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modifying the judgment to reflect a recovery of $71,410.34 instead of $71,460.34 because appellate court had the necessary information to do so
Summary of this case from Hwang v. Capital One Nat'l Ass'nOpinion
No. 07-14-00442-CV
08-04-2016
FERMIN LOPEZ, APPELLANT v. NORMA BAILON, APPELLEE
On Appeal from the 68th District Court Dallas County, Texas
Trial Court No. DC-13-01584; Honorable Martin J. Hoffman, Presiding
MEMORANDUM OPINION
Before QUINN, C.J., and CAMPBELL and PIRTLE, JJ.
Appellant, Fermin Lopez, appeals a judgment rendered in favor of Appellee, Norma Bailon, on a breach of contract claim. The dispute in question arises from a commercial lease agreement between Lopez, as lessor, and Bailon, as lessee, concerning certain real property situated in Dallas County. Following a bench trial, Bailon was awarded $71,460.34 in compensatory damages and $9,075 in attorney's fees. On appeal, Lopez asserts the evidence was legally and factually insufficient to prove (1) a breach of the lease agreement, (2) damages resulting from that breach, (3) the reasonableness and necessity of any repairs performed by or on behalf of Bailon, (4) Bailon's entitlement to the recovery of attorney's fees, and (5) the amount of attorney's fees awarded by the trial court. We modify a clerical error in the trial court's judgment regarding the amount of damages, affirm that portion of the judgment pertaining to liability and damages as modified, reverse that portion of the judgment awarding attorney's fees, and remand this matter to the trial court for a redetermination of attorney's fees consistent with the opinion of this court.
Originally filed in the Fifth Court of Appeals (Dallas), this case was transferred to this court pursuant to a docket equalization order entered by the Texas Supreme Court. See TEX. GOV'T CODE ANN. § 73.001 (WEST 2005). We have applied precedent from that court where applicable. See TEX. R. APP. P. 41.3.
BACKGROUND
In 2011, Bailon leased real property belonging to Lopez for the purpose of operating a "[b]ar, lounge or tavern." The lease period was from February 1, 2011 through January 31, 2014, at a rate of $3,300 a month. Relevant to this dispute, the lease agreement provided "if the Leased Premises or any part thereof . . . is so damaged by fire, casualty, or structural defects that the same cannot be used for [Bailon's] purposes," then she was "relieved from paying rent or other charges during any portion of the Lease term that the Leased Premises [were] inoperable or unfit for occupancy, or use, in whole or in part, for [her] purposes." The lease agreement also provided that while Bailon was responsible for routine repairs related to damage occurring through normal occupancy, Lopez was required to repair, at his expense, any damage by fire, casualty, or structural defects that prevented Bailon's use of the premises for her intended purpose. Lopez was further required to "comply with all laws, orders, ordinances, and other public requirements" affecting the leased premises. In the event of a default by Lopez with respect to any of his covenants, warranties, or representations under the lease, Bailon was authorized to cure the default and deduct the cost thereof from her rent. If the lease terminated prior to Bailon's receiving full reimbursement, Lopez was obligated to repay the unreimbursed balance plus accrued interest on demand. The lease agreement did not provide for the payment of a security deposit or the assessment of a late charge if rent was not timely paid.
Bailon testified that, prior to execution of the lease, she told Lopez she wanted to lease the premises to operate a bar and Lopez told her the building was already set up for that purpose.
The lease agreement did provide that Bailon would pay Lopez "a 'Security Deposit' in the amount of $0.00."
When Bailon took possession of the property, she learned city authorities would not issue a permit allowing her to operate a bar because the electricity needed to be upgraded, there was no air-conditioning, the kitchen was not properly equipped, there were no overhead sprinklers, and a handicap bathroom was required. Despite this, Bailon undertook to apply for the needed permits and perform the repairs necessary to obtain those permits. On September 15, 2011, the bar opened with the necessary permits; however, in October 2012, Lopez's lender foreclosed on the property and terminated the lease.
On February 7, 2013, Bailon sued Lopez for breach of their lease agreement. After continuing the trial setting "a number of times" to allow Lopez to retain counsel, a bench trial was held on September 9, 2014. Bailon appeared in person and by her attorney. Lopez appeared without legal counsel but with the assistance of an interpreter. At trial, Bailon offered uncontested and unrebutted evidence that she paid Lopez $20,000—comprised of the following: (1) the first and last month's rent totaling $6,600, (2) a security deposit of $6,600, and (3) $6,800 for remodeling of the premises. She offered further evidence that she paid Lopez $20,000 "in order to sell me the use of that property." Although Bailon's testimony is extremely sparse and non-specific, documentary evidence admitted shows two separate invoices for $20,000. Bailon also offered evidence concerning her claim for (1) overpayment of rent ($24,750 for seven and one-half months beginning February 1 and continuing through September 15 at $3,300 per month), (2) failure to return her security deposit ($6,600), (3) improper imposition of late charges ($2,050), (4) improper remodeling charge ($6,800), and (5) reimbursement of lease-related expenses incurred in order to enable her to use the premises for its intended purpose ($11,210.34). Back-up documentation and receipts admitted pursuant to business record affidavits by Bailon and her attorney corroborated most of her testimony.
Although the Findings of Fact and Conclusions of Law found Bailon's construction expenses to be $11,260.34 (Finding No. 10), her testimony and documentary evidence only support a finding of $11,210.34, as follows:
Bailon's attorney then testified that he "spent 33 hours in different court hearings, drafting pleadings, research, mediation, client consultation" at a rate of $275 per hour, resulting in a total fee for legal services performed of $9,075. At the conclusion of the trial, the court awarded Bailon judgment against Lopez for the sum of $71,460.34 plus $9,075 in attorney's fees.
The trial court's total damage award of $71,460.34 breaks down as follows:
STANDARD OF REVIEW
In conducting a legal sufficiency review, we must consider the evidence in the light most favorable to the challenged finding, indulge every reasonable inference in support of it; City of Keller v. Wilson, 168 S.W.3d 802, 822 (Tex. 2005), and credit favorable evidence if reasonable jurors could while disregarding contrary evidence unless reasonable jurors could not. Id. at 827. A challenge to the legal sufficiency will be sustained when, among other things, the evidence offered to establish a vital fact does not exceed a scintilla. Kroger Tex. Ltd. P'ship v. Suberu, 216 S.W.3d 788, 793 (Tex. 2006). In addition, so long as the evidence falls within the zone of reasonable disagreement, we may not invade the role of the fact finder, who alone determines the credibility of the witnesses, the weight to be given their testimony, and whether to accept or reject all or part of their testimony. Wilson, 168 S.W.3d at 822.
Less than a scintilla of evidence exists when the evidence is so weak as to do no more than create a mere surmise or suspicion of fact. King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 751 (Tex. 2003), cert. denied, 541 U.S. 1030, 124 S. Ct. 2097, 158 L. Ed. 2d 711 (2004). --------
In reviewing the factual sufficiency of the evidence, we examine all of the evidence, both the evidence that supports the finding and the evidence that controverts the finding. See Maritime Overseas Corp. v. Ellis, 971 S.W.2d 402, 406-07 (Tex. 1998). We will set aside the finding only if it is so against the great weight and preponderance of the evidence that it is clearly wrong and manifestly unjust. Id. at 407.
MODIFICATION OF JUDGMENT
As explained in footnotes 4 and 5, the trial court's judgment contains a mathematical error as to the amount of damages because the sum of Bailon's construction expenses was overstated by $50. This court has the power to modify the judgment of the court below to make the record speak the truth when we have the necessary information to do so. TEX. R. APP. P. 43.2(b). See generally Jordan-Nolan v. Nolan, No. 07-12-00431-CV, 2014 Tex. App. LEXIS 8159 at *9 (Tex. App.—Amarillo July 28, 2014, no pet.) (mem. op., not designated for publication); Bigley v. State, 865 S.W.2d 26, 27-28 (Tex. Crim. App. 1993). Appellate courts have the power to reform whatever the trial court could have corrected by a judgment nunc pro tunc where the evidence necessary to correct the judgment appears in the record. See Asberry v. State, 813 S.W.2d 526, 529 (Tex. App.—Dallas 1991, pet. ref'd). Accordingly, we modify the judgment to reflect a recovery of $71,410.34, instead of $71,460.34.
SUFFICIENCY OF THE EVIDENCE—BREACH OF LEASE AGREEMENT
By his first three issues, Lopez contends the evidence is legally and factually insufficient to establish that (1) he breached the lease agreement in question, (2) Bailon suffered damages as the result of the breach, and (3) the claimed repair damages were reasonable and necessary. He contends that "charging [Bailon] amounts not specifically authorized by the Lease, such as construction (remodeling) fees, sale of business fee, security deposit and late fees do not constitute a breach of the Lease." He further contends that "most, if not all of the repair work performed by [Bailon] was her obligation under the express terms of the Lease" and she failed to establish that the repairs made were necessary and reasonable.
When interpreting a contract, our primary concern is to ascertain and give effect to the intent of the parties as expressed in the contract. Seagull Energy E & P, Inc. v. Eland Energy, Inc., 207 S.W.3d 342, 354 (Tex. 2006). "To discern this intent, we 'examine and consider the entire writing in an effort to harmonize and give effect to all the provisions of the contract so that none will be rendered meaningless. No single provision taken alone will be given controlling effect; rather, all the provisions must be considered with reference to the whole instrument.'" Id. In addition, "documents executed at the same time, with the same purpose, and as part of the same transaction, are construed together." In re Prudential Insurance Co. of America, 148 S.W.3d 124, 135 (Tex. 2004) (citing Jim Walters Homes, Inc. v. Schuenemann, 668 S.W.2d 324 (Tex. 1984)). See Gray & Co. Realtors, Inc. v. Atlantic Housing Foundation, Inc., 228 S.W.3d 431, 436 (Tex. App.—Dallas 2007, no pet.) (that one agreement was purposeless without other agreement is a factor to be considered).
Here, the lease provided that it was being entered into for the express purpose of operating a bar and Bailon, the only witness to testify on the subject, stated that it was the agreement of the parties that Lopez would deliver premises suitable for that purpose. Bailon further testified that the premises were not suitable for that purpose, that Lopez did not make any improvements to the property, and that she had to expend monies in order to make the premises suitable for her intended use. Bailon also testified that her peaceful possession of the property was interrupted when Lopez failed to pay his mortgage, resulting in a foreclosure of the property and termination of the lease. Because this evidence is legally and factually sufficient to establish that Lopez breached the lease agreement, issue one is overruled.
As to his second and third issues, Lopez contends the evidence is legally and factually insufficient as the amount of damages awarded because the $6,600 security deposit, $6,800 remodeling expense, $2,050 late charges, and $20,000 sale of a business payment were not required under the terms of the lease and were, therefore, voluntary payments barred by the common law voluntary payment rule. The voluntary payment defense does not apply to a simple breach of contract action. See Texas South Rentals, Inc. v. Gomez, 267 S.W.3d 228, 243 (Tex. App.—Corpus Christi 2008, no pet.) (defense applies to claims asserting unjust enrichment). Moreover, it is an affirmative defense that cannot be raised on appeal if it was not raised in the trial court. See Man Engines & Components, Inc. v. Shows, 434 S.W.3d 132, 135-37 (Tex. 2014); Alexander v. Kent, 480 S.W.3d 676, 701 (Tex. App.—Fort Worth 2015, no pet.). See also TEX. R. CIV. P. 94. Because Lopez did not raise this defense in his pleadings or before the trial court, he has waived that argument on appeal.
Lopez further contends that because those additional charges were not addressed in the lease agreement, they were not recoverable as damages under a breach of contract theory. Lopez maintains that these sums are only recoverable under a different legal theory such as breach of the implied covenant of suitability or restitution for unjust enrichment. We disagree.
Here, the lease agreement expressly provided that if the leased premises were inoperable, in whole or in part, for Bailon's intended purpose, she would be relieved from paying rent. Accordingly, the overpayment of rent was a recoverable element of Bailon's damages. Furthermore, because the security deposit, late charges, and remodeling fees were all paid in conjunction with the lease agreement, each of those items was properly recoverable under a breach of contract theory. Finally, because the lease agreement required Lopez to reimburse Bailon for expenses she incurred in order to bring the premises to a condition where they could be used for her intended purpose, those expenses are likewise recoverable under a breach of contract theory.
Finally, Lopez asserts the evidence of damages was legally and factually insufficient because the trial court erroneously accepted Bailon's lay testimony that her expenditures to cure the default were reasonable and necessary in lieu of expert testimony. Again, we disagree.
The Texas Rules of Evidence permit opinion testimony from lay witnesses as well as expert witnesses. See TEX. R. EVID. 701, 702. The personal experience and knowledge of a lay witness may establish that the witness is capable, without qualification as an expert, of expressing an opinion on a subject outside the realm of common knowledge. Hathcock v. Hankook Tire Am. Corp., 330 S.W.3d 733, 747 (Tex. App.—Texarkana 2010, no pet.). It is only where the fact finder may not fully understand the evidence or be able to determine the fact in issue without the assistance of someone with specialized knowledge that a witness must be qualified as an expert. Id. In that regard, Texas courts regularly allow business owners and company officers to testify as lay witnesses, based on knowledge derived from their positions and any other relevant experience. See, e.g., Am. Heritage, Inc. v. Nevada Gold & Casino, Inc., 259 S.W.3d 816, 827 (Tex. App.—Houston [1st Dist.] 2008, no pet.) (former chief financial officer testified about lost profits); Lamajak, Inc. v. Frazin, 230 S.W.3d 786, 797 (Tex. App.—Dallas 2007, no pet.) (business owner testified about value of services he provided to retail chain); SAS & Associates, Inc. v. Home Mktg. Servicing, Inc., 168 S.W.3d 296, 302 (Tex. App.—Dallas 2005, pet. denied) (sole shareholder, director, and officer testified about reasonable cost of repairing company's damaged personal property).
In this case, Bailon's damages were either fixed costs for which she provided documentary evidence or they were determinable by simple multiplication. Having considered Bailon's unrebutted testimony, we cannot say the trial court abused its discretion by considering that testimony and the supporting documentary evidence as sufficient to establish the reasonableness and necessity of the expenses she incurred in order to cure Lopez's failure to comply with the terms of the lease agreement. This is particularly so where the lease expressly permitted her to make such repairs in the absence of timely action by Lopez. Having considered the record, we find the trial court's damages findings (as modified above) were supported by both legally and factually sufficient evidence. Accordingly, issues two and three are overruled.
SUFFICIENCY OF THE EVIDENCE—ATTORNEY'S FEES
By issues four and five, Lopez contends there was insufficient evidence to prove Bailon was entitled to the recovery of attorney's fees because she failed to prove Lopez breached the lease agreement and her attorney's testimony was insufficient to prove up the fees under the lodestar method. Having found the evidence was sufficient to prove Lopez breached the lease agreement, we will confine our discussion to the sufficiency of her attorney's testimony.
An appellate court reviews a trial court's decision to award attorney's fees for an abuse of discretion. El Apple I, Ltd. v. Olivas, 370 S.W.3d 757, 761 (Tex. 2012). If attorney's fees are proper under section 38.001(8) of the Texas Civil Practice and Remedies Code, the trial court has no discretion to deny them. Smith v. Patrick W.Y. Tam Trust, 296 S.W.3d 545, 547 (Tex. 2009).
To calculate reasonable attorney's fees, the fact finder should multiply the number of hours worked by the attorney's hourly rate. See Blackstone Medical Inc. v. Phoenix Surgicals, L.L.C., 470 S.W. 636, 658 (Tex. App.—Dallas 2015, no pet.). The resulting amount is commonly referred to as the "lodestar" figure. Id.; Guity v. C.C.I. Enter. Co., 54 S.W.3d 526, 528 (Tex. App.—Houston [1st Dist.] 2001, no pet.). The party applying for the award of attorney's fees under the lodestar method bears the burden of proof documenting the hours expended on the litigation and the value of those hours. El Apple, 370 S.W.3d at 761-63.
When applying for a fee under the lodestar method, the applicant must prove sufficient details of the work performed before the court can make a meaningful review of the fee request. El Apple, 370 S.W.3d at 764. For purposes of the lodestar calculations, this evidence includes, at a minimum, documentation of (1) the nature of the work, (2) who performed the services and their rate, e.g., if multiple attorneys or other legal professionals are involved in the case, the fee application should indicate which attorney performed a particular task or category of tasks, (3) approximately when the services were performed, and (4) the number of hours worked as to each task or category. See El Apple, 370 S.W.3d at 763, 764; Blackstone Medical Inc., 470 S.W.3d at 658.
Here, Bailon offered no documentary evidence to support the reasonableness of her request for the recovery of attorney's fees under the lodestar method. The only evidence offered was the testimony of Bailon's attorney that he "spent 33 hours in different court hearings, drafting pleadings, research, mediation, client consultation" at a rate of $275 per hour. Although unrebutted, this sparse evidentiary basis offers no basis upon which the trial court could meaningfully review the fee request. See El Apple, 370 S.W.3d at 764.
Where, as here, the evidence is not legally and factually sufficient to support the amount of attorney's fees awarded because the evidence presented does not provide sufficient information for a meaningful review of the lodestar calculation, an appellate court is required to reverse the judgment as to the issue of attorney's fees and remand the matter to the trial court for a redetermination of those fees consistent with the opinion of the court. See Long v. Griffin, 442 S.W.3d 253, 254-55 (Tex. 2014) (evidence legally insufficient when no evidence indicates the time expended on the specific tasks for which attorney's fees may be recovered).
Accordingly, we overrule issue four, sustain issue five, and remand the issue of the amount of attorney's fees to the trial court for a redetermination consistent with this opinion.
CONCLUSION
We modify the trial court's judgment regarding Lopez's liability and damages for breach of the lease agreement to reflect a recovery of $71,410.34, instead of $71,460.34; reverse the trial court's judgment awarding attorney's fees totaling $9,075; and remand this matter to the trial court for a redetermination of attorney's fees consistent with the opinion of this court.
Patrick A. Pirtle
Justice
| $5,377.95 | Home Depot/Lowes |
| 1,500.00 | Electrical Work (Sixtos Vasquez) |
| 1,900.00 | Air Conditioning Repair |
| 359.39 | Lighting (Lighting Guy) |
| 500.00 | Electrical Work (Caslito Aulia) |
| 398.00 | Thermostat Replacement |
| 1,175.00 | Installation of Fire Sprinklers |
|---|---|
| $11,210.34 | Total |
| $11,260.34* | Construction Expenses paid by Bailon |
| 20,000.00 | Sale of a Business |
| 6,600.00 | Security Deposit |
| 6,800.00 | Construction Expenses paid to Lopez |
| 2,050.00 | Late Charges |
| 24,750.00 | 7.5 months of rent at $3,300 per month |
|---|---|
| $71,460.34 | Total |
*As previously stated, this sum should be $11,210.34. As a result of this mathematical error, the trial court's judgment overstates the amount to be recovered by $50.