Court Opinion

ID: 4077662
Source: CourtListenerOpinion
Date Created: 2016-09-30 22:00:54.868826+00
Date Added: 2024-06-11T14:06:00.858223
License: Public Domain

Affirmed in part; Reversed in part; and Remand; Opinion Filed November 4, 2015.

                                            In The
                               Court of Appeals
                        Fifth District of Texas at Dallas
                                     No. 05-13-01752-CV

    STUTZ ROAD LIMITED PARTNERSHIP AND WILLIAM D. WHITE, III AND
           LEN-MAC DEVELOPMENT CORPORATION, Appellants
                                  V.
    WEEKLEY HOMES, L.P. D/B/A DAVID WEEKLEY HOMES AND PRIORITY
                     DEVELOPMENT, L.P., Appellees

                      On Appeal from the County Court at Law No. 2
                                  Dallas County, Texas
                          Trial Court Cause No. CC-10-01696-B

                            MEMORANDUM OPINION
                          Before Justices Bridges, Francis, and Myers
                                   Opinion by Justice Myers
       This case concerns a real estate development agreement and promissory notes that were

to be paid with the proceeds from the agreement. After offsetting awards of damages and

attorney’s fees to various parties, the trial court rendered judgment of $9,336.91 to Len-Mac

Development Corporation against Priority Development, L.P.                Appellants Len-Mac

Development Corporation, Stutz Road Limited Partnership, and William D. White, III, and

cross-appellant Priority Development, L.P., bring issues contending the trial court erred in its

rulings on motions for summary judgment and motion for judgment notwithstanding the verdict,

the court’s calculation of damages, the court’s award of attorney’s fees, and the court’s order
granting judgment on a motion to assign collateral. We affirm the trial court’s judgment in part

and reverse in part.

                                                         BACKGROUND

          William White is a residential real estate developer through his company, Len-Mac. In

previous developments before the one at issue, White would select raw land for development,

recruit investors, and obtain a bank loan for the purchase price of the property and the cost of

developing the land. White would develop the property to prepare it for homebuilders by

building the streets for the community and bringing in the utilities. White would then sell the

lots to Weekley Homes, L.P., which would build homes on the lots and sell them to homebuyers.

          In 2003, White determined that a piece of property called Wyrick Estates1 could be a

good residential development project.                         White approached executives at Weekley to see if

Weekley would be interested in building homes in Wyrick Estates. Weekley was interested, and

its executives told White they could use Weekley’s sister company, Priority Development, L.P.,

which would eliminate the need for White to obtain financing for the project and recruit other

investors.

          In February 2005, White, through Len-Mac, entered into a Residential Development

Agreement with Priority for development of residential lots in Wyrick Estates. Under this

agreement, Priority would obtain the financing for the project and would purchase and own the

property.        Len-Mac would perform the work to convert the raw land into lots ready for

homebuilding. Priority would then sell the lots to Weekley Homes. Priority would reimburse

Len-Mac for all the costs of developing the property. Additionally, Priority would pay Len-Mac

a “Fixed Fee” of $12,000 a month for eighteen months (a total of $216,000) as well as a

     1
        The development was ultimately called Enclave at Wyrick Estates. However, the parties also called it Enclave at Dixon Branch. We refer
to the property as “Wyrick Estates” regardless of how the parties referred to it in particular documents.

                                                                    –2–
“Contingent Fee” consisting of sixty percent of the “Project Available Cash.” The Project

Available Cash was all the revenues from the project, such as the sale of lots to Weekley Homes,

minus the acquisition and development costs of the project.

       After Priority and Len-Mac executed the Residential Development Agreement, Priority

entered into a lot-purchase agreement with Weekley whereby Weekley agreed to purchase

twelve lots per quarter at certain prices. In addition, the prices in the lot-purchase agreement

would increase by six percent per year. Under this agreement, Weekley put up $10,000 of

earnest money for the right to purchase the lots. If Weekley purchased the lots timely for the

prices in the lot-purchase agreement, then Priority would receive $10,190,100 for the 134 platted

lots. The lot-purchase agreement provided that if Weekley defaulted on the agreement, then

Priority’s only remedies were either to extend the time for Weekley to comply or to cancel the

lot-purchase agreement and keep the earnest money.

       Priority’s lender, GMAC, agreed to loan Priority Development the money for the

purchase of the property and its development as part of Priority’s $50 million line of credit.

Unbeknownst to White and Len-Mac, this line of credit also provided the funds for other of

Priority’s real estate developments. The line of credit was “cross-collateralized,” meaning the

property in each of the different developments served as collateral for the entire line of credit.

The cross-collateralization of Priority’s loan with GMAC was not mentioned in any of the

documents signed by White or to which he had access.

       At the time they entered into the Residential Development Agreement, White calculated

that if the project met the budget and Weekley Homes purchased all the lots pursuant to the

lot-purchase agreement, then the Project Available Cash would be $2,721,287, and Len-Mac’s

Contingent Fee would be $1,632,772.

                                               –3–
       The development of the lots was substantially completed on March 6, 2006, and Weekley

began to purchase lots from Priority in accordance with the schedule in the lot-purchase

agreement.

       In November 2006, White needed money for personal reasons, so on November 30, 2006,

Len-Mac borrowed $250,000 from Priority Development. The promissory note (the “Len-Mac

Note”) stated the interest would be paid quarterly. The principal, however, would be paid from

the contingent fee owed to Len-Mac from the Residential Development Agreement. The note

stated that Priority was to retain eighty percent of the contingent fee as payments on the

principal. Any outstanding principal plus unpaid interest on the note was to be due and payable

in full on June 1, 2008, later extended to July 1, 2009. The note was secured by Len-Mac

assigning Priority a security interest in Len-Mac’s interest in the Residential Development

Agreement and by a guaranty of payment signed by White.           Len-Mac made two interest

payments on the note in 2007 covering most of the first six months’ interest, but Len-Mac made

no other direct payments on the note.

       In 2007, White wanted to purchase additional real estate to develop for residential

housing, and he created a limited partnership, Stutz Road, L.P., to purchase the property. On

June 5, 2007, Stutz Road borrowed $600,000 from Priority to purchase the property. This note

(the “Stutz Road Note”) provided that both principal and interest would be paid from the

contingent fee owed to Len-Mac under the Residential Development Agreement. As with the

Len-Mac Note, White guaranteed the Stutz Road Note, and Len-Mac signed a new assignment of

a security interest in the Residential Development Agreement. This assignment authorized

Priority to retain eighty percent of the contingent fee to pay both notes and stated that the

retained contingent fee would be used first to pay off the Len-Mac Note and then be used to pay

                                             –4–
the Stutz Road Note. The Stutz Road Note had a maturity date of November 30, 2008, when all

principal and interest would be due and payable in full.

           In 2007 and 2008, a significant downturn in the housing market occurred. By late 2008,

Priority was having financial difficulties due to the housing market crisis. Priority’s practice

with GMAC was that it would present the workmen’s bills to GMAC, and GMAC would provide

the money to pay those bills as part of the loan. In late 2008, Priority had bills of $800,000 to be

paid on the developments, including Wyrick Estates, but GMAC stopped funding the loan.

Priority used all of its excess cash to pay the bills and then had to cease work on the

developments. At the same time, homes stopped selling, and Weekley’s purchases of lots

slowed dramatically.2 With little money coming in, Priority had insufficient income to meet its

debt obligations. Priority began discussions with GMAC about how to solve Priority’s debt

crisis; Priority owed GMAC $20 million. In late 2008, GMAC posted Wyrick Estates and the

other properties collateralizing the loan for foreclosure.

           In April 2009, Priority reached an agreement with GMAC resolving the debt. Under the

agreement, Priority paid GMAC $10 million cash and transferred some of its other developments

to GMAC on which Priority had allocated $10 million of its borrowing. To pay the $10 million

cash to GMAC, Priority borrowed the money from Weekley, using development projects,

including the remaining lots in Wyrick Estates, as collateral. This loan came due in 20 days.

When Priority was unable to repay the cash to Weekley, it transferred Wyrick Estates and the

other developments to Weekley. The agreement transferring the developments to Weekley

allocated $2,767,120 of value to the remaining lots in Wyrick Estates.

     2
       Weekley had difficulty selling the lots it purchased from Priority. In 2006, Weekley purchased 39 lots and sold 22 houses, leaving a
surplus of 17 lots. In 2007, Weekley purchased 34 lots and sold 23 houses, leaving Weekley with a surplus of 28 lots. In November 2007,
Weekley notified Priority Development that 7 lot purchases per quarter was “more realistic” than 12. In 2008, Weekley purchased only 4 lots and
sold 11 houses, leaving it with a surplus of 21 lots. If Weekley had followed the schedule in the lot-purchase agreement, it would have purchased
57 more lots than it did through 2008. On March 30, 2009, Priority and Weekley agreed to terminate the lot-purchase agreement. This
termination agreement permitted Priority to keep the $10,000 in earnest money deposited by Weekley.

                                                                     –5–
       Priority never paid any amount to Len-Mac as the contingent fee, nor did it apply any

amount of the contingent fee to the notes.

                                       THE LITIGATION

       In March 2010, Len-Mac sued Weekley and Priority asserting tort and contract claims

concerning the development project, the Residential Development Agreement, and Priority’s

failure to pay the contingent fee. Priority filed a counterclaim against Len-Mac and White

seeking payment of the Len-Mac Note. Priority then filed a separate lawsuit against Stutz Road

and White seeking payment of the Stutz Road Note. Stutz Road and White filed counterclaims

against Priority for breach of the Residential Development Agreement and various tort claims.

The two lawsuits were later consolidated.

       Priority moved for summary judgment as to liability only on the two notes and White’s

guaranties. The trial court granted the motion, ordered that Len-Mac and Stutz Road were liable

on their notes and White was liable on the guaranties, and stated that the amount of unpaid

principal and interest under the notes was a disputed issued to be decided at trial. The trial court

also granted Priority and Weekley’s motion for summary judgment on Stutz Road and White’s

counterclaims.

       The case was tried before a jury on Priority’s suit on the notes and guaranties and on

Len-Mac’s claims. At the conclusion of the trial, the trial court granted Priority and Weekley’s

motion for directed verdict on several of Len-Mac’s claims. The court also entered a directed

verdict on the amount due on the notes, determining the full amount of the principal, $250,000

on the Len-Mac Note and $600,000 on the Stutz Road Note, was due and awarding interest on

the principal through the day of trial. The trial court submitted a single issue to the jury asking,

“How much is the Contingent Fee . . . ?” The jury answered $1,037,000. The court determined

the amount of attorney’s fees to award all the parties and then offset the various awards. After

                                                –6–
offsetting the awards, the net amount was $9,336.91 due Len-Mac from Priority, and the trial

court granted judgment to Len-Mac against Priority for that amount.

                                      ISSUES ON APPEAL

        Stutz Road and White bring three issues contending the trial court erred by (1) granting

Priority’s motion for partial summary judgment determining that Stutz Road and White were

liable on the Stutz Road Note; (2) granting Priority’s motion for summary judgment dismissing

Stutz Road and White’s counterclaims for breach of contract, fraud, and breach of fiduciary duty;

and (3) granting Priority’s motion for directed verdict for the amount owed on the Stutz Road

Note and offsetting the damages for the breach of the note against the contingent fee found by

the jury.

        Len-Mac brings two issues. Its first issue asserts the trial court erred in its calculation of

the amount owing on the Len-Mac Note, and its second issue asserts the trial court erred by

granting Priority’s motion for judgment on the collateral assignment of the Residential

Development Agreement.

        Priority brings two cross-issues contending (1) the trial court erred by denying Priority’s

motion for judgment notwithstanding the verdict on the jury’s determination of the amount of the

contingent fee under the Residential Development Agreement; and (2) the trial court erred by

awarding Len-Mac its attorney’s fees.

       SUMMARY JUDGMENT ON LIABILITY FOR THE STUTZ ROAD NOTE

        In their first issue, Stutz Road and White contend the trial court erred by granting Priority

Development’s motion for partial summary judgment on its claims against them for breach of the

Stutz Road Note and White’s guaranty of that note. In the motion, Priority Development sought

summary judgment that Stutz Road was liable on the note and White was liable on the guaranty.

Priority did not move for summary judgment on the amount of damages, i.e., the amount of

                                                 –7–
principal and interest owed on the note. The trial court granted the motion for partial summary

judgment and ordered that Stutz Road was liable on the note and White was liable on his

guaranty of the note.

       The standard for reviewing a traditional summary judgment is well established. See

Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548–49 (Tex. 1985); McAfee, Inc. v. Agilysys,

Inc., 316 S.W.3d 820, 825 (Tex. App.—Dallas 2010, no pet.). The movant has the burden of

showing that no genuine issue of material fact exists and that it is entitled to judgment as a matter

of law. TEX. R. CIV. P. 166a(c). In deciding whether a disputed material fact issue exists

precluding summary judgment, evidence favorable to the nonmovant will be taken as true.

Nixon, 690 S.W.2d at 549; In re Estate of Berry, 280 S.W.3d 478, 480 (Tex. App.—Dallas 2009,

no pet.). Every reasonable inference must be indulged in favor of the nonmovant and any doubts

resolved in its favor. City of Keller v. Wilson, 168 S.W.3d 802, 824 (Tex. 2005). We review a

summary judgment de novo to determine whether a party’s right to prevail is established as a

matter of law. Dickey v. Club Corp., 12 S.W.3d 172, 175 (Tex. App.—Dallas 2000, pet. denied).

       To establish Stutz Road’s liability on the Stutz Road Note, Priority had the burden of

proving the note in question, that Stutz Road signed the note, that Priority was the legal owner

and holder of the note, and that a balance was due and owing on the note. See TrueStar

Petroleum Corp. v. Eagle Oil & Gas Co., 323 S.W.3d 316, 319 (Tex. App.—Dallas 2010, no

pet.). Stutz Road and White assert that Priority failed to prove the last element, that a balance

was due and owing on the note. They do not contest that Priority conclusively proved the other

elements.

                                                –8–
       The note set out how the principal and interest were to be paid:

                                 Principal and Interest Payments:

       Principal and Interest accrued in accordance with this Note shall be repaid from
       Contingent Fees earned and payable to Len-Mac Development Corp (“LMDC”)
       in accordance with the terms of Article V of that certain Residential Development
       Agreement dated February 15, 2005 (the “RDA”) by and between LMDC and
       Lender. In accordance with the terms and provisions of a Collateral Assignment
       of LMDC’s interest in the RDA to Lender dated June 5, 2007, Lender will retain
       Contingent Fee payments that become due on the RDA as payments from
       Borrower. Such payments will be applied first to accrued but unpaid interest and
       then to principal.

The note also stated that the unpaid principal and accrued but unpaid interest “shall be due and

payable in full on November 30, 2008.” The note was secured by Len-Mac’s “Collateral

Assignment of Interest in Residential Development Agreement,” in which Len-Mac granted

Priority a security interest in all of Len-Mac’s “rights, title and interest” under the Residential

Development Agreement. The collateral assignment authorized and instructed Priority to retain

80 percent “of each Contingent Fee payment that would be paid to Pledgor [Len-Mac] under the

[Residential Development] Agreement.” The assignment stated that the retained contingent fee

was to be used first to pay the Len-Mac Note in full and then used to pay the Stutz Road Note.

       In its motion for summary judgment, Priority stated and presented evidence that the note

had matured but Stutz Road had not made any payments on the note. Priority did not address the

note’s statement that the indebtedness would be paid from the contingent fee retained by Priority

that would otherwise have been paid to Len-Mac. White testified that no contingent fee had

been paid to Len-Mac. Because the note permitted the loan to be paid from the contingent fee

retained by Priority under the Residential Development Agreement, Priority’s assertion in the

motion and its summary judgment evidence that Stutz Road had not made any payments on the

note did not conclusively establish that an amount was due and owing under the note. If 80

percent of the contingent fee would have been sufficient to pay the $250,000 principal and all

                                               –9–
accrued interest under the Len-Mac Note as well as the $600,000 principal and all accrued

interest under the Stutz Road Note, then no balance would have been due and owing under the

Stutz Road note, the note would not have been in default, and White would have had no liability

under his guaranty of the Stutz Road Note. Because Priority’s motion for summary judgment

and summary judgment evidence did not address the contingent fee, its motion for summary

judgment failed to prove conclusively the element that a balance was due and owing under the

Stutz Road Note. We conclude the trial court erred by granting Priority’s motion for summary

judgment as to Stutz Road’s liability on the Stutz Road Note and White’s liability on his

guaranty of the note.

           Although we conclude the trial court erred by granting the motion for summary judgment

on Stutz Road’s liability on the Stutz Road Note and White’s liability on his guaranty of the note,

we cannot reverse unless the error probably caused the rendition of an improper judgment. TEX.

R. APP. P. 44.1(a)(1). In this case, the error would not cause the rendition of an improper

judgment if Priority proved at trial that the amount of the contingent fee it was authorized to

retain (80 percent of the total contingent fee) was not sufficient to pay the principal and interest

of both notes at the time the contingent fee became payable to Len-Mac.

           The jury found that “the Contingent Fee” under the Residential Development Agreement

was $1,037,000.3 It was undisputed that Priority did not make any payment of the contingent fee

to Len-Mac.              Therefore, any contingent fee earned under the Residential Development

Agreement was retained by Priority. The collateral assignment authorized Priority to retain 80

percent of the contingent fee and to apply it to the two promissory notes. The contingent fee was

60 percent of the amount by which the receipts from the project exceeded the acquisition and

     3
        As discussed below, no evidence supported the jury’s finding that the contingent fee was $1,037,000. All the evidence of the contingent
fee showed it was, at most, less than half that amount. However, for purposes of this issue, we apply the jury’s finding of the contingent fee,
because even using this unreasonably high calculation for the contingent fee, the portion of the fee to be allocated to payment of the notes was not
sufficient to pay them.

                                                                      –10–
development costs. The evidence presented at the trial established that the receipts did not

exceed the costs until Priority transferred the last 52 lots to Weekley in April 2009. There was

no evidence that the receipts exceeded the costs before that date and no evidence that Weekley

had any receipts after that date. Therefore, if 80 percent of the contingent fee did not exceed the

amounts due and owing on the two promissory notes in April 2009,4 then the trial court’s error in

granting summary judgment on Stutz Road’s and White’s liability on the Stutz Road note and its

guaranty will have been harmless.

          At trial, Priority introduced amortization tables for both notes. Those tables showed that

in April 2009, there was $282,369.32 in principal and interest owing on the Len-Mac Note,

$688,908.33 in principal and interest owing on the Stutz Road Note, and the total principal and

interest on both notes was $971,277.65. At the trial, the jury was asked only one question:

“How much is the Contingent Fee (Paragraph 5.03 of Defendant’s Exhibit 33 [the Residential

Development Agreement]), if any?” The jury answered, “$1,037,000.”                                                Eighty percent of

$1,037,000 is $829,600, which is less than the amount owing on the two notes. In fact, it is less

than the $850,000 of principal owed on the two notes.

          Because the evidence at trial conclusively established that the amount of the contingent

fee Priority was authorized to retain and apply to the promissory notes was less than the amount

owed on the notes, the evidence conclusively established there was a balance due on the Stutz

Road Note. The trial court’s error in granting summary judgment on Stutz Road’s liability on

the Stutz Road Note and White’s liability on the guaranty of that note did not cause the rendition

     4
       We make no determination of when the contingent fee should have been applied to the notes and paid to Len-Mac. The Residential
Development Agreement stated the contingent fee was due “No later than twenty (20) days following the closing of each calendar month’s
accounting records at the end of which month there is Project Available Cash.” The agreement transferring the lots to Weekley and allocating
$2,767,120 to their value occurred on April 30, 2009. The record does not show when the accounting records for April 2009 closed, and no party
contends they did not close. However, the contingent fee could not have been payable before the April 30, 2009 agreement transferring the lots
from Priority to Weekley. Therefore, the April 30 date represents a best-case scenario for Len-Mac, Stutz Road, and White because the interest
due on the notes would have been lower than at any other date.

                                                                   –11–
of an improper judgment. Therefore, the error is not reversible. We overrule Stutz Road and

White’s first issue.

   SUMMARY JUDGMENT ON STUTZ ROAD AND WHITE’S COUNTERCLAIMS

       In their second issue, Stutz Road and White contend the trial court erred by granting

Priority’s no-evidence motion for summary judgment on their counterclaims.

       We review a no-evidence summary judgment under the same legal sufficiency standard

used to review a directed verdict. See TEX. R. CIV. P. 166a(i); Flood v. Katz, 294 S.W.3d 756,

762 (Tex. App.—Dallas 2009, pet. denied). Thus, we must determine whether the nonmovant

produced more than a scintilla of probative evidence to raise a fact issue on the material

questions presented. See id. When analyzing a no-evidence summary judgment, we consider all

the evidence in the light most favorable to the nonmovant, indulging every reasonable inference

and resolving any doubts against the movant. Sudan v. Sudan, 199 S.W.3d 291, 292 (Tex. 2006)

(quoting City of Keller v. Wilson, 168 S.W.3d 802, 824 (Tex. 2005)). A no-evidence summary

judgment is improperly granted if the respondent brings forth more than a scintilla of probative

evidence to raise a genuine issue of material fact. King Ranch, Inc. v. Chapman, 118 S.W.3d
742, 751 (Tex. 2003). “More than a scintilla of evidence exists when the evidence rises to a

level that would enable reasonable, fair-minded persons to differ in their conclusions.” Id.

(quoting Merrell Dow Pharms., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex. 1997)). “Less than a

scintilla of evidence exists when the evidence is ‘so weak as to do no more than create a mere

surmise or suspicion’ of a fact.” Id. (quoting Kindred v. Con/Chem, Inc., 650 S.W.2d 61, 63

(Tex. 1983)).

                                             –12–
                                                         Breach of Contract

           Stutz Road and White first complain that the trial court erred by granting Priority’s

motion for summary judgment on their claim for breach of contract.5 In their pleading, Stutz

Road and White asserted they were third-party beneficiaries of the Residential Development

Agreement and that Priority breached the Residential Development Agreement by failing to use

the contingent fee to pay the Stutz Road Note. Priority’s motion for summary judgment asserted

there was no evidence that Stutz Road and White were third-party beneficiaries of the

Residential Development Agreement.

           Neither Stutz Road nor White were parties to the Residential Development Agreement,

and Stutz Road did not exist when the Residential Development Agreement was executed and

took effect. “A third party may recover on a contract made between other parties only if the

parties intended to secure a benefit to that third party, and only if the contracting parties entered

into the contract directly for the third party’s benefit.” Stine v. Stewart, 80 S.W.3d 586, 589

(Tex. 2002) (per curiam). “A third party does not have a right to enforce the contract if [the

party] received only an incidental benefit.” Id. “A court will not create a third-party beneficiary

contract by implication.” Id. (quoting MCI Telecomms. Corp. v. Tex. Util. Elec. Co., 995 S.W.2d
647, 651 (Tex. 1999)). “Rather, an agreement must clearly and fully express an intent to confer

a direct benefit to the third party.” Id. “To determine the parties’ intent, courts must examine

the entire agreement when interpreting a contract and give effect to all the contract’s provisions

so that none are rendered meaningless.” Id.

      5
        The trial court’s order stated that Priority’s motion for summary judgment on Stutz Road and White’s counterclaims was granted, and it
“ORDERED that the following counterclaims asserted by Stutz [Road] and White . . . are hereby dismissed with prejudice: fraud, civil
conspiracy, breach of fiduciary duty, accounting, and statutory fraud.” According to this order (and Stutz Road and White do not cite to any other
order as dismissing their breach of contract counterclaim), the trial court did not dismiss their breach of contract counterclaim. However, the
parties and the trial court treated the order as having dismissed this counterclaim. In the interest of justice, we address Stutz Road and White’s
arguments concerning that counterclaim.

                                                                     –13–
       Priority’s motion for summary judgment asserted “there is no evidence that (a) the

contracting parties (Priority and Len-Mac) intended to secure a benefit for White or Stutz

[Road]; or (b) that the contracting parties entered into the contract directly for White or Stutz

[Road]’s benefit.”

       Stutz Road and White argue on appeal, “There was an expressed intent to confer a direct

benefit on Stutz Road by the inclusion of Priority Development’s obligations under the RDA,

and more than a scintilla of evidence existed regarding same.” The note and the assignment of

collateral granting Priority a security interest in the Residential Development Agreement express

an intent that Priority retain 80 percent of the contingent fee that would be owing to Len-Mac

and put that toward payment of the two promissory notes. However, this is not evidence that

Len-Mac and Priority entered into the Residential Development Agreement for the benefit of

Stutz Road and White. Stutz Road did not exist and White’s status as guarantor of the Stutz

Road Note did not exist when Len-Mac and Priority entered into the Residential Development

Agreement.

       To the extent Stutz Road and White may be arguing the Stutz Road Note, assignment of

collateral, and White’s guaranty modified the Residential Development Agreement creating an

express intent in the modified agreement that the Residential Development Agreement benefit

Stutz Road and White, we disagree. The Residential Development Agreement states, “This

Agreement may not be modified or amended except in writing signed by both parties hereto.”

Priority did not sign the Stutz Road Note, the guaranty, or the assignment of collateral.

Therefore, those documents did not modify the Residential Development Agreement.

       We conclude the trial court did not err by granting Priority’s no-evidence motion for

summary judgment on Stutz Road and White’s cause of action for breach of contract.

                                              –14–
                                                                 Fraud

          Stutz Road and White contend the trial court erred by granting Priority’s no-evidence

motion for summary judgment on their claim for fraud. In its motion for summary judgment,

Priority asserted “there is no evidence that Priority made any false statements to Stutz [Road] or

White (in his individual capacity).”

          One of the elements of fraud that Stutz Road and White had the burden of proving was

that Priority “made a material misrepresentation,” i.e., a false statement.                                         Exxon Corp. v.

Emerald Oil & Gas Co., L.C., 348 S.W.3d 194, 217 (Tex. 2011) (elements of fraud);

Misrepresentation, BLACK’S LAW DICTIONARY 1152 (2014) (defining “misrepresentation” as

meaning “an incorrect, unfair, or false statement”). In their counterclaim, Stutz Road and White

alleged, “Priority Development made false statements to [Stutz Road and White] regarding the

sufficiency of funds available from the sale of the Lots pursuant to the Agreement for Sale and

Purchase of Lots between Priority Development and Weekley Homes, L.P. for securement of the

Promissory Note and Guaranty.” On appeal, Stutz Road and White assert they “provided the

trial court with evidence that Priority Development falsely represented the sufficiency of funds

from which payment was to be contractually made.” They cite generally to White’s affidavit and

deposition and the affidavit of his accountant and lawyer, Daniel Schreimann, but they do not

identify any particular statements in those documents as constituting evidence of the

misrepresentations. We have reviewed those documents, and we have found no evidence of a

representation by Priority that 80 percent of the contingent fee would be sufficient to pay the

Stutz Road Note.6

     6
       If those representations are somewhere in those documents, then Stutz Road and White’s citation to the documents generally and not to
the specific page or pages where they appear in the record fails to comply with the requirement of TEX. R. APP. P. 38.1(i) that parties make
“appropriate citations . . . to the record.” See Leija v. Laredo Comty. Coll., 04-10-00410-CV, 2011 WL 1499440, at *5 (Tex. App.—San Antonio
Apr. 20, 2011, no pet.) (mem. op.) (“When a summary judgment respondent fails to direct the reviewing court to specific summary judgment
evidence, a fact issue cannot be raised sufficient to defeat summary judgment.”); Arredondo v. Rodriguez, 198 S.W.3d 236, 238–39 (Tex. App.—

                                                                  –15–
          Stutz Road and White also assert on appeal that Priority represented “that it was

accounting and applying payment to the Stutz Road Note as agreed”; and “that it was properly

and diligently complying with its obligations as to the contingent fees . . . .” They cite generally

to White’s deposition and Schreimann’s affidavit in support of their assertion that Priority made

these representations. White’s deposition and Schreimann’s affidavit contain no evidence that

Priority represented it was accounting for the contingent fee and applying it to the Stutz Road

Note.

          We conclude the trial court did not err by granting Priority’s motion for summary

judgment on Stutz Road and White’s claim of fraud.

                                                  Breach of Fiduciary Duty

          Stutz Road and White also contend the trial court erred by granting Priority’s

no-evidence motion for summary judgment on their claim for breach of fiduciary duty. Priority

asserted in its motion for summary judgment “there is no evidence Priority owed a fiduciary duty

to Stutz [Road] or White.”

          Stutz Road and White argue they were “joint adventurers” with Priority because the note

and collateral assignment provide that repayment of the loan was to be from the contingent fee.

Parties in a joint venture owe a fiduciary duty to one another. Bohatch v. Butler & Binion, 977
S.W.2d 543, 550 (Tex. 1998). A joint venture has four elements: (1) a community of interest in

the venture, (2) an agreement to share profits, (3) an agreement to share losses, and (4) a mutual

right of control or management of the enterprise. Ayco Dev. Corp. v. G.E.T. Serv. Co., 616
S.W.2d 184, 186 (Tex. 1981); Smith v. Deneve, 285 S.W.3d 904, 913 (Tex. App.—Dallas 2009,

no pet.).       Even if Stutz Road and White had an interest in the Residential Development

San Antonio 2006, no pet..) (court reviewing a summary judgment is not required “to wade through a voluminous record to marshal respondent’s
proof” to determine whether the respondent carried its burden; “[a]n appellant has a duty to show that the record supports its contention”).

                                                                  –16–
Agreement and had agreed with Priority to share its profits, there is no evidence that Stutz Road

and White agreed to share in any losses incurred under the Residential Development Agreement

or that they had any right of control or management under the Residential Development

Agreement. There is no evidence that Stutz Road and White were in a joint venture with

Priority.

        We conclude Stutz Road and White presented no evidence that Priority owed them a

fiduciary duty.   Accordingly, the trial court did not err by granting Priority’s motion for

summary judgment on Stutz Road and White’s claim for breach of fiduciary duty.

        We conclude the trial court did not err by granting Priority’s no-evidence motion for

summary judgment on these counterclaims. We overrule Stutz Road and White’s second issue.

                                           DAMAGES

        Len-Mac, Stutz Road, White, and Priority complain of the trial court’s award of damages.

Len-Mac asserts in its first issue and Stutz Road and White in their third issue that the trial court

erred by offsetting the contingent fee found by the jury against the amounts owed on the notes on

the day of trial instead of applying the contingent fee to the notes when the fee would otherwise

have been payable to Len-Mac, which would have reduced the amount of interest accrued on the

notes. Priority contends in its first cross-issue that the evidence is insufficient to support the

jury’s finding that the amount of the contingent fee under the Residential Development

Agreement was $1,037,000. We address Priority’s cross-issue first.

                                 Amount of the Contingent Fee

        In its first cross-issue, Priority contends the trial court erred by denying its motion for

judgment notwithstanding the verdict and by rendering judgment based on the jury’s finding of

the contingent fee. Priority asserts the jury disregarded the evidence and failed to calculate the

contingent fee using the method set out in the Residential Development Agreement.

                                               –17–
       We review a trial court’s decision whether to grant a motion for judgment

notwithstanding the verdict under a no–evidence standard, examining whether any evidence

supports the jury’s findings. Gharda USA, Inc. v. Control Solutions, Inc., 464 S.W.3d 338, 347

(Tex. 2015); see also City of Keller v. Wilson, 168 S.W.3d 802, 823 (Tex. 2005) (test for legal

sufficiency is same for summary judgment, directed verdict, JNOV, and appellate no–evidence

review). No evidence exists when there is:

       (a) a complete absence of evidence of a vital fact; (b) the court is barred by rules
       of law or of evidence from giving weight to the only evidence offered to prove a
       vital fact; (c) the evidence offered to prove a vital fact is no more than a mere
       scintilla; (d) the evidence establishes conclusively the opposite of a vital fact.

Gharda USA, Inc., 464 S.W.3d at 347 (quoting City of Keller, 168 S.W.3d at 810). We review

only the evidence tending to support the jury’s verdict and “must disregard all evidence to the

contrary.” Id. (quoting Mancorp, Inc. v. Culpepper, 802 S.W.2d 226, 227 (Tex. 1990)). We

consider the evidence and possible inferences in the light most favorable to the finding under

review and indulge every reasonable inference that would support it. Id.; City of Keller, 168
S.W.3d at 822. We will uphold the jury’s finding if more than a scintilla of competent evidence

supports it. Gharda USA, Inc., 464 S.W.3d at 347; Tanner v. Nationwide Mut. Fire Ins. Co., 289
S.W.3d 828, 830 (Tex. 2009). “More than a scintilla of evidence exists when the evidence

supporting the finding ‘rises to a level that would enable reasonable and fair-minded people to

differ in their conclusions.’”   Gharda USA, Inc., 464 S.W.3d at 347 (quoting Burroughs

Wellcome Co. v. Crye, 907 S.W.2d 497, 499 (Tex. 1995)).

       In this case, the jury was asked, “How much is the Contingent Fee (Paragraph 5.03 of

Defendant’s Exhibit 33), if any?” Defendant’s Exhibit 33 was the Residential Development

Agreement. Although the jury was not asked to find an amount of damages, the standards

for reviewing damages findings are helpful in this case because, like a finding of damages,

the question required the jury to calculate a number based on its analysis of the evidence.
                                              –18–
The jury generally has broad discretion to award damages within the range of evidence presented

at trial. See Gulf States Utils. Co. v. Low, 79 S.W.3d 561, 566 (Tex. 2000). When a precise

method for determining damages is presented, the jury may not arbitrarily assess an amount not

authorized or supported by the evidence. See First State Bank of Keilman, 851 S.W.2d 914, 931

(Tex. App.—Austin 1993, writ denied). In other words, the verdict must fall within the range of

the evidence presented, and a jury may not “pull figures out of a hat” in assessing damages. See

CCC Grp., Inc. v. S. Cent. Cement, Ltd., 450 S.W.3d 191, 200 (Tex. App.—Houston [1st Dist.]

2014, no pet.).

       The Residential Development Agreement stated the “Contingent Fee” was “sixty percent

(60%) of Project Available Cash.” The agreement defined Project Available Cash as meaning:

       all receipts derived from the conduct of the business of the Project, and proceeds
       from the sale of all or any portion of the Project whether by sale of lots or
       otherwise, reduced by such amounts as are necessary (a) to repay Acquisition
       Costs and Development Costs incurred to date, and (b) to provide reserves for the
       reasonable needs of the business of the Project as Owner [Priority] and Developer
       [Len-Mac] mutually agree to in writing, including, without limitation, estimating
       future Development Costs and future principal and interest payments associated
       with acquisition and development debt included in Acquisition Costs. (If the
       parties disagree on the need for a reserve or its size, the cash involved in the
       dispute shall not be distributed pending resolution of the dispute.) At any time,
       Developer may make a written request of Owner to make a determination of
       Project Available Cash within ten (10) days of such request. For purposes of
       determining Project Available Cash, no more than $285,000 shall be included as
       Development Costs over the lifetime of the Project for end-of-year ad valorem tax
       payments due with respect to unsold Lots. The foregoing cap does not apply to ad
       valorem taxes that are prorated to (and thus paid by) Owner in connection with
       any sale of Lots, however.

(Emphasis added.) In short, Project Available Cash was receipts from the business minus

acquisition and development costs and any necessary cash reserve. Because all the lots have

been transferred and the acquisition and development costs have all been paid, no cash reserve is

necessary. Therefore, the Project Available Cash is the receipts minus the acquisition and

development costs, and the contingent fee is 60 percent of that number.

                                              –19–
          The receipts for the business consisted of $6,391,586.42 for the lots sold to Weekley

through February 5, 2009, and $2,767,120 for the lots transferred to Weekley on April 30, 2009

to pay back the $10 million loan from Weekley. These receipts total $9,158,706.42.7 The

amount of the acquisition and development costs was disputed: Priority maintained the costs

were $8,904,601; White testified those costs were $8,339,000. Using Priority’s calculation of

the costs, the Project Available Cash would be $9,158,706.42 minus $8,904,601, which equals

$254,105.42; 60 percent of that amount, $152,463.25, would be the contingent fee. Using

White’s calculation of the costs, the Project Available Cash would be $9,158,706.42 minus

$8,339,000, which equals $819,706.42, and the contingent fee would be $491,823.85. However,

none of the amounts in evidence for Priority’s receipts or the acquisition and development costs

would have permitted the jury to get anywhere near the contingent fee it found of $1,037,000.

We agree with Priority that no evidence supported the jury’s finding.

          Len-Mac argues the jury’s finding should be interpreted as damages caused by Priority’s

multiple breaches of the Residential Development Agreement, including transferring the last 52

lots to Weekley for only $2,767,120 when they were worth $4,000,000. Using that figure would

raise Priority’s receipts to $10,391,586.42, and using White’s figure for the acquisition and

development costs, $8,339,000, would result in Project Available Cash of $2,052,586.42 and a

contingent fee of $1,231,551.85, which exceeds the jury’s finding of the contingent fee. The

argument lacks merit because the jury’s finding cannot be interpreted as damages. 8 The jury

question was clear: “How much is the Contingent Fee (Paragraph 5.03 of Defendant’s Exhibit

33), if any?” The jury was not asked to determine the amount of Len-Mac’s damages for

     7
       The parties’ calculations apparently do not include the $10,000 earnest money received by Priority from Weekley when the lot-purchase
agreement was terminated. We make no determination whether that amount should be included in the determination of “all receipts derived from
the conduct of the business of the Project.”
     8
        Len-Mac also states in its brief, “The jury determined that [sic] breached the RDA.” Presumably, Len-Mac means the jury determined
that Priority breached the Residential Development Agreement. However, the jury was not asked to determine whether Priority breached the
agreement, and it made no such determination.

                                                                  –20–
breach of the Residential Development Agreement. The jury’s answer can be interpreted

only as the contingent fee under the Residential Development Agreement, which is expressly

defined as 60 percent of the difference between Priority’s receipts and the acquisition and

development costs. The record does not support Len-Mac’s argument that the jury’s finding

was for damages and was not limited to the contingent fee as defined in the Residential

Development Agreement.

       Although no evidence supports the jury’s finding of $1,037,000 for the contingent

fee, we cannot substitute a finding unless the evidence conclusively establishes the amount of

the contingent fee. See Favaloro v. Comm’n for Lawyer Discipline, 994 S.W.2d 815, 823

(Tex. App.—Dallas 1999, pet. struck). In this case, the amount of the contingent fee is not

conclusively established and remains a fact question because of the conflicting testimony

concerning the amount of the acquisition and development costs. The parties’ testimony

concerning the amount of the acquisition and development costs varies by $565,601,

resulting in a difference of $339,360.60 in the contingent fee using the different acquisition

and development costs. We conclude the trial court erred by rendering judgment based on

the jury’s verdict. We sustain Priority’s first cross-issue.

                                    Calculation of Damages

       In Len-Mac’s first issue and Stutz Road and White’s third issue, those parties contend

the trial court erred by granting a directed verdict as to the amount of Priority’s damages for

the breaches of the notes and White’s guaranties.

       In rendering judgment, the trial court took the amount of the contingent fee found by

the jury, added an award of attorney’s fees to Len-Mac, and then subtracted the principal and

                                              –21–
interest owed on both notes as of the day of trial and the awards of attorney’s fees to Priority.

This resulted in a net judgment for Len-Mac against Priority of $9,336.91.

       Len-Mac, Stutz Road, and White argue that the contingent fee should have been

applied to the notes at the time the fee would otherwise have been payable to Len-Mac.

They assert that doing so would have reduced the amount of principal and interest owing on

the notes. They are correct in part: the trial court should have apportioned to the notes the

amount of the contingent fee authorized to be retained toward payment of the notes at the

time the contingent fee would otherwise have been payable to Len-Mac. That amount of the

contingent fee was 80 percent of the contingent fee, not the entire contingent fee. According

to the terms of the notes and the collateral assignments, 80 percent of the contingent fee

should be applied first to the principal and interest owing on the Len-Mac Note. If 80

percent of the contingent fee is sufficient to pay the principal and interest owing on the

Len-Mac Note on the day the contingent fee would otherwise have been payable to Len-Mac,

then any remaining amounts of the 80 percent of the contingent fee should be applied to the

principal and interest owing on the Stutz Road Note on the same date. Interest on any

principal not covered by the 80 percent of the contingent fee would continue to accrue. The

remaining twenty percent of the contingent fee would be the amount owed to Len-Mac under

the Residential Development Agreement.

       We sustain Len-Mac’s first issue and Stutz Road and White’s third issue.

                                    ATTORNEY’S FEES

       In the second cross-issue, Priority contends the trial court erred by awarding Len-Mac

attorney’s fees of $206,163 on its claim for breach of the Residential Development Agreement.

Priority contends Len-Mac failed to meet the prerequisite of presentment of the claim, failed to

segregate the attorney’s fees for recoverable claims from the fees attributable to the claims on
                                              –22–
which it did not recover, and failed to present sufficient evidence of the fees. See TEX. CIV.

PRAC. & REM. CODE ANN. § 38.002(2) (West 2015) (presentment-of-claim requirement); Long v.

Griffin, 442 S.W.3d 253, 255 (Tex. 2014) (per curiam) (sufficiency of evidence of time spent on

specific tasks); Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 312–14 (Tex. 2006)

(segregation of fees). Because we reverse the trial court’s awards of damages in this case, we

also reverse the awards of attorney’s fees. See Mustang Pipeline Co. v. Driver Pipeline Co., 134
S.W.3d 195, 201 (Tex. 2004) (per curiam); Paradigm Oil, Inc. v. Retamco Operating, Inc., 242
S.W.3d 67, 75 (Tex. App.—San Antonio 2007, pet. denied). Accordingly, we do not address

Priority’s arguments.

                                              COLLATERAL ASSIGNMENT

           Len-Mac contends in its second issue that the trial court erred by granting Priority’s

motion for judgment on the collateral assignment of the Stutz Road Note. Priority’s prayer in the

motion asked that any amount it owed Len-Mac for the contingent fee be reduced in the

judgment by the amount owed for principal and interest on the Stutz Road Note. The trial

court’s order granting the motion stated that all amounts Stutz Road owed to Priority in

connection with the $600,000 note “shall be applied to and shall reduce the amounts that

[Priority] owes to [Len-Mac].”

           Len-Mac appears to argue that Priority’s failure to account for the contingent fee meant

that the collateral represented by the collateral assignment, the contingent fee, never came into

existence.9 Len-Mac’s argument appears to be based on evidence that Priority did not set up an

accounting system to determine the amount of Project Available Cash or the contingent fee.

Because the contingent fee never came into existence, Len-Mac asserts, it was not retained by

     9
        Priority states that “Len-Mac’s articulation of this argument is nearly indecipherable.” We do not disagree. The legal arguments Len-Mac
asserts are not clear, and to the extent we may have misstated them and misunderstood the import of the arguments, we conclude they are waived
for improper briefing. See TEX. R. APP. P. 38.1(i) (brief must contain a “clear” argument for the contentions made).

                                                                    –23–
Priority. Thus, Len-Mac concludes, the jury’s finding of $1,037,000 as the amount of the

contingent fee should be considered a finding of damages for Priority’s failure to account for and

to pay the contingent fee. We disagree. The contingent fee was a concept created by the

Residential Development Agreement. Regardless of whether Priority took steps to account for

the contingent fee, the contingent fee was 60 percent of the difference between the receipts and

the acquisition and development costs. Priority’s failure to set up an accounting system to

determine the amount of the fee does not mean the fee did not exist or that it was not collateral

securing payment of the notes. To the extent the contingent fee was not paid to Len-Mac, it was

retained by Priority. It was undisputed that Priority did not pay any amount of the contingent fee

to Len-Mac; therefore, Priority retained the entire amount. To the extent Len-Mac argues the

jury’s finding was a finding of the damages Len-Mac suffered, we disagree. As discussed above,

the jury was not instructed to find damages. The jury’s finding of “the Contingent Fee” was

specifically the amount of the contingent fee under section 5.03 of the Residential Development

Agreement, and nothing more.

       We overrule Len-Mac’s second issue.

                                        CONCLUSION

       We reverse the trial court’s judgment in part. We reverse the trial court’s judgment on

Priority’s claims against Len-Mac and Stutz Road for breach of the notes and against White for

breach of the guaranties, and we reverse the trial court’s judgment on Len-Mac’s claim against

Priority for breach of the Residential Development Agreement for Priority’s failure to pay the

contingent fee, if any, owed to Len-Mac. We also reverse the trial court’s awards of attorney’s

fees to all parties. In all other respects, we affirm the trial court’s judgment. We remand the

cause to the trial court for further proceedings. See Formosa Plastics Corp. USA v. Presidio

Eng’rs & Contractors, Inc., 960 S.W.2d 41, 51 (Tex. 1998) (“[B]ecause there is no legally

                                              –24–
sufficient evidence to support the entire amount of damages, but there is some evidence of the

correct measure of damages, we . . . remand the cause for a new trial.”).

131752F.P05
                                                   /Lana Myers/
                                                   LANA MYERS
                                                   JUSTICE

                                               –25–
                               Court of Appeals
                        Fifth District of Texas at Dallas
                                      JUDGMENT

STUTZ ROAD LIMITED PARTNERSHIP                      On Appeal from the County Court at Law
AND WILLIAM D. WHITE, III AND LEN-                  No. 2, Dallas County, Texas
MAC DEVELOPMENT CORPORATION,                        Trial Court Cause No. CC-10-01696-B.
Appellants                                          Opinion delivered by Justice Myers. Justices
                                                    Bridges and Francis participating.
No. 05-13-01752-CV         V.

WEEKLEY HOMES, L.P. D/B/A DAVID
WEEKLEY HOMES AND PRIORITY
DEVELOPMENT, L.P., Appellees

In accordance with this Court’s opinion of this date, the judgment of the trial court is
AFFIRMED in part and REVERSED in part. We REVERSE the trial court’s judgment as to
appellee Priority Development, L.P.’s causes of action against appellant Len-Mac Development
Corporation for breach of the Len-Mac Promissory Note and against appellant William D.
White, III for breach of his guaranty of the Len-Mac Promissory Note. We REVERSE the trial
court’s judgment as to appellee Priority Development, L.P.’s causes of action against appellant
Stutz Road Limited Partnership for breach of the Stutz Road Promissory Note and against
appellant William D. White, III for breach of his guaranty of the Stutz Road Promissory Note.
We REVERSE the trial court’s judgment as to appellant Len-Mac Development Corporation’s
cause of action against appellee Priority Development, L.P. for breach of the Residential
Development Agreement for failure to pay the Contingent Fee under Section 5.03 of the
Residential Development Agreement. We also REVERSE the trial court’s awards of attorney’s
fees to all parties. In all other respects, the trial court’s judgment is AFFIRMED. We
REMAND this cause to the trial court for further proceedings consistent with this opinion.

       It is ORDERED that each party bear its own costs of this appeal.

Judgment entered this 4th day of November, 2015.

                                             –26–