Lozoya Construction, Inc. v. H&E Equipment Services, Inc. ( 2020 )

Opinion filed March 26, 2020
In The
Eleventh Court of Appeals
__________
No. 11-19-00287-CV
__________
LOZOYA CONSTRUCTION, INC., Appellant
V.
H&E EQUIPMENT SERVICES, INC., Appellee
On Appeal from the 441st District Court
Midland County, Texas
Trial Court Cause No. CV55629
MEMORANDUM OPINION
Pursuant to a written contract, Lozoya Construction, Inc. agreed to perform
certain work at H&E Equipment Services, Inc.’s facility in Midland. H&E was
dissatisfied with the work and sued Lozoya for breach of contract, breach of implied
warranty of good and workmanlike manner, negligence, negligent
misrepresentation, and fraud.1 Lozoya moved to dismiss these claims pursuant to
1
H&E also asserted claims against Lozoya for suit on a sworn account, breach of contract, and
quantum meruit based on Lozoya’s failure to pay the rental charges for certain equipment. Lozoya did not
move to dismiss those claims.
the Texas Citizens Participation Act, TEX. CIV. PRAC. & REM. CODE ANN.
§§ 27.001–.011 (West 2015) (the TCPA).2 The trial court denied Lozoya’s motion
to dismiss, determined that the motion was frivolous and intended to delay, and
awarded H&E attorney’s fees.
In eight issues, Lozoya contends that the trial court erred when it considered
the factual allegations in H&E’s response and conclusory allegations in H&E’s
response and pleadings as evidence, determined that the TCPA did not apply to
H&E’s claims and that H&E established by clear and specific evidence a prima facie
case for each essential element of its claims, found that the commercial speech
exemption in the statute applies to H&E’s claims, awarded H&E attorney’s fees, and
failed to award Lozoya attorney’s fees and sanctions. We hold that the trial court
did not err when it (1) denied the motion to dismiss based on the commercial speech
exemption and (2) found that H&E was entitled to recover the attorney’s fees that it
incurred to respond to the motion. Because the evidence is insufficient to support
the amount of attorney’s fees awarded by the trial court, we reverse the trial court’s
award of attorney’s fees in the amount of $9,360 and remand the issue of the amount
of attorney’s fees to be awarded to H&E to the trial court for further proceedings.
We affirm the trial court’s order in all other respects.
Background
Pursuant to a written contract, Lozoya agreed to perform site work and
concrete installation at H&E’s facility in Midland. Among other work, Lozoya was
required to install an 8,250 square foot concrete slab and approximately 28,196
2
The Texas legislature amended the TCPA effective September 1, 2019. See Act of May 17, 2019,
86th Leg., R.S., ch. 378, §§ 1–9, 12 (H.B. 2730) (codified at TEX. CIV. PRAC. & REM. CODE ANN.
§§ 27.001, .003, .005–.007, .0075, .009–.010 (West Supp. 2019)). Because the underlying lawsuit was filed
prior to September 1, 2019, the law in effect before September 1 applies. See id. §§ 11–12. For
convenience, all citations to the TCPA in this opinion are to the version of the statute prior to September 1,
2019. See Act of May 21, 2011, 82d Leg., R.S., ch. 341, § 2, 2011 Tex. Gen. Laws 961–64, amended by
Act of May 24, 2013, 83d Leg., R.S., ch. 1042, 2013 Tex. Gen. Laws 2499–2500.
2
square feet of three-inch asphalt. The contract specified that the concrete was to be
“8 [inch] 4000 psi concrete with fiber.” H&E agreed to pay Lozoya $296,078.68 for
all the work under the contract, with half of the money to be paid before Lozoya
started the work and the other half to be paid “upon completion and final
walkthrough.” H&E and Lozoya signed a second contract that required Lozoya to
“[s]ervice blade” and lay caliche over 4.78 acres of the property and to install twelve
pipe bollards. H&E agreed to pay $81,870 for this work.
Lozoya purchased concrete that contained micro reinforcement fiber from PB
Materials, LLC to use on the project. It also purchased the asphalt for the project
from APM Contractor Services, LLC.
After Lozoya completed the work, H&E filed this suit. In its first amended
petition, H&E alleged that the parties agreed that Lozoya would use macro
reinforcement fiber in the concrete. H&E pleaded that, due to Lozoya’s use of micro
reinforcement fiber, there had been “a considerable amount of cracking in the
concrete slab that requires immediate removal and replacement.” H&E also alleged
that the contract required Lozoya “to install the asphalt to be three inches thick
through the entire concept.” H&E asserted that Lozoya “installed the asphalt in a
manner that is inconsistent with the three-inch thickness” and that the asphalt “is of
substandard strength and starting to crack.”
As relevant to this appeal, H&E asserted claims against Lozoya for the
following: (1) breach of contract based on Lozoya’s failure to provide concrete with
the correct reinforcement fiber and to install the asphalt to the contracted-for
thickness; (2) breach of the implied warranty of good and workmanlike manner
based on Lozoya’s failure to ensure that its services were performed in a skillful and
workmanlike manner; (3) negligence; (4) negligent misrepresentation; and (5) fraud.
H&E specifically alleged that Lozoya made material misrepresentations about the
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type of reinforcement fiber that would be included in the concrete mix and about the
thickness of the asphalt.
In its answer and counterclaim, Lozoya asserted that it supplied H&E with
“certain goods or services” as shown by the two contracts and that H&E was required
to pay for the goods or services. Lozoya stated that the prices that it charged to H&E
were “usual, customary, or reasonable prices” and “were the same prices charged to
any other customer for the same goods and service at that time in Midland County.”
Lozoya pleaded that H&E failed to pay for the goods and services and sought to
recover $229,909.34 based on a sworn account, breach of contract, quantum meruit,
and the Texas Prompt Pay Act, TEX. PROP. CODE ANN. §§ 28.001–.010 (West 2014).
Lozoya filed a TCPA motion to dismiss H&E’s claims. Lozoya asserted that
H&E’s claims were based on, related to, or in response to Lozoya’s exercise of the
right of free speech. Lozoya specifically alleged that the statements about “the
materials and qualities of the concrete work it had completed” for H&E were made
in connection with a matter of public concern. Lozoya further contended that H&E
could not meet its burden to establish a prima facie case for each essential element
of its claims.
In conjunction with its motion to dismiss, Lozoya filed the affidavit of its
CEO, Filiberto I. Lozoya, Jr. Filiberto stated that Lozoya and H&E entered into two
contracts. As relevant here, the first contract required Lozoya to install
approximately 28,196 square feet of three-inch asphalt and “8,250 square feet of 8-
inch 4000 psi concrete with fiber.” The second contract required Lozoya to install
a layer of caliche over 4.78 acres of the site and to install twelve pipe bollards.
Filiberto attached both contracts to his affidavit.
Filiberto confirmed that H&E agreed to pay Lozoya $296,078.68 for the work
under the first contract and $81,870 for the work under the second contract.
However, because of the development of cracks in the concrete, H&E paid only fifty
4
percent of the amount due on the first contract and none of the amount due on the
second contract. Filiberto stated that he had “over 10 years’ experience in the
construction industry” and had “been involved with and/or supervised hundreds of
projects involving site work including the type of work completed for H&E.” In
Filiberto’s experience, “substantially all concrete will develop some cracks after it
cures,” but “the cracks do not determine the integrity of the concrete.”
Filiberto asserted that Lozoya made “a number of representations” that related
“to safety, the economic well-being, the community well-being, and/or a good,
product, or service in the marketplace”; that all the communications were true; and
that Lozoya satisfied “all requirements expressed in the communications.” Filiberto
specifically stated that, while Lozoya was contractually required to use “fiber” in the
concrete, it was not obligated to use “macro” fiber. Finally, Filiberto stated that
Lozoya obtained the asphalt for the project from APM and that “the documents”
established that Lozoya installed 28,196 square feet of three-inch asphalt. Filiberto
attached to his affidavit an invoice from APM for 28,196 square feet of asphalt and
a “Bill Payment Stub” that reflected that Lozoya paid APM for the asphalt.
Lozoya also filed an affidavit from Jerry Garcia, who was Lozoya’s vice
president at the time of the proposal to H&E, that was virtually identical to
Filiberto’s affidavit. Although Garcia did not state how many years of experience
that he had in the construction industry, he indicated that he had “been involved with
and/or supervised hundreds of projects involving site work including the type of
work completed for H&E.” Garcia offered the same opinions as Filiberto about the
integrity of the concrete. Along with the contracts and documents from APM, Garcia
attached to his affidavit pictures of the concrete at H&E’s facility.
H&E filed a response to the motion to dismiss in which it argued that Lozoya
had failed to establish that the TCPA applied to H&E’s claims, that H&E’s claims
were exempt from the TCPA under the commercial speech exemption in the statute,
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and that it had established by clear and specific evidence a prima facie case for each
essential element of its claims. H&E also asserted that Lozoya’s motion was
frivolous and/or solely intended to delay because Lozoya’s statements “clearly fall
under the commercial speech exemption.”
H&E attached the affidavit of Cliff McNeel, H&E’s director of facilities, to
its response. McNeel stated that, in connection with Lozoya’s proposal to do the site
work at H&E’s facility, he had several conversations with Garcia about the
specifications that H&E required for the concrete slab. Garcia sent a proposal that
indicated that reinforcement fiber would be added to the concrete mix. McNeel told
Garcia that H&E required that macro reinforcement fiber, not the alternative micro
reinforcement fiber, be used for the slab. Garcia represented to McNeel that macro
reinforcement fiber would be included in the concrete mix. McNeel e-mailed Garcia
the specifications for the concrete mix that H&E used on another project, and Garcia
provided an updated proposal.
According to McNeel, after Lozoya installed and constructed the concrete
slab, employees at the Midland facility told him that there was a considerable amount
of cracks in the concrete. McNeel inspected Lozoya’s work and determined that
Lozoya did not use concrete with macro reinforcement fiber. A representative from
Lozoya gave McNeel “trip tickets” that reflected that the batch plant, which provided
the concrete, used micro fiber in the mix.
McNeel attached to his affidavit e-mails to and from Garcia about Lozoya’s
proposal to do the site work at H&E’s facility. In one of those e-mails, McNeel
provided Garcia with the specifications for concrete work at H&E’s Hutto facility
that included macro reinforcement fiber. McNeel also attached the contract and the
trip tickets from PB Materials to his affidavit.
6
The trial court denied Lozoya’s motion to dismiss without stating a basis for
the ruling, found that the motion was frivolous and intended to delay, and awarded
H&E attorney’s fees in the amount of $9,360.
Analysis
The TCPA provides a summary procedure to dismiss a legal action that is
based on, related to, or in response to a party’s exercise of the right of free speech,
the right of association, or the right to petition. CIV. PRAC. & REM. §§ 27.003(a),
.005(b); In re Lipsky, 460 S.W.3d 579, 589–90 (Tex. 2015) (orig. proceeding).
However, Section 27.010 of the Civil Practice and Remedies Code exempts certain
types of legal actions from the TCPA. CIV. PRAC. & REM. § 27.010; State ex rel.
Best v. Harper, 562 S.W.3d 1, 11 (Tex. 2018) (noting that, if a statutory exemption
applies, the movant “cannot invoke the TCPA’s protections”). As relevant in this
case, the TCPA does not apply to a legal action based on commercial speech. CIV.
PRAC. & REM. § 27.010(b). Because the trial court’s order can be affirmed based on
the application of the commercial speech exemption, we will address Lozoya’s fifth
issue first.
The TCPA “does not apply to a legal action brought against a person primarily
engaged in the business of selling or leasing goods or services, if the statement or
conduct arises out of the sale or lease of goods, services, or . . . a commercial
transaction in which the intended audience is an actual or potential buyer or
customer.” Id. The commercial speech exemption applies only to certain
communications that are “made not as a protected exercise of free speech by an
individual, but as ‘commercial speech which does “no more than propose a
commercial transaction.”’” Castleman v. Internet Money Ltd., 546 S.W.3d 684, 690
(Tex. 2018) (per curiam) (quoting Posadas de P.R. Assocs. v. Tourism Co. of P.R.,
478 U.S. 328, 340 (1986)). The commercial speech exemption applies when (1) the
movant was primarily engaged in the business of selling or leasing goods or services,
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(2) the movant made the statement or engaged in the conduct on which the claim is
based in the movant’s capacity as a seller or lessor of those goods or services, (3) the
statement or conduct at issue arose out of a commercial transaction that involved the
kind of goods or services that the movant provides, and (4) the intended audience of
the statement or conduct was an actual or potential customer of the movant for the
kind of goods or services that the movant provides. Id. at 688; see also CIV. PRAC.
& REM. § 27.010(b).
The party that relies on the commercial speech exemption has the burden to
prove these elements by a preponderance of the evidence. Forget About It, Inc. v.
BioTE Med., LLC, 585 S.W.3d 59, 68 (Tex. App.—Dallas 2019, pet. denied). When
we review whether the nonmovant met its burden, we consider the pleadings and
any supporting affidavits. CIV. PRAC. & REM. § 27.006(a); Gaskamp v. WSP USA,
Inc., No. 01-18-00079-CV, 2020 WL 826729, at *16 (Tex. App.—Houston [1st
Dist.] Feb. 20, 2020, no pet. h.) (en banc). “[T]he factual allegations contained in
the pleadings may alone be sufficient to demonstrate that the nature of the claims is
such that the claims are statutorily exempt without need of additional proof.”
Gaskamp, 2020 WL 826729, at *16; see also Rouzier v. BioTE Med., LLC, No. 05-
19-00277-CV, 2019 WL 6242305, at *4 (Tex. App.—Dallas Nov. 22, 2019, no pet.
h.) (mem. op.) (“[A]n affirmative allegation of facts, with no contrary evidence or
denial of those facts, is sufficient to satisfy the elements of the commercial speech
exemption.”).
The first element of the Castleman test requires that Lozoya be primarily
engaged in the business of selling or leasing goods or services. See Castleman, 546
S.W.3d at 688. H&E pleaded in its first amended petition that Lozoya contractually
agreed to “construct the site work and concrete installation” at H&E’s facility in
Midland. That work included the installation of an 8,250 square foot concrete slab
and over 28,000 square feet of asphalt. In its answer, Lozoya acknowledged that it
8
provided the “goods or services” set out in the contract to H&E. Lozoya also pleaded
that the prices that it charged to H&E for the “goods and services” were the same
prices that it charged to any other customer for the same goods and services.
Therefore, Lozoya’s pleadings reflect that it provided the same “goods and services”
that it provided to H&E to more than one customer.
Filiberto, Lozoya’s CEO, and Garcia, Lozoya’s vice president at the time of
the proposal to H&E, had “been involved with and/or supervised hundreds of
projects involving site work including the type of work completed for H&E.”
Filiberto also acknowledged that he personally had “over 10 years’ experience in the
construction industry.” On behalf of Lozoya, Garcia prepared a proposal for the site
work and concrete installation at H&E’s facility. McNeel and Garcia discussed
Lozoya’s proposal and the required specifications for the concrete included in the
proposal, and Garcia then revised the proposal. Under these circumstances, it is
reasonable to conclude that Lozoya was primarily engaged in the same business as
its officers. See Rose v. Sci. Mach. & Welding, Inc., No. 03-18-00721-CV, 2019
WL 2588512, at *5 (Tex. App.—Austin June 25, 2019, no pet.) (mem. op.) (holding
that it was a logical conclusion that operations manager of company was necessarily
“primarily engaged” in the same business as his employer).
H&E produced evidence through the parties’ pleadings and the affidavits of
McNeel, Filiberto, and Garcia that Lozoya was primarily engaged in the business of
selling goods, including concrete and asphalt, and services in the construction
industry. Lozoya did not deny that it was primarily engaged in the business of selling
goods and services in the construction industry and produced no contrary evidence.
See Rouzier, 2019 WL 6242305, at *4.
The second Castleman element requires that Lozoya made the complained-
about statements in its capacity as a seller of those goods or services. Castleman,
546 S.W.3d at 688. On this element, we consider the context of the statements to
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determine whether the statements proposed a commercial transaction. Hawkins v.
Fox Corp. Housing, LLC, No. 01-19-00394-CV, 2020 WL 425121, at *4 (Tex.
App.—Houston [1st Dist.] Jan. 28, 2020, no pet. h.). A party makes a statement in
its capacity as a seller of goods or services when the statement is made to further the
party’s business or to secure sales. See Gaskamp, 2020 WL 826729, at *17
(concluding that TCPA movants engaged in the complained-about conduct in their
capacity as sellers of services because the conduct occurred in the context of
furthering business for the purpose of securing sales); Bejarano v. Dorgan, No. 03-
19-00182-CV, 2019 WL 4458798, at *3 (Tex. App.—Austin Sept. 18, 2019, no pet.)
(mem. op.) (concluding that second Castleman element is established where the
statement was made “for the purpose of securing sales in the goods or services of
the person making the statement” (quoting Backes v. Misko, 486 S.W.3d 7, 21 (Tex.
App.—Dallas 2015, pet. denied))).
H&E pleaded and produced evidence that Lozoya proposed to complete the
site work at H&E’s facility and that, during the proposal process, Lozoya represented
that the concrete that it offered to supply to H&E would contain macro fiber and that
the asphalt that it offered to supply to H&E would be three inches thick. The contract
that the parties signed required Lozoya to install approximately 28,196 square feet
of three-inch asphalt and 8,250 square feet of eight-inch, 4000 psi concrete “with
fiber.” H&E agreed to pay Lozoya for its work.
The pleadings and the evidence establish that Lozoya made the complained-
about statements in its pursuit of business or sales and that it stood to profit from
those sales. Therefore, Lozoya made the statements in its capacity as a seller of
concrete and asphalt or as a seller of its services to install the concrete and asphalt.
The third Castleman element, that the complained-about statements arise out
of a commercial transaction that involves the kind of goods or services that Lozoya
provides, is closely related to the second element. See Castleman, 546 S.W.3d at
10
688; Gaskamp, 2019 WL 826728, at *17. For purposes of this factor, the sale or
lease of goods or services refers to the defendant’s sale or lease of goods or services.
Castleman, 546 S.W.3d at 688. The third element is satisfied by evidence that the
movant “pursued business for itself and stood to profit from it.” Bejarano, 2019 WL
4458798, at *3 (quoting Staff Care, Inc. v. Eskridge Enters., LLC, No. 05-18-00732-
CV, 2019 WL 2121116, at *8 (Tex. App.—Dallas May 15, 2019, no pet.) (mem.
op.)). As set out above, the pleadings and the evidence established that Lozoya made
the complained-about statements when it proposed to sell goods—concrete and
asphalt—and installation services for its own profit.
Lozoya, however, argues that, because it ultimately provided neither the
concrete nor the asphalt, its statements were not about its goods. In support of its
argument, Lozoya points to cases that have held that statements about another
person’s goods or services do not fall within the commercial speech exemption. See
Toth v. Sears Home Improvement Prods., 557 S.W.3d 142, 154–55 (Tex. App.—
Houston [14th Dist.] 2018, no pet.) (concluding that the movant’s statements about
a product that he did not sell and that were not made to promote the movant’s
personal business were not commercial speech); Moldovan v. Polito, No. 05-15-
01052-CV, 2016 WL 4131890, at *3–4 (Tex. App.—Dallas Aug. 2, 2016, no pet.)
(mem. op.) (concluding that commercial speech exemption did not apply to the
movant’s communications about the nonmovants’ business where the
communications were directed to the general public and not to the movant’s
customers); Kinney v. BCG Attorney Search, Inc., No. 03-12-00579-CV, 2014 WL
1432012, at *6–7 (Tex. App.—Austin Apr. 11, 2014, pet. denied) (mem. op.) (noting
that, for the commercial exemption to apply, the communication “must be made for
the purpose of securing sales in the goods or services of the person making the
statement” and that an anonymous statement about the nonmovant’s business that
made no reference to the movant’s business was not commercial speech). However,
11
none of the cases relied upon by Lozoya address the situation in which a party who
is selling goods or services makes statements about a good that it intends to supply
through a subcontract with a third party.
We question whether Lozoya’s choice to use another entity to supply the
goods that Lozoya sold insulates Lozoya’s statements from the commercial speech
exemption. However, we need not address that question because the pleadings and
the evidence clearly established that, at the time that Lozoya made the complained-
about statements, Lozoya sought to sell its own services to provide and install the
concrete and asphalt.
The final Castleman element requires that the intended audience of the
statement or conduct be an actual or potential customer of Lozoya for the kind of
goods or services that Lozoya provides. See Castleman, 546 S.W.3d at 688. The
pleadings and evidence established that Lozoya made the communications to H&E
and that H&E was an actual or potential customer of Lozoya’s goods or services.
We hold that H&E’s claims, which are based on statements made by Lozoya
as part of its proposal to perform site work at H&E’s facility, fall within the
commercial speech exemption. Because the exemption applies, Lozoya could not
invoke the protections of the TCPA, see Harper, 562 S.W.3d at 11, and the trial
court did not err when it denied Lozoya’s motion to dismiss. We overrule Lozoya’s
fifth issue.
Because we have considered only the factual statements in the pleadings, the
affidavits, and the documents attached to the affidavits, we need not address
Lozoya’s first two issues in which it argues that the trial court erred when it
considered factual allegations in H&E’s response to the motion to dismiss and
conclusory allegations in H&E’s response and pleadings. See TEX. R. APP. P. 47.1.
Further, because H&E’s claims fall within the commercial speech exemption, we
need not consider Lozoya’s third and fourth issues in which it complains that the
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trial court erred when it determined that Lozoya was not engaged in the exercise of
its right to free speech when it made the statements and that H&E established by
clear and specific evidence a prima facie case for each essential element of its claims.
See id.
In its sixth, seventh, and eighth issues, Lozoya argues that the trial court erred
when it (1) determined that the motion to dismiss was frivolous and intended to
delay, (2) awarded attorney’s fees to H&E, and (3) failed to award attorney’s fees
and sanctions to Lozoya. “We review the trial court’s decision to award attorney’s
fees under the TCPA for an abuse of discretion.” Caliber Oil & Gas, LLC v. Midland
Visions 2000, 591 S.W.3d 226, 242 (Tex. App.—Eastland 2019, no pet.); see also
Sullivan v. Tex. Ethics Comm’n, 551 S.W.3d 848, 857 (Tex. App.—Austin 2018,
pet. denied). “A trial court abuses its discretion when it acts arbitrarily or
unreasonably or without regard to guiding principles.” Caliber Oil & Gas, 591
S.W.3d at 242–43; see also Downer v. Aquamarine Operators, Inc., 701 S.W.2d
238, 241–42 (Tex. 1985).
In its eighth issue, Lozoya complains that the trial court erred when it failed
to award Lozoya attorney’s fees and sanctions. If a trial court grants a motion to
dismiss under the TCPA, it is required to award the movant (1) court costs,
reasonable attorney’s fees, and other expenses incurred to defend the action as
justice and equity may require and (2) sanctions against the party who brought the
legal action as the court determines sufficient to deter the party from bringing similar
actions. CIV. PRAC. & REM. § 27.009(a). As discussed above, the trial court did not
err when it denied Lozoya’s motion to dismiss; therefore, Lozoya was not entitled
to an award of attorney’s fees and sanctions. We overrule Lozoya’s eighth issue.
In its sixth and seventh issues, Lozoya contends that the trial court erred when
it awarded H&E attorney’s fees. “[T]o secure an award of attorney’s fees from an
opponent, the prevailing party must prove that: (1) recovery of attorney’s fees is
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legally authorized, and (2) the requested attorney’s fees are reasonable and necessary
for the legal representation, so that such an award will compensate the prevailing
party generally for its losses resulting from the litigation process.” Rohrmoos
Venture v. UTSW DVA Healthcare, LLP, 578 S.W.3d 469, 487 (Tex. 2019). Lozoya
asserts that H&E failed to establish either prong.
The TCPA authorizes a trial court to award costs and reasonable attorney’s
fees to the nonmovant if the motion to dismiss was frivolous or solely intended to
delay. CIV. PRAC. & REM. § 27.009(b). The trial court found that Lozoya’s motion
was “frivolous and intended to delay.” Lozoya contends that the evidence is
insufficient to support either finding.
A motion to dismiss is frivolous if it does not have a basis in law or in fact
and lacks a legal basis or legal merit. Caliber Oil & Gas, 591 S.W.3d at 243. Lozoya
contends that the evidence is insufficient to support the trial court’s determination
that the motion was frivolous because (1) H&E argued only that the motion was
frivolous based on the commercial speech exemption and (2) Lozoya “[did] not have
to prove anything on the exemption until the party claiming the exemption ha[d] met
their burden.” Lozoya essentially argues that a motion to dismiss can never be
frivolous if it is denied based on the application of the commercial speech
exemption.
We agree that H&E had the burden to prove that the commercial speech
exemption applied. However, it is equally true that, as the movant, Lozoya had a
duty, before it filed the motion, to evaluate whether it had a right to invoke the
protections of the TCPA. See Harper, 562 S.W.3d at 11; Caliber Oil & Gas, 591
S.W.3d at 243. We have determined that Lozoya was not entitled to the protections
of the TCPA because Lozoya’s statements constituted commercial speech. Much of
the evidence that establishes that Lozoya was engaged in commercial speech comes
from e-mails written by Lozoya’s vice president and affidavits from Lozoya’s CEO
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and vice president. Lozoya, therefore, had no basis in fact to support its position
that it had a right to invoke the protections of the statute.
If it had performed an evaluation of H&E’s claims, Lozoya also would have
determined that the motion to dismiss had no basis in law. Lozoya’s primary legal
argument as to why the commercial speech exemption did not apply to H&E’s
claims was that PB Materials supplied the concrete and APM supplied the asphalt
and that Lozoya’s statements, therefore, were not about its own goods. Lozoya cited
no authority to support the proposition that its statements about a good that it
proposed to sell did not constitute commercial speech simply because it chose to hire
a subcontractor to supply the good. Lozoya also failed to address that, regardless of
what company actually provided the concrete and asphalt, Lozoya made the
statements when it proposed to sell its services to supply and install those goods.
We stress that the fact that the commercial speech exemption applies is not
sufficient, in and of itself, to support a finding that a motion to dismiss is frivolous.
However, we cannot conclude that a trial court abuses its discretion when it finds
that a motion to dismiss is frivolous when the record shows (1) that the movant’s
pleadings and evidence establish that it was engaged in commercial speech, (2) that
the movant cited no authority that supported its primary legal argument, and (3) that
there is no indication that the movant performed any evaluation of the applicability
of the TCPA before it filed the motion. Therefore, we hold that the trial court did
not abuse its discretion when it determined that Lozoya’s motion to dismiss was
frivolous. Because the TCPA authorizes an award of attorney’s fees to the
nonmovant when a motion to dismiss is frivolous, we need not address whether the
trial court erred when it determined that the motion to dismiss was intended to delay.
See TEX. R. APP. P. 47.1. We overrule Lozoya’s sixth issue.
In its seventh issue, Lozoya argues that the evidence is insufficient to support
the amount of attorney’s fees awarded to H&E. Texas uses the “lodestar method,”
15
which is essentially a “short hand version” of the Arthur Anderson3 factors, to
determine reasonable and necessary attorney’s fees. Rohrmoos Venture, 578 S.W.3d
at 496. Under the lodestar method, the factfinder must first determine the reasonable
hours spent by counsel and the reasonable hourly rate for counsel’s work. El Apple I,
Ltd. v. Olivas, 370 S.W.3d 757, 760 (Tex. 2012). The factfinder then multiplies the
number of hours that counsel worked on the case by the applicable rate to determine
the base fee or lodestar. Id. The base fee is presumed to reflect the reasonable and
necessary attorney’s fees. Rohrmoos Venture, 578 S.W.3d at 499. The factfinder
may adjust the lodestar up or down if relevant factors indicate an adjustment is
necessary to reach a reasonable fee in the case. Id. at 500–01.
It is the fee claimant’s burden to provide sufficient evidence of both the
reasonable hours worked and the reasonable hourly rate. Id. at 498. “Sufficient
evidence includes, at a minimum, evidence of (1) particular services performed,
(2) who performed the services, (3) approximately when the services were
performed, (4) the reasonable amount of time required to perform the services, and
(5) the reasonable hourly rate for each attorney performing the services. Id.4
“General, conclusory testimony devoid of any real substance will not support
a fee award.” Id. at 501. Generalities about tasks performed provide insufficient
information for the factfinder to meaningfully review whether the tasks and hours
were reasonable and necessary. El Apple I, 370 S.W.3d at 764. While
contemporaneous billing records are not required, Rohrmoos Venture, 578 S.W.3d
at 502, there must be some evidence to inform the trial court of the time spent on
specific tasks to enable the factfinder to meaningfully review the requested fees,
3
Arthur Anderson & Co. v. Perry Equip. Corp., 945 S.W.2d 812, 818 (Tex. 1997).
4
The evidentiary standard is the same for attorney’s fees awarded as a fee-shifting sanction. See
Nath v. Tex. Children’s Hosp., 576 S.W.3d 707, 709–10 (Tex. 2019) (per curiam) (“Although this case
deals with attorney’s fees awarded through a sanctions order, the distinction is immaterial because all fee-
shifting situations require reasonableness.”).
16
Long v. Griffin, 442 S.W.3d 253, 253, 255 (Tex. 2014) (per curiam); City of
Laredo v. Montano, 414 S.W.3d 731, 736–37 (Tex. 2013) (per curiam) (reversing
and remanding to redetermine attorney’s fees when attorney testified to the time
expended and the hourly rate but failed to provide evidence of the time devoted to
specific tasks).
The only evidence to support the amount of attorney’s fees awarded to H&E
were two affidavits from its counsel, Matthew K. Joeckel. In the first affidavit,
Joeckel stated that he was an associate of Fee, Smith, Sharp & Vitullo, LLP and was
H&E’s counsel in the case. According to Joeckel, H&E was charged attorney’s fees
of $240 an hour for the work done on the case. Joeckel divided the work into three
categories: (1) seven hours to study the motion to dismiss, to evaluate the appropriate
case law, and to draft a letter to opposing counsel, for which H&E was charged fees
of $1,680; (2) twenty-three hours to review the motion to dismiss, to prepare and file
the response to the motion, to create affidavits in support of the motion, and to
identify supporting case law, for which H&E was charged $5,520; and (3) nine hours
to prepare for and participate in the hearing on the motion, for which H&E would be
charged $2,160. Joeckel did not explain the difference between “studying” and
“reviewing” the motion to dismiss or between “evaluating” and “identifying” case
law. Joeckel opined that H&E had incurred $9,360 for reasonable and necessary
attorney’s fees to respond to Lozoya’s motion to dismiss.
In his second affidavit, Joeckel used the same categories as in his first affidavit
to describe the work performed on the case. He increased the time spent to study
the motion to dismiss, to evaluate the appropriate case law, and to draft a letter to
opposing counsel to 8.8 hours, but decreased the billing rate for that time to $225
per hour. The total amount of fees for this block of work increased to $1,980.
Joeckel also increased the amount of time spent to review the motion to dismiss, to
prepare and file the response to the motion, to create affidavits in support of the
17
motion, and to identify supporting case law to 25.2 hours, but again decreased the
billing rate to $225 per hour. The total fees charged for this work increased to
$5,670. As to the attorney’s fees to prepare for and participate in the hearing, Joeckel
increased the time spent to 11.0 hours and included costs of $545.96 for a flight from
Dallas to Midland, which increased the fees for this block of work to $3,020.96.
Joeckel opined that H&E had incurred reasonable and necessary attorney’s fees of
$10,670.96 to respond to Lozoya’s motion to dismiss.
Joeckel’s affidavits are deficient in several respects. First, he did not
segregate the total time between various tasks and, even if we assume that he is the
only attorney who worked on the case, did not specify when he performed the work.
Second, based on Joeckel’s general description of the work performed, some of the
work could be duplicative. Third, Joeckel did not explain the changes in the
affidavits as to either the time spent on certain work or the hourly rate charged.
Finally, Joeckel did not provide any billing records that could help explain these
deficiencies. Joeckel’s affidavits, therefore, lack “the substance required to uphold
a fee award” and are insufficient. See Rohrmoos Venture, 578 S.W.3d at 505; see
also Nath, 576 S.W.3d at 709–10.
We sustain Lozoya’s seventh issue, reverse the trial court’s award of $9,360
for attorney’s fees, and remand the issue to the trial court for a redetermination of
fees. See El Apple, 370 S.W.3d at 765 (concluding that, because record did not
provide sufficient evidence to support discretionary award of attorney’s fees under
the Texas Commission on Human Rights Act, case should be remanded to the trial
court for a redetermination of fees); see also Rohrmoos Venture, 578 S.W.3d at 505;
Long, 442 S.W.3d at 256.
This Court’s Ruling
We reverse that portion of the trial court’s order in which it awarded H&E
$9,360 for attorney’s fees that it incurred to respond to Lozoya’s motion to dismiss,
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and we remand that issue to the trial court for a redetermination of the amount of
attorney’s fees that H&E is entitled to receive. We affirm the trial court’s order in
all other respects.
JIM R. WRIGHT
SENIOR CHIEF JUSTICE
March 26, 2020
Panel consists of: Bailey, C.J.,
Stretcher, J., and Wright, S.C.J.5
Willson, J., not participating.
5
Jim R. Wright, Senior Chief Justice (Retired), Court of Appeals, 11th District of Texas at Eastland,
sitting by assignment.
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