Court Opinion

ID: 2985084
Source: CourtListenerOpinion
Date Created: 2015-09-22 22:15:24.876554+00
Date Added: 2024-06-11T13:18:35.495860
License: Public Domain

Affirmed in Part; Reversed and Remanded in Part; and Memorandum
Opinion filed January 9, 2014.

                                     In The

                    Fourteenth Court of Appeals

                             NO. 14-13-00034-CV

                   RO-BT INVESTMENTS, LLP, Appellant
                                       V.

     LE PROPERTIES, LLC AND LE COMMERCIAL, INC., Appellees

             On Appeal from the County Civil Court at Law No. 4
                           Harris County, Texas
                      Trial Court Cause No. 1013335

                 MEMORANDUM                     OPINION

      Le Properties, LLC and Le Commercial, Inc. (Le) sued RO-BT Investments,
LLP for breach of a property management agreement, seeking to collect a six
percent commission upon the sale of the property. The trial court signed a no-
answer default judgment in Le‘s favor, awarding $58,500 in damages and $11,700
in attorney‘s fees. RO-BT brought this restricted appeal. RO-BT contends the trial
court‘s judgment should be reversed because (1) Le‘s petition does not adequately
allege jurisdiction; (2) Le‘s petition does not state a cause of action or provide fair
notice of the claim involved; (3) there is no evidence of damages; and (4)
attorney‘s fees cannot be awarded when there is no evidence of damages.

      We sustain RO-BT‘s third and fourth issues, affirm the trial court‘s
judgment as to liability, reverse the trial court‘s judgment as to damages and
attorney‘s fees, and remand for a new trial on damages and attorney‘s fees.

                                I.     BACKGROUND

      Le sued RO-BT in a County Civil Court at Law. Le alleged in its petition
that Le and RO-BT signed a property management agreement commencing on
November 1, 2010, by which RO-BT employed Le as ―the exclusive party ‗to
manage, sale, lease, operate and maintain‘ the real property and improvements
generally described as the ‗Spring Cypress Center,‘ located at 4710 Spring Cypress
Road, Spring, Harris County, Texas 77379.‖            The petition states that ―the
Agreement provided for certain payments to be made‖ to Le, including, ―‗[f]or sale
of the Property or any portion thereof, a commission equal to six percent (6%) of
the gross sales price.‘‖ Le alleged further in paragraphs eight through eleven:

            8. By email dated April 18, 2012, Richard Ong of Defendant
      admitted to Kristen Nguyen of Plaintiff that Defendant was selling the
      Property during the week of April 23, 2012 to April 27, 2012.
              9. By email dated April 20, 2012, Francois Le of the Plaintiff
      notified Richard Ong of Defendant of Section 4.4 of the Agreement
      requiring Defendant to pay Plaintiff six percent (6%) of the gross
      sales price. In this same email, Mr. Le notified Mr. Ong that Plaintiff
      intended to enforce its rights to collect the commission pursuant to the
      Agreement and requested a response from Mr. Ong regarding whether
      or not Defendant intended to honor Section 4.4 of the Property by no
      later than April 23, 2012. Neither Mr. Ong, nor any other party
      associated or otherwise affiliated with Defendant, contacted Mr. Le or
      any other party associated or otherwise affiliated with Plaintiff about
      this issue.

                                          2
             10. Plaintiff files the lawsuit against Defendant to protect its
      rights, as provided in the Agreement, and collect the six percent (6%)
      commission upon the closing and funding of the Property.
                                Causes of Action
                                Breach of Contract
             11. The Agreement is a valid, enforceable agreement between
      Plaintiff and Defendant. Plaintiff is a proper party to sue for a breach
      of contract. Plaintiff has performed consistent with the terms of the
      Agreement. Defendant has breached the Agreement, or such a breach
      of the Agreement is anticipated, as Defendant is acting in a manner
      that is inconsistent with the unambiguous provisions of the
      Agreement. Defendant‘s breach has caused, or will cause, probable
      and foreseeable damages to Plaintiff.
Le requested relief in the form of ―un-liquidated actual damages/economic
damages,‖ among other things.

      RO-BT did not answer, and Le filed an unverified motion for default
judgment.   In the motion, Le alleged that no hearing was necessary because
damages were liquidated, so Le was entitled to six percent of a $985,500 sales
price, or $58,500 in damages. Le attached only the affidavit of its attorney, Brad
Porter, who primarily addressed the issue of attorney‘s fees. Porter testified,
―Plaintiff is entitled to, and has been awarded, Fifty-Eight Thousand Five Hundred
and No/100 Dollars ($58,500) in damages.‖

      The trial court did not hold a hearing on damages and granted the default
judgment in Le‘s favor for $58,500 in damages and $11,700 in attorney‘s fees.
Within six months of the judgment, RO-BT filed a timely notice of a restricted
appeal. See Tex. R. App. P. 26.1(c); Tex. R. App. P. 30.

                         II.    PLEADING JURISDICTION

      In its first issue, RO-BT contends that Le‘s petition failed to establish the
trial court‘s jurisdiction because the petition does not indicate that the amount in

                                         3
controversy is within the jurisdictional limits of the trial court, nor has Le alleged a
ripe controversy. RO-BT cites no rule, statute, case law, or any other authority to
support these contentions, and RO-BT makes several factual assertions without
citation to the record. RO-BT‘s brief is deficient on this issue. See Tex. R. App. P.
38.1(i) (appellant‘s brief must ―contain a clear and concise argument for the
contentions made, with appropriate citations to authorities and to the record‖); see
also, e.g., Nguyen v. Kosnoski, 93 S.W.3d 186, 188 (Tex. App.—Houston [14th
Dist.] 2002, no pet.) (―An issue not supported by authority is waived.‖).

       Further, RO-BT failed to raise the issue in the trial court. See Peek v. Equip.
Serv. Co. of San Antonio, 779 S.W.2d 802, 805 (Tex. 1989) (―In the absence of
special exceptions or other motion, defendant waives the right to complain of such
a defect if plaintiff establishes the trial court‘s jurisdiction before resting its
case.‖). As we will remand this case for a new trial on Le‘s damages, discussed
below in Part IV of this opinion, Le will have the opportunity to establish the trial
court‘s jurisdiction and cure any pleading defect.1

       RO-BT‘s first issue is overruled.

       1
           Ordinarily, parties should have an opportunity to amend their pleadings when a
jurisdictional pleading issue is raised for the first time on appeal and the petition does not
affirmatively negate jurisdiction. See Rusk State Hosp. v. Black, 392 S.W.3d 88, 96–97 (Tex.
2012). Le‘s petition does not affirmatively negate jurisdiction, as it states, ―Jurisdiction is also
proper pursuant to the statements contained in this petition,‖ and the amount in controversy is not
identified as being outside the jurisdictional limits of the trial court. Further, we note that a
controversy may ripen after filing of the petition, and a suit need not be dismissed under those
circumstances. See Perry v. Del Rio, 66 S.W.3d 239, 251–52 (Tex. 2001).

                                                 4
             III.   PLEADING A CAUSE OF ACTION AND FAIR NOTICE

      In its second issue, RO-BT contends Le‘s petition fails to state a cause of
action and does not provide RO-BT fair notice of the cause of action. The Texas
Supreme Court has explained,

      [W]hile a petition which serves as the basis for a default judgment
      may be subject to special exceptions, the default judgment will be
      held erroneous only if (1) the petition (or other pleading of the non-
      defaulting party that seeks affirmative relief) does not attempt to state
      a cause of action that is within the jurisdiction of the court, or (2) the
      petition (or pleading for affirmative relief) does not give fair notice to
      the defendant of the claim asserted, or (3) the petition affirmatively
      discloses the invalidity of such claim.
      ....

      [A] default judgment will stand if the plaintiff has alleged a claim
      upon which the substantive law will give relief, and has done so with
      sufficient particularity to give fair notice to the defendant of the basis
      of his complaint, even though he has stated some element or elements
      in the form of legal conclusions which will need to be revised if
      attacked by special exceptions.
Paramount Pipe & Supply Co. v. Muhr, 749 S.W.2d 491, 494–95 (Tex. 1988)
(quotations omitted). ―The purpose of the fair notice requirement is to provide the
opposing party with sufficient information to enable him to prepare a defense.‖ Id.
at 494.   Under the fair notice standard, ―courts assess the sufficiency of the
pleadings by determining whether an opposing party can ascertain from the
pleading the nature, basic issues, and the type of evidence that might be relevant to
the controversy.‖ Low v. Henry, 221 S.W.3d 609, 612 (Tex. 2007). ―[A] petition
is sufficient if a cause of action may reasonably be inferred from what is
specifically stated in the petition, ‗even if an element of the cause of action is not
specifically alleged.‘‖ Dodd v. Savino, No. 14-12-00555-CV, — S.W.3d —, 2013

                                          5
WL 5861517, at *11 (Tex. App.—Houston [14th Dist.] Oct. 31, 2013, no pet. h.)
(quoting Boyles v. Kerr, 855 S.W.2d 593, 601 (Tex. 1993)).

      From reviewing the petition, quoted at length above, we note that Le
described the contract by date and subject matter; identified the real property
subject to the agreement; identified and quoted the particular section of the
agreement concerning a six percent commission for the sale of the property;
identified by name persons that Le communicated with about the sale of the
property and the commission; and described the subject matter of those
communications giving rise to Le‘s concern that RO-BT was selling the property
and had breached or would imminently breach the contract. Further, Le included a
section titled ―Causes of Action‖ with a subtitle ―Breach of Contract,‖ which
identified the elements of the cause of action.

      Based on these allegations, RO-BT had sufficient information to enable it to
prepare a defense, understand the basic issues, and ascertain the type of evidence
that might be relevant to the controversy. Thus, we conclude RO-BT had fair
notice of the breach of contract cause of action. See Household Fin. Corp. III v.
DTND Sierra Invs., LLC, 2013 WL 5948899, at *6 (Tex. App.—San Antonio
Nov. 6, 2013, no pet. h.) (default judgment supported by fair notice of a breach of
contract claim although the petition omitted the damages element); Oliphant Fin.,
LLC v. Galaviz, 299 S.W.3d 829, 834–35 (Tex. App.—Dallas 2009, no pet.) (trial
court erred by not signing a default judgment because the petition gave fair notice
of a breach of contract claim when it identified the parties to the original credit
contract and the date credit was extended, described the defendant‘s credit account
as ―Yamaha-serviced,‖ and stated that the plaintiff acquired the defendant‘s
account from the original contracting party); Myan Mgmt. Group, L.L.C. v. Adam
Sparks Family Revocable Trust, 292 S.W.3d 750, 754–55 (Tex. App.—Dallas

                                          6
2009, no pet.) (affirming default judgment because the petition gave fair notice of a
breach of contract claim when the petition stated that the parties entered into three
contracts, quoted the relevant parts of the contracts, alleged that the respondent
violated the contracts, and stated that the petitioner was damaged); cf. Fairdale
Ltd. v. Sellers, 651 S.W.2d 725, 726 (Tex. 1982) (no default judgment because of a
lack of fair notice of a breach of contract claim concerning defective kitchen
cabinets when the petition failed to allege that the defendant contracted with the
plaintiff, built the house, provided or installed the cabinets, owed a duty to the
plaintiff, or warranted the cabinets); Crown Asset Mgmt., L.L.C. v. Loring, 294
S.W.3d 841, 843–44 (Tex. App.—Dallas 2009, pet. denied) (no default judgment
because of a lack of fair notice of a breach of contract claim concerning a lien;
petition alleged assignment of an account but did not provide any identifying
information about the underlying contract, the collateral, or a sale of the collateral;
it was ―impossible to determine from the petition with whom or for what [the
defendant] allegedly contracted‖).

       RO-BT‘s second issue is overruled.

                                        IV.     DAMAGES

       In its third issue, RO-BT contends that there is no evidence of damages. Le
responds that RO-BT cannot obtain a new trial on damages because RO-BT failed
to meet the Craddock test for obtaining a new trial after a default judgment.2

       2
          See, e.g., Sutherland v. Spencer, 376 S.W.3d 752, 754 (Tex. 2012) (―Under Craddock, a
trial court is required to set aside a default judgment if (1) ‗the failure of the defendant to answer
before judgment was not intentional, or the result of conscious indifference on his part, but was
due to a mistake or an accident‘; (2) ‗the motion for a new trial sets up a meritorious defense‘;
and (3) granting the motion ‗will occasion no delay or otherwise work an injury to the plaintiff.‘‖
(quoting Craddock v. Sunshine Bus Lines, Inc., 133 S.W.2d 124, 126 (Tex. 1939))).

                                                  7
       Craddock established the circumstances under which a trial court ―must,‖ or
is ―required to,‖ set aside a default judgment and order a new trial. See, e.g.,
Milestone Operating, Inc. v. ExxonMobil Corp., 388 S.W.3d 307, 309 (Tex. 2012);
Sutherland, 376 S.W.3d at 754. A defendant‘s failure to meet the Craddock test,
however, does not foreclose review of the sufficiency of the evidence of damages
to support a no-answer default judgment. See Holt Atherton Indus., Inc. v. Heine,
835 S.W.2d 80, 82–83, 86 (Tex. 1992) (reversing a no-answer default judgment for
legally insufficient evidence of damages although the defendant failed to meet the
Craddock test); Pentes Design, Inc. v. Perez, 840 S.W.2d 75, 79 (Tex. App.—
Corpus Christi 1992, writ denied) (reviewing sufficiency of the evidence to support
the damages awarded in a no-answer default judgment although the defendant
failed to meet the Craddock test). In a restricted appeal from a no-answer default
judgment, an appellant may challenge the sufficiency of the evidence supporting
the trial court‘s damages award. See Whitaker v. Rose, 218 S.W.3d 216, 221 (Tex.
App.—Houston [14th Dist.] 2007, no pet.); Jackson v. Gutierrez, 77 S.W.3d 898,
901 (Tex. App.—Houston [14th Dist.] 2002, no pet.).3

       Thus, RO-BT‘s issue concerning the sufficiency of the evidence to prove
Le‘s damages is properly before this court.                 RO-BT argues that there is no

       3
          As part of its Craddock argument, Le contends RO-BT admitted in its appellate brief
that RO-BT‘s failure to file an answer was intentional, and RO-BT cannot obtain a new trial on
damages under these circumstances. Even if RO-BT intentionally failed to file an answer,
however, this fact would not alter our scope of review. See Texaco, Inc. v. Cent. Power & Light
Co., 925 S.W.2d 586, 590 (Tex. 1996) (―As in an ordinary appeal, a writ of error [or restricted
appeal] appellant is not required to show diligence or lack of negligence before its complaints
will be heard. . . . [I]t is the fact of nonparticipation, not the reason for it, that determines the
right to appeal by writ of error.‖); see also Norman Commc’ns v. Tex. Eastman Co., 955 S.W.2d
269, 270 (Tex. 1997) (reversing and instructing the court of appeals, in a restricted appeal, to
address the defendant‘s legal sufficiency point of error although the court of appeals correctly
concluded that the defendant failed to prove lack of notice of the trial setting that led to a default
judgment; ―Review by writ of error affords an appellant the same scope of review as an ordinary
appeal, that is, a review of the entire case.‖).

                                                  8
evidence of Le‘s unliquidated damages because the trial court did not hold a
hearing, Le did not attach any evidence to its motion for a default judgment, and
Le‘s motion containing factual allegations about damages was unverified and
therefore not evidence. Le contends that there is some evidence of damages found
in the affidavit from its attorney, Brad Porter, who testified, ―Plaintiff is entitled to,
and has been awarded, Fifty-Eight Thousand Five Hundred and No/100 Dollars
($58,500) in damages.‖4

       ―It is well settled that once a default judgment is taken against a non-
answering defendant on an unliquidated claim, all allegations of fact set forth in
the petition are deemed admitted, except the amount of damages.‖ Tex. Commerce
Bank, Nat’l Ass’n v. New, 3 S.W.3d 515, 516 (Tex. 1999). ―During a default
judgment proceeding, affidavit testimony will support the award of unliquidated
damages if the affidavit avers personal knowledge of the facts, describes the
circumstances that resulted in the loss, and identifies the total amount owed as a
result.‖ Dodd v. Savino, No. 14-12-00555-CV, — S.W.3d —, 2013 WL 5861517,
at *12 (Tex. App.—Houston [14th Dist.] Oct. 31, 2013, no pet. h.) (citing New, 3
S.W.3d at 517). But conclusory evidence of damages is no evidence of damages
and will not support an award of damages in a default judgment. McCoy v. Waller
Group, LLC, No. 05-10-01479-CV, 2012 WL 1470147, at *2 (Tex. App.—Dallas

       4
          Le does not contend on appeal that its damages were liquidated. We note that the
petition requested unliquidated damages only and did not specify the sales price of the property,
so it would have been impossible to determine liquidated damages merely from the factual
allegations in the petition and the written instrument. See generally Whitaker, 218 S.W.3d at 220
(discussing liquidated damages); Freeman v. Leasing Assocs., Inc., 503 S.W.2d 406, 408 (Tex.
App.—Houston [14th Dist.] 1973, no writ) (same).

                                               9
Apr. 26, 2012, no pet.) (mem. op.); Lefton v. Griffith, 136 S.W.3d 271, 277 (Tex.
App.—San Antonio 2004, on pet.).5

       We hold that Le failed to adduce legally sufficient evidence of damages. In
particular, Porter‘s affidavit containing a statement about the total amount of
damages, even when viewed in context of RO-BT‘s admissions of the allegations
in Le‘s petition, is no evidence of damages.                The affidavit testimony about
damages is wholly conclusory and lacks any explanation about the circumstances
surrounding the amount of damages. For example, there is no evidence about the
sales price of the property, so Le provided no basis for calculating the dollar figure
of Le‘s six percent commission.

       The testimony in this case is even weaker than in Sembritzky v. Shanks,
where the First Court of Appeals found the evidence legally insufficient to support
the damages awarded in a default judgment based on an alimony contract. See No.
01-07-00251-CV, 2009 WL 48234, at *7 (Tex. App.—Houston [1st Dist.] Jan. 8,
2009, no pet.). The contract specified the husband would pay the wife twenty-five
percent of the husband‘s monthly gross income or $5,000 per month, whichever
was greater, for sixty months or until the total alimony paid was $5 million,
whichever occurred first. Id. at *6. The wife testified that the husband had not
provided her with any information that would show twenty-five percent of the

       5
          See also Heine, 835 S.W.2d at 84–86 (holding evidence was legally insufficient to
support lost profits damages awarded in a default judgment because although the plaintiff
testified as to the total amount of lost profits and provided some explanation, the plaintiffs did
not provide evidence of one complete calculation); Milestone Operating, Inc. v. ExxonMobil
Corp., 346 S.W.3d 101, 110–11 & n.6 (Tex. App.—Houston [14th Dist.] 2011) (holding
evidence was legally insufficient to support damages awarded in a default judgment when the
accountant failed to adequately explain how he reached the damages amount for a working
interest in oil or gas production; noting that ―several courts have held that conclusory evidence
was insufficient to support damages awarded in a default judgment‖; and collecting cases), rev’d
on other grounds, 388 S.W.3d 307 (Tex. 2012) (holding that the defendant was entitled to a new
trial on both liability and damages because it satisfied the Craddock test).

                                               10
husband‘s gross monthly income for the applicable period was less than $5 million.
Id. at *2. She testified further that she had no reason to believe the amount would
be less than $5 million, and she asked the court to enter a judgment for $4,945,000,
which comprised $5 million minus a prior judgment and payment. Id. The trial
court signed a judgment for that amount plus attorney‘s fees. Id. By doing so, the
court of appeals reasoned, the trial court ―would have had to find that the evidence
established that, during the time period in question, [the husband] had a total gross
income of at least $20,000,000.‖ Id. at *6. The court of appeals found no such
evidence in the record and held that the damages award was ―purely speculative
and no more than a mere surmise and suspicion.‖ Id. at *7. For the trial court to
award twenty-five percent of the husband‘s income up to $5 million, therefore, the
wife needed to adduce some evidence of the amount of income to which the
percentage could be applied. But ―[i]inferences upon inferences merely beget
inferences, not evidence.‖ Id.

      Similarly, Le‘s evidence that it was entitled to a six percent commission of
the sales price of the property, without Le providing any evidence about the sales
price of the property, constitutes no evidence of any amount of damages. Porter‘s
testimony that damages were equal to $58,500 is conclusory, purely speculative,
and no more than a mere surmise and suspicion unless there is additional evidence
concerning the factual basis for the damages award.6

      RO-BT‘s third issue is sustained.

      6
         Le alleged in its unsworn motion for default judgment the total sales price of the
property, but ―any statements made in an unsworn motion do not constitute evidence of
probative value.‖ Christian Bros. Auto. Corp. v. Decicco, No. 14-03-00997-CV, 2004 WL
1877735, at *2 (Tex. App.—Houston [14th Dist.] Aug. 24, 2004, no pet.) (mem. op.).

                                            11
                            V.         ATTORNEY’S FEES

      RO-BT contends that if we reverse the damages award, we must also reverse
the attorney‘s fees award. Le does not dispute this proposition, and we agree. See,
e.g., Barker v. Eckman, 213 S.W.3d 306, 315 (Tex. 2006) (remanding for new trial
on attorney‘s fees when damages were reduced significantly).

      RO-BT‘s fourth issue is sustained.

                                 VI.     CONCLUSION

      Having sustained RO-BT‘s third and fourth issues, we affirm the trial court‘s
judgment as to liability, reverse the trial court‘s judgment as to damages and
attorney‘s fees, and remand for a new trial on damages and attorney‘s fees. See,
e.g., Heine, 835 S.W.2d at 86 (remanding for new trial on damages after a
successful sufficiency challenge from an uncontested default judgment
proceeding).

                                 /s/            Sharon McCally
                                                Justice

Panel consists of Justices McCally, Busby, and Wise.

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