Opinion
NO. 14-18-00792-CV
08-06-2020
ABANTE & JOPIO LLC AND 5110 WASHINGTON LLC, Appellants v. UR PROPERTIES I, L.P., Appellee
On Appeal from the County Civil Court at Law No. 2 Harris County, Texas
Trial Court Cause No. 1104927
MEMORANDUM OPINION
In this appeal, we consider whether the trial court abused its discretion in denying appellants' motion for attorney's fees filed after judgment. Because we conclude the trial court did not abuse its discretion in refusing to reopen evidence, we affirm.
BACKGROUND
Appellants Abante and Jopio ("Tenants") leased space at 5110 Washington Avenue in Houston and opened it as the Lincoln Bar ("the Property"). The landlord was appellee UR Properties ("Landlord").
On March 1, 2015, Tenants assumed the lease on the Property that had begun on March 1, 2013. The lease's term was 60 months and was set to expire February 28, 2018. An addendum to the lease allowed extension of the lease's term for an additional 60 months at Tenants' option. When Tenants sought to extend the lease term, Landlord did not allow extension because it alleged that alterations were made to the Property after Tenants assumed the lease that were in violation of City of Houston building codes. Specifically, Tenants modified an awning on the Property changing the awning's covering from canvas to sheet metal. Tenants also added televisions, misters, and heaters to the awning. The City cited the Property because the structure (as modified) encroached on the City's setback requirement. To comply with City codes, the City asked Landlord to either replat the Property or remove the items that were built.
On October 26, 2017, Landlord gave Tenants ten days' notice of default under the lease for:
• Multiple violations of city code, for which you have previously received citations. The violations pertain to unpermitted alterations, specifically including the outdoor awnings and construction in the alley, over the property line, and in the right-of-way.Because the items were not removed within ten days from Landlord's notice, Landlord filed a suit for eviction in justice court. Landlord prevailed in justice court and Tenants appealed to the County Civil Court at Law. The county court conducted a trial de novo.
• Failure to repair leaks and damage to interior from leaks in bathrooms and kitchen.
• Failure to remedy mold issue everywhere.
• Subleasing space from tenant next door for operation of a second bar.
• Submission of plans to city without landlord permission.
Chase Lovullo, the lessee of the Property before Tenants, testified that he built the awning over the Property in 2009 or 2010. At the time Lovullo made renovations to the Property, he was aware of the City's setback requirements and the City approved the renovations despite their encroachment on the setback.
Roveen Abante, one of the Tenants, testified that in 2016, Tenants modified the awnings built by Lovullo, building a wooden patio structure and adding televisions, a misting system, and heaters. The original structure was framed in metal with a canvas cover. Tenants replaced the metal framing with wood framing and replaced the canvas cover with sheet metal. Tenants did not alter the footprint of the existing structure. On October 5, 2017, Tenants emailed Landlord explaining several improvements Tenants intended to make to the Property and requesting reassurance on the lease extension. Landlord responded the same day saying, "Due to all the current lease breaches and ongoing city of Houston planning department violations I am not comfortable that we can do that." The email on October 5 was the first constructive notice Tenants received that Landlord considered the improvements to be breaches of the lease. It is undisputed that Tenants did not default on the rent.
Abante acknowledged that Tenants received official notice on October 26, 2017 that portions of the improvements needed to be removed to comply with the lease. Due to the effects of Hurricane Harvey, which had occurred two months earlier, Tenants were not able to retain a contractor until November. By November 22, 2017, the improvements that had violated City codes had been removed.
Following trial de novo, the county court made the following findings of fact:
A. The Lease
1. On March 1, 2013, 5110 Washington, LLC executed a lease (the "Lease") for the property at 5110 Washington Avenue, Houston, Texas 77007, leasing the property from UR Properties I, L.P. ("Landlord"). The Lease contained an addendum for extension of term, at Tenant's sole option, for sixty (60) months.
2. On March 1, 2015, Abante & Jopio, LLC executed a Lease Assumption Agreement, fully assuming the rights, duties, and obligations of and under the Lease.
3. Tenants have fulfilled, and continue to fulfill their duties and obligations under the Lease.
B. The Better Deal & Alleged Breaches
4. On October 5, 2017, at 12:52 p. m. Tenants, via email, exercised their option to extend the term of the Lease for sixty (60) months.
5. On October 5, 2017, at 12:59 p.m. Landlord refused to accept Tenants' option, making vague claims of breaches. No breaches were ever mentioned by landlord, in writing or otherwise, before Tenants exercised their option to extend.
6. On October 6, 2017, Landlord and Tenants met in person, and Landlord informed the Tenants that he could not allow them to exercise their option because he had offers on the property for "$1.5 to $1.7 million". Landlord did not mention any breaches at that meeting.
7. On October 26, 2017, Landlord sent to Tenant a notice of default, citing (i) multiple violations of city code pertaining to unpermitted alterations, specifically including outdoor awnings and construction in the alley, over the property line and in the right-of-way, (ii) failure to repair leaks and damage to interior from leaks in bathrooms and kitchen, (iii) failure to remedy mold issue everywhere, (iv) subleasing space from tenant next door, and (v) submission of plans to city without landlord permission.
8. On November 6, 2017, Landlord sent to Tenant a notice to vacate for failure to cure the alleged breaches.
9. The previous tenant erected the awnings complained of, and those were in existence at the time Abante & Jopio, LLC assumed the Lease.
10. Further, no evidence was offered showing that having violations of city code, or being "red tagged", is a breach of the Lease. Paragraphs
10(A)(3) and 16(A) of the Lease do not contemplate or govern city code violations or "red tags."The county court made several conclusions of law finding that Tenants had not breached the lease. On June 13, 2018, the county court signed an order holding that Landlord take nothing from Tenants.
11. Landlord's written consent was given to Tenants regarding patio cover, through an email from Landlord sent to Tenants on April 6, 2017.
12. No evidence was offered showing that leaks and damage to the interior from leaks in the bathrooms and kitchen were present at the time the notice to vacate was delivered.
13. No evidence was offered showing that a mold issue existed before or at the time the notice to vacate was delivered.
14. No evidence was offered showing that the Lease prohibits the Tenants from subleasing from anyone else, party to another lease.
15. No evidence was offered showing that the Lease prohibits submission of plans to the city without landlord permission.
16. Though not pled, the Landlord's complaints regarding the building being in the right-of-way and red-tagged in 2018 are misplaced, as the offending parts were already in place at the time Tenants assumed the Lease.
On July 6, 2018, Tenants filed a motion for attorney's fees and costs. The motion quoted a provision in the lease that provided for recovery of fees and costs by the prevailing party. Tenants averred in their motion that they incurred $32,315 in attorney's fees in defending the suit as well as $10.78 in costs. The lease provided:
ATTORNEY'S FEES: Any person who is a prevailing party in any legal proceeding brought under or related to the transaction described in this lease is entitled to recover prejudgment interest, reasonable attorney's fees, and all other costs of litigation from the nonprevailing party.Landlord responded arguing Tenants were not entitled to attorney's fees because (1) the trial court lost plenary power to award fees after final judgment; and (2) Tenants had not presented evidence of their fees at trial. The county court signed an order on August 6, 2018 denying Tenants' motion for attorney's fees but granting their motion for court costs. Tenants timely appealed. In their notice of appeal Tenants purport to appeal the "Final Judgment signed June 13, 2018 and Order denying its motion to modify the judgment to award attorney's fees, signed August 6, 2018." Tenants extended the county court's initial 30-day plenary power to change its judgment by filing an appropriate post-judgment motion within the 30-day period. See Lane Bank Equip. Co. v. Smith Southern Equip., Inc., 10 S.W.3d 308, 312 (Tex. 2000). Because Tenants complain only of the county court's denial of their request for attorney's fees, we address the August 5, 2018 order in this opinion.
ANALYSIS
On appeal, Tenants challenge the trial court's denial of their motion for attorney's fees. Neither party challenges Landlord's take-nothing judgment nor the trial court's findings of fact and conclusions of law. Therefore, it is undisputed that Tenants are the prevailing party under the lease. It is also undisputed that Tenants requested attorney's fees in their pleading in the county court but did not seek to produce evidence of fees until three weeks after the county court signed the June 13, 2018 order.
I. Standard of Review and Governing Law
We review a trial court's decision to deny a party's motion to offer additional evidence for abuse of discretion. In re Hawk, 5 S.W.3d 874, 876-77 (Tex. App.—Houston [14th Dist.] 1999, no pet.). Absent a clear abuse of discretion, a reviewing court should not disturb a trial court's refusal to reopen a case for the purpose of admitting additional evidence. See Word of Faith World Outreach Ctr. Church, Inc. v. Oechsner, 669 S.W.2d 364, 366 (Tex. App.—Dallas 1984, no writ).
In determining parties' entitlement to attorney's fees, Texas courts follow the American Rule, which provides that litigants may recover attorney's fees only if a statute or contract specifically provides for such a recovery. Rohrmoos Venture v. UTSW DVA Healthcare, LLP, 578 S.W.3d 469, 484 (Tex. 2019). Section 24.006 of the Property Code, entitled "Attorney's Fees and Costs of Suit," provides for recovery of fees "if a written lease entitles the landlord or the tenant to recover attorney's fees[.]" Tex. Prop. Code Ann. § 24.006(c). Under this provision, a prevailing tenant is entitled to recover reasonable attorney's fees if the written lease provides for recovery of attorney's fees and the tenant had a request for affirmative relief pending in the trial court. See Stroman v. Tautenhahn, 465 S.W.3d 715, 718 (Tex. App.—Houston [14th Dist.] 2015, pet. dism'd w.o.j.). Recovery of mandatory attorney's fees pursuant to the parties' contract requires a request for, and proof of, the reasonableness of attorney's fees. See Hassell Const. Co., Inc. v. Stature Commercial Co., 162 S.W.3d 664, 668 (Tex. App.—Houston [14th Dist.] 2005, no pet.); see also Rohrmoos, 578 S.W.3d at 484-85, 506.
Here, Tenants requested attorney's fees in their pleading, but failed to put on evidence of their fees in the trial court. By filing their motion for fees after the evidence was closed and the June 13, 2018 order was signed, Tenants asked the trial court to reopen the evidence to allow them to put on evidence of reasonable attorney's fees.
Texas Rule of Civil Procedure 270 provides that a trial court may permit additional evidence to be offered at any time when it clearly appears necessary to the administration of justice. Tex. R. Civ. P. 270. Rule 270 allows, but does not require, a trial court to permit additional evidence. Lopez v. Lopez, 55 S.W.3d 194, 201 (Tex. App.—Corpus Christi 2001, no pet.); see also Naguib v. Naguib, 137 S.W.3d 367, 372 (Tex. App.—Dallas 2004, pet. denied). In deciding whether to exercise its discretion and reopen the evidence, the trial court may consider a number of factors, including (1) the diligence of a party in presenting its evidence, (2) whether reopening the record will cause undue delay, (3) whether granting the motion to reopen the evidence "will do an injustice," and (4) whether the evidence to be introduced is decisive. Hawk, 5 S.W.3d at 877. "[A] trial court does not abuse its discretion by refusing to reopen a case after evidence is closed if the party seeking to reopen has not shown diligence in attempting to produce the evidence in a timely fashion." Lopez, 55 S.W.3d at 201 (citing Estrello v. Elboar, 965 S.W.2d 754, 759 (Tex. App.—Fort Worth 1998, no pet.)).
II. The trial court did not abuse its discretion in denying Tenants' request to reopen the evidence.
We now apply these factors to the facts of this case to determine if the trial court abused its discretion in denying Tenants' motion to reopen. In addressing their diligence in presenting their evidence, Tenants argue that "the informality of the justice court rules and speed of the proceedings and appeal should be considered as a mitigating factor when determining whether counsel acted diligently[.]" Tenants do not point to anything in the record that shows they acted diligently.
Tenants filed their appeal to county court January 25, 2018, and trial de novo was conducted May 8, 2018, and no one objected to the court closing the evidence. The county court's judgment was signed more than a month later. Tenants did not seek to reopen the evidence until three weeks after the judgment was signed. While the county court had plenary power, it was not required to reopen the evidence. See Tex. R. Civ. P. 329b ("The trial court, regardless of whether an appeal has been perfected, has plenary power to grant a new trial or to vacate, modify, correct, or reform the judgment within thirty days after the judgment is signed."); Lopez, 55 S.W.3d at 201 (holding that Rule 270 allows, but does not require, a trial court to permit additional evidence). Also, at trial, Landlord presented evidence of its attorney's fees. Tenants could have presented evidence of their fees at trial. Nothing in the record reflects that Tenants were diligent in attempting to produce evidence of attorney's fees in a timely fashion.
Tenants did not file their motion until two months after trial had ended and Tenants cite cases in which courts held the trial court did not abuse its discretion in reopening evidence as many as 33 days after trial. See Craft v. Davis, No. 02-07-332-CV, 2008 WL 4180357, at *4 (Tex. App.—Fort Worth Sept. 11, 2008, no pet.) (mem. op.); Harrison v. Bailey, 260 S.W.2d 702, 705 (Tex. Civ. App.—Eastland 1953, no writ); and Priddy v. Tabor, 189 S.W. 111, 116 (Tex. Civ. App.—Fort Worth 1916, writ ref'd). Tenants cite no authority, nor have we found any, in which an appellate court held that the trial court abused its discretion in denying a motion to reopen evidence to put on evidence of attorney's fees. We decline to extend abuse of discretion to apply in cases where the trial court chose not to reopen evidence two months after trial concluded.
Tenants further contend that reopening the evidence would not have caused an injustice because they were entitled to attorney's fees as the prevailing party and that the trial court "inadvertently reward[ed] a landlord who brought a harassing eviction action against non-breaching tenants." Tenants attempt to shift the burden to Landlord by claiming that the trial court's denial of the motion caused injustice to Tenants. "In reviewing a motion to reopen, this court must protect injustice to the non-movant by placing the burden to prove an absence of injustice on the moving party." Mora, 2005 WL 568067, at *6 n.2. Tenants have not shown how injustice would not arise from granting their motion.
Finally, Tenants argue their evidence of attorney's fees was decisive. Tenants produced evidence of attorney's fees in the form of an unsworn declaration from their attorney. The unsworn declaration stated the experience of Tenants' attorney, his hourly billing rate, his paralegal's hourly rate, and the hours they spent working on this case. However, only fees reasonable and necessary for the legal representation will be shifted to the non-prevailing party, and not necessarily the amount contracted for between the prevailing party and its attorney, as a client's agreement to a certain fee arrangement or obligation to pay a particular amount does not necessarily establish that fee as reasonable and necessary. Rohrmoos, 578 S.W.3d at 487-88. Stated differently, an amount incurred or contracted for is not conclusive evidence of reasonableness or necessity. Id.
Initially, the attorney failed to sign the declaration. Tenants later filed an amended unsworn declaration with the attorney's signature.
Determination of reasonable attorney's fees requires consideration of several factors including: (1) the time and labor required, the novelty and difficulty of the questions involved, and the skill required to perform the legal service properly; (2) the likelihood that the acceptance of the particular employment will preclude other employment by the lawyer; (3) the fee customarily charged in the locality for similar legal services; (4) the amount involved and the results obtained; (5) the time limitations imposed by the client or the circumstances; (6) the nature and length of the professional relationship with the client; (7) the experience, reputation, and ability of the lawyer or lawyers performing the services; and (8) whether the fee is fixed or contingent on results obtained or uncertainty of collection before the legal services have been rendered. Arthur Andersen & Co. v. Perry Equip. Corp., 945 S.W.2d 812, 818 (Tex. 1997). As with any other fact question, the opposing party is entitled to rebut evidence of attorney's fees. While Tenants' attorney's affidavit may be "decisive," Tenants are not entitled to put on such evidence without permitting Landlord an opportunity to challenge the evidence. Tenants' attorney's declaration cannot overcome Tenants' lack of diligence in seeking to reopen the evidence. We overrule Tenants' sole issue on appeal.
CONCLUSION
Having overruled Tenants' sole issue on appeal we affirm the trial court's judgment.
/s/ Jerry Zimmerer
Justice Panel consists of Justices Zimmerer, Spain, and Hassan.