Opinion issued March 8, = 2007
In=20 The
For=20 The
NO.=20
01-03-00025-CV
CHARLES =
MCINTYRE=20
HADEN, JR., INDIVIDUALLY, and CHARLES MCINTYRE HADEN, JR. & =
COMPANY=20
D/B/A HADEN & COMPANY, Appellants DAVID J. =
SACKS, P.C.=20
D/B/A SACKS & ASSOCIATES, Appellee
On =
Appeal from=20
County Civil Court at Law No. 2 Harris =
County,=20
Texas Trial =
Court Cause=20
No. 722,791
OPINION =
ON MOTION=20
FOR REHEARING Appellants, Charles M. Haden, =
Jr.,=20
individually (Haden), and Charles McIntyre Haden, Jr. & =
Company d/b/a=20
Haden & Company (the company),
These=20
appeals derive from a dispute over whether and how a client agreed =
to pay=20
a law firm for legal services. In Cause No. 01-01-00200-CV, the =
company=20
challenges a series of interlocutory summary judgments and a final =
judgment rendered in favor of the law firm. In three issues, the =
company=20
contends that the law firm did not establish its entitlement to =
judgment=20
as a matter of law (1) for breach of a contract to pay $30,314.38 =
for=20
legal services performed, (2) for $120,887.50 in attorney's fees =
awarded=20
the law firm in connection with pursuing the breach of contract =
claim, or=20
(3) on the company's counterclaims for violations of the Deceptive =
Trade=20
Practices and Consumer Protection Act (DTPA),
The parties began their working =
relationship through a written engagement letter sent from the law =
firm=20
and dated August 4, 1997. The letter, in its entirety, states as=20
follows: I am honored to represent you =
with regard=20
to the above-referenced matter. At this point, you have requested =
that I=20
assist with the writing of the Appellant's Brief and any reply. If =
oral=20
arguments are granted by the Fifth Circuit, a decision will have =
to be=20
made on who should argue the case. My normal rate is $300.00 per =
hour, but=20
my rate for this particular matter will be $200.00 per hour. The =
other=20
lawyers in my firm range from $150.00 to $200.00 per hour, and =
paralegals=20
range from $50.00 to $100.00 per hour. You are responsible for all =
costs=20
and expenses in the case as incurred. These expenses include, but =
are not=20
limited to, copies; binding; fax transmissions; travel; lodging; =
parking;=20
etc. Please submit a $10,000 =
retainer to be=20
applied to fees and expenses. Please sign in the space =
provided below=20
and return the original to my office as soon as possible. =
Thank you for your cooperation =
and=20
attention. Sacks's signature appears at =
the close of=20
the letter. Below Sacks's signature is the statement, "Your =
signature=20
below indicates acceptance of the terms of this fee agreement." =
The face=20
of this letter shows that, on endorsing it, individually and as =
president=20
of the company on August 21, 1997 and returning it to the law =
firm, Haden=20
had altered the original $10,000 amount proposed by striking =
through that=20
amount, superscripting the amount of $5,000 over the original =
typewritten=20
numerals in handwriting, and adding his initials beside that =
change.=20
In addition to endorsing the =
law firm's=20
letter, Haden, again individually and on behalf of the company, =
forwarded=20
a check for the $5,000 retainer by an August 21, 1997 letter, =
which stated=20
the following: Pursuant to our telephone =
conversation,=20
enclosed herewith is a check in the amount of five thousand =
dollars=20
($5,000) to be applied to fees and expenses in assisting with the =
writing=20
of the Appellants' Brief and reply. Also enclosed is an executed =
copy of=20
your August 4, 1997 letter indicating that I have acknowledged =
acceptance=20
of your fee agreement on behalf of Haden & Company and myself, =
except=20
that the initial retainer amount has been reduced to $5,000 per =
our=20
agreement. Thank you for your assistance in this matter. I look =
forward to=20
reading your appellant [sic] brief. The law firm filed the 48-page =
brief with=20
the Fifth Circuit on September 10, 1997. The brief sought a remand =
on the=20
merits and a new trial for Haden's and the company's=20
counterclaims. On September 15, 1997, the law =
firm=20
finalized its invoice for work on the brief at a total due of =
$37,259.71.=20
The invoice reflected 28 hours' work by Sacks, 161.75 hours' work =
by an=20
associate, and 37 hours' work by a paralegal, as well as expenses =
and=20
disbursements. On the same day, Sacks wrote to Haden concerning =
the brief=20
and forwarded the invoice. Concerning the brief and the invoice, =
Sacks's=20
letter states, I hope you are happy with the =
Brief.=20
There is an enormous amount of blood, sweat, and tears that went =
into it.=20
I think it gives us the best possible chance of getting your case =
turned=20
around. In that regard, given the state =
of the=20
record that we were eventually able to retrieve from the Court, =
putting=20
together winning arguments took considerable [sic] more time than =
I=20
anticipated after giving the cursory review of the initial =
documents. I=20
have attached our bill for service rendered and expenses incurred =
through=20
the completion of the Brief. We are committed to excellence =
and will=20
generally spend whatever time is necessary to develop a winning =
brief=20
given the state of the record. Sometimes that gets a little more =
expensive=20
than anticipated. If you can take care of this =
bill within=20
the next thirty (30) days, I will agree to do the work we have =
done so far=20
for a flat fee of $30,000. With your $5,000, the balance due would =
be=20
$25,000. On November 24, 1997, an =
associate of the=20
law firm sent a letter to Haden, along with a copy of the =
opponent's=20
appellee's brief. The letter stated, as follows: Please find enclosed for your =
review a=20
copy of the Brief of Appellee. A reply brief must be filed no =
later than=20
Tuesday, December 2, 1997. If you are interested in having our =
firm submit=20
a reply brief, you must contact me as soon as possible; otherwise, =
I will=20
presume you do not wish to submit a reply brief. I look forward to hearing from =
you.=20
The law firm filed the reply =
brief on=20
December 4, 1997. On December 17, 1997, the law =
firm sent=20
an invoice reflecting an outstanding debt of $32,259.71 for the =
initial=20
brief. The total was the amount due after the $5,000 retainer was =
credited=20
against the original debt of $37,259.71. This invoice also =
included an=20
additional $3,045 fee for work done by the law firm to prepare the =
reply=20
brief. The total outstanding balance shown due on the invoice was=20
$35,304.71. The company paid $5,000 to the law firm by a check =
dated=20
December 31, 1997, which the law firm deposited in its account on =
January=20
13, 1998. On March 17, 1998, when only the $5,000 retainer and the =
additional $5,000 had been paid, and the outstanding balance due =
was=20
$30,314.38, Sacks sent a letter to Haden. The complete text of the =
letter=20
follows: Dear Charles:
In November you told me that =
you were=20
going to start paying $5,000.00 a month. I did receive December's =
payment=20
sometime in January, but I have received nothing for January, =
February, or=20
March. A few weeks ago when we spoke, you reassured me that you =
were going=20
to resume paying on this account. I had the impression that the =
first=20
payment would be within a few days, but nothing has been received. =
I have=20
tried to work with you over the last seven months or so, but it =
does not=20
appear that any consistent effort is being made to pay this=20
bill.
If you really do not intend to =
pay for my=20
services, please let me know, and we can deal with that =
accordingly.=20
Otherwise, I am interested in hearing your plan for payment. It =
needs to=20
be some firm consistent schedule that pays this off in a =
reasonably short=20
period of time. In any event, prior to oral arguments before the =
Fifth=20
Circuit.
Please let me know how you wish =
to=20
proceed. On September 9, 1998, the Fifth =
Circuit=20
issued an 18-page, unpublished opinion in Haden's and the =
predecessor=20
company's appeal. The disposition affirmed the adverse judgment of =
$66,363.03 that had been rendered as a matter of law against Haden =
and the=20
predecessor company, but also granted them partially favorable =
relief by=20
vacating dismissal of their promissory-estoppel counterclaim and =
remanding=20
those claims for trial. Eleven months later, on August =
2, 1999,=20
Sacks sent the following demand letter, by certified mail, return =
receipt=20
requested, to Haden and the company: Dear Charles:
As you are aware, your account =
with my=20
firm is over nineteen (19) months past due, with a current =
outstanding=20
balance of $30,314.38. Please send me, at the [letterhead] =
address, the=20
full amount due and unpaid by cashier's check or money order. Your =
cashier's check or money order should be made payable to David J. =
Sacks,=20
P.C.
If I have not received payment =
from you=20
within thirty (30) days after your receipt of this letter, I will =
take all=20
legal actions necessary to collect this debt. The lawsuit will =
seek court=20
costs, legal interest and attorney's fees in addition to the =
amount of the=20
debt. On August 27 and September 1, =
1999,=20
respectively, Haden and Sacks exchanged the lengthy, four-page,=20
single-spaced letters that precipitated this lawsuit. In his =
letter of=20
August 27, Haden contested the total amount of fees owed to the =
law firm=20
on several grounds, including the following: the law firm had =
initially=20
been hired to review a brief drafted by trial counsel and "to =
assist," as=20
stated in the firm's August 4, 1997 letter; Haden had "made it =
clear" that=20
$5,000 was all he could afford to spend and that spending more =
made little=20
sense; the law firm had "never advised" that it was "substantially =
exceeding the retainer amount," and its "cost over-runs were =
clearly=20
different that [sic] what both of us anticipated in what your fee =
would=20
be," which precluded Haden from either approving the cost =
revisions or=20
terminating the firm's work; that the fees charged for the work on =
the=20
brief and Sacks' participation in the work differed significantly =
from=20
Haden's understandings; Haden made no promises to the law firm to =
induce=20
the law firm to prepare a reply brief to the Fifth Circuit, except =
for the=20
additional $5,000 paid after that brief was filed; and the "only =
way" that=20
payment of more than the $10,000 already paid would be as a result =
of a=20
reversal and remand by the Fifth Circuit and a statutory award of=20
attorney's fees on prevailing in the district court after the =
remand.=20
Sacks's reply of September 1, =
1999, in=20
which he accused Haden of fabrication and misstatements, included =
the=20
following statements: Sacks denied not discussing the additional =
work=20
required with Haden and stated that he had, in fact, explained =
that the=20
additional cost to rewrite trial counsel's brief "probably be =
between=20
$25,000 and $40,000," which Haden had authorized; Haden had =
promised to=20
begin to pay the law firm $5,000 monthly until the bill was paid; =
Haden=20
did not respond to the law firm's February and March letters =
regarding=20
these monthly payments; Sacks refused to travel to New Orleans for =
oral=20
argument in the case because the company had not paid its bill; =
Sacks kept=20
Haden apprised of both status and costs as the case progressed; =
Sacks=20
disagreed that Haden had "ever state[d] that [he] had only $5,000 =
to spend=20
on the case," and stated that the law firm would never have =
accepted the=20
case if that were true; and Haden knew that "reviewing the all the =
materials and assisting with editing" trial counsel's brief "would =
cost at=20
least $10,000." After this exchange of =
correspondence,=20
the law firm filed this lawsuit on September 22, 1999. Procedural=20
Background The law firm's live pleadings =
asserted=20
claims for (1) "suit on sworn account" by claiming that the =
company=20
accepted the services and became bound to pay the law firm on an =
open=20
account, see The law firm sought traditional =
and=20
no-evidence summary judgment on the company's counterclaims. The =
company's=20
response to the motion for summary judgment included a challenge =
to the=20
affidavit by Sacks that had been attached to the law firm's =
motion. The=20
company also offered Haden's affidavit and other evidentiary =
exhibits. In=20
addition to responding on the merits, the law firm's reply =
included an=20
amended, extensively detailed affidavit executed by Sacks. =
On May 11, 2000, the trial =
court rendered=20
a preliminary take-nothing summary judgment in favor of the law =
firm on=20
the company's counterclaims for unconscionable action, fraud, and=20
violations of the DTPA. On June 5, 2000, the trial court rendered =
an=20
additional preliminary take-nothing summary judgment on the =
company's=20
counterclaims for breach of fiduciary duty and breach of =
contract. The law firm had also sought =
traditional=20
and no-evidence summary judgment for its breach of contract claim =
by=20
asserting its right to judgment as a matter of law for unpaid =
attorney's=20
fees amounting to $30,314.38, pursuant to section 38.001 of the =
Civil=20
Practice and Remedies Code. The law firm attached the =
following=20
exhibits to this motion for summary judgment: correspondence, =
described=20
more fully above, dated August 4, 1997, August 20, 1997, November =
24,=20
1997, March 17, 1998, and August 2, 1999; Sacks's affidavit; =
copies of=20
checks from Haden, for $5,000, dated August 21, 1997, and for =
$5,000,=20
dated December 31, 1997; a copy of the appellant's brief and reply =
brief=20
prepared by the law firm for the company's appeal to the Fifth =
Circuit,=20
with that court's resulting order; and invoices for the billing by =
the law=20
firm. The summary judgment motion pertained only to the law firm's =
breach=20
of contract claim and did not assert any contentions regarding the =
law=20
firm's alternative claims for "suit on sworn account," quantum =
meruit, or=20
alleged DTPA violations for bringing DTPA counterclaims against =
the law=20
firm. Haden's and the company's =
response to the=20
law firm's motion for summary judgment disputed that any agreement =
existed=20
for the law firm to prepare a brief for the appeal to the Fifth =
Circuit=20
because, according to Haden, his trial counsel had already =
prepared a=20
brief, and Haden had hired the law firm merely to review trial =
counsel's=20
draft. The response also asserted that Haden had agreed only to a =
flat,=20
maximum fee of up to $10,000 for the law firm's services and also =
asserted=20
several affirmative defenses. The company's response included =
the=20
following attachments: (1) Haden's affidavit, in which he stated =
that he=20
had hired Sacks to "put an edge on my trial lawyer's brief" and =
therefore=20
"assist in the preparation" of the brief for a fee that "could be =
as high=20
as $10,000"; (2) an excerpt from Sacks's oral deposition =
testimony,=20
showing that Sacks stated that the parties had not agreed to a =
"specified=20
number" for the work done by the law firm and that Sacks had given =
Haden a=20
range of from $15,000 to $50,000 as a possible fee; (3) a letter =
from=20
Haden to Sacks dated August 27, 1999; (4) a letter from Sacks to =
Haden=20
dated September 1, 1999; and (5) an affidavit disputing the =
reasonableness=20
of the attorney's fees sought by the law firm for the breach of =
contract=20
claim. The law firm replied to the =
company's=20
response to its motion for summary judgment by stating that the =
agreement=20
was not, as a matter of law, ambiguous and, therefore, that =
Haden's=20
affidavit testimony concerning an agreement to a flat fee that was =
capped=20
at $10,000 was inadmissible because the statements in the =
affidavit=20
violated the parol evidence rule. In addition, the law firm also =
argued=20
that all of the company's affirmative defenses to the law firm's =
breach of=20
contract claim necessarily failed because the company retained and =
accepted the benefits of the contract and had also ratified the =
contract.=20
According to the law firm, Haden received all of the invoices =
relating to=20
the services performed by the law firm, which showed the type of =
legal=20
services and the amount billed for the legal services by the law =
firm,=20
requested that the law firm prepare a reply brief, and then made a =
$5,000=20
payment. The law firm contends, therefore, that Haden ratified the =
contract by making a single payment on the final invoice and by =
requesting=20
that a reply brief be prepared by the law firm after receiving the =
invoice=20
for the work performed on the initial appellant's brief. =
The trial court rendered an =
interlocutory=20
summary judgment in favor of the law firm on its =
breach-of-contract claims=20
for $30,314.38, plus interest. The trial court also ruled that the =
law=20
firm was entitled to attorney's fees expended in pursuing the =
contract=20
claim, but reserved ruling on the amount of reasonable attorney's =
fees.=20
Two months later, the law firm =
sought a=20
traditional summary judgment against the company on the =
reasonableness of=20
the attorney's fees incurred in seeking the summary judgment on =
its=20
breach-of-contract claim. The trial court then rendered a final =
judgment,=20
which incorporated the earlier ruling on the contract, and awarded =
the law=20
firm an additional $75,887.50 for attorney's fees incurred in =
pursuing the=20
contract claim, with contingent fees totaling $45,000 for appeals =
to an=20
intermediate appellate court and for seeking a petition for review =
in the=20
supreme court. The first paragraph of the judgment recites that =
Haden and=20
the company filed no response to the law firm's motion concerning =
the=20
issue of the attorney's fees in connection with pursuit of the =
contract=20
claim. Haden and the company challenge this judgment in Cause No.=20
01-01-00200-CV, which also includes the trial court's orders =
granting=20
summary judgment in favor of the law firm on the company's=20
counterclaims. Haden and the company did not =
supersede=20
the judgment challenged in Cause No. 01-01-00200-CV, which =
prompted=20
postjudgment collection and enforcement procedures. These =
culminated in=20
the law firm's obtaining turnover relief, for which the firm =
sought=20
attorney's fees pursuant to section 31.002(e) of the Civil =
Practice and=20
Remedies Code. Tex. Civ. Prac. & Rem. Code Ann. =A7 31.002(e) =
(Vernon=20
Supp. 2005). The law firm again prevailed and recovered a judgment =
for=20
$90,000 in attorney's fees. Haden and the company challenge that =
judgment=20
in Cause No. 01-03-00025-CV.
We review summary judgments de =
novo,=20
Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 =
(Tex.=20
2005), and follow the usual standards that apply when a summary =
judgment=20
order grants relief without specifying grounds. See Dow Chem. =
Co. v.=20
Francis, 46 S.W.3d 237, 242 (Tex. 2001); Stephens v.=20
Dolcefino, 126 S.W.3d 120, 125-26 (Tex. App.--Houston [1st =
Dist.]=20
2003, pet. denied). The law firm moved for summary =
judgment=20
under two authorizing rules, rule 166a(c) ("traditional" summary =
judgment)=20
and 166a(i) ("no-evidence" summary judgment). See Tex. R. =
Civ. P.=20
166a(c),(i). For its breach of contract claims, the law firm moved =
for=20
traditional summary judgment under rule 166a(c). For Haden's and =
the=20
company's counterclaims, the law firm sought both a traditional =
summary=20
judgment and a no-evidence summary judgment under rule 166a(i). We =
apply=20
the standard of review appropriate for each type of summary =
judgment.=20
See Flameout Design & Fabrication, Inc. v. Pennzoil =
Caspian=20
Corp., 994 S.W.2d 830, 834 (Tex. App.--Houston [1st Dist.] =
1999, no=20
pet.) (166a(i) no evidence standard); Science Spectrum, Inc. =
v.=20
Martinez, 941 S.W.2d 910, 911 (Tex. 1997) (166a(c) =
traditional=20
standard).
Haden's and the company's =
second issue=20
challenges the traditional summary judgment rendered in favor of =
the law=20
firm on its claim that the company breached its contract with the =
law=20
firm. The law firm defends the trial court's ruling by claiming =
that it=20
established its right to prevail as a matter of law for unpaid =
legal fees=20
and expenses in the amount of $30,314.38, and that the company =
offered no=20
properly admissible summary judgment evidence to dispute that =
right. We=20
disagree. The law firm moved for summary =
judgment=20
based on its August 4, 1997 engagement letter and on Haden's and =
the=20
company's having endorsed the letter and supplied the $5,000 =
retainer=20
required by that letter. The law firm argued that these documents=20
established that Haden and the company had agreed to pay the law =
firm on=20
an hourly basis for services rendered in connection with the Fifth =
Circuit=20
appeal and that (1) the law firm had a valid contract with the =
company,=20
(2) the law firm had performed under the contract, and (3) the =
company=20
breached the contract, which resulted in damages. The law firm =
provided=20
documentary evidence showing that the firm was paid an agreed =
$5,000=20
retainer, completed the work, sent an invoice, filed a reply =
brief, sent=20
another invoice, received another $5,000 toward the unpaid =
balance,=20
formally demanded the outstanding balance of $30,314.38, and filed =
suit=20
when the balance remained unpaid. Haden and the company =
challenged the law=20
firm's right to summary judgment based in part on an affidavit by =
Haden.=20
In the affidavit, Haden stated that, in entering into the =
agreement by=20
endorsing the law firm's August 4, 1997 engagement letter on =
August 21,=20
1997 and paying the $5,000 retainer fee, he relied on Sacks's=20
"representation that the work would cost as much as $10,000." The =
law firm=20
rejected that assertion as untenable, in part by emphasizing that =
Haden=20
and the company had already received the firm's initial invoice =
for=20
$37,259.71 before the law firm filed the reply brief in the Fifth =
Circuit=20
case. In response, Haden averred that =
he had=20
never agreed to pay more than $10,000 for the law firm's work. In=20
addition, Haden and the company offered evidentiary exhibits that =
included=20
the correspondence by which the law firm forwarded its initial, =
$37,259.71=20
invoice for the work on Haden's and the predecessor company's =
principal=20
brief. In that correspondence, which appears in full above, Sacks=20
acknowledged that the work on the brief was "a little more =
expensive than=20
anticipated" because "putting together winning arguments took =
considerable=20
[sic] more time than I anticipated after giving the cursory review =
of the=20
initial documents." In the same letter, Sacks offered to reduce =
the=20
outstanding balance by approximately $5,000 if the invoice were =
paid in=20
full within 30 days. The law firm responded by =
contending that=20
Haden's and the company's summary judgment evidence, in =
particular,=20
Haden's affidavit, contravened the parol evidence rule and was =
therefore=20
inadmissible to vary the terms of the August 4, 1997 written =
contract,=20
which had been accepted in full on August 21, 1997, on payment of =
the=20
$5,000 retainer fee. The law firm brings the same challenge in =
response to=20
Haden's and the company's second issue on appeal. A. Whether the Parties' =
Minds Met=20
To be=20
enforceable, the contract must be sufficiently certain to enable a =
court=20
to determine the rights and responsibilities of the respective =
parties.=20
T.O. Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218, =
221=20
(Tex. 1992); America's Favorite Chicken v. Samaras, 929 =
S.W.2d=20
617, 622 (Tex. App.--San Antonio 1996, writ denied). Under settled =
principles of contract interpretation, we construe a contract as a =
matter=20
of law to determine whether it can be enforced as written without=20
resorting to parol evidence. J.M. Davidson, Inc. v. =
Webster, 128=20
S.W.3d 223, 229 (Tex. 2003). Our primary concern is to ascertain =
the=20
intent of the parties, as expressed in the contract instrument. =
Id.=20
(citing R.P. Enters. v. LaGuarta, Gavrel & Kirk, =
Inc.,=20
596 S.W.2d 517, 518 (Tex. 1980)). The engagement-letter contract =
does not=20
support the law firm's interpretation. Though the law firm's =
verified=20
pleadings initially sought recovery on an "open" or sworn-account, =
as=20
authorized by rule 185, On construing the =
engagement-letter=20
contract, as acknowledged by Haden and the company, we conclude =
that it=20
binds the parties to the following terms: (1) the law firm would =
represent=20
Haden and the company by providing professional assistance with =
their=20
appellate brief to the Fifth Circuit, (2) Haden, both individually =
and for=20
the company, acknowledged the law firm's rates and responsibility =
for the=20
law firm's disbursed expenses, and (3) a $5,000 retainer fee =
instead of a=20
$10,000 retainer fee would apply. We do not=20
agree that the engagement-letter contract acknowledges Haden's and =
the=20
company's agreement to (1) pay billing as accrued at (2) =
the=20
hourly rates acknowledged in the engagement-letter contract. To=20
acknowledge an hourly rate is not necessarily to acknowledge open =
account=20
billing at that hourly rate. Accordingly, whether the minds of the =
parties=20
"met" on the crucial obligation, which the law firm vigorously =
contends is=20
imposed by the engagement-letter contract, but which Haden and the =
company=20
dispute with equal vigor--legal fees representing approximately =
$37,000 of=20
work and the attending obligation to pay that amount--are =
questions of=20
fact that a jury must decide. See Foreca, S.A. v. GRB Dev. =
Co.,=20
758 S.W.2d 744, 746 (Tex. 1988). B.=20
The Law of Parol Evidence As in the=20
trial court, however, the law firm counters that the =
parol-evidence rule=20
does not permit Haden and the company to assert their flat, or =
maximum=20
$10,000, fee theory because it alters the acknowledged terms of =
the law=20
firm's engagement-letter contract, in violation of the parol =
evidence=20
rule. The parol=20
evidence rule is a rule of substantive law. Hubacek v. Ennis =
State=20
Bank, 317 S.W.2d 30, 31 (Tex. 1958); Gonzalez v. =
United=20
Bd. of Carpenters & Joiners, 93 S.W.3d 208, 211 (Tex.=20
App.--Houston [14th Dist.] 2002, no pet.); Piper, Stiles & =
Ladd v.=20
Fid. & Dep. Co., 435 S.W.2d 934, 940 (Tex. Civ. =
App.--Houston=20
[1st Dist.] 1968, writ ref'd n.r.e.). When parties reduce an =
agreement to=20
writing, the law of parol evidence presumes, in the absence of =
fraud,=20
accident, or mistake, that any prior or contemporaneous oral or =
written=20
agreements are merged into the final, written agreement and, =
therefore,=20
that any provisions not set out in the writing were either =
abandoned=20
before execution of the agreement or, alternatively, were never =
made and=20
are thus excluded from consideration in interpreting the written=20
agreement. See Hubacek, 817 S.W.2d at 31; Smith v.=20
Smith, 794 S.W.2d 823, 827 (Tex. App.--Dallas 1990, no writ); =
Muhm v. Davies, 580 S.W.2d 98, 101 (Tex. Civ. =
App.--Houston [1st=20
Dist.] 1979, writ ref'd n.r.e.). We review=20
parol evidence questions de novo, as questions of law. City of =
Pasadena v. Gennedy, 125 S.W.3d 687, 691 (Tex. App.--Houston =
[1st=20
Dist.] 2003, pet. denied). Evidence that violates the parol =
evidence rule=20
has no legal effect and "merely constitutes proof of facts that =
are=20
immaterial and inoperative." Piper, Stiles & Ladd, =
435 S.W.2d=20
at 940. Because all prior negotiations and agreements are presumed =
merged=20
into the final agreement, parol evidence is not admissible to =
vary, alter,=20
or supplement the terms of an otherwise unambiguous contract =
except to=20
show (1) that the contract was induced by fraud, accident, or =
mistake, (2)=20
that an agreement was to become effective only upon certain =
contingencies,=20
or (3) in the case of ambiguity, that the parties' true intentions =
differ=20
from those expressed in the agreement. See Messer v. =
Johnson, 422=20
S.W.2d 908, 912 (Tex. 1968); Gonzalez, 93 S.W.3d at 211;=20
Litton v. Hanley, 823 S.W.2d 428, 430 (Tex. App.--Houston =
[1st=20
Dist.] 1993, no writ). But, parol=20
evidence may also be admissible, under an additional exception, to =
show=20
collateral, contemporaneous agreements that are consistent with =
the=20
underlying agreement to be construed. See Hubacek, 317 =
S.W.2d at=20
31; see also Transit Enter., Inc. v. Addicks Tire & Auto =
Supply,=20
Inc., 725 S.W.2d 459, 461 (Tex. App.--Houston [1st Dist.] =
1987, no=20
writ) (applying exception for collateral, consistent, =
contemporaneous=20
agreements); Sherrod v. Bailey, 580 S.W.2d 24, 29 (Tex. =
Civ.=20
App.--Houston [1st Dist.] 1979, writ ref'd n.r.e.) (same). =
Relying on the "collateral, =
consistent=20
terms" exception to the parol evidence rule, Haden and the company =
contend=20
that Haden's affidavit, which describes a separate, unwritten =
agreement=20
with the law firm for a flat, maximum fee of $10,000, is =
admissible=20
because Haden refers to "conditions . . . [that] are collateral to =
the=20
terms of the engagement letter signed by the parties." We agree.=20
The terms of the August 4, 1997 =
engagement-letter, as endorsed on August 21, 1997, show that the =
parties=20
agreed that (1) the law firm would represent Haden and the company =
in the=20
appeal to the Fifth Circuit, (2) Haden, individually and for the =
company,=20
acknowledged the law firm's hourly rates, as well as =
responsibility for=20
all disbursed expenses, and (3) a $5,000 retainer fee, instead of =
the=20
$10,000 retainer proposed, would be paid. But, the engagement-letter =
contract sheds=20
no light on the very terms that the parties so vigorously dispute, =
specifically, whether they had agreed to an open account, Accordingly, our holding that =
fact issues=20
remain C.=20
Ratification The law firm alternatively =
contends that=20
Haden and the company cannot assert the flat, maximum fee billing =
theory=20
because Haden paid the law firm an additional $5,000 after =
receiving all=20
invoices, which showed a balance due of $35,304.71, and therefore =
ratified=20
the parties' agreement that the law firm's fees would be paid on =
an=20
as-accrued, hourly basis. Ratification of a contract is =
usually a=20
mixed question of law and fact. Garcia v. Kastner Farms, =
Inc.,=20
789 S.W.2d 656, 659 (Tex. App.--Corpus Christi 1990, no writ). =
When=20
evidence concerning ratification is incontrovertible, ratification =
of a=20
disputed contract is an issue of law for the court. See =
id. But,=20
when the act or acts of ratification are controverted, the trier =
of fact=20
must determine whether the parties ratified the disputed contract. =
See=20
id. We recognize that, in addition to the $5,000 retainer =
fee, Haden=20
and the company paid $5,000 to the law firm after receiving all =
invoices=20
for the work done on the brief. Yet, because fact issues remain =
concerning=20
whether the parties had agreed that the law firm would collect =
fees as=20
accrued and on an hourly basis or on a flat, or maximum, fee basis =
and=20
without regard to hours spent, the trial court could not =
determine, as a=20
matter of law, that, by paying $5,000 after receiving all of the =
invoices,=20
Hayden, for the company, acknowledged and therefore ratified, =
payment on=20
an hourly or accrued basis. Accordingly, we reject the law firm's=20
contention that we should affirm the summary judgment because =
Haden and=20
the company ratified payment of the law firm's fees on an =
as-accrued basis=20
on payment of the additional $5,000. Having thus concluded that fact =
issues=20
precluded summary judgment on the law firm's claim for breach of =
contract,=20
we sustain Haden's and the company's second issue.
In their first issue, Haden and =
the=20
company challenge whether the law firm established its right to =
summary=20
judgment for the attorney's fees awarded in the trial court's =
judgment=20
pursuant to subsection (8) of section 38.001 of the Civil Practice =
and=20
Remedies Code. See Tex. Civ. Prac. & Rem. Code Ann. =
=A7=20
38.001(8) (Vernon 1997) (authorizing recovery of attorney's fees =
for valid=20
claims based on oral or written contract). Well-settled law =
requires that=20
a party must prevail to recover attorney's fees pursuant to =
chapter 38.=20
Green Int'l, Inc. v. Solis, 951 S.W.2d 384, 390 =
(Tex.1997);=20
Ryan v. Abdel-Salam, 39 S.W.3d 332, 337 (Tex. =
App.--Houston [1st=20
Dist.] 2001, pet. denied). Our holding that the law firm was not =
entitled=20
to prevail, because fact issues precluded summary judgment, =
compels the=20
conclusion that the law firm did not prevail for purposes of =
chapter 38.=20
See Ryan, 39 S.W.3d at 337. We sustain Haden's and the =
company's=20
first issue.
In their=20
third issue, Haden and the company contend that the trial court =
erred by=20
rendering a take-nothing summary judgment for the law firm on =
Haden's and=20
the company's counterclaims to the law firm's suit to collect its =
unpaid=20
fee invoices. The trial court rendered this summary judgment =
before=20
rendering the summary judgment on the unpaid fees addressed above. =
Haden's=20
and the company's counterclaims allege that the law firm (1) =
breached its=20
fiduciary duty to Haden and the company, (2) committed fraud, (3) =
violated=20
the DTPA, and (4) breached the contract with Haden and the =
company. The=20
grounds asserted in the law firm's no-evidence motion for summary =
judgment=20
on the counterclaims included the law firm's contention that it =
was=20
entitled to judgment as a matter of law because Haden and the =
company had=20
not incurred any damages on any of their counterclaims. A summary judgment movant who=20
demonstrates that its opponent cannot prevail on an element of its =
claim=20
is entitled to judgment as a matter of law. See Tex. R. =
Civ. P.=20
166a(c); Doe v. Boys Clubs, 907 S.W.2d 472, 477 (Tex. =
1995) ;=20
Gibbs v. Gen. Motors, 450 S.W.2d 827, 828 (Tex. 1970). =
Accordingly, a=20
law firm that demonstrates that it caused no damages to its former =
client=20
is entitled to summary judgment as a matter of law. See =
Spera=20
v. Fleming, Hovenkamp & Grayson, P.C., 25 S.W.3d 863, 874 =
(Tex.=20
App.--Houston [14th Dist.] 2000, no pet.); Schlager v. =
Clements,=20
939 S.W.2d 183, 186-87 (Tex. App.--Houston [14th Dist.] 1996, writ =
denied)=20
(both decided in context of legal malpractice claim). A. No-Evidence Motion =
for Summary=20
Judgment In moving=20
for no-evidence summary judgment, the law firm enumerated each of =
Haden's=20
and the company's counterclaims, for breach if the DTPA, breach of =
the=20
fee-agreement contract, fraud, and breach of fiduciary duty, and =
then=20
listed the elements of each counterclaim. We will=20
affirm a no-evidence summary judgment when (1) there is a complete =
absence=20
of evidence of a vital fact, (2) the court is barred by rules of =
law or of=20
evidence from giving weight to the only evidence offered to prove =
a vital=20
fact, (3) the evidence offered to prove a vital fact is no more =
than a=20
scintilla, or (4) the evidence conclusively establishes the =
opposite of a=20
vital fact. King Ranch, 118 S.W.3d at 751; =
Mathis, 189=20
S.W.3d at 844. We review any evidence presented by Haden and the =
company=20
in the light that favors them, as nonmovants. See =
Johnson, 73=20
S.W.3d at 208; Rueda, 178 S.W.3d at 109. If the summary =
judgment=20
record shows that Haden and the company presented more than a =
scintilla of=20
probative evidence that raised a genuine issue of material fact on =
the=20
challenged element, here the damages element required for them to =
prevail=20
on any of their claims, then the trial court erred by rendering =
the=20
no-evidence summary judgment and we must reverse. See =
Rueda, 178=20
S.W.3d at 109. B.=20
Challenge to Damages Element Common to All=20
Counterclaims Haden and=20
the Company asserted counterclaims against the law firm for breach =
of the=20
DTPA, fraud, breach of fiduciary duty, and breach of contract. In =
moving=20
for no-evidence summary judgment on the grounds that Haden and the =
company=20
had not sustained any damages on any of those counterclaims, =
[1] sued under a contract [that =
they] did=20
not make, [and were] [2] forced to hire an =
attorney to=20
defend . . . that lawsuit[,] and may have to pay excess =
fees=20
. . . . [Emphasis added.] Haden also provided his =
affidavit in=20
support of his and the company's response. In the affidavit, Haden =
elaborated on the two contentions stated above by asserting that =
the law=20
firm's success in the appeal was irrelevant to their counterclaims =
for=20
DTPA violations, breach of contract, breach of fiduciary duty, and =
fraud=20
because Haden and the company had not agreed to the contract that =
the law=20
firm actually executed, also had to expend funds as attorney's =
fees to=20
defend the law firm's breach-of-contract claims, and might yet =
incur=20
additional fees. In attempting to avoid the =
no-evidence=20
summary judgment sought by the law firm on its claim that they =
could not=20
substantiate the damages required to prevail on any and all of =
their=20
counterclaims, therefore, Haden and the company relied on the =
following=20
premises as substantive evidence that they sustained the necessary =
element=20
of damages for each of their counterclaims : (1) their previously =
asserted=20
defenses to the law firm's suit for breach of the fee-agreement =
contract=20
and (2) the attorney's fees and expenses they had to spend to =
defend this=20
lawsuit or would have to pay if the law firm prevailed. =
A. Previously Asserted =
Defenses=20
to Contract Claim Concerning the first premise, =
reliance on=20
previously asserted legal defenses to the law firm's claims for =
breach of=20
contract did not, as a matter of law, constitute competent summary =
judgment evidence that Haden and the company sustained damages =
related to=20
their counterclaims. See LAB, Ltd. v. Moreno, 201 S.W.3d =
686, 689=20
(Tex. 2006) (applying settled law that legal conclusions, stated =
without=20
supporting facts in affidavit responding to no-evidence motion for =
summary=20
judgment, did not constitute competent summary judgment evidence). =
Accordingly, the legal contentions that reasserted defenses to the =
law=20
firm's contract action, by which Haden and the company responded =
to the=20
law firm's no-evidence motion, did not constitute competent,=20
summary-judgment evidence and thus failed to raise any fact issues =
to=20
substantiate the necessary damages element of any of Haden's and =
the=20
company's counterclaims. B. Attorney's Fees as =
Actual=20
Damages We next address Haden's and the =
company's=20
second premise, in which they attempted to substantiate the =
damages=20
required for them to prevail on their counterclaims, by relying on =
the=20
fees and expenses they had incurred to defend the law firm's =
claims for=20
breach of contract in this action and risked incurring in the =
event the=20
law firm prevailed. Through these assertions, Haden and the =
company=20
attempted to substantiate the "actual damages" elements of their=20
counterclaims by stating that they incurred or could incur =
attorney's fees=20
and expenses. The law firm contends that these factual allegations =
did not=20
constitute competent summary judgment evidence that Haden and the =
company=20
incurred or would incur recoverable damages from any of the =
counterclaims=20
that they asserted. Attorney's fees are ordinarily =
not=20
recoverable, therefore, as actual damages in and of =
themselves.=20
See Tana Oil & Gas Corp. v. McCall, 104 S.W.3d 80, =
81-82=20
(Tex. 2003) (holding that attorneys, who sought to recover damages =
based=20
solely on value of time and costs incurred in defending =
claims,=20
had affirmatively precluded themselves of any recovery); Qwest =
Communications Int'l, Inc. v. AT&T Corp., 114 S.W.3d 15, =
32-33=20
(Tex. App.--Austin 2003), rev'd in part on other grounds, =
167=20
S.W.3d 324 (Tex. 2005). The settled=20
prohibition against independent recovery of attorney's fees =
as=20
damages notwithstanding, Haden's and the company's response to the =
law=20
firm's no-evidence motion relied solely on the attorney's fees and =
expenses they had sustained in defending this lawsuit and could =
sustain if=20
the law firm prevailed. Having thus relied on assertions of =
nonrecoverable=20
damages in attempting to substantiate their claim that they =
sustained the=20
damages required for them to prevail on their counterclaims, Haden =
and the=20
company presented a legal barrier to any recovery. See Tana =
Oil &=20
Gas Corp., 104 S.W.3d at 81-83 (holding that "only damages . =
. .=20
claimed," for value of time spent and costs incurred, precluded =
recovery=20
even if all other elements of claim proven). Because the=20
settled prohibition against recovery of attorney's fees =
as actual=20
damages barred the trial court from accepting the only evidence =
that Haden=20
and the company offered to defeat the law firm's no-evidence =
motion for=20
summary judgment for lack of evidence of damages, the trial court =
would=20
have ruled properly by rendering no-evidence summary judgment in =
favor of=20
the law firm. See King Ranch, 118 S.W.3d at 751 (listing =
among=20
circumstances for properly rendering summary judgment, those =
instances in=20
which rules of law preclude giving effect to "the only evidence =
offered to=20
prove a vital fact"). For these=20
reasons, we hold that the trial court properly rendered =
no-evidence=20
summary judgment in favor of the law firm on Haden's and the =
company's=20
counterclaims. We overrule=20
issue three.
In this=20
cause, Haden and the company challenge attorney's fees awarded to =
the law=20
firm incident to its obtaining turnover relief, pursuant to =
section=20
31.002(e) of the Civil Practice and Remedies Code. Tex. Civ. Prac. =
&=20
Rem. Code Ann. =A7 31.002(e). The law firm sought relief pursuant =
to section=20
31.002 to enforce the judgment rendered by the trial court on the =
law's=20
firm's motion for summary judgment. See Tex. Civ. Prac. =
&=20
Rem. Code Ann. =A7 31.002. Having reversed the underlying judgment =
in Cause=20
No. 01-01-00200-CV, we also reverse the subsequent judgment =
challenged in=20
this cause, which awarded the law firm attorney's fees for =
enforcing the=20
underlying judgment, pursuant to section 31.002.
In Cause=20
No. 01-01-00200-CV, except as to the take-nothing summary judgment =
rendered on Haden's and the company's counterclaims, which we =
affirm, we=20
reverse the judgment of the trial court and remand the cause for =
trial of=20
the law firm's breach-of-contract claims. We also reverse the =
judgment in=20
Cause No. 01-03-00025-CV.
Sherry=20
Radack Chief=20
Justice Panel=20
consists of Chief Justice Radack and Justices Keyes and=20
Alcala. Justice=20
Alcala, concurring and dissenting.=20
1. We refer to appellants jointly as "the =
company."=20
2. Because we have granted rehearing and =
issue this=20
opinion, the motions for en banc reconsideration in Cause Nos.=20
01-01-00200-CV and 01-03-00025-CV are rendered moot. =
Brookshire=20
Brothers, Inc. v. Smith, 176 S.W.3d 30, 41 n.2 (Tex. =
App.--Houston=20
[1st Dist.] 2004, no pet.) (supp. op. on rehearing). 3. Tex. Bus. & Com. Code Ann. =A7 =
17.41-.854 (Vernon=20
2002 & Supp. 2005).=20
4. Haden and the company then sought to =
recuse the=20
trial court, but did not succeed. This ruling has not been =
challenged on=20
appeal.=20
5. Tex. R. Civ. P. 185 (authorizing evidence =
of open=20
account for "personal services rendered" (among other claims) to =
serve as=20
"prima facie evidence of amount due, if supported by proper =
affidavit=20
stating that claim is "just and true," due, and that "all just and =
lawful=20
offsets, payments, and credits have been allowed.")=20
6. We emphasize, in this regard, that the =
law firm=20
abandoned its initial, sworn-account theory of recovery.=20
7. The law firm relied on the ratification =
theory in=20
its reply to Haden's and the company's response to the law firm's =
motion=20
for summary judgment, to rebut their flat, or maximum fee theory.=20
8. We address this issue in accordance with=20
9. The law firm's=20
motion also included a traditional motion for summary judgment on =
Haden=20
and the company's counterclaims. See Tex. R. Civ. P.=20
166a(c). 10. See=20
Tex. Bus. & Com. Code Ann. =A7 17.50(a) (Vernon Supp. =
2006-2007)=20
(requiring that defendant's act constitute producing cause of =
economic=20
or mental anguish damages); Latham v. Castillo, 972 =
S.W.2d=20
66, 69 (Tex. 1998) (stating elements of claim for unconscionable =
conduct=20
recovery under DTPA, including damages pursuant to =
section=20
17.50(a)(3); Wright v. Christian & Smith, 950 S.W.2d =
411, 412=20
(Tex. App.--Houston [1st Dist.] 1997, no writ) (stating elements =
of=20
breach-of-contract claim, including damages arising from =
breach);=20
De Santis v. Wackenhut Corp., 793 S.W.2d 670, 688 (Tex. =
1990)=20
(stating elements of fraud claim, including injury to =
party=20
claiming fraud); Abetter Trucking Co. v. Arizpe, 113 =
S.W.3d 503,=20
508 (Tex. App.--Houston [1st Dist.] 2003, no pet.) (stating =
elements of=20
breach of fiduciary claim, including damages).=20
11. An exception arises when the =
complaining party=20
seeks forfeiture of fees paid to counsel who breaches a fiduciary =
duty. In=20
that instance, the complaining party need not produce evidence of =
actual=20
damages. See Burrow v. Arce, 997 S.W.2d 229, 240 (Tex. =
1999).=20
This exception does not apply under the facts of this case.=20
12. Under a narrow, "equitable" exception =
to the rule=20
barring independent recovery of attorney's fees as damages, a =
party who=20
must sue a third party because of a defendant's tort may recover=20
attorney's fees as a recoverable element of damages. See Qwest =
Communications Int'l, Inc. v. AT&T Corp., 114 S.W.3d 15, =
33 (Tex.=20
App.--Austin 2003), rev'd in part on other grounds, 167 =
S.W.3d=20
324 (Tex. 2005).