Court of Appeals of Texas, Thirteenth District, Corpus Christi-Edinburg
On appeal from the 117th District Court of Nueces County, Texas.
Before Chief Justice Valdez and Justices Benavides and Longoria
NORA L. LONGORIA Justice
Marilyn McKeithan appeals a final judgment awarding Bradford M. Condit $37, 584 in damages for breach of contract, $20, 000 in exemplary damages for fraud, $23, 033 in attorney's fees, and $299 in court costs. In four issues, McKeithan argues the following: (1) the evidence is insufficient to support a judgment for fraud; (2) Condit is not entitled to recover both breach of contract damages and fraud damages, in violation of the one satisfaction rule; (3) the evidence is insufficient to support the damages award for breach of contract in the amount of $37, 584; and (4) the evidence is insufficient to support the award of attorney's fees in the amount of $23, 033.
For the reasons set forth below, we reverse the trial court's judgment in part. See Tex. R. App. P. 43.2(d). Specifically, we reverse the trial court's award of exemplary damages in the amount of $20, 000 because we conclude that the evidence is insufficient to prove that McKeithan committed fraud by making a material representation that was false. In addition, we reverse the award of attorney's fees in the amount of $23, 033 because we conclude that the evidence is insufficient to prove that $23, 033 was reasonable and necessary. We remand for a new trial on the fraud claim and request for attorney's fees. See id. In all other respects, we affirm the trial court's judgment. See Tex. R. App. P. 43.2(a).
In late 2008, McKeithan hired Condit to assist in defending her in a lawsuit arising out of a foreclosure and suit on a promissory note. After losing at trial, McKeithan hired two new lawyers. In May 2009, Condit withdrew from the case. Then, he filed the instant suit against McKeithan for unpaid attorney's fees. Condit later amended his suit to add a cause of action for fraud, alleging in relevant part as follows:
Plaintiff provided goods and services by way of legal representation to Defendant. After 30 days written demand, Defendant has failed to pay the debt of $47, 320.00. Additionally, Defendant committed fraud when she falsely represented to Plaintiff that she would pay for his services and expenses that he advanced, when in fact she had no intention of doing so. Plaintiff would not have provided the services he did but for Defendant's misrepresentations which was a producing and/or proximate cause of Plaintiffs damages. When such representations were made they were made with the intent to induce Plaintiff into providing legal services. Such conduct entitles Plaintiff to recover exemplary damages.
On June 1, 2009, McKeithan filed a pro se answer in the nature of a general denial. She subsequently amended her pleadings to add causes of action against Condit including breach of fiduciary duties. On December 31, 2009, Condit filed a motion for sanctions, requesting that the trial court prohibit McKeithan from testifying at trial. On January 8, 2010, the trial court held a hearing on the motion during which the court remarked as follows:
[McKeithan] failed to respond to discovery, failed to appear at several noticed depositions, failed to appear at the court-ordered deposition and failed to appear for mediations ordered by this Court, so I will strike her pleadings . . . and . . . [she] will not be allowed to present testimony - - not be allowed to present evidence .... It will be a very short trial.
The court did not subsequently enter an order striking McKeithan's pleadings.
On August 19, 2010, the case was called for trial. McKeithan did not appear. The court held a bench trial. Condit was the only witness. He testified in relevant part that he "agreed to continue the [legal] representation of" McKeithan based on her representation "that she did not have the funds to pay" his attorney's fees in advance in one "lump sum" but would instead pay "on a monthly basis." He testified that he "subsequently . . . found out that she [had] lied to . . . [him]." He testified that he later
"learned that in fact she had [subsequently] paid ... [a second attorney] a lump sum in excess of $20, 000." He also testified that she paid a third attorney an amount "in excess of $8, 000 in a lump sum." "Needless to say, " he testified, "I was the victim of her fraud is my allegation in the pleadings and what I'm testifying to the Court today. I would not have represented Ms. McKeithan, had I known the true facts about what she was telling me." According to Condit, he "expended in excess of 200 hours in the defense of that case [on behalf of McKeithan, ] . . . which comes out to, at $185 an hour, . . . $37, 584."
After testifying, Condit told the trial court the following:
[A]nd I'm also asking, Your Honor, for a directed verdict on her counterclaims for breach of fiduciary duties, common law fraud, unconscionable action or course of action, and any causation of any alleged damages that is being alleged, loss of use of funds, loss of opportunity costs, loss of credit and damage to credit reputation, mental anguish, or any conduct that would support an exemplary damages award. And so, I ask the Court for a directed verdict at this time ... for those causes of action.
Thereafter, the trial court said the following:
[T]here is absolutely no evidence before the Court with regards to any of the Defendant's counterclaims, and I'm going to grant a directed verdict against any and all direct or implied causes of action alleged by the Defendant in the pleadings.
In its final judgment, the trial court awarded the amounts set forth above and then stated in relevant part as follows:
The court directs a verdict on Counter-Plaintiff Marilyn McKeithan's pled causes of action, those being:
a. breach of fiduciary duties;
b. common law fraud;
c. unconscionable action or course of action;
d. any causation of any alleged damages, i.e,
1. Loss of use of funds
2. Loss of opportunity costs
3. Loss of credit and damage to credit reputation
4. Mental anguish;
e. conduct that would support exemplary damages; and the court enters a take nothing judgment. McKeithan now appeals the trial court's ...