Hal Crews and Debra Leitch v. DkASI Corporation, Debra H. Holley, David Holley and ASI Gymnastics, Inc. , 469 S.W.3d 194 ( 2015 )

Affirm in part; Reverse in part and Opinion Filed April 21, 2015
S In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-14-00544-CV
HAL CREWS AND DEBRA LEITCH, Appellants
V.
DKASI CORPORATION, DEBRA H. HOLLEY, DAVID HOLLEY AND ASI
GYMNASTICS, INC., Appellees
On Appeal from the 14th Judicial District Court
Dallas County, Texas
Trial Court Cause No. DC-11-15393
OPINION
Before Justices Bridges, Fillmore, and Brown
Opinion by Justice Bridges
Appellants Hal Crews and Debra Leitch, as fifty-percent shareholders in DKASI
Corporation, filed a shareholder oppression suit against appellees Debra and David Holley and
ASI Gymnastics, Inc. The parties filed cross-motions for summary judgment regarding the
interpretation and enforcement of a Rule 11 agreement. The trial court granted the Holleys’
motion, denied Crews and Leitch’s motion, and later awarded the Holleys $133,840 in attorney’s
fees.
On appeal, appellants argue (1) the Rule 11 agreement was an unenforceable “agreement
to agree” because it lacked essential financing terms; (2) later conduct could not transform
incomplete negotiations into an enforceable agreement; (3) the electronically generated signature
block at the bottom of the emails creating the purported Rule 11 agreement does not meet the
Rule 11 signature requirement; (4) the Rule 11 agreement is ambiguous as to the meaning of
“fair market valuation”; and (5) the trial court abused its discretion by awarding attorney’s fees.
We reverse the attorney’s fee award of $133,840 in favor of the Holleys. In all other
respects, the trial court’s judgment is affirmed.
Background
Hal Crews, Debra Leitch, David Holley, and Debra Holley each owned twenty-five
percent of the shares in DKASI Corporation, which owned and operated three gymnastics centers
in conjunction with the Holleys’ wholly owned company, ASI Gymnastics. Crews, Leitch, and
the Holleys entered into an agreement wherein ASI would manage the DKASI gyms in ASI’s
name, receive all DKASI’s income in the name of ASI, and then remit to DKASI the net income
attributable to DKASI’s operation.
Crews and Leitch later sued the Holleys and ASI for shareholder oppression and
derivative claims. Crews and Leitch sought appointment of a receiver for DKASI. Within a few
months, the parties began discussions for a “business divorce,” in which the Holleys would buy
out Crews and Leitch.
The Holleys’ attorney sent a proposal on June 7, 2012 that contained six provisions.
Provision 1 required each side to designate a business appraiser within fifteen days of the
agreement. Provision 2, the substance of which is an issue on appeal, states the following:
2. The designated consultants will, within 14 days of both of
their designations, select a 3rd appraiser to evaluate the Plaintiffs’
50% interest in DKASI, assuming those three gyms were operating
independently and without considering the undeveloped land
adjacent to the Keller facility (hereafter referred to as “the
Interests”). The consultants will be free to communicate with the
3rd appraiser regarding data, methodology and assumptions. The
3rd appraiser will provide a report with a fair market valuation of
the Interests within 30 days of appointment.
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(Emphasis in original). Provision 3 required ASI to buy the Interests from Crews and Leitch at
the price provided by the third appraiser. Provision 4 discussed the ownership of the
“undeveloped land” in Keller. Provision 5 permitted ASI to pay the assigned purchase price in
cash or finance it through a ten-year note. The final provision stated the agreement would not
settle any remaining claims between the parties.
Crews and Leitch’s counsel responded the next day and stated, in relevant part, “My
clients agree to paragraphs 1 through 4 of your correspondence. . . . As we discussed, my clients
agree to the context of paragraph 5, but do not agree to the specific terms offered, either in terms
of amount of down payment, length of payment, and/or interest rate, just to the context of taking
payments over time to amortize any balance due.” The Holleys’ counsel responded, “The heart
of my proposal is paragraphs 1-4, to which you have agreed, but we cannot execute on an
agreement without reaching a consensus on the mechanics contained in paragraph 5.”
Crews and Leitch then proposed a $500,000 down payment, plus the Keller development
site with appropriate deed restrictions, and a five-year note amortized at twelve percent interest.
The Holleys countered with “6%, 7 years, $250k down, 100% of TCAD value for their half of
Keller land.”
Crews and Leitch’s attorney then said his clients would buy out the Holleys on the same
terms they offered to sell. After further discussions, the Holleys’ attorney sent another email
agreeing to postpone an upcoming deposition if Crews and Leitch agreed to one of the following
proposals: “(a) an interest rate of 9% or less, (b) a down-payment of $400,000 or less, or (c)
giving the Holleys 100% of the TCAD evaluation of their interest in the Keller property.” Crews
and Leitch agreed to (c). The Holleys’ attorney then sent the following letter, with the email
exchanges attached, to Crews and Leitch’s attorney and filed it as a Rule 11 Agreement with the
trial court on June 13, 2012:
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Thank you for your proposal at 11:46 a.m.
My clients accept your proposal as reflected by our
correspondence attached. Pursuant to our agreement, we are both
obligated to designate a business appraiser within 15 days.
I hope we are able to resolve additional issues as effectively as we
have resolved the buy-out issue. In that regard, please let me know
if you and your clients believe mediation would be worthwhile at
this point.
On June 28, 2012, Crews and Leitch filed their notice of designation of business
appraiser/consultant “pursuant to paragraph 1 of the correspondence dated June 7, 2012.”
On July 19, 2012, the Holleys filed a motion to enforce Rule 11 agreement in which they
alleged Crews and Leitch tried to “‘change’ exactly what the appraiser is charged with
evaluating” a full month after filing the original Rule 11 agreement and after both sides had
designated their appraiser. The Holleys argued that rather than a neutral appraiser providing a
valuation of “Plaintiff’s 50% interest in DKASI,” Crews and Leitch now argued a neutral
appraiser should appraise the company and “50% of this value is to be assigned to the 50%
interest being valued.” According to the Holleys, Crews and Leitch were attempting to ignore
the “fair market valuation of Interests” language in Provision 2 and give it a meaning that did not
exist.
Crews and Leitch filed a motion to clarify, or, in the alternative, to declare Rule 11
agreement null and void. On August 1, 2012, the trial court granted the Holleys’ motion and
ordered:
Mr. Jeff Balcombe, the neutral appraiser, and/or his company, The
BVA Group, LLC, is hereby retained by the parties so that he may
be engaged to appraise the fair market value of Plaintiffs’ 50%
interest in DKASI Corporation in accordance with generally
accepted valuation methods and in consideration of the factors
outlined in the Uniform Standards of Professional Appraisal
Practice Standards.
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Balcombe provided his appraisal on October 10, 2012 with a fair market valuation of Crews and
Leitch’s fifty percent interest in DKASI at $620,000. After subtracting fifty percent of the cost
of the appraisal and fifty percent of the TCAD value of the Keller land, the final buy out
payment totaled $334,661.50. On December 11, 2012, the Holleys deposited a check in this
amount with the trial court’s registry.1
After delivering the funds to the trial court’s registry, the Holleys filed a supplemental
counterclaim in which they sought a declaration from the court that Crews and Leitch were no
longer shareholders of DKASI, and therefore, should take nothing by their claims as
shareholders of DKASI. The Holleys also requested attorney’s fees.
In January of 2014, the parties filed cross-motions for summary judgment in which they
again argued the enforceability of the Rule 11 agreement. The trial court granted the Holleys’
motion, denied the cross-motion, and ordered that Crews and Leitch take nothing on their
shareholder oppression claims. In the final judgment, the trial court awarded the Holleys
$133,840.00 in attorney’s fees. This appeal of the summary judgment and the award of
attorney’s fees followed.
Enforceability of Rule 11 Agreement
In their first issue, Crews and Leitch argue the parties never entered into an enforceable
Rule 11 agreement because they did not agree on essential terms, and even if they did agree on
the essential terms, the agreement was never signed. The Holleys respond the parties repeatedly
acknowledged and confirmed the existence of such an agreement, terms of the agreement were
sufficiently defined, and the electronic signature block of the emails met the signature
requirement of Rule 11.
1
Prior to the deposit, Crews and Leitch filed mandamus petitions in both this court and the Supreme Court of Texas after the trial court
denied their motion seeking a continuance of the trial date. In their petition, they again argued the validity of the Rule 11 agreement. Although
the Texas Supreme Court granted an emergency stay and requested briefing, the court ultimately denied relief.
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We review a trial court’s summary judgment de novo. Valence Operating Co. v. Dorsett,
164 S.W.3d 656, 661 (Tex. 2005). When reviewing a summary judgment, we take as true all
evidence favorable to the nonmovant, indulge every reasonable inference, and resolve any doubts
in the nonmovant’s favor. Id. When both parties move for summary judgment on the same
issues and the trial court grants one motion and denies the other, as here, the reviewing court
considers the summary judgment evidence presented by both sides, determines all questions
presented, and if the reviewing court determines that the trial court erred, renders the judgment
the trial court should have rendered. Id.
Rule 11 of the Texas Rules of Civil Procedure provides that “[u]nless otherwise provided
in these rules, no agreement between attorneys or parties touching any suit pending will be
enforced unless it be in writing, signed and filed with the papers as part of the record . . . .” TEX.
R. CIV. P. 11. The same rules governing construction of contracts apply in construing Rule 11
agreements. Dallas Cnty. v. Rischon Dev. Corp., 242 S.W.3d 90, 93 (Tex. App.—Dallas 2007,
pet. denied). The essential or material terms of a contract must be definite, certain, and clear,
and, if they are not, the contract is unenforceable. T.O. Stanley Boot Co. v. Bank of El Paso, 847
S.W.2d 218, 221 (Tex. 1992).
The issue of whether a Rule 11 agreement fails for lack of an essential term is generally a
question of law to be determined by the court. Kanan v. Plantation Homeowner’s Ass’n Inc.,
407 S.W.3d 320, 330 (Tex. App.—Corpus Christi 2013, no pet.). Essential or material terms are
those terms the parties “would reasonably regard as vitally important elements of their bargain.”
Id. (citing Potcinske v. McDonald Prop. Invs., Ltd., 245 S.W.3d 526, 531 (Tex. App.—Houston
[1st Dist.] 2007, no pet.)). Whether a term forms an essential element of a contract depends
primarily upon the intent of the parties. Domingo v. Mitchell, 257 S.W.3d 34, 41 (Tex. App.—
Amarillo 2008, pet. denied). As long as the parties agree to the essential terms of the contract,
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the agreement may leave other non-essential provisions open for future agreement. Kanan, 407
S.W.3d at 330.
Crews and Leitch admit the parties agreed almost immediately on the appraisal and
subsequent buy out based on the appraised value, but the parties never agreed on payment,
financing, or preservation of claims, which were essential terms to the agreement. First, Crews
and Leitch did not argue to the trial court that preservation of claims for litigation was an
essential term of the agreement, nor have they provided argument on appeal supporting their
claim. Therefore, we do not consider it in our analysis. See TEX. R. CIV. P. 166a(c) (“Issues not
expressly presented to the trial court by written motion, answer or other response shall not be
considered on appeal as grounds for reversal.”); TEX. R. APP. P. 33.1. We do, however, consider
whether payment and financing were essential terms of the agreement.
Although Crews and Leitch argue payment and financing were obviously central to the
agreement and the Holleys’ attorney established the terms materiality “when he rejected the
notion of settlement without them,” we do not agree with Crews and Leitch’s characterization of
the settlement negotiations. In the first letter proposing a buy-out procedure between the parties,
the Holleys’ attorney detailed six different terms and said the Holleys were unwilling to postpone
an upcoming deposition “without and [sic] agreement of some kind . . . .” Crews and Leitch’s
attorney responded that Crews and Leitch “agree to paragraphs 1 through 4 of your
correspondence,” and although they agreed “to the context of paragraph 5,” they did “not agree
to the specific terms offered, either in terms of amount of down payment, length of payment,
and/or interest rate . . . .”
As negotiations regarding the context of paragraph 5 continued, the Holleys’ attorney
specifically stated, “The heart of my proposal is paragraphs 1-4, to which you have agreed.”
Although he also stated the parties could not execute on an agreement without reaching a
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consensus on the mechanics of paragraph 5, the continued email exchanges, as discussed below,
establish the parties did in fact reach an acceptable consensus.
After a few more email exchanges in which both parties suggested terms for interest rate,
duration of loan, amount of down payment, and percentage of TCAD value for the Keller
property, the Holleys’ attorney finally required Crews and Leitch to “make a proposal that
contains at least one of these terms: (a) an interest rate of 9% or less, (b) a down-payment of
$400,000 or less, or (c) giving the Holleys 100% of the TCAD evaluation of their interest in the
Keller property” or the Holleys would move forward with a scheduled deposition. Crews and
Leitch agreed to (c).
This exchange between the parties establishes the “heart of the proposal” was agreed to
by the parties, and Crews and Leitch made a proposal containing at least one of the terms to
satisfy the “mechanics” of paragraph 5, as required by the Holleys. Through the proposal and
acceptance of just one of these terms, the parties likewise indicated the other terms were not
essential to the agreement or a vitally important ingredient of their bargain.2 See Domingo, 257
S.W.3d at 41; see also Ozlat v. Nguyen, No. 01-97-00568-CV, 1998 WL 255142, at *2 (Tex.
App.—Houston [1st Dist.] May 21, 1998, no pet.) (not designated for publication) (noting
financing terms were not essential to the contract). Further, in the letter accepting Crews and
Leitch’s proposal (and filed with the trial court), the Holley’s attorney said, “I hope we are able
to resolve additional issues as effectively as we have resolved the buy-out issue.” Accordingly,
the parties’ Rule 11 agreement does not fail for lack of an essential term.
In reaching this conclusion, we are unpersuaded by Crews and Leitch’s reliance on an
email arguing the parties had nothing more than “an agreement to agree.” In one email, the
Holleys’ attorney referenced a need to mediate, if necessary and resume depositions as soon as
2
Indeed, the eventual buy-out was paid in lump sum and no financing was involved.
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practical “after fully exploring the buy-out option.” This statement, however, was made before
Crews and Leitch proposed giving the Holleys one hundred percent of the TCAD evaluation,
which the Holleys accepted. Moreover, because the financing terms were not essential, the
parties were free to leave other non-essential provisions open for future agreement. See Kanan,
407 S.W.3d at 330. Accordingly, we overrule Crews and Leitch’s first issue.
Having concluded the agreement contains the essential and material terms to be
enforceable, we need not consider the Holleys’ argument that Crews and Leitch repeatedly
acknowledged and confirmed the existence of a Rule 11 agreement, nor Crews’ and Leitch’s
response that later conduct could not transform incomplete negotiations into an enforceable
agreement. TEX. R. APP. P. 47.1.
We now turn to Crews and Leitch’s third issue in which they argue the agreement was
unenforceable because the computer-generated signature block in their attorney’s email did not
meet the signature requirement of Rule 11. See TEX. R. CIV. P. 11. The Holleys first argue
Crews and Leitch failed to timely raise this argument to the trial court. Alternatively, they argue
the Rule 11 signature requirement was met by the computer-generated signature block.
As a prerequisite to presenting a complaint for appellate review, the record must show the
complaint was made to the trial court by a timely request, objection, or motion. TEX. R. APP. P.
33.1. The record shows that Crews and Leitch first raised this issue in the trial court in their
summary judgment response filed on February 7, 2014. They argue this was enough to preserve
their complaint for review. We do not agree.
A “timely” objection for purposes of rule 33.1 is one “interposed at a point in the
proceedings which gives the trial court the opportunity to cure any alleged error.” See Driver v.
Conley, 320 S.W.3d 516, 518 n.3 (Tex. App.—Texarkana 2010, pet. denied). The record shows
the Holleys first raised the enforceability of the agreement in the trial court in their motion to
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enforce rule 11 agreement on July 19, 2012. Crews and Leitch did not raise the electronic
signature argument in their response to the motion to enforce filed on July 26, 2012, or challenge
the trial court’s order signed on August 1, 2012 enforcing the Rule 11 agreement. They also
failed to raise the issue in their motion for summary judgment filed on January 23, 2014. Not
until over a year and a half later, did they raise the argument to the trial court.
Under these facts, we cannot conclude Crews and Leitch timely raised their complaint
regarding the alleged lack of signature to the trial court as required by rule 33.1. See TEX. R.
APP. P. 33.1. Accordingly, Crews and Leitch have failed to preserve their issue for review. We
overrule their third issue.
Finally, Crews and Leitch argue in the alternative that if a Rule 11 agreement exists, it is
ambiguous, and the trial court erred by not construing it against the Holleys. The Holleys
respond the contract is not ambiguous.
When construing a written contract, the primary concern is to ascertain the true intentions
of the parties as expressed in the instrument. D Design Holdings, L.P. v. MMP Corp., 339
S.W.3d 195, 201 (Tex. App.—Dallas 2011, no pet.). We give contract terms their plain and
ordinary meaning unless the contract indicates the parties intended a different meaning. Id. We
consider the entire writing and attempt to harmonize and give effect to all the provisions of the
contract by analyzing the provisions with reference to the whole agreement. Id. When
provisions of a contract appear to conflict, we will attempt to harmonize the provisions and
assume the parties intended every provision to have the same effect. Id.
If contract language can be given a certain or definite meaning, then it is not ambiguous.
Id. If we are unable to harmonize the provisions and give effect to all of the contract’s clauses,
the contract is susceptible to more than one reasonable interpretation and is ambiguous. Id.
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Whether a contract is ambiguous is a question of law, which we review de novo. Id. Likewise,
interpretation of an unambiguous contract is reviewed de novo. Id.
Here, Crews and Leitch argue the parties differ over the meaning of “fair market
valuation” as it relates to “operating independently” in Provision 2 of the Rule 11 agreement,
which provides as follows:
2. The designated consultants will, within 14 days of both of
their designations, select a 3rd appraiser to evaluate the Plaintiffs’
50% interest in DKASI, assuming those three gyms were operating
independently and without considering the undeveloped land
adjacent to the Keller facility (hereafter referred to as “the
Interests”). The consultants will be free to communicate with the
3rd appraiser regarding data, methodology and assumptions. The
3rd appraiser will provide a report with a fair market valuation of
the Interests within 30 days of appointment.
Crews and Leitch argue the parties disagree over whether the appraisal of their fifty percent
interest must include a discount for lack of control based on the “operating independently”
language.
All parties agree the term “fair market value” has been defined as “the price at which the
stock would change hands between a willing seller, under no compulsion to sell, and a willing
buyer, under no compulsion to buy, with both parties having reasonable knowledge of relevant
facts.” Ritchie v. Rupe, 339 S.W.3d 275, 300 (Tex. App.—Dallas 2011), rev’d on other grounds,
443 S.W.3d 856 (Tex. 2014). However, Crews and Leitch contend a contractual term is not
accorded its plain, ordinary meaning when the contract itself reveals that the term is used in a
different sense. Mid-Continent Cas. Co. v. Castagna, 410 S.W.3d 445, 456 (Tex. App.—Dallas
2013, pet. denied). They contend the only way to “harmonize” and give effect to both the
“operated independently” and “fair market valuation” language in Provision 2 is to conclude
their fifty percent interest in DKASI should be valued using the general measure of fair market
value, but as though no majority/minority management situation existed. Stated another way, the
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three DKASI gyms should be evaluated as an independent company, and Crews and Leitch
should get fifty percent of the value of DKASI.
The Holleys respond “operating independently” simply means the three DKASI gyms
should be evaluated independently from the other ASI gyms, and fair market valuation does not
take on a different meaning just because there was an underlying shareholder oppression suit.
They argue the focus is not who the purchaser is, but rather the determination of fair market
value as per the agreement.
Here, the plain language of Provision 2 specifically provides the third independent
appraiser will provide a report with a fair market valuation of the Interests within thirty days of
the appointment. We agree with the Holleys that by including the language “assuming those
three gyms were operating independently . . .,” the parties did not somehow modify or change
the plain, ordinary meaning of fair market value. Crews and Leitch attempt to argue the phrase
has no meaning unless it is construed to mean the three DKASI gyms must be evaluated as an
independent company. To further this argument, they assert the Holleys’ interpretation is
meaningless because everyone agreed Crews and Leitch had no interest in the ASI gyms so there
would be no reason to include language excluding those gyms from the value. Thus, Crews and
Leitch contend this creates an ambiguity. We cannot agree. Including facts in a contract that all
parties agree exist does not create an ambiguity. Rather, it helps clarify the meaning of the
contract. Accordingly, the “operating independently” language neither creates an ambiguity nor
alters the plain meaning of fair market value.
In further support of our conclusion, the record shows the trial court ordered the BVA
Group to appraise the fair market value. The email from Erica Bramer, one of the designated
“consultants,” to Jeff Balcombe with the BVA Group informed Balcombe that “The standard of
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value is fair market value. . . .” In the final appraisal prepared by Balcombe, he stated the
following:
We were directed to use “fair market value” as the standard of
value for this valuation analysis. According to the American
Society of Appraiser Business Valuation Standards Glossary, fair
market value is defined as the price, expressed in terms of cash
equivalents, at which property would change hands between a
hypothetical willing and able buyer and a hypothetical willing and
able seller, acting at arm’s-length in an open and unrestricted
market, when neither is under compulsion to buy or sell and when
both have reasonable knowledge of the relevant facts. In the
context of this definition of fair market value, we recognize that
the Subject Interest was a noncontrolling interest and was not
freely marketable on a public exchange.
The evidence shows “fair market value” was given its plain and ordinary meaning by the parties
involved, and nothing indicates the parties intended a different meaning or that lack of control
should not be taken into account in valuing the interest of Crews and Leitch. D Design
Holdings, L.P., 339 S.W.3d at 201. Accordingly, the Rule 11 agreement is unambiguous as a
matter of law. We overrule Crews’ and Leitch’s fourth issue.
Attorney’s Fees
In their final issue, Crews and Leitch contend the Holleys were not entitled to attorney’s
fees based on their request for declaratory relief; therefore, the trial court abused its discretion by
awarding the Holleys $133,840. The Holleys respond they properly requested declaratory relief,
which the trial court granted, thereby entitling them to attorney’s fees.
The Declaratory Judgment Act does not require an award of attorney’s fees to the
prevailing party, or to any party. Preston State Bank v. Willis, 443 S.W.3d 428, 440 (Tex.
App.—Dallas 2014, pet. denied). Moreover, a party cannot use the Declaratory Judgment Act as
a vehicle to obtain otherwise impermissible attorney’s fees. MBM Fin. Corp. v. Woodlands
Operating Co., L.P., 292 S.W.3d 660, 670 (Tex. 2009) (noting that if a party could replead any
claim as a declaratory judgment to justify a fee award, attorney’s fees would be available to all
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parties in all cases, which would frustrate the limits Chapter 38 imposes on fee recoveries).
However, if the trial court awards such fees, the award must be reasonable, necessary, equitable,
and just. Id. We review a trial court’s award of fees for an abuse of discretion. Bocquet v.
Herring, 972 S.W.2d 19, 21 (Tex. 1998). It is an abuse of discretion to award attorney’s fees
under the Declaratory Judgment Act when the statute is relied upon solely as a vehicle to recover
such fees. City of Carrollton v. RIHR Inc., 308 S.W.3d 444, 454 (Tex. App.—Dallas 2010, pet.
denied).
Here, after the trial court entered the order granting the Holleys’ motion to enforce the
Rule 11 agreement, Crews and Leitch filed their fourth and fifth amended petitions in which they
continued to challenge the enforceability of the Rule 11 agreement, along with other claims. On
December 5, 2012, the Holleys filed their supplemental answer and supplemental counterclaim.
They raised standing and/or capacity as an affirmative defense. Specifically, they argued as
follows:
Plaintiffs and Defendants executed an agreement in which
Defendants purchased Plaintiffs’ interest in DKASI Corporation.
As of December 5, 2012, Defendants have complied with that
agreement in all respects and have delivered funds and otherwise
performed pursuant to that agreement. As a result, Defendants
have completed the purchase of Plaintiffs’ interest in DKASI, and
Plaintiffs no longer have standing to bring claims in their capacity
as shareholders.
Their counterclaim for declaratory judgment then requested a declaration that “Plaintiffs are no
longer shareholders in DKASI Corporation and are no longer entitled to any rights or benefits as
shareholders.”
The Holleys argue the trial court did not abuse its discretion by awarding attorney’s fees
because filing a counterclaim for declaratory relief was necessary after the Holleys fully
performed their obligations under the Rule 11 agreement and Crews and Leitch continued to
dispute the issue. Crews and Leitch respond declaratory judgment was not available to the
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Holleys because the dispute was already pending before the trial court, and the Holleys’
requested declaration was an affirmative defense that did not seek any additional relief. We
agree with Crews and Leitch.
Artful pleading to present affirmative defenses in the form of a declaratory judgment
counterclaim is not sufficient to state a claim for affirmative relief. Pace Concerts, Ltd. v.
Resendez, 72 S.W.3d 700, 703 (Tex. App.—San Antonio 2002, pet. denied). Here, the Holleys’
request for a declaration that Crews and Leitch were no longer shareholders was no more than a
restatement of their defense that the Holleys had purchased Crews and Leitch’s interest in
DKASI, which meant Crews and Leitch no longer had standing to bring any claims as
shareholders. Thus, the main thrust of the Holleys’ counterclaim was whether Crews and Leitch
were still shareholders, an issue that could be resolved within the context of the Holleys’
affirmative defense. See, e.g., id. (party seeking declaration that a partnership agreement
terminated on a certain date was no more than a restatement of defense that no agreement existed
or that agreement terminated on a certain date and trial court could resolve issue through
defenses raised rather than through declaration).
Under these facts, the Holleys used the Declaratory Judgment Act as a vehicle to obtain
an otherwise impressible attorney’s fee award. Accordingly, the trial court abused its discretion
by awarding the fees. We sustain Crews and Leitch’s fifth issue and reverse the trial court’s
award of $133,840 in attorney’s fees. Having concluded the Holleys were not entitled to an
attorney’s fee award, we need not address the parties’ arguments regarding whether the evidence
is legally sufficient to support the award. TEX. R. APP. P. 47.1.
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Conclusion
Having considered the parties’ arguments, we reverse the attorney’s fee award of
$133,840 in favor of the Holleys. In all other respects, the trial court’s judgment is affirmed.
140544F.P05
/David L. Bridges/
DAVID L. BRIDGES
JUSTICE
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S
Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
HAL CREWS AND DEBRA LEITCH, On Appeal from the 14th Judicial District
Appellants Court, Dallas County, Texas
Trial Court Cause No. DC-11-15393.
No. 05-14-00544-CV V. Opinion delivered by Justice Bridges.
Justices Fillmore and Brown participating.
DKASI CORPORATION, DEBRA H.
HOLLEY, DAVID HOLLEY AND ASI
GYMNASTICS, INC., Appellees
In accordance with this Court’s opinion of this date, we REVERSE the attorney’s fee
award of $133,840 in favor of Debra H. Holley, David Holley, and ASI Gymnastics, Inc.
In all other respects, the judgment of the trial court is AFFIRMED.
Each party shall bear their own costs of appeal.
Judgment entered April 21, 2015.
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