Opinion
No. 03-07-00376-CV
Filed: February 5, 2010.
Appealed from the County Court at Law No. 1 of Burnet County No. C3206, Honorable W. R. Savage, Judge Presiding.
Before Justices PATTERSON, PURYEAR and PEMBERTON; Concurring Opinion by Justice PATTERSON.
Concurring Opinion by Justice PEMBERTON.
Concurring and Dissenting Opinion by Justice PURYEAR, Joined in part by Justice PEMBERTON.
MEMORANDUM OPINION
Elizabeth Louise Handley appeals from a final summary judgment awarding appellee, Marian C. Bloss, an attorney, $9,338.23 on a claim for unpaid legal services. Bloss, in turn, has filed a motion for sanctions under Tex. R. App. P. 45. Justice Puryear has filed a concurring and dissenting opinion, which Justice Pemberton joins in part. Justices Patterson and Pemberton have each filed concurring opinions. As reflected in these opinions, the Court unanimously holds that the summary judgment should be affirmed. A majority of the Court — Justices Patterson and Pemberton — holds that Bloss's motion for sanctions should be denied. Justice Puryear dissents from this portion of the Court's judgment and would award sanctions.
CONCURRING OPINION
I concur in the judgment to affirm the trial court's summary judgment ruling in favor of appellee Marian Bloss. I write separately to address Bloss's motion for damages pursuant to rule 45 of the rules of appellate procedure. See Tex. R. App. P. 45. Bloss urges that Handley's appeal is frivolous and that damages are warranted pursuant to rule 45 because: (i) Handley waived her points of error by failing to raise them with the trial court, (ii) Handley has no reasonable expectation of reversal, (iii) Handley's brief is technically and substantively deficient, (iv) Handley appeals for the purpose of delay, (v) Handley failed to respond to the motion for damages to this Court, and (vi) Handley failed to file a supersedeas bond. For the reasons that follow, I conclude that Elizabeth Handley's appeal was not frivolous and that damages are not warranted.
Bloss brought suit against Handley, alleging that Handley had failed to pay Bloss for legal services that Bloss provided to Handley. After a hearing, the trial court granted Bloss's motion for summary judgment pursuant to rule 166a(c) of the rules of civil procedure and rendered final summary judgment awarding $9,338.23 plus interest and attorney's fees. See Tex. R. Civ. P. 166a(c).
Rule 45 permits an appellate court to award a prevailing party "just damages" for "frivolous appeals." Tex. R. App. P. 45; Smith v. Brown, 51 S.W.3d 376, 380 (Tex. App.-Houston [1st Dist.] 2001, pet. denied). In determining whether an appeal is frivolous, this Court applies an objective test. Smith, 51 S.W.3d at 381. We review the record from the viewpoint of the advocate and ask whether the advocate had reasonable grounds to believe the judgment could be reversed. Id. Whether to grant sanctions for a frivolous appeal is a matter within this Court's discretion, but we are to exercise our discretion with caution and prudence, and only after careful deliberation. Id.; see also Conseco Fin. Servicing v. Klein Indep. Sch. Dist., 78 S.W.3d 666, 676 (Tex. App.-Houston [14th Dist.] 2002, no pet.) ("Although imposing sanctions [damages under rule 45] is within our discretion, we will do so only in circumstances that are truly egregious."). In this context, I turn to Handley's asserted grounds for the award of damages pursuant to rule 45.
Rule 45 provides:
If the court of appeals determines that an appeal is frivolous, it may — on motion of any party or on its own initiative, after notice and a reasonable opportunity for response — award each prevailing party just damages. In determining whether to award damages, the court must not consider any matter that does not appear in the record, briefs, or other papers filed in the court of appeals.
Tex. R. App. P. 45.
It is undisputed that Handley failed to raise her points of error with the trial court; Handley did not file a response to Bloss's motion for summary judgment. See Tex. R. Civ. P. 166a(c). The failure to file a response with the trial court, however, is not dispositive. See Rhone-Poulenc, Inc. v. Steel, 997 S.W.2d 217, 223 (Tex. 1999). In Rhone-Poulenc, the supreme court explained the challenge that a nonmovant may make on appeal to a summary judgment ruling pursuant to rule 166a(c) when the nonmovant did not file a response with the trial court:
Summary judgments must stand on their own merits. Accordingly, on appeal, the nonmovant need not have answered or responded to the motion to contend that the movant's summary judgment proof is insufficient as a matter of law to support summary judgment. . . . On appeal, the movant still bears the burden of showing that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law.
Id. (internal citations omitted). And in Houston v. Clear Creek Basin Authority, 589 S.W.2d 671, 678 (Tex. 1979), the court stated: "While it would be prudent and helpful to the trial court for the non-movant always to file an answer or response, the non-movant needs no answer or response to the motion to contend on appeal that the grounds expressly presented to the trial court by the movant's motion are insufficient as a matter of law to support summary judgment."
To be entitled to summary judgment on her claim that Handley owed her for legal services, among the elements that Bloss had to conclusively establish was the amount of the debt owed — that Handley owed her $9,338.23 — or, stated differently, that there were no genuine issues of material fact and that she was entitled to judgment as a matter of law as to the amount owed. See Tex. R. Civ. P. 166a(c). Bloss supported her motion by her own affidavit with attachments that included the fee schedule and fee agreement between Bloss and Handley, copies of checks Handley made against her account, billing statements, and two demand letters.
In her points of error, Handley does not dispute that she owes a debt to Bloss for legal services provided; rather, she challenges the trial court's finding as to the actual amount owed. The substance of her first point of error challenges the sufficiency of Bloss's evidence to support this element. Handley focuses on the inconsistency between Bloss's averment that the principal balance owed was $9,338.23 and Bloss's billing statements that reflect the total amount owed to be $6,138.23 and her demand letter dated October 28, 2006, that states that the "Debt/Original Principal" is $6,138.23. Handley also urges that "[t]he trial court erred in granting summary judgment for [Bloss] because [Bloss]'s summary judgment evidence presented fact issues" and summarizes her argument to be that Bloss's "summary judgment evidence is inconsistent and presents fact issues to be determined by the trier of fact." Because Handley challenges the sufficiency of Bloss's evidence to support summary judgment as to the actual amount owed, I cannot conclude that Handley's failure to raise her points of error with the trial court supports an award of damages under rule 45. See Clear Creek Basin Authority, 589 S.W.2d at 678.
I also cannot conclude that Handley's attorney did not have reasonable grounds to believe the judgment could be reversed. See Tex. R. Civ. P. 166a(c); Tex. R. App. P. 45; Smith, 51 S.W.3d at 381. 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. See Rhone-Poulenc, 997 S.W.2d at 223. Although Bloss's explanation in her affidavit for the inconsistencies in the evidence as to the amount owed "could have been readily controverted," the billing statements and her October demand letter are inconsistent with her affidavit, and her billing statements contain no explanation for the reduction in hours charged. See Tex. R. Civ. P. 166a(c) (summary judgment may be based upon "uncontroverted testimonial evidence of an interested witness . . . if the evidence is clear, positive and direct, otherwise credible and free from contradictions and inconsistencies, and could have been readily controverted").
In her affidavit, Bloss explains the inconsistency by characterizing the amount of $6,138.23 as a "discounted payoff amount"; her billing statements reflect that she discounted the hours that she charged to Handley, and the amount of $9,338.23 reflects the balance of $6,138.23 plus $3,200.00, the value of the discounted hours. In her second point of error, Handley contends that the rescission of the discounted amount of $3,200.00 for failure to pay was an unenforceable penalty. I agree with Justice Puryear's opinion that Handley waived her second point of error by failing to raise it with the trial court.
Moreover, given the limited nature of the controversy, I cannot conclude that Handley's brief is so technically or substantively deficient to support an award of damages under rule 45. See Tex. R. App. P. 38.1; 45; Conseco Fin. Servicing, 78 S.W.3d at 676 (damages under rule 45 should be imposed "only in circumstances that are truly egregious"). Handley's brief contains the categories of information required under rule 38.1 of the rules of appellate procedure, references the summary judgment evidence, includes the summary judgment evidence as an appendix to the brief, and provides authority, albeit unpersuasive, to support her points of error.
In her remaining grounds, Bloss asserts that damages are warranted because Handley appealed for the purpose of delay, failed to respond to Bloss's motion for damages to this Court, and failed to post a supersedeas bond. The procedural background of Handley's appeal is relevant to these grounds:
• In April 2007, Handley filed her notice of appeal.
• On September 11, 2007, Bloss filed a motion to dismiss Handley's appeal and motion for damages in the amount of $1,270 under rule 45, contending that Handley was pursuing the appeal solely for delay.
• On September 24, 2007, this Court granted Handley's motion for extension of time to file her brief, and Handley filed her appellant brief.
• On October 10, 2007, this Court overruled Bloss's motion to dismiss and for damages by postcard without a response by Handley to the motion.
• On October 24, 2007, Bloss filed her appellee brief, reasserting her motion to dismiss for failure to prosecute and motion for damages under rule 45.
Given this Court's actions during the pendency of this appeal, these grounds do not support the award of damages under rule 45. See Smith, 51 S.W.3d at 380 (whether to award damages within appellate court's discretion).
Because I conclude that Handley's appeal does not warrant damages under rule 45, I concur in the judgment to affirm the trial court's summary judgment ruling in favor of Bloss and write separately to address the award of damages by this Court pursuant to rule 45.
CONCURRING OPINION
I join in Justice Puryear's opinion to the extent it holds that Handley waived two of her appellate challenges to the summary judgment — that the fee agreement did not authorize Bloss to "revoke" the $3,200 in billing discounts, and if it did, it imposes an unenforceable penalty — because Handley did not raise these grounds for denying summary judgment in a timely written response to Bloss's motion. See City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678 (Tex. 1979). In the view that these were the only grounds that Handley raises on appeal, Justice Puryear would award damages to Bloss to sanction Handley for filing a frivolous appeal. If these were in fact the only grounds Handley presented on appeal, I might be inclined to join that portion of Justice Puryear's opinion. However, Handley also complains that Bloss's summary-judgment evidence was "inconsistent" with respect to whether she owes Bloss $6,138.23 or the full $9,338.23. I agree with Justice Patterson that this complaint is in the nature of a challenge to the legal sufficiency of Bloss's summary-judgment proof that can be raised for the first time on appeal. See id.
Justice Puryear acknowledges that Handley contends Bloss's summary-judgment proof is "inconsistent," but concludes that Handley nonetheless failed to challenge the legal sufficiency of Bloss's summary-judgment proof because Handley did not explicitly refer to "legal insufficiency" or cite specific authorities for the concept that "inconsistent evidence is legally insufficient to support summary judgment." While Handley's briefing is admittedly sparse, the substance of her contention is straightforward — Bloss is not entitled to summary judgment for the full $9,338.23 because she failed to conclusively establish that Handley owed her that entire amount as opposed to the $6,138.23 that Bloss had originally billed. This is a challenge to the legal sufficiency of Bloss's summary-judgment proof that Handley can raise for the first time on appeal. See M.D. Anderson Hosp. Tumor Inst. v. Willrich, 28 S.W.3d 22, 22-23 (Tex. 2000) (per curiam); Cotton v. Ratholes, Inc., 699 S.W.2d 203, 204-05 (Tex. 1985) (per curiam). Further, Handley's challenge has some colorable legal and factual basis — there is evidence that Bloss originally charged Handley $6,138.23 and not the full $9,338.23 — and, therefore, does not rise to the level of frivolousness.
I agree with Justice Puryear that Handley ultimately does not prevail on this contention because Bloss's undisputed summary-judgment proof establishes that she provided Handley $9,338.23 in unpaid reasonable and necessary legal services and that the $3,200 discrepancy represented discounts on hours, and because the mere fact Bloss originally discounted some of her hours does not in itself raise a fact issue as to the reasonableness and necessity of the $9,338.23 amount. Justice Patterson reaches a similar conclusion. Consequently, I concur in the judgment affirming the summary judgment. However, because I differ with Justice Puryear's core contention that Handley advances only unpreserved arguments on appeal, and because Handley's challenge to the "inconsistency" of Bloss's summary-judgment evidence, while ultimately unsuccessful, is not frivolous, I concur with Justice Patterson in the judgment denying Bloss's motion for damages.
CONCURRING AND DISSENTING OPINION
Marian Bloss, an attorney, sued her former client, Elizabeth Handley, to recover unpaid fees. Bloss filed a traditional motion for summary judgment, see Tex. R. Civ. P. 166a(c), which the trial court granted after Handley failed to file a response. On appeal, Handley argues that (1) Bloss's summary judgment evidence raises a fact question as to the fees Handley actually owed and (2) a portion of the fees that Bloss seeks to recover constitutes an "unenforceable penalty." Bloss argues that we should affirm the summary judgment and award her damages because Handley's appeal is frivolous. I concur with the majority in affirming the summary judgment, but I respectfully dissent on the issue of damages because I believe this appeal is frivolous.
FACTUAL AND PROCEDURAL BACKGROUND
Bloss represented Handley in a divorce proceeding. Handley contractually agreed to pay Bloss $200 per hour for her services. As Handley's bills came due, Bloss apparently offered to discount them a total of $3200. After Handley failed to pay her bills, however, Bloss sent her a letter that stated: "If a check is not received, this office shall be forced to file suit against you for the amount owed — minus all previous discounts allowed, interest at the maximum rate allowed by law, court costs and attorney fees." (Emphasis in original.) Handley did not pay her bills, and Bloss sued for everything she was owed, including the amounts she had previously offered to discount.
Bloss eventually filed a motion for summary judgment. The motion included an affidavit by Bloss that detailed the fees she was owed and averred that the fees were reasonable and necessary. The affidavit attached the following exhibits: (1) Handley's "client information" form; (2) a "Fee Schedule and Fee Agreement with Client" form, signed by Handley, which detailed Bloss's billing rate ($200 per hour) as well as all other expenses for which Handley was responsible (e.g., copying costs, court costs); (3) copies of checks that Handley remitted to Bloss; (4) copies of bills dated August 23, September 4, October 13, and October 28, 2006 that show the amount of fees Handley owed Bloss for each interval; (5) a letter from Bloss to Handley dated October 28, 2006, styled a "formal demand," that stated that if Handley did not pay Bloss her outstanding debt of $6,138.23 within thirty days, Bloss would file suit for that amount plus the $3200 in discounts previously offered (for a total of $9,338.23); and (6) a letter from Bloss to Handley dated December 18, 2006, again styled a "formal demand," that stated that Bloss would file suit if Handley did not pay the entire $9,338.23 within thirty days.
Handley did not file a response to Bloss's summary judgment motion. The trial court granted the motion and awarded Bloss the $9,338.23 she was owed under the parties' contract, plus costs, attorney's fees, and pre-and post-judgment interest.
On appeal, Handley argues that a fact question exists as to whether she owes Bloss the previously discounted $3200. She also argues that requiring her to pay the $3200 constitutes an "unenforceable penalty." Bloss not only denies these claims but also seeks damages for having to contest them, characterizing them as frivolous. See Tex. R. App. P. 45 (appellate court may award damages for frivolous appeals).
STANDARD OF REVIEW
A "traditional" motion for summary judgment is properly granted when the movant establishes that there are no genuine issues of material fact and that it is entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c); Lear Siegler, Inc. v. Perez, 819 S.W.2d 470, 471 (Tex. 1991); Holmstrom v. Lee, 26 S.W.3d 526, 530 (Tex. App.-Austin 2000, no pet.). In reviewing a grant of summary judgment, we take as true evidence favorable to the nonmovant, making every reasonable inference and resolving all doubts in the nonmovant's favor. Centeq Realty, Inc. v. Siegler, 899 S.W.2d 195, 197 (Tex. 1995).
DISCUSSION
Summary Judgment
Handley raises two points of error on appeal. First, she argues that because Bloss offered discounts totaling $3200 as Handley's first few bills came due, a fact issue exists as to whether Bloss had the right to revoke that offer. Second, Handley argues that Bloss's revocation of the $3200 discount constitutes an "unenforceable penalty."
Handley did not raise these arguments in the trial court, so she cannot raise them on appeal. See Tex. R. Civ. P. 166a(c) ("Issues not expressly presented to the trial court by written motion, answer or other response shall not be considered on appeal as grounds for reversal [of summary judgment]."); City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678 (Tex. 1979) (party appealing from summary judgment may not raise grounds for reversal that it did not raise in writing in trial court). Nevertheless, I will briefly explain why these arguments would fail even if they had not been waived.
Regarding Handley's first argument — namely, that a fact question exists as to whether Bloss had the right to revoke her offer of a $3200 discount — it is clear that the parties' fee agreement did not require discounts for timely payment. Rather, under the fee agreement's plain terms, Handley owed Bloss $9,338.23 for her services. Handley appears to argue that because Bloss initially agreed to accept $6,138.23 for her services, a fact question exists as to whether $6,138.23 or $9,338.23 was the reasonable rate for Bloss's services. This argument fails for two reasons. First, Handley agreed to a contract rate of $9,338.23 and has not alleged that she was misled into doing so. See In re McKinney, 167 S.W.3d 833, 835 (Tex. 2005) (per curiam) (absent fraud, misrepresentation, or deceit, parties are bound by the terms of the contracts they sign). Second, Bloss submitted an affidavit that stated $9,338.23 was a reasonable rate for her services. That affidavit was sufficient to support summary judgment because Handley failed to controvert it. See Tex. Civ. Prac. Rem. Code Ann. § 18.001 (West 2008) (affidavit by service provider stating that service charge was reasonable is sufficient to support judgment if not contradicted by counteraffidavit); see also In the Estate of Tyner, 292 S.W.3d 179, 184 (Tex. App.-Tyler 2009, no pet.) (proper affidavit by attorney, if uncontroverted, is sufficient to establish reasonableness of attorney's fees). That being the case, the mere fact that Bloss offered a discount does not suggest that her rate may in fact have been unreasonable. Put another way, the fact that an attorney offered to discount her fees is irrelevant to the question of whether those fees were reasonable in the first place. The only thing that could suggest Bloss's fees were unreasonable would be evidence directly demonstrating as much. See Karen Corp. v. Burlington N. Santa Fe Ry. Co., 107 S.W.3d 118, 126 (Tex. App.-Fort Worth 2003, pet. denied) (affidavit establishing reasonableness of attorney's fees must be controverted with facts demonstrating that fees were unreasonable). Handley offered no such evidence below.
Handley admits this fact; in her brief she states, "[t]he contract itself is silent on the question of discounts."
Handley's second argument — namely, that Bloss's revocation of the $3200 discount constitutes an "unenforceable penalty" — fails because requiring someone to pay an agreed-upon contract rate is not a "penalty." See Phillips v. Phillips, 820 S.W.2d 785, 788 (Tex. 1991) (a penalty is a demand for unreasonably large liquidated damages).
I reiterate that even though I have explained why Handley's appellate arguments would fail on their merits, those arguments are in fact waived because Handley did not raise them below. See Clear Creek Basin Auth., 589 S.W.2d at 678 (party appealing from summary judgment may not raise grounds for reversal that it did not raise in trial court). When a party fails to oppose a summary judgment motion, the only evidentiary argument it can legitimately raise on appeal is that the movant's summary judgment evidence was legally insufficient. See id. at 678-79. Handley does not make such an argument here. Indeed, the only part of her brief that could conceivably be relevant to such an argument is the statement that "[a]ppellee's summary judgment proof is inconsistent." Even giving Handley every benefit of the doubt, however, I cannot construe this isolated statement as an argument that Bloss's summary judgment evidence was legally insufficient because it was inconsistent. First, Handley's brief does not even mention the concept of legal insufficiency. Second, Handley does not cite any authority that suggests inconsistent evidence is legally insufficient to support summary judgment. Third, even if Handley did cite such authority, Bloss's evidence was not in fact inconsistent. Rather, Bloss's evidence established that Bloss sought fees consistent with the parties' fee agreement. That the evidence also suggested the possibility of a discount for Handley does not, absent more, bear on the issue of whether the fees proven and awarded were reasonable and necessary.
Damages
Bloss has moved for damages equal to the $4,648.95 in attorney's fees she incurred in responding to Handley's appeal. See Tex. R. App. P. 45 (appellate court may award damages for frivolous appeal). Bloss argues that taken together, the following six facts show that Handley's appeal was frivolous: (1) Handley failed to file a response to Bloss's motion for damages; (2) Handley did not raise her points of error in the trial court; (3) Handley's appellate brief contains little substantive argument and few citations to authority or the record, see Tex. R. App. P. 38.1; (4) Handley's brief does not comply with the rules of appellate briefing, see Tex. R. App. P. 9.4; (5) Handley has delayed pursuing her appeal, twice missing filing deadlines and requesting extensions; and (6) Handley had no reasonable basis to expect to prevail on appeal.
I agree that Handley's appeal is frivolous. An appeal is frivolous to the point that damages are warranted "if, at the time asserted, the advocate had no reasonable grounds to believe judgment would be reversed." Njuku v. Middleton, 20 S.W.3d 176, 178 (Tex. App.-Dallas 2000, pet. denied). Handley's points of error are patently meritless, but even if they were not, Handley's attorney had no reasonable basis to believe that they would succeed on appeal because Handley did not raise them in the trial court. The law is well-settled that failure to raise issues in the trial court waives them on appeal. See Tex. R. Civ. P. 166a(c); Clear Creek Basin Auth., 589 S.W.2d at 678. Furthermore, Handley filed no response to Bloss's motion for damages and eventually filed an appellate brief that was cursory and superficial. As Bloss argues, these facts suggest that Handley's appeal represents an attempt to delay payment rather than a good-faith belief that the trial court erred. See Compass Exploration, Inc. v. B-E Drilling Co., 60 S.W.3d 273, 280 (Tex. App.-Waco 2001, no pet.) (facts supporting award of damages include (1) failure to respond to motion for damages and (2) filing of cursory brief).
Again, the only evidentiary argument Handley could legitimately make on appeal is that Bloss's summary judgment evidence was legally insufficient. See City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678-79 (Tex. 1979). As already stated, though, and as discussed further below, I do not believe that Handley makes this argument.
My fellow panelists believe we should not grant Bloss's motion for damages because Handley made a colorable argument on appeal — namely, that Bloss's summary judgment evidence was legally insufficient because it was inconsistent. I disagree with them because, as discussed above, I do not think that Handley's brief, fairly construed, actually makes that argument. Handley's brief does not mention the concept of legal insufficiency or cite any authority that suggests inconsistent evidence is legally insufficient to support summary judgment. And even if the brief did cite such authority, Bloss's evidence was not in fact inconsistent (as my fellow panelists apparently agree).
An appellant must have notice and an opportunity to respond before we award damages. See Tex. R. App. P. 45. Here, Bloss filed a motion for damages and reiterated her request for damages in her brief. Handley had notice of both and declined to take advantage of her opportunities to respond. See Tex. R. App. P. 10.1 (party may file response to motion filed by opponent); Tex. R. App. P. 38.3 (appellant may file reply brief to respond to any issue raised in appellee's brief). Thus, I would award Bloss $4,648.95 in damages, an amount equal to the attorney's fees she incurred in opposing this appeal. See Smith v. Brown, 51 S.W.3d 376, 382 (Tex. App.-Houston [1st Dist.] 2001, pet. denied) (using attorney's fees as measure of damage award under Tex. R. App. P. 45). I respectfully dissent from the majority's opinion insofar as it refuses to award those damages.