Edom Corner, LLC and Earl Berry, Jr. v. It's the Berry's, LLC

ACCEPTED
12-14-00365-CV
TWELFTH COURT OF APPEALS
TYLER, TEXAS
5/6/2015 8:28:31 AM
CATHY LUSK
CLERK
No. 12-14-00365-CV
RECEIVED IN
12th COURT OF APPEALS
TYLER, TEXAS
IN THE COURT OF APPEALS 5/6/2015 8:28:31 AM
TWELFTH DISTRICT OF TEXAS CATHY S. LUSK
AT TYLER Clerk
EDOM CORNER, LLC AND EARL A. BERRY, JR., 5/6/2015
APPELLANTS
v.
IT’S THE BERRYS, LLC d/b/a MARY ELLEN’S,
APPELLEE
On Appeal from the 294th Judicial District Court
Of Van Zandt County, Texas
Trial Court Cause 09-00138
Hon. Teresa Drum, Judge Presiding
_____
APPELLANTS’ BRIEF
_____
Katherine A. Ferguson Richard L. Ray
SBN 06918050 SBN 16606300
Renshaw, Davis & Ferguson, Ray & Thatcher, P.C.
L.L.P. 300 S. Trade Days Blvd.
2900 Lee Street, Suite 102 Canton, Texas 75103
P.O. Box 21 Telephone: (903) 567-2051
Greenville, Texas 75403-0021 Facsimile: (903) 567-6998
Telephone: (903) 454-6050
Facsimile: (903) 454-4898
Email: rdflawoffice@yahoo.com
ATTORNEYS FOR APPELLANTS EDOM CORNER, LLC
AND EARL A. BERRY, JR.
ORAL ARGUMENT REQUESTED
IDENTITY OF PARTIES AND COUNSEL
Appellants:
Edom Corner, LLC
Earl A. Berry, Jr.
Appellants’ Attorneys:
Katherine A. Ferguson
Renshaw, Davis & Ferguson, LLP
P.O. Box 21
Greenville, Texas 75403-0021
Richard L. Ray
Ray & Thatcher, P.C.
300 S. Trade Days Blvd.
Canton, Texas 75103
Appellants’ Trial Attorneys:
Katherine A. Ferguson
Renshaw, Davis & Ferguson, LLP
P.O. Box 21
Greenville, Texas 75403-0021
Richard L. Ray
Ray & Thatcher, P.C.
300 S. Trade Days Blvd.
Canton, Texas 75103
Appellee:
It’s the Berry’s, LLC d/b/a Mary Ellen’s
Appellee’s Attorneys:
Larry M. Lesh, Esq.
1 Forest Park Drive
Richardson, Texas 75080
R. Paul Elliot, Esq.
301 S. Main St.
Canton, Texas 75103
Appellee’s Trial Attorneys:
Larry M. Lesh, Esq.
1 Forest Park Drive
2
Richardson, Texas 75080
R. Paul Elliot, Esq.
301 S. Main St.
Canton, Texas 75103
Trial Court:
Hon. Teresa A. Drum
294th Judicial District Court
3
TABLE OF CONTENTS
Identity of the Parties and Counsel ............................................................................ 2
Table of Contents ....................................................................................................... 4
Index of Authorities ................................................................................................... 5
Statement of the Case................................................................................................. 8
Statement Regarding Oral Argument ........................................................................ 8
Issues Presented ......................................................................................................... 8
Issue One
THE TRIAL COUR ERRED IN FINDING THAT APPELLEEE WAS
THE PREVAILING PARTY IN THE LITIGATION
Issue Two
THE TRIAL COURT ERRED IN FINDING NEITHER RES JUDICATA
NOR COLLATERAL ESTOPPEL BARRED APPELLEE’S SUIT
Issue Three
THE TRIAL COURT ERRED IN FINDING BERRY INDIVIDUALLY
LIABLE IN APPELLEE’S SUIT
Issue Four
THE TRIAL COURT ERRED IN AWARDING ATTORNEY’S FEES ON
SUMMARY JUDGMENT TO APPELLEE
Statement of the Facts ................................................................................................ 9
Summary of Argument ............................................................................................ 16
Argument and Authorities........................................................................................ 17
Conclusion and Prayer for relief .............................................................................. 35
Certificate of compliance of typeface and Word Count .......................................... 36
Certificate of Service ............................................................................................... 36
4
INDEX OF AUTHORITIES
Federal Cases:
Citizens for a Better Environment v. The Steel Co.,
230 F.3d 923 (7th Cir. 2000).................................................................................. 20
Grynberg v. Praxair, Inc.,
389 F.3d 1038 (10th Cir. 2004)............................................................................. 20
State Cases:
Armstrong v. Rice,
556 S.W.2d 620 (Tex. App. – Texarkana 1977, reh’g denied) ............................ 32
Carbon El Norteno, LLV v. Sanchez,
2008 WL 3971554 (Tex. App. – Corpus Christi 2008, no pet.) ............................ 30
CSFB 1998-PI Buffalo Speedway Office, Ltd. Partnership v. Amtech Elevator
Services, 2007 WL 3294287 (Tex. App. – Houston [1st Dist.] Aug. 19, 2010) ...... 33
CU Lloyd’s of Tex. v. Feldman,
977 S.W.2d 568 (Tex. 1998) ................................................................................. 17
Engel v. Pettit,
713 S.W.2d 770 (Tex. App. – Houston [14th Dist.] 1986)..................................... 33
Estate of Tyner,
292 S.W.3d 179 (Tex. App. – Tyler 2009) ........................................................... 33
Fidelity Mutual Life Ins. Co. v. Kaminsky,
820 S.W.2d 878 (Tex. App. – Texarkana 1992, writ denied) .............................. 24
Gillam v. Sullivan,
352 S.W.2d 507 (Tex. Civ. App. – Ft. Worth 1961, writ ref’d n.r.e.) ................... 32
Green International, Inc. v. Solis,
951 S.W.2d 384 (Tex. 1997) ................................................................................. 34
Hackberry Creek Country Club, Inc. v. Hackberry Creek Homeowners Assoc.,
5
205 S.W.3d 46 (Tex. App. – Dallas 2006, pet. denied) ..................................28, 29
Healthcare Cable Systems, Inc. v. The Good Shepherd Hospital, Inc.,
180 S.W.2d 787 (Tex. App. – Tyler 2005, no pet.) .............................................. 28
Igal v. Brightstar Information Technology Group, Inc.,
250 S.W.3d 78 (Tex. 2008) .............................................................................24, 26
In Re Nalle Plastics Family Ltd. Partnership,
406 S.W.3d 168 (Tex. 2013) ...........................................................................34, 35
Insurance Co. of the State of Pennsylvania v. Oraco,
170 S.W.3d 129 (Tex. App. – San Antonio 2005, no pet.).............................18, 19
It’s the Berry’s, LLC v. Edom Corner, LLC,
271 S.W.3d 765 (Tex. App. – Amarillo 2008, no pet.) ........................................ 19
King Ranch, Inc. v. Chapman,
118 S.W.3d 742 (Tex. 2003) ................................................................................. 17
Malcomson Road Utility Dist. v. Newsome,
171 S.W.3d 257 (Tex. App. – Houston [1st Dist.] 2005) ...................................... 17
Mart. v. Dosoh I, Ltd., Inc.,
2 S.W.3d 350 (Tex. App. – San Antonio 1999, pet. denied) ................................ 31
MBM Financial Corp. v. Woodlands Operating Co.,
292 S.W.3d 660 (Tex. 2009) ................................................................................. 34
Mediacomp, Inc. v. Capital Cities Communication,
698 S.W.2d. 207 (Tex. App. – Houston [1st. Dist.] 1985, no pet.) ....................... 28
Musgrave v. Owen,
67 S.W.3d 513 (Tex. App. – Texarkana 2002) ..................................................... 27
Mustang Pipeline Co. v. Driver Pipeline Co., Inc.,
134 S.W.3d 195 (Tex. 2004) ................................................................................. 34
Samedan Oil Corp. v. Louis Dreyfus Nat. Gas Corp.,
52 S.W.3d 788 (Tex. App. – Eastland 2001, pet. denied) .................................... 31
6
Smith v. Patrick W.Y. Tam Trust,
296 S.W.3d 545 (Tex. 2009) ................................................................................. 33
State Farm Life Ins. Co. v. Beaston,
907 S.W.2d 430 ..................................................................................................... 34
Sugarland Bus. Ctr., Ltd. v. Norman,
624 S.W.2d 639 (Tex. App. – Houston [14th Dist.] 1981, no writ) ...................... 32
Twin City Fire Ins. Co. v. Vega-Garcia,
223 S.W.3d 762 (Tex. App. – Dallas 2007, pet. denied) ................................21, 22
State Statutes:
TEX. BUS. ORGAN. CODE SEC. 101.113 .................................................................... 29
TEX. BUS. ORGAN. CODE SEC. 101.114 .............................................................. 29, 30
TEX. CIV. PRAC. & REM. CODE SEC. 37.009 ............................................................. 31
TEX. CIV. PRAC. & REM. CODE SEC. 38.001 ....................................................... 34, 35
TEX. R. APP. P. SEC. 39............................................................................................... 8
TEX. R. CIV. P. 65 ..................................................................................................... 32
7
STATEMENT OF THE CASE
This case arises from a series of litigation between Edom Corner, LLC
(“Edom Corner”) and It’s the Berry’s, LLC d/b/a Mary Ellen’s (“ITB”) relating to
a lease of commercial property.
STATEMENT REGARDING ORAL ARGUMENT
Appellants request oral argument. See TEX. R. APP. P.
39 (2015). Although the facts and legal arguments are adequately presented in this
Brief, Appellants believe that this Court's decisional process will be significantly
aided by oral argument.
ISSUES PRESENTED
Issue Number One
THE TRIAL COUR ERRED IN FINDING THAT APPELLEE WAS
THE PREVAILING PARTY IN THE LITIGATION
Issue Number Two
THE TRIAL COURT ERRED IN FINDING NEITHER RES JUDICATA OR
COLLATERAL ESTOPPEL BARRED APPELLEE’S SUIT
Issue Number Three
THE TRIAL COURT ERRED IN FINDING BERRY INDIVIDUALLY
LIABLE IN APPELLEE’S SUIT
Issue Number Four
THE TRIAL COURT ERRED IN AWARDING ATTORNEY’S FEES ON
SUMMARY JUDGMENT TO APPELLEE
8
STATEMENT OF THE FACTS
Appellant Edom Corner, LLC (“Edom Corner”) was a limited liability
company organized under the laws of the State of Texas and having its principal
place of business in Van Zandt County, Texas. Appellant Earl A. Berry, Jr.
(“Berry”) is an individual living in Van Zandt County, Texas. Berry was also a
member of defendant Edom Corner. Appellee It’s the Berry’s, LLC d/b/a Mary
Ellen’s (“ITB”) is a limited liability company organized and existing under the laws
of the State of Texas and having its principal offices and principal place of business
in Van Zandt County, Texas.
From May of 2006 until October of 2008, Edom Corner and ITB were
involved in a series of litigation regarding their respective rights and obligations
under a commercial property lease. This litigation involved only Edom Corner and
ITB as Plaintiff and Defendant, respectively. The end result of the series of litigation
was that ITB was no longer a tenant of Edom Corner. Subsequent to the conclusion
of this series of litigation, ITB filed this cause asserting a claim for its attorney’s fees
in the previous series of litigation (CR VOL. 1, #13), despite the fact that ITB had
had either made such claims in the previous series of litigation or such claims were
not made but were compulsory counterclaims (such as adding Berry individually as
a party to the litigation) therein.
9
The history of the litigation between Appellants and Appellee relates to a retail
lease of real property. On or about September 1, 2004, Edom Corner entered into a
Retail Lease with It’s The Berry’s, LLC, the term of which would expire on August
31, 2007 (the “Lease”). (CR Vol. 2, #342).
On or about May 12, 2006, Edom Corner initiated litigation against ITB in the
Justice of the Peace Court, Precinct 4 in Cause No. E40196. That suit was
transferred to the 294th Judicial District Court of Van Zandt County and consolidated
as cause No. 06-00428 (the “District Court Case”). ITB counterclaimed in that
action for a declaratory judgment that ITB was not in breach of the Lease and for
attorney’s fees. A bench trial was held in July of 2006 and the Trial Court signed a
judgment awarding Edom Corner possession of the leased premises, a writ of
possession, costs and attorney’s fees (the “Trial Court Judgment”). (CR Vol. 2,
#285) The Trial Court Judgment also decreed that ITB take nothing by its
counterclaims. The court set a supersedeas bond for the monetary portions of the
Trial Court Judgment, but did not permit Appellee to supersede the non-monetary
portions, which included a writ of possession for the leased premises. (CR Vol. 2,
#285)
In the course of preparing to appeal the District Court Case, ITB filed a
petition for writ of mandamus in the Texas Court of Appeals for the Twelfth District
sitting in Tyler to force the court to set a supersedeas bond. This was filed as cause
10
no. 07-06-298. The mandamus was conditionally granted unless the trial court set a
supersedeas bond for the non-monetary portions of the Judgment. The trial court set
a supersedeas bond for the non-monetary portion of the Judgment in the amount of
$50,000.
After the court set the supersedeas bond, but prior to the posting of the
supersedeas bond by ITB, on or about October 26, 2006 Edom Corner initiated
litigation against Park Cities Bank (Cause No. 06-00829) in the 294th District Court
of Van Zandt County, Texas (the “Park Cities Garnishment”) and against the First
State Bank of Ben Wheeler (Cause No. 06-00830) (the “Ben Wheeler Garnishment”)
in an attempt to execute on the Judgment. On October 30, 2006, ITB filed an
Emergency Motion to Dissolve the Writ of Garnishment on the basis that subsequent
to the filing of the Park Cities Garnishment and the Ben Wheeler Garnishment
actions, ITB made a cash deposit in lieu of supersedeas bond on October 30, 2006
to supersede the Judgment. (CR Vol. 2, # 287) On November 2, 2006, the Writs of
Garnishment in the Ben Wheeler Garnishment and the Park Cities Garnishment were
dissolved.
The appeal of the District Court Case was initially assigned to the Twelfth
Court of Appeals at Tyler but, due to docketing concerns, was transferred to the
Seventh Court of Appeals at Amarillo under Cause No. 07—6-00390-CV (the
“Amarillo Appeal”).
11
On or about January 5, 2007, after the conclusion of the District Court Case
and while the Amarillo Appeal was pending, Edom Corner instituted another action
against ITB for breaches of the Lease which occurred post-Judgment. This was filed
in the Justice Court, Precinct 4, Place 1 under Cause No. E40222 (the Second Breach
Suit”). ITB filed a Plea in Abatement Subject To, And Without Waiving, Motion to
Dismiss, alleging that the matters in this action were the same as in the District Court
Case. The Plea in Abatement was granted and the Second Breach Suit was dismissed
and no fees were awarded to ITB. (CR Vol. 2, #303)
During the Second Breach Suit, Edom Corner learned of a possible conflict
of interest with its former attorney joining the firm of Dan Anderson, who was
representing ITB. Edom Corner therefore filed motions to disqualify Dan
Anderson’s firm and Larry Lesh, which led ultimately to a petition for writ of
mandamus in the Texas Supreme Court in Cause No. 07-0537 (the “Disqualification
Mandamus”). The Disqualification Mandamus was denied with no attorney’s fees
having been awarded to ITB. (CR Vol. 2, #304)
Edom Corner subsequently appealed the Second Breach Suit. That appeal
was docketed as Cause No. CV04217 in the County Court at Law of Van Zandt
County, Texas. ITB filed a Motion to Dismiss Appeal, and did not request attorney’s
fees. The Second Breach Suit was subsequently transferred to the 294 th District
Court under Cause No. 07-00187, and there was no counterclaim by ITB for
12
attorney’s fees. (CR Vol. 2, #305) Edom Corner later non-suited this cause on
September 4, 2007. (CR Vol. 3, #309)
On or about May 1, 2007, Edom Corner posted a notice to vacate for non-
payment of rent on the front door of the property leased by ITB. In response to that
posting, on or about May 5, 2007, ITB sued Edom Corner in Cause No. 07-00341 in
the 294th Judicial District Court (the “Temporary Injunction Action”), seeking a
temporary injunction against Edom Corner instituting any eviction action and for
costs and attorney’s fees. (CR Vol. 2 # 310) On May 8, 2007, after hearing, the
court ruled that ITB’s petition for a temporary injunction was in all things denied.
(CR Vol. 2 # 317)
On or about May 10, 2007, Edom Corner filed a forcible entry and detainer
action against ITB in the Justice Court, Precinct 4, Place 1 of Van Zandt County, in
Cause No. E40233 (the “Third Breach Suit”). ITB filed a counterclaim including a
request for attorney’s fees and costs, but did not seek to add Berry individually as a
party to the suit. (CR Vol. 2, #318) On May 23, 2007, Judge Scott Shinn entered a
judgment in favor of ITB but denied its request for attorney’s fees. (CR Vol. 2,
#322) Edom Corner appealed the Third Breach Suit to the County Court at Law of
Van Zandt County, Texas under Cause No. CV04237. ITB again filed a Plea in
Abatement, and Subject Thereto, Amended Answer and Counterclaim, alleging that
the subject of the suit was identical to the pending District Court Case, but again did
13
not file any claim against Berry individually. (CR Vol. 2, # 323) This case was non-
suited on September 4, 2007. (CR. Vol. 2, #329)
On or about October 28, 2008, the Amarillo Court of Appeals issued its
opinion in the Amarillo Appeal. (CR Vol. 2, #331). This decision, which became
final, found that the district court lacked subject matter jurisdiction over Edom
Corner’s forcible entry claims against ITB in the District Court Case and reversed
that portion of the Judgment. The Amarillo Court of Appeals also affirmed the
portions of the Judgment which denied all of ITB’s claims, including ITB’s claims
for attorney’s fees and costs. (CR Vol. 2, #331) The District Court Case, the Park
Cities Garnishment, the Ben Wheeler Garnishment, the Second Breach Suit, the
Disqualification Mandamus, the Temporary Injunction Action, the Third Breach
Suit, and the Amarillo Appeal are referred to collectively herein as the “Litigation.”
On January 9, 2009, Appellee sent a demand notice to Appellant Edom Corner
(CR Vol. 1, #19) but did not include Appellant Berry in the demand. On February
26, 2009, Appellee filed suit against Appellant Edom Corner, alleging that Appellant
Edom Corner was liable to Appellee for attorney’s fees arising out of the Litigation.
(CR Vol. 1, #13). On May 28, 2009, Appellee filed a First Amended Original
Petition (CR Vo1. 1, #114) wherein for the first time Appellee sought any sort of
recovery against Appellee Berry arising out of the Litigation.
14
This suit proceeded, with numerous motions for summary judgment filed by
both Appellee and Appellants. (CR Vol. 1, #123; CR Vol. 2, #259). These motions
were all denied by the Trial Court. (CR Vol. 5, #851; CR Vol. 5, #884; CR Vol. 5,
#885). The parties were ordered to mediation, but no settlement was reached. (CR
Vol. 7, #1043). On April 4, 2013, the parties filed a Joint Motion for Determination
of Controlling Questions of Law and for Interlocutory Appeal (CR Vol. 7, #1050)
and the Trial Court ruled on those issues on May 8, 2014. (CR Vol. 8, #1428),
wherein the Trial Court ruled in favor of Appellee on all issues submitted. Appellee
promptly filed its Third Amended Motion for Summary Judgment (CR Vol. 8,
#1435) wherein Appellee sought recovery of the attorney’s fees incurred in the
Litigation as well as for pursuing this case. Appellants filed their Response to
Plaintiff’s Motion for Final Summary Judgment on August 1, 2014 (CR Vol. 8, #
1464). The Trial Court heard that matter on August 11, 2014 (RR Vol. 6). On
October 16, 2014, the Trial Court entered its Final Summary Judgment (CR Vol. 9,
#1619). Appellants filed their Motion for New Trial (CR Vol. 9, #1625) on
November 6, 2014 and filed their First Amended Motion for New Trial on December
17, 2014. (CR Vol. 10, #1699) On December 29, 2014 Appellants filed their Notice
of Appeal (CR Vol. 10, #1705)
15
SUMMARY OF ARGUMENT
The Trial Court erred in granting judgment for the Appellee in this suit. The
suit was nothing more than a request for attorney’s fees arising out of the prior
litigation, and the prior judgments in those cases specifically denied the recovery of
attorney’s fees for Appellee. Therefore those claims are barred by res judicata. To
the extent Appellee did not seek attorney’s fees in those suits, the claims were
compulsory counterclaims which Appellee was required to assert or waive forever.
The claims against Appellant Berry individually are also barred by res judicata. The
Appellee never added Appellant Berry as a party to any of the prior litigation. The
claims of Appellee were mandatory claims against Appellant Berry and are now
barred by res judicata. Additionally, the provisions of the Texas Business
Organizations Code prohibit Appellee from seeking recovery against Appellant
Berry solely by his status as a member of Appellant Edom Corner. Finally, the Trial
Court erred in granting attorney’s fees to Appellee on summary judgment because
the Appellee was not the prevailing party, the claims were barred by res judicata,
and Appellee wholly failed to provide any competent summary judgment evidence
in support of their Third Amended Motion for Summary Judgment. Furthermore,
Appellants, through the affidavit of expert Martin R. Bennett, raised a material issue
of fact relating to attorney’s fees. Finally, pursuant to the provisions of Tex. Civ.
Prac. Rem. Code Sec. 38.001 because Appellee did not recover any actual damages
16
in any of the cases that compromised the litigation. Because it did not recover actual
damages, it is not entitled to recover attorney’s fees. The Trial Court erred in
granting summary judgment in favor of Appellee.
ARGUMENT AND AUTHORITIES
Standard of Review
The Trial Court did not conduct any evidentiary hearings or receive any
testimony in this matter. The Trial Court ruled strictly on the pleadings of the parties.
In effect, the Trial Court granted a no-evidence summary judgment motion in favor
of Appellees. Both sides moved for summary judgment (CR Vol. 1, #28; CR Vol.
1, #123; CR Vol. 2, #259; CR Vol. 7, #1056; CR Vol. 8, #1310; CR Vol. 8, #1435)
and the request for the Trial Court to rule on controlling issues of law was, in effect,
a request for a ruling on the summary judgment motions. The standard of review,
then, is for this court to consider the evidence in the light most favorable to the non-
movant (Appellants). King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 750 (Tex.
2003) “When both sides move for summary judgment and the trial court grants one
motion and denies the other, [the appellate court] can consider both motions, their
evidence, and their issues and render the judgment the trial court should have
rendered.” Malcomson Road Utility Dist. V. Newsom, 171 S.W.3d 257, 263 (Tex.
App. – Houston [1st Dist.] 2005). See also CU Lloyd’s of Tex. v. Feldman, 977
S.W.2d 568, 569 (Tex. 1998)
17
ISSUE ONE: THE TRIAL COUR ERRED IN FINDING THAT
APPELLEE WAS THE PREVAILING PARTY IN THE LITIGATION
In the Order on Joint Motion for Determination of Controlling Questions of
Law and For Interlocutory Appeal, the Trial court held that Appellee “was the
prevailing party in the litigation . . . described in the first amended original petition
filed in this action.” (CR Vol. 8, #1428-29). The Trial Court erred in this ruling.
“A prevailing party is one who is vindicated by the trial court’s judgment.”
Insurance Co. of the State of Pennsylvania v. Oraco, 170 S.W.3d 129, 134 (Tex.
App. – San Antonio 2005, no pet.) As shown below, Appellees were never
vindicated by any trial court throughout the course of the Litigation. Appellant will
address each parcel of the Litigation separately.
Appellee did not prevail in the District Court Case
The District Court case was a forcible entry and detainer case filed by
Appellant Edom Corner. Appellee filed an amended counter-petition in the District
Court Case seeking a declaratory judgment that Appellee was not in default of the
Lease and requested attorney’s fees (see Exhibit A-1 to the Affidavit of Jeffrey W.
Hurt)1 In the Judgment, the Trial Court specifically denied Appellee’s request for a
declaratory judgment and for attorney’s fees (CR Vol. 2, #285) Appellee appealed
the District Court Judgment, alleging, among other grounds, that ITB was the
1
The Affidavit of Jeffrey W. Hurt and all exhibits thereto which were attached to Defendants’ Motion for Summary
Judgment are incorporated herein by reference as if set forth fully in this Brief. (CR Vol. 2, #273 - 330)
18
“prevailing party” in the District Court Case and was entitled to attorney’s fees. The
Seventh Court of Appeals in the Amarillo Appeal held that the Trial Court lacked
jurisdiction over the forcible entry and detainer suit brought by Edom Corner and
severed and dismissed those portions of the Judgment. However, the appellate court
specifically found that Appellee did “not contend that the absence of an award of
attorney’s fees under the Uniform Declaratory Judgments Act . . . was error. . . . We
overrule [ITB’s] eleventh issue as to its claim for attorney’s fees.” It’s the Berry’s,
LLC v. Edom Corner, LLC, 271 S.W.3d 765, 772 (Tex. App. – Amarillo 2008, no
pet) (emphasis added). Appellee was not awarded attorneys’ fees and did not appeal
the decision in the Amarillo Appeal. Therefore the appellate court held Appellee
did not prevail in the Litigation and the denial of an award of attorneys’ fees to
Appellee in the District Court Case was a final order.
Appellee was not the prevailing party in the District Court Case. “A
prevailing party is one who is vindicated by the trial court’s judgment.” Oraco, 170
S.W.3d at 134. Far from vindicating Appellee, the District Court Judgment denied
Appellee’s claim. The appellate court affirmed that denial. All Appellee succeeded
in doing in the District Court Case was protracting the litigation by not raising the
jurisdictional claim until the Amarillo Appeal. “A defendant may persuade the court
that the plaintiff has sued too soon, or in the wrong court, or failed to jump through
a procedural hoop. Then the dispute will continue later, or elsewhere, and it remains
19
to be seen who will prevail. Such a victory is like persuading a judge to deny
summary judgment, a step that transfers decision to a jury but does not end the
litigation in the defendant’s favor and therefore does not make it a prevailing party.”
Citizens for a Better Environment v. The Steel Co., 230 F.3D 923, 929-930 (7th Cir.
2000)(emphasis added) The appellate court in the Amarillo Appeal did not find that
Appellant Edom Corner had no right to sue Appellee under the Lease, but rather that
it filed in the wrong court. Because the decision in the Amarillo Appeal did not
foreclose another suit by Appellant Edom Corner against Appellee, Appellee was
not the prevailing party. See Grynberg v. Praxair, Inc., 389 F.3d 1038, 1057 (10th
Cir. 2004) (Party is prevailing party in litigation if the party can “point to a resolution
of the dispute which [materially] changes the legal relationship between itself” and
the other party.) Appellee “was not the prevailing party because the court dismissed
[Edom Corner’s] claims for lack of subject matter jurisdiction, rather than on the
merits.” Id. at 1058, footnote 21.
The Park Cities and Ben Wheeler Garnishments
Appellee claimed that it was entitled to recover attorney’s fees for the Park
Cities and Ben Wheeler Garnishment actions. Appellee is incorrect. Appellant
Edom Corner filed those actions because Appellee had failed to post a supersedeas
bond to supersede and appeal the Judgment. The filing of the Park Cities and Ben
Wheeler Garnishment actions in effect forced Appellee to post a supersedeas bond,
20
which it finally did on October 30, 2006 – four days after the issuance of the writs
of garnishment in the Park Cities and Ben Wheeler Garnishment actions. (CR Vol.
2, # 287 - 302) Because Appellant Edom Corner was successful in getting Appellee
to post a supersedeas bond, Appellant Edom Corner was the prevailing party in those
actions.
The Second and Third Breach Suits
The Second Breach Suit was filed by Appellant Edom Corner against
Appellee for post-Judgment breaches of the Lease by Appellee. This suit was filed
in the justice court. Appellee did not challenge the jurisdiction of the justice court
to hear the suit, but rather only asserted that the suit was identical to matters in the
District Court case and the suit should be abated. Appellee did not claim attorney’s
fees in the Second Breach Suit. The suit was abated; however, the order did not
award attorney’s fees to Appellee. (CR Vol. 2, #303) Appellant Edom Corner
subsequently appealed the abatement and dismissal in Cause No. CV04217 in the
County Court at Law of Van Zandt County, Texas. Appellee filed a motion to
dismiss the appeal and did not seek attorney’s fees. (CR Vol. 2, #305) The appeal
was transferred to the Trial Court under cause No. 07-00187. Appellee did not
counterclaim for attorney’s fees. Appellant Edom Corner non-suited the appeal. (CR
Vol. 2, #309) “Upon non-suit, [Appellee] was in the same position [it] would be in”
if Appellant Edom Corner had never appealed the Second Breach Suit. Twin City
21
Fire Ins. Co. v. Vega-Garcia, 223 S.W.3d 762, 768 (Tex. App. – Dallas 2007, pet
den). In other words, Appellee was back in the position of having an order abating
the Second Breach Suit. The order did not award attorney’s fees to Appellee. The
nonsuit of the appeal by Edom Corner did not transform Appellee into a prevailing
party entitled to its attorney’s fees, but only affirmed the order dismissing the suit.
Appellee could have appealed the failure of the justice court to award Appellee
attorney fees in the Second Breach Suit, but Appellee declined to appeal such failure.
Therefore, any claim for attorney’s fees relating to the Second Breach Suit is barred
by res judicata. The Trial Court erred in holding Appellee prevailed in the Second
Breach Suit.
In the Third Breach Suit, Appellee received a favorable ruling; however, the
justice court’s order specifically denied Appellee’s claims for attorney fees. (CR
Vol. 2, #322) Appellant Edom Corner appealed that order, but subsequently non-
suited its appeal. The non-suit had the effect of rendering the order a final order.
See Twin City Fire Ins., 223 S.W.3d at 768. Appellee did not appeal the order and
therefore the order is a final judgment. Because Appellee sought its attorney’s fees
in the Third Breach Suit and such claim was denied, Appellee was also barred by res
judicata from relitigating the attorney fee aspects of the Third Breach Suit.
Appellee Lost the Temporary Injunction Action
Appellee claimed it prevailed in the Temporary Injunction Action and
22
therefore was entitled to its attorney’s fees in this suit. Appellee is wrong. The
Temporary Injunction Action was brought by Appellee against Appellant Edom
Corner seeking to enjoin Appellant Edom Corner from evicting Appellee. Appellee
also sought attorney’s fees for filing the action. (CR Vol. 2, #310) The case was
heard by the Trial Court as Cause No. 07-00341. On May 8, 2007, the Trial Court
entered its Order Denying Plaintiff’s Request for Temporary Injunction. (CR Vol.
2, #317). The Trial Court specifically ruled that Appellee’s “application for a
temporary injunction is in all things DENIED.” Because Appellee’s request for
relief was denied, it was not the “prevailing party.” Additionally, any claim for
attorney’s fees relating to the Temporary Injunction Action is barred by res judicata
because it was specifically sought in the Temporary Injunction Action and was
denied. The Trial Court erred in finding Appellee prevailed in the Temporary
Injunction Action.
The Disqualification Mandamus
Appellee also sought to recover attorney’s fees for its actions in the
Disqualification Mandamus. However, that suit was not related to any claim under
the Lease, but was an independent action seeking to determine if Edom Corner’s
prior attorney was subsequently barred from representing Appellee. It did not
address the merits of the District Court Case. Additionally, Appellee did not seek,
and was not awarded, attorney’s fees in that action. (CR Vol. 2, #304) Appellee
23
was therefore not the prevailing party in the Disqualification Mandamus. The Trial
Court erred in finding otherwise.
Appellee was not the “prevailing party” in any of the suits that make up the
Litigation. The Trial Court erred in finding that it was and the judgment of the Trial
Court should be reversed and judgment rendered in favor of Appellants.
ISSUE TWO: THE TRIAL COURT ERRED IN FINDING NEITHER RES
JUDICATA NOR COLLATERAL ESTOPPEL BARRED APPELLEE’S
SUIT
Appellants raised the affirmative defenses of res judicata and collateral
estoppel to Appellee’s claims. (CR Vol. 1, #24) Appellant was required to prove the
defense of res judicata. Appellee asserted a claim for attorney’s fees arising out of
the Litigation for breach of the Lease. (CR Vol. 1, #114; CR Vol. 1, #206; CR Vol.
1, #206). However, the law does not recognize Appellee’s cause of action for
attorney’s fees in a suit separate and apart from the prior litigation on the Lease. See
Fidelity Mutual Life Ins. Co. v. Kaminsky, 820 S.W.2d 878 (Tex. App. – Texarkana
1992, writ denied) (Holding that tenant’s suit for attorney fees from breach of lease
was a compulsory counterclaim that should have been brought in the original breach
of lease litigation and was thus barred by res judicata.) See also Igal v. Brightstar
Information Technology Group, Inc., 250 S.W.3d 78, 86 (Tex. 2008) (“[A] party
may not pursue a claim determined by a court of competent jurisdiction in a prior
suit as a ground of recovery in a later suit against the same parties.”) In summary,
24
the law requires a claimant to raise its claim for attorney fees in the initial litigation
and have it adjudicated therein so that the court may address all of the relevant issues
at once and not be saddled with duplicative litigation. In its Motion for Summary
Judgment (CR Vol. 2, #259-424) Appellants presented certified copies of all the
judgments in the Litigation. In each and every judgment, the presiding court either
denied the Appellee’s request for attorney’s fees, or the Appellee failed to request
attorney’s fees in their claims. Appellee did not challenge that the copies of
judgments were inaccurate or inauthentic; Appellee merely asserted its own “spin”
on the meaning and effect of those judgments. (CR Vol. 4, #805) The Trial Court
erred in ruling that Appellee’s claims were not barred by res judicata or collateral
estoppel.
In the Trial Court, Appellee cited numerous cases in support of its contention
that because the Trial Court lacked jurisdiction in the District Court Case as to
Appellant Edom Corner’s forcible entry and detainer claims, it is not barred by res
judicata from seeking them in this suit. Appellee deliberately ignored that its claim
for attorney’s fees in the District Court Case was a claim under the Declaratory
Judgments Act and therefore (i) was subject to the jurisdiction of the Trial Court; (ii)
was denied by the Trial Court in the District Court Judgment; (iii) the denial was
affirmed by the appellate court in the Amarillo Appeal; and (iv) Appellee never
challenged the judgment of the court of appeals in the Amarillo Appeal. Appellee’s
25
counterclaim in the District Court Case for a declaratory judgment is identical to the
claim it now asserted in this suit. Because Appellee’s claim was denied by the Trial
Court in the District Court case and such denial was affirmed by the appellate court
in the Amarillo Appeal, Appellee is barred by res judicata from making the same
claim in this suit. See Igal v. Brightstar Information Technology Group, Inc., 250
S.W.3d 78, 86 (Tex. 2008) (“[A] party may not pursue a claim determined by a
court of competent jurisdiction in a prior suit as a ground of recovery in a later suit
against the same parties.”)
The Trial Court erred in failing to hold that Appellee’s claims against
Appellants were barred by res judicata. This Court should reverse and render
judgment in favor of Appellants.
ISSUE THREE: THE TRIAL COURT ERRED IN FINDING
BERRY INDIVIDUALLY LIABLE IN APPELLE’S SUIT
After engaging in all of the protracted litigation noted above, Appellee
decided to seek recovery against Appellant Berry individually for the actions of
Edom Corner. Appellee’s claims against Appellant Berry were also barred by res
judicata. The basis for the claims was that Appellant Berry, as a “member” of Edom
Corner, is personally liable under the terms of the Lease. However, this claim is
predicated on the argument that Appellee is entitled to recover its attorney’s fees in
the first place. Because the claim for attorney’s fees is without merit as discussed
infra, the same analysis applies to the claim against Appellant Berry. The Trial
26
Court erred in deciding otherwise.
Any claim against Appellant Berry under Lease necessarily arises from the
same nexus of facts as the claim against Appellant Edom Corner. That claim was
therefore a compulsory counterclaim which Appellees should have raised in the any
of the cases making up the Litigation. Because it could have raised the claim, and
did not, Appellee’s claims against Appellant Berry is now barred by res judicata.
See Musgrave v. Owen, 67 S.W.3d 513, 519 (Tex. Civ. App. – Texarkana 2002) (The
“main concern” for res judicata analysis is “whether the cases share the same nucleus
of operative facts.”) The Trial Court erred in ruling the claims against Berry were
not barred by res judicata and/or collateral estoppel, and this Court should reverse
and render judgment in favor of Appellant Berry.
Berry Was Not a Party to the Lease
Appellee argued to the Trial Court that Appellant Berry assumed individual
liability for the actions of Edom Corner in enforcing the Lease. Appellee’s argument
was premised on a strained reading of the definition of Landlord, which provided
that “Landlord means Landlord and its agents, employees, invitees, licensees or
visitors.” (CR Vol. 3, #568) Contrary to Appellee’s assertions, this definition did
not make Berry individually responsible for the actions of Edom Corner. Rather,
the provision served to make Edom Corner liable for the actions of any of its
members, agents, etc., who violated the Lease. Appellee cannot, and did not, show
27
any pattern or course of dealing by Berry, other than signing the Lease as a member
of Edom Corner, to establish that Berry assumed liability for the debts of Edom
Corner. See Mediacomp, Inc. v. Capital Cities Communication, 698 S.W.2d 207
(Tex. App. – Houston [1st Dist.] 1985, no pet) (Finding that actions of agent such as
guaranteeing payment of the account constituted implied assumption of liability by
the agent).
The definition of Landlord under the Lease does not establish Appellant
Berry’s individual liability. The definition of Landlord in the Lease is identical to
that of Tenant, which reads “Tenant means Tenant and its agents, employees,
invitees, licensees or visitors.” “In construing a written contract, the primary
concern of the court is to ascertain the true intentions of the parties as expressed in
the instrument.” Healthcare Cable Systems, Inc. v. The Good Shepherd Hospital,
Inc., 180 S.W.2d 787, 790 (Tex. App. – Tyler 2005, no pet) No single provision
taken alone is to be given controlling effect; the contract must be construed as a
whole. Hackberry Creek Country Club, Inc. v. Hackberry Creek Homeowners
Assoc., 205 S.W.3d 46, 56 (Tex. App. – Dallas 2006, pet den) By interpreting the
Lease as urged by Appellee, the Trial Court decision leads to the clearly absurd and
unintended result that agents, employees, invitees or visitors of the Tenant have
equal standing with the Tenant to sue the Landlord, that those same, agents,
employees, invitees, licensees and visitors are personally liable to Appellant Edom
28
Corner for any breach of the Lease by Appellee, and makes agents, employees,
invitees, licensees or visitors of Landlord personally liable under the Lease.
“[C]ourts construe contracts from a utilitarian standpoint bearing in mind the
particular business activity sought to be served, and will avoid when possible and
proper a construction which is unreasonable, inequitable, and oppressive.” Id.
(emphasis added) Appellee failed to show any grounds under which a proper
construction of the Lease would lead to the results noted above. Appellee’s tortured
reading (and the Trial Court’s adoption of such) leads to the nonsensical conclusion
that each and every one of Appellant Edom Corner’s and Appellee’s agents,
employees, invitees, licensees or visitors would have been necessary parties to the
District Court Case, the Amarillo Appeal, the Disqualification Mandamus, the
Second Breach Suit, the Temporary Injunction Action and the Third Breach Suit.
Such a reading of the Lease is absurd.
In addition to the fact that the plain language of the Lease supports Appellants,
the Texas Business Organizations Code supports Appellant Berry’s position.
Section 101.113 provides:
A member of a limited liability
company may be named as a party in
an action by or against the limited
liability company only if the action is
brought to enforce the member’s right
against or liability to the company.
TEX. BUS. ORG. CODE SEC. 101.113
29
(Vernon’s 2006) (emphasis added)
Section 101.114 provides:
Except as and to the extent the
company agreement specifically
provides otherwise, a member or
manager is not liable for a debt,
obligation, or liability of a limited
liability company, including a debt,
obligation, or liability under a
judgment, decree, or order of a court.
TEX. BUS. ORG. CODE SEC. 101,114
(Vernon’s 2006) (emphasis added)
Appellee wholly failed to provide any evidence to prove that in the formation
of Edom Corner, the regulations of Edom Corner provided for the members to have
any individual liability for the debts of Edom Corner. See also Carbon El Norteno,
LLV v. Sanchez, 2008 WL 3971554 (Tex. App. – Corpus Christi 2008, no pet)
(Finding defendants individually liable on contract because at the time they executed
the contract, they were no longer members of limited liability corporation.) In fact,
all of the summary judgment evidence proffered by Appellee did nothing more than
affirm that the limited liability company known as Edom Corner, LLC was properly
formed and in existence at the time of the execution of the Lease. Thus, Appellant
Berry is not individually liable for signing the Lease on behalf of Edom Corner as a
member. The Trial Court erred in so finding. This Court should reverse the ruling
of the Trial Court and order that Appellees take nothing against Appellant Berry.
30
ISSUE FOUR: THE TRIAL COURT ERRED IN AWARDING
ATTORNEY’S FEES ON SUMMARY JUDGMENT TO APPELLEE
Appellee filed its claim under the Declaratory Judgment Act. Appellee sought
in the instant litigation to have the Trial Court provide judicial interpretation of
earlier judgments in the Litigation. Declaratory judgment is not available for
Appellee’s action. Samedan Oil Corp. v. Louis Dreyfus Nat. Gas Corp., 52 S.W.3d
788, 792 (Tex. App. – Eastland 2001, pet. denied); Martin v. Dosohs I, Ltd., Inc., 2
S.W.3d 350, 353 (Tex. App. – San Antonio 1999, pet. denied). Because Appellee’s
claim for attorney fees in this action is premised solely upon the Texas Uniform
Declaratory Judgments Act (TEX. CIV. PRAC. & REM. CODE SEC. 37.009) and this
action is not an appropriate action under the Uniform Declaratory Judgments Act,
the Trial Court erred in awarding attorneys to Appellee. This Court should reverse
the Trial Court and render a take nothing judgment.
Assuming arguendo that this Court determines that Appellee’s action was
properly brought pursuant to the Texas Uniform Declaratory Judgments Act, the
Trial Court still erred in awarding attorney’s fees to Appellee. Appellee’s Third
Motion for Summary Judgment (CR Vol. 8, #1435-1455) (the “Third Motion”) did
not contain any affidavits or other evidence as to the reasonableness and necessity
of the attorney’s fees sought. Appellee had attached affidavits to prior motions for
summary judgment filed in the case, but wholly failed to attach any summary
judgment proof to the Third Motion. Appellee merely referred the Trial Court to
31
prior pleadings and asked the court to take judicial notice of its file. (RR Vol. 6)
Reference to prior pleadings and affidavits previously filed but not attached to the
motion for summary judgment is not proper summary evidence. “Documents which
had been attached to an original motion for summary judgment, but none of which
were attached to an amended motion were not entitled to consideration in ruling on
the amended motion. Gillam v. Sullivan, 352 S.W.2d 507 (Tex. Civ. App. - Fort
Worth 1961, writ ref'd n.r.e.). The prior motion was supplanted in all regards, no
longer to be considered as part of the record of the cause. TEX. R. CIV. P. 65.”
Armstrong v. Rice, 556 S.W.2d 620, 622 (Tex. App. – Texarkana 1977, reh’g denied)
See Sugarland Bus. Ctr., Ltd. v. Norman, 624 S.W.2d 639, 642 (Tex. App. – Houston
[14th Dist.] 1981, no writ) (Affidavit attached to pleadings but not to motion for
summary judgment was not competent summary judgment proof). Because
Appellee wholly failed to produce competent summary judgment proof, the Trial
Court erred in granting the summary judgment. This Court should reverse the Trial
Court’s ruling.
In the alternative, even should this Court find that Appellee proffered proper
summary judgment evidence, Appellee was not entitled to summary judgment
because Appellants presented a genuine issue of material fact in their response and
affidavit attached thereto. (CR Vol. 8, #1464; CR Vol. 9, #1481-1487) Summary
judgment is a “harsh remedy” and “trial courts must deny a motion for summary
32
judgment unless the movant clearly established a right thereto as a matter of law.”
Engel v. Pettit, 713 S.W.2d 770, 773 (Tex. App. - Houston [14th Dist.]
1986)(emphasis added). “The reasonableness of an attorney’s fee award generally
presents a question of fact.” CSFB 1998-PI Buffalo Speedway Office, LTD.
Partnership v. Amtech Elevator Services, 2007 WL 3294287 (Tex. App. – Houston
[1st Dist.] Aug. 19, 2010). See also Smith v. Patrick W.Y. Tam Trust, 296 S.W.3d
545, 547 (Tex. 2009) (Reasonableness of attorney’s fees is left to the fact finder).
To create a fact issue, the non-movant must file an affidavit contesting the
reasonableness of the movant’s attorney fee affidavit. Estate of Tyner, 292 S.W3d
179, 184 (Tex. App. – Tyler 2009).
Appellants attached to their response to the Third Motion the Affidavit of
Martin R. Bennett and exhibits (the “Bennett Affidavit”) (CR Vol. 10, #1481-1610).
The Bennett Affidavit directly controverted the statements in prior affidavits
submitted by Appellee as to the reasonableness and necessity of the attorney’s fees.
Therefore, the Bennett Affidavit raised a fact issue which precluded the granting of
summary judgment. See Engle, 713 S.W.2d at 773. Because Appellants raised a
genuine issue of material fact, the Trial Court erred in granting the summary
judgment in favor of Appellee. This Court should reverse the Trial Court and render
a take nothing judgment in favor of Appellants.
33
Finally, Appellee is not legally entitled to recover attorney’s fees because of
the provisions of Section 38 of the TEX. CIV. PRAC. & REM. CODE. Section 38.001(8)
provides:
A person may recover
reasonable attorney’s fees from
an individual or corporation, in
addition to the amount of a valid
claim and costs, if the claim is
for: (8) an oral or written
contract.
TEX. CIV. PRAC. & REM. CODE SEC.
38.001(8) (2015) (emphasis added)
“To recover attorney’s fees under this statute, a party must first prevail on the
underlying claim and recover damages.” In re Nalle Plastics Family Ltd.
Partnership, 406 S.W.3d 168, 173 (Tex. 2013) “The second requirement is implied
from the statute’s language; for a fee recovery to be ‘in addition to the amount of a
valid claim,’ the claimant must recover some amount on that claim.” MBM
Financial v. Woodlands Operating Corp., 292 S.W.3d 660, 666 (Tex. 2013)
“Because [Appellee] failed to recover damages . . . [Appellee] was not entitled to
recover attorney’s fees under Section 38.001.” Green International, Inc. v. Solis,
951, S.W.2d 384, 390 (Tex. 1997) See also State Farm Life Ins. Co. v. Beaston, 907
S.W.2d 430, 437 (Tex. 1995) (Prevailing party could not recover attorney’s fees
“because she has recovered no damages.”) See also Mustang Pipeline Co. v. Driver
Pipeline Co., 134 S.W.3d 195, 201 (Tex. 2004) (“While Mustang did have a valid
34
claim against Driver, it was not entitled to recover attorney’s fees because it was not
awarded damages on its . . . contract claim.”)
Appellee failed to recover any damages against either Appellant Edom Corner
or Appellant Berry in any of the Litigation. Nor does Appellee claim to have
recovered any damages. The only ‘damages’ sought by Appellee in this suit are the
attorney’s fees incurred in the Litigation. These are not damages as construed in
TEX. CIV. PRAC. & REM. CODE SEc. 38.001. Nalle, 406 S.W.3d at 173. The Trial
Court erred in granting summary judgment for Appellee for its attorney’s fees. This
Court should reverse and render a take nothing judgment in favor of Appellants.
CONCLUSION AND PRAYER FOR RELIEF
WHEREFORE, PREMISES CONSIDERED, Appellants pray that this Court
reverse the judgment of the Trial Court and render judgment of in favor of
Appellants or, alternatively, remand the cause to the Trial Court for further
proceedings.
Respectfully submitted,
RENSHAW, DAVIS & FERGUSON, LLP
By: /s/ Katherine A. Ferguson
Katherine A. Ferguson
(SBN 06918050)
2900 Lee Street, Suite 102
P.O. Box 21
35
Greenville, Texas 75403-0021
Telephone: (903) 454-6050
Facsimile: (903) 454-4898
Email: rdflawoffice@yahoo.com
Richard L. Ray, Esq.
RAY & THATCHER, P.C.
300 S. Trade Days Blvd.
Canton, Texas 75103
Telephone: (903) 567-2051
Facsimile: (903) 567-0998
CERTIFICATE OF SERVICE
I certify that a true and correct copy of the Appellants’ Brief was served on
May 4, 2015 on the parties below by first class United States mail.
/s/Katherine A. Ferguson`
Katherine A. Ferguson
Larry M. Lesh
Law offices of Larry M. Lesh
1 Forest Park Drive
Richardson, Texas 75080
R. Paul Elliot
301 S. Main
Canton, Texas 75103
CERTIFICATE OF COMPLIANCE
I certify this document was produced on a computer using Microsoft Word
2013 and contains 6,569 words, as determined by the computer software’s word
count function, excluding sections of the document listed in Texas Rules of
Appellate Procedure 9.4(i)(1).
/s/Katherine A. Ferguson
Katherine A. Ferguson
36