Court of Appeals of Texas, Fifth District, Dallas
WOODHAVEN PARTNERS, LTD., WH MANAGEMENT, INC., MARK JOHNS, PMR PARTNERS I, LTD., SUNETICS INTERNATIONAL, L.P. A/K/A SUNETICS INTERNATIONAL, INC., AND JCMJ VENTURES, L.L.C., Appellants
SHAMOUN & NORMAN, L.L.P. F/K/A SHAMOUN, KLATSKY, NORMAN, Appellee
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On Appeal from the County Court at Law No. 4, Dallas County, Texas. Trial Court Cause No. CC-10-00907-C.
For appellants: Evan Lane (Van) Shaw, Janet R. Randle, Law Offices of Van Shaw, Dallas, TX.
For appellees: Jonathan J. Cunningham, C. Gregory Shamoun, Kevin Moran, Shamoun & Norman, LLP, Dallas, TX.
Before Justices FitzGerald,
Lang, and Myers.
LANA MYERS, JUSTICE.
This is an appeal from a summary judgment granted in favor of appellee, Shamoun & Norman, L.L.P. f/k/a Shamoun, Klatsky, Norman, against appellants, Woodhaven Partners, Ltd., WH Management, Inc., Mark Johns, PMR Partners I, Ltd., Sunetics International, L.P. a/k/a Sunetics International, Inc., and JCMJ Ventures, L.L.C. In six issues, appellants argue the trial court erred by (1) striking a summary judgment affidavit filed by appellant Mark Johns; (2) granting appellee's traditional motion for summary judgment; (3) granting appellee's no-evidence summary judgment motion; (4) overruling appellants' objections to the summary judgment affidavit filed by C. Gregory Shamoun; (5) finding Mark Johns jointly and severally liable with Sunetics International, Inc.; and (6) finding that appellee did not prove it was entitled to the damages and attorneys' fees awarded by the trial court. We affirm the trial court's judgment in part, and reverse and remand for further proceedings.
Background and Procedural History
This appeal arises from a lawsuit brought by appellee, a Dallas law firm, for non-payment of various attorneys' fees incurred during four legal matters. In April of 2007, appellee was hired to represent appellant Sunetics International, Inc. (" Sunetics, Inc.," unless otherwise indicated), in a complex patent infringement case against Lexington Lasercomb I.P.A.G. and Lexington International, L.L.C. (the " Sunetics litigation" ). The agreement was signed by Mark Johns, Sunetics, Inc.'s president and secretary. Also in April of 2007, appellee was hired to represent appellant Woodhaven Partners, Ltd., in a real estate litigation and contract dispute against Marlin Land Development, L.L.C. (the " Marlin litigation" ). The agreement was signed by Johns, the president of Woodhaven Partners. In August of 2007, appellants Woodhaven Partners, Ltd., WH Management, Inc., PMR Partners I, Ltd., and Johns hired appellee to represent them in litigation involving claims brought by Balch Springs Development II, L.P. (the " Balch Springs litigation" ). The agreement was signed by Johns as the authorized agent for PMR Partners, Woodhaven, WH Management, and by Johns individually. The following April, appellee was hired by Johns to represent him in proceedings involving the conservatorship of Johns's child (the " Johns custody litigation" ).
On February 10, 2010, appellee brought suit against Woodhaven Partners, Ltd., Mark Johns, WH Management, Inc., PMR Partners I, Ltd., Sunetics International, L.P., Sunetics International, Inc., and JCMJ Ventures, L.L.C. (collectively, " appellants" ) asserting causes of action for sworn account, breach of contract, and, alternatively, promissory estoppel and quantum meruit, and fraud and fraud in the inducement, based on appellants' failure to pay incurred attorneys' fees pursuant to the retainer agreements. Appellants answered. Appellants Mark Johns, Woodhaven Partners, Ltd., and WH Management counterclaimed against appellee for breach of contract, negligence, negligent misrepresentation, fraud, violations of the Texas Deceptive Trade Practices Act (DTPA), and breach of fiduciary duty, alleging that appellee overcharged appellants for legal services:
[Appellants] would show that [appellants] and [appellee] entered into an agreement whereby [appellee] agreed to provide legal services to [appellants] at a reasonable rate. Notwithstanding this agreement, [appellee] overcharged [appellants] for the legal services in issue, as the billings [appellants] received from [appellee] were not proper and were not accurate causing damages to [appellants] in excess of the minimum jurisdictional limits of this Court.
Appellants also alleged affirmative defenses of ratification, waiver, fraud, estoppel, laches, unclean hands, set-off, prior material breach, and the economic loss rule.
On October 4, 2010, appellee filed a traditional and no-evidence motion for partial summary judgment. The summary judgment motion was supported, in part, by an affidavit from C. Gregory Shamoun, appellee's president and managing partner. After various pleadings were supplemented and amended by the parties, appellants filed their response to the motion for summary judgment and objected to Shamoun's affidavit. Affidavits from Mark Johns and Janet Randle, one of the attorneys of record for appellants, were included with appellants' response to appellee's summary judgment motion.
After another round of amended and supplemented pleadings, appellee filed, on April 19, 2011, an amended traditional and no-evidence motion for partial summary judgment. On May 11, 2011, along with their response to the amended motion for partial summary judgment, appellants filed a " Supplement to All Existing Answers," which purported to be a verified denial of appellee's claim for suit on a sworn account. Appellee objected to and moved to strike Mark Johns's and Janet Randle's affidavits.
On June 2, 2011, the trial court granted, in part, appellee's amended motion for partial summary judgment. The trial court sustained appellee's objections to Johns's affidavit and overruled its objections to Janet Randle's affidavit. The court then concluded that, given deficiencies in appellee's pleadings and proof, granting summary judgment against all appellants would be reversible error. The trial court thus granted summary judgment as to all of appellee's claims against (1) Sunetics, Inc. for the Sunetics litigation, and all of its affirmative defenses and counterclaims; (2) Woodhaven Partners for the Marlin litigation, and all of its affirmative defenses and counterclaims; (3) Woodhaven Partners, WH Management, PMR Partners, and Johns for the Balch Springs litigation, and all of their affirmative defenses and counterclaims; and (4) Johns, individually, for the Johns custody litigation, and all of his affirmative defenses and counterclaims. The trial court did not grant summary judgment against Johns
for the Sunetics litigation or against WH Management for the Marlin litigation. The trial court also declined to award attorneys' fees because it could not determine the appropriate amount of fees to award, given that appellee's " attorney's fees affidavit involves fees against certain Defendants against whom Judgment has not been achieved," and that there was no " adequate segregation of fees."
After supplementing its Fourth Amended Petition on June 30, 2011, appellee filed a second summary judgment motion. The motion sought attorneys' fees and to hold Johns jointly and severally liable with Sunetics, Inc. for the Sunetics litigation, and WH Management jointly and severally with Woodhaven for the Marlin litigation. It was supported by an affidavit filed by Shamoun, along with numerous attached documents. Appellee also provided a segregation of its attorneys' fees in the Marlin and Sunetics litigation, supported by a second Shamoun affidavit. In their response, appellants objected to Shamoun's first affidavit and moved to strike certain exhibits that accompanied the affidavit.
In the final judgment signed on September 29, 2011, the trial court granted appellee's second motion for summary judgment in its entirety. The court struck one sentence of the Shamoun affidavit, but overruled all of appellants' other objections. The court's final judgment found, inter alia, (1) against Sunetics, Inc. and Mark Johns, jointly and severally, for $244,732.95 in actual damages based on the Sunetics litigation, and $53,207.17 in attorneys' fees; (2) against Woodhaven Partners and WH Management, jointly and severally, for $61,163.46 in actual damages attributable to the Marlin litigation, and $18,853.30 in attorneys' fees; (3) against Woodhaven Partners, WH Management, PMR Partners, and Mark Johns, jointly and severally, for $11,102.38 in actual damages based on the Balch Springs litigation, and $11,546.41 in attorneys' fees; and (4) against Mark Johns, individually, for $89,773.89 in actual damages attributable to the Johns custody litigation, and $23,456.65 in attorneys' fees. Appellants filed a motion for new trial that was overruled by operation of law, followed by the instant notice of appeal.
1. Affidavit of Mark Johns
In their first issue, appellants argue that the trial court erred by striking the affidavit testimony of Mark Johns because the testimony " was admissible under governing case law and the applicable retainer agreements."
After appellee filed its traditional and no-evidence motion for summary judgment seeking summary judgment as to its causes of action and appellants' counterclaims, appellants' response included an affidavit from Mark Johns disputing the reasonableness and necessity of the attorneys' fees that are the subject of this lawsuit. Appellee moved to strike paragraphs 4, 8, 12, and 16 of the Johns affidavit as it applied to the reasonableness and necessity of the attorneys' fees and services.
In each of the challenged paragraphs, Johns began by quoting the following language that is found in all of the relevant retainer agreements between appellants and appellee:
For purposes of this Engagement Letter, the Engagement means rendering of reasonable and necessary legal services including, without limitation, conducting a preliminary investigation; drafting documents, correspondence and pleadings; motion practice; conducting and defending discovery; attending mediation
and trial; and drafting settlement documents. Reasonable and necessary legal services shall be those which [the client] and [appellee] decide are reasonable and necessary to perform the Engagement . . . [EMPHASIS ADDED].
Johns stated that he did " not agree that the invoices sent in this case to me by [appellee] were all for reasonable and necessary legal services that were reasonable and necessary to perform the Engagement." He then noted that appellee " agreed that 'Reasonable and necessary legal services shall be those which Client and [appellee] decide are reasonable and necessary,'" and added that he did " not agree that the services provided by [appellee] were reasonable and necessary to perform the Engagement in this matter." He reviewed individual invoices for various legal services, after which he stated that the claims did " not reflect invoices for the legal services I believe were all reasonable and necessary," and that he did not believe all of the services for which he was billed by appellee " were reasonable and necessary services as reflected above."
Appellee's motion to strike argued that Johns is not an attorney and that his assertions regarding the reasonableness and necessity of attorneys' fees are not competent summary judgment evidence. The trial court sustained appellee's objections in its order partially granting summary judgment, finding:
Plaintiff's Objections to the Johns Affidavit are SUSTAINED. Plaintiff is correct that Johns is not a competent or qualified witness to offer an expert opinion as to the reasonableness and necessity of attorney's fees. In that respect, Plaintiff's objection is SUSTAINED, and paragraphs 4, 8, 12, and 16 are struck as expert opinion evidence if being offered by Defendants to prove Plaintiff's attorneys['] fees were not reasonable and necessary.
Standard of Review
Inclusion or exclusion of summary judgment evidence is a matter committed to the trial court's discretion. See United Blood Servs. v. Longoria, 938 S.W.2d 29, 30 (Tex. 1997); All Am. Tel., Inc. v. USLD Commc'ns, Inc., 291 S.W.3d 518, 528 (Tex. App.--Ft. Worth 2009, pet. denied). We review a trial court's ruling sustaining or overruling objections to summary judgment evidence for an abuse of discretion. See All Am. Tel., 291 S.W.3d at 528; Bradford Partners II, L.P. v. Fahning, 231 S.W.3d 513, 521 (Tex. App.--Dallas 2007, no pet.); Cantu v. Horany, 195 S.W.3d 867, 871 (Tex. App.--Dallas 2006, no pet.). A trial court abuses its discretion if its decision is arbitrary, unreasonable, and without reference to guiding principles. See Owens-Corning Fiberglas Corp. v. Malone, 972 S.W.2d 35, 43 (Tex. 1998). An appellate court must uphold the trial court's evidentiary ruling if there is any legitimate basis for the ruling. Id.
Appellants argue that the Texas Supreme Court's decision in Anglo-Dutch Petroleum Int'l v. Greenberg Peden, P.C., 352 S.W.3d 445 (Tex. 2011), combined with the above-noted terms of the retainer agreements between appellants and appellee, gave Mark Johns the right to testify as to his determination of the reasonableness and necessity of legal services. In particular, appellants cite this portion of the Anglo-Dutch Petroleum opinion:
Only reasonable clarity is required, not perfection; not every dispute over the contract's meaning must be resolved against the lawyer. But the object is that the client be informed, and thus whether the lawyer has been reasonably clear must be determined from the client's perspective. Accordingly, we agree with the Restatement (Third) of
the Law Governing Lawyers that " [a] tribunal should construe a contract between client and lawyer as a reasonable person in the circumstances of the client would have construed it."
Id. at 451 (quoting Restatement (Third) of Law Governing Lawyers, § 18(2)).
There are several problems with this argument. To begin with, the issue in Anglo-Dutch Petroleum was whether the fee agreement letter that the client accepted was with the law firm of Greenberg Peden, P.C., or with the individual attorney, when the letter was written on firm letterhead and signed on behalf of the firm. Id. at 446. The dispute, in other words, was whether the attorneys' fee agreement was ambiguous. Id. The concept of viewing the agreement from the client's perspective, as applied, concerned whether the facts and circumstances viewed from the client's perspective indicated he was contracting with the firm and not the individual lawyer. Id. at 449-453. In the present case, neither party below raised an issue of ambiguity that would require the fee agreements to be construed or interpreted by the court. Appellants are arguing, instead, that Johns's lay testimony is admissible in order to contest the reasonableness and necessity of the attorneys' fees in the underlying litigation. No reasonable interpretation of Anglo-Dutch Petroleum supports such an argument.
Texas law is clear that " [t]he issue of reasonableness and necessity of attorney's fees requires expert testimony." Twin City Fire Ins. Co. v. Vega--Garcia, 223 S.W.3d 762, 770-71 (Tex. App.--Dallas 2007, pet. denied); see also Phillips v. Phillips, 296 S.W.3d 656, 671 (Tex. App.--El Paso 2009, pet. denied); Cantu v. Moore, 90 S.W.3d 821, 826 (Tex. App.--San Antonio 2002, pet. denied); Woollett v. Matyastik, 23 S.W.3d 48, 53 (Tex. App.--Austin 2000, pet. denied); Ogu v. C.I.A. Services, Inc., No. 01-09-01025-CV, 2011 WL 947008, at *3 (Tex. App.--Houston [1st Dist.] Mar. 17, 2011, no pet.) (mem. op.); Horvath v. Hagey, No. 03-09-00056-CV, 2011 WL 1744969, at *9 (Tex. App.--Austin, May 6, 2011, no pet.) (mem. op.). An attorney testifies as to reasonableness; the testifying attorney must be designated as an expert before he or she testifies. See Lesikar v. Rappeport, 33 S.W.3d 282, 308 (Tex. App.--Texarkana 2000, pet. denied); see also Nguyen Ngoc Giao v. Smith & Lamm, P.C., 714 S.W.2d 144, 148 (Tex. App.--Houston [14th Dist.] 1986, no writ) (" An affidavit by an attorney representing a party in a suit, concerning an award of attorney's fees, whether in support of or in contradiction of an amount claimed to be reasonable, is admissible in a summary judgment proceeding and is considered expert testimony." ). As a result, lay witness testimony regarding the reasonableness and necessity of attorneys' fees is not competent, admissible summary judgment evidence. See, e.g., Cantu, 90 S.W.3d at 826 (non-attorney testified as to appellate attorneys' fees; such testimony did not constitute expert testimony and award of appellate attorneys' fees reversed on appeal); Woollett, 23 S.W.3d at 53 (a " layman's unsupported assertion regarding reasonableness and necessity for attorney's fees does not support the payment of attorney's fees from the estate" ); Ogu, 2011 WL 947008, at *3 (because counter-defendants, neither of whom were attorneys, did not designate themselves or qualify as experts on issues concerning attorneys' fees, trial court properly restricted their testimony concerning reasonableness and necessity of attorneys' fees); Horvath, 2011 WL 1744969, at *9 (lay witness's testimony as to what she paid her attorney was insufficient to support attorneys' fee award); In the Interest of L.L., No. 04-08-00911-CV, 2010 WL 2403579, at *8 (Tex. App.--San Antonio June 16, 2010, no pet.) (mem. op.)
(party's testimony regarding her attorney's hourly rate and amount she had paid did not constitute expert testimony and trial court erred in awarding attorney's fees based on her testimony).
In his affidavit, Mark Johns purports to testify regarding the reasonableness and necessity of attorneys' fees and legal expenses in the underlying litigation. But Johns is not an attorney, and he does not qualify as an expert on issues concerning attorneys' fees. He offered conclusory assertions without the support or analysis that must be performed by any witness testifying as to the reasonableness and necessity of attorneys' fees. Accordingly, because the testimony and opinions proffered by Johns in paragraphs 4, 8, 12, and 16 of his affidavit are inadmissible and not competent summary judgment evidence, the trial court did not abuse its discretion by sustaining appellee's objections to Johns's affidavit. We overrule appellants' first issue.
2. Appellee's Amended Traditional Motion for Partial Summary Judgment
In their second issue, appellants argue that the trial court erred by granting appellee's amended traditional motion for partial summary judgment because appellee did not prove it was entitled to summary judgment as a matter of law, " given the questions of fact raised in Mark Johns's affidavit and Janet Randle's affidavit as to [appellee's] breach of contract on multiple retainer agreements." Appellee responds that the traditional summary judgment should be affirmed as to its claims against appellants because it proved there was no genuine issue of material fact regarding its cause of action for suit on a sworn account--one of the grounds on which it moved for traditional summary judgment.
Standard of Review
We review the trial court's summary judgment de novo. Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). We apply the well-established standards for reviewing summary judgments. See Tex. R. Civ. P. 166a(c), (i); Timpte Indus., Inc. v. Gish, 286 S.W.3d 306, 310-11 (Tex. 2009) (no-evidence summary judgment standard of review); Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548-49 (Tex. 1985) (traditional summary judgment standard of review). A traditional motion for summary judgment must show there is no genuine issue as to a specified material fact and, therefore, the moving party is entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c). For a defendant to prevail on a traditional motion for summary judgment, he must either disprove at least one element of the plaintiff's claim as a matter of law, or conclusively establish all elements of an affirmative defense. Friendswood Dev. Co. v. McDade & Co., 926 S.W.2d 280, 282 (Tex. 1996); Kalyanaram v. Univ. of Tex. ...