St. Mina Auto Sales, Inc. and Victor S. Elgohary v. Najwa Al-Muasher, D/B/A American Auto Sales, D/B/A American Auto Sales 1.1

Opinion issued October 6, 2015

In The

Court of Appeals

For The

First District of Texas

————————————

NO. 01-14-00599-CV

———————————

ST. MINA AUTO SALES, INC. AND

VICTOR S. ELGOHARY, Appellants

V.

NAJWA AL-MUASHER D/B/A AMERICAN AUTO

SALES AND D/B/A AMERICAN AUTO SALES 1.1, Appellee

On Appeal from the 80th District Court

Harris County, Texas

Trial Court Case No. 2013-12024

OPINION

In a dispute between two used car dealers, we determine whether (1) the trial

court properly modified its dismissal order to reflect the parties’ settlement

agreement, (2) our court has appellate jurisdiction over an attorney’s challenge to

the trial court’s monetary sanction assessed against him, individually, and should

permit the attorney’s amended notice of appeal, and (3) the trial court acted within

its discretion in assessing the sanction. We conclude that the trial court properly

modified its dismissal order. We further conclude that we have appellate

jurisdiction over the attorney’s challenge to the trial court’s sanctions order, but we

reject his challenge on the merits. We therefore affirm.

Background

St. Mina Auto Sales, Inc. (“Mina”) purchased a 1996 Cadillac Deville from

Najwa Al-Muasher d/b/a American Auto Sales and d/b/a American Auto Sales 1.1

(“AAS”). Mina later sued AAS for breach of contract and misrepresentation,

alleging that the Cadillac was not roadworthy and that AAS improperly had

refused to tender the car’s title to Mina. Mina claimed about $4,000 in repair

expenses as damages and sought a declaration of title. AAS counterclaimed

against Mina for breach of contract and conspiracy, alleging that Mina had paid

only $2,150 of the agreed $4,200 purchase price for the car and had conspired with

Cinco Car Care, Inc. to assert a fraudulent mechanic’s lien against the car’s title.

AAS also sued Cinco in a third-party petition, but it never served Cinco with the

lawsuit. Victor S. Elgohary represented Mina in the case.

Mina and AAS then settled their dispute. In connection with their agreement

to settle, Mina and AAS prepared and signed an “Agreed Joint Motion to Dismiss”

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and a proposed “Order Granting Agreed Motion to Dismiss,” to be filed with the

trial court. The agreed motion recited that Mina and AAS had resolved all matters

in controversy between them and that all of the claims and causes of action against

each other should be dismissed with prejudice. The agreed proposed order granted

the motion and dismissed all claims by and between Mina and AAS with prejudice.

Neither the agreed motion nor the proposed order addressed AAS’s claims against

Cinco.

After executing the settlement agreement, AAS nonsuited its claims against

Cinco without prejudice. See TEX. R. CIV. P. 162. The trial court signed an order

nonsuiting AAS’s claims against Cinco without prejudice.

Mina’s counsel, Elgohary, then filed an “Agreed Joint Motion to Dismiss,”

and a proposed order with the trial court. But Elgohary’s motion and order were

different from the motion and proposed order that AAS had approved in

connection with the settlement. Notably, Elgohary had added language that AAS

also had agreed to dismiss its claims against Cinco “with prejudice.” Under the

impression that the parties had approved the proposed dismissal order, the trial

court signed it.

AAS then discovered the discrepancy between the terms of the signed order

and those of the agreed-to proposed order. After efforts to resolve the issue failed,

it moved to set aside the trial court’s dismissal order, asserting that Elgohary had

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intentionally altered the terms of the agreed joint motion to dismiss and order after

AAS had approved them. AAS pointed out that none of the settlement-related

documents and filings to which AAS had agreed mentioned Cinco or AAS’s

claims against Cinco. AAS moved for sanctions against Elgohary for filing the

altered documents with the court.

In a hearing on AAS’s motion, Elgohary admitted that he had altered the

agreed joint motion and proposed order to include Cinco’s dismissal with

prejudice. After the hearing, the trial court modified its dismissal order to delete

the reference to Cinco. The court further ordered Elgohary to pay $450 to AAS

within 30 days as a sanction. Mina moved for a new trial, which the trial court

denied.

Discussion

I. Modification of the Judgment

On appeal, Mina contends that the trial court erred in denying its motion for

new trial, contending that the trial court erred in modifying its dismissal order to

remove Cinco. We review the trial court’s denial of a motion for new trial for an

abuse of discretion. Jackson v. Van Winkle, 660 S.W.2d 807, 809 (Tex. 1983);

Xenos Yuen v. Fisher, 227 S.W.3d 193, 204 (Tex. App.—Houston [1st Dist.] 2007,

no pet.). An abuse of discretion occurs when the trial court acts without reference

to any guiding rules or principles, that is, when its action is arbitrary or

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unreasonable. Cire v. Cummings, 134 S.W.3d 835, 838–39 (Tex. 2004) (upholding

trial court’s sanctions order). 1

During its plenary power, a trial court can vacate, modify, correct or reform

its judgment. TEX. R. CIV. P. 329b(d); Transam. Leas. Co. v. Three Bears, Inc.,

567 S.W.2d 799, 800 (Tex. 1978); Bryan v. Resolution Trust Corp., 823 S.W.2d

433, 434 (Tex. App.—Houston [1st Dist.] 1992, writ dism’d w.o.j.). Mina

contends that the original dismissal fully incorporated the terms of the parties’

settlement with each other, and thus AAS lacks a basis for challenging it. Mina

fails to acknowledge, however, that the original dismissal included—without

AAS’s knowledge or approval—an additional term to which AAS had not agreed:

the dismissal with prejudice of AAS’s claims against Cinco.

Based on the evidence adduced in the hearing on AAA’s motion to set aside

the dismissal order, and Elgohary’s admission that he altered the parties’ approved

motion and proposed order before he filed them with the court, the trial court

correctly modified its dismissal order to accurately reflect the parties’ agreement.

See Bryan, 823 S.W.2d at 434–35 (court authorized to enter modified judgment to

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AAS’s brief designates some of its responsive contentions as “cross points,” but it

does not seek relief that would alter the trial court’s judgment. See TEX. R. APP. P.

25.1(c); cf. City of Houston v. Boyle, 148 S.W.3d 171, 175 n.5 (Tex. App.—

Houston [1st Dist.] 2004, no pet.) (declining to address “cross-points” in

appellee’s brief by which he sought to alter the trial court’s rulings because

appellee did not file notice of appeal). We review these issues as responsive

arguments in support of the judgment under review.

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correctly reflect approved final judgment of parties); see also Lawrence v. Kohl,

853 S.W.2d 697, 701 (Tex. App.—Houston [1st Dist.] 1993, no writ) (unpublished

part of opinion available on Westlaw) (“[T]he court has no power to supply terms,

provisions, or essential details not previously agreed to by the parties.” (citing

Dodson v. Seymour, 664 S.W.2d 158, 161 (Tex. App.—San Antonio 1983, no

writ)). Further, AAS had nonsuited its claims against Cinco without effecting

service. Cinco had never appeared and, after the nonsuit, Cinco was not even

nominally a party to the suit. See TEX. R. CIV. P. 124; CHCA Woman’s Hosp., L.P.

v. Lidji, 369 S.W.3d 488, 492 (Tex. App.—Houston [1st Dist.] 2012) (“A

voluntary nonsuit ‘extinguishes a case or controversy from the moment the motion

for nonsuit is filed . . . .’”), aff’d, 403 S.W.3d 228 (Tex. 2013); In re Green Oaks

Hosp. Subsidiary, L.P., 297 S.W.3d 452, 456 (Tex. App.—Dallas 2009, orig.

proceeding) (holding that trial court had no jurisdiction to render judgment against

party who “was not served with process, was not represented by counsel and did

not otherwise appear”). Accordingly, we hold that the trial court acted within its

discretion in denying Mina’s motion for new trial.

II. Appellate Jurisdiction and the Sanction Award

Elgohary challenges the $450 monetary sanction that the trial court assessed

against him, individually. He contends that (1) the evidence does not support a

finding of bad faith or conscious wrongdoing; (2) AAS did not incur any attorney’s

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fees due to his misconduct; and (3) the trial court’s failure to issue findings of fact

to support the imposition of sanctions requires reversal of the award. We initially

determine whether we have jurisdiction to decide Elgohary’s individual appeal;

concluding that we do, we in turn address the merit of his challenges to the

sanction that the trial court imposed against him.

A. Elgohary’s Notice of Appeal

Mina timely filed a notice of its appeal, naming Mina as the only appellant,

on July 18, 2014. Elgohary amended Mina’s notice of appeal and filed a docketing

statement on October 6, 2014, before the appellant’s brief was due. See TEX. R.

APP. P. 25.1(g) (“[a]n amended notice of appeal correcting a defect or omission in

an earlier filed notice may be filed in the appellate court”). The amended notice of

appeal named Elgohary individually as an additional appellant. The initial notice

of appeal conferred appellate jurisdiction over all of the parties to the trial court’s

order, including Elgohary, who was named in it. See TEX. R. APP. P. 25.1(b) (“The

filing of a notice of appeal by any party invokes the appellate court’s jurisdiction

over all parties to the trial court’s judgment or order appealed from.”).

Accordingly, we have jurisdiction over his appeal, and may, within our

discretion, hear it. See id. (“Any party’s failure to take any other step required by

these rules, including the failure of another party to perfect an appeal . . . does not

deprive the appellate court of jurisdiction but is ground only for the appellate court

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to act appropriately, including dismissing the appeal.”). Rule 25.1 vests the

appellate court with the discretion to consider an amended notice of appeal in a

case in which any notice of appeal has already been filed. An amended notice,

however, “is subject to being struck for cause on the motion of any party affected

by the amended notice.” See TEX. R. APP. P. 25.1(g). While not a matter of right,

the rule eliminates any jurisdictional bar to the consideration of a late-filed notice

in a case in which one party has appealed the trial court’s order.

In this case, Elgohary’s later-filed amended notice of appeal—filed within

six weeks of filing the original notice and two months before the original deadline

for filing the appellant’s brief—apprised our court and the parties of Elgohary’s

intent to challenge the sanctions assessed solely against him. AAS did not move to

strike Elgohary’s amended notice, nor did it otherwise claim unfair surprise. The

appellate rules, their underlying policy, and the circumstances surrounding the

notice of appeal’s amendment in this case favor reviewing Elgohary’s appeal on its

merits. See Perry v. Cohen, 272 S.W.3d 585, 587 (Tex. 2008) (per curiam)

(“[A]ppellate courts should reach the merits of an appeal whenever reasonably

possible.”); cf. Braden v. Downey, 811 S.W.2d 922, 928 & n.6 (Tex. 1991)

(addressing merits of mandamus petition seeking relief from sanctions imposed on

both party and his attorney because no jurisdictional bar prevented attorney from

being added as relator to mandamus proceeding).

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Warwick Towers Council of Co-Owners v. St. Paul Fire Insurance Co., 244

S.W.3d 838 (Tex. 2008), further supports our application of Rule 25.1 to reach the

merits of Elgohary’s appeal. There, the Supreme Court allowed an amended notice

naming the insurance company where the initial notice of appeal had named only

the insured. In the trial court in that case, the insured hotel sought dismissal of St.

Paul’s subrogation claim, contending that a contractual waiver provision applied to

it. Id. at 839. After the hotel prevailed, it settled the claims brought by the

condominium association against it. See id. The Court observed that St. Paul had

named its insured as the appellant in its notice of appeal but had properly identified

itself as the appellant in the docketing statement. See id. On that showing, the

Court held that St. Paul had “made a bona fide attempt to appeal” and that the court

of appeals “erred in not allowing St. Paul to amend and in not reaching the merits

of St. Paul’s appeal.” Id. at 840.

The dissent relies on Bahar v. Baumann, No. 03-09-00691-CV, 2011 WL

4424294 (Tex. App.—Austin 2011, pet. denied), to argue that we should reject

Elgohary’s amended notice of appeal. In Bahar, the Austin Court of Appeals

declined to grant leave to appeal to an attorney who, like Elgohary in this case,

sought to amend the notice of appeal filed on behalf of the client to include his

own sanction appeal. The Austin Court of Appeals’ reasoning in Bahar, however,

is flawed because it applied a derivative standing analysis to determine its

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appellate jurisdiction, relying on a Supreme Court decision that predated the 1997

amendments to the appellate rules. See 2011 WL 4424294, at *2 (citing Tex. Ass’n

of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 444–45 (Tex. 1993)). When

Texas Association of Business was decided, however, the Texas Rules of Appellate

Procedure were silent on whether the filing of a timely notice of appeal conferred

appellate jurisdiction over all of the parties to the trial court’s judgment or order.

Now, the appellate rules provide that the filing of a notice of appeal “by any party”

invokes appellate jurisdiction “over all parties to the trial court’s judgment or

order.” See TEX. R. APP. P. 25.1(b). Rule 25.1(b) clarifies that, as long as any

party has timely filed a notice of appeal, an appellate court has jurisdiction over

any party aggrieved by the trial court’s judgment. See id. Because an appellate

court gains jurisdiction over all parties to the trial court’s judgment once a timely

notice of appeal has been filed, the court of appeals’ reliance in Bahar on standing

principles to analyze appellate jurisdiction was misplaced.

The Bahar court also erred in distinguishing Warwick Towers “because [the

insurer’s] interests were not merely ‘aligned’ with the Council’s, but rather the

interests of the two entities were legally united and joined” as subrogee and

subrogor. 2011 WL 4424294, at *3. Bahar correctly observed that subrogee and

subrogor generally share identical interests. In Warwick Towers, however, St. Paul

sought to amend the notice of appeal to contest the lower court’s rejection of its

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subrogation claim: for purposes of the appeal, its interests were different from its

insured. See 244 S.W.3d at 839. Because Bahar places undue emphasis on

standing based on pre-1997 authority and unduly narrows the holding in Warwick

Towers, we decline to follow Bahar here.

The circumstances in Crofton v. Amoco Chemical Co., No. 01-01-00526-

CV, 2003 WL 21297588 (Tex. App.—Houston [1st Dist.] May 30, 2003, pet.

denied), are also different from those presented here. In Crofton, the appellants

attempted to amend their notice of appeal a second time—four months after filing

the original notice—to add a plaintiff whose name was missing from the appellate

caption. Id. at *3. The appellees responded with a motion to strike that notice,

invoking Texas Rule of Appellate Procedure 25.1(g), which allows the appellate

court to strike an amended notice “for cause on the motion of any party affected by

the amended notice.” Id.; TEX. R. APP. P. 25.1(g). Id. The appellants in Crofton

did not respond to the motion. See id. The decision to strike the amendment in

Crofton, at the request of the appellees’ unopposed motion to strike was within this

court’s discretion for good cause shown, as the rule contemplates. See id.

The plain text of Rule 25.1(b) is purposeful in its language: when any party

timely appeals, we have jurisdiction over all parties to the judgment. Rule 25.1(g)

states that an amended notice of appeal “may be filed in the appellate court.” This

rule is in the passive, and not limited to an amended notice of appeal filed by the

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original appellant. We address latecomers to the appellate fray as a matter of

procedure, balancing the relative equities and weighing the circumstances of the

individual case. Rule 25.1 keeps the appellate courts out of the jurisdictional

swamp with a bright line rule.

But even were we to wade into it, the factors present here demonstrate that

Elgohary made a bona fide attempt to invoke appellate court jurisdiction. The

original notice of appeal filed by Elgohary on behalf of his client specifically refers

to the order granting AAS’s motion for sanctions against Elgohary. The docketing

statement recites that the disposition in the trial court included $450 in attorney’s

fees, the amount of the sanction assessed solely against Elgohary. Elgohary

amended the notice of appeal and docketing statement to identify himself as an

additional appellant within six weeks of filing the original notice and nearly two

months before the original date on which the appellants’ briefs were due. AAS did

not move to strike the amended notice. Under these circumstances, we consider

the merits of Elgohary’s sanctions appeal. See Perry, 272 S.W.3d at 587

(“[A]ppellate courts should reach the merits of an appeal whenever reasonably

possible.”); cf. Braden, 811 S.W.2d at 928 & n.6 (addressing merits of mandamus

petition seeking relief from sanctions imposed on both party and his attorney

because no jurisdictional bar prevented attorney from being added as relator to

mandamus proceeding; court expressed no opinion on whether attorney must

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perfect separate appeal apart from that perfected by client to procure review of

sanctions on appeal).

The policy animating the appellate rules disfavors disposing of appeals

based upon harmless procedural defects. We construe the rules reasonably, yet

liberally, so that the right to appeal is not lost by imposing requirements not

absolutely necessary to achieve the purpose of a rule. Verburgt v. Dorner, 959

S.W.2d 615, 616–17 (Tex. 1997); see Maxfield v. Terry, 888 S.W.2d 809, 811

(Tex. 1994) (holding that the rules should be interpreted liberally to give appellate

courts the opportunity to reach the merits of an appeal whenever possible). We

“should not dismiss an appeal for a procedural defect whenever any arguable

interpretation of the Rules of Appellate Procedure would preserve the appeal.”

Verburgt, 959 S.W.2d at 616; see also Nathan E. Hecht & E. Lee Parsley,

Procedural Reform: Whence and Whither, Matthew Bender CLE, PRACTICING

LAW UNDER THE NEW RULES OF APPELLATE PROCEDURE 1–12 at § 1.02(b) & (c)

(Nov. 1997) (explaining that most recent revision to rules was “intended to make

appellate practice more user-friendly, refocus appellate practice on the merits

rather than technicalities, and reduce cost and delay”), quoted in Steven K. Hayes,

Could You Be A Little More Specific?, 66 THE ADVOC. (TEX.) 196, 227 (2014).

Accordingly, we turn to the merits of Elgohary’s appeal.

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B. The Sanction

Elgohary contends that the trial court had no evidence upon which it could

base the sanction award assessed against him and that it failed to issue findings of

fact in connection with its order.

Standard of review

We review a trial court’s decision to impose sanctions for an abuse of

discretion. Low v. Henry, 221 S.W.3d 609, 614 (Tex. 2007). A trial court abuses

its discretion if it acts in an arbitrary or unreasonable manner “without reference to

guiding rules and principles.” See Garcia v. Martinez, 988 S.W.2d 219, 222 (Tex.

1999). When reviewing matters committed to the trial court’s discretion, we may

not substitute our own judgment for that of the trial court. Bowie Mem’l Hosp. v.

Wright, 79 S.W.3d 48, 52 (Tex. 2002). A trial court does not abuse its discretion

merely because it decides a discretionary matter differently than an appellate court

would in a similar circumstance. Gray v. CHCA Bayshore L.P., 189 S.W.3d 855,

858 (Tex. App.—Houston [1st Dist.] 2006, no pet.).

Analysis

The parties agree that the trial court had the inherent power to assess

sanctions upon a finding that Elgohary committed bad-faith abuse of the judicial

process. See, e.g., In re Tex. Dep’t of Family & Protective Servs., 415 S.W.3d 522,

529 (Tex. App.—Houston [1st Dist.] 2013, orig. proceeding) (“A trial court has

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inherent power to sanction bad faith conduct during the course of litigation that

interferes with the administration of justice or the preservation of the court’s

dignity and integrity.”); Ezeoke v. Tracy, 349 S.W.3d 679, 685 (Tex. App.—

Houston [14th Dist.] 2011, no pet.) (“Trial courts have inherent power to impose

sanctions for bad faith abuse of the judicial process even when the targeted conduct

is not expressly covered by a rule or statute.” (citing Eichelberger v. Eichelberger,

582 S.W.2d 395, 398–99 (Tex. 1999)).

AAS’s motion for sanctions asserted that Elgohary, without AAS’s

knowledge or consent, altered the proposed order granting the agreed motion to

dismiss to make it falsely appear to the trial court that AAS had agreed to dismiss

Cinco from the lawsuit with prejudice. This representation contradicted counsels’

discussions about the content of the proposed order. Elgohary admitted in open

court that he altered the documents without AAS’s knowledge or consent and, by

attaching AAS’s signature page from the authentic agreed motion, had represented

to the trial court that AAS had approved and reviewed the documents. When AAS

discovered the discrepancies in the documents, it notified Elgohary and gave him

an opportunity to correct the matter, but Elgohary did not respond until after AAS

moved to modify the dismissal and request sanctions.

Elgohary complains that the trial court failed to make specific findings to

support its imposition of sanctions. When a trial court imposes sanctions under its

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inherent power, it should make specific findings to support its conclusion that the

conduct complained of significantly interfered with its legitimate exercise of its

core functions; the absence of findings, however, does not automatically require

reversal. See Harmouch v. Rassner, No. 01-10-00367-CV, 2011 WL 1435008, at

*2 (Tex. App.—Houston [1st Dist.] Apr. 14, 2011, no pet.) (acknowledging lack of

express findings to support sanctions, but reviewing entire record before

determining that trial court erred based on lack of evidence plaintiff acted

dishonestly or maliciously to interfere with trial setting) (citing Houtex Ready Mix

Concrete & Materials v. Eagle Constr. & Envt’l Servs, L.P., 226 S.W.3d 514, 524

(Tex. App.—Houston [1st Dist.] 2006, no pet.)).

Here, the entire record reveals with certainty the basis for the sanction

against Elgohary. To show bad faith requires evidence of conscious wrongdoing

for a dishonest, discriminatory, or malicious purpose. Mattly v. Spiegel, Inc., 19

S.W.3d 890, 896 (Tex. App.—Houston [14th Dist.] 2000, no pet.). Elgohary’s

admission establishes that he consciously misrepresented the terms of the parties’

agreement in the proposed order he submitted to the court in an attempt to enlarge

the scope of the opponent’s concessions. We have upheld inherent-power

sanctions under similar circumstances. See Lawrence, 853 S.W.2d at 700

(upholding imposition of sanctions under court’s inherent power where counsel

admitted that he had submitted and procured, under unexplained circumstances,

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judge’s signature on form order awarding him sanctions from opposing party and

his attorney without notice or hearing on sanctions motion, and, once error was

discovered, counsel failed to come forward to request order be set aside until, at

bench conference held over a month after erroneous order was signed, counsel

agreed that error had been made); see also Houtex, 226 S.W.3d at 524 (upholding

imposition of sanctions under inherent power where attorney failed to notify

opposing counsel he would be absent from hearing even though attorney knew

days in advance he would be unavailable, and, as result, opposing counsel

needlessly made 720-mile round trip to attend hearing). Elgohary was apprised of

the complained-of conduct in AAS’s motion for sanctions, upon which the trial

court heard evidence. Because the specific basis for the sanction is evident from

the record, we hold that the trial court’s failure to include a description of the

conduct in its order is harmless error. See TEX. R. APP. P. 44.1.

Finally, Elgohary asserts that the $450 amount is not supported by evidence

of opposing counsel’s attorney’s fees. The record belies this assertion. At the

hearing on the motion for modification and sanctions, the trial court inquired into

opposing counsel’s fees. Opposing counsel stated that he spent approximately two

and a half hours on preparing and filing the motion and in attending the hearing,

and he informed the court that his hourly fee rate was $225. The modest

assessment of sanctions in the form of $450 in attorney’s fees is reasonably related

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to the extra measures that AAS was required to undertake in alerting the court to

Elgohary’s misconduct and having the misstatement corrected. We hold that the

trial court acted within its discretion in imposing the $450 in sanctions on

Elgohary.

Frivolous Appeal

In its brief, AAS contends that Mina’s appeal is frivolous and asks this Court

$5,000.00 as a sanction. See TEX. R. APP. P. 45 (damages for frivolous appeals in

civil cases). After considering the record, briefs, and other papers filed, we may

award a prevailing party “just damages” if we objectively determine that an appeal

is frivolous. Id.; Smith v. Brown, 51 S.W.3d 376, 381 (Tex. App.—Houston [1st

Dist.] 2001, pet. denied). An appeal is frivolous when the record, viewed from the

perspective of the advocate, does not provide reasonable grounds for the advocate

to believe that the case could be reversed. Smith, 51 S.W.3d at 381. The decision

to grant appellate sanctions is a matter of discretion that an appellate court

exercises with prudence and caution. Id. After a review of the record and briefing,

we decline to award appellate sanctions.

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III. Conclusion

We affirm the judgment of the trial court. We deny AAS’s request for

sanctions.

Jane Bland

Justice

Panel consists of Justices Jennings, Bland, and Brown.

Justice Jennings, concurring in part and dissenting in part.

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