TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-05-00787-CV
Gilbert & Maxwell, PLLC; Keith Gilbert and William T. Maxwell, Appellants
v.
Texas Mutual Insurance Company, Appellee
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 201ST JUDICIAL DISTRICT
NO. GN200967, HONORABLE W. JEANNE MEURER, JUDGE PRESIDING
M E M O R A N D U M O P I N I O N
This appeal arises from a series of lawsuits filed by appellants Gilbert & Maxwell,
PLLC, Keith Gilbert, and William T. Maxwell (collectively, "Gilbert & Maxwell") against various
workers compensation carriers, including appellee Texas Mutual Insurance Company, on behalf of
their client, First Rio Valley Medical clinic. See Howell v. Texas Workers' Comp. Comm'n,
143 S.W.3d 416, 427-28 (Tex. App.--Austin 2004, pet. denied). Gilbert & Maxwell filed more than
700 suits against the carriers on behalf of First Rio, seeking payment on medical bills partially paid
or denied by the carriers. Id. at 429. Gilbert & Maxwell also filed the underlying suit in
Travis County on behalf of First Rio, seeking declaratory relief related to the disputed bills. Id. The
defendants, including Texas Mutual, counterclaimed for declaratory relief and an anti-suit injunction,
and the trial court rendered judgment in favor of the defendants, enjoined First Rio from filing
further or prosecuting the existing suits, awarded attorney's fees in favor of the defendants, and
imposed sanctions against Gilbert & Maxwell. Id. at 426-27. The sanctions were imposed in two
orders--the first assessed $13,000 in attorney's fees in favor of Texas Mutual and the second
sua sponte imposed $3,200 in sanctions when Gilbert & Maxwell failed to appear at a hearing. Id.
at 427. The $13,000 award was based on discovery abuses and six other grounds. Id. at 446-47.
Gilbert & Maxwell and First Rio appealed, and this Court largely affirmed, including holding that
five of the seven grounds for sanctions against Gilbert & Maxwell were supported by sufficient
evidence. Id. at 450-51. However, we held that two of the grounds--discovery abuse sanctions and
sanctions related to the signing of certain affidavits--were not supported by the evidence, id. at 446,
448, and remanded the matter for recalculation of sanctions. Id. at 451.
On remand, the trial court held a hearing, concluded that it was limited to the
evidence presented on its original consideration of Texas Mutual's motion for sanctions, and reduced
the award to $12,900. In its order, the court stated:
The Court makes this award in the exercise of [its] inherent power over attorneys
appearing before it, and in light of the harm to Texas Mutual from the five categories
of sanctionable conduct affirmed by the appellate court, the attorneys' fees
incurred by Texas Mutual because of the sanctionable conduct, the need to punish
Gilbert & Maxwell for its wrongful conduct, and the need to deter
Gilbert & Maxwell from repeating such conduct. The Court has weighed these
factors without consideration of the two grounds on which the appellate court found
sanctions were not proper.
Gilbert & Maxwell appeals that order, complaining in four issues that the trial court abused its
discretion in assessing sanctions pursuant to its "inherent power over attorneys appearing before it"
and because the new order is not supported by the evidence. We affirm.
In its first issue, Gilbert & Maxwell contends that the trial court's recalculation order
"clarified" that it was imposing sanctions solely pursuant to its inherent authority over attorneys who
appear before it and that to do so was an improper expansion of the court's inherent authority. It
asserts, in other words, that a trial court has inherent authority related to its core functions but not
over attorneys before it, although Gilbert & Maxwell acknowledges that a trial court has contempt
power over attorneys before it. In its second issue, Gilbert & Maxwell complains that the sanctions
order is erroneous on its face because it did not provide specific conclusions or apportion the
sanctions between the specific instances of bad conduct or to the firm or a particular attorney. In its
third issue, Gilbert & Maxwell argues that the trial court abused its discretion in its recalculation
because the improper conduct did not affect the trial court's core functions and was "beyond the trial
court's inherent authority over attorneys who appear before it." In its fourth and final issue,
Gilbert & Maxwell asserts that the recalculated sanctions are not supported by the evidence.
We first turn to Gilbert & Maxwell's arguments related to the authority under which
the trial court assessed the recalculated sanctions. Gilbert & Maxwell argues that the trial court
"clarified on remand that the sole basis for the award of sanctions (not overturned by the appellate
court) was the trial court's 'inherent authority over attorneys appearing before it,'" "that none of the
remaining grounds for sanctions previously awarded by the trial court were pursuant to its inherent
authority regarding core functions," and that the other factors referenced by the trial court--harm
suffered and attorney's fees incurred by Texas Mutual as a result of Gilbert & Maxwell's misconduct
and the need to punish Gilbert & Maxwell for its misconduct and deter it from similar conduct in
the future--"do not provide a valid basis to expand the trial court's inherent authority."
Gilbert & Maxwell further asserts that the trial court's order clarified that "rule 13 sanctions were
not a basis [for] the award of sanctions on the remaining five grounds" and "that it did not award
sanctions under its inherent power in order to exercise its jurisdiction, in the administration of justice
or in the preservation of its independence and integrity." We disagree.
The grounds for sanctions found by the trial court and affirmed by this Court were
that Gilbert & Maxwell improperly obtained an ex parte temporary restraining order that was a bad-faith abuse of the judicial process; "designed and carried out a vexatious litigation campaign"; made
false statements of material fact to the trial court; filed a groundless motion to disqualify for purposes
of delay or harassment, in violation of rule 13 of the rules of civil procedure, see Tex. R. Civ. P. 13
(signing of document certifies that attorney has read document and believes it is not groundless,
brought in bad faith, or for purposes of harassment); and filed a "patently frivolous" petition for
writ of mandamus. Howell, 143 S.W.3d at 447. The trial court stated in its original order that the
sanctionable conduct, including the five grounds noted above, "included multiple abuses of the
judicial process itself and of the traditional core functions of Texas courts." The court found that
Texas Mutual had incurred $13,000 in attorney's fees as a direct result of the bad acts, including the
two that were invalidated by this Court, and also that $13,000 was necessary to deter
Gilbert & Maxwell from similar bad conduct in the future and was appropriate under the court's
inherent authority necessary to perform its core functions, rule 13, and rule 215.2, which applies only
to the invalidated allegations of discovery abuse.
The new order states that sanctions were awarded based solely on the five grounds
affirmed in Howell and in light of the trial court's inherent power over attorneys appearing before
it. The order also states that sanctions were intended to punish Gilbert & Maxwell and to deter them
from such conduct in the future. The new sanctions order neither limited the grounds for assessing
sanctions nor expanded the inherent power of the court. Instead, the new order simply recalculated
the amount of sanctions for Gilbert & Maxwell's misconduct in light of the fact that we struck as
grounds for sanctions two of the seven instances of misconduct. Our instruction to recalculate the
amount of the sanctions to be awarded did not negate or change the five remaining bases set out in
the original order or the authority under which the sanctions were imposed. Those five grounds were
reviewed and affirmed in Howell. Thus, the original order provided the grounds for the
sanctions--explaining the instances of misconduct being sanctioned--and explained the authorities
on which the court properly relied to impose the sanctions. The new order served only to recalculate
the monetary amount of the sanctions award.
As stated by the supreme court, "Rule 13 sanctions serve both deterrent and
compensatory purposes. Courts impose sanctions against parties filing frivolous claims to deter
similar conduct in the future and to compensate the aggrieved party by reimbursing the costs incurred
in responding to baseless pleadings." Scott & White Mem'l Hosp. v. Schexnider, 940 S.W.2d 594,
596-97 (Tex. 1996). Thus, the trial court had the authority under rule 13 to sanction
Gilbert & Maxwell for its bad-faith conduct related to the filing of groundless documents, and its
omission from the new order of a reference to rule 13 did not negate the original findings and
conclusions made under that rule.
Further, even if the new order did somehow limit the sanctions imposed to being
assessed pursuant to the trial court's inherent powers, the court's use of the phrase "authority over
attorneys appearing before it" neither improperly expanded the court's sanction powers nor barred
the imposition of sanctions to the misconduct in question. At most, the phrase refers to a
subcategory of the trial court's authority to manage its judicial functioning, ensure the administration
of justice, and preserve its independence and integrity. (1) See In re Bennett, 960 S.W.2d 35, 40
(Tex. 1997) ("Courts possess inherent power to discipline an attorney's behavior."); Howell,
143 S.W.3d at 446-47. "Even in the absence of an applicable rule or statute, a court has the inherent
authority to sanction parties for bad-faith abuses if it finds that to do so will 'aid in the exercise of
its jurisdiction, in the administration of justice, and in the preservation of its independence and
integrity.'" Howell, 143 S.W.3d at 446 (quoting Bennett, 960 S.W.2d at 40) (discussing courts'
general inherent power). We overrule Gilbert & Maxwell's first issue.
Gilbert & Maxwell also argues that the misconduct being sanctioned "was not subject
nor directed at the trial court's core functions or was beyond the trial court's inherent authority over
attorneys who appear before it." Again, we disagree.
The trial court found that Gilbert & Maxwell filed a frivolous petition for
extraordinary relief, designed and conducted a "vexatious litigation campaign," improperly and in
bad faith obtained an ex parte TRO, made false statements of material fact to the court, and filed a
groundless motion to disqualify in bad faith and for the purposes of harassment or delay. The court
found that Gilbert & Maxwell's misconduct supported sanctions pursuant to the trial court's inherent
authority to control the attorneys who appear before it. As a whole, the misconduct amounted to an
abuse of the judicial process and interfered with the court's administration of justice, its dignity and
integrity, and its exercise of its traditional core functions. (2) See Kennedy v. Kennedy, 125 S.W.3d 14,
19 (Tex. App.--Austin 2002, pet. denied) (court cannot invoke inherent sanction authority without
evidence and findings that bad conduct "significantly interfered with the court's legitimate exercise
of one of its traditional core functions"); Onwuteaka v. Gill, 908 S.W.2d 276, 280
(Tex. App.--Houston [1st Dist.] 1995, no writ) ("inherent power to sanction exists only to the extent
necessary to deter, alleviate, and counteract bad faith abuse of the judicial process, such as the
significant interference with core judicial functions of Texas courts"); Kutch v. Del Mar College,
831 S.W.2d 506, 510 (Tex. App.--Corpus Christi 1992, no writ) (citing Armadillo Bail
Bonds v. State, 802 S.W.2d 237, 239-40 (Tex. Crim. App. 1990)) (court's core functions are "hearing
evidence, deciding issues of fact raised by the pleadings, deciding questions of law, entering
final judgment and enforcing that judgment"); see also Howell, 143 S.W.3d at 447 (citing
Eichelberger v. Eichelberger, 582 S.W.2d 395, 398 (Tex. 1979)) (holding that inherent power
allowed sanctions for obtaining improper TRO). We overrule Gilbert & Maxwell's third issue.
Gilbert & Maxwell complains in its second issue that the order is erroneous on its
face because it does not apportion the sanctions award between the individual attorneys and the law
firm or attribute specific sums to specific instances of sanctionable conduct. This, it argues, makes
"an adequate determination by appellate review impossible and meaningless."
Gilbert & Maxwell did not request findings and conclusions or raise any objections
to the form of the trial court's order. Therefore, any complaints about a lack of specificity or
findings is waived. See Robson v. Gilbreath, No. 03-06-00364-CV, 2008 Tex. App. LEXIS 5820,
at *10 (Tex. App.--Austin Aug. 1, 2008, no pet. h.) (op. on reh'g); Land v. AT & S Transp., Inc.,
947 S.W.2d 665, 667 (Tex. App.--Austin 1997, no writ). Further, Gilbert & Maxwell has not
pointed to any authority holding that a sanctions award must be apportioned among the sanctionable
acts or to the law firm and its partners, rather than jointly and severally against all three appellants.
In the original order largely affirmed in Howell, the trial court made specific findings and
conclusions about the sanctionable behavior giving rise to the award. We instructed the trial court
only to recalculate the amount of sanctions to be assessed and did not instruct the court that it had
to make new findings or conclusions related to the sanctionable conduct. The trial court did just that,
limiting its recalculation to the evidence presented at the original sanctions hearing and referring to
its original, affirmed findings and conclusions in its new order. It was not required to set out further
findings, especially in the absence of any such request by Gilbert & Maxwell, and the order was not
required to specifically state what sum was assessed for each bad act. We overrule
Gilbert & Maxwell's second issue.
Finally, we turn to Gilbert & Maxwell's fourth issue, in which it complains that the
evidence is insufficient to support the recalculated sanctions award. (3) Gilbert & Maxwell further
contends that Texas Mutual's attorney testified in the original sanctions hearing that Texas Mutual
had accrued only $12,982 in attorney's fees due to Gilbert & Maxwell's misconduct, including the
grounds later reversed on appeal.
In considering the propriety of a trial court's sanctions award, we look to see whether
there is a "direct relationship" between the misconduct and the sanctions, meaning that the sanctions
are directed at the abuse and at alleviating the harm to the innocent party. Transamerican Natural
Gas Corp. v. Powell, 811 S.W.2d 913, 917 (Tex. 1991) (discovery sanctions). Sanctions may also
be imposed to secure compliance with the rules or court orders, deter future violations, and punish
violators. See Bodnow Corp. v. City of Hondo, 721 S.W.2d 839, 840 (Tex. 1986) (discovery
sanctions). If the sanctions meet one of those requirements, we next look to whether they were
excessive. Transamerican Natural Gas Corp., 811 S.W.2d at 917.
Here, the trial court imposed sanctions in the amount of $12,900 in light of the
attorney's fees incurred by Texas Mutual due to the sanctionable conduct as well as the need to
punish Gilbert & Maxwell for its misconduct and deter it from committing such acts in the future.
We cannot say that the sanctions imposed are excessive or an abuse of discretion. The sanctions
imposed have a direct relationship to the misconduct at issue--Gilbert & Maxwell's bad-faith abuse
of the judicial process overall in an attempt to delay litigation, drive up litigation costs, and harass
the opposing parties. Thus, the sanctions were intended not only to reimburse Texas Mutual for the
fees and expenses it incurred, but also to punish Gilbert & Maxwell and deter similar acts in the
future. The court was not required to match Texas Mutual's incurred attorney's fees dollar-for-dollar. Further, Gilbert & Maxwell has not shown that the $12,900 assessed is excessive. Because
the sanction had both punitive and deterrent purposes and in light of the amount of attorney's fees
sought by Texas Mutual and the conduct in question, we cannot say the trial court abused its
discretion by awarding $12,900 in sanctions after reconsidering the issue on remand. (4) We therefore
overrule Gilbert & Maxwell's fourth and final issue.
Having overruled Gilbert & Maxwell's issues, we affirm the trial court's order
recalculating the amount of sanctions assessed against Gilbert & Maxwell in favor of Texas Mutual.
__________________________________________
David Puryear, Justice
Before Chief Justice Law, Justices Patterson and Puryear;
Concurring opinion by Justice Patterson
Affirmed
Filed: December 19, 2008
1. Gilbert & Maxwell asserts that its misconduct "[c]onceivably" could have been sanctioned
under rule 13 and only rule 13, not pursuant to the trial court's inherent authority. See Tex. R. Civ.
P. 13 (allowing sanctions against attorneys who file groundless or bad-faith documents). However,
Gilbert & Maxwell provides no authority for the proposition that its filing of groundless or bad-faith
documents, misstating material facts, and conducting a campaign of vexatious litigation is
punishable solely under rule 13, may not be punished pursuant to the trial court's inherent authority,
and does not strike at the court's core functions. See Tex. R. App. P. 38.1(h).
2. Gilbert & Maxwell notes that the petition for mandamus was filed in this Court, not in the
trial court, and argues that it therefore did not affect the trial court's core functions. However,
because it was "patently frivolous" and "served only to escalate Texas Mutual's costs," the filing of
that document in this Court did affect the trial court and its functioning.
3. Much of this fourth issue refers again to Gilbert & Maxwell's arguments that the
misconduct could not be punished pursuant to the trial court's inherent authority and did not strike
at the trial court's core functions. We have resolved those arguments against Gilbert & Maxwell.
4. Some of our sister courts have held that "proof of attorney's fees expended or the
reasonableness thereof is not required when such fees are assessed as sanctions." Allied Assocs., Inc.
v. INA County Mut. Ins. Cos., 803 S.W.2d 799, 799 (Tex. App.--Houston [14th Dist.] 1991, no writ)
(citing Brantley v. Etter, 677 S.W.2d 503, 504 (Tex. 1984)); see also Stites v. Gillum, 872 S.W.2d
786, 797 (Tex. App.--Fort Worth 1994, writ denied) (following Allied Assoc.); Glass v. Glass,
826 S.W.2d 683, 688-89 (Tex. App.--Texarkana 1992, writ denied) (same).