TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-07-00072-CV
Todd M. Hertzberg, Appellant
v.
The Austin Diagnostic Clinic Association, P.A. d/b/a The Austin Diagnostic Clinic, Appellee
FROM COUNTY COURT AT LAW NO. 1 OF TRAVIS COUNTY
NO. 01-CV-05-002021, HONORABLE J. DAVID PHILLIPS, JUDGE PRESIDING
M E M O R A N D U M O P I N I O N
Appellant, Todd M. Hertzberg, appeals from a summary judgment in favor
of appellee, The Austin Diagnostic Clinic Association, P.A. d/b/a The Austin Diagnostic Clinic
("ADC"), in a breach-of-contract suit. Hertzberg raises two issues on appeal, asserting that: (1) the
trial court erred in granting summary judgment based on limitations where ADC failed to
conclusively establish that the statute of limitations began running before November 25, 2001; and
(2) the trial court erred in granting ADC's requests for attorney's fees and post-judgment interest.
We affirm the trial court's judgment.
BACKGROUND
In February 1999, Hertzberg entered into an employment contract with ADC in which
he agreed to work for ADC as a physician radiologist from October 1, 1999 to September 30, 2001.
The contract provided that both parties could terminate the agreement at any time upon three-months' prior notice. Specifically with regard to ADC's termination of the agreement, the
contract stated:
This Agreement may be terminated by [ADC], for any reason, upon
three (3) months notice in advance. During the notice period,
Doctor's duties shall continue and Doctor shall receive compensation
as usual until the end of said notice period, provided Doctor performs
all of Doctor's usual duties.
The contract further provided that "[i]n the event of termination of this agreement by either party,
Doctor hereby agrees to purchase a tail policy prior to such termination date." (1) In addition, the
contract included a provision regarding Hertzberg's possible advancement to an associate physician
position, stating:
[ADC] will notify physician ninety (90) days prior to end of
employment agreement as to [ADC's] intent to advance or not
advance physician to Associate status. Should [ADC] not advance
physician to Associate status and elect not to extend physician
employment agreement, [ADC] agrees to bear the expense of
tail policy for professional liability to cover the period of employment
physician [sic] while working at [ADC], and [ADC] agrees to
waive physician's obligation to reimburse [ADC] for the expense of
moving originally incurred to relocate physician to Austin at the
commencement of this employment agreement.
During his term of employment, Hertzberg did not become board-certified in
radiology. According to ADC policy, physicians were prohibited from being promoted to associate
positions unless they first became board-certified in their respective specialties. Thus, rather than
promoting Hertzberg, ADC offered in early September 2001 to extend his employment for one year
and increase his salary. Hertzberg rejected the offer. In a memorandum dated September 11, 2001,
ADC notified Hertzberg that because ADC could not offer him an associate position and because he
had rejected ADC's offer to extend his contract, his last day of employment at ADC would coincide
with the last day of his contract term, which was September 30, 2001. The memo also stated that
ADC expected Hertzberg to pay for his tail-insurance policy and reimburse ADC for his moving
expenses. On September 14, 2001, Hertzberg's attorney responded in a letter to ADC asserting
that Hertzberg would not pay for his tail-insurance coverage or reimburse ADC for his moving
expenses because ADC did not provide him with the required ninety days' notice that he would not
be promoted to an associate position and that ADC would not continue the employment relationship.
Hertzberg ultimately worked until September 17, 2001, and was paid through the
month of September due to leave he had accumulated during his employment. On November 21,
2005, he filed suit for breach of contract, alleging that ADC breached the employment agreement
by failing to: (1) provide him with ninety days' written notice that he would not be advanced to an
associate position and that ADC would not extend the employment agreement; (2) provide him with
a minimum of three months' written notice of its intent to terminate the agreement; and (3) pay for
his tail-insurance policy and waive reimbursement of his moving expenses.
On August 17, 2006, ADC filed a motion for summary judgment, contending that
Hertzberg's suit was barred by the four-year statute of limitations applicable to breach-of-contract
claims. The trial court set a hearing for the motion on October 9, 2006. On September 29, 2006,
Hertzberg filed a cross-motion for summary judgment, asserting that he filed his suit within
the limitations period and that he was entitled to judgment as a matter of law on his claims. On
October 5, 2006, ADC filed an objection to Hertzberg's cross-motion, arguing that the trial court
should not consider the motion at the hearing because Hertzberg did not timely file the motion. The
trial court did not rule on ADC's objection. At the hearing, the trial court considered and granted
ADC's motion and reserved the issue of attorney's fees for another hearing. A month later, the
trial court held a hearing in which it granted ADC's request for attorney's fees. The trial court then
granted a final judgment in favor of ADC on November 7, 2006. ADC later filed a motion to modify
the judgment to include post-judgment interest, and the trial court granted the motion and issued a
modified final judgment including post-judgment interest on November 21, 2006. This appeal
followed.
STANDARD OF REVIEW We review the trial court's summary judgment de novo. Valence Operating Co.
v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). Summary judgment is proper when there are no
disputed issues of material fact, and the movant is entitled to judgment as a matter of law. Tex. R.
Civ. P. 166a(c); Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215-16 (Tex. 2003).
A defendant moving for summary judgment on the affirmative defense of limitations has the burden
of conclusively establishing that defense. Diversicare Gen. Partner, Inc. v. Rubio, 185 S.W.3d
842, 846 (Tex. 2005). If the movant establishes that limitations bars the action, the non-movant
must then adduce summary-judgment proof raising a fact issue in avoidance of limitations. Id.
When reviewing a summary judgment, we take as true all evidence favorable to the nonmovant, and
we indulge every reasonable inference and resolve any doubts in the nonmovant's favor. Valence
Operating Co., 164 S.W.3d at 661.
DISCUSSION Hertzberg raises two issues on appeal, contending that the trial court erred in:
(1) granting summary judgment based on limitations where ADC failed to conclusively establish that
the statute of limitations began to run before November 25, 2001; and (2) granting ADC's requests
for attorney's fees and post-judgment interest. We address each issue in turn.
Statute of Limitations
The statute of limitations for a breach-of-contract action is four years from the
date the cause of action accrues. See Tex. Civ. Prac. & Rem. Code Ann. § 16.051 (West 2008); Stine
v. Stewart, 80 S.W.3d 586, 592 (Tex. 2002). As a general rule, a cause of action accrues and
the statute of limitations begins to run when facts come into existence that authorize a party to seek
a judicial remedy. Knott, 128 S.W.3d at 221. In most cases, a cause of action accrues when a
wrongful act causes a legal injury, regardless of when the plaintiff learns of that injury or if all
resulting damages have yet occurred. Id.
In its motion for summary judgment, ADC argued that Hertzberg's suit was barred
by limitations because even assuming ADC breached the employment contract, the latest date
at which the cause of action could have accrued was September 30, 2001, the day the contract
expired, and Hertzberg did not file suit until more than four years later, on November 21, 2005.
Although Hertzberg did not file a response to ADC's motion, he filed a cross-motion in which he
argued that his cause of action did not accrue until November 25, 2001, the date on which he paid
his tail-insurance premium. He asserts the same argument on appeal.
In order to determine when Hertzberg's cause of action accrued, we must first look
at the injury on which he based his cause of action and then determine when the facts underlying the
cause of action came into existence. See id.
A. Alleged Injury
The grounds on which Hertzberg filed his suit include allegations that ADC did
not: (1) provide him with three months' notice before terminating his employment; (2) provide him
with ninety days' notice of its intent to not advance him to associate status and not extend the
contract; and (3) pay for his tail-insurance policy or waive reimbursement of his moving expenses.
Regarding the first alleged breach, Hertzberg asserted in his petition that ADC's failure to give him
three months' notice of termination of the employment agreement breached the provision in
the contract stating that "[t]his Agreement may be terminated by [ADC], for any reason, upon three
(3) months notice in advance." Regarding the second and third alleged breaches--ADC's failure
to give Hertzberg ninety days' notice of its intent to not promote him to an associate position and
to not extend the contract, and ADC's failure to pay for Hertzberg's tail-insurance policy and waive
the reimbursement of his moving expenses--Hertzberg asserted that those actions breached the
provision of the contract stating:
[ADC] will notify physician ninety (90) days prior to end of
employment agreement as to [ADC's] intent to advance or not
advance physician to Associate status. Should [ADC] not advance
physician to Associate status and elect not to extend physician
employment agreement, [ADC] agrees to bear the expense of
tail policy for professional liability to cover the period of employment
physician [sic] while working at [ADC], and [ADC] agrees to
waive physician's obligation to reimburse [ADC] for the expense of
moving originally incurred to relocate physician to Austin at the
commencement of this employment agreement.
B. When Facts of Alleged Injury Came Into Existence
Turning to the issue of when the facts underlying Hertzberg's cause of action came
into existence, we conclude that they did so on September 11, 2001, when ADC notified Hertzberg
in a memorandum that his final day of employment would be September 30, 2001, and that he was
expected to pay for his tail-insurance policy and reimburse ADC for his moving expenses. It was
at that point that the facts that allegedly caused him injury came into existence and authorized him
to seek a judicial remedy. See id.
Specifically, the first alleged breach of the contract was made clear in the
September 11 memo when ADC stated that it was "informing [Hertzberg] that [his] last day
with ADC [would] coincide with the expiration of [his] current contract on 9/30/01." Assuming that
allowing the contract to expire was the same as terminating the contract, ADC breached the contract
by providing only nineteen days' notice of its termination rather than the three months' notice
required by the contract.
ADC's second alleged breach of the contract was also evident in the September 11
memo when ADC stated that "a physician must be board certified in his/her specialty in order to
become an associate physician at ADC" and that "[a]s of [that] date, [Hertzberg had] been unable
to provide proof of [his] board certification in Radiology, which preclude[d] any offer of an associate
contract." Because the contract required ADC to notify Hertzberg ninety days prior to the end of
the employment agreement of ADC's intent not to advance him to associate status, ADC allegedly
breached the contract when it notified him on September 11, 2001, only nineteen days prior to the
end of the agreement.
The third alleged breach was apparent in the September 11 memo when ADC stated
that it expected Hertzberg "to reimburse ADC for the cost of [his] tail policy, as well as [his] moving
expenses which were paid by [ADC]." Because the contract provided that ADC would pay for
the tail insurance and moving expenses if it did not advance Hertzberg to associate status and did
not extend the employment agreement, ADC allegedly breached the contract when it did not
promote him and did not extend the agreement but still expected him to pay for his tail insurance and
moving expenses.
Because facts authorizing Hertzberg to seek a judicial remedy came into existence
on September 11, 2001, his claims accrued on that date. See id.; Ambulatory Infusion Therapy
Specialist, Inc. v. North Am. Adm'rs, Inc., 262 S.W.3d 107, 119 (Tex. App.--Houston [1st Dist.]
2008, no pet.) (cause of action accrued when plaintiff received defendant's letter stating that
defendant would pay only $3,500 of plaintiff's $31,089.20 invoice, thus denying reimbursement
for remainder).
C. Other Arguments Regarding Accrual Date
Although Hertzberg raises other arguments that his cause of action did not accrue
until November 2001, he has waived those arguments on appeal by not raising them in the trial court.
Specifically, Hertzberg contends that this case is similar to three different types of cases, each
of which allegedly supports a determination that his cause of action did not accrue until
November 2001. The three different types of cases he relies upon include: (1) those involving
insurance claims in which there is no "outright denial" of a claim and an insurance company "strings
an insured along without denying or paying a claim;" (2) those involving installment contracts; and
(3) those applying the discovery rule, in which the cause of action accrues when the plaintiff
discovered or should have discovered facts establishing a cause of action. See Murray v. San Jacinto
Agency, Inc., 800 S.W.2d 826, 828 n.2 (Tex. 1990) (insurance claim); Ehrig v. Germania Farm Mut.
Ins. Ass'n, 84 S.W.3d 320, 325 (Tex. App.--Corpus Christi 2002, pet. denied) (insurance claim);
F.D. Stella Prods. Co. v. Scott, 875 S.W.2d 462, 465-66 (Tex. App.--Austin 1994, no writ)
("installment contract" approach); Houston Livestock Show & Rodeo, Inc. v. Hamrick, 125 S.W.3d
555, 569-70 (Tex. App.--Austin 2003, no pet.) (discovery rule). However, there is nothing in the
record indicating that Hertzberg raised these arguments in the trial court, and he has therefore waived
the arguments on appeal. See Tex. R. App. P. 33.1(a)(1); Aldrich v. State, 104 S.W.3d 890, 895-96
(Tex. Crim. App. 2003).
Even if he had not waived the arguments, the cases he cites in support of his
arguments are inapplicable to this case. For example, this case does not involve an insurance claim,
and the insurance-claim cases apply only when an insurance company does not provide an "outright
denial" of a claim and "strings along" an insured without approving or denying the claim. See
Murray, 800 S.W.2d at 828 n.2; Ehrig, 84 S.W.3d at 325. Here, even assuming that ADC was acting
in a role similar to an insurer and that the issue of payment of the tail insurance and moving expenses
was akin to an insurance claim, ADC did not string Hertzberg along regarding its position on the
payment issue. Rather, ADC specifically stated in its September 11, 2001 memo that it expected
Hertzberg to pay for his tail-insurance policy and moving expenses. Regardless of any subsequent
demands for payment Hertzberg may have made, he had sufficient facts with which to seek a judicial
remedy as of the day he received the memo. See Mid-South Telecomms. Co. v. Best, 184 S.W.3d
386, 388, 391 (Tex. App.--Austin 2006, no pet.) (cause of action accrued when defendant defaulted
on note, regardless of whether plaintiff still demanded and expected payment after default).
Regarding the installment-contract cases, Hertzberg cites to only one case, and
the case is considerably different from the one before us. See Scott, 875 S.W.2d at 465-66. In Scott,
the plaintiff sued the defendant for past-due monthly lease payments, and the issue was whether
a new cause of action accrued--and thus a new statute of limitations began running--for each
missed payment. See id. at 466. The case before us does not involve a lease, nor does it involve
multiple payments. Scott is therefore inapplicable.
The cases involving the discovery-rule exception are also inapplicable to this case.
The Texas Supreme Court has made it clear that the discovery-rule exception should be applied
only where an injury is unlikely to be discovered within the prescribed limitations period
despite due diligence. See Via Net v. TIG Ins. Co., 211 S.W.3d 310, 313, 315 (Tex. 2006). The
supreme court further stated that the discovery-rule exception should be restricted "to exceptional
cases" so as "to avoid defeating the purposes behind the limitations statutes." Id. at 313. Here, any
breach of the contract by ADC was evident in the September 11, 2001 memorandum. Hertzberg
makes no argument that he could not have discovered his injury during the four-year limitations
period. In fact, he argues that he discovered the injury in November 2001, when he claims that he
had to pay his insurance premium by the insurance company's deadline. Further, in the one case
to which Hertzberg cites, Houston Livestock, this court pointed out that "[a] party seeking to avail
itself of the discovery rule must plead the rule, either in its original petition or in an amended or
supplemental petition in response to defendant's assertion to the defense as a matter of avoidance."
125 S.W.3d at 570. The record shows that Hertzberg never pleaded the discovery rule despite
ADC's assertion of the affirmative defense of limitations in its answer.
Because the cases cited by Hertzberg are inapplicable to this case, we disregard them.
D. Conclusion Regarding Accrual Date
As previously indicated, any injury suffered by Hertzberg was known to him on
September 11, 2001, when he received ADC's memo. Thus, his cause of action accrued on that date.
Hertzberg did not file suit until November 21, 2005. Because there is no genuine issue of material
fact that he filed suit more than four years after his cause of action accrued, we affirm the trial court's
summary judgment.
Attorney's Fees and Post-Judgment Interest
In his second issue, Hertzberg contends that the trial court erred in granting ADC's
requests for attorney's fees and post-judgment interest and that the amount of attorney's fees granted
was unreasonable. We review a trial court's decision to either grant or deny attorney's fees under
an abuse-of-discretion standard, and we review the amount of attorney's fees awarded under a legal-sufficiency standard. See Ridge Oil Co., Inc. v. Guinn Invs., Inc., 148 S.W.3d 143, 163 (Tex. 2004);
Aaron Rents, Inc. v. Travis Cent. Appraisal Dist., 212 S.W.3d 665, 671 (Tex. App.--Austin 2006,
no pet.). A trial court abuses its discretion if it acts without reference to any guiding rules and
principles. Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241-42 (Tex. 1985). To
determine whether a trial court abused its discretion, we must determine whether the trial court's
action was arbitrary or unreasonable. Id. at 242. Because we review the amount of attorney's fees
awarded under a legal-sufficiency review, we must view the evidence in a light that tends to support
the disputed finding and disregard evidence and inferences to the contrary. Wal-Mart Stores, Inc.
v. Canchola, 121 S.W.3d 735, 739 (Tex. 2003). If more than a scintilla of evidence supports the
challenged finding, the legal-sufficiency challenge must fail. Id.
Although Hertzberg challenges the trial court's award of attorney's fees and post-judgment interest, he does not cite to any legal authority to support reversal of the trial court's
determinations, thus waiving error on the issue. See Tex. R. App. P. 38.1(i) (requiring citation to
authority). Even if he had not waived error, we find nothing in the record to support his assertions.
The trial court's decision to award attorney's fees and post-judgment interest is supported by the
contract, which states:
If the services of an attorney are retained and/or if any action at law
or in equity is brought to enforce or interpret the provisions of this
Agreement or to collect any monies due hereunder, the prevailing
party shall be entitled to reasonable attorney's fees together with
interest thereon at the highest rate provided by law in addition to any
other relief to which he may be entitled at law or in equity.
A "prevailing party" is a party who successfully prosecutes the action or successfully
defends against it, prevailing on the main issue, even if not to the extent of its original contention.
See Flagship Hotel, Ltd. v. City of Galveston, 117 S.W.3d 552, 564 (Tex. App.--Texarkana 2003,
pet. denied); Dear v. City of Irving, 902 S.W.2d 731, 739 (Tex. App.--Austin 1995, writ denied).
Because ADC successfully defended against Hertzberg's suit by obtaining summary judgment on his
claims, ADC is the prevailing party. See Robbins v. Capozzi, 100 S.W.3d 18, 27 (Tex. App.--Tyler
2002, no pet.). Thus, ADC is entitled to "reasonable attorney's fees together with interest thereon"
as provided by the contract. Accordingly, the trial court's decision to grant ADC's requests for
attorney's fees and post-judgment interest was not an abuse of discretion.
Regarding the amount of attorney's fees the trial court awarded, there are several
factors a fact finder should consider in determining the reasonableness of a fee. (2) Arthur Andersen
& Co. v. Perry Equip. Corp., 945 S.W.2d 812, 818 (Tex. 1997). ADC's attorney, Scott Brutocao,
testified at the hearing on attorney's fees as to several of the Arthur Andersen factors. First, he
explained that the case was a standard breach-of-contract suit that required him and two associates
at his firm to file an answer, perform research, conduct discovery, and prepare a summary-judgment
motion. He also pointed out that additional research was required beyond that associated with a
standard case because Hertzberg "was making a novel theory on the statute of limitations." Second,
Brutocao testified that the case took him and two associates at his firm 70.7 hours total, and he
supported his assertion with the billing records of his firm, which were introduced as an exhibit at
the hearing. Third, Brutocao testified that he was familiar with customary rates charged by attorneys
for similar legal services in Austin, and he explained that the hourly rate his firm charged ADC was
$235 and remained fixed regardless of whether he or an associate worked on the case. He also stated
that the hourly rate his firm charged ADC was less than his standard rate, which was $335 an hour.
Fourth, he testified extensively about his own experience and abilities as well as the experience
and abilities of the two associates who worked on the case, and he offered his own and the
two associates' curriculum vitae as exhibits to support his assertions. Finally, he testified that
the total amount of attorney's fees for the case was $16,614.50 and that the amount was reasonable
and necessary.
Because there is evidence of several of the eight Arthur Andersen factors supporting
the reasonableness of the award of attorney's fees, we conclude that there is more than a scintilla of
evidence to support the amount of the award. Accordingly, the trial court did not abuse its discretion
in awarding $16,614.50 in attorney's fees to ADC. See EMC Mortgage Corp. v. Davis, 167 S.W.3d
406, 418-19 (Tex. App.--Austin 2005, pet. denied).
Appellate Attorney's Fees
ADC requests that we award it appellate attorney's fees as monetary sanctions
against Hertzberg for bringing a frivolous appeal. See Tex. R. App. P. 45 (authorizing appellate
court to award prevailing party "just damages" upon determination that appeal is frivolous). In
determining whether an appeal is frivolous, we review the record from the appellant's viewpoint and
decide whether the appellant had reasonable grounds to believe the judgment could be reversed.
Smith v. Brown, 51 S.W.3d 376, 381 (Tex. App.--Houston [1st Dist.] 2001, pet. denied). Whether
to grant sanctions for a frivolous appeal is a matter of discretion that an appellate court exercises
with prudence and caution and only after careful deliberation in truly egregious circumstances. Goss
v. Houston Cmty. Newspapers, 252 S.W.3d 652, 657 (Tex. App.--Houston [14th Dist.] 2008,
no pet.). Although we have rejected Hertzberg's arguments on appeal, we cannot characterize the
appeal as objectively frivolous. Accordingly, we overrule ADC's request.
In the alternative, ADC asks that we remand the case to the trial court for the award of
appellate attorney's fees. As previously indicated, the contract provides that the prevailing party in
the suit is entitled to recover attorney's fees. However, ADC did not request appellate attorney's fees
in the trial court and has not filed a notice of appeal on the issue. Accordingly, we must deny ADC's
request. See Tex. R. App. P. 25.1(c) ("A party who seeks to alter the trial court's judgment or
other appealable court order must file a notice of appeal."); In re Lesikar, 285 S.W.3d 577, 586
(Tex. App.--Houston [14th Dist.] 2009, no pet.) (appellee waived claim to appellate attorney's fees
on remand because she did not request appellate fees, present evidence to support fees, or
obtain finding or judgment on issue in trial court) (citing Varner v. Cardenas, 218 S.W.3d 68, 69-70
(Tex. 2007)).
CONCLUSION
Because we find no error in the trial court's determinations, we affirm the trial court's
summary judgment.
___________________________________________
David Puryear, Justice
Before Justices Patterson, Puryear and Pemberton
Affirmed
Filed: September 11, 2009
1. A "tail policy" is an insurance policy covering a professional once the professional's
"claims-made" insurance policy is discontinued. Tail insurance essentially extends the period of
the claims-made policy to allow additional time to make claims for acts occurring during the time
the claims-made policy was in effect. See Woods v. Mercer, Inc., 769 S.W.2d 515, 516 (Tex. 1988).
2. The factors include:
(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).