Elness Swenson Graham Architects, Inc.// RLJ II-C Austin Air, LP RLJ II-C Austin Air Lessee, LP And RLJ Lodging Fund II Acquisitions, LLC v. RLJ II-C Austin Air, LP RLJ II-C Austin Air Lessee, LP And RLJ Lodging Fund II Acquisitions, LLC// Elness Swenson Graham Architects, Inc.
03-14-00738-CV
| Tex. App. | Jul 16, 2015Background
- ESG is appellant in a breach of contract dispute against RLJ entities and RLJ sought Chapter 38 fees despite no damages recovered.
- RLJ settled with a third party before trial and obtained no damages that could offset ESG’s liability.
- The PSA between South Ausaircourt and RLJ did not expressly assign pre‑existing causes of action to RLJ.
- The trial court admitted ESG’s contract without proper authentication, and RLJ’s breach claim was framed beyond ESG’s contractual scope.
- The jury awarded RLJ lost market value damages based on an appraisal date later than the breach, but those damages were deemed legally insufficient.
- ESG urges reversal to render a take-nothing judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| No net recovery rule applicability | RLJ prevails despite no damages | Solis/McKinley rule supports fees only with recoverable damages | Rule does not apply; no offset or counterclaim support; no fees awarded |
| Assignment of pre-existing causes of action | PSA/transfer chartered an assignment of ESG claims | No express transfer; anti-assignment provisions control | No valid express or equitable assignment; RLJ lacks standing to sue ESG |
| Admissibility of ESG contract | ESG contract properly authenticated via evidence | No proper authentication; inadmissible without Rule 901 compliance | Trial court erred admitting unauthenticated ESG contract |
| ESG’s duty to warrant/perform structural engineering | ESG contract implied a duty to perform structural engineering services | Contract only requires ESG to include services; independent contractor performed the work | No contractual obligation to perform; error in submitting broader duty to jury |
| Damages: lost market value and appraisal date | Hornsby’s appraisal date supported lost value caused by ESG | Appraisal date is improper; expert testimony insufficient to prove ESG-specific damages | Damages reverse; expert testimony insufficient; appraisal date analysis improper |
Key Cases Cited
- Green Intern., Inc. v. Solis, 951 S.W.2d 384 (Tex. 1997) (defining prevailing party and when fees recoverable under Chapter 38)
- City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) (evidentiary standard for reviewing damages and sufficiency of evidence)
- Galle, Inc. v. Pool, 262 S.W.3d 564 (Tex. App.—Austin 2008) (reversed award when damages offset by settlements; appellate review of damages evidence)
- Island Recreational Develop. Corp. v. Republic of Texas Sav. Ass’n, 710 S.W.2d 551 (Tex. 1986) (anti-assignment provisions; transferability of contract rights)
- Richey v. Stop N Go Mkts. of Texas, 654 S.W.2d 430 (Tex. 1983) (conveyance of rights and pre-existing causes of action; assignment rules)