Opinion by Justice LANA MYERS.
This is an appeal of the trial court's failure to award appellants VSDH Vaquero Venture, Ltd. (VSDH), Evan L. Shaw, and Douglas M. Hickok attorney's fees and costs, following a take-nothing judgment entered in their favor. In their sole issue, appellants contend the trial court erred by refusing to award them reasonable attorney's fees and costs because they were the prevailing parties in an action brought against them by appellees Kenneth and Betsy Gross. We reverse the trial court's judgment and remand for further proceedings.
BACKGROUND AND PROCEDURAL HISTORY
The background of this case is fully set forth in our memorandum opinion in In re VSDH Vaquero Venture, Ltd. and Douglas M. Hickok, No. 05-15-01513-CV, 2016 WL 2621073 (Tex. App.-Dallas May 6, 2016, orig. proceeding) (mem. op.), and need not be repeated here. We will limit our discussion to the facts that are relevant to the issues raised by the parties.
In a trial before a jury, Kenneth and Betsy Gross failed to prevail on their breach of contract and fraud counterclaims against VSDH and Hickok. These claims were based on a sales contract for the purchase of a luxury home. The parties to the "NEW HOME CONTRACT" were VSDH, the seller, and the Grosses, the buyers. The sales contract incorporated "Addendum A" with a buy-back option that granted the Grosses the right to require VSDH to repurchase the home at the original sales price. The addendum also included a provision in which VSDH's two limited partners, Hickok and Shaw, personally guaranteed the seller's obligations under the buy-back option. VSDH sued the Grosses, claiming they breached their obligations under the buy-back option, and the Grosses counterclaimed against VSDH, Hickok, and Shaw for breach of contract and fraud in a real estate transaction. Prior to trial, the trial court granted summary judgment in favor of Shaw because he was not a party to the contract and had not signed it in any capacity. See id. at *2.
After hearing the evidence, the jury found against the Grosses on all issues. Specifically, the jury found the Grosses failed to comply with the buy-back option, but that VSDH and Hickok had not. It also found that neither VSDH or Hickok had committed fraud against the Grosses. After the jury returned its verdict, the Grosses filed a motion for new trial that the trial court granted, setting aside the jury's verdict. VSDH and Hickok then filed a petition for writ of mandamus in this Court asserting the trial court's reason for granting a new trial was not legally appropriate. We agreed and conditionally granted the petition and directed the trial court to render judgment in accordance with the jury's verdict. See id. at *4. The trial court subsequently rendered a take-nothing judgment in favor of VSDH, Hickok, and Shaw, but it did not award attorney's fees. Prior to trial, the parties had stipulated to allowing the trial court to decide the issue of attorney's fees, rather than submitting it to the jury.
Hickok moved to correct or modify the final judgment so as to include an award of attorney's fees, arguing he was entitled to attorney's fees under the "NEW HOME CONTRACT" because he was a "prevailing party" according to paragraph 17 of the contract. It provides as follows:
VSDH adopted this motion. Hickok's motion to correct or modify the final judgment was overruled by operation of law, and Hickok, Shaw, and VSDH thereafter brought this appeal.
In his only issue on appeal, Hickok argues the trial court erred by refusing to award him attorney's fees and costs because he was a "prevailing party" under the contract. VSDH and Shaw have filed a brief incorporating Hickok's brief and joining in his argument.
Rule 329b(g) provides that a motion to modify or reform the judgment must be filed and determined within the same time period prescribed for deciding a motion for new trial and shall extend the trial court's plenary power and the time for perfecting an appeal in the same manner as a motion for new trial. TEX. R. CIV. P. 329b(g). The motion must be in writing and specify how the judgment should be modified. Id. A trial court's denial of a motion to modify a final judgment is typically reviewed under an abuse of discretion standard. See Hodges v. Rajpal, 459 S.W.3d 237, 250 (Tex. App.-Dallas 2015, no pet.). But an issue concerning the availability of attorney's fees under a statute or a contract presents a question of law we review de novo. Holland v. Wal-Mart Stores, Inc., 1 S.W.3d 91, 94 (Tex. 1999); Goldman v. Olmstead, 414 S.W.3d 346, 367 (Tex. App.-Dallas 2013, pet. denied); Fitzgerald v. Schroeder Ventures II, LLC, 345 S.W.3d 624, 627 (Tex. App.-San Antonio 2011, no pet.); In re Lesikar, 285 S.W.3d 577, 583 (Tex. App.-Houston [14th Dist.] 2009, orig. proceeding). The party seeking to recover attorney's fees has the burden of showing its entitlement to that award. Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1, 10 (Tex. 1991).
The Grosses first argue that appellants' live pleadings at the time of trial do not support an award of attorney's fees under the contract because the only mention of attorney's fees in the live pleadings is in the prayers for relief—with no reference to the contract itself.
Reviewing the relevant pleadings, Shaw's live responsive pleading was his third supplemental answer and first amended answer to defendants/counter-plaintiffs' counterclaim, filed on April 29, 2011. The prayer for relief stated:
Hickok's live responsive pleading at the time of trial was his amended and supplemental answer to counter-plaintiffs' counterclaim, filed on January 17, 2014. Hickok's prayer for relief stated:
VSDH's live responsive pleading was its fourth supplemental answer and its first amended answer to the defendants/counter-plaintiffs' counterclaim, filed on January 24, 2014. The prayer for relief reads as follows:
We have previously upheld a request for attorney's fees that was based on a similar prayer for relief. See Alan Reuber Chevrolet, Inc. v. Grady Chevrolet, Ltd., 287 S.W.3d 877 (Tex. App.-Dallas 2009, no pet.). In that case, the defendant sought recovery of its attorney's fees for successfully defending against the plaintiff's breach of contract claim based on the following prayer for relief, which was in a first amended answer:
See id. at 885. As in this case, the opposing party did not specially except to the pleading. See id. The contract also provided for the award of attorney's fees to the "successful party" in the event of any litigation between the parties to enforce provisions or rights under the agreement. See id. at 881. We concluded that while the defendant's general prayer for relief (i.e., "such other and further relief at law or in equity") might not support an award of attorney's fees, the fact that the prayer also requested attorney's fees, albeit without specifying that it sought attorney's fees pursuant to the attorney's fees provision in the agreement between the parties, allowed the plaintiff to ascertain from the pleading the nature, basic issues, and type of evidence that might be relevant to the controversy. See id. at 885. Furthermore, the plaintiff could hardly argue lack of fair notice when its own pleadings sought attorney's fees pursuant to the same provision of the agreement. See id. at 886.
In this case, in addition to appellants' prayers for relief, which requested attorney's fees, the Grosses' third amended counterclaim and second amended third-party petition, filed on April 15, 2013, included a pleading for reasonable and necessary attorney's fees under section 38.001 of the civil practice and remedies code because it was a suit for breach of a written contract, and under section 27.01(e) of the business and commerce code because it was a suit for statutory fraud. See TEX. CIV. PRAC. & REM. CODE. ANN. § 38.001(8); TEX. BUS. & COM. CODE ANN. § 27.01(e). Thus, as in Alan Reuber Chevrolet, the Grosses cannot argue there was no fair notice to them that appellants sought attorney's fees. This is especially true since all the parties entered into a pre-verdict rule 11 agreement that the issue of attorney's fees would not be submitted to the jury, but instead would be decided by the trial court. That rule 11 agreement was read into the record during a June 17, 2015 hearing before the trial court. The record of that hearing reads as follows:
The Grosses also argue that neither Shaw nor Hickok are entitled to attorney's fees based on the contract because they were not parties to the contract.
Texas law provides that litigants may recover attorney's fees only if specifically provided for by statute or contract. Fleming & Assocs., L.L.P. v. Barton, 425 S.W.3d 560, 574 (Tex. App.-Houston [14th Dist.] 2014, pet. denied) (citing Epps v. Fowler, 351 S.W.3d 862, 865 (Tex. 2011)); see also Woodhaven Partners, LTD v. Shamoun & Norman, L.L.P., 422 S.W.3d 821, 837 (Tex. App.-Dallas 2014, no pet.). Here, the only possible basis for the recovery of attorney's fees by appellants is the "NEW HOME CONTRACT," or more specifically the "prevailing party" attorney's fees provision in paragraph 17 of that contract.
In construing contractual attorney's fees provisions, we apply ordinary rules of contract interpretation. Fitzgerald v. Schroeder Ventures II, LLC, 345 S.W.3d 624, 629-30 (Tex. App.-San Antonio 2011, no pet.). Our primary concern when interpreting a contract 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, 345 (Tex. 2006); Bhatia v. Woodlands N. Houston Heart Ctr., 396 S.W.3d 658, 669 (Tex. App.-Houston [14th Dist.] 2013, pet. denied). Contract terms are given their plain, ordinary, and generally accepted meanings, and contracts are to be construed as a whole in an effort to harmonize and give effect to all provisions of the contract. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 662 (Tex. 2005); Bhatia, 396 S.W.3d at 669-70. If, after applying pertinent contract construction rules, the contract can be given a certain or definite legal meaning or interpretation, then it is not ambiguous and we will construe the contract as a matter of law. Frost Nat'l Bank v. L & F Distribs., Ltd., 165 S.W.3d 310, 312 (Tex. 2005). Regarding guaranty agreements like the one in this case, they are to be strictly construed and may not be extended beyond their precise terms by construction or implication. See Jamshed v. McLane Exp., Inc., 449 S.W.3d 871, 877 (Tex. App.-El Paso 2014, no pet.); Robinson v. Surety Ins. Co. of Cal., 688 S.W.2d 705, 708 (Tex. App.-Fort Worth 1985, no writ).
The "prevailing party" attorney's fees provision in paragraph 17 applies, according to its very terms, to the parties to the contract. Paragraph 1 of the contract identifies the "parties" as VSDH as "Seller" and Kenneth and Betsy Gross as "Buyer." Discussion of "parties" throughout the remainder of the contract, including Addendum A, is limited to the terms "Buyer" and "Seller." In the guaranty found in paragraph 4 of Addendum A, Hickok and Shaw, as partners of VSDH, personally guaranteed "Seller's obligations under the Buy Back Option granted from VSDH to Buyer hereunder." The guaranty does not alter the definition of the parties to the contract—the "Buyer" and "Seller." Furthermore, the guaranty does not provide that Hickok obtained the benefits of any portion of the agreement, and it is silent on the issue of attorney's fees, as is Addendum A. Since guaranty agreements are strictly construed and may not be extended beyond their terms by construction or implication, we conclude Hickok has shown no contractual basis for an award of attorney's fees. The same is true for Shaw, who was "granted summary judgment in his favor because he was not a party to the Contract and had not signed it in any capacity." See VSDH, 2016 WL 2621073, at *2.
It is undisputed that VSDH was a signatory and party to the contract. The contract, however, does not define "prevailing party," so we presume the parties intended the phrase's ordinary meaning to apply. Bhatia, 396 S.W.3d at 670 (citing Intercont'l Group P'ship v. KB Home Lone Star L.P., 295 S.W.3d 650, 653 (Tex. 2009); Fitzgerald, 345 S.W.3d at 629-30)). Other courts have interpreted "prevailing party" in similar contract provisions to mean the party that prevails on the main issue in the litigation. See Bhatia, 396 S.W.3d at 670. For a defendant, prevailing "would mean successfully defending on the main action." Id. "Typically, this would mean obtaining a take-nothing judgment on the main issue or issues in the case." Id. This Court has similarly held that "[a] prevailing party is the party who successfully prosecutes a cause of action or defends against it." Goldman, 414 S.W.3d at 367.
VSDH prevailed in the trial court on the breach of contract and fraud claims asserted against it when the court rendered a take-nothing judgment in its favor. See Bhatia, 396 S.W.3d at 671 (parties prevailed when they received take-nothing judgment in their favor); Fitzgerald, 345 S.W.3d at 630 (defendants who obtained take-nothing judgment in their favor were prevailing parties entitled to recover attorneys' fees under parties' agreement); Old HH, Ltd. v. Henderson, No. 03-10-00129-CV, 2011 WL 6118570, at *4 (Tex. App.-Austin December 09, 2011, no pet.) (mem. op.) (defendants who prevailed in trial court when court rendered take-nothing judgment in their favor were entitled under "prevailing party" clause of contract to attorney's fees for defense of claims asserted against them); Silver Lion, Inc. v. Dolphin Street, Inc., No. 01-07-00370-CV, 2010 WL 2025749, at *18 (Tex. App.-Houston [1st Dist.] May 20, 2010, pet. denied) (mem. op.) (defendant awarded take-nothing judgment on breach of contract claim was prevailing party entitled, under parties' agreement, to recover attorneys' fees for successfully defending against claim).
It is also clear that both the fraud and breach of contract counterclaims asserted against VSDH (and determined in its favor by the jury) "related to" the "NEW HOME CONTRACT." The nature of the Grosses' fraud claim was that they entered into the contract and purchased the property because the defendants made the false representation that they would buy the property back pursuant to the buy-back option. Thus, although based in tort, the fraud claim "related to" the sales contract. See Rich v. Olah, 274 S.W.3d 878, 888 (Tex. App.-Dallas 2008, no pet.) (party entitled to recover attorney's fees for defending fraud claim related to contract where the contract provided for an award of an attorney's fees to the "prevailing party in any legal proceeding related to this contract."); see also Fitzgerald, 345 S.W.3d at 630-31 (finding that tort claims involved allegations that defendants failed to disclose information in sales transaction that was the subject of the contract, and contract's attorney's fees provision, which provided for the recovery of fees "in any legal proceeding brought under or with relation to this contract or this transaction," therefore applied).
While a trial court has discretion to determine what were reasonable attorney's fees, it does not have the discretion to deny attorney's fees entirely when, as in this case, an award of reasonable attorney's fees was required under the terms of the contract. See Bhatia, 396 S.W.3d at 671-72 (affirming award of fees to defendant as prevailing party because defendant obtained a take-nothing judgment in its favor); Fitzgerald, 345 S.W.3d at 630 (concluding that because defendants obtained a judgment in their favor, they were entitled to recover costs and attorney's fees from non-prevailing party). As a result, we conclude VSDH was entitled, under the "prevailing party" attorney's fees provision of the contract, to its reasonable attorney's fees and costs for its successful defense of the claims asserted against it by Kenneth and Betsy Gross.
The Grosses also challenge appellants' proof of attorney's fees, arguing it is insufficient as a matter of law to support a judgment because they failed to segregate the fees by claim and/or party.
The affidavit filed by Shaw in support of attorney's fees does not segregate between recoverable and non-recoverable claims. Shaw explained that he was the lead attorney for both VSDH and himself in this case and that he was the lead attorney for Hickok during the time his firm represented Hickok in this matter, from approximately July of 2009 through July of 2010. Within the affidavit, Shaw specified that $146,200 represented a reasonable and necessary attorney's fee for his firm's representation of VSDH and himself as well as his representation of Hickok. An attached itemized billing statement showing the initials of the person performing the work, a brief description of the service, the date it was performed, the time spent, hourly rate, and the amount billed, indicated that from July 1, 2009 through June 19, 2015, a total of $146,200 for 416.50 hours of total time was expended by Shaw's firm in this cause. In a later paragraph in the affidavit, Shaw asserted that the claims were inextricably intertwined:
The Grosses argue, in part, that the statement in Shaw's affidavit that segregation was not possible is insufficient as a matter of law and not supported by the evidence. They point out that Shaw's affidavit shows legal services were provided by his firm to both Shaw and Hickok, who are not legally permitted to recover attorney's fees. The Grosses also argue Shaw and Hickok asserted causes of action that would not permit the recovery of attorney's fees, such as negligence.
During the July 25, 2016 hearing held before the trial court on the motion to correct or modify the judgment, counsel for the Grosses referred to written objections to Shaw's affidavit he had filed prior to the hearing. Those objections are not part of the record on appeal,
Shaw, who also represented himself, argued at the hearing that no segregation of fees was required because "[t]his is a prevailing party case." He told the court that VSDH was entitled to $131,580 in reasonable and necessary attorney's fees "pursuant to the contract and . . . as the prevailing party," which was, as Shaw pointed out, ninety percent of the $146,200 total fee claimed in this case. The remaining ten percent, or $14,620, represented Shaw's reasonable and necessary attorney's fees. There is no account of what percentage of the total fee, if any, was attributable to Hickok, for whom Shaw's firm also provided legal services.
A party seeking attorney's fees has a duty to segregate non-recoverable fees from recoverable fees and to segregate the fees owed by different parties. Stewart Title Guar. Co., 822 S.W.2d at 10-11. In Tony Gullo Motors I, LP v. Chapa, 212 S.W.3d 299 (Tex. 2006), the Texas Supreme Court rejected the idea that a litigant could prove that claims were inextricably intertwined merely by stating the claims were dependent on the same set of facts. There, the Court acknowledged that Chapa's fraud, contract, and DTPA claims were all dependent upon the same set of facts or circumstances, yet went on to state, "that does not mean they all required the same research, discovery, proof, or legal expertise." Id. at 313. The Court continued:
Id. (citing Stewart Title Guar. Co., 822 S.W.2d at 11). The Court acknowledged that many actions taken in a case, such as "requests for standard disclosures, proof of background facts, depositions of the primary actors, discovery motions and hearings, voir dire of the jury, and a host of other services may be necessary whether a claim is filed alone or with others," and held that to the extent these services would have been incurred on a recoverable claim alone, "they are not disallowed simply because they do double service." Id. But the Court reaffirmed that when certain services are performed only for an unrecoverable claim, and are not doing "double service," a claimant must segregate recoverable from unrecoverable fees. Id. In addition, to recover fees for causes of action that are inextricably intertwined but involve both recoverable and unrecoverable claims, lawyers must identify the "discrete legal services" that perform the dual service of advancing both the recoverable and unrecoverable claims. Id. at 313-14; see also Goldman, 414 S.W.3d at 367; Allan v. Nersesova, 307 S.W.3d 564, 573 (Tex. App.-Dallas 2010, no pet.). A lawyer need not keep separate time records for every service claimed to advance both a recoverable and an unrecoverable claim; he may opine what percentage of the service would have been required even if the unrecoverable claim had not been brought. See Tony Gullo Motors, 212 S.W.3d at 314. Here, the supporting affidavit shows discrete legal services were provided by Shaw's firm to both Hickok and Shaw and for claims, such as negligence, for which attorney's fees are unrecoverable, yet there is no segregation of attorney's fees between the recoverable and non-recoverable claims. As a result, we agree with the Grosses that Shaw's affidavit is insufficient as a matter of law to support an award of attorney's fees for VSDH.
Our analysis does not end there, for under Texas law, a prevailing party who is entitled to attorney's fees on one but not all of their claims would be required to "segregate fees between claims for which [attorney's fees] are recoverable and claims for which they are not." Tony Gullo Motors, 212 S.W.3d at 311. Failure to segregate, though, does not result in the denial of any fee award. Id. at 314. Instead, the testimony of the full, unsegregated amount of the fee is treated as some evidence of the segregated fee amount, and remand is appropriate to determine the segregated fee amount due. See Citibank (S.D.), N.A. v. Tran, No. 05-11-01423-CV, 2013 WL 3205878, at *8 (Tex. App.-Dallas June 21, 2013, pet. denied) (mem. op.) (testimony of aggregate fee was some evidence of segregated fees and, therefore, supported remand); Glenn v. Pack, No. 02-09-00204-CV, 2011 WL 167254, at *7 (Tex. App.-Fort Worth Jan. 13, 2011, no pet.) (mem. op.) (same); Wright v. McCusker, No. 04-99-00592-CV, 2000 WL 863099, at *1 (Tex. App.-San Antonio June 28, 2000, no pet.) (mem. op.) (same).
Accordingly, we sustain appellants' issue, in part. We conclude the trial court erred by denying the motion to correct or modify the final judgment as to VSDH. We reverse the trial court's judgment and remand this cause for a determination, pursuant to the parties' June 17, 2015 rule 11 agreement, of VSDH's reasonable attorney's fees and costs as a "prevailing party" under paragraph 17 of the "NEW HOME CONTRACT" for its successful defense of the fraud and breach of contract counterclaims asserted against it by Kenneth and Betsy Gross. 161041F.P05
In accordance with this Court's opinion of this date, the judgment of the trial court is