Rudis Robles and Claudia Flores Robles v. Christopher Mann, Gwenda Mann, and Mann's MacHine, Inc.

• Court: Court of Appeals of Texas
• Decided: December 29, 2014
• Docket: 13-14-00211-CV
• Status: Published

Opinion

ACCEPTED FILED 13-14-00211 IN THE 13TH COURT OF APPEALS THIRTEENTH COURT OF APPEALS CORPUS CHRISTI, TEXAS CORPUS CHRISTI 12/29/2014 5:40:19 PM DORIAN RAMIREZ 12/29/14 CLERK DORIAN E. RAMIREZ, CLERK BY DTello NO. 13-14-00211-CV

IN THE THIRTEENTH COURT OF APPEALS RECEIVED IN 13th COURT OF APPEALS CORPUS CHRISTI, TEXAS CORPUS CHRISTI/EDINBURG, TEXAS 12/29/2014 5:40:19 PM DORIAN E. RAMIREZ RUDIS ROBLES AND CLAUDIA E. Clerk FLORES ROBLES, Appellants

VS.

CHRISTOPHER MANN, GWENDA MANN, AND MANN'S MACHINE, INC., Appellees

On Appeal from the 284th District Court of Montgomery County, Texas Trial Court Cause Number 10-12-13737-CV

REPLY BRIEF FOR CROSS-APPELLANTS, CHRISTOPHER MANN, GWENDA MANN, AND MANN’S MACHINE, INC.

Tom Shipp Kenna M. Seiler State Bar No. 18271000 State Bar No. 13944250 10200 Grogan’s Mill Road, Suite 320 The Seiler Law Firm, PLLC The Woodlands, Texas 77380 8505 Technology Forest Place (281) 364-7228 Suite 1102 (281) 364-7230 – Telecopier The Woodlands, Texas 77381 tomshippassoc@aol.com (281) 419-7770 (281) 419-7791 – Telecopier kenna.seiler@theseilerlawfirm.com

ATTORNEYS FOR APPELLEES

ORAL ARGUMENT REQUESTED TABLE OF CONTENTS

Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii

Index of Authorities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .iii

Argument. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Issue Number One

The trial court’s finding of no damages for Christopher Mann, Gwenda Mann, and Mann’s Machine, Inc. is against the great weight and preponderance of the evidence. (C.R. 228-230; R.R. Vol. 4, p. 10). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Issue Number Two

The trial court’s award of only attorney fees through trial in the amount of $4,069.98 is against the great weight and preponderance of the evidence. (C.R. 228-230; R.R. Vol. 4, pp. 10-11). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

Prayer for Relief. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

Certificate of Service. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Certificate of Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . .9

ii INDEX OF AUTHORITIES

CASES

Brookshire Katy Drainage Dist. v. Lily Gardens, LLC, 333 S.W.3d 301 (Tex. Civ. App.—Houston [1st Dist.] 2010, pet. denied) . . .3

Smith v. Patrick W.Y. Tam Trust, 296 S.W.3d 545 (Tex. 2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4-5

Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299 (Tex. 2006) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

RULES

Tex. Civ. Prac. & Rem. Code Section 37.009. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

iii NO. 13-14-00211-CV

IN THE THIRTEENTH COURT OF APPEALS CORPUS CHRISTI, TEXAS

RUDIS ROBLES AND CLAUDIA E. FLORES ROBLES, Appellants

CHRISTOPHER MANN, GWENDA MANN, AND MANN'S MACHINE, INC., Appellees

On Appeal from the 284th District Court of Montgomery County, Texas Trial Court Cause Number 10-12-13737-CV

BRIEF FOR APPELLEES, CHRISTOPHER MANN, GWENDA MANN, AND MANN’S MACHINE, INC. __________________________________________________________________

SUMMARY OF THE ARGUMENT

The evidence is undisputed that Robles interfered with the Manns’ easement

rights. As a result of that interference, the Manns sustained damages, damages

which were not controverted.

ARGUMENT

Issue Number One: The trial court’s finding of no damages for Christopher Mann, Gwenda Mann, and Mann’s Machine, Inc. is against the great weight and preponderance of the evidence. (C.R. 228-230; R.R. Vol. 4, p. 10) (Restated) 1 The evidence is undisputed that Robles interfered with the Manns’ easement

rights. Because of that interference, the Manns sustained damages, damages which

were not controverted. The Robleses claim that the Manns did not prevail on any

claim for which they would be entitled to damages and there was insufficient

evidence of those damages. But both contentions are incorrect.

There is both legally and factually sufficient evidence that the Robleses

interfered with the Manns’ property rights. Robles focuses on the timing of the

installation of the gate, the prior temporary injunction, and the Manns’ actions

regarding the gate. But the focus should be on the Robleses’ actions, as these

support the claim for interfering with the Manns’ property rights. And the

Robleses’ actions were many: Rudis Robles denied there was an easement, he placed

a gate on the easement that was latched 24 hours a day, and he placed poles on the

easement. (R.R. Vol. 2, pp. 29, 30-31, 35, 47-48, 52-53) And this was testimony

directly from Mr. Robles. The Manns also testified about debris on the easement,

with utility poles, trees, and pipes. (R.R. Vol. 2, pp. 63-64, 106, 107-108) Mr.

Robles disagreed with the easement and did everything he could to interfere with the

Manns’ use of that easement.

As a result of this interference, the Manns and their business suffered

damages. Mr. Mann testified that they sustained losses of $120,000.00 to

2 $130,000.00. (R.R. Vol. 2, p. 68) Customers and vendors could not get to the

business. (R.R. Vol. 2, p. 69, 100)

The Robleses claim that because an easement does not convey title to the

property, there is no claim for damages to real property. But this argument misses

the mark. The Manns sued for interference with easement rights. To prevail on

such a claim, they had to prove that the Robleses engaged in activities that interfered

with their reasonable use and enjoyment of the easement. Brookshire Katy

Drainage Dist. v. Lily Gardens, LLC, 333 S.W.3d 301, 310 (Tex. Civ. App.—

Houston [1st Dist.] 2010, pet. denied). They provided this proof. And they

provided proof of those damages, even under the standards set forth by the Robleses.

The statement by the Robleses that the only evidence presented was Gwenda Mann’s

statement they lost business is incorrect. Both Mr. and Mrs. Mann testified to dollar

amounts lost because of the Robleses’ interference with their rights. (R.R. Vol. 2,

p. 68; R.R. Vol. 2, p. 114)

This interference caused the Manns mental anguish damages—so much so

they had to seek medical attention and were prescribed medication. (R.R. Vol. 2,

p. 77; R.R. Vol. 2, pp. 113-114)

Because the evidence as to the interference and the damages sustained was so

contrary to the overwhelming weight of all the evidence, this portion of the trial

court’s judgment should be set aside and a new trial ordered as to the Manns’ 3 damages.

Issue Number Two: The trial court’s award of only attorney fees through trial in the amount of $4,069.98 is against the great weight and preponderance of the evidence. (C.R. 228-230; R.R. Vol. 4, pp. 10-11) (Restated)

The Manns incurred substantial attorney fees in obtaining the declaratory

judgment signed by the trial court to enforce their easement rights. The trial court

erred by limiting the recovery of attorney fees to all of the fees charged in one month

to the Manns by their prior attorney.

Specifically, the trial Court stated:

I am awarding attorneys fees to Christopher Mann and Gwenda Mann, the attorneys fees being in an amount testified to by Ms. Tillman as being expended on this case during one month. That amount is $4,069.98.

(R.R. Vol. 4, pp. 10-11) But the Manns prevailed on their claim for a declaratory

judgment, a claim that has been part of the relief sought by the Manns in their

original pleading. (C.R. 10-74) Section 37.009 of the Tex. Civ. Prac. & Rem.

Code allows the Court to award costs and reasonable attorney fees. Tom Shipp

testified as to his reasonable hourly rate of $390.00 per hour. (R.R. Vol. 3 p. 60)

He testified as to the number of hours worked. (R.R. Vol. 3 p. 64)

Attorney fees are conclusively proved when the supporting evidence is clear,

direct, positive, and without contradiction from another witness or attendant

circumstances, and such evidence could have easily been controverted. Smith v. 4 Patrick W.Y. Tam Trust, 296 S.W.3d 545, 547-548 (Tex. 2009). Robles’ primary

dispute with the Manns’ attorney fees is that Tom Shipp did not segregate the fees.

The general rule requires the segregation of attorney fees. But as the Texas

Supreme Court directed in Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299,

313-314 (Tex. 2006), when discrete legal services advance both a recoverable and

unrecoverable claim they are so intertwined that they need not be segregated. And

Steven Lawrence testified about the attorney fees. (R.R. Vol. 3, p. 69) He testified

that because of the common nucleus of acts, each of the causes of action are

interrelated. (R.R. Vol. 3, p. 72) He testified that the fees sought by Christopher

Mann, Gwenda Mann, and Mann’s Machine, Inc. were reasonable and customary.

(R.R. Vol. 3, pp. 72-73) The trial court erred in disregarding this uncontradicted

testimony.

Cross-Appellants request that this Court sustain their Issue Number Two,

reverse the Judgment of the trial court awarding attorney fees of $4,069.98, and

remand to the trial court for a new trial as to the amount of the Cross-Appellants’

attorney fees.

CONCLUSION

The trial court’s failure to award damages to the Manns and the trial court’s

award of attorney fees limited to $4,069.98 are not supported by sufficient evidence.

The Robleses took affirmative and undisputed steps to interfere with the Manns’ 5 easement. And because of those steps, the Manns sustained damages. The trial

court’s failure to award damages is not supported by sufficient evidence.

And the Manns attorney worked in excess of 200 hours, including the trial on

the merits of this case. Yet the trial court awarded damages only for one month of

fees charged by a prior attorney—and awarded no fees for the actual trial. The

Robleses’ only argument as to the Manns’ fees is that Tom Shipp did not segregate

his fees. But segregation is not required when the claims are so intertwined that

they need not be segregated. Although Tom Shipp did not testify as to the

intertwined nature of the claims, Steven Lawrence did. With this evidence, the trial

court’s award of attorney’s fees for one month’s work for the prior attorney is not

support by sufficient evidence.

PRAYER FOR RELIEF

Cross-Appellants request that this Court reverse the Judgment of the trial court

on the issue of the Cross-Appellants’ damages and attorney fees and remand this

case to the trial court for a new trial on these issues.

6 Respectfully submitted,

THE SEILER LAW FIRM, PLLC

/s/ Kenna M. Seiler Kenna M. Seiler State Bar No. 13944250 8505 Technology Forest Place, Suite 1102 The Woodlands, Texas 77381 kenna.seiler@theseilerlawfirm.com (281) 419-7770 (281) 419-7791 – Telecopier

Tom Shipp State Bar No. 18271000 10200 Grogan’s Mill Road, Suite 320 The Woodlands, Texas 77380 (281) 364-7228 (281) 364-7230 – Telecopier

ATTORNEYS FOR CROSS- APPELLANTS

7 CERTIFICATE OF SERVICE

Pursuant to Rule 9.5 of the Texas Rules of Appellate Procedure, I certify that the Cross-Appellants’ Brief has been electronically filed with the Clerk of the Thirteenth Court of Appeals, and true and correct copies of same have been electronically served, on this 29th day of December 2014, correctly addressed as follows:

George D. Gordon Richard S. Browne Baggett, Gordon & Deison 307 N. San Jacinto Conroe, Texas 77301

/s/ Kenna M. Seiler Kenna M. Seiler

8 CERTIFICATE OF COMPLIANCE

Pursuant to Rules 9.4(i)(2)(C) and 9.4(i)(2)(3) of the Texas Rules of Appellate Procedure, I certify that this Appellees’ Brief contains 1,205 words (excluding the Caption, Statement regarding Oral Argument, Table of Contents, Index of Authorities, Signature, Proof of Service, Certification, and Certificate of Service). This is a computer-generated document created in Microsoft Word, using 14-point typeface for all text, except for footnotes, which are in 12-point typeface. In making this Certificate of Compliance, I am relying on the word count provided by the software used to prepare the document.

9 Page 1

BROOKSHIRE KATY DRAINAGE DISTRICT, Appellant v. THE LILY GARDENS, LLC, RICHARD E. FLUECKIGER AND KENNETH B. LUEDECKE, Appellees

NO. 01-07-00431-CV

COURT OF APPEALS OF TEXAS, FIRST DISTRICT, HOUSTON

333 S.W.3d 301; 2010 Tex. App. LEXIS 7532

September 10, 2010, Opinion Issued

SUBSEQUENT HISTORY: Released for Publication OPINION May 25, 2011. Reconsideration denied by, En banc Brookshire Katy Drainage Dist. v. Lily Gardens, LLC, 2011 Tex. App. [*304] OPINION ON REHEARING LEXIS 1619 (Tex. App. Houston 1st Dist., Feb. 25, 2011) Appellees, Lily Gardens, LLC, and its owners, Petition for review denied by Brookshire Katy Drainage Richard E. Flueckiger and Kenneth B. Leudecke Dist. v. Lily Gardens, LLC, 2012 Tex. LEXIS 84 (Tex., (collectively, the "Defendants"), have filed a motion for Jan. 27, 2012) rehearing. Appellant, Brookshire Katy Drainage District PRIOR HISTORY: [**1] (the "District"), filed a response to the motion. We grant On Appeal from the 9th District Court, Waller County, rehearing and withdraw our opinion and judgment of Texas. Trial Court Case No. 06-08-18415. December 22, 2009 and substitute this opinion and Brookshire Katy Drainage Dist. v. Lily Gardens, LLC, judgment in their place. 2009 Tex. App. LEXIS 9716 (Tex. App. Houston 1st Dist., The District filed suit against the Defendants and Dec. 22, 2009) sought declaratory and injunctive relief, alleging, among other things, that the Defendants (record owners of the tract of real property at issue) violated the District's rights COUNSEL: For APPELLANT: David Frishman, Katy, pursuant to an express easement and trespassed on the TX; Kevin D. Jewell, William S. Helfand, Chamberlain, District's property. Specifically, the District alleged Hrdlicka, White, Williams & Martin, Houston, TX. [**2] that the Defendants were "encroaching and For APPELLEE: Dale Jefferson, Levon G. Hovnatanian, infringing into the [District's] easement and culverts Raul H. Suazo, Martin, Disiere, Jefferson & Wisdom, without permission." L.L.P., Houston, TX. The Defendants filed traditional and no-evidence summary judgment motions relating to all of the District's JUDGES: Panel consists of Justices Alcala, Hanks, and claims. The trial court granted summary judgment Wilson. Justice Wilson, dissenting. disposing of all of the District's claims and awarded attorney's fees to the Defendants. 1 OPINION BY: George C. Hanks Page 2 333 S.W.3d 301, *304; 2010 Tex. App. LEXIS 7532, **2

1 Prior to the trial court dismissing the case, the damage to roads, passageways and fences Defendants nonsuited their counterclaims against resulting from the DISTRICT'S use in the District, and accordingly, those claims are not going to and from said easement and right at issue in this appeal. of way, and to restore the same to the previously existing condition as near as In its first two issues, the District contends that the possible. trial court erred by granting the Defendants' motion for summary [*305] judgment on the District's claims for GRANTOR reserves the right to use declaratory and injunctive relief for violation of the the facilities offered by the drainage canal easement and trespass. In its third issue, the District for the disposal of surface waters, rain, or argues the trial court erred in awarding attorney's fees to any excess waters collecting upon his the Defendants under the Declaratory Judgments Act. land, and in such connection GRANTOR has the right in the manner provided by We find no reversible error and affirm. law and at his own expense to construct and provide ditches, drains and laterals Background connecting his said land or portions thereof with the drainage canal. The District is a political subdivision of the State of Texas, created by the Texas Legislature, and charged with controlling drainage in an area of Waller County. Pursuant to the easement, the District constructed a Pursuant to this directive, in 1962 the District entered ten-foot deep drainage ditch traversing both of the tracts into two [**3] express easements with Mrs. Frank E. and severing the front portions of the tracts from the Smith and Johnnie Harris. Identical in language, the larger back parcels. After the drainage ditch was easements granted the District "a right of way and completed, the District installed a concrete bridge across easement for the purpose of constructing, maintaining, the ditch to connect the front and back portions of the operating, repairing and re-constructing a drainage canal" tracts. Underneath the bridge and in the drainage ditch, across two tracts of land. The easement conveyances, the District installed two metal pipes (or "culverts") that which were submitted by both parties as summary ran along with the route of drainage. judgment evidence, go into greater detail regarding the respective rights of the parties, and state, In 2004, Richard Flueckiger and Kenneth Luedecke created Lily Gardens, LLC ("Lily Gardens"), which The DISTRICT shall have all rights and acquired three [**5] consecutive tracts of land, including benefits necessary or convenient for the the two tracts subject to the drainage ditch easements full enjoyment or use of the rights herein with the District. After acquiring the property, Lily granted, with the right of ingress and Gardens undertook various projects to make the property egress to and from said drainage canal suitable for visitors as an outdoor event venue, including right of way, provided however, that after adding a picturesque covering to the existing cement construction of said drainage canal, said bridge spanning the drainage ditch. Lily Gardens right of ingress and egress of the intended to use the existing bridge to transport visitors DISTRICT shall be limited to the said from a reception facility on the front part of the property right of way and to existing roads and to a gazebo on the back portion of the property. passageways. The DISTRICT is given the right from time to time to cut and remove [*306] Lily Gardens left all existing structures in all trees, undergrowth, and abate other place and merely affixed the bridge covering to the obstruction, upon said canal right of way, existing cement bridge at ground level; the bridge that may injure, endanger, or interfere with covering did not extend down to the actual drainage ditch the construction, operation, maintenance nor did it touch the pipes (or "culverts") underneath the and repair of said drainage canal. bridge. In 2006, the District sent Lily Gardens a cease and desist letter stating that the construction of the bridge The DISTRICT agrees during the life covering constituted an encroachment on the District's of this easement to repair [**4] all right-of-way and otherwise violated the easement Page 3 333 S.W.3d 301, *306; 2010 Tex. App. LEXIS 7532, **5

restrictions. Specifically, the District alleged that the court based its ruling. structure was attached to the District's "culverts," which "interfere[d] with the District's drainage plans and After conducting a hearing on attorney's fees, the system, . . . violate[d] [**6] the easement restrictions, court signed an amended final judgment. In the judgment, and impermissibly encroache[d] on the District's the court reiterated that it granted the Defendants' motion right-of-way." for summary judgment, awarded attorney's fees, and disposed of all remaining claims [**8] by After the Defendants refused to remove the bridge acknowledging that the Defendants non-suited their covering, the District filed suit. The District alleged remaining claims without prejudice. causes of action for temporary and injunctive relief relating to (1) violation, encroachment, and infringement Summary Judgment on the District's rights under the easement; (2) trespass; In its first and second issues, the District contends and (3) nuisance. Each claim involved the common the trial court erroneously granted summary judgment allegation that Lily Gardens wrongfully constructed the because the Defendants failed to establish entitlement to bridge covering. judgment as a matter of law and, alternatively, the The Defendants filed traditional and no-evidence District raised genuine issues of material fact precluding motions for summary judgment as to all of the District's summary judgment. Although the trial court granted causes of action. The trial court signed an order granting summary judgment in the Defendants' favor on all of the the "Defendants' Traditional and No-Evidence Motion for District's causes of action, the District only challenges the Summary Judgment," without specifying whether it was trial court's summary judgment as to two of its claims; granting summary judgment on the traditional or specifically, the claims relating to violation of easement no-evidence motions. In the order, the trial court and trespass. Accordingly, [*307] we limit our review to specifically stated that "the bridge covering at issue . . . whether summary judgment was proper on those claims. [did] not encroach on the Brookshire Katy Drainage A. Standard of Review District's easement rights" and that the Defendants were "not required to remove the bridge covering and "We review a grant of summary judgment de novo." defendants [were] expressly allowed to complete the Ferguson v. Bldg. Materials Corp. of Am., 295 S.W.3d bridge covering." 2 The court withheld ruling on the issue 642, 644 (Tex. 2009) (citing Tex. Mun. Power Agency v. of attorney's [**7] fees so that it could hold a hearing. PUC of Tex., 253 S.W.3d 184, 192 (Tex. 2007)). In both traditional and no-evidence summary judgment motions, 2 In its brief, the District points to this language we review the entire record in the light most favorable to in the order and argues that the trial court the non-movant, indulging every reasonable inference "specifically state[d] the grounds on which [the and resolving any doubts [**9] against the motion. summary judgment was] based[.]" Citing Sudan v. Sudan, 199 S.W.3d 291, 292 (Tex. 2006); Vannerson v. Klevenhagen, 908 S.W.2d 37, 41 KPMG Peat Marwick v. Harrison County Hous. Fin. (Tex. App.--Houston [1st Dist.] 1995, writ Corp., 988 S.W.2d 746, 748 (Tex. 1999). denied), the District argues that "Lily Gardens is limited to the rationale enumerated by the trial "[I]ssues a non-movant contends avoid the movant's court and cannot seek affirmance on other entitlement to summary judgment must be expressly arguments." The authority cited by the District is presented by written answer to the motion or by other misplaced. The Texas Supreme Court has more written response to the motion and are not expressly recently held that the Court of Appeals is not presented by mere reference to summary judgment limited to the grounds enumerated in a trial court's evidence." 3 McConnell v. Southside Indep. Sch. Dist., order and may consider any grounds presented to 858 S.W.2d 337, 341 (Tex. 1993). We must affirm the the trial court that are preserved for appellate summary judgment if any of the movant's theories review. Cincinnati Life Ins. Co. v. Cates, 927 presented to the trial court and preserved for appellate S.W.2d 623, 626 (Tex. 1996). Accordingly, we review are meritorious. Provident Life & Accident Ins. need not opine on whether the statements in the Co. v. Knott, 128 S.W.3d 211, 216 (Tex. 2003). order constitute the grounds on which the trial Page 4 333 S.W.3d 301, *307; 2010 Tex. App. LEXIS 7532, **9

3 On appeal, the District argues that the trial must grant the motion unless [*308] the respondent court erred in denying its motion for produces summary judgment evidence raising a genuine reconsideration that it filed after the trial court issue of material fact." TEX. R. CIV. P. 166a(i). If the granted summary judgment. However, after non-movant brings forward more than a scintilla of granting summary judgment, the trial court evidence that raises a genuine issue of material fact, then generally has no obligation to consider further summary judgment is not proper. Flameout Design & motions on issues adjudicated by the summary Fabrication, Inc. v. Pennzoil Caspian Corp., 994 S.W.2d judgment. Macy v. Waste Mgmt., Inc., 294 S.W.3d 830, 834 (Tex. App.--Houston [1st Dist.] 1999, no pet.). 638, 650-51 (Tex. App.--Houston [1st Dist.] 2009, pet. filed). New arguments to defeat summary Our review of a trial court's summary judgment judgment presented [**10] after the trial court extends to the evidence that was before the court at the has granted summary judgment do not warrant time of the ruling. Plotkin v. Joekel, 304 S.W.3d 455, 486 reversal. See id.; see also TEX. R. CIV. P. (Tex. App.--Houston [1st Dist.] 2009, pet. denied); 166a(c). Accordingly, we limit our review to [**12] see also TEX. R. CIV. P. 166a(c); TEX. R. APP. P. those arguments set out in the District's summary 33.1. However, "[i]n determining whether a respondent to judgment response, not those arguments presented a no-evidence motion for summary judgment has for the first time in the District's motion for sufficient evidence to raise a genuine issue of material reconsideration or in its appellate briefs. fact, courts are not required to search the record without guidance." Aleman v. Ben E. Keith Co., 227 S.W.3d 304, When a party seeks both a traditional and a 309 (Tex. App.--Houston [1st Dist.] 2007, no pet.). A no-evidence summary judgment on the non-movant's general reference to a voluminous record that does not claim, we first review the trial court's summary judgment direct the trial court and parties to the evidence relied under the no-evidence standards of Texas Rule of Civil upon is insufficient. See Rogers v. Ricane Enterprises, Procedure 166a(i). Ford Motor Co. v. Ridgway, 135 Inc., 772 S.W.2d 76, 81 (Tex. 1989). S.W.3d 598, 600 (Tex. 2004). If a non-movant failed to produce evidence to defeat the summary judgment We will affirm a no-evidence summary judgment motion, then we need not analyze whether the movant's when (1) there is a complete absence of evidence of a summary judgment proof satisfied the less stringent vital fact, (2) the court is barred by rules of law or of "traditional" burden. Id. In other words, if no-evidence evidence from giving weight to the only evidence offered summary judgment was properly granted, we do not to prove a vital fact, (3) the evidence offered to prove a reach arguments under the traditional motion for vital fact is no more than a scintilla, or (4) the evidence summary judgment. See id. conclusively establishes the opposite of a vital fact. City of Keller v. Wilson, 168 S.W.3d 802, 810 (Tex. 2005). Here, the Defendants included both traditional and no-evidence grounds in their motion for summary 2. District's Summary Judgment Response judgment. The trial court did not specify whether it was In its response to the Defendants' no-evidence granting the motion on traditional or no-evidence motion, the District specifically asserted that the grounds. [**11] Accordingly, we review the no-evidence construction of the bridge covering [**13] violated the grounds first. terms of the easement. To support this argument, the 1. No-Evidence Summary Judgment District attached summary judgment evidence to its response, including the easement in question and pictures Under the no-evidence standard, the party without of the bridge covering. The District also attached the the burden of proof may move for a no-evidence affidavit of Raymond Dollins, President of the District. summary judgment on the basis that there is no evidence to support an essential element of the non-moving party's In the affidavit, Dollins states that the Defendants did claim. TEX. R. CIV. P. 166a(i). Once the motion is filed, not obtain a permit from the District prior to beginning the burden shifts to the non-moving party to present construction on the bridge covering. The remainder of evidence raising a genuine issue of material fact as to the Dollins's affidavit is either (1) not relevant to a material elements specified in the motion. Mack Trucks, Inc. v. fact regarding the easement or alleged trespass or (2) Tamez, 206 S.W.3d 572, 582 (Tex. 2006). "The court verbatim allegations and conclusions from the District's Page 5 333 S.W.3d 301, *308; 2010 Tex. App. LEXIS 7532, **13

response without supporting "statements of fact." See of plaintiff's claims" that "could not support summary TEX. R. CIV. P. 166a(f); TEX. GOV'T CODE ANN. § judgment"; further stating that an affiant "cannot simply 312.011(1) (Vernon 2005) (defining "affidavit" as a say, Take my word for it; I know[.]"). In short, Dollins's "statement in writing of a fact or facts"). affidavit contains no probative evidence favorable to the District's claims, as it is entirely his unsupported Such conclusory statements in an affidavit are conclusions and interpretations of law. insufficient to raise an issue of fact in response to a motion for summary judgment. See, e.g., Ryland Group, The District's claim that the bridge covering Inc. v. Hood, 924 S.W.2d 120, 122 (Tex. 1996); Brownlee infringes upon the scope of its easement across v. Brownlee, 665 S.W.2d 111, 112 (Tex. 1984). "A Defendants' land seems to be based, in part, upon an conclusory statement is one that does not provide the allegation that the covering either impedes the flow of underlying facts to support the conclusion." Winchek v. water through the canal or that it might, in the future, Am. Exp. Travel Servs. Co., 232 S.W.3d 197, 206 (Tex. impact the District's ability to repair or maintain the App.--Houston [1st Dist.] 2007, no pet.). [**14] canal. However, the District failed to provide any Similarly, an affidavit that is nothing more than a sworn summary judgment evidence to show this. repetition of allegations in the pleadings has no probative force, as the statements are no more than conclusions or a Thus, our analysis turns [**16] to the remaining mere surmise or suspicion. Selz v. Friendly Chevrolet, summary judgment evidence: the express easement Inc., 152 S.W.3d 833, 837 (Tex. App.--Dallas 2005, no language and the photos of the construction in question. pet.). We must determine whether the mere act of constructing the bridge covering, even if that covering does not extend Further, Dollins's conclusory statements that the into the canal or impede the flow of water through the District's legislative authority allows it do certain things canal beneath it, violates the terms of the easement. (Dollins's interpretations of the law) are not competent [*309] summary judgment evidence. Haden v. David J. B. Violation of Easement Sacks, P.C., No. 01-01-00200-CV, 332 S.W.3d 503, 2009 On appeal, the District argues that the trial court Tex. App. LEXIS 3199, 2009 WL 1270372, *5 (Tex. erred in granting summary judgment on its claim for App.--Houston [1st Dist.] 2009, pet. denied) ("Statements declaratory and injunctive relief relating to the that are nothing more than legal conclusions are not Defendants' alleged violation of the easement. sufficient to support a summary judgment as a matter of law . . . ."). 4 1. Applicable Law 4 The absence of factual statements and the "An easement does not convey title to property." presence of conclusory statements are both Stephen F. Austin State Univ. v. Flynn, 228 S.W.3d 653, defects of substance. See Rizkallah v. Conner, 952 658 (Tex. 2007) (citing Marcus Cable Assocs. v. Krohn, S.W.2d 580, 587 (Tex. App.--Houston [1st Dist.] 90 S.W.3d 697, 700 (Tex. 2002)). Instead, an easement is 1997, no writ). a nonpossessory interest in another's property that authorizes its holder to use that property for a particular In its reply brief, the District asserts (without purpose. Marcus Cable, 90 S.W.3d at 700. The supporting authority) that "every word in Mr. Dollins's contracting parties' intentions as expressed in the grant affidavit in support of the District must be taken as true." determine the scope of the interest conveyed. Id. at That, however, is not the case when the affidavit is 700-01. We read the terms of an easement as a whole to wholly lacking factual support. [**15] In the reply brief, reach an adequate interpretation of the parties' intentions the District argues that, in his affidavit, Dollins "clearly and to carry out [**17] the purpose for which the and unequivocally denied Lily Gardens' description of easement was created. Id. at 701. Unless the language is events." However, a sworn general denial of another ambiguous, we rely solely on the written instrument. party's factual accounts does not meet the burden under Koelsch v. Indus. Gas Supply Corp., 132 S.W.3d 494, 498 the no-evidence summary judgment grounds of (Tex. App.--Houston [1st Dist.] 2004, pet. denied). producing evidence to create a material fact issue. See Burrow v. Arce, 997 S.W.2d 229, 235-36 (Tex. 1999) [*310] "In determining the scope of an easement, (rejecting affidavit as "nothing more than a sworn denial Page 6 333 S.W.3d 301, *310; 2010 Tex. App. LEXIS 7532, **17

'we may only imply those rights reasonably necessary to District has asserts that the covering was affixed to the the fair enjoyment of the easement with as little burden as "culvert." By "culvert," the District is referring to two possible to the servient owner.'" Whaley v. Cent. Church pipes that are located in the drainage canal, underneath of Christ of Pearland, 227 S.W.3d 228, 231 (Tex. the cement bridge. 5 The term "culvert" is not used in the App.--Houston [1st Dist.] 2007, no pet.) (quoting easement grant, as are "canal" and "roadway." The Lakeside Launches, Inc. v. Austin Yacht Club, Inc., 750 easement delineates, in clear terms, the District's rights S.W.2d 868, 871 (Tex. App.--Austin 1988, writ denied)); with respect (a) the roadways to access the drainage canal see also Marcus Cable, 90 S.W.3d at 701. "If a particular and (b) the canal. We also address (c) the District's public purpose is not provided for in the grant, a use pursuing interest arguments. that purpose is not allowed." Marcus Cable, 90 S.W.3d at 701. 5 See Fort Bend County Drainage Dist. v. Sbrusch, 818 S.W.2d 392, 395 (Tex. 1991) To prevail on a claim for interference with easement (drawing distinction between responsibilities with rights, the District must prove that the Defendants regard to easement and bridge crossing over engaged in activities that interfered with the District's easement in tort case). reasonable use and enjoyment of the easement. See Still v. Eastman Chem. Co., 170 S.W.3d 851, 854 (Tex. a. Rights with respect to the roadway App.--Texarkana 2005, no pet.) (citing County of Harris The granting instrument provides the District with v. Southern Pacific Trans. Co., 457 S.W.2d 336, 340 certain rights incident to the purpose or use of the (Tex. Civ. App.-Houston [1st Dist.] 1970, no writ.)). easement, including the "right of ingress and egress to 2. [**18] Analysis and from said drainage canal right of way[.]" In other words, the District has the right to use the Defendants' In their summary judgment motion, the Defendants roadway to travel from the public street to the drainage specifically alleged that there was no evidence that they canal location and back; the easement does not provide engaged in activities that interfered with the District's unlimited or exclusive use of the roadways [**20] or the reasonable use and enjoyment of the easement. Defendants' property. [*311] The instrument also Accordingly, the burden shifted to the District to present provides, "after construction of said drainage canal, said summary judgment evidence raising a genuine issue of right of ingress and egress of the DISTRICT shall be material fact that they did. See Mack Trucks, Inc., 206 limited to the said right of way and to existing roads and S.W.3d at 582. passageways." (Emphasis added.) Thus, the District is prohibited from relocating the roadways. As further Here, the easement's stated purposes was for evidence of the District's limited right to use the "constructing, maintaining, operating, repairing, and roadways on the property, the easement also expressly re-constructing a drainage canal, including drains, states that, during the life of the easement, the District is ditches, laterals and levees[.]" The District alleged that required "to repair all damage to roads, passageways and the Defendants' construction of the covering over the fences resulting from the DISTRICT'S use[.]" existing bridge interfered with its easement rights. The intention of the parties was clearly expressed in The bridge covering added by the Defendants is the easement instrument. The District has no right, under affixed to the preexisting cement bridge above the the terms of the easement, to control or prohibit drainage canal, as distinguishable from construction in or construction on the roadway. The District's only right obstructing the canal. with respect to the roadways is ingress and egress to and from the drainage canal, and the District has not produced It is undisputed that the cement bridge was built any evidence showing that the construction of the bridge around the time the District built the drainage canal. The covering prevented its ingress and egress to and from the pictures attached as summary judgment evidence by the drainage canal. District show that the bridge covering was attached to this preexisting bridge. The District does not provide any b. District's Ability to Maintain the Drainage evidence showing that the structure [**19] was actually Canal built onto or extended into the drainage canal. The Page 7 333 S.W.3d 301, *311; 2010 Tex. App. LEXIS 7532, **20

The District argues that the construction of the writ denied) (observing that when summary judgment covering may interfere with its ability [**21] to maintain evidence raises only mere suspicion or surmise of fact in the canal. Specifically, the District argues that it may issue, no genuine issue of material fact exists). need to remove and replace its "culverts." The District points to language in the easement providing the District [*312] c. Benefit of the Public "the right from time to time to cut and remove all trees, The District also makes an appeal to the interest of undergrowth, and abate other obstruction, upon said [**23] the public, despite its failure to put forth any canal right of way, that may injure, endanger, or interfere evidence showing that the bridge covering affects with the construction, operation, maintenance and repair drainage, water flow, or flooding. In its summary of said drainage canal." (Emphasis added). The District judgment response, and without supporting allegations or has not produced any evidence to show how the bridge facts, the District urged that "there will be injury to the covering would interfere with "the construction, area landowners and the general public at large." operation, maintenance and repair" of the drainage canal as required by the terms of the easement. In fact, the On appeal, the District makes a similar public photographs, provided by the District as summary interest argument, citing authority relating to "public judgment evidence, conclusively establish that there is easements." However, unlike the authority cited, this case space between the preexisting cement bridge (to which does not involve a public dedication or an easement the bridge covering was attached) and the piping in the authorizing use by the public. See Marcus Cable, 90 drainage ditch below. In other words, the photos show S.W.3d at 707 (public easements are those easements that the cement bridge is not attached to the piping in the dedicated to public's use); Grimes v. Corpus Christi drainage ditch. Transmission, 829 S.W.2d 335, 337 (Tex. App.--Corpus Christi 1992, writ denied) (easement granting State The District also suggests that the structure might right-of-way for "highway purposes"). Furthermore, the interfere with the future operation of the drainage system Texas Supreme Court has held that the interests of the because the District might opt to change the location of public, no matter how laudable they may be, do not the culvert. [**22] But the District has not shown how warrant disregarding express easement terms to enlarge the bridge covering might affect its ability to move the its purpose beyond those intended by the contracting culvert located beneath the bridge that was erected by the parties. Marcus Cable, 90 S.W.3d at 706. District. The District has failed to show that the Defendants' The District concedes that the bridge covering has construction of the bridge covering violated the [**24] not affected drainage, but it asserts that it may pose a District's rights as expressly provided in the easement or drainage problem in the future. To this extent, Dollins's those rights reasonably necessary to accomplish the affidavit states: purpose of the easement, namely, "constructing, maintaining, operating, repairing, and reconstructing a I do not know every possible future drainage canal[.]" The District has not provided any problem that might result from the covered evidence to create a fact issue as to whether the bridge; but for example, it might be a construction of the bridge covering infringed on its rights drainage problem, it might be a wedding pursuant to the easement. Accordingly, the record in this that was planned and the District removed case warrants summary judgment in the Defendants' its culverts before the wedding, it might be favor on the District's claims that its easement was that someone was injured on the covered violated. Because we conclude that the trial court could bridge; the District would not want those have properly granted the Defendants' no-evidence parties to claim that somehow the District summary judgment motion, we need not reach was responsible for their problems. Defendants' traditional summary judgment grounds motion. The statement quoted above has no evidentiary value because it is not a "statement of fact," but instead, is We overrule the District's first issue. Dollins's speculation. See Wiggins v. Overstreet, 962 S.W.2d 198, 200 (Tex. App.--Houston [14th Dist.] 1998, C. Trespass Page 8 333 S.W.3d 301, *312; 2010 Tex. App. LEXIS 7532, **24

In its second issue, the District argues that the trial ability to regulate and improve drainage and flood court erred in granting summary judgment in favor of the prevention within the district. See Tex. H.B. 2959, 77th Defendants on the "District's trespass claim." Leg., R.S. (2001) (enrolled). The Legislature cannot, however, change a nonpossessory easement interest into a The Defendants addressed trespass in both its possessory interest or title ownership, as would be traditional and no-evidence summary judgment points. required to maintain a trespass action against the Under the no-evidence grounds, the Defendants argued Defendants, without compensating a private landowner. that, to recover on a trespass claim, the District would [**27] See, e.g., Nollan v. Ca. Coastal Com'm, 483 U.S. have to show that the Defendants made [**25] an 825, 107 S.Ct. 3141, 97 L. Ed. 2d 677 (1987). unauthorized entry onto property owned by the District. The Defendants contended that the District had no Accordingly, the trial court did not err by granting evidence that it owned the property at issue or that the summary judgment in the Defendants' favor on the Defendants made an unauthorized entry. Also, to the District's trespass claim. extent that the District relied on its regulations to support the trespass allegation, the Defendants argued in their We overrule the District's second issue. no-evidence points that the District had no evidence that Attorney's Fees its regulations were lawfully adopted. In its third issue, the District argues that the trial In its brief, in support of its trespass claim, the court erred in awarding the Defendants attorney's fees for District asserts that "Lily Gardens does not own the two reasons: (1) the Defendants were not entitled to fees culvert in fee simple and the covering constitutes a because they were not entitled to judgment under the physical trespass without the District's consent." The Declaratory Judgments Act; and (2) the Defendants did District points out that the summary judgment record not timely supplement their responses to the District's "conclusively establishes the existence of a physical request for production of documents regarding fees. structure built by Lily Gardens upon the District's easement," and the District summarily argues, "The A. Attorney's Fees Under Declaratory Judgment Act presence of [the bridge covering] structure constitutes a trespass as a matter of law." The District argues that, "because Lily Gardens is not entitled to judgment under the Declaratory Judgments To prevail on a trespass claim, the plaintiff has the Act, it may not recover fees under the statute." The burden to prove (1) his right of ownership of the property District seems to be arguing that only a party who or a [*313] lawful right of possession, and (2) an entry prevails on his own declaratory judgment cause of action by the defendant. Cain v. Rust Indus. Cleaning Servs., may recover attorney's fees. To the contrary, it is well Inc., 969 S.W.2d 464, 470 (Tex. App.--Texarkana 1998, established that the trial court may award attorney's fees pet denied). [**26] "Unlike a possessory interest in land, to any party under the Declaratory Judgment Act. an easement is a nonpossessory interest that authorizes its holder to use the property for only particular purposes." Section 37.009 of the Texas Civil Practice and Marcus Cable, 90 S.W.3d at 700 (emphasis added). "An Remedies Code, addressing [**28] costs and fees under easement does not convey title to property." Flynn, 228 the Declaratory Judgment Act, provides, "In any S.W.3d at 658. In other words, an easement does not proceeding under this chapter, the court may award costs convey to the easement holder an ownership or and reasonable and necessary attorney's fees as are possessory interest. See id. Because, as a matter of law, equitable and just." TEX. CIV. PRAC. & REM. CODE the District cannot establish the first element of trespass ANN. § 37.009 (Vernon 2008). The grant or denial of (ownership or right of possession), its claim necessarily attorney's fees in a declaratory judgment action lies fails. within the discretion of the trial court, and its judgment will not be reversed on appeal absent a clear showing that Lastly, the District attempts to support its trespass it abused that discretion. Oake v. Collin County, 692 claim with its own rules and regulations. The District S.W.2d 454, 455 (Tex. 1985). In the exercise of its asserted that the legislature authorized it to enact rules discretion to award attorney's fees in declaratory and a permitting system and that House Bill 2959 of the judgment action, the trial court may award attorney's fees 77th Texas Legislative Session expanded the District's Page 9 333 S.W.3d 301, *313; 2010 Tex. App. LEXIS 7532, **28

to the prevailing party, may decline to award attorney's prejudice. See TEX. R. CIV. P. 193.6. fees to either party, or may award attorney's fees to the nonprevailing party, regardless of which party sought In its brief, the District fails to specify what declaratory judgment. Ochoa v. Craig, 262 S.W.3d 29, 33 testimony, documents, or other evidence the trial court (Tex. [*314] App.--Dallas 2008, pet. denied). Thus, improperly admitted and has thus waived this issue for contrary to the District's assertion, it is well established improper briefing. See TEX. R. APP. P. 38.1(h); Garza v. that attorney's fees under section 37.009 are not Tex. Alcoholic Beverage Comm'n, 138 S.W.3d 609, 618 conditioned upon a party's prevailing on its own (Tex. App.--Houston [14th Dist.] 2004, no pet.) (holding declaratory claim. appellant waived complaint that court improperly admitted testimony and documents untimely [**31] The authority cited by the District does not support produced or disclosed during discovery because he cited its position. 6 Because the District [**29] has not clearly only one example of improperly admitted evidence and established an abuse of discretion, we may not disturb the otherwise failed to specify which evidence was trial court's award. improperly admitted).

6 The District cites Cytogenix, Inc. v. Waldroff The District does not allege that the Defendants and McDowell v. McDowell for the proposition failed to properly designate their counsel as an expert that, because the Defendants were not entitled to witness on attorney's fees. Rather, the District judgment under the Declaratory Judgment Act, it acknowledges that the Defendants requested attorney's may not recover under Section 37.009. Cytogenix fees and provided summary judgment evidence in support involved a traditional breach of contract claim in of the figures claimed at that point of time. Specifically, which the party was not awarded actual damages. the Defendants provided the affidavit of their counsel See Cytogenix, 213 S.W.3d 479, 489-90 (Tex. created on November 6, 2006. The affidavit included the App.--Houston [1st Dist.] 2006, pet. denied). hourly billing rate sought, the summary of the work Cytogenix suggested the Declaratory Judgment performed up to that time, an opinion regarding the Act as an alternative basis for attorney's fees, and reasonable and necessary cost of the services provided the Court held that, "A party may not . . . couple a and the services that would be required in the event of an declaratory plea with a damages action just to appeal, and the total fees as of that time. The trial court recover attorney's fees." Id. at 490. In McDowell, granted the Defendants' summary judgment but left open the San Antonio Court of Appeals reversed an the issue of attorney's fees so that a hearing could be award of attorney's fees where declaratory held. Between the time of the Defendants motion for judgment was not pled as a cause of action. See summary judgment on November 6, 2006 and the hearing McDowell, 143 S.W.3d 124, 131 (Tex. App.--San on attorney's fees on April 17, 2007, the Defendants Antonio 2004, pet. denied). [**30] Both cases are incurred additional fees in corresponding [**32] with distinguishable from the present case because, and addressing the issues raised by the District. Thus, the here, declaratory relief was pled and pursued as change to the requested attorney's fees [*315] was an actual theory of relief. Thus, neither authority merely due to their continuation of their work on the case supports reversal of attorney's fees in the present to address issues raised and to prepare for the hearing on case. attorney's fees. We cannot conclude the trial court abused its discretion by determining that the District was not B. Failure to Supplement Discovery Record unfairly surprised. See TEX. R. CIV. P. 193.6(a)(2).

The District argues that the trial court's award of We overrule the District's third issue. attorney's fees to the Defendants was improper because the Defendants "did not timely supplement [their] Conclusion responses to the District's request for production of documents[.]" Specifically, the District alleges that the We affirm the trial court's summary judgment. trial court should have excluded the evidence of George C. Hanks attorney's fees under Texas Rule of Civil Procedure 193.6 because evidence was not timely produced and there was Justice no showing of good cause or a lack of unfair surprise or Page 10 333 S.W.3d 301, *315; 2010 Tex. App. LEXIS 7532, **32

Panel consists of Justices Alcala, Hanks, and Wilson. 7 with the . . . maintenance and repair of said drainage canal" as in the language of the easement. 7 The Honorable Davie L. Wilson, retired Justice, First Court of Appeals, participating by It is within the common knowledge of all that to assignment. work on the large pipes seen in the pictures might require the use of equipment that may need to be placed on the Justice Wilson, dissenting. top of the bridge/ culvert. To insist the District come forth with exacting evidence to make the future certain DISSENT BY: Davie L. Wilson asks for more than the burden required by law.

DISSENT Further, to reach its conclusions, it appears the majority must necessarily believe that the top of the bridge/ culvert is not in the easement. This result flows DISSENT FROM OPINION ON REHEARING from a narrow interpretation of the easement language which I do not believe is supported by the law as outlined Because I believe the District has produced more in the original opinion. Because I would stand on the than a scintilla of evidence that raises a genuine issue of original opinion of the court, return the case below for material fact, I respectfully dissent. further consideration of the merits [**34] of the issues The word "may" as used in the easement language presented, I respectfully dissent. contemplates future events which by their nature are Davie L. Wilson speculative. The pictures of the bridge covering are in and of themselves sufficient to raise a fact issue (i.e., Justice, Retired showing that the bridge covering includes walls on the side of the bridge that prevent people and [**33] Panel consists of Justices Alcala, Hanks, and Wilson. machinery from reaching down off of the bridge into the 1 waterway below). In my judgment, expert testimony is not necessary to reach the conclusion that some future 1 The Honorable Davie L. Wilson, retired event "may" require access to the top of the Justice, First Court of Appeals, participating by bridge/culvert by the District to make repairs and/or assignment. improvements to the canal directly below due to circumstances that "may injure, endanger, or interfere Page 1

LAURI SMITH AND HOWARD SMITH, PETITIONERS, v. PATRICK W. Y. TAM TRUST, RESPONDENT

NO. 07-0970

SUPREME COURT OF TEXAS

296 S.W.3d 545; 2009 Tex. LEXIS 822; 53 Tex. Sup. J. 54

August 29, 2008, Argued October 23, 2009, Opinion Delivered

PRIOR HISTORY: [**1] (quoting Cochran v. Wool Growers Cent. Storage Co., ON PETITION FOR REVIEW FROM THE COURT 140 Tex. 184, 166 S.W.2d 904, 908 (Tex. 1942)). We OF APPEALS FOR THE FIFTH DISTRICT OF must decide whether Ragsdale authorizes a court to TEXAS. award fees as a matter of law when a jury awards roughly Smith v. Patrick W.Y. Tam Trust, 235 S.W.3d 819, 2007 one-third of the damages sought and no attorney's fees. Tex. App. LEXIS 6022 (Tex. App. Dallas, 2007) Because, under such circumstances, a court's award of the full amount of fees sought is unreasonable, we reverse in part the court of appeals' judgment and remand to the trial COUNSEL: For Smith, Lauri, PETITIONER: Mr. court for a new trial on attorney's fees. Robert D. Ranen, Ranen & Netzer, LLP, Plano TX. I For Patrick W.Y. Tam Trust, RESPONDENT: Mr. Scott E. Hayes, Mr. Michael Wayne Massiatte, Vincent | Factual and Procedural Background Moye, P.C., Dallas TX. The Patrick W. Y. Tam Trust owns a shopping center JUDGES: CHIEF JUSTICE JEFFERSON delivered the in [**2] Collin County. The Trust leased space to opinion of the Court. Independent Quality Wholesale, Inc. d/b/a Plano Pets & Grooming, with Lauri and Howard Smith as guarantors. OPINION BY: Wallace B. Jefferson When Plano Pets stopped making payments, the Trust sued Plano Pets 1 and the Smiths, seeking $ 215,391.50 in OPINION damages and $ 47,438.75 in attorney's fees.

[*546] The reasonableness of attorney's fees is 1 The Trust nonsuited Plano Pets after the generally an issue for the trier of fact. In Ragsdale v. company filed bankruptcy. Progressive Voters League, however, we held that a court At trial, Scott Hayes, the Trust's attorney, testified may award attorney's fees as a matter of law when the that a reasonable fee for the preparation and trial of the testimony on fees "'is not contradicted by any other case would be $ 47,438.75, plus $ 15,000 for appeals, for witness, or attendant circumstances, and the same is a total of $ 62,438.75. To support his testimony, Hayes clear, direct and positive, and free from contradiction, offered the legal bills of several other attorneys in his inaccuracies, and circumstances tending to cast suspicion firm. The Smiths unsuccessfully objected that the bills thereon.'" Ragsdale, 801 S.W.2d 880, 882 (Tex. 1990) Page 2 296 S.W.3d 545, *546; 2009 Tex. LEXIS 822, **2; 53 Tex. Sup. J. 54

were hearsay but did not otherwise challenge the Trust's provided by counsel; the time required for trial; the evidence. amount of money involved; the client's interest that is at stake; the responsibility imposed upon counsel; and the The jury found the Smiths liable and awarded the skill and expertise required." Ragsdale, 801 S.W.2d at Trust $ 65,000 in damages but no attorney's fees. The 881. We noted that generally, "'the testimony of an Trust moved to enter judgment on the jury's liability and interested witness, such as a party to the suit, though not damages answers and to disregard the jury's refusal to contradicted, does no more than raise a fact issue to be award attorney's fees. The trial court rendered judgment determined by the jury.'" Id. at 882 (quoting Cochran, that the Trust receive the $ 65,000 the jury awarded, and 166 S.W.2d at 908). But we recognized that there was rendered judgment notwithstanding [*547] the verdict on "'an exception to this rule, which is that where the attorney's fees: $ 7,500 for fees incurred through [**3] testimony of an interested witness is not contradicted by trial and up to $ 15,000 in attorney's fees for success at any other witness, or attendant [**5] circumstances, and various stages of appeal. Both sides appealed. the same is clear, direct and positive, and free from contradiction, inaccuracies, and circumstances tending to The court of appeals vacated the $ 7,500 attorney's cast suspicion thereon, it is taken as true, as a matter of fee award and rendered judgment for $ 47,438.75 instead, law.'" Id. (quoting Cochran, 166 S.W.2d at 908). "The holding that "[b]ecause the Trust presented competent, court, as a trier of fact, may award attorneys' fees as a uncontroverted evidence of its right to attorney's fees and matter of law in such circumstances, especially when the because the Smiths did not challenge the amount, nature, opposing party has the means and opportunity of or necessity of these fees . . . the trial judge abused his disproving the testimony or evidence and fails to do so." discretion in awarding $ 7,500." 235 S.W.3d 819, 828 Id. Because the attorney's fees evidence met those (citing Ragsdale, 801 S.W.2d at 881). The court of requirements, we rendered judgment for $ 22,500 in appeals affirmed the remainder of the judgment. Id. at attorney's fees and affirmed the $ 40,000 damages award. 829. We granted the Smiths' petition for review. 51 Tex. Id. Sup. Ct. J. 980, 987 (June 9, 2008). Relying on Ragsdale, the court of appeals in this II case rendered judgment as a matter of law, holding that the Trust's attorney's fee evidence was competent, Discussion uncontroverted, and unchallenged. 235 S.W.3d at 828-29. "A person may recover reasonable attorney's fees . . . But Ragsdale recognized that its rule would not apply in addition to the amount of a valid claim and costs, if the whenever attorney's fees testimony is undisputed: claim is for . . . an oral or written contract." TEX. CIV. PRAC. & REM. CODE § 38.001(8). If attorney's fees are [W]e do not mean to imply that in every proper under section 38.001(8), the trial court has no case when uncontradicted testimony is discretion to deny them. See Bocquet v. Herring, 972 offered it mandates an award of the S.W.2d 19, 20 (Tex. 1998) (holding that statutes amount claimed. For example, even providing that a party "may recover" attorney's fees are though the evidence might be not discretionary). Generally, the party seeking [**4] to uncontradicted, if it is unreasonable, recover attorney's fees carries the burden of proof. incredible, [*548] or its belief is Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1, 10 questionable, [**6] then such evidence (Tex. 1991). would only raise a fact issue to be determined by the trier of fact. The reasonableness of attorney's fees is ordinarily left to the factfinder, and a reviewing court may not Ragsdale, 801 S.W.2d at 882. We also cautioned that the substitute its judgment for the jury's. Barker v. Eckman, factfinder had to consider "the amount of money 213 S.W.3d 306, 314 (Tex. 2006); Ragsdale, 801 S.W.2d involved." Id. at 881; see also Wayland v. City of at 881. In Ragsdale, we held that "[i]n awarding Arlington, 711 S.W.2d 232, 233 (Tex. 1986) ("One of the attorney's fees the trial court, as the trier of fact, must factors in determining the reasonableness of attorney's take into account various factors such as: the nature and fees is the amount of damages awarded."). Seven years complexity of the case; the nature of the services later, we added a corollary: the factfinder should consider Page 3 296 S.W.3d 545, *548; 2009 Tex. LEXIS 822, **6; 53 Tex. Sup. J. 54

"the amount involved and the results obtained," among to fee awards made by trial courts, not just juries. Young other things. Arthur Andersen & Co. v. Perry Equip. v. Qualls, 223 S.W.3d 312, 314 (Tex. 2007). We see no Corp., 945 S.W.2d 812, 818 (Tex. 1997). reason why [**8] they would not apply--as the Ragsdale factors do--to an appellate court's assessment of whether Here, the Trust sought over $ 200,000 in damages, fees were established as a matter of law. Because the fee but the jury awarded only $ 65,000. The Trust asked for a is unreasonable in light of the amount involved and the maximum of $ 62,438.75 in attorney's fees; the jury results obtained, the evidence did no more than raise a awarded nothing. The court of appeals held that fees were fact issue to be decided by the jury. See Ragsdale, 801 established as a matter of law. See Ragsdale, 801 S.W.2d S.W.2d at 882. at 882. But the fee, though supported by uncontradicted testimony, was unreasonable in light of the amount The jury, however, awarded nothing. Although it involved and the results obtained, and in the absence of could have rationally concluded that, in light of the evidence that such fees were warranted due amount involved and the results obtained, a reasonable circumstances unique to this case. Cf. Farrar v. Hobby, fee award was less than the full amount sought, no 506 U.S. 103, 114, 113 S. Ct. 566, 121 L. Ed. 2d 494 evidence supported the jury's refusal to award any (1992) (holding that "'the degree [**7] of the plaintiff's attorney's fees (as the court of appeals correctly noted). overall success goes to the reasonableness' of a fee 235 S.W.3d at 829. The trial court could have directed the award" and "'the most critical factor' in determining the jury to reform its verdict, see TEX. R. CIV. P. 295, but the reasonableness of a fee award 'is the degree of success court was not free to set a reasonable fee on its own. obtained.'") (quoting Tex. State Teachers Ass'n v. Accordingly, the Smiths are entitled to a new trial on Garland Indep. Sch. Dist., 489 U.S. 782, 793, 109 S. Ct. attorney's fees. 1486, 103 L. Ed. 2d 866 (1989); Hensley v. Eckerhart, 461 U.S. 424, 436, 103 S. Ct. 1933, 76 L. Ed. 2d 40 On retrial, the evidence may support a similar fee (1983)). Although the Trust sought some $ 215,000 in award, but that is a matter within the jury's purview. See damages, the jury found that "the amount involved" was Young, 223 S.W.3d at 315 ("It may be that, upon much lower--$ 65,000. The jury then decided that the consideration of the correct results obtained, this Trust was entitled to no fees (which must be reversed for evidence would be factually sufficient to support a like reasons explained below). fee award."). On this record, the [**9] Trust is not entitled to its fees [*549] as a matter of law. Because the The Trust complains that the Smiths' failure to court of appeals concluded otherwise, we reverse its request a jury instruction on the Arthur Andersen factors judgment as to attorney's fees and remand that part of the waives their right to complain about the fee award. But case to the trial court for a new trial. TEX. R. APP. P. the jury's fee award is not at issue here. The court of 60.2(d). appeals awarded the full amount requested, despite the jury's rejection of a substantial portion of the damages Wallace B. Jefferson sought. Those fees, even though supported by Chief Justice uncontradicted testimony, may not be awarded by a court as a matter of law. Opinion Delivered: October 23, 2009 We have held that the Arthur Andersen factors apply Page 1

TONY GULLO MOTORS I, L.P. AND BRIEN GARCIA, PETITIONERS, v. NURY CHAPA, RESPONDENT

NO. 04-0961

212 S.W.3d 299; 2006 Tex. LEXIS 1301; 50 Tex. Sup. J. 278

October 19, 2005, Argued December 22, 2006, Opinion Delivered

SUBSEQUENT HISTORY: [**1] Released for JUSTICE HECHT, JUSTICE WAINWRIGHT, JUSTICE Publication February 23, 2007. GREEN, and JUSTICE WILLETT joined. JUSTICE Rehearing denied by Tony Gullo Motors I, L.P. v. Chapa, JOHNSON filed a concurring opinion. JUSTICE 2007 Tex. LEXIS 165 (Tex., Feb. 23, 2007) O'NEILL filed a dissenting opinion. JUSTICE MEDINA On remand at, Remanded by Chapa v. Tony Gullo did not participate in the decision. Motors I, L.P., 2007 Tex. App. LEXIS 5870 (Tex. App. Beaumont, July 26, 2007) OPINION BY: Scott Brister On remand at, Remanded by Chapa v. Tony Gullo Motors I, L.P., 2007 Tex. App. LEXIS 9543 (Tex. App. OPINION Beaumont, Dec. 6, 2007) [*303] Nury Chapa bought a Toyota Highlander PRIOR HISTORY: ON PETITION FOR REVIEW from Tony Gullo Motors for $ 30,207.38; they disagree FROM THE COURT OF APPEALS FOR THE NINTH what model of the car was involved. After a two-day trial, DISTRICT OF TEXAS. the six jurors answered 15 questions concerning breach of Chapa v. Tony Gullo Motors I, L.P., 2004 Tex. App. contract, fraud, and the DTPA 1 in Chapa's favor. They LEXIS 7751 (Tex. App. Beaumont, Aug. 26, 2004) also found a difference in value of the two models of $ 7,213, mental anguish damages of $ 21,639, exemplary damages of $ 250,000, and attorney's fees of $ 20,000. COUNSEL: For PETITIONER: The Honorable Craig T. Enoch, Ms. Melissa Anne Prentice, Mr. Alejandro Sin 1 See Texas Deceptive Trade Valdes, Ms. Roxanne T. L. Wilson, WINSTEAD Practices-Consumer Protection Act, TEX. BUS. & SECHREST & MINICK, P.C., Austin, TX; Mr. Joe COM. CODE §§ 17.41-.63 ("DTPA"). Michels, Jr., WINSTEAD SECHREST & MINICK, P.C., [**2] The trial court disregarded the mental anguish The Woodlands, TX; Mr. William T. Green, III, Houston, and exemplary awards on the ground that Chapa's only TX. claim was for breach of contract, and the fee award For RESPONDENT: Ms. Kristin Bays, Mr. J. Randal because Chapa had not segregated fees attributable to that Bays, BAYS & BAYS, Conroe, TX. claim alone. In a per curiam memorandum opinion, the Ninth Court of Appeals disagreed with both conclusions, JUDGES: JUSTICE BRISTER delivered the opinion of reinstating all the awards but reducing exemplary the Court, in which CHIEF JUSTICE JEFFERSON, damages to $ 125,000. Page 2 212 S.W.3d 299, *303; 2006 Tex. LEXIS 1301, **2; 50 Tex. Sup. J. 278

We agree that Chapa could assert her claim in 4 See Stewart Title Guar. Co. v. Aiello, 941 several forms, but disagree that she could recover in all of S.W.2d 68, 72, 40 Tex. Sup. Ct. J. 290 (Tex. 1997) them. Further, the court of appeals' judgment included (holding mental anguish and exemplary damages exemplary damages exceeding the bounds of unavailable for breach of contract). constitutional law and attorney's fees exceeding the 5 See New Amsterdam Cas. Co. v. Texas Indus., bounds of Texas law. Accordingly, we reverse and 414 S.W.2d 914, 915, 10 Tex. Sup. Ct. J. 357 (Tex. remand for further proceedings. 1967) (stating that "attorney's fees are not recoverable either in an action in tort or a suit I. Election of Remedies upon a contract unless provided by statute or by contract between the parties"); see also Neeley v. In entering judgment for Chapa on all her contract, Bankers Trust Co. of Texas, 757 F.2d 621, 633 fraud, and DTPA claims, the court of appeals violated the (5th Cir. 1985). one-satisfaction rule. "There can be but one recovery for 6 See TEX. BUS. & COM. CODE § 17.50(b)(1). one injury, and the fact that . . . there may be more than For acts committed intentionally, a consumer may one theory of liability[] does not modify this rule." 2 recover additional damages up to three times the amount of economic and mental anguish damages 2 Stewart Title Guar. Co. v. Sterling, 822 S.W.2d combined, see id.; with regard to the DTPA, 1, 8, 35 Tex. Sup. Ct. J. 206 (Tex. 1991). Chapa only requested and obtained a jury finding [**3] Chapa alleged only one injury -- delivery of a that Gullo Motor's violations were committed base-model Highlander rather than a Highlander Limited. knowingly. While she could certainly plead more than one theory of [**5] But as Chapa was the prevailing party, she is liability, she could not recover on more than one. 3 still entitled to judgment on the most favorable theory 3 See Boyce Iron Works, Inc. v. Sw. Bell Tel. supported by the pleadings, evidence, and verdict. 7 Gullo Co.,747 S.W.2d 785, 787, 31 Tex. Sup. Ct. J. 310 Motors does not challenge the jury's breach of contract or (Tex. 1988) ("When a party tries a case on economic damages findings in this Court. Accordingly, alternative theories of recovery and a jury returns the only question before us is whether Chapa is entitled to favorable findings on two or more theories, the anything more. party has a right to a judgment on the theory 7 See Gulf States Utils. Co. v. Low, 79 S.W.3d entitling him to the greatest or most favorable 561, 566, 45 Tex. Sup. Ct. J. 724, 45 Tex. Sup. Ct. relief."); see also TEX. BUS. & COM. CODE § J. 793 (Tex. 2002); Boyce Iron Works, 747 S.W.2d 17.43 (providing that "no recovery shall be at 787 (Tex. 1988). permitted under both this subchapter and another law of both damages and penalties for the same II. Mere Breach of Contract act or practice"); Gunn Infiniti, Inc. v. O'Byrne, 996 S.W.2d 854, 862 (Tex. 1999)(holding plaintiff Gullo Motors argues that Chapa's only claim is in must elect recovery under either DTPA or fraud contract, as the parties' only dispute is whether she after remand). contracted for a base-model Highlander or Highlander Limited. "An allegation of a mere breach of contract, [*304] For breach of contract, Chapa could recover without more, does not constitute a 'false, misleading or economic damages and attorney's fees, but [**4] not deceptive act' in violation of the DTPA." 8 Similarly, "the mental anguish or exemplary damages. 4 For fraud, she usual view is that mere breach of contract is not fraud and could recover economic damages, mental anguish, and that it may not be evidence of fraud." 9 exemplary damages, but not attorney's fees. 5 For a DTPA violation, she could recover economic damages, 8 Ashford Dev., Inc. v. US Life Real Estate Serv. mental anguish, and attorney's fees, but not additional Corp., 661 S.W.2d 933, 935, 27 Tex. Sup. Ct. J. damages beyond $ 21,639 (three times her economic 118 (Tex. 1983)(citations omitted). damages). 6 The court of appeals erred by simply [**6] awarding them all. 9 Thigpen v. Locke, 363 S.W.2d 247, 252, 6 Tex. Sup. Ct. J. 157 (Tex. 1962). Page 3 212 S.W.3d 299, *304; 2006 Tex. LEXIS 1301, **6; 50 Tex. Sup. J. 278

But Chapa alleged more than a mere breach of "failing to disclose information concerning goods contract; her complaint was not just that Gullo Motors or services which was known at the time of the failed to deliver a Highlander Limited, but that it never transaction if such failure to disclose such intended to do so. A contractual promise made with no information was intended to induce the consumer intention of performing may give rise to an action for into a transaction into which the consumer would fraudulent inducement. 10 The duty not to fraudulently not have entered had the information been procure a contract arises from the general obligations of disclosed"). law rather than the contract itself, and may be asserted in tort even if the only damages are economic. 11 [**8] Of course, Chapa was required not just to plead but to prove her claims. Proving that a party had no 10 See Formosa Plastics Corp. USA v. Presidio intention of performing at the time a contract was made is Eng'rs and Contractors, Inc., 960 S.W.2d 41, 46, not easy, as intent to defraud is not usually susceptible to 41 Tex. Sup. Ct. J. 289 (Tex. 1998)(quoting Crim direct proof. 16 Breach alone is no evidence that breach Truck & Tractor Co. v. Navistar Int'l Transp. was intended when the contract was originally made. 17 Corp., 823 S.W.2d 591, 597, 35 Tex. Sup. Ct. J. Similarly, denying that an alleged promise was ever made 342 (Tex. 1992)). is not legally sufficient evidence of fraudulent 11 inducement. 18 Usually, successful claims of fraudulent inducement have involved confessions by the defendant See id. at 46-47. or its agents of the requisite intent. 19

Gullo Motors argues that Chapa cannot bring a 16 See Spoljaric, 708 S.W.2d at 435. fraudulent inducement claim because she was not [**7] 17 See id. ("Failure to perform, standing alone, is promised a car she did not want, but one that she did. But no evidence of the promisor's intent not to a party may bring a fraudulent inducement [*305] claim perform when the promise was made."); Formosa even if the terms of the promise are later subsumed into a Plastics, 960 S.W.2d at 48; Schindler v. Austwell contract. 12 In all such cases, the liability of the defendant Farmers Co-op., 841 S.W.2d 853, 854, 36 Tex. on the contract does not absolve it from liability in tort Sup. Ct. J. 84 (Tex. 1992) (per curiam) (finding damages too. 13 failure to pay amount due was not fraud); Crim Truck, 823 S.W.2d at 597. 12 See id. at 47 (citing Graham v. Roder, 5 Tex. 18 See Miga v. Jensen, 96 S.W.3d 207, 210-11, 141, 149 (1849)). 46 Tex. Sup. Ct. J. 89 (Tex. 2002); T.O. Stanley 13 Boot Co., Inc. v. Bank of El Paso, 847 S.W.2d 218, 222, 36 Tex. Sup. Ct. J. 259 (Tex. 1992) See id.; Spoljaric v. Percival Tours, Inc., 708 (stating that denial of making promise was "a S.W.2d 432, 436, 29 Tex. Sup. Ct. J. 280 (Tex. factor" but "does not constitute evidence that the 1986). Bank never intended to perform its promise"); Similarly, while the failure to deliver a Highlander Spoljaric, 708 S.W.2d at 435 ("Failure to perform Limited would not alone violate the DTPA, 14 Chapa's . . . is a circumstance to be considered with other claim was that Gullo Motors represented she would get facts to establish intent."). But see Thigpen v. one model when in fact she was going to get another. Locke, 363 S.W.2d 247, 252, 6 Tex. Sup. Ct. J. While failure to comply would violate only the contract, 157 (Tex. 1962) ("[S]ubsequent breach is not the initial misrepresentation violates the DTPA. 15 evidence that may be considered in determining whether or not there was fraud in the original 14 See Crawford v. Ace Sign, Inc., 917 S.W.2d transaction."). 12, 14, 39 Tex. Sup. Ct. J. 296 (Tex. 1996). [**9] 15 See TEX. BUS. & COM. CODE §§ 19 See, e.g., Formosa Plastics, 960 S.W.2d at 48 17.46(b)(7) (defining deceptive acts to include (noting that defendant's civil department director "representing that . . . goods are of a particular admitted that defendant had acted deceptively and style or model, if they are of another"), had no intention of performing a key contractual 17.46(b)(24)(defining deceptive acts to include promise at the time it was made); Spoljaric, 708 Page 4 212 S.W.3d 299, *305; 2006 Tex. LEXIS 1301, **9; 50 Tex. Sup. J. 278

S.W.2d at 434-35 (noting that defendant denied he 23 Chapa also argues that Gullo Motors' ever approved a bonus contract, but corporate agreement after the dispute arose to install certain secretary testified that he did). features of a Highlander Limited in her base-model is some evidence of its earlier But while breach alone is no evidence of fraudulent fraudulent intent. We disagree; if efforts to satisfy intent, breach combined with "slight circumstantial a consumer after a dispute arises are some evidence" of fraud is enough to support a verdict for evidence of fraud, sellers will be loathe to make fraudulent inducement. 20 We believe Chapa met that any. Cf. PPG Indus., Inc. v. JMB/Houston Ctrs. standard here. Partners Ltd. P'ship, 146 S.W.3d 79, 95, 47 Tex. Sup. Ct. J. 822 (Tex. 2004)("We should encourage 20 Spoljaric, 708 S.W.2d at 435. sellers to attempt repairs; tolling limitations every time they do might discourage them from doing At trial, Chapa testified that she signed a contract so at all."). listing a Highlander Limited, but that Gullo Motors personnel "snatched" the contract from her after she [**12] We recognize the need to keep tort law from signed it, and must have destroyed it later. She also overwhelming contract law, so that private agreements testified that the signatures [**10] on at least four are not subject to readjustment by judges and juries. 24 documents were forged, and that [*306] some were But we long ago abandoned the position that procuring a forgeries of her deceased husband's signature rather than contract by fraud was simply another contract dispute. 25 her own. In light of the favorable verdict, we must Because Chapa proved more than mere breach of contract assume the jury credited this testimony. 21 here, we hold she was entitled to assert fraud and DTPA claims as well. 21 See City of Keller v. Wilson, 168 S.W.3d 802, 819-20, 48 Tex. Sup. Ct. J. 848 (Tex. 2005). 24 See, e.g., William Powers, Jr., The Availability of Tort Remedies for Breach of Spoliation of evidence normally supports an Contract: Border Wars, 72 TEX. L. REV. 1209 inference only that the evidence was unfavorable, 22 not (1994). that it was created ab initio with fraudulent intent. But as 25 See Formosa Plastics, 960 S.W.2d at 46-47. the evidence here was part of the original contracting process, it provides some circumstantial evidence of III. Exemplary Damages fraud in that process. The jury found Gullo Motors had committed 22 See Trevino v. Ortega, 969 S.W.2d 950, 953, deceptive acts knowingly and found clear and convincing 41 Tex. Sup. Ct. J. 907 (Tex. 1998)(holding evidence that it had committed fraud. Beyond arguing spoliation best addressed not by independent that Chapa can only sue in contract, Gullo Motors does cause of action but by inference that evidence was not challenge either finding. As we have rejected that unfavorable). argument, Chapa is entitled under the verdict to exemplary damages for either fraud or violation of the Further, the only contract introduced at trial listed [**13] DTPA. 26 [**11] the car sold as a "2002 Toyota"; although Gullo Motors prepared the contract, it offered no explanation 26 See TEX. CIV. PRAC. & REM. CODE § why the box for indicating the model was left blank. 41.003(a) (providing for recovery of exemplary Although the contract listed a vehicle identification damages if claimant proves by clear and number that matched the base-model Chapa ultimately convincing evidence that harm resulted from received, there was evidence that Gullo Motors did not fraud); TEX. BUS. & COM. CODE § contract for that car until several days after Chapa signed 17.50(b)(1)(providing for recovery of up to three the contract, and thus must have added it later. 23 And times economic damages if conduct violating when Chapa's first attorney offered to return the car for a DTPA was committed knowingly). refund, Gullo Motors refused on the ground that it had already been titled, although evidence at trial suggested But both parties challenge the court of appeals' that did not occur until several days later. judgment reinstating exemplary damages but reducing Page 5 212 S.W.3d 299, *306; 2006 Tex. LEXIS 1301, **13; 50 Tex. Sup. J. 278

them to $ 125,000 -- Gullo Motors because the 436-37, 121 S. Ct. 1678, 149 L. Ed. 2d 674 reinstatement went too far, and Chapa because it did not (2001)(requiring de novo appellate review of go far enough. Although the jury assessed exemplary exemplary damages because "the level of punitive damages for both fraud [*307] and deceptive acts at $ damages is not really a 'fact' 'tried ' by the 250,000, the DTPA caps those damages at $ 21,639 jury")(citation omitted). (three times Chapa's economic loss of $ 7,213), 27 while 31 See Bentley v. Bunton, 94 S.W.3d 561, 607, the fraud award is capped at $ 200,000. 28 Accordingly, 45 Tex. Sup. Ct. J. 1172 (Tex. 2002) (finding the court of appeals' opinion and the parties' briefs exemplary damages were not constitutionally address only whether the exemplary damages were excessive, but remanding for reassessment in light properly awarded based on fraud. of reduced mental anguish award); Malone, 972 S.W.2d at 45-48 (finding exemplary damages 27 TEX. BUS. & COM. CODE § 17.50(b)(1). were not constitutionally excessive). The same statutory provision limits additional 32 Honda Motor Co., Ltd. v. Oberg , 512 U.S. damages to three times economic and mental 415, 418, 426-27, 114 S. Ct. 2331, 129 L. Ed. 2d anguish damages if conduct is committed 336 (1994) ("An amendment to the Oregon intentionally, id., but Chapa only requested a jury Constitution prohibits judicial review of the finding whether Gullo Motors' committed amount of punitive damages awarded by a jury deceptive acts knowingly. 'unless the court can affirmatively say there is no [**14] evidence to support the verdict.' The question 28 TEX. CIV. PRAC. & REM. CODE § presented is whether that prohibition is consistent 41.008(b)(capping exemplary damages at the with the Due Process Clause of the Fourteenth greater of (1) noneconomic damages plus two Amendment. We hold that it is not."). times economic damages, or (2) $ 200,000). [**16] Second, Chapa claims that by authorizing up A to $ 200,000 in exemplary damages, the Legislature necessarily rendered that amount constitutionally As an initial matter, Chapa asserts that three grounds permissible. But while "state law governs the amount preclude our constitutional review of the exemplary properly awarded as punitive damages," that amount is damages award. First, she argues this Court lacks still "subject to an ultimate federal constitutional check jurisdiction to consider whether exemplary damages are for exorbitancy." 33 constitutionally excessive. While the excessiveness of damages as a factual matter is final in the Texas courts of 33 Gasperini v. Ctr. for Humanities, Inc., 518 appeals, 29 the constitutionality of exemplary damages is U.S. 415, 431 n.12, 116 S. Ct. 2211, 135 L. Ed. 2d a legal question for the court. 30 We have conducted such 659 (1996); Malone, 972 S.W.2d at 45 ("[E]ven if analyses before. 31 Moreover, the Supreme Court of the an assessment of punitive damages is not deemed United States has found unconstitutional a state excessive under governing state law, it may constitutional provision limiting appellate scrutiny of violate a party's substantive due process right to exemplary damages to no-evidence review. 32 Only by protection from 'grossly excessive' punitive adhering to our practice of reviewing exemplary damages damages awards."). for constitutional (rather than factual) excessiveness can we avoid a similar constitutional conflict. Third, Chapa argues that she is entitled to the jury's entire exemplary damage award because the trial court 29 See Alamo Nat'l. Bank v. Kraus, 616 S.W.2d complied with the procedural protections required by the 908, 910, 24 Tex. Sup. Ct. J. 343 (Tex. 1981). Due Process Clause. But the constitutional limitations on [**15] such awards are substantive as well as procedural. 34 30 [*308] Even if the procedural processes [**17] were perfect, "[t]o the extent an award is grossly excessive, it See Owens-Corning Fiberglas Corp. v. furthers no legitimate purpose and constitutes an arbitrary Malone, 972 S.W.2d 35, 43, 45, 41 Tex. Sup. Ct. deprivation of property." 35 J. 877 (Tex. 1998); see also Cooper Indus., Inc. v. Leatherman Tool Group, Inc., 532 U.S. 424, 34 State Farm Mut. Auto. Ins. Co. v. Campbell, Page 6 212 S.W.3d 299, *308; 2006 Tex. LEXIS 1301, **17; 50 Tex. Sup. J. 278

538 U.S. 408, 418, 123 S. Ct. 1513, 155 L. Ed. 2d financial ruin."). 585 (2003); Cooper Indus.,532 U.S. at 433; 40 Campbell, 538 U.S. at 419. Oberg, 512 U.S. at 420 ("Our recent cases have recognized that the Constitution imposes a Touching the second guidepost, the Supreme Court substantive limit on the size of punitive damages has declined to adopt a bright-line ratio between actual awards."); TXO Prod. Corp. v. Alliance Res. and exemplary damages, but has stated that "few awards Corp., 509 U.S. 443, 453-54, 113 S. Ct. 2711, 125 exceeding a single-digit ratio . . . will satisfy due L. Ed. 2d 366 (1993). process." 41 Further, the Court has pointed to early 35 Campbell, 538 U.S. at 417. statutes authorizing awards of double, treble, or quadruple damages as support for the conclusion that B "four times the amount of compensatory damages might be close to the line of constitutional impropriety." 42 We review not whether the exemplary damage award Here, the court of appeals' award exceeds four times is exorbitant (as the dissent says), but whether it is Chapa's total compensatory award, and is more than 17 constitutional. In reviewing the amount of an exemplary times her economic damages. Further, the [**20] jury's damage award for constitutionality, we have been award of precisely $ 21,639 for mental anguish -- exactly directed to consider three "guideposts": (1) the nature of three times her economic damages of $ 7,213 -- supports the defendant's conduct, (2) the ratio between exemplary the Supreme Court's observation that emotional damages and compensatory damages, and (3) the size [**18] of themselves often include a punitive element. 43 The court civil penalties in comparable cases. 36 of appeals' judgment [*309] at least pushes against, if not exceeds, the constitutional limits. 36 Id. at 418 (citing BMW of N. Am. v. Gore, 517 U.S. 559, 575, 116 S. Ct. 1589, 134 L. Ed. 2d 41 Id. at 425; Gore, 517 U.S. at 581-82. 809 (1996)). 42 Campbell, 538 U.S. at 425. 43 See id. at 426; see also RESTATEMENT The reprehensibility of Gullo Motors' conduct (the (SECOND) OF TORTS § 908, cmt. c, at 466 most important of the guideposts) 37 depends in turn on (1977)("In many cases in which compensatory five more factors, all but one of which weigh against damages include an amount for emotional exemplary damages here. 38 Gullo Motors' actions did distress, such as humiliation or indignation not cause physical rather than economic harm, did not aroused by the defendant's act, there is no clear threaten the health or safety of others, and did not involve line of demarcation between punishment and repeated acts rather than an isolated incident. Chapa compensation and a verdict for a specified amount claims she was financially vulnerable, but the only harm frequently includes elements of both."). she alleged (that her SUV did not have Michelin tires and lumbar-support seats) did not threaten financial ruin. 39 Finally, we must compare the exemplary damages Only the last factor, that the conduct at issue was awarded here to civil penalties authorized in comparable deceitful rather than accidental, points in Chapa's favor. cases. The [**21] Texas Occupations Code provides for The existence of a single factor "may not be sufficient to a maximum civil penalty of $ 10,000 for statutory or sustain a punitive damages award." 40 regulatory violations by motor vehicle dealers. 44 Similarly, the attorney general could collect not more 37 Id. at 419 (quoting Gore, 517 U.S. at 575). than $ 20,000 as a civil penalty under the DTPA in a case [**19] like this. 45 These are precisely the kinds of penalties for 38 See id. comparable misconduct the Supreme Court has used -- 39 Cf. Transp. Ins. Co. v. Moriel, 879 S.W.2d 10, and says we must use -- in our constitutional analysis. 46 24, 37 Tex. Sup. Ct. J. 883 (Tex. 1994) ("[A]n insurance carrier's refusal to pay a claim cannot 44 TEX. OCC. CODE § 2301.801. justify punishment unless the insurer was actually 45 See TEX. BUS. & COM. CODE § 17.47(c). aware that its action would probably result in 46 See Campbell, 538 U.S. at 428 (comparing extraordinary harm not ordinarily associated with award in bad-faith insurance case to civil penalty breach of contract or bad faith denial of a of $ 10,000 available under Utah law); Cooper claim-such as death, grievous physical injury, or Indus., Inc. v. Leatherman Tool Group, Inc., 532 Page 7 212 S.W.3d 299, *309; 2006 Tex. LEXIS 1301, **21; 50 Tex. Sup. J. 278

U.S. 424, 442-43, 121 S. Ct. 1678, 149 L. Ed. 2d [**24] 674 (2001) (comparing award in misappropriation 50 Campbell, 538 U.S. at 426. case to civil penalty of $ 25,000 available under 51 See S.W.3d at . Oregon's Unlawful Trade Practices Act). 52 Campbell, 538 U.S. at 425. 53 S.W.3d at . Chapa argues we should consider the possibility 54 Gore, 517 U.S. at 575 (emphasis added); [**22] that Gullo Motors might be found criminally Campbell, 538 U.S. at 428; Cooper Indus., Inc. v. liable or lose its license for what happened here. But she Leatherman Tool Group, Inc., 532 U.S. 424, provides no proof that such a sanction has ever been 442-43, 121 S. Ct. 1678, 149 L. Ed. 2d 674 awarded in a case like this. "[T]he remote possibility of a (2001). criminal sanction does not automatically sustain a 55 See S.W.3d at . The case cited by the punitive damages award." 47 dissent does not support its analysis. See Gore, 517 U.S. at 583-84 (comparing award in fraud 47 Campbell, 538 U.S. at 428 ("Great care must case to maximum civil penalty of $ 2,000 be taken to avoid use of the civil process to assess available under Alabama's Deceptive Trade criminal penalties that can be imposed only after Practices Act). the heightened protections of a criminal trial have 56 Honda Motor Co., Ltd. v. Oberg, 512 U.S. been observed, including, of course, its higher 415, 432, 114 S. Ct. 2331, 129 L. Ed. 2d 336 standards of proof. Punitive damages are not a (1994). substitute for the criminal process. . ."). While finding the jury verdict of $ 250,000 The dissent reaches a different conclusion only by constitutionally excessive, the court of appeals gave no changing the constitutional standards. The Supreme explanation for its award of half that amount. Exemplary Court says "repeated conduct" refers to recidivism; 48 the damages are not susceptible to precise calculation, but dissent says it means reiterating a single this is still five to ten times [**25] more than comparable misrepresentation to a single consumer. 49 The Supreme civil penalties, or what Chapa could recover under the Court says $ 1,000,000 in emotional anguish does not consumer-friendly DTPA. 57 Pushing exemplary mean there are "physical injuries"; 50 the dissent [**23] damages to the absolute constitutional limit in a case like says $ 21,000 in emotional anguish is enough to conclude this leaves no room for greater punishment in cases otherwise. 51 The Supreme Court says multiplying involving death, grievous physical injury, financial ruin, damages by a factor of 4 is "close to the line of or actions that endanger a large segment of the public. 58 constitutional impropriety"; 52 the dissent says using a On this record, Gullo Motors' conduct merited exemplary factor of 4.33 is unworthy of our review. 53 The Supreme damages, but the amount assessed by the court of appeals Court says we must look to the civil penalties "imposed exceeds constitutional limits. in comparable cases"; 54 the dissent says we should look to the general $ 200,000 cap applicable to all exemplary 57 Cf. PPG Indus., Inc. v. JMB/Houston Ctrs. cases regardless of their nature. 55 The Supreme Court Partners Ltd. P'ship, 146 S.W.3d 79, 89, 47 Tex. says exemplary damages "pose an acute danger of [*310] Sup. Ct. J. 822 (Tex. 2004) ("Frequently, the arbitrary deprivation of property"; 56 the dissent DTPA is pleaded not because it is the only perceives no danger in pushing against the constitutional remedy, but because it is the most favorable limits in all fraud cases, as the only factor present here remedy.") (italics in original). (deceitful conduct) is present in every one. 58 See Transp. Ins. Co. v. Moriel, 879 S.W.2d 10, 24, 37 Tex. Sup. Ct. J. 883 (Tex. 1994). 48 See, e.g., BMW of N. Am. v. Gore, 517 U.S. 559, 577, 116 S. Ct. 1589, 134 L. Ed. 2d 809 C (1996) ("Our holdings that a recidivist may be punished more severely than a first offender The Texas Rules of Appellate Procedure provide for recognize that repeated misconduct is more remittitur orders by the courts of appeals, 59 but make no reprehensible than an individual instance of similar provision for this Court. While this Court may malfeasance."). [**26] review the constitutionality of an exemplary 49 See S.W.3d at . damages award, the amount of a suggested remittitur is in Page 8 212 S.W.3d 299, *310; 2006 Tex. LEXIS 1301, **26; 50 Tex. Sup. J. 278

the first instance a matter for the courts of appeals. Appraisal Dist. v. Seven Inv. Co., 835 S.W.2d 75, 77, 35 Tex. Sup. Ct. J. 856 (Tex. 1992); New 59 TEX. R. APP. P. 46. Amsterdam Cas. Co. v. Texas Indus., Inc., 414 S.W.2d 914, 915, 10 Tex. Sup. Ct. J. 357 (Tex. Thus, for example, when our constitutional review in 1967); Mundy v. Knutson Constr. Co., 156 Tex. Bentley v. Bunton found evidentiary support for some 211, 294 S.W.2d 371, 373 (Tex. 1956). amount of mental anguish damages but not for the $ 7 64 See, e.g., Buckhannon Bd. and Care Home, million awarded, we remanded to the court of appeals to Inc. v. West Virginia Dept. of Health and Human determine an appropriate remittitur. 60 When the case Res., 532 U.S. 598, 602, 121 S. Ct. 1835, 149 L. returned to us after remittitur but without any Ed. 2d 855 (2001) ("In the United States, parties reassessment of exemplary damages, we returned it again are ordinarily required to bear their own attorney's to the court of appeals to conduct a constitutional analysis fees-the prevailing party is not entitled to collect of those damages in the first instance. 61 from the loser. Under this 'American Rule,'" we follow "a general practice of not awarding fees to 60 94 S.W.3d 561, 605-08, 45 Tex. Sup. Ct. J. a prevailing party absent explicit statutory 1172 (Tex. 2002). authority.") (internal citations omitted). 61 See Bunton v. Bentley, 153 S.W.3d 50, 53-54, 65 Travelers Indem. Co. of Connecticut v. 48 Tex. Sup. Ct. J. 197 (Tex. 2004) (per curiam). Mayfield, 923 S.W.2d 590, 594, 39 Tex. Sup. Ct. Accordingly, [**27] having found that the amount J. 678 (Tex. 1996). awarded by the court of appeals exceeds the [**29] constitutional limitations on exemplary damages, we 66 See Stewart Title Guar. Co. v. Aiello, 941 remand to that court for determining a constitutionally S.W.2d 68, 73, 40 Tex. Sup. Ct. J. 290 (Tex. permissible remittitur. 1997); Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1, 10, 35 Tex. Sup. Ct. J. 206 (Tex. 1991); IV. Attorney's Fees Matthews v. Candlewood Builders, Inc., 685 S.W.2d 649, 650, 28 Tex. Sup. Ct. J. 284 (Tex. The jury found a reasonable and necessary attorney's 1985); Int'l Sec. Life Ins. Co. v. Finck, 496 S.W.2d fee "in this case" was $ 20,000. 62 During and after trial, 544, 547, 16 Tex. Sup. Ct. J. 381 (Tex. 1973). Gullo Motors objected that fees were not recoverable for Chapa's fraud claim, and thus had to be excluded. We We recognized an exception to this historical agree, and thus reverse and remand the fee issue for a practice in 1991 that has since threatened to swallow the new trial. rule. In Stewart Title Guaranty Co. v. Sterling, we affirmed the general rule: "the plaintiff is required to 62 The figure represented fees only through the show that [attorney's] fees were incurred while suing the trial level; Chapa tendered no evidence or jury defendant sought to be charged with the fees on a claim question on appellate fees. which allows recovery of such fees." 67 But we then added: For more than a century, Texas law has not allowed recovery of attorney's fees unless authorized by statute or A recognized exception to this duty to contract. 63 This rule is so venerable and [*311] segregate arises when the attorney's fees ubiquitous in American courts it is known as "the rendered are in connection with claims American Rule." 64 Absent a contract or statute, trial arising out of the same transaction and are courts do not have inherent authority to require a losing so interrelated that their "prosecution or party to pay the prevailing party's fees. 65 As a result, defense entails proof or denial of [**28] fee claimants have always been required to essentially the same facts." Flint & Assoc. segregate fees between claims for which they are v. Intercontinental Pipe & Steel, Inc., 739 recoverable and claims for which they are not. 66 S.W.2d 622, 624-25 (Tex. App.-Dallas 1987, writ denied) [**30] . Therefore, 63 See, e.g., Gulf States Utils. Co. v. Low, 79 when the causes of action involved in the S.W.3d 561, 567, 45 Tex. Sup. Ct. J. 724, 45 Tex. suit are dependent upon the same set of Sup. Ct. J. 793 (Tex. 2002); Dallas Cent. Page 9 212 S.W.3d 299, *311; 2006 Tex. LEXIS 1301, **30; 50 Tex. Sup. J. 278

facts or circumstances and thus are sought to invoke it. Moreover, as the details of an "interwined to the point of being attorney's work are shrouded in the attorney-client inseparable," the party suing for attorney's privilege, it may be hard for anyone else to tell whether fees may recover the entire amount the work on [**32] several claims truly was inextricably covering all claims. Gill Sav. Ass'n v. intertwined. Chair King, Inc., 783 S.W.2d 674, 680 (Tex. App.-Houston [14th Dist.] 1989), 72 A Westlaw search shows more than one modified, 797 S.W.2d 31, 34 Tex. Sup. Ct. hundred published and unpublished opinions J. 42 (Tex. 1990)(remanded to the trial addressing the Sterling exception since 1991. See, court for reexamination of attorney's fee e.g., Ski River Dev., Inc. v. McCalla, 167 S.W.3d award). 68 121, 143 (Tex. App.-Waco 2005, pet. denied); Marrs and Smith P'ship v. D.K. Boyd Oil and Gas As the only two authorities cited in this passage suggest, Co., 2005 Tex. App. LEXIS 9691, 2005 WL this exception had not been recognized by this Court 3073794, *15 (Tex. App.-El Paso 2005, pet. before, but only by a few courts of appeals beginning denied); Shadow Dance Ranch P'ship, Ltd. v. about ten years earlier. 69 In fact, we did not even apply Weiner, 2005 Tex. App. LEXIS 10131, 2005 WL the exception in Sterling (as the fees there could be 3295664, *9 (Tex. App.-San Antonio 2005, no pet. segregated), 70 and appear to have applied it only once h.); Royal Maccabees Life Ins. Co. v. James, 146 since. 71 S.W.3d 340, 353 (Tex. App.-Dallas 2004, pet. denied); Aetna Cas. & Sur. v. Wild, 944 S.W.2d 67 822 S.W.2d at 10. 37, 40 (Tex. App.-Amarillo 1997, writ denied); 68 Id. at 11-12. Panizo v. Young Men's Christian Ass'n of the 69 See, e.g., Village Mobile Homes, Inc. v. Greater Houston Area, 938 S.W.2d 163, 170 (Tex. Porter, 716 S.W.2d 543, 552 (Tex. App.-Austin App.-Houston [1st Dist.] 1996, no writ); Kenneth 1986, writ ref'd n.r.e.); de La Fuente v. Home Sav. H. Hughes Interests, Inc. v. Westrup, 879 S.W.2d Ass'n, 669 S.W.2d 137, 146 (Tex. App.-Corpus 229, 233 (Tex. App.-Houston [1st Dist.] 1994, Christi 1984, no writ); First Wichita Nat'l Bank v. writ denied). Wood, 632 S.W.2d 210, 215 (Tex. App.-Fort Worth 1982, no writ); Wilkins v. Bain, 615 S.W.2d [**33] The exception has also been hard to apply 314, 316 (Tex. Civ. App.-Dallas 1981, no writ). consistently. The courts of appeals have disagreed about [**31] what makes two claims inextricably intertwined -- some 70 See Sterling, 822 S.W.2d at 12. focusing on the underlying facts, 73 others on the 71 See Aiello, 941 S.W.2d at 73. In Am. Nat'l elements that must be proved, 74 and others on some Petroleum Co. v. Transcon. Gas Pipe Line Corp., combination of the two. 75 Some do not require testimony this Court held that the court of appeals erred in that claims are intertwined, 76 while others do. 77 When requiring segregation of fees between a valid faced with fraud and breach of contract claims like those contract and an invalid tortious interference claim, here, some have held the claims inextricably intertwined, holding instead that both claims were valid. 798 78 and others just the opposite. 79 S.W.2d 274, 280, 34 Tex. Sup. Ct. J. 20 (Tex. 73 See, e.g., Rio Grande Valley Gas Co. v. City 1990). We did not address the alternative basis for of Edinburg, 59 S.W.3d 199, 224 (Tex. the court of appeals' ruling -- that attorney's fees App.-Corpus Christi 2000) aff'd in part, rev'd in are not recoverable in a tort action. See part sub nom. Southern Union Co. v. City of Transcontinental Gas Pipe Line Corp., 763 Edinburg, 129 S.W.3d 74, 47 Tex. Sup. Ct. J. 60 S.W.2d 809, 823 (Tex. App.-Texarkana 1988). (Tex. 2003); Great Am. Ins. Co. v. N. Austin Mun. [*312] But the courts of appeals have been flooded Util. Dist. No. 1, 902 S.W.2d 488, 505 (Tex. with claims that recoverable and unrecoverable fees are App.-Austin 1993) aff'd in part, rev'd in part, 908 inextricably intertwined. 72 As the exception can make all S.W.2d 415, 38 Tex. Sup. Ct. J. 817 (Tex. 1995). fees recoverable (even if Texas law has long said they are 74 See, e.g., Z.A.O., Inc. v. Yarbrough Drive Ctr. not), it is no surprise that more and more claimants have Joint Venture, 50 S.W.3d 531, 550-51 (Tex. Page 10 212 S.W.3d 299, *312; 2006 Tex. LEXIS 1301, **33; 50 Tex. Sup. J. 278

App.-El Paso 2001, no pet.); AU Pharm., Inc. v. pet. denied); Pacesetter Pools, Inc. v. Pierce Boston, 986 S.W.2d 331, 337 (Tex. Homes, Inc., 86 S.W.3d 827, 833 (Tex. App.-Texarkana 1999, no pet.). App.-Austin 2002, no pet.); Aetna Cas. & Sur. v. [**34] Wild, 944 S.W.2d 37, 41 (Tex. App.-Amarillo 75 See, e.g., Air Routing Int'l. Corp. (Canada) v. 1997, writ denied). But see AU Pharm., Inc. v. Britannia Airways, Ltd., 150 S.W.3d 682, 693 Boston, 986 S.W.2d 331, 337 (Tex. (Tex. App.-Houston [14th Dist.] 2004, no pet.). App.-Texarkana 1999, no pet.) (applying abuse of 76 See id. discretion review). 77 See Royal Maccabees, 146 S.W.3d at 353. 78 See, e.g., Nat'l Gas Clearinghouse v. Midgard [**36] This case illustrates several of these Energy Co., 113 S.W.3d 400, 417 (Tex. difficulties. The court of appeals held that Chapa was not App.-Amarillo 2003, pet. denied); W. Beach required to segregate fees (and thus could recover 100 Marina, Ltd. v. Erdeljac, 94 S.W.3d 248, 268 percent of them) because she "was required to prove (Tex. App.-Austin 2002, no pet.); Pegasus Energy essentially the same facts in pursuing each of her three Group, Inc. v. Cheyenne Petroleum Co., 3 S.W.3d causes of action." But when Chapa's attorneys were 112, 131 (Tex. App.-Corpus Christi 1999, pet. drafting her pleadings or the jury charge relating to fraud, denied). there is no question those fees were not recoverable. Nor 79 See, e.g., Young v. Neatherlin, 102 S.W.3d does Texas law permit them to be compensated for 415, 421 (Tex. App.-Houston [14th Dist.] 2003, preparing and presenting evidence regarding the no pet.); Panizo v. Young Men's Christian Ass'n, defendant's net worth. 938 S.W.2d 163, 171 (Tex. App.-Houston [1st Further, the effort to recover 100 percent of their fees Dist.] 1996, no writ); S. Concrete Co. v. Metrotec has required Chapa's attorneys to take a position Fin., 775 S.W.2d 446, 450-51 (Tex.App.-Dallas inconsistent with her underlying claims. As noted above, 1989, no writ). Chapa has insisted (and we have agreed) that her claims As Sterling suggests the need to segregate fees is a were more than a mere breach of contract - they could be question of law, 80 the courts of appeals have generally asserted in fraud. But when it came time to segregate [**35] (though not always) applied a de novo standard of fees, her attorneys testified that their work on the fraud review. 81 That standard, of course, gives no [*313] claim could not possibly be distinguished from that on deference to the factual determinations of the trial judge the contract and DTPA claims. Having prevailed in her or the jury. But the fees necessary to prove particular argument that the claims are distinct, it is hard to see how claims often turn on such facts - how hard something was she can also claim they are inextricably intertwined. to discover and prove, how strongly it supported It is certainly true that Chapa's [**37] fraud, particular inferences or conclusions, how much contract, and DTPA claims were all "dependent upon the difference it might make to the verdict, and a host of same set of facts or circumstances," 82 but that does not other details that include judgment and credibility mean they all required the same research, discovery, questions about who had to do what and what it was proof, or legal expertise. Nor are unrecoverable fees worth. Given all these details, it may often be impossible rendered recoverable merely because they are nominal; to state as a matter of law the extent to which certain there is no such exception in any contract, statute, or "the claims can or cannot be segregated; the issue is more a American Rule." To the extent Sterling suggested that a mixed question of law and fact for the jury. common set of underlying facts necessarily made all 80 See Stewart Title Guar. Co. v. Sterling, 822 claims arising therefrom "inseparable" and all legal fees S.W.2d 1, 12, 35 Tex. Sup. Ct. J. 206 (Tex. 1991) recoverable, it went too far. ("Following a review of the record, we conclude 82 Sterling, 822 S.W.2d at 11. that the attorney's fees are capable of segregation."). But Sterling was certainly correct that many if not 81 See, e.g., Air Routing Int'l. Corp., 150 S.W.3d most legal fees in such cases cannot and need not be at 688; Flagship Hotel, Ltd. v. City of Galveston, precisely allocated to one claim or the other. Many of the 117 S.W.3d 552, 565 (Tex. App.-Texarkana 2003, services involved in preparing a contract or DTPA claim Page 11 212 S.W.3d 299, *313; 2006 Tex. LEXIS 1301, **37; 50 Tex. Sup. J. 278

for trial must still be incurred if tort claims are appended a rough percent of the amount attributable to the to it; adding the latter claims does not render the former breach of contract claim. Schenck v. Ebby services unrecoverable. Requests for standard Halliday Real Estate, Inc., 803 S.W.2d 361, 369 disclosures, proof of background facts, depositions (Tex. App.-Fort Worth 1990, no writ); accord, [**38] of the primary actors, discovery motions and Bradbury v. Scott, 788 S.W.2d 31, 40 (Tex. hearings, voir dire of the jury, and a host of other services App.-Houston [1st Dist.] 1989, writ denied)."). may be necessary whether a claim is filed alone or with others. To the extent such services would have been [**40] There may, of course, be some disputes incurred on a recoverable claim alone, they are not about fees that a trial or appellate court should decide as a disallowed simply because they do double service. matter of law. For example, to prevail on a contract claim a party must overcome any and all affirmative defenses Accordingly, we reaffirm the rule that if any (such as limitations, res judicata, or prior material attorney's fees relate solely to a claim for which such fees breach), and the opposing party who raises them should are unrecoverable, a claimant must segregate recoverable not be allowed to suggest to the jury that overcoming from unrecoverable fees. Intertwined facts do not make those defenses was unnecessary. But when, as here, it tort fees recoverable; it is only when discrete legal cannot be denied that at least some of the attorney's fees services advance both a recoverable and unrecoverable are attributable only to claims for which fees are not [*314] claim that they are so intertwined that they need recoverable, segregation of fees ought to be required and not be segregated. We modify Sterling to that extent. the jury ought to decide the rest.

This standard does not require more precise proof for Chapa's failure to segregate her attorney's fees does attorney's fees than for any other claims or expenses. not mean she cannot recovery any. Unsegregated Here, Chapa's attorneys did not have to keep separate attorney's fees for the entire case are some evidence of time records when they drafted the fraud, contract, or what the segregated amount should be. 84 We have DTPA paragraphs of her petition; an opinion would have applied this same rule for lost profits, medical expenses, sufficed stating that, for example, 95 percent of their and attorney's fees -- an unsegregated damages award drafting time would have been necessary even if there requires a remand. 85 Accordingly, remand is required. had been no fraud claim. 83 The court of appeals could then [**39] have applied standard factual and legal 84 See Sterling, 822 S.W.2d at 12. sufficiency review to the jury's verdict based on that 85 See Minnesota Mining and Mfg. Co. v. evidence. Nishika Ltd., 953 S.W.2d 733, 739, 41 Tex. Sup. Ct. J. 14 (Tex. 1997) (lost profits); Texarkana 83 See, e.g., Stewart Title Guar. Co. v. Aiello, Mem'l Hosp., Inc. v. Murdock, 946 S.W.2d 836, 941 S.W.2d 68, 73, 40 Tex. Sup. Ct. J. 290 (Tex. 840-41, 40 Tex. Sup. Ct. J. 513 (Tex. 1997) 1997) (noting that claimant's attorney "testified (medical expenses); Sterling, 822 S.W.2d at 11-12 that approximately twenty-percent of his time and (attorney's fees). fifteen-percent of his paralegal's time concerned issues predating the agreed judgment"); Med. [**41] V. Conclusion Specialist Group, P.A. v. Radiology Assocs., Because the jury found in Chapa's favor on all her L.L.P., 171 S.W.3d 727, 738 (Tex. App.-Corpus claims, she is entitled to recover on the most favorable Christi 2005, pet. denied) ("In his affidavit, theory the verdict would support. But she is not required Radiology Associates' counsel. . . testified that his to make that election until she knows her choices. 86 fees for the defense of the case totaled $ 460,087.00, and approximately forty percent of 86 The dissent suggests Chapa must elect these fees were directly related to Saratoga's between her fraud, contract, and DTPA claims antitrust claims."); Flagship Hotel, 117 S.W.3d at before knowing what amount of attorney's fees 566 n.7 ("Flagship argues that the segregation she might recover. This would defeat the principle standard is difficult to meet. We disagree and note that she is entitled to recover on the most that segregated attorney's fees can be established favorable theory the verdict supports. See n.7, with evidence of unsegregated attorney's fees and supra. Page 12 212 S.W.3d 299, *314; 2006 Tex. LEXIS 1301, **41; 50 Tex. Sup. J. 278

Under either fraud or the DTPA, Chapa is entitled to $ 7,213 in economic damages and $ 21,639, in mental We decline again to impose a bright-line anguish. The court of appeals must reassess her ratio which a punitive damages award exemplary damages, and a jury must reassess her cannot exceed. Our jurisprudence and the attorney's fees. There is no rule establishing [*315] principles it has now established which should go first, but for practical reasons we demonstrate, however, that, in practice, remand first to the court of appeals. At the trial level, the few awards exceeding a single-digit ratio most Chapa could recover under the DTPA would be between punitive and compensatory additional damages of $ 21,639 (three times her damages, to a significant degree, will economic damages) plus attorney's [**42] fees of satisfy due process. In Haslip, in something less than $ 20,000 (depending on the new upholding a punitive damages award, we verdict). If the court of appeals' reassessment of concluded that an award of more than four exemplary damages for fraud exceeds this amount, Chapa times the amount of compensatory would obviously be better off electing that recovery; if damages might be close to the line of not, then the court of appeals should thereafter remand to constitutional impropriety. 499 U.S. , at the trial court for a new trial on attorney's fees. 23-24. We cited that 4-to-1 ratio again in Accordingly, we remand to the court of appeals for Gore. 517 U.S., at 581. The Court further further proceedings consistent with this opinion. referenced a long legislative history, dating back over 700 years and going Scott Brister forward to today, providing for sanctions of double, treble, or quadruple damages to Justice deter and [**44] punish. Id., at 581, and n. 33. While these ratios are not binding, CONCUR BY: Phil Johnson they are instructive. They demonstrate what should be obvious: Single-digit CONCUR multipliers are more likely to comport JUSTICE JOHNSON, concurring. with due process, while still achieving the State's goals of deterrence and retribution, I concur in the Court's judgment, and, except for part than awards with ratios in range of 500 to III.B. as to Exemplary Damages, I join its opinion. 1, id., at 582, or, in this case, of 145 to 1.

The court of appeals properly identified State Farm Nonetheless, because there are no rigid Mutual Automobile Insurance Co. v. Campbell, 538 U.S. benchmarks that a punitive damages 408, 123 S. Ct. 1513, 155 L. Ed. 2d 585 (2003) and BMW award may not surpass, ratios greater than of North America, Inc. v. Gore, 517 U.S. 559, 116 S. Ct. those we have previously upheld may 1589, 134 L. Ed. 2d 809 (1996) as guiding authorities for comport with due process [under certain its review of the $ 250,000 exemplary damages jury circumstances]. award. It then concluded that $ 125,000 exemplary damages is constitutionally permissible under this record. Campbell, 538 U.S. at 425 (emphasis added). That amount is between 4.33 and 4.34 times the actual damages of $ 28,852 found by the jury. The court of [*316] The Court says that "The court of appeals' appeals' analysis as to the exemplary [**43] damages judgment at least pushes against, if not exceeds the issue is not as detailed as that in this Court's opinion. But, constitutional limits." S.W.3d . A ratio of 4.33 to 1 is because the court of appeals did not give a detailed clearly close to the ratio of 4 to 1 which "might be close explanation for its conclusion does not mean that its to the line of constitutional impropriety." Campbell, 538 conclusion is wrong. U.S. at 425. But, there are no rigid constitutional benchmarks that an exemplary damages award may not The United States Supreme Court has not set a bright surpass. Id. Unless we determine that the court of appeals line constitutional limit for exemplary damages. Some of misapplied the standards [**45] enunciated by the its specific language bears reviewing: Supreme Court, however, I consider a 4.33 ratio of Page 13 212 S.W.3d 299, *316; 2006 Tex. LEXIS 1301, **45; 50 Tex. Sup. J. 278

exemplary damages to actual damages under this record Chapa agreed, but when she returned to sign the contract to be within the discretion lodged in the court of appeals it only indicated she was buying a "2002 Toyota." Chapa to determine the amount of remittitur to suggest. I would wrote "Limited," "Michelin tires," "TV" and "VCR" on remand to the court of appeals for reconsideration of the the contract and then signed it. She was told more exemplary damages issue and more complete explanation signatures were needed and a copy would be mailed to of its analysis as to the remittitur. I would not instruct the [**47] her. Chapa never received the contract. court of appeals, at this juncture, that it should determine a different, more appropriate, remittitur. After sending in her $ 30,207.38 payment, Chapa received a call informing her that the vehicle had arrived. Phil Johnson Chapa went to pick it up, but Garcia presented her with a Highlander, not a Highlander Limited. When Chapa Justice refused to take it, Garcia acknowledged that she had purchased a Highlander Limited and assured her she DISSENT BY: Harriet O'Neill would get one.

DISSENT Again, a sales representative called Chapa to say her car was ready, and again a Highlander, not a Highlander JUSTICE O'NEILL, dissenting. Limited, was presented to her. Chapa complained, but Gullo told her the Highlander she was taking had a V-6 Nury Chapa's allegations describe what amounts to a engine just like the Limited; in addition, Gullo promised bait-and-switch by Gullo Motors, a claim the jury and to add the other features from the Limited, plus the this Court agree there is evidence to support. The Michelin tires, and assured her the modifications would evidence shows that, in furtherance of that scheme, be complete in two [*317] days. Chapa agreed to take Chapa was threatened, lied to, and her signature and that delivery of the Highlander, but insisted Gullo Motors of her deceased husband were forged. The defendant's write these promises on her new delivery check sheet, conduct in this case was at best reprehensible, and which she then signed. Garcia wrote her a "We Owe" bordered on criminal, prompting the jury to award $ form, which stated Gullo owed her Michelin tires and 250,000 in exemplary damages. Texas law capped that lumbar seats. He did not include the other items, so award at $ 200,000, and the court of appeals further Chapa listed them on the delivery check sheet; she reduced it by remittitur to $ 125,000. Even though the testified Garcia told her that was enough. remitted award is [**46] well below the statutory ceiling that the Legislature set, the Court today decides the When Gullo Motors failed to install [**48] the appeals court award is exorbitant and cannot stand. I do promised items, Chapa went to the dealership to speak not agree that the court of appeals violated constitutional with Brian Debiski, the sales manager. Debiski told exorbitancy standards by suggesting the remittitur that it Chapa she was "crazy, that [she] didn't buy that did, nor do I agree with the Court's advisory [Limited]." Chapa explained that she had a "We Owe" determination of the attorney's fee issue. Accordingly, I form, but Debiski responded, "[Y]ou have nothing. You respectfully dissent. are a nobody. It's your word against me." When Chapa told him she would inform the media, Debiski responded I. Background that "nobody will dare to go against me, against us," and The evidence supporting the verdict in this case informed Chapa that he would show her by having her demonstrates that Chapa purchased a Toyota Highlander car towed away at her expense. Limited from Gullo Motors, but Gullo Motors tried to Later, when Chapa's attorney informed the make her accept instead a less expensive Toyota dealership that Chapa would like to return the car for a Highlander. According to Chapa, she offered her refund, Gullo refused, claiming the Highlander had salesman, Brien Garcia, $ 30,000 for the Highlander already been titled to Chapa (even though it had not) and Limited on the showroom floor, with the added options explaining that it would thus have to sell the car as used. of a TV/VCR and Michelin tires. After consulting with Gullo produced a New Vehicle Delivery Check Sheet management, Garcia responded that the showroom car showing Chapa had accepted delivery of the Highlander had been sold but he could get her one for $ 207.38 more. without complaint. However, Chapa testified that Gullo Page 14 212 S.W.3d 299, *317; 2006 Tex. LEXIS 1301, **48; 50 Tex. Sup. J. 278

forged her deceased husband's signature on the delivery concerning appropriate sanctions. BMW of N. Am. v. check sheet by using documents her late husband, Gore, 517 U.S. 559, 583, [*318] 116 S. Ct. 1589, 134 L. Ernesto Chapa, had signed when they had previously Ed. 2d 809 (1996). "[A] punitive damages award that bought a car from Gullo. Chapa also claimed that Gullo comports with a statutory cap provides strong evidence forged her deceased husband's signature on [**49] the that a defendant's due process rights have not been "We Owe" form. Chapa testified that numerous other violated." Rodriguez-Torres v. Caribbean Forms Mfr., documents were forged, and there was evidence that Inc., 399 F.3d 52, 65 (1st Cir. 2005) (citing Romano v. Garcia admitted to Gullo he had promised Chapa the U-Haul Int'l, 233 F.3d 655, 673 (1st Cir. 2000)). The features listed on the "We Owe" form. award the Court finds excessive today is well below the statutory cap that the Legislature determined appropriate The jury found Chapa's evidence credible and when a defendant engages in conduct [**51] that would awarded her $ 7,213 for breach of contract (the difference support an exemplary damages award. Neither does the in value between the vehicle promised and the one award violate the three-part test for constitutional delivered), $ 7,213 for fraud, $ 21,639 for mental exorbitancy that the United States Supreme Court has anguish, $ 250,000 for exemplary damages, $ 7,213 for articulated. See State Farm Mut. Auto. Ins. Co. v. damages under the Texas Deceptive Trade Practices Act, Campbell, 538 U.S. 408, 418-19, 123 S. Ct. 1513, 155 L. and $ 20,000 for attorney's fees. The trial court rendered Ed. 2d 585 (2003). judgment only on the breach of contract claim, but the court of appeals reversed and reinstated all the awards Courts must consider three guideposts when except for exemplary damages, which the court remitted reviewing an exemplary damage award: (1) the degree of to $ 125,000, one-half of what the jury awarded. reprehensibility of the misconduct; (2) the disparity between the actual or potential harm suffered by the I agree with the Court that Chapa must elect only one plaintiff and the punitive damages award; and (3) the liability theory upon which to recover, and the court of difference between the punitive damages awarded by the appeals erred to the extent it concluded otherwise. But I jury and the civil or criminal penalties that could be disagree that the court of appeals' remittitur is imposed for comparable misconduct. Id.; Gore, 517 U.S. constitutionally infirm or that Chapa's attorney's fees are at 575. According to the Supreme Court, it is "the degree capable of segregation. of reprehensibility of the defendant's conduct" that is "[t]he most important indicium of the reasonableness of a II. Exemplary Damages punitive damages award," and five factors guide that assessment: (1) whether the harm caused was physical In Texas, the amount of exemplary damages for rather than economic, (2) whether the conduct evinced an which a defendant may be liable is capped [**50] at indifference to others' health or safety, (3) whether the harm involved repeated acts or isolated incidents, (4) an amount equal to the greater of: whether the [**52] target of the conduct was financially (1) (A) two times the amount of vulnerable, and (5) whether the harm resulted from mere economic damages; plus accident or from "intentional malice, trickery, or deceit . . . ." Campbell, 538 U.S. at 419. (B) an amount equal to any noneconomic damages found by the jury, The Court summarily concludes that only the last of not to exceed $ 750,000; or these factors, deceitful conduct, favors Chapa. And the Court gives that conduct very cursory attention, even (2) $ 200,000. though the Supreme Court has said that the "infliction of economic injury, especially when done intentionally TEX. CIV. PRAC. & REM. CODE § 41.008(b) (emphasis through affirmative acts of misconduct . . . can warrant a added). I agree with the Court that the mere existence of a substantial penalty." Gore, 517 U.S. at 576 (citing TXO statutory cap does not foreclose a federal constitutional Prod. Corp. v. Alliance Res. Corp. 509 U.S. 443, 453, check for exorbitancy. But the United States Supreme 113 S. Ct. 2711, 125 L. Ed. 2d 366 (1993)). Assuming Court has instructed that reviewing courts should accord Chapa elected to recover on the jury's fraud finding, she "substantial deference" to legislative judgments would be entitled to $ 28,852 in compensatory damages. Page 15 212 S.W.3d 299, *318; 2006 Tex. LEXIS 1301, **52; 50 Tex. Sup. J. 278

Thus, the penalty the court of appeals determined to be The third guidepost considers civil or criminal appropriate reflects a ratio between compensatory and penalties that could be imposed for comparable exemplary damages of a little more than 4 to 1, a misconduct. Campbell, 538 U.S. at 418; Gore, 517 U.S. differential the petitioners have not demonstrated is at 575. The Court considers two potential civil penalties constitutionally disproportionate to the defendant's of $ 10,000 and $ 20,000 that Gullo Motors' conduct conduct here. See TXO Prod. Corp., 509 U.S. at 462 [**55] might subject it to, yet declines to consider (holding a 10 to 1 ratio permissible); [**53] Pac. Mut. potentially applicable criminal penalties that, according Life Ins. Co. v. Haslip, 499 U.S. 1, 19, 111 S. Ct. 1032, to Chapa, would result in jail time and $ 80,000 in felony 113 L. Ed. 2d 1 (1991) (affirming award of four times fines for forgery, document destruction, and fraudulently compensatory damages and two hundred times economic inducing signatures. Certainly I agree that "the remote damages); Glasscock v. Armstrong Cork Co., 946 F.2d possibility of a criminal sanction does not automatically 1085, 1095-96 (5th Cir. 1991) (upholding a 20 to 1 ratio). sustain a punitive damages award," as the Court recites, but that doesn't mean comparable potential criminal As for the other reprehensibility factors, the Court sanctions should be altogether ignored. Campbell, 538 either misapplies them or gives them short shrift. For U.S. at 428. example, the Court's conclusion that Gullo's actions caused Chapa only economic harm ignores the jury's In my view the more important issue is not the actual award of mental anguish damages, a damage element we dollar amount that Chapa will ultimately recover, but the have long considered non-economic that compensates for low threshold this Court steps over to declare a jury harm with physical elements. See Golden Eagle Archery, award constitutionally exorbitant. Had I been on the jury Inc. v. Jackson, 116 S.W.3d 757, 763, 46 Tex. Sup. Ct. J. in this case, I may well have disagreed with the amount 1133 (Tex. 2003). The Court also concludes Gullo of exemplary damages the jury actually awarded or even Motors' misconduct was an isolated incident that did not the amount the appellate court suggested in its remittitur. involve repeated acts, even though the evidence indicates Although exemplary damage awards can serve otherwise. Gullo Motors committed [*319] multiple acts worthwhile purposes, they can also have debilitating of misconduct, including switching contracts, altering economic impact and should be carefully policed by the documents, engaging in deceptive and threatening courts. See Transp. Ins. Co. v. Moriel, 879 S.W.2d 10, 31, behavior, and even forging the signatures of Chapa and 37 Tex. Sup. Ct. J. 883 (Tex.1994). Our courts of appeals her deceased husband. In sum, the factors that the Court in Texas have long [**56] been empowered to suggest a purports to follow in determining the reprehensibility remittitur of excessive awards when the evidence is [**54] of Gullo Motors' conduct weigh in favor of the factually insufficient to support them. Id.; TEX. R. APP. court of appeals' remitted award, not against it. P. 46.3. The court of appeals assiduously exercised that power in this case. It is, of course, appropriate for this The second guidepost used to review an exemplary Court to intervene if the appeals court allows a damage award examines the ratio between exemplary and constitutionally offensive award to stand. But when the compensatory damages. The Supreme Court has refused Court chooses a marginal case like this in which to to adopt a bright-line constitutionally prohibited ratio. intervene, it risks intruding upon an area that has Instead, it has suggested a range beyond which traditionally been the well-patrolled province of our exemplary damage awards will likely become courts of appeals. And when, as here, the Legislature has constitutionally exorbitant, stating "few awards chosen to set its own parameters for such awards, the exceeding a single-digit ratio between punitive and Court's intrusion is even more disturbing. compensatory damages, to a significant degree, will satisfy due process." Campbell, 538 U.S. at 419. The III. Attorney's Fees Court's opinion in this case highlights a 17 to 1 ratio that reflects a comparison between the remitted award and I also question the Court's decision to address the economic damages. The constitutionally relevant attorney's fee issue in this case. If the court of appeals comparison, though, focuses on compensatory rather than renders judgment on remand based on the jury's fraud economic damages, which yields a much lower 4.33 to 1 finding, the attorney's fee issue will be moot. Thus, the ratio. Court's analysis of the issue is purely advisory. TEX. CONST. art. II, § 1; Brooks v. Northglen Ass'n, [*320] Page 16 212 S.W.3d 299, *320; 2006 Tex. LEXIS 1301, **56; 50 Tex. Sup. J. 278

141 S.W.3d 158, 164, 47 Tex. Sup. Ct. J. 719 (Tex. 2004). to disclose information concerning goods which was But even assuming the Court properly reaches the issue, I known at the time of the transaction if such failure to disagree with the Court's application [**57] of the rule it disclose was intended to induce the consumer into a announces. According to the Court, when the legal transaction the consumer would not have entered had the services themselves advance both a recoverable and information been disclosed. As for the common-law fraud unrecoverable claim, segregation is not required. The claim, the jury was instructed that Gullo Motors Court concludes that at least some of Chapa's attorney's committed fraud if (a) it made a material fees are attributable only to claims for which fees are not misrepresentation, (b) the representation was made with recoverable, requiring a new trial. It is true that some of knowledge of its falsity or made recklessly without any Chapa's attorney's fees are attributable to her knowledge of the truth and as a positive assertion, (c) the common-law fraud claim for which fees are not representation was made with the intention that Chapa recoverable. Attorneys fees are recoverable, though, would act upon it, and (d) Chapa relied on the under the DTPA for deceptive acts or practices. It is misrepresentation and thereby suffered injury. The unclear to me, and the Court does not explain, how the evidence that Chapa presented to support her fraud claim legal services used to advance Chapa's DTPA claim did also supported her DTPA claim, and vice versa. Because not also advance her common-law fraud claim. The the legal services provided to advance the DTPA claim court's charge that was read to the jury instructed that also advanced the fraud claim, the fees incurred cannot be Gullo Motors violated the DTPA if it (1) breached an segregated even under the Court's own analysis. express warranty, defined as any affirmation of fact that related to the 2002 Highlander Limited and became part *** of the basis of its bargain with Chapa, or (2) engaged in For the reasons expressed, I respectfully dissent. any false, misleading, or deceptive act or practice upon which Chapa relied to her detriment. A false, misleading, Harriet O'Neill or deceptive act or practice includes representing that goods or services are of a particular standard, [**58] Justice quality, grade, or of a particular style or model, or, failing