playoff-corporation-donruss-playoff-lp-donruss-llc-and-ann-blake ( 2009 )

COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 2-06-249-CV
PLAYOFF CORPORATION, DONRUSS APPELLANTS AND
PLAYOFF, L.P., DONRUSS LLC, AND APPELLEES
ANN (BLAKE) POWELL
V.
LAWRENCE BLACKWELL APPELLEE AND
APPELLANT
------------
FROM THE 141ST DISTRICT COURT OF TARRANT COUNTY
------------
OPINION ON REHEARING
------------
After reviewing appellee/cross appellant, Lawrence Blackwell’s motion for
rehearing and/or motion for en banc reconsideration, we deny the motions. We
withdraw our December 11, 2008 opinion and judgment and substitute the
following.
This is a breach of employment-contract case. The key issue is whether
the oral employment contract in question is unenforceably indefinite as a matter
of law. We hold that it is, and we affirm the trial court’s take-nothing judgment
notwithstanding the verdict on Lawrence Blackwell’s breach of contract claim
against Playoff Corp., Donruss Playoff, L.P., Donruss LLC, and Ann Powell
(collectively, “the defendants”). We also affirm the trial court’s denial of the
defendants’ motion for attorney’s fees under the Texas Commission on Human
Rights Act.
Background
The jury heard six days of testimony from fourteen witnesses, and the
trial court admitted approximately 1,200 pages of exhibits into evidence. The
following summary reflects only the evidence essential to our resolution of this
appeal.
Powell founded Playoff Corp., a sports trading-card company, in 1992.
In 1997, Playoff hired Blackwell as a consultant for $1,500 per day. A few
months later, Powell and Blackwell began a romantic relationship, which
continued until February 2002.
In December 1999, Playoff hired Blackwell as an employee, and Powell
appointed him to serve as Playoff’s president. The terms of Blackwell’s
2
employment agreement are the crux of this case. According to Blackwell, he
and Powell orally agreed to the following eight terms:
1. Playoff would employ Blackwell;
2. Playoff would not pay Blackwell $600,000 in consulting fees
that it allegedly owed to him;
3. Playoff would pay Blackwell a lower salary than he would
have earned as a consultant;
4. Blackwell would not engage in business opportunities with
other companies or organizations in which he, in reasonable
probability, would otherwise have had an opportunity to
engage;
5. Blackwell would loan money to Playoff and entities
contemplated to be formed by the parties;1
6. Blackwell would sign personal guaranties for loans made to
Playoff and entities contemplated to be formed by the
parties;
7. Playoff and Powell would pay Blackwell 25% of the proceeds
from the sale of Playoff or entities contemplated to be
formed by the parties, if any, after reducing the proceeds
from the sale by $5,000,000.00 (Playoff’s agreed fair market
value at the time of the alleged employment agreement); or
25% of the fair market value of Playoff or entities
contemplated to be formed by the parties, if any, after
reducing the fair market value by $5,000,000.00, on the last
day of his employment if Playoff or any entity contemplated
to be formed by the parties terminated Blackwell’s
employment; and
1
… The “entities contemplated to be formed” are, according to Blackwell,
Donruss Playoff, L.P. and Donruss LLC (collectively, “Donruss”).
3
8. Playoff and Powell would pay Blackwell 25% of any
distributions made by Playoff or any entity contemplated to
be formed by the parties after payment of taxes owed by
Powell arising from the operation of Playoff or any entity
contemplated to be formed by the parties, if any.
Blackwell testified that he and Powell shook hands over the deal but did not
memorialize the agreement in writing. Powell denied the existence of any
agreement whatsoever, calling Blackwell’s testimony regarding the handshake
deal “a complete lie.”
Blackwell continued to work for Playoff and related entities until
November 2002, during which time the Playoff entities greatly increased in
value. The parties hotly contested whether Blackwell resigned or Powell
terminated his employment.
Blackwell sued the defendants for sexual harassment under the Texas
Commission on Human Rights Act (TCHRA), alleging that Powell terminated him
when he refused to rekindle their romantic relationship. He later added claims
for breach of contract, fraud, and breach of fiduciary duty and nonsuited his
TCHRA claims. The defendants filed a motion for attorney’s fees and costs
under TCHRA. The parties tried Blackwell’s claims to a jury and submitted the
issue of TCHRA attorney’s fees to the court.
The trial court granted a directed verdict in favor of Donruss on
Blackwell’s breach of contract claim and in favor of all the defendants on his
4
fraud claim. The jury found that Blackwell and Powell agreed to the eight terms
set forth above and that Playoff and Powell failed to comply with the
agreement. It also found that Blackwell did not resign and did not engage in
any misconduct that justified his termination. With regard to breach of contract
damages, the trial court instructed the jury to consider only the following
element:
Twenty-five (25%) of the fair market value of Playoff Corporation,
Donruss Playoff, LP and Donruss LLC (after reducing the fair market
value by $5,000,000.00) on the last day of Lawrence Blackwell’s
employment, if any, with Donruss, LLC, Donruss Playoff, LP, or
Playoff Corporation.
The jury returned a verdict on breach of contract damages of $6,100,000.
The trial court first rendered judgment for Blackwell for $6,100,000, but
then granted Powell and Playoff’s motion for judgment notwithstanding the
verdict and rendered a take-nothing judgment. In the order granting Powell and
Playoff’s motion for judgment notwithstanding the verdict, the trial court
stated,
[T]he court is of the opinion that Plaintiff Blackwell should take
nothing by way of his claims against any Defendant. The alleged
oral agreement found by the jury in Question 1 is legally
unenforceable. In particular, but not by way of limitation, the Court
finds that the alleged oral agreement found by the jury in Question
1 is insufficiently definite as a matter of law. The jury’s finding in
Question 1 cannot support a recovery in favor of Plaintiff Blackwell
against any Defendant.
5
The trial court also denied the defendants’ motion for attorney’s fees under
TCHRA. Blackwell appeals from the judgment not withstanding the verdict, and
the defendants appeal from the trial court’s denial of their motion for TCHRA
attorney’s fees.
Blackwell’s Appeal
1. Standard of review.
A trial court may disregard a jury verdict and render judgment
notwithstanding the verdict (“JNOV”) if no evidence supports the jury findings
on issue necessary to liability or if a directed verdict would have been proper.
See Tex. R. Civ. P. 301; Tiller v. McLure, 121 S.W.3d 709, 713 (Tex. 2003);
Fort Bend County Drainage Dist. v. Sbrusch, 818 S.W.2d 392, 394 (Tex.
1991). A directed verdict is proper only under limited circumstances: (1) when
the evidence conclusively establishes the right of the movant to judgment or
negates the right of the opponent; or (2) when the evidence is insufficient to
raise a material fact issue. Prudential Ins. Co. v. Fin. Review Servs., Inc., 29
S.W.3d 74, 77 (Tex. 2000); Ray v. McFarland, 97 S.W.3d 728, 730 (Tex.
App.—Fort Worth 2003, no pet.).
To determine whether the trial court erred by rendering a JNOV, we view
the evidence in the light most favorable to the verdict under the well-settled
standards that govern legal sufficiency review. See W al-Mart Stores, Inc. v.
6
Miller, 102 S.W.3d 706, 709 (Tex. 2003). The standard for reviewing a
judgment notwithstanding the verdict, like all other motions rendering judgment
as a matter of law, requires a reviewing court to credit evidence favoring the
jury verdict if reasonable jurors could and disregard contrary evidence unless
reasonable jurors could not. Cent. Ready Mix Concrete Co. v. Islas, 228
S.W.3d 649, 651 (Tex. 2007).
2. Is the alleged employment contract unenforceably indefinite?
In his fourth issue, Blackwell argues that the trial court erred by granting
judgment notwithstanding the verdict because—contrary to the trial court’s
statement in the order granting Powell’s motion for JNOV—the alleged
employment contract is not too indefinite to enforce. The defendants argue
that eight indefinite terms in the agreement, including “fair market value,”
render the whole unenforceably vague.
A contract is legally binding only if its terms are sufficiently definite to
enable a court to understand the parties’ obligations. Fort Worth ISD v. City
of Fort Worth, 22 S.W.3d 831, 846 (Tex. 2000). “The rules regarding
indefiniteness of material terms of a contract are based on the concept that a
party cannot accept an offer so as to form a contract unless the terms of that
contract are reasonably certain.” Id.
7
A contract is sufficiently definite if a court is able to determine the
respective legal obligations of the parties. T.O. Stanley Boot Co. v. Bank of El
Paso, 847 S.W.2d 218, 221 (Tex. 1992). Contract terms are reasonably
certain “if they provide a basis for determining the existence of a breach and
for giving an appropriate remedy.” Restatement (Second) of Contracts § 33(2)
(1981). If an alleged agreement is so indefinite as to make it impossible for a
court to fix the legal obligations and liabilities of the parties, it cannot constitute
an enforceable contract. See id.
An agreement to make a future contract is enforceable only if it is
“specific as to all essential terms, and no terms of the proposed agreement may
be left to future negotiations.” Fort Worth ISD, 22 S.W.3d at 846 (quoting
Foster v. Wagner, 343 S.W.2d 914, 920–21 (Tex. Civ. App.—El Paso 1961,
writ ref’d n.r.e.)). “It is well settled law that when an agreement leaves
material matters open for future adjustment and agreement that never occur,
it is not binding upon the parties and merely constitutes an agreement to
agree.” Id.
Whether an agreement fails for indefiniteness is a question of law to be
determined by the court. COC Servs., Ltd. v. CompUSA, Inc., 150 S.W.3d
654, 664 (Tex. App.—Dallas 2004, pet. denied); see also T.O. Stanley Boot
Co., 847 S.W.2d at 222.
8
The question here is whether the term “fair market value” as used in the
alleged agreement is unenforceably indefinite; that is, whether “the fair market
value of Playoff Corporation or entities contemplated to be formed by the
parties, if any . . . on the last day of [Blackwell’s] employment” is reasonably
certain and provides a basis for giving an appropriate remedy.2 See
Restatement (Second) of Contracts § 33(2). Several Texas courts have held
that the fair market value of a company is a measure of damages to be resolved
by the fact finder. See Willis v. Donnelly, 199 S.W.3d 262, 275 n.24 (Tex.
2006) (holding fair market value of stock shares is the appropriate measure of
damages when employer breaches agreement to compensate employee with
stock); Miga v. Jensen, 96 S.W.3d 207, 215 (Tex. 2002) (same); Bowers
Steel, Inc. v. De Brooke, 557 S.W.2d 369, 371 (Tex. Civ. App.—San Antonio
1977, no writ) (same). The pattern jury charge also uses the term “value” in
an instruction on benefit-of-the bargain contract damages. See Comm. on
Pattern Jury Charges, State Bar of Texas, Texas Pattern Jury Charges:
Business, Consumer, Insurance, Employment PJC 110.3 (2006). Courts in
some other jurisdictions have held that “fair market value” is sufficiently definite
2
… Blackwell suggests that the meaning of fair market value and the
method of calculating same are merely ancillary aspects of the alleged
agreement. We disagree because the 25% of the companies’ fair market value
dwarfs the other consideration due under the alleged agreement.
9
as a price term in an option contract to support an action for specific
performance. See, e.g., Coodwest Rubber Corp. v. Munoz, 216 Cal. Rptr. 604,
604–05 (Cal. Ct. App. 1985) (collecting cases from several states).
But just because “fair market value” is an appropriate measure of
damages to be determined by the jury in some cases and sufficiently definite
as a contract term in some contexts does not mean that every contract
containing the phrase is sufficiently definite to be enforced. In the context of
this case, the only evidence of an alleged agreement containing the phrase “fair
market value” came from Blackwell’s testimony.
Blackwell acknowledged that they did not have an understanding as to
how market value was to be determined in 1999. And the evidence shows that
even Blackwell realized the parties needed to agree on a valuation method
during later negotiations. In a document dated March 27, 2002, and titled
“Proposals for a Working Arrangement for Larry Blackwell and Ann Blake,”
Blackwell wrote,
If company is sold or I am no longer with the company for any
reason: Receive 25% of sale amount or value as determined by
formula (formula or methodology still needs to be determined) on
an after-tax basis, less the amount of $1,250,000.00 (which
equals 25% of the $5 million threshold).
[Emphasis added.] Likewise, in an email dated October 25, 2002, Blackwell
wrote, “[I] believe this is where we left off [the employment contract
10
discussions] some time ago, with the major unresolved element being the
valuation methodology at the time of my departure.” [Emphasis added]
Blackwell characterized the documents and emails in 2000 and 2002 as
proposing “replacement deals,” not as describing the 1999 oral agreement. He
said they “shook hands” on the 1999 oral agreement, and, although Powell had
said she would put it in writing, she never did. In 2000, he explained, Powell
had become more comfortable with the “equity” concept3 and thus asked him
to call Playoff’s attorneys and see if they could reach a “replacement deal.”
Another reason for a “replacement deal,” he said, was for potential tax
advantages for Powell. In 2002, he said, Powell wanted to pull money out of
the business and delay payment of his 25 percent. It wasn’t that she did not
3
… From the time of his initial interview with Powell, Blackwell
acknowledged, he wanted to pursue some “upside” as well as an “equity
interest” in Playoff, and his discussions with Powell in that regard continued
both before and after they reached the oral agreement of 1999 as found by the
jury. Blackwell acknowledged that the oral agreement did not give him an
equity interest. Some three months after the handshake deal as found by the
jury, he was again proposing an equity deal. He emailed Playoff’s lawyers on
March 23, 2000, proposing a limited partnership with an equity interest for
himself, with the value of Playoff to be determined “by appraisal.”
Blackwell’s efforts continued through the next two years with proposals
to accountants and lawyers of the companies to provide him with an equity
interest in the Playoff entities as well as alternative bonus plans for payment of
25 percent of after-tax distributions on sale or termination, virtually identical to
the 1999 agreement terms.
11
want to pay him, Blackwell said, but that she wanted to “postpone it for some
time.”
Except for the provisions of the proposals that would have provided
Blackwell some equity interest, nothing in the documents, emails, or Blackwell’s
testimony indicates that the proposed “replacement” agreements were any
different from the 1999 oral agreement with respect to valuing the entities.
And the documents and emails are uncontradicted. It is inescapable that even
Blackwell contemplated that fair market value of the entities would be
determined by a specific formula yet to be determined by additional negotiation
and agreement between the parties.
Though the evidence that the method of valuation remained to be
determined might be considered contrary to the jury’s verdict, neither a
reasonable jury nor a court could ignore it. See Cent. Ready Mix Concrete Co.,
228 S.W.3d at 651 (citing City of Keller v. Wilson, 168 S.W.3d 802, 821 (Tex.
2005) (holding court must consider evidence that jury could not disregard that
is contrary to verdict in no-evidence review)). Moreover, Blackwell’s
uncontroverted admissions in these statements are not contrary to and do not
conflict with the jury’s finding of the agreement in answer to Question No. 1.
Instead, his admissions establish that, in addition to the terms agreed upon, the
agreement would ultimately contain an additional term on which the parties had
12
not yet reached an agreement–how to determine fair market value of the
companies in the event his employment was terminated. “Evidence is not
conflicting just because the parties cannot agree to it. For example, . . .
evidence showing the terms of one loan does not conflict with undisputed
evidence that the parties never reached an agreement regarding the terms of
another.” City of Keller, 168 S.W.3d at 821 (citing T.O. Stanley Boot Co., 847
S.W.2d at 222)).
In other words, Blackwell’s admissions show that, at most, the alleged
agreement left a material matter open for future adjustment and agreement that
never occurred. See Fort Worth ISD, 22 S.W.3d at 846. Because this
evidence established that the parties never reached an agreement on an
additional material term, the agreement fails for “indefiniteness” as a matter of
law. See T.O. Stanley Boot Co., 847 S.W.2d at 222.
The Tennessee court of appeals held an agreement too indefinite to
enforce under similar facts in Four Eights, LLC v. Salem, 194 S.W.3d 484
(Tenn. Ct. App. 2005). There, the parties entered into a lease agreement with
an option to purchase the leased premises for “its then fair market value.” Id.
at 486. The lease further provided that “[t]he Fair Market Value must be
determined by the Lessor and Lessee, negotiating in good faith . . . .” Id.
When the lessee sued the lessor to enforce the purchase option, the trial court
13
ruled that the agreement was too indefinite to enforce. Id. The court of
appeals affirmed, holding that while “fair market value” has a common
meaning, the lease provision that fair market value must be determined through
good-faith negotiation was an unenforceable agreement to agree:
[I]f the parties had simply utilized the term “fair market value,” then
the Court could have ascertained the same based on common
usage. By adding the provision that “Fair Market Value must be
determined by the Lessor and Lessee, negotiating in good
faith” . . . , the parties basically made an “agreement to agree” to
something in the future, and such agreements have generally been
held unenforceable, both in this jurisdiction and others.
Id.; see also Connor v. Harless, 626 S.E.2d 755, 758 (N.C. Ct. App. 2006)
(holding lease agreement with option to purchase premises at “fair market
value” based on two appraisals too indefinite to enforce because agreement did
not contain additional provisions stating how to proceed if appraisals produced
vastly different values).
Blackwell argues that the term “fair market value” is sufficiently definite
because the term is defined by an IRS revenue ruling and because expert
testimony defined the term at trial.4 Contracts are presumed to incorporate
4
… Blackwell also argues—in two sentences—that the defendants waived
any indefiniteness in fair market value because they invited error by requesting
a jury question containing the term—a question identical to the one the trial
court actually submitted. This argument fails because even if the jury found (as
it did) that Blackwell and Powell entered into an employment agreement that
referenced the fair market value of the companies, whether the agreement is
14
regulations and laws existing at the time of execution. Houston Lighting &
Power Co. v. R.R. Comm’n of Tex., 529 S.W.2d 763, 766 (Tex. 1975).
Blackwell points to Revenue Ruling 56-60 as defining the term “fair market
value.” See Rev. Rul. 56-60, 1959 -1 C.B. 237. Revenue Ruling 56-60
concerns the valuation of closely held corporations for estate and gift tax
purposes. Id. §1. Although Blackwell contends that ruling 56-60 defines the
term “fair market value,” it is more accurate to say that ruling 56-60 provides
an approach to or guidelines for determining fair market value. See id. § 3
(captioned “Approach to Valuation”). Section 2.02 notes that the Estate Tax
Regulations and the Gift Tax Regulations “define fair market value, in effect, as
the price at which the property would change hands between a willing buyer
and a willing seller when the former is not under any compulsion to buy and the
latter is not under any compulsion to sell, both parties having reasonable
knowledge of relevant facts.” Id. § 2.02. But section 3.01 goes on to observe
that “[n]o formula can be devised that will be generally applicable to the
multitude of different valuation issues,” and section 7 notes that “valuations
cannot be made on the basis of a prescribed formula” and that “there is no
means whereby the various applicable factors in a particular case can be
unenforceably indefinite remains a question of law for the court. See COC
Servs., Ltd.,150 S.W.3d at 664.
15
assigned mathematical weights in deriving the fair market value.” Id. §§ 3.01,
7.
As in Four Eights, LLC, had the parties simply utilized the term “fair
market value” in the alleged agreement, then the court and jury could have
ascertained the same based on its common meaning. See Four Eights, LLC,
194 S.W.3d at 486. But Blackwell acknowledged that he an Powell did not
have an understanding of how fair market value would be calculated with
regard to the 1999 agreement, and the parties’ later negotiations—as
established by Blackwell’s own written admissions—show that the method of
valuation was a “major unresolved element.” Without an agreed method of
calculating fair market value, the 1999 agreement as found by the jury was
unenforceably indefinite as a matter of law. See Fort Worth ISD, 22 S.W.3d
at 846; COC Servs., Ltd., 150 S.W.3d at 664. We therefore hold that the trial
court did not err by granting JNOV, and we overrule Blackwell’s fourth issue.
Having overruled his fourth issue, we need not consider his other issues, in
which he attacks the alternative bases for JNOV asserted in the defendants’
JNOV motion. See Tex. R. App. P. 47.1.
Powell, Playoff, and Donruss’s Appeal
In a single cross-issue, the defendants argue that the trial court abused
its discretion by denying their motion for attorney’s fees under TCHRA.
16
TCHRA provides that “[i]n a proceeding under this chapter, a court may
allow the prevailing party, other than the commission, a reasonable attorney’s
fee as part of the costs.” Tex. Lab. Code Ann. § 21.259(a) (Vernon 2006)
(emphasis added). When a statute states that a trial court “may” award
attorney’s fees, such an award is discretionary and we review the trial court’s
ruling under the abuse of discretion standard. Smith v. McCarthy, 195 S.W.3d
301, 304 (Tex. App.—Fort Worth 2006, pet. denied); Winters v. Chubb & Son,
Inc., 132 S.W.3d 568, 580 (Tex. App.—Houston [14th Dist.] 2004, no pet.).
A trial court abuses its discretion when it acts without reference to any guiding
rules and principles. Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238,
241–42 (Tex. 1985), cert. denied, 476 U.S. 1159 (1986).
Texas courts of appeals that have addressed attorney’s fees under
TCHRA have followed federal precedent, under which an employer may recover
attorney’s fees if the plaintiff’s claims were frivolous, meritless, or unreasonable
or the plaintiff continued to litigate after it became clear that his claim was
frivolous. See, e.g., Elgaghil v. Tarrant County Junior College, 45 S.W.3d 133,
145 (Tex. App.—Fort Worth 2000, pet. denied). Attorney’s fees are not
appropriate under TCHRA simply because the plaintiff loses his case. Id. (citing
Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 420, 98 S. Ct. 694, 700
(1978)). Rather, to show that a lawsuit was without merit, the defendant must
17
establish that the case was groundless or without foundation. Id. (affirming
trial court’s award of attorney’s fees to TCHRA defendant when defendant
established that plaintiff’s claims were groundless as a matter of law). Under
the equivalent federal law, a defendant is not a prevailing party when a plaintiff
voluntarily dismisses his claim, unless the defendant can demonstrate that the
plaintiff withdrew to avoid a disfavorable judgment on the merits. Dean v.
Riser, 240 F.3d 505, 511 (5th Cir. 2001); see also Butler v. MBNA Tech. Inc.,
No. Civ. 3:02-CV-1715-H, 2004 WL 389101, at *4–5 (N.D. Tex. March 1,
2004) (awarding attorney’s fees under Title VII when plaintiff nonsuited claims
in face of motion for summary judgment).
In Dean, the fifth circuit court of appeals, bemoaning the “small and
almost infinitesimal universe of reported cases in which civil rights plaintiffs
voluntarily dismiss their claims to avoid judgment on the merits,” offered the
following guidance to aid federal district courts in determining whether such
dismissals warrant an award of attorney’s fees:
Upon the defendant’s motion, the court must determine that the
plaintiff’s case was voluntarily dismissed to avoid judgment on the
merits. Once this affirmative determination has been made, the
defendant must then establish that the plaintiff’s suit was frivolous,
groundless, or without merit. Ordinarily, these inquiries can be
resolved from the record developed in the case before the court,
supplemented by affidavits and, only if necessary, testimonial
evidence. Additional relevant evidence includes but is not limited
to information concerning discovery delays and abuses, slothful
18
prosecution, negative rulings, and sanctions against the plaintiffs.
Upon reaching the above two conclusions, the district court may
then in its discretion award the defendant attorney’s fees under
§ 1988.
Dean, 240 F.3d at 511.
Blackwell sued the defendants under TCHRA for sexual harassment in the
form of unwanted sexual advances, requests to engage in a sexual relationship,
requests for sexual favors, and improper questions regarding his activities and
relationships outside the office; retaliation; and sex discrimination. He
nonsuited his TCHRA claims the day before a hearing on the defendants’
motion for summary judgment on his TCHRA claims. The defendants filed a
motion for attorney’s fees under TCHRA some months later.
During trial, the trial court heard extensive testimony about both the
employment and romantic relationships between Blackwell and Powell.
Blackwell and Powell both testified that they had an exclusive, sexual
relationship and lived together from shortly after Powell hired Blackwell in 1997
until February 2002. They both testified about several instances when they
renewed their romantic relationship after February 2002, but they disagreed
about who instigated the reconciliations. Blackwell testified that Powell
terminated his employment in November 2002 when she learned that he was
romantically involved with another woman. Powell testified that she did not fire
19
Blackwell. When asked, “[I]f [Blackwell] was still in a personal relationship with
you, he’d still be working there, right?” she answered, “As far as I would be
concerned, that opportunity would still be available.”
After the jury trial on Blackwell’s claims, the trial court held a hearing on
the defendants’ motion for attorney’s fees. The defendants offered evidence
of attorney’s fees incurred in defending against Blackwell’s TCHRA claims in
the amount of $618,554. When the trial court granted JNOV as to Donruss,
it also awarded $618,554 in attorney’s fees to Donruss under TCHRA and
made findings of fact and conclusions of law in support of the award. But after
hearing additional arguments, the trial court vacated its prior judgment and
findings of fact and conclusions of law, rendered a final take-nothing JNOV in
favor of all defendants, and denied the defendants’ motion for TCHRA
attorney’s fees. Because the trial court vacated its findings of fact, we must
assume that it found all facts necessary to support its denial of the defendants’
motion for attorney’s fees. See Pharo v. Chambers County, 922 S.W.2d 945,
948 (Tex. 1996).
The defendants argue that the trial court abused its discretion by denying
their motion for attorney’s fees because they were the prevailing parties on
Blackwell’s TCHRA claims. Blackwell responds that his nonsuit of the TCHRA
20
claims was a strategic decision, not an effort to avoid an adverse judgment on
the merits.
Although this court has not previously reviewed a trial court’s denial of
a defendant’s motion for attorney’s fees under TCHRA, we have previously
reviewed the denial of attorney’s fees under another statute that gives a trial
court the discretion to award fees to a prevailing party. In Smith v. McCarthy,
the appellant argued that the trial court abused its discretion by denying the
appellant’s motion for attorney’s fees under civil practice and remedies code
section 16.034(a), which provides:
In a suit for the possession of real property . . . , if the prevailing
party recovers possession of the property from a person unlawfully
in actual possession, the court may award costs and reasonable
attorney’s fees to the prevailing party.
Tex. Civ. Prac. & Rem. Code Ann. § 16.034(a) (Vernon 2002) (emphasis
added); Smith, 195 S.W.3d at 304. We held that the appellant did not meet
his burden of showing that the trial court abused its discretion by denying his
request for attorneys’s fees because the trial court’s basis for denying
attorney’s fees was unclear. Smith, 195 S.W.3d at 304. We further noted
that because section 16.034(a) makes the award of fees discretionary —just
like TCHRA—the trial court could have determined that the appellant was the
21
prevailing party as a matter of law but, in its discretion, decided to deny
attorney’s fees anyway. Id.
Likewise, in this case the basis for the trial court’s denial of attorney’s
fees is unclear. Under the Dean guidelines, the trial court could have
determined that Blackwell did not voluntarily dismiss his TCHRA claims to avoid
judgment on the merits; or it could have determined that Blackwell’s TCHRA
claims were not frivolous, groundless, or without merit; or—even if it found the
two foregoing factors in the defendants’ favor—it could have decided, in its
discretion, not to award attorney’s fees. See Dean, 240 F.2d at 511. Because
the trial court’s resolution of all three factors, much less the basis for those
resolutions, is unclear, the defendants have not carried their burden of showing
an abuse of discretion. See Smith, 195 S.W.3d at 304.
The defendants argue that the reasoning in Smith is inapplicable to this
case because our interpretation of TCHRA, unlike our interpretation of the civil
practice and remedies code, must be guided by existing federal case law on the
equivalent federal statute. But none of the federal or Texas cases cited by the
defendants involved the situation presented here, namely, appellate review of
a trial court’s discretionary denial of attorney’s fees when the basis for the
denial is not clear from the record. See, e.g., Butler, 2004 WL 389101, at
*6–7 (explaining why the trial court was exercising its discretion in favor of
22
awarding fees); Elgaghil, 45 S.W.3d at 144–45 (reviewing trial court’s exercise
of discretion to award attorney’s fees under TCHRA). In the absence of other
controlling or persuasive authority applicable to the case before us, it is fitting
that we turn to our own precedent, Smith, for guidance.
We hold that the defendants have not shown that the trial court abused
its discretion by denying their motion for TCHRA attorney’s fees, and we
overrule their sole issue.
Conclusion
Having overruled Blackwell’s fourth issue, not having reached his
remaining issues, and having overruled Powell, Playoff, and Donruss’s sole
issue, we affirm the trial court’s judgment.
ANNE GARDNER
JUSTICE
PANEL: DAUPHINOT, GARDNER, and MCCOY, JJ.
DELIVERED: October 29, 2009
23