Court Opinion

ID: 4880251
Source: CourtListenerOpinion
Date Created: 2021-08-31 11:21:54.971099+00
Date Added: 2024-06-11T08:02:05.621873
License: Public Domain

Fourth Court of Appeals
                                      San Antonio, Texas
                                  MEMORANDUM OPINION

                                         No. 04-20-00051-CV

                                     MEDFINMANAGER, LLC,
                                           Appellant

                                                   v.

                                             John SALAS,
                                               Appellee

                      From the 407th Judicial District Court, Bexar County, Texas
                                   Trial Court No. 2019-CI-22706
                             Honorable Karen H. Pozza, Judge Presiding

Opinion by:       Rebeca C. Martinez, Chief Justice

Sitting:          Rebeca C. Martinez, Chief Justice
                  Luz Elena D. Chapa, Justice
                  Lori I. Valenzuela, Justice

Delivered and Filed: August 25, 2021

AFFIRMED IN PART; REVERSED AND REMANDED IN PART

           John Salas was injured in a vehicle collision while on the job, and he sued the employer of

the other driver. While Salas’s case was pending, MedFinManager, LLC (“MedFin”) paid medical

providers who performed spinal fusion surgery on Salas. After Salas settled with the other driver’s

employer, MedFin sought to collect for its medical payments from the settlement proceeds. It sued

Salas for breach of contract, quantum meruit, and promissory estoppel. Following the first part of

a bifurcated bench trial, the trial court dismissed MedFin’s breach of contract claim. The trial

court then dismissed MedFin’s quantum meruit claim during a pretrial conference before the start
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of the second part of trial. After the completion of the second part of trial, the trial court ordered

that MedFin recover $69,393.10 on its promissory estoppel claim and denied all other relief.

       MedFin argues that it proved its right to collect $210,365.40, pursuant to its claims for

breach of contract and quantum meruit. MedFin also asserts a right to recover attorney’s fees as

the prevailing party on its promissory estoppel claim. In a cross-issue, Salas argues the trial court

erred by denying him recovery of litigation costs. We affirm the trial court’s judgment as to

MedFin’s breach of contract and quantum meruit claims and as to litigation costs. We reverse and

remand for a determination of MedFin’s attorney’s fees related to its promissory estoppel claim.

                                           BACKGROUND

       In 2013, John Salas was injured while driving a company truck, and he sued the employer

of the other driver. MedFin coordinated with Salas’s then-attorneys and with medical providers

to secure Salas’s spinal fusion surgery to alleviate his back pain. In February 2014, in connection

with his surgery, Salas signed four documents, each entitled “Contract for Payment/Medical Lien,”

which are discussed below. In August 2014, Salas dismissed his attorneys and hired new counsel.

Meanwhile, Salas’s lawsuit against the employer of the other driver progressed, and, in December

2015, Salas successfully arbitrated his claims and was awarded a confidential settlement amount.

       In February 2016, Salas filed counterclaims against his former attorneys and a third-party

petition against MedFin. He challenged whether his former attorneys and MedFin had any valid

right to recover from the settlement funds. MedFin filed a general denial and counterclaims against

Salas for breach of contract, quantum meruit, promissory estoppel, and several other claims no

longer at issue. The trial court ordered that the settlement proceeds be deposited into the court

registry until resolution of the claims. In October 2017, the trial court severed Salas’s claims

against his former attorneys, and later these parties settled.

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       In 2019, Salas and MedFin agreed to a bifurcated bench trial of their claims. Part one

concerned MedFin’s breach of contract claim. After part one, the trial court ordered MedFin’s

breach of contract claim dismissed. During a pretrial conference before part two of trial, the trial

court dismissed MedFin’s quantum meruit claim. After the parties tried the promissory estoppel

claim, they submitted their requests for attorney’s fees and costs for a determination based on

affidavits they filed with the trial court. Thereafter, the trial court signed a final judgment, which

awarded MedFin $69,393.10 on its promissory estoppel claim, ordered the parties to bear their

costs, and denied all other requests for relief. The trial court then entered findings of fact and

conclusions of law.

       On appeal, MedFin argues it established its entitlement to recover $210,365.40 on its

breach of contract claim and, alternatively, its quantum meruit claim. It also asserts a right to

recover attorney’s fees as the prevailing party on its promissory estoppel claim. Salas argues, in

his cross-appeal, that the trial court erred by denying him an award of litigation costs. We first

review the trial court’s judgment as to MedFin’s breach of contract claim and then as to its quantum

meruit claim. After that, we review the trial court’s denial of MedFin’s attorney’s fees, and, last,

we review the trial court’s denial of Salas’s litigation costs. We reach only the issues necessary to

resolve this appeal. See TEX. R. APP. P. 47.1.

                                      BREACH OF CONTRACT

A. Issue Addressed

       MedFin describes itself as a “factoring” company. “Factoring is a process by which a

business sells to another business, at a discount, its right to collect money before the money is

paid.” Primoris Energy Servs. Corp. v. Myers, 569 S.W.3d 745, 763 (Tex. App.—Houston [1st

Dist.] 2018, no pet.) (citation and ellipsis omitted). MedFin purports to factor medical accounts

receivables in the context of personal-injury litigation. Salas disputes whether the contracts

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MedFin sued upon are enforceable and achieved factoring. He also challenges MedFin’s contracts

as illegal under section 406.035 of the Texas Labor Code because the contracts prohibit him from

submitting medical bills arising out of those contracts to any workers’ compensation policy. See

TEX. LAB. CODE ANN. § 406.035 (“Except as provided by this subtitle, an agreement by an

employee to waive the employee’s right to [workers’] compensation is void.”). Additionally, Salas

challenges the contracts as unconscionable because the contracts “necessarily require[] fraud,

perjury, and subornation of perjury.”

       The trial court did not clearly specify which of Salas’s theories it adopted to support its

judgment denying MedFin relief on its contract claim. In the only finding of fact relevant to breach

of contract, the trial court found: “MedFin Management [sic], LLC did not prove by a

preponderance of the evidence that John Salas failed to comply with the Contracts for

Payment/Medical Lien.” In the only relevant conclusion of law, the trial court determined: “The

Contracts for Payment/Medical Lien is [sic] unenforceable.” Due to the abbreviated nature of the

trial court’s findings and conclusions, we cannot pinpoint the exact basis for the trial court’s

judgment. See Crapps v. Crapps, 546 S.W.2d 909, 911 (Tex. App.—Austin 1977, no writ) (“The

reviewing court must look to the district court’s findings of fact and conclusions of law and to the

judgment to determine the basis for the entry of the judgment.”). Moreover, it is not clear how the

trial court’s finding as to MedFin’s failure to prove Salas’s noncompliance with the contracts

relates to its conclusion that the contracts are unenforceable. Cf. Brown v. Frontier Theatres, Inc.,

369 S.W.2d 299, 301 (Tex. 1963) (“The findings of fact and the conclusions of law will be

construed together; and if the findings of fact are susceptible of different constructions, they will

be construed, if possible, to be in harmony with the judgment and to support it.”). The parties each

argue on appeal all of Salas’s theories for why the contracts could be unenforceable, and MedFin

does not argue that the trial court found against Salas on any of his theories. Consequently, the

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trial court’s findings and conclusions do not serve their limiting function. See Guillory v. Dietrich,

598 S.W.3d 284, 290 (Tex. App.—Dallas 2020, pet. denied) (“The purpose of requesting findings

of fact and conclusions of law is to narrow the judgment’s bases and thereby reduce the number

of contentions the appellant must make on appeal.”).

        Under these circumstances, we cannot say the trial court deliberately omitted a finding on

any essential element of MedFin’s contract claim or Salas’s contract defenses, and we must

presume the trial court made implied findings on all of the essential elements of the claim and

defenses. See TEX. R. CIV. P. 299; Vickery v. Comm’n for Lawyer Discipline, 5 S.W.3d 241, 252

(Tex. App.—Houston [14th Dist.] 1999, pet. denied) (explaining that, when a trial court makes

findings of fact but inadvertently omits an essential element of a ground of recovery or defense,

the presumption of the validity of judgments will supply the omitted element by implication, unless

the record demonstrates the trial judge deliberately omitted the element). We, therefore, consider

Salas’s breach of contract defense that no enforceable contract existed because there was no

“meeting of the minds.”

        “When the ‘meeting of the minds’ element is contested, it is a question for the fact finder.”

Pollard v. Fine, No. 04-08-00745-CV, 2009 WL 2882941, at *3 (Tex. App.—San Antonio Sept.

9, 2009, no pet.) (mem. op.); accord Angelou v. African Overseas Union, 33 S.W.3d 269, 278

(Tex. App.—Houston [14th Dist.] 2000, no pet.). MedFin challenges the sufficiency of the

evidence to support the trial court’s implied finding that there was no meeting of the minds. We

overrule MedFin’s challenge, and consequently affirm the trial court’s conclusion of law that the

contracts sued upon are not enforceable. Because this issue is dispositive as to the breach of

contract claim, we do not reach the parties’ other issues related to this claim. See TEX. R. APP. P.

47.1.

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B. Standard of Review

       To determine MedFin’s sufficiency challenge, we review the trial evidence in the light

most favorable to the trial court’s finding and indulge every reasonable inference that would

support it. See City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005); Lloyd Walterscheid &

Walterscheid Farms, LLC v. Walterscheid, 557 S.W.3d 245, 257 (Tex. App.—Fort Worth 2018,

no pet.). A party attacking the legal sufficiency of an adverse finding on an issue on which it bore

the burden of proof, must demonstrate that the evidence establishes, as a matter of law, all vital

facts in support of the issue. See Dow Chem. Co. v. Francis, 46 S.W.3d 237, 241 (Tex. 2001) (per

curiam); see also McAllen Hosps., L.P. v. Lopez, 576 S.W.3d 389, 392 (Tex. 2019) (specifying the

burden of proving the existence of a valid contract lies on the party alleging breach of contract).

In reviewing MedFin’s factual sufficiency challenge, we consider and weigh all the evidence in a

neutral light and may set aside the finding only if the evidence is so weak or the finding is so

against the great weight and preponderance of the evidence that it is clearly wrong and unjust.

Dow Chem., 46 S.W.3d at 242.

C. Applicable Law

       “Under Texas law, the elements needed to form a valid and binding contract are (1) an

offer; (2) acceptance in strict compliance with the offer’s terms; (3) a meeting of the minds; (4)

consent by both parties; (5) execution and delivery; and (6) consideration.” Specialty Select Care

Ctr. of San Antonio, L.L.C. v. Owen, 499 S.W.3d 37, 43 (Tex. App.—San Antonio 2016, no pet.)

(citation and brackets omitted). “‘Meeting of the minds’ describes the mutual understanding and

assent to the agreement regarding the subject matter and the essential terms of the contract.”

Pollard, 2009 WL 2882941, at *3 (citing Weynand v. Weynand, 990 S.W.2d 843, 846 (Tex. App.—

Dallas 1999, pet. denied)). “Although often treated as a distinct element, meeting of the minds is

a component of both offer and acceptance measured by ‘what the parties said and did and not on

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their subjective state of mind.’” Karns v. Jalapeno Tree Holdings, L.L.C., 459 S.W.3d 683, 692

(Tex. App.—El Paso 2015, pet. denied) (citation omitted); see also Komet v. Graves, 40 S.W.3d

596, 601 (Tex. App.—San Antonio 2001, no pet.). “The parties must agree to the same thing, in

the same sense, at the same time.” Pollard, 2009 WL 2882941, at *3 (quoting Weynand, 990

S.W.2d at 846).

D. Discussion

       MedFin alleges in its breach of contract counterclaim that the claim concerns “non-

payment of amounts owed to MedFin under contracts signed by John Salas and his legal

representative.” According to MedFin, Salas signed these contracts with his medical providers,

and MedFin purchased and was assigned the contracts. Salas argues there was no meeting of the

minds because his medical providers were not parties to the contracts sued upon. Cf. Mission

Grove, L.P. v. Hall, 503 S.W.3d 546, 552 (Tex. App.—Houston [14th Dist.] 2016, no pet.) (“It is

‘axiomatic . . . that a contract between other parties cannot create an obligation or duty on a non-

contracting party, which non-contracting party was a stranger to the basic, underlying construction

contract.’” (quoting City of Beaumont v. Excavators & Constructors, Inc., 870 S.W.2d 123, 129

(Tex. App.—Beaumont 1993, writ denied))).

       We agree with Salas that the trial court reasonably could have determined there was no

meeting of the minds between Salas and his medical providers. MedFin purported to contract on

behalf of the medical providers, and the trial court, as the factfinder, reasonably could have

weighed the evidence to determine that MedFin had no authority to do so and, consequently, did

not.

       The four contracts sued upon were each entitled “Contract for Payment/Medical Lien” and

were signed only by Salas and his attorney. Each contract is addressed to one of Salas’s four

medical providers: “TO: Dennis R. Gutzman;” “TO: Lawrence L. Lenderman;” “TO: . . . Star

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Anesthesia PA;” and “TO: . . . Foundation Surgical Hospital of San Antonio.” Each contract

provides:

         I hereby authorize and direct my attorney to i) withhold . . . sums from any
         settlement, judgment or verdict, . . . ii) pay directly and fully to said Provider such
         sums as may be due and owing the Provider for medical and professional services
         rendered to me by reason of the accident, [and] iii) to cooperate with Provider in
         taking whatever steps are necessary to collect monies due under this contract/lien .
         ...

         ...

         I fully understand that I am DIRECTLY, PERSONALLY, and FULLY responsible
         to make payment in full to said Provider for all professional bills submitted by it
         for services rendered to me and that the above stated is made solely for said
         Provider’s additional protection and in consideration of its waiting payment.

Salas’s signature follows, and, below his signature, is a section entitled “Attorney’s Consent to

Contract for Payment/Medical Lien.” A sentence in this section states: “Undersigned attorney 1

verifies that the above referenced patient has made the personal and irrevocable obligation to make

payment in full for the medical care being rendered by Provider.” Each of the pages of the contract

contains a footer which states: “Medical care will not be provided without signatures on both pages

of this document.” 2

         Deposition transcripts were admitted at trial. A representative for MedFin testified that

MedFin drafted the Contracts for Payment/Medical Liens. One of Salas’s medical providers stated

that he had never seen the contract addressed to him and was not a party to it; another stated that

1
  One of Salas’s former attorneys signed these contracts.
2
  MedFin argues that the Contracts for Payment/Medical Liens are unilateral contracts that became enforceable when
the medical providers performed Salas’s surgery. A unilateral contract is “created by the promisor promising a benefit
if the promisee performs. The contract becomes enforceable when the promisee performs.” Vanegas v. Am. Energy
Services, 302 S.W.3d 299, 302 (Tex. 2009) (citation omitted). Here, however, Salas did not condition his promises
on the medical provider’s performance. Instead, he authorized the repayment of medical bills from settlement funds
for the medical provider’s “additional protection,” and he made other promises related to repayment “for the medical
care being rendered.” The Contracts for Payment/Medical Liens are unenforceable bilateral contracts with mutual
promises between Salas and his medical providers. See id.

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he did not recognize the contract addressed to him and did not remember making the agreement

with Salas. There was no deposition testimony from a representative of the two other providers.

        Also in the record were contracts for three of the providers governing their relationship

with MedFin. These contracts, entitled “Medical Lien Purchase and Servicing Agreement,”

specify terms governing MedFin’s purchase of each provider’s accounts receivable. The contracts

specify: “[The medical provider] will bill in accordance with [the provider’s] standard billing

schedule . . . .” MedFin would accept accounts through a “Purchase Acceptance Notice” and pay

the provider fifty or fifty-five percent of the provider’s billed amount, depending on the provider.

The contract imposes an obligation on the medical provider, “within a reasonable time period after

[the provider’s] receipt of an Acceptance Notice,” to provide MedFin with (i) the patient’s billing

statement, (ii) supporting medical documentation, (iii) an executed “Notice of Sale and

Assignment” of the account, (iv) “any and all further documentation that may be required to

evidence, perfect, or otherwise cause the lien to be a validly existing obligation assigned to

[MedFin],” and (v) “if applicable, a consensual lien letter executed by the patient and the patient’s

attorney.” Elsewhere, the contract defines “Medical Liens” as “all liens and the resulting accounts

receivable . . . for which there is a lien letter executed by both the patient and his/her legal counsel

. . . directing the patient for whom [the medical provider] has provided medical services to pay

[the provider] for those services from proceeds of insurance, judgment, litigation, or compromise.”

The contracts also contain a provision granting MedFin limited powers as attorney-in-fact for the

provider:

        [The medical provider] hereby appoints [MedFin] as its attorney-in-fact to exercise
        at any time, at [MedFin’s] cost and expense, any or all of the following Powers: (i)
        to receive, take and endorse [the provider’s] name on all checks and other evidences
        of payment made payable to [MedFin] on accounts assigned to [MedFin]; (ii) to
        deal with all mail addressed to [the provider] relating to the accounts or Liens; (iii)
        to notify patients and their attorneys of the assignment of the accounts and the
        associated Liens to [MedFin] and to request information thereon; and (iv) to make

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       collection efforts in [the provider’s] name that [MedFin] deems necessary or
       desirable.

       On this record, we cannot say that the great weight and preponderance of the evidence or

the evidence as a matter of law compels the conclusion that MedFin’s powers as attorney-in-fact

included a power to create lien letters or otherwise contract on behalf of the medical providers for

additional security related to the payment of medical bills. The contracts between MedFin and the

medical providers indicate that the providers were responsible for creating lien letters and for

providing such letters to MedFin after it purchased an account. Two providers testified at their

depositions that they did not recognize the Contracts for Payment/Medical Liens; there is no

deposition testimony related to the other two providers. To the extent there is any ambiguity about

MedFin’s authority to contract for additional security for repayment of medical bills on behalf of

the providers, the trial court reasonably could have resolved the matter in favor of Salas because

it is not established as a matter of law and is not against the great weight and preponderance of the

evidence. See City of Keller, 168 S.W.3d at 821; Dow Chem., 46 S.W.3d at 242. In consequence,

the trial court did not err by finding there was no meeting of the minds between the medical

providers and Salas related to the Contracts for Payment/Medical Liens because the providers were

not parties to these contracts; therefore, the contracts are unenforceable by MedFin, as a purported

assignee of the contracts.

       Looking beyond the written Contracts for Payment/Medical Liens, MedFin argues that it

also sued for breach of oral contracts between the medical providers and Salas that are evidenced

through medical bills. According to MedFin, even if the Contracts for Payment/Medical Liens are

unenforceable, it may collect on unsecured, accounts receivable. However, MedFin’s assertion

that it sued upon oral contracts is belied by its pleading, which states that its breach of contract

claim is a “dispute over the non-payment of amounts owed to MedFin under contracts signed by

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John Salas and his legal representative” (emphasis added). Likewise, MedFin’s motion for

summary judgment addresses the claim only with respect to the Contracts for Payment/Medical

Liens. MedFin argued in its motion that “MedFin intended to make an offer” and that Salas

breached the contracts by submitting bills to a workers’ compensation plan, by refusing to release

settlement funds to pay the medical liens, and by disputing medical bills. All three of these alleged

breaches correspond to specific provisions in the Contracts for Payment/Medical Liens. The trial

court’s findings and conclusions referred specifically to the Contracts for Payment/Medical Liens

and did not address any other purported contracts, oral or otherwise. See Valencia v. Garza, 765

S.W.2d 893, 897–98 (Tex. App.—San Antonio 1989, no writ) (“The principal usefulness of

conclusions of law is to denote to the appellate court the theory on which the action was tried).

         “Parties are restricted on appeal to the theory on which the case was tried.” Wells Fargo

Bank, N.A. v. Murphy, 458 S.W.3d 912, 916 (Tex. 2015) (quoting Davis v. Campbell, 572 S.W.2d

660, 662 (Tex. 1978)); see also TEX. R. APP. P. 33.1. MedFin cannot argue on appeal a theory for

its breach of contract claim based upon purported oral contracts that does not comport with the

theory for breach of written contracts argued in the trial court. See Simmons & Simmons

Construction Co. v. Rea, 155 Tex. 353, 356, 286 S.W.2d 415, 417 (1955) (holding plaintiff that

could have gone to the jury on oral and written contract theories but that accepted without

complaint submission of the issue only on a written contract theory had implicitly agreed that the

case would be decided on that theory).

         We affirm the trial court’s judgment denying MedFin recovery on its breach of contract

claim.

                                         QUANTUM MERUIT

         MedFin asserts that the trial court dismissed its quantum meruit claim during a pretrial

hearing before the second part of the bifurcated bench trial because it determined there would be

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legally insufficient evidence for the claim. On appeal, MedFin argues there is more than a scintilla

of evidence on each element of the claim.

       “Quantum meruit is an equitable remedy that is based upon the promise implied by law to

pay for beneficial services rendered and knowingly accepted.” Hill v. Shamoun & Norman, LLP,

544 S.W.3d 724, 732 (Tex. 2018) (citation omitted). “Generally, a party may recover under

quantum meruit only when no express contract covering the services or materials furnished exists.”

Residential Dynamics, LLC v. Loveless, 186 S.W.3d 192, 198 (Tex. App.—Fort Worth 2006, no

pet.). To recover under quantum meruit, a claimant must prove that: (1) valuable services were

rendered or materials furnished; (2) for the person sought to be charged; (3) those services and

materials were accepted by the person sought to be charged and were used and enjoyed by the

person; and (4) the person sought to be charged was reasonably notified that the person performing

such services or furnishing such materials was expecting to be paid by the person sought to be

charged. Hill, 544 S.W.3d at 732–33.

       We do not reach the merits of MedFin’s arguments on appeal as to its quantum meruit

claim because we hold that MedFin waived its arguments by failing to raise them in the trial court.

See TEX. R. APP. P. 33.1. As with its breach of contract claim, MedFin attempts to pursue a new

theory of recovery on appeal. At trial, MedFin sought recovery for the payments for surgery made

on Salas’s behalf. MedFin argued in its summary judgment briefing that the valuable services

rendered, upon which the quantum meruit claim was based, consisted of the medical care Salas

received through his surgery. MedFin argued that it “step[ped] into the shoes of the medical

providers who performed Salas [sic] surgery.” Now, on appeal, MedFin argues that the valuable

services rendered were ancillary services MedFin performed to arrange medical care, including

assessing Salas’s personal-injury case and drafting the Contracts for Payment/Medical Liens.

Because, MedFin is restricted to the theory that Salas’s medical care, and not ancillary services,

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comprise the valuable services rendered, we do not consider MedFin’s arguments based on its new

theory for services rendered. See Murphy, 458 S.W.3d at 916; see also TEX. R. APP. P. 33.1. We

affirm the trial court’s judgment denying MedFin recovery on its quantum meruit claim.

                                        ATTORNEY’S FEES

       MedFin asserts the trial court erred by denying it attorney’s fees after it prevailed on its

promissory estoppel claim. In a conclusion of law, the trial court determined that an award of

attorney’s fees would not be “equitable or just.” MedFin argues that the trial court erroneously

applied an equitable standard when fees were mandatory.

       Salas does not dispute MedFin’s entitlement to fees on its promissory estoppel claim

generally, but instead argues the denial of fees was proper because MedFin failed to supplement

its discovery responses. However, Salas argues from a false premise. We disagree with Salas that

the trial court withheld fees from MedFin as discovery sanctions because the record is clear that

the trial court did not impose sanctions.

       Rule 193.6 of the Texas Rules of Civil Procedure generally prohibits a party from

introducing evidence that it failed to disclose in a timely manner. See TEX. R. CIV. P. 193.6. Rule

215.2 permits a range of sanctions for a party’s failure to comply with a discovery request. See id.

R. 215.2. Salas filed a motion to exclude MedFin’s experts on attorney’s fees under these Rules;

however, the trial court orally denied Salas’s motion at a preliminary hearing. Later, the trial court

granted a motion in limine related to contested evidence on attorney’s fees, but the trial court

ultimately held a bench trial, which made the ruling on the motion in limine irrelevant. See Allison

v. Comm’n for Lawyer Discipline, 374 S.W.3d 520, 526 (Tex. App.—Houston [14th Dist.] 2012,

no pet.) (“Absent a jury, a motion in limine is irrelevant.”). By agreement, the parties tried the

issue of attorney’s fees by affidavit following the trial of MedFin’s promissory estoppel claim.

The trial court denied all attorney’s fees in its judgment but did not specify that denial was in any

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way related to Salas’s requested sanctions, which the trial court previously refused. From this

record it is apparent the trial court did not exclude evidence of MedFin’s attorney’s fees as a

discovery sanction.

        We agree with MedFin that the trial court erred by applying an equitable standard when it

denied MedFin fees, rather than award fees to MedFin as the prevailing party on its promissory

estoppel claim. Promissory estoppel permits enforcement of an otherwise unenforceable promise

that a party has relied upon to its detriment. Vogel v. Travelers Indem. Co., 966 S.W.2d 748, 754

(Tex. App.—San Antonio 1998, no pet.). Section 38.001 of the Texas Civil Practice and Remedies

Code provides for recovery of attorney’s fees when the claim is for “an oral or written contract.”

See TEX. CIV. PRAC. & REM. CODE ANN. § 38.001(8); cf. id. § 37.009 (allowing an award of

attorney’s fees under the Declaratory Judgments Act if such award would be “equitable and just”).

“[T]he weight of authority in Texas is that attorney’s fees are recoverable under Section 38.001(8)

of the Texas Civil Practices & Remedies Code in a promissory estoppel claim.” Turner v. NJN

Cotton Co., 485 S.W.3d 513, 528 (Tex. App.—Eastland 2015, pet. denied). Previously, we upheld

an award of attorney’s fees under Section 38.001(8) for the prevailing party on a promissory

estoppel claim, and Salas has not presented any argument or authority to justify reversing or

distinguishing our precedent. See Traco, Inc. v. Arrow Glass Co., 814 S.W.2d 186, 193–94 (Tex.

App.—San Antonio 1991, writ denied). Consequently, we hold the trial court erred by denying

fees to MedFin under Section 38.001(8) as the prevailing party on its promissory estoppel claim.

See Brent v. Field, 275 S.W.3d 611, 622 (Tex. App.—Amarillo 2008, no pet.) (“Under section

38.001, an award of reasonable attorney’s fees is mandatory if there is proof of the reasonableness

of the fees.”).

        As to our disposition, MedFin asks that we render a fee award in its favor. We remand,

however, because Salas disputed the reasonableness of MedFin’s fees before the trial court, and

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the matter of MedFin’s reasonable fees remains unresolved. See id.; DaimlerChrysler Motors Co.,

LLC v. Manuel, 362 S.W.3d 160, 198 (Tex. App.—Fort Worth 2012, no pet.) (remanding for a

determination of reasonable and necessary attorney’s fees after a trial court improperly denied fees

under Section 38.001).

                                        LITIGATION COSTS

       Last, Salas argues in his cross-issue that the trial court erred by denying him costs pursuant

to Chapter 42 of the Texas Civil Practice and Remedies Code and Rule 167 of the Texas Rules of

Civil Procedure.

       Chapter 42 and Rule 167 provide a method by which a party can recover certain litigation

costs for certain claims if (1) the party makes an offer to settle a claim, (2) the offeree rejects the

offer, and (3) “the judgment to be awarded [on the claim] is significantly less favorable to the

offeree than was the offer.” TEX. R. CIV. P. 167.4(a); see also TEX. CIV. PRAC. & REM. CODE ANN.

§§ 42.002–.005; TEX. R. CIV. P. 167.1–167.7; Amedisys, Inc. v. Kingwood Home Health Care,

LLC, 437 S.W.3d 507, 513 (Tex. 2014).            The Legislature created this offer-of-settlement

mechanism through Chapter 42, and the Texas Supreme Court promulgated Rule 167 to provide

the procedural details for its implementation. See TEX. CIV. PRAC. & REM. CODE ANN. § 42.005;

Note Inv. Group, Inc. v. Assocs. First Capital Corp., 476 S.W.3d 463, 475 (Tex. App.—Beaumont

2015, no pet.).

       Under Rule 167, the cost-shifting mechanism “applies only to ‘an offer made substantially

in accordance with this rule.’” Amedisys, 437 S.W.3d at 513 (quoting TEX. R. CIV. P. 167.1). “A

settlement offer not made in compliance with this rule . . . cannot be the basis for awarding

litigation costs under this rule as to any party.” TEX. R. CIV. P. 167.7.

       MedFin argues that Salas did not make an offer substantially in accordance with Chapter

42 and Rule 167 because he did not file a declaration prior to making a settlement offer. Salas

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argues that he timely filed and served a declaration through an amended answer with

counterclaims. He filed his pleading on February 22, 2019, and it includes a declaration pursuant

to Chapter 42 and Rule 167. See Orix Capital Mkts., LLC v. La Villita Motor Inns, J.V., 329

S.W.3d 30, 50 (Tex. App.—San Antonio 2010, pet. denied) (remarking that a party invoked the

cost-shifting procedures available under Chapter 42 and Rule 167 when it filed an amended

petition and answer). However, Salas made his settlement offers prior to filing his declaration.

He sent his first offer on December 28, 2018, and his second offer on January 16, 2019.

       We determine that Salas did not make an offer substantially in accordance with Chapter 42

and Rule 167 because he did not file a declaration prior to making his settlement offers. Rule

167.2(a) provides:

       Defendant’s declaration a prerequisite; deadline. A settlement offer under this
       rule may not be made until a defendant—a party against whom a claim for monetary
       damages is made—files a declaration invoking this rule. When a defendant files
       such a declaration, an offer or offers may be made under this rule to settle only
       those claims by and against that defendant. The declaration must be filed no later
       than 45 days before the case is set for conventional trial on the merits.

TEX. R. CIV. P. 167.2. Section 42.002(c) of the Texas Civil Practice and Remedies Code provides:

“This chapter does not apply until a defendant files a declaration that the settlement procedure

allowed by this chapter is available in the action.”       TEX. CIV. PRAC. & REM. CODE ANN.

§ 42.002(c). We apply the same rules of construction to a rule of civil procedure as to statutes.

See In re Christus Spohn Hosp. Kleberg, 222 S.W.3d 434, 437 (Tex. 2007). “When a rule of

procedure is clear and unambiguous, we construe the rule’s language according to its plain or

literal meaning.” Id. Rule 167.2(a) is clear; its plain language stipulates that an offer “may not be

made” until after a declaration is filed. The phrase “may not” “imposes a prohibition and is

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synonymous with ‘shall not.’” TEX. GOV’T CODE ANN. § 311.016(5). 3 The subsection’s heading,

“Defendant’s declaration a prerequisite,” gives some indication that the supreme court intended a

declaration as a prerequisite to a settlement offer under the Rule. See In re United Servs. Auto.

Ass’n, 307 S.W.3d 299, 307 (Tex. 2010) (explaining that, while a heading cannot expand a statute’s

meaning, it “gives some indication of the Legislature’s intent” (citing TEX. GOV’T CODE ANN.

§ 311.024)). Moreover Rule 167.2(a) comports with Section 42.002(c), which specifies that

Chapter 42 “does not apply until a defendant files a declaration.” TEX. CIV. PRAC. & REM. CODE

ANN. § 42.002(c).

        Salas did not make his settlement offers substantially in accordance with Chapter 42 and

Rule 167 because he made his offers prior to filing his declaration invoking the cost-shifting

mechanism. See id.; TEX. R. CIV. P. 167.2(a); cf. Logsdon v. Logsdon, No. 02-14-00045-CV, 2015

WL 7690034, at *13 (Tex. App.—Fort Worth Nov. 25, 2015, no pet.) (determining a settlement

offer did not comply with Rule 167 and Chapter 42 because there was no declaration invoking

Rule 167 in the record); Orix Capital Mkts., 329 S.W.3d at 50 (determining party did not comply

with Rule 167 because it first invoked the Rule only thirty-two days before trial began).

Consequently, the trial court did not err by denying Salas litigation costs pursuant to Chapter 42

and Rule 167. We overrule Salas’s cross-issue.

                                              CONCLUSION

        We affirm the trial court’s judgment in all respects, except as to the denial of an award of

attorney’s fees to MedFin. We remand the cause to the trial court for a determination of MedFin’s

3
 The Code Construction Act, which comprises Chapter 311 of the Government Code, applies to the Texas Rules of
Civil Procedure. See TEX. GOV’T CODE ANN. §§ 311.001–.035; In re Walkup, 122 S.W.3d 215, 217 (Tex. App.—
Houston [1st Dist.] 2003, no pet.).

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reasonable attorney’s fees under Section 38.001(8) in connection with its promissory estoppel

claim.

                                               Rebeca C. Martinez, Chief Justice

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