Court Opinion

ID: 7800762
Source: CourtListenerOpinion
Date Created: 2022-08-16 10:11:02.408015+00
Date Added: 2024-06-11T16:29:08.327150
License: Public Domain

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

                           ON RECONSIDERATION EN BANC

                                   NO. 03-20-00058-CV

  Appellant, Christopher F. Bertucci, as Executor of The Estate of Anthony R. Bertucci,
 Deceased, and derivatively on behalf of American Affordable Homes & Properties, Inc.;
 American Affordable Homes, LP; Town Vista Development, LLC; Town Vista Terrace,
   Inc.; and MidCrowne Senior SLP, LLC // Cross-Appellant, Eugene L. Watkins, Jr.

                                             v.

Appellee, Eugene L. Watkins, Jr. // Cross-Appellee, Christopher F. Bertucci, as Executor of
  The Estate of Anthony R. Bertucci, Deceased, and derivatively on behalf of American
  Affordable Homes & Properties, Inc.; American Affordable Homes, LP; Town Vista
    Development, LLC; Town Vista Terrace, Inc.; and MidCrowne Senior SLP, LLC

               FROM THE PROBATE COURT NO. 1 OF TRAVIS COUNTY
     NO. C-1-PB-17-000937, THE HONORABLE GUY S. HERMAN, JUDGE PRESIDING

                            OPINION AND ORDER

              We withdraw our opinions and judgment of January 28, 2022, and substitute the

following opinions and judgment.

              Appellant and cross-appellee Christopher F. Bertucci (the Executor), as executor

of the estate of Anthony R. Bertucci, deceased, and derivatively on behalf of: American

Affordable Homes & Properties, Inc. (AAHP); American Affordable Homes, LP (AAH); Town

Vista Development, LLC (TVD); Town Vista Terrace, Inc. (TVT); and MidCrowne Senior SLP,

LLC (MCS) (collectively, the Companies), filed a notice of appeal complaining of the probate
court’s order granting summary judgment in favor of appellee and cross-appellant Eugene L.

Watkins.   Watkins cross-appealed from the court’s order severing his claims against the

Companies and transferring them back to the Travis County district court from which the cause

was transferred upon Anthony’s death. A panel of this Court held that the severance was

improper, vacated the severance, and dismissed the appeal for want of jurisdiction. See Bertucci

v. Watkins, No. 03-20-00058-CV, 2022 WL 261563 (Tex. App.—Austin Jan. 28, 2022, no pet.

h.) (mem. op.) (citing Dalisa, Inc. v. Bradford, 81 S.W.3d 876 (Tex. App.—Austin 2002, no

pet.)), withdrawn, __ S.W.3d __, 2022 WL __, at *1 (Tex. App.—Austin [date], no pet. h.). The

parties then filed a joint motion for reconsideration en banc. See Tex. R. App. P. 49.7. This

Court sitting en banc will overrule Dalisa and abate the appeal to allow the parties to obtain a

final, appealable judgment.

                    FACTUAL AND PROCEDURAL BACKGROUND

              In 2001, Watkins and Anthony formed a partnership to build low-income housing;

that partnership eventually included the five Companies. Watkins and Anthony were limited

partners of AAH and shareholders of its general partner, AAHP, and this suit began when

entities handling the sale of AAH’s property filed petitions in interpleader against AAH and

AAHP in Travis County district court, seeking to deposit the sale proceeds into the court’s

registry. Watkins intervened, seeking a declaratory judgment as to his rights to some of the

funds under the AAH partnership agreement. Watkins, individually and on behalf of AAH and

AAHP, also filed claims against Anthony as a third-party defendant, seeking a declaration that

the AAH partnership agreement requires the funds to be distributed to the limited partners.

Anthony, individually and on behalf of the Companies, responded with claims against Watkins

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for civil theft under the Texas Theft Liability Act (TTLA), see Tex. Civ. Prac. & Rem. Code

§§ 134.001-.005; breach of fiduciary duties; breach of the duty to account; equitable

disgorgement and forfeiture; and breach of contract.        Watkins sought attorney’s fees for

defending against the TTLA theft claims. See id. § 134.005(b) (providing for recovery of

attorney’s fees).

               Anthony died in 2017, at which point the case was transferred to the probate

court, and Christopher, the executor of Anthony’s estate, was substituted for Anthony. Watkins

filed additional claims—including for breach of contract and equitable restitution or unjust

enrichment—against the Executor, TVD, and AAHP, later nonsuiting his claims against the

Executor. In 2019, the probate court granted summary judgment in Watkins’s favor on all the

Executor’s claims and about a month later signed the Final Order, stating in part:

       1. [Watkins], having nonsuited (without prejudice) all of his prior causes of
          action against Christopher F. Bertucci, individually and as Executor, and the
          Court having confirmed such dismissal (without prejudice) by Order dated
          October 31, 2018, the Court hereby severs and transfers back to the Travis
          County District Court for further disposition, all of Watkins’ Claims that
          remain pending, including Watkins’ Claim for reasonable and necessary
          attorney’s fees, expenses, and costs in defending against the Executor’s Claim
          asserted pursuant to Tex. Civ. Prac. & Rem. Code § 134.005(b) and any valid
          defenses or offsets thereto.

       ....

       3. The Court, having overruled the Executor’s Claims against Watkins, . . .
          retains jurisdiction in this cause over such claims to render a final appealable
          judgment as to same. . . .

       4. Subject only to consummation of the transfer ordered as provided above, all
          prior orders granting Watkins relief or denying the Executor’s relief . . . are
          now considered final and appealable. This Order therefore disposes of all

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            issues retained by this Court as between the parties, and is a final judgment as
            to the Executor’s Claims.

The Executor appealed the granting of summary judgment, and Watkins cross-appealed the

severance and transfer of his claim for TTLA attorney’s fees.

                In January 2022, a panel of this Court held that the severance of Watkins’s claim

for attorney’s fees was improper because the claim would not be “the proper subject of an

independently asserted lawsuit.” Bertucci, 2022 WL 261563, at *2 (quoting State v. Morello,

547 S.W.3d 881, 888-89 (Tex. 2018) (severance proper when controversy involves multiple

causes of action, severed claim could be proper subject of independently asserted lawsuit, and

severed claim is not so interwoven with remaining action that they involve same facts and

issues)); see also Huff v. Fidelity Union Life Ins. Co., 312 S.W.2d 493, 501 (Tex. 1958) (claim

for statutory attorney’s fees is dependent on recovery on merits and cannot be maintained as

separate trial-court action).

                Bound by our precedent in Dalisa, the panel, with Justice Triana dissenting, held

that the improper severance “affect[ed] appellate jurisdiction,” vacated the severance order “to

the extent that it severed the TTLA attorney fee claim,” and dismissed the appeal for lack of

jurisdiction. Bertucci, 2022 WL 261563, at *3-4. The parties then filed a Joint Motion for En

Banc Reconsideration, asking this Court to overrule Dalisa, noting the Texas Supreme Court’s

recent holding in In re Elizondo, 544 S.W.3d 824 (Tex. 2018) (orig. proceeding). 1 The parties

        1 In In re Elizondo, the trial court signed a one-page order that was supposed to address
only one issue but included “a finality phrase that stated: ‘This judgment is final, disposes of all
claims and all parties, and is appealable. All relief not granted herein is denied.’” 544 S.W.3d
824, 825 (Tex. 2018). When Elizondo noticed the finality language well beyond thirty days after
the order was signed, he asked the trial court to sign an amended order omitting the finality
phrase, and the court did so. Id. The defendants then sought mandamus relief, a divided court of
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informed this Court that, in an attempt to remedy possible jurisdictional problems in this case,

they have resolved their remaining disputes through a stipulation “as to the amount of fees each

side will receive from the other, and the mechanism by which they will automatically be

determined.” 2 This stipulation was not before the trial court when it rendered judgment and

issued related orders sought to be reviewed here and is therefore not in the trial-court record

presented for our review. The stipulation does not, on its own, resolve the jurisdictional problem

presented in this appeal.

                                          DISCUSSION

               The members of this Court unanimously agree that the Dalisa opinion was

wrongly decided insofar as it holds that a reviewing court must dismiss an appeal when it

determines that a severance rendering an interlocutory order final and appealable was improper.

In Dalisa, the majority of the panel, after determining that the trial court had abused its discretion

by severing Bradford’s claim for declaratory relief from his claim for attorney’s fees under the

Uniform Declaratory Judgments Act and from Dalisa’s counterclaims, which were “interwoven

to an extent that they involve the same facts and issues,” vacated the severance and then, “[f]or

appeals granted relief, and the Texas Supreme Court agreed, holding that although the order “left
lots of relief not granted—namely, all other relief Elizondo sought against the Builders,” the
inclusion of the finality phrase made the order “final—‘erroneous, but final.’” Id. at 825, 829.
Elizondo, who had “had thirty days to examine the one-page order and notice that it included a
finality phrase,” “should have treated” the order as final, and the court concluded “that the
original order’s finality phrase was clear, unequivocal, and neither ambiguous nor absurd,” and
that the amended order was void. Id. at 827, 829.
       2   Although the parties assert that the stipulation removes jurisdictional impediments,
Watkins has not to our knowledge nonsuited or obtained final resolution on the merits of the
attorney’s fees claim, so at least one part of a cause of action that is on appeal here remains
pending at the trial-court level.
                                                  5
want of an appealable judgment,” dismissed Dalisa’s appeal from the summary judgment in

Bradford’s favor. 81 S.W.3d at 881-82.

               However, the supreme court has been clear in its instruction that an order that

renders a judgment final and appealable, albeit improperly, bestows jurisdiction on the courts of

appeals to consider the propriety of the trial court’s action. See Elizondo, 544 S.W.3d at 829

(“When a trial court issues an order or judgment without a conventional trial on the merits,

Lehmann remains the rule for identifying whether the order or judgment is final. It is a rigid

rule, but that is why it is useful.”); Lehmann v. Har-Con Corp., 39 S.W.3d 191, 206 (Tex. 2001)

(if order’s language is clear and unequivocal, “it must be given effect despite any other

indications that one or more parties did not intend for the judgment to be final;” “express

adjudication of all parties and claims in a case is not interlocutory merely because the record

does not afford a legal basis for the adjudication,” and such orders “must be appealed and

reversed”); Pierce v. Reynolds, 329 S.W.2d 76, 78 (Tex. 1959) (“No matter how erroneous its

conclusion and action may have been, it was within the judicial power of the court to determine

that the cause was severable and to sever the same accordingly. The order of severance is

subject to being set aside on appeal, but until this is done it effectively separates the controversy

into two causes.”). As explained by the Thirteenth Court of Appeals, “an improper severance

does not rob this court of jurisdiction to consider a case; otherwise we could not consider

whether the severance itself was in fact improper. . . . Accordingly, if the severance constitutes

reversible error, we should reverse and remand, not dismiss for want of jurisdiction.” Nicor

Expl. Co. v. Florida Gas Transmission Co., 911 S.W.2d 479, 482 (Tex. App.—Corpus Christi-

Edinburg 1995, writ denied).

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               The Dalisa court erroneously vacated the severance order and dismissed the

appeal—after having exercised appellate jurisdiction to review the propriety of the severance

order. 81 S.W.3d at 882. Given the supreme court’s reiterated guidance that an order can be

made final and appealable through an error, this Court sitting en banc overrules Dalisa insofar as

it holds that a finding of an improper severance divests this Court of jurisdiction over the appeal

such that the proper procedure is to vacate the severance and dismiss the appeal for want of

jurisdiction. The members of this Court diverge on the Court’s next steps with this appeal.

               Many courts of appeals have held that, after determining an order was wrongly

rendered final by an improper severance, the underlying judgment or order is interlocutory and,

thus, that the appellate court lacks jurisdiction to reach the issues challenged in the interlocutory

order or judgment. See, e.g., Alanis v. Wells Fargo Bank Nat’l Ass’n, No. 04-16-00121-CV,

2016 WL 7234047, at *2 (Tex. App.—San Antonio Dec. 14, 2016, no pet.) (mem. op.) (“Having

determined the severance was improper, we do not reach Alanis’s remaining issues.”); Lousteau

v. Noriega, No. 01-15-00254-CV, 2016 WL 4537371, at *6 (Tex. App.—Houston [1st Dist.]

Aug. 30, 2016, pet. denied) (mem. op.) (“Having concluded that the trial court erred in entering

its severance order, we further conclude that the underlying judgment is interlocutory and, thus,

we lack jurisdiction to reach Lousteau and Clanton’s first, second, third, and fourth issues . . . .”);

Ozcelebi v. Chowdary, No. 13-13-00659-CV, 2015 WL 6119495, at *5 (Tex. App.—Corpus

Christi-Edinburg Oct. 15, 2015, no pet.) (mem. op.) (same); Tilger v. Samson Homes, Inc.,

No. 14-97-0361-CV, 1999 WL 160995, at *2 (Tex. App.—Houston [14th Dist.] Mar. 25, 1999,

pet. denied) (not designated for publication) (same); Nicor Expl., 911 S.W.2d at 483 (same); see

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also In re Hoover, Bax & Slovacek, L.L.P., 6 S.W.3d 646, 649 (Tex. App.—El Paso 1999, orig.

proceeding) (similar). 3

               Justice Triana, with Justice Kelly joining, would proceed immediately to consider

the merits of the Executor’s arguments, which is what the parties ask this Court to do. Because

the severance was improper, however, we conclude along with the cases just discussed that the

summary judgment is not final. 4

               In the unusual context of this case, though, we opt against reversing the entire

judgment immediately and follow a path that offers more efficiency for the parties and the court

system. The unanimous court agrees that the trial court erred by severing the attorney’s fees

       3  But see Bird v. Lubricants, USA, LP, No. 2-06-061-CV, 2007 WL 2460352, at *3 (Tex.
App.—Fort Worth Aug. 31, 2007, pet. denied) (mem. op.) (defendants did not perfect appeal and
thus could not challenge propriety of severance order; however, “even assuming, for argument’s
sake, that the severance order was improper, the alleged error does not deprive us of jurisdiction
over the appeal”); Rucker v. Bank One Tex., N.A., 36 S.W.3d 649, 652 (Tex. App.—Waco 2000,
pet. denied) (noting that “courts of appeals are divided on the proper disposition of an appeal
from a case in which a severance was improperly granted”; stating that because judgment was
final, court had “the duty to review all aspects of a final judgment”; and holding that “improper
severance is trial court error, and our determination of error does not prevent us from considering
the remaining issues on appeal”).
       4  In Pierce v. Reynolds, the Texas Supreme Court discussed “whether a court has the
power to sever one entire cause of action into two or more parts and render a separate final
judgment disposing of each part,” even if improperly, before going on to consider the merits of
the appeal. 329 S.W.2d 76, 78 (Tex. 1959). In its discussion, the supreme court stated that the
appealability of a judgment cannot depend upon whether the action is severable because such a
rule would lead to confusion and uncertainty. Id. Because the trial court had jurisdiction over
the parties and the controversy and its order “[did] not violate any prohibition or mandatory
provision,” the supreme court explained, the severance was within its “judicial power” although
erroneous. Id. However, because the defendant “did not object to the severance, and is therefore
not in position to complain of a mere error in granting the same,” the supreme court did not
consider the propriety of the severance and instead proceeded to the merits of the appeal. Id.
        But in Morello v. State, the Texas Supreme Court held that a party may challenge an
improper severance on appeal even when no party had objected at trial because “challenges to
lack of subject matter jurisdiction may be raised for the first time on appeal.” State v. Morello,
547 S.W.3d 881, 888–89 (Tex. 2018).
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claim, which is not a standalone claim for relief. See Huff, 312 S.W.2d at 501. There is no

dispute presented or apparent regarding the probate court’s jurisdiction to have issued the

severance order; its improper severance order is merely erroneous or voidable, not void, and is

correctable through the ordinary appellate processes or other proper proceedings. See Reiss

v. Reiss, 118 S.W.3d 439, 443 (Tex. 2003) (citing Mapco, Inc. v. Forrest, 795 S.W.2d 700, 703

(Tex. 1990)). The rules of procedure prohibit us from affirming, reversing, or dismissing an

appeal if the trial court’s erroneous action or failure to act prevents the proper presentation of the

case to us and if the trial court can correct its action or failure to act. Tex. R. App. P. 44.4(a). If

such remediable error exists, we “must direct the trial court to correct the error” and “then

proceed as if the erroneous action or failure to act had not occurred.” Id. R. 44.4(b). Rule 27.2

provides that “[t]he appellate court may allow an appealed order that is not final to be modified

so as to be made final and may allow the modified order and all proceedings relating to it to be

included in a supplemental record.” Tex. R. App. P. 27.2.

               The Texas Supreme Court invoked Rule 27.2 in McNally v. Guevara, a case in

which the trial court’s summary judgment did not address a party’s claim for attorney’s fees. 52

S.W.3d 195, 195-96 (Tex. 2001). A divided panel of this Court had held that the judgment was

final because the defendants had abandoned their claim by failing to include it in their summary-

judgment motion and because the trial court’s award of costs indicated finality and, implicitly,

denial of the attorney’s fees claim. McNally v. Guevara, 989 S.W.2d 380, 382 (Tex. App.—

Austin 1999), rev’d, 52 S.W.3d at 195-96. This Court then affirmed the summary judgment. Id.

at 383. The Texas Supreme Court reversed, holding that the omission of the attorney’s fees

claim from the motion did not waive the claim because the party might have moved for partial

summary judgment and that the award of costs did not, alone, make the judgment final.

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McNally, 52 S.W.3d at 196. The supreme court concluded that the judgment was not final or

appealable, reversed this Court’s judgment, and remanded to this Court “to determine whether to

abate the appeal to permit the trial court to render a final judgment, Tex. R. App. P. 27.2, or to

dismiss the appeal for want of jurisdiction.” Id. 5

               Although we and other courts of appeals have held that a Rule 27.2 abatement is

not available when an unadjudicated claim for attorney’s fees is contested and its resolution

might involve an evidentiary proceeding and other rulings, 6 the parties in this case assert they

have reached “a stipulated resolution of the attorney’s fees issue.” That stipulation will make the

trial court’s rendition of judgment on the attorney’s fees claim ministerial or perfunctory and

suitable for resolution on abatement of this appeal to make the judgment final and to award

attorney’s fees as required under Texas Civil Practice and Remedies Code Section 134.005(b).

               Under these unusual circumstances, rather than either (1) reversing and

remanding the entire case for resolution of the attorney’s fees issue, which would require the

parties to file new notices of appeal and briefing if they remain dissatisfied with any of the

probate court’s rulings, or (2) considering summary-judgment merits issues on appeal without

jurisdiction over the appeal and knowing that we must reverse for rendition of judgment on

attorney’s fees regardless of our disposition of the merits issues, we sua sponte abate the appeal

for thirty days to allow the parties to obtain from the probate court an appealable order or

       5   On remand, this Court dismissed the appeal on appellant’s motion. McNally
v. Guevara, No. 03-97-00380-CV, 2001 WL 1548740, at *1 (Tex. App.—Austin Dec. 6, 2001,
no pet.) (mem. op.).
       6 See, e.g., Hammer v. Morgan, No. 03-21-00149-CV, 2021 WL 4483505, at *2 (Tex.
App.—Austin Oct. 1, 2021, no pet.) (mem. op.); Trane US, Inc. v. Sublett, 501 S.W.3d 783, 787
(Tex. App.—Amarillo 2016, no pet.); Parks v. DeWitt Cnty. Elec. Co-op, Inc., 112 S.W.3d 157,
163-64 (Tex. App.—Corpus Christi–Edinburg 2003, no pet.).
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judgment. Once that occurs, the appeal may be reinstated for our consideration of the parties’

briefing on the merits.

                                         CONCLUSION

               This Court sitting en banc overrules Dalisa insofar as it holds that when a

reviewing court determines that a severance rendering an interlocutory order final and appealable

was improper, the reviewing court must vacate the severance, determine that it has lost

jurisdiction over the appeal, and dismiss the appeal for want of jurisdiction. We hold that the

severance of the attorney’s fees issue was improper.

               We abate the appeal for thirty days. The parties are directed to file a status report

or a motion to reinstate on or before thirty days from the date of this order; the parties may file a

motion requesting more time if needed to obtain an appealable order or judgment.               If an

appealable order or judgment including resolution of the attorney’s fees issue is filed in a

supplemental clerk’s record, upon a motion for reinstatement, the case will be reinstated for

consideration of the merits as briefed by the parties. If no appealable order or judgment is filed,

a majority of the en banc Court will reverse and remand the case to the probate court.

               Ordered on August 12, 2022.

                                              __________________________________________
                                              Darlene Byrne, Chief Justice

Before Chief Justice Byrne, Justices Goodwin, Baker, Triana, Kelly, and Smith
       Concurring and Dissenting Opinion by Justice Triana; Joined by Justice Kelly

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