COURT OF APPEALS SECOND DISTRICT OF TEXAS FORT WORTH
NO. 02-11-00095-CV
KHOSROW SADEGHIAN APPELLANT
V.
WILLIE HUDSPETH APPELLEE
----------
FROM COUNTY COURT AT LAW NO. 2 OF DENTON COUNTY
MEMORANDUM OPINION1
In seven points, Appellant Khosrow Sadeghian appeals from the trial court’s
judgment awarding Appellee Willie Hudspeth $16,000 on his counterclaims against
Sadeghian and $70,210.53 in sanctions, including $20,210.53 in attorney’s fees.
Sadeghian challenges the trial court’s jurisdiction over Hudspeth’s counterclaims
and the evidence in support of the judgment. Because we hold that part of the trial
court’s judgment exceeds its jurisdictional limit, we modify the judgment in part to 1 See Tex. R. App. P. 47.4. exclude the damages awarded for conversion. But because we also hold that the
trial court had jurisdiction over Hudspeth’s claims and that the evidence supports the
judgment, we affirm the judgment as modified.
Background
This suit arose out of a dispute over whether Hudspeth and Sadeghian had a
written contractual agreement under which Hudspeth would perform repairs on
Sadeghian’s property. Sadeghian sued Hudspeth asserting breach of contract, and
Hudspeth defended the suit on the ground that Sadeghian’s suit was groundless
and nothing more than an attempt to fraudulently force a settlement out of
Hudspeth.
Sadeghian filed his breach of contract suit against Hudspeth in the justice
court. Hudspeth filed a counterclaim for common law fraud asserting that
Sadeghian had made false and material misrepresentations of fact to Hudspeth and
the trial court. Hudspeth also sought sanctions under rule 13 of the rules of civil
procedure and chapters 9 and 10 of the civil practice and remedies code,2 arguing
that Sadeghian’s suit was frivolous, baseless, and groundless and brought in bad
faith as a means to harass Hudspeth. The jury found for Hudspeth and found that
his attorney’s fees and costs were $4,316, and the trial court rendered judgment for
Hudspeth in that amount.
2 Tex. R. Civ. P. 13; Tex. Civ. Prac. & Rem. Code Ann. §§ 9.001–.014, 10.001–.006 (West 2002).
2 Sadeghian then appealed to the county court. Hudspeth amended his
petition, adding a claim for conversion of personal property. Hudspeth once again
sought sanctions, including attorney’s fees, under rule 13 and chapters 9 and 10.
Hudspeth also asserted that in defending against Sadeghian’s suit, he had been
forced to spend time away from work, causing him to lose work worth $6,400.
At trial, Sadeghian and Hudspeth told very different versions of the events
leading up to the litigation. Hudspeth testified that had been doing work on different
property owned by a third party and had left materials on the property for that
purpose, but the property was sold at a foreclosure sale to Sadeghian. After
Sadeghian’s purchase of the property, an employee of Sadeghian refused to let
Hudspeth retrieve the materials. Sadeghian testified Hudspeth’s testimony was “not
believable at all,” that Hudspeth was lying, and that he did not see any materials at
the property.
The parties agreed that Sadeghian had asked Hudspeth about doing some
repair work on one of the properties he owned and that Hudspeth gave Sadeghian a
bid for the work. Hudspeth testified that the bid was for $25,000. Sadeghian
testified that Hudspeth’s bid was for $17,000, and when asked if the bid had been
for $25,000, he asserted that Hudspeth’s testimony was a lie. But he later changed
his testimony to say that Hudspeth’s original bid was $25,000 and that he had
lowered it to $17,000. Both parties agreed that Sadeghian rejected Hudspeth’s bid
as too high.
3 The parties disagreed about what happened next. Hudspeth testified that
Sadeghian asked him to do the work for $8,900, that he declined, and that
Sadeghian asked him if he knew anyone who would do the work for that amount.
Hudspeth gave him the contact information for Eddie Vasquez, who had done some
work for Hudspeth in the past.
Sadeghian testified that he only hired Vasquez on the condition that Hudspeth
would be supervising his work, that he gave Hudspeth a handwritten contract
obligating Hudspeth to manage Vasquez’s work for a payment of $200, and that
Hudspeth accepted that offer over the telephone. Hudspeth testified that he
unequivocally turned down Sadeghian’s handwritten offer but agreed to take money
from Sadeghian to give to Vasquez and that he did so. Hudspeth also offered into
evidence a written, signed contract that Sadeghian entered into with Vasquez to
perform work on the property. Sadeghian acknowledged that this contract made no
mention of Hudspeth or of Hudspeth supervising Vasquez’s work. But Sadeghian
maintained that notwithstanding the terms of his agreement with Vasquez, Hudspeth
had agreed to manage the project under the terms of the handwritten offer.
Hudspeth testified that Vasquez and Sadeghian began having disagreements
almost as soon as Vasquez began working on the property and that within three or
four days, Sadeghian kicked Vasquez off the job. Sadeghian testified that Hudspeth
claimed to have paid Vasquez to purchase materials but that no work was done on
the property and that he never saw any of the items Vasquez supposedly
purchased.
4 Hudspeth testified that Sadeghian demanded that Hudspeth pay him the
$8,900 that Vasquez had agreed to do the work for (but most of which Sadeghian
acknowledged he had not paid to Vasquez or anyone else) plus the money that
Hudspeth had taken from Sadeghian and given to Vasquez for materials. Hudspeth
stated that when he refused, Sadeghian physically threatened him and then filed this
lawsuit. Sadeghian denied ever threatening Hudspeth and testified that he originally
asked Hudspeth to return only the money he had given him to give to Vasquez but
that after the property was demolished because it had not been repaired, he
increased his demand.
The jury believed Hudspeth’s version of events and found that Sadeghian and
Hudspeth did not have a written agreement, that Sadeghian committed fraud against
Hudspeth, and that Sadeghian converted Hudspeth’s personal property. The jury
found that Hudspeth’s damages were $10,000 for fraud and $6,000 for conversion.
The jury further found that Sadeghian’s suit was “frivolous, baseless, or groundless”
and had been brought in bad faith or for purposes of harassment and determined
that $50,000 would compensate Hudspeth for Sadeghian’s filing of the suit. The jury
also found that $20,210.53 was a reasonable fee for Hudspeth’s attorney in
defending against Sadeghian’s frivolous, baseless, or groundless lawsuit, that
$10,000 was a reasonable fee if Sadeghian appealed to the court of appeals, and
that another $10,000 was a reasonable fee if Sadeghian appealed to the Supreme
Court of Texas. The trial court’s judgment conformed to the jury’s findings, awarding
Hudspeth $10,000 for fraud, $6,000 for conversion, $50,000 for Sadeghian’s
5 “frivolous, baseless, or groundless litigation,” $20,210.53 in attorney’s fees, plus
$10,000 contingent appellate attorney’s fees if Sadeghian appealed, and an
additional $10,000 if Sadeghian filed a petition for review with the Supreme Court.
Sadeghian now appeals.
Analysis
Jurisdiction
In his first point, Sadeghian argues that the sum of Hudspeth’s counterclaims
exceeded the jurisdictional limits of the county court and that the county court
therefore did not have jurisdiction over the counterclaims. He argues that this court
should therefore reverse the county court’s judgment and dismiss Hudspeth’s claims
with prejudice.
In an appeal from a justice court to a county court, the jurisdiction of the
county court is confined to the jurisdictional limits of the justice court. 3 A justice
court has jurisdiction of civil matters in which the amount in controversy—that is, the
value of the case at the time of filing—is not more than $10,000, exclusive only of
interest.4 When jurisdiction is properly acquired, no subsequent event in the case
will defeat that jurisdiction.5 Accordingly, when the original suit is within the
3 Crumpton v. Stevens, 936 S.W.2d 473, 476 (Tex. App.—Fort Worth 1996, no writ). 4 Tex. Gov’t Code Ann. § 27.031 (West Supp. 2012); United Servs. Auto. Ass’n v. Brite, 215 S.W.3d 400, 401 (Tex. 2007) (referring to the “amount in controversy” as the value of the case at filing). 5 Flynt v. Garcia, 587 S.W.2d 109, 109–10 (Tex. 1979).
6 jurisdictional limits of the court and subsequent amendments seek only additional
damages that accrued because of the passage of time, the court does not lose
jurisdiction even if the amendment increases the amount in controversy above the
jurisdictional limits of the court.6 If the party’s “original and amended petitions do not
affirmatively demonstrate an absence of jurisdiction, a liberal construction of the
pleadings in favor of jurisdiction is appropriate.”7
Sadeghian argues that Hudspeth sought $10,000 for fraud, $6,000 for
conversion, $50,000 as sanctions for filing a frivolous suit, and $19,230 in attorney’s
fees, also as sanctions. We first note that in his discussion of this point, Sadeghian
fails to cite any part of the record where we may find support for his assertions. 8
Because this point concerns jurisdiction, however, we searched the record to find
Hudspeth’s pleadings.9 From our review we have determined that although the jury
6 Id.; Cont’l Coffee Prods. Co. v. Cazarez, 937 S.W.2d 444, 449 (Tex. 1996). 7 Cont’l Coffee Prods., 937 S.W.2d at 449. 8 See Tex. R. App. P. 38.1(i) (requiring argument to be supported by appropriate citations to the record); see also Fredonia State Bank v. Gen. Am. Life Ins. Co., 881 S.W.2d 279, 284 (Tex. 1994) (stating that appellate court has discretion to waive point due to inadequate briefing); Devine v. Dallas County, 130 S.W.3d 512, 513–14 (Tex. App.—Dallas 2004, no pet.) (holding that when a party fails to adequately brief a complaint, he waives the issue on appeal). 9 See Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 443–44 (Tex. 1993) (considering whether the trial court had jurisdiction over the case and stating that subject matter jurisdiction cannot be waived); Lawrence v. City of Wichita Falls, 122 S.W.3d 322, 326 (Tex. App.—Fort Worth 2003, pet. denied) (“Subject matter jurisdiction cannot be waived and may be raised by the court on its own motion or for the first time on appeal.”)
7 awarded those amounts, Hudspeth’s counterpetition did not allege damages in
those amounts.
In Hudspeth’s original counterpetition, he asserted a claim for common law
fraud, and he asked for attorney’s fees “in the amount of not less than $5,000.00” as
a sanction for Sadeghian’s filing what Hudspeth alleged was a “frivolous, baseless,
and groundless lawsuit in bad faith.” He prayed for actual damages, court costs,
prejudgment and postjudgment interest, exemplary damages, sanctions, and
attorney’s fees. But other than the $5,000 in sanctions, Hudspeth did not assert any
specific amount of damages or relief sought.
The Supreme Court of Texas has held that “the omission of any allegation
regarding the amount in controversy from plaintiff’s petition [does] not deprive the
court of jurisdiction, but [is] instead a defect in pleading subject to special exception
and amendment.”10 The Peek court held that although the original petition in that
case was defective for failing to allege the amount in controversy, the petition was
nevertheless sufficient to invoke the jurisdiction of the trial court.11
This case differs from Peek in that Hudspeth did include one allegation
regarding the amount in controversy: $5,000 in sanctions. This amount was within
the court’s jurisdiction. But he made no allegations in his original counterpetition
regarding the amount in controversy relating to his other claims. Because this
10 Peek v. Equip. Serv. Co. of San Antonio, 779 S.W.2d 802, 805 (Tex. 1989). 11 Id.
8 counterpetition did not affirmatively negate the absence of jurisdiction, the justice
court correctly construed the pleadings in favor of jurisdiction.12 And because the
justice court properly acquired jurisdiction over Hudspeth’s counterclaim, Hudspeth’s
subsequent amendment of his pleadings did not divest the court of jurisdiction.13
Hudspeth amended his pleadings in the county court, but these pleadings did
not demonstrate that the county court lacked jurisdiction over the new claims. In his
second amended counterpetition, Hudspeth added a claim for conversion, for which
he alleged damages of $6,000, and did not assert any specific amount of damages
on his fraud claim. Hudspeth also sought as a sanction his attorney’s fees that had
accrued during the course of litigation, as well as sanctions for Sadeghian’s pursuit
of a groundless lawsuit—amounts that were premised on the passage of time due to
the ongoing litigation and were therefore within the trial court’s jurisdiction.14 Thus,
although the jury found and the judgment awarded damages of more than $10,000,
contrary to Sadeghian’s argument, Hudspeth did not plead damages over the court’s
jurisdictional limit. Accordingly, we hold that Hudspeth’s pleadings did not negate
the existence of jurisdiction.
12 See Cont’l Coffee Prods., 937 S.W.2d at 449. 13 See Flynt, 587 S.W.2d at 109–10. 14 See Cont’l Coffee Prods. Co., 937 S.W.2d at 449; see also Crumpton, 936 S.W.2d at 477 (holding that the county court erred by denying Crumpton’s attorney’s fees on the ground that the fees were in excess of justice court’s jurisdictional limits because the fees were incurred in prosecuting the suit in the county court).
9 Although the trial court rendered a judgment in excess of its jurisdictional
limits, Sadeghian makes no argument about the court’s lack of authority to do so.
His only argument relates to the trial court’s jurisdiction to hear the claims in the first
place. He makes no arguments supported by authority that even if the trial court
had jurisdiction to hear the claims, it had no authority to render a judgment in excess
of its jurisdiction limits. Nevertheless, because an amount of a judgment in excess
of the trial court’s jurisdictional limits is void, we consider whether the trial court’s
judgment exceeded its jurisdictional limits.15
As stated above, in his second amended counterclaim, Hudspeth sought two
additional categories of damages, both of which he alleged were incurred while the
litigation was proceeding. First, he pled for $6,400 for loss of employment
opportunities caused by the ongoing litigation. Second, he asked to be awarded as
sanctions the attorney’s fees that he incurred and that had continued to accrue in
defending against Sadeghian’s groundless lawsuit. The attorney’s fees accrued
during the litigation and the employment opportunities lost because Hudspeth was
required to spend time away from work in order to “handle Sadeghian’s . . . baseless
litigation” were damages that accrued because of the passage of time during the
litigation period. Therefore, even if they caused the amount in controversy to
15 Kendziorski v. Saunders, 191 S.W.3d 395, 410 (Tex. App.—Austin 2006, no pet.).
10 surpass the jurisdictional limits of the court, the trial court had jurisdiction to hear the
claims and to render judgment on those claims in excess of its jurisdictional limits.16
Hudspeth also asserted a claim for conversion, based on his allegation that he
had left materials at a property that Sadeghian purchased in foreclosure and that
Sadeghian had refused to let him retrieve the materials. The trial court awarded
Hudspeth damages for $6,000 on this claim in accordance with the jury’s verdict.
The trial court’s award of fraud damages of $10,000 was the maximum amount of
damages that could be awarded within the trial court’s jurisdiction (exclusive of
interest and amounts due to the passage of time), and consequently this amount of
conversion damages was rendered in excess of the trial court’s jurisdictional limit.17
Because this part of the award was not due to the passage of time, we hold that this
part of the judgment in excess of the trial court’s jurisdictional limit is void.
Accordingly, we sustain Sadeghian’s first point as to this claim, and we modify the
trial court’s judgment in part to exclude the award of $6,000 on Hudspeth’s
conversion claim.18 We overrule the remainder of Sadeghian’s first point.
16 See Cont’l Coffee Prods. Co., 937 S.W.2d at 449; Crumpton, 936 S.W.2d at 477. 17 See Kendziorski, 191 S.W.3d at 410 (holding that the portion of the judgment in excess of the trial court’s jurisdictional limit was void); N. Am. Ins. Co. v. Jenkins, 184 S.W. 307, 308 (Tex. Civ. App.—Galveston 1916, no writ) (reforming the trial court’s judgment to omit the amount exceeding the trial court’s jurisdiction). 18 See Oldner v. Medlock, No. 05-10-00848-CV, 2012 WL 114192, at *1 (Tex. App.—Dallas Jan. 12, 2012, no pet.) (mem. op.) (holding that the fact that county court’s judgment included compensatory and exemplary damages exceeding its jurisdictional limits “does not render its entire judgment void or deprive the county
11 Conversion
In part of his second point, Sadeghian argues that the trial court should not
have submitted Hudspeth’s counterclaim for conversion to the jury. Because we
modify the judgment to delete all damages for conversion, we overrule this portion of
his second point as moot. Similarly, in Sadeghian’s fifth point, he argues that the
evidence does not support the jury’s answers to the questions regarding Hudspeth’s
conversion claim. We likewise overrule this point as moot.
Breach of Contract
In his third point, Sadeghian asserts that the evidence at trial proved the
existence of a contract, and therefore the jury’s answers to the questions on his
breach of contract claim are erroneous. Under this point, Sadeghian first states that
a contract is established when an offer is accepted, accompanied by consideration.
He then argues that Hudspeth established “that he performed pursuant to the
handwritten contract” when he testified that he cashed Sadeghian’s check in order
to give the money to Vasquez and that he gave the money to Vasquez as he
completed repairs or incurred expenses. But this testimony does not indicate that
Hudspeth accepted the offer alleged by Sadeghian. Reviewing the testimony relied
court of jurisdiction over the case” and that “only that portion of the county court’s judgment exceeding the jurisdictional limit of $10,000 exclusive of interest is void”); Kendziorski, 191 S.W.3d at 410; Jenkins, 184 S.W. at 308; cf. H & S Supply Co., Inc. v. Oscar Renda Contracting, Inc., No. 02-02-00093-CV, 2003 WL 1897584, at *3 (Tex. App.—Fort Worth Apr. 17, 2003, no pet.) (mem. op.) (rendering judgment dismissing the appellee’s counterclaim for lack of jurisdiction because the evidence at trial showed that the amount in controversy on the appellee’s only counterclaim exceeded the jurisdictional limits of the court).
12 upon by Sadeghian, the record actually shows that Hudspeth testified that he
expressly refused to agree to the terms of the handwritten contract and that he
agreed to take the check and pass the money on to Vasquez solely as a favor to
Sadeghian.19
Sadeghian then states that written contracts may consist of multiple
documents, and he argues that the handwritten contract and the check, executed at
or near the same time for the same purpose and in the course of the same
transaction, “should be considered together for what they clearly are[—]a contract.”
But Sadeghian fails to explain how considering these documents together shows the
existence of a contract. He does not argue that these two documents together
contain all the material terms necessary for a contract, and even if the handwritten
document contained all the necessary terms, Sadeghian points to no evidence
showing that Hudspeth accepted the offer.
Finally under this point, Sadeghian states that an offer may be accepted by
conduct, and he argues that he “was certainly justified in relying upon the conduct of
[Hudspeth], for he had been a contractor for some 38 years . . . and to hear him
utter otherwise is clearly unavailing.” [Ellipses in original.] While Sadeghian’s exact
argument here is unclear, to the extent that he argues that the evidence shows that
Hudspeth accepted an offer by conduct, he does not point out what acts of
19 See Brown v. Sabre, Inc., 173 S.W.3d 581, 588 (Tex. App.—Fort Worth 2005, no pet.) (noting that contract formation requires “an offer, an acceptance, a meeting of the minds, each party’s conceding to the terms, and an execution and delivery of the contract with the intent that it be mutual and binding”).
13 Hudspeth show that he accepted any offer from Sadeghian. The only evidence
Sadeghian directs us to is the statement of Hudspeth that he accepted the check
from Sadeghian. As we have noted, Hudspeth explained that he cashed the check
and passed the money to Vasquez as a favor to Sadeghian after expressly refusing
to agree to enter into the contract offered by Sadeghian. In other words, while the
evidence could support a finding that the parties had an oral agreement for
Hudspeth to hold the funds and distribute them to Vasquez, the evidence pointed
out by Sadeghian does not establish as a matter of law the existence of an
agreement for Hudspeth to manage Vasquez’s work on the terms alleged by
Sadeghian.20 Accordingly, we overrule Sadeghian’s third point.
Fraud
Although Sadeghian does not reference Hudspeth’s fraud claim in the
statement of his second point and does not include any legal analysis about whether
Hudspeth’s fraud claim as pled in the county court was a new ground of recovery,
he does mention in one sentence under that point that Hudspeth altered his fraud
claim from the one pled in the justice court.21 Civil procedure rule 574a provides
that on appeal to a county court from a justice court, “[e]ither party may plead any
new matter in the county . . . court which was not presented in the court below, but
20 See Dow Chem. Co. v. Francis, 46 S.W.3d 237, 241 (Tex. 2001) (“When a party attacks the legal sufficiency of an adverse finding on an issue on which she has the burden of proof, she must demonstrate on appeal that the evidence establishes, as a matter of law, all vital facts in support of the issue.”). 21 See Tex. R. App. P. 38.1(i); Devine, 130 S.W.3d at 514.
14 no new ground of recovery shall be set up by the plaintiff, nor shall any . . .
counterclaim be set up by the defendant.”22 While a new ground of recovery may
not be added on appeal, additional causes of action, claiming the same damages
and based on the same conduct alleged in the justice court, are not new grounds of
recovery in violation of rule 574a.23
The conduct of Sadeghian on which Hudspeth based his fraud counterclaim in
the county court was the same conduct he alleged in his pleadings in the justice
court. Hudspeth always asserted that Sadeghian was falsely claiming that
Hudspeth had agreed to a written contract and that Sadeghian brought his breach of
contract claim only to harass Hudspeth. Accordingly, to the extent that Sadeghian
argues that the trial court should not have submitted the fraud question to the jury
because it was a new ground of recovery not asserted in the justice court, we
overrule the remainder of Sadeghian’s second point.
In his fourth point, Sadeghian argues that “[t]he evidence does not support the
jury’s answers to questions regarding fraud.” Under this point, he first states that
Hudspeth cannot show any evidence of the elements of fraud “in any of his many
22 Tex. R. Civ. P. 574a. 23 See Harrill v. A.J.’s Wrecker Serv., Inc., 27 S.W.3d 191, 195 (Tex. App.— Dallas 2000, pet. dism’d w.o.j.).
15 and varied pleadings.” But Hudspeth was not required to provide evidence of fraud
in his pleadings.24
To the extent that Sadeghian argues that the evidence produced at trial is
insufficient to support a fraud finding, his arguments under this point are
inadequately briefed.25 Sadeghian argues that Hudspeth relied on Sadeghian’s
filing of the lawsuit to establish fraud but that communications made in the course of
a judicial proceeding will not serve as the basis for an action for libel or slander. But
Hudspeth did not sue Sadeghian for libel or slander, and therefore this argument
has no relevance to Sadeghian’s sufficiency complaint.
Sadeghian next argues that Hudspeth “tried to argue that the actionable
representation was an amorphous belief that all [Hudspeth] was to do was pass the
money along” and that such belief “will not satisfy the standards for justifiability
established by the courts of this state.” Although Sadeghian does not elaborate on
his argument, we understand Sadeghian to mean that Hudspeth believed that
Sadeghian gave him a check only to pass on to Vasquez rather than to form an offer
to contract (which Sadeghian contends Hudspeth accepted, forming the basis of
Sadeghian’s breach of contract suit) but that Hudspeth’s belief was not justified. But
Sadeghian does not explain why Hudspeth’s belief could not be justifiable.
Sadeghian states that a person may not justifiably rely on a representation “if there
24 See Tex. R. Civ. P. 85, 97 (describing the requirements for a defendant’s answer and counterclaims). 25 See Tex. R. App. P. 38.1(i); Fredonia State Bank, 881 S.W.2d at 284.
16 are ‘red flags’ indicating such reliance is unwarranted,” but he does not explain what
“red flags” made Hudspeth’s reliance unjustified and points to nothing in the record
from which we may conclude that Hudspeth’s reliance was unjustified.
Finally, Sadeghian argues that Hudspeth did not show any evidence of
causation because Hudspeth’s “claimed injuries arise only from the filing of this
case,” and, therefore, Sadeghian is covered by the litigation privilege. But the case
he cites for this proposition held that “[c]ommunications in the due course of a
judicial proceeding will not serve as the basis of a civil action for libel or slander.”26
Again, Hudspeth did not sue Sadeghian for libel or slander. To the extent that
Sadeghian attempts to argue that he is shielded by the litigation privilege under
which attorneys cannot be held liable on a cause of action for wrongful litigation
conduct, such protection extends to his attorney, not to him.27 Sadeghian makes no
other argument for why the evidence does not support the jury’s fraud finding. He
cites to no applicable case law suggesting that his actions cannot support a fraud
claim.28 Accordingly, we overrule Sadeghian’s fourth point.
26 James v. Brown, 637 S.W.2d 914, 916 (Tex. 1982). 27 See Alpert v. Crain, Caton & James, P.C., 178 S.W.3d 398, 408 (Tex. App.—Houston [1st Dist.] 2005, pet. denied) (holding that acts taken by an attorney to facilitate the rendition of legal services to a party were not a basis for a fraud claim against the attorney by a third party absent legal privity or an independent duty to and justifiable reliance by the third party); Renfroe v. Jones & Assocs., 947 S.W.2d 285, 288 (Tex. App.—Fort Worth 1997, writ denied) (“Under Texas law, attorneys cannot be held liable for wrongful litigation conduct.”). 28 See Tex. R. App. P. 38.1(i); Tello v. Bank One, N.A., 218 S.W.3d 109, 116 (Tex. App.—Houston [14th Dist.] 2007, no pet.) (stating that “we know of no
17 Sanctions
In his sixth point, Sadeghian asserts that “[t]he evidence, and procedures
used in this case, do not support, or warrant, the jury’s answers to questions
regarding the filing of a frivolous, baseless, or groundless lawsuit in bad faith or for
the purposes of harassment.” In a section heading, he asserts that Hudspeth did
not establish all of the elements necessary for sanctions.
Sadeghian’s argument under this point, however, does not address the
evidence produced by Hudspeth at trial and why Sadeghian believes it did not show
good cause for an award of sanctions, nor does he discuss what a party must show
to be entitled to sanctions. Rather, Sadeghian argues that before awarding
sanctions, the trial court must hold a pretrial evidentiary hearing “to make the
necessary factual determinations about the party’s or attorney’s motives and
credibility” and that without such a hearing, “the trial court has no evidence before it
to determine that a pleading was filed in bad faith or to harass.” Sadeghian seems
to be impliedly arguing that a trial court may consider only evidence produced at a
pretrial sanctions hearing and that evidence produced at trial may not be used to
satisfy the good cause requirement for a sanctions award. Sadeghian concludes by
stating (with no citation to authority)29 that the issue’s submission to the jury was a
process calculated to lead to improper findings.
authority obligating us to become advocates for a particular litigant through performing [his] research and developing [his] argument for [him]”) (citation omitted). 29 See Tex. R. App. P. 38.1(i).
18 We review a trial court’s order of sanctions for abuse of discretion.30 A trial
court’s imposition of sanctions constitutes an abuse of its discretion when the court
based its order on an erroneous view of the law or a clearly erroneous assessment
of the evidence.31 Any error in imposing sanctions, however, will not be set aside on
appeal unless the error probably caused the rendition of an improper judgment or
probably prevented the appellant from properly presenting the case on appeal. 32
And although a trial court commits error if it submits a question of law to the jury,
“the error is harmless if the jury answers the question of law correctly or if it can be
deemed immaterial and disregarded by the trial court.”33
Texas law provides more than one basis for sanctioning a party’s conduct. In
addition to a trial court’s inherent authority to sanction parties for bad faith abuses of
30 Unifund CCR Partners v. Villa, 299 S.W.3d 92, 97 (Tex. 2009). 31 Monroe v. Grider, 884 S.W.2d 811, 816 (Tex. App.—Dallas 1994, writ denied). 32 See Tex. R. App. P. 44.1(a); Bloom v. Graham, 825 S.W.2d 244, 247 (Tex. App.—Fort Worth 1992, writ denied) (holding that the trial court’s failure to comply with the requirements of rule 13 was harmless under the circumstances); see also Bloodworth v. Aden, No. 01-05-00796-CV, 2007 WL 1845111, at *3 (Tex. App. — Houston [1st Dist.] June 28, 2007, pet. denied) (mem. op.) (holding that under the circumstances, the trial court’s submission of the issue of sanctions to the jury was harmless). 33 Grohman v. Kahlig, 318 S.W.3d 882, 887–88 (Tex. 2010) (deciding that “[t]he trial court committed harmless error by submitting the question to the jury because the jury answered it as the trial court should have”); see also McCain v. NME Hospitals, Inc., 856 S.W.2d 751, 757 (Tex. App.—Dallas 1993, no writ) (noting that the trial court did not describe good cause or the particulars required by rule 13 in its sanction orders and examining the record to determine if it would support the trial court’s judgment).
19 the judicial process,34 several Texas statutes provide trial courts with the authority to
sanction parties for various abusive behaviors.35 If a party files pleadings that lack a
reasonable basis in fact or law, chapters 9 and 10 of the civil practice and remedies
code and civil procedure rule 13 each provide a basis on which a trial court may
sanction a party for filing the pleadings.36
Sadeghian is correct that in some cases, a party may waive its right to
sanctions if the party does not obtain a pretrial ruling on the matter. A party waives
any claim for sanctions based on pretrial discovery abuses if the party does not
obtain a pretrial ruling on the discovery disputes.37 But this case does not involve
discovery abuses, and the trial court was within its discretion to postpone a
determination of whether the suit was groundless and brought in bad faith or for
34 See In re Bennett, 960 S.W.2d 35, 40 (Tex. 1997) (“A court has the inherent power to impose sanctions on its own motion in an appropriate case.”); Eichelberger v. Eichelberger, 582 S.W.2d 395, 398–99 (Tex. 1979) (recognizing that a court has inherent power “which it may call upon to aid in the exercise of its jurisdiction, in the administration of justice, and in the preservation of its independence and integrity”); Howell v. Tex. Workers’ Comp. Comm’n, 143 S.W.3d 416, 446 (Tex. App.—Austin 2004, pet. denied) (noting that “[e]ven in the absence of an applicable rule or statute, a court has the inherent authority to sanction parties for bad-faith abuses”). 35 See Tex. R. Civ. P. 13, 215.2; Tex. Bus. & Comm. Code Ann. § 17.50(c) (West 2011); Tex. Civ. Prac. & Rem. Code Ann. §§ 9.012, 10.004; see also Low v. Henry, 221 S.W.3d 609, 614 (Tex. 2007) (“Chapters 9 and 10 of the Texas Civil Practice and Remedies Code and rule 13 of the Texas Rules of Civil Procedure allow a trial court to sanction an attorney or a party for filing motions or pleadings that lack a reasonable basis in fact or law.”). 36 Tex. R. Civ. P. 13; Tex. Civ. Prac. & Rem. Code Ann. §§ 9.012, 10.004; see also Low, 221 S.W.3d at 614. 37 Remington Arms Co., Inc. v. Caldwell, 850 S.W.2d 167, 170 (Tex. 1993).
20 purposes of harassment until after the parties presented evidence at trial about
Sadeghian’s claims and his purpose in filing suit.38 For sanctions based on conduct
other than discovery abuses that the party seeking sanctions knew about pretrial,
courts of appeals have routinely upheld sanctions awarded during or after trial.39
Here, both sides presented evidence at trial about the events giving rise to the
suit and about Sadeghian’s motive in filing suit against Hudspeth. We therefore find
unpersuasive Sadeghian’s argument that because the trial court did not hold a
pretrial hearing, it had no evidence before it from which it could determine whether
sanctions were appropriate.
Although Sadeghian cites no authority holding that the jury may not make the
necessary findings about his motives in filing suit, we note that the Supreme Court
of Texas has held that the question of whether a suit under the Deceptive Trade
38 See, e.g., Gibson v. Ellis, 126 S.W.3d 324, 336 (Tex. App.—Dallas 2004, no pet.) (upholding a trial court’s award of sanctions against Gibson and noting that the court had taken judicial notice of the evidence presented at trial in determining whether good cause existed to sanction Gibson). 39 See, e.g., Lane Bank Equip. Co. v. Smith S. Equip., Inc., 10 S.W.3d 308, 312 (Tex. 2000) (upholding a sanctions award based on a motion filed after judgment by construing the motion as a motion to modify the judgment); Land v. AT & S Transp., Inc., 947 S.W.2d 665, 668 (Tex. App.—Austin 1997, no writ) (noting that trial court considered evidence presented at trial in determining whether to award sanctions); Kutch v. Del Mar Coll., 831 S.W.2d 506, 509 (Tex. App.—Corpus Christi 1992, no writ) (holding that “Texas courts have inherent power to sanction for bad faith conduct during litigation”).
21 Practices Act is groundless is a question of law for the trial court.40 Courts have also
held that whether a suit was brought in bad faith or for purposes of harassment are
questions for the trial court to determine after hearing evidence and making findings
based on that evidence.41 Thus, the trial court in this case should not have
submitted the question to the jury. Our analysis does not end here, however,
because we generally do not reverse a judgment for trial court error if that error was
harmless.42
At trial, both Hudspeth and Sadeghian presented testimony about the events
giving rise to the lawsuit. For his part, Hudspeth testified that Sadeghian asked him
to sign a handwritten agreement providing that, in exchange for being paid $200, he
would manage Vasquez’s work on the property. Hudspeth expressly declined the
offer, refusing to supervise Vasquez’s work for that amount of money. But later,
after receiving phone calls from both Sadeghian and Vasquez about disagreements
40 Donwerth v. Preston II Chrysler-Dodge, Inc., 775 S.W.2d 634, 637 (Tex. 1989) (holding that whether a claim is “groundless” under the deceptive trade practices act is a question of law). 41 See Rodriguez v. MumboJumbo, L.L.C., 347 S.W.3d 924, 926 (Tex. App.— Dallas 2011, no pet.) (noting that in determining whether a party’s actions are sanctionable, the trial court acts as the fact finder and as such weighs the evidence and makes reasonable deductions therefrom); Randolph v. Walker, 29 S.W.3d 271, 278 (Tex. App.—Houston [14th Dist.] 2000, pet. denied) (holding that the trial court did not abuse its discretion in determining facts at the rule 13 hearing); N.Y. Underwriters Ins. Co. v. State Farm Mut. Auto. Ins. Co., 856 S.W.2d 194, 205 (Tex. App.—Dallas 1993, no writ) (“Rule 13 requires the trial court to hold an evidentiary hearing to make the necessary factual determinations about the motives and credibility of the person signing the groundless petition.”) (emphasis added). 42 See Tex. R. App. P. 44.1.
22 they had about payments and the speed of the work, he agreed as a favor to take
some money from Sadeghian and pass it on to Vasquez as an intermediary.
Hudspeth received $3,000 from Sadeghian, most of which he passed on to Vasquez
as Vasquez completed repairs or incurred expenses, and the remainder of which he
attempted to return to Sadeghian.
At some point soon after Vasquez began work on the property, Sadeghian
kicked Vasquez off the job. Hudspeth tried to give the rest of the money that he had
received for Vasquez back to Sadeghian, but Sadeghian refused to take it. Instead,
Sadeghian demanded that Hudspeth pay him $8,900—the amount for which
Vasquez had contracted with Sadeghian to do the work on the property—plus the
money that Hudspeth had already passed on to Vasquez on behalf of Sadeghian.
After Sadeghian made several unsuccessful phone calls to Hudspeth demanding
payment, he showed up at Hudspeth’s house with his son-in-law and once again
demanded the money. Sadeghian threatened Hudspeth physically and threatened
to take his house and possessions and make Hudspeth’s life “a living hell” if he did
not pay Sadeghian the money he demanded. Hudspeth refused to pay, and
subsequently Sadeghian filed this suit claiming that Hudspeth had breached the
very contract that Hudspeth had refused to sign. Then, a few months before the jury
trial in the county court, Sadeghian ran into Hudspeth outside the courthouse and
told Hudspeth that he should settle because Sadeghian would not stop the litigation.
Hudspeth also presented testimony from Darrel Bartkowiak, Sadeghian’s
former employee. Bartkowiak testified that in the course of his employment, he had
23 been asked “to embellish work that had been done or that was going to be done on
some insurance,” “to inflate estimates on some . . . properties,” and once to put a
property in his name “to claim that [Sadeghian] was an innocent owner of a
particular property that the City of McKinney was going to go after him for some
substandard work that was unpermitted.”
Bartkowiak also testified about his knowledge of Sadeghian’s “practice of filing
lawsuits as a form of intimidation.” He testified that Sadeghian had “bragged on
more than one occasion” about using the legal system “to his advantage to gain
[the] upper hand on individuals and crush individuals in regard to the fact that he
had so much money that he could do this forever and that he just ran the clock on
most people with legal bills and legal proceedings.” He stated that Sadeghian told
him that he filed lawsuits as a way to make money.
This evidence is sufficient to support a finding that Sadeghian’s pleadings
were filed in bad faith or for purposes of harassment.43 The evidence also supports
a conclusion that Sadeghian’s suit had no basis in law and was not warranted by a
good faith argument for the extension, modification, or reversal of existing law, in
43 See Pearson v. Stewart, 314 S.W.3d 242, 248 (Tex. App.—Fort Worth 2010, no pet.) (stating that the term “harass” describes “words, gestures, and actions that tend to annoy, alarm, and verbally abuse another person” and that “bad faith” is “the conscious doing of a wrong for a dishonest, discriminatory, or malicious purpose”); see also Monroe, 884 S.W.2d at 818–19 (noting the dishonest, discriminatory, or malicious purpose standard applies to claims under the deceptive trade practices act and holding that a lesser standard should apply for determining bad faith under rule 13 and “for rule 13 purposes, a party acts in bad faith when discovery puts him on notice that his understanding of the facts may be incorrect and he does not make a reasonable inquiry into the facts before filing a pleading”).
24 other words, that the suit was groundless.44 Accordingly, because the evidence
supports the judgment, the error in submitting the question to the jury was
harmless.45 And we point out that Sadeghian does not complain either that the
judgment did not specify the good cause on which the sanctions were based (nor
did he object on that ground in the trial court)46 or that the sanctions imposed were
not appropriate.47 We therefore expressly do not consider whether there is a direct
relationship between the offensive conduct and the sanction imposed, whether it is
excessive,48 or whether the trial court’s failure to specify the particulars of a good
44 See Tex. R. Civ. P. 13. 45 See, e.g., Bloodworth, 2007 WL 1845111, at *3 (holding that the trial court’s submission of the issue of sanctions to the jury was harmless). 46 See Bloom v. Graham, 825 S.W.2d 244, 247 (Tex. App.—Fort Worth 1992, writ denied) (holding that the appellant presented nothing for review on his argument that the trial court’s sanction order did not set out the particulars for good cause because the record did not reflect that he filed any motion requesting that the trial court be more specific as to good cause or its particulars). 47 Cf. Low, 221 S.W.3d at 620–22 (stating that a sanction generally cannot be excessive or assessed without appropriate guidelines and that “the absence of an explanation of how a trial court determined that amount of sanctions when those sanctions are especially severe is inadequate,” and concluding that the trial court was within its discretion to award the sanctions, but, because the court could not determine the basis of the $50,000 sanction in that case, reversing and remanding “in the interest of justice to allow the parties to present evidence responsive to our guidelines, if necessary, and to allow the trial court to consider the amount of the penalty imposed in light of the guidelines in this opinion”). 48 See GTE Commc’ns Sys. Corp. v. Tanner, 856 S.W.2d 725, 731 (Tex. 1993) (stating that the requirement that rule 13 sanctions be “appropriate” is the equivalent of rule 215’s requirement that they be “just”); TransAm. Natural Gas Corp. v. Powell, 811 S.W.2d 913, 917 (Tex. 1991) (holding that whether an imposition of sanctions is “just” is measured by whether a direct relationship exists between the offensive
25 cause for sanctions was harmful error.49 We further note that although Hudspeth
sought sanctions by way of a counterclaim50 and that the trial court referred to the
sanctions as “damages,” Sadeghian does not argue that this procedure was not the
proper vehicle for pursuing sanctions or that sanctions may not be awarded as
damages.51 We overrule Sadeghian’s sixth point.
Sadeghian’s seventh and final point is that the evidence does not support the
jury’s answer regarding attorney’s fees. Hudspeth’s attorney testified about his level
of experience, his hourly rate, and the amount of time that he spent on the litigation.
He testified that the hourly rate he was charging Hudspeth was reasonable and was
conduct and the sanction imposed and whether it is excessive, that is, whether it more severe than necessary to satisfy its legitimate purposes); Woodall v. Clark, 802 S.W.2d 415, 418 (Tex. App.—Beaumont 1991, no writ) (affirming trial court’s sanction order because, among other reasons, the appellant made no complaint on appeal that the trial court’s order was unjust). 49 See Bloom, 825 S.W.2d at 247 (holding that the appellant presented nothing for review on his argument that the trial court’s sanction order did not set out the particulars for good cause because the record did not reflect that he filed any motion requesting that the trial court be more specific as to good cause or its particulars and that any error in the trial court’s failure to set out the particulars of good cause in its sanctions order was harmless). 50 See N.Y. Underwriters Ins. Co., 856 S.W.2d at 205 (assuming without deciding that a counterclaim for affirmative relief under rule 13 was an available method to bring a motion for sanctions under that rule); see also Tex. R. Civ. P. 71 (“When a party has mistakenly designated any plea or pleading, the court, if justice so requires, shall treat the plea or pleading as if it had been properly designated.”); State Bar of Tex. v. Heard, 603 S.W.2d 829, 833 (Tex. 1980) (“We look to the substance of a plea for relief to determine the nature of the pleading, not merely at the form of title given to it.”). 51 See Mantri v. Bergman, 153 S.W.3d 715, 717 (Tex. App.—Dallas 2005, pet. denied) (stating that a request for sanctions is not an independent cause of action).
26 in fact lower than what he usually charged. He testified that that it was customary
for an attorney in Denton County to bill at that rate for a person with the skill and
judgment of his experience in this type of subject matter. And he introduced his
billing records, which stated the work he had performed on the case and the amount
of time he had spent on each task performed. This evidence supports the finding as
to the reasonableness of the requested attorney’s fees.52
Sadeghian’s analysis under this point, however, does not challenge the
sufficiency of the evidence to support the jury’s finding. Instead, he argues that
Hudspeth is not entitled to attorney’s fees because attorney’s fees are not
recoverable on tort claims and Hudspeth did not segregate his attorney’s fees
among his claims and defenses.
Hudspeth did not claim a right to his attorney’s fees based on his tort
counterclaims. Instead, Hudspeth sought his attorney’s fees as additional sanctions
on the ground that Sadeghian’s suit was frivolous and groundless and brought for
purposes of harassment.53 The trial court awarded the fees on that basis.
52 See Arthur Andersen & Co. v. Perry Equip. Corp., 945 S.W.2d 812, 818 (Tex. 1997). (discussing factors to consider in determining the reasonableness and necessity of attorney’s fees); see also In re A.S.M., 172 S.W.3d 710, 718 (Tex. App.—Fort Worth 2005, no pet.) (upholding award of attorney’s fees as sanctions despite the lack of proof that the fees incurred were either reasonable or necessary); Stites v. Gillum, 872 S.W.2d 786, 797 (Tex. App.—Fort Worth 1994, writ denied) (same). 53 See Tex. R. Civ. P. 13; In re A.S.M., 172 S.W.3d at 717–18 (noting that rule 13 “provides that a party may seek sanctions against a party or counsel or both if the court determines that any pleading or motion is groundless and brought either in bad faith or for the purpose of harassment” and holding that under the
27 Sadeghian does not challenge the award of attorney’s fees on this ground.
Accordingly, we overrule Sadeghian’s seventh point.
Conclusion
Having sustained Sadeghian’s first point in part, we modify the trial court’s
judgment to exclude the $6,000 damages award on Hudspeth’s conversion claim.
Having overruled the remainder of Sadeghian’s issues, we affirm the trial court’s
judgment as modified.
PER CURIAM
PANEL: DAUPHINOT, GARDNER, and WALKER, JJ.
DELIVERED: August 30, 2012
circumstances, the trial court did not abuse its discretion in awarding attorney’s fees as sanctions).