Opinion issued June 28, 2012

In The

Court of Appeals 

For The 

First District of Texas 

————————————

NO. 01-11-00227-CV

———————————

JAMES R. CLEVELAND; PAUL R. CLEVELAND; KELLIE L. DORMAN; 

NICOS ENERGY, LLC; OASIS PETROLEUM, LLC; AND LONE STAR 

LAND & EXPLORATION, LLC, Appellants

V.

ROBERT G. TAYLOR II; JOSEPH F. ARCHER; CLAIBORNE BRUCE; 

ALLAM ALSHAYEB; RUSS HIMEL; RAYMOND CHACHERE; DENNIS 

MCLAUGHLIN; DALE GORMAN; LOUAY JOUBARANI; SEMAN 

MATTA; AND CARLO CANGELOSI, Appellees

On Appeal from the 400th District Court

Fort Bend County, Texas

Trial Court Case No. 09-CV-175448
2

O P I N I O N

Appellees, Robert G. Taylor II, Joseph F. Archer, Claiborne Bruce, Allam 

Alshayeb, Russ Himel, Raymond Chachere, Dennis McLaughlin, Dale Gorman,

Louay Joubarani, Seman Matta, and Carlo Congelosi (collectively, “the 

Investors”), sued appellants, James R. Cleveland, Paul R. Cleveland, Kellie L. 

Dorman, Nicos Energy, LLC, Oasis Petroleum, LLC, and Lone Star Land & 

Exploration, LLC (collectively, “the Cleveland parties”) for fraud, breach of 

contract, and other causes of action arising out of investments related to an oil and 

gas prospect. The trial court eventually entered summary judgment in favor of the 

Investors on all of their claims. In five issues, the Cleveland parties argue that the 

trial court erred (1) in denying their motion to compel arbitration; (2) in refusing to 

allow them to withdraw their deemed admissions; (3) in granting summary 

judgment in favor of the Investors; (4) in granting summary judgment awarding the 

Investors attorney’s fees of $500,000; and (5) in entering “the death-penalty 

sanction” against Kellie Dorman.

We modify and affirm as modified.
3

Background

The Investors invested various sums of money in an oil and gas venture

described by the parties as the Schleicher County well.1 The investments were 

primarily solicited by James “Rusty” Cleveland, who controlled the companies 

Oasis Petroleum, LLC, and Lone Star Land & Exploration, LLC. Paul Cleveland, 

James’s son, was also involved in the venture at issue at various points, both 

individually and through his operating company, Copperhead Operating, LLC.2 

Many of the investments were received by Nicos Energy, LLC, which was owned 

by James Cleveland’s wife, Kellie Dorman. 

The Investors subsequently discovered that James Cleveland had previously 

pled guilty to securities fraud and had served a prison sentence for that crime. 

They also discovered that, as a condition of his supervised release, James 

Cleveland was not supposed to act in a fiduciary capacity at any financial 

institution. They never received any of the promised returns on their investments 

regarding the oil and gas venture, and this lawsuit was filed.3

 

1

The record also contains some references to another prospect referred to as the 

“Fort Bend” or “Pleak” interest. However, the record does not provide a clear 

description of this interest.

2 Copperhead Operating, LLC, is not a party to this case.

3

The parties were also involved in other litigation. According to arguments 

presented to the trial court, the Investors in this case had previously intervened in a 

lawsuit that James Cleveland and Lone Star Land & Exploration had filed against 

the entity with which they had contracted to drill and operate the Schleicher 
4

Two investors, Archer and Taylor, filed their original petition on October 5, 

2009, alleging causes of action for common law fraud and fraudulent inducement, 

breach of contract, conspiracy to defraud, unjust enrichment, and violations of the 

Texas Theft Liability Act.4 Archer and Taylor also demanded an accounting 

regarding the money they had invested and alleged that “Nicos Energy, LLC, Oasis 

Petroleum, LLC and Lone Star Land & Exploration, LLC are the alter egos of the 

individual Defendants.” The remaining investors were subsequently added in 

amended petitions.5 The Cleveland parties filed a general denial on April 9, 2010.

The Investors alleged that James and Paul Cleveland made various 

representations regarding the Schleicher County well’s productivity and potential 

returns on investments with the purpose of inducing them to invest money. The 

Investors wrote checks or wired money to various Cleveland entities, including 

Oasis Petroleum and Nicos Energy, based on the Cleveland parties’ representations 

that they would assign interests in the prospect to the Investors in return. 

 

County well, claiming that they had an interest in any recovery Cleveland and 

Lone Star might receive from the driller. Also, another entity that allegedly 

invested in the Schleicher County well sued James Cleveland, Paul Cleveland, and 

Lone Star Land & Exploration, among others, alleging causes of action for 

negligence, breach of contract, conversion, fraud, and negligent misrepresentation 

related to the Schleicher County well. The record does not reveal the outcomes of 

these suits.

4

See TEX. CIV. PRAC. & REM. CODE ANN. §§ 134.001–.005 (Vernon 2011).

5

The Investors also filed various causes of action related to violations of federal 

and state securities acts, but these claims are not raised on appeal.
5

However, the Investors were never given written documentation of their interests 

in the well. The Investors alleged that the Cleveland parties’ representations about 

the nature of the oil and gas prospect and the additional wells and production that 

they intended to procure were all false.

The Investors propounded multiple requests for production and 

interrogatories, and the Cleveland parties failed to respond. On August 4, 2010, 

the Investors moved for the first time to compel the Cleveland parties to comply 

with the Investors’ discovery requests. On August 16, 2010, the parties entered an 

agreed order, signed by the trial court, granting the Investors’ motion to compel.

On September 22, 2010, the Investors moved again for sanctions, 

complaining of multiple instances in which the Cleveland parties “have refused to 

participate in discovery.” The motion for sanctions alleged that the Cleveland 

parties had not complied with the agreed order of August 16, 2010. The Investors 

also alleged that “Kellie Dorman refused to attend her properly noticed 

deposition”

6

and that “James R. Cleveland appeared at his deposition for 

approximately 17 minutes, where he refused to answer even basic questions 

regarding his prior employment, and then walked out of the deposition on the

advice of counsel when asked about his parole terms for his theft and securities 

violations conviction.”

 

6

The Investors filed a notice of nonappearance related to Dorman’s first failure to 

appear for her deposition.
6

On October 4, 2010, attorneys for both sides attended a hearing on the 

Investors’ motion for sanctions. The trial court stated that the Investors’ motion 

for sanctions “appear[ed] to be the death penalty” and that he would attempt to use 

less-harsh remedies to procure compliance before he struck the Cleveland parties’

pleadings and entered a default judgment. The trial court signed an order, dated 

November 29, 2010, and subsequently amended on December 6, 2010, granting 

sanctions and compelling discovery. The trial court ordered full and complete 

compliance with the Investors’ previous discovery requests and provided specific 

dates and times for each Cleveland party to appear to be deposed at the offices of 

the Investors’ counsel, Lytle & Moore, LLP, in Richmond, Texas.

On December 6, 2010, the Cleveland parties filed their first amended 

answer, special exceptions, and breach of contract counterclaim for unpaid 

operating costs under a “valid participation agreement.” In response, the Investors 

filed several special exceptions and asserted numerous affirmative defenses.

On December 13, 2010, the Cleveland parties filed their motion to compel 

arbitration. The motion states, “In a written Participation Agreement[, the 

Investors] agreed to arbitrate this case in the following terms: A copy of the 

agreement is attached hereto and is labeled as Exhibit A.” It also quotes a portion 

of the “Participation Agreement” addressing arbitration. However, the 
7

“Participation Agreement” itself is not attached to the motion provided with the 

clerk’s record.

On December 14, 2010, Kellie Dorman again failed to appear for her 

deposition. The Investors filed a second certificate of nonappearance.

On December 20, 2010, the Investors answered the Cleveland parties’ 

counterclaim and filed special exceptions. The Investors also moved for summary 

judgment, seeking traditional summary judgment on their own claims and noevidence summary judgment on the Cleveland parties’ counterclaim. 

On December 30, 2010, the Investors moved again for orders of contempt 

and sanctions against the Cleveland parties, arguing that Kellie Dorman and Nicos 

Energy failed to appear for their depositions and that all Cleveland parties had 

failed to comply with the court’s prior order. The Investors asked that, in addition 

to ordering further sanctions and holding the Cleveland parties in contempt, the 

trial court render a default judgment against all Cleveland parties.

On January 10, 2011, the date the Investors noticed for the hearing on their

motion for contempt and sanctions, the Cleveland parties moved for a continuance 

on the grounds that their attorney had a scheduling conflict and that they had

moved to compel arbitration and were “awaiting the Order setting this Motion for a 

hearing.” The trial court proceeded with the hearing, granted the Investors’ 

motion, and ordered that Kellie Dorman’s pleadings be struck. The Investors also 
8

argued their December 20, 2010 motion for summary judgment on all of their 

claims against the Cleveland parties; the trial court denied the motion.7

On January 25, 2011, the Investors filed a motion for default judgment 

against Kellie Dorman in compliance with the trial court’s order striking her

pleadings.

On January 27, 2011, the Investors filed a “Notice of Filing [of] Defendant’s 

Admissions,” contending that they had served the Cleveland parties with requests 

for admission on December 21, 2010, and that the Cleveland parties had failed to 

respond. The Investors attached a copy of their requests for admission to the 

notice and certified that the notice had been served on Gregg Clements, the 

attorney for the Cleveland parties.

On January 31, 2011, the Investors filed their response to the Cleveland 

parties’ motion to compel arbitration. The Investors argued multiple bases for 

denying the motion, including: (1) the Cleveland parties failed to establish that an 

agreement of the parties to arbitrate existed or that the dispute fell within the scope 

of an arbitration agreement between the parties; (2) the arbitration clause cited in 

the motion to compel arbitration was unconscionable because it permitted the 

Cleveland parties to choose all three members of the arbitration panel; and (3) the 

Cleveland parties waived their right to compel arbitration “by waiting over a year 

 

7

There is no written ruling on this motion in the record. The trial court stated on 

the record in a subsequent hearing that it was denied.
9

since this suit was filed, and less than sixty days before the commencement of 

trial” to bring their motion to compel. Among other arguments, the Investors 

complained that the Cleveland parties attached only “an unverified and 

unauthenticated document to their Motion” and that the agreement that was 

attached was an agreement between Oasis Petroleum, LLC and “an unknown third 

party, Diane Ganzer.” The “Participation Agreement” exhibit attached to the 

Investors’ response, dated November 2, 2007, provided that it “was made and 

entered into . . . by and between Oasis Petroleum, LLC . . . and Diane C. 

Genzer. . . .” It was signed by Kellie Dorman on behalf of Oasis Petroleum and by 

Diane Genzer on her own behalf.

Also on January 31, following a hearing, the trial court rendered default 

judgment against Kellie Dorman on all of the Investors’ claims and on Dorman’s

counterclaim for unpaid expenses. The trial court further ordered that “the 

damages of [the Investors’] Second Amended Petition are unliquidated and will be 

established at an evidentiary hearing to take place on February 4, 2011.” The trial 

court denied the Investors’ motion for contempt and sanctions against the 

remaining Cleveland parties. Finally, the trial court granted the Investors’ special 

exceptions contending that the Cleveland parties’ counterclaim was too general to 

give fair notice of the facts or to plead adequate allegations, among other grounds. 
10

The trial court ordered the Cleveland parties to amend the defects in their pleadings 

by 5:00 p.m. on February 7, 2011.

The Investors again moved, on January 31, 2011, for summary judgment or, 

alternatively, for sanctions requesting default judgment against the Cleveland 

parties. The Investors argued, in part, that they were entitled to summary judgment 

against the Cleveland parties based on their failure to respond to the requests for 

admissions propounded on December 21, 2010. In addition to the deemed 

admissions, the Investors also filed numerous other documents demonstrating the 

Cleveland parties’ failure to comply with various discovery requests. The record 

contains no ruling on this motion. 

On February 8, 2011, the Investors filed multiple documents in preparation

for the February 15, 2011 trial setting, including their exhibit list, which listed the 

Cleveland parties’ deemed admissions as an exhibit.

On February 9, 2011, the Cleveland parties filed an unsigned, amended 

counterclaim asserting that the Investors were liable for breach of contract for 

failure to pay expenses incurred under the contracts at issue. The Investors moved 

to dismiss the Cleveland parties’ counterclaim and sought sanctions against the 

Cleveland parties for filing a frivolous claim.

On February 15, 2011, the parties appeared in court and were called for trial. 

The Cleveland parties announced they were not ready for trial, and the trial court 
11

addressed various other pending motions, including a motion for default judgment 

against Nicos Energy, the Cleveland parties’ attempt to file the breach of contract

counterclaim, and the Cleveland parties’ motion to compel arbitration.

Regarding the motion to compel arbitration, the Cleveland parties’ attorney 

stated at the hearing that he believed all of the Investors had signed identical 

Participation Agreements and that the originals had been destroyed. The Investors’ 

attorney conceded that some of the Investors signed “a similar agreement” to the 

“Participation Agreement” provided by the Cleveland parties, but “not all of them 

did.” The Cleveland parties presented no evidence that any Investors had signed 

agreements, nor did they present any evidence of what the terms of the alleged

agreements were. Nevertheless, the Investors also argued that the arbitration 

provision in the Participation Agreement between Oasis Petroleum and Diane 

Ganzer was unconscionable on its face because it allowed Copperhead Operating, 

LLC, a company for which Paul Cleveland was the sole managing member,8to 

name all three arbitrators. The trial court stated, “Well, I just can’t believe that an 

arbitration before three arbitrators that are appointed by one side would be a fair 

 

8

The Cleveland parties’ attorney stated at the hearing that the provision involving 

Copperhead Operating, and Paul Cleveland in the Participation Agreement 

between Oasis and Ganzer was not relevant to the claims of the Investors. He 

stated, “And it’s our contention that every one of them signed a participation 

agreement ordering . . . that they shall go to arbitration on a three-arbitrator panel. 

Then the name on there is not applicable to this case, which you can deduce 

Copperhead would not be on this. It’s the agreement itself without the name that 

we’re saying these [Investors] signed. . . .”
12

arbitration, and, therefore, I’m going to deny [the Cleveland parties’] motion to 

compel arbitration.” The trial court’s signed order denying the motion to compel, 

however, did not provide a basis for the ruling.

The Investors also renewed their previous objections to the Cleveland 

parties’ amended counterclaim for contractual unpaid operating costs, arguing that 

it did not cure the defects cited in their special exceptions to the Cleveland parties’ 

original counterclaim, that the attached “Participation Agreement” was signed by a 

non-party to the present suit rather than by one of the Investors, and that the 

attached agreement did not support a claim for unpaid operation costs, even if it 

could be enforced against the Investors. The parties also discussed the existence of 

the Cleveland parties’ deemed admissions: the Investors’ attorney stated on the 

record, “We sent requests for admissions that were never responded to.”

Finally, the attorney for the Cleveland parties stated that he had “been fired 

by both of my clients that are here”—James Cleveland and the two corporations he 

represented, Oasis Petroleum and Lone Star Land & Exploration, and Paul 

Cleveland—and asked the trial court to allow them time to secure new counsel 

before proceeding to trial. James Cleveland and Paul Cleveland were both sworn 

as witnesses and testified that they were in the process of securing new counsel. 

James also testified that he decided to fire Clements when he realized that 

Clements had not filed a “motion to compel” or a motion to continue the hearing 
13

on the default judgment and that he had started seeking new counsel when he 

“found out that [Clements] has not been . . . truthful with me about what’s going on 

in this case.” He acknowledged, however, that he had not yet entered into a 

representation agreement or paid fees to another attorney. James also testified that 

he did not believe he had been adequately represented and that he wanted Clements 

to file a motion to continue the February 15 trial date so that James could secure 

new counsel. Paul Cleveland testified that he believed he had a conflict of interest 

with the other Cleveland parties and that he intended to secure his own counsel 

separate from that of the remaining parties. He testified that he was not 

comfortable with Clements representing him at the same time as he represented the 

other Cleveland parties. Paul further testified that he had retained a new attorney, 

Charles Watson, that morning. 

The trial court stated that it would defer ruling on Clements’ motion to 

withdraw until the Cleveland parties could obtain other counsel, and he 

admonished Clements, in the presence of James and Paul Cleveland, that if they 

failed to procure new counsel “within a reasonable time,” they would be required 

to go forward to trial with Clements as their attorney. The trial court granted a 

continuance on the trial setting to May 17, 2011. However, Clements never filed a 

written motion to withdraw as counsel and Watson never made an appearance as 

an attorney of record.
14

On April 4, 2011, the Investors moved a third time for traditional and noevidence summary judgment against the Cleveland parties. The Investors argued 

that there was no genuine issue of material fact on their claims for common law 

fraud and fraudulent inducement, breach of contract, conspiracy, unjust 

enrichment, Texas Theft Liability Act violations, an accounting, and alter ego, and 

therefore, they were entitled to summary judgment. The Investors further argued 

that the Cleveland parties had made “deemed admissions which are the basis for 

summary judgment.” In addition to filing the Cleveland parties’ deemed 

admissions, the Investors filed more than twenty additional exhibits in support of 

their motion for summary judgment, including multiple affidavits, deposition 

excerpts, letters produced during discovery, certified copies of proceedings in other 

courts, and records from the Secretary of State regarding the corporate parties.

On April 12, 2011, the Cleveland parties, through their attorney Clements,

moved to abate the trial court proceedings pending their appeal of the trial court’s 

denial of their motion to compel arbitration.

9

 

On April 26, 2011, the trial court rendered summary judgment against all the 

Cleveland parties, including Dorman and Nicos Energy. It ordered that the 

Cleveland parties, jointly and severally, pay the following amounts to the 

Investors: Alshayeb, $7,500; Archer, $100,000; Bruce, $30,000; Chachere, 

 

9

The record does not contain an explicit ruling on the motion to abate.
15

$30,275; Cangelosi, $185,000; Gorman, $55,000; Himel, $150,000; Joubarani and 

Matta, $472,000; McLaughlin, $227,039.98; and Taylor, $199,392, for a total of

$1,456,206.98. The trial court also awarded $500,000 as attorney’s fees, and it 

awarded “taxable costs” without specifying a dollar amount.

On May 23, 2011, new counsel filed an appearance on behalf of the 

Cleveland parties. On May 24, 2011, the Cleveland parties moved to withdraw the 

deemed admissions, moved for a new trial, and moved to set aside the deathpenalty sanction against Dorman. This motion was accompanied by the affidavits 

of James Cleveland, Paul Cleveland, Kellie Dorman, and Gregg Clements, among 

other documents. In their affidavits, James Cleveland, Paul Cleveland, and Kellie 

Dorman all averred that they were not aware of the requests for admissions and 

would have answered them had they been aware and that they first learned of the 

requests for admissions after the trial court rendered summary judgment. Clements 

averred that his office received the requests for admissions but he did not see or 

answer them. He stated that it “appears to be true” that no one from his office 

informed the Cleveland parties about the requests for admissions due to some 

turnover in his office staff. Finally, he stated that he did not intentionally fail to 

answer the requests for admission, but that his failure was due to “oversight and 

mistake on my part, as well as the disorganized situation in my office at that time.”
16

On July 11, 2011, following a July 7, 2011 hearing, the trial court denied the 

Cleveland parties’ motion to withdraw the deemed admissions, motion for new 

trial, and motion to set aside Dorman’s death-penalty sanction.

Motion to Compel Arbitration

In their first issue, the Cleveland parties argue that the trial court erred in 

denying their motion to compel arbitration.

A party attempting to compel arbitration must first establish that the dispute 

in question falls within the scope of a valid arbitration provision. J.M. Davidson, 

Inc. v. Webster, 128 S.W.3d 223, 227 (Tex. 2003). The presumption in favor of 

arbitration arises only after the party seeking to compel arbitration proves that a 

valid agreement exists. Id. 

Here, the Cleveland parties have failed to prove that any of the Investors 

entered a valid agreement to arbitrate. The Cleveland parties referenced only the 

Participation Agreement between Oasis Petroleum and Diane Ganzer, an 

individual who is not a party to this suit. The Cleveland parties presented no 

evidence that the terms of that Participation Agreement apply in the instant case. 

They presented only their motion to compel and the argument of their counsel that 

all of the Investors signed similar agreements and that at least one of the terms of 

the Participation Agreement—the clause designating the party who would choose 

the panel of arbitrators—did not apply in the present case. Neither an attorney’s 
17

arguments nor the pleadings or motions of a party constitute evidence. See, e.g., 

Love v. Moreland, 280 S.W.3d 334, 336 n.3 (Tex. App.—Amarillo 2008, no pet.); 

Potter v. GMP, L.L.C., 141 S.W.3d 698, 704 (Tex. App.—San Antonio 2004, pet. 

dism’d); see also Laidlaw Waste Sys. (Dallas), Inc. v. City of Wilmer, 904 S.W.2d 

656, 660 (Tex. 1995) (stating that pleadings, even if sworn and verified, are not 

generally competent evidence to prove facts alleged in them); McCain v. NME 

Hosps., Inc., 856 S.W.2d 751, 757 (Tex. App.—Dallas 1993, no writ) (“Motions 

and arguments of counsel are not evidence.”). Thus, the Cleveland parties failed to 

meet their burden of proving the existence of a valid agreement to arbitrate 

between the parties, and the trial court did not abuse its discretion in denying the 

motion to compel arbitration. See Webster, 128 S.W.3d at 227.

The Cleveland parties argue that the trial court based its ruling on the 

Investors’ argument that the arbitration agreement was unconscionable and that the 

ruling should be overturned on that ground. However, the written and signed order 

of the trial court denied the motion to compel without providing a basis for the 

ruling. “[A] judgment or order that is rendered in writing and signed by the trial 

judge becomes the official judgment of the court,” and recitals in a signed order 

“control over conflicting recitals in either the reporter’s or clerk’s record.” Lopez 

v. Brown, 356 S.W.3d 599, 603 n.4 (Tex. App.—Houston [14th Dist.] 2011, no 

pet.). We may uphold an order denying arbitration if it is proper on any basis 
18

considered by the trial court. See Bates v. MTH Homes-Texas, L.P., 177 S.W.3d 

419, 422 (Tex. App.—Houston [1st Dist.] 2005, no pet.); In re H.E. Butt Grocery 

Co., 17 S.W.3d 360, 367 (Tex. App.—Houston [14th Dist.] 2000, orig. 

proceeding). Because we have concluded that the order denying arbitration was 

proper on the basis that the Cleveland parties failed to establish the existence of a 

valid agreement to arbitrate between the parties, we need not address the remaining 

grounds presented to the trial court.

We overrule the Cleveland parties’ first issue.

Withdrawal of Deemed Admissions

In their second issue, the Cleveland parties argue that the trial court erred in 

refusing to allow them to withdraw their deemed admissions.

Once an action is filed, a party may serve written requests for admissions 

that can encompass “any matter within the scope of discovery, including 

statements of opinion or of fact or of the applications of law to fact. . . .” TEX. R.

CIV. P. 198.1; Marino v. King, 355 S.W.3d 629, 632 (Tex. 2011) (per curiam). If 

the opposing party does not serve its responses to the admissions requests within 

thirty days, the matters in the requests are deemed admitted against the party 

without the necessity of a court order. TEX. R. CIV. P. 198.2(C); Marino, 355 

S.W.3d at 633. Any matter admitted or deemed admitted is conclusively 

established unless the court, on motion, permits withdrawal or amendment of the 
19

admission. TEX. R. CIV. P. 198.3; Boulet v. State, 189 S.W.3d 833, 836 (Tex. 

App.—Houston [1st Dist.] 2006, no pet.) (citing Marshall v. Vise, 767 S.W.2d 699, 

700 (Tex. 1989)).

We review a trial court’s ruling on a motion to withdraw deemed admissions 

for an abuse of discretion. See Wheeler v. Green, 157 S.W.3d 439, 443 (Tex. 

2005) (per curiam) (“We recognize that trial courts have broad discretion to permit 

or deny withdrawal of deemed admissions, but they cannot do so arbitrarily, 

unreasonably, or without reference to guiding rules or principles.”). Withdrawal of 

deemed admissions is permitted upon a showing of good cause and a finding by 

the trial court that (1) the party relying upon the deemed admissions will not be 

unduly prejudiced, and (2) presentation of the merits of the action will be served. 

TEX. R. CIV. P. 198.3; Marino, 355 S.W.3d at 633. The party seeking withdrawal 

of the deemed admissions has the burden to establish good cause. Boulet, 189 

S.W.3d at 836. 

The Texas Supreme Court has held that, under special circumstances, a party 

may bring a request to withdraw deemed admissions for the first time in a motion 

for new trial. See Wheeler, 157 S.W.3d at 442; see also Marino, 355 S.W.3d at 

632–33 (holding that trial court erred in denying pro se appellant opportunity to 

withdraw deemed admissions, in spite of fact that she never formally made such 

request before trial court, because her “argument and pending motions” filed prior 
20

to rendition of summary judgment provided evidence of good cause and lack of 

prejudice). However, the supreme court has also held “the equitable principles 

allowing these arguments to be raised in a motion for new trial do not apply if a 

party realizes its mistake before judgment and has other avenues of relief 

available.” Wheeler, 157 S.W.3d at 442 (citing Carpenter v. Cimarron 

Hydrocarbons Corp., 98 S.W.3d 682, 686 (Tex. 2002)); see also Unifund CCR 

Partners v. Weaver, 262 S.W.3d 796, 798 (Tex. 2008) (holding that summary 

judgment motion put appellant on notice of deficiency of his response to requests 

for admissions, and, thus, appellant knew of his mistake before judgment but failed 

to respond, thereby waiving his right to challenge deemed admissions).

The Cleveland parties argue that they are entitled to “a more lenient 

standard” because: (1) the trial court’s summary judgment “was based on meritspreclusive deemed admissions”; (2) the Investors’ “requests for admissions were 

aimed at seeking admissions that [the Cleveland parties] did not have a case, as 

opposed to gathering information” and the requests asked the Cleveland parties to 

“admit the elements of [the Investors’] claims against them”; and (3) “there was no 

evidence of flagrant bad faith or callous disregard for the rules and the [Investors] 

could prepare for trial without the admissions.” Specifically, they argue that their 

motion for new trial affidavits and the affidavit of Gregg Clements establish that 

they acted in good faith, that they were unaware of the requests for admission due 
21

to Clements’ poor representation, and that they would have responded had they 

known of the existence of the requests for admission.

The Investors served the Cleveland parties, through their attorney Gregg 

Clements, with requests for admissions on December 21, 2010, and the Cleveland 

parties failed to respond. Prior to the trial court’s rendition of judgment, the 

Investors (1) filed a notice of the Cleveland parties’ deemed admissions on January 

27, 2011; (2) filed two motions for summary judgment—one on January 31, 2011,

and one on April 4, 2011—based, in part, on the Cleveland parties’ deemed 

admissions; (3) filed a trial exhibit list including the deemed admissions as an 

exhibit; and (4) stated on the record at the time of the original trial setting, 

February 15, 2011, in the presence of both James and Paul Cleveland and their 

attorney, the fact that the Investors “sent requests for admissions that were never 

responded to” by any of the Cleveland parties, in addition to pointing out several 

other discovery and pleading abuses. The notice of deemed admissions, two

motions for summary judgment, trial exhibit list, and discussion on the record in 

the presence of two of the Cleveland parties and their attorney demonstrate that the 

Cleveland parties had notice of their mistake before the trial court rendered 

judgment and that they had other avenues of relief available, but that they failed to 

take action until after the trial court’s judgment. Thus, we conclude that the 
22

Cleveland parties waived their right to challenge the deemed admissions. See 

Weaver, 262 S.W.3d at 798; Wheeler, 157 S.W.3d at 442.

The Cleveland parties cite Wheeler and Marino to support their arguments 

on this issue. In Wheeler, although the pro se litigant, Wheeler, filed her responses 

to the requests for admissions two days after they were due because of a 

miscalculation involving the mailbox rule, they were filed six months before the 

motion for summary judgment based exclusively on the deemed admissions was 

heard. 157 S.W.3d at 441. The supreme court held that Wheeler did not waive her 

complaint regarding withdrawal of the deemed admissions by presenting it for the 

first time in her motion for new trial because “nothing in this record suggests that 

before summary judgment was granted, [Wheeler] realized that her responses were 

late, that she needed to move to withdraw deemed admissions, or that she needed 

to file a response to the summary judgment raising either argument.” Id. at 442. 

The court observed that Wheeler’s procedural failures were based on her 

mistaken understanding of when “service” occurred and of what a summary 

judgment “hearing” was and concluded, “On this record, the lower courts could 

have concluded that [Wheeler] was wrong on her dates and wrong on how to 

correct them, but not that either was the result of intent or conscious indifference.” 

Id. The court noted, however, that “[b]y contrast, if the same elementary mistakes 
23

had been made by a lawyer, such a conclusion might well be warranted.” Id. at 

442 n.1. 

The supreme court reached a similar conclusion in Marino, where the pro se 

litigant’s responses to the requests for admission were one day late, where she had 

filed “argument and pending motions” raising grounds for continuing the summary 

judgment hearing and denying the motion for summary judgment, and where the 

record indicated that she had presented good cause to extend the discovery 

deadline before the trial court ruled on the summary judgment motion based 

exclusively on the deemed admissions. 355 S.W.3d at 630–33.

This case is distinguishable from both Wheeler and Marino. Here, the 

Cleveland parties were represented at all times by an attorney, unlike the pro se 

litigants in Wheeler and Marino. Furthermore, the Cleveland parties did not file 

responses to the requests for admissions until well after the trial court rendered 

summary judgment, rather than just a day or two after the original admissions 

deadline, as occurred in Wheeler and Marino. In fact, the Cleveland parties failed 

to respond to numerous discovery requests and orders compelling production, even 

after the February 15, 2011 trial setting, when their failure to respond to 

admissions and other discovery was discussed on the record in the presence of both 

James and Paul Cleveland and their attorney. Following this hearing, they failed, 

for the third time, to respond to the Investors’ motion for summary judgment.
24

Finally, the trial court’s summary judgment here was not, as the Cleveland 

parties argue, based exclusively upon the deemed admissions. The Texas Supreme 

Court has acknowledged that requests for admissions were “never intended to be 

used as a demand upon a plaintiff or defendant to admit that he had no cause of 

action or ground of defense.” Stelly v. Papania, 927 S.W.2d 620, 622 (Tex. 1996) 

(per curiam). The supreme court has held that “when admissions are deemed as a 

discovery sanction to preclude a presentation of the merits, they implicate the same 

due process concerns as other case-ending discovery sanctions.” Marino, 355 

S.W.3d at 632; Wheeler, 157 S.W.3d at 443. Thus, in Wheeler, the supreme court 

held that “absent flagrant bad faith or callous disregard for the rules, due process 

bars merits-preclusive sanctions.” Wheeler, 157 S.W.3d at 443; see also Marino, 

355 S.W.3d at 633 (stating that Wheeler “required a showing of ‘flagrant bad faith 

or callous disregard for the rules’ to substantiate a summary judgment based solely 

on deemed admissions.”).

Here, contrary to the Cleveland parties’ arguments, we need not determine 

whether the record demonstrates the existence of flagrant bad faith and callous 

disregard for the rules because the summary judgment was not based solely on the 

deemed admissions. See Marino, 355 S.W.3d at 633 (stating that Wheeler 

“required a showing of ‘flagrant bad faith or callous disregard for the rules’ to 

substantiate a summary judgment based solely on deemed admissions.”) (emphasis 
25

added). Instead, we analyze the propriety of the summary judgment and 

supporting evidence.

We overrule the Cleveland parties’ second issue.

Summary Judgment

In their third issue, the Cleveland parties argue that the trial court erred in 

rendering summary judgment against them. The Investors asserted multiple 

grounds for recovery, including claims for fraud and fraudulent inducement, 

breach of contract, conspiracy, unjust enrichment, alter ego, and violations of the 

Texas Theft Liability Act and other statutory violations, against all the Cleveland 

defendants, including Dorman and Nicos Energy. The trial court rendered 

summary judgment against all of the Cleveland parties, jointly and severally, for 

the amounts the Investors had invested with the Cleveland parties.

A. Standard of Review

We review de novo the trial court’s ruling on a summary judgment motion. 

Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 

(Tex. 2009). To prevail on a traditional summary judgment motion, the movants

must establish that no genuine issues of material fact exist and that they are entitled 

to judgment as a matter of law. TEX. R. CIV. P. 166a(c); Little v. Tex. Dep’t of 

Criminal Justice, 148 S.W.3d 374, 381 (Tex. 2004). Parties moving for summary 

judgment on their own claims must conclusively prove all essential elements of the 
26

claim. Rhone-Poulenc, Inc. v. Steel, 997 S.W.2d 217, 223 (Tex. 1999); see also 

TEX. R. CIV. P. 166a(a) (“A party seeking to recover upon a claim . . . may, at any 

time after the adverse party has appeared or answered, move with or without 

supporting affidavits for a summary judgment in his favor upon all or any part 

thereof.”). A matter is conclusively established if reasonable people could not 

differ as to the conclusion to be drawn from the evidence. See City of Keller v. 

Wilson, 168 S.W.3d 802, 816 (Tex. 2005). “[S]ummary judgments must stand or 

fall on their own merits, and the non-movant’s failure to answer or respond cannot 

supply by default the summary judgment proof necessary to establish the movant’s 

right.” McConnell v. Southside Indep. Sch. Dist., 858 S.W.2d 337, 343 (Tex. 

1993).

If the movants meets their burden, the burden then shifts to the nonmovants

to raise a genuine issue of material fact precluding summary judgment. See Centeq 

Realty, Inc. v. Siegler, 899 S.W.2d 195, 197 (Tex. 1995). The evidence raises a 

genuine issue of fact if reasonable and fair-minded jurors could differ in their 

conclusions in light of all of the summary judgment evidence. Goodyear Tire & 

Rubber Co. v. Mayes, 236 S.W.3d 754, 755 (Tex. 2007) (per curiam). To 

determine if the nonmovants have raised a fact issue, we review the evidence in the 

light most favorable to the nonmovants, crediting favorable evidence if reasonable 

jurors could do so, and disregarding contrary evidence unless reasonable jurors 
27

could not. Fielding, 289 S.W.3d at 848 (citing City of Keller, 168 S.W.3d at 827). 

We indulge every reasonable inference and resolve any doubts in the nonmovants’

favor. Sw. Elec. Power Co. v. Grant, 73 S.W.3d 211, 215 (Tex. 2002) (citing Sci. 

Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 911 (Tex. 1997)).

We must affirm the summary judgment if any of the grounds presented to 

the trial court are meritorious. Provident Life & Accident Ins. Co. v. Knott, 128 

S.W.3d 211, 216 (Tex. 2003); Pickett v. Tex. Mut. Ins. Co., 239 S.W.3d 826, 840 

(Tex. App.—Austin 2007, no pet.).

B. The Investors’ Breach of Contract Claim

To prevail on a breach of contract claim, a plaintiff must prove: (1) the 

existence of a valid contract; (2) the plaintiff’s performance or tender of 

performance; (3) the defendant’s breach of contract; and (4) the plaintiff’s damages 

as a result of the breach. Prime Prods. Inc. v. S.S.I. Plastics, Inc., 97 S.W.3d 631, 

636 (Tex. App.—Houston [1st Dist.] 2002, pet. denied).

The Investors argued in their motion for summary judgment that (1) they 

had valid contracts with the Cleveland entities, (2) that each Investor performed 

pursuant to the contract by investing the amount agreed upon between the parties, 

(3) that the Cleveland parties breached the agreement by failing to properly invest 

the money, and (4) that they were harmed by the Cleveland parties’ breach. They 

supported this argument with the affidavits of the Investors and their supporting 
28

exhibits. The Investors also included deposition excerpts from James and Paul

Cleveland regarding their involvement in the oil and gas prospect and the nature of 

their interest in the corporate entities involved, documents related to other 

litigation involving various Cleveland parties, letters written by James and Paul 

Cleveland, documents from the Texas Secretary of State regarding the corporate 

entities involved, and the Cleveland parties’ deemed admissions.

The Investors’ affidavits outlined the nature of their agreement and course of 

dealing with the Cleveland parties. For example, Robert Taylor averred that, in 

approximately February or March 2007, James and Paul Cleveland represented that 

the Schleicher County well was “producing approximately 10 million cubic feet of 

gas per day.” In April 2007, James told Taylor that “he would transfer a 2% 

ownership interest in the leases and existing well in exchange for an immediate 

investment in this Schleicher County well that he claimed . . . was producing in 

excess of 10 million cubic feet of gas per day.” James told Taylor to wire the 

money to an account for Nicos Energy, which James represented that he 

controlled. Taylor averred that James sought a second investment in May 2007 to 

convert the well to a saltwater injection well and to drill a new well that would 

improve production from the lease. Taylor stated that James promised him that 

this investment “would represent a 4% or 6% interest in the leases.”
29

Taylor averred that James Cleveland eventually provided an unsigned lease 

entered into between “Larry J. Kerr” and “Ryanco Trust” that indicated the

potential interest in the Schleicher County property expired on April 17, 2007, 

“which was prior to the dates that [Archer] and I made our investments.” He stated 

that James never provided further documentation regarding Taylor’s interest in the 

lease or the wells. Taylor stated that James eventually gave him “a handful of 

invoices showing some work-over to the well totaling approximately $300,000 [the 

amount invested by Taylor and Archer], in an effort to show that work had been 

done, but this shows that a small amount of re-work to a damaged well was done, 

not that a new well was drilled or that a saltwater injection well had been drilled or 

completed.” Finally, Taylor averred that “the Schleicher County well had no 

production” and that there “was never any saltwater injection well. There was 

never a new well drilled.” He stated that “there was no work being performed as 

of the date that I invested onward.” 

Attached as exhibits to Taylor’s affidavit were certified copies from the 

Texas Railroad Commission showing that the Schleicher County well, operated by 

Copperhead Operating, LLC, an entity controlled by Paul Cleveland, had no 

production between January 2003 and January 2011, email correspondence 

between Taylor and James Cleveland, a copy of the unsigned lease, and documents 

reflecting the wire transfers Taylor made to Nicos Energy. Taylor’s exhibits also 
30

included two copies of “Contract Assignments” that James Cleveland delivered to 

Taylor in August 2007. The Contract Assignment acknowledged the receipt of “a 

wire transfer payable to Nicos Energy, LLC, represented by James R. Cleveland, 

acting in his capacity as President of Nicos Energy, LLC, (hereinafter referred to as 

Assignor), for the Schleicher County Lone Star Land & Exploration, LLC lease.” 

It further stated: “Oasis Petroleum, LLC agrees to assign, sell, convey, and will 

transfer to Taylor . . . upon completion of the first well” a working interest in that 

well and the saltwater injection well located on the lease.

We conclude that Taylor’s statements recounted above were clear, positive, 

direct, otherwise credible and supported by accompanying documents, free from 

contradictions and inconsistencies, and could have been readily controverted. 

Thus, these portions of Taylor’s affidavit could serve as the basis for granting 

summary judgment. See Trico Techs. Corp. v. Montiel, 949 S.W.2d 308, 310 (Tex. 

1997) (holding that uncontroverted, self-serving affidavit of interested witness may 

serve as basis for granting summary judgment if evidence is “clear, positive, direct, 

otherwise credible, free from contradictions and inconsistencies, and could have 

been readily controverted.”); see also TEX. R. CIV. P. 166a(c) (discussing use of 

affidavits as summary judgment evidence).

Archer, McLaughlin, and Cangelosi made substantially similar statements in 

their affidavits and also provided multiple supporting documents. Himel likewise 
31

averred that he invested money in the Schleicher County well in exchange for a 

certain interest in the well, and that several friends—investors Alshayeb, Bruce, 

and Gorman—also invested based on similar arrangements. Himel’s affidavit 

included exhibits regarding his own transfers and alleged interests, as well as the 

business records affidavits of Alshayeb, Bruce, and Gorman reflecting their 

investments and purported interests in the Schleicher County well in the form of 

additional “Contract Assignments” and checks or wire transfers paid to Oasis 

Petroleum or Nicos Energy. All investors averred that the Cleveland parties failed 

to invest the money as promised and that they never received any payment from 

any of the Cleveland parties.

The Cleveland parties argue only that the Investors’ proof of this claim 

“relies on the [Investors’] testimony, which does not rise to the level of 

conclusively establishing breach.” However, as we have already discussed, the 

affidavits of the Investors provided the terms upon which they paid money to the 

various Cleveland parties, and the Investors averred that the money was not 

invested consistent with those terms. These statements were “clear, positive, 

direct, otherwise credible, free from contradictions and inconsistencies, and could 

have been readily controverted,” and, thus, served as a proper basis for granting 

summary judgment. See Montiel, 949 S.W.2d at 310. These statements were 

further supported by documents demonstrating that the Cleveland parties accepted 
32

various payments but never produced any gas from the Schleicher County well or 

drilled the promised saltwater injection well or “new” well.

Regarding damages, the Investors presented multiple affidavits, financial 

records, and, in addition, deemed admissions regarding the amount of money each 

investor paid to the Cleveland parties. The Investors averred that the money they 

invested was not used as promised and that they never received any payment or 

compensation from the Cleveland parties. The exact amount of each Investors’ 

investment was provided in the individual affidavits or business records and was

also the subject of deemed admissions. These amounts constituted reliance 

damages of the Investors. See Quigley v. Bennett, 227 S.W.3d 51, 56 (Tex. 2007)

(stating that reliance damages are one type of recoverable damages for breach of 

contract and are intended to “compensate for the plaintiff’s out-of-pocket 

expenditures”); see also Chung v. Lee, 193 S.W.3d 729, 733 (Tex. App.—Dallas 

2006, pet. denied) (“When . . . a party makes a substantial investment in 

performing the agreement and the agreement is breached, she is entitled to have 

that investment returned.”). 

We conclude that the summary judgment evidence, adduced by the Investors 

and never controverted by the Cleveland parties, established that the Investors 

agreed to invest cash with various Cleveland parties in exchange for an interest in 

the Schleicher County well, that the Investors made such investments, that the 
33

Cleveland parties breached the agreement by failing to provide the Investors with 

the agreed upon interests and by failing to use the investments to develop those 

interests, and that the Investors were damaged by this breach in the amount of their 

investments. Thus, the Investors established each element of their cause of action 

for breach of contract against the Cleveland parties. See Prime Prods. Inc., 97 

S.W.3d at 636 (providing elements of breach of contract claim); see also RhonePoulenc, Inc., 997 S.W.2d at 223 (holding that party moving for summary 

judgment on his own claim must conclusively prove all essential elements of the 

claim); City of Keller, 168 S.W.3d at 816 (holding that matter is conclusively 

established if reasonable people could not differ as to conclusion to be drawn from 

evidence). 

Therefore, the burden shifted to the Cleveland parties to raise a genuine 

issue of material fact. See Centeq Realty, Inc., 899 S.W.2d at 197. The Cleveland 

parties, who did not respond to the motion to summary judgment in the trial court, 

failed to present any evidence raising a genuine issue of material fact. 

We hold that the trial court did not err in granting summary judgment on this 

ground.10 Because the Investors’ claim for breach of contract supports the 

 

10 We note that the Investors’ motion for summary judgment included arguments and 

authority that they were entitled to no-evidence summary judgment on the 

Cleveland parties’ counterclaim for unpaid expenses, and the trial court’s 

judgment ordered “that all claims by [the Cleveland parties] against [the Investors] 
34

judgment of the trial court, we need not address the other grounds asserted in the 

motion for summary judgment.11 See Provident Life & Accident Ins. Co., 128 

S.W.3d at 216 (holding that we must affirm summary judgment if any ground 

presented to trial court is meritorious).

Attorney’s Fees

In their fourth issue, the Cleveland parties argue that the trial court erred in 

awarding $500,000 in attorney’s fees.

The trial court awarded attorney’s fees of $500,000 based on the affidavit of 

the Investors’ attorney, Jeremy Stone. Stone provided his qualifications as a 

shareholder with his law firm and an attorney with general knowledge regarding 

reasonable and necessary fees customarily charged for legal services in Harris and 

Fort Bend Counties. He averred that he and his firm provided representation for all 

of the Investors totaling over 600 hours, and he provided a list of services he 

performed. Stone stated that his hourly rate was $300 per hour and his associate’s 

rate was $200 per hour, “which are reasonable rates considering the factors” he had 

previously discussed, such as time and labor required, the fee customarily charged, 

 

are dismissed with prejudice. The Cleveland parties do not complain of this 

portion of the trial court’s ruling on appeal.

11 The trial court’s summary judgment was rendered against all Cleveland parties, 

including Dorman. Because we uphold the trial court’s judgment against Dorman 

on this basis, we need not address the Cleveland parties’ fifth issue, arguing that 

the trial erred in striking Dorman’s pleadings and entering a default judgment on 

liability only against her prior to its entry of summary judgment.
35

and the nature and length of the professional relationship with the client. He 

specifically averred that “[t]he total amount of attorneys’ fees, including paralegal 

time, is $142,400, which is reasonable and necessary.” He further stated that his 

firm “incurred $12,675.54 in expenses” and that “these fees were reasonable and 

customary.” Finally, he stated that his firm “has a 40% contingency fee agreement 

with Plaintiffs. It is my opinion [that] 40% of the judgment amount against 

Defendants would be a reasonable and necessary fee considering the factors 

above.”

The Cleveland parties did not respond to the motion for summary judgment 

or object to Stone’s affidavit before the trial court entered judgment. They argued 

for the first time in their motion for new trial that the award of $500,000 in 

attorney’s fees was erroneous because the Investors did not conclusively establish 

that they were entitled to $500,000 in attorney’s fees because Stone averred that 

both $142,400 and 40% of the judgment constituted a reasonable fee.

We review an award of attorney’s fees for abuse of discretion. Bocquet v. 

Herring, 972 S.W.2d 19, 20–21 (Tex. 1998). A trial court abuses its discretion if it 

acts arbitrarily, unreasonably, or without regard to guiding legal principles. Id. at 

21. When reviewing a trial court’s decision under this standard, we must view the 

evidence in the light most favorable to the trial court’s ruling and indulge every 

presumption in its favor. Phillips & Akers, P.C. v. Cornwell, 927 S.W.2d 276, 279 
36

(Tex. App.—Houston [1st Dist.] 1996, no writ.). We have already held that the 

trial court properly rendered summary judgment on the Investors’ breach of 

contract claim, which is a claim that supports an award of attorney’s fees. See 

TEX. CIV. PRAC. & REM. CODE ANN. § 38.001(8) (Vernon 2008) (permitting 

recovery of attorney’s fees “in addition to the amount of a valid claim and costs” in 

a breach of contract action). Thus, the only remaining question is whether the trial 

court’s award of $500,000 in attorney’s fees was reasonable and necessary.

Whether fees are reasonable and necessary is a question of fact. Bocquet, 

972 S.W.2d at 21. The non-exclusive factors the factfinder may consider when 

determining the reasonableness of a fee include: (1) the time and labor required, 

the novelty and difficulty of the questions involved, and the skill required to 

perform the legal service properly; (2) the likelihood that the acceptance of the 

particular employment will preclude other employment by the lawyer; (3) the fee 

customarily charged in the locality for similar legal services; (4) the amount 

involved and the results obtained; (5) the time limitations imposed by the client or 

by the circumstances; (6) the nature and length of the professional relationship 

with the client; (7) the experience, reputation, and ability of the lawyer or lawyers 

performing the services; and (8) whether the fee is fixed or contingent on results 

obtained or uncertainty of collection before the legal services have been rendered. 
37

Hoover Slovacek LLP v. Walton, 206 S.W.3d 557, 561 n.7 (Tex. 2006); Arthur 

Andersen & Co. v. Perry Equip. Co,, 945 S.W.2d 812, 818 (Tex. 1997). 

Although what constitutes reasonable attorney’s fees is a question of fact, 

clear, direct, and uncontroverted evidence, even evidence from an interested 

witness, will establish that attorney’s fees sought are reasonable, necessary, and 

credible, where the opposing party had means and opportunity to disprove the 

testimony but failed to do so. See Smith v. Patrick W.Y. Tam Trust, 296 S.W.3d 

545, 547–48 (Tex. 2009); Rosenblatt v. Freedom Life Ins. Co., 240 S.W.3d 315, 

321 (Tex. App.—Houston [1st Dist.] 2007, no pet.).

Here, Stone’s affidavit averred that, based on the Arthur Andersen factors, 

the time spent by his firm, and the services rendered, $142,400 in fees and 

$12,675.54 in costs were reasonable and necessary. This evidence was clear, 

direct, and uncontroverted. The Cleveland parties had the means and opportunity 

to disprove the evidence but failed to do so. Thus, this evidence established that 

the specific attorney’s fees and expenses sought by the Investors—$155,075.54—

were reasonable and necessary. See Smith, 296 S.W.3d at 547–48. 

However, Stone’s statement that 40% of the judgment would be a reasonable 

and necessary fee in light of his firm’s 40% contingency fee agreement with the 

Investors does not justify increasing the fee award beyond the specific amount 

requested by the Investors. Attorney’s fees cannot be awarded as a percentage of 
38

an amount of damages based solely on the existence of a contingency fee contract. 

See Arthur Andersen & Co., 945 S.W.2d at 818–19. To recover attorney’s fees 

from the defendant, a plaintiff must request a specific sum for the attorney fees, not 

expressed as a percentage of the damages. Id. at 819. While a contingent fee may 

be “a reasonable fee from the standpoint of the parties to the contract[,]” that alone 

does not make the fee “reasonable for purposes of shifting that fee to the 

defendant.” Id. at 818–19.

Therefore, we sustain the Cleveland parties’ fourth issue in part and modify 

the portion of the trial court’s judgment awarding attorney’s fees by reducing the 

amount awarded from $500,000 to $155,075.54.

Conclusion

We modify the judgment of the trial court to reduce the award of attorney’s 

fees to the Investors to $155,075.54. We affirm the judgment of the trial court as 

modified.

Evelyn V. Keyes

Justice 

Panel consists of Justices Keyes, Bland, and Sharp.