Hong Kong Development, Inc. v. Nguyen, 01-04-00586-CV.

CourtCourt of Appeals of Texas
Writing for the CourtTim Taft
Citation229 S.W.3d 415
PartiesHONG KONG DEVELOPMENT, INC., Hai Du Duong, and Phuong Truong Tu, Appellants, v. Kim Loan NGUYEN d/b/a Alpha Bakery, Appellee.
Docket NumberNo. 01-04-00586-CV.,01-04-00586-CV.
Decision Date07 June 2007
229 S.W.3d 415
HONG KONG DEVELOPMENT, INC., Hai Du Duong, and Phuong Truong Tu, Appellants,
Kim Loan NGUYEN d/b/a Alpha Bakery, Appellee.
No. 01-04-00586-CV.
Court of Appeals of Texas, Houston (1st Dist.).
June 7, 2007.
Rehearing Overruled July 13, 2007.

[229 S.W.3d 425]

Bradford W. Irelan, Pamela Heckman Zettlemoyer, Irelan & Hargis, P.L.L.C., Thomas W. Sankey, Thompson & Knight LLP, E. John Gorman, Houston, TX, for Appellants.

Robert W. Higgason, Law Office of Robert W. Higgason, Woodlands, TX, Tammy Tran, Pete Mai, The Tammy Tran Law Firm Attorneys at Law, L.P., Houston, TX, for Appellee.

Panel consists of Chief Justice RADACK and Justices TAFT and NUCHIA.


TIM TAFT, Justice.

Appellee, Kim Loan Nguyen ("Nguyen"), has filed a motion for rehearing of the Court's opinion dated November 9, 2006. Appellants, Hong Kong Development, Inc. ("HKDI"), Hai Du Duong ("Duong"), and Phuong Truong Tu ("Tu") (collectively, "appellants") have responded to that motion. After due consideration, the Court grants Nguyen's motion for rehearing, withdraws its judgment and opinion of November 9, 2006, and issues this opinion and judgment in their stead.

Appellants appeal from a judgment, rendered upon a jury verdict, in favor of Nguyen for $15,312.58 in actual damages against HKDI and Duong, jointly and severally; $200,000 in punitive damages against each of HKDI and Duong; and

229 S.W.3d 426

$79,900 in attorney's fees against all three appellants, jointly and severally. We determine (1) over what appellate challenges we have jurisdiction; (2) whether the trial court erred in consolidating an appeal pending before it in a forcible-detainer suit with a suit in which Nguyen, invoking the court's original jurisdiction, had asserted various tort and declaratory claims; (3) whether the error in consolidating the suits, if any, was rendered moot; (4) whether the evidence is legally sufficient to support liability, actual damages, and punitive damages against HKDI and Duong; (5) whether Tu had a duty to indemnify Nguyen for her attorney's fees; and (6) whether the trial court erred in rendering judgment for attorney's fees that Nguyen's expert did not segregate among claims and defenses for which fees were recoverable and those for which they were not. We reverse the judgment in part, affirm it in part, and remand the cause for limited proceedings.


Tu and Nguyen were sisters-in-law. Tu, Nguyen, and Nguyen's sister entered into a partnership to run a bakery and sandwich shop called Alpha Bakery. In February of that same year, Tu and Nguyen leased space for their business in HKDI's shopping mall. The lease that they executed with HKDI ("the lease agreement") listed Tu and Nguyen as "Tenant" and contained the following provisions:


24.1 Tenant shall not assign this Lease, or any interest therein, . . . without first obtaining the written consent of Landlord. . . . Any assignment . . . without the prior written consent of Landlord shall be void and shall, at the option of Landlord, terminate this Lease. This Lease shall not, nor shall any interest therein, be assignable, as to the interest of Tenant, by operation of law, without the prior written consent of Landlord. However, it is further understood and agreed that Tenant shall not sell, convey, or assign any interest in the corporation [sic] without prior written approval from Landlord, and if Landlord does not agree to the sale, conveyance or assignment of the corporation [sic], Landlord may, at Landlord's option, terminate this Lease.

. . . .


57.2 Acceptance of Rental by Landlord from Tenant or any assignee, subtenant or other successor in interest of Tenant, or the payment or tender of any Rental to Landlord, with or without notice, shall never be construed as a waiver of any breach of any term, condition or covenant of this Lease. The failure of Landlord to declare any Event of Default upon the occurrence thereof, or any delay by Landlord in taking action with respect thereto shall not waive such default, but Landlord shall have the right to declare such default at any time and to take such action as may be authorized hereunder to the extent herein provided.

Duong, HKDI's president and owner, signed the lease agreement on behalf of HKDI.

Tu's and Nguyen's relationship soured a few years later, about the time that Nguyen and her husband, Tu's brother, began divorce proceedings. The partners' dispute led to a lawsuit ("the partnership suit"), and the partnership eventually went into receivership. The jury in the partnership suit awarded Nguyen and her sister, also a partner, 70% of the partnership; awarded Tu 30% of the partnership; and awarded actual damages to Nguyen and

229 S.W.3d 427

attorney's fees to Nguyen and her sister.1 In a separate receivership sale of Alpha Bakery, Nguyen purchased the business. Final paperwork for the sale was drawn up, including a contract assigning Tu's lease interest to Nguyen ("the lease assignment"), as well as a contract assigning Tu's partnership interest to Nguyen ("the partnership assignment"). No one obtained HKDI's consent to the lease assignment, despite the lease agreement's requirement that HKDI's written consent be obtained as a precondition to any assignment of the leasehold interest. Nonetheless, Nguyen and Tu signed the documents, including the lease assignment.

In a nutshell, Nguyen's position in the current suit was that she and Tu had signed the lease assignment without HKDI's written consent under duress because the trial court in the partnership suit had ordered them to sign it under threat of contempt. She also alleged that Tu's counsel in the partnership suit, who had represented HKDI in other matters, had implied in the partnership suit that he was representing both Tu and HKDI and that HKDI would not object to the assignment. Nguyen also took the position in the current lawsuit that Tu, HKDI, and Duong had conspired, for various reasons, to have the parties execute the lease assignment without first obtaining HKDI's written consent so that Nguyen could be declared in default, HKDI could evict her, and Tu could open a competing restaurant in the same mall. HKDI, Duong, and Tu disputed the validity of Nguyen's theories.

In May 2003, HKDI notified Nguyen and Tu that they were in default under the lease because HKDI's consent had not been obtained to the lease assignment and instructed them to vacate the premises. Later that month, Nguyen sued HKDI, Duong, and Tu in Harris County Civil Court at Law No. 3 ("the tort suit").2 Nguyen (1) sought a declaration that the lease assignment from Tu to Nguyen was not a breach of the lease agreement; (2) asserted a cause of action for breach of fiduciary duty against Tu; (3) asserted a cause of action for conspiracy against all appellants, alleging that they had conspired in order for Tu to run Nguyen's restaurant out of business so that Tu could operate an allegedly competing restaurant within Hong Kong Market; and (4) sought actual damages of "less than $100,000," exemplary damages, attorney's fees, and injunctive relief. Two months later, Nguyen filed a first supplemental petition in the tort suit, seeking a declaration—as an apparent alternative to a declaration that the lease assignment had not breached the lease agreement—that the lease assignment was void for having been executed under the "extreme duress" of the threat of contempt in the partnership suit. All appellants answered, and HKDI and Duong asserted a counter-claim against Nguyen for sanctions for the filing of a frivolous lawsuit.

In July 2003, HKDI filed suit, against both Tu and Nguyen, for forcible detainer in a Harris County justice of the peace court, seeking possession of the leasehold property ("the forcible-detainer suit"). See TEX. PROP.CODE ANN. § 24.002 (Vernon 2000). Although the record does not show how the justice court disposed of the forcible-detainer suit, HKDI asserts, without

229 S.W.3d 428

dispute, that it confessed judgment and then immediately appealed to County Civil Court at Law No. 1.3 See TEX.R.APP. P. 38.1(f) ("In a civil case, the court will accept as true the facts stated [in the appellant's brief] unless another party contradicts them."); Mullins v. Coussons, 745 S.W.2d 50, 50 (Tex.App.-Houston [14th Dist.] 1987, no writ) (holding that rendition of agreed judgment in justice court in forcible-detainer suit does not deprive county court of jurisdiction to hear case, when appealed, in trial de novo). Both Tu and Nguyen answered in the county civil court at law in the forcible-detainer suit. On October 2, 2003, Nguyen asserted counter-claims in the forcible-detainer suit against HKDI, cross-claims against Tu, and "cross-claims"—which were actually third-party claims—against Duong, who had theretofore not been a party in the forcible-detainer suit.4 Nguyen alleged (1) that Tu and Duong had tortiously interfered with her contractual relations; (2) that Tu had breached her fiduciary duty to Nguyen; (3) that all appellants had unfairly competed with her; and (4) that all appellants had conspired to evict her. On her counter-, cross-, and third-party claims in the forcible-detainer suit, Nguyen sought actual damages of "less than $100,000," exemplary damages, and attorney's fees. HKDI answered Nguyen's counter-claims against it, but Duong did not. Although the clerk's record does not show this, HKDI and Duong assert on appeal, without contradiction by Nguyen, that Nguyen never served Duong on her third-party claim. See TEX.R.App. P. 38.1(f).

On October 10 and 15, 2003, respectively, Tu and HKDI moved in the forcible-detainer suit to strike or to sever Nguyen's counter-claims, cross-claims, and third-party claims, arguing that the county civil court at law had no subject-matter jurisdiction to consider these matters in a forcible-detainer suit. On October 16, 2003, Nguyen moved in the...

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