No. 12

- 14 -00365- CV

IN THE COURT OF APPEALS TWELFTH DISTRICT OF TEXAS

AT TYLER

EDOM CORNER, LLC AND EARL A. BERRY, JR.,

APPELLANTS

v.

IT’S THE BERRYS, LLC d/b/a MARY ELLEN’S ,

APPELLEE

On Appeal from the 294 th Judicial District Court

Of Van Zandt County, Texas Trial Court Cause 09 -00138 Hon. Teresa Drum, Judge Presiding

_____

APPELLANTS’ REPLY BRIEF

_____ Katherine A. Ferguson SBN 06918050 Renshaw, Davis & Ferguson, L.L.P. 2900 Lee Street, Suite 102 P.O. Box 21 Greenville, Texas 75403

- 0021 Telephone: (903) 454

- 6050 Facsimile: (903) 454

- 4898 Email: rdflawoffice@yahoo.com Richard L. Ray SBN 16606300 Ray & Thatcher, P.C. 300 S. Trade Days Blvd. Canton, Texas 75103 Telephone: (903) 567

- 2051 Facsimile: (903) 567

- 6998

ATTORNEYS FOR APPELLANTS EDOM CORNER, LLC

AND EARL A. BERRY, JR

.

ORAL ARGUMENT REQUESTED ACCEPTED 12-14-00365-CV TWELFTH COURT OF APPEALS

TYLER, TEXAS 5/25/2015 11:22:22 AM

CATHY LUSK CLERK2 IDENTITY OF PARTIES AND COUNSEL

Appellants: Edom Corner, LLC Earl A. Berry, Jr.

Appella n t s’ Attorney s : Katherine A. Ferguson Renshaw, Davis & Ferguson, LLP P.O. Box 21 Greenville, Texas 75403

- 0021

Richard L. Ray Ray & Thatcher, P.C. 300 S. Trade Days Blvd. Canton, Texas 75103

Appellant s’ Trial Attorney s : Katherine A. Ferguson Renshaw, Davis & Ferguson, LLP P.O. Box 21 Greenville, Texas 75403

- 0021

Richard L. Ray Ray & Thatcher, P.C. 300 S. Trade Days Blvd. Canton, Texas 75103

Appellee: It’s the Berry’s , LLC d/b/a Mary Ellen’s

Appellee’s Attorneys: Larry M. Lesh, Esq. 1 Forest Park Drive Richardson, Texas 75080

R. Paul Elliot, Esq. 301 S. Main St. Canton, Texas 75103

Appellee’s Trial Attorneys: Larry M. Lesh, Esq. 1 Forest Park Drive3

Richardson, Texas 75080

R. Paul Elliot, Esq. 301 S. Main St. Canton, Texas 75103

Trial Court : Hon. Teresa A. Drum 294 th Judicial District Court4 TABLE OF CONTENTS

Identity of the Parties and Counsel

................................ ................................ ............ 2

Table of Contents

................................ ................................ ................................ ....... 4

Index of Authorities

................................ ................................ ................................ ... 5

Reply Issues Presented

................................ ................................ ............................... 6

Reply Issue One
THE TRIAL COUR ERRED IN FINDING THAT APPELLEE E WAS THE PREVAILING PARTY IN THE LITIGATION
Reply I ssue Two
THE TRIAL COURT ERRED IN FINDING NEITHER RES JUDICATA N OR COLLATERAL ESTOPPEL BARRED APPELLEE’S SUIT
Reply Issue Three
THE TRIAL COURT ERRED IN FINDING BERRY INDIVIDUALLY LIABLE IN APPELLEE ’S SUIT
Reply Issue Four
THE TRIAL COURT ERRED IN AWARDING ATTORNEY ’S FEES ON SUMMARY JUDGMENT TO APPELLEE

A r gument and Authorities

................................ ................................ .......................... 7

Conclusion and Prayer for relief

................................ ................................ .............. 13

Certificate of compliance of typeface and Word Count

................................ .......... 14

Certificate of Service

................................ ................................ ............................... 145 INDEX OF AUTHORITIES

State Cases:

Goldman v. Olmstead

, 414 S.W.3d 346 (Tex . App.

- Dallas 2013, no pet)

................................ ............ 8, 9

Igal v. Brightstar Information Technology Group, Inc.

, 250 S.W.3d 78, 86 (Tex. 2008)

................................ ................................ ............ 10

In Re Nalle Plastics Family Ltd. Partnership

, 406 S.W.3d 168 (Tex. 2013)

................................ ................................ ................. 14

Insurance Co. of the State of Pennsylvania v. Oraco, 170 S.W.3d 129 (Tex. App.

– San Antonio 2005, no pet.)

................................ ..... 9

It’s the Berry’s, LLC v. Edom Corner, LLC, 271 S.W.3d 765 (Tex. App.

– Amarillo 2008, no pet.)

................................ ........ 1 0

Laredo Independent School Dist. v. Trevino

, 25 S.W.3d 26 3 (Tex. App.

– San Antonio 2000, pet. denied)

............................. 13

MBM Financial Corp. v. Woodlands Operating Co., 292 S.W.3d 660 (Tex. 2009)

................................ ................................ ................. 13

Robbins v. Capozzi

, 100 S.W.3d 18 (Tex. App.

- Tyler 2002, no pet.)

................................ ................... 8

State Statutes:

T EX

. B US

. O RGAN

. C ODE S EC

. 101.113

................................ ................................ .... 11

T EX

. B US

. O RGAN

. C ODE S EC

. 101.114

................................ ................................ .... 116 REPLY ISSUES PRESENTED

Issue Number One

THE TRIAL COUR ERRED IN FINDING THAT APPELLEE WAS THE PREVAILING PARTY IN THE LITIGATION

Issue Number Two
THE TRIAL COURT ERRED IN FINDING NEITHER RES JUDICATA OR COLLATERAL ESTOPPEL BARRED APPELLEE’S SUIT

Issue Number Three
THE TRIAL COURT ER RED IN FINDING BERRY INDIVIDUALLY LIABLE IN APPELLEE ’S SUIT

Issue Number Four THE TRIAL COURT ERRED IN AWARDING ATTORNEY’S FEES ON SUMMARY JUDGMENT TO AP P ELLEE7 ARGUMENT AND AUTHORITIES

REPLY ISSUE ONE: THE TRIAL COUR ERRED IN FINDING THAT A PPELLEE WAS THE PREVAILING PARTY IN THE LITIGATION

In the Appellee’s Brief 1 (hereinafter, the “Brief”) Appellee misstates the law

to support its argument that it was the prevailing party in the Litigation. Appellee

asserts that it prevailed because Ap pellants did not achieve the aim of evicting

Appellee from the property. Brief at 15. Appellants were not thwarted in the

objective to evict Appellee due to an adverse legal ruling; the passage of time

involved during the course of the Litigation rendere d the issue moot because

Appellee forgot to renew the Lease and the Lease expired. Nothing about the

Litigation would have prevented Appellants from starting over again and pursuing

an eviction action against Appellee had the Lease still been in effect. Because there

was no decision on the merits by a court of competent jurisdiction that denied

Appellants’ the right to seek to evict Appellee, Appellee did not prevail in the

Litigation

. Appellee cites this Court to Robbins v. Capozzi , 100 S.W.3d 18 (Tex. App.

-
Tyler 2002, no pet.) and Goldman v. Olmstead , 414 S.W.3d 346 (Tex . App.

- Dallas

2013, no pet) in support of its argument, but fails to note the critical factual

distinction: in both Robbins and Goldman , the defendant s success fully defended the

1 This Reply Brief will use the same abbreviations as used in the Appellants’ Brief.8

claims on the merits

. Robbins, 100 S

. W

. 3d at. 27 ; Goldman , 424 S.W3d at 367.

“ Whether a party is a prevailing party is based on success on the merits

. . . . A

prevailing party is one who is vindicated by the trial court's judgmen t.” Robbins,

100 S.W.3d at 27, citing Insurance Co. of the State of Pennsylvania v. Oraco, 170

S.W.3d 129, 134 (Tex. App.

– San Antonio 2005, no pet.) Appellee w as never

vindicated by Appellants receiving an adverse ruling on the merits in the District

Court Case. 2 Appellee therefore w as not the prevailing party and w as not entitled

to recover attorney ’ s fees

. Similarly, Appellee either did not receive rulings in its

favor on the merits in any of the other cases comprising the Litigation , or the

Appe llee’s request for attorney’s fees was denied in those rulings

.

REPLY ISSUE TWO: THE TRIAL COURT ERRED IN FINDING NEITHER RES JUDICATA N OR COLLATERAL ESTOPPEL BARRED APPELLEE’S SUIT

In its brief, Appellee asserts that the District Court lacked jurisd iction over its

claims for attorney ’ s fees in the District Court Case and therefore res judicata does

not apply . Appellees are misreprese n ting both the facts of the District Court Case

and the Seventh Court of Appeal ’ s ruling. Appellees filed a separate counterclaim

against Appellants in the District Court Case. (CR Vol. 2, #279

- 284). Appellee

sought an award of attorney’s fees on its counterclaim for a declaratory judgment.

2 Appellee did not raise the jurisdiction issue in the District Court Ca se; therefore, any positions taken by Appell ee at the District Court level were not ‘ vindicated ’ at the appellate court level.9

Th e Trial Court denied all of Appelle e ’s claims in its declaratory judgment ac tion.

(CR Vol. 2, #285) The Seventh Court specifically severed and dismissed the forcible

detainer action from the Appellee’s counterclaim , and affirme d the Trial Court’s

denial of attorney’s fees on Appellee’s declaratory judgment action

. It’s the Berry’s,

LLC v. Edom Corner, LLC , 271 S.W.3d 765 , 772 (Tex. App.

– Amarillo 2008, no

pet) (Appellee “did not contend the absence of an award of attorney’s fees under the

Uniform Declaratory Judgment Acts . . . was error. We overrule [ ITB’s] eleventh

issue as to its claim for attorney’s fees.”) The Trial Court did have jurisdiction over

Appellee’s claims for attorney’s fees in the District Court Case, and it denied the

claim. Appellee waived that issue by failing to argue that the Trial Court’s denial of

attorney’s fees under the declaratory judgments act was error. Thus the Seventh

Court of Appeals affirmed the Trial Court’s ruling, and that decision is now res

judicata. Appellee is seeking to correct its error in failing to raise the issue to the

Seven th Court of Appeals by bringing this action. The law does not allow Appellee

another bite at the apple.

In its Brief, Appellee does not contest the fact that in all of the other judgments

comprising the Litigation, Appellee either sought and was denied i ts claim for

attorney’s fees, or it did not raise the claim in those actions. “A party may not pursue

a claim determined by a court of competent jurisdiction in a prior suit as a ground of

recovery in a later suit against the same parties.” Igal v. Brigh tstar Information10

Technology Group, Inc. , 250 S.W.3d 78, 86 (Tex. 2008 ) The T r ial Court erred in

holding that Appellee’s claims were not barred by res judicata and the judgment of

the Trial Court should be reversed.

REPLY ISSUE THREE: THE TRIAL COURT ER RED IN FINDING BERRY INDIVIDUALLY LIABLE IN APPELLE’S SUIT

It is significant that Appellee fails to address the fact that the Texas Business

and Organizations Code, Sections 101.113 and 101.114 wholly negate its claim s

against Appellant Berry. Appellee’s brief fails to point to any fact to show that the

regulations of Appellant Edom Corner provided for the members to have any

individual liability for the debts of Appellant Edom Corner and further failed to show

any pattern or course of dealing by Appellant Berry that would establish individual

liability of Appellant Berry for the debts of Appellant Edom Corner. The Trial Court

erred in finding Appellant Berry liable . This Court should reverse the ruling of the

Trial Court and order that Appellees take nothing a gainst Appellant Berry.

Appellee also ignores the fact that, assuming arguendo its tortured reading of

the Lease is correct and Appellant Berry was a party to the Lease, its claims against

Appellant Berry under the Lease necessarily ar ose from the same nexus of facts as

the claim s against Appellant Edom Corner in the District Court Case and the other

cases comprising the Litigation

. Appellee wholly fails to acknowledge, let alone

refute, the argumen t that t h ose claim s were compulsory counterclaim s which

A ppellee should have raised in any of the cases making up the L itigation. Appellee11

fails to address this because it cannot refute the clear case law that Appellee’s claims

against Appellant Ber

ry are barred by res judicata. The Trial Court erred in finding

otherwise and this Court should rever se the judgment of the Trial Court and render

a judgment in favor of Appellants.

ISSUE FOUR: THE TRIAL COURT ERRED IN AWARDING ATTORNEY’S FEES ON SUMMARY JUDGMENT TO APPELLEE

Appellee claims that Appellants wholly failed to rebut the presumpti on of

reasonableness of its fees . Appellee is incorrect. Appellan ts attached to their

response to the Third Motion the Bennett Affidavit (CR Vol. 9, #1481 1610).

Appellee claims the Bennett Affidavit did not rebut the “statutory presumption” of

reasonableness of its claims for attorney’s fees. Appellee is incorrect.

The Bennett Affidavit directly controvert ed the statements in prior affidavits

submitted by Appellee as to the reasonableness and necessity of the attorney’s fees.

For example, in paragraph 8, the Bennett Affidavit noted the practice of Appellee’s

lead at torney of billing in a minimum of half hour increments. (CR Vol. 9, #1484)

The Bennett Affidavit stated that such a practice was neither reasonable, usual nor

customary in Van Zandt County, Texas. In para graph 9, the Bennett Affidavit noted

that many of the entries included as part of the claim for “attorney’s fees” were

actually claims for reimbursement of costs incurred rather than attorney work, and

as such did not belong as part of a claim for attorney fees. (CR Vol. 9, #1484

- 85)

In paragraph 11, t he Bennett Affidavit noted that there were numerous12

inconsistencies between the bills of the three attorneys for Appellee (CR Vol. 9,

#1486), including instances where one attorney billed a certain time for attending a

hearing while another attorney billed significantly less for attending and

participating in the same hearing (CR Vol. 9, #1486) , and that multiple attorneys

billed for the same task, a redundancy which Bennett stated was not a reasonable,

usual or customary practice in Van Zandt County, Texas

. Appellee cites this court to Laredo Independent School Dist. v. Trevino , 25

S.W.3d 263 (Tex. App.

– San Antonio 2000, pet. denied) in support. Appellees are

misconstruing Laredo

. In Laredo , Trevino presented summary judgment evidence

as to the usual and customary fee to be recovered in a quasi

- contract case. Trevino

presented ev idence that a 40% contingency fee was a reasonable and customary fee.

Laredo “ introduced no evidence to the contrary .” Id . at. 266 (emphasis added)

. The

Laredo case does no t stand for the proposition that if one side argues its fees are

usual and customary that the court is then bound by law to find them so. Rather,

Laredo merely supports that proposition that a trial court may find attorney’s fees

usual and customary if th e other party fails to challenge that assertion. This is not

what happened in the present case.

Appellee is engaging in a circular argument. Appellee asserts a trial court

may take judicial notice of a usual and customary fee, and then attempts to extend

that rule to provide that if one party asserts its fee is the usual and customary fee, the13

opposing party by law cannot rebut that assertion. This is incorrect. Just because

Appellee claimed its fees were usual , reasonable and customary does not mean by

law that such fees were. Appellants presented an affidavit that ra ised fact questions

that a large portion of the attorney fees claimed by Appellee were not usual,

customary or reasonable . Because Appellants raised a fact issue, the Trial Court

erred in granting summary judgment in favor of Appellee.

Appellee fails to address MBM Financial Corp. v. Woodlands Operating Co.,

292 S.W.3d 660 (Tex. 2009) , which holds that without actual damages, a claim for

attorney ’ s fees is inappropriate. Appellee never sought, nor was it awarded, actual

damages in any of the cases that made up the Litigation. Therefore, it is not entitled

to recover attorney ’ s fees in this cause.

Finally, it is important to note that Appellee has yet again misconstrued the

law to support its claims. Appellee asserts that In re Nalle Plastics Family Limited

Partnership

, 406 S.W.3d 168 (Tex. 2013) su pports its position that it can recover

attorney’s fees without having recovered any actual damages. Appellee is incorrect.

Nalle merely recognized that if the “ underlying suit concerns a claim for attorney’s

fees as an element of damages . . . then thos e fees may property be included in a

compensatory damage award.” Id at 175. In other words, if the underlying case, for

example, was for collection of attorney ’ s fees by an attorney pursuant to a contract

for the rendering of legal services, then the attorney ’ s fees would be part of the14

compensatory damages. Nalle specifically recognized that suits to recover

attorney’s fees incurred for prosecuting a claim, as is the case here, are not

compensatory damages and are not recoverable.

C ONCLUSION AND PRAYER FOR RELIEF

WHEREFORE, PREMISES CONSIDERED, Appellants pray that this Court

reverse the judgment of the Trial Court and render judgment of in favor of

Appellants or, alternatively, remand the cause to the Trial C ourt for further

procee dings.

Respectfully submitted,

RENSHAW, DAVIS & FERGUSON, LLP

By: /s/ Katherine A. Ferguson Katherine A. Ferguson (SBN 06918050)

2900 Lee Street, Suite 102 P.O. Box 21 Greenville, Texas 75403

- 0021 Telephone: (903) 454

- 6050 Facsimile: (903) 454

- 4898 Email: rdflawoffice@yahoo.com

Richard L. Ray, Esq. RAY & THATCHER, P.C. 300 S. Trade Days Blvd. Canton, Texas 75103 Tele phone: (903) 567

- 2051 Facsimile: (903) 567

- 099815 CERTIFICATE OF SERVICE

I certify that a true and correct copy of the Appellants’ Brief was served on May 2 5 , 2015 on the parties below by first class United States mail.

/s/Katherine A. Ferguson Katherine A. Ferguson

Larry M. Lesh Law offices of Larry M. Lesh 1 Forest Park Drive Richardson, Texas 75080

R. Paul Elliot 301 S. Main Canton, Texas 75103

CERTIFICATE OF COMPLIANCE

I certify this document was produced on a computer using Microsoft Word 2013 and contains 1, 861 words, as determined by the computer software’s word count function, excluding sections of the document listed in Texas Rules of Appellate Procedure 9.4(i)(1).

/s/Katherine A. Ferguson Katherine A. Ferguson