Fiamma Statler, LP, Fiamma Partners, LLC, and Fiamma Management Group, LLC v. Matthew D. Challis and Jefferies, LLC ( 2020 )

In the
Court of Appeals
Second Appellate District of Texas
at Fort Worth
___________________________
No. 02-18-00374-CV
___________________________
FIAMMA STATLER, LP; FIAMMA PARTNERS, LLC; AND FIAMMA
MANAGEMENT GROUP, LLC, Appellants and Appellees
V.
MATTHEW D. CHALLIS AND JEFFERIES, LLC, Appellees and Appellants
On Appeal from the 342nd District Court and the 141st District Court
Tarrant County, Texas
Trial Court Nos. 342-303752-18, 342-294034-17, and 141-294034-17
Before Sudderth, C.J.; Gabriel and Kerr, JJ.
Memorandum Opinion by Justice Gabriel
Concurring and Dissenting Memorandum Opinion by Chief Justice Sudderth
MEMORANDUM OPINION
In this appeal, we are asked to decide whether a thirty-one-page petition alleging
multiple claims against twelve defendants was subject to dismissal regarding two of
those defendants under Rule 91a and, if so, whether the prevailing defendants were
entitled to a larger award for costs and attorney’s fees. We conclude under the facts of
this case that although the petition included a plethora of facts, neither the petition’s
length nor its substantive allegations saved the claims brought against these two
defendants from dismissal under Rule 91a. Therefore, the two defendants were entitled
to a mandatory award of all costs and reasonable and necessary attorney’s fees.
Regarding costs, the trial court erred by awarding a specific amount, which is a
ministerial duty reserved for the trial court clerk. Regarding their trial attorney’s fees,
the two defendants as prevailing parties under Rule 91a were entitled to recover their
reasonable and necessary attorney’s fees incurred with respect to the challenged causes
of action. Because the two defendants supported their request for trial attorney’s fees
with sufficient proof, the trial court abused its discretion by limiting the recovery solely
to those fees tied to filing the successful motion to dismiss. Accordingly, we affirm the
trial court’s dismissal, but reverse and remand for a redetermination of the specified
amounts awarded for costs and for reasonable and necessary trial attorney’s fees. See
Tex. R. App. P. 43.2(a), (d). And although the evidence of conditional appellate
attorney’s fees was insufficient, that issue must be remanded to the trial court for a
redetermination as well.
2
I. BACKGROUND
A. THE PROJECT
This case involves the renovation and reconstruction of the historic Statler Hotel
and downtown public library in Dallas (the Project). In 2015, Commerce Statler
Development, LLC (the Developer) began to redevelop the Statler Hotel into a hotel,
apartments, restaurants, and retail space and to transform the adjacent library building
into office space. The Centurion Parties1 owned 75% of the Developer. The minority
interest effectively was owned by appellants Fiamma Statler, LP; Fiamma Partners,
LLC; and Fiamma Management Group, LLC (collectively and singularly, Fiamma).
Funding for the Project was accomplished through private and public funds,
including special subsidies from tax credits based on the Project’s location in a tax-
increment finance (TIF) district. Thus, the Project qualified for and received $46
million in TIF funds. PNC Investment Company, LLC purchased the TIF funds for
the Project. Other federally regulated loans were obtained through the assistance of
A&J Capital Investments, Inc. and Henry Global Consulting.
1
As identified by Appellants in their live pleading, the “Centurion Defendants”
were Centurion American Development Group, LLC; TriArc Construction, LLC; 1914
Commerce Leasing, LLC; 1914 Commerce GM, Inc.; Statler Developers, LLC; and
Mehrdad Moayedi. The Developer was not included as a Centurion Defendant. For
purposes of this opinion and unless otherwise noted, our references to the “Centurion
Parties” will track Appellants’ definition of the Centurion Defendants in their third
amended petition.
3
The Developer contracted with Statler Developers, one of the Centurion Parties,
to oversee “design, construction and development of the Project.” The Developer also
leased the Project to 1914 Commerce Leasing, another Centurion Party, which then
entered into an omnibus management agreement for the Project with Fiamma
Management.
When construction of the Project’s exterior was nearing completion, the
Centurion Parties selected one of their own—TriArc—to be the manager and general
contractor to finish out the interior. When Fiamma balked and questioned TriArc’s
selection, 1914 Commerce Leasing terminated its property-management agreement
with Fiamma Management. Under TriArc’s management, the interior finish-out costs
increased significantly.
These and other cost overruns spurred the Centurion Parties to attempt to sell
the TIF funds in a public-bond offering. In August 2016, appellee Jefferies, LLC and
its senior vice president, appellee Matthew D. Challis, brokered and underwrote a bond
sale, preparing an offering memorandum (the Offer) that included representations
about the nature of the Project and offering $41 million of the TIF funds for sale. See
17 C.F.R. § 240.15c2-12(f)(8) (2018). The funds were offered to and sold to Wisconsin
for $26 million.
B. THE LAWSUIT
The increased costs, the end of the management contract with Fiamma
Management, the handling of the funds received from public sources, and the TIF sale
4
soured the relationship between Fiamma, the Centurion Parties, and the Developer.
This led to a long and convoluted litigation history involving several amended petitions,
nonsuits, and an array of ever-shifting claims and allegations, all occurring before any
significant discovery was conducted.
1. Multiple Petitions and Initial Motions to Dismiss
In December 2016, Fiamma petitioned the 348th District Court of Tarrant
County for an order allowing Fiamma to investigate possible claims against A&J. See
Tex. R. Civ. P. 202.1. Fiamma twice amended its petition to add as defendants PNC
and Jefferies. On May 8, 2017, the trial court denied Fiamma’s petition. See Tex. R.
Civ. P. 202.4(a).
On July 31, 2017, Fiamma filed suit against several parties involved in the Project,
including Jefferies and Challis (the Underwriters); the suit was assigned to the 141st
District Court of Tarrant County.2 Against the Underwriters, Fiamma alleged claims
for
• aiding and abetting breach of fiduciary duty and
2
The Underwriters ascribe questionable motives to Fiamma’s filing suit in
Tarrant County where Challis resides, instead of in Dallas County where the Project is
located, because of “[t]he infrequency [in Tarrant County] of multi-party, complex
commercial disputes in which plaintiffs seek $100 million exclusive of punitive
damages.” But we are confident, even if the Underwriters are not, that the trial judges
of Tarrant County are as equipped and qualified as are the trial judges of Dallas County
to handle complex, commercial disputes. And as stated by the trial court, all cases are
important no matter the issues or the amount in controversy: “They’re all serious cases.
Okay. They’re all serious cases.”
5
• aiding and abetting fraud.
Two days later, Fiamma filed a notice of nonsuit, and the petition was dismissed.
On August 21, Fiamma filed an original petition bringing similar claims against
the Underwriters, A&J, Henry Global, and PNC. The case was assigned to the 352nd
District Court. The Underwriters moved to transfer the case back to the 141st District
Court because Fiamma’s prior nonsuit and rapid refiling constituted “improper forum-
or judge-shopping” given the “liberal rules regarding amendments to pleadings.” The
352nd District Court granted the motion and transferred the case to the 141st District
Court. Against the Underwriters, Fiamma raised claims for
• aiding and abetting Centurion American’s breach of fiduciary duty and
• aiding and abetting Centurion American’s fraud.
The Underwriters answered and raised the affirmative defense of legal justification. 3 See
Baty v. ProTech Ins. Agency, 63 S.W.3d 841, 863 (Tex. App.—Houston [14th Dist.] 2001,
pets. denied) (op. on reh’g).
Jefferies and Challis each filed a motion to dismiss Fiamma’s claims because they
had no basis in law or fact.4 See Tex. R. Civ. P. 91a.1. The motions were set for a
3
The Underwriters did not amend their answer in light of Fiamma’s later
amended petitions.
4
A&J also moved to dismiss Fiamma’s claim.
6
December 14 hearing. On November 13, Fiamma filed a first amended petition against
the same defendants. Against the Underwriters, Fiamma alleged
• fraud arising from its role in the TIF sale;
• aiding and abetting the “fraudulent scheme” to misuse the federally backed loan
proceeds and to sell the TIF funds; and
• conspiracy.
On November 28—sixteen days before the dismissal hearing—Fiamma filed a second
amended petition, adding as defendants most of the Centurion Parties 5 and the
Developer. Fiamma raised claims against the Underwriters for
• fraud;
• aiding and abetting the “fraudulent scheme” surrounding the Project and its
funding;
• aiding and abetting Centurion American’s, 1914 Commerce GM’s, and
Moayedi’s breach of the management contract with Fiamma Management; and
• conspiracy.
Rather than amending their dismissal motions, the Underwriters withdrew them on
December 11 “in light of [Fiamma’s] Second Amended Petition.” See Tex. R. Civ. P.
91a.5(b).
5
Fiamma did not name TriArc as a defendant.
7
Six hours later, Fiamma filed a third amended petition against the same
defendants and added the remaining Centurion Parties. Against the Underwriters,
Fiamma alleged:
• fraud by material misrepresentations in the Offer and by failing to disclose the
TIF sale to Fiamma;
• aiding and abetting fraud regarding the Project and, specifically, regarding the
TIF sale;
• aiding and abetting 1914 Commerce Development’s, Moayedi’s, the Developer’s,
and Centurion American’s breaches of fiduciary duty; and
• conspiracy.
2. Motion for Sanctions Based on Pleadings Abuse
The Underwriters then filed a motion for sanctions against Fiamma based on
pleadings abuse, raising some of the same arguments included in their prior motions to
dismiss:
[Fiamma] and [its] attorneys have abused the judicial process by filing
multiple frivolous, groundless, and false pleadings against [the
Underwriters] in bad faith and without reasonable inquiry of facts or
applicable law as the next step in their long campaign to coerce a buy-out
at a steep profit of their involvement in [the Project]. . . . [Fiamma’s]
baseless claims against [the Underwriters] rest on conclusory allegations
devoid of evidentiary support, are belied by publicly available documents,
and are unviable under Texas law.
See Tex. Civ. Prac. & Rem. Code Ann. § 10.004(a), (c); Tex. R. Civ. P. 13.
On January 23, 2018, the trial court stayed the case “until the date of the oral
hearing on the [sanctions] Motion,” which was later set for March 23, 2018. Fiamma
then nonsuited its claims against PNC and A&J. Three days before the hearing, Fiamma
8
responded to the Underwriters’ sanctions motion and argued that the motion was based
on no legal or evidentiary support and was premature because no appreciable discovery
had been conducted.
At the nonevidentiary hearing, the trial court ordered Fiamma to file a proposed
jury charge to clarify what claims it was alleging against which defendant. The
Underwriters explained the reason why they chose to file a sanctions motion instead of
a second motion to dismiss under Rule 91a:
[W]e did make similar arguments in a Rule 91(a) motion, and [Fiamma]
amended [its] petition two days later to address some of the challenges
that we raised, which to me is not the way that Rule 91(a) is supposed to
work. We confirmed that and eventually withdrew our Rule 91(a) motion.
Now, that very same day that we withdrew it, six hours later,
[Fiamma] again amended their petition and re[-]added the challenge[d]
cause of action [i.e., aiding and abetting breach of fiduciary duty].
....
. . . And yes, we did challenge it via Rule 91(a), and we’re bringing
the sanction motion under this rule, because Rule 91(a) doesn’t allow us
to deal with this type of gamesmanship.
The trial court then stated that the Underwriters should file another motion to dismiss
and that although Fiamma could continue to remove and re-add claims by amendment,
“at some point in time, if that becomes a pattern where [Fiamma is] doing that, I think
it becomes frivolous.” The trial court declined to rule on the motion at the hearing and
left the stay in place until the sanctions motion was determined.
9
Fiamma’s proposed jury charge, which Fiamma filed four days later, laid out the
definitions, instructions, and questions applicable to three claims against the
Underwriters:
• fraud;
• “assisting or encouraging” and “assisting and participating” in Centurion
American’s, TriArc’s, 1914 Commerce Leasing’s, 1914 Commerce GM’s,
Moayedi’s, and the Developer’s fraud; and
• “assisting or encouraging” and “assisting and participating” in Centurion
American’s, 1914 Commerce Leasing’s, 1914 Commerce GM’s, Moayedi’s, and
the Developer’s breaches of fiduciary duty.
The Underwriters objected to the proposed jury charge, arguing that the instructions
provided further evidence of Fiamma’s “repeated violations and gamesmanship,”
included claims not raised in Fiamma’s third amended petition, and included claims not
recognized in Texas.
3. “Renewed” Motion to Dismiss
One month after the trial court’s sanctions hearing, the Underwriters filed a
“[r]enewed” motion to dismiss Fiamma’s claims under Rule 91a. They pointed to
Fiamma’s “improper conduct” and challenged the legal and factual bases for each of
Fiamma’s claims against them. Further, they argued that Fiamma had abandoned its
conspiracy claim because it was not included in its proposed jury charge. The
Underwriters attached several exhibits to their motion, including the Offer the
Underwriters had prepared in 2016. Fiamma responded that the Underwriters were
attempting to seek a no-evidence summary judgment before discovery had been
10
conducted. It also argued that its aiding-and-abetting claims were cognizable under
Texas law, that these claims were properly pleaded through a “wealth of detailed factual
allegations,” and that it had not abandoned its conspiracy claim. The motion was set
for a June 1 hearing.
Although the hearing was held, the stenographic recording was lost or destroyed.
No party argues that the record from this hearing is “necessary to the appeal’s
resolution”; thus, we do not further address this discrepancy. Tex. R. App. P. 34.6(f)(3).
On June 15, the trial court granted the Underwriters’ renewed motion to dismiss
and dismissed Fiamma’s claims for “aiding and abetting breach of fiduciary duty, aiding
and abetting fraud, conspiracy, and fraud” against the Underwriters. Because the
Underwriters, therefore, were entitled to a mandatory award of all costs and reasonable
and necessary attorney’s fees, the trial court ordered the Underwriters to submit
evidence regarding their costs and fees no later than July 3. See Tex. R. Civ. P. 91a.7,
76 Tex. B.J. 221, 222 (2013) (Tex. Sup. Ct. 2013, amended 2019) (requiring costs and
attorney’s-fees award for prevailing party).6
6
The current version of Rule 91a.7 provides that costs and attorney’s fees “may”
be awarded to the prevailing party. Tex. R. Civ. P. 91a.7. This amendment, however,
applies only to “civil actions commenced on or after September 1, 2019.” Tex. R. Civ.
P. 91a 2019 cmt. We will thus apply and cite to the 2013 version of Rule 91a.7 in our
discussion of this issue.
11
4. Motion to Reconsider
On June 28, Fiamma filed a motion to reconsider the dismissal and argued that
the renewed motion to dismiss was untimely because it had been filed more than sixty
days after the third amended petition and that the order was untimely because it was
not granted or denied within forty-five days after the Underwriters filed their motion
to dismiss. See Tex. R. Civ. P. 91a.3(a), (c). The next day, the trial court lifted the stay
“for all parties.” The trial court then extended the Underwriters’ deadline to submit
evidence to the trial court of their costs and fees until three business days after the
reconsideration motion was determined. The trial court heard and denied Fiamma’s
motion on July 13, making the Underwriters’ costs and fees evidence due July 18.
5. Costs and Attorney’s Fees
On July 18, the Underwriters submitted their attorneys’ unredacted,
contemporaneous billing records to the court in camera accompanied by an affidavit
from their lead counsel, Katherine Treistman, in which she averred that the hourly rates
charged and the fees shown in the billing records were “reasonable and necessary for a
case of this magnitude and complexity” and were “incurred with respect to the
challenged causes of action from the matter’s inception on July 31, 2017, through
July 13, 2018.”7 She and two other attorneys (Harry J. Moren and Toni K. Lambert)
7
The unredacted billing records were provided to the court in camera on July 17;
Treistman’s affidavit and supporting memorandum were not filed with the court until
the next day.
12
had worked on the case for an hourly rate that ranged from $408 to $850. The curricula
vitae of Treistman, Moren, and Lambert were also attached to Treistman’s affidavit.
Treistman stated that the Underwriters were requesting $668,447 in reasonable and
necessary attorney’s fees.
The Underwriters provided Fiamma a copy of the redacted billing records on
July 19. Treistman averred that redacted records were necessary to protect information
subject to the attorney–client and work-product privileges. The redactions generally
were placed to conceal the subject matter of a billed task. A few examples:
(1) “T. Lambert[:] Compared original petition to amended petition to [redacted]”;
(2) “K. Treistman[:] Confer by phone twice with [Fiamma’s counsel] and team;
confer by email with co-defendants re [redacted]; strategize re motion for
sanctions”;
(3) “T Lambert[:] Review and revise motion to dismiss draft to include client
edits; beef up [redacted]; reorganize and rewrite [redacted]; add [redacted];
smaller edits”; and
(4) H. Moren[:] Prepare for hearing on motion to dismiss, confer with K.
Treistman re [redacted], email M. Challis re [redacted].”
Many entries were not redacted, however, and identified the legal professional
performing the task and the type of task that was billed. For example:
(1) “H. Moren[:] Meet and confer with plaintiffs’ counsel S. Klein re motion to
transfer court; confer with K. Treistman re same”;
(2) “T. Lambert[:] Prepare and edit special exceptions to Plaintiffs’ amended
complaint”;
(3) “K. Treistman[:] Review and revise motion to dismiss; write introduction to
same”; and
13
(4) “H. Moren[:] Draft response to reconsideration motion.”
Fiamma filed a motion to compel production of the unredacted billing records
to allow it to respond to the Underwriters’ evidence of their costs and attorney’s fees.
The trial court held an evidentiary hearing on this motion on August 10. At the hearing,
Fiamma argued that it could not effectively dispute the Underwriters’ requested
attorney’s fees because the Underwriters had provided only redacted billing records;
Fiamma offered as an exhibit, “for purposes of the hearing,” the redacted billing records
that the Underwriters had provided. The trial court stated that it would not consider
the unredacted billing records, declining to compel their production, and admitted the
redacted billing records as an exhibit over no objection by either Fiamma or the
Underwriters. Once Fiamma knew that the trial court would consider only the redacted
billing records, it requested “a reasonable time” to respond to the Underwriters’
requested attorney’s fees, which the trial court granted until September 28.
Fiamma responded on September 19 and argued that the Underwriters’ evidence
was legally insufficient to support the requested costs and attorney’s fees. Regarding
the attorney’s fees, Fiamma specifically attacked the evidentiary value of Treistman’s
affidavit and asserted that the billing records, even if considered, failed to segregate the
fees that were recoverable with respect to the challenged causes of action. Fiamma
attached the affidavit of its lead counsel, Gregory N. Ziegler, in which he asserted that
several deficiencies in Treistman’s affidavit showed that the requested attorney’s fees
14
were not reasonable or necessary. Ziegler countered Treistman’s rate testimony and
averred that he was charging Fiamma $350 per hour and that “other shareholders and
associates on this type of case” charge anywhere from $175 to $250 per hour.
Treistman also averred in her affidavit that the Underwriters had incurred
$12,410 in costs, which were included in the billing records. Fiamma argued that not
only was Treistman’s affidavit impermissibly conclusory on this issue, many of the
Underwriters’ requested costs were not identified as being recoverable under a specific
rule or statute and, thus, could not be awarded.
On October 10, the trial judge of the 141st District Court recused himself,
apparently at Fiamma’s request, and the case was transferred to the 342nd District
Court of Tarrant County.8 The Underwriters then replied to Fiamma’s attacks on the
sufficiency of their evidence to establish their costs and fees. They attached to their
reply the affidavit of Robert M. Hoffman, who stated that he was lead counsel for one
of the Underwriters’ co-defendants—PNC—and that he was charging a discounted
8
Shortly after the recusal and transfer, Fiamma filed its seventh amended petition
against the same defendants as those named in the third amended petition plus three
newly named defendants. Our record does not contain the fourth, fifth, or sixth
amended petitions. Fiamma and PNC, which was revived as a defendant after
Fiamma’s earlier nonsuit, are currently litigating whether Fiamma’s claims against PNC
are subject to dismissal under the Texas Citizens Participation Act. See PNC Inv. Co. v.
Fiamma Statler, LP, No. 02-19-00037-CV, 2020 WL 5241190, at *1, *7 (Tex. App.—
Fort Worth Sept. 3, 2020, no pet. h.) (mem. op.).
15
hourly rate of $722.50. Fiamma objected to Hoffman’s affidavit as being conclusory
and lacking foundation.
The 342nd District Court then took up the issue of the Underwriters’ costs and
attorney’s fees under Rule 91a.7 at a January 17, 2019 hearing. Fiamma again argued
that the billing records were incomplete and not timely provided to the court or to
Fiamma and attacked the sufficiency of Treistman’s and Hoffman’s affidavits. Fiamma
also argued that any costs and fees regarding anything other than the Underwriters’
ultimately successful renewed motion to dismiss, such as their sanctions motion, could
not be included in the awarded amount. Finally, Fiamma asserted that not all of the
costs requested by the Underwriters were recoverable, even under Rule 91a.7, because
they were not authorized as recoverable court costs. See Tex. Civ. Prac. & Rem. Code
Ann. § 31.007. On January 31, the trial court awarded the Underwriters $36,750 “in
attorney’s fees” and $408 “in court costs.” The trial court did not rule on Fiamma’s
objections to Treistman’s and Hoffman’s affidavits or on Fiamma’s challenges to the
sufficiency of the Underwriters’ evidence of fees and costs.
6. Severance and Appeal
The Underwriters moved to sever Fiamma’s claims brought against them from
Fiamma’s claims brought against the remaining defendants, which the trial court
granted. Fiamma then filed a notice of appeal regarding the order granting the
Underwriters’ renewed motion to dismiss, the denial of its motion to reconsider the
dismissal, and the costs and fees award. On appeal, Fiamma argues that dismissal was
16
inappropriate because the Underwriters’ motion was untimely and because Fiamma’s
claims were sufficiently based in law and fact. Fiamma also asserts that the
Underwriters were not entitled to costs or attorney’s fees because they should not have
been a prevailing party or because the Underwriters’ proof was insufficient. The
Underwriters also filed a notice of appeal from the trial court’s costs and attorney’s-fees
award because they had allegedly proved that they were entitled to a significantly larger
award. See Tex. R. App. P. 25.1(c).
II. DISMISSAL UNDER RULE 91A
A. PROCEDURAL REQUIREMENTS
As a procedural device, Rule 91a is “unique, an animal unlike any other in its
particulars.” Wooley v. Schaffer, 447 S.W.3d 71, 84 (Tex. App.—Houston [14th Dist.]
2014, pet. denied) (Frost, C.J., concurring). And although Rule 91a is “an effective tool
to quickly ferret out groundless causes of action,” a movant is guided by the rule’s
procedural requirements in seeking a dismissal early in the life of a case. Emma Cano
& Lamont A. Jefferson, Rule 91A: Early Disposition Tool or the Mean Green Mother from
Outer Space?, 87 The Advoc. (Tex.) 1, 1 (2019).
The movant must refer to Rule 91a in the motion; must identify the claim to
which it is addressed; and must specify the reasons why the claim has no basis in law,
fact, or both. Tex. R. Civ. P. 91a.2. The motion must be filed no later than sixty days
after the claim is served on the movant, and the trial court must rule on the motion no
later than forty-five days after the motion was filed. Tex. R. Civ. P. 91a.3.
17
Fiamma filed and served its third amended petition on December 11, 2017.
Forty-three days later, the trial court stayed the case. The Underwriters filed their
renewed motion on April 23, 2018. The trial court granted the motion on June 15 and
lifted the stay on June 29. In its first issue, Fiamma argues that the trial court erred by
dismissing its claims against the Underwriters because either (1) the Underwriters failed
to move for dismissal within sixty days after Fiamma served the third amended petition
or (2) the trial court failed to rule on the motion within forty-five days after the motion
was filed. But even if both were untimely, we conclude that Fiamma cannot show harm
arising from either alleged error.
Although the procedural deadlines in Rule 91a are phrased in terms of “must,”
these provisions are directory and not mandatory. Tex. R. Civ. P. 91a.3; see MedFin
Manager, LLC v. Stone, No. 04-19-00662-CV, 2020 WL 5027201, at *3 (Tex. App.—San
Antonio Aug. 26, 2020, no pet. h.); Smale v. Williams, 590 S.W.3d 633, 636 (Tex. App.—
Texarkana 2019, no pet.); Koenig v. Blaylock, 497 S.W.3d 595, 598–99 (Tex. App.—Austin
2016, pet. denied) (citing Chisholm v. Bewley Mills, 287 S.W.2d 943, 945 (Tex. 1956)).
Thus, any noncompliance with the timing of the renewed motion or the trial court’s
ruling will not result in reversal if such error is harmless. See Tex. R. App. P. 44.1(a);
Aguilar v. Morales, 545 S.W.3d 670, 682 (Tex. App.—El Paso 2017, pet. denied); Walker
v. Owens, 492 S.W.3d 787, 790–91 (Tex. App.—Houston [1st Dist.] 2016, no pet.); see
also Malone v. Malone, No. 06-10-00083-CV, 2011 WL 908176, at *5 (Tex. App.—
Texarkana Jan. 7, 2011, no pet.) (mem. op.) (“The harmless error rule applies to all
18
errors, even those involving the violation of procedural rules couched in mandatory
language.”).
Fiamma asserts that it was harmed by the delays because they allowed the
Underwriters to amass more attorney’s fees. But Rule 91a, including its directory
deadlines, was intended to benefit a movant seeking early dismissal of a baseless claim
before costly litigation ensues. Walker, 492 S.W.3d at 790 n.3. Additional time would
not prejudice a nonmovant because the delay would give the nonmovant “more time
to formulate a response to a dismissal argument, more time to amend a petition to add
facts or adjust legal theories, and more time to consider whether to non-suit [its] case.”
Koenig, 497 S.W.3d at 599; see also Smale, 590 S.W.3d at 636–37. And the trial court’s stay
during its consideration of the sanctions and dismissal motions belies Fiamma’s
argument that the delays necessarily caused the Underwriters’ attorney’s fees to
increase.9 See Marshall v. Enter. Bank, No. 10-16-00379-CV, 2018 WL 4224078, at *3
(Tex. App.—Waco Sept. 5, 2018, pet. denied) (mem. op.). We cannot conclude that
either of these complained-of delays probably caused the rendition of an improper
judgment or probably prevented Fiamma from properly presenting its case to this court.
See Tex. R. App. P. 44.1(a). Thus, we overrule Fiamma’s first issue and turn to the
merits of the Underwriters’ motion to dismiss under Rule 91a.
9
Further, we note that Fiamma’s own delay in failing to raise the alleged deadline
violations until its motion to reconsider could be seen as a cause of some of the
Underwriters’ increased attorney’s fees.
19
B. STANDARD AND SCOPE OF REVIEW
Rule 91a allows a party to move to dismiss a claim brought against it if the claim
has “no basis in law or fact.” Tex. R. Civ. P. 91a.1. If a claimant’s factual allegations,
taken as true, and the reasonable inferences to be drawn from those allegations do not
entitle the claimant to the relief sought, the claim has no basis in law. Tex. R. Civ. P.
91a.1. Legal conclusions alleged by the pleader should not be taken as true however.
See City of Austin v. Liberty Mut. Ins. Co., 431 S.W.3d 817, 826 (Tex. App.—Austin 2014,
no pet.). Two examples of the meaning of “no basis in law”:
1. The petition alleges too few facts to show a viable, legally cognizable right to
relief. In other words, inadequate content may justify dismissal because it does
not provide fair notice of a legally cognizable claim for relief.
2. The petition alleges additional facts that, if true, bar recovery.
See Reaves v. City of Corpus Christi, 518 S.W.3d 594, 608 (Tex. App.—Corpus Christi–
Edinburg 2017, no pet.); Stallworth v. Ayers, 510 S.W.3d 187, 190 (Tex. App.—Houston
[1st Dist.] 2016, no pet.); Guillory v. Seaton, LLC, 470 S.W.3d 237, 240 (Tex. App.—
Houston [1st Dist.] 2015, pet. denied); DeVoll v. Demonbreun, No. 04-14-00116-CV,
2014 WL 7440314, at *3 (Tex. App.—San Antonio Dec. 31, 2014, no pet.). A claim
has no basis in fact if “no reasonable person could believe the facts pleaded,” which is
similar to a legal-sufficiency review. Tex. R. Civ. P. 91a.1; City of Dall. v. Sanchez,
494 S.W.3d 722, 724 (Tex. 2016) (per curiam); see Drake v. Chase Bank, No. 02-13-00340-
CV, 2014 WL 6493411, at *2 (Tex. App.—Fort Worth Nov. 20, 2014, no pet.) (mem.
op.).
20
In determining a Rule 91a motion, the trial court’s factual inquiry is limited to
“the pleading of the cause of action” and any pleading exhibits permitted by Rule 59,
which are those attached to or copied into the plaintiff’s pleadings. Tex. R. Civ. P.
91a.6, 59; see Bethel v. Quilling, Selander, Lownds, Winslett & Moser, P.C., 595 S.W.3d 651,
656 (Tex. 2020). But the trial court’s legal inquiry is not as limited. See Bethel,
595 S.W.3d at 656. In its legal inquiry, a trial court may additionally consider the
substance of the motion to dismiss and any arguments presented at the hearing. 10 See
id. at 655.
We review the trial court’s ruling de novo because whether a claim has a basis in
law or a basis in fact are questions of law. See id. at 654; Sanchez, 494 S.W.3d at 724;
Bedford Internet Office Space, LLC v. Tex. Ins. Grp., Inc., 537 S.W.3d 717, 719 (Tex. App.—
Fort Worth 2017, pet. dism’d by agr.); Weizhong Zheng v. Vacation Network, Inc.,
468 S.W.3d 180, 183 (Tex. App.—Houston [14th Dist.] 2015, pet. denied). In doing
so, we incorporate the fair-notice pleading standard to determine if the petition
allegations are sufficient to allege a legal and factual basis for each cause of action.
Wooley, 447 S.W.3d at 75–76 (majority op.); see Tex. R. Civ. P. 45(b), 47(a); In re Odebrecht
Constr., Inc., 548 S.W.3d 739, 746 (Tex. App.—Corpus Christi–Edinburg 2018, orig.
proceeding) (op. on reh’g). That means we construe the pleadings liberally in Fiamma’s
10
As we recognized previously, there is no reporter’s record from the hearing on
the Underwriters’ renewed motion; thus, we cannot determine if additional arguments
were made at the hearing.
21
favor, accepting as true Fiamma’s factual allegations, to determine whether Fiamma
sufficiently alleged a legal and factual basis for each cause of action, thereby giving the
Underwriters fair notice of the nature of the controversy, its basic issues, and the type
of evidence that could be relevant. See First United Pentecostal Church of Beaumont v. Parker,
514 S.W.3d 214, 224–25 (Tex. 2017); Darnell v. Rogers, 588 S.W.3d 295, 301 (Tex. App.—
El Paso 2019, no pet.) (quoting Low v. Henry, 221 S.W.3d 609, 612 (Tex. 2007)); Thomas
v. 462 Thomas Family Props., LP, 559 S.W.3d 634, 639–40 (Tex. App.—Dallas 2018, pet.
denied); Wooley, 447 S.W.3d at 75–76; Gregory P. Sapire & Mario Franke, Dismissal
Motions Under Rule 91a, 91 The Advoc. (Tex.) 318, 334 (2020).
Although Rule 91a does not supersede the fair-notice pleading requirements, 11
fair notice should be judged in the context of Rule 91a’s definitions of no legal or factual
basis. Resendez v. Scottsdale Ins. Co., No. 1-15-CV-1082 RP, 2016 WL 756576, at *2 (W.D.
Tex. Feb. 26, 2016) (order) (interpreting Rule 91a and citing New Life Assembly of God v.
Church Mut. Ins. Co., No. 2:15-CV-00051-J, 2015 WL 2234890, at *4–5 (N.D. Tex. May
12, 2015) (mem. op. & order)); Reaves, 518 S.W.3d at 598; see also Tex. R. Civ. P. 91a.9
(providing that Rule 91a dismissal is “in addition to, and does not supersede or affect,
11
Indeed, the analysis of the bill that authorized the Supreme Court to enact a
dismissal rule for frivolous lawsuits noted that the Supreme Court was not required to
adopt the federal standard in Rule 12(b)(6) and that the eventual procedural rule—Rule
91a—“would not change the forms of pleadings in Texas” unless the Supreme Court
made any necessary changes to the pleading requirements. House Comm. on Judiciary
& Civ. Juris., Bill Analysis, Tex. H.B. 274, 82d Leg., R.S. (2011).
22
other procedures that authorize dismissal” such as special exceptions under Rules 90
and 91); Sapire & Franke, supra, at 334 (recognizing Rule 91a’s no-basis-in-fact standard
“may offer the only opportunity for an expedited resolution”). To fail to apply Rule
91a’s dictates in tandem with the fair-notice standard would read one out of existence,
which is a result we cannot approve. See Fort Worth Transp. Auth. v. Rodriguez, 547 S.W.3d
830, 839 (Tex. 2018) (“[O]ur analysis seeks to harmonize the two statutes at issue in
this case, giving effect to both . . . .”); In re Christus Spohn Hosp. Kelberg, 222 S.W.3d 434,
437 (Tex. 2007) (orig. proceeding) (providing rules of civil procedure subject to
statutory rules of construction). Although several courts have found federal cases
applying Rule 12(b)(6) to be persuasive in reviewing a Rule 91a dismissal and have
implicitly held the reviews to be the same,12 we do not go that far in this case. We
12
See, e.g., Ruth v. Crow, No. 03-16-00326-CV, 2018 WL 2031902, at *5 (Tex.
App.—Austin May 2, 2018, pet. denied) (mem. op. on reh’g); Salazar v. HEB Grocery
Co., No. 04-16-00734-CV, 2018 WL 1610942, at *3 (Tex. App.—San Antonio Apr. 4,
2018, pet. denied) (mem. op.), cert. denied, 140 S. Ct. 260 (2019); Aguilar, 545 S.W.3d at
676; Weizhong Zheng, 468 S.W.3d at 186; Wooley, 447 S.W.3d at 76; GoDaddy.com, LLC v.
Toups, 429 S.W.3d 752, 754 (Tex. App.—Beaumont 2014, pet. denied). But see In re Butt,
495 S.W.3d 455, 461–62 (Tex. App.—Corpus Christi–Edinburg 2016, orig. proceeding)
(recognizing that some courts follow Rule 12(b)(6) analysis in applying Rule 91a, but
relying solely on fair notice in reviewing Rule 91a motion). See generally Sapire & Franke,
supra, at 343–44 (recognizing split of authority); Cano & Jefferson, supra, at 4–5
(discussing relation between Rules 91a and 12(b)(6) and stating “Texas courts are
regularly referring to Rule 12(b)(6) jurisprudence in deciding the sufficiency of pleadings
under Rule 91a”); Kennon L. Wooten & Anthony Arguijo, Rule 91a Dismissal Procedures:
Basic Considerations and Unanswered Questions, 80 The Advoc. (Tex.) 60, 60–61 (2017)
(recognizing uncertainty of Rule 91a’s effect on fair-notice standard).
23
merely read the fair-notice precepts along with Rule 91a’s requirements of a pleaded
legal and factual basis for each claim, as those terms are defined in Rule 91a.1.
C. FIAMMA’S CLAIMS AND THEIR BASES
1. Fraud
In subpart A of its third issue, Fiamma argues that it adequately pleaded its fraud
claim such that the Underwriters were given fair notice of the claim’s legal and factual
bases. To allege a legal and factual basis for its fraud claim against the Underwriters,
Fiamma was required to give fair notice that
1. the Underwriters made a material representation that was false;
2. the Underwriters knew the representation was false or made it recklessly as a
positive assertion without any knowledge of its truth;
3. the Underwriters intended to induce Fiamma to act upon the representation;
and
4. Fiamma actually and justifiably relied upon the representation and suffered
injury as a result.
See JP Morgan Chase Bank, N.A. v. Orca Assets G.P., 546 S.W.3d 648, 653 (Tex. 2018);
Lloyd Walterscheid & Walterscheid Farms, LLC v. Walterscheid, 557 S.W.3d 245, 261 (Tex.
App.—Fort Worth 2018, no pet.); see also Mitchell Energy Corp. v. Bartlett, 958 S.W.2d 430,
439 (Tex. App.—Fort Worth 1997, pet. denied) (holding plaintiff’s reasonable reliance
on deception is element of fraudulent concealment).
Fiamma alleged that the Underwriters’ Offer contained at least six “material
misrepresentations of fact about the Project” that were either “expressly false or
24
misleadingly concealed.” Fiamma asserted that the Underwriters misrepresented to
Fiamma, “either directly or indirectly,” that the Offer statements were true; but Fiamma
also alleged that the Underwriters concealed the TIF sale from Fiamma and did not
contact Fiamma during the “due diligence process” before issuing the Offer, leading
Fiamma to take “no action to stop” the TIF sale. Had it been informed of the TIF sale,
Fiamma contended that it could have corrected the alleged misrepresentations in the
Offer, and the bonds would not have been issued based on the alleged false
information. The misrepresentations allegedly damaged Fiamma “by devaluing
[Fiamma’s] ownership interests” in the Project.
None of these allegations, even taken as true, show that the Underwriters
prepared the Offer with the intent that Fiamma rely on the representations to Fiamma’s
detriment. See, e.g., DeVoll, 2014 WL 7440314, at *2–3. Nor do the allegations give fair
notice that the Underwriters made any misrepresentations directly to Fiamma or
indirectly to a third party that were subsequently relied on by Fiamma. See, e.g., Exxon
Corp. v. Emerald Oil & Gas Co., 348 S.W.3d 194, 217 (Tex. 2011). The Offer admittedly
was directed to Wisconsin, not Fiamma. See Scott v. Comm’l Servs. of Perry, Inc., 121 S.W.3d
26, 30 (Tex. App.—Tyler 2003, pet. denied). The misrepresentations or failures to
disclose alleged in Fiamma’s petition concerned a matter about which Fiamma had
personal knowledge as an interested owner of the Project. See Darnell v. Rogers,
588 S.W.3d 295, 305 (Tex. App.—El Paso 2019, no pet.). No reasonable person could
believe that Fiamma would rely on the Offer, even if false, to its detriment based on
25
Fiamma’s actual knowledge. Indeed, Fiamma negated any possibility of justifiable
reliance by alleging that it would have corrected the misrepresentations and stopped the
sale if it had reviewed the Offer before the sale. And no such reliance would have been
justifiable, as a matter of law. See, e.g., Grant Thornton LLP v. Prospect High Income Fund,
314 S.W.3d 913, 923–24 (Tex. 2010).
We conclude that Fiamma’s fraud claim as pleaded had no basis in law or fact,
failing to give fair notice (as the Underwriters argued in their renewed motion to
dismiss); thus, the trial court did not err by granting the Underwriters’ motion as to this
claim. See DeVoll, 2014 WL 7440314, at *3. We overrule issue 3.A.
2. Aiding and Abetting
In subpart B of its third issue, Fiamma argues that it adequately pleaded claims
against the Underwriters for aiding and abetting fraud and for aiding and abetting
breach of fiduciary duty. Under the aiding-and-abetting umbrella, there are three
theories of liability, two of which were alleged by Fiamma against the Underwriters:
(1) assisting or encouraging a tort and (2) assisting and participating in a tort. See
O’Connor’s Texas Causes of Action 1263–64 (2019); Thomas C. Riney, Participatory &
Vicarious Liability in Business Litigation, 37 Corp. Couns. Rev. 31, 38 (2018); see also Collins
v. Kappa Sigma Fraternity, No. 02-14-00294-CV, 2017 WL 218286, at *15 (Tex. App.—
Fort Worth Jan. 19, 2017, pet. denied) (mem. op.); Restatement (Second) of Torts
§ 876(b)–(c) (Am. Law Inst. 1979). In its allegations of aiding and abetting fraud,
Fiamma contended that the Underwriters assisted and participated in the alleged
26
fraudulent scheme involving the Project. Regarding aiding and abetting breach of
fiduciary duty, Fiamma alleged that the Underwriters assisted, encouraged, and
participated in the breach.
Texas has not clearly recognized that assisting or encouraging a primary actor’s
tort is a recognized cause of action independent of a civil conspiracy claim. See First
United, 514 S.W.3d at 225; Juhl v. Airington, 936 S.W.2d 640, 643 (Tex. 1996); see also In
re DePuy Orthopaedics, Inc., 888 F.3d 753, 781–82 (5th Cir. 2018); AmWins Specialty Auto,
Inc. v. Cabral, 582 S.W.3d 602, 610–11 (Tex. App.—Eastland 2019, no pet.). See generally
O’Connor’s Texas Causes of Action 1264 (recognizing Texas Supreme Court has not
adopted Restatement’s recognition of assisting-or-encouraging liability in Restatement
Section 876(b) but noting “it is likely” the Court will do so). However, Texas arguably
has recognized assisting and participating in a tort as a theory for imposing joint,
derivative liability. See City of Fort Worth v. Pippen, 439 S.W.2d 660, 665 (Tex. 1969);
Kinzbach Tool Co. v. Corbett-Wallace Corp., 160 S.W.2d 509, 514 (Tex. 1942); see also Milligan
v. Salamone, No. 1:18-CV-327-RP, 2019 WL 4003093, at *1–2 (W.D. Tex. Aug. 23, 2019)
(order on reh’g); Clayton v. Richards, 47 S.W.3d 149, 154 (Tex. App.—Texarkana 2001,
pet. denied); O’Connor’s Texas Causes of Action 1271; Restatement (Second) of Torts
§ 876(c). But see Mark III Sys., Inc. v. Sysco Corp., No. 01-05-00488-CV, 2007 WL 529960,
at *8 (Tex. App.—Houston [1st Dist.] Feb. 22, 2007, no pet.) (mem. op.) (“Because
‘participating and assisting’ is not a recognized cause of action in the context of
misappropriation of trade secrets and fraud, the trial court did not err in granting
27
summary judgment on those claims.”); Nelson S. Ebaugh, The Liability, 78 Tex. B.J. 362,
365 (2015) (recognizing questionable viability of claim for participating and assisting in
a tort under Section 876(c) of Restatement).
But even assuming both liability theories are cognizable independent of
Fiamma’s conspiracy claim, we conclude that neither, as alleged, has a basis in law or
fact and we overrule issue 3.B.13 See Ernst & Young, L.L.P. v. Pac. Mut. Life Ins. Co.,
51 S.W.3d 573, 583 n.7 (Tex. 2001); Juhl, 936 S.W.2d at 644.
a. Aiding and abetting fraud
The Underwriters argue that Fiamma did not raise a claim for aiding and abetting
fraud against them in the third amended petition. But Fiamma specified in a bolded
heading that it was raising a claim for aiding and abetting fraud. Fiamma then alleged
under that heading that some of the defendants assisted others in a fraudulent scheme
regarding the Project’s funding:
Each of the Big Three[14] and Challis, individually, committed the
fraudulent acts identified herein. In addition, each of the Non-Fiduciary
Centurion Defendants[15] assisted in and encouraged the fraudulent acts.
13
Because we assume these liability theories are cognizable for purposes of this
case, we need not address Fiamma’s alternative second issue urging this court to
definitively decide the existence of such claims. See Tex. R. App. P. 47.1.
14
Fiamma defined the “Big Three” as PNC, A&J, Henry Global, and Jefferies.
15
Fiamma did not specifically define “Non-Fiduciary Centurion Defendants”;
but it did define “Fiduciary Defendants” as 1914 Commerce GM, Moayedi, the
Developer, and Centurion American. Reading this definition together with Fiamma’s
28
Each of [sic] had knowledge of the fraudulent scheme . . . . Each assisted
in completing these fraudulent transactions and activities, with the intent
and understanding that the activities were fraudulent, or with reckless
disregard.
While Fiamma’s “each” language is imprecise and its attempt to group the defendants
into various named-party groups is confusing, we conclude that Fiamma fairly included
the Underwriters as parties to Fiamma’s allegation that “[e]ach assisted in completing
these fraudulent transactions and activities”; thus, Fiamma sufficiently named the
Underwriters as parties to its aiding-and-abetting-fraud claim. See Tex. R. Civ. P. 45(b),
47(a); Restatement (Second) of Torts § 876(c) & cmt. e (defining and explaining
assisted-and-participated theory of aiding-and-abetting liability).
Even so, aiding and abetting, no matter the pleaded theory of liability, is a
dependent claim that is premised on an underlying tort. See Ernst & Young, 51 S.W.3d
at 583; see also Nettles v. GTECH Corp., Nos. 17-1010, 18-0159, 2020 WL 5754456, at *9
(Tex. June 12, 2020) (recognizing aiding and abetting is “derivative” liability theory).
We have already determined that the trial court did not err by dismissing Fiamma’s
fraud claim based on the lack of fair notice of a legal or factual basis for such a claim
against the Underwriters; thus, Fiamma’s claim for aiding and abetting that same fraud
was also subject to dismissal based on the Underwriters’ renewed motion. See Nettles,
2020 WL 5754456, at *9 (holding aiding and abetting, as a “liability-spreading theor[y],”
definition of “Centurion Defendants,” we conclude that the Non-Fiduciary Centurion
Defendants were TriArc, 1914 Commerce Leasing, and Statler Developers.
29
depends on “liability for an underlying tort” and would “survive or fail alongside that
tort”).
b. Aiding and abetting breach of fiduciary duty
Regarding aiding and abetting breach of fiduciary duty, Fiamma alleged two
theories of liability: assisting or encouraging as well as assisting and participating.
Fiamma alleged that the Underwriters knew the Fiduciary Defendants—1914
Commerce GM, Moayedi, the Developer, and Centurion American—owed Fiamma a
fiduciary duty and that the Underwriters played a part in the Fiduciary Defendants’
breaches. Fiamma summarized the alleged breaches to have been “the ongoing
irregularities in the construction contracting, operation, financing, and budgeting of
the . . . Project, including unauthorized and unsupported budget increases, transfers of
valuable project assets, wrongful termination of [Fiamma Management’s] management
role on the . . . Project, and other violations of the [Fiduciary16] Defend [sic] fiduciary
duties to [Fiamma] as minority owner[].”
16
Fiamma alleged in this portion of its third amended petition that the “Centurion
Defend [sic]” violated their fiduciary duties to Fiamma. Because Fiamma’s definition
of the Centurion Defendants included parties that Fiamma also identified as Non-
Fiduciary Defendants, who necessarily would not owe a fiduciary duty to Fiamma, we
have assumed that Fiamma meant the “Fiduciary Defendants” in its summary statement
of this claim. But if Fiamma meant to include the Non-Fiduciary Defendants in this
allegation, such a claim would have no basis in fact or law based on the absence of an
owed fiduciary duty to Fiamma. See Kline v. O’Quinn, 874 S.W.2d 776, 786–87 (Tex.
App.—Houston [14th Dist.] 1994, writ denied).
30
(1). assisting or encouraging
To show the Underwriters’ derivative breach-of-fiduciary-duty liability based on
their assistance or encouragement (if such a claim is cognizable), Fiamma had to give
fair notice that (1) the Fiduciary Defendants committed a breach of fiduciary duty;
(2) the Underwriters had knowledge that the Fiduciary Defendants’ conduct constituted
a breach of fiduciary duty; (3) the Underwriters had the intent to assist the Fiduciary
Defendants in committing the tort; (4) the Underwriters gave the Fiduciary Defendants
assistance or encouragement; and (5) the Underwriters’ assistance or encouragement
was a substantial factor in causing the breach of fiduciary duty. See Juhl, 936 S.W.2d at
644; Immobiliere Jeuness Establissement v. Amegy Bank Nat’l Ass’n, 525 S.W.3d 875, 882 (Tex.
App.—Houston [14th Dist.] 2017, no pet.); see also Restatement (Second) of Torts
§ 876(b) & cmt. d.
Fiamma alleged in a conclusory manner that the Underwriters “knew” or had
“full knowledge” that the Fiduciary Defendants breached their duty to Fiamma. As
argued by the Underwriters in their motion to dismiss, Fiamma failed to allege any facts
in its third amended petition supporting this bare “knowledge” allegation. See First
United, 514 S.W.3d at 224–25; Salazar, 2018 WL 1610942, at *3–5. Unadorned recitals
of the elements of a cause of action, supported by mere conclusory statements, fail to
sufficiently allege a cause of action under the fair-notice and Rule 91a standards.
GoDaddy.com, 429 S.W.3d at 754; see Weizhong Zheng, 468 S.W.3d at 186. In other words,
Fiamma’s basic recitation that the Underwriters had knowledge of the Fiduciary
31
Defendants’ breach is nothing more than a conclusory restatement of the legal elements
of the claim itself with no supporting factual allegation. See generally Roark v. Allen,
633 S.W.2d 804, 810 (Tex. 1982) (“A petition is sufficient if it gives fair and adequate
notice of the facts upon which the pleader bases his claim.” (emphasis added)). Thus,
this aiding-and-abetting liability theory was appropriately dismissed under Rule 91a
because it had no basis in fact or law, failing to give fair notice to the Underwriters. See
Darnell, 588 S.W.3d at 305; Beddingfield v. Beddingfield, No. 10-15-00344-CV, 2018 WL
6378553, at *13 (Tex. App.—Waco Dec. 5, 2018, pet. denied) (mem. op.); Salazar,
2018 WL 1610942, at *3–5; Dailey v. Thorpe, 445 S.W.3d 785, 787–89 (Tex. App.—
Houston [1st Dist.] 2014, no pet.).
(2). assisting and participating
To show the Underwriters’ derivative liability for assisting and participating in
the Fiduciary Defendants’ alleged breach of fiduciary duty, Fiamma had to sufficiently
allege that (1) the Fiduciary Defendants’ activity was a breach of fiduciary duty; (2) the
Underwriters provided substantial assistance to the Fiduciary Defendants in
accomplishing the tortious result; (3) the Underwriters’ own conduct, separate from the
Fiduciary Defendants’, was a breach of duty to Fiamma; and (4) the Underwriters’
participation was a substantial factor in causing the breach of fiduciary duty. See Premier
Rsch. Labs, LP v. Nurman, No. A-13-CA-069-SS, 2014 WL 978477, at *3 (W.D. Tex.
Mar. 12, 2014) (order); O’Connor’s Texas Causes of Action 1271; see also Restatement
(Second) of Torts § 876(c) & cmt. e.
32
As the Underwriters asserted in their renewed motion to dismiss, Fiamma alleged
no facts showing that the Underwriters’ actions surrounding the Offer were a
substantial causative factor—a cause in fact—in the Fiduciary Defendants’ breaches.
To give fair notice of cause in fact, Fiamma was required to include factual allegations
that allowed a reasonable inference that the Underwriters’ actions were a substantial
factor in bringing about the Fiduciary Defendants’ breaches. See Aguilar, 545 S.W.3d at
680 (citing Doe v. Boys Clubs of Greater Dall., Inc., 907 S.W.2d 472, 477 (Tex. 1995));
Restatement (Second) of Torts § 876(b) cmt. d (“In determining liability, the factors are
the same as those used in determining the existence of legal causation when there has
been negligence . . . or recklessness.”). Fiamma alleged that the Underwriters’ role in
the alleged “scheme” was brokering and underwriting the TIF sale in the Offer.
Fiamma also alleged that the Underwriters did not contact Fiamma about the Offer or
the TIF sale, preventing Fiamma from either stopping the sale or correcting the
misrepresentations. Fiamma does not allege even in a cursory manner how the Offer
was a substantial factor in the Fiduciary Defendants’ breaches of their fiduciary duty to
Fiamma regarding the Project. See Darnell, 588 S.W.3d at 305; Dailey, 445 S.W.3d at
788–89. Indeed, Fiamma’s allegations are nothing more than assertions that the
Underwriters, at most, created the condition that made a harm possible and are, thus,
insufficient factual allegations supporting this claim as a matter of law. See Moore Freight
Servs., Inc. v. Munoz, 545 S.W.3d 85, 99 (Tex. App.—El Paso 2017, pets. denied);
Immobiliere Jeuness, 525 S.W.3d at 882. Nor does Fiamma allege that the Fiduciary
33
Defendants’ use of the Underwriters to communicate the Offer was anything more than
slight assistance. See Restatement (Second) of Torts § 876 cmt. d, illus. 9 & cmt. e, ¶ 2.
We conclude that Fiamma’s claim that the Underwriters participated in and assisted the
Fiduciary Defendants’ breach of fiduciary duty has no basis in fact or law as pleaded
and failed to give fair notice. See First United, 514 S.W.3d at 224–25. Thus, the trial
court did not err by dismissing this claim. See Darnell, 588 S.W.3d at 305; Dailey,
445 S.W.3d at 788–89.
3. Conspiracy
In issue 3.C., Fiamma contends that it adequately pleaded a civil conspiracy claim
against the Underwriters. If the underlying claim fails because the plaintiff cannot prove
one of the underlying claim’s elements, a derivative civil conspiracy claim also fails. See
Nettles, 2020 WL 5754456, at *9–10; Grant Thornton, 314 S.W.3d at 930–31; Ernst &
Young, 51 S.W.3d at 583; see also Agar Corp. v. Electro Cirs. Int’l, LLC, 580 S.W.3d 136,
142 (Tex. 2019) (holding civil conspiracy is not an independent tort). Here, Fiamma’s
conspiracy theory against the Underwriters is wholly derivative of the underlying alleged
fraud and breach of fiduciary duty. See, e.g., Nettles, 2020 WL 5754456, at *9–10.
Because we have concluded that Fiamma failed to sufficiently allege a legal or factual
basis for its fraud claim and for its aiding-and-abetting liability theories against the
Underwriters, Fiamma’s conspiracy claim was likewise subject to dismissal. 17 See Baty,
17
Even if the conspiracy claim were not dragged down in the undertow of
Fiamma’s other claims against the Underwriters, we would agree with the Underwriters
34
63 S.W.3d at 864. Based on these conclusions, we need not address the Underwriters’
argument that Fiamma abandoned its conspiracy claim by failing to include it in its
proposed jury charge. We overrule issue 3.C.
III. MANDATORY AWARD OF ALL COSTS AND
REASONABLE AND NECESSARY ATTORNEY’S FEES
Fiamma argues in its fourth issue that because its claims were erroneously
dismissed under Rule 91a, the trial court must consider Fiamma’s request for costs and
fees as the prevailing party. Because we have held the trial court’s dismissal was not in
error, we need not address this issue. Similarly, we need not address Fiamma’s
argument that the Underwriters must segregate their attorney’s fees because Fiamma
conditions this argument on a reversal of at least part of the dismissal.
In its fifth issue, Fiamma argues that the awarded $408 for costs and $36,750 for
attorney’s fees were supported by no evidence because the deficiencies in Treistman’s
affidavit and the “secret” nature of the billing records rendered this evidence no
evidence at all. The Underwriters argue in their appellate issue that the costs and fees
that Fiamma failed to base its conspiracy claim in fact or law because it proffered only
conclusory recitations of the Underwriters’ specific intent (or meeting of the minds) to
further the scheme. See Bart Turner & Assocs. v. Krenke, No. 3:13-CV-2921-L, 2014 WL
1315896, at *6 (N.D. Tex. Mar. 31, 2014) (mem. op. & order); Massey v. Armco Steel Co.,
652 S.W.2d 932, 934 (Tex. 1983). In other words, the conspiracy allegations amounted
to nothing more than a statement that the Underwriters committed conspiracy. These
bare recitals did not give the Underwriters fair notice. See First United, 514 S.W.3d at
224–25; Darnell, 588 S.W.3d at 305; Beddingfield, 2018 WL 6378553, at *12–13; Salazar,
2018 WL 1610942, at *3–5; Weizhong Zheng, 468 S.W.3d at 186; Dailey, 445 S.W.3d at
789.
35
awards were an abuse of discretion because the Underwriters proffered evidence that
they incurred more than $680,000 in costs and fees and because the awards did not
expressly account for appellate costs and fees.
A. GOVERNING LAW
Under Rule 91a.7, the trial court was required to award to the Underwriters “all
costs and reasonable and necessary attorney fees incurred with respect to the challenged
cause of action in the trial court.” Tex. R. Civ. P. 91a.7. In determining the costs and
fees awards, the trial court “must consider evidence.” Tex. R. Civ. P. 91a.7.
Although the trial court is required to award attorney’s fees to the prevailing party
and to consider evidence on the issue, the amount of such an award is a matter within
the trial court’s discretion that we will not second-guess absent an abuse of that
discretion. See Cypress Creek EMS v. Dolcefino, 548 S.W.3d 673, 691 (Tex. App.—
Houston [1st Dist.] 2018, pet. denied); Drake, 2014 WL 6493411, at *2–3. The trial
court’s discretion, however, is governed by whether the requested attorney’s fees are
reasonable and necessary. See, e.g., Rohrmoos Venture v. UTSW DVA Healthcare, LLP,
578 S.W.3d 469, 496 (Tex. 2019).
On the other hand, the mandatory award of “all costs” to the prevailing party on
a motion to dismiss is not restricted to those that are considered reasonable and
necessary; thus, we question whether an abuse-of-discretion standard would apply to
review the amount of a mandatory costs award under Rule 91a.7. Compare Estate of
Purgason v. Good, No. 14-14-00334-CV, 2016 WL 552149, at *3 (Tex. App.—Houston
36
[14th Dist.] Feb. 11, 2016, pet. denied) (mem. op.) (“Whether a particular expense is
recoverable under statute or rule as court costs is a question of law and reviewed de
novo.”), and Whitley v. King, 581 S.W.2d 541, 543–44 (Tex. App.—Fort Worth 1979, no
writ) (concluding whether court cost authorized is not issue of discretion but of law),
with Rogers v. Walmart Stores, Inc., 686 S.W.2d 599, 601 (Tex. 1985) (holding trial court’s
assessment of typically nonrecoverable costs for good cause under Rule 141 subject to
abuse-of-discretion review), and Headington Oil Co. v. White, 287 S.W.3d 204, 212 (Tex.
App.—Houston [14th Dist.] 2009, no pet.) (same). See generally Ochoa-Bunsow v. Soto,
587 S.W.3d 431, 446 (Tex. App.—El Paso 2019, pet. denied) (“The trial court’s role in
regard to costs of court is to adjudicate which party bears those costs, not to determine
their amount.”). But Fiamma and the Underwriters do not dispute in their briefing that
an abuse-of-discretion standard applies to our review of both reasonable and necessary
fees and all costs. Because the applicable standard is not case dispositive here and in
the absence of cogent briefing targeted to the appropriate review standard, we will
follow the parties’ lead and apply an abuse-of-discretion standard to both awards.
B. COSTS
In her affidavit, Treistman averred that the Underwriters had incurred $12,410
in costs with respect to the dismissed claims against them. She stated that these costs
were “detailed in the invoices.” The Underwriters explain that the “disbursement”
37
entries in the billing records equate to their requested costs.18 These disbursements
show charges for entries such as Westlaw research, travel expenses, business meals,
taxis, document reproduction, “outside services,” and filing fees. The trial court clerk’s
bills reflect $3,849 in taxed costs, including $3,560 to prepare the clerk’s records for
appeal. In its order, the trial court awarded the Underwriters $408 in costs.19
Fiamma argues that the Underwriters were entitled to recover none of their
requested costs because they did not identify a statute or rule authorizing each item and
because Treistman’s costs opinion was “conclusory, legally insufficient, and lack[ed]
foundational support.” The Underwriters respond that “all costs” in Rule 91a.7
unqualifiedly means any cost no matter its character; thus, they were entitled to each of
the disbursements noted in the billing records even if not commonly considered a court
cost.
A trial court’s role in awarding costs is to “adjudicate which party or parties is to
bear the costs of court, not to determine the correctness of specific items.” Madison v.
Williamson, 241 S.W.3d 145, 158 (Tex. App.—Houston [1st Dist.] 2007, pet. denied); see
18
The disbursement portions of the billing records were not redacted; thus, we
will not address Fiamma’s complaints about the form of the billing records in our costs
discussion. Our review of the billing records reveals $12,410.24 in disbursement entries.
19
The record does not clearly show from where this amount was derived. The
billing records reflect $308 as a “Court Filing Fee (Charged By Court),” but the
numerous disbursements in the billing records and the taxed “fees” in the bills of costs
prevent even an informed guess.
38
Wood v. Wood, 320 S.W.2d 807, 812 (Tex. 1959); Ochoa-Bunsow, 587 S.W.3d at 446; Pitts
v. Dall. Cnty. Bail Bond Bd., 23 S.W.3d 407, 417 (Tex. App.—Amarillo 2000, pet. denied)
(op. on reh’g); cf. Tex. Civ. Prac. & Rem. Code Ann. § 31.007(a) (providing successful
party not required to formally prove its costs to the trial court in order to have costs
adjudged in its favor); Tex. R. Civ. P. 131 (providing successful party entitled to recover
all incurred costs from adversary). The trial court clerk carries the ministerial duty of
taxing a specific amount of costs. Madison, 241 S.W.3d at 158 (citing Wood, 320 S.W.2d
at 813). Accordingly, it was an abuse of discretion 20 for the trial court to tax a specific
amount of costs. See Tex. R. Civ. P. 622; Lion Copolymer Holdings, LLC v. Lion Polymers,
LLC, No. 01-17-00671-CV, 2019 WL 1285115, at *15 (Tex. App.—Houston [1st Dist.]
Mar. 21, 2019, pet. filed) (mem. op.); United Servs. Auto. Ass’n v. Hayes, 507 S.W.3d 263,
277–78 (Tex. App.—Houston [1st Dist.] 2016, pets. granted, judgm’t vacated w.r.m.).
Rule 91a.7 entitles the prevailing party to a recovery of “all costs.” The
Underwriters were the prevailing parties. Accordingly, the Underwriters are entitled to
an award of all costs as taxed by the trial court clerk. The trial court, however, is not
tasked with an accounting of the specific recoverable costs; thus, any alleged deficiency
in Treistman’s affidavit regarding the amount of or specific authorization for each cost
20
Again, we do not hold that an abuse-of-discretion standard applies to this issue;
we only review it as such based on Fiamma’s and the Underwriters’ briefing. Even so,
the trial court’s award of a specific cost amount would not survive a de novo review
either.
39
is not relevant to the trial court’s determination of who is entitled to recover its costs
as the prevailing party under Rule 91a.7. See Tex. Civ. Prac. & Rem. Code Ann.
§ 31.007(a); United Servs. Auto., 507 S.W.3d at 277–78. We overrule the costs portion of
Fiamma’s fifth issue but sustain in part the costs portion of the Underwriters’ sole issue.
C. ATTORNEY’S FEES
Unlike Rule 91a.7’s authorization of an award of “all costs,” the amount of a
mandatory award of attorney’s fees to the prevailing party clearly is subject to the trial
court’s discretion under a reasonable-and-necessary standard. Tex. R. Civ. P. 91a.7; see
Cypress Creek, 548 S.W.3d at 693. Fiamma asserts that the Underwriters did not prove
that their requested $668,447 in attorney’s fees was reasonable and necessary; the
Underwriters assert that it was an abuse of discretion to award only $36,750 in attorney’s
fees because all of their requested fees were incurred with respect to the challenged
claims in the trial court. They further argue that the trial court abused its discretion by
failing to expressly award any amount for conditional, appellate attorney’s fees. For the
following reasons, we overrule the fees portion of Fiamma’s fifth issue and sustain the
fees portion of the Underwriters’ issue.
1. Competency of the Underwriters’ Evidence
We first address Fiamma’s arguments that because of the flawed nature and
timing of the Underwriters’ evidence of attorney’s fees, the Underwriters produced no
evidence to support an award.
40
Fiamma argues that the redacted billing records were never admitted into
evidence and even if they were, they were produced too late to be considered. 21 The
Underwriters provided the unredacted billing records to the trial court by the July 18
deadline; they provided the redacted billing records to Fiamma the next day. Even if
the production of the redacted billing records to Fiamma ran afoul of the deadline to
provide evidence to the trial court, we cannot conclude that the one-day delay harmed
Fiamma, as the Underwriters assert in their briefing. See Tex. R. App. P. 44.1(a).
In any event, the trial court admitted the redacted records for the purposes of
the hearing on Fiamma’s motion to compel production of the unredacted billing
records, which was filed in the context of the Underwriters’ request for attorney’s fees
as the prevailing parties. After the 141st District Court recused itself at Fiamma’s
request, the 342nd District Court clearly had at least the redacted billing records to
21
Fiamma does not seem to raise on appeal its prior argument that the trial court
could not consider the billing records because they were redacted. Indeed, some courts
have implicitly approved of the practice, especially when (as here) the redactions are
limited and targeted and do not prevent a determination of whether the fees were
reasonable and necessary. See, e.g., KBIDC Invs., LLC v. Zuru Toys Inc., No. 05-19-00159-
CV, 2020 WL 5988014, at *22–23 (Tex. App.—Dallas Oct. 9, 2020, no pet. h.) (mem.
op. on reh’g); In re S.C., No. 05-18-00629-CV, 2020 WL 3046203, at *6 (Tex. App.—
Dallas June 8, 2020, pet. filed) (mem. op.); Sentinel Integrity Sols., Inc. v. Mistras Grp., Inc.,
414 S.W.3d 911, 928–29 (Tex. App.—Houston [1st Dist.] 2013, pet. denied);
cf. McGibney v. Rauhauser, 549 S.W.3d 816, 821–22 (Tex. App.—Fort Worth 2018, pet.
denied) (holding “heavily redacted” billing records insufficient to allow trial court to
make reasonable-and-necessary finding). In short, the operative question is whether
the trial court had sufficient evidence to exercise its discretion, not whether the billing
records were or were not redacted.
41
review. These records had previously been admitted as an exhibit (over no objection)
at the hearing regarding the Underwriters’ proof of attorney’s fees, and the 342nd
District Court expressly stated that it had copies of and would consider the
Underwriters’ redacted “bills” in its review of “everything.” Thus, the redacted billing
records were part of the record, and the trial court could consider them in determining
the Underwriters’ reasonable and necessary attorney’s fees. See, e.g., Swarovski v. Enger,
No. 05-17-00398-CV, 2018 WL 1357483, at *4–5 (Tex. App.—Dallas Mar. 16, 2018,
no pet.) (mem. op.).
Fiamma next contends that Treistman’s and Hoffman’s affidavits were
conclusory and, therefore, no evidence of the Underwriters’ attorney’s fees. Fiamma
specifies that Treistman did not establish the qualification of each attorney and paralegal
that billed hours to the Underwriters, did not provide the hourly rate for each person,
and failed to establish that each billed task was incurred with respect to the challenged
causes of action. Fiamma’s beef with Hoffman’s affidavit is that he failed to use the
word “reasonable” in stating his discounted hourly billing rate for the Underwriters’ co-
defendant, rendering his opinion conclusory. Although Fiamma did not secure a ruling
on these objections to the affidavits, an objection that an affidavit is conclusory is a
substantive one that is not subject to preservation-of-error requirements. See Seim v.
Allstate Tex. Lloyds, 551 S.W.3d 161, 166 (Tex. 2018) (per curiam).
“[A] claimant seeking an award of attorney’s fees must prove the attorney’s
reasonable hours worked and reasonable rate by presenting sufficient evidence to
42
support the fee award sought.” Rohrmoos Venture, 578 S.W.3d at 501–02. At a minimum,
such proof must include evidence of (1) the 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 person performing such services. Id. (citing El Apple I, Ltd. v. Olivas,
370 S.W.3d 757, 762–63 (Tex. 2012)); see also Arthur Andersen & Co. v. Perry Equip. Corp.,
945 S.W.2d 812, 818 (Tex. 1997) (op. on reh’g); Tex. Disciplinary Rules Prof’l Conduct
R. 1.04(b), reprinted in Tex. Gov’t Code Ann., tit. 2, subtit. G, app. A (art. X, § 9).
Treistman’s affidavit, consistent with these parameters, walked through the
applicable factors and averred that the hourly rates charged and the fees incurred by the
Underwriters in the trial court were reasonable and necessary. Hoffman’s affidavit
substantively pointed to the reasonableness of his hourly rate by explaining his
experience, the work he performed for PNC in the same case, and the discounted rate
he charged for those services.
The Underwriters fully and cogently discuss Treistman’s and Hoffman’s
affidavits and the reasonable-and-necessary factors in their briefing, and there is no
need to repeat those arguments here. For purposes of this discussion, it is enough to
state that the affidavits go beyond mere “generalities” and were not, therefore,
impermissibly conclusory. Rohrmoos Venture, 578 S.W.3d at 496; cf., e.g., State v. Buchanan,
572 S.W.3d 746, 750–51 (Tex. App.—Austin 2019, no pet.) (concluding factually
insufficient evidence supported jury’s award of no attorney’s fees to prevailing party);
43
McCalla v. Ski River Dev., Inc., 239 S.W.3d 374, 381 (Tex. App.—Waco 2007, no pet.)
(recognizing evidence on each reasonableness factor not required to award attorney’s
fees). Further, because an award of attorney’s fees was mandatory under Rule 91a.7,
Treistman’s affidavit, Hoffman’s affidavit, and the redacted billing records were
“enough to present the issue to the trial court” for its determination. El Apple,
370 S.W.3d at 762 (discussing Garcia v. Gomez, 319 S.W.3d 638, 641 (Tex. 2010));
cf. Buchanan, 572 S.W.3d at 750 (“When a statute provides for mandatory recovery of
attorney’s fees, the trial court has no discretion but to award them if they are pleaded
and proved.”); Hagedorn v. Tisdale, 73 S.W.3d 341, 353 (Tex. App.—Amarillo 2002, no
pet.) (recognizing “entire record” may be considered in determining reasonableness of
fee award).
2. Reasonable and Necessary
Part of Fiamma’s argument that no evidence shows that the Underwriters’
attorney’s fees were reasonable and necessary is its contention that the Underwriters
did not show that each claimed fee was “incurred with respect to [the] Rule 91a
dismissal.” In making this argument, Fiamma points to multiple billing entries and
attacks the Underwriters’ failure to identify that each billed task related to the motion
to dismiss. The Underwriters assert that the great weight and preponderance of the
evidence demonstrated higher fees than were awarded, rendering the awarded amount
an abuse of discretion.
44
Rule 91a.7 requires an award of reasonable and necessary attorney’s fees that a
prevailing party “incurred with respect to the challenged cause of action in the trial
court.” Tex. R. Civ. P. 91a.7; see Weizhong Zheng, 468 S.W.3d at 187. Awarded attorney’s
fees must be “associated with” the challenged cause of action, “including fees for
preparing or responding to the motion to dismiss.” Tex. R. Civ. P. 91a.7 2013 cmt.
(emphasis added); see Drake, 2014 WL 6493411, at *3. Accordingly, any fees so
associated are not limited to those incurred only with regard to filing the motion to
dismiss. See Drake, 2014 WL 6493411, at *3. Both reasonableness and necessity are
fact questions that are, of course, determined based on the proffered evidence. See
Bocquet v. Herring, 972 S.W.2d 19, 21 (Tex. 1998); Roth v. JPMorgan Chase Bank, N.A.,
439 S.W.3d 508, 514 (Tex. App.—El Paso 2014, no pet.).
The Underwriters successfully moved to dismiss each claim brought against
them; thus, their attorney’s fees necessarily were incurred with respect to the challenged
causes of action even though the redactions arguably prevent identifying which specific
claim the task was related to. As the Underwriters point out in their briefing, the trial
court seemed to have arrived at its $36,750 award by including only tasks in the redacted
billing records that clearly referred to the renewed motion to dismiss. 22 We agree with
the Underwriters that these amounts minus the stated client discounts match the trial
22
Even though Fiamma filed a Rule 202 petition that was eventually denied, the
Underwriters did not request any of their fees incurred in responding to this petition,
which was eventually denied.
45
court’s awarded amount “to the dollar.” Although we understand that the Underwriters
were not necessarily entitled to recover all of their requested but contradicted attorney’s
fees, see Ragsdale v. Progressive Voters League, 801 S.W.2d 880, 882 (Tex. 1990) (per curiam),
they were entitled to those fees that were reasonable and necessary regarding the
dismissed claims and they were not limited to those fees incurred only with regard to
the renewed motion to dismiss. See Drake, 2014 WL 6493411, at *3. Limiting the
Underwriters to only those fees directly traceable to the renewed motion to dismiss was
an error of law that equates to an abuse of discretion. Accord Steiger v. J.S. Builders, Inc.,
663 A.2d 432, 436 (Conn. App. Ct. 1995) (holding trial court abused its discretion by
failing to consider all reasonableness factors in finding amount of attorney’s fees). See
generally Bocquet, 972 S.W.2d at 21 (recognizing fee award is an abuse of discretion if trial
court rules “arbitrarily, unreasonably, or without regard to guiding legal principles, . . .
or to rule without supporting evidence.”). Further, an award of approximately 5% of
the Underwriters’ proven attorney’s fees, which necessarily were incurred with respect
to the challenged claims in the trial court and with respect to claims that Fiamma argued
arose from “one of the biggest frauds and heists . . . that has ever existed,” is against
the great weight and preponderance of the evidence presented in this case. See Midland
W. Bldg. L.L.C. v. First Serv. Air Conditioning Contractors, Inc., 300 S.W.3d 738, 739 (Tex.
2009) (per curiam); Bocquet, 972 S.W.2d at 21. And we decline Fiamma’s invitation to
parse each billed item to determine if each meets the reasonableness factors. See Fox v.
Vice, 563 U.S. 826, 838 (2011) (holding “trial courts need not, and indeed should not,
46
become green-eyeshade accountants” because “essential goal in shifting fees . . . is to
do rough justice, not to achieve auditing perfection”).
Because the evidence was insufficient to support the awarded amount of
attorney’s fees (to the extent those fees were for fees incurred in the trial court), the
appropriate disposition is to reverse the award and remand the issue for the trial court
to redetermine a reasonable and necessary amount for trial attorney’s fees. See Long v.
Griffin, 442 S.W.3d 253, 255–56 (Tex. 2014) (per curiam); El Apple, 370 S.W.3d at 764;
Midland W. Bldg., 300 S.W.3d at 739; Great Am. Rsrv. Ins. Co. v. Britton, 406 S.W.2d 901,
907 (Tex. 1966); Universal MRI & Diagnostics, Inc. v. Med. Lien Mgmt. Inc., 497 S.W.3d
653, 665 (Tex. App.—Houston [14th Dist.] 2016, no pet.); cf. City of Laredo v. Montano,
414 S.W.3d 731, 736–37 (Tex. 2013) (per curiam) (remanding for recalculation of
attorney’s fees when evidence of work performed existed but was insufficient to
support the amount awarded in judgment); Akin, Gump, Strauss, Hauer & Feld, L.L.P. v.
Nat’l Dev. & Rsch. Corp., 299 S.W.3d 106, 124 (Tex. 2009) (“[W]hen there is some
evidence of damages, but not enough to support the full amount, it is inappropriate to
render judgment.”).
3. Appellate Fees
The trial court awarded $36,750 in “attorney’s fees” without delineating whether
this amount included appellate attorney’s fees. The Underwriters attack the trial court’s
failure to expressly include appellate attorney’s fees in its fees award. The Underwriters
47
requested such fees in the trial court but proffered no opinion testimony of the
reasonably expected amount of necessary appellate attorney’s fees.
The Underwriters argue that Treistman’s affidavit regarding the Underwriters’
attorney’s fees incurred in the trial court and the complexity of the case equated to
implicit evidence of reasonable and necessary appellate fees. But Treistman included
no statement regarding her belief of the reasonable appellate fee charged or of the
required services if the dismissal were appealed. See KBIDC Invs., 2020 WL 5988014, at
*24; Assoun v. Gustafson, 493 S.W.3d 156, 168 (Tex. App.—Dallas 2016, pet. denied); cf.
State & Cnty. Mut. Fire Ins. Co. v. Walker, 228 S.W.3d 404, 408–10 (Tex. App.—Fort
Worth 2007, no pet.) (concluding sufficient evidence supported award for appellate
attorney’s fees when attorney testified over no objection to reasonable fee charged for
necessary services if case appealed). The Underwriters’ mere request for appellate fees
cannot, standing alone, serve as evidence of their reasonableness and necessity.
To prove a conditional award of appellate attorney’s fees, not only were the
Underwriters required to make a request for such fees, they must also have provided
“opinion testimony about the services [they] reasonably believe[] will be necessary to
defend the appeal and a reasonable hourly rate for those services.” Yowell v. Granite
Operating Co., No. 18-0841, 2020 WL 2502141, at *13 (Tex. May 15, 2020); see KBIDC
Invs., 2020 WL 5988014, at *23; cf. Ventling v. Johnson, 466 S.W.3d 143, 154 (Tex. 2015)
(holding if award of trial attorney’s fees is mandatory under authorizing statute, award
of appellate attorney’s fees is likewise mandatory if proof of reasonable fees presented).
48
The Underwriters did not do so; thus, the evidence of the reasonableness and necessity
of appellate attorney’s fees was legally insufficient. See KBIDC Invs., 2020 WL 5988014,
at *23–24. Even so, because the award of appellate attorneys fees was mandatory under
Rule 91a.7, see Weizhong Zheng, 468 S.W.3d at 188, the issue of reasonable and necessary
appellate attorney’s fees to the Underwriters as the prevailing parties must be remanded
to the trial court for a redetermination. See Rohrmoos Venture, 578 S.W.3d at 484–85,
506; Long, 442 S.W.3d at 256; KBIDC Invs., 2020 WL 5988014, at *24; Sloane v. Goldberg
B’Nai B’Rith Towers, 577 S.W.3d 608, 622 (Tex. App.—Houston [14th Dist.] 2019, no
pet.); Jones v. Patterson, No. 11-17-00112-CV, 2019 WL 2051301, at *10 (Tex. App.—
Eastland May 9, 2019, no pet.) (mem. op.); Thomas, 559 S.W.3d at 645.
IV. CONCLUSION
Although Rule 91a is a procedural device that must be strictly construed and
narrowly applied, we conclude that Fiamma’s claims against the Underwriters have no
basis in law or fact as pleaded thereby failing to give the Underwriters fair notice; thus,
the trial court appropriately dismissed the claims. We affirm the trial court’s June 15,
2018 order granting the Underwriters’ renewed motion to dismiss. See Tex. R. App. P.
43.2(a).
But because the trial court abused its discretion by limiting the Underwriters’
recovery for their trial attorney’s fees to only those arising from the renewed motion to
dismiss and by excluding those fees that were incurred with respect to the challenged
causes of action in the trial court, all of which were dismissed, the awarded amount was
49
likewise an abuse of discretion. We reverse the award for attorney’s fees in the trial
court’s January 31, 2019 order and remand that issue for the trial court to redetermine
the Underwriters’ reasonable and necessary trial attorney’s fees. See Tex. R. App. P.
43.2(d), 43.3. Similarly, even though the Underwriters’ evidence of appellate attorney’s
fees was legally insufficient to show reasonableness and necessity, we remand this issue
for the trial court to redetermine and enter an express award for appellate attorney’s
fees because such an award is mandatory under Rule 91a.7. Finally, we reverse the
specific amount of costs awarded by the trial court and remand for the taxation of costs
by the trial court clerk; however, we affirm the trial court’s determination that the
Underwriters were entitled to a costs award under Rule 91a.7 as the prevailing parties.
See Tex. R. App. P. 43.2(a), (d).
/s/ Lee Gabriel
Lee Gabriel
Justice
Delivered: October 29, 2020
50