Court Opinion

ID: 9939960
Source: CourtListenerOpinion
Date Created: 2024-02-13 15:13:06.888303+00
Date Added: 2024-06-11T13:42:09.345265
License: Public Domain

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

                                     NO. 03-22-00176-CV

Appellant, Abira Medical Laboratories, LLC d/b/a Genesis Diagnostics// Cross-Appellant,
    OMH-Healthedge Holdings, Inc. d/b/a Omega Healthcare Management Services

                                                v.

Appellee, OMH-Healthedge Holdings, Inc. d/b/a Omega Healthcare Management Services//
       Cross-Appellee, Abira Medical Laboratories, LLC d/b/a Genesis Diagnostics

              FROM THE 126TH DISTRICT COURT OF TRAVIS COUNTY
 NO. D-1-GN-21-001179, THE HONORABLE MAYA GUERRA GAMBLE JUDGE PRESIDING

                            MEMORANDUM OPINION

               OMH-Healthedge Holdings, Inc. d/b/a Omega Healthcare Management Services

(Omega) sued Abira Medical Laboratories, LLC d/b/a Genesis Diagnostics (Abira) for damages

and attorney’s fees under theories of breach of contract and sworn account. The trial court granted

summary judgment for Omega for actual damages but denied any award of attorney’s fees. Abira

appealed, arguing that Omega breached the parties’ agreement first, thereby excusing Abira from

its future contractual obligations. Omega cross-appealed, arguing that the trial court erred in

denying it attorney’s fees. We will affirm in part and reverse and remand in part.
                     FACTUAL AND PROCEDURAL BACKGROUND

               Omega provides medical coding and billing services to health-care companies.

Abira provides professional analytic and diagnostic services for the medical profession. In

December 2018, Omega and Abira entered into a Services Agreement in which Omega would

perform certain medical coding and billing support services for Abira and provide Abira with

monthly invoices for those services. Abira agreed to pay all such invoices within 15 days of receipt

unless there was a dispute regarding the invoiced amount. The Agreement provided that Abira

had 30 days to dispute any invoice it received. Abira agreed that if it did not dispute an invoice

within 30 days, the invoiced amounts would be deemed final, and all amounts would be due and

owing within 45 days of Abira’s receipt of the invoice.

               Omega performed services under the Agreement and sent monthly invoices to

Abira, which Abira paid for several months. Beginning in May 2019, however, Abira stopped

paying Omega’s invoices, although it did not, at that time, lodge any dispute about them. From

May 2019 through September 2019, Omega continued to perform services under the Agreement

and submit monthly invoices, but Abira did not submit payments. Abira did not dispute any

portion of the May to September 2019 invoices within the Agreement’s 30-day dispute period.

               On September 8, 2019, Abira sent Omega a “sixty (60) day no-cause written

notification” terminating the Agreement. This letter did not provide any reason for termination,

dispute any of the past-due invoices, or give an excuse for Abira’s failure to pay. Abira’s letter

stated that termination would be “effective sixty (60) days later”—on November 7, 2019. Before

that date, however, Omega sent its own letter terminating the Agreement.

               Omega filed a motion for summary judgment, attaching evidence that it had

performed the services called for in the Services Agreement and that Abira had failed to pay the

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last five months of invoices, totaling $90,401.49. In its response in opposition to Omega’s motion,

Abira asserted that the Services Agreement required Omega to pre-submit all work to Abira via a

“SOW” (statement of work) and to attach to its invoices “activity logs” setting forth the specific

activities conducted by Omega’s personnel. Abira presented summary-judgment evidence that

Omega had done neither of those things, thereby allegedly violating the Agreement. Abira argued

that Omega’s failures were material breaches of the Agreement that excused Abira from its own

obligations under the Agreement, including paying for Omega’s services.

                The trial court granted Omega’s motion for summary judgment. In addition to

actual damages, prejudgment interest, and postjudgment interest, the summary-judgment order

decreed that Omega recover judgment from Abira for “[a]ttorneys’ fees, associated expenses,

and court costs in the amount to be determined by the Court in the absence of an agreement by

the parties.”

                When Omega and Abira were unable to reach an agreement on the amount of the

attorney’s fee award, Omega filed a pleading titled “Motion to Modify Final Judgment to Include

Amount of Attorneys’ Fees and Costs,” to which it attached an affidavit and invoices supporting

its request for $55,215 in attorney’s fees and $643 in costs. Rather than filing a motion requesting

the court to make the anticipated determination of the attorney’s fee award, Omega apparently

believed that the order granting summary judgment was a final judgment that needed to be

“modified” in order to incorporate an attorney’s fee award. The court denied the motion to modify

the judgment in an order stating that the “motion to modify the Court’s final judgment in order

to incorporate attorney’s fees into the judgment lacks merit and should be denied.” The court

later clarified that it intended this order to decree a complete denial of attorney’s fees to Omega.

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Abira appealed the award of actual damages to Omega. Omega cross-appealed the denial of

attorney’s fees.

                                          DISCUSSION

Breach of Contract

               Abira argues that Omega’s failure to use SOWs and activity logs were material

breaches of the Services Agreement and thus excused Abira from its own obligations to perform—

i.e., pay for Omega’s services—following Omega’s alleged breach. It is true that “when one

party to a contract commits a material breach of that contract, the other party is discharged or

excused from further performance.” Bartush-Schnitzius Foods Co. v. Cimco Refrigeration,

Inc., 518 S.W.3d 432, 436 (Tex. 2017) (quoting Mustang Pipeline Co. v. Driver Pipeline Co.,

134 S.W.3d 195, 196 (Tex. 2004)). There is, however, a well-established exception to that rule:

“A party who elects to treat a contract as continuing [after a material breach by the other party]

deprives himself of any excuse for ceasing performance on his own part.” Long Trusts v. Griffin,

222 S.W.3d 412, 415 (Tex. 2006) (quoting Hanks v. GAB Bus. Servs., Inc., 644 S.W.2d 707, 708

(Tex. 1982)); accord Leafguard of Tex., Inc. v. Guidry, No. 09-21-00034-CV, 2023 WL 3369176,

at *4 (Tex. App.—Beaumont May 11, 2023, no pet.) (mem. op.) (“When, however, the

nonbreaching party decides to treat the contract as continuing, even after the other party materially

breached the agreement, the nonbreaching party may not then seek to excuse his own

nonperformance.”); Rescue Concepts Inc. v. HouReal Corp., No. 01-20-00553-CV, 2022 WL

2976299, at *7 (Tex. App.—Houston [1st Dist.] July 28, 2022, pet. denied) (op.) (“[I]f the non-

breaching party treats the contract as continuing after the breach, it is deprived of any excuse for

terminating its own performance.”).

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               Accordingly, the non-breaching party must, after a material breach by the other

party, either treat the contract as continuing or as terminated:

       Thus, the non-breaching party must elect between two courses of action: continuing
       performance under the contract or ceasing to perform. . . . “Seeking to benefit from
       the contract after the breach operates as a conclusive choice depriving the non-
       breaching party of an excuse for his own non-performance.”

Rescue Concepts, 2022 WL 2976299, at *7–8 (quoting Henry v. Masson, 333 S.W.3d 825, 841

(Tex. App.—Houston [1st Dist.] 2010, no pet.)).

               In the present case, Abira stopped paying Omega’s invoices beginning in May 2019

but allowed Omega to continue providing services for five months before Abira finally sent notice

of termination of the contract in September. During that time, Abira benefited from Omega’s

continued performance under the Services Agreement. Abira’s actions therefore represented a

“conclusive choice” to treat the contract as continuing during those five months. See id. Thus,

Abira may not use Omega’s failure to use SOWs and activity logs—even assuming such failure

was a material breach by Omega—to excuse the performance of its own contractual obligations,

i.e., to pay for Omega’s services. Abira’s failure to pay Omega’s invoices during those five months

constituted, as a matter of law, a breach of the Services Agreement by Abira.

               Accordingly, the trial court did not err in granting summary judgment for Omega

on its breach-of-contract claim.

Attorney’s Fees

               As described above, the trial court’s January 6, 2022 “Order Granting Plaintiff’s

Motion for Summary Judgment” decreed that Omega should recover from Abira attorney’s fees

and costs “in the amount to be determined by the Court in the absence of an agreement by the

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parties.” Because that order did not follow a conventional trial on the merits and did not dispose

of Omega’s claim for attorney’s fees, it was not a final, appealable judgment. See McNally v.

Guevara, 52 S.W.3d 195, 196 (Tex. 2001) (per curiam) (holding that summary-judgment order that

did not dispose of claim for attorney’s fees was not final judgment). When Omega subsequently

filed a “Motion to Modify Final [sic] Judgment” to include an award of attorney’s fees, the court

denied the motion, finding in its order that the motion “lack[ed] merit and should be denied.” After

this Court sought clarification regarding the trial court’s intent in denying Omega’s motion, the

trial court issued an order stating that “[t]he Court intended the denial of Plaintiff’s motion to

modify the Summary Judgment Order to fully and finally dispose of all remaining claims, issues,

and all parties, and to be appealable. Accordingly, the March 23, 2022 Order Denying Plaintiff’s

Motion to Modify was a final judgment.” This clarification order also contained a more detailed

explanation of the court’s reasoning:

       Because Plaintiff did not submit evidence to support the amount, reasonableness,
       and necessity of the attorneys’ fees and associated expenses it sought during the
       summary judgment proceedings, the Court, at the time, was of the opinion that
       Plaintiff was precluded from doing so after the summary judgment proceedings
       had concluded and therefore, the Court was without the authority to modify its
       January 6, 2022 order granting Plaintiff’s motion for summary judgment.”

This order makes clear that the court’s intent was to deny any award of attorney’s fees to Omega

notwithstanding the recitation in the court’s earlier order that Omega “have and recover judgment

from Abira [for] . . . [a]ttorneys’ fees.” Accordingly, the court’s March 23, 2022 order denying

Omega’s “Motion to Modify” was indeed a final judgment.

               Because the trial court’s order granting summary judgment to Omega was

interlocutory, Omega’s failure to present evidence at that time of the amount and reasonableness

of attorney’s fees it was seeking did not preclude it from presenting additional evidence at a later

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time, perhaps through a second or amended summary-judgment motion. See Rentfro v. Cavazos,

No. 04-10-00617-CV, 2012 WL 566364, at *14 (Tex. App.—San Antonio Feb. 15, 2012, pet.

denied) (mem. op.) (“It is certainly possible that a summary judgment movant might not have

sufficient evidence to establish an affirmative defense as a matter of law when the motion for

summary judgment is first filed, but this does not mean that prior to the entry of any final judgment

such evidence might not become available, allowing the movant to amend, refile, or reurge the

motion for summary judgment based on additional evidence.”); see also Service Corp. Int’l v.

Williams-Birdow, No. 02-22-00213-CV, 2023 WL 2325206, at *7 (Tex. App.—Fort Worth

Mar. 2, 2023, no pet.) (mem. op.) (“[A]n amended or new motion for summary judgment can be

filed after a previous motion for summary judgment is denied.”); cf. McNally, 52 S.W.3d at 196

(“[A] party’s omission of one of his claims from a motion for summary judgment does not waive

the claim because a party can always move for partial summary judgment, Tex. R. Civ. P. 166a(e),

and thus there can be no presumption that a motion for summary judgment addresses all of the

movant’s claims.”).

               In its later-filed Motion to Modify, Omega did present evidence of the amount and

reasonableness of its requested attorney’s fees. The supreme court has held that this is sufficient

to make an award of attorney’s fees mandatory: “Under section 38.001 [of the Texas Civil Practice

and Remedies Code], the trial court has no discretion to deny attorney’s fees when presented with

evidence of the same.” Ventling v. Johnson, 466 S.W.3d 143, 154 (Tex. 2015); see also State v.

Buchanan, 572 S.W.3d 746, 750 (Tex. App.—Austin 2019, no pet.) (“When a statute provides for

mandatory recovery of attorney’s fees, the trial court has no discretion but to award them if they

are pleaded and proved.”).

               Accordingly, the trial court erred in denying an award of attorney’s fees to Omega.

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                                         CONCLUSION

               We affirm the portion of the trial court’s judgment granting summary judgment to

Omega for actual damages, prejudgment interest, and postjudgment interest. We reverse the

portion of the judgment denying Omega its attorney’s fees and remand that portion of the case to

the trial court for calculation of a proper award of trial and appellate attorney’s fees to Omega.

                                              __________________________________________
                                              J. Woodfin Jones, Justice

Before Justices Baker, Theofanis, and Jones*

Affirmed in Part, Reversed and Remanded in Part

Filed: February 13, 2024

*Before J. Woodfin Jones, Chief Justice (Retired), Third Court of Appeals, sitting by assignment.
See Tex. Gov’t Code § 74.003(b).

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