Court Opinion

ID: 9384241
Source: CourtListenerOpinion
Date Created: 2023-04-02 08:11:26.057004+00
Date Added: 2024-06-11T17:17:51.623135
License: Public Domain

Affirmed in Part; Reversed in Part; Remanded; and Memorandum Opinion
filed March 30, 2023.

                                      In The

                    Fourteenth Court of Appeals

                              NO. 14-21-00396-CV

   MARY ARTHUR; JAMES P. ARTHUR; ARTHUR HOLDINGS, L.P.;
    ARTHUR P. HOLDINGS, L.P.; ARTHUR J. HOLDINGS., INC.;
     LEGONITE, INC.; AND PARADISE LIVING, INC., Appellants

                                        V.
        BLACKBURNE & BROWN MORTGAGE FUND I, Appellee

                    On Appeal from the 11th District Court
                            Harris County, Texas
                      Trial Court Cause No. 2018-42929

                 MEMORANDUM                      OPINION

      In this case arising from a mortgage debt, the parties reached a settlement
agreement that resulted in an agreed final judgment nearly seven years ago, but they
have been continuously in litigation in new lawsuits ever since. In this appeal from
the judgment rendered in the consolidated lawsuits of 2018, 2019, and 2020, the
plaintiffs below appeal the judgment against them on the defendant’s counterclaims
for breach of contract and fraudulent inducement. The plaintiffs and one of their
attorneys also appeal the sanctions against them.

       We conclude that the plaintiffs have failed to demonstrate that the trial court
erred in rendering judgment for the defendant on its breach-of-contract and
fraudulent-inducement claims. The trial court did err, however, in sanctioning the
plaintiffs and their attorney without an evidentiary hearing. We accordingly affirm
the trial court’s judgment in part, reverse it in part, and remand the case to the trial
court for further proceedings.

                                      I. BACKGROUND

       In 2006, James Arthur, Mary Arthur, and Arthur Holdings, LP, were the
borrowers or guarantors of a loan by Blackburne & Brown Mortgage Fund I, secured
by a deed of trust and assignment of rents on a property at 7639 Beechnut St.,
Houston, Texas 77074. These loan documents, and amendments thereto, were the
subject of a 2016 lawsuit brought against Blackburne by the Arthurs and five of their
affiliated entities—Arthur Holdings, LP, Arthur P. Holdings, LP, Arthur J. Holdings,
Inc., Legonite, Inc., and Paradise Living, Inc. d/b/a The Cottage Health Services.1
We refer to the Arthurs and these entities collectively as “the Arthur Parties.”

       The 2016 lawsuit concluded with a Settlement Agreement in which the Arthur
Parties agreed to make scheduled payments on specified dates. Blackburne and the
Arthur Parties also agreed to the terms of an Agreed Final Judgment to be filed in
the event that any of the scheduled payments were not timely made. The Agreed
Final Judgment would order foreclosure of the Beechnut property on the first
available date, and in the event of foreclosure, Blackburne would recover liquidated

       1
         Each of the Arthur Parties’ lawsuits against Blackburne were assigned or transferred to
the 11th District Court of Harris County. The 2016 lawsuit was assigned cause number 2016-
12403.

                                               2
damages of $400,000.00 if the Agreed Final Judgment were to be filed between July
1, 2017, and July 26, 2018. The Arthur Parties’ attorney James O. Okorafor signed
the Agreed Final Judgment under the line, “approved to as to form and substance.”

       The Settlement Agreement called for the Arthur Parties to make a payment of
$60,000.00 on June 26, 2017. The Arthur Parties did not make the payment, and in
July 2017, Blackburne filed the Agreed Final Judgment, which the trial court signed
on August 24, 2017. The trial court also signed a post-judgment order ruling that
neither the Settlement Agreement nor the Agreed Final Judgment is void or voidable.
But, rather than concluding the litigation between the parties, the Agreed Final
Judgment marked the beginning of another round of lawsuits.

A.     Appeal of the 2016 Lawsuit

       In accordance with the Settlement Agreement, the Agreed Final Judgment
expressly states that it is not appealable, but the Arthur Parties’ attorney James O.
Okorafor nevertheless attempted to appeal it anyway. The First Court of Appeals did
not review the Agreed Final Judgment on the merits but dismissed the attempted
appeal as untimely. See Holding v. Blackburne & Brown, No. 01-17-00962-CV,
2018 WL 1003798, at *2 (Tex. App.—Houston [1st Dist.] Feb. 22, 2018, no pet.)
(per curiam) (mem. op.).2

B.     The 2017 Lawsuit

       On August 24, 2017—the same day that the trial court signed the Agreed Final
Judgment in the 2016 Lawsuit—Mary Arthur, Paradise Living, Inc., and Legonite,
Inc., again sued Blackburne.3 The Arthur Parties admit that “[t]he 2017 Lawsuit was

       2
         In an apparent misnomer, the appellant in that case was identified as “Arthur P. Holding”
and the appellee as “Blackburne & Brown.”
       3
           The 2017 case was assigned cause number 2017-56890.

                                                3
essentially identical to the 2016 Lawsuit,” although “the 2017 Lawsuit did not
specifically challenge the Settlement Agreement by name.”

       Blackburne counterclaimed for breach of the Settlement Agreement, and the
trial court granted summary judgment in Blackburne’s favor on the ground of res
judicata, awarding Blackburne its attorneys’ fees as actual damages and holding that
the conduct of the plaintiffs and their counsel was sanctionable pursuant to Texas
Rule of Civil Procedure 13 and Chapter 10 of the Texas Civil Practice and Remedies
Code. The trial court ordered the plaintiffs’ attorneys to attend 2.5 hours of
continuing legal education ethics courses.4

       Mary and Paradise Living appealed and the First Court of Appeals affirmed
the judgment on the merits. Paradise Living, Inc. v. Blackburne & Brown Mortg.
Fund I, No. 01-18-00194-CV, 2019 WL 2426168, at *6 (Tex. App.—Houston [1st
Dist.] June 11, 2019, no pet.) (mem. op.).5

C.     The 2018 Lawsuit

       Less than three months after the trial court’s judgment in the 2017 suit was
signed, and while the appeal of the 2017 Lawsuit was pending, the first of the three

       4
         See Paradise Living, Inc. v. Blackburne & Brown Mortg. Fund I, No. 01-18-00194-CV,
2019 WL 2426168, at *2–3 (Tex. App.—Houston [1st Dist.] June 11, 2019, no pet.) (mem. op.).
Ike Okorafor and Larry Boje were the attorneys sanctioned in that suit. All other references in this
opinion to “Okorafor” refer to James Okorafor.
       5
          Appellant James Okorafor, who appeared for the Arthur Parties in the 2016, 2018, 2019,
and 2020 lawsuits against Blackburne, misrepresents the appeal of the 2017 case, saying “The said
lawsuit was dismissed by the Court of Appeals mainly for lack of prosecution—failure to file a
brief. This is not a resolution on the merits by the Court of Appeals.” Not only is the filing of an
appellate brief in that case a matter of public record, but our sister court quoted from the brief in
considering and overruling on the merits the five issues presented. See id. at *1 (appellants
presented five issues on appeal); id. at *3 (quoting from the appellants’ brief and considering and
overruling their third issue on the merits); id. at *3–4 (considering and overruling the appellants’
first and fifth issues on the merits); id. at *4–6 (considering and overruling appellants’ remaining
issues on the merits).

                                                 4
consolidated cases at issue in this appeal was filed on June 27, 2018, by Mary Arthur,
James Arthur, Paradise Living, Inc., Legonite, Inc., and Arthur Holdings, LP.6
Arthur J. Holdings, Inc. later joined the suit. In their pleadings, the plaintiffs denied
that the 2016 Lawsuit’s Agreed Final Judgment was valid, and they asked the trial
court to set aside the Settlement Agreement, vacate the Agreed Final Judgment, and
quiet title to the Beechnut property in the plaintiffs’ names “free and clear of any
claims by defendant’s Agreed Judgment.”

D.     Mary’s Chapter 11 Bankruptcy Case

       In March 2019, Mary Arthur filed a Chapter 11 bankruptcy petition.7 In
October 2019, the bankruptcy court issued an order for in rem relief from the
automatic stay applicable to bankruptcy cases. The properties that were the subject
of that order included the Beechnut property, and the authoring court found that “the
filing of Debtor’s bankruptcy petition was part of a scheme to delay, hinder, and
defraud Blackburne through the protection of bankruptcy law.” The court held that
“the automatic stay shall not apply to Blackburne’s interests in the Properties and
shall not operate as a stay to Blackburne’s enforcement of its rights in and to the
Properties. Accordingly, Blackburne is permitted to pursue its state law remedies
against the Properties, including foreclosure and/or eviction.”

E.     The 2019 Lawsuit

       In October 2019, the Harris County Constable’s Office noticed the Beechnut
property for a foreclosure sale to take place on November 5, 2019. The day before
the foreclosure sale, all seven of the Arthur Parties again sued Blackburne and

       6
           This case was assigned cause number 2018-42929.
       7
         Mary had earlier filed a petition for Chapter 13 bankruptcy and admitted that she filed the
petition “to stop foreclosure on the rental properties,” but the properties to which she referred in
that case did not include the Beechnut property.

                                                 5
obtained a temporary restraining order to prevent the sale;8 however, the order was
not provided to Blackburne or the Harris County Constable’s Office, and the sale
took place as scheduled.

      After the sale, the Arthur Parties seem to have briefly vacillated in their
continued opposition to enforcement of the Agreed Final Judgment. While
represented by attorney Troy Wilson, the Arthur Parties non-suited their claims with
prejudice, but while subsequently represented by James Okorafor in the same case,
the Arthur Parties appealed their own non-suit. The First Court of Appeals dismissed
the appeal for lack of jurisdiction because the order dismissing the Arthur Parties’
claims was not a final judgment, given that Blackburne’s counterclaims remained
pending. See Arthur v. Blackburne & Brown Mortgage Fund, Inc., No. 01-20-00122-
CV, 2021 WL 4597108, at *1 (Tex. App.—Houston [1st Dist.] Oct. 7, 2021, no pet.)
(per curiam) (sub. mem. op.).

F.    The 2020 Lawsuit

      In 2020, attorney James Okorafor, on behalf of the Arthur Parties, filed yet
another lawsuit against Blackburne.9 In their petition, the Arthur Parties admitted
that the Settlement Agreement contained a “June 26, 2017 payment deadline” and
that they “declined to make the $60,000 lump sum payment on June 26, 2017.” They
asserted that Blackburne wrongfully asserted a “technical default” for this
nonpayment.

      In this suit, the Arthur Parties added Blackburne’s attorney John Michael
Raborn as a defendant. Raborn moved for dismissal from the lawsuit on the ground
that he was sued solely in his capacity as trustee under the deed of trust securing the

      8
          That case was assigned cause number 2019-80239.
      9
          This case was assigned cause number 2020-13849.

                                              6
Beechnut property and therefore was not a necessary party.10 The trial court agreed,
but although it dismissed the claims against Raborn, the trial court denied a motion
to sever the dismissed claims against Raborn from the remainder of the suit.

G.      Proceedings in the Consolidated 2018, 2019, and 2020 Lawsuits

        In September of 2020, the trial court consolidated the 2018, 2019, and 2020
Lawsuits into the 2018 Lawsuit’s cause number.

        In January of 2021, Blackburne filed its combination Second Amended
Motion for Summary Judgment and Motion for Sanctions and sent counsel notices
that the motion was set for telephonic hearing. In the motion, Blackburne sought
judgment disposing of all of the Arthur Parties’ claims and affirmative defenses and
sought judgment on its own claims that the Arthur Parties fraudulently induced
Blackburne to sign the Settlement Agreement and breached the same agreement. In
addition, Blackburne sought sanctions against all of the Arthur Parties and against
attorneys Chris Conry, Troy Wilson, and James Okorafor, who, respectively, signed
the initial petitions in the 2018, 2019, and 2020 lawsuits.

        Three weeks after Blackburne filed its motion for summary judgment and
sanctions, Okorafor filed a motion to withdraw as the Arthur Parties’ counsel. The
trial court signed the order granting Okorafor’s motion to withdraw on May 11,
2021.

        Four days later, the trial court granted Blackburne’s motion for summary
judgment and for sanctions, holding the Arthur Parties jointly and severally liable
for damages of $257,656.26 for breach of contract, and holding each of the Arthur
Parties individually liable for damages of $20,000.00 for fraud. In addition, the trial

        10
             See TEX. PROP. CODE § 51.007.

                                             7
court held the Arthur Parties and Okorafor jointly and severally liable for sanctions
of $30,000.00.

       Okorafor and the Arthur Parties timely moved for reconsideration or new trial,
and Blackburne moved to modify the judgment to correct a clerical error in
Okorafor’s name. The trial court signed an amended final order in accordance with
Blackburne’s request, and the Arthur Parties timely filed an amended motion for
reconsideration.11 The Arthur Parties’ motion was overruled by operation of law and
again by signed order before the trial court’s plenary power expired.

H.     The First Appeal from the Final Judgment

       The first notice of appeal from the judgment in the consolidated case was filed
prematurely and was assigned to the First Court of Appeals, so that court acquired
dominant jurisdiction over appellate proceedings upon the trial court’s signing of the
final judgment.12 In that appeal, James and Mary Arthur, Legonite, Inc., Paradise
Living, Inc., and Arthur Holdings, L.P., attempted to appeal the order dismissing
Raborn. See Arthur v. Raborn, No. 01-21-00072-CV, 2022 WL 17835228, at *1
(Tex. App.—Houston [1st Dist.] Dec. 22, 2022, no pet.) (mem. op.). After the final
judgment was signed, the dismissal order merged into it, and the appeal proceeded.
Our sister court affirmed Raborn’s dismissal from the case.

       11
         Okorafor also filed another motion for reconsideration after the trial court signed the
amended final judgment, but his motion was untimely.
       12
           When the first appeal was perfected, the First Court of Appeals acquired dominant
jurisdiction over the entire controversy. See Miles v. Ford Motor Co., 914 S.W.2d 135, 138–39
(Tex. 1995) (per curiam). Because that proceeding has concluded, we can proceed to dispose of
this appeal. See id. (when one appellate court has dominant jurisdiction, the appellate court in
which the second notice of appeal is filed should abate until proceedings have concluded in the
court with dominant jurisdiction).

                                               8
I.    The Second Appeal from the Final Judgment

      While the appeal of the final judgment was pending in the First Court of
Appeals, the Arthur Parties filed their second notice of appeal, and Okorafor filed
his first notice of appeal. Those appeals were assigned to this Court.

      In this proceeding, the Arthur Parties challenge the summary judgment in
Blackburne’s favor on its claims for breach of contract and fraudulent inducement.
In addition, Okorafor joins the Arthur Parties in appealing the portion of the
judgment holding them jointly and severally liable for payment of sanctions.

                              II. SUMMARY JUDGMENT

      We review summary judgments de novo. See Boerjan v. Rodriguez, 436
S.W.3d 307, 310 (Tex. 2014) (per curiam). To prevail on a traditional motion for
summary judgment, the movant must show that there is no genuine issue of material
fact and that it is entitled to judgment as a matter of law. TEX. R. CIV. P. 166a(c); see
Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215–16 (Tex. 2003).
If the movant carries this burden, the burden shifts to the nonmovant to raise a
genuine issue of material fact precluding summary judgment. Lujan v. Navistar, Inc.,
555 S.W.3d 79, 84 (Tex. 2018) (citing Centeq Realty, Inc. v. Siegler, 899 S.W.2d
195, 197 (Tex. 1995)). On review, we construe the evidence in the light most
favorable to the non-movant, crediting evidence favorable to the nonmovant if a
reasonable juror could and disregarding contrary evidence unless a reasonable juror
could not. Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844,
848 (Tex. 2009).

A.    Breach of Contract

      Blackburne sought summary judgment on the ground that the Arthur Parties
breached the following provision of the Settlement Agreement:

                                           9
      Plaintiffs agree they will NOT attempt to or actually impede, obstruct,
      or oppose such foreclosure [of the Beechnut property] in any manner,
      including via lawsuit, temporary restraining order, temporary
      injunction, or permanent injunction. Plaintiffs expressly waive any
      defense to enforcement of this Settlement Agreement, entry of the
      Agreed Final Judgment, or foreclosure.
Blackburne argued that the Arthur Parties breached this provision by, among other
things, filing the 2017, 2018, 2019, and 2020 Lawsuits; appealing from the judgment
in the 2017 Lawsuit; obtaining a temporary restraining order in the 2019 Lawsuit in
an effort to prevent the 2019 foreclosure sale; and, in Mary Arthur’s case,
temporarily obtaining an automatic stay of any foreclosure proceedings by filing for
bankruptcy. In connection with its breach-of-contract claim, Blackburne sought to
recover all legal fees and expenses it had incurred since the day after summary
judgment was entered in the 2017 Lawsuit, whether those fees and expenses were
characterized as actual damages, or alternatively, under the fee-shifting statute
applicable to breach-of-contract claims. See TEX. CIV. PRAC. & REM. CODE § 38.001.

      The Arthur Parties say that they did not breach the Settlement Agreement,
because they asked Blackburne “for a payoff amount to retire the entire debt but
[Blackburne] consistently refused to give the payoff amount thwarting [the Arthur
Parties’] attempt to obtain financing to retire the debt.” But, the Settlement
Agreement itself specified all payments to be made and the consequences of non-
payment as follows:

      9.     Plaintiffs shall pay to Defendant the following:
           • $29,872.76 in certified funds to Blackburne & Sons Realty
             Capital by May 26, 2016; and
           • $139,000.00 via wire transfer on or before July 26, 2016
             ($89,000.00 to be applied to principal and $50,000.00 to be
             applied to attorneys’ fees incurred by Defendant); and

                                         10
            • $12,355.45 via wire transfer by the 26th of every month starting
              June 26, 2016 and continuing until June 26, 2018 (totaling 25
              monthly payments); and
            • $60,000.00 via wire transfer by June 26, 2017 (to be applied to
              principal).
            • $909,711.17 via wire transfer by July 26, 2018.1
                                          ...

      11.     Plaintiffs will not make additional payments from those
              identified in paragraph 9. This is not intended to prevent early
              full payment of any of the above scheduled payments, and in the
              event of an early full payment of any of the above scheduled
              payments such payment is no longer due.
      12.     The Parties have agreed to the terms of an Agreed Final
              Judgment, attached hereto as Exhibit C, to be filed in this case in
              the event any of the above payments in paragraphs 8 and 9 are
              not timely made or wired by Plaintiffs .
                                          ...
      1
              This amount is agreed and derived from the amortization
              schedule attached hereto as Exhibit B, adding $50,000.00 for
              attorneys’ fees incurred by Defendant.
Adding the figures listed in paragraph 9 shows that the total amount that the Arthur
Parties jointly agreed to pay was $1,447,470.18. The Settlement Agreement allowed
for early payment “of the above scheduled payments,” but it did not require
Blackburne to assist the Arthur Parties to obtain financing by providing a pay-off
amount.

      Moreover, the Arthur Parties agreed that Blackburne was to file the Agreed
Final Judgment in the event any payment in paragraph 9 was not timely made, and
they agreed to the judgment’s form, substance, and non-appealability. The Arthur
Parties also admit that they “declined” to make the $60,000 payment due on June
26, 2017. As a long-settled matter of law, their failure to make this payment was a
breach of the Settlement Agreement by all seven of the Arthur Parties, and that
                                           11
breach alone was sufficient to entitle Blackburne to rendition of the Agreed Final
Judgment.

      Nevertheless, the Arthur Parties opposed rendition of the Agreed Final
Judgment, appealed it, and have sought for years to have it set aside or to block its
enforcement. By these actions, the Arthur Parties committed additional breaches of
the Settlement Agreement. To cite just one example in which all seven of the Arthur
Parties joined in a single additional breach, all of the Arthur Parties agreed they
would not attempt to obstruct the foreclosure of the Beechnut property by a lawsuit
or temporary restraining order, but all seven of the Arthur Parties filed the 2019
Lawsuit in which they all jointly obtained a temporary restraining order in an effort
to obstruct the foreclosure sale.

      Most of the Arthur Parties’ appellate arguments concerning Blackburne’s
breach-of-contract claim amount to no more than assertions that various material
fact questions exist, for which the Arthur Parties offer a global citation to over two
hundred pages of exhibits. But, “[t]his Court has no duty to search a voluminous
record without guidance from appellant to determine whether an assertion of
reversible error is valid.” Casteel-Diebolt v. Diebolt, 912 S.W.2d 302, 305 (Tex.
App.—Houston [14th Dist.] 1995, no writ).

      The Arthur Parties’ most detailed argument concerns certain funds that were
paid into the registry of the trial court and released to Blackburne. At some point
during the history of the litigation between the parties, the Arthur Parties paid money
into the registry of the court under the cause number of the 2016 Lawsuit in which
the Agreed Final Judgment was rendered; the Arthur Parties cite no evidence
identifying the purpose of the payments. Blackburne applied for release of the funds
as partial payment of the liquidated-damages award of the Agreed Final Judgment.
The trial court granted Blackburne’s request and ordered the principal amount of

                                          12
$87,825.08, plus accrued interest, released to Blackburne. On appeal, the Arthur
Parties assert there is a material fact question as to whether Blackburne violated the
Settlement Agreement by applying the released funds to its liquidated damages
before foreclosing on the Beechnut property, as opposed to applying the funds from
the registry of the court to any liquidated damages that remained unpaid after
applying the proceeds from the foreclosure sale of the Beechnut property.
Significantly, however, the Arthur Parties did not oppose Blackburne’s motion for
the trial court to release the funds in its registry to Blackburne, and the trial court
granted the motion in December 2018—eighteen months before Blackburne
foreclosed on the Beechnut property. In light of the Arthur Parties’ lack of opposition
to the pre-foreclosure release of funds, this complaint was not preserved for review
even in the 2016 Lawsuit in which these events took place. See TEX. R. APP. P. 33.1.
The complaint is not properly before us in this appeal from the judgment in the
consolidated 2018, 2019, and 2020 cases.

      We overrule the Arthurs’ first issue challenging the portion of the judgment
holding the seven Arthur Parties jointly and severally liable to Blackburne for
$257,656.26 as damages for breach of contract. We affirm this portion of the
judgment.

B.    Fraudulent Inducement

      In its summary-judgment motion, Blackburne argued that the Arthur Parties
fraudulently induced Blackburne to enter into the Settlement Agreement and to
approve the Agreed Final Judgment by falsely representing that they would pay as
agreed and would not oppose Blackburne’s collection efforts. To prevail on its
fraudulent-inducement claim, Blackburne had to prove that the Arthur Parties falsely
promised to perform a future act while having no present intent to perform it; that
the Arthur Parties intended Blackburne should rely or act on that misrepresentation;

                                          13
that Blackburne did in fact rely on it; and that Blackburne was injured by that
reliance. See Int’l Bus. Machines Corp. v. Lufkin Indus., LLC, 573 S.W.3d 224, 228
(Tex. 2019).

       In challenging the judgment for Blackburne on its fraudulent-inducement
claim, the Arthur Parties quote the Settlement Agreement’s statement, “The Parties
expressly agree that this Settlement Agreement is not the result of fraud, collusion,
duress, coercion, undue influence, or misrepresentation.” The Arthur Parties next
quote Blackburne’s statement from its summary-judgment motion that the Arthur
Parties did not intend to honor the promises they made in the Settlement Agreement,
but instead made such promises merely “to induce Blackburne to execute the
Settlement Agreement and approve the Agreed Final Judgement [sic], such that
Plaintiffs could procure additional time to find a way out of their unhappy bargain.”
The Arthur Parties then assert, “This is exactly what [Blackburne] agreed was not
fraud in the agreement itself!” However, the Arthur Parties offer no argument or
authorities in support of their assumption that the quoted language from the
Settlement Agreement was sufficient to waive Blackburne’s claim that the Arthur
Parties entered into the agreement without the intention to abide by it.13 We therefore
consider this argument waived. See TEX. R. APP. P. 38.1(i) (“The brief must contain
a clear and concise argument for the contentions made, with appropriate citations to
authorities and to the record.”).

       The Arthur Parties similarly assert that “there is no evidence of fraud,” but
here, too, the Arthur Parties fail to support this statement. They do not mention the
evidence on which Blackburne relied, and they do not explain why they believe that

13
  But see Forest Oil Corp. v. McAllen, 268 S.W.3d 51, 53–54, 61 (Tex. 2008) (specific waiver-of-reliance
language can contractually bar a fraudulent-inducement claim, but this “should not be construed to mean
that a mere disclaimer standing alone will forgive intentional lies regardless of context”).

                                                  14
evidence has no probative value. Again, we conclude this argument is waived. See
id.

      In the Arthur Parties’ remaining argument concerning the fraudulent-
inducement claim, they state that “the evidence showed nothing to indicate any kind
of post-judgement [sic] activity that would constitute a joint enterprise or joint
venture of fraud that would result in a joint and liable finding as this judgment does.”
But this argument is based on the mistaken premise that the trial court held the Arthur
Parties jointly and severally liable for fraudulent-inducement damages, when in fact,
the trial court held each of the Arthur Parties individually liable. Thus, this argument
is inapplicable.

      Having disposed of each of the Arthur Parties’ arguments for reversal of the
judgment on Blackburne’s fraudulent-inducement claim, we overrule this issue and
affirm the portion of the judgment holding the Arthur Parties individually liable to
Blackburne for fraud damages in the amount of $20,000.00 each.

                                   III. SANCTIONS

      In the parties’ final issue, the Arthur Parties and attorney James Okorafor
contest the portion of the judgment holding them jointly and severally liable for
sanctions in the amount of $30,000.00 under Chapters 9 and 10 of the Texas Civil
Practice and Remedies Code and Rule 13 of the Texas Rules of Civil Procedure. We
review the imposition of sanctions for abuse of discretion. Low v. Henry, 221 S.W.3d
609, 614 (Tex. 2007). A trial court abuses its discretion if it acts without reference
to any guiding rules and principles, such that its ruling is arbitrary or unreasonable.
Id. But “[a] trial court has no ‘discretion’ in determining what the law is or applying
the law to the facts.” Walker v. Packer, 827 S.W.2d 833, 840 (Tex. 1992) (orig.
proceeding).

                                          15
A.     Chapter 9

       Chapter 9 of the Texas Civil Practice and Remedies Code applies only to
proceedings to which neither Rule 13 nor Chapter 10 applies. TEX. CIV. PRAC. &
REM. CODE § 9.012(h). Because both Rule 13 and Chapter 10 apply to the
proceedings under review, Chapter 9 is inapplicable as a matter of law. We therefore
conclude that the trial court abused its discretion in sanctioning the Arthur Parties
and Okorafor pursuant to Chapter 9 of the Civil Practice and Remedies Code, and
we reverse that part of the judgment.

B.     Rule 13

       Texas Rule of Civil Procedure 13 provides in pertinent part as follows:

       The signatures of attorneys or parties constitute a certificate by them
       that they have read the pleading, motion, or other paper; that to the best
       of their knowledge, information, and belief formed after reasonable
       inquiry the instrument is not groundless and brought in bad faith or
       groundless and brought for the purpose of harassment. Attorneys or
       parties who shall bring a fictitious suit as an experiment to get an
       opinion of the court, or who shall file any fictitious pleading in a cause
       for such a purpose, or shall make statements in pleading which they
       know to be groundless and false, for the purpose of securing a delay of
       the trial of the cause, shall be held guilty of a contempt. If a pleading,
       motion or other paper is signed in violation of this rule, the court, upon
       motion or upon its own initiative, after notice and hearing, shall impose
       an appropriate sanction available under Rule 215-2b, upon the person
       who signed it, a represented party, or both.14
       Okorafor asserts that the sanctions imposed by the trial court are not among
those listed in Texas Rule of Civil Procedure 215.2(b). He is correct.

       14
          This is the rule as provided on the website of the Texas Judicial Branch, available at
https://www.txcourts.gov/rules-forms/rules-standards/. On Westlaw, the rule instead refers to “an
appropriate sanction available under Rule 215,” followed by the footnote, “Probably Vernon’s
Ann. Rules Civ. Proc., rule 215.2(b).”

                                               16
       “Rule 13 authorizes the imposition of the sanctions listed in Rule 215.2(b),
which only provides for a monetary penalty based on expenses, court costs, or
attorney’s fees.” Low, 221 S.W.3d at 614. But here, the trial court held Okorafor and
the Arthur Parties “jointly and severally liable in the sum of: thirty thousand dollars
and no cents ($30,000.00).” Blackburne did not ask the trial court to impose
sanctions in this amount, which is unconnected to attorney’s fees, expenses, or
taxable court costs. To the contrary, Blackburne stated in its motion that if the trial
court awarded Blackburne all of the attorney fees and expenses it sought via
summary judgment, then the trial should “impos[e] a penalty to be paid to the Court
pursuant to Texas Civil Practice & Remedies Code § 10.004(c)(2).” Under that
provision, a trial court may sanction a person who has signed a pleading or motion
in violation of Chapter 10 by ordering the person “to pay a penalty into court.” TEX.
CIV. PRAC. & REM. CODE § 10.004(c)(2).15

       Because the sanctions imposed are not available under Rule 13, the trial court
abused its discretion in basing the sanctions award under Rule 13. We accordingly
reverse the portion of the judgment awarding sanctions pursuant to Rule 13, for the
sanctions can be affirmed, if at all, only under Chapter 10.

B.     Chapter 10

       Chapter 10 of the Texas Civil Practice and Remedies Code provides as
follows:

       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

       15
          The judgment does not say whether the sanctions are payable to Blackburne or to the
registry of the court, but “[w]hen an ambiguous order is susceptible to two reasonable
constructions, an appellate court should adopt the construction that correctly applies the law.”
MacGregor v. Rich, 941 S.W.2d 74, 75 (Tex. 1997) (per curiam). We therefore construe the
judgment as ordering the sanctions as a penalty to be paid into court pursuant to Chapter 10.

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      signatory’s best knowledge, information, and belief, formed after
      reasonable inquiry:
      (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.
Id. § 10.001. “A party may make a motion for sanctions, describing the specific
conduct violating Section 10.001.” Id. § 10.002.

      1.     Legal sufficiency of the motion for sanctions

      Okorafor argues that Blackburne’s motion for sanctions is legally insufficient
in that it does not describe the specific conduct that is sanctionable. Blackburne
simply states,

      The 2018 Suit, 2019 Suit, and 2020 Suit—the initiating pleadings and
      all subsequent pleadings, motions, and responses filed by Plaintiffs,
      were groundless and dishonest, brought in bad faith to harass, delay,
      and to needlessly increase the cost of litigation; and are patent
      violations of a judgment of this Court.
                                        ...
      Attorney Chris Conry signed the initial petition in the 2018 Suit.
      Attorney Troy Wilson signed the initial petition in the 2019 Suit.
      Attorney James Okorafor signed the initial petition in the 2020 suit. All
      three lawyers continued to litigate the cases, including the filing of

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       numerous motions aimed to delay enforcement of the Agreed Final
       Judgment.
                                           ...
       All Plaintiffs are also subject to sanctions because they are implicated
       in the sanctionable conduct apart from having entrusted the legal
       representation to the attorneys. All Plaintiffs (i) were parties to the 2016
       Suit in which the same “facts” were asserted and litigated; (ii) are
       parties to the Settlement Agreement in which they agreed to not oppose
       enforcement of the Agreed Final Judgment, (iii) are parties to the
       Agreed Final Judgment which disposes of the claims asserted in the
       2018 Suit, 2019 Suit, and 2020 Suit; and (iv) are parties to this
       consolidated 2018 Suit.
       Blackburne’s motion for sanctions does not identify the Arthur Parties’
motions and responses that allegedly violate Chapter 10, but Blackburne does
identify three pleadings that allegedly do so: the original petitions in the 2018, 2019,
and 2020 Lawsuits. In addition, the “Facts” section of Blackburne’s motion recounts
the history of the Arthur Parties’ attempts to evade or delay enforcement of the
Agreed Final Judgment, and the paragraph concerning sanctions against the
plaintiffs gives reasons why Blackburne believes those pleadings were unwarranted.
We conclude that this is sufficiently specific. See, e.g., Marquez v. Weadon, No. 05-
17-00276-CV, 2018 WL 3829267, at *4 (Tex. App.—Dallas Aug. 13, 2018, no pet.)
(mem. op.) (sanctions motion that did not point out each statement that was allegedly
false, deceptive, misleading, or without merit was legally sufficient in that the
motion clearly complained about the petition’s factual allegations and requests for
extraordinary relief); Akinwamide v. Transp. Ins. Co., 499 S.W.3d 511, 526 (Tex.
App.—Houston [1st Dist.] 2016, pet. denied) (motion for sanctions challenging the
filing of a “2014 motion to set aside a 2000 judgment” and describing all of the
sanctioned party’s previous attempts to overturn the 2000 judgment was legally
sufficient).

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       2.      Failure to hold an evidentiary hearing

       Before imposing sanctions under Chapter 10, the trial court must hold an
evidentiary hearing. R.M. Dudley Constr. Co., Inc. v. Dawson, 258 S.W.3d 694, 709
(Tex. App.–Waco 2008, pet. denied). Blackburne had filed a “Second Amended
Motion for Final Summary Judgment and Motion for Sanctions,” and a week before
the scheduled telephonic hearing on the motion, the Arthur Parties filed a response
in which they objected that the “hearing is not an evidentiary hearing” and so would
not afford them, and their attorneys, due process.16

       Because neither the record nor the parties’ briefs indicate that an evidentiary
hearing was held, we presume that the hearing was non-evidentiary. See Michiana
Easy Livin’ Country, Inc. v. Holten, 168 S.W.3d 777, 783 (Tex. 2005). And by
failing to hold an evidentiary hearing, the trial court impliedly overruled the Arthur
Parties’ objection. See TEX. R. APP. P. 33.1(a)(1). But the Arthur Parties are correct:
the trial court abused its discretion by sanctioning the Arthur Parties and their
counsel over the preserved objection that the scheduled hearing was non-evidentiary.
See, e.g., Aldine Indep. Sch. Dist. v. Baty, 946 S.W.2d 851, 853 (Tex. App.—
Houston [14th Dist.] 1997, no writ). Thus, without addressing the Arthur Parties’
and Okorafor’s remaining arguments for the reversal and remand of the sanctions,
we reverse this part of the judgment and remand Blackburne’s request for sanctions.

                                      IV. CONCLUSION

       For the reasons described above, we affirm the portions of the judgment
awarding Blackburne damages on its breach-of-contract and fraudulent-inducement

       16
         The Arthur Parties also moved for a new sanctions trial on the ground that no evidentiary
hearing was held, but the motion was overruled both by operation of law and by a signed order.

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claims, reverse the portion of the judgment imposing sanctions on the Arthur Parties
and Okorafor, and remand the case to the trial court for further proceedings.

                                       /s/    Tracy Christopher
                                              Chief Justice

Panel consists of Chief Justice Christopher and Justices Wise and Hassan.

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