Opinion
NO. 01-16-00824-CV
07-20-2017
FRAZER TRANSPORT, INC., Appellant v. TRANSAFE, INC., Appellee
On Appeal from the County Civil Court at Law No. 1 Harris County, Texas
Trial Court Case No. 1056891
MEMORANDUM OPINION
Frazer Transport, Inc., a trucking company, hired Transafe, Inc. to provide consulting services. When Frazer failed to pay over $5,000 in consulting fees, Transafe sued Frazer for breach of contract, seeking damages and attorney's fees. The jury found that Frazer breached the contract and awarded Transafe damages.
In three issues, Frazer argues that the trial court erred in awarding attorney's fees to Transafe on its claim for breach of contract. We affirm.
Background
Transafe began invoicing Frazer for its consulting services in late 2013. By August 2014, Frazer owed over $5,000 in unpaid invoices. Transafe sent a demand letter in November, indicating that it would seek attorney's fees if litigation were required to collect on the unpaid invoices.
Transafe filed suit in December, asserting claims for breach of contract, quantum meruit, and suit on a sworn account. Transafe sought damages and attorney's fees. Frazer answered the suit in February 2015, asserted counterclaims for breach of contract and Deceptive Trade Practices Act violations, and sought attorney's fees.
In its disclosure response, Transafe identified its attorney, Richard Griffin, Jr., as a fact witness and described his knowledge of relevant facts as follows: "Mr. Griffin will provide testimony that the legal fees and costs Plaintiff incurred in this matter were reasonable and necessary." Transafe did not list Griffin as an expert witness. Over the next year, there were several trial continuances. The case was eventually set for trial in August 2016.
Transafe submitted its list of trial witnesses one month before the trial date. It identified Griffin as a witness and stated that he would testify "that the legal fees and costs Plaintiff incurred in this matter were reasonable and necessary."
On July 20, Frazer's attorney filed with the trial court copies of email correspondence dated two months earlier in which counsel for Transafe stated, "I agree we don't need any more discovery." Frazer's position was that the earlier correspondence created a Rule 11 agreement that discovery was complete and that Transafe therefore could not supplement its discovery responses. See TEX. R. CIV. P. 11. The next day, which was 14 days before trial, Transafe filed a supplemental discovery response that identified Griffin as an expert witness who would testify on the reasonableness and necessity of attorney's fees incurred litigating the breach-of-contract action. Transafe produced Griffin's CV and copies of his invoices with the supplemental disclosure.
Frazer objected and moved to exclude this evidence on the grounds that it was not timely produced. The trial court held a hearing. There is no reporter's record of the pretrial hearing; however, the trial transcript includes two discussions between the trial judge and counsel about that earlier hearing. In those discussions, the trial court noted, and the parties agreed, that it had permitted a late designation of Griffin as an expert on attorney's fees.
A jury trial was held August 4, 2016. During trial, the parties entered into a stipulation on the record. Frazer's attorney explained the stipulation, stating that "both sides have agreed that reasonable and necessary attorney fees at the trial level are $24,000." Frazer's attorney clarified that, by making this stipulation, Frazer was not also agreeing that Transafe is "entitled to recover attorney fees." Frazer informed the trial court that it intended to preserve its argument that Transafe could not recover attorney's fees due to Griffin's untimely expert designation. Given the stipulation on the attorney's fees amount, Griffin did not testify. The jury found that Frazer breached the contract and that Transafe did not. It awarded Transafe $5,530 in damages.
On August 10, Transafe moved for entry of judgment, seeking $5,530 in damages, $24,000 in stipulated attorney's fees, and costs and interest. Frazer responded, arguing that there was no evidence to support the damage award and that Transafe could not recover attorney's fees because Transafe (1) did not timely designate an expert on attorney's fees and (2) did not present any evidence at trial to support its attorney's fees request.
At the hearing on Transafe's motion, Frazer argued that the parties' Rule 11 agreement prevented Transafe from supplementing its discovery responses to designate Griffin as an expert witness on attorney's fees. Frazer explained that it sought that pretrial Rule 11 agreement because it was aware that Transafe had not properly designated Griffin as an expert witness and it believed that closing discovery meant that it was "not at risk for any attorney fees" due to the disclosure error.
The trial court entered a final judgment that awarded Transafe $5,530 in actual damages and $24,000 in attorney's fees. The judgment acknowledged that Frazer never waived its attorney's-fee objection but found that Transafe met its burden under Rule 193.6(a)(2) to show that Frazer was neither unfairly surprised nor unfairly prejudiced by the "apparently incorrect form of the expert witness designation" when Griffin was listed as a fact witness instead of an expert witness—an error that was corrected two weeks before trial through a supplemental expert designation. See TEX. R. CIV. P. 193.6(a)(2) (stating that party may not introduce evidence not timely produced or offer testimony of witness not timely identified unless court finds that failure to timely produce or identify "will not unfairly surprise or unfairly prejudice the other parties").
Trial Court Did Not Abuse Discretion in Award of Attorney's Fee
Frazer argues that Transafe did not establish a lack of unfair surprise or prejudice because Frazer had a legal argument against the recovery of attorney's fees, Transafe's efforts to late-designate Griffin jeopardized that legal advantage, and the trial court's ruling that allowed the recovery of attorney's fees unfairly surprised and prejudiced Frazer by negating its legal advantage.
A. Applicable law and standard of review
A request for disclosure seeks information on fact witnesses, expert witnesses, and other information commonly relevant to litigation. TEX. R. CIV. P. 194.2. For fact witnesses, the rule requires the disclosing party to identify individuals having knowledge of relevant facts and to provide a brief statement of each witness's connection with the case. Id. at 194.2(e). For expert witnesses, the rule requires the disclosing party to identify the experts, state the subject matter on which the experts will testify, provide the general substance of their mental impressions and opinions and a brief summary of the bases for them, and offer additional information relevant to experts who are subject to the responding party's control. Id. at 194.2(f). A party seeking affirmative relief must designate its testifying experts within 30 days after a request is served or 90 days before the end of the discovery period, whichever is later. Id. at 195.2.
An expert witness who is not timely identified during discovery will not be permitted to testify unless the court finds that there was good cause for the failure to timely identify the expert or finds that the "failure to timely make, amend, or supplement the discovery response will not unfairly surprise or unfairly prejudice the other parties." Id. at 193.6(a); see Dyer v. Cotton, 333 S.W.3d 703, 717 (Tex. App.—Houston [1st Dist.] 2010, no pet.). "The purpose behind this rule is to prevent trial by ambush." Harris Cty. v. Inter Nos, Ltd., 199 S.W.3d 363, 367 (Tex. App.—Houston [1st Dist.] 2006, no pet.) The burden of establishing either (1) good cause or (2) a lack of unfair surprise and unfair prejudice is on the party seeking to call the witness. TEX. R. CIV. P. 193.6(b); Dyer, 333 S.W.3d at 717. The trial court has discretion in determining whether this burden has been met, but the trial court's finding must be supported by the record. See TEX. R. CIV. P. 193.6(b); Dyer, 333 S.W.3d at 717.
We review a trial court's decision to admit or exclude expert testimony for an abuse of discretion. K-Mart Corp. v. Honeycutt, 24 S.W.3d 357, 360 (Tex. 2000). A trial court abuses its discretion when it rules on the admissibility of evidence in an arbitrary or unreasonable manner or without reference to guiding legal principles or rules. Carpenter v. Cimarron Hydrocarbons Corp., 98 S.W.3d 682, 687 (Tex. 2002).
A party seeking to reverse a judgment based on an evidentiary error must prove that the error probably resulted in an improper judgment or probably prevented the appellant from properly presenting the case to the court of appeals. See TEX. R. APP. P. 44.1(a); Owens-Corning Fiberglass Corp. v. Malone, 972 S.W.2d 35, 43 (Tex. 1998). "An appellate court must uphold the trial court's evidentiary ruling if there is any legitimate basis for the ruling." Malone, 972 S.W.2d at 43.
B. Transafe met burden to establish lack of unfair surprise and unfair prejudice
Transafe sought attorney's fees on its breach-of-contract claim. Transafe identified its attorney, Griffin, in its disclosure and stated that he would testify "that the legal fees and costs Plaintiff incurred in this matter were reasonable and necessary." This disclosure was made more than a year before trial. And it included all that is required, substantively, of an expert designation on attorney's fees. See Kim v. Sanchez, No. 02-12-00465-CV, 2014 WL 4364170, at *4 (Tex. App.—Fort Worth Sept. 4, 2014, pet. denied) (mem. op.) ("A disclosure identifying an attorney's fees expert that states that the expert will be testifying about the reasonableness and necessity of attorney's fees sought is sufficient to give the 'general substance' of that expert's anticipated testimony, especially when, as here, the responding party is seeking fees for representation during the entire litigation, which are not determinable at the time of disclosure.").
Frazer's complaint is not that it did not know that Griffin intended to testify in support of an award of attorney's fees. Instead, Frazer's argument, in effect, is that Transafe's error in listing Griffin as a fact witness instead of an expert witness should have precluded the recovery of attorney's fees because the error was not corrected by the discovery deadline for supplementing expert-witness disclosures and Transafe's statement in the "Rule 11" correspondence should have foreclosed its ability to correct the error after the discovery deadline passed. That Transafe was permitted to correct a disclosure error that Frazer always realized was present is where Frazer finds unfair surprise and prejudice.
Frazer's arguments to the trial court focused on the second of these—prejudice. It argued that it should be allowed to rely on Transafe's erroneous disclosure and the parties' Rule 11 agreement. It contended that allowing Transafe to correct the error Frazer knew to exist would result in unfair prejudice to Frazer:
We always knew that their experts were not properly disclosed, and we were willing to grant a continuance, but we were not willing to grant a continuance to give them time to designate an expert. So here we are totally prejudiced 100 percent.
Transafe argued, both before and after the verdict was announced, that Frazer would not be unfairly surprised or prejudiced by allowing the supplementation to designate Griffin as an expert on attorney's fees because Transafe's petition disclosed that it was seeking attorney's fees on the breach-of-contract claim, Transafe's earlier demand letter also disclosed that Transafe sought attorney's fees, the information required to be disclosed about Griffin was timely disclosed although it was listed under the heading of fact witness instead of expert witness, and, to the extent there was a problem with the disclosure, the problem was fixed when the trial court permitted Transafe to supplement its disclosure two weeks before trial to list Griffin as an expert and to produce his CV and attorney invoices supporting the attorney's fee amount requested.
Frazer's arguments to this Court focus on surprise, not prejudice. It argues that there can be no greater surprise than believing the rules will bind your opponent to the disadvantageous effects of its procedural error and then lose that advantage.
We see no merit to either of Frazer's arguments. Fully realizing an opponent has made a disclosure error yet all the while having the information that needed to be disclosed does not provide a basis for an assertion of unfair prejudice or surprise. Any negative impact of the late disclosure is further diminished given that Frazer stipulated during trial that $24,000 is the amount of "reasonable and necessary attorney fees at the trial level" no matter which party prevailed. Thus, neither the claim for attorney's fees nor the amount of fees being sought can be the basis to argue prejudice or surprise.
On this record, we hold that the trial court did not abuse its discretion in concluding that Frazer was not unfairly surprised or unfairly prejudiced by allowing attorney's fees on this breach-of-contract claim. See Crawford v. Nguyen & Chen LLP, No. 01-16-00274-CV, 2017 WL 1738096, at *3 (Tex. App.—Houston [1st Dist.] May 4, 2017, no. pet. h.) (mem. op.) (concluding that trial court did not abuse its discretion by implicitly finding no unfair surprise); Williams v. Cty. of Dallas, 194 S.W.3d 29, 32-33 (Tex. App.—Dallas 2006, pet. denied) (concluding trial court did not abuse discretion in admitting undisclosed documents supporting damages because pleading indicated that such damages would be sought at trial). Frazer admitted that it knew Transafe intended to seek attorney's fees and to have Griffin provide the supporting evidence. It even agreed to the amount. It could have agreed to extend the trial date to obtain discovery on the attorney's fee issue but did not do so, admittedly because it wanted to prevent the correction of the disclosure error. Even after the trial court permitted Transafe to supplement its discovery to correct its error, Frazer did not seek a continuance. Nor did it seek to depose Griffin or otherwise indicate that it required additional discovery on the issue. Instead, it stipulated to the amount of reasonable and necessary attorney's fees. There is neither surprise nor prejudice in these events.
We overrule Frazer's second issue.
C. Stipulation relieved Transafe of requirement that it present evidence in support of attorney's fee amount
In Frazer's third issue, it argues that Transafe is not entitled to attorney's fees because it presented no evidence at trial to support the fee amount. There is no merit to this argument. Frazer stipulated that $24,000 in attorney's fees represents the reasonable and necessary amount of fees incurred in the litigation, no matter which party prevailed. In light of the stipulation, Transafe had no requirement to present evidence supporting the fee amount. See Rosenboom Mach. & Tool, Inc. v. Machala, 995 S.W.2d 817, 821-22 (Tex. App.—Houston [1st Dist.] 1999, pet. denied) (stating that stipulation obviates need for proof on litigable issue); cf. TEX. CIV. PRAC. & REM. CODE § 38.001, .004 (allowing trial court to take judicial notice of usual and customary attorney's fees in breach-of-contract cases).
We overrule Frazer's third issue.
D. Request for additional attorney's fees did not repudiate stipulation
Frazer's final argument is that Transafe repudiated the stipulation by seeking additional attorney's fees post-verdict.
Repudiation is a refusal to perform a contract; it is expressed through "conduct that shows a fixed intention to abandon, renounce, and refuse to perform the contract." CMA-CGM (Am.), Inc. v. Empire Truck Lines, Inc., 416 S.W.3d 495, 519 (Tex. App.—Houston [1st Dist.] 2013, pet. denied). The burden of proving repudiation is on the party alleging the repudiation. New York Party Shuttle, LLC v. Bilello, 414 S.W.3d 206, 216 (Tex. App.—Houston [1st Dist.] 2013, pet. denied).
Transafe sought entry of judgment based on the jury's verdict, specifically requesting $5,530 in damages and $24,000 in stipulated attorney's fees. Frazer opposed the entry of judgment by arguing that Transafe was not entitled to any attorney's fees. Both parties filed briefing, and the trial court held a hearing on the issue. More than a month later, Transafe submitted a revised motion for entry of judgment, in which it requested its damages, the $24,000 in stipulated attorney's fees, plus additional attorney's fees to cover the expense of litigating the recoverability of the stipulated amount. Frazer responded by arguing that the effort to obtain additional attorney's fees acted as a repudiation of the stipulation to $24,000 in attorney's fees "at the trial level."
There is no evidence that Transafe refused to perform under the stipulated agreement. Instead, at all times, Transafe sought to enforce the stipulation and, in doing so, sought attorney's fees for its efforts. Whether it was entitled to additional attorney's fees is not before us because the trial court denied the request, and Transafe does not appeal that denial. On this record, we conclude that seeking to enforce a stipulation and then unsuccessfully moving to obtain attorney's fees incurred to enforce the stipulation in no way acts as a repudiation of the original stipulation.
We overrule Frazer's first issue.
Conclusion
We affirm the trial court's judgment.
Harvey Brown
Justice Panel consists of Justices Higley, Bland, and Brown.