COURT OF APPEALS

SECOND DISTRICT OF TEXAS

FORT WORTH

NO. 2-08-352-CV

NATIONAL CITY MORTGAGE COMPANY APPELLANT

V.

CAROLYN A. ADAMS APPELLEE

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FROM THE 141ST DISTRICT COURT OF TARRANT COUNTY

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OPINION ON REHEARING

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I. Introduction

In one issue, Appellant National City Mortgage Company (“NCM”) asserts

that the trial court erred by failing to enter a judgment awarding NCM its

attorneys’ fees. While we deny NCM’s motion for rehearing, we withdraw our

earlier opinion and judgment of February 25, 2010, and substitute the

following. We affirm.
II. Factual and Procedural History

In March 2003, Appellee Carolyn A. Adams contracted with Steve

Paulsen Properties, Ltd. for the construction of a new home. In April 2003, she

obtained financing for the construction through NCM, executing a

Construction/Permanent Loan Agreement (the “Loan Agreement”), a Promissory

Note (the “Note”) in the amount of $202,800, and a Disbursement

Authorization form, which allowed NCM to disburse funds to Paulsen upon

NCM’s receipt of either a written or verbal draw request from Paulsen or

Carolyn.

On September 12, 2003, Carolyn’s son, Murray Adams, met with Paulsen

to discuss the completion date of Carolyn’s house. During the conversation,

Paulsen advised Murray that there had been some delays but that he intended

to personally supervise the job from that point on. Two days later, during a

telephone conversation with Paulsen, Murray claimed that Paulsen quit the job

and told Murray to contact a lawyer. Paulsen, on the other hand, claimed that

he only told Murray that he was not going to complete the job because Murray

had threatened to kill him.

On September 15, 2003, Murray called NCM’s home office in Ohio and

spoke with Charles Dixon about Paulsen quitting the job. Dixon allegedly

confirmed that there were no draws pending at that time and that NCM would

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no longer honor Paulsen’s draw requests. Dixon also instructed Murray to have

Carolyn contact NCM’s Southlake office and inform someone there that Paulsen

had quit the job. The next morning, Carolyn called the Southlake office and

spoke with Bonnie Doran, the district manager. Carolyn informed Doran that

Paulsen had quit the job and that NCM should no longer honor Paulsen’s draw

requests.

On September 17, 2003, Paulsen submitted a request for disbursement

to NCM in the amount of $33,320. On September 18, 2003, Larry Bracken,

Carolyn’s attorney, faxed a letter to Paulsen and to NCM’s Southlake office

instructing NCM that no more payments were to be made to Paulsen and

requesting that Paulsen or another builder complete the construction by October

14, 2003, or that other accommodations be made. On that same day, NCM

paid Paulsen the $33,320 he had requested the day before.

Subsequently, Carolyn sued NCM for declaratory relief, breach of

contract, deceptive trade practices, conspiracy, common law unreasonable

collection efforts, and violation of the Texas Debt Collection Practices Act

(“TDCPA”). NCM filed a counter-claim for contractual indemnity. At trial, the

only claims against NCM submitted to the jury were breach of contract and

purported violations of the TDCPA.

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After a trial on the merits, the jury found that: (1) NCM did not breach

the Loan Agreement with Carolyn, (2) NCM did not violate the TDCPA, and (3)

Carolyn was not entitled to attorney’s fees against NCM. The jury also found

that a reasonable and necessary fee for the services of NCM’s attorneys was

$174,500.

On March 7, 2008, NCM and Paulsen filed a joint motion for entry of

judgment consistent with the jury’s verdict. Thereafter, Carolyn filed a motion

for judgment notwithstanding the verdict (“JNOV”) and a response and

objection to NCM and Paulsen’s motion for entry of judgment. In her motion,

Carolyn asserted ten grounds on which the trial court should disregard the

jury’s verdict and enter a take nothing judgment. Of those ten grounds, only

four were applicable to NCM: 1) the jury’s answer to jury question number

one

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should be disregarded because the answer “yes” was marked out and “no”

was written beside it with scribbled initials; 2) the jury’s answer to jury

question number twenty

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should be disregarded because jury question number

one was conflicting, incomplete, and unresponsive; 3) the jury’s answer to jury

1 Jury question number one asked, “Did [NCM] fail to comply with

terms of the Construction/Permanent Loan Agreement?”

2 Jury question number twenty asked, “What is a reasonable fee for the

necessary services of [NCM’s] attorneys in this case, stated in dollars and

cents?”

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question number twenty should be disregarded because there was legally and

factually insufficient evidence to warrant the submission of question number

twenty; and 4) the jury’s answers to jury questions one through twenty should

be disregarded because the trial court erroneously instructed the jury concerning

the dollar amount of Carolyn’s contractual damage claim; thereby, commenting

on the weight of the evidence.

On June 5, 2008, the trial court entered a judgment that all parties take

nothing by way of their claims, with court costs to be taxed against Carolyn.

One week later, the trial court entered an order denying NCM and Paulsen’s

joint motion for entry of judgment. Subsequently, NCM filed a motion to alter,

modify, or amend judgment, arguing that, as a matter of law, NCM was entitled

to recover all of its attorneys’ fees. NCM’s motion was overruled by operation

of law. See Tex. R. Civ. P. 329b(c). This appeal followed.

III. Discussion

In its sole issue, NCM argues that the trial court abused its discretion

because the award of attorneys’ fees to NCM was mandatory under the Loan

Agreement and Texas law. In response, Carolyn asserts that this court must

affirm the trial court’s denial of attorneys’ fees because NCM appeals from a

JNOV and NCM failed to challenge all the grounds upon which the trial court

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could have entered a JNOV. This case, however, is procedurally awkward in

that it does not fit within the traditional standard of review for JNOV.

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Here, NCM does not challenge the trial court’s setting aside of the jury

verdict and entering a judgment in conflict with that verdict—a challenge

requiring this court to look at the jury’s findings. Instead, NCM complains

about the trial court’s failure to determine, as a matter of law, that NCM was

entitled to attorneys’ fees—a legal issue, requiring no inquiry into the jury’s

findings. See Holland v. Wal-Mart Stores, 1 S.W.3d 91, 94 (Tex. 1999)

(holding that the determination of whether attorneys’ fees are available in a

particular case is a question of law, which is reviewed by this court under the

de novo standard). Thus, the JNOV standard is inapplicable.

A trial court’s determination of whether to award attorneys’ fees is

reviewed for abuse of discretion. See Armstrong v. Steppes Apartments, Ltd.,

57 S.W.3d 37, 50 (Tex. App.—Fort Worth 2001, pet. denied), cert. denied,

3 A trial court may disregard a jury verdict and render judgment

notwithstanding the verdict (“JNOV”) if no evidence supports the jury’s findings

on issues necessary to liability or if a directed verdict would have been proper.

See Tex. R. Civ. P. 301; Tiller v. McLure, 121 S.W.3d 709, 713 (Tex. 2003);

Fort Bend County Drainage Dist. v. Sbrusch, 818 S.W.2d 392, 394 (Tex.

1991). In determining whether the trial court erred by rendering a JNOV, we

view the evidence in the light most favorable to the verdict under the wellsettled standards that govern legal sufficiency review. See Wal-Mart Stores,

Inc. v. Miller, 102 S.W.3d 706, 709 (Tex. 2003).

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536 U.S. 951 (2002). To determine whether a trial court abused its discretion,

we must decide whether the trial court acted without reference to any guiding

rules or principles; in other words, we must decide whether the act was

arbitrary or unreasonable. Low v. Henry, 221 S.W.3d 609, 614 (Tex. 2007);

Cire v. Cummings, 134 S.W.3d 835, 838–39 (Tex. 2004). A trial court has no

discretion in determining what the law is or applying the law to the facts.

Walker v. Packer, 827 S.W.2d 833, 840 (Tex. 1992). A trial court’s erroneous

legal conclusion, even in an unsettled area of law, is an abuse of discretion.

Perry v. Del Rio, 66 S.W.3d 239, 257 (Tex. 2001) (orig. proceeding); Huie v.

DeShazo, 922 S.W.2d 920, 927–28 (Tex. 1996) (orig. proceeding).

Generally, a party may not recover attorneys’ fees unless such an award

is authorized by statute or contract. Tony Gullo Motors I, L.P. v. Chapa, 212

S.W.3d 299, 311 (Tex. 2006); GXG, Inc. v. Texacal Oil & Gas, 977 S.W.2d

403, 424 (Tex. App.—Corpus Christi 1998, pet. denied). NCM asserts that the

Loan Agreement between itself and Carolyn is a contract that contains language

making the award of attorneys’ fees to NCM mandatory. The language at issue

provides:

(xvii) That [NCM] will be reimbursed for all expenses of any

kind, including without limitation attorney’s fees, that

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may be incurred by [NCM] in connection with or arising

out of this agreement . . .

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(xviii) [CAROLYN] AGREES THAT [NCM] AND ITS AGENTS

AND ATTORNEYS WILL BE INDEMNIFIED AND HELD

HARMLESS FROM ANY AND ALL ACTIONS, CLAIMS,

DEMANDS, DAMAGES, COSTS, EXPENSES, AND

OTHER LIABILITIES, INCLUDING WITHOUT

4 Although the record reflects that NCM used language from this

reimbursement provision in its petition, NCM did not plead reimbursement of its

attorneys’ fees but, instead, pleaded contractual indemnity. Specifically, NCM

pleaded

COUNT 1-CONTRACTUAL INDEMNITY

9. NCM incorporates paragraphs 1 through 8 as is set forth herein

fully verbatim. [Paragraphs 1 through 8 set forth the factual and

procedural background of the case.]

10. Adams agreed to indemnify and hold NCM harmless from any

and all claims arising out of the Loan Agreement. The claims which

are the subject matter of this lawsuit arise out of the Loan

Agreement. NCM has been forced to incur attorney[s’] fees, costs,

and other expenses to defend this lawsuit.

11. Adams’s conduct has, therefore, proximately caused damage

to NCM in an amount in excess of the minimum jurisdictional limit

of the Court.

NCM concluded by asking the trial court to enter a judgment in its favor for,

among other things, reasonable and necessary attorneys’ fees. Because NCM

pleaded only contractual indemnity for its attorneys’ fees, it is not entitled to

an award of attorneys’ fees under the Loan Agreement’s reimbursement

provision. See Smith v. Deneve, 285 S.W.3d 904, 916 (Tex. App.—Dallas

2009, no pet.) (“[W]hen a party pleads a specific ground for recovery of

attorney’s fees, the party is limited to that ground and cannot recover

attorney’s fees on another, unpleaded ground.”).

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LIMITATION ATTORNEY’S FEES, THAT ANY SUCH

PARTIES MAY INCUR OR THAT IN ANY WAY RELATE

TO OR ARISE OUT OF THE CONSTRUCTION OF THE

IMPROVEMENTS, INCLUDING WITHOUT LIMITATION

THOSE ARISING OUT OF THE NEGLIGENCE OF

[NCM].

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[Emphasis in original.]

When, as here, we construe a written contract, we “ascertain the true

intent of the parties as expressed in the instrument.” See Nat’l Union Fire Ins.

Co. v. CBI Indus., Inc., 907 S.W.2d 517, 520 (Tex. 1995). In deciding

whether a contract is ambiguous, we consider the written instrument as a

whole and determine if it is subject to more than one reasonable interpretation

in light of the circumstances present at the time of its formation. Grain Dealers

Mut. Ins. Co. v. McKee, 943 S.W.2d 455, 458 (Tex. 1997). If the contract

can be given a certain or definite legal meaning, it is not ambiguous and should

be construed as a matter of law. Id.; CBI Indus., 907 S.W.2d at 520.

The provision of the Loan Agreement under (xviii) is clearly one of

indemnity, and neither party argues otherwise. An indemnity agreement arises

from a promise by the indemnitor to safeguard or hold harmless the indemnitee

against existing or future loss, liability, or both. See Dresser Indus., Inc. v.

Page Petroleum, Inc., 853 S.W.2d 505, 508 (Tex. 1993), rev’d on other

5 For convenience, we have substituted “NCM” for “Lender” and

“Carolyn” for “Borrower” in the quoted version of the Loan Agreement’s

provision.

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grounds, 853 S.W.2d 505 (Tex. 1993); Wallerstein v. Spirt, 8 S.W.3d 774,

779 (Tex. App.—Austin 1999, no pet.); Derr Constr. Co. v. City of Houston,

846 S.W.2d 854, 858 (Tex. App.— Houston [14th Dist.] 1992, no writ). Such

is the plain intent of the quoted language of the Loan Agreement.

That being said, a defining characteristic of an indemnity agreement is

that it “does not apply to claims between the parties to the agreement.”

Wallerstein, 8 S.W.3d at 780 (citing Derr Constr., 846 S.W.2d at 858). “[A]

contract of indemnity does not relate to liability claims between the parties to

the agreement but, of necessity, obligates the indemnitor to protect the

indemnitee against liability claims of persons not a party to the agreement.”

Dresser Indus., Inc., 821 S.W.2d at 362–63.

Thus, because both NCM and Carolyn are parties to the indemnity

agreement, the agreement, as a matter of law, does not obligate Carolyn to pay

NCM its attorneys’ fees incurred in defending itself against Carolyn’s claims and

in prosecuting its counterclaim against Carolyn. See MRO Southwest, Inc. v.

Target Corp., 2007 WL 4403912, at *3 (Tex. App.—San Antonio Dec.19,

2007, pet. denied) (mem. op., not designated for publication) (holding

defendant could not recover attorneys’ fees incurred in defending the suit based

on indemnity provision because the provision did not apply to claims between

the parties to the agreement); see also Baird v. Lease Acquisition Partners, Inc.,

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No. 03-99-00773-CV, 2000 WL 1508263, at *4 (Tex. App.—Austin Oct. 12,

2000, no pet.) (not designated for publication) (concluding the same based on

similar indemnity provision). Consequently, the trial court did not abuse its

discretion by refusing to award NCM its attorneys’ fees under the Loan

Agreement and Texas law. Accordingly, we overrule NCM’s sole issue.

IV. Conclusion

Having overruled NCM’s sole issue, we affirm the trial court’s judgment.

BOB MCCOY

JUSTICE

PANEL: LIVINGSTON and MCCOY, JJ.

DELIVERED: March 25, 2010

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