Opinion issued May 19, 2022
In The
Court of Appeals For The
First District of Texas ———————————— NO. 01-20-00368-CV ——————————— RAMEY & SCHWALLER, LLP, Appellant V. THE DOCUMENT GROUP, INC., Appellee
On Appeal from the 152nd District Court Harris County, Texas Trial Court Case No. 2018-04560
MEMORANDUM OPINION
Appellee The Document Group, Inc. (TDG) sued appellant law firm Ramey
& Schwaller, LLP for breach of contract. TDG alleged that it provided goods and
services to Ramey & Schwaller and that the firm failed to pay eight invoices for
such services, resulting in $8,980.27 in unpaid services. Ramey & Schwaller denied owing the money, arguing in relevant part that it acted as an agent for its
client. TDG amended its pleadings to add a cause of action under the Declaratory
Judgments Act (DJA), seeking a declaration of its rights under the contracts as
represented in the invoices and particularly seeking a declaration that Ramey &
Schwaller did not disclose that it was acting as an agent for its client. TDG also
sought attorney’s fees pursuant to the DJA. A jury found in TDG’s favor, and the
trial court rendered judgment on the verdict, awarding TDG $8,980.27 in actual
damages, plus pre- and post-judgment interest and $90,000 in trial-level attorney’s
fees under the DJA.
Ramey & Schwaller appeals, arguing in multiple issues that the trial court
erred in awarding TDG $90,000 in attorney’s fees because those fees were not
recoverable, or alternatively, were unreasonable, not supported by the evidence,
and not properly segregated. Ramey & Schwaller further argued that the trial court
erred in excluding evidence that its client eventually paid the invoices that formed
the basis of this suit; the trial court erred “in calling parties for trial when Ramey &
Schwaller, LLP pled in its Third Amended Verified Answer and the evidence
showed that the unpaid invoices were paid prior to the start of the trial”; the trial
court erred “in requiring full disclosure” of the client’s name; and Ramey &
Schwaller was itself entitled to attorney’s fees incurred after its Rule 167
settlement offers to TDG.
2 Because we agree with Ramey & Schwaller that attorney’s fees were not
recoverable for TDG’s claim under the DJA, we modify the judgment to delete the
award of attorney’s fees and affirm the judgment as modified.
Background
Ramey & Schwaller contracted with TDG for document management
services. Between January and March 2017, TDG issued eight invoices to Ramey
& Schwaller for a total of $8,980.27 in goods and services. TDG asserted that
Ramey & Schwaller accepted the goods and services but failed to pay the invoices.
On January 23, 2018, TDG filed its original petition alleging a breach of
contract claim and a suit on a sworn account against Ramey & Schwaller based on
the unpaid invoices. Ramey & Schwaller answered, denying that it owed TDG any
money. It further asserted, “While not agreeing that [Ramey & Schwaller] owes
[TDG] any money, [Ramey & Schwaller] specifically informed [TDG] that any
goods or services provided by [TDG] were not for [Ramey & Schwaller] but rather
its clients and that the clients were responsible for payment of the goods and
services delivered.” It stated that “proper defendant parties include Azita DiMarco,
aka Azita Erfani (“Erfani”), Global Equity Management (S.A.) Pty. Ltd.
(“GEMSA”), and Rick Mushinski (“Mushinski”).”
Ramey & Shwaller also filed a counterclaim against TDG for unfair debt
collection, and it filed a third-party petition against GEMSA, Erfani, and
3 Mushinski. It alleged that GEMSA was the client on whose behalf Ramey &
Schwaller ordered services from TDG, and it asserted that Erfani and Mushinski
were individuals who interfered with the contract between it and GEMSA. Ramey
& Schwaller asserted that GEMSA, Erfani, and Mushinski were the parties liable
for any unpaid debt to TDG.
Months of litigation ensued, with multiple motions for summary judgment
filed by various parties and at least one attempt at mediation. On June 27, 2019,
Ramey & Schwaller made a settlement offer to TDG pursuant to Rule of Civil
Procedure 167 and Civil Practice and Remedies Code Chapter 42, which allow the
shifting of some litigation costs following settlement offers that conform to the
procedural rules and statutory requirements. See TEX. CIV. PRAC. & REM. CODE
§ 42.001–.005; TEX. R. CIV. P. 167.1–167.7. Ramey & Schwaller offered TDG
$8,000 “to settle all monetary claims—including any attorney’s fees, interest, and
costs—between the parties.”
TDG filed an amended petition on July 17, 2019, in which it continued to
assert claims for breach of contract and suit on a sworn account. TDG added a
claim pursuant to the DJA, citing the same facts relevant to its breach of contract
claim—i.e., its assertion that it issued eight invoices to Ramey & Schwaller that
went unpaid. TDG challenged the assertions from Ramey & Schwaller’s answer, in
which the firm disputed “that it is liable under the invoices [and] contend[ed] that
4 its client, GEMSA was a disclosed principal for which [Ramey & Schwaller], as
agent, sought goods and services.” TDG therefore sought, “pursuant to Section
37.004 of the Texas Civil Practice and Remedies Code, a determination of its
rights, status and legal relations to [Ramey & Schwaller] arising from these
contracts.” TDG sought a declaration that “GEMSA is not a disclosed principal in
the subject contract so to absolve Ramey of liability for the contract amount.” TDG
likewise sought attorney’s fees and costs associated with prosecuting its claim
against Ramey & Schwaller.
On November 18, 2019, Ramey & Schwaller made a second settlement offer
pursuant to Civil Practice and Remedies Code Chapter 42 and Rule 167. It offered
TDG $15,000 to settle all monetary claims between the parties.
Ramey & Schwaller filed an amended answer on February 12, 2020. It
continued to assert that it had “specifically informed TDG that payments [on the
invoices] were not [Ramey & Schwaller’s] responsibility but rather were the
responsibility of the [Ramey & Schwaller’s] clients, who TDG knew [Ramey &
Schwaller] was representing.” Ramey & Schwaller denied that it had any
contractual obligation to TDG because the firm “was acting as attorney (i.e., agent)
for clients (i.e., [Ramey & Schwaller’s] principals) that TDG knew [Ramey &
Schwaller] was representing.” Ramey & Schwaller denied that it owed any money
to TDG and asserted that Erfani was a proper third-party defendant. It indicated
5 that it had settled its third-party claims against Erfani and that, as part of its
agreement, Erfani made a payment to TDG for $8,980.27—the full amount owed
on the unpaid invoices.
The case then proceeded to trial between TDG and Ramey & Schwaller. The
jury found that “[b]efore Ramey & Schwaller, LLP placed any of the orders,” it did
not “disclose to The Document Group, Inc. that it was ordering the goods and
services as an attorney acting in a representative capacity” and that TDG did not
“know or have reasonable grounds to know that Ramey & Schwaller, LLP was
ordering the goods and services as an attorney acting in a representative capacity.”
The jury further found that Ramey & Schwaller failed to disclose to TDG “that its
client’s full name was Global Equity Management (S.A.) Pty. Ltd.” The jury found
that Ramey & Schwaller “expressly or impliedly assume[d] liability to pay [TDG]
for the goods and services it ordered.” Finally, the jury made findings regarding the
amount of TDG’s reasonable and necessary attorney’s fees, determining in relevant
part that reasonable fees for TDG’s representation through trial totaled $90,000.
The trial court rendered judgment based on the jury’s verdict in favor of
TDG against Ramey & Schwaller. The trial court’s final judgment included
findings that Ramey & Schwaller placed orders for the goods and services
provided by TDG, that it accepted the goods and services and was invoiced for
them, but it failed to make the payments on the invoiced amounts. The trial court
6 found that TDG suffered damages of $8,980.27. The trial court also found and
declared that “Ramey did not disclose [GEMSA] [a]s its principal in the (8)
contracts between The Document Group and Ramey” and that “Ramey either
impliedly or expressly assumed liability for the eight (8) contracts at issue with
[TDG].” The trial court awarded TDG its actual damages of $8,980.27, plus pre-
and post-judgment interest and costs. It also awarded TDG $90,000 in trial level
attorney’s fees plus contingent attorney’s fees for subsequent appeals pursuant the
DJA. Finally, the trial court credited Ramey & Schwaller with the payment Erfani
made to TDG of $8,980.27.
TDG’s Attorney’s Fees
Ramey & Schwaller asserts in its first issue that the trial court erred in
awarding TDG attorney’s fees. It asserts that fees were not available to TDG based
on the terms of the alleged contract, nor did Civil Practice and Remedies Code
Chapter 38 permit the recovery of fees against an LLP like Ramey & Schwaller.1
Furthermore, Ramey & Schwaller argues that the trial court’s award of attorney’s
1 The legislature amended Civil Practice and Remedies Code section 38.001 effective September 1, 2021, to permit recovery of attorney’s fees from an individual or “organization,” as defined by Business Organizations Code section 1.002. See Act of May 28, 2021, 87th Leg., R.S., ch. 665, § 1, 2021 Tex. Sess. Law Serv. (West) (to be codified at TEX. CIV. PRAC. & REM. CODE § 38.001). This suit was filed prior to that amendment taking effect, and so we apply the version that was in effect when this action was commenced. See id. § 2 (amendment applies to award of attorney’s fees in action commenced on or after effective date of September 1, 2021).
7 fees under the DJA was improper because TDG’s declaratory judgment claim
merely duplicated its breach of contract claim for which attorney’s fees were not
available. TDG agrees that attorney’s fees were not awarded on its breach of
contract claim and were, instead, awarded pursuant to the DJA, which it alleges
was proper under the facts of this case.
Under the DJA, a court “may award . . . reasonable and necessary attorney’s
fees as are equitable and just.” TEX. CIV. PRAC. & REM. CODE § 37.009. However,
“a party cannot use the [DJA] as a vehicle to obtain otherwise impermissible
attorney’s fees.” MBM Fin. Corp. v. Woodlands Operating Co., L.P., 292 S.W.3d
660, 669 (Tex. 2009). The supreme court explained:
[W]hen a claim for declaratory relief is merely tacked onto a standard suit based on a matured breach of contract, allowing fees under Chapter 37 would frustrate the limits Chapter 38 imposes on such fee recoveries. And granting fees under Chapter 37 when they are not permitted under the specific common-law or statutory claims involved would violate the rule that specific provisions should prevail over general ones. While the Legislature intended the Act to be remedial, it did not intend to supplant all other statutes and remedies.
Id. at 670 (internal citations omitted). Thus, “when a party has a claim for which
fees are unavailable, in addition to a claim for declaratory relief, the declaratory
relief claim must do ‘more than merely duplicate the issues’ being litigated by the
claims for which fees are unavailable.” Allstate Ins. Co. v. Irwin, 627 S.W.3d 263,
268 (Tex. 2021) (quoting MBM Fin., 292 S.W.3d at 670). “If it does not, fees are
8 also unavailable under [the DJA].” Id.; see Etan Indus., Inc. v. Lehmann, 359
S.W.3d 620, 624–25 (Tex. 2011) (per curiam).
TDG’s original petition alleged causes of action for breach of contract and
suit on a sworn account based on eight unpaid invoices for goods and services sent
to Ramey & Schwaller. TDG alleged that the invoices constituted contracts
between the parties, that TDG had performed by providing the requested goods and
services—which were accepted by Ramey & Schwaller—and that Ramey &
Schwaller breached the agreements by failing to pay the invoices.
Ramey & Schwaller’s answer denied liability on the contracts, based in part
on its assertion that “any goods or services provided by [TDG] were not for
[Ramey & Schwaller] but rather its clients [GEMSA] and that the clients were
responsible for payment of the goods and services delivered.” Ramey & Schwaller
identified Erfani, Mushinski, and GEMSA as the proper defendants and filed a
third-party petition against them. Ramey & Schwaller eventually amended its
answer to assert that it was acting as the agent for its principal, GEMSA.2 In
2 TDG contends that Ramey & Schwaller failed to adequately plead its agency affirmative defense. We disagree. Texas follows a fair-notice standard for pleadings, which requires courts to consider whether the opposing party “can ascertain from the pleading the nature and basic issues of the controversy and what testimony will be relevant.” First United Pentecostal Church of Beaumont v. Parker, 514 S.W.3d 214, 224 (Tex. 2017). Stated another way, the fair-notice standard examines “whether the pleadings have provided the opposing party sufficient information to enable that party to prepare a defense or a response.” Id. at 224–25. Here, Ramey & Schwaller’s original answer asserted that it was not the
9 answer to this agency defense, TDG sought a declaratory judgment of its rights
under the invoices, specifically seeking a declaration that “GEMSA is not a
disclosed principal in the subject contract so to absolve Ramey of liability for the
contract amount.”
Thus, based on the pleadings and the evidence adduced at trial, TDG had a
mature breach of contract claim against Ramey & Schwaller for failure to pay for
the invoiced goods and services. TDG’s amended petition seeking a declaration of
its rights under those same contracts and on Ramey & Schwaller’s affirmative
defense to liability under those contracts merely duplicated issues already being
litigated in TDG’s breach of contract claim, for which attorney’s fees were not
available. Because TDG’s requested relief pursuant to the DJA did not do more
than merely duplicate issues already being litigated, TDG’s fees are also
unavailable under the DJA. See Irwin, 627 S.W.3d at 268; Etan Indus., Inc., 359
S.W.3d at 624–25.
TDG argues that its declaratory judgment claim did not merely recast its
breach of contract claim because Ramey & Schwaller used the agency defense to
party liable under the contracts and stated that it was acting on behalf of its client, GEMSA. Although the pleadings did not specifically label these allegations as an affirmative defense based on a disclosed agency, the pleadings nevertheless provided sufficient information to inform TDG of the basic nature of the controversy and to prepare a response to Ramey & Schwaller’s assertions. See id. at 242–25; Surgitek, Bristol-Myers Corp. v. Abel, 997 S.W.2d 598, 601 (Tex. 1999) (courts look to substance of motion or pleading rather than its form or caption to determine its nature).
10 avoid liability for the contracts it had made with TDG, and thus TDG sought a
declaration of the parties’ rights under the contract and a declaration that GEMSA
was not a disclosed principal of Ramey & Schwaller’s. TDG argues that the jury’s
answers allowed the trial court to declare that GEMSA was not a disclosed
principal and, thus, dispose of Ramey & Schwaller’s affirmative defense. But the
affirmative defense asserted in response to TDG’s breach of contract claim did not
require a filing of the declaratory judgment claim to resolve; rather, the agency
issue was subsumed within the litigation on the breach of contract claim.
TDG nevertheless argues that it could have “sued Ramey solely under the
[DJA] for a determination of [its] agency defense and assumption of liability and
recovered attorney’s fees for the prosecution of that case. Then, TDG could have
brought a separate action to enforce its breach of contract claim, having disposed
of Ramey’s defenses through the declarations.” It refers to this strategy as a
“procedural two-step” that is “often employed in the uninsured/underinsured
motorist claim context,” and TDG argues that it should therefore be able to recover
attorney’s fees here. TDG cites Potter v. Clear Channel Outdoor, Inc., No. 01-07-
00578-CV, 2009 WL 1886168 (Tex. App.—Houston [1st Dist.] July 2, 2009, no
pet.) (mem. op.).
In Potter, the parties’ conflict arose over the construction of various lease
agreements in which Potter leased land to Clear Channel for the placement of
11 billboard advertisements. 2009 WL 1886168, at *1. After the leases expired and
the parties failed to come to an agreement to extend the leases, the parties
disagreed regarding Potter’s contractual right to buy the billboard structures. Id.
When Clear Channel denied that the contractual right to purchase the structures
applied and indicated that it would remove the structures from the previously-
leased land, Potter filed suit, seeking in part a declaratory judgment that he was
entitled to exercise his right to purchase the sign structures under the terms of the
leases. Id. at *1–2.
Potter is distinguishable from this case. Nothing in the Potter opinion
addressed the issue relevant here—i.e., whether the suit was brought as a
declaratory judgment claim rather than a breach of contract claim for the sole
purpose of obtaining attorney’s fees. No attorney’s fees were awarded in the trial
court because Potter did not prevail on his declaratory judgment act claim at trial,
and this Court, after reversing the judgment of the trial court and holding in
Potter’s favor, remanded for the trial court to consider his claim for attorney’s fees.
Id. at *8.
TDG also relies on Irwin, in which the Supreme Court of Texas addressed
the availability of attorney’s fees under the DJA in a suit to establish rights to
Uninsured Motorist/Under-insured Motorist (UIM) benefits under an insurance
contract. 627 S.W.3d at 267–68. The supreme court recognized the unique
12 character of UIM claims, which condition benefits on the insured’s legal
entitlement to receive damages from a third party. Id. at 268 (citing Brainard v.
Trinity Universal Ins. Co., 216 S.W.3d 809, 818 (Tex. 2006) (recognizing
“unique” nature of UIM claims and holding that attorney’s fees were not available
to insured under Chapter 38 because claim for UIM coverage could not have been
properly “presented” to insurer pursuant to section 38.002 because contractual
liability did not exist “until the trial court signs a judgment establishing the
negligence and underinsured status of the other motorist”)).
Irwin argued that, when Allstate failed to make a reasonable adjustment of
his UIM claim, his only recourse was to sue under the DJA because he could not
sue Allstate directly for the underlying tort, nor could he sue for breach of contract
because no breach had occurred. Id. Thus, he asserted, he was entitled to attorney’s
fees under the DJA. Id. Allstate argued, on the other hand, that award of attorney’s
fees in connection with the UIM claim was contrary to Brainard and MBM
Financial. Id. Allstate argued that “because Irwin cannot recover his Chapter 38
attorney’s fees for breach of contract under Brainard, he likewise should not be
able to recover his Chapter 37 attorney’s fees per [the] ruling in MBM Financial.”
Id. The supreme court disagreed with Allstate and stated, “The rule Allstate
invokes, however, does not match the circumstances here because Irwin seeks a
13 declaration of rights under the UIM contract prior to the existence of any breach or
claim for attorney’s fees under Chapter 38.” Id.
The Irwin court reaffirmed the general principle set out in MBM Financial—
that a party “could not use the [DJA] as a means to obtain attorney’s fees it would
not otherwise be entitled to recover”—and thus, “when a party has a claim for
which fees are unavailable, in addition to a claim for declaratory relief, the
declaratory relief claim must do ‘more than merely duplicate the issues’ being
litigated by the claims for which fees are unavailable.” Id. (citing MBM Fin., 292
S.W.3d at 669–70). The court distinguished the rule from MBM Financial,
however, by observing that Irwin did not have a claim for breach of contract, and
so “his request for declaratory relief does not merely duplicate that claim”:
Irwin has not merely tacked this request “onto a standard suit based on a matured breach of contract.” MBM Fin., 292 S.W.3d at 670. The circumstances here are different from those in MBM Financial because, according to Brainard, no breach-of-contract claim had matured on which to join a request for declaratory relief. Instead, what Irwin sought to establish through his request for declaratory relief were the prerequisites for, and existence of, a UIM claim under the policy. Irwin’s declaratory judgment action therefore does not “merely duplicate[] issues already before the trial court.” Id. at 671.
Id. at 269.
The court in Irwin ultimately concluded that a declaratory judgment was the
proper vehicle for resolving the coverage dispute between Irwin and Allstate and
that, “[b]ecause Chapter 37 provides for the award of attorney’s fees, and the
14 UDJA has not been invoked simply to replicate issues already before the court that
might implicate Chapter 38, the award of attorney’s fees [to Irwin] is not
erroneous.” Id. at 270, 272.
Irwin is factually distinguishable from this case. The court in Irwin relied on
the unique nature of UIM claims and expressly stated that Irwin had no matured
breach of contract claim at the time he sought declaratory relief. See id. at 269.
Here, by contrast, TDG had filed a matured breach of contract claim, and its
declaratory judgment sought to resolve issues relative to that claim. TDG was not
required to use the DJA to resolve any aspect of the conflict between the parties
because all issues surrounding Ramey & Schwaller’s liability on the contracts—
including the defensive issues raised by Ramey & Schwaller—were already
presented to the trial court through TDG’s breach of contract claim and Ramey &
Schwaller’s answer to that claim.
TDG also cites cases such as Nabers v. Nabers, No. 14-18-00968-CV, 2020
WL 830025 (Tex. App.—Houston [14th Dist.] Feb. 20, 2020, no pet.) (mem. op.),
Mooti v. Aldirawi, No. 10-12-00161-CV, 2014 WL 2719916 (Tex. App.—Waco
Jun. 12, 2014, pet. denied) (mem. op.), and Roddy v. Holly Lake Ranch
Association, Inc., 589 S.W.3d 336 (Tex. App.—Tyler 2019, no pet.), to support its
contention that its declaratory judgment claim is not “merely duplicative” of its
15 breach of contract claim. These cases are all, likewise, distinguishable in that the
DJA claims were separate and distinct from any breach of contract claim.
In Nabers, the court rejected the appellant’s contention that the appellee
“tacked on” her DJA claim to a breach of contract claim. 2020 WL 830025, at *3.
The court observed that it was the appellant who filed a declaratory judgment
claim, and appellee filed her answer seeking attorney’s fees related to defending
against that claim nearly two weeks before she filed her breach of contract claim.
Id. The court reasoned:
Unlike in MBM, the present case is not a situation where [the appellee] asserted a breach of contract claim, failed to recover on that claim, but sought attorney’s fees under the UDJA for the fees incurred in pursuing the failed contract claim. In her answer, [the appellee] asserted the right to recover prevailing party attorney’s fees incurred in having to defend [the appellant’s] counterclaim for a declaration that the [parties’ earlier mediated settlement agreement] was void.
Id. Here, by contrast, TDG filed its breach of contract claim first and then added a
claim under the DJA, making this case more like MBM Financial than Nabers. See
id.; MBM Financial, 292 S.W.3d at 670.
In Mooti, the Waco Court of Appeals determined that appellee Aldirawi’s
request for attorney’s fees was distinguishable from the one in MBM Financial
because “the attorney’s fees awarded to Aldirawi in this case under chapter 37 of
the Civil Practice and Remedies Code are not the same fees that he is prevented
from recovering under chapter 38.” 2014 WL 2719916, at * 6. And in Roddy, the
16 Tyler court likewise concluded that the appellee’s declaratory judgment claim was
not “part and parcel” of its breach of contract cause of action against the
appellants. 589 S.W.3d at 346. The Roddy court analyzed the pleadings and stated,
“[T]here is a distinction between [the appellee’s] breach of contract cause of
action, which addresses how Appellants’ actions breached [certain deed]
restrictions to the extent that such restrictions constituted a contractual agreement
between them, . . . and its declaratory judgment action, which sought, among other
reasons, to have the amendments to the deed restrictions declared void under the
common law.” Id. Here, by contrast, there is no material distinction between
TDG’s declaratory judgment claim—seeking a declaration of TDG’s rights under
the invoice contracts and a declaration resolving Ramey & Schwaller’s agency
defense to liability under those contracts—and TDG’s breach of contract claim
based on the same invoices.
We sustain Ramey & Schwaller’s first issue asserting that the trial court
erred in awarding attorney’s fees to TDG. We modify the trial court’s judgment to
delete the award of attorney’s fees. Because we have sustained Ramey &
Schwaller’s complaint regarding the award of attorney’s fees on this basis, we need
not address its remaining issues challenging the attorney’s fees award.3
3 Ramey & Schwaller numbered its issues differently in different sections of its brief. Based on the statement of issues presented, the issues relevant to the firm’s
17 Actual Damages
Ramey & Schwaller asserts several additional issues relevant to the
judgment against it on TDG’s breach of contract claim.
A. Exclusion of Evidence that the Alleged Debt Was Paid Before Trial
In its fourth issue, Ramey & Schwaller argues that the trial court erred in
excluding evidence that the alleged debt was paid in full before trial. We review
the trial court’s evidentiary ruling for an abuse of discretion. Fleming v. Wilson,
610 S.W.3d 18, 21 (Tex. 2020) (per curiam).
Ramey & Schwaller settled its third-party claim against Erfani, and as part
of that agreement, Erfani paid TDG $8,980.27. However, nothing in the record
indicated that TDG was a party to this settlement agreement or that it agreed to
release its claims against Ramey & Schwaller in exchange for the payment from
Erfani. At trial, Ramey & Schwaller made an offer of proof attempting to show
challenge to the award of attorney’s fees include issues one, two, three, five, and six. In the remainder of its first issue, Ramey & Schwaller asserts numerous arguments regarding segregation of the fees and sufficiency of the evidence to support the amount awarded. In its second issue, Ramey & Schwaller asserts that the trial court erred in submitting the issue of attorney’s fees to the jury. In its third issue, the firm asserts that the trial court erred in denying various motions, including a motion for summary judgment, motion in limine, motion for judgment as a matter of law, motion for judgment notwithstanding the verdict and motion for new trial, all of which asserted that TDG was not entitled to its attorney’s fees. In its fifth issue, Ramey & Schwaller asserts that the trial court erred in denying its proposed jury charge that did not include questions on attorney’s fees. In its sixth issue, it argues that the trial court erred in awarding attorney’s fees based on the jury’s verdict. None of these issues will grant Ramey & Schwaller any greater relief than will our resolution of its first issue. See TEX. R. APP. P. 47.1.
18 that the eight invoices from TDG were paid by GEMSA, and the trial court
excluded the evidence.
Ramey & Schwaller argues that Erfani’s payment was “evidence that
GEMSA was the responsible party of the payment,” and it asserts, “Had the jury
known that [Ramey & Schwaller’s] former client GEMSA paid TDG the alleged
debt, the jury likely would have determined that [Ramey & Schwaller] did in fact
disclose that GEMSA was the party responsible for the payment.”
These arguments, however, require assumptions that are not supported by
the evidence. Ramey & Schwaller’s settlement with third-party defendants Erfani
and/or GEMSA does not, by itself, demonstrate that TDG had knowledge of the
relationship between Ramey & Schwaller and GEMSA. Nor is the nature of the
relationship between Ramey & Schwaller and its client necessarily relevant to
whether the firm properly disclosed its relationship with GEMSA to TDG. Thus,
the trial court could have concluded that evidence of the settlement between Erfani
and Ramey & Schwaller did not have any probative value regarding the question
being litigated during trial—that of Ramey & Schwaller’s own liability to TDG on
the contracts. See TEX. R. EVID. 401 (evidence is relevant if “it has any tendency to
make a fact more or less probable than it would be without the evidence” and “the
fact is of consequence in determining the action”), 402 (irrelevant evidence is
19 inadmissible). We cannot say that the trial court abused its discretion in excluding
evidence of Erfani’s settlement payment.4 See Fleming, 610 S.W.3d at 21.
We overrule Ramey & Schwaller’s fourth issue.
B. Jury Charge on Disclosure of GEMSA’s Full Name
In its ninth issue, Ramey & Schwaller argue that the trial court erred by
requiring it to prove that it disclosed the full name of its principal, GEMSA. It
argues that the trial court required that it “prove that it disclosed more than
required by law” by providing a jury charge that “required proof of [disclosure of]
‘Global Equity Management (SA) Pty. Ltd.’ rather than GEMSA.” Ramey &
Schwaller argues, “There is proof that TDG knew R&S was working for a client in
representative capacity and that R&S disclosed beyond any question the identity of
the client as GEMSA. TDG was on notice to further investigate the client for
which R&S was working for under the contracts.”
Ramey & Schwaller asserted that it was not liable on the contracts with TDG
because it entered into them in a representative capacity on behalf of its client,
4 As part of its fourth issue, Ramey & Schwaller also cites the one satisfaction rule. See Sky View at Las Palmas, LLC v. Mendez, 555 S.W.3d 101, 106 (Tex. 2018) (“Under the one satisfaction rule, a plaintiff is entitled to only one recovery for any damages suffered.”). We first observe that, although the trial court did not allow the jury to hear evidence of the payment from Erfani to TDG as part of Erfani’s settlement with Ramey & Schwaller, the trial court did grant the firm an offset for the amount paid by Erfani. To the extent that Ramey & Schwaller argues that the one satisfaction rule precluded TDG from recovering attorney’s fees, we note that we have already held on other grounds that TDG was not entitled to its attorney’s fees, and so we need not address this argument.
20 GEMSA. Texas law does not presume agency. Wright Group Architects–Planners,
P.L.L.C. v. Pierce, 343 S.W.3d 196, 200 (Tex. App.––Dallas 2011, no pet.).
“When an agent seeks to avoid personal liability on a contract he signs, it is his
duty to disclose that he is acting in a representative capacity and the identity of his
principal.” Id.; see Latch v. Gratty, Inc., 107 S.W.3d 543, 546 (Tex. 2003) (per
curiam). If the party asserting the defense of agency fails to prove that it made
these disclosures, it may be held liable on the contract. See Pierce, 343 S.W.3d at
200.
The jury charge here asked the jury three questions relevant to Ramey &
Schwaller’s affirmative defense of agency. Question 1 asked, “Before Ramey &
Schwaller, LLP placed any of the orders, did Ramey & Schwaller, LLP disclose to
The Document Group, Inc. that it was ordering the goods and services as an
attorney acting in a representative capacity?” The jury answered, “No.” Question 2
asked, “Before Ramey & Schwaller, LLP placed any of the orders, did The
Document Group, Inc. know or have reasonable grounds to know that Ramey &
Schwaller, LLP was ordering the goods and services as an attorney acting in a
representative capacity?” The jury answered, “No.” Question 3 asked, “Before
Ramey & Schwaller, LLP placed any of the orders, did Ramey & Schwaller, LLP
disclose to The Document Group, Inc. that its client’s full name was Global Equity
Management (S.A.) Pty. Ltd.?” The jury answered, “No.”
21 “A trial court has considerable discretion to determine proper jury
instructions, and we review a trial court’s decision to submit or refuse a particular
instruction for an abuse of discretion.” Gunn v. McCoy, 554 S.W.3d 645, 675 (Tex.
2018). “[W]e do not reverse a judgment based on charge error unless the error
probably caused the rendition of an improper judgment or prevented the petitioner
from properly presenting the case to the appellate courts.” Id.
Assuming without deciding that the trial court erred in its submission of
Question 3 by asking whether Ramey & Schwaller disclosed the full name of its
purported principal, the firm cannot show any harm. “Error in the submission of an
issue generally is deemed to be harmless when the findings of the jury in answer to
other issues are sufficient to support the judgment.” Hatfield v. Solomon, 316
S.W.3d 50, 63 (Tex. App.—Houston [14th Dist.] 2010, no pet.) (citing Boatland of
Houston, Inc. v. Bailey, 609 S.W.2d 743, 750 (Tex. 1980)). Here, the first two jury
findings established that Ramey & Schwaller did not adequately disclose that it
was acting in a representative capacity without reference to the specific name of its
principal, GEMSA. See Pierce, 343 S.W.3d at 200 (stating that party asserting
agency as affirmative defense must prove that it disclosed that it was acting in
representative capacity and identity of its principal). Thus, the answers to
Questions 1 and 2 supported the trial court’s judgment denying Ramey &
Schwaller’s affirmative defense of agency and holding the firm liable for breach of
22 contract. See id. (holding that, if party asserting affirmative defense of agency
failed to prove it made required disclosures, it can be held liable on contract); see
also Hatfield, 316 S.W.3d at 63 (discussing harmless error in jury charges).
We overrule Ramey & Schwaller’s ninth issue.
Ramey & Schwaller’s Litigation Expenses
Finally, in its eighth issue, Ramey & Schwaller argues that, pursuant to Rule
of Civil Procedure 167, it is owed its own litigation expenses after its June 27,
2019 and/or November 18, 2019 settlement offers. TDG argues that Ramey &
Schwaller is not entitled to litigation expenses because, among other reasons, it
raised this issue for the first time on appeal.
Civil Practice and Remedies Code chapter 42 and Rule of Civil Procedure
167 provide that if a settlement offer made in accordance with the rule and statute
is rejected and the judgment awarded at trial is significantly less favorable than the
offer, then the court must award litigation costs to the party that made the offer.
See TEX. R. CIV. P. 167.4(a); TEX. CIV. PRAC. & REM. CODE §§ 42.001–.005.
Although Ramey & Schwaller filed documentation regarding its two
settlement offers as appendices to its Amended Motion for Entry of Judgment,
Ramey & Schwaller did not ask the trial court to award its litigation costs pursuant
Rule 167. Failure to present a claim in the trial court prevents the appellate court
from considering that issue on appeal. SeeTEX. R. APP. P. 33.1(a) (requiring, as
23 condition for review, that party make objection in manner that calls trial court’s
attention to specific error alleged); Breakwater Advance Mfg., LLC v. E. Tex.
Machine Works, Inc., No. 12-19-00013-CV, 2020 WL 827139, at * 4 (Tex. App.—
Tyler 2020, pet. denied) (mem. op.) (appellate court could not consider appellant’s
argument that trial court erred in sustaining appellee’s objections to Rule 167
settlement offer because argument was not presented to trial court in motion for
summary judgment); Grocers Supply, Inc. v. Cabello, 390 S.W.3d 707, 731 (Tex.
App.—Dallas 2012, no pet.) (discussing requirements of Rule of Appellate
Procedure 33.1 in context of complaint about trial court’s failure to award litigation
costs pursuant to Rule of Civil Procedure 167).
Ramey & Schwaller argues now that, “[b]ecause the Trial court improperly
ruled against [it], the offers were never considered,” and it asserts that if we
determine “that the award of attorney’s fees against Ramey & Schwaller was
improper, then Ramey & Schwaller is entitled to its litigation expenses.” It cites no
support for this contention beyond a basic recitation of the statutory provisions and
an erroneous statement that “[b]oth offers are more than TDG received, especially
after GEMSA paid TDG for the unpaid invoices.” We observe that the June 27,
2019 settlement offer of $8,000 was less than the actual damages awarded against
Ramey & Schwaller on TDG’s breach of contract claim. The fact that the award
was later offset because of the payment Erfani made as part of her settlement with
24 Ramey & Schwaller does not change the fact that TDG was awarded more than
Ramey & Schwaller offered on June 27, 2019. See Bobo v. Varughese, 507 S.W.3d
817, 828 (Tex. App.—Texarkana 2016, no pet.) (determining that calculation of
whether “a judgment will be significantly less favorable” means “the damages
awarded by the fact-finder, rather than the final judgment rendered by the trial
court” and concluding that prejudgment interest should not be included in “the
judgment” when comparing with Rule 167 settlement offer).
Furthermore, Ramey & Schwaller cites no authority to support its request for
a remand on this issue, nor does its briefing provide any argument regarding
whether an award of attorney’s fees could properly be considered part of the
“judgment” for Rule 167 purposes. See id. Thus, to the extent that Ramey &
Schwaller is attempting to argue that it was not required to present this request to
the trial court and could raise it for the first time on appeal, we conclude that
Ramey & Schwaller has failed to adequately brief the issue. See TEX. R. APP. P.
38.1(i); Tesoro Petroleum Corp. v. Nabors Drilling USA, Inc., 106 S.W.3d 118,
128 (Tex. App.—Houston [1st Dist.] 2002, pet. denied) (holding that requirements
of Rule 38.1 are not met “by merely uttering brief conclusory statements,
unsupported by legal citation”); see also Lowry v. Tarbox, 537 S.W.3d 599, 611–
12, 620 (Tex. App.—San Antonio 2017, pet. denied) (appellants waived their
sufficiency argument because their brief provided no argument or analysis
25 supporting their contention and thus afforded appellate court no basis to analyze
and determine issue; failure to provide “a substantive analysis waives an appellate
issue”).
We overrule Ramey & Schwaller’s eighth issue.
Conclusion
We conclude that the trial court erred in awarding TDG attorney’s fees
pursuant to the DJA. Accordingly, we modify the trial court’s judgment to delete
the award of attorney’s fees and affirm the judgment as modified.
Richard Hightower Justice
Panel consists of Justices Landau, Hightower, and Rivas-Molloy.