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Stern v. Bella Custom Homes, Inc.

Court of Appeals of Texas, Fifth District, Dallas

August 5, 2019

MATTHEW D. STERN, Appellant
v.
BELLA CUSTOM HOMES, INC., Appellee

          On Appeal from the County Court at Law No. 2 Dallas County, Texas Trial Court Cause No. CC-16-00079-B

          Before Justices Bridges, Brown, and Nowell

          MEMORANDUM OPINION

          ERIN A. NOWELL JUSTICE.

         Following a bench trial, the trial court granted appellee Bella Custom Homes, Inc.'s ("BCH") motion to file a post-trial pleading amendment over the objection of appellant Matthew D. Stern. The trial court subsequently entered a final judgment in favor of BCH, which included awards of attorney's fees. In three issues, Stern asserts the trial court erred by allowing BCH to file its post-trial pleading amendment and awarding appellate attorney's fees to BCH. We modify the trial court's judgment and affirm as modified.

         Factual & Procedural Background

         BCH and Stern entered into a New Residential Construction Contract in which BCH agreed to construct a home for Stern. During construction, a dispute arose between the parties, and BCH terminated the contract pursuant to the contract's terms. Stern sued BCH for negligence, negligent misrepresentation, fraud, fraud in the inducement, fraud in a real estate transaction, violations of the Texas Deceptive Trade Practices Act, conversion/unjust enrichment/constructive trust, breach of contract, and breach of express and implied warranties. BCH's original answer included a general denial and asserted that paragraph 16(P) of the contract entitled BCH to recover its reasonable and necessary attorney's fees.

         In addition to its answer, BCH filed its Amended Counterclaim and Petition for Declaratory Judgment, which includes a section titled "Claim for Relief." In that section, BCH pleaded: "The Defendant and Counter-Plaintiff seeks monetary relief over $100, 000 but not more than $200, 000, and non-monetary relief. Tex.R.Civ.P. 47(c)(3)." In its prayer, BCH requested, among other things, "its attorneys' fees, pursuant to Sections 37.009 and 38.001(8) of the Texas Civil Practice and Remedies Code, and Section 16, Subpart P of the Contract."

         BCH filed a motion for partial summary judgment on its counterclaim for declaratory judgment, which the trial court granted; the trial court held the parties' contract is valid and enforceable. The case proceeded to a bench trial on March 28, 2017, and, after Stern presented his evidence, BCH moved for directed verdict on all claims. Stern agreed to judgment in favor of BCH on the following causes of action: negligence, negligent misrepresentation, fraud in a real estate transaction, and breach of warranty. The trial court subsequently concluded BCH was entitled to judgment against Stern on all remaining causes of action.

         On the issue of attorney's fees, the parties stipulated they would submit attorney fee affidavits to be treated "as if they're presented in [their] respective cases in chief." Both parties submitted affidavits with supporting documentation to the trial court. BCH's evidence shows it incurred attorney's fees of $497, 773.42 from inception of the dispute through April 20, 2017. The affidavit also states BCH is entitled to an additional sum of $40, 500 "in the event of any subsequent unsuccessful appeal by BCH [sic] to a Court of Appeals"; an additional sum of $20, 250 "in the event of any subsequent unsuccessful petition to the Texas Supreme Court"; and an additional sum of $20, 250 "if the review is accepted but unsuccessful." Stern provided a rebuttal affidavit to show the time spent by BCH's counsel was unreasonable and also asserted BCH's live pleading limited its damages to $200, 000.

         On May 16, 2017, the trial court sent a letter containing its factual findings to counsel. The letter states BCH, as the prevailing party, is entitled to an award of reasonable and necessary attorney's fees, which are: $350, 000 through the time of trial; $40, 000 in the event Stern unsuccessfully appeals to the Court of Appeals; $20, 000 "if a petition for review is filed by [Stern] but not granted by the Supreme Court of Texas"; and an additional $20, 000 "if the petition for review is granted but the appeal to the Supreme Court of Texas is unsuccessful." Two weeks later, BCH filed a proposed judgment consistent with the terms of the trial court's May 16 letter. Stern objected to the proposed judgment on two grounds: (1) it would grant more relief to BCH than BCH sought in its pleadings, and (2) it provided for a double recovery.

         On June 15, 2017, BCH filed a motion for leave to file an amended pleading for the purpose of conforming its pleadings to the evidence at trial. BCH sought to amend the "Claim for Relief section of its counterclaim "to state that the claim for relief exceeds $200, 000 but not more than $1, 000, 000." Stern filed a verified response stating the amendment would constitute surprise and prejudice. Stern stated he relied "upon the $200, 000 maximum since the time that Bella pleaded that maximum on May 5, 2016. . . . Of course, it is a surprise to Stern that, after all this time, Bella wants to change its maximum sought from $200, 000 to $1, 000, 000." Stern stated he would be prejudiced "to have planned his case on his liability being capped (by Bella's own pleadings) at $200, 000 only to learn-months after trial-that his liability would instead be capped at $1, 000, 000."

         Without conducting a hearing, the trial court granted BCH's motion for leave to file an amended pleading. The court subsequently entered a final judgment in favor of BCH. The judgment awards $350, 000 in reasonable and necessary attorney's fees through trial, as well as appellate attorney's fees if Stern unsuccessfully appeals the judgment to an intermediate court of appeals or the Texas Supreme Court. This appeal followed.

         Law & Analysis

         In his first issue, Stern asserts the trial court abused its discretion by permitting BCH to file a post-trial pleading amendment and awarding BCH attorney's fees in excess of $200, 000 because Stern was surprised and prejudiced when BCH changed its "Claim for Relief to seek $200, 000 to $1, 000, 000 instead of $100, 000 to $200, 000.

         Rule 47 of the Texas Rules of Civil Procedure, titled "Claims for Relief," sets forth specific requirements for a party's "original pleading which sets forth a claim for relief, whether an original petition, counterclaim, cross-claim, or third party claim." Tex.R.Civ.P. 47. Subsection (c) requires a party setting forth a claim for relief to state it seeks:

(1) only monetary relief of $100, 000 or less, including damages of any kind, penalties, costs, expenses, pre-judgment ...

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