following Texas’s "fair notice" standard for pleading, "we give effect to the substance of [plaintiff]’s original petition regardless of which section of [a statute] [plaintiff] cited in the pleading."Summary of this case from Kelsall v. Haisten
Opinion issued December 9, 2010.
On Appeal from the 164th District Court, Harris County, Texas, Trial Court Case No. 2007-29388.
Panel consists of Justices KEYES, HIGLEY, and BLAND.
This appeal involves a suit brought by real estate agent, Jose L. Pruneda, to recover commissions from appellants, UL, Inc., d/b/a Urban Living and George Silaski arising from the sale of two pieces of real property. The trial court rendered summary judgment for monetary damages and attorney's fees in favor of Pruneda against Urban Living and Silaski.
On appeal, Urban Living and Silaski present six issues challenging the summary judgment. Among their challenges, appellants assert that the trial court lacked subject-matter jurisdiction, contend that a number of affirmative defenses barred Pruneda's recovery of damages, claim that Pruneda did not carry his summary judgment burden, and dispute the award of attorney's fees.
We affirm in part, reverse in part, and remand the case to the trial court.
Factual Procedural Background
Jose Pruneda worked as a real estate agent for UL, Inc., d/b/a Urban Living, a real estate company. In 2005, Pruneda procured real estate contracts for two separate properties. The first contract was for the sale of real property located at 3201 Moxroy. Pruneda acted as the intermediary agent between the seller and the buyer.
Urban Living's employee handbook provided that commissions earned by its associates on property transactions "will be split with 60% going to [Urban Living] and 40% going to the associate." The sales price for the Moxroy property was $1,106,786.
The registration agreement for the Maxroy property identifies Pruneda as the agent and www.Urban, Inc. as the broker for the sale. Appellant, George Silaski, is a licensed broker and an officer of www.Urban, Inc., which holds a corporate broker's license.
With regard to the second real estate contract, Pruneda acted as the buyer's agent for the purchase of property located at 1114 Bomar. The sales price for the Bomar property was $203,000. Pruneda signed the sales contract for the property as the buyer's agent. The contract identified www.Urban, Inc. as the buyer's broker.
Later in 2005, Vinod Ramani, president and CEO of Urban Living, sent two invoices, each signed by him, to the title company that would be conducting the closings on the two properties. The invoices indicate that Pruneda's share of the sales commission on the Moxroy property was $26,518 and that his share on the Bomar property was $2,756.
On January 2, 2006, Pruneda terminated his association with Urban Living. The closing on the Bomar property occurred on January 15, 2006, and the closing on the Maxroy property occurred on January 17, 2006.
Ramani and Silaski took the position that, because Pruneda had terminated his association with Urban Living before the closings on the properties, he was no longer entitled to his share of commissions on the sales. As support, they relied on a provision in Urban Living's employee handbook, which provides, in part, "When leaving [Urban Living], ALL listings will remain with [Urban Living] and any commissions paid from the sale of such listings will belong solely to [Urban Living]." Ramani and Silaski notified the title company handling the closings that Pruneda should not share in the commissions for either property. Pruneda received no commissions from either property sale.
On May 4, 2006, Pruneda filed a wage claim with the Texas Workforce Commission (TWC). Pruneda alleged that Urban Living had failed to pay him $29,274 in commissions, including $26,518 for the Moxroy property sale and $2,756 for the Bomar sale. In a preliminary-wage determination order issued by TWC on June 21, 2006, Urban Living was ordered to pay the full $29,274 in commissions sought by Pruneda. Urban Living timely appealed the preliminary determination to TWC's Wage Claim Tribunal. The tribunal conducted two hearings on Urban Living's appeal.
On January 26, 2007, the tribunal issued its written decision rescinding the preliminary-wage order and dismissing Pruneda's wage claim on the merits. In support of its decision, the tribunal relied on the provision in Urban Living's handbook providing, "When leaving [Urban Living], ALL listings will remain with [Urban Living] and any commissions paid from the sale of such listings will belong solely to the [Urban Living]." The tribunal noted that the two property sales at issue closed after Pruneda resigned from Urban Living.
On February 21, 2007, Pruneda timely appealed the tribunal's decision dismissing his wage claim. TWC affirmed the wage tribunal's decision on April 16, 2007. In so doing, TWC adopted the tribunal's findings of fact and conclusions of law. TWC notified the parties that the decision became final 14 days after its issuance, unless TWC reopened the appeal or one of the parties filed a motion for rehearing. TWC's notice also informed the parties that an appeal of the decision could be made by filing a suit. TWC informed the parties that suit for judicial review must be filed no later than 30 days after TWC mailed its decision affirming the dismissal of Pruneda's wage claim.
Twenty-five days after the final TWC decision, Pruneda timely filed suit in district court on May 11, 2007. Pruneda named Urban Living, Silaski, and TWC as defendants. In his original petition, Pruneda sought "trial de novo review" of TWC's April 16, 2007 decision. He alleged that Urban Living and Silaski had agreed that he would receive forty percent of all net commissions from the two property transactions. Pruneda pointed out that he was the agent when the sales contracts for each property were signed. Pruneda averred that TWC "failed to understand that once a binding agreement between a buyer and seller is signed, the fees are earned." He asserted that TWC "erroneously interpreted the status of the transaction even though there was a binding agreement for sale, which meant that fees were earned at the time of the property transaction between Buyer and Seller."
Pruneda also asserted common law claims of breach of contract and quantum meruit against Urban Living and Silaski. He sought to recover $29,274 in commissions and also to recover attorney's fees.
On May 30, 2008, Pruneda filed a motion for leave to reopen the TWC proceedings to present additional evidence in the trial court. Pruneda alleged that the TWC wage tribunal never heard evidence at its hearings regarding the provision in Urban Living's employee handbook, which the tribunal cited as a basis for dismissing Pruneda's wage claim.
The trial court granted Pruneda's motion to reopen on July 3, 2008. The court's order provided that the TWC proceedings were reopened. The court remanded Pruneda's wage claim to TWC for the presentation of additional evidence. Although not requested by Pruneda in his motion, the trial court also ordered "[t]hat the Texas Workforce Commission decision is hereby set aside," effectively vacating the TWC decision.
On August 6, 2008, Pruneda filed a notice of nonsuit in the trial court with regard to his claims against TWC. In the notice, Pruneda explained that he was filing the nonsuit because the trial court had set aside the TWC decision. The notice also indicates that Pruneda had withdrawn his wage claim with TWC. He stated that he was acting in reliance on representations by TWC that his withdrawal of his wage claim "has the same effect as if the wage claim had never been brought" by him.
Also on August 6, 2008, appellant filed an amended petition. Urban Living and Silaski were the only named defendants. TWC was no longer a defendant, and there was no challenge to the then-vacated TWC decision. Pruneda also added a claim for money had and received against Urban Living and Silaski.
Pruneda filed a motion for summary judgment on August 8, 2008. Pruneda asserted that he was entitled to judgment as a matter of law against Urban Living and Silaski on his breach of contract and money had and received claims. Pruneda sought damages for $29,274, representing his share of the commissions that he had earned when he procured the sales contracts on the Moxroy and Bomar properties. He also sought attorney's fees.
As summary judgment evidence, Pruneda offered his own affidavit in which he testified,
At the time of each of the real estate transactions made the basis of this suit, I worked as a licensed real estate agent in the State of Texas on behalf of real estate broker, George Silaski, and real estate company, [Urban Living].
I expended valuable time, effort and expense on behalf of Defendants. Defendants Urban Living and George Silaski accepted the benefit of my services as a licensed real estate agent. The real estate commissions I was to be paid are evidenced by writings signed by Vinod Ramani, President of Urban Living, who was authorized to sign the documents on behalf of real estate broker, George Silaski, and real estate company, Urban Living. The writings were delivered to each respective title company. The commissions were to be paid directly to me. Subsequently, Defendants wrongfully instructed the title companies not to pay me and to direct all payments to Urban Living.
I have never received the commissions I earned with respect to these transactions. Further, I have never received my payment or consideration in any form for my work on these real estate transactions.
. . .
Defendants have conspired, pursued, and continued to pursue, a flagrant course of misrepresentation in an effort to withhold my commissions. To that end, the procedure was in place for me to receive my commissions after they were earned. George Silaski as broker and Vinod Ramani, President of Urban Living, took advantage of their unique control to misdirect my commissions. Thereafter, they have made false statements to the Texas Workforce Commission and engaged in an overall pattern of misrepresentations designed to deny me my property at all costs. Defendants' conduct indicates untrustworthiness and fails to uphold the ethics required by the Texas Real Estate Commission. Further, the Defendants conspired by concerted action to effectuate all wrongful actions, further stated herein, that resulted in damages.
I provided valuable services which Defendants accepted. Defendants knew that I expected to be compensated for these services, but failed to compensate me. I seek actual damages of $29,274.00 for the commissions wrongfully denied to me by Defendants.
To his affidavit, Pruneda attached the two invoices that Ramani had signed and sent to the title company. Pruneda pointed out that the invoices reflect the amount of real estate commissions he was entitled to receive for his services in connection with the property sale identified in each invoice.
Pruneda also attached to his affidavit a letter from the title company that conducted the closing on the Moxroy property. The letter is dated February 14, 2006 and is addressed to Ramani and Silaski. The letter reads, "With reference to the above subject property, enclosed is a copy of the Settlement Statement and our check no. 137904 in the amount of $66,407.16 representing 100% payment of the commission per your letter dated January 12, 2006." Pruneda also offered a copy of the referenced check. The check was made payable to Urban Living and noted "Attn: George Silaski." Pruneda explained in his affidavit that the $66,407.16 paid by the title company was 100 percent of the commissions for the Moxroy property. He averred that this amount included the 40 percent of the commissions that he was entitled to receive for his services as the intermediary agent on the property sale.
As summary judgment evidence, Pruneda also attached several documents relating to the two real estate transactions. These documents include the broker registration agreement for the Moxroy sale and the sales contract for the Bomar transaction.
To support his attorney's fees request, Pruneda filed his attorney's affidavit with his motion for summary judgment. Pruneda's counsel testified in his affidavit that Pruneda would incur $17,243.72 in pursuing his claims in the trial court.
Urban Living and Silaski (hereafter, collectively "appellants") filed a response to Pruneda's motion for summary judgment. They asserted that Pruneda "has failed to provide this Court with evidence that there is an enforceable contract between himself and Defendants regarding commissions to be paid to him for the transactions at issue in this lawsuit."
In response to the motion for summary judgment, Urban Living and Silaski also pointed to the policy in Urban Living's employee handbook providing, "When leaving [Urban Living], ALL listings will remain with [Urban Living] and any commissions paid from the sale of such listings will belong solely to the [Urban Living]." Appellants appended the provision of the employee handbook to their response.
In addition, appellants offered Ramani's affidavit. Ramani explained that Pruneda had voluntarily resigned his employment with Urban Living on January 2, 2006 and that the closings on the two properties for which Pruneda sought commissions occurred after his resignation. Ramani averred,
It is our company policy that any person holding any sales position, either as an employee or an independent contractor, is not entitled to real estate commissions once such person leaves the company — unless there is a separate agreement signed by myself and said person entitling the same to commissions. Plaintiff Pruneda and I did not enter into any such agreement.
Each person either employed as an independent contractor or an employee of [Urban Living] is given the Handbook at the onset of his/her employment. Plaintiff was given the aforementioned Handbook at the onset of his employment and is aware he is not entitled to commissions unless he remains with our Company. . . . Attached as Exhibit B is a true and correct copy of our [Urban Living's] handbook and is hereby incorporated by this reference. Specifically, Page 16 of the Urban Living handbook states that all listings remain with the Company. Further, any commissions paid from the sale of such listings belong to the Company if said employee/independent contractor leaves before the closing.
Appellants also attached Silaski's affidavit to their response. In his affidavit, Silaski indicated that, although he is a licensed broker, he did not act as Pruneda's sponsoring broker with respect to the two real estate transactions underlying Pruneda's claims.
Pruneda's motion for summary judgment was set for submission on September 8, 2006. Pruneda filed a late reply to appellant's response to his motion for summary judgment on September 23, 2006. In the reply, Pruneda only sought summary judgment against Urban Living, not Silaski.
Also on September 23, 2206, Pruneda filed an amended motion for partial summary judgment. In the motion, Pruneda sought summary judgment on his breach of contract and money had and received claims against Urban Living only. Pruneda no longer sought summary judgment against Silaski. The amended motion for partial summary judgment clarified that, with regard to the two real estate transactions, Pruneda, a licensed real estate agent, was acting as a salesperson, and www.Urban, Inc. was the broker sponsoring Pruneda. Silaski was not the sponsoring broker on the transactions as previously asserted by Pruneda.
The trial court granted Pruneda's motion for summary judgment on October 21, 2008. The trial court's order reflects that it granted summary judgment based on Pruneda's originally filed motion and not on his later-filed motion for partial summary judgment.
The trial court signed a final judgment on December 12, 2008. In the judgment, the trial court ordered Urban Living and Silaski to pay $29,274 in damages to Pruneda. As the basis for liability, the trial court identified Pruneda's claims for breach of contract and money had and received. The trial court also awarded Pruneda attorney's fees of $17,243.72 for trial and additional attorney's fees for an appeal to this court and to the Texas Supreme Court.
Appellants filed a motion for new trial in which they argued for the first time that Pruneda's common law claims were barred by res judicata and the election of remedies doctrine. Appellants acknowledged that they had failed previously to raise these defenses.
Pruneda filed a response to the motion for new trial to which appellants, in turn, filed a reply. In their reply, appellants asserted, for the first time, that the trial court had erred in setting aside the TWC decision when it granted Pruneda's motion for leave to reopen the TWC proceedings. The trial court denied appellant's motion for new trial on February 4, 2009.
Appellants also filed a post-judgment motion to dismiss, asserting that the trial court lacked subject-matter jurisdiction over the case. The trial court did not rule on the motion.
Appellants now appeal the trial court's judgment against them.
Jurisdiction, Res Judicata, and Election of Remedies
Appellants' second issue reads, "The trial court's summary judgment is void because the trial court lacked subject-matter jurisdiction and the final TWC order barred a subsequent suit on common law claims seeking the same unpaid commissions." Appellants present their third issue as follows: "Plaintiff's suit is also barred by election of remedies, as he knowingly chose to pursue an administrative remedy to final decision in lieu of proceeding in district court on his common law claims." In their fourth issue, appellants contend, "Pruneda obtained a final decision from the TWC and thus was barred by res judicata from filing suit for common law claims against the same parties for the same commissions."
As briefed, appellants have intertwined issues of subject-matter jurisdiction with issues of res judicata and election of remedies. For this reason, we will discuss the issues together.
A. Appellants' Affirmative Defenses
1. Jurisdictional Plea vs. Plea in Bar
We begin by recognizing that res judicata and election of remedies are affirmative defenses on the merits. See France v. American Indem. Co., 648 S.W.2d 283, 285 (Tex. 1983) (election of remedies); W. Dow Hamm III Corp. v. Millennium Income Fund, L.L.C, 237 S.W.3d 745, 755 (Tex. App.-Houston [1st] 2007, no pet.) (res judicata). Here, appellants assert that, because Pruneda had already obtained a final administrative decision on the merits from TWC, res judicata and election of remedies barred Pruneda from pursuing his common law claims to recover unpaid commissions in the trial court. See Igal v. Brightstar Information Tech. Group, Inc., 250 S.W.3d 78, 93 (Tex. 2008) (holding that res judicata barred plaintiff from recovering on common law claims for wages when a final TWC decision on the merits had previously been rendered on the same wage claims against plaintiff).
Appellants frame this argument as a jurisdictional one; that is, they assert that the final TWC decision operated to deprive the trial court of subject-matter jurisdiction over Pruneda's common law claims for unpaid commissions. We disagree.
Because they pertain to the merits of a case and a plaintiff's ultimate right to recover, res judicata and election of remedies are pleas in bar, not jurisdictional pleas. See Tex. Hwy. Dep't v. Jarrell, 418 S.W.2d 486, 488 (Tex. 1967); Kelley v. Bluff Creek Oil Co., 309 S.W.2d 208, 214 (Tex. 1958). If a plea in bar is sustained, a take-nothing judgment finally disposing of the controversy will be rendered on the merits for the defendant. See Jarrell, 418 S.W.2d at 488; Kelley, 309 S.W.2d at 214. In contrast, a plea to the jurisdiction is a challenge to the court's power to hear the suit, which, if sustained, requires dismissal of the case. See Jarrell, 418 S.W.2d at 488; see Nat'l Life Co. v. Rice, 167 S.W.2d 1021, 1024 (Tex. Comm'n App. 1943) (defining jurisdiction as "the power conferred upon a court by the Constitution and laws to determine the merits of that suit as between the parties and to carry its judgment into effect").
Pruneda filed his wage claim with TWC pursuant to the Texas Payday Law. See TEX. LABOR CODE ANN. § 61.001-.095 (Vernon 2006 Vernon Supp. 2010). The Payday Law provides for administrative review of claims and then for judicial review of final administrative decisions. Holmans, II v. Transource Polymers, Inc., 914 S.W.2d 189, 190 n. 1 (Tex. App.-Fort Worth 1995, writ denied); see TEX. LABOR CODE ANN. §§ 61.052, 61.0525, 61.055, 61.062 (Vernon Supp. 2010 Vernon 2006).
Appellants acknowledge that the Payday Law is not an employee's sole and exclusive remedy for a claim for unpaid past wages, but, rather, is an alternative remedy that is cumulative of common-law remedies. Tricon Tool Supply, Inc. v. Thumann, 226 S.W.3d 494, 511 (Tex. App.-Houston [1st] 2006, pet. denied); Holmans, 914 S.W.2d at 192-93. As a result, a claimant can seek recovery of unpaid wages by filing a claim pursuant to the Payday Law with TWC or by filing suit in a court of law to assert common-law claims. Appellants correctly point out that a wage claimant must choose whether he will pursue his wage claim by filing an administrative claim or by filing a lawsuit. See Igal, 250 S.W.3d at 92-93. Appellants are also correct in asserting that, once a claimant has pursued his claim to a final determination or judgment, whether with TWC or in a court of law, he cannot then pursue the alternative avenue of recourse. See id. Appellants are incorrect, however, in asserting that the claimant is jurisdictionally barred from pursuing the wage claim in the alternate forum. The Texas Supreme Court's analysis in Igal demonstrates that a claimant, who has pursued an administrative claim with TWC to a final wage determination, is barred by res judicata, not by some jurisdictional impediment to pursuing common law claims in a court of law. See id.
Appellants' res judicata and election of remedies assertions, and the arguments underlying them, relate to the merits of Pruneda's claims and his entitlement to summary judgment. See Kelley, 309 S.W.2d at 214. Had they successfully presented these defenses, appellants would have been entitled to a take-nothing judgment against Pruneda on his common law claims. See Jarrell, 418 S.W.2d at 488; Kelley, 309 S.W.2d at 214; see also Igal, 250 S.W.3d at 93. Appellants would not have been entitled to a dismissal of Pruneda's common-law claims for lack of jurisdiction. See Jarrell, 418 S.W.2d at 488; see also Igal, 250 S.W.3d at 93 1. Preservation of Affirmative Defenses
Appellants cite Hull v. Davis, 211 S.W.3d 461, 466 (Tex. App.-Houston [14th] 2006, no pet.) for the proposition that a trial court lacks subject-matter jurisdiction over a common law claim to recover wages when the claimant has already pursued a remedy under the Payday Law with TWC to a final administrative decision. The Hull court cites 11th St. Bingo Assoc. v. Simonson, No. 13-02-399-CV, 2004 WL 1117161, at *2-3 (Tex. App.-Corpus Christi May 20, 2004, no pet.) (mem. op.) for this same proposition. See Hull, 211 S.W.3d at 466. We note, however, that at the time of these decisions, neither court of appeal had the benefit of the supreme court's analysis and decision in Igal.
The party asserting an affirmative defense, such as res judicata or election of remedies, bears the burden of pleading and proving its elements. See Compass Bank v. MFP Financial Services, Inc., 152 S.W.3d 844, 851 (Tex. App.-Dallas 2005, pet. denied); Welch v. Hrabar, 110 S.W.3d 601, 606 (Tex. App.-Houston [14th] 2003, pet. denied). Rule of Civil Procedure 94 requires a party to expressly plead those affirmative defenses listed in the rule "and any other matter constituting an avoidance or affirmative defense." TEX. R. CIV. P. 94. If an affirmative defense is not pleaded or tried by consent, it is waived. See RE/MAX of Tex., Inc. v. Katar Corp., 961 S.W.2d 324, 327-28 (Tex. App.-Houston [1st] 1997, pet. denied).
Here, appellants did not affirmatively plead res judicata or election of remedies. In their reply brief, appellants contend that their failure to plead the defenses did not result in waiver. Appellants point to Pruneda's original petition in which he mentioned and sought review of the adverse TWC decision. Citing Holladay v. CW A, Inc., appellants assert that "[t]he mere mention of the prior decision was enough to make the res judicata defense `apparent on the face of the plaintiff's pleadings.'" 60 S.W.3d 243, 246 (Tex. App.-Corpus Christi 2001, pet. denied). The propriety of such assertion aside, we conclude that appellants have not preserved for appeal their assertion that the defenses of res judicata and election of remedies precluded summary judgment on Pruneda's common law claims. When a party contends that summary judgment in favor of a plaintiff is improper because of an affirmative defense, it must do more than merely plead that defense. Kirby Exploration Co. v. Mitchell Energy Corp., 701 S.W.2d 922, 926 (Tex. App.-Houston [1st] 1985, writ ref'd n.r.e.). An affirmative defense will prevent summary judgment in favor of a plaintiff only if the defendant supports each element of his affirmative defense by summary judgment evidence. Tesoro Petroleum Corp. v. Nabors Drilling USA, Inc., 106 S.W.3d 118, 124 (Tex. App.-Houston [1st] 2002, pet. denied).
In their response to Pruneda's motion for summary judgment, appellants did not assert or present evidence that the affirmative defenses of res judicata and election of remedies defeated Pruneda's request for summary judgment. Thus, appellants cannot now successfully argue on appeal that the summary judgment should be reversed based on these defenses. See Kirby Exploration Co., 701 S.W.2d at 926.
Moreover, Pruneda asserts that the TWC decision no longer serves as a basis to support the defenses of res judicata and election of remedies. He points out that the trial court set aside the TWC decision when it granted Pruneda's motion to re-open the TWC proceeding for the presentation of additional evidence. On appeal, appellants attack Pruneda's position by arguing that the trial court's act of setting aside the TWC decision was without basis in the law and was, therefore, in error.
Appellants did not raise this argument in their response to Pruneda's motion for summary judgment or at any time before the trial court granted summary judgment in Pruneda's favor. Appellants first presented this argument to the trial court in their reply to Pruneda's response to appellants' motion for new trial.
Issues that a nonmovant contends avoid summary judgment that are not expressly presented to the trial court by written answer or other written response to the summary judgment motion are waived on appeal. See TEX. R. CIV. P. 166a(c); see also D.R. Horton-Texas, Ltd. v. Markel Intern. Ins. Co., Ltd., 300 S.W.3d 740, 743 (Tex. 2009); City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678 (Tex. 1979). Because they did not timely raise their assertion that the trial court improperly set aside the TWC decision, we cannot consider it on appeal as grounds for reversing the summary judgment. See D.R. Horton-Texas, 300 S.W.3d at 743; Clear Creek, 589 S.W.2d at 678; see also Unifund CCR Partners v. Weaver, 262 S.W.3d 796, 797-98 (Tex. 2008) (concluding that argument first raised by summary judgment non-movant in post-judgment filing did not preserve argument for appeal).
B. Jurisdictional Arguments
Subject-matter jurisdiction is a question of law, which we review de novo. Tex. Dep't of Parks Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex. 2004). Subject-matter jurisdiction is essential for a court to have authority to decide a case; it is never presumed, cannot be waived, and can be raised any time. See Alfonso v. Skadden, 251 S.W.3d 52, 55 (Tex. 2008).
Here, appellants present only two arguments that truly can be construed to challenge subject-matter jurisdiction. One such argument is appellants' assertion that Pruneda failed to timely seek judicial review of the final TWC decision as statutorily required.
Pruneda dismissed TWC from the suit and abandoned his judicial review of the administrative decision after the trial court set aside the final TWC decision. The summary judgment in favor of Pruneda, which is the subject of this appeal, is based only on Pruneda's common law claims. Thus, whether Pruneda properly invoked the trial court's jurisdiction to judicially review the TWC decision rendered pursuant to the Payday Law is arguably moot. We discuss it for completeness of review of the issues, which, as briefed, are intertwined and overlapping.
Section 61.062 of the Payday Law governs the procedure for seeking judicial review of a final TWC decision. The section provides as follows:
(a) A party who has exhausted the party's administrative remedies under this chapter, other than a motion for rehearing, may bring a suit to appeal the order.
(b) The suit must be filed not later than the 30th day after the date the final order is mailed.
(c) The commission and any other party to the proceeding before the commission must be made defendants in the suit.
(d) The suit must be brought in the county of the claimant's residence. If the claimant is not a resident of this state, the suit must be brought in the county in this state in which the employer has its principal place of business.
(e) An appeal under this subchapter is by trial de novo with the substantial evidence rule being the standard of review in the manner as applied to an appeal from a final decision under Subtitle A, Title 4.
TEX. LABOR CODE ANN. § 61.062 (Vernon 2006).
The record shows that Pruneda filed his original petition in the trial court less than 30 days after the final TWC decision was mailed. See TEX. LABOR CODE ANN. § 61.062(b). Appellants do not dispute this. Instead, appellants contend that Pruneda missed the 30-day deadline because he did not properly plead his appeal of the TWC decision. Specifically, appellants assert, "Pruneda never invoked the applicable statute [section 61.062]," when he filed his original petition. Appellants point out that Pruneda did not cite Labor Code section 61.062 in his original petition. Instead, Pruneda cited two provisions of the Labor Code, sections 212.201 and 212.206, which pertain to judicial review of a TWC decision regarding unemployment claims, not unpaid wage claims.
In his original petition, Pruneda named TWC as a defendant. Pruneda pleaded, "This petition seeks trial de novo of the decision of the [Texas Workforce] Commission in Commission Appeal Number 06-056857-0, Commission Appeal Decision Date April 16, 2007, which was an appeal of hearing officer M. Miller's Findings of Fact, Conclusions of Law and Decision mailed on January 26, 2007." Pruneda further pled, "The decision of the Commission is not supported by substantial evidence." The original petition made clear that Pruneda was seeking to recover unpaid wages and that he was appealing TWC's decision that disallowed his recovery of unpaid commissions. The original petition cannot be read to assert an appeal from an agency unemployment decision.
Texas follows a "fair notice" standard for pleading, which looks to whether the opposing party can ascertain from the pleading the nature and basic issues of the controversy and what testimony will be relevant. See Horizon/CMS Healthcare Corp. v. Auld, 34 S.W.3d 887, 896 (Tex. 2000) (holding that defendant's answer gave fair notice that defendant sought to invoke punitive-damages cap, even though defendant had cited wrong statute). Moreover, the law requires us to give effect to the substance of a pleading rather than its title or form. See State Bar v. Heard, 603 S.W.2d 829, 833 (Tex. 1980) (orig. proceeding); see also In re S.A.M, No. 14-08-01068-CV, 2010 WL 3230621, at *2 (Tex. App.-Houston [14th] Aug. 17, 2010, no pet.) (concluding that substance of petition governs over petition's title).
Consistent with these principles, we give effect to the substance of Pruneda's original petition regardless of which section of the Labor Code Pruneda cited in the pleading. The plain language of the original petition shows that Pruneda was seeking judicial review of the TWC decision denying his wage claim. This can be ascertained from the pleading. Thus, Pruneda timely sought judicial review of the final TWC decision when he filed his original petition. See TEX. LABOR CODE ANN. § 61.062.
The other argument asserted by appellants that raises a jurisdictional challenge is appellants' contention that TWC was a necessary party to Pruneda's maintenance of his suit in the trial court. Appellants contend that, because TWC was a necessary party, the trial court lost subject-matter jurisdiction when Pruneda nonsuited his claims against TWC and filed his first amended petition in which he abandoned his claims against TWC.
We agree that, while Pruneda sought to appeal the administrative decision, TWC was required to be a defendant in the suit. See TEX. LABOR CODE ANN. § 61.062(c). We also agree with Pruneda that once the trial court set aside the final TWC decision, Pruneda dismissed his wage claim with TWC, and he abandoned judicial review of the TWC decision, TWC was no longer a necessary party. In fact, it was not a proper party at that point. All that then remained pending in the trial court were Pruneda's common law claims against appellants. TWC was not a defendant to these claims. Thus, appellants' second jurisdictional argument is without merit.
For the reasons discussed, we overrule appellants' second, third, and fourth issues.
In their fifth issue, appellants assert that the trial court erred in granting summary judgment against Urban Living and Silaski in favor of Pruneda. The trial court granted summary judgment against appellants on Pruneda's claims for breach of contract and money had and received.
A. Standard of Review
To prevail on a Rule 166a(c) summary-judgment motion, a movant must prove that there is no genuine issue regarding any material fact and that it is entitled to judgment as a matter of law. See TEX. R. CIV. P. 166a(c); Little v. Tex. Dep't of Criminal Justice, 148 S.W.3d 374, 381 (Tex. 2004). A plaintiff moving for summary judgment must conclusively prove all essential elements of its claim. See Rhone-Poulenc, Inc. v. Steel, 997 S.W.2d 217, 223 (Tex. 1999). A matter is conclusively established if reasonable people could not differ as to the conclusion to be drawn from the evidence. See City of Keller v. Wilson, 168 S.W.3d 802, 816 (Tex. 2005).
If the movant meets its burden, the burden then shifts to the nonmovant to raise a genuine issue of material fact precluding summary judgment. See Centeq Realty, Inc. v. Siegler, 899 S.W.2d 195, 197 (Tex. 1995). The evidence raises a genuine issue of fact if reasonable and fair-minded jurors could differ in their conclusions in light of all of the summary-judgment evidence. Goodyear Tire Rubber Co. v. Mayes, 236 S.W.3d 754, 755 (Tex. 2007).
On appeal, we review de novo a trial court's summary judgment ruling. See Mann Frankfort Stein Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009). In our review, we consider all the evidence in the light most favorable to the nonmovant, crediting evidence favorable to the nonmovant if reasonable jurors could, and disregarding contrary evidence unless reasonable jurors could not. See Mack Trucks, Inc. v. Tamez, 206 S.W.3d 572, 582 (Tex. 2006).
B. Breach of Contract
Appellants assert that the trial court erred in granting Pruneda's motion for summary judgment on Pruneda's breach-of-contract cause of action.
Parties form a valid and enforceable contract when the following elements are present: (1) an offer, (2) an acceptance in strict compliance with the terms of the offer, (3) meeting of the minds, (4) each party's consent to the terms, and (5) execution and delivery of the contract with the intent that it be mutual and binding. See Winchek v. Am. Express Travel Related Servs. Co., 232 S.W.3d 197, 202 (Tex. App.-Houston [1st] 2007, no pet.); Hubbard v. Shankle, 138 S.W.3d 474, 481 (Tex. App.-Fort Worth 2004, pet. denied). To be entitled to summary judgment on his breach-of-contract claim, Pruneda was required to prove, as a matter of law, the following essential elements: (1) the existence of a valid contract; (2) performance or tendered performance by the plaintiff; (3) breach of the contract by the defendant; and (4) damages sustained as a result of the breach. See B W Supply, Inc. v. Beckman, 305 S.W.3d 10, 16 (Tex. App.-Houston [1st] 2009, pet. denied).
1. Urban Living a. Pruneda Met His Summary Judgment Burden
"A breach of contract occurs when a party fails or refuses to do something he has promised to do." Id. (quoting Mays v. Pierce, 203 S.W.3d 564, 575 (Tex. App.-Houston [14th] 2006, pet. denied)). Here, Pruneda offered summary-judgment evidence conclusively establishing that Urban Living breached its contract with him to share in the real estate commissions earned on the Moxroy and Bomar properties.
Pruneda's affidavit testimony indicates that, with respect to the two properties, Pruneda worked as a real estate agent on behalf of Urban Living. Pruneda's testimony further indicates that, in exchange for the "valuable time, effort, and expense" that he expended in procuring the contracts on the Moxroy and Bomar properties, Urban Living had agreed that Pruneda would be paid commissions.
The two invoices offered by Pruneda further evidence the agreement between Urban Living and Pruneda to split the commissions. The invoices, signed by Ramani and sent to the title company, show that Urban Living would receive 60 percent of the commissions and that Pruneda would receive approximately 40 percent of the commissions. The invoices show that Urban Living and Pruneda had reached an agreement to share the commissions earned on the two properties. The invoices further establish that the amount of the commissions claimed by Pruneda are the same amounts reflected in the invoices.
Pruneda's evidence also shows that Urban Living breached its agreement to split the commissions. Pruneda testified in his affidavit that Urban Living caused his commissions to be "misdirected" to Urban Living. The letter from the title company offered by Pruneda further evidenced that Ramani, Urban Living's president, instructed the title company not to pay Pruneda his share of the commissions. The summary judgment evidence also shows that 100 percent of the commissions were paid to Urban Living and that Pruneda received no commissions.
Viewing Pruneda's evidence in favor of Urban Living does not change the only reasonable conclusion that can be drawn it: Urban Living and Pruneda had a contract to share in the real estate commissions generated from the sale of the Moxroy and Bomar properties, and Urban Living breached the contract when it diverted Pruneda's share of the commissions to itself. Pruneda met his summary judgment burden to establish his breach of contract claim against Urban Living as a matter of law.
Urban Living contends that Pruneda did not show that he was entitled to receive the commissions once he resigned from Urban Living. It is undisputed that Pruneda resigned before the closings on the two properties. Urban Living points out that the invoices offered pre-date Pruneda's resignation from Urban Living. Urban Living asserts that Pruneda's right to receive commissions terminated when he left Urban Living's employment.
Contrary to Urban Living's position, Pruneda's evidence shows that he earned the commissions when he procured the sales contracts on the two properties. Pruneda's affidavit testimony indicates that the commissions were in exchange for the many hours of work he expended and the out-of-pocket expenses he incurred in procuring the contracts. Pruneda performed his obligation under the agreement to share commissions when he procured the contracts. Pruneda procured the sales contracts many months before he resigned from Urban Living. Pruneda was not required to offer anything more to show that he had earned the commissions.
It was part of Pruneda's summary-judgment burden to show a specific agreement to share commissions beyond his date of resignation. Pruneda met his summary-judgment burden when he conclusively showed an agreement to split commissions, his performance of his contractual obligation, and Urban Living's breach the agreement. At that point, the burden shifted to Urban Living, as nonmovant, to raise a genuine issue of material fact precluding summary judgment. See Centeq Realty, 899 S.W.2d at 197.
b. Urban Living Did Not Meet Its Summary Judgment Burden
To support its summary-judgment response, Urban Living offered Ramani's affidavit and excerpts from its employee handbook. Urban Living relies heavily on the provision in the handbook which provides, "When leaving [Urban Living], ALL listings will remain with [Urban Living] and any commissions paid from the sale of such listings will belong solely to the [Urban Living]." Urban Living asserts this shows that Pruneda was no longer entitled to share in the commissions after Pruneda resigned his employment. Urban Living contends that Pruneda's receipt of commissions was conditioned on his continued employment with Urban Living.
We must determine whether the evidence offered by Urban Living in support of its response raises a genuine issue of material fact regarding whether the parties had agreed to such condition. We conclude that Urban Living has not met its burden.
In his affidavit, Ramani testified that it was Urban Living's "company policy" that employees did not receive commissions once they left the company. Ramani also averred that Pruneda was given a copy of the employee handbook containing the continued-employment provision when he began working for Urban Living. Ramani averred, "[Pruneda] is aware he is not entitled to commissions unless he remains with [Urban Living]." Ramani stated that the only exception to this policy occurs when Urban Living and the employee have entered into a separately signed, written agreement stating that the employee will receive the commissions after he leaves Urban Living. Ramani testified that there was no such agreement with Pruneda.
Pruneda cites Texas case authority holding that a broker or salesperson earns his commission at the time he procures the sales contract on the property. See Frady v. May, 23 S.W.3d 558, 562-63 (Tex. App.-Fort Worth 2000, pet. denied) (citing Goodwin v. Gunter, 185 S.W. 295, 296-97 (Tex. 1916)). Pruneda also points out that Texas courts have rejected the contention that a broker's right to a commission hinges on his continued employment through the time of the final consummation of the sale. See id. Pruneda relies on this legal precept to refute Urban Living's claim that Pruneda's receipt of his share of the commissions was conditioned on his continued employment with Urban Living. However, courts have also recognized that parties can agree to vary from this generally applicable rule by incorporating express language into their sales commission agreement. See id.; see also Ramesh v. Johnson, 681 S.W.2d 256, 259 (Tex. App.-Houston [14th] 1984, writ ref'd n.r.e) ("We agree with appellant that where the parties to a contract make the payment of a commission expressly contingent on a closing or other event, and that event does not occur, no obligation exists to pay the commission."). Thus, if it is shown that the parties agreed that Pruneda's receipt of the commissions in this case was conditioned on his continued employment through the closing on each sales contract, such condition may have barred his recovery of damages.
The question that must be answered is whether the handbook provision operates to bar Pruneda from recovering his share of the commissions on the Moxroy and Bomar properties. We agree with Pruneda that it does not. As he points out, the language of the provision demonstrates that it does not apply to commissions that have already been earned on a property when the employee leaves Urban Living.
In the trial court, Pruneda raised a statute of frauds objection regarding the employee handbook. We note that the Real Estate License Act ("RELA") provides that an agreement between real estate license holders to share commissions need not be in writing. See TEX. OCC. CODE § 1101.806(a)(1) (Vernon 2004).
To reiterate, the provision states, "When leaving [Urban Living], ALL listings will remain with [Urban Living] and any commissions paid from the sale of such listings will belong solely to the [Urban Living]." Pruneda avers that a "listing" does not result in a commission; rather, a commission results from the procurement of a sales contract. He asserts, "A listing pertains to a solicitation for which no sale has been procured."
Pruneda contends, and we agree, that the handbook provision does not address listings that culminated into sales contracts before an employee leaves. Rather, it limits an employee's right to receive commissions on a sales contract procured on a listing after the employee leaves Urban Living. As a practical matter, the provision deprives an employee of commission on a listing on which he had worked but had not yet procured a sales contract at the time he left Urban Living. When a sales contract is later procured, the provision would preclude the employee from seeking compensation for the work he had performed on the listing before leaving Urban Living.
By its language, the provision does not address a sales commission earned by an employee who already had procured a sales contract before leaving Urban Living. The provision does not disturb the general rule regarding when commissions are earned. Nor does it preclude Pruneda from receiving the Moxroy and Bomar commissions, which he earned months before leaving Urban Living when those properties sold, even though the closings had not yet taken place. Thus, the employee handbook does not raise a genuine issue of material fact or otherwise serve to defeat Pruneda's summary judgment evidence.
Urban Living also assails the summary judgment on the ground that any agreement between Urban Living and Pruneda under which Urban Living was obligated to directly pay Pruneda commissions would be illegal. In its reply brief, Urban Living contends, "Pruneda has failed to counter the dispositive point made in Appellants' initial brief that any contract requiring UL or Silaski to pay him commissions is void and unenforceable because he is statutorily prohibited from receiving commissions from UL or Silaski, and they are likewise statutorily prohibited from paying him commissions." To support its argument, Urban Living cites section 1101.651 of the Real Estate Licensing Act ("RELA"), which, in part, provides as follows:
(b) A salesperson may not accept compensation for a real estate transaction from a person other than the broker with whom the salesperson is associated or was associated when the salesperson earned the compensation.
(c) A salesperson may not pay a commission to a person except through the broker with whom the salesperson is associated at that time.
TEX. OCC. CODE ANN. § 1101.651(b), (c) (Vernon 2004). Urban Living points to the sales documents offered by Pruneda which show that neither Urban Living nor Silaski was the sponsoring broker on the Moxroy and Bomar transactions. Instead, the documents show www.Urban, Inc. as the broker listed in the documents. Urban Living asserts that RELA section 1101.651 mandates that only www.Urban, Inc. could directly pay Pruneda. Urban Living contends that a claim by Pruneda to recover commissions directly from Urban Living violates section 1101.651.
An analysis of the record shows that Urban Living's argument is flawed. Pruneda's summary judgment evidence proved a contract between Pruneda and Urban Living to split commissions on the Moxroy and Bomar transactions. Pruneda's summary judgment evidence does not show a contract between him and Urban Living under which Urban Living was obligated to directly pay Pruneda his commissions. Presumably, Urban Living and Pruneda would have each been paid that party's respective share of the commissions from a legally-authorized third party. We note that Urban Living was ultimately paid 100 percent of the commissions on the Moxroy transactions with a check from the title company. The check bore a notation that it was sent to the attention of Silaski, who is a licensed broker in Texas and a principal of corporate broker www.Urban, Inc., which is the sponsoring broker on the transactions.
Moreover, to the extent that the judgment in this case requires Urban Living to pay money to Pruneda, such payment is not prohibited by RELA section 1101.651. Pruneda is seeking, and Urban Living would pay, damages to Pruneda for breaching the contract to share commissions. In other words, Urban Living would not pay commissions to Pruneda; it would pay him breach-of-contract damages.
c. Conclusion Regarding Pruneda's Breach of Contract Claim Against Urban Living
We conclude that Pruneda conclusively showed (1) he had a contract with Urban Living to split the commissions earned on the Moxroy and Bomar property transactions, (2) he performed his contractual obligation to procure the sales contracts, (3) and Urban Living breached the contract when it misdirected Pruneda's share of the commissions to itself. Stated differently, Pruneda met his summary judgment burden by proving his breach of contract claim against Urban Living as a matter of law. We further conclude that Urban Living did not meet its summary judgment burden as nonmovant. Urban Living did not offer evidence that raised a genuine issue of material fact on the elements of Pruneda's contract cause of action. We hold that Pruneda is entitled to summary judgment against Urban Living on his breach of contract claim.
We next determine whether Pruneda satisfied his summary judgment burden against Silaski with regard to his breach of contract claim. We conclude that he did not. Vital to Pruneda's successful breach of contract claim against Urban Living are the invoices evidencing the agreement between Pruneda and Urban Living to share the commissions on the Moxroy and Bomar contracts procured by Pruneda. The invoices serve to link together the other evidence offered by Pruneda to support his breach of contract claim against Urban Living. The invoices provide context to the letter from the title company and to the check paying Urban Living 100 percent of the Moxroy commissions. In short, the invoices are the glue holding Pruneda's summary judgment evidence together.
Although generally averred by him in his affidavit, Pruneda did not show that Ramani was acting on behalf Silaski when he signed the invoices. To the contrary, it appears from the invoices that Ramani was acting on behalf of Urban Living. Evidence suggesting that Silaski caused the commissions to be diverted to Urban Living or that he, in some undefined manner, benefited financially from Pruneda's procurement of the sales contracts does not show an agreement between Pruneda and Silaski to share commissions.
Pruneda did not offer other evidence to show that he had an agreement with Silaski regarding the commissions. Without such evidence, Pruneda failed to show the existence of a valid contract between him and Silaski with respect to payment of, or sharing of, commissions.
In addition, the record does not support a claim that Silaski had agreed, as the sponsoring broker, to pay Pruneda the commissions. Pruneda's affidavit testimony indicating that Silaski was the sponsoring broker on the two sales contracts is refuted by the sales documents offered by Pruneda and by Silaski's affidavit testimony.
We conclude that Pruneda did not conclusively prove his breach of contract claim against Silaski. Thus, Pruneda is not entitled to summary judgment against Silaski on this claim.
C. Money Had and Received
In addition to breach of contract, the trial court rendered summary judgment based on Pruneda's claim for money had and received. We agree with appellants that this cause of action cannot support summary judgment on the record presented.
Appellants also complain that the trial court improperly based summary judgment on a cause of action not pleaded because it referenced the Real Estate Licensing Act in the recital portion of its judgment. Express decretal language in a judgment controls over recitals. State v. Brownlow, 319 S.W.3d 649, 653 (Tex. 2010). The decretal portion of the summary judgment indicates that the trial court based appellants' liability on Pruneda's pleaded claims of breach of contract and money had and received. No mention was made of RELA in the decretal portions of the judgment.
To recover on a claim for money had and received, a plaintiff must show that the defendant holds money which in equity and good conscience belongs to him. Staats v. Miller, 243 S.W.2d 686, 687 (Tex. 1951); Edwards v. Mid-Continent Office Distributors, L.P., 252 S.W.3d 833, 837 (Tex. App.-Dallas 2008, pet. denied). A cause of action for money had and received is not based on wrongdoing, but, instead, "looks only to the justice of the case and inquires whether the defendant has received money which rightfully belongs to another." Everett v. TK-Taito, L.L.C., 178 S.W.3d 844, 860 (Tex. App.-Fort Worth 2005, no pet.); Amoco Prod. Co. v. Smith, 946 S.W.2d 162, 164 (Tex. App.-El Paso 1997, no writ). In short, it is an equitable doctrine applied to prevent unjust enrichment. Hunt v. Baldwin, 68 S.W.3d 117, 132 (Tex. App.-Houston [14th] 2001, no pet.); Phippen v. Deere Co., 965 S.W.2d 713, 725 (Tex. App.-Texarkana 1998, no pet.).
Generally, when a valid, express contract covers the subject matter of the parties' dispute, there can be no recovery under a quasi-contract theory, such as money had and received. See Fortune Prod. Co. v. Conoco, Inc., 52 S.W.3d 671, 684 (Tex. 2000) (involving claim for unjust enrichment); DeClaire v. G B McIntosh Family Ltd. P'ship, 260 S.W.3d 34, 49 (Tex. App.-Houston [1st] 2008, no pet.) (same). Parties should be bound by their express agreements, and when a valid agreement already addresses the matter, recovery under an equitable theory is generally inconsistent with the express terms of the agreement. Conoco, 52 S.W.3d at 684; see Edwards v. Mid-Continent Office Distribs., L.P., 252 S.W.3d 833, 837 (Tex. App.-Dallas 2008, pet. denied) ("The doctrine of unjust enrichment applies the principles of restitution to disputes that are not governed by a contract between the parties.").
As discussed, Pruneda has proven the existence of a contract with Urban Living that covers the subject matter of the dispute. Accordingly, summary judgment cannot be sustained against Urban Living based on Pruneda's claim for money had and received. See Ledig v. Duke Energy Corp., 193 S.W.3d 167, 176 (Tex. App.-Houston [1st] 2006, no pet.) (affirming summary judgment for defendant on plaintiff's unjust enrichment claim because express contract covered subject of dispute).
We further conclude that, on the record presented, summary judgment is not proper on Pruneda's money had and received claim against Silaski. Pruneda has not conclusively shown that Silaski "holds money which in equity and good conscience belongs to him." See Staats, 243 S.W.2d at 687. In his affidavit, Pruneda averred that Silaski had benefitted from his procurement of the Moxroy and Bomar contracts. Pruneda also offered the check from the title company made payable to Urban Living and sent to the attention of Silaski. Pruneda did not, however, offer evidence conclusively showing that Silaski was holding or in possession of money that belonged to Pruneda. For this reason, Pruneda did not show, as a matter of law, that he was entitled to summary judgment against Silaski based on money had and received.
To summarize, Pruneda proved, as a matter of law, that he was entitled to summary judgment against Urban Living for breach of contract. For this reason, Pruneda is not entitled to summary judgment against Urban Living for money had and received. On this record, Pruneda did not prove, as a matter of law, that he was entitled to summary judgment against Silaski for breach of contract or for money had and received.
In his first issue, Silaski challenges the trial court's summary judgment against him on the ground that Pruneda's amended motion for partial summary judgment was the "live" motion for summary judgment at the time the trial court granted summary judgment against him on the originally filed motion. Silaski points out that Pruneda did not seek summary judgment against him in the amended motion. Because we have determined that summary judgment was not appropriate against Silaski on this record, we need not determine Silaski's first issue.
Accordingly, we overrule appellants' fifth issue to the extent that it challenges the summary judgment based on breach of contract against Urban Living. We otherwise sustain appellants' fifth issue.
D. Segregation of Attorney's Fees
In their sixth issue, appellants contend that the trial court erred in awarding Pruneda his attorney's fees in the amount of $17,243.72 for trial, and additional sums for appellate attorney's fees, because Pruneda did not segregate his recoverable attorney's fees from his unrecoverable fees.
We first clarify that, because we have determined that summary judgment was not appropriate against Silaski on the contract and quasi-contract claims, Pruneda is not entitled to the attorney's fees awarded against Silaski by the trial court. See Mustang Pipeline Co. v. Driver Pipeline Co., 134 S.W.3d 195, 201 (Tex. 2004) (holding that plaintiff must recover actual damages to recover attorney's fees in breach of contract action). In contrast, Pruneda is entitled to attorney's fees against Urban Living based on his successful breach of contract claim, if he has properly proven the fees. See TEX. CIV. PRAC. REM. CODE ANN. § 38.001(8) (Vernon 2008).
When a lawsuit involves multiple claims or parties, the proponent of attorney's fees must segregate recoverable fees from those incurred by parties or on claims for which fees are not recoverable. Clearview Props., L.P. v. Prop. Tex. SC One Corp., 287 S.W.3d 132, 143 (Tex. App.-Houston [14th] 2009, pet. denied). Attorney's fees that relate solely to a claim for which fees are unrecoverable must be segregated. Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 313 (Tex. 2006).
In his motion for summary judgment, Pruneda sought attorney's fees based on Civil Practice and Remedies Code section 38.001. Pruneda asserted that his attorney's fees claim was "for rendered services, performed labor, and an oral or written contract." See TEX. CIV. PRAC. REM. CODE ANN. § 38.001 (permitting recovery for attorney's fees and costs for variety of claims, including claims for rendered services, performed labor, or oral or written contract). This corresponds to Pruneda's claims for breach of contract and money had and received on which he sought summary judgment.
Significantly, the party seeking to recover attorney's fees bears the burden of demonstrating segregation is not required. See Hong Kong Dev., Inc. v. Nguyen, 229 S.W.3d 415, 455 (Tex. App.-Houston [1st] 2007, no pet.); see also CA Partners v. Spears, 274 S.W.3d 51, 82 (Tex. App.-Houston [14th] 2008, pet. denied). Here, Pruneda offered the affidavit testimony of his attorney to support his attorney's fees request.
Pruneda's counsel represented him in both the TWC proceeding and in the trial court. Urban Living asserts that counsel failed to segregate the time he spent pursuing Pruneda's TWC claim from his common law claims on which the trial court awarded attorney's fees. The record supports Urban Living's assertion.
The record contains several filings prepared in the trial court that pertain to Pruneda's claim for judicial review of the TWC claim. The record shows that counsel prepared Pruneda's original petition, which included a claim for judicial review of the TWC claim. Pruneda's counsel also prepared Pruneda's seven page "Motion for Leave to Re-Open Texas Workforce Commissions Hearing to Present Additional Evidence." After the trial court vacated the TWC decision, counsel prepared and filed Pruneda's notice of nonsuit informing the trial court that he was dismissing his claim against TWC.
Counsel's affidavit offered to support attorney's fees does not segregate the time that counsel spent preparing the filings relating to Pruneda's appeal of the TWC decision from the time that counsel spent advancing the common law claims on which Pruneda recovered attorney's fees. Counsel averred that his firm had charged Pruneda reasonable fees for his legal services that were necessary to representing Pruneda "in this case." Counsel states, inter alia, that "[t]his case involved adjudication of an administrative law appeal under the substantial evidence rule. . . ."
It is undisputed that Pruneda did not recover, nor could he recover, attorney's fees with respect to his claim seeking judicial review of the TWC decision. See Abatement Inc. v. Williams, No. 14-09-00523-CV, 2010 WL 3917308, at *5 (Tex. App.-Houston [14th] Oct. 7, 2010, no pet. h.) (recognizing that, while they are recoverable for breach of contract claim, attorney's fees are not recoverable for Payday Law claims).
Urban Living cites Tony Gullo Motors as controlling authority on the issue of segregation of attorney's fees. 212 S.W.3d at 313-14. In that case, Chapa, the plaintiff, asserted claims for breach of contract, violations of the Deceptive Trade Practices Act, and fraud. Id. at 303. The jury awarded Chapa $20,000 in attorney's fees. It was not clear on which claims the attorney's fees had been awarded. See id. Tony Gullo Motors objected on the ground that attorney's fees were unrecoverable on Chapa's fraud claim. Id. at 310.
The court expressed concern that it needed to address an exception it had previously recognized to the long-standing rule that fee claimants are always required to segregate fees between claims for which fees are recoverable and claims for which they are not. Id. at 311. The exception of concern had been created by the court in Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1, 10 (Tex. 1991). There, the court had recognized that, when attorney's fees rendered are "in connection with claims arising out of the same transaction and are so interrelated that their prosecution or defense entails proof or denial of essentially the same facts," the fees need not be segregated. Id. at 11. The Sterling court had concluded, "Therefore, when the causes of action involved in the suit are dependent upon the same set of facts or circumstances and thus are intertwined to the point of being inseparable, the party suing for attorney's fees may recover the entire amount covering all claims." Id.
In Tony Gullo Motors, the court warned that the Sterling exception "threatened to swallow" the rule. See 212 S.W.3d at 311. The court explained that the exception had been difficult for courts to consistently apply and had flooded courts with claims for otherwise unrecoverable fees. Id. at 312. The supreme court concluded that to the extent it had suggested in Sterling "that a common set of underlying facts necessarily made all claims arising therefrom `inseparable' and all legal fees recoverable, it went too far." Id. at 313.
Ultimately, the Tony Gullo Motors court modified Sterling and "reaffirm[ed] the rule that if any attorney's fees relate solely to a claim for which such fees are unrecoverable, a claimant must segregate recoverable from unrecoverable fees." Id. The court clarified, "Intertwined facts do not make [unrecoverable] fees recoverable; it is only when discrete legal services advance both a recoverable and unrecoverable claim that they are so intertwined that they need not be segregated." See id. at 313-14. This is the rule that we apply today.
Here, the following legal services reflected in the record did not advance Pruneda's common law claims on which he was entitled to recover attorney's fees: drafting the portion of the original petition seeking judicial review of the TWC decision and preparing the motion to re-open the TWC proceedings for the taking of additional evidence. Instead, these legal services advanced Pruneda's appeal of the TWC decision.
Pruneda did not carry his burden to show that segregation was not required. Nor does counsel's affidavit reflect that he discounted the services related to the TWC appeal when he calculated the amount of attorney's fees owed to Pruneda. Counsel's affidavit also does not reflect the amount or percentage of his time that he spent on the TWC appeal versus the amount of time he spent advancing the claims on which Pruneda was entitled to recover his attorney's fees. See id. ("Chapa's attorneys did not have to keep separate time records when they drafted the fraud, contract, or DTPA paragraphs of her petition; an opinion would have sufficed stating that, for example, 95 percent of their drafting time would have been necessary even if there had been no fraud claim."); cf. Med. Specialist Group, P.A. v. Radiology Assocs., L.L.P., 171 S.W.3d 727, 738 (Tex. App.-Corpus Christi 2005, pet. denied) ("In his affidavit, Radiology Associates' counsel . . . testified that his fees for the defense of the case totaled $460,087.00, and approximately forty percent of these fees were directly related to Saratoga's antitrust claims.").
We conclude that, because he did not segregate the fees, Pruneda did not conclusively establish the attorney's fees awarded by the trial court.
We sustain appellants' sixth issue.
To summarize, we hold that, based on the record presented, (1) summary judgment was properly granted in favor of Pruneda against Urban Living on Pruneda's breach of contract claim; (2) summary judgment was not properly granted against Urban Living on Pruneda's money had and received claim; and (3) summary judgment was not properly granted against Silaski on either of Pruneda's claims. We further hold that the trial court erred by awarding Pruneda attorney's fees on the record presented.
We affirm the portion of the trial court's judgment awarding Pruneda $29,274 in damages against Urban Living for breach of contact. We reverse the remainder of the trial court's judgment and remand the case to the trial court for further proceedings.