Court Opinion

ID: 4656456
Source: CourtListenerOpinion
Date Created: 2021-02-02 10:13:50.585702+00
Date Added: 2024-06-11T08:00:54.044868
License: Public Domain

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

                                    NO. 03-19-00059-CV

                   Permit Partners, LLC; and David Cancialosi, Appellants

                                              v.

                                    Heidi Sauer, Appellee

               FROM THE 353RD DISTRICT COURT OF TRAVIS COUNTY
      NO. D-1-GN-17-003996, THE HONORABLE ERIC SHEPPERD, JUDGE PRESIDING

                           MEMORANDUM OPINION

               This case involves competing claims for breach of a mediated settlement

agreement (MSA). Appellee Heidi Sauer claimed that her former employer, Permit Partners,

LLC, and supervisor, David Cancialosi (collectively, Permit Partners) breached the MSA by

failing to timely close on the agreement. Per the MSA, closing required Permit Partners to make

the first of six settlement payments and execute a release of its claims against Sauer. Permit

Partners claimed that Sauer breached the MSA by disclosing its confidential contents in her

court pleadings. After a bench trial, the court rendered judgment awarding Sauer damages and

attorney’s fees and ordering that Permit Partners take nothing. We reverse the portion of the

judgment awarding Sauer attorney’s fees against Permit Partners, LLC. We otherwise affirm the

trial court’s judgment.
                                         BACKGROUND

               Permit Partners, LLC, a permitting and code-compliance company, and

Cancialosi sued Sauer after she allegedly refused to return her company-issued laptop containing

proprietary information when her employment with the company ceased. Permit Partners sued

Sauer for breach of contract and sought a declaratory judgment, damages, and attorney’s fees.

Sauer filed a counterclaim, asserting claims against Permit Partners for breach of contract, sexual

harassment, and intentional infliction of emotional distress.

               While the cause was pending, the parties mediated their dispute and executed the

MSA on June 28, 2018. The MSA required Permit Partners to pay Sauer $30,000, in six equal

monthly payments. It required a closing on or before August 1, by which time Permit Partners

was to make the first of the six required payments and both parties were to execute “a full,

complete and mutual release of all claims of any type whatsoever that have been or could be

asserted by either side against the other in the above-referenced proceeding [the present

lawsuit].” The MSA also required the parties to “maintain confidentiality as to the terms of [the

MSA] . . . except as required by law.”

               On August 1, Permit Partners presented Sauer with a mutual release of claims that

it drafted, which Sauer signed and tendered to Permit Partners for its signature. When Permit

Partners did not make the first required payment or execute the release of claims, Sauer filed her

third amended counterclaim, in which she added a claim against Permit Partners for alleged

breach of the MSA by failing to dismiss its lawsuit and tender the required payment.

               Permit Partners then amended its petition, adding a claim that Sauer breached

the MSA by disclosing its payment terms in violation of its confidentiality provision when she

revealed those terms in her filed counterclaim. Permit Partners sought a declaration that, as a

                                                 2
result of Sauer’s breach, its “payment obligations under the MSA have ceased.” Permit Partners

also added a fraud claim, alleging that Sauer “knowingly and intentionally failed to disclose that

she had filed a wage-and-hour dispute with the DOL [Department of Labor] prior to negotiating

[the MSA],” which induced it to execute the MSA. Both Sauer and Permit Partners filed motions

for summary judgment, which the trial court denied.

                The parties subsequently by Rule 11 agreement waived a jury trial and provided

that the bench trial would be limited to the claims related to the MSA and that all evidence would

be documentary only. After trial, the trial court rendered a final judgment in Sauer’s favor,

determining that she was entitled to recover from Permit Partners under the MSA and awarding

her $30,000 in damages and $12,606 in attorney’s fees (plus more in the event of unsuccessful

appeals by Permit Partners). The trial court issued amended findings of fact and conclusions of

law after Permit Partners filed objections to the original findings and conclusions. In part, the

trial court determined that Permit Partners “breached the MSA by failing to make the required

payment on August 1, 2018” and that Sauer “performed on and did not breach the MSA.” The

trial court rejected Permit Partners’s request for a declaration that Permit Partners’s payment

obligations under the MSA had ceased. Permit Partners filed a motion for new trial, which the

trial court denied.

                On appeal, Permit Partners contends that the trial court erred in rendering a

judgment in favor of Sauer on her breach-of-contract claim for two independent reasons. In

addition, Permit Partners challenges the trial court’s award of attorney’s fees to Sauer.

                                                 3
                                         DISCUSSION

The trial court’s breach-of-contract findings

               In its first issue, Permit Partners contends that the trial court erred in concluding

that Sauer did not breach the MSA1 and, consequently, in failing to declare that Permit Partners’s

payment obligation under the MSA had ceased due to Sauer’s breach. Specifically, Permit

Partners contends that the undisputed evidence establishes that Sauer breached the MSA by

disclosing its contents and that such breach released Permit Partners from its payment

obligations, as specifically provided in the MSA:

        The parties agree to maintain confidentiality as to the terms of this settlement
        agreement, except as required by law or for professional legal or accounting
        advice. The parties also mutually agree not to disparage each other. If
        Defendant [Sauer] violates this provision, then the Plaintiffs’ [Permit
        Partners’s] payment obligation under this agreement ceases.

(Emphasis added.)

               When the terms of a contract are clear and unambiguous and the facts concerning

breach or performance are undisputed or conclusively established, the trial court decides, as a

matter of law, whether the facts show performance or breach. See Trinity Indus., Inc. v. Ashland,

Inc., 53 S.W.3d 852, 868–69 (Tex. App.—Austin 2001, pet. denied); Meek v. Bishop Peterson &

Sharp, P.C., 919 S.W.2d 805, 808 (Tex. App.—Houston [14th Dist.] 1996, writ denied). Here,

Permit Partners argues that the MSA unambiguously required the parties to keep its terms

confidential, and that the undisputed evidence establishes that Sauer disclosed material terms of

the MSA (i.e., the total settlement amount and the schedule of payments) in her court filings,

which are public records. See Tex. R. Civ. P. 76a (providing that “court records . . . are presumed

       1
         The trial court’s relevant conclusion of law provided, “Defendant [Sauer] performed on
and did not breach the MSA.”
                                                 4
to be open to the general public” and definition of “court records” includes “all documents of any

nature filed in connection with any matter before any civil court”). Permit Partners points out

that under notice-pleading requirements in Texas, Sauer could have adequately pleaded her

claim for breach of contract without disclosing the MSA’s payment terms. See First United

Pentecostal Church of Beaumont v. Parker, 514 S.W.3d 214, 225 (Tex. 2017) (“Under the [fair-

notice standard for pleadings], courts consider whether the opposing party ‘can ascertain from

the pleading the nature and basic issues of the controversy and what testimony will be relevant.’”

(quoting Horizon/CMS Healthcare Corp. v. Auld, 34 S.W.3d 887, 896 (Tex. 2000))). Permit

Partners also suggests that under the Rules of Civil Procedure, Sauer could have requested

permission to file the MSA under seal, see Tex. R. Civ. P. 76a (outlining procedure and standard

for sealing court records), but did not.

               In response, Sauer contends that the trial court “correctly found that she

performed on and did not breach the MSA,” including the agreement’s confidentiality

requirement. Alternatively, Sauer argues that even if she did breach the MSA’s confidentiality

requirement, her claim for damages is not forfeited because the findings and the evidence

establish that Permit Partners breached the MSA first when it failed to make the first payment as

required on August 1, 2018. In effect, Sauer argues that the forfeiture provision in the MSA, on

which Permit Partners relies, includes an exception for Permit Partners’s prior material breach.

               In construing a contract, our primary concern is to ascertain the true intentions

of the parties as expressed in the contract itself. Plains Expl. & Prod. Co. v. Torch Energy

Advisors, Inc., 473 S.W.3d 296, 305 (Tex. 2015). In doing so, we must favor an interpretation

that gives effect to each part of the agreement so that none of the provisions will be rendered

meaningless. Id. Although generally enforceable, forfeiture provisions are not favored in the

                                                5
law and are thus strictly construed to avoid forfeiture. See In re Marriage of I.C. and Q.C.,

552 S.W.3d 291, 296 (Tex. App.—Dallas 2016), aff’d, 551 S.W.3d 119 (Tex. 2018) (upholding

appellate and trial courts’ enforcement of no-contest forfeiture clause in contract that was

unambiguous and provided “clear consequences”—i.e., loss of contractual right to payment—if

party violated provision); Dewhurst v. Gulf Marine Inst. of Tech., 55 S.W.3d 91, 99–100 (Tex.

App.—Corpus Christi–Edinburg 2001, pet. denied) (noting rule of contract construction that

forfeiture provision must be clear and unambiguous for court to enforce it). “[W]here equities

are shown which justify a continuation of the contract rather than forfeiture of it, the forfeiture

will be prevented.” W.W. Laubach Tr. v. Georgetown Corp., 80 S.W.3d 149, 157 (Tex. App.—

Austin 2002, pet. denied) (quoting T-Anchor Corp. v. Travarillo Assocs., 529 S.W.2d 622, 627

(Tex. App.—Amarillo 1975, no writ)); see Home Reader Serv., Inc. v. Grappi, 446 S.W.2d 95,

97–99 (Tex. App.—Dallas 1969, writ ref’d n.r.e.) (noting that contract provision for termination

of contract by either party, when fairly entered into, “will be enforced if not contrary to equity

and good conscience”).

               Applying these principles here, we conclude that implicit in the MSA’s forfeiture

provision is an exception for just cause based on prior breach. That is, even if Sauer violates

the confidentiality provision, a forfeiture results only when Permit Partners has, at the time,

complied with its material obligations under the MSA. See Deep Nines, Inc. v. McAfee, Inc.,

246 S.W.3d 842, 848 (Tex. App.—Dallas 2008, no pet.) (holding that because appellant’s failure

to make timely payment under settlement agreement occurred before appellee’s alleged breach

of agreement’s confidentiality provision by attaching it to its pleadings, appellee was excused

from further performance, and affirming summary judgment in favor of appellee that awarded

damages in amount of unpaid settlement payments). The record conclusively shows that Permit

                                                6
Partners breached the MSA by failing to make its first required payment on August 1, 2018, and

execute the mutual release of claims, which release the trial court found Sauer had executed.2

The evidence also conclusively shows that Sauer’s alleged unlawful “disclosure” of the MSA’s

contents occurred on August 6, 2018, when she filed her third amended counterclaim, adding for

the first time a claim for Permit Partners’s breach of the MSA. Because Permit Partners had

materially breached the MSA before Sauer filed her third amended counterclaim, Sauer’s

filing—even if a breach of the MSA—does not result in a forfeiture of her right to enforce

Permit Partners’s payment obligations under the MSA. See id. at 848. To hold otherwise would

be “contrary to equity and good conscience.” See Grappi, 446 S.W.2d at 99.

               In reply, Permit Partners contends that its own prior material breach of the MSA,

even if proven, has no impact on the issue of whether Sauer forfeited her right to enforce Permit

Partners’s payment obligations under the MSA. In support of this assertion, Permit Partners

argues that because Sauer elected to “continue the MSA and su[ed] to receive [its] benefits,”

she may not rely on the prior-material-breach doctrine to argue that her alleged breach of the

2
   While the trial court did not make an express finding that Permit Partners’s breach was
material, we imply such a finding from its judgment and uphold the finding if legally and
factually sufficient evidence supports it. See Pulley v. Milberger, 198 S.W.3d 418, 427 (Tex.
App.—Dallas 2006, pet. denied). Mutual release of the parties’ claims and Permit Partners’s
agreement to make the specified settlement payments were the essence of the MSA, which
expressly required the parties to “sign a full, complete and mutual release of all claims” at
closing, which was to “occur on or before August 1, 2018.” Permit Partners’s first payment was
also to be made on or before closing. Permit Partners’s failure to timely pay Sauer the agreed-
upon amount in settlement of her claims and to release its claims against her deprived her of
the benefit of that agreement. On this record, we conclude that the evidence was legally and
factually sufficient to support the trial court’s implied finding that Permit Partners’s breach was
material. See Mustang Pipeline Co. v. Driver Pipeline Co., 134 S.W.3d 195, 199 (Tex. 2004)
(per curiam) (outlining several factors significant in determining whether breach is material,
including “the extent to which the injured party will be deprived of the benefit which he
reasonably expected,” and holding that appellee committed material breach as matter of law).

                                                7
confidentiality requirement was excused. See Mustang Pipeline Co. v. Driver Pipeline Co.,

134 S.W.3d 195, 196 (Tex. 2004) (per curiam) (“It is a fundamental principle of contract law that

when one party to a contract commits a material breach of that contract, the other party is

discharged or excused from further performance.”). Specifically, Permit Partners contends that

by signing the Rule 11 agreement to limit the issues at trial to only those concerning the MSA

and by suing to receive the benefits of the MSA, Sauer elected to treat the contract as continuing

after Permit Partners’s breach and therefore cannot now claim to be excused from her own

obligation to perform under the contract. See Long Trs. v. Griffin, 222 S.W.3d 412, 415 (Tex.

2006) (per curiam) (noting that “party who elects to treat a contract as continuing deprives

himself of any excuse for ceasing performance on his own part” (quoting Hanks v. GAB Bus.

Servs., Inc., 644 S.W.2d 707, 708 (Tex. 1982))). However, we need not decide whether Sauer’s

alleged breach of the confidentiality requirement was excused by Permit Partners’s prior material

breach or whether, instead, an exception to the prior-material-breach doctrine applies here.

Based on our construction of the MSA and the trial court’s express and implied findings, we

conclude that Sauer’s alleged breach, even if unexcused, did not result in a forfeiture of her right

to enforce Permit Partners’s payment obligations.

               Consequently, even if Sauer’s disclosure of the MSA’s contents in her pleadings

constitutes a breach—and the trial court’s conclusion that she did not thereby breach thus

constitutes legal error—we conclude that the trial court did not err in failing to declare that

Permit Partners’s payment obligation ceased or, as a result, in rendering judgment for Sauer.3

       3
         Per the parties’ Rule 11 agreement, they each filed trial briefs with attached
documentary evidence. In its prayer for relief, Permit Partners sought a declaratory judgment
that “no payment is owed [by Permit Partners under the MSA] because Sauer materially
breached the MSA . . . by breaching her confidentiality obligation . . . by disclosing the
                                                 8
See Tex. R. App. P. 44.1(a) (“No judgment may be reversed on appeal on the ground that the

trial court made an error of law unless the court of appeals concludes that the error complained

of: (1) probably caused the rendition of an improper judgment; or (2) probably prevented

the appellant from properly presenting the case to the court of appeals.”). We overrule Permit

Partners’s first issue.

                We next consider Permit Partners’s second contention—that the trial court erred

in concluding that Permit Partners breached the MSA because the evidence establishes that its

breach was excused by Sauer’s prior alleged fraud in failing to disclose a “pending” DOL claim

and then failing to “withdraw” the claim as required by the MSA.           While the evidence

conclusively shows that Sauer did not disclose that she had previously filed a DOL claim until

after she executed the MSA, the evidence also conclusively shows that there was no pending

DOL claim when the MSA was executed but, rather, that the DOL had previously concluded

Sauer’s claim on November 3, 2017—far in advance of the MSA’s execution.4 Accordingly, the

trial court did not err by impliedly finding that Permit Partners’s breach was not excused by

Sauer’s failure to disclose or withdraw the concluded DOL claim. We overrule Permit Partners’s

second issue.

confidential payment amount—an incurable breach that ceases [Permit Partners’s] payment
obligations under the MSA.” Permit Partners also sought its attorney’s fees but did not seek any
actual damages.
        4
          Evidence in the record demonstrates that Sauer was uncertain about the status of her
DOL claim and that she relayed the existence of the claim and her uncertainty to Permit Partners
for the first time on July 29, 2018, prompting Permit Partners to withhold its first settlement
payment. However, the uncontroverted fact—as supported by a letter from the DOL—remains
that, despite Sauer’s uncertainty, the DOL had previously “concluded” her claim.
                                               9
Sufficiency of the evidence supporting attorney’s fees

               In its third issue, Permit Partners contends that the trial court erred in awarding

Sauer attorney’s fees because (1) she failed to prove that her fees were reasonable or necessary,

and (2) attorney’s fees cannot be awarded against an LLC. We understand the former argument

to be that Sauer’s evidence supporting attorney’s fees was insufficient, and we address it first.

               To support her claim for attorney’s fees, Sauer presented, and the trial court

admitted without relevant objection,5 the affidavit of her attorney Anthony Icenogle and his fee

invoice. Permit Partners contends that the affidavit and invoice do not contain all the elements

the supreme court has explained are necessary to support attorney-fee awards based on the

lodestar method (i.e., hours of work performed multiplied by the hourly rate). See El Apple I,

Ltd. v. Olivas, 370 S.W.3d 757, 760–61 (Tex. 2012) (explaining lodestar method of proof and

need for documentary evidence to prove that fees were reasonable and necessary). Specifically,

Permit Partners contends that the fee invoice does not indicate who performed the services

detailed.   “Sufficient evidence includes, at a minimum, evidence of (1) particular services

performed, (2) who performed those services, (3) approximately when the services were

performed, (4) the reasonable amount of time required to perform the services, and (5) the

reasonable hourly rate for each person performing such services.” Rohrmoos Venture v. UTSW

DVA Healthcare, LLP, 578 S.W.3d 469, 498 (Tex. 2019); see El Apple, 370 S.W.3d at 763 (“[I]f

multiple attorneys or other legal professionals are involved in a case, the fee application should

indicate which attorney performed a particular task or category of tasks.”); see also Tex. Civ.

       5
         At trial, Permit Partners objected to admission of the fee invoice only on the basis of
Sauer’s failure to submit the exhibit the week prior to trial pursuant to the parties’ Rule 11
agreement. Permit Partners does not contend on appeal that the trial court erred in admitting the
exhibit.
                                                 10
Prac. & Rem. Code § 38.001 (providing for recovery by prevailing party of “reasonable

attorney’s fees” on breach-of-contract claim).

                Permit Partners is correct that the supreme court has included the identity of who

performed the legal services among the minimum-required evidence to support an award of

attorney’s fees under the lodestar method. See Rohrmoos Venture, 578 S.W.3d at 498. However,

we conclude that the evidence in this record sufficiently identifies that it was Icenogle who

performed the services for which Sauer sought to recover. While the fee invoice itself does not

specifically identify which attorney with Icenogle’s firm performed the detailed legal services,

and merely recites an hourly rate of $300, Icenogle’s affidavit specifies, relevantly, that: he is

“the attorney” for Sauer, his hourly rate is $300, the amount of attorney’s fees (calculated at

$300 per hour) that Sauer had incurred so far is $11,706, and the amount of additional attorney’s

fees that he “expected to incur . . . to prepare for and attend the trial” in this case is $900.

The trial court could reasonably have concluded that the affidavit, in conjunction with the fee

invoice, sufficiently identified that it was Icenogle who performed the legal services at issue.

We overrule Permit Partners’s complaint that Sauer’s evidence failed to meet the Rohrmoos

Venture requirements.

                Permit Partners raises two additional complaints about Sauer’s evidence on

attorney’s fees: (1) it was insufficient to support the portion of the award for appellate attorney’s

fees because, in his affidavit, Icenogle did not specifically identify “any background by which he

has the ability to testify as to appellate attorney’s fees,” and (2) it outlined time billed for Sauer’s

“unsuccessful” summary-judgment motion and for defending against Permit Partners’s claims,

which are not “proper” bases for attorney’s-fee awards.

                                                  11
               We overrule Permit Partners’s complaint that the evidence was insufficient to

support an award of appellate attorney’s fees. In his affidavit, Icenogle averred as to the fees he

expected Sauer to incur as “reasonable and necessary” in case of an appeal by Permit Partners.

He also averred that he had been a licensed Texas attorney since 1983, with the majority of his

practice concentrated in Travis County, and that he was “fully cognizant and aware of the type

and nature of attorneys’ fees reasonably charged for legal services” in Travis County. Permit

Partners did not object to this affidavit or introduce any controverting evidence, and Permit

Partners has not cited any relevant authority requiring more specificity about an attorney’s

appellate background when opining about appellate attorney’s fees. Accordingly, the affidavit of

Sauer’s attorney constituted legally and factually sufficient evidence to support the trial court’s

award of appellate attorney’s fees in the event of unsuccessful appeals by Permit Partners. See

City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005) (explaining that evidence is legally

sufficient if it would enable reasonable and fair-minded people to make finding under review);

Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986) (explaining that when party challenges factual

sufficiency of adverse finding on issue on which it did not have burden of proof, it must

demonstrate that finding is so contrary to overwhelming weight of evidence as to be clearly

wrong and manifestly unjust).

               We also overrule Permit Partners’s contentions about the “improper” bases for

Sauer’s attorney’s fees because it did not preserve error as to the complaints. See Tex. R. App.

P. 33.1. However, even if its general contention in its motion for new trial that Sauer “failed

to segregate her fees between recoverable and unrecoverable claims” could be construed to

encompass these complaints, Permit Partners does not cite any applicable authority supporting a

reversal of the award on those bases. Cf. Smith v. Texas Farmers Ins., 82 S.W.3d 580, 588 (Tex.

                                                12
App.—San Antonio 2002, pet. denied) (“[I]f the plaintiff’s breach of contract claim and the

defendant’s counterclaim encompass matters that are indistinguishable and arose from the same

transactions, and the same facts required to prosecute the claim are required to defend against

the counterclaim, then attorney’s fees may be appropriate.”). Furthermore, the record contains

sufficient uncontroverted evidence—in the form of Icenogle’s affidavit—to support the trial

court’s conclusion that the attorney’s fees Sauer incurred, including time spent pursuing

summary judgment and defending against Permit Partners’s breach-of-contract claims, were

reasonable and necessary to prevail on her claims. We overrule Permit Partners’s contention that

Sauer “failed to prove the reasonableness or necessity of her attorney’s fees.”

Attorney’s fees assessed against the LLC

                We now turn to Permit Partners’s contention that the trial court erred in assessing

attorney’s fees against the LLC rather than solely against Cancialosi. Sauer concedes that the

award of attorney’s fees against the LLC cannot stand and that the award should be reversed as

to that party. See, e.g., Alta Mesa Holdings, L.P. v. Ives, 488 S.W.3d 438, 455 (Tex. App.—

Houston [14th Dist.] 2016, pet. denied) (holding that Section 38.001 does not authorize recovery

of attorney’s fees against LLC). We, accordingly, hold that the trial court erred in assessing

attorney’s fees against the LLC and reverse the award of attorney’s fees against it.

                                         CONCLUSION

                We reverse the portion of the trial court’s judgment awarding Sauer attorney’s

fees against Permit Partners, LLC and render judgment accordingly. We affirm the remainder of

the judgment.

                                                13
                                            __________________________________________
                                            Thomas J. Baker, Justice

Before Justices Goodwin, Baker, and Kelly

Affirmed in Part; Reversed and Rendered in Part

Filed: January 29, 2021

                                              14