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
5/25/2015 11:22:22 AM
CATHY LUSK
CLERK
No. 12-14-00365-CV
FILED IN
12th COURT OF APPEALS
TYLER, TEXAS
IN THE COURT OF APPEALS 5/25/2015 11:22:22 AM
TWELFTH DISTRICT OF TEXAS CATHY S. LUSK
AT TYLER Clerk
EDOM CORNER, LLC AND EARL A. BERRY, JR.,
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’ REPLY 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
Reply Issues Presented ............................................................................................... 6
Reply Issue One
THE TRIAL COUR ERRED IN FINDING THAT APPELLEEE WAS
THE PREVAILING PARTY IN THE LITIGATION
Reply Issue Two
THE TRIAL COURT ERRED IN FINDING NEITHER RES JUDICATA
NOR COLLATERAL ESTOPPEL BARRED APPELLEE’S SUIT
Reply Issue Three
THE TRIAL COURT ERRED IN FINDING BERRY INDIVIDUALLY
LIABLE IN APPELLEE’S SUIT
Reply Issue Four
THE TRIAL COURT ERRED IN AWARDING ATTORNEY’S FEES ON
SUMMARY JUDGMENT TO APPELLEE
Argument and Authorities.......................................................................................... 7
Conclusion and Prayer for relief .............................................................................. 13
Certificate of compliance of typeface and Word Count .......................................... 14
Certificate of Service ............................................................................................... 14
4
INDEX OF AUTHORITIES
State Cases:
Goldman v. Olmstead,
414 S.W.3d 346 (Tex. App. - Dallas 2013, no pet) ............................................ 8, 9
Igal v. Brightstar Information Technology Group, Inc.,
250 S.W.3d 78, 86 (Tex. 2008) ............................................................................ 10
In Re Nalle Plastics Family Ltd. Partnership,
406 S.W.3d 168 (Tex. 2013) ................................................................................. 14
Insurance Co. of the State of Pennsylvania v. Oraco,
170 S.W.3d 129 (Tex. App. – San Antonio 2005, no pet.)..................................... 9
It’s the Berry’s, LLC v. Edom Corner, LLC,
271 S.W.3d 765 (Tex. App. – Amarillo 2008, no pet.) ........................................ 10
Laredo Independent School Dist. v. Trevino,
25 S.W.3d 263 (Tex. App. – San Antonio 2000, pet. denied) ............................. 13
MBM Financial Corp. v. Woodlands Operating Co.,
292 S.W.3d 660 (Tex. 2009) ................................................................................. 13
Robbins v. Capozzi,
100 S.W.3d 18 (Tex. App. - Tyler 2002, no pet.) ................................................... 8
State Statutes:
TEX. BUS. ORGAN. CODE SEC. 101.113 .................................................................... 11
TEX. BUS. ORGAN. CODE SEC. 101.114 .................................................................... 11
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REPLY 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
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ARGUMENT AND AUTHORITIES
REPLY ISSUE ONE: THE TRIAL COUR ERRED IN FINDING THAT
APPELLEE WAS THE PREVAILING PARTY IN THE LITIGATION
In the Appellee’s Brief1 (hereinafter, the “Brief”) Appellee misstates the law
to support its argument that it was the prevailing party in the Litigation. Appellee
asserts that it prevailed because Appellants did not achieve the aim of evicting
Appellee from the property. Brief at 15. Appellants were not thwarted in the
objective to evict Appellee due to an adverse legal ruling; the passage of time
involved during the course of the Litigation rendered the issue moot because
Appellee forgot to renew the Lease and the Lease expired. Nothing about the
Litigation would have prevented Appellants from starting over again and pursuing
an eviction action against Appellee had the Lease still been in effect. Because there
was no decision on the merits by a court of competent jurisdiction that denied
Appellants’ the right to seek to evict Appellee, Appellee did not prevail in the
Litigation.
Appellee cites this Court to Robbins v. Capozzi, 100 S.W.3d 18 (Tex. App. -
Tyler 2002, no pet.) and Goldman v. Olmstead, 414 S.W.3d 346 (Tex. App. - Dallas
2013, no pet) in support of its argument, but fails to note the critical factual
distinction: in both Robbins and Goldman, the defendants successfully defended the
1
This Reply Brief will use the same abbreviations as used in the Appellants’ Brief.
7
claims on the merits. Robbins, 100 S.W.3d at. 27; Goldman, 424 S.W3d at 367.
“Whether a party is a prevailing party is based on success on the merits . . . . A
prevailing party is one who is vindicated by the trial court's judgment.” Robbins,
100 S.W.3d at 27, citing Insurance Co. of the State of Pennsylvania v. Oraco, 170
S.W.3d 129, 134 (Tex. App. – San Antonio 2005, no pet.) Appellee was never
vindicated by Appellants receiving an adverse ruling on the merits in the District
Court Case.2 Appellee therefore was not the prevailing party and was not entitled
to recover attorney’s fees. Similarly, Appellee either did not receive rulings in its
favor on the merits in any of the other cases comprising the Litigation, or the
Appellee’s request for attorney’s fees was denied in those rulings.
REPLY ISSUE TWO: THE TRIAL COURT ERRED IN FINDING
NEITHER RES JUDICATA NOR COLLATERAL ESTOPPEL BARRED
APPELLEE’S SUIT
In its brief, Appellee asserts that the District Court lacked jurisdiction over its
claims for attorney’s fees in the District Court Case and therefore res judicata does
not apply. Appellees are misrepresenting both the facts of the District Court Case
and the Seventh Court of Appeal’s ruling. Appellees filed a separate counterclaim
against Appellants in the District Court Case. (CR Vol. 2, #279-284). Appellee
sought an award of attorney’s fees on its counterclaim for a declaratory judgment.
2
Appellee did not raise the jurisdiction issue in the District Court Case; therefore, any positions taken by Appellee
at the District Court level were not ‘vindicated’ at the appellate court level.
8
The Trial Court denied all of Appellee’s claims in its declaratory judgment action.
(CR Vol. 2, #285) The Seventh Court specifically severed and dismissed the forcible
detainer action from the Appellee’s counterclaim, and affirmed the Trial Court’s
denial of attorney’s fees on Appellee’s declaratory judgment action. It’s the Berry’s,
LLC v. Edom Corner, LLC, 271 S.W.3d 765, 772 (Tex. App. – Amarillo 2008, no
pet) (Appellee “did not contend the absence of an award of attorney’s fees under the
Uniform Declaratory Judgment Acts . . . was error. We overrule [ITB’s] eleventh
issue as to its claim for attorney’s fees.”) The Trial Court did have jurisdiction over
Appellee’s claims for attorney’s fees in the District Court Case, and it denied the
claim. Appellee waived that issue by failing to argue that the Trial Court’s denial of
attorney’s fees under the declaratory judgments act was error. Thus the Seventh
Court of Appeals affirmed the Trial Court’s ruling, and that decision is now res
judicata. Appellee is seeking to correct its error in failing to raise the issue to the
Seventh Court of Appeals by bringing this action. The law does not allow Appellee
another bite at the apple.
In its Brief, Appellee does not contest the fact that in all of the other judgments
comprising the Litigation, Appellee either sought and was denied its claim for
attorney’s fees, or it did not raise the claim in those actions. “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.” Igal v. Brightstar Information
9
Technology Group, Inc., 250 S.W.3d 78, 86 (Tex. 2008) The Trial Court erred in
holding that Appellee’s claims were not barred by res judicata and the judgment of
the Trial Court should be reversed.
REPLY ISSUE THREE: THE TRIAL COURT ERRED IN FINDING
BERRY INDIVIDUALLY LIABLE IN APPELLE’S SUIT
It is significant that Appellee fails to address the fact that the Texas Business
and Organizations Code, Sections 101.113 and 101.114 wholly negate its claims
against Appellant Berry. Appellee’s brief fails to point to any fact to show that the
regulations of Appellant Edom Corner provided for the members to have any
individual liability for the debts of Appellant Edom Corner and further failed to show
any pattern or course of dealing by Appellant Berry that would establish individual
liability of Appellant Berry for the debts of Appellant Edom Corner. The Trial Court
erred in finding Appellant Berry liable. This Court should reverse the ruling of the
Trial Court and order that Appellees take nothing against Appellant Berry.
Appellee also ignores the fact that, assuming arguendo its tortured reading of
the Lease is correct and Appellant Berry was a party to the Lease, its claims against
Appellant Berry under the Lease necessarily arose from the same nexus of facts as
the claims against Appellant Edom Corner in the District Court Case and the other
cases comprising the Litigation. Appellee wholly fails to acknowledge, let alone
refute, the argument that those claims were compulsory counterclaims which
Appellee should have raised in any of the cases making up the Litigation. Appellee
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fails to address this because it cannot refute the clear case law that Appellee’s claims
against Appellant Berry are barred by res judicata. The Trial Court erred in finding
otherwise and this Court should reverse the judgment of the Trial Court and render
a judgment in favor of Appellants.
ISSUE FOUR: THE TRIAL COURT ERRED IN AWARDING
ATTORNEY’S FEES ON SUMMARY JUDGMENT TO APPELLEE
Appellee claims that Appellants wholly failed to rebut the presumption of
reasonableness of its fees. Appellee is incorrect. Appellants attached to their
response to the Third Motion the Bennett Affidavit (CR Vol. 9, #1481 1610).
Appellee claims the Bennett Affidavit did not rebut the “statutory presumption” of
reasonableness of its claims for attorney’s fees. Appellee is incorrect.
The Bennett Affidavit directly controverted the statements in prior affidavits
submitted by Appellee as to the reasonableness and necessity of the attorney’s fees.
For example, in paragraph 8, the Bennett Affidavit noted the practice of Appellee’s
lead attorney of billing in a minimum of half hour increments. (CR Vol. 9, #1484)
The Bennett Affidavit stated that such a practice was neither reasonable, usual nor
customary in Van Zandt County, Texas. In paragraph 9, the Bennett Affidavit noted
that many of the entries included as part of the claim for “attorney’s fees” were
actually claims for reimbursement of costs incurred rather than attorney work, and
as such did not belong as part of a claim for attorney fees. (CR Vol. 9, #1484-85)
In paragraph 11, the Bennett Affidavit noted that there were numerous
11
inconsistencies between the bills of the three attorneys for Appellee (CR Vol. 9,
#1486), including instances where one attorney billed a certain time for attending a
hearing while another attorney billed significantly less for attending and
participating in the same hearing (CR Vol. 9, #1486), and that multiple attorneys
billed for the same task, a redundancy which Bennett stated was not a reasonable,
usual or customary practice in Van Zandt County, Texas.
Appellee cites this court to Laredo Independent School Dist. v. Trevino, 25
S.W.3d 263 (Tex. App. – San Antonio 2000, pet. denied) in support. Appellees are
misconstruing Laredo. In Laredo, Trevino presented summary judgment evidence
as to the usual and customary fee to be recovered in a quasi-contract case. Trevino
presented evidence that a 40% contingency fee was a reasonable and customary fee.
Laredo “introduced no evidence to the contrary.” Id. at. 266 (emphasis added). The
Laredo case does not stand for the proposition that if one side argues its fees are
usual and customary that the court is then bound by law to find them so. Rather,
Laredo merely supports that proposition that a trial court may find attorney’s fees
usual and customary if the other party fails to challenge that assertion. This is not
what happened in the present case.
Appellee is engaging in a circular argument. Appellee asserts a trial court
may take judicial notice of a usual and customary fee, and then attempts to extend
that rule to provide that if one party asserts its fee is the usual and customary fee, the
12
opposing party by law cannot rebut that assertion. This is incorrect. Just because
Appellee claimed its fees were usual, reasonable and customary does not mean by
law that such fees were. Appellants presented an affidavit that raised fact questions
that a large portion of the attorney fees claimed by Appellee were not usual,
customary or reasonable. Because Appellants raised a fact issue, the Trial Court
erred in granting summary judgment in favor of Appellee.
Appellee fails to address MBM Financial Corp. v. Woodlands Operating Co.,
292 S.W.3d 660 (Tex. 2009), which holds that without actual damages, a claim for
attorney’s fees is inappropriate. Appellee never sought, nor was it awarded, actual
damages in any of the cases that made up the Litigation. Therefore, it is not entitled
to recover attorney’s fees in this cause.
Finally, it is important to note that Appellee has yet again misconstrued the
law to support its claims. Appellee asserts that In re Nalle Plastics Family Limited
Partnership, 406 S.W.3d 168 (Tex. 2013) supports its position that it can recover
attorney’s fees without having recovered any actual damages. Appellee is incorrect.
Nalle merely recognized that if the “underlying suit concerns a claim for attorney’s
fees as an element of damages . . . then those fees may property be included in a
compensatory damage award.” Id at 175. In other words, if the underlying case, for
example, was for collection of attorney’s fees by an attorney pursuant to a contract
for the rendering of legal services, then the attorney’s fees would be part of the
13
compensatory damages. Nalle specifically recognized that suits to recover
attorney’s fees incurred for prosecuting a claim, as is the case here, are not
compensatory damages and are not recoverable.
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
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
14
CERTIFICATE OF SERVICE
I certify that a true and correct copy of the Appellants’ Brief was served on
May 25, 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 1,861 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
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