Leon Springs Gas Co. v. Restaurant Equipment Leasing Co.

• Decision Date: 17 December 1997
• Docket Number: A,No. 04-97-00173-CV,B-,04-97-00173-CV
• Citation: 961 S.W.2d 574
• Parties: LEON SPRINGS GAS CO. d/b/a Rudy's Country Store & Bar-ppellant, v. RESTAURANT EQUIPMENT LEASING CO., Appellee.
• Court: Texas Court of Appeals

Page 574

961 S.W.2d 574

LEON SPRINGS GAS CO. d/b/a Rudy's Country Store & Bar-B-Q, Appellant, v. RESTAURANT EQUIPMENT LEASING CO., Appellee.

No. 04-97-00173-CV.

Court of Appeals of Texas San Antonio.

Dec. 17, 1997.

Robert John Myers, Hector Gonzalez, III, Robert John Myers & Associates, San Antonio, for Appellant.

Kevin M. Warburton, Holmes T. Bennett, Gardner & Ferguson, Inc., San Antonio, for Appellee.

Before HARDBERGER, C.J., and LPEZ and ANGELINI, JJ.

OPINION

LOPEZ, Justice.

This appeal concerns the effect of plaintiff's nonsuit under Rule 162 on defendant's pending claim for attorney's fees on a breach of contract claim and pursuant to a counterclaim for sanctions. For the reasons stated in this opinion, we affirm in part, and reverse and remand the remainder of the case to the trial court for further proceedings.

Facts

Restaurant Equipment Leasing Company ("Restaurant Equipment") leased ice-making machines to Leon Springs Gas Company d/b/a Rudy's Country Store and Bar-B-Q ("Rudy's"). Consideration was exchanged. The equipment didn't work right, so Rudy's unplugged them, told Restaurant Equipment to pick them up, and stopped making lease payments. Restaurant Equipment picked the machines up and sued for breach of contract. Rudy's raised affirmative defenses and asked for attorney's fees. Following discovery, Rudy's filed a motion for partial summary judgment asking for a take nothing judgment against the lessor. Restaurant Equipment filed a non-suit before the summary judgment motion was heard. Following the filing of the non-suit, Rudy's counterclaimed for sanctions for filing a frivolous suit. ¹ At the hearing, the court denied the partial summary judgment motion as moot and dismissed all remaining claims for relief.

On Nov. 14, 1996, the only setting on the court's docket in this matter was Rudy's partial summary judgment motion. Restaurant Equipment had not filed a response, rather it filed a non-suit. The only evidence presented was attached to the motion for partial summary judgment. No testimony was offered. The court essentially dismissed the entire case as moot, and denied sanctions for want of evidence. Each party submitted its version of the rulings and Judge Canales signed them both on November 19, 1996. ² Appellant's points of error ("POE") fall into five categories: whether the court erred in dismissing the entire case when Rudy's had requests for affirmative relief on file (POE Nos. 1, 6 & 7); whether it was error to dismiss Rudy's claims for affirmative relief without notice of hearing or a trial on the merits (POE Nos. 2, 6 & 7); whether it was error to deny Rudy's motion for partial summary judgment (POE No. 3); whether the court erred in denying a right to trial by jury (POE No. 4); and whether it erred in failing to assess costs to appellant (POE No. 5).

The Standard of Review

In appellant's sixth and seventh points of error, Rudy's contends that the evidence is both legally and factually insufficient to support the court's dismissal. However, the issues before us involve procedural propriety and are, therefore, legal issues. Appellee suggests that there is really nothing to review here. The occasion for the hearing below was a motion for partial summary judgment which was denied as moot. We agree that that portion of the orders denying partial summary judgment does not fall within the parameters of interlocutory appellate review. See TEX. CIV. PRAC. & REM.CODE § 51.014. This is not an interlocutory appeal, however, because the orders complained of disposed of all parties and all claims. We will review the record under an abuse of discretion standard. Abuse of discretion is the exercise of a "vested power in a manner that is contrary to law or reason." Landon v. Jean-Paul Budinger, Inc., 724 S.W.2d 931, 935 (Tex.App.--Austin 1987, no writ).

The Effect of a Nonsuit

Rule 162 permits a plaintiff to voluntarily dismiss his claims or nonsuit a party opponent at any time before he has introduced all his evidence other than rebuttal evidence. TEX.R. CIV. P. 162. Under the circumstances presented here, a plaintiff has a right to take a nonsuit after the defendant files a motion for summary judgment, up to the time the court announces a summary judgment. See Taliaferro v. Smith, 804 S.W.2d 548, 550 (Tex.App.--Houston [14th Dist.] 1991, no writ); Extended Servs. Program, Inc. v. First Extended Serv. Corp., 601 S.W.2d 469, 471 (Tex.Civ.App.--Dallas 1980, writ ref'd n.r.e.). "The plaintiff's right to take a nonsuit is unqualified and absolute as long as the defendant has not made a claim for affirmative relief." BHP Petroleum Co. Inc. v. Millard, 800 S.W.2d 838, 840 (Tex.1990); Greenberg v. Brookshire, 640 S.W.2d 870, 871 (Tex.1982); McQuillen v. Hughes, 626 S.W.2d 495, 496 (Tex.1981). Our review of the court's dismissal requires that we first determine whether Rudy's claim for attorney's fees stated a claim for affirmative relief.

To qualify as a claim for affirmative relief, a defensive pleading must allege that the defendant has a cause of action independent of the plaintiff's claim, on which he could recover benefits, compensation or relief, even though the plaintiff may abandon his cause of action or fail to establish it.

General Land Office v. OXY U.S.A., Inc. 789 S.W.2d 569, 570 (Tex.1990) (quoting Weaver v. Jock, 717 S.W.2d 654, 657 (Tex.App.--Waco 1986, writ ref'd n.r.e.). Where a defendant does no more than resist plaintiff's claim, the right to take a nonsuit is absolute. General Land Office, 789 S.W.2d at 570. Even where the defendant employs artful pleading to present affirmative defenses in the form of a declaratory judgment counterclaim, the plaintiff has the right to obtain a dismissal of the entire suit. See Newman Oil Co. v. Alkek, 614 S.W.2d 653, 655 (Tex.App.--Corpus Christi 1981, writ ref'd n.r.e.) (holding defendants' counterclaim nothing more than denial of plaintiffs' cause of action).

Rudy's argues that its first amended original answer raised an affirmative claim for attorney's fees for breach of contract. The answer has four parts: (1) it raises a defect of parties by specially denying Rudy's alleged status as a corporation, supported by a sworn affidavit; (2) it raises affirmative defenses ³; (3) makes a general denial; and (4) seeks to recover reasonable attorney's fees and costs in connection with its defense of the suit. The prayer also seeks recovery of fees and costs.

Because Rudy's allegations in response to the breach of contract claims are presented only as affirmative defenses, their effect is confined to strategies of avoidance. At the hearing, the trial court told appellant's counsel, "I've read your answer. I don't think it asks for affirmative relief. The nonsuit stands as far as I'm concerned."

A request for attorney's fees made in connection with a contract dispute may be a request for affirmative relief. See TEX. CIV. PRAC. & REM.CODE § 38.001. This request, however, must be made in connection with the underlying contract claim. See id. at § 38.002. ⁴ Because Rudy's has made no claim for damages against Restaurant Equipment pursuant to the equipment lease, there is no basis for recovery of attorney's fees under the lease. ⁵ See Melson v. Stemma Exploration and Production Co., 801 S.W.2d 601, 604 (Tex.App.--Dallas 1990, no writ) (citing American Airlines, Inc. v. Swest Inc., 707 S.W.2d 545, 547 (Tex.1986)). We agree with the trial court that appellant's live pleadings at the time the nonsuit was filed did not state a claim for affirmative relief.

At oral argument, appellant cited to our opinion in De La Rosa v. Kaples which has recognized cases where attorney's fees are awarded in defense of a contract suit even though the jury awarded no damages. In such cases, however, the successful defendant filed a counterclaim for actual damages and sought attorney's fees both for defending and prosecuting the contract claim. See De La Rosa v. Kaples, 812 S.W.2d 432, 433 (Tex.App.--San Antonio 1991, writ denied). We stated:

Although Article 2226 and § 38.001 do not provide for attorney's fees for the pure defense of a claim, "there is an exception to the general rule of law for cases in which the matters encompassed by the claim and counterclaim are indistinguishable, where they arose from the same transactions, where the same facts required to prosecute the claim are required to defend against the counterclaim"; under these circumstances, attorney's fees are appropriate.

Id. at 434 (quoting Veale v. Rose, 657 S.W.2d 834, 841 (Tex.App.--Corpus Christi 1983, writ ref'd n.r.e.). Rudy's affirmative defenses may very well have formed the basis of a counterclaim for damages, however, they had not been presented in such form prior to the filing of plaintiff's nonsuit. The nonsuit rendered moot the matters raised in Rudy's pending motion for partial summary judgment as of October 25, 1996. The portion of Appellant's point of error which deals with Rudy's affirmative defenses, as well as points of error three, six and seven are overruled.

Sanctions

Rudy's, however, amended its pleadings on November 1, 1996, to add a counterclaim for sanctions, pursuant to Texas Civil Practice and Remedies Code section 10.001 and Rule 13 of the rules of civil procedure, against Restaurant Equipment for filing a frivolous claim. Two weeks later, the parties appeared before the court for the hearing on the motion for partial summary judgment. The trial court denied the motion and dismissed the attorney's fees claim as a result of the nonsuit. It then took up the counterclaim for sanctions. The court noted that the sanctions claim survived the nonsuit. The court then asked Rudy's attorney, "What evidence do you have to give me there's a frivolous lawsuit filed?" Following a brief summary of the basis for the claim, Rudy's counsel stated he was prepared that day only to argue the relative merits of the motion for partial summary judgment--the only motion set on the...