Winners win and losers lose

In Brinson Benefits v. Hooper (July 7, 2016), the Dallas Court of Appeals considered whether a plaintiff who wins a Texas Theft Liability Act (“TTLA”) claim nonetheless can be ordered to pay prevailing party attorney’s fees to the losing defendant if that defendant defeats at least one theory asserted by the plaintiff.

Brinson sued Hooper, a former employee, after it discovered that Hooper had taken confidential information and diverted a business opportunity to her new employer. During litigation, Brinson discovered that Hooper had developed and served several clients on the side, keeping the commissions for herself. One of Brinson’s clients also moved with Hooper to her new employer, which Brinson alleged was the result of the theft of confidential information . At the close of evidence, the trial court granted a directed verdict in favor of Hooper on a claim related to a specific former client and then the jury found against Hooper on theft claims for her retaining commissions for her work on the side while still employed by Hooper. The trial court then awarded Brinson its attorney’s fees for the theft claim arising from the stolen commissions but awarded Hooper her attorney’s fees for defending against claims arising from the client she took with her to her new employer.

The Dallas Court of Appeals reversed. It held that no, if you have been found liable for theft under the TTLA, you are not a prevailing party, even if you were not liable for all the damages the plaintiff asserted. A prevailing party is “[t]he party to a suit who successfully prosecutes the action or successfully defends against it, even though not necessarily to the extent of his original contention.” Thus, to recover fees, a defendant must prevail on the merits of the claim, which at least one court has held requires the defendant to “establish [she] did not commit theft.” The Court held that the fact that Brinson prevailed in recovering one set of damages, but not another, does not convert Brinson’s suit for theft into two separate claims.

Brinson Benefits v. Hooper (July 7, 2016)

Theft Liability and Disqualification

A pair of attorneys sued each other for breach of contract and breach of fiduciary duty, with the plaintiff also asserting a claim for violation of the Texas Theft Liability Act. The jury found both attorneys at fault and awarded no damages. The defendant moved for an award of attorney fees as the prevailing party on the Theft Liability Act claim, but the trial court denied the motion. The Court of Appeals affirmed, holding that the defendant’s failure to plead a claim for recovery of attorney fees under the Act precluded him from recovering his costs of defense. Pleading for recovery of fees under the breach of contract counterclaim and in special exceptions was not sufficient to invoke a claim for recovery under the Theft Liability Act, even though that statute provides for a mandatory award of attorney fees to the prevailing party.

The Court also affirmed on the plaintiff’s cross-appeal, which challenged the trial court’s disqualification of him from personally conducting the examination of his computer forensics expert. Under Disciplinary Rule 3.08, an attorney is generally prohibited from appearing as both an advocate and a witness. However, the defendant failed to meet his burden of showing he would have been prejudiced by having his opposing party conduct the examination, so the trial court did abuse its discretion by ordering the disqualification. Nevertheless, the error was deemed harmless because the plaintiff failed to advise the trial court that his attorney was not prepared to question the witness and he did not point to any specific testimony that the attorney had failed to elicit from the expert. The Court also affirmed the trial court’s rulings on a pair of evidentiary issues and on special exceptions to the Theft Liability Act claim.

Shaw v. Lemon, No. 05-12-00903-CV