Terrence Mann and Evelyn Mann v. Kendall Home Builders Construction Partners I, Ltd.
2015 Tex. App. LEXIS 3246
| Tex. App. | 2015Background
- Terrence and Evelyn Mann sued Kendall Home Builders alleging breach related to promised closing incentives and asserted fraud, conspiracy, DTPA, Texas Insurance Code, and RESPA claims; Kendall later won partial summary judgment and the remaining claims were dismissed for want of prosecution.
- One week after final judgment, Kendall moved under Tex. R. Civ. P. 13 for sanctions against the Manns and their attorney, arguing the Manns’ original petition was groundless and filed in bad faith; the motion sought >$24,000 in fees and attached a proposed order asking that sanctions be reduced to judgment.
- After an evidentiary hearing, the trial court found the Manns’ claims were without factual foundation and frivolous, awarded $6,500 in sanctions, and signed the sanctions order 35 days after final judgment.
- The disputed factual core: the sales contract referenced addenda promising a $5,000 closing-cost credit and a $5,000 buyer incentive, plus payment of loan-origination fees if the buyer used the preferred lender; HUD-1 showed Kendall paid $5,000 in closing costs (which included a $1,273 origination fee) and Kendall later paid $5,000 to the Manns six weeks after closing.
- Kendall argued the Manns’ original petition contained false or groundless factual allegations (e.g., that Kendall never paid the origination fee or that the $5,000 incentive wasn’t recorded), while the Manns claimed their pleadings fairly alleged facts and a contract interpretation that could support their claims.
Issues
| Issue | Plaintiff's Argument (Manns) | Defendant's Argument (Kendall) | Held |
|---|---|---|---|
| 1. Plenary power / timing: whether the trial court lost jurisdiction by signing the sanctions order after plenary power expired | Sanctions order void because signed >30 days after final judgment and no postjudgment motion extended plenary power | Motion for sanctions (with proposed order) operated as a postjudgment motion to modify, extending plenary power | Held: Motion and proposed order amounted to a motion to modify; plenary power extended; sanctions order not void |
| 2. Specificity: whether the sanctions order is unenforceable for lack of particularized factual findings | Order fails to state particulars of sanctionable conduct; unenforceable | Complaint forfeited because Manns did not raise lack-of-specificity in trial court | Held: Issue waived on appeal for failure to preserve below |
| 3. Amendments: whether Rule 13 sanctions may be based on an earlier pleading that was later amended | Amended pleading superseded original; sanctions cannot be based on a superseded pleading | Rule 13 targets signing/filing; amendment does not necessarily avoid sanctions under the current Rule 13 | Held: Sanctions may be based on a signed pleading that was later amended; amendment does not automatically preclude Rule 13 relief |
| 4. Substantive merit: whether Manns’ original petition was groundless and filed in bad faith so as to justify Rule 13 sanctions | Original petition alleged factual bases (HUD-1 markings, contract/addenda, subsequent payments and communications) and advanced a reasonable contract interpretation; not groundless or in bad faith | Pleadings contained false or baseless assertions (e.g., claim that origination fee was unpaid; seeking $5,000 twice) warranting sanctions | Held: Court abused its discretion; record does not show every claim was groundless or filed in bad faith; reverse and render judgment denying sanctions |
Key Cases Cited
- Lane Bank Equip. Co. v. Smith S. Equip., Inc., 10 S.W.3d 308 (Tex. 2000) (postjudgment motion to incorporate sanctions into final judgment functions as a motion to modify and extends plenary power)
- Thota v. Young, 366 S.W.3d 678 (Tex. 2012) (favoring common-sense application of procedural rules over rigid formality)
- Nath v. Tex. Children's Hosp., 446 S.W.3d 355 (Tex. 2014) (burden and presumptions applicable to Rule 13 sanctions; courts must consider delay and who caused fees)
- Unifund CCR Partners v. Villa, 299 S.W.3d 92 (Tex. 2009) (presumption that filings are in good faith; movant must present competent evidence rebutting that presumption)
- GTE Commc'ns Sys. Corp. v. Tanner, 856 S.W.2d 725 (Tex. 1993) (movant bears burden to establish entitlement to sanctions)
- Low v. Henry, 221 S.W.3d 609 (Tex. 2007) (standard of review for sanctions: abuse of discretion)
- Mattox v. Grimes Cnty. Comm'rs Court, 305 S.W.3d 375 (Tex. App.—Houston [14th Dist.] 2010) (sanctions not warranted merely because parties disagree on legal or factual assertions)
- Robson v. Gilbreath, 267 S.W.3d 401 (Tex. App.—Austin 2008) (reasonableness of inquiry measured by facts and circumstances known when document was signed)