PM Holdings, LLC, Robert Mize and David Piper v. Jong Song

Affirmed in Part as Modified, Reversed and Remanded in Part, and
Memorandum Opinion filed February 28, 2017.
In The
Fourteenth Court of Appeals
NO. 14-15-00933-CV
PM HOLDINGS, LLC, ROBERT MIZE, AND DAVID PIPER, Appellants
V.
JONG SONG, Appellee
On Appeal from the County Civil Court at Law No. 3
Harris County, Texas
Trial Court Cause No. 1067143
MEMORANDUM OPINION
This is a forcible detainer (eviction) action originally brought by Jong Song
in the justice court and tried de novo in the county court. PM Holdings, LLC,
Robert Mize, and David Piper (the “PM Parties”) now appeal the judgment of the
county court in favor of Song. After a bench trial, the county court awarded Song
possession of the property, damages, attorney’s fees, and costs. On appeal, the PM
Parties challenge the legal and factual sufficiency of the evidence to support the
county court’s judgment. We affirm in part as modified and reverse and remand in
part.
I. FACTUAL AND PROCEDURAL BACKGROUND
Due to the limited evidence introduced at trial, we utilize the clerk’s record
to supplement the background facts when those facts do not appear to be in
dispute. Mize and Song entered into a commercial lease related to real property at
2003 Union Street, Houston, Harris County, Texas. Mize’s monthly rent under the
lease was $3,750. The original term of the lease was from December 1, 2008 to
November 30, 2013. The lease contained a commercial lease expense
reimbursement addendum requiring the tenant to pay its pro rata share (100%) of
ad valorem taxes on the property monthly. The lease was renewed and Mize
assigned the lease to Piper or PM Holdings.1 Piper is the managing partner of PM
Holdings.
Song, through counsel, sent a letter to Mize and Piper regarding a “notice of
increase[d] payment and demand for payment - $26,250.00 plus late fees”
notifying them of default under the lease on May 11, 2015. The letter stated that
seven months’ rent was past due and late fees totaling $1,312.50 were owed as a
result. Further, the letter indicated $17,658 in ad valorem taxes on the property for
the years 2013 and 2014 had just been paid by Song. The letter increased rent by
$1,471.50 a month unless Song was reimbursed in full for the ad valorem taxes.
The letter provided three days to become compliant under the lease. Piper testified
he requested an accounting which he did not receive.
A “notice of lease termination and notice to and [sic] vacate” was sent by
Song, through counsel, to Mize and Piper on May 20, 2015. The letter indicated
1
The assignment is not in the record and the testimony is unclear as to the identity of the
assignee.
2
the account remained in default and Song was terminating the lease. Three days
were allowed to vacate the premises. Subsequently, Song filed a forcible detainer
action in the justice court. While that action was pending, Piper presented a
$26,250 check to Song’s counsel on June 23, 2015. Piper was under the
impression that the matter was resolved, but he was not provided with a settlement
agreement. The forcible detainer action was dismissed after the check was
tendered. Song cashed the check.
Song, through counsel, mailed a “demand for payment - $5,221.50 plus late
fees” to the PM Parties on June 23, 2015.2 The letter indicated the base monthly
rent of $5,221.50 for June 2015 had not been paid. It also indicated $261.07 in late
fees was due as a result of the unpaid rent. The letter stated failure to make
payment of $5,482.57 within three days would constitute default under the lease.
A second “notice of lease termination and notice to and [sic] vacate” was
sent to the PM Parties on June 27, 2015. The letter indicated the tenant was in
default for failure to pay the amount past due within the time specified by the June
23, 2015 letter. The letter provided eleven days to vacate the premises.
Song filed a second forcible detainer action in the justice court against the
PM Parties on July 9, 2015. Song sought possession of the property, along with
past due rent, attorney’s fees, costs, and interest. The justice court signed a
judgment of eviction in favor of Song on August 6, 2015. The justice court also
awarded attorney’s fees and court costs to Song. The PM Parties appealed the
justice court’s judgment to the county court.
The PM Parties filed a general denial in the county court. After a bench
2
The June 23, 2015 letter was not introduced into evidence during the trial, but is in the
clerk’s record. We include reference to this letter for background purposes only and express no
opinion as to whether any evidence related to this letter was properly before the county court.
3
trial, the county court signed an order granting eviction on October 19, 2015. The
county court awarded Song $25,612 in damages, $6,700 in attorney’s fees, and
$836.53 in costs. The county court did not issue findings of fact or conclusions of
law.
The PM Parties superseded the judgment by filing a $27,729.31 cash deposit
with the Harris County clerk. This appeal followed.
II. ANALYSIS
A. Standard of Review
Where the trial court does not file findings of fact and conclusions of law,
we imply all findings necessary to the court’s judgment, if supported by the
evidence. See BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 795 (Tex.
2002). We review the PM Parties’ complaints presuming all findings of fact and
conclusions of law were made in favor of Song. We will affirm the judgment if it
can be upheld on any legal theory supported by the evidence. Worford v. Stamper,
801 S.W.2d 108, 109 (Tex. 1990) (per curiam).
When the appellate record includes the reporter’s and clerk’s records, an
appellant may challenge implied findings by contesting the legal and factual
sufficiency of the evidence in the record to support them. See BMC Software
Belg., 83 S.W.3d at 795. We apply the same standards of review as those applied
to the review of jury findings or a trial court’s findings of fact. RR Maloan
Investments, Inc. v. New HGE, Inc., 428 S.W.3d 355, 359 (Tex. App.—Houston
[14th Dist.] 2014, no pet.).
When reviewing the legal sufficiency of the evidence, we consider the
evidence in the light most favorable to the challenged finding, making every
reasonable inference to support it. City of Keller v. Wilson, 168 S.W.3d 802, 822
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(Tex. 2005). We must credit favorable evidence if a reasonable factfinder could
and disregard contrary evidence unless a reasonable factfinder could not. Id. at
827. We must determine whether the evidence at trial would enable reasonable
and fair-minded people to reach the verdict at issue. Id.When an appellant challenges the legal sufficiency of the evidence on a
matter for which he did not have the burden of proof, he must demonstrate on
appeal that there is no evidence to support the adverse findings. Croucher v.
Croucher, 660 S.W.2d 55, 58 (Tex. 1983); Foley v. Capital One Bank, N.A., 383
S.W.3d 644, 646 (Tex. App.—Houston [14th Dist.] 2012, no pet.). A “no
evidence” challenge will be sustained when the record discloses one of the
following situations: (a) a complete absence of a vital fact; (b) the court is barred
by rules of law or of evidence from giving weight to the only evidence offered to
prove a vital fact; (c) the evidence offered to prove a vital fact is no more than a
mere scintilla; or (d) the evidence conclusively establishes the opposite of the vital
fact. Ford Motor Co. v. Castillo, 444 S.W.3d 616, 620 (Tex. 2014). If the
factfinder would have to guess whether a vital fact exists, the evidence does not
exceed a scintilla. Foley, 383 S.W.3d at 647.
In reviewing a factual sufficiency challenge, we consider and weigh all the
evidence in a neutral light and may set aside the finding only if the evidence is so
weak or the finding is so against the great weight and preponderance of the
evidence that it is clearly wrong and unjust. Green v. Alford, 274 S.W.3d 5, 23
(Tex. App.—Houston [14th Dist.] 2008, pet. denied) (en banc).
B. Forcible Detainer
Forcible detainer is committed by a person who refuses to surrender
possession of real property on demand if the person is a tenant or subtenant who
willfully and without force holds-over after termination of their right of possession.
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See Tex. Prop. Code Ann. § 24.002(a)(1) (West 2014). The forcible detainer
action is designed to be a speedy, simple, and inexpensive means to regain
possession of property. Salaymeh v. Plaza Centro, LLC, 264 S.W.3d 431, 437
(Tex. App.—Houston [14th Dist.] 2008, no pet.). As forcible detainer is a
statutory cause of action, strict compliance with the statute is required. Geters v.
Baytown Housing Authority, 430 S.W.3d 578, 584 (Tex. App.—Houston [14th
Dist.] 2014, no pet.).
C. Default and Notice of Default
The PM Parties contend that Song failed to offer legally and factually
sufficient evidence to establish that they were in default under the lease and that
Song sent proper notice of default.3 A demand for possession must be made in
writing and comply with the requirements of Tex. Prop. Code § 24.005. Tex. Prop.
Code Ann. § 24.002(b). Under Section 24.005, the landlord must give a tenant
who defaults at least three days’ written notice to vacate before filing a forcible
detainer suit, unless the lease provides for a shorter or longer period. See id. §
24.005.
The lease in this case recognizes two types of notice relevant here: a notice
of non-compliance, which is required in certain circumstances before a tenant will
be in default; and a notice to vacate. The lease states a tenant’s right to occupy the
3
Section 24.007 of the Property Code currently states “[a] final judgment of a county
court in an eviction suit may not be appealed on the issue of possession unless the premises in
question are being used for residential purposes only.” Tex. Prop. Code Ann. § 24.007 (West
Supp. 2016). However, at the time final judgment was signed by the county court, Section
24.007 read “[n]otwithstanding any other law, an appeal may be taken from a final judgment of a
county court, statutory county court, statutory probate court, or district court in an eviction suit.”
Tex. Prop. Code Ann. § 24.007(b) (West 2014). The statutory language governing an appeal,
when the judgment was signed in this case, did not limit jurisdiction to issues of possession
solely in regards to residential premises. Accordingly, we have jurisdiction to address the issues
the PM Parties raise which are related to the issue of possession.
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property can be terminated with three days’ written notice to vacate if the tenant is
in default. A tenant is in default under the lease “[i]f Landlord does not actually
receive at the place designated for payment any rent due under this lease within 5
days after it is due.” Unlike a tenant’s other failures to comply, the lease does not
require any notice of non-compliance before a defendant will be in default for
failure to timely pay rent.4
The PM Parties contend that the evidence does not establish they failed to
pay rent in June. Song argues the county court could have concluded June rent
was not timely paid. Song presented evidence at trial that the last payment
received from the PM Parties was $26,250. The evidence established this payment
was given to Song on June 23, 2015. Song testified she had not received any
payment since that date, and her accounts payable ledger showed rent was due for
June.5 Piper testified his understanding of the $26,250 payment was that it settled
all claims between the parties through June 23, 2015. He testified he calculated the
payment based on rent due through June. No settlement agreement was offered
into evidence related to the payment or first forcible detainer action.
We imply from the county court’s judgment that it found a valid lease
between the parties and the PM Parties were in default for failing to timely pay
June rent. Viewing the evidence in the light most favorable to the county court’s
determination, we conclude there is some evidence in the record that would enable
a reasonable factfinder to conclude the PM Parties were in default under the lease.
Song testified her accounts payable ledger showed rent due for June. Additionally,
4
As to failures other than payment of rent, the lease states “[i]f Tenant fails to comply
with this lease for any other reason within 10 days after Landlord notifies Tenant of its failure to
comply, Tenant will be in default.”
5
Song offered two accounts payable ledgers into evidence at trial. After the entry of the
$26,250 payment on the ledgers, both showed an outstanding balance of $5,300.
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the $26,250 payment was made more than five days after June 1. The payment by
the PM Parties, even if it included June rent, was untimely under the lease.
Further, while the PM Parties presented testimony that they paid June rent,
we cannot conclude that finding the PM Parties in default under the lease is so
contrary to the overwhelming weight of the evidence as to be clearly wrong and
unjust. The PM Parties’ understanding that the $26,250 payment cured any
existing default under the lease was contested and there was no agreement offered
to support the PM Parties’ contention. Accordingly, there is legally and factually
sufficient evidence that the PM Parties were in default under the lease for the
failure to timely pay rent in June 2015.
The county court also impliedly concluded that notice of non-compliance
was not required. The notice contained in the June 23, 2015 letter was not offered
into evidence at trial. The PM Parties cite to no legal authority or provision in the
lease requiring notice of non-compliance prior to a notice to vacate in this case.
Additionally, our review of the lease does not reveal a requirement of notice of
non-compliance for failure to timely pay rent under the lease. There is some
evidence in the record from which a reasonable factfinder could conclude notice of
non-compliance was not required, viewing the evidence in the light most favorable
to the county court’s judgment. Further, as the PM Parties offered no evidence
establishing notice of non-compliance was required by law or the lease, this
finding is not so contrary to the overwhelming weight of the evidence as to be
clearly wrong or unjust. Accordingly, we conclude the implied finding of the
county court, that notice of non-compliance was not required, is supported by
legally and factually sufficient evidence. We overrule the PM Parties’ first issue.
D. Damages
The PM Parties argue that the evidence is legally and factually insufficient
8
to support the county court’s award for rent and ad valorem taxes. “Damages must
be established with reasonable certainty, not mathematical precision.” O and B
Farms, Inc. v. Black, 300 S.W.3d 418, 422 (Tex. App.—Houston [14th Dist.]
2009, pet. denied). We evaluate the legal and factual sufficiency of the evidence
based on the measure of damages presented to the county court. See Energy
Maintenance Services Group I, LLC v. Sandt, 401 S.W.3d 204, 219 (Tex. App.—
Houston [14th Dist.] 2012, pet. denied).
We first address the PM Parties’ subissue challenging any award of ad
valorem taxes. The PM Parties contend Song is not entitled to an award of ad
valorem taxes because Song failed to provide timely notice as required by the
lease. The failure to provide timely notice is a defense to Song’s claim for rent,
which the evidence established was increased based on ad valorem taxes owed. In
this case, the PM Parties’ reliance on the timely notice requirement in contesting
the amount due under the lease is an affirmative defense. The PM Parties’ answer
contained only a general denial and did not include any affirmative defense based
on the failure to timely provide notice. The issue was not tried by consent. We
conclude this affirmative defense was waived. See Tex. R. Civ. P. 94; Hassell
Const. Co., Inc. v. Stature Commercial Co., Inc., 162 S.W.3d 664, 667 (Tex.
App.—Houston [14th Dist.] 2005, no pet.).
The county court awarded $25,612 in damages. Song offered no evidence
that she was entitled to precisely $25,612 in damages. At trial, Song did not pray
for a specific amount, nor did she include a prayer for a specific amount in her
petition. In response to questioning by the court, Song’s counsel indicated that rent
for June, July, August, September, and October was being contested.
The evidence established the rental rate under the lease was $3,750 per
month. Song also introduced evidence that the rental rate was increased by
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$1,471.50 per month due to the tenant’s pro rata share of ad valorem taxes
beginning June 1, 2015. Further, the lease provided for a late fee of 5% of the
amount due if rental payments were not received within five days of the due date.
The late fee based on an amount due including rent and ad valorem taxes is
$261.07 per month.
We imply from the county court’s judgment that it found Song entitled to
damages, including rent, ad valorem taxes, and late fees, due to the PM Parties’
default under the lease. Viewing the evidence in the light most favorable to the
county court’s determination, we conclude there was some evidence in the record
as to the fact of damages which would support an award to Song by the county
court. See ERI Consulting Engineers, Inc. v. Swinnea, 318 S.W.3d 867, 877–78
(Tex. 2010); Garza v. Cantu, 431 S.W.3d 96, 108 (Tex. App.—Houston [14th
Dist.] 2013, pet. denied) (noting courts distinguish between uncertainty as to the
fact of damages, which is fatal to recovery, and uncertainty as to the amount of
damages, which is not).
Based on a review of the record, we also conclude that there is legally and
factually sufficient evidence of a higher amount of damages than that awarded by
the county court. The evidence summarized above supported a monthly amount
owed by the PM Parties, when rental payments were untimely, of $5,482.57. Had
the court awarded damages as prayed for by Song from June to October, the
damages award would have been $27,412.85. We also note the PM Parties and
Song provide damage calculations in their briefs which exceed the amount
awarded by the county court.
Because the record supports a higher award of damages, any error in the
county court’s damage award is harmless to the PM Parties. See McCann v.
Brown, 725 S.W.2d 822, 824–25 (Tex. App.—Fort Worth 1987, no writ)
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(“appellant cannot complain that he was charged too little and thus obtain a new
trial”); Gulftide Gas Corp. v. Cox, 699 S.W.2d 239, 244–45 (Tex. App.—Houston
[1st Dist.] 1985, writ ref’d n.r.e.) (“Since the evidence was sufficient to support an
award at least equal to that made by the jury, the error, if any, in calculating the
measure of damages was either harmless or beneficial to appellant.”). Because any
error was harmless, we overrule the PM Parties’ second issue. See Tex. R. App. P.
44.1.
E. Attorney’s Fees and Costs
The PM Parties contend there is legally and factually insufficient evidence to
support the county court’s award of attorney’s fees. Reasonable attorney’s fees
and costs are recoverable in this matter under section 24.006 of the Property Code
and the lease. Tex. Prop. Code Ann. § 24.006(b), (d). An award of attorney’s fees
must be supported by evidence that the fees are reasonable and necessary. See
Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1, 10 (Tex. 1991). The
reasonableness of attorney’s fees is generally a fact issue. See Garcia v. Gomez,
319 S.W.3d 638, 642 (Tex. 2010). We review attorney’s fee awards for an abuse
of discretion. Ridge Oil Co v. Guinn Invs., Inc., 148 S.W.3d 143, 163 (Tex. 2004).
Song sought to prove entitlement to reasonable attorney’s fees by submitting
an affidavit for attorney’s fees with billing time sheets attached in support. No
testimony was offered regarding Song’s claim for attorney’s fees. The affidavit
submitted in support of Song’s claim for attorney’s fees used the lodestar method
relating the hours worked multiplied by the hourly rate for a total fee. See Long v.
Griffin, 442 S.W.3d 253, 255 (Tex. 2014). We evaluate the sufficiency of
evidence supporting the attorney’s fees awarded in this case under the lodestar
method. See Auz v. Cisneros, 477 S.W.3d 355, 360 (Tex. App.—Houston [14th
Dist.] 2015, no pet.).
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When a party applies for an award of attorney’s fees under the lodestar
method by multiplying hours worked by a reasonable hourly fee, as did Song, it
bears the burden of documenting the hours expended on the litigation and the value
of those hours. El Apple I, Ltd. v. Olivas, 370 S.W.3d 757, 761 (Tex. 2012). The
proof should include the nature of the work, who performed the services and his
rate, approximately when the services were performed, and the number of hours
worked. Id. at 763. This proof may not be based on generalities, and requires
enough specific details of who performed which tasks when and at what rate so
that the trial court has sufficient information to meaningfully review the fee
request. Long, 442 S.W.3d at 255.
The affidavit for attorney’s fees stated 26.80 hours were spent on this case.
Billing time sheets were attached in support of the affidavit which included time
entries, with general descriptions, totaling 16.20 hours. While the billing time
sheets state “total billable hours: 26.80” there are no time entries detailing work for
the remaining 10.60 hours. As Song did not present trial testimony regarding
attorney’s fees, no evidence beyond the affidavit and billing time sheets was
offered in support of attorney’s fees.
The county court awarded attorney’s fees in the full amount stated in the
affidavit, $6,700, based on 26.80 hours worked. Without additional evidence as to
the nature of the work performed during the 10.60 hours not reflected on the billing
sheets, Song failed to submit legally sufficient evidence to allow for meaningful
review of the entire amount of attorney’s fees claimed. We conclude that although
there is evidence to support an award of attorney’s fees, the amount of fees
awarded by the county court is not supported by legally sufficient evidence. We
sustain the PM Parties’ third issue as to attorney’s fees and reverse and remand the
award of attorney’s fees for a redetermination of the award. See El Apple, 370
12
S.W.3d at 765; Auz, 477 S.W.3d at 362.
The PM Parties also challenge the county court’s award of costs contending
not all costs shown on the billing sheet are related to this case and there is a
duplication of the filing fee.6 In response, Song states she will “concur in a just
reduction of her recoverable costs: [sic] for example, she will forego costs
pertaining to the prior eviction proceeding.” To preserve error for appellate
review, a timely and reasonably specific objection, followed by an adverse ruling,
is required. Tex. R. App. P. 33.1(a). Failure to file a motion to modify or retax
costs results in a waiver of the right to complain on appeal. See Jackson v.
LongAgriBusiness, L.L.C., 2013 WL 84921, *6 (Tex. App.—Houston [14th Dist.]
2013, no pet.); Wright v. Pino, 163 S.W.3d 259, 261–62 (Tex. App.—Fort Worth
2005, no pet.). However, because Song concurs in a just reduction of costs, we
modify the award in the amount of $532, for costs arising prior to the forcible
detainer action in which judgment was rendered and the reflection of a duplicative
filing fee for this case not reflected on the clerk’s bill of costs in the record. See
Wright, 163 S.W.3d at 262 (modifying award of costs based on appellee agreement
that amount erroneously included even though error not preserved). We modify
the award of taxable costs by that amount to a total of $304.53. Otherwise, we
conclude the PM Parties failed to preserve error as to the calculation of court costs.
We sustain the PM Parties’ third issue as to attorney’s fees and reverse and
remand this case for a redetermination of attorney’s fees. We modify the award of
costs and otherwise, overrule the remainder of the PM Parties’ third issue.
6
We review the PM Parties’ challenge to the award of court costs to determine if there is
a basis for the costs awarded, not to determine if sufficient evidence was presented at trial to
prove each cost.
13
F. Personal Liability of Piper
The PM Parties contend that the evidence is insufficient to establish that
Piper is personally liable in his individual capacity as a guarantor on the lease.
Song contends there is sufficient evidence that Piper is personally liable as a tenant
and a party under the lease. While the PM Parties state the finding is both legally
and factually insufficient, they challenge the county court’s finding of liability as
to Piper based on a no-evidence challenge. Accordingly, we construe this issue as
a legal-sufficiency challenge.
Piper testified he is the managing partner of PM Holdings. He stated he was
representing himself and PM Holdings during the trial. The evidence at trial did
not include the management agreement for PM Holdings. Song did not contest PM
Holdings’ status as a limited-liability company. For our purposes we presume PM
Holdings is a properly organized limited-liability company such that a member
would generally be immune from liability for its debts. See Tex. Bus. Orgs. Code
Ann. § 101.114 (West 2012).
Mize testified at trial that he assigned his leasehold interest to Piper. The
assignment is not in the record on appeal. Piper also testified that the lease in the
record was the commercial lease he assumed from Mize other than the handwritten
notations. The testimony is unclear as to whether the lease was assumed by Piper
personally or in his capacity as managing partner of PM Holdings.
We imply from the county court’s judgment it found Piper personally liable.
Viewing the evidence in a light most favorable to the county court’s decision, there
is some evidence that Piper individually, and not PM Holdings, was the assignee of
the lease. Based on this evidence, a reasonable factfinder could conclude Piper is
personally liable on the lease. We overrule the PM Parties’ fourth issue.
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III. CONCLUSION
We reverse the portion of the county court’s judgment awarding attorney’s
fees and remand for a redetermination of attorney’s fees consistent with this
opinion. We modify the award of taxable costs to a total of $304.53. The
remainder of the county court’s judgment is affirmed as modified.
/s/ Marc W. Brown
Justice
Panel consists of Justices Busby, Donovan, and Brown.
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