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First Cash, Ltd. v. JQ-Parkdale, LLC

Court of Appeals of Texas, Thirteenth District, Corpus Christi-Edinburg

January 11, 2018

FIRST CASH, LTD., Appellant,

         On appeal from the 319th District Court of Nueces County, Texas.

          Before Justices Rodriguez, Contreras, and Longoria Opinion by Justice Rodriguez



         First Cash, Ltd. filed this suit alleging that its lease at the Parkdale Shopping Center was breached by two groups of parties:

(1) the "Legacy Landlords, " a group of the four LLCs that once owned the shopping center; and
(2) the "Current Landlords, " the two entities that currently own the shopping center.[1]

         A jury awarded First Cash two forms of damages on its claim for breach of lease against the Legacy Landlords: damages for building costs and for the lost value of the breached lease. On cross-appeal, the Legacy Landlords assert that there is insufficient evidence to support either award. We affirm the award of damages for building costs, but we reverse and remand the award for the lost value of the breached lease.

         The jury also awarded First Cash attorney's fees, but the trial court granted judgment notwithstanding the verdict ("JNOV") denying the award. On appeal, First Cash challenges the JNOV, asserting that the trial court misconstrued the attorney's fees statute. We affirm the entry of JNOV.[2]

         I. Background

         In September 2001, First Cash entered into a lease for space in the Parkdale Shopping Center in Corpus Christi. The lease had one ten-year term, with two additional five-year options that, if exercised, would come to term in September 2021. The lease provided that in the event of casualty and significant loss of the premises' value, the Landlords could terminate the lease.

         In 2007, the owners of the Legacy Landlords entered into talks with Walmart to explore a redevelopment plan, wherein several buildings in the Parkdale Shopping Center would be demolished and a Walmart would be built in their place. The Legacy Landlords' owners told First Cash's management of its possible plan.

         On June 22, 2009, a fire occurred at the shopping center, damaging a portion of the main building. The fire did not damage the separate building containing First Cash's store. Three weeks after the fire, the Legacy Landlords notified First Cash that it was terminating First Cash's lease as a result of the alleged fire damage. First Cash vacated the premises in December 2009 and moved into a new location less than a mile away. First Cash demanded compensation from the Landlords for the value of its breached lease and for the cost to make improvements to its new location, which were allegedly necessary to bring the location into useable condition. First Cash filed this suit in the fall of 2010.

         Meanwhile, the Landlords completed a partial sale of the Parkdale Shopping Center to Walmart. Ultimately, most of the original retail space (including First Cash's former building) was demolished, and a large part of the land was sold to Walmart. Roughly 40, 000 square feet of new, higher-quality retail space was constructed on the tract that remained in the Landlords' possession. At some point, the Legacy Landlords transferred all of its remaining interest in Parkdale to the Current Landlords. Both the Legacy and Current Landlords have the same owners.

         The case went to trial in June of 2015. The trial court granted a directed verdict in favor of the Current Landlords. This directed verdict is the subject of First Cash's second issue on appeal.

         A jury found that the Legacy Landlords breached the lease. The Legacy Landlords do not challenge this finding on appeal.

         The jury awarded First Cash $182, 400 as damages to compensate for the value of its breached lease under the "rent differential" measure of damages. The jury further awarded First Cash $130, 000 as the cost to move its pawn shop into and build out a new location. These two awards are the subject of the Legacy Landlords' cross-appeal.

         The jury also awarded First Cash $800, 000 in attorney's fees through trial and $65, 000 for various stages of appeal. The Legacy Landlords submitted a post-verdict motion opposing the award of attorney's fees. They asserted that because the Legacy Landlords were LLCs, they did not qualify as either an "individual or corporation" under the language of the attorney's fees statute. See Tex. Civ. Prac. & Rem. Code Ann. § 38.001(8) (West, Westlaw through 2017 1st C.S.). The trial court agreed and granted JNOV to exclude the attorney's fees.

         II. Attorney's Fees

         By its first issue on appeal, First Cash asserts that the trial court erred in granting JNOV because it misinterpreted the attorney's fees statute, section 38.001. See id. All Texas and federal courts which have interpreted section 38.001 have held that LLCs cannot be held liable for attorney's fees under the plain meaning of the terms "individual or corporation." See Alta Mesa Holdings, LP v. Ives, 488 S.W.3d 438, 455 (Tex. App.- Houston [14th Dist.] 2016, pet. denied). Here, First Cash repeats many of the arguments that Texas courts have rejected based on sound and persuasive reasoning. See, e.g., id. at 452-55; Choice! Power, LP v. Feeley, 501 S.W.3d 199, 211-14 (Tex. App.- Houston [1st Dist.] 2016, no pet.); Fleming & Assocs., LLP v. Barton, 425 S.W.3d 560, 574-76 (Tex. App.-Houston [14th Dist.] 2014, pet. denied). We reject these arguments for the reasons stated in Alta Mesa. See 488 S.W.3d at 452-55.

         However, First Cash offers certain arguments that have not been previously addressed by Texas courts. According to First Cash, the attorney's fees statute was not meant to be interpreted according to the plain meaning of the separate terms "individual" and "corporation." Rather, the proper approach is to assess the phrase "individual or corporation" as a whole. First Cash asserts that this unified phrase has acquired a particular meaning apart from the separate words of which it is made. According to First Cash, this particular meaning is shown by the unique legislative history of the attorney's fees statute, as well as by similar uses of this phrase in related statutes. First Cash asserts that both of these aspects-legislative history and comparable usage-show the Legislature intended the phrase "individual or corporation" to refer to virtually any legal entity, including LLCs such as the Legacy Landlords.

         To address this argument, we briefly summarize the history of the attorney's fees statute as a recodification from an earlier statute, as well as comparable uses of the phrase "individual or corporation" in other statutes.

         A. Standard of Review

         Statutory construction is a question of law for the court to decide. Tex. Dep't of Transp. v. Needham, 82 S.W.3d 314, 318 (Tex. 2002). We review legal questions de novo. Id. The trial court may grant a JNOV if there is no evidence to support one or more of the jury findings on issues necessary to liability or if a legal principle precludes recovery. Daftary v. Prestonwood Mkt. Square, Ltd., 404 S.W.3d 807, 814 (Tex. App.- Dallas 2013, pet. denied) (applying this rule in breach-of-commercial lease case). A no-evidence point will be sustained when (1) there is a complete absence of evidence of a vital fact, (2) the court is barred by rules of law or of evidence from giving weight to the only evidence offered to prove a vital fact, (3) the evidence offered to prove a vital fact is no more than a mere scintilla, or (4) the evidence conclusively establishes the opposite of the vital fact. Volkswagen of Am., Inc. v. Ramirez, 159 S.W.3d 897, 903 (Tex. 2004).

         B. Statutory Interpretation and Recodification

         Our fundamental goal when reading statutes is to give effect to the Legislature's intent. Cadena Comercial USA Corp. v. Tex. Alcoholic Beverage Comm'n, 518 S.W.3d 318, 325 (Tex. 2017). We rely on the plain meaning of a statute's words as expressing legislative intent unless a different meaning is supplied, is apparent from the context, or the plain meaning of the words leads to absurd results. Id. Words and phrases that have acquired a technical or particular meaning, whether by legislative definition or otherwise, shall be construed accordingly. Colorado Cty. v. Staff, 510 S.W.3d 435, 452 (Tex. 2017). We presume the Legislature "chooses a statute's language with care, including each word chosen for a purpose, while purposefully omitting words not chosen." Cadena, 518 S.W.3d at 325-26. We may not interpret a statute in a way that renders any part of it meaningless. Randol Mill Pharmacy v. Miller, 465 S.W.3d 612, 617 (Tex. 2015).

         In construing the meaning of a statute, courts may also consider other factors such as the circumstances under which the statute was enacted and the statute's legislative history. Tex. Gov't Code Ann. § 311.023(2)-(3) (West, Westlaw through 2017 1st C.S.). If possible, courts are to construe statutes so as to harmonize with other relevant laws. In re United Servs. Auto. Ass'n, 307 S.W.3d 299, 311 (Tex. 2010) (orig. proceeding).

         "For more than thirty years, our statutes have undergone a continuing process of codification and in some instances recodification." Fleming Foods of Tex., Inc. v. Rylander, 6 S.W.3d 278, 283 (Tex. 1999). The Legislature charged the Texas Legislative Council with the task of revising statutes to "clarify and simplify" them, but with the restriction that the Legislative Council "may not alter the sense, meaning, or effect of [a] statute." Id. That is, recodifications must be nonsubstantive. See id. at 284.

         However, when the specific provisions of a recodification are "direct, unambiguous, and cannot be reconciled with prior law, " the recodification must be given effect according to its plain terms, and the prior, repealed statute will not control. Id. at 286. The Legislature's general statement that a recodification is nonsubstantive "cannot revive ...

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