Thomas Phillips v. American Bankers Insurance Company of Florida

Opinion issued July 16, 2019
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-18-00375-CV
———————————
THOMAS PHILLIPS, Appellant
V.
AMERICAN BANKERS INSURANCE COMPANY OF FLORIDA, Appellee
On Appeal from County Court
Waller County, Texas
Trial Court Case No. C17-129
MEMORANDUM OPINION
After his home was damaged during Hurricane Harvey, Thomas Phillips
sued American Bankers Insurance Company of Florida (“ABIC”) for breaching the
homeowner’s policy it had issued to him. ABIC moved to dismiss the suit based on
Rule of Civil Procedure 91a and Insurance Code Chapter 542A.1 The trial court
granted the motion and signed a judgment dismissing the suit without prejudice to
refiling it. Less than 30 days later, ABIC filed a motion to modify the judgment.
The trial court denied the motion but signed an order awarding, among other relief,
sanctions to ABIC to be paid, jointly and severally, by Phillips and his attorney.
On appeal, Phillips raises three issues. In his first issue, Phillips claims that
the trial court lacked plenary power to award the post-judgment sanctions. In his
second and third issues, Phillips contends that the trial court abused its discretion
in sanctioning him.
We disagree that the trial court lacked plenary power to sign the post-
judgment order, but we agree with Phillips that the trial court abused its discretion
in sanctioning him. Accordingly, we reverse the trial court’s award of sanctions
against Phillips and render judgment that ABIC take nothing from him. We
otherwise affirm the judgment.
Background
Phillips filed a claim with ABIC under his homeowner’s policy to recover
insurance money for damage to his home caused by Hurricane Harvey. Phillips
retained counsel who sued ABIC on Phillips’s behalf. The suit alleged that the two
sides could not agree regarding the amount of loss to the home. Phillips’s amended
1
See TEX. R. CIV. P. 91a.1–.9; TEX. INS. CODE §§ 542A.001–.007.
2
petition claimed that ABIC breached the insurance policy by refusing to engage in
the appraisal process as the policy required. Phillips asked the trial court to order
ABIC to participate in the appraisal process.
ABIC answered and moved to dismiss the suit. ABIC asserted that the suit
should be dismissed because the breach of contract claim was not ripe. ABIC
pointed out that, under the terms of the insurance policy, an appraisal was not
required until Phillips made a written demand for an appraisal, and he had not
made such a demand.
Citing Supreme Court of Texas case authority, ABIC explained that an
appraisal is intended to take place before a suit is filed as a condition precedent to
suit. See State Farm Lloyds v. Johnson, 290 S.W.3d 886, 894 (Tex. 2009). ABIC
relied on the supreme court’s statement that “[a]ppraisals require no attorneys, no
lawsuits, no pleadings, no subpoenas, and no hearings.” Id. And ABIC pointed out
that “the right to demand an appraisal accrues when the parties reach an impasse in
their negotiations” regarding the amount of loss. See In re Universal Underwriters
of Tex. Ins. Co., 345 S.W.3d 404, 412 (Tex. 2011) (orig. proceeding). ABIC
indicated that no impasse had been reached. ABIC stated that, to the contrary, the
parties were still in the pre-suit stages, attempting to resolve the insurance claim
without the necessity of litigation. ABIC also asserted that the suit should be
3
dismissed because Phillips did not comply with Insurance Code Chapter 524A’s
pre-suit notice requirements. See TEX. INS. CODE §§ 542A.001–.007.2
In its motion to dismiss, ABIC also sought attorney’s fees and sanctions.
ABIC requested sanctions against Phillips and his attorney under Rule 13 of the
Rules of Civil Procedure and Chapters 9 and 10 of the Civil Practice and Remedies
Code. See TEX. R. CIV. P. 13; TEX. CIV. PRAC. & REM. CODE §§ 9.001–.014,
10.001–.006. ABIC claimed that it was entitled to sanctions because Phillips’s
petition was frivolous and groundless.
At the hearing on the motion to dismiss, ABIC asserted that the suit should
be dismissed because Phillips had not complied with the pre-suit notice
requirements of Insurance Code Chapter 542A. ABIC also emphasized that
Phillips’s breach of contract claim, based on the allegation that ABIC would not
engage in the appraisal process, was premature because ABIC had not been given
the opportunity to conduct an appraisal. ABIC explained that Phillips had not
invoked the appraisal process by providing ABIC proper written notification
regarding his claim. ABIC stated that Phillips had provided an estimate of his
2
Chapter 542A applies to an action on a claim against an insurer, including actions
alleging breach of contract. See TEX. INS. CODE § 542A.002(a)(1). Section
542A.003 provides that “not later than the 61st day before the date a claimant files
an action to which this chapter applies in which the claimant seeks damages from
any person, the claimant must give written notice” that complies with the specific
requirements of that section. Id. § 542A.003.
4
damages to ABIC but had done so less than a week before the hearing, not
affording ABIC an opportunity to begin the appraisal process.
To provide ABIC the opportunity to engage in the appraisal process, the trial
court recessed the hearing for two weeks. ABIC immediately appointed an
appraiser. The appraiser went to Phillips’s home where the appraiser discovered
that Phillips had already made repairs. Because the home had been repaired, an
appraisal could not be performed.
When the hearing on the dismissal motion reconvened, ABIC informed the
trial court that it could not conduct the appraisal because the home had been
repaired. The trial court noted on the record that the relief Phillips had requested
was an order requiring ABIC to appraise the home. The trial court agreed with
ABIC that the suit should be dismissed because Phillips’s claim for appraisal was
mooted by the repair of the home.
Phillips opposed the dismissal. He asserted that he anticipated ABIC would
ultimately deny coverage under the insurance policy. The trial court informed
Phillips that it would dismiss the suit without prejudice, allowing Phillips to refile
the suit should he ultimately believe coverage was wrongfully denied.
At the end of the hearing, Phillips’s counsel asked whether the dismissal
order would include sanctions, and ABIC’s counsel stated on the record that the
order would not include sanctions. On January 18, 2018, the trial court signed an
5
order dismissing the case without prejudice. No sanctions or attorney’s fees were
awarded.
Less than 30 days later, on February 13, 2018, ABIC filed a motion to
modify the judgment of dismissal. ABIC requested $9,287.31 for attorney’s fees it
claimed to have incurred from the filing of Phillips’s suit through the suit’s
dismissal. ABIC asserted it was entitled to these fees under Rule of Civil
Procedure 91a.7. It offered the affidavit of its attorney to support the amount of the
fees.
In the motion to modify, ABIC also informed the trial court that “the
appraisal of the underlying insurance claim remain[s] ongoing.” ABIC explained
that, after the suit was dismissed, it sent a letter to Phillips’s attorney and copied
Phillips, requesting Phillips and his wife to submit to an examination under oath
(“EUO”) as part of its investigation of Phillips’s claim. ABIC relied on a provision
in the insurance policy requiring Phillips to submit to an EUO if requested.
The EUO was scheduled to take place at the courthouse in Hempstead,
Texas on January 30, 2018. ABIC never heard from Phillips or his attorney
regarding whether they would attend the EUO. On the day of the EUO, ABIC’s
attorney drove from Fort Worth to Hempstead; however, neither Phillips nor his
attorney showed up for the EUO.
6
In its motion to modify, ABIC also sought “abatement of the appraisal
process” and recovery of its attorney’s fees incurred for its attorney to travel from
Fort Worth to Hempstead for the EUO. ABIC asserted that Phillips’s “failure to
appear at the EUO as required in the policy breached an underlying condition of
the insurance contract.” ABIC requested “its reasonable costs and attorney’s fees
under Chapter 38 of the Texas Civil Practice and Remedies Code.”3 ABIC claimed,
“The total reasonable and necessary attorney’s fees and costs incurred by ABIC
between dismissal of the underlying suit on January 18, 2018 through February 8,
2018 was $3,954.12.” ABIC did not request sanctions in the motion.
The trial court conducted a telephonic hearing on ABIC’s motion to modify
the dismissal judgment. On February 22, 2018, the trial court signed an order
regarding the motion, which provides as follows:
After considering ABIC’s Motion [to Modify], evidence and
arguments of counsel, the Court makes the following findings:
1. The Court properly granted ABIC’s Motion to Dismiss by
Order entered and rendered January 18, 2018;
2. This Court retains plenary power to modify the January 18,
2018 Order under Rule 329b(g) of the Texas Rules of Civil
3
Under Chapter 38 of the Civil Practice and Remedies Code, a party that prevails in
a contract suit and recovers damages is entitled to an award of attorney’s fees. See
Intercontinental Grp. P’ship v. KB Home Lone Star L.P., 295 S.W.3d 650, 653,
655–56 (Tex. 2009) (stating that, to recover attorney’s fees under Civil Practice
and Remedies Code Chapter 38, party must “prevail on a cause of action for which
attorney’s fees are recoverable”).
7
Procedure because this Motion was filed within 30 days of the
final order;
3. The Court finds that plaintiff’s counsel and plaintiff committed
sanctionable conduct after entry of the Order dismissing their case
by refusing to attend and by failing to notify ABIC’s counsel of
their refusal to attend the properly requested and noticed
examination under oath on January 30th;
4. The Court finds that ABIC incurred attorney’s fees relating to
the examination under oath that plaintiff and plaintiff’s counsel
should reimburse.
In accordance with the Court’s findings, the following rulings are
issued:
1. The Court denies Defendant’s Motion to Modify Judgment;
2. The appraisal is abated until such time as the requested
examinations under oath have been completed; and
3. ABIC is entitled to reasonable and necessary costs and
attorney’s fees in the amount of $3,954.12 for the refusal of
plaintiff, plaintiff’s wife and plaintiff’s counsel to appear for the
Examinations Under Oath.
IT IS ORDERED and ADJUDGED that the appraisal be abated until
such time as plaintiff complies with the request of ABIC to take the
insureds’ examinations under oath; and plaintiff and/or plaintiff’s
attorney must pay $3,954.12 as sanctions for their wrongful conduct.
The trial court then filed findings of fact and conclusions of law. Regarding
the “sanctionable conduct” identified in the order, the trial court made the
following findings and conclusions:
8
Findings of Fact
1.29. After the dismissal, defendant [ABIC] properly requested the
examination under oath of the insureds for January 30th.
1.30. The notice was properly served on plaintiff’s [Phillips’s] counsel
and on the insureds directly. (Mrs. Phillips is not a party to the suit nor
represented by counsel.)
1.31. [ABIC’s] counsel sent two letters and numerous emails to the
plaintiff’s counsel asking if the insureds were going to appear at the
noticed examinations under oath.
1.32. Plaintiff’s counsel refused to confirm or deny whether plaintiff
(named insured), his wife (named insured but not a plaintiff to the
suit) and plaintiff’s counsel would appear as noticed.
1.33. Defendant’s counsel drove from Fort Worth to Hempstead and
appeared for the examinations under oath, but plaintiff, plaintiff’s
counsel and Mrs. Phillips (named insured) refused to appear and
produce the documents requested.
1.34. Plaintiff’s counsel reason for the insureds’ refusal to appear was
“[w]e never told her [carrier’s counsel] we would appear.”
1.35. Defendant filed a motion to modify the judgment to seek
recovery of its attorneys’ fees under Rule 91a and under Chapter 38A
on February 13, 2018.
....
1.42. The court again denied defendant’s request to modify the
judgment to award fees for the dismissal.
1.43. Plaintiff’s counsel acted improperly in instructing the insured’s
not to attend their examinations under oath.
1.44. Plaintiff’s counsel acted improperly in failing to advise
defendant’s counsel that they would not appear.
9
1.45. Plaintiff’s counsel knowingly wasted the time of defense
counsel by refusing to inform her that they would not appear.
1.46. Sanctions are proper for the conduct of plaintiff’s counsel in
interfering with the carrier’s rights to gather information and
documents concerning the loss.
1.47. Sanctions are proper against the insureds for failing to appear
without excuse at the examinations under oath.
1.48. Proper sanctions are: reimbursement of attorneys’ fees and
expenses for taking the certificates of nonappearance and abatement
of the appraisal pending the insured’s cooperation with the request for
examination.
1.49. Defendant’s counsel incurred reasonable and necessary
attorney’s fees and costs of $3,954.12 for attending the examinations
under oath and taking certificates of non-appearance.
Conclusions of Law
....
2.1.6. Defendant properly noticed the insureds for an examination
under oath.
2.1.7. Sitting for an examination under oath is a condition precedent to
suit. Refusing to sit for an examination under oath constitutes failure
to cooperate and failure to meet a condition precedent to suit.
2.1.8. Defendant incurred unnecessary expenses and costs based on
the plaintiff’s failure to cooperate and comply with a condition
precedent under the policy.
2.1.9. The conduct of plaintiff’s counsel violated the Texas Rules of
Disciplinary Conduct. The specific violations are:
2.2. A lawyer shall keep a client reasonably informed about the status
of the matter and promptly comply with reasonable requests for
information.
10
2.3. A lawyer shall explain a matter to the extent reasonably necessary
to permit the client to make an informed decision regarding the
representation.
2.3.1. The conduct of plaintiff’s counsel violate[d] Rule 3.04 of the
ethical rules which provides:
A lawyer shall not:
Unlawfully obstruct another party’s access to evidence; in
anticipation of a dispute unlawfully alter, destroy, or conceal a
document or other material that a competent lawyer would
believe has potential or actual evidentiary value; or counsel or
assist another person to do such act.
2.3.2. The insureds, including plaintiff Thomas Phillips failed, without
explanation, to attend the requested examinations under oath.
2.3.3. The proper sanction for conduct of plaintiff, plaintiff’s wife and
plaintiff’s counsel is the award of reasonable and necessary attorney’s
fees.
On appeal, Phillips challenges the trial court’s sanctions award against him.
Trial Court’s Plenary Power
In his first issue, Phillips contends that the trial court was without authority
to award the sanctions against him because it lacked plenary power at the time it
signed the post-judgment order on ABIC’s motion to modify judgment. See Martin
v. Tex. Dep’t of Family & Protective Servs., 176 S.W.3d 390, 392 (Tex. App.—
Houston [1st Dist.] 2004, no pet.) (“After a trial court loses plenary power,
however, it has no authority to award sanctions.”). We disagree that the trial court
did not have plenary power at the time it awarded the sanctions.
11
A trial court retains jurisdiction over a case for 30 days after it signs a final
judgment or order. TEX. R. CIV. P. 329b(d). During this period, the trial court has
plenary power to modify its judgment, but, after 30 days has passed, the trial court
loses its plenary power, and lacks jurisdiction to act in the case. See Martin, 176
S.W.3d at 392 (citing Check v. Mitchell, 758 S.W.2d 755, 756 (Tex. 1988)).
However, a party can extend the trial court’s plenary power by filing an
appropriate post-judgment motion, such as a motion to modify, correct, or reform
the judgment, within 30 days after the trial court signs the final judgment or order.
See TEX. R. CIV. P. 329b(a), (g). The timely filing of an appropriate post-judgment
motion extends the trial court’s plenary power “until thirty days after all such
timely-filed motions are overruled, either by a written and signed order or by
operation of law, whichever occurs first.” TEX. R. CIV. P. 329b(e).
A timely motion to modify extends the trial court’s jurisdiction over its
judgment up to an additional 75 days, depending on when or whether the court acts
on the motions. Martin, 176 S.W.3d at 392 (citing TEX. R. CIV. P. 329b(c);
Philbrook v. Berry, 683 S.W.2d 378, 379 (Tex. 1985)). If a motion to modify a
judgment is not denied in a written order, then the motion is overruled by operation
of law 75 days after the trial court signs the judgment. TEX. R. CIV. P. 329b(c), (g).
The trial court retains plenary power to alter its judgment for 30 days after the
12
motion to modify is overruled by written order or by operation of law. TEX. R. CIV.
P. 329b(c), (e).
Here, the trial court signed the final judgment of dismissal on January 18,
2018. Less than 30 days later, on February 13, 2018, ABIC timely filed its motion
to modify the trial court’s judgment. See TEX. R. CIV. P. 329b(a), (g). The trial
court then had 75 days from January 18, 2018 (that is, April 3, 2018) to rule on the
motion, or the motion would be overruled by operation of law. See TEX. R. CIV. P.
329b(c), (g). The trial court’s plenary power continued during this 75-day period.
See Penny v. Shell Oil Prods. Co., 363 S.W.3d 694, 697 (Tex. App.—Houston [1st
Dist.] 2011, no pet.). The trial court overruled the motion to modify and signed the
order awarding sanctions against Phillips on February 22, 2018, well within its
plenary power. See TEX. R. CIV. P. 329b(c), (g).
We overrule Phillips’s first issue.
Sanctions Award
In his second and third issues, Phillips challenges the trial court’s award of
sanctions against him.
A. Standard of Review
We review the imposition of sanctions under an abuse-of-discretion
standard. Nath v. Tex. Children’s Hosp., 446 S.W.3d 355, 361 (Tex. 2014). An
appellate court may reverse the trial court’s ruling only if the trial court acted
13
without reference to any guiding rules and principles, such that its ruling was
arbitrary or unreasonable. Id. We will not find an abuse of discretion in awarding
sanctions if some evidence supports the trial court’s decision. Id.
In reviewing a sanctions order for an abuse of discretion, we are not bound
by a trial court’s findings of fact and conclusions of law. Am. Flood Research, Inc.
v. Jones, 192 S.W.3d 581, 583 (Tex. 2006). Any “findings of fact” made by a trial
court in support of a sanctions order are not treated on appeal as findings under
Rule 296 of the Rules of Appellate Procedure. Clark v. Bres, 217 S.W.3d 501, 513
(Tex. App.—Houston [14th Dist.] 2006, pet. denied). In other words, our review of
a sanctions order is not limited to evaluating the sufficiency of the evidence
supporting a trial court’s findings. Liles v. Contreras, 547 S.W.3d 280, 287 (Tex.
App.—San Antonio 2018, pet. denied). Rather, we must conduct an independent
review of the entire record to determine whether there has been an abuse of
discretion. Am. Flood Research, 192 S.W.3d at 583; Liles, 547 S.W.3d at 287. The
purpose of findings made following the imposition of sanctions is to assist the
appellate court in its analysis, assure judicial deliberation, and enhance the
deterrent effect of the sanctions order itself. Liles, 547 S.W.3d at 287.
A. Analysis
Phillips and his counsel did not appear for the EUO, which had been
unilaterally scheduled by ABIC after the trial court signed the judgment of
14
dismissal. The trial court ordered Phillips “and/or” his attorney to pay $3,954.12 as
sanctions, an amount representing the attorney’s fees incurred by ABIC for its
attorney to attend the EUO.
Phillips argues that the trial court abused its discretion in assessing sanctions
because the suit had been dismissed, and the EUO was not related to any pending
or ongoing judicial matter, including the trial court’s enforcement of its judgment
or enforcement of its jurisdiction. Phillips points out that the post-judgment EUO
was outside the trial court’s oversight; there was no court order requiring or
regulating the EUO. Instead, the EUO was contemplated by the insurance policy to
aid ABIC in its investigation of Phillips’s insurance claim.
When the trial court imposed the sanctions, there was no request for
sanctions pending. ABIC had requested sanctions in its motion to dismiss the suit,
asserting Phillips’s petition was frivolous and citing Rule of Civil Procedure 13
and Chapters 9 and 10 of the Civil Practice and Remedies Code. However, ABIC
stated on the record during the hearing on the motion to dismiss that it was not
pursuing sanctions. After the case was dismissed, ABIC filed its motion to modify
the judgment. ABIC requested attorney’s fees in the motion to modify, but it did
not request sanctions in the motion.
In its order on the motion to modify, in which sanctions were assessed, the
trial court identified the “sanctionable conduct” as the failure of Phillips and his
15
attorney to attend the EUO. Specifically, the order states that the trial court found
Phillips and his attorney “committed sanctionable conduct after entry of the Order
dismissing their case by refusing to attend and by failing to notify ABIC’s counsel
of their refusal to attend the properly requested and noticed examination under oath
on January 30th.” The sanctions awarded were the amount of attorney’s fees ABIC
claimed to have incurred for its attorney to attend the EUO.
Although the order specifies the factual basis for the sanctions, the trial
court’s order does not specify the legal basis for the sanctions award. By his
arguments on appeal, Phillips contends there is no valid legal basis for the
sanctions against him. After reviewing the possible legal bases for the sanctions,
we agree that no legal basis supports the sanctions against Phillips.
Chapter 10 of the Civil Practice and Remedies Code authorizes sanctions
against one who signs a frivolous pleading or motion, and Rule of Civil Procedure
13 permits sanctions against one who signs a groundless pleading or motion. See
TEX. R. CIV. P. 13; TEX. CIV. PRAC. & REM. CODE §§ 10.001–.006. Chapter 9 also
precludes parties from filing pleadings that are groundless and allows the trial
court to award sanctions against a party who files such a pleading.4 See TEX. CIV.
PRAC. & REM. CODE. §§ 9.011–.012. As discussed, ABIC abandoned its claim for
4
Chapter 9 only applies in proceedings in which neither Rule 13 nor Chapter 10
applies. TEX. CIV. PRAC. & REM. CODE § 9.012(h).
16
sanctions under Chapters 9 and 10 and under Rule 13 at the hearing on the motion
to dismiss. In addition, the trial court’s order shows that the sanctions were
assessed based on Phillips’s failure to appear at the EUO, not based on frivolous or
groundless pleadings.
The only remaining legal basis to support the trial court’s sanctions award
would be the court’s inherent authority.5 A trial court possesses the inherent
authority to impose sanctions for a bad faith abuse of the judicial process even
when the specific conduct is not covered by a rule or statute. See In re Bennett, 960
S.W.2d 35, 40 (Tex. 1997) (holding that courts possess inherent power to
discipline attorney’s behavior); Eichelberger v. Eichelberger, 582 S.W.2d 395,
398–99 (Tex. 1979) (recognizing that court has inherent power to impose sanctions
to aid in exercise of its jurisdiction, in administration of justice, and in preservation
of its independence and integrity). This inherent power exists to enable courts to
effectively perform their judicial functions and to protect their dignity,
independence, and integrity. Darnell v. Broberg, 565 S.W.3d 450, 460 (Tex.
App.—El Paso 2018, no pet.).
A trial court may exercise this inherent authority as necessary to deter,
alleviate, or counteract a bad faith abuse of the judicial process. Liles, 547 S.W.3d
5
Discovery abuses can also result in sanctions, see TEX. R. CIV. P. 215.1–5, as can
the failure to deliver copies of pleadings and motions to other parties to an action,
TEX. R. CIV. P. 21b. However, neither scenario is applicable here.
17
at 290. This includes sanctions imposed for interference with a court’s traditional
core functions, which include hearing evidence, deciding issues of fact raised by
the pleadings, deciding questions of law, rendering final judgment, enforcing its
judgment, managing its docket, and issuing and enforcing its orders. Id. at 290–91.
Here, Phillips’s non-attendance of the EUO did not interfere with the trial
court’s traditional core functions. ABIC did not request Phillips to attend the EUO
until after the suit had been dismissed. No orders were in place relating to the
EUO. Nothing in the record indicates that the EUO was being conducted under the
trial court’s auspices, supervision, or control. Instead, the EUO requirement is
found in the insurance policy between Phillips and ABIC. The policy required
Phillips to submit to an EUO, if requested by ABIC, to aid in determining the
extent to which the damage to his home is a covered loss under the policy. Thus,
because the EUO was not part of the judicial process in this case, the trial court
could not use its inherent authority to sanction Phillips for failing to attend the
EUO.
A court may also use its inherent power to impose sanctions for conduct
that, if tolerated, “breeds disrespect for and threatens the integrity of our judicial
system.” In re Bennett, 960 S.W.2d at 40. Here, the trial court cited the
Disciplinary Rules of Professional Conduct to support the imposition of sanctions
18
for Phillips’s failure to appear at the EUO. Specifically, the trial court made the
following conclusions of law:
2.1.9. The conduct of [Phillips’s] counsel violated the Texas Rules of
Disciplinary Conduct. The specific violations are:
2.2. A lawyer shall keep a client reasonably informed about the
status of the matter and promptly comply with reasonable requests
for information.
2.3. A lawyer shall explain a matter to the extent reasonably
necessary to permit the client to make an informed decision
regarding the representation.6
2.3.1. The conduct of [Phillips’s] counsel violate[d] Rule 3.04 of
the ethical rules which provides:
A lawyer shall not:
Unlawfully obstruct another parties access to evidence; in
anticipation of a dispute unlawfully alter, destroy, or conceal a
document or other material that a competent lawyer would
believe has potential or actual evidentiary value; or counsel or
assist another person to do such act.7
Related to these conclusions, the trial court found that Phillips’s counsel
“acted improperly in failing to advise [ABIC’s] counsel that they would not appear
[at the EUO]” and that Phillips’s counsel “knowingly wasted the time of defense
counsel by refusing to inform her that they would not appear [at the EUO].” The
6
Conclusions of law 2.2 and 2.3 match the language of Texas Rule of Professional
Conduct 1.03. See TEX. DISCIPLINARY RULES PROF’L CONDUCT R. 1.03, reprinted
in TEX. GOV’T CODE, tit. 2, subtit. G, app. A.
7
See TEX. DISCIPLINARY RULES PROF’L CONDUCT R. 3.04(a).
19
trial court also found that Phillips’s attorney “acted improperly in instructing
[Phillips] not to attend [the] examinations under oath.”
The Disciplinary Rules do not empower or otherwise operate as a source of
authority to impose sanctions but have been cited by courts in conjunction with a
court’s inherent authority to sanction inappropriate attorney conduct. See Greene v.
Young, 174 S.W.3d 291, 298 n.3 (Tex. App.—Houston [1st Dist.] 2005, pet.
denied); see also In re Terminix Int’l, Co., 131 S.W.3d 651, 653–54 (Tex. App.—
Corpus Christi 2004, orig. proceeding) (imposing sanctions pursuant to court’s
inherent power to sanction for conduct in course of original proceeding that
violated Rules of Professional Conduct); Johnson v. Johnson, 948 S.W.2d 835,
840–41 (Tex. App.—San Antonio 1997, writ denied) (relying on appellate court’s
inherent power to discipline attorney misconduct, which violated Rules of
Professional Conduct, to support imposing sanctions against attorney for
disparaging remarks about trial court). In any event, a violation of the Disciplinary
Rules by Phillips’s attorney cannot be attributed to Phillips, his non-lawyer client.
Cf. Darnell v. Broberg, 565 S.W.3d 450, 467 (Tex. App.—El Paso 2018, no pet.)
(holding that it was appropriate to sanction attorney alone and not his client when
sanctionable acts were those commonly within control of an attorney and his office
and all sanctionable conduct was undertaken by attorney). Thus, we conclude that
20
there was no legal basis for the trial court to sanction Phillips for his failure to
appear at the EUO.
Finally, we are mindful that the imposition of sanctions must be in
accordance with due process. Nath, 446 S.W.3d at 363. In short, “a sanction must
be neither unjust nor excessive.” Id. To be a just sanction requires a direct
relationship between the offensive conduct, the offender, and the sanction imposed.
Id. A sanction is just if it is directed against the abusive conduct “with an eye
toward remedying the prejudice caused to the innocent party,” and is “visited upon
the true offender.” Id.
Here, the trial court expressly identified Phillips’s attorney as the motivating
force behind Phillips’s failure to appear at the EUO. In its findings of fact, the trial
court found that the attorney improperly instructed Phillips not to appear at the
EUO. Phillips should not be faulted for following the professional advice of his
counsel. Nothing in the record suggests that Phillips had any nefarious motivation
with respect to the EUO or that he did anything other than rely on his attorney’s
instruction. We conclude that sanctioning Phillips was unjust because the record
shows him not to be the “true offender” with respect to the sanctionable conduct.
See TransAmerican Nat. Gas Corp. v. Powell, 811 S.W.2d 913, 917 (Tex. 1991)
(recognizing that party should not be punished for counsel’s conduct in which
21
party is not implicated apart from having entrusted its legal representation to
counsel).
****
In sum, there was no legal basis to sanction Phillips, and the sanctions
imposed against him are not just. Thus, we hold that the trial court abused its
discretion by sanctioning Phillips. 8 We sustain Phillips’s second and third issues.
8
We do not decide whether sanctioning Phillips’s attorney was appropriate. The
notice of appeal does not list the attorney as an appellant, nor did the attorney file
his own notice of appeal. We note that courts of appeals have held that an attorney
who wishes to appeal sanctions must either join in a party’s notice of appeal or file
his own. See Benavides v. Knapp Chevrolet, Inc., No. 01-08-00212-CV, 2009 WL
349813, at *3 (Tex. App.—Houston [1st Dist.] Feb. 12, 2009, no pet.) (mem. op.)
(concluding sanctioned attorney who did not file notice of appeal was not entitled
to relief on appeal); see also Sluder v. Ogden, No. 03-10-00280-CV, 2011 WL
116058, at *2 (Tex. App.—Austin Jan. 13, 2011, pet. denied) (mem. op.)
(concluding court lacked jurisdiction over sanctioned attorney’s appeal where
attorney failed to properly file notice of appeal); Niera v. Frost Nat’l Bank, No.
04-09-00224-CV, 2010 WL 816191, *2 (Tex. App.—San Antonio Mar. 10, 2010,
pet. denied) (mem. op.) (same); Matbon, Inc. v. Gries, 287 S.W.3d 739, 740 (Tex.
App.—Eastland 2009, no pet.) (dismissing appeal of attorney sanctions for want of
jurisdiction when party lacked standing to appeal and notice of appeal did not list
attorney as appellant).
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Conclusion
We reverse the trial court’s award of $3,954.12 in sanctions against Phillips
and render judgment that ABIC take nothing from him with respect to the
sanctions. We affirm the remainder of the judgment.
Laura Carter Higley
Justice
Panel consists of Chief Justice Radack and Justices Higley and Hightower.
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