                                                                             ACCEPTED
                                                                         03-14-00738-CV
                                                                                 5643512
                                                              THIRD COURT OF APPEALS
                                                                         AUSTIN, TEXAS
                                                                    6/11/2015 3:29:35 PM
                                                                       JEFFREY D. KYLE
                                                                                  CLERK

                 03-14-00738-CV
                In the Court of Appeals                  FILED IN
                                                  3rd COURT OF APPEALS
        For the Third District of Texas at Austin     AUSTIN, TEXAS
                                                  6/11/2015 3:29:35 PM
                                                    JEFFREY D. KYLE
      Elness, Swenson, Graham Architects,     Inc.,       Clerk

                  Appellant and Cross-Appellee,

                           v.

RLJ II-C Austin Air, LP, RLJ II-C Austin Air Lessee, LP,
     and RLJ Lodging Fund II Acquisitions, LLC,
                Appellees and Cross-Appellants.


                  On Appeal from the
  200th Judicial District Court of Travis County, Texas
            Cause Number: D-1-GN-002325
  The Honorable Stephen Yelenosky, Presiding Judge


   CROSS-APPELLEE’S RESPONSE BRIEF


      Attorneys for Appellant and Cross-Appellee

                                Gregory N. Ziegler
                                Texas Bar No. 00791985
 MACDONALD DEVIN, PC            GZiegler@MacdonaldDevin.com
 3800 Renaissance Tower         Weston M. Davis
    Dallas, Texas 75270         Texas Bar No. 24065126
  214.744.3300 telephone        WDavis@MacdonaldDevin.com
  214.747.0942 facsimile        Steven R. Baggett
                                Texas Bar No. 01510680
                                SBaggett@MacdonaldDevin.com


                                Oral argument requested
                        STATEMENT REGARDING ORAL ARGUMENT

         Cross-Appellee respectfully requests the opportunity to present oral

argument, and has so noted on the cover of this Brief. 2 Although the facts and legal

arguments at issue are thoroughly represented in this Brief and the record, oral

argument will significantly aid the decision in this case because it addresses

complex issues of common law and contractual interpretation, as well as

evidentiary issues.




2
    See Tex. R. App. P. 39.7.
                                          i                            895484   402/122
                                              TABLE OF CONTENTS

Statement on Oral Argument .................................................................................i

Table of Contents ................................................................................................... ii

Index of Authorities ...............................................................................................iv

Statement of Additional Facts ................................................................................2

Summary of the Argument ....................................................................................5

Argument .................................................................................................................5

         I.       Standard of Review .............................................................................. 5

         II.       Texas law does not require joint and several liability for
                   application of the one-satisfaction rule. (Issue No. A.1) .................. 6

         III.      RLJ admitted its damages were indivisible and presented only
                   evidence of indivisible damages. (Issue No. A.2) ............................14

         IV.       Texas law unequivocally holds that the one-satisfaction rule
                   applies to breach of contract claims. (Issue No. A.3) .....................20

         V.        Application of the one-satisfaction rule in this case cannot violate
                   any constitutional right to freedom of contract. (Issue No. A.4) . 23

         VI.       ESG did not waive or otherwise fail to preserve its right to
                   settlement credits. (Issue No. A.5)...................................................25

         VII. The trial court properly excluded attorney’s fees attributable to
              EBCO and Terracon from the fee award issued to RLJ. (Issue
              No. B) ..................................................................................................29


Prayer .....................................................................................................................31

Certificate of Service .............................................................................................33

                                                             ii                                          895484      402/122
Certificate of Compliance .....................................................................................33




                                                       iii                                    895484     402/122
                                           INDEX OF AUTHORITIES

Cases

All Saints Catholic Church v. United Nat’l Ins. Co.,
       257 S.W.3d 800 (Tex. App. – Dallas 2008, no pet.) .................................... 27

Allen v. Nersesova,
      307 S.W.3d 564 (Tex. App.–Dallas 2010, no pet.) ........................................ 8

Allison v. Fire Ins. Exch.,
      98 S.W.3d 227 (Tex. App. – Austin 2002, no pet.) ...................................... 27

Alvord v. Waggoner,
      32 S.W. 872 (Tex. 1895)(cited in Section II, supra , n.2) ........................6, 21

Amalgamated Transit Union, Local Div. 1338 v. Dallas Pub. Transit Bd.,
     430 S.W.2d 107 (Tex. Civ. App.-Dallas 1968, writ ref’d n.r.e.) ................ 24

AMX Enterprises, Inc. v. Bank One, N.A.,
    196 S.W.3d 202 (Tex. App.–Houston [1st Dist.] 2006, pet. denied) .............22

Andrews v. Harvey,
     39 Tex. 123 (Tex. 1873) ...........................................................................6, 21

Bradshaw v. Baylor Univ.,
     84 S.W.2d 703 (1935) .................................................................................. 20

Brown v. American Transfer and Storage Co.,
     601 S.W.2d 931 (Tex. 1980) ........................................................................13

Bullock v. Regular Veterans Ass’n.,
      806 S.W.2d 311 (Tex. App.—Austin 1991, no pet.) ................................... 29

Burke v. Union Pacific Resources Co.,
      138 S.W.3d 46 (Tex. App.–Texarkana 2004, pet. denied) ......................... 8-9

B&W Supply, Inc. v. Beckman,
    305 S.W.3d 10 (Tex. App. – Houston [1st Dist.] 2009, pet. denied .............. 26

                                                      iv                                     895484    402/122
Byer Custom Builders v. Franks,
      389 S.W.3d 880 (Tex. App.–Houston ([14 Dist.] 2012, no pet.) ........... 17-18

City of San Benito v. Rio Grande Valley Gas Co.,
       109 S.W.3d 750 (Tex. 2003) ......................................................................... 6

Coastal Transport Co. v. Crown Cent. Petroleum Corp.,
     136 S.W.3d 227 (Tex. 2004) ....................................................................... 28

Cunningham v. Haroona,
     382 S.W.3d 492 (Tex. App.–Fort Worth 2012, pet. denied) .........................22

CTTI v. Priesmeyer,
     164 S.W.3d 675 (Tex. App.–Austin 2005, no pet.) ................................ 12-13

Dalworth Restoration, Inc. v. Rife-Marshall,
     No. 02-12-00381-CV, 2014 Tex. App. LEXIS 5271 (Tex. App.– Fort Worth
     May 15, 2014, no pet.) ...................................................................................26

Duncan v. Cessna Aircraft Co.,
     665 S.W.2d 414 (Tex. 1984) ........................................................................19

El Paso Natural Gas Co. v. Berryman,
      858 S.W.2d 362 (Tex. 1993) ....................................................................... 21

Emerson Electric Co. v. Am. Permanent Ware Co.,
     201 S.W.3d 301 (Tex. App.–Dallas 2006, no pet.) ......................................22

Entergy Gulf States, Inc. v. Summers,
      282 S.W.3d 433 (Tex. 2009) ....................................................................... 23

First Title Co. of Waco v. Garrett,
       860 S.W.2d 74 (Tex. 1993) ................................................................... 10-11

Galle, Inc. v. Pool,
      262 S.W.3d 564 (Tex. App.—Austin 2008, pet. denied) ......... 7, 9-12, 18-19



                                                       v                                      895484     402/122
GE Capital Comm., Inc. v. Washington Nat’l Bank,
     754 F.3d 297 (5th Cir. 2014) ................................................................... 10-11

Gevinson v. Manhattan Constr. Co. of Okla.,
     449 S.W.2d 458 (Tex. 1969) .........................................................................14

Horizon/CMS Healthcare Corp. v. Auld,
      34 S.W.3d 887 (Tex. 2000) ......................................................................... 28

Houston Unlimited, Inc. v. Mel Acres Ranch,
     443 S.W.3d 820 (Tex. 2014) ................................................................. 16, 28

Howell v. Texas Workers’ Comp. Comm’n,
     143 S.W.3d 416 (Tex. App. – Austin 2004, pet. denied) ............................ 24

Hunt v. Ellisor & Tanner,
      739 S.W.2d 933 (Tex. App.—Dallas 1987, pet. denied) ............................ 18

Hunt v. Ziegler,
      271 S.W. 936 (Tex. App. 1925, aff’d 280 S.W. 546 (Tex. 1926) ......... 20-21

In re Day,
       342 S.W.3d 193 (Tex. App.—Beaumont 2011, pet. denied) ...................... 16

In re Laibe Corp.,
       307 S.W.3d 314 (Tex. 2010) ....................................................................... 29

Kizer v. Meyer, Lytton, Alen & Whit-Aker, Inc.,
      228 S.W.3d 384 (Tex. App. – Austin 2007) ........................................ 8-9, 12

Knesek v. Witte,
     754 S.W.2d 814 (Tex. App. – Houston [1st Dist.] 1998, writ denied) .......... 29

Lewis v. Exxon Co.,
      786 S.W.2d 724 (Tex. App. – El Paso 1989, no pet.) ..................................20

Lewis v. Taylor,
      17 Tex. 57 (Tex. 1856) ............................................................................ 6, 21


                                                      vi                                     895484    402/122
Marquis Acquisitions, Inc. v. Steadfast Ins. Co.,
     409 S.W.3d 808 (Tex. App. – Dallas 2013, no pet.) ................................... 26

Matthews v. P.D. Sohn,
     No. 13-12-00302-CV, 2013 Tex. App. LEXIS 7277 (Tex. App.—Corpus
     Christi June 13, 2013, no pet.) ........................................................................8

McGinty v. Hennen,
     372 S.W.3d 625 (Tex. 2012) ....................................................................... 16

Mobil Oil Corp. v. Ellender,
      968 S.W.2d 917 (Tex. 1998) ....................................................................... 17

Metal Bldg. Components, LP v. Raley,
      No. 03-05-00823, 2007 Tex. App. LEXIS 186 (Tex. App.–Austin Jan. 10,
      2007, no pet.) ....................................................................................... 8-9, 11

National City Bank of Indiana v. Ortiz,
      401 S.W.3d 867 (Tex. App.–Houston [14 Dist.] 2013,
      pet. denied) ....................................................................................... 25-27, 29

Osborne v. Jauregui, Inc.,
     252 S.W.3d 70 (Tex. App. – Austin 2008, pet. denied) (en banc) ....... 7, 9, 12

Oyster Creek Fin. Corp. v. Richwood Investments II, Inc.,
      176 S.W.3d 307 (Tex. App.—Houston [1st Dist.] 2004, pet.
      denied) ....................................................................................................... 5, 8

Price Pfister, Inc. v. Moore & Kimmey, Inc.,
      48 S.W.3d 341 (Tex. App. – Houston [14 Dist.] 2001, pet. denied)............. 25

Regions Bank v. Bay,
     No. 05-12-00531, 2013 Tex. App. LEXIS 11811 (Tex. App.–Dallas Sept.
     18, 2012, no pet.) ..........................................................................................22

Roberts v. Grande,
     868 S.W.2d 956 (Tex. App.—Houston [14th Dist.] 1994, no pet.) .............. 20



                                                           vii                                        895484     402/122
Robertson v. ADJ Partnership, Ltd.,
     204 S.W.3d 484 (Tex. App.-Beaumont 2006, pet. denied) ......................... 17

Safety Cas. Co. v. Wright,
      160 S.W.2d 238 (Tex. 1942) ................................................................. 13, 30

Snyder v. Eanes Indep. Sch. Dist.,
     860 S.W.2d 692 (Tex. App.-Austin 1993, writ denied) ........................ 15, 26

Stewart Title Guar. Co. v. Sterling,
     822 S.W.2d 1 (Tex. 1991) ............................................................................19

Tesfa v. Stewart,
      135 S.W.3d 272 (Tex. App.–Fort Worth 2004, pet. denied) ....................... 18

Tex. Capital Sec. Inc. v. Sandefer,
      108 S.W.3d 923 (Tex. App.—Texarkana 2003, pet. denied) ........................ 5

Texas Standard Oil & Gas, L.P. v. Frankel Offshore Energy, Inc.,
      394 S.W.3d 753 (Tex. App.–Houston [14 Dist.] 2012, no pet. ................... 14

Tony Gullo Motors I, L.P. v. Chapa,
     212 S.W.3d 299 (Tex. 2006) ........................................................................ 30

Utts v. Short,
       No. 03-03-00512, 2004 Tex. App. LEXIS 2874 (Tex. App.—Austin Apr. 1,
       2004, pet. denied) .......................................................................................... 6

Utts v. Short,
       81 S.W.3d 822 (Tex. 2002) ....................................................................... 6-7

Wayne v. A.V.A.Vending, Inc.,
     52 S.W.3d 412 (Tex. App. – Corpus Christi 2001, pet.
     denied) .......................................................................................................... 29

Woods v. State,
     301 S.W.3d 327 (Tex. App.—Houston [14 Dist.] 2009,
     pet. ref’d) .................................................................................................... 16


                                                          viii                                        895484     402/122
Statutes

Tex. Civ. Prac. & Rem. Code § 32.001 ........................................................... 22-23

Tex. Civ. Prac. & Rem. Code § 33.001 ........................................................... 22-23

Tex. Civ. Prac. & Rem. Code § 38.001 ...................................................................29

Tex. R. Civ. P. 94 ....................................................................................................29


Rules

Tex. R. App. P. 39.7....................................................................................................i




                                                           ix                                        895484     402/122
                              03-14-00738-CV

                             In the Court of Appeals
                     For the Third District of Texas at Austin


                   Elness, Swenson, Graham Architects, Inc.,

                               Appellant and Cross-Appellee,

                                        v.

             RLJ II-C Austin Air, LP, RLJ II-C Austin Air Lessee, LP,
                  and RLJ Lodging Fund II Acquisitions, LLC,

                              Appellees and Cross-Appellants.


                               On Appeal from the
               200th Judicial District Court of Travis County, Texas
                         Cause Number: D-1-GN-002325
               The Honorable Stephen Yelenosky, Presiding Judge


TO THE HONORABLE JUSTICES OF THE COURT OF APPEALS:

      Cross-Appellee Elness, Swenson, Graham Architects, Inc. (“ESG”) provides

the following response to the Brief of Cross-Appellants RLJ II-C Austin Air, LP,

RLJ II-C Austin Air Lessee, LP, and RLJ Lodging Fund II Acquisitions, LLC

(collectively, “RLJ”):




                                        1                              895484   402/122
                           STATEMENT OF ADDITIONAL FACTS

       RLJ’s statement of facts and issues on appeal attempt to show allocation of

damages on appeal despite the fact that RLJ presented no such evidence to the

trial court. RLJ’s complaint alleged indivisible damages as follows:

               As a direct, natural, probable, and foreseeable
               consequence associated with breaches of contract by
               EBCO, ESG, Swenson, HBC, Swoboda, and Terracon,
               Plaintiffs have sustained damages for which they sue
               herein.
               ...

               As a result of the breaches of contract, breach of
               fiduciary duties, breach of warranty, tort/negligence
               breaches, and negligent acts alleged above, Plaintiffs
               have sustained damages in excess of the minimal
               jurisdictional requirements of this court. The appropriate
               measure of damages for the breach of contract and breach
               of warranty claims is the difference in value between the
               building as constructed, and the value of the building had
               it been designed and constructed pursuant to the
               respective contracts. In the alternative, the measure of
               damages is the cost to fully and completely repair the
               Project.

CR:195; 200-01 (¶¶49, 73) (emphasis added).1                     RLJ did not allocate or

differentiate between the alleged damages caused by ESG and those of the settling

parties at issue, Terracon Consultants, Inc. (“Terracon”) and EBCO General

Contractor, Ltd., EBCO Advanced Building Systems, Ltd., and EBCO Warrior

Management LLC (collectively “EBCO”). CR:195; 200-02. Confirming this fact,

1
 ESG adopts the format for citation to the record identified on pages 1-2, notes 1 and 3 of RLJ’s
Brief.
                                                2                                 895484.2   402/122
RLJ sought “judgment against the Defendants, jointly and severally, for their

damages.” CR:202.

      At trial, counsel for ESG asked RLJ’s expert witness on market value

damages if he had allocated any damages to any particular party’s breach or

conduct. RR:V.7, 159:8-20. RLJ’s witness stated that he was unable to allocate or

“parse out” any damages to any particular party. Id. RLJ’s appellate brief admits

it did not present evidence of allocation of damages, stating “RLJ was not given

the opportunity to segregate or apportion damages to satisfy the trial court’s

reasoning before the case was submitted to the jury.” RLJ Brief at 13, n.4. The

record does not contain any request from RLJ to the trial court for an “opportunity”

to present evidence segregating or apportioning its damages.

      After the jury issued its verdict, ESG presented evidence that the damages

award contained indivisible damages by referencing RLJ’s complaint. CR:1173-

1178. ESG also submitted RLJ’s settlement agreements with Terracon and EBCO,

which did not allocate damages to any particular claim. CR:1461-1488. RLJ

agreed to release EBCO from the following:

            any and all actions, causes of actions, claims, demands,
            costs, loss of services, expenses, and compensation on
            account of or in any way growing out of any known and
            unknown damages which Releasors may now or hereafter
            have against Releasees resulting, existing or alleged to
            result from, related to or arising out of, the Project, the
            Contract, repair/remediation of the Project, allegations
            asserted against Releasees described in any of
                                         3                            895484.2   402/122
             Releasors’ pleadings filed in the above-referenced
             lawsuit, involving any services, work or materials
             provided by Releasees, or any claim(s) against
             Releasees involving the Project.

CR:1468-69 (emphasis added). Likewise, RLJ agreed to release Terracon from the

following:

             all Claims and Causes of Action arising out of or relating
             to the Occurrence in Question as defined above,
             including but not limited to, all Claims and Causes of
             Action which have been asserted, could have been
             asserted, or may accrue in the future or otherwise become
             known to Releasor as claims that could be asserted
             against the Released Parties by Releasor based upon the
             Occurrence in Question.

CR:1479. The “Occurrence in Question” is defined to include the allegations in

RLJ’s petition. CR:1477. ESG’s evidence of common damages and indivisible

injury shifted the burden to RLJ to provide evidence of allocation of damages.

CR:1173-78.    RLJ did not provide any allocation evidence and subsequently

admitted in pleadings to the trial court that RLJ’s injuries in this case are

“indivisible.” CR:1266 (“In a case involving indivisible injury, such as this . . .”)

(emphasis added).

      Based on RLJ’s pleadings and evidence at trial, the trial court properly

entered a judgment applying the full amounts of the EBCO and Terracon

settlements to the jury’s verdict. CR:1437-41; 1708-12.




                                         4                             895484.2   402/122
                          SUMMARY OF THE ARGUMENT

      A plaintiff cannot recover twice for the same injury. This is not a new or

novel principle of law—case law in Texas applying this principle dates back to the

1800s. Presumably seeking to maximize their recovery in this case, RLJ pled and

repeatedly emphasized that their alleged injuries (foundation damage) and alleged

monetary damages were indivisible and sought to recover all of their damages

jointly and severally from all defendants. Because RLJ alleged that each defendant

caused the same injury and damage, the trial court properly applied RLJ’s

settlements as credits against the jury’s verdict.   Absent evidence that RLJ’s

settlements applied to damages solely caused by parties other than ESG, which

RLJ admits does not exist, Texas law requires full application of the settlement

credits to avoid double recovery.

                                    ARGUMENT

I.     Standard of review

      The trial court’s determination regarding the amount of the settlement credit

is reviewed for an abuse of discretion. See Oyster Creek Fin. Corp. v. Richwood

Invs. II, Inc., 176 S.W.3d 307, 328 (Tex. App.—Houston [1st Dist.] 2004, pet.

denied); Texas Cap. Sec. Inc. v. Sandefer, 108 S.W.3d 923, 925 (Tex. App.—

Texarkana 2003, pet. denied). The test for abuse of discretion is whether the court

acted without reference to any guiding rules and principles or, stated another way,


                                        5                            895484.2   402/122
whether its decision was arbitrary or unreasonable. City of San Benito v. Rio

Grande Valley Gas Co., 109 S.W.3d 750, 757 (Tex. 2003). Weighing the evidence

with respect to the amount of the settlement credit involves the exercise of the trial

court’s discretion, and the trial court will not be held to have abused its discretion

if some evidence reasonably supports its decision. Utts v. Short, No. 03-03-00512,

2004 Tex. App. LEXIS 2874, at *10-11 (Tex. App.—Austin Apr. 1, 2004, pet.

denied).

II.    Texas law does not require joint and several liability for application of
       the one-satisfaction rule. (Issue No. A.1)

       RLJ has scant authority for its position that the one-satisfaction rule does not

apply in this case. Attempting to craft an argument where precedent does not exist,

RLJ argues that the one-satisfaction rule was created only to apply to contribution

claims and never intended to apply outside of tort claims. RLJ Brief at 19-21. To

the contrary, the Texas Supreme Court began enforcing the one-satisfaction rule as

early as 1856, with the only requisite being that the claimant may not recover twice

for the same injury. 2 The Supreme Court has explained that Texas’ statutory

contribution scheme for tort claims upholds the broader one-satisfaction rule. Utts

2
  Lewis v. Taylor, 17 Tex. 57 (Tex. 1856) (“in an action or actions against several persons for the
same trespass, the plaintiff can have judgment separately against each of them, and separate
executions; but he can have but one satisfaction”); Andrews v. Harvey, 39 Tex. 123 (Tex. 1873)
(“The liability of the appellant and McGrew may exist at the same time, although there can be
but one satisfaction”); Alvord v. Waggoner, 32 S.W. 872, 873 (Tex. 1895) (“Alvord had the
right to sue Fosdick or Eustis upon the warranties contained in these deeds, or he might have
sued each of them, but he could have but one satisfaction of his damages.”) (emphasis added in
each).
                                                6                                  895484.2   402/122
v. Short, 81 S.W.3d 822, 831-32 (Tex. 2002). The Supreme Court in Utts did not

find that Civil Practice and Remedies Code Chapter 33 supersedes the one-

satisfaction rule—it complements the one-satisfaction rule. Id. As the recent

Texas precedent discussed below reveals, the one-satisfaction rule applies to any

and all claims and simply holds that a party may not recover for the same injury

twice.

         RLJ seeks to inhibit the simple application of the one-satisfaction rule by

introducing a new requirement—joint and several liability. RLJ’s description of

joint and several tort liability and Texas’ statutory contribution scheme is a straw

man intended to deflect attention from Texas’ common law one-satisfaction rule.

RLJ Brief at 21-22. The authority contrary to RLJ’s position is overwhelming—

neither this Court nor any other appellate jurisdiction in Texas holds that the one-

satisfaction rule is limited by the particular cause of action asserted by the plaintiff:

               Galle, Inc. v. Pool, 262 S.W.3d 564, 573 (Tex. App.—
               Austin 2008, pet. denied) (“if the plaintiff has suffered
               only one injury, even if based on ‘overlapping and
               varied theories of liability,’ the plaintiff may only
               recover once”) (emphasis added);
               Osborne v. Jauregui, Inc., 252 S.W.3d 70, 75 (Tex.
               App.—Austin 2008, pet. denied) (en banc) (application
               of the one-satisfaction rule “is not limited to tort claims,
               and whether the rule may be applied depends not on the
               cause of action asserted but rather the injury sustained”)
               (emphasis added);



                                            7                              895484.2   402/122
Metal Bldg. Components, LP v. Raley, No. 03-05-00823,
2007 Tex. App. LEXIS 186 at *58, n.22 (Tex. App.—
Austin Jan. 10, 2007, no pet.) (“The one satisfaction rule
is consistent with principles of contract law, which
preclude a non-breaching party from recovering damages
for breach of contract that would put the non-breaching
party in a better position than if the contract had been
performed.”) (emphasis added).

Kizer v. Meyer, Lytton, Alen & Whit-Aker, Inc., 228
S.W.3d 384, 392, n.3 (Tex. App.—Austin 2007) (“some
or all of his potential recovery on a breach of contract
claim in a later district court lawsuit might well be barred
due to the application of the one-satisfaction rule which
prohibits more than one recovery for a given harm”)
(emphasis added);

Allan v. Nersesova, 307 S.W.3d 564, 574 (Tex.App.—
Dallas 2010, no pet.) (“The one-satisfaction rule prohibits
a plaintiff from recovering twice for a single injury . . .
Whether the rule applies is determined not by the cause
of action, but by the injury.”) (citations omitted)
(emphasis added);

See Oyster Creek, 176 S.W.3d at 328 (allowing
settlement credit and finding one injury even though
causes of action against separate defendants included one
for tort and one for contract);

Matthews v. Sohn, 13-12-00302-CV, 2013 Tex. App.
LEXIS 7277, at *14 (Tex. App.—Corpus Christi June 13,
2013) (“The one satisfaction rule applies when ‘there is
only one injury, even if it is based on several
overlapping and varied theories of liability.’”) (citations
omitted) (emphasis added);

Burke v. Union Pac. Res. Co., 138 S.W.3d 46, 70 (Tex.
App.—Texarkana 2004, pet. denied) (applying
settlement credit to breach of contract claim without


                             8                             895484.2   402/122
             addressing joint and several liability) (emphasis
             added).

      This Court’s opinion in Galle, Inc. v. Pool is directly on point and holds that

the application of the one-satisfaction rule “is not limited to tort claims, and

whether the rule may be applied depends not on the cause of action asserted but

rather the injury sustained.” 262 S.W.3d at 573. RLJ attempts to distinguish Galle

by stating that the plaintiff in the trial court elected negligent misrepresentation

damages rather than breach of contract. RLJ Brief at 28. RLJ incorrectly asserts

that this supports the argument that the one-satisfaction rule only applies to tort

claims. Id. This Court directly confronted the argument RLJ makes here and

refuted it, plainly holding that the one-satisfaction rule applied to the breach of

contract claim. 262 S.W.3d at 573-74. This Court has confirmed the rule stated in

Galle on numerous occasions. See Osborne, 252 S.W.3d at 75; Metal Bldg., 2007

Tex. App. LEXIS 186 at *58, n.22; Kizer, 228 S.W.3d at 392, n.3.

      RLJ’s tortured interpretation of the one-satisfaction rule is wrong but, even

according to RLJ’s standards, the trial court properly applied the settlement credits

in this case. RLJ pled that ESG, EBCO, and Terracon were jointly and severally

liable for RLJ’s breach of contract claims. CR:202. RLJ now runs from this

allegation and seeks to explain why there cannot be joint and several contractual

liability. RLJ Brief at 31-32. Even where joint and several liability is addressed in



                                         9                             895484.2   402/122
relation to the one-satisfaction rule, the only requirement is an allegation of joint

and several liability. The merits of such a claim are not relevant.

         RLJ points to a recent decision in the United States Court of Appeals for the

Fifth Circuit 3 to argue that, where the one-satisfaction rule applies to contractual

claims, it only applies if there is a finding of joint and several liability between the

defendants. RLJ Brief at 23-34. The GE Capital decision, however, holds only

that the one-satisfaction rule requires an allegation by the plaintiff of joint and

several liability between the defendants. 754 F.3d at 308-309. In GE Capital, the

plaintiff never alleged joint liability or indivisible injury. Id. at 308. Based on the

lack of any such allegations, the Fifth Circuit determined that the two defendants

“did not ‘commit the same act’ or ‘commit technically different acts that result in a

single injury.’” Id. at 309 (citation omitted). In reaching its ruling, the Fifth

Circuit examined the Galle, Inc. v. Pool decision and the Texas Supreme Court’s

decision in First Title Co. of Waco v. Garrett, 860 S.W.2d 74 (Tex. 1993). In

Garrett, the Supreme Court applied the one-satisfaction rule “although not

adjudicated to be joint tortfeasors, [the defendants] cannot reasonably be said to

have caused separate injuries” and “reaffirmed” that the one-satisfaction rule

“prohibits a plaintiff from recovering twice from the same injury.” 860 S.W.2d at

79.


3
    GE Capital Comm., Inc. v. Washington Nat’l Bank, 754 F.3d 297, 306 (5th Cir. 2014).
                                                10                               895484.2   402/122
      Addressing Garrett and Galle, the Fifth Circuit explained that those

decisions did not support application of the one-satisfaction rule in GE Capital

because the pleadings in GE Capital did not evidence any “common liability.”

GE Capital, 754 F.3d at 306-07, n.9 (emphasis added). The Fifth Circuit stated

that, unlike the pleadings in GE Capital, the pleadings in Garrett and Galle both

included allegations that the defendants at issue were jointly liable. Id. The court

reasoned that the presence of allegations of joint liability allowed application of the

one-satisfaction rule. Id.

      Unlike GE Capital, RLJ admitted and pled that (1) RLJ’s damages were

“indivisible” (CR:1266) and (2) ESG, EBCO, and Terracon were jointly and

severally liable for those damages (CR:202). The GE Capital analysis is consistent

with Texas’ one-satisfaction case law, which provides that a settlement credit is

applicable where the plaintiff alleges joint liability and/or indivisible damages and

settles with one party but not another. See Galle, 262 S.W.3d at 572; Garrett, 860

S.W.2d at 79.

      RLJ also relies on CTTI v. Priesmeyer to argue that the one-satisfaction rule

requires a finding of joint and several contractual liability. RLJ Brief at 32-33. To

the contrary, this Court in CTTI explained the burden shifting procedure that

occurs for credits under the one-satisfaction rule to mean “Where there are at least

some damages for which there could be joint and several liability,” the burden


                                          11                             895484.2   402/122
shifts to the Plaintiff to establish an allocation of damages applicable solely to the

settling parties.4 164 S.W.3d 675, at 685, n.3 (Tex. App.—Austin 2005, no pet.).

Absent such an allocation, it is presumed that all settlement amounts are joint

damages, even if it is “theoretically” possible that some damages are separable.

Galle, 262 S.W.3d at 572-73.

       In this case, ESG satisfied the initial burden to show that there are “at least

some damages for which there could be joint and several liability.” CTTI, 164

S.W.3d at 685, n.3. RLJ sought joint and several damages from ESG, EBCO, and

Terracon both in their pleadings and at trial. CR:202; RR:V.7, 159:8-20. Thus, the

burden shifted to RLJ to show allocation of damages applicable only to ESG.

Galle, 262 S.W.3d at 572-73. RLJ did not satisfy that burden and admitted that the

damages against ESG were “indivisible” from those alleged against EBCO and

Terracon. CR:1266.

       Despite pleading joint and several liability (CR:202), RLJ argues in its brief

that ESG’s contractual duties were distinct from EBCO’s and Terracon’s, so joint

and several liability could not apply. RLJ Brief at 25-31. This argument must fail

because RLJ is bound by its own pleadings, which allege joint and several


4
 To the extent that RLJ argues that CTTI stands for the proposition that the one-satisfaction rule
only applies to tort claims, ESG asserts that the holding itself acknowledges and allows for the
application to breach of contract claims. Further, subsequent opinions of this Court have
overruled any such precedent set by CTTI. See Galle, 262 S.W.3d at 572-73; Osborne, 252
S.W.3d at 75; Metal Bldg., 2007 Tex. App. LEXIS 186 at *58, n.22; Kizer, 228 S.W.3d at 392,
n.3.
                                               12                                 895484.2   402/122
contractual liability. Safety Cas. Co. v. Wright, 160 S.W.2d 238, 245 (Tex. 1942)

(“parties are restricted in the appellate court to the theory on which the case was

tried in the lower court”); CR:202. RLJ’s analysis of the particular contractual

duties of the parties is irrelevant. RLJ Brief at 34-39. The issue is not whether the

contractual duties were exactly the same, but whether “there are at least some

damages for which there could be joint and several liability.” CTTI, 164 S.W.3d at

685, n.3. RLJ pled and presented their case at trial as if there were such damages.

      RLJ’s argument regarding the collateral source rule is a non-sequitur, as the

collateral source rule applies only to insurance payments, which are not at issue in

this case. Brown v. American Transfer and Storage Co., 601 S.W.2d 931, 935-36

(Tex. 1980). RLJ asks this Court to not only stretch the blanket of coverage

afforded the collateral source rule, but to sew new patches to broaden its

application to serve RLJ’s purposes here. Contrary to RLJ’s argument, application

of the one-satisfaction rule in this case cannot “obliterate” the collateral source rule

because it does not apply. By the same token, it necessarily follows that RLJ’s

request of this Court to make new law extending the collateral source rule should

be rejected because doing so would effectively “obliterate” the centuries-old one-

satisfaction rule.

      Texas law requires RLJ to live with the consequences of their pleading and

proof at trial. RLJ chose to present their case as one of joint liability and joint


                                          13                             895484.2   402/122
damages between ESG, EBCO, and Terracon. RLJ also chose to settle its claims

against EBCO and Terracon and receive compensation in exchange for release of

the alleged joint liability and joint damages. The trial court did not abuse its

discretion in applying the one-satisfaction of judgment rule to the jury’s verdict.

III.   RLJ admitted its damages were indivisible and presented only evidence
       of indivisible damages. (Issue No. A.2)
       RLJ argue that, although it presented evidence of indivisible damages, the

jury (without any evidence) apportioned the damages only to ESG’s alleged breach

of contract and excluded the other alleged breaches. RLJ Brief at 39-47. RLJ’s

argument is based solely on the fact that the charge asked the jury to award

damages for ESG’s alleged breach of contract and did not include breaches by

other parties. Id. RLJ also argue on appeal that its damages are not indivisible.

RLJ Brief at 39-41.      RLJ judicially admitted that the damages at issue are

“indivisible.” CR:1266 (“In a case involving indivisible injury such as this . . .”);

Texas Standard Oil & Gas, L.P. v. Frankel Offshore Energy, Inc., 394 S.W.3d 753,

764-65 (Tex. App.—Houston [14 Dist.] 2012, no pet.); Gevinson v. Manhattan

Constr. Co. of Okla., 449 S.W.2d 458, 466 (Tex. 1969).

       Even ignoring RLJ’s admission, their argument puts the cart before the horse

– the jury can only award damages according to the proof presented at trial.

Because RLJ only presented evidence of joint or “indivisible” damages, the jury’s

award necessarily included such damages. RR:V.7, 159:8-20; RLJ Brief at 13, n.4.

                                          14                            895484.2   402/122
In seeking to recover damages for ESG’s alleged breach of contract, RLJ bore the

burden to establish damages “resulting” from any such breach. See Snyder v.

Eanes Indep. Sch. Dist., 860 S.W.2d 692, 695 (Tex. App.—Austin 1993, writ

denied). RLJ provided no evidence as to the alleged damage caused by ESG. See

CR:1127; RR:V.7, 159:8-20. Instead, RLJ’s evidence supporting their claim for

damages addressed the total alleged losses attributable to all design professionals,

contractors, and subcontractors on the Hotel project—including ESG, MBA,

EBCO, and Terracon. Id.

      Despite the lack of evidence supporting their specific damage claims against

ESG, RLJ claim the jury’s answers to Question 3 reflect the damages allegedly

resulting from ESG’s breach alone. RLJ Brief at 39-47. This claim is based on the

fact that the jury’s finding of $700,000 in lost market value damages is

substantially less than the $6,430,000 amount RLJ’s expert, Paul Hornsby, opined

to be the total market value loss on the Hotel. See CR:1127; RR:V.7, 143-44, 148.

According to RLJ, this reduction in the amount RLJ sought to recover necessarily

means the jury “allocated” the amount of loss attributable to ESG from the total

amount of the lost market value on the Hotel in answering the question on

damages. RLJ Brief at 39-47. It means nothing of the sort.

      RLJ attempts to point to trial counsel’s closing argument as RLJ’s evidence

of apportionment or allocation.     RLJ Brief at 45-46.      Of course, counsel’s


                                        15                            895484.2   402/122
argument is not evidence. Nevertheless, RLJ argues to this Court that in closing

argument at trial, RLJ’s attorney suggested to the jury that they should subtract

20% of the total alleged $6,430,000 total market value loss in determining the

amount of damages to award RLJ in their claim against ESG, which would make

the total approximately $5.1 million. Id. These statements in the closing argument

are not evidence, and there is no evidence in the record supporting this 20%

reduction argument. 5 See In re Day, 342 S.W.3d 193, 197 (Tex. App.—Beaumont

2011, pet. denied); Woods v. State, 301 S.W.3d 327, 332 n.1 (Tex. App.—Houston

[14th Dist.] 2009, pet. ref’d). Counsel for ESG, on the other hand, argued there was

no market value loss attributable to ESG. RR:V.10, 54:13-56:9.6

       Even if there were any evidentiary basis for the lost market value damages

the jury awarded (there is not), RLJ’s assumption that the $700,000 finding reflects

the market value loss resulting from ESG’s alleged breach is just that—an

unsupported assumption. There is no indication at all that the amount the jury

found was actually intended to reflect market value loss attributed to ESG. The

5
 The 20% figure was apparently an arbitrary number chosen by counsel for RLJ. It was not
based on any testimony or documentary evidence admitted at trial.
6
  The only evidence of any alleged lost market value presented at trial was the expert testimony
of Paul Hornsby. As discussed in more detail in Appellant’s Brief, Hornsby’s testimony was
irrelevant and unreliable, and it failed to satisfy the standards for expert testimony under Texas
law. See ESG Appellant’s Brief, pp. 36-56. Because RLJ failed to provide legally sufficient
evidence of its alleged lost market value damages, there can be no recovery of such damages.
See Houston Unlimited, Inc. v. Mel Acres Ranch, 443 S.W.3d 820, 838, (Tex. 2014); McGinty v.
Hennen, 372 S.W.3d 625, 629 (Tex. 2012).


                                               16                                 895484.2   402/122
only conclusion the trial court could have reached (and the conclusion this Court

must now reach), based on the evidence presented, is that the jury was not

persuaded by RLJ’s evidence as to the amount of damages RLJ allegedly incurred

and, as the finder of fact, rendered its verdict accordingly for a lesser amount.

      Because there was no allocation evidence presented, RLJ have no basis to

argue there has been any previous allocation of the alleged damages in this case.

See, e.g., Mobil Oil Corp. v. Ellender, 968 S.W.2d 917, 928 (Tex. 1998) (imposing

burden on plaintiff to show sums received in settlement from other parties were not

subject to settlement credit in order to avoid settlement credit in amount of all

settlement payments). Further, the case law cited by RLJ is actually consistent

with ESG’s position.

      For example, in Robertson v. ADJ Partnership, Ltd., the court held that the

one-satisfaction rule did not apply and the jury charge limited damages to claims

against one party because “nothing in the record” indicated the parties were

“jointly liable for the damages awarded by the jury in this case.” 204 S.W.3d 484,

495 (Tex. App.—Beaumont 2006, pet. denied).              Likewise, in Byer Custom

Builders, the arbitration award at issue was apportioned for specific damages,

including “the driveway, framing, pool deck, windows, and paint.” Byer Custom

Builders v. Franks, 389 S.W.3d 880, 881 (Tex. App.—Houston [14 Dist.] 2012, no




                                          17                             895484.2   402/122
pet.).7 The common damages were to the foundation pad, which the award did not

include. Id.

      RLJ’s reliance on Tesfa v. Stewart is unpersuasive because the issue before

the court does not apply to this case. RLJ Brief at 42. There was no issue of

“segregation” on appeal as described by RLJ. The appellant sought reversal of the

jury’s damages finding based on the assertion that there was no evidence to support

one element of those damages. 135 S.W.3d 272, 274-75 (Tex. App.—Fort Worth

2004, pet. denied). The Second Court of Appeals found that the appellant failed to

make the objection to the trial court. Id. The Hunt v. Ellisor & Tanner case did

not involve any allegations of joint liability and/or indivisible damages either. 739

S.W.2d 933 (Tex. App.—Dallas 1987, pet. denied). The Hunt opinion is in line

with the Fifth Circuit’s decision in GE Capital and does not apply here given

RLJ’s joint liability and indivisible damage allegations.

      The case precedent that does apply supports ESG’s position. The breach of

contract jury question addressed in Galle was nearly identical to the question in

this case. Compare CR:1127 with CR:1213. There, the plaintiffs settled with their

insurance company prior to trial against a mold remediation company for damages

to their home resulting from mold. Galle, 262 S.W.3d at 566-67. The plaintiffs

obtained a verdict against the mold remediation company for negligent

7
  RLJ’s quotation to this case omits with brackets the identification of these apportioned
damages. RLJ Brief at 43-44.
                                           18                              895484.2   402/122
misrepresentation and breach of contract. Id. at 570. The remediation company

sought a settlement credit for the insurance company’s settlement and, when the

trial court denied the request, appealed to this Court. Id. This Court found that the

settlement credit applied under either the negligent misrepresentation or breach of

contract theories because damages for both “were based on pleadings and evidence

of a common harm or injury.” Id. at 574. In Galle, the jury question could not

change the pleadings and evidence the plaintiffs chose to present. The same is true

in this case.

       RLJ misunderstands or misconstrues the application of the one-satisfaction

rule in arguing that ESG somehow received a “double-recovery.” RLJ Brief at 45-

47. After ESG provided evidence, via RLJ’s pleading, of common liability and

damages and the settlement agreements were entered in the record, RLJ bore the

burden to present “evidence allocating the settlement amounts to separate rather

than joint damages.” Galle, 262 S.W.3d at 574. RLJ could not because its

damages were admittedly indivisible. 8 CR:202. RLJ cannot present any actual

evidence that ESG received a “double recovery” because it did not develop or

present evidence at trial to make that determination. That is why the trial court



8
  RLJ’s citation to Duncan v. Cessna Aircraft Co., 665 S.W.2d 414 (Tex. 1984), does not apply
to this case. RLJ Brief at 47. In Duncan, Texas Supreme Court “created a comparative
causation scheme for product liability suits.” See Stewart Title Guar. Co. v. Sterling, 822
S.W.2d 1, 6 (Tex. 1991) (explaining the limited nature of the Duncan holding). No such claims
are at issue here.
                                             19                               895484.2   402/122
correctly applied the full amounts of the EBCO and Terracon settlements to the

verdict against ESG.

IV.   Texas law unequivocally holds that the one-satisfaction rule applies to
      breach of contract claims. (Issue No. A.3)
      Yet again, RLJ asks this Court to create a new rule of law, this time arguing

that Texas’ statutory contribution scheme for tort claims should abolish the

common law one-satisfaction of judgment rule.          RLJ Brief at 48-50.          This

argument contradicts the history of Texas law. The one-satisfaction rule is a

common law creation, separate from any statutory scheme. Roberts v. Grande,

868 S.W.2d 956, 959 (Tex. App. —Houston [14 Dist.] 1994, no pet.) (“even

though not adjudicated as joint tortfeasors, appellee and the real estate agent and

broker cannot be said to have caused separate injuries.”); Lewis v. Exxon Co., 786

S.W.2d 724, 729 (Tex. App.—El Paso 1989, no pet.) (“It is a rule of general

acceptation that an injured party is entitled to but one satisfaction for the injuries

sustained by him . . . although not abolished in situations where Section 33.015

does not apply, [the one-satisfaction rule] has been severely modified in its

application by the comparative negligence statutes”) (citing Bradshaw v. Baylor

Univ., 84 S.W.2d 703, 705 (1935)) (emphasis added); Hunt v. Ziegler, 271 S.W.

936, 938 (Tex. App. 1925, aff’d 280 S.W. 546 (Tex. 1926)) (“when that




                                         20                             895484.2   402/122
satisfaction is made by one of the joint tort-feasors, or by any person . . . it has the

effect of releasing all others who may be jointly, or jointly and severally liable.”).9

       RLJ attempts to evade the extensive case law contradicting its argument by

distinguishing the Texas Supreme Court’s decision in El Paso Natural Gas Co. v.

Berryman, 858 S.W.2d 362, 364 (Tex. 1993). RLJ Brief at 50. RLJ incorrectly

contends that the alter ego issue in that case distinguishes it from other one-

satisfaction cases. Id. To the contrary, Berryman is a textbook example of the

one-satisfaction rule.     The plaintiff in Berryman asserted claims against two

companies, alleging that they were alter egos. 858 S.W.2d at 363. The trial court

entered a directed verdict finding alter ego, which was reversed on appeal and

remanded for trial.      Id.   After the reversal, the plaintiff entered a settlement

agreement with one entity, but reserved its right to sue the other. Id. The Texas

Supreme Court upheld summary judgment on claims against the non-settling entity

because the plaintiff received “full settlement” of his damages from the first entity.

Id. at 364. The one-satisfaction rule precluded any further recovery, regardless of

the alter ego issue. Id.

       Berryman establishes the fallacy of RLJ’s argument that the one-satisfaction

rule no longer exists in the common law. The rule does not have strictly defined

limits on causes of action. It simply precludes more than one recovery for the

9
 See also Lewis v. Taylor, 17 Tex. 57; Andrews v. Harvey, 39 Tex. 123; Alvord v. Waggoner, 32
S.W. 872 (cited in Section II, supra, n.2).
                                             21                               895484.2   402/122
same injury, regardless of the claims at issue. ESG cited extensive case law

refuting RLJ’s argument in Section II, supra. More holdings are below:

             Regions Bank v. Bay, No. 05-12-00531, 2013 Tex. App.
             LEXIS 11811, at *12-13 (Tex. App.—Dallas Sept. 18,
             2013, no pet.) (applying one-satisfaction rule to breach of
             contract claim);

             Emerson Elec. Co. v. American Permanent Ware Co.,
             201 S.W.3d 301, 314-15 (Tex. App.—Dallas 2006, no
             pet.)(“the absence of tort liability does not preclude the
             application of the one-satisfaction rule”);

             AMX Enterps., Inc. v. Bank One, N.A., 196 S.W.3d 202,
             206 (Tex. App.—Houston [1st Dist.] 2006, pet. denied)
             (“Whether the [one-satisfaction] rule applies is
             determined not by the cause of action asserted but by the
             injury sustained”);

             Cunningham v. Haroona, 382 S.W.3d 492, 512-13 (Tex.
             App.—Fort Worth 2012, pet. denied) (“Whether the
             [one-satisfaction] rule applies is determined not by the
             cause of action but by the injury”).

      RLJ lastly argues that “it must be presumed” that Texas Civil Practice and

Remedies Code Chapters 32 and 33 preempt the common law one-satisfaction rule.

RLJ Brief at 50-51. This argument is nonsensical because those statutes do not

apply to breach of contract claims. See Tex. Civ. Prac. & Rem. Code § 32.001(a)

(“This chapter applies only to tort actions”); § 33.002(a) (chapter applicable only

to tort claims and actions under the Texas Deceptive Trade Practice Act). The

plain language of those statutes evidences the legislature’s clear intent to limit the

scope of those statutes to tort and/or DTPA claims.


                                         22                             895484.2   402/122
       RLJ’s analysis of Chapter 33’s legislative history is only relevant within the

confines of the statute—to tort and DTPA claims. RLJ Brief at 52. The statute has

never applied to breach of contract claims and the legislative history does not

address such claims in any way. “The words the Legislature uses should be the

surest guide to legislative intent.” Entergy Gulf States, Inc. v. Summers, 282

S.W.3d 433, 437 (Tex. 2009) (citations omitted). Chapters 32 and 33 simply do

not apply to breach of contract claims and do not preempt the application of the

one-satisfaction rule in this case.

V.     Application of the one-satisfaction rule in this case cannot violate any
       constitutional right to freedom of contract. (Issue No. A.4)
       RLJ next assert that applying the one satisfaction rule to limit recovery of

damages to RLJ’s actual loss would somehow violate the Texas Constitutional

provision prohibiting laws impairing the obligation of contracts. There is no basis

for this assertion.

       The Texas Constitution provides that “[n]o bill of attainder, ex post facto

law, retroactive law, or any law impairing the obligation of contracts, shall be

made.” Tex. Const. art I, § 16. The provision on impairment of contracts (the

“Contract Impairment Prohibition”) is based on Article I, Section 10 of the United

States Constitution, which was placed in the Constitution primarily “to prevent

states from passing laws to relieve debtors of their legal obligation to pay their

debts.” Id., interp. commentary (Vernon 2007).

                                         23                            895484.2   402/122
      This Court recognizes that the Contract Impairment Prohibition “applies to

‘laws,’ which do not include decisions of a court.” Howell v. Texas Workers’

Comp. Comm’n, 143 S.W.3d 416, 444 (Tex. App.—Austin 2004, pet. denied). It is

well established in Texas that “a decision of a court is not a law, within the

provisions of the Constitution relating to impairment of contracts.” Id. (quoting

Amalgamated Transit Union, Local Div. 1338 v. Dallas Pub. Transit Bd., 430

S.W.2d 107, 119 (Tex. Civ. App.—Dallas 1968, writ ref’d n.r.e.)). This is not a

case in which RLJ seeks to challenge a law passed by the Texas Legislature. In

fact, RLJ’s brief readily acknowledges there is no statute covering the one

satisfaction rule in connection with contract claims. RLJ Brief at 50. Accordingly,

the trial court’s decision to apply the one satisfaction rule to this case cannot

violate the Contract Impairment Prohibition. See Howell, 143 S.W.3d at 444

(holding that trial court’s permanent injunction did not violate the Contract

Impairment Prohibition because it was a judicial act rather than a legislative act).

      Further, the Contract Impairment Prohibition “forbids only laws which

operate retroactively on contracts.” Tex. Const. art I, § 16, interp. commentary

(Vernon 2007) (emphasis added). There is also no evidence of any impaired

vested rights. A contractual obligation is impaired under the Contract Impairment

Prohibition only “when a statute is enacted that releases a part of [the] obligation

or to any extent or degree amounts to a material change or modifies it.” Price


                                          24                            895484.2   402/122
Pfister, Inc. v. Moore & Kimmey, Inc., 48 S.W.3d 341, 356 (Tex. App.—Houston

[14th Dist.] 2001, pet. denied). This is not a case in which a new law was passed

after contractual rights vested in favor of RLJ. Instead, it is undisputed the one-

satisfaction rule was in existence long before any contract at issue in this case.

RLJ Brief at 19-20. Therefore, application of the one-satisfaction rule cannot

violate the Contract Impairment Prohibition. See Price Pfister, 48 S.W.3d at 356

(holding that legislative act governing payment of commissions to sales

representatives did not violate Contract Impairment Prohibition because no

previously-existing contractual obligations were impaired by act’s application);

Tex. Const. art I, § 16.

VI.   ESG did not waive or otherwise fail to preserve its right to settlement
      credits. (Issue No. A.5)
      RLJ complain that ESG did not object to RLJ’s failure to properly allocate

damages among multiple defendants and other settling parties. According to RLJ,

ESG is barred from receiving credit for settlement funds RLJ received from other

parties because ESG failed to provide “notice” of ESG’s intent to argue such

allocation was required. There is no merit to this argument.

      As a matter of law, the one-satisfaction rule does not require that the

defendant plead the one-satisfaction rule as an affirmative defense or object to the

submission of a jury question that may lead to a verdict that constitutes a double

recovery. National City Bank of Indiana v. Ortiz, 401 S.W.3d 867, 888 (Tex.

                                        25                            895484.2   402/122
App.—Houston [14 Dist.] 2013, pet. denied); Dalworth Restoration, Inc. v. Rife-

Marshall, 02-12-00381-CV, 2014 Tex. App. LEXIS 5271 at *26 (Tex. App.—Fort

Worth May 15, 2014, no pet.). RLJ’s waiver argument does not apply here.

      Further, the obvious problem with RLJ’s waiver argument is that it is RLJ’s

burden – not ESG’s – to allocate RLJ’s alleged damages and recover from ESG

only those damages actually caused by ESG’s alleged breach. This Court and

other Texas courts have long recognized that a plaintiff must show as a necessary

element of its breach of contract claim that the defendant’s breach caused the

plaintiff’s injuries. See Snyder, 860 S.W.2d at 695 (“When a cause of action is

based on breach of contract, the plaintiff must show that . . . the defendant

breached a duty under the contract, and that the plaintiff sustained damages as a

result.”); see also Marquis Acquisitions, Inc. v. Steadfast Ins. Co., 409 S.W.3d 808,

813 (Tex. App.—Dallas 2013, no pet); B&W Supply, Inc. v. Beckman, 305 S.W.3d

10, 16 (Tex. App.—Houston [1st Dist.] 2009, pet. denied).

      ESG is not required to provide notice to RLJ about the requirements of

RLJ’s causes of action, nor is ESG obligated to point out RLJ’s failure to provide

evidence supporting the necessary elements of RLJ’s causes of action prior to or

during trial. See All Saints Catholic Church v. United Nat’l Ins. Co., 257 S.W.3d

800, 802-03 (Tex. App.—Dallas 2008, no pet.); Allison v. Fire Ins. Exch., 98

S.W.3d 227, 258 (Tex. App.—Austin 2002, no pet.). RLJ cannot shift their burden


                                         26                            895484.2   402/122
of proof on causation and damages to ESG by arguing RLJ’s burden only exists if

ESG makes certain objections to RLJ’s pleadings.

       Equally unavailing is RLJ’s assertion that ESG was required to object to the

jury charge because there was purportedly no reference to allocation of damages in

the questions and instructions submitted to the jury. First, there is no requirement

for a defendant to make any such objections in order to raise the one satisfaction

rule. See Ortiz, 401 S.W.3d at 888 (holding defendant was not required to “object

to the submission of more than one acceptable measure of his damages” or

“request a limiting instruction” as a prerequisite to application of the one-

satisfaction rule).

       Second, there was nothing wrong with the form of the damage question

submitted to the jury. It properly asked the jury to decide the amount of damages

“that resulted from” ESG’s alleged breach of contract. CR:1127. The problem is

that RLJ did not offer any evidence to answer that question, instead offering only

irrelevant and unreliable expert testimony concerning a loss in market value

allegedly resulting from the collective performance of numerous contractors and

subcontractors who worked on the Hotel. See Appellant’s Brief, pp. 36-56. ESG

properly objected to this inadmissible expert testimony, and is entitled to a take-

nothing judgment based on RLJ’s failure to prove up market value damages.




                                        27                            895484.2   402/122
RR:V.9, 143:14-145:19; 153:6-11; CR:1130-37; Houston Unlimited, Inc. v. Mel

Acres Ranch, 443 S.W.3d 820, 837-38 (Tex. 2014).10

         Additionally, there is no basis for RLJ’s assertion that ESG has somehow

“waived” the one-satisfaction rule by purportedly failing to plead it as an

affirmative defense.        Even though ESG was not required to plead the one-

satisfaction rule, ESG’s pleadings, construed liberally as required under Texas

law, 11 did provide notice of ESG’s intent to reduce any damage award based on

sums received by other settling parties. In ESG’s Second Amended Answer, ESG

specifically alleged it is entitled to “a credit for any settlement Plaintiffs receive

from any other person or entity.” CR:49. Although it was not required to do so,

ESG affirmatively asserted (1) “Plaintiffs’ alleged injuries and damages, if any,

resulted, if at all, from conditions unrelated to any act, omission or conduct of

[ESG]” and (2) “Plaintiffs’ alleged injuries and damages, if any, were caused, if at

all, in whole or in part by the acts or omissions of others for whose conduct [ESG

is] not legally responsible.” CR:48. These allegations are more than enough to put

RLJ on notice of ESG’s intent to rely on the one satisfaction rule. See Bullock v.

Regular Veterans Ass’n., 806 S.W.2d 311, 314 (Tex. App.—Austin 1991, no pet.).



10
  No objection is required to preserve error when expert testimony is speculative or conclusory
on its face. Coastal Transport Co. v. Crown Cent. Petroleum Corp., 136 S.W.3d 227, 233 (Tex.
2004).
11
     See Horizon/CMS Healthcare Corp. v. Auld, 34 S.W.3d 887, 897 (Tex. 2000).
                                               28                                895484.2   402/122
       Finally, RLJ’s laches argument fails because laches requires proof of

unreasonable delay asserting a claim and a detrimental change of position by the

party asserting laches because of the delay. In re Laibe Corp., 307 S.W.3d 314,

318 (Tex. 2010).       ESG’s pleadings clearly provide notice that ESG will seek a

reduction in any damages based on settlement amounts received by RLJ from other

parties and that ESG will object to the payment of any damages caused by other

contractors and subcontractors on the Hotel project. See Ortiz, 401 S.W.3d at 888;

CR:48-49. Laches also applies only to equitable rights, and cannot be used in

connection with RLJ’s claims to enforce purported contractual rights. See Wayne

v. A.V.A. Vending, Inc., 52 S.W.3d 412, 415 (Tex. App.—Corpus Christi 2001, pet.

denied). Simply put, the doctrine of laches has nothing to do with this case, and

cannot be used to enable RLJ to disregard the one-satisfaction rule. 12

VII. The trial court properly excluded attorney’s fees attributable to EBCO
     and Terracon from the fee award issued to RLJ. (Issue No. B)
       In their last issue, RLJ argue, without any authority, that if the one-

satisfaction rule applies in this case, RLJ is entitled to additional attorney’s fees it

incurred to prosecute its claims against EBCO and Terracon. 13             RLJ Brief at 59-

62. RLJ argues that the trial court erred in failing to award RLJ fees incurred in

12
   Further, laches is an affirmative defense that must be specifically pleaded, and there is no
reference to it in any of RLJ’s pleadings. Tex. R. Civ. P. 94; Knesek v. Witte, 754 S.W.2d 814,
816 (Tex. App.—Houston [1st Dist.] 1988, writ denied); CR:184-218.
13
   As established in ESG’s opening brief on its appeal, RLJ are not entitled to any fees under
Texas Civil Practice and Remedies Code Section 38.001 because they are not prevailing parties
as defined by the statute and the Texas Supreme Court. See ESG Appellant’s Brief at 13-17.
                                              29                               895484.2   402/122
prosecuting its claims against EBCO and Terracon because those claims required

proof of the same facts as their claims against ESG. RLJ Brief at 59-60. However,

RLJ did not make this argument to the trial court. See 3SCR1-16; Safety, 160

S.W.2d at 245. Texas law only allows for recovery of unsegregated fees where

there is evidence that the legal services provided advanced all claims at issue and

are so intertwined that they need not be segregated. Tony Gullo Motors I, L.P. v.

Chapa, 212 S.W.3d 299, 313-14 (Tex. 2006). RLJ provided no such evidence

regarding the EBCO and Terracon fees it now seeks on appeal. 3SCR1-16.

       RLJ did argue at the trial level that it was entitled to fees attributable to

claims against EBCO and Terracon because, if the settlement credits are upheld,

there must be a finding of joint and several liability, which would entitle RLJ to

fees jointly and severally as well.              3SCR1-16.        However, RLJ provides no

authority for this argument and there is none. 14 Further, RLJ cannot recover fees

attributable to those claims because RLJ expressly settled and released their claims

for such fees. RLJ’s settlement agreement with EBCO states that all “fees, costs

and expenses related to this lawsuit or the claims related to the investigation and/or

defense or pursuit of claims related to the Project will be paid by the party

incurring the same.”          CR:1472.       Likewise, RLJ’s settlement agreement with


14
  As established in Section II, supra, a finding of joint and several liability is not required for the
application of the one-satisfaction rule. RLJ failed to identify any authority supporting this
argument because it is not a part of Texas law.
                                                  30                                  895484.2   402/122
Terracon states that RLJ “shall be solely responsible for all of its own attorneys’

fees and expenses incurred in connection with the Lawsuit.” CR:1479-80. RLJ’s

release of their claims for these fees precludes any recovery from ESG.

      RLJ offer no authority to support their position that they are entitled to

recover fees from ESG related to other parties or other claims. Accordingly, the

trial court did not err in excluding such fees.

                                       PRAYER

      WHEREFORE,          PREMISES       CONSIDERED,      Cross-Appellee         Elness,

Swenson, Graham Architects, Inc. prays that this Court deny relief on the issues

submitted by Cross-Appellants RLJ II-C Austin Air, LP, RLJ II-C Austin Air

Lessee, LP, and RLJ Lodging Fund II Acquisitions, LLC in their entirety; and for

general relief.




                                           31                         895484.2    402/122
     Respectfully submitted,

        /s/ Weston M. Davis
     Gregory N. Ziegler
     Texas Bar No. 00791985
     GZiegler@MacdonaldDevin.com
     Weston M. Davis
     Texas Bar No. 24065126
     WDavis@MacdonaldDevin.com
     Steven R. Baggett
     Texas Bar No. 01510680
     SBaggett@MacdonaldDevin.com

     MACDONALD DEVIN, PC
     1201 Elm Street
     3800 Renaissance Tower
     Dallas, Texas 75270
     214.744.3300 telephone
     214.747.0942 facsimile

     Attorneys for Cross-Appellee
     Elness, Swenson, Graham
     Architects, Inc.




32                             895484.2   402/122
                             CERTIFICATE OF SERVICE

        The undersigned attorney certifies that a true and correct copy of the

foregoing Cross-Appellee’s Brief and was served on all counsel of record in

accordance with the Texas Rules of Appellate Procedure via eFiling, on June 11,

2015:

        Michael Huddleston
        Stephen Gibson
        Benton T. Wheatley
        Tracy L. McCreight
        Jessica C. Neufeld
        MUNSCH HARDT KOPF & HARR, P.C.
        401 Congress Ave, Suite 3050
        Austin, Texas 78701
        512.391.6100
        512.391.6149 fax

                                                 /s/ Weston M. Davis
                                               Weston M. Davis


                           CERTIFICATE OF COMPLIANCE

        Pursuant to Tex. R. App. P. 9.4, I hereby certify that this petition contains

7,580 words. This is a computer-generated document created in Microsoft Word,

using 14-point typeface for all text, except for footnotes which are in 12-point

typeface. In making this certificate of compliance, I am relying upon the word

count provided by the software used to prepare the document.

                                                 /s/ Weston M. Davis
                                               Weston M. Davis


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