Opinion
03-21-00099-CV
02-28-2023
Bensal Limited Partnership; Daneshjou Resources, Inc.; Benny Daneshjou; and Sally Daneshjou, Appellants v. Equity Secured Capital, L.P., and Equity Secured Investments, Inc., Appellees
FROM THE 459TH DISTRICT COURT OF TRAVIS COUNTY NO. D-1-GN-19-006632, THE HONORABLE AMY CLARK MEACHUM, JUDGE PRESIDING
Before Justices Baker, Smith, Theofanis
MEMORANDUM OPINION
ROSA LOPEZ THEOFANIS, JUSTICE
Bensal Limited Partnership, Daneshjou Resources, Inc. (DRI), and Benny and Sally Daneshjou (collectively, Appellants) appeal the district court's amended final judgment granting the traditional motion for summary judgment filed by Equity Secured Investments, Inc. (ESI). After ESI filed its motion, the Daneshjous filed third-party counterclaims against Equity Secured Capital, L.P., (ESC) and ESI (collectively, Appellees) requesting declaratory relief as well as court costs and attorney's fees under the Uniform Declaratory Judgments Act (UDJA). See Tex. Civ. Prac. & Rem. Code § 37.009. On appeal, Appellants contend that the district court erred by denying the Daneshjous' third-party counterclaims in its amended final judgment because the counterclaims were not addressed in ESI's summary-judgment motion. We will affirm the district court's amended final judgment.
Although Bensal and DRI appear as appellants, they do not allege any error in the amended final judgment as to themselves.
BACKGROUND
The Daneshjous are a married couple. Sally owns Bensal, a limited partnership managed by Benny, and is also the president and secretary of DRI, Bensal's general partner.
In 2017 Bensal, through DRI, obtained a promissory real estate lien note from ESC secured by a deed of trust against real property owned by Bensal in Travis County. The Daneshjous executed guaranties agreeing to pay, when due or declared due, the note's principal as well as interest, attorney's fees, and costs provided for in the loan documents. In 2018, ESC assigned the note-with all liens-to ESI, its general partner.
Following a disagreement between the parties about the note's terms, the substitute trustee appointed by ESI under the deed of trust determined that Bensal was in default on the note. ESI directed the substitute trustee to hold a foreclosure sale, at which ESI purchased Bensal's Travis County property.
Bensal and DRI filed suit against Appellees alleging causes of action for common law fraud, statutory fraud, tortious interference with a contract, and negligent misrepresentation. ESI responded by filing a counterclaim against Bensal for deficiency on the note or, alternatively, attorney's fees resulting from Bensal's alleged breach of contract as well as a third-party petition against the Daneshjous for amounts owed under the guaranties, including the purported deficiency, court costs, and attorney's fees. In an amended petition, Bensal and DRI dropped their tortious-interference claim; added claims for usury, breach of contract, wrongful foreclosure, and suit to quiet title; and requested a declaratory judgment that the foreclosure sale was void. Appellees in turn filed several motions for summary judgment on Bensal's and DRI's claims. On August 7, 2020, the district court granted all of Appellees' motions, denying each of Bensal's and DRI's causes of actions.
ESI next filed a motion for summary judgment on its amended counterclaim and third-party petition. In its third-party petition, ESI stated that it "br[ought] suit against the Daneshjous, jointly and individually, as guarantors of the Note and for amounts owed under the Guaranty, including but not limited to all sums incurred and expended by [ESI] in the causes of action described . . . in this case" plus interest and reasonable and necessary attorney's fees. In its summary-judgment motion, ESI asserted in relevant part that it:
moves for summary judgment on its counterclaim against [Bensal and DRI] for the deficiency owed on the Note, plus all accrued default interest and all of its reasonable and necessary attorney's fees incurred. [ESI] further moves for summary judgment against the Daneshjous on its third-party claim for their personal guaranties guaranteeing payment of all reasonable and necessary attorney's fees incurred by [ESI] in enforcing and collecting on the Note.
The Daneshjous filed a response, a motion to determine the fair market value of the Travis County property, and counterclaims against Appellees. In their counterclaims, the Daneshjous sought declaratory judgments that the substitute trustee's deed and notices of sale were invalid or void, that the Daneshjous had not waived any rights under Section 51.003 of the Texas Property Code, that they were subject to the protections of Chapter 43 of the Texas Civil Practice and Remedies Code, and that they were entitled to court costs and attorney's fees under the UDJA. They subsequently nonsuited the counterclaims concerning the substitute trustee, and the district court ordered those nonsuited claims dismissed with prejudice.
A hearing was held on ESI's summary-judgment motion on October 30, 2020, at which ESI announced in open court that it was nonsuiting its claims against the Daneshjous for any deficiency on the note or guaranties as well as for attorney's fees incurred prior to the foreclosure sale. On November 20, 2020, the district court ordered the claims nonsuited and entered a final judgment. It amended its final judgment on December 1, 2020, finding in relevant part that all of Bensal and DRI's affirmative claims against Appellees had been denied; that ESI had nonsuited "any claim against the Daneshjous for any claim for deficiency, other than for fees and expenses incurred after" the foreclosure sale; and that ESI's traditional motion for summary judgment against Appellants was "in all things" granted. The court awarded ESI judgment against Bensal and DRI in an amount of $1,970,500.00 plus $163,485.45 in attorney's fees and court costs and against the Daneshjous in an amount of $91,970.39 in attorney's fees and expenses. It likewise ordered that Appellants "take nothing on any claims asserted by them in this case" and stated "This judgment is FINAL and disposes of all claims by and between the parties in this matter. All relief not otherwise previously granted or expressly granted herein is hereby DENIED." This appeal followed.
DISCUSSION
In a single issue, Appellants assert that the district court erred in granting final judgment because ESI's motion for summary judgment did not address the Daneshjous' counterclaims and none of the claims or parties were severed, asking that we reverse the order "as to finality" and remand the cause to allow the district court to consider the Daneshjous' counterclaims. Liberally construing Appellants' brief, we understand them to contend that the district court erred by granting Appellees greater relief than ESI sought in its traditional motion for summary judgment. See Tex. R. App. P. 38.9 (providing that appellate courts are to construe briefing liberally).
Standard of Review
We review summary judgments de novo, taking as true evidence favorable to the nonmovant and indulging reasonable inferences and resolving doubts in the nonmovant's favor. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). A motion for summary judgment must stand or fall on the grounds expressly presented in the motion, and a court considering such a motion is restricted to the issues presented in the motion, response, and replies. See Tex. R. Civ. P. 166a(c); McConnell v. Southside Indep. Sch. Dist., 858 S.W.2d 337, 341-42 (Tex. 1993). If the trial court does not specify the grounds for its summary judgment, "we must affirm the summary judgment if any of the theories presented to the trial court and preserved for appellate review are meritorious." Provident Life & Accident Ins. v. Knott, 128 S.W.3d 211, 216 (Tex. 2003).
A traditional summary judgment is proper if the movant submits sufficient evidence to establish that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law. See Tex. R. Civ. P. 166a(c); Amedisys, Inc. v. Kingwood Home Health Care, LLC, 437 S.W.3d 507, 511 (Tex. 2014); Knott, 128 S.W.3d at 215-16. If the movant meets this burden, the burden shifts to the nonmovant to raise a fact issue. Amedisys, 437 S.W.3d at 511.
Finality of Judgment
As a preliminary matter, we must address Appellants' contention that the district court erred by designating its judgment as final. Absent certain statutory exceptions not present in this case, we have jurisdiction "only to review final judgments." McFadin v. Broadway Coffeehouse, LLC, 539 S.W.3d 278, 283 (Tex. 2018) (citing Tex. Civ. Prac. & Rem. Code § 51.014).
A judgment rendered without a conventional trial on the merits is final if it (1) "actually disposes of every pending claim and party" or (2) "clearly and unequivocally states that it finally disposes of all claims and parties, even if it does not actually do so." In re Guardianship of Jones, 629 S.W.3d 921, 924 (Tex. 2021); see Lehmann v. Har-Con Corp., 39 S.W.3d 191, 195, 200 (Tex. 2001), superseded by statute on other grounds as recognized by Industrial Specialists, LLC v. Blanchard Refin. Co., LLC, 652 S.W.3d 11, 14-15 (Tex. 2022). There is no "magic language" requirement, although "a trial court may express its intent to render a final judgment by describing its action as (1) final, (2) a disposition of all claims and parties, and (3) appealable." Bella Palma, LLC v. Young, 601 S.W.3d 799, 801 (Tex. 2020) (citing In re R.R.K., 590 S.W.3d 535, 543 (Tex. 2019)). When a judgment contains a "finality phrase," a reviewing court "cannot look at the record"; rather, "it must take the order at face value." In re Elizondo, 544 S.W.3d 824, 828 (Tex. 2018) (per curiam) (orig. proceeding). As long as the "intent to finally dispose of the case" is "unequivocally expressed in the words of the order itself," the judgment is final and appealable, "even though the record does not provide an adequate basis for rendition of judgment." Lehmann, 39 S.W.3d at 200; see Young, 601 S.W.3d at 801 (explaining that "a clear and unequivocal statement of finality must be given effect even if review of the record would undermine finality").
In other words, if the trial court grants more relief than requested, "that judgment, although erroneous, is final and appealable." G & H Towing Co. v. Magee, 347 S.W.3d 293, 298 (Tex. 2011); see Cammack the Cook, L.L.C. v. Eastburn, 296 S.W.3d 884, 890 (Tex. App.- Texarkana 2009, pet. denied) ("In such a case, where the language of the order suggests the court intended the summary judgment to be final, but adjudicated counterclaims which were not brought by summary judgment, the judgment is 'final-erroneous, but final.'" (quoting Lehmann, 39 S.W.3d at 200)). Under such circumstances, an appellate court "should treat such a summary judgment as any other final judgment, considering all matters raised and reversing only those portions of the judgment based on harmful error." G & H Towing, 347 S.W.3d at 298.
Consequently, even if the district court improperly adjudicated counterclaims that were not addressed in ESI's summary-judgment motion, its amended summary judgment would nevertheless be final-albeit erroneous-because it contained clear and unequivocal language of finality: the amended judgment provided that all of Bensal's and DRI's affirmative claims had been denied; that ESI's motion for summary judgment was granted "in all things"; that Appellants should "take nothing on any claims asserted by them in this case"; that if the Daneshjous appealed the judgment, Appellees would have judgment against them for attorney's fees; that the judgment "is FINAL and disposes of all claims by and between the parties in this matter"; and that "[a]ll relief not otherwise previously granted or expressly granted herein is hereby DENIED." We hold that because the amended judgment's language clearly and unequivocally demonstrates the district court's intent to dispose fully of the case, the amended judgment is final. See Guardianship of Jones, 629 S.W.3d at 924; Young, 601 S.W.3d at 801; Lehmann, 39 S.W.3d at 205 ("Language that the plaintiff take nothing by his claims in the case . . . shows finality if there are no other claims by other parties.").
Summary Judgment on Counterclaims
The Daneshjous' counterclaims, first raised after ESI filed its motion for summary judgment, were not expressly addressed in the motion, but in its final judgment the district court ordered that the Daneshjous "take nothing on any claims asserted by them in this case" and that "[a]ll relief not otherwise previously granted or expressly granted" was denied. The district court thus granted summary judgment on the counterclaims, and we must now determine whether that action amounted to harmful error. G & H Towing, 347 S.W.3d at 298.
Granting summary judgment on a claim not addressed in a motion for summary judgment "is, as a general rule, reversible error." Id. at 297 (citing Chessher v. Southwestern Bell Tel. Co., 658 S.W.2d 563, 564 (Tex. 1983) (per curiam)); see Tex. R. Civ. P. 166a(c). A movant who does not amend or supplement its summary-judgment motion to address newly added claims in a subsequent petition generally "is not entitled to summary judgment on those claims." Callahan v. Vitesse Aviation Servs., LLC, 397 S.W.3d 342, 350 (Tex. App-Dallas 2013, no pet.) (citing Chessher, 658 S.W.2d at 564; Wilson v. Davis, 305 S.W.3d 57, 73 (Tex. App-Houston [1st Dist] 2009, no pet.); Blancett v. Lagniappe Ventures, Inc., 177 S.W.3d 584, 592 (Tex. App-Houston [1st Dist.] 2005, no pet.)).
However, limited exceptions apply, and an amended, supplemental, or new motion is not required when: (1) the amended petition essentially reiterates previously pleaded theories of liability, (2) a ground asserted in a motion for summary judgment conclusively negates an element common to both the new claim and the previously pleaded claims, or (3) the original motion is broad enough to encompass the newly asserted claims. See Callahan, 397 S.W.3d at 350 (citing Wilson, 305 S.W.3d at 73 n.13; Coterill Jenkins v. Texas Med. Ass'n Health Care Liab. Claim Tr., 383 S.W.3d 581, 592 (Tex. App-Houston [14th Dist] 2012, pet. denied); Rotating Servs. Indus., Inc. v. Harris, 245 S.W.3d 476, 487 (Tex. App-Houston [1st Dist.] 2007, pet. denied)); Rush v. Johnson, No. 03-19-00102-CV, 2019 WL 4020272, at *4 (Tex. App-Austin Aug. 27, 2019, no pet.) (mem. op.) (citing Silver Gryphon, LLC v. Bank of N.Y. Mellon, 529 S.W.3d 595, 598 (Tex. App-Houston [14th Dist.] 2017, no pet.)).
Moreover, any error is rendered harmless when (1) the motion asserts grounds that bar the omitted cause of action as a matter of law or (2) the omitted claim is derivative of an addressed claim on which the movant showed itself entitled to summary judgment. See G & H Towing, 347 S.W.3d at 297-98; Endeavor Energy Res., L.P. v. Cuevas, 593 S.W.3d 307, 312 (Tex. 2019); Kilgore Indep. Sch. Dist. v. Axberg, 572 S.W.3d 244, 263 (Tex. App -Texarkana 2019, pet. denied); see also Withrow v. State Farm Lloyds, 990 S.W.2d 432, 437-38 (Tex. App -Texarkana 1999, pet. denied) (affirming summary judgment on cause of action not specifically addressed in summary-judgment motion where reversing would be meaningless because omitted cause of action was precluded as matter of law). The harmless error rule, which applies to all errors, provides that:
before reversing a judgment because of an error of law, the reviewing court must find that the error amounted to such a denial of the appellant's rights as was reasonably calculated to cause and probably did cause the rendition of an improper judgment, or that the error probably prevented the appellant from properly presenting the case [on appeal].G & H Towing, 347 S.W.3d at 297-98.
After the Daneshjous nonsuited their counterclaims regarding the substitute trustee, their remaining counterclaims sought the following declaratory relief under the UDJA:
11. [The Daneshjous] also seek a declaration they have not waived any rights under the Texas anti-deficiency statutes set forth in Tex. Prop. Code § 51, et seq. and that they are entitled to a determination of fair market value of the Property as provided in the applicable section of Tex. Prop. Code § 51, et seq.
12. [The Daneshjous] also seek a declaration the purported waiver of rights under Tex. Bus. & Comm. Code § 34 as provided under the guaranty at issue in this case in fact waived nothing on the basis Tex. Bus. & Comm. Code § 34 had been repealed more than 8 years before the execution of any guaranty and that they are entitled to the benefits of Tex. Civ. Prac. & Rem. Code § 43.
13. Pursuant to Tex. Civ. Prac. & Rem. Code § 37.009, . . . [the Daneshjous] request the Court award [them] costs and reasonable and necessary attorney's fees as are equitable and just.
See Tex. Prop. Code § 51.003(a) (requiring that deficiency action be brought within two years of foreclosure sale), (b)-(d) (allowing defendant in deficiency action to claim offset against deficiency based on fair market value of foreclosed property when that value exceeds property's sale price).
See Tex. Civ. Prac. & Rem. Code §§ 43.002 (allowing surety, by written notice, to require obligee to bring suit on contract "without delay" when right of action has accrued, and discharging surety's liability if obligee fails to do so), .003 (providing that, when judgment against multiple defendants finds suretyship relationship between or among them, trial court must levy execution of judgment against principal's property first). Chapter 43 of the Civil Practice and Remedies Code was formerly codified in Chapter 34 of the Business and Commerce Code. See Wyrick v. Business Bank of Tex., N.A., 577 S.W.3d 336, 344 n.2 (Tex. App.- Houston [14th Dist.] 2019, no pet.).
See Tex. Civ. Prac. & Rem. Code § 37.009 (permitting court to award costs and attorney's fees under UDJA).
The Daneshjous did not bring claims under the Property Code or the Business and Commerce Code, and indeed the provisions they referenced are defensive in nature and would not support a claim for affirmative relief. See Tex. Civ. Prac. & Rem. Code § 43.002 (providing that when contractual claim accrues on contract for payment of money or performance of act, surety may, by written notice, require obligee to bring suit without delay, and surety that provides such notice "is discharged from all liability on the contract" if obligee is not under legal disability and does not file suit within proscribed timeframe); Tex. Prop. Code § 51.003 (if foreclosure sale results in deficiency, suit on deficiency must be brought within two years of foreclosure, and defendant may claim offset based on property's fair market value); see also Sowell v. International Ints., LP, 416 S.W.3d 593, 597 (Tex. App-Houston [14th Dist] 2013, pet. denied) ("we conclude that [Texas Property Code] section 51.003 does not create an independent claim"). Instead, the Daneshjous attempted to seek declaratory relief under the UDJA by reference to those defensive provisions.
However, the UDJA is "intended as a means of determining the parties' rights when a controversy has arisen but before a wrong has been committed, and is preventative in nature." Etan Indus., Inc. v. Lehmann, 359 S.W.3d 620, 624 (Tex. 2011) (internal quotation marks omitted). It is "not available to settle disputes already pending before a court." John Chezik Buick v. Friendly Chevrolet, 749 S.W.2d 591, 594 (Tex. App.-Dallas 1988, writ denied). Consequently, "a party cannot bring a counterclaim for declaratory relief and recover attorney's fees when the counterclaim seeks resolution of disputes already" under consideration by the trial court. Thomas v. Thomas, 902 S.W.2d 621, 626 (Tex. App.-Austin 1995, writ denied) (citing HECI Expl. Co. v. Clajon Gas Co., 843 S.W.2d 622, 638-39 (Tex. App.-Austin 1992, writ denied); John Chezik Buick, 749 S.W.2d at 594). The sole exception to the rule applies when the counterclaim "seeks a true declaration of an ongoing and continuing relationship, and . . . asserts relief having 'greater ramifications' than the original suit." Anderson v. New Prop. Owners' Ass'n of Newport, Inc., 122 S.W.3d 378, 390-91 (Tex. App.- Texarkana 2003, pet. denied) (quoting BHP Petroleum Co. v. Millard, 800 S.W.2d 838, 841 (Tex. 1990)). To qualify as a claim for affirmative relief, a defensive pleading must allege that the defendant has a cause of action, independent of the plaintiff's claim, on which he could recover, even if the plaintiff abandoned or failed to establish his cause of action. Garden Oaks Maint. Org. v. Chang, 542 S.W.3d 117, 123 (Tex. App.-Houston [14th Dist.] 2017, no pet.) (citing Millard, 800 S.W.2d at 841). Merely repleading claims or defenses cannot "serve as the basis for declaratory judgment or attorney's fees thereunder." Id.
The Daneshjous' counterclaims did just that, reframing statutory defenses to Appellees' third-party claims-including the previously nonsuited deficiency claim-as requests for declaratory relief. See Sowell, 416 S.W.3d at 597 ("[S]ection 51.003 "does not create an independent claim."); Martin v. PlainsCapital Bank, No. 05-10-00235-CV, 2017 WL 1536508, at *5 (Tex. App.-Dallas Apr. 26, 2017, no pet.) (mem. op.) ("An offset under section 51.003 operates as an affirmative defense to a deficiency claim."); First Nat'l Bank of Atlanta v. Hargrove, 503 S.W.2d 856, 859 (Tex. App.-Texarkana 1973, no writ) ("As a surety, Hargrove had such defenses to liability on the notes as are afforded by Tex. Bus. & Commerce Code, Secs. 3.606 and 34.02."). The UDJA was thus an inappropriate vehicle for bringing the counterclaims because they concerned a dispute already before the district court and did not seek a declaration as to the parties' ongoing relationship or assert "greater ramifications" beyond the instant dispute. See Anderson, 122 S.W.3d at 391.
As for the claim for attorney's fees, because the UDJA counterclaims involved the same parties and issues that were raised in ESI's summary-judgment motion, the Daneshjous' declaratory action falls squarely within the prohibition that "[a] declaratory judgment may not be used solely as a vehicle to obtain attorney's fees and is inappropriate if it will serve no useful purpose." Tees v. East Lake Woods Homeowners Ass'n, No. 12-04-00020-CV, 2006 WL 133229, at *6 (Tex. App.-Tyler Jan. 18, 2006, no pet.) (mem. op.); see Anderson, 122 S.W.3d at 391 ("Anderson's allegations are merely denials of NPOAN's cause of action. Therefore, Anderson would not be entitled to attorneys' fees under the Uniform Declaratory Judgments Act."). Moreover, "simply repleading a claim as one for a declaratory judgment cannot serve as a basis for attorney's fees, since such a maneuver would abolish the American Rule and make fees 'available for all parties in all cases.'" Etan Indus., 359 S.W.3d at 624 (quoting MBM Fin. Corp. v. Woodlands Operating Co., 292 S.W.3d 660, 669 (Tex. 2009)). Allowing the Daneshjous to recover attorney's fees by essentially "tack[ing]" their request onto "statutory or common-law claims that do not permit fees" "would violate the rule that specific provisions should prevail over general ones." Id. (quoting MBM Fin. Corp., 292 S.W.3d at 669).
For these reasons, we conclude that the Daneshjous' purported counterclaims were instead defenses to the third-party claims brought by Appellees and addressed in ESI's motion for summary judgment, improperly couched as counterclaims under the UDJA and precluded as a matter of law. See G & H Towing, 347 S.W.3d at 297-98; Axberg, 572 S.W.3d at 263. Any error committed by the district court in granting summary judgment on those defensive issues was therefore harmless. Axberg, 572 S.W.3d at 263. We overrule Appellants' sole issue on appeal.
CONCLUSION
Having denied Appellants' only issue, we affirm the district court's amended final judgment.
Affirmed.