Jack Corey and Corey Supply v. Jonathan L. Rankin and RAMS Aviation Company, Inc. ( 2018 )

Affirmed as Modified in Part, Reversed and Remanded in Part, and
Memorandum Opinion filed November 13, 2018.
In The
Fourteenth Court of Appeals
NO. 14-17-00752-CV
JACK COREY AND COREY SUPPLY, INC., Appellants
V.
JONATHAN L. RANKIN AND RAMS AVIATION COMPANY, INC.,
Appellees
On Appeal from the 506th District Court
Grimes County, Texas
Trial Court Cause No. 31919
MEMORANDUM OPINION
Appellees Jonathan L. Rankin and RAMS Aviation Company, Inc.
(collectively, the “Rankin Appellees”) sued appellants Jack Corey and Corey
Supply, Inc. (collectively, the “Corey Appellants”) to recover the outstanding
balance owed for helicopter repair services. The parties proceeded to trial and the
jury returned a verdict in favor of the Rankin Appellees; attorney’s fees were tried
to the bench. The trial court signed a final judgment awarding the Rankin Appellees
$6,833.36 in actual damages and $46,957 in attorney’s fees.
The Corey Appellants raise ten issues on appeal challenging the trial court’s
final judgment based on asserted errors in the jury charge and the relief awarded in
the final judgment. We affirm the trial court’s judgment as modified in part, reverse
in part, and remand for further proceedings consistent with this opinion.
BACKGROUND
I. Facts
Rankin owns and operates RAMS Aviation Company, Inc., which provides
helicopter repair services. Corey hired RAMS to inspect his helicopter and perform
any necessary repairs. Rankin estimated the cost for this work at $49,149.41; of this
total, he estimated that the parts would cost $37,292.94. Corey paid up-front for
parts and agreed to pay the remaining balance when the repairs were completed.
According to Rankin, Corey’s helicopter required more work than initially
estimated. Rankin testified that he had several discussions with Corey over the
ensuing months regarding the scope of the helicopter’s repairs. Rankin could not
recall whether he provided Corey with an update on the expected cost of completion.
When Corey arrived to pick up the helicopter, Rankin presented Corey with a
final invoice totaling $32,000. The invoice included 257 hours of labor.
Rankin testified that Corey was upset when he received the final invoice and
discussed with Rankin the parts and labor required for the job. Rankin testified that
Corey “alluded to the fact that he could disrupt [Rankin’s] flow of work if [Rankin]
didn’t work things out with him.” Rankin discounted the labor costs “to a point that
was acceptable” to Corey and altered the invoice to include only 100 hours of labor.
The total amount for the adjusted final invoice equaled $19,833.36. Corey and
Rankin “shook hands” and Corey said he would wire the money to Rankin’s account.
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After Corey wired $13,000 to Rankin’s account, Rankin called Corey to
inquire about the remaining balance. Rankin testified that Corey said “[h]e had
decided that that was going to be all that he was going to pay me for on that.” Rankin
filed a lien on Corey’s helicopter for the $6,833.36 remaining on the final invoice.
Rankin did not attempt to foreclose on the lien.
II. Legal Proceedings
The Rankin Appellees sued the Corey Appellants in November 2010 and
asserted claims for breach of contract; promissory estoppel; suit on a sworn account;
quantum meruit; unjust enrichment; conversion; fraud; and negligent
misrepresentation. The Corey Appellants answered and asserted counterclaims for
unfair debt collection practices and wrongful filing of a mechanic’s lien.
The parties proceeded to a jury trial in April 2017. Rankin and Corey testified
at trial. Numerous exhibits were admitted at trial but the exhibits were “not
requested for the appellate record.”
At the close of the Rankin Appellees’ case, the Corey Appellants moved for
a directed verdict on all of the appellees’ claims. The trial court granted a directed
verdict on the Rankin Appellees’ claims for breach of contract; promissory estoppel;
quantum meruit; conversion; fraud; and negligent misrepresentation. The trial court
denied the Corey Appellants’ motion for a directed verdict with respect to the
appellees’ claim for suit on a sworn account.
After the parties rested, the jury was presented with a seven-question jury
charge. The first three questions appear to submit a breach of contract question:
Question 1:
Did RAMS Aviation and Jack Corey agree that RAMS Aviation would
perform maintenance and repair services on and provide parts for the Aircraft?
Answer “Yes” OR “No”: ________
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Instructions:
In deciding whether the parties reached an agreement, you may consider what
they said and did in light of the surrounding circumstances, including any
earlier course of dealing. You may not consider the parties’ unexpressed
thoughts or intentions. If you find that the services provided by RAMS
Aviation comported with trade[,] custom and usage that actually existed in the
aviation industry, then you can consider it in determining the parties’ intent.
Instructions for Questions 2 and 3:
A failure to comply must be material. The circumstances to consider in
determining whether a failure to comply is material include:
1. the extent to which the injured party will be deprived of the benefit
which he reasonably expected;
2. the extent to which the injured party can be adequately compensated
for the part of that benefit of which he will be deprived;
3. the extent to which the party failing to perform or to offer to perform
will suffer forfeiture;
4. the likelihood that the party failing to perform or to offer to perform
will cure his failure, taking into account the circumstances including
any reasonable assurances;
5. the extent to which the behavior of the party failing to perform or to
offer to perform comports with standards of good faith and fair dealing;
6. the extent to which RAMS Aviation did not perform the maintenance
and repair services in a reasonable amount of time.
If you answered “Yes” to Question 1, then answer Question 2. Otherwise, do
not answer Question 2.
Question 2:
Did Jack Corey fail to comply with the Agreement?
Answer “Yes” or “No”: ________
Question Nos. 1 and 2 track Texas Pattern Jury Charges 101.1 and 101.2 addressing
a breach of contract claim. See Comm. on Pattern Jury Charges, State Bar of Tex.,
Texas Pattern Jury Charges: Business PJC 101.1, 101.2 (2016). The jury answered
“Yes” to Question No. 1 and “Yes” to Question No. 2.
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Question No. 4 asked the jury to respond with a “sum of money” that “would
fairly and reasonably compensate RAMS Aviation for its damages, if any, that
resulted from Jack Corey’s failure to comply with the Agreement[.]” The jury
answered “$3,416.68” in response to Question No. 4.
Question No. 5 appears to submit a quantum meruit claim:
Question No. 5:
Did RAMS Aviation perform compensable work for Jack Corey?
One party performs compensable work if valuable services are rendered
or materials furnished for another party who knowingly accepts and
uses them and if the party accepting them should know that the
performing party expects to be paid for the work.
Answer “Yes” or “No”: ________
Question No. 5 tracks Texas Pattern Jury Charge 101.42 addressing a quantum
meruit claim. See id. at 101.42 (2016). The jury answered “Yes” to Question No. 5
and, for Question No. 6, responded with “$6,833.36” as “the reasonable value of
such compensable work at the time and place it was performed[.]”
The parties submitted the issue of attorney’s fees to the trial court. The trial
court signed a final judgment on May 17, 2017, awarding the Rankin Appellees
$6,833.36 in actual damages; pre-judgment interest at the rate of 5%; post-judgment
interest at the rate of 18%; $46,957 in attorney’s fees; and $888 in court costs.
The Corey Appellants filed a post-verdict motion entitled “Defendants
Objections to Plaintiffs’ Proposed Judgment and Judgment Not Withstanding the
Verdict.” The trial court denied the Corey Appellants’ post-verdict motion. The
Corey Appellants timely appealed.
ANALYSIS
The Corey Appellants assert a variety of arguments on appeal challenging
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(1) the jury charge; (2) the $46,957 attorney’s fees award included in the final
judgment; and (3) other aspects of the trial court’s final judgment.
With respect to the jury charge, the Corey Appellants assert that the trial court
erred by including questions assessing Corey’s liability for breach of contract and
quantum meruit. The Corey Appellants contend that these claims should not have
been submitted to the jury because the trial court previously had granted the Corey
Appellants’ motion for a directed verdict on these causes of action. The Corey
Appellants also assert that the quantum meruit question included in the jury charge
did not comport with the format recommended in the Texas Pattern Jury Charge.
Turning to the $46,957 attorney’s fees award, the Corey Appellants argue that
(1) the trial court abused its discretion by failing to grant the Corey Appellants’
objections to the Rankin Appellees’ attorney’s fees evidence; (2) the Rankin
Appellees failed to segregate their attorney’s fees evidence between claims for
which fees were recoverable and claims for which they were not; and (3) the trial
court’s attorney’s fees award is not reasonable and necessary.
The Corey Appellants’ remaining challenges to the trial court’s final judgment
assert that the judgment erroneously includes (1) certain parties; (2) court costs;
(3) mediation costs; and (4) an 18% post-judgment interest rate.
We address these contentions in turn.
I. Jury Charge
Pointing out that the trial court granted their motion for a directed verdict with
respect to the Rankin Appellees’ breach of contract and quantum meruit claims, the
Corey Appellants assert that the trial court erred by submitting to the jury questions
assessing appellants’ liability for these causes of action. The Corey Appellants also
assert that Question No. 5 did not comport with the Texas Pattern Jury Charge
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question for a quantum meruit claim.
The Rankin Appellees argue that the Corey Appellants failed to object to these
errors in the trial court as necessary to preserve them for our review.
To preserve a charge error complaint for appellate review, a party must “point
out distinctly the objectionable matter and the grounds of the objection.” Tex. R.
Civ. P. 274; see also Bruce v. Cauthen, 515 S.W.3d 495, 511 (Tex. App.—Houston
[14th Dist.] 2017, pet. denied). Charge error is preserved for appeal if the party’s
argument on appeal corresponds with its argument in the trial court. Bruce, 515
S.W.3d at 511. “A judgment shall not be reversed because of the failure to submit
other and various phases or different shades of the same question.” Tex. R. Civ. P.
278.
Objections not raised before the charge is read to the jury generally are
waived. Tex. R. Civ. P. 272; see also King Fisher Marine Serv., L.P. v. Tamez, 443
S.W.3d 838, 843 (Tex. 2014); Mo. Pac. R.R. Co. v. Cross, 501 S.W.2d 868, 873
(Tex. 1973).
“But a party is not required to object to the charge to complain later that a
finding is immaterial.” Superior Laminate & Supply, Inc. v. Formica Corp., 93
S.W.3d 445, 450 (Tex. App.—Houston [14th Dist.] 2002, pet. denied); see also BP
Am. Prod. Co. v. Red Deer Res., LLC, 526 S.W.3d 389, 402 (Tex. 2017). A jury
finding is immaterial if the question “‘should not have been submitted, or when it
was properly submitted but has been rendered immaterial by other findings.’” USAA
Tex. Lloyds Co. v. Menchaca, 545 S.W.3d 479, 506 (Tex. 2018) (quoting Spencer v.
Eagle Star Ins. Co. of Am., 876 S.W.2d 154, 157 (Tex. 1994)).
Issues of immateriality may be preserved in a post-verdict motion. See BP
Am. Prod. Co., 526 S.W.3d at 402; see also Dunnagan v. Watson, 204 S.W.3d 30,
7
40 (Tex. App.—Fort Worth 2006, pet. denied) (immateriality challenge raised for
the first time in a motion to disregard jury findings preserved issue for appellate
review). An objection need not specifically assert “immateriality” to preserve the
moving party’s argument on this point. See Nat’l Plan Adm’rs, Inc. v. Nat’l Health
Ins. Co., 235 S.W.3d 695, 704 (Tex. 2007) (immateriality argument preserved even
though the appellant’s objection did not assert “that the jury question was defective”
but only that it “should not have been submitted” at all); Superior Laminate &
Supply, Inc., 93 S.W.3d at 449-50 (appellant’s post-verdict motions preserved
immateriality argument where motions asserted that “any findings on [the
challenged] claim should be disregarded”).
We apply these precepts to the Corey Appellants’ arguments challenging the
trial court’s jury charge.
A. Error Preservation
1. Breach of contract
Question Nos. 1 and 2 appear to submit a claim assessing Corey’s liability for
breach of contract. See Comm. on Pattern Jury Charges, State Bar of Tex., Texas
Pattern Jury Charges: Business PJC 101.1, 101.2 (2016). The trial court previously
had granted the Corey Appellants’ motion for a directed verdict on the Rankin
Appellees’ breach of contract claim.
At the charge conference, the Corey Appellants did not object to Question
Nos. 1 and 2 based on the trial court’s prior directed verdict. The Corey Appellants’
only objection to these questions addressed the “trade custom and usage” instruction
included after Question No. 1; appellants asserted that “[t]here’s been no evidence
that Mr. Corey is under a trade, custom and usage guideline, that RAMS would be
under or that there’s a history of this type of agreement[] between each other.” This
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objection did not preserve the Corey Appellants’ contention that Question Nos. 1
and 2 should not have been submitted to the jury. See Tex. R. Civ. P. 274; see also
USAA Tex. Lloyds Co., 545 S.W.3d at 506.
The Corey Appellants’ post-verdict motion challenged the submission of
Question Nos. 1 and 2 on grounds that “the Court granted [the Corey Appellants’]
motion for directed verdict as to [the Rankin Appellees’] breach of contract claim.”
This post-verdict objection preserves for our review the Corey Appellants’
immateriality challenge to Question Nos. 1 and 2. See BP Am. Prod. Co., 526
S.W.3d at 402; Nat’l Plan Adm’rs, Inc., 235 S.W.3d at 704; see also Superior
Laminate & Supply, Inc., 93 S.W.3d at 449-50.
A directed verdict is proper if the evidence is such that no other verdict could
be rendered and therefore the moving party is entitled to judgment as a matter of
law. Tanglewood Homes Ass’n, Inc. v. Feldman, 436 S.W.3d 48, 66 (Tex. App.—
Houston [14th Dist.] 2014, pet. denied). When the trial court grants a directed
verdict on a plaintiff’s claim, that claim should not be submitted to the jury. See,
e.g., Hunt v. Baldwin, 68 S.W.3d 117, 133 (Tex. App.—Houston [14th Dist.] 2001,
no pet.).
Here, because the trial court previously had granted a directed verdict on the
Rankin Appellees’ breach of contract claim, this claim should not have been
submitted to the jury. See Tanglewood Homes Ass’n, Inc., 436 S.W.3d at 66; Hunt,
68 S.W.3d at 133. Question Nos. 1 and 2 therefore were immaterial and should not
have been included in the jury charge. See USAA Tex. Lloyds Co., 545 S.W.3d at
506.
2. Quantum meruit
The Corey Appellants assert on appeal two challenges to the trial court’s
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submission of Question No. 5: (1) Question No. 5 should not have been submitted
in light of the trial court’s directed verdict on the Rankin Appellees’ quantum meruit
claim; and (2) Question No. 5 did not comport with the Texas Pattern Jury Charge’s
recommended form for a quantum meruit claim. See Comm. on Pattern Jury
Charges, State Bar of Tex., Texas Pattern Jury Charges: Business PJC 101.42.
In the underlying proceedings, the Corey Appellants objected to Question No.
5 at the charge conference and in a post-verdict motion. At the charge conference,
the Corey Appellants asserted three objections: (1) Question No. 5 is not proper in
a suit on a sworn account; (2) Question No. 5 is duplicative of Question No. 1; and
(3) “there has been no evidence of any compensable work done” for the Rankin
Appellees. In their post-verdict motion, the Corey Appellants asserted that Question
No. 5 “fails to conform with the Texas Pattern Jury Charge (PJC 101.42).”
With respect to the Corey Appellants’ first challenge, the charge conference
objections do not preserve their contention that Question No. 5 should not have been
submitted in light of the trial court’s earlier directed verdict. The Corey Appellants’
charge conference objections do not mention the trial court’s directed verdict; they
assert error on other grounds. The third objection challenges the submission of
Question No. 5 on “no evidence” grounds, but the Corey Appellants do not advance
this argument on appeal — they instead acknowledge that compensable work was
performed. The third objection does not correspond with the arguments made on
appeal and does not preserve anything for our review. See Tex. R. Civ. P. 274;
Bruce, 515 S.W.3d at 511.
Likewise, the Corey Appellants’ post-verdict objection to Question No. 5 does
not preserve the Corey Appellants’ immateriality challenge based on the trial court’s
directed verdict. See Tex. R. Civ. P. 274; Bruce, 515 S.W.3d at 511. The Corey
Appellants’ post-verdict objection challenges Question No. 5 only with respect to its
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form.
The Corey Appellants’ second post-verdict challenge asserts error in Question
No. 5’s form based on the Texas Pattern Jury Charge; this error was not raised before
the charge was read to the jury. See Tex. R. Civ. P. 272, 274; King Fisher Marine
Serv., L.P., 443 S.W.3d at 843; Mo. Pac. R.R. Co., 501 S.W.2d at 873. Although
this error was raised in the Corey Appellants’ post-verdict motion, error with respect
to a jury question’s form is waived if the objection is not asserted before the charge
is read to the jury. See King Fisher Marine Serv., L.P., 443 S.W.3d at 843; Mo. Pac.
R.R. Co., 501 S.W.2d at 873.
We overrule the Corey Appellants’ objections to the trial court’s submission
of Question No. 5.
B. Effect of Charge Error
We conclude that the trial court erred by submitting to the jury Question Nos.
1 and 2 — these questions submitted a breach of contract claim on which the trial
court previously had granted the Corey Appellants’ motion for a directed verdict.
Because of this error, the Corey Appellants argue that the jury’s answers in response
to these questions “should have no effect on the Final Judgment.”1
Error in the submission of an issue generally is deemed to be harmless where
the jury’s findings with respect to other issues are sufficient to support the judgment.
Hatfield v. Solomon, 316 S.W.3d 50, 63 (Tex. App.—Houston [14th Dist.] 2010, no
1
In their response to the Corey Appellants’ argument, the Rankin Appellees assert that
“the trial court erred in granting directed verdicts on Rankin’s claims.” The Rankin Appellees did
not file a notice of appeal in the trial court as required to challenge the directed verdicts on appeal.
See Tex. R. App. P. 25.1(c); see also Kwik Indus., Inc. v. Rock Prairie Holdings, Ltd., No. 05-13-
00054-CV, 2015 WL 1449902, at *11 (Tex. App.—Dallas Mar. 30, 2015, no pet.) (mem. op.)
(because the appellees did not file a notice of appeal, they could not challenge on appeal the trial
court’s order granting the appellants’ motion for a directed verdict). We do not address the Rankin
Appellees’ arguments challenging the directed verdicts.
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pet.). If a final judgment is supported by the jury’s findings with respect to a viable
theory of liability, then submission of an improper jury question is harmless. See
Gilbert Wheeler, Inc. v. Enbridge Pipelines (E. Tex.), L.P., 449 S.W.3d 474, 486
(Tex. 2014).
Here, the trial court’s final judgment “render[s] judgment in favor” of the
Rankin Appellees and awards the appellees $6,833.36 in actual damages. This
amount corresponds to jury’s finding in response to Question No. 6, which asked the
jury to provide “the reasonable value” of compensable work performed by RAMS
Aviation for Corey as found in response to Question No. 5. The $6,833.36 damages
award was not dependent on the jury’s responses to Question Nos. 1 and 2, which
submitted the Rankin Appellees’ breach of contract claim. The $6,833.36 damages
award also was not dependent on the jury’s damages finding in response to Question
No. 4, which was predicated on the jury’s affirmative findings in response to
Question Nos. 1 and 2.
Considering the jury charge as a whole, the judgment in favor of the Rankin
Appellees and the $6,833.36 actual damages award were not based on an invalid
theory of liability. See Gilbert Wheeler, Inc., 449 S.W.3d at 486. Therefore, any
error in the trial court’s submission of Question Nos. 1 and 2 was harmless. See
Hatfield, 316 S.W.3d at 63.
II. Attorney’s Fees
After the jury returned its verdict, the trial court held a brief discussion with
the parties’ counsel regarding attorney’s fees. The trial court instructed the Rankin
Appellees’ counsel as follows:
[I]f you would prepare a proposed judgment in draft form, obviously
leaving blank the attorney’s fees so that we can start working with that.
Then go ahead and present the attorney’s fees affidavit that we had
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agreed upon earlier at the beginning of this.
The trial court gave the Rankin Appellees’ counsel two weeks to prepare the
attorney’s fees submission; the trial court “allow[ed] an extra ten days for [the Corey
Appellants’ counsel] to respond” and “file any objections on the attorney’s fees.”
Two weeks later, the Rankin Appellees filed an affidavit from Gary L. Evans,
one of appellees’ attorneys and appellees’ designated attorney’s fees expert.
Included with Evans’s affidavit were billing records showing the legal work
completed and expenses associated with the Rankin Appellees’ representation; the
billing records include time entries from November 2010 through April 2017 and
list $46,957 in fees and $1,088.62 in expenses. The Corey Appellants objected to
the attorney’s fees evidence in a filing entitled “Defendants Objections, Motion to
Strike and Response to Plaintiff’s Affidavit on Attorney’s Fees.” The trial court
signed an order denying the Corey Appellants’ requested relief.
The trial court’s final judgment awards the Rankin Appellees $46,957 in
attorney’s fees and $888 in court costs. The final judgment also provides the
following contingent appellate attorney’s fees awards: $5,000 if the Corey
Appellants unsuccessfully seek a new trial; $5,000 if the Corey Appellants
unsuccessfully appeal the judgment to an intermediate court of appeals; and $3,500
if the Corey Appellants unsuccessfully appeal the judgment to the Supreme Court of
Texas.
The Corey Appellants assert a variety of arguments challenging the trial
court’s attorney’s fees award. These arguments can be grouped into three main
categories: (1) the trial court abused its discretion by failing to grant the Corey
Appellants’ objections to the Rankin Appellees’ attorney’s fees evidence; (2) the
Rankin Appellees failed to segregate their attorney’s fees evidence between claims
for which fees were recoverable and claims for which they were not; and (3) the trial
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court’s attorney’s fees award is not reasonable and necessary.
We address these contentions below.
A. Evidentiary Objections
The Corey Appellants assert evidentiary challenges with respect to
(1) Evans’s expert designation; (2) the Rankin Appellees’ failure to produce billing
records until they were included with Evans’s affidavit; and (3) the final judgment’s
contingent appellate attorney’s fees awards. These objections were asserted in the
Corey Appellants’ “Objections, Motion to Strike and Response to Plaintiff’s
Affidavit on Attorney’s Fees,” which the trial court denied in a signed order. These
objections are preserved for our review. See Trevino v. City of Pearland, 531 S.W.3d
290, 299-300 (Tex. App.—Houston [14th Dist.] 2017, no pet.) (in a bench trial on
attorney’s fees, error is preserved with respect to evidentiary objections if the
complaint is presented to the trial court and a ruling is secured).
1. Evans’s expert designation
The Rankin Appellees designated Evans as their attorney’s fees expert in
March 2012, approximately five years before trial. Citing Texas Rule of Civil
Procedure 194.2, the Corey Appellants assert that Evans’s designation is deficient
in two respects.
First, the Corey Appellants assert that Evans’s designation fails to include “the
general substance of [Evans’s] mental impressions and a brief summary of the basis
for them . . . .” See Tex. R. Civ. P. 194.2(f)(3). Evans’s expert designation provides
the following summary with respect to his testimony:
[Evans] may testify as [an] expert[] concerning attorney’s fees incurred
in this case. The general substance of such testimony is that Rankin has
been forced to incur reasonable and necessary attorney’s fees and legal
expenses, which are increasing as this litigation progresses. These
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opinions are based upon [Evans’s] experience as [an] aviation trial
attorney[] in Texas, [his] familiarity with the facts and circumstances
of this case, and consideration of those factors mandated in Texas State
Bar Rule 1.04(b).
Evans’s expert designation states that his curriculum vitae is attached.
The Corey Appellants do not cite any cases to support their contention that
the description included with Evans’s expert designation fails to satisfy Rule
194.2(f)(3)’s requirements. A disclosure identifying an attorney’s fees expert and
stating that the expert will be testifying about the reasonableness and necessity of
attorney’s fees is sufficient to give the “general substance” of that expert’s
testimony. See Goldman v. Olmstead, 414 S.W.3d 346, 365 (Tex. App.—Dallas
2013, pet. denied); see also DDR DB Stone Oak, LP v. Rector Party Co., No. 04-17-
00018-CV, 2017 WL 6032541, at *6 (Tex. App.—San Antonio Dec. 6, 2017, no
pet.) (mem. op.). The description included with Evans’s designation satisfies this
standard. See Goldman, 414 S.W.3d at 365; see also DDR DB Stone Oak, LP, 2017
WL 6032541, at *6. We overrule the Corey Appellants’ first challenge to Evans’s
expert designation.
Second, the Corey Appellants assert that Evans’s expert designation did not
include billing records and therefore failed to include “all documents, tangible
things, reports, models, or data compilations” Evans reviewed or prepared in
preparation for his testimony. See Tex. R. Civ. P. 194.2(f)(4)(A).
We previously have held that an expert may testify as to attorney’s fees even
if the underlying billing records were not produced in response to discovery requests.
See Schlager v. Clements, 939 S.W.2d 183, 193 (Tex. App.—Houston [14th Dist.]
1996, writ denied); see also Young v. Leach, No. 14-03-00071-CV, 2004 WL
1925967, at *7 (Tex. App.—Houston [14th Dist.] Aug. 31, 2004, pet. denied) (mem.
op.). Therefore, the failure to produce billing records with Evans’s expert
15
designation does not warrant excluding Evans’s testimony altogether. See Schlager,
939 S.W.2d at 193; see also Young, 2004 WL 1925967, at *7. We overrule the
Corey Appellants’ second challenge to Evans’s expert designation.
2. The billing records included with Evans’s affidavit
Asserting that the trial court erred by failing to exclude the billing records
included with Evans’s affidavit, the Corey Appellants contend that the Rankin
Appellees failed to produce the billing records (1) in response to the Corey
Appellants’ requests for disclosure; (2) in response to the Corey Appellants’ requests
for production; and (3) with Evans’s expert designation as documents reviewed by
a testifying expert. See Tex. R. Civ. P. 194.2(f), 196.1. The Corey Appellants argue
that the billing records therefore were subject to mandatory exclusion under Texas
Rule of Civil Procedure 193.6.
Rule 193.6 prohibits a party from offering evidence not timely disclosed in a
discovery response unless the trial court finds that (1) there was good cause for the
failure to timely make, amend, or supplement the discovery response; or (2) the
failure to timely make, amend, or supplement the discovery response will not
unfairly surprise or unfairly prejudice the other party. Tex. R. Civ. P. 193.6(a); see
also Moore v. Mem’l Hermann Hosp. Sys., Inc., 140 S.W.3d 870, 874 (Tex. App.—
Houston [14th Dist.] 2004, no pet.). The burden of establishing good cause or lack
of unfair surprise or unfair prejudice is on the party seeking to introduce the
evidence. Tex. R. Civ. P. 193.6(b). This rule is intended “to require complete
responses to discovery so as to promote responsible assessment of settlement and
prevent trial by ambush.” Tex. Mun. League Intergovernmental Risk Pool v. Burns,
209 S.W.3d 806, 817 (Tex. App.—Fort Worth 2006, no pet.) (citing Alvarado v.
Farah Mfg. Co., 830 S.W.2d 911, 914 (Tex. 1992)).
By overruling the Corey Appellants’ objections to the Rankin Appellees’
16
billing records, the trial court implicitly found either (1) there was good cause for
the Rankin Appellees’ failure to timely make, amend, or supplement their discovery
responses; or (2) the Rankin Appellees’ failure to timely make, amend, or
supplement their discovery responses did not unfairly surprise or unfairly prejudice
the Corey Appellants. See Tex. R. Civ. P. 193.6; Moore, 140 S.W.3d at 874.
The Rankin Appellees assert on appeal that the Corey Appellants were not
unfairly surprised or unfairly prejudiced by the billing records’ inclusion with
Evans’s affidavit. The record supports this conclusion. Evans’s designation was
provided to the Corey Appellants approximately five years before the parties went
to trial. Evans’s designation clearly stated that he would testify as to the Rankin
Appellees’ attorney’s fees — fees that “increas[ed] as th[e] litigation progresse[d].”
After the jury returned its verdict, Evans’s affidavit and the billing records were filed
with the trial court for its attorney’s fees determination; the Corey Appellants were
given ten days to review the evidence and respond. The record does not indicate
that the Corey Appellants sought a continuance or any additional time to conduct
discovery or depose Evans. This record adequately supports the trial court’s implied
finding that the Rankin Appellees’ failure to timely produce the billing records did
not unfairly surprise or unfairly prejudice the Corey Appellants. See Tex. Mun.
League Intergovernmental Risk Pool, 209 S.W.3d at 817 (party’s failure to produce
billing records did not cause unfair surprise or unfair prejudice where opposing party
was aware of attorney’s fees claim approximately two years before evidence offered
at trial); see also Pike v. Tex. EMC Mgmt., LLC, No. 10-14-00274-CV, 2017 WL
2507783, at *19 (Tex. App.—Waco June 7, 2017, pet. denied) (mem. op.) (untimely
production of billing records did not cause unfair surprise or unfair prejudice where
“the fees corresponded with work associated with trial — largely an event attended
by all parties”).
17
We overrule the Corey Appellants’ challenge to the trial court’s admission of
the billing records included with Evans’s affidavit.
3. Appellate attorney’s fees
The Corey Appellants’ final evidentiary objection asserts that Evans cannot
testify with respect to appellate attorney’s fees because he “cannot testify as an
expert about matters for which he is not designated.” Aside from this conclusory
assertion, the Corey Appellants do not explain how Evans’s expert designation is
deficient nor do the Corey Appellants cite any case law to support their position.
Evans’s expert designation states that he may testify “concerning attorney’s fees”
and that this testimony is based on Evans’s “experience as [an] aviation trial
attorney[] in Texas” and his “familiarity with the facts and circumstances of this case
and the legal fees and expenses which have been necessary to prosecute.” This
designation does not purport to limit Evans’s testimony to attorney’s fees incurred
as part of the trial court proceedings.
We overrule the Corey Appellants’ evidentiary challenge with respect to the
trial court’s award of appellate attorney’s fees.
B. Segregation of Attorney’s Fees Evidence
The Corey Appellants assert that the trial court erred by awarding the Rankin
Appellees $46,957 in attorney’s fees because the appellees did not properly
segregate between recoverable and unrecoverable fees.2 To support their attorney’s
fees claim, the Rankin Appellees submitted to the trial court Evans’s affidavit and
2
The Corey Appellants preserved error on this point by objecting when evidence of
attorney’s fees was presented and considered by the trial court. Tex. R. App. P. 33.1(a)(1); see
also Red Rock Props. 2005, Ltd. v. Chase Home Fin., L.L.C., No. 14-18-00352-CV, 2009 WL
1795037, at *7 (Tex. App.—Houston [14th Dist.] June 25, 2009, no pet.) (mem. op.).
18
billing records. The affidavit and the billing records indicate that $46,957 in total
billable hours were incurred in the Rankin Appellees’ representation. Neither the
affidavit nor the billing records segregate the fees among claims for which fees are
recoverable and claims for which they are not recoverable.
The trial court’s decision as to whether segregation is required is a question
of law we review de novo. Clearview Props., L.P. v. Prop. Tex. SC One Corp., 287
S.W.3d 132, 143 (Tex. App.—Houston [14th Dist.] 2009, pet. denied). If any
attorney’s fees relate solely to claims for which fees are not recoverable, a claimant
must segregate recoverable from unrecoverable fees. Tony Gullo Motors I, L.P. v.
Chapa, 212 S.W.3d 299, 313 (Tex. 2006); Citizens Nat’l Bank of Tex. v. NXS
Constr., Inc., 387 S.W.3d 74, 87 (Tex. App.—Houston [14th Dist.] 2012, no pet.).
But “when discrete legal services advance both a recoverable and
unrecoverable claim[,] . . . they are so intertwined that they need not be segregated.”
Chapa, 212 S.W.3d at 313-14; accord Clearview Props., L.P., 287 S.W.3d at 143.
For this determination “we do not look at the legal work as a whole but parse the
work into component tasks, such as examining a pleading paragraph by paragraph
to determine which ones relate to recoverable claims.” Clearview Props., L.P., 287
S.W.3d at 144. Segregation is required even if merely nominal fees were incurred
for performing a discrete legal service that advanced only a claim for which fees are
unrecoverable. Chapa, 212 S.W.3d at 313-14; see also Home Comfortable Supplies,
Inc. v. Cooper, 544 S.W.3d 899, 910 (Tex. App.—Houston [14th Dist.] 2018, no
pet.).
“The party seeking to recover attorney’s fees bears the burden of
demonstrating segregation is not required.” Clearview Props., L.P., 287 S.W.3d at
144. Segregation is required unless the party seeking fees “proves that no amount
of the fees it seeks were for a discrete legal service that advanced only a claim or
19
claims for which fees are [un]nrecoverable.” Milliken v. Turoff, No. 14-17-00282-
CV, 2018 WL 1802207, at *2 (Tex. App.—Houston [14th Dist.] Apr. 17, 2018, no
pet.) (mem. op.).
Proper fee segregation does not mandate that attorneys keep separate records
documenting the exact time spent working on recoverable versus unrecoverable
claims. Citizens Nat’l Bank of Tex., 387 S.W.3d at 87. “Rather, segregation is
sufficiently established if, for example, an attorney testifies that a given percentage
of the drafting time would have been necessary even if the claim for which attorney’s
fees are unrecoverable had not been asserted.” Id.
Here, the Rankin Appellees’ original petition pleaded claims for breach of
contract; promissory estoppel; suit on a sworn account; quantum meruit; unjust
enrichment; conversion; fraud; and negligent misrepresentation. The Rankin
Appellees do not dispute that attorney’s fees are unrecoverable for some of the
claims pleaded in their original petition. See Chevron Phillips Chem. Co. v.
Kingwood Crossroads, L.P., 346 S.W.3d 37, 69 (Tex. App.—Houston [14th Dist.]
2011, pet. denied) (“attorney’s fees are not recoverable for prosecuting a fraud or
negligent misrepresentation claim”); Broesche v. Jacobson, 218 S.W.3d 267, 277
(Tex. App.—Houston [14th Dist.] 2007, pet. denied) (“[a]ttorney’s fees are
generally not available for a conversion claim”).
The Rankin Appellees do not contend that they segregated their attorney’s
fees. The Rankin Appellees assert only that their fees “cannot reasonably be
segregated as the claims brought by [the Rankin Appellees] are inexplicably
intertwined.”
But “[i]ntertwined facts do not make tort 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.” Chapa, 212 S.W.3d at 313-14.
20
If a discrete legal service does not advance a claim for which fees are recoverable,
then the fees for that service must be segregated even if they are nominal. See id.
The Rankin Appellees did not present any evidence to show that every legal
service that advanced unrecoverable claims also advanced recoverable claims. The
record on appeal does not support this conclusion.
The record instead indicates that discrete legal services were expended to
advance claims for which fees were not recoverable. For example, the Rankin
Appellees’ original petition pleaded separate claims for unjust enrichment,
conversion, fraud, and negligent misrepresentation; pleading these causes of action
required research and drafting specific to these claims. The appellate record also
contains the Rankin Appellees’ responses to the appellants’ interrogatories; the
appellees responded to questions seeking information about claims for which fees
were not recoverable. The Rankin Appellees therefore were required to segregate
their fees between claims for which fees were recoverable and claims for which they
were not. See CA Partners v. Spears, 274 S.W.3d 51, 84 (Tex. App.—Houston [14th
Dist.] 2008, pet. denied) (segregation required where claims for which fees were not
recoverable required “drafting separate portions of [the appellee’s] pleading,”
“separate legal research,” and “possibly separate discovery requests”); 7979 Airport
Garage, L.L.C. v. Dollar Rent A Car Sys., Inc., 245 S.W.3d 488, 509-10 (Tex.
App.—Houston [14th Dist.] 2007, pet. denied) (segregation required for fees
expended to draft pleadings for unrecoverable claim). These fees may be nominal,
but they must be segregated nonetheless. Chapa, 212 S.W.3d at 313-14; see also
Home Comfortable Supplies, Inc., 544 S.W.3d at 910.
Because the Rankin Appellees did not segregate fees over the Corey
Appellants’ objection, we must reverse the trial court’s attorney’s fees award and
remand for a new trial solely on the amount of attorney’s fees. See Chapa, 212
21
S.W.3d at 314; see also Home Comfortable Supplies, Inc., 544 S.W.3d at 912.
As a result of our disposition of this issue, we do not reach the question of
whether the trial court’s attorney’s fees award was reasonable and necessary. See
7979 Airport Garage, L.L.C., 245 S.W.3d at 510.
III. Final Judgment
The Corey Appellants assert five issues challenging the trial court’s final
judgment:
1. The final judgment erroneously awards relief to Rankin because “the
jury did not issue any findings for Jonathan Rankin.”
2. The final judgment erroneously awards relief against Corey Supply,
Inc. because “the jury did not issue any findings against Corey Supply,
Inc.”
3. The final judgment erroneously states the amount of court costs
awarded.
4. The final judgment erroneously includes “a double recovery of $500.00
mediation fees as court costs.”
5. The final judgment erroneously allows for 18% post-judgment interest.
The Corey Appellants asserted these challenges in their post-verdict filing entitled
“Defendants Objections to Plaintiffs’ Proposed Judgment and Judgment Not
Withstanding the Verdict.” These issues are preserved for our review. See Willis v.
Willis, 826 S.W.2d 700, 702 (Tex. App.—Houston [14th Dist.] 1992, no writ); see
also Rooney v. Rooney, No. 14-10-01007-CV, 2011 WL 3684618, at *9 (Tex.
App.—Houston [14th Dist.] Aug. 23, 2011, no pet.) (mem. op.).
A. Relief Awarded to Jonathan Rankin
The trial court’s final judgment awards relief to “Plaintiffs, Jonthan [sic] L.
Rankin and RAMS Aviation Company, Inc.” The Corey Appellants assert that the
final judgment erroneously awards relief to Rankin because “[t]he words ‘Jonathan
22
Rankin,’ ‘Mr. Rankin,’ or ‘Rankin’ do not appear in any jury question.”
“The judgment of the court shall conform to the pleadings, the nature of the
case proved and the verdict . . . .” Tex. R. Civ. P. 301. “The judge may not disregard
answers to material issues, set aside findings and make contrary ones, hear additional
evidence and make supplementary findings on material issues, or select from
conflicting findings those which he approves.” Harris Cty. v. Garza, 971 S.W.2d
733, 735 (Tex. App.—Houston [14th Dist.] 1998, no pet.).
Here, the trial court’s final judgment awards relief to Jonathan Rankin
although he was not included in any of the jury questions assessing liability or
damages — the jury charge assessed liability and damages only with respect to
RAMS Aviation. The trial court’s final judgment does not conform to the jury’s
verdict in this regard. See Tex. R. Civ. P. 301; Harris Cty., 971 S.W.2d at 735. We
sustain the Corey Appellants’ argument and modify the trial court’s final judgment
to delete the relief awarded to Jonathan Rankin. See Tex. R. App. P. 43.2(b); see
also In re Estate of Tyner, 292 S.W.3d 179, 183 (Tex. App.—Tyler 2009, no pet.)
(appellate court has “the authority to modify incorrect judgments when the necessary
information is available” to do so).
B. Relief Awarded Against Corey Supply, Inc.
The Corey Appellants assert that the trial court’s final judgment erroneously
awards relief against Corey Supply, Inc. because “the jury did not issue any findings
against Corey Supply, Inc.” But the final judgment does not award any relief against
appellant Corey Supply, Inc. — it awards relief only against “Defendant Jack
Corey.” We overrule the Corey Appellants’ argument with respect to this issue.
C. Court Costs Included in Final Judgment
The trial court’s final judgment awards the Rankin Appellees “[c]ourt costs in
23
the amount of $888.00 (mediation and filing fees only).” The Corey Appellants
assert that the trial court’s final judgment should not “state[] the amount of court
costs awarded.” The Corey Appellants do not cite any cases to support this
contention. Case law suggests that a final judgment’s award of a specific amount of
court costs is not problematic. See, e.g., Ruder v. Jordan, No. 05-16-00742-CV,
2018 WL 672091, at *4 (Tex. App.—Dallas Feb. 2, 2018, no pet.) (mem. op.). We
overrule the Corey Appellants’ argument with respect to this issue.
D. Mediation Costs Included in Final Judgment
The trial court’s final judgment states that its $888 award of court costs
includes only “mediation and filing fees.” Challenging this award, the Corey
Appellants assert that the Rankin Appellees “already included the $500.00 fee in
[their] request for attorney fees,” and the $500 included with the court costs therefore
constitutes a “double recovery.”
We concluded above that the Rankin Appellees failed to segregate their
attorney’s fees evidence and reversed the trial court’s attorney’s fees award for a
new trial. Because we reversed the trial court’s attorney’s fees award, we do not
reach the issue of whether the attorney’s fees award and court costs include a double
recovery. See 7979 Airport Garage, L.L.C., 245 S.W.3d at 510.
E. Post-Judgment Interest Rate
The trial court’s final judgment provides for the following recovery with
respect to post-judgment interest:
Post-judgment interest on all of the above at the rate of 18%
compounded annually, from the date this judgment is rendered until all
amounts are paid in full.
The Corey Appellants assert that an 18% post-judgment interest rate cannot stand
because “[t]he Court ruled on directed verdict that the parties did not have a written
24
contract.”
The Texas Finance Code provides for a maximum post-judgment interest rate
of 18% on certain contract claims:
A money judgment of a court of this state on a contract that provides
for interest or time price differential earns postjudgment interest at a
rate equal to the lesser of: (1) the rate specified in the contract, which
may be a variable rate; or (2) 18 percent a year.
Tex. Fin. Code Ann. § 304.002 (Vernon 2015); see also Saad v. Valdez, No. 14-15-
00845-CV, 2017 WL 1181241, at *17 (Tex. App.—Houston [14th Dist.] Mar. 30,
2017, no pet.) (mem. op.) (“Texas law authorizes a maximum lawful rate of 18
percent per annum to be applied to a written contract”).
We concluded above that the trial court erred in submitting to the jury
Question Nos. 1 and 2, which submitted a claim assessing Corey’s liability for
breach of contract. We determined that the trial court did not err in submitting
Question No. 5, which assessed Corey’s liability under a quantum meruit theory.
The jury answered “Yes” to Question No. 5 and, in response to Question No. 6,
answered “$6,833.36” for “the reasonable value of such compensable work[.]”
The trial court’s final judgment awards the Rankin Appellees $6,833.36 in
actual damages. This award corresponds to the jury’s determination of liability and
damages in response to the questions submitting the Rankin Appellees’ quantum
meruit claim. But the final judgment’s inclusion of an 18% post-judgment interest
rate is not supported by the jury’s quantum meruit findings — an 18% post-judgment
interest rate only may be assessed for a “money judgment . . . on a contract.” See
Tex. Fin. Code Ann. § 304.002; see also Houston Med. Testing Servs., Inc. v.
Mintzer, 417 S.W.3d 691, 695 (Tex. App.—Houston [14th Dist.] 2013, no pet.) (“a
party generally cannot recover under quantum meruit where there is a valid contract
covering the services or materials furnished” (internal quotation omitted)). Because
25
we conclude that the trial court erred in submitting to the jury questions assessing
the Corey Appellants’ liability for breach of contract, we reverse the trial court’s
final judgment with respect to the applicable post-judgment interest rate and remand
for further action consistent with this opinion. See Hooks v. Samson Lone Star, L.P.,
457 S.W.3d 52, 69-70 (Tex. 2015) (remanding case where judgment included
incorrect post-judgment interest rate).
CONCLUSION
We conclude that the jury charge erroneously included questions assessing
Corey’s liability for breach of contract. Because the trial court’s final judgment is
adequately supported by other jury findings, this error is harmless. The Corey
Appellants did not preserve their challenges to the jury question assessing Corey’s
liability under a quantum meruit theory and we overrule the Corey Appellants’
arguments on this point.
We overrule the Corey Appellants’ evidentiary challenges to the Rankin
Appellees’ attorney’s fees evidence. We conclude that the Rankin Appellees were
required to segregate their attorney’s fees evidence between claims for which fees
were recoverable and claims for which they were not recoverable. We reverse the
trial court’s attorney’s fees award and remand for a new trial. We do not reach the
question of whether the trial court’s attorney’s fees award was reasonable and
necessary.
With respect to the Corey Appellants’ arguments addressing the trial court’s
final judgment, we conclude that the final judgment erroneously awards relief to
Jonathan L. Rankin because he was not included in any jury questions assessing
liability or damages. We modify the trial court’s final judgment to delete the relief
awarded to Jonathan L. Rankin.
26
The final judgment’s inclusion of an 18% post-judgment interest rate also is
in error because the jury’s verdict does not award a money judgment on a contract.
We reverse the trial court’s final judgment with respect to the 18% post-judgment
interest rate and remand for further action consistent with this opinion.
We overrule the Corey Appellants’ remaining challenges to the trial court’s
final judgment.
In sum, we modify the trial court’s final judgment to delete the relief awarded
to Jonathan L. Rankin. We reverse the final judgment with respect to the $46,957
attorney’s fees award and the 18% post-judgment interest rate and remand these
issues for further proceedings consistent with this opinion. We affirm the remainder
of the judgment.
/s/ William J. Boyce
Justice
Panel consists of Justices Boyce, Donovan, and Wise.
27