Opinion

Opinion issued December 29, 2011

In The

Court of

Appeals

For The

First District

of Texas

————————————

NO. 01-08-00969-CV

———————————

Pitts & Collard, L.L.P. and Gary Pitts , Appellants

V.

Arthur L.

Schechter, Arthur L. Schechter, P.C. d/b/a Schechter & Associates,

Schechter & Marshall, L.L.P., and Schechter, McElwee & Shaffer, L.L.P. , Appellees

and

Arthur L. Schechter, Arthur L. Schechter, P.C. d/b/a Schechter &

Associates, Schechter & Marshall, L.L.P., and Schechter, McElwee &

Shaffer, L.L.P. , Appellants

V.

Pitts &

Collard, L.L.P. and Gary Pitts , Appellees

On Appeal from the 157th District

Court

Harris County, Texas

Trial

Court Case No. 2005-59482

OPINION ON REHEARING *

Gary Pitts

and Pitts & Collard, LLP sued Arthur L. Schechter, Arthur L. Schechter,

P.C. d/b/a Schechter & Associates, Schechter & Marshall, L.L.P., and

Schechter, McElwee & Shaffer, L.L.P. for breach of contract. The contract claim was based upon an

allegation that the Schechter parties failed to pay referral fees from nearly a

thousand lawsuits that Pitts referred by way of nine letter agreements. [1] Pitts also sued the Schechter parties for

breach of a subsequent 1995 agreement, which also pertained to fees and

expenses from certain referred cases.

Schechter raised several

affirmative defenses, countersued for breach of contract based on the nine

letter agreements, and sued for defamation and abuse of process. He alleged that as retribution for the

dispute over referral fees, Pitts made slanderous statements to the Houston

City Council before approval of his nomination to serve as the Chairman of the

Metropolitan Transit Authority of Harris County. Schechter also alleged that Pitts slandered

him to professional colleagues, interfered with his client relationships by

sending letters informing the clients they were being charged interest on their

litigation expenses and informing them how to file a grievance, and abused the

litigation process by failing to file certain exhibits under seal as the trial

court had ordered. Both parties raised various

affirmative defenses, and the case was tried to a jury.

After considering the jury’s

verdict, numerous post-trial motions, and the applicable law as provided by the

parties, the trial court entered judgment as follows:

·

take-nothing judgment against Pitts on the breach-of-contract claim

pertaining to the nine letter agreements, based on the jury’s answers to

questions about Pitts’s prior breach, prior repudiation, and the commercial

impracticability of the agreements;

·

judgment for the Schechter parties, including attorney’s fees, on their

breach-of-contract claim pertaining to the letter agreements;

·

judgment for Pitts on the breach-of-contract claim pertaining to the 1995

contract;

·

take-nothing judgment against Schechter on his claims pertaining to Pitts’s

communication with the clients;

·

judgment for Schechter for compensatory and punitive damages on the

abuse-of-process claim;

·

judgment for Schechter for compensatory and punitive damages on the

defamation claim that alleged Pitts slandered him to his colleagues; and

·

judgment not withstanding the verdict in favor of Pitts on Schechter’s

defamation claim relating to statements made before the Houston City Council because

these claims were barred by limitations.

Both Pitts and Schechter filed notices of appeal addressing

both the contract and tort parts of the underlying case. We affirm the trial court’s judgment

pertaining to the contract claims and the non-economic and exemplary damages

awarded under Schechter’s professional colleague defamation cause of action. We reverse and render judgment that Schechter

take nothing by way of economic damages for his professional colleague

defamation cause of action, and we reverse and render a take-nothing judgment

on Schechter’s abuse of process cause of action.

I.

Background

In the early

1990s, attorney Gary Pitts and his law partner, Ed Collard, advertised about

the product liabilities associated with silicone breast implants. As a result of their advertising campaign,

over a thousand women retained Pitts & Collard to pursue possible

claims. The major manufacturers of

silicone breast implants announced a global settlement in September 1993, after

negotiations with a plaintiffs’ steering committee in a federal lawsuit filed

in Alabama. Any woman with silicone

breast implants could opt into this settlement.

One feature of this settlement was that an opt-in claimant’s attorney’s

contingency fee would be reduced to 25%.

The settlement was approved by the federal district court in early 1994.

From late 1993 through 1994, in a

series of nine letter agreements, Pitts & Collard referred approximately 1,000

clients to the law firm of attorney

Arthur L. Schechter . Each such agreement

referred to the lawyers’ prior agreements and course of dealing, which included

a 60/40 split of attorney’s fees on a fees-recovered basis, with the larger

amount going to Schechter’s firm and the balance to Pitts & Collard. After the second such letter agreement was

signed, the lawyers jointly sent a letter to their clients stating that they

would share the work and share the fee received from their cases. The client letter indicated that Richard Melancon,

an attorney associated at that time with Schechter, would have day-to-day

responsibility for their cases.

Initially, the

lawyers thought this would be a lucrative arrangement because of the global

settlement. But in the summer of 1995, one

of the largest manufacturers of silicone breast implants, Dow Corning, sought

bankruptcy protection. The global

settlement was revised to apply only to claims against the other major implant manufacturers. The lawyers continued to advocate actively

for the clients in cases that did not involve Dow Corning.

A dispute

arose in 1995, and Pitts sued Schechter, alleging that the cases were being

mismanaged. That lawsuit settled after

mediation. As part of the settlement,

the parties referred almost 400 of the breast-implant cases to attorney Richard

Laminack. However, Laminack refused to

take any cases against Dow Corning.

Schechter

argues that Pitts stopped working on the cases in 1996, although Schechter

continued to represent the clients and pay Pitts referral fees until late

1997. The revised global settlement

ended in 1999. At that time, only the

Dow Corning cases remained from the cases referred by Pitts to Schechter. But the Dow Corning bankruptcy court had

dramatically reduced the fees recoverable by claimants’ attorneys, and in some types

of cases, the federal court had disallowed attorney’s fees entirely. This resulted in a financial loss to the

attorneys, particularly Schechter, who had fronted expenses in the cases. In 2001, Pitts sought arbitration under the

1995 settlement agreement, alleging that Schechter was not properly sharing

fees. In March 2002, the parties

arbitrated the dispute, which was resolved in Schechter’s favor.

Meanwhile, by

April 2002, Schechter had been appointed to the board of directors of the Metropolitan Transit Authority of Harris

County, and he was under consideration to become the chairman. On April 2, 2002, approximately two weeks

after the arbitration, Pitts spoke at a public meeting of the Houston City

Council, insinuating that Schechter was difficult, dishonest, and unethical in

the conduct of his business and political affairs. These comments were recorded and broadcast

through local-access cable television.

Pitts implored the city council to investigate Schechter and to begin by

speaking to his former colleagues and law partners. Pitts also spoke to some of Schechter’s

former associates and partners about his appointment to the METRO board and the

consideration of him for its chairmanship.

He told Melancon and other former colleagues of Schechter that someone

from city council might contact them to discuss their private opinions about

Schechter.

Pitts became

aware in 2004 that Schechter had begun charging the clients interest on the

expenses paid on the contingent-fee cases.

Pitts informed the clients that this practice was not part of their

contingent-fee arrangement. He also told

them how to file a grievance with the State Bar. Subsequently, Schechter stopped charging the

clients interest.

Pitts sued

Schechter in 2005 for breach of contract and other claims, alleging that

Schechter owed him attorney’s fees from the nine letter agreements. Pitts generally contended that he was

entitled to share in the attorney’s fees recovered, and that Schechter was not

entitled to an offset for losses in those cases resulting only in a loss. Schechter took the opposite position, arguing

that the losses in some cases should be offset against the attorney’s fees

collected in other cases. Schechter also

countersued for breach of contract, alleging that Pitts did not share the

litigation work and that Schechter had to hire other people to do the

work. Finally, Schechter sued for

defamation related to the comments that Pitts made before city council in 2002

and repeated to Schechter’s professional colleagues. During the course of litigation, Pitts repeatedly

filed a recording of the statements he made before city council, but he did not

file them under seal as required by a protective order entered by the trial

court at the agreement and request of the parties. As a result, Schechter added a claim for

abuse of process.

II.

Claims arising from joint representation

Both parties appeal from various

aspects of the judgment relating to disputes over their joint representation of

the breast-implant clients. Pitts

challenges the judgment against him for breach of contract. Schechter challenges the rejection of some of

his contract claims on limitations grounds as well as the rejection of his

claim that the parties had a joint venture which gave rise to a duty of good

faith and fair dealing that was allegedly breached by Pitts. Both parties raise issues relating to attorney’s

fees.

A.

Pitts’s

appeal concerning the nine letter agreements

The jury found that Pitts was first

to breach the nine letter agreements and that Schechter’s breach was excused by

Pitts’s repudiation and by commercial impracticability. The trial court entered judgment on the

jury’s verdict in Schechter’s favor. Pitts

raises numerous appellate issues pertaining to his contract claim, arguing that

the trial court erred in failing to render judgment in his favor. He disputes the legal and factual sufficiency

of the evidence supporting three affirmative defenses asserted by Schechter:

prior breach, prior repudiation, and commercial impracticability. He also asserts that the trial court should

not have set aside the jury’s finding that Schechter failed to pay fees because

Schechter elected to continue the contract and thereby waived his opportunity

to have his obligations discharged.

1.

Prior

breach by Pitts

Pitts argues that there was no

evidence, or legally and factually insufficient evidence, to support the jury’s

verdict that he was first to breach the nine letter agreements by not sharing

the litigation work. In a legal sufficiency, or “no-evidence” review, [2] we determine whether the

evidence would enable reasonable and fair-minded people to reach the verdict

under review. City of Keller v. Wilson , 168 S.W.3d 802, 827 (Tex. 2005). In making this determination, we credit

favorable evidence if a reasonable fact-finder could, and we disregard contrary

evidence unless a reasonable fact-finder could not. Id. We consider the evidence in the light most

favorable to the finding under review and indulge every reasonable inference

that would support it. Id. at 822 . So long as the evidence falls within the zone

of reasonable disagreement, we may not substitute our judgment for that of the

fact-finder. Id. The trier of fact is the

sole judge of the credibility of the witnesses and the weight accorded to their

testimony. Id. at 819 . Although we

consider the evidence in the light most favorable to the challenged findings,

indulging every reasonable inference that supports them, we may not disregard

evidence that allows only one inference.

Id. at 822 .

In a factual-sufficiency review, [3] the court must examine both

the evidence supporting and contrary to the judgment. See Dow

Chem. Co. v. Francis , 46 S.W.3d 237, 242 (Tex. 2001); Plas-Tex, Inc. v. U.S. Steel Corp. ,

772 S.W.2d 442, 445 (Tex. 1989). In

reviewing a factual-sufficiency challenge to a jury finding on an issue on

which the party did not have the burden of proof, we consider and weigh all of

the evidence and set aside the verdict only if the evidence that supports the

jury finding is so weak as to make the verdict clearly wrong and manifestly

unjust. Cain v. Bain , 709 S.W.2d 175, 176 (Tex. 1986); Raw Hide Oil & Gas, Inc. v. Maxus Exploration Co. , 766 S.W.2d

264, 275 (Tex. App.—Amarillo 1988, writ denied). The fact-finder is the sole judge of the

witnesses’ credibility and the weight to be given their testimony, and the

fact-finder may choose to believe one witness over another. See Golden Eagle Archery, Inc. v. Jackson ,

116 S.W.3d 757, 761 (Tex. 2003). Because

it is the fact-finder’s province to resolve conflicting evidence, we must

assume that the fact-finder resolved all evidentiary conflicts in accordance

with its decision if a reasonable person could have done so. See id. An appellate court may not impose its own

opinion to the contrary of the fact-finder’s implicit credibility

determinations. Id.

a. Ambiguity of agreements

Pitts’s legal argument that he had no

obligation to share the litigation work relies upon the text of the nine letter

agreements, which he contends was unambiguous in that regard. “When construing a contract, the court’s

primary concern is to give effect to the written expression of the parties’

intent.” Forbau v. Aetna Life Ins. Co. , 876 S.W.2d 132,

133 (Tex. 1994); see Tellepsen Builders,

L.P. v. Kendall/Heaton Assocs., Inc. , 325 S.W.3d 692, 695 (Tex.

App.—Houston [1st Dist.] 2010, pet. denied).

Whether a contract is ambiguous is a question of law, which we review de

novo. See Coker v. Coker , 650 S.W.2d 391, 394 (Tex. 1983); Tellepsen Builders , 325 S.W.3d at 696 .

A contract is not ambiguous if its

wording permits a definite or certain legal meaning. DeWitt

Cnty. Elec. Coop., Inc. v. Parks , 1 S.W.3d 96, 100 (Tex. 1999); Nat’l Union Fire Ins. Co. v. CBI Indus. ,

907 S.W.2d 517, 520 (Tex. 1995). A

contract is ambiguous if, after applying established rules of construction, its

meaning is uncertain and doubtful or the writing is reasonably susceptible to

more than one meaning . DeWitt Cnty. Elec. Coop. , 1 S.W.3d at 100 ;

Coker , 650 S.W.2d at 393 . In determining whether a contract is

ambiguous, courts construe and harmonize all provisions of the contract to

discern the parties’ intent. Coker , 650 S.W.2d at 393–94; Tellepsen Builders , 325 S.W.3d at 695 . This inquiry also considers the context of the

agreement of the parties and the circumstances present when the agreement

arose. Friendswood Dev. Co. v. McDade + Co. , 926 S.W.2d 280, 282 (Tex. 1996).

To discern the contracting parties’

intent, courts may properly consider all writings pertaining to the same

transaction, even if the writings were executed at different times and do not

expressly refer to one another . DeWitt Cnty. Elec. Coop. , 1 S.W.3d at 102 ;

see also Miles v. Martin , 159 Tex.

336, 341 , 321 S.W.2d 62, 65 (1959) (“It is well settled that separate

instruments executed at the same time, between the same parties, and relating

to the same subject matter may be considered together and construed as one

contract. This undoubtedly is sound in

principle when the several instruments are truly parts of the same transaction

and together form one entire agreement.” (citation omitted)).

A writing is not ambiguous merely

because it lacks clarity or because a disagreement in interpretation arises. DeWitt

Cnty. Elec. Coop. , 1 S.W.3d at 100 ; Tellepsen

Builders , 325 S.W.3d at 696 . “The

parties’ interpretation of a contract is parol evidence, and parol evidence is

not admissible to create an ambiguity.”

Zurich Am. Ins. Co. v. Hunt

Petroleum (AEC), Inc. , 157 S.W.3d 462, 465 (Tex. App.—Houston [14th

Dist.] 2004, no pet.) (citing Friendswood

Dev. Co. , 926 S.W.2d at 283 ). Likewise,

parol evidence of the parties’ intent is not admissible to vary the terms of an

otherwise unambiguous instrument. See Estes v. Rep. Nat’l Bank , 462 S.W.2d

273, 275 (Tex. 1970). For parol evidence

of the parties’ intent to be admissible, the contract must first be ambiguous

as a matter of law. See id.

On

appeal, as in the trial court, Pitts argues that the jury should have been

restricted to considering only the written language in the nine letter

agreements. The charge asked the jury to

determine if either Arthur L. Schechter, P.C. or Pitts & Collard, L.L.P.

failed to comply with the nine letter agreements. The jury was instructed that it could

consider parol evidence. All the letter

agreements were substantially the same, and provided as follows:

1.

November 5, 1993. “This letter

will confirm that we are referring the attached one hundred (100) cases to be

handled by Richard Melancon, Esq. of your law firm on our usual 60%/40% split

of attorney’s-fees-recovered basis, with the larger amount to your firm, and

the balance to our firm. . . . We would

also like to be copied in on significant pleadings and correspondence and have

the option of attending the trial of any of these cases in a ‘second chair’

status. Our referral of these cases and

this agreement are irrevocable, and we appreciate your firm’s assistance in

this matter. . . . Again, we thank you

for your involvement and look forward to working with you on these cases and

additional cases in the future.”

2.

December 31, 1993. “This letter

will confirm that we are referring the attached five hundred seventy-one cases

to Richard Melancon, Esq. of your law firm on our usual 60%/40% split of

attorney’s-fees-recovered basis, with the larger amount to your firm, and the

balance to our firm. . . . Our referral

of these cases and this agreement are irrevocable, and we appreciate your

firm’s assistance in this matter. . . . Again,

we thank you for your involvement and look forward to working with you on these

cases and additional cases in the future.”

3.

March 10, 1994. The letter retracted

13 files that were mistakenly referred and referred an additional 298 cases “on

the same 60%-40% referral basis as set out in our December 31, 1993, letter

regarding the previous 571 cases.” It

concluded, “We look forward to working with you on these cases and on other

matters in the future.”

4.

March 26, 1994. This letter

referred an additional 114 cases, again referred to the letter of December 31,

1993, and stated: “We look forward to working with you on these cases and on

other matters in the future.”

5.

May 5, 1994. This letter referred

an additional 17 cases, again referred to the letter of December 31, 1993, and

stated: “We look forward to working with you on these cases and on other

matters in the future.”

6.

May 19, 1994. This letter referred

an additional 21 cases, again referred to the letter of December 31, 1993, and

stated: “We look forward to working with you on these cases and on other

matters in the future.”

7.

June 10, 1994. This letter

referred an additional 9 cases, referred to the letter of December 31, 1993,

and stated: “Thank you for your attention and assistance in these and other

matters.”

8.

August 19, 1994. This letter

referred 3 cases and referred to the December 31, 1993 letter. It concluded, “Thank you for your attention

and cooperation in these and other matters.”

9.

September 9, 1994. This letter

referred one case and referred to the December 31, 1993 letter. It concluded, “Thank you for your attention

and cooperation in these and other matters.”

On January 31 1994, Pitts and Melancon sent a joint

letter, on Pitts & Collard, L.L.P. letterhead, to the clients whose cases

had been referred to Schechter. This

letter stated:

A

lawsuit has been filed in Federal Court on your behalf by the Law Offices of

Pitts & Collard, LLP, in association with the Law Offices of Schechter

& Associates. Our two offices will work together on your case, but

Schechter & Associates and its staff will do most of the day-to-day work with you and you should report

important events to them and cooperate with their staff as fully as you have to

date with Pitts & Collard, LLP. . . . Both our

firms will share the work and share the fee in your case. . . .

(Emphasis supplied.)

Under the Rules of Disciplinary

Conduct, a client must consent in writing to a referral agreement to give it

effect. See Tex. Disciplinary R. Prof’l Conduct 1.04(f)(2), reprinted in Tex. Gov’t Code Ann. , tit. 2, subtit. G app. A (West 2005)

(Tex. State Bar R. art X, § 9). In particular,

Rule 1.04(f) states:

A division or arrangement for division of a

fee between lawyers who are not in the same firm may be made only if . . . the

client consents in writing to the terms of the arrangement prior to the time of

the association or referral proposed, including . . . whether fees will be

divided based on the proportion of services performed or by lawyers agreeing to

assume joint responsibility for the representation . . . .

Id. The letter that Pitts and Melancon sent on

January 31, 1994 was the mechanism by which the lawyers solicited the clients’

consent, which was required to effectuate the referral and fee-sharing

agreement. Therefore this letter

pertains to the same transaction as the nine letter agreements, and we must

consider it in determining the parties’ intent and whether the contracts were

ambiguous. See DeWitt Cnty. Elec. Coop. , 1 S.W.3d at 102 . Based on the nine letter agreements and the

letter that the lawyers sent to their clients, we find that their meaning is

uncertain and doubtful with respect to the disputed questions of whether and to

what extent the two law firms would divide professional responsibilities for

the preparation of cases on behalf of their joint clients. While the letters stated that referred cases

would be “handled by” Melancon, they also referenced the two firms “working”

together, Pitts reserved the option to act as second-chair counsel, and the

letter to clients stated that the firms would “work together” and “share the

work.”

Because the agreement was

reasonably susceptible to more than one meaning, we hold that the nine letter

agreements were ambiguous in regard to this question and that the trial court

did not err by permitting the jury to consider parol evidence in answering the

breach-of-contract question. See id. at 100 ; Coker , 650 S.W.2d at 393–94.

b. Sufficiency of evidence

Agreement

to share work. As noted

above, the nine letter agreements and the letter to clients soliciting their

consent to the referrals contain statements suggesting an intent for the lawyers

to continue working together on the clients’ cases. For example, the first six letters from Pitts

to Schechter stated, “We look forward to working with you on these cases.” The letter to the clients said, “Both our

firms will share the work and share the fee in your case.”

Because the parties’ agreement was

ambiguous about the division of work responsibilities, the jury was entitled to

consider parol evidence, such as the parties’ testimony about the

agreement. Schechter testified that

their “deal at the time” was that they would handle the cases jointly. Regarding the client letter, Schechter

testified:

To

me that meant that we were going to jointly handle this mass-tort case as a

project, that we were going to work on it together, that I was going to be

responsible for setting up what needed to be done, Richard Melancon and Gary

Pitts were going to be the lead counsel in the litigation; and then there was

an understanding that if the case actually had to be litigated at some point

down the line, that I would become involved in the active litigation, that as

far as the project itself goes, you know, it was going to be a joint deal.

In March 1994, Pitts and Melancon

(on behalf of Schechter’s firm), sent a joint litigation update to their

clients, on Pitts & Collard letterhead, which suggests that the parties

were working together on the cases. The

same month, a memorandum from Pitts to Collard, Schechter, and Melancon

detailed a litigation plan, which specified how the four lawyers should share

the work of interviewing their clients.

Two

months later, Pitts sent a memo to “Task Force Leader Schechter” about the referred

implant cases. Pitts requested a change

to the affidavits they were asking their clients to sign. The memo stated: “At the bottom of the

affidavit we ask that you change it to: ‘This will further ratify that my

attorneys, Pitts & Collard, L.L.P. have associated Arthur Schechter &

Associates in my case.’” In addition,

Pitts stated, “We appreciate your trying to set up modem ability between our

computers. This will save everyone a lot

of time.” Based on this and other parts

of the record, we conclude that the evidence is legally sufficient to support the

jury’s verdict that the parties agreed to share the litigation work. See

City of Keller , 168 S.W.3d at 827 .

Prior breach by Pitts. Two breast-implant clients

testified. One testified that based on

the January 1994 letter, she expected both law firms to work together on her

case, but she received no regular correspondence from Pitts or his firm. She testified that from 1994 through 2004,

she had no indication that Pitts was working on her case, and she believed he had

simply stopped working on it. She

testified that she believed Pitts abandoned her case around 1994 or 1995,

stating: “I thought they fell off the edge of the world.”

Another

client also testified that based on the January 1994 letter, she believed the

law firms would work together to represent her.

However, she testified that Pitts had done no work on her case since

around the time Dow Corning filed for bankruptcy, approximately mid-1995. Regarding Pitts & Collard’s involvement,

she said, “[T]hey never called me after the initial visit . . . .

They didn’t do any work. They never

contacted me.”

Schechter

testified that he was the only attorney handling these cases since 2002 and

that Pitts stopped working with him years before that. He testified that “after 1995 basically there

really wasn’t any reason for me to assert much of anything to try to get their

help. And after 1996, they continued to

give instructions on the file but would not do anything to help or

participate.” Schechter paid Pitts 40%

of the attorney’s fees received in the referred cases until October 1997, at

which time Schechter instructed his staff to set the fees due to Pitts aside in

a separate account. A paralegal who

worked for Schechter testified that Schechter sent at least one additional

check to Pitts after 1997, but Pitts did not cash it. Schechter testified that he continued to

communicate with Pitts and send him copies of client settlement statements

through 1998. Even Pitts acknowledged

that the letter he sent the clients in 2004 regarding Schechter’s assessment of

interest was his first communication with the clients in approximately eight years.

Viewing the evidence in the light

most favorable to the verdict, we conclude that the evidence was legally

sufficient to enable reasonable jurors to conclude that Pitts agreed to share

the litigation work, Pitts stopped sharing the litigation work in approximately

1996, and Schechter continued to pay Pitts under the agreement through

1997. We hold that the evidence was therefore

legally sufficient to show that Pitts breached the contract first. See

City of Keller , 168 S.W.3d at 827 .

We also hold that the evidence was

factually sufficient to support the jury’s verdict as to Pitts’s prior breach

and that the trial court did not abuse its discretion in denying Pitts’s motion

for new trial. Central to Pitts’s

factual-sufficiency issue are his contentions that he never agreed to share the

work and that the writings between the parties did not evidence any agreement

or obligation for him to share the litigation work. Pitts testified to this throughout the

trial. The jury’s determination about

Pitts’s prior breach depended heavily on its interpretation of the contract,

which, in turn, depended on an evaluation of the credibility of the

witnesses. Simply put, the parties

disagreed about the meaning of their agreement.

We may not overrule the jury’s implicit credibility determinations. Golden

Eagle Archery , 116 S.W.3d at 761 .

For this reason, and based on the evidence in the record, we conclude

that the evidence supporting the jury’s finding as to prior breach was not so

weak as to make the verdict clearly wrong and manifestly unjust. See

Cain , 709 S.W.2d at 176 .

Because we must affirm the trial

court’s judgment on any legal theory that is supported by the evidence and the

jury’s verdict, we need not consider Pitts’s arguments about the legal and

factual sufficiency of the evidence to support Schechter’s other affirmative

defenses. See Worford v. Stamper ,

801 S.W.2d 108, 109 (Tex. 1990).

2.

Effect of

Schechter’s continuing representation of the joint clients

Despite legally sufficient evidence

supporting the jury’s verdict on Schechter’s affirmative defense of prior

breach, Pitts contends that Schechter waived his right to assert prior breach

by electing to continue the contract. The

argument is that if Schechter believed Pitts had breached the agreements first,

he could have ceased performance and sued for breach of contract in 1996 or

found substitute counsel. Under this

theory, because Schechter chose to continue, Pitts contends that he remained

obligated to share the fees he collected. [4] See,

e.g. , Hanks v. GAB Bus. Servs., Inc. ,

644 S.W.2d 707, 708 (Tex. 1982) (“A party who elects to treat a contract as

continuing deprives himself of any excuse for ceasing performance on his own

part.”); Henry v. Masson , 333 S.W.3d

825, 840 (Tex. App.—Houston [1st Dist.] 2010, no pet.). In response, Schechter argues that his

continued representation of the clients should not be given any such effect

because he owed duties arising from the attorney-client relationship independent

of the fee arrangement with Pitts.

Pitts wrongly assumes that

Schechter treated his failure to share work as a partial breach (which, by his

conduct, Schechter purportedly elected to waive) rather than a total breach of

their agreement (terminating Schecter’s obligation to perform and giving rise

to the claim for damages). Pitts

identifies no actions by Schechter that constituted a continuation of the

agreement between them other than continuing to “operate” under the letter

agreements and “accept the benefits of the agreements,” meaning that he

continued to render services to the joint clients and collect a fee. Just as a landowner exercising his

independent rights over his property may move into a defective home without

thereby waiving complaints against the builder who breached a construction

contract, see E. Allan Farnsworth,

Contracts § 8.19, at 598 (3d ed. 1999) (citing Cawley v. Weiner , 140 N.E. 724, 725 (N.Y. 1923)), we decline to hold that Schechter waived his

claims against Pitts by continuing to honor his independent obligations to his

clients. The Texas Disciplinary Rules of

Professional Conduct do not authorize Pitts or Schechter to terminate

representation of their joint clients based upon a dispute between them about

division of labor or sharing of fees. See generally Tex. Disciplinary R.

Prof’l Conduct 1.15, reprinted in

Tex. Gov’t Code Ann. , tit. 2,

subtit. G app. A (West 2005) (Tex. State Bar R. art. X, § 9). We therefore conclude that Schechter’s

continued representation of the joint clients did not, in and of itself,

constitute an election to treat the fee-sharing agreement as a continuing

contract or otherwise absolve Pitts of the consequences of his breach. We hold that the trial court did not err in

rendering judgment on the jury’s verdict, which found that Schechter’s breach

of the nine letter agreements was excused.

* * *

Having found that the evidence is

legally and factually sufficient to support Schechter’s affirmative defense of

prior breach, we hold that the trial court did not err by rendering a

take-nothing judgment against Pitts on his breach of contract claim pertaining

to the letter agreements.

B.

Schechter’s

appeal concerning existence of joint venture and duties of good faith and fair

dealing

In Schechter’s appeal, he argues

that the trial court erred by refusing to submit jury questions regarding the

existence of a joint venture and whether, in the event a joint venture existed,

Pitts breached his resulting duty of good faith and fair dealing. Schechter tendered to the court requested

jury instructions on joint venture and breach of the duty of good faith and

fair dealing, in substantially correct wording.

The issue therefore is preserved for our review. Tex.

R. Civ. P. 278; ASEP USA, Inc. v.

Cole , 199 S.W.3d 369, 376 (Tex. App.—Houston [1st Dist.] 2006, no pet.).

We review a trial court’s decision

to submit or refuse a particular question for an abuse of discretion. Tex.

Dep’t of Human Servs. v. E.B. , 802 S.W.2d 647, 649 (Tex. 1990); ASEP USA , 199 S.W.3d at 376 . “The test for abuse of discretion is not

whether, in the opinion of the reviewing court, the facts present an

appropriate case for the trial court’s actions.

Rather, the question is whether the trial court acted without reference

to any guiding principles and law.” ASEP USA , 199 S.W.3d at 376 (citing Downer v. Aquamarine Operators, Inc. ,

701 S.W.2d 238 , 241–42 (Tex. 1985)). A

trial court must submit a jury question if it is supported by some evidence,

but it may refuse to do so if it is not supported by any evidence. See

Tex. R. Civ. P. 278 (“The court

shall submit the questions . . . which are raised by the written pleadings and

the evidence.”); Elbaor v. Smith , 845

S.W.2d 240, 243 (Tex. 1992). If there is

some evidence to support a jury question and the trial court does not submit

the question, the trial court commits reversible error. See

Elbaor , 845 S.W.2d at 243 . In

determining whether a trial court should have submitted a question to the jury,

the reviewing court must examine the record for evidence supporting submission

of the question and ignore all evidence to the contrary. See id. Conflicting evidence presents a fact question

for the jury. See Brown v. Goldstein , 685 S.W.2d 640 , 641–42 (Tex. 1985).

A joint venture is similar to a

partnership, but it is ordinarily limited to a particular transaction or

enterprise. See Adams v. Petrade Int’l, Inc. , 754 S.W.2d 696, 713 (Tex. App.—Houston

[1st Dist.] 1988, writ denied); Harrington

v. Harrington , 742 S.W.2d 722, 724 (Tex. App.—Houston [1st Dist.] 1987, no

writ). A joint venture must be based

upon an agreement, either express or implied. Coastal Plains Dev. Corp. v. Micrea, Inc. , 572 S.W.2d 285, 287

(Tex. 1978). A joint venture exists if

the parties concerned have: (1) a community of interest in the venture;

(2) an agreement to share profits; (3) an agreement to share losses;

and (4) a mutual right of control or management of the venture. St.

Joseph Hosp. v. Wolff , 94 S.W.3d 513, 535 (Tex. 2002); Knowles v. Wright , 288 S.W.3d 136, 147 (Tex. App.—Houston [1st

Dist.] 2009, pet. denied). “Whether a

joint venture exists is a question of law for the court’s determination.” Swinehart

v. Stubbeman, McRae, Sealy, Laughlin & Browder, Inc. , 48 S.W.3d 865,

879 (Tex. App.—Houston [14th Dist.] 2001, pet. denied).

“A joint venture does not exist if

any one of the four elements is missing.”

Brazosport Bank of Tex. v. Oak

Park Townhouses , 889 S.W.2d 676, 683 (Tex. App.—Houston [14th Dist.] 1994,

writ denied) (citing State v. Houston

Lighting & Power Co. , 609 S.W.2d 263, 268 (Tex. Civ. App.—Corpus

Christi 1980, writ ref’d n.r.e.)). These

elements cannot be established by implication.

Id. at 683. If the parties do not agree to share losses,

no joint venture will be implied. See Coastal Plains Dev. Corp. , 572

S.W.2d at 288 . Thus, “[n]o joint venture

exists as a matter of law where an agreement includes a provision for sharing

profits, but no express provision for sharing losses.” Arthur

v. Grimmett , 319 S.W.3d 711, 721 (Tex. App.—El Paso 2009, pet. denied)

(citing Gutierrez v. Yancey , 650

S.W.2d 169, 172 (Tex. App.—San Antonio 1983, no writ)); see Brazosport Bank , 889 S.W.2d at 683 (“Where the issue before the

trial court is whether a joint venture exists, proof of an agreement to share

profits does not also constitute proof of an agreement to share losses.”).

On appeal, Schechter argues that

there was evidence of each of the four elements of joint venture, and therefore

the trial court erred by refusing to submit the requested jury instruction. Pitts argues that there is no evidence of an

agreement to share the losses; he does not contest that there is some evidence

on the other elements of joint venture. This

issue was disputed at trial, and Schechter contends that his testimony and that

of attorney Richard Laminack constitute some evidence of an agreement to share

the losses involved in the breast-implant litigation.

Laminack testified that he had no

personal knowledge of the usual fee-splitting arrangement employed by the parties

to this lawsuit. He also testified,

however, that it was common practice among plaintiffs’ lawyers to share losses

in mass-tort litigation. Although

Laminack’s testimony about what he and other lawyers do is no evidence of what

Pitts and Schechter agreed to do, Schechter referred to Laminack’s testimony in

explaining the agreement he had with Pitts.

Schechter testified, “[W]e agreed to share the profits and losses in these

cases in the manner that Mr. Laminack described basically. That’s what I understood was happening.”

Schechter relies entirely upon

parol evidence of his own interpretation of the letter agreements to

demonstrate an agreement to share losses.

However the letter agreements are not ambigious as to this point, and we

cannot rely upon parol evidence to create an ambiguity when none exists on the

face of the agreement. See Nat’l Union Fire Ins. , 907 S.W.2d at

520 . The letters refer to the parties’

agreement to share fees on a “fees-recovered basis,” and they are silent on the

subject of losses. An agreement to share

profit and an agreement to share losses are separate elements necessary to the

creation of a joint venture. St. Joseph Hosp. , 94 S.W.3d at 535 . Thus, the existence of a joint venture cannot

be based on an inference that the parties agreed to share losses in some cases,

when that inference arises only from an agreement to share fees in other cases. See,

e.g. , Arthur , 319 S.W.3d at 721

(“No joint venture exists as a matter of law where an agreement includes a

provision for sharing profits, but no express provision for sharing losses.”); Brazosport Bank , 889 S.W.2d at 683 ; Gutierrez v. Yancey , 650 S.W.2d 169, 172

(Tex. App.—San Antonio 1983, no writ) (holding that no joint venture existed as

matter of law when contract explicitly provided for allocation of potential profits

but made no provision for sharing of losses); see also W. H. Hodges & Co. of Alexandria, Inc. v. Donley Cnty.

State Bank of Clarendon , 407 S.W.2d 221, 224 (Tex. 1966).

Because Schechter presented no

evidence demonstrating an agreement to share losses, the trial court correctly

declined to submit a jury question on the existence of a joint venture. Accordingly, the instruction about the duty

of good faith and fair dealing was also correctly declined, and we overrule

Schechter’s issue.

C.

Schechter’s

appeal concerning limitations as applied to contract claim

Schechter also argues that the

trial court erred by concluding that the four-year statute of limitations

applied to his contract claim and by granting judgment n.o.v. barring his

recovery of $85,610 in contract damages which accrued more than four years

before he filed suit.

A judgment notwithstanding the

verdict is proper when a directed verdict would have been proper. Tex.

R. Civ. P. 301; Fort Bend Cnty.

Drainage Dist. v. Sbrusch , 818 S.W.2d 392, 394 (Tex. 1991). The motion should be granted (1) when

the evidence is conclusive, and one party is entitled to recover as a matter of

law or (2) when a legal principle precludes recovery. See Spencer

v. Eagle Stars Ins. Co. of Am. , 876 S.W.2d 154, 157 (Tex. 1994). A motion for judgment n.o.v. based on a legal

principle is appropriately granted when it is conclusively established that

recovery is precluded even though all the allegations are proven. Schindley

v. Ne. Tex. Cmty. Coll. , 13 S.W.3d 62, 65 (Tex. App.—Texarkana 2000, pet.

denied); see John Masek Corp. v. Davis ,

848 S.W.2d 170, 173 (Tex. App.—Houston [1st Dist.] 1992, writ denied). Although appellate courts ordinarily review a

trial court’s ruling on a motion for judgment n.o.v. under a no-evidence

standard of review, Wal-Mart Stores, Inc.

v. Miller , 102 S.W.3d 706, 709 (Tex. 2003) (per curiam), whether a cause of

action is barred by limitations is a question of law that appellate courts

review de novo. Provident Life & Accident Ins. Co. v. Knott , 128 S.W.3d 211, 221

(Tex. 2003). Because the trial court

granted Pitts’s motion for judgment n.o.v. based on the statute of limitations,

we review this issue de novo. See id.

The limitations period for breach

of contract claims is four years. Tex. Civ. Prac. & Rem. Code Ann. §

16.051 (West 2008); Stine v. Stewart ,

80 S.W.3d 586, 592 (Tex. 2002).

“Limitations begins to run upon accrual of the cause of action.” Barker

v. Eckman , 213 S.W.3d 306, 311 (Tex. 2006).

A breach of contract claim accrues when the contract is breached. Stine ,

80 S.W.3d at 592 ; Ambulatory Infusion

Therapy Specialist, Inc. v. N. Am. Adm’rs, Inc. , 262 S.W.3d 107, 119 (Tex. App.—Houston

[1st Dist.] 2008, no pet.). Thus,

“[w]hen recovery is sought on an obligation payable in installments, the

statute of limitations runs against each installment from the time it becomes

due.” Hollander v. Capon , 853 S.W.2d 723, 726 (Tex. App.—Houston [1st

Dist.] 1993, writ denied). But if the parties’

agreement contemplates a continuing contract for performance, the limitations

period does not usually commence until the contract is fully performed. See,

e.g. , Lyle v. Jane Guinn Revocable

Trust , No. 01-09-00081-CV, 2010 WL 1053060, at *10 (Tex. App.—Houston [1st

Dist.] Mar. 11, 2010, pet. denied); Intermedics,

Inc. v. Grady , 683 S.W.2d 842, 845 (Tex. App.—Houston [1st Dist.] 1984,

writ ref’d n.r.e.).

Schechter argues that the trial

court erred in applying the statute of limitations. He contends that the nine letter agreements

comprised a continuing contract because the parties contemplated that Pitts would

share the litigation work and because the final amount of attorney’s fees could

not be distributed until all losses and unrecoverable expenses had been offset

from the total amount of attorney’s fees.

The parties anticipated that the shared

litigation work would occur over an extended period of time, but that does not

convert the agreement into a continuing contract. This was not a class-action lawsuit in which all

of the work had to be substantially completed before any recovery could be

received. Rather, this was a mass-tort

project that involved individual claims.

Cf. Authorlee v. Tuboscope Vetco Int’l,

Inc. , 274 S.W.3d 111, 121 (Tex. App.—Houston [1st Dist.] 2008, pet. denied)

(explaining that mass-tort settlement involved individual negotiations on

individual cases). Therefore, Schechter’s

cause of action for breach of contract, based on Pitts’s failure to perform by

sharing the litigation work, accrued at the time of Pitts’s breach. See,

e.g. , Dell Computer Corp. v.

Rodriguez , 390 F.3d 377, 392 (5th Cir. 2004) (holding that employment

agreement was not continuing contract) (citing Sun Med. Inc. v. Overton , 864 S.W.2d 558 , 560–61 (Tex. App.—Fort

Worth 1993, writ denied)). Because we have already held that

there was no evidence that the parties agreed to share losses, we reject

Schechter’s argument that the need to offset losses against total attorney’s

fees supports the conclusion that the parties had a continuing contract.

Accordingly, we conclude that Schechter’s

contract claims were barred by limitations to the extent they accrued more than

four years before suit was filed. We hold

that the trial court did not err by granting Pitts’s motion for judgment n.o.v.

on this issue. We overrule this issue in

Schechter’s appeal.

D.

Attorney’s

fees

Both parties raised issues relating

to attorney’s fees. Pitts argues that

the trial court erred by not reducing the attorney’s fees awarded to Schechter

because of a partial settlement and because part of Schechter’s claim was

barred by the statute of limitations.

Texas law does not allow for recovery of attorney’s fees unless

authorized by statute or contract. Tony Gullo Motors I, L.P. v. Chapa , 212

S.W.3d 299, 310 (Tex. 2006). “As a

result, [attorney’s] fee claimants have always been required to segregate fees

between claims for which they are recoverable and claims for which they are

not.” Id. at 311 . However, the

party opposing an award of attorney’s fees must make a timely objection. Green

Int’l, Inc. v. Solis , 951 S.W.2d 384, 389 (Tex. 1997) (“[I]f no one objects

to the fact that the attorney’s fees are not segregated as to specific claims,

then the objection is waived.”); Hruska

v. First State Bank of Deanville , 747 S.W.2d 783, 785 (Tex. 1988). Such an objection must be made before the

trial court renders judgment. See Tex.

R. App. P. 33.1(a)(1) (providing that party must make “timely request,

objection, or motion” to present complaint for appellate review); cf. Donihoo v. Lewis , No.

01-08-00277-CV, 2010 WL 1240970 , at *14 (Tex. App.—Houston [1st Dist.] Mar. 25,

2010, pet. denied) (mem. op.) (holding that segregation of attorney’s fees must

be raised before trial court renders judgment).

At the charge conference, Pitts did

not object to the failure to segregate attorney’s fees or request an instruction

thereon. Pitts

opposed Schechter’s motion to enter judgment after the jury rendered its

verdict, asserting that “one-half of the attorney fees were settled by Ed

Collard,” but this objection did not account for the fact that none of the post-settlement

fees incurred by Schechter were attributable to pursuing a claim against

Collard. Pitts first raised his

objection to the failure to segregate attorney’s fees in his motion for new

trial and in his fourth supplemental motion for judgment n.o.v. These two motions were filed nearly a full

month after the trial court rendered judgment.

Because Pitts’s objection to the failure to segregate attorney’s fees

was not raised before the trial court rendered judgment, Pitts has waived this

objection on appeal. See Tex.

R. App. P. 33.1(a), Donihoo ,

2010 WL 1240970 , at *14. We overrule

Pitts’s issues relating to the award of attorney’s fees. [5]

In his appeal, Schechter argues

that the jury’s award of no attorney’s fees for his cause of action pertaining

to the interpretation of the 1995 agreement was against the great weight and

preponderance of the evidence. This is a

complaint about factual sufficiency. Griffin v. Carson , No. 01-08-00340-CV,

2009 WL 1493467 , at *2 (Tex. App.—Houston [1st Dist.] May 28, 2009, pet.

denied) (mem. op.). A motion for new

trial is a prerequisite to bringing a complaint on appeal alleging either that

the evidence is factually insufficient to support a jury finding or that a jury

finding is against the great weight and preponderance of the evidence. See

Tex. R. Civ. P. 324(b)(2),

(3). Schechter did not file a motion for

new trial. Therefore, this issue is not

preserved for our review. See id. ; Griffin , 2009 WL 1493467 , at *2.

We overrule Schechter’s issue.

III.

Defamation and abuse of process claims

Having resolved all the issues

pertaining to the parties’ contract claims, we now consider the issues

pertaining to Schechter’s defamation and abuse of process claims. In response to Pitts’s lawsuit, Schechter

countersued for defamation based on statements Pitts made to the Houston City

Council and to Schechter’s professional colleagues. Schechter later added a cause of action for

abuse of process based on the filing of a video recording of Pitts’s remarks to

city council in the underlying litigation.

Although the trial court had ordered the parties to keep the recording

confidential, on three separate occasions Pitts filed it without placing it

under seal. On appeal we must determine whether

the defamation claims were barred by limitations, whether the finding of

liability on the professional colleague defamation claim was supported by

sufficient evidence, and whether there was legally sufficient evidence to

support the liability finding and damages awarded on Schechter’s claim for abuse

of process.

A.

Defamation

claim based on statements to city council

Schechter raises numerous appellate

issues related to his defamation claim based on statements Pitts made to the

Houston City Council before it confirmed Schechter’s nomination to serve as METRO

Chairman. He contests the trial court’s

determination that his cause of action was barred by limitations and not

revived by the Civil Practice and Remedies Code. He also addresses the sufficiency of the

evidence to support the jury’s verdict as to defamation and actual malice

relating to Pitts’s statements to city council.

Finally, he argues that no absolute privilege applied to Pitts’s

statements before city council.

“A trial court may disregard a

jury’s verdict and render a [judgment n.o.v.] if there is no evidence to

support the jury’s findings or if a directed verdict would have been proper.” Williams

v. Briscoe , 137 S.W.3d 120, 124 (Tex. App.—Houston [1st Dist.] 2004, no

pet.) (citing Brown v. Bank of Galveston ,

963 S.W.2d 511, 513 (Tex. 1998)). “When

a trial court specifies the ground upon which it is granting a judgment

notwithstanding the verdict, an appellant need only challenge the ground relied

upon by the trial court.” Edascio, L.L.C. v. NextiraOne L.L.C. , 264

S.W.3d 786, 795 (Tex. App.—Houston [1st Dist.] 2008, pet. denied) (citing Voskamp v. Arnoldy , 749 S.W.2d 113, 118

(Tex. App.—Houston [1st Dist.] 1987, writ denied)). In granting judgment n.o.v. in favor of Pitts

on the city council defamation claims, the trial court expressly relied on the

statute of limitations and non-revival under section 16.069 of the Civil

Practice and Remedies Code. Therefore

Schechter need only challenge this ground on appeal.

A defamation cause of action ordinarily

accrues on the date the defamatory matter is published or circulated. See,

e.g. , Newsom v. Brod , 89 S.W.3d

732, 736 (Tex. App.—Houston [1st Dist.] 2002, no pet.). The limitations period for slander is one

year after the day the cause of action accrues.

Tex. Civ. Prac. & Rem. Code

§ 16.002 (West 2002); see Newsom , 89

S.W.3d at 735–36. However, Civil

Practice and Remedies Code section 16.069 provides an exception to the statute

of limitations applicable to compulsory counterclaims:

(a) If

a counterclaim or cross claim arises out of the same transaction or occurrence

that is the basis of an action, a party to the action may file the counterclaim

or cross claim even though as a separate action it would be barred by

limitation on the date the party’s answer is required.

(b) The

counterclaim or cross claim must be filed not later than the 30th day after the

date on which the party’s answer is required.

Tex. Civ. Prac. & Rem.

Code Ann. § 16.069 (West 2008). The statute

is a savings clause, “intended to prevent a plaintiff from waiting until an

adversary’s valid claim arising from the same transaction was barred by

limitations before asserting his own claim.” Hobbs

Trailers v. J.T. Arnett Grain Co. , 560 S.W.2d 85, 88 (Tex. 1977)

(interpreting predecessor statute substantially similar to section 16.069);

accord Leasure v. Peat, Marwick, Mitchell

& Co. , 722 S.W.2d 37, 38 (Tex. App.—Houston [1st Dist.] 1986, no writ);

Wells v. Dotson , 261 S.W.3d 275 , 280–81

(Tex. App.—Tyler 2008, no pet.). “We

apply a logical relationship test to determine whether counterclaims arise out

of the same transaction or occurrence.” Commint Technical Servs., Inc. v. Quickel ,

314 S.W.3d 646, 653 (Tex. App.—Houston [14th Dist.] 2010, no pet.) (citing Jack H. Brown & Co. v. Nw. Sign Co. ,

718 S.W.2d 397, 400 (Tex. App.—Dallas 1986, writ ref’d n.r.e.); accord Wells , 261 S.W.3d at 281 . The logical relationship test is met when the

same facts, which may or may not be disputed, are significant and logically

relevant to both claims. Commint Technical Servs. , 314 S.W.3d at

653 .

On April 2, 2002, Pitts spoke negatively

about Schechter during the non‑agenda portion of the Houston City Council

meeting. The gist of Pitts’s remarks was

an expression of his opinion that Schechter’s business and political affairs suggest that he is

a dishonest and unethical person. Over three years later, on August 10, 2005,

Schechter asserted defamation as a counterclaim to Pitts’s lawsuit alleging

breach of contract. Because Schechter

first asserted this claim more than one year after the day that Pitts allegedly

slandered Schechter at the city council meeting, Schechter’s claim was barred

by limitations. See Tex. Civ. Prac. &

Rem. Code § 16.002; Wheeler

v. Methodist Hosp. , 95 S.W.3d 628, 636 (Tex. App.—Houston [1st Dist.] 2002,

no pet.). Nevertheless, Schechter argues

that Pitts’s statements were motivated by his disappointment about the outcome

of their failed contractual and business relationship, and that the defamation

action based on these allegations was therefore revived by section 16.069

because it arises from the same transaction as Pitts’s breach of contract

claim.

As discussed above, Pitts sued for

breach of contract alleging that he had referred certain personal-injury cases

to Schechter. Under the referral

agreements, Schechter was to share attorney’s fees, and Pitts alleged that

Schechter failed to pay his share from the successful claims. Schechter’s defamation claim alleged that

Pitts caused him harm by slandering him before the Houston City Council. Accordingly, Pitts’s causes of action arise from

the contract between the parties, and Schechter’s causes of action arise from

statements Pitts made about Schechter’s fitness to serve in an appointed

position. We conclude that the logical

relationship test is not met here and that Schechter’s defamation claims do not

arise out of the same transaction or occurrence that was the basis of Pitts’s

contract action. See Commint Technical Srvs. ,

314 S.W.3d at 653 . Therefore,

Schechter’s city-council defamation claims were barred by limitations, and we

hold that the trial court properly rendered a take-nothing judgment on this

claim.

B.

Defamation

claim based on statements to professional colleagues

Pitts challenges the trial court’s

judgment in Schechter’s favor on the defamation claim based on statements to Schechter’s

professional colleagues. Pitts argues

that the evidence shows that he spoke with only one of Schechter’s professional

colleagues, Richard Melancon, and that any claims based upon his statements to

Melancon were barred by limitations. Pitts

also contends that Schechter should have obtained a jury finding on actual

malice and, in any event, the evidence is legally and factually insufficient to

establish actual malice. He further

argues that the evidence is legally and factually insufficient to support the damages

award.

1. Limitations

Pitts argues that the professional colleague defamation claim

is barred by limitations for the same reasons that the city council defamation

claim is time-barred. Because

limitations is an affirmative defense, see

Tex. R. Civ. P. 94, Pitts

had the burden to “plead, prove, and secure findings to sustain [his] plea of

limitations.” Woods v. William M. Mercer, Inc. , 769 S.W.2d 515, 517 (Tex. 1988). Unlike his statements made to city council,

Pitts’s statements to Melancon were not known to Schechter at the time they

were made, and the discovery rule applies to a defamation claim if the matter

is not public knowledge. Wheeler , 95 S.W.3d at 636 . Pitts did not seek or obtain a determination

from the jury as to when the professional colleague statements were made. No issue on limitations was submitted to the

jury, and Pitts did not object to this omission or request that a question on limitations

be submitted. He has therefore waived

his limitations defense. See Tex.

R. Civ. P. 279; see also Wise v. Anderson , 359 S.W.2d 876 , 880–81

(Tex. 1962) (holding that plaintiff waived issue by failing to request jury

issues and obtain fact findings on whether defendant’s absence from state tolled

statute of limitations); Roberts v. Holmes ,

412 S.W.2d 947, 949 (Tex. Civ. App.—Eastland 1966, no writ) (holding that

appellants waived limitations defense by failing to request jury question or

object to trial court’s failure to submit limitations issue).

2.

Actual malice

In connection with the professional-colleague defamation

claim, the jury found that Schechter was harmed as a result of Pitts’s malice. In a question predicated upon a finding that

Pitts made statements to professional colleagues of Schechter that were

defamatory per se, the jury was specifically asked whether any harm resulted

from malice. The jury was instructed

that “malice” meant:

(a)

a specific intent

by Gary Pitts to cause substantial injury to Arthur L. Schechter; or

(b)

an act or

omission by Gary Pitts,

(i)

which, viewed

objectively from the standpoint of Gary Pitts at the time of its occurrence,

involved an extreme degree of risk, considering the probability and magnitude

of the potential harm to others; and

(ii)

of which Gary

Pitts had actual, subjective awareness of the risk involved, but nevertheless

proceeded with conscious indifference to the rights, safety, or welfare of

others.

Pitts

argues that Schechter was a public figure during all times relevant to the

defamation claims, and therefore a jury finding of actual malice was required

to support the claims. See, e.g. , New York Times Co. v. Sullivan , 376 U.S. 254 , 279–80, 285–86, 84 S.

Ct. 710, 726 , 728–29 (1964); Turner v.

KTRK Television, Inc. , 38 S.W.3d 103 , 119–20 (Tex. 2000). Pitts also argues that the evidence is

legally and factually insufficient to prove actual malice by clear and

convincing evidence.

a.

Schechter’s public-figure status

As a threshold matter, we must resolve the question of

whether Schechter was a public figure for purposes of this claim, which he

denies. Schechter contends that although

he had been publicly identified as one of several possible nominees to the

METRO board, there was no controversy about his nomination at the time of

Pitts’s defamatory statements. Moreover,

Schechter points out that city council had not yet been asked to confirm him as

of the time Pitts made his presentation.

“The question of public-figure status is one of

constitutional law for courts to decide.”

WFAA-TV, Inc. v. McLemore , 978

S.W.2d 568, 571 (Tex. 1998). As opposed

to general-purpose public figures, “who have achieved such pervasive fame or

notoriety that they become public figures for all purposes and in all

contexts,” a limited-purpose public figure is only a public figure “for a

limited range of issues surrounding a particular public controversy.” Id .

(citing Gertz v. Robert Welch, Inc. ,

418 U.S. 323, 351 , 94 S. Ct. 2997, 3012 (1974)). We apply a three-part test to determine

whether Schechter qualified as a limited-purpose public figure:

(1) the controversy at issue must be public both in the sense that

people are discussing it and people other than the immediate participants in

the controversy are likely to feel the impact of its resolution;

(2) the plaintiff must have more than a trivial or tangential role in

the controversy; and

(3) the alleged defamation must be germane to the plaintiff's

participation in the controversy.

Id . Schechter

easily satisfies this standard. His

nomination to chair the METRO board was a matter of public concern that

impacted the entire Houston area.

Pitts’s comments and the resulting controversy concerned Schechter’s

fitness to serve in that role.

Accordingly, Schechter had a central role. Contrary to Schechter’s suggestion, no

preexisting “controversy” was required, and we therefore hold that he was a

public figure for this purpose. Cf. Monitor Patriot Co. v. Roy , 401 U.S.

265, 277 , 91 S. Ct. 621, 628 (1971) (“a charge of criminal conduct, no matter

how remote in time or place, can never be irrelevant to an official’s or a

candidate’s fitness for office” for purposes of applying New York Times v. Sullivan ); Foster

v. Laredo Newspapers, Inc. , 541 S.W.2d 809, 814 (Tex. 1976).

b.

Waiver

Schechter contends that Pitts waived his complaint about the

absence of an instruction on actual malice.

The free-speech implications of this case require that we find waiver

only in circumstances that are “clear and compelling.” Osterberg

v. Peca , 12 S.W.3d 31, 40 (Tex. 2000) (quoting Curtis Publ’g Co. v. Butts , 388 U.S. 130, 145 , 87 S. Ct. 1975, 1986

(1967)).

Pitts argues that the gravity of his First Amendment

interests requires that our analysis consider whether the grounds for

procedural waiver of the actual-malice evidentiary standard “are adequate as a

matter of substantive federal constitutional law to protect the constitutional

interests at stake,” as required by Osterberg

v. Peca , 12 S.W.3d 31 , 39–40 (Tex. 2000). [6] In stating this rule, the Texas Supreme Court

relied upon the authority of Lawrence v.

State Tax Comm’n , 286 U.S. 276, 282 , 52 S. Ct. 556, 558 (1932), quoting

that opinion for the proposition that “[e]ven though the claimed constitutional

protection be denied on nonfederal grounds, it is the province of this Court to

inquire whether the decision of the state court rests upon a fair or

substantial basis.” Osterberg , 12 S.W.3d at 40 (quoting Lawrence , 286 U.S. at 282 , 52 S. Ct. 556 ).

In Lawrence , the appellant

was a Mississippi resident who challenged an amendment to the state’s excise

tax on Fourteenth Amendment equal protection grounds. See 286

U.S. at 279 , 52 S. Ct. at 556–57. The

challenged legislation exempted from the definition of gross income “[i]ncome

of a domestic corporation, when earned from sources without this state.” Id . The effect of the amendment was to place

Lawrence at a competitive disadvantage as compared to his competitors operating

as corporations. See id . at 279, 52 S. Ct. at 557 .

The Mississippi Supreme Court had avoided resolving the constitutional

challenge by concluding that “if the amendment were valid, [Lawrence] could not

complain,” and “if invalid, he would still be subject to the tax, since the act

which it amended . . . would then remain in full force, and

under it individuals and domestic corporations are taxed alike.” Id .

at 281, 52 S. Ct. at 558 . It was in this

context that the United States Supreme Court held, as quoted by the Texas

Supreme Court in Osterberg , that

“[e]ven though the claimed constitutional protection be denied on nonfederal

grounds, it is the province of this Court to inquire whether the decision of

the state court rests upon a fair or substantial basis.” Id . The U.S. Supreme Court concluded in Lawrence that “the purported nonfederal

ground put forward by the state court for its refusal to decide the

constitutional question was unsubstantial and illusory.” Id .

at 282–83, 52 S. Ct. at 558 .

Accordingly, the Court addressed the constitutional challenge to the

statute.

In contrast to the circumstances in Lawrence , Pitts’s procedural waiver in this case was neither

unsubstantial nor illusory. Pitts filed

his original answer in response to Schechter’s defamation claim, and he

subsequently filed three amended answers.

The appellate record reflects no pretrial motions suggesting an absence

of proof of actual malice to support a defamation claim. See,

e.g. , Tex. R. Civ. P.

166a(i). The case was tried to a jury

over the course of three weeks. Although

Schechter moved for a directed verdict on Pitts’s liability for defamation, the

record reflects no written response, and Pitts offered no motion of his own

suggesting a lack of evidence of actual malice. The trial court noted on the record that after

the close of evidence at noon the prior day, the parties worked on the charge

until around 8:00 p.m. and “hammered out all of the issues.” When offered the opportunity to formally

object to the charge, Pitts made several objections relating to the charge regarding

his claims against Schechter, but he did not object to the malice instruction on

Schechter’s defamation claim. Pitts did

not request that the jury be instructed on actual malice, offer a substantially

correct question, or in any other way indicate that he thought the charge was

improper because Schechter was a public figure.

See Tex. R. Civ. P. 278 (“Failure to submit a question shall not

be deemed a ground for reversal of the judgment, unless its submission, in

substantially correct wording, has been requested in writing and tendered by

the party complaining of the judgment . . . .”).

When “the ultimate effect of sustaining a claim of waiver

might be an imposition on” the freedom of speech, we cannot find waiver except

under “clear and compelling” circumstances.

See Curtis Pub. Co. v. Butts ,

388 U.S. 130, 145 , 87 S. Ct. 1975, 1986 (1967).

However, under these circumstances, we find that Pitts’s failure to

object or otherwise suggest the correct law to the trial court was a

sufficiently clear and compelling waiver, under the ordinary procedural rules, to

require the sufficiency of the evidence to be evaluated in light of the court’s

charge as opposed to some other law that was not identified to the trial

court. See Osterberg , 12 S.W.3d

at 55 ; see also Tex. R. Civ. P. 272 & 274; Tex. R. App. P. 33.1(a). Even when fundamental constitutional rights

are at stake, the rules of appellate procedure bar review of unpreserved error

except in very narrow circumstances. See, e.g. , In re B.L.D. , 113 S.W.3d 340, 352 (Tex. 2003) (applying analytical

framework of Mathews v. Eldridge , 424

U.S. 319, 335 , 96 S. Ct. 893, 903 (1976), to conclude that due process does not

require appellate review of unpreserved complaints in cases involving the

termination of parental rights). The

Texas Supreme Court has confirmed that the error-preservation rules vindicate

the State’s “strong interest in ensuring that our trial courts have an

opportunity to correct errors as a matter of judicial economy.” Id .

at 353; see also Pirtle v. Gregory ,

629 S.W.2d 919, 920 (Tex. 1982) (per curiam) (“The reason for the requirement

that a litigant preserve a trial predicate for complaint on appeal is that one

should not be permitted to waive, consent to, or neglect to complain about an

error at trial and then surprise his opponent on appeal by stating his

complaint for the first time.”). In the

absence of any procedural due process arguments suggesting a different result

in this case, “we presume that our rules governing preservation of error in

civil cases comport with due process.” B.L.D. , 113 S.W.3d at 352 .

We conclude that by failing to raise the issue in the trial

court, Pitts has waived his complaint about the absence of clear and convincing

evidence of actual malice to support a defamation claim. We therefore overrule Pitts’s issue complaining

about the lack of such evidence.

c.

Actual damages

The jury awarded Schechter $100,000 for damage to his

reputation and $1,000 in pecuniary damages.

Pitts contends that the damages award is arbitrary and not supported by

legally or factually sufficient evidence.

He argues that Schechter suffered no reputational damages because he

repeated his defamatory statements to only one person, Melancon. He thus contends that any presumption of

reputational damages was rebutted by evidence that Melancon already had a low

opinion of Schechter. In support of this

argument, Pitts relies on his answer to an interrogatory, which asked him to

identify each person with whom he communicated his concerns about Schechter

becoming Chairman of METRO and the date and substance of each

communication. He also relies on the

parties’ stipulation that Collard would not be called to testify. Pitts states in his brief, “No one else was

alleged to have heard or been told of the statements.”

The evidence does not support the contention that Melancon

was only hearer of Pitts’s allegedly defamatory statements. Pitts did not state in his interrogatory

responses that his communications with Schechter’s colleagues were limited to

Melancon. Rather, he listed numerous

other people in addition to Melancon, including but not limited to five other

attorneys who had previously been associated with Schechter. He also disclosed that he communicated to the

members of Houston City Council, anyone watching the Houston city government

cable channel at the time of his comments to Council, and co-workers his office. Pitts stated that he repeated the substance

of his city council comments only to his wife, Collard, and Melancon, but he

also stated that he discussed Schechter’s potential METRO appointment and

possible future political ambitions with most of the other individuals

identified in the interrogatory response.

Moreover, Schechter’s testimony about his professional

colleague claim was not limited to statements that Pitts made to Melancon. Rather, Schechter testified without objection

that his professional colleague claim related to his colleagues at METRO.

Q. Generally, if you would,

tell the ladies and gentlemen of the jury what your defamation claim based on

the professional colleagues is.

A. Well, professional

colleagues first in the sense of the METRO group. As I said, I got a phone call from the

president of METRO . . . with whom I was going to be working if I got this

appointment and who was a very dynamic leader.

She wanted to know what was going on.

I went to the METRO offices to discuss it with several of the people

with whom I was going to be working if the appointment went through.

And this was a volunteer public-service job. It paid nothing. It took hours and hours of time. And it was something I wanted to do because I

believe in public service. I do.

And it caused me to start off in the job with a

negative, which is a very bad thing for a new chairman to have going for him or

her when they go into a public-service position like this.

Finally,

the question that was submitted to the jury, without objection, on Schechter’s

professional colleague defamation claim was not limited to Melancon. Rather, the question asked only, “Were the

statements that Gary Pitts made to professional colleagues of Arthur L.

Schechter defamatory per se?” The jury

was not provided a definition of “professional colleagues.” Thus, in considering Pitts’s objection to the

sufficiency of the evidence to support damages, we are not limited to considering

defamatory statements made to Melancon.

With this background in mind, we will consider first the necessity for

proof of damages in this case and whether any presumption of damages has been

rebutted.

A statement is defamatory per se if it injures a person in

his office, business, profession, or occupation, or if it is a false statement

that accuses him of committing a crime. See Morrill v. Cisek , 226 S.W.3d 545 ,

549–50 (Tex. App.—Houston [1st Dist.] 2006, no pet.). “Our law presumes that statements that are

defamatory per se injure the victim’s reputation and entitle him to recover

general damages, including damages for loss of reputation and mental

anguish.” Bentley v. Bunton , 94 S.W.3d 561, 604 (Tex. 2002) ( Bentley I ) (citing Leyendecker & Assoc. v. Wechter , 683 S.W.2d 369, 374 (Tex.

1984)). “Once injury to reputation is

established, a person defamed may recover general damages without proof of

other injury.” Leyendecker , 683 S.W.2d at 374 . “Non-economic damages like these

cannot be determined by mathematical precision; by their nature, they can be

determined only by the exercise of sound judgment.” Bentley

I , 94 S.W.3d at 605. “The amount of

damages in a defamation case is peculiarly within the province of the

fact-finder, and an appellate court will not disturb the verdict or award unless

it appears from the record to be excessive or the result of passion, prejudice,

or other improper influences.” Morrill , 226 S.W.3d at 550 .

An appellate court may review a jury’s award of damages in a

defamation case for evidentiary sufficiency.

See Bunton v. Bentley , 153

S.W.3d 50, 53 (Tex. 2004) ( Bentley II )

(holding that legally sufficient evidence supported remitted award of $150,000

for mental anguish); see also Morrill ,

226 S.W.3d at 550–51 (reviewing evidence of damage to reputation for legal

sufficiency); Beaumont v. Basham , 205

S.W.3d 608 , 620–21 (Tex. App.—Waco 2006, pet. denied) (reviewing legal

sufficiency of jury’s award for damage to reputation). Thus, here we must determine whether the

evidence would enable reasonable and fair-minded people to award Schechter

$100,000 for damage to his reputation and $1,000 in pecuniary damages, see City of Keller , 168 S.W.3d at 827

(legal sufficiency), or if the evidence that supports these awards of damages

is so weak as to make the verdict clearly wrong and manifestly unjust. See

Cain , 709 S.W.2d at 176 (factual sufficiency).

The evidence in this case showed that

Schechter was an attorney, a former ambassador, a philanthropist, and a government

official. The evidence also established

that Pitts defamed Schechter by saying, among other things not republished in

this opinion, that he was dishonest and unethical in the conduct of his

business and political affairs.

Schechter also testified to the falsity of the statements that Pitts

made. Because these statements related

to Schechter’s profession, they were defamatory per se, and Schechter was

entitled to general damages without further proof of injury, so long as the

amount of damages awarded is not excessive or the result of passion, prejudice,

or other improper influences. See Leyendecker , 683 S.W.2d at 374 ; Morrill , 226 S.W.3d at 550 . Nothing in the record suggests that the

jury’s award was excessive or the result of passion, prejudice, or other

improper influences. Therefore, this

Court may not disturb the jury’s damages award on appeal. See

Morrill , 226 S.W.3d at 550

Although Pitts contends that Melancon’s opinion of Schechter

was so low that it could not have been injured further by anything Pitts may

have said, we have explained that this cause of action was not limited to

statements made only to Melancon.

We hold that there was legally and

factually sufficient evidence to support the jury’s award of non-economic

damages in the amount of $100,000.

However, Schechter does not identify any evidence that supports the

award of $1,000 in pecuniary damages, and we find nothing in the record to support

it. We therefore sustain Pitts’s issue

as to the pecuniary damages award and overrule his issue as to the non-economic

damages award.

d. Exemplary damages

In addition to the $101,000 that the jury awarded in

pecuniary and non-economic damages on the professional colleague defamation

claim, the jury also awarded $300,000 in exemplary damages, which the trial

court reduced to $200,000 in accordance with Texas Civil Practice and Remedies

Code section 41.008. Pitts contends

that there is no evidence to support this award of exemplary damages because

there is no evidence of malice under Chapter 41 of the Texas Civil Practice and

Remedies Code, which defines malice as “a specific intent by the defendant to

cause substantial injury or harm to the claimant.” Tex.

Civ. Prac. & Rem. Code. Ann. § 41.001(8) (West 2008).

Exemplary damages only could have been awarded in this case

if Schechter proved by clear and convincing evidence that the harm resulting

from Pitts’s defamatory statements to his professional colleagues resulted from

malice. See id. § 41.003(a)(2). We

must “address the evidence or lack of evidence with specificity, as it relates

to the liability for or amount of exemplary damages, in light of the

requirements of [Chapter 41].” See id.

§ 41.013.

Pitts argues that there is no evidence

of malice because his statements consisted only of isolated conversations

between himself and his long-time friend, Melancon. But neither the evidence at trial nor the

charge to the jury on this issue was limited only to communications between

Pitts and Melancon. In response to

Schechter’s discovery requests, Pitts stated that he had, in fact, made

derogatory statements about Schechter to several of Schechter’s professional

colleagues, including leveling specific allegations that accused Schechter of

dishonest, unethical, and illegal behavior.

Schechter offered detailed testimony refuting the truthfulness of each

specific allegation Pitts made, and by its verdict, the jury indicated that it

believed Schechter. He further testified

that the defamation caused him to “start off in the [METRO] job with a negative,

which is a very bad thing for a new chairman to have going for him or her when

they go into a public-service position like this.”

The evidence also showed that Pitts

and Schechter were themselves engaged in a business dispute over multi-million

dollar mass litigation at the time of the defamatory statements and that

Schechter had recently won an award in mediation against Pitts. As evidenced by his statement, Pitts, who was

not a Houston resident, attended a Houston city council meeting with the intent

to prevent Schechter’s appointment to METRO.

This alone would be injurious to Schechter, but Pitts’s after-the-fact

repetition of defamatory statements to Schechter’s colleagues had no purpose

other than to injure Schechter’s reputation or further his cause of blocking

Schechter’s appointment to METRO, both of which represent a substantial injury

to Schechter.

We conclude that the evidence shows that Pitts’s repetition

of false and defamatory accusations about Schechter’s business conduct showed a

specific intent to injure Schechter, and we hold that the evidence was legally

and factually sufficient to support an award of exemplary damages under Chapter

41. We overrule Pitts’s issue contending

that there is insufficient evidence of malice.

Finally, Pitts argues that, as a matter of federal

constitutional law, the ratio of exemplary damages awarded as compared to

compensatory damages must be reduced from 2:1 to a ratio of 1:1. Pitts relies on Exxon Shipping Company v. Baker , 554 U.S. 471 , 128 S. Ct. 2605

(2008), for the proposition that when compensatory damages are “substantial,”

exemplary damages may not exceed compensatory damages as a matter of

constitutional law. However, the Supreme

Court noted that its Exxon Shipping

decision was based on maritime law, not due process concerns. See

Exxon Shipping , 554 U.S. at 501–02, 128 S. Ct. at 2626 . The Constitution has not been applied to

impose a maximum 1:1 ratio of exemplary to compensatory damages. See,

e.g. , State Farm Mut. Auto. Ins. Co.

v. Campbell , 538 U.S. 408, 418 , 123 S. Ct. 1513, 1513 (2003); Bennett v. Reynolds , 315 S.W.3d 867,

874 (Tex. 2010).

We overrule Pitts’s objections to

the trial court’s judgment in Schechter’s favor on the defamation claim based

on statements to Schechter’s professional colleagues.

C. Abuse of process

Schechter alleged that Pitts also committed

the tort of abuse of process by repeatedly filing copies of a video recording

of the statements to Houston City Council that were the subject of the

defamation claim. The record reflects

that Pitts took the position during pretrial discovery that he did not have a

copy of the recording and that he was unable to obtain one from any public

source. He insisted that a copy be

produced to him by Schechter, who complied, designating it as being

confidential for purposes of the protective order governing the case. The record does not reflect any objection by

Pitts to this designation of confidentiality.

The protective order specified that

“confidential information shall not be filed with the clerk of the Court nor

included in whole or in part in pleading, motions or briefs.” The order did permit the filing of

confidential materials under seal “should the Court need to examine them as evidence

in a hearing or other pretrial proceeding.”

The order further provided that confidential information “shall not be

disclosed directly or indirectly to any person, including the media, other than

those authorized by this Protective Order without the consent of the

non-disclosing Party, or upon further order of the Court.”

On appeal, Pitts has not contended

that his actions were not violations of the protective order. To the contrary, Pitts affirmatively testified

that the video recording was subject to a protective order, that he filed it

without placing it under seal, and that, in so doing, he failed to follow the

proper procedure. On cross-examination

he agreed he was responsible for the recording being filed on three separate

occasions without being placed under seal.

Schechter’s counsel testified that he complained to Pitts in writing

about each of the first two violations, but Pitts nevertheless continued to

attach the videorecording to his public filings.

Although Schechter suggested to the

jury that Pitts’s actions resulted in confidential information being published

in a newspaper article, no evidence was presented at trial to show that any

information published by the newspaper could be directly traced to Pitts’s

violations of the protective order. The

only actual damages requested by Schechter were litigation costs in the amount

of $10,146.50 incurred in attempts to secure Pitts’s compliance with the

protective order and to remediate or reverse the effects of the

violations. Schechter also sought and

obtained a jury finding by clear and convincing evidence that the abuse of

process damages resulted from Pitts’s malice.

The jury found Pitts liable to

Schechter on his claim of abuse of process and awarded $10,146.50 in actual

damages and $15,000 in exemplary damages.

On appeal, Pitts argues that the evidence was legally and factually

insufficient to support an abuse-of-process cause of action because this claim

was improperly based on litigation conduct.

In addition, he contends that the judgment must be reversed because

there is no evidence of special damages.

The elements of the cause of action

for abuse of process include: (1) the defendant made an illegal, improper,

perverted use of the process; (2) in so doing the defendant had an

ulterior motive or purpose; and (3) damage resulted

to the plaintiff from the irregularity. Detenbeck v. Koester , 886 S.W.2d 477,

480 (Tex. App.—Houston [1st Dist.] 1994, writ dism’d). To recover for abuse of process in Texas, a

claimant must demonstrate that he suffered special damages, i.e. some physical

interference with the claimant’s person or property in the form of an arrest,

attachment, injunction, or sequestration.

See Martin v. Trevino , 578

S.W.2d 763, 766769 (Tex. Civ. App.—Corpus Christi 1978, writ ref’d n.r.e.); see also Tex. Beef Cattle Co. v. Green ,

921 S.W.2d 203, 209 (Tex. 1996). The

policy supporting this rule is that it “assures good faith litigants access to

the judicial system without fear of intimidation by a countersuit.” Tex.

Beef Cattle , 921 S.W.2d at 209 (quoting Martin ,

578 S.W.2d at 768 ). The special damage

requirement also serves to avoid needless and vexatious litigation. See id .

Schechter claimed no damages for

abuse of process other than his legal fees incurred in the course of responding

to Pitts’s improper filings in violation of the protective order. But for purposes of the special-injury

requirement, “[i]t is insufficient that a party has suffered the ordinary

losses incident to defending a civil suit, such as inconvenience,

embarrassment, discovery costs, and attorney’s fees.” Id .

at 208. Schechter’s appellate brief

identifies no other evidence of special injury.

Accordingly, we sustain Pitts’s issues challenging the awards of

damages, including punitive damages, on Schechter’s abuse-of-process claim.

IV.

Conclusion

We affirm the judgment of the trial court in all

respects concerning Schechter’s contract claims against Pitts. We also affirm the judgment with respect to

non-economic and exemplary damages awarded under Schechter’s defamation claim.

We reverse for evidentiary insufficiency that portion of the judgment

that awarded Schechter $1,000 in economic damages on his professional colleague

claim, and we render judgment that Schechter take nothing in economic damages

on that cause of action. We also find the

evidence of special injury arising from Schechter’s claim of abuse of process

to be legally insufficient . We therefore reverse and render judgment that

Schechter take nothing on his abuse-of-process claim against Pitts. The judgment of the trial court is affirmed

in all other respects.

Michael

Massengale

Justice

Panel

consists of Chief Justice Radack and Justices Massengale and Nuchia. *

*

Appellants and cross-appellees Gary Pitts and Pitts

& Collard, LLP have filed a motion for rehearing of our original

opinion. Appellees and cross-appellants

Arthur L. Schechter, Arthur L. Schechter, P.C. d/b/a Schechter &

Associates, Schechter & Marshall, L.L.P., and Schechter, McElwee &

Shaffer, L.L.P. also filed a motion for rehearing. We deny Pitts’s motion and grant Schechter’s

motion. We withdraw our opinion and

judgment of May 12, 2011, and we issue this opinion and judgment in their

place.

[1]

Pitts

& Collard’s interest in this case was assigned to Pitts because the firm

closed its business except to wind up these pending cases, and Collard settled

with Schechter on his own behalf and on behalf of his one-half interest in the

partnership. For simplicity, some references

to “Pitts” in this opinion denote both the individual and the partnership. Similarly, because of the unity of interests,

Schechter’s law firms may be referred to as “the Schechter parties” or

“Schechter.”

[2]

Schechter

contends that the issue of legal sufficiency of the evidence was not preserved. To

preserve a complaint for appellate review, a party must first demonstrate that

the complaint was made to the trial court by a timely request, objection, or

motion. Tex. R. App. P. 33.1.

A “no-evidence” issue is raised in the trial court and preserved for

appellate review in one of five ways: (1) a motion for instructed verdict, (2)

a motion for judgment n.o.v., (3) an objection to the submission of the issue

to the jury, (4) a motion to disregard the jury’s answer to a vital fact issue,

or (5) a motion for new trial. T.O. Stanley Boot Co. v. Bank of El Paso ,

847 S.W.2d 218, 220 (Tex. 1992); Cecil v.

Smith , 804 S.W.2d 509 , 510–11 (Tex. 1991); El-Khoury v. Kheir , 241 S.W.3d 82, 86 (Tex. App.—Houston [1st

Dist.] 2007, pet. denied). Pitts filed five motions for judgment n.o.v.,

in which he argued that there was no evidence or jury finding that he breached

the nine letter agreements, that there was no evidence that the alleged breach

was material, and that Schechter waived the excuse of prior repudiation by not

promptly suing Pitts and instead waiting for Pitts’s performance under the

contract. In addition, Pitts argued at

length in his initial motion for judgment n.o.v. that the nine letter

agreements were an integrated contract and were not ambiguous, therefore the

jury should not have been permitted to consider parol evidence in determining

whether Pitts breached the contract and whether his breach preceded Schechter’s

contractual breach. Pitts also filed a

motion for new trial, in which he argued, among other things, that the evidence

was legally and factually insufficient to support the jury’s answers on these

issues. Pitts’s motions for judgment

n.o.v. and his motion for new trial were sufficient to inform the trial court

of the complaints he now raises on appeal, i.e., that there was no evidence to

support Schechter’s affirmative defenses and that he did not breach the nine

letter agreements because they unambiguously do not require him to share the

work. Thus, we conclude that these issues

are preserved for our review.

[3]

In his motion for new trial, as on appeal, Pitts

argued that the evidence was factually insufficient to support the jury’s

finding as to Schechter’s affirmative defenses.

The standard of review of the denial of a motion for new trial is abuse

of discretion. Champion Int’l Corp. v. Twelfth Court of Appeals , 762 S.W.2d 898,

899 (Tex. 1988) (orig. proceeding). A

trial court abuses its discretion when it acts in an arbitrary or unreasonable

manner, or if it acts without reference to any guiding rules or principles. Downer

v. Aquamarine Operators, Inc. , 701 S.W.2d 238 , 241–42 (Tex. 1985).

[4] Pitts also contends that

Schechter receives a double-recovery windfall if he is permitted to keep the

full measure of attorney’s fees he collected from the breast-implant clients

and also recover damages from Pitts for out-of-pocket expenses to hire extra

employees to do the work that Pitts failed to perform. This argument does not directly support the

issue raised by Pitts, i.e. that Schechter had a continuing contractual

obligation to split the fees collected. The

windfall complaint instead goes to the measure of damages awarded for Pitts’s

breach — a matter not contested through an issue challenging the legal or factual

sufficiency of the evidence to support the amount of the award.

[5]

In

the sole issue addressed by Pitts’s motion for rehearing, Pitts contends that

the parties agreed and stipulated before trial that any recovery by Schechter,

including any recovery for attorney’s fees, would be reduced by half to account

for Schechter’s settlement with Collard.

We have reviewed the record excerpts relied upon by Pitts, and it is

apparent that the context of the relevant stipulation was a discussion of

Pitts’s motion in limine and Pitts’s damages claims against Schechter. Although the parties did agree to refrain

from mentioning the Collard settlement, they only discussed reducing any jury

award on Pitts’s claims for damages, and in particular there was no discussion

about the effect on a jury award on Schechter’s claims for attorney’s

fees. The discussion culminated with the

trial court stating: “the way to

resolve this is that this is a suit brought by Pitts & Collard for

100 percent and then with the agreement of everybody that at the end of

the day, however much the jury awards, we cut it in half.” Counsel for both Pitts and Schechter

indicated their agreement on the record.

The stipulation thus did not relate to the Collard settlement’s effect

on any claim asserted by Schechter.

[6]

Our

original opinion interpreted this language in Osterberg to require that we “‘make an independent examination of

the whole record’ so as to ensure that ‘the judgment does not constitute a

forbidden intrusion on the field of free expression.’” E.g. ,

Snyder v. Phelps , 131 S. Ct. 1207,

1216 (2011); Bose Corp. v. Consumers

Union of U.S., Inc. , 466 U.S. 485, 499 , 104 S. Ct. 1949, 1958 (1984); New York Times , 376 U.S. at 285 , 84 S.

Ct. at 728 . In light of additional

briefing provided by the parties on Schechter’s motion for rehearing, and for

the reasons provided above, we now conclude that Osterburg does not require a de novo review in response to an

allegation of procedural waiver of the First Amendment requirement of clear and

convincing evidence of actual malice to support a public figure’s defamation

claim.

*

The

Honorable Sam Nuchia, Senior Justice, Court of Appeals for the First District

of Texas, sitting by assignment.