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Click here for the full text of this decision FACTS:In January 2000, attorney Larry McDougal filed suit against Saramma Thottumkal for stopping payment on a check written for legal services rendered by McDougal. McDougal recovered a final judgment in his favor. Thereafter, on May 4, 2005, the Thottumkals filed a separate suit against McDougal in district court alleging that: 1. their adult son wrote the check subject of the 2000 lawsuit without their consent; 2. McDougal committed perjury in the 2000 lawsuit when he testified that he provided legal services to Saramma Thottumkal, when in fact such services were performed for the Thottumkals’ adult son; and 3. McDougal used scare tactics, coercion and forceful means to pressure Saramma to pay the check. On May 16, 2005, McDougal wrote a letter to the Thottumkals informing them that their suit was frivolous and time-barred. McDougal gave the Thottumkals 10 days to withdraw the lawsuit; otherwise McDougal said that he would seek sanctions. The Thottumkals did not respond to the letter. On May 25, 2005, McDougal filed his answer. Two days later he filed a motion for sanctions pursuant to Texas Rule of Civil Procedure 13 and Chapters 9 and 10 of the Texas Civil Practice & Remedies Code. McDougal also filed a no-evidence motion for summary judgment and requested attorneys’ fees for the preparation and defense of the suit. On Aug. 11, 2005, the Thottumkals sent a letter to the court requesting that their suit be withdrawn. The trial court subsequently granted McDougal’s motion for sanctions and his no-evidence motion for summary judgment. The judgment awarded McDougal $5,536.50 on two grounds: “(1) relief sought in defendant’s motion for sanctions under section 10 of the Texas Civil Practice and Remedies Code; and (2) relief sought in defendant’s motion for summary judgment for defending against the instant lawsuit.” On appeal, the Thottumkals argued that the trial court abused its discretion, because insufficient evidence supported the imposition of sanctions and no legal basis supported the award of attorneys’ fees to McDougal for defending against the suit. HOLDING:Affirmed as modified. The court confined its analysis to sanctions available under Chapter 10 of the code. Section 10.004(a) states: “[a] court that determines that a person has signed a pleading or motion in violation of [s]section 10.001 may impose a sanction on the person, a party represented by the person, or both.” Moreover, �10.004(a) provides: “The signing of a pleading or motion as required by the Texas Rules of Civil Procedure constitutes a certificate by the signatory that to the signatory’s best knowledge, information, and belief, formed after reasonable inquiry: “(1) the pleading or motion is not being presented for any improper purpose, including to harass or to cause unnecessary delay or needless increase in the cost of litigation; “(2) each claim, defense, or other legal contention in the pleading or motion is warranted by existing law or by a non-frivolous argument for the extension, modification, or reversal of existing law or the establishment of new law; “(3) each allegation or other factual contention in the pleading or motion has evidentiary support or, for a specifically identified allegation or factual contention, is likely to have evidentiary support after a reasonable opportunity for further investigation or discovery; and “(4) each denial in the pleading or motion of a factual contention is warranted on the evidence or, for a specifically identified denial, is reasonably based on a lack of information or belief.” The court noted that the trial court found that the Thottumkals did not exercise due diligence and failed to make a reasonable inquiry and examination “into the validity of their claims” and “any potential bars” including “statute of limitations, res judicata, and/or collateral estoppel.” Had the Thottumkals made a reasonable inquiry before filing suit, the court stated, they would have discovered that their claims were barred by statute of limitations, res judicata or collateral estoppel from the 2000 suit. McDougal, the court stated, produced adequate evidence rebutting the presumption that the Thottumkals’ petition was filed in good faith. McDougal also produced sufficient evidence that the Thottumkals failed to conduct a reasonable inquiry into the validity of their claims prior to filing suit, which would have revealed that it was groundless. Applying the appropriate standard of review, the court held that the monetary sanction imposed on the Thottumkals was tailored to remedy the prejudice caused to McDougal. Moreover, the court found that the the award of $5,536.50 was proper in light of evidence that McDougal incurred that amount, including reasonable attorneys’ fees, defending against the suit. In their second issue, the Thottumkals alleged that the trial court abused its discretion in awarding attorneys’ fees based on McDougal’s motion for summary judgment for defending against the suit, because such award was unsupported by any statute, rule or contractual authority. The court agreed with the Thottumkals. No statute, the court stated, authorized McDougal’s recovery of attorneys’ fees for defending against the suit. Because McDougal did not produce evidence of a contractual right to attorneys’ fees, and there was no statute authorizing attorneys’ fees for defending against a claim, the court found that the trial court abused its discretion in awarding attorneys’ fees to McDougal for defending against the Thottumkals’ suit. Accordingly, the court modified the judgment to delete the award of attorneys’ fees as requested in defendant’s motion for summary judgment and reformed the judgment to reflect that the award in the amount of $5,536.50 was awarded to McDougal for sanctions under Chapter 10. OPINION:Hedges, C.J.; Hedges, C.J., and Fowler, J. CONCURRENCE:Edelman, J. “The parties have cited, and we have found, no Texas appeals court opinion addressing which party has the burden of proof under section 10.002(c) on the issue of due diligence.”

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