Ted B. Lyon, III v. Building Galveston, Inc., D/B/A Building Solutions ( 2015 )

ACCEPTED
01-15-00664-CV
FIRST COURT OF APPEALS
HOUSTON, TEXAS
11/16/2015 8:21:10 AM
CHRISTOPHER PRINE
CLERK
No. 01-15-00664-CV
FILED IN
1st COURT OF APPEALS
In the First Court of Appeals HOUSTON, TEXAS
at Houston, Texas 11/16/2015 8:21:10 AM
CHRISTOPHER A. PRINE
Clerk
Ted B. Lyon, III, et al.,
Apellant(s) and Cross-Appellee(s)
vs.
Building Galveston, Inc. d/b/a Building Solutions,
Appellee and Cross-Appellant
Appeal(s) from 405th District Court, Galveston County, Texas
(cause no. 10-CV-2353), Hon. Michelle Slaughter presiding
Brief for Appellants Ted B. Lyon, III, et al.
CRISS & ROUSSEAU LAW FIRM TED B. LYON & ASSOCIATES, P.C.
L.L.P.
Ben Taylor (19684500)
Susan E. Criss (06630475) btaylor@tedlyon.com
susan.criss@crissrousseau.com Josh Birmingham (24059329)
P.O. Box 17046 jbirmingham@tedlyon.com
Galveston, Texas 77552 18601 LBJ Freeway, Suite 525
Telephone: 409-515-6176 Mesquite, Texas 75150-5632
Facsimile: 409-763-1508 Telephone: 972-279-6571
Facsimile: 972-279-3021
counsel for appellants
Oral Argument Requested
Identity of Parties and Counsel
The appellants are Ted B. Lyon, III (hereafter “Mr. Lyon”), and Lyon
Properties & Custom Homes, LLC d/b/a Lyon Construction Services, more
correctly named Lyon Properties & Custom Homes, L.C. [5RR85-86; PX38]
(hereafter “Lyon Construction” or “Mr. Lyon’s company”). CR243-48, 266-270,
271-76, 277-78, 308-314; 1SuppCR98-103.1 Lyon Construction was the original
plaintiff but Mr. Lyon and Lyon Construction eventually became named
defendants pursuant to the trial court’s order of realignment. CR6-9, 29-32, 96.
Mr. Lyon and his company are also cross-appellees in this Court. Mr. Lyon’s and
his company’s trial and appellate counsel are listed on the cover of this brief. 2
1
The last-in-time judgment rendered by the trial court (second “nunc pro tunc” signed
October 13, 2015) denied all relief requested against Lyon Construction; however,
Lyon Construction has joined this opening brief (in an abundance of caution) because: (a) the
first “nunc pro tunc” (signed July 31, 2015) judgment mistakenly inserted unspecified “findings
of fact as requested by” plaintiff Building Galveston, Inc. and mistakenly awarded Building
Galveston, Inc. “$15,889.84” against Lyon Construction (see CR273, 276; 1SuppCR6-7, 27);
and (b) no subsequent order or judgment signed by the trial court expressly vacated, modified or
corrected the first “nunc pro tunc” judgment signed on July 31, 2015. See 1SuppCR37, 93-94,
96 (10/12/2015 judgment abstract form requested by Building Galveston, Inc.’s counsel naming
“Lyon Construction Services” as a “Judgment Debtor” with reference to “Nunc Pro Tunc Order
of 7/31/2015”), 103 (last-in-time “nunc pro tunc” judgment signed October 13, 2015, ordering:
“This judgment corrects the Judgment of May 19, 2015 . . .”). Cf. Mullins v. Thomas, 136
Tex. 215, 217, 150 S.W.2d 83, 84 (1941) (reaffirming “well settled” rule “that the entry of a
second judgment in the same case is not a vacation of the first, and that if there is nothing to
show the first was vacated, the second is a nullity”), Lane Bank Equip. Co. v. Smith S. Equip.,
Inc., 10 S.W.3d 308, 314 (Tex. 2000) (Rule 329b(h) provides that “[i]f a judgment is modified,
corrected or reformed in any respect” the appellate timetable runs from the date of the new
judgment — whether or not the change is “material or substantial”) (italics original).
2
In obedience to Tex. R. App. P. 38.1(a) and Tesco American, Inc. v. Strong Industries, Inc.,
221 S.W.3d 550, 552 & n.3 (Tex. 2006), rev’g 129 S.W.3d 606 (Tex. App.--Houston [1st Dist.]
2004), and 129 S.W.3d 594 (Tex. App.--Houston [1st Dist.] 2003) (en banc), Mr. Lyon and
-2-
The appellee and cross-appellant is Building Galveston, Inc. d/b/a
Building Solution (hereafter “Building Galveston” or “BGI”). 3 BGI was
originally the intervenor below; however, BGI later became the plaintiff suing
Mr. Lyon and his company pursuant to the trial court’s order of realignment.
CR12-19, 34-43, 46-55, 96, 106-113, 122. BGI’s trial and appellate counsel is:
Scott Lyford (127153200)
(slyford@millsshirley.com)
Mills Shirley L.L.P.
P.O. Box 1949 (77553)
2228 Mechanic Street, Suite 400
Galveston, Texas 77550
Telephone: 409-763-2341
Facsimile: 409-763-2879 4
Note regarding earlier-dismissed parties: No party appealed the trial
court’s January 2012 orders granting summary judgment on Lyon Construction’s
claims against Chris Arneson and dismissing (by agreement) Lyon Construction’s
Lyon Construction state that their counsel in the trial court also included Benjamin P. Barmore
(24073076). E.g., 1RR2. (Mr. Barmore departed Ted B. Lyon & Associates, P.C., in
December 2013 and on information and belief is now with Rad Law Firm, P.C.,
2777 Allen Parkway, Suite 1000, Houston, Texas 77019.)
3
See CR292-93, 299 (Building Galveston, Inc. announcing its intention to appeal the
trial court’s failure “to enter [sic] judgment against the corporate [sic] defendant and the failure
to award attorney’s fees related to the breach of contract damages awarded”).
4
BGI’s counsel in the trial court also included Christopher C. Garcia (24007221). E.g., CR113.
(On information and belief, Mr. Garcia departed Mills Shirley L.L.P. in about July 2015 and is
now with Chris Garcia Law Group, P.C., 1207 S. Shepherd, Houston, Texas 77019.) Andy Soto
(24071128) from the Mills Shirley firm also appeared in the trial court for BGI during the post-
verdict evidentiary hearing on attorney’s fees. 11RR2, 5, 22-24, 30, 49-50, 80-82, 94-95.
-3-
claims against Patty Cake Bakery and the Rennicks CR78, 80-81, 333.5
Chris Arneson, Patty Cake Bakery, and the Rennicks: (1) did not appear as parties
during the November 2013 jury trial (CR96, 339-340; 1RR1-6RR10; 1SuppCR98);
(2) are not named as parties in the the trial court’s final judgment (1SuppCR98-
103); and (3) are not parties to the appeal or cross-appeal now before this Court
(CR277-78, 292-93, 299, 312-13). Neither Mr. Lyon (or Lyon Construction) nor
Building Galveston is challenging the trial court’s January 2012 orders granting
summary judgment and/or dismissal in favor of Chris Arneson, Patty Cake
Bakeries, and the Rennicks; consequently, those rulings should be affirmed. 6
5
The record reveals Lyon Construction’s claims against Chris Arneson, Patty Cake Bakery, and
the Rennicks were never severed from this action; consequently, the January 2012 interlocutory
orders in favor of Chris Arneson, Patty Cake Bakery, and the Rennicks became final when the
trial court subsequently signed its original final judgment disposing of all parties and claims on
May 19, 2015. CR4, 243-48, 271-76. See Webb v. Jorns, 488 S.W.2d 407, 408-09 (Tex. 1972);
H.B. Zachry Co. v. Thibodeaux, 364 S.W.2d 192, 193 (Tex. 1963) (per curiam). The last-in-time
judgment signed by the trial court — purportedly nunc pro tunc “AS of 5-19-2015” but before
the trial court’s period of Rule 329b plenary power ended — included the following order to
remove any doubt about finality: “This judgment corrects the Judgment of May 19, 2015, finally
disposes of all parties and all claims, and is appealable. Any relief requested by any party not
granted herein is hereby DENIED.” 1SuppCR103, 98. See In re Burlington Coat Factory
Warehouse, Inc., 167 S.W.3d 827, 829-830 (Tex. 2005) (orig. pro.) (reaffirming that language
suggested by Justice Hecht for the majority in Lehmann v. Har-Con Corp., 39 S.W.3d 191, 206
(Tex. 2001), “would clearly indicate finality . . .”); North East Indep. School Dist. v. Aldridge,
400 S.W.2d 893, 898 (Tex. 1966) (“Of course, the problem can be eliminated entirely by . . .
inclusion in judgments of a simple statement that all relief not expressly granted is denied”).
6
See, e.g., Feith Sys. & Software, Inc. v. Design Info. Sys., 813 S.W.2d 481 (Tex. 1991)
(per curiam); accord Black v. Shell Oil Co., 397 S.W.2d 877, 889 (Tex. Civ. App.--Texarkana
1965, writ ref’d n.r.e.) (“The portions of the judgment of the trial court which were not appealed
from are not disturbed”).
-4-
Table of Contents
Page
Identity of Parties and Counsel ..................................................................................2
Index of Authorities ...................................................................................................6
Mr. Lyon’s Statement of the Case ...........................................................................13
Mr. Lyon’s Issues Presented ....................................................................................15
Mr. Lyon’s Statement of Undisputed Facts in the Record ......................................16
Mr. Lyon’s Summary of Argument .........................................................................18
Mr. Lyon’s Arguments and Authorities ...................................................................19
I. The Jury’s Fraudulent Lien Findings, in Answer To Question No. 4,
Lack the Required Support of Legally and Factually Sufficient
Evidence.........................................................................................................19
II. The Trial Court Abused Its Discretion and Committed Reversible Error
by Overruling Hearsay Objections and Admitting PX45 into Evidence ......37
III. BGI’s Legally and Factually Insufficient Attorney’s Fee Evidence,
Predicate, and Segregation Independently Require a New Trial ..................45
IV. BGI Failed In BGI’s Burden to Submit an Adequate Jury Question
Regarding Damages for Mr. Lyon’s Alleged Failure to Comply with
the Subcontract; Consequently, The Trial Court Should Have Granted
Defendants’ Motions for New Trial for This Additional Reason as Well ....52
Conclusion ...............................................................................................................57
Certificate of Word Count Compliance ...................................................................59
Certificate of Filing and Service ..............................................................................60
Appendix Items ..................................................................................................... post
Jury charge and verdict returned November 12, 2013 (CR123-139)
Judgment Nunc Pro Tunc signed October 13, 2015 (1SuppCR98-103)
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Index of Authorities
Page(s)
Constitutional Law
U.S. Const. amend. XIV, § 1 ...................................................................................27
Case Law
$56,700 in U.S. Currency v. State,
730 S.W.2d 659 (Tex. 1987) .........................................................................28
Alanis v. US Bank N.A.,
No. 01-14-00559-CV (Tex. App.--Houston [1st Dist.]
Nov. 03, 2015, n.p.h.) ....................................................................................36
Amegy Bank N.A. v. Brazos M&E, Ltd. (In re Bigler LP),
458 B.R. 345 (Bankr. S.D. Tex. 2011) .................................................... 49-50
Banda v. Garcia,
955 S.W.2d 270 (Tex. 1997) (per curiam) ....................................................30
Black v. Shell Oil Co.,
397 S.W.2d 877 (Tex. Civ. App.--Texarkana 1965, writ ref’d n.r.e.) ............4
Browning-Ferris, Inc. v. Reyna,
865 S.W.2d 925 (Tex. 1993) .........................................................................28
Casa Linda Tile & Marble Installers, Inc. v. Highlands Place 1981, Ltd.,
642 So. 2d 766 (Fla. 4th DCA 1994).............................................................24
Cecil v. Smith,
804 S.W.2d 509 (Tex. 1991) .........................................................................19
Centurion Planning Corp. v. Seabrook Venture II,
176 S.W.3d 498 (Tex. App.--Houston [1st Dist.] 2004, no pet.) ..................25
Christus Health Gulf Coast v. Carswell,
433 S.W.3d 585 (Tex. App.--Houston [1st Dist.] 2013),
review granted, 58 Tex. Sup. Ct. J. 1067 (June 12, 2015)
(cause no. 14-0362) (oral arguments heard Nov. 13, 2015) .................... 31-32
Coalition of Cities v. Public Util. Comm’n,
798 S.W.2d 560 (Tex. 1990), cert. denied, 499 U.S. 983 (1991) .................26
Contemporary Contractors, Inc. v. Centerpoint Apt. Ltd. P’ship,
No. 05-13-00614-CV (Tex. App.--Dallas July 3, 2014, no pet.)
(mem. op.) ......................................................................................................49
-6-
Crim Truck & Tractor Co. v. Navistar Int’l Transp. Corp.,
823 S.W.2d 591 (Tex. 1992) .........................................................................33
D&M Marine, Inc. v. Turner,
409 S.W.3d 693 (Tex. App.--Houston [1st Dist.] 2013, pet. denied) ...........38
El Apple I, Ltd. v. Olivas,
370 S.W.3d 757 (Tex. 2012) .........................................................................38
Elizondo v. Krist,
415 S.W.3d 259 (Tex. 2013) .........................................................................40
El-Khoury v. Kheir,
241 S.W.3d 82 (Tex. App.--Houston [1st Dist.] 2007, pet. denied) .............52
Estrada v. Dillon,
44 S.W.3d 558 (Tex. 2001) (per curiam),
rev’g in part 23 S.W.3d 422 (Tex. App.--Amarillo 2000) ............................52
Feith Sys. & Software, Inc. v. Design Info. Sys.,
813 S.W.2d 481 (Tex. 1991) (per curiam) ......................................................4
Gray v. Entis Mechanical Servs., LLC,
No. 01-11-00129-CV (Tex. App.--Houston [1st Dist.]
Apr. 26, 2012, no pet.) (mem. op.) ................................................................36
H.B. Zachry Co. v. Thibodeaux,
364 S.W.2d 192 (Tex. 1963) (per curiam) ......................................................4
Haygood v. De Escabedo,
356 S.W.3d 390 (Tex. 2012) .........................................................................56
In re Burlington Coat Factory Warehouse, Inc.,
167 S.W.3d 827 (Tex. 2005) (orig. pro.) .........................................................4
In re Hon. Michelle Slaughter, Presiding Judge of the
405th Judicial District Court, Galveston County, Texas,
Docket No. 15-0001 (Special Court of Review of Texas
Sep. 30, 2015) (per curiam) .............................................................. 23, 24, 27
In re MetroPCS Commc’ns, Inc.,
391 S.W.3d 329 (Tex. App.--Dallas 2013, orig. pro.)...................................30
Jelinek v. Casas,
328 S.W.3d 526 (Tex. 2010) .........................................................................26
Joske v. Irvine,
91 Tex. 574, 44 S.W. 1059 (1898) ................................................................28
-7-
Kerr-McGee Corp. v. Helton,
133 S.W.3d 245 (Tex. 2004) .........................................................................45
Kindred v. Con/Chem, Inc.,
650 S.W.2d 61 (Tex. 1983) ...........................................................................28
Lane Bank Equip. Co. v. Smith S. Equip., Inc.,
10 S.W.3d 308 (Tex. 2000) .............................................................................2
Larson v. Cook Consultants, Inc.,
690 S.W.2d 567 (Tex. 1985) .........................................................................20
Lehmann v. Har-Con Corp.,
39 S.W.3d 191 (Tex. 2001) .............................................................................4
Litton Industrial Products, Inc. v. Gammage,
668 S.W.2d 319 (Tex. 1984) .........................................................................28
Lovelace v. Sabine Consolidated, Inc.,
733 S.W.2d 648 (Tex. App.--Houston [14th Dist.] 1987, writ denied) ........55
Luna v. North Star Dodge Sales, Inc.,
667 S.W.2d 115 (Tex. 1984) .........................................................................24
Mancorp, Inc. v. Culpepper,
802 S.W.2d 226 (Tex. 1990) .........................................................................20
Missouri-K.T. R.R. v. McFerrin,
156 Tex. 69, 291 S.W.2d 931 (1956) ............................................................25
Mullins v. Thomas,
136 Tex. 215, 150 S.W.2d 83 (1941) ..............................................................2
North East Indep. School Dist. v. Aldridge,
400 S.W.2d 893 (Tex. 1966) ...........................................................................4
Perry Nat’l Bank v. Eidson,
340 S.W.2d 483 (Tex. 1960) .........................................................................48
Pool v. Ford Motor Co.,
715 S.W.2d 629 (Tex. 1986) .........................................................................20
Price Constr., Inc. v. Castillo,
147 S.W.3d 431 (Tex. App.--San Antonio 2004),
pet. denied, 209 S.W.3d 90 (Tex. 2005) ........................................................32
R.M. Dudley Constr. Co. v. Dawson,
258 S.W.3d 694 (Tex. App.--Waco 2008, pet. denied) ........................... 48-49
-8-
Ramos v. Frito Lay, Inc.,
784 S.W.2d 667 (Tex. 1990) .........................................................................52
Saenz v. Fidelity & Guaranty Ins. Underwriters,
925 S.W.2d 607 (Tex. 1996) .........................................................................20
Salomon v. Lesay,
369 S.W.3d 540 (Tex. App.--Houston [1st Dist.] 2012, no pet.) ..................20
Sentinel Integrity Solutions, Inc. v. Mistras Group, Inc.,
414 S.W.3d 911 (Tex. App.--Houston [1st Dist.] 2013, pet. denied) ...........45
Spencer v. Eagle Star Ins. Co. of Am.,
876 S.W.2d 154 (Tex. 1994) .................................................................. 19, 53
St. Paul Surplus Lines Ins. Co. v. Dal-Worth Tank Co.,
974 S.W.2d 51 (Tex. 1998) (per curiam) ............................................... 24, 34
Stewart Title Guar. Co. v. Aiello,
941 S.W.2d 68 (Tex. 1997) ...........................................................................51
Suarez v. City of Texas City,
465 S.W.3d 623 (Tex. 2015),
aff’g City of Texas City v. Suarez, No. 01-12-00848-CV
(Tex. App.--Houston [1st Dist.] Mar. 7, 2013) (mem. op.)...........................28
Superior Trucks, Inc. v. Allen,
664 S.W.2d 136 (Tex. App.--Houston [1st Dist.] 1983,writ ref’d n.r.e.) .....31
Tesco American, Inc. v. Strong Industries, Inc.,
221 S.W.3d 550 (Tex. 2006),
rev’g 129 S.W.3d 606 (Tex. App.--Houston [1st Dist.] 2004),
and 129 S.W.3d 594 (Tex. App.--Houston [1st Dist.] 2003) (en banc) ..........2
Texas & Pac. Ry. Co. v. Van Zandt,
159 Tex. 178, 317 S.W.2d 528 (1958) ..........................................................56
Texas Real Estate Comm’n v. Nagle,
767 S.W.2d 691 (Tex. 1989) .........................................................................26
Tony Gullo Motors I, L.P. v. Chapa,
212 S.W.3d 299 (Tex. 2006) .........................................................................46
Trevino v. American Nat’l Ins. Co.,
140 Tex. 500, 168 S.W.2d 656 (1943) ..........................................................51
Trinity Drywall Sys., LLC v. TOKA General Contractors, Ltd.,
416 S.W.3d 201 (Tex. App.--El Paso 2013, pet. denied) ..............................48
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U-Haul Int’l, Inc. v. Waldrip,
380 S.W.3d 118 (Tex. 2012) .........................................................................48
Unifund CCR Partners v. Villa,
299 S.W.3d 92 (Tex. 2009) (per curiam) ......................................................44
Vinci Dev. Co. v. Connell,
509 So. 2d 1128 (Fla. 2d DCA 1987) (per curiam) .......................................24
Vista Chevrolet, Inc. v. Lewis,
709 S.W.2d 176 (Tex. 1986) (per curiam) ....................................................26
W.O. Bankston Nissan, Inc. v. Walters,
754 S.W.2d 127 (Tex. 1988) .........................................................................52
Wal-Mart Stores, Inc. v. Gonzalez,
968 S.W.2d 934 (Tex. 1998) .........................................................................28
Webb v. Jorns,
488 S.W.2d 407 (Tex. 1972) ...........................................................................4
West v. State,
124 S.W.3d 732 (Tex. App.--Houston [1st Dist] 2010, no pet.) ...................43
Statutory
Fla. Stat. Ann. § 713.31(2)(a) ..................................................................................24
Tex. Civ. Prac. & Rem. Code § 37.009 ...................................................................48
Tex. Civ. Prac. & Rem. Code § 38.001 ...................................................................47
Tex. Civ. Prac. & Rem. Code Ann.
§ 12.002 (Vernon Supp. 2015) ............................................. 20, 25, 47, 48, 57
Tex. Prop. Code Ann.
§ 53.024 (Vernon 2014)..................................................................... 21, 28-31
Tex. Prop. Code Ann.
§ 53.156 (Vernon 2014).................................................................... 47, 48, 51
Rules
Tex. R. App. P. 3.1(b) ..............................................................................................48
Tex. R. App. P. 33.1(b) ............................................................................... 19, 46, 55
Tex. R. App. P. 33.1(d) ............................................................................................45
Tex. R. App. P. 38.1(a) ..............................................................................................2
Tex. R. App. P. 43.2(c), (d) .....................................................................................48
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Tex. R. App. P. 44.1(b)(1) .......................................................................................52
Tex. R. Civ. P. 279 ...................................................................................................19
Tex. R. Civ. P. 300 ...................................................................................................55
Tex. R. Civ. P. 301 ....................................................................................... 19, 55-56
Tex. R. Civ. P. 324(b)(2) .........................................................................................19
Tex. R. Civ. P. 329b ...............................................................................................2, 4
Tex. R. Civ. P. 329b(c) ............................................................................... 19, 46, 55
Tex. R. Civ. P. 329b(h) ..............................................................................................2
Tex. R. Evid. 101 .....................................................................................................44
Tex. R. Evid. 703 .....................................................................................................40
Tex. R. Evid. 801 .............................................................................................. 41, 43
Tex. R. Evid. 802 ........................................................................................ 41, 43, 44
Tex. R. Evid. 803 .............................................................................................. 41, 42
Tex. R. Evid. 803(6)........................................................................................... 41-43
Tex. R. Evid. 902(10)...............................................................................................42
Other
ACORD certificate of liability insurance
(TDI approved Feb. 12, 2013) .......................................................................33
American Heritage Dict. (2nd college ed. 1985) .....................................................34
Black’s Law Dict. (5th ed. 1979) .............................................................................34
Fraudulent Construction Liens: Willful Exaggeration
or Good Faith Dispute, 75 Fla. B.J. 34 (Mar. 2001) .....................................24
http://judgemichelleslaughter.com/justice-prevails/ ................................................23
Lawrence Morales II,
Evidence in A Bench Trial: Do the Rules Really Matter,
73 Tex. B.J. 110 (2010) .................................................................................44
Luke 10:31-32 (King James) ....................................................................................26
Nathan L. Hecht, Foreword: W. Wendell Hall,
Revisiting Standards of Review in Civil Appeals,
24 St. Mary’s L.J. 1041 (1993)......................................................................29
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Robert W. Calvert,
Appellate Court Judgments or Strange Things Happen on the Way to
Judgment, 6 Tex. Tech. L. Rev. 915 (1975) ..................................................48
W. Wendell Hall, O. Rey Rodriguez, Rosemarie Kanusky & Mark Emery,
Hall’s Standards of Review in Texas,
42 St. Mary’s L.J. 3 (2010) ...................................................................... 19-20
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To the Honorable First Court of Appeals:
Mr. Lyon (joined by Lyon Construction) files this brief requesting reversal
of the final judgment rendered by Hon. Michelle Slaughter, presiding over the
405th District Court of Galveston County, and respectfully shows:
Mr. Lyon’s Statement of the Case
Lyon Construction (a subcontractor) commenced this action in August 2010
against Patty Cakes Bakery and the Rennicks (owners of the Patty Cakes Bakery
project) seeking to foreclose a claimed $35,697.00 mechanic’s and materialman’s
lien. CR6-9. Building Galveston, Inc. (general contractor for the Patty Cakes
Bakery project) (BGI) intervened in April 2011. CR12-19. In November 2013,
BGI became designated as the plaintiff, with Lyon Construction and Mr. Lyon
being designated as the defendants. CR96; 2RR8.
BGI’s third amended petition included (among others) the following alleged
causes of action against Mr. Lyon and Lyon Construction: (a) breach of contract;
(b) filing of an invalid lien; and (c) filing of a fraudulent lien. CR102, 108-11.
BGI’s third amended petition also expressly requested a judgment against
Mr. Lyon and Lyon Construction for “[e]xemplary damages as awarded by the trier
of fact . . . .” CR112.7 Because BGI wanted to open and conclude both the
7
Appropriately on this record, BGI did not (1) request submission of jury questions on
exemplary damages against Mr. Lyon or Lyon Construction, nor (2) ask the trial court to award
any exemplary damages to BGI in its final judgment.
-13-
presentation of evidence and arguments to the jury, BGI admitted to the trial court
that BGI bore “the burden of proof at trial.” CR93, 96. The trial court later
confirmed on the record an agreement and stipulation between the parties “that
attorney’s fees would be taken up by a separate motion with the Court and not put
to the jury . . . so that will be taken up after the verdict is rendered by the jury.”
5RR5-6; 11RR89-90.
After a week-long trial in November 2013, twelve Galveston County jurors
unanimously found: (1) Mr. Lyon, individually, and Building Galveston agreed to
enter into a subcontract for the construction of the Patty Cakes Bakery;
(2) Mr. Lyon failed to comply with his subcontract with Building Galveston;
(3) amounts to fairly and reasonably compensate Building Galveston for any
damages that resulted from Mr. Lyon’s failure to comply; (4) Mr. Lyon made,
presented or used a fraudulent lien or claim against real property; and (5) an
amount to fairly and reasonably compensate Building Galveston for any damages
that resulted from Mr. Lyon presenting or using a fraudulent lien or claim against
real property. CR127-131, 138-39.
Mr. Lyon’s motion to disregard the jury’s answer to Question No. 4 was
heard in December 2014 and later “DENIED” on the first page of the trial court’s
signed final judgment, which went on award BGI: $47,820.59 for actual damages;
$9,806.50 in pre-judgment interest; $162,556.42 for attorney’s fees through trial
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and any unsuccessful appeal by Mr. Lyon to this Court; and additional amounts for
any unsuccessful appeal by Mr. Lyon to the Texas Supreme Court. CR141-47,
169-172; 10RR4-21; CR243, 271; 1SuppCR98, 101-03.8 Mr. Lyon’s (and his
company’s) timely-filed motions for new trial were overruled by operation of law.
CR266-270, 308-314; 1SuppCR50-57. Mr. Lyon (and his company) filed timely
notice(s) of appeal and made an appropriate cash deposit in lieu of supersedeas
bond. CR277-78, 312-13, 315-323, 347; 1SuppCR5. BGI filed its own timely
notice of appeal (CR292) and has insisted on parallel briefing tracks.
Mr. Lyon’s Issues Presented
1. Whether the trial court erred by (a) denying Mr. Lyon’s motion to
disregard the jury’s answer to Question No. 4, (b) rendering judgment awarding
BGI statutory damages, interest and attorney’s fees for fraudulent lien, and
(c) denying Mr. Lyon’s motions for new trial.
2. Whether the trial court abused its discretion and committed reversible
error by overruling defendants’ hearsay objections and admitting PX45 during the
bench trial on attorney’s fees.
8
The first page of all three judgments BGI persuaded the trial court to sign contained an
untrue statement that BGI “moved for judgment based on the jury’s verdict.” 10RR23-24.
BGI’s September 29, 2014 “motion for judgment” (CR175-76) was not a motion for judgment
based on the verdict; it also requested breach of subcontract damages not even arguably
supported by the jury’s answer to Question No. 3. See 10RR5-6, 23-29; see also CR242 (BGI’s
“judgment worksheet” filed May 1, 2015); cf. CR129 (jury’s actual verdict regarding breach of
subcontract damages).
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3. Whether the trial court erred by denying defendants’ motions for new
trial asserting no legally and factually sufficient evidence (or sustainable legal
predicate) supports the trial court’s excessive findings and awards for trial and
appellate attorney’s fees.
4. Whether the trial court erred by rendering judgment for breach of
subcontract damages not lawfully supported by the jury’s answer to Question No. 3
and by denying defendants’ motions for new trial.
Mr. Lyon’s Statement of Undisputed Facts in the Record
BGI (through its owner, Chris Arneson) entered into a December 2009
agreement with the owners of Patty Cake Bakery (the Rennicks) to serve as general
contractor for that project with various plans and specifications. 2RR93-95; PX1,
6, 7. BGI entered into (what the trial court ruled was an ambiguous) subcontract
agreement signed by Mr. Lyon as “Owner” of Lyon Construction. 2RR70-71, 100;
PX2. Later various disputes arose over the completeness and quality of
subcontract work performed by (and the remaining amount due) Mr. Lyon;
dissatisfied with his efforts, BGI told Mr. Lyon not to come back to the job site and
terminated him from the project. 2RR162; 3RR135.
Mr. Lyon proceeded to fax Mr. Arneson and BGI a letter asserting a
remaining balance due of $35,697 and explaining how Mr. Lyon calculated that
amount. PX14; 2RR164-65. Mr. Arneson testified at trial he thought the $35,697
-16-
claimed in Mr. Lyon’s demand letter (PX14) was “ridiculously high” but he “really
didn’t know.” 2RR183. In Mr. Arneson’s words: “I didn’t argue with the fact that
he [Mr. Lyon] was demanding money. I argued with the amounts. In fact, I think
we [BGI] actually made them [Mr. Lyon / Lyon Construction] a settlement offer
they turned down.” 2RR183. See also 3RR60-61 (on cross-examination,
Mr. Arneson stood by his testimony the day before that when he and BGI
terminated Lyon Construction, he owed them some money / wasn’t sure if BGI
was going to owe them money or not).
Mr. Lyon later filed an affidavit claim of lien against the Patty Cakes Bakery
project for the same amount ($35,697), and Lyon Construction commenced this
lawsuit in August 2010 against the owners of the property to try to collect that
money. PX16; 3RR11-12, 135-38; CR6-9. The Rennicks later settled with
Lyon Construction (for a payment of $25,000) after Mr. Arneson “encouraged
them to” do so. 3RR14-15, 66. A predecessor presiding judge signed an order
dismissing with prejudice all claims that had been filed by Lyon Construction
against Patty Cakes Bakery and the Rennicks (with each of these parties bearing
their own attorney’s fees and costs) in January 2012. CR80-81, 324.
In November 2013, all remaining claims between and among BGI, Mr. Lyon
and Lyon Construction proceeded to a trial by jury, except attorney’s fees, which
both sides agreed would be taken up after verdict by a separate motion with the
-17-
trial court. 5RR5-6. Both liability and damages were disputed in the trial court by
both sides, resulting in the voluminous reporter’s record now before this Court.
The trial court determined questions of subcontract breach (by Mr. Lyon,
Mr. Lyon’s company, and BGI) were raised by the evidence for submission to the
jury. See CR128-29, 132, 135.
The jury’s verdict was mostly favorable to BGI and unfavorable to
Mr. Lyon. CR123-139. 9 The last-in-time final judgment obtained by BGI below is
the second “Judgment Nunc Pro Tunc” signed by the trial court on October 13,
2015. 1SuppCR98-103, 43-57. Mr. Lyon and Lyon Construction have filed timely
notice(s) of appeal. CR277-78, 308, 312-13. BGI also filed its own timely notice
of appeal. CR292-93.
Mr. Lyon’s Summary of Argument
The trial court’s awards for attorney’s fees far exceed actual damages
awarded in the trial court’s final judgment; however, Mr. Lyon has been most
significantly harmed (as a businessman and building contractor) by the
“fraudulent lien” theory erroneously found by the jury against him in answer to
Question No. 4 (CR130) and the resulting trial court judgment under that theory.
Mr. Lyon urgently needs relief from that insupportable jury finding and judgment
and consequently will brief that issue first and most emphatically.
9
The jury answered “No” to Question No. 6 inquiring whether Lyon Properties & Custom
Homes, LLC failed to comply with its subcontract with BGI. CR132.
-18-
Mr. Lyon’s remaining issues demonstrate additional reversible errors by the
trial court in admitting hearsay evidence in support of BGI’s claims for high dollar
attorney’s fees, awarding excessive (and inadequately segregated) attorney’s fees
based on insufficient evidence (and predicate), and rendering judgment on an
inadequate subcontract damages question.
Mr. Lyon’s Arguments and Authorities
I. The Jury’s Fraudulent Lien Findings, in Answer To Question No. 4,
Lack the Required Support of Legally and Factually Sufficient
Evidence
Mr. Lyon preserved his legal sufficiency challenges by presenting a timely
and proper motion to disregard the jury’s answer to Question No. 4, which the trial
court denied. CR141-47, 169-172; 243, 271; 1SuppCR53, CR98. 10 Mr. Lyon
preserved his factual sufficiency challenges regarding Question No. 4 by filing
timely motions for new trial, which the trial court overruled by operation of law.
CR266, 268, 308, 310; 1SuppCR53n.8; Tex. R. Civ. P. 329b(c); see Tex. R. App.
P. 33.1(b); Cecil v. Smith, 804 S.W.2d 509, 511-12 (Tex. 1991). 11 As the plaintiff
10
See Tex. R. Civ. P. 301 (the court may, upon motion and reasonable notice, “disregard any
jury finding on a question that has no support in the evidence”); Tex. R. Civ. P. 279 (last
sentence) (“A claim that the evidence was legally or factually insufficient to warrant the
submission of any question may be made for the first time after verdict . . .”). Jury findings
should be disregarded (on a proper motion to disregard) when no legally sufficient evidence
supports them or when they are immaterial. Spencer v. Eagle Star Ins. Co. of Am., 876
S.W.2d 154, 157 (Tex. 1994).
11
Factual insufficiency of the evidence to support necessary jury findings supports the granting
of a new trial. Tex. R. Civ. P. 324(b)(2); see generally W. Wendell Hall, O. Rey Rodriguez,
Rosemarie Kanusky & Mark Emery, Hall’s Standards of Review in Texas, 42 St. Mary’s L.J. 3,
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asserting a cause of action under section 12.002 of the Texas Civil Practice and
Remedies Code, it was BGI’s burden to prove all the elements required by the
statute and the submitted jury charge.12
In determining whether legally and factually sufficient evidence supports the
jury’s fraudulent lien finding in answer to Question No. 4, this Court must construe
sufficiency of the evidence in light of the literal wording of the trial court’s charge
and the unobjected-to instructions submitted with Question No. 4 in the trial
court’s charge. See, e.g., Larson v. Cook Consultants, Inc., 690 S.W.2d 567, 568
(Tex. 1985); see also Mancorp, Inc. v. Culpepper, 802 S.W.2d 226, 228
(Tex. 1990) (“appellate courts must consider the evidence and inferences as they
tend to support the verdict and not with a view towards supporting the judgment”)
(italics original); Saenz v. Fidelity & Guaranty Ins. Underwriters, 925 S.W.2d 607,
615-16 (Tex. 1996) (Phillips, C.J., concurring in part, joined by Cornyn & Owen,
JJ.) (acknowledging sufficiency of the evidence to support jury’s finding must be
construed in light of “the literal wording of the trial court’s charge . . .”).
40-42 (2010). The question under existing law is whether evidence said to support a particular
finding is so weak, or the evidence contrary to the finding is so overwhelming, that the finding is
manifestly unjust and a new trial should be ordered. Pool v. Ford Motor Co., 715 S.W.2d 629,
635 (Tex. 1986).
12
See, e.g., Salomon v. Lesay, 369 S.W.3d 540, 542 (Tex. App.--Houston [1st Dist.] 2012,
no pet.) (also aptly observing: “One of the essential elements of a Section 12.002 claim is that
the defendant used a document or record despite knowing that it reflected a fraudulent lien or
claim against real property”) (emphases supplied).
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The jury necessarily made several independent, affirmative findings when it
answered “yes” to Question No. 4, including that Mr. Lyon made, presented or
used his affidavit claim of lien [PX16] with knowledge that it was a fraudulent lien
or claim against real property, with the intent to defraud, and with the intent to
cause BGI to suffer financial injury. CR130. Constructive or imputed knowledge
was not the question. CR130. Under the trial court’s instructions submitted with
Question No. 4, a “yes” answer required that Mr. Lyon had actual knowledge that
his claimed lien was not valid at the time it was filed. CR130. The instructions
under Question No. 4 went on to state the lien was invalid if the amount claimed
exceeded a formula that was taken from section 53.024 of the Texas Property
Code. See Tex. Prop. Code Ann. § 53.024 (Vernon 2014). Exceeded-the-formula
is yet another affirmative finding the jury had to make to answer Question No. 4
“yes” and on which BGI also bore the burden of proof. CR130, 124.
The reporter’s record from the jury trial contains a few critical exhibits, and
sworn testimony by Mr. Lyon, bearing on whether BGI met its burden of proving
all the elements under Question No. 4 and section 12.002 of the Texas Civil
Practice and Remedies Code. The first is PX14, Mr. Lyon’s 5-7-2010 two page
letter to Mr. Arneson and BGI explaining Mr. Lyon’s calculation of the $35,697
Mr. Lyon claimed was due for work completed. The fax legend at the top of PX14
shows the letter was part of a seven (7) page fax Mr. Lyon sent Mr. Arneson and
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BGI; however, PX14 as introduced by BGI consists of only two pages. Page 2 of
that letter explains the financial backup Mr. Lyon was relying on (and faxed to
Mr. Arneson and BGI): “Attached are the materials and cost needed through
completion per the original plans and contract.” BGI chose to redact from its
Exhibit 14 the financial backup Mr. Lyon was relying on for his lien calculation.
PX14, like PX15 (Mr. Lyon’s 5-25-2014 invoice to BGI for $35,697) and
PX16 (affidavit claim of lien for $35,697 Mr. Lyon filed 6-4-2010), was admitted
into evidence without objection. 2RR164, 163; 3RR6. All three are probative of
(if anything) Mr. Lyon’s actual subjective belief in May and June 2010 that the
amount then due him was $35,697. And Mr. Lyon consistently testified under oath
that when he filed his affidavit claim of lien, he believed he was owed the amount
that was stated on the lien at that time, which was $35,697. 5RR44-45.
It was undisputed in the evidence that when Mr. Arneson first received
PX14, he didn’t really know for sure whether there was any possibility BGI might
owe Mr. Lyon some money for the work he had done because BGI hadn’t
completed or hadn’t gotten the chance to complete the work BGI felt was needed
for repairs; Mr. Arneson testified as follows before the jury: “I didn’t argue with
the fact that [Mr. Lyon] was demanding money. I argued with the amounts. In
fact, I think we actually made them a settlement offer [Mr. Lyon and
Lyon Construction] turned down.” 2RR183. The reporter’s record contains no
-22-
correspondence documenting any such argument between Mr. Arneson and
Mr. Lyon, but be that as it may, these testimonial admissions by Mr. Arneson for
BGI (and BGI’s settlement offer to Mr. Lyon) are consistent with Mr. Lyon’s
actual subjective belief in May and June of 2010 that the remaining amount due
Mr. Lyon was $35,697. Granted, that amount later become the subject of dispute
and disagreement; however, subsequent disagreement over the proper amount of
Mr. Lyon’s clamed lien is zero evidence Mr. Lyon had actual knowledge in May
and June of 2010 that his claimed lien was invalid.
The fraudulent lien finding in this case is extremely serious to Mr. Lyon and
his ability to do business in the future. It’s just as harmful to Mr. Lyon’s
construction business and professional reputation (indeed, probably more harmful)
than the erroneous written decision admonishing Hon. Michelle Slaughter for
“willfully” violating the Code of Judicial Conduct by certain actions as a judge.
See In re Hon. Michelle Slaughter, Presiding Judge of the 405th Judicial District
Court, Galveston County, Texas, Docket No. 15-0001 (Special Court of Review of
Texas Sep. 30, 2015) (per curiam); http://judgemichelleslaughter.com/justice-
prevails/. Willfully is lower on the scienter continuum than knowingly;
nevertheless, the Special Court of Review of Texas correctly dismissed all charges
against Hon. Michelle Slaughter because the evidence against her showed she
committed (at most) an “error in judgment . . .” (Slip op. at 18).
-23-
Likewise, the jury’s findings in answer to Question No. 4 against Mr. Lyon
are unsupported by the evidence under governing Texas substantive law. By stark
(and informative) contrast, Florida’s statute permits liability when a claimed lien
amount is “willfully exaggerated” through “gross negligence.” See Fraudulent
Construction Liens: Willful Exaggeration or Good Faith Dispute, 75 Fla. B.J. 34
(Mar. 2001).13 Mr. Lyon believes the evidence in the reporter’s record would not
support liability even under Florida’s lower willful exaggeration / gross negligence
standard (just like the evidence did not support admonishing Judge Slaughter for
web posting facts from a pending case in her court),14 but that kind of question was
13
Florida’s “fraudulent” lien statute authorizes liability when “the lienor has willfully
exaggerated the amount for which such lien is claimed” or “has compiled his or her claim with
such willful and gross negligence as to amount to a willful exaggeration . . . .” Fla. Stat. Ann.
§ 713.31(2)(a) (emphases supplied). See, e.g., Casa Linda Tile & Marble Installers, Inc. v.
Highlands Place 1981, Ltd., 642 So. 2d 766, 768-69 (Fla. 4th DCA 1994) (reversing because
“the record does not support a conclusion that this was not a good faith dispute over
workmanship concerning the balance owed for work performed”) (appeals court also reversed
“all awards of costs and attorney’s fees, subject to resolution of all other issues on remand”); see
generally Vinci Dev. Co. v. Connell, 509 So. 2d 1128, 1132 (Fla. 2d DCA 1987) (per curiam)
(“[a] subsequent dispute between the parties as to the amount of compensation due according to
the contract plan of compensation or even a dispute as to the method of compensation provided
in the contract does not convert such a good faith dispute into a fraudulent lien . . .”).
14
Cf. Luna v. North Star Dodge Sales, Inc., 667 S.W.2d 115, 118 (Tex. 1984) (“If a person
commits a wrongful act with actual awareness of the falsity, deception or unfairness of the act,
then this is a more culpable mental state than one who is grossly negligent. We are not
attempting to equate the terms gross negligence, ‘knowingly,’ ‘willful’ and intentional. These
terms lie on a continuum with gross negligence being the lowest mental state and intentional
being the highest”); St. Paul Surplus Lines Ins. Co. v. Dal-Worth Tank Co., 974 S.W.2d 51, 53-
54 (Tex. 1998) (per curiam) (finding that a party “acted knowingly” does not require evidence
merely that the person knew what he was doing; rather, it requires evidence that the person knew
what he was doing was false, deceptive, or unfair. In other words, a person must think to
himself at some point, “Yes, I know this is false, deceptive, or unfair to him, but I’m going to do
it anyway”) (bold emphasis supplied). The reporter’s record contains not even a scintilla of
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not before the jury nor is it before the Court in this case. Texas’s lawmakers chose
not to promulgate the lower scienter standard previously promulgated by Florida’s
lawmakers. Instead, under governing Texas substantive law (and the trial court’s
submitted Question No. 4), legally and factually sufficient evidence had to
establish Mr. Lyon had actual knowledge his claimed lien was invalid in May and
June of 2010. There is no such evidence in the reporter’s record whatsoever.
Mr. Lyon testified live before the jury that he was trying to be as fair as he
could when he calculated the $35,697 set out in his May 2010 letter, the same
calculation he used when he filed his affidavit claim of lien against the Rennicks’
property in June 2010. 3RR135-38; PX16. The jury of course had a right to
disbelieve Mr. Lyon’s testimony, but that does not supply evidence to the contrary,
i.e., that Mr. Lyon had actual knowledge his claimed $35,697 lien amount was
invalid.15 The Court should ask itself (and BGI during oral arguments, if needed):
evidence that Mr. Lyon actually knew (i.e., thought to himself) his affidavit claim was false and
fraudulent. The court’s charge in this case (like section 12.002 of the Texas Civil Practice and
Remedies Code) did not authorize punishing liability under some lesser scienter standard. There
is no legally (nor factually) sufficient evidence in the reporter’s record that Mr. Lyon filed his
affidavit claim of lien with knowledge that it was fraudulent, with the intent to defraud, and with
the intent to cause BGI to suffer financial injury. CR130. Cf. Centurion Planning Corp. v.
Seabrook Venture II, 176 S.W.3d 498, 507 (Tex. App.--Houston [1st Dist.] 2004, no pet.)
(concluding record contained “more than a scintilla of evidence establishing that Knickerbocker
had violated section 12.002 when he ‘made, presented, or used the lien’ knowing, based on the
lack of a written contract, that the lien was invalid and intending that it be given the same legal
effect as a valid lien”) (emphasis supplied). There is no evidence (and should be no contention)
that Mr. Lyon’s claimed lien was invalid based on lack of a written contract. See PX2.
15
See Missouri-K.T. R.R. v. McFerrin, 156 Tex. 69, 90, 291 S.W.2d 931, 945 (1956).
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why did BGI deliberately redact from PX14 all the pages of financial backup
Mr. Lyon was expressly relying on when he sent Mr. Arneson and BGI his seven
page fax in May 2010. 16 The reason is BGI knew those pages would have shown
the fairness and reasonableness of Mr. Lyon’s $35,697 lien calculation. And they
would have conclusively and overwhelmingly disproved the required element BGI
bore the burden of proving: that Mr. Lyon had actual knowledge his claimed lien
was invalid and fraudulent. CR130. The reporter’s record is devoid of such
evidence; Mr. Lyon’s professional reputation and livelihood will unjustly be
eviscerated by this verdict and judgment (if affirmed); and this Court ought not
“pass[] by on the other side.” Luke 10:31-32 (King James).
Simply put, no “evidence” proves it is “more likely true than not true”
(CR124) that Mr. Lyon actually knew his claimed lien amount was invalid.
16
The trial court apparently believed that the admission of PX14 “without objection” during the
jury trial was important in determining the legal sufficiency (or insufficiency) of BGI’s evidence
concerning fraudulent lien. 10RR16-18. Again, PX14 (if anything) was probative of
Mr. Lyon’s belief at the time that the $35,697 he was claiming was appropriate. But even
ignoring the probative value of PX14 in Mr. Lyon’s favor as the exhibit was admitted without
objection, BGI still needed (and lacks) evidence that Mr. Lyon had actual knowledge his claimed
amount due was invalid. See generally Coalition of Cities v. Public Util. Comm’n, 798
S.W.2d 560, 563-64 (Tex. 1990), cert. denied, 499 U.S. 983 (1991) (a party who fails to meet its
burden of proof “loses” and it “is not entitled to a second trial to present more evidence”); Texas
Real Estate Comm’n v. Nagle, 767 S.W.2d 691, 695 (Tex. 1989) (“In an ordinary adversarial
proceeding the failure of a party bearing the burden of proof would ordinarily result in rendition
of judgment against that party”); Vista Chevrolet, Inc. v. Lewis, 709 S.W.2d 176, 176-77
(Tex. 1986) (per curiam) (emphasizing that rendition in such circumstances is “a basic rule of
law”); Jelinek v. Casas, 328 S.W.3d 526, 538 (Tex. 2010) (despite recognizing “the difficulty of
proving” one fact essential to plaintiffs’ claims — and sympathizing with the plaintiffs’
frustration over the defendant’s conduct — supreme court rendered a take-nothing judgment
because the plaintiffs “shouldered that burden” in their “quest” to hold the defendant liable).
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CR130. With utmost respect, if this Court applies the same standards to
Mr. Lyon’s conduct that the Special Court of Review of Texas applied to exonerate
Hon. Michelle Slaughter, this Court could never conclude there was evidence that
Mr. Lyon knowingly filed a fraudulent affidavit claim of lien (much less did so
with the required “intent to defraud” and the required “intent to cause
Building Galveston to suffer financial injury”). CR130. Cf. U.S. Const.
amend. XIV, § 1 (“No State . . . shall deny to any person within its jurisdiction the
equal protection of the laws”). The evidence in the reporter’s record does not even
come close to proving Mr. Lyon knowingly filed a fraudulent affidavit claim of
lien (CR130); in the words of the Special Court of Review of Texas vindicating
Hon. Michelle Slaughter, Mr. Lyon’s claimed lien amount was (at most) an “error
in judgment” (even if BGI had met its burden of proving the statutory formula
submitted with Question No. 4 would have yielded a lesser permissible lien
amount, which BGI did not do).
Mr. Lyon should never have been found guilty of knowingly filing a
fraudulent affidavit claim of lien. He should never have been ordered to pay
statutory damages (and three-fold statutory attorney’s fees) on BGI’s meritless
statutory fraudulent lien claim. And he should never have his business and all-
important reputation as a building contractor eviscerated by this unsupported
verdict resulting from skillful lawyering of the (Mills Shirley litigation partner
-27-
Chris Garcia’s words) “[t]oo many” (11RR56) Mills Shirley L.L.P. attorneys
representing Building Galveston in this case against an out-of-town litigant. On
this record, the actual knowledge inference BGI would have this Court draw is
inappropriate as a matter of law and fact. 17
But before the Court even gets to the question of actual knowledge of
invalidity, there is a threshold evidentiary deficit: where is BGI’s required
evidence that Mr. Lyon’s claimed $35,697 lien amount “exceeds” the amount
permitted by the formula set out in Property Code section 53.024? CR130. BGI’s
unsworn original, first amended, second amended, and third amended original
17
See generally Suarez v. City of Texas City, 465 S.W.3d 623 (Tex. 2015), aff’g City of
Texas City v. Suarez, No. 01-12-00848-CV (Tex. App.--Houston [1st Dist.] Mar. 7, 2013)
(mem. op.) (despite the truly tragic facts of that case, and even construing record in the light
most favorable to Mrs. Suarez, both the Texas Supreme Court and this Court unanimously
concluded no evidence raised the required question that the municipality had actual knowledge
of concealed conditions at the beach creating an extreme risk of harm at the time of the incident)
(note: Houston office of the Mills Shirley law firm successfully represented the defendant
municipality on appeal in both the Texas Supreme Court and this Court); Wal-Mart Stores, Inc.
v. Gonzalez, 968 S.W.2d 934, 936 (Tex. 1998) (“meager circumstantial evidence from which
equally probable but opposite inferences may be drawn is speculative and thus legally
insufficient to support a finding”); $56,700 in U.S. Currency v. State, 730 S.W.2d 659, 662
(Tex. 1987) (“When circumstances are consistent with either of two facts and nothing shows that
one is more probable than the other, neither fact can be inferred”) (reaffirming Litton Industrial
Products, Inc. v. Gammage, 668 S.W.2d 319, 324 (Tex. 1984)); Browning-Ferris, Inc. v. Reyna,
865 S.W.2d 925, 927 & n.2 (Tex. 1993) (“we believe that suspicion linked to other suspicion
produces only more suspicion, which is not the same as some evidence”) (reaffirming Kindred v.
Con/Chem, Inc., 650 S.W.2d 61, 63 (Tex. 1983)); Joske v. Irvine, 91 Tex. 574, 582-83, 44
S.W. 1059, 1063 (1898) (“broad and wise policy of the law” has always forbidden letting juries
deprive parties of their lives, liberty, or property based on “mere surmise or suspicion of the fact
sought to be established . . .”).
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petitions all alleged the “amount claimed” by Mr. Lyon “clearly exceeds 18 the
permissible amount” under section 53.024. CR16, 38, 50, 53, 109. BGI’s unsworn
petitions, however, were neither offered nor admitted into evidence for the jury’s
consideration on this additional element BGI also bore the burden of proving.
The reporter’s record shows that BGI’s lead trial counsel wished to display
section 53.024 of the Property Code in front of the jury and criticize Mr. Lyon
because he did not perform his lien calculations based on the somewhat confusing
formula set forth in that statute. 3RR152-55. There is evidence that Mr. Lyon
calculated his claimed lien amount based on what he considered fair, relying on a
state website he had found on the Internet (3RR151-52), rather than utilizing the
formula set out in the instructions the trial court submitted under Question No. 4
based on the statute. Regardless, neither Mr. Lyon, Mr. Arneson, nor any other
witness testified before the jury that Mr. Lyon’s claimed $35,697 “exceeds” the
amount that would be yielded by applying by the statutory formula. There’s just
no evidence on this issue.
Significantly, during a bench conference, outside the hearing of the jury,
BGI’s lead trial counsel, Mr. Lyford, argued to the trial court that Mr. Lyon’s
$35,697 calculation “exceeds” the maximum amount section 53.024 of the
18
Cf. Nathan L. Hecht, Foreword: W. Wendell Hall, Revisiting Standards of Review in Civil
Appeals, 24 St. Mary’s L.J. 1041, 1043 (1993) (“I have learned in more than a decade of judging
that what is claimed to be clear seldom is”).
-29-
Property Code would have permitted. 3RR154 (152, 155). But even if the jurors
could have heard Mr. Lyford’s ipse dixit, the reporter’s record of this jury trial
reflects without dispute that attorney Lyford: (1) was not sworn in as a witness;
(2) was arguing to the court outside the hearing of the jury; (3) was not testifying
from the witness stand; and (4) gave no testimony the jurors heard (or could have
lawfully considered) in reaching their answer to Question No. 4. 19
Mr. Lyford also emphasized the following point during BGI’s closing
arguments to the jury: “The trial has been unusual in that we have not had any
paid expert witnesses.” 5RR120. Mr. Lyford was correct on that one point. The
reporter’s record shows that no paid expert, no fact witness, and no other witness
testified before the jury that Mr. Lyon’s $35,697 calculation “exceeds” the
statutory limit in Property Code section 53.024. BGI might have hired a
construction lien or accounting expert to try and prove Mr. Lyon’s claimed
$35,697 exceeded the amount permitted by statute and the instructions submitted
under Question No. 4 in the Court’s charge, but BGI chose not to do so.
Under the submitted charge and as a matter of law, it was BGI’s burden to
prove, as a threshold matter, that Mr. Lyon’s $35,697 lien calculation exceeded the
statutory limit in Property Code section 53.024. CR130. The reporter’s record
19
Compare Banda v. Garcia, 955 S.W.2d 270, 272 (Tex. 1997) (per curiam) (party’s attorney
stated she was “testifying . . . as an officer of the court”), with In re MetroPCS Commc’ns, Inc.,
391 S.W.3d 329, 338 (Tex. App.--Dallas 2013, orig. pro.) (“Golovoy does not explain, and the
record does not show, how argument by his counsel at the hearing constitutes ‘evidence.’”)
-30-
contains zero proof about the value of Mr. Lyon’s labor performed and other
admittedly confusing statutory items. The jury had no evidence before it
establishing proportionate value and proportionate profit margin in relation to the
total subcontract price. The fact that Mr. Lyon unwisely relied on a state website
he found on the Internet and his own views of fairness — instead of the statutory
formula — is at most an “error in judgment”; however, it is zero evidence that his
claimed $35,697 lien amount actually “exceeds” the statutory limit in Property
Code section 53.024. On that basis alone, the jury’s answer to Question No. 4
should have been disregarded, or a new trial should have been granted.
But even if this Court assumed Mr. Lyon’s claimed lien amount was not
valid (i.e., exceeded what would be permitted under the statute), Question No. 4
additionally and independently required BGI to prove Mr. Lyon had actual
knowledge that the amount claimed was invalid and therefore fraudulent. CR130.
BGI’s written response in the trial court cited irrelevant common-law fraud and
premises liability case law, erroneously arguing circumstantial evidence supports a
inference of actual knowledge by Mr. Lyon. CR180. Common-law fraud does not
require actual knowledge of falsity; a “recklessly” false representation is enough
under Texas law. See, e.g., Superior Trucks, Inc. v. Allen, 664 S.W.2d 136, 142
(Tex. App.--Houston [1st Dist.] 1983, writ ref’d n.r.e.); Christus Health Gulf Coast
v. Carswell, 433 S.W.3d 585, 602, 604-05 (Tex. App.--Houston [1st Dist.] 2013),
-31-
review granted, 58 Tex. Sup. Ct. J. 1067 (June 12, 2015) (cause no. 14-0362) (oral
arguments heard Nov. 13, 2015).
Moreover, if Texas premises liability law were relevant, Texas premises
liability law teaches that actual knowledge means “what a person actually knows
as distinguished from constructive or imputed knowledge; that is, what a person
does not actually know, but should know or have reason to know. . . . Even when
viewed in the light most favorable to the plaintiffs, the evidence is legally
insufficient to support the jury’s finding of actual knowledge by Price.” Price
Constr., Inc. v. Castillo, 147 S.W.3d 431, 437 (Tex. App.--San Antonio 2004),
pet. denied, 209 S.W.3d 90 (Tex. 2005). Equally, the evidence in the reporter’s
record is legally (and factually) insufficient to support the jury’s finding of actual
knowledge by Mr. Lyon. CR130.
Again, the Court should recall that (as a matter of trial strategy) BGI
deliberately redacted from BGI’s Exhibit 14 the financial backup Mr. Lyon
expressly and openly relied upon when he sent Mr. Arneson and Building
Galveston his seven page fax explaining his $35,697 balance due calculation in
May 2010. PX14. Without those pages in the reporter’s record, the jurors (1) had
no idea what was in Mr. Lyon’s mind (see 10RR16-18), and (2) had no legally (nor
factually) sufficient evidentiary basis on which they could find Mr. Lyon had
actual knowledge that his claimed lien amount was invalid in May or June 2010.
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The jury’s answer to Question No. 4 should have been disregarded (or a new trial
granted) for this independent reason as well.
The reporter’s record contains no evidence whatsoever, direct or
circumstantial, that Mr. Lyon ever thought to himself: “Yes, I know my claimed
$35,697 lien is invalid or fraudulent, but I’m going to file it anyway.” BGI has
argued legitimate inferences arise from the facts that Mr. Lyon did not calculate his
claimed lien amount in the way required by the Property Code, that Mr. Lyon
shared office space with his father’s office (Law Offices of Ted B. Lyon &
Associates),20 and that Mr. Lyon purportedly tried to mislead or “defraud” the jury
with a liability insurance certificate dated after 2010. CR170; 1SuppCR94.21 But
none of that evidence — even as misleadingly characterized below by BGI —
20
This fact would would have zero tendency to support the jury’s findings in answer to
Question No. 4, even if this Court did not know (or could not take judicial notice) that
Mr. Lyon’s father, Ted B. Lyon, Jr. (with whom Mr. Lyon shared office space) was — before
becoming a trial lawyer — a respected police officer, Texas state representative, and later Texas
state senator. See generally Crim Truck & Tractor Co. v. Navistar Int’l Transp. Corp., 823
S.W.2d 591, 592-93 n.l (Tex. 1992) (first inquiry on “no evidence” review addresses “the quality
of the evidence offered,” inquiring whether the evidence actually “has a tendency to prove the
existence of a material fact”) (emphasis supplied).
21
BGI persuaded the trial court to sustain its “predicate” objections and exclude evidence that
would have let lay jurors understand that an ACORD certificate of liability insurance is
informational only and would reflect the date such a certificate was issued by Mr. Lyon’s
insurance agent — in this case apparently 10/28/2013, shortly before the jury trial commenced
— as opposed to when the original liability insurance policy was issued. See 5RR28-30
(Mr. Lyford successfully asserting “[t]he predicate’s not laid . . . and I object” to which the trial
court responded: “Sustained”). Mr. Lyon is not challenging that trial court ruling in this appeal;
however, Mr. Lyon’s issue 2 (argued at pages 37-45, below) will likewise ask this Court to
enforce the rules excluding hearsay evidence because BGI did not meet BGI’s burden of proving
a proper predicate for admitting PX45 (detailed Mills Shirley billing records admitted to support
BGI’s claims for high dollar attorney’s fees) over Mr. Lyon’s hearsay objections. 11RR33-36.
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supports a legitimate inference that Mr. Lyon thought to himself at some point:
“Yes, I know my claimed $35,697 lien is invalid or fraudulent, but I’m going to
file it anyway.” See and compare St. Paul Surplus Lines Ins. Co. v. Dal-Worth
Tank Co., 974 S.W.2d 51, 53-54 (Tex. 1998) (per curiam).
The jury’s “yes” answer to Question No. 4 lacks the required support of
legally and factually sufficient evidence, and the jury’s answer should have been
disregarded or a new trial should have been granted.
As yet another stand-alone, additional element, the jury’s “yes” answer
Question No. 4 also required a finding that Mr. Lyon made, presented, or used his
affidavit claim of lien “with the intent to defraud . . . .” CR130. The trial court’s
charge did not define “intent to defraud” so instead of the common-law definition,
the jurors were required to apply the “commonly understood” meaning of fraud.
CR125. Black’s Law Dictionary teaches “Intent to defraud means an intention to
deceive another person and to induce such other person, in reliance upon such
deception, to assume, create, transfer, alter or terminate a right, obligation or power
with reference to property.” Black’s Law Dict. 381 (5th ed. 1979) (emphases
supplied). The American Heritage Dictionary gives this definition: “de-fraud . . .
To take from or deprive by fraud, swindle.” American Heritage Dict. 376
(2nd college ed. 1985) (emphases supplied). See also id. at 668 (“in-tent . . . That
which is intended; purpose”) (emphases supplied).
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The reporter’s record contains zero testimony (and supports no legitimate
inference) that Mr. Lyon intended to deceive or had a purpose to swindle anyone.
PX14, even as redacted by BGI’s trial counsel, shows Mr. Lyon was above-board,
forthcoming and transparent with how he calculated his $35,697 claim for funds
due for the work completed. Again, page 2 of that faxed letter shows BGI did not
want the jurors to see (like BGI saw) the attachment pages that were the financial
backup Mr. Lyon openly relied upon and faxed to Mr. Arneson and BGI in
May 2010. PX16, the affidavit claim of lien filed the following month, claimed the
identical $35,697 lien amount and relied on the same calculations and redacted
financial backup BGI had received by fax the month before but did not want the
jurors to see. Because there is no legally (nor factually) sufficient evidence that
Mr. Lyon made, presented, or used his affidavit claim of lien with the intent to
defraud, the jury’s “yes” answer to Question No. 4 should have been disregarded
(or a new trial should have been granted) for this independent reason as well.
Finally, as yet one additional, stand-alone independent no-evidence ground,
the “yes” answer to Question No. 4 also required the jury to find that Mr. Lyon
made, presented or used his affidavit claim of lien “with the intent to cause
Building Galveston, Inc. to suffer financial injury.” CR130. If this Court assumed
(for sake of argument) that all the other elements were somehow supported by
evidence in the reporter’s record, the Court should still reverse because no legally
-35-
(and no factually) sufficient evidence established that Mr. Lyon made, presented or
used his lien with intent to cause BGI to suffer financial injury. 22
PX16 shows Mr. Lyon’s affidavit claim of lien was filed against the Patty
Cakes Bakery property owned by the Rennicks (accord CR6-9); however, the
reporter’s record contains no evidence indicating Mr. Lyon’s affidavit claim of lien
was ever asserted against BGI. Although BGI presented some evidence that, by
agreement between BGI and the Rennicks, the $25,000 paid by the Rennicks to
settle Mr. Lyon’s lien claim was withheld from BGI’s retainage (3RR14-15), there
was no evidence this was the intent or purpose of Mr. Lyon. Instead, the only
evidence is that Mr. Lyon’s intent in making, presenting or using the lien was to
receive payment from the Rennicks. PX16; 3RR11-12, 135-38; CR6-9.23
22
The (Bexar County) jury refused to find make a “fraudulent lien” finding in Alanis v.
US Bank N.A., No. 01-14-00559-CV (Tex. App.--Houston [1st Dist.] Nov. 03, 2015, n.p.h.), so
that recent decision is not on point procedurally; however, this Court did correctly observe:
“Alanis provided no evidence that either US Bank or BAC intended to cause her physical injury,
financial injury, or mental anguish.” See id. (Slip op. at 37). Similarly, Building Galveston
introduced no evidence from which Building Galveston’s (Galveston County) jury could have
lawfully found Mr. Lyon “intend[ed] to cause Building Galveston, Inc. to suffer financial
injury.” CR130.
23
Cf. Gray v. Entis Mechanical Servs., LLC, No. 01-11-00129-CV (Tex. App.--Houston
[1st Dist.] Apr. 26, 2012, no pet.) (mem. op.) (Slip op. at 13) (upholding trial court fraudulent-
lien finding in that bench-tried case because (unlike Mr. Lyon) appellant Gray — among other
things — (1) “attempt[ed] to create tax problems for Entis by asking a third person to withhold
needed tax information from Entis until Entis would agree to add Gray’s names to its liens” and
(2) “sought criminal charges against Entis for theft of services despite Gray’s bill not yet being
due” and (3) “did not file and maintain the liens to secure payment” and thus: “[T]he evidence
as a whole supports the trial court’s finding that Gray intended to cause Entis financial harm”).
-36-
The reporter’s record contains evidence that Mr. Arneson and BGI
encouraged the Rennicks to pay Mr. Lyon $25,000 — 70 cents on the dollar — in
settlement of his claimed $35,697 lien (3RR63-66); however, the reporter’s record
contains no shred of evidence, as required for the jury’s “yes” answer to
Question No. 4, that Mr. Lyon made, presented or used the lien with intent to cause
BGI to suffer financial injury. CR130.24 That additional element was not
addressed by BGI’s evidence (at all), and Question No. 4 should have been be
disregarded (or new trial granted) for this independent reason as well.
With respect, the trial court’s judgment awarding damages and attorney’s
fees for filing a fraudulent lien is erroneous as a matter of law and fact, will cause
immense additional harm if not corrected, and should accordingly be reversed.
II. The Trial Court Abused Its Discretion and Committed Reversible Error
by Overruling Hearsay Objections and Admitting PX45 into Evidence
The trial court’s final judgment orders that BGI shall recover from Mr. Lyon
attorney’s fees in the amount of $142,556.42, plus $20,000 for any unsuccessful
appeal to this Court, plus additional amounts for any unsuccessful appeal to the
Texas Supreme Court. 1SuppCR101-03. As the party applying for these lodestar
24
During the December 2014 motion to disregard hearing, BGI’s lead trial counsel argued to the
trial court that Mr. Lyon “knew” BGI had a statutory duty to defend Patty Cakes Bakery
(10RR21); however, the reporter’s record includes no witness’s testimony supporting that
argument by BGI’s lead trial counsel.
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awards (11RR37), BGI bore the burden of proof in the trial court. See El Apple I,
Ltd. v. Olivas, 370 S.W.3d 757, 762-63 (Tex. 2012).
El Apple I was decided in June 2012, more than one year before BGI’s
liability claims against Mr. Lyon (and Lyon Construction) were tried to the jury in
November 2013, and nearly three years before BGI’s claims for attorney’s fees
were tried to the court in April 2015. 1SuppCR98-99. Our supreme court’s
June 2012 El Apple I decision authoritatively established that, except in the
simplest cases, detailed billing records or other documentary evidence should be
required to substantiate a claim for attorney’s fees, such evidence permitting the
court to see “(1) the nature of the work, (2) who performed the services and their
rate, (3) approximately when the services were performed, and (4) the number of
hours worked.” 370 S.W.3d at 762-63. 25
No doubt aware of its heightened substantive burden of proof under
El Apple I, BGI sought to introduce its Galveston law firm’s lengthy, detailed
billing records [PX45] into evidence (in April 2015), with the reporter’s record
25
Cf. id at 764 (remanding for a redetermination of attorney’s fees, rather than rendering,
because “the attorneys in this [i.e., the El Apple I] case may not have contemporaneous billing
records that document their time as we have not heretofore explained the proof necessary to
support a fee application under the lodestar method”) (emphasis supplied); accord D&M Marine,
Inc. v. Turner, 409 S.W.3d 693, 702-04 (Tex. App.--Houston [1st Dist.] 2013, pet. denied)
(sustaining factual sufficiency challenge, and remanding case for a new trial on attorney’s fees,
because appellees’ evidence failed to meet requirements of then “recent” Texas Supreme Court
decision in El Apple I).
-38-
showing the following offer by BGI’s lead trial counsel, objections by Mr. Lyon’s
counsel, purported predicate testimony by Mr. Garcia, and the trial court’s rulings:
MR. LYFORD: If I didn’t say it, Judge, we would offer 45
subject to the same rules as the Court is --
MR. TAYLOR: Objection. Inadmissible hearsay, no custodian
on the stand; and we don’t believe that the predicate has been laid to
show that these questions -- that the predicate has been laid. So we
would object to inadmissible hearsay.
THE COURT: So you’re admitting that the predicate has been
laid, but you’re objecting as to hearsay?
MR. TAYLOR: I misspoke then. No. The predicate has not
been laid to show that these are business records, that they were
contemporaneously made; and I add, too, that a supplement was sent
to us while we were driving down to Galveston yesterday. So I make
all those objections respectfully.
MR. LYFORD: First of all, he’s testifying as an expert. So
he’s allowed to testify about the things that he’s reviewed. I can take
the time to qualify these as business records. If counsel really wants
us to do that, I’ll be happy to.
THE COURT: All right. Go right ahead.
Q. (BY MR. LYFORD) Mr. Garcia, where do those time
records come from?
A. They came from the file that I maintained as part of this
matter.
Q. Are you a member of the firm --
A. Yes.
Q. -- Mills Shirley, that made those records?
A. Yes.
Q. Did you keep your records in their timekeeping system?
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A. Yes.
Q. Did you go to the people that operate that time-keeping
system and have them prepare those documents for you to -- and to
provide the other side in discovery?
A. Yes, I did.
Q. Are those true and accurate copies of the time records of
Mills Shirley in regard to the work that was done on this case?
A. Yes.
Q. Are they -- in your mind, are those accurate and reliable
sources of information for -- that you rely upon 26 in determining the
amount of time that Mills Shirley devoted to these claims in this case?
A. Yes.
MR. LYFORD: Your Honor, we would offer Exhibit 45 again,
as admitted into the record.
(Plaintiff's Exhibit No. 45 offered)
MR. TAYLOR: One question on voir dire?
THE COURT: Go ahead.
VOIR DIRE EXAMINATION
BY MR. TAYLOR:
26
Mr. Garcia was not asked to testify (nor did he testify) that it is reasonable for experts in his
field to rely on his own law firm’s billing records (in a single case) that were not even proved to
meet the requirements for admission as records of a regularly conducted activity. See Tex. R.
Evid. 703; cf. Elizondo v. Krist, 415 S.W.3d 259, 263-64 & n.7 (Tex. 2013) (opining expert’s
reliance on “thousands” of similar cases after “persuasively comparing all the circumstances of
the case to the settlements obtained in other cases” might satisfy Rule 703, but nevertheless
holding expert’s testimony was conclusory and non-probative). Neither did BGI attorney’s fee
expert Jack Brock give any such testimony. Cf. 11RR70-71, 80 (Mr. Brock testifying that
certain “percentages were reached in combination with discussions with Mr. Garcia in relying, to
a large extent, on [Mr. Garcia’s] personal knowledge of what was involved” and, further,
Mr. Brock thinks Mr. Garcia is “a credible witness”).
-40-
Q. Were these time records kept contemporaneously?
A. Yes. The records were -- you enter the time or provide the
written time sheets to a timekeeper that enters the time a couple of
times a week, if not daily.
MR. TAYLOR: Objection stands. Hearsay.
THE COURT: Okay. Overruled. Exhibit No. 45 is admitted.
11RR33-36 (emphases supplied).
There is no doubt PX45 was offered (and admitted) for the truth of the
matters asserted in the Mills Shirley time records, and they were therefore hearsay.
Tex. R. Evid. 801, 802. Admitted over hearsay objections, PX45 cannot be
accorded probative value unless an applicable exception was proved. See Tex. R.
Evid. 802 (inadmissible hearsay admitted over objections should be denied
probative value).
The so-called business records exception actually appears within Rule 803
(as most recently amended without substantive change) as follows:
Rule 803. Exceptions to the Rule Against Hearsay —
Regardless of Whether the Declarant Is Available as a Witness
The following are not excluded by the rule against hearsay,
regardless of whether the declarant is available as a witness:
***
(6) Records of a Regularly Conducted Activity. A
record of an act, event, condition, opinion, or diagnosis if:
(A) the record was made at or near the time by —
or from information transmitted by — someone
with knowledge;
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(B) the record was kept in the course of a
regularly conducted business activity;
(C) making the record was a regular practice of
that activity;
(D) all these conditions are shown by the
testimony of the custodian or another qualified witness,
or by an affidavit or unsworn declaration that complies
with Rule 902(10); and
(E) the opponent fails to demonstrate that the
source of information or the method or circumstances of
preparation indicate a lack of trustworthiness.
“Business” as used in this paragraph includes every kind
of regular organized activity whether conducted for
profit or not.
Tex. R. Evid. 803(6) (bold/italics/underscoring supplied).
Volume 11 of the reporter’s record contains zero testimony (and the record
contains no affidavit nor unsworn declaration) showing that the lengthy
Mills Shirley time records making up PX45 were made by — or from information
transmitted by — someone “with knowledge.” Volume 11 of the reporter’s record
also contains zero testimony (and the record contains no affidavit nor unsworn
declaration) showing the records making up PX45 were kept in the course a
“regularly conducted” business or any “regular organized” activity.
In fact, the words “regular,” “regularly,” “conducted,” and “organized,” do
not appear in any question or answer in volume 11 of the reporter’s record.
Compare 11RR76 (testimony by BGI’s non-custodian attorney’s fee expert
Jack Brock that “in any case a lot of the activity is dictated by what your opponents
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do” and that “from Building Galveston’s perspective, as I understand it, [this] was
a case that involved their reputation”) (emphases supplied), and 11RR56
(testimony by Mills Shirley record custodian and billing partner Chris Garcia
candidly admitting under oath to the trial court that “[t]oo many” Mills Shirley
attorneys worked on this case), with 11RR96 (Mr. Lyon’s additional trial counsel,
Ms. Criss, correctly arguing that the legislative purpose of chapter 38’s
presentment requirement “was to stop cases from taking on a life of their own”).
This Court cannot assume (without supporting custodian “testimony”) that
Mills Shirley’s high-dollar billing records (in this reputation-driven case) constitute
“regularly conducted business activity” (nor that making those records “was a
regular practice of that activity”). Without custodian “testimony” supporting “all”
the conditions required by Rule 803(6), it was a violation of Rules 801 and 802, an
abuse of discretion under this Court’s precedent, and reversible error to overrule
Mr. Lyon’s hearsay objections and to admit PX45 into evidence. See West v. State,
124 S.W.3d 732, 736 (Tex. App.--Houston [1st Dist] 2010, no pet.) (“We conclude
testimony reflecting that records are maintained as part of a business does not
relieve a party from otherwise showing that the records were kept in the course of a
regularly conducted business activity and that it was the regular practice of that
business activity to make the records”).
-43-
It makes zero difference that the issue of attorney’s fees was tried to the
court instead of the jury. Rules excluding hearsay evidence apply whether it is a
jury or a judge awarding attorney’s fees against a party. See Unifund CCR
Partners v. Villa, 299 S.W.3d 92, 97-98 (Tex. 2009) (per curiam) (where only
basis for granting motion was inadmissible hearsay document that should have
been excluded from evidence, trial court’s findings of fact were supported by
legally insufficient evidence; therefore, order granting motion had to be reversed,
and judgment had to be rendered denying relief sought by the motion); Lawrence
Morales II, Evidence in A Bench Trial: Do the Rules Really Matter, 73 Tex.
B.J. 110, 114 (2010) (acknowledging that even after a bench trial, an appellate
court will sustain a no-evidence challenge when, among other things, the court “is
barred by rules of law or of evidence from giving weight to the only evidence
offered to prove a vital fact”); Tex. R. Evid. 101 (Texas Rules of Evidence govern
proceedings in Texas state district court — without regard to whether a jury or the
the trial court is deciding the facts); Tex. R. Evid. 802 (inadmissible hearsay
admitted over objection should be denied probative value).
BGI will likely argue that a “summary” of BGI’s requested attorney’s fees
(PX46) was discussed, later admitted into evidence without objection, and includes
the specific amounts found and awarded by the trial court for BGI’s (purportedly
-44-
segregated) attorney’s fees. 11RR36, 54, 62, 69-70, 74-75, 84. 27 Texas Supreme
Court precedent, however, does not allow (as here) a “representation” of earlier
admitted inadmissible evidence to cure the error in overruling objections to
necessary but inadmissible evidence from which the later exhibit was extracted.
See Kerr-McGee Corp. v. Helton, 133 S.W.3d 245, 252 (Tex. 2004).
Mr. Lyon’s issue 2 should accordingly be sustained, the judgment’s awards
for BGI’s trial and appellate attorney’s fees should be reversed, and this Court
should remand the case for a new trial.
III. BGI’s Legally and Factually Insufficient Attorney’s Fee Evidence,
Predicate, and Segregation Independently Require a New Trial
Though arguably not required to do so (see Tex. R. App. P. 33.1(d)),
Mr. Lyon filed timely motions for new trial asserting no legally or factually
sufficient evidence (and no sustainable predicate) supports the trial court’s awards
of $142,556.42 for reasonable and necessary attorney’s fees for fraudulent lien and
invalid lien, plus another $20,000.00 in the event Mr. Lyon takes an unsuccessful
27
Cf. Sentinel Integrity Solutions, Inc. v. Mistras Group, Inc., 414 S.W.3d 911, 928-29
(Tex. App.--Houston [1st Dist.] 2013, pet. denied) (upholding substantial attorney’s fee award
where admitted “summary was supported by approximately 170 pages of redacted bills detailing
the services that resulted in those fees, including the type of services performed, the amount of
time expended on each service, the identity of the person who performed them and their billable
rates, and the dates the services were performed”); id. at 922 (“The documentary evidence of
Olson’s attorney’s fees included approximately 170 pages of redacted billing records reflecting
the tasks performed by various attorneys and support personnel, the amount of time required for
those tasks, the billable rate charged by the various attorneys and personnel, and other litigation
expenses incurred in the course of the litigation”); id. at 923 (“Sentinel did not object to the
evidence supporting the request for attorney’s fees on any basis”) (all emphases supplied).
-45-
appeal to this Court, plus another $10,000.00 in the event Mr. Lyon files a petition
for review to the Texas Supreme Court that is denied, plus another $10,000.00 in
the event Mr. Lyon’s petition for review is denied after briefing on the merits is
requested by the Court, plus another $7,500.00 in the event Mr. Lyon’s petition for
review is denied after oral argument in the Texas Supreme Court. CR268-69, 311.
Mr. Lyon’s timely-filed motions for new trial also asserted the amounts
awarded are excessive; manifestly too large; unsupported by legally or factually
sufficient evidence appropriately segregating fees (a) among claims for which
attorney’s fees may and may not be recovered, and (b) between defendants against
whom (or which) attorney’s fees may and may not be recovered; and (with respect)
an abuse of discretion. CR269, 311.
The trial court overruled Mr. Lyon’s timely-filed motions for new trial by
operation of law. Tex. R. Civ. P. 329b(c); Tex. R. App. P. 33.1(b). Those rulings
were also in error. See generally Tony Gullo Motors I, L.P. v. Chapa, 212
S.W.3d 299, 313-14 (Tex. 2006) (“if any attorney’s fees relate solely to a claim for
which such fees are unrecoverable, a claimant must segregate recoverable from
unrecoverable fees. Intertwined facts do not make [unrecoverable] fees
recoverable; it is only when discrete legal services advance both a recoverable and
unrecoverable claim that they are so intertwined that they need not be segregated”).
-46-
In this case, it is undisputed that BGI incurred considerably more in
attorney’s fees pursuing BGI’s breach of subcontract action (for which the trial
court ruled attorney’s fees are not recoverable under chapter 38) than BGI incurred
pursuing its claims for invalid lien and fraudulent lien. PX46. The record shows
the trial court sustained defendants’ no-pleading objection regarding the required
presentment, denied BGI’s claim for attorney’s fees under section 38.001 of the
Texas Civil Practice and Remedies Code, and granted BGI’s motion for attorney’s
fees only under Tex. Prop. Code section 53.156 and Tex. Civ. Prac. & Rem. Code
section 12.002. 11RR11, 85, 87; 1SuppCR98-99.
BGI’s total requested attorney’s fees through the trial were $158,396.02,
reduced by only 10% (to $142,556.42) if (as the trial court later ruled) fees for
breach of contract were disallowed and recovery of fees was allowed only for
invalid lien and fraudulent lien. PX46. BGI’s exhibit asserts there should be only
a 12% reduction (down to $139,388.50) if both breach of contract and fraudulent
lien are disregarded, and there were a recovery only for invalid lien. PX46.
As already demonstrated, the judgment for fraudulent lien lacks the required
support of legally and factually sufficient evidence. Once that judgment is
properly reversed, BGI will have no recovery for invalid lien as a matter of law
because this Court’s duty, upon reversing, will be to render the judgment the trial
court should rendered (i.e., render judgment ordering that BGI take nothing from
-47-
Mr. Lyon on BGI’s claim for fraudulent lien under section 12.002 of the Texas
Civil Practice and Remedies Code) (or alternatively order a general remand for
further proceedings). See Tex. R. App. P. 43.2(c), (d).28
The trial court previously dismissed with prejudice (in January 2012)
Lyon Construction’s claims against Patty Cakes Bakery and the Rennicks (CR80-
81) after those claims settled “early on” (11RR83-84), but — apart from the
insupportable fraudulent lien finding (in answer to Question No. 4) and existing
judgment on that finding — there was no order, adjudication or decree by the court
that Mr. Lyon’s claimed lien was invalid. Cf. Trinity Drywall Sys., LLC v. TOKA
General Contractors, Ltd., 416 S.W.3d 201, 206 (Tex. App.--El Paso 2013,
pet. denied) (“the judgment decreed that [subcontractor]’s mechanic’s lien against
[owner]’s real property was invalid and unenforceable and awarded [owner]
$43,585.50 as attorney’s fees pursuant to Section 37.009 of the Texas Civil
Practice and Remedies Code 29 and Section 53.156 of the Texas Property Code”);
R.M. Dudley Constr. Co. v. Dawson, 258 S.W.3d 694, 707 (Tex. App.--
28
Compare U-Haul Int’l, Inc. v. Waldrip, 380 S.W.3d 118, 141 & n.23 (Tex. 2012) (it is
appropriate for a Texas appellate court to render judgment against claim that is supported by
legally insufficient evidence, and to remand for new trial the claim or claims on which there was
legally sufficient evidence), and Tex. R. App. P. 3.1(b) (“Appellate court means the courts of
appeals . . . and the Supreme Court”), with Perry Nat’l Bank v. Eidson, 340 S.W.2d 483, 487 &
n.2 (Tex. 1960) (majority of the supreme court construed appeals court’s judgment as providing
for a “general remand”), and Robert W. Calvert, Appellate Court Judgments or Strange Things
Happen on the Way to Judgment, 6 Tex. Tech. L. Rev. 915, 921 (1975).
29
It is undisputed that BGI never pleaded entitlement to attorney’s fees under section 37.009 of
the Texas Civil Practice and Remedies Code. See 11RR7-9; CR111.
-48-
Waco 2008, pet. denied) (holding presiding trial court judge abused discretion “by
misapplying the law in his conclusion that the entire proceeding was of the type
referenced in section 53.156”) (italics original).
There is no judgment of the trial court (nor will there be after this Court
reverses judgment on BGI’s fraudulent lien theory) that could support attorney’s
fees under section 53.156 of the Property Code. Cf. Contemporary Contractors,
Inc. v. Centerpoint Apt. Ltd. P’ship, No. 05-13-00614-CV (Tex. App.--Dallas
July 3, 2014, no pet.) (mem. op. at 10) (explaining trial court’s judgment ordered
“the Denton County Clerk, Denton County Records Department, Deed and/or
Record Department and/or the appropriate government authority responsible for
removal or action on such lien” to “take all actions necessary to immediately
remove, abrogate and/or nullify such lien filed by [appellant] . . .” and,
consequently, “appellee was entitled to recover its attorney’s fees under
section 53.156 for removal of the lien”); 30 Amegy Bank N.A. v. Brazos M&E, Ltd.
(In re Bigler LP), 458 B.R. 345, 387 (Bankr. S.D. Tex. 2011) (“this Court
concludes that it does have discretion to award attorneys’ fees to Halgo because the
suit at bar: (i) is governed by § 53.156; and (ii) has been an action whereby
30
The record in this case contains no trial court order, adjudication or decree requiring
Mr. Lyon, Galveston County officials, or anyone else to take any actions to remove, abrogate
and/or nullify Mr. Lyon’s earlier claim of lien.
-49-
Amegy has attempted to convince this Court that Halgo has no valid lien in the
first instance, or, even if it does, Halgo’s lien is inferior to the lien of Amegy”). 31
Correctly anticipating this Court’s reversal on BGI’s fraudulent lien theory,
BGI’s attorney’s fee expert Jack Brock opined from the witness stand: “I think not
only would it be helpful to the Court -- even if the Court were to award all the
attorneys’ fees, to break out within the judgment the award of attorneys’ fees for
each of those independent causes of action. For instance, if the Court -- even
though the Court awarded fraudulent lien, it would be appropriate for the Court in
a judgment to suggest that if the fraudulent lien were set aside, then here’s what the
fees would be.” 11RR73. Mr. Brock continued: “In the event this case were
appealed, then that gives the appellate court the ability to modify the judgment, as
opposed to remanding for the determination.” 11RR73. Again correctly
foreseeing this Court’s judgment of reversal, Mr. Brock further continued: “[N]ow
that the appellate court, for instance, has said fraudulent lien was improper, that
there wasn’t adequate or sufficient evidence, then the Court could modify its [sic]
judgment as it relates to the attorneys’ fees without having to remand it [sic] back
to the trial court.” 11RR73 (emphasis supplied).
31
Apart from the jury’s answer to Question No. 4 (and the trial court’s final judgment awarding
BGI damages on its “fraudulent lien” claim), the record in this case contains no trial court order,
adjudication or decree declaring Mr. Lyon’s earlier claim of lien is valid or invalid or,
alternatively, inferior to the claim of any other creditor.
-50-
Despite these entreaties by Mr. Brock, the trial court chose not to make
additional or alternative findings segregating fees among the various causes of
action, and thus a new trial on attorney’s fees is required at a minimum. Nor has
BGI at any time (even in BGI’s Exhibit 46) segregated fees for making claims
against Mr. Lyon (against whom the trial court did award attorney’s fees) as
opposed to Lyon Construction (against which the trial court held neither damages
nor attorney’s fees were recoverable). Consequently, even if some portion of the
attorney’s fees might arguably be recoverable under section 53.156 of the Property
Code (which Mr. Lyon respectfully denies), this Court cannot make original fact
findings on attorney’s fees. 32 Instead, as BGI’s attorney’s fee expert
acknowledged, a remand for further trial court proceedings on attorney’s fees
would be necessary.
On this record, the trial court’s awards of trial and appellate attorney’s fees
to BGI are legally unsupported, factually excessive, not adequately segregated
among parties and claims, and (with respect) were an abuse of discretion.
Mr. Lyon’s issue 3 should accordingly be sustained, the trial court’s excessive (and
inadequately segregated) awards for trial and appellate attorney’s fees should be
reversed, and the case should be remanded for a new trial.
32
See Trevino v. American Nat’l Ins. Co., 140 Tex. 500, 506, 168 S.W.2d 656, 660 (1943)
(reaffirmed on this point in Stewart Title Guar. Co. v. Aiello, 941 S.W.2d 68, 73 (Tex. 1997)).
-51-
IV. BGI Failed In BGI’s Burden to Submit an Adequate Jury Question
Regarding Damages for Mr. Lyon’s Alleged Failure to Comply with the
Subcontract; Consequently, The Trial Court Should Have Granted
Defendants’ Motions for New Trial for This Additional Reason as Well
In light of applicable standards governing review of jury findings, Mr. Lyon
cannot challenge in this appeal the sufficiency of the evidence supporting the
jury’s findings that he, individually, entered into (and failed to comply with) his
subcontract with BGI (CR127-28), even though Mr. Lyon respectfully disagrees
with those findings. When writing its judgment, however, this Court should
remember that questions of subcontract compliance were hotly disputed (on both
sides) below, and the trial court determined questions of subcontract breach (by
both sides) were raised for submission to the jury. CR127-28, 132-36.33
“[I]t was [BGI’s] burden to obtain affirmative answers to jury questions as
to the necessary elements of [BGI’s] cause of action.” Ramos v. Frito Lay, Inc.,
784 S.W.2d 667, 668 (Tex. 1990). This same rule also applies to BGI’s burden of
proving and submitting jury questions under a correct legal measure of damages.
See W.O. Bankston Nissan, Inc. v. Walters, 754 S.W.2d 127, 128 (Tex. 1988),
33
See generally Estrada v. Dillon, 44 S.W.3d 558, 562 (Tex. 2001) (per curiam), rev’g in part
23 S.W.3d 422 (Tex. App.--Amarillo 2000) (holding court of appeals erred by remanding the
case for a new trial solely on the damages issue when defendants initially contested liability in
the trial court, but did not challenge liability post-judgment or on appeal) (interpreting Tex. R.
App. P. 44.1(b)(1)); El-Khoury v. Kheir, 241 S.W.3d 82, 90 (Tex. App.--Houston [1st Dist.]
2007, pet. denied) (“we may not order a separate trial solely on the issue of damages when, as
here, the parties contested liability at trial”).
-52-
reaffirmed in part (on rehearing) by Spencer v. Eagle Star Ins. Co. of Am., 876
S.W.2d 154, 158 (Tex. 1994)).
As submitted, Question No. 3 (regarding damages from Mr. Lyon’s failure
to comply with his subcontract with BGI) with accompanying instructions and the
jury’s answers read as follows:
What sum of money, if any, if paid now in cash, would fairly
and reasonably compensate Building Galveston, Inc. for its damages,
if any, that resulted from such failure to comply?
The measure of damages for the breach of a construction
contract by a subcontractor is the difference between the subcontract
price, and the total of the following amounts:
1) The amount actually paid to the subcontractor;
2) the reasonable and necessary amounts paid by the
contractor for repairing any defective work performed by the
subcontractor,
3) the reasonable and necessary cost to the contractor of
completing the subcontractor’s work; and
4) the amounts paid by Building Galveston, Inc. that were a
natural probable, and foreseeable consequence of the failure to
comply.
Do not add any amount for interest on damages, if any.
Answer separately in dollars and cents for damages, if any.
1. The reasonable and necessary amounts paid by Building
Galveston, Inc. for repairing any defective work performed by Ted
Lyon III.
Answer: _26,38976____
-53-
2. The reasonable and necessary cost to Building Galveston,
Inc. of completing the work performed by Ted Lyon III.
Answer: _33037.16 ____
3. The amounts paid by Building Galveston, Inc. that were a
natural, probable, and foreseeable consequence of the failure to
comply.
Answer: _7926.92 ____
CR129.
The sum of the jurors’ findings in answer to Question No. 3 would have
been $67,353.84, but BGI never contended the jury’s findings could support
judgment for principal damages of $67,353.84. Instead, BGI repeatedly “moved
for judgment” (not on the verdict) indefensibly requesting judgment for principal
damages of either $47,820.59 (if all the jury findings in BGI’s favor were upheld)
or $40,889.84 (if the trial court granted Mr. Lyon’s motion to disregard the jury’s
answer to Question No. 4, permitting only BGI’s breach of contract theory to
stand). CR173-74, 175-76. During the December 2014 motion to disregard
hearing, Mr. Lyon’s counsel pointed out the damages portion of BGI’s motion was
inappropriate and the most Question 3 even arguably supported was a judgment
for principal damages of about $15,800 (instead of $40,000). 10RR23-25, 27-29.
Later BGI’s trial counsel admitted in correspondence to the trial court (with
an enclosed “JUDGMENT WORKSHEET”) that Question No. 3 did not support
$40,889.84 in principal damages (as BGI had previously requested) but instead
-54-
(according to counsel’s post-verdict calculations) a “Recoverable Difference” of
just $15,889.84. CR240, 242. After the trial court rendered judgment awarding
BGI $15,889.84 for breach of contract (CR245, 273) — based on BGI’s judgment
worksheet calculations (CR242), instead of the the jury’s answers to Question
No. 3 (CR129) — defendants timely filed motions for new trial asserting the jury’s
answers to Question No. 3 were not only “excessive” and “manifestly too large”
but also asserting:
Question No. 3 as submitted to the jury is also too vague and
confusing to support the Court’s awarding $15,889.84 (or any
amount) for BGI’s breach of contract damages. There is no express
finding by the jury supporting the Court’s $15,889.84 award for BGI’s
breach of contract claims, and Question No. 3 cannot salvage the
Court’s 5-19-2015 (7-31-2015) judgment on appeal. See generally
Lovelace v. Sabine Consolidated, Inc., 733 S.W.2d 648, 655
(Tex. App.--Houston [14th Dist.] 1987, writ denied) (“[The appellee]
mistakes where the duty to submit separate jury findings on damages
lies. An appellant cannot be held accountable for the failure of an
appellee to secure separate jury findings upon which an accurate
judgment could be based”).
CR267-68 (309). The trial court overruled defendants’ motions for new trial by
operation of law. Tex. R. Civ. P. 329b(c); Tex. R. App. P. 33.1(b). Those rulings
were also reversible errors.
“When a special verdict is rendered . . . , the court shall render judgment
thereon unless a new trial is granted or judgment is rendered notwithstanding the
verdict or jury finding under these rules.” Tex. R. Civ. P. 300. Our rules also
provide “that upon motion and reasonable notice the court may render judgment
-55-
non obstante veredicto if a directed verdict would have been proper, and provided
further that the court may upon like motion and notice, disregard any jury finding
that has no support in the evidence.” Tex. R. Civ. P. 301.
BGI never sought judgment on the jury’s actual answers to Question No. 3
because BGI’s damages question and answer blanks did not call for an actual
verdict on recoverable subcontract damages, but rather (at most) elements of a
formula for BGI (and later the Court) to work out later in determining what
principal amount of damages should be awarded in the Court’s judgment.
That’s not the way our system of trial by jury works. In a jury trial, as here,
the plaintiff must obtain findings the Court can incorporate into its judgment (if the
evidence supports the amounts found by the jury). Otherwise, defendants are
denied their constitutional right (like the plaintiff’s right) to have the jury decide
every material fact that is disputed in the evidence (in this case, what amount of
actual damages, if any, would fairly and reasonably compensate BGI for
Mr. Lyon’s supposed failure to comply with his subcontract). 34
34
See generally Haygood v. De Escabedo, 356 S.W.3d 390, 399 (Tex. 2012) (rejecting
dissenters’ argument for “post-verdict” proceedings to finalize actual damage awards in personal
injury lawsuits because “a requirement that the trial court resolve disputed facts in determining
the damages to be awarded violates the constitutional right to trial by jury”); Texas & Pac. Ry.
Co. v. Van Zandt, 159 Tex. 178, 182-83, 317 S.W.2d 528, 531-32 (1958) (opinion overruling
plaintiff’s motion for rehearing) (usual harmless error rule cannot be applied when, as here, to
do so would deny a party’s constitutional right of trial by jury).
-56-
The best BGI will muster is an argument that BGI and the trial court cobbled
together bits and piece of evidence (after BGI backed down and no longer
inappropriately requested $25,000 for loss of retainage damages for breach of
contract), and the $15,889.84 awarded for subcontract damages can be teased out
of the reporter’s record. But, with respect, BGI failed to secure accurate jury
findings on which any judgment for breach of subcontract damages could properly
be awarded. BGI also failed to request or obtain any order disregarding the jurors’
excessive and confusing answers to Question No. 3, none of which supports the
trial court’s $15,889.84 award for breach of subcontract damages.
As a result, Mr. Lyon’s issue 4 should be sustained, the trial court’s
judgment should be reversed, and this cause should be remanded for a new trial.
Conclusion
Mr. Lyon and Lyon Construction primarily request that: (1) the jury’s
answer to Question No. 4 be set aside; (2) the trial court’s final judgment be
reversed; (3) this Court render judgment ordering that BGI shall take nothing from
Mr. Lyon on BGI’s claim for fraudulent lien claim under section 12.002 of the
Texas Civil Practice and Remedies Code; and (4) this Court remand the cause to
the trial court for a new trial on the breach of subcontract, actual damages and
attorney’s fees issues.
-57-
Mr. Lyon and Lyon Construction also request that this Court: (5) order the
Galveston County district clerk’s office to refund to Mr. Lyon and
Lyon Construction their $65,972.00 cash deposit in lieu of supersedeas bond
(CR315-323, 347; 1SuppCR5, 96-97); (5) tax costs of the appeal(s) against BGI;
and (6) grant Mr. Lyon and Lyon Construction all other appropriate relief to which
they may be entitled (including a general remand if the Court were to sustain only
the factual sufficiency challenge concerning Question No. 4).
Respectfully submitted,
TED B. LYON & ASSOCIATES, P.C.
Ben Taylor (19684500)
btaylor@tedlyon.com
Josh Birmingham (24059329)
jbirmingham@tedlyon.com
18601 LBJ Freeway, Suite 525
Mesquite, Texas 75150-5632
Telephone: 972-279-6571
Facsimile: 972-279-3021
CRISS & ROUSSEAU LAW FIRM L.L.P.
Susan E. Criss (06630475)
susan.criss@crissrousseau.com
P.O. Box 17046
Galveston, TX 77552
Telephone: 409-515-6176
Facsimile: 409-763-1508
counsel for appellants Ted B. Lyon, III, et al.
-58-
Certificate of Word Count Compliance
Relying on the word count function in the word processing software used to
produce this document, I certify that the number of words in this brief (excluding
any caption, identity of parties and counsel, statement regarding oral argument,
table of contents, index of authorities, statement of the case, statement of issues
presented, statement of jurisdiction, statement of procedural history, signature,
proof of service, certification, certificate of compliance, and appendix items) is
11,768 [15,000 or less].
Ben Taylor
-59-
Certificate of Filing and Service
I hereby certify that on the 16th day of November, 2015, this brief (with
accompanying appendix items) has been e-filed with the Clerk of the First Court of
Appeals; also, a copy of this brief was served served upon BGI’s counsel of record
via e-file and e-mail (with a courtesy copy to the trial court by e-mail also) this
16th day of November, 2015:
Scott Lyford (slyford@millsshirley.com)
Hon. Michelle M. Slaughter (c/o dana.winston@co.galveston.tx.us)
Ben Taylor
-60-
c'&R~~ 0. KINARD
FJLE:D "
NOV 0 8 2013 3:npm
GALVESTON COUNTY TEXA
ev · s
No. 10CV2353 0
BUILDING GALVESTON, INC. § IN THE DISTRICT COURTS
§
vs. §
§ OF GALVESTON COUNTY, TEXAS
I:YON CONSIROCIION SERV'ICES, §
TED B. LYON, III, AND LYON §
PROPERTIES & CUSTOM HOMES, LLC § 405TH JUDICIAL DISTRICT
Charge ofthe Court
Lad1es and Gentlemen of the Jury:
After the closing arguments, you will go to the jury room to decide the case, answer the
queglim'lg that are allaGhed, and t' W V> ' ' Vo
Answer: ~Q.S
8
130
If you have answered "Yes" to Question No. 4, then answer the following question.
Otherwise, do not answer the following question.
QUESTION NO. 5
What sum of money, if paid now in cash, would fairly and reasonably compensate
Building Galveston, Inc. for its damages, if any, that resulted from Ted B. Lyon, III presenting or
using a fraudulent lien or claim against real property?
Answer in dollars and cents for damages, if any:
j:>tJJ
Ans .. er: $ 9~ ~ S..: 'D I q "%0, '7 5"
9
131
QUESTION NO.6
Did Lyon Properties & Custom Homes, LLC fail to comply with its subcontract with
Building Galveston, Inc.?
Answer '"'Yes" or ''No."
f\(
Answer: ~u
10
132
If you have answered "Yes" to Question No. 6, then answer the following question.
Otherwise, do not answer the following question.
QUESTION NO.7
What sum of money, if any, if paid now in cash, would fairly and reasonably compensate
Building Galveston, Inc. for its damages, if any, that resulted from such failure to comply?
The measure of damages for the breach of a constmction contract by a subcontractor is
the difference between the subcontract price, and the total of the following amounts:
I) The amount actually paid to the subcontractor;
2) the reasonable and necessary amounts paid by the contractor for repamng any
defective work performed by the subcontractor;
3) the reasonable and necessary cost to the contractor of completing the subcontractor's
work' and
4) the amounts pmd by Bmldmg Galveston, Inc. that were a natura~ probable, and
foreseeable consequence of the failure to comply.
Do not add any amount for interest on damages, if any.
Answer separately in dollars and cents for damages, if any.
I. The reasonable and necessary amounts paid by Building Galveston, Inc. for repairing
any defective work performed by Lyon Properties and Custom Homes, LLC.
Answer:
2. The reasonable and necessary cost to Building Galveston, Inc. of completing the work
performed by Lyon Properties and Custom Homes, LLC.
nswer:
3. The amounts paid by Building Galveston, Inc. that were a natural, probable, and
foreseeable consequence of the failure to comply.
Answer:
II
133
If you answered "No" to Question No. I, then answer the following question. Otherwise,
do not answer the following question.
QUESTION NO. 8
Did Building Galveston, Inc. and Lyon Properties & Custom Homes LLC enter into a
subeonlrftet agreement for the construction of Patty Cakes Bakery?
You are instructed that Ted Lyon III is presumed to have individually agreed to enter into a
subcontract agreement for the construction of the Patty Cakes Bakery unless, prior to making the
subcontract agreement, Ted Lyon III disclosed to Building Galveston, Inc., or Building Galveston
had actual knowledge, that Ted Lyon III was signing the subcontract as an agent for Lyon
Properties & Custom Homes, LLC.
You are instructed that an agent is defined as a person who acts for another person or legal
entity with that person or entity's authority. Authority for another to act for a party must arise from
the party's agreement that the other act on behalf and for the benefit of the party. If a party so
authorizes another to perform an act, that other party is also authorized to do whatever else is
proper, usual, and necessary to perfumt the act expressly authorized.
Answer "Yes" or "No."
Answer: _ _ _ _ _ _ _ _ _ _ __
12
134
If you answered " Yes" to Question No. 8, then answer the following question. Otherwise,
do not answer the following question.
QUES liON NO.9
Did Building Galveston, Inc. fail to comply with its subcontract with Lyon Properties &
Answer '"Yes" or ''No."
13
135
If you have answered "Yes" to Question No. 9, then answer the following question.
Otherwise, do not answer the following question.
QUESTION NO. 10
Vv1rat smn ofnroney, if any, if paid now in cash, would fairly and reasonably compensate
Lyon Properties & Custom Homes, LLC for its damages, if any, that resulted from such failure to
comply?
The measme of damages is the diffe1ence between the value of the work peiformed by Lyon
Properties & Custom Homes, LLC under the agreement, and the total of the amount actually paid
to Lyon Properties & Custom Homes, LLC and the reasonable and necessary amounts paid by
Building Galveston, Inc. for repairing any defective work performed by Lyon Properties &
Custom Homes, LLC d/b/a Lyon Construction Services.
Consider the following elements of damages, if any, and none other.
Do not add any amount for interest on damages, if any.
Answer separately in dollars and cents for damages, if any.
1. The value of the work perfonned and the matenals proVlded by Lyon Properties &
Custom Homes, LLC for services performed under the agreement.
Answer:
2. The reasonable and necessary amounts paid by Building Galveston, Inc. for repairing
any defective work performed by Lyon Properties & Custom Homes, LLC.
Answer:
14
136
Presiding Juror:
1) When you go into the jury room to answer the questions, the first thing you will
need to do is choose a presiding juror.
2) The presidingjurm has these duties.
a. have the complete charge read aloud if it will be helpful to your deliberations;
b. preside over your deliberations, meaning manage the discussions, and see that
c. give written questions or comments to the bailiff who will give them to the
·ud e·
d. write down the answers you agree on;
e. get the signatures for the verdict certificate; and
f. notify the bailiff that you have reached a verdict.
Do you understand the duties of the presiding juror? If you do not, please tell me now.
15
137
Instructions for Signing the Verdict Certificate:
I. Unless otherwise instructed, )OU may ansl'ier the questions on a vote often jurors. The
same ten jurors must agree on every answer in the charge. This means you may not have one
group of ten jurors agree on one answer and a different group of ten jurors agree on another
answer.
2 If ten jurors agree on every answer, those ten jurors sign the verdict
If eleven jurors agree on every answer, those eleven jurors sign the verdict
If all twelve of you agree on every answer, you are unanimous and only the presiding
juror signs me veraicr.
3. All jurors should deliberate on every question. You may end up with all twelve of you
agreeing on some answers, while only ten or eleven of you agree on other answers. But when
you sign the verdict, only those ten who agree on every answer will sign the verdict.
Do you understand these instr uetions? If you do not, please tell me now.
//7
~{/ -----·
HONORABLE MICHELLE M. SLAUGHTER
PR TT Jn(;F
16
138
JOliN D. Kll'IARJa.r
Verdict Certificate
GAL:IIE51'Eitl COUNTY TEXAS
/ Our verdict is unanimous. All twelve of us have agreed to each and every answer. The
presiding juror has signed the certificate for all twelve of us
I
g Juror
Our verdict js not unanimons Eleven of ns have agreed to each and every answer and
have signed the certificate below.
Our verdict is not unanimous. Ten of us have agreed to each and every answer and have
signed the certificate below.
Signature Name Printed
1.
3.
5.
6.
7.
8.
9.
10.
11.
17
139
. 10-CV-2353
DCNUPTD
~
~~n;'l~~ Tunc Order
No. 10CV2353
~~AH!2!
·"·- 1111.1
IN ny:~:. ,., :§55
GA!o¥E~'I'QW,
~
IHJIU>IWG IWG.
vs. § - t}'!_7: T_~~-3tJ.-:pi:;-Ef\:K
.• r ...
§ OF GALVEstb#tot:JNify;ftiE~X~
LYON CONSTRUCTION SERVICES §
TED B. LYON, III, AND LYON §
I
PROPERTIES & CUSTOM HOMES, LLC § 405m JUDICIAL DISTRICT
i JUDGMENT NUNC PRO TUNC
I
I
'fhe abe•te sty led and ntlf!lbered ea\lse eame en fer J\lfj 'frial en the 4th da, ef
November, 2013. Plaintiff Building Galveston, Inc. and Defendants Lyon Properties & Custom
I
Homes, LLC d/b/a Lyon Construction Services and Ted B. Lyon, III, appeared through their
attorneys of record and announced that they were ready for trial. The parties agreed on the record
I
I
!
and before the Court that the issues of recovery of attorney's fees by either Plaintiff or
I
'
Defendants would be tried to the Court following the Jury's verdict on the merits of the causes of
t action asserted by the parties.
I
i
A jury was duly accepted, impaneled, and sworn. After hearing evidence, arguments of
I
I
counsel, and the Court's instructions and after receiving guestions to be answered, the iurx
returned its verdict, which is incorporated herein as if set forth in full.
On January 30, 2014, defendant Ted B. Lyon, III, filed his motion requesting the Court to
disregard the jmy 's answer to ~aestion No. 4. en S"ptember 21}, 2()14, !'lain tiff Building
Galveston, Inc. moved for judgment based on the jury's verdict. The Court conducted a hearing
on those motions on December 16, 2014. The Court, having heard and considered all of the
above, is of the opinion that defendant's Motion to Disregard should he DENTED
Thereafter, on February 5, 2015, Plaintiff filed its Application for Attorney's Fees. On
April 9, 20 I 5, Plaintiff filed its First Supplemental Petition. On April I 0, 2015, Defendants filed
98
their Objections to the Application and the filing of the Supplemental Petition. On Aprill7,
2015, th@ Court R@ard @Yid@nC@ and argum@nt of counsel in regard to the issues concerning
attorney's fees.
At the hearing, Plaintiff sought leave of court to file its First Supplemental Petition, to
which Defendants objected. The Court denied Plaintiff leave to file the supplemental petition on
the record at the hearing as such petition was untimely. On request for reconsideration urged by
Plaintiff in its post-hearing briefing and in consideration ofthe briefing supplied by both parties
following the heating, the Comt hereby DENIES the Plaintiffs oral motion fm leave to file its
First Supplemental Petition.
At the hearing, Defendants made objections to the evidence which the Court took under
advisement. The Court makes the following rulings on the objections:
I. Defendants objected to Plaintiffs presentation of evidence on presentment
claiming that Plaintiff' failed to plead presentment. The Court SUSTAINS that
~J .~ \JUler ~~ ~ eviaence or
presentment as such evtdence would be melevant.
2. Defendants objected to Plaintiffs presentation of evidence on attorney's fees to
the Court arguing that Plaintiff's application for attorney's fees requested fees
solely under TEX. CIV. PRAC. & REM. CODE$ 38 001 The Court OVERRULES
that objection because the pleadings properly allege attorney's fees under more
than one statute, and Defendants had fair notice of Plaintiffs. pleadings on
attorney's fees. Moreover, before Plaintiffs filed the Application for Attorney's
Fees, the parties agreed in open court that they would submit the issue of
attorney's fees to the Court after the jury verdict.
The Court, havmg heard and constdered all of the above, IS of the opm10n that Plamtlff's
Motion for Judgment should be GRANTED and attorney's fees should be awarded to Plaintiff
under TEX. PROP. CODE§ 53.156AND TEX Ciy PRAC & REM CODE§ 12 002
99
.
'
Defendants' Cross-Claims
Witfl fespest te I)e!enaants byen PFepefties & 8ustem Hames, bb8 dfb/a byen
Construction Services and Ted B. Lyon, III's claims for breach of contract against Plaintiff
Building Galveston, Inc. the Court ENTERS JUDGMENT in favor of Plaintiff Building
Galveston, Inc. and against Defendants Lyon Properties & Custom Homes, LLC d/b/a Lyon
Construction Services and Ted B. Lyon, III. Defendants Lyon Properties & Custom Homes, LLC
d/b/a Lyon Construction Services and Ted B. Lyon, III shall TAKE NOTHING by those claims.
Plaintiff's Breach of Contract Clatms
With respect to Plaintiff Building Galveston, Inc.'s claim against Defendants Lyon
Properties & Custom Homes, LLC d/b/a Lyon Construction Services and Ted B. LyQn, III fQ[
breach of contract; based on the jury's verdict the Court ENTERS JUDGMENT in favor of
Plaintiff Building Galveston, Inc. against Defendant Ted B. Lyon, III. It is ADJUDGED that
l'laintifffiailding Y,~UO.JU.
It is further ADJUDGED that Building Galveston, Inc., Plaintiff, recover from Defendant
Ted B. Lxon, III, attQrney's fees in tbe amount of"$142,556 42.
101
Attorney's Fees on Appeal
Ihe ColU;t find~ that I'laintift'I:luiiE!ing Galveston, Ine. will inellf fttfthef attemey's rees iu
the event that Defendants appeal this judgment to the court of appeals and the Texas Supreme
Court.
• The Court finds that in the event Defendant Ted B. Lyon. lll takes an unsuccessful appeal
to the Court of Appeals, Plaintiff will incur an additional $20,000.00 in attorney's fees.
• The Court finds that in the event Defendant Ted B. Lyon, III files a Petition for Review
in the Texas Supreme Court followmg an unsuccessful appeal, Plamtlft wtll mcur an
additional $10,000.00 in attorney's fees.
• The Court finds that in the exent the Iexas Supreme Court requests briefing en th<> mefits
Plaintiff will incur an additional $10,000.00 in attorney's fees.
• The Court finds that in the event oral argument is requested by the Texas Supreme Court,
Ptamtlftwtll mcur an aaa1ttonal $7,500.00 m attorney's fees.
It is therefore further ADJUDGED that Building Galveston, Inc, Plaintiff, recover from
Defendant Ted B. Lyon, III:
• the additional sum of $20,000.00 as attorney's fees in the event that Defendant Ted B.
Lyon, III takes an unsuccessful appeal to the Court of Appeals;
• the additic:mal sum et' $Hl,QQQ.Q() as attemey's rees in the e 1ent that Bereudant 'f.,d fl .
Lyon, III files a Petition for Review to the Texas Supreme Court that is denied;
• the additional sum of$10,000.00 as attorney's fees in the event that Defendant Ted B .
Lyon, III's Petition for Review to the Texas Supreme Court is denied after hriefing on the
merits is requested by the Court; and
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• the additional sum of$7,500.00 as attorney's fees in the event that Defendant Ted B .
byen, HI's Petitien for R:e~iew to tire 'fexas Supreme eourt is denied after oral argument
in the Texas Supreme Court
It is further ADJUDGED that Building Galveston, Inc., Plaintiff, recover from Defendant
Ted B. Lyon, III its costs of court herein; and that this Judgment shall bear 1nterest at the statutory
rate of five percent (5%) per annum on the total amount of the Judgment from the date of this
Judgment until paid.
It is ORDERED that Plaintiff shall have all writs of execution and other process
necessary to enforce this judgment.
'fhisjudgrnent corrects the Judgment of!VIay !9, 20!5, fmally arsposes oi all parties ana
all claims, and is appealable. Any relief requested by any party not granted herein is hereby
DENIED.
SIGNED and ORDERED entered on ~~~b!z'"' l
n '2015.
.,.;;:::.· -~
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Han. Michelle M. Slaughter, District Judge
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