Republic Capital Group, LLC v. Jason Roberts Eden Farms Ltd. Ashley & Jason Inc. Zachary Potts Northwoods Energy, LLC. Chanan Corp. George Atallah And Saliba Family Trust ( 2018 )

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-17-00481-CV
Republic Capital Group, LLC, Appellant
v.
Jason Roberts; Eden Farms Ltd.; Ashley & Jason Inc.; Zachary Potts; Northwoods
Energy, LLC; Chanan Corp.; George Atallah; and Saliba Family Trust, Appellees
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 201ST JUDICIAL DISTRICT
NO. D-1-GN-15-002254, HONORABLE LORA J. LIVINGSTON, JUDGE PRESIDING
MEMORANDUM OPINION
This appeal arises from a dispute among business partners that resulted in appellant
Republic Capital Group, LLC, filing suit against appellees Jason Roberts, Eden Farms Ltd., Ashley
& Jason Inc., Zachary Potts, Northwoods Energy, LLC, Chanan Corp., George Atallah, and
Saliba Family Trust.1 In two pretrial orders, the trial court granted summary judgment on many of
Republic’s claims, leaving the jury to decide Republic’s claims for fraudulent inducement as to the
Roberts Parties and breach of contract as to all appellees. The jury found in favor of appellees, and
the trial court signed a judgment ordering that Republic take nothing by its claims and awarding
attorney’s fees to appellees. As explained below, we will affirm the trial court’s judgment.
1
We will refer to appellees Jason Roberts, Eden Farms Ltd., and Ashley & Jason Inc.
collectively as the “Roberts Parties”; to appellees Zachary Potts, Northwoods Energy, LLC, and
Chanan Corp. as the “Potts Parties”; and to appellees George Atallah and Saliba Family Trust as the
“Atallah Parties.” Patrick McDavid was a plaintiff below but is not party to this appeal.
Factual and Procedural Summary
Business partners Patrick McDavid, Zachary Potts, Jason Roberts, and
George Atallah, along with their respective businesses, formed a venture to drill and operate
saltwater disposal wells. After disputes arose about the management of the various projects, the
parties went to mediation, which resulted in a confidential settlement agreement (“the Agreement”).
After the Agreement was signed, further disputes arose, and Republic eventually filed this suit,2
asserting claims for rescission, breach of contract, negligent misrepresentation, negligence, and
indemnification, and requesting an accounting and the creation of a constructive trust. Appellees
each filed a motion for traditional and no-evidence summary judgment, and Republic filed a “global
response” to the motions. The day before the hearing on the motions for summary judgment,
Republic filed a second amended petition, adding a claim for fraudulent inducement. About two
weeks after the hearing, the trial court signed an order granting summary judgment on Republic’s
claims for rescission, breach of contract related to a specific real-estate deal, negligence, and
negligent misrepresentation. It denied summary judgment as to Republic’s claims for breach of
contract on several other deals, for indemnity, and for an accounting and a constructive trust.
Appellees next filed amended, supplemental, or additional motions for summary
judgment. Republic filed another global response and a third amended petition, asserting claims for
fraudulent inducement, breach of contract, negligent misrepresentation, negligence, indemnification,
and a “statutory action for fraudulent claim filed against property” under the civil practice and
2
Republic and McDavid originally sued a total of forty-two defendants, but after several
nonsuits and amended petitions, the only remaining defendants were the eight appellees.
2
remedies code;3 it also sought a declaratory judgment construing certain documents. The trial court
held a hearing on the second round of motions for summary judgment.4 Trial began about a month
later, and on the last day of trial, the court signed an order granting summary judgment in favor of
all appellees as to Republic’s claims for negligent misrepresentation and for a fraudulent
claim against property against all appellees. It also granted summary judgment in favor of the
Atallah Parties on Republic’s claim for fraudulent inducement. The court denied appellees’ motions
for summary judgment as to Republic’s request for declaratory judgment and its claim for fraudulent
inducement against the Potts Parties and the Roberts Parties.
The jury was then asked whether the Roberts Parties had committed fraudulent
inducement and whether any of the appellees had breached the Agreement. The jury returned a
verdict in favor of appellees and made findings about the attorney’s fees incurred by each party. The
trial court entered judgment ordering that Republic should take nothing in its claims against
3
See Tex. Civ. Prac. & Rem. Code §§ 12.001-.007 (“Liability Related to a Fraudulent Court
Record or a Fraudulent Lien or Claim Filed Against Real or Personal Property”).
4
Due to the central-docket system in Travis County, different judges heard various motions
and signed orders throughout the proceeding, and Republic makes much of that fact. However,
district courts are authorized to operate on central-docket systems, see Tex. Const. art. V, § 11
(authorizing district judges to “exchange districts, or hold courts for each other”); see also Tex. R.
Civ. P. 330(e) (in county with multiple civil district courts, judges may exchange benches and may
determine any case pending in another court or sit as judge in other courts); In re Schmitz,
285 S.W.3d 451, 454 (Tex. 2009) (orig. proceeding) (judges may sit for one another whenever they
choose). Pursuant to that authority, the Travis County District Courts have passed local rules
permitting the operation of a rotating central-docket system. See Travis Cty. Dist. Ct. Loc. R. 1.2
(all civil cases other than those on specialized dockets are set on Central Docket), 1.3 (any district
judge may conduct hearing). The local rules allow a party to request that a case be assigned to one
judge instead of the central docket system (such a request generally “should be made at the beginning
of the case”). See id. R. 2.6. The record does not reflect that Republic ever made such a request.
3
appellees and finding that appellees were entitled to attorney’s fees under the indemnification clause
in paragraph 18 of the Agreement.
In seven points of error, Republic argues that the trial court erred in denying
Republic’s motion for mediation; in granting summary judgment as to rescission, breach of contract,
and negligent misrepresentation; and in awarding attorney’s fees to appellees.
Standards of Review
We review a trial court’s decision on a motion for alternative dispute resolution for
an abuse of discretion. See Tex. Civ. Prac. & Rem. Code § 154.021(a) (trial court “may, on its own
motion or the motion of a party, refer a pending dispute for resolution by an alternative dispute
resolution procedure” (emphasis added)); Downey v. Gregory, 757 S.W.2d 524, 525 (Tex.
App.—Houston [1st Dist.] 1988, orig. proceeding) (trial court has discretion to decide whether to
refer case to alternative dispute resolution). We review a court’s decision on a motion for summary
judgment de novo. Tarr v. Timberwood Park Owners Ass’n, __ S.W.3d __, No. 16-1005,
2018 WL 2372594, at *3 (Tex. May 25, 2018), Veigel v. Texas Boll Weevil Eradication Found., Inc.,
549 S.W.3d 193, 196 (Tex. App.—Austin 2018, no pet.). A movant for traditional summary
judgment must show that there is no genuine issue of material fact and that it is entitled to judgment
as a matter of law, Tex. R. Civ. P. 166a(c); Veigel, 549 S.W.3d at 196, and a defendant seeking
traditional summary judgment who “conclusively negates at least one essential element of a cause
of action is entitled to summary judgment,” Boerjan v. Rodriguez, 436 S.W.3d 307, 310 (Tex. 2014).
A movant for no-evidence summary judgment “contends that no evidence supports one or more
essential elements of a claim for which the nonmovant would bear the burden of proof at trial,”
4
and such a motion must be granted if the nonmovant does not raise a genuine issue of material
fact on each challenged element. Id.; see Tex. R. Civ. P. 166a(i) (explaining procedure for
no-evidence motion).
Motion to Mediate
In its first point of error, Republic asserts that mediation was required by the
Agreement, that it filed its motion “immediately after the lawsuit was on file,” as required by the
Agreement, and that the trial court abused its discretion in denying the motion. However, the record
does not support Republic’s assertions.
The portion of the Agreement on which Republic relies reads as follows:
Any controversy or claim arising out of or relation to this Agreement, shall first be
mediated prior to the filing of a lawsuit, with such mediation being performed in
good faith by both parties, and with a mediator mutually agreed to between the
parties. If the parties are unable to mutually agree on a mediator, either party may
file a lawsuit but must simultaneously request that the court appoint an impartial
mediator to mediate the controversy and shall extend any answer or other deadlines
until after completion of such mediation, the parties may then proceed to litigation
in any venue allowed under Texas Law.
(Emphasis added.) Republic, however, did not seek court-ordered mediation until four months after
filing suit, and when it did, it sought mediation pursuant to the civil practice and remedies code5 and
the local rules,6 explicitly stating that it was “not seeking mediation pursuant to the Settlement
5
See Tex. Civ. Prac. & Rem. Code §§ 154.001-.073 (“Alternative Dispute
Resolution Procedures”).
6
See Travis Cty. Dist. Ct. Loc. R. 13.1-13.8 (“Referral of Cases to Alternative
Dispute Resolution”).
5
Agreement.” Further, although the trial court’s “Order Denying ‘Plaintiffs’ Motion Requesting
Court-Ordered Mediation’” recited that the court was denying Republic’s motion, the order went on
to state, “Parties are ordered to schedule a mediation sixty (60) days after the completion of the five
primary depositions.” Thus, the trial court did not deny mediation—it actually ordered the parties
to mediate once certain depositions were taken.
The record demonstrates that Republic delayed its request for mediation until four
months after the lawsuit was filed, in contravention of the Agreement’s mediation clause, and the
trial court did not deny mediation but rather ordered mediation to occur after key depositions were
conducted, as it had the discretion to do. See Tex. Civ. Prac. & Rem. Code § 154.021(a). Republic
has not shown an abuse of discretion in the trial court’s order on Republic’s motion for court-ordered
mediation. See Downey, 757 S.W.2d at 525. We overrule Republic’s first point of error.
Summary Judgment as to Rescission
In its second point of error, Republic argues that the trial court erred in granting
summary judgment on Republic’s claims for rescission.
Rescission is an equitable remedy allowing for the termination of an agreement if the
party can show that it gave timely notice to the other party that the contract was being rescinded and
that it returned or offered to return the property received and the value of any benefit derived from
its possession. Carrow v. Bayliner Marine Corp., 781 S.W.2d 691, 696 (Tex. App.—Austin 1989,
no writ). Thus, an essential element of rescission is that the party show it offered to return any
benefits it received under the contract. Texas Co. v. State, 281 S.W.2d 83, 91 (Tex. 1955); Wright
v. Lessard, No. 03-02-00428-CV, 2003 WL 21241592, at *5 (Tex. App.—Austin May 30, 2003, no
6
pet.) (mem. op.); see Ford Motor Co. v. Castillo, 279 S.W.3d 656, 664 (Tex. 2009) (explaining that
case law requiring party seeking rescission to “restore the original status” refers to return of money
or property received under contract); Johnson v. Cherry, 726 S.W.2d 4, 8 (Tex. 1987) (“Restoration
or an offer to restore consideration received by one seeking to cancel a deed is a condition precedent
to maintaining a suit for cancellation of an instrument.”). That rule “is one of justice, designed to
ensure that parties do not repudiate an agreement while retaining benefits received by reason of the
agreement.” Castillo, 279 S.W.3d at 665.
Appellees’ motions for summary judgment asserted that Republic had received
benefits under the Agreement and had not returned or offered to return those benefits. They asserted
that there was no evidence Republic had refused or offered to restore any consideration received
under the Agreement, pointing to deposition testimony by McDavid, Republic’s manager and
majority owner, who testified that Republic continued to accept benefits under the Agreement after
learning of the facts that Republic claimed were grounds for rescission. He also testified that
Republic had not tendered back the received benefits and that appellees had not prevented Republic
from doing so. In its global response to the three motions for summary judgment, Republic
addressed those arguments by simply stating, “Finally, summary judgment as to Plaintiff’s rescission
claim must be denied because Plaintiffs are willing to restore any benefits gained from the
Settlement Agreement.” Such an assertion unsupported by evidence of any attempt or even intention
to do so does not raise a fact issue as to the challenged element of rescission. See id. at 664;
Johnson, 726 S.W.2d at 8; Texas Co., 281 S.W.2d at 91; Wright, 2003 WL 21241592, at *5; Carrow,
781 S.W.2d at 696.
7
Republic has not shown that the trial court erred in granting summary judgment as
to rescission. We overrule Republic’s second point of error.
Summary Judgment as to Breach of Contract
In its third issue, Republic asserts that the trial court erred in granting summary
judgment on its claim for breach of contract. Republic’s entire appellate argument as to the granting
of summary judgment on breach of contract reads as follows:
In an order entered July 22, 2016, Judge Sulak of the 353rd District Court granted
Appellees’ motions for summary judgment on Appellant’s breach of contract cause
of action, relating to the Fashing deal and other deals from which Appellant was
denied rights to significant proceeds. Appellant had argued that Appellees breached
the [Agreement] by making an assignment to Appellant that failed to secure
Appellant’s right in relation to Fashing and other business deals. Appellant argued
that Appellees breached the [Agreement] by proposing an assignment to Appellant
that failed to secure Appellant’s right in relation to numerous deals entered into by
the individual Appellees, through their various entities, as guaranteed by the
[Agreement]. At a minimum, fact issues existed which were not precluded by the
Motions for Summary Judgment presented by Appellees.
Thus, Republic repeats its trial-court arguments in a general way but does not provide this Court with
sufficient explanation of how it established that a fact issue existed.7 Nor does it cite to evidence
in the record showing the existence of a fact issue as to breach of contract.8 Republic has
7
Although Republic characterizes the order as granting summary judgment on its claim for
breach of contract “relating to the Fashing deal and other deals,” the order was very specific in only
granting judgment on this claim relating to the Fashing deal and in denying summary judgment as
to Republic’s other breach-of-contract claims.
8
At the beginning of its argument, Republic notes that the trial court excluded certain
exhibits at trial because of the pretrial granting of summary judgment on its claims for negligent and
fraudulent misrepresentation. It also cites to trial testimony. However, evidence admitted (or
excluded) at trial is not relevant to the propriety of the pretrial summary judgment orders.
8
therefore waived any error. See Tex. R. App. P. 38.1(i); Ramsey v. Reagan, Burrus, Dierksen,
Lamon & Bluntzer, P.L.L.C., No. 03-01-00582-CV, 2003 WL 124206, at *3 (Tex. App.—Austin
Jan. 16, 2003, no pet.) (mem. op.). We overrule Republic’s third point of error.
Summary Judgment on Negligent Misrepresentation
In its fourth issue, Republic argues that the trial court erred in granting summary
judgment on negligent misrepresentation and fraudulent misrepresentation. However, Republic
asserted a claim for negligent misrepresentation, not for fraudulent misrepresentation.9 We thus
consider only whether Republic showed that there was a genuine issue of material fact as to each
element of its claim for negligent misrepresentation. See Boerjan, 436 S.W.3d at 310.
The elements of a claim for negligent misrepresentation are: (1) a representation
made by the defendant in the course of business or a transaction in which he has a pecuniary interest,
(2) which provided “‘false information’ for the guidance of others in their business”; (3) the
defendant did not exercise reasonable care in obtaining or conveying the false information; and
(4) the plaintiff justifiably relied on the representation and suffered pecuniary loss as a result.
JPMorgan Chase Bank, N.A. v. Orca Assets, G.P., L.L.C., 546 S.W.3d 648, 653-54 (Tex. 2018).
However, “parties who contractually promise not to rely on extra-contractual statements—more than
that, promise that they have in fact not relied upon such statements—should be held to their word.”
9
Republic’s third amended petition added a claim for fraudulent inducement. The trial court
granted summary judgment on that claim as to the Atallah Parties, and granted a directed verdict on
that claim as to the Potts Parties. The fraudulent-inducement claim as to the Roberts Parties was
submitted to the jury, which found against Republic. Republic does not complain on appeal about
any decisions related to the claim for fraudulent inducement.
9
Forest Oil Corp. v. McAllen, 268 S.W.3d 51, 60 (Tex. 2008). “It is not asking too much that parties
not rely on extra-contractual statements that they contract not to rely on (or else set forth the
relied-upon representations in the contract or except them from the disclaimer).” Id. at 60-61.
In the portion of its second amended petition (the petition on file at the time appellees
filed their first round of motions for summary judgment) asserting a claim for negligent
misrepresentation, Republic asserted that appellees represented that they would “negotiate the real
property transfers and assignments” required under the Agreement in good faith and would execute
“additional documents” necessary to effectuate the Agreement; that appellees “supplied false
information for the guidance of others”; and that appellees “did not exercise reasonable care or
competence in communicating the information,” resulting in injury to Republic.10
In its response to the motions for summary judgment, however, Republic changed its
focus to the following specific representation made by two of the appellees in the Agreement:
16. Jason Roberts and George Atallah (the “warranting parties”) represent and
warrant that they are not currently doing business with the Banks Groups and/or its
subsidiaries, including its affiliates, officers, directors, shareholders, partners,
owners, members, agents, servants, employees, attorneys, successors or assigns . . . .
10
Republic pointed to Paragraphs 29 and 36 of the Agreement as bases for this claim.
Paragraph 29 required each party to execute “additional documents, and instruments in writing as
may be necessary, proper or required, desirable, or convenient for the purpose of fully effectuating
the terms of this Agreement.” Paragraph 36 required each party to “act in good faith in the
performance of their obligations under this Agreement,” to not “unreasonably delay, withhold or
condition any notice approval or similar action required or permitted by this Agreement,” and to “act
in good faith and use best efforts to achieve the ends of this Agreement.”
10
Republic asserted that contrary to that assurance, at the time the Agreement was being negotiated,
the Roberts Parties and the Potts Parties were engaged in dealings or negotiations with the Banks
Group; that appellees “were fully aware” of that fact; that appellees knew that the Banks Group
“dealings directly affected properties that were subject to” the Agreement and that those dealings
would delay execution of the Agreement; and that appellees “orally and falsely represented that there
were no such dealings . . . and, moreover, made said representation directly in the Settlement
Agreement.”11 On appeal, Republic likewise focuses only on Paragraph 16 and the alleged
misrepresentations related to the Banks Group, asserting that “Appellees promised they were not
doing business with the Banks Group.”
In addition to the provision noted above, the Agreement also included the following
provisions disclaiming any reliance on statements made outside of the contract:
25. It is further understood and agreed that this Agreement contains the entire
Agreement of the parties and supersedes any and all prior agreements, arrangements,
or understandings between them relating to the subject matter of this Agreement.
There are no oral understandings, statements, promises, or inducements contrary to
the terms of this Agreement.
26. Each party acknowledges that with respect to that party:
(a) such party has received advice from independent legal counsel selected by that
party prior to that party’s execution of this Agreement;
11
In its third amended petition, filed after the trial court granted summary judgment on its
claim for negligent misrepresentation, Republic added a claim for fraudulent inducement, asserting
that appellees induced Republic to enter into the Agreement by making false statements about their
involvement with the Banks Group. The jury found against Republic on that claim, which as we
previously mentioned, is not challenged on appeal.
11
(b) the legal nature and effect of this Agreement has been fully explained to such
party by such independent counsel;
(c) such party fully understands the terms and provisions of this Agreement and
the nature and effect thereof;
...
(f) such party has not relied upon any representation or statements of any other
party hereto, any employee of agent of such party, or counsel for any other party
hereto in executing this Agreement.
Because the Agreement’s provision related to the Banks Group only applied to Roberts and Atallah,
even if the Potts Parties had made representations outside of the Agreement, Republic disclaimed
its reliance on any such representations and could not later assert a claim for negligent
misrepresentation against the Potts Parties. See McAllen, 268 S.W.3d at 60-61. The trial court did
not err in dismissing that claim against the Potts Parties.
As to the Roberts Parties and the Atallah Parties, Republic’s brief provides little
explanation of how it showed that a fact issue exists, arguing in relevant part:
Through the warranty in [Agreement] Paragraph 16, Appellees promised they were
not doing business with the Banks Group. All Appellees are “parties” as defined in
Paragraph 18 of the [Agreement], as noted above. Appellees should be liable for
breach of Paragraph 16, individually and through their entities. At the very
minimum, issues of fact existed as to whether Appellees supplied false information,
whether Appellees exercised reasonable care in their communications, and whether
Appellant justifiably relied on the representations given by Appellees in the
[Agreement].
Republic does not cite to evidence showing that the trial court erred in granting summary judgment.
12
Even if this Court were obligated to delve into the record or other portions of
Republic’s brief to find such citations, the somewhat spare record citations provided in Republic’s
statement of the facts are to trial testimony, not to evidence produced at the summary judgment
stage. See Tex. R. Civ. P. 166a(c) (trial court shall decide motion for summary judgment based on
motion, response, affidavits, deposition transcripts, discovery responses, stipulations, or public
records; “[n]o oral testimony shall be received at the hearing”). Further, we are not obliged to
independently review the evidence submitted by Republic with its global response to the motions
for summary judgment. See Green v. Port of Call Homeowners Ass’n, No. 03-18-00264-CV,
2018 WL 4100855, at *6 (Tex. App.—Austin Aug. 29, 2018, no pet. h.) (mem. op.) (“As an
appellate court, it is not our duty to perform an independent review of the summary-judgment record
for evidence supporting appellants’ position.”); King v. Wells Fargo Bank, N.A., 205 S.W.3d 731,
734-35 (Tex. App.—Dallas 2006, no pet.) (pleadings do not constitute summary judgment proof and
do not create fact issue; “It is not our duty to make an independent search of the voluminous
summary judgment record for evidence supporting [appellants’] position.”). Republic waived any
error related to the trial court’s granting summary judgment on its claim for negligent
misrepresentation. See Tex. R. App. P. 38.1.(i). We overrule Republic’s fourth point of error.
Attorney’s Fee Awards
In point of error five, Republic contends that the trial court erred in awarding
attorney’s fees to appellees because “the only liability question . . . that was submitted to the jury”
was answered in the negative. Republic argues that the jury therefore did not find Republic was
liable for attorney’s fees, and that “[w]ith no predicate jury finding of liability, the trial court erred
13
in awarding judgment of attorneys’ fees” under the Agreement’s indemnity clause. In its related
sixth point of error, Republic complains that appellees did not seek to submit a jury question that
would provide support for the attorney’s fee award. Finally, in its seventh point of error, Republic
argues that the trial court erred in ordering it to pay appellees’ attorney’s fees because it is a limited
liability company, not an individual or corporation.
“Ordinarily, the allowance of attorney’s fees rests with the sound discretion of the
trial court and will not be reversed without a showing of abuse of that discretion.” Ragsdale
v. Progressive Voters League, 801 S.W.2d 880, 881 (Tex. 1990). However, whether a contract will
allow for the award of attorney’s fees is a question of law that we review de novo. Fitzgerald
v. Schroeder Ventures II, LLC, 345 S.W.3d 624, 627 (Tex. App.—San Antonio 2011, no pet.). “We
construe indemnity agreements under normal rules of contract construction,” seeking to “ascertain
and give effect to the parties’ intent as expressed in the contract.” Gulf Ins. Co. v. Burns Motors,
Inc., 22 S.W.3d 417, 423 (Tex. 2000).
Republic asserts that the trial court erred in its attorney’s fee awards because appellees
did not request or obtain a jury finding as to Republic’s liability for attorney’s fees. However, in the
jury charge, the jury was asked to determine what attorney’s fees the various parties had or would
incur after being instructed:
The Court will decide which, if any, party is entitled to receive attorney’s fees for this
case. However, it is your duty to determine the amount of any reasonable and
necessary attorney fees for the services in this case, if any. . . . Any recovery will be
determined by the court when it applies the law to your answers at the time of
judgment.
14
At the charge conference, Republic stated that it had no objections to the jury charge.
Not until in its post-verdict motion for entry of judgment did Republic assert, among other things,
that the jury charge did not include a liability question as to whether Republic had breached
the Agreement.
The charge stated that the determination of whether any of the parties were entitled
to attorney’s fees would be decided by the trial court, and Republic did not make the trial court aware
in a timely manner of any complaints about the court’s intention to reserve that question for itself.
Republic cannot now argue that the jury should have answered that question instead of the trial court.
See Wackenhut Corp. v. Gutierrez, 453 S.W.3d 917, 919-20 (Tex. 2015); Cruz v. Andrews
Restoration, Inc., 364 S.W.3d 817, 829-30 (Tex. 2012); see also Railroad Comm’n v. Gulf Energy
Expl. Corp., 482 S.W.3d 559, 571 & n.19 (Tex. 2016) (quoting Tex. R. Civ. P. 278 and noting that
failure to submit jury question is not ground for reversal unless error was noted for trial court in
either proposed substantially correct question or, if relied on by opposing party, objection).12
Furthermore, the interpretation of a contract is a question of law for a court, not the jury, to decide.
12
Republic cites to Bank of Texas v. VR Electric, Inc., 276 S.W.3d 671 (Tex.
App.—Houston [1st Dist.] 2008, pet. denied), for the proposition that “unless conclusively
established by the evidence, a party’s failure to submit a properly worded issue, or object to its
omission, results in waiver.” However, the court in VR Electric stated, “Under Rule 279 [of the rules
of civil procedure], if a ground is not conclusively established, and at least one element is submitted
to and found by the jury, the parties are considered to have agreed to waive a jury trial on the
elements that were not submitted, and to have submitted those issues to the trial court for resolution.”
Id. at 676-77. VR Electric therefore supports our conclusion that the issue of liability for attorney’s
fees was properly considered and decided by the trial court.
15
See Gulf Ins., 22 S.W.3d at 423; UMC, Inc. v. Coonrod Elec. Co., 667 S.W.2d 549, 554 (Tex.
App.—Corpus Christi 1983, writ ref’d n.r.e.).13
We overrule Republic’s complaints related to the absence of a “predicate question”
on its liability for attorney’s fees under the Agreement and now consider whether there was any error
in the trial court’s determination that Republic was liable for attorney’s fees.
In their counterclaims, appellees sought attorney’s fees under the indemnity provision
contained in the Agreement, and in its final judgment, the trial court stated appellees were “entitled
to be awarded their attorneys’ fees under the indemnification clause at paragraph 18 of the settlement
agreement.” We thus start with the indemnification provision, which provided in relevant part:
18. It is further understood and agreed that in consideration of the execution of this
Agreement, the parties shall indemnify and hold harmless each other, including all
affiliates, owners, officers, directors, members, partners, shareholders, employees,
contractors, servants, and any other person(s) acting under the parties’ direction
and/or control, the parties’ independent contractors, and successors and assigns, and
all persons, natural or corporate, in privity with them or any of them, from any and
all expenses, claims, demands, liabilities and causes of action of any kind
whatsoever, arising directly or indirectly from: (A) the above Dispute . . . (E)
including, without limitation, attorney’s fees, expert fees, and court costs, brought by
anyone by, through or under the parties either directly or indirectly in the future, it
being the purpose of this Agreement that the parties expend no further funds on
this Dispute.
13
Republic did not request any findings of fact or conclusions of law from the trial court,
and thus we imply all fact findings necessary to support the judgment that are supported by the
evidence. See BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 795 (Tex. 2002). Republic
does not challenge the sufficiency of the evidence supporting any implied findings.
16
Under the broad and plain language of the indemnity clause, the parties, including their affiliated
business entities, agreed to indemnify one another for costs, including attorney’s fees, incurred
directly or indirectly by the dispute that led to the creation of the Agreement.
We can reach no other conclusion than that the parties’ subsequent dispute about the
Agreement itself arose at least indirectly from the original dispute. Republic sued appellees without
having first sought mediation, in violation of the Agreement.14 Appellees, defendants against
Republic’s claims, obtained favorable verdicts and judgments against those claims and therefore
were the “prevailing parties.” See WWW.URBAN.INC. v. Drummond, 508 S.W.3d 657, 666-67 (Tex.
App.—Houston [1st Dist.] 2016, no pet.) (defendant that successfully defends against claim is
entitled to attorney’s fees under contractual “prevailing party” clause). The trial court did not err in
concluding that Republic was required to indemnify appellees for their attorney’s fees. See Carroll
v. Paetznick, 603 S.W.2d 381, 383 (Tex. App.—Austin 1980, writ ref’d n.r.e.) (interpreting release
as indemnification agreement requiring appellants to pay attorney’s fees incurred by appellee as
result of suit filed by appellants against third party, who then asserted claim against appellee).
As for its argument that the attorney’s fee award is improper because appellees did
not segregate their fees “among the different defendants, and failed entirely to segregate fees for the
work expended on the many claims and causes of action asserted by, against, and among the various
14
Republic again asserts that it “promptly requested mediation” but that the trial court
“erroneously denied” that request, “thereby frustrat[ing] the purpose of” the Agreement. However,
as explained earlier, Republic did not request mediation until four months after filing suit; it sought
mediation under the civil practice and remedies code, not the Agreement; and the trial court in fact
ordered mediation to take place after key discovery was conducted. Further, we disagree with
Republic’s interpretation of the indemnification clause as essentially stating that no party may
recover anything further against any of the other parties.
17
parties,” Republic argued before the trial court in its motion for entry of judgment that only the
signing parties to the Agreement—Eden Farms, Northwood Energy, and Atallah, as trustee of the
Saliba Family Trust—could rely on the indemnification provision and that because the jury
determined the fees incurred by the groups of defendants, including non-signatories, it was
impossible to determine what part of the attorney’s fees were incurred by the parties who could rely
on Paragraph 18. However, Paragraph 18 included in its reach “all affiliates, owners, officers,
directors, members, partners, shareholders, employees, contractors, servants, and any other person(s)
acting under the parties’ direction and/or control, the parties’ independent contractors, and successors
and assigns, and all persons, natural or corporate, in privity with them or any of them.” That broad
language states that the individuals and other entities affiliated with the signatories are encompassed
within the protections of the indemnification provision.
As for its argument, also made in its motion to enter judgment, that the Atallah Parties
had not segregated fees incurred “for work on recoverable claims versus non-recoverable claims,”
Republic is correct that “fee claimants have always been required to segregate fees between claims
for which they are recoverable and claims for which they are not.”15 Tony Gullo Motors I, L.P.
v. Chapa, 212 S.W.3d 299, 311 (Tex. 2006). However, Republic has not attempted to explain what
claims would be “non-recoverable,” and the Atallah Parties (and all the other appellees) sought
attorney’s fees under the indemnification provision, which covers “all expenses, claims, demands,
liabilities and causes of action of any kind whatsoever, arising directly or indirectly” from the dispute
15
Republic argued that the Atallah Parties had not segregated their fees because of the
statement by the attorney: “I felt so bad that I stopped billing at $145,000.”
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that led to the Agreement’s creation. This is not a situation in which the Atallah Parties sought
attorney’s fees after defending themselves against both a claim for which attorney’s fees could be
recovered and a claim for which fees may not be recovered. See Tex. Civ. Prac. & Rem. Code
§ 38.001; Bruce v. Cauthen, 515 S.W.3d 495, 514 (Tex. App.—Houston [14th Dist.] 2017, pet.
denied) (“it has long been recognized that party may not recover its attorney’s fees incurred in an
action based on a tort claim”). Instead, all of the claims against which the Atallah Parties and the
other appellees defended themselves fell within the broad scope of the indemnification provision.
As for any other complaints related to segregation,16 Republic did not raise those
issues before the trial court and may not raise them for the first time on appeal. Green Int’l, Inc.
v. Solis, 951 S.W.2d 384, 389 (Tex. 1997); C.M. Asfahl Agency v. Tensor, Inc., 135 S.W.3d 768, 801
(Tex. App.—Houston [1st Dist.] 2004, no pet.). We overrule points of error five and six.
Finally, Republic asserts that the trial court erred in ordering it to pay attorney’s fees
because it is a limited liability company, not an individual or corporation, and “[u]nder Chapter 38
of the Texas Civil Practice and Remedies Code, attorney’s fees can only be recovered from an
‘individual’ or corporation.’” See Tex. Civ. Prac. & Rem. Code §§ 38.001-.006. However, appellees
did not seek attorney’s fees under chapter 38, nor were they awarded fees under that chapter.
16
Although Republic’s phrasing seems to imply otherwise, appellees did not file claims
against one another—they each answered Republic’s lawsuit and filed counterclaims against
Republic for indemnity and attorney’s fees. Thus, none of the appellees had to defend against claims
filed by another defendant. They only defended themselves against the claims filed by Republic, and
each appellee presented evidence about the attorney’s fees they themselves had incurred in defending
against those claims.
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Instead, they sought and were awarded fees pursuant to Paragraph 18 of the Agreement, as discussed
above. We overrule Republic’s seventh and final point of error.
Conclusion
We have overruled Republic’s seven points of error. We affirm the trial court’s
final judgment.
__________________________________________
Cindy Olson Bourland, Justice
Before Justices Puryear, Goodwin, and Bourland
Affirmed
Filed: October 25, 2018
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