Court Opinion

ID: 2894615
Source: CourtListenerOpinion
Date Created: 2015-09-07 23:03:51.341929+00
Date Added: 2024-06-11T13:32:50.949839
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                                            NO. 07-03-0408-CV

                                     IN THE COURT OF APPEALS

                            FOR THE SEVENTH DISTRICT OF TEXAS

                                                AT AMARILLO

                                                   PANEL E

                                        JANUARY 11, 2006
                                 ______________________________

                                   MILES E. and IRENE BALDWIN,
                                                                                         Appellants

                                                        v.

             ROBERT E. GARNER, individually, and TEMPLETON & GARNER,

                                                                                         Appellees
                              _________________________________

                 FROM THE 108TH DISTRICT COURT OF POTTER COUNTY;

                          NO. 75,051-E; HON. VANN CULP, PRESIDING
                             ________________________________

                                     Memorandum Opinion
                               ________________________________

Before QUINN, C.J., REAVIS, J. and BOYD, S.J.1

        Miles E. Baldwin and Irene Baldwin (Baldwin) appeal from a final judgment denying

them recovery against Robert E. Garner, individually, and Templeton & Garner (Garner)

but awarding Garner damages against them. Each party appealed from the final judgment.

We affirm.

         Background

        1
          John T. B oyd, C hief Justice (R et.), Se venth Court of Appeals, sitting by as signm ent. T EX . G O V 'T
C ODE A N N . §75.002(a)(1) (Verno n Supp . 2005).
         The matter before us involves a fee dispute. Baldwin retained Garner to prosecute

claims against various individuals. The parties executed a retainer agreement under which

Baldwin delivered to Garner $20,000 as a retainer. Upon pursuing various claims to a

monetary judgment in favor of Baldwin in 1985, Garner withdrew from further

representation after attempting collection efforts and hiring, as attorneys in his law firm,

children of two of the judgment debtors. Thereafter, Baldwin sought to enforce the

judgment against the judgment debtors. In doing so, he acquired an asset (the Michigan

Chestnut or MC property) from a debtor’s bankruptcy estate. The asset eventually proved

valuable, affording Baldwin a return exceeding $750,000. Litigation, culminating in this

appeal, followed.

         Baldwin sued Garner for breach of contractual and fiduciary duties, negligence, and

committing deceptive trade practices. So too did he request return of the unexpended

retainer. In response, Garner sought a percentage of the monies recovered by Baldwin

under the 1985 judgment by alleging choses in action sounding in breach of contract and

fraud.

         Upon motion for a partial summary judgment, the trial court determined that the

retainer was not refundable.            Furthermore, a subsequent jury trial resulted in the

aforementioned verdict for Garner and the judgment underlying this appeal.

Baldwin Argument One2 – Garner’s Purported Breach of Contract

         2
          W e label Baldwin’s contentions as “arguments” because he does not separately brief each of the nine
issues. Ra the r, he com bines several issues in each of h is argum ents. Th us, it is easier to address his
con tention s as argu m ents instea d of issue s or p oints o f error.

                                                      2
      Baldwin initially contends that the trial court erred in concluding that Garner was not

obligated to return the balance of the $20,000 under the retainer agreement. We overrule

the issue.

      Baldwin correctly states that whether any portion of the retainer was refundable

depended upon the agreement between the two parties. So, our task is to read the

contract and determine who it obligated to do what. And, in undertaking that task, we

heed various settled rules of law. The first dictates that construing an unambiguous

contract involves a question of law which we resolve de novo. Cross Timbers Oil Co. v.

Exxon Corp., 22 S.W.3d 24, 26 (Tex. App.–Amarillo 2000, no pet.).             Second, it is

imperative to give effect to the intent of those party to the agreement. Id. Furthermore,

that intent is garnered from the language of the contract, which language is considered in

its entirety. Id. That is, we peruse the complete document to understand, harmonize, and

effectuate all its provisions. Id. So too must we afford the words contained in the

agreement their plain, ordinary, and generally accepted meaning, unless the instrument

requires otherwise.    Id.; Sun Operating, Ltd. v. Holt, 984 S.W.2d 277, 285 (Tex.

App.--Amarillo 1998, pet. denied). Finally, construction of the instrument must not lead to

unreasonable or absurd results. See Reilly v. Rangers Mgt, Inc., 727 S.W.2d 527, 530

(Tex. 1987) (stating that courts should avoid, when possible, a construction that is

unreasonable, oppressive or inequitable); Pavecon, Inc. v. R-Com, Inc., 159 S.W.3d 219,

222 (Tex. App.–Fort Worth 2005, no pet.) (stating that when interpreting a contract, one

should avoid, if possible, construction that is unreasonable, oppressive, inequitable, or

absurd). With this in mind, we turn to the retainer agreement at issue.

                                             3
      The contract stated:

      I [Garner] have agreed to represent you [Baldwin] and assist you in these
      matters and agree to use the best of my ability and capacity in so
      representing you on the following terms and conditions:

             (1) I will be paid a retainer fee in advance of $20,000 cash.

             (2) All costs and expenses incurred by me by way of travel,
             photocopies, telephone charges, court costs, depositions, and bond
             fees (to $5,000) and expert expert [sic] witnesses in the above and
             foregoing endeavors will be paid by the undersigned firm out of the
             retainer advanced.

             (3) Any recoveries made in litigation for damages per se, I shall
             receive twenty percent (20%) of such in addition to the retainer after
             the first $100,000 has been recovered.

             (4) On any properties which are foreclosed and which you retake
             ownership or possession of or any properties recovered through
             litigation, I shall be paid no portion of any profits or advantage which
             comes to you through such activities.

      If you are agreeable to my doing this work, I will abide by your instructions and use
      my best efforts to the end that you may be ably and fully represented. In the event
      that you should become dissatisfied with my services or desire to terminate my
      services at any time, you may do so without further cost or expense to you, and I
      shall, upon request, return to you any portion of the retainer fee advanced which
      has not been used for payment of costs and expenses covered in Paragraph (2)
      and any portion which has not been earned at the rate of $125 per hour according
      to my time records which shall be kept and delivered to you quarterly or more
      frequently should you desire.

      If you are agreeable to this undertaking on this basis, please so indicate by affixing
      your signatures below mine and attaching your check for $20,000.

(Emphasis added). As can be immediately seen, nothing in the words selected expressly

states whether or not the $20,000 is refundable. Yet, the parties took care to note several

things in the agreement. First, $20,000 was to be paid Garner in advance and as a

condition of his assuming representation of Baldwin. Second, while costs and expenses

were to be paid from the $20,000, so too were fees “earned at the rate of $125 per hour

                                            4
according to [Garner’s] time records . . . .” These two indicia indicate that the $20,000 was

contemplated as more than a deposit to cover expenses and costs; the parties also viewed

it as a source of payment for services rendered by Garner on behalf of Baldwin. Third, in

discussing the extent of Garner’s fee, the parties also spoke of giving him 20% of the

damages recovered and which exceeded $100,000 “in addition to” the $20,000 retainer. 3

        Fourth, to the extent that Garner’s services were ever terminated by Baldwin, the

agreement obligated the former to return the balance of the retainer “upon request” of

Baldwin. In other words, the obligation to refund upon termination of the attorney/client

relationship was dependent upon Baldwin requesting the monies, according to the

expressed wording of the contract. So, as per the contract, if Baldwin discharged Garner

but did not request the funds, Garner was not obligated to return them.

        From the above indicia, we infer the following. Baldwin and Garner intended that

the $20,000 retainer be used to pay both costs and expenses related to the prosecution

of the claims as well as the fees incurred by Garner if there was no further recovery.

Furthermore, the sum was not refundable unless Baldwin first terminated Garner’s services

and then demanded payment. Indeed, if the funds were simply a refundable deposit, as

argued by Baldwin, then there would have been no reason to include in the document

either a provision addressing the return of funds upon the termination of Garner or one

requiring Baldwin to first ask for their return. See MCI Tel. Corp. v. Texas Utilities Elec.

        3
          To the extent that Garner was to receive 20% of the recovered damages exceeding $100,000 and
$20,000 is 20 % of $100,000, it can reasona bly be said that Garner contem plated a 20% across the bo ard
con tingen t fee a rrangem ent. H owe ver, the first 20% was to be paid in advanc e.

                                                   5
Co., 995 S.W.2d 647, 652 (Tex. 1999) (stating that a court must avoid interpreting a

contract in a manner that renders aspects of it meaningless).

       Moreover, to adopt Baldwin’s contention that the retainer was refundable (after the

payment of costs and expenses) even if Garner was never terminated would be to interpret

the agreement in an unreasonable and inequitable way. Under it, Garner would be entitled

to a fee if his conduct was less than satisfactory and resulted in his termination. However,

he would not be so entitled if his performance was exemplary but failed to result in

payment of damages exceeding $100,000. Interpreting the contract in a way that rewards

bad behavior but punishes good is absurd and, thus, a construction that we should avoid.

See Reilly v. Rangers Mgt, Inc., supra; Pavecon, Inc. v. R-Com, Inc., supra.

       In sum, the trial court did not err in construing the agreement in a manner holding

that the $20,000 sum was non-refundable. Thus, we overrule Baldwin’s first issue.

       Baldwin Argument Two – Authority to Sue Melroe

       Next, Baldwin contends that the retainer agreement did not authorize Garner to sue

Irving L. and Edward Melroe. Yet, irrespective of whether the agreement expressly

directed Garner to sue those two individuals, nothing therein directed him to forego suit.

More importantly, the record contains a plethora of evidence illustrating that Baldwin

discussed litigation against the Melroes with Garner before and after executing the

agreement, understood that Garner would sue them, approved of the suit, and obtained

benefit from the judgment eventually secured against them by Garner. Accordingly, we

overrule the issue.

       Baldwin Argument Three – Amount to Credit

                                             6
       Next, Baldwin argues that when calculating the amount of credit a judgment debtor

is to receive when the judgment creditor obtains property in partial satisfaction of the

judgment, one uses the “‘bid in” amount, or the sum paid to acquire the property. Given

this and the allegation that $25,000 was paid to acquire the Michigan Chestnut asset, the

amount recovered for purposes of calculating the fee payable to Garner under the contract

was only $25,000, Baldwin concludes. Yet, we find the argument inapposite for Garner

was not a judgment debtor under the 1985 judgment. Thus, the issue is overruled.

       Baldwin Argument Four – Attorney’s Fees/Interest Excluded

       Next, Baldwin argues that the attorney’s fees and interest encompassed by the 1985

judgment are excluded from the formula used to calculate the amount of fees due Garner.

We overrule the issue for several reasons.

      First, the argument is inadequately briefed. Baldwin fails to cite us to evidence of

record indicating the amount of attorney’s fees and interest purportedly comprising the sum

ordered payable under the judgment. TEX . R. APP. P. 38.1(h) (requiring the parties to cite

to authority and the record). Thus, even if this argument was correct, which it is not,

Baldwin failed to illustrate that the supposed error was harmful.

       Second, the contention assumes that Garner agreed only to receive 20% of any

“damages” recovered. Attorney’s fees and interest are not considered damages, Baldwin

continues, and because they are not, any such fees and interest must be omitted from the

sum upon which Garner’s fee is determined. In so construing the agreement, however,

Baldwin ignored pertinent rules of contract interpretation.

       As previously mentioned, the entire document must be considered when

determining the intent of the parties. And, while paragraph three of the accord contains

                                             7
the phrase “damages per se,” those are not the only words used to describe Garner’s

entitlement. Again, the complete paragraph states: “[a]ny recoveries made in litigation for

damages per se, I shall receive twenty percent (20%) of such in addition to the retainer

after the first $100,000 has been recovered.” (Emphasis added). The phrase “any

recoveries” is rather encompassing. Indeed, the commonly known parameters of “any”

include the idea of “every” and “all.” MERRIAM -W EBSTER COLLEGIATE DICTIONARY 53 (10th

ed. 1995). And, authority generally requires us to assign words their common or plain

meaning when interpreting a contract. Natural Gas Clearinghouse v. Midgard Energy

Co.,113 S.W.3d 400, 406 (Tex. App.–Amarillo 2003, pet. denied).4 And, to the extent that

the parties expressly incorporated some sort of limitation in the paragraph, it appears in the

phrase “after the first $100,000 has been recovered.” Nothing is said about separating

attorney’s fees or interest from the scope of “recoveries,” and, because the parties did not

include the limitation now sought by Baldwin in the retainer agreement, we cannot add it.

See Cross Timbers Oil Co. v. Exxon Corp., 22 S.W.3d at 26 (holding that the parties are

bound by the terms that they use). 5

            Baldwin Argument Five – Duty to Disclose Anything to Garner

         Next, Baldwin argues that he had no duty to disclose anything to Garner or acquire

the Michigan Chestnut property in a way providing Garner with a fee. We overrule the

argument.

        4
            No one argu es that the phra se is am biguous .

        5
         W e also reject Baldwin’s contention that the opinion in Levine v. Bayne, Snell & Krause, Ltd., 40
S.W .3d 92 (Tex. 2001) controls the outcome. Though Levine also dealt with the que stion o f how to calculate
an attorney’s fee, the circum stan ces befo re the Sup rem e Court d iffered from those be fore us. Unlike the court
in Levine, we do not have to decide what the client “received,” for purposes of calculating the fee, when two
opp osing claim s we re offset against ea ch o ther in th e sa m e judgm ent.

                                                         8
       Regarding the duty to disclose, Baldwin’s argument is twofold. He asserts that he

had none because the contingency vesting Garner with an enforceable interest in the

recoveries did not occur until after Garner terminated the attorney/client relationship with

Baldwin on August 1, 1989. Furthermore, the purported contingency consisted of obtaining

a final judgment. And, since the 1985 judgment was on appeal at the time Garner quit, it

allegedly was not final. We reject the contention.

       The record reveals that while Melroe appealed the judgment he and Baldwin

nevertheless settled their dispute before August 1, 1989. This is of import because

authority holds that an executory contract (such as a contingent fee agreement) vests the

attorney with an enforceable interest when the dispute is resolved through final judgment

or settlement. In re Willis, 143 B.R. 428, 432 (Bankr. E.D. Tex. 1992). Given that the claim

of Baldwin arising from the judgment was actually settled before the appeal was dismissed

or Garner purported to withdraw via the August 1st letter, the contingent fee agreement

was no longer executory. It was executed. Thus, Garner’s interest in the recoveries had

vested.

       Similarly misplaced is Baldwin’s contention that he could use that portion of the

judgment he owned to acquire the Michigan Chestnut interest to the exclusion of Garner.

Through the fee agreement, Garner did not simply receive 20% of the judgment. Rather,

he was entitled to 20% of what was recovered from Melroe after the first $100,000. So,

to the extent that Baldwin recovered sums exceeding $100,000, Garner was entitled to

20% of them. This interpretation of the agreement also negates Baldwin’s contention that

he was entitled to allocate receipts from the Michigan Chestnut asset to interest first and

thereby reduce the sums recoverable by Garner. Again, Garner was entitled to 20% of

                                             9
“any recoveries,” per the agreement, not simply 20% of what was left after payment of

interest upon the principal reflected in the 1985 judgment.6

        Finally, Baldwin cites two cases purportedly holding that Garner could only obtain

an interest in sums he personally recovered on behalf of his client. Neither so state,

however. The first, Casey v. March, 30 Tex. 180 (1867), dealt with whether an attorney

could have a possessory lien on a judgment itself or monies payable under it before they

were collected. The second, Raley v. Hancock, 77 S.W. 658 (Tex. Civ. App.–Austin 1903,

no writ), also dealt with the matter of liens upon monies collected by another attorney. Yet,

neither held that an attorney who executed a contingent fee agreement with his client had

a contractual interest only in funds he personally collected.

        Baldwin Argument Six – No Evidence of Damages

        Next, Baldwin attacks the jury’s verdict as it relates to the quantum of damages

recoverable by Garner. The attacks are twofold.                        First, Baldwin suggests that the

percentage received was to be paid only from damages recovered, not attorney’s fees or

interest. We addressed and rejected that allegation earlier. Again, it requires the injection

into the retainer agreement of words or limitations the parties omitted.

        Second, Baldwin again posits that he was entitled to allocate whatever recovery he

received to post-judgment interest which accrued on the Melroe judgment. This argument

too has been addressed and found inapposite.

        6
          So too must it be noted that the authorities cited b y Baldw in to su ppo rt his argum ent dealt with the
rights of a creditor viz-a-viz a debtor. Garner was not Baldwin’s debtor. Thus, it did not matter that a creditor
could allocate, against a debtor, whatever payments he received first to the interest and then to principle.

                                                        10
       We further note that the evidence of record illustrates Baldwin recovered in excess

of $1,000,000 due to the judgment obtained through the efforts of Garner and per the

retainer agreement.      And, though that sum far exceeded the $100,000 threshold

mentioned in the fee agreement, Baldwin paid Garner none of the excess. Thus, more

than a scintilla of evidence appears of record illustrating that Garner was damaged in the

amount found by the trial court, i.e. $152,621.73.

       In sum, we overrule this argument as well.

       Baldwin Argument Seven – No Evidence of Fraud

       Next, Baldwin claims that there was no evidence presented to satisfy any element

of fraud. Again, his argument is twofold. First, he contends that Garner suffered no injury

because the retainer agreement afforded him no interest in recoveries from Melroe and

because attorneys other than Garner effectuated the recoveries from Melroe.            We

previously addressed and rejected each of these propositions. So, they cannot be used

as a way of illustrating that Garner suffered no injury.

       As his second ground, Baldwin contends that there is no evidence illustrating Garner

relied on any misrepresentation of Baldwin regarding the ability to recover from Melroe.

To assess the accuracy of this contention, it is imperative to discuss the form of the

question submitted. It asked: “[d]id the Baldwins commit fraud against Templeton &

Garner in regard to the Irving Melroe bankruptcy?” Accompanying the question was the

following instruction:

       Fraud occurs when –

       a.     a party makes a material misrepresentation,

                                             11
       b.     the misrepresentation is made with knowledge of its falsity or made
              recklessly without any knowledge of the truth and as a positive
              assertion,

       c.     the misrepresentation is made with the intention that it should be
              acted on by the other party, and

       d.     the other party acts in reliance on the misrepresentation and thereby
              suffers injury.

                                          *    *   *

       Fraud also occurs when –

       a. a party conceals or fails to disclose a material fact within the knowledge
                    of that party,

       b. the party knows that the other party is ignorant of the fact and does not
       have an equal opportunity to discover the truth;

       c. the party intends to induce the other party to take some action by
       concealing or failing to disclose the fact; and

       d. the other party suffers injury as a result of acting without knowledge of the
       undisclosed fact.

(Emphasis added). The final portion of the issue simply asked the jury to “[a]nswer ‘yes’

or ‘no,’” to which it answered “yes.”

       As can be seen, fraud was submitted through two differing theories. See Springs

Window Fashions Division, Inc. v. The Blind Maker, Inc., 03-03-00367-CV, 2005 Tex. App.

WL 1787440 (Tex. App.–Austin July 29, 2005, no pet. h.) (noting the various legal theories

on which fraud can be based). And, while reliance was an element of the first, it was not

of the second. So, in contending that there was no evidence of reliance, Baldwin’s attack

logically affects only the first way in which the jury could find fraud; he says nothing of the

second. And, because the jury could have concluded that Garner established fraud under

the second theory and Baldwin does not address it, we cannot sustain the argument.

                                              12
Daves v. Commission Lawyer Disc., 952 S.W.2d 573, 580 (Tex. App.–Amarillo 1997, pet.

denied) (stating that purported error regarding a jury’s answer to a particular question is

harmless when the jury’s other findings are sufficient to support the judgment).

       First Garner Issue – Punitive Damages

       Garner initially contends that the trial court erred when it denied him punitive

damages even though the jury awarded him same. This was purportedly error because

he proved fraud and the ensuing injuries were other than those arising from the breach of

the underlying fee agreement. We overrule the issue.

       A claim must sound in contract if liability arises from the contract or is determined

by reference to the contract. In re Weekley Homes, L.P., 04-0119, WL 2807410 *3 (Tex.

October 28, 2005). Yet, if founded upon general duties imposed by law irrespective of the

contract, it may sound in tort. Id. The former rule encompasses the situation at bar.

       Though Garner claimed that he was defrauded, the basis for those allegations was

inextricably tied to the retainer agreement and contractual duties imposed by it. The latter,

not general duties imposed by law, obligated Baldwin to give him 20% of “all recoveries”

above the initial $100,000. Moreover, it was that percentage that Garner sought and

received, which percentage again was set by contract as opposed to general legal duties.

Indeed, without the retainer agreement and the obligations arising under it, he would have

had no general right to 20% of “all recoveries.” Simply put, what Garner wanted was the

benefit of his bargain with Baldwin irrespective of the label placed on the demand. See

Formosa Plastics Corp. v. Presidio Engineers & Contractors, Inc. 960 S.W.2d 41, 45 (Tex.

                                             13
1996) (recognizing precedent holding that one’s claim sounds in contract as opposed to

tort when the claimant is actually attempting to recover the benefit of the bargain under the

agreement).7 Given this, we cannot but hold that Baldwin’s liability arose from the

contractual retainer agreement and sounded in contract. Because it did, exemplary

damages were not recoverable, and the trial court did not err in denying Garner same. See

Jim Walter Homes, Inc. v. Reed, 711 S.W.2d 617, 618 (Tex.1986); see also Weber v.

Domel, 48 S.W.3d 435, 437 (Tex. App.–Waco 2001, no pet.) (holding that punitive

damages are not recoverable for a breach of contract).

        Second Garner Issue – Frivolous Suit

        The next and final issue raised by Garner concerns the trial court’s refusal to

sanction Baldwin, under §17.50(c) of the Texas Business and Commerce Code, for

initiating and prosecuting suit against him. We overrule the issue.

        Statute authorizes a trial court to award a defendant reasonable and necessary

attorney’s fees against one prosecuting a deceptive trade practice claim. TEX . BUS. & COM .

CODE ANN . §17.50(c) (Vernon 2005). However, the trial court must first find that the cause

of action was groundless in fact or law, brought in bad faith, or brought for the purpose of

harassment. Id. Moreover, the decision whether to sanction one under §17.50(c) lies

        7
          Though the court in Formosa Plastics ultimately held that damages for fraud in the induce m ent were
recoverable des pite the existence of a co ntract, the circumstanc es there are distinguishable from those here.
W hen the misrepresentations were uttered in Formosa there was no contract since the misrepresentations
themselves induced the subsequent accord. Here, the retainer agreement establishing the rights and liabilities
of those involved pre-existed the misrepresentations relating to the contract and its performance. Thus, it is
quite understandable why tort recovery was permitted in Formosa; simply put, there could have been no
contention that the duties emanated from anything other than general principle s of law since there was no
contract when the misrepresentations were made.

                                                      14
within the trial court’s discretion. Riddick v. Quail Harbor Condominium Ass’n., Inc., 7
S.W.3d 663, 678 (Tex. App.–Houston [14th Dist.] 1999, no pet.).

        Here, Baldwin alleged (in his live petition) a myriad of bases purportedly illustrating

how Garner committed deceptive trade practices. Yet, Garner did not illustrate how each

was groundless or initiated in bad faith or for purposes of harassment. For instance,

nothing was said about the allegations involving the decision of Garner to hire as attorneys

the offspring of several people he agreed to sue on behalf of Baldwin. Nor does he

address the allegation that hiring those attorneys purportedly created a conflict of interest.

We do not mean to say that such circumstances evinced a deceptive trade practice.

Rather, we mention the allegation simply because it was one that Baldwin cited as a

deceptive trade practice and Garner had to address to carry his burden on appeal. In other

words, he had to explain why it, and every other supposedly bad act of Garner mentioned

in Baldwin’s live petition, was encompassed within §17.50(c). Otherwise, it could not be

said that he proved the trial court abused its discretion in denying recovery under the

statute.8 Indeed, while some of the allegations may have fallen within the scope of

§17.50(c), others may not have. So, it was incumbent upon Garner to show why each did.

        Having denied each issue and contention raised by the litigants, we affirm the

judgment of the trial court.

                                                          Brian Quinn
                                                          Chief Justice

Reavis, J., dissenting.

        8
          Under that segment of his live petition dealing with deceptive trade practices, Baldwin incorporated
all other acts of Garner previously mentioned in the pleading and which he considered objectionable. Thus,
the supposedly deceptive acts comm itted by Garner were not simply those expressly mentioned under the
topic “De fendan ts’ Violation of th e Dece ptive T rade Practices Ac t.”

                                                     15