Opinion
No. 04-17-00699-CV
06-06-2018
COX'S FIESTA SUPERMARKETS OF SAN ANTONIO, INC. d/b/a La Fiesta Supermarket, Appellant v. WMS, L.L.C., Appellee
MEMORANDUM OPINION
From the County Court at Law No. 5, Bexar County, Texas
Trial Court No. 2014CV02683-A
Honorable David J. Rodriguez, Judge Presiding Opinion by: Sandee Bryan Marion, Chief Justice Sitting: Sandee Bryan Marion, Chief Justice Karen Angelini, Justice Irene Rios, Justice AFFIRMED
Appellant Cox's Fiesta Supermarkets of San Antonio, Inc. d/b/a La Fiesta Supermarket ("La Fiesta") appeals from a final judgment in a quantum meruit dispute tried to the bench. We affirm the trial court's judgment.
BACKGROUND
The parties dispute most of the central facts in this case but agree to the following: (1) La Fiesta stored equipment in an unimproved commercial property owned by Appellee WMS, L.L.C. ("WMS") in San Antonio (the "Property"); (2) La Fiesta and WMS did not have a written lease agreement; and (3) La Fiesta never paid any rent for the space. The parties dispute the amount La Fiesta owes WMS for occupying the Property.
La Fiesta and WMS never communicated directly with each other, but rather only through Amanda Concha, a real estate broker and owner of SA Core Commercial, L.L.C. ("SA Core"). La Fiesta's director and manager Ron Catlett asked Concha if any of her clients had storage space La Fiesta could use. WMS was a client of SA Core, so Concha knew WMS had storage space available at the Property. Concha told Catlett La Fiesta could store its equipment at the Property for $500 per month and La Fiesta moved its equipment into the Property for storage. Catlett asked Concha on multiple occasions for information regarding where and how to direct rent payments, but Concha never gave him an answer, and La Fiesta never made a payment. According to Concha, WMS's owner and director Wael Suleiman was always out of town and promising to "deal with it when I get back."
Suleiman believed the fair market rent for the Property was $3,000 per month, but testified he told Concha he would only charge La Fiesta $2,000 per month as a favor to Concha. Michael Hoover, a real estate agent licensed over thirty years who was familiar with the Property, opined its fair market rental value was at least $2,000 per month at the time La Fiesta occupied it. Suleiman testified he asked Concha about the unpaid rent on multiple occasions, but Concha always told him La Fiesta's representatives were out of the country and assured him La Fiesta could and would pay. After Suleiman told Concha he was going to lock La Fiesta out of the Property, Suleiman observed all of La Fiesta's equipment had been removed. On September 5, 2014, Suleiman's counsel sent a letter to La Fiesta demanding back rent at the rate of $2,000 per month from July 2012 through June 2014.
Later in September 2014, SA Core initiated this lawsuit against WMS, seeking a broker's commission related to another WMS property. WMS answered and asserted counterclaims against SA Core for, among other things, breach of fiduciary duty and breach of contract related to La Fiesta's failure to pay rent for its use of the Property. WMS also asserted third-party claims against La Fiesta for breach of contract, unjust enrichment, and quantum meruit for unpaid rent. WMS and SA Core settled their dispute before trial, and a bench trial was held on WMS's claims against La Fiesta. The trial court ruled in favor of WMS on its quantum meruit claim only and awarded WMS $30,000 in unpaid rent and $20,515.31 in attorney's fees through trial, as well as conditional appellate attorney's fees. La Fiesta appeals.
QUANTUM MERUIT
In its first issue, La Fiesta argues the trial court erred in finding in WMS's favor on the quantum meruit claim because: (1) as a landlord, WMS did not render valuable service or furnish materials to La Fiesta; and (2) WMS never gave La Fiesta reasonable notice that it expected payment.
A. A landlord may recover unpaid rent under quantum meruit.
Quantum meruit is an equitable theory of recovery based on an implied agreement to pay for benefits received. Heldenfels Bros., Inc. v. City of Corpus Christi, 832 S.W.2d 39, 41 (Tex. 1992). The plaintiff alleging quantum meruit must prove: (1) valuable service was rendered or materials furnished, (2) to the defendant, (3) which the defendant accepted, and (4) under such circumstances as reasonably notified the defendant that the plaintiff expected to be paid by the defendant. Id. A plaintiff may recover under quantum meruit only if there is no express contract covering the services or materials furnished. Vortt Exploration Co. v. Chevron U.S.A., Inc., 787 S.W.2d 942, 944 (Tex. 1990).
Here, there is no dispute La Fiesta used and occupied WMS's property, but La Fiesta argues WMS may not recover unpaid rent under quantum meruit because a landlord does not render "valuable service" or furnish "materials." A number of courts in Texas have held to the contrary, and we are unaware of any authority suggesting a property owner cannot obtain quantum meruit for unpaid rent. See, e.g., 2616 S. Loop L.L.C. v. Health Source Home Care, Inc., 201 S.W.3d 349, 360 (Tex. App.—Houston [14th Dist.] 2006, no pet.) (holding trial court erred in dismissing quantum meruit claim for unpaid rent where "[t]he evidence is uncontroverted that the Tenants received and accepted the use of the Property and received written demands for payment of market rental rates in return"); Alford v. Johnston, 224 S.W.3d 291, 297 (Tex. App.—El Paso 2005, pet. denied) ("In an action for damages for a lessee's wrongful holdover, the proper measure of damages is the reasonable market rental value of the property during the holdover period."); Frazier v. Havens, 102 S.W.3d 406, 412-13 (Tex. App.—Houston [14th Dist.] 2003, no pet.) (noting tenants would have prevailed on quantum meruit counterclaim for overpayment of rent if trial court had not erred in applying statute of limitations to that claim); Camacho v. Sullivan Transfer Co., 577 S.W.2d 793, 794 (Tex. App.—Waco 1979, no writ) (affirming quantum meruit award where "[d]efendant occupied plaintiff's premises for 3 months without payment of any rent and refused to vacate when requested to by plaintiff after misunderstanding as to the rent surfaced").
La Fiesta's reliance on an unreported decision from our sister court is misplaced. In that case, the court of appeals held there is no quantum meruit claim for loss of the value of real property through a valid foreclosure. D&R Constructors, Inc. v. Tex. Gulf Energy, Inc., No. 01-15-00604-CV, 2016 WL 4536959, at *14 (Tex. App.—Houston [1st Dist.] Aug. 30, 2016, pet. denied). The case did not address whether quantum meruit is available to recover unpaid rent.
Based on this authority, we conclude the trial court did not err in holding WMS, as a property owner, may recover unpaid rent from La Fiesta under a quantum meruit theory of recovery.
B. The evidence is sufficient to support the trial court's finding that La Fiesta had notice of WMS's expectation of payment.
La Fiesta also argues there is no evidence it had reasonable notice that WMS expected payment for La Fiesta's use and occupation of the property. See Heldenfels Bros., 832 S.W.2d at 41 (requiring proof of circumstances reasonably notifying defendant that plaintiff expected payment). La Fiesta essentially argues the evidence is legally insufficient to support the verdict. The test for legal sufficiency is "whether the evidence at trial would enable reasonable and fair-minded people to reach the verdict under review." City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005). We credit evidence favoring the trial court's finding if a reasonable factfinder could, and we disregard contrary evidence unless a reasonable factfinder could not. Id.
Here, La Fiesta's argument is undermined by the testimony of its director and manager Ron Catlett. Catlett testified he understood he could not occupy the Property for free:
Q [by WMS's counsel]: You weren't thinking that you were going to get this space free, were you?Catlett also testified he asked Amanda Concha on multiple occasions where and how to make monthly rent payments, indicating his understanding that the owner of the property expected payment for La Fiesta's use of the space. In her testimony, Concha confirmed Catlett asked her for information regarding how to make rent payments. Neither Catlett nor Concha testified they were not aware WMS expected to be paid rent for the Property.
A [by Catlett]: I did not.
Q: You understood you were going to have to pay consideration for it?
A: I understood I was going to pay $500 a month, yes, sir.
. . . Q: We're clear that it wasn't free?
A: We're clear it wasn't free.
Accordingly, we hold there is legally sufficient evidence in the record demonstrating La Fiesta used and occupied the Property under such circumstances as reasonably notified La Fiesta that WMS expected to be paid by La Fiesta. La Fiesta's first issue is overruled.
ATTORNEY'S FEES
In its second and third issues, La Fiesta argues the trial court erroneously awarded WMS attorney's fees because: (1) no statute authorizes an award of fees on a quantum meruit claim; and (2) even if attorney's fees are recoverable on WMS's quantum meruit claim, WMS failed to segregate recoverable from unrecoverable fees.
A. Attorney's fees are available to a party prevailing on a quantum meruit claim.
A party who prevails on a quantum meruit claim is entitled to recover attorney's fees. Gentry v. Squires Constr., Inc., 188 S.W.3d 396, 406 (Tex. App.—Dallas 2006, no pet.); see also TEX. CIV. PRAC. & REM. CODE ANN. § 38.001(1), (3) (West 2014) (authorizing recovery of attorney's fees in claims for rendered services or furnished material). Because WMS prevailed on its quantum meruit claim against La Fiesta, WMS was entitled to recover its attorney's fees. La Fiesta's second issue is overruled.
B. WMS segregated its fees.
La Fiesta argues the trial court erred by not requiring WMS to segregate fees related to its claims against SA Core from fees related to its claims against La Fiesta. "[I]f any attorney's fees relate solely to a claim for which such fees are unrecoverable, a claimant must segregate recoverable from unrecoverable fees." Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 313 (Tex. 2006). However, "when discrete legal services advance both a recoverable and unrecoverable claim that they are so intertwined," the party seeking attorney's fees may recover the entire amount without segregating. Id. at 313-14.
The trial court held a post-trial hearing on WMS's claim for attorney's fees. During the hearing, the trial court admitted Plaintiff's Exhibit 1A, a billing statement documenting the work WMS's counsel performed in this case, and the trial court heard testimony from WMS's counsel Richard Karam. Exhibit 1A explicitly indicates the amounts Karam segregated from the total amount of WMS's attorney's fees claim. Karam also testified regarding his efforts to segregate recoverable from unrecoverable fees.
First, Karam testified he excluded all work related to SA Core's claim against WMS, which was unrelated to the dispute with La Fiesta. The first entry in Plaintiff's Exhibit 1A is for 2.50 hours on February 6, 2015: "Hearing on Plaintiff's Motion to Sever Defendant's Counterclaim and Third-Party Action into a Separate Lawsuit; discussion with Wael Suleiman." A footnote indicates 1.25 hours of the first entry was segregated from the final total. All other entries in Plaintiff's Exhibit 1A are dated after the trial court granted the motion to sever.
Second, Karam testified he excluded all work in the severed action that related solely to SA Core. However, "not a lot of time was spent on [SA] Core," and much of the work was too intertwined between the two defendants to be segregated. Karam explained:
La Fiesta hired—hired Ms. Concha to find storage space on behalf of La Fiesta to store their equipment. She was involved with the discussions and she was the intermediary between both parties. She didn't convey—apparently didn't convey the essential terms of the contract to both parties correctly. And she was intricately involved in this lawsuit. She—all of her testimony, all of her discovery was material to the action against La Fiesta. There's no way to separate her.Each of the claims WMS asserted against SA Core was premised on the allegation that Concha permitted La Fiesta to occupy the Property without any agreement as to the terms of a lease. The work required to prove this allegation also necessarily advanced WMS's claim against La Fiesta for quantum meruit based on its occupation and use of the Property without paying rent.
La Fiesta argues WMS's failure to segregate is evidenced by the inclusion of fees for responding to SA Core's motion to strike Michael Hoover's testimony. WMS, however, designated Hoover as an expert on the fair and reasonable market value of rent for the Property. Therefore, regardless of whether SA Core or La Fiesta moved to strike his testimony, Hoover's testimony was necessary to prove the value of WMS's quantum meruit claim against La Fiesta. Therefore, the fees for this work were so intertwined they could not be segregated between SA Core and La Fiesta.
Because the record demonstrates Karam segregated his fees where possible and segregation is not required when discrete legal services advance both a claim for which fees are recoverable and a claim for which they are not, we overrule La Fiesta's third issue.
CONCLUSION
We affirm the trial court's judgment.
Sandee Bryan Marion, Chief Justice