                         COURT OF APPEALS
                         SECOND DISTRICT OF TEXAS
                              FORT WORTH

                              NO. 02-12-00028-CV


BRYAN L. WALTER                                                     APPELLANT

                                        V.

DONALD E. TELLER, JR. AND                                           APPELLEES
SONYA DEE JENNINGS


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          FROM THE 325TH DISTRICT COURT OF TARRANT COUNTY

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              MEMORANDUM OPINION ON REHEARING1

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      Appellant Bryan L. Walter filed a motion for rehearing of our opinion issued

June 27, 2013. We grant the motion in part, withdraw our previous opinion and

judgment of June 27, 2013, and substitute the following.

                                I. INTRODUCTION

      In four issues, Walter appeals the trial court’s January 3, 2012 order

imposing sanctions against him for violating chapters 9 and 10 of the civil


      1
       See Tex. R. App. P. 47.4.
practice and remedies code. Because we hold that the trial court abused its

discretion by sanctioning Walter under chapter 9 but did not abuse its discretion

by imposing sanctions under chapter 10 of the civil practice and remedies code,

we will reverse the trial court’s order and remand the case to the trial court to

reconsider the amount of sanctions to be ordered against Walter, if any, under

chapter 10.

                                II. BACKGROUND

      The trial court signed an agreed final decree of divorce in July 2008 that

dissolved the marriage between David Jennings and Appellee Sonya Jennings.

As part of the division of the marital estate, Sonya was awarded, among other

things, a 2007 Jeep Compass and the responsibility for paying the ―balance due

. . . on the promissory note payable to Capital One Auto Loans[] and given as

part of the purchase price of and secured by a lien on the‖ Jeep. The decree

also included a section entitled, ―Contractual Alimony,‖ pursuant to which David

agreed to pay Sonya $600 per month for sixty months.

      Sonya made the Jeep payments, but after losing her job, she had difficulty

making the payments timely—she paid in the middle of the month instead of at

the beginning—and she missed one payment. Because the financing for the

Jeep was in David’s name, Sonya could not get Capital One to ―work‖ with her,

and David would call and ―harass [her about the late payments] every month.‖

Eventually, Sonya learned through her divorce lawyer’s office that David’s

attorney was going to begin proceedings ―to take the car away‖ from her. So


                                       2
Sonya, who was ―tired of [David] bullying [her]‖ and ―could not afford to legally

fight him,‖ told David that if he wanted the Jeep, he should let her know where to

take it. David left Sonya a voicemail instructing her to leave the Jeep at her

apartment complex and explaining that he had insurance on it and would ―deal

with Capital One.‖    David picked up the Jeep shortly thereafter, Sonya quit

making the loan payments (although she tried to pay for the deficiency owed),

and although David paid approximately $1,900 towards the loan, Capital One

eventually repossessed the Jeep. Up to that point, according to Sonya, there

had been no mention of David’s contractual alimony responsibility.

      In August 2010, David filed an original petition, request for equitable relief,

and request for disclosure in which he alleged a claim against Sonya for breach

of contract. Referencing the divorce decree, David alleged that he and Sonya

had agreed that he would pay contractual alimony to Sonya and that she would

pay the Jeep loan. David claimed that he had upheld his end of the bargain but

that Sonya had breached the contract by ―ceasing to meet her obligation to make

payments [on the Jeep].‖      David pleaded for rescission of the decree and,

alternatively, damages for, among other things, ―As of July 1, 2010, $15,000 in

contractual alimony payments‖ and ―$21,000 obligation for remaining contractual

alimony payments.‖

      In November 2010, Sonya filed a motion for sanctions against David and

his attorney, Walter, arguing that they had violated chapter 10 of the civil practice

and remedies code for, among other things, filing a claim that was not supported


                                         3
by existing law. David later filed a notice of nonsuit, and the trial court signed an

order granting the nonsuit on May 24, 2011.

      Between June 2011 and November 2011, the trial court conducted three

hearings on Sonya’s motion for sanctions, which she amended to include a

violation of chapter 9 of the civil practice and remedies code. On January 3,

2012, the trial court signed the sanctions order that is the subject of this appeal,

finding that both David and Walter had violated chapters 9 and 10 of the civil

practice and remedies code and ordering David to pay Sonya’s attorney’s fees in

the amount of $6,830.00 and Walter to pay Sonya’s attorney’s fees of

$13,657.50.2 Walter, but not David, appeals the sanctions order.

                            III. VOID SANCTIONS ORDER

      In his first issue, Walter argues that the January 3, 2012 sanctions order is

void because the trial court signed it months after the court’s plenary jurisdiction

had expired.    According to Walter, the May 24, 2011 order granting David’s

nonsuit ―had the effect of dismissing the entire case and the date of that order

was the starting point for determining when the trial court’s plenary jurisdiction

expired.‖

      The expiration date for a trial court’s plenary power is calculated from the

date the court enters a final order disposing of all the claims and parties. Unifund

CCR Partners v. Villa, 299 S.W.3d 92, 95–97 (Tex. 2009).               ―A judgment

      2
        The sanctions order also directed Walter to pay Sonya’s attorney $15,000
in the event Walter unsuccessfully appealed the order to the court of appeals and
$20,000 in the event of an unsuccessful appeal to the supreme court.

                                         4
dismissing all of a plaintiff’s claims against a defendant, such as an order of

nonsuit, does not necessarily dispose of any cross-actions, such as a motion for

sanctions, unless specifically stated within the order.‖   Crites v. Collins, 284

S.W.3d 839, 840 (Tex. 2009). Thus, an order of dismissal pursuant to nonsuit is

not a final, appealable order when the order does not ―unequivocally express an

intent to dispose of all claims and all parties.‖ Id. at 841; see Unifund CCR

Partners, 299 S.W.3d at 95–97 (reasoning that sanctions order was not void

because motion for sanctions was (1) pending when trial court signed dismissal

order and (2) not specifically referenced by dismissal order); see also Tex. R.

Civ. P. 162 (―A dismissal under this rule shall have no effect on any motion for

sanctions, attorney’s fees or other costs, pending at the time of dismissal, as

determined by the court.‖).

      Here, Sonya filed her original motion for sanctions in November 2010, and

the trial court signed the order granting David a nonsuit in May 2011. The motion

for sanctions was therefore pending when the trial court signed the dismissal

order. As for the finality of the dismissal order, it is entitled, ―Order Granting

Nonsuit,‖ and states, ―On May 24, 2011, the Court received the Notice of Nonsuit

of DAVID LYNN JENNINGS and ORDERS this case dismissed without prejudice

to DAVID LYNN JENNINGS’s right to refile it.        All costs incurred are taxed

against DAVID LYNN JENNINGS, for which let execution issue if not paid.‖ The

dismissal order did not specifically reference Sonya’s motion for sanctions or

otherwise unequivocally express any intent to dispose of the motion; therefore,


                                        5
the order was not a final order that disposed of the motion for sanctions. See

Unifund CCR Partners, 299 S.W.3d at 96–97 (conducting similar analysis); In re

Anderson, No. 01-10-00182-CV, 2010 WL 1612309, at *2 (Tex. App.—Houston

[1st Dist.] Apr. 19, 2010, orig. proceeding) (mem. op.) (same). Accordingly, the

trial court’s plenary power had not expired before it entered the January 3, 2012

sanctions order. We overrule Walter’s first issue.

                            IV. MERITS OF SANCTIONS ORDER

      In his fourth issue, Walter argues that the trial court abused its discretion

by imposing sanctions against him under chapters 9 and 10 of the civil practice

and remedies code because the original petition ―was not groundless and without

evidentiary support when it was filed and was not filed for an improper purpose.‖

We limit our analysis to the propriety of ordering sanctions under chapter 10.

      We review a trial court’s ruling on a motion for sanctions under an abuse-

of-discretion standard. Cire v. Cummings, 134 S.W.3d 835, 838 (Tex. 2004). A

trial court abuses its discretion if the court acts without reference to any guiding

rules or principles, that is, if the act is arbitrary or unreasonable. Low v. Henry,

221 S.W.3d 609, 614 (Tex. 2007); Cire, 134 S.W.3d at 838–39.

      Chapter 10 of the civil practice and remedies code permits sanctions for

the filing of frivolous pleadings and motions. See Tex. Civ. Prac. & Rem. Code

Ann. §§ 10.001–.006 (West 2002).         Specifically, section 10.001 provides in

relevant part as follows:

            The signing of a pleading or motion as required by the Texas
      Rules of Civil Procedure constitutes a certificate by the signatory that

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      to the signatory’s best knowledge, information, and belief, formed
      after reasonably inquiry:

             ....

             (2) each claim, defense, or other legal contention in the
      pleading or motion is warranted by existing law or by a nonfrivolous
      argument for the extension, modification, or reversal of existing law
      or the establishment of new law[.] . . .

Id. § 10.001(2). A court that determines that a person has signed a pleading or

motion in violation of section 10.001 may impose a sanction against the person

who signed the pleading. Id. § 10.004(a).

      Sonya argued in her original motion for sanctions that Walter should be

sanctioned for filing the original petition because, in violation of civil practice and

remedies code section 10, the petition contained a ―claim, defense or other legal

contention that is not warranted by existing law or by a nonfrivolous argument for

the extension, modification or reversal of existing law or the establishment of new

law.‖3 Sonya outlined the specific offending conduct as follows:

         a. Plaintiff’s Petition seeks rescission of the parties’ divorce
      decree (including rescission of $21,000.00 in remaining contractual
      alimony payments) . . . .

          ....

         c. Plaintiff’s Petition seeks damages and attorney’s fees that
      have not been incurred and that are not reasonably related to this
      suit.

         d. Plaintiff’s Petition seeks to use this lawsuit as a
      sledgehammer to release Plaintiff from a $21,000.00 contractual
      alimony obligation.
      3
       The amended motion for sanctions contained much of the same language
and allegations.

                                          7
At the hearing on the motion for sanctions, David agreed that his damages claim

included a request that he be awarded $15,000 for contractual alimony payments

that he had already made and that he be released from paying the remaining

$21,000 in contractual alimony payments owed.

      The trial court was well within its discretion to sanction Walter for violating

civil practice and remedies code section 10.001(2) because the damages

allegations contained in the original petition included two contentions that are not

warranted by existing law. Specifically, the record demonstrates that the conduct

for which David sought to hold Sonya accountable was her alleged failure to

continue making the Jeep payments.           Instead of filing a motion to enforce

Sonya’s responsibility to make the Jeep payments, Walter, on behalf of David,

chose to sue Sonya under a breach-of-contract theory.4          Walter alleged that



      4
        Contractual alimony agreements are enforceable as contracts and are
governed by contract law, see Heller v. Heller, 359 S.W.3d 902, 903 (Tex. App.—
Beaumont 2012, no pet.), but Walter argues that the entire divorce decree (not
just the alimony agreement) is enforceable as a contract, in part because the
decree contains the following statement under a heading that says ―Agreement of
Parties‖: ―To the extent permitted by law, the parties stipulate the agreement is
enforceable as a contract.‖ For purposes of this analysis, we will assume without
deciding that David had the option to bring a breach-of-contract claim against
Sonya for her alleged failure to continue making the Jeep payments.

        Walter complains about this footnote in his motion for rehearing. He says
it is ―misleading‖ because it ―seems to suggest that only the contractual alimony
agreement is governed by contract law and that the remainder of the divorce
settlement agreement is not.‖ The footnote makes no such suggestion. It merely
indicates, in unambiguous terms, what it states—that in performing our analysis,
we will assume without deciding that a breach-of-contract claim was permissible
under these circumstances.

                                         8
Sonya had breached the contract by ―ceasing to meet her obligation to make

payments [on the Jeep],‖ and he claimed that David’s damages included, among

other things, ―$15,000 in contractual alimony payments‖ and ―$21,000 obligation

for remaining contractual alimony payments.‖       Thus, David alleged that his

damages for Sonya’s alleged failure to continue making Jeep payments included

reimbursement of contractual alimony payments and termination of his future

contractual alimony obligation.

      It is well established that to recover damages for breach of contract, a

plaintiff must show that the damages sought were the natural, probable, and

foreseeable consequence of the defendant’s conduct. Mead v. Johnson Grp.,

Inc., 615 S.W.2d 685, 687–88 (Tex. 1981).          The absence of this causal

connection between the alleged breach and the alleged damages will preclude

recovery.   Abraxas Petroleum Corp. v. Hornburg, 20 S.W.3d 741, 758 (Tex.

App.—El Paso 2000, no pet.).

      To the extent that Sonya’s responsibility to make the Jeep payments was

enforceable as a contractual obligation, there is nothing in the record to indicate

that David’s damages for Sonya’s alleged breach of that obligation could have

included reimbursing David for contractual alimony payments already made,

termination of his future contractual alimony obligation, or both. Indeed, there is




                                        9
a complete lack of any causal connection between the alleged breach and the

alleged damages.5

      Walter attempts to establish a connection between the allegations by

stating that Sonya specifically agreed to make the Jeep payments in exchange

for David’s agreement to make contractual alimony payments, but the rules of

contract construction, as applied to the decree, belie this argument. See Coker

v. Coker, 650 S.W.2d 391, 393 (Tex. 1983). Walter makes no attempt—even in

his motion for rehearing—to explain how, in light of the specific language of the

divorce decree, reimbursing David for contractual alimony payments already

made or terminating his future contractual alimony obligation would be a natural,

probable, and foreseeable consequence of Sonya’s alleged failure to continue

making Jeep payments.

      In his motion for rehearing, Walter argues, ―It is uncontroverted that the

contract incorporated into the divorce decree required Sonya to pay all of the

Jeep debt . . . , that she failed to pay the debt, and that her failure to pay resulted

in monetary damages to David.         How can it be said that David’s claim was

groundless?‖ He also states that ―one cannot say that the claim as a whole is

without legal basis.‖ We do not hold that ―David’s claim was groundless‖ or that

―the claim as a whole is without legal basis.‖ Indeed, had David not nonsuited his

      5
       Walter points out in his brief that as a result of Sonya’s alleged breach,
David ―incurred damages resulting from payments that he made to Capital One
Auto Finance, harm to his credit, and liability to Capital One Auto Finance after
the Jeep was repossessed.‖ He does not mention the damages allegations that
were the subject of the motion for, and order imposing, sanctions.

                                          10
claims, he may very well have been entitled to recover the damages that are

mentioned in footnote five, but those matters are not before us, nor may we

speculate about them. Instead, the very narrow issue here is whether the trial

court abused its discretion by sanctioning Walter for seeking reimbursement for

contractual alimony payments already made and termination of his future

contractual alimony obligation as ―damages‖ for Sonya’s alleged failure to

continue making the Jeep payments. We express no opinion about any other

claims alleged by David, and we decline to conflate the issue in this appeal with

the other bases for recovery that were alleged but that are not part of this appeal.

      Walter further argues on rehearing that our holding conflicts with other

cases that recognize ―that an offset against future alimony payments is an

appropriate remedy.‖ He contends that there is no reason that the doctrine of

setoff should not be applied ―to competing claims between ex-spouses which

arise from the same contractual divorce agreement.‖ [Emphasis added.] We do

not hold that an offset is inappropriately applied to ―competing claims between

ex-spouses which arise from the same contractual divorce agreement‖ because

this case did not involve competing claims between Sonya and David.             For

example, if in addition to David seeking to recover damages against Sonya for

her failure to continue making Jeep payments, Sonya had sought to recover

past-due alimony payments from David, then the trial court would have been in a

position to offset any damages that David recovered on his breach-of-contract

claim against any amount of past-due child support that Sonya recovered under


                                        11
her competing claim for past-due alimony. But Sonya did not allege any claims

against David. The only claims were those alleged by David against Sonya.

Thus, to the extent that David could have recovered against Sonya for breach of

contract, the trial court would have had no competing claim and damages against

which to offset David’s would-be damages.

      Walter directs us to Bandy v. First State Bank, but that case actually

reinforces our point. See 835 S.W.2d 609 (Tex. 1992). There, the supreme

court observed, ―The doctrine of setoff is ancient, having its roots in early

bankruptcy law in England. The effect of setoff was to allow a defendant in a suit

for a debt to raise a debt owed by the plaintiff to the defendant as a defense or

counterclaim.‖ Id. at 618 (citations deleted, emphasis added). The supreme

court cited an opinion issued by the Supreme Court of Alabama and noted in a

parenthetical, ―It is generally held that where parties have cross-demands against

each other, the real indebtedness is the excess of one debt over the other.‖ Id.

(citing Norris v. Commercial Nat’l Bank of Anniston, 163 So. 798, 801 (Ala.

1935)) (emphasis added). As explained, Sonya alleged no claims against David.

      The supreme court has also confirmed that ―[t]he right of offset is an

affirmative defense.    The burden of pleading offset and of proving facts

necessary to support it are on the party making the assertion.‖ Brown v. Am.

Transfer & Storage Co., 601 S.W.2d 931, 936 (Tex.), cert. denied, 449 U.S. 1015

(1980) (emphasis added). That the supreme court describes the right of offset as

an affirmative defense also supports our conclusion that an offset under these


                                       12
circumstances would not have been feasible. Not only was there no pleading for

an offset, but Walter’s argument does not utilize his purported ability to seek an

offset as an affirmative defense to any claim alleged by Sonya.

      Walter directs us to Jenkins v. Jenkins, 991 S.W.2d 440 (Tex. App.—Fort

Worth 1999, pet. denied), but in that case, the trial court awarded a bankruptcy

trustee $107,000 in past-due alimony payments, less a $28,000 offset to

appellant for damages that he sustained to his home. Id. at 443. Thus, unlike

here, the case involved competing claims and damages that the trial court was

able to offset.

      Walter has cited no authority demonstrating that the trial court could have

offset any damages that David recovered from Sonya against David’s contractual

obligation to make alimony payments, nor does the divorce decree contain any

language indicating that David’s alimony obligation would be suspended if Sonya

failed to make the Jeep payments.          See Coker, 650 S.W.2d at 393 (―In

construing a written contract, the primary concern of the court is to ascertain the

true intentions of the parties as expressed in the instrument.‖).

      Walter additionally complains in his motion for rehearing that we place too

much emphasis on Sonya’s testimony at the sanctions hearing because ―much of

that testimony was controverted by David Jennings and the documentary

evidence.‖    He argues that we are improperly accepting her testimony over

David’s testimony.    This argument appears to advocate that we not properly




                                         13
apply the abuse-of-discretion standard of review. We therefore summarily reject

it.

      Walter also argues in his motion for rehearing that he had no opportunity to

amend his original petition because David nonsuited his case prior to the

sanctions hearing.    The record reflects that the trial court signed the order

granting the nonsuit on May 24, 2011.        Sonya’s attorney filed a motion for

sanctions approximately six months earlier, on November 12, 2010. There is

nothing in the record to show that Walter could not have filed an amended

petition between those dates.

      Accordingly, we hold that the trial court did not abuse its discretion by

sanctioning Walter for violating civil practice and remedies code section

10.001(2). We overrule Walter’s fourth issue.

                       V. SANCTIONS ORDER DESCRIPTION

      In his third issue, Walter argues that the order imposing sanctions

inadequately describes the conduct that the trial court found to be in violation of

civil practice and remedies code section 10.001(2).

      Section 10.005 provides that ―[a] court shall describe in an order imposing

a sanction under this chapter the conduct the court has determined violated

Section 10.001 and explain the basis for the sanction imposed.‖ Tex. Civ. Prac.

& Rem. Code Ann. § 10.005. Merely tracking the language of the statute is

insufficient. Law Offices of Windle Turley, P.C. v. French, 164 S.W.3d 487, 492

(Tex. App.—Dallas 2005, no pet.).


                                        14
      The order imposing sanctions stated in relevant part as follows:

      Plaintiff’s Original Petition, Request for Equitable Relief, and
      Request for Disclosure filed on August 6, 2010, was groundless
      when filed, filed for an improper purpose and includes a claim that is
      not warranted by existing law, and each factual claim did not have
      evidentiary support even after a reasonable opportunity for discovery
      and further investigation, in that: Plaintiff alleged that contractual[]
      alimony payments may be repaid to Plaintiff or terminated although
      such a claim was groundless and not warranted by existing law.
      [Emphasis added.]

Although concise, the order specifically identifies the conduct underlying the trial

court’s decision to sanction Walter—that the damages allegations for Sonya’s

alleged failure to continue making Jeep payments included reimbursement for

contractual alimony payments already made, termination of the future contractual

alimony obligation, or both. We hold that the conduct portion of the sanctions

order is sufficient to meet section 10.005’s specificity requirement, and we

overrule Walter’s third issue.

                                  VI. CHAPTER 9

      Walter argues in his second issue that the trial court abused its discretion

by additionally imposing sanctions under chapter 9 of the civil practice and

remedies code.6 Section 9.012(h) states, ―This section does not apply to any

proceeding to which Section 10.004 . . . applies.‖ Tex. Civ. Prac. & Rem. Code

Ann. § 9.012(h) (West 2002).      Having determined that the trial court did not

abuse its discretion by sanctioning Walter under chapter 10, we hold that the trial


      6
       Sonya concedes that sanctions under chapter 9 ―would become
inapplicable‖ if we affirm the sanctions order under chapter 10.

                                        15
court abused its discretion by also sanctioning Walter under chapter 9.          We

sustain his second issue.

                                 VII. CONCLUSION

      Walter argues on rehearing that ―the trial court should be given an

opportunity to reconsider its sanctions award in [] light of this Court’s ruling that

sanctions under Chapter 9 were an abuse of discretion.‖ We agree. Having

sustained Walter’s second issue, we reverse the trial court’s order and remand

this case to the trial court to reconsider the amount of sanctions to be ordered

against Walter, if any, under only chapter 10 of the civil practice and remedies

code. See Tex. R. App. P. 43.2(d); Howell v. Tex. Workers’ Comp. Comm’n, 143

S.W.3d 416, 449 (Tex. App.—Austin 2004, pets. denied) (remanding case for

recalculation of sanctions).




                                                    BILL MEIER
                                                    JUSTICE

PANEL: DAUPHINOT, WALKER, and MEIER, JJ.

DELIVERED: November 7, 2013




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