Cardenas v. Varner

• Citation: 182 S.W.3d 380
• Decision Date: 02 February 2006
• Docket Number: No. 07-03-0537-CV.,07-03-0537-CV.
• Parties: Jose L. CARDENAS and Gloria Cardenas, Appellants/Cross-Appellees, v. Jack N. VARNER and Joyce L. Varner, Appellees/Cross-Appellants.
• Court: Supreme Court of Texas

182 S.W.3d 380

Jose L. CARDENAS and Gloria Cardenas, Appellants/Cross-Appellees, v. Jack N. VARNER and Joyce L. Varner, Appellees/Cross-Appellants.

No. 07-03-0537-CV.

Court of Appeals of Texas, Amarillo.

December 7, 2005.

Rehearing Overruled February 2, 2006.

Daniel L. Schaap and R. Wade King, Underwood, Wilson, Berry, Stein & Johnson, P.C., Amarillo, for Appellants & Cross-appellees.

Roger Lee, Gibson, Hotchkiss, Roach & Davenport, Wichita Falls, for Appellees & Cross-appellees.

Before QUINN, C.J., and REAVIS and CAMPBELL, JJ.

Opinion

BRIAN QUINN, Chief Justice.

Jack and Joyce Varner sued Jose and Gloria Cardenas to recover upon a promissory note and foreclose upon a vendor's lien securing payment of the note. The Cardenas executed the note as partial payment for ranch land bought from the Varners. When the Cardenas discovered, after closing of the sale, that the acreage was less than that represented by the Varners, they refused to pay the outstanding note balance. This precipitated the aforementioned suit. In response, the Cardenas counterclaimed for breach of the sales contract and warranties, asserting that they were sold less land than promised. Upon trial before the court, the trial judge reformed the purchase price of the land, subtracted the difference from the outstanding balance due on the note, awarded the Varners the remaining sum due, and permitted them to foreclose upon their lien. The issues before us concern the reformation of the purchase price, the attorney's fees awarded to the Varners, and the interest rates adopted by the trial court. We reverse in part and affirm in part.

First Issue — Reformation of the Agreement

The first issue we address encompasses the trial court's reformation of the purchase price. The Cardenas argue that it did not reduce the price enough while the Varners assert that it had no basis to reduce it at all. We overrule the Cardenas' assertion and sustain that of the Varners.

No one disputes that the trial court attempted to reform the agreement struck by the parties. Furthermore, the Cardenas believe that the trial court was authorized to do so because the parties were mistaken about the actual amount of land encompassed in the sale. Thus, equity purportedly entitled the trial court to make the changes to reflect the actual property conveyed. Yet, in suing for redress, the Cardenas only pled causes of action sounding in breached contract and warranties. And, as for relief, they sought only damages in the amount of $204,800, plus court costs, attorney's fees, and interest. Their live pleading said nothing about mistake (either mutual or otherwise) or reforming the terms of the agreement. This is fatal since one must seek reformation in his live pleading to acquire it. Rattan v. Dicker, 373 S.W.2d 306, 310 (Tex.Civ.App.-Dallas 1963, no writ); accord Liu v. Yang, 69 S.W.3d 225, 229 (Tex.App.-Corpus Christi 2001, no pet.) (stating that to be entitled to reformation of an agreement, a party must plead either mutual mistake, unilateral mistake accompanied by fraud, or other inequitable conduct by the other party).¹ So, because the Cardenas did not, they were not entitled to reformation of the agreement. Cunningham v. Parkdale Bank, 660 S.W.2d 810, 813 (Tex.1983) (stating that a party may not be granted relief in absence of pleadings to support that relief).

The Cardenas, however, cite Scott v. Nunn Elec. Supply Corp., 386 S.W.2d 891 (Tex.Civ.App.-Amarillo 1965, no writ) and Gable Elec. Serv., Inc. v. Mims, 364 S.W.2d 292 (Tex.Civ.App.-Dallas 1963, no writ) for the proposition that the Varners waived any complaint about the lack of pleading. Furthermore, they allegedly did so because they invited the error by submitting to the trial court findings of fact and conclusions of law encompassing the trial court's decision to reform the agreement. While Scott and Gable indicate that one cannot complain about findings he solicited, we find the cases inapposite for several reasons. First, the Varners are not complaining about the trial court's findings of fact and conclusions of law. Second, the error at issue occurred before the findings were submitted by the Varners. By that time, the trial court had already executed its final judgment effectively reforming the agreement. So, it can hardly be said that the proffered findings induced the trial court to act in an objectionable manner.

In sum, the conditions necessary to obtain any reformation of the agreement were not satisfied. Thus, the trial court could not enter judgment granting relief which no one sought and erred by doing so.

Second Issue — Attorney's Fees

Next we address the dispute regarding attorney's fees. The Cardenas allege that the trial court awarded the Varners too much because the Varners did not segregate the recoverable fees from those that were not. On the other hand, the Varners contend that the trial court failed to award them enough. We agree with the Cardenas.

First, we address the Varners' allegation that the trial court erred in not awarding them attorney's fees to be incurred on appeal and in conducting the post-judgment foreclosure. The record is bereft of evidence indicating what a reasonable fee would be for pursuing those avenues. Without such evidence, the trial court lacked basis to award them. Thus, we reject the Varners' contention.

Next, we address the allegation that the Cardenas were entitled to a reduction in fees awarded to their opponents since the trial court reformed the agreement and lowered the damages due the Varners. In other words, since they were partially victorious in defending against the Varners' suit, the Cardenas believe that they should not have to pay all the fees sought. Assuming that law exists supporting the argument, facts do not. Simply put, the foundation upon which it rests is the validity of the trial court's reformation of the agreement. Because we have held that the trial court erred in that regard, there is no basis to support the argument. Thus, we reject it.

Next, the Cardenas assert that the Varners did not properly segregate the fees. With this, we agree. One claiming attorney's fees has the burden to segregate those recoverable from an opponent from those which are not. Natural Gas Clearinghouse v. Midgard Energy Co., 113 S.W.3d 400, 416-17 (Tex.App.-Amarillo 2003, pet. denied); accord Hruska v. First State Bank, 747 S.W.2d 783, 785 (Tex.1988) (generally requiring segregation of fees). Yet, segregation need not occur if the causes of action are dependent upon the same set of facts or circumstances and, thus, are inseparable. Stewart Title Guaranty Co. v. Sterling, 822 S.W.2d 1, 11-12 (Tex.1991); Natural Gas Clearinghouse v. Midgard Energy Co., 113 S.W.3d at 416-17.

Here, the Varners sought to recover approximately $45,000 in attorney's fees. The billing summary tendered into evidence illustrated that those fees encompassed action taken to prosecute their claims against the Cardenas and founded upon the promissory note. Yet, so too did it disclose that fees incurred in prosecuting causes of action against defendants other than the Cardenas were also included in the sum. Moreover, the causes of action asserted against the other defendants and operative facts underlying them were distinct from those entitling the Varners to recovery against the Cardenas.

The Varners cite us to no authority obligating the Cardenas to pay for attorney's fees incurred by the Varners in prosecuting distinct claims against distinct parties and involving distinct facts. Thus, they were obligated to segregate the recoverable fees from those that were not. And, while the trial court awarded less fees than requested (approximately $40,000 instead of $45,000), we cannot say, upon the record before us, that the difference equaled the amount incurred in prosecuting the claims against the other defendants. Thus, the issue of fees must be remanded to the trial court. Stewart Title Guaranty Co. v. Sterling, 822 S.W.2d at 12.

The same can be said of the fees incurred in defending against the Cardenas' counterclaim. The latter was based not upon the note and vendor's lien. Nor did they attempt to vitiate or otherwise alter either instrument.² Rather, they sued for breach of the underlying sales contract. Furthermore, the damages sought represented the difference in cost between the acreage they thought they acquired and the acreage that they actually received. The difference was then to be used to reduce (by offset) the sum due under the note. So, while there was some relationship between the claims, the causes of action differed. Moreover, the operative facts upon which they depended were not so intertwined as to be inseparable. Thus, the fees incurred by the Varners in prosecuting their claims were capable of segregation from those incurred in defending against the counterclaim.

Third Issue — Pre and Post-Judgment Interest

The Cardenas next complain about the trial court's application of the default interest rate to the sums found outstanding. That rate, as specified in the note, was 18% per annum. Furthermore, their argument is two-fold. We address each part in turn.

First, they assert that because the trial court afforded them some relief by reforming the agreement, they were not in default. Our having...