Opinion
No. 04-03-00354-CV
Delivered and Filed: March 9, 2005.
Appeal from the 150th Judicial District Court, Bexar County, Texas, Trial Court No. 99-CI-15316, Honorable Janet Littlejohn, Judge Presiding.
Affirmed.
Sitting: Sarah B. DUNCAN, Justice, Sandee Bryan MARION, Justice, Phylis J. SPEEDLIN, Justice.
MEMORANDUM OPINION
The background of this case is well-known to the parties and is set forth in detail in this court's opinions in Smith v. Texas Farmers Ins. Co., 82 S.W.3d 580 (Tex.App.-San Antonio 2002, pet. denied), and Smith v. Levine, 911 S.W.2d 427 (Tex.App.-San Antonio 1995, writ denied). We need not repeat it here.
The Smiths' Claims Against the Levines
In their first five points of error, Donald and Pat Smith complain about the summary judgment in favor of Ron Mitchell Levine and Serena Levine in the Smiths' fraud and conversion claims against the Levines.
The Smiths first argue the trial court erred in granting summary judgment on the ground that the 1993 judgment extinguished the Smiths' interest in the Levines' homeowner's insurance policy and the proceeds of any claims made on the policy. This court has already rejected the Smiths' argument, holding that rendition of the 1993 judgment satisfied the Levines' obligations under the mortgage and extinguished all rights the Smiths had under the insurance policy. Smith v. Texas Farmers Ins. Co., 82 S.W.3d at 585. The Smiths therefore had no interest in property-loss claims paid after rendition of the 1993 judgment. Id. As a matter of law, the Smiths had no interest in the property loss checks issued by the insurer in 1994, and the trial court correctly granted summary judgment on the Smiths' claim that the Levines fraudulently concealed the checks from them. For the same reason, the trial court correctly granted summary judgment on the Smiths' claim that Ron Levine "fraudulently converted" one of the 1994 property-loss checks. The Levines established as a matter of law that the Smiths did not own, never had possession of, and were not entitled to possession of the property loss check. See Ojeda v. Wal-Mart Stores, Inc., 956 S.W.2d 704, 707 (Tex.App.-San Antonio 1997, pet. denied) (listing elements of conversion claim).
The Smiths next argue that the $33,800 in actual damages awarded the Levines in the 1993 judgment included damages for repairs that the Levines were later compensated for by their homeowner's insurer, and that this "double recovery" is the result of the Levines' fraudulent concealment of the insurance claims. They contend summary judgment was improper because the Levines failed to conclusively establish that they did not make a double recovery of damages. We disagree. In the lawsuit that resulted in the 1993 judgment, the Levines claimed the Smiths represented that "the house they sold to [the Levines] was in `excellent' condition when the Smiths knew at the time that an engineer had previously determined that the foundation was defective." Smith v. Levine, 911 S.W.2d at 429. The jury agreed and "found the difference in value of the house as represented and received to be $33,800." Id. at 430. This court held that the finding was supported by the Levines' evidence "that a defective foundation caused the value of a home to diminish a minimum of twenty percent or, in this case, $33,800." Id. at 436. Thus the damages awarded in the 1993 judgment were for the diminution in value of the home because of a defective foundation, not the cost to repair any damage to the home. Moreover, the summary judgment evidence conclusively establishes that the Levines' insurance claims were for damages caused by water leaks and were not related to the defective foundation.
The Smiths' and Nelson Skinner's Pleas for Attorney's Fees as Sanctions
In their next four points of error, the Smiths complain that the trial court erred in its disposition of their requests for attorneys' fees as sanctions. The Smiths' attorney, Nelson Skinner, separately appealed and makes the same arguments.
In response to the Smiths' fraud claims, the Levines filed tort causes of action in a counterclaim against the Smiths and in a third party action against Skinner. In their answers, under the heading "Affirmative Defenses," Skinner and the Smiths pleaded that the Levines' pleadings violated Chapters 9 and 10 of the Texas Civil Practice and Remedies Code and Rule 13 of the Texas Rules of Civil Procedure and requested attorney's fees as sanctions. See Tex. Civ. Prac. Rem. Code Ann. § 9.012 (Vernon 2002); id. § 10.004; Tex. R. Civ. P. 13. The trial court later granted Skinner a summary judgment on the Levines' third-party claims, and the Smiths filed a no-evidence motion for summary judgment on the counterclaims that included a request for recovery of attorney's fees as sanctions. Before the Smiths' motion was heard, the Levines filed a motion to dismiss, effectively nonsuiting their counterclaims against the Smiths, and stating that "all matters heretofore in controversy have been concluded." The Smiths objected to dismissal of the cause because they and Skinner had outstanding "claims for affirmative relief for reasonable attorney fees and costs." At a February 7, 2003, hearing on both motions, the court granted the motion to dismiss, ruled that the Smiths' motion for summary judgment was moot, and expressly denied the Smiths' and Skinner's requests for attorney's fees. The court's "Order of Dismissal," signed the same day, recites that all matters relating to the Levines' claims against the Smiths and Skinner "have been fully dismissed" and ordered that all costs be borne by the party that incurred them. Skinner timely filed a motion for new trial, arguing the court erred in dismissing the cause in its entirety because his "counterclaim" for attorney's fees was still pending. At the hearing on the motion for new trial, the court once again considered the Smiths' and Skinner's pleas for attorney's fees as sanctions and denied them. On April 14, 2003, while the trial court still had plenary power, the court signed an order that expressly denies the Smiths and Skinner any relief sought under Chapters 9 and 10 of the Texas Civil Practice and Remedies Code and Rule 13 and their requests for an award of costs.
Skinner and the Smiths first argue the trial court abused its discretion and violated their rights by dismissing their claims for attorney's fees in response to the Levines' nonsuit. We disagree. The trial court did not dismiss the requests for attorney's fees. It considered and denied them at the February 7 hearing; considered and denied them again at the hearing on Skinner's motion for new trial; and expressly denied both the Smiths's and Skinner's requests for fees and sanctions in its final order.
Skinner and the Smiths next argue they were entitled to a trial by jury on their requests for sanctions. We again disagree. Whether to sanction a party is a matter decided by the court, not a jury. Tex. Civ. Prac. Rem. Code Ann. § 9.012 ("At the trial of the action or at any hearing inquiring into the facts and law of the action, . . . the court may . . . determine if a pleading has been signed in violation of . . . the standards prescribed by Section 9.011.") (emphasis added); id. § 10.004(a) ("A court that determines that a person has signed a pleading or motion in violation of Section 10.001 may impose a sanction . . .") (emphasis added); Miller v. Bank One, Texas, N.A., No. 05-99-01689-CV, 2001 WL 333617, at *4 (Tex.App.-Dallas April 6, 2001, no pet.) (not designated for publication) (holding there is no right to a jury trial on the issue of whether section 10.001 of the Texas Civil Practice and Remedies Code has been violated); Neely v. Comm'n for Lawyer Discipline, 976 S.W.2d 824, 827 (Tex.App.-Houston [1st Dist.] 1998, no pet.) ("There is no right to a trial by jury on the issue of whether Rule 13 has been violated."); see also Brantley v. Etter, 662 S.W.2d 752, 756 (Tex.App.-San Antonio 1983) (holding there is no right to a jury trial on issue of whether to impose discovery sanctions), writ ref'd n.r.e., 677 S.W.2d 503, 504 (Tex. 1984) (per curiam) (holding that amount of attorney's fees to be awarded as sanction is a matter within the sound discretion of the trial judge).
Appellants also argue the trial court abused its discretion and violated due process by deciding their requests for sanctions without notice or an evidentiary hearing. The record establishes that Skinner and the Smiths had notice the trial court would be considering the issue of sanctions at both the February 7 and March 21 hearings. The Smiths' motion for summary judgment, which included a request for attorney's fees as sanctions, and the Levines' motion to dismiss and the objections thereto, which were grounded on the pleas for sanctions, were set for February 7. Likewise, the parties all had notice of the March 21 hearing on Skinners' motion for new trial, which related almost exclusively to the issue of sanctions.
Skinner and the Smiths contend that their pleadings for sanctions were counterclaims — independent causes of action — that they are entitled to have tried at an evidentiary hearing. To the extent the authorities they rely on support their argument, those authorities have been effectively overruled by the Texas Supreme Court's holding in Lane Bank Equip. Co. v. Smith Southern Equip., Inc., 10 S.W.3d 308 (Tex. 2000), that a "judgment [does] not have to resolve [a] pending sanctions motion to be final because a motion for sanctions `is not a pleading that frames issues which must be resolved in a final judgment.'" Lane Bank Equipment Co. v. Smith Southern Equip. Co., 10 S.W.3d 308, 312 (Tex. 2000) (quoting Jobe v. Lapidus, 874 S.W.2d 764, 766 (Tex.App.-Dallas 1994, writ denied)); see Mantri v. Bergman, No. 05-04-00164-CV, 2005 WL 110359, at *1 (Tex.App.-Dallas, Jan. 20, 2005, no pet. h.) (holding that Chapter 10 merely entitles a party to file a motion and does not provide a litigant with an independent cause of action for sanctions); Jobe v. Lapidus, 874 S.W.2d 764, 766 (Tex.App.-Dallas 1994, writ denied) (rejecting argument that motion for Rule 13 sanctions is a pleading that asserts an independent cause of action that must be resolved in a final judgment and holding that summary judgment disposing of all issues and parties was final notwithstanding fact that motion for Rule 13 sanctions was unresolved). Moreover, neither Chapter 10 nor Rule 13 requires the trial court to hold an evidentiary hearing before denying a motion for sanctions. Chapter 10 requires the court to give notice and an opportunity to respond to the "party who is the subject of a motion for sanctions" but contains no hearing requirement. See Tex. Civ. Prac. Rem. Code Ann. §§ 10.001-.006. And Rule 13 requires a "hearing" only before the trial court imposes sanctions. See Tex. R. Civ. P. 13. "[A] trial court is not required to hold an evidentiary hearing prior to denying sanctions [under Rule 13]." Breault v. Psarovarkas, No. 01-01-00122-CV, 2003 WL 876651, at * 6 (Tex.App.-Houston [1st Dist.] Feb. 28, 2003, pet. denied) (mem. op.); see Egan v. Egan, 8 S.W.3d 1, 3 (Tex.App.-San Antonio 1999, pet. denied) (trial court did not abuse its discretion by denying Rule 13 sanctions without holding an evidentiary hearing); see also Cire v. Cummings, 134 S.W.3d 835, 843-44 (Tex. 2004) (holding that the "hearing" required before a trial court may impose discovery sanctions under Rule of Civil Procedure 215.3 "does not necessarily contemplate a personal appearance before the court or an oral presentation to the court" and trial court did not abuse its discretion in imposing monetary sanctions without an oral hearing). We therefore overrule these points of error.
Under the circumstances of this case, no award of sanctions under Chapter 9 was available. A court may award expenses, including attorney's fees pursuant to Chapter 9 only if the party who filed the offending pleading does not withdraw or amend the pleading within ninety days after the trial court determines the pleading was signed in violation of section 9.011. Tex. Civ. prac. Rem. Code Ann. § 9.012(d). The Levines filed their motion to dismiss before the trial court ever considered the issue of sanctions.
In support of their argument that the trial court was required to hold an evidentiary hearing, Skinner and the Smiths rely on this court's opinion in Leon Springs Gas Co. v. Restaurant Equip. Leasing Co., 961 S.W.2d 574 (Tex.App.-San Antonio 1997, no pet.). In Leon Springs, this court held that the trial court abused its discretion in denying the defendant's motion for Rule 13 and Chapter 10 sanctions at a hearing on the plaintiff's motion for nonsuit, stating, "[w]e know of no basis in the law for making the determination the trial court made without notice and an opportunity to present evidence." Id. at 579. However, since Leon Springs was decided, the supreme court has held that a motion for sanctions is not an independent cause of action, see Lane Bank, 10 S.W.3d at 312, and both the supreme court and this court have held that no evidentiary hearing or oral presentation to the court is required before the trial court denies a motion for sanctions. See Cire, 134 S.W.3d at 843-44; Egan, 8 S.W.3d at 3.
Costs in the Trial Court
Skinner and the Smiths next argue the trial court abused its discretion by failing to award them their costs. We disagree. The Smiths did not prevail on their claims against the Levines and thus were not "[t]he successful party to a suit" entitled to recover costs. Tex. R. Civ. P. 131. And, although Skinner prevailed in the Levines' third party action, the trial court had discretion, "for good cause . . . stated on the record," to require Skinner to pay his own costs. Tex. R. Civ. P. 141; Furr's Supermarkets, Inc. v. Bethune, 53 S.W.3d 375, 376 (Tex. 2001). At the hearing on Skinner's motion for new trial, the trial judge made her reason for her denial of sanctions, fees, and costs clear:
I granted Texas Farmers' motion for summary judgment against the Smiths saying that the Smiths had no claim against Texas Farmers. I granted Mr. Levines' motion for summary judgment against the Smiths saying that the Smiths had no claim against Mr. and Mrs. Levine. Mr. Levine sued you in addition to counterclaiming against the Smiths. I granted your motion for summary judgment saying that he — Mr. and Mrs. Levine had no claim against you, Mr. Skinner. This suit was in its entirety a frivolous suit. It should never have been brought, period. The Court of Appeals has affirmed that ruling in affirming my ruling on the motion for summary judgment, that there was no basis for the Smiths to sue either Texas Farmers or the Levines because of the extinction of the money that they were claiming in this suit in the former judgment in the prior suit.
The trial court was justified in its belief that Skinner, as the Smiths' attorney, was at least partly responsible for the prolonged litigation because he continued to pursue the Smiths' claims against the Levines after both the trial court and this court had rejected the identical argument in the Smiths' suit against the insurance company. The trial court therefore acted within its discretion in declining to award Skinner his costs. See Furr's Supermarkets, 53 S.W.3d at 377 ("Typically . . ., `good cause' has meant that the prevailing party unnecessarily prolonged the proceedings, unreasonably increased costs, or otherwise did something that should be penalized.").
Findings of Fact and Conclusions of Law
In their final points of error, Skinner and the Smiths complain of the trial court's failure to make findings of fact and conclusions of law after they were timely requested. The trial court's failure to respond to a timely request is error and is presumed harmful unless the record affirmatively shows that the complaining party suffered no injury. Cherne Indus., Inc. v. Magallanes, 763 S.W.2d 768, 772 (Tex. 1989). "The test of whether this constitutes harm is whether the circumstances of the particular case would require an appellant to guess the reason or reasons that the trial judge ruled against it." Brazoria County v. Texas Comm'n on Environmental Quality, 128 S.W.3d 728, 744 (Tex.App.-Austin 2004, no pet.). Here, the trial court's reasons for denying sanctions, fees, and costs were made clear on the record, and appellants were not prevented from presenting their case on appeal because of the failure to file findings and conclusions. See id.; Elizondo v. Gomez, 957 S.W.2d 862, 865 (Tex.App.-San Antonio 1997, pet. denied). Accordingly, we overrule these points of error.
The judgment of the trial court is affirmed.