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Carnegie Homes & Construction LLC v. Turk

Court of Appeals of Texas, Fourteenth District

September 7, 2017

EROL TURK, Appellee

         On Appeal from County Civil Court at Law No. 4 Harris County, Texas Trial Court Cause No. 1046321

          Panel consists of Justices Boyce, Busby, and Wise.


          William J. Boyce Justice.

         Carnegie Homes & Construction LLC appeals from the county court's judgment in favor of Erol Turk, who sued Carnegie for breach of contract in connection with a $10, 000 "project initiation deposit" Turk paid to Carnegie for the architectural design of a home. Turk sued after Carnegie did not act on his request to return the deposit following termination of the contract.

         The county court granted summary judgment in Turk's favor and awarded $10, 000 in damages, along with attorney's fees. Carnegie contends that the county court (1) lacked subject matter jurisdiction to award attorney's fees to Turk; (2) erred in denying Carnegie's objections to Turk's summary judgment evidence; (3) erred because fact issues precluded summary judgment in Turk's favor; and (4) erred in awarding attorney's fees because Turk effectively nonsuited his request for attorney's fees.

         We affirm the county court's judgment in part with respect to liability and damages on the contract claim. We reverse and remand the county court's judgment in part with respect to attorney's fees because Carnegie controverted Turk's fee evidence.


         Turk and Carnegie entered into a "Memorandum of Understanding" on May 2, 2012. The memorandum states in its entirety as follows:

This letter serves as acknowledgement of the understanding between Carnegie Custom Homes (builder) and Mr. Erol Turk, and/or related parties that a $10, 000 project initiation deposit has been received by Carnegie Homes.
This deposit is considered earned upon completion of the architectural design of proposed property on 1116 Drew, Houston, TX 77006 and is credited towards the final contract price for the construction.
Please do not hesitate to call or email me with any questions or concerns.

         This text is followed by two signature blocks. Turk signed individually as "Buyer" and Carnegie's president, Arpan Gupta, signed on behalf of "Carnegie Custom Homes (Builder)." The parties signed no other agreements.

         Turk sent an email to Carnegie on July 30, 2012, in which he terminated the contract for Carnegie's services. In a certified letter to Carnegie dated October 1, 2012, Turk stated that "some architectural services for the property . . . were rendered on my behalf by Architect Martin Lide through your firm." Turk's letter further stated that "the architectural design of the property was not completed. As a result, my $10, 000 deposit with your firm was not earned, as required by the Memorandum." Turk demanded "[a]n accounting of the architectural services by Martin Lide and already paid to him by your firm . . . ." He also demanded "[a] return of the balance of the $10, 000 deposit." Carnegie did not respond.

         Acting pro se, Turk filed a petition in small claims court contending that Carnegie was "justly indebted to Plaintiff in the amount of $10, 000 for project initiation deposit for completion of architectural design of proposed building at 1116 W. Drew, Houston, TX 77006 . . . ." Turk's small claims petition alleged that "there are no counterclaims existing in favor of the Defendant and against the Plaintiff, except . . . a fee in the amount of $2, 400 that defendant is believed to have paid for the architect's services." Turk effected service on Carnegie and its counsel filed an answer. A justice of the peace subsequently signed a default judgment against Carnegie awarding $7, 652.50 in damages and $104 in court costs to Turk, along with post-judgment interest.[1]

         Carnegie then appealed to County Court at Law No. 4 for a trial de novo. See Tex. R. Civ. P. 506.3 ("The case must be tried de novo in the county court. A trial de novo is a new trial in which the entire case is presented as if there had been no previous trial.").

         Turk, now represented by counsel, characterized the Memorandum of Understanding in county court as a "deposit contract" in his live petition. He alleged that "the deposit would be earned 'upon completion of the architectural design'" and "[t]he architectural plans were never completed." He further alleged that Carnegie "has not returned the project initiation deposit" and Carnegie "wrongfully exercised dominion and control over Plaintiff's money, and continues to refuse to return the initiation fee." Turk pleaded that all conditions precedent had been performed, waived, or excused; he asked for judgment against Carnegie awarding actual damages, pre- and post-judgment interest, attorney's fees under Chapter 38 of the Texas Civil Practice and Remedies Code, and court costs. Carnegie's live answer asserted a general denial along with defenses based on modification; novation; ambiguity; mutual mistake; offset; and failure of conditions precedent.

         Turk filed a combined traditional and no-evidence motion for summary judgment in county court. The county court granted Turk's motion for summary judgment in its entirety. The county court's judgment awards $10, 000 in actual damages and $15, 000 in attorney's fees to Turk, along with court costs and pre- and post-judgment interest.[2] Carnegie timely appealed to this court.


         Turk filed a traditional motion for summary judgment under Texas Rules of Civil Procedure 166a(a) and (c) with respect to his affirmative claim against Carnegie seeking return of the $10, 000 "project initiation deposit" along with $15, 000 in attorney's fees under Chapter 38 of the Civil Practice and Remedies Code.

         Turk filed a no-evidence motion for summary judgment under Texas Rule of Civil Procedure 166a(i) with respect to Carnegie's pleadings asserting that Carnegie performed and completed all obligations; the parties modified the contract and established a novation; the agreement is ambiguous and was entered into based on mutual mistake; Carnegie is entitled to offset for services and work performed at Turk's request; and Turk's claims are barred by the failure of conditions precedent.

         We review a trial court's grant of summary judgment de novo. See, e.g., Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). We consider all of the summary judgment evidence in the light most favorable to the nonmovant, crediting evidence favorable to the nonmovant if a reasonable factfinder could and disregarding contrary evidence unless a reasonable factfinder could not. See Mack Trucks, Inc. v. Tamez, 206 S.W.3d 572, 582 (Tex. 2006). When a party moves for summary judgment on both traditional and no-evidence grounds, we address the no-evidence grounds first. See Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 600 (Tex. 2004).

         In a no-evidence motion for summary judgment, the movant represents that there is no evidence of one or more essential elements of the claims for which the nonmovant bears the burden of proof at trial. Tex.R.Civ.P. 166a(i). The burden then shifts to the nonmovant to present evidence raising a genuine issue of material fact as to the elements specified in the motion. Tamez, 206 S.W.3d at 582.

         The movant for traditional summary judgment has the burden of showing that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Tex.R.Civ.P. 166a(c); Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009). In particular, a plaintiff moving for summary judgment must conclusively prove all essential elements of its claim. Cullins v. Foster, 171 S.W.3d 521, 530 (Tex. App.-Houston [14th Dist.] 2005, pet. denied) (citing MMP, Ltd. v. Jones, 710 S.W.2d 59, 60 (Tex. 1986)).

         We review a trial court's rulings on admission or exclusion of summary judgment evidence for abuse of discretion. See, e.g., United Blood Servs. v. Longoria, 938 S.W.2d 29, 30 (Tex. 1997) (per curiam); Sloan Creek II, L.L.C. v. N. Tex. Tollway Auth., 472 S.W.3d 906, 918 (Tex. App.-Dallas 2015, pet. denied).

         Carnegie also asserts a jurisdictional challenge to the attorney's fee award. Whether the fees awarded exceed the jurisdictional limits of the trial court presents a question of law, which we review de novo. See City of Ingleside v. City of Corpus Christi, 469 S.W.3d 589, 590 (Tex. 2015) (per curiam) (jurisdiction reviewed de novo); Tucker v. Thomas, 419 S.W.3d 292, 295 (Tex. 2013) (statutory entitlement to fees reviewed de novo).

         I. Jurisdiction Over Turk's Request for Attorney's Fees

         As it did below, Carnegie contends on appeal that the county court lacked jurisdiction to award attorney's fees to Turk in addition to his $10, 000 recovery because (1) the upper jurisdictional limit is $10, 000 for a justice court handling a small claims case; and (2) "a county court, on an appeal from a suit originating in justice court, has no greater jurisdiction and is unable to grant any greater relief than the justice court."

         Justice courts handling a small claims case may entertain claims for "no more than $10, 000, excluding statutory interest and court costs but including attorney fees." Tex.R.Civ.P. 500.3(a); see also Tex. Gov't Code Ann. §§ 27.031(a)(1), 27.060(a) (Vernon Supp. 2016).

         Generally, "the county court's appellate jurisdiction is confined within the limits of the justice court's jurisdiction." Kendziorski v. Saunders, 191 S.W.3d 395, 406 (Tex. App.-Austin 2006, no pet.). This general rule does not apply to additional sums that are "sustained as a result of the passage of time, such as attorney's fees." Id. at 409. We agree with the conclusion of our sister court in Lost Creek Ventures, LLC v. Pilgrim, No. 01-15-00375-CV, 2016 WL 3569756, at *8 (Tex. App.-Houston [1st Dist.] June 30, 2016, no pet.): "[T]he county court may award attorney's fees in excess of the jurisdictional limits of the small claims court on appeal, because fees increase as litigation continues over time." Id.; see also Crumpton v. Stevens, 936 S.W.2d 473, 477 (Tex. App.-Fort Worth 1996, no writ) (citing Mr. W. Fireworks, Inc. v. Mitchell, 622 S.W.2d 576, 577 (Tex. 1981), and Flynt v. Garcia, 587 S.W.2d 109, 109-10 (Tex. 1979)).

         Carnegie attempts to distinguish Lost Creek Ventures because a portion of the analysis in that case discusses former Texas Rule of Civil Procedure 574a, which was repealed in 2013. This attempt fails because the portion of Lost Creek Ventures discussing former Rule 574a addressed a different issue focusing on whether a litigant who did not seek attorney's fees in small claims court nonetheless could seek them on appeal in county court. See Lost Creek Ventures, LLC, 2016 WL 3569756, at *8.[3]

         We rely on the portion of Lost Creek Ventures that confirms a litigant's ability in appropriate circumstances to recover attorney's fees on appeal to county court beyond the $10, 000 ceiling established for small claims under Texas Rule of Civil Procedure 500.3. See id. This portion of Lost Creek Ventures relies on Kendziorski, 191 S.W.3d at 406-09, which Carnegie also relies upon in his briefing.

         We overrule Carnegie's first issue.

         II. Carnegie's Objections to Turk's Summary Judgment Evidence

         Carnegie objected to six of Turk's summary judgment exhibits in the county court; the judge signed an order overruling all of Carnegie's objections. In its second appellate issue, Carnegie contends that the county court erred in denying all objections to these six exhibits. We overrule Carnegie's second issue for the reasons stated below.

         Exhibit D: Emails Produced by Turk in Response to Discovery.

         This exhibit consists of four emails between Turk and Martin Lide, an architect who worked with Carnegie, addressing the status of Turk's design project; the emails were exchanged between June and August 2012.

         Carnegie contends that the emails were not authenticated. See Tex. R. Evid. 901. We reject this contention because Turk's July 2, 2015 affidavit and Lide's November 20, 2015 affidavit both authenticate these emails; Carnegie does not challenge the portions of these affidavits authenticating these emails.

         Carnegie also contends that these emails "constitute hearsay as to the Defendant Carnegie Homes & Construction as they are communication with a third party that was made outside the presence of the Defendant." We reject this contention because (1) it does not correspond to the hearsay definition under Texas Rule of Evidence 801(d); and (2) Carnegie cites no authority for this contention and does not attempt to explain why these emails, or portions thereof, constitute inadmissible hearsay under Rules 801-804. See Tex. R. App. P. 38.1(i).

         The county court acted within its discretion in overruling Carnegie's objections to Exhibit D.

         Exhibit E: Turk Affidavit Signed on April 1, 2015. Except for paragraph six, Carnegie globally objected in the county court to every part of every paragraph in this ...

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