AFFIRMED and opinion filed December 12, 2024
In The Court of Appeals Fifth District of Texas at Dallas No. 05-22-01103-CV
EXECUTIVE WORKSPACE–ABC–PRESTON ROAD, LLC A/K/A EXECUTIVE WORKSPACE–PRESTON ROAD, LLC; EXECUTIVE WORKSPACE, LLC; EXECUTIVE WORKSPACE–PRESTON TRAIL, LLC; EXECUTIVE WORKSPACE-HILLCREST, LLC; EXECUTIVE WORKSPACE-ABC-TOLLWAY, LLC; AND EXECUTIVE WORKSPACE- FRISCO STATION, LLC, Appellants V. RESERVE CAPITAL–PRESTON GROVE SPE, LLC, Appellee
On Appeal from the 101st Judicial District Court Dallas County, Texas Trial Court Cause No. DC-18-12900
MEMORANDUM OPINION Before Justices Partida-Kipness, Pedersen, III, and Garcia Opinion by Justice Pedersen, III A jury found all appellants violated the Texas Uniform Fraudulent Transfer
Act (TUFTA) and that two appellants were part of a civil conspiracy. Appellants
complain (1) there was no TUFTA “transfer,” “asset,” or “transferee” as a matter of
law; (2) the evidence is legally insufficient to support the jury’s award of actual
damages; (3) the civil-conspiracy claim fails as a matter of law because it
circumvents TUFTA’s express requirements; (4) the award of exemplary damages is not supported by actual damages; (5) the trial court abused its discretion in
awarding attorney’s fees to appellee; and (6) the trial court abused its discretion in
taxing all costs against appellants. We affirm the trial court’s judgment.
Background
Appellant Executive Workspace–ABC–Preston Road, LLC a/k/a Executive
Workspace–Preston Road, LLC (Preston Road) leased office space from appellee
Reserve Capital–Preston Grove SPE, LLC (Reserve Capital). Preston Road leased
that same space and provided office-related services to its own lessees pursuant to
written “licenses.” In March 2018, Preston Road began to inform its licensees it
intended to cease doing business. At that time, Preston Road’s agreements with its
licensees had not expired. Some of Preston Road’s licensees subsequently arranged
for office space and related services with other businesses owned by Preston Road’s
owner, appellant Executive Workspace, LLC (EW). These other EWS-owned
businesses—which also are appellants in this lawsuit—are Executive Workspace–
Preston Trail, LLC; Executive Workspace–Hillcrest, LLC; Executive Workspace–
ABC–Tollway, LLC; and Executive Workspace–Frisco Station, LLC (EW’s other
centers). Preston Road permanently shut down operations at the end of July 2018
and vacated the building although its lease with appellee had not expired.
Appellee filed this lawsuit. Appellee’s petition alleges as follows: EW owned
and managed Preston Road. EW was unsatisfied with Preston Road’s financial
performance. Preston Road struggled to meet its financial obligations in Spring 2018
–2– and likely was insolvent. EW and its other centers communicated with Preston
Road’s tenants to inform them Preston Road would cease operations and encouraged
them to abandon their Preston Road leases and to sign leases with other EW centers.
Appellee alleged claims for (1) breach of contract against Preston Road; (2)
“fraudulent transfer—actual fraud” against all appellants; (3) “fraudulent transfer-
constructive fraud” against all appellants; (4) “fraud-failure to disclose” against EW
and Shawn L. Petersen, an alleged owner and manager of EW; (5) civil conspiracy
against all appellants and Petersen; and (6) “constructive trust” against EW’s other
centers. Appellee sought attorney’s fees.
Subsequently, the parties stipulated, “The sum of money, if paid now in cash,
that would fairly and reasonably compensate [appellee] for its damages that resulted
from [Preston Road’s] failure to comply with the Lease is $533,347.00.” They also
stipulated, “The reasonable and necessary attorneys’ [sic] fees incurred by [appellee]
and associated with [appellee’s] breach of contract claim against [Preston Road] is
$33,000.00.”
A jury heard the remainder of the case. The jury found (1) neither Petersen
nor EWS committed fraud against appellee; (2) Preston Road transferred the licenses
without receiving reasonably equivalent value and with actual intent to hinder, delay,
or defraud a creditor; (3) EW and the other EW centers were transferees of the
licenses or were persons for whose benefit the transfer of the licenses were made;
(4) the monetary value of licenses transferred to EW and the other EW centers; (5)
–3– EW and Preston Road were part of a conspiracy to transfer the licenses; (6) by clear
and convincing evidence that monetary harm to appellee due to the transfer of
licenses resulted from malice or fraud by EW; and (7) $61,606 in exemplary
damages against EW. The trial court decided appellee’s motion for attorney’s fees
and costs.
The trial court’s final judgment awarded actual damages of $533,347 and
reasonable and necessary attorney’s fees of $33,000 from Preston Road pursuant to
the above-described trial stipulations related to breach of lease. The final judgment
awarded actual damages of $272,640, jointly and severally, against EW and Preston
Road, with all other appellants jointly and severally liable “thereon” for lesser
amounts, provided appellee could recover no more than $272,640 total actual
damages. It awarded $61,060 in exemplary damages against EW. It awarded
$276,450 in reasonable and necessary attorney’s fees in favor of appellee and from
all appellants, jointly and severally; contingent appellate attorney’s fees from all
appellants, jointly and severally; pre-judgment and post-judgment interest; and costs
from all appellants, jointly and severally. It ordered that appellee take nothing from
Petersen.
All defendants, except Petersen, filed a notice of appeal from the final
judgment. This appeal followed.
–4– Standard of Review
When a party attacks the legal sufficiency of an adverse finding on an issue
on which it did not have the burden of proof, it must demonstrate on appeal that no
evidence supports the adverse finding. See Graham Cent. Station, Inc. v. Pena, 442
S.W.3d 261, 263 (Tex. 2014). Evidence is legally insufficient to support a jury
finding when (1) the record bears no evidence of a vital fact; (2) the court is barred
by rules of law or of evidence from giving weight to the only evidence offered to
prove a vital fact; (3) the evidence offered to prove a vital fact is no more than a
mere scintilla; or (4) the evidence conclusively establishes the opposite of a vital
fact. See Shields Ltd. P’ship v. Bradberry, 526 S.W.3d 471, 480 (Tex. 2017). In
evaluating the legal sufficiency of the evidence to support a finding, we view the
evidence in the light most favorable to the finding, indulging every reasonable
inference supporting it. See City of Keller v. Wilson, 168 S.W.3d 802, 822 (Tex.
2005). We “must credit favorable evidence if reasonable jurors could, and disregard
contrary evidence unless reasonable jurors could not.” Id. at 827. The “final test for
legal sufficiency” is “whether the evidence at trial would enable reasonable and fair-
minded people to reach the verdict under review.” Id. Proper legal-sufficiency
review prevents reviewing courts from substituting their opinions on credibility for
those of the jurors. See id. at 817–18.
In reviewing the factual sufficiency of the evidence to support a jury finding
for which the party did not have the burden of proof, we consider and weigh all of
–5– the evidence and set aside the verdict only if the evidence that supports the finding
is so weak as to make the verdict clearly wrong and manifestly unjust. See Ins. All.
v. Lake Texoma Highport, LLC, 452 S.W.3d 57, 73 (Tex. App.—Dallas 2014, pet.
denied) (citing Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986)). We defer to the
jury’s implicit determinations of credibility and weight to be given to the evidence.
See Wise v. SR Dallas, LLC, 436 S.W.3d 402, 408 (Tex. App.—Dallas 2014, no pet.)
(citing Golden Eagle Archery, Inc. v. Jackson, 116 S.W.3d 757, 761 (Tex. 2003)).
Construction of a statute presents a question of law, which we review de novo.
See TIC Energy & Chem., Inc. v. Martin, 498 S.W.3d 68, 74 (Tex. 2016); Fluor
Corp. v. E.D.G.M., No. 05-19-00921-CV, 2022 WL 1222713, at *3 (Tex. App.—
Dallas Apr. 26, 2022, no pet.) (mem. op.).
Assets Were Transferred, and Appellants were TUFTA Transferees or Persons for whose Benefit Transfers were Made
In their first issue on appeal, appellants argue that as a matter of law, (1) no
TUFTA “transfer” of an “asset” occurred and (2) no appellant was a TUFTA
transferee or a person for whose benefit transfers were made.
1. Transfer of Assets
Initially, we address appellants’ argument that the appellate record contains
no evidence of a TUFTA transfer of an asset.
Jury question 1b asked, “Did [Preston Road] transfer any of the assets listed
below without receiving reasonably equivalent value?” Jury question 1b instructed
–6– the jury to “answer the following question as to ‘Licenses’ only.” The jury answered,
“Yes.” The question contained a definition, which stated, “‘Transfer means every
mode, direct or indirect, absolute or conditional, voluntary or involuntary, of
disposing of or parting with an asset or an interest in an asset, and includes payment
of money, release, lease, and creation of a lien or other encumbrance.” That jury
definition closely tracks TUFTA’s § 24.002(12), which defines “transfer” and
provides,
“Transfer” means every mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with an asset or an interest in an asset, and includes payment of money, release, lease, and creation of a lien or other encumbrance. . . .
TEX. BUS. & COM. CODE ANN. § 24.002(12).
In deciding whether a TUFTA transfer occurred, we first look to the plain and
common language of § 24.002(12). See Greenville Surgery Ctr., Ltd. v. Beebe, 320
S.W.3d 850, 853 (Tex. App.—Dallas 2010, no pet.) (courts construe statutes by first
looking to the plain and common meaning of the statute’s words). We construe
statutory language de novo. See Pedernal Energy, LLC v. Bruington Eng’g, Ltd.,
536 S.W.3d 487, 491 (Tex. 2017); Superior Indus., Inc. v. Kallus, No. 05-23-00219-
CV, 2024 WL 1089473, at *2 (Tex. App.—Dallas, Mar. 13, 2024, no pet.) (mem.
op.). A reviewing court’s goal is to determine and give effect to the legislature’s
intent. See Pedernal Energy, LLC, 536 S.W.3d at 491; Superior Indus., Inc., 2024
WL 1089473, at *2. Courts construe statutes so that no part is surplusage, but so that
–7– each word has meaning. See Pedernal Energy, LLC, 536 S.W.3d at 491; Superior
Indus., Inc., 2024 WL 1089473, at *2. We take statutes as we find them and refrain
from rewriting text chosen by the legislature. See Pedernal Energy, LLC, 536
S.W.3d at 491.
The language of § 24.002(12) is broad. See Hearne v. RiverSource Life Ins.
Co., 670 S.W.3d 360, 370 (Tex. App.—Texarkana, 2023, pet. denied). That broad
definition is designed to promote TUFTA’s purpose of “prevent[ing] debtors from
prejudicing creditors by improperly moving assets beyond their reach.” Id. (citing
Janvey v. Golf Channel, Inc., 487 S.W.3d 560, 566 (Tex. 2016)). The broad
definition of transfer accomplishes that purpose by subjecting almost any form of
conveyance a debtor attempts to make to the remedies provided by TUFTA. See id.
The definition of transfer focuses on the debtor and its attempt to move its assets
beyond the reach of creditors. See id.
Appellants first argue, “As a matter of law, no transfer could occur once the
licenses terminated.” They argue, “[W]hen a debtor’s contract rights are at issue, no
transfer occurs ‘[w]hen a termination is pursuant to the terms of a contact.’”
(Emphasis added). However, appellants argue “all the licenses” terminated by
operation of law when Preston Road ceased operations. They argue, “It is a
fundamental principle of contract law that when one party to a contract commits a
material breach of that contract, the other party is discharged or excused from further
performance.” Appellants cite Mustang Pipeline Co., Inc. v. Driver Pipeline Co.,
–8– Inc., 134 S.W.3d 195, 196 (Tex. 2004). They argue, “An ‘anticipatory’ breach is a
‘breach of the entire contract’ for purposes of this rule.” For this proposition, they
cite Murray v. Crest Construction, Inc., 900 S.W.2d 342, 344 (Tex. 1995) (“We have
long recognized the rule of anticipatory breach: the repudiation of a contract before
the time of performance has arrived amounts to a tender of breach of the entire
contract and allows the injured party to immediately pursue an action for damages.”).
Accordingly, appellants apparently concede Preston Road materially
breached “all of the licenses” by ceasing operations. Consequently, we are not
persuaded by appellants’ assertion that the licenses terminated pursuant to their own
terms and that such termination precluded transfer of the licenses. To the contrary,
breach of contract occurs when a party fails to perform an act it has explicitly or
impliedly promised to perform. See Gaspar v. Lawnpro, Inc., 372 S.W.3d 754, 757
(Tex. App.—Dallas 2012, no pet.) (citing Esty v. Beal Bank S.S.B., 298 S.W.3d 280,
299 (Tex. App.—Dallas 2009, no pet.)). And “material breach” of “all of the
licenses” fails to support appellants’ conclusion that the licenses were terminated
pursuant to their own terms and thus could not have been transferred. We are
unpersuaded by appellants’ argument.
We must determine whether Preston Road’s termination of the licenses was a
“mode . . . of disposing of or parting with an asset or an interest in an asset . . . .”
BUS. & COM. § 24.002(12). Appellants do not contest that the leases were assets
prior to Preston Road’s cessation of operations. They argue that “the parties to a
–9– license ‘own’ an interest in that license[.]” They argue the licensees paid Preston
Road monthly license fees. Indeed, appellants argue that Preston Road had possessed
valuable rights under the licenses. The terms of the leases had not expired when
Preston Road materially breached the leases and ceased doing business. Moreover,
appellants argue that due to Preston Road’s material breach of all the leases, Preston
Road no longer had the right to payments pursuant to the leases. Consequently,
following the above-described rules of statutory construction and the plain, broad
language of TUFTA’s § 24.002(12), we conclude Preston Road’s material breach of
“all of the licenses” constituted a TUFTA transfer, a “mode, direct or indirect,
absolute or conditional, voluntary or involuntary, of disposing of or parting with an
asset or an interest in an asset.” Id. § 24.002(12).
Second, appellants briefly argue that as a matter of law, Preston Road’s clients
were not an “asset” or “property” subject to “transfer” under TUFTA. An “asset” is
“property of a debtor.” Id. § 24.002(2).1 “Property” means “anything that may be the
subject of ownership.” Id. § 24.002(10). Appellants argue, “[P]arties to the license
do not own one another. Accordingly, those clients are not [Preston Road’s]
1 “Asset” under TUFTA does not include, (A) property to the extent it is encumbered by a valid lien; (B) property to the extent it is generally exempt under nonbankruptcy law; or (C) an interest in property held in tenancy by the entireties to the extent it is not subject to process by a creditor holding a claim against only one tenant, under the law of another jurisdiction. BUS & COM. § 12.002(2)(A), (B), (C).
–10– ‘property’ as defined by TUFTA and cannot be the subject of a fraudulent transfer.”
Appellee responds that its theory has never been that Preston Road’s clients were
“assets” or “property” that were fraudulently transferred. Indeed, jury question 1b
expressly pertained to transfer of “licenses.” The jury charge generally defined
“licenses”: “‘Licenses” as used herein refers to the license agreements between
[Preston Road] and its licensees at the Premises.” The question does not ask whether
clients were transferred. Consequently, we conclude appellants’ argument—that
clients are not TUFTA assets or property subject to transfer—is not supported by the
record.
Third, appellants argue that legal authority cited by appellees in the trial court
is inapplicable. See Hometown 2006-1 1925 Valley View, L.L.C. v. Prime Income
Asset Mgmt., L.L.C., 847 F.3d 302, 308–09 (5th Cir. 2017) (“Waiver of the sixty-
day notice period effected a transfer of the right to continued performance under the
Agreements and receive the payments due thereunder, payments which had
ascertainable value and were sufficiently vested to constitute ‘assets’ under
TUFTA’s broad definition of ‘anything that may be the subject of ownership.’”). In
their argument to distinguish that opinion, appellants argue, “As explained above,
the licenses terminated as a matter of law when [Preston Road] ceased operations.
When that happened, [Preston Road’s] right to any future payments under the
licenses also terminated, leaving behind no right to payment that could be
transferred.” However, we rejected that assertion by appellants when we concluded
–11– above that legally sufficient evidence supported the jury’s finding that Preston Road
transferred assets pursuant to TUFTA. Consequently, we are not persuaded by that
already rejected assertion as reason here to distinguish Hometown 2006-1 1925
Valley View, L.L.C.
We conclude the appellate record contains evidence that appellants transferred
TUFTA assets.
2. Transferees and Persons for whose Benefit Transfers were Made.
Next, we address appellants’ argument that as a matter of law, no appellant is
a TUFTA transferee or person for whose benefit transfers were made.2
Jury question 1e asked, “Which of the following entities, if any, was a
transferee of a License or a person for whose benefit the transfer of a License was
made?” The jury answered “yes” for EW and all the other EW centers.
Section 24.009(b) of TUFTA provides,
(b) Except as otherwise provided in this section, to the extent a transfer is voidable in an action by a creditor under Section 24.008(a)(1) of this code, the creditor may recover judgment for the value of the asset transferred, as adjusted under Subsection (c) of this section, or the amount necessary to satisfy the creditor’s claim, whichever is less. The judgment may be entered against:
(1) the first transferee of the asset or the person for whose benefit the transfer was made . . . .
BUS. & COM. § 24.009(b)(1).
2 TUFTA does not define the word “transferee.” The jury charge defines “transferee” as “a person who receives a transferred asset.” Appellants do not complain about that definition in this Court.
–12– First, appellants argue, “[A]s as a matter of law, [EW] is not a ‘transferee’ or
a ‘person for whose benefit the transfer was made’ as defined by TUFTA.” They
argue, “TUFTA does not ‘allow for recovery from a party who was not a direct or
indirect recipient of a fraudulent transfer.” They argue that TUFTA does not impose
“derivative” liability such as vicarious liability based on theories such as civil
conspiracy” or on a defendant’s “mere status as a shareholder, officer, or director.”3
Consequently, appellants argue, that to establish liability under TUFTA, a
plaintiff must show some “independent benefit” to the defendant. They rely on
Janvey v. Libyan Investment Authority, 840 F.3d 248, 266 (5th Cir. 2016). They
argue “no evidence” shows EW received any “independent benefit” from the
transfers, separate and apart from its status as a “shareholder/owner” of its EW
centers.
Appellee responds that Texas judicial authority supports a conclusion that EW
received an independent benefit due to transfer of the licenses. It relies on Esse v.
Empire Energy III, Ltd., 333 S.W.3d 166 (Tex. App.—Houston [1st Dist.] 2010, pet.
denied) and Citizens National Bank of Texas v. NXS Construction, Inc., 387 S.W.3d
74, 84–85 (Tex. App.—Houston [14th Dist.] 2012, no pet.)). In Esse, the court of
appeals held,
3 Appellee notes the jury found EW was a transferee or a person for whose benefit the transfer of a license was made. Appellee argues the jury’s finding is relevant to direct TUFTA liability, not to derivative liability. We agree.
–13– The trial court found that “Brent and Todd Esse assented to and benefited from these transfers.” The uncontested evidence demonstrates that members of the Esse family were the only shareholders of both Westgate [transferor] and 5E [transferee], with Brent and Todd controlling the vast majority of the shares of both. Thus, their actions resulted in more than just an incidental or indirect benefit to them. Under the plain meaning of the statute, Brent and Todd Esse were both “person[s] for whose benefit the transfer was made.”
Esse, 333 S.W.3d at 181 (emphasis added). In Citizens National Bank of Texas, the
court of appeals concluded,
Strong evidence supports a finding that CNB was a person for whose benefit the transfer was made: CNB owned, but was required to sell, IQC; and CNB approved the transfer of Westex’s lines to IQC for the purpose of increasing IQC’s value. The transfer directly benefited CNB because it increased the value of an entity owned by CNB and which CNB needed to sell. Accordingly, we hold the evidence is legally and factually sufficient to support the jury’s finding pertaining to CNB under Question 3.
Citizen’s Nat’l Bank of Tex., 387 S.W.3d at 85 (emphases added). The Janvey court
summarized the rationale of these two Texas opinions, stating,
The Esse court determined that shareholders were transfer beneficiaries because they had “‘assented to and benefitted from these transfers’ and knowingly participated in the wrongdoing.” . . . The Citizens National Bank court determined that a shareholder was a transfer beneficiary because the shareholder was actually involved with the transfer.
Janvey v. Libyan Inv. Auth., 840 F.3d at 266 (footnotes omitted and emphases
added).
Appellants rely exclusively on trial-court testimony of appellee’s expert
witness to support their argument that there is “no evidence” that EW received an
“independent benefit” from the transfers. The expert testified, in part,
–14– Q. And you’re not aware of any direct benefit that Executive Workspace received [from the alleged transfer of licenses]?
A. Other than it owns – I mean, there’s a chain of ownership, but, yeah, I understand what you’re saying.
Q. Right. Their entities could have received a benefit, but [Parent EW] directly did not receive a benefit, right?
A. Yes.
However, in reviewing whether the jury’s finding that EW was a TUFTA transferee,
we do not consider only the above-quoted testimony. See City of Keller, 168 S.W.3d
at 827 (a court reviewing the appellate record to determine legal sufficiency of the
evidence to support the verdict begins by considering all the evidence or the evidence
supporting the verdict).
In support of its argument that the transfers resulted in an independent benefit
to EW, appellee argues EW was financially struggling when the licenses were
transferred. Appellee argues EW closed an also-struggling Preston Road and
transferred Preston Road’s licensees to other EW centers to benefit EW’s financial
situation. Consequently, appellee argues, EW was a person for whose benefit the
transfer was made pursuant to TUFTA, Esse, and Citizen’s National Bank of Texas.
EW’s Petersen testified as follows: He owned 96 percent of EW and was its
manager. EW wholly owned and managed Preston Road and the other centers. In
2018, Preston Road’s occupancy rate was 50 percent and lost money “from the day
we bought it,” including every month between January 2018 and July 2018. Preston
–15– Road and “the company, EWS, as a whole” were struggling financially and losing
money. He acknowledged that “the company” was “cash-flow negative, under
water.” Petersen testified that in May 2018, he decided to stop doing business at
Preston Road.
The appellate record contains EW internal emails. In a January 31, 2018 email
from Erica Fahti, EW’s controller, to Peterson and to Brenda EW’s chief operating
officer, Fahti projected EW would lose almost $1 million in 2018. Fahti
characterized Preston Road as “weak” and projected Preston Road would alone lose
$158,631 in 2018. In another January 31, 2018 email, Fahti informed Petersen and
Hesse, “We have 7 centers that even at full capacity would not be able to break even
as things stand right now.” She included Preston Road as one of the seven centers
and said of Preston Road, “I’m increasingly concerned about the results I’m finding
at this location.” In a February 6, 2018 email to Petersen and Hesse, Fahti stated
Preston Road continued to underperform. Then, on May 18, 2018, Fathi emailed to
Petersen, “Attached is what April would have looked like with no [Preston Road]
and moving 20 lowest clients to [two other EW centers].” On May 20, 2018, Fathi
emailed to Petersen that “changes” with Preston Road and another center would
result in “$2M negative before profitability.” Petersen responded EW would “go neg
by $3.21” before becoming profitable. Petersen asked whether he needed to plan to
fund “an additional $1.3–1.5 to carry us through?” On May 19, 2018, Petersen
–16– emailed to Fahti, providing financial projections for EW if Preston Road and another
EW center were shut down. Petersen’s email, verbatim, follows:
COLUMS ON THE RIGHT: (include removing Preston Road & [another EW center])
Scenario #1: I feel like this is a low conservative projection and very realistic Adding 11 offices per month, breakeven will be about 17 months Maybe longer, because this DOES NOT include rent increases Breakeven looks to be about 60–65% Occupancy We will go neg about $2MM M, but will hit a $3MM EBITDA in 36 months
Scenario #2: I think this is worst case and very unlikely Adding only 6 offices per month Breakeven looks to be about 60–65% Occupancy Breakeven in 24–28 months & will go neg about $2.8MM, (DOES NOT include rent increases)
On June 8, 2018, Petersen informed Fathi and Hesse by email, “[W]e are planning
to close [Preston Road] on either end of June or July . . . .”
Becky Gullage, an EW regional manager testified that Preston Road was
performing badly. She saw financial documents that demonstrated the effect on EW
and on other centers if a number of former Preston Road licensees moved to other
EW centers. She testified Hesse asked her to speak with licensees about relocating
to a different EW center. She spoke with licensees about transferring their licenses.
She testified it was EW’s goal to relocate as many of the Preston Road licensees as
possible to offices in other EW centers. She testified EW offered licensees financial
concessions to relocate at other EW centers, such as providing increased office space
–17– without increasing lease payments and paying moving expenses. She testified she
was able to convince at least sixteen of Preston Road’s licensees to move to other
EW centers before Preston Road ceased doing business. Moreover, Petersen testified
Preston Road closed its doors for business at the end of July 2018.
In sum, the appellate record contains evidence that EW was the sole owner
and manager of Preston Road and the other EW centers. EW conceived of and took
action in the closing of Preston Road and the transferring of Preston Road licenses
to other EW centers. EW did so in order to strengthen its financial position and that
of other EW centers. Consequently, the record contains evidence EW received an
independent benefit from the transfer of the licenses, contrary to appellants’
assertions. See Citizen’s Nat’l Bank of Tex., 387 S.W.3d at 85; Esse, 333 S.W.3d at
18; see also BUS. & COM. § 24.009(b)(1).
Additionally, appellants argue that as a matter of law the other EW centers are
not transferees or persons for whose benefit the transfer was made pursuant to
TUFTA. Specifically, they argue the other EW centers were not transferees of an
asset because there is no evidence of a transaction between Preston Road and EW’s
other centers in which Preston Road “assigned, or otherwise transferred any licenses
from [Preston Road] to [another EW center].” Additionally, they argue there is no
evidence demonstrating that any other EW center took over rights and obligations
of the Preston Road licensees “by assignment or other contractual agreement.”
–18– However, TUFTA’s broad definition of “transfer” subjects almost any form
of conveyance a debtor attempts to make to the remedies provided by TUFTA. See
Hearne, 670 S.W.3d at 370 (also stating TUFTA’s broad definition of transfer
focuses on the debtor and its attempt to move its assets beyond the reach of
creditors). Indeed, TUFTA defines “transfer” as including “every mode, direct or
indirect . . . of disposing of or parting with an asset or an interest in an asset . . . .).
See BUS. & COM. § 24.002(12). The jury charge contained a definition of “transfer”
that closely tracked TUFTA’s definition.
Consequently, appellants’ focus on the absence of (1) an assignment or (2) a
contract expressly evidencing a transfer is too narrow to negate as a matter of law a
“transfer”—as TUFTA broadly defines the word. See id.; Hearne, 670 S.W.3d at
370; see also Hometown 2006-1 1925 Valley View, L.L.C., 847 F.3d at 305 (old
agreements terminated, new agreements entered).
Moreover, contrary to appellants’ assertion, the record contains legally
sufficient evidence that the other EW centers “took over” —as appellants put it—
rights and obligations previously performed at Preston Road. Evidence thereof is
provided by emails of Petersen and Fahti and testimony of Petersen and Gullage. We
describe that evidence in detail above.
Additionally, that the other EW centers “took over” those rights by—in part—
employing “new” contracts is not determinative of whether the other EW centers
were TUFTA transferees. See Hearne, 670 S.W.3d at 370 (TUFTA’s definition of
–19– transfer reaches almost any form of a transaction used to put assets beyond the reach
of a creditor); and see BUS. & COM. § 24.002(12) (broadly defining “transfer).
We conclude the appellate record contains evidence that EW and its other
centers were TUFTA transferees or persons for whose benefit a transfer was made.
We overrule appellant’s first issue on appeal.
Legally Sufficient Evidence Supports TUFTA Damages
In their second issue on appeal, appellants complain the evidence is legally
insufficient to support the award for actual damages.
Remedies under TUFTA for a fraudulent transfer generally include (1)
avoidance of the transfer to the extent necessary to satisfy the creditor’s claim; (2)
an attachment or other provisional remedies in accordance with Texas law; (3) other
equitable remedies such as injunctions and appointment of receivers; or (4) pursuant
to court order, execution by a judgment creditor on an asset transferred or its
proceeds. Id. § 24.008; Qui Phuoc Ho v. MacArthur Ranch, LLC, 395 S.W.3d 325,
334 (Tex. App.—Dallas 2013, no pet.). Under § 24.009(b) of TUFTA, a plaintiff
may recover judgment for the value of the asset transferred, as adjusted . . . or the
amount necessary to satisfy its claim, whichever is less. See BUS. & COM. §
24.009(b); Qui Phuoc Ho, 395 S.W.3d at 334. If the judgment is based upon the
value of the asset transferred, the judgment must be for an amount equal to the value
of the asset at the time of the transfer, subject to adjustment as the equities may
require. See BUS. & COM. § 24.009(c)(1).
–20– Appellants first argue,
[Appellee] presented no evidence of the “value” of [Preston Road’s] licenses at the time of their alleged transfer. The reality is that those licenses had no value at the time of their alleged transfer. As shown above, those licenses terminated when [Preston Road] stopped operating, making the licenses worthless because the clients no longer had any obligation to continue paying [Preston Road].
(Emphasis added.) However, we previously rejected appellants’ argument
concerning termination of the licenses. Consequently, that rejected argument does
not support appellants’ argument that the licenses had “no value.”
Additionally, appellants argue no evidence supports the jury’s answer
concerning TUFTA damages because appellee’s expert witness did not determine
the value of Preston Road’s licenses at the time of their alleged transfer. Appellants
argue that evidence of value of the licenses of former Preston Road licensees at the
other EW centers is no evidence of the value of the transferred Preston Road licenses.
However, appellants fail to cite a judicial opinion or a TUFTA provision suggesting
appellee’s damages evidence was legally insufficient. See TEX. R. APP. P. 38.1(i);
Bolling v. Farmers Branch Indep. Sch. Dist., 315 S.W.3d 893, 895 (Tex. App.—
Dallas 2010, no pet.) (this Court is not responsible for doing legal research that might
support a party’s contentions). We conclude appellant’s argument is without legal
basis.
We overrule appellants’ second issue on appeal.
–21– Appellee’s Conspiracy Claim does not Fail as a Matter of Law
In their third issue on appeal, appellants first argue that because appellee’s
fraudulent-transfer claim fails as a matter of law, its conspiracy claim also fails. They
argue none of the appellants can be found liable for a conspiracy to do something
that is not, itself, unlawful. See W. Fork Advisors, LLC v. SunGard Consulting
Servs., LLC, 437 S.W.3d 917, 921 (Tex. App.—Dallas 2014, pet. denied) (“. . . West
fork is unable to establish that any named defendant is liable for an underlying tort.
In the absence of such liability, West Fork’s conspiracy claim must fail.”). However,
we concluded above that evidence supports every jury answer on TUFTA liability
that appellants challenge in this Court. Consequently, appellants’ first argument
concerning conspiracy fails.
Second, appellants argue the civil-conspiracy claim fails as a matter of law
because neither EW nor the other EW centers are transferees or recipients of Preston
Road’s licenses.4 In particular, appellants argue, “[A] creditor could not use a
conspiracy claim to broaden the scope of fraudulent-transfer liability, because that
‘would essentially render meaningless’ the statutory limitations on that liability.”
They quote Mack v. Newton, 737 F.2d 1343, 1361 (5th Cir. 1984). However, the
jury’s conspiracy answer did not “broaden the scope of fraudulent-transfer liability”
of appellants. TUFTA’s § 24.009(b)(1) authorizes a creditor to recover judgment for
4 The jury’s conspiracy question did not involve the other EW centers. Rather, it asked whether EW or Preston Road were part of a conspiracy. The jury answered “yes” to each.
–22– the value of the asset transferred, subject to adjustments, from “the person for whose
benefit the transfer was made[.]” BUS. & COM. § 24.009(b)(1). The jury found EW
was “a transferee of a License or a person for whose benefit the transfer of a License
was made[.]” We concluded above that evidence supported a finding that EW was a
person for whose benefit the transfer was made. The jury found the value of the
transferred licenses to be $272,640 as to EW and so found prior to answering the
conspiracy question. Moreover, the trial court’s final judgment awarded appellee
$272,640 in actual damages against EW—the same amount the jury attributed to EW
under appellee’s TUFTA claim. Accordingly, appellants’ argument that the jury’s
conspiracy answer somehow “broaden[ed] the scope of fraudulent-transfer liability”
is unfounded.
We overrule appellants’ third issue on appeal.
The Record Supports the Award of Exemplary Damages
In their fourth issue on appeal, appellants argue the award of exemplary
damages fails because without recovery of actual damages, plaintiffs may not
recover exemplary damages. See Burbage v. Burbage, 447 S.W.3d 249, 263 (Tex.
2014) (“A party may not recover exemplary damages unless the plaintiff establishes
actual damages.”); Radiant Fin., Inc. v. Bagby, No. 05-16-00268-CV, 2017 WL
2927825, at *6 (Tex. App.—Dallas July 10, 2017, pet. denied) (mem. op.). However,
we concluded above that evidence supports the jury’s finding on actual damages.
Appellant makes no other argument concerning exemplary damages.
–23– We overrule appellants’ fourth issue on appeal.
Attorney’s Fees
In their fifth issue on appeal, appellants complain the trial court abused its
discretion by awarding attorney’s fees to appellee.
The trial court granted appellee’s “motion for attorney’s fees under TUFTA.”
It awarded $276,450 for attorney’s fees through trial and completion of proceedings
in the trial court, plus $101,750 for appeals, for a total of $378,200. The trial court’s
judgment held all defendants, except Petersen, jointly and severally liable for the
attorney’s fees.
Section 24.013 of TUFTA provides that “the court may award . . . reasonable
attorney’s fees as are equitable and just.” BUS. & COM. § 24.013. “This provision of
TUFTA gives the trial court the sound discretion to award attorney’s fees based on
the evidence the trial court heard.” Walker v. Anderson, 232 S.W.3d 899, 919 (Tex.
App.—Dallas 2007, no pet.); see Yamin v. Carroll Wayne Conn, L.P., 574 S.W.3d
50, 69 (Tex. App.—Houston [14th Dist.] 2018, pet. denied) (courts review an award
of attorney’s fees under § 24.013 of TUFTA for abuse of discretion). A trial court
abuses its discretion if it acts without reference to any guiding rules and principles.
Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241–42 (Tex. 1985).
First, appellants argue the trial court abused its discretion by not reducing the
“lodestar” amount of attorney’s fees because appellee recovered less in damages
than it sought. They argue appellee’s expert witness testified to $1,425,057 in total
–24– damages including interest, but the final judgment awarded appellee $272,640 in
actual damages and $61,060 in exemplary damages. They argue appellee received
approximately seventy-five percent of the amount it requested for attorney’s fees.
Appellants argue the trial court failed to give “appropriate weight” to the monetary
results appellee achieved at trial.
Appellants cite two Texas judicial opinions in support of their argument that
the trial court abused its discretion based solely on its application of the “results
obtained” factor. See Arthur Andersen & Co. v. Perry Equip. Corp., 945 S.W.2d 812
(Tex. 1997); and see Smith v. Patrick W.Y. Tam Tr., 296 S.W.3d 545 (Tex. 2009).
However, Arthur Andersen & Co. did not involve TUFTA or an argument that the
“results obtained” factor required a reduction of attorney’s fees. See Arthur Andersen
& Co., 945 S.W.2d at 819 (holding that to recover attorney’s fees under the Texas
Deceptive Trade Practices-Consumer Protection Act, the plaintiff must prove that
the amount of attorney’s fees was both reasonably incurred and necessary to the
prosecution of the case at bar, and must ask the jury to award the fees in a specific
dollar amount, not as a percentage of the judgment). We conclude that Arthur
Anderson & Co. does not support appellants’ assertion that the trial court abused its
discretion.
Nor was Smith a TUFTA case. See Smith, 296 S.W.3d at 546 (breach of
contract). In Smith, a trust sought damages of $215,931.50 and attorney’s fees
through trial of $47,438.75. See id. at 546. The jury awarded $65,000 damages but
–25– no attorney’s fees. See id. The trial court rendered judgment notwithstanding the
verdict and awarded plaintiff $7,500 for attorney’s fees incurred through trial and up
to $15,000 in attorney’s fees for successful appellate proceedings. See id. at 546–47.
This Court determined that the trust was entitled to the full amount of attorney’s fees
it sought, $47,438.75, because it proved that amount as a matter of law. See Smith v.
Patrick W.Y. Tam Trust, 235 S.W.3d 819, 828 (Tex. App.—Dallas 2007) (“Because
the Trust presented competent, uncontroverted evidence of its right to attorney’s fees
and because the Smiths did not challenge the amount, nature, or necessity of these
fees, we conclude the trial judge abused his discretion in awarding $7500.”), rev’d,
296 S.W.3d 545 (Tex. 2009). The supreme court determined that because the jury
had awarded the trust far less damages than the trust sought, there was a fact question
whether $47,438.75 was a reasonable attorney’s fee. See Smith, 296 S.W.3d at 548.
The supreme court concluded, “the fee is unreasonable in light of the amount
involved and the results obtained.” Id. That is one of eight Arthur Andersen & Co.
non-exclusive factors. See Arthur Andersen & Co., 945 S.W.2d at 818. The
unreasonableness of that one factor meant the amount of attorney’s fees was not
established as a matter of law and that the amount had to be determined by a jury.
See Smith, 296 S.W.3d at 548. The court observed that although the amount the court
of appeals awarded was unreasonable under one factor, on retrial, the jury could
award a similar amount. See id.; Sandberg v. STMicroelectronics, Inc., 600 S.W.3d
511, 534 (Tex. App.—Dallas 2020, pet. denied) (distinguishing Smith).
–26– The present lawsuit is distinguishable from Smith. Here, it was the judge as
finder of fact who determined the reasonable amount of attorney’s fees, not the trial
court ruling as a matter of law and awarding attorney’s fees despite a jury answer
awarding no fees. See Smith, 296 S.W.3d at 548. Additionally, the fact that one of
the eight Arthur Andersen & Co. factors does not support the full amount of
attorney’s fees requested does not mean that the totality of evidence supporting other
factors does not support that amount. See Sandberg, 600 S.W.3d at 534. Because
appellants fail to address the other Arthur Andersen & Co. factors, we cannot
conclude that the trial court’s award of attorney’s fees was an abuse of discretion.
See id.
In this case, appellee supported its motion for attorney’s fees with evidence
of (1) particular services performed, (2) who performed those 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. Consequently, appellee presented sufficient evidence of
the base lodestar calculation of reasonable and necessary attorney’s fees. See
Rohrmoos Venture v. UTSW DVA Healthcare, LLP, 578 S.W.3d 469, 498 (Tex.
2019). Appellants had the burden of providing specific evidence to overcome the
presumptive reasonableness of the base lodestar figure. See id. at 501. For reasons
stated above, we conclude appellants failed to carry their burden. See Rohrmoos
Venture, 578 S.W.3d at 500. We are not persuaded by appellants’ argument that the
–27– trial court abused its discretion due to a failure to give appropriate weight to the
Arthur Andersen & Co. factor of “the amount involved and the results obtained.”
Second, appellants argue the trial court’s award of attorney’s fees does not
adequately segregate fees on unrecoverable claims. They argue attorney’s fees are
only recoverable to the extent they were incurred on appellee’s claim for fraudulent
transfer of the licenses. However, appellants fail to cite legal authority to support
their argument. See TEX. R. APP. P. 38.1(i); Bolling, 315 S.W.3d at 895 (this Court
is not responsible for doing legal research that might support a party’s contentions).
Consequently, appellants fail to provide a legal basis to demonstrate the trial court
abused its discretion in its award of attorney’s fees due to a failure to segregate fees.
We overrule appellant’s fifth issue on appeal.
Costs
In their sixth issue on appeal, appellants argue the trial court abused its
discretion by awarding costs to appellee. They argue appellee lost all its contested
claims at trial except for its fraudulent transfer of licenses and related conspiracy
claims and recovered less than one-third of the damages it sought.
Section 24.013 of TUFTA provides, “[T]he court may award costs . . . as are
equitable and just.” BUS. & COM. § 24.013. Appellants cite Rule 131 of the Texas
Rules of Civil Procedure. Rule 131 provides, “The successful party to a suit shall
recover of his adversary all costs incurred therein, except where otherwise
provided.” TEX. R. CIV. P. 131.
–28– A “successful party” is one who obtains a judgment from a competent court
vindicating a civil claim of right. See, e.g., Hasty, Inc. v. Inwood Buckhorn Joint
Venture, 908 S.W.2d 494, 502 (Tex. App.—Dallas 1995, writ denied). A plaintiff
who prevails on one claim but not others in the same suit is a successful party. See
Richman Trs. v. Time, No. 05-00334-CV, 2024 WL 510339, at *18 (Tex. App.—
Dallas June 24, 2024, no pet.) (mem. op.); Hasty, Inc., 908 S.W.2d at 503 (plaintiff
that prevailed on one out of three claims against defendant was a successful party
for purposes of rule 131). The decision to assess costs is within the trial court’s
discretion. See Hasty, Inc., 908 S.W.3d at 502. Absent an abuse of discretion, we
will not reverse the trial court’s assessment of costs. See id.
Appellee prevailed on its TUFTA claim. Consequently, we conclude appellee
was a successful party as contemplated by rule 131 even though it did not prevail on
every claim it asserted. See Richman Trs., 2024 WL 510339, at *18; Hasty, Inc., 908
S.W.2d at 503. We also conclude the trial court’s award of costs was not an abuse
of discretion.
We overrule appellant’s sixth issue on appeal.
–29– Conclusion
We affirm the trial court’s judgment.
/Bill Pedersen, III/ 221103f.p05 BILL PEDERSEN, III JUSTICE
–30– Court of Appeals Fifth District of Texas at Dallas JUDGMENT
EXECUTIVE WORKSPACE–ABC– On Appeal from the 101st Judicial PRESTON ROAD, LLC A/K/A District Court, Dallas County, Texas EXECUTIVE WORKSPACE Trial Court Cause No. DC-18-12900. PRESTON ROAD, LLC; Opinion delivered by Justice EXECUTIVE WORKSPACE, LLC; Pedersen, III. Justices Partida- EXECUTIVE WORKSPACE– Kipness and Garcia participating. PRESTON TRAIL, LLC; EXECUTIVE WORKSPACE- HILLCREST, LLC; EXECUTIVE WORKSPACE-ABC-TOLLWAY, LLC; AND EXECUTIVE WORKSPACE-FRISCO STATION, LLC, appellants
No. 05-22-01103-CV V.
RESERVE CAPITAL–PRESTON GROVE SPE, LLC, appellee
In accordance with this Court’s opinion of this date, the judgment of the trial court is AFFIRMED.
It is ORDERED that appellee RESERVE CAPITAL–PRESTON GROVE SPE, LLC recover its costs of this appeal from appellants EXECUTIVE WORKSPACE–ABC–PRESTON ROAD, LLC A/K/A EXECUTIVE WORKSPACE–PRESTON ROAD, LLC; EXECUTIVE WORKSPACE, LLC; EXECUTIVE WORKSPACE–PRESTON TRAIL, LLC; EXECUTIVE WORKSPACE-HILLCREST, LLC; EXECUTIVE WORKSPACE-ABC- TOLLWAY, LLC; AND EXECUTIVE WORKSPACE-FRISCO STATION, LLC.
–31– Judgment entered this 12th day of December, 2024.
–32–