Rice v. Lewis Energy Grp., L.P.

Jonathan David RICE and Diana Rice Appellants v. LEWIS ENERGY GROUP, L.P.; Lewis Petro Properties, Inc.;Lewis Resource Management, LLC; Segundo Navarro Drilling, Ltd.;and Tercero Navarro, Inc., Appellees

No. 04-19-00234-CV

Fourth Court of Appeals San Antonio, Texas

October 28, 2020

MEMORANDUM OPINION

From the 224th Judicial District Court, Bexar County, Texas

Trial Court No. 2015-CI-08936

Honorable Peter A. Sakai, Judge Presiding

Opinion by: Irene Rios, Justice

Sitting: Sandee Bryan Marion, Chief Justice Rebeca C. Martinez, Justice Irene Rios, Justice

REVERSED AND REMANDED IN PART, AFFIRMED IN PART

In this appeal from a final judgment,¹ we are asked to reverse parts of the judgment assessing sanctions and sealing court records. We are also asked to grant leave to amend the notice of appeal and to dismiss part of the appeal. We grant leave to amend the notice of appeal, deny themotion to dismiss, reverse and remand the part of the judgment permanently sealing court records, and affirm the remainder of the judgment.²

BACKGROUND

After Jonathan David Rice and Diana Rice ("the Rices") arbitrated their dispute with Lewis Energy Group L.P., Lewis Petro Properties Inc., Lewis Resource Management LLC, Segundo Navarro Drilling Ltd., and Tercero Navarro Inc., (collectively, "the Lewis parties"), the Rices filed a motion to confirm the arbitration award. Attached to the motion was a copy of the arbitration award, which detailed the arbitrator's reasons for his ruling and awarded the Rices damages. Contending the parties agreed to keep the arbitration award confidential, the Lewis parties moved to enforce the confidentiality agreement. Their claim of confidentiality was based, in part, on a provision in a document titled, "Arbitration Policy and Rules." The Lewis parties also moved for sanctions against the Rices' lawyers, ("the lawyers."). The sanctions motion asserted that the lawyers had violated Texas Rule of Civil Procedure 13, which prohibits the filing of groundless pleadings brought in bad faith or for the purpose of harassment. A later-filed supplemental sanctions motion asserted the lawyers had violated their duty of candor to the trial court.

On May 22 and 23, 2018, the trial court³ held a hearing on the motion to confirm the arbitration award. At this hearing, the trial court asked the Rices' lawyers if they had any knowledge of a confidentiality agreement when they filed the arbitration award in the trial court. The lawyers assured the trial court they were not aware of the "Arbitration Policy and Rules" whenthey filed the arbitration award. One of the lawyers testified under oath that he had no prior knowledge of this document.

On May 24, 2018, the trial court signed an order temporarily sealing the motion to confirm and the arbitration award; ordering briefing on the lawyers' prior knowledge of the "Arbitration Policy and Rules;" and permitting the Lewis parties to pay the damages awarded in the arbitration award into the court registry. However, the trial court did not rule on the motion to confirm the arbitration award.

The Rices filed a mandamus petition in this court, seeking review of the trial court's May 24, 2018 order. We conditionally granted mandamus relief, directing the trial court to rule on the motion to confirm and to withdraw its order permitting payment of damages into the court registry. In re Rice, No. 04-18-00359-CV, 2018 WL 3440709, at *4 (Tex. App.—San Antonio July 18, 2018, orig. proceeding). The trial court complied with our mandamus order, signing an order confirming the arbitration award and vacating its order permitting payment of the arbitration award into the court registry.

On August 21, 2018, the trial court held a hearing. At the end of the hearing, it granted the motion to enforce the confidentiality agreement and for sanctions and permanently sealed the court records in this case.

On December 17, 2018, the trial court held another hearing, where it considered and denied the Rices' motion for reconsideration of the order permanently sealing court records.

On January 29, 2019, the trial court signed a final judgment, permanently enjoining the Rices and their "[r]epresentatives"⁴ "from using, disclosing, or transmitting for any purpose, anyaspect of the arbitration proceeding [] or this lawsuit []." The judgment also ordered the lawyers to pay the Lewis parties monetary sanctions in the amount of $70,000.00, but suspended payment of the $70,000.00 "as long as" the Rices and their representatives complied with the permanent injunction. The trial court also ordered that "the case remain permanently sealed." The Rices timely filed a notice of appeal.

The Rices requested, and the trial court ultimately filed, findings of fact and conclusions of law. The trial court's conclusions of law state that $70,000.00 in monetary sanctions is proper based on multiple grounds, including Rule 13 of the Texas Rules of Civil Procedure and "the inherent power of the court."

MOTIONS FILED ON APPEAL

The Rices present six issues on appeal. In their first, second, third, and fourth issues, the Rices complain about the trial court's order assessing sanctions against their lawyers. In their fifth and sixth issues, the Rices complain about the trial court's order permanently sealing court records. As a preliminary matter, we must consider two motions pending in this appeal: (1) the Lewis parties' motion to dismiss the Rices' sanctions-related issues; and (2) the Rices' motion for leave to file an amended notice of appeal.

The Lewis parties move to dismiss the sanctions-related issues asserting the Rices lack standing to challenge sanctions assessed only against their lawyers. The Lewis parties emphasize that the Rices' lawyers are not listed as appellants in the original notice of appeal. The Lewis parties' argument is based on Niera v. Frost Nat'l Bank, No. 04-09-00224-CV, 2010 WL 816191, at *2 (Tex. App.—San Antonio Mar. 10, 2010, pet. denied) (mem. op.). In Niera, the trial court granted a motion for sanctions against a lawyer; however, the lawyer did not file a notice of appeal. Id. at *1. On appeal, the client challenged the sanctions order and this court held that the client lacked standing to complain about the sanctions order because an appealing party may notcomplain of errors that do not injuriously affect her or merely affect the rights of others. Id. Based on her lack of standing, we overruled the client's issue challenging the sanctions imposed on her lawyer. Id. at *2.

The present case is readily distinguishable from Niera. In Niera, the sanctioned lawyer never filed a notice of appeal. Here, the Rices have filed a motion for leave to file an amended notice of appeal and the amended notice of appeal clearly expresses the lawyers' intention to appeal the trial court's judgment.

Under the Texas Rules of Appellate Procedure, we have the discretion to grant leave to allow the amendment of a notice of appeal after the appellants have filed their brief. Rule 25.1(g) provides:

Amending the Notice. An amended notice of appeal correcting a defect or omission in an earlier filed notice may be filed in the appellate court at any time before the appellant's brief is filed. The amended notice is subject to being struck for cause on the motion of any party affected by the amended notice. After the appellant's brief is filed, the notice may be amended only on leave of the appellate court and on such terms as the court may prescribe.

TEX. R. APP. P. 25.1(g) (emphasis added); see Cortez v. Brown, No. 03-17-00365-CV, 2019 WL 961672, at *3 (Tex. App.—Austin Feb. 28, 2019, pet. denied) (mem. op.) (examining the facts and circumstances and exercising its discretion to deny a motion for leave to file an amended notice of appeal); Ostrovitz & Gwinn, LLC v. First Specialty Ins. Co., 393 S.W.3d 379, 384-86 (Tex. App.—Dallas 2012, no pet.) (granting a motion for leave to file an amended notice of appeal filed after oral argument).

The Texas Supreme Court has instructed appellate courts "to construe the Rules of Appellate Procedure reasonably, yet liberally, so that the right to appeal is not lost by imposing requirements not absolutely necessary to effect the purpose of a rule." Verburgt v. Dorner, 959 S.W.2d 615, 616-17 (Tex. 1997). The supreme court's "decisions reflect the policy embodied inour appellate rules that disfavors disposing of appeals based upon harmless procedural defects." Id. at 616. Instead of disposing of appeals based on harmless procedural defects, the appellate court should reach the merits of an appeal whenever reasonably possible. Horton v. Stovall, 591 S.W.3d 567, 567 (Tex. 2019); see St. Mina Auto Sales, Inc. v. Al-Muasher, 481 S.W.3d 661, 666, 668 (Tex. App.—Houston [1st Dist.] 2015, pet. denied) (recognizing that an amended notice of appeal naming the lawyer as an additional appellant apprised the court of his intent to challenge sanctions assessed solely against him and addressing the merits of the lawyer's sanctions issues).

The Lewis parties urge us to deny the Rices' motion for leave, contending that any amendment of the Rices' notice of appeal at this late juncture would violate Rule 25.1(c)'s requirement that any party seeking to alter a judgment must file a timely notice of appeal.⁵ See TEX. R. APP. P. 25.1(c). However, after considering Rule 25.1 as a whole, we reject this contention. Under Rule 25.1(b), this court has jurisdiction over all parties to the judgment as long as any party to the trial court's judgment files a timely notice of appeal See id. 25.1(b); Al-Muasher, 481 S.W.3d at 667 ("The plain text of Rule 25.1(b) is purposeful in its language: when any party timely appeals, we have jurisdiction over all parties to the judgment."). Here, the filing of the original notice of appeal invoked our jurisdiction over all parties to the trial court's judgment. See TEX. R. APP. P. 25.1(b). Therefore, in the present appeal, we have jurisdiction over all parties to the judgment,...