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Goehrs v. U.S. Specialty Insurance Co.

Court of Appeals of Texas, Fourteenth District

December 31, 2019


          On Appeal from the 157th District Court Harris County, Texas Trial Court Cause No. 2017-00802

          Panel consists of Justices Jewell, Bourliot, and Zimmerer.


          Kevin Jewell Justice.

         Appellant Linda Goehrs appeals a summary judgment against her on an indemnity agreement. Appellee U.S. Specialty Insurance Company issued a surety bond for the benefit of Goehrs, conditioned on Goehrs's agreement to indemnify U.S. Specialty for certain damages it incurred by reason of the bond, including attorney's fees and expenses. Alleging it incurred such damages and that Goehrs refused demands for indemnity, U.S. Specialty sued to enforce the indemnity agreement. The trial court granted U.S. Specialty's motion for summary judgment, denied Goehrs's motion for summary judgment, and awarded U.S. Specialty $255, 432.01 in damages, including attorney's fees and expenses as well as bond premiums U.S. Specialty contends were unpaid.

         Goehrs attacks the summary judgment on several grounds. First, she argues that the indemnity agreement is invalid due to a mutual mistake. Second, Goehrs contends the trial court's damages award is error because (1) U.S. Specialty, as the movant, did not conclusively establish its attorney's fees and unpaid bond premiums, and (2) alternatively, Goehrs raised a genuine issue of material fact as to the reasonableness and necessity of attorney's fees and expenses.

         We conclude that the trial court correctly granted summary judgment in U.S. Specialty's favor on liability because U.S. Specialty conclusively established its right to judgment, and Goehrs failed to raise a fact question on her mutual mistake affirmative defense. However, as to damages, U.S. Specialty was required to prove that its claimed attorney's fees and expenses were reasonable and necessary, but it failed to do so. Accordingly, we affirm the judgment in part, reverse in part only as to attorney's fees and expenses, and remand the case for further proceedings.


         In June 2008, a Harris County probate court appointed Goehrs temporary guardian pending contest of the person and estate of Mary Olive Calkins and ordered that letters of temporary guardianship be issued to Goehrs upon issuance of a surety bond. The same day, Goehrs applied for a surety bond from U.S. Specialty. As part of the bond application, Goehrs signed an "INDEMNITY AGREEMENT," in which she:

agree[d] to pay the Company the usual annual premiums; and . . . agree[d] to indemnify and keep indemnified the Company from and against any liability and all costs, charges, suits, damages, counsel fees and expenses of whatever kind or nature which said Company shall at any time sustain or incur, for or by reason, or in consequence of said Company having become surety or entering into such bond or bonds and agree[d] to place the Company in funds to meet any claim or demand before it shall be required to make payment.

U.S. Specialty then issued a $500, 000 bond, which it subsequently increased to $3.2 million upon order of the probate court.

         In December 2008, Carolyn James, the daughter of Mary Olive Calkins, sued Goehrs based on Goehrs's alleged acts or omissions while serving as temporary guardian; James later added U.S. Specialty as a party and asserted claims against the bond. According to U.S. Specialty, James alleged that Goehrs committed numerous wrongful acts or omissions, including wasting and mismanaging Calkins's estate, misapplying Calkins's assets, breach of fiduciary duty, professional negligence, negligence, and legal malpractice.[1] James sought damages for the value of the cash and property that Goehrs, directly or indirectly, allegedly misappropriated, converted, or lost. U.S. Specialty retained counsel to defend itself against James's attempt to possibly exhaust the penal limit of the bond.

         In May 2009, the probate court signed an order finding that the court had not acquired jurisdiction over the person and estate of Mary Olive Calkins until January 27, 2009. In that order, the court indicated that it would, upon motion or hearing, determine if any orders prior to January 27, 2009, were "not void." The probate court later found that all previous orders signed prior to January 27, 2009, were void, except for an order appointing an attorney ad litem and an order appointing a court investigator, neither of which concerns Goehrs, the surety bond, or the indemnity agreement at issue.

         U.S. Specialty sent Goehrs three written indemnity demands. The final demand, sent in December 2015, requested $161, 405.35 in attorney's fees and expenses incurred through that date and $54, 754 in unpaid bond premiums. Goehrs rejected all demands, arguing that the June 2008 order appointing her temporary guardian was void and, therefore, the indemnity agreement executed as part of the surety bond application was also void or otherwise invalid.

         Mary Olive Calkins died in 2015. In 2017, the administrator of her estate initiated another proceeding in probate court against Goehrs and U.S. Specialty, asserting a claim against the bond. Upon U.S. Specialty's motion, the probate court dismissed the claim against U.S. Specialty three months later.

         U.S. Specialty filed the present suit against Goehrs, alleging that Goehrs had breached the indemnity agreement.[2] U.S. Specialty sought to recover all amounts expended in defense of the bond-related litigation and the unpaid bond premiums, as well as attorney's fees, interest, and court costs. Goehrs denied U.S. Specialty's claims, asserted numerous defenses including mutual mistake, and sought a declaration of non-liability under the indemnity agreement. Goehrs alleged that, at the time she signed the indemnity agreement, both parties mistakenly believed she had been legally appointed temporary guardian when in fact the court's order appointing her was void; this mistake, in turn, rendered the indemnity agreement void.

         The parties filed competing motions for summary judgment. U.S. Specialty argued that Goehrs was liable under the indemnity agreement in two respects: (1)by failing to indemnify the surety for its incurred costs under the bond; and (2)by failing to pay annual premiums on the bond since 2008. U.S. Specialty sought a total of $255, 432.01, consisting of attorney's fees and expenses incurred in defending itself against all claims made under the bond, unpaid premiums, and attorney's fees incurred in prosecuting the present suit. Goehrs opposed U.S. Specialty's motion on two grounds: (1) the indemnity agreement is invalid pursuant to the doctrine of mutual mistake; and (2) U.S. Specialty failed to ...

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