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Callaway v. Martin

Court of Appeals of Texas, Second District, Fort Worth

May 25, 2017






         I. Introduction

         Appellant Edgar "Pat" Callaway sued his daughter, Appellee Judy Martin, and her husband, Appellee Granville "Randy" Martin III, individually and doing business as Lukes Mobile Home Park, after their 1999 business deal involving the park soured. The parties had created two corporations-one, JRP Enterprises, Inc., to own the park, and the other, Lukes Mobile Home Park, Inc., to manage the park, [2] and in June 2000, Pat paid $89, 970 of the purchase price and borrowed the remaining amount-$200, 000-from a bank before the sale closed. Opal Lukes signed the deed transferring the property to JRP. Pat waited until after the closing to tell Judy and Randy that he had obtained the loan instead of using his own cash, and for the following five years-from August 12, 2000 to July 12, 2005-JRP and Lukes struggled to pay off the bank note at more than $4, 000 per month and ultimately paid the bank an additional $48, 000 in interest that was not contemplated at the outset of the transaction. Neither corporation fully recovered from this financial blow.

         In December 2012, Pat filed his lawsuit. Among the other claims that Pat asserted during the course of the litigation, he alleged fraud, undue influence, coercion, breach of fiduciary duty, and breach of an oral contract, and he sought a declaratory judgment. Pat added his declaratory judgment claim in his third amended petition, which he filed in April 2013, and he added his breach-of-oral-contract claim in his fifth amended petition, which he filed a week before the first summary judgment hearing in 2014. The trial court granted a partial summary judgment for Randy and Judy on all but the declaratory judgment and contract actions.

         A few days after Randy and Judy filed a second motion for summary judgment on Pat's remaining claims, they also sought rule 13 sanctions, complaining that all of Pat's pleadings had been groundless, had been filed in bad faith, and had been filed for purposes of harassment. Undeterred, Pat filed a sixth amended petition, raising a new fraud claim in addition to his breach-of-oral-contract claim and requiring Randy and Judy to supplement their second summary judgment motion. The trial court granted the second summary judgment motion but denied Randy and Judy's motion for sanctions.

         After Randy and Judy were realigned as plaintiffs based on the counterclaims they had asserted against Pat, Pat moved for summary judgment on their claims, and Randy and Judy asked the trial court to reconsider assessing sanctions. At the January 7, 2016 hearing on the parties' motions, Randy and Judy informed the trial court that they would dismiss their counterclaims but that they wanted reimbursement for their expenditures made in defending against Pat's unmeritorious lawsuit. After hearing additional testimony, including Pat's, the trial court awarded sanctions against Pat in the amount of $75, 000 in attorney's fees and $45, 000 in court costs.

         Pat does not challenge the amount awarded. Nor does he appeal the trial court's summary judgments on his claims. Instead, in three issues, he appeals only the propriety and basis for the sanctions imposed. We affirm.

         II. The Trial Court's Sanctions Award and Final Judgment

         The trial court signed the order awarding sanctions, with findings of fact therein, on May 11, 2016, stating,

The Court finds that all of the claims of [Pat] filed against the Martins were groundless; that with regard to such claims there was no basis in law or fact; that they were not warranted by a good-faith argument for the extension, modification or reversal of existing law and further that the claims of [Pat] filed against the Martins were also filed in bad faith and/or for the purpose of harassment, and that good cause exists for the imposition of the sanctions as set forth below.
In particular the Court finds that each of [Pat's] claims against the Martins for fraud were groundless because each such claim was barred by the four year statute of limitation and that each claim was also without any factual basis.
The Court finds that [Pat's] claim against the Martins that Judy Martin had exercised undue influence on [Pat] was without factual basis for the reason that [Pat] admitted to facts during his deposition proving that Judy Martin had not exercised undue influence on him.
The Court finds that [Pat's] claim against the Martins that he had been excluded from the premises and business, that the Martins had failed to provide him with information about the business and that the Martins failed and refused to pay him any net profits of the business was factually groundless because [Pat] admitted in his deposition that he had always had access to the Company's bank account records and in answer to [Randy's] Interrogatory No. 15 that Lukes Mobile Home Park, Inc. ("Lukes") had paid [Pat] $76, 260.00 between 2006 and 2011.
The Court finds that [Pat's] claim against the Martins that they had breached an oral contract with him to pay him $1, 500.00 a month is without legal or factual basis for the reason that no consideration existed for any alleged contract and that any such contract as alleged by [Pat] was barred by the Statute of Frauds.
The Court finds that [Pat's] claim against the Martins wherein he alleged that the Martins misappropriated money from Lukes for themselves is factually groundless for the reason that an audit by Erickson Group after detailed examination of the records of Lukes found that no evidence existed reflecting the Martins had improperly appropriated money from Lukes.
The Court finds that [Pat's] claim against the Martins for Trespass to Try Title and to Quiet Title is legally and factually groundless for the reason that the warranty deed attached as Exhibit "B" to [Pat's] Original Petition and his admissions during his deposition reflect that [Pat] never owned any right, title or interest in the real property the subject of the lawsuit and knew that he had never had ownership of such property.
The Court finds that [Pat's] declaratory judgment action groundless for the reason that [Pat] alleged no factual basis authorizing a declaratory judgment.
The Court further finds that [Pat's] suit against the Martins was filed in bad faith because:
a) He filed a sworn Original Petition in which his verification to his Original Petition was false;
b) He alleged facts and claims in his verified Original Petition which he subsequently contradicted under oath by deposition, reflecting that the facts alleged in his Original Petition were false and unfounded in fact;
c) He continuously refused to answer questions responsively during his deposition and again during the hearing on March 31, 2016 to reconsider the Martins' Motion for Sanctions;
d) He amended his pleadings to allege a new claim for breach of contract in order to avoid dismissal of his lawsuit by Summary Judgment, which claim was also equally groundless;
e) He continued to assert factual allegations and claims after the discovery process revealed that the factual basis of his claims were untrue; and
f) In the course of discovery he produced from his possession minutes of a partnership meeting the occurrence of which he denied and which minutes negated his fraud claim regarding an American Express credit card.
The Court further finds that [Pat] filed his suit for the purpose of harassment in that the [sic] sought to bribe witnesses to testify against the Martins and stated that his purpose in suing the Martins was to damage [Randy] financially.

         On the same day, the trial court signed its final judgment, rendering a take-nothing judgment against Pat, dismissing Randy and Judy's claims, and incorporating the sanctions award.

         III. ...

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