Lejune v. Pow-Sang, No. 01-04-00843-CV (TX 4/6/2006)

• Court: Texas Supreme Court
• Writing for the Court: Tim Taft
• Decision Date: 06 April 2006
• Docket Number: No. 01-04-00843-CV.,01-04-00843-CV.
• Citation: Lejune v. Pow-Sang, No. 01-04-00843-CV (TX 4/6/2006), No. 01-04-00843-CV. (Tex. Apr 06, 2006)
• Parties: DANA LEJUNE and TAMMY LEJUNE, Appellants, v. DENNIS POW-SANG, Appellee.

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DANA LEJUNE and TAMMY LEJUNE, Appellants, v. DENNIS POW-SANG, Appellee.

No. 01-04-00843-CV.

Court of Appeals of Texas, First District, Houston.

Opinion issued April 6, 2006.

On Appeal from the 151st District Court, Harris County, Texas, Trial Court Cause No. 98-51193A.

Panel consists of Justices TAFT, KEYES, and HANKS.

OPINION ON REHEARING

TIM TAFT, Justice.

On November 23, 2005, this Court issued its opinion and judgment in this cause. Appellants, Dana LeJune and Tammy LeJune, have filed a motion for rehearing, to which appellee, Dennis Pow-Sang, has responded. After due consideration, we grant the rehearing motion, withdraw our November 23, 2005 opinion and judgment, and issue this opinion and judgment in their stead. However, the disposition remains unchanged.

The LeJunes appeal from a final judgment awarding sanctions rendered under chapter 10 of the Civil Practice and Remedies Code. See TEX. CIV. PRAC. & REM. CODE ANN. §§ 10.001—.006 (Vernon 2002). The trial court ordered the LeJunes to pay the attorney's fees and court costs of appellee, Dennis Pow-Sang, as sanctions. See TEX. CIV. PRAC. & REM. CODE ANN. § 10.004(c)(3) (Vernon 2002) ("A sanction may include any of the following: . . . (3) an order to pay to the other party the amount of the reasonable expenses incurred by the other party because of the filing of the pleading or motion, including reasonable attorney's fees."). We determine (1) whether the trial court's award of some sanctions against the LeJunes, rather than against their attorneys, rendered the order void in part; (2) whether the trial court abused its discretion in granting Pow-Sang's motion for sanctions based on affidavit evidence; (3) whether the LeJunes received due process of law by being given notice of and a reasonable opportunity to respond to the sanctions allegations; and (4) whether the trial court's sanctions order adequately explained the sanctions' bases. We affirm.

Facts

On March 26, 1997, the LeJunes contracted with Yigal Kass for the construction of their home. After a dispute arose, Kass filed a mechanics and materialmens' lien. Pow-Sang notarized Kass's lien affidavit.

The LeJunes sued Kass, Pow-Sang, and Pow-Sang's surety, Universal Surety of America, in October 1998. The LeJunes' sole allegation against Pow-Sang was that he had violated his notary duties by acknowledging Kass's signature on a lien affidavit for a matter in which Pow-Sang allegedly had a pecuniary interest, due to his having been Kass's "spouse" (the LeJunes, as do we, used quotation marks in their petition) and the real-estate broker for the sale of the lot and the home to the LeJunes.

On November 13, 1998, Pow-Sang answered and counter-claimed, seeking sanctions under Chapter 10 of the Civil Practice and Remedies Code and under Rule of Civil Procedure 13 for the filing of frivolous pleadings. See TEX. CIV. PRAC. REM. CODE ANN. §§10.001—.006; TEX. R. CIV. P. 13. The LeJunes non-suited their claims against Pow-Sang and the surety on January 11, 1999. On March 31, 1999, Pow-Sang moved for sanctions against the LeJunes under both chapter 10 and rule 13.

On September 30, 1999, after having held an oral hearing in June of that year, the trial court granted Pow-Sang's motion for sanctions, assessing sanctions against the LeJunes and their attorney's firm, LeJune & Singer, which was also Mr. LeJune's firm. That order required the LeJunes and LeJune & Singer each to pay half of Pow-Sang's attorney's fees and costs for trial: $3,835.50 in fees and $263.00 in costs, for a total of $4,098.50. On March 29, 2001, the trial court severed Pow-Sang's counter-claim for sanctions against the LeJunes from the suit's remaining claims. Pow-Sang later moved for entry of judgment in the severed cause, adding a request to increase the sanctions by his estimated appellate attorney's fees should the LeJunes pursue an unsuccessful appeal. On June 24, 2004, the trial court signed a final judgment in the severed cause, awarding Pow-Sang monetary sanctions under chapter 10 in the amount of his trial costs and attorney's fees (together $4,098.50) and awarding him appellate attorney's fees contingent upon an unsuccessful appeal by the LeJunes ($7,500 for an appeal to the court of appeals, and $5,000 for an appeal to the Texas Supreme Court). Unlike the sanctions order, the final judgment awarded all of the sanctions against only the LeJunes, not against their attorneys.

Standard of Review

We review a sanctions order for abuse of discretion. Finlay v. Olive, 77 S.W.3d 520, 524 (Tex. App.-Houston [1st Dist.] 2002, no pet.). A trial court abuses its discretion if it acts without reference to any guiding rules and principles. Id. One who asserts that the trial court abused its discretion "labors under a heavy burden." Johnson v. Fourth Court of Appeals, 700 S.W.2d 916, 917 (Tex. 1985).

Sanctions Under Chapter 10

In issues one, two, four, and six, the LeJunes complain that the trial court abused its discretion in awarding sanctions to Pow-Sang.¹

A. The Law and the Sanctions Order

Civil Practice and Remedies Code section 10.001 provides, in pertinent part, as follows:

The signing of a pleading or motion as required by the Texas Rules of Civil Procedure constitutes a certificate by the signatory that to the signatory's best knowledge, information, and belief, formed after reasonable inquiry:

(1) the pleading or motion is not being presented for any improper purpose, including to harass or to cause unnecessary delay or needless increase in the cost of litigation;

(2) each claim, defense, or other legal contention in the pleading or motion is warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law; [and]

(3) each allegation or other factual contention in the pleading or motion has evidentiary support or, for a specifically identified allegation or factual contention, is likely to have evidentiary support after a reasonable opportunity for further investigation or discovery. . . .

TEX. CIV. PRAC. & REM. CODE ANN. § 10.001. "A court that determines that a person has signed a pleading or motion in violation of Section 10.001 may impose a sanction on the person, a party represented by the person, or both." Id. § 10.004(a) (Vernon 2002).

The trial court's sanctions order, which was incorporated by reference into the final judgment, provided in pertinent part:

A. Conduct of [the LeJunes] the Court Finds to Have Violated Tex. Civ. Prac. & Rem. Code Ann. § 10.001

1. [The LeJunes] brought their suit against [Pow-Sang] for an improper purpose, to harass and threaten Defendants with scurrilous and unproved allegations regarding extremely private, personal matters that have nothing to do with [the LeJunes'] claims of construction defects in their home, but which allegations were calculated to bully Defendants into settling in order to avoid embarrassment. See TEX. CIV. PRAC. & REM. CODE ANN. § 10.001(1).

2. [The LeJunes'] claim that male co-defendants Pow-Sang and Yigal Kass were "spouses," upon which [the LeJunes'] suit against Pow-Sang was affirmatively predicated, was not warranted by existing law or by any non-frivolous argument for the extension, modification or reversal of existing law. See TEX. CIV. PRAC. & REM. CODE ANN. § 10.001(2).

3. [The LeJunes'] claim that they were damaged by Pow-Sang's notarizing Yigal Kass's signature on a lien affidavit had no evidentiary support—nor was it likely to ever have evidentiary support—because the notarized signature's authenticity was never in dispute. [The LeJunes'] damages, if any, flowed from the substantive act of signing or filing the lien affidavit—which acts were performed by another—not from Pow-Sang's ministerial act of notarizing a signature thereon. Without the necessary element of causation, [the LeJunes'] claims against Pow-Sang could never have had evidentiary support. TEX. CIV. PRAC. & REM. CODE ANN. § 10.001(3).

B. Basis [sic] for Sanctions Imposed

4. Because [the LeJunes'] suit against Pow-Sang was brought for purposes of harassment and intimidation, and because [the LeJunes'] allegation that they were damaged by Pow-Sang's notarization of a genuine signature on an affidavit had no evidentiary support, and was unlikely to ever have any evidentiary support, [the LeJunes] are subject to sanction under TEX. CIV. PRAC. & REM. CODE ANN. §§ 10.001(1), 10.001(3).

5. Because the claims in [the LeJunes'] pleadings that male Co-Defendants [Pow-Sang] and Yigal Kass were "spouses" was not warranted by existing law or by a non-frivolous argument for the extension, modification, or reversal of existing law, or the establishment of new law, [the LeJunes'] attorneys, LeJune & Singer, are subject to sanction under TEX. CIV. PRAC. & REM. CODE ANN. §§ 10.001(2), 10.004(d).

6. Because [the LeJunes] did not show due diligence in investigating the law and facts before filing their groundless, frivolous suit against Pow-Sang, the Court may award Pow-Sang all costs for inconvenience, harassment, and out-of-pocket expenses incurred or caused by the subject litigation. See TEX. CIV. PRAC. & REM. CODE ANN. § 10.002(c).

7. . . . The payment of Pow-Sang's attorney's fees and costs incurred or caused by the subject litigation would (i) compensate Pow-Sang for the expenses that he has been forced to incur; (ii) punish [the LeJunes] and their counsel for violating the rules of pleading; and hopefully (iii) deter other litigants from violating the rules of pleading.

(Emphasis in original.)

"When an order of sanctions refers to one specific rule, either by citing the rule, tracking its language, or both, we are confined to determining whether the sanctions are appropriate under that particular rule." Finlay, 77 S.W.3d at 524 (citing Metzger v. Sebek, 892 S.W.2d 20, 51 (Tex. App.-Houston [1st Dist.] 1994, writ denied)). Accordingly, our review is limited to the ruling's propriety in...