In Gore v. Trans Union LLC, the Fifth Court addressed whether the Fair Credit Reporting Act preempts Texas statutes about the award of attorney’s fees to a prevailing defendant in a credit-reporting dispute.

The Court rejected this argument, noting that the FCRA does not expressly preempt the attorney’s fees provision in TBCC Section 20.08(c).  The court emphasized that the FCRA’s preemption provisions “have a narrow and targeted scope,” and Sections 1681n(c) and 1681o(b) of the FCRA, which govern attorney’s fees, are not among the provisions intended to preempt state law. No conflict arises: “That TBCC Section 20.08(c) allows attorney’s fees for the prevailing party in the absence of a finding of bad faith or harassment by the opposing party does not create an impossibility for compliance or stand as an obstacle to accomplishing Congress’s purposes in enacting the FCRA.” No. 05-23-00659-CV, Oct. 9, 2024.

A party sought to avoid the effect of a “prevailing party” attorneys’ fee provision in MRT of Kemp TX-SNF, LLC v. Lloyd Douglase Enterprises LC. The Fifth Court disagreed:

“MRT is not a party to PSA 1. But MRT embraced PSA 1 by seeking to enforce its terms. By doing so, MRT subjected itself to the entirety of the terms of PSA 1, including the attorney’s fee provision in Article 28.”

No. 05-23-00574-CV (Sept. 5, 2024).

Ostteen v. Holmes presented a conflict between a developer and a neighborhood activist. The Fifth Court affirmed the trial court’s denial of Ostteen’s motion to dismiss under the TCPA, concluding that Holmes’s claims were not based on or in response to TCPA-protected activity: “Holmes’s allegations and claims indicate his suit was based on or in response to Ostteen’s trespassing, interference or harassment of Holmes’s agents and contractors, and disparaging remarks about Holmes or the property allegedly made to locals or social media followers.”

The Court also reversed the trial court’s award of attorney’s fees because Homes did not provide sufficient detail about the particular services performed, who performed them, and the reasonable amount of time required for those services. No. 05-23-01150-CV, Aug. 22, 2024 (mem. op.).

Simons v. Medical Hyperbarics, Inc. reviews the need for a jury trial to determine the reasonableness and necessity of attorneys’ fees.

• Substance. “[CPRC] Section 38.001(b) permits the recovery of attorneys’ fees but does not dictate how to determine the attorneys’ fee amount, except that the award must be ‘reasonable.’ … When faced with a similar silent fee-shifting provision in [Transcon. Ins. Co. v.] Crump, the Supreme Court of Texas construed the statute as entitling the parties to have the jury determine the disputed issue of the reasonableness of the attorneys’ fees. … Similarly, because section 38.001(b) does not dictate the manner to determine the amount of attorneys’ fees, providing only that the award must be ‘reasonable,’ reasonableness remains a fact issue that a jury, upon proper request, may resolve.” 
• Preservation. “Simons filed his request for a jury trial and paid his fee. He objected to the trial court considering the fee issue in his response to MHI’s application for fees and objected throughout the hearing on MHI’s application for fees. … Because Simons was entitled to a jury trial on attorneys’ fees as a matter of right, his timely request was presumptively reasonable and should have been granted.”

No. 05-23-00053-CV (March 16, 2024) (mem. op.) (emphasis added).

Fortuitously, a Justice with a mechanical engineering degree drew the opinion in Rosales v. Allstate Vehicle & Prop. Ins. Co., which involved the application of a (literal) statutory formula in a section of the Insurance Code, to answer the question whether the payment of all possible damages for a prompt-payment claim extinguished a claim for attorneys’ fees under the prompt-payment statute.

Here’s the formula, from section 542A.007(a) of the Insurance Code, edited slightly in the opinion for easier review:

In this case, the insurer paid the amount found by an appraisal on a home-damage claim (minus the deductible), plus an amount to cover any prompt-payment interest for the time period leading up to the payment. Under the statute, then, “the amount to be awarded in a [prompt-payment] judgment for a covered loss is presently zero dollars, and because the amount of attorney’s fees is a multiple of that amount, Chapter 542As formula must result in an award of zero attorney’s fees.”

The opinion also deftly summarizes the surprisingly voluminous federal district-court authority, distinguishing some adverse precedent as not accurately reflecting the Texas Supreme Court’s most recent guidance on similar issues. No. 05-22-00676-CV (May 16, 2023).

The Theft Liability Act allows the recovery of fees by a successful defendant; therefore, “a ‘defendant may be a prevailing party when a plaintiff nonsuits without prejudice if the trial court determines, on the defendant’s motion, that the nonsuit was taken to avoid an unfavorable ruling on the merits.” (citation and emphasis omitted).

Absent such a finding, however, when a defendant nonsuits a TTLA claim after the filing of summary-judgment motions on other claims, a trial court’s decision to not award fees is not reversible error.

In the “Department of Subtle Hints,” the Fifth Court noted that findings of fact were requested but not made, but no appellate argument had been made on that procedural point. Centurion American Custom Homes, Inc. v. Crossroads Opportunity Partners LLC, No. 05-21-00025-CV (Dec. 28, 2022) (mem. op.).

The plaintiff in Kivowitz v. Dorfman sought to “remove his deceased parents’ remains from mausoleum crypts on Hillcrest’s property.” The defendants had a different view; the unfortunate cemetery operators were stuck in the middle. The resulting litigation contributes to the – body – of law about recoverability of attorneys’ fees in declaratory-judgment cases.

“Caught between competing demands and mindful of its statutory and contractual obligations,” the cemetery sought a declaratory judgment, and “took no position regarding appropriate disposition of the Decedents’ remains.”  The trial court issued a declaratory judgment that the plaintiff was right, and assessed attorneys’ fees of $191,245.25 against the cemetery pursuant to the Declaratory Judgment Act.

The cemetery appealed, noting that the (surprisingly detailed) provisions about the handling of human remains in the Health & Safety Code did not allow for the recovery of fees. The Fifth Court agreed and reversed, citing primarily MBM Fin. Corp. v. Woodlands Operating Co., 292 S.W.3d 660, 669 (Tex. 2009) (“[A] party cannot use the [Declaratory Judgments] Act as a vehicle to obtain otherwise impermissible attorney’s fees.”). Put another way, the plaintiff did not urn a fee award by his suit.

Awards of appellate attorneys’ fees have become more detailed in recent months, following a Texas Supreme Court that clarified the necessary proof requirements. Bucking that trend, the prevailing party in Wafer v. Hiltop Residential obtained an award, “in the event of an unsuccessful appeal by [appellant], any reasonable and necessary amounts.” The Fifth Court dismissed the appeal for want of jurisdiction, as that language did not resolve the issue of appellate fees. The Court noted that the phrase was insufficient for “ministerial officers [to] carry the judgment to execution without ascertainment of facts” not stated in the judgment. No. 05-22-00546-CV (Aug. 29, 2022) (mem. op.).(Thanks to the eagle-eyed Ben Taylor for catching an error in my original post!)

Allegheny Millwork v. Honeycutt highlights a tension in some requests for sanctions–a request for a large amounts of attorneys’ fees can be inconsistent with the underlying claim that a position is not well-founded:

“While Allegheny’s counsel’s failure  o reconcile or even address that the case is disappointing, and thereby raises an issue of candor with the Court, we do not see it as sufficiently egregious to support a shifting of fees, and certainly not in the amount requested by NQS. Given this Court’s familiarity with its own opinion in Ninety Nine Physicians, a brief reference to the case in response to the attorney’s fee issue would have sufficed.”

No. 05-21-00113-CV (June 8, 2022) (mem. op.) (footnote omitted).

The issue in Bluestone Resources, Inc. v. First Nat’l Capital, LLC was a judgment that included post-judgment interest, by the court that confirmed an arbitration award, when the award itself was silent about post-judgment interest. The Fifth Court held:

“We acknowledge there is a line of cases … that appears to conclude the award of any post-judgment interest is unauthorized unless such interest was awarded by the arbitrator.  We respectfully disagree. Interest on a money judgment accrues automatically and is recoverable even if it is not specifically awarded. We see no reason why a judgment confirming an arbitration award, which is a ‘money judgment of a court of this state,’ would be exempt from this rule.”

No. 05-20-00776-CV (April 29, 2022) (citations and footnote omitted).

Delaware corporate law has a robust line of authority about the advancement of attorneys’ fees during litigation; Texas, not so much, which is why In re Demattia is important to know. The case involved a typical advancement provision in an LLC’s organizational documents:

“(a) the Company shall indemnify each Member who was, is, or is threatened to be made a party to any threatened, pending, or completed action, suit, or proceeding (‘Proceeding’), any appeal thereof, or any inquiry or investigation preliminary thereto, by reason of the fact that he or she is or was a Member ….”

in the context of the LLC’s suit against a former member for the alleged theft of trade secrets. Even in that setting where the member was adverse to the company, the Fifth Court held that the provision was enforceable, drawing on the principles established in Delaware law:

The board may well have a firm basis to believe that the official intentionally injured the corporation and is therefore reluctant to advance funds for his defense, fearing that the funds will never be paid back and resisting the idea of seeing further depletion of corporate resources at the instance of someone perceived to be a faithless fiduciary. But the Delaware courts have determined that to ‘give effect to this natural human reaction as public policy would be unwise’ because the possibility exists that the company’s allegations are untrue or cannot be proven.

Based on that conclusion, the Court granted mandamus relief as against a summary-judgment ruling adverse to the member on the issue of his entitlement to fee advancement. Notably, because of the limited scope of the order under review, the opinion addressed only the entitlement to fees, and not the specific procedural mechanism under Texas law for obtaining payment. No. 05-21-00460-CV (April 12, 2022).

In Sunchase IV Homeowners Assoc. v. Atkinson, the Texas Supreme Court returned to the topic of a defendant who wins a take-nothing judgment on a key claim, in the context of a Property Code fee-shifting provision, and reached substantially the same result as in the Court’s recent Rohrmoos opinion. No. 20-0682 (Tex. April 8, 2022).

The lease at issue in Apple Texas Restaurants v. Shops Dunhill Ratel, LLC, No. 05-20-01052-CV (March 25, 2022) (mem. op.), contained a “prevailing party” allowing either side to recover in a suit about the lease. The judgment included an award of “defensive” fees, and the Fifth Court concluded that that topic had fairly been placed at issue:

“[I]n addition to both parties’ repeated reliance on section 13.08 described above, Dunhill provided disclosure responses more than a year before trial describing its counsel’s expected testimony regarding defensive attorney’s fees, stating, (1) Dunhill “is entitled to damages pursuant to the Lease . . . and interest, attorneys’ fees, and costs,” and (2) its counsel “is expected to testify regarding the reasonableness and necessity of attorneys’ fees and costs related to the prosecution of Plaintiff’s claims . . . and defense against Defendant’s counterclaims.'”

No. 05-20-01052-CV (March 25, 2022) (mem. op.).

Under the most current precedent, this testimony was insufficient to prove up a contingent award of appellate attorneys fees:

“Dunhill will be required to incur additional attorney’s fees if Apple appeals the final judgment entered in this Action. In my opinion, Dunhill will likely incur at least $35,000 in reasonable and necessary attorney’s fees if Apple appeals the final judgment to the Court of Appeals. In addition, Dunhill will likely incur at least an additional $35,000 in reasonable and necessary attorney’s fees if Apple appeals the final judgment to the Texas Supreme Court and Dunhill is required to respond thereto.”

Apple Texas Restaurants v. Shops Dunhill Ratel, LLC, No. 05-20-01052-CV (March 25, 2022) (mem. op.) (applying Yowell v. Granite Operating Co., 620 S.W.3d 335 (Tex. 2020)).

The Fifth Court found that a set of overly-redacted fee statements was legally insufficient evidence to support an award of fees in THB Construction v. Holt Texas, Ltd., observing:

“[T]he evidence here is like that presented in [Long v. Griffin, 442 S.W.3d 253 (Tex. 2014)]. In both cases, counsel testified only to general tasks performed during the representation.  Although Holt’s counsel produced invoices, they effectively provide no additional evidence beyond counsel’s testimony due to the heavy redactions. Indeed, counsel admitted as much. In that regard, the evidence presented here is just as insufficient as that presented in Long.”

The Court further reviewed its own relevant precedent in this area. No. 05-20-00020-CV (Jan. 13, 2022) (mem. op.) (citation omitted).

Since the supreme court’s opinion in Rohrmoos Venture v. UTSW DVA Healthcare, 578 S.W.3d 469 (Tex. 2019), the mechanics of proving up attorneys’ fees have received a great deal of thought by practitioners and judges. The Fifth Court’s opinion in In re Estate of Willingham reminds of something more basic as to awards of appellate attorneys’ fees:

“[T]here is no certainty regarding who will represent the appellee in the appellate court, what counsel’s hourly rate(s) will be, or what services will be necessary to ensure appropriate representation in light of the issues the appellant raises … [but] this uncertainty does not excuse a party seeking to recover contingent appellate fees from the need to provide opinion testimony about the services it reasonably believes will be necessary to defend the appeal and a reasonable hourly rate for those services.”

Finding no evidence on that topic, the Court deleted the award of appellate attorneys fees from the judgment and otherwise affirmed. No. 05-20-00235-CV (Dec. 20, 2021) (mem. op.) (applying Yowell v. Granite Operating Co., 620 S.W.3d 335, 355 (Tex. 2020)).

These facts led to a problem with the timeliness of the notice of appeal in Jordan Kahn Music Co. v. Threlkeld:

• January 19, 2021. Trial court signs interlocutory order granting a TCPA motion to dismiss, and orally invites the movant to submit a fee affidavit;
• February 28, 2021. Trial court signs a final judgment, including a fee award.
• Nonmovant timely moved for a new trial.
• May 24, 2021. Notice of appeal filed.

The Fifth Court held that the February 28 judgment was a “trial court order on a motion  to dismiss … under section 27.003” under the relevant statute, and thus triggered the 20-day deadline for perfecting an accelerated appeal–for which, the filing of a motion for new trial does not extend the perfection deadline is it otherwise would. No. 05-21-00381-CV (Sept. 29, 2021) (mem. op.).

The peculiar treatment of attorneys’ fee awards against LLCs in contract cases, by the now-repealed version of CPRC § 38.001, led to the resolution of a novel issue in Benge General Contracting, LLC v. Hertz Elec., LLC: “Absent mandatory, or at least persuasive, authority applying the alter-ego theory to hold an LLC’s members liable for attorney’s fees that could not be incurred by the LLC, we must abide by the plain statutory language. Accordingly, we conclude that the trial court abused its discretion in awarding attorney’s fees, and we sustain appellants’ first issue.” No. 05-19-01506-CV (Sept. 7, 2021) (mem. op.).

Quintanilla v. ANG Rental Holdings, provides a cautionary note about proving up attorneys’ fees, even in the relative informality of a bench trial on frequently litigated issues:

• The appeal arose from a de novo retrial, to the bench, of an FED action in county court; as a result, “an appellant may raise a no-evidence point for the first time on appeal.”
• The record was silent as to (a) an 11-day notice required by the statute allowing fee recovery, and more basically (b) “no evidence of a written lease that entitles ANG to recover attorney’s fees.”
• Why? Because “the lease agreement was excluded from evidence because of the [tenants’] objection, and ANG made no according offer of proof or bill of exception.”

No. 05-20-00062-CV (Aug. 16, 2021) (mem. op.).

In Ferrant v. Lewis Brisbois, No. 05-19-01552-CV (July 14, 2021) (mem. op.), a law firm client contended that no evidence established his consent to an hourly billing arrangement; the Fifth Court affirmed the judgment against him based on this “acknowledgment” at the time the client moved his business from another law firm —

and a “yes” answer to this jury question:

Solving several years of mischief arising from unclear statutory language, the governor recently signed an amended version of Tex. Civ. Prac. & Rem. Code § 38.001 to clarify when attorneys’ fees may be recovered in breach-of-contract actions. It is effective to cases filed on or after Sept. 1, 2021:

The parties in Ninety Nine Physician Services, PLLC v. Murray arbitrated a business dispute; the lingering issue at confirmation was an award of $341,680 in attorneys’ fees. The Fifth Court found that the award was proper, reasoning as follows:

1. “[U]nder the parties’ distinct agreement and incorporation of the AAA rules, there were three circumstances in which the arbitrator was vested with the authority to award attorney’s fees (1) if all parties requested such an award or (2) if it was separately authorized by law or (3) if it is authorized by the arbitration agreement.” (emphasis in original); and then
2. “Both parties submitted posthearing briefs in which they requested attorney’s fees. In their briefing, Appellees urged, as they do here, there was no basis in the general law to award fees to Appellant. … Appellees contend Appellant’s post-hearing brief is not a proper request for attorney’s fees. The arbitrator in interpreting the Commercial Rules evidently disagreed with Appellees and found the post-hearing briefs to be requests for attorney’s fees under Rule 47(d)(ii).” 

The Court thus reversed a trial-court ruling that vacated that portion of the award. A concurrence would have reached the same result for a different reason: “Because appellant did not file any pleading affirmatively seeking attorneys’ fees until after the arbitration hearing, the arbitrator abused his discretion in awarding attorneys’ fees to appellant. The arbitrator’s mistake of law, however, is not grounds to vacate the award,  and the trial court erred in doing so. Consequently, appellant was entitled to enforcement of the attorneys’ fees award but not on the basis relied upon by the majority.” No. 05-19-01216-CV (Feb. 22, 2021) (mem. op.).

The appellant in KBIDC Investments v. Zuru Toys contended that the appellees failed to segregate attorneys’-fee evidence among claims involving the Texas Theft Liability Act (compensable) and those for misappropriation of trade secrets and unfair competition (not compensable). The Fifth Court observed that a basic holding of Tony Gullo Motors v. Chapa, 212 S.W.3d 299 (Tex. 2006)–that “it is only when discrete legal services advance both a recoverable and unrecoverable claim that they are so intertwined that they need not be segregated”–was not overruled by Horizon Health Corp. v. Acadia Healthcare Co., 520 S.W.3d 848 (Tex. 2017), which as a factual matter found a failure to properly segregate fees related to a TTLA claim. Here, “[Appellees’] argument is that all of their attorney’s fees were reasonable and necessary to their prevailing on appellant’s TTLA claim. Their attorney testified to that fact. He also testified that the attorney’s fees would have been the same if the TTLA claim had been the only claim. Appellant does not identify any invoice entry that did not apply to the TTLA claim.” No. 05-19-00159-CV (June 26, 2020) (mem. op.).

A counterclaim defendant sought recovery of attorneys’ fees under the relevant lease agreements, leading the Fifth Court to review and apply the current Texas Supreme Court precedents on that subject:

1. One set of leases had the following fee provisions:

29.1 Attorney Fees. If this lease is placed in the hands of any attorney due to a default in the payment or performance of any of its terms, the defaulting party shall pay, immediately upon demand, the other party’s reasonable attorney fees, collection costs, costs of litigation, even though no suit or action is filed thereon, and any other fees or expenses incurred by the nondefaulting party.

29.2 Types of Fees. For purposes of this Lease the term attorney fees includes all

charges of the prevailing party’s attorneys and their staff (including without limitation legal assistants, paralegals, word processing, and other support personnel) and any post-petition fees in a bankruptcy court. . . .

The Court reasoned: “Under the broad language of [these] Leases, we agree, as the court did in Rohrmoos, that appellee was not just a plaintiff; he also successfully defended against appellants’ breach of contract counterclaim that sought unpaid lease payments and repair costs for damages to the premises,” and was thus entitled to fees as a “prevailing party” .

2. The second set of leases had this fee provision:

30. Attorneys’ Fees. In the event either party shall fail to comply with any of the covenants, conditions, obligations, rules, or regulations imposed by this Texas Commercial Lease or the laws of the state of Texas, and suit is brought for damages or enforcement, the losing party shall pay to the prevailing party reasonable attorneys’ fees, costs, and expenses incurred in prosecuting these suits.

“Here, the lease specifically requires that the attorneys’ fees be incurred by the
‘prevailing party’ in ‘prosecuting these suits.’ ‘Prosecute’ means ‘to institute legal proceedings against’ or ‘to institute and carry on a legal suit or prosecution: sue.'” Accordingly, the clause did not reach the counter-defendant’s claim, and recovery of fees was prohibited by Intercontinental Group v. KB Home, 295 S.W.3d 650 (Tex. 2009). Desio v. Del Bosque, No. 05-19-00224-CV (Dec. 19, 2019) (mem. op.)

Richardson Business Center proved an easement by estoppel, and appealed the trial court’s decision to not award attorneys’ fees for its successful declaratory-judgment action. However: “The trial court did not file findings of fact or conclusions of law. Without findings of fact establishing the basis for the trial court’s exercise of discretion, we cannot conclude as a matter of law that the trial court abused its discretion in declining to award attorney’s fees.” Hazzani v. Richardson Business Center, No. 05-18-00346-CV (July 21, 2019) (mem. op.)

The appellant in Sumner v. Harbor Owners Ass’n disputed the conditioning language used in an award of attorneys’ fees against him, arguing that an award of “$10,000 in attorneys’ fees if [appellant] unsuccessfully appeals to the Texas Supreme Court” failed to ” set out the steps in an appeal to the Texas Supreme Court.” The Fifth Court found that this level of detail was unnecessary, and “[b]ecause the award of appellate fees is conditioned on [Appellant]’s unsuccessful appeal, we conclude the trial court’s award
is not in error.” No. 05-18-00580-CV (May 1, 2019) (mem. op.)

In its introduction to a comprehensive discussion of attorneys’-fee recovery, the Texas Supreme Court said: “It should have been clear from our opinions in [three earlier case] that we intended the lodestar analysis to apply to any situation in which an objective calculation of reasonable hours worked times a reasonable rate can be employed. We reaffirm  today that the fact finder’s starting point for calculating an attorney’s fee award is determining the reasonable hours worked multiplied by a reasonable hourly rate, and the fee claimant bears the burden of providing sufficient evidence on both counts.” Rohrmoos Venture v. UTSW DVA Healthcare LLP, No. 16-0006 (Tex. Apr. 26, 2019) (emphasis added).

Morben Realty successfully sued Texas Capital Holdings; the trial court denied recover of attorneys’ fees and the Fifth Court reversed, noting: “Texas law has ‘long distinguished attorneys’ fees from damages.’ So does this contract.” Specifically, the section on remedies “generally provides the seller with a liquidated damages remedy if the purchaser defaults” –

Seller shall, as Seller’s sole remedy, be entitled to terminate this Contract and receive and retains the Earnest Money deposit as liquidated damages; it being specifically agreed between Seller and Purchaser that Seller’s actual damages in the event of Purchaser’s default would be impossible to ascertain and the Earnest Money Deposit is a reasonable estimate of the same . . . .

But another section addressed the recovery of fees by the prevailing party –

In the event either party to this Contract commences legal action of any kind to enforce the terms and conditions of this Contract, the prevailing party in such  litigation shall be entitled to collect from the other party all reasonable costs, expenses, and attorney’s fees incurred in connection with such action.

Morben Realty v. Texas Capital Holdings, No. 05-17-01105-CV (Feb. 27, 2019) (mem. op.)

Justice Molberg‘s first appearance as an opinion author in this blog involves Alliance’s allegation that Top Hat was a “a domestic, for-profit limited liability corporation authorized to do business in the State of Texas with its principal office in Ennis, Texas.” Alliance won an award of attorneys’ fees; Top Hat argued that it was an LLC and was thus not subject to CPRC § 38.001. The Fifth Court rejected that argument: “Top Cat did not file a rule 93 verified affidavit denying that it is a corporation as alleged and, therefore, failed to preserve its complaint that it is not an entity against which attorney’s fees may be awarded under section 38.001.” Top Cat Ready Mix LLC v. Alliance Trucking LP, No. 05-18-00175-CV (Jan. 22, 2019) (mem. op.)

In the first opinion by Justice Osborne discussed by this blog, Porter complained that he should have been awarded attorneys’ fees in a successful DTPA claim, noting that his attorney’s invoice was admitted without objection. Unfortunately, though: “Porter bore the burden of proving reasonableness. Consequently, on appeal, the question is not  whether A-1 objected to Porter’s failure to offer evidence of reasonableness, but whether the evidence in the record is sufficient to support the trial court’s implied finding that Porter did not meet his burden of proof.” As Porter did not offer evidence on this point besides the invoice itself, the trial court’s ruling was affirmed. Porter v. A-1 Parts, No. 05-17-01468-CV (Jan. 14, 2019) (mem. op.)

An published opinion about recoverable attorneys’ fees in a declaratory judgment action reviewed the controlling authorities, from the Texas Supreme Court and the Fifth Court, and reminded of these principles-

• “[Counsel]’s argument that her fees were ‘intertwined” was an insufficient basis for the trial court’s award. But neither should the trial court have disallowed all fees ‘simply because the services also further[ed] non-recoverable claims.'”
• “[Counsel] offered some evidence of her recoverable fees through her attorneys’ testimony and supporting documentation . . . . ‘Unsegregated attorney’s fees for the entire case are some evidence of what the segregated amount should be.'”
• Remand is an appropriate appeal remedy “for reconsideration with sufficiently detailed information for a meaningful review of the fees sought.”
• There is dispute among the Texas courts of appeal as to when a timely objection about segregation must be made. Footnote 4 of the opinion summarizes the authority on this point.

Anderton v. Green, No. 05-17-00024-CV (July 23, 2018).

Miskevitch, a store manager, alleged that 7-Eleven terminated her in violation of the Texas Labor Code in retaliation for opposing a discriminatory practice. Specifically, she alleged that in accordance with company policy, she had reported an employee’s complaint of harassment by another manager, and then shook her head in disgust at a meeting about the complaint. The Fifth Court, following precedent from San Antonio, found that because the report was made pursuant to company policy, it was done in support of the company rather than in opposition to it, and was not actionable under this statute. And the evidence showed that her head shake was in reaction to the report of harassment – not actions by the company. The Court denied 7-Eleven’s request for fees, however, observing: “Although [Miskevitch] lacked Texas authority for her position on protected activity, she  attempted to distinguish 7-Eleven’s cases and argued for an extension of federal law.” Miskevitch v. 7-Eleven, No. 05-17-00099-CV (July 25, 2018) (mem. op.)

A common issue about attorneys’ fees awards in commercial cases involves “allocation” between activity for which fees are recoverable (speaking generally, contract claims), and those for which they are not (again generally, related business tort claims.  A variant of that issue appeared in Anderton v. City of Cedar Hill, in which the City recovered attorneys’ fees in a declaratory judgment dispute with property owners about permissible land use. Unfortunately for the City, the fee award proved to have a weak connection to the four pieces of property at issue in the litigation:

• as to “Lot 4,” while the City argued that its use was a main objective of the litigation, the parties’ pleadings did not in fact make a claim about it, and the landowners voluntarily ceased to occupy it at some point during the litigation;
• as to “Lot 5,” the parties’ claims were mooted by zoning amendments that came after the majority of the fees incurred about it;
• as to “Lot 6,” while “[t]he City appears to have accomplished some, although not all, of its objectives,” “the [property owners] appear to have been largely successful in defending their use of” the lot, if not their construction on it;
• and as to “Lot 7,” the parties largely agreed upon the resolution of their issues.

Accordingly, after examining “the parties’ claims, objectives, and outcomes” about the lots, the Fifth Court concluded that a $166,000 fee award under the declaratory judgment statute was not “equitable or just.” No. 05-17-00138-CV (May 25, 2018).

Section 38.001 of the Texas Civil Practice & Remedies Code refers to an award of “reasonable attorney’s fees” in types of cases. In Basic Energy Services v. Exco Resources, however, the parties’ contract “provide[d] for ‘all expenses of litigation, court costs, and attorneys’ fees which may be incurred by Company Group . . . ‘ and does not include any requirement that such amounts must be subsequently subjected to scrutiny for reasonableness.” Distinguishing an earlier case about a note dispute between two individuals, the Fifth Court reasoned that “two sophisticated, commercial entities” had negotiated an agreement under which the indemnitee:

. . . could either (1) tender its defense to Basic thus allowing Basic to control the costs of litigation or (2) incur litigation expenses itself, negotiating with attorneys for fees that it would then submit to Basic for indemnification, risking Basic’s refusal or inability to pay and assuring itself of the reasonableness of the fees it was paying in the process. Accordingly, in view of the fact that the agreement at issue here was between two sophisticated, commercial entities presently familiar with the expenses of litigation, court costs and attorney’s fees and free to negotiate and structure their affairs as they sought fit, we see no reason to impose additional procedures beyond those they chose for themselves.

No. 05-15-00667-CV (Jan. 26, 2018) (mem. op.)

In the fifth appellate proceeding about payment of attorneys’ fees in the prosecution of Attorney General Paxton, the Fifth Court disapproved of a local rule that allowed a judge to depart from the standing fee schedule in particular cases (and thus here, for the payment of the prosecutors pro tem in the Paxton matter): “Rule 4.01B thwarts what we perceive to be the objectives of the [applicable] statute, which are to ensure by means of a duly adopted schedule that (1) appointed attorneys––in this case the prosecutors pro tem––are paid a fair, but not excessive, fee and (2) the commissioners court, which is tasked with the responsibility of settling and directing payments of accounts against the county, can more accurately project the expenses of a fiscal year and budget accordingly. By adopting local rule 4.01B, the Collin County judges partially abdicated to the individual judges the responsibility delegated to them collectively to determine the reasonable fee for appointed counsel and rendered illusory the legislative requirement of setting and applying a fee schedule.” In re Collin County, Texas, County Commissioners, No. 05-17-00634-CV et seq. (Aug. 21, 2017).

The Fifth Court has now joined the line of cases stating that CPRC § 38.001 only allows an award of attorneys fees against certain kinds of business entities (although bypassing the actual application of that statement on the specific, conflicting facts presented about the defendants’ business structure): “Under the plain language of section 38.001, a trial court cannot order limited liability partnerships (L.L.P.), limited liability companies (L.L.C.), or limited partnerships (L.P.) to pay attorneys’ fees.” Varel Int’l Indus., LP v. PetroDrillBits Int’l, Inc., No.  05-14-01556-CV (Aug. 30, 2016) (mem. op.)

In Premier Pools Management Corp. v. Premier Pools Inc., the Fifth Court found that a successful trademark plaintiff had established sufficient evidence of secondary meaning for the phrase “Premier Pools,” noting — in particular — the plaintiff’s proof about its advertising about and long use of the name, as well as the testimony of nine impartial witnesses about the issue of confusion. Similar evidence supported the findings for liability, damages, and disgorgement. The Court reversed the related declaratory judgment (and with it, the attorney’s fees award), finding that the “claim added nothing and provided access to no remedy that was not otherwise available . . . ” No. 05-14-01388-CV (Aug. 12, 2016) (mem. op.)

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)

Schultz, owner of a chain of movie theaters, did not want to pay Banowsky, a licensed Texas attorney, for helping Schultz find a theater location.  Schultz won summary judgment based on the Texas Real Estate Licensing Act,  primarily because Banowsky admitted that his work did not involve legal services.  The Fifth Court reversed: “[Schultz] argues that Banowsky’s construction of the Act is both unreasonable and favors the individual interest of an attorney over the interest in protecting the public from unlicensed, unscrupulous, or unqualified persons.  But the fact remains that the plain language of the statute exempts attorneys from all requirements of the Act.”  Banowsky v. Schultz, No. 05-14-01624-CV (Feb. 10, 2016) (mem. op.)

A personal injury case led to an award of $4500 in attorney fees against the defendants’ attorneys after they lost a motion to compel. Among other things, the defendants sought to designate certain documents as “ATTORNEYS EYES ONLY” and objected to 14 of 21 document requests on the basis of trade secret privilege — in a car wreck case. The county court at law overruled the vast majority of the defendants’ objections, and awarded the $4500 to the plaintiff. On appeal, the defendants’ attorneys argued that the award was a sanction that could not be justified by any offensive conduct. The Dallas Court of Appeals disagreed, pointing to the trial court’s order stating that the award of fees and costs was granted for securing orders overruling the defendants’ objections to the plaintiff’s discovery requests. That made it an award of expenses on a motion to compel, which is required (but rarely observed) by TRCP 215.1(d). Reviewing the course of the proceedings in the trial court, the Court of Appeals could not conclude that the trial court had abused its discretion in determining that the defendants’ resistance to the discovery had not been “substantially justified.”

MacDonald Devin, PC v. Rice, No. 05-14-00938-CV

Jenner & Block took on the representation of Parallel Networks in patent infringement litigation. Their contingency fee agreement provided that Parallel was responsible for the payment of expenses, but Parallel ran up a $500,000 deficit before expenses were finally paid out of proceeds from settlement in another lawsuit. Jenner withdrew from the case, citing a termination clause that allowed it to withdraw if continuing was not in its economic interest. After the patent cases settled under successor counsel, Jenner invoked arbitration and sought to recover $10 million in fees. The arbitrator ruled that Jenner’s withdrawal was justified and awarded $3 million as an “appropriate and fair” portion of the contingent fee recovery, as provided in the parties’ contract. The trial court confirmed the award, and the Dallas Court of Appeals affirmed. The Court declined Parallel’s invitation to declare that the fee agreement was against public policy, holding that the statutory grounds for vacating an award under the FAA are exclusive, and that public policy therefore could not serve to vacate the award.

Parallel Networks, LLC v. Jenner & Block LLP, No. 05-13-00748-CV

Glen Stover was assaulted by two judgment-proof college students at a party in 2010, resulting in multiple surgeries, a shattered wrist and face, stitches, and broken teeth. He signed a contingency-fee agreement with John H. Carney & Associates, which provided for a 33% fee if the matter was settled before suit was filed. In the meantime, a criminal case proceeded against at least one of the assailants, Drew McClure, who agreed to accept a plea deal that included $100,000 in restitution to the victim. When that check was tendered to Carney by McClure’s father, Carney retained funds that he claimed as his contingency fee. A Dallas County district court disagreed, and the Dallas Court of Appeals affirmed, holding that the restitution was paid in satisfaction of McClure’s deferred adjudication order, not in settlement of any civil claim. The Court did not reach the question of whether an attorney could ever legally claim a fee from a criminal restitution payment, but noted in dicta that “we strongly discourage attorneys from engaging in such practices.”

John H. Carney & Assocs. v. Office of Attorney General, No. 05-13-01325-CV

The Court of Appeals has reversed a summary judgment in favor of the attorney defendants in a civil barratry case. The plaintiffs were victims of a pipeline explosion. Their case against the pipeline company eventualy settled, and the lawyers collected their 40% contingency fee. But the plaintiffs learned that they had actually been solicited by a private investigator working for their attorneys, so they sued to rescind the fee agreement and recover their contingency fees. The Court of Appeals agreed that rescission was an available remedy for barratry, and that the attorney defendants had not established their former clients would be unable to make counter-restitution for the benefits they had received from the lawyers.

Neese v. Lyon, No. 05-13-01597-CV

Among other issues in this case, the Court reversed the trial court’s award of $15,000 in attorney’s fees on summary judgment.  The moving party submitted an affidavit that $53,714 was the reasonable amount of fees for the legal services rendered, but the opponent submitted an affidavit in which their expert stated that a reasonable fee would be no more than $15,000.  Because neither party offered uncontroverted evidence of an amount certain, the trial court improperly made a factual finding in awarding $15,000 in fees.

Myers v. HCB Real Holdings, LLC

The Dallas Court of Appeals has now joined two other Texas appellate courts in holding that “A post-verdict motion requesting attorney’s fees filed before the entry of a final judgment is a sufficient pleading to support an attorney’s fee award.” The Court also disposed of the appellant’s argument that a $50,000 fee award was unreasonable because it far exceeded the $11,000 in damages found by the jury, holding that the issue was waived by failing to request a reporter’s record of the hearing.

Nisby v. Dentsply Int’l, Inc., No. 05-14-00814-CV

The Texas Citizens’ Participation Act continues to be a powerful tool in certain types of commercial cases. In this instance, the publisher of Petroleum News Bakken managed to obtain and affirm a judgment of dismissal and attorney fees in a business disparagement and tortious interference case. The dispute arose out of a newspaper article that stated no records could be found for wells that Breitling Oil & Gas claimed to have drilled in North Dakota. The publisher moved to dismiss under the TCPA, which shifted the burden to the burden to the plaintiff to come forward with prima facie evidence of each element of its claims. Breitling responded with a notice of nonsuit, but that didn’t stop the trial court from moving forward with the hearing and awarding the defendant $88,444.58 in attorney fees and expenses. The Court of Appeals affirmed, holding that the nonsuit did not moot the pending motion to dismiss because the defendant had already made a “pending claim for affirmative relief” through its request for attorney fees and sanctions. The Court also rejected Breitling’s argument that the attorney fees should have been tried to a jury, noting that the record did not show that Breitling ever objected to the trial court making findings on the reasonableness of the fees awarded.

Breitling Oil & Gas Corp. v. Petroleum Newspapers of Alaska, LLC, No. 05-14-00299-CV

The Court of Appeals has reversed a trial court’s judgment awarding approximately $46,000 in attorney fees in a denial of coverage dispute. The case was brought by a homebuyer who sued his builders for a number of defects.  The buyer obtained a judgment against the builders in arbitration. The builders had tendered the buyer’s claim to their insurer, Oklahoma Surety Co., but OSC denied coverage for both the defense of the case and ultimate liability. After arbitration, the builders assigned their coverage claim to the buyer, who then sued OSC for the builders’ defense costs and for indemnification under the policy. The trial court ruled that OSC had a duty to the defend the case, but had no duty to indemnify for damages. The Court of Appeals disagreed, holding that an exclusion for property damage to “your work” applied under the “eight corners” rule, thereby barring both coverage and the duty to defend.

Oklahoma Surety Co. v. Novielo, No. 05-13-01546-CV

The Dallas Court of Appeals has affirmed a trial court’s award of $3.1 million in attorney fees following the settlement of a shareholder derivative suit against J.C. Penney. The settlement required J.C. Penney to stop guaranteeing the unvested incentive equity awards of certain officers, which the plaintiffs’ evidence showed to be worth $62 million over the four years covered by the settlement. The settlement agreement permitted the plaintiffs to apply for a fee award to “compensate Plaintiff’s Counsel for the results achieved in the Action and the risks of undertaking the prosecution of the Action on a contingent basis.” Although plaintiffs’ evidence showed that the lodestar fee for the case would have been $558,123.50, the Court held that the specific language of the parties’ agreement justified a departure from the lodestar. The Court further held that the $3.1 million award was reasonable because it represented 5% of the monetary value of the settlement, citing a number of shareholder derivative cases that also approved fee awards based on a percentage of the settlement value.

J.C. Penney Co., Inc. v. Ozenne, No. 05-13-01601-CV

Attorney Baltasar Cruz sued for libel against the operators of the Burnt Orange Report, which published a statement that Cruz had been “thrown out three times, finally by the police, of an Elizabeth Edwards book signing event in Dallas several years ago.” The defendants moved to dismiss on anti-SLAPP grounds. The trial court granted the motion and awarded the defendants their attorney fees. The Court of Appeals affirmed the dismissal of the case, but reversed on the award of attorney fees.

Cruz raised a remarkable 121 issues for appellate review, taking up 25 pages of non-word count briefing. The Court of Appeals did not find that lack of conciseness persuasive — see Tex. R. App. P. 38.1(f) — nor did it care for the absence of headings, divisions, or groupings in the brief’s 69 pages of argument. The Court also noted that the brief lacked legal authority and failed to identify the evidentiary objections Cruz was seeking to vindicate on appeal. As a result, the Court deemed many of Cruz’s “multifarious” issues to be waived. On the merits of the anti-SLAPP motion, the Court quickly disposed of Cruz’s claim that the statement was not a “matter of public concern” because he was a candidate for judicial office at the time the blog post was published and a candidate’s character is relevant to his qualification for public office. Cruz also could not establish that the statement was published with malice just because the defendants had not been present at the book signing incident, while the defendants averred they had relied on several sources for their account.

However, the Court of Appeals vacated an award of $158,521.50 in attorney fees to one group of defendants because they had not actually “incurred” those fees. Since their attorneys had taken the case pro bono, the clients were not personally responsible for payment of the claimed fees. However, the Court sustained a separate fee award of $31,783.75 to another defendant, holding that there was evidence showing that party was personally liable for those fees.

Cruz v. Van Sickle, No. 05-13000191-CV

Following up on an opinion issued last month that ruled an interlocutory appeal from the denial of a special appearance was frivolous, the Court of Appeals has now awarded the appellee sanctions of $9,650 in attorney fees and $191.25 in expenses as damages from the frivolous appeal. The Court shaved off $2,325 from the appellee’s fee application because some of her attorney’s billing entries either did not relate to the appeal or consisted of block billing that contained a mix of appellate and non-appellate activities.

Estate of Ardyce Deuel-Nash, Deceased (II), No 05-14-00128-CV

When a judgment judgment for breach of contract is entered that includes an award of attorney fees, the defendant is generally not required to supersede that fee award in order to suspend judgment. Instead, the defendant only has to supersede post-judgment interest on the award for the expected duration of the appeal. In this case, Highland Capital Management was awarded $2.8 million in attorney fees, but the defendant only bonded out $287,000. Highland moved to increase the supersedeas bond, arguing that the attorney fees were actually compensatory damages because the parties’ contract contained a clause requiring the defendant to pay Highland’s fees in the event of a breach. The Court of Appeals rejected that argument, essentially concluding that an award of attorney fees under the contract was no different than an award of attorney fees under Chapter 38 of the Civil Practice & Remedies Code (which Highland had also sought in its pleadings and at trial).

Highland Capital Mgmt., L.P. v. Daugherty, No. 05-14-01215-CV

A builder sued the prospective buyers of a townhome for breach of contract and fraud after they backed out of the sale before closing. The Court of Appeals affirmed a jury verdict for the buyers. The seller’s first issue on appeal was simply that “the evidence demonstrates [buyers] committed fraud against [seller],” a complaint that was too broad and generic to preserve any specific error. The Court also affirmed an award of $9,675 in attorney fees to the buyers under a prevailing-party clause of the contract, holding that the seller’s briefing about that award failed to discuss the evidence concerning the fees and did not explain how the cited case law should be applied to the jury’s finding.

Davenport Meadows LP v. Dobrushkin, No. 05-12-01471-CV

The issue in this case was whether the trial court erred in awarding attorneys’ fees to the defendant when the plaintiff dropped its claim under the Texas Theft Liability Act (“TTLA”)  a few days after the defendant filed a motion for summary judgment.

Under the TTLA, the prevailing party is entitled to recover attorneys’ fees.  In this case, the plaintiff brought a TTLA claim against the defendant.  When the defendant moved for summary judgment, the plaintiff must have realized that it was going to lose.  Consequently, the plaintiff amended its complaint and removed the TTLA claim, effectively nonsuiting it.  Thus, the plaintiff claimed that the defendant was not a prevailing party and therefore not entitled to attorneys’ fees.

The Court of Appeals affirmed the trial court’s decision to award attorneys’ fees, holding that a party is still a prevailing party if the nonsuit was taken to avoid an unfavorable ruling on the merits.  This result was further cemented by the fact that at the hearing on attorneys’ fees, plaintiff’s attorney acknowledged that by filing its nonsuit the plaintiff “basically, said ‘Uncle.'”

BBP Sub I LLP v. Di Tucci

Among several issues on appeal in this dispute between a commercial landlord and tenant, the Court of Appeals considered whether the defendant could recover attorneys’ fees pursuant to the declaratory judgments act.  After the plaintiff sued the defendant for breach of contract for failing to construct ramps in compliance with the ADA, the defendant responded by requesting a declaratory judgment that he had no duty to pay for the ramps.  Because the defendant’s counsel admitted at trial that the issues raised in his declaratory judgment action would be resolved by the plaintiff’s breach of contract lawsuit, the court rejected the defendant’s attempt to recover attorneys’ fees, noting the rule that “a party cannot use the declaratory judgments act merely as a vehicle to obtain otherwise impermissible attorney’s fees.”

Cellular Sales of Knoxville, Inc. v. McGonagle

In this breach of settlement action, the plaintiff won almost $10,000 in damages, but the trial court awarded him zero dollars in attorneys’ fees.  On appeal, the Court found that attorneys’ fees were proper under section 38.001(8), so the trial court had no discretion to deny them.  The Court noted that one of the factors in determining the reasonableness of attorneys’ fees is the amount of damages awarded, and remanded the determination to the trial court.

Garcia v. Solorio

A trial court that dismisses a lawsuit after a motion made under the Texas Citizens Participation Act “shall award to the moving party . . . reasonable attorney’s fees . . . incurred in defending against the legal action as justice and equity may require.” Tex. Civ. Prac. & Rem. Code § 27.009(a)(1). In this case, the trial court signed its order on March 6 granting the defendant’s motion to dismiss the lawsuit, then followed it up on April 14 with an order awarding defendant $15,616 in attorney fees and sanctioning the plaintiff another $15,000. The plaintiff claimed that the April 14 award was a nullity because the March 6 order was a final judgment. The Court of Appeals disagreed, first order did not purport to dispose of the defendant’s claim for fees and costs, and both the court and the parties recognized that there had not been a final judgment because they continued to litigate the additional issues. The Court of Appeals went on to rule on several other issues, concluding among other things that the plaintiff had waived any complaint about the trial court’s failure to timely hold a hearing on the motion to dismiss by failing to object in the trial court; that the statements attributed to the defendant were not capable of being defamatory; and that the plaintiff had not pointed to any evidence of damages to support its tortious interference claim. The judgment was therefore affirmed.

American Heritage Capital LP v. Gonzalez, No. 05-12-0892-CV

In 2010, the Court of Appeals reversed summary judgment in favor of the lender in a collateral-disposition case, holding that the borrowers had raised a fact question as to the commercial reasonableness of the property. DMC Valley Ranch, L.L.C. v. HPSC, Inc., 315 S.W.3d 898 (Tex. App.–Dallas 2010, no pet.). On remand, the lender took the position that the defendants’ valuation expert report was correct, and again moved for summary judgment on that basis (apparently seeking to recover a smaller deficiency rather than fighting for a larger one). The trial court granted summary judgment for the lender, and also awarded attorney fees via summary judgment. The Court of Appeals affirmed on the deficiency ruling, but reversed on attorney fees. The Court held that there was a fact issue on the reasonableness and necessity of the attorney fees because the defendants’ attorney had submitted an affidavit opining that it was unreasonable to seek fees for unsuccessful appeals and motions, and that it was not appropriate to have seven lawyers on the file. The case was therefore remanded for further proceedings on attorney fees.

DMC Valley Ranch LLC v. HPSC, Inc., No. 05-11-01730-CV

Boardwalk Motor Cars sued Imagine Automotive Group over allegations that it had bribed Boardwalk employees to obtain used cars at preferential prices for resale, and that it had outright stolen some cars from Boardwalk’s dealerships. During discovery, Boardwalk successfully moved to compel the production of certain financial records, including canceled checks and documents supporting Imagine’s claim that it had paid for the allegedly stolen vehicles. That set off a lengthy series of sanctions motions and hearings. A week before trial, the court struck Imagine’s defenses for failing to produce some of those documents, and on the third day of trial it struck all of Imagine’s pleadings when Boardwalk informed the court of Imagine’s failure to produce still other documents. The jury awarded $269,950 in damages under the Theft Liability Act. The trial court then awarded Boardwalk $389,898 for its attorney fees under the Act, plus an additional $180,000 in sanctions against Imagine for the discovery abuse. The Court of Appeals affirmed.

The Court held that the trial court had not failed to consider the availability of lesser sanctions before imposing its death penalty sanctions. Among other things, the court had previously warned that noncompliance could result in dismissal, and the sanctions order stated that the judge had considered and rejected the less intrusive remedy of reopening discovery and continuing the trial. The trial court also did not err in refusing Imagine’s attempt to put on evidence disputing causation for Boardwalk’s claimed damages, as the striking of the pleadings meant that Imagine’s theft of the cars was an established fact. Imagine could have put on evidence that the cars were worth less than Boardwalk claimed, but could not dispute they had been stolen. The Court held that the sanctions were not excessive in light of Imagine’s multiple misrepresentations and acts of discovery abuse. Finally, the Court of Appeals rejected Imagine’s argument that Boardwalk should have been required to sub-segregate its attorney fees for the Theft Liability Act claim because that claim had shrunk during the course of the litigation from 256 allegedly stolen vehicles to only 11. The Court reasoned that segregation is only required between causes of action, not within a particular cause of action.

Imagine Automotive Group v. Boardwalk Motor Cars, No. 05-11-01119-CV

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

The Court of Appeals has affirmed in part and reversed in part a summary judgment in favor of a law firm in a suit to recover attorney fees from its former clients. The opinion is quite lengthy and covers a number of topics. The first issue is evidentiary, as the Court decided that the trial court did not abuse its discretion in striking the affidavit of one of the defendants, in which he averred that the defendants did not owe the fees because they were not “reasonable and necessary” to the engagement. The engagement letter provided that the law firm was to perform “[r]easonable and necessary legal services . . . which [the firm] and [the clients] decide are reasonable and necessary to perform the Engagement.” Nevertheless, the affiant was not an attorney and was therefore not qualified to offer an opinion on the reasonableness or necessity of the fees. The Court also affirmed the summary judgment ruling in favor of the law firm’s cause of action for sworn account, as the defendants had failed to answer it with a verified affidavit that disputes the specific facts on which such a claim is based. The Court further affirmed that the defendants had not produced any evidence of recoverable damages on their counterclaims, since the only harm they had shown was having to incur attorney fees to defend themselves in this lawsuit. However, the Court reversed that portion of the judgment that held the president of one defendant jointly and severally liable for payment of the debt owed by one of the corporate defendants, and remanded the case to the trial court for further consideration of the attorney fees that had been assessed against that individual.

Woodhaven Partners, Ltd. v. Shamoun & Norman, L.L.P., No 05-11-01718-CV

Two and a half years ago, Charlene Taggert obtained the reversal of a declaratory judgment ordering that certain retirement accounts of her late husband belonged to his estate, not to her. The probate court had awarded attorney fees to the executors, so the Court of Appeals remanded to that court for further consideration of the attorney fees now that Charlene had become the prevailing party. On remand, the probate court awarded Charlene $18,000 for fees incurred at trial, and an additional $5,000 for the appeal. Both sides appealed the $5,000 award for the first appeal. The Court of Appeals rejected the executors’ claim that appellate fees could only be awarded on a conditional basis (i.e., “if the appeal is successful”), rather than for an appeal that has already been successful. The Court noted that “[o]n remand, the parties stand in the position they held before judgment was entered.” Likewise, the Court rejected Charlene’s argument that the probate court should have permitted her to offer new evidence of her actual appellate fees, rather than relying on the estimated fees presented during the original trial of the case. Relying on the Texas Supreme Court’s opinion in Varner v. Cardenas, 218 S.W.3d 68 (Tex. 2007), the Court held that retrial of a party’s attorney fees on remand is only necessary when the evidence offered at trial is no longer relevant.

Tigert v. Tigert, No. 05-12-01282-CV

Among other claims, the Olmsteads sued the Goldmans for breach of contract to purchase residential real estate.   The trial court rendered judgment in favor of the Olmsteads and awarded them damages and attorney fees; the Goldmans appealed.  The Court of Appeals partially reversed, holding that the Olmsteads take nothing on their claims and remanded the issue of attorneys’ fees.  The Court found that the trial court erred by awarding the Olmsteads damages based on the carrying costs of the house after the Goldmans breached the contract until the house was sold.  The proper measure of damages was the difference between the contract price and the market value of the house on the date the Goldmans breached the contract, which was zero.  The court reasoned that non-breaching sellers should not be awarded the post breach costs of ownership because it could “incent the seller to hold the property indefinitely while waiting for market conditions to change, or for a purchaser willing to pay a specific price.”

Goldman v. Olmstead

In 2008, Metroplex entered a mail processing agreement with Donnelley’s predecessor in interest Browne & Co under which Metroplex would sort mail for Browne’s Dallas facility customers.  In 2009, Metroplex ceased its operations, and Browne filed suit against Metroplex seeking the return of money it had on deposit.  The jury found in favor of Browne, and Metroplex appealed.  The Court of Appeals affirmed the jury’s finding of breach of contract against Metroplex and its award of attorney’s fees.  The Court, however, found no evidence to support piercing Metroplex’s corporate veil to hold its president personally liable.  Accordingly, the Court reversed the trial court’s judgment to the extent it orders recovery against the president individually, and affirmed the trial court’s judgment in all other respects.

Metroplex Mailing Servs. v. R.R. Donnelley Sons

Appellant Danny Katave and two other individuals solicited Israeli investors to develop commercial real estate. The negotiations took place in Israel, and were conducted in Hebrew. The discussions resulted in two written contracts, one in Hebrew and one in English. The Hebrew document provided for a 10% success fee to Katave, but the English document included a 20% success fee. Naturally, Katave claimed the 20% fee when the property was sold. In the resulting litigation, the jury sided with the investors, finding that Katave had committed fraud by failing to disclose that the English document did not contain the same terms as the Hebrew contract.

The Court of Appeals confirmed the adequacy of the evidence supporting the finding of fraud by omission, holding that Katave had a duty to make a full disclosure in order to correct the false impression conveyed by his partial disclosure that the terms of the documents were consistent. The Court also affirmed the trial court’s finding of $466,226 in out-of-pocket damages, rejecting Katave’s contention that his agreement to submit the issue of “damages” to the trial court did not include the measure of damages to be applied. However, the Court of Appeals reversed the trial court’s award of attorney fees in favor of the investors, holding that the investors had plead and prevailed in the case as a fraud claim, not a claim for breach of contract. Because attorney fees are not recoverable on the basis of fraud, the investors could only recover their out of pocket damages.

K.A. West, LLC v. GK Investments, Inc., No. 05-11-00617-CV

The trial court granted summary judgment for approximately $30,000 in unpaid invoices under an “account stated” theory, as well as roughly $15,000 in attorneys fees.  Pegasus Transportation Group v. CSX Transportation, No. 05-12-00465-CV (August 14, 2013, mem. op.)  The Court of Appeals affirmed, reminding that “account stated” can allow recovery without an express contract when the parties have “a standard course of dealing . . . after the expiration of that written agreement.”  The Court also gave no weight to a controverting affidavit on attorneys fees, noting that it “does not address what was described by [plaintiff’s] lawyer as the work that was done, what is customarily charged in similar cases, why the time expended was excessive to accomplish the work provided, or that the work performed was unnecessary.”  (citing Cammack the Cook, LLC v. Eastburn, 296 S.W.3d 884, 895 (Tex. App.–Texarkana 2009, pet. denied)).

McKinney Aerospace was in the business of airplane repair.  In 2006, Boyington Capital Group came to McKinney for repairs on its airplane.  During negotiations, McKinney’s executive vice president, Randall Haler, told Boyington Capital, that McKinney was in “very fine legally financial shape.”  As it turns out, McKinney was on the verge of bankruptcy and failed to repair the plane.  It had also used Boyington’s initial payments to hold off creditors, so it could not return those funds to Boyington.  Boyington sued McKinney and Haler for, among other things, fraud, conversion, breach of fiduciary duty and breach of the Texas Theft Liability Act.  The jury found for Boyington.

On appeal, Haler argued that there was insufficient evidence to establish a claim under the TTLA against him. The Court of Appeals disagreed, upholding the jury’s finding and pointing out that “by misrepresenting the financial condition of McKinney Aerospace and spending money it received from Boyington on payments other than those related to repairing Boyington’s plane, Haler unlawfully appropriated Boyington’s property with the intent to deprive Boyington of its money.”  However, the Court of Appeals reversed the trial court’s grant of attorney’s fee to Boyington because Boyington did not segregate and exclude the fees for services that relate to its claims for which fees are not recoverable.

Haler v. Boyington Capital Group

IBP leased a restaurant space to Pizza Associates.  Graman executed the lease for Pizza Associates as its president, and executed a written guaranty, guaranteeing the payment and performance of the lease.  IBP terminated the lease after Pizza Associates failed to comply with its terms.  IBP sued Pizza Associates for breach of the lease, and sued Graman pursuant to the guaranty.  The trial court granted IBP’s motion for summary judgment, to which Graman had filed a response but Pizza Associates did not.  Graman appealed.

The court of appeals held that Graman did not raise a viable challenge to the trial court’s summary judgment against them because their arguments did not address the obligation to pay under the guaranty.  Instead, Graman raised issues related to the lease, but Pizza Associates’ liability was settled.  The court of appeals determined that Graman cannot avoid liability under the guaranty by now questioning the settled underlying liability related to the lease.  The court of appeals also rejected Graman’s argument that IBP was required to segregate its fees between the breach of lease suit and the breach of guaranty claim.  The court of appeals affirmed the trial court’s judgment.

Graman v. IBP Retail No. 5, L.P., No. 05-12-00565-CV

In 2006, Dr. Tran bought medical equipment on eBay for $14,580 using his Citibank credit card.  When the equipment arrived, Dr. Tran found that it was missing a key component so he contacted Citibank to dispute the purchase.  In response, Citibank issued two chargebacks: one in October 2006 for $4,580 (which the seller accepted) and one in November 2006 for the remaining $10,000 (which the seller did not accept).  Among other things, Tran sued Citibank for breach of an oral agreement to “timely” issue the credit card chargebacks together.  The Court of Appeals found that Tran had not put forward any evidence showing that Citibank agreed to issue the chargebacks “by a certain date, within a certain time frame, or at the same time.”  Thus, the Court held that the oral contract alleged by Dr. Tran failed for indefiniteness.

Citibank v Tran

In a commercial dispute concerning a furniture liquidation sale, the trial court awarded appellees damages for breach of contract and fraud, and attorney’s fees, but reduced the jury’s attorney’s fee award by nearly $425,000.  Among other issues, appellants challenge the trial court’s $100,000 judgment against Lavercombe based on fraud, and appellees challenge the trial court’s reduction of attorney’s fees.

The court of appeals reversed the trial court’s judgment with respect to the fraud claim.  The court found no evidence in the record showing that Lavercombe made a material misrepresentation as to the quantity and availability of upholstery products with an intent to deceive and with no intention of performing as represented.  The court of appeals also reinstated the jury’s higher award of attorney’s fees because there was more than a scintilla of evidence in the record supporting the jury’s award.  In all other respects, the court of appeals affirmed the trial court’s judgment.

Broyhill Furniture Indus. v. Murphy, No. 05-11-01545-CV

The trial court awarded the appellees over $360,000 in attorney’s fees in a commercial dispute concerning the sale of a business under an asset purchase agreement.  On appeal, the Court addressed the requirement that, when a party seeks attorney’s fees in a case involving several claims, some of which permit the recover of fees and some of which don’t, “the party must segregate and exclude the fees for services related to the claims for which fees are not recoverable.”  In this case, the appellees argued that they could not segregate fees because their tort claims (which don’t provide for attorney’s fees) arose from the same transactions and facts as their contract claims (which do).  The Court disagreed and found that “[b]ecause there is not a de minimis exception to the requirement to segregate recoverable attorney’s fees from non-recoverable and there was evidence of unsegregated non-recoverable attorney’s fees included in the amount awarded by the trial court, a new trial on attorney’s fees is required.”

CTMI v. Fischer

Turner Brothers Trucking sued Kristal Baker, S/W Quality Hay and others in 2007 for breach of contract, fraud, and DTPA violations, among other things.  The suit stemmed from the brokerage agreement between Baker and Turner Brothers under which Turner would invoice customers, receive payment and pay Baker a commission.  S/W Quality was one of Baker’s customers who refused to pay Turner a commission.  Turner won on summary judgment and was awarded damages and attorneys fees.  But in March 2010, Turner sought an application for turnover so it could join the former managers and members of S/W Quality because those managers purportedly paid for and received life insurance proceeds with company funds. Turner thought this money should be available for creditors like itself.  The court agreed with Turner and required S/W to turnover two computers, a tractor and a pickup truck, but refused to appoint a receiver to pursue legal claims against S/W’s managers.

On appeal, Turner challenged the court’s refusal to appoint a receiver as well as its conclusion that Turner was not entitled to attorneys’ fees.  The Court of Appeals upheld the trial court’s refusal to appoint a receiver to go after the manager of S/W because, it held, “Texas courts do not apply the turnover statute to non-judgment debtors.”  The Court, however, reversed the trial court’s holding on attorneys fees, noting that “a judgment creditor who obtains turnover relief is entitled to reasonable costs, including attorneys’ fees.”

Turner Bros v Baker

The court vacated and reversed and rendered the trial court’s judgment in a forcible-detainer action awarding the Plaintiff possession of the property, damages, and attorney’s fees. The Daftarys commercial real estate lease with HSM expired in 2008, and they sought to exercise a three-year renewal option. The parties did not execute a written extension, but the Daftarys continued paying rent for over a year beginning in July 2008. In December 2009, HSM requested that the Daftarys either execute a new long-term lease or vacate, and when the Daftarys refused filed this forcible-detainer action. On the morning of trial, the Daftarys relinquished the keys to the property and tendered possession of the space to the court and then argued that the case was moot because it no longer presented an issue about which party was entitled to possession. The trial court proceeded to a bench trial, awarding HSM possession, damages for the rental difference, and attorney’s fees.

On appeal, the court held that the issue of possession was moot, but that HSM’s claims for damages and attorney’s fees incurred defending possession presented live controversies. HSM failed to show sufficient evidence of damages, however, because they only presented evidence that the property’s rental value had increased in July 2008, and presented no evidence of value in December 2009 when their right to possession accrued. And because the trial court lacked jurisdiction to consider the possession issue and erred by awarding HSM’s damages, HSM was no longer the prevailing party and could not collect attorney’s fees.

Daftary v. Prestonwood Market Square, No. 05-11-00673-CV

We don’t usually cover family law cases here at 600 Commerce, but this one involves the validity of an award of attorney fees as a sanction against the plaintiff. Steven Shilling and Karrie Gough divorced in 2005. The divorce decree included an agreed permanent injunction prohibiting the Ms. Gough from “disclosing” information about her ex-husband’s medical history. Several years later, Mr. Shilling sued his ex-wife for allegedly violating the injunction. After a bench trial, the trial court ruled that Gough had not violated the injunction by discussing Shilling’s medical history with her friend and new husband because they already knew about Shilling’s medical history — hence, Gough had not “disclosed” it to them. The trial court then awarded Ms. Gough $96,000 in attorney fees under both section 9.014 of the Family Code and as sanctions against Shilling for bringing a frivolous and bad faith lawsuit.

After rejecting section 9.014 as the basis for an award of fees — concluding that section only authorizes attorney fees in a suit for enforcement of the division of property, not enforcement of an injunction against speech — the court of appeals turned to the issue of attorney fees as a sanction. Gough’s answer had requested an award of attorney fees and stated that Shilling’s suit was “frivolous and brought for the purposes of harassment only.” The pleading was otherwise silent on the basis for any award of fees, no motion for sanctions was ever filed, and the trial court never issued any order for Shilling to show cause why he should not be sanctioned. Under those circumstances, the court of appeals held that the trial court abused its discretion by awarding fees to Gough under Chapter 10 of the Civil Practice & Remedies Code, which requires either a motion for sanctions or an order to show cause that describes the sanctionable conduct. The court likewise ruled that the attorney fees could not be sustained as a sanction under Rule 13 for filing a case that was “groundless and brought in bad faith,” because it was not self-evident that Ms. Gough’s discussions with her friend and new husband had not “disclosed” new information about Shilling’s medical history. Accordingly, the court of appeals reversed and rendered the attorney fees award.

Shilling v. Gough, No. 05-11-00292-CV

The court of appeals has issued a lengthy opinion in an employment non-disclosure case, partially affirming a jury verdict in favor of the former employer.  In this instance, both the plaintiff and the corporate defendant were in the business of providing in-home pediatric nursing services.  After the defendant company hired away three of the plaintiff’s employees, eleven of the plaintiff’s most profitable accounts moved over to the new company.  The court of appeals started by noting that the defendants did not challenge the jury’s finding that they had entered into a conspiracy to damage the plaintiff.  That led the court to conclude that each of the defendants was jointly and severally liable for the other defendants’ breaches of their non-disclosure agreements, which were themselves established by sufficient evidence at trial.  The court of appeals upheld the jury’s award of $250,000 in lost profits attributable to the eleven patients lost by the plaintiff, but reversed and rendered amounts that had been awarded for profits that would have been earned after the plaintiff went bankrupt and sold off its business.  According to the court, there was no evidence that he plaintiff would have had the right to continue receiving profits from customers after the business was sold, so there was no evidentiary basis for the recovery of those post-sale profits.  Finally, the court of appeals affirmed the trial court’s grant of JNOV against the plaintiff on its claim for attorney fees, holding that fees were not recoverable because the plaintiff had not offered any proof of presentment to the defendants.

Helping Hands Home Care, Inc. v. Home Health of Tarrant County, Inc., No. 05-08-01657-CV

The members of a limited partnership entered into a partnership agreement providing that they would each relinquish their partnership interest if they departed involuntarily.  The agreement also provided that while no payment was required, the remaining partners could still decide to make a payment to the involuntarily departing partner.  In late 2008, two of the three partners decided to terminate Arvid Leick.  The remaining partners initially offered to pay him in excess of $300,000, but Leick insisted on almost twice that amount.  The partnership and the remaining partners then filed suit seeking a declaratory judgment that Leick had been involuntarily terminated and that they therefore did not owe him anything at all.  Leick counterclaimed.  The jury found that Leick’s termination had been involuntary, but that he still should have been paid what the remaining partners had originally offered.  The trial court reduced the award to $125,000, but still entered judgment in favor of Leick.

On appeal, the partnership claimed that the trial court had erred by improperly instructing the jury that the remaining partners had an obligation to treat the involuntarily terminated partner fairly and reasonably.  The court of appeals reversed and entered a take-nothing judgment against Leick, holding that this instruction was contrary to the plain language of the partnership agreement, which left it up to the remaining partners whether an involuntarily departure would lead to any payment at all.  Although the Texas Revised Partnership Act does require partners to be fair and reasonable to one another, that could not serve as the basis for the jury instruction because Leick was no longer a partner after the day he was terminated.  The court of appeals likewise sustained the trial court’s directed verdict against Leick on his claim for breach of fiduciary duty, since that claim also focused on the other partners’ treatment of him after he was terminated, and there was no fiduciary duty for the parties to remain partners with one another.  Finally, the court vacated the trial court’s award of attorney fees to Leick, but noted that he still might still be able to recover fees on remand under the Declaratory Judgments Act, even though he was no longer the prevailing party.

LG Insurance Management Services, LP v. Leick, No. 05-10-01646-CV

Inwood on the Park Apartments brought a forcible detainer action to get tenant, Stephanie Morris, to vacate her apartment.  According to Inwood, Morris breached her lease by permitting a guest to create “disturbances” in the apartment parking lot, which included disturbances involving public indecency.  After the suit was filed, Morris vacated the apartment, and Inwood filed a notice of nonsuit as to “possession” but reserved its claim for attorney’s fees.

Morris moved to dismiss the claim for attorney’s fees, arguing that Inwood’s nonsuit of its claim for forcible detainer mooted any claim for attorney’s fees.  Rejecting Morris’ argument, the Court of Appeals held that a “dispute over attorney’s fees is a live controversy and may prevent an appeal from being moot.”

Inwood on the Park Apartments v. Morris, No. 05-11-0142

In 2009, a class of shareholders challenged the stock-for-stock merger between Centex Corp. and Pulte Homes, charging that the board breached its fiduciary duties by failing to obtain an adequate price for the shareholders.  As often happens, the parties quickly settled, and Centex and Pulte agreed to disclose additional information about the merger in the proxy statements.  While the settlement provided class counsel with a hefty cash payment of attorneys’ fees, the shareholder’s reward was simply more information.

Rocker raised several objections to the settlement, but his most salient objections were (1) that the settlement’s release was too broad because it waived all known and unknown claims without granting the shareholders an opportunity to opt-out; and (2) that class counsel could not recover their attorneys’ fee in cash, when the class received only injunctive relief.  The Court credited both of Rocker’s arguments.  Regarding the first, the Court held that “[i]f appellees require a ‘limitless release,’ then due process requires that class members be afforded the option to be excluded from the class.” Regarding the second, it found that “if there is no cash recovery for the class, fees could not be awarded in cash, regardless of the value of the benefit to the class.”    The Court then remanded the case to the trial court for further proceedings.

Rocker v. Centex Corp, No. 05-10-00903