt because the Fleming Firm failed to comply
with the Texas Revised Partnership Act’s (TRPA) requirements for maintaining its
status as a limited liability partnership. See Act of May 31, 1993, 73rd Leg., R.S.,
5
The Kirklins’ first issue challenged the trial court’s directed verdict on their fraud claim.
During oral argument, the Kirklins waived consideration of this issue in the event we affirmed
the judgment against the Fleming Firm on a breach-of-contract theory. Because we affirm the
judgment on that theory, we do not address the Kirklins’ fraud issue. See Tex. R. App. P. 47.1.
12
ch. 917, § 1, sec. 3.08, 1993 Tex. Gen. Laws 3887, 3894 (expired Jan. 1, 2010).
Fleming responds that: (1) TRPA does not apply; and (2) even if it does, the
Fleming Firm met all statutory requirements to qualify as a limited liability
partnership, thereby precluding his individual liability.
Assuming without deciding that TRPA applies to this dispute,6 it requires
partners seeking the protection afforded by a limited liability partnership to meet
specified requirements, including establishing financial responsibility. See id. The
statute provides alternative methods of establishing financial responsibility,
including carrying at least $100,000 of liability insurance, or maintaining $100,000
of funds specifically designated and segregated for the satisfaction of judgments
against the partnership through a bank letter of credit. Id. Although the statute
provides that the burden of proving compliance with the statute is on the person
seeking the protection of limited liability, individual partner liability is not
automatically imposed once a limited liability partnership is found liable for a
contract debt. See id. (placing burden of proof on person seeking limitation of
liability); see also Am. Star Energy & Minerals Corp. v. Stowers, 457 S.W.3d 427,
429 (Tex. 2015) (stating that judgment against partnership is not by itself a
judgment against partner); Kao Holdings, L.P. v. Young, 261 S.W.3d 60, 64 (Tex.
2008) (stating that judgment against limited partnership is not automatically a
6
TRPA expired January 1, 2010. See Ingram v. Deere, 288 S.W.3d 886, 894 n. 4 (Tex.
2009) (noting statutes governing Texas partnerships). On January 1, 2006, the Texas Business
Organizations Code replaced TRPA. Id. The parties dispute which law controls this long-
running litigation. Compare Tex. Bus. Orgs. Code Ann. § 402.006 (West 2012) (“The prior law
governs the acts, contracts, or transactions of the entity or its managerial officials, owners, or
members that occur before the mandatory application date [of January 1, 2010].”) with Knight v.
Int’l Harvester Credit Corp., 627 S.W.2d 382, 384 (Tex. 1982) (stating that if a statute is
repealed or amended without a savings clause for pending suits, the repeal is given immediate
effect).
13
judgment against the general partner).7
The trial court separated the question of Fleming’s individual liability from
the initial question whether the Fleming Firm breached the referral agreements.8
After the jury returned its verdict in favor of the Kirklins, the Kirklins filed a
motion seeking a determination of whether the Fleming Firm had complied with
the financial responsibility provisions of the TRPA.
Fleming and the Fleming Firm filed a response in which they argued that
Fleming was not individually liable because the Fleming Firm had always
complied with the financial responsibility requirements set forth in the TRPA. In
an affidavit attached to the response, Fleming testified that since its formation in
1999, the Fleming Firm: (1) “had carried general liability insurance with policy
limits of between $1,000,000 and $2,000,000;” and (2) “had access to a
multimillion dollar line of credit. . . .” Fleming also included in the response a
request for a jury trial to resolve any fact issues related to the Fleming Firm’s
compliance with the financial responsibility requirements set forth in the TRPA.
The Kirklins did not file any evidence disputing Fleming’s affidavit. The Kirklins
also did not file a motion for summary judgment,9 nor was there a jury trial on the
7
Article 6132b-3.08(d)(3) of TRPA provides:
If compliance with Subdivision (1) is disputed:
(A) compliance must be determined separately from the trial or proceeding to
determine the partnership debt or obligation in question, its amount, or
partner liability for the debt or obligation; and
(B) the burden of proof of compliance is on the person claiming limitation of
liability under Subsection (a)(2).
Act of May 31, 1993, 73rd Leg., R.S., ch. 917, § 1, sec. 3.08(d)(3), 1993 Tex. Gen. Laws 3887,
3896 (expired Jan. 1, 2010).
8
The Kirklins do not complain about this ruling on appeal.
9
The Kirklins assert in their cross-appellant’s brief that their motion was actually a no-
evidence motion for summary judgment on their cause of action seeking a declaratory judgment
14
issue of Fleming’s individual liability. The trial court’s modified final judgment
ultimately did not hold Fleming individually liable.
We conclude that Fleming and the Fleming Firm presented evidence
conclusively demonstrating compliance with TRPA’s financial responsibility
provisions. Faced with Fleming’s evidence of compliance, the burden passed to
the Kirklins to either (1) file a motion for summary judgment seeking to prove as a
matter of law that the Fleming Firm failed to comply with the financial
responsibility requirements of the limited liability partnership statute; or (2) submit
the issue to a jury for resolution. See Evanston Ins. Co. v. Dillard Dept. Stores,
Inc., 602 F.3d 610, 612 (5th Cir. 2010) (resolving issue of individual liability of
former partners in dissolved limited liability partnership through a motion for
summary judgment); see also Dynegy, Inc. v. Yates, 422 S.W.3d 638, 642–43 (Tex.
2013) (stating that burden shifted to plaintiff to establish an exception once
on Fleming’s individual liability. Even if we assume that the Kirklins sought a declaratory
judgment on the issue of Fleming’s individual liability, we disagree that their motion was a no-
evidence motion for summary judgment. First, the motion was not identified as a no-evidence
motion for summary judgment in its title or in the notice of hearing. See Grimes v. Reynolds, 252
S.W.3d 554, 558 (Tex. App.—Houston [14th Dist.] 2008, no pet.) (stating that a motion that
does not clearly state that it is a motion for no-evidence summary judgment does not give the
nonmovant notice that the movant is seeking a no-evidence motion for summary judgment);
Lesikar v. Moon, 237 S.W.3d 361, 369 (Tex. App.—Houston [14th Dist.] 2007, pet. denied)
(stating that Rule 166a’s notice requirements must be strictly construed). Second, the Kirklins’
motion did not specifically state the elements on which Fleming had the burden of proof and as
to which there was no evidence. See Jose Fuentes Co., Inc. v. Alfaro, 418 S.W.3d 280, 288 (Tex.
App.—Dallas 2013, pet denied) (“A motion for no-evidence summary judgment that does not
specify the element or elements that are being challenged does not provide any ground upon
which the trial court can grant summary judgment.”); Specialty Retailers, Inc. v. Fuqua, 29
S.W.3d 140, 147 (Tex. App.—Houston [14th Dist.] 2000, pet. denied) (“A motion for no-
evidence summary judgment must specifically ‘state the elements as to which there is no
evidence,’ there may be no ‘conclusory motions or general no-evidence challenges to an
opponent’s case.’”). This requirement to state the elements was particularly important here,
because although Fleming would have the burden of proving compliance with TRPA, the
Kirklins had the burden to prove any other elements necessary to obtain affirmative relief against
Fleming in the form of a declaratory judgment. See Russell v. City of Bryan, 919 S.W.2d 698,
704 (Tex. App.—Houston [14th Dist.] 1996, writ denied). The Kirklins could not establish those
elements through a no-evidence motion for summary judgment. See Tex. R. Civ. P. 166a(i).
15
defendant conclusively established statute of frauds affirmative defense). The
Kirklins did neither and therefore waived the issue of Fleming’s individual liability
for the contract debt. See Tex. R. Civ. P. 279 (“Upon appeal all independent
grounds of recovery or defense not conclusively established under the evidence
and no element of which is submitted or requested are waived.”); Dynegy, Inc., 422
S.W.3d at 643 (holding plaintiff’s failure to secure favorable findings on exception
to statute of frauds affirmative defense constituted waiver of the issue under Rule
279); Triplex Commc’ns, Inc. v. Riley, 900 S.W.2d 716, 718 (Tex. 1995) (“If an
issue is properly pleaded and is supported by some evidence, a litigant is entitled to
have controlling questions submitted to the jury.”); Lane-Valente Indus. (Nat’l),
Inc., 468 S.W.3d at 204 (observing that a party has a right to submit contested fact
issues to a jury for resolution).10 We overrule the Kirklins’ second issue of their
cross-appeal.
III. This Court’s precedent precludes the Kirklins from recovering
attorneys’ fees from the Fleming Firm.
In their fourth issue, the Kirklins assert that the trial court erred when it
refused to award their attorneys’ fees against the Fleming Firm, a limited liability
partnership.11 This Court has held that section 38.001 of the Civil Practices and
10
The Kirklins cite two cases in support of their argument that the Fleming Firm failed to
comply with the financial responsibility provisions of TRPA. We conclude that neither case
supports their position. In Edward B. Elmer, M.D., P.A. v. Santa Fe Prop., Inc., No. 04-05-
00821-CV, 2006 WL 3612359, at *2 (Tex. App.—San Antonio Dec. 13, 2006, no pet.) (mem.
op.), the court of appeals held that the defendant was not a properly registered limited liability
partnership because there was no evidence that the partnership, rather than the individual doctor,
had any form of insurance or other form of financial responsibility designated in the statute.
Similarly, in Apcar Inv. Partners VI, Ltd. v. Gaus, 161 S.W.3d 137, 140–42 (Tex. App.—
Eastland 2005, no pet.), the court held that the partnership was not a properly registered limited
liability partnership because the liability at issue arose after the partnership’s registration expired
and was not renewed. Neither of those situations is present here.
11
In their third issue, the Kirklins argue that the trial court erred when it did not order
Fleming to pay their attorneys’ fees. We overrule this issue because we have affirmed the trial
16
Remedies Code does not authorize an award of attorneys’ fees against a limited
liability partnership. Fleming & Assoc., L.L.P. v. Barton, 425 S.W.3d 560, 576
(Tex. App.—Houston [14th Dist.] 2014, pet. denied). As the Fleming Firm is a
limited liability partnership, and section 38.001 of the Civil Practice and Remedies
Code is the only basis upon which the Kirklins sought attorneys’ fees, we hold that
the trial court did not err when it refused to award the Kirklins’ attorneys’ fees
against the Fleming Firm. Id. We overrule the Kirklins’ fourth issue on appeal.
CONCLUSION
Having overruled the issues raised by the Fleming Firm and by the Kirklins,
we affirm the trial court’s judgment.
/s/ J. Brett Busby
Justice
Panel consists of Justices Jamison, Busby, and Brown.
court’s refusal to hold Fleming individually liable for breach of contract. See 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.”).
17