                                                  United States Court of Appeals
                                                           Fifth Circuit
                                                          F I L E D
                    In the                                  July 28, 2004
United States Court of Appeals                         Charles R. Fulbruge III
          for the Fifth Circuit                                Clerk

            ___________________

                m 04-40060
              Summary Calendar
            ___________________




 FALLON T. GORDON, MEDICAL DOCTOR;
  JOHN T. HUMBLE, MEDICAL DOCTOR,

                                   Plaintiffs-
                                   Counter Defendants-
                                   Appellees,

                   VERSUS

            SOUTHTRUST BANK,

                                   Defendant-
                                   Counter Claimant-
                                   Appellant.



            ___________________

  Appeal from the United States District Court
       for the Eastern District of Texas
               m 1:02-CV-657
            ___________________
Before SMITH, DEMOSS, and STEWART,                         believed was a loan to the corporation. Upon
  Circuit Judges.                                          his arrival, however, he was surprised to learn
                                                           that he was signing papers for a personal loan.
JERRY E. SMITH, Circuit Judge.*                            Pressed for time and on his way to a medical
                                                           conference in New York, Humble decided to
   SouthTrust Bank appeals an adverse judg-                sign the paperwork, get the check upon his
ment in a breach of contract suit. The bank                return, and then decide whether to lend the
also appeals the denial of its renewed motion              $400,000 to Las Lomas or return the check.
for judgment as a matter of law (“j.m.l.”) or
for new trial. We affirm.                                     Two days later, Gordon was informed be-
                                                           tween surgeries that an emergency at the bank
                        I.                                 required his immediate presence. Under the
   In 1997, plaintiff Drs. Fallon Gordon and               impression that his signature, as a director of
John Humble decided to invest in a corpora-                the corporation, was needed to sign a loan, he
tion that purported to be building a hospital,             went to the bank. He too was surprised to
Las Lomas Medical Center, S.A. de C.V.                     learn that the loan was for him personally rath-
(“Las Lomas”), in Honduras. Armando Mon-                   er than for the corporation. Unable to reach
cada, a physician with whom both doctors                   the executive vice president of the bank, Steve
worked, represented to them that he was the                Gantham, Gordon contacted Moncada, who
president of the corporation and that Humble               assured him the loan was not personal, but
and Gordon, as investors, were directors. Be-              corporate. Reluctantly, Gordon signed the
fore November 1998, Humble had already in-                 paperwork, figuring that if it did turn out to be
vested nearly $420,000, and Gordon $300,-                  a personal loan, he would simply return the
000, entitling them to three- and four-percent             money once he received the check.
shares, respectively. In October 1998, Humble
and Gordon were informed that hurricane                        Both Contracts consisted of a Promissory
Mitch had destroyed substantial parts of the               Note, Disbursement Instructions, and a Dis-
center, and Las Lomas needed approximately                 claimer of Oral Agreements. Both notes stipu-
$2,000,000 to complete construction.                       lated that, “for the value received, Borrower
                                                           promises to pay to the order of Lender . . . the
    In November of that year, Humble and                   principal amount [$400,000] . . . plus interest
Gordon executed individual promissory notes                on the unpaid principal balance at the rate and
to the bank (then operating as First Bank &                in the manner described below.” Pursuant to
Trust) for $400,000 each. The loan Contracts               these notes, both plaintiffs agreed to make
were signed by plaintiffs under unusual cir-               twenty-four monthly payments of interest on
cumstances. On November 18, 1998, Humble                   the principal. At the end of the twenty-four
received a telephone call requesting that he go            month term, each was to begin making thirty-
to the bank to sign loan documents for what he             five monthly payments on the principal,
                                                           amounting to approximately $12,506.63 each,
                                                           including interest.
   *
     Pursuant to 5TH CIR. R. 47.5, the court has
determined that this opinion should not be pub-               A merger clause was included in the Prom-
lished and is not precedent except under the limited       issory Note, and the Disclaimer provided that
circumstances set forth in 5TH CIR. R. 47.5.4.

                                                       2
no prior, contemporaneous, or subsequent oral              Gordon received no notice for interest in
agreements could modify the obligations of the         the second month and was assured by Monca-
Contract. The Disbursement Instructions                da that the corporation would pay it. But, in
provided, respecting the obligation of the bank        the third month, Gordon was asked by Monca-
“to disburse” proceeds of the Promissory Note          da to resume payments on the interest, main-
in the form of a cashier’s check “in the follow-       taining that all the money had been spent
ing manner: PROCEEDS PAID DIRECTLY                     building the hospital and that the corporation
TO CUSTOMER $400,000.00.” Each Con-                    would not be able to make payments until the
tract identified Gordon and Humble as the              hospital opened and began to generate cash
“customer,” respectively.                              flow.

   The bank issued cashier’s checks in the loan           By late summer 1999, Humble and Gordon
amount to each plaintiff. The bank’s loan              were growing wary of Moncada. In October
secretary, Graff, made those funds payable to          1999, while attending a stockholders’ meeting
Moncada and deposited them in his business             in Honduras, both doctors learned that their
account. The bank issued a check payable to            stock was worthless under Honduran law.
Las Lomas (with Moncada as the remitter) for           Distressed, they tried to salvage their invest-
$1,900,000, combining Gordon’s and Hum-                ment and create a modern, American-style
ble’s loan proceeds with the loan proceeds of          hospital for the country. They cont inued to
five other doctors. The check was deposited            make interest payments on the loan from the
into Las Lomas’s account at Banco Atlantida            bank while attempting, along with the other
in Tegucigalpa, Honduras, on November 23,              shareholders, to salvage the project.
1998.
                                                          By spring 2001, the bank (which had been
   Confused by these developments, Gordon              wholly purchased by SouthTrust Bank in the
contacted Moncada, who continued to main-              Fall of 1999) began demanding that Gordon
tain that the loans were for the corporation.          and Humble begin to pay on the principal or to
Because, however, the corporation was unable           enter into other terms for extension. Ulti-
to make the interest payments on these loans,          mately, in hopes of avoiding a legal dispute,
Moncada requested that Gordon make the first           both men entered into Extension Agreements
month’s interest payment. Gordon did so.               and subsequently entered into a second, and
                                                       even a third, each. They contend that each
    Humble, on the other hand, was assured by          Extension Agreement contained a provision al-
Moncada that the interest notice was a mis-            lowing them to sue on the ground that they
take, so Humble did not make the first month’s         had never received the $400,000.1 Pursuant to
payment, and the interest was paid by the cor-
poration. When Humble received notice for an
interest payment in the second month, Mon-                1
                                                             The last of the three Extension Agreements
cada successfully convinced him to make                reads, in pertinent part, that “. . . execution of this
payments for the corporation for the remainder         Extension by “Bor rower” does not and shall not
of the year, claiming Las Lomas could not af-          compromise, diminish, waive, or release “Borrow-
ford to do so.                                         er’s” alleged defenses to such claim, including but
                                                       not limited to, the defense that “Borrower” never
                                                                                                (continued...)

                                                   3
the final two Extension Agreements, both were              be upheld unless the facts and inferences point
obligated to make their first principal payments           so strongly and overwhelmingly in favor of
of approximately $12,168.77 each, including                one party that reasonable men could not arrive
interest, in August 2002. Neither made these               at any verdict to the contrary. W. Co. of N.
payments, and the bank declared the Promis-                Am. v. United States, 699 F.2d 264, 276 (5th
sory Notes in default.                                     Cir. 1983).

                      II.                                                       IV.
   Humble and Gordon sued for a declaratory                   The bank appeals the final judgment and the
judgment that they are not liable under the                denial of the motion for j.m.l. We affirm.
Promissory Notes because of want of consid-
eration. They also sued for breach of contract                                     A.
for the failure to disburse $400,000 each to                  Ambiguity in a contract is a question of law
them pursuant to the terms of the Contract.                for the court to decide by looking at the con-
The bank counterclaimed, seeking money dam-                tract as a whole, in light of the circumstances
ages under the Promissory Notes.                           present when the contract was entered. See
                                                           Coker v. Coker, 650 S.W.2d 391, 394 (Tex.
   The bank unsuccessfully moved for sum-                  1983). If the contract is found to be ambigu-
mary judgment, and the suit proceeded to trial.            ous, its interpretation is left to the jury. Id.
The bank’s motion for judgment as a matter of              Having determined that the Contracts were in-
law (“j.m.l.”) at the close of plaintiffs’ case            ternally inconsistent, the district court found as
was denied. The jury found that the bank had               a matter of law that the Contracts were am-
breached the Contracts, and plaintiffs were                biguous and submitted the cause to the jury.
awarded the amount of interest payments
made by each between December 1998 and                         The dispute is whether the bank breached
July 2002. Plaintiffs were granted reasonable              the Contracts’ provision for disbursement.
attorneys’ fees pursuant to TEX. CIV. PRAC. &              The bank maintains that the Promissory Notes
REM. CODE § 38.001, and prejudgment and                    were executed appropriately, that the Con-
post-judgment interest of 6% and 1.36%,                    tracts were not breached, and ipso facto, that
respectively.                                              plaintiffs owe the bank monetary damages for
                                                           recovery on the principal. Plaintiffs claim
                       III.                                there was no such oral agreement and that the
   We review the district court’s legal conclu-            terms of the Contracts required that the loans
sions, including its interpretation of contracts,          be paid directly to them. As a result, plaintiffs
de novo. See Taita Chem. Co. v. Westlake                   argue that the Contracts were materially
Styrene Corp., 246 F.3d 377, 385 (5th Cir.                 breached by the bank, absolving them of
2001). We apply a sufficiency of the evidence              liability.
standard in reviewing jury decisions. See
Chem. Distribs., Inc. v. Exxon Corp., 1 F.3d                  Finding no error of law with respect to the
1478, 1483 (5th Cir. 1993). The verdict must               district court’s decision to declare the contract
                                                           ambiguous, we proceed to a review of the
                                                           jury’s findings. There is sufficient evidence to
   1
    (...continued)                                         support the finding that the bank breached the
received the proceeds reflected in the Note . . . .”

                                                       4
terms of its agreements with Gordon and                 version of plaintiffs’ funds and was in breach
Humble with respect to its disbursement of the          of the Contracts.
checks.
                                                            Secondly, there was sufficient evidence for
    Firstly, read alone, the terms of the Con-          a jury to find that there was no oral agreement
tracts support the jury’s finding. The plain            that clarified the “ambiguous” terms of dis-
meaning of the Contracts best supports the              bursal. The district court, in ruling the Con-
interpretation accorded to them by the plain-           tracts to be ambiguous, found that the alleged
tiffs. The Disbursement Instructions provide            oral agreement did not, as a matter of law,
that “Borrower hereby instructs Lender to dis-          necessarily contradict the terms of the Con-
burse the initial or complete proceeds from the         tracts, because the Disbursement Instruction
Promissory Note in the following manner:                was so vague as to encompass bot h sides’
PROCEEDS PAID DIRECTLY TO CUS-                          interpretations. Because the alleged oral
TOMER $400,000.” “To disburse” suggests                 agreement did not contradict the plain meaning
something to be done in the future, and evi-            of the Contracts, it could not automatically be
dence at trial suggested that neither Humble            excluded under the Disclaimers of Oral Agree-
nor Gordon had received the loans when the              ment signed by both sides.
Notes were signed. Payment “directly to
customer” further indicates that the checks                Relying on testimony, the jury found that
were to be made out to Humble and Gordon,               the bank’s version lacked credibility. Grant-
respectively.                                           ham’s testimony at deposition and at trial con-
                                                        tained enough inconsistencies that a jury might
   Although the checks were indeed made out             easily find the existence of an oral agreement
to plaintiffs, instead of being given directly to       incredible. Moreover, Grantham’s testimony
them, they were deposited into Moncada’s                conflicts in several important respects with
business account. Evidence indicates, there-            Graff’s, casting further shadow on the bank’s
fore, that neither Gordon nor Humble was ever           claim. Additionally, Humble, Gordon, and
in direct control of the loan, and they had not         even Moncada flatly stated that no such oral
been “paid directly.”                                   agreement existed, and the bank was unable
                                                        successfully to impeach that testimony.
    The bank argues that this arrangement was
per an oral agreement made by the parties at                Thirdly, the bank’s behavior contradicted
an earlier date. The merger clause and Dis-             its own internal policies. A reasonable jury
claimer of Oral Agreements in each of the               could very well be disturbed by the bank’s pro-
Contracts represent, however, that the entirety         cess. Neither Gordon nor Humble had done
of the agreements consisted of the Promissory           business with the bank before, and neither
Notes themselves. In fact, the Disclaimer ex-           owned accounts there. Neither requested a
plicitly notes “THERE ARE NO UNWRIT-                    personal loan, and both were called in on
TEN ORAL AGREEMENTS BETWEEN                             “emergencies” and asked to sign the papers in
THE PARTIES.” Reading the Contracts in                  a rush. Neither was informed that the checks
their plainest meaning supports the jury’s find-        would be made out to him but then directly
ing that the bank’s disbursal of the funds to           signed over to Moncada and deposited into his
Moncada constituted an unauthorized con-                corporate account. Grantham’s deposition


                                                    5
testimony amounts to a virtual admission of             od of time is demonstrative of a waiver of their
the bank’s failure to comport with its own              claim. Evidence that they continued to make
policies regarding disbursal, and the evidence          those payments based on Moncada’s misrepre-
is sufficient for the jury to have found that the       sentations and a desire to avoid costly litiga-
bank acted inappropriately.                             tion is sufficient to support the jury’s finding
                                                        that interest payments did not bar plaintiffs’
    Finally, the terms of the Extension Agree-          cause.
ments do not preclude the jury’s findings in
light of partial performance on the part of the                                 B.
plaintiffs. Partial performance is an exception             Under Texas law, “reasonable attorneys
to the statute of frauds whereby an oral agree-         fees from an individual or corporation, in ad-
ment may be enforced if a failure to do so              dition to the amount of a valid claim and costs,
would amount to virtual fraud. Exxon Corp.              may be awarded if the claim is for . . . (8) an
v. Breezevale Ltd. 82 S.W.3d 429, 439 (Tex.             oral or written contract.” TEX. CIV. PRAC. &
App.SSDallas 2002, pet. ref’d). For partial             REM. CODE § 38.001. To recover, the party
performance to prove contractual obligation,            (1) must be represented by an attorney; (2)
the alleged performance must be “unequivo-              must present the claim to the opposing party
cally referable to the agreement and corrobo-           or to a duly authorized agent of the opposing
rative of the fact that a contract was actually         party; and (3) must not have received payment
made.” Conner v. Lavaca Hosp. Dist., 267                for the just amount owed before expiration of
F.3d 426, 436 (5th Cir. 2001).                          the thirtieth day after the claim is presented. §
                                                        38.002.
    With respect to the preservation of plain-
tiffs’ claims, the jury analyzed the Extension              The bank argues that plaintiffs are not en-
Agreement signed by the doctors and quite               titled to attorney’s fees because they did not
reasonably concluded that it was written to             seek affirmative relief in enforcement of the
preserve all of their defenses to the bank’s            Contracts.2 This flatly contradicts court rec-
claims, including their right to sue for breach         ords. Plaintiffs’ original petition contains two
of contract. Plaintiffs never acknowledge re-           causes of action: a declaratory judgment and,
ceipt of money or the fulfillment of the Con-           if the Contracts are ruled enforceable, a breach
tracts. Especially noteworthy is their insis-           of contract claim seeking damages. With the
tence that the term “Borrowers” be placed in            delaratory judgment denied, plaintiffs instead
quotation marks in the Extension Agreements.            brought a breach of contract suit. Therefore,
The Extension Agreements, in explicitly stat-           as claimants in a suit in law rather than in equi-
ing that they waived none of their rights, do           ty, they are eligible for attorney’s fees.
not constitute adequate evidence that plaintiffs
assumed their contractual duties by undertak-
ing these new agreements.
                                                           2
                                                             To recover attorney’s fees under § 38.001, a
   The doctors’ regular monthly payments on             party who seeks only to defend itself against an-
the interest cannot be considered to bind them          other’s contract claim cannot recover. See Ener-
to the terms of the Contracts, because no ac-           gen Res. MAQ, Inc v. Dalbosco, 23 S.W.3d 551,
tion on the part of the doctors during that peri-       558 (Tex. App.SSHouston [1st Dist.] 2001, pet.
                                                        denied).

                                                    6
   The bank also contests plaintiff’s present-            trict court was correct in finding that interest
ment of the claim within thirty days. Adequate            began to accrue on the date the lawsuit was
presentment for plaintiffs’ monetary claims can           filed, rather than on October 21, 2002 (when
be found in the Extension and Amendment                   the bank claims it first became aware of the
Agreements. A demand letter sent to the bank              breach of contract claim), because the original
dated June 3, 2003, also presents the claim for           petition includes t he claim as well as the re-
fees. Both these claims were presented within             quest for declaratory judgment. The award
the thirty days before trial established by               was not excessive.
§ 38.0001. Thus, as a matter of law, plaintiffs
were eligible for relief under § 38.001.                                           D.
                                                             The bank contends that its substantive right
    Mindful that it is within the district court’s        to a trial on all the issues was abridged by the
discretion to award attorney’s fees, we may re-           exclusion of testimony and evidence regarding
view the reasonableness of those fees. B-M-G              plaintiffs’ separate trial against Moncada. We
Inv. Co. v. Continental/Moss Gordin, Inc.,                review evidentiary rulings for abuse of discre-
437 F.2d 892, 893 (5th Cir. 1971). The stan-              tion. See In re Air Crash Disaster at New
dard of review is abuse of discretion. See                Orleans, La., 795 F.2d 1230, 1233 (5th Cir.
Johnson v. Ga. Highway Express, Inc., 488                 1986). The district court did not abuse its
F.2d 714, 717 (5th Cir. 1974). In determining             discretion in excluding the evidence, because
reasonableness, a court should, among other               the bank was given a jury trial on all the issues.
factors, consider the customary fee for similar           The trial against Moncada regarded different
work in the community. Id. at 718. Two pri-               issues, although it arose from the same set of
mary attorneys represented plaintiffs, one                circumstances and facts. Plaintiffs’ claims
charging $240 per hour and the other $175.                against Moncada dealt with his allegedly
Evidence was presented that plaintiffs’ choice            fraudulent actions regarding the stock that was
of lawyers was appropriate, given the difficulty          sold to the doctors and not regarding the loans
of the case. The district court, after hearing            to plaintiffs.
extensive testimony and with years of experi-
ence, determined that reasonable fees would                  AFFIRMED.
be $200 and $175 per hour, respectively.
Both these fees are lower than that suggested
by a prominent and well-respected local law-
yer, who testified that $225 was reasonable.
There is no evidence to suggest that the court
acted inappropriately in awarding fees.

                       C.
   There also is sufficient evidence to support
the award of prejudgment interest.3 The dis


   3                                                         3
    Contrary to the opinion of the bank’s counsel,             (...continued)
we review prejudgment interest for abuse of dis-          cretion, not de novo. See Reyes-Mata v. IBP, Inc.,
                                     (continued...)       299 F.3d 504, 507 (5th Cir. 2002).

                                                      7
