Texas Real Estate Commission v. Paul Murphy ( 2023 )

In the
Court of Appeals
Second Appellate District of Texas
at Fort Worth
___________________________
No. 02-22-00199-CV
___________________________
TEXAS REAL ESTATE COMMISSION, Appellant
V.
PAUL MURPHY, Appellee
On Appeal from County Court at Law No. 2
Tarrant County, Texas
Trial Court No. 2016-000685-2
Before Sudderth, C.J.; Bassel and Wallach, JJ.
Memorandum Opinion by Justice Wallach
MEMORANDUM OPINION
Appellant Texas Real Estate Commission (TREC) challenges the trial court’s
order directing payment to Appellee Paul Murphy out of the real estate recovery trust
account (the fund) maintained by TREC. See Tex. Occ. Code Ann. § 1101.601. TREC
is statutorily required to maintain the fund to “reimburse aggrieved persons who
suffer actual damages” caused by certain actions by licensed real estate brokers. See id.Murphy obtained a judgment against a license holder, and after attempting
unsuccessfully to collect the judgment, Murphy applied to the trial court for an order
directing TREC to pay the judgment out of the fund. See id. § 1101.606. After a
hearing, the trial court signed the requested order, and TREC now appeals.
In three issues, TREC argues that the trial court erred by ordering payment
from the fund because the judgment on which the order is based was not a final
judgment; that even if ordering payment of part of the judgment was proper, ordering
payment of the judgment’s mental anguish damages was not; and that the trial court
erred by ordering payment of attorney’s fees and prejudgment interest calculated at
eighteen percent. In his appellee’s brief, Murphy raises a cross-point asserting that
TREC’s appeal is moot because he assigned the underlying judgment to TREC as he
is required to do before TREC may pay him from the fund. See id. § 1101.612.
We will affirm the judgment in part and reverse and remand in part. The trial
court’s order is based on a final judgment, TREC’s appeal is not moot, and the trial
court was authorized to award Murphy—an attorney representing himself—his
2
attorney’s fees. We therefore affirm in part. However, mental anguish damages may
not be paid out of the fund, and the trial court miscalculated the amount of
prejudgment interest, so we will reverse in part and remand for a new calculation of
prejudgment interest.
I. Background
In 2016, Murphy sued Jason Light, Individually and d/b/a The Light Realty
Group and Allstar Locators (Light) and Latter & Blum of Texas, L.L.C. d/b/a Realty
Associates (Realty Associates) on claims related to Murphy’s house purchase. Murphy
alleged that Light had agreed to pay him all but $200 of the commission from the
purchase; that closing occurred in December 2013; and that the defendants had
refused to pay him the $10,769.50 that he was owed. See 22 Tex. Admin. Code
§ 535.147(d). Murphy sued for breach of contract, breach of fiduciary duty, fraud,
conversion, and unjust enrichment. Murphy also pled statutory fraud in a real estate
transaction, see Tex. Bus. & Com. Code Ann. § 27.01, and violations of the Deceptive
Trade Practices Act, see id. § 17.41, for which he sought attorney’s fees and exemplary
damages. As part of his DTPA claim, he further asserted that he was entitled to
mental anguish damages.
In 2017, the trial court signed a post-answer default judgment against Light and
Realty Associates (the 2017 Judgment). The 2017 Judgment awarded $10,769.50 in
economic damages, $20,000 in mental anguish damages, $61,539 in exemplary
damages, and $6,053.22 in attorney’s fees.
3
Based on lack of service, this court reversed the judgment as to Realty
Associates and remanded for further proceedings. See Latter & Blum of Tex., LLC v.
Murphy, No. 02-17-00463-CV, 2019 WL 3755765, at *9 (Tex. App.—Fort Worth Aug.
8, 2019, pet. denied) (mem. op.). The judgment against Light was not appealed. On
remand, the trial court severed the claims against Realty Associates and signed a
“revised final judgment” (Revised Final Judgment) that deleted Realty Associates,
leaving only the judgment against Light.
In 2021, Murphy filed an application seeking an order directing payment out of
the fund; he sought to be paid $30,769.50 in actual damages, $6,053.22 in attorney’s
fees, $431.00 in costs of court; and $2,907.77 in prejudgment interest. See Tex. Occ.
Code Ann. § 1101.601. Murphy attached to his application the 2017 Judgment, an
abstract of judgment that he had filed in 2017, and a writ of execution that had been
returned nulla bona in 2018. Id. § 1101.606.
After TREC filed a response pointing out that Murphy’s application was not
verified, Murphy filed an amended verified application. TREC filed a response
objecting to Murphy’s amended application, raising among other arguments that
• Murphy’s application was based on a judgment that had been reversed, and it
thus failed to meet the statutory requirements for payment from the fund;
• Because TREC was not a party to the original suit in which the judgment was
granted, it had the right to a hearing to re-litigate any material and relevant issue
that was determined in the underlying case;
4
• the fund is statutorily limited to payment of out-of-pocket damages, and thus
Murphy could not recover mental anguish damages, and as an attorney
representing himself, he was not entitled to attorney’s fees;
• Murphy’s case against Light was based on breach of contract, and breach of
contract is not an act that implicates fund liability; and
• Murphy had not provided supporting evidence for the amounts that he had
requested from the fund, including his calculation of prejudgment interest.
Murphy filed a reply stating that the fund is not limited to actual damages and that he
was entitled to recovery of attorney’s fees. The trial court agreed with Murphy and
ordered TREC to pay the judgment from the fund.
II. TREC’s Appeal
A. Governing Statutes
The governing statutory scheme is Chapter 1101 of the Occupations Code,
which regulates the profession of real estate brokers and sales agents. Tex. Occ. Code
Ann. ch. 1101. That chapter prohibits a licensed real estate broker from taking certain
actions, including engaging in fraudulent or dishonest behavior while engaged in real
estate brokerage. Id. § 1101.652(a-1), (b).
Subchapter M (the Act) requires TREC to maintain the fund, the purpose of
which is “to reimburse aggrieved persons who suffer actual damages caused by an act
described by Section 1101.602 committed by: . . . a license holder[.]” Id.
§ 1101.601 (emphasis added). Section 1101.602, entitled “Entitlement to
Reimbursement,” states that an aggrieved person may be reimbursed from the fund
when a license holder engages in behavior prohibited by other sections of the Act:
5
An aggrieved person is entitled to reimbursement from the trust account if
a person described by Section 1101.601 engages in conduct that requires
a license or certificate of registration under this chapter and is described
by Section 1101.652(a-1)(1) or (b), if the person is a license holder, or
Section 1101.653(1), (2), (3), or (4), if the person is a certificate holder.
Id. § 1101.602. (emphasis added). Section 1101.606 describes how an aggrieved person
may apply for payment from the fund, and that process starts with the aggrieved
person obtaining a judgment against the license holder for an act described by Section
1101.602. Id. § 1101.606.
B. Case Law
In 1983, the Texas Supreme Court looked at Section 1101.601’s predecessor
statute, which stated that “[t]he fund shall be used in the manner provided in this
section for reimbursing aggrieved persons who suffer monetary damages by
reason of certain acts . . . .” See Pace v. State, 650 S.W.2d 64, 65 (Tex. 1983) (emphasis
added). In Pace, the issue was whether punitive damages could be reimbursed from the
fund. The court noted that “Black’s Law Dictionary defines ‘reimburse’ as ‘to pay
back, to make restoration, to pay that expended,’” and “[t]hus, the Act provides that
the fund is to be used to pay back the monetary damages suffered by the victims of an
unscrupulous real estate agent or broker.” Id. (emphasis added) (citing Black’s Law
Dictionary 1157 (5th ed. 1979)). The court held that because “[p]unitive damages are
not to restore one to his position before the act giving rise to the damages, rather they
are to punish the wrongdoer and are an example to others,” “the Legislature could
not have intended that treble damages be paid from the fund or they would not have
6
used the words ‘. . . reimbursing aggrieved persons who suffer monetary damages. . . .’”
Id. (emphasis added).
The predecessor statute was amended to change “monetary damages” to
“actual damages.” Arlington Equities, Inc. v. Tex. Real Est. Comm’n, 765 S.W.2d 472,
473 (Tex. App.—Dallas 1988, writ denied). The legislature did not, however, change
the word “reimbursing.” In a case construing the statute after that amendment, the
Dallas Court of Appeals upheld the denial of Arlington Equities’s recovery from the
fund for “lost profits and deception” because it had “no out-of-pocket losses.” Id.The court held that, as amended, the Act still limited recovery to persons who had
“changed [their] monetary position”:
Relying upon the legislative choice of “reimbursing” in the original act,
the legislative retention of “reimbursing” in the amended act, the
exclusion of mere breach of contract in Torres [v. State, 605 S.W.2d 394,
396 (Tex. App.—Beaumont 1980, no writ)], and the exclusion of
punitive damages in Pace, we find and hold that Arlington [Equities] had
expended nothing for which it was entitled to be reimbursed (as used in
article 6573a [the former version of Section 1101.601]) from the fund
and that Arlington [Equities] had not changed its monetary position to
secure the contract [that] Fernandez breached; consequently, there was
no position to which it was entitled to be restored (as described in Pace
and Torres).
Id.C. Mental Anguish Damages Barred
We begin with TREC’s second issue challenging a specific part of the trial
court’s order—the part ordering payment for Murphy’s mental anguish damages—
7
before moving on to its first issue, which challenges the entire order. We hold that the
Act does not allow payment of mental anguish damages from the fund.
In its modification of Section 1101.601’s predecessor, the legislature did not
change its use of the word “reimbursement.” The only relevant difference between
the statute construed by the Pace court and the version of the statute currently in
effect is the change from “monetary damages” to “actual damages.” Compare Pace,
650 S.W.2d at 65 (setting out predecessor statute), with Tex. Occ. Code Ann.
§ 1101.601 (current statute).
The “reimbursement” language in the statute has already been construed by the
Texas Supreme Court. The construction does not encompass payment for damages
that serve any purpose other than reimbursement. 1 Pace, 650 S.W.2d at 65. Further,
the legislature’s amendment of Section 1101.601 to use “actual damages” rather than
“monetary damages” does not indicate a substantive change that would allow a
broader use of the fund. The legislature could have amended the statute to use
1
Two Finance Code sections with similar language allow a person to recover
from a fund set up under the Finance Code to compensate persons aggrieved by an
act of a licensed mortgage broker, and those statutes also use the wording “reimburse
. . . for actual damages.” Tex. Fin. Code Ann. § 156.501(6) (providing that the “fund
shall be used to reimburse residential mortgage loan applicants for actual damages
incurred”), § 341.602 (same); see also id. § 157.0201 (stating that the fund established in
Chapter 156 “shall be used as provided by . . . Chapter 156 to reimburse residential
mortgage loan applicants for actual damages incurred . . . .” (footnote omitted)).
However, unlike the Act in this case, those two sections further specify that “[t]he use
of the fund is limited to reimbursement for out-of-pocket losses.” Id. §§ 156.501,
341.602.
8
language other than the word reimbursement. For example, some states’ recovery fund
statutes simply state that an aggrieved party may recover actual damages awarded in a
judgment and do not limit recovery to actual damages that constitute reimbursement.
See, e.g., Ala. Code § 34-27-31; Ga. Code Ann. § 43-40-22; see also Del. Code Ann. tit.
24, § 2922 (providing that an aggrieved person who obtains a final judgment against a
licensee for certain kinds of claims “may file a verified claim with the Commission
seeking an order directing payment from the Fund of any amount unpaid upon the
judgment,” up to $25,000 (emphasis added)). The legislature chose not to make that
change, and the reimbursement restriction remains in the statute.
That Pace addressed punitive damages rather than a type of compensatory
damages does not alter our conclusion because the Pace court specifically stated that
the Act “is to be used to pay back the monetary damages” suffered by an applicant.
Pace, 650 S.W.2d at 65. Although mental anguish damages, like other elements of
actual damages, function to restore an injured party to the position that the party
would have been in had the wrong not occurred, see In re Cent. Or. Truck Co.,
644 S.W.3d 668, 670 (Tex. 2022) (orig. proceeding), mental anguish damages cannot
be characterized as “paying back” for something expended or compensating the
plaintiff for a change in the plaintiff’s monetary position. Cf. Arlington Equities,
765 S.W.2d at 473. Mental anguish damages compensate a plaintiff for harm, but they
do not “pay back” the plaintiff for something the plaintiff expended. We sustain
9
TREC’s first issue, and we will modify the trial court’s order to delete the amount for
mental anguish damages.2
D. Murphy’s Entitlement to Payment for the Remaining Judgment
TREC’s first issue asserts that the trial court erred by ordering the fund to pay
any of the 2017 Judgment. Its argument is that the trial court ordered payment from
the fund for a judgment that was not the actual final judgment and that Murphy did
not satisfy the Act’s procedural requirements for payment of the final judgment:
Murphy recorded an abstract of judgment on August 8, 2017, the date
the final judgment was signed. A writ of execution was also returned
nulla bona on May 21, 2018. However, the trial court signed a Revised
Final Judgment in this case on March 3, 2021, after the default judgment
had been appealed, reversed, and remanded. There can be only one final
judgment in this case. Murphy’s Application for Order Directing
Payment Out of the Recovery Trust Account attached the August 8,
2017 default judgment as well as the writ and abstract of that judgment,
even though the 2017 [J]udgment was reversed, and a revised judgment
was signed in 2021. Because [Section] 1101.606(a) includes the statutory
language allowing for recovery only “after final judgment is entered,”
Murphy’s Application should have been based on the Revised Final
Judgment. Further, Murphy failed to comply with the statutory
requirements contained in [Section] 1101.606(a) because the writ of
execution and abstract of judgment did not reference the Revised Final
Judgment but instead referred to the [2017 J]udgment that was
superseded by the Revised Final Judgment. [Citations and record
references omitted.]
2
It is worth noting that the Act caps the recovery from the fund at $50,000,
meaning that the Act is not necessarily intended to make a claimant whole. See Tex.
Occ. Code Ann. § 1101.610; contra Goldman v. Olmstead, 414 S.W.3d 346, 357 (Tex.
App.—Dallas 2013, pet. denied) (stating, in a case not turning on interpretation of
Section 1101.601, that “the occupations code sets out a procedure by which a person
injured by a license holder’s violation of section 1101.652(a)(3) can be made whole
through the payment of a claim from” the fund).
10
TREC also contends that Murphy’s pleadings do not support payment from the fund
because the pleadings’ factual allegations support only a breach of contract claim, and
the fund does not pay judgments based on breach of contract. Finally, TREC argues
that because it was not a party to the suit in which the 2017 Judgment was rendered, it
is entitled to have the entire case retried. 3 We address these arguments in reverse
order.
1. TREC is not entitled to a retrial
Under Section 1101.608(a) of the Act, when TREC receives notice that
someone has filed a verified claim for payment under Section 1101.606, TREC may
agree to pay the claim, or it may “notify the attorney general of [its] desire to schedule
a hearing, enter an appearance, file a response, appear at the hearing, defend the
action, or take any other action [that it] considers appropriate.” Tex. Occ. Code Ann.
§ 1101.608(a). At that hearing, TREC “may relitigate . . . any material and relevant
issue that was determined in the action that resulted in the judgment, including an
agreed judgment, in favor of the aggrieved person.” Id. § 1101.608(c) (emphasis
added); Tex. Real Est. Comm’n v. Bayless, 366 S.W.3d 808, 815 (Tex. App.—Fort Worth
2012, pet. denied). Thus, at the hearing on Murphy’s application for payment, TREC
It is not clear from TREC’s brief whether it argues that Section
3
1101.608 allows it a do-over or whether it raised its right to relitigate issues merely to
head off any argument by Murphy that TREC’s arguments in the trial court
constituted an impermissible collateral attack on the underlying judgment. To the
extent that TREC intended the former, we address the argument.
11
could have opted to relitigate any issue that resulted in the underlying judgment. See
Tex. Occ. Code Ann. § 1101.608(c).
TREC’s attorney raised its right to relitigate at the hearing. In its argument to
the trial court, the attorney asserted that
since TREC [wa]s not there at the default hearing, we’re entitled to have
some—basically have some evidence put on of the fraud. We would like
to ask—if you’re inclined to find that this is a fraud judgment that the
fund is liable for, we would request a few minutes to inquire some of the
evidence of Mr. Murphy as to the evidence of fraud. That’s all I have at
this point.
The trial court then allowed Murphy to respond. In Murphy’s argument, he stated that
he believed that he had “provided everything to [TREC] at a meeting before even
having this hearing”; that he believed that he had “actually included the entire
transcript,” and if he had not, he could do that if TREC’s attorney “wants to revisit
the evidence”; that he had proved everything that he needed to at the hearing; and
that “[i]f they want to relitigate it, they have that right, but it’s going to cost them
because, of course, attorney’s fees will be incurred doing that.” The trial court then
asked, “Anything further?” TREC’s attorney responded, “I don’t believe so, no,
ma’am.”
As TREC and Murphy both recognized at the hearing, if TREC wanted to
make Murphy re-prove his case against Light, it could have. Instead, TREC told the
trial court that it had nothing further. TREC did not object that it was denied the
12
opportunity to relitigate the fraud claim or that the trial court had not ruled on its
request. See Tex. R. App. P. 33.1.
The language of Section 1101.608 does not authorize TREC to participate in
the hearing on Murphy’s application, tell the trial court that it had nothing further
rather than objecting that it wanted to relitigate an issue, get an unfavorable ruling,
and then, on appeal, obtain a second hearing on issues it could have pursued in the
first hearing but chose not to. To the extent it argues that we should reverse for it to
have another hearing, we reject that argument.
2. The underlying judgment supports Murphy’s application
TREC’s next argument is that Murphy’s pleadings support a judgment only on
a breach of contract claim for which payment from the fund is not allowed and that,
at the hearing on Murphy’s application, he presented no evidence to support his claim
that Light’s actions fit into one of the categories implicating the fund’s liability.
The Act requires an applicant for payment to show at the hearing, among other
things, “that the judgment is based on facts allowing recovery” under the Act. Tex. Occ.
Code Ann. § 1101.607 (emphasis added). Thus, the starting place for determining the
application is the underlying judgment. The trial court’s order directing payment states
that the court had previously “rendered judgment (the Judgment) in favor of
[Murphy] and against [Light] based on facts allowing recovery under Tex. Occ. Code
§ 1101.652(b).” We agree with the trial court.
13
Looking at Murphy’s pleadings, as TREC asks us to do, Murphy alleged that
Light had agreed to pay to him “any and all fees/commissions received by Realty
Associates and Light from the purchase, less the sum of two hundred ($200.00)
dollars” and that Light had not followed through on that promise. TREC is correct
that these fact allegations could have supported a breach of contract claim if Murphy
had proved that the promised payment was a term in an agreement with Light and
had further proved the other breach-of-contract elements. See Pathfinder Oil & Gas,
Inc. v. Great W. Drilling, Ltd., 574 S.W.3d 882, 890 (Tex. 2019) (setting out breach-of-
contract elements).
However, a promise to perform an act can also support a fraud claim or a
DTPA claim if that promise was false when made. See Tex. Bus. & Com. Code Ann.
§ 27.01; T.O. Stanley Boot Co., Inc. v. Bank of El Paso, 847 S.W.2d 218, 222 (Tex. 1992);
Torres, 605 S.W.2d at 396; see also In re Rhee, 481 B.R. 880, 893 (Bankr. S.D. Tex. 2012)
(holding that real estate broker’s false promise to rebate commission to home
purchasers was a violation of the DTPA); D’Olivio v. Fox, No. 05-18-00868-CV,
2020 WL 4047868, at *11 (Tex. App.—Dallas July 20, 2020, pet. denied) (mem. op.)
(noting that failure to comply with contract alone does not violate the DTPA but “an
initial misrepresentation inducing a party to enter into a contract the person making
the representation had no intention of performing” violates the DTPA). Accordingly,
14
Murphy’s pleadings do not support TREC’s argument that the 2017 Judgment could
have been based only on a breach of contract claim.4
Further—and importantly—the judgment awarded Murphy exemplary
damages, which he requested only in connection with his fraud in a real estate
transaction and DTPA claims, and which are not recoverable on a breach of contract
claim. See Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 304 (Tex. 2006). The
judgment further awarded Murphy mental anguish damages, which he requested
under only his claims for DTPA violations. Thus, the judgment could not have been
based on Murphy’s breach of contract claim and could only have been based on his
DTPA allegations, a claim for which payment from the fund is permitted. Tex. Occ.
Code Ann. § 1101.607.
Additionally, the economic damages awarded to Murphy could be construed as
reimbursement because they compensated him for his change in monetary position
due to Light’s misrepresentation.5 Murphy suffered a pecuniary loss of the
At the hearing, Murphy asserted that it was “clear from the pleadings, this is a
4
judgment based on fraud and DTPA on a real estate transaction.”
5
Under this issue, TREC does not argue that the economic damages award did
not compensate Murphy for out-of-pocket losses. However, TREC does assert in one
sentence that “no order for payment from [the fund] can be affirmed since there is no
pleading or evidence to support it.” Further, under a separate issue, TREC argues that
Murphy’s pleadings do not assert that he paid any amount for which he sought
reimbursement. We therefore assume that, taking TREC’s brief as a whole, it fairly
includes an argument that the 2017 Judgment’s damages award did not reimburse
Murphy for losses.
15
$10,769.50 that he did not receive, and this loss was not merely the lost expectation of
profit from a business deal. Murphy specifically pled that he would not have entered
into the transaction but for Light’s misrepresentation. Because of Light’s
misrepresentation, Murphy agreed to pay X amount to buy his home and to receive
$10,769.50 in return, such that his out-of-pocket cost for the purchase was X minus
$10,769.50.6 Because of Light’s actions, Murphy’s purchase ultimately cost him an
extra expenditure of $10,769.50. The economic damages awarded in the
2017 Judgment reimbursed Murphy for the extra purchase cost, which he incurred
because of Light, and he therefore may recover the amount of that award from the
fund. See Pace, 650 S.W.2d at 65. We reject this part of TREC’s first issue.
3. Murphy satisfied the Act’s requirements as to the judgment against
Light
Finally, we address TREC’s argument that Murphy did not satisfy the Act’s
requirements for payment because he did not file his verified claim in the trial court
“after final judgment is entered, execution returned nulla bona, and a judgment lien
perfected” as required by the Act. See Tex. Occ. Code Ann. § 1101.606(a) (emphasis
6
Murphy attached to his brief a transcript of the hearing resulting in the
2017 Judgment, and in addressing TREC’s arguments about the basis for that
judgment, he references his testimony from that hearing about the circumstances of
his house purchase. However, that transcript is not a part of the appellate record, and
we therefore do not consider it. See Tex. R. App. P. 34.1; Fibela v. Wood, 657 S.W.3d
664, 672 (Tex. App.—El Paso 2022, no pet.).
16
added). Its argument hinges on its contention that the 2017 Judgment was not a final
judgment for purposes of Section 1101.606.
The trial court signed the 2017 Judgment on August 8, 2017. Light did not
appeal, and accordingly, that judgment became final as to Light.7 See George v. Vick,
686 S.W.2d 99, 100 (Tex. 1984) (stating that when “[n]o party appealed from the trial
court’s judgment insofar as it disposes of the actions by and against [a party], [t]he trial
court’s judgment as to [that party] is affirmed”); Snively Royalty Analysis, LLC v.
Panchasarp, No. 05-19-00577-CV, 2020 WL 2079179, at *1 n.1 (Tex. App.—Dallas
Apr. 30, 2020, no pet.) (mem. op.) (stating, in appeal from multi-party litigation, that
trial court’s judgment had become final as to party who had not appealed); Klement v.
Munder, 619 S.W.2d 31, 32 (Tex. App.—El Paso 1981, no writ) (same). Murphy then
satisfied the requirements of Section 1101.606(a) by filing an abstract of judgment on
September 28, 2017, see Tex. Prop. Code Ann. § 52.001 (setting out how to establish a
judgment lien), and by obtaining a writ of execution that was returned nulla bona on
August 17, 2018. Murphy thus satisfied the requirements of Section 1101.606(a). See
Tex. Occ. Code Ann. § 1101.606(a).
This court then reversed the 2017 Judgment as to Realty Associates but did
nothing regarding the judgment against Light because, as stated, Light did not appeal.
7
The Revised Final Judgment recognized the finality of the 2017 Judgment in
that it awarded prejudgment interest from the time that the underlying suit was filed
until the date of the 2017 Judgment rather than the date of the Revised Final
Judgment. See Tex. Fin. Code Ann. § 304.104.
17
See Latter & Blum, 2019 WL 3755765, at *9 (stating that we were reversing the trial
court’s judgment “as to [Realty Associates] only” (emphasis added)). On remand, the
trial court did not alter the final judgment against Light, and it had no authority to
alter the judgment had it so desired. See Spicer v. Maxus Healthcare Partners, LLC,
No. 02-21-00423-CV, 2023 WL 2033774, at *2 (Tex. App.—Fort Worth Feb. 16,
2023, no pet. h.) (mem. op.); United Res., L.P. v. Sepco Tubulars, Inc., No. 04-12-00663-
CV, 2014 WL 3339537, at *4 (Tex. App.—San Antonio July 9, 2014, no pet.) (mem.
op.). Consequently, the court’s subsequent signing of the Revised Final Judgment to
delete references to Realty Associates could not alter its judgment as to Light, did not
affect the finality of the 2017 Judgment as to Light for purposes of Section 1101.606,
and did not erase Murphy’s already-completed compliance with Section 1101.606.
Section 1101.606(a)’s requirements ensure that the fund provides payment only
for uncollectible judgments. See Tex. Occ. Code Ann. § 1101.606(a). Murphy satisfied
the Act’s requirements and the purpose of those requirements, and that purpose
would not be served by our holding otherwise. We overrule the remainder of TREC’s
first issue.
F. Attorney’s Fees and Pre-Judgment Interest
In its third issue, TREC challenges the award of $6,053.22 in attorney’s fees. It
also complains that the prejudgment interest awarded was presumably and
erroneously based on the eighteen percent interest rate set out in the 2017 Judgment.
18
Regarding the interest rate, the parties agree that the Finance Code controls the
calculation of prejudgment interest here, and Murphy concedes that the prejudgment
interest should have been calculated at five percent. 8 However, he further contends
that he requested interest at five percent in his application for payment from the fund,
and he asserts that the trial court ordered interest at that rate.9 We agree with TREC
that the trial court did not calculate prejudgment interest at five percent.
A calculation of simple interest based on the economic damages award of
$10,769.50 at a rate of eighteen percent over eighteen months (the number of months
between when Murphy filed his original petition and when the trial court rendered its
2017 Judgment) yields the exact amount of prejudgment interest awarded by the trial
court: $2,907.77. We therefore agree with TREC that the trial court apparently
calculated prejudgment interest at eighteen percent for eighteen months.10
A money judgment on a contract that provides for interest may earn
8
postjudgment interest—and therefore prejudgment interest—at eighteen percent. Tex.
Fin. Code Ann. § 304.002; E.F. Johnson Co. v. Infinity Glob. Tech., No. 05-14-01209-CV,
2016 WL 4254496, at *11 (Tex. App.—Dallas Aug. 11, 2016, no pet.) (mem. op.).
However, as we have held, the judgment in this case was not based on a contract
claim.
9
Regarding postjudgment interest, the order on appeal states that the underlying
judgment “is accruing interest at the rate of 5% per annum pursuant to Tex. Fin.
Code [Ann.] § 304.003.” It does not, however, state the rate on which the trial court
calculated prejudgment interest.
The Finance Code dictates the period of time on which prejudgment interest
10
accrues. Citizens Nat’l Bank v. Allen Rae Invs., Inc., 142 S.W.3d 459, 486–87 (Tex.
App.—Fort Worth 2004, no pet.). That period begins on “the 180th day after the date
the defendant receives written notice of a claim or the date the suit is filed” and ends
19
Murphy asserts that the trial court must have applied a five percent interest rate
because an eighteen percent interest rate would have amounted to more than
$8,000 in prejudgment interest. That would be true if the 2017 Judgment had awarded
prejudgment interest on the mental anguish damages as well as on economic damages
and if the order directing payment from the fund had then calculated prejudgment
interest based on that award. However, the 2017 Judgment ordered prejudgment
interest on only the $10,769.50 in economic damages.11 Simple interest on
$10,769.50 calculated at an eighteen percent rate for the applicable period does not
result in over $8,000 in interest—as we have stated, it results in the exact amount
awarded.
We sustain this part of TREC’s third issue. See Roberts v. Jay Fuller Enters., LLC,
No. 12-20-00134-CV, 2021 WL 1047052, at *7 (Tex. App.—Tyler Mar. 18, 2021, no
pet.) (mem. op.). We will remand this case to the trial court to recalculate the
prejudgment interest. See McGee v. Tatum, No. 05-21-00303-CV, 2022 WL 17248174,
at *8 (Tex. App.—Dallas Nov. 28, 2022, no pet.) (mem. op.).
“on the day preceding the date judgment is rendered.” Tex. Fin. Code Ann. § 304.104.
Prejudgment interest “is computed as simple interest and does not compound.” Id.11
Simple interest on $30,769.50 (the economic and mental anguish damages
together) at five percent yields a figure that is close but not equal to the amount
awarded by the trial court. Thus, even if the trial court had included the mental
anguish damages in its calculation, it could not have been using a five percent rate.
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Regarding attorney’s fees, TREC asserts that because Murphy represented
himself, under Jackson v. State Office of Administrative Hearings, 351 S.W.3d 290, 300 (Tex.
2011), Murphy could not recover attorney’s fees. TREC argues that the Texas
Supreme Court’s more recent decision in Rohrmoos Venture v. UTSW DVA Healthcare,
LLP, 578 S.W.3d 469 (Tex. 2019), does not allow a different result. This court has
already held otherwise—we have pointed out that in Rohrmoos, the supreme court
“acknowledged that . . . an attorney may recover fees for representing himself.” J.
Michael Ferguson, P.C. v. Ghrist Law Firm, PLLC, No. 02-18-00332-CV,
2021 WL 2006321, at *20 (Tex. App.—Fort Worth May 20, 2021, pet. denied) (mem.
op.).
Further, in Jackson, the statute being considered authorized a trial court to
award “reasonable attorney[’s] fees incurred by a plaintiff,” and the supreme court’s
holding was based on its conclusion that the plaintiff representing himself had not
incurred attorney’s fees “because he did not at any time become liable for attorney’s
fees.” Id. at 299–300. In its reply brief, TREC argues that we should not allow
recovery of attorney’s fees here because the fund is limited to compensating out-of-
pocket losses, and Murphy suffered no out-of-pocket losses in representing himself.
Unlike the statute in Jackson, however, the attorney’s fees provision at issue here
does not include the word incurred. TREC’s argument essentially attempts to graft onto
Section 1101.610 the incurred language from the statute in Jackson, and it ignores the
fact that the Act’s authorization for awarding reasonable attorney’s fees is separate
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from the provision for reimbursement of damages. See Tex. Occ. Code Ann.
§ 1101.610. The attorney’s fees provision specifically authorizes the recovery of
“reasonable attorney’s fees in the amount determined by the court.” Because the Act
authorizes recovery of reasonable attorney’s fees, and an attorney representing himself
may recover the reasonable fees for his services in representing himself, the trial court
was authorized to order payment of Murphy’s reasonable attorney’s fees. We overrule
the remainder of TREC’s third issue.
III. Murphy’s Cross-Point
Murphy’s sole cross-point asserts that TREC’s appeal is moot. After Murphy
obtained the order directing payment from the fund, TREC requested and received
from Murphy a partial assignment of the judgment against Light. Murphy argues that,
as such, TREC cannot change its mind “after requesting and accepting an assignment
of the underlying judgment and entering into a Rule 11 agreement obligating it to pay
the assigned judgment amount.” He contends that TREC “should not be allowed to
mislead [him] into believing that the controversy is over by requesting and receiving
an assignment of the judgment under a Rule 11 agreement and later refus[ing] to
honor the agreement and fil[ing] an appeal relating to the judgment it has been
assigned.”
TREC responds that the Act requires it to obtain an assignment of the
judgment on which payment is made from the fund and that any email discussions
between TREC’s attorney and Murphy regarding preparation and execution of the
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assignment do not satisfy the requirements for a Rule 11 agreement. See Tex. R. Civ.
P. 11; Tex. Occ. Code Ann. § 1101.612(a), (c) (providing that “[TREC] is subrogated
to all rights of a judgment creditor to the extent of an amount paid from the trust
account, and the judgment creditor shall assign to [TREC] all right, title, and interest in
the judgment up to that amount” (emphasis added) and that TREC “shall deposit any
amount recovered on the judgment to the credit of the trust account”).
We have reviewed the emails in the record on which Murphy bases his Rule
11 argument, and we agree with TREC that they do not support Murphy’s argument.
See Tex. R. Civ. P. 11. There is no agreement “in writing, signed[,] and filed with the
papers as part of the record” that TREC would not appeal from the trial court’s order.
TREC represented in the emails that the Act required Murphy to “assign [his] interest
in the judgment up to the amount ordered paid from the Fund,” but it said nothing
about appealing the order.
As for Murphy’s other argument under his cross-point, he asserts that “[b]y
requesting and accepting the partial assignment, [TREC] has waived its right to
appeal[,] and [the appeal] should be dismissed.” However, in each of the cases that he
cites to support this assertion, the appellant had satisfied the judgment from which it
appealed. See Highland Church of Christ v. Powell, 640 S.W.2d 235, 236–37 (Tex. 1982)
(holding appeal not moot because judgment paid under duress, and citing Guajardo v.
Alamo Lumber Co., 317 S.W.2d 725, 725–26 (Tex. 1958), which involved discharge of
indebtedness by petitioner and held that appeal was moot because appellant garnishee
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discharged the garnishment judgment and then took an assignment of the underlying
judgment); Hudler-Tye Const., Inc. v. Pettijohn & Pettijohn Plumbing, Inc., 632 S.W.2d 219,
223 (Tex. App.—Fort Worth 1982, no writ); Otto v. Rau Petroleum Prods., 582 S.W.2d
504 (Tex. App.—Houston [1st Dist.] 1979, no writ). But see Miga v. Jensen, 96 S.W.3d
207, 211 (Tex. 2002) (“The Texas rule is not, and never has been, simply that any
payment toward satisfying a judgment, including a voluntary one, moots the
controversy and waives the right to appeal that judgment.”). Here, Murphy does not
contend that TREC has already paid the order being appealed, and he directs us to
nothing in the record to establish that it has been paid. 12 We overrule Murphy’s sole
cross-point.
IV. Conclusion
Because we have overruled Murphy’s cross-point and have sustained TREC’s
second issue, we reverse the part of the trial court’s order directing TREC to pay from
the fund the mental anguish damages award, and we modify the order to reduce the
amount ordered to be paid by $20,000. Having further sustained part of TREC’s third
issue, we remand the case to the trial court to recalculate the prejudgment interest.
The assignment states that TREC has paid Murphy $40,161.49 and that, in
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consideration of that payment, TREC has the right to collect up to that much of the
judgment from Light. However, the emails sent in connection with this assignment’s
signing make clear Murphy was executing the assignment before TREC made any
payment from the fund, and thus the assignment’s language is not sufficient to show
that TREC has satisfied the trial court’s order. Notably, Murphy does not argue on
appeal that TREC has paid the order.
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Finally, having overruled TREC’s second issue and the remainder of its third issue, we
affirm the trial court’s order in all other respects.
/s/ Mike Wallach
Mike Wallach
Justice
Delivered: April 13, 2023
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