Mbm Financial Corporation, Petitioners v. the Woodlands Operating Company, L.p., Respondent

Summary

The Texas Supreme Court reversed a judgment awarding The Woodlands Operating Company $1,000 in damages and $145,091.59 in attorney’s fees against MBM Financial Corporation in a dispute over terminated copier leases. The Court held no evidence supported the $1,000 award as either actual or nominal damages — $1,000 being far too large to be a “trifling sum” — and rendered a take-nothing judgment on the breach-of-contract claim rather than remanding. Because chapter 38 fee recovery requires both prevailing on a breach-of-contract claim and recovering damages, and because fraud, bad-faith allegations, and the Declaratory Judgments Act cannot supply fees where contract fees are impermissible, the fee award fell with the damages award. The Court simultaneously confirmed that declaratory relief was proper in this matured-breach, terminated-relationship setting but announced that a party cannot use the Declaratory Judgments Act as a vehicle to obtain otherwise impermissible attorney’s fees.