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Net Worth Realty USA, LLC v. Denney

Court of Appeals of Texas, Fifth District, Dallas

May 6, 2019

NET WORTH REALTY USA, LLC AND DALLAS METRO HOLDING, LLC., Appellants
v.
IRMGARD DENNEY, Appellee

          On Appeal from the 191st Judicial District Court Dallas County, Texas Trial Court Cause No. DC-18-03776

          Before Justices Schenck, Reichek, and Nowell

          MEMORANDUM OPINION

          ERIN A. NOWELL JUSTICE.

         Net Worth Realty USA, LLC and Dallas Metro Holdings, LLC appeal the trial court's order denying their motion seeking attorney's fees under section 17.50(c) of the Deceptive Trade Practices Act (DTPA) and Rule 13 of the Rules of Civil Procedure. After they obtained summary judgment dismissing Irmgard Denney's claims against them, Net Worth and Dallas Metro filed a motion to recover their attorney's fees arguing that Denney's claims were groundless and brought in bad faith or groundless and brought for the purpose of harassment. The trial court denied the motion and questioned whether appellants had pleaded a claim for attorney's fees under the DTPA. Appellants then filed a motion to amend their counterclaim to add such a claim, but they filed the motion after the deadline for amending pleadings. The trial court denied the motion.[1] In three issues, Net Worth and Dallas Metro contend the trial court abused its discretion by denying the motion to amend, and by denying their claim for attorney's fees under the DTPA and under Rule 13. We conclude the trial court did not abuse its discretion and affirm.

         Background

         Denney purchased a house from IH Solutions, LLC on November 20, 2013. After moving in, she discovered several deficiencies in the house that were not disclosed to her. IH Solutions bought the house from Dallas Metro on April 5, 2013 and renovated it before selling it to Denney. Dallas Metro owned the property for less than two weeks before selling it to IH Solutions. Dallas Metro purchased the house on March 26, 2013, immediately listed it for sale through its affiliated brokerage, Net Worth, and sold the house to IH Solutions.

         On April 15, 2015, Denney sued IH Solutions, Dallas Metro, Net Worth, and several other defendants who had either owned or performed renovations on the property. She alleged causes of action for fraud, fraudulent inducement, negligent misrepresentation, and civil conspiracy against all defendants. She also alleged IH solutions violated the DTPA.

         On May 12, 2015, Dallas Metro and Net Worth filed an amended answer and counterclaim requesting sanctions under Rule 13 against Denney and her attorney. They alleged Denney's original petition was groundless and brought in bad faith and groundless and brought for the purpose of harassment. Denney had not asserted a DTPA against them at the time Dallas Metro and Net Worth filed their counterclaim for Rule 13 sanctions. Almost two years later, Denney, represented by a new attorney, filed a fourth amended petition in which she alleged Dallas Metro and Net Worth violated the DTPA by committing false, misleading, or deceptive acts, breaching an express or implied warranty, and committing an unconscionable action or course of action.

         Dallas Metro and Net Worth did not amend their answer and counterclaim in response to the fourth amended petition. Rather, they filed a traditional and no-evidence motion for summary judgment on Denney's DTPA claim. They alleged Denney was not a consumer in a transaction with Dallas Metro and Net Worth, she had no evidence they committed any of the alleged DTPA violations, and Denney's DTPA claim was barred by limitations. Denney requested and obtained a continuance of the summary judgment hearing in order to conduct discovery to respond to the motion.

         Two months later, Dallas Metro and Net Worth filed an amended motion for summary judgment attaching additional summary judgment evidence and requesting attorney's fees under DTPA section 17.50(c).[2] They argued they had no role in the transaction where Denney purchased the house and that Denney's lawsuit against them was frivolous and likely brought for the purpose of harassment. Denney argued in her response that Dallas Metro and Net Worth did not plead for attorney's fees under the DTPA and had not shown entitlement to an award of fees under section 17.50(c).

         The trial court granted the amended motion for summary judgment and dismissed Denney's claims against Dallas Metro and Net Worth with prejudice on June 2, 2017. The court reserved ruling on the request for attorney's fees and invited the parties to file a motion for attorney's fees.

         Dallas Metro and Net Worth filed a motion for attorney's fees on August 9, 2017 based on section 17.50(c) of the DTPA and Rule 13. They alleged their amended answer and counterclaim filed in 2015 gave Denney notice that her DTPA claim was groundless and brought in bad faith or groundless and brought for the purpose of harassment. They also alleged that Denney sought to postpone the summary judgment hearing in order to conduct an unreasonable and burdensome amount of discovery in an effort to extort a settlement.

         Denney asserted in response that Dallas Metro and Net Worth had not pleaded for attorney's fees under DTPA section 17.50(c), had not overcome the presumption her pleading was filed in good faith, she should not be punished for her former attorney's conduct in signing the pleading, and sanctions were not appropriate under Rule 13. Denny also requested an evidentiary hearing and her attorney stated at the hearing he was prepared to present evidence to rebut the claim for sanctions. Dallas Metro and Net Worth did not offer any evidence at the hearing, relying instead on the argument of their counsel. The trial court denied the motion for attorney's fees.

         A month later, Dallas Metro and Net Worth filed a motion for leave to amend their counterclaim to assert a claim for attorney's fees under DTPA section 17.50(c). Denney objected because the deadline for filing amended pleadings asserting a new cause of action expired three months before Dallas Metro and Net Worth sought leave to amend and their attempt to amend the counterclaim after they had ...


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