Court Opinion

ID: 9679156
Source: CourtListenerOpinion
Date Created: 2023-08-24 06:42:49.91903+00
Date Added: 2024-06-11T18:17:10.840606
License: Public Domain

OPINION ON REHEARING
Opinion by
Justice CASTILLO.
Both appellants and appellee have filed motions for rehearing. We deny appel-lee’s motion for rehearing. We similarly deny appellant’s motion for rehearing. We provide this supplemental opinion on rehearing to fully address the question of attorney fees in the declaratory judgment action, appellate cause No. CV-04-358CV. These issues do not alter the Court’s opinion in this appeal which issued July 20, 2006.
I. The Issues
Appellants’ issues thirteen, fourteen and fifteen on appeal are framed as follows:
13. The trial court erred in granting judgment for attorney fees because Ortiz failed to timely designate Shelby Jordan as a fact and expert witness, and Ortiz also failed to timely produce documents admitted into evidence pursuant to appellants’ request for production. All such evidence should have been excluded.
14. The trial court erred in granting judgment for attorney fees because Ortiz failed to properly segregate attorney fees incurred to obtain her declaratory judgment versus attorney fees incurred to prosecute tort damage claims and other matters.
15. The trial court erred in granting judgment for attorney fees because there was no right to recover attorney fees under the declaratory judgment act. Ortiz’s declaratory judgment action raised no new factual or legal issues that were not already raised in appellants’ pleadings.
II. Background
As we noted in our opinion, partial summary judgment in the declaratory judgment action that the 1990 judgment was an action for debt, and not based in tort, was entered on February 21, 2003. Partial summary judgment that Schor’s was at all times Ortiz’s “special community property,” subject to her sole management and control and not available for attachment to satisfy the 1990 judgment debt, was entered on May 27, 2003. On August 11, 2003, the declaratory judgment action was severed from Ortiz’s counterclaims for damages. Following a jury trial on the damage claims, Ortiz returned to the trial court in the declaratory judgment action to pursue her claim for attorney fees.
On September 8, 2003, Ortiz filed a motion for determination of attorney fees and *661for severance. Montemayor and Graham (collectively “Montemayor”) objected. On November 4, 2003, the trial court issued a letter to counsel advising that it found the fee request to be excessive and unreasonable, and that $35,000 would be awarded in fees. Montemayor and Ortiz objected. Judgment awarding $35,000 in fees to Ortiz was entered on January 13, 2004. Ortiz subsequently filed a motion for new trial as to the attorney fees, complaining of the trial court’s summary disposition of the issue. Montemayor also filed a motion for new trial. At a hearing held on February 27, 2004, both parties objected to the fee award and agreed the issue needed to be tried. A new trial was granted and set to commence March 22, 2004, less than thirty days later.1
The charge submitted to the jury included a request for a dollar amount of attorney fees reasonably and necessarily incurred by Ortiz in “this” lawsuit. The jury’s response was $142,908.72 for representing Ortiz in court, $20,000 for representing her on appeal, and $15,000 for any appeal to the Supreme Court of Texas. Final judgment incorporating this award was entered April 19,2004.
A. Discovery Documents
Requests for Disclosure were propounded to Ortiz on May 29, 2002. Supplemental responses, provided in February and March 2003, include identification of various persons with knowledge of relevant facts, and various experts. Mr. Frank Perez is identified as the expert who would testify as to the reasonableness and necessity of attorney fees. Montemayor’s Third Request for Production was propounded to Ortiz on October 14, 2003. The requests call for production of any and all attorney fee agreements, attorney fee billing statements, and payments for retained or other services made to attorneys. On November 14, 2003, Ortiz responded by objecting to each request.
Following the hearing on February 27, 2004, a jury trial was scheduled for March 22, 2004. On March 3, 2004, Montemayor file a motion to compel discovery and for sanctions, complaining of Ortiz’s failure to respond to the third set of requests for production. On March 11, 2004, Ortiz produced documents responsive to the requests, including Ortiz’s fee agreement and detailed time records of Shelby Jordan and Norman Thomas, counsel for Ortiz. Ortiz also notified Montemayor of her intent to use Jordan as an expert on attorney fees, and tendered him for deposition. Jordan’s deposition was taken on approximately March 18, and Montemayor reviewed with him the related documentation and his prospective testimony.
B. Trial
At the hearing on pre-trial motions held March 22, Montemayor objected to the admission of Jordan’s testimony, contending he was either never designated, or was late designated as an expert. Ortiz contended that Jordan had been designated as soon as it was learned the motion for new trial had been granted, and further that, having taken Jordan’s deposition, Monte-mayor would sustain no unfair surprise. The trial court overruled Montemayor’s objections and permitted Jordan to testify. The trial court also overruled Montema-yor’s objections to the admission of attorney fee and billing records.
Jordan testified as to his experience and expertise, and his hourly rates. He testified that he did not bill Ortiz at his usual rate of $375, but instead at the reduced *662rate of $250 an hour. He testified that Montemayor first filed suit requesting declaratory judgment in May 2002. Jordan’s involvement in the case began even before the fee agreement was signed.2 He discussed the nature and complexity of the case, including each party’s request for a declaratory judgment, and the volume of pleadings and other filings exchanged between the parties. Jordan stated he brought in additional local counsel and other counsel as well to share the work load but that, pursuant to the fee agreement, no additional fees would be due by Ortiz; rather, the attorneys would divide any recovery.
Jordan and his firm maintained time records of services rendered in the case. The contingency fee agreement called for Ortiz to pay costs of the litigation as they were incurred. Fees in Ortiz’s exhibit 6 totaled $183,000, but some portions were redacted and not requested because they were unrelated to the declaratory judgment action. Fees requested totaled $131,268.50, plus $11,000 in costs for a total of $142,268.50.3
Jordan testified that fees and services associated with the other affirmative claims brought by Ortiz, which had been severed and were pursued separately to a jury trial, were not included in this fee request. He estimated what reasonable and necessary fees would be for any appeal. Jordan was fully cross-examined.
William Kimball, counsel for Montema-yor, testified to counter the assertions of Jordan. He testified he was familiar with pleadings filed in the case and that he had reviewed Jordan’s billing records. He complained of the vagueness of certain billing entries, and expressed his opinion that many of the services reflected in those records did not relate to issues in the declaratory judgment action. He contested specific entries. Kimball and counsel for Montemayor contended that Ortiz should only be able to recover fees, if at all, for work done on the sole issue of whether or not Schor’s was her special community property. Kimball opined that in Jordan’s firm billing records, only 5.2 hours properly dealt with that issue, and those were spent by an attorney billing at $180 per hour. He also opined that only 33 hours of Thomas’s time could be attributed to this issue, at a rate of $200 per hour, bringing the total reasonable fees to only $7,500-$8,000. Kimball distinguished the different suits involved, the issues in each, and opined that the other suits had no bearing on the matters in the declaratory judgment action. Ortiz’s cross-examination of Kimball explored Ortiz’s contrary view. The fact of the severance was discussed.
The jury returned a unanimous verdict awarding to Ortiz $142,908.72 in fees, plus $20,000 for any appeal to the court of appeals, and $15,000 for any appeal to the Texas Supreme Court. Judgment on this verdict was entered on April 19, 2004. This appeal ensued.
III. Standard of Review
The Declaratory Judgments Act provides that in proceedings brought under it, “reasonable and necessary attorney’s fees” may be awarded as are “equitable and just.” Tex. Crv. PRAC. & Rem.Code *663Ann. § 37.009 (Vernon 1997); Allstate Ins. Co. v. Hallman, 159 S.W.3d 640, 643 (Tex.2005). The reasonable and necessary requirements are questions of fact to be determined by the fact finder, but the equitable and just requirements are questions of law for the trial court to decide. Ridge Oil Co. v. Guinn Invs., Inc., 148 S.W.3d 143, 161 (Tex.2004). “Unreasonable fees cannot be awarded, even if the court believes them just, but the court may conclude that it is not equitable or just to award even reasonable and necessary fees.” Id. at 161-62 (citing Bocquet v. Herring, 972 S.W.2d 19, 20 (Tex.1998)).
A judge’s decision to award or not award attorney’s fees is reviewed on appeal for an abuse of discretion. Id. at 163. To find an abuse of discretion, the trial court must have acted without reference to any guiding rules or principles, such that the act was arbitrary or unreasonable. Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241-42 (Tex.1985). Merely because a trial court may decide a matter within its discretion in a different manner than an appellate court would in a similar circumstance does not demonstrate that an abuse of discretion has occurred. Id. at 242.
Similarly, the admission and exclusion of evidence is committed to the trial court’s sound discretion. Oyster Creek Fin. Corp. v. Richwood Invs. II, Inc., 176 S.W.3d 307, 315 (Tex.App.-Houston [1st Dist.] 2004, pet. denied); Moore v. Bank Midwest, N.A., 39 S.W.3d 395, 401 (Tex.App.-Houston [1st Dist.] 2001, pet. denied). We must uphold the trial court’s evidentiary ruling if there is any legitimate basis for the ruling. Owens-Corning Fiberglas Corp. v. Malone, 972 S.W.2d 35, 43 (Tex.1998) (citing State Bar of Tex. v. Evans, 774 S.W.2d 656, 658 n. 5 (Tex.1989)). We will not reverse a trial court for an erroneous evidentiary ruling unless the error probably caused the rendition of an improper judgment. See Tex.R.App. p. 44.1; Malone, 972 S.W.2d at 43; see also Gee v. Liberty Mut. Fire Ins. Co., 765 S.W.2d 394, 396 (Tex.1989).
 With respect to the conclusions of the jury, the trier-of-fact remains the sole judge of the credibility of the witnesses and the weight to give their testimony. City of Keller v. Wilson, 168 S.W.3d 802, 819 (Tex.2005). It may choose to believe one witness and disbelieve another, and a reviewing court cannot impose its own opinions to the contrary. Id. “A reviewing court cannot substitute its judgment for that of the trier-of-fact, so long as the evidence falls within this zone of reasonable disagreement.” Id. at 822. “The court must consider evidence in the light most favorable to the verdict, and indulge every reasonable inference that would support it. But if the evidence allows of only one inference, neither jurors nor the reviewing court may disregard it.” Id.
IV. Analysis
A. Admissibility of Testimony and Documents to Support the Fee Award
Montemayor urges that the trial court erred in permitting Jordan to testify as a fact or expert witness because he was not timely designated. Montemayor further urges that because Ortiz failed to timely respond to production requests, all documentary evidence admitted in support of the attorney fees should have been excluded.
Texas Rule of Civil Procedure 193.6 provides that a party who fails to amend or supplement discovery in a timely manner may not introduce in evidence the material or information that was not timely disclosed, or offer the testimony of a witness who was not timely identified, unless the *664court finds (1) there was good cause for the failure to timely supplement, or (2) the failure will not unfairly surprise or unfairly prejudice the other parties. Tex.R. Civ. P. 193.6. The burden to establish good cause or the lack of unfair surprise or unfair prejudice is on the party seeking to introduce the evidence or call the witness; any finding of good cause or lack of unfair surprise or unfair prejudice must be supported by the record. Id.
Ortiz contended there was no unfair surprise. The trial court repeatedly overruled Montemayor’s objections to entry of the evidence and the testimony, at both the pre-trial hearing and at trial. Implicit in the trial court’s decisions, both to permit Ortiz’s witness to testify on attorney fees and to admit the related documentary evidence, is a determination that there was good cause or no unfair surprise in any late disclosure of the witness or the documentation. Bellino v. Comm’n for Lawyer Discipline, 124 S.W.3d 380, 384 (Tex.App.Dallas 2003, pet. denied) (citing Capital Metro. Transp. Author./Cent. of Tenn. Ry. and Navigation Co. v. Cent, of Tenn. Ry. and Navigation Co., 114 S.W.3d 573, 583 (Tex.App.-Austin 2003, pet. denied) (finding of unfair surprise implicit in court’s ruling)); see also De La Rosa v. St. John, No. 03-99-0282-CV, 2000 WL 235173, at *3, 2000 Tex.App. LEXIS 1371, at *6 (Tex.App.-Austin March 2, 2000, no pet.) (designated as opinion) (finding an implicit ruling of good cause in the trial court’s ruling in favor of admission of the evidence and testimony).
Additionally, the record is unequivocal that the sole issue to be addressed in the forthcoming trial was attorney fees. Subsequent to the disclosure of the information in issue, the deposition of Jordan was scheduled and taken by Montemayor. Testimony provided at trial by Kimball, counsel for Montemayor, reflected he had reviewed in detail the fee records as well as Jordan’s deposition testimony. Cross-examination of Jordan was full and competent.
We conclude the record supports an implicit finding of lack of unfair surprise, and that the trial court did not abuse its discretion in permitting the witness to testify and the documentary evidence to be admitted. Bellino, 124 S.W.3d at 384; Capital Metro., 114 S.W.3d at 583. Accordingly, we conclude the trial court did not err in admitting either the testimony or the documentary evidence of the fee records. We overrule Montemayor’s issue thirteen on appeal.
B. Segregation of Fees
Montemayor next urges it was error to submit evidence of all the various fees to the jury because Ortiz failed to properly segregate attorney fees related solely to pursuit of the declaratory judgment issues. Montemayor argues that, because of this failure, the jury award was excessive, unreasonable, and conflicted with the trial court’s earlier finding.
The trial court issued its first judgment awarding fees without any hearing or evidence of the parties. Montema-yor in fact objected to entry of that order on fees, and Ortiz had requested a jury trial on the issue. Both parties filed a motion for new trial on the issue of attorney fees; that new trial was granted, and the earlier judgment was withdrawn. The question was then presented to the jury as the fact finder.
The trial court has broad discretion in granting a new trial. Champion Int’l Corp. v. Twelfth Court of Appeals, 762 S.W.2d 898, 899 (Tex.1988) (orig. proceeding) (per curiam). When a motion for new trial is granted, the original judgment is set aside and the parties may proceed *665without prejudice from previous proceedings. Markowitz v. Markowitz, 118 S.W.3d 82, 88 (Tex.App.-Houston [14th Dist.] 2003, pet. denied) (citing In re Marriage of Wilburn, 18 S.W.3d 837, 844 (Tex.App.-Tyler 2000, pet. denied); Long John Silver’s Inc. v. Martinez, 850 S.W.2d 773, 777 (Tex.App.-San Antonio 1993, writ dism’d w.o.j.)). Granting a new trial has the legal effect of vacating the original judgment and returning the case to the trial docket as though there had been no previous trial or hearing. Id. (citing Pinkley v. Vega, 768 S.W.2d 473, 475 (Tex.App.-E1 Paso 1989, no writ) (finding that order granting new trial vacates former judgment in its entirety); Schintz v. Morris, 13 Tex.Civ.App. 580, 35 S.W. 516, 519 (Tex.Civ.App.-Austin 1896, orig. proceeding) (noting that a decision to grant a motion for new trial, thereby setting aside the only judgment that was rendered on the verdict, had “the effect of destroying the life of the verdict for all purposes.”)). Any argument by Montemayor that the earlier judgment should prevail over the subsequent verdict and judgment based thereon is without merit.
With respect to segregation of fees, Montemayor argues that Ortiz recovered for time spent not just on the declaratory judgment action dealing with whether or not Schor’s was her separate property, but also other claims, including other declaratory judgment claims and counterclaims based in tort. A plaintiff is required to show that the fees were incurred in conjunction with the prosecution or defense (in the context of a declaratory judgment) of a claim which allows recovery of such fees. Recovery of attorney fees is statutorily permissible under the Texas Declaratory Judgments Act; fees may be awarded “as are equitable and just,” without the requirement that a party prevail on its claims. Tex. Crv. Pra.c & Rem.Code Ann. § 37.009 (Vernon 1997).
Here, Montemayor originally brought suit seeking a declaratory judgment of the
right of the Plaintiffs [Montemayor] to execute and foreclose upon the personal properties ... and/or equipment of the Defendants and/or Schor’s jewelry stores ...” and that “said personal properties ... inventory and/or equipment of the Schor’s jewelry stores is the community property of defendants Cela-da and Becky Ortiz; that said cash and properties are subject to levy and execution by the plaintiffs based upon said judgment debt....
Subsequently, Ortiz filed counter-claims seeking a declaratory judgment that Ortiz was not personally liable on the judgment, and that neither Ortiz nor her business assets of Schor’s were subject to the judgment debt underlying Montemayor’s action to levy on that property. Ortiz also sought a declaration that the judgment on the debt was dormant. Ortiz’s counterclaims included several based in tort; those were later severed from the declaratory judgment actions.
Evidence at trial included testimony that work on the declaratory judgment issues was consuming and closely intertwined with all other issues, up until the date of the severance. Jordan further testified that time incurred prior to the severance that was attributable to the tort claims had been redacted from the fees requested; time attributed to trial preparation and trial on the tort claims similarly had not been included in the fee request. Full cross-examination of Jordan occurred; an attorney also testified on behalf of Monte-mayor. The jury had the opportunity to not only evaluate the testimony but also to review the fee statements.
As noted above, the jury, as trier-of-fact, is the sole judge of the credibility of the witnesses and the weight to give their testimony. City of Keller, 168 S.W.3d at 819. It may choose to believe *666one witness and disbelieve another; a reviewing court cannot impose its own opinions to the contrary or substitute its judgment for the trier of fact, so long as the evidence falls within the zone of reasonable disagreement. Id. Further, “segregation of fees is not required if services are rendered in connection with claims arising out of the same transaction and are so interrelated that their prosecution or defense entails proof or denial of essentially the same facts.” Hill v. Heritage Res., Inc., 964 S.W.2d 89, 148 (Tex.App.-El Paso 1997, pet. denied). The jury could reasonably have concluded either that the fees had been appropriately segregated, or that remaining fees, if not fully segregated, related to services that were so intertwined as to make further segregation impractical and unnecessary.
Montemayor contends the fee award is unjust as a matter of law. Whether the fees are reasonable and necessary is a question of fact for the jury. Bocquet, 972 S.W.2d at 21. Whether the fees are also equitable and just is an equitable consideration, submitted to the trial court’s discretion, and it is an abuse of discretion to rule arbitrarily, unreasonably, or without regard to guiding legal principles. Id. Jordan testified that he had reduced his normal fee, his firm had expended numerous hours and extensive efforts in litigating her position on the declaratory judgment issues, and that in some instances, matters at first deemed to be “undisputed” would resurface as contested issues requiring additional litigation. Ortiz prevailed on the declaratory judgment issues before the trial court.
We conclude that the jury could properly find that the fees it awarded were neither unreasonable nor unnecessary. We further conclude that the trial court did not abuse its discretion or err as a matter of law in finding that the fee award reflected in the jury award, and subsequently incorporated in the final judgment was neither inequitable nor unjust. We overrule Montemayor’s issue fourteen on appeal.
C. Availability of Attorney Fee Award
In the fifteenth issue, Montema-yor urges that Ortiz had no right to recover attorney fees under the Declaratory Judgments Act because she presented no new factual or legal issues not already raised in appellants’ pleadings. It is undisputed that Montemayor initiated proceedings with a suit for declaratory judgment and that Ortiz counterclaimed with her own requests for declaratory judgment. Two summary judgment orders issued declaring rights in favor of Ortiz.
Attorney fees may be recovered in actions arising under the Declaratory Judgments Act. See Tex. Civ. PRAC & Rem.Code Ann. § 37.009 (Vernon 1997). Montema-yor contends that Ortiz’s counterclaims presented no new controversies, and therefore an award of fees based thereon was improper.
 When a party brings a declaratory judgment action by way of a counterclaim, and that counterclaim involves only issues already raised by the original claim, the party is not entitled to an award of attorney’s fees. Flagship Hotel, Ltd. v. City of Galveston, 117 S.W.3d 552, 566 (Tex.App.-Texarkana 2003, pet. denied). However, this general rule only applies when a defendant files a declaratory-judgment counterclaim that presents no new issues except to recover attorneys’ fees. Hansson v. Time Warner Entm’t Advanced /Newhouse P’ship, No. 03-01-00578-CV, 2002 WL 437297, at *3, 2002 Tex.App. LEXIS 2058, at *10 (Tex.App.-Austin 2002, pet. denied) (designated as opinion) (citing Falls County v. Perkins & Cullum, 798 S.W.2d 868, 871 (Tex.App.-Fort Worth 1990, no writ)). The rule does not apply where a defendant is defending against a *667plaintiffs declaratory judgment action. Id.
In the present case, the plaintiff (appellant), not the defendants (appellees), invoked the Declaratory Judgments Act in its pleadings. Only after appellant instigated the declaratory judgments action as the basis for its suit did appellees then request attorney’s fees under the same Declaratory Judgments Act. The request was logical and clearly authorized in defense of the main suit.
Falls County, 798 S.W.2d at 871.4 Such is the case here, where Montemayor brought the initial suit as a declaratory judgment action.5
We conclude the trial court did not abuse its discretion in finding that Ortiz was entitled to seek and recover an award of attorney fees under the Declaratory Judgments Act. See Bocquet, 972 S.W.2d at 20. Accordingly, we overrule the fifteenth issue on appeal.6
CONCLUSION
We deny the motions for rehearing filed by appellants and by appellee.

. Montemayor’s motion for new trial also complained of the trial court’s substantive findings in the declaratory judgment. Only the attorney fee issue proceeded to trial.

. Jordan’s firm first formally appeared as counsel of record in the case in February 2003. The time records reflect consultations and services rendered beginning in late August 2002. Jordan testified that he and Ortiz first reached an oral agreement regarding his representation; the later written fee agreement is dated November 1, 2002.

. The exhibit also includes time records and fees incurred on behalf of Ortiz by counsel J. Norman Thomas who assisted in the matter.

. Montemayor relies upon Howell v. Mauzy, 899 S.W.2d 690, 706-07 (Tex.App.-Austin 1994, writ denied) and Redwine v. AAA Life Ins. Co., 852 S.W.2d 10, 17 (Tex.App.-Dallas 1993, no writ). However, these cases are distinguishable from Hansson v. Time Warner Entm’t Advance/Newhouse P’ship, No. 03-0100578-CV, 2002 WL 437297, 2002 Tex.App. LEXIS 2058 (Tex.App.-Austin 2002) (designated as opinion), from Falls County v. Perkins & Cullum, 798 S.W.2d 868, 871 (Tex.App.-Fort Worth 1990, no writ), and from the matter before us. In Howell and Redwine, no claim supporting an award of attorney fees existed prior to the filing of the counterclaim for declaratory judgment; these courts therefore concluded that the Declaratory Judgments Act could not be used to bootstrap a claim for attorney fees where it raised no new issues.

. We further note that an award of fees under the Declaratory Judgments Act is not dependent upon whether or not the party ultimately prevails. Bocquet v. Herring, 972 S.W.2d 19, 20 (Tex.1998) (stating the declaratory judgments act “does not require an award of attorney fees to the prevailing party”); Barshop v. Medina Cty. Underground Water Conserv. Hist., 925 S.W.2d 618, 637 (Tex.1996); Scottsdale Ins. Co. v. Travis, 68 S.W.3d 72, 77 (Tex.App.-Dallas 2001, pet. denied).

.We note Montemayor’s contention that we failed to address the third issue on appeal, that the trial court erred in determining that the 1990 judgment was not a "joint debt.” The 1990 judgment, based on promissory notes, did not name Ortiz as a party or as an obligor. The record is further devoid of any evidence that Ortiz participated in any of the underlying events or even had knowledge of the 1990 judgment. In our earlier opinion, we discussed at length that the judgment was for a claim in contract and not in tort; only a tort debt can reach community property under the separate management and control of the other spouse. Tex Fam.Code Ann. § 3.202 (Vernon 1998). Nothing supports any contention that this earlier judgment debt was a "joint obligation” simply because Ortiz was married to a named debtor. We have already distinguished Cockerham, v. Cockerham, 527 S.W.2d 162 (Tex.1975), and overruled Montemayor's third issue. We reiterate that conclusion here.