Hawkins v. Horton
| Docket Number | 04-22-00307-CV |
| Decision Date | 30 August 2023 |
| Parties | Daniel W. HAWKINS, Appellant v. Bobby HORTON, Appellee |
| Court | Texas Court of Appeals |
From the 216th Judicial District Court, Kerr County, Texas Trial Court No. 20252A Honorable Albert D. Pattillo, III, Judge Presiding
Sitting: Rebeca C. Martinez, Chief Justice, Lori I Valenzuela, Justice Sandee Bryan Marion, Chief Justice (Retired) [1]
Daniel W. Hawkins appeals following a bench trial in this suit on a promissory note. In seven issues, Hawkins challenges the trial court's judgment awarding Bobby Horton damages and attorney's fees and denying Hawkins relief on his counterclaims. We sustain one issue and apply a settlement credit to reduce the damages award. We otherwise overrule Hawkins's issues and affirm the trial court's judgment.
In 2013, Horton sold Hawkins an equipment rental business, General Rental Center ("GRC"), in Ingram, Texas for $875,000. Hawkins paid $150,000 as a down payment, and Horton financed the remainder. As part of the financing, Hawkins and Horton entered into a promissory note, which consisted of a printed form with terms handwritten into designated spaces and a handwritten exhibit stating collateral. The original note specified a ten-year repayment term. Several months after execution of the promissory note, Hawkins Ward Enterprises, LLC ("HWE") was formed as a limited liability company in the State of Texas. Its initial members were Hawkins and his then-partner Courtney Ward. After HWE was formed, Horton transferred the real estate upon which GRC operated to HWE. On February 10, 2014, Horton and Hawkins entered into a restructuring of the promissory note. The restructuring agreement consisted of a single handwritten page signed by both Hawkins and Horton.
According to Hawkins's testimony, on December 19, 2014, the parties entered into a release agreement, pursuant to which Horton released Hawkins from liability arising under the original promissory note in exchange for $150,000. A copy of the purported release was admitted into evidence. Horton contested any release in his testimony, contending that his signature on the release agreement was a forgery. A handwriting expert Horton called also testified that, in her opinion, the signature was a forgery. According to Horton, instead of a release, on December 20, 2014, the parties entered into a second restructuring of the promissory note.
On the back of the December 20, 2014 note is an indorsement: "Pay to the order of GEORGE L. SCHULGEN, JR. and FLORENCE E. SCHULGEN," and below the indorsement is Horton's signature. Also in the record is a promissory note Horton made in favor of George and Florence Schulgen in 2016. The Schulgen promissory note is secured by the December 20, 2014 note between Hawkins and Horton.
Around the end of 2016, Hawkins stopped making payments on the December 20, 2014 note. Hawkins testified that, at the time he stopped making payments, any debt he owed had been released pursuant to a deal he and Horton had made to share profits from the partition and sale of ranchland. Horton denied any such release in his testimony.
In May 2020, Horton filed suit against Hawkins and HWE for breach of contract and quantum meruit. Horton alleged that Hawkins owed $352,837 on the December 20, 2014 note. Horton sought a judgment for the unpaid amount and a right to foreclose on Hawkins's ownership of HWE and HWE's assets. In December 2020, Ward entered into an agreement with Hawkins and HWE, pursuant to which she purchased Hawkins's equity in HWE and became HWE's sole owner. In December 2020, Horton, Ward, and HWE settled. Pursuant to the settlement agreement, HWE paid Horton $25,000.
Horton filed a motion for leave to file verified denials on the day of trial, February 14, 2022.[4] By this motion, Horton requested leave to file a verified denial as to execution of the December 19, 2014 release and any purported partnership between Hawkins and Horton. On the morning of trial, the trial court considered Horton's motion for leave. After hearing argument, the trial court took the issue under advisement. It never explicitly ruled on the motion then or later. Next, the trial court considered Hawkins's motion to reconsider an earlier summary judgment ruling. Hawkins's counsel argued that Horton's indorsement of the December 20, 2014 note to the Schulgens and his action to give up physical possession of the note to the Schulgens's attorney prohibited Horton from enforcing the note as a "holder," as that term is used in the Uniform Commercial Code ("UCC"), or otherwise. See Tex. Bus. & Comm. Code Ann. §§ 1.201(b)(21), 3.301. The trial court took the matter under advisement.
At the bench trial, Horton, Hawkins, Ward, the Schulgens's attorney, and Horton's handwriting expert testified. Counsel for both parties also testified regarding attorney's fees; however, the trial court prohibited Hawkins from calling Horton's attorney to testify regarding the filing of a purportedly fraudulent lien. At the conclusion of trial, the trial court ruled in favor of Horton. It then signed a final judgment and findings of fact and conclusions of law. The findings of fact and conclusions of law specify that Horton established a right to enforce the December 20, 2014 note and that Horton established the elements of a breach of contract claim. Hawkins timely appealed.
Some of Hawkins's issues and sub-issues are duplicative. To simplify matters, we address the appeal first as to Horton's claims, considering all arguments Hawkins has presented as to those claims. Hawkins contends that the trial court's judgment must be reversed because Horton cannot enforce the December 20, 2014 promissory note as a matter of law after he indorsed the note and gave up possession. Hawkins also contends that Horton released the debt through the December 19, 2014 release agreement, that Horton released his claims against Hawkins through Horton's settlement with Ward and HWE, and that Horton released any debt owed through the parties' purported partnership to sell ranchland. As to the releases, Hawkins contends that Horton cannot deny his execution of the December 19, 2014 release agreement and the purported partnership because there are no verified denials in the pleadings. The trial court did not explicitly rule on Horton's motion for leave to file verified denials, and, even if it had, Hawkins argues, the trial court abused its discretion by granting leave to file the verified denials so close to trial. Hawkins also argues that the trial court abused its discretion by allowing testimony from Horton's handwriting expert. Hawkins argues that, if we reverse the damages judgment, we should render a take-nothing judgment because Horton cannot establish his quantum meruit claim. In addition, Hawkins contends the amount of damages is unsupported by legally sufficient evidence and that the trial court erred by refusing to apply a settlement credit.
We overrule all of Hawkins's issues directed at the breach of contract claim, any purported releases, and any subsidiary pleading and evidentiary matters. We sustain only Hawkins's issue regarding the settlement credit, and reduce the damages award by $25,000, which represents the settlement amount between Hawkins and HWE. We do not reach Hawkins's issue regarding Horton's alternative quantum meruit claim because the judgement, as modified, is supported based on the breach of contract claim. See Tex. R. App. P. 47.1.
Next, we consider Hawkins's issue concerning his counterclaims. Hawkins argues the trial court abused its discretion by excluding testimony from Horton's counsel related to a purportedly fraudulent lien. Hawkins contends that without this testimony he could not establish his counterclaim. We overrule this issue.
Last, we consider and reject Hawkins's issue, in which he contends the attorney's fees award to Horton is unsupported by legally sufficient evidence.
A. Horton's Claim for Breach of Contract
Horton sued to enforce the December 20, 2014 promissory note. Hawkins complains the trial court abused its discretion by awarding damages to Horton after Horton indorsed the note to the Schulgens and gave up possession. Horton's indorsement and lack of possession are undisputed. It also is undisputed that Horton pledged the December 20, 2014 note as security to the Schulgens and that Horton was not in default on his own note with the Schulgens. Based on this undisputed evidence, the trial court made a finding of fact that Horton had established a right to enforce the December 20, 2014 note. On...
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