Opinion issued October 6, 2015
In The
Court of Appeals For The
First District of Texas ———————————— NO. 01-14-00599-CV ——————————— ST. MINA AUTO SALES, INC. AND VICTOR S. ELGOHARY, Appellants V. NAJWA AL-MUASHER D/B/A AMERICAN AUTO SALES AND D/B/A AMERICAN AUTO SALES 1.1, Appellee
On Appeal from the 80th District Court Harris County, Texas Trial Court Case No. 2013-12024
OPINION
In a dispute between two used car dealers, we determine whether (1) the trial
court properly modified its dismissal order to reflect the parties’ settlement
agreement, (2) our court has appellate jurisdiction over an attorney’s challenge to the trial court’s monetary sanction assessed against him, individually, and should
permit the attorney’s amended notice of appeal, and (3) the trial court acted within
its discretion in assessing the sanction. We conclude that the trial court properly
modified its dismissal order. We further conclude that we have appellate
jurisdiction over the attorney’s challenge to the trial court’s sanctions order, but we
reject his challenge on the merits. We therefore affirm.
Background
St. Mina Auto Sales, Inc. (“Mina”) purchased a 1996 Cadillac Deville from
Najwa Al-Muasher d/b/a American Auto Sales and d/b/a American Auto Sales 1.1
(“AAS”). Mina later sued AAS for breach of contract and misrepresentation,
alleging that the Cadillac was not roadworthy and that AAS improperly had
refused to tender the car’s title to Mina. Mina claimed about $4,000 in repair
expenses as damages and sought a declaration of title. AAS counterclaimed
against Mina for breach of contract and conspiracy, alleging that Mina had paid
only $2,150 of the agreed $4,200 purchase price for the car and had conspired with
Cinco Car Care, Inc. to assert a fraudulent mechanic’s lien against the car’s title.
AAS also sued Cinco in a third-party petition, but it never served Cinco with the
lawsuit. Victor S. Elgohary represented Mina in the case.
Mina and AAS then settled their dispute. In connection with their agreement
to settle, Mina and AAS prepared and signed an “Agreed Joint Motion to Dismiss”
2 and a proposed “Order Granting Agreed Motion to Dismiss,” to be filed with the
trial court. The agreed motion recited that Mina and AAS had resolved all matters
in controversy between them and that all of the claims and causes of action against
each other should be dismissed with prejudice. The agreed proposed order granted
the motion and dismissed all claims by and between Mina and AAS with prejudice.
Neither the agreed motion nor the proposed order addressed AAS’s claims against
Cinco.
After executing the settlement agreement, AAS nonsuited its claims against
Cinco without prejudice. See TEX. R. CIV. P. 162. The trial court signed an order
nonsuiting AAS’s claims against Cinco without prejudice.
Mina’s counsel, Elgohary, then filed an “Agreed Joint Motion to Dismiss,”
and a proposed order with the trial court. But Elgohary’s motion and order were
different from the motion and proposed order that AAS had approved in
connection with the settlement. Notably, Elgohary had added language that AAS
also had agreed to dismiss its claims against Cinco “with prejudice.” Under the
impression that the parties had approved the proposed dismissal order, the trial
court signed it.
AAS then discovered the discrepancy between the terms of the signed order
and those of the agreed-to proposed order. After efforts to resolve the issue failed,
it moved to set aside the trial court’s dismissal order, asserting that Elgohary had
3 intentionally altered the terms of the agreed joint motion to dismiss and order after
AAS had approved them. AAS pointed out that none of the settlement-related
documents and filings to which AAS had agreed mentioned Cinco or AAS’s
claims against Cinco. AAS moved for sanctions against Elgohary for filing the
altered documents with the court.
In a hearing on AAS’s motion, Elgohary admitted that he had altered the
agreed joint motion and proposed order to include Cinco’s dismissal with
prejudice. After the hearing, the trial court modified its dismissal order to delete
the reference to Cinco. The court further ordered Elgohary to pay $450 to AAS
within 30 days as a sanction. Mina moved for a new trial, which the trial court
denied.
Discussion
I. Modification of the Judgment On appeal, Mina contends that the trial court erred in denying its motion for
new trial, contending that the trial court erred in modifying its dismissal order to
remove Cinco. We review the trial court’s denial of a motion for new trial for an
abuse of discretion. Jackson v. Van Winkle, 660 S.W.2d 807, 809 (Tex. 1983);
Xenos Yuen v. Fisher, 227 S.W.3d 193, 204 (Tex. App.—Houston [1st Dist.] 2007,
no pet.). An abuse of discretion occurs when the trial court acts without reference
to any guiding rules or principles, that is, when its action is arbitrary or
4 unreasonable. Cire v. Cummings, 134 S.W.3d 835, 838–39 (Tex. 2004) (upholding
trial court’s sanctions order). 1
During its plenary power, a trial court can vacate, modify, correct or reform
its judgment. TEX. R. CIV. P. 329b(d); Transam. Leas. Co. v. Three Bears, Inc.,
567 S.W.2d 799, 800 (Tex. 1978); Bryan v. Resolution Trust Corp., 823 S.W.2d
433, 434 (Tex. App.—Houston [1st Dist.] 1992, writ dism’d w.o.j.). Mina
contends that the original dismissal fully incorporated the terms of the parties’
settlement with each other, and thus AAS lacks a basis for challenging it. Mina
fails to acknowledge, however, that the original dismissal included—without
AAS’s knowledge or approval—an additional term to which AAS had not agreed:
the dismissal with prejudice of AAS’s claims against Cinco.
Based on the evidence adduced in the hearing on AAA’s motion to set aside
the dismissal order, and Elgohary’s admission that he altered the parties’ approved
motion and proposed order before he filed them with the court, the trial court
correctly modified its dismissal order to accurately reflect the parties’ agreement.
See Bryan, 823 S.W.2d at 434–35 (court authorized to enter modified judgment to
1 AAS’s brief designates some of its responsive contentions as “cross points,” but it does not seek relief that would alter the trial court’s judgment. See TEX. R. APP. P. 25.1(c); cf. City of Houston v. Boyle, 148 S.W.3d 171, 175 n.5 (Tex. App.— Houston [1st Dist.] 2004, no pet.) (declining to address “cross-points” in appellee’s brief by which he sought to alter the trial court’s rulings because appellee did not file notice of appeal). We review these issues as responsive arguments in support of the judgment under review.
5 correctly reflect approved final judgment of parties); see also Lawrence v. Kohl,
853 S.W.2d 697, 701 (Tex. App.—Houston [1st Dist.] 1993, no writ) (unpublished
part of opinion available on Westlaw) (“[T]he court has no power to supply terms,
provisions, or essential details not previously agreed to by the parties.” (citing
Dodson v. Seymour, 664 S.W.2d 158, 161 (Tex. App.—San Antonio 1983, no
writ)). Further, AAS had nonsuited its claims against Cinco without effecting
service. Cinco had never appeared and, after the nonsuit, Cinco was not even
nominally a party to the suit. See TEX. R. CIV. P. 124; CHCA Woman’s Hosp., L.P.
v. Lidji, 369 S.W.3d 488, 492 (Tex. App.—Houston [1st Dist.] 2012) (“A
voluntary nonsuit ‘extinguishes a case or controversy from the moment the motion
for nonsuit is filed . . . .’”), aff’d, 403 S.W.3d 228 (Tex. 2013); In re Green Oaks
Hosp. Subsidiary, L.P., 297 S.W.3d 452, 456 (Tex. App.—Dallas 2009, orig.
proceeding) (holding that trial court had no jurisdiction to render judgment against
party who “was not served with process, was not represented by counsel and did
not otherwise appear”). Accordingly, we hold that the trial court acted within its
discretion in denying Mina’s motion for new trial.
II. Appellate Jurisdiction and the Sanction Award
Elgohary challenges the $450 monetary sanction that the trial court assessed
against him, individually. He contends that (1) the evidence does not support a
finding of bad faith or conscious wrongdoing; (2) AAS did not incur any attorney’s
6 fees due to his misconduct; and (3) the trial court’s failure to issue findings of fact
to support the imposition of sanctions requires reversal of the award. We initially
determine whether we have jurisdiction to decide Elgohary’s individual appeal;
concluding that we do, we in turn address the merit of his challenges to the
sanction that the trial court imposed against him.
A. Elgohary’s Notice of Appeal
Mina timely filed a notice of its appeal, naming Mina as the only appellant,
on July 18, 2014. Elgohary amended Mina’s notice of appeal and filed a docketing
statement on October 6, 2014, before the appellant’s brief was due. See TEX. R.
APP. P. 25.1(g) (“[a]n amended notice of appeal correcting a defect or omission in
an earlier filed notice may be filed in the appellate court”). The amended notice of
appeal named Elgohary individually as an additional appellant. The initial notice
of appeal conferred appellate jurisdiction over all of the parties to the trial court’s
order, including Elgohary, who was named in it. See TEX. R. APP. P. 25.1(b) (“The
filing of a notice of appeal by any party invokes the appellate court’s jurisdiction
over all parties to the trial court’s judgment or order appealed from.”).
Accordingly, we have jurisdiction over his appeal, and may, within our
discretion, hear it. See id. (“Any party’s failure to take any other step required by
these rules, including the failure of another party to perfect an appeal . . . does not
deprive the appellate court of jurisdiction but is ground only for the appellate court
7 to act appropriately, including dismissing the appeal.”). Rule 25.1 vests the
appellate court with the discretion to consider an amended notice of appeal in a
case in which any notice of appeal has already been filed. An amended notice,
however, “is subject to being struck for cause on the motion of any party affected
by the amended notice.” See TEX. R. APP. P. 25.1(g). While not a matter of right,
the rule eliminates any jurisdictional bar to the consideration of a late-filed notice
in a case in which one party has appealed the trial court’s order.
In this case, Elgohary’s later-filed amended notice of appeal—filed within
six weeks of filing the original notice and two months before the original deadline
for filing the appellant’s brief—apprised our court and the parties of Elgohary’s
intent to challenge the sanctions assessed solely against him. AAS did not move to
strike Elgohary’s amended notice, nor did it otherwise claim unfair surprise. The
appellate rules, their underlying policy, and the circumstances surrounding the
notice of appeal’s amendment in this case favor reviewing Elgohary’s appeal on its
merits. See Perry v. Cohen, 272 S.W.3d 585, 587 (Tex. 2008) (per curiam)
(“[A]ppellate courts should reach the merits of an appeal whenever reasonably
possible.”); cf. Braden v. Downey, 811 S.W.2d 922, 928 & n.6 (Tex. 1991)
(addressing merits of mandamus petition seeking relief from sanctions imposed on
both party and his attorney because no jurisdictional bar prevented attorney from
being added as relator to mandamus proceeding).
8 Warwick Towers Council of Co-Owners v. St. Paul Fire Insurance Co., 244
S.W.3d 838 (Tex. 2008), further supports our application of Rule 25.1 to reach the
merits of Elgohary’s appeal. There, the Supreme Court allowed an amended notice
naming the insurance company where the initial notice of appeal had named only
the insured. In the trial court in that case, the insured hotel sought dismissal of St.
Paul’s subrogation claim, contending that a contractual waiver provision applied to
it. Id. at 839. After the hotel prevailed, it settled the claims brought by the
condominium association against it. See id. The Court observed that St. Paul had
named its insured as the appellant in its notice of appeal but had properly identified
itself as the appellant in the docketing statement. See id. On that showing, the
Court held that St. Paul had “made a bona fide attempt to appeal” and that the court
of appeals “erred in not allowing St. Paul to amend and in not reaching the merits
of St. Paul’s appeal.” Id. at 840.
The dissent relies on Bahar v. Baumann, No. 03-09-00691-CV, 2011 WL
4424294 (Tex. App.—Austin 2011, pet. denied), to argue that we should reject
Elgohary’s amended notice of appeal. In Bahar, the Austin Court of Appeals
declined to grant leave to appeal to an attorney who, like Elgohary in this case,
sought to amend the notice of appeal filed on behalf of the client to include his
own sanction appeal. The Austin Court of Appeals’ reasoning in Bahar, however,
is flawed because it applied a derivative standing analysis to determine its
9 appellate jurisdiction, relying on a Supreme Court decision that predated the 1997
amendments to the appellate rules. See 2011 WL 4424294, at *2 (citing Tex. Ass’n
of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 444–45 (Tex. 1993)). When
Texas Association of Business was decided, however, the Texas Rules of Appellate
Procedure were silent on whether the filing of a timely notice of appeal conferred
appellate jurisdiction over all of the parties to the trial court’s judgment or order.
Now, the appellate rules provide that the filing of a notice of appeal “by any party”
invokes appellate jurisdiction “over all parties to the trial court’s judgment or
order.” See TEX. R. APP. P. 25.1(b). Rule 25.1(b) clarifies that, as long as any
party has timely filed a notice of appeal, an appellate court has jurisdiction over
any party aggrieved by the trial court’s judgment. See id. Because an appellate
court gains jurisdiction over all parties to the trial court’s judgment once a timely
notice of appeal has been filed, the court of appeals’ reliance in Bahar on standing
principles to analyze appellate jurisdiction was misplaced.
The Bahar court also erred in distinguishing Warwick Towers “because [the
insurer’s] interests were not merely ‘aligned’ with the Council’s, but rather the
interests of the two entities were legally united and joined” as subrogee and
subrogor. 2011 WL 4424294, at *3. Bahar correctly observed that subrogee and
subrogor generally share identical interests. In Warwick Towers, however, St. Paul
sought to amend the notice of appeal to contest the lower court’s rejection of its
10 subrogation claim: for purposes of the appeal, its interests were different from its
insured. See 244 S.W.3d at 839. Because Bahar places undue emphasis on
standing based on pre-1997 authority and unduly narrows the holding in Warwick
Towers, we decline to follow Bahar here.
The circumstances in Crofton v. Amoco Chemical Co., No. 01-01-00526-
CV, 2003 WL 21297588 (Tex. App.—Houston [1st Dist.] May 30, 2003, pet.
denied), are also different from those presented here. In Crofton, the appellants
attempted to amend their notice of appeal a second time—four months after filing
the original notice—to add a plaintiff whose name was missing from the appellate
caption. Id. at *3. The appellees responded with a motion to strike that notice,
invoking Texas Rule of Appellate Procedure 25.1(g), which allows the appellate
court to strike an amended notice “for cause on the motion of any party affected by
the amended notice.” Id.; TEX. R. APP. P. 25.1(g). Id. The appellants in Crofton
did not respond to the motion. See id. The decision to strike the amendment in
Crofton, at the request of the appellees’ unopposed motion to strike was within this
court’s discretion for good cause shown, as the rule contemplates. See id.
The plain text of Rule 25.1(b) is purposeful in its language: when any party
timely appeals, we have jurisdiction over all parties to the judgment. Rule 25.1(g)
states that an amended notice of appeal “may be filed in the appellate court.” This
rule is in the passive, and not limited to an amended notice of appeal filed by the
11 original appellant. We address latecomers to the appellate fray as a matter of
procedure, balancing the relative equities and weighing the circumstances of the
individual case. Rule 25.1 keeps the appellate courts out of the jurisdictional
swamp with a bright line rule.
But even were we to wade into it, the factors present here demonstrate that
Elgohary made a bona fide attempt to invoke appellate court jurisdiction. The
original notice of appeal filed by Elgohary on behalf of his client specifically refers
to the order granting AAS’s motion for sanctions against Elgohary. The docketing
statement recites that the disposition in the trial court included $450 in attorney’s
fees, the amount of the sanction assessed solely against Elgohary. Elgohary
amended the notice of appeal and docketing statement to identify himself as an
additional appellant within six weeks of filing the original notice and nearly two
months before the original date on which the appellants’ briefs were due. AAS did
not move to strike the amended notice. Under these circumstances, we consider
the merits of Elgohary’s sanctions appeal. See Perry, 272 S.W.3d at 587
(“[A]ppellate courts should reach the merits of an appeal whenever reasonably
possible.”); cf. Braden, 811 S.W.2d at 928 & n.6 (addressing merits of mandamus
petition seeking relief from sanctions imposed on both party and his attorney
because no jurisdictional bar prevented attorney from being added as relator to
mandamus proceeding; court expressed no opinion on whether attorney must
12 perfect separate appeal apart from that perfected by client to procure review of
sanctions on appeal).
The policy animating the appellate rules disfavors disposing of appeals
based upon harmless procedural defects. We construe the rules reasonably, yet
liberally, so that the right to appeal is not lost by imposing requirements not
absolutely necessary to achieve the purpose of a rule. Verburgt v. Dorner, 959
S.W.2d 615, 616–17 (Tex. 1997); see Maxfield v. Terry, 888 S.W.2d 809, 811
(Tex. 1994) (holding that the rules should be interpreted liberally to give appellate
courts the opportunity to reach the merits of an appeal whenever possible). We
“should not dismiss an appeal for a procedural defect whenever any arguable
interpretation of the Rules of Appellate Procedure would preserve the appeal.”
Verburgt, 959 S.W.2d at 616; see also Nathan E. Hecht & E. Lee Parsley,
Procedural Reform: Whence and Whither, Matthew Bender CLE, PRACTICING
LAW UNDER THE NEW RULES OF APPELLATE PROCEDURE 1–12 at § 1.02(b) & (c)
(Nov. 1997) (explaining that most recent revision to rules was “intended to make
appellate practice more user-friendly, refocus appellate practice on the merits
rather than technicalities, and reduce cost and delay”), quoted in Steven K. Hayes,
Could You Be A Little More Specific?, 66 THE ADVOC. (TEX.) 196, 227 (2014).
Accordingly, we turn to the merits of Elgohary’s appeal.
13 B. The Sanction
Elgohary contends that the trial court had no evidence upon which it could
base the sanction award assessed against him and that it failed to issue findings of
fact in connection with its order.
Standard of review
We review a trial court’s decision to impose sanctions for an abuse of
discretion. Low v. Henry, 221 S.W.3d 609, 614 (Tex. 2007). A trial court abuses
its discretion if it acts in an arbitrary or unreasonable manner “without reference to
guiding rules and principles.” See Garcia v. Martinez, 988 S.W.2d 219, 222 (Tex.
1999). When reviewing matters committed to the trial court’s discretion, we may
not substitute our own judgment for that of the trial court. Bowie Mem’l Hosp. v.
Wright, 79 S.W.3d 48, 52 (Tex. 2002). A trial court does not abuse its discretion
merely because it decides a discretionary matter differently than an appellate court
would in a similar circumstance. Gray v. CHCA Bayshore L.P., 189 S.W.3d 855,
858 (Tex. App.—Houston [1st Dist.] 2006, no pet.).
Analysis
The parties agree that the trial court had the inherent power to assess
sanctions upon a finding that Elgohary committed bad-faith abuse of the judicial
process. See, e.g., In re Tex. Dep’t of Family & Protective Servs., 415 S.W.3d 522,
529 (Tex. App.—Houston [1st Dist.] 2013, orig. proceeding) (“A trial court has
14 inherent power to sanction bad faith conduct during the course of litigation that
interferes with the administration of justice or the preservation of the court’s
dignity and integrity.”); Ezeoke v. Tracy, 349 S.W.3d 679, 685 (Tex. App.—
Houston [14th Dist.] 2011, no pet.) (“Trial courts have inherent power to impose
sanctions for bad faith abuse of the judicial process even when the targeted conduct
is not expressly covered by a rule or statute.” (citing Eichelberger v. Eichelberger,
582 S.W.2d 395, 398–99 (Tex. 1999)).
AAS’s motion for sanctions asserted that Elgohary, without AAS’s
knowledge or consent, altered the proposed order granting the agreed motion to
dismiss to make it falsely appear to the trial court that AAS had agreed to dismiss
Cinco from the lawsuit with prejudice. This representation contradicted counsels’
discussions about the content of the proposed order. Elgohary admitted in open
court that he altered the documents without AAS’s knowledge or consent and, by
attaching AAS’s signature page from the authentic agreed motion, had represented
to the trial court that AAS had approved and reviewed the documents. When AAS
discovered the discrepancies in the documents, it notified Elgohary and gave him
an opportunity to correct the matter, but Elgohary did not respond until after AAS
moved to modify the dismissal and request sanctions.
Elgohary complains that the trial court failed to make specific findings to
support its imposition of sanctions. When a trial court imposes sanctions under its
15 inherent power, it should make specific findings to support its conclusion that the
conduct complained of significantly interfered with its legitimate exercise of its
core functions; the absence of findings, however, does not automatically require
reversal. See Harmouch v. Rassner, No. 01-10-00367-CV, 2011 WL 1435008, at
*2 (Tex. App.—Houston [1st Dist.] Apr. 14, 2011, no pet.) (acknowledging lack of
express findings to support sanctions, but reviewing entire record before
determining that trial court erred based on lack of evidence plaintiff acted
dishonestly or maliciously to interfere with trial setting) (citing Houtex Ready Mix
Concrete & Materials v. Eagle Constr. & Envt’l Servs, L.P., 226 S.W.3d 514, 524
(Tex. App.—Houston [1st Dist.] 2006, no pet.)).
Here, the entire record reveals with certainty the basis for the sanction
against Elgohary. To show bad faith requires evidence of conscious wrongdoing
for a dishonest, discriminatory, or malicious purpose. Mattly v. Spiegel, Inc., 19
S.W.3d 890, 896 (Tex. App.—Houston [14th Dist.] 2000, no pet.). Elgohary’s
admission establishes that he consciously misrepresented the terms of the parties’
agreement in the proposed order he submitted to the court in an attempt to enlarge
the scope of the opponent’s concessions. We have upheld inherent-power
sanctions under similar circumstances. See Lawrence, 853 S.W.2d at 700
(upholding imposition of sanctions under court’s inherent power where counsel
admitted that he had submitted and procured, under unexplained circumstances,
16 judge’s signature on form order awarding him sanctions from opposing party and
his attorney without notice or hearing on sanctions motion, and, once error was
discovered, counsel failed to come forward to request order be set aside until, at
bench conference held over a month after erroneous order was signed, counsel
agreed that error had been made); see also Houtex, 226 S.W.3d at 524 (upholding
imposition of sanctions under inherent power where attorney failed to notify
opposing counsel he would be absent from hearing even though attorney knew
days in advance he would be unavailable, and, as result, opposing counsel
needlessly made 720-mile round trip to attend hearing). Elgohary was apprised of
the complained-of conduct in AAS’s motion for sanctions, upon which the trial
court heard evidence. Because the specific basis for the sanction is evident from
the record, we hold that the trial court’s failure to include a description of the
conduct in its order is harmless error. See TEX. R. APP. P. 44.1.
Finally, Elgohary asserts that the $450 amount is not supported by evidence
of opposing counsel’s attorney’s fees. The record belies this assertion. At the
hearing on the motion for modification and sanctions, the trial court inquired into
opposing counsel’s fees. Opposing counsel stated that he spent approximately two
and a half hours on preparing and filing the motion and in attending the hearing,
and he informed the court that his hourly fee rate was $225. The modest
assessment of sanctions in the form of $450 in attorney’s fees is reasonably related
17 to the extra measures that AAS was required to undertake in alerting the court to
Elgohary’s misconduct and having the misstatement corrected. We hold that the
trial court acted within its discretion in imposing the $450 in sanctions on
Elgohary.
Frivolous Appeal
In its brief, AAS contends that Mina’s appeal is frivolous and asks this Court
$5,000.00 as a sanction. See TEX. R. APP. P. 45 (damages for frivolous appeals in
civil cases). After considering the record, briefs, and other papers filed, we may
award a prevailing party “just damages” if we objectively determine that an appeal
is frivolous. Id.; Smith v. Brown, 51 S.W.3d 376, 381 (Tex. App.—Houston [1st
Dist.] 2001, pet. denied). An appeal is frivolous when the record, viewed from the
perspective of the advocate, does not provide reasonable grounds for the advocate
to believe that the case could be reversed. Smith, 51 S.W.3d at 381. The decision
to grant appellate sanctions is a matter of discretion that an appellate court
exercises with prudence and caution. Id. After a review of the record and briefing,
we decline to award appellate sanctions.
18 III. Conclusion
We affirm the judgment of the trial court. We deny AAS’s request for
sanctions.
Jane Bland Justice
Panel consists of Justices Jennings, Bland, and Brown.
Justice Jennings, concurring in part and dissenting in part.