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The Stonegate Financial Corp. v. Broughton Maintenance Association, Inc.

Court of Appeals of Texas, Second District, Fort Worth

July 30, 2019

The Stonegate Financial Corporation, Appellant,
v.
Broughton Maintenance Association, Inc., and Old Grove Maintenance Association, Inc., Appellees

          On Appeal from the 96th District Court Tarrant County, Texas Trial Court No. 096-256351-11

          Before Kerr and Pittman, JJ., and Gonzalez, J.[1]

          MEMORANDUM OPINION

          Elizabeth Kerr Justice.

         With an incomplete record and in two issues, the Stonegate Financial Corporation appeals the amount of attorney's fees awarded to it following a trial to the court, arguing first that the trial court abused its discretion by awarding less than Stonegate's evidence had established in this breach-of-contract case. In its second issue, Stonegate complains of the trial court's declining to award a contractual 18 per cent interest on top of the full amount of attorney's fees Stonegate sought at trial.

         Because Stonegate did not comply with appellate-procedure rule 34.6(c)(1) by providing a "statement of the points or issues to be presented on appeal"-not in its request to the court reporter, in its notice of appeal, or otherwise-we must presume that the record's missing portions are relevant and support the trial court's judgment. We will therefore affirm.

         Background

         A. The litigation

         In November 2011, Stonegate, Sister Initiative, LLC, and Randy Vest[2] sued three maintenance associations (HOAs) that performed landscaping and common- area-upkeep services for various residential developments and to which the plaintiffs had loaned money. Of the roughly $118, 000 collectively sued for, the outstanding amount owed to Stonegate when suit was filed totaled less than $5, 300: Broughton Maintenance Association, Inc. was alleged to owe $4, 170.98 in principal and accrued interest, and Old Grove Maintenance Association, Inc. allegedly owed Stonegate $1, 068.47 in principal and accrued interest.[3]

         The plaintiffs' seemingly straightforward breach-of-promissory-note claims were met with accusations of fraud and self-dealing, along with counterclaims asserted several months later in February 2012 by all three HOAs against Stonegate and the other two plaintiffs. Until the late summer of 2014, Bracewell LLP continued to represent all three plaintiffs-counterdefendants, limiting its representation to Stonegate and its president, Dale Crane, only after the HOAs brought third-party actions against Crane, David Bagwell, Susan Bagwell, the David Bagwell Company, and Old Grove Limited Partnership in August and September 2014. Around that time, Sister Initiative and the others obtained separate counsel.

         B. Trial testimony on Stonegate's attorney's fees

         A bench trial on all claims and counterclaims took place over several weeks in the early summer of 2018, almost seven years after this lawsuit started. In the only part of the reporter's record that is before us in connection with Stonegate's appeal, Stonegate's counsel testified to attorney's fees through trial of $564, 521.01 and introduced some 175 pages of Bracewell billing records. Testifying in narrative form about the requested fees through trial, counsel discussed each of the Arthur Andersen factors.[4]

         As for the contractual interest on attorney's fees that Stonegate also seeks on appeal, counsel's testimony refers to other testimony-that of Stonegate's president, Crane-which was not included in the record:

Mr. Crane testified that he's seeking interest on his attorneys' fees and - based off of an 18 percent provision in his contract at the point that he paid the invoices.
I have a demonstrative that I would like to pull up on the screen. [Counsel then described that demonstrative, which is not in the record.]
The total amount of the accrued interest on the amount actually paid is $93, 092.25. He testified that he's seeking that as - as damages as well. And - And - And that - And he couldn't testify at that point in time from his memory of each date that he paid, but this demonstrative here shows those particular dates and the amount he is seeking for interest on attorneys' fees of $93, 092.25.

         Each HOA cross-examined Stonegate's counsel, including about a mutual-walkaway offer that the HOAs had made before a mediation that took place in September 2012, which was almost a year before the HOAs filed their third-party claims.

         C. Final judgment

         In mid-December 2017, the trial court entered a final judgment. As it related to Stonegate's claims, the judgment awarded Stonegate the following monetary relief:

         from Old Grove Maintenance Association-

• $2, 073.72 owed "under the terms of the promissory notes";
• $11, 706.15 in reasonable and necessary attorney's fees through judgment;
• $17, 000 in attorney's fees at the court-of-appeals level; and
• $12, 750 in attorney's fees through any appeal to the Texas Supreme Court; and from Broughton Maintenance Association-
• $6, 955.38 owed "under the terms of the promissory notes";
• $57, 153.55 in reasonable and necessary attorney's fees through judgment;
• $83, 000 in attorney's fees at the court-of-appeals level; and
• $62, 250 in attorney's fees through any appeal to the Texas Supreme Court.

         With this judgment, the trial court awarded Stonegate the entirety of its requested $175, 000 in conditional attorney's fees at the appellate and highest-court levels but reduced the requested attorney's fees through trial from $564, 521.01 down to $68, 859.70 ($11, 706.15 plus $57, 153.55).

         D. Findings of fact and conclusions of law

         At Stonegate's request, the trial court later entered findings of fact and conclusions of law. Among other things, including noting the "amount in controversy with regard to the Stonegate notes" (a total, through trial, of $9, 029.10, including accrued interest), the trial court found that

the amount of $11, 706.15 is a reasonable fee for the necessary services rendered by Bracewell on behalf of Stonegate in the collection of the Stonegate notes pertaining to [Old Grove]. The Court further finds that any amount of fees paid to Bracewell in excess of $11, 706.15 were not reasonable or necessary in connection with the collection of the Stonegate notes pertaining to [Old Grove], and therefore any recovery of fees for collection of the [Old Grove] notes ...

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