# 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) · June 12, 2015 URL: https://www.frixlaw.com/law-library/cases/4068344 ## Case - **Court:** Texas Court of Appeals, 3rd District (Austin) - **Decided:** June 12, 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/4068344 ## Opinion text ACCEPTED 03-14-00738-CV 5659032 THIRD COURT OF APPEALS AUSTIN, TEXAS 6/12/2015 2:19:36 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 6/12/2015 2:19:36 PM Third District of Texas at Austin JEFFREY D. KYLE Clerk Elness, Swenson, Graham § From the 200th District Court Architects, Inc., § Appellant and Cross-Appellee, § § 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 _____ UNOPPOSED MOTION TO AMEND APPELLEES’ BRIEF TO CORRECT SENTENCE FRAGMENT _____ Appellees and Cross-Appellants, RLJII-C Austin Air, LP; RLJ II-C Austin Air Lessee, LP; and RJL Lodging Fund II Acquisitions, LLC, respectfully move for leave to amend their Appellees’ Brief filed in this cause on June 11, 2015. To demonstrate why leave to amend should be granted, Appellees and Cross- Appellants respectfully show as follows: I. Nature of the Correction Leave to amend is sought to correct the omission of ten words from the first sentence fragment of the third paragraph of the Summary of Argument on page 5 1 MHDocs 6179368_1 12690.2 of the Appellees’ Brief. That fragment reads, “acquired during its history that does not address the issue here: whether RLJ satisfied Chapter 38.” It should have read, “The Architect’s argument relies on the general patina Chapter 38 acquired during its history that does not address the issue here: whether RLJ satisfied Chapter 38.” No other alterations than the necessary correction to the word count in the certificate of compliance and correction of the date on the certificate of service will be made to the Amended Appellees’ Brief, a true and correct copy of which is attached as Exhibit “A” to this motion. II. Explanation of the Cause of the Need to Amend The omission making this motion necessary was the result of an error that occurred during the final preparation of the brief. Using Microsoft Word, the last version of the summary of argument was pasted in its entirety into the Appellees’ Brief. In the process of doing so, the omitted phrase was deleted. Because the document was copied and pasted in its entirety, it was anticipated that the summary of argument appeared in the brief as it had appeared in the source document. That it did not so appear was not detected until after Appellees’ Brief was filed. III. Not Opposed by Counsel for Appellant, Cross-Appellee. On Friday, June 12, 2015, counsel for the parties to this appeal conferred concerning this motion to amend. Counsel for Appellant and Cross-Appellee is not opposed to the relief this motion requests. 2 MHDocs 6179368_1 12690.2 IV. Relief Requested For the foregoing reasons, Appellees and Cross-Appellants request that this motion be granted and that the court accept for filing Amended Appellees’ Brief tendered this day for filing in this cause. Appellees and Cross-Appellants further request any other relief to which this motion may entitle them. Respectfully submitted, MUNSCH HARDT KOPF & HARR PC /s/Michael W. Huddleston Michael W. Huddleston State Bar No. 10148415 J. Stephen Gibson State Bar No. 07866000 3800 Ross Tower 500 North Akard Street Dallas, TX 75201 (214) 855-7500 Main Tel. (214) 855-7584 Main Fax mhuddleston@munsch.com sgibson@munsch.com 3 MHDocs 6179368_1 12690.2 Benton T. Wheatley State Bar No. 24015171 Tracy McCreight State Bar No. 24037064 Munsch Hardt Kopf & Harr, P.C. 401 Congress Avenue, Suite 3050 Austin, TX 78701 (512) 391-6100 Main Tel. (512) 391-6149 Main Fax bwheatley@munsch.com tmccreight@munsch.com Attorneys For Appellees and Cross- Appellants CERTIFICATE OF SERVICE I certify that I served a true and correct copy of the foregoing document upon counsel listed below on this 12th day of June, 2015 by e-file: Weston M. Davis Gregory N. Ziegler Steven R. Baggett Macdonald Devin, P.C. 1201 Elm Street 3800 Renaissance Tower Dallas, TX 75270 /s/ Michael W. Huddleston Michael W. Huddleston 4 MHDocs 6179368_1 12690.2 EXHIBIT A Oral Argument Requested No. 3-14-00738-CV In The Court of Appeals For The Third District of Texas Elness, Swenson, Graham § From the 200th District Court Architects, Inc., § Appellant and Cross-Appellee, § § 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 APPELLEES’ AMENDED 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 ATTORNEYS FOR APPELLEES, CROSS-APPELLANTS 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: Appellant, Cross-Appellee: Elness, Swenson, Graham Architects, Inc. Appellant’s, Cross-Appellee’s Weston M. Davis Counsel on Appeal: Gregory N. Ziegler Steven R. Baggett Macdonald Devin, P.C. 1201 Elm Street 3800 Renaissance Tower Dallas, TX 75270 Appellant, Cross-Appellee’s 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 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 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 TABLE OF CONTENTS IDENTITY OF PARTIES AND COUNSEL .............................................................i STATEMENT CONCERNING ORAL ARGUMENT ........................................... iii TABLE OF CONTENTS ..........................................................................................iv INDEX OF AUTHORITIES.................................................................................. viii I. STATEMENT OF THE CASE ....................................................................... 1 II. ISSUES PRESENTED ....................................................................................3 III. STATEMENT OF FACTS ..............................................................................4 IV. SUMMARY OF ARGUMENT ....................................................................... 5 V. ARGUMENT AND AUTHORITIES ............................................................. 8 A. The Trial Court Correctly Awarded RLJ Its Attorney’s Fees............... 8 1. Chapter 38 Does Not Require a Judgment for Damages. ........... 8 a. The “Judgment” Requirement Was Eliminated by the 1977 Amendment to Chapter 38’s Predecessor.................................................. 9 b. The Texas Supreme Court and This Court Have Rejected Any Such Requirement. ........................... 9 c. The Architect’s Cases Do Not Say Otherwise. ....................................................................11 2. Chapter 38 Only Requires a Valid Claim Timely Presented and Unpaid for Thirty Days. ............................................................12 a. The Architect Ignores Proper Statutory Interpretation...................................................................12 b. The Architect Attempts to Add Words to Chapter 38 By Misapplication of Cases. ........................13 3. Chapter 38 Only Requires a Valid Claim Timely Presented and Unpaid for Thirty Days. ............................................................15 a. A “Valid Claim” Is Required..........................................15 1) “In [A]ddition [T]o” Does Not Imply a “Valid Claim” Requires a Judgment Awarding Damages. .............................................15 2) A Verdict Awarding Damages Is Enough To Have a “Valid Claim.” ......................16 b. Chapter 38 Requires the Valid Claim to Remain Unpaid 30 Days After Presentment. ................. 17 iv 4. RLJ Met All the Statutory Requirements for Recovering Its Attorney’s Fees. ........................................................................21 a. RLJ Had a Valid Claim. .................................................21 b. The Just Amount Owing Was Not Timely Tendered. ....................................................................22 5. The Trial Court’s Reasoning Agreed With the Legislature’s. .. 23 B. RLJ Was Assigned the Contract and the Cause of Action and Had Standing to Sue....................................................................................24 1. RLJ Owned Both the Architectural Contract Rights and Causes of Action of Action for Its Breach. ...........................................25 a. Ausaircourt Assigned the Contract to RLJ Under the PSA and the Cause of Action By Assignment of “Intangible Assets.” ...............................25 2. The Intangibles Assignment Transferred the Contract Cause of Action. .......................................................................................26 a. “Intangible Assets” Included Contract Cause of Action. .............................................................27 b. The Architect’s Argument Ignores Context and the Residuary Clause’s Purpose...............................28 3. The Intangibles Assignment was “Express.” ............................31 4. The Supplemental Clarification May Be Considered and Removes Any Doubt That RLJ Was Assigned the Architectural Contract and the Cause of Action For Its Breach. ....................34 5. Alternatively, The PSA Transferred The Contract Cause of Action When It Transferred the Contract. ................................36 6. The Architectural Contract Was Validly Assigned to RLJ. ..... 36 C. The Contract Was Admissible and Authenticated. .............................39 D. The Trial Court Did Not Err in Submitting the Contractual Liability Issue Concerning Structural Engineering and The Architect’s Complaints Have Not Been Preserved For Review. ...........................41 1. The Architect Waived Its Complaint By Failing to Specially Except to the Omission of Vicarious or Respondeat Superior Allegations. ...............................................................................41 2. The Architect Waived Its Complaint By Failing to File a Verified Denial of Liability in the Capacity Sued. ...................43 v 3. The Architect Failed to Preserve Its Charge Complaint By Objecting On Different Grounds Than Those Now Urged. ..... 44 4. Vicarious or Respondeat Superior Liability Is Not Required When Responsibility Exists Under a Contract. ........................44 a. Ryan Decided Tort, Not Contractual, Duty Under a Now-Rejected Liability Theory. .......................44 b. The Contract Defines Contractual Duties.......................45 5. The Architect Waived Any Complaint About the Duty Submitted By Failing to Request Any Question, Definition or Instruction. ................................................................................46 6. Ryan Only Addressed the Architect’s Direct, Not Vicarious, Tort Liability. ............................................................................46 7. Architect’s Reasoning Permits It All the Contractual Benefits Free of Burden and Risk. ..........................................................47 8. Illegality Is Not an Issue Due to The Architect’s Failure to Plead It and Statutory Authorization for Architects Performing Structural Engineering Services................................................48 a. Any Illegality Was Waived Because It Is Not Apparent And The Architect Did Not Affirmatively Plead It. ....................................................49 b. Seaview Hospital Does Not Say An Architect Cannot Provide Structural Engineering Services. .....................................................50 E. The Evidence of Diminution in Value Was Legally Sufficient. ......... 50 1. The Evidence Is Legally Sufficient If It Provides More Than a Scintilla of Factual Support. .....................................................51 2. Hornsby’s Testimony Was Well-Founded Based on Well- Accepted Standards and Methodologies. ..................................52 3. The Architect’s Complaints Are Meritless. ..............................54 a. The Evidence Supported the Answer to the Question Asked, and the Architect Waived Its Valuation Date Complaint. ........................................54 b. The Jury Was Provided With Actual Performance Data. ..........................................................58 c. There Was Legally Sufficient Evidence to Support the Jury’s Verdict and Any Allocation of Damages. ..................................................60 vi 1) The Architect Erroneously Assumes Jury Must Have Implicitly Found Others Breached. ..................................................60 2) Evidence of Unsegregated Damages Is Legally Sufficient Evidence of Segregated Damages. ...........................................61 3) Testimony Segregating Damages Is Not Required. .......................................................62 d. Comparable Sales Were a Vouchsafe, Not the Basis for Valuations..................................................63 e. There Was No Recovery For “Stigma” Damages and No Double Recovery. ..............................65 f. Lost Profits Were Not a Separate Element of Recovery, But Were Only Used As Necessary for the Texas Supreme Court’s Approved Method of Valuing Property Producing Income. ..........................................................66 VI. CONCLUSION AND PRAYER ...................................................................67 CERTIFICATE OF COMPLIANCE .......................................................................70 CERTIFICATE OF SERVICE ................................................................................71 APPENDIX ..............................................................................................................72 vii INDEX OF AUTHORITIES Page(s) CASES A.D. Willis Co. v. Metal Bldg. Components, Inc., No. 03-99-00574-CV, 2000 WL 1508500 (Tex. App.—Austin Oct. 12, 2000, pet. denied) .............................. 10, 12, 15-16 Adams v. Great American Lloyd’s Ins., 891 S.W.2d 769 (Tex. App.—Austin 1995, no writ) .........................................27 Akin, Gump, Strauss, Hauer & Feld, L.L.P. v. E Court, Inc., No. 03-02-00714-CV, 2003 WL 21025030 (Tex. App.—Austin May 8, 2003, no pet.).........................................................27 Alaniz v. Jones & Neuse, Inc., 907 S.W.2d 450 (Tex. 1995) ..............................................................................42 Am. Multi-Cinema, Inc. v. Hegar, No. 03-14-00397-CV, 2015 WL 1967877 (Tex. App.—Austin Apr. 30, 2015, no pet. h.) ...................................................28 Associated Press v. Hicks Broad. Corp., No. C14-93-00066-CV, 1993 WL 495114 (Tex. App.—Houston [14th Dist.] Dec. 2, 1993, no writ) ........................... 40-41 Austin Hill Country Realty, Inc. v. Palisades Plaza, Inc., 948 S.W.2d 293 (Tex. 1997) ..............................................................................10 Austin Road Co. v. Pope, 147 Tex. 430, 216 S.W.2d 563 (1949) ...............................................................20 Avanti Servs. Inc. v. Questor Drilling, Inc., No. 01-86-00741-CV, 1987 WL 8352 (Tex. App.—Houston [1st Dist.] Mar. 26, 1987, no writ) ..................................43 Baroid Equipment, Inc. v. Odeco Drilling, Inc., 184 S.W.3d 1 (Tex. App.—Houston [1st Dist.] 2006, pet. denied) ...................35 Barraza v.Koliba, 933 S.W.2d 164 (Tex. App.—San Antonio 1996, writ denied) .........................54 viii Barry v. Jackson, 309 S.W.3d 135 (Tex. App.—Austin 2010, no pet.) .................................... 56-58 Bechtel Corp. v. CITGO Products Pipeline Co., 271 S.W.3d 898 (Tex. App.—Austin 2008, no pet.) ..........................................62 Beech Aircraft Corp. v. Jinkins, 739 S.W.2d 19 (Tex. 1987).................................................................................20 Berschauer/Phillips Const. Co. v. Seattle Sch. Dist. No. 1, 881 P.2d 986 (Wash. 1994) .......................................................................... 37-38 Binion v. Brinkley, No. 2-09-121-CV, 2010 WL 396385 (Tex. App.—Houston [14th Dist.] Feb. 4, 2010) ...............................................62 Blizzard v. Nationwide Mut. Fire Ins. Co., 756 S.W.2d 801 (Tex. App.—Dallas 1988, no writ) ....................................12, 20 BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789 (Tex. 2002).................................................................................23 Boerschig v. Southwestern Holdings, Inc., 322 S.W.3d 752 (Tex. App.—El Paso 2010, no pet.) ........................................30 Brooks v. Chevron USA Inc., No. 13-05-029-CV, 2006 WL 1431227 (Tex. App.—Corpus Christi May 25, 2006, pet. denied)(mem. op.) ........... 32-33 Browne v. King, 196 S.W. 884 (Tex. Civ. App. 1917) aff'd, 111 Tex. 330, 235 S.W. 522 (1921) ...................................................................27 Buccaneer Homes of Ala., Inc. v. Pelis, 43 S.W.3d 586 (Tex. App.—Houston [1st Dist.] 2001, no pet.) ........................20 Buckner Glass & Mirror Inc. v. T.A. Pritchard Co., 697 S.W.2d 712 (Tex. App.—Corpus Christi 1985, no writ) ........................8, 22 Burroughs Wellcome Co. v. Crye, 907 S.W.2d 497 (Tex.1995)................................................................................51 ix Butler v. Joseph's Wine Shop, Inc., 633 S.W.2d 926 (Tex. App.—Houston [14th Dist.] 1982, writ ref'd n.r.e.)..................................43 C.W. 100 Louis Henna, Ltd. v. El Chico Rests. of Tex., L.P., 295 S.W.3d 748 (Tex. App.—Austin 2009, no pet.) ..........................................21 C& H Nationwide, Inc. v. Thompson, 903 S.W.2d 315 (Tex. 1994) ..............................................................................23 CBI NA-CON, Inc. v. UOP Inc., 961 S.W.2d 336 (Tex. App.—Houston [1st Dist.] 1997, pet. denied) ..........................................45 Cedar Point Apartments v. Cedar Point Inv. Corp., 693 F.2d 748 (8th Cir.), cert. denied, 461 U.S. 914 (1983) ...............................38 Ceramic Tile Int’l Inc. v. Balusek, 137 S.W.3d 722 (Tex. App.—San Antonio 2004, no pet.) ................................32 City of Harlingen v. Sharboneau, 48 S.W.3d 177 (Tex. 2001).....................................................................52, 55, 66 City of Keller v. Wilson, 168 S.W.3d 802 (Tex.2005)..........................................................................51, 60 City of Rockwall v. Hughes, 246 S.W.3d 621 (Tex. 2008) ........................................................................ 13-14 Coffin v. Douglas, 61 Tex. 406 (1884)(available at 1884 WL 8785) ......................................... 29-30 Collin Cnty. v. Hixon Family P'ship, Ltd., 365 S.W.3d 860 (Tex. App.—Dallas 2012, pet. denied)....................................64 Commercial Structures and Interiors, Inc. v. Liberty Educ. Ministries, Inc., 192 S.W.3d 827 (Tex. 2006) ........................................................................26, 34 Cook v. Exxon Corp., 145 S.W.3d 776 (Tex. App.—Texarkana 2004, no pet.)....................................32 D Design Holdings, L.P. v. MMP Corp., 339 S.W.3d. 195 (Tex. App.—Dallas 2011, no pet.) .........................................36 x De La Rosa v. Kaples, 812 S.W.2d 432 (Tex. App.—San Antonio 1991, writ denied) .........................16 Doctors Hosp. 1997, L.P. v. Sambuca Houston, L.P., 154 S.W.3d 634 (Tex. App—Houston [14th Dist.] 2004, pet. abated) .........................................17 Dynegy Midstream Servs., Ltd. P'ship v. Apache Corp., 294 S.W.3d 164 (Tex. 2009) ..............................................................................27 Effel v. McGarry, 339 S.W.3d 789 (Tex. App.—Dallas 2011, pet. denied)....................................36 Ellis County State Bank v. Keever, 888 S.W.2d 790 (Tex. 1994) ..............................................................................23 331 S.W.3d at 420, 424-25 ......................................................................................31 Enriquez v. K & D Development & Construction, Inc., 567 S.W.2d 40 (Tex. Civ. App.—El Paso 1978, writ ref'd n.r.e.) ................................................. 8 Exxon Corp. v. Emerald Oil & Gas Co., L.C., 331 S.W.3d 419, 424-25 (Tex. 2010) ...........................................................31, 33 Exxon Corp. v. Pluff, 94 S.W.3d 22 (Tex. App.—Tyler 2002, pet. denied) ................................... 31-32 Farrar v. Hobby, 506 U.S. 103 (1992) ............................................................................................14 Fire Ins. Exchg. v. Sullivan, 192 S.W.3d 99 (Tex. App.—Houston [14th Dist.] 2006, pet. denied) ..................................12, 20 Folgers Architects Ltd. v. Kerns, 612 N.W.2d 539 (Neb. App. 2000) ....................................................................37 Ford v. Robertson, 739 S.W.2d 3 (Tenn. Ct. App. 1987) ..................................................................37 Gallagher v. Southern Source Packaging, LLC, 564 F.Supp.2d 503 (E.D.N.C. 2008) ..................................................................38 xi Geis v. Colina Del Rio, LP, 362 S.W.3d 100 (Tex. App.—San Antonio 2011, pet. denied)..........................49 Getzschman v. Miller Chem. Co., 232 Neb. 885, 443 N.W.2d 260 (1989) ..............................................................45 Gips v. Red Robin Corp., 366 S.W.2d 853 (Tex. Civ. App.—Houston 1963, writ ref’d n.r.e) ..............................................38 Grapevine Excavation, Inc. v. Maryland Lloyds, 35 S.W.3d 1 (Tex. 2000).....................................................................................13 Green Int’l, Inc. v. Solis, 951 S.W.2d 384 (Tex. 1997) .......................................................................passim Green v. H. E. Butt Found., 217 F.2d 553 (5th Cir. 1954) ..............................................................................28 Guirey, Srnka & Arnold, Architects v. Phoenix, 9 Ariz. App. 70, 449 P.2d 306 (1969) ................................................................45 Gulf Ins. Co. v. Cunningham, A14-91-00799-CV, 1993 WL 136039 (Tex. App.—Houston [14th Dist.] Apr. 29, 1993, writ denied) .........................57 Gulf States Utilities Co. v. Low, 79 S.W.3d 561 (Tex. 2002).................................................................................59 Hagins v. E-Z Mart Stores, Inc., 128 S.W.3d 383 (Tex. App.—Texarkana 2004, no pet.)....................................62 Halliburton, Inc. v. Admin. Review Bd., 771 F.3d 254 (5th Cir. 2014) ..............................................................................30 Hamra v. Gulden, 898 S.W.2d 16 (Tex. App.—Dallas 1995, writ dism’d w.o.j.)...........................20 Haubold v. Medical Carbon Research Inst., LLC, No. 03-11-00115-CV, 2014 WL 1018008 (Tex. App.—Austin Mar. 14, 2014, no pet.)(mem. op.) ........................ 11-12, 16 xii Horton v. Robinson, 776 S.W.2d 260 (Tex. App.—El Paso 1989, no writ) ........................................43 Houston Unlimited, Inc. Metal Processing v. Mel Acres Ranch, 389 S.W.3d 583 (Tex. App.—Houston [14th Dist.] 2012), rev'd on other grounds, 443 S.W.3d 820 (Tex. 2014) ........................................65 Houston Unlimited, Inc. Metal Processing v. Mel Acres Ranch, 443 S.W.3d 820 (Tex. 2014) ..............................................................................52 Hubacek v. Ennis State Bank, 159 Tex. 166, 317 S.W.2d 30 (1958) .................................................................34 Ian Martin, Inc. v. Greenspoint Bank, 01-87-00631-CV, 1988 WL 45423.....................................................................33 Imperial Lofts, Ltd. v. Imperial Woodworks, Inc., 245 S.W.3d 1 (Tex. App.—Waco 2007, pet. denied).........................................20 In re Cooper, 242 B.R. 767 (Bankr. S.D. Ga. 1999) .................................................................38 In re First State Bancorporation, 498 B.R. 322 (Bankr. D.N.M. 2013) ..................................................................27 In re Fleckenstein, 589 S.W.2d 788 (Tex. Civ. App.—El Paso 1979, no writ) ................................28 In re Grotjohn, No. 03-47055DML, 2005 WL 6441386 (Bankr. N.D. Tex. July 19, 2005) .......................................................................28 In re Malacara, 223 S.W.3d 600 (Tex. App.—Amarillo 2007, no pet.) ......................................28 In re Scott, 157 B.R. 297 (Bankr. W.D. Tex. 1993), withdrawn per settlement, 162 B.R. 1004 (Bankr. W.D. Tex. Jan. 21, 1994) .......................................................................28 Intercontinental Group P’ship v. KB Home Lone Star, L.P., 295 S.W.3d 650 (Tex. 2009) ........................................................................11, 14 xiii Interstate Contracting Corp. v. City of Dallas, 135 S.W.3d 605 (Tex. 2004) ..............................................................................48 Jakab v. Gran Villa Townhouses Homeowners Ass'n, Inc., 149 S.W.3d 863 (Tex. App.—Dallas 2004, no pet.) ..........................................14 Jones v. Kelley, 614 S.W.2d 95 (Tex.1981)...................................................................... 14, 16-17 Karol v. Presido Enterprises, Inc., 622 S.W.2d 638 (Tex. App.—Austin 1981, no writ) .........................................22 Kelly v. Northwest Community Hospital, 66 Ill.App.3d 679, 23 Ill.Dec. 466, 384 N.E.2d 102 (1978)...............................45 Kennedy v. Lynd, 306 F.2d 222 (5th Cir. 1962) ..............................................................................30 Kleas v. Clark, Thomas & Winters, P.C., No. 03-12-00755-CV, 2013 WL 4516120 (Tex. App.—Austin Aug. 21, 2013, pet. denied) .........................................21, 12 La Tierra de Simmons Familia, Ltd. v. Main Event Entm't, LP, No. 03-10-00503-CV, 2012 WL 753184 (Tex. App.—Austin Mar. 9, 2012, pet. denied)..................................................32 Lay v. Aetna Ins. Co., 599 S.W.2d 683 (Tex. App.—Austin 1980, writ ref'd n.r.e.) .............................27 Lee v. City of Houston, 807 S.W.2d 290 (Tex. 1991) ................................................................................ 9 Leggett v. Brinson, 817 S.W.2d 154 (Tex. App.—El Paso 1991, no writ) ........................................43 Leland v. Brandal, 257 S.W.3d 204 (Tex. 2008) ..............................................................................13 Lewis v. Adams, 979 S.W.2d 831 (Tex. App.—Houston [14th Dist.] 1998, no pet)................................................34 xiv Lippincott v. Whisenhunt, 58 Tex. Sup. Ct. J. 705, 2015 WL 1967025 (Tex. Apr. 27, 2015)(per curiam) .......................................................................12 Mack Trucks, Inc. v. Tamez, 206 S.W.3d 572 (Tex. 2006) ..............................................................................59 Mancorp, Inc. v. Culpepper, 802 S.W.2d 226 (Tex.1990)................................................................................51 Manges v. Mustang Oil Tool Co., 658 S.W.2d 725 (Tex. App.—Corpus Christi 1983, writ ref'd n.r.e.) ...........................................17 Marange v. Marshall, 402 S.W.2d 236 (Tex. Civ. App.—Corpus Christi 1966, writ ref'd n.r.e.) ...................................47 Martini v. Tatum, 776 S.W.2d 666 (Tex. App.—Amarillo 1989, writ denied) ...............................16 MBM Fin. Corp. v. Woodlands Operating Co., 292 S.W.3d 660 (Tex. 2009) ........................................................................11, 16 McGalliard v. Kuhlmann, 722 S.W.2d 694 (Tex.1986)................................................................................60 McGinty v. Hennen, 372 S.W.3d 625 (Tex. 2012) ........................................................................54, 56 McKinley v. Drozd, 685 S.W.2d 7 (Tex. 1985)............................................................................passim Merrell Dow Pharm., Inc. v. Havner, 953 S.W.2d 706 (Tex. 1997) ..............................................................................57 Methodist Hosps. v. Corporate Communicators, Inc., 806 S.W.2d 879 (Tex. App.-Dallas 1991, writ denied) ......................................40 Minn. Mining & Mfg. Co. v. Nishika Ltd., 953 S.W.2d 733 (Tex. 1997) ........................................................................ 61-62 xv Missouri-Kansas-Texas R. Co. v. City of Dallas, 623 S.W.2d 296 (Tex. 1981) ..............................................................................51 Montgomery Ward & Co. v. Scharrenbeck, 146 Tex. 153, 204 S.W.2d 508 (1947) ...............................................................42 Moundsview ISD v. Buetow & Assoc., 253 N.W.2d 836 (Minn.1977) ............................................................................45 Mueller v. All-Temp Refrig., Inc., 2014 Ohio 2718...................................................................................................32 Mustang Pipeline Co. v. Driver Pipeline Co., 134 S.W.3d 195 (Tex. 2004) ..............................................................................11 Naylor v. Stiegler, 613 S.W.2d 546 (Tex. Civ. App.—Fort Worth 1981, no writ) ..........................57 O and B Farms, Inc. v. Black, 300 S.W.3d 418 (Tex. App.—Houston [14th Dist.] 2009, pet. denied) ........................................51 Office of Pub. Util. Counsel v. P.U.C., 878 S.W.2d 598 (Tex. 1994) ..............................................................................40 Orix Credit Alliance, Inc. v. Omnibank, N.A., 858 S.W.2d 586 (Tex. App. 1993)......................................................................33 Osborne v. Jauregui, Inc., 252 S.W.3d 70 (Tex. App.—Austin 2008, pet. denied) ..............................passim Osterberg v. Peca, 12 S.W.3d 31 (Tex. 2000)...................................................................................54 Owen v. CNA Insurance/Continental Cas. Co., 167 N.J. 450, , 771 A.2d 1208 (N.J. Super. 2001) .............................................38 Owen v. Vibrasonic Exploration, Inc., 694 S.W.2d 421 (Tex. App.—Houston [14th Dist.] 1985, writ ref’d n.r.e.) .................................33 Pagosa Oil & Gas LLC v. Marrs & Smith Ptnrs., 323 S.W.3d 203 (Tex. App.—El Paso 2010, pet. denied) ..................................37 xvi Park v. Escalera Ranch Owners' Ass'n, Inc., No. 03-12-00314-CV, 2015 WL 737424 (Tex. App.—Austin Feb. 13, 2015, no pet. h.) ...................................................49 Parkway Co. v. Woodruff, 901 S.W.2d 434 (Tex. 1995) ..............................................................................66 Peissel v. Peissel, 620 S.W.2d 796 (Tex. Civ. App.—Houston [14th Dist.] 1981, no writ) ......................................19 Perez v. Baker Packers, 694 S.W.2d 138 (Tex. App.—Houston [14th Dist.] 1985, writ ref'd n.r.e.)..................................10 Petsch v. Slator, 573 S.W.2d 849 (Tex. Civ. App.—Austin 1978, writ ref'd n.r.e.) .....................30 Phillips v. Estate of Poulin, No. 03-05-00099-CV, 2007 WL 2980180 (Tex. App.—Austin Oct. 12, 2007, no pet.) .......................................................23 Phillips v. Phillips, 820 S.W.2d 785 (Tex.1991)................................................................................49 Pilgrim’s Pride Corp. v. Smoak, 134 S.W.3d 880 (Tex. App.—Texarkana 2004, pet. denied) .............................63 Playskool, Inc. v. Elsa Benson, Inc., 147 Ill. App. 3d 292, 497 N.E.2d 1199 (1986) ...................................................47 Precision Homes, Inc. v. Cooper, 671 S.W.2d 924 (Tex. App.—Houston [14th Dist.] 1984, writ ref'd n.r.e.)............................ 65-66 Prize Energy Res., L.P. v. Cliff Hoskins, Inc., 345 S.W.3d 537 (Tex. App.—San Antonio 2011, no pet.) ................................48 Provident Life & Acc. Ins. Co. v. Knott, 128 S.W.3d 211 (Tex. 2003) ..............................................................................34 xvii Rasmusson v. LBC PetroUnited, Inc., 124 S.W.3d 283 (Tex. App.—Houston [14th Dist.] 2003, pet. denied) ..................................14, 16 Reuben H. Donnelley Corp. v. McKinnon, 688 S.W.2d 612 (Tex. App.—Corpus Christi 1985, writ ref’d).........................38 Richey v. Stop N Go Markets of Tex., 654 S.W.2d 430 (Tex.1983).......................................................................... 31-33 Rockwall Commons Assocs. Ltd. v. MRC Mortgage Grantor Trust I, 331 S.W.3d 500 (Tex. App.—El Paso 2010, no pet.) ........................................39 Rogers v. RAB Inv. Ltd., 816 S.W.2d 543 (Tex. App.—Dallas 1991, no writ) ..........................................16 Rosell v. Central W. Motor Stages, Inc., 89 S.W.3d 643 (Tex. App.—Dallas 2002, pet. denied)......................................63 Ross v. Ross, 20 Ala. 105 (1852) ..............................................................................................32 Ross v. St. Luke’s Episcopal Hosp., 58 Tex. Sup. Ct. J. 766, 2015 WL 2009744 (Tex. May 1, 2015) .......................12 Rumbin v. Utica Mut. Ins. Co., 254 Conn. 259, 757 A.2d 526 (Conn. 2000) ......................................................38 Ryan v. Morgan Spear Associates Inc., 546 S.W.2d 678 (Tex. Civ. App.—Corpus Christi 1977, writ ref'd n.r.e.) ............................. 44-47 Sanders v. Worthington, 382 S.W.2d 910 (Tex.1964)................................................................................39 Seaview Hospital, Inc. v. Medicenters of Am., Inc., 570 S.W.2d 35 (Tex. Civ. App.—Corpus Christi 1978, no writ)................. 49-50 Shoemake v. Fogel, Ltd., 826 S.W.2d 933 (Tex.1992)................................................................................42 xviii Simmons v. Bisland, No. 03-08-00141-CV, 2009 WL 961522 (Tex. App.—Austin Apr. 9, 2009, pet. denied)(mem. op.) ................................63 Southwestern Bell Tel. Co. v. DeLanney, 809 S.W.2d 493 (Tex. 1991) ..............................................................................45 St. Anthony's Hosp. v. Whitfield, 946 S.W.2d 174 (Tex. App.—Amarillo 1997, writ denied) ...............................47 State Dep't of Highways & Pub. Transp. v. Payne, 838 S.W.2d 235 (Tex. 1992) ........................................................................44, 46 State Farm Fire and Casualty Co. v Gandy, 925 S.W.2d 696 (Tex. 1996) ..............................................................................36 State Farm Life Ins. Co. v. Beaston, 907 S.W.2d 430 (Tex. 1995) ........................................................................ 11-12 State v. Bristol Hotel Asset Co., 293 S.W.3d 170 (Tex. 2009) ........................................................................27, 67 Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1 (Tex. 1991).............................................................................14, 62 Tex. Lottery Comm’n v. First State Bank of DeQueen, 325 S.W.3d 628 (Tex. 2010) ..............................................................................13 Tex. Pipe Line Co. v. Hunt, 149 Tex. 33, 228 S.W.2d 151 (Tex. 1950) .........................................................64 Texarkana Memorial Hospital, Inc. v. Murdock, 946 S.W.2d 936 (Tex. 1997) ..............................................................................62 Texas Alcoholic Beverage Comm'n v. Kings Four, Inc., 583 S.W.2d 676 (Tex. Civ. App.—Austin 1979, no writ) ................................... 9 Thomas C. Cook, Inc. v. Rowhanian, 774 S.W.2d 679 (Tex. App.—El Paso 1989, writ denied) .................................39 THPD, Inc. v. Cont’l Imports, Inc., 260 S.W.3d 593 (Tex. App.—Austin 2008, no pet.) ..........................................54 xix Turner, Collie & Braden, Inc. v. Brookhollow, Inc., 642 S.W.2d 160 (Tex. 1984) ..............................................................................57 Union Carbide Corp. v. Synatzske, 438 S.W.3d 39 (Tex. 2014).................................................................................13 University Mews Associates v. Jeanmarie, 122 Misc.2d 434, 471 N.Y.S.2d 457 (N.Y. Sup.Ct. 1983).................................38 Van Zandt v. Fort Worth Press, 359 S.W.2d 893 (Tex. 1962) ..............................................................................13 Vance v. My Apartment Steak House of San Antonio, Inc., 677 S.W.2d 480 (Tex.1984)..........................................................................51, 56 Vanderburg v. Nocona Gen. Hosp., No. 7:02-CV-291-KA, 2008 WL 114846 (N.D. Tex. Jan. 10, 2008) ...................................................................................27 Vann v. Bowie Sewerage Co., 127 Tex. 97, 90 S.W.2d 561 (1936) ...................................................................31 Vernooy Architects v. Smith, 346 S.W.3d 877 (Tex. App.—Austin 2011, pet. denied) ...................................45 Welch v. Monroe, No. 10-03-00013-CV, 2004 WL 2474504 (Tex. App.—Waco Nov. 3, 2004, no pet.) .........................................................31 Westminster Falcon/Trinity L.L.P. v. Chong Shin, No. 07-11-0033-CV, 2012 WL 5231851 (Tex. App.—Amarillo Oct. 23, 2012, no pet.) ...................................................56 Whirlpool Corp. v. Camacho, 298 S.W.3d 631 (Tex. 2009) ..............................................................................59 White v. Dennison, 752 S.W.2d 714 (Tex. App.—Dallas 1988, writ denied) ...................................47 xx STATUTES Act of April 25, 1977, ch. 76, §1, 1977 TEX. GEN. LAWS 153 .................................. 9 Act of May 17, 1971, ch. 225, §1, 1971 TEX. GEN. LAWS 1073 ............................... 9 Act of June 6, 1979, ch. 314, §1, 1979 TEX. GEN. LAWS 718 .................................17 TEX. OCCUP. CODE §1001.0031(d) ..........................................................................50 TEX. BUS. & COMM. CODE §9.110 ...........................................................................33 TEX. BUS. & COMM. CODE §17.50(d).......................................................................14 TEX. BUS. & COM. CODE ANN. § 2.210(b) (West 2011) ..........................................36 TEX. CIV. PRAC. & REM. CODE §§32.001, 32.002....................................................20 TEX. CIV. PRAC. & REM. CODE §33.002.................................................15, 17, 20, 23 TEX. CIV. PRAC. & REM. CODE §38.001.........................................................8, 15, 17 TEX. CIV. PRAC. & REM. CODE §38.005.............................................................13, 17 TEX. INS. CODE §541.152 .........................................................................................14 OTHER AUTHORITIES Black's Law Dictionary (10th ed. 2014) ..................................................................27 Black’s Law Dictionary 117 (6th ed. 1990) ............................................................29 Charles R. “Skip” Watson, Jr., “The Court's Charge to the Jury,” Advanced Civil Trial Course (State Bar of Texas 2003) ...................................55 TEX. R. CIV. P. 90 .....................................................................................................42 TEX. R. CIV. P. 93 ......................................................................................... 39-40, 43 TEX. R. CIV. P. 94 .....................................................................................................49 TEX. R. CIV. P. 274 ...................................................................................................55 TEX. R. CIV. P. 278 ...................................................................................................42 xxi TEX. R. CIV. P. 279 .............................................................................................46, 54 TEX. R. EVID. 201(b) ................................................................................................40 TEX. R. EVID. 901(10) ..............................................................................................41 xxii I. STATEMENT OF THE CASE This is a breach of contract case arising out of severe foundation problems at the Courtyard by Marriott Hotel, located on East Ben White Boulevard, near Bergstrom International Airport (“Project”). (CR187) 1. RLJ II-C Austin Air, LP; RLJ II-C Austin Air Lessee, LP; and RLJ Lodging Fund II Acquisitions, LLC (“RLJ” collectively), sued, among others, the architect, general contractor and soils engineer for breaching their separate contractual responsibilities related to the Project’s construction. (CR184-218). RLJ asserted that claim as assignee of and successor-in-interest to and assignee of the rights under the Architectural Contract and the contract cause of action of White Lodging Services Corp. (“Owner”), original owner of the Project. (CR1124;1063-64). The architect, Elness, Swenson, Graham. Inc. (“Architect”), was the only remaining defendant when the case was submitted to the jury. (CR1121-29). Due to settlements by other parties and the trial court’s pre-trial rulings, breach of contract was the only liability theory against the Architect. Id. The jury found that the Architect failed to “comply with the Architectural Contract regarding the structural engineering services required by the contract” 1 The Clerk’s Record is cited as “CR”; First Supplemental Clerk’s Record,“1SCR”; Second Supplemental Clerk’s Record, “2SCR”; Third Supplemental Clerk’s Record, “3SCR”). The Reporters 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. “4SCR__” refers to the supplemental clerk’s record that is being requested, but is not yet available. See n.14. 1 (“Structural Engineering Question”). (CR1126). The jury’s verdict assessed $785,000 in damages for the breach. (CR1125-27). After trial, the Architect moved for and the trial court allowed credit under the one satisfaction rule for $1.17 million paid by the General Contractor and the Soils Engineer (“Settling Defendants” collectively) in settlement of the contract claims against them. (CR1173-79,1439,1710). The parties agreed to try the attorney’s fees claimed under Chapter 38 of the Texas Civil Practice and Remedies Code (“Chapter 38”2) to the court instead of the jury. (CR201,1710). RLJ presented evidence of its reasonable and necessary attorney’s fees for asserting the contractual claims against the Architect and the Settling Defendants. (3SCR3-611;2SCR1603-1605). The trial court only awarded fees for the contractual claim against the Architect. For that claim, it determined that RLJ was entitled to recover from the Architect $901,650.96 as reasonable attorney’s fees. (CR1711). The trial court rendered judgment for RLJ in the principal sum of $516,650.96. (CR1711). It arrived at this amount by adding the amount of the damages awarded in the jury verdict with the amount of the Chapter 38 attorney’s fees award, then subtracting the amounts paid in settlement by the Settling Defendants. (Id.). The judgment also awarded conditional appellate attorney’s fees, 2 References to “Chapter 38” also include the 1977 and later versions of its predecessor statute, article 2226. 2 costs, and post-judgment interest. (Id.). The Architect timely filed its notice of appeal (CR1907-1913) and RLJ timely perfected its cross-appeal (1SCR3-4). II. ISSUES PRESENTED A. Whether the trial court correctly allowed RLJ to recover its attorney’s fees under Chapter 38 of the Texas Civil Practice & Remedies Code even if it correctly applied the one satisfaction rule to offset the jury’s damage award? B. Whether the trial court correctly determined that RLJ has standing to sue the Architect under the assignments of rights from RLJ’s predecessors-in- interest? C. Whether the trial court’s determination may be further supported by consideration of the supplemental clarification which the trial court erroneously deemed parol evidence inappropriate for consideration? (Appellees’ Reply Point). D. Whether the trial court correctly ruled that the Architectural Contract was not inadmissible hearsay and was sufficiently authenticated? E. Whether the trial court erred in submitting the contractual liability issue concerning structural engineering services and, in the unlikely event that it did, whether the Architect failed to preserve the complaints it makes in this appeal? 3 F. Whether the evidence was legally sufficient to support the damages for diminution in value awarded by the jury? III. STATEMENT OF FACTS RLJ is not satisfied with the accuracy of Architect’s Statement of Facts and includes the following as a brief statement of the facts relevant to Appellant’s issues. The proceedings below are described in the Statement of the Case and as necessary in the argument section of this brief. RLJ also refers the court to the Statement of Facts in Cross-Appellant’s Brief at 6-13, and reserves to the argument section further discussion of the facts relevant to those issues. The Architect contracted with the Owner to design the Project. The Architectural Contract obliged the Architect to provide architectural and structural engineering services. (12RR39,47). Under a separate contract to which the Owner was not a party, the Architect engaged “[o]ur Structural Engineering firm...Marlin Bridges Associates, Inc.” (“Structural Engineer”) to design the foundation. (12RR17-25,30,35,47,49;App.G). Before the Project was complete, RLJ contracted to purchase the Project from the Owner, along with numerous other hotels. (CR184-218;606-676;707- 709;App.J). Before RLJ closed the purchase of this hotel, the Project experienced some cracking in the laundry room and around the pool area. (3RR122). RLJ was advised that repair costs would be $50,000 (3RR187-88), and it received a credit of 4 the same amount3 and closed the purchase. (CR626-28). After closing, the Project began to experience cracks in partition walls, shifting door frames, and other issues evident of foundation movement. (3RR118;4RR78-79;7RR47). Investigation revealed the foundation design was inappropriate for the soil conditions at this site. (4RR111). This litigation ensued. IV. SUMMARY OF ARGUMENT None of the Architect’s complaints permit it to elude its liabilities for failing to comply with the Architectural Contract’s concerning the provision of structural engineering services. Its attack on liability for RLJ’s attorney’s fees is invalid. As the verdict established, it had a valid claim for a just amount owed that was presented and unpaid for years, and which remained unpaid when this case was tried. Nothing in Chapter 38 further requires the claimant to recover those damages in a judgment. The Legislature eliminated that requirement when it amended the statute 38 years ago. Neither it nor the Architect’s cited cases require the claimant to obtain a judgment. The Texas Supreme Court has said so. This Court has said so. The Architect’s argument relies on the general patina Chapter 38 acquired during its history that does not address the issue here: whether RLJ satisfied 3 The Architect is incorrect to suggest this adjustment amount was for all of the Project’s foundation problems that ultimately manifested themselves. (Appellant’s Brief 5-6). It was only for the limited issues then known. (3RR187-88). 5 Chapter 38. The alpha and omega of that inquiry is the statute itself, not the language of cases, other statutes, or general concepts about attorney’s fee recovery. The trial court adhered to the precise language of the statute when it awarded RLJ its attorney’s fees. Even if the one satisfaction rule applied so that credit for a settlement during trial could preclude recovery of the jury’s damage award, the trial court did not err in allowing RLJ to recover its attorney’s after application of that credit. RLJ also had standing to sue on the Architectural Contract by virtue of an assignment of all intangible assets related to the Project. The Architect’s only argument is that a cause of action is not an intangible asset. This court, other jurisdictions, and even the dictionary on which the Architect bases its argument, recognize that a cause of action is an asset that is intangible. A supplement to this assignment made clear that it included all “causes of action” against the Architect. The trial court erroneously ruled that it could consider the supplement, but it may nevertheless support the trial court’s standing determination because it was not parol evidence at all. Even if it were, the Architect was not a party to the contract the supplement concerned and, therefore, could not invoke the parol evidence rule. The Architect’s complaint that the Architectural Contract was inadmissible hearsay is baseless. The contract was not offered to prove anything other than the fact that it said what it said. Its complaint about improper authentication is equally 6 flawed. The Architect used the contract as an exhibit and proved that it was a business record. The Architect waived its complaint that RLJ should have been required to prove its derivative liability for the Structural Engineer’s errors by failing to specially except, file a verified plea that it was not liable in the capacity sued, and failing to preserve its complaints at the charge conference. In any event, RLJ was not obliged to establish vicarious liability because the Architect had direct, contractual liability. Its only support to the contrary is a case that was long ago superseded by the Texas Supreme Court. The Architect finally challenges the sufficiency of the expert testimony to support the jury’s diminution-in-value damage award. That testimony employed accepted appraisal methodologies and standards. Indeed, the valuation method used was the one the Texas Supreme Court has deemed appropriate. The valuation date used was the date that was submitted in the court’s charge – an appropriate date given what be considered. Criticism of the appraiser for allegedly failing to provide actual performance data is baseless because the appraiser in fact provided it. His testimony did not include “stigma” damages and did not include damages for lost profits. The damages need not have been “segregated” to be legally sufficient. Legally sufficient evidence supported the jury’s damage assessment. 7 V. ARGUMENT AND AUTHORITIES A. The Trial Court Correctly Awarded RLJ Its Attorney’s Fees. The Architect asserts the trial court erred in awarding RLJ Chapter 38 attorney’s fees. It argues Chapter 38 required RLJ to “recover damages” without specifying what a “recovery” of damages is. (Appellant’s Brief 16,17). The jury found $785,000 in damages.4 (CR1127;App.B). Apparently, the Architect contends the jury’s damage award does not suffice and that Texas Civil Practice & Remedies Code §38.001 (“§38.001”) requires a judgment awarding damages to recover attorney’s fees. The Architect’s complaint is moot if this Court rules that the one satisfaction rule is inapplicable. 5 (Cross-Appellants’ Brief 13-58). 1. Chapter 38 Does Not Require a Judgment for Damages. The Architect’s argument is also wrong. Chapter 38 does not now require and has not for nearly 40 years required a judgment awarding damages. McKinley v. Drozd, 685 S.W.2d 7, 10-11 (Tex. 1985); Buckner Glass & Mirror Inc. v. T.A. Pritchard Co., 697 S.W.2d 712, 714 (Tex. App.—Corpus Christi 1985, no writ); Enriquez v. K & D Development & Construction, Inc., 567 S.W.2d 40, 42 (Tex. Civ. App.—El Paso 1978, writ ref'd n.r.e.). 4 The Architect’s assertion that the jury “found” RLJ’s damages “greatly exaggerated” (Appellant’s Brief 17) is incorrect. There was no such finding. 5 RLJ’s attorney’s fees arguments are presented subject to and without waiving its arguments that the one satisfaction rule is inapplicable. 8 a. The “Judgment” Requirement Was Eliminated by the 1977 Amendment to Chapter 38’s Predecessor. In 1977, the Legislature amended the predecessor to Chapter 38 to eliminate “finally obtain judgment” as a condition to recovering attorney’s fees. Compare Act of May 17, 1971, ch. 225, §1, 1971 TEX. GEN. LAWS 1073 (former article 2226), with Act of April 25, 1977, ch. 76, §1, 1977 TEX. GEN. LAWS 153; McKinley, 685 S.W.2d at 10-11 (explaining effect of amendment and court’s failure to notice it). If the Legislature wishes to re-impose recovery of damages in the judgment to recover attorney’s fees, it may do so. Judicial resurrection of this requirement after Legislative elimination would impermissibly transgress the constitutional separation of legislative authority from judicial power. See Lee v. City of Houston, 807 S.W.2d 290, 293 (Tex. 1991); Texas Alcoholic Beverage Comm'n v. Kings Four, Inc., 583 S.W.2d 676, 678 (Tex. Civ. App.—Austin 1979, no writ). b. The Texas Supreme Court and This Court Have Rejected Any Such Requirement. If “obtain[ing] judgment” were still necessary, the Texas Supreme Court could not have allowed recovery of attorney’s fees in McKinley. There, the claimant received a verdict for contract damages, but did not recover them in the judgment because of an offsetting counterclaim. Nevertheless, the court awarded 9 attorney’s fees because the claimant met the statutory requirements without a judgment for damages. 685 S.W.2d at 11. This court also recognized, under circumstances very similar to those in this case, that a party may recover Chapter 38 attorney’s fees without recovering damages in the judgment. In A.D. Willis Co. v. Metal Bldg. Components, Inc., No. 03-99-00574-CV, 2000 WL 1508500 (Tex. App.—Austin Oct. 12, 2000, pet. denied)(not designated for publication), the jury awarded damages for the claimant’s breach of contract claim, but found a greater loss caused by the claimant’s failure to mitigate. This Court ruled Chapter 38 attorney’s fees could not be denied merely for want of damage recovery in the judgment. Id. at *5. Like a settlement credit, failure to mitigate reduces recovery because it “tends to rebut the measure of damages under the [plaintiff’s] claim of breach.” Austin Hill Country Realty, Inc. v. Palisades Plaza, Inc., 948 S.W.2d 293, 300 (Tex. 1997). This Court noted that the claimant had a “valid claim” for a “just amount” unpaid on the thirtieth day following presentment. Because McKinley rejected a “net recovery” requirement, this Court allowed attorney’s fees despite no judgment awarding damages. 6 Id. at *6. 6 This reasoning is consistent with Perez v. Baker Packers, 694 S.W.2d 138, 143 (Tex. App.— Houston [14th Dist.] 1985, writ ref'd n.r.e.), in which a claimant whose damages offset by settlement credits was deemed the “successful party” entitled to recover rule 131 costs. 10 c. The Architect’s Cases Do Not Say Otherwise. The Architect’s attack rests entirely on cases saying recovery of attorney’s fees generally requires the claimant “(1) prevail on a cause of action for which attorney’s fees are recoverable, and (2) recover damages,” Intercontinental Group P’ship v. KB Home Lone Star, L.P., 295 S.W.3d 650, 653 (Tex. 2009)7; MBM Fin. Corp. v. Woodlands Operating Co., 292 S.W.3d 660, 664, 666 (Tex. 2009)(no proof); Green Int’l, Inc. v. Solis, 951 S.W.2d 384, 390 (Tex. 1997); State Farm Life Ins. Co. v. Beaston, 907 S.W.2d 430, 434, 437 (Tex. 1995); see also Mustang Pipeline Co. v. Driver Pipeline Co., 134 S.W.3d 195, 201 (Tex. 2004); Haubold v. Medical Carbon Research Inst., LLC, No. 03-11-00115-CV, 2014 WL 1018008 at *6, *7 (Tex. App.—Austin Mar. 14, 2014, no pet.)(mem. op.). Closer examination of the facts in these cases reveals that “recovery” does not require a judgment awarding damages. Instead, they hold that one cannot recover attorney’s fees when there is no possibility of liability. In each, there was no recovery because: (1) the jury found zero damages; (2) liability was not established; or (3) no legally competent evidence supported awarding damages. Intercontinental Group, 295 S.W.3d at 653, 655 (no finding); MBM Fin. Corp., 292 S.W.3d at 664, 666 (Tex. 2009)(no proof); Mustang Pipeline Co., 134 S.W.3d 7 An example of the Architect’s superficial analysis is its assertion that this case “hold[s] that, absent recovery of damages, attorney’s fees are not recoverable under Chapter 38.” (Appellant’s Brief 15). The opinion, however, says Chapter 38 “is not controlling.” Intercontinental Group, 295 S.W.3d at 653. 11 at 201 (no proof); Solis, 951 S.W.2d at 390 (Tex. 1997)(no finding); Beaston, 907 S.W.2d at 434, 437 (no proof of damages under DTPA); Blizzard v. Nationwide Mut. Fire Ins. Co., 756 S.W.2d 801, 806 (Tex. App.—Dallas 1988, no writ)(no unpaid damages 8); Fire Ins. Exchg. v. Sullivan, 192 S.W.3d 99, 102, 110-11 (Tex. App.—Houston [14th Dist.] 2006, pet. denied)(same 9); Haubold (claimant sought no recoverable damages). None of them address a situation like McKinley or A.D. Willis Co. in which the claim is valid but results no recovery under a judgment. They do not, as the Architect suggests, require the recovery of damages by judgment. 2. Chapter 38 Only Requires a Valid Claim Timely Presented and Unpaid for Thirty Days. The foregoing shows Chapter 38 does not require the recovery of damages in a judgment. The inquiry may now focus on what Chapter 38 does require. a. The Architect Ignores Proper Statutory Interpretation. All statutory interpretation begins with the statute’s language. Ross v. St. Luke’s Episcopal Hosp., 58 Tex. Sup. Ct. J. 766, 2015 WL 2009744 at *3 (Tex. May 1, 2015); Lippincott v. Whisenhunt, 58 Tex. Sup. Ct. J. 705, 2015 WL 8 In both Beaston and Blizzard, there was no breach of contract at all. The insurers paid more than the policy required. Neither claimant in those cases had a “valid claim.” See Kleas, 2013 WL 4516120, at *2. 9 In Sullivan, the insurer had also paid more than the damages later found so there was never a “valid claim” for breach of the policy or a DTPA violation that would support recovery of attorney’s fees. 12 1967025 at *1(Tex. Apr. 27, 2015)(per curiam). The goal is to ascertain the Legislature’s intent from that language alone, Leland v. Brandal, 257 S.W.3d 204, 206 (Tex. 2008), by considering the all statutory language in context, not in isolation. See Union Carbide Corp. v. Synatzske, 438 S.W.3d 39, 51 (Tex. 2014). Under the guise of interpretation, Courts may not add to or remove words from an unambiguous statute. City of Rockwall v. Hughes, 246 S.W.3d 621, 631 (Tex. 2008). Undefined, unambiguous words have their ordinary meaning. Tex. Lottery Comm’n v. First State Bank of DeQueen, 325 S.W.3d 628, 635 (Tex. 2010); Leland, 257 S.W.3d at 206. Further, the Legislature has rejected narrow construction of Chapter 38 and mandates instead that it “be liberally construed to promote its underlying purposes.”10 TEX. CIV. PRAC. & REM. CODE §38.005. That purpose is to discourage unnecessary litigation over just claims. McKinley, 685 S.W.2d at 10-11. b. The Architect Attempts to Add Words to Chapter 38 By Misapplication of Cases. The Architect’s argument ignores these well-settled rules and relies on case language interpreting other attorney’s fees statutes or previous versions of Chapter 10 Article 2226 was also amended in 1979 to add claims for oral and written contracts and to mandate liberal statutory construction to overturn the previous rule that it should be strictly construed because recovery of attorney’s fees was contrary to common law. See, e.g., Van Zandt v. Fort Worth Press, 359 S.W.2d 893, 995 (Tex. 1962). Without intending to change the statute's meaning, in 1985 the Legislature codified the 1979 version of article 2226 into the Civil Practice and Remedies Code. Grapevine Excavation, Inc. v. Maryland Lloyds, 35 S.W.3d 1, 7 (Tex. 2000). 13 38 with language different from Chapter 38. See V.A.1.c., supra. Nothing in Chapter 38 says the claimant must either “prevail” or “recover damages.” To “prevail” is only required for recovery of attorney’s fees under the DTPA and Insurance Code, not Chapter 38. TEX. BUS. & COMM. CODE §17.50(d); TEX. INS. CODE §541.152. Nevertheless, the Architect relies on cases interpreting these dissimilar or outdated statutes to impermissibly superimpose requirements not supported by Chapter 38’s language. Reading words into a statute impermissibly usurps the legislative prerogative. See Hughes, 246 S.W.3d at 631. The Texas Supreme Court has ruled that constructions of disparate language in other attorney's fees statutes do not control what Chapter 38 means. McKinley, 685 S.W.2d at 9; Jakab v. Gran Villa Townhouses Homeowners Ass'n, Inc., 149 S.W.3d 863, 868 (Tex. App.—Dallas 2004, no pet.). 11 11 In Solis, without acknowledging its holding in McKinley, the court included “prevail” as part of its two-part “test” for Chapter 38. 951 S.W.2d at 390. This led some courts to improperly look to federal attorney’s fees statutes with a “prevail” requirement. E.g.,, Intercontinental Group, 295 S.W.3d at 654. Even under the federal standard, RLJ “prevailed” by procuring a settlement, Farrar v. Hobby, 506 U.S. 103, 11-12 (1992); Intercontinental Group, 295 S.W.3d at 654, of its claim for damages for which all defendants must have been jointly liable if the one satisfaction rule applies. Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1, 7 (Tex. 1991). RLJ also succeeded by establishing liability and receiving a damages verdict. Several Texas Chapter 38 cases permit attorney’s fees with no damage award if the claimant recovers “something of value,” such as a decree for specific performance. Jones, 614 S.W.2d at 96, 100–01; Rasmusson v. LBC PetroUnited, Inc., 124 S.W.3d 283, 287 (Tex. App.—Houston [14th Dist.] 2003, pet. denied). 14 3. Chapter 38 Only Requires a Valid Claim Timely Presented and Unpaid for Thirty Days. Chapter 38 only requires (1) that the claimant be represented by an attorney; (2) that the claim be for a specified type; (3) that the claim be “valid” and (4) presented; and (5) that the just amount owing not be tendered within 30 days after presentment. TEX. CIV. PRAC. & REM. CODE §§38.001-.002. If these conditions are satisfied, the claimant may recover attorney’s fees. TEX. CIV. PRAC. & REM. CODE §38.001. In the present case, the meaning of the statutory requirements for representation of counsel, presentment, and type of claim are not at issue. a. A “Valid Claim” Is Required. Under §38.001, “[a] person may recover reasonable attorney’s fees … in addition to the amount of a valid claim” for a “written contract.” TEX. CIV. PRAC. & REM. CODE §38.001. Chapter 38 further informs that a “valid claim” is one with a “just amount owed.” TEX. CIV. PRAC. & REM. CODE §38.002(2). As McKinley and A. D. Willis illustrate, a “valid claim” authorizing Chapter 38 attorney’s fees exists with a verdict of liability and resulting damages, even if award of those damages is ultimately rendered in the judgment. 1) “In [A]ddition [T]o” Does Not Imply a “Valid Claim” Requires a Judgment Awarding Damages. Yet, the Architect also cites cases suggesting that the phrase “in addition to the amount of a valid claim” implies there must be some damage amount awarded 15 in the judgment to recover Chapter 38 attorney’s fees. (Appellant’s Brief 16). Its reliance on Solis, 951 S.W.2d at 390, MBM Fin. Corp., 292 S.W.3d at 666, and Haubold, 2014 WL 1018008 at *6, for this interpretation is misplaced. In all three, there was no valid verdict awarding damages because the jury found no damages or the damage finding was unsupported by competent evidence. Further, suggesting that Chapter 38 requires either a verdict or judgment for monetary damages ignores that Chapter 38 attorney’s fees may be recovered when only non- monetary relief is obtained. See, e.g., Jones v. Kelley, 614 S.W.2d 95, 96, 100–01 (Tex.1981); Rasmusson v. LBC PetroUnited, Inc., 124 S.W.3d 283, 287 (Tex. App.—Houston [14th Dist.] 2003, pet. denied); Martini v. Tatum, 776 S.W.2d 666, 668, 670 (Tex. App.—Amarillo 1989, writ denied)(contractual liability decided but no judgment awarding monetary relief); De La Rosa v. Kaples, 812 S.W.2d 432, 433, 435 (Tex. App.—San Antonio 1991, writ denied)(same). 2) A Verdict Awarding Damages Is Enough To Have a “Valid Claim.” As McKinley and A. D. Willis amply demonstrate, recovery of damages in a judgment is not necessary. If the existence of a “valid claim” included a requirement that the claimant “recover” as the Architect’s cases suggest, it is apparent that a verdict of liability and awarding damages is “recovery” enough to have a valid claim. Rogers v. RAB Inv. Ltd., 816 S.W.2d 543, 551 (Tex. App.— Dallas 1991, no writ), observed, “Without a jury finding of damages or a recovery 16 of damages, there can be no award of attorney’s fees” under §38.001. By negative implication, Solis also suggests that a jury verdict is a “recovery” by treating a zero damages verdict as a failure to “recover.” b. Chapter 38 Requires the Valid Claim to Remain Unpaid 30 Days After Presentment. Chapter 38 also specifies when the valid claim must exist. “Payment for the just amount owed must not have been tendered before the expiration of the 30th day after the claim is presented.” TEX. CIV. PRAC. & REM. CODE §38.002(3). As already discussed, the reason why the Legislature authorized the recovery of attorney’s fees was to encourage pre-trial settlement of valid claims and thereby avoid unnecessary litigation over just claims. McKinley, 685 S.W.2d at 10-11; Jones v. Kelley, 614 S.W.2d 95, 100 (Tex. 1981); see also Doctors Hosp. 1997, L.P. v. Sambuca Houston, L.P., 154 S.W.3d 634, 638 (Tex. App—Houston [14th Dist.] 2004, pet. abated); Manges v. Mustang Oil Tool Co., 658 S.W.2d 725, 730 (Tex. App.—Corpus Christi 1983, writ ref'd n.r.e.). Permitting recovery of Chapter 38 attorney’s fees based on the validity of the claim before events trial instead of after it commences is “more consistent” with (1) “legislative intent” to discourage unnecessary litigation over just claims, and (2) the statutory liberal construction mandate to “promote its underlying purpose.” McKinley, 685 at 10-11; TEX. CIV. PRAC. & REM. CODE §38.005; Act of June 6, 1979, 66th Leg., R.S., ch. 314, §1, 1979 TEX. GEN. LAWS 718. 17 Of course, trial results affect whether there was ever a valid claim. A finding of no liability or zero damages, or want of legally sufficient evidence of either establishes no valid claim ever existed. See cases cited in V.A.1.c., supra. However, allowing a claim’s validity to be undermined by credits for settlements that occur during trial, which is the situation here, defeats Chapter 38’s purpose. Settlements during trial do not avoid the unnecessary expense that Chapter 38 was intended to avoid. The distinction between pre-trial and during trial settlements was critical to this Court’s analysis in Osborne v. Jauregui, Inc., 252 S.W.3d 70, 75-77 (Tex. App.—Austin 2008, pet. denied). Unlike the present Chapter 38 breach-of-contract case, Osborne involved recovery of attorney’s fees under the DTPA, under which the issue was whether the plaintiff “prevailed” – something Chapter 38 does not require. See V.A.2.a., supra. However, the analogy is instructive with respect to when the validity of the claim is measured. In Osborne, the plaintiff settled before trial commenced with all but one defendant for an amount greater than the damages awarded by the jury against the remaining defendant. Osborne, 252 S.W.3d at 73. RLJ, on the other hand, reached the relevant settlement after trial commenced. This Court recognized in Osborne that “a net recovery is not necessary for a plaintiff to be considered a prevailing party.” Osborne, 252 S.W.3d at 76. But it 18 concluded, reasonably enough, that a party does not “prevail” at trial when it received before trial more than it recovered at trial for tort damages that all defendants would have jointly and severally liable for under the contribution statute. “It is one thing to allow attorney’s fees notwithstanding an opposing party’s success on an offsetting claim. However it is another to allow attorney’s fees on a claim that, although successful, was paid before trial.” Id. (Emphasis added). The logic of Osborne implicit in the concept of what it means to “prevail” is explicit under Chapter 38 which specifically says attorney’s fees may be recovered if the claim is valid and unpaid for more than thirty days after presentment. It should be noted that some cases have suggest that fees are recoverable under Chapter 38 if the presented claim is unpaid before trial commences. Peissel v. Peissel, 620 S.W.2d 796, 800 (Tex. Civ. App.—Houston [14th Dist.] 1981, no writ). Cases can neither add nor subtract from Chapter 38’s plain language that the claim need only be valid thirty days after presentment. For reasons discussed below, resolving that discrepancy is unnecessary here. Chapter 38’s concern with whether a valid claim that existed before a trial begins is the basis of the so-called “exception” to McKinley disallowing attorney’s fees if the claimant’s contract damages are fully offset by a “credit” for sums the defendant paid. In these cases, including Osborne, the “credit” was due to 19 payments madd worade before trial so that there was no “valid claim” for a “just amount owing” remaining when trial commenced. Blizzard, 756 S.W.2d at 806 12; Osborne, 252 S.W.3d at 74, 76-77; Imperial Lofts, Ltd. v. Imperial Woodworks, Inc., 245 S.W.3d 1, 7 (Tex. App.—Waco 2007, pet. denied); Buccaneer Homes of Ala., Inc. v. Pelis, 43 S.W.3d 586, 591 (Tex. App.—Houston [1st Dist.] 2001, no pet.); Hamra v. Gulden, 898 S.W.2d 16, 19 (Tex. App.—Dallas 1995, writ dism’d w.o.j.); Sullivan, 192 S.W.3d at 109-110. Assume arguendo the one satisfaction rule applies to breach of contract claims at all or that joint liability may be based on common injury alone. Under either assumption, if a claim’s validity were determined by whether the claimant received a damage award under a judgment, a defendant in multi-defendant cases would resist reasonable settlements as long as possible in hopes other defendants would settle and allow it to escape scot-free, despite its joint liability, if those settlement sums exceed the damages caused. Settling defendants have no contribution claim against the hold-out under either Chapter 32 or common law because the settlors are not judgment debtors. 13 Beech Aircraft Corp. v. Jinkins, 739 S.W.2d 19, 22 (Tex. 1987)(Chapter 32); Austin Road Co. v. Pope, 147 Tex. 12 Blizzard is actually a no-breach, not a “credit,” case. See n.8, supra. 13 TEX. CIV. PRAC. & REM. CODE §§32.001, 32.002 (contribution allowed only in tort actions for “a person against whom a judgment is rendered”); TEX. CIV. PRAC. & REM. CODE §33.002 (Chapter 33 only applies to tort actions); Beech Aircraft Corp. v. Jinkins, 739 S.W.2d 19, 22 (Tex. 1987)(settlor has no right to sue for contribution). 20 430, 216 S.W.2d 563, 564-65 (1949)(common law); see Cross-Appellants’ Brief 19-21,48-51. Thus, the Architect’s suggested interpretation of Chapter 38 discourages, rather than encourages, settlement of valid claims. For these reasons, neither the Architect’s authorities nor Osborne support a rule barring recovery of Chapter 38 attorney’s fees if the settlement exceeding the damage award occurs during rather than before trial. 4. RLJ Met All the Statutory Requirements for Recovering Its Attorney’s Fees. RLJ met all of Chapter 38’s necessary conditions. It had a valid claim that was unpaid more than thirty days after presentment and remained unpaid before trial commenced. a. RLJ Had a Valid Claim. A “valid” breach of contract claim requires: (1) a valid contract; (2) that the claimant performed or was excused from performing; (3) that the defendant breached which (4) damaged the claimant. Kleas v. Clark, Thomas & Winters, P.C., No. 03-12-00755-CV, 2013 WL 4516120, at *2 (Tex. App.—Austin Aug. 21, 2013, pet. denied); C.W. 100 Louis Henna, Ltd. v. El Chico Rests. of Tex., L.P., 295 S.W.3d 748, 752 (Tex. App.—Austin 2009, no pet.). The jury’s verdict removes all doubt that RLJ’s claim was valid. (CR1126-27). 21 b. The Just Amount Owing Was Not Timely Tendered. RLJ’s claim was first presented in August 2009, with further presentments of its claim in August 2010 and by April 6, 2011 letter. (3SCR37-38,4SCR___ 14). The Architect did not respond to these presentments. (3SCR38). Assume arguendo that the jury’s verdict was – as the Architect contended– for “indivisible” damages for which the Architect and the Settling Defendants were jointly liable, RLJ did not – unlike the claimant in Osborne – settle for a total amount greater than the jury’s damage award until during the 2014 trial, long after the claim was presented. (CR1080-81,1174,1710;7RR105-108). In that hypothetical case, the jury’s finding established that the “just amount owing” was $785,000 (CR1127) which was not timely paid. Even if the one satisfaction rule applied, which it does not, that is all that was necessary. “If a plaintiff meets the requirements of [the attorney’s fee statute], [t]he [plaintiff] is entitled to attorney's fees. Karol v. Presido Enterprises, Inc., 622 S.W.2d 638, 640 (Tex. App.—Austin 1981, no writ); see also Buckner Glass & Mirror Inc. v. T.A. Pritchard Co., 697 S.W.2d 712, 714 (Tex. App.— Corpus Christi 1985, no writ)(decided under post-1977 amendment to article 14 Exhibits 5 and 6 to Amended Attorney’s Fees Affidavit were included in RLJ’s request for the accompanying motion to be included in the Clerk’s Record, but appear to have been omitted. RLJ is requesting supplementation to include them. 22 2226). Thus, RLJ satisfied Chapter 38’s timing requirement regarding its valid claim. TEX. CIV. PRAC. & REM. CODE §38.002(3).15 5. The Trial Court’s Reasoning Agreed With the Legislature’s. The Architect alleges that the trial court was “creat[ing] its own rule of law” by ruling based on the settlement’s timing. (Appellant’s Brief 15). To the contrary, the trial court here correctly distinguished settlements before trial from those that occur during trial. (CR1439-41). The trial court was not legislating or improvising. It simply analyzed the language of Chapter 38 more carefully than the Architect. 16 The Architect also attacks the trial court’s reasoning for treating attorney’s fees as damages. This criticism assumes attorney’s fees cannot be recovered or considered “part of the amount of the judgment” unless other damages are recovered. (Appellant’s Brief 16). The Architect cites C& H Nationwide, Inc. v. Thompson, 903 S.W.2d 315, 325-26 (Tex. 1994), and Ellis County State Bank v. Keever, 888 S.W.2d 790, 797n.13 (Tex. 1994), without mentioning they construe “amount of the judgment” in the pre-judgment interest statute, not Chapter 38. Indeed, “amount of the judgment” appears nowhere in Chapter 38. 15 §38.002 also requires presentment and representation by counsel. It is undisputed that RLJ’s claim was presented and it was represented by counsel. (3SCR31,37-38). 16 Unlimited by findings or conclusions, the judgment must be upheld under any theory supported by evidence. BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002); Phillips v. Estate of Poulin, No. 03-05-00099-CV, 2007 WL 2980180, at *4 (Tex. App.— Austin Oct. 12, 2007, no pet.). The very letter ruling the Architect criticizes states that it does not limit the ruling’s bases and incorporates previous admonitions to that effect. (CR1057,1437). 23 Chapter 38 does not require recovery of damages under a judgment to authorize attorney’s fees. Whether attorney’s fees are “damages” is beside the point. It is still worth noting, however, the Legislature considered attorney’s fees as “damages” when it eliminated the “finally obtain judgment” requirement in 1977. The Committee Report for the 1977 amendment states, “Even in a lawsuit involving a lot of money, the losing party in effect prevents the winner from getting the full amount, because the winner must pay his attorney. Either way, it's not right for a person to be deprived of his full damages from a wrongdoer.” (emphasis added; available from the Texas Legislative Reference Library at http://www.lrl.state.tx.us/scanned/hroBillAnalyses/65-0/HB452.pdf;App.K). RLJ was entitled to attorney’s fees. It met all of Chapter 38’s requirements. Nothing further required RLJ to recover a judgment for damages to recover its attorney’s fees. The Architect cites no authority addressing the effect of post-trial settlement credits. Authorities interpreting other statutes have no bearing on Chapter 38. Even if they did, RLJ “prevailed.” B. RLJ Was Assigned the Contract and the Cause of Action and Had Standing to Sue. On three separate occasions, the Architect has tried and failed to convince two different trial judges that RLJ could not sue because it did not have the necessary consensual assignment of rights under the Architectural Contract. (CR220,1083-84). The outcome can be no different here. 24 1. RLJ Owned Both the Architectural Contract Rights and Causes of Action of Action for Its Breach. The Owner and the Architect were the original parties to the Architectural Contract. (CR463;App.G). With the Architect’s consent, the Owner assigned to South Ausaircourt, L.P. (“Ausaircourt”) “all of [the Owner’s] interest … in and to that certain Standard Form Agreement Between Owner and Architect … date[d] … January 1, 2005 ….” (CR578;App.L). There is no dispute that the Owner effectively assigned its rights under the Architectural Contract to Ausaircourt. (Appellant’s Brief 19). The Architect does not question that Ausaircourt owned the contract cause of action against it. (Appellant’s Brief 21). The Architect’s first challenge to the trial court’s summary judgment is limited to whether Ausaircourt effectively and validly transferred the cause of action to RLJ. (Appellant’s Brief 19,28). a. Ausaircourt Assigned the Contract to RLJ Under the PSA and the Cause of Action By Assignment of “Intangible Assets.” After the Project was substantially completed, many properties, including the Project, were contracted to be sold pursuant to a “New Hotels Purchase and Sale Agreement” (“PSA”). (CR605-676). Under the PSA, the Owner sold Ausaircourt “all contracts, agreements … and warranties covering the design, development, construction, operations, maintenance and repair of the Property….” (CR 613[“Assets” defined];615[“Contracts” defined]; 619[“Property” defined]; 25 621[sales agreement]; App.J). At closing, Ausaircourt assigned RLJ “all of [Ausaircourt]’s right, title and interest in and to all licenses, permits and all other intangible assets relating to the [Project]….” (CR701; emphasis added; App.M). (“Intangibles Assignment”). RLJ has a clear chain of ownership from Ausaircourt through the PSA and Intangibles Assignment of both the Architectural Contract and the cause of action. Under the PSA’s authorization for supplemental documentation effecting the transaction (CR656), a later “Supplemental Clarification of Assignment” (“Supplemental”) specified the Intangibles Assignment “intended to assign” Ausaircourt’s rights in the Architectural Contract “along with all intangibles, including but not limited to causes of action or claims owned by [Ausaircourt] against [the Architect].” (CR602-04; emphasis added; App.N). 2. The Intangibles Assignment Transferred the Contract Cause of Action. The plain language of the Intangibles Assignment conveyed the cause of action to RLJ. Assignments are construed like any contract through rules of construction to ascertain the parties’ intent expressed in the written assignment. Commercial Structures and Interiors, Inc. v. Liberty Educ. Ministries, Inc., 192 S.W.3d 827, 832-33 (Tex. 2006). Terms are given “their plain and ordinary meaning unless the instrument indicates the parties intended a different meaning.” 26 Dynegy Midstream Servs., Ltd. P'ship v. Apache Corp., 294 S.W.3d 164, 168 (Tex. 2009). a. “Intangible Assets” Included Contract Cause of Action. The plain, ordinary meaning of an “intangible asset” includes choses in action or causes of action. An “intangible asset” is “[a]ny nonphysical asset or resource that can be amortized or converted to cash, such as patents, goodwill, and computer programs, or a right to something, such as services paid for in advance.” Asset, Black's Law Dictionary (10th ed. 2014). A cause of action is “intangible” because it is an incorporeal personal property right with no physical existence except by a document without intrinsic value. Lay v. Aetna Ins. Co., 599 S.W.2d 683, 686 (Tex. App.—Austin 1980, writ ref'd n.r.e.); Browne v. King, 196 S.W. 884, 887 (Tex. Civ. App. 1917) aff'd, 111 Tex. 330, 235 S.W. 522 (1921). A cause of action is an “asset” as the right to a judicial proceeding to recover money. Vanderburg v. Nocona Gen. Hosp., No. 7:02-CV-291-KA, 2008 WL 114846, at *4 (N.D. Tex. Jan. 10, 2008); Adams v. Great American Lloyd’s Ins., 891 S.W.2d 769, 772 (Tex. App.—Austin 1995, no writ). A non-frivolous claim is an “asset,” regardless of its ultimate success. In re First State Bancorporation, 498 B.R. 322, 329-30 (Bankr. D.N.M. 2013). This Court agrees, calling a claim “an asset of the receivership estate.” Akin, Gump, Strauss, Hauer & Feld, L.L.P. v. E Court, Inc., No. 03-02-00714-CV, 2003 27 WL 21025030 (Tex. App.—Austin May 8, 2003, no pet.)(emphasis added). It explained in Am. Multi-Cinema, Inc. v. Hegar, No. 03-14-00397-CV, 2015 WL 1967877, at *5 (Tex. App.—Austin Apr. 30, 2015, no pet. h.), that “Intangible property” includes “incorporeal property (as choses in action) often evidenced by documents (as stocks, bonds, notes, judgments, franchises) having no intrinsic value or by rights of action, easements, goodwill, trade secrets.” Accord, In re Malacara, 223 S.W.3d 600, 602 (Tex. App.—Amarillo 2007, no pet.)(retirement benefits); In re Fleckenstein, 589 S.W.2d 788, 789-90 (Tex. Civ. App.—El Paso 1979, no writ)(promissory note). Thus, “intangible asset” and “intangible property” are commonly understood to include causes of action. Green v. H. E. Butt Found., 217 F.2d 553, 554 (5th Cir. 1954)(constructive possession of a chose in action); In re Grotjohn, No. 03-47055DML, 2005 WL 6441386, at *5 (Bankr. N.D. Tex. July 19, 2005)(“Intangible assets such as … causes of action”); In re Scott, 157 B.R. 297, 314 (Bankr. W.D. Tex. 1993), withdrawn per settlement, 162 B.R. 1004 (Bankr. W.D. Tex. Jan. 21, 1994)(party succeeded to “intangible assets like causes of action”). b. The Architect’s Argument Ignores Context and the Residuary Clause’s Purpose. The Architect’s declaration that there is “[n]o authority … causes of action are included within ‘intangible assets’” is incorrect. (Appellant’s Brief 26). The Architect’s only cited support, an old edition of Black’s Law Dictionary, defines 28 “asset” as “[p]roperty of all kinds, real and personal, tangible and intangible, including … causes of action….” Black’s Law Dictionary 117 (6th ed. 1990)(emphasis added). Nevertheless, the Architect argues that omission of “cause of action” from the examples of “intangible asset” means it is not one. Having already described “cause of action” as an “asset,” the dictionary’s failure to repeat it as an example of an “intangible asset” does not support the Architect’s conclusion. Presumably, the dictionary reasonably assumed readers would understand that a “cause of action” is intangible property and that example lists are not exhaustive. The Architect points to the dictionary’s inclusion of “judgment” or “claim” as examples of a “nominal asset” to suggest that they cannot be intangible assets. Nothing indicates that “intangible” and “nominal” assets are mutually exclusive. The parties did not incorporate any such distinction. The Architect may not now urge interpreting the assignments as if they had. The Architect’s narrow definition of “intangible asset” also ignores its context. In construing assignments, the courts consider the surrounding circumstances. Coffin v. Douglas, 61 Tex. 406, 409 (1884)(available at 1884 WL 8785). Here, the parties were closing the sale of the Project. They intended RLJ to step into Ausaircourt’s shoes. The PSA required the transfer of all Ausaircourt’s claims and causes of action concerning the Project. (CR692). The PSA provides specifically that Ausaircourt must cooperate with RLJ to enforce “any rights under 29 the [A]rchitectural [Contract] … respecting the design … and construction of the Hotel.” (CR643;App.J). Thus, RLJ “bargained for an assignment of the prior owner’s possible causes of action … that occurred before [its] purchase.” Boerschig v. Southwestern Holdings, Inc., 322 S.W.3d 752, 767 (Tex. App.—El Paso 2010, no pet.). Under the Intangibles Assignment, the transfer of “all other intangible assets” (CR701;App.M; emphasis added) is a residue or “Mother Hubbard” clause intended to convey any categorical item not otherwise assigned. This Court recognizes such clauses clearly intend to dispose of all of one’s property. Petsch v. Slator, 573 S.W.2d 849, 853 (Tex. Civ. App.—Austin 1978, writ ref'd n.r.e.). The same is true here. “The language used [in the Intangibles Assignment] is as broad as it well could be.” Coffin, 61 Tex. at 409 (effect of assigning “all properties of all kinds owned by us”). “All means all,” Halliburton, Inc. v. Admin. Review Bd., 771 F.3d 254, 266 (5th Cir. 2014); Kennedy v. Lynd, 306 F.2d 222, 230 (5th Cir. 1962), not “all, but” or “all, except.” Ausaircourt could not express more definitively that it conveyed all, and reserved no, intangible asset. The Architect’s narrow and self- serving assignment interpretation cannot be reconciled with surrounding circumstances, the parties’ manifest intent, controlling interpretive rules, or its own dictionary’s definition of “asset.” 30 3. The Intangibles Assignment was “Express.” Notwithstanding the explicit assignment of “all ... intangible assets” (CR701;App.M), the Architect argues that something more “express” – by which the Architect means “more particular” – was required. (Appellant’s Brief 22) This argument relies on cases about whether wording in a real property deed also effectively assigns an accrued cause of action for damage to the real estate conveyed. The courts, quite logically, have said “no.” The cause of action is not a right that “runs with the land.” Welch v. Monroe, No. 10-03-00013-CV, 2004 WL 2474504, at *2 (Tex. App.—Waco Nov. 3, 2004, no pet.); Exxon Corp. v. Pluff, 94 S.W.3d 22, 27 (Tex. App.—Tyler 2002, pet. denied). Once accrued, the claim is the personal property of the owner at that time. Exxon Corp. v. Emerald Oil & Gas Co., L.C., 331 S.W.3d 419, 424-25 (Tex. 2010); Vann v. Bowie Sewerage Co., 127 Tex. 97, 90 S.W.2d 561, 562 (1936)(permanent nuisance). Not being a real property right, “mere transfer of the land by deed does not transfer the [accrued] claim for damages.” Emerald Oil, 331 S.W.3d at 420, 424- 25; Vann, 90 S.W.2d at 563. Without a more specific reference, Emerald Oil, 331 S.W.3d at 424-25, the accrued cause of action is not conveyed by a general warranty deed’s grant of the described real estate and all “rights and appurtenances thereto.” Richey v. Stop N Go Markets of Tex., 654 S.W.2d 430, 431 (Tex.1983). Assignment of the cause of action cannot be implied because a general warranty 31 deed contains no language manifesting an intention to convey personal property. See Brooks v. Chevron USA Inc., No. 13-05-029-CV, 2006 WL 1431227, at *8 (Tex. App.—Corpus Christi May 25, 2006, pet. denied)(mem. op.); Pluff, 94 S.W.3d at 27; Cook v. Exxon Corp., 145 S.W.3d 776, 781 (Tex. App.—Texarkana 2004, no pet.); La Tierra de Simmons Familia, Ltd. v. Main Event Entm't, LP, No. 03-10-00503-CV, 2012 WL 753184 at * (Tex. App.—Austin Mar. 9, 2012, pet. denied). Unlike the parties in the Architect’s cases, RLJ need not rely on the real property deed for its right to sue. It has express assignments of the seller’s personal property and intangible property. Cf. Ceramic Tile Int’l Inc. v. Balusek, 137 S.W.3d 722, 724 (Tex. App.—San Antonio 2004, no pet.)(plaintiff’s claim for damage to real property failed due because separate assignment not introduced). Yet, the Architect relies on Richey to argue that more particularity is necessary for the cause of action’s assignment to be “express.” “Express” is the opposite of “implied.” Mueller v. All-Temp Refrig., Inc., 2014 Ohio 2718, ¶ 45; Ross v. Ross, 20 Ala. 105, 111 (1852). RLJ need not resort to implication because the assignment to it was overtly expressed. Richey says nothing about particularity. It only holds that a general warranty deed’s conveyance of described real property “with all … rights and appurtenances” does not include personal property 32 consisting of an accrued land damage cause of action. 654 S.W.2d at 431-32; see Emerald Oil, 331 S.W.3d at 425; Brooks, 2006 WL 1431227, at *8. The Richey cases also do not suggest that a categorical description is ineffective to describe everything within that category. General, categorical descriptions are effective for that purpose. See, e.g., Owen v. Vibrasonic Exploration, Inc., 694 S.W.2d 421, 424 (Tex. App.—Houston [14th Dist.] 1985, writ ref’d n.r.e.)(“accounts receivable” … “including but not limited to those shown” sufficient to describe unlisted account); Ian Martin, Inc. v. Greenspoint Bank, 01-87-00631-CV, 1988 WL 45423 at *3 (Tex. App.—Houston [14th Dist.] May 5, 01-87-00631-CV, 1988 WL 45423 (Tex. App. May 5, 1988)(same; unpublished); Orix Credit Alliance, Inc. v. Omnibank, N.A., 858 S.W.2d 586 (Tex. App. 1993)(“property of every kind and nature” satisfied TEX. BUS. & COMM. CODE §9.110’s “reasonably identified” requirement for a lien on all tangible property). The Architect cites, and research reveals, no authority invalidating a cause of action’s assignment because it conveyed an encompassing class of intangible rights without specifically mentioning “cause of action” or “chose in action.” Merely because an accrued cause of action does not automatically pass with a real property conveyance or the underlying contract’s assignment does not justify a “magic words” test that ignores that assignments like any other contract must be construed according to its language in light of surrounding circumstances. 33 Commercial Structures, 192 S.W.3d at 832-33. RLJ was validly assigned Ausaircourt’s ownership of the cause of action against the Architect on the basis of the Intangibles Assignments alone.17 4. The Supplemental Clarification May Be Considered and Removes Any Doubt That RLJ Was Assigned the Architectural Contract and the Cause of Action For Its Breach. The propriety of the trial court’s ruling RLJ had standing is confirmed by considering the Supplemental’s statement the Intangibles Assignment was intended to include the Architectural Contract and “causes of action or claims … against the [Architect].” (CR603;App.N). The Architect suggests, however, the Supplemental cannot be considered because the trial court sustained its extrinsic parol evidence objection. (Appellant’s Brief 27). The parol evidence rule is a substantive, not evidentiary, so this ruling can be reconsidered de novo. Hubacek v. Ennis State Bank, 159 Tex. 166, 169, 317 S.W.2d 30, 31 (1958)(parol evidence substantive); Provident Life & Acc. Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003)(summary judgment reviewed de novo). The parol evidence rule only precludes enforcement of inconsistent prior or contemporaneous agreements if the parties have a fully integrated agreement. Hubacek, 317 S.W.2d at 31; Lewis v. Adams, 979 S.W.2d 831, 836 (Tex. App.— 17 The Architect devotes considerable discussion to the trial court’s April 10, 2014 letter. (Appellant’s Brief 22). The trial court did not limit the underpinnings for its ruling to the reasoning in its letter. See n. 16, supra. 34 Houston [14th Dist.] 1998, no pet)(only excludes prior agreements). The Supplemental was not parol evidence for at least four reasons. First, assuming arguendo that intent was not, as the Architect contends, expressed with sufficient particularity, the Supplemental was consistent with the intent to convey causes of action as a subset of the “intangible assets” expressly conveyed. All the Supplemental did was provide more particularity; it did not alter and was not inconsistent with the intent originally expressed. Second, the Supplemental was not parol evidence because it did not antedate the PSA or the Intangibles Assignment. Third, the assignment was not fully integrated. Indeed, the PSA authorized the execution of any necessary additional instruments and permitted its modification in writing. (CR654,656;App.J). Finally and ironically, the Architect has no standing to assert the parol evidence rule. The Architect is a stranger to both the Intangibles Assignment and the PSA. The parol evidence rule does not apply to a dispute between a contracting party and a contractual stranger. Baroid Equipment, Inc. v. Odeco Drilling, Inc., 184 S.W.3d 1, 13 (Tex. App.—Houston [1st Dist.] 2006, pet. denied). The Supplemental was appropriate for consideration despite the trial court’s erroneous “evidentiary” ruling and fully supports its decision that RLJ had standing through the Intangibles Assignment. 35 5. Alternatively, The PSA Transferred The Contract Cause of Action When It Transferred the Contract. If more than the Intangibles Assignment were required to transfer the cause of action, it is found in the PSA. It transferred all of Ausaircourt’s “right, title and interest” to “the Assets,” which included “all contracts, agreements … and warranties covering the design, development, construction, operations, maintenance and repair of the Property….” (CR613,615,619;App.J). This clearly intended and effectuated an assignment of the Architectural Contract rights. The PSA’s assignment of all “right, title, and interest” in that contract includes the cause of action for its breach. See D Design Holdings, L.P. v. MMP Corp., 339 S.W.3d. 195, 202-203 (Tex. App.—Dallas 2011, no pet.)(pre-suit assignment of “all of right, title, and interest” left no cause for the assignor to assert); see also Effel v. McGarry, 339 S.W.3d 789, 792 (Tex. App.—Dallas 2011, pet. denied) (all interests in assigned judgment, “including the underlying claim,” was assigned). 6. The Architectural Contract Was Validly Assigned to RLJ. The Architect next argues that the Architectural Contract’s Anti-Assignment Clauses invalidated the transfer of rights under that contract. Notably, the Architect does not assert these clauses affected assignment of the cause of action. 18 18 The Architect’s consent was unnecessary to assign the cause of action. Causes of action are freely alienable, subject to exceptions inapplicable here. State Farm Fire and Casualty Co. v Gandy, 925 S.W.2d 696, 707 (Tex. 1996); see TEX. BUS. & COM. CODE ANN. § 2.210(b) (West 2011)(contract actions). Anti-assignment clauses do not prevent assignments of causes of action. 36 Assignment of the cause of action was conclusively established under either the Intangibles Assignment or the PSA which makes irrelevant the Architect’s arguments about the Architectural Contract’s assignment. Nevertheless, the Architect’s challenge to the contract assignment is refuted here. First, the Architect inaccurately asserts that RLJ admitted “alleg[ing] only an assigned cause of action … rather than assignment of the [Architectural] Contract itself.” (Appellant’s Brief 18,n.9). Yet the cited portion of RLJ’s pleading states “Ausaircourt assigned the Project, the contracts, … intangibles … and causes of action to [an] RLJ [entity].… and then assigned its rights … under the Project contracts to … RLJ.” (CR222,329). This is no admission RLJ was not assigned the contract, but simply acknowledges the PSA and Intangibles Assignments were separate instruments. Additionally, even if contract assignment had been proscribed by the anti- assignment clause, Ausaircourt’s transfer of the Architectural Contract to RLJ remained effective. “[T]he obligor a right to damages for breach of the terms forbidding assignment but [its breach] does not render the assignment ineffective.” Pagosa Oil & Gas LLC v. Marrs & Smith Ptnrs., 323 S.W.3d 203, 212 (Tex. App.—El Paso 2010, pet. denied); see also Restatement (Second) of Contract §§322(1), (2)(a). Other jurisdictions agree that the AIA anti-assignment clause does not require consent to assign a cause of action. See e.g. Berschauer/Phillips Const. Co. v. Seattle Sch. Dist. No. 1, 881 P.2d 986 (Wash. 1994); Ford v. Robertson, 739 S.W.2d 3, 5 (Tenn. Ct. App. 1987)(post-performance assignment of cause of action); Folgers Architects Ltd. v. Kerns, 612 N.W.2d 539, 548 (Neb. App. 2000)(same). 37 Restatement (Second) of Contract §322(2)(b); see Reuben H. Donnelley Corp. v. McKinnon, 688 S.W.2d 612, 615 (Tex. App.—Corpus Christi 1985, writ ref’d); Gips v. Red Robin Corp., 366 S.W.2d 853, 857 (Tex. Civ. App.—Houston 1963, writ ref’d n.r.e); accord, Cedar Point Apartments v. Cedar Point Inv. Corp., 693 F.2d 748, 753, 754 (8th Cir.), cert. denied, 461 U.S. 914 (1983); Rumbin v. Utica Mut. Ins. Co., 254 Conn. 259, 757 A.2d 526, 528, 530, 535-537, 541 (Conn. 2000); University Mews Associates v. Jeanmarie, 122 Misc.2d 434, 471 N.Y.S.2d 457, 461 (N.Y. Sup.Ct. 1983). Some jurisdictions hold that if the assignor has fully performed, as is the case here, the anti-assignment is unenforceable absent significant resulting harm. In re Cooper, 242 B.R. 767, 771 (Bankr. S.D. Ga. 1999); Gallagher v. Southern Source Packaging, LLC, 564 F.Supp.2d 503, 506-508, 514, 515 (E.D.N.C. 2008)(assigment not barred if payment only performance due); Owen v. CNA Insurance/Continental Cas. Co., 167 N.J. 450, , 771 A.2d 1208, 1213-14, 1218 (N.J. Super. 2001)(no material increase in risk or burden). In Berschauer/Phillips Const. Co. v. Seattle Sch. Dist. No. 1, 881 P.2d 986 (Wash. 1994), the court observed that “[t]he primary purpose of clauses prohibiting the assignment of contract rights without … permission is to protect him [or her] in selecting the persons with whom he [or she] deals.” 811 P.2d at 830 (citing Portland Elec. & Plumbing Co. v. Vancouver, 627 P.2d 1350 (1981)). Thus, the anti-assignment 38 clause, if enforceable at all, did not invalidate the PSA’s assignment of the Architectural Contract. C. The Contract Was Admissible and Authenticated. The Architect next complains the trial court abused its discretion by admitting the Architectural Contract in evidence because the contract was (1) inadmissible hearsay and (2) not properly authenticated. (Appellant’s Brief 31-32). Both complaints are meritless. A contract has legal effect independent of the truth of any statements therein. Rockwall Commons Assocs. Ltd. v. MRC Mortgage Grantor Trust I, 331 S.W.3d 500, 511 (Tex. App.—El Paso 2010, no pet.). Statements that constitute offer, acceptance or terms of a contract— so-called “operative facts”—are not hearsay[. M]erely making of such statements are in themselves relevant and thus evidence that such statements were made is not barred by the hearsay rule. Thomas C. Cook, Inc. v. Rowhanian, 774 S.W.2d 679, 685 (Tex. App.—El Paso 1989, writ denied); see also Sanders v. Worthington, 382 S.W.2d 910, 915–16 (Tex.1964). The Architect is simply wrong when, without supporting authority, it asserts otherwise. The trial court correctly overruled the Architect’s hearsay objection. (4RR8-9). The Architect’s complaint about authentication fares no better. Texas Rule of Civil Procedure 93(7) requires a verified denial to contest the execution of any written instrument on which any pleading is wholly or partially founded. RLJ alleged the Architect “contracted for” and “breached the Architectural Contract” 39 (CR189,192), making the Architectural Contract the bedrock for RLJ’s pleading. The Architect having not made a sworn denial (CR33-34,47-48), Rule 93(7) mandated its “receipt in evidence as fully proved.” TEX. R. CIV. P. 93(7); see also Associated Press v. Hicks Broad. Corp., No. C14-93-00066-CV, 1993 WL 495114, at *2 (Tex. App.—Houston [14th Dist.] Dec. 2, 1993, no writ)(unpublished); Methodist Hosps. v. Corporate Communicators, Inc., 806 S.W.2d 879, 882 (Tex. App.-Dallas 1991, writ denied). The Architect could hardly deny the authenticity of the Architectural Contract. It defended on the provisions in, and founded its declaratory relief request based on, the Architectural Contract. (CR53,55;App.O). It attached the same contract bearing the same date stamp and its Bates numbers to its live answer and counterclaim. (Compare CR59-79;App.O with 12RR26-46;App.G). The Architect supported its summary judgment motions with the Architectural Contract (CR90-91,100-120,262-63,265,278-300), calling it an “undisputed fact” that the Architect “performed its services on the Project under” that instrument. (CR91). Its counsel represented during trial that “Plaintiffs' Exhibit 15 … is a copy of the ESG/White Lodging contract for this project.” (5RR134). The trial court could and presumably did take judicial notice of this instrument filed in its records. See TEX. R. EVID. 201(b); Office of Pub. Util. Counsel v. P.U.C., 878 S.W.2d 598, 600 (Tex. 40 1994). On that basis alone, the contract was sufficiently authenticated. Associated Press, 1993 WL 495114, at *3. The same contract was also proved a business record by the Architect’s vice- president. (CR178,316). Such proof also authenticated the contract. TEX. R. EVID. 901(10). For all these reasons, the trial court correctly overruled the hearsay and authentication objections. D. The Trial Court Did Not Err in Submitting the Contractual Liability Issue Concerning Structural Engineering and The Architect’s Complaints Have Not Been Preserved For Review. The Architect complains of the jury submission of its liability for “fail[ure] to comply with the Architectural Contract regarding the structural engineering services” (CR1126) “because RLJ did not plead or prove any theory of respondeat superior or vicarious liability against [it] for the [Structural Engineer’s] services.” (Appellant’s Brief 33). Though the Architect agreed its “services would ‘include’ structural engineering services” (12RR39,47-50;App.G), it now argues that without pleading and proof of vicarious or respondeat superior liability, it has no responsibility for the Structural Engineer’s work. (Appellant’s Brief 33). 1. The Architect Waived Its Complaint By Failing to Specially Except to the Omission of Vicarious or Respondeat Superior Allegations. Vicarious or respondeat superior liability is, as explained below, unnecessary. The Architect assumed in the Architectural Contract direct 41 responsibility to the Owner to provide structural engineering services. (12RR39,47-50;App.G) RLJ did not need to rely on any warranty concerning structural engineering because reasonable performance is implied in every contractual undertaking. Montgomery Ward & Co. v. Scharrenbeck, 146 Tex. 153, 204 S.W.2d 508, 510 (1947). Even if such derivative liability theories had been necessary, the Architect cannot predicate its current complaint on its non-specific “no evidence” charge objection. The trial court is only required to submit the “questions, instructions and definitions … raised by the pleadings and the evidence.” TEX. R. CIV. P. 278(emphasis added). A party is only required to prove what it pleads. See Alaniz v. Jones & Neuse, Inc., 907 S.W.2d 450, 452 (Tex. 1995)(no questions permitted regarding unpleaded issues). Unalleged facts essential to liability need not be proved unless the opponent specially excepts to the omission. TEX. R. CIV. P. 90; Shoemake v. Fogel, Ltd., 826 S.W.2d 933, 937 (Tex.1992). RLJ alleged the Architect “agreed to … provide … structural engineering design … for the Project” (CR44) and “breached the Architectural Contract by … failing to produce design plans free from defects.” (CR47). The Architect never specially excepted to failure to allege vicarious or respondeat superior liability. Therefore, RLJ was not required to prove either theory. 42 2. The Architect Waived Its Complaint By Failing to File a Verified Denial of Liability in the Capacity Sued. The Architect also now denies direct contractual liability, asserting instead that it is only vicariously liable for its Structural Engineer. The Architect alleged generally it did nothing that harmed RLJ, and any of RLJ’s damages were caused by “others for whose conduct [the Architect is] not legally responsible.” (CR48 ¶¶D.1, 2;App.O). This is a contest to liability in the capacity sued, which the Architect was required, but failed, to plead by verified denial. TEX. R. CIV. P. 93(2). Leggett v. Brinson, 817 S.W.2d 154, 158 (Tex. App.—El Paso 1991, no writ)(defendant sued individually for DTPA violations waived defense that he was only acting as agent for another without a verified denial); Avanti Servs. Inc. v. Questor Drilling, Inc., No. 01-86-00741-CV, 1987 WL 8352, at *2 (Tex. App.— Houston [1st Dist.] Mar. 26, 1987, no writ)(unpublished; same for corporate contract signatory sued for direct contract liability with no verified plea that it only signed as agent for another). The Architect’s general, unverified denial of causing any of RLJ’s damages does not preserve its current complaint about its liability for the Structural Engineer’s defective design. See Butler v. Joseph's Wine Shop, Inc., 633 S.W.2d 926, 929-30 (Tex. App.—Houston [14th Dist.] 1982, writ ref'd n.r.e.)(unverified denial of action in individual capacity waived capacity defense). Without a sworn denial, the Architect waived its complaint. See Horton v. Robinson, 776 S.W.2d 260, 266–267 (Tex. App.—El Paso 1989, no writ). 43 3. The Architect Failed to Preserve Its Charge Complaint By Objecting On Different Grounds Than Those Now Urged. At the charge conference, the Architect’s only objection to the structural engineering liability question was “there is no evidence to support [liability for]… failure to comply with the [A]rchitectural [C]ontract regarding structural engineering services.” (9RR152). This objects to whether there was probative evidence the Architect failed to comply. The Architect’s complaint now concerns evidence supporting the Architect’s responsibility for the Structural Engineer’s failure to comply. Objection on one ground preserves no error on another. State Dep't of Highways & Pub. Transp. v. Payne, 838 S.W.2d 235, 242 (Tex. 1992). The Architect waived its objection to the submission of the structural engineering liability question for this additional reason. 4. Vicarious or Respondeat Superior Liability Is Not Required When Responsibility Exists Under a Contract. The substance of the Architect’s argument is also meritless. The Architect relies on Ryan v. Morgan Spear Associates Inc., 546 S.W.2d 678, 681–82 (Tex. Civ. App.—Corpus Christi 1977, writ ref'd n.r.e.), for its vicarious/respondeat superior liability argument. That reliance is misplaced. a. Ryan Decided Tort, Not Contractual, Duty Under a Now-Rejected Liability Theory. The Architect acknowledges the Ryan plaintiff contended the liability inquiry should have been based on whether the architect “breached its contractual 44 duty to prepare plans and specifications free from defect.” (Appellant’s Brief 35;emphasis added). It fails to mention, however, that the Ryan court never reached contractual duty question by ruling “liability … can only be sustained on proof that [the architect] was negligent….” 19 Id. at 682 (emphasis added). For 24 years since Southwestern Bell Tel. Co. v. DeLanney, 809 S.W.2d 493, 494–95 (Tex. 1991), damages to the contract’s subject must be recovered in contract, not tort, actions. CBI NA-CON, Inc. v. UOP Inc., 961 S.W.2d 336, 340 (Tex. App.— Houston [1st Dist.] 1997, pet. denied). Ryan antedated DeLanney and only addresses the architect’s tort duty. It does not resolve the situation here: whether contractual liability may be imposed for breach of a duty the architect’s agreement to provide structural engineering services. (CR68,72-73). b. The Contract Defines Contractual Duties. As this Court recognized in Black + Vernooy Architects v. Smith, 346 S.W.3d 877, 882 (Tex. App.—Austin 2011, pet. denied), an architect’s duties are contractually defined. Accord Guirey, Srnka & Arnold, Architects v. Phoenix, 9 Ariz. App. 70, 449 P.2d 306 (1969); Moundsview ISD v. Buetow & Assoc., 253 N.W.2d 836 (Minn.1977); Getzschman v. Miller Chem. Co., 232 Neb. 885, 898-99, 443 N.W.2d 260, 270 (1989); Kelly v. Northwest Community Hospital, 66 19 After obtaining summary judgment that RLJ could not recover in negligence pursuant to the doctrine of equitable subrogation (CR1708), the Architect now seeks liability insulation under law only applicable to liability for negligence. 45 Ill.App.3d 679, 23 Ill.Dec. 466, 384 N.E.2d 102 (1978). Here, the Architect had a direct duty to provide structural engineering services by contracting to do so. Proof of vicarious or respondeat superior liability was superfluous. 5. The Architect Waived Any Complaint About the Duty Submitted By Failing to Request Any Question, Definition or Instruction. Nevertheless, the Architect suggests under Ryan it should not be liable for “failure to comply with the Architectural Contract regarding the structural engineering services required” because it neither “guarantee[d]” quality nor promised “a perfect plan or satisfactory result.” (Appellant’s Brief 33, 34). Even if Ryan had so constricted the Architect’s contractual duty, the Architect’s complaint is that the jury question incorrectly stated the liability standard. But the Architect requested no question proposing any liability standard. (CR1119-20). Its own proposed bulk charge, on which it obtained no ruling, included no such liability standard. (CR1108). It requested no definition or instruction submitting such a standard. (CR1119-20). The Architect’s complaint was waived through these failures. TEX. R. CIV. P. 279; Payne, 838 S.W.2d at 242. 6. Ryan Only Addressed the Architect’s Direct, Not Vicarious, Tort Liability. The Architect also asserts that Ryan means a contract party may later delegate its promised performance to one it unilaterally characterizes an independent contractor and thereby elude liability without proof of respondeat 46 superior. Respondeat superior, however, is only applicable to torts. It is based on the theory the employer is liable for the employee’s negligence though the employer itself beached no duty. St. Anthony's Hosp. v. Whitfield, 946 S.W.2d 174, 178 (Tex. App.—Amarillo 1997, writ denied); White v. Dennison, 752 S.W.2d 714, 716 (Tex. App.—Dallas 1988, writ denied); Marange v. Marshall, 402 S.W.2d 236, 241–42 (Tex. Civ. App.—Corpus Christi 1966, writ ref'd n.r.e.). It is unnecessary when the employer breaches a direct duty it contractually assumed. See V.D.4.b., supra. Because the Ryan plaintiff failed to request a charge question whether the engineer was the architect’s agent, 546 S.W.2d at 682, the only issue before the court was whether sufficient evidence supported the architect’s direct tort liability. Id. at 681. The Architect’s suggestion that Ryan defines a contractual standard is incorrect. Even in negligence, an architect is not relieved of responsibility simply by hiring a consultant to discharge its professional responsibilities. Playskool, Inc. v. Elsa Benson, Inc., 147 Ill. App. 3d 292, 299, 497 N.E.2d 1199, 1204 (1986). 7. Architect’s Reasoning Permits It All the Contractual Benefits Free of Burden and Risk. The Architect further uses Ryan to suggest that it is not contractually liable for the Structural Engineer’s shortcomings because the contract between the Architect and Structural Engineer provided the latter was an independent contractor. (Appellant’s Brief 33). The Owner was not a party to that agreement. 47 Its rights are unaffected by such a contract. See Prize Energy Res., L.P. v. Cliff Hoskins, Inc., 345 S.W.3d 537, 554 (Tex. App.—San Antonio 2011, no pet.). The lack of privity between construction subcontractors and owners is why it was necessary to devise the “pass-through” fiction based on the general contractor’s privity with the owner to permit subcontractors to sue owners for breaches. Interstate Contracting Corp. v. City of Dallas, 135 S.W.3d 605, 615 (Tex. 2004). The Architect in this case was, however, a party to the contract under which it agreed to perform structural engineering services. It was free to contract with the Structural Engineer for indemnity or other protections. No matter how it chose to arrange the Structural Engineer’s performance, the Architect was contractually answerable to the Owner and its assigns for the breach. The Architect’s vicarious- only argument overlooks the same principle the Architect espouses concerning the assignment: there is no privity; ergo, no contractual liability. If the remedy against the Architect were limited to derivative liability, the Architect would be free to contract for services completely free of liability for another’s failure to provide the promised performance. 8. Illegality Is Not an Issue Due to The Architect’s Failure to Plead It and Statutory Authorization for Architects Performing Structural Engineering Services. The Architect also argues that it cannot be liable for failings of its Structural Engineer because it “literally cannot agree to provide structural engineering 48 services.” (Appellant’s Brief 36). It quotes Seaview Hospital, Inc. v. Medicenters of Am., Inc., 570 S.W.2d 35, 39 (Tex. Civ. App.—Corpus Christi 1978, no writ), for the proposition that “a contract for engineering services to be performed by a person who is prohibited from practicing engineering in Texas is void and unenforceable.” (Appellant’s Brief 36). a. Any Illegality Was Waived Because It Is Not Apparent And The Architect Did Not Affirmatively Plead It. Unenforceability due to alleged illegality is an affirmative defense that is waived if not pleaded unless pleaded facts conclusively establish illegality. TEX. R. CIV. P. 94; Phillips v. Phillips, 820 S.W.2d 785, 789 (Tex.1991); Park v. Escalera Ranch Owners' Ass'n, Inc., No. 03-12-00314-CV, 2015 WL 737424, at *16 (Tex. App.—Austin Feb. 13, 2015, no pet. h.). Even if it were a valid defense here, nothing pleaded showed the Architect was not licensed to or could not lawfully provide engineering services. Failure to plead illegality waived any such defense. There was no illegality defense to waive, however. Even if the contract violated architecture regulations, the Architect could not assert it. Public policy would not prevent contract enforcement against the Architect because of the need to discourage Architect’s from regulatory violations. Geis v. Colina Del Rio, LP, 362 S.W.3d 100, 110 (Tex. App.—San Antonio 2011, pet. denied). Further, there is no illegality. The Architect is authorized to prepare “engineering plans and 49 specifications for … the depiction of the building systems, including structural, mechanical, electrical, and plumbing systems….” TEX. OCCUP. CODE §1001.0031(d)(emphasis added). b. Seaview Hospital Does Not Say An Architect Cannot Provide Structural Engineering Services. Finally, the Architect’s citation of and quotation ignores that Seaview Hospital does not discuss the dividing line between architecture and engineering. It involved a contract under which a general contractor agreed to provide, not perform, those services under a turnkey contract. 570 S.W.2d at 38-39. The contractor in fact arranged for those services through licensed professionals. It was the owner-defendant, not the architect, asserting illegality. Seaview Hospital held the contract should be interpreted to be enforceable; i.e., that the general contractor only agreed to arrange for others to provide such services. The Architect’s complaint cannot be sustained. The trial court did not reversibly err in submitting a jury question concerning the Architect’s failure to perform structural engineering services. E. The Evidence of Diminution in Value Was Legally Sufficient. The Architect’s last complaint is “[t]he evidence at trial was legally insufficient to support the jury’s $700,000 award of market value damages.” (Appellant’s Brief 36). This attack is limited to supporting evidence for the jury’s 50 finding of Project value difference “determined as of August 31, 2010.” (CR 1127;App.B). The jury’s verdict, however, is fully supported. 1. The Evidence Is Legally Sufficient If It Provides More Than a Scintilla of Factual Support. A finding is unsupported by legally sufficient evidence only if there is a complete absence of probative evidence; such evidence is not enough to cause reasonable, fair-minded people to differ; or its opposite is conclusively established. City of Keller v. Wilson, 168 S.W.3d 802, 810 (Tex.2005); Burroughs Wellcome Co. v. Crye, 907 S.W.2d 497, 499 (Tex.1995). A reviewing court may only consider evidence supporting the verdict, viewing that evidence and inferences therefrom in the light most favorable to the verdict. Mancorp, Inc. v. Culpepper, 802 S.W.2d 226, 227 (Tex.1990). Even if an expert’s valuation lacks supportive market data, the opinion is more than a scintilla and sufficient to present a disputed fact issue. Alleged data deficiency goes to persuasive, not probative, value. See Missouri-Kansas-Texas R. Co. v. City of Dallas, 623 S.W.2d 296, 299 (Tex. 1981). Damages are not denied for want of exactitude “[i]f an injured party has produced the best evidence available… afford[ing] a reasonable basis for determining [the] loss.” Vance v. My Apartment Steak House of San Antonio, Inc., 677 S.W.2d 480, 484 (Tex.1984); O and B Farms, Inc. v. Black, 300 S.W.3d 418, 422 (Tex. App.— Houston [14th Dist.] 200 [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/4068344. Public record. Not legal advice.