Reed Martin v. Donald M. Bishop--Appeal from 295th District Court of Harris County

In The

Court of Appeals

For The

First District of Texas

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NO. 01-02-00423-CV

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REED MARTIN, Appellant

V.

DONALD M. BISHOP, Appellee

On Appeal from the 295th District Court

Harris County, Texas

Trial Court Cause No. 9952230

O P I N I O N

Appellant, Reed Martin, is the former law partner of appellee, Donald M. Bishop, and was formerly licensed to practice in Texas. Martin appeals pro se to challenge a judgment rendered in favor of Bishop, who sued Martin and recovered actual damages and attorney s fees based on claims that Martin wrongfully withdrew from their partnership. Martin raises several broad contentions, which we have construed indulgently and address as challenging (1) the validity of the partnership agreement, (2) the legal sufficiency of the evidence to support Martin s financial responsibilities to Bishop under the partnership agreement, and (3) the trial court s implied finding that Bishop complied with his duty, under the partnership agreement, to mitigate damages. // We affirm.

Background

Bishop and Martin executed a written, limited liability partnership agreement on June 26, 1996, having previously agreed to open a practice dedicated to education-disability law and having moved into an office suite for that purpose in mid-March 1996. Bishop had retired from his career position as a corporate tax attorney and had used his severance package funds to open the practice with Martin. Martin was a nationally recognized speaker and expert in education-disability law.

The partnership agreement recites that the purpose of the partnership is to facilitate the practice of law by each of the partners and states an effective date of March 1, 1996 for the formation of Martin and Bishop, L.L.P. The agreement did not provide for income to either partner and acknowledges Bishop s contribution of $25,000 worth of office equipment, furniture, and fixtures, as well as $25,000 in cash. The address of the partnership was the office suite Martin and Bishop had occupied since March 1996, which had been leased for a three-year term.

The general business plan for the partnership was that Bishop would fund the firm, by using his severance funds to provide operating expenses, while Martin would share his expertise to educate Bishop in education-disability law while generating clients for disability cases the firm could litigate. Martin planned to generate clients by continuing the national seminars that had been his primary income before joining Bishop and by presenting local seminars in the large conference room in the firm s office suite. //

During the first months of the partnership, Martin spent considerable time and effort attempting to generate potential clients, but by September 1996, the firm had no actual cases for litigation and income potential. Martin told Bishop then that he would no longer work on taking on new potential cases on behalf of parents of disabled children and would concentrate instead on his lecture circuit and accept every possible speaking engagement. During the 1996 Christmas holidays, Martin removed all of his belongings from the partnership s office suite while Bishop was out of town. When Bishop returned to the office, he found a letter from Martin stating that he could not continue to go into a building or an office that violates the Americans with Disabilities Act. Martin s letter listed 11 conditions of the building and office suite that Martin considered violations of that statute.

During the course of the partnership, Bishop advanced over $5,000 to Martin for personal expenses. In addition, Martin withdrew over $7,000 from partnership funds for personal expenses without Bishop s approval. Bishop ultimately sued to recover the funds he had advanced to Martin; the funds Martin had withdrawn; other contractual damages, including remaining rental obligations; and attorney s fees. Martin answered by claiming that the alleged inaccessibility of the firm s offices to disabled persons rendered the partnership agreement void from its inception, kept Martin from practicing law, and jeopardized Martin s reputation.

Trial was to the court, which rendered judgment in favor of Bishop for $51,134 in actual damages, $8,773.20 in prejudgment interest, and $10,000 in attorney s fees. The clerk s record contains a document entitled Findings of Fact and Conclusions of Law, and the reporter s record of the bench trial reflects these were drafted and proposed by Bishop s counsel. The trial court did not sign the proposed findings and conclusions, however, and Martin did not request findings of fact and conclusions of law. See Tex. R. Civ. P. 296 (authorizing any party to request findings of fact and conclusions of law after non-jury trial).

Standard of Review

Proposed findings of fact and conclusions of law that lack the trial court s signature present nothing for review, and the record stands as if the trial court filed no findings and conclusions. See Summers v. Welltech, Inc., 935 S.W.2d 228, 233-34 (Tex. App. Houston [1st Dist.] 1996, no writ); Friedman v. New Westbury Village Assoc., 787 S.W.2d 154, 157 (Tex. App. Houston [1st Dist.] 1990, no writ). When the trial court files no findings of fact and conclusions of law after a bench trial, the court s judgment implies all findings necessary to support it, provided the necessary findings are raised by the pleadings and supported by the evidence, and the decision can be sustained on any reasonable theory consistent with the evidence and the governing law. See Roberson v. Robinson, 768 S.W.2d 280, 281 (Tex. 1989); Fair Deal Auto Sales v. Brantley, 24 S.W.3d 543, 546 (Tex. App. Houston [1st Dist.] 2000, no pet.). We review, de novo, the trial court s implied legal conclusions supporting the judgment. See Houston Bellaire, Ltd. v. TCP LB Portfolio I, L.P., 981 S.W.2d 916, 919 (Tex. App. Houston [1st Dist.] 1998, no pet.). When, as here, the record on appeal contains a full reporter s record of the trial, appellant may challenge the trial court s implied findings for legal and factual sufficiency, under the same standards that govern challenges to a jury s findings, but must show that the judgment of the court below cannot be sustained by any theory raised by the evidence. See Roberson, 768 S.W.2d at 281; Fair Deal Auto Sales, 24 S.W.3d at 546. In an appeal from a bench trial, we may not invade the fact-finding role of the trial court, who alone determines the credibility of the witnesses, the weight to give their testimony, and whether to accept or reject all or any part of that testimony. Fair Deal Auto Sales, 24 S.W.3d at 546.

Validity of the Partnership

Martin presents several arguments that challenge the validity of his partnership agreement with Bishop on the grounds that the alleged inaccessibility of the firm s offices to disabled clients violated the Americans with Disabilities Act and thus rendered the partnership agreement void from its inception. By rendering judgment in Bishop s favor, the trial court implicitly rejected Martin s claimed defense and concluded that the claim failed as a matter of law. On reviewing this implied conclusion de novo, see Houston Bellaire, Ltd., 981 S.W.2d at 919, we conclude the trial court complied with settled Texas law in rejecting Martin s claim.

The validity of a contract is generally a question of law. Farah v. Mafrige & Kormanik, P.C., 927 S.W.2d 663, 678 (Tex. App. Houston [1st Dist.] 1996, no writ). An illegal contract is one in which the parties undertake what the law forbids. See Lewis v. Davis, 199 S.W.2d 146, 148-49 (Tex. 1947); Franklin v. Jackson, 847 S.W.2d 306, 309 (Tex. App. El Paso 1992, writ denied). Because the contract violates the law, it imposes no legal obligation on the parties. Miller v. Long-Bell Lumber Co., 222 S.W.2d 244, 246 (Tex. 1949); Franklin, 847 S.W.2d at 309. The law presumes, however, that contracts are legal, and the burden to prove illegality is on the party asserting it, in this case, Martin. See Franklin, 847 S.W.2d at 310. Although a contract that cannot be performed without violating the law is void, unless the face of the contract shows it is illegal, the party asserting illegality must present facts demonstrating the illegality before a court may declare the contract void. See Lewis, 199 S.W.2d at 149; Franklin, 847 S.W.2d at 310.

The stated purpose of the partnership agreement between Martin and Bishop was to facilitate the practice of law by each of the partners. This purpose does not violate the law. As the trial court countered repeatedly, in response to Martin s final argument contending the agreement was void since its inception, The practice of law is not an illegal purpose and The contract to be partners is not void. Because the face of the contract thus reflects a valid, legal purpose, the burden shifted to Martin to substantiate his claim of illegality. See Lewis, 199 S.W.2d at 149; Franklin, 847 S.W.2d at 310.

Although challenged by the trial court to demonstrate an illegality that rendered the partnership void, Martin produced neither evidence nor legal authority to support his defense. Martin argued vehemently before the trial court that a handicapped visitor to the leased premises would find conditions that violated governmentally imposed accessibility regulations and repeats those same arguments here. Martin never went beyond these speculations, however, and offered no evidence of actual violations or complaints by visitors that were premised on violations. Although Martin and Bishop had occupied the leased premises for over a month when they signed the partnership agreement, nothing in the agreement either acknowledges that the firm s premises must accommodate disabled persons or requires that the firm s premises comply with the Americans with Disabilities Act. As the trial court noted, The place of practicing law is not a material part of the contract. Likewise, Martin failed to provide the trial court with any legal authority to support his illegality defense and has not provided us with any authority to substantiate this claim.

The trial court s implied rejection of Martin s defense, that the alleged inaccessibility of the leased premises invalidated the partnership agreement from its inception, is raised by the pleadings, supported by the record, and consistent with the record and the governing law. Accordingly, we overrule Martin s arguments contending that the partnership agreement was void.

Martin s Financial Responsibility to Bishop

Martin presents several issues that we have construed as challenging whether the partnership agreement obligated him to pay the damages awarded by the trial court. By awarding Bishop damages, the trial court impliedly construed the partnership agreement as binding Martin with financial responsibility to pay partnership expenses. We construe this legal conclusion de novo. See Houston Bellaire, Ltd., 981 S.W.2d at 919.

Although Bishop funded the rental of the firm s office suite in the first year of the partnership, it is undisputed that the lease was for a full, three-year term. In disputing his financial responsibility to pay one-half of the rent, Martin reasserts his contention that the suite was inaccessible and illegal and that this negated any duty to contribute to payment of rentals due under the lease. This contention merely reasserts Martin s challenge to the validity of the partnership agreement, a contention we rejected above and reject once again here.

Paragraph (a) of section VII of the partnership agreement, which addressed dissolution of the partnership, also outlined the financial responsibility of a partner on voluntary withdrawal from the partnership and required contribution to the firm s continuing overhead expenses. The trial court s implied conclusion that the partnership agreement obligated Martin to contribute to the rental expenses after the first year of the partnership is raised by the pleadings, supported by the record, and consistent with the governing law. Accordingly, we overrule Martin s contention that he had no responsibility to contribute to payment of rent over the term of the lease.

Martin also disputes his responsibility to reimburse Bishop for funds he advanced to Martin for non-partnership expenses. It is undisputed that Bishop contributed $50,000 in cash and equipment to the partnership and funded the partnership during its first year and that the partnership agreement did not provide for any income to either partner and contemplated shared income only if the firm actualized a profit. It is also undisputed that Martin kept the funds he earned from speaking engagements to apply them to the $60,000 advance he owed his publisher. In 1996, Bishop issued several checks bearing the label advance to Martin. These totaled over $5,000. In addition, Martin issued several checks to himself in 1996. These totaled over $7,000. Martin argued in the trial court and continues to argue on appeal that these funds were gifts. Bishop, however, considered these advances loans, and Martin acknowledged, in correspondence to Bishop, that he had borrowed funds from Bishop for living expenses. A loan implies a debtor-creditor relationship. Johnson v. Cherry, 726 S.W.2d 4, 6 (Tex. 1987). Accordingly, the trial court could have properly concluded that both the funds Bishop advanced to Martin and the funds Martin withdrew from the partnership were not gifts but loans and that Martin had a duty to repay these funds to Bishop. This implied conclusion is raised by the pleadings, supported by the record, and is consistent with the governing law. Accordingly, we overrule Martin s argument that he had no obligation to repay Bishop.

Bishop s Compliance with His Duty to Mitigate Damages

Martin also presents arguments that we have construed as challenging the sufficiency of the evidence to support the trial court s implied finding that Bishop complied with his duty to mitigate damages under the partnership agreement. Bishop testified that he negotiated unsuccessfully with at least three attorneys over a six-to-eight-month period in an effort to occupy Martin s vacated offices and later negotiated with two additional attorneys, but to no avail. Bishop s testimony is legally sufficient to support the trial court s implied finding that Bishop complied with his duty to mitigate damages under the partnership agreement. We further conclude that the evidence does not so greatly preponderate against that finding as to render it clearly wrong and manifestly unjust and that Bishop s testimony is, therefore, factually sufficient to support the trial court s implied finding. We overrule Martin s challenge to the sufficiency of the evidence to support the trial court s implied finding that Bishop complied with his duty to mitigate damages.

Waived Complaints

Martin contends that Bishop s failures to obtain liability insurance and lawful office space, and the possibility that the firm might be found to be in violation of the Texas Deceptive Trade Practices-Consumer Protection Act, all constituted breaches of the partnership agreement that excused Martin from complying with the agreement. Although he never asserted a counterclaim, Martin further contends he should be compensated because he taught Bishop about disability law. Martin has waived these points by not providing either citations to the record or legal authority to support his contentions. See Tex. R. App. P. 38.1(h).

Martin s brief contains additional arguments that fall short of the requirement that issues or points presented for review must be concisely stated. See Tex. R. App. P. 38.1(c). We overrule all additional arguments in Martin s brief on that ground.

Conclusion

We affirm the judgment of the trial court.

Elsa Alcala

Justice

Panel consists of Justices Taft, Alcala, and Price. //

Do not publish. Tex. R. App. P. 47.4.