Court Opinion

ID: 2739575
Source: CourtListenerOpinion
Date Created: 2014-10-03 04:08:03.141087+00
Date Added: 2024-06-11T09:50:54.954498
License: Public Domain

Opinion issued October 2, 2014

                                  In The

                           Court of Appeals
                                  For The

                       First District of Texas
                         ————————————
                           NO. 01-12-00229-CV
                         ———————————
      JONATHAN LEVINE AND SAMANTHA LEVINE, Appellants
                                    V.
    STEVE SCHARN CUSTOM HOMES, INC., STEVE SCHARN, AND
             NEWFIRST NATIONAL BANK, Appellees

                 On Appeal from the 268th District Court
                        Fort Bend County, Texas
                  Trial Court Case No. 08-DCV-162201

                                 OPINION

     Appellants, Jonathan and Samantha Levine, sued Steve Scharn Custom

Homes, Inc. (SSCHI), Steve Scharn, and NewFirst National Bank for various
claims relating to construction of a new home. 1 SSCHI counter-sued for breach of

contract and defamation. NewFirst counter-sued seeking sanctions for the claims

filed against it. The trial court granted summary judgment against the Levines on

some of their claims against NewFirst. A jury later determined that the Levines

had breached the contract with SSCHI first and awarded damages to SSCHI. It

also determined that the Levines had defamed SSCHI. The Levines did not prevail

on any of their claims against SSCHI or NewFirst. After trial, the trial court

awarded sanctions in favor of NewFirst and against the Levines.

      On appeal, the Levines argue that (1) the trial court abused its discretion by

denying their request for a jury instruction on SSCHI’s defamation claim, (2) the

evidence is legally insufficient to support the jury’s determination that the Levines

defamed SSCHI, (3) the evidence is legally insufficient to support the jury’s

damage award for defamation, (4) the evidence establishes as a matter of law that

SSCHI breached the construction contract first, (5) the jury’s determination that

the Levines breached first is against the great weight and preponderance of the

evidence, (6) the Levines are entitled to recover their damages against SSCHI, (7)

1
      Steve Scharn, individually, was a party to the suit at trial. He did not obtain any
      recovery in the judgment, however, and no judgment was obtained against him.
      Scharn has not asserted any error on appeal, and the Levines have not raised an
      issue on appeal that would have any legal effect on him. Accordingly, we do not
      consider him a proper party to this appeal. See Gupta v. E. Idaho Tumor Inst.,
      Inc., 140 S.W.3d 747, 751 n.4 (Tex. App.—Houston [14th Dist.] 2004, pet.
      denied).

                                           2
the Levines are entitled to recover their attorneys’ fees against SSCHI, (8) the trial

court erred by granting summary judgment on their claims against NewFirst, and

(9) the trial court abused its discretion by awarding sanctions in favor of NewFirst.

      We affirm.

                                    Background

      The Levines bought two lots in a development in Fort Bend County with

plans to build a home on the lots. The first builder they hired, M&A Construction,

laid the foundation for the home. Problems with the foundation were identified,

and the Levines terminated their contract with M&A Construction.

      The Levines subsequently met Scharn, the president and part owner of

SSCHI, and ultimately entered into a contract with SSCHI to complete the

construction of their home. The Levines had money to cover most of the cost of

construction of the home, but not all of it. They needed to obtain a loan for the

remainder of the cost of construction. Scharn recommended NewFirst to the

Levines.

      The Levines ultimately entered into a loan agreement with NewFirst. Under

the terms of the loan agreement, one of the prerequisites for NewFirst to authorize

a loan to the Levines for the construction of their home was that the Levines had to

open an account with NewFirst and deposit $814,990.35 in the account. The loan

agreement provided that the deposited amount would be used to pay for the costs

                                          3
of construction of the home. Only once the deposited amount was fully dispersed

would NewFirst issue any funds under the loan agreement. The loan agreement

also provided that no fiduciary relationship existed between the parties.

       When the Levines deposited their money in the NewFirst account, NewFirst

placed a hold on the account, which prevented the Levines from withdrawing

money from the account for any purposes other than the construction of the home.

The deposit agreement creating the NewFirst bank account provided that one

signature was required for a withdrawal.

       Along with the construction agreement, the Levines and SSCHI signed an

agreement concerning builder and mechanic liens. The agreement required SSCHI

to provide the Levines with receipts. Specifically, it provided,

       [SSCHI] shall furnish [the Levines] proper receipts and releases from
       any and all materialmen from whom any material is obtained by
       [SSCHI] for use in said improvements, and from all sub-contractors,
       as well as from each and all the workmen who have worked thereon,
       to the end that no liens may be fixed upon said premises save and
       except the express liens herein created.

While construction was ongoing, only one lien was filed on the property. That lien

was filed by mistake and was removed as soon as the error was brought to the

attention of the party that filed the lien.

       Once the parties had entered into the construction agreement and the loan

agreement, SSCHI began construction on the home. Construction started around

mid-June 2007. Eventually, disputes arose about the quality of SSCHI’s work and

                                              4
its conformity with the construction plans. In November, the Levines sent SSCHI

a letter, through their counsel, explaining the numerous complaints they had about

the construction.   On January 4, 2008, the Levines formally terminated the

construction contract.

      While construction was ongoing, SSCHI obtained three draws from

NewFirst on the Levines’ account. These three draws totaled $475,355.38. Before

it requested each draw on the Levines’ bank account from NewFirst, SSCHI

presented the Levines with a Contractor’s Disbursement Disclosure for Residential

Construction.   Each disbursement disclosure provided, “The following is the

information required to be provided under the Texas Property Code in connection

with this payment request on the above-described project.” Near the bottom of the

page, the document identified the date it was received by the Levines and, below

that, contained the signatures of the Levines.

      The Levines were also presented with a similar document, entitled Lender’s

Disbursement Disclosure for Residential Construction. This disclosure provided,

“The following is the information required to be provided under the Texas

Property Code in connection with a payment request on the above-described

project.” It also identified the date it was received by the Levines and, below that,

contained the signatures of the Levines.

                                           5
      The Levines brought suit against SSCHI and NewFirst in February 2008.

The Levines asserted a number of claims against SSCHI, including breach of

contract. SSCHI counter-claimed for breach of contract against the Levines. The

central dispute at trial was who breached the contract first. The jury found that

both parties breached the contract but that the Levines breached first and that

SSCHI’s breach was excused.

      By at least November 2008, the Levines were receiving complaints from the

neighbors to the Levines’ lots that the uncompleted structure was an eyesore and a

nuisance. Jonathan Levine sent an email to one of the residents, John Hettig, with

the subject line “10 Sovereign Circle- The House That Crooks Ruined.” The body

of the email stated,

      I can only apologize for the inconvenience and welcome you to look
      up Levine versus Steve Scharn Custom Home builders, Mark Millis
      and the Millis Development Company, New First Bank as well as
      Royal Palm Homes Inc., Ron Scharn, and Ron Scharn’s Wife’s
      Insurance Company in the Fort Bend civil court if you would like to
      know about the injustice occurring in our community. Also look up
      Levine versus Mark Blake and M and A Custom Homes. Hopefully
      you will also share it with everyone else. You should also talk to Dr.
      Jalal as well. I can only say that you are very fortunate to have had
      a[n] honest builder. We have had 2 crooks.

In response, Hettig stated, “Thanks . . . . My concern is not with your business but

[the] value of Sovereign Shores! Unfortunately, your house has become a major

detriment.”

                                         6
         Scharn learned of this email from Hettig. Specifically, Scharn testified at

trial as follows:

         Q.    All right. And do you know why Dr. Levine sent this e-mail?

         A.    No, sir.

         Q.    Okay. So, the -- you’re just assuming he’s talking about you?
               You don’t know that he’s talking about you?

         A.    I know that he’s talking about me.

         Q.    Why do you know that he’s talking about you?

         A.    Because I had a conversation with Mr. Hettig, who told me.

         Q.    He told you what?

         A.    That he was talking about me in an e-mail.

         After learning of the email, SSCHI filed a defamation counter-claim against

the Levines. The Levines argued, among other things, that they were not referring

to SSCHI as a crook, that the claim was barred by the group libel doctrine, and that

the email was substantially true. The jury found that Jonathan Levine published

the email, that the email was defamatory as to SSCHI, and that the statement was

false.

         The Levines also brought claims against NewFirst. They asserted claims of

breach of fiduciary duty, breach of contract, conversion, fraudulent inducement,

negligence, and gross negligence. The thrust of these claims was that NewFirst

owed the Levines a fiduciary duty and that NewFirst breached the fiduciary duty

                                           7
when it released the draws to SSCHI. The Levines also argued that their signatures

on the disbursement disclosures did not constitute proper authorization to withdraw

the funds. For the third draw, the Levines asserted that they did not sign the

disbursement disclosures and that their signatures were forged.

       NewFirst subsequently filed a traditional and no-evidence motion for

summary judgment on all of the Levines’ claims against it. The trial court fully

granted summary judgment on the Levines’ conversion and fraud in the

inducement claims against NewFirst. For the Levines’ breach of contract, breach

of fiduciary duty, negligence and gross negligence claims, the trial court granted

summary judgment as those claims related to the first two draws but denied

summary judgment on those claims as they related to the last draw.

       During trial, Jonathan Levine agreed that his and his wife’s claim against

NewFirst was based, at least in part, on their allegation of forgery. Specifically, he

testified:

       Q.    You and your wife have made a forgery claim, true?

       A.    Yeah, we didn’t sign the last draw documents.

       Q.    Right. Draw No. 3, your claim against the bank, against
             NewFirst National Bank, relates to the claim that you and your
             wife were making that Draw No. 3 was based upon forged
             signatures, true?

       A.    Correct.

                                          8
      Later in the trial, NewFirst presented its expert on document forensics, Janet

Masson, to testify to the authenticity of the Levines’ signatures on the

disbursement disclosure for the third draw. Masson testified that she had the

highest level of assurance that the signatures on the document in question were the

Levines’ signatures.

      Scharn testified that he and Jonathan Levine signed the last disbursement

disclosure together in the construction trailer at the job site. Scharn then left the

disclosure with Jonathan to take to Samantha to sign. Scharn got the disclosure

back from the Levines and took it to NewFirst. In contrast, the Levines flatly

denied signing the disbursement disclosures for the third draw. While not claiming

to know who specifically signed their names on the document, they unequivocally

stated that they did not sign them.

      At the charge conference, one of the Levines’ attorneys objected to the

question in the charge concerning whether the signatures on the disbursement

disclosure was forged. The Levines’ attorney claimed that the issue of forgery was

not a controlling issue and was immaterial to the outcome of the case. NewFirst

argued that the Levines had asserted fraud throughout the life of the case and that,

as a result, NewFirst had developed and presented its defense to this allegation,

including presenting an expert witness. The trial court agreed, and submitted the

                                         9
issue to the jury. The jury determined that the third disbursement did not occur as

a result of forgery.

      When NewFirst filed its original answer to the Levines’ petition, it asserted

as a counter-claim a request for sanctions against the Levines for asserting baseless

claims against it. After trial, NewFirst filed a motion seeking sanctions. NewFirst

argued that the trial established that the Levines’ claim of forgery was baseless.

The trial court agreed and awarded sanctions.

                                   Jury Charge

      In part of their first issue, the Levines argue the trial court abused its

discretion by denying their request for an instruction on a qualified privilege for

SSCHI’s defamation claim.

A.    Standard of Review

      We review a challenge to the trial court’s jury charge under an abuse of

discretion standard. Tex. Dep’t of Human Servs. v. E.B., 802 S.W.2d 647, 649

(Tex. 1990); Moss v. Waste Mgmt. of Tex., Inc., 305 S.W.3d 76, 81 (Tex. App.—

Houston [1st Dist.] 2009, pet. denied). A trial court abuses its discretion when it

acts in an arbitrary or unreasonable manner, or if it acts without reference to any

guiding rules or principles. Tex. Dep’t of Human Servs., 802 S.W.2d at 649; Moss,
305 S.W.3d at 81. A trial court has wide discretion in submitting instructions and

jury questions. Moss, 305 S.W.3d at 81.

                                          10
B.    Analysis

      The Levines argue that SSCHI cannot recover a judgment against them for

defamation because the email was a privileged communication based on the claim

that Jonathan Levine was speaking to his neighbors on a matter of common

interest. They also argue the trial court abused its discretion by denying their

request for a charge instruction on the matter.

      A qualified privilege to make a statement exists when the person making the

statement makes it in good faith on a subject matter in which the speaker has a

common interest with the other person, or with reference to which the speaker has

a duty to communicate to the other. Saudi v. Brieven, 176 S.W.3d 108, 118 (Tex.

App.—Houston [1st Dist.] 2004, pet. denied).          The party seeking to use the

privilege has the burden to plead and prove its applicability.                See id.

“Communications given voluntarily, rather than in response to a request for

information, are privileged ‘if the relationship between the parties is such that it is

within generally accepted standards of decent conduct to furnish the information

for the protection of the interest of the recipient.’” Pioneer Concrete of Tex., Inc.

v. Allen, 858 S.W.2d 47, 50 (Tex. App.—Houston [14th Dist.] 1993, writ denied)

(quoting Kaplan v. Goodfried, 497 S.W.2d 101, 105–06 (Tex. Civ. App.—Dallas

1973, no writ)).

                                          11
      The evidence established that the neighbors in the residential neighborhood

where the construction took place were complaining to the Levines after

construction had stopped.      The complaints made were that the structure had

become a nuisance and should be torn down. Jonathan Levine sent an email to

John Hettig in response to the complaints identifying the lawsuits he was involved

in concerning the residence and asserting that while Levine was “very fortunate to

have had a[n] honest builder,” he had “had two crooks.”

      The evidence establishes that Hettig was not seeking a builder for a home or

seeking the Levines’ opinion on any of their builders. 2 Instead, the neighbors’

complaint was that the unfinished building was a nuisance. Jonathan Levine’s

assertion that his house was ruined by “crooks” may have served as an explanation

for the circumstances giving rise to the neighbors’ concerns, but it nevertheless did

not propose any solution to their complaint that the unfinished house had become

a nuisance. Jonathan Levine’s statements about crooks, then, were voluntarily

given, instead of being in response to a request for information. See Pioneer

Concrete, 858 S.W.2d at 50.

2
      Jonathan Levine’s own testimony established that the neighbors’ complaint was
      that the unfinished house had become an eyesore and a nuisance. Hettig confirmed
      this in his response to Jonathan Levine’s email, where he clarified that he was not
      concerned about the Levines’ troubles with any builders or the Levines’ opinions
      of their builders. Instead, Hettig maintained that his concern was about the
      property values of the neighborhood.

                                          12
      Because the statements were voluntarily given, the privilege would only

apply if it was necessary to furnish the information for the protection of the interest

of the recipient. See id. There was no proof that these statements were necessary

to protect the interest of Hettig or anyone else in the neighborhood. We hold the

trial court did not abuse its discretion by denying the Levines’ request for an

instruction on the qualified privilege of speaking on matters of common interest.

      We overrule this portion of the Levines’ first issue.

                                    Defamation

      In the remaining portion of their first issue and in their second issue, the

Levines argue that the evidence is legally insufficient to support the findings of

liability and damages on SSCHI’s defamation claim. Specifically, the Levines

argue (1) the claim was submitted to the jury as libel per quod instead of libel per

se, (2) recovery was barred under the group libel doctrine, (3) there is no proof of

damages, and (4) SSCHI failed to disclose its method and amount of damages in

response to the Levines’ requests for disclosure.

A.    Standard of Review

      “The final test for legal sufficiency must always be whether the evidence at

trial would enable reasonable and fair-minded people to reach the verdict under

review.”   City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005).               In

performing a legal-sufficiency review, we must credit favorable evidence if

                                          13
reasonable fact finders could credit it and disregard contrary evidence unless

reasonable fact finders could not disregard it. Id. “If the evidence . . . would

enable reasonable and fair-minded people to differ in their conclusions, then [fact

finders] must be allowed to do so.” Id. at 822. “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. If the evidence allows only one

inference, however, neither fact finder nor the reviewing court may disregard the

inference. Id.

      Appellants attacking the legal sufficiency of an adverse finding on an issue

on which they had the burden of proof must demonstrate that the evidence

conclusively establishes all vital facts in support of the issue. Dow Chem. Co. v.

Francis, 46 S.W.3d 237, 241 (Tex. 2001). The appellants must show that there is

no evidence to support the fact finder’s finding and that the evidence conclusively

establishes the opposite of the finding. See id. In contrast, when the appellants

attack the legal sufficiency of an adverse finding on an issue for which they did not

have the burden of proof, they must demonstrate that there is no evidence to

support the adverse finding. Croucher v. Croucher, 660 S.W.2d 55, 58 (Tex.

1983).

                                         14
B.    Claim Submitted to Jury

      SSCHI asserted a counterclaim of libel against the Levines. The Levines

argue that SSCHI’s defamation claim was submitted to the jury as libel per quod

instead of libel per se. We review the sufficiency of the evidence to support the

actually submitted charge. Osterberg v. Peca, 12 S.W.3d 31, 55 (Tex. 2000). The

Levines argue in their brief that there is no evidence to support the jury’s damage

award, and they concede that this argument is premised on their contention that

defamation per quod was submitted to the jury. Accordingly, it is necessary to

determine what claim was submitted to the jury.

      A defamatory statement is either defamatory per se or defamatory per quod.

Hancock v. Variyam, 400 S.W.3d 59, 63 (Tex. 2013). A statement is defamatory

per se when the “statements . . . are so obviously hurtful to a plaintiff’s reputation

that the jury may presume general damages.” Id. “[A] statement is defamatory per

se only if it falls within one of the following categories: (1) imputation of a crime;

(2) imputation of a loathsome disease; (3) injury to a person’s office, business,

profession, or calling; or (4) imputation of sexual misconduct.” Memon v. Shaikh,

401 S.W.3d 407, 421 (Tex. App.—Houston [14th Dist.] 2013, no pet.). In contrast,

a statement is defamatory per quod if the defamatory nature of the statement must

be established by proof of innuendo or other extrinsic evidence. Main v. Royall,

                                         15
348 S.W.3d 381, 390 (Tex. App.—Dallas 2011, no pet.). In that circumstance, the

plaintiff must also present proof of injury and damages. Id.

      Defamation per se and defamation per quod are not separate causes of

action, however. “[T]he distinction between them instead is based on a rule of

evidence, the difference between them lying in the proof of the resulting injury.”

Downing v. Burns, 348 S.W.3d 415, 425 (Tex. App.—Houston [14th Dist.] 2011,

no pet.) (internal quotations omitted).

      The Levines argue that defamation per quod was submitted to the jury

because (1) the charge did not include a question on whether the email was

defamatory per se and (2) it did not instruct the jury that it could find presumed

damages.    In support of their argument, the Levines rely on Texas Disposal

Systems Landfill, Inc. v. Waste Management Holdings, Inc., 219 S.W.3d 563 (Tex.

App.—Austin 2007, pet. denied).

      In Texas Disposal, the Austin Court of Appeals held, “The issue of whether

statements are defamatory per se is generally a matter of law to be decided by the

court.” Id. at 581. The matter goes to the jury only when “an ambiguity exists

about the meaning and effect of the words.” Id. The court in Texas Disposal

determined that the meaning and effect of the statements in question was

ambiguous and, for this reason, held that whether the statements were defamatory

per se should have been submitted to the jury. Id. at 582; see also Hancock, 400
16
S.W.3d at 66 (holding, “[i]f the court determines that a statement is ambiguous or

of doubtful import, the jury should determine the statement’s meaning”). The

Levines did not argue at trial that there is any ambiguity in whether Jonathan

Levine’s email was defamatory per se. 3        Accordingly, it would have been

inappropriate to submit the issue to the jury. See Tex. Disposal, 291 S.W.3d at

581.

       Similarly, we reject the Levines’ reliance on Texas Disposal for their

argument that failure to instruct the jury that they can presume damages converted

the claim in the charge to defamation per quod. The court in Texas Disposal held

that it was error to deny the plaintiff’s request for a beneficial instruction for

defamation per se. Id. at 584. It never held that failure to include the instruction

would convert the claim to defamation per quod.

       As SSCHI points out, the Fourteenth Court of Appeals has held that failure

to include an instruction that general damages can be presumed does not convert

the question into defamation per quod when only general damages are sought in

the damage question. Downing, 348 S.W.3d at 425–26. The damages question at

issue only included recovery for damage to reputation and damage for mental

3
       The Levines argue that SSCHI was not defamed because of the group libel
       doctrine and because the statements were substantially true, which we address
       below. Neither of these arguments, however, even if correct, establishes that
       calling someone a crook in the context of business dealings would not be
       construed as defamation per se.

                                         17
anguish. These are the type of damages for which the jury is permitted to presume

damages. See Bentley v. Bunton, 94 S.W.3d 561, 604 (Tex. 2002) (“Our law

presumes that statements that are defamatory per se injure the victim’s reputation

and entitle him to recover general damages, including damages for loss of

reputation and mental anguish.”).

        We hold the Levines have failed to establish that defamation per quod was

submitted to the jury. Based on this determination, it is unnecessary for us to

address their further contention that there was no evidence to support damages per

quod.

C.      Group Libel

        The Levines argue that SSCHI cannot recover for any statements made in

Jonathan Levine’s email due to the group libel doctrine. Under the group libel

doctrine, a plaintiff has no cause of action for a defamatory statement directed to

some of, but less than, the entire group when there is nothing to single out the

plaintiff. Harvest House Publishers v. Local Church, 190 S.W.3d 204, 213 (Tex.

App.—Houston [1st Dist.] 2006, pet. denied). Consequently, the plaintiff has no

cause where the statement does not identify to which members it refers. See id; see

also Wright v. Rosenbaum, 344 S.W.2d 228, 231–33 (Tex. Civ. App.—Houston

[1st Dist.] 1961, no writ) (holding that the statement that “one of the four ladies”

                                        18
stole a dress, without more, was not a slanderous statement to any one in

particular).

      In contrast, if a statement refers to all members of a small group, then

individuals within that group can maintain a defamation claim. See Sellards v.

Express-News Corp., 702 S.W.2d 677, 680 (Tex. App.—San Antonio 1985, writ

ref’d n.r.e.) (holding claim of drug use and suicide construed to apply to everyone

in car was actionable by one passenger); Harvest House, 190 S.W.3d at 214

(holding defamatory statement directed at group of individuals is actionable when

statement infers all members of group participated in activity forming basis of

defamation claim).

      The focus of our inquiry is how the message can be perceived objectively by

a reasonable person. Harvest House, 190 S.W.3d at 213. “[I]t is not necessary that

every listener understand [the reference to the plaintiff], so long as there are some

who reasonably do so.”      Id.   A claim is actionable “if the language of the

publication and the surrounding circumstances are such that friends and

acquaintances of the plaintiff recognize that the publication is about the plaintiff”

when that recognition is objectively reasonable. Id. at 214.

      The jury determined that the email Jonathan Levine sent to Hettig was

defamatory. To obtain a reversal of this finding, then, the Levines must establish

                                         19
that, after reviewing the evidence in the light most favorable to the verdict, there is

no evidence to support the adverse finding. Croucher, 660 S.W.2d at 58.

      The subject line of Jonathan Levine’s email asserted that his home was

ruined by crooks (“10 Sovereign Circle- The House That Crooks Ruined.”).

Jonathan Levine claimed in the body of the email that he had had two crooks as

builders (“I can only say that you are very fortunate to have had a[n] honest

builder. We have had 2 crooks.”). He further identified SSCHI as a builder, even

misstating the name of the company as “Steve Scharn Custom Home Builders.”

This is sufficient evidence for the jury to conclude that a reasonable person would

identify SSCHI as a subject of the defamatory statement. See Harvest House, 190
S.W.3d at 213–14. In fact, that is the way Hettig construed the email. See id. at

214 (holding claim is actionable if friends and acquaintances of plaintiff

reasonably recognize publication is about plaintiff).

      Additionally, the evidence establishes that the Levines hired two companies

to build their home: M&A Construction and SSCHI. While both companies hired

subcontractors, the jury could have reasonably determined that the email referred

to the two builders hired and not any of the subcontractors. The body of the email

supports this interpretation. Jonathan Levine stated that Hettig was fortunate “to

have had a[n] honest builder.” In this statement, Levine used the singular, which

reasonably could have been understood as not including subcontractors into the

                                          20
meaning of the term “builder.” Accordingly, considering the evidence in the light

most favorable to the verdict, Jonathan Levine’s claim that he had “had two

crooks” reasonably could have been understood to refer to the two builders he had

hired and not any of the subcontractors. As a result, the statement refers to all

members of a small group and is actionable. See Sellards, 702 S.W.2d at 680.

D.     Substantial Truth

       The Levines argue the jury could not have found that Jonathan Levine

defamed SSCHI because the email was substantially true. The Levines bore the

burden at trial of establishing that the statements were substantially true. See

Randall’s Food Mkts., Inc. v. Johnson, 891 S.W.2d 640, 646 (Tex. 1995) (holding

truth is affirmative defense to slander in suits between private individuals); TEX.

CIV. PRAC. & REM. CODE ANN. § 73.005 (Vernon 2011) (establishing truth of

statement in action for libel as a defense). Accordingly, the Levines bear the

burden on appeal of establishing that there is no evidence to support the jury’s

finding that the statements were not substantially true and that the evidence

conclusively establishes the opposite of the finding. See Francis, 46 S.W.3d at

241.

       The Levines present two arguments for why the allegation of “crooks” was

substantially true. First, the Levines argue that Jonathan Levine was thinking only

                                        21
of the first builder and his subcontractor when he mentioned crooks. Second, the

Levines argue that SSCHI was, in fact, a crook.

      For the first argument, Jonathan Levine testified that he was only referring to

the first builder and subcontractor when he wrote “crooks.” He also argues that he

had already obtained a judgment that included findings of fraud against the first

builder and subcontractor when he wrote that email. As we have addressed above,

the determination of whether a statement refers to the plaintiff is an objective test,

not a subjective one. Harvest House, 190 S.W.3d at 213; see also Turner v. KTRK

Television, Inc., 38 S.W.3d 103, 114 (Tex. 2000) (holding “an allegedly

defamatory publication should be construed as a whole in light of the surrounding

circumstances based upon how a person of ordinary intelligence would perceive

it”). Accordingly, Jonathan Levine’s testimony about what he claimed to mean

when he wrote the email is not dispositive of the issue.

      For the second argument, the Levines argue in their brief that SSCHI took

more money than necessary in the three draws from the Levines’ account. They

then conclude, “that is [the] sort of things crooks do.” The appropriateness of the

amounts of the draws was one of the many issues disputed by the parties at trial.

      Similarly, the Levines claim SSCHI changed the description for part of its

charges to the Levines from “Owner distribution” to “account for Sub labor.”

Scharn, the owner of SSCHI, explained at trial that he had performed some work

                                         22
on the home as a subcontractor and received payment for that amount. In their

brief, the Levines assert, “Crooks sometimes use such creative accounting.”

      Conflicting evidence was presented on both of these matters. The Levines

have presented no argument for why the jury had to reject SSCHI’s evidence on

these issues or why the Levines’ evidence conclusively established the opposite of

the jury’s determination. See Francis, 46 S.W.3d at 241. We hold the Levines

have failed to conclusively establish that Jonathan Levine’s statements were

substantially true.

E.    Requests for disclosure on damages

      The Levines argue that SSCHI was “legally precluded” from recovering on

its defamation claim because SSCHI failed to disclose their method and amount of

damages pursuant the Levines’ request for disclosure. Rule 194.2(d) requires a

plaintiff to disclose to a defendant who requests it “the amount and any method of

calculating economic damages.” TEX. R. CIV. P. 194.2(d). This rule only concerns

economic damages. See id.; TEX. R. CIV. P. 194 cmt. 2. It is undisputed that

SSCHI sought and obtained only non-economic damages.

      We overrule the remaining portion of the Levines’ first issue as well as the

Levines’ second issue.

                                        23
                         Breach of Construction Contract

      In their third through eighth issues, the Levines argue (1) the evidence

establishes as a matter of law that SSCHI breached the construction contract first,

(2) the jury’s determination that the Levines breached first is against the great

weight and preponderance of the evidence, (3) the Levines are entitled to recover

their damages, and (4) the Levines are entitled to recover their attorneys’ fees.

A.    Standard of Review

      The standard of review for the Levines’ legal sufficiency arguments is the

same as the standard of review stated above for defamation. To determine whether

the evidence is factually sufficient to support a finding, an appellate court

considers and weighs all evidence that was before the trial court. Cain v. Bain, 709
S.W.2d 175, 176 (Tex. 1986). When the appellants attack the factual sufficiency

of an adverse finding on an issue on which they did not have the burden of proof,

the appellants must demonstrate the finding is so contrary to the overwhelming

weight of the evidence as to be clearly wrong and manifestly unjust. See id. When

the appellants attack the factual sufficiency of an adverse finding on which they

bore the burden of proof, they must establish that the finding is against the great

weight and preponderance of the evidence. Francis, 46 S.W.3d at 242. As the

reviewing court, we may not act as fact finder and may not pass judgment on the

                                          24
credibility of witnesses or substitute our judgment for that of the trier of fact.

Golden Eagle Archery, Inc. v. Jackson, 116 S.W.3d 757, 761 (Tex. 2003).

B.    Breach

      The jury determined that both the Levines and SSCHI breached the

construction contract. It also determined that the Levines breached the contract

first. Accordingly, the jury awarded damages and attorneys’ fees to SSCHI but not

to the Levines. The Levines challenge all of these findings. We start with who

breached first. See Mustang Pipeline Co., Inc. v. Driver Pipeline Co., Inc., 134
S.W.3d 195, 196 (Tex. 2004) (“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.”).

      A party is excused from further performance of a contract only when the

breach by the other party is material. Id. When a breach is immaterial, the non-

breaching party is not excused from future performance but may sue for the

damages caused by the breach. Harris Cnty. Util. Dist. No. 16 v. Harris Cnty.

Mun. Dist. No. 36, No. 01-10-00042-CV, 2011 WL 3359698, at *9 (Tex. App.—

Houston [1st Dist.] Aug. 4, 2011, no pet.) (citing Hernandez v. Gulf Group Lloyds,

875 S.W.2d 691, 693 (Tex. 1994)). Whether a party’s breach of contract is so

material as to render the contract unenforceable is a question of fact to be

                                        25
determined by the trier of fact. See Henry v. Masson, 333 S.W.3d 825, 835 (Tex.

App.—Houston [1st Dist.] 2010, no pet.).

      It is undisputed that, on January 4, 2008, the Levines formally terminated the

contract. If the jury reasonably could have determined that SSCHI did not breach

the contract before this date, then the jury reasonably could have determined that

the Levines breached first. The Levines present two major arguments for how

SSCHI breached first: by failing to provide receipts and by failing to build

according to the plans.

      The Levines rely on the Builders and Mechanics Lien Contract to establish

that SSCHI was required to provide receipts. 4 The relevant portion of the lien

contract provides,

      [SSCHI] shall furnish [the Levines] proper receipts and releases from
      any and all materialmen from whom any material is obtained by
      [SSCHI] for use in said improvements, and from all sub-contractors,
      as well as from each and all the workmen who have worked thereon,
      to the end that no liens may be fixed upon said premises save and
      except the express liens herein created.

Before November 28, 2007, SSCHI had not provided any receipts to the Levines.

On November 28, the Levines’ attorney wrote a demand letter to SSCHI requesting

receipts. SSCHI provided them on December 11.

4
      The parties dispute, at trial and on appeal, whether the Levines properly pleaded a
      breach of contract claim for this contract. Because we hold that any such breach is
      immaterial, we do not need to reach whether the claim was properly pleaded.

                                          26
        The Builders and Mechanics Lien Contract in general, and this provision in

particular, concern the creation of liens on the property. The evidence at trial

established that only one lien was filed on the property, that that lien was filed by

mistake, and that the lien was removed as soon as the error was brought to the

attention of the party that filed the lien. Given this, we hold the jury reasonably

could have determined that any breach by SSCHI’s failure to provide the Levines

receipts before December 11 was not a material breach. The Levines argue the

breach was material because there was no back-up for the draw requests that

SSCHI submitted to NewFirst. As we have noted, however, the requirement for

receipts concerned avoidance of liens on the property, and the contract does not

make the transmission of the receipts a precondition for making draws from the

bank.

        The Levines also claim that SSCHI breached first by failing to build

according to the plans. The Levines complain that SSCHI “bought unpainted steel

and . . . torch cut and field weld[ed] it on site” instead of using “engineered steel.”

SSCHI argues that the Levines have failed to establish that SSCHI had a

contractual obligation to use painted steel. We agree. See Manon v. Solis, 142
S.W.3d 380, 391 (Tex. App.—Houston [14th Dist.] 2004, pet. denied) (holding

appellate court has no duty to search voluminous record without sufficient

                                          27
guidance from appellant to determine whether assertion of reversible error is

valid).

      For the difference between torch cut and field welded steel versus

engineered steel, we hold the Levines have failed to establish that the difference is

material. One portion of the record the Levines rely on to establish materiality is

the testimony of a civil engineer, Hachem Domloj. Domloj testified that “nothing

was constructed as per the plans.” He testified that the engineered steel was

important because of precision.          “[W]hen you specify the steel with the

connections and, you know, you go with the dimensions to the one-eighth or the

one-sixteenth, and you cannot do that on the site.”

      Even assuming the jury was compelled to accept this testimony as true, there

is no evidence of what level of deviation the field-welded steel had compared to

the one-eighth to one-sixteenth inch precision of engineered steel. In addition,

there is no testimony on how any such deviation in the field-welded steel would

have had any significant effect on the remaining construction or on the integrity or

aesthetics of the completed structure.

      The Levines also complain about the manner in which SSCHI welded the

beams together, concerning the proper use of “moment connections.” Here, the

Levines presented testimony from witnesses about why the difference was

                                           28
significant. The main complaint was that the type of connection was not the type

depicted in the drawings.

      SSCHI offered proof that the contract required SSCHI “to build the house in

general accordance with the plans and specifications by the Architect” and that

SSCHI could “make such changes or substitutions in the construction of the

residence as . . . [SSCHI] may deem appropriate so long as the materials of equal

or better quality are used; however, any amendments thereof, or changes and

variations therein must be in substantial conformity with the plans and

specifications by Architect.” (Emphasis added.) SSCHI also points to testimony in

the record that the beam connections used by SSCHI “can be just as strong as or

stronger than bolted connections.” There was also testimony and photographs

establishing that, when the structure was subsequently demolished, the beams were

torn apart to fit in the dumpster, but the welding held.

      It is the province of the jury to resolve conflicting evidence, to determine the

credibility of the witnesses, and to weigh their testimony. See City of Keller, 168
S.W.3d at 819; Mariner Health Care of Nashville, Inc. v. Robins, 321 S.W.3d 193,

210 (Tex. App.—Houston [1st Dist.] 2010, no pet.). We hold that the Levines

have failed to establish that the jury could not have made credibility determinations

in favor of SSCHI and against the Levines on this matter or that the jury could not

have resolved the conflicting evidence in favor of SSCHI.

                                          29
      The Levines also presented testimony that the way the beams were

connected raised the porte cochere by six inches (from 26.5 feet to 27 feet) and

changed the “slenderness ratio.”       The Levines do not provide, however, any

explanation of how such changes were material breaches.           While a six-inch

variation in height is not inherently immaterial, we hold that—without an

explanation of how such a variation or the change in the slenderness ratio was

material—the jury was not compelled to conclude that it was material.

      Finally, the Levines argue that “a 55 foot long 24 inch tall steel ‘I’ beam was

either sagging by about an inch or it was designed as a ‘cambered’ beam and

installed upside down.” Given that there were two possibilities, the Levines have

failed to establish why the jury could not determine that the beam was sagging by

one inch and that this was immaterial.

      We hold the jury reasonably could have rejected all of the bases that the

Levines claim on appeal prove that SSCHI breached before the Levines terminated

the contract. Accordingly, we hold the evidence is legally and factually sufficient

to support the jury’s findings on this issue.

C.    Damages

      The Levines argue they are entitled to recover all the money they paid to

SSCHI as damages and that SSCHI could not recover more than $52,000 in

damages. For their claim that they were entitled to recover all the money they paid

                                          30
to SSCHI as damages, we have already upheld the jury’s determination that the

Levines breached first. See Mustang Pipeline, 134 S.W.3d at 196 (holding prior

material breach by one party excuses further performance of other party). We have

also held that the jury could have reasonably determined that the alleged

contractual breaches that the Levines assert that SSCHI committed before their

breach were immaterial.     Nevertheless, a party can still recover damages for

immaterial breaches. See Harris Cnty. Util. Dist. No. 16, 2011 WL 3359698 at *9

(citing Hernandez, 875 S.W.2d at 693). The Levines did not establish at trial,

however, any damages specific to these alleged breaches. Instead, the Levines

argued that all of “[t]he work done had no value.” Accordingly, there was no basis

for the jury to award damages for these alleged breaches.

      For the Levines’ claim that SSCHI could not recover more than $52,000 in

damages, the record establishes that the Levines submitted requests for disclosure

to SSCHI, including the request to identify the amount and method of calculating

economic damages. See TEX. R. CIV. P. 194.2(d). In its response, SSCHI stated it

was seeking “approximately $52,000” in damages. The Levines claim that SSCHI

was “precluded as a matter of law” from recovering any amount greater than

$52,000.

      The Levines rely on rule 193.6 of the Texas Rules of Civil Procedure as

authority that SSCHI was precluded from a greater recovery as a matter of law.

                                        31
Rule 193.6 provides, “A party who fails to make, amend, or supplement a

discovery response in a timely manner may not introduce in evidence the material

or information that was not timely disclosed” unless certain requirements are met.

TEX. R. CIV. P. 193.6(a).

      The admission or exclusion of evidence is left to the discretion of the trial

court. Bay Area Healthcare Grp., Ltd. v. McShane, 239 S.W.3d 231, 234 (Tex.

2007).   In order to preserve any error in the admission of evidence, the

complaining party must raise an objection and obtain a ruling. TEX. R. APP. P.

33.1(a); TEX. R. EVID. 103(a). This applies to any evidence that could be excluded

under rule 193.6. City of Paris v. McDowell, 79 S.W.3d 601, 606–07 (Tex. App.—

Texarkana 2002, no pet.).

      The Levines have failed to cite to any portion of the record establishing that

they raised any objection to evidence of SSCHI’s damages in excess of $52,000.

Accordingly, they have failed to establish that this issue was preserved for appeal.

D.    Attorneys’ Fees

      The Levines argue that they are entitled to attorneys’ fees because the jury

found that SSCHI breached the contract and made a determination of what the

Levines’ damages would have been. The contract between the Levines and SSCHI

provided, “If any claim or litigation is commenced by the parties concerning any

                                         32
provision of this Contract, the prevailing party or parties shall be entitled . . . to a

reasonable sum for their attorney’s fees incurred in the claim or litigation process.”

      In order to be a “prevailing party,” the party must have received “relief that

materially altered the parties’ legal relationship.” Epps v. Fowler, 351 S.W.3d
862, 868 (Tex. 2011) (citing Intercontinental Grp. P’ship v. KB Home Lone Star,

L.P., 295 S.W.3d 650, 652 (Tex. 2009)). In KB Home, although the jury had found

in favor of KB Home on liability, it had also found the damages to be zero. 295
S.W.3d at 652. As a result, KB Home was not a prevailing party.

      Here, the Levines did not obtain a favorable finding on liability. The jury

found that SSCHI, like the Levines, had failed to comply with the terms of their

contract. Unlike the Levines, however, the jury also determined that SSCHI’s

failure to comply was excused. Accordingly, the Levines did not prevail simply by

a finding that SSCHI had failed to comply with the agreement. See id.

      We overrule the Levines’ third through eighth issues.

                Summary Judgment on Claims Against NewFirst

      In their ninth issue, the Levines argue the trial erred by granting summary

judgment on their claims of breach of fiduciary duty and breach of contract against

NewFirst. NewFirst argues these issues have been waived.

                                          33
A.     Standard of Review

       The summary-judgment movant must conclusively establish its right to

judgment as a matter of law. MMP, Ltd. v. Jones, 710 S.W.2d 59, 60 (Tex. 1986).

Because summary judgment is a question of law, we review a trial court’s

summary judgment decision de novo. Mann Frankfort Stein & Lipp Advisors, Inc.

v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009).

       To prevail on a “traditional” summary-judgment motion, asserted under

Rule 166a(c), a movant must prove that there is no genuine issue regarding any

material fact and that it is entitled to judgment as a matter of law. See TEX. R. CIV.

P. 166a(c); Little v. Tex. Dep’t of Criminal Justice, 148 S.W.3d 374, 381 (Tex.

2004). A matter is conclusively established if reasonable people could not differ as

to the conclusion to be drawn from the evidence. See City of Keller, 168 S.W.3d at

816.     A defendant moving for traditional summary judgment must either (1)

disprove at least one element of the plaintiff’s cause of action or (2) plead and

conclusively establish each essential element of an affirmative defense to rebut the

plaintiff’s cause. Am. Tobacco Co, Inc. v. Grinnell, 951 S.W.2d 420, 425 (Tex.

1997).

       After an adequate time for discovery, a party may move for no-evidence

summary judgment on the ground that no evidence exists of one or more essential

elements of a claim on which the adverse party bears the burden of proof at trial.

                                         34
TEX. R. CIV. P. 166a(i); Flameout Design & Fabrication, Inc. v. Pennzoil Caspian

Corp., 994 S.W.2d 830, 834 (Tex. App.—Houston [1st Dist.] 1999, no pet.). The

burden then shifts to the non-movant to produce evidence raising a genuine issue

of material fact on the elements specified in the motion. TEX. R. CIV. P. 166a(i);

Mack Trucks, Inc. v. Tamez, 206 S.W.3d 572, 582 (Tex. 2006). The trial court

must grant the motion unless the non-movant presents more than a scintilla of

evidence raising a fact issue on the challenged elements. Flameout Design, 994
S.W.2d at 834; see also Merrell Dow Pharms., Inc. v. Havner, 953 S.W.2d 706,

711 (Tex. 1997) (holding “[m]ore than a scintilla of evidence exists when the

evidence supporting the finding, as a whole, rises to a level that would enable

reasonable and fair-minded people to differ in their conclusions”).

      To determine if there is a fact issue, we review the evidence in the light most

favorable to the non-movant, crediting favorable evidence if reasonable jurors

could do so, and disregarding contrary evidence unless reasonable jurors could not.

See Fielding, 289 S.W.3d at 848 (citing City of Keller, 168 S.W.3d at 827). We

indulge every reasonable inference and resolve any doubts in the non-movant’s

favor. Sw. Elec. Power Co. v. Grant, 73 S.W.3d 211, 215 (Tex. 2002). When the

trial court’s summary judgment order does not state the basis for the trial court’s

decision, we must uphold the order if any of the theories advanced in the motion

                                         35
are meritorious. Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 216

(Tex. 2003).

B.    Waiver

      The Levines asserted claims of breach of fiduciary duty, breach of contract,

conversion, fraudulent inducement, negligence, and gross negligence against

NewFirst. NewFirst subsequently filed a traditional and no-evidence motion for

summary judgment on all of the Levines’ claims. The trial court fully granted

summary judgment on the Levines’ conversion and fraud in the inducement

claims. For the Levines’ breach of contract, breach of fiduciary duty, negligence

and gross negligence claims, the trial court granted summary judgment as those

claims related to the first two draws but denied summary judgment on those claims

as they related to the last draw.

      On appeal, the Levines challenge the trial court’s ruling on their breach of

fiduciary duty and breach of contract claims. NewFirst argues that the Levines

waived all their complaints about the trial court’s grant of summary judgment on

their fraud in the inducement and conversion claims. In particular, NewFirst

contends that complaints concerning the first two draws were waived because the

Levines had four claims relating to those draws but have not identified on appeal

which of the four claims they are seeking reversal on. The Levines’ brief argues

extensively that the trial court erred by granting summary judgment because

                                       36
NewFirst owed them a fiduciary duty and because they did not properly authorize

the withdrawals. It contains citations to legal authority and to the record for the

matters asserted. In their reply brief, the Levines clarify that they are seeking

reversal of the summary judgment on their breach of fiduciary duty and breach of

contract claims. To the degree there was any ambiguity in their brief on the merits,

the Levines have rectified it in their reply brief. We hold that any such ambiguity

is insufficient to result in waiver of the issues raised and argued in their brief on

the merits. See TEX. R. APP. P. 38.9 (requiring substantial compliance to acquaint

court with argument and proper authority).

C.    Breach of Fiduciary Duty

      The loan agreement between the Levines and NewFirst provided that one of

the prerequisites to NewFirst authorizing the loan was that the Levines had to open

an account with NewFirst and deposit $814,990.35 in the account. The loan

agreement provided that the deposited amount would be used to pay for the costs

of construction of the home. Only once the deposited amount was fully dispersed

would NewFirst issue any funds under the loan agreement.

      When the account was opened, NewFirst placed a hold on the account,

which prevented the Levines from withdrawing money from the account for any

purposes other than the construction of the home. The agreement creating the

NewFirst bank account provided that one signature was required for a withdrawal.

                                         37
Three draws were ultimately made on the deposited amount. Construction of the

home stopped before the deposited amount was fully dispersed and before any

money was issued under the loan.

      For their breach of fiduciary duty claim, the Levines argued that the account

in which they deposited $814,990.35 was a special deposit, which gave NewFirst a

fiduciary duty in managing the account and releasing funds. The Levines argue

that NewFirst breached this fiduciary duty by not getting receipts and by failing to

obtain either of the Levines’ signatures for a withdrawal authorization. NewFirst

argued in its motion for summary judgment that the Levines’ money was not a

special deposit and that, accordingly, NewFirst did not owe the Levines any

fiduciary duties.

      The Levines rely on their argument that a special deposit was created as the

ground for their claim that NewFirst owed them a fiduciary duty. A deposit with a

bank can be a general deposit or a special deposit. See Hudnall v. Tyler Bank &

Trust Co., 458 S.W.2d 183, 186 (Tex. 1970); Lee v. Gutierrez, 876 S.W.2d 382,

384–85 (Tex. App.—Austin 1994, writ denied) (citing Hudnall). If money is

deposited without any special agreement, it is a general deposit. Hudnall, 458
S.W.2d at 186. In that circumstance, the bank becomes the owner of the money,

the funds are mingled with the bank’s other funds, and the relationship between the

bank and the depositor is a relationship of debtor (the bank) and creditor (the

                                        38
depositor). Id. In contrast, if money is deposited with an agreement that the

money “shall be paid out for a specific purpose,” it is a special account. Id. In that

circumstance, the fund is a trust fund, the bank does not acquire title to the money,

and the bank becomes a trustee for the disbursement of the money according to the

agreement under which the deposit was made. Id. When a trustee relationship is

created, a fiduciary duty arises as a matter of law. Meyer v. Cathey, 167 S.W.3d
327, 330 (Tex. 2005).

      The Levines were required to deposit money into a NewFirst account as a

prerequisite to obtaining the necessary loan. The money deposited would be used

only to pay for the costs of construction for the Levines’ home. A hold was placed

on the account to prevent the Levines from withdrawing the money for any other

purpose. This is some indication that the parties intended the money deposited with

NewFirst to be a special deposit.

      As NewFirst argues, however, this intent was disclaimed by the loan

agreement. One of the specific conditions of the loan agreement was that the

Levines deposit this money with NewFirst and that the money only be used to pay

for the costs of construction of their home. One document in the set of documents

constituting the loan agreement provides,

      The relationship between Borrower [i.e., the Levines] and Lender
      [i.e., NewFirst] is solely that of borrower and lender, and Lender has
      no fiduciary or other special relationship with Borrower. No term or
      condition of the Loan Documents shall be construed so as to deem the

                                         39
         relationship between Borrower and Lender to be other than that of the
         borrower or lender.

The deposit is a condition of one of the loan documents. Accordingly, the parties

agreed that, regardless of the typical circumstances for a special deposit, no

fiduciary relationship would be created in this situation.

         The Levines also argue that, while it was “not an ‘escrow agent’ in the

formal sense, NewFirst was a fiduciary with the duties that position entails.” The

Levines rely on a portion of a document that is a proposal for the general terms of

the loan agreement.       Even assuming this document was a part of the loan

agreement, the agreement explicitly disclaims any interpretation of the loan

agreement that creates a fiduciary duty. See Nat’l Plan Adm’rs, Inc. v. Nat’l

Health Ins. Co., 235 S.W.3d 695, 702 (Tex. 2007) (holding fiduciary duties are

equitable in nature, not subject to “hard and fast rules,” and should be considered

in light of parties’ written contract).

         We hold the trial court did not err by granting summary judgment on the

Levines’ breach of fiduciary duty claim for the first two draws. The Levines also

argue in their brief that, because the trial court failed to recognize the fiduciary

relationship between the parties, there was error in certain questions that went to

the jury on the Levines’ remaining claims against NewFirst. Because we have held

there was no fiduciary relationship between the parties, this argument necessarily

fails.

                                          40
D.    Breach of Contract

      For their breach of contract claim, the Levines argued that NewFirst was

required to obtain a signed authorization for withdrawal from at least one of the

Levines before it could release money to SSCHI. They argue that, by failing to

obtain the required signature, NewFirst breached the deposit agreement requiring

the signature.

      NewFirst argued in its motion for summary judgment that it, in fact, had

obtained the requisite signature of the Levines. Before it requested each draw on

the Levines’ bank account from NewFirst, SSCHI presented the Levines with a

Contractor’s Disbursement Disclosure for Residential Construction.             Each

disbursement disclosure provided, “The following is the information required to be

provided under the Texas Property Code in connection with this payment request

on the above-described project.” See TEX. PROP. CODE ANN. § 53.258(a) (Vernon

2007). Near the bottom of the page, the document identifies the date it was

received by the Levines and, below that, contains the signatures of the Levines.

      The Levines were also presented with a similar document, entitled Lender’s

Disbursement Disclosure for Residential Construction. This disclosure likewise

provided, “The following is the information required to be provided under the

Texas Property Code in connection with a payment request on the above-described

                                         41
project.” See id. § 53.258(b). It also identifies the date it was received by the

Levines and, below that, contains the signatures of the Levines.

      NewFirst argues these signatures from the Levines constitute the required

signatures. It has been established that the purpose of the account was to pay for

the costs of construction of the Levines’ home. SSCHI presented the Levines with

a disbursement disclosure giving notice that it was going to seek a draw on the

account, detailing the bills to be paid with the money drawn. The Levines signed

the construction disbursement disclosure. NewFirst then presented the Levines

with notice that it had disbursed the money to SSCHI, and the Levines signed this

as well. The Levines were aware of at least the first two draws and, at the time, did

not complain about any failure to obtain the proper signatures for withdrawal.

      The Levines have established the requirement in the deposit agreement that

one of their signatures is required for a withdrawal from the account. But this does

not establish that their signatures on the disbursement disclosures cannot satisfy

that requirement. The Levines also point to a statement by NewFirst that Shirley

was the one to authorize the withdrawals. This statement comes from a response

from NewFirst to an interrogatory submitted by the Levines. The interrogatory

instructs NewFirst to “[i]dentify each and every Bank employee who authorized a

withdrawal” from the Levines’ account. NewFirst identified Shirley as the bank

employee that authorized the withdrawal.         The Levines’ interrogatory was

                                         42
specifically limited to identifying bank employees. Nothing in this interrogatory

suggests that NewFirst was asserting it acted without the required signatures. To

the contrary, Shirley testified in his deposition that the signatures on the

disbursement disclosures are what gave him authority to release the money.

      The Levines also argue that NewFirst never compared the Levines’

signatures on the disbursement disclosures against their signatures on file, that they

never signed a check, that NewFirst never emailed them seeking authority or

informing them of any disbursement. The Levines have provided no authority that

any of these actions were necessary to authorize release of the funds.

      We hold the trial court did not err by granting summary judgment on the

Levines’ breach of contract claim for the first two draws.         We overrule the

Levines’ ninth issue.

                                     Sanctions

      In their tenth issue, the Levines argue the trial court abused its discretion by

awarding sanctions against them in favor of NewFirst.

A.    Standard of Review & Applicable Law

      We review a trial court’s imposition of sanctions for an abuse of discretion.

Low v. Henry, 221 S.W.3d 609, 614 (Tex. 2007). A trial court abuses its discretion

in imposing sanctions when it acts “without reference to any guiding rules and

principles, such that its ruling was arbitrary or unreasonable.” Id. When reviewing

                                         43
matters committed to the trial court’s discretion, we may not substitute our own

judgment for that of the trial court. Bowie Mem’l Hosp. v. Wright, 79 S.W.3d 48,

52 (Tex. 2002). A trial court does not abuse its discretion merely because it

decides a discretionary matter differently than an appellate court would in a similar

circumstance. Gray v. CHCA Bayshore L.P., 189 S.W.3d 855, 858 (Tex. App.—

Houston [1st Dist.] 2006, no pet.).

      We presume that pleadings are filed in good faith. Low, 221 S.W.3d at 614.

The party seeking sanctions bears the burden of overcoming this presumption. Id.

In reviewing the sanctions order, we review the entire record to determine whether

the trial court abused its discretion. Am. Flood Research, Inc. v. Jones, 192
S.W.3d 581, 583 (Tex. 2006) (per curiam).           The trial court may consider

everything that has occurred during the history of the litigation when determining

how to sanction a party.     Berry–Parks Rental Equip. Co. v. Sinsheimer, 842
S.W.2d 754, 757 (Tex. App.—Houston [1st Dist.] 1992, no writ); see also Downer

v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241 (Tex. 1985).

      NewFirst sought the imposition of sanctions against the Levines under both

rule 13 of the Texas Rules of Civil Procedure and chapter 10 of the Texas Civil

Practice and Remedies Code. Rule 13 permits sanctions against attorneys and

represented parties who file a groundless pleading in bad faith or for the purpose of

harassment. TEX. R. CIV. P. 13; R.M. Dudley Constr. Co. v. Dawson, 258 S.W.3d
44
694, 707 (Tex. App.—Waco 2008, pet. denied). The party seeking to impose

sanctions pursuant to Rule 13 must demonstrate first that the opposing party’s

pleadings are groundless; then the party must demonstrate that the groundless

pleadings were either filed in bad faith or filed for the purpose of harassment.

Dawson, 258 S.W.3d at 707. A pleading is “groundless” if it has “no basis in law

or fact and [is] not warranted by good faith argument for the extension,

modification, or reversal of existing law.” TEX. R. CIV. P. 13; Dawson, 258
S.W.3d at 708.

B.    Assertion of Forgery Claim

      The Levines argue on appeal that they “did not sue NewFirst for forgery.”

We disagree. The facts section of the Levines’ live petition provides that they

“specifically allege that they did not consent nor sign off on draw number three,

the receipt for purported draw number and that their signatures thereon were

forged.” While they did not use the word forgery in any of their stated claims

against NewFirst, the Levines did assert that they did not authorize the

withdrawals.

      During trial, Jonathan Levine testified as follows:

      Q.    You and your wife have made a forgery claim, true?

      A.    Yeah, we didn’t sign the last draw documents.

      Q.    Right. Draw No. 3, your claim against the bank, against
            NewFirst National Bank, relates to the claim that you and your

                                         45
             wife were making that Draw No. 3 was based upon forged
             signatures, true?

      A.     Correct.

      Later in the trial, NewFirst presented its expert on document forensics, Janet

Masson, to testify to the authenticity of the Levines’ signatures on the

disbursement disclosure for the third draw. Masson testified that she had the

highest level of assurance that the signatures on the document in question were the

Levines’ signatures. The Levines’ attorney made no objection to the relevance of

the testimony and cross-examined Masson on the validity of her opinion.

      At the charge conference, one of the Levines’ attorneys objected to the

question in the charge concerning whether the signatures on disbursement

disclosure was forged. At that point, the Levines’ attorney claimed that the issue

of forgery was not a controlling issue and was immaterial to the outcome of the

case. NewFirst argued that the Levines had asserted fraud throughout the life of

the case and that, as a result, NewFirst had developed and presented its defense to

this allegation, including presenting an expert witness.

      Even if we take the Levines’ attorney’s statement during the charge

conference as abandoning their assertion of forgery on the third draw as a ground

supporting their claims for relief, the record establishes that the Levines were

relying on forgery as a ground supporting their claims for relief up until that point.

We hold NewFirst could seek sanctions on a ground asserted in support of the

                                         46
Levines’ claim that the Levines asserted throughout the litigation, that was

developed through discovery, and that was asserted at trial.

C.    Sanctions Award

      The trial court determined that the Levines’ claim of forgery against

NewFirst was “frivolous, brought in bad faith, and for the purpose of harassing”

NewFirst. The trial court further determined that the allegation of forgery “was a

fiction” and that the Levines’ testimony at trial underscored the determination that

the claim was brought in bad faith. We review this determination for an abuse of

discretion. See Low, 221 S.W.3d at 614 (holding appellate courts review sanctions

award for abuse of discretion); Falk & Mayfield L.L.P v. Molzan, 974 S.W.2d 821,

827–28 (Tex. App.—Houston [14th Dist.] 1998, pet. denied) (holding trial court

has broader discretion in awarding sanctions for groundless pleadings). Lying

about a ground supporting a party’s claim is sanctionable conduct. See Income

Adm’r Servs., Inc. v. Payne, No. 03-01-00283-CV, 2002 WL 220038, *2, 5 (Tex.

App.—Austin Feb. 14, 2002, pet. denied) (upholding award of sanctions based on

determination that plaintiff lied about “critical allegation” supporting claims).

      At trial, the Levines flatly denied signing the disbursement disclosures for

the third draw. While not claiming to know who specifically signed their names on

the document, they unequivocally stated that they did not sign them. The jury

similarly heard that the Levines also denied signing documents in support of the

                                          47
second draw, despite having previously admitting the authenticity of their

signatures in deposition testimony. Against this conflicting evidence about which

signatures the Levines were admitting and which they were challenging as forged,

Scharn testified that he and Jonathan Levine signed the last disbursement

disclosure together in the construction trailer at the job site. Scharn then left the

disclosure with Jonathan to take to Samantha to sign. Scharn got the disclosure

back from the Levines and took it to NewFirst. Masson, an expert in verifying the

authenticity of signatures testified that she had the highest level of certainty that

both of the Levines’ signatures were authentic.

      The Levines complain about the trial court’s assertion that sanctions could

be “awarded for clearly a matter that should have been resolved prior to this matter

starting trial, and that’s whether they were forgeries or not.” The Levines argue in

their brief that “[r]esolving factual matters is what trials are for.” This is more than

just a factual dispute between the parties, however.

      The Levines flatly denied signing the disbursement disclosure for the third

draw. Yet the jury concluded that they did not carry their burden to prove, by a

preponderance of the evidence, that the signatures were forged. The trial court

reached a similar conclusion based on the same set of facts and determinations of

credibility. In making this determination, the trial court did not simply decide in

favor of one party over the other on how to interpret facts or whose memory of

                                          48
events was more likely correct. Instead, the trial court determined that the Levines

did in fact sign the document in question. In support of the sanctions order, the

trial court expressly found:

      1.     Plaintiffs’ forgery claims against NewFirst were sanctionable
             because they were frivolous, brought in bad faith, and for the
             purpose of harassing the Defendant.

      2.     Plaintiffs’ testimony in depositions and at trial in regard to the
             forgery allegations underscored the fact that Plaintiffs’
             pleadings and affidavits against the bank were brought in bad
             faith, solely for the purpose of harassing NewFirst.

      3.     There is a direct relationship between the sanction and the
             Plaintiffs’ offensive conduct. Due to the frivolous claims of
             forgery, NEWFIRST NATIONAL BANK was caused to incur
             $25,000.00 in attorney’s fees, and $2,550.00 in expert witness
             expenses that otherwise would not have been incurred.
             NEWFIRST NATIONAL BANK was forced to hire counsel to
             respond to the frivolous pleadings, engage in ongoing discovery
             and motion practice, and defend itself in an eleven-day trial. For
             these reasons, the sanction is also no more severe than
             necessary.

      4.     There is good cause to support the imposition of sanctions
             because Plaintiffs pleadings and testimony in regard to the
             forgery allegations were frivolous and brought in bad faith.
             Plaintiffs’ lawsuit against NewFirst was based on the allegation
             of forgery as to Draw No. 3; however, the allegation of forgery
             was a fiction, which became clear during the trial of this case.

(Emphasis supplied.) As indicated by its findings, the trial court determined that,

rather than being confused or having simply forgotten (a possibility that even the

Levines rejected), the Levines lied—both in their pleadings and at trial. The

                                         49
Levines have presented no argument for why the trial court could not have made

this determination, and we find none.

      The Levines also argue that, during the hearing on the motion for sanctions,

the trial court exhibited some confusion about the evidence from the trial. Because

we have held there is evidence to support the trial court’s ruling, any other

potential confusion is irrelevant to our analysis. See Donalson v. Barr, 86 S.W.3d
718, 720 (Tex. App.—Houston [1st Dist.] 2002, no pet.) (holding trial court cannot

abuse its discretion if it reaches correct result even for wrong reason); Chenault v.

Banks, 296 S.W.3d 186, 190 (Tex. App.—Houston [14th Dist.] 2009, no pet.)

(same).

      The Levines also argue that the trial court’s findings in its sanctions award

“do[] not sufficiently particularize the basis for the ruling.” See TEX. R. CIV. P. 13

(requiring sanction order to state particulars of good cause supporting sanctions).

The Levines have not established that they raised any objection to this alleged

error. A party against whom sanctions are awarded waives any error in the order’s

failure to identify good cause if the party fails to object to the form of the sanctions

order. Robson v. Gilbreath, 267 S.W.3d 401, 407 (Tex. App.—Austin 2008, pet.

denied). In such case, the appellate court reviews the record for support for

implied findings. Id. Because this objection was not raised before the trial court,

the Levines have waived any error in any in the order’s findings.

                                          50
      We overrule the Levines’ tenth issue.

                                     Conclusion

      We affirm the judgment of the trial court.

                                              Laura Carter Higley
                                              Justice

Panel consists of Justices Keyes, Higley, and Massengale.

Justice Keyes, dissenting in part.

                                         51