Opinion
NO. 03-14-00698-CV
03-11-2016
Shamark Smith Limited Partnership, Sharon D. Marcus, and Paul J. Smith, Appellants v. Martin M. Longoria, Appellee
FROM THE DISTRICT COURT OF MILAM COUNTY, 20TH JUDICIAL DISTRICT
NO. CV32,515, HONORABLE JAN P. PATTERSON, JUDGE PRESIDINGMEMORANDUM OPINION
Appellants Shamark Smith Limited Partnership (the Partnership), Sharon D. Marcus, and Paul J. Smith (collectively the Plaintiffs) sued Martin M. Longoria in July 2008, alleging that Longoria's employees trespassed onto the Partnership's property, began deconstructing a building without permission, and stole goods and materials from the building. The Plaintiffs brought causes of action for conversion, theft under the Texas Theft Liability Act (TTLA), see Tex. Civ. Prac. & Rem. Code § 134.001-.005, and trespass. Longoria asserted that he had permission to deconstruct the building and filed a counterclaim against the Plaintiffs for malicious prosecution, intentional infliction of emotional distress, and defamation. A jury found in favor of Longoria and awarded him reputation and mental anguish damages and attorney's fees. The trial court rendered final judgment for Longoria in accordance with the jury's verdict. In two issues on appeal, the Plaintiffs challenge the award of damages and attorney's fees to Longoria. Because the evidence in support of Longoria's award of damages or fees is insufficient under the binding precedents of the Texas Supreme Court, we will reverse the trial court's judgment.
BACKGROUND
The facts recited herein are taken from the testimony and exhibits presented at trial.
Marcus and Smith, who were married at the time but divorced by the time of trial, formed the Partnership in order to manage certain assets they owned, including an old building in Milam County referred to in the record by a variety of names, including the Old Sneed Home. Longoria and his employees performed various jobs for Marcus and Smith throughout the years. It is undisputed that in March 2008 Marcus and Smith came upon Longoria's workers as they were deconstructing the Old Sneed Home. Marcus and Smith called the Milam County Sheriff's Office and reported that these workers were trespassing on their property and stealing goods and materials from the building. Longoria explained to the investigator that he had made an agreement with Marcus whereby he would deconstruct the Old Sneed Home and keep the roof tin for himself but leave the lumber and other materials.
Longoria was arrested, and Smith, who is an attorney, submitted a report on behalf of the Partnership directly to a grand jury requesting that Longoria be indicted for theft of property over $100,000 but under $200,000. In July 2008, the Plaintiffs brought this suit against Longoria. In November 2008, the grand jury no billed the criminal complaint against Longoria.
The civil case was tried to a jury, which rejected the Plaintiffs' claims and found that the Plaintiffs had maliciously prosecuted Longoria, intentionally inflicted severe emotional distress on Longoria, and published a defamatory statement that Longoria had stolen components or contents from the Old Sneed Home. The jury awarded Longoria $315,000 in reputation damages, $75,000 in mental anguish damages, and $100,000 in exemplary damages. The jury also awarded Longoria $163,000 in trial court attorney's fees, $30,000 in fees for representation in this Court, and $20,000 in fees for representation in the Texas Supreme Court. This appeal followed.
DISCUSSION
Damages
Longoria conceded at trial that he was not seeking economic damages. Instead, Longoria sought damages solely for injury to his reputation and for mental anguish. In the jury charge, these damages were predicated on the jury finding in favor of Longoria on his defamation claim.
Question 19, which required the jury to assess damages for injury to reputation and mental anguish, asked, "What sum of money . . . would fairly and reasonably compensate Martin Longoria for his injuries, if any, that were proximately caused by the statement in Question 14?" Question 14 asked whether the Plaintiffs had published the statement "that Martin Longoria had stolen components of or contents inside the Old Sneed Home."
In their first issue, the Plaintiffs contend that the trial court erred by awarding damages and attorney's fees to Longoria. Specifically, the Plaintiffs argue that the evidence is legally and factually insufficient to support the actual damages awarded to Longoria and that, because Longoria was not entitled to recover actual damages, he was also not entitled to recover exemplary damages or attorney's fees.
When reviewing a challenge to the legal sufficiency of the evidence, we review the evidence in the light most favorable to the judgment, crediting favorable evidence if a reasonable factfinder could and disregarding contrary evidence unless a reasonable factfinder could not. City of Keller v. Wilson, 168 S.W.3d 802, 807 (Tex. 2005). When an appellant challenges the legal sufficiency of the evidence supporting an adverse finding of fact for which the opposing party had the burden of proof, the appellant must demonstrate that there is no evidence, or merely a scintilla of evidence, to support the adverse finding. Id. at 827. The evidence is legally sufficient if it would enable reasonable and fair-minded jurors to reach the verdict under review. Id. In a factual-sufficiency review, we must examine the evidence that both supports and contradicts the jury's verdict in a neutral light. See Dow Chem. Co. v. Francis, 46 S.W.3d 237, 242 (Tex. 2001) (per curiam). We consider and weigh all the evidence, and can set aside the verdict only if the evidence is so weak or if the finding is so against the great weight and preponderance of the evidence that the verdict is clearly wrong and manifestly unjust. Id.; City of Austin v. Chandler, 428 S.W.3d 398, 407-08 (Tex. App.—Austin 2014, no pet.).
In response to the Plaintiffs' challenges to the sufficiency of the evidence supporting the damages awarded to him, Longoria argues that, because the Plaintiffs' conduct constituted defamation per se, damages may be presumed. Longoria also contends that there is sufficient evidence to support his award of reputation and mental anguish damages.
The jury found that the Plaintiffs published the statement "that Martin Longoria had stolen components of or contents inside the Old Sneed Home." This statement constitutes defamation per se because it accused Longoria of a crime and adversely reflected upon Longoria's fitness to conduct his business or trade. See In re Lipsky, 460 S.W.3d 579, 596 (Tex. 2015). Longoria is correct that when a party has committed defamation per se "general damages, such as mental anguish and loss of reputation, are presumed." Id. "General damages include non-economic losses, such as loss of reputation and mental anguish." Id. at 593. However, the Texas Supreme Court has recently instructed us that "even though Texas law presumes general damages when the defamation is per se, it does not 'presume any particular amount of damages beyond nominal damages.'" Id. (quoting Salinas v. Salinas, 365 S.W.3d 318, 320 (Tex. 2012)); see Martin v. Beitler, No. 03-13-00605-CV, 2015 WL 4197042, at *3 (Tex. App.—Austin July 7, 2015, no pet.) (mem. op.) ("[T]his presumption yields only nominal damages, which the Supreme Court has defined as a 'trifling sum,' such as $1-100, and which are awarded when there is no proof of serious harm.") (quoting Burbage v. Burbage, 447 S.W.3d 249, 259 (Tex. 2014)). "Any award of general damages that exceeds a nominal sum is thus reviewed for evidentiary support." Lipsky, 460 S.W.3d at 593; see Burbage, 447 S.W.3d at 259 ("Beyond nominal damages, we review presumed damages for evidentiary support."); Hancock v. Variyam, 400 S.W.3d 59, 66 (Tex. 2013) ("Awards of presumed actual damages are subject to appellate review for evidentiary support."). Therefore, because the jury awarded Longoria more than nominal damages, we must review these awards for evidentiary support. See Martin, 2015 WL 4197042, at *3 ("Because the jury awarded substantial damages . . . there must be legally sufficient evidence to support both the jury's findings of damage for reputational injury and mental anguish and the amount of the jury's compensatory damage awards.").
In support of his claim for damages to his reputation, Longoria testified that he had lost many jobs since the Plaintiffs made their allegations against him, that he had never lost a job before then, and that people were treating him "a little different" after the allegations were made. However, Longoria also testified to the following:
• no one has told him that his reputation has been damaged because of the Plaintiffs' allegations;
• he could not name anyone who has refused him work because of the allegations or point to any specific lost job; and
• he cannot identify how much income he claims to have lost.
We conclude that Longoria failed to present legally or factually sufficient evidence of the damages awarded to him for injury to his reputation. Although Longoria contended that the Plaintiffs' allegations had caused him to lose jobs, he provided no evidence of underlying facts to support this assertion.See Burbage, 447 S.W.3d at 262 ("[T]he jury cannot reasonably infer that defamation caused the cancellations when the cancellations could have occurred for any number of reasons. Indeed, Kirk admitted that he did not ask why the customers cancelled, only that he was 'afraid' it was because of accusations."). Longoria failed to present any evidence of the extent of the alleged injury to his reputation. "Although it is impossible to calculate the exact amount of injury to reputation, which requires that the jury be given a measure of discretion in finding damages, there must be some evidence to justify the amount awarded." Martin, 2015 WL 4197042, at *4 (citing Bentley v. Bunton, 94 S.W.3d 561, 606 (Tex. 2002)). Accordingly, we sustain the Plaintiffs' first issue to the extent it challenges the award of reputation damages to Longoria.
Furthermore, although Longoria denied at trial that there could be any reason for people not hiring him other than the Plaintiffs' allegations, he admitted that he had testified in his deposition that he was not sure why he had lost work.
Similarly, we conclude that the evidence is legally and factually insufficient to support the jury's award of damages to Longoria for mental anguish. Longoria testified that he was embarrassed by the Plaintiffs' allegations and the threat of criminal indictment that he faced. In addition, Longoria testified that his wife has noticed that he stays in a bad mood and that the emotional distress from the Plaintiffs' allegations has disrupted his daily activities. However, Longoria also testified that he has never visited any medical doctor, psychologist, psychiatrist, or therapist as a result of the allegations and that he has experienced no illness or physical symptoms related to the allegations.
"Mental anguish is only compensable if it causes a substantial disruption in . . . daily routine or a high degree of mental pain and distress." Hancock, 400 S.W.3d at 68 (internal quotation marks omitted). In addition, in order to recover damages for mental anguish, "[t]here must be both evidence of the existence of compensable mental anguish and evidence to justify the amount awarded." Id. Here, although Longoria testified at trial that his distress had disrupted his daily activities, Longoria did not explain which daily activities were disrupted or how they were disrupted, nor did he present any evidence of what the law considers a "substantial disruption."See Martin, 2015 WL 4197042, at *4 (noting that in Hancock "evidence the plaintiff was embarrassed, distracted at home and at work, and stressed did not reflect substantial disruption in daily routine or a high degree of mental pain and distress so as to support an award for mental anguish"); see also Hancock, 400 S.W.3d at 69-70. Longoria also failed to present any evidence that would justify the award of any particular amount of damages. See Hancock, 400 S.W.3d at 68 ("Even when an occurrence is of the type for which mental anguish damages are recoverable, evidence of the nature, duration, and severity of the mental anguish is required.") (internal quotation marks omitted). Accordingly, we sustain the Plaintiffs' first issue to the extent it challenges the award of damages to Longoria for mental anguish.
In his deposition, Longoria stated that stress from the Plaintiffs' allegations did not disrupt his daily activities. At trial, Longoria testified that the stress did disrupt his daily activities and admitted that his testimony had changed since his deposition.
"A party may not recover exemplary damages unless the plaintiff establishes actual damages." Burbage, 447 S.W.3d at 263. The only actual damages that the jury awarded to Longoria were for injury to reputation and mental aguish. Because we have determined that there is insufficient evidence to support the award of actual damages, we must also conclude that Longoria is not entitled to recover exemplary damages. Accordingly, we sustain the Plaintiffs' first issue to the extent it challenges the award of exemplary damages to Longoria.
Attorney's Fees
In their first issue, the Plaintiffs also raise several arguments challenging the award of attorney's fees to Longoria. First, the Plaintiffs argue that "there can be no award of attorney's fees without the award of actual damages." However, the Plaintiffs alleged in their live pleading that Longoria committed theft under the TTLA, which provides, "Each person who prevails in a suit under this chapter shall be awarded court costs and reasonable and necessary attorney's fees." Tex. Civ. Prac. & Rem. Code § 134.005(b). "The award of fees to a prevailing party in a TTLA action is mandatory." Arrow Marble, LLC v. Estate of Killion, 441 S.W.3d 702, 705 (Tex. App.—Houston [1st Dist.] 2014, no pet.); see Bocquet v. Herring, 972 S.W.2d 19, 20 (Tex. 1998) ("Statutes providing that a party 'may recover', 'shall be awarded', or 'is entitled to' attorney fees are not discretionary."). Moreover, "[c]ourts have held that the phrase 'prevailing party' in section 134.005(b) of the TTLA includes both a plaintiff successfully prosecuting a theft suit and a defendant successfully defending against one." Arrow Marble, 441 S.W.3d at 706; see In re Corral-Lerma, 451 S.W.3d 385, 386 (Tex. 2014) (orig. proceeding) (per curiam) (noting that TTLA "provides for attorney's fees even without an underlying damages recovery"); Hertzberg v. Austin Diagnostic Clinic Ass'n, P.A., No. 03-07-00072-CV, 2009 WL 2913620, at *6 (Tex. App.—Austin Sept. 11, 2009, no pet.) (mem. op.) ("A 'prevailing party' is a party who successfully prosecutes the action or successfully defends against it, prevailing on the main issue . . . ."). Longoria was a prevailing party in the Plaintiffs' TTLA suit because the jury did not find that he had committed theft and awarded no damages to the Plaintiffs. He is therefore entitled to recover fees under the TTLA even if he is not entitled to recover damages on his counterclaims.
"The availability of attorney's fees under a particular statute is a question of law for the court." Holland v. Wal-Mart Stores, Inc., 1 S.W.3d 91, 94 (Tex. 1999) (per curiam).
Longoria argues that he is also entitled to recover attorney's fees under the Uniform Declaratory Judgments Act (UDJA). Although the Plaintiffs did ask for a declaratory judgment in their original petition, it is unclear whether they continued to raise the UDJA in their live pleading. However, because we conclude that he can recover fees under the TTLA, we need not address Longoria's UDJA argument. Moreover, the only declaratory relief sought in the Plaintiffs' original petition was a declaration that Longoria "committed theft and is liable for the damages resulting from the theft." This is the same issue presented in the Plaintiffs' TTLA claim. Therefore, our analysis would not change were we to consider whether Longoria was entitled to recover fees under the UDJA.
However, the Plaintiffs also argue that, even if Longoria could otherwise recover attorney's fees, "Longoria's counsel presented no evidence regarding attorney's fees other than by stating that he had a one-third contingent fee agreement . . . [and he did not] delineate what factors were considered to establish reasonableness." Generally, the party seeking to recover attorney's fees carries the burden of proof and must establish that the requested fees are reasonable and necessary. Rowland v. Herren, No. 03-07-00247-CV, 2010 WL 566881, at *7 (Tex. App.—Austin Feb. 19, 2010, no pet.) (mem. op.) (citing Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1, 10 (Tex. 1991)). We will reverse an award of fees if the trial court abused its discretion by awarding fees when there is insufficient evidence that the fees were reasonable and necessary. Id.
At trial, Longoria did not produce any documents relevant to his attorney's fees, nor did Longoria's attorney testify concerning his fees. Instead, one of Longoria's attorneys cross- examined Israel Garcia, one of the Plaintiffs' attorneys, concerning fees. When Garcia had finished testifying concerning his own attorney's fees, Longoria's attorney asked Garcia a series of questions concerning the reasonableness of the contingent fee arrangement that Longoria had with his attorneys. During this cross-examination, Garcia agreed that a one-third contingent fee was reasonable, that it would be reasonable for Longoria to request the same appellate fees that the Plaintiffs were requesting, that Longoria's attorneys had experience and certification similar to those of Garcia, and that he "would suspect" that Longoria's attorneys would "meet the Lone Star [sic] requirements." When asked "Wouldn't you think the time expenditures have been roughly the same?" Garcia responded, "I don't know."
What was transcribed as "Lone Star requirements" is an apparent reference to the lodestar method reasonableness factors enumerated in Texas Disciplinary Rule of Professional Conduct 1.04(b).
At most, Longoria presented some evidence that he had a contingent fee arrangement with his attorneys and that this type of arrangement was reasonable. However, the only way for Longoria to recover attorney's fees in this case was his successful defense of the Plaintiffs' TTLA claim, and the existence of a contingent fee arrangement between Longoria and his attorneys relative to Longoria's tort claims does not suffice as proof that the fees incurred by Longoria's attorneys in the defense of the TTLA claim were reasonable and necessary. Any contingent fee arrangement related only to a percentage of Longoria's recovery against the Plaintiffs on Longoria's counterclaims. There was no possibility of a contingency on attorney's fees awarded for successful defense of a TTLA claim. Therefore, evidence of the reasonableness of the contingent fee agreement in place relative to Longoria's tort claims is no evidence of the reasonableness of that fee as it relates to the defense of the Plaintiffs' TTLA claim.
Generally, a party cannot recover attorney's fees for prevailing on a tort claim. See Intercontinental Grp. P'ship v. KB Home Lone Star L.P., 295 S.W.3d 650, 653 (Tex. 2009) ("Under the American Rule, litigants' attorney's fees are recoverable only if authorized by statute or by a contract between the parties.").
Even assuming, however, that Longoria's contingent fee agreement with his attorneys is somehow relevant to his recovery of fees as a prevailing party under the TTLA, he still failed to provide sufficient evidence that such fees were reasonable and necessary. See Arthur Andersen & Co. v. Perry Equip. Corp., 945 S.W.2d 812, 818-19 (Tex. 1997) (holding that, even under a contingent fee arrangement, a party seeking fees must still introduce evidence of the fees' reasonableness). Longoria did not present evidence of the time, labor, or skill that the case required, the likelihood that the acceptance of his case would preclude other employment by his attorneys, the fees customarily charged in the locality for similar services, time limitations imposed by Longoria or the circumstances of the case, the nature and length of Longoria's professional relationship with his attorneys, or the reputation or abilities of the attorneys. See id. at 818 (listing factors factfinder should consider when determining reasonableness of attorney's fees) (citing Tex. Disciplinary R. Prof. Conduct 1.04(b)). Without having any information regarding the number of hours Longoria's attorneys spent on his case, the rates they charged, or the reasonableness of their rates, the jury had no way of determining a reasonable amount of attorney's fees. See Rolls v. Rolls, No. 03-14-00435-CV, 2016 WL 284373, at *4 (Tex. App.—Austin Jan. 14, 2016, no pet. h.) (mem. op.) (reversing award of fees because party "did not present evidence about how long her attorney had been licensed, her attorney's qualifications, whether her attorney's rates were reasonable and in line with those charged by other attorneys in the geographical area for similar services, or whether the number of hours worked were reasonable and necessary"). We therefore conclude that the award of attorney's fees to Longoria is not supported by sufficient evidence that the fees were reasonable and necessary and that the trial court abused its discretion by awarding fees to Longoria. Accordingly, we sustain the Plaintiffs' first issue to the extent it challenges the sufficiency of the evidence supporting Longoria's attorney's fees.
The Plaintiffs also argue that Longoria cannot recover attorney's fees because of alleged problems with the jury charge. Because we have concluded that there is insufficient evidence to support Longoria's award of fees, we need not consider this jury charge argument.
CONCLUSION
We reverse the trial court's judgment and render judgment that Longoria take nothing.
Because we render a take-nothing judgment against Longoria, we need not address the Plaintiffs' second issue, which argues that the trial court reversibly erred by refusing to strike certain jurors who had been challenged for cause. --------
/s/_________
Scott K. Field, Justice Before Chief Justice Rose, Justices Pemberton and Field Reversed and Rendered Filed: March 11, 2016