Sky View at Las Palmas, L.L.C. and Ilan Israely v. Roman Geronimo Martinez Mendez & San Jacinto Title Services of Rio Grande Valley, LLC

• Court: Court of Appeals of Texas
• Decided: August 11, 2015
• Docket: 13-15-00019-CV
• Status: Published

Opinion

ACCEPTED 13-15-00019-CV THIRTEENTH COURT OF APPEALS CORPUS CHRISTI, TEXAS 8/11/2015 1:06:02 PM CECILE FOY GSANGER CLERK

NO. 13-15-00019-CV ______________________________________________________________ FILED IN IN THE COURT OF APPEALS 13th COURT OF APPEALS CORPUS CHRISTI/EDINBURG, TEXAS FOR THE THIRTEENTH DISTRICT OF TEXAS 8/11/2015 1:06:02 PM ______________________________________________________________ CECILE FOY GSANGER Clerk

SKY VIEW AT LAS PALMAS, L.L.C., and ILAN ISRAELY, Appellants,

v.

ROMAN GERONIMO MARTINEZ MENDEZ, and SAN JACINTO TITLE SERVICES OF RIO GRANDE VALLEY, LLC, Appellees.

_______________________________________________________________

On Appeal From the 370th District Court of Hidalgo County, Texas Cause No. C-1401-10-G(4) _______________________________________________________________

BRIEF OF APPELLANTS SKY VIEW AT LAS PALMAS, L.L.C. and ILAN ISRAELY _______________________________________________________________

Murry B. Cohen Joel Bailey Texas Bar No. 04508500 Texas Bar No. 24069330 Akin Gump Strauss Hauer & Feld LLP Akin Gump Strauss Hauer & Feld LLP 1111 Louisiana Street, 44th Floor 1700 Pacific Ave., Suite 4100 Houston, Texas 77002 Dallas, Texas 75201 Telephone: (713) 220-5866 Telephone: (214) 969-2800 Facsimile: (713) 236-0822 Facsimile: (214) 969-4343 mcohen@akingump.com jbailey@akingump.com

ORAL ARGUMENT REQUESTED IDENTITY OF PARTIES AND COUNSEL Appellants certify that the following is a complete list of the parties and any

other person who has any interest in the outcome of this lawsuit:

Appellants: Sky View at Las Palmas, L.L.C.; and Ilan Israely

Attorneys for Appellants: Murry B. Cohen (Appellate Counsel) Texas Bar No. 04508500 mcohen@akingump.com AKIN GUMP STRAUSS HAUER & FELD LLP 1111 Louisiana Street, 44th Floor Houston, Texas 77002 Telephone: (713) 220-5866 Facsimile: (713) 236-0822

Joel Bailey (Appellate Counsel) Texas Bar No. 24069330 jbailey@akingump.com AKIN GUMP STRAUSS HAUER & FELD LLP 1700 Pacific Ave., Suite 4100 Dallas, Texas 75201 Telephone: (214) 969-2800 Facsimile: (214) 969-4343

Donald O. Walsh (Counsel at trial only) Texas Bar No. 20797300 dwalsh@fishmanjackson.com FISHMAN JACKSON PLLC Three Galleria Tower, Suite 700 13155 Noel Road Dallas, Texas 75240 Telephone: (972) 419-5500 Facsimile: (972) 419-5501

i Appellee/Plaintiff: Roman Geronimo Martinez Mendez

Attorneys for Raymond Thomas (Appellate Counsel) Appellee/Plaintiff Texas Bar No. 19865350 rthomas@ktattorneys.com Ricardo Pumarejo, Jr. Texas Bar No. 24056168 rpumarejo@ktattorneys.com KITTLEMAN, THOMAS, PLLC 4900-B N. 10th St. McAllen, Texas 78504 Telephone: (956) 632-5056 Facsimile: (956) 630-5199

Michael E. Flanagan (Counsel at trial only) Texas State Bar No. 07107550 mike@lomef.com LAW OFFICE OF MICHAEL E. FLANAGAN 809 Chicago Avenue McAllen, Texas 78501 Telephone: (956) 683-0333 Facsimile: (956) 683-0222

Terry L. Scarborough (Counsel at trial only) Texas State Bar No. 17716000 tscarborough@hslawmail.com HANCE SCARBOROUGH, LLP 400 W. 15th, Suite 950 Austin, Texas 78701 Telephone: (512) 479-8888 Facsimile: (512) 482-6891

Appellee/Cross-Defendant San Jacinto Title Services of Rio Grande Valley, LLC

Attorneys for Rafael Garcia, Jr. (Appellate Counsel) Appellee/Cross-Defendant Texas State Bar No. 07641300 rgarcia@thorntonfirm.com Vaughan Waters Texas State Bar No. 20916700 ii vwaters@thorntonfirm.com THORNTON, BIECHLIN, SEGRATO, REYNOLDS & GUERRA, LLC 418 East Dove Avenue McAllen, Texas 78504 Telephone: (956) 630-3080 Facsimile: (956) 630-0189

Interested Abraham Gottlieb Party/Co-Defendant:

Trial Judge: Honorable Noe Gonzalez

iii TABLE OF CONTENTS Page IDENTITY OF PARTIES AND COUNSEL ............................................................. i

TABLE OF CONTENTS ......................................................................................... iv

INDEX OF AUTHORITIES ................................................................................... vii

STATEMENT OF THE CASE................................................................................. xi

STATEMENT REGARDING ORAL ARGUMENT ........................................... xiii

ISSUES PRESENTED........................................................................................... xiii

STATEMENT OF FACTS ........................................................................................ 1

A. Sky View’s Purchase of the Property and First-Lien Financing From Texas State Bank..........................................................................1

B. Gottlieb and Hugo Martinez Pursue Interim Construction Loan from Appellee Martinez. .......................................................................1

C. Martinez’s Interim Construction Loan to Sky View .............................3

D. Sky View’s Default and Foreclosure on the Property ...........................4

E. Martinez Sues Seven Defendants, and Settles with Three Defendants Before Trial and with a Fourth After Trial. ........................4

F. Trial and Judgment ................................................................................6

SUMMARY OF THE ARGUMENT ........................................................................ 8

ARGUMENT .......................................................................................................... 10

I. APPELLANTS ARE ENTITLED TO SETTLEMENT CREDITS UNDER THE ONE SATISFACTION RULE AND THE FINAL JUDGMENT SHOULD BE REDUCED ACCORDINGLY. ....................... 10

A. Standard of Review ............................................................................. 11

B. The One Satisfaction Rule Applies to Both Tort Claims and Contract Claims. ..................................................................................12

iv C. Settlement Credits Should Be Applied When a Plaintiff Suffers a Single, Indivisible Injury and Settles with Co-Defendants. ................16

D. Martinez Alleged Contract and Tort Claims Against All Seven Defendants Based on a Single, Indivisible Injury—Nonpayment of the Note. ..........................................................................................18

1. The only damage Martinez pleaded was that he never received the principal, interest, and attorney’s fees due under the Note. ......................................................................... 19

2. The only proof of damages Martinez presented was that he never received his money under the Note. ............................... 20

3. Martinez never asked the jury to find, and the jury never found, any damages except nonpayment of the Note. ............. 21

4. Martinez Failed to Meet His Burden to Demonstrate Allocation of Settlement Funds Among Defendants. .............. 22

E. The Worthington Case Does Not Support Denial of Settlement Credits Here. ........................................................................................24

F. Worthington is different from, and should not control, this case. .......25

G. Worthington was wrongly decided. .....................................................28

II. THE ATTORNEYS’ FEES SHOULD BE REDUCED................................ 29

A. Standard of Review .............................................................................29

B. Texas Law Does Not Permit Attorneys’ Fees if the Case Was Overworked or if the Prevailing Party Retained Numerous Counsel During the Litigation. ............................................................30

C. Martinez Incurred Excessive Attorneys’ Fees of Over $369,000. ......33

D. Martinez’s Attorneys’ Fees Are Excessive After Settlement Credits Are Applied. ............................................................................35

PRAYER ................................................................................................................. 38

CERTIFICATE OF SERVICE ................................................................................ 40

v CERTIFICATE OF COMPLIANCE....................................................................... 41

APPENDIX ............................................................................................................. 42

vi INDEX OF AUTHORITIES

Page(s) CASES Allan v. Nersesova, 307 S.W.3d 564 (Tex. App.—Dallas 2010, no pet.) ....................................15, 18

Allied Finance Co. v. Garza, 626 S.W.2d 120 (Tex. App.—Corpus Christi 1981, no pet.) .......................29, 31

AMX Enterp., Inc. v. Bank One, N.A., 196 S.W.3d 202 (Tex. App.—Houston [1st Dist.] 2006, pet. denied) ............... 14

Argonaut Ins. Co. v. ABC Steel Prods. Co., 582 S.W.2d 883 (Tex. App.—Texarkana 1979, writ ref’d n.r.e.) ...................... 31

Armstrong Forest Prods. v. Redempco, Inc., 818 S.W.2d 446 (Tex. App.—Texarkana 1991, pet. denied) ............................. 32

Arthur Andersen & Co. v. Perry Equip. Corp., 945 S.W.2d 812 (Tex. 1997) .............................................................................. 30

Barker v. Eckman, 213 S.W.3d 306, 314 (Tex. 2006) ...............................................................36, 37

Cohen v. Arthur Andersen, L.L.P., 106 S.W.3d 304 (Tex. App.—Houston [1st Dist.] 2003, no pet.) ...................... 22

CTTI Priesmeyer, Inc. v. K&O Ltd., 164 S.W.3d 675 (Tex. App.—Austin 2005, no pet.) .................................... 28-29

El Apple I, Ltd. v. Olivas, 370 S.W.3d 757 (Tex. 2012) ........................................................................30, 32

El Paso Nat. Gas Co. v. Berryman, 858 SW.2d 362 (Tex. 1993)................................................................................ 12

Emerson Elec. Co. v. Am. Permanent Ware Co., 201 S.W.3d 301 (Tex. App.—Dallas, 2006, no pet.) ......................................... 14

Erie R. Co. v. Tomkins, 304 U.S. 64 (1938) .............................................................................................. 24 vii FDIC v. White, No. 13-08-00263, 2011 Tex. App. LEXIS 8344 (Tex. App.—Corpus Christi Oct. 20, 2011, no pet.) ............................................................................ 17

First Title Co. v. Garrett, 860 S.W.2d 74 (Tex. 1993)...........................................................................13, 16

Galle, Inc. v. Pool, 262 S.W.3d 564 (Tex. App.—Austin 2008, pet. denied) .................13, 15, 17, 29

GE Capital Commercial, Inc. v. Worthington Nat’l Bank, 754 F.3d 297 (5th Cir. 2014) ........................................................................ 24-28

Goldman v. Alkek, 850 SW2d 568 (Tex. App.—Corpus Christi 1993, no writ) (op. on reh'g) ........ 37

Hensley v. Eckerhart, 461 U.S. 424 (1983) ............................................................................................ 32

In re DCP Midstream, L.P., No. 13-14-00502-CV, 2014 Tex. App. LEXIS 11092 (Tex. App.—Corpus Christi Oct. 7, 2014, orig. proceeding) ........... 12-14 , 16-17

Krobar Drilling, LLC v. Ormiston, 426 S.W.3d 107 (Tex. App.—Houston [1st Dist.] 2012, pet. denied) ............... 16

Matthews v. P.D. Sohn, No. 13-12-00302-CV, 2013 Tex. App. LEXIS 7277 (Tex. App.—Corpus Christi June 13, 2013, no pet.) ........................ 12-13, 15, 22

Metal Building Components, LP v. Raley, No. 03-05-00823, 2007 Tex. App. LEXIS 186 (Tex. App.—Austin 2007, no pet.) ................................................................................................................ 14

Mission Park Funeral Chapel, Inc. v. Gallegos, No. 04-00-00459-CV, 2001 Tex. App. LEXIS 2978 (Tex. App.—San Antonio May 9, 2001, no pet.) ............................................................................ 31

Musgrave v. Brookhaven Lake Prop. Owners Ass’n, 990 S.W.2d 386 (Tex. App.—Texarkana 1999, pet. denied) .......................31, 35

Osborne v. Jauregui, 252 S.W.3d 70 (Tex. App.—Austin 2008, pet. denied) (en banc) .........13, 15, 29 viii Oyster Creek Fin. Corp. v. Richwood Invs. II, Inc., 176 S.W.3d 307 (Tex. App.—Houston [1st Dist.] 2004, pet. denied) ......... 11, 14

Penrod Drilling Corp. v. Williams, 868 S.W.2d 294 (Tex. 1993) .............................................................................. 24

RSR Corp. v. Int’l Ins. Co., No. 3:00-CV-0250-P, 2009 U.S. Dist. LEXIS 27745 (N.D. Tex. Mar. 23, 2009), aff’d 612 F.3d 851 (5th Cir. 2010) ...................14, 25

Snoke v. Republic Underwriters Ins. Co., 770 S.W.2d 777 (Tex. 1989) .............................................................................. 29

Stewart Title Guaranty v. Sterling, 822 S.W.2d 1 (Tex. 1991), overruled on other grounds by Tony Gullo Motors L.L.P. v. Chapa, 212 S.W.3d 299 (Tex. 2007) ...................................... 15

Tex. Capital Sec. Inc. v. Sandefer, 108 S.W.3d 923 (Tex. App.—Texarkana 2003, pet. denied) ............................. 11

Thomas v. Bobby D. Assocs., No. 12-08-00007-CV, 2008 Tex. App. LEXIS 5881 (Tex. App.—Tyler 2008, no pet.) ...........................................................32, 34, 35

Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299 (Tex. 2006) ........................................................................12, 35

Travelers Indem. Co. v. Page & Assocs. Constr. Co., 1998 Tex. App. LEXIS 7531 (Tex. App.—Amarillo Dec. 3, 1998, no pet.) ....................................................................................................12, 14, 25

Utts v. Short, 81 S.W.3d 822 (Tex. 2002)................................................................................. 12

Waite Hill Servs., Inc. v. World Class Metal Works, Inc., 959 S.W.2d 182 (Tex. 1998) ........................................................................15, 18

Young v. Qualls, 223 S.W.3d 312 (Tex. 2007) ........................................................................35, 37

RULES Tex. R. App. P. 43.2 ............................................................................................... 29 ix Tex. R. App. P. 43.6 ............................................................................................... 29

Tex. R. App. P. 46.3 ............................................................................................... 29

x STATEMENT OF THE CASE

Nature of the Case: This is a breach of contract case. Appellee Roman Geronimo Martinez Mendez (“Martinez”) loaned $1.275 million to Appellant Sky View at Las Palmas, L.L.C. (“Sky View”). 30 RR 291 (PX 37). Martinez obtained the purported personal guaranties of Sky View’s two members—Ilan Israely and Abraham Gottlieb. 30 RR 309, 316 (PX 40, 41). The loan went into default, and Martinez sued Appellants 1) in contract based on the loan and the guaranty, 2) in tort for fraud and conspiracy, and 3) for estoppel and quantum meruit. Martinez sued Appellants’ four co-defendants (two law firms, a title insurer, and a title company) variously for breach of contract, negligence, fraud, conspiracy, legal malpractice, and breach of fiduciary duty. CR 60.

Course of Proceedings: Martinez settled with three of Appellants’ co-defendants before trial, and with a fourth after trial. Martinez proceeded to trial only against Sky View, Israely, and Gottlieb. The jury found Sky View liable on the note, Gottlieb and Israely liable on the guaranties, and Israely liable for fraud. App. 2. The trial court submitted a single damages question for all of Martinez’s tort and contract claims against Appellants. The jury awarded damages for all tort and contract claims, jointly, of $2,665,832.72, the exact amount Martinez claimed was due for principal and interest on the note. The jury found $569,062 in attorneys’ fees through trial and additional amounts for appeal. App. 2.

Trial Court Disposition: The trial court ordered Martinez to elect one cause of action on which to recover, and Martinez elected breach of contract. 28 RR 13. The trial court rendered judgment on the jury’s verdict, and refused to grant Appellants settlement credits to reduce the judgment by the $2.3 million Martinez had received from the four defendants who settled. The trial court never ruled on Appellants’ Motion for New Trial, Motion for Judgment Notwithstanding the Verdict, and Motion for

xi Modification of Judgment. Those were overruled by operation of law, and Appellants appealed.

xii STATEMENT REGARDING ORAL ARGUMENT Appellants request oral argument. This appeal presents substantial issues

involving settlement credits and the reasonableness of attorneys’ fees that could

reduce the judgment by millions of dollars and significantly affect other cases. Oral

argument would assist the Court.

ISSUES PRESENTED 1. Were Appellants entitled by law to more than $2.3 million in judgment

credits for settlement payments Martinez received from Appellants’ co-defendants

as payment for his single injury—nonpayment of the Note?

2. Was $569,062 in attorneys’ fees through trial excessive, given that

$369,687 of that amount was incurred (1) in a twenty-day period immediately before

and during trial, (2) after Martinez fired his original counsel and replaced him with

six lawyers from three firms, and (3) after Martinez’s damages had been reduced

by the three settlements that occurred from one to twelve months before trial and

totaled $1,750,000?

xiii STATEMENT OF FACTS

A. Sky View’s Purchase of the Property and First-Lien Financing From Texas State Bank. Appellant Sky View at Las Palmas, L.L.C. (“Sky View”) was formed in

December 2007 to buy and develop land in Hidalgo County, Texas. 30 RR 244 (PX

19). In March 2008, Sky View purchased 38.416 acres in Hidalgo County (the

“Property”). 24 RR 21, 30 RR 212 (PX 4). Sky View purchased the Property

from M Construction, Ltd. (“M Construction”), whose President and Member was

Hugo Martinez. Id.

Sky View purchased the Property for $6.5 million and financed $4 million of

the purchase price through a Promissory Note and Deed of Trust with Texas State

Bank (the “TSB Loan”).1 24 RR 21-23; 30 RR 217 (PX 3, 4, and 5). During this

time period, Sky View had two members—Ilan Israely and Abraham Gottlieb. 30

RR 261 (PX 25).

B. Gottlieb and Hugo Martinez Pursue Interim Construction Loan from Appellee Martinez. After Sky View purchased the Property, Israely and Gottlieb wanted to

develop it, starting with grading. 25 RR 143-44. Shortly after obtaining the TSB

Loan, Sky View approached Compass Bank about a construction loan. Id. at 144.

Sky View and Compass Bank had a favorable initial discussion about an additional

1 Texas State Bank is now known as “Compass Bank” and is referred to interchangeably in the record as both Texas State Bank and Compass Bank. 1 $9 million loan for construction, but the bank stated it would take a few months to

complete the diligence for the loan. Id.

In addition to being the grantor of the Property, M Construction had also

entered into a Construction Contract with Sky View to be the general contractor.

30 RR 252 (PX 22). M Construction’s President, Hugo Martinez, and Gottlieb

wanted to begin construction, and were not willing to wait months for Compass

Bank to evaluate the construction loan. 25 RR 144. Hugo Martinez and Gottlieb

decided to seek an interim construction loan. Id.

Hugo Martinez and Gottlieb pursued the interim, second-lien construction

loan from Appellee Roman Geronimo Martinez Mendez (“Martinez”). In

connection with the loan (the “Martinez Loan”), Martinez retained the law firm

Kittleman, Thomas & Gonzales, PLLC (“Kittleman Thomas”) to draft loan

documents. 30 RR 332 (PX 47). Martinez further retained San Jacinto Title

Services of Rio Grande Valley, LLC (“San Jacinto”) to close the transaction and be

the title company. Id. San Jacinto was an agent authorized to issue title insurance

policies for Fidelity National Title Insurance Company (“Fidelity”). CR 355.

Carmen Solis was a closer and escrow officer with San Jacinto who was in

charge of closing the Martinez Loan. 21 RR 174. To finalize the Martinez Loan,

Solis sent the loan documents to Gottlieb via overnight mail. 30 RR 668 (PX 180).

The loan documents were sent back to Solis fully executed by someone. 30 RR 669

2 (PX 181). There is no evidence in the record of who actually signed the loan

documents. It is undisputed that Israely did not sign any loan documents, including

his guaranty, because he was out of the country during this time period. 25 RR

121-22. Yet, upon receipt, Solis notarized the documents, falsely stating that

Israely appeared before her personally in Texas and that she saw him sign. 22 RR

68. Solis acknowledged she did not follow proper procedure or regulations in

connection with the Martinez Loan transaction. Id. at 68-69. Solis acknowledged

she did not keep current notary books, as required by regulations. 22 RR 112.

Solis testified falsely under oath at deposition concerning the transaction.

She knew that neither Israely nor Gottlieb appeared in person at the closing, but she

testified they did. 22 RR 76. Upon recanting that testimony and sitting a second

time for her deposition, Solis repeatedly invoked her Fifth Amendment right not to

incriminate herself by answering. 21 RR 152.

C. Martinez’s Interim Construction Loan to Sky View On April 14, 2008, Martinez loaned Sky View $1.275 million and received a

second lien on the Property. Martinez’s loan was reflected in (i) a Second Real

Estate Lien Note (the “Note”); (ii) a Second Lien Deed of Trust, Security Agreement

and Financing Statement (iii) an Assignment of Leases and Rents; (iv) a purported

Guaranty Agreement from Israely (“Israely Guaranty”); and (v) a Guaranty

Agreement from Gottlieb (collectively, “Martinez Loan Documents”). 30 RR

3 291-316 (PX 37-41). The Note reflected a principal amount of $1.275 million and

an annual interest rate of 18%. 30 RR 291 (PX 37). Principal and interest were

due on or before October 14, 2008 in a single payment. Id.

D. Sky View’s Default and Foreclosure on the Property When Sky View defaulted on the Note, Martinez retained the law firm of

Walker Twenhafel, LLP (“Walker Twenhafel”) to assist in the recovery. CR 357;

30 RR 504 (PX 101). Walker Twenhafel never advised Martinez that the first

lienholder—Compass Bank—could foreclose on the Property and adversely affect

Martinez’s position and his title insurance policy claim. CR 357. Compass Bank

foreclosed, which adversely affected Martinez’s security. 25 RR 171.

E. Martinez Sues Seven Defendants, and Settles with Three Defendants Before Trial and with a Fourth After Trial. To recover the Note balance, Martinez sued seven defendants under tort and

contract theories: (1) Sky View; (2) Israely; (3) Gottlieb; (4) San Jacinto; (5)

Kittleman Thomas; (6) Walker Twenhafel; and (7) Fidelity. Martinez settled with

four defendants: (1) Kittleman Thomas; (2) Walker Twenhafel; (3) San Jacinto; and

(4) Fidelity (collectively, the “Settling Parties”). CR 479. Three of the four

settlements occurred before trial began on April 28, 2014. The settlements with

Kittleman Thomas, San Jacinto, and Fidelity occurred between 27 and 362 days

before trial, and totaled $1,750,000, an amount $475,000 greater than the principal

amount of the Note. The fourth settlement, with Walker Twenhafel, occurred a

4 month after the trial. The chart below summarizes Martinez’s claims, pleaded

damages, and settlements with each defendant in chronological order.2

Defendant Appellee’s Claims Damages Settlement Kittleman Legal Malpractice; Nonpayment of $175,000 on April Thomas Breach of Fiduciary Duty; the Note. CR 28, 2013. 30 RR Negligence. CR 195. 207. 187 (Court Ex. B). Fidelity Breach of Contract; Nonpayment of $300,000 on March Unfair Settlement the Note. CR 10, 2014. 28 RR Practices; and 362. 25; CR 479-482. Negligence. CR 362. San Jacinto Negligence; Fraud; and Nonpayment of $1,275,000 on Conspiracy. CR 360. the Note. CR April 1, 2014. 28 362. RR 25; 31 RR 243 (Court Ex. 2); CR 479-482. Walker Legal Malpractice. CR Nonpayment of $550,000 on June Twenhafel 390. the Note. CR 13, 2014. 28 RR 392. 25; CR 479-482. Sky View Breach of Note and Nonpayment of N/A Guaranty Agreements; the Note. CR Fraud; Promissory 358. Estoppel; Quantum Meruit; Ratification/Adoption; Conspiracy; Piercing the Corporate Veil. CR 358. Israely Same as Sky View claims. Nonpayment of N/A the Note. CR 358. Gottlieb Same as Sky View claims Nonpayment of N/A the Note. CR 358.

2 A subsequent chart accounts for interest on these settlement amounts. 5 Martinez thus received $2,300,000 from Appellants’ four co-defendants,

before accounting for interest on those settlements from the date received.

Martinez stipulated to the amounts of the settlements (28 RR 23-25; 29 RR 28).

Appellants also proved them by affidavit (CR 479-482). Martinez never presented

evidence allocating any part of any settlement to any particular defendant, claim,

injury, or damages.

F. Trial and Judgment Martinez proceeded to trial by jury against Sky View, Israely, and Gottlieb

only (the “Non-Settling Parties”). Gottlieb never testified, did not appear for trial,

and did not appeal.

The jury found that (i) Sky View failed to comply with the Note; (ii) Israely

authorized another to execute his Guaranty, ratified his Guaranty, and failed to

comply with his Guaranty; and (iii) Israely committed fraud. App. 2.

Martinez submitted only one question on damages. In a single question that

lumped together all damages arising from the Note, the guaranties, and the fraud, the

jury assessed damages of $2,665,832.72. Id. That amount was, to the penny, the

amount Martinez claimed was due him for nonpayment of the Note. 30 RR 876

(PX 609); 27 RR 126-27. During trial, Martinez never pleaded, proved, or asked

the jury for any other measure or amount of damages.

6 After trial, Martinez never proved that any part of any settlement was

compensation for anything except nonpayment of the Note. He never alleged or

proved that any particular defendant or defendants caused any discrete part of his

sole injury, nonpayment of the note, that was separate from acts by other defendants.

The jury awarded Martinez $569,062 in attorneys’ fees through trial,

$100,000 for representation through appeal to this Court, and additional amounts for

further appeals. Id.

The trial court ordered Martinez to elect a cause of action on which to recover,

and he elected breach of contract. 28 RR 13.

The trial court rendered judgment based on the jury’s verdict, i.e.,

$2,665,832.72 in actual damages, which included prejudgment interest at 18%,

attorneys’ fees, and post-judgment interest at 18%. App. 1.

Appellants’ repeatedly requested post-trial relief, but the trial court never

ruled on their motions for new trial, for judgment notwithstanding the verdict, and

for modification of judgment. They were overruled by operation of law, and

Appellants appealed.

7 SUMMARY OF THE ARGUMENT Martinez sued seven parties and asserted multiple causes of action, but

suffered only one injury—nonpayment of a $1.275 million Note. He has been paid

$2.3 million in settlements by four co-defendants. Because he pleaded, proved,

suffered, and argued only one injury, Martinez did not even attempt to allocate any

part of any settlement to any different injury or to the conduct of any particular

defendant, nor did Martinez submit separate damages questions at trial for his tort

and contract theories. But instead of reducing the judgment pursuant to the one

satisfaction rule by the $2.3 million (plus imputed interest) Martinez received, the

trial court provided Martinez a windfall recovery.

In Texas, a party can only recover one satisfaction for damages arising from

one injury. The one satisfaction rule applies to both tort and contract claims, and

guards against a plaintiff receiving a windfall recovery. Here, the trial court denied

all requested settlement credits. If this Court affirms, Martinez will recover over $5

million for a $1.275 million Note. This Court should reduce the judgment by the

$2.3 million settlement funds Martinez received, plus imputed interest, on the

settlements from the date he received them until the judgment is satisfied.

The trial court awarded $569,062 as trial court attorneys’ fees, which is

excessive. Martinez incurred $369,687 of that total during a twenty-day period

from April 19, 2014 through May 8, 2014. That amounts to almost $18,500 per

8 day, or $770 per hour based on one attorney working 24 hour days over that entire

period. The award is also excessive when considered against the settlement credits

the trial court should have granted. If this Court grants the credits, that would

reduce the actual damages awarded by over 97% (including interest on the

settlements). Martinez received three of the four settlements, representing $1.75

million of the $2.3 million total, during a period of 27 to 362 days before the trial

began. Because the settlements had the effect of significantly reducing the amount

in controversy, Martinez’s attorneys should have adjusted the time spent preparing

for trial. This Court should reduce the attorney’s fees award to $95,000 by

suggesting a remittitur of $274,687.

9 ARGUMENT

I. APPELLANTS ARE ENTITLED TO SETTLEMENT CREDITS UNDER THE ONE SATISFACTION RULE AND THE FINAL JUDGMENT SHOULD BE REDUCED ACCORDINGLY. Martinez sued seven parties seeking damages for the same

injury—nonpayment of the Note. Martinez never pleaded or proved any other

injury, never mentioned any other injury during voir dire, opening argument, or

closing argument, never submitted a jury question on any other injury, and never

sought judgment in post-trial motions for any other injury.

After Martinez settled with four defendants for $2.3 million for his indivisible

injury, the trial court ordered Appellants to pay for the same injury again, in its

entirety. The trial court erred by not applying the one satisfaction rule and reducing

the judgment by the settlement amounts Martinez already received for the same

injury.

This Court should reverse and render judgment reducing the trial court’s

judgment by $2.3 million plus 18% interest on the amount of each settlement

payment from the date Martinez received it until the judgment is satisfied. The

chart below calculates and summarizes the proper amount of actual damages, if this

Court were to reduce the judgment by the applicable settlement credits to the date

this brief is due, August 11, 2015:

10 Amount Owed on Note Principal Balance of Note $1,275,000

Interest at 18% from Apr. 15, 2008 to Aug. 11, 2015 (7 yrs, 3 mo., 28 days) $1,681,480.56 Total Owed $2,956,481

Settlement Credits Kittleman Thomas ($175,000)

Interest at 18% from Apr. 28, 2013 to Aug. 11, 2015 (2 yrs, 3 mo., 14 days) ($72,083.20)

Fidelity ($300,000)

Interest at 18% from Mar. 10, 2014 to Aug. 11, 2015 (1 yr, 5 mo., 1 day) ($76,647.95)

San Jacinto ($1,275,000)

Interest at 18% from Mar. 12, 2014 to Aug. 11, 2015 (1 yr, 5 mo.) ($325,125)

Walker Twenhafel ($550,000)

Interest at 18% from June 17, 2014 to Aug. 11, 2015 (1 yr, 1 mo., 29 days) ($115,115.67)

Total Settlement Credits + Interest) ($2,888,972)

Total Owed After Application of Settlement Credits $67,509

A. Standard of Review

A trial court’s determination of the existence or amount of a settlement credit

is reviewed for abuse of discretion. Tex. Capital Sec. Inc. v. Sandefer, 108 S.W.3d

923, 925 (Tex. App.—Texarkana 2003, pet. denied); Oyster Creek Fin. Corp. v. 11 Richwood Invs. II, Inc., 176 S.W.3d 307, 326 (Tex. App.—Houston [1st Dist.] 2004,

pet. denied). After the nonsettling defendant presents evidence of the plaintiff’s

benefit from settlements with other defendants, the trial court “shall presume” the

settlement credit applies unless the plaintiff presents evidence to overcome this

presumption. Utts v. Short, 81 S.W.3d 822, 829 (Tex. 2002).

B. The One Satisfaction Rule Applies to Both Tort Claims and Contract Claims. During post-trial proceedings, Martinez elected to recover for breach of

contract, (28 RR 13), and then he argued that the one satisfaction rule does not apply

in contract actions. Texas law is the opposite. In re DCP Midstream, L.P., No.

13-14-00502-CV, 2014 Tex. App. LEXIS 11092, at *20 (Tex. App.—Corpus

Christi Oct. 7, 2014, orig. proceeding) (“The application of the [one satisfaction]

rule is not limited to tort claims.”); Matthews v. P.D. Sohn, No. 13-12-00302-CV,

2013 Tex. App. LEXIS 7277, at *5 (Tex. App.—Corpus Christi June 13, 2013, no

pet.) (same); Travelers Indem. Co. v. Page & Assocs. Constr. Co., 1998 Tex. App.

LEXIS 7531, at *5 (Tex. App.—Amarillo Dec. 3, 1998, no pet.) (“Our courts

routinely apply the one satisfaction rule in contract cases.”).

The one satisfaction rule provides that “a party which suffers but one injury

can recover only one satisfaction for damages arising from that injury.” El Paso

Nat. Gas Co. v. Berryman, 858 SW.2d 362, 364 (Tex. 1993); see also Tony Gullo

Motors I, L.P. v. Chapa, 212 S.W.3d 299, 303 (Tex. 2006) (“There can be but one 12 recovery for one injury.”) First Title Co. v. Garrett, 860 S.W.2d 74, 79 (Tex. 1993)

(“The ‘one satisfaction’ rule . . . prohibits a plaintiff from recovering twice for a

single injury.”).

The one satisfaction rule guards against “a plaintiff receiving a windfall by

recovering an amount in court that covers the plaintiff’s entire damages, but to

which a settling defendant has already partially contributed.” Galle, Inc. v. Pool,

262 S.W.3d 564, 573 (Tex. App.—Austin 2008, pet. denied). Otherwise, a plaintiff

could recover an amount greater than what a jury determined would fully

compensate the plaintiff for that injury. Id. That happened here.

The one satisfaction rule applies to both contract and tort claims when, as

here, both types of claims are alleged against multiple defendants in the same

lawsuit. In re DCP Midstream, L.P., No. 13-14-00502-CV, 2014 Tex. App. LEXIS

11092, at *20 (Tex. App.—Corpus Christi Oct. 7, 2014, orig. proceeding) (“The

application of the [one satisfaction] rule is not limited to tort claims.”); Matthews v.

P.D. Sohn, No. 13-12-00302-CV, 2013 Tex. App. LEXIS 7277, at *5 (Tex.

App.—Corpus Christi June 13, 2013, no pet.) (same); Osborne v. Jauregui, 252

S.W.3d 70, 75 (Tex. App.—Austin 2008, pet. denied) (en banc) (same); Galle, Inc.

v. Pool, 262 S.W.3d 564, 573 (Tex. App.—Austin 2008, pet. denied) (same).

In other words, “the absence of tort liability does not preclude the application

of the one satisfaction rule.” Oyster Creek Fin. Corp. v. Richwood Invs. II, Inc.,

13 176 S.W.3d 307, 327 (Tex. App.—Houston [1st Dist.] 2004, pet. denied); AMX

Enterp., Inc. v. Bank One, N.A., 196 S.W.3d 202, 206 (Tex. App.—Houston [1st

Dist.] 2006, pet. denied); Emerson Elec. Co. v. Am. Permanent Ware Co., 201

S.W.3d 301, 314 (Tex. App.—Dallas, 2006, no pet.).

The one satisfaction rule is “consistent with principles of contract law, which

preclude a non-breaching party from recovering damages for breach of contract that

would put the non-breaching party in a better position than if the contract had been

performed.” Metal Building Components, LP v. Raley, No. 03-05-00823, 2007

Tex. App. LEXIS 186, at *58 n.22 (Tex. App.—Austin 2007, no pet.); see also

Travelers Indem. Co. v. Page & Assocs. Constr. Co., No. 07-97-0338-CV, 1998

Tex. App. LEXIS 7531, at *5 (Tex. App.—Amarillo Dec. 3, 1998, no pet.) (“Our

courts routinely apply the one satisfaction rule in contract cases.”); RSR Corp. v.

Int’l Ins. Co., No. 3:00-CV-0250-P, 2009 U.S. Dist. LEXIS 27745, at *34 (N.D.

Tex. Mar. 23, 2009), aff’d 612 F.3d 851 (5th Cir. 2010) (“Texas courts have

established that the one-satisfaction rule may be applied to contract claims.”).

The one satisfaction rule applies to both tort and contract claims, and the

reason is simple: Under Texas law, what matters is the nature of the plaintiff’s

injury, not the nature of the plaintiff’s causes of action. In re DCP Midstream,

2014 Tex. App. LEXIS 11092, at *20 (Corpus Christi) (“[W]hether the [one

satisfaction] rule may be applied depends not on the causes of action asserted but

14 rather the injury sustained.”); Matthews, 2013 Tex. App. LEXIS 7277, at *5 (Corpus

Christi) (same); Osborne, 252 S.W.3d at 75 (same); Galle, 262 S.W.3d at 573

(same); Allan v. Nersesova, 307 S.W.3d 564, 574 (Tex. App.—Dallas 2010, no pet.)

(“Whether the [one satisfaction] rule applies is determined not by the cause of action

but by the injury.”).

Because the injury is what matters, not the causes of action alleged, “appellate

courts have applied the one satisfaction rule when the defendants commit the same

act as well as when the defendants commit technically differing acts which result in

a single injury.” Waite Hill Servs., Inc. v. World Class Metal Works, Inc., 959

S.W.2d 182, 185 (Tex. 1998); Stewart Title Guaranty v. Sterling, 822 S.W.2d 1, 7

(Tex. 1991), overruled on other grounds by Tony Gullo Motors L.L.P. v. Chapa, 212

S.W.3d at 313-14. Here, Appellants and the settling defendants committed

different acts that resulted in a single injury, nonpayment of the Note.

The number and type of claims alleged have no bearing on whether the one

satisfaction rule should apply when the plaintiff has suffered a single, indivisible

injury. See Stewart Title, 822 S.W.2d at 8 (“There can be but one recovery for one

injury, and the fact that more than one defendant may have caused the injury or that

there may be more than one theory of liability, does not modify the rule.”); Galle,

Inc. v. Pool, 262 S.W.3d 564, 573 (Tex. App.—Austin 2008, pet. denied) (“Thus, if

the plaintiff has suffered only one injury, even if based on overlapping and varied

15 theories of liability, the plaintiff may only recover once.”). “When, as here, it is

alleged that a breach of contract and a tort caused a single injury, the rationale

behind the ‘one-satisfaction’ rule permitting successive suits against

joint-tortfeasors until a judgment is satisfied is equally applicable.” Krobar

Drilling, LLC v. Ormiston, 426 S.W.3d 107, 111-12 (Tex. App.—Houston [1st

Dist.] 2012, pet. denied).

That is the situation here: The breaches of contract Martinez alleged against

Appellants, the fraud Martinez alleged against Israely, and the breaches of contract

and torts Martinez alleged against the four Settling Parties were all alleged, proved

and argued to have been caused by a single injury—nonpayment of the Note.

C. Settlement Credits Should Be Applied When a Plaintiff Suffers a Single, Indivisible Injury and Settles with Co-Defendants. The one satisfaction rule applies when there is a single, indivisible injury.

An “indivisible injury” means “an injury that may have been caused by distinct

actors but is so singular in character as to render appointment of fault impossible.”

First Title Co. v. Garrett, 860 S.W.2d 74, 78 (Tex. 1993).

To determine whether a plaintiff has suffered a single, indivisible injury,

courts examine the plaintiff’s petition and the jury’s answer to the damages question.

For example, in DCP Midstream, this Court granted a writ of mandamus compelling

discovery of a settlement agreement needed to adjudicate a settlement credit issue,

because “[t]he [plaintiff’s] fifth amended original petition includes numerous causes 16 of actions and factual allegations that are virtually identical as against both [the

non-settling party] and [the settling party].” DCP Midstream, 2014 Tex. App.

LEXIS 11092, (Corpus Christi) at *23 (emphasis added). Similarly, in Galle, the

court held that the contract damages and the negligent misrepresentation damages

were the same “based on pleadings and evidence of a common harm or injury of

proliferating mold.” Galle, 262 S.W.3d at 574.

To determine if multiple theories asserted against multiple defendants

actually assert only a single, indivisible injury, courts examine the jury charge. As

this Court explained,

When a plaintiff pleads alternate theories of liability, a judgment that awards damages based upon both theories does not amount to a double recovery if the theories of liability arise from two separate and distinct injuries, and there has been a separate and distinct finding of damage on both theories of liability. An impermissible double recovery occurs when there is only one injury, the theories of liability are mutually exclusive, or there are no separate damages findings based on the alternate theories of liability.

FDIC v. White, No. 13-08-00263, 2011 Tex. App. LEXIS 8344, at *15 (Tex.

App.—Corpus Christi Oct. 20, 2011, no pet.) (emphasis added). That happened

here: There were no separate damages findings because Martinez submitted only

one damage question for all his theories against Appellants. Question 4, the

damages question, lumped failure to pay the note (question 1C), failure to pay the

guaranty (question 3C), and fraud (question 3D) together, thus recognizing that

Martinez suffered one indivisible injury. Martinez was right to submit the damages 17 question that way. One injury properly yields one damages question and one

recovery.

Similarly, in Allan v. Nersesova, 307 S.W.3d 564, 574 (Tex. App.—Dallas

2010, no pet.), the Dallas Court held that the trial court properly granted settlement

credit because, as here, “the jury charge contained a single damages question for

damages ‘resulting from the occurrences in question.’ The jury did not make

separate damages findings for the negligence and breach of contract claims.”

Even when a jury made separate damages findings on various claims, the

Texas Supreme Court applied the one satisfaction rule because “these were contract

as well as tort damages, and the jury awarded identical amounts in response to both

damages questions.” Waite Hill Servs., Inc. v. World Class Metal Works, Inc., 959

S.W.2d 182, 185 (Tex. 1998). Applying the one satisfaction rule in this case

would be even more appropriate than in Waite Hill because this jury awarded one

amount for all claims in response to one damages question.

D. Martinez Alleged Contract and Tort Claims Against All Seven Defendants Based on a Single, Indivisible Injury—Nonpayment of the Note.

The pleadings and the jury charge reveal that Martinez asserted numerous

contract and tort claims against multiple defendants, but those claims sought

recovery for a single, indivisible injury—nonpayment of the Note.

18 1. The only damage Martinez pleaded was that he never received the principal, interest, and attorney’s fees due under the Note.

Martinez’s pleadings asserted he suffered one injury under every theory against

every defendant. From Appellants, Martinez sought one measure of damages

whether suing in contract or in tort—money due under the Note. CR 358. From

the other four defendants, Martinez sought the same, one measure of damages

whether suing in contract or in tort—money due under the Note.

Martinez sued San Jacinto, which settled before trial for $1.275 million, for

conspiracy, fraud, and negligence. The only injury Martinez alleged was that he

never received his due under the Note. CR 359, 362. He sought “economic out of

pocket damages (the principal amount lent to Sky View) and benefit of the bargain

damages (18% interest under the loan documents).” CR 362. He alleged one

injury—nonpayment of the Note.

As to Fidelity, which settled before trial for $300,000, Martinez asserted

Fidelity should pay for loss caused by invalid loan documents. CR 362. Martinez

asserted that, after the foreclosure, he had “one other avenue to possibly recoup the

personal funds he loaned to Sky View—making a claim on his title insurance

policy.” CR 357. Martinez’s claims against Fidelity included not only breach of

contract for losses arising from invalid loan documents, but also Fidelity’s alleged

failure to properly supervise its agent, San Jacinto, culminating in a botched closing.

CR 362-64. Given that Martinez’s claimed damages against Fidelity’s agent, San 19 Jacinto, were nonpayment the Note, it follows that Martinez’s vicarious liability

claims against Fidelity were for the same injury.

Against the Kittleman Thomas law firm, which settled before trial for

$175,000, Martinez alleged a legal malpractice/negligence claim alleging that if the

firm had properly closed the loan transaction, Appellants’ contractual liability to

Martinez would have been clear. Specifically Martinez asserted he should recover

“lost principal and interest which he was entitled to under the loan documents.” CR

207, 225.

Against the Walker Twenhafel law firm, which settled for $550,000, Martinez

asserted a legal malpractice/negligence claim based upon the firm’s failure to advise

Martinez that foreclosing the first lien would likely eliminate Martinez’s second lien

and his title insurance claim. CR 364, 392. Once again, the damages were

nonpayment of the Note.

Thus, Martinez’s pleadings against every defendant alleged one

2. The only proof of damages Martinez presented was that he never received his money under the Note.

The jury found that Israely committed fraud, but Martinez never presented

any evidence of fraud damages except nonpayment of the Note. For example,

during closing argument, Martinez asked solely for the amount due on the Note, as

calculated in a trial exhibit, and nothing else. 27 RR 126-27; 30 RR 876 (PX 609). 20 3. Martinez never asked the jury to find, and the jury never found, any damages except nonpayment of the Note.

The jury charge included liability questions for tort and contract claims against

Appellants and Gottlieb. But instead of asking separate questions on

damages—one for tort claims and one for contract claims—the jury charge

contained only one question: “What sum of money, if any, if paid now in cash,

would fairly and reasonably compensate Martinez for his damages, if any, that

resulted from either (1) Sky View’s failure to comply with the Note; (2) Gottlieb’s

failure to comply with the guaranty agreement; (3) Israely’s failure to comply with

the guaranty agreement; or (4) Israely’s fraud?” CR 408 (emphasis added).

The single question submitted treated the injury from either theory the same,

because that was how Martinez pleaded, proved, and argued his case. If Martinez

had pleaded or proved separate damages for separate injuries, the jury charge would

have included a damages question for each separate injury. Neither the jury’s

answer to the one damages question submitted nor any evidence anywhere in the

record shows that any part of any settlement was for an injury different from that

found in Question 4.

21 4. Martinez Failed to Meet His Burden to Demonstrate Allocation of Settlement Funds Among Defendants.

If Martinez actually suffered more than a single, indivisible injury, it was his

burden to prove that fact and how the four settlements were allocated among the

multiple injuries. Martinez never even tried to do that. He presented no evidence

of allocation. Because he failed to meet his burden, the trial court erred by not

applying settlement credits.

This Court has explained the procedural and burden-shifting framework a trial

court must use to determine whether and how to apply settlement credits under the

one satisfaction rule. Matthews v. P.D. Sohn, No. 13-12-00302-CV, 2013 Tex.

App. LEXIS 7277, at *5 (Tex. App.—Corpus Christi June 13, 2013, no pet.) (citing

Cohen v. Arthur Andersen, L.L.P., 106 S.W.3d 304, 310 (Tex. App.—Houston [1st

Dist.] 2003, no pet.)). Specifically, the defendant must first put the settlement

agreement or some evidence of its amount in the record. Id.

The burden then shifts to the plaintiff, who must “tender a valid settlement

agreement allocating the settlement between (1) damages for which the settling and

non-settling defendant are jointly liable, and (2) damages for which only the settling

party was liable.” Id. If the plaintiff cannot satisfy this burden, the non-settling

defendant is entitled to a credit for the entire settlement amount. Id.

Here, Appellants satisfied their burden by introducing evidence of the

settlement amounts. During the hearing on the Motion for Entry of Judgment, 22 Martinez’s counsel stated the amounts of the settlements. 28 RR 15, 23-25.

Then, Appellants provided evidence of the settlement amounts in their (1)

Memorandum in Support of [Their] Response to Plaintiff’s Motion for Judgment;

(2) Supplemental Brief of Defendants’ . . . in Opposition to Plaintiff’s Motion for

Judgment; and (3) Motion for Modification of Judgment. Supp. CR 38, 76; CR 457.

Appellants’ counsel filed an uncontested affidavit specifically identifying the

settlement amounts, settlement parties, and settlement dates (CR 479), and Martinez

stipulated to the amounts on the record during the hearing on Appellants’ post-trial

motions. 29 RR 27-28. Additionally, the actual settlement agreements between

San Jacinto, Kittleman Thomas, and Martinez were admitted in evidence. 30 RR

187 (Court Ex. B); 31 RR 243 (Court Ex. 2).

Because Appellants proved the settlements, the burden shifted to Martinez to

present evidence allocating the settlement between (1) damages for which the

Appellants and the settling defendants were jointly liable, and (2) damages for which

only the settling defendants were liable. He never did. No such evidence exists.

Martinez failed to meet this burden.

The trial court failed to follow the burden-shifting framework this Court

requires. If it had, the trial court would have granted the settlement credits.

Because Martinez failed to present any evidence allocating the settlement amounts,

the trial court erred in refusing them.

23 By refusing to apply credits, the trial court permitted a windfall recovery. If

this Court affirms, Martinez would recover more than $5.8 million (through August

11, 2015) in compensation for nonpayment of a $1.275 million loan. See p. 11

above ($2,956,481+$2,888,972=$5,845,453). He would be better off than if the

Note had been paid, which it mostly was by settlements. That is more than Texas

law allows.

E. The Worthington Case Does Not Support Denial of Settlement Credits Here. In post-trial motions, Martinez relied solely on the Worthington case to assert

settlement credits should be denied. GE Capital Commercial, Inc. v. Worthington

Nat’l Bank, 754 F.3d 297 (5th Cir. 2014). Worthington, a federal court decision, is

not binding on this Court. Penrod Drilling Corp. v. Williams, 868 S.W.2d 294, 296

(Tex. 1993).

This Court may treat the opinion in one of two ways. First, this Court could

distinguish the facts of Worthington and hold it does not control here.

Alternatively, to the extent Worthington makes a guess under Erie R. Co. v.

Tomkins, 304 U.S. 64 (1938) that the one satisfaction rule does not apply in Texas

contract cases, this Court should disregard Worthington because it is wrong. As the

Seventh Court of Appeals stated years before Worthington was decided, “Our courts

routinely apply the [one satisfaction rule] in contract cases.” Travelers Indem. Co.

v. Page & Assocs. Constr. Co., 1998 Tex. App. LEXIS 7531 at *5 (Tex. 24 App.—Amarillo, Dec. 3, 1998, no pet.). And as the Northern District of Texas

stated years before Worthington was decided, “Texas courts have established that

the one satisfaction rule may be applied to contract claims. In fact, Texas courts

appear to use the one satisfaction rule as a gap-filler in contract cases to prevent a

double recovery in cases where there is not a contractual provision preventing

double recovery.” RSR Corp. v. Int’l Ins. Co., 2009 U.S. Dist. LEXIS 27745 at *34

(N.D. Tex. 2009), aff’d 612 F.3d 851 (5th Cir. 2010). Either way, Appellants should

get a dollar-for-dollar credit for the four settlements.

F. Worthington is different from, and should not control, this case. In Worthington, Worthington Bank was sued by GE under the Texas

Fraudulent Transfer Act. Worthington requested a settlement credit for proceeds

the GE plaintiffs had received from a never-sued third party, Citibank, in a contract

dispute. Worthington, 754 F.3d at 304. The Fifth Circuit predicted the Texas

Supreme Court would hold the one satisfaction rule was inapplicable under those

facts. Id. at 308. The Worthington opinion itself demonstrates how different that

case was from this case and why Worthington would call for a different result here.

First, the Fifth Circuit framed the issue by stating, “The Texas Supreme Court

has not considered the applicability of the one satisfaction rule where a tortfeasor

seeks a settlement credit based on the settlement of a contractual dispute with a

non-defendant third party.” Id. at 305. Our case is different. Appellants did not

25 seek a credit “based on the settlement of a contractual dispute with a non-defendant

third party.” Appellants sought a credit based on settlements with four jointly sued

co-defendants, and they, like Appellants, were all sued in—and settled in—tort.

Martinez alleged all the defendants were tortfeasors, see Chart above at page 5, and

in Question 3D, the jury found that Israely was a tortfeasor. If the language just

quoted describes when Worthington applies, then it should not apply here, because

co-defendants, not non-defendants, were sued for torts, not solely in contract, and

they settled in tort.

Second, the following quotes from Worthington confirm the case is

distinguishable and does not support Martinez’s trial court argument:

• “[T]he GE Plaintiffs have never alleged that Citibank was a joint

tortfeasor alongside Worthington.” Worthington, 754 F.3d at 308. But Mr.

Martinez did allege that every settling party—San Jacinto, Fidelity, Walker

Twenhafel, Kittleman Thomas—and Israely were tortfeasors, even accusing San

Jacinto and Israely of conspiring with each other and with other defendants to

defraud him. CR 359.

• “Nor did Worthington ever file a cross-claim against Citibank seeking

contribution under a theory that Citibank was a joint tortfeasor.” Worthington, 754

F.3d at 308. But Appellants did file a cross-claim seeking contribution from San

Jacinto as a joint tortfeasor. CR 108.

26 • “In the absence of any such allegation, we must conclude that

Worthington and Citibank did not ‘commit the same act’ or ‘commit technically

different acts that result(ed) in a single injury.’” Worthington, 754 F.3d at 308-09.

But here, Martinez did allege that San Jacinto and other settling co-defendants

committed the same act (conspiracy with Mr. Israely to commit fraud) plus

technically different acts by the other three settling defendants (negligence, fraud,

breach of contract, breach of fiduciary duty, and legal malpractice) that resulted in a

single injury—nonpayment of the note. CR 205-10, 358-64

If the facts here had been before the Fifth Circuit, the Worthington Court

probably would have granted settlement credits. For example, the Worthington

Court held that “[f]or purposes of applying the one-satisfaction rule, a settling

party’s status as joint tortfeasor need not be proven by evidence, so long as there is

an allegation to this effect.” Worthington, 754 F.3d at 308 (emphasis added).

Under that rule from Texas law and Worthington, Martinez’s tort allegations against

all settling defendants establishes their status as joint tortfeasors for purposes of

applying the one satisfaction rule. CR 205-10, 358-64. Worthington, properly

understood, actually supports Appellants’ argument that the trial court erred by not

27 G. Worthington was wrongly decided. But if the Worthington Court really meant that the one satisfaction rule should

never apply to reduce a judgment based in contract, then it is wrong and should not

be followed. The Fifth Circuit explained that “the one-satisfaction rule emerges in

Texas Supreme Court jurisprudence as a tort law contribution doctrine, and its

application has generally been limited to cases in which a plaintiff settles with an

alleged joint tortfeasor.” Worthington, 754 F.3d at 308. That is incorrect.

For that conclusion, Worthington relied heavily on a case from the Austin

Court of Appeals—CTTI Priesmeyer, Inc. v. K&O Ltd., 164 S.W.3d 675 (Tex.

App.—Austin 2005, no pet.). The CTTI court seemingly held that the one

satisfaction rule should never apply to contract claims because breach of contract

defendants and tort defendants could never be jointly liable for all damages because

the tort defendants were not parties to the contract. CTTI, 164 S.W.3d at 685. Of

course, Israely, who was a tort defendant, was also a party to the contract, so that

basis for the CTTI opinion does not apply here. That alone distinguishes CTTI, but

there are other reasons not to follow CTTI, or Worthington.

The CTTI opinion has never been expressly overruled; instead, the Austin

Court in two later opinions, including an en banc opinion, has reached the opposite

conclusion while ignoring CTTI’s holding. In those opinions, the Austin Court

declared, “the application of the rule is not limited to tort claims, and whether the

28 rule may be applied depends not on the cause of action asserted but rather the injury

sustained.” Osborne v. Jauregui, Inc., 252 S.W.3d 70, 75 (Tex. App.—Austin

2008, pet. denied) (en banc); Galle, Inc. v. Pool, 262 S.W.3d 564, 573 (Tex.

App.—Austin 2008, pet. denied) (same). These two cases destroy the authority of

CTTI’s holding. Even if they did not, the litany of cases cited above demonstrates

that Texas law is clear: the one satisfaction rule has long been applied to both tort

and contract claims.

II. THE ATTORNEYS’ FEES SHOULD BE REDUCED.

The jury awarded Martinez $569,062 as reasonable attorneys’ fees for

representation through trial and $100,000 for representation through appeal to this

Court. App. 2 (jury charge). The trial court rendered judgment for those amounts.

App. 1 (final judgment). The attorneys’ fees are excessive, especially when

considered in light of the settlement credits that should have been applied.

A. Standard of Review An attorneys’ fees award is reviewed for excessiveness under a factual

sufficiency of the evidence standard. Snoke v. Republic Underwriters Ins. Co., 770

S.W.2d 777, 777-78 (Tex. 1989). The appellate court may suggest a remittitur.

Allied Finance Co. v. Garza, 626 S.W.2d 120, 127 (Tex. App.—Corpus Christi

1981, no pet.); Tex. R. App. P. 43.2, 43.6, and 46.3.

29 B. Texas Law Does Not Permit Attorneys’ Fees if the Case Was Overworked or if the Prevailing Party Retained Numerous Counsel During the Litigation. The fact finder should consider the following factors to determine the

reasonableness of attorneys’ fees:

1) The time and labor required, the novelty and difficulty of the questions involved, and the skill required to perform the legal service properly; 2) The likelihood that the acceptance of the particular employment will preclude other employment by the lawyer; 3) The fee customarily charged in the locality for similar legal services; 4) The amount involved and the results obtained; 5) The time limitations imposed by the client or by the circumstances; 6) The nature and length of the professional relationship with the client; 7) The experience, reputation, and ability of the lawyer or lawyers performing the services; and 8) Whether the fee is fixed or contingent on results obtained or uncertainty of collection before the legal services have been rendered.

Arthur Andersen & Co. v. Perry Equip. Corp., 945 S.W.2d 812, 818 (Tex. 1997)

(emphasis supplied) (citing Tex. Disc. R. Prof. Conduct 1.04). These factors were

included as instructions under jury Question No. 5. App. 2. A party like Martinez

seeking attorneys’ fees under the lodestar method must document the hours

expended on the litigation and their value. El Apple I, Ltd. v. Olivas, 370 S.W.3d

757, 761 (Tex. 2012).

30 The reasonableness of attorneys’ fees is a question of fact, but the trial and

appellate courts still have a duty to reduce an excessive fee. Argonaut Ins. Co. v.

ABC Steel Prods. Co., 582 S.W.2d 883, 889 (Tex. App.—Texarkana 1979, writ ref’d

n.r.e.); Mission Park Funeral Chapel, Inc. v. Gallegos, No. 04-00-00459-CV, 2001

Tex. App. LEXIS 2978, at *14 (Tex. App.—San Antonio May 9, 2001, no pet.).

The court should examine the entire record to ensure that the attorneys’ fees awarded

are “reasonable under the circumstances of each case and bear some relationship to

the amount in controversy or the amount recovered.” Allied Finance Co. v. Garza,

626 S.W.2d 120, 127 (Tex. App.—Corpus Christi 1981, no pet.).

Texas courts have repeatedly held that the losing party should not pay for the

prevailing party’s over-preparation, over-trying, and over-briefing of the litigation.

Allied Finance, 626 S.W.2d at 127 (“[I]f their attorneys expended a total of 173

hours solely on the Federal Truth in Lending Act aspect of the case, then they

overprepared, overtried and overbriefed that area of the litigation, and [the

non-prevailing party] should not be held liable for such overproduction, overtrying

of the case, or overbriefing in the appellate court.”); Argonaut, 582 S.W.2d at 889

(concluding that attorneys’ fees award was excessive because amount of time spent

on case made clear that the case was “overworked”).

In Musgrave v. Brookhaven Lake Prop. Owners Ass’n, the damages awarded

were $49,420.97 and the attorneys’ fees were $49,528.21. 990 S.W.2d 386, 402

31 (Tex. App.—Texarkana 1999, pet. denied). Holding the attorneys’ fees award was

excessive, the court concluded the attorneys “overprepared for this case and [the

non-prevailing party] should not be held liable for the cost of overpreparing.” Id.;

see also Armstrong Forest Prods. v. Redempco, Inc., 818 S.W.2d 446, 453 (Tex.

App.—Texarkana 1991, pet. denied) (affirming a trial court’s decision not to award

a greater amount of attorneys’ fees because the case had been “overworked”).

Similarly, the losing party should not be forced to pay for inefficiencies

caused by having multiple and different counsel over time. As one court explained

in holding a case had been “overworked,” “[s]even lawyers worked on this case for

[the prevailing party], not at the same time, but one after the other. It is probably

safe to assume that each new lawyer assigned to the case was required to spend some

time replowing the same ground as his or her predecessor.” Thomas v. Bobby D.

Assocs., No. 12-08-00007-CV, 2008 Tex. App. LEXIS 5881, at *11 (Tex.

App.—Tyler 2008, no pet.).

As the Texas Supreme Court declared, “charges for duplicative, excessive,

or inadequately documented work should be excluded.” El Apple, 370 S.W.3d at

762. “Counsel for the prevailing party should make a good faith effort to exclude

from a fee request hours that are excessive, redundant, or otherwise unnecessary.”

Id. (citing Hensley v. Eckerhart, 461 U.S. 424, 434 (1983)).

32 C. Martinez Incurred Excessive Attorneys’ Fees of Over $369,000. Martinez divided his attorneys’ fees into four different stages with each stage

covering a certain date range during the litigation. The amount Martinez requested

for the third and fourth stages of the litigation—trial preparation and trial

attendance—is excessive, especially when measured against his requested fees for

other stages.

Stage one ran from November 2009 to May 17, 2013—three and one-half

years. 26 RR 118-19. During this stage, the fees were incurred by Mark Walker of

Walker Twenhafel, an attorney who Martinez fired on the eve of a trial setting and

later sued in this litigation for legal malpractice in connection with nonpayment of

the Note. 3 26 RR 119; CR 384. Ultimately, Martinez sought no more than

$140,000 in trial court attorneys’ fees for this stage of the litigation as a result of his

resolution of the fee dispute. Id.

Stage two of the litigation ran from May 17, 2013 to April 18, 2014, during

which 125 hours were incurred at $475/hour. Id. Thus, Martinez sought $59,375

for these eleven months. Id. at 119-20.

The excessive attorneys’ fees begin at Martinez’s stage three of the litigation,

a five-day period from April 19, 2014, the Thursday before the trial started on April 3 Although Walker Twenhafel allegedly charged Martinez almost $500,000 during this time period (26 RR 119), Martinez retained Ray Thomas of Kittleman Thomas to represent him in a lawsuit filed by Walker Twenhafel against Martinez arising from unpaid legal fees. 30 RR 22 (Ex. A). Martinez had previously sued Kittleman Thomas in this litigation for legal malpractice. CR195; 30 RR 187 (Ex. B). After being sued by Martinez in this matter and after representing Martinez in the fee dispute with Walker Twenhafel, Kittleman Thomas represented Martinez at the trial of this matter, and Ray Thomas testified as Martinez’s expert on attorneys’ fees. 33 24, 2014. Id. at 121. Beginning at stage three, Martinez had at least six attorneys,

three law firms, and one paralegal working on his case full time. See id. For this

five-day period, Martinez sought and was awarded fees of $87,062.50. Id.

Stage four of the litigation ran from April 24, 2014 to May 8, 2014, the last

day of trial. Id. For this fifteen-day period, Martinez sought fees of $282,625.

Id. at 122.

Combining stages three and four, Martinez sought attorneys’ fees in the

amount of $369,687 for services rendered from April 19, 2014 to May 8, 2014—a

period of 20 days. This amount is excessive when placed in context. It amounts to

almost $18,500 per day, or $770 per hour, based on working 24-hour days.

Martinez’s decision to fire his original trial attorney, Walker, when this case was

first called to trial and his decision to retain six new attorneys from three firms for

trial may explain the surge in fees, but they should be borne by him, not by

Appellants. See Thomas v. Bobby D. Assocs., No. 12-08-00007-CV, 2008 Tex.

App. LEXIS 5881, at *11 (Tex. App.—Tyler 2008, no pet.). These numbers reflect

over-preparation, over-working, and over-trying the case, as in the opinions cited

above.

Another reason for the excessiveness is that Martinez never segregated the

attorney’s fees he incurred suing Appellants from those he incurred suing the four

settling defendants, nor did he segregate fees he incurred suing Appellants under tort

34 claims, for which attorney’s fees are not recoverable, from those he incurred suing

Appellants on contract claims. See CR 447, 454 (Appellants’ motion for new trial);

CR 457, 463-465 (Appellants’ motion for modification of judgment); Tony Gullo

Motors I, L.P. v. Chapa, 212 S.W.3d 299, 311 (Tex. 2006). But as the previous

paragraph shows, even the unsegregated fees were excessive.

Assuming one attorney billed at $475/hour (the highest rate billed to

Martinez), and worked twenty consecutive ten-hour days, she would earn $95,000.

Accordingly, this Court should suggest a remittitur of $274,687, which is the

amount by which Martinez’s legal bills over the twenty days exceed $95,000. As

explained below, the fee awarded is also excessive in light of the application of

settlement credits to the judgment.

D. Martinez’s Attorneys’ Fees Are Excessive After Settlement Credits Are Applied. Martinez’s attorneys’ fees are excessive when measured after the proper

application of settlement credits.

We understand that attorneys’ fees which exceed actual damages may be

reasonable. Even so, a court should consider the proportionality between the

damages awarded and the attorneys’ fees. See Musgrave, 990 S.W.2d at 402

(attorneys’ fees of $49,528.21 were excessive where damages were $49,420.97);

Thomas, 2008 Tex. App. LEXIS 5881, at *9 (attorneys’ fees of $49,000 were

excessive where damages were $7,030). “Unless an appellate court is reasonably 35 certain that the jury was not significantly influenced by the erroneous amount of

damages it considered, the issue of attorneys’ fees should be retried if the damages

awarded are reduced on appeal.” Young v. Qualls, 223 S.W.3d 312, 314 (Tex.

2007) (emphasis added); Barker v. Eckman, 213 S.W.3d 306, 314 (Tex. 2006)

(when damages on appeal were reduced to 1/7 of the trial court award, a new trial on

attorney’s fees was required).

If this Court grants the settlement credits the trial court should have granted,

that would reduce Martinez’s actual damages by over 97%.4 Given that three of the

settlements were paid between April 28, 2013 and April 1, 2014—from 27 to 362

days before trial began—for a total amount of $1,818,625 ($1,750,000 plus

interest5), Martinez’s attorneys should have reduced the time spent preparing for

trial because they knew well before trial that a much lesser amount remained in

dispute.

Tellingly, Martinez’s contingent fee agreement with his new attorneys

acknowledges how the proper application of settlement credits should help

determine what fee is reasonable, because the agreement took settlement credits into

account. As Appellants stated in their Motions for New Trial and for Modification

4 $2,888,972 total settlement credits plus interest ÷ $2,956,481 total owed = 0.977 . See Chart above at 11 showing amount owed under Note and sought as settlement credits as of August 11, 2014. 5 This amount represents the sum total of $206,500 (the sum of the Kittleman Thomas settlement of $175,000 plus 18% interest for one year), plus $307,311 (the sum of the Fidelity settlement of $300,000 plus 18% interest for one month and 19 days), plus $1,304,814 (the sum of the San Jacinto settlement of $1,275,000 plus 18% interest for one month and seventeen days). 36 of Judgment, that agreement limited their fee to 25% of the judgment after

allowance of all settlement credits. CR 454, 465. Martinez’s expert witness on

attorney’s fees testified to the same thing, i.e., that counsel would receive “25% of

what is ultimately recovered,” which means Martinez’s counsel had already

recovered 25% of the three pretrial settlements totaling $1,750,000 before the

expensive twenty-day period immediately preceding trial began. 26 RR 113.

If this Court grants settlements credits to prevent a windfall for Mr. Martinez

based on his actual damages, it should also grant a remittitur of the attorneys’ fees

award or a new trial on attorney’s fees in order to prevent a windfall to Mr. Martinez

on that part of his recovery. See Goldman v. Alkek, 850 S.W.2d 568, 578-79 (Tex.

App.—Corpus Christi 1993, no writ) (op. on reh'g) (remanding for new trial of

attorney’s fees when this Court reduced a $210,000 judgment by only $4,900);

Young, 223 S.W.3d at 314; Barker, 213 S.W.3d at 314. This Court should suggest

a remittitur that reduces the attorneys’ fees by $274,687 to the total amount of

$95,000.

Finally, if Appellants prevail on either issue, this Court should hold they are

the prevailing parties on appeal, as this Court did in Goldman v. Alkek, 850 S.W.2d

at 578-79, and relieve Appellants from the judgment for $100,000 in attorneys’ fees

for this appeal.

37 PRAYER Appellants respectfully request that this Court:

(i) Reverse the judgment and render a new judgment that reduces

Mr. Martinez’s damages by $2.3 million plus 18% interest on each settlement from

the date it was paid until the judgment is satisfied;

(ii) Suggest a remittitur of Martinez’s trial court attorneys’ fees by

$274,687 to a total of $95,000 or remand for a new trial on attorney’s fees;

(iii) Hold that Appellants are the successful parties on appeal and thus

are not liable for the $100,000 conditional attorney’s fees awarded for appeal to this

Court;

(iv) Grant Appellants costs and all general relief to which they are

entitled.

38 Respectfully submitted,

/s/ Murry B. Cohen Murry B. Cohen Texas Bar No. 04508500 Akin Gump Strauss Hauer & Feld LLP 1111 Louisiana Street, 44th Floor Houston, Texas 77002 Telephone: (713) 220-5866 Facsimile: (713) 236-0822 mcohen@akingump.com

-and-

Joel Bailey Texas Bar No. 24069330 Akin Gump Strauss Hauer & Feld LLP 1700 Pacific Avenue, Suite 4100 Dallas, Texas 75201 Telephone: (214) 969-2800 Facsimile: (214) 969-4343 jbailey@akingump.com

ATTORNEYS FOR APPELLANTS

39 CERTIFICATE OF SERVICE As required by Texas Rule of Appellate Procedure 6.3 and 9.5(b), (d), (e), I certify that I have served this document on all other parties which are listed below via email on this the 11th day of August, 2015 as follows:

Michael E. Flanagan ROMAN GERONIMO MARTINEZ Law Office of Michael E. Flanagan MENDEZ 809 Chicago Avenue McAllen, Texas 78501 Ricardo Pumarejo, Jr. mike@lomef.com Kittleman Thomas, PLCC ATTORNEYS FOR PLAINTIFF 11149 Research Blvd., Suite 380 ROMAN GERONIMO MARTINEZ Austin, Texas 78759 MENDEZ rpumarejo@ktattorneys.com ATTORNEYS FOR PLAINTIFF Terry L. Scarborough ROMAN GERONIMO MARTINEZ Hance Scarborough, LLP MENDEZ 400 W. 15th, Suite 950 Austin, Texas 78701 Rafael Garcia, Jr. tscarborough@hslawmail.com Vaughan Waters ATTORNEYS FOR PLAINTIFF Thornton, Biechlin, Segrato, Reynolds ROMAN GERONIMO MARTINEZ & Guerra, LLC MENDEZ 418 East Dove Avenue McAllen, Texas 78504 Raymond L. Thomas rgarcia@thorntonfirm.com Kittleman, Thomas & Gonzalez, LLP vwaters@thorntonfirm.com 4900-B N. 10th St. ATTORNEYS FOR DEFENDANT McAllen, Texas 78504 AND CROSS-DEFENDANT, SAN rthomas@ktattorneys.com JACINTO TITLE SERVICES OF ATTORNEYS FOR PLAINTIFF RIO GRANDE VALLEY, LLC.

/s/ Murry B. Cohen Murry B. Cohen

40 CERTIFICATE OF COMPLIANCE Based on a word count run in Microsoft Word 2010, this brief contains 8,527

words, excluding the caption, identity of the parties and counsel, statement

regarding oral argument, table of contents, index of authorities, statement of the

case, statement of issues presented, signature, proof of service, certificate of

compliance, and appendix, pursuant to Tex. R. App. P. 9.4.

41 APPENDIX

TAB DESCRIPTION 1 Final Judgment

2 Jury Charge and Verdict

42 TAB 1 (Final Judgment) Electronically Filed 8/4/2014 2:25:32 PM Hidalgo County District Clerks Reviewed By: Kim Hinojosa

CAUSE NO. C-1401-10-G(4)

ROMAN GERONIMO MARTINEZ § IN THE DISfRicr COURT MENDEZ, Plaintiff § § v. § 370TH JUDICIAL DISTRICT § SKY VIEW AT LAS PALMAS, LLC, ILAN § ISRAELY, AND ABRAHAM GOTTLIEB, § Defendants § HIDALGO COUNTY, TEXAS

FINAL JUDGMENT

On April 28, 2014, this case was called for trial. Plaintiff, Roman Geronimo Martinez

Mendez, appeared through his attorney and announced ready for trial. Defendant, Sky View at

Las Palmas, LLC, appeared through its attorney and announced ready for trial. Defendant and

cross-claimant, Ilan Israely, appeared through his attorney and announced ready for trial.

Defendant, Abraham Gottlieb, had notice of the trial setting but did not attend. Third-Party

Defendant, San Jacinto Title Services of Rio Grande Valley, LLC ("San Jacinto"), appeared

through its attorney and announced ready for trial.

After a jury was impaneled and sworn, it heard the evidence and arguments of counsel.

In response to the jury charge, the jury made findings that the Court received, filed, and entered

of record. The questions submitted to the jury and the jury's findings are attached as Exhibit A

and incorporated by reference. Plaintiff filed a motion for judgment on the verdict. The Court

hereby RENDERS judgment in favor of Plaintiff and San Jacinto. It is therefore

ORDERED, ADJUDGED, AND DECREED that Plaintiff Roman Geronimo Martinez

Mendez have and recover jointly and severally from Defendants Sky View at Las Palmas, LLC,

Ilan Israely, and Abraham Gottlieb actual damages in the amount of Two Million Six Hundred

Sixty Five Thousand Eight Hundred Thirty Two Dollars and 72/100 ($2,665,832.72).

420 Electronically Filed 8/4/2014 2:25:32 PM Hidalgo County District Clerks Reviewed By: Kim Hinojosa

It is further ORDERED, ADJUDGED, AND DECREED that Plaintiff Roman Geronimo

Martinez Mendez have and recover jointly and severally from Defendants Sky View at Las

Palmas, LLC, Ilan Israely, and Abraham Gottlieb reasonable and necessary attorney's fees in the

amount of Five Hundred Seventy Four Thousand Sixty Two Dollars and 00/100 ($574,062.00).

It is further ORDERED, ADJUDGED, AND DECREED that if Defendants unsuccessfully

appeal this Final Judgment to an intermediate court of appeals, Plaintiff Roman Geronimo

Martinez Mendez shall have and recover jointly and severally from Defendants Sky View at Las

Palmas, LLC, Ilan Israely, and Abraham Gottlieb an additional One Hundred Thousand Dollars

and 00/100 ($100,000.00) for reasonable and necessary attorney's fees in defending the appeal.

It is further ORDERED, ADJUDGED, AND DECREED that if Defendants unsuccessfully

appeal this Final Judgment to the Texas Supreme Court, Plaintiff Roman Geronimo Martinez

Mendez shall have and recover jointly and severally from Defendants Sky View at Las Palmas,

LLC, Ilan Israely, and Abraham Gottlieb the following amounts: Ten Thousand Dollars and

00/100 ($10,000.00) for representation at the petition for review stage; Fifty Thousand Dollars

and 00/100 ($50,000.00) for representation at the merits briefing stage; and Forty Thousand

Dollars and 00/100 ($40,000.00) for representation at the oral argument stage.

It is further ORDERED, ADJUDGED, AND DECREED that Plaintiff Roman Geronimo

Martinez Mendez have and recover jointly and severally from Defendants Sky View at Las

Palmas, LLC, Ilan Israely, and Abraham Gottlieb post-judgment interest at the rate of eighteen

percent (18%) compounded annually, from the date this Final Judgment is entered until all

amounts are paid in full.

It is further ORDERED, ADJUDGED, AND DECREED that Plaintiff Roman Geronimo

Martinez Mendez have and recover jointly and severally his court costs from Defendants Sky

View at Las Palmas, LLC, Ilan Israely, and Abraham Gottlieb.

421 Electronically Filed 8/4/2014 2:25:32 PM Hidalgo County District Clerks Reviewed By: Kim Hinojosa

October 13, 2014 xxx 3:39 p.

422 RO!vlAN GERONI1vl0 ~lt\RTINEZ i'vli"NDEZ, Plnintiff

v. 370TH JUDICIAL DISTRICT SKY VIEW AT LAS Pt\Li\·lt\5, LLC. ILAN ISRAEL Y, AND A BRA! !Mvl GO'I I'LIEB. Defendants HIDALGO COUN rY, TEXAS

JURY CHARGE

~·IE~IBERS OF THE JUI~Y: After lhc dosing :ll'gLmtenl<>, you will go to the jury room Lo decide the cn~c, nnswer the qucslions thnt nrc alladtcd, nml rc.ICh a vcrdid. Y()lt nmy disctt'>~ the casl' with olht•r jmor'> only when you arc all together in the jm y room. Remember my p1 evious in!-.lructions. Do not discuss lhc case with anyone L'l'ic, either in pt.mmn or by any other means. Do not do , the bailiff will collect your notes. When you arc rclciiscd from jury duly, the bOIL' judges of the credibility of the witnesses nnd the weight to give their testimony. 13ut on malters of hm•, you must follow all of my instructions, .J. If my instructions use" word in a way that is different from its ordinary mcnning, use the mc

423 6. Answer "yes" or "no" to all questions unless you arc told otherwise. A "yes" answc1· must be based on a preponderance of the evidence unless you are told otherwise. Whenever a question requires an answer other than "yes" m· "no," your nnswer must be based on a preponderance of the evidence unless you are told otherwise. The term "preponderance of the evidence" means the greater weight of credible evidence presented in this case. A prcpnndcrance of the evidence is not measured by the number of witnesses or by the number of documt'nts admitted in evidence. For a fact to be proved by a prcpondcram·c of the evidence, you must find that the fact is more likely true than not true. A fact may be established by direct evidence or by circumstantial evidence or both. A fnct is established by direct evidence when proved by documentary evidence or by witnesses \VIm saw the act done or heard the words spoken. A fact is established by circumstantial evidence when it may be fairl}'

424 QUESTION N0.1A

Did lsraely and Gottlieb both twtlwri: e Sky View's execution of the Note?

) (II_ j)( Answer "Yes" or "No": '~-----

lnstrudions:

In dcdding whether the pC of dcnlmg. You may not c.:on<>idcr the pnrtil•s' um•xprco;sed thoughts ur intentions.

A pml\' 'i unKlm:t indudc~ the conduct of mwthcr who adc; with the pnrly'o;

t\uthorit\' for .mother to <1cl for ,, pml\· must arise fwm the pnrty' s ngrcement thnt the other net on l~h.tlf nnd for the bcndit of the party. If a party o;o .1uth01'ii'cs ,mother lo perform an net. thnl other pnrty is ,,lso authorized to do wlMtcvcr else is prnpl'l, usu nl .md ncccssa1 y to perform the net expressly

QUESTION NO. lB

Did lst·acly and Gottlieb both mlif.IJ Sky View's cxcculion of the Note?

Answer "Yes" or "No": \I I e5 ln~truclions:

1\ party's conduct includes conduct of others that the party hac; mtified. Ratifkntion m'') lw express or implied. Implied mlificillion occurs if a parly, though he may h11vc been unm,•arc of unauthorized comlucl tnkl!n on his behalf at the time it occutTed, rl~tnins tile' benefits of the lr

If you WCI'Cd "Yes" to c•ithcr Question No. 1A or Question No. I B, then

QUESTION NO. 1C

Did Sky View fail to comply with the Note?

Answer "Yes" or "No": -).>.J!:.....;;.f_>______

425 If you answered "Yes" to Question No. 1C, then answer the following l[Ucstion. Otherwise, do not answer the fullowing l.[liCStion.

QUESTION NO.2

Did GottJieb fail to comply with the guaranty agreement that named him as a guarantor of the Note?

Answer "Yes" or "No": __:f- l _·l_ __

426 If you ,ms\\·e• ed "Yes" to Question No. IC, th~..·n answer tht.: following question. Otherwise, do not ailS\\ cr the following quc!>linn.

Q~L:STION NO. 3A

Uid lsracly tllttlwrizc another to execute the guaranty agreement that named lst;Jcly as a guarantor of the Note?

Answer "Yes" or "No": ~ InstruL t ionc;:

In dedding whether the pmtics reachl!d an rtgrecment, you mav lonsillcr whal they said and did in light of the c;mroumling dn:umst,mccs, indudin~ nny cMiil'r Lourc;c llf de

i\ party'-; u.mduct includes till~ conduct of anuther who ,Jll'> wilh the party's authority. Authlwily for another to net for n party must nl'ic;e from the party's agreement that the other act on behalf nnd for the benefit of the party. If a p,uly so .tuthorizco, another to perform an cld, that t.1lher p;uty is <~lso authorized to do whatever cl'ic io; proper, usual and necess

If you <111~\VI:'I'l>d "Yes" to Question No. JC.:, then llll<;\n•r thl! following quest ion. OtherwisL', do not anc;w1.1 r the following question.

QUESTION NO. 38

Oid lsracly mtify the guaranty agreement that named him as a guarantor o( the Note?

Answer "Yes" or "No":

Instructions:

t\ pmty's condud includes t:onduct of others that the party lms mtifit>d. l~alitkcltic'n m,ly be express or implied. Implied rntificntion occur<; if a pc1rty, though he m

427 If you answered "Yes" to either Question No. 3A or Question No. :m, then answer the following question. Otherwise, do not answer the following questiun.

QUESTION NO. 3C

Did lsraely fail to comply with the guaranty agreement that named him as a guarantor of the Note?

QUESTION NO. 30

Did lsracly commit fraud on Martinez?

Answer "Yes" or "No": __ .\.,_/..~..··-'_ __ I

Jnstructions:

Fraud occurs when- • a party makes a material misrepresentation, cmd • the misrepresentation is made with knowledge of its falsity or made recklessly without any knowledge of the truth and as a positive assertion, and • the misrepresentation is made with the intention that it should be acted on by the other party, and • the other party relies on the misrepresentation and thereby suffers injury.

"Misrepresentation" means a falsi.! statement of fact or a promise of future performance made \·vith an intent, at the time the promise was made, not to perform as pwmised.

428 If \'OU ano,wercd "Yes" tu either Question 'Jo. IC. Question No. 2, Qu~stion No. 1C, or Qucslion No. 30, then

QUI·STION NO.4

What sum of money, if any, if paid now in cash, would fail'ly and reasonably compensate NlartineL for his damages, if any, thnt resulted from either (1) Sky View's failmc to comply with the Note; (2) Gottlieb's failmc to comply with the guamnty agreement; (l) lsracly's failure to comply with the guaranty agreement; or (4} lsracly'.., fraud?

Answer in dollars nnd u•nts, it .111\' .

Answer: f J. _1 liS ~'("--f}_l_7__:;,)_-_ _ _ _ __

429 If you answered "YC's" to either Que<>tion No. IC, Q uestion No. 2, or Qm•stion No. "\C, then answl'r the following q ueslion. Otlwrwi'ic, do not nno;wer the following question.

QUFSTION NO.5

\IVhat is a reasonable fcc for the ncccs!>ary !lervkcs of Martine.£'<; attorneys, stated in dollars and cents?

Answer w ith em nmount for l'•teh of the following:

1. for representation in the tri.1l court up In the 5. For rcpre$entntion at the merits briefing end of trial. Answer: stage in lhe Supreme Court of Texas. 11 5L9 I D(, ), Answct :

'Jv 2. Fur representation in the trial court post- trial. Answer: 6. for representation through ol'al argument ;md the completion of proceedings in the lJOU Supreme Court of Texas. Answer:

3. for representation through appeal to the (/ t;o bvO court of appeals. Answer: 7. For representation in domesticating the judgment in California. Answer:

4. for representation at the petition for ,f Sc ov u review stage in the Supreme Court of Texas. Answer:

,{/ jl) I (; t) 0

Fnd(li"S lo consider in determining a rc.1sonable fl'c include - • llw lime and labor rct!uired, the nnvclty and diffkully of the questions involved, and Llw !>kill rcquirl•d to perform the Icgnl ~c1 vices propel'ly. • fhc li!..clihood that the acccptann' of the partkular employnwnt will preclude other l'mploymcnl by the I~lW)'l'l'. • The fcc customnrily lhMgcd in the loci1lity for simi 1M lcr,al services. • l he .m10unt involved nnd the result~ obt.1incd. • fhc time limilntions imposed by the client or by the circum~hmces . • rhc natun• and ll'llgth of the profcssionalrclalionc;hip with the dicnl. • The cxperit'ncc, re putation, and .1hilitv of the lawyer m J.n...-yers performing the scrvill'S. • Whether the fcc is fixed or wntingcnt on results obtained or uncert.tinty of collection before the legal services have lwen rL•ndcred.

430 If you answered "Yes'' to either Question No. JA or Queslion No. 3B, then do not answer the following question. Otherwise, answer the following question.

QUESTION NO.6

Did Carmen Solis commit fraud against lsraely?

Answer "Yes" or "No": - - - - - - -

Fraud occurs when- • a party fails lo disclose a matl•rial fact within the knowledge of that party, and • the party knows thnt the other party is ignorant of the fact and does not have nn l'qual opportunity to discover the truth, ,md • the party intends to induce the other party not to take action by failing to disdose the fact, and • the oU1cr party suffers injury as a result of not having knowledge of the undisclosed fact and not taking action.

431 If you answered "Yes" to Question No. 6, then answer the following qut>slion. Otherwise, do not answer the following qucstil1n.

QUESTION NO.7

On the occasion in question, was Carmen Solis acting in the scope of her employment with San Jacinto?

Answer "Yes" or ''No":

lnst1·uctions:

An crr1ployee is acting in the scope of his employment if the act was within the employee's gcnen1l authority, in furtherance nf the employer's business, and for the accomplishment of the object for which the employee was hired.

432 If you answered "Yes" to Question No. 6, then answer the following question. Otherwise, do not ntlSW€r the following question.

QUESTION NO.8

Did (sracly ratify the fraud committed against him?

Answer "Yes" or "No": -----------

[nstructions:

Ratification may be express or implied. Implied ratification <.Jccurs if a party, though he may have been unaware of unauthorized comluct taken on his behalf at the time it occurred, retains the benefits of the transaction involving the unauthorized conduct after he

A party ratifies fraud of another if the party (1) has fuJI knowledge of the fraudulent acts or breach at the time of ratification and (2) nevertheless chases to ratify the contract in spite of the alleged fraud .

433 1f you ans\'\'ered "Yes'' to Question No. 6 and "No" to Question No. 8, then answer the following question. Otherwise, do not answer the following question.

QUESTION NO. 9

What sum of money, if any, if paid now in cash, would fairly and reasonably compensate lsracly for his damages, if any, that were proximately caused by such fraud?

Anc;wcr in dollars and cents for dan1<"~8es, if any.

Answer: -------·--··--·

"Proximate cause'' means a caus~ that was a substantial fador in bringing r~bout an event, r~nd without which cause such event would not have occurred. In order tube a proximate cause, the act or omission complained of must be such that a person using the degree of care required of him would have foreseen thal the event, or some similar event, might reasonably result therefrom. There may be more than one proximate cause of an event.

Consider the fol1owing elements of damages, if any, and none other.

The reasonable and necesc;ary legal costs (including attorney's fees) incurred by lsraely in defending himsdf against the claims asserted against him in this lawsuit by Martinez.

Do not sp<..>culate about what any party's ultimate recovery may or may not be. Any recovery will be determined by the court when it applies the law to yom answers at the time of judgment. Do not add any amount for interest on damages, if any.

Factors to consider in determining a reasonable fee include- • The time and labor required, the novelty and difficulty of the questions involved, and the skill required to perfo11n the legal services properly. • The likelihood that the acceptance of the particular employment will preclude other employment by the lawyer. • The fee customarily charged in the locality fOl" similar legal services. • The amount involved ami the results obtained. • The time limitations imposed by the client or by the circumstances. • The nature and length of the professional relationship with tht! client. • The experience, reputation, and ability of the lawyer or lawyers performing the services. • Whether the fee is fixed or contingent on results obtained or uncertainty of collection before the legal services have been rendered.

434 Presiding Juror: L When you gn into the jury room to amm•cr the queslions, the firsl thing you will need to do is choose a preo;iding juror. 2. The prc'iiding juror hac; these duties: ''·haw the compiL~tc charge re<~d aloud if it willlw helpful to your deliberntions; b. pn.•side over your ddibcrrtllons, n1l'aning manage the discus11ions, and sec llMt you follow these instructions; c. give written questions or L:nmmcnts lo the lMiliff who will give them to the judgl'; d. wrill~ down th1..~ nnswcrs you agree on; c. gel the signatures for thl! wrdkt l'l.'rtificatc; and f. notify the b<~iliff that you have rc

JUDGE PRESI

435 VI:RDICf CERTIHCATE

Che~.:k nne:

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Our vcrdid is not Utltmimous. r:tcven of us h

Our verdict i'> not unanimllll~. len of us have .tgrccd to e.llh and ever) ,mswer and hrlve signed the ccrlificalc below.

NJ\i\:IE PRINTED

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436 TAB 2 (Jury Charge and Verdict) - , " '' \ , FILED AT\ ./~"'~ O'CLOCK \JQM CAUSE NO. C-1401-10-G(4) MAT UI! lUI'! . JC ROMAN GERONIMO MARTINEZ § IN THELm~ . . I ERK MENDEZ, Plaintiff § . . f'Ailrt Hi~g Cou · § C~"7~ I 0 eputy#14 v. § J/U1TIJ' • 1.110>11'<1~1 § SKY VIEW AT LAS PALMAS, LLC, !LAN § '

ISRAELY, AND ABRAHAM GOTTLIEB, § Defendants § HIDALGO COUNTY, TEXAS

MEMBERS OF THE JURY: After the closing arguments, you will go to the jury room to decide the case, answer the questions mat are attacnea, ana reacn a vermct. r ou may OISCuss me case wtm omer JUrors oruy when you are all together m the Jury room. ' Remember my previous instructions: Do not discuss the case with anyone else, either in person or by any other means. Do not do any independent investigation about the case or conduct any research. Do not look up any words in dictionaries or on the Internet. Do not post ~c""' on me . uo nor snare any - r 'b' I or ""P""""L<=> wtm me omer JUrors. uo not use your pnone or any omer e1ecrromc aev1ce aurmg your deliberations for any reason. Any notes you have taken are for your own personal use. You may take your notes back mto the 1ury room and consult them durmg deliberations but do not show or read your notes to --yuur ' ,; ,~,= . ' ;-your . .. ' rG>.~HUl<=' . LaLH Ul JVU

re1y on your mae-,., ur me anu nuL ve vy me ran mar another juror has or has not taken notes. You must leave your notes with the bailiff when you are not deliberating. The bailiff will give your notes to me promptly after collecting them from you. I will make sure your notes are 1:~-· ,_ - -~·~ . __ , -~· . ·~ .., h •• • -re. , : . .. .., " y c>. .. n '"' yvu ' ', uvm JIU y a1o= 1 'T

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bailiff will promptly destroy your notes so that nobody can read what you wrote. Here are the instructions for answering the questions. 1. Do not let bias, prejudice, or sympathy play any part in your decision. 2. Base your answers only on tile evidence admitted in court and on the law that is in these instructions and questions. Do not consider or discuss any evidence that was not admitted in the courtroom. 3. You are to make up your own minds about the facts. You are the sole judges of the credibility of the witnesses and the weight to give their testimony. But on matters of law, you musnorrowarr or my mstructwns. 4. If my instructions use a word in a way that is different from its ordinary meaning, use the meaning I give you, which will be a proper legal definition. 5. All the questions and answers are important. No one should say that any question or answer is not important.

1 402

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6. Answer "yes" or "no" to all questions unless you are told otherwise. A "yes" answer must be based on a preponderance of the evidence unless you are told otherwise. Whenever a I I question requires an answer other than "yes" or "no," your answer must be based on a preponderance of the evidence unless you are told otherwise. !Tiererm preponaerance or-me evmence means the greater we1ght ot credible evidence presented m this case. A preponderance of the evidence is not measured by the number of witnesses or by the number of documents admitted in evidence. For a fact to be I

proved by a preponderance of the evidence, you must find that the fact is more likely true than not true. A racr may oe esraorisneu oy airecr eviaence or oy circurnsranua1 ev1aence or oom. A raCf IS e~y direct ev1dence when proved by documentary ev1dence or by w1tnesses who saw the act done or heard the words spoken. A fact is established by circumstantial '

evidence when it may be fairly and reasonably inferred from other facts proved. 7. Do not decide who you think should win before you answer the questions and then JUSr answer me .. I'" LU yuw eaut •y •w H

consRfermg wno wllrwm.-uo n6f01scuss or consRfer[ffe effect your answers Will have. '

8. Do not answer questions by drawing straws or by any method of chance. 9. Some questions might ask you for a dollar amount. Do not agree in advance to decide on a dollar amount by adding up each juror's amount and then figuring the average. 10. Do not tr~de vour an. - 0J ' ' ' " J _, -· ' •'- 0 J ·'" L b' ,£ • "'"J 'J misconduct, and I might have to order a new trial and start this process over again. This would waste your time and the parties' money, and would require the taxpayers of this county to pay for another trial. Tf a juror breaks any of these rules, tell that person to stop and report it to me immediately. n fo e '" hons 0 0 1

"Martinez" means Plaintiff Roman Martinez. "Sky View" means Defendant Sky View at Las Palrnas, LLC. "Israely'' means Defendant Ilan Israely. "Gottlieb" means Defendant Abraham Gottlieb. "San Jacinto" means San Jacinto Title Services of Rio Grande Valley, LLC. "The Note" means Martinez's Second Real Estate Lien Note. Special Instructions -rn an>werlng questions aoout aamages, answer eacn question separately. uo nor mcrease or reuuce the amount m one answer oecause ot your answer to any other question about damages. Do not speculate about what any party's ultimate recovery may or may not be. Any recovery will be determined by the court when it applies the law to your answers at the time of judgment.

2 403 . - ----

QUESTION NO. lA

Did Israely and Gottlieb both authorize Sky View's execution of the Note? \) p ~ JJV. " IJlii..L " ·

I Instructions:

In deciding whether the parties reached an agreement, you may consider what they said and did in light of the surrounding circumstances, includin<' anv earlier course of dealin2". I

You may not consider the parties' unexpressed thoughts or intentions.

A party's conduct includes the conduct of another who acts with the party's authority. Authority for another to act for a party must arise from the party's agreement that the u Lm:r au uu auu lUI uLe u1 uLe P""Y. " a parry so aumorizes anomer to pertorm an act, mat omer party IS also aumonzea to ao wnafever erse IS proper, usual and necessary to perform the act expressly authorized.

Did Israely and Gottlieb both ratify Sky View's execution of the Note?

Answer 'Yes or No: ,, ~ c /

' Instructions: '

A party's conduct includes conduct of others that the party has ratified. Ratification may be ;r ~· . . .. . " -~ ,, ' ' • T ~ r _, ,,._,__ , __ u H ''- ~·~ . r. U

If you answered "Yes" to either Question No. lA or Question No. lB, then answer the following question. Otherwise, do not answer the following question.

Answer IJYes" or uNo": ¥f)

3 404 ----- -- -- ---- ---

If you answered "Yes" to Question No. lC, then answer the following question. Otherwise, do not answer the following question.

~· --.~ ~

Did Gottlieb fail to comply with the guaranty agreement that named him as a guarantor of the Note?

Answer "Yes" or "No": \} e5' I

'

4 405 - - -- - - -

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If you answered "Yes" to Question No. 1C, then answer the following question. Otherwise, do not answer the following question. ,..... . "''"' ~.

Did Israely authorize another to execute the guaranty agreement that named Israely as a guarantor of the Note?

Answer uYes" or JJNo": \JPf I

In deciding whether the parties reached an agreement, you may consider what they said and did in light of the surrounding circumstances, including any earlier course of dealing. • "' • ' ol . T. • ~vu m~y uv• U

I A party's conduct includes the conduct of another who acts with the party's authority. Authority for another to act for a party must arise from the party's agreement that the other act on behalf and for the benefit of the party. If a party so authonzes another to rf r an act that other ar is also authorized to do whatever else is ro er usual and

If ou answered "Yes" to uestion No. 1C, then answer the followin uestion. Otherwise, do not answer the following question.

QUESTION NO 3B

Bid lstaely 1atifg the guat:anty ag:reenrent that named hint as a guatantot of the Note'?

Answer 11 Yes" or "No": yef Instructions:

A oartv' s conduct includes conduct of others that the oartv has ratified. Ratification mav be express or implied. Implied ratification occurs if a party, though he may have been unaware of unauthorized conduct taken on his behalf at the time it occurred, retains the benefits of the transaction involving the unauthorized conduct after he acquired full knowledge of the unauthorized conduct. Implied ratification results in the ratification of the entire transaction.

5 406

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If you answered "Yes" to either Question No. 3A or Question No. 3B, then answer the following question. Otherwise, do not answer the following question.

Did Israely fail to comply with the guaranty agreement that named him as a guarantor of the Note?

Answer JJYes" or "No": ~e_>

QUESTION NO. 3D

Did Israely commit fraud on Martinez?

Answer 11 Yes" or IJNo": yer Tnd-n' -<'

Fraud occurs when- • a party makes a material misrepresentation, and . • the misrepresentation is made with knowledge of its falsity or made recklessly without any knowledge of the truth and as a positive assertion, and • the misre2resentation is made with the intention that it should be acted on by the other party, and • the other party relies on the misrepresentation and thereby suffers injury . "Misrepresentation" means a false statement of fact or a promise of future performance made with an intent, at the tiine the prourise was rnad~, not to petfornt as prentised.

6 407 ~-

If you answered "Yes" to either Question No. 1C, Question No.2, Question No. 3C, or Question No. 3D, then answer the following question. Otherwise, do not answer the following question. ,.... .. ' ,.. ,,.... . I

What sum of money, if any, if paid now in cash, would fairly and reasonably compensate Martinez for his damages, if any, that resulted from either (1) Sky View's failure to comply with the Note; (2) Gottlieb's failure to comply with the guaranty agreement; (3) 'Israely's failure to comply with the guaranty agreement; or (4) Israely's fraud?

Answer in dollars and cents, if any.

Answer: '-t?- I l 6i:S l;gJ(). . 7 )-

7 408 ------

If you answered "Yes" to either Question No. lC, Question No. 2, or Question No. 3C, then answer the following question. Otherwise, do not answer the following question.

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What is a reasonable fee for the necessary services of Martinez's attorneys, stated in dollars and cents?

Answer with an amount for each of the following:

1. For representation in the trial court up to the 5. For representation at the merits briefing end of trial. Answer: stage in the Supreme Court of Texas.

Jt 5&1 .,&bJ- Answer: fl~o •• ,._ il ,..,

" .,, •J.. h ·.1 c . trial. ~;wer: 6. For representation through oral argument Jlt5 DOO and the completion of proceedings in the Supreme Court of Texas. Answer:

!'or representanon tnrougn appeal to tne .i. ill /.J"' . V/ fVj()QV

court or appeals. Answer:

J/ /0° 1 6oD 7. For representation in domesticating the judgment in California. Answer:

4 For at thP nPtition for .n lJ o D rPviPw- •huP in thP \onrt of TPYa•. Answer:

J fO 1 (;DO

mstructions:

Factors to consider in determining a reasonable fee include- • The time and labor required, the novelty and difficulty of the questions involved, and the skill required to perform the legal services properly . TJ.. ~ +hoHh ·c •• •h c T mc •h -J .L cT. T • ]"'~"" VJ ·~·~ cu• • J~•·

• The fee customarily charged m the locahty for similar legal servrces. o The amount involved and the results obtained . • • • • Whether the fee is fixed or contingent on results obtained or uncertainty of collection before the legal services have been rendered.

8 409 -------

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If you answered "Yes" to either Question No. 3A or Question No. 3B, then do not answer the following question. Otherwise, answer the following question . I ...... . . ,..... " Did Carmen Solis commit fraud against Israely?

Answer 11Yes" or 11 No":

Fraud occurs when- • a party fails to disclose a material fact within the knowledge of that party, and I

• the party knows that the other party is ignorant of the fact and does not have an equal UjJjJUllWUlY lU Ule l l UUI,

• the party mtends to mctuce the other party not to take actionoyTailmg toaiSclose the fact, and • the other party suffers injury as a result of not having knowledge of the undisclosed fact and not taking action.

9 410 If you answered "Yes" to Question No. 6, then answer the following question. Otherwise, do not answer the following question.

On the occasion in question, was Carmen Solis acting in the scope of her employment with San Jacinto?

Answer "Yes" or "No": ----------------

An employee is acting in the scope of his employment if the act was within the employee's general authority, in furtherance of the employer' s business, and for the accomplishment of the object for which the employee was hired.

10 411 If you answered "Yes" to Question No. 6, then answer the following question. Otherwise, do not answer the following question.

Did Israely ratify the fraud committed against him?

Answer "Yes" or "No'': ----------------

Ratification may be express or implied. Implied ratification occurs if a party, though he may have been rmaware of unauthorized conduct taken on his behalf at the time it occurred, retains the benefits of the transaction involving the unauthorized conduct after he acquired full knowledge of the rmauthorized conduct. Implied ratification results in the ratification of the entire transaction

A party ratifies fraud of another if the party (1) has full knowledge of the fraudulent acts or breach at the time of ratification and (2) nevertheless choses to ratify the contract in spite of the alleged fraud.

11 412

_ _ _ _ _ _ __ _ _ _ _____j If you answered "Yes" to Question No. 6 and "No" to Question No. 8, then answer the following question. Otherwise, do not answer the following question.

What sum of money, if any, if paid now in cash, would fairly and reasonably compensate Israely for his damages, if any, that were proximately caused by such fraud?

Answer in dollars and cents for damages, if any.

Answer:-------- -- - - - - - - - - - -

,Proximate cause" means a cause that was a substantial factor in bringing about an event, and without which cause such event would not have occurred. In order to be a proximate cause, the act or omission complained of must be such that a p erson using the degree of care required of him would have foreseen that the event, or some similar event, might reasonably result therefrom. There may be more than one proximate cause of an event.

Consider the following elements of damages, if any, and none other.

The reasonable and necessary legal costs (including attorney' s fees) incurred by Israely in defending himself against the claims asserted against him in this lawsuit by Martinez.

Do not speculate about what any party' s ultimate recovery may or may not be. Any recovery will be determined by the court when it applies the law to your answers at the time of judgment. Do not add any amoWlt for interest on damages, if any.

Factors to consider in determining a reasonable fee include- • The time and labor required, the novelty and difficulty of the questions involved, and the skill required to perform the legal services properly. • The likelihood that the acceptance of the particular employment will preclude other employment by the lawyer. • The fee customarily charged in the locality for similar legal services. • The amount involved and the results obtained. • The time limitations imposed by the client or by the circumstances. • The nature and length of the professional relationship with the client. • The experience, reputation, and ability of the lawyer or lawyers performing the services. • Whether the fee is fixed or contingent on results obtained or uncertainty of collection before the legal services have been rendered.

12 413 Presiding Juror: 1. When you go into the jury room to answer the questions, the first thing you will need to do is choose a presiding juror. 2. The presiding juror has these duties: a. have the complete charge read aloud if it will be helpful to your deliberations; b. preside over your deliberations, meaning manage the discussions, and sec that you follow these instructions; c. give written questions or comments to the bailiff who will give them to the judge; d. write down the answers you agree on; e. get the signatures for the verdict certificate; and f. notify the bailiff that you have reached a verdict. Do you understand the duties of the presiding juror? U you do not, please tell me now. Instructions for Signing the Verdict Certificate: 1. Unless otherwise instructed, you may answer the questions on a vote of 10 jurors. The same 10 jurors must agree on every answer in the charge. This means you may not have one group of 10 jurors agree on one answer and a different group of 10 jurors agree on another answer. 2. If 10 jurors agree on every answer, those 10 jurors sign the verdict. U 11 agree on every answer, those 11 jurors sign the verdict. U all 12 of you agree on every answer, you are unanimous and only the presiding juror signs the verdict. 3. All jurors should deliberate on every question. You may end up with all 12 of you agreeing on some answers, while only 10 or 11 of you agree on other answers. But when you sign the verdict only those 10 who agree on every answer will sign the ve diet. Do you understand these instructions? If you do not, please t

13 414 VERDICT CERTIFICATE

Check one:

_ _ _ _ Our verdict is unanimous. All12 of us have agreed to each and every answer. The presiding juror has signed the certificate for all12 of us.

Sign Printed Name of Presiding Juror

Our verdict is not unanimous. Eleven of us have agreed to each and every answer and have signed the certificate below.

/ Our verdict is not unanimous. Ten of us have agreed to each and every answer and have signed the certificate below.

NAME PRINTED

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14 415