# Elness Swenson Graham Architects, Inc.// RLJ II-C Austin Air, LP RLJ II-C Austin Air Lessee, LP And RLJ Lodging Fund II Acquisitions, LLC v. RLJ II-C Austin Air, LP RLJ II-C Austin Air Lessee, LP And RLJ Lodging Fund II Acquisitions, LLC// Elness Swenson Graham Architects, Inc. > Texas Court of Appeals, 3rd District (Austin) · April 10, 2015 URL: https://www.frixlaw.com/law-library/cases/4051046 ## Case - **Court:** Texas Court of Appeals, 3rd District (Austin) - **Decided:** April 10, 2015 - **Precedential status:** Published - **Opinion:** Opinion - **Cited by:** 0 later opinions in the Frix Law Library ## Citator (automated) - No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases. - Full citator and citing cases: https://www.frixlaw.com/law-library/cases/4051046 ## Opinion text ACCEPTED 03-14-00738-CV 4853036 THIRD COURT OF APPEALS AUSTIN, TEXAS 4/10/2015 5:50:17 PM JEFFREY D. KYLE CLERK Oral Argument Requested No. 3-14-00738-CV FILED IN 3rd COURT OF APPEALS AUSTIN, TEXAS In The Court of Appeals For The 4/10/2015 5:50:17 PM Third District of Texas JEFFREY D. KYLE Clerk Elness, Swenson, Graham § From the 200th District Court Architects, Inc. § Appellants and Cross-Appellees, § § v. § § RLJII-C Austin Air, LP, § RLJ II-C Austin Air Lessee, LP § and RJL Lodging Fund II § Acquisitions, LLC § Appellees and Cross-Appellants. § Of Travis County, Texas CROSS-APPELLANTS’ BRIEF MUNSCH, HARDT, KOPF & HARR, P.C. Michael W. Huddleston Benton T. Wheatley State Bar No. 10148415 State Bar No. 24015171 J. Stephen Gibson Tracy McCreight State Bar No. 07866000 State Bar No. 24037064 3800 Ross Tower 401 Congress Avenue 500 North Akard Street Suite 3050 Dallas, Texas 75201 Austin, TX 78701 214-855-7500 telephone 512-391-6100 telephone 214-855-7584 facsimile 512-391-6149 facsimile Email: mhuddleston@munsch.com Email: bwheatley@munsch.com Email: sgibson@munsch.com Email: tmccreight@munsch.com ATTORNEYS FOR APPELLEES, CROSS-APPELLANTS MHDocs 6062453_7 12690.2 IDENTITY OF PARTIES AND COUNSEL The undersigned counsel of record, pursuant to Texas Rule of Appellate Procedure 38.2, certifies that the following persons have an interest in the outcome of this case: Appellants, Cross-Appellees: Elness, Swenson, Graham Architects, Inc. Appellants, Cross-Appellees’ Weston M. Davis Counsel on Appeal: Gregory N. Ziegler Matthew Mumm Macdonald Devin, P.C. 1201 Elm Street 3800 Renaissance Tower Dallas, TX 75270 Appellants, Cross-Appellees’ Weston M. Davis Counsel at Trial: Gregory N. Ziegler Matthew Mumm Macdonald Devin, P.C. 1201 Elm Street 3800 Renaissance Tower Dallas, TX 75270 Appellees, Cross-Appellants: RLJ II-C Austin Air, LP RLJ II-C Austin Air Lessee, LP RLJ Lodging Fund II Acquisitions, LLC Appellees, Cross-Appellants Michael W. Huddleston Counsel on Appeal: J. Stephen Gibson Munsch Hardt Kopf & Harr, P.C. 3800 Ross Tower 500 North Akard Street Dallas, Texas 75201 i MHDocs 6062453_7 12690.2 Appellees, Cross-Appellants Benton T. Wheatley Counsel at Trial: Tracy McCreight Munsch Hardt Kopf & Harr, P.C. 401 Congress Avenue Suite 3050 Austin, TX 78701 By: /s/ Michael W. Huddleston Attorney for Appellees, Cross- Appellants ii MHDocs 6062453_7 12690.2 STATEMENT CONCERNING ORAL ARGUMENT Appellees and Cross-Appellants respectfully request oral argument in this case. Appellees and Cross-Appellants respectfully submit that oral argument will help the Court in evaluating the issues necessary to the resolution of this appeal. iii MHDocs 6062453_7 12690.2 TABLE OF CONTENTS IDENTITY OF PARTIES AND COUNSEL .............................................................i STATEMENT CONCERNING ORAL ARGUMENT ........................................... iii TABLE OF CONTENTS ..........................................................................................iv INDEX OF AUTHORITIES...................................................................................ixx I. STATEMENT OF THE CASE ....................................................................... 1 II. ISSUES PRESENTED ....................................................................................4 III. STATEMENT OF FACTS .............................................................................. 6 A. Separate Contracts With Separate and Distinct Promised Performances on the Project. ................................................................. 7 B. Separate and Distinct Acts and Omissions Breaching Separate and Distinct Contractual Obligations. .......................................................... 9 C. Suit and Settlements By the Soils Engineer and the General Contractor. ...........................................................................................11 D. The Trial Court Rules That the One Satisfaction Rule Applies.......... 12 E. Attorney’s Fees Allowed Only for Breach of Contract Claim Against the Architect. .......................................................................................13 F. The Trial Court Renders Final Judgment. ...........................................13 IV. SUMMARY OF ARGUMENT .....................................................................14 A. The One Satisfaction Rule Does Not Apply. ......................................14 B. RLJ Entitled To Attorney’s Fees For the Presentation of the Breach of Contract Claims Against the Architect, General Contractor, and Soils Engineer Either If These Parties Shared a Joint and Several Contractual Duty Or If the Damages Were “Indivisible.” .................. 15 V. ARGUMENT AND AUTHORITIES ...........................................................16 A. The One Satisfaction Rule Does Not Apply. ......................................17 iv MHDocs 6062453_7 12690.2 1. This Case Involves Contractual, Not Tort, Liability. ............... 18 2. The One Satisfaction Rule Was Developed to Address Settlements In Tort Cases With Less Than All Defendants After the Legislature Authorized Joint and Several Liability. ........... 19 a. Generally There Was No Joint & Several Tort Liability at Common Law. ......................................20 b. There Was No General Right of Contribution at Common Law. .......................................20 c. Statute Allowed Collection of All Damages From Any Defendant and Gave Defendant the Right to Contribution from the Other Tortfeasors, But Fails to Address Settlement With Less Than All Tortfeasors. ....................................21 d. The One Satisfaction Rule Was Designed to Address Joint and Several Liability In Tort Cases Only. ....................................................................22 3. The One Satisfaction Rule Only Applies In Cases Involving Joint Liability. ...........................................................................23 a. Unlike Tort Cases, Joint Liability in Contract Cases Requires More Than Common, Indivisible Damages. .....................................25 b. Without a Joint Contractual Obligation, Settlement Credit Under the One Satisfaction Rule Allowed the Architect to Do Indirectly What It Could Not Do Directly. ....................................................................31 c. This Court Has Rejected Application of the One Satisfaction Rule to Contractual Liability Without a Joint Contractual Obligation. ....................................................................32 v MHDocs 6062453_7 12690.2 d. Applying the One Satisfaction Rule Without Joint Contractual Liability Obliterates the Collateral Source Exception. ..........................................33 e. This Case Involved No Joint Contractual Liability of the Architect and the Settling Defendants. ....................................................................34 1) The Performance Could Not Be the Same by Operation of Law: General Contractors Legally Precluded From Preparing Plans & Specifications. ........................34 2) The Performance of the Architect and the Settling Defendants Was Not Alleged To Be the Same.......................................35 3) The Architect Argued That Its Duty Was Different From Those of the Settling Defendants. .............................................38 4. The One Satisfaction Rule Does Not Apply Because the Jury’s Verdict Did Not Award Damages for an “Indivisible” Injury.. 39 a. The Charge Submitted Apportioned Damages. ....................................................................40 1) The Plain Language of the Question Asked Determines What the Jury Found. .........................................................41 2) The Plain Language of the Question Limited Damages to Those Resulting from the Architect’s “[F]ailure to [C]omply [W]ith the Architectural Contract.” .........................................................42 b. The Jury Was Asked To Apportion and in Fact Apportioned Damages. ...........................................45 vi MHDocs 6062453_7 12690.2 5. No Right to Application of One Satisfaction Rule or Contribution Exists In Contract Cases In Light of Section 33.001. .......................................................................................48 6. Applying the One Satisfaction Rule in Contractual Liability Cases Impairs Contract Obligations In Violation of Texas Constitution Article I, §16. .......................................................53 a. Texas Public Policy Strongly Favors Freedom of Contract. ......................................................53 b. The One Satisfaction Rule Impermissibly Impairs Contractual Obligations.....................................54 c. Freedom of Contract Outweighs One Satisfaction’s Questionable Objectives. .........................55 7. The Architect Is Procedurally Barred From Asserting the One Satisfaction Rule. ......................................................................56 a. Waived by Failure to Specially Except. .........................56 b. Waived by Failure to Request Question or Instruction. ....................................................................56 c. Waived By Failure to Plead as an Affirmative Defense. ......................................................57 d. Barred By Laches. ..........................................................58 B. No Segregation of Attorney’s Fees Was Required. ............................59 1. There Is No Need to Segregate Fees For Claims Requiring Proof of the Same Facts. ...........................................................60 2. If the One Satisfaction Rule Applies, It Requires Proof of Breach of the Same Promised Performance and an Indivisible Injury. ........................................................................................61 3. Alternatively, If Proof of Indivisible Injury Alone is Enough for the Application of the One Satisfaction Rule, Segregation of Fees Was Still Not Required. ....................................................61 vii MHDocs 6062453_7 12690.2 VI. CONCLUSION AND PRAYER ...................................................................62 CERTIFICATE OF COMPLIANCE .......................................................................64 CERTIFICATE OF SERVICE ................................................................................65 APPENDIX IN SUPPORT OF CROSS-APPELLANTS’ BRIEF ..........................66 viii MHDocs 6062453_7 12690.2 INDEX OF AUTHORITIES Page(s) CASES Allan v. Nersesova, 307 S.W.3d 564 (Tex. App.—Dallas 2010, no pet.) ..........................................44 Amco Trust, Inc. v. Naylor, 159 Tex. 146, 317 S.W.2d 47 (1958) .................................................................32 AMX Enters., Inc. v. Bank One, N.A., 196 S.W.3d 202 (Tex. App.—Houston [1st Dist.] 2006, pet. denied) ............... 49 Austin Road Co. v. Pope, 147 Tex. 430, 216 S.W.2d 563 (1949) ...............................................................21 Bejjani v. TRC Servs., Inc., No. 14-08-00750-CV, 2009 WL 3856924 (Tex. App.—Houston [14th Dist.] Nov. 19, 2009, no pet.) .............................................................................57 Bonniwell v. Beech Aircraft Corp., 663 S.W.2d 816 (Tex.1984)................................................................................48 Bradshaw v. Baylor University, 126 Tex. 99, 84 S.W.2d 703 (1935) ...................................................................22 Brewer & Pritchard, P.C. v. AMKO Res. Int’l, LLC, No. 14-13-00113-CV, 2014 WL 3512836 (Tex. App.—Houston [14th Dist.] July 15, 2014, no pet.) (mem. op.) ............................................................57 Brewer v. Nationsbank of Texas, N.A., 28 S.W.3d 801 (Tex. App.—Corpus Christi 2000, no writ) ..............................58 Brown v. Am. Transfer and Storage Co., 601 S.W.2d 931 (Tex. 1980) ..............................................................................33 Buccaneer Homes of Alabama, Inc. v. Pelis, 43 S.W.3d 586 (Tex. App.—Houston [1st Dist.] 2001, no pet.) ........................37 Buckner Orphans Home v. Berry, 332 S.W.2d 771 (Tex. Civ. App.—Dallas 1960, writ ref’d n.r.e.) .....................26 ix MHDocs 6062453_7 12690.2 Bullock v. Regular Veteran’s Ass’n of U.S., 806 S.W.2d 311 (Tex. App.—Austin 1991, no writ) .........................................56 Byer Custom Builders v. Franks, 389 S.W.3d 880 (Tex. App.—Houston [14 Dist.] 2012, no pet. hist.) .........39, 43 C.H. v. Dep’t of Family & Protective Servs., No. 01-11-00385-CV, 2012 WL 586972 (Tex. App.—Houston [1st. Dist.] Feb. 23, 2012, pet. denied) (mem. op.) .....................................................41 City of Fort Worth v. Johnson, 388 S.W.2d 400 (Tex. 1964) ..............................................................................58 Coleman v. United Savings Ass’n of Texas, 846 S.W.2d 128 (Tex. App.—Fort Worth 1993, no writ) ..................................51 Columbia Rio Grande Healthcare, L.P. v. Hawley, 284 S.W.3d 851 (Tex. 2009) ..............................................................................42 Crown Life Ins. Co. v. Casteel, 22 S.W.3d 378 (Tex. 2000).....................................................................24, 39, 49 CTTI Priesmeyer, Inc. v. K&O Limited Partnership, 164 S.W.3d 675 (Tex. App.—Austin 2005, no pet.) ...................................passim Dalworth Restoration, Inc. v. Rife-Marshall, 433 S.W.3d 773 (Tex. App.—Fort Worth 2014. pet. dism’d w.o.j.) ................. 58 Deal v. Madison, 576 S.W.2d.................................................................................................... 21-22 Dick’s Last Resort of West End, Inc. v. Market/Ross, Ltd., 273 S.W.3d 905 (Tex. App.—Dallas 2008, pet. denied)....................................56 Duncan v. Cessna Aircraft Co., 665 S.W.2d 414 (Tex. 1984) .......................................................................passim El Paso Natural Gas Co. v. Berryman, 858 S.W.2d 362 (Tex. 1993) ..............................................................................50 Energy Reserves Group v. Kansas Power & Light, 459 U.S. 400 (1983) ............................................................................................54 x MHDocs 6062453_7 12690.2 Export Worldwide, Ltd. v. Knight, No. SA 05 CA 647 XR, 2007 WL 628746 (W.D. Tex. Feb. 27, 2007) ............. 27 Fairfield Insurance Co. v. Stephens Martin Paving, LP, 246 S.W.3d 653 (Tex. 2004) ..............................................................................53 First Title Co. of Waco v. Garrett, 860 S.W.2d 74 (Tex. 1993).................................................................................24 Fortenberry v. Cavanaugh, No. 03-07-00310-CV, 2008 WL 4997568 (Tex. App.—Austin Nov. 26, 2008, pet. denied) (mem. op.) .............................................................................61 Galle, Inc. v. Pool, 262 S.W.3d 564 (Tex. App.—Austin 2008, pet. denied) ............................. 28-29 Gattegno v. The Parisian, 53 S.W.2d 1005 (Tex. Comm’n App. 1932, holding approved) ..................20, 22 GE Capital Commercial Inc. v. Worthington Nat’l Bank, 754 F.3d 297 (5th Cir. 2014) .......................................................................passim Green v. Flournoy, No. 03-10-00299-CV, 2011 WL 3435735 (Tex. App.—Austin Aug. 5, 2011, no pet.) (mem. op.)....................................................................................41 Gym-N-1 Playgrounds, Inc. v. Snider, 220 S.W.3d 905 (Tex. 2007) ..............................................................................53 Haygood v. DeEscabedo, 356 S.W.3d 390 (Tex. 2012) ..............................................................................33 Hoffmann v. Dandurand, 180 S.W.3d 340 (Tex. App.—Dallas 2005, no pet.) ..........................................50 Hudspeth v. Enter. Life Ins. Co., 358 S.W.3d 373...................................................................................................49 Hunt v. Ellisor & Tanner, 739 S.W.2d 933 (Tex. App.—Dallas 1987, writ denied) ....................... 36-37, 43 Hunter v. Fort Worth Capital Corp., 620 S.W.2d 547 (Tex. 1981) ..............................................................................51 xi MHDocs 6062453_7 12690.2 In re Sewell, 413 B.R. 562 (Bankr. E.D. Tex. 2009) ...............................................................26 InvestIn.com v. Europa Int’l , Ltd., 293 S.W.3d 819 (Tex. App.—Dallas 2009, pet. denied)....................................27 Jim Walters Homes v. Reed, 711 S.W.2d 617 (Tex. 1986) ..............................................................................18 K-Bar Servs., Inc. v. English, No. 03-05-00076-CV, 2006 WL 903735 (Tex. App.—Austin Apr. 7, 2006, no pet.) ......................................................................................................27 Landers v. East Texas Salt Water Disposal Co., 151 Tex. 251, 248 S.W.2d 731 (1952) ........................................................passim Langever v. Miller, 124 Tex. 80, 76 S.W.2d 1025 (1934) .................................................................54 LJ Charter, LLC v. Air America Jet Charter, Inc., No. 14-08-00534-CV, 2009 WL 4794242 (Tex. App.—Houston [14th Dist.] Dec. 15, 2009, pet. denied) ..................................................... 24, 26, 30-31 Mancorp, Inc. v. Culpepper, 802 S.W.2d 226 (Tex. 1990) ..............................................................................50 McCarty v. Wani Venture, A.S., 251 S.W.3d 573 (Tex. App.—Houston [1st Dist.] 2007, pet. denied) ............... 57 McClellan v. Scardello Ford, Inc., 619 S.W.2d 593 (Tex. Civ. App.—Amarillo 1981, no writ)..............................26 Med. Specialist Group, P.A. v. Radiology Assocs., L.L.P., 171 S.W.3d 727 (Tex. App.—Corpus Christi 2005, pet. denied) ......................46 Medina v. Hart, 240 S.W.3d 16 (Tex. App.—Corpus Christi 2007, pet. denied) ........................38 Merit Drilling Co. v. Honish, 715 S.W.2d 87 (Tex. App.—Corpus Christi 1986, writ ref’d n.r.e.) ................. 48 Minn. Min. & Mfg. Co. v. Nishika, 953 S.W.2d 733 (Tex. 1997) ..............................................................................41 xii MHDocs 6062453_7 12690.2 OAIC Commercial Assets, L.L.C. v. Stonegate Village, L.P., 234 S.W.3d 726 (Tex. App.—Dallas 2007, pet. denied)....................................31 Osborne v. Jauregui, 252 S.W.3d 70 (Tex. App.—Austin 2008, pet. denied) ............................... 29-30 Osterberg v. Peca, 12 S.W.3d 31 (Tex. 2000)...................................................................................41 Oyster Creek Fin. Corp. v. Richwood Investments II, Inc., 176 S.W.3d 307 (Tex. App.—Houston [1st Dist.] 2004, pet. denied) ......... 49-50 Pagosa Oil & Gas, L.L.C. v. Marrs & Smith P’ship, 323 S.W.3d 203 (Tex. App.—El Paso 2010, pet. denied) ..................................57 Paschall v. Peevey, 813 S.W.2d 710 (Tex. App.—Austin 1991, writ denied)...................................49 Pilgrim’s Pride Corp. v. Smoak, 134 S.W.3d 880 (Tex. App.—Texarkana 2004, pet. denied) .............................46 Price Pfister, Inc. v. Moore & Kimmey, Inc., 48 S.W.3d 341 (Tex. App.—Houston [14th Dist.] 2001, pet. denied) ............... 38 Reliant Energy Servs., Inc. v. Cotton Valley Compression, L.L.C., 336 S.W.3d 764 (Tex. App.—Houston [1st Dist.] 2011, no pet.) ......................41 RenewData Corp. v. eMag Solutions, LLC, No. 03–05–00509–CV, 2009 WL 1255583 (Tex. App.—Austin May 6, 2009, pet. denied)................................................................................................57 Robertson v. ADJ Partnership, Ltd., 204 S.W.3d 484 (Tex. App.—Beaumont 2006, pet. denied) ................. 39, 43-44 Shoemake v. Fogel, 826 S.W.3d 933 (Tex. 1992) ..............................................................................24 Snyder v. Eanes Indep. Sch. Dist., 860 S.W.2d 692 (Tex. App.—Austin 1993, writ denied)...................................35 Stewart Title Guar. Co. v. Aiello, 941 S.W.2d 68 (Tex. 1997)...........................................................................46, 60 xiii MHDocs 6062453_7 12690.2 Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1 (Tex. 1992).................................................................24, 39, 58, 60 Sugar Land Props., Inc. v. Becnel, 26 S.W.3d 113 (Tex. App.—Houston [1st Dist.] 2000, no pet.) ........................57 Sun Oil Co. v. Robicheaux, 23 S.W.2d 713 (Tex. Comm. App. 1930).....................................................20, 22 Szczepanik v. First S. Trust Co., 883 S.W.2d 648 (Tex. 1994) ..............................................................................41 Tesfa v. Stewart, 135 S.W.3d 272 (Tex. App.—Fort Worth 2004, pet. denied) ............................42 Tex. & Pac. Ry. v. Levi & Bro., 59 Tex. 674 (1883)..............................................................................................33 THPD, Inc. v. Cont’l Imports, Inc., 260 S.W.3d 593 (Tex. App.—Austin 2008, no pet.) ..........................................41 Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299 (Tex. 2006) ........................................................................46, 60 Travelers Ins. Co. v. Joachim, 315 S.W.3d 860 (Tex. 2010) ..............................................................................31 Western Technologies, Inc. v. All-American Golf Center, Inc., 139 P.3d 858 (Nev. 2006) ...................................................................................44 White Budd VanNess P’ship v. Major-Gladys Drive Joint Venture, 798 S.W.2d 805 (Tex. App.—Beaumont 1990), writ dism’d, 811 S.W.2d 541 (Tex. 1991), cert. denied, 502 U.S. 861 (1991).....................................23, 37 Wood Motor Co. v. Nebel, 150 Tex. 86, 238 S.W.2d 181 (1951) .................................................................54 Zidell v. Bird, 692 S.W.2d 550 (Tex. App.—Austin 1985, no writ) .........................................26 xiv MHDocs 6062453_7 12690.2 STATUTES TEX. OCCUP. CODE §1051.701 .................................................................................35 TEX. CIV. PRAC. & REM. CODE §§32.001.................................................................50 TEX. CIV. PRAC. & REM. CODE §33.0001 et seq. .....................................................48 TEX. CIV. PRAC. & REM. CODE §§33.002.................................................................29 TEX. CIV. PRAC. & REM. CODE §33.012.......................................................30, 50, 52 TEX. CIV. PRAC. & REM. CODE §33.013...................................................................30 Chapter 38 of the Texas Civil Practice and Remedies Code ...................................59 OTHER AUTHORITIES Article 2212........................................................................................................ 21-23 Hodges, Contribution and Indemnity Among Tortfeasors, 26 Tex. L. Rev. 150, 151 n.11 (1947) ...........................................................................................21 House Bill 4 .............................................................................................................52 Senate Bill 890 .........................................................................................................52 TEX. R. CIV. P. 90 .....................................................................................................56 TEX. R. CIV. P. 94 ............................................................................................... 57-58 TEX. R. CIV. P. 278 ...................................................................................................56 Article I, §16 of the Texas Constitution ..................................................5, 14, 53, 56 Wigmore, Joint Tortfeasors and Severance of Damages: Making the Innocent Party Suffer Without Redress, 17 Ill. L. Rev. 458, 459) (1922) .......... 21 Williston on Contracts, §§ 36:1 ...............................................................................26 xv MHDocs 6062453_7 12690.2 I. STATEMENT OF THE CASE This is a breach of contract case involving a local Courtyard by Marriott Hotel (the “Project”), located on East Ben White Boulevard, near Bergstrom International Airport. (CR187; App. A). 1 The foundation of the Project failed in numerous respects and resulted in varied injuries to the property, resulting in $7,536,624.00 of claimed past, present, and future damages. (7RR48; 9RR123- 124, 136; 7RR16-18, 26-39; 3RR133-136; PX-151, 16RR1-1145; 10RR29-31). As the original owner’s successor in interest and assignee, RLJ II-C Austin Air, LP; RLJ II-C Austin Air Lessee, LP; and RLJ Lodging Fund II Acquisitions, LLC (“RLJ” collectively), 2 alleged that the general contractor, EBCO General Contractor, Ltd. (the “General Contractor”), the geotechnical engineer, Terracon Consultants, Inc. (the “Soils Engineer”), and the architect, Elness, Swenson, Graham, Inc. (the “Architect”) failed to perform as specifically and individually promised in three separate and independent contracts. (CR184-218; App. A). After the trial court entered rulings on various pre-trial motions, the only claims being prosecuted were for breach of contract against the Architect, the General Contractor, and the Soils Engineer. (CR1057-62; 1063-64; 1083-84; CR1708-1710). The Soils Engineer settled its contractual liability with RLJ before 1 The Clerk’s Record is cited as “CR”; First Supplemental Clerk’s Record as “1SCR”; Second Supplemental Clerk’s Record as “2SCR”; Third Supplemental Clerk’s Record as “3SCR”. 2 White Lodging Services Corporation, Inc. “assigned the contracts and causes of action in this lawsuit to the RLJ Plaintiffs in this case.” (CR1124; App. B.) 1 MHDocs 6062453_7 12690.2 trial. (CR1080-81; CR1710). The General Contractor settled during trial. (7RR105- 108; CR1710).3 Trial proceeded on RLJ’s breach of contract claim against the Architect. The jury found that the Architect “fail[ed] to comply with the Architectural Contract regarding the structural engineering services required by the contract” in answer to Question 2 (the “Structural Engineering Question”) (CR1126; App. B). The jury then determined the amount that would reasonably compensate for damages “that resulted from [the Architect’s] failure to comply with the Architectural Contract” as found in the Structural Engineering Question. (CR1125- 27; App. B). The total amount of damages found by the jury was $700,000 for the difference in value from the hotel as constructed and the value had the Architect complied with the Architectural Contract, $70,000 for the cost of barrier remediation resulting from the Architect’s failure to comply, and $15,000 for the reasonable and necessary cost of repairs to the hotel due to the Architect’s failure to comply. (Id.) After trial, the Architect moved for credit under the “one satisfaction rule” for sums the General Contractor and the Soils Engineer (“Settling Defendants” collectively) paid in settlement of the contract claims against them. (CR1173- 1228). The trial court deemed the credit applicable because it concluded the 3 The Reporter’s Record is cited by “[Volume Number]RR.” Exhibits are cited to page or pages of the Reporter’s Record on which they or the pertinent parts thereof appear. 2 MHDocs 6062453_7 12690.2 damages were indivisible, despite the fact the court submitted and the jury found damages limited to those “that resulted from [the Architect’s] failure to comply with the Architectural Contract . . . .” (CR1437-41; CR1127; App. B, C). Moreover, the trial court concluded that the absence of contractual joint and several liability did not render the one satisfaction rule inapplicable. (CR1437-41; App. C). Applying the one satisfaction rule, the Court ordered that RLJ recover the from the Architect $516,650.96, which was the sum of the jury’s award of $785,000 as actual damages resulting from the Architect’s breach of contract and the attorney’s fee award of $901,650.96, less $1,170,000, which was the amount of the settlements of the Settling Defendants. (CR1711; App. D). The parties agreed to try the attorney’s fees to the court instead of the jury. RLJ presented evidence of its reasonable and necessary attorney’s fees for asserting the contractual claims against the Architect, the General Contractor, and the Soils Engineer. (3SCR3-611; 2SCR1603-05). However, the trial court only awarded fees for the contractual claim against the Architect and rendered judgment according to its application of the one satisfaction rule and its segregation of attorney’s fees. (CR1708-1712; App. D). The Architect timely filed its notice of appeal (CR1907-13) and RLJ timely perfected its cross-appeal (1SCR3-4). 3 MHDocs 6062453_7 12690.2 II. ISSUES PRESENTED A. Whether the trial court erred in applying the one satisfaction rule and thus reducing the damages found to have resulted from the specific breach of the Architectural Contract by the Architect by the amounts received in settlement for damages resulting from the breach of the different contractual duties owed by the Soils Engineer and the General Contractor (CR1173-79, 1437-41; 2SCR1578-97, 1637-1745) including but not limited to the following sub-issues: 1. Whether, in addition to an indivisible injury, joint and several liability is required for application of the one satisfaction rule, and, if so, whether the liable and settling parties must have contracted for the same performance to deem a contractual liability joint and several? 2. Whether the one satisfaction rule does not apply due to the absence of an “indivisible injury” because: (a) the damages found by the jury were specifically limited to those caused by the contractual breach of the non-settling defendant; (b) the non-settling defendant in its closing argument advised the jury that it should not include damages it deemed attributable to the Settling Defendants; or (c) both? 3. Whether the one satisfaction rule does not apply unless the liability of the non-settling defendant is based on a non-contractual theory? 4 MHDocs 6062453_7 12690.2 4. Whether application of the one satisfaction rule violates article I, §16 of the Texas Constitution guaranteeing freedom of contract by depriving a party of the benefit of a contractual agreement with another and applying those benefits to offset the liability of a third- party? 5. Whether the Architect waived the right to seek application of the one satisfaction rule by any one or more of the following: (a) failing to specially except to a lack of settlement allocation; (b) failing to plead the rule as an affirmative defense, (c) inviting the jury to exclude from its damage finding damages caused by the Settling Defendants; or (d)failing to object to a jury question that permitted the jury to only find damages attributable to the Architect’s breach of contract? B. Either if there was a joint and several contractual liability between the Architect and the Settling Defendants or if the damages were awarded for an indivisible injury, whether the trial court erred in refusing to award RLJ reasonable and necessary attorney’s fees incurred in the presentation of the breach of contract claims against the Architect, the General Contractor and the Soils Engineer and in awarding those fees attributable only to the presentation of the claim against the Architect? (3SCR3-611; 2SCR1603-05, 1600-01, 1711). 5 MHDocs 6062453_7 12690.2 III. STATEMENT OF FACTS The record in this case does not support the application of the one satisfaction offset against the damages found caused by the Architect. First, the evidence shows separate contractual duties, not common or overlapping duties. Thus, there is no basis for joint and several liability, a sine qua non for application of the one satisfaction rule. Second, the jury, in answer to Question 3, determined the damages caused by the Architect. The jury did not find an indivisible amount of damages caused by the settling defendants and the Architect. Third, the Architect invited the jury to reduce the damages finding based on damages caused by the settling defendants. Indeed, the Architect did not raise the issue of one satisfaction until after the trial, failing to plead it, specially except regarding it, and failing to object to either the omission of a segregated damages question or to Question 3, which focused on damages caused by the Architect only. Finally, Question 3 and the record show that the jury reduced the amount of damages it awarded resulting from the Architect’s breach to remove amounts caused by the non-settling parties. Thus, the record shows that recovery of the full amount awarded in answer to Question 3 did not present even the possibility of a double recovery or more than one satisfaction. Having suffered over $7 million in damages, receiving settlement funds of $1,170,000 for the damages caused by the breaches by the General Contractor and 6 MHDocs 6062453_7 12690.2 Soils Engineer, plus the jury award of $785,000 for the damages caused by the Architect, certainly would not amount to more than one satisfaction. Indeed, despite three contracts for millions of dollars and separate and distinct promised performances, RLJ received a building with serious deficiencies that have caused loss and will continue to do so. Yet, RLJ is forced to accept the Architect benefiting from the other’s breaches of contract to which it was not a party by receiving two damage reductions or offsets: one by the limited damage inquiry in the jury charge and a second from the application of the one satisfaction rule. A. Separate Contracts With Separate and Distinct Promised Performances on the Project. The contracts with the Architect, the General Contractor, and the Soils Engineer did not promise the same performance. • The Soils Engineer agreed to assess site conditions and recommend specific foundation design parameters based on the same. (PX-3; 12RR6-11; 3RR161; App. E). • The General Contractor agreed to build the structure designed by the Architect with the assistance of its Structural Engineer, and comply with the plans and specifications of the Project. (PX-48; 12RR569-75; App. F). • The Architect, with the assistance of its Structural Engineer, agreed to prepare an appropriate foundation plan. (PX-15; 12RR30, 35, 47, 49; App. G). The Architectural Contract (PX-15; 12RR26-77; App. G) provided, among other things, that the Architect’s design services “include normal structural, 7 MHDocs 6062453_7 12690.2 mechanical and electrical engineering” (12RR39) along with “[s]tructural [e]ngineering design, document preparation and coordination” through “[o]ur Structural Engineering firm...Marlin Bridges Associates, Inc.” (12RR47). In conjunction with its retained Structural Engineer (PX-15; 12RR28), the Architect promised to provide a foundation design for the Project. (PX-15; 12RR30, 35, 47, 49; PX-13; 12RR17-25). The original owner White Lodging Services Corporation, Inc. contracted for the services of the Soils Engineer to provide “geotechnical services” including evaluating soil conditions and providing recommendations which would address “[f]oundation design and construction.” (PX-3; 12RR6-11; App. E). This information was to be supplied to the Architect and its Structural Engineer in connection with the Project’s foundation design. (PX-15; 12RR48; App. G). The original owner also separately contracted with the General Contractor to build the Project according to the Architect’s plans and specifications. (PX-48; 12RR569-75; App. F). The General Contractor agreed “that materials and equipment furnished will be of good quality[,]…that the work will be free from defect…and will conform to the requirements” (PX-48; 12RR616; App. F) of the Architect’s plans and specifications. (PX-48; 12RR610-11). After the construction was completed, the Project was found to have cracks in the slab and grade, shifting door frames, cracks in partition walls, cracks in the 8 MHDocs 6062453_7 12690.2 swimming pool, and perimeter drainage problems. (3RR118; 4RR78-79; 7RR47). Investigation revealed that the Project suffered from geotechnical engineering deficiencies, foundation design defects, and construction defects (DX-147; 17RR514; 7RR49-62), in breach of the separate contractual duties undertaken by the Architect, the General Contractor, and the Soils Engineer. B. Separate and Distinct Acts and Omissions Breaching Separate and Distinct Contractual Obligations. The Soils Engineer allegedly breached its contract by, among other things, failing to account for the amount of necessary site excavation. This breach resulted in soil expansion greater than the estimate in the Soils Engineer’s report. (CR192- 93, 197-98, 200-01, 209-12). The Soils Engineer miscalculated the potential vertical rise (PVR) of the soil and failed to recommend that enough of the soil be dug out and replaced with special engineered soil that did not have the expansive properties of the native soil, called “select fill.” (DX-147; 17RR510). The Architect breached its contract by failing to provide a foundation design that was adequate for the site. Specifically, the Architect’s Structural Engineer improperly designed the foundation and other structures by, among other things, failing to account for the limitations and recommendations in the Soils Engineer’s report, including designing a foundation insufficiently robust for the conditions reported by the Soils Engineer. (4RR122-124; 4RR150-151). The Architect’s Structural Engineer further failed to follow the Soil Engineer’s recommendations 9 MHDocs 6062453_7 12690.2 concerning the appropriate type of foundation design. (4RR122-124; 4RR150- 151). The General Contractor was alleged to have failed to build according to the plans and specifications supplied and provide a building free from defects, contrary to its promised contractual performance. (CR188-89). Richard Reeves, a construction manager expert, testified concerning the General Contractor’s specific construction omissions and defects, meaning that certain construction failed to comply with the plans and specifications provided by the Architect. (7RR49-62). These included: • A missing foundation grade beam (7RR53-54), • Reinforcement of the concrete slab with welded wire mesh lacking polypropylene fibers (7RR58), • Unconnected and improperly constructed drains (7RR49-51, 55-58, 60-62), • Improperly constructed “clean-out” access points to drains, sewer lines and vents that were covered with flooring and drywall (7RR51-53, 56-57), and • Concrete overpours that improperly encased pipes in concrete. (7RR58-60). Under Question 3 in the charge, the jury was asked to determine the amount of damages caused by the Architect, and thus it was allowed and indeed encouraged 10 MHDocs 6062453_7 12690.2 to reduce its damages award based on breaches of contract by the Settling Defendants. (CR1127; App. B). C. Suit and Settlements By the Soils Engineer and the General Contractor. As the original owner’s successor in interest and assignee, RLJ sued, among others, the Architect, the Soils Engineer, and the General Contractor for damages to the Project resulting from various breaches of contract that caused foundation and drainage problems. (CR188-218; App. A). Through pre-trial summary judgments and non-suits, the suit was confined as matter of law to RLJ’s contract claims against the General Contractor, the Soils Engineer and the Architect. (CR1708, 1710; 2SCR42; App. D). Before trial, and after the trial court restricted the case to contract claims, the Soils Engineer settled the contract claim against it for $70,000. (CR1080-81; CR1710; App. D). During trial, RLJ settled its contract claims against the General Contractor for $1.1 million. (7RR105-08; CR1710, 1226; App. D). As noted, the evidence showed that the damages to the Project from all contractual breaches of the Architect and Settling Defendants was at least $7,536,224. (7RR48; 9RR123-124, 136; 7RR16-18, 26-39; 3RR133-136; PX-151, 16RR1-1145; 10RR29-31). During closing arguments, RLJ argued that only $6,029,299 in damages was attributable to the Architect, the rest being attributable to the Settling Defendants and other responsible parties. (10RR29-31). The Architect similarly argued that the portion of RLJ’s damages attributable to the 11 MHDocs 6062453_7 12690.2 Architect was “zero,” because the fault was attributable to other parties. (10RR54- 56). RLJ’s contract claims against the Architect were then submitted to the jury. (CR1121-29; App. B). The jury found that the Architect breached its contract “by failing to comply … regarding the structural engineering services required.” (CR1126; App. B). Finding that the Architect breached the Architectural Contract in response to the Structural Engineering Question, the jury awarded $785,000 in damages that resulted from the Architect’s breach. (CR1125, 1127; App. B). D. The Trial Court Rules That the One Satisfaction Rule Applies. Four days later, the Architect claimed for the first time a credit for the General Contractor’s and Soils Engineer’s settlements under the one satisfaction rule. (CR1173-79). After entertaining RLJ’s response (2SCR1578-97), the trial court ruled that the one satisfaction rule applied solely because it deemed the claims against the Architect, the General Contractor, and the Soils Engineer all to be for one “indivisible injury.” (CR1439). It presumed the General Contractor’s and Soils Engineer’s settlements were payment for the same injury for which the jury awarded damages against the Architect. (CR1438). The trial court further reasoned “RLJ needed to identify that category of [divisible] damages [against the 12 MHDocs 6062453_7 12690.2 General Contractor] and state the amount apportioned to it.” 4 (CR1438). RLJ sought reconsideration of the trial court’s letter ruling via a Motion for Judgment (2SCR1606-1636) and a Motion for Reconsideration (2SCR1637-1745). The trial court denied both motions. (CR1905; 2SCR2102). E. Attorney’s Fees Allowed Only for Breach of Contract Claim Against the Architect. Per stipulation, RLJ submitted its attorney’s fees claim for resolution by the court. The trial court’s letter ruling suggested that RLJ was entitled to recover fees for presenting the contractual claims against the Architect, the General Contractor and the Soils Engineer. (CR1400; App. C). RLJ filed an amended application for those attorney’s fees in the amount of $1,388,019. (3SCR3-611; 2SCR1603-05). The trial court, however, ultimately decided to award attorney’s fees only for the breach of contract case against the Architect. (CR1711; App. D). F. The Trial Court Renders Final Judgment. The trial court rendered judgment for RLJ in the principal sum of $551,650.96, being the difference between the sum of the damage and attorney’s fees award against the Architect, less the sum of the settlements from the Settling Defendants. (CR1711; App. D). 4 The trial court was not clear whether this identification needed to be contained in the settlement agreements themselves or be presented in the evidence to the jury. (CR1438). RLJ was not given the opportunity to segregate or apportion damages to satisfy the trial court’s reasoning before the case was submitted to the jury. 13 MHDocs 6062453_7 12690.2 IV. SUMMARY OF ARGUMENT A. The One Satisfaction Rule Does Not Apply. The one satisfaction rule applies if, and only if, the liability of judgment debtor and settling defendants is joint and several. Indivisible injury alone is only sufficient to establish joint and several tort, not contractual, liability. If the one satisfaction rule applies at all, it applies in this case only if there is joint and several contractual liability. To have such liability, the Architect and the Settling Defendants must each have breached a promise to provide the same performance. Here, the promised performances were not the same, so the one satisfaction rule does not apply. Even if “indivisible” damages alone somehow is assumed arguendo to have created joint and several contractual liability, the jury’s damages finding was limited to the damages resulting from the Architect’s failure to comply. (CR1127; App. B). Further, RLJ would urge that the one satisfaction rule simply should not apply in contract cases such as this. The one satisfaction rule was judicially created to address a problem created by a statute that only applied to tort liability. Applying it in contract cases deprives the injured party of the benefit of its settlement agreement and transfers that benefit to the wrongdoer in violation of the freedom of contract guaranteed by Texas Constitution article I, section 16. 14 MHDocs 6062453_7 12690.2 In any event, the Architect waived application of the one satisfaction rule. It failed to plead this affirmative defense, was guilty of laches in waiting until after the verdict to assert it, failed to object to the failure of the damages question to segregate damages as it contends should have been done, and argued for the apportionment of damages in its closing argument. For all these reasons, as more fully articulated below, the trial court’s decision to credit RLJ’s settlement with the General Contractor and Soils Engineer to the damages the jury assessed against the Architect was erroneous. Accordingly, the judgment must be modified to restore the damages awarded to RLJ by the jury for the Architect’s breach of contract. B. RLJ Entitled To Attorney’s Fees For the Presentation of the Breach of Contract Claims Against the Architect, General Contractor, and Soils Engineer Either If These Parties Shared a Joint and Several Contractual Duty Or If the Damages Were “Indivisible.” If multiple defendants breached the same contractual duty, RLJ was entitled to recover attorney’s fees for the presentation against all those defendants because the preparation and proof would have been necessary for the case against any one of them. RLJ maintains that the Architect and the Settling Defendants here did not breach contractual undertakings to perform the same duties and, therefore, there was no joint and several contractual liability among the Architect and the Settling Defendants. However, if this Court holds otherwise, then it necessarily follows that RLJ is entitled to recover its attorney’s fees for cases against the Architect, the 15 MHDocs 6062453_7 12690.2 General Contractor and the Soils Engineer because the same preparation and proof would have been necessary for the case against any one of them. If so, there was no need to limit the recoverable attorney’s fees only to those attributable to the breach of contract case against the Architect. The same is also true if the trial court correctly ruled that the damages for the Architect’s breach were indivisible from those allegedly caused by the Settling Defendants. Again, RLJ maintains that the damages here were necessarily segregated by the nature of the damages question and under the arguments of the parties to the jury and presents this contention only if this Court determines that the one satisfaction rule applies. V. ARGUMENT AND AUTHORITIES The one satisfaction rule is intended under appropriate circumstances to prevent a plaintiff from receiving a double recovery. It was never been intended to be used to reduce damages found to have been caused by the remaining defendant by the amount of settlements entered with settling defendants. As applied in this case, the one satisfaction rule does not achieve the purpose of defeating a double recovery absent joint and several liability and indivisible damages. In fact, as applied, the rule violates Texas public policy encouraging settlement and the freedom to contract. The application here provides a strong disincentive to partial settlements, particularly in construction contract cases. In any event, the rule was 16 MHDocs 6062453_7 12690.2 not timely and appropriately raised by the Architect through timely pleading, exceptions, objections to the charge, and indeed the Architect invited the jury to do its own reduction in answering the damages question prior to applying the one satisfaction rule. A. The One Satisfaction Rule Does Not Apply. The decision to apply the one satisfaction rule was erroneous for many reasons. First, the rule requires at a minimum joint and several liability of the defendants. Here, the Architect was tried only on a breach of contract theory. Joint and several liability is limited to tort law. There was no evidence here of a joint and common contractual duty among the settling defendants and the Architect. Second, the damages reduced by the trial court here were not so-called common or indivisible damages. Instead, the jury found only “damages that resulted from [the Architect’s] failure to comply with the Architectural Contract . . . .” Finally, the record does not in any way support the notion that RLJ would be getting a double recovery absent application of the one satisfaction rule. The damages sought and as to which evidence was presented involved a claim of over $7 million. The jury was permitted and invited by counsel for the Architect to reduce its damage finding as to damages caused by others based on the fact the Court’s charge required that the damages had to have resulted from the Architect’s breach of contract. The jury is presumed to have read the charge and followed it. Thus, this is not a case of a 17 MHDocs 6062453_7 12690.2 double recovery; instead, with application of the settlements relating to separate contractual duties under the one satisfaction rule, it is the Architect who is unfairly receiving a double reduction. 1. This Case Involves Contractual, Not Tort, Liability. Because of pre-trial rulings and non-suits, the only claims pending before trial were RLJ’s contract claims against the General Contractor, the Soils Engineer and the Architect. (CR1708,1710; 2SCR42; App. D). Before trial, RLJ settled with the Soils Engineer for $70,000. (CR1080-81; CR1710; App. D). During trial, RLJ settled with the General Contractor for $1.1 million. (7RR105-08l; CR1226, 1710; App. D). Only RLJ’s contract claims against the Architect were submitted to the jury. Not only was the Architect’s liability purely contractual, the damages sought were only recoverable in contract. (CR1127; App. B). The alleged harm was economic loss to the subject of the contract itself – i.e., the Project. “When the injury is only the economic loss to the subject of a contract itself, the action sounds in contract alone.” Jim Walters Homes v. Reed, 711 S.W.2d 617, 617-18 (Tex. 1986). After trial, the Architect asserted for the first time it was entitled to credit under the one satisfaction rule for the Settling Defendants’ settlements. (CR1173- 1179). The trial court agreed (CR1710; 1437-41; App. C, D), conflating the tort 18 MHDocs 6062453_7 12690.2 joint and several liability with contract. According to the trial court, “Each party is liable for its own [contractual] breach which by itself results in indivisible damages[, j]ust as with tortfeasors who breach different common law duties that each proximately cause an indivisible damage.” (CR1439; App. C; emphasis added). 2. The One Satisfaction Rule Was Developed to Address Settlements In Tort Cases With Less Than All Defendants After the Legislature Authorized Joint and Several Liability. More than sixty years ago, the Texas Supreme Court deemed the risk of a double recovery no justification for depriving a plaintiff of a favorable settlement. [O]ur courts seem to have embraced the philosophy … that it is better that the injured party lose all of his damages than that any of several wrongdoers should pay more of the damages than he individually and separately caused. If such has been the law, from the standpoint of justice it should not have been …. Landers v. East Texas Salt Water Disposal Co., 151 Tex. 251, 248 S.W.2d 731, 734 (1952) (emphasis added). Fully understanding when the one satisfaction rule should and should not apply requires an appreciation of its history and why it was created in the first place. The one satisfaction rule was developed to correct a statutorily-created anomaly. In the early Twentieth Century, the Legislature attempted to alleviate the harshness of the common law prohibition of contribution claims by creating a contribution cause of action against other tortfeasors when a defendant was held 19 MHDocs 6062453_7 12690.2 liable for more than its per capita share of liability. But the statute did not address what happened if the plaintiff settled with one of the other defendants. The courts responded by creating the one satisfaction rule. If a defendant is subject to liability through joint and several liability for more than the damages he or she caused, a settlement by that defendant involves something that overlaps with a remaining non-settling joint and several defendant, thus allowing consideration of double recovery issues. Therefore, outside the context of joint and several tort liability, there is no other recognized justification for imposing the one satisfaction rule. a. Generally There Was No Joint & Several Tort Liability at Common Law. At common law, a tort suit could not be asserted against multiple defendants for damages to which each defendant contributed unless the defendants acted according to a common plan or scheme. Sun Oil Co. v. Robicheaux, 23 S.W.2d 713, 715 (Tex. Comm. App. 1930) (judgment adopted). Otherwise, there could be no joint tort liability. Instead, the plaintiff had to sue each defendant separately and establish that particular part of the injury that particular defendant caused. Id. b. There Was No General Right of Contribution at Common Law. Also, defendants were not permitted a right of contribution generally under Texas common law. Gattegno v. The Parisian, 53 S.W.2d 1005, 1007 (Tex. Comm’n App. 1932, holding approved). It was “against the policy of the law to 20 MHDocs 6062453_7 12690.2 adjust equities between wrongdoers, or to allow a [liable] person to found an action on his own wrong.” Austin Road Co. v. Pope, 147 Tex. 430, 216 S.W.2d 563, 564- 65 (1949). c. Statute Allowed Collection of All Damages From Any Defendant and Gave Defendant the Right to Contribution from the Other Tortfeasors, But Fails to Address Settlement With Less Than All Tortfeasors. The Legislature passed article 2212 (now Texas Civil Practice & Remedies Code chapter 32) to change these two perceived deficiencies. First, article 2212 allowed a tort defendant to be liable for all damages even if the common result of multiple actors’ independent torts. A plaintiff no longer bore the “intolerable burden” of proving particular damages attributable to a particular tort defendant in common injury cases. Hodges, Contribution and Indemnity Among Tortfeasors, 26 Tex. L. Rev. 150, 151 n.11 (1947); Wigmore, Joint Tortfeasors and Severance of Damages: Making the Innocent Party Suffer Without Redress, 17 Ill. L. Rev. 458, 459 (1922). Instead, the plaintiff could recover all tort damages from a single defendant. Deal v. Madison, 576 S.W.2d at 414. Article 2212 also created a right of action so that the defendant who was held liable for the total common damages and, thereby, paid more than its per capita 5 share of the total tort liability could sue to collect the excess payment from 5 At the time, liability was established by judgment and statutorily allocated equally among joint tortfeasors so the amount of potential contribution liability was fixed. Accordingly, there was no need to plead the one satisfaction rule. The rules concerning contribution are today vastly 21 MHDocs 6062453_7 12690.2 the other jointly liable defendants. Id.; Hodges, 26 Tex. L. Rev. at 151 n.11. Article 2212, however, made no provision for cases in which fewer than all tortfeasors settled. Deal, 576 S.W.2d at 414. (Tex. Civ. App.—Dallas 1978, writ ref’d n.r.e.). To address a situation unique to tort claims involving defendants jointly and severally liable for common injuries from independent torts, the courts created the one satisfaction rule. Under it, a plaintiff who settled with less than all tortfeasors for more than the settlors’ share of damages could not recover from the non- settling tortfeasors more than the difference between total damages and the sum of all settlements. Hodges, 26 Texas L. Rev. at 171-72; see Gattegno, 53 S.W.2d at 1007; Bradshaw v. Baylor University, 126 Tex. 99, 84 S.W.2d 703, 705 (1935). d. The One Satisfaction Rule Was Designed to Address Joint and Several Liability In Tort Cases Only. After the one satisfaction rule was adopted, the Texas Supreme Court abolished the common-law rule in Robicheaux, 23 S.W.2d at 715, that prevented joining multiple defendants in a single suit to impose joint and several liability for independent torts. In Landers v. East Texas Salt Water Disposal Co., the court ruled that when tortious acts of two or more wrongdoers join to produce an indivisible injury, that is, an injury which from its nature cannot be apportioned with reasonable certainty to the individual wrongdoers, all of the wrongdoers will be held jointly and severally liable for the entire different, but cases continue, we would respectfully submit, to incorrectly recite that it is unnecessary to plead the one satisfaction rule though the reason why no longer exists. 22 MHDocs 6062453_7 12690.2 damages and the injured party may proceed to judgment against any one separately or against all in one suit. If fewer than the whole number of wrongdoers are joined as defendants to plaintiff’s suit, those joined may by proper cross action under the governing rules bring in those omitted. 248 S.W.2d at 734 (emphasis added). Landers abolished Robicheaux’s concerted action requirement for establishing joint and several tort liability. Under Landers, indivisible injury alone was enough in tort cases to establish joint and several liability. A party had to be jointly and severally liable for the entire damages, not just its share. Thus, when that party settled, they theoretically could have settled for more than just their individual liability for just the damages they caused. Accordingly, in that setting, the plaintiff had the opportunity to ultimately settle with multiple defendants for an amount greater than the plaintiff’s overall injury. 3. The One Satisfaction Rule Only Applies In Cases Involving Joint Liability. The one satisfaction rule’s historical development demonstrates it was intended to address a problem unique to settlements with less than all jointly and severally liable defendants in tort cases – the only cases to which article 2212 applied. Even assuming for the sake of argument that the one satisfaction rule applies in a contract case, which RLJ disputes, the one satisfaction rule does not apply unless the liability of the liable defendant and the settling defendant is joint and several. GE Capital Commercial Inc. v. Worthington Nat’l Bank, 754 F.3d 297, 306 (5th Cir. 2014); Crown Life Ins. Co. v. Casteel, 22 S.W.3d 378, 390 (Tex. 23 MHDocs 6062453_7 12690.2 2000); First Title Co. of Waco v. Garrett, 860 S.W.2d 74, 78 (Tex. 1993); Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1, 8 (Tex. 1992); CTTI Priesmeyer, Inc. v. K&O Limited Partnership, 164 S.W.3d 675, 684 (Tex. App.—Austin 2005, no pet.); LJ Charter, LLC v. Air America Jet Charter, Inc., No. 14-08-00534-CV, 2009 WL 4794242 at *9 (Tex. App.—Houston [14th Dist.] Dec. 15, 2009, pet. denied). Joint and several liability is essential, Garrett, 860 S.W.2d at 79; Sterling, 822 S.W.2d at 8, because the contribution right is derivative of the plaintiff’s right to recover from the contribution defendant. Shoemake v. Fogel, 826 S.W.3d 933, 935 (Tex. 1992). A non-settling defendant may successfully urge the one satisfaction rule only to reduce damages for which all the defendants are jointly liable. Casteel, 22 S.W.3d at 391; Garrett, 860 S.W.2d at 78. In other words, if the plaintiff could not impose joint and several liability, it would have no right to sue for damages other than those caused by a particular defendant. Accordingly, a non- settling defendant would have no right to seek an offset or credit from a settling defendant since the plaintiff had no right to do so against the settling defendant or the non-settling defendant. Just last summer, the Fifth Circuit was persuaded by Garrett, Sterling, and this Court’s reasoning in CTTI that joint and several liability was essential to the application of the one satisfaction rule. GE Capital, 754 F.3d at 306. The suit arose when a predecessor’s employee fraudulently induced wire transfers to a bank that 24 MHDocs 6062453_7 12690.2 accepted them in bad faith in violation of a Texas statute. GE Capital sued the predecessor for contractual remedies under the purchase and sale agreement and sued the bank for statutory tort. Id. at 300. GE Capital settled its contractual claims with the predecessor, but successfully tried the statutory tort claim against the bank. Id. at 301. The bank asserted the one satisfaction rule applied and GE Capital should recover nothing because its contract damages were for the same loss settled by the bank. Id. at 303. The Fifth Circuit held there was no legal duty shared by the settling and liable defendants and, therefore, the one satisfaction rule did not apply. Id. at 306- 07, 309. A common factual origin for the damages claimed against the settling and liable defendants was not enough. [The settling defendant’s] alleged contractual breach and the TUFTA action against [the liable defendant] may share common underlying facts – the three fraudulent transfers …. But such factual commonality does not suffice … to render [the settling defendant] a joint tortfeasor for one-satisfaction rule purposes. Id. at 309 (emphasis added). The Fifth Circuit agreed with CTTI’s analysis that the one satisfaction rule did not apply in any case where the duty allegedly breached by the liable and settling defendants was not the same. Id. at 306-07. a. Unlike Tort Cases, Joint Liability in Contract Cases Requires More Than Common, Indivisible Damages. Tort duties are universal; contractual duties are not. Landers implicitly recognized the joint duty requirement would necessarily be satisfied in tort cases so that joint and several tort liability need only focus on existence of a common, 25 MHDocs 6062453_7 12690.2 indivisible injury. 248 S.W.2d at 734. For purposes of tort liability, “the law imposes on all persons a duty to act as a reasonably prudent person would act under same or similar circumstances, considering any reasonably foreseeable risks or probability of injury to others.” Zidell v. Bird, 692 S.W.2d 550, 553 (Tex. App.—Austin 1985, no writ). Undertakings in a contract, however, are binding only on the contracting parties and their privies. McClellan v. Scardello Ford, Inc., 619 S.W.2d 593, 597 (Tex. Civ. App.—Amarillo 1981, no writ); Buckner Orphans Home v. Berry, 332 S.W.2d 771, 776 (Tex. Civ. App.—Dallas 1960, writ ref’d n.r.e.). Thus, joint and several contractual liability requires more than indivisible injury. It also requires that the parties separately promise the same performance,6 whether under the same or separate contracts. 12 Richard A. Lord, Williston on Contracts, §§ 36:1; In re Sewell, 413 B.R. 562, 568 n.5 (Bankr. E.D. Tex. 2009); CTTI, 164 S.W.3d at 679, 684 (joint and several contractual liability under separate contracts requires promise of the same performance); LJ Charter, 2009 WL 4794242 at *9. But not all undertakings for the same performance are necessarily joint. Under the common law doctrine of joint, joint and several, and several obligations in a contract, the question is whether multiple promisors of the same performance have promised as a unit (jointly), or have 6 Whether the performance promised by the both parties must be exactly the same for the liability to be joint is not an issue that need be resolved here. As will be discussed in greater detail below, the Architect’s deficient performance concerned obligations that were not and could not lawfully have been undertaken by others. 26 MHDocs 6062453_7 12690.2 promised the same performance separately (severally), or both as a unit and separately (jointly and severally).… The problem does not arise, however, unless the promises relate to the same performance. InvestIn.com v. Europa Int’l , Ltd., 293 S.W.3d 819, 828 (Tex. App.—Dallas 2009, pet. denied); accord K-Bar Servs., Inc. v. English, No. 03-05-00076-CV, 2006 WL 903735 at *3 (Tex. App.—Austin Apr. 7, 2006, no pet.). In other words, to be jointly liable under contract, the parties must effectively promise the same performance. Export Worldwide, Ltd. v. Knight, No. SA 05 CA 647 XR, 2007 WL 628746 (W.D. Tex. Feb. 27, 2007) (joint promises); InvestIN.com Corp., 293 S.W.3d at 829; English, 2006 WL 903735 at *3. The Texas Supreme Court has not yet decided whether joint and several liability is necessary for application of the one satisfaction rule to a contractual liability. GE Capital, 754 F.3d at 305. This and other courts, however, have concluded that it does not apply unless both the liable and settling defendants’ alleged liability arises out of the breach of a common contractual duty. Like this case, CTTI involved a contract suit by an owner against the architect and general contractor for a new building’s foundation defects. 164 S.W.3d at 679. The CTTI architect’s contract required design and “supervisory services.” 164 S.W.3d at 685. A separate contract required CTTI, the general contractor, to build according to the architect’s plans and specifications. 164 27 MHDocs 6062453_7 12690.2 S.W.3d at 678. Before trial, the owner settled with several parties involved in the building’s construction and settled with the architect during trial. Id. After the jury returned its verdict, the general contractor sought to have its contractual liability reduced by the other defendants’ settlement payments. Id. at 680. After carefully reviewing Texas Supreme Court authorities, this Court held the one satisfaction rule inapplicable unless the liable and settling defendants breached the same contractual duty. Id. at 685. It concluded the architect’s and general contractor’s promised performances differed so that the one satisfaction rule did not apply. Id. Necessity of a joint liability is also illustrated by this Court’s decision in Galle, Inc. v. Pool, 262 S.W.3d 564, 574 (Tex. App.—Austin 2008, pet. denied). Galle involved a suit by an insured homeowner against his insurer and a mold remediator, alleging contractual and tort liabilities against both. Id. at 568, 570. The homeowner settled all claims against the insurer before trial. Id. at 569. Post- verdict, the homeowner elected to recover in tort against the remediator. Id. at 570. The remediator claimed a credit for the insurer’s settlement because the damages allegedly caused by the insurer and the remediator were indivisible. Implicitly recognizing indivisible injury alone is sufficient for the joint and several tort liability under Landers, this Court held the one satisfaction rule applied. It further ruled that the entire amount of the insurer’s settlement must be credited against the 28 MHDocs 6062453_7 12690.2 tort damages because the plaintiff did not segregate the settlement between “separate and joint damages” or between the tort and contractual liability theories. Id. at 574. Osborne v. Jauregui, 252 S.W.3d 70, 74 (Tex. App.—Austin 2008, pet. denied), presented the obverse situation to Galle. In Osborne, it was the liable defendant, not the settling defendant, who allegedly had a contractual liability in addition to joint tort and DTPA liability with the settling defendants. See also GE Capital, 754 F.3d at 307 n.9. The Osborne jury found no liability for breach of contract, only for negligence and breaches of implied warranties actionable under the DTPA. 252 S.W.3d at 74. Because the case involved alleged DTPA claims, unlike the verdict in Galle, the jury determined the percentage responsibility of the liable and settling defendants. Id.; see TEX. CIV. PRAC. & REM. CODE §§33.002 (proportionate responsibility applicable to “any action brought under the DTPA”); 33.012 (under 2005 version, defendant had option of percentage reduction or dollar credit for settlement). The jury also decided the total amount of the plaintiff’s damages attributable to both the liable and settling defendant in an amount less than the amount paid by the settling defendants. The liable defendant elected the dollar-for-dollar credit which more than offset the total amount of damages awarded by the jury. The plaintiff apparently elected to recover under the DTPA because the issue before the court was whether attorney’s fees could be recovered 29 MHDocs 6062453_7 12690.2 when the total amount of settlement exceeded the amount of the total damages awarded by the jury for the injuries caused by both the liable and settling defendants. Id. at 75-76. Thus, Osborne is a straightforward application of Civil Practice and Remedies Code chapter 33 to a case to which it explicitly applies: a DTPA/tort claim for which the liable and settling defendants were jointly liable involving an injury this Court deemed indivisible. The joint and several liability in that case was created by statute, not common law. TEX. CIV. PRAC. & REM. CODE §33.013, and the amount of damages awarded in that case were for the amount of damages caused by all responsible persons. TEX. CIV. PRAC. & REM. CODE §33.012. The distinctions between Osborne and this case are manifold. Here, there was no joint and several tort liability. Indeed, there was no joint and several liability of any description. See V.A.3.e., infra. Further, the damages awarded in Osborne were those found to have been caused by both the liable and settling defendants. Here, the damages awarded were explicitly limited to those caused by the Architect. See V.A.4., infra. Nevertheless, this Court’s decision in Osborne confirms that the application of either a common law or statutory credit for settlement hinges on joint and several liability. Four years after CTTI, the Houston Fourteenth Court of Appeals also refused to apply the one satisfaction rule absent a shared contractual duty. In LJ Charter, 30 MHDocs 6062453_7 12690.2 No. 14-08-00534-CV, 2009 WL 4794242 at **8-9 (Tex. App.—Houston [14th Dist.] Dec. 15, 2009, pet. denied), the plaintiff received a judgment against the liable defendant for damages for breach of contract, breach of fiduciary duty and fraud. Id. at *6 n.12. The plaintiff previously settled claims for the alleged breach of two contracts by two other parties. The liable defendant was not a party to either of the contracts that were the basis of the settled claims. Id. at 9. The court refused the liable defendant’s request for credit under the one satisfaction rule because the liable defendant was not a party to, and could not have been liable under, those contracts. Id. When there was no joint liability, the one satisfaction rule did not apply. b. Without a Joint Contractual Obligation, Settlement Credit Under the One Satisfaction Rule Allowed the Architect to Do Indirectly What It Could Not Do Directly. CTTI correctly observed if an indivisible injury alone created a joint and several liability between contract and tort defendants, applying the one satisfaction rule would permit “hold[ing] a person not a party to a contract liable for the breach of that contract.” Id. at 685. Such result is legally impermissible because contractual privity is necessary for standing to sue. OAIC Commercial Assets, L.L.C. v. Stonegate Village, L.P., 234 S.W.3d 726, 738 (Tex. App.—Dallas 2007, pet. denied). Standing to sue is essential to subject-matter jurisdiction. Travelers Ins. Co. v. Joachim, 315 S.W.3d 860, 865 (Tex. 2010). No privity of contract exists 31 MHDocs 6062453_7 12690.2 between persons not parties to the same contract without promises of the same performance. See Amco Trust, Inc. v. Naylor, 159 Tex. 146, 150, 317 S.W.2d 47, 50 (1958). Under these circumstances, a contractually liable defendant who shared no contractual obligation would have no standing to recover from the settling defendant. The liable defendant is a stranger to the contract between the plaintiff and the settling defendant. If credit under the one satisfaction rule were permitted absent a shared performance obligation, the liable defendant could achieve indirectly what could not have been achieved directly; a stranger without privity could in effect wrest a credit based on settlement of that contractual obligation. Regardless of whether the injury was “indivisible,” the one satisfaction rule could not apply without a common promise to perform the same contractual duty. Id. at 684. c. This Court Has Rejected Application of the One Satisfaction Rule to Contractual Liability Without a Joint Contractual Obligation. The trial court in this case applied the one satisfaction rule solely on the basis of perceived “indivisible” damages. (CR1438-39). In CTTI, this Court: acknowledge[d] that there are cases in which the courts have applied the one satisfaction rule and granted settlement credits or required an election of remedies where there are co-existing tort and contract claims. . . .In those cases, the courts have focused on the indivisible nature of the injury to the plaintiffs, and have not discussed the requirement of joint liability. We find that focus to be misplaced and 32 MHDocs 6062453_7 12690.2 decline to follow those decisions.… If we were to hold that, due to the indivisible nature of the resulting injury, breach of contract defendants and tort defendants are jointly and severally liable for all damages, we would be forced to hold a person not a party to a contract liable for the breach of that contract. (164 S.W.3d at 684-85; emphasis added). The same rationale applies when the liable and settling defendants’ liability rests on distinct contractual obligations under different contracts. Therefore, the trial court erred in applying the one satisfaction credit based solely on perceived “indivisible” damages. d. Applying the One Satisfaction Rule Without Joint Contractual Liability Obliterates the Collateral Source Exception. The collateral source rule is an exception to the one satisfaction rule. Brown v. Am. Transfer and Storage Co., 601 S.W.2d 931, 936 (Tex. 1980). If indivisible injury alone were enough for applying the one satisfaction rule, this exception would be meaningless. Under the collateral source rule, a wrongdoer cannot reduce its liability because of benefits the plaintiff independently procures from another to which the wrongdoer was not privy. Haygood v. DeEscabedo, 356 S.W.3d 390, 395 (Tex. 2012); Tex. & Pac. Ry. v. Levi & Bro., 59 Tex. 674 (1883). Typically, the collateral source is an insurer’s contractual obligation to pay for all or part of same damages sought from the defendant. Brown v. Am. Transfer & Storage Co., 601 S.W.2d 931, 934 (Tex. 1980). If an indivisible injury or the “same damages” alone triggered the one satisfaction rule, such insurance benefits would serve to 33 MHDocs 6062453_7 12690.2 reduce the liable defendant’s liability and prevent a double recovery. Thus, the existence of the collateral source exception belies the notion that indivisible injury alone is sufficient for application of the one satisfaction rule. For this additional reason, a joint and several liability is essential for application of the one satisfaction rule to contractual liabilities. e. This Case Involved No Joint Contractual Liability of the Architect and the Settling Defendants. Because joint and several contractual liability is essential, the question here narrows to whether the Architect’s contractual liability was joint with that of the Settling Defendants; i.e., was the liability imposed on the Architect for the same contractual promise or promises also made by each Settling Defendant. As acknowledged in CTTI, the contractual obligations of an architect are distinct from those of a general contractor. 164 S.W.3d at 685. Only the Architect’s contractual liability was submitted to the jury. (CR1125-26, 1708-10). There could be no common promised performance between the Architect and the Settling Defendants. 1) The Performance Could Not Be the Same by Operation of Law: General Contractors Legally Precluded From Preparing Plans & Specifications. Neither the Soils Engineer nor the General Contractor in this case were a registered architect and were not retained to perform architectural duties. (PX-15; 12RR26-77; PX-48; 12RR569-75; App. F, G). As a matter of Texas law, the obligations of an architect cannot be undertaken by one who is not a registered 34 MHDocs 6062453_7 12690.2 architect. TEX. OCCUP. CODE §1051.701. This statute is part of the contracts as if written in explicitly because the parties are conclusively presumed to know and contract with reference to existing law. Snyder v. Eanes Indep. Sch. Dist., 860 S.W.2d 692, 697 (Tex. App.—Austin 1993, writ denied). By operation of law, therefore, the Architect’s duties were not and could not be the same as those of the Settling Defendants. 2) The Performance of the Architect and the Settling Defendants Was Not Alleged To Be the Same. According to the live portions of the petition on which the case was tried, the General Contractor “agreed to construct the Project free from defects” (2SCR44; App. A), but failed to do so. It was alleged the General Contractor did not comply with the Project’s plans and specifications and contract documents, the promise to build free from defects, and the duty perform in a good and workmanlike manner. (2SCR43-44, 47; App. A). RLJ alleged that the Soils Engineer 7 was retained by the owner to “conduct a geotechnical engineering study,” provide “geotechnical engineering services,” and “materials testing and construction inspection services.” (2SCR45; App. A). RLJ alleged that the Soils Engineer breached these undertakings by failing to properly estimate the potential of the soil at the site for swelling and underestimating the 7 Terracon, a settling defendant, was the successor-in-interest to HBC, a party to the Geotechnical Study Contract. (CR186; App. A). 35 MHDocs 6062453_7 12690.2 amount of soil that needed to be replaced to control soil expansion. (2SCR66-67; App. A). The allegations against the Architect, on the other hand, were that it agreed to “provide overall architectural, civil, and structural engineering design, document preparation, and coordination for the Project.” (2SCR44; App. A). RLJ alleged the Architect “breached the Architectural Contract by deviating from the applicable standard of care, failing to produce design plans free from defects, and failing to properly administer the construction of the Project.” (2SCR47; App. A). The legal injury sustained when an architect breaches its contractual obligation to provide appropriate building plans and supervisory services is separate from that sustained when a general contractor fails to build in accordance with those plans and specifications. Hunt v. Ellisor & Tanner, 739 S.W.2d 933, 936, 938 (Tex. App.—Dallas 1987, writ denied). “The [architect’s] obligation was non-construction; the general contractor’s obligation was construction.” Hunt, 739 S.W.2d at 938. Because of the lack of a joint or common contractual undertaking, the court in Hunt ruled: [W]hen the situation is pure contract, the special issues should not include comparative causation [under the Uniform Comparative Fault Act]…[because] if the acts of others (whether wrongful or not) are contributing factors, those others are not thereby joined with the defendant as having committed the breach of the contract. 36 MHDocs 6062453_7 12690.2 (Emphasis added; quoting 5 A. Corbin, Corbin on Contracts §§ 999 n.21 & 999 - 1,000 (1964)). The court in White Budd VanNess P’ship v. Major-Gladys Drive Joint Venture, 798 S.W.2d 805, 819 (Tex. App.—Beaumont 1990), writ dism’d, 811 S.W.2d 541 (Tex. 1991), cert. denied, 502 U.S. 861 (1991), followed Hunt’s reasoning to conclude that want of joint liability prevented submission of comparative fault to reduce the architect’s contractual liability. Under Hunt and White Budd, the architect’s liability arose from the architect’s unique contractual obligations, not a promise to perform the same duty as the general contractor. Just as there can be no comparative submission of a general contractor’s fault, the one satisfaction rule cannot be invoked to reduce the Architect’s liability with the General Contractor’s settlement. The same is true for the Architect’s particular failings concerning the foundation design detailed in the certificate of merit. (2SCR60-61; App. A). The duty breached is the same if the evidence supporting the various causes of action is the same. Buccaneer Homes of Alabama, Inc. v. Pelis, 43 S.W.3d 586, 590 (Tex. App.—Houston [1st Dist.] 2001, no pet.). It is not the same if different evidence would be required to prove the breach. These included failing to follow the various recommendations and reports of the Soils Engineer. (2SCR61; App. A). Here, the promised performances of the Architect could not have been the same because the evidence necessary to prove the Architect’s breach differed from that which would 37 MHDocs 6062453_7 12690.2 have been necessary to prove the alleged breaches of the Soils Engineer and the General Contractor. Thus, the claims settled were for breaches of differing and separate contractual duties from those of the Architect, both as a matter of fact and by operation of law. 3) The Architect Argued That Its Duty Was Different From Those of the Settling Defendants. The Architect emphasized to the jury in closing arguments that the duties of the Architect and the other participants were different. The Architect urged the jury that it should not be found liable because the breaches of duties undertaken by others, not the Architect, caused the damage. The Architect argued it was not serving as an engineer or a general contractor. (10RR33-34). It essentially denied any common duty, arguing it could not second-guess the Soils Engineer’s predictions about the potential vertical rise or provisions groundwater drainage at the Project. (10RR34-37). According to the Architect, the foundation design was “doomed from the start” due to the Soils Engineer’s faulty performance. (10RR39). Such clear, deliberate and unequivocal assertions during closing arguments are judicial admissions foreclosing application of the one satisfaction rule. See Price Pfister, Inc. v. Moore & Kimmey, Inc., 48 S.W.3d 341, 349 (Tex. App.—Houston [14th Dist.] 2001, pet. denied); see also Medina v. Hart, 240 S.W.3d 16, 23 (Tex. App.—Corpus Christi 2007, pet. denied). 38 MHDocs 6062453_7 12690.2 In summary, the Architect and Settling Defendants did not promise the same performance. Therefore, the one satisfaction rule does not apply because the contractual liability of the Architect and the Settling Defendants was not joint. 4. The One Satisfaction Rule Does Not Apply Because the Jury’s Verdict Did Not Award Damages for an “Indivisible” Injury. The one satisfaction rule also requires an indivisible injury common to the wrongdoing of the liable and settling defendants. Sterling, 822 S.W.2d at 7; Landers, 248 S.W.2d at 734. The one satisfaction rule is inapplicable in this case also because the damages were not for an “indivisible” injury as the trial court supposed. (2SCR1599-1600; App. C). “Under the one satisfaction rule, the non- settling defendant may only claim a credit based on the damages for which all tortfeasors are jointly liable.” Crown Life Ins. Co. v. Casteel, 22 S.W.3d 378, 391 (Tex. 2000). Where the jury charge limits its inquiry to damages caused by the non-settling defendant, there is no basis for application of the one satisfaction rule. Robertson v. ADJ Partnership, Ltd., 204 S.W.3d 484, 485 (Tex. App.—Beaumont 2006, pet. denied); accord Byer Custom Builders v. Franks, 389 S.W.3d 880, 881 (Tex. App.—Houston [14 Dist.] 2012, no pet. hist.) (holding that because the finder of fact, an arbitrator, “did not award any damages against the non-settling defendant for any of the alleged damage he plaintiffs claimed was caused by the alleged settling defendant, there could be no violation of the one-satisfaction rule if 39 MHDocs 6062453_7 12690.2 the [plaintiffs] received compensation on those claims from [the settling defendant].”). The jury was not asked to and did not assess damages to the Project as a whole. Rather it was asked to assess only those damages for the Architect’s particular breach. What sum of money, if any, if paid now in cash, would fairly and reasonably compensate [RLJ] for its damages, if any, that resulted from [the Architect’s] failure to comply with the Architectural Contract that you found in answer to Question[] 2 [concerning the required structural engineering services]? (CR1127; App. B; emphasis added). The trial court acknowledged the narrow focus of this question in its letter ruling. The damage question in the Charge asked for damages “due to [the Architect’s] failure to comply.” The question had to ask specifically about damages resulting from [the Architect’s] failure to inquire about cause-in-fact. (2SCR1599; App. B; emphasis in original). Nevertheless, the trial court concluded specification of the particular party and contractual breach did “not mean, without more, that the damages found were divisible and attributable only to [the Architect].” (2SCR1599; App. B). a. The Charge Submitted Apportioned Damages. The trial court’s analysis is irreconcilable with the principle that, without a sufficient charge objection to the question’s form, the effect of the answer is measured by the question actually asked, not the question that ought to have been 40 MHDocs 6062453_7 12690.2 asked. See THPD, Inc. v. Cont’l Imports, Inc., 260 S.W.3d 593, 608 (Tex. App.— Austin 2008, no pet.); see also Osterberg v. Peca, 12 S.W.3d 31, 55 (Tex. 2000). The Architect did not object to the damages question’s form, and never objected that the question was improperly limited to those damages caused by the Architect’s breach of its own contract. The Architect only complained there was no legally and factually sufficient evidence to support a damage award. 8 (9RR140, 143-44, 153). 1) The Plain Language of the Question Asked Determines What the Jury Found. Absent objection, whether the damages were necessarily attributable to the Architect alone is governed by the plain meaning of the language in the question. See Reliant Energy Servs., Inc. v. Cotton Valley Compression, L.L.C., 336 S.W.3d 764, 788 (Tex. App.—Houston [1st Dist.] 2011, no pet.). This presumption applies whenever the charge does not include a different definition. C.H. v. Dep’t of Family & Protective Servs., No. 01-11-00385-CV, 2012 WL 586972, at *6 (Tex. App.—Houston [1st. Dist.] Feb. 23, 2012, pet. denied) (mem. op.). When the 8 This objection did not assert there was no evidence of allocation or segregation. (9RR153). If it had, the objection was meritless. Unsegregated damages evidence is legally sufficient evidence of segregated damages. Minn. Min. & Mfg. Co. v. Nishika, 953 S.W.2d 733, 739 (Tex. 1997). The factual insufficiency objection preserved nothing. Green v. Flournoy, No. 03-10-00299-CV, 2011 WL 3435735, at *4 (Tex. App.—Austin Aug. 5, 2011, no pet.) (mem. op.). Such complaints must be presented in a new trial motion. The court is required to submit charge questions on any issue if legally sufficient evidence supported an affirmative answer, Szczepanik v. First S. Trust Co., 883 S.W.2d 648, 649 (Tex. 1994), even if the evidence was factually insufficient. The Architect filed no new trial motion. 41 MHDocs 6062453_7 12690.2 question limits the subject of the jury’s consideration, the court must presume compliance unless the record shows otherwise. See Columbia Rio Grande Healthcare, L.P. v. Hawley, 284 S.W.3d 851, 861-62 (Tex. 2009). Under circumstances similar to those here, in Tesfa v. Stewart, 135 S.W.3d 272, 273 (Tex. App.—Fort Worth 2004, pet. denied), the court held that this presumption applied to discharge a segregation requirement when the question asked the amount of damages “for injuries prior to [plaintiff’s] death, if any, that reasonably resulted from” the doctor’s negligence. The case was one for medical malpractice case during treatment of auto accident injuries. The doctor did not object to the form of the question but nonetheless asserted the charge did not segregate damages caused in the auto collision from those caused by the alleged malpractice. Id. at 274. Finding nothing to rebut the presumption of compliance, the court held the jury’s damages finding was “limited in accordance with the trial court’s express instruction” and determined damages “for injuries attributable to Dr. Tesfa’s negligence alone.” Id. at 279. 2) The Plain Language of the Question Limited Damages to Those Resulting from the Architect’s “[F]ailure to [C]omply [W]ith the Architectural Contract.” Concerning the effect of the damages finding, this case is indistinguishable from Tesfa. The damages question here clearly limited its inquiry to the Architect’s “failure to comply with the Architectural Contract ….” (CR1127; App. B). 42 MHDocs 6062453_7 12690.2 Similarly, in Hunt, 739 S.W.2d at 940, an owner sued an architect for design deficiencies and various contractors for construction defects in a parking deck. All but the Architect settled before trial. Id. at 935. The Architect claimed credit under the one satisfaction rule. The damages question was: What sum of money, if any, if paid now in cash will fully compensate [the owner] for any permanent diminution in market value of [the shopping center and office complex] which was caused by the acts or omissions of the defendant(s), despite the completion of all reasonable repair procedures? (Id.; emphasis in original). The Architect urged that the question permitted a double recovery because it included damages for the settled claims. Id. at 940. The court denied the credit because the jury compensated [the owner] only for the separate wrong … by [the Architect’s] breach of []its duties …. [T]he consideration received under the prior settlement compensated [the owner] for acts and omissions of others…. [The Architect] was not a party to the settlement agreement. Therefore, the present case presents the situation where each wrongdoer pays separately for its own acts or omissions. (Id.; emphasis added). Similarly, in Robertson v. ADJ Partnership, Ltd., 204 S.W.3d at 485, the court held that where the jury charge limits its inquiry to damages caused by the non-settling defendant, there is no basis for application of the one satisfaction rule. The same conclusion was reached in Byer Custom Builders v. Franks, 389 S.W.3d at 881. In that case, the finder of fact, an arbitrator, “did not award any damages 43 MHDocs 6062453_7 12690.2 against the [non-settling defendant] for any of the alleged damage the [plaintiffs] claimed was caused by [the alleged settling defendant], there could be no violation of the one-satisfaction rule if the [plaintiffs] received compensation on those claims from [the settling defendant].” Like the damages questions in Tesfa, Hunt and Robertson, the plain language of the damage question here removed any possibility the damages included those for breaches of a different contract or party. For this reason alone, there could have been no finding of damages common to those caused by the Settling Defendants. Contrast these decisions with Allan v. Nersesova, 307 S.W.3d 564, 574 (Tex. App.—Dallas 2010, no pet.), penned by CTTI’s author. In Nersesova, the jury charge contained a single damages question for damages “resulting from the occurrences in question.” The jury did not make separate damages findings for the negligence and breach-of-contract claims. [Plaintiff]’s injuries, as found by the jury, included the damage to her unit and personal property and the additional living expenses she incurred. [Plaintiff] alleged these injuries were caused by both the settling defendants and appellees. Nothing in the settlement agreement shows the settlement amount was for anything other than the damages found by the jury. If appellees were not given credit for the settlement, [the Plaintiff] would receive a double recovery for her injuries. Id. (emphasis added); accord Western Technologies, Inc. v. All-American Golf Center, Inc., 139 P.3d 858, 862 (Nev. 2006) (charge did not limit damages to those caused by a particular party’s breaches; presumed the jury awarded all damages 44 MHDocs 6062453_7 12690.2 sustained from all parties’ breaches). A verdict that allocates damages eliminates any risk of double recovery. See Duncan v. Cessna Aircraft Co., 665 S.W.2d 414, 431 (Tex. 1984). The damage question here itself allocated damages; a “double recovery” was impossible. b. The Jury Was Asked To Apportion and in Fact Apportioned Damages. The Architect, not RLJ, is getting the double dip here. The Architect invited the jury in closing argument for, and in fact received, a damages reduction in the jury verdict before obtaining another by raising the one satisfaction rule for the first time post-verdict. 9 Counsel for both parties urged the jury in closing arguments to adjust its damages award. RLJ suggested without objection that the jury could and should make a 20% reduction for the damages attributable to the Settling Defendants. (10RR29). In light of the evidence, the jury clearly limited the damages to those caused by the Architect. The Architect went further, suggesting the jury “in Question 3 … answer zero” if it believed “there’s no causal connection” between the Architect’s breaches and RLJ’s damages. (10RR54). The Architect devoted much of its argument faulting Terracon for the too-light 9 RLJ’s evidence supported damages in excess of $7 million. (7RR48; 9RR123-124, 136; 7RR16-18, 26-39; 3RR133-136; PX-151, 16RR1-1145; 10RR29-31). Had the architect pleaded the one satisfaction rule or asserted it before submission to the jury, RLJ could have elected to submit damages based on the total amount of all damages and risk the application of one satisfaction rule. It did not have this option, however, because the architect first asserted that it was entitled to settlement credit under the one satisfaction rule long after the jury returned its verdict. 45 MHDocs 6062453_7 12690.2 foundation design and urging the reasonableness of its blind reliance on Terracon’s work. (10RR36-39, 44-48, 50-51). The jury clearly understood from both the charge and closing arguments it should limit damages to those specifically caused by the Architect’s breach.10 The jury usually may decide causation when general experience and common sense enable a layperson to fairly determine that relationship between event and result. Pilgrim’s Pride Corp. v. Smoak, 134 S.W.3d 880, 894 (Tex. App.—Texarkana 2004, pet. denied). The damages awarded were significantly reduced from the total costs of repair and residual diminution in value. RLJ provided evidence and sought over $7 million in total damages. (7RR48; 9RR123- 124, 136; 7RR16-18, 26-39; 3RR133-136; PX-151, 16RR1-1145; 10RR29-31). The jury awarded much less. Indeed, the trial court commented on this reduction: “The source of RLJ’s disappointment regarding damages is the jury verdict….” (2SCR1600; App. C). The jury clearly used its skill and common sense to apportion damages. The jury was asked to determine the amount that would fairly “compensate” RLJ for 10 There can be no complaint that the jury’s apportionment was not sufficiently precise. Segregation by “rough percentage” is sufficient. Chapa, 212 S.W.3d at 314 n. 83; see, e.g., Stewart Title Guar. Co. v. Aiello, 941 S.W.2d 68, 73 (Tex. 1997) (testimony based on percentage of attorney and paralegal time); Med. Specialist Group, P.A. v. Radiology Assocs., L.L.P., 171 S.W.3d 727, 738 (Tex. App.—Corpus Christi 2005, pet. denied) (fee segregation based percentage time attribution). 46 MHDocs 6062453_7 12690.2 damages caused by the Architect. Applying a further reduction does not assure one satisfaction; instead, it assures less than one satisfaction. For all these reasons, the damages question required apportionment and the jury’s verdict reflects the apportionment the charge required. The jury was also asked to apportion damages by both parties. Based on the evidence and the trial court’s own observation, the jury must have responded to the instructions of the Court and the party’s requests to do so. “[T]he reasoning of the one recovery rule no longer applies” if the jury is “allow[ed] allocation of liability between the parties, even when the injury is indivisible.” Duncan, 665 S.W.2d at 431 (emphasis added). The one satisfaction rule is not an insuperable barrier to plaintiff benefitting from a favorable settlement. [T]he one recovery rule does not prevent … adopting a system that reduces the plaintiff’s recovery and the non-settling defendants’ liability by the percentage of causation assigned to any tortfeasor with whom plaintiff has settled. [Such reductions] leave defendants unaffected by settlements in which they do not participate.... Allowing plaintiffs to keep the excess from a good settlements may violate the one recovery rule, but no one is harmed [if the jury allocates the damages]. Id. at 432 (emphasis added). The same is no less true here. The charge permitted and the parties invited and the jury’s answer provided the necessary damage allocation. Therefore, “the reasoning of the one recovery rule no longer applies” and its application here cannot be justified. See Duncan, 665 S.W.2d at 431. 47 MHDocs 6062453_7 12690.2 5. No Right to Application of One Satisfaction Rule or Contribution Exists In Contract Cases In Light of Section 33.001. RLJ acknowledges that there are some cases suggesting that tort liability does not necessarily have to be present in order for the one satisfaction rule to apply. As we have demonstrated above, even assuming the rule could be applied in a breach of contract case, the rule is inapplicable in the present case because there is no basis for joint and several contractual liability and because the damages found were those resulting from the breach of contract by the Architect. RLJ would further show that the cases suggesting tort liability is not necessarily required are distinguishable in light of a complete analysis of the authority relied upon to make that suggestion. Moreover, the history and subsequent adoption of TEX. CIV. PRAC. & REM. CODE §33.0001 et seq., strongly suggests that the rule was applicable only in tort and was in any event abolished by the statutory scheme adopted in section 33.001. The Texas Supreme Court refused to permit the one satisfaction rule to prevent its adoption of a pure comparative causation scheme or requiring an injured person to prove the precise damages caused by a particular defendant. Landers, 248 S.W.2d at 734; Duncan, 665 S.W.2d at 431-32. By statute, contribution is allowed only among joint tortfeasors. Bonniwell v. Beech Aircraft Corp., 663 S.W.2d 816, 818 (Tex.1984); see also Merit Drilling Co. v. Honish, 48 MHDocs 6062453_7 12690.2 715 S.W.2d 87, 89 (Tex. App.—Corpus Christi 1986, writ ref’d n.r.e.) (suggesting one satisfaction rule survived Duncan only to the extent necessary under former article 2212a, now TEX. CIV. PRAC. & REM. CODE ch. 32). As explained, the one satisfaction rule was created to address a problem unique to tort cases created by article 2212. GE Capital, 754 F.3d at 305; see V. B., supra. Indeed, the Texas Supreme Court has only applied the one satisfaction rule to joint tort liability. Id. at 306; Casteel, 22 S.W. 3d at 391-392 (“the non- settling defendant may only claim a credit based on the damages for which all tortfeasors are jointly liable.”). This Court has suggested on more than one occasion that the credit is only available in tort cases. CTTI, 164 S.W.3d at 684; Paschall v. Peevey, 813 S.W.2d 710, 712 (Tex. App.—Austin 1991, writ denied) (“The non-settling tortfeasor may only claim a credit based on the damages for which all tortfeasors are jointly liable.”). RLJ is aware there are cases stating “the absence of tort liability does not preclude the application of the one satisfaction rule.” See, e.g., Hudspeth v. Enter. Life Ins. Co., 358 S.W.3d 373, 383 (Tex. App.—Houston [1st Dist. 2011, no pet.); AMX Enters., Inc. v. Bank One, N.A., 196 S.W.3d 202, 206 (Tex. App.—Houston [1st Dist.] 2006, pet. denied). Insofar as research reveals, this proposition first appeared in Oyster Creek Fin. Corp. v. Richwood Investments II, Inc., 176 S.W.3d 307, 327 (Tex. App.—Houston [1st Dist.] 2004, pet. denied). The only support 49 MHDocs 6062453_7 12690.2 Oyster Creek cited, however, was the per curiam opinion in El Paso Natural Gas Co. v. Berryman, 858 S.W.2d 362, 364 (Tex. 1993). However, Berryman involved whether an alleged alter ego could be liable for a judgment against a corporate entity after the corporation’s settlement extinguished the judgment. Id. at 326. The alter ego doctrine applies when there is such unity between two entities that they are, in law, are one and the same. See Mancorp, Inc. v. Culpepper, 802 S.W.2d 226, 228 (Tex. 1990); Hoffmann v. Dandurand, 180 S.W.3d 340, 347 (Tex. App.— Dallas 2005, no pet.). Berryman did not involve any question of joint liability between two different parties, but rather whether there was any liability remaining against what was, in legal effect, the same party. Thus, Berryman did not involve an application of the one satisfaction rule at all and cannot support its application in non-tort cases. This conclusion is further confirmed by the legislative history of section 33.012 of the Texas Civil Practice and Remedies Code. Chapters 32 and 33 codify not only contribution rights, but also the common-law one satisfaction doctrine. In doing so, the Legislature explicitly limited the application of the one satisfaction rule generally to tort and DTPA cases. TEX. CIV. PRAC. & REM. CODE §§32.001 (“applies only to tort actions;” 33.002 applies to any cause of action based on tort or any action under the DTPA). 50 MHDocs 6062453_7 12690.2 It follows from the plain language of the statute that when the Legislature generally limited contribution and settlement credits to tort cases, it precluded other common-law contribution and settlement credits in other cases. When the Legislature expressly provides for an exclusive remedy, it pre-empts the common law. Coleman v. United Savings Ass’n of Texas, 846 S.W.2d 128, 132 (Tex. App.—Fort Worth 1993, no writ). For example, when the Legislature abolished the common law equitable trust fund theory for pre-dissolution claims to protect corporate directors, officers and shareholders, the Texas Supreme Court ruled that the statute preclude further application of the previous common law doctrine. Hunter v. Fort Worth Capital Corp., 620 S.W.2d 547, 551 (Tex. 1981). Part of the court’s reasoning was that application of the doctrine outside the restrictions imposed by the statute would render the statute meaningless and impermissibly presume the Legislature intended to do something that was effectively useless. Id. The same is no less true here. Chapters 32 and 33 and their rules for settlement credits are explicitly limited to tort and DTPA claims. If the Legislature had intended to include other claims, it could have easily done so. By not including breach of contract actions, it must be presumed that the Legislature intended to limit application of the one satisfaction rule to the cases and methods specified in the statute. 51 MHDocs 6062453_7 12690.2 Legislative history confirms this intent. In 2005, the Legislature enacted Senate Bill 890 to amend section 33.0012 to restore the dollar-for-dollar credit. This credit was eliminated in 2003 when the Legislature enacted “tort reform” by adopting House Bill 4. Senate Bill 890 was accompanied by a statement of intent from the author and sponsor stating, Since the 1930s, Texas has recognized that an injured party is entitled to recover only once for an injury. (Bradshaw v. Baylor, 126 Tex. 99, 101; 84 S.W.2d 703, 704 (1935)). The “one-satisfaction” rule was codified by the Legislature in Chapter 33, Civil Practice and Remedies Code, in 1987…. The settlement credit scheme created by H.B. 4 eliminates the one-satisfaction rule that has been part of Texas law for more than 70 years, except in medical liability cases. Senate Committee on State Affairs, Bill Analysis, Tex. S.B. 890, 79th Leg. R.S. (2005) and Senate Committee on State Affairs, Bill Analysis, Tex. C.S.S.B. 890, 79th Leg. R.S.(2005) (emphasis added); available at Capitol Research Services., The Legislative History of Tex. S.B. 890, 79th Leg., R.S. (2005), Regarding Settlement Credit 20, 82, 89 (App. I). The Legislature’s declaration that the 2003 tort reform bill “eliminate[d]” the common-law one satisfaction rule confirms that, except as permitted by statute, the common-law one satisfaction rule had otherwise been “eliminate[d]” when House Bill 4 was passed. Its continued application by the courts outside the scope of chapters 32 and 33 is legally erroneous. The error is understandable because the courts were likely unaware of the not-readily-available declaration of Legislative 52 MHDocs 6062453_7 12690.2 intent in the legislative history of the statute. Thus, they naturally continued to resort to case law antedating H.B.4 without fully appreciating the historical reason why the one satisfaction rule was developed or fully realizing that chapters 32 and 33 of the Civil Practice and Remedies Code supplanted the common-law one satisfaction rule after September 1, 2003. It is, nonetheless, erroneous to apply the one satisfaction rule outside the statutory parameters of chapters 32 and 33. 6. Applying the One Satisfaction Rule in Contractual Liability Cases Impairs Contract Obligations In Violation of Texas Constitution Article I, §16. Applying the one satisfaction rule outside tort cases where it is ostensibly still necessary threatens to impair contractual obligations in violation of article I, §16 of the Texas Constitution. a. Texas Public Policy Strongly Favors Freedom of Contract. The Texas Supreme Court has “long recognized Texas’ strong public policy in favor of preserving the freedom of contract.” Fairfield Insurance Co. v. Stephens Martin Paving, LP, 246 S.W.3d 653, 664 (Tex. 2004). This constitutionally guaranteed contractual freedom strongly favors the parties’ right to “bargain for mutually agreeable terms and [to] allocate risks as they see fit.” Gym- N-1 Playgrounds, Inc. v. Snider, 220 S.W.3d 905, 912 (Tex. 2007). It outweighs court-created general policies, such as that prohibiting insuring punitive damages. Fairfield Insurance Co., 246 S.W.3d at 664. 53 MHDocs 6062453_7 12690.2 [I]f there is one thing which more than another public policy requires it is that [persons] of full age and competent understanding shall have the utmost liberty of contracting, and that their contracts when entered into freely and voluntarily shall be held sacred and shall be enforced by Courts of justice. Therefore, you have this paramount public policy to consider – that you are not lightly to interfere with this freedom of contract. Wood Motor Co. v. Nebel, 150 Tex. 86, 238 S.W.2d 181, 185 (1951) (quoting Printing & Numerical Registering Co. v. Sampson, LR 19 Eq 462, 465, 1874 WL 16322 (1875)). This freedom outweighs application in contract cases of a judicial doctrine to remedy a conundrum unique to tort actions. b. The One Satisfaction Rule Impermissibly Impairs Contractual Obligations. Whether a law violates the freedom of contract depends on three-part test: (1) it must not substantially impair a contractual relationship; (2) it “must have a significant and legitimate purpose behind the regulation, such as the remedying of a broad and general social or economic problem”; and (3) it must be reasonable and appropriate for its intended purpose. Energy Reserves Group v. Kansas Power & Light, 459 U.S. 400, 410, 411-13 (1983). The one satisfaction rule cannot satisfy the first test because it substantially impairs a contractual relationship. It effectively takes from the injured party the benefit of its settlement with another defendant to reduce the wrongdoer’s liability. See, e.g., Langever v. Miller, 124 Tex. 80, 76 S.W.2d 1025, 1028 (1934) (law reducing collectible amount of deficiency judgments to difference between actual 54 MHDocs 6062453_7 12690.2 property value and foreclosure price void as a substantial contractual impairment). In contract cases, the one satisfaction rule’s reduction of damages by credit for another’s settlement substantially and unconstitutionally impairs contractual freedom. It also creates, as applied here, a disincentive to settle, which is contrary to the strong Texas public policy in favor of settlements. c. Freedom of Contract Outweighs One Satisfaction’s Questionable Objectives. The Texas Supreme Court has refused to accept that preventing recovery of more than the jury’s damage assessment is a more important than preventing a wrongdoer from escaping its full liability. Landers, 248 S.W.2d at 734. It justified overruling Bradshaw’s one satisfaction rule the extent it conflicted with its creation of a purely comparative negligence system because the one satisfaction rule unfairly allowed the non-settling defendant to unfairly “benefit from a generous settlement in which they refused to participate” for this reason. Duncan, 665 S.W.2d at 431. It recognized that settlement consideration includes benefits other than relief from paying damages. Id. “There is no conceptual inconsistency in allowing a plaintiff to recover more from a settlement or partial settlement than he could receive as damages.” Id. “Plaintiffs will benefit from good settlements and bear the risk of bad ones, just as they do in single-tortfeasor cases. Allowing plaintiffs to keep the excess from a good settlements may violate the one recovery 55 MHDocs 6062453_7 12690.2 rule, but no one is harmed” when the jury apportions liability. Allowing plaintiffs to keep the excess from a good settlement is not overpayment of damages. The one satisfaction rule has a questionable objective based on questionable reasoning. It ought to be and is trumped by the freedom of contract guarantee in Texas Constitution article I, §16. 7. The Architect Is Procedurally Barred From Asserting the One Satisfaction Rule. a. Waived by Failure to Specially Except. The Architect’s post-verdict motion urging credit under the one satisfaction rule for the first time asserted “Plaintiff’s damages resulted from ‘the breaches of contract’ Plaintiffs alleged were committed by [all remaining defendants]” and that RLJ failed to allocate those damages. (CR1174). Complaint about the damages allegations was waived by failure to urge them in writing before charge submission. TEX. R. CIV. P. 90; Bullock v. Regular Veteran’s Ass’n of U.S., 806 S.W.2d 311, 314 (Tex. App.—Austin 1991, no writ). b. Waived by Failure to Request Question or Instruction. Neither did the Architect object to the charge on this ground. Failure to object to the charge’s failure to segregate failure to request an instruction requiring allocation waives complaint about failure to segregate. TEX. R. CIV. P. 278 (failure to request properly worded question); see Dick’s Last Resort of West End, Inc. v. Market/Ross, Ltd., 273 S.W.3d 905, 919 (Tex. App.—Dallas 2008, pet. denied); 56 MHDocs 6062453_7 12690.2 McCarty v. Wani Venture, A.S., 251 S.W.3d 573, 585 (Tex. App.—Houston [1st Dist.] 2007, pet. denied) (failure to request instruction). c. Waived By Failure to Plead as an Affirmative Defense. A party must affirmatively plead “accord and satisfaction, arbitration and award, … discharge in bankruptcy, … payment, release … and any other matter constituting an avoidance or affirmative defense.” TEX. R. CIV. P. 94. Each of these involves prior payment or other discharge that is waived if not pleaded. Bejjani v. TRC Servs., Inc., No. 14-08-00750-CV, 2009 WL 3856924, at *5 (Tex. App.— Houston [14th Dist.] Nov. 19, 2009, no pet.) (right to offset); Sugar Land Props., Inc. v. Becnel, 26 S.W.3d 113, 121 (Tex. App.—Houston [1st Dist.] 2000, no pet.) (payment of medical expenses). Settlement credit under the one satisfaction rule, though not specifically named, is an “other matter constituting an avoidance or affirmative defense” that must be pleaded. This Court specifically acknowledged that the one satisfaction rule is in the nature of an affirmative defense. RenewData Corp. v. eMag Solutions, LLC, No. 03–05–00509–CV, 2009 WL 1255583, at *1 n. 1 (Tex. App.—Austin May 6, 2009, pet. denied) (mem. op.; unasserted one satisfaction rule could not be considered as alternative summary judgment ground); accord Pagosa Oil & Gas, L.L.C. v. Marrs & Smith P’ship, 323 S.W.3d 203, 217 (Tex. App.—El Paso 2010, pet. denied); Brewer & Pritchard, P.C. v. AMKO Res. Int’l, LLC, No. 14-13-00113-CV, 2014 WL 3512836, at *1 (Tex. App.—Houston 57 MHDocs 6062453_7 12690.2 [14th Dist.] July 15, 2014, no pet.) (mem. op.). Cases holding otherwise are irreconcilable with rule 94 because the opponent must be notified of the need to prove damages allocation plus the elements of the asserted claims. See Dalworth Restoration, Inc. v. Rife-Marshall, 433 S.W.3d 773, 783-84 (Tex. App.—Fort Worth 2014. pet. dism’d w.o.j.). The Architect did not plead this affirmative defense (CR46-79; App. H) and RLJ was given no notice or opportunity to present evidence meeting any allocation requirement before the jury was discharged. d. Barred By Laches. The post-verdict assertion of the one settlement rule is also precluded by laches. The one satisfaction rule developed as an equitable principle, Sterling, 822 S.W.2d at 6, subject to equitable defenses. See Brewer v. Nationsbank of Texas, N.A., 28 S.W.3d 801 (Tex. App.—Corpus Christi 2000, no writ), and is subject to equitable defense for unreasonable delay and another’s good faith detrimental change in position. See City of Fort Worth v. Johnson, 388 S.W.2d 400, 403 (Tex. 1964). By the Architect’s failure to raise the one satisfaction rule prior to verdict, RLJ had no reason whatsoever to anticipate any need to adduce any evidence segregating damages. Similarly, the Architect waived any argument on the one satisfaction rule by specifically asking the jury to apportion damages and award only those damages caused by the Architect. (10RR54-56). 58 MHDocs 6062453_7 12690.2 For any one or all of the foregoing reasons, the one satisfaction rule did not and could not apply to reduce the Architect’s liability to RLJ. The trial court erred in concluding otherwise. Accordingly, the judgment must be reformed to restore recovery for the damages awarded by the jury together with interest. B. No Segregation of Attorney’s Fees Was Required. RLJ sought its reasonable and necessary attorney’s fees under chapter 38 of the Texas Civil Practice and Remedies Code. (CR201; App. A). The parties agreed to submit the attorney’s fees claim to the court rather than the jury. After the jury’s verdict, RLJ moved for its attorney’s fees and submitted its proof by affidavit and supporting documents showing RLJ expended a total of $1,388,019 in reasonable and necessary attorney’s fees to prosecute the breach of contract claims against the Architect, Soils Engineer, and the General Contractor. (3SCR3-611; 2SCR1603- 05). However, the trial court determined for purposes of attorney’s fees it was necessary to segregate those expended on RLJ’s claim against the Architect from those on its claims against the Settling Defendants. (CR1711; App. D). The trial court awarded attorney’s fees attributable to the prosecution of the breach of contract claim against the Architect only, even though it considered the damages “indivisible.” (CR1711; 2SCR1600; App. C, D). Accordingly, of the $1,388,019 in attorney’s fees for presenting all its contract claims, the trial court allowed RLJ 59 MHDocs 6062453_7 12690.2 only $901,650.96 as fees attributable to the contract claim against the Architect only. (CR1711; App. D). RLJ timely moved conditionally to modify the judgment so that, if the one satisfaction rule applied, it could recover its unsegregated attorney’s fees for breach of contract claims against the Architect and the Settling Defendants. (CR1747-48). The trial court denied this motion. (CR1905). RLJ continues to maintain that the one satisfaction rule does not apply. If and only if this Court decides otherwise, RLJ was not obliged to segregate its attorney’s fees for the breach of contract claims against the Architect from those for the breach of contract claims against the Settling Defendants. 1. There Is No Need to Segregate Fees For Claims Requiring Proof of the Same Facts. Generally, reasonable and necessary attorney’s fees requires proof of the fees incurred for suit on a claim for which such fees are recoverable. Sterling, 822 S.W.2d at 10. If the causes of action depend upon the same facts or circumstances, they may be “intertwined to the point of being inseparable.” Id. Attorney’s fees should be allowed for inseparable claims even if some issues also relate to matters for which attorney’s fees are not recoverable, Aiello, 941 S.W.2d at 73; Sterling, 822 S.W.2d at 11, provided the underlying services advance both. Chapa, 212 S.W.3d at 314. Whether fees can be segregated is a mixed question of law and fact. Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 303 (Tex. 2006). For example, 60 MHDocs 6062453_7 12690.2 when an attorney testified that the issue common to all claims was the right of control over a corporation, this Court deemed the recoverable and unrecoverable claims so interrelated that it was unnecessary to segregate fees. Fortenberry v. Cavanaugh, No. 03-07-00310-CV, 2008 WL 4997568, at *12 (Tex. App.—Austin Nov. 26, 2008, pet. denied) (mem. op.). 2. If the One Satisfaction Rule Applies, It Requires Proof of Breach of the Same Promised Performance and an Indivisible Injury. The one satisfaction rule may apply in contract case only if there was a joint and several contractual liability, which in turn requires a promise of the same performa [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/4051046. Public record. Not legal advice.