Opinion
No. 13-05-542-CV
Opinion delivered and filed February 28, 2008.
On appeal from the 33rd District Court of Llano County, Texas.
Before Justices GARZA, BENAVIDES, and VELA.
MEMORANDUM OPINION
This is a residential construction dispute pertaining to two upscale residences built in the Horseshoe Bay subdivision in Llano County, Texas. On appeal, appellants, Keystone Architects, A.J. Garza, and Suzette Soucie, raise twenty-two issues and contend that the trial court erred in rendering judgment in favor of appellees, Lanai Development, Gene Allen, and Judy Allen, for actual and exemplary damages against Garza and Keystone and actual damages against Soucie. We reverse and render judgment in favor of appellants.
I. FACTUAL AND PROCEDURAL BACKGROUND
Garza is a licensed architect who does business as Keystone Architects. Soucie, Garza's wife, serves as a part-time employee of Keystone. Soucie has a degree in architecture, but is not licensed; therefore, she does not practice. In 1999, the Allens first came in contact with Garza and Soucie by telephone at the recommendation of their son. Keystone made subsequent advertising efforts to the Allens to promote a "design-build" concept. Specifically, the Allens desired to build two properties, the Avivar house and the Brook house, in the Horseshoe Bay subdivision for investment purposes.
After meeting in the fall of 1999, the Allens and Keystone agreed in principal that Keystone would provide "design-build" services for both of the houses in an attempt to save the Allens money. In essence, the Allens agreed to allow Keystone to design the houses and then act as the builder for the projects in the event that the Allens decided to proceed with construction. The parties reduced their agreement (the "Part I Agreement") to writing in January 2000. In accordance with the Part I Agreement, Keystone provided the design services for the houses and the Allens paid Keystone a $5,000.00 retainer.
The Part I Agreement required Keystone to provide the Allens with schematic plans, the design development plan, the construction budget estimate, the revised design development and budget estimate, and an architectural model. The Part I Agreement also provided that Keystone would be paid a 7% fee for these services. The fee amount was to be derived from the total construction cost of the two houses.
In April 2000, Keystone tendered a second contract (the "Part II Agreement") to the Allens providing that Keystone would act as the builder of the two houses. At this time, the Allens obtained financing from Frost National Bank ("Frost Bank") to undertake the construction project. In order to obtain 100% financing from Frost Bank and to obtain other tax and business advantages, the Allens formed a corporate entity, Lanai Development, L.L.C., to serve as the vehicle for the construction. As a result of forming the corporate entity, the Allens assigned the two lots on which the subject houses were to be built to Lanai Development, L.L.C.
The Allens allege that they intended to move into one of the houses upon completion of the construction project, whichever house did not sell first.
Construction of the two houses commenced in September 2000. The construction project went much slower than anticipated. The first house was substantially completed in November 2001 and the second house was substantially completed in January 2002. However, the design and construction work performed at the two houses did not comply with building codes, industry standards, or with the plans and specifications provided by Keystone for the project.
Judy Allen testified at trial that the entire construction project went over budget by more than $180,903.09 on the Avivar house and $143,951.63 on the Brook house as of August 2002. The Allens attempted to repair the structural defects themselves. They allege that Keystone's actions resulted in a drastic reduction of the market value of the houses and forced them to borrow an additional $84,000.00 in August 2001 and $104,000.00 in February 2002 to make necessary repairs.
In their submission of October 11, 2004, regarding Keystone's request for damages, Lanai notes that the final construction cost for the Avivar house were $444,456.00 and the final construction cost for the Brook house were $402,624.00.
The Allens unsuccessfully attempted to market the houses themselves. Frost Bank eventually conducted a foreclosure sale which resulted in $296,766 in proceeds for the Avivar house and $279,054 in proceeds for the Brook house, amounts significantly lower than the Allens' original target sales prices of $500,000 per house.
In the interim, the bank sued the Allens to collect the difference between the loan amounts and the amounts received on the foreclosure sales for the Brook and Avivar houses. Judy Allen testified that they have a "deficiency of close to $400,000 with the bank. . . ."
On February 14, 2003, the Allens filed suit against Garza, Soucie, and Keystone (collectively "Keystone") on behalf of themselves and Lanai Development, L.L.C. (collectively "Lanai"), alleging breach of contract, breach of fiduciary duty, negligence, fraud, and deceptive trade practice act ("DTPA") violations and seeking actual and exemplary damages. On October 13, 2003, Keystone served requests for disclosure on Lanai, seeking information on economic damages and the identities of expert witnesses.
Subsequently, on September 1, 2004, Lanai filed a first amended petition re-asserting claims for DTPA violations, negligence, breach of contract, breach of fiduciary duty, and fraud. Lanai also asserted new claims for negligent misrepresentation, negligence per se, and unjust enrichment, claiming at least $500,000 in actual damages, special or consequential damages, attorney's fees, costs of court, and consulting and expert fees. In response, on September 7, 2004, Keystone filed a motion for partial summary judgment on traditional and no-evidence grounds. After a hearing conducted on September 24, 2004, the trial court granted Keystone's motion for partial summary judgment as to Lanai's breach of fiduciary duty and negligence per se claims.
The record contains an order granting Keystone's motion for summary judgment as to Lanai's claims for breach of fiduciary duty and negligence per se signed on October 7, 2004.
On September 30, 2004, Keystone filed a motion to exclude the expert testimony of Norm Cooper, asserting that Lanai did not timely describe all the subject areas of testimony to be addressed by Cooper. The record does not contain an order signed by the trial court denying Keystone's motion. However, on the first page of Keystone's motion to exclude the expert testimony of Norm Cooper, the trial court has handwritten the following message: "Motion presented to the court 6 October 2004 and it is in all things overruled [therefore] denied." On October 1, 2004, Lanai filed a motion for leave to file a second amended petition with the trial court. On the same day, Lanai filed their second amended petition providing additional support for their claim for damages pertaining to their DTPA and breach of contract claims.
The record does not contain an order of the trial court granting Lanai's motion for leave.
The trial court commenced a bench trial of this matter on October 4, 2004. Prior to commencing direct examination of Judy Allen, Lanai filed a motion for continuance, which the trial court denied. Also on the first day of the trial, Keystone filed a written objection to Lanai's evidence of damages. Keystone asserted that Lanai failed to disclose "the amount and any method of calculating economic damages" pursuant to rule 194.2(d) of the Texas Rules of Civil Procedure and the documents upon which their economic claims were based. See TEX. R. CIV. P. 194.2(d), 194.4. Lanai filed their response on the same day and contended that they timely provided Keystone with evidence of economic damages, in the form of the deposition testimony of Michael Falk, Senior Vice-President of Frost Bank, and Judy and Gene Allen. Lanai attached the cover page of the court reporter's record of the deposition testimony of Judy and Gene Allen. Lanai asserted that Gene Allen testified that the plan was to sell the Avivar house for $485,000 to $635,000 and the Brook house for $380,000 to $500,000. Lanai also asserted that Gene Allen testified that Garza promised to pay $20,000 to repair roof problems, but he never followed through on that promise. Moreover, Lanai contended that Judy Allen's deposition testimony revealed (1) the cost of construction for the Avivar house was to be approximately $436,000, which was well over the $263,000.00 budgeted, and (2) that a spa was budgeted for the Avivar house in the amount of $5,040.00, but Garza replaced the spa to save money. As a result of Garza's actions, Judy Allen testified that the spa essentially was a "dysfunctional" hot pool that ran over budget by $10,000. Based on the above mentioned references, Lanai contended that it complied with rule 194.2(d) of the rules of civil procedure. See TEX. R. CIV. P. 194.2(d).
Lanai contends that one of the purposes for its motion for continuance was for more time to provide Keystone with information regarding the amount and calculation of economic damages sustained in accordance with rule 194.2(d). See TEX. R. CIV. P. 194.2(d).
In their objection to Lanai's evidence of damages, Keystone asserts that it first served Lanai with requests for disclosure on October 13, 2003 and Lanai first responded to Keystone's requests on August 2, 2004. In their August 2, 2004 response, Lanai stated that: "Plaintiffs are still in the process of calculating damages and will supplement this response as required by the rules." Keystone further asserted that Lanai attempted to supplement their responses on September 3, 2004 and September 13, 2004, "without any change[s]" to the August 2, 2004 language. As of October 4, 2004, Keystone asserted that Lanai had yet to supplement their response with actual damage amounts and calculations.
Judy Allen's deposition was taken on August 5, 2004, and Gene Allen's deposition was taken on August 11, 2004. However, the substantive contents of the depositions were not attached to Lanai's response.
Lanai also used their response to Keystone's economic damages objection to address Keystone's motion to strike Norm Cooper's expert testimony. Lanai contended that it produced detailed reports and Cooper's resume to Keystone, in compliance with rule 194.2(f) of the rules of civil procedure. Lanai further contended that Cooper had personal knowledge of the subject matter and attached copies of Cooper's inspection reports of the two houses and a copy of the building codes.
The trial court overruled Keystone's objections to Lanai's evidence of damages. On October 11, 2004, after both parties had rested their cases-in-chief, Lanai filed "PLAINTIFFS' SUBMISSION REGARDING REQUEST FOR DAMAGES" with the trial court, asserting that Keystone violated the DTPA and that it was entitled to treble damages or exemplary damages upon a finding of knowing or unconscionable conduct. Lanai further chronicled damages sustained for their negligence, breach of contract, DTPA, and fraud claims. Specifically, Lanai calculated damages associated with the alleged DTPA violations as follows:
The record does not contain a signed order from the trial court overruling Keystone's objection to Lanai's economic damages; however, Keystone acknowledges this ruling in their appellate brief.
A. Diminution in Market Value:
We highlight Lanai's diminution of market value calculation because it is the calculation the trial court appears to rely on in awarding Lanai damages. We note that this calculation was not admitted into evidence at trial.
27,335
Value of Avivar without Defects $ 395,000-600,000 Foreclosure Sale Amount 280,000 Loss 220,000-285,000 Value of Brook without Defects 500,000-565,000 Foreclosure Sale Amount 297,000 Loss 98,000-300,000 Overcharge for Donald Thompson Fees 17,000 A.J. Garza Promise to Pay Fee for FRS Roofing 20,000 Defendant's Fee overcharges Total Loss (w/lower market value) 382,335Lanai provided other calculations for damages associated with the alleged DTPA violations based upon (1) "Investment Loss," which amounted to $486,380 in damages, (2) "Restitution — Return of Fees Earned by Defendants (unjust enrichment/fraud)," amounting to $197,000 in damages, (3) "Over Budget/Itemized Defective Items," which amounted to $438,775 in damages, and (4) "Loss of Profits," yielding $264,335 in damages.
On February 2, 2005, the trial court ruled in favor of Lanai on all of their claims and awarded the following: (1) actual damages of $382,335; (2) exemplary damages of $764,670; (3) attorney's fees of $148,303 for trial, $25,000 for success on appeal, and $10,000 for a successful appeal to the supreme court; (4) prejudgment interest of 10% on the total damage amount from the date of judgment; and (5) costs of court. On March 4, 2005, Keystone filed a motion for new trial and alternate motion to modify judgment. On March 10, 2005, the trial court issued twenty-four (24) findings of fact and seven (7) conclusions of law. On March 14, 2005, Keystone filed written objections to the findings of fact and conclusions of law and requested amended or additional findings by the trial court. Subsequently, on March 31, 2005, the trial court issued additional findings of fact numbered 25 through 106. On April 8, 2005, the trial court denied Keystone's motion for new trial and alternate motion to modify judgment. This appeal ensued.
II. ANALYSIS
A. Disclosure of Economic Damages
In their first issue, Keystone alleges that the trial court erred in denying their motion to exclude evidence of economic and actual damages because this evidence was not timely disclosed within the discovery period. Conversely, Lanai argues that information concerning economic and actual damages was readily available and exchanged with Keystone through discovery, negotiations, and pleadings prior to trial. Specifically, Lanai references the deposition testimony of the Allens and Falk as timely-submitted evidence establishing economic damages. To further support their contentions pertaining to damages, Lanai asserts that Keystone did not establish that it was unfairly surprised or prejudiced if damages were, indeed, not timely disclosed. Finally, Lanai cites a litany of cases explaining that "a trial court cannot abuse their [its] discretion if it reaches the right result, even for the wrong reason," and "[i]f a correct decision is made by a trial court in its judgment, then assignment by the trial court of a wrong reason for granting such judgment is not reversible error." See, e.g., Johnson v. Fuselier, 83 S.W.3d 892, 898 n. 4 (Tex.App.-Texarkana 2002, no pet.); Rutledge v. Staner, 9 S.W.3d 469, 472 (Tex.App.-Tyler 1999, pet. denied); In re Acevedo, 956 S.W.2d 770, 775 (Tex.App.-San Antonio 1997, no pet.); Hawthorne v. Guenther, 917 S.W.2d 924, 931 (Tex.App.-Beaumont 1996, writ denied); Luxenberg v. Marshall, 835 S.W.2d 136, 141-42 (Tex.App.-Dallas 1992, orig. proceeding); Ace Drugs Marts, Inc. v. Sterling, 502 S.W.2d 935, 940 (Tex.Civ.App.-Corpus Christi 1973, writ ref'd n.r.e).
1. Applicable Law
Decisions about the admissibility of evidence are left to the sound discretion of the trial court. Owens-Corning Fiberglas Corp. v. Malone, 972 S.W.2d 35, 43 (Tex. 1998); Gee v. Liberty Mut. Fire Ins. Co., 765 S.W.2d 394, 396 (Tex. 1989); Pegasus Energy Corp. v. Cheyenne Petroleum Co., 3 S.W.3d 112, 133 (Tex.App.-Corpus Christi 1999, pet. denied). An abuse of discretion exists when the court's decision is without reference to guiding rules or principles or is arbitrary or unreasonable. See Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241-42 (Tex. 1985). The mere fact that a trial judge may decide a matter within his discretionary authority in a different manner than an appellate judge in a similar circumstance does not demonstrate that an abuse of discretion has occurred. Id. at 242 (citing Sw. Bell Tel. Co. v. Johnson, 389 S.W.2d 645, 648 (Tex. 1965); Jones v. Strayhorn, 321 S.W.2d 290, 295 (Tex. 1959)). An appellate court must uphold the trial court's evidentiary ruling if there is any legitimate basis for the ruling. See State Bar of Tex. v. Evans, 774 S.W.2d 656, 658 n. 5 (Tex. 1989). Moreover, we will not reverse a trial court for an erroneous evidentiary ruling unless the error probably caused the rendition of an improper judgment. See TEX. R. APP. P. 44.1; see also Gee, 765 S.W.2d at 396.
Under the Texas Rules of Civil Procedure, which govern civil actions in the district court, a party may request disclosure of the amount of damages sought and any method of calculating economic damages. TEX. R. CIV. P. 2, 194.2(d). Comment 2 to rule 194.2 provides that subsection (d) is "intended to require disclosure of a party's basic assertions, whether in prosecution of claims or in defense." TEX. R. CIV. P. 194.2(d) cmt. 2. For example, to illustrate the nature of the required disclosure, comment 2 provides that in a claim for damages suffered in a car accident, the plaintiff would be required to state how loss of past earnings and future earning capacity was calculated, and defendant "would be required to disclose . . . any basis for contesting the damage calculations." Id.; see Harris County v. Inter Nos, Ltd., 199 S.W.3d 363, 368 (Tex.App.-Houston [1st Dist.] 2006, no pet.).
Rule 194.1 of the rules of civil procedure provides that a party served with a discovery request must disclose information or material listed in rule 194.2 within thirty days of service of the request. TEX. R. CIV. P. 194.1. Moreover, rule 193.6 governs the admission of evidence not timely disclosed in discovery. Specifically, rule 193.6 provides:
(a) Exclusion of Evidence and Exceptions. A party who fails to make, amend, or supplement a discovery response in a timely manner may not introduce in evidence the material or information that was not timely disclosed, or offer the testimony of a witness (other than a named party) who was not timely identified, unless the court finds that:
(1) there was good cause for the failure to timely, make, amend, or supplement the discovery response; or
(2) the failure to timely make, amend, or supplement the discovery response will will not unfairly surprise or unfairly prejudice the other parties.
TEX. R. CIV. P. 193.6(a). The party offering the undisclosed evidence has the burden to establish good cause or lack of surprise, which must be supported by the record. TEX. R. CIV. P. 193.6(b); see also Williams v. County of Dallas, 194 S.W.3d 29, 32 (Tex.App.-Dallas 2006, pet. denied); Norfolk S. Ry. Co. v. Bailey, 92 S.W.3d 577, 581 (Tex.App.-Austin 2002, no pet.). Rule 193.6(a) is mandatory, and the penalty — exclusion of evidence — is automatic, absent a showing of (i) good cause, (ii) lack of unfair surprise or (iii) lack of unfair prejudice. Lopez v. La Madeleine of Tex., Inc., 200 S.W.3d 854, 860 (Tex.App.-Dallas 2006, no pet.); Harris County, 199 S.W.3d at 368. The purpose behind this rule and its accompanying sanction is to prevent trial by ambush. See Aetna Cas. Sur. Co. v. Specia, 849 S.W.2d 805, 807 (Tex. 1993) (applying former Rule 215(5)); see also Harris County, 199 S.W.3d at 368.
The good cause exception permits a trial court to excuse a failure to comply with discovery in difficult or impossible circumstances. Alvarado v. Farah Mfg. Co., 830 S.W.2d 911, 915 (Tex. 1992) (explaining that counsel should not be excused from the requirements of the rule without a strict showing of good cause). However, the following factors, standing alone, do not constitute good cause: inadvertence of counsel, lack of surprise, or uniqueness of the excluded evidence. Id.; see Sharp v. Broadway Nat'l Bank, 784 S.W.2d 669, 671 (Tex. 1990) (per curiam). "Failing to timely supplement discovery can lead to the exclusion of key evidence and effectively grant the opponent certain victory." Kidd v. Paxton, 1 S.W.3d 309, 312 n. 5 (Tex.App.-Amarillo 1999, pet. denied).
2. Discussion
In the instant case, the record reflects that Keystone first served their discovery requests on Lanai on October 13, 2003, and Lanai responded that "Plaintiffs are still in the process of calculating damages and will supplement this response as required by the rules." On June 14, 2004, the trial court entered a discovery control order, which stipulated that the parties "shall complete all discovery on or before August 20, 2004" and that "all documents and information required by Texas Rule of Civil Procedure 194 . . . must be produced by July 30, 2004." Therefore, Lanai had from October 13, 2003 (the date it was first served with Keystone's discovery request) until July 30, 2004 — approximately nine months — to provide an amount and calculation of economic damages to Keystone, which it failed to do. Lanai supplemented their response to Keystone's discovery request regarding the amount and calculation of economic damages twice, stating in both responses that: "Plaintiffs are still in the process of calculating damages and will supplement this response as required by the rules."
The record further reflects that Keystone filed a motion to exclude damage testimony presented by Lanai on the second day of trial, and the trial court overruled this motion. The record also supports Keystone's contention that it repeatedly objected to trial testimony of economic damages. In fact, the trial court allowed Keystone to have a running objection to any damages evidence presented at trial. It was not until after both the plaintiff and defendant had rested their case-in-chief on October 11, 2005, that Lanai finally provided Keystone and the trial court, for that matter, with an amount and calculation of economic damages. It is clear from our review of the record that the trial court based its findings of fact and final judgment upon Lanai's amount and calculation of economic damages provided on October 11, 2004.
Keystone notes that their objections were based on "Plaintiff's failure to answer requests for disclosure and produce some of the documents upon which their claims were based."
As previously mentioned, the trial court, in its final judgment, awarded Lanai $382,335 in actual damages, $764,670 (exactly two times the trial court's actual damage award of $382,355, thus accounting for a trebling of the actual damages awarded) in exemplary damages, $148,303 in attorney's fees, additional attorney's fees in the event of an appeal, and 10% in pre-judgment interest. The trial court's actual damages award is the exact same figure provided in Lanai's Diminution of Market Value calculation submitted on October 11, 2004. For example, in its finding of fact, under the heading "Plaintiff's Damages," the trial court noted that "Lanai Development, L.L.C.'s economic damages were calculated by aggregating the diminution in market value of the Avivar house ($220,000.00), the loss of value of the Brook house ($98,000.00), the amount of overcharge for Donald Thompson's [one of many subcontractors for the project] fees ($17,000.00), the amount of FRS Roofing's fee that A.J. Garza promised to pay ($20,000.00), and the amount of Defendant's overcharges ($27,335.00) for a total of Three Hundred Eighty-two Thousand Three Hundred Thirty-five and 00/100 Dollars ($382,335.00)." This language directly corresponds to Lanai's diminution of market value calculations submitted on October 11, 2004.
We are unable to derive the origin of the trial court's exemplary damage award, as it could be a result of the trial court's Deceptive Trade Practices Act finding or a punitive damage finding associated with one or more of Lanai's common law tort claims. Furthermore, nowhere in its findings of fact and conclusions of law did the trial court make a finding that Lanai had timely disclosed the amount and calculation of economic damages to Keystone.
Lanai contends that they relied upon depositions and attachments thereto of Falk, Judy Allen, and Gene Allen, which were timely produced to Keystone, to establish economic damages sustained. Lanai further contends that Keystone has failed to establish that the trial court's denial of Keystone's motion to exclude Lanai's damages evidence resulted in an improper judgment. We disagree.
In our review of the record, it is clear that Lanai failed to include deposition testimony of Falk, Judy Allen, and Gene Allen in the record. In their response to Keystone's objection to their economic damages evidence, Lanai includes the cover sheet for Judy Allen's deposition taken on August 5, 2004, and the cover sheet for Gene Allen's deposition taken on August 11, 2004. Lanai failed to attach copies of the substance of the depositions taken to any motions presented to the trial court. Furthermore, Lanai has neither included Falk's alleged deposition in the record nor designated Falk as a potential witness or expert witness on damages.
We do note that depositions are not usually filed with the trial court. However, Lanai continually references the deposition testimony of the Allens and Falk in establishing its damages. The record reflects that this Court and the trial court have not been provided with copies of the deposition testimony to substantiate Lanai's contentions.
Lanai did, however, include an expert report completed by Cooper in their response to Keystone's objections to their economic damages. However, Cooper's report does not address the amount or calculation of economic damages sustained by Lanai. In fact, Lanai designated Cooper as an expert testifying "regarding the condition of both houses at the date of his inspection" rather than on economic damages. The evidence demonstrates that Lanai submitted a variety of invoices and sales receipts into the record; however, Lanai failed to organize the evidence into a cognizable calculation of economic damages.
The record does contain a second motion for continuance of trial filed by Lanai on October 4, 2004. In their motion for continuance, Lanai requested that the trial court give it the "opportunity for hearing to show that any failure to timely make, amend or supplement discovery responses will not unfairly surprise or unfairly prejudice Defendants or that there is good cause for any failure to timely supplement." The trial court denied Lanai's second motion for continuance and commenced the bench trial. The evidence demonstrates that Lanai had approximately nine months to produce the amount and calculation of their economic damages sustained by the time this motion was filed. It is clear to us that Lanai did not timely disclose the amount and calculation of the economic damages it sustained to Keystone. See TEX. R. CIV. P. 194.1, 194.2(d).
The trial court may, but is not required to, grant a continuance or postpone a trial temporarily to allow discovery regarding the matter not timely identified during discovery. See TEX. R. CIV. P. 193.6(c); see also Talley Constr. Co. v. Rodriguez, No. 01-03-01147-CV, 2006 Tex. App. LEXIS 2721, at **24-25 (Tex.App.-Houston [1st Dist.] Apr. 6, 2006, no pet.) (mem. op. on reh'g). Clearly, the trial court's denial of Lanai's motion for continuance was a discretionary ruling.
On appeal, Lanai attempts to shift the burden of proving good cause, unfair prejudice, or unfair surprise to Keystone. However, rule 193.6 clearly provides that the burden of proving good cause, lack of unfair prejudice, or lack of unfair surprise is on the party — Lanai — seeking to introduce evidence that was not timely disclosed. TEX. R. CIV. P. 193.6(b). Additionally, rule 193.6 requires that the record support a finding of good cause, unfair prejudice, or unfair surprise. See id. In our review of the record, it is clear that Lanai has not provided evidence to support a finding of good cause, lack of unfair prejudice, or lack of unfair surprise for their failure to timely disclose economic damages. The trial court made the following observation regarding Lanai's untimely disclosure:
THE COURT: Well, what do the rules require? You know, over and over and over in this case you folks have not been timely with submitting your discovery, but a lot of this stuff if it goes up, you're in serious trouble. You know, you can't come into Court and tell me, well, hey, this is what we do judge somewhere [sic]. You know, somebody is going to sit down and say you called and made these rules and let you go ahead and make your record because there was no jury in this case.
MS. CARTER: I understand, Your Honor.
THE COURT: You may have serious problems when you respond or fail to respond the way you've failed to respond in this case.
Moreover, the record does not reflect that Lanai established a rule 193.6 exception. See TEX. R. CIV. P. 193.6(b).
On appeal, Lanai deemed it important to note that Keystone did not provide an expert on damages at trial and that the lack of a damages expert demonstrates that Keystone was not contesting damages. However, it is apparent to this Court that a possible reason why Keystone did not provide an expert on damages at trial was because Lanai did not timely provide a damage amount or calculation of which to rebut. We conclude, therefore, that the trial court did not follow the guiding rules on discovery requests and responses, specifically rules 193.6, 194.1, and 194.2. See TEX. R. CIV. P. 193.6, 194.1, 194.2. We further conclude that the trial court, in fashioning its judgment, improperly relied on Lanai's "SUBMISSION REGARDING REQUEST FOR DAMAGES," which was not timely produced. As such, we find that the trial court abused its discretion in denying Keystone's motion to exclude evidence of economic and actual damages and admitting evidence of Lanai's economic damages.
Moreover, because we have concluded that Lanai failed to timely provide evidence of economic damages, Lanai cannot establish any of their causes of action. That is because a damages finding is among the essential elements for all of Lanai's causes of action. Accordingly, we sustain appellant's first issue.
The supreme court in Doe v. Boys Clubs of Greater Dallas noted that the elements of a DTPA claim are: (1) the plaintiff is a consumer, (2) the defendant engaged in false, misleading, or deceptive acts, and (3) these acts constituted a producing cause of the consumer's damage. 907 S.W.2d 472, 478 (Tex. 1995) (emphasis added). For a negligence cause of action, a plaintiff must produce evidence of (1) a legal duty owed by the defendant to the plaintiff, (2) a breach of that duty, and (3) damages proximately caused by that breach. Praesel v. Johnson, 967 S.W.2d 391, 394 (Tex. 1998) (emphasis added). The elements of a breach of fiduciary duty claim are: (1) a fiduciary relationship between the plaintiff and defendant; (2) the defendant must have breached his fiduciary duty to the plaintiff; and (3) the defendant's breach must result in injury to the plaintiff or benefit to the defendant. See Punts v. Wilson, 137 S.W.3d 889, 891 (Tex.App.-Texarkana 2004, no pet.) (emphasis added); see also Guerrero v. Salinas, No. 13-05-323-CV, 2006 Tex. App. LEXIS 8562, at *39 (Tex.App.-Corpus Christi Aug. 10, 2006, no pet.) (mem. op.) (upholding the trial court' awarding of actual damages, including out-of-pocket losses and economic injuries resulting from a breach of fiduciary duty). To prevail on a breach of contract claim, a party must prove that (1) a valid agreement between plaintiff and defendant existed, (2) the plaintiff performed or tendered performance, (3) the defendant breached the agreement, and (4) the plaintiff sustained damages as a result of the breach. Beverick v. Koch Power Co., 186 S.W.3d 145, 150 (Tex.App.-Houston [1st Dist.] 2005, pet. denied) (emphasis added) (citing Prime Prods., Inc. v. S.S.I. Plastics, Inc., 97 S.W.3d 631, 636 (Tex.App.-Houston [1st Dist.] 2002, pet. denied)). Finally, a fraud cause of action requires "a material misrepresentation, which was false, and which was either known to be false when made or was asserted without knowledge of its truth, which was intended to be acted upon, which was relied upon, and which caused injury." Formosa Plastics Corp. USA v. Presidio Eng'rs Contractors, Inc., 960 S.W.2d 41, 47-48 (Tex. 1998) (noting that direct damages for common-law fraud can be in the form of out-of-pocket damages or benefit-of-the-bargain damages) (emphasis added).
B. Attorney's Fees
In their twentieth issue, Keystone asserts that Lanai failed to timely produce attorney billing records in response to discovery requests and did not demonstrate good cause for failing to produce such records. Keystone further asserts that there is legally and factually insufficient evidence to establish that the trial court's awarding of attorney's fees to Lanai was reasonable and necessary. Lanai, on the other hand, contends that a court may determine a reasonable fee for legal services rendered in a case even if no evidence is offered. Lanai further contends that as the prevailing party at trial, it was entitled to receive attorney's fees, that the calculation of the attorney's fees was reasonably based on the complexity of the case (Lanai deemed this case to be "extremely complex"), and that the fee calculation was at the low end of the range that trial counsel typically charges clients.
1. Applicable Law
An award of attorney's fees is reviewed under an abuse of discretion standard. Dail v. Couch, 99 S.W.3d 390, 391 (Tex.App.-Corpus Christi 2003, no pet.). To recover attorney fees under section 38.001 of the civil practice and remedies code, a party must: (1) prevail on a cause of action for which attorney fees are recoverable; and (2) recover damages. TEX. CIV. PRAC. REM. CODE ANN. § 38.001; see Green Int'l v. Solis, 951 S.W.2d 384, 390 (Tex. 1997).
2. Discussion
In its conclusions of law, the trial court determined that Lanai was entitled to "recover their reasonable and necessary attorneys' [sic] fees under the DTPA and under § 38.001 of the Texas Civil Practice Remedies Code." Furthermore, in its findings of fact, the trial court awarded Lanai $148,303.00 in reasonable and necessary attorney's fees. Because we have found that Lanai's untimely disclosure of economic damages would result in a reversal of all of their causes of action, Lanai would not be entitled to attorney's fees under either the DTPA or section 38.001 of the Texas Civil Practice and Remedies Code. See TEX. BUS. COM. CODE ANN. §§ 17.46(a), 17.50(a)(1), 17.50(d) (Vernon Supp. 2007); TEX. CIV. PRAC. REM. CODE ANN. § 38.001; see also Doe v. Boys Clubs of Greater Dallas, 907 S.W.2d 472, 478 (Tex. 1995). Given that we have found that Lanai would not be entitled to attorney's fees under either the DTPA or section 38.001 of the civil practice and remedies code, we conclude that the trial court abused its discretion in awarding Lanai attorney's fees. Accordingly, we sustain Keystone's twentieth issue.
The record reflects that the contracts between Lanai and Keystone are silent as to attorney's fees.
Section 17.50(d) provides that under the DTPA, attorney's fees are only awarded to the consumer if he prevails in a lawsuit. TEX. BUS. COM. CODE ANN. § 17.50(d) (Vernon Supp. 2007). Because we have concluded that Lanai failed to timely produce evidence of economic damages and therefore failed to establish an essential element of their DTPA causes of action, Lanai would not be entitled to attorney's fees pursuant to their DTPA claim. See id.; see also Doe, 907 S.W.2d at 478.
With respect to section 38.001 of the civil practice and remedies code, Lanai has not prevailed on any causes of action on appeal and has failed to establish damages; therefore it would not be entitled to attorney's fees. Green Int'l v. Solis, 951 S.W.2d 384, 390 (Tex. 1997); see TEX. CIV. PRAC. REM. CODE ANN. § 38.001.
III. CONCLUSION
In conclusion, because we have sustained Keystone's first and twentieth issues on appeal, we need not address their remaining issues. TEX. R. APP. P. 47.1. We therefore reverse the judgment of the trial court and render judgment in favor of appellants.
Because we have concluded that Lanai has failed to establish damages for any of their causes of action, there are no damages upon which pre-judgment or post-judgment interest can be calculated, making it unnecessary for us to consider Keystone's twenty-second issue on appeal.