L&W Supply Corporation D/B/A Building Specialties v. Thomas Kizziah, Individually ( 2022 )

In The
Court of Appeals
Ninth District of Texas at Beaumont
__________________
NO. 09-20-00198-CV
__________________
L&W SUPPLY CORPORATION D/B/A BUILDING SPECIALTIES,
Appellant
V.
THOMAS KIZZIAH, INDIVIDUALLY, Appellee
__________________________________________________________________
On Appeal from the 172nd District Court
Jefferson County, Texas
Trial Cause No. E-204043
__________________________________________________________________
MEMORANDUM OPINION
L&W Supply Corporation (L&W or L&W Supply) sued Thomas
Kizziah (Thomas) on a guaranty he signed to collect a debt incurred by
Kizziah Construction when it charged supplies that it purchased to the
account it opened at L&W Supply. The trial court, however, granted
Thomas’s motion for summary judgment, which was tied to affirmative
1
defenses he raised claiming L&W’s suit against him was barred on
theories of res judicata and collateral estoppel, defenses Thomas asserted
prevented L&W from recovering on Thomas’s guaranty. The trial court
also denied L&W’s motion for summary judgment against Thomas, which
was based on L&W’s claim against Thomas under Thomas’s guaranty.
We conclude the trial court erred in granting Thomas’s motion and
in denying L&W’s. We further conclude that even though L&W Supply
has a right to recover attorney’s fees on its claim on the guaranty, its
proof of fees isn’t sufficient to conclusively prove what amount is a
reasonable and necessary attorney’s fee award on its claim.
For the reasons explained below, we reverse the trial court’s
judgment in favor of Thomas, render judgment for L&W, and remand for
further proceedings on the issue of attorney’s fees and costs.
Background
L&W Supply is a commercial distributor of residential and
commercial building materials. In February 2002, Kizziah Construction
opened an account with L&W Supply. A written agreement governs the
account, and the agreement allows Kizziah Construction to charge the
supplies it bought from L&W to its account. L&W kept a systematic
2
record of what Kizziah Construction charged to the account. The
agreement governing the account required Kizziah Construction to pay
L&W interest at the rate of 1 1/2 percent per month on any outstanding
balance not paid in thirty days after the balance on the account became
due. In a separate agreement signed when Kizziah construction opened
the account, Thomas Kizziah signed a personal guaranty promising he
would pay Kizziah Construction’s debt should it default on its obligations
to L&W on the account.
In December 2018, L&W Supply sued Kizziah Construction for
breaching the credit agreement. In the same suit, L&W sued Thomas for
breaching the guaranty. L&W filed the suit in Jefferson County, Texas,
and the district clerk assigned the case Trial Court Cause Number A-
0203094 and assigned it to the 58th District Court. Although the appeal
before us here is from the 172nd District Court, Thomas’s res judicata
and collateral estoppel defenses are tied to the case L&W Supply filed in
the 58th District Court. Throughout the opinion, we will refer to the case
L&W filed in the 58th District court as either the First Case or the case
filed in the 58th District Court.
3
After Kizziah Construction and Thomas were served in the First
Case, Thomas answered for himself and on behalf of Kizziah
Construction. But since Thomas is not licensed as an attorney, L&W
Supply moved to strike Kizziah Construction’s answer and asked the trial
court to default Kizziah Construction. 1 The judge of the 58th District
Court granted L&W’s request, struck Kizziah Construction’s answer
because Thomas is not a licensed attorney, and entered a default
judgment against Kizziah Construction based on Kizziah Construction’s
failure to file an answer. The order granting the default judgment was
interlocutory, however, because it didn’t dispose of all parties and claims.
But even though the order was interlocutory, the order awards L&W
Supply $61,288 in actual damages based on the debt the trial court found
Kizziah Construction owed L&W on the open account. 2 In the
interlocutory-default judgment in Trial Court Cause Number A-0203094
1The Clerk’s Record doesn’t include a copy of L&W’s combined
Motion to Strike, Motion for Interlocutory Default Judgment, or a
transcript of the hearing that the 58th District Court conducted on
L&W’s motion.
2The amount awarded in the 58th District court is $61,287.98, not
$61,288. But for convenience, unless otherwise stated in the opinion, we
have rounded all monetary figures to whole numbers.
4
(the First Case), the 58th District court also awarded L&W Supply
prejudgment and post-judgment interest, attorney’s fees, and court costs.
In June 2019, L&W Supply nonsuited its claims against Thomas in
the case in the 58th District Court. It did so by filing a notice of nonsuit,
which states that L&W was nonsuiting its claims “without prejudice
against refiling same.” 3 In July 2019, the judge of the 58th District Court
signed an order acknowledging L&W Supply’s nonsuit. That order states
L&W Supply’s “causes of action against Defendant, THOMAS KIZZIAH,
INDIVIDUALLY, are nonsuited without prejudice to refiling same . . .
[making] the Order Granting Interlocutory-Default Judgment . . . a final
order.” 4 By dismissing L&W’s claims against Thomas, the trial court
disposed of all claims it did not resolve in the interlocutory-default
judgment, which addressed L&W’s claim against Kizziah Construction.
So when the trial court signed the order of nonsuit, the nonsuit merged
with the interlocutory-default judgment, making the interlocutory-
default judgment in the First Case final the day the trial court dismissed
3Bold in original.
4Italics and all caps as quoted in the trial court’s order.
5
Thomas from the suit, July 9, 2019. 5 Thus, in the 58th District Court,
L&W Supply recovered a judgement of $61,288 on its claim against
Kizziah Construction under the credit agreement governing its account
with Kizziah Construction, prejudgment interest at eighteen percent (1
1/2 percent per month), post-judgment interest at 5.25 percent (the
amount that was then required by Texas Finance Code section
304.003(c)(1)), plus additional awards of attorney’s fees and costs.
In July 2019, alleging that Kizziah Construction’s debt remained
unpaid, L&W Supply sued Thomas Kizziah in Jefferson County claiming
he breached his obligations to L&W under the guaranty he signed when
Kizziah Construction opened the account. In the second suit, L&W
alleged Thomas was personally liable for the $61,288 Kizziah
Construction owed L&W under the guaranty that he signed in February
2002. 6
5See Wembley Inv. Co. v. Herrera, 11 S.W.3d 924, 926 (Tex. 1999)
(per curiam) (concluding an order nonsuiting the last defendants against
whom the plaintiff had filed claims made an earlier default judgment the
plaintiff took become final when the dismissal disposed of the
outstanding claims).
6L&W’s Original Petition includes breach of fiduciary duty and
breach of trust claims. But in February 2020, L&W Supply nonsuited
these claims.
6
In February 2020, relying on Thomas’s guaranty, L&W moved for
summary judgment. Thomas responded with a cross-motion for summary
judgment of his own. In his cross-motion and relying on the suit and the
judgment signed by the judge of the 58th District Court, Thomas argued
that L&W’s claim under the guaranty was barred by the doctrines of res
judicata and collateral estoppel. Following a hearing, the trial court
denied L&W Supply’s motion and granted Thomas’s cross-motion. The
trial court did not explain the basis of its ruling for either of the motions.
In the brief L&W filed on appeal, it did not separately number its
issues. But for convenience, we will discuss L&W’s issues as follows. On
appeal, L&W complains in its first two issues that the trial court erred
in granting Thomas’s motion for summary judgment because Thomas
failed to meet his summary judgment burden and failed to conclusively
establish that his defenses of res judicata and collateral estoppel barred
its claims under the guaranty. In its third issue, L&W argues the trial
court erred in denying its motion for summary judgment. It asks this
Court to reverse and render judgment in its favor on the guaranty.
After L&W appealed, we noticed that neither of the trial court’s
orders granting the motions for summary judgment stated they were
7
final. The order granting Thomas’s motion also did not order L&W to take
nothing on its claims. 7 When an appellate court “is uncertain about the
intent of the order, it can abate the appeal to permit clarification by the
trial court.” 8 After we abated the appeal, the trial court signed an
amended order, adding language of finality and ordering L&W Supply to
take nothing on its claims. On November 9, 2022, the district clerk filed
a supplemental clerk’s record and we reinstated the appeal.
Standard of Review
We review appeals challenging rulings on motions for summary
judgment de novo. 9 “To prevail on a traditional motion for summary
judgment, the movant must show no material fact issues exist and that
it is entitled to judgment as a matter of law.” 10 We take as true all
evidence favorable to the respondent, and we indulge every reasonable
7Naaman v. Grider, 126 S.W.3d 73, 74 (Tex. 2003). (“An order that
merely grants a motion for judgment is in no sense a judgment itself. It
adjudicates nothing.”).
8Lehmann v. Har-Con Corp., 39 S.W.3d 191, 206 (Tex. 2001).
9Rosetta Res. Operating, LP v. Martin, 645 S.W.3d 212, 218 (Tex.
2022).
10Id.; Tex. R. Civ. P. 166a(c).
8
inference and resolve any doubts in favor of the non-movant. 11 “When
both parties move for summary judgment and the trial court grants one
motion and denies the other, . . . we review both sides’ summary judgment
evidence and render the judgment the trial court should have
rendered.” 12 As those standards apply here, we must resolve three issues
to decide whether the trial court’s judgment should be affirmed. First, do
res judicata and collateral estoppel bar L&W’s claims against Thomas
under the guaranty. 13 Second, if Thomas didn’t prove his affirmative
defenses bar L&W’s suit, we must then decide whether L&W conclusively
proved that Thomas breached the guaranty by failing to pay Kizziah
Construction’s debt based on the agreement he made when he signed the
guaranty. Third, if L&W established it had a right to prevail on its cross-
motion for summary judgment, we must then decide whether L&W
conclusively proved it had a right to recover $13,912 in attorney’s fees to
11Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215
(Tex. 2003).
12Endeavor Energy Res., L.P. v. Energen Res. Corp., 615 S.W.3d 144,
147-48 (Tex. 2020).
13See Eagle Oil & Gas Co. v. TRO-X, L.P., 619 S.W.3d 699, 705-06
(Tex. 2021); Travelers Ins. Co. v. Joachim, 315 S.W.3d 860, 862-63 (Tex.
2010).
9
enforce the guaranty, plus additional fees for representing L&W in this
appeal, plus additional conditional awards of attorney’s fees made
contingent on Thomas exercising his right to appeal.
Analysis
The Arguments in the
Motions For Summary Judgment
We start with Thomas’s motion for summary judgment and the
argument he raised in the trial court. We start there because if Thomas
prevails on his affirmative defenses to the guaranty, the conclusion the
trial court reached, we will not need to reach L&W’s other claims. 14
As mentioned above, Thomas’s motion for summary judgment relies
on his claims of res judicata and collateral estoppel. In turn, those claims
depend on what occurred in the First Case, filed in the 58th District
Court. According to Thomas, even though L&W nonsuited him in the
First Case, L&W through the exercise of due diligence “should have”
pursued its claim against him in the 58th District Court and should not
have dismissed him from that case since its claim under the guaranty
arises from the same transaction as the claims L&W filed against Kizziah
14See Tex. R. App. P. 47.1.
10
Construction and the claim L&W filed against him in the 58th District
Court. Thomas also claimed that in filing a second suit in the 172nd
District Court, L&W is seeking a second judgment on the same debt as
the debt the judgment L&W obtained in the First Case against Kizziah
Construction is based. According to Thomas, L&W seeks “to obtain a
double recovery that the doctrine of res judicata was designed to
prevent.”
As to Thomas’s claim of collateral estoppel, Thomas argued when
he was in the trial court that the judgment in the First Case led to “a
final determination on the merits of its claim.” As a final judgment,
Thomas claimed the judgment has “the same effect as any final judgment
would have after a full trial on the merits.” And Thomas noted that for
collateral estoppel to apply, he needed to prove that under the credit
agreement that he, Kizziah Construction, and L&W were in privity on
the agreement before collateral estoppel applied and barred the suit
L&W filed against him in the 172nd District Court.
In response to Thomas’s claim that it was seeking a double recovery
when it was in the trial court, L&W argued it had not collected against
Kizziah Construction on the judgment it obtained in the 58th District
11
Court. L&W told the 172nd District Court it had not collected on that
judgment “due to the corporation’s undeniably poor financial condition.”
To support that claim, L&W attached evidence to the response it filed to
Thomas’s motion. Generally, speaking, the evidence it filed shows all
Kizziah Construction’s assets have existing liens.
As to Thomas’s defenses of res judicata and collateral estoppel,
L&W argued that it nonsuited its claims against Thomas in the First
Case without prejudice, and that by doing so, it preserved its right to
later refile its claim against him on the guaranty. L&W noted that
because the 58th District Court dismissed L&W’s claims against Thomas
in the First Case without prejudice, its claims in the First Case against
Thomas were never adjudicated on their merits. L&W also pointed out
that the judge in the 58th District Court also defaulted Kizziah
Construction for failing to appear and answer, so even its claims against
Kizziah Construction were not decided on their merits.
In its cross-motion for summary judgment, L&W argued it was
entitled to a judgment against Thomas because he breached the terms of
his guaranty by failing to promptly pay “all monies owed under Kizziah
Construction’s account with L&W.” L&W’s motion further alleged
12
Kizziah Construction’s account “remains unpaid in the principal amount
of $61,2[88].” Among the exhibits L&W included with its motion are
Thomas’s guaranty, the affidavit of L&W’s credit manager, Valerie
Nottage, and an attorney’s fee affidavit, signed by Jason Walker.
In her affidavit, Nottage states she reviewed L&W Supply’s records
on Kizziah Construction’s account. Nottage swore that Kizziah
Construction owes L&W $61,288 after “all just and lawful offsets,
payments, and credits have been allowed[,]” plus interest. But Nottage
didn’t seek to calculate past interest on Kizziah Construction’s account
based on the terms of its credit agreement with L&W, and there is no
summary-judgment evidence that would support a calculation of a
prejudgment interest amount under the terms of the credit agreement
governing the open account. That said, neither party has complained
about that on appeal.
Jason Walker, L&W’s attorney, addressed the attorney’s fees L&W
incurred in his affidavit. Based on his experience (which is set out in his
affidavit), Walker averred that $13,912 represents a reasonable,
necessary, and customary legal fee for the services that he and his firm
rendered on L&W’s behalf through the hearing on L&W’s motion for
13
summary judgment based on the services rendered to L&W from the day
L&W hired Walker’s firm to represent L&W and to collect on the
guaranty.
The Res Judicata Defense
A party relying on res judicata as a defense must present evidence
on these elements of the defense:
(1) a prior final judgment on the merits by a court of competent
jurisdiction;
(2) establish an identity of parties or those in privity with them;
and
(3) establish the second action is based on the same claims as were
raised or could have been raised in the first action. 15
Here, the question is whether a final judgment on the merits of the
guaranty occurred in the case filed in the 58th District Court. As
explained below, we conclude the answer to that question is no.
When the 58th District Court dismissed L&W’s claim against
Thomas in the First Case without prejudice, it placed L&W in the same
position it was in before L&W invoked the jurisdiction of the 58th District
15Amdstadt v. United States Brass Corp., 919 S.W.2d 644, 652 (Tex.
1996).
14
Court just as if it had never filed suit on the guaranty. 16 In Epps v.
Fowler, the Texas Supreme Court explained that res judicata does not
apply when a claim is nonsuited, stating “[w]hen a case is nonsuited
without prejudice, res judicata does not bar relitigation of the same
claims.” 17
Second, the summary-judgment evidence supporting Thomas’s
motion doesn’t show that he, Kizziah Construction, and L&W are in
privity regarding the promises tied to the guaranty. The guaranty
agreement and credit agreement are separate agreements. Kizziah
Construction and L&W are the parties to the credit agreement, while
Thomas and L&W are the parties to the guaranty. Besides involving
different parties, the two agreements involve different promises. For
instance, the credit agreement required Kizziah Construction to pay for
the supplies it bought from L&W under terms that are stated in the
written credit agreement applicable to the open account. Had Thomas not
signed the guaranty, he would not have been personally obligated to pay
16KT Bolt Mfg. Co. v. Tex. Elec. Coop., Inc., 837 S.W.2d 273, 275
(Tex. App.—Beaumont 1992, writ denied).
17Epps v. Fowler, 351 S.W.3d 862, 868 (Tex. 2011).
15
Kizziah Construction’s debt if it defaulted since it was the corporation’s
debt. 18 So Thomas’s liability for the debt tied to breaching the guaranty
rather than to Kizziah Construction’s failure to pay its corporate debt.
On appeal, Thomas does not argue that he, Kizziah Construction,
and L&W are in privity on the guaranty. 19 Yet as to these two
agreements, the summary-judgment evidence in the record shows no
identity of parties or those in privity with them exist. Thomas was
required to do more than merely prove the guaranty and credit
agreement existed and involve a related debt to establish the elements
required to prove res judicata barred L&W’ from suing Thomas for
breaching the guaranty. 20
18See Tex. Bus. Orgs. Code Ann. § 21.223(a)(2).
19For example, Thomas did not plead or prove that Kizziah
Construction was his alter ego. There is also no evidence proving what
ownership interest Thomas has in Kizziah Construction, Inc., and no
evidence showing the office, if any, that Thomas holds in the company.
20See generally Amdstadt, 919 S.W.2d at 653 (explaining privity for
res judicata purposes means the mutual or successive relationship to the
same rights in the property involved in the suit); and see PRIVITY, BLACK’S
LAW DICTIONARY (9th ed. 2009) (defining “privity” as “[t]he connection or
relationship between two parties, each having a legally recognized
interest in the same subject matter (such as a transaction, proceeding, or
a piece of property); mutuality of interest”).
16
To sum up: The trial court erred in granting summary judgment in
Thomas’s favor on his res judicata defense because: (1) Thomas failed to
conclusively prove a prior final judgment on the merits adjudicated L&W
Supply’s breach of guaranty claim, and (2) Thomas failed to prove an
identity of parties or privity exists between the parties in the suit
resulting in the judgment rendered in the 58th District Court and the one
that was before the 172nd District Court. We sustain L&W’s first issue.
The Collateral Estoppel Defense
To prevail on its collateral estoppel defense, Thomas needed to
prove:
(1) the facts sought to be litigated in the second action were
fully and fairly litigated in the first action;
(2) those facts were essential to the judgment in the first
action; and
(3) the parties were cast as adversaries in the first action. 21
On appeal, Thomas didn’t respond to L&W’s argument that he
failed to present summary-judgment proof sufficient to conclusively
establish his collateral estoppel defense. But as discussed before, L&W
didn’t litigate its guaranty claim to a conclusion in the First Case.
21Sysco Food Servs., Inc. v. Trapnell, 890 S.W.2d 796, 801 (Tex.
1994).
17
Instead, that claim—along with its other claims against Thomas—were
dismissed in that case without prejudice. 22 Because the guaranty claim
was not ever “fully and fairly litigated” in the 58th District Court,
collateral estoppel did not bar L&W Supply from refiling its claim against
Thomas on the guaranty.
We conclude the trial court erred in concluding that collateral
estoppel applied to L&W’s claim against Thomas on his guaranty. We
sustain L&W’s second issue.
L&W’s Motion For Summary Judgment
In issue three, L&W argues that because it conclusively proved
Thomas breached the guaranty, the trial court erred in denying its
motion for summary judgment. According to L&W, Thomas never
presented any evidence to dispute L&W’s evidence, which it contends
shows (1) a guaranty owned by L&W exists; (2) Thomas guaranteed
Kizziah Construction’s debt on L&W’s open account; (3) Kizziah
Construction incurred a debt to L&W of $61,288 on the account; and (4)
Thomas failed or refused to pay L&W what it owed under his guaranty.
22Barr v.Resolution Tr. Corp. ex. Rel. Sunbelt Fed. Sav., 837 S.W.2d
627, 628 (1992).
18
“To recover under a guaranty contract, a party must show (1) the
existence and ownership of the guaranty contract, (2) terms of the
underlying contract by the holder, (3) occurrence of conditions upon
which liability is based, and (4) the guarantor’s failure or refusal to
perform the promise.” 23 L&W attached a copy of the credit agreement and
the guaranty to its motion for summary judgment. The agreement states:
The undersigned [Thomas] for consideration do[es] hereby
personally guarantee . . . the full and immediate prompt
payment to L&W . . . of all indebtedness heretofore or
hereafter incurred on the aforesaid account and all attorney’s
fees and expenses incurred to enforce this guarant[y]. 24
L&W’s summary-judgment evidence includes an affidavit from
Valerie Nottage, L&W’s area credit manager. Nottage’s affidavit states
Kizziah Construction owes L&W $61,288, plus interest on its account.
L&W’s evidence supporting its motion for summary judgment includes
Thomas’s answers to L&W’s interrogatories. In his answers, Thomas
“acknowledge[d] that the principal amount of $61,2[88] was owed to
23Ally v. Cmty. Bank of Tex., N.A., No. 09-11-00537-CV, 2012 Tex.
App. LEXIS 3771, at *4-5 (Tex. App.—Beaumont May 10, 2012, no pet.).
24The guaranty Thomas signed is typed in all capital letters. But
since words in uppercase text are generally harder to read, we have
elected to make the text more legible and used lower-case text.
19
[L&W Supply].” Then, in answering the interrogatories Thomas
explained he did not pay the debt because he did not owe it, as “this is
the same debt on which [L&W Supply] has already obtained a signed
Judgment against Kizziah Construction Inc. . . . in the 58th District
Court[.]”
In response to L&W’s motion for summary judgment, Thomas relied
on his claims of res judicata and collateral estoppel. That said, the
evidence he produced to support these defenses didn’t support them
because L&W nonsuited its claims against Thomas on the guaranty in
the 58th District Court.
To sum up: We conclude the summary-judgment evidence
establishes: (1) L&W owns the guaranty; (2) the guaranty obligated
Thomas to pay the debt Kizziah Construction incurred on its open
account based on the amount stated by Valerie Nottage in her affidavit;
(3) the undisputed amount of that debt is $61,288; and (4) Thomas
breached his guaranty by failing to pay L&W $61,288 under the terms of
his guaranty.
L&W also asks that this Court award L&W attorney’s fees for the
work its attorneys performed in the trial court, in this Court, and for
20
conditional and additional awards of fees should Thomas appeal. But for
the reasons explained below, we conclude that even though L&W is
entitled to an award of attorney’s fees, this Court may not award fees
since they are a contested issue which must be decided for the first time
in the district court.
Attorney’s Fees
Although L&W did not prevail on its motion for summary judgment
in the trial court, it asks this Court to render judgment on its various
claims for attorney’s fees without those claims first being reviewed in the
district court. Alternatively, it asks that we remand the case to the trial
court and instruct the trial court to render a judgment in its favor and to
grant all other relief to which it is entitled.
Ordinarily, deciding the amount to award as a reasonable and
necessary attorney’s fee award presents an issue that a court cannot
resolve as a matter of law. 25 Generally, the testimony of an interested
witness, even when that testimony is uncontradicted, just raises an issue
of fact, which leaves it up to a factfinder to decide what amount a party
25See Garcia v. Gomez, 319 S.W.3d 638, 642 (Tex. 2010), Ragsdale
v. Progressive Voters League, 801 S.W.2d 880, 881 (Tex. 1990).
21
should be awarded in reasonable and necessary attorney’s fees. 26 That
said, there are circumstances when an interested witness’s testimony
may be conclusive on an issue. For instance, when the testimony “is not
contradicted by any other witness, or attendant circumstances, and the
same is clear, direct and positive, and free from contradiction,
inaccuracies, and circumstances tending to cast suspicion thereon,” the
testimony “is taken as true, as a matter of law.” 27
But the exception mentioned above is a narrow exception to the
general rule requiring testimony of interested witnesses to be presented
to a factfinder, and the exception doesn’t apply when the interested
witness’s testimony is “unreasonable, incredible, or its belief is
questionable.” 28 To be clear, the attorney’s fee evidence, which depends
on Walker’s affidavit (an interested witness), shows what Walker’s firm
charged L&W. The evidence includes itemized time records from
Walker’s firm for the work Walker’s firm performed. To be sure, we are
not suggesting that any of the evidence on attorney’s fees is incredible:
26See Smith v. Patrick W. Y. Tam Tr., 296 S.W.3d 545, 547 (Tex.
2009).
27Ragsdale, 801 S.W.2d at 882.
28Id.
22
it isn’t. Still, there are problems with the evidence on attorney’s fees the
Court cannot ignore, which make it unreasonable for a court that cannot
act as a factfinder to render a judgment awarding attorney’s fees and
expense on the evidence we have here.
First, as L&W didn’t prevail on its claims in the trial court, Thomas
has never had a chance to test L&W’s attorney’s fee claims before a trier
of fact. 29 Second, the evidence L&W presented in support of its attorney’s
fee claim is subject to question when presented to be decided as a matter
of law. For instance, in several respects the evidence L&W relies on falls
short of the requirements established in by the Texas Supreme Court in
Rohrmoos Ventures v. UTSW DVA Healthcare, LLP, 578 S.W.3d 469, 488
(Tex. 2019), to prove what amount would be a reasonable and necessary
fee.
The non-exclusive factors considered in deciding a reasonable and
necessary fee in Rohrmoos include “the experience, reputation, and
ability of the lawyer or lawyers performing the services[.]”30 In Walker’s
29Tex.
Civ. Prac. & Rem. Code Ann. § 38.001(8); Ventling v.
Johnson, 466 S.W.3d 143, 154 (Tex. 2015).
30Rohrmoos Venture v. UTSW DVA Healthcare, LLP, 578 S.W.3d
469, 494 (Tex. 2019).
23
affidavit, Walker discussed his background and qualifications. And his
qualifications are matters relevant to his hourly rate. Yet Walker
provided no information about the background and qualifications of the
associate and paralegals who worked on the file, yet they both charged
L&W at rates that must be supported by evidence about their background
and qualifications to support what they charged. 31 Without supporting
information, a factfinder has no meaningful way to determine whether
an attorney’s fee request is (or is not) reasonable and necessary for the
services rendered.
Next, Walker’s affidavit and the itemized time records cover the
time Walker and his firm spent on both the First Case, filed in December
2018 against Kizziah Construction and Thomas, and the case L&W filed
only against Thomas in the 172nd District Court. But as discussed, L&W
Supply nonsuited Thomas on the First Case. So in deciding whether the
attorney’s fees award L&W requests represents one that is reasonable
and necessary, a factfinder could reasonably disagree with Walker’s
31We assume without deciding that the guaranty, which gives L&W
the right to recover “attorney’s fees and expenses” from Thomas is the
basis of L&W’s claim seeking the paralegal charges it included in the
claim for fees it sought from Thomas.
24
opinion that the fees covering the work performed on the First Case and
the case in the 172nd District Court all relate to L&W’s claim against
Thomas on the guaranty. Put another way, a reasonable factfinder could
decide L&W should not recover the attorney’s fees against Thomas for
the work on a case on claims against Thomas that L&W chose to
voluntarily dismiss.
Last, in his affidavit, Walker made no effort to segregate the time
his firm spent on the claims it pursued against Kizziah Construction on
the credit agreement and the time it spent to collect against Thomas on
the guaranty. Parties seeking attorney’s fees must segregate the fees
between claims so that the trier of fact may determine what amount
represents a reasonable and necessary award on which the award in the
case is based. 32 The damages award before us here is based on Thomas
breach of the guaranty rather than Kizziah Construction’s breach of its
promises under the credit agreement. While we recognize that proving
what Kizziah Construction owed L&W is evidence that L&W needed to
prove damages on its claim against Thomas for breaching the guaranty,
32Kinsel v. Lindsey, 526 S.W.3d 411, 427 (Tex. 2017).
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Thomas contractual relationship with L&W is tied to the guaranty, not
to the credit agreement governing the open account. Besides, the amount
L&W claimed Kizziah Construction owed became a liquidated sum that
didn’t require anything more than proving Kizziah Construction didn’t
pay the judgment in proving that Thomas breached the guaranty.
Simply because cases share common facts isn’t a sufficient reason
to excuse a party from its duty to segregate fees between claims when
they involve separate parties.33 We conclude L&W’s summary-judgment
evidence fails to conclusively establish the amount it claims it has a right
to recover in attorney’s fees and expenses based on its claim against
Thomas on the guaranty. 34
33See A.G. Edwards & Sons, Inc. v. Beyer, 235 S.W.3d 704, 710 (Tex.
2007).
34We further note that Thomas’s guaranty allows L&W the right to
recover “attorney’s fees and expenses.” In his affidavit, Walker stated
that $13,912 is the reasonable and necessary amount for the fees and
costs that his firm rendered for representing L&W against Thomas. But
on items charged to clients as an expense, an attorney or his law firm
may only charge the client for what the attorney or his firm was actually
charged for the expense it then billed to the client unless the attorney
and his firm disclosed the firm would be charging the client more than
the actual expenses for the items or services the firm incurred on the
client’s behalf before it was hired and then billed the item as a
reimbursable expense. See Tex. Disciplinary Rules Prof’l Conduct 1.04(c),
1.03(b), and 8.04(a)(3). That said, we do not intend to imply that Walker
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Conclusion
We conclude the trial court erred in granting Thomas’s motion for
summary judgment. As to the principal amount of the debt Kizziah
Construction owed L&W Supply under Thomas’s guaranty, which is
$61,287.98 as Thomas admits, we conclude the trial court erred in
denying L&W’s motion. But we further conclude L&W Supply failed to
conclusively prove it had a right to recover attorney’s fees in amounts it
claimed.
We REVERSE and RENDER judgment for the appellant, L&W
Supply Corporation against Thomas Kizziah on its breach of guaranty
claim, as follows: We ORDER, ADJUDGE AND DECREE that L&W
Supply Corporation D/B/A Building Specialties recover from the
defendant, Thomas Kizziah, as follows:
or Walker’s firm didn’t comply with the disclosures required by the Rules
of Professional Conduct, and we are also not implying that the firm
charged reimbursable expenses to L&W at a rate that exceeded what the
firm was charged. Even so, Walker didn’t state the disclosures that are
required were made, and he didn’t state the expenses were billed at the
rates the firm was actually charged. All we can say on this record is that
we have no meaningful way of knowing whether the expenses were
properly billed.
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a) the sum of $61,287.98 on its claim that Thomas Kizziah breached
the guaranty;
b) prejudgment interest on the sum of $61,287.98 at the rate provided
by section 304.003 of Finance Code, beginning July 1, 2019, and
running until the day preceding the day the trial court signs the
final judgment; and
c) post-judgment interest on that sum at the rate provided by section
304.003 of the Finance Code, beginning the day the trial court signs
the final judgment until the judgment is paid.
We REMAND the case to the trial court and instruct the trial court
to conduct proceedings limited to determining the amount in attorney’s
fees, expenses, and costs the appellant, L&W Supply Corporation D/B/A
Building Specialties, may recover from Thomas Kizziah on its claim
against him on his guaranty. After the trial court conducts those
proceedings, we instruct the trial court to enter a final judgment that
awards: (1) the amount, if any, that is determined to be a reasonable and
necessary award for attorney’s fees and expenses on L&W’s claim for
attorney’s fees; (2) the amount we have determined that Thomas owes
L&W for breaching the guaranty—$61,287.98, as indicated above; (3) an
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award of prejudgment interest; (4) an award of post-judgment interest;
and (5) taxable costs.
REVERSED AND RENDERED IN PART, REVERSED AND
REMANDED IN PART.
_________________________
HOLLIS HORTON
Justice
Submitted on January 24, 2022
Opinion Delivered December 1, 2022
Before Golemon, C.J., Horton and Johnson, JJ.
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