Lyon v. Bldg. Galveston, Inc., 01-19-00571-CV

TED B. LYON III, Appellant v. BUILDING GALVESTON, INC., AppelleeAndBUILDING GALVESTON, INC., Appellant v. TED B. LYON III, Appellee

NO. 01-19-00571-CV

Court of Appeals For The First District of Texas

December 17, 2020

On Appeal from the 405th District Court Galveston County, Texas

Trial Court Case No. 10-CV-2353

MEMORANDUM OPINION

This is the second appeal in an ongoing dispute between Ted B. Lyon III and Building Galveston, Inc. (BGI). In the first appeal, this Court reversed the portion of the trial court's judgment rendered in BGI's favor on its fraudulent lien and invalid lien claims and the award of attorney's fees to BGI based on those claims. Lyon v. Bldg. Galveston, Inc., No. 01-15-00664-CV, 2017 WL 4545831 (Tex. App.—Houston [1st Dist.] Oct. 12, 2017, pet. denied) (mem. op.) (Lyon I). We also reversed the trial court's denial of attorney's fees to BGI on its breach of contract claim, and we "remand[ed] for further proceedings on the attorney's fees issue." Id. at *13. On remand, a visiting judge reviewed the transcripts from the original bench trial on attorney's fees and, after hearing the parties' arguments, awarded BGI attorney's fees based on its breach of contract claim. Lyon and BGI are appealing the trial court's judgment.

In six issues with multiple sub-parts, Lyon argues that: (1) the visiting judge erred by not granting him a jury trial on the issue of attorney's fees on remand, and relying instead upon the transcripts of the 2015 bench trial; (2) the district court judge who presided over the 2015 bench trial on attorney fees abused her discretion by admitting BGI's billing records over Lyon's objections (Plaintiff's Exhibit 45); (3) the visiting judge abused her discretion by considering evidence from a mediation proceeding; (4)(a) there is legally and factually insufficient evidencesupporting the visiting judges' awards of trial and appellate fees to BGI; (4)(b) the visiting judge "improperly sua sponte awarded appellate fees [to BGI] unconditionally for the parties' earlier appeals in this case"; (5) the visiting judge's judgment is void or voidable because she was not authorized to "complete the April 2015 bench trial and to purportedly find facts in 2019 on disputed 2015 evidence" in violation of Lyon's rights under the Texas and United States constitutions; and (6) the visiting judge's judgment is void or voidable because, among other things, she did not preside over the 2015 bench trial on which her judgment on remand is based. BGI raises several counterpoints to these issues.¹

In one issue, BGI argues that the trial court erred in failing to award BGI conditional appellate attorney fees.

We set aside the trial court's judgment and dismiss the appeal for want of jurisdiction.

Background²

In 2010, Lyon, on behalf of his construction company, and BGI entered into a subcontract agreement whereby Lyon's company agreed to serve as BGI's subcontractor for a project remodeling a bakery. See Lyon I, 2017 WL 4545831 at *1. After BGI fired Lyon, Lyon filed a mechanic's and materialman's lien on the property and sued the bakery's owners to foreclose on the lien.³ BGI intervened in the suit several months later and asserted claims against Lyon, including claims for breach of contract and filing of a fraudulent lien. Id.

After a November 2013 trial on the liability issues, the jury found in BGI's favor with respect to its breach of contract and invalid and fraudulent lien claims. Id. The trial was presided over by District Court Judge Michelle Slaughter.

The issue of attorney's fees was tried to the bench by agreement of the parties five months later on April 17, 2015. Id. at *2. On April 9, 2015, eight days before the bench trial, BGI filed a supplemental petition in which it alleged that BGI had presented its claim for damages to Lyon more than thirty days before the filing ofthe supplemental petition and that Lyon had failed to pay BGI's damages within thirty days from presentment. Id.⁴ Judge Slaughter denied BGI's motion for leave to file its supplemental petition because the petition was untimely. Id. at *8. Judge Slaughter, however, allowed BGI to put on testimony and offer evidence attempting to establish presentment during the trial over Lyon's objection. Id.

At the conclusion of the bench trial, Judge Slaughter took under advisement several objections made by Lyon to BGI's evidence. Judge Slaughter subsequently signed a final judgment in the suit in which she sustained Lyon's objection to BGI's evidence of presentment because BGI had not pleaded presentment of its claims asrequired to recover attorney's fees under Chapter 38 of the Texas Civil Practice and Remedies Code. Id. As a result of this ruling, Judge Slaughter did not rule on Lyon's other objections to BGI's evidence of presentment, which she considered to be moot. Id. The judgment also awarded BGI approximately $15,000 in damages on its breach of contract claim, approximately $30,000 in damages on its fraudulent lien claim, and over $142,000 in attorney's fees for its fraudulent lien and invalid lien claims, but no attorney's fees on its breach of contract claim.

On appeal, this Court held that there was legally insufficient evidence to support the jury's findings that the lien was invalid, and that Lyon had filed a fraudulent lien. Id. at *6. Accordingly, we reversed the trial court's judgment and rendered judgment in favor of Lyon with respect to these claims. Because the award of attorney's fees was based on these claims, we "reverse[d] the trial court's award of attorney's fees to BGI in its entirety and remand[ed] that issue to the trial court for further proceedings." Id. at *6. We also held that the trial court erred by denying BGI's motion for leave to amend its pleading to more specifically allege presentment, and that the error was harmful because, although disputed, BGI had offered some evidence of presentment during the bench trial. Id. at *13.

After this court's mandate issued, BGI filed a motion for judgment post appeal in the trial court, but no action was taken on the matter before Judge Slaughter left the bench on December 31, 2018. Judge Sylvia Matthews, who was assigned to thedistrict court in February 2019 to hear cases and dispose of any accumulated business requested by the court, see TEX. GOV'T. CODE § 74.056, held two hearings in this remand proceeding in February and April 2019. No testimony was presented during either hearing. Judge Matthews did, however, hear arguments from counsel on several issues during these hearings, including whether she could rely on the record from the April 2015 bench trial in order to determine whether BGI was entitled to recover attorney's fees on its breach of contract claim pursuant to Chapter 38, and if so, the amount of BGI's reasonable and necessary fees, as opposed to holding a new trial to resolve these questions, and, if she had to hold a trial, whether it was required to be a jury trial, as Lyon argued. The court also heard arguments on Lyon's objections to evidence that BGI had offered during the 2015 bench trial that Judge Slaughter had not ruled on. The evidence at issue was a mediation PowerPoint (Exhibit 42), one of BGI's discovery responses (Exhibit 43), and an email between BGI's and Lyon's counsel (Exhibit 44).

Judge Matthews subsequently entered an order on BGI's motion for judgment post appeal in which she determined that she was not required to hold a new trial on the issue of attorney's fees and could rely on the record from the April 2015 bench trial, and she denied Lyon's request for a jury trial. Judge Matthews granted BGI leave to file its supplemental petition alleging presentment, sustained Lyon's objection to the mediation PowerPoint (Exhibit 42), overruled Lyon's objections tothe discovery response and the email and admitted those two exhibits. (Exhibits 43 and 44) and granted BGI's request for attorney's fees on its breach of contract claim.

The same day, Judge Matthews also entered a final judgment after remand, in which she awarded BGI approximately $15,000 in damages on its breach of contract claim, pre-judgment interest on the claim, reasonable and necessary attorney's fees incurred through trial in the amount of $155,228.10, $20,000 in attorney's fees for prevailing in this Court during the first appeal, and $10,000 in attorney's fees for defending against Lyon's unsuccessful petition for review to the Supreme Court of Texas.

BGI and Lyon are appealing that final judgment.

Jurisdiction

In its sixth issue, Lyon argues that Judge Matthews' final judgment on remand is void because she did not hear the evidence on which the judgment is based. Because appellate courts do not have subject matter jurisdiction over void judgments, we will address this issue first. See Malone v. PLH Group, Inc., 570 S.W.3d 292, 296 (Tex. App.—Houston [1st Dist.] 2018, no pet.) (citing Freedom Commc'ns, Inc. v. Coronado, 372 S.W.3d 621, 624 (Tex. 2012)).

The rules of practice and procedure in civil district court allow judges to exchange courts and transfer cases from one court to another and permit a practice in which one judge hears a part of a case and determines some issues while anotherjudge completes the case. See Malone, 570 S.W.3d at 294-95 (citing to TEX. R. CIV. P. 18, 330(e), 330(g) and Masa Custom Homes, LLC v. Shahin, 547 S.W.3d 332, 335 (Tex. App.—Dallas 2018, no pet.)). However, "neither the rules nor case law permit one judge to preside over the entire bench trial and a visiting judge, who heard no evidence, to render a judgment based on disputed facts." See Malone, 570 S.W.3d at 295 (citing to Masa Custom Homes, 547 S.W.3d at 335-36). As the finder of fact during a bench trial, the trial judge assesses the witnesses' credibility and the weight of the evidence and resolves factual disputes. See Malone, 570 S.W.3d at 295 (citing to Masa Custom Homes, 547 S.W.3d at 337). A judge who did not preside over some or all the trial may make substantive legal...