Court Opinion

ID: 3092650
Source: CourtListenerOpinion
Date Created: 2015-10-16 04:09:29.337772+00
Date Added: 2024-06-11T11:49:51.779429
License: Public Domain

In The
              Court of Appeals
Sixth Appellate District of Texas at Texarkana
        ______________________________

              No. 06-10-00080-CV
        ______________________________

              DANNY DIKE, Appellant

                          V.

      PELTIER CHEVROLET, INC., Appellee

   On Appeal from the County Court at Law No. 3
               Smith County, Texas
             Trial Court No. 57,614-B

     Before Morriss, C.J., Carter and Moseley, JJ.
             Opinion by Justice Moseley
                                                 OPINION

        Peltier Chevrolet, Inc., apparently upset with multiple lawsuits brought against it by the

Weinstein Law Firm, sought sanctions against Jeffrey Weinstein, the principal in the firm, James

Owen, his employee or associate, and Danny Dike, their client. This is an appeal from an award

of sanctions on behalf of Peltier against Weinstein, Owen, and Dike.

I.      FACTUAL AND PROCEDURAL HISTORY

        Dike had purchased a 2005 Chevrolet Colorado from Peltier on September 14, 2005; as a

part of the deal, Peltier had caused the financing to be arranged through a retail installment

transaction (the transaction).1 Over three years later (March 4, 2009), Dike formally retained his

attorneys to represent him with respect to certain claims against Peltier arising from the

transaction. On January 19, 2010, Dike filed his original petition alleging certain promises were

made by Peltier to him at the time of the transaction.                      Dike alleged fraud, negligent

misrepresentation, money had and received, intentional infliction of emotional distress, and

promissory estoppel as a result of the 2005 automobile purchase. Attorneys Weinstein and Owen

were listed on the petition as representing Dike, but only Owen signed the petition. In his

petition, Dike alleged that Peltier‘s fraud ―was inherently undiscoverable.‖

1
 Originally appealed to the Twelfth Court of Appeals, this case was transferred to this Court by the Texas Supreme
Court pursuant to its docket equalization efforts. See TEX. GOV‘T CODE ANN. § 73.001 (Vernon 2005). We are
unaware of any conflict between precedent of the Twelfth Court of Appeals and that of this Court on any relevant
issue. See TEX. R. APP. P. 41.3.

                                                        2
            Thereafter, on April 23, 2010, Peltier filed its traditional motion for summary judgment

alleging the statute of limitations barred Dike‘s claims. Peltier maintained that Dike‘s causes of

action accrued in 2005 at the time of the transaction and, therefore, were all barred by the relevant

two-year and four-year limitations statutes. Rather than filing a response to the motion for

summary judgment, Dike filed a motion to nonsuit his claims; those claims were nonsuited without

prejudice.

            Peltier then filed a motion for sanctions under Section 10.001 of the Texas Civil Practice

and Remedies Code and Rule 13 of the Texas Rules of Civil Procedure, asserting that Dike‘s suit

was frivolous and filed in bad faith for the purpose of harassment. Peltier argued that Dike should

have known his claims were barred by the statute of limitations. The trial court conducted a

hearing on the motion for sanctions, in which Dike agreed his claims were subject to two- and

four-year statutes of limitations.             Dike maintained, however, that because his claims were

inherently undiscoverable and information regarding his claims was fraudulently concealed from

him, the accrual of his claims did not begin until such time as they were discovered.

            The trial court rejected this argument, primarily because Dike concedes he discovered his

claims in March 2009, some six months before the four-year statute of limitations for his fraud

claims expired.2 The trial court granted the motion and sanctioned Dike, Owen, and Weinstein

2
    The following exchange took place at the hearing between the trial court and the attorney for Dike:

                    THE COURT: Well, let me ask you this: Discovery Rule cases -- are there any
            Discovery Rule cases that say when a person discovers a claim within the limitations period but then

                                                             3
$15,353.00, representing Peltier‘s attorneys‘ fees in defending Dike‘s claims. The sanctions were

imposed jointly and severally against Dike and his attorneys.

II.    APPLICABLE LAW AND STANDARD OF REVIEW

       We review the imposition of sanctions under Chapter 10 of the Texas Civil Practice and

Remedies Code and Rule 13 of the Texas Rules of Civil Procedure for an abuse of discretion.

Low v. Henry, 221 S.W.3d 609, 614 (Tex. 2007); Cire v. Cummings, 134 S.W.3d 835, 838 (Tex.

2004). Under this standard, courts view the evidence in the light most favorable to, and indulge

every presumption in favor of, the trial court‘s action. In re Liu, 290 S.W.3d 515, 519 (Tex.

App.—Texarkana 2009, orig. proceeding). ―An appellate court 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. A trial court abuses its

discretion in awarding sanctions only if the order is based on an erroneous assessment of the

evidence or the law. Dolenz v. Boundy, 197 S.W.3d 416, 421 (Tex. App.—Dallas 2006, pet.

denied).

       Rule 13 authorizes the imposition of sanctions against an attorney, a represented party, or

both, who filed a pleading that is either: (1) groundless and brought in bad faith; or (2) groundless

and brought to harass. TEX. R. CIV. P. 13; see also Rudisell v. Paquette, 89 S.W.3d 233, 236 (Tex.

       doesn‘t assert the claim within the limitations period, somehow that buys them an extra four years or
       an extra two years?

                MR. WALSH: I haven‘t seen the case law.

                                                        4
App.—Corpus Christi 2002, no pet.). The rule defines ―groundless‖ as having ―no basis in law or

fact and not warranted by good faith argument for the extension, modification, or reversal of

existing law.‖ TEX. R. CIV. P. 13. Sanctions may only be imposed for good cause under Rule 13,

the particulars of which must be stated in the order. TEX. R. CIV. P. 13; Rudisell, 89 S.W.3d at

237.

       Similarly, to award sanctions under Chapter 10, it must be shown that: (1) the pleading or

motion was brought for an improper purpose; (2) there were no grounds for the legal arguments

advanced; or (3) the factual allegations or denials lacked evidentiary support. See TEX. CIV.

PRAC. & REM. CODE ANN. § 10.001 (Vernon 2002); Low, 221 S.W.3d at 614; Armstrong v. Collin

County Bail Bond Bd., 233 S.W.3d 57, 62 (Tex. App.—Dallas 2007, no pet.). Chapter 10

specifies that one of the aims for imposition of sanctions for the filing of frivolous or groundless

pleadings is to ―deter repetition of the conduct or comparable conduct by others similarly

situated.‖ TEX. CIV. PRAC. & REM. CODE ANN. § 10.004(b) (Vernon 2002). We construe the

phrase ―improper purpose‖ as the equivalent of ―bad faith‖ under Rule 13. See TEX. R. CIV. P. 13;

cf. Save Our Springs Alliance, Inc. v. Lazy Nine Mun. Util. Dist. ex rel. Bd. of Directors, 198
S.W.3d 300, 321 (Tex. App.—Texarkana 2006, pet. denied) (―nonfrivolous‖ requirement is same

as ―good faith‖ requirement); Elwell v. Mayfield, No. 10-04-00322-CV, 2005 WL 1907126, at *5

(Tex. App.—Waco Aug. 10, 2005, pet. denied) (mem. op.) (same). An order imposing a sanction

under Chapter 10 ―shall describe . . . the conduct the court has determined violated Section 10.001

                                                 5
and explain the basis for the sanction imposed.‖ TEX. CIV. PRAC. & REM. CODE ANN. § 10.005

(Vernon 2002).

       In determining whether sanctions are appropriate, the trial court must examine the facts

available to the litigant and the circumstances existing when the litigant filed the pleading.

Robson v. Gilbreath, 267 S.W.3d 401, 405 (Tex. App.—Austin 2008, pet. denied); Alejandro v.

Robstown Indep. Sch. Dist., 131 S.W.3d 663, 669 (Tex. App.—Corpus Christi 2004, no pet.).

Courts should presume parties and their counsel file all papers in good faith, and the party seeking

sanctions must overcome that presumption. See TEX. R. CIV. P. 13; GTE Commc’ns Sys. Corp. v.

Tanner, 856 S.W.2d 725, 731 (Tex. 1993). The party seeking sanctions has the burden of

showing its right to relief. Tanner, 856 S.W.2d at 731; Elkins v. Stotts-Brown, 103 S.W.3d 664,

668 (Tex. App.—Dallas 2003, no pet.).

III.   ANALYSIS OF POINTS OF ERROR

       On appeal, Dike claims (1) the trial court abused its discretion in assessing sanctions

against him, absent any evidence he did anything other than entrust legal representation to his

lawyers; (2) the trial court abused its discretion in assessing sanctions against Weinstein absent

evidence of his involvement in the petition on which the sanctions order is founded; and (3) the

trial court abused its discretion in assessing any sanctions because the claims were not groundless

and had a nonfrivolous legal basis. We initially address Dike‘s contention that the trial court

abused its discretion in assessing sanctions based on the record before us.

                                                 6
         A.       The Trial Court Erred in Assessing Sanctions Under Rule 13

         To impose sanctions under Rule 13 of the Texas Rules of Civil Procedure, the proponent of

sanctions must establish that the suit was groundless and brought (1) in bad faith or (2) for

purposes of harassment. TEX. R. CIV. P. 13. A pleading is groundless when it has no basis in law

or in fact. TEX. R. CIV. P. 13.

                  (1)       Peltier Failed to Establish that Dike’s Petition Was Groundless

         The party seeking sanctions has the burden of showing his right to relief. Tanner, 856
S.W.2d at 731. Groundlessness turns on the legal merits of a claim. Robson, 267 S.W.3d at 405.

Thus, in order to establish Dike‘s claim was groundless, Peltier had the burden of showing that the

claim had no legal merit, i.e., that Dike‘s claim had no basis in law or fact and was not warranted

by good faith argument for the extension, modification, or reversal of existing law. TEX. R. CIV.

P. 13. Further, a lawsuit is ―groundless,‖ as used in Rule 13, if ―there is no arguable basis for the

cause of action.‖           Attorney Gen. of Tex. v. Cartwright, 874 S.W.2d 210, 215 (Tex.

App.—Houston [14th Dist.] 1994, writ denied).

         Dike‘s original petition asserted, among other things, claims of fraud in connection with

the purchase of a motor vehicle from Peltier in an installment transaction.3 More specifically, the

petition alleged that Peltier made ―overt false statements of material facts‖ and failed to ―disclose

3
 The factual background set forth in the petition is less than crystal clear, but generally alleges that Peltier committed
fraud in connection with representations made and information withheld regarding the financing terms of Dike‘s
purchase, which were arranged and implemented by Peltier.

                                                            7
material facts‖ required to be disclosed, and that the resulting harm was inherently undiscoverable.

The basis for the imposition of sanctions rested primarily on the trial court‘s finding that the

petition alleged time-barred causes of action, which, by definition, lacked legal merit. 4 In

4
The sanctions order includes findings in support of sanctions under Section 10.004 of the Texas Civil Practice and
Remedies Code, Rules 13 and 215 of the Texas Rules of Civil Procedure, and the court‘s inherent power:

        1.       Plaintiff entered into the transaction forming the basis of the above-captioned suit on
                 September 14, 2005. Plaintiff executed an attorney-fee agreement with his counsel on
                 March 4, 2009. The applicable statutes of limitations ran, . . . on all the causes of action
                 Plaintiff and his attorneys asserted in the Original Petition of the above-captioned suit on
                 September 14, 2009. Plaintiff and Plaintiff‘s counsel filed the Original Petition on
                 January 19, 2010. Thus, Plaintiff and Plaintiff‘s counsel alleged time-barred causes of
                 action in the Original Petition.

        2.       The Original Petition was thus signed in violation of section 10.001 of the Texas Civil
                 Practice and Remedies Code and Texas Rule of Civil Procedure 13.

        3.       Plaintiff and his attorneys‘ implicit assertion in the Original Petition that the lawsuit was
                 timely-filed under the applicable statutes of limitations is frivolous because it was
                 (1) presented for the purpose of harassment, (2) was not warranted by law, and/or (3) had
                 no, and was unlikely to have any, basis in fact.

        4.       Plaintiff and his attorneys‘ implicit assertion in the Original Petition that the lawsuit was
                 timely-filed under the applicable statutes of limitations is groundless because it had no
                 basis in law or fact and was not warranted by a good faith argument for extension,
                 modification, or reversal of existing law.

        5.       A reasonable inquiry into the applicable statutes of limitations and into the basic operative
                 facts of this lawsuit shows that the Original Petition was time-barred when filed and that no
                 basis exists for filing suit.

        6.       Plaintiff and his attorneys did not make a reasonable, duly diligent inquiry into the
                 aforementioned law and facts before filing the Original Petition. Plaintiff‘s attorneys
                 could have readily obtained the requisite knowledge to ascertain that the lawsuit was
                 time-barred by speaking to their client and reviewing the installment sales contract at issue.

        7.       Plaintiff‘s attorneys regularly file similar lawsuits against automobile dealership [sic]
                 across Texas in Texas courts and thus have extensive working knowledge of the statutes of
                 limitations applicable to the causes of actions asserted in Plaintiff‘s Original Petition. For
                 the same reason, Plaintiff‘s attorneys are charged with knowledge of such statutes of
                 limitations.

                                                          8
response to the motion for sanctions, Dike relied on the discovery rule, alleging that the statute of

limitations did not begin to run on his claims until such time as they were discovered, said claims

being ―inherently undiscoverable‖ and fraudulently concealed by Peltier.

       8.      Any additional facts adduced hereafter in discovery or otherwise are highly unlikely to
               establish a basis for filing this time-barred lawsuit.

       9.      Plaintiff and his attorneys have made no reasonable, good-faith argument for the extension,
               modification, or reversal of existing law. Further, it is highly unlikely that this or any
               Court would entertain an argument for an extension, modification, or reversal of the
               well-established statutes of limitations.

       10.     Plaintiff and his attorneys engaged in bad faith and/or harassing behavior by ignoring law
               and facts that were known to them—facts which showed the lawsuit was time-barred—and
               proceeding to file suit nonetheless.

       11.     Plaintiff and his attorneys‘ groundless, frivolous, and bad-faith/harassing assertion of this
               time-barred lawsuit against Defendant abused the judicial and legal process. This
               conduct, along with Plaintiff‘s attorneys‘ and firm‘s wider campaign of filing similar
               baseless suits against Defendant and other car dealerships across Texas significantly
               impedes this Court‘s ability to conduct its core functions because it congests the Court‘s
               docket with motions and other pleadings relating to the statute of limitations issue and
               otherwise increases the costs of litigation.

       12.     Sanctions will be necessary to necessary to [sic] deter, alleviate, and counteract Plaintiff‘s
               attorneys‘ bad faith abuse of the judicial process.

       13.     There is a direct relationship between the sanction and the offensive conduct described
               above. The sanctions of reasonable costs, attorney‘s fees, and other expenses incurred in
               responding to the filing of the time-barred Original Petition directly address the harm and
               inconvenience caused by the frivolous, groundless and bad faith and/or harassing nature of
               the implicit assertion in such petition that the claims were timely filed in accordance with
               governing statutes of limitations.

       14.     The sanctions imposed are no more severe than necessary to promote full compliance with
               the rules. The evidence shows that the sanctions awarded will reasonably offset the costs,
               attorney‘s fees, and expenses incurred by Defendant as a direct result from having to
               respond to Plaintiff‘s attorneys‘ frivolous, groundless pleading.

       15.     For these reasons, there is good cause to support the imposition of sanctions.

                                                        9
         Typically, a cause of action accrues when a wrongful act causes some legal injury.

Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 221 (Tex. 2003); S.V. v. R.V., 933
S.W.2d 1, 4 (Tex. 1996). In some types of cases, the discovery rule may defer accrual of a cause

of action until the plaintiff knew or, by exercising reasonable diligence, should have known of the

facts giving rise to a cause of action. HECI Exploration Co. v. Neel, 982 S.W.2d 881, 886 (Tex.

1998). In order for the discovery rule to apply, the nature of the injury must be inherently

undiscoverable and the injury itself must be objectively verifiable. Id.5 An injury is inherently

undiscoverable if it is, by its nature, unlikely to be discovered within the prescribed limitations

period despite due diligence. Wagner & Brown, Ltd. v. Horwood, 58 S.W.3d 732, 734–35 (Tex.

2001).     ―The requirement of inherent undiscoverability recognizes that the discovery rule

exception should be permitted only in circumstances where ‗it is difficult for the injured party to

learn of the negligent act or omission.‘‖ Computer Assocs. Int’l, Inc. v. Altai, Inc., 918 S.W.2d
453, 456 (Tex. 1996) (quoting Willis v. Maverick, 760 S.W.2d 642, 645 (Tex. 1988)). The

discovery rule is an independent ground of defense. Barker v. Eckman, 213 S.W.3d 306, 312

(Tex. 2006).

5
 Peltier complains that Dike failed to plead that his injury was objectively verifiable—the second element of the
discovery rule—and claims that this omission is sufficient to uphold the trial court‘s finding as to the discovery rule.
(The trial court did not make an explicit finding regarding application of the discovery rule; rather, the trial court
opined, ―Any additional facts adduced hereafter in discovery or otherwise are highly unlikely to establish a basis for
filing this time-barred lawsuit.‖). Peltier specially excepted to Dike‘s discovery rule pleading, but failed to obtain a
hearing on its special exceptions. Dike‘s pleadings are, therefore, liberally construed in his favor. See
Horizon/HMS Healthcare Corp. v. Auld, 34 S.W.3d 887, 897 (Tex. 2000). Dike‘s failure to plead each element of the
discovery rule might have constituted the basis for an order compelling him to re-plead, but does not render fatal his
reliance on the discovery rule to avoid sanctions.

                                                          10
       The Texas Supreme Court has sometimes used the phrase ―discovery rule‖ to refer

generally to all instances in which accrual is deferred, including fraud and fraudulent concealment.

Williams v. Khalaf, 802 S.W.2d 651, 657 (Tex. 1990) (citing case that ―involved the ‗discovery

rule‘ since there was a claim of fraudulent concealment‖); Moreno v. Sterling Drug, Inc., 787
S.W.2d 348, 351 (Tex. 1990) (citing fraud case as one in which discovery rule applied). The

Texas Supreme Court has, however, acknowledged the difference in these theories: ―Strictly

speaking, the cases in which we have deferred accrual of causes of action for limitations purposes

fall into two categories: those involving fraud and fraudulent concealment, and all others. The

deferral of accrual in the latter cases is properly referred to as the discovery rule.‖ S.V., 933
S.W.2d at 4.

       Even though the discovery rule and the doctrine of fraudulent concealment each delay the

accrual of the cause of action, the reasons justifying each are different. Horwood, 58 S.W.3d at

736.   The doctrine of fraudulent concealment works to estop a defendant from asserting

limitations as a defense because ―a person cannot be permitted to avoid liability for his actions by

deceitfully concealing wrongdoing until limitations has run.‖ S.V., 933 S.W.2d at 6; Slusser v.

Union Bankers Ins. Co., 72 S.W.3d 713, 719 (Tex. App.—Eastland 2002, no pet.). An alleged

misrepresentation may be relevant to the equitable principles involved in a fraudulent concealment

                                                11
analysis, but does not affect the determination of inherent undiscoverability in a discovery rule

analysis.6 Horwood, 58 S.W.3d at 736.

         Where the discovery rule applies, a cause of action does not accrue—meaning limitations

does not begin to run—until discovery. ―Accrual of a cause of action is deferred in two types of

cases: (1) those involving fraud or fraudulent concealment and (2) those where the injury is

‗inherently undiscoverable‘ and is ‗objectively verifiable.‘‖ In re Estate of Fawcett, 55 S.W.3d
214, 218–19 (Tex. App.—Eastland 2001, pet. denied). Moreover, in the discovery rule context, a

categorical approach is utilized to determine its applicability. Apex Towing Co. v. Tolin, 41
S.W.3d 118, 122 (Tex. 2001). Using this approach, a court does not determine when a particular

injury was actually discovered in a particular case, but rather whether the case is the type to which

the discovery rule applies. Id. The focus is on whether a type of injury, rather than a particular

injury was discoverable. Horwood, 58 S.W.3d at 736; Tolin, 41 S.W.3d at 122; Via Net v. TIG

Ins. Co., 211 S.W.3d 310, 314 (Tex. 2006). For example, the discovery rule applies to cases

involving fraud or fraudulent concealment. See Murphy v. Campbell, 964 S.W.2d 265, 270 (Tex.

1997); Salinas, 31 S.W.3d at 336. Dike alleged the ―inherent undiscoverability‖ of his injury as

6
 In spite of this distinction, these concepts continue to be utilized more or less interchangeably. Murphy v. Campbell,
964 S.W.2d 265, 270 (Tex. 1997); Salinas v. Gary Pools, Inc., 31 S.W.3d 333, 336 (Tex. App.––San Antonio 2000, no
pet.) (discovery rule applies to cases involving fraud and fraudulent concealment).

                                                         12
well as fraud and fraudulent concealment.7 Thus, the concept of delayed accrual of Dike‘s cause

of action—under both theories—was alleged.8

         Peltier contends that Dike‘s claims were subject to two- and four-year limitations periods

that commenced with the September 2005 transaction.                         In his response to the motion for

sanctions, Dike filed an affidavit stating that he became aware of his claims against Peltier in

March 2009, when he sought the advice of his attorney.9 The petition was filed in January 2010.

Peltier alleges that this evidence, on its face, establishes not only that (1) Dike‘s claims were

7
 Peltier relies on caselaw decided in a summary judgment context to assert that Dike had the burden of proving the
elements of fraudulent concealment to avoid the statute of limitations. We reject this argument in the context of a
motion for sanctions. Peltier further maintains that given a ―chorus of legal authority‖ that a car dealership is not
required to disclose profits it makes in the sale of a vehicle, there can be no doubt that Dike‘s lawsuit was sanctionable.
Because this allegation, which speaks to the merits of Dike‘s claim, did not comprise any portion of the trial court‘s
findings with respect to the imposition of sanctions, we do not address it.
8
 In Archer v. Nissan Motor Acceptance Corp., 550 F.3d 506, 507–08 (5th Cir. 2008), the plaintiffs brought various
claims alleging the dealer made misrepresentations concerning their purchase of an automobile. Applying
Mississippi law to determine whether the injury was ―latent‖ so that limitations did not run, the court ruled as a matter
of law that the car dealer‘s alleged misrepresentations were discoverable because plaintiffs had the ability to research
the deal they were receiving on their own. Peltier relies on Archer to assert Dike failed to exercise due diligence in
discovering the alleged fraud. Because Archer applies Mississippi law rather than Texas law, we do not find this case
to be controlling.
9
 Peltier directs us to the case of Harper v. Mac Haik Ford, Ltd., No. 01-09-01144-CV, 2010 WL 2650543, at *4–5
(Tex. App.––Houston [1st Dist.] July 1, 2010, no pet.) (mem. op.), in support of its assertion that Dike‘s affidavit does
not present evidence that his injury was inherently undiscoverable. In that case, also brought by the Weinstein law
firm, the person signing the affidavit stated, ―I was not aware of my claims against [the car dealership] until such time
as I sought legal advice from my attorney.‖ Id. at 4. In that case, Harper alleged application of the discovery rule in
response to a motion for summary judgment filed by the car dealership. The court held that Harper did not raise a fact
issue about the discovery rule so as to toll limitations beyond the date of the purchase, with a statement that she learned
of her claim when she consulted her attorney on an unidentified date. Id. at *5. Aside from the obvious difference in
Dike‘s affidavit—which alleged a date on which he consulted his attorney—Harper involved a summary judgment
proceeding wherein Harper bore the burden of raising a fact issue regarding application of the discovery rule.
Because this case involves a sanctions motion, in which Peltier bore the burden of proving Dike‘s claim was
groundless, Harper is not applicable here.

                                                           13
time-barred, but also (2) as a matter of law, the discovery rule does not apply because Dike

discovered his claims some six months prior to the running of the four-year limitations period for

fraud claims.10 Peltier, therefore, maintains that Dike‘s claims were groundless because they

were clearly barred by the statute of limitations, and Dike‘s response to the motion for sanctions

did not present argument for a reasonable extension, modification, or reversal of existing law.

           We have not been provided caselaw supporting the proposition that if a claim is discovered

inside the statute of limitations, it cannot, as a matter of law, be one that is ―inherently

undiscoverable.‖11 We find no such cases. If Dike‘s cause of action did not accrue until it was

discovered (here, after he had visited with his attorney), the discovery within the usual period of

limitations did not shorten the limitations period.12 Moreover, Peltier did not by its sanctions

motion address the discovery rule. During the hearing, Peltier‘s attorney argued that:

10
     See TEX. CIV. PRAC. & REM. CODE ANN. § 16.004(a)(4) (Vernon 2002).
11
  Peltier relies on Fightertown, Inc. v. K-C Aviation, Inc., No. 05-96-01998-CV, 1999 WL 701491, at *4 (Tex.
App.––Dallas Sept. 10, 1999, pet. denied) (not designated for publication), in support of the proposition that discovery
of injury within the statute of limitations showed that the injury at issue was not the type to which the discovery rule
applies. Fightertown, however, concerned a very different factual scenario, involving a dispute concerning the
adequacy of a paint job on an airplane. The discovery at issue occurred when the plaintiff observed signs of corrosion
emerging from underneath the plane. The Dallas Court of Appeals correctly observed that the proper inquiry in a
discovery rule case is whether the general nature of the wrongful act complained of is inherently undiscoverable. Id.
at *3. An improper paint job was not inherently undiscoverable within the prescribed limitations period so as to
justify application of the discovery rule. In Fightertown, the plaintiff discovered facts suggesting its cause of action
within about a year of having the plane painted. Id. at *1. The court, therefore, concluded that this fast and simple
discovery of damage, visible to the naked eye, suggested the claims were not inherently undiscoverable. Id. at *4.
Fightertown does not stand for the broad proposition that discovery of an injury within the limitations period bars
application of the discovery rule as a matter of law.
12
  If one were to assume that discovery of an injury during the limitations period placed the burden on the injured party
to file suit within the usual limitations period and assuming a four-year period of limitations, a person who discovered

                                                          14
                They then try to contend, well, but there‘s fraud, yet, they present no
         evidence of fraud with regard to this transaction to try to contend we didn‘t know or
         couldn‘t know.

                  And so we get an additional four years from the time he went to see a lawyer
         to file this lawsuit. But that‘s not how it works. When you know of the claims
         within the statute of limitations, you‘re supposed to file within the statute of
         limitations. Well established law.

         We cannot agree this is well-established law in the discovery rule context. This issue

notwithstanding, there is a fair amount of caselaw on the issue of whether a time-barred pleading is

sanctionable. The sanctions order states that because the petition alleged time-barred causes of

action, it was signed in violation of Rule 13 and Chapter 10. This issue has been addressed in

certain contexts which are readily distinguished from the case at bar.

         For example, Peltier relies on Booth v. Malkan for the proposition that:

         [W]here . . . the defenses to the lawsuit are so clearly established and are defenses
         that one would reasonably anticipate to be asserted in such a case, the evidence still
         may support the trial court‘s conclusion that the lawsuit is groundless and brought
         in bad faith or groundless and brought for the purpose of harassment.

858 S.W.2d 641, 643–44 (Tex. App.––Fort Worth 1993, writ denied). In that case, Booth

withdrew from a partnership for the purpose of establishing another business. To that end, Booth

executed a withdrawal of partner and general release, which absolved him of all liability with

regard to the partnership. Ten years later, when the partnership was sold, Booth filed suit seeking

over $100,000.00 for his services to the partnership. Booth testified that no new facts had come to

an injury on the third year and 364th day after the injury occurred would be forced to file a lawsuit within one day or be
thereafter barred.

                                                           15
his attention concerning the matter other than the sale of the partnership assets. Booth further

testified that he signed the release for economic reasons and denied that he was forced to sign it, as

alleged in his petition. Id. at 643. Under these facts, the lawsuit was held to be groundless. Id.

Booth is distinguished from this case inasmuch as suit was brought ten years after the release was

signed, no allegation of fraud or the discoverability of Booth‘s claim was made, and Booth

admitted making false statements in his petition.

         Dolenz affirmed the trial court‘s finding that plaintiff‘s time-barred claims were groundless

and brought in bad faith. 197 S.W.3d at 421–22. In that case, the trial court granted Boundy‘s

motion for summary judgment on limitations grounds. Thereafter, Boundy sought sanctions

under Section 10.001 of the Texas Civil Practice and Remedies Code and Rule 13 of the Texas

Rules of Civil Procedure, arguing Dolenz‘s suit was groundless and filed in bad faith for the

purpose of harassment. The trial court found that Dolenz had a law degree and was aware of the

applicable statute of limitations. The tolling provisions Dolenz asserted did not, on their face,

apply to his case.13 Hence, the trial court did not abuse its discretion in upholding the trial court‘s

sanctions order. Dolenz is distinguished from the case at bar because it involved claims the trial

court previously ruled on in Bundy‘s motion for summary judgment. Those claims, having been

13
  Dolenz argued his claims were tolled because he was in prison. At the time of his claim, imprisonment was deleted
from the definition of legal disability. Next, Dolenz argued his claims were tolled because of physical disabilities.
The court determined that legal disability did not include physical impairment. Finally, Dolenz argued his claims
were tolled due to his absence from the state. The court held this tolling provision only applied to defendants, rather
than plaintiffs. Dolenz, 197 S.W.3d at 420–21. Each of these matters was decided by the court as a matter of law in
ruling on Bundy‘s motion for summary judgment.

                                                          16
determined as a matter of law on summary judgment to have been time barred, coupled with

facially inapplicable arguments for tolling the statute, are factors not present in this case.14

         Moreover, Dike has alleged at least an arguable basis for the delayed accrual of the statute

of limitations, based on assertions of fraud, fraudulent concealment, and the claim that Peltier‘s

conduct was inherently undiscoverable. While the record is not sufficiently developed to permit

an analysis of the facts supporting those allegations, these types of allegations are recognized legal

concepts, that if proven, either toll the statute of limitations or delay the accrual of the cause of

action, as previously discussed. This Court takes no position on whether Dike‘s claims against

14
  Other cases cited by Peltier in support of the proposition that a petition which asserts time-barred claims is
groundless include Stromberger v. Turley, No. 05-04-00050-CV, 2005 WL 701034 (Tex. App.––Dallas Mar. 28,
2005, no pet.) (mem. op.) (trial court granted summary judgment finding Stromberger‘s Deceptive Trade Practices Act
(DTPA) claims barred by limitations and imposed sanctions for filing time-barred claim; evidence showed
Stromberger lied about his claimed communications with attorney in support of tolling argument); Walston v.
Lockharat, No. 10-03-00183-CV, 2005 WL 428433 (Tex. App.––Waco Feb. 23, 2005, pet. denied) (mem. op.) (after
1994 divorce, plaintiff appealed property division; thereafter plaintiff brought numerous suits variously alleging fraud
by receiver in sale of property; plaintiff alleged discovery rule applied to toll statute of limitations because fraud not
discovered until 1999, when she attempted to collaterally attack judgment in trespass to try title suit, which failed; a
bill of review filed in 2003, again alleging order of sale was void; under these facts, trial court did not abuse discretion
in dismissing case with prejudice); Bohls v. Oakes, 75 S.W.3d 473 (Tex. App.––San Antonio 2002, pet. denied)
(award of attorney‘s fees to party joined in DTPA claim and nonsuited before trial upheld where virtually no evidence
company was involved save for a few invoices on their letterhead and limitations had run when party was joined);
Almanza v. Transcont’l Ins. Co., No. 05-97-01612-CV, 1999 WL 1012959 (Tex. App.––Dallas Nov. 8, 1999, pet.
denied) (not designated for publication) (lawsuit against Transcontinental dismissed with prejudice as sanction for
violating Rule 13 of the Texas Rules of Civil Procedure; party reasserted claims previously disposed of by summary
judgment; the claims were barred by res judicata, collateral estoppel, and/or statute of limitations); Campos v. Ysleta
Gen. Hosp., Inc., 879 S.W.2d 67 (Tex. App.––El Paso 1994, writ denied) (directed verdict granted in wrongful death
lawsuit affirmed on appeal, as there was no evidence that act or omission of defendant caused death; second suit
thereafter filed for survival cause of action, although not brought by estate; trial court granted summary judgment
based on judicial estoppel and statute of limitations and imposed sanctions; under these facts, imposition of sanctions
affirmed). Each of these cases is easily distinguished from the case at bar: in some, summary judgment was granted
on limitations; in others, there was proof of outright deception; and in others, the facts clearly show abuse of the
judicial system.

                                                            17
Peltier are barred by limitations; we hold only that Peltier failed to carry its burden to establish

Dike‘s claim was groundless.15

         (2)       Peltier Failed to Establish that Dike’s Lawsuit Was Brought in Bad Faith or for
                   Purposes of Harassment

         Because Peltier failed to establish bad faith or harassment as a motive for filing the

petition, Rule 13 sanctions would not be warranted even if Dike‘s petition was groundless. See

TEX. R. CIV. P. 13. The burden is on the party moving for sanctions to overcome the presumption

that the pleading was filed in good faith. Tanner, 856 S.W.2d at 731. A groundless pleading is

not sanctionable unless it is also brought in bad faith or for the purpose of harassment. Id. Bad

faith does not exist when a party exercises bad judgment or negligence. Rather, bad faith means

―the conscious doing of a wrong for dishonest, discriminatory, or malicious purposes.‖ Campos,
879 S.W.2d at 71; Mattly v. Spiegel, Inc., 19 S.W.3d 890, 896 (Tex. App.—Houston [14th Dist.]

2000, no pet.).

         In deciding whether a pleading was filed in bad faith or for the purpose of harassment, the

trial court must measure a litigant‘s conduct at the time the relevant pleading was signed.

Texas-Ohio Gas, Inc. v. Mecom, 28 S.W.3d 129, 139 (Tex. App.—Texarkana 2000, no pet.).

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

15
  Peltier argues that Dike failed to introduce evidence sufficient to support his claims concerning discovery, or to
establish the merit of the underlying claim. This argument misapprehends the parties‘ relative burdens. Peltier is
correct that a party relying on the discovery rule at trial must prove all elements of the discovery to avoid the statute of
limitations bar. Because this case concerns the imposition of sanctions, Peltier, as movant, bore the burden to prove
entitlement to sanctions. See TEX. R. CIV. P. 13.

                                                            18
about the motives and credibility of the person signing the petition. R.M. Dudley Constr. Co. v.

Dawson, 258 S.W.3d 694 (Tex. App.—Waco 2008, pet. denied); see, e.g., Low, 221 S.W.3d at

613, 617 (referring to trial court‘s evidentiary hearing on motion for Chapter 10 sanctions).

        The only evidence introduced at the sanctions hearing was two exhibits offered by Peltier.

Exhibit one consists of a series of eleven petitions and corresponding nonsuits filed against Peltier

Chevrolet, Inc., and related entities, by the Weinstein law firm.16 Exhibit two consists of a series

of eight petitions and corresponding nonsuits filed by the Weinstein law firm against Peltier

Enterprises, Inc., d/b/a Peltier Nissan, an entity related to Peltier Chevrolet, Inc.17 These exhibits

were admitted for the purpose of showing bad faith in the filing of Dike‘s lawsuit. In referring to

these exhibits at the sanctions hearing, counsel for Peltier stated:

        [A]nd why we know these lawsuits are frivolous is we have brought a number of
        non-suits which have been filed in the very recent past by this law firm against
        Peltier Chevrolet with basically the same type allegation . . . .

        Because the trial court took judicial notice of ―the pattern and practice of the Attorneys in

similar cases,‖18 Peltier maintains that the filings and nonsuits included in these exhibits are

16
 Only one of the petitions was filed in the Smith County Court at Law Number Three, where the Dike case was filed.
The remaining petitions were filed in the two remaining Smith County Courts at Law, the District Courts of Smith
County, and in Henderson County. The trial court took judicial notice of each of these filings, without objection.
Any error in having done so was remedied when the filings were admitted into evidence without objection.
17
   These filings were in the Smith County District Courts, Smith County Court at Law Number Two, and in Henderson
County. This exhibit was admitted into evidence without objection.
18
   The trial court commented that:

        What I‘m seeing here is, and I think from all those other cases right there, is motion for summary
        judgment and then the case gets non-suited. There‘s not a response filed. And I think I‘ve had one

                                                       19
circumstantial evidence that Dike‘s petition was filed in bad faith. The record fails to reflect that

the trial court took judicial notice of anything other than the filings contained in exhibit one. The

issue presented, therefore, is whether the petitions and nonsuits filed by the Weinstein law firm on

behalf of other clients against Peltier and a related entity are, standing alone and in and of

themselves, evidence of bad faith in the filing of the petition in the Dike case. Certainly, the fact

that other, similar lawsuits were filed and subsequently nonsuited gives cause for concern that

those lawsuits lacked merit and were filed for the purpose of harassment. If at least some of the

other suits had been shown to be without merit or brought for the purpose of harassment, then the

logical inference could then be that the lawsuit filed on behalf of Dike were of a like kind.

Because the record shows the filing of the previous lawsuits and their subsequent dismissals

through nonsuits, but is totally devoid of evidence relating to impermissible circumstances

concerning these actions, the trial court could not infer they were brought in bad faith. Any

subsequent inference that the Dike petition was brought in bad faith is without evidentiary support.

        Rule 162 of the Texas Rules of Civil Procedure provides that a plaintiff may dismiss its

case at any time before it has introduced all of its evidence. TEX. R. CIV. P. 162. A ―plaintiff‘s

right to take a nonsuit is unqualified and absolute as long as the defendant has not made a claim for

        or more of those here like that.

The record does contain evidence of a pattern of filing petitions, with a nonsuit after summary judgment. The record
merely reflects various petitions and corresponding nonsuits. Even the lone petition and nonsuit filed in the Smith
County Court at Law Number Three contained in exhibit one does not include evidence of a motion for summary
judgment having been filed in that case.

                                                        20
affirmative relief.‖ BHP Petroleum Co. v. Millard, 800 S.W.2d 838, 840 (Tex. 1990). Plaintiffs

decide to nonsuit for a variety of reasons, many having nothing to do with the merits of the

litigation. Here, there is no evidence relating to the circumstances or timing of the other petitions

followed by nonsuits.           Peltier did not question Dike‘s attorneys about the circumstances

surrounding the other cases, and did not call any party involved in the other cases to explain the

reasons for the nonsuits. It may well be that if the record had been more fully developed in this

regard, ample evidence of bad faith may well have been established. We cannot infer from this

scant evidence a pattern and practice of filing petitions and nonsuiting same after the filing of a

motion for summary judgment. In short, there is no evidence in the record tying the filings in

exhibits one and two to the merits of the sanctions order in this case.19 As a result, we do not find

the evidence offered at the sanctions hearing to be relevant to the issue of bad faith in filing the

petition by Dike against Peltier.

         Moreover, in the absence of evidence of Dike‘s motive in nonsuiting his petition, the

simple fact he filed a nonsuit after Peltier filed a motion for summary judgment is not evidence of

bad faith or harassment. Because neither Dike nor his counsel were called to testify regarding the

19
  One of the findings of the trial court in support of good cause for imposing sanctions is the ―Plaintiff‘s attorneys‘ and
firm‘s wider campaign of filing similar baseless suits against Defendant and other car dealerships across Texas.‖ We
find no support for this finding in the record. The fact that the Weinstein law firm has filed and nonsuited similar
claims against Peltier Chevrolet, Inc., and Peltier Nissan is no evidence that those lawsuits were baseless. There is no
independent evidence in the record to support the finding that any of these lawsuits were baseless. Further, the
petitions and nonsuits contained in exhibits one and two were filed only in Smith and Henderson Counties. There is
no evidence in the record of similar lawsuits filed against other car dealerships across Texas. We disregard this
finding in its entirety. ―In reviewing sanctions orders, the appellate courts are not bound by a trial court‘s findings of
fact and conclusions of law; rather, appellate courts must independently review the entire record to determine whether
the trial court abused its discretion.‖ Am. Flood Res., Inc. v. Jones, 192 S.W.3d 581, 583 (Tex. 2006) (per curiam).

                                                           21
reasons for taking a nonsuit, there is no evidence in the record regarding the motive in filing the

nonsuit. Dike could have nonsuited his claims for a variety of reasons. The Houston Fourteenth

Court of Appeals recognized this reality in Mattly, 19 S.W.3d at 896–97, where the plaintiff

nonsuited her claims after the defendant sought summary judgment. In that case, Mattly testified

at the sanctions hearing that she could no longer afford to continue her lawsuit. Because the

record contained no evidence to show that Mattly acted in bad faith by filing a nonsuit, the court

was unwilling to find that the filing of a nonsuit is, in and of itself, evidence of bad faith. Id.

Likewise, there is no evidence in this case that Dike acted in bad faith by filing a nonsuit. The fact

that Dike filed a nonsuit is not, standing alone, evidence of bad faith.20 See id. at 897.

         Peltier further maintains bad faith is evidenced here because Dike‘s attorneys failed to

make reasonable inquiry regarding the statute of limitations before filing suit. Here, limitations is

a particularly important issue since the sanctions order finds that filing the petition outside of the

statute of limitations amounts to sanctionable conduct. We have previously discussed the cases

Peltier relies on to support its claim that the filing of a case outside of the statute of limitations is

sufficient to support sanctions. The conduct in each of those cases, when taken together with the

20
  Peltier contends that it was permissible for the trial court to draw inferences from the filing of the nonsuit, together
with the additional nonsuits filed by Dike‘s attorneys. Because we determine the nonsuits filed in other cases are not
relevant to the issue of bad faith, we do not believe an inference of bad faith can be made solely from the filing of the
nonsuit in this case.

                                                           22
time-barred claim, was sufficient to support sanctions. 21                      Here, there is no evidence of

questionable conduct.22

            Rule 13 requires sanctions based on the acts or omissions of the represented party or

counsel, and not merely on the legal merit of the pleading. Parker v. Walton, 233 S.W.3d 535,

539 (Tex. App.—Houston [14th Dist.] 2007, no pet.). This is true because improper motive is an

essential element of bad faith. Elkins, 103 S.W.3d at 669; Alejandro v. Bell, 84 S.W.3d 383, 393

(Tex. App.––Corpus Christi 2002, no writ) (no evidence presented at sanctions hearing from

which the trial court could determine lawsuit filed in bad faith). Here, the petition was not merely

filed outside of the limitations period; there was a dispute regarding the application of the

discovery rule. Because Peltier had the burden of proving bad faith, it was incumbent that Peltier

provide some proof of improper motive at the sanctions hearing. See Randolph v. Jackson

Walker, L.L.P., 29 S.W.3d 271, 277 (Tex. App.—Houston [14th Dist.] 2000, pet. denied)

(―Because appellees had the burden to establish that sanctions were justified, it was ‗imperative for

the trial court to convene and conduct an evidentiary hearing.‘‖). Peltier claims this proof is

evident in the fact that Dike could not have made reasonable inquiry into the applicability of the

statute of limitations, or he would not have filed the suit. Conversely, Peltier contends that if Dike

filed the petition after having made reasonable inquiry into the statute of limitations, this is

21
     See FN 14 and related text, supra.
22
  Peltier claims the other filings and nonsuits introduced at the hearing, together with the nonsuit in this case, support
an inference of bad faith. For the reasons previously stated, we do not find these circumstances to be evidence of bad
faith or harassment.

                                                           23
evidence of bad faith. We reject this circuitous argument. If counsel conducted legal research

that led to the conclusion that either the discovery rule or the doctrine of fraudulent concealment

salvaged Dike‘s claims, does that amount to bad faith? We do not believe that it does. If counsel

was incorrect in that conclusion, this may amount to poor judgment, but poor judgment does not

equate to bad faith. Campos, 879 S.W.2d at 71.

       While we recognize circumstantial evidence will suffice to allow a trial court to infer bad

faith and improper motive, we do not believe that circumstantial evidence is present in this case.

The record does not reflect what inquiry was made regarding the statute of limitations and the

application of the discovery rule. As the party having the burden of proof at the sanctions

hearing, Peltier could have easily called counsel to testify regarding what inquiry, if any, was made

with respect to the application of the discovery rule before filing the petition. It may well be that

no such inquiry was made, but we cannot draw that inference from a silent record. We find that

Peltier failed to establish bad faith or harassment in the filing of Dike‘s petition.

       B.      The Trial Court Erred in Assessing Sanctions Under Chapter 10 of the Texas
               Civil Practice and Remedies Code

       Peltier maintains that even if sanctions cannot be imposed under Rule 13, this Court should

affirm the imposition of sanctions under Chapter 10. Chapter 10 provides that:

             The signing of a pleading or motion as required by the Texas Rules of Civil
       Procedure constitutes a certificate by the signatory that to the signatory‘s best
       knowledge, information, and belief, formed after reasonable inquiry:

                                                  24
                         (1)     the pleading or motion is not being presented for any
                  improper purpose, including to harass or to cause unnecessary delay or
                  needless increase in the cost of litigation;

                          (2)    each claim, defense, or other legal contention in the pleading
                  or motion 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;

                          (3)    each allegation or other factual contention in the pleading or
                  motion has evidentiary support or, for a specifically identified allegation or
                  factual contention, is likely to have evidentiary support after a reasonable
                  opportunity for further investigation or discovery; and

                         (4)    each denial in the pleading or motion of a factual contention
                  is warranted on the evidence or, for a specifically identified denial, is
                  reasonably based on a lack of information or belief.

TEX. CIV. PRAC. & REM. CODE ANN. § 10.001.23 The trial court found that the petition was signed

for an improper purpose and that its implicit assertion that the lawsuit was timely filed under the

applicable statutes of limitations was frivolous because it was not warranted by existing law, had

no basis in fact, or was unlikely to have any basis in fact.24

         Although Rule 13 requires a party to have filed a groundless pleading brought in bad faith

or a groundless pleading for harassment, sanctions under Chapter 10 can be awarded if the suit was

filed for an improper purpose, even if the suit was not frivolous. Save Our Springs Alliance, Inc.,

23
  The court may issue sanctions under Chapter 10 upon motion or upon its own initiative. TEX. CIV. PRAC. & REM.
CODE ANN. § 10.002(b). The sanctions may include ―an order to pay to the other party the amount of the reasonable
expenses incurred by the other party because of the filing of the pleading or motion, including reasonable attorney‘s
fees.‖ TEX. CIV. PRAC. & REM. CODE ANN. § 10.004(c)(3).
24
  While Dike‘s brief addressed the merits of imposition of sanctions under Rule 13, it does not address the merits of
the imposition of sanctions under Chapter 10.

                                                         25
198 S.W.3d at 321. Compare TEX. R. CIV. P. 13 with TEX. CIV. PRAC. & REM. CODE ANN.

§ 10.001. We construe the phrase ―improper purpose‖ as the equivalent of ―bad faith‖ under

Rule 13. See TEX. R. CIV. P. 13; Save Our Springs Alliance, Inc., 198 S.W.3d at 321. For the

reasons stated earlier in this opinion, there is no evidence of an improper purpose.

       Under Section 10.001, the signer of a pleading certifies that each claim and allegation is

based on the signatory‘s best knowledge, information, and belief, formed after reasonable inquiry.

Low, 221 S.W.3d at 615. Each allegation and factual contention in a pleading must have, or be

likely to have, evidentiary support after a reasonable investigation. Id. In Low, the Texas

Supreme Court found sanctions were justified when the petition claimed physicians prescribed the

drug Propulsid to White. White‘s attorney was in possession of White‘s medical records before

he filed the lawsuit; those records did not indicate that the physicians prescribed or administered

the drug to White. Id. at 616. Further, both physicians filed affidavits swearing that they did not

in any way provide Propulsid to White. Id. at 617. The evidence, therefore, supported the trial

court‘s conclusion that the allegations against the physicians were without evidentiary support.

       In this case, as previously discussed, the only evidence offered at the sanctions hearing was

other lawsuits and corresponding nonsuits filed by Dike‘s attorneys, together with the nonsuit filed

by Dike. We have previously determined this evidence, standing alone, does not support a

finding that Dike‘s pleading was filed in bad faith. Thus, in order to find Dike‘s petition lacked

                                                26
legal or factual support at the time it was filed, the trial court could only have relied on the petition

itself and/or Dike‘s affidavit.

        The petition alleged fraud and the inherent undiscoverability of Dike‘s claim. Dike‘s

affidavit stated that he became aware of his claims in March 2009. For the reasons previously

discussed, this information, standing alone, is not evidence that Dike‘s claims were not warranted

by existing law or that those claims lack a factual basis or were unlikely to lack a factual basis.

Unlike Low, where evidence was presented that the plaintiff‘s claims did not have a factual basis,

there is no such evidence in this case. That is not to say that such evidence does not exist—but it

was not presented to the trial court. Under Chapter 10, Dike‘s attorneys certified he made a

reasonable inquiry into all of the allegations and certified that all the allegations had evidentiary

support, or were likely to have evidentiary support. There is no evidence that such reasonable

inquiry was not made, and the fact that the petition and affidavit show the claims were discovered

inside the statute of limitations does not evidence the failure to make reasonable inquiry. We

conclude the trial court abused its discretion in concluding Chapter 10 was violated in this

instance.

        C.      Sanctions Against Dike and Weinstein

        In his remaining two points of error, Dike claims that even if sanctions were properly

assessed against Owen (who signed the pleadings in Dike‘s case) neither he nor Weinstein should

                                                   27
have been sanctioned. Because we find error in the imposition of sanctions under Rule 13 and

Chapter 10 and this is dispositive, it is not necessary for us to address these issues.

IV.    CONCLUSION

       For the reasons stated herein, we reverse the trial court‘s order imposing sanctions against

Owen, Dike, and Weinstein and render judgment that no sanctions be imposed.

                                               Bailey C. Moseley
                                               Justice

Date Submitted:        March 9, 2011
Date Decided:          April 1, 2011

                                                  28