Court Opinion

ID: 5122240
Source: CourtListenerOpinion
Date Created: 2021-11-01 07:14:32.417084+00
Date Added: 2024-06-11T08:22:27.013756
License: Public Domain

In the
         Court of Appeals
 Second Appellate District of Texas
          at Fort Worth
       ___________________________
            No. 02-20-00330-CV
       ___________________________

             YUE QI, Appellant

                       V.

HANYANG AN AND RUOLIN WANG, Appellees

    On Appeal from the 462nd District Court
            Denton County, Texas
        Trial Court No. 17-10422-362

    Before Birdwell, Bassel, and Wallach, JJ.
    Memorandum Opinion by Justice Bassel
                           MEMORANDUM OPINION

                                   I. Introduction

      Appellant Yue Qi failed to file an answer after being served by substitute

service via email and posting the documents on his front door. The trial court

rendered a no-answer default judgment against Qi and awarded Appellees Hanyang

An and Ruolin Wang damages and costs totaling $1,348,451.64, prejudgment interest

totaling $111,201.08, and attorneys’ fees and nontaxable expenses totaling $70,258.70.

      On appeal, Qi argues that he is entitled to a new trial under Craddock 1 because

he was served via his Gmail account while he was in the process of moving back to

China where Gmail is blocked; alternatively, Qi argues that he is entitled to a new trial

on unliquidated damages and attorneys’ fees because Appellees did not plead an

indemnity claim and because the trial court made the award of attorneys’ fees without

hearing evidence. Appellees did not file a brief.

      Because Qi was served via substituted service by appending the citation and

other documents to his front door on February 16, 2018, and did not leave for China

until March 12, 2018, and because he stated that his plan was to wait and see what

evidence Appellees would put on and then appeal if it did not go well for him, he has

not overcome the initial Craddock prong—that his failure to answer was not

intentional or the result of conscious indifference. Because Appellees did not plead

an indemnity claim but because it is unclear from the default judgment how much the

      1
       Craddock v. Sunshine Bus Lines, 133 S.W.2d 124, 126 (Tex. [Comm’n Op.] 1939).

                                           2
trial court awarded for the unpleaded indemnity claim, we reverse and remand for the

trial court to modify the judgment to delete the damages that were awarded for

indemnity. And because the trial court abused its discretion by awarding damages for

an unpleaded indemnity claim, we reverse the portion of the judgment awarding

attorneys’ fees and remand the cause to the trial court for a redetermination of the

amount of reasonable and necessary attorneys’ fees.

                     II. Factual and Procedural Background2

      In October 2016, Appellees and Qi, along with Yutian Zhang,3 commenced

discussions regarding a potential investment in a Bareburger franchise to be located in

the Dallas/Fort Worth metroplex. Qi and Zhang represented to Appellees that they

had substantial net worth and would not only be able to pay their portion of the

anticipated capital and costs but that they would be able to cover any future liabilities

of the to-be-formed company. The parties agreed to form a limited liability company

owned 50% by An and 50% by Zhang.

      The following month, An and Zhang executed the Company Agreement of

Omibear Restaurant Management LLC.             Pursuant to the Omibear Agreement,

      2
       In a no-answer default judgment, the defendant’s failure to answer operates as
an admission of all the material facts alleged in the plaintiff’s petition, except for
unliquidated damages. Dolgencorp of Tex., Inc. v. Lerma, 288 S.W.3d 922, 930 (Tex.
2009); Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 83 (Tex. 1992). We therefore
borrow heavily from Appellees’ original petition for the factual background.
      3
       Zhang was married to Qi when the events that formed the basis of the suit
occurred, but she is not part of this appeal.

                                           3
Omibear was formed for the purpose of entering into a franchise agreement and

developing, operating, owning, and managing a Bareburger restaurant. In January

2017, Omibear entered into a franchise agreement with Bareburger Group LLC.

      Five days after entering into the franchise agreement with Bareburger, Qi sent

an invoice purportedly received by Qi from Bareburger in the aggregate amount of

$440,000 for (i) an initial franchise fee of $50,000; (ii) $275,000 for equipment,

furniture, and fixtures; (iii) $50,000 for a point-of-sale computer system; (iv) $5,000

for advertising; and (v) $60,000 for blueprints and design. At the time, Qi represented

to An that Qi had already paid the entire $440,000 to Bareburger from his personal

funds and that An, therefore, owed Qi $220,000 for An’s portion of the invoice. In

reliance upon Qi’s representations, An paid a total of $220,000 to Qi and his family

members via five separate transfers: An’s mother sent Qi’s mother $100,000; An

wired $6,000 to Zhang; An paid Qi $50,000 and $59,000 via two transactions; and An

paid $10,000 ($5,000 of which was owed by Zhang) to Omibear’s checking account as

a capital contribution. Appellees later learned that Qi had never paid the invoice

amount to Bareburger.

      Shortly after An contributed $5,000 to the Omibear checking account for An’s

capital contribution and an additional $5,000 for Zhang’s capital contribution, Qi

withdrew the entire $10,000, and such amount was used by Qi and Zhang for their

own personal benefit and not for Omibear.

                                          4
         In June 2017, Omibear entered into a ten-year lease with Excel Southlake I LP

(landlord) for a space located in a Southlake shopping center. In connection with the

lease, Appellees, Qi, and Zhang each executed lease guaranties. Prior to entering into

the lease guaranties, Qi and Zhang represented that they had sufficient financial

means to perform under the lease and to satisfy any obligations of Omibear should

Omibear for any reason be unable to perform its obligations under the lease. In

signing the lease guaranties, Appellees relied on Qi and Zhang’s representations with

regard to their personal net worth and their ability to perform under the lease

guaranties should Omibear fail or be unable to meet any of the obligations under the

lease.

         To further eliminate any of Appellees’ concerns with respect to the lease

guaranties, Qi represented to An that Bareburger would guarantee the lease for a fee

of $120,000 and that An would only have to pay $30,000 of the $120,000 with the

remaining $90,000 to be paid by Qi.            An, in reliance on Qi’s representation,

transferred $30,000 to Qi’s personal bank account for payment of the fee to

Bareburger in exchange for Bareburger’s guaranty of the lease. Subsequently, Qi

advised An that Bareburger returned the $120,000 fee to Qi’s personal bank account,

but Qi never returned to An any portion of the $30,000 that An had paid.

         In July 2017, Qi contacted An and represented to him that Bareburger was

requesting that Omibear send a payment of $34,600 for a design fee. An wired to

Omibear’s account the aggregate amount of $70,000 to cover the design fee payable

                                           5
to Bareburger and other operational payments for Omibear that Qi claimed An

needed to pay. Appellees later learned that (i) Bareburger never requested a design

fee; and (ii) although An transferred $34,600 from Omibear’s account to pay

Bareburger, upon Bareburger’s receipt of the funds, Qi contacted Bareburger and

instructed Bareburger to pay the $34,600 received from Omibear’s checking account

to Qi’s personal bank account. Pursuant to Qi’s instructions, the $34,600 was paid to

Qi.

      During 2017, An paid additional amounts to Qi and on his behalf as he

requested, including having his (An’s) father transfer $36,232 to Qi’s mother. In

September 2017, Qi, Zhang, or both Qi and Zhang made unauthorized and

unexplained withdrawals totaling $12,700 from Omibear’s business checking account.

      In October 2017, Appellees began to uncover the falsity of many of Qi’s prior

representations and the misuse of funds paid by An to Qi or to Omibear including,

but not limited to, Qi and Zhang’s failure to pay the $440,000 to Bareburger as

represented and Qi’s instructions to Bareburger to deposit the design fee directly into

Qi’s personal bank account. When confronted, Qi and Zhang admitted that they had

made misrepresentations to Appellees and had used funds that An had sent to them

or to Omibear for their own personal benefit. Qi and Zhang assured Appellees that

Appellees would be repaid the entire amount of funds that Qi and Zhang had

misappropriated, as well as the $36,232 loan that An had sent Qi’s mother and other

amounts that An had loaned Qi personally.

                                          6
      Shortly thereafter, Qi executed and delivered to An a promissory note dated

October 17, 2017, payable to An in the principal amount of $104,720, together with

interest on the unpaid principal balance at six percent per annum (the An Note). The

An Note was payable in full on October 31, 2017, at which time all outstanding

principal plus all accrued but unpaid interest was immediately due and payable.

      Additionally, on October 17, 2017, Qi executed and delivered to Omibear a

promissory note dated October 17, 2017, payable to Omibear in the principal amount

of $147,700, together with interest at six percent per annum (the Omibear Note). The

Omibear Note was payable on October 31, 2017, at which time all outstanding

principal plus all accrued but unpaid interest was immediately due and payable. When

the An Note and the Omibear Note matured on October 31, 2017, Qi failed to pay

any portion of the principal or the accrued but unpaid interest on the notes.

      Appellees hired counsel, who by letter dated November 2, 2017, made demand

upon Qi and Zhang for the aggregate sum of $467,706.75 to be paid on or before

November 7, 2017, and advised Qi and Zhang that Appellees intended to file a legal

proceeding to collect the amount unless Qi and Zhang timely executed the demand

letter and agreed to pay $467,706.75 pursuant to the schedule below:

      • $54,036.75 to be paid on or before November 10, 2017;

      • $75,500 to be paid on or before November 24, 2017;

      • $128,170 to be paid on or before December 15, 2017;

      • $123,830 to be paid on or before January 15, 2018; and

                                           7
      • $86,170 to be paid on or before January 31, 2018.

In the letter, Appellees also demanded that Qi and Zhang take action to have

Appellees removed as guarantors of the lease on or before November 24, 2017.

      On or about November 7, 2017, and November 14, 2017, Qi and Zhang signed

the demand letter thereby agreeing to pay the aggregate sum of $467,706.75 in

accordance with the schedule set forth in the letter and to cause the landlord to

release Appellees from any obligation under the lease guaranties on or before

November 24, 2017, which deadline was extended to December 8, 2017, by

agreement of the parties.

      Although untimely, Qi and Zhang made the initial payment of $54,036.75 to

Appellees. Qi and Zhang failed to pay the second installment due and payable under

the terms of the letter agreement in the amount of $75,500. Qi and Zhang also failed

to obtain the release of Appellees from the lease guaranties by the deadline provided

in the letter agreement. After repeated requests for payment and for Qi and Zhang to

perform their obligations under the letter agreement were not carried out, Appellees

filed suit against Qi and Zhang in December 2017, (1) alleging claims for breach of

contract, “claim on note,” fraud, theft, conversion, negligent misrepresentation,

money had and received, and unjust enrichment and (2) seeking attorneys’ fees.

Appellees obtained an order allowing substituted service on Qi.

      In June 2018, the landlord filed suit against Omibear, Appellees, and Qi for

defaulting on the lease by failing to make rent payments. In the landlord suit, the

                                          8
landlord moved for summary judgment against all parties and requested the amount

lawfully found due on the lease ($843,930.99), plus attorneys’ fees ($1,500.00),

together with interest at the legal rate from the date of the judgment until paid in full.

       In February 2019, after Qi had failed to answer Appellees’ suit, Appellees filed

a motion for default judgment.        The trial court granted the motion for default

judgment, stating that

       [t]he [c]ourt has read the pleadings and the papers on file, and is of the
       opinion that the allegations of [the] Original Petition have been
       admitted, and [Appellees’] claims for[] (i) breach of contract; (ii) suit on
       the An Note; (iii) theft under the Texas Theft Liability Act; (iv)
       conversion; (v) money had and received; and (vi) unjust enrichment[] are
       liquidated in the amount of $1,347,754.59. Additionally, the [c]ourt finds
       that, on good and sufficient evidence presented to the [c]ourt,
       [Appellees] should recover their taxable court costs which the court
       finds to be $697.05, their reasonable and necessary attorneys’ fees which
       the court finds to be $70,209.90, and their non-taxable expenses which
       the court finds to be $48.80. [Footnote defining the An Note omitted.]

The trial court also awarded Appellees $111,201.08 as prejudgment interest.

       Although the trial court signed the default judgment against Qi on August 14,

2019, the case continued because Appellees had claims pending against Zhang.

Eleven months later, the trial court held a bench trial and entered a post-answer

default judgment against Zhang on July 22, 2020.

       On August 21, 2020, Qi filed his motion for new trial and alternative motion

for remittitur. The motion was overruled by operation of law. See Tex. R. Civ. P.

329b(c). After the motion was overruled by operation of law, the trial court retained

plenary power for an additional thirty days. See Tex. R. Civ. P. 329b(e). During that

                                            9
time, Qi’s attorneys set a hearing on his motion for new trial for October 26, 2020.

Appellees filed a response the same day as the hearing. Because the trial court had

not had adequate time to review Appellees’ response, the hearing was continued until

October 29, 2020.

       The trial court held a hearing on the motion for new trial on October 29, 2020.

At the conclusion of the hearing, the trial judge stated that she was going to finish

reading the parties’ documents and would tell the parties her decision before the trial

court’s plenary power expired on November 4, 2020. However, no written order

appears in the record.

                      III. First Craddock Prong Was Not Met

      We begin with Qi’s third issue because it would entitle him to the greatest

relief—a new trial on liability, damages, and attorneys’ fees, unlike his other issues that

are limited to damages and attorneys’ fees. In his third issue, Qi argues that the trial

court abused its discretion by refusing to grant a new trial under Craddock. Although

Qi provides an explanation for his failure to answer the suit, his explanation does not

meet the first prong of Craddock to show that his failure to answer was not intentional

or the result of conscious indifference.

      A.     Standard of Review and Applicable Law

      We have previously set forth the standard of review and the Craddock test as

follows:

                                            10
      We review a trial court’s denial of a motion for new trial for abuse of
      discretion. In re R.R., 209 S.W.3d 112, 114 (Tex. 2006). A default
      judgment should be set aside and a new trial granted if (1) the failure to
      answer was not intentional or the result of conscious indifference but
      was due to a mistake or accident, (2) the defendant sets up a meritorious
      defense, and (3) the motion is filed at such time that granting a new trial
      would not result in delay or otherwise injure the plaintiff. Id. at 114–15
      (citing Craddock[, 133 S.W.2d at 126]). The defendant’s burden as to the
      first Craddock element has been satisfied when the factual assertions, if
      true, negate intentional or consciously indifferent conduct by the
      defendant and the factual assertions are not controverted by the
      plaintiff. Sutherland v. Spencer, 376 S.W.3d 752, 755 (Tex. 2012).

             Consciously indifferent conduct occurs when “the defendant
      knew it was sued but did not care.” Id. “When determining whether the
      defendant’s failure to file an answer was intentional or due to conscious
      indifference, a court looks to the knowledge and acts of the defendant.”
      R.R., 209 S.W.3d at 115. Some excuse, although not necessarily a good
      one, will suffice to show that a defendant’s failure to file an answer was
      not because he did not care. Sutherland, 376 S.W.3d at 755. However,
      not understanding a citation and then doing nothing following service
      does not constitute a mistake of law that is sufficient to meet the
      Craddock requirements. R.R., 209 S.W.3d at 115.

$2,442.00 Current Money of U.S. v. State, No. 02-19-00021-CV, 2019 WL 3334434, at

*1–2 (Tex. App.—Fort Worth July 25, 2019, no pet.) (mem. op.). We must defer to

the trial court’s credibility determinations to determine whether nonappearance was

intentional or due to conscious indifference. Parsons v. Parsons, No. 01-18-00902-CV,

2019 WL 5382637, at *4 (Tex. App.—Houston [1st Dist.] Oct. 22, 2019, no pet.)

(mem. op.).

      B.      Analysis

      Here, the record demonstrates that Appellees obtained an order allowing

substituted service. See Tex. R. Civ. P. 106(b). The order permitted Appellees to

                                          11
serve Qi by (1) emailing the citation, petition, and a copy of the substituted-service

order to Qi’s Gmail account and to his attorney’s email and (2) securely affixing the

citation, petition, and a copy of the substituted-service order to Qi’s usual place of

abode on University Boulevard. The record contains the service of return regarding

the email and the return of service from the process server showing that the

documents were served on Qi’s usual place of abode and that the substituted service

was completed on February 16, 2018.

      Qi argued in his motion for new trial and argues on appeal that he did not see

the email until after his answer was due because he did not check his email between

February 16, 2018, and March 13, 2018 (the date that he arrived in China). Qi gives

several explanations for why he did not check his Gmail account during that time

frame, but we need not detail his reasons. Instead, we focus on the other form of

substituted service that was effectuated by affixing the documents to the door of Qi’s

residence. Qi makes no mention of that form of substituted service, nor does he

explain why he ignored the citation that was affixed to the door of his residence

almost a month before he relocated to China.

      Qi admits that the citation informed him that a default judgment could be

taken against him if he did not file an answer. As for why he did not file an answer

after learning about the suit, Qi averred in the affidavit attached to his motion for new

trial that he did not believe that Appellees had evidence to prove the amount of

money that they claimed Qi owed, that he did not have money to pay an attorney, and

                                           12
that he therefore planned to wait and see what evidence Appellees presented and what

the trial court did; if it did not go well for Qi, he planned to “appeal and start over.”

Qi assumed that the legal process in the United States would operate the same as that

in China, which he explained as requiring a plaintiff in a default-judgment scenario to

put on evidence to support his claims and as allowing a default judgment to be

challenged under a de novo standard.

      Qi urges us to hold that his failure to answer was excused because it was based

on a mistake of law—his mistaken belief that United States courts would operate the

same as Chinese courts. In the Texas Supreme Court case that Qi relies on, the

bank’s branch president did not file a written answer to the writ of garnishment

because he thought that it was a sufficient answer to freeze the subject accounts and

tender the balance of the accounts to the court issuing the writ. See Bank One, Tex.,

N.A. v. Moody, 830 S.W.2d 81, 84–85 (Tex. 1992). That case is distinguishable because

the defendant took an action (as opposed to deciding on inaction) that he thought was

the answer that the writ required. See id. at 85. Moreover, that case specifically states

that not every act of a defendant that could be characterized as a mistake of law is a

sufficient excuse. See id. at 84. As examples, the Texas Supreme Court cites a case in

which an attorney made a conscious decision not to file an answer based on a

mistaken belief about the effect of a bankruptcy stay and a case in which a defendant

read but did not understand the citation and did nothing. See id. (first citing Carey

Crutcher, Inc. v. Mid-Coast Diesel Servs., Inc., 725 S.W.2d 500, 502 (Tex. App.—Corpus

                                           13
Christi–Edinburg 1987, no writ), disapproved on other grounds by Dir., State Emps. Workers’

Comp. Div. v. Evans, 889 S.W.2d 266, 268 (Tex. 1994); and then citing Butler v. Dal Tex

Mach. & Tool Co., 627 S.W.2d 258, 260 (Tex. App.—Fort Worth 1982, no writ)).

These examples of inaction are more in line with the scenario before us.

       Here, Qi ignored the fact that he had been served with citation and that he had

been instructed that a default would be taken if he did not file an answer. Qi had

been represented by an attorney in the United States throughout the settlement

negotiations; yet, when that attorney informed Qi that the matter was “extremely

urgent” and that Qi needed to pay his outstanding invoice in order to obtain

assistance with this matter, Qi did not pay. Qi instead relied on a faulty assumption

that a default judgment in the United States would operate the same as one in China.

Qi’s mistake is not a sufficient excuse.

      Based on this record, we conclude that the trial court could have properly

found that Qi did not act as a reasonable person would have in similar circumstances

and that he exhibited conscious indifference to filing an answer. See Dunn v. Parker,

No. 06-19-00036-CV, 2019 WL 4559096, at *3 (Tex. App.—Texarkana Sept. 20,

2019, no pet.) (mem. op.) (“Consequently, the trial court could have reasonably

concluded that [appellant,] knowing that his answer was due and that he needed to

retain another attorney, was consciously indifferent to his obligation to do so.”);

$2,442.00 Current Money of U.S., 2019 WL 3334434, at *2 (“[Appellant] simply stated

that he did not understand and sat idly[.] . . . Without more, [appellant’s] explanation

                                            14
does not negate conscious indifference.”). Qi thus failed to meet the first prong of

the Craddock test. See Dunn, 2019 WL 4559096, at *4. Accordingly, we hold that the

trial court did not abuse its discretion by not granting the motion for new trial. We

overrule Qi’s third issue.

                      IV. Indemnity Claim Was Not Pleaded

       In his first issue,4 Qi argues that the trial court’s default judgment must be set

aside as to the award of unliquidated damages. 5 Qi lists several reasons to set aside

the unliquidated damages award, but we focus on his pleading argument—that

Appellees did not assert an indemnity claim in their original petition and did not

amend their petition to add the claim after the landlord filed suit. Because a trial court

       Qi’s “Issues Presented” section couches his first and second issues differently
       4

than his arguments in his brief. We follow the order that was used in his brief,
recognizing as his first issue his arguments attacking the indemnity award and as his
second issue his arguments attacking the award of attorneys’ fees. Neither issue
depends on successfully arguing Craddock.

       Although the trial court labeled the damages amount as “liquidated,” at the
       5

hearing on Qi’s motion for new trial, Appellees did not dispute Qi’s reclassification of
the damages pertaining to the unpleaded indemnity claim as unliquidated damages:

       [QI’S ATTORNEY:] The unliquidated damage is separate. [Appellees’
       attorney] has zero response to that in his written response on file on the
       unliquidated damages portion.

              THE COURT: Okay.

             [APPELLEES’ ATTORNEY]: And we don’t have any problem
       with that because we’ve already told these guys we’d agree on that
       matter, Judge.

                                           15
cannot award damages on an unpleaded claim that was not tried by implied consent,

the damages on the unpleaded indemnity claim cannot stand.

         A default judgment must be supported by the pleadings. See Tex. R. Civ. P.

301; Stoner v. Thompson, 578 S.W.2d 679, 682 (Tex. 1979). This rule is a specific

application of the more general principle that a party may not be granted relief in the

absence of pleadings to support that relief, unless the request for relief is tried by

consent—a situation that cannot occur in the context of a default judgment. In re

Marriage of Day, 497 S.W.3d 87, 90 (Tex. App.—Houston [14th Dist.] 2016, pet.

denied) (first citing Stoner, 578 S.W.2d at 682; and then citing Maswoswe v. Nelson, 327

S.W.3d 889, 895–96 (Tex. App.—Beaumont 2010, no pet.)). A default judgment not

supported by the pleadings is fundamentally erroneous. Caruso v. Krieger, 698 S.W.2d

760, 762 (Tex. App.—Austin 1985, no writ). Absent fair notice, a party who fails to

appear at trial will not be held to have tried an unpleaded cause of action by implied

consent. Stoner, 578 S.W.2d at 685.

         Here, Appellees pleaded the following causes of action in their original petition:

breach of contract, “claim on note,” fraud, theft, conversion, negligent

misrepresentation, money had and received, and unjust enrichment. As pointed out

by Qi,

         Appellees’ original petition does [not] assert an indemnity claim or seek
         any damages from Qi’s alleged failure to secure releases. Nor does it
         allege any facts regarding a lawsuit by the landlord or a default of the
         lease. Indeed, the petition states that Qi and Zhang’s actions “exposed
         [Appellees] to potential liability to the business’s landlord.” But the

                                             16
      alleged default of the lease did not occur until February 1, 2018 ([two]
      months after [Appellees] filed the petition)[,] and the landlord did not file
      a lawsuit until four months later, on June 1, 2018. Appellees could have
      amended their petition—and served it on Qi—asserting an indemnity
      claim based on the landlord’s lawsuit. But they did not[] and instead
      tried to slide those alleged damages in a footnote in their motion [f]or
      default judgment. [Footnotes omitted.]

      Because there were no pleadings to support judgment for the amount allegedly

due and owing to the landlord for the alleged breach of the lease guaranty by

Appellees, the trial court abused its discretion by imposing damages based on a claim

not included in Appellees’ petition. We sustain Qi’s first issue as to the damages

awarded for indemnity and reverse and remand for the trial court to modify the

default judgment to delete the portion of the damages attributable to the unpleaded

indemnity claim.6 See Williams v. Asset Acceptance LLC, No. 03-11-00520-CV, 2012 WL

2989219, at *6 (Tex. App.—Austin July 20, 2012, no pet.) (mem. op.) (vacating

“portion of final default judgment awarding [appellee] amounts due on the First

USA/Chase Bank account” because appellee did not plead any entitlement to money

      6
        It is unclear from the default judgment how much the trial court awarded for
the unpleaded indemnity claim. Appellees’ motion for default judgment requested
“an award of liquidated damages in the amount of $424,074.73 plus (+) at least
$845,430.99.” [Footnotes omitted.] Appellees’ motion for default judgment included
a footnote explaining that the $845,430.99 was “the amount allegedly due and owing
to [l]andlord as of December 18, 2018[,] for the alleged breach of the [l]ease [g]uaranty
by [Appellees].” Adding $424,074.73 to $845,430.99 equals $1,269,505,72, but the
default judgment awards $1,347,754.59. Because the default judgment does not give a
breakdown of the amount, we must remand for the trial court to modify the judgment
by deleting the amount that it awarded for the unpleaded indemnity claim, thereby
leaving only the damages for the pleaded claims.

                                           17
damages based on that account and first asserted appellant’s liability for that account

as part of its motion for default judgment).7

                       V. Attorneys’ Fees Must Be Remanded

       In his second issue, Qi argues that the default judgment must be set aside for a

new trial on attorneys’ fees.      Having determined that the trial court abused its

discretion by awarding damages for an unpleaded indemnity claim, we reverse the

portion of the judgment awarding attorneys’ fees and remand the cause to the trial

court for a redetermination of the amount of reasonable and necessary attorneys’ fees.

See Bossier Chrysler-Dodge II, Inc. v. Rauschenberg, 238 S.W.3d 376, 376 (Tex. 2007); Barker

v. Eckman, 213 S.W.3d 306, 314–15 (Tex. 2006); Haynes v. Haynes, No. 04-15-00107-

CV, 2017 WL 2350970, at *7 (Tex. App.—San Antonio May 31, 2017, pet. denied)

(mem. op.); see also Powell Elec. Sys., Inc. v. Hewlett Packard Co., 356 S.W.3d 113, 129

(Tex. App.—Houston [1st Dist.] 2011, no pet.) (“Because we have meaningfully

reduced the amount of [appellee’s] damages on appeal, we must reverse the attorney’s

fees award and remand for a determination of attorney’s fees.”). Accordingly, we

sustain Qi’s second issue.

       Alternatively, even if Appellees had pleaded a claim for indemnity, the
       7

requested award of approximately $850,000 could not stand as it was established at
the hearing on Qi’s motion for new trial that Appellees had settled the landlord suit
for $50,000. Thus, it would be a tremendous windfall for Appellees to be awarded
$800,000 more than what they settled for.

                                            18
                                    VI. Conclusion

      Having overruled Qi’s third issue, we affirm the default judgment as to both

liability and the damages on Appellees’ claims for breach of contract, “claim on note,”

fraud, theft, conversion, negligent misrepresentation, money had and received, and

unjust enrichment. Having sustained Qi’s first issue as to the unliquidated damages

awarded to Appellees for an unpleaded indemnity claim, we reverse and remand for

the trial court to modify the default judgment to delete the award attributed to the

unpleaded indemnity claim. Having sustained Qi’s second issue, we reverse and

remand for a new trial as to attorneys’ fees.

                                                     /s/ Dabney Bassel

                                                     Dabney Bassel
                                                     Justice

Delivered: October 28, 2021

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