Court Opinion

ID: 4030015
Source: CourtListenerOpinion
Date Created: 2016-08-31 11:02:59.005282+00
Date Added: 2024-06-11T07:45:09.338369
License: Public Domain

Opinion issued August 30, 2016

                                      In The

                               Court of Appeals
                                     For The

                          First District of Texas
                             ————————————
                              NO. 01-14-00299-CV
                            ———————————
                        WWW.URBAN.INC., Appellant
                                        V.
                        CHRIS DRUMMOND, Appellee

                    On Appeal from the 281st District Court
                             Harris County, Texas
                       Trial Court Case No. 2012-33836

                                 OPINION

      WWW.URBAN.INC. (Urban) appeals a final judgment entered after a jury

trial in a suit it initiated against Chris Drummond in which no party received any

award of damages, but in which Drummond was awarded attorney’s fees. In five

issues, Urban contends that: (1) the trial court erroneously awarded attorney’s fees

to Drummond and denied Urban’s motion to disregard the jury’s finding on
attorney’s fees to Drummond, (2) alternatively, if Drummond was entitled to recover

attorney’s fees, a remittitur is appropriate, because the amount of attorney’s fees

awarded is excessive and the evidence was factually and legally insufficient to

support it, (3) the trial court erred by refusing to award Urban its attorney’s fees in

the amount found by the jury, (4) the trial court erred by denying Urban’s amended

motion for sanctions which sought mandatory statutory attorney’s fees under the

Texas Deceptive Trade Practices Act (DTPA) and Texas Debt Collection Act

(TDCA) and attorney’s fees as sanctions pursuant to Texas Rules of Civil Procedure

13 and 215 and Chapters 9 and 10 of the Texas Civil Practice and Remedies Code,

and (5) the trial court erred in refusing to award Urban its appellate attorney’s fees

as a matter of law. We affirm in part and reverse in part.

                                    Background

      Chris Drummond signed a Residential Buyer/Tenant Representation

Agreement (the Agreement) in 2011 in which Drummond agreed to “work

exclusively through [Urban] in acquiring property” in the Houston market area for a

six-month period. Under the terms of the Agreement, Urban was entitled to a

commission based on the gross sales price of the property Drummond agreed to

purchase in the market area, and the commission became payable when the

transaction closed or when Drummond breached the Agreement, whichever occurred

first. The Agreement further stated that in the event Drummond defaulted on the

                                          2
Agreement, Drummond “will be liable for the amount of compensation that [Urban]

would have received under this agreement if [Urban] was not in default.” The

Agreement also contained the following attorney’s fees provision:

      ATTORNEY’S FEES: If Client or Broker is a prevailing party in any
      legal proceeding brought as a result of a dispute under this agreement
      or any transaction related to this agreement, such party will be entitled
      to recover from the non-prevailing party all costs of such proceeding
      and reasonable attorney’s fees.

      Drummond purchased a home in Houston through another realtor during

Urban’s six-month exclusive period. Urban filed a breach of contract claim against

Drummond to collect the commission and attorney’s fees as provided for in the

Agreement. Drummond answered and asserted numerous affirmative defenses to

Urban’s breach of contract claim, including breach of fiduciary duty, and ten

counterclaims against Urban, including a “counterclaim” for breach of the

Agreement and a counterclaim for breach of fiduciary duty based exclusively upon

Urban’s conduct prior to execution of the Agreement. Drummond also filed

third-party claims against Urban’s counsel (Chris Di Ferrante), Urban’s President

and CEO (Vinod Ramani), and an Urban employee (George Silaski). Urban later

added claims for fraud, and statutory attorney’s fees under section 17.50(c) of the

DTPA and section 15.21 of the Texas Free Enterprise and Antitrust Act (TFEA).

      Drummond nonsuited his third-party actions without prejudice and Urban

dismissed its fraud claim against Drummond before trial. Urban also obtained

                                         3
summary judgment on several of Drummond’s counterclaims and affirmative

defenses prior to trial, and the trial court refused to submit jury questions on several

others.1 The only questions submitted to the jury pertained to Urban’s breach of

contract claim and Drummond’s affirmative defense of breach of fiduciary duty.2

The jury was asked: (1) whether Urban or Drummond failed to comply with the

Agreement, (2) if both Urban and Drummond failed to comply, who failed to

materially comply first, (3) if Urban failed to materially comply first, was Urban’s

failure to comply excused, and (4) what amount of damages, if any, Urban was

entitled to as a result of Drummond’s failure to materially comply with the

Agreement. The jury was also asked to decide whether Urban had breached its

fiduciary duty to Drummond after Drummond executed the Agreement, and to

determine a reasonable amount of attorney’s fees for both parties through trial and

1
      Although they were set forth in his live pleading at trial, several of Drummond’s
      other counterclaims and affirmative defenses were never expressly disposed of by
      the court (e.g., Drummond’s counterclaim for class relief).
2
      In his live pleading Drummond alleged: (1) breach of fiduciary duty as an
      affirmative defense to Urban’s breach of contract claim; and (2) a counterclaim
      against Urban for breach of fiduciary duty. Drummond’s counterclaim for breach of
      fiduciary duty is based exclusively upon Urban’s actions prior to and
      contemporaneous with the execution of the Agreement. The jury, however, was only
      asked to determine if Urban complied with its fiduciary duties to Drummond after
      Drummond executed the Agreement. Thus, the record reflects that the court’s
      charge included a question on Drummond’s affirmative defense to Urban’s breach
      of contract claim, not a question on Drummond’s breach of fiduciary duty claim, as
      Urban argues on appeal.

                                           4
on appeal. No damages question was submitted to the jury with respect to

Drummond.

      The jury found that both Drummond and Urban failed to comply with the

Agreement, Urban failed to materially comply first, Urban’s failure to materially

comply was not excused, and Urban did not comply with its fiduciary duty to

Drummond. The jury found that Urban incurred zero damages. The jury also found

that a reasonable amount for Urban’s attorney’s fees was $74,649 through trial and

zero on appeal, and that a reasonable amount for Drummond’s attorney’s fees was

$110,000 through trial and $60,000 on appeal.

      The trial court rendered a final judgment based on the jury verdict that ordered

that Urban take nothing on its claims against Drummond, and awarded Drummond

$110,000 in attorney’s fees through trial, plus an additional $60,000 in conditional

appellate attorney’s fees. The award of attorney’s fees was premised on the trial

court’s conclusion that Drummond was the “prevailing party” under the Agreement

and Urban was the “non-prevailing party.”

      Urban filed a timely motion to disregard the jury’s findings and a motion for

new trial. Urban also filed a post-trial amended motion for sanctions which sought

mandatory statutory attorney’s fees under the DTPA, the TFEA, the TDCA, and

attorney’s fees as sanctions under Texas Rules of Civil Procedure 13 and 215 and

                                          5
Texas Civil Practice and Remedies Code Chapters 9 and 10. The trial court denied

all three motions.

      This appeal followed.

        Breach of Contract “Counterclaim” and Prior Material Breach

      Urban raises arguments in its first appellate issue that are premised in part

upon the following two assertions: (1) Drummond pleaded a “counterclaim” against

Urban for breach of contract, and (2) the trial court granted summary judgment in

Urban’s favor on Drummond’s affirmative defense of prior material breach.

A.    Drummond’s Breach of Contract “Counterclaim”

      Urban contends that Drummond pleaded a “counterclaim” against Urban for

breach of contract. Drummond responds that he only asserted an affirmative defense

to Urban’s breach of contract claim, not a separate counterclaim.

      The record reflects that Drummond pleaded what he denoted as a

“counterclaim” for breach of contract in his live pleading, as well as an affirmative

defense to Urban’s breach of contract claim, both of which were premised on the

same reasoning, i.e., that Urban breached the Agreement by failing to use best efforts

in representing Drummond after the Agreement was executed. Because Urban did

not challenge Drummond’s pleading by special exceptions, we must liberally

construe the pleading in Drummond’s favor. See Horizon/CMS Healthcare Corp. v.

Auld, 34 S.W.3d 887, 897 (Tex. 2000); cf. CKB & Assocs., Inc. v. Moore

                                          6
McCormack Petroleum, Inc., 809 S.W.2d 577, 586 (Tex. App.—Dallas 1991, writ

denied) (“A pleading that gives adequate notice will not fail merely because the

draftsman named it improperly.”).

      Drummond’s purported “counterclaim” did not ask for damages as a result of

the alleged breach, and, instead, argued that Urban’s prior breach excused him from

paying any commission under the Agreement. See generally Compass Bank v. MFP

Fin. Servs., Inc., 152 S.W.3d 844, 852 (Tex. App.—Dallas 2005, pet. denied)

(excuse based upon prior material breach is affirmative defense). We liberally

construe Drummond’s purported “counterclaim” for breach of contract as an

affirmative defense to Urban’s breach of contract claim.

B.    Prior Material Breach

      Urban also contends that the trial court granted summary judgment in its favor

on Drummond’s affirmative defense of prior material breach, thus foreclosing

Drummond from arguing that affirmative defense at trial. The record reflects,

however, that the parties debated the scope of the summary judgment order during a

pretrial hearing and, at that hearing, the trial judge clarified her earlier summary

judgment ruling and stated that “prior breach by Urban is still a viable affirmative

defense” for Drummond. Thus, Drummond’s affirmative defense that he was

excused from performance under the contract based on Urban’s prior material breach

had not been disposed of by the court by the time of trial.

                                          7
      Having resolved these preliminary matters, we will now address Urban’s

appellate complaints.

                Award of Attorney’s Fees Pursuant to Agreement

      In its first issue, Urban contends that the trial court erred by awarding

attorney’s fees to Drummond because Drummond is not a “prevailing party” under

the Agreement.3 Drummond requested an award of attorney’s fees based exclusively

upon the Agreement’s attorney’s fee provision. See Epps v. Fowler, 351 S.W.3d 862,

865 (Tex. 2011) (citing Intercontinental Grp. P’ship v. KB Home Lone Star L.P.,

3
      Whether a party is entitled to seek an award of attorney’s fees pursuant to a statute
      or contract is a question of law that we review de novo. See Peterson Grp., Inc. v.
      PLTQ Lotus Grp., L.P., 417 S.W.3d 46, 59 (Tex. App.—Houston [1st Dist.] 2013,
      pet. denied) (statute); Goldman v. Olmstead, 414 S.W.3d 346, 365–66 (Tex. App.—
      Dallas 2013, pet. denied) (prevailing party provision in contract). A trial court’s
      decision to award attorney’s fees, however, is generally reviewed for an abuse of
      discretion. The First and Fourteenth Courts of Appeals, however, have recently
      addressed whether a trial court’s decision to award attorney’s fees to a “prevailing
      party” under a contractual attorney’s fee provision should be reviewed under a de
      novo or abuse of discretion standard. See N. Star Water Logic, LLC v. Ecolotron,
      Inc., No. 14-14-00972-CV, 2016 WL 402072, at *1 (Tex. App.—Houston [14th
      Dist.] Feb. 2, 2016, no pet.); see also Referente v. City View Courtyard, L.P., No.
      01–14–00602–CV, 2015 WL 6081428, at *2–3 (Tex. App.—Houston [1st Dist.]
      Oct. 13, 2015, no pet.). In those cases, the courts held that a trial court’s decision to
      grant or deny attorney’s fees under a contract’s “prevailing party” clause when the
      plaintiff has nonsuited its claims without prejudice is a mixed question of law and
      fact. N. Star Water Logic, 2016 WL 402072, at *1; Referente, 2015 WL 6081428,
      at *2–3. In such cases, a trial court’s decision that a party nonsuited to avoid an
      unfavorable ruling is reviewed for an abuse of discretion, deferring to any factual
      findings supported by some evidence, and legal questions involved in that decision
      are reviewed de novo. Referente, 2015 WL 6081428, at *2–3. Although Urban
      argues that de novo review is the appropriate standard in this case, we need not
      decide this issue because regardless of which standard of review we employ, our
      holding would be the same.

                                              8
295 S.W.3d 650, 653 (Tex. 2009) (stating that Texas litigants can only recover

attorney’s fees if statute or contract specifically provides for such recovery)). The

Agreement states in relevant part that if Drummond “is a prevailing party in any

legal proceeding brought as a result of a dispute under this agreement or any

transaction related to this agreement, [Drummond] will be entitled to recover from

the non-prevailing party all costs of such proceeding and reasonable attorney’s fees.”

A.    Applicable Law

      1.     Contract Interpretation

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

of the parties as expressed in the document. Amedisys, Inc. v. Kingwood Home

Health Care, LLC, 437 S.W.3d 507, 514 (Tex. 2014). We begin our analysis with

the language of the contract because it is the best representation of what the parties

mutually intended. Gilbert Tex. Constr., L.P. v. Underwriters at Lloyd’s London,

327 S.W.3d 118, 126 (Tex. 2010). Unless the contract dictates otherwise, we give

words and phrases their ordinary and generally accepted meaning, reading them in

context and in light of the rules of grammar and common usage. See id.; Forbau v.

Aetna Life Ins. Co., 876 S.W.2d 132, 133 (Tex. 1994).

                                          9
      2.     Prevailing Parties

      When interpreting a contractual attorney’s fee provision in which the

“prevailing party” term is left undefined, as is the case here, we are to “presume the

parties intended the terms ordinary meaning.” KB Home, 295 S.W.3d at 653.

      A prevailing party is the party “who successfully prosecutes the action or

successfully defends against it, prevailing on the main issue, even though not to the

extent of its original contention.” Johns v. Ram-Forwarding, Inc., 29 S.W.3d 635,

637–38 (Tex. App.—Houston [1st Dist.] 2000, no pet.) (citing City of Amarillo v.

Glick, 991 S.W.2d 14, 17 (Tex. App.—Amarillo 1997, pet. denied)). Determination

of whether a party is the prevailing or successful party is based upon success on the

merits, and not on whether damages were awarded. Glick, 991 S.W.2d at 17; see

also Robbins v. Capozzi, 100 S.W.3d 18, 27 (Tex. App.—Tyler 2002, no pet.). In

other words, the prevailing party is the party who is vindicated by the trial court’s

judgment. Glick, 991 S.W.2d at 17.

      In its 2009 opinion in KB Home, the Texas Supreme Court explained that “[t]o

qualify as a prevailing party, a . . . plaintiff must obtain at least some relief on the

merits of his claim. The plaintiff must obtain an enforceable judgment against the

defendant from whom fees are sought, or comparable relief through a consent decree

or settlement.” 295 S.W.3d at 654. In short, “[w]hether a party prevails turns on

whether the party prevails upon the court to award it something, either monetary or

                                          10
equitable.” Id. at 655. Although the opinion is instructive with regard to when a

plaintiff can be a prevailing party, KB Home did not reach the issue of “whether the

defendant in that case could instead be the ‘prevailing party.’” Silver Lion, Inc. v.

Dolphin St., Inc., No. 01–07–00370–CV, 2010 WL 2025749, at *18 (Tex. App.—

Houston [1st Dist.] May 20, 2010, pet. denied) (mem. op.); see also Fitzgerald v.

Schroeder Ventures II, LLC, 345 S.W.3d 624, 629–30 (Tex. App.—San Antonio

2011, no pet.) (relying on Silver Lion and holding KB Home was inapplicable to

question of whether defendant was entitled to attorney’s fees).

      Two years after the KB Home opinion, the Texas Supreme Court revisited the

question of what it means to be a “prevailing party” and clarified that a defendant

does not have to obtain affirmative relief from a court in order to “prevail.” Epps,
351 S.W.3d at 868–70. In Epps, the plaintiff nonsuited its case with prejudice. Id.

The Court held that a defendant is a prevailing party under such circumstances

because “[t]he res judicata effect of a nonsuit with prejudice works a permanent,

inalterable change in the parties’ legal relationship to the defendant’s benefit: the

defendant can never again be sued by the plaintiff or its privies for claims arising out

of the same subject matter.” Id. at 868–69. Thus, a defendant who successfully

defends against a plaintiff’s claim is entitled to recover its attorney’s fees pursuant

to a contract’s “prevailing party” clause. See SEECO, Inc. v. K. T. Rock, LLC, 416
S.W.3d 664, 674 (Tex. App.—Houston [14th Dist.] 2013, pet. denied) (awarding

                                          11
defendant its attorney’s fees under “prevailing party” clause); see also Bhatia v.

Woodlands N. Hous. Heart Ctr., PLLC, 396 S.W.3d 658, 670–71 (Tex. App.—[14th

Dist.] 2013, pet. denied) (same); Johnson v. Smith, No. 07–10–00017–CV, 2012 WL
140654, at *2 (Tex. App.—Amarillo Jan. 18, 2012, no pet.) (mem. op.) (same);

Silver Lion, Inc., 2010 WL 2025749, at *18 (same).

      3.     “Main Issue” Analysis

      Drummond contends that he is the “prevailing party” under the Agreement

because he prevailed at trial by successfully defending against the “main issue” in

the case, i.e., Urban’s breach of contract claim. Urban argues that KB Home

specifically rejected “main issue” analysis in cases involving contractual attorney’s

fees provisions, and therefore, we should determine which party prevailed under the

Agreement by looking at which party prevailed at any stage of the proceedings on

the most claims, counterclaims, and affirmative defenses, as opposed to only looking

at which party prevailed at trial on the main issue.

      KB Home did not reject “main issue” analysis in all circumstances. Although

the Texas Supreme Court rejected the dissent’s reliance upon “main issue” analysis

in that case, it did so based on a conflict between the express language of the

controlling attorney’s fee provision and the dissent’s analysis, which concluded that

the “main issue” in that breach of a contract case was a counterclaim based on a

separate oral agreement. KB Home, 295 S.W.3d at 661. Relying upon the express

                                          12
language of the contract’s attorney’s fees provision, the KB Home majority held that

whether a party was a prevailing party under the contract was confined to disputes

arising out of that written contract, and did not include disputes over oral side

agreements.4 Id. Therefore, we do not read KB Home as rejecting “main issue”

analysis in all cases in which a contractual attorney’s fee provision controls, but,

rather, only in those cases in which such analysis is incompatible with a controlling

contractual provision. See generally Bhatia, 396 S.W.3d at 670–71.

      In the years since KB Home was decided, this Court and others have continued

to use “main issue” analysis in cases involving contractual attorney’s fees

provisions. See Silver Lion, Inc., 2010 WL 2025749, at *18 (relying upon pre-KB

Home authorities and holding defendant who prevailed on “main issue” was entitled

to attorney’s fees pursuant to contract provision); see also SEECO, Inc., 416 S.W.3d

at 674 (holding defendant who prevailed on “main issue” was entitled to attorney’s

fees pursuant to contract provision); Bhatia, 396 S.W.3d at 670–71 (same); Johnson,

4
      Specifically, the majority stated:
         The attorney’s-fees provision makes clear that the prevailing party is judged
         by “an action to enforce the terms of this Contract or to declare rights
         hereunder.” The problem with the dissent’s analysis is that Intercontinental’s
         counterclaim was not rooted in the parties’ written contract, but rather in an
         alleged separate oral agreement. Under the dissent’s “main issue” test, the
         interpretation of “prevailing party” in “this Contract” is controlled by the fate
         of a claim brought under a separate oral contract.
      Intercontinental Grp. P’ship v. KB Home Lone Star L.P., 295 S.W.3d 650, 661 (Tex.
      2009) (emphasis in original).

                                            13
2012 WL 140654, at *2 (same). In a case tried to a jury, the issues that are fully

litigated and properly submitted to the jury provide compelling evidence of the main

issues in that case. See Bhatia, 396 S.W.3d at 670–71 (holding that, in suit involving

multiple claims and counterclaims based on breach of contract, tort, and statutory

causes of action, some of which “were essentially abandoned, and others were

defeated in motions practice and were not submitted to the jury or raised in th[e]

appeal,” main issues were those that were fully litigated, properly submitted to jury,

and formed basis of “vast majority of the [trial] testimony”); see generally Johnson,

No. 07–10–00017–CV, 2012 WL 140654, at *3 (stating that parties who “obtained

favorable findings on all major jury issues” and take-nothing judgment in their favor

were prevailing parties under contract).

      Unlike Bhatia, the Court cannot review a full transcript of the trial

proceedings in this case order to determine which issue or issues were the primary

focus of the testimony because the parties have only presented a partial reporter’s

record on appeal. See TEX. R. APP. P. 34.6(c) (allowing for filing of partial reporter’s

record). Unfortunately, only a fraction of the reporter’s record on file with this court

includes testimony on the merits. Most of the nine-volume reporter’s record consists

of transcripts of bench and pretrial conferences held outside the jury’s presence, a

bill of exception, a hearing on post-trial motions, and exhibits. Furthermore, half of

the testimony included in the partial record relates primarily to the issue of attorney’s

                                           14
fees, and, to a lesser degree, Urban’s amended motion for sanctions. As a result, we

cannot discern which issue or issues consumed the majority of the trial testimony in

this case. Because Urban filed a statement of the points or issues to be presented on

appeal in compliance with Rule 34.6(c), we “must presume that the partial reporter’s

record designated by the parties constitutes the entire record for purposes of

reviewing the stated points or issues.” TEX. R. APP. P. 34.6(c)(4).

B.    Analysis

      The only issues in this case that were submitted to the jury after a full trial on

the merits were Urban’s breach of contract claim and Drummond’s affirmative

defenses to that claim based on Urban’s alleged breach of its fiduciary duty and

Urban’s prior breach of the Agreement. Although there were other issues raised in

this case, those claims, counterclaims, and affirmative defenses were either

eliminated in pretrial motion practice or not submitted to the jury. Thus, the appellate

record reflects that Urban’s breach of contract claim was the main issue in this case.

See Bhatia, 396 S.W.3d at 670–71.

      The jury found that both Urban and Drummond failed to comply with the

Agreement, but Urban failed to materially comply with the Agreement first, and

Urban’s failure to comply was not excused. The jury also found that Urban did not

comply with its fiduciary duty to Drummond after Drummond signed the

Agreement. The jury awarded zero damages to Urban for Drummond’s breach of

                                          15
contract and the final judgment ordered that Urban take nothing on its claims against

Drummond. Urban is not challenging the jury’s findings on appeal. Based on the

jury’s findings, Drummond’s failure to comply with the Agreement was excused as

a matter of law by Urban’s prior material breach. See Mustang Pipeline Co. v. Driver

Pipeline Co., 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.”).

Accordingly, we hold that Drummond prevailed at trial by successfully defending

against the main issue in this case, i.e., Urban’s breach of contract claim. See Bhatia,
396 S.W.3d at 670–71; see also Johnson, 2012 WL 140654, at *3 (stating that parties

who “obtained favorable findings on all major jury issues” and take-nothing

judgment in their favor were prevailing parties under contract). As the “prevailing

party” at trial on the main issue in this case, Drummond was entitled to recover his

costs and reasonable attorney’s fees pursuant to the express language of the

Agreement.

      Urban argues that Drummond is not entitled to attorney’s fees pursuant to KB

Home because Drummond did not recover any affirmative relief on his

“counterclaim” against Urban for breach of contract. See KB Home, 295 S.W.3d at

654–55 (stating plaintiff must obtain some affirmative relief on his claim in order to

be prevailing party). However, Drummond asserted an affirmative defense, not a

                                          16
counterclaim for breach of contract, therefore, KB Home does not prohibit him from

being a prevailing party under the Agreement. See Fitzgerald, 345 S.W.3d at 629–

30 (noting that KB Home did not reach issue of whether defendant can be prevailing

party); Silver Lion, Inc., 2010 WL 2025749, at *18 (same).

      Urban also argues that even if Drummond is a “prevailing party,” Drummond

still cannot recover his attorney’s fees because Urban “prevailed” on most of the

claims and affirmative defenses raised in this case, and therefore, Urban cannot be

considered a “non-prevailing party” under the contract. As previously discussed,

regardless of whether Urban successfully defended against other issues raised in this

case, particularly in motion practice, a “prevailing party” is one that succeeds on the

main issue. See SEECO, 416 S.W.3d at 674; see also Mag Instrument, Inc. v. G.T.

Sales Inc., 294 S.W.3d 800, 808 (Tex. App.—Dallas 2009, pet. denied)

(“[T]he prevailing party is typically the party who either successfully prosecutes the

action or successfully defends against it, prevailing on the main issue.”); cf. Chevron

Phillips Chem. Co., L.P. v. Kingwood Crossroads, L.P., 346 S.W.3d 37, 72 (Tex.

App.—Houston [14th Dist.] 2011, pet. denied) (rejecting party’s argument that it

could not be considered “non-prevailing party” because jury found it “utterly

blameless” with regard to failed transaction; stating that “[n]onetheless, the contract

entitled a party to recover attorney’s fees for successful defense of a claim”). The

trial court rendered a take-nothing judgment in Drummond’s favor with respect to

                                          17
the main issue in this case, Urban’s breach of contract claim, and Urban is not

challenging that aspect of the trial court’s judgment on appeal.

      Urban also argues that Drummond cannot recover attorney’s fees based on his

defense of Urban’s breach of contract claim because the jury found that Drummond

breached the Agreement and there is no jury finding that Drummond’s breach was

excused. As previously discussed, the jury’s findings—which are not being

challenged on appeal—demonstrate that Drummond’s failure to comply with the

Agreement was excused as a matter of law by Urban’s prior material breach. See

Mustang Pipeline Co., 134 S.W.3d at 196. Because Drummond’s breach was

excused as a matter of law, no jury finding on this issue was necessary. The jury’s

finding of breach in this context also does not prevent Drummond from recovering

his costs and attorney’s fees under the Agreement’s prevailing party provision. See

Chevron Phillips Chem. Co., 346 S.W.3d at 71–72 (affirming award of contractual

attorney’s fees to party jury had found failed to comply with contract; party’s failure

to comply was excused by impracticability).

      Urban also cites to several cases for the general proposition that contracting

parties cannot take advantage of favorable provisions of a contract they breached.

All of these cases, however, are distinguishable because none of them involve a

breaching party’s attempt to enforce a contractual attorney’s fees provision when

                                          18
that party’s breach was excused.5

      Urban’s reliance upon dicta in KB Home and on another distinguishable case

is similarly misplaced.6 After acknowledging that “[t]he issue of whether a

breaching-but-nonpaying defendant can be a ‘prevailing party’ under an

attorney’s-fees provision” was not before the court, the KB Home court stated in a

footnote that “[w]hen defining litigation success, some might argue that while relief

is required for plaintiffs to prevail, a finding of ‘no breach’ is required for

defendants—that is, a desired finding on breach is insufficient for plaintiffs but

indispensable for defendants.” KB Home, 295 S.W.3d at 659 n.42. Urban argues that

this language indicates that Drummond cannot be a “prevailing party” under the

5
      See generally Drury Sw., Inc. v. Louie Ledeaux #1, Inc., 2013 WL 5812989 at *10
      (Tex. App.—San Antonio 2013, no pet.) (holding lessor could not enforce lease’s
      limitation of liability provision against lessee because lessor had fraudulently
      induced lessee to sign lease); Macy v. Waste Mgmt., Inc., 294 S.W.3d 638, 650 (Tex.
      App.—Houston [1st Dist.] 2009, pet. denied) (holding employer, who had not
      breached employment agreement, could enforce contract’s termination for cause
      provision); Arias v. Brookstone, 265 S.W.3d 459, 469 n.3 (Tex. App.—Houston [1st
      Dist.] 2007, pet. denied) (reversing subcontractor’s quantum meruit award; noting
      in footnote that breaching plaintiff may sue defendant for breach of construction
      contract if plaintiff substantially complied with contract); Willis v. Donnelly, 118
S.W.3d 10, 40 (Tex. App.—Houston [14th Dist.] 2003), rev’d on other grounds,
      199 S.W.3d 262 (Tex. 2006) (holding that in suit between shareholders of closely
      held corporation, shareholder who breached contract could not enforce contract’s
      share valuation provision).
6
      Tex. Standard Oil & Gas, L.P. v. Frankel Offshore Energy, Inc., 394 S.W.3d 753,
      779 (Tex. App.—Houston [14th Dist.] 2012, no pet.) (jury found that both parties
      materially breached contract, but GTP breached first; court held that GTP was not
      entitled to damages on claim because “prior material breach was not the only
      possible ground for the jury to find Frankel’s material breach was excused,” and
      GTP was not challenging all possible grounds on appeal).

                                           19
Agreement. KB Home’s dicta, however, does not express any opinion about the

situation presented here—whether a defendant whose breach of the contract was

excused by the plaintiff’s prior material breach, can nevertheless be a “prevailing

party.”

      Urban further contends that Drummond cannot recover attorney’s fees from

Urban because Drummond has no obligation to pay such fees under Drummond’s

contingent fee agreement with this counsel. Regardless of the terms of Drummond’s

fee arrangement, the Agreement at issue in this case expressly entitles a “prevailing

party in any legal proceeding brought as a result of a dispute under this agreement

or any transaction related to this agreement . . . to recover from the non-prevailing

party all costs of such proceeding and reasonable attorney’s fees.” The only

limitations imposed by the Agreement on the award of attorney’s fees are that such

fees must be reasonable and relate to an applicable legal proceeding. We will not

rewrite the parties’ agreement or add any new requirements. See Am. Mfrs. Mut. Ins.

Co. v. Schaefer, 124 S.W.3d 154, 162 (Tex. 2003) (a court “may neither rewrite the

parties’ contract nor add to its language”); Nat. Gas Clearinghouse v. Midgard

Energy Co., 113 S.W.3d 400, 407 (Tex. App.—Amarillo 2003, pet. denied) (“[W]e

cannot change the contract merely because we or one of the parties comes to dislike

its provisions or thinks that something else is needed.”).

                                          20
      We overrule Urban’s first issue.7

                             Drummond’s Attorney’s Fees

      In its second issue, Urban argues that, even if Drummond is entitled to

attorney’s fees, the trial court erred by awarding Drummond $110,000 in trial

attorney’s fees because Drummond failed to segregate his fees between recoverable

and non-recoverable claims and asked for attorney’s fees for time spent on claims

and issues for which attorney’s fees are not recoverable, such as Drummond’s third-

party petitions against Di Ferrante, Silaski, and Ramani and Drummond’s

counterclaims and defenses that either did not survive summary judgment or were

not submitted to the jury.

      Urban further contends that the trial court erred in denying its motion to

disregard the jury’s findings on this issue because the evidence is factually and

legally insufficient to support the award and a remittitur is appropriate because the

amount of attorney’s fees awarded to Drummond is excessive.

A.    Standard of Review and Applicable Law

      The need to segregate attorney’s fees is a question of law, but the extent to

which certain claims can or cannot be segregated is a mixed question of law and fact.

See Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 312–13 (Tex. 2006).

7
      In light of our disposition, we need not address Urban’s third and fifth issues
      challenging the trial court’s failure to award Urban its trial and appellate attorney’s
      fees pursuant to the Agreement’s “prevailing party” clause.

                                            21
Generally, a party seeking attorney’s fees must segregate fees between claims for

which they are recoverable and claims for which they are not. Id. at 311. If the fee

movant survives the segregation inquiry, the reviewing court can then turn its

attention to the legal and factual sufficiency of the evidence underpinning the award.

See id. at 314.

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

of the parties as expressed in the document. Amedisys, Inc. v. Kingwood Home

Health Care, LLC, 437 S.W.3d 507, 514 (Tex. 2014). We begin our analysis with

the language of the contract because it is the best representation of what the parties

mutually intended. Gilbert Tex. Constr., 327 S.W.3d at 126. Unless the contract

dictates otherwise, we give words and phrases their ordinary and generally accepted

meaning, reading them in context and in light of the rules of grammar and common

usage. See id.; Forbau, 876 S.W.2d at 133.

B.    Analysis

      Here, the Agreement does not expressly limit the availability of attorney’s

fees to a party who prevails on any particular type of claim, but rather allows the

“prevailing party in any legal proceeding brought as a result of a dispute under this

agreement or any transaction related to this agreement . . . to recover from the

non-prevailing party all costs of such proceeding and reasonable attorney’s fees.”

Because the term “legal proceeding” is not defined in the Agreement, we interpret

                                         22
this phrase according to its ordinary and generally accepted meaning. See Gilbert

Tex. Constr., 327 S.W.3d at 126; Forbau, 876 S.W.2d at 133. Black’s Law

Dictionary defines “legal proceeding” as: “Any proceeding authorized by law and

instituted in a court or tribunal to acquire a right or to enforce a remedy.” BLACK’S

LAW DICTIONARY 370 (Pocket ed. 1996). The term “legal proceeding,” as used in

the “prevailing party” provision of a real estate contract includes, at the very least, a

“lawsuit.” Sierra Assoc. Grp., Inc. v. Hardeman, No. 03-08-00324-CV, 2009 WL
416465, at *8–9 (Tex. App.—Austin Feb. 20, 2009, no pet.) (mem. op.) (“Sierra

filed a lawsuit, which is, of course, a legal proceeding.”).

      Urban initially sued Drummond for breach of contract in order to collect an

unpaid commission under the Agreement. This suit is undoubtedly a “legal

proceeding brought as a result of a dispute under” the Agreement. Drummond’s

counterclaims against Urban and Urban’s subsequently added fraud claim against

Drummond are also part of the same “legal proceeding,” as that term is used in the

Agreement.

      Drummond argues that his third-party petitions against Di Ferrante, Silaski,

and Ramani are also part of the same “legal proceeding” with Urban, and therefore,

he is entitled to recover any costs and attorney’s fees incurred with respect to these

claims. Although Drummond’s actions against Di Ferrante, Silaski, and Ramani

were included in the same trial court cause number as the action between Drummond

                                           23
and Urban, the contract only authorizes an award of fees against “the non-prevailing

party,” and Urban is not the non-prevailing party with respect to Drummond’s third-

party petitions against Di Ferrante, Silaski, and Ramani. As a result, Drummond

cannot recover attorney’s fees and costs against Urban as a “prevailing party” with

respect to such claims. Cf. Garrison v. Kocurek, No. 03-99-00270-CV, 2000 WL
45643, at *2 (Tex. App.—Austin Jan. 21, 2000, no pet.) (mem. op., not designated

for publication) (stating that main action should be viewed separately when

evaluating who is “prevailing party” in third-party action). Therefore, Drummond

was required to segregate his fees with respect to the time his attorney spent on his

third-party petitions against Di Ferrante, Silaski, and Ramani. See Tony Gullo, 212
S.W.3d at 311.

      Accordingly, we sustain Urban’s second issue and we remand the case for

further proceedings consistent with this opinion on the issue of Drummond’s

attorney’s fees.

            Statutory Attorney’s Fees and Attorney’s Fees as Sanctions

      In its fourth issue, Urban argues that the trial court erred by denying Urban’s

amended motion for sanctions which sought mandatory statutory attorney’s fees

under the DTPA and TDCA, and attorney’s fees as sanctions under Texas Rules of

Civil Procedure 13 and 215 and Texas Civil Practice and Remedies Code Chapters

9 and 10.

                                         24
A.    Urban’s Claims for Attorney’s Fees pursuant to DTPA and TDCA

      1.     Standard of Review

      The availability of attorney’s fees under the DTPA or TDCA is a question of

law that we review de novo. See Holland v. Wal-Mart Stores, Inc., 1 S.W.3d 91, 94

(Tex. 1999); see also Johnson v. City of Fort Worth, 774 S.W.2d 653, 656 (Tex.

1989) (“Matters of statutory construction are questions of law for the court to

decide.”). However, if attorney’s fees are available pursuant to a given statute, we

review a trial court’s refusal to award such fees for an abuse of discretion. See

Donwerth v. Preston II Chrysler–Dodge, Inc., 775 S.W.2d 634, 637 n.3 (Tex. 1989);

Bohls v. Oakes, 75 S.W.3d 473, 480 (Tex. App.—San Antonio 2002, pet. denied).

      2.     Texas Debt Collection Act

      Urban’s amended motion asked the trial court to award it its attorney’s fees

and costs pursuant to the TDCA and DTPA. Both statutes have similar provisions

authorizing the trial court to award a defendant reasonable attorney’s fees and costs

if the court finds that an action under that section: (1) “was brought in bad faith or

for purposes of harassment,” TEX. FIN. CODE ANN. § 392.403(c) (West 2006); and

(2) “was groundless in fact or law or brought in bad faith, or brought for the purpose

of harassment.” TEX. BUS. & COM. CODE ANN. § 17.50(c) (West 2011).

      Although Urban pleaded for attorney’s fees pursuant to the Agreement and

DTPA section 17.50(c), it did not request attorney’s fees under TDCA section

                                         25
392.403(c) until its post-trial amended motion for sanctions. See Heritage Gulf

Coast Props., Ltd. v. Sandalwood Apartments, Inc., 416 S.W.3d 642, 663 (Tex.

App.—Houston [14th Dist.] 2013, no pet.) (holding that trial court did not err by

refusing to award party attorney’s fees on unpleaded ground). Accordingly, we hold

that the trial court did not err in refusing to award Urban its attorney’s fees under

TDCA section 392.403(c) because Urban did not timely plead for such relief. Id.;

see also TEX. R. CIV. P. 63 (stating party may amend its pleadings until seven days

before trial unless amended pleadings operate as surprise to opposing party).

      3.     Texas Deceptive Trade Practices Act

      The trial court granted summary judgment in favor of Urban on Drummond’s

DTPA counterclaim. Urban contends that it is entitled to attorney’s fees under

section 17.50(c) because Drummond’s DTPA claim is groundless.8

      The DTPA authorizes a trial court to award a defendant its reasonable and

necessary attorney’s fees and court costs if the court finds that “an action under this

section was groundless in fact or law or brought in bad faith, or brought for the

purpose of harassment.” TEX. BUS. & COM. CODE ANN. § 17.50(c) (West 2011). The

term “groundless” as used in the DPTA has the same meaning as it does under Rule

13, i.e., “no basis in law or fact and not warranted by good faith argument for the

8
      Urban does not argue on appeal that Drummond’s DTPA claim was brought in bad
      faith or for purposes of harassment.

                                          26
extension, modification, or reversal of existing law.” Donwerth, 775 S.W.2d at 637;

see also Mosk v. Thomas, 183 S.W.3d 691, 695 (Tex. App.—Houston [14th Dist.]

2003, no pet.). In order to determine whether a DTPA claim is groundless, a trial

court must examine the facts available to the litigant and circumstances existing

when the litigant filed his or her pleadings. Davila v. World Car Five Star, 75 S.W.3d
537, 542–43 (Tex. App.—San Antonio 2002, no pet.) (applying case law interpreting

Rule 13 to motion for attorney’s fees under DTPA). The standard for determining

whether a suit is groundless considers “whether the totality of the tendered evidence

demonstrates an arguable basis in fact and law for the consumer’s claim.”

Splettstosser v. Myer, 779 S.W.2d 806, 808 (Tex. 1989). Groundlessness is more

than an ultimate determination that the claim is not a winner. See Emmons v. Purser,

973 S.W.2d 696, 700 (Tex. App.—Austin 1998, no pet.) (Rule 13).

      Questions of whether an action is groundless, brought in bad faith, or brought

for the purpose of harassment are reserved solely for the court, according to the plain

words of the statute. See Donwerth, 775 S.W.2d at 637. Appellate review of such

determinations is a question of law under an abuse of discretion standard. Id. at 637

n.3. A trial court abuses its discretion if the trial court acts without reference to

guiding rules and principles, or acts arbitrarily or unreasonably. Downer v.

Aquamarine Operators, Inc., 701 S.W.2d 238, 241–42 (Tex. 1985).

                                          27
      In its amended motion for sanctions, Urban argued that Drummond’s DTPA

claim was groundless and brought in bad faith and for purpose of harassment, and

asked the court to take judicial notice of Drummond’s counterclaims, Urban’s

motion for partial summary judgment, Urban’s reply to Drummond’s response to

Urban’s motion, and the court’s order granting Urban’s motion. Later in its amended

motion for sanctions, Urban argued that “[m]ost of the allegations supporting

Drummond’s” DTPA claim “were contradicted by Drummond’s own testifying

expert, George Stephens in his deposition,” and that “Drummond and his counsel

failed to explore and verify any basis for [his] allegations [regarding the validity and

enforceability of the Agreement] from those experts in Texas real estate rules,

regulations, and practices.” Urban did not otherwise specify in its motion why it

believed that Drummond’s claim was groundless, brought in bad faith, and for

purpose of harassment.

      Drummond responded to the amended motion, attaching an affidavit from his

counsel. In that affidavit Drummond’s counsel testified that he had made a

reasonable inquiry into the legal and factual basis for the DTPA claim and that the

claim was not brought in bad faith or for purpose of harassment. An evidentiary

hearing was not held on Urban’s motion for sanctions. The trial court denied Urban’s

motion and stated: “After reviewing the motion and response, as well as the evidence

                                          28
in the record and the pleadings on file, the Court is of the opinion that the Motion

should be denied.”

      The pleadings and motions Urban relied on in its sanctions motion do little to

illuminate the facts available to Drummond’s attorney and the circumstances that

existed when he signed and filed the various pleadings asserting a counterclaim

under the DTPA. See Davila, 75 S.W.3d at 542–43 (stating court must examine facts

available to litigant and circumstances existing when litigant filed his pleading when

determining whether DTPA claim is groundless). Drummond’s counsel, however,

testified that he reviewed the DTPA and “select[ed] those possible claims that could

be warranted by the facts as [he] then understood them or as [he] reasonably

expected them to ultimately be after discovery.” Thus, there is some evidence from

which the trial court could have determined that the DTPA claim was not groundless.

See Butnaru v. Ford Motor Co., 84 S.W.3d 198, 211 (Tex. 2002) (stating that trial

court does not abuse its discretion so long as some evidence supports its decision).

Accordingly, based on the record before us, we cannot say that the trial court abused

its discretion when it denied Urban’s motion for attorney’s fees and costs under the

DTPA. See Donwerth, 775 S.W.2d at 637 n.3; Bohls, 75 S.W.3d at 480.

                                         29
B.    Urban’s Claims for Attorney’s Fees as Sanctions under Rule 13 and
      Chapters 9 and 10

      1.     Chapter 9

      Urban complains on appeal about the trial court’s failure to sanction

Drummond pursuant to Chapter 9. Although Urban moved for sanctions pursuant to

Chapter 9 in a pre-trial motion, Urban did not mention Chapter 9 in its post-trial

Amended Motion for Sanctions. Unlike a supplemental motion, an amended motion

supercedes the previous motion. See Dall. Ind. Sch. Dist. v. Finlan, 27 S.W.3d 220,

231 (Tex. App.—Dallas 2000, pet. denied) (stating that amended summary judgment

motion supercedes and supplants previous motion, which may no longer be

considered). A court is not authorized to grant sanctions under a statute or rule not

identified in the motion for sanctions. See Greene v. Young, 174 S.W.3d 291, 301

(Tex. App.—Houston [1st Dist.] 2005, pet. denied) (holding trial court erred in

imposing sanctions on grounds that were not pleaded). The trial court did not abuse

its discretion by not awarding Urban sanctions pursuant to Chapter 9 because Urban

did not request sanctions on that basis in its amended motion. See Greene, 174
S.W.3d at 301; Ball v. Rao, 48 S.W.3d 332, 338 (Tex. App.—Fort Worth 2001, pet.

denied).

      2.     Chapter 10 and Rule 13

      On appeal, Urban argues that the trial court erred in denying its request for

sanctions because: (1) Drummond filed groundless claims (i.e., DTPA, TDCA, all

                                         30
claims against Di Ferrante, fraud, class relief, and anti-trust violations) and defenses

(i.e., illegality, public policy, and failure to be a procuring cause) in bad faith and

for purpose of harassment; (2) Drummond’s response to Urban’s motion for

summary judgment included a verifiably false statement of fact regarding the

amount of attorney’s fees requested by Urban; (3) Drummond’s response to another

of Urban’s motions for summary judgment included a “misleading statement” to the

court about the definition of the term “procuring cause”; (4) Drummond abused the

discovery process by refusing to appear for deposition and then refusing to answer

questions during his deposition; and (5) Drummond and his counsel “engaged in a

pattern of conduct” that includes the aforementioned instances of misconduct,

resulting in “needless expense, delay and waste of judicial resources.”

          a. Standard of Review

      Our analysis of a motion for sanctions filed under Chapter 10 is the same as

our review of a motion filed under Rule 13. See Nath v. Tex. Children’s Hosp., 446
S.W.3d 355, 361 (Tex. 2014); Low v. Henry, 221 S.W.3d 609, 614 (Tex. 2007). We

may reverse the trial court’s ruling only if the trial court acted without reference to

any guiding rules and principles, such that its ruling was arbitrary or unreasonable.

Low, 221 S.W.3d at 614.

      For the purposes of Chapter 10 and Rule 13, courts presume pleadings,

motions, and other papers are filed in good faith. Thottumkal v. McDougal, 251

                                          31
S.W.3d 715, 718 (Tex. App.—Houston [14th Dist.] 2008, pet. denied); Nath, 446
S.W.3d at 361. The party moving for sanctions bears the burden of overcoming this

presumption. Nath, 446 S.W.3d at 361; Low, 221 S.W.3d at 614.

          b. Rule 139

      Rule 13 authorizes the imposition of sanctions if an attorney or party signs a

pleading, motion, or other paper that is (1) groundless and (2) brought in bad faith

or for the purpose of harassment. TEX. R. CIV. P. 13. For the purpose of Rule 13,

“groundless” means that the claim has “no basis in law or fact and not warranted by

good faith argument for the extension, modification, or reversal of existing law.” Id.;

R.M. Dudley Constr. Co. v. Dawson, 258 S.W.3d 694, 708 (Tex. App.—Waco 2008,

pet. denied). To determine if a claim is groundless, the trial court must objectively

ask whether the party and counsel made a reasonable inquiry into the legal and

factual basis of the claim at the time the document in question was filed. See Loeffler

v. Lytle Indep. Sch. Dist., 211 S.W.3d 331, 348 (Tex. App.—San Antonio 2006, pet.

denied). We determine whether a reasonable inquiry has been made by looking at

the facts available to the attorney and the circumstances that existed when the

attorney signed and filed the document in question. See Robson v. Gilbreath, 267

9
      Rule 13 authorizes sanctions as are available under Rule 215.2(b), which includes
      attorney’s fees.

                                          32
S.W.3d 401, 405 (Tex. App.—Austin 2008, pet. denied); Elkins v. Stotts–Brown,

103 S.W.3d 664, 668 (Tex. App.—Dallas 2003, no pet.).

      Bad faith is the conscious doing of a wrong for dishonest, discriminatory, or

malicious purposes; bad faith does not exist when a party merely exercises bad

judgment or is negligent. Thielemann v. Kethan, 371 S.W.3d 286, 294 (Tex. App.—

Houston [1st Dist.] 2012, pet. denied) (citing Elkins, 103 S.W.3d at 669)). A

document is filed for the purpose of harassment if it is filed with the intent to annoy,

alarm, and abuse another person. See Thielemann, 371 S.W.3d at 294 (citing Elkins,
103 S.W.3d at 669). In deciding whether a party filed a document in bad faith or for

the purpose of harassment, the trial court must measure the party’s conduct and

examine the facts available to the party at the time the relevant document was signed.

See Gomer v. Davis, 419 S.W.3d 470, 478, 480 (Tex. App.—Houston [1st Dist.]

2013, no pet.). Thus, the court must consider the acts or omissions of counsel, not

merely the legal merit of a pleading or motion. See id.; see also Parker v. Walton,

233 S.W.3d 535, 539 (Tex. App.—Houston [14th Dist.] 2007, no pet.).

      Rule 13 generally requires that the trial court hold an evidentiary hearing to

make a determination about the motives and credibility of the person signing the

document. Gomer, 419 S.W.3d at 480. In some circumstances, however, the trial

court may be able to make a determination by taking judicial notice of items in the

case file. The trial court abuses its discretion in imposing sanctions under Rule 13 if

                                          33
there is no evidence in the record for the court to determine that the party signed and

filed the document in bad faith or for the purpose of harassment. See id.

          c. Chapter 10

      Chapter 10 provides that the signature of attorneys or parties on a pleading or

motion constitutes a certificate by them that, to the best of their knowledge,

information, and belief formed after a reasonable inquiry, the instrument is not being

presented for an improper purpose, is warranted by existing law or by a nonfrivolous

argument for the extension, modification, or reversal of existing law or the

establishment of new law, and there is evidentiary support for each allegation or

contention. TEX. CIV. PRAC. & REM. CODE ANN. § 10.001 (West 2002). “A court that

determines that a person has signed a pleading or motion in violation of Section

10.001 may impose a sanction on the person, a party represented by the person, or

both.” Id. § 10.004. As with Rule 13, in order to impose sanctions under Chapter 10,

the trial court in most cases must hold an evidentiary hearing in order to make the

necessary factual determinations about the party’s or the attorney’s motives and

credibility. See Dawson, 258 S.W.3d at 709; Gomer, 419 S.W.3d at 480. The party

moving for sanctions must prove the pleading party’s subjective state of mind.

Without an evidentiary hearing, the court may lack evidence to determine whether a

pleading or motion was filed in bad faith or for the purpose of harassment. Dawson,
258 S.W.3d at 710; Gomer, 419 S.W.3d at 480.

                                          34
         d. Analysis

           i.   False or Misleading Statements in Pretrial Responses to Motion
                for Summary Judgment
      Urban moved for sanctions against Drummond based on the fact that

Drummond’s counsel signed: (1) the October 2012 response to Urban’s partial

motion for summary judgment which included a “misleading statement” about the

definition of the term “procuring cause”; and (2) the October 2013 response to

Urban’s motion for summary judgment on Drummond’s TDCA claims which falsely

stated that Urban was seeking $128,571.72 in attorney’s fees.

      “Sanctions for alleged violations known to movants before trial are waived if

a hearing and ruling are not secured pretrial.” Finlay v. Olive, 77 S.W.3d 520, 525

(Tex. App.—Houston [1st Dist.] 2002, no pet.) (holding party waived its right to

sanctions pursuant to Chapter 10 and Rule 215 by failing to request and obtain

hearing on sanctions motion for matters known to party prior to trial). In this case,

Urban did not request sanctions based on these allegedly false and misleading

statements until after trial. Moreover, Urban’s amended motion reflects that its

request for sanctions is based entirely upon pre-trial events that, in one case, were

known to Urban well in advance of trial (i.e., Drummond’s October 2012 response).

As was the case in Finlay, “the pre-trial conduct matters at issue . . . were all

complete before trial; no trial testimony was needed to determine whether improper

conduct known before trial warranted sanctions.” Id. at 526. Urban argues that its

                                         35
amended motion is timely because the trial court has plenary power to grant a

sanctions motion filed after a final judgment has been rendered for filing groundless

pleadings pursuant to Rule 13 and Chapter 10. See Lane Bank Equip. Co. v. Smith

So. Equip., Inc., 10 S.W.3d 308, 312 (Tex. 2000). However, Urban waived its right

to sanctions based on Drummond’s allegedly false or misleading pretrial statements

by failing to obtain a hearing and ruling on said motion prior to trial. See Finlay, 77
S.W.3d at 526.

           ii.   Drummond’s “Groundless” Claims and Defenses

      On appeal, Urban argues that it is entitled to sanctions against Drummond

based on Drummond’s filing of groundless claims and defenses in bad faith and with

intent to harass. See TEX. R. CIV. P. 13. At the outset, we note that Urban did not

request sanctions based on Drummond’s claims for fraud and class relief in its

amended motion for sanctions. Accordingly, we cannot say that the trial court abused

its discretion when it refused to award Urban attorney’s fees based on Drummond’s

filing of these claims. See Ball, 48 S.W.3d at 338 (holding trial court erred in

imposing sanctions when motion did not request sanctions on that ground).

      With respect to Drummond’s other allegedly groundless claims and defenses,

Drummond responded to the amended motion for sanctions, attaching an affidavit

from his counsel in which he stated that he made what he considered to be a

reasonable inquiry into the legal and factual basis of these claims when he filed the

                                          36
pleading in question and responded to the various motions for summary judgment

on those claims. Drummond’s counsel also testified that he “unequivocally” denied

filing any of these claims or defenses for the purpose of harassment or in bad faith.

Thus, there is some evidence from which the trial court could have determined that

these claims and defenses were not groundless. Accordingly, based on the record

before us, we cannot say that the trial court abused its discretion when it denied

Urban’s motion for sanctions on this ground. See Donwerth, 775 S.W.2d at 637 n.3;

Bohls, 75 S.W.3d at 480.

          iii.   Discovery Abuses

      Urban also sought sanctions against Drummond for pretrial discovery abuses

relating to Drummond’s alleged refusal to appear for deposition and his refusal to

answer questions during his deposition. See TEX. R. CIV. P. 215.2(b)(2) (authorizing

court to impose monetary penalty against party, or advising attorney, who fails to

comply with order compelling discovery or abuses discovery process). A party’s

failure to obtain a pretrial ruling on discovery disputes existing before trial begins

constitutes a waiver of the issue on appeal. See Remington Arms Co., Inc. v.

Caldwell, 850 S.W.2d 167, 170 (Tex. 1993); see also Finlay, 77 S.W.3d at 525.

Although Urban filed motions to compel Drummond’s deposition testimony, the

appellate record does not reflect that Urban ever obtained a ruling on its motions.

                                         37
Accordingly, Urban has waived any claim for sanctions based on these pretrial

discovery abuses. Id.

          iv.   “Pattern of Conduct”

      Urban also argues on appeal that the trial court abused its discretion when it

refused to award it sanctions because Drummond and his counsel “engaged in a

pattern of conduct” that resulted in “needless expense, delay and waste of judicial

resources.” Urban did not raise this argument in its amended motion for sanctions

and Urban’s “pattern of conduct” argument is not an independent ground for the

imposition of sanctions. The trial court did not abuse its discretion by not sanctioning

Drummond and awarding Urban attorney’s fees on this basis.

C.    Urban’s Claim for Mandatory Attorney’s Fees with Respect to
      Drummond’s Third-Party Petitions

      In addition to seeking recovery of the attorney’s fees Urban incurred

defending itself against Drummond’s counterclaims, Urban is also seeking

attorney’s fees from Drummond based on Drummond’s filing of third-party

petitions against Urban’s counsel (Di Ferrante), Urban’s president and CEO

(Ramani), and an Urban employee (Silaski). Urban contends that Drummond’s third-

party DTPA and TDCA claims are groundless and have no basis in law or fact and

seeks to recover the attorney’s fees Urban incurred defending Di Ferrante, Silaski,

and Ramani against these claims.

                                          38
      Drummond nonsuited all of his claims against Di Ferrante, Silaski, and

Ramani without prejudice in October 2012. Urban and Drummond tried the

remaining claims to a jury in November 2013. The record reflects that Urban did not

attempt to recover attorney’s fees it incurred defending Di Ferrante, Silaski, and

Ramani against Drummond’s DTPA and TDCA claims pursuant to Chapter 10 and

Rule 13 until Urban’s post-trial amended motion for sanctions, which was filed in

December 2013—14 months after the nonsuit.

      As previously discussed, “[s]anctions for alleged violations known to movants

before trial are waived if a hearing and ruling are not secured pretrial.” Finlay, 77
S.W.3d at 525; see generally Remington Arms, 850 S.W.2d at 170 (holding that “the

failure to obtain a pretrial ruling on discovery disputes that exist before

commencement of trial constitutes a waiver of any claim for sanctions based on that

conduct”). Urban did not request sanctions for these pretrial matters until after trial.

As was the case in Finlay, “the pre-trial conduct matters at issue . . . were all

complete before trial; no trial testimony was needed to determine whether improper

conduct known before trial warranted sanctions.” Finlay, 77 S.W.3d at 526.

      Urban waived its right to sanctions based on Drummond’s filing of the

third-party complaints by failing to move for sanctions and request and obtain

hearing on its sanctions motion for matters known to the party prior to trial. See id.

                                          39
D.    Conclusion

      Having determined that Urban waived its right to sanctions or that the trial

court did not abuse its discretion by denying Urban’s amended motion for sanctions,

we overrule Urban’s fourth issue.

                                    Conclusion

      We reverse the portion of the trial court’s judgment awarding Drummond his

attorney’s fees and we remand the case for further proceedings consistent with this

opinion on this issue. We affirm the trial court’s denial of Urban’s amended motion

for sanctions and affirm the judgment in all other respects.

                                              Russell Lloyd
                                              Justice

Panel consists of Justices Keyes, Massengale, and Lloyd.

                                         40