Xing Zhao v. the Hudgens Group, Inc.

• Court: Court of Appeals of Texas
• Decided: June 7, 2011
• Docket: 14-10-00081-CV
• Status: Published

Opinion

Affirmed as Modified and Memorandum Opinion filed June 7, 2011.

In The

Fourteenth Court of Appeals

NO. 14-10-00081-CV

Xing Zhao, Appellant

v.

The Hudgens Group, Inc., Appellee

On Appeal from County Court at Law No. 3

Galveston County, Texas

Trial Court Cause No. 59,146

MEMORANDUM OPINION

Xing Zhao appeals from an adverse judgment in his breach of contract action against The Hudgens Group, Inc.  After a bench trial, the court entered judgment favoring The Hudgens Group based, at least in part, on an accord and satisfaction.  In six issues, Zhao contends that (1) the trial court erred in awarding attorney’s fees to The Hudgens Group, (2) Zhao established as a matter of law that The Hudgens Group breached the contract between the parties, (3) the trial court erred in basing its judgment on The Hudgens Group’s first accord and satisfaction defense, (4) the trial court erred in basing its judgment on the second accord and satisfaction defense, (5) the trial court erred in holding that the original agreement was satisfied and that Zhao did not suffer damages, and (6) the trial court erred in refusing to grant a new trial based on, among other things, newly discovered evidence.  We modify the judgment to eliminate the award of attorney’s fees and affirm the judgment as so modified.

I.  Background

            On February 3, 2006, Zhao and The Hudgens Group entered into a Memorandum of Agreement (MOA) concerning an investment in real property in Galveston County (the canal lot).  Under the terms of the agreement, the canal lot was to be purchased in Zhao’s name, with Zhao providing over $32,000 of the down payment and The Hudgens Group providing $10,000.  The canal lot was to be sold within one year from the date of purchase, with the proceeds split evenly after Zhao’s share of the down payment was reimbursed.  The parties also agreed to bear evenly any losses.  The Hudgens Group retained the right to purchase the canal lot for $225,000 within one year from its purchase.  The Hudgens Group was to be responsible for making the monthly mortgage payments until it purchased or sold the property.  The canal lot was then purchased in Zhao’s name for $195,000 plus closing costs of over $4,000, and The Hudgens Group began making the monthly mortgage payments.

            Before entering the MOA, The Hudgens Group had entered into an agreement with JZ Investments, a company partially owned by Zhao, under which The Hudgens Group and JZ invested in two Galveston “dry lots,” i.e., lots not located on the water.  On one of these dry lots, Randall Hudgens, a homebuilder and owner of The Hudgens Group, began constructing a “spec house.”  The Hudgens Group was making mortgage payments on the spec house property.

            At some point, The Hudgens Group stopped making the mortgage payments on both the canal lot and the spec house property.  The spec house property then went into foreclosure, and Zhao purchased it at the foreclosure sale.  Zhao also began making the payments on the canal lot, the title to which was already in his name.  The canal lot was ultimately sold for a loss at $180,000.  Zhao subsequently sued The Hudgens Group for breach of the MOA.  In the lawsuit, Zhao principally sought reimbursement for eighteen mortgage payments he made on the canal lot, totaling approximately $35,000.

            Among its defenses in the lawsuit, The Hudgens Group asserted two different alleged oral agreements, each superseding the MOA and resulting in an accord and satisfaction.  In the first oral agreement, according to The Hudgens Group, Zhao agreed to take over the monthly loan payments on both the spec house property and the canal lot, and The Hudgens Group agreed to relinquish any rights it had to those properties, including any right to reimbursement or profits.  In the second alleged oral agreement, The Hudgens Group agreed to provide information to aid Zhao in completing the construction of the spec house and, in return, Zhao agreed to not sue Hudgens or The Hudgens Group over the canal lot.  The Hudgens Group further alleged that the terms of the MOA itself had been fulfilled.

            The case was tried to the bench with Zhao representing himself.  The only two witnesses called were Zhao and Randall Hudgens.  They both essentially agreed regarding the formation of their investment relationships, but they markedly disagreed regarding the latter stages of their relationship and about the existence or terms of any oral agreements.

Hudgens testified that by the end of 2005 and beginning of 2006, the spec house was in the final stages of completion.  He also said that in May 2006, he found a buyer for the canal lot.  Karl Hancock, a Galveston-area homebuilder, owned a house on an adjacent lot and wanted to construct a pool on the canal lot.  According to Hudgens, Hancock offered $215,000 for the canal lot, but Zhao rejected the offer.[1]

            Hudgens acknowledged that he began to have difficulty making the mortgage payments for both the spec house property and the canal lot.  He said that he had not expected to have to carry both notes for a long time but that the Galveston property market had begun to decline, making sales increasingly difficult.  According to Hudgens, he asked Zhao to make payments on the canal lot while Hudgens continued making the spec house property payments.  Around this time, Zhao began urging Hudgens to transfer the spec house and spec house property note to Zhao, thus abandoning Hudgens’ investment in that property.  Hudgens said that he had attempted to get refinancing for the spec house property in order to give JZ Investments its initial $53,000 down payment back but that Zhao wanted a 40% return on the property and refused to release the secondary lien owned by JZ Investments.

Eventually, according to Hudgens, he orally agreed to let Zhao take over the debt of both properties and ownership of the spec house.  Hudgens said that at the time, it looked like the nearly completed spec house was going to make a profit, whereas the canal lot was going to be a loss.  Hudgens gave Zhao permission to talk to Enterprise Bank, which held the spec house mortgage, and believed that an understanding had been reached that would keep the property out of foreclosure.  Hudgens testified that he stopped making payments on the spec house property because of the first oral agreement.

            Negotiations between Zhao and Enterprise fell though, however, and the spec house property went into foreclosure because of the missed mortgage payments.  Hudgens stated that the negotiations failed because Zhao was demanding a steep discount, which the bank refused.  Further, according to Hudgens, after Zhao bought the spec house property at the foreclosure sale, Zhao contacted Hudgens and asked for assistance in completing the construction of the spec house.  Hudgens asked Zhao why he should help, given that Zhao had just “put [him] out of the building business.”  Zhao responded that if Hudgens helped with the spec house, Zhao would not sue over Hudgens’s failure to make payments on the canal lot mortgage.  As Hudgens explained, Zhao had no prior experience in the home-building industry, and Zhao said that all he needed was information.  Hudgens testified that he orally agreed to help Zhao in return for Zhao’s agreement not to sue over the canal lot.  Hudgens said that this agreement superseded the MOA.

Hudgens further testified that he fulfilled his obligations under the second oral agreement by helping in any way he was asked.  He detailed times when Zhao called or emailed for information regarding the spec house and Hudgens provided it, including information about permitting, an appraisal, a survey, flooring, a water heater, and windstorm certification, as well as information on locating an engineer and a plumber.

            In his testimony, Zhao acknowledged that after he purchased the spec house property at the foreclosure sale, certain things still needed to be done to ready the house for sale.  He further acknowledged turning to Hudgens for help with certain items, but he denied that there was any agreement regarding such help.  Zhao explained Hudgens’ willingness to help by pointing out that Hudgens owed certain contractors for items related to the spec house, such as an appraisal, survey, engineering and plumbing services; by helping Zhao, Hudgens ensured the contractors would get paid by Zhao.

Zhao also questioned the value of help and information provided by Hudgens.  According to Zhao, while Hudgens provided certain information, such as a permit number, how to get a copy of the appraisal, who to call for the survey information, that money was still owed on the flooring, and why the water heater had not been installed, Hudgens was unable to provide other information, such as the process for getting a windstorm certificate.  Zhao also testified that Hudgens’ information was not always accurate, such as the location of the engineer who had inspected the property and the name of a carpenter who had worked on the spec house.  Zhao further said that he could have obtained much of Hudgens’ information from the City of Galveston, and he only asked Hudgens to save time. [2]  According to Zhao, Hudgens gave him advice regarding deck posts at the spec house that contradicted information from the engineer who had inspected the property.

Zhao also pointed out that he had requested help from Hudgens even before buying the spec house on foreclosure.  He suggested that Hudgens’ subsequent assistance was just a friendly response to a request for help that pre-dated the alleged oral agreement.  However, the evidence to which Zhao points to support this contention—a series of emails on March 1 and 2, 2007—actually supports the opposite conclusion, i.e., that Hudgens was not willing to help.  In the email exchange, Zhao twice requested the name and phone number of the company that performed an appraisal on the spec house, and Hudgens twice declined to provide that information.  The exchange can best be described as “testy.”  The next series of emails admitted into evidence, dating from March 12 and 14, 2007—apparently after the foreclosure sale and the purported second oral agreement—reveals Zhao again asking for the appraisal information and Hudgens agreeing to provide it.

The record also contains numerous subsequent email exchanges, over a several-month period, in which Zhao requested information regarding the spec house and Hudgens provided it.  Of particular note are two emails occurring toward the end of the exchanges.  In one, dated August 8, 2007, Hudgens stated:  “as you know [I] have given you help on the [spec house] in any way you have asked, ever since you bought out my project. . . .  [S]ince you agreed not to sue me or my company, I have been available for you to help in any way possible so you could profit from the [spec house].”  Zhao acknowledged in his testimony that this email made it sound like there was an agreement in place “if somebody didn’t know what happened after that.”

In the other e-mail, dated August 15, 2007, Hudgens sternly denied a request from Zhao to sign a letter to Enterprise Bank permitting it to discuss any issues regarding the spec house loan with Zhao.  At the conclusion of his response, Hudgens stated:  “I have helped you through the punch out with the project, and any way you have asked, when I have not had any obligation to do so, but you have crossed the line.”  Zhao suggested during trial that this email language demonstrated that there was no second oral agreement between the parties relating to help with the spec house.  Hudgens explained that his statement in the email indicating that he had no obligation, was a reference to entering into the second oral agreement (i.e., he had no obligation to agree to help in exchange for not being sued), not an admission that there was no second oral agreement .

At the conclusion of the trial, the court entered judgment that Zhao take nothing on his claims against The Hudgens Group and that The Hudgens Group recover $8,800 in attorney’s fees.  In the judgment, the court specifically states that it found “in favor of [The Hudgens Group] on the ground [sic] of the affirmative defenses of accord and satisfaction of superceding [sic] [oral] contract and that the Memorandum of Agreement was satisfied.”  After entry of judgment, Zhao sought a new trial based on the alleged discovery of new evidence.  Zhao’s motion for new trial was overruled by operation of law.

            As stated above, on appeal, Zhao asserts that (1) the trial court erred in awarding attorney’s fees to The Hudgens Group, (2) he established as a matter of law that The Hudgens Group breached the MOA, (3) the trial court erred in basing its judgment on The Hudgens Group’s first accord and satisfaction defense, (4) the trial court erred in basing its judgment on the second accord and satisfaction defense, (5) the trial court erred in holding that the original agreement was satisfied, and (6) the trial court erred in refusing to grant a new trial.

II.  Accord and Satisfaction

            In his fourth issue, Zhao asserts that the trial court erred in basing its judgment on The Hudgens Group’s second accord and satisfaction defense.  In that affirmative defense, The Hudgens Group alleged the second oral agreement under which Hudgens agreed to help Zhao with completing the spec house he bought at foreclosure, and Zhao agreed to not sue Randall Hudgens or The Hudgens Group on the canal lot.

Under Texas common law, the affirmative defense of accord and satisfaction is based on an express or implied contract under which the parties agree to discharge an existing obligation by means of a lesser payment that is tendered and accepted.  Lopez v. Munoz, Hockema & Reed, L.L.P., 22 S.W.3d 857, 863 (Tex. 2000).  To prevail on this defense, The Hudgens Group had to produce evidence establishing (1) a dispute between the parties, and (2) that the parties specifically and intentionally agreed to discharge The Hudgens Group’s prior obligations.  See id.

On appeal, Zhao specifically asserts that as a matter of law:  (1) the alleged second oral agreement was too vague to be the basis for a valid accord and satisfaction, (2) The Hudgens Group failed to establish that it indeed performed its alleged obligations under the second oral agreement, and (3) the alleged second oral agreement contradicts contemporaneous documents without explanation.  We will address each issue in turn.  To the extent Zhao’s arguments require that we review the legal sufficiency of the evidence, we utilize well-established standards in doing so.  See City of Keller v. Wilson, 168 S.W.3d 802, 810-21 (Tex. 2005).

A.  Vagueness

As stated, Zhao initially argues that the second alleged oral agreement was too vague to be an enforceable contract or the basis for an accord and satisfaction.  An alleged agreement is sufficiently definite if a court is able to determine the respective legal obligations of the parties thereunder.  Playoff Corp. v. Blackwell, 300 S.W.3d 451, 455 (Tex. App.—Fort Worth 2009, pet. denied) (citing T.O. Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex. 1992)).  Stated conversely, if an alleged agreement is so indefinite as to make it impossible to fix the legal obligations and liabilities of the parties, it cannot constitute an enforceable contract.  Id. (citing Restatement (Second) of Contracts § 33(2) (1981)).

The nature of the second oral agreement alleged by The Hudgens Group was straightforward.  Randall Hudgens testified that Zhao called him after purchasing the spec house at the foreclosure sale.  According to Hudgens, during their phone conversation, Zhao requested Hudgens’ help with the spec house in exchange for Zhao’s agreement not to sue Hudgens or The Hudgens Group over the canal lot.  Hudgens further stated that Zhao told him the desired assistance was in the form of information only.

Zhao specifically argues that the alleged second oral agreement was too vague in that (1) the “boundaries” of Hudgens’ help were not specifically defined in terms of content, duration and acceptable performance, (2) no time frame was given for Zhao’s restraint from suing, and (3) no terms were given regarding the mortgage payments on the canal lot.  As to the “boundaries” argument, the second oral agreement was not fatally indefinite for not spelling out the specifics of the help to be given where Zhao appeared to not know exactly what he was going to need.[3]  Furthermore, Hudgens testified that he was to help Zhao by providing information for completion of the spec house through the “punch list” for the property.  Thus, there was evidence upon which the trial court could conclude that the duration of Hudgens’ promise to provide information upon request to Zhao was until the house was completed and ready for sale.  Zhao offers no authority or argument for his suggestion that the agreement was too vague because it did not provide a specific basis for measuring Hudgens’ performance.  Certainly, one possible measure of nonperformance would be Hudgens’ refusal to provide requested information.  The boundaries of performance in this simple agreement were sufficiently set forth.

Zhao next complains that no timeframe was given for how long he was to refrain from suing; however, there is no indication in the record that such a timeframe was necessary.  Hudgens testified that Zhao agreed not to sue Hudgens or The Hudgens Group over the canal lot.  This testimony clearly implies that the agreement was that as long as Hudgens performed his obligation under the agreement, Zhao would never bring such a lawsuit.

Lastly, Zhao points out that the agreement did not specify who was responsible for continuing to make the mortgage payments on the canal lot.  Evidence established that, by the time the agreement was allegedly entered, Hudgens, presumably on behalf of The Hudgens Group, had asked Zhao to take over payments on the canal lot mortgage and had stopped making such payments himself.  The trial court could have reasonably concluded that in agreeing to refrain from suing The Hudgens Group regarding the canal lot, Zhao was agreeing to release The Hudgens Group from its canal lot obligations.  In short, the alleged agreement between Zhao and Hudgens did not fail for lack of specificity.

B.  Performance

Next, Zhao contends that even if the second oral agreement existed, The Hudgens Group failed to demonstrate that it or Hudgens performed the obligations under that agreement; thus, according to Zhao, no satisfaction of the MOA ever occurred.  Zhao’s essential argument here is that the information provided by Hudgens “was of little use and carried little to no value.”

As explained above, Hudgens testified that he agreed to provide Zhao information so that Zhao could complete the spec house.  Hudgens further testified that he provided all the requested information to the best of his ability.  There is considerable evidence in the record regarding what Zhao requested and what Hudgens provided.  The testimony of both men provided details of the requests and the aid provided, as did the emails admitted into evidence.

In his brief, Zhao identifies certain items of help allegedly provided by Hudgens that he claims were ultimately not very helpful.  However, Zhao’s critique of Hudgens’ assistance does not negate The Hudgens Group’s evidence of performance.  Below, we discuss the items as identified by Zhao, as well as Hudgens’ response:

·        Zhao requested information about the appraisal company, and Hudgens provided the name of the company and a phone number.  Zhao points out that his request came before the alleged agreement was entered, but as explained above, Hudgens declined to provide the information after two requests and only subsequently provided it after the alleged agreement was in place.  Thus, the providing of this information was in performance of the oral agreement.

·        Zhao asked for a copy of the spec house survey, and Hudgens told him how to get one from the surveyor.  Zhao complains that he had to pay for a copy of the survey. Hudgens apparently did not have a free survey to give Zhao, and the second oral agreement called only for providing information, not paying for surveys.  This does not negate performance of the agreement.

·        Zhao asked for a windstorm certificate, but Hudgens responded that he had little experience with that and recommended Zhao contact the surveyor, for whom Hudgens provided a name and phone number.  Hudgens’ “help” in regards to the certificate was of minimal value, but there is evidence that he tried to find a solution for Zhao.

·        Zhao asked for contact information for the engineer on the spec house because he might have the windstorm certificate.  Hudgens responded that he used an engineer out of League City but was having trouble locating the engineer’s phone number.  Zhao states that he later found the engineer himself in Hitchcock.  On this item, it does appear that Hudgens did not provide the requested assistance, although the evidence indicates that he tried to do so and that he informed Zhao of a different way to obtain the windstorm certificate:  through the surveyor.

·        Zhao requested contact information for the contractor who built the wood decks at the spec house, as he believed the decks needed additional bolts in order to be windstorm certified.  Hudgens replied that the carpenter was a man named Jose but that he was no longer working on Galveston Island.  He further told Zhao that the framing had been done properly and had already been inspected and passed by the engineer.  He recommended that if Zhao still needed work done on the decks, he could get someone else in Galveston to do it.  Although Zhao did not get the information he originally requested, Hudgens did provide information regarding this item.

·        Zhao disputes Hudgens’ contention that the framing had passed inspection, claiming that the original engineer never inspected the decks.  However, Zhao only cites his own testimony as evidence of this, and the trial court could have disregarded Zhao’s testimony and accepted Hudgens’ on this issue.  See City of Keller, 168 S.W.3d at 820.

·        Zhao requested a permit number for the spec house, and Hudgens provided one.  In his brief, Zhao suggests that the number was incorrect; however, the citation to his own testimony does not support this contention.

·        Zhao asked why a water heater had not been installed at the property.  According to Zhao, Hudgens simply responded that the plumber had stopped showing up to work and that Zhao should call another one.  However, the emails revealed that Zhao also stated that the height of the attic appeared to preclude putting a water heater there, and he asked Hudgens to “please take a look at the plan to see what water heater(s) to be used [sic]?”  Hudgens then responded with a specific model number that could fit the space allowed, explained that all major manufacturers had models in that size, and told Zhao that a plumber could buy and install a water heater for him.  Thus, Hudgens provided the requested information.

·        Finally, Zhao challenges Hudgens’ assertion in his testimony that he had helped Zhao regarding a problem with the setback line.  According to Hudgens, there was actually no such problem.  The email cited by Zhao does not directly refute this contention, and even if it had, the trial court could have accepted Hudgens’ explanation.  See id.

As the above discussion illustrates, despite Zhao’s critique of Hudgens’ performance, there was evidence that Hudgens performed under the alleged second oral agreement.[4]  Thus, Zhao’s contention to the contrary is without merit.

Zhao further appears to complain that the aid provided was not worth the over $32,000 that he believed he would be entitled to recover in a lawsuit against The Hudgens Group.  However, he cites no authority in support of his contention that this calculation is relevant to the issue of whether Hudgens performed.  The very nature of an accord and satisfaction is that the obligee under an agreement agrees to accept less than owed under the original agreement in return for extinguishing the obligations under that agreement.  See Lopez, 22 S.W.3d at 863.

Further, viewed from Zhao’s perspective at the time he allegedly entered the second oral agreement, it was far from clear that he would be successful in a lawsuit against The Hudgens Group.  Hudgens had made his own complaints in numerous emails regarding Zhao’s conduct. Thus, the possibility that the value of Hudgens’ aid may have been worth less than $32,000 to Zhao does not establish as a matter of law that Hudgens did not perform under the second oral agreement.  We find no merit in Zhao’s performance arguments.

C.  Conflicts in the Evidence

            Lastly under issue four, Zhao contends that Hudgens’ testimony regarding the second oral agreement contradicted “contemporaneous documents without any explanation.”  Specifically, Zhao argues that Hudgens’ testimony contradicted (1) The Hudgens Group’s answers in the lawsuit, (2) an email Hudgens sent to Zhao in August, 2007, and (3) an email Zhao sent to Hudgens, also in August 2007.  Generally, conflicts in the evidence are matters for the fact-finder to resolve.  City of Keller, 168 S.W.3d at 820.  We assume the fact-finder in this case resolved any conflicts in The Hudgens Group’s favor.  See id.

The answers The Hudgens Group filed in the lawsuit were not evidence at trial.  Cf. Laidlaw Waste Sys. (Dallas), Inc. v. City of Wilmer, 904 S.W.2d 656, 660 (Tex. 1995) (“Generally, pleadings are not competent evidence, even if sworn or verified.”).  Zhao has offered no legal argument or authority to support his contention that any discrepancy between Hudgens’ testimony and the pleadings nullifies the judgment in this case.  See Tex. R. App. P. 38.1(i) (“[Appellant’s] brief must contain a clear and concise argument for the contentions made, with appropriate citations to authorities and to the record.”).  Consequently, we find no merit in this argument.

Next, Zhao cites an email Hudgens sent on August 15, 2007, in which Hudgens stated:  “I have helped you through the punch out with the project, and in any way you have asked when I have not had any obligation to do so but you have crossed the line.”  Zhao asserts that this email excerpt demonstrates that there was no agreement between the parties relating to help with the spec house.  The email was sent in response to a request from Zhao asking Hudgens to sign a letter permitting Enterprise Bank to make an accounting of the spec house loan and discuss the loan with Zhao.  In the email, Hudgens suggested Zhao had gone too far and might be seeking something illegal.  At the email’s conclusion, Hudgens made the above quoted statement.

In his trial testimony, Hudgens explained that his statement in the email that he was not obligated to agree to help was not an admission that there was no second oral agreement.  Additionally, an earlier email from Hudgens explicitly referenced that he was helping Zhao with the spec house because Zhao had agreed not to sue The Hudgens Group.  Given the context of the emails and Hudgens’ testimonial explanation, it was within the trial court’s discretion as fact-finder to reject Zhao’s contention that Hudgens’ August email constituted an admission that no agreement had been reached and that Hudgens had merely provided help as a friend.  See City of Keller, 168 S.W.3d at 820.  Accordingly, we find no merit in Zhao’s argument.

Lastly, Zhao argues that his own statements in emails sent in August 2007 conflict with Hudgens’ trial testimony and demonstrate that there was no second oral agreement.  Specifically, Zhao references an email in which he told Hudgens:  “I am very glad to learn that you have 20 years of track record of total trust worth and solid reputation. That means I can trust you to make mortgage payments on the canal lot as you promised me.”  Zhao’s email came in the midst of a heated exchange with Hudgens, in fact, the very one in which Hudgens accused Zhao of having gone too far in his requests for help.  Given the combative context of this exchange and the self-serving nature of Zhao’s statement, the trial court was within its discretion as fact-finder to reject Zhao’s suggestion that his email proved that there was no agreement to extinguish The Hudgens Group’s debt related to the canal lot.  Finding no merit in any of Zhao’s arguments under his fourth issue, we overrule Zhao’s fourth issue.[5]

III. Motion for New Trial

In his sixth issue, Zhao contends that the trial court erred in refusing to grant a new trial based on (1) several pieces of evidence discovered subsequent to trial, and (2) the same arguments discussed above regarding the accord and satisfaction defense.  We will discuss each ground in turn.

A.  Newly Discovered Evidence

A party seeking a new trial on grounds of newly discovered evidence must demonstrate that:  (1) the evidence has come to his or her knowledge since the trial, (2) the failure to discover the evidence sooner was not due to a lack of diligence, (3) the evidence is not cumulative, and (4) the evidence is so material it would probably produce a different result if a new trial were granted.  Waffle House, Inc. v. Williams, 313 S.W.3d 796, 813 (Tex. 2010).  It is also sometimes said that such evidence cannot be merely for the purpose of impeaching the testimony of the opposing party.  See New Amsterdam Cas. Co. v. Jordan, 359 S.W.2d 864, 866 (Tex. 1962); Fantasy Ranch, Inc. v. City of Arlington, 193 S.W.3d 605, 615 (Tex. App.—Fort Worth 2006, pet. denied); Hughes Drilling Fluids, Inc., Div. of Hughes Tool Co. v. Eubanks, 729 S.W.2d 759, 763 (Tex. App.—Houston [14th Dist.] 1986), writ granted w.r.m., 742 S.W.2d 275 (Tex. 1987).  We review a trial court’s denial of a motion for new trial for an abuse of discretion.   Waffle House, 313 S.W.3d at 813.

In his motion for new trial, Zhao alleged that after the trial concluded, he made three discoveries warranting a new trial:  (1) that Karl Hancock denies that he ever offered to buy the canal lot as Hudgens testified at trial, (2) that the final inspections on the spec house were not completed prior to foreclosure as Hudgens indicated at trial, and (3) that The Hudgens Group maintained a website in 2009 for the purpose of selling homes constructed by Hudgens.  Zhao attached to his motion an affidavit from Hancock, a Certificate of Occupancy from the City of Galveston, and two screen shots from The Hudgens Group’s alleged website.

The trial court, however, did not abuse its discretion in declining to grant a new trial on any of these new-evidence grounds because Zhao failed to demonstrate to the trial court that the failure to discover the evidence sooner was not due to a lack of diligence.  See id.  With regard to the latter two items of allegedly newly discovered evidence—concerning inspections of the spec house and the alleged website—Zhao made absolutely no effort to demonstrate that the failure to discover the evidence sooner was not due to a lack of diligence.

Regarding the first listed item—that pertaining to Hancock’s apparent disclaimer of making any offer to buy the canal lot—we note that Zhao stated in his motion that Hudgens did not reveal the name of the purportedly interested buyer prior to trial.  But Zhao does not argue that he could not have discovered the name earlier.  In fact, all of the evidence Zhao claims to have discovered post-trial appears to be of types that could have been discovered through the effective use of standard pretrial discovery techniques.  In the absence of a showing that the failure to discover the evidence sooner was not due to a lack of diligence, we cannot say the trial court abused its discretion in refusing to grant a new trial.  See id.

B.  Great Weight and Preponderance

            In his final ground for new trial, Zhao contends that the trial court’s final judgment is against the great weight and preponderance of the evidence.  Although Zhao does not offer any citations to authority or provide cogent legal or factual argument in this section of his brief, we take his position to be that the evidence was factually insufficient to support the judgment.  See generally Tex. R. App. P. 38.1(i) (stating an appellant’s brief must contain clear argument for the contentions made, as well as appropriate citation to authority); Dow Chem. v. Francis, 46 S.W.3d 237, 241-42 (Tex. 2001) (discussing standards governing factual sufficiency review).

Regarding the second oral agreement, which the trial court found operated as an accord and satisfaction of the MOA, Zhao at best merely attempts to incorporate by reference the same arguments discussed above under issue four.  For the same reasons we rejected these arguments above, we reject them here as bases for a new trial under the standards governing factual sufficiency of the evidence.  See Manon v. Solis, 142 S.W.3d 380, 390-91 (Tex. App.—Houston [14th Dist.] 2004, pet. denied) (overruling appellant’s factual sufficiency issue which merely incorporated by reference same arguments raised in legal sufficiency issue, holding issue was improperly briefed and otherwise without merit).  Finding no merit in any of Zhao’s new trial arguments, we overrule Zhao’s sixth issue.

IV.  Attorney’s Fees

            In his first issue, Zhao contends that the trial court erred in awarding attorney’s fees to The Hudgens Group.  In its live petition at the time of trial, The Hudgens Group asserted only section 38.001 of the Civil Practice and Remedies Code as the basis for its request for attorney’s fees.  The petition contained no counter-claims, causes of action, or requests for affirmative relief other than the request for attorney’s fees under section 38.001.

Section 38.001 authorizes recovery of attorney’s fees when a party proves a valid claim based on a written or oral contract.  Tex. Civ. Prac. & Rem. Code § 38.001.  However, it does not authorize an award of attorney’s fees for successfully defending against a breach of contract claim.  E.g., Thottumkal v. McDougal, 251 S.W.3d 715, 718-19 (Tex. App.—Houston [14th Dist.] 2008, pet. denied) (citing Am. Airlines, Inc. v. Swest, Inc., 707 S.W.2d 545, 547 (Tex. 1986)).  Although The Hudgens Group successfully defended against Zhao’s breach of contract claim, it did not affirmatively raise or prove that Zhao breached the contract.  Consequently, the trial court erred in awarding attorney’s fees to The Hudgens Group based on section 38.001.  We sustain Zhao’s first issue.

V.  Conclusion

Having sustained Zhao’s first issue, we modify the judgment to remove the award of attorney’s fees.  Having overruled the remainder of Zhao’s issues, we affirm the judgment as modified.

                                                                        /s/        Martha Hill Jamison

                                                                                    Justice

Panel consists of Justices Brown, Boyce, and Jamison.

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[1] Zhao testified that although there was apparently a buyer interested in the spec house at one point, Hudgens did not reveal it was Hancock until his testimony at trial.

[2] In his testimony, Hudgens explained that he provided the correct name of the carpenter but that the carpenter may have moved.  He further denied that Zhao could have obtained from the city all of the answers he sought.  He also stated that it was “ridiculous” to suggest he would have helped Zhao merely because Zhao paid off a few subcontractors for work done on the spec house; Hudgens explained that the subcontractors in question were longtime associates who had not demanded payment from him.  An email admitted into evidence revealed Hudgens told Zhao he had no recent experience with windstorm certificates and recommended that Zhao talk to a specified surveyor for help.

[3] Section 34 of the Restatement (Second) of Contracts explains that “[t]he terms of a contract may be reasonably certain even though it empowers one or both parties to make a selection of terms in the course of performance.”  Restatement (Second) of Contracts § 34(1).  Comment “a” to that section further states that an agreement “is not made invalid by the fact that it leaves particulars of performance to be specified by one of the parties.”  Id. § 34 cmt. a.  Furthermore, even when one or more terms are missing from an alleged agreement, the parties may show by their subsequent actions that they intended to conclude a binding agreement.  See id. § 33 cmt. a.  Here, after the alleged agreement was entered, Zhao made numerous requests for help from Hudgens and Hudgens provided information to Zhao.

[4] It is also worth noting what the record does not contain:  significant evidence that Zhao was displeased with the information Hudgens was providing at the time it was provided.  Based on Hudgens’ testimony and the email exchanges, the trial court could have concluded that Zhao found Hudgens’ performance acceptable, at least until Hudgens’ refusal to sign the letter request to Enterprise Bank.

[5] Because the trial court’s judgment was supported by its finding of accord and satisfaction based on the second alleged verbal agreement having superseded the MOA, we need not consider the merits of Zhao’s third and fifth issues, which challenge other bases for the court’s judgment.  Further, we need not address Zhao’s contention in issue two that he proved as a matter of law that The Hudgens Group failed to comply with the MOA.  By definition, such argument does not defeat an accord and satisfaction affirmative defense.  See Lopez, 22 S.W.3d at 863.  We therefore overrule Zhao’s second, third, and fifth issues as moot.