Court Opinion

ID: 3130755
Source: CourtListenerOpinion
Date Created: 2015-10-16 16:52:27.608489+00
Date Added: 2024-06-11T11:53:33.617563
License: Public Domain

COURT OF APPEALS
                          SECOND DISTRICT OF TEXAS
                               FORT WORTH

                               NO. 2-09-129-CV

INNOVATIVE MAILING SOLUTIONS, INC.                                 APPELLANTS
AND JOHN ANDERSON

                                        V.

LABEL SOURCE, INC.                                                     APPELLEE

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       FROM COUNTY COURT AT LAW NO. 2 OF TARRANT COUNTY

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                         MEMORANDUM OPINION 1

                                    ------------

                                 I. Introduction

      In four points, Appellants Innovative Mailing Solutions, Inc. and John

Anderson (collectively “IMS”) assert that the trial court (1) erred by denying

their motion to transfer venue, (2) abused its discretion under Texas Rule of

Civil Procedure 63 by denying IMS’s motion for leave to file its original answers,

      1
           See Tex. R. App. P. 47.4.
(3) erred by concluding that there was no good cause for the delay in filing

IMS’s answers, and (4) erred by awarding attorney’s fees and expenses based

on the testimony of an interested witness. We affirm.

                       II. Factual and Procedural History

      In October 2006, Appellee Label Source, Inc. entered into an agreement

with IMS to provide mailing services.       By May 24, 2007, IMS owed Label

Source $4,250.14, prompting Label Source to send demand letters requesting

payment for the outstanding account balance. Label Source subsequently filed

suit against IMS for breach of their agreement. On August 20, 2007, IMS filed

a motion to transfer venue and attached to it Anderson’s affidavit, which set

forth facts purporting to establish venue in Dallas County or Collin County.

      IMS’s motion to transfer was set for hearing on October 15, 2007. On

the date of the hearing, IMS’s attorney appeared, but Label Source’s attorney

did not, apparently due to lack of notice of the hearing. 2 Consequently, the trial

court did not enter an order on the motion. Almost a year later, on August 7,

2008, IMS filed a motion for entry of an order based on the October 15, 2007

hearing; alternatively, it requested resetting the hearing on its motion to

transfer. The trial court set the hearing on the motion for September 29, 2008,

      2
        Counsel for IMS was unable to produce any evidence of notice to
Label Source.

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but IMS’s attorney failed to appear, and the trial court entered an order denying

IMS’s motion to transfer.

      The case was then set for trial on January 30, 2009. One day before

trial, IMS, which had not previously filed an answer in the suit, filed a motion

for leave to file its original answers. The trial court heard argument and denied

the motion for leave because “[t]here ha[d] been plenty of time.” Label Source

then moved for a judgment on the pleadings, which the trial court granted.

      The only evidence presented at trial was Label Source’s counsel’s

testimony about attorney’s fees.     The trial court found that $4,800 was a

reasonable fee under section 38.001 of the civil practice and remedies code.

      On March 9, 2009, the trial court entered supplemental findings of fact

and conclusions of law in which it concluded, in part, that Tarrant County was

the proper venue for this action and that there was no good cause for IMS’s

delay in filing its answers. This appeal followed.

                                   III. Venue

      In its first point, IMS argues that the trial court erred by denying its

motion to transfer.    Label Source responds that IMS waived the right to

challenge venue by not using due diligence in requesting a hearing and obtaining

an order from the trial court on its motion.

                                       3
A. Rule of Civil Procedure 87

      Rule 87(1) of the Texas Rules of Civil Procedure reads in part as follows:

“The determination of a motion to transfer venue shall be made promptly by the

court and such determination must be made in a reasonable time prior to

commencement of the trial on the merits. The movant has the duty to request

a setting on the motion to transfer.” Tex. R. Civ. P. 87(1).

      In commenting on this very language from rule 87(1), the Austin Court

of Appeals has noted,

      It is apparent that this language contemplates a speedy
      determination of a venue question. Indeed, we find it implicit in the
      language and purpose of this rule that a movant may not sit on his
      rights indefinitely without incurring waiver. Thus, while a trial
      court may rule on a venue motion without a hearing, the movant is
      under a duty to request a hearing to urge his motion within a
      reasonable time. Here, Whitworth waited more than a year after
      filing his motion to transfer venue before requesting a hearing on
      that motion. His complete lack of diligence is inconsistent with the
      purpose of Rule 87(1), and the trial court could have refused his
      motion on that basis.

Whitworth v. Kuhn, 734 S.W.2d 108, 111 (Tex. App.—Austin 1987, no writ)

(internal citations omitted). Likewise, in finding that a fourteen-month period

between filing the motion to transfer and obtaining a hearing on the motion

constituted a lack of diligence in securing the hearing, another of our sister

courts observed that “[a] party filing a venue motion has the burden to diligently

request a setting on the motion and obtain a ruling prior to a trial on the merits.

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A delay in obtaining a hearing provides a basis for the trial court to deny a

venue motion.” Carlile v. RLS Legal Solutions, Inc., 138 S.W.3d 403, 408

(Tex. App.—Houston [14th Dist.] 2004, no pet.) (internal citations omitted).

      Further, the movant must demonstrate a “continuing intention to insist

on the motion [to transfer venue and] . . . he must pursue a hearing thereon in

order to later rely upon his motion on appeal.” Gentry v. Tucker, 891 S.W.2d
766, 768–69 (Tex. App.—Texarkana 1995, no writ). Otherwise, a failure to

obtain a ruling on a motion to transfer venue in a timely manner constitutes

waiver on part of the movant.     Grozier v. L-B Sprinkler, 744 S.W.2d 306,

309–10 (Tex. App.—Fort Worth 1988, writ denied) (“The law in Texas has

long been that any party to a lawsuit may expressly or impliedly waive rights

conferred upon him by a venue statute. The matter of venue is a personal

privilege which may be waived.”).

B. Analysis

      IMS initially waited three months to have a hearing on its motion to

transfer, for which Label Source apparently received no notice. IMS failed to

request a second hearing for over eleven months, and IMS’s counsel then failed

to appear at the second hearing. Considering the time elapsed between the

time the motion to transfer was filed and a properly noticed hearing obtained

(at which the movant did not appear), we hold that this absence of diligence in

                                      5
obtaining a ruling constitutes waiver. This is reinforced by an absence of any

evidence that IMS made any effort to determine whether the trial court had

ruled on its motion until nearly three months after the second hearing, and then

only at the time of trial. We overrule IMS’s first point.

                IV. Motion for Leave to File Original Answers

      In its second point, IMS asserts that the trial court abused its discretion

and failed to follow rule 63 by denying IMS’s motion for leave to file original

answers on the eve of trial. Label Source responds that the trial court acted

properly because Label Source showed surprise and prejudice.

      To determine whether a trial court abused its discretion, we must decide

whether the trial court acted without reference to any guiding rules or

principles; in other words, we must decide whether the act was arbitrary or

unreasonable. Cire v. Cummings, 134 S.W.3d 835, 838–39 (Tex. 2004). An

appellate court cannot conclude that a trial court abused its discretion merely

because the appellate court would have ruled differently in the same

circumstances. E.I. du Pont de Nemours & Co. v. Robinson, 923 S.W.2d 549,

558 (Tex. 1995).

      In its supplemental conclusions of law, the trial court stated:

      15. Defendants’ filing of their answers on the day before the trial
      setting operated as a surprise on the Plaintiff.

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      16. Defendants’ answers contained new claims and defenses
      which were prejudicial on their face.

      ....

      18. There was no good cause for the delay in the filing of
      Defendants’ answers.

Conclusions of law may not be challenged for factual sufficiency, but they may

be reviewed to determine their correctness based upon the facts. Citizens Nat’l

Bank v. City of Rhome, 201 S.W.3d 254, 256 (Tex. App.—Fort Worth 2006,

no pet.); Dominey v. Unknown Heirs & Legal Representatives of Lokomski, 172
S.W.3d 67, 71 (Tex. App.—Fort Worth 2005, no pet.).

      Assuming that rules 63 and 66 apply to an original answer filed on the

eve of trial, our supreme court has noted,

      Under Rules 63 and 66, a trial court has no discretion to refuse an
      amendment unless: (1) the opposing party presents evidence of
      surprise or prejudice, or (2) the amendment asserts a new cause of
      action or defense, and thus is prejudicial on its face, [unnecessarily
      delaying trial] and the opposing party objects to the amendment.

Greenhalgh v. Serv. Lloyds Ins. Co., 787 S.W.2d 938, 939 (Tex. 1990)

(internal citations omitted).

      IMS first argues that Label Source did not make a showing of surprise to

justify the trial court’s denial of its motion. However, a review of the record

shows the contrary.     A suit on sworn account requires a verified denial.

See Tex. R. Civ. P. 185. The day before trial, counsel for Label Source had yet

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to be served with any answer, and on the day of trial, Label Source asserted

surprise, stating that “the whole trial ha[d] totally changed” with regard to

IMS’s proposed last minute answer. Counsel for Label Source was prepared to,

and did, move for judgment on the pleadings of its suit on sworn account. See

Solano v. Syndicated Office Sys., 225 S.W.3d 64, 67 (Tex. App.—El Paso

2005, no pet.) (setting out sworn account elements—that a sale and delivery

of goods occurred, the charges on the account are just, and the amount

remains unpaid, supported by an affidavit that all just and lawful offsets have

been allowed—and stating that if the party resisting a sworn account claim fails

to timely file a verified denial, he will not be permitted to deny the claim). In

its attempted late answer, IMS tried to deny each element of a suit on sworn

account and to raise as affirmative defenses that the products received were

defective, that no offsets had been made, and that Label Source had breached

its implied warranties of merchantability and fitness for a particular purpose—a

far different situation from what Label Source was prepared to address, i.e.,

judgment on the pleadings on its suit on sworn account.

      IMS next argues that its motion established that there was no surprise

because its motion to transfer and its responses to requests for disclosure and

interrogatories contained Anderson’s specific denial as to liability in his

individual capacity and its defenses. However, a review of the record reveals

                                       8
that, although IMS did set out in its discovery responses allegations that Label

Source sold some defective products and did not give IMS credit for them, it did

not mention its breach of implied warranty affirmative defense in any of these

documents prior to the day of trial. 3 Cf. City of The Colony v. N. Tex. Mun.

Water Dist., 272 S.W.3d 699, 745 (Tex. App.—Fort Worth 2008, pet. filed)

(stating, under rule 66, that an amendment is prejudicial on its face if it asserts

a new substantive matter that reshapes the nature of the trial itself, the

opposing party could not have anticipated the amendment in light of the case’s

prior development, and the opposing party’s presentation of the case would be

detrimentally affected).

      IMS also argues that a statement by Label Source’s counsel that he was

ready to proceed is a tacit admission that he was not surprised. There is no

such tacit admission in the record. Label Source’s counsel stated that he “was

prepared to come to trial today to argue what was in [his] file, and then this

morning . . . the whole trial has totally changed . . .,” indicating he was only

prepared to try the case with no answer on file from IMS.

      3
         Furthermore, IMS’s argument is a non-starter because, without an
answer on file, a motion for judgment on the pleadings was appropriate and a
trial on the merits was not, notwithstanding what might have been contained
in discovery responses.

                                        9
      IMS finally asserts that its proposed original answer did not prejudice

Label Source. However, because surprise is sufficient reason alone to deny the

last minute filing request, we need not address this argument. See Tex. R.

App. P. 47.1; Greenhalgh, 787 S.W.2d at 939. We hold that the trial court did

not abuse its discretion by disallowing the last-minute answer, and we overrule

IMS’s second point.

                               V. Delay in Filing

      In its third point, IMS asserts that the trial court erred by concluding that

there was no good cause for the delay in filing IMS’s answer on the eve of trial.

IMS urges that the trial court should have allowed the last-minute filing by

enlarging the time during which its answer could be properly filed under rule 5

of the Texas Rules of Civil Procedure.

      The trial court’s permission is necessary to file a pleading within seven

days of trial. Tex. R. Civ. P. 63. Rule 5 may be used to enlarge time “where

good cause is shown for the failure to act.” Tex. R. Civ. P. 5. In its motion for

leave to file original answers, IMS avers as good cause that “[s]ince there has

been no order entered with respect to the Motion to Transfer, the defendants

have not filed their answer.” However, counsel for IMS did not appear at the

hearing on the motion to transfer nor check with the trial court to see if an

order had been entered prior to the day of trial. Inaction or neglect does not

                                       10
constitute good cause. See, e.g., Woods v. Woods, 193 S.W.3d 720, 723–24

(Tex. App.—Beaumont 2006, pet. denied) (stating that lack of knowledge of

procedural rules is not sufficient for good cause). Therefore, the trial court did

not act improperly by finding that no good cause existed to warrant an

enlargement of time to answer. We overrule IMS’s third point.

                              VI. Attorney’s Fees

      In its fourth point, IMS asserts that the trial court erred by awarding

attorney’s fees and expenses based on the testimony of an interested

witness—Label Source’s counsel—“contraven[ing] established Texas law on the

award of attorney’s fees.” Specifically, it argues,

      In the instant case, the attorney for Appellee testified in general
      about the attorney’s fees incurred by Appellee. Although he was
      asked to produce copies of billing statements, he refused based on
      attorney-client privilege. When an inquiry was made regarding legal
      assistants, he could only testify that they were certified. Despite
      these deficiencies, the trial court awarded attorney’s fees in excess
      of the amount of Appellee’s claim. Under the circumstances, the
      trial court’s award of attorney’s fees based upon the testimony of
      the Appellee’s counsel contravened Texas law and must be
      overturned by this Court.

      IMS focuses on Label Source’s counsel’s status as an interested witness,

basing its argument on Ragsdale v. Progressive Voters League, 801 S.W.2d
880, 882 (Tex. 1990), which states, “It is the general rule that the testimony

of an interested witness, such as a party to the suit, though not contradicted,

                                       11
does no more than raise a fact issue to be determined by the jury.” However,

the next line sets out the exception,

        which is that where the testimony of an interested witness is not
        contradicted by any other witness, or attendant circumstances, and
        the same is clear, direct and positive, and free from contradiction,
        inaccuracies, and circumstances tending to cast suspicion thereon,
        it is taken as true, as a matter of law.

Id. And this exception is “especially true” when the opposing party has the

means and opportunity of disproving the testimony if it is not true, and fails to

do so—that is, “failure to contradict is another factor to be considered by the

court.”    Id.    The reasonableness of attorney’s fees is ordinarily left to the

factfinder.      Smith v. Patrick W.Y. Tam Trust, 296 S.W.3d 545, 547 (Tex.

2009).

        Label Source’s counsel was the only person to testify about attorney’s

fees.     Although he asserted attorney-client privilege to protect his client’s

unredacted billing, he also testified about the time, labor, novelty and difficulty

of the questions involved and the skill required; that the prosecution of this

case precluded him from undertaking other representation; about the fee

customarily charged in Tarrant County for similar legal services; the time

limitations imposed; the nature and length of the professional relationship with

Label Source; his experience and ability to perform said services; the hourly

rates charged; and the total amount billed in the prosecution of Label Source’s

                                         12
case. That is, his clear, direct, positive testimony, made without contradiction

or inaccuracies, was made in accordance with the factors enumerated in Arthur

Andersen & Co. v. Perry Equipment Corp., 945 S.W.2d 812, 818 (Tex. 1997),

for the award of attorney’s fees. 4     We cannot state, on the record and

arguments before us, that the trial court erred by concluding that Label

Source’s counsel’s testimony was credible, and we overrule this portion of

IMS’s last point. And to the extent IMS’s legal assistant fees complaint centers

      4
         IMS also argues that an attorney’s “imprecise estimation of his firm’s
fees” does not permit a court to award such fees as a matter of law and that
a matter-of-law award is precluded when circumstances tend to impeach the
interested witness’s testimony, “such as when the fees sought are two times
larger than the other side’s fees, or when the requested fees are not segregated
by claims.” As Label Source’s counsel’s testimony was not imprecise with
regard to his firm’s fees, there was no testimony about the size of IMS’s fees,
and there was only one claim—the suit on sworn account—we need not
address this portion of IMS’s argument.

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on its interested witness argument, 5 we overrule the remainder of IMS’s last

point.

                                   VII. Conclusion

         Having overruled all of IMS’s points, we affirm the trial court’s judgment.

                                               BOB MCCOY
                                               JUSTICE

PANEL: WALKER, MCCOY, and MEIER, JJ.

DELIVERED: February 4, 2010

         5
         To the extent IMS intended otherwise in its argument—“When an
inquiry was made regarding legal assistants, he could only testify that they
were certified”—its point is multifarious and we thereby disregard it. See Shull
v. United Parcel Serv., 4 S.W.3d 46, 51 (Tex. App.—San Antonio 1999, pet.
denied) (“A point of error addressing more than one specific ground of error is
multifarious. If a court concludes that a point of error is multifarious, it may
refuse to review it or it may consider the point of error if it can determine, with
reasonable certainty, the error about which complaint is made.” (internal
citations omitted)), cert. denied, 531 U.S. 835 (2000). Legal Source’s counsel
not only testified that the paralegals were certified but also that a reasonable
hourly rate in the Fort Worth area for paralegal services was $75 and that they
spent twelve and three-quarters hours of paralegal time investigating,
researching, and prosecuting Label Source’s claims.

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