Sky View at Las Palmas, LLC v. Mendez

• Decision Date: 19 January 2017
• Docket Number: NUMBER 13–15–00019–CV
• Citation: Sky View at Las Palmas, LLC v. Mendez, 548 S.W.3d 18 (Tex. App. 2017)
• Parties: SKY VIEW AT LAS PALMAS, LLC and Ilan Israely, Appellants, v. Roman Geronimo Martinez MENDEZ & San Jacinto Title Services of Rio Grande Valley, LLC, Appellees.
• Court: Texas Court of Appeals

548 S.W.3d 18

SKY VIEW AT LAS PALMAS, LLC and Ilan Israely, Appellants,

v.Roman Geronimo Martinez MENDEZ & San Jacinto Title Services of Rio Grande Valley, LLC, Appellees.

NUMBER 13–15–00019–CV

Court of Appeals of Texas, Corpus Christi-Edinburg.

Delivered and filed January 19, 2017

ATTORNEYS OF RECORD FOR THE APPELLANTS: Donald O. Walsh, Fishman Jackson PLLC, 13155 Noel Road, Suite 700, Dallas, TX 75240-5030, Joel Bailey, Akin Gump Strauss Hauer Feld, 1700 Pacific Ave. Suite 4100, Dallas, TX 75229, Murry B. Cohen, Akin Gump Strauss Hauer & Feld LLP, 1111 Louisiana St., 44th Floor, Houston, TX 77002.

ATTORNEYS OF RECORD FOR THE APPELLEE: Raymond L. Thomas, Ricardo Pumarejo Jr., Kittleman Thomas, PLLC, 4900-B N. 10th Street, McAllen, TX 78504, Michael E. Flanagan, 809 Chicago Avenue, McAllen, TX 78501, Vaughan Waters, Thorton, Biechlin, Segrato, Reynolds & Guerra, L.C., 100 NE Loop 410, Ste. 500, San Antonio, TX 78216, Rafael Garcia, Thorton, Biechlin, Segrato, Reynolds & Guerra, L.C., 418 E. Dove Avenue, McAllen. TX 78504.

Before Justices Benavides, Perkes, and Longoria¹

MEMORANDUM OPINION

Memorandum Opinion by Justice BenavidesIn this commercial litigation case, appellants Sky View at Las Palmas, LLC ("Sky View") and Ilan Israely assert that: (1) they are entitled to a settlement credit to offset the jury's verdict of $2,665,832.72, plus pre-and post-judgment interest, under the one-satisfaction rule; and (2) the award of attorney's fees in appellee Roman Geronimo Martinez Mendez's ("Martinez") favor was excessive and should be reduced. We affirm.

I. BACKGROUND

Sky View was a company formed to purchase and develop a 38.416–acre tract of commercial property in Hidalgo County ("the property"). At the time, Sky View was owned by only two members: Israely and Abraham Gottlieb. Israely is an appellant along with Sky View in this case, but Gottlieb is not.

In 2008, Sky View sought to purchase the property from M Construction, Ltd. ("M Construction") for $6.5 million. In order to finance this purchase, Sky View obtained a $4 million promissory note and deed of trust from Texas State Bank (later known as Compass Bank). After purchasing the property, Israely testified that Sky View sought a second construction loan from Texas State Bank for $9 million in order to begin "grading" the property. According to Israely, Texas State Bank officials told him that the loan would take "a few months" to finance. In the interim, Sky View sought what witnesses called a "bridge loan" to infuse capital into the development while Sky View awaited financing on the second loan from Texas State Bank. In order to finance the bridge loan, Israely, through a connection made by Hugo Martinez² of M Construction, approached appellee Martinez. After some negotiation, Martinez and Sky View began negotiating the terms for the $1.275 million loan ("the bridge loan").

To help facilitate this agreement with Sky View and Israely, Martinez engaged the legal services of the Law Offices of Kittleman Thomas Gonzales ("KTG") and San Jacinto Title Company ("San Jacinto") to prepare the loan documents and close on the transaction. On April 14, 2008, Martinez agreed to loan Sky View a principal of $1.275 million at an annual interest rate of eighteen percent, secured by a second lien deed of trust on the property for Martinez's benefit. According to the note, all principal and interest owed was due to Martinez on October 14, 2008. Evidence also showed that Israely provided Martinez with a personal guaranty on the loan. By October of 2008, Sky View had defaulted on the note and informal negotiations took place between Martinez and Sky View regarding payment on the note. More than a year and a half after the default passed without resolution between the parties. As a result, Martinez hired the Law Offices of Walker and Twenhafel, LLP ("WT") to sue Sky View, Israely, and Gottlieb for payment.

Over a nearly four-year period of litigation, Martinez added additional defendants to his lawsuit, including causes of action for: (1) negligence, fraud, and conspiracy against San Jacinto; (2) breach of contract, unfair settlement practices, and negligence against Fidelity, who issued a title insurance policy to Martinez through San Jacinto; (3) legal malpractice, breach of fiduciary duty, negligence, Texas Deceptive Trade Practices Act Violations, and breach of contract against KTG; and (4) legal malpractice against WT for various acts and omissions, including allowing Compass Bank to foreclose on the property due to Sky View's default on the first note, thereby extinguishing Martinez's lien on the land.

All defendants—except Sky View, Israely, and Gottlieb—settled with Martinez prior to trial in the following order and for the following amounts totaling $2.3 million:

Date Defendant Settlement Amount
                April 28, 2013     KTG              $175,000.00
                March 10, 2014     Fidelity         $300,000.00
                April 1, 2014      San Jacinto      $1,275,000.00
                June 13, 2014      WT               $550,000.00
                

On April 29, 2014, trial proceeded against the non-settling defendants—Sky View, Israely, and Gottlieb—for causes of action related to the breach of the note and guaranty agreements, fraud, promissory estoppel, quantum meruit, ratification/adoption, and conspiracy. After an eight-day trial, the jury reached a verdict finding: (1) Israely and Gottlieb authorized Sky View's execution of the note; (2) Israely and Gottlieb ratified Sky View's execution of the note; (3) Sky View failed to comply with the terms of the note; (4) Gottlieb failed to comply with his guaranty agreement; (5) Israely authorized another to execute the guaranty agreement on his behalf and ratified the guaranty agreement; (6) Israely failed to comply with the guaranty agreement; (7) Israely committed fraud on Martinez; and (8) Martinez incurred damages of $2,665,832.72. The jury also awarded Martinez attorneys' fees related to trial, appeals, and any post-judgment efforts to collect the judgment. In summary, the trial court signed a final judgment finding Sky View, Israely, and Gottlieb jointly and severally liable and awarding Martinez $2,665,832.72 in damages and trial attorneys' fees of $574,063.00, as well as $200,000.00 for contingent appellate attorneys' fees to the intermediate court of appeal and the Texas Supreme Court. Sky View and Israely sought settlement credits on the amount awarded by the jury through various post-trial motions, which were denied. This appeal followed.

II. SETTLEMENT CREDIT

By their first issue, Sky View and Israely contend that they are entitled to a settlement credit in this case under the one satisfaction rule.

A. Standard of Review and Applicable Law

We review a trial court's determination of the existence of, the amount of, or its decision to apply a settlement credit for an abuse of discretion. See Oyster Creek Fin. Corp. v. Richwood Invs. II, Inc. , 176 S.W.3d 307, 326 (Tex. App.—Houston [1st Dist.] 2004, pet. denied) ; Tex. Capital Sec. Inc. v. Sandefer , 108 S.W.3d 923, 925 (Tex. App.—Texarkana 2003, pet. denied) ; see also Valley Grande Manor v. Paredes , No. 13-11-00752-CV, 2013 WL 3517806, at *1 (Tex. App.—Corpus Christi July 11, 2013, pet. denied) (mem. op.).

Under the one-satisfaction rule, a plaintiff is entitled to only one recovery for any damages suffered. Crown Life Ins. Co. v. Casteel , 22 S.W.3d 378, 390 (Tex. 2000) ; Stewart Title Guar. Co. v. Sterling , 822 S.W.2d 1, 7 (Tex. 1991). This rule applies when multiple defendants commit the same act as well as when defendants commit technically different acts that result in a single injury. Casteel , 22 S.W.3d at 390. The application of the rule is not limited to tort claims, and whether the rule may be applied depends not on the cause of action asserted, but rather the injury sustained. See Osborne v. Jauregui, Inc. , 252 S.W.3d 70, 75 (Tex. App.—Austin 2008, pet. denied) ; see also In re DCP Midstream, L.P. , No. 13-14-00502-CV, 2014 WL 5019947, at *8 (Tex. App.—Corpus Christi Oct. 7, 2014, no pet.). The rationale for the one-satisfaction rule is that the plaintiff should not receive a windfall by recovering an amount in court that covers the plaintiff's entire damages, but to which a settling defendant has already partially contributed. The plaintiff would otherwise be recovering an amount greater than the trier of fact has determined would fully compensate for the injury. First Title Co. of Waco v. Garrett , 860 S.W.2d 74, 78 (Tex. 1993).

A defendant seeking a settlement credit has the burden to prove its right to such a credit by putting evidence on the record showing, in the settlement agreement or otherwise, the settlement credit amount. Utts v. Short , 81 S.W.3d 822, 828 (Tex. 2002). Once the nonsettling defendant demonstrates a right to a settlement credit, the burden shifts to the plaintiff to show that certain amounts should not be credited because of the settlement agreement's allocation. Id.

B. Discussion

Sky View and Israely argue that they are entitled to a settlement credit in this case because throughout Martinez's various contract and tort claims he alleged against all seven defendants, Martinez sought recovery for a "single, indivisible injury—nonpayment of the [n]ote." The Texas Supreme Court has held that the indivisible injury recovery theory is significant because "if the settling parties are partially responsible for such an injury, then as a matter of law the judgment should be reduced by the amount of any settlements so as to prevent double recovery by the prevailing plaintiff." Garrett , 860 S.W.2d at 78. It is undisputed that the injury sustained by the jury's finding against Sky View and Israely related solely to the nonpayment of the note. With that said, we disagree with Sky View and Israely's contentions that the various claims asserted by Martinez against all seven defendants sought recovery for a single, indivisible injury.³ To support this conclusion, we will examine Martinez's causes of action,...