Elness Swenson Graham Architects, Inc. v. RLJ II-C Austin Air, LP
This case involves an appeal and cross-appeal concerning a breach of contract suit related to defects in the design and construction of a hotel. Appellant Elness Swenson Graham Architects, Inc. (Elness), the architectural firm, appealed a judgment in favor of appellees RLJ II-C Austin Air, LP; RLJ II-C Austin Air Lessee, LP; and RLJ Lodging Fund II Acquisitions, LLC (collectively, RLJ), the hotel owner. RLJ had acquired the contract rights through an assignment from a previous owner and had settled with other defendants, EBCO (general contractor) and Terracon (geotechnical engineering firm). The jury found Elness liable and awarded RLJ $785,000 in damages. The trial court applied settlement credits and attorney's fees, resulting in a net award to RLJ. On appeal, Elness's issues regarding RLJ's capacity to sue, evidence admissibility, jury charge, and damages sufficiency were overruled. However, the appellate court reversed the trial court's judgment regarding attorney's fees. It ruled that after applying the one-satisfaction rule and the $1,170,000 in settlement credits from other defendants, RLJ did not actually recover any damages from Elness. Consequently, RLJ was not a "prevailing party" entitled to attorney's fees under Texas law. The court reversed the trial court’s final judgment and rendered a judgment that RLJ take nothing.