Rosenblatt & Associates, P.C. v. Charles D. Simmons--Appeal from 61st District Court of Harris County

Rosenblatt & Assoc v. Simmons /**/

IN THE

TENTH COURT OF APPEALS

 

No. 10-93-175-CV

 

ROSENBLATT & ASSOCIATES, P.C.,

Appellant

v.

 

CHARLES D. SIMMONS,

Appellee

 

From the 61st District Court

Harris County, Texas

Trial Court # 92-02487

 

O P I N I O N

 

This is an appeal from a judgment on a jury verdict in a breach of contract case. Plaintiff-Appellee Simmons sued Defendants Steve Rosenblatt, individually, and Rosenblatt and Associates, a professional corporation, for amounts he claimed Defendants owed to him under an oral agreement whereby Rosenblatt and Simmons had worked together practicing law. After about six months, Rosenblatt terminated the agreement. Rosenblatt and Rosenblatt and Associates, P.C., filed a counter-claim for actual and exemplary damages for malicious conversion, tortious interference with Rosenblatt's contractual relations with clients, breach of the agreement, and conspiracy to deprive Rosenblatt of funds. Prior to trial, Simmons paid into the registry of the court $47,952.24 in fees he had received after leaving Rosenblatt, which were for legal work Simmons performed under the agreement. The trial court entered judgment on the verdict against Defendant Rosenblatt and Associates, P.C., in the amount of $11,423.40 owed to Simmons from fees collected by Rosenblatt under their agreement, and for $75,000 attorneys' fees and costs. Based on stipulated facts and jury findings, the trial court also awarded Simmons one-half of the money in the registry of the court, and one-half to Rosenblatt and Associates, P.C. Rosenblatt was denied all relief on the counter-claim alleged by Rosenblatt and Associates, P.C., from which judgment Rosenblatt appeals. We affirm the trial court's judgment.

In the spring of 1991, Simmons and Rosenblatt formed a working arrangement to practice law at Rosenblatt's law offices. The terms of that association were detailed and oral. After practicing law together for about six months, Rosenblatt terminated the association. The parties then disagreed about the terms of their association, and Simmons filed this suit.

Simmons believed the terms were as follows:

(1)The agreement was between Simmons and Steve Rosenblatt individually.

(2)Simmons was an independent contractor, not an employee.

(3)The agreement was terminable at will.

(4) 50% of any fees based on work done by Simmons would be received by Rosenblatt and treated as an "overhead fund" out of which overhead attributable to Simmons would be paid to Rosenblatt.

(5) 50% of any fees based on work Simmons did for his own clients would be paid to Simmons.

(6) 40% of any fees based on work Simmons did for Rosenblatt's clients would be paid to Simmons.

(7) 10% of any fees based on work Simmons did for Rosenblatt's clients would be paid to Rosenblatt.

(8) The amount due Rosenblatt for overhead attributable to Simmons would be determined and retained by Rosenblatt; whereas, any excess amount in the "overhead fund" would then be paid to Simmons.

(9)(a) Rosenblatt's accounting system would be used by Simmons for record keeping, for billing clients, and for collecting fees; but

(b) only through the date the agreement was terminated, that is, October 28, 1991.

Rosenblatt disagreed with respect to items 1, 2, 8, and 9(b). He believed that the agreement was between Simmons and Rosenblatt and Associates, P.C.; that Simmons was an employee, not an independent contractor; that Simmons would use Rosenblatt's accounting system; and that Simmons owed Rosenblatt 50% of fees for overhead through November 21, 1991. He also believed that he had no obligation to account to Simmons for overhead or to pay Simmons any part of the 50% which Simmons considered to be an "overhead fund."

Rosenblatt terminated Simmons' employment on October 28, 1991. Simmons began to find a new association and prepared to move while continuing to handle cases for his clients. On November 20, 1991, Rosenblatt wrote letters to several of Simmons' clients, telling them that Simmons was no longer associated with Rosenblatt; that Rosenblatt understood that the client wanted to continue to be represented by Simmons; that Rosenblatt would not be responsible for any future work done for the client; that Rosenblatt would bill the client for work done prior to November 21, 1991; and that Simmons would bill the client for work done after that time. Copies of the letters were delivered to Simmons. Simmons felt that it was "incorrect" for Rosenblatt to bill Simmons' clients for work done for those clients in November, 1991, after termination of the association between Rosenblatt and Simmons on October 28, 1991. Simmons therefore wrote those clients himself on November 21, 1991, telling them that he had formed a new association with another lawyer, Mr. Fred E. Salley; that Rosenblatt's November 20, 1991, letter was in error; and that his clients should not pay any invoices from Rosenblatt.

During Simmons' period of association with Rosenblatt, Rosenblatt's accounting system had been used to record all lawyer time and work done; to account for expenses chargeable to clients; to account for all expenses of operating Rosenblatt's office; to bill clients; and to collect fees. Simmons had none of that accounting information after his termination, so could not determine how accounts should be settled under their agreement. On December 6, 1991, he therefore requested in writing an accounting from Rosenblatt "to settle accounts according to our agreement." Simmons got no satisfactory response to his request, so he again wrote Rosenblatt on January 3, 1992, stating he calculated that Rosenblatt owed him $44,478, and insisting that Rosenblatt either "prove up reasonable expenses or pay me the balance due which I have calculated."

Simmons got no response from Rosenblatt. He then decided to send bills to his clients for all outstanding invoices for 1991, and to file suit against Rosenblatt to resolve the matter. Simmons contacted each client, told each client what he was about to do, and received permission for the invoicing from each client. He began sending out bills on January 8, 1992, and he filed suit for breach of the agreement on January 18, 1992. Portions of some of the bills were virtually the same as bills sent earlier by Rosenblatt.

Some of the work reflected on Simmons' bills had been done while Simmons was associated with Rosenblatt. Simmons billed his clients for $47,952.24 (actually $17,558.04 plus interest accrued in separate accounts) for work done during that association. When Simmons received payment from his clients for work done during his association with Rosenblatt, he set that money aside in a separate account, and later paid it with interest into the registry of the court.

When he deposited the funds in the registry of the court, Simmons recognized that his right to these funds was disputed. He contended that, under the agreement, he was entitled to all fees from his clients, less Rosenblatt's reasonable overhead and expenses. However, he acknowledged that Rosenblatt had taken the position that Simmons was an employee and that Rosenblatt was entitled to collect those fees, to be split between Rosenblatt and Simmons according to Rosenblatt's understanding of their agreement. Simmons therefore deposited the fees in the registry of the court "for disposition in accordance with further court orders and the result of disposition of this cause."

The jury found in part as follows:

(1) Rosenblatt and Associates, P.C., orally agreed with Simmons for Simmons to practice law in Rosenblatt's offices.

(2) Simmons was to work as an employee of Rosenblatt and Associates, P.C., not as an independent contractor.

(3) Simmons was to receive as compensation 50% of the billings for work he brought in and 40% of the billings for work given him by Rosenblatt. The other 50% and 60%, respectively, were to be received by Rosenblatt as compensation. Rosenblatt was to pay overhead out of these percentages, but owed no obligation to pay Simmons any part of those percentages not used to pay overhead.

The jury thus found, in essence, that fees for work done by Simmons for his own clients were to be split 50% - 50%, and that the fees for work done by Simmons for Rosenblatt's clients were to be split 60% to Rosenblatt and 40% to Simmons, and that Rosenblatt was to pay all overhead.

The jury further found in answer to Special Issue No. 6 that Rosenblatt and Associates, P.C., owed Simmons an additional sum of $5,711.70 for Simmons' 50% of the fees collected by Rosenblatt from the business brought in by Simmons.

In Answer to Special Issue No. 7 the jury found that Rosenblatt and Associates, P.C., owed Simmons an additional $5,711.70 for his (Simmons') 40% from fees collected by Rosenblatt and Associates, P.C.

The jury had determined that the agreement between Rosenblatt and Simmons was that fees for work done for Simmons' clients by Simmons would be split 50% - 50%. It was agreed by the parties that all of the $47,952.24 Simmons had deposited in the registry of the court represented payments made by Simmons' clients for work done for them by Simmons. The jury also found that Simmons had not breached the agreement with Rosenblatt.

At the time of the entry of its judgment, the trial court thus had before it all of the following:

(a) an agreement by the parties that the $47,952.24 in the registry of the court represented client fees paid Simmons for work done by Simmons for Simmons' clients during the period of the agreement;

(b) a jury finding that the agreement called for fees for work done for Simmons' clients by Simmons to be split 50% - 50% between Simmons and Rosenblatt;

(c) a jury finding that Rosenblatt owed Simmons $5,711.70 out of fees collected by Rosenblatt for work done for Simmons' clients. (The jury also found the amount of $5,711.70 was owed to Simmons for work done for Rosenblatt's clients, as shown above);

(d) a jury finding that Simmons did not owe Rosenblatt anything under the agreement.

The jury was aware that Simmons had collected $47,952.24 for work done for his own clients and later had paid that sum into the registry of the court. They found Simmons' action in collecting the $47,952.24 to be a conversion of Rosenblatt's receivables, but they found no malice involved and no damages for that conversion.

The jury was not asked specifically to determine the rights to the money in the registry of the court. The parties agreed that the money in the registry represented fees from Simmons' clients, and the jury found that Simmons and Rosenblatt had agreed to split such fees 50% - 50%. The jury found that Simmons had converted those fees when he collected them (but did not award any damages or find malice for such conversion), and found that Simmons had not been guilty of any breach of the agreement. The jury also found how much Rosenblatt owed Simmons from fees collected by Rosenblatt.

These agreed facts and jury findings authorized the court to award the money in the registry 50% to Simmons and 50% to Rosenblatt because their rights to their respective shares were then undisputed. The jury determined the amount Rosenblatt owed Simmons for fees collected by Rosenblatt under the agreement and also determined that Simmons did not owe Rosenblatt any money for a breach of the agreement. The trial court was, therefore, correct in dividing the money equally between the parties. The jury further awarded attorneys' fees in favor of Simmons in the amount of $75,000.

Appellant comes to this court on seven points of error. Point one asserts the trial court erred as a matter of law by awarding Simmons actual damages for breach of contract because the jury determined that the contract upon which Simmons based his claim did not exist.

We believe the trial court properly awarded damages for breach of contract based on the pleadings and the verdict. Because Simmons pleaded and proved a cause of action for breach of contract, the jury found the terms of the contract, the failure to perform by Rosenblatt, and the amount of damages. The agreement found by the jury contained some elements pleaded by Simmons and some elements pleaded by Rosenblatt, as we have hereinabove pointed out. The jury also found that Rosenblatt owed Simmons a total of $11,723.40 under their agreement. Rosenblatt's only complaint under his first point of error is that Simmons cannot recover on his breach of contract claim because the agreement found by the jury is not exactly the same agreement alleged by Simmons. The fact that some asserted terms of a contract are not operative does not invalidate the remaining terms. Zep Mfg. Co. v. Harthcock, (Tex. App. Dallas 1992, no writ) 824 S.W.2d 654, 662; Williams v. Williams, (Tex. 1978) 569 S.W.2d 867, 871. In other words, the fact that certain elements alleged by Simmons were not found by the jury to be a part of the agreement does not affect the elements which the jury found were part of the agreement. We overrule Appellant's first point of error.

Appellant's second point of error reads as follows: The district court erred as a matter of law by awarding Simmons actual damages for breach of contract because there was no jury finding that Rosenblatt failed to comply with Simmons' claimed contract. We do not agree.

The trial court acted properly in awarding Simmons damages for breach of contract because the jury found that Rosenblatt had failed to perform the contract when it found that Rosenblatt owed Simmons money under the contract, and because it was undisputed that Rosenblatt had failed to perform the contract.

The trial court is not required to submit jury questions on undisputed facts. See St. Paul Ins. Co. v. Rakkar, (Tex. App. Dallas 1992, writ denied) 838 S.W.2d 622, and the cases cited at page 629. It was undisputed that Rosenblatt had breached the contract found by the jury because he (Rosenblatt) testified that he owed Simmons a net $2,040 under the agreement found by the jury. The only dispute therefore was the amount of money which he owed Simmons. Accordingly, no question needed to be submitted on whether Rosenblatt failed to comply with the contract because his noncompliance was undisputed. The only dispute was as to the extent of the noncompliance. As stated above, the jury found the amount Rosenblatt owed was $11,423.40. We overrule Appellant's second point of error.

Appellant's third point reads as follows: The district court erred as a matter of law by awarding Simmons attorneys' fees and costs for breach of contract because, as a matter of law, there were no actual damages on which to base an award of attorneys' fees and costs.

Appellant's fourth point of error asserts that the trial court erred as a matter of law by awarding Simmons attorneys' fees and costs for breach of contract because Simmons was not statutorily entitled to attorneys' fees and costs. We overrule both points three and four.

The trial court correctly awarded Simmons attorneys' fees because Simmons properly presented a claim for breach of contract and thereafter recovered damages for breach of that contract.

As stated hereinabove, during the time the parties practiced law together, all of the accounting records concerning hours worked, clients billed, and payments from clients were kept by Rosenblatt. Simmons had no such records in his possession. Simmons made written demands upon Rosenblatt on December 6, 1991, for an accounting under their contract and another on December 17, 1991. Simmons filed suit on January 18, 1992, each demand having been made more than thirty days before suit was filed.

The contract claim in writing, which Simmons presented to Rosenblatt on January 3, 1992, exceeded the contract claim upon which Simmons recovered in the suit because the claim included the "overhead fund" contract element which Simmons believed was a part of their agreement, but which the jury found was not. However, the fact that the claim Simmons presented exceeded the claim upon which Simmons recovered does not prevent Simmons from recovering attorneys' fees in this case. A plaintiff who recovers only a portion of a total claim founded on contract is still entitled to an award of attorneys' fees. Caldwell and Hurst v. Myers, (Tex. App. Houston [14th Dist.] 1986, writ ref'd n.r.e.) 714 S.W.2d 63, and the cases cited at page 65; Gerdes v. Mustang Exploration Co., (Tex. App. Corpus Christi 1984, no writ) 666 S.W.2d 640, 645; Okon v. Levy, (Tex. App. Dallas 1981, n.r.e.) 612 S.W.2d 938, 943. The fact that certain elements of their contract were not found by the jury to be part of their agreement does not affect the elements which the jury found were a part of their agreement, and does not affect Simmons' right to attorneys' fees. The jury found that Simmons had complied with the agreement, and that Rosenblatt had failed to comply with the agreement. Rosenblatt's failure to meet its obligations and the damages resulting from that failure form the basis for the award of attorneys' fees.

Appellant contends that Simmons' demand for payment prior to suit was excessive. Simmons' demand by way of his letter to Rosenblatt of January 3, 1992, totals $44,478. To the contrary, Rosenblatt consistently refused to acknowledge that no more that $2,040 could be due Simmons under the agreement. The jury found that Rosenblatt owed Simmons $11,423.40.

Excessiveness is not a defense where the debtor is unwilling to tender even the lesser amount determined to be due. In the case at bar, a demand for $11,423.40, later found to be due, would have been fruitless because Rosenblatt refused to acknowledge any sum greater than $2,040. See Warrior Constructors, Inc. v. Small Business Investment Co., (Tex. App. Houston [14th Dist.] 1976, no writ) 536 S.W.2d 382, 386.

Simmons' claims were adequately presented under the provisions of Section 38.001 et. seq., Texas Civil Practice and Remedy Code Ann. (Vernon 1986). Appellant's third and fourth points of error are overruled.

Appellant's fifth point of error asserts the trial court erred in awarding Rosenblatt partial damages on his claim for conversion, because the amount of conversion damages was proved as a matter of law.

Appellant's sixth point of error contends the trial erred in awarding Rosenblatt partial damages on his claim for conversion, because the jury's answer of zero for conversion damages was against the great weight and preponderance of the evidence.

In jury question nine, the jury found that Simmons had converted receivables belonging to Rosenblatt and that this conversion was the proximate cause of damages to Rosenblatt. However, in jury question ten, the jury found that Rosenblatt's damages, as a result of the conversion, were "zero." Then in answer to Special Issue No. 11, the jury failed to find that Simmons acted with malice in such act of conversion.

Rosenblatt argues that Simmons converted Rosenblatt's receivables by re-billing clients who were billed by Rosenblatt and by convincing those clients to pay Simmons rather than Rosenblatt; yet these were Simmons' clients for whom Simmons had done work. The agreement to use Rosenblatt's accounting system had been terminated by Rosenblatt. When Simmons received payments on those billings, he kept those payments separate from his other funds, and he later deposited these funds in the registry of the court. Rosenblatt contends, as a matter of law, that he is entitled to those payments now in the registry of the court, same being in the amount of $47,952.24. We do not agree because, under the agreement found by the jury, one-half of those funds belonged to Simmons as payment for his work. The funds in the registry of the court are not Rosenblatt's measure of damages because Simmons' right to one-half of those payments was undisputed. Rosenblatt's right to the other half was established when the trial court awarded him one-half of the funds in the registry of the court. If Rosenblatt is awarded a sum equal to the funds in the registry of the court, as conversion "damages," he will be receiving funds which belong one-half to Simmons. Rosenblatt is not entitled to such an award.

The jury's answer of "zero" to the conversion-damages question was properly supported, under the record, and was not against the great weight and preponderance of the evidence, as Appellant claims. The jury was fully aware that the funds in the registry of the court were placed there by Simmons for disposition in accordance with further orders of the court.

"Conversion" was defined in the charge as a "distinct act or dominion wrongfully asserted over another's property in denial of his rights or inconsistent with them." Once Simmons had placed the funds in the registry of the court for disposition by the court, he was no longer asserting dominion over the property or denying Rosenblatt's right to that property. To the contrary, he had placed that property in the custody of the court for a legal determination of those rights. Under the definition of conversion, the jury would not have considered the proper division of the funds in the registry to be included as damages for conversion.

The only evidence in the record supporting Rosenblatt's conversion damage was from Mr. Rosenblatt. In summary, his testimony was very vague and was to the effect that some damage may have resulted from the conversion, but "who knows" how much. We overrule Appellant's fifth and sixth points of error.

Appellant's seventh and final point of error asserts the trial court erred as a matter of law by dividing the money, in the registry of the court, equally between the parties because there were no pleadings or jury findings to support such a judgment. We do not agree.

The trial court acted properly in dividing the money in the registry of the court equally because the parties' rights to the money were established by proper pleadings, by agreement, and by jury findings. The verdict and stipulated facts provided the basis for awarding one-half of the money to Simmons. The parties stipulated that the money in the registry of the court represented fees collected by Simmons for his work from his clients. The jury found, under the agreement between Simmons and Rosenblatt, that 50% of those funds were to be paid to Simmons as compensation for work Simmons did for his clients. The jury also found that Rosenblatt owed Simmons $5,711.70 from fees collected by Rosenblatt as compensation for work Simmons did for his own clients. Simmons' breach of contract damages were limited to amounts Rosenblatt owed Simmons out of funds collected by Rosenblatt; those damages were not in any way based on funds received by Simmons. Awarding Simmons one-half of the money in the court registry did not amount to any sort of double recovery by Simmons. Moreover, the jury found that Simmons did not fail to comply with his agreement with Rosenblatt. This finding eliminated any claim by Rosenblatt to any part of Simmons' 50% of the money in the registry of the court. Rule 301 of the Rules of Civil Procedure requires that the judgment "shall be so framed as to give the party all the relief to which he may be entitled either in law or equity." We overrule Appellant's seventh point of error.

Judgment of the trial court is affirmed.

JOHN A. JAMES, JR.

Justice (Retired)

 

Before Chief Justice Thomas,

Justice Vance, and

Justice James (Retired)

Affirmed

Opinion delivered and filed October 26, 1994

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