Intercontinental Group v. Kb Home Lone Star

Citation295 S.W.3d 668
Decision Date23 August 2007
Docket NumberNo. 13-06-617-CV.,13-06-617-CV.
PartiesINTERCONTINENTAL GROUP PARTNERSHIP, Appellant, v. KB HOME LONE STAR LP, Appellee.
CourtCourt of Appeals of Texas

Edward C. Snyder, Jesse R. Castillo, Castillo Snyer, PC, San Antonio, David N. Calvillo, McAllen, for Appellant.

Diann M. Bartek, Renee A. Forinash McElhaney, Natalie L. Hall, Cox, Smith, Matthews, Inc., San Antonio, Andrew J. Yoder, Houston, for Appellee.

Before Justices YAÑEZ, BENAVIDES, and VELA.

MEMORANDUM OPINION

Memorandum Opinion by Justice BENAVIDES.

In this appeal, we must decide what constitutes a "prevailing party" in a breach of contract lawsuit. If a jury has found a defendant liable for breach, but does not award damages to the plaintiff, then has the plaintiff truly "prevailed?" This is not merely an abstract question of legal linguistics; it is a question with significant practical implications for the recovery of attorneys' fees. The question is of particular importance when, as in this case, the contract terms addressing attorneys' fees depart from the provisions in the civil practice and remedies code. Tex. Civ. Prac. & Rem.Code Ann. § 38.001(8) (Vernon 2006). We answer the question by determining that liability, not damages, is the appropriate indicator of which party has prevailed in litigation. Therefore, we affirm the judgment of the district court.

I. Factual Background

Intercontinental Group Partnership ("Intercontinental") is a real estate development partnership based in McAllen, Texas. KB Home Lone Star ("KB") is a nationally prominent home builder based in Los Angeles, California. Beginning in 2003, the two parties entered into several contracts wherein Intercontinental agreed to develop and then sell subdivision plots in the Rio Grande Valley to KB. The contracts, which were drafted by KB, included the following language:

Attorney's Fees. If either party named herein brings an action to enforce the terms of the contract or to declare rights hereunder, the prevailing party in any such action, on trial or appeal, shall be entitled to his reasonable attorney's fees to be paid by losing party as fixed by the Court.

[Emphasis added.]

The contract did not define the term "prevailing party." During the time for performance of the contract, Intercontinental asserted that KB had reneged on a contractual promise to purchase three particular subdivisions. In response, Intercontinental refused to sell KB a subdivision known as "Santa Clara" although the sale had been provided for in a contract between the parties. KB then filed suit, seeking specific performance and actual damages.1

Intercontinental filed a counterclaim in which it alleged that in an oral agreement accompanying the written Santa Clara contract, KB had agreed to buy Santa Clara at below-market price in exchange for buying other subdivisions from Intercontinental at above-market prices. Intercontinental argued that it had detrimentally relied upon the alleged oral promise.

At trial, a jury found Intercontinental liable for breaching the Santa Clara contract. The charge contained fourteen questions, all of which the jury answered to find unambiguously that Intercontinental was liable for breach and that KB bore no liability whatsoever. No jury question was submitted as to whether KB had also breached the Santa Clara contract because Intercontinental had not sued upon those grounds. The jury further found that KB was entitled to recover $66,000 in attorneys' fees as the "reasonable fee for ... necessary services." The jury did not, however, find that KB was entitled to the specific performance or actual damages which it sought.

Both parties filed motions for entry of judgment. KB moved for entry of judgment on the premise that it had prevailed because Intercontinental was found liable for breach of contract. Intercontinental moved for entry of judgment on the premise that it had prevailed because the jury did not award any damages to KB. The district court entered judgment for KB, declaring that it "should recover its damages against the Intercontinental Group Partnership as found by the jury." The district court then awarded KB, the "prevailing party," $66,000 in attorneys' fees as decided by the jury. Intercontinental now appeals.

II. Standard of Review

Both parties agree that an award of attorneys' fees is reviewed under an abuse of discretion standard. Dail v. Couch, 99 S.W.3d 390, 391 (Tex.App.-Corpus Christi 2003, no pet.). The test for abuse of discretion is to determine whether the trial court acted without reference to any guiding rules or principles, or whether under the circumstances of the case, the trial court's actions were arbitrary or unreasonable. Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241-42 (Tex.1985).

III. The Contract Controls Over Chapter 38

We must begin our analysis by distinguishing the language of the contract in this case from the language in chapter 38.001(8) of the civil practice and remedies code, a similarly-worded Texas statute that directly addresses the recovery of attorneys' fees in a breach of contract action. See Tex. Civ. Prac. & Rem.Code Ann. § 38.001(8) (Vernon 2006). Intercontinental argues that case law interpreting the provisions of chapter 38.001 is controlling authority in the instant case. See, e.g., Mustang Pipeline Co., Inc. v. Driver Pipeline Co., Inc., 134 S.W.3d 195, 201 (Tex. 2004); Ed Rachal Found. v. D'Unger, 117 S.W.3d 348, 357 (Tex.App.-Corpus Christi 2003), rev'd on other grounds, 207 S.W.3d 330 (Tex.2006). We disagree. It is the contract — rather than the statute — that controls.

Under Texas statutory law, a party may recover reasonable attorneys' fees from an individual or corporation, in addition to the amount of a valid claim and costs, if the claim is for breach of an oral or written contract. See § 38.001(8). The phrase in the statute, which reads "in addition to the amount of a valid claim," implies that a party must first have been awarded damages before it may be awarded attorneys' fees. Green Int'l v. Solis, 951 S.W.2d 384, 390 (Tex.1997); State Farm Life Ins. Co. v. Beaston, 907 S.W.2d 430, 437 (Tex.1995); Stewart Title Guar. Co. v. Becker, 930 S.W.2d 748, 760 (Tex.App.-Corpus Christi 1996, writ denied).

Parties to a contract may also recover attorneys' fees if they arrange for such recovery as a contractual term. Alma Group, L.L.C. v. Palmer, 143 S.W.3d 840, 845 (Tex.App.-Corpus Christi 2004, pet. denied) (citing New Amsterdam Cas. v. Tex. Indus., Inc., 414 S.W.2d 914, 915 (Tex.1967)). The parties to the contract may create their own terms which need not correspond to chapter 38 of the civil practice and remedies code. Wayne v. A.V.A. Vending, Inc., 52 S.W.3d 412, 417 (Tex.App.-Corpus Christi 2001, pet. denied) (citing One Call Sys., Inc. v. Houston Lighting & Power, 936 S.W.2d 673, 676 (Tex.App.-Houston [14th Dist.] 1996, writ denied)); see also Cysco Enters., Inc. v. Hardeman Family Joint Venture, No. 03-0200230-CV, 2002 Tex.App. LEXIS 8955, at *15, 2002 WL 31833724, at *5 (Tex. App.-Austin 2002, no pet.) (not designated for publication). The parties may agree to terms for the recovery of fees that are either more or less liberal than the terms presented in chapter 38. Wayne, 52 S.W.3d at 418. In such cases, it is the language of the contract, not the statute, that governs. Twelve Oaks Tower I, Ltd. v. Premier Allergy, Inc., 938 S.W.2d 102, 118 (Tex.App.-Houston [14th Dist.] 1996, no writ). Furthermore, it is the language of the agreement itself — not the present interpretation of the parties — that determines the intent of the parties, and the agreement must be enforced as written. Pegasus Energy Group, Inc. v. Cheyenne Petroleum Co., 3 S.W.3d 112, 121 (Tex. App.-Corpus Christi 1999, pet. denied).

In the instant case, both KB and Intercontinental agree that the contract, not the civil practice and remedies code, controls the attorneys' fees dispute, but the parties disagree as to the scope and interpretation of the contract. Intercontinental argues that the contract term addressing attorneys' fees is analogous to the language of the code, and therefore, the case law interpreting the statute is controlling authority. KB argues, however, that the contract language is different from the statutory language and must be construed more liberally. We agree with KB's interpretation.

To begin, the language of the contract states that the prevailing party "shall be entitled to his reasonable attorneys' fees to be paid by losing party as fixed by the Court," and it does not offer any qualifying criteria for the recovery of fees other than that a party must "prevail." The contract language notably excludes the phrase, "in addition to the amount of a valid claim and costs," which appears in chapter 38 operating as a proviso preventing recovery for a prevailing party unless damages are first awarded. ITT Commercial Fin. Corp. v. Riehn, 796 S.W.2d 248, 256 (Tex.App.-Dallas 1990, no writ) (explaining that under chapter 38, "there must be a recovery of money, or at least of something of value otherwise, the attorney's fee award cannot be described as an `addition' to the claimant's relief"). Intercontinental offers no evidence as to why the clause from the statute must be implied in the contract when the parties did not choose to include it at the time of formation. Limiting ourselves to the plain language of the agreement, we must presume that the parties' exclusion of the phrase was deliberate. Pegasus, 3 S.W.3d at 121.

Thus, with no indication that Intercontinental and KB intended to predicate the recovery of attorneys' fees upon first receiving money damages, chapter 38 and the cases pursuant to it are inapposite. Instead of chapter 38's two-part requirement that a party must both prevail and receive money damages, the contract provides only a single requirement for the recovery of fees: that a party must prevail.

IV. Is KB the "Prevailing party"?

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7 cases
  • Intercontinental Group v. Kb Home
    • United States
    • Texas Supreme Court
    • 28 Agosto 2009
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