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Defendant's Attorney: Not Available

Description: Austin, Texas civil litigation lawyers represented the parties on breach of contract theories.


In 2001, Watkins and Anthony formed a partnership to build low-income housing; that partnership eventually included the five Companies. Watkins and Anthony were limited partners of AAH and shareholders of its general partner, AAHP, and this suit began when entities handling the sale of AAH's property filed petitions in interpleader against AAH and AAHP in Travis County district court, seeking to deposit the sale proceeds into the court's registry. Watkins intervened, seeking a declaratory judgment as to his rights to some of the funds under the AAH partnership agreement. Watkins, individually and on behalf of AAH and AAHP, also filed claims against Anthony as a third-party defendant, seeking a declaration that the AAH partnership agreement requires the funds to be distributed to the limited partners. Anthony, individually and on behalf of the Companies, responded with claims against Watkins for civil theft under the Texas Theft Liability Act (TTLA), see Tex. Civ. Prac. & Rem. Code §§ 134.001-.005; breach of fiduciary duties; breach of the duty to account; equitable disgorgement and forfeiture; and breach of contract. Watkins sought attorney's fees for defending against the TTLA theft claims. See id. § 134.005(b) (providing for recovery of attorney's fees).

Anthony died in 2017, at which point the case was transferred to the probate court, and Christopher, the executor of Anthony's estate, was substituted for Anthony. Watkins filed additional claims-including for breach of contract and equitable restitution or unjust enrichment-against the Executor, TVD, and AAHP, later nonsuiting his claims against the Executor. In 2019, the probate court granted summary judgment in Watkins's favor on all the Executor's claims and about a month later signed the Final Order, stating in part:

1. [Watkins], having nonsuited (without prejudice) all of his prior causes of action against Christopher F. Bertucci, individually and as Executor, and the Court having confirmed such dismissal (without prejudice) by Order dated October 31, 2018, the Court hereby severs and transfers back to the Travis County District Court for further disposition, all of Watkins' Claims that remain pending, including Watkins' Claim for reasonable and necessary attorney's fees, expenses, and costs in defending against the Executor's Claim asserted pursuant to Tex. Civ. Prac. & Rem. Code § 134.005(b) and any valid defenses or offsets thereto.

. . . .

3. The Court, having overruled the Executor's Claims against Watkins, . . . retains jurisdiction in this cause over such claims to render a final appealable judgment as to same. . . .

4. Subject only to consummation of the transfer ordered as provided above, all prior orders granting Watkins relief or denying the Executor's relief . . . are now considered final and appealable. This Order therefore disposes of all

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issues retained by this Court as between the parties, and is a final judgment as to the Executor's Claims.

The Executor appealed the granting of summary judgment, and Watkins cross-appealed the severance and transfer of his claim for TTLA attorney's fees.

In January 2022, a panel of this Court held that the severance of Watkins's claim for attorney's fees was improper because the claim would not be "the proper subject of an independently asserted lawsuit." Bertucci, 2022 WL 261563, at *2 (quoting State v. Morello, 547 S.W.3d 881, 888-89 (Tex. 2018) (severance proper when controversy involves multiple causes of action, severed claim could be proper subject of independently asserted lawsuit, and severed claim is not so interwoven with remaining action that they involve same facts and issues)); see also Huff v. Fidelity Union Life Ins. Co., 312 S.W.2d 493, 501 (Tex. 1958) (claim for statutory attorney's fees is dependent on recovery on merits and cannot be maintained as separate trial-court action).

Bound by our precedent in Dalisa, the panel, with Justice Triana dissenting, held that the improper severance "affect[ed] appellate jurisdiction," vacated the severance order "to the extent that it severed the TTLA attorney fee claim," and dismissed the appeal for lack of jurisdiction. Bertucci, 2022 WL 261563, at *3-4. The parties then filed a Joint Motion for En Banc Reconsideration, asking this Court to overrule Dalisa, noting the Texas Supreme Court's recent holding in In re Elizondo, 544 S.W.3d 824 (Tex. 2018) (orig. proceeding).[1] The parties
informed this Court that, in an attempt to remedy possible jurisdictional problems in this case, they have resolved their remaining disputes through a stipulation "as to the amount of fees each side will receive from the other, and the mechanism by which they will automatically be determined."[2] This stipulation was not before the trial court when it rendered judgment and issued related orders sought to be reviewed here and is therefore not in the trial-court record presented for our review. The stipulation does not, on its own, resolve the jurisdictional problem presented in this appeal.

Outcome:
This Court sitting en banc overrules Dalisa insofar as it holds that when a reviewing court determines that a severance rendering an interlocutory order final and appealable was improper, the reviewing court must vacate the severance, determine that it has lost jurisdiction over the appeal, and dismiss the appeal for want of jurisdiction. We hold that the severance of the attorney's fees issue was improper.

We abate the appeal for thirty days. The parties are directed to file a status report or a motion to reinstate on or before thirty days from the date of this order; the parties may file a motion requesting more time if needed to obtain an appealable order or judgment. If an appealable order or judgment including resolution of the attorney's fees issue is filed in a supplemental clerk's record, upon a motion for reinstatement, the case will be reinstated for consideration of the merits as briefed by the parties. If no appealable order or judgment is filed, a majority of the en banc Court will reverse and remand the case to the probate court.

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