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Landmark Dividend LLC v. Hickory Pass L.P.

Court of Appeals of Texas, Third District, Austin

November 17, 2017

Hickory Pass L.P. Appellant,
v.
Landmark Dividend LLC Appellee, Landmark Dividend LLC Cross-Appellant, Hickory Pass L.P. Cross-Appellee,

         FROM THE DISTRICT COURT OF TRAVIS COUNTY, 98TH JUDICIAL DISTRICT NO. D-1-GN-13-001177, HONORABLE ORLINDA NARANJO, JUDGE PRESIDING

          Before Chief Justice Rose, Justices Goodwin and Bourland.

          MEMORANDUM OPINION

          Jeff Rose, Chief Justice.

         Landmark Dividend LLC appeals from the trial court's judgment in favor of Hickory Pass L.P. on its breach-of-contract claim against Landmark arising from an option contract regarding the sale of real property. Hickory Pass raises a conditional cross-appeal, challenging the trial court's dismissal on special exceptions of Hickory Pass's declaratory-judgment claim against Landmark. For the reasons explained below, we will reverse the judgment and render judgment that Hickory Pass take nothing on its breach-of-contract claim against Landmark.

         BACKGROUND

         Landmark is a company that specializes in billboard and telecommunications ground leases. In early December 2012, Landmark entered into an "Option Contract" with Hickory Pass giving Landmark the option to purchase a 0.23-acre parcel of real property ("the Property") in Marble Falls, Texas that was part of a larger tract owned by Hickory Pass. The Option Contract included a requirement that the closing on the property occur by December 31, 2012, and a "walkaway" clause providing the following:

Landmark may exercise this Option at any time, providing that closing shall occur on or before December 31, 2012. If closing does not occur on or before December 31, 2012, then this option shall expire without any cost, expense, damages, or obligations to or from H[ickory] P[ass].

         During the option period, Landmark discovered that subdividing the Property from the larger tract required approval from Burnet County officials, and that Landmark would not be able to garner that approval by the December 31 deadline because of the county officials' schedules during the holiday season. The parties discussed different transactions and exchanged proposed contracts into the next year, but ultimately Hickory Pass notified Landmark that it would not agree to Landmark's proposed terms and that it instead, planned to sell the Property as part of a larger tract of land.

         Landmark sued Hickory Pass, alleging that Hickory Pass had breached the terms of the Option Contract by not cooperating to close the sale and seeking $8, 965 in damages for the evaluation and research performed on the Property in anticipation of the sale. Hickory Pass denied liability and counterclaimed for breach of contract, indemnity, and declaratory judgment, contending that Landmark had breached the walk-away provision by asserting a claim in connection with the Option Contract after its expiration.

         The trial court dismissed Hickory Pass's declaratory-judgment claim on Landmark's special exceptions.[1] Hickory Pass then filed a motion for summary judgment on Landmark's breach-of-contract claims, which the trial court granted. Thereafter, the parties filed competing motions for summary judgment on Hickory's Pass's counterclaims for breach of contract and indemnity. The trial court granted summary judgment in favor of Landmark on the indemnity counterclaim and granted partial summary judgment in favor of Hickory Pass on the breach-of-contract counterclaim.[2]After denying Landmark's motion for reconsideration, the trial court conducted a bench trial as to the amount of Hickory Pass's damages. In a final judgment, the trial court awarded Hickory Pass $128, 383.12 in compensatory damages, which consisted entirely of Hickory Pass's attorney's fees, legal-assistant fees, court costs, court-reporter fees and expenses, lost time of Hickory Pass executives, and other litigation expenses. The trial court made findings of fact and conclusions of law upon Landmark's request, and this appeal followed.

         DISCUSSION

         Landmark challenges the trial court's judgment in favor of Hickory Pass on its breach-of-contract counterclaim in six issues. First, Landmark asserts that the trial court erred in granting summary judgment on Hickory Pass's breach-of-contract counterclaim because there was no breach of the Option Contract and, even if there had been a breach, Hickory Pass did not suffer any recoverable damages as a result of that breach. As its second, third, and fourth issues, Landmark asserts that the trial court erred by awarding attorney's fees and litigation expenses as compensatory damages under the Option Contract and that the court erred by awarding attorney's fees under Section 38.001 of the Texas Civil Practice & Remedies Code. In its fifth issue, Landmark asserts that, even if attorney's fees were recoverable, Hickory Pass failed to segregate its fees and included impermissible administrative tasks. Finally, Landmark contends in its sixth issue that the trial court abused its discretion by awarding excessive attorney's fees. In a conditional cross-appeal, Hickory Pass challenges the trial court's dismissal of its declaratory-judgment counterclaim in response to Landmark's special exceptions, and asks us to direct the trial court to consider its declaratory-judgment claim and the possibility of attorney's fees based on that claim.[3]

         As part of its first issue, Landmark argues that it and not Hickory Pass was entitled to summary judgment on Hickory Pass's breach-of-contract claim because Hickory Pass's attorney's fees and litigation expenses incurred in the present litigation do not constitute damages that will support a claim for breach of contract. We agree.[4]

         "Courts have long distinguished attorney's fees from damages." In re Nalle Plastics Family Ltd. P'ship, 406 S.W.3d 168, 172 (Tex. 2013) (orig. proceeding) (citations omitted); see also Haubold v. Medical Carbon Research Inst., LLC, No. 03-11-00115-CV, 2014 WL 1018008, at *6 (Tex. App.-Austin Mar. 14, 2014, no pet.) (mem. op.) ("'Texas law distinguishes between recovery of attorney's fees as actual damages and recovery of attorney's fees incident to recovery of other actual damages.'" (quoting Haden v. David J. Sacks, P.C., 222 S.W.3d 580, 597 (Tex. App.-Houston [1st Dist.] 2007), rev'd in part on other grounds, 263 S.W.3d 919 (Tex. 2008) (per curiam))). Attorney's fees are generally not recoverable as damages in and of themselves. Tana Oil & Gas Corp. v. McCall, 104 S.W.3d 80, 81 (Tex. 2003). "Texas has long followed the 'American Rule' prohibiting [attorney's] fee awards unless specifically provided by contract or statute." MBM Fin. Corp. v. The Woodlands Operating Co., L.P., 292 S.W.3d 660, 669 (Tex. 2009) (citing Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 310-11 (Tex. 2006)). Similarly, "litigation expenses, including the value of lost time due to litigation, generally are not recoverable unless expressly provided by statute or contract or recoverable under equitable principles." Profitlive P'ship v. Surber, No. 02-09-00104-CV, 2010 WL 1999461, at *4 (Tex. App.-Fort Worth May 20, 2010, pet. denied) (mem. op.); see also Texas Mut. Ins. Co. v. Ray Ferguson Interests, Inc., No. 01-02-00807-CV, 2006 WL 648834, at *8 (Tex. App.-Houston [1st Dist.] Mar. 16, 2006, no pet.) (mem. op.) (holding that "financial loss due to time spent by [party's] employees on litigation maters" cannot serve as basis for jury award of damages unless contract or statute expressly provides for such recovery); Eberts v. Businesspeople Pers. Servs., 620 S.W.2d 861, 863 (Tex. Civ. App.-Dallas 1981, no writ) ...


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