Reverse and Render : Texas Appellate Lawyer & Attorney : Cowles & Thompson Law Firm : Court of Appeals, Texas Supreme Court

The Dallas Court of Appeals, in an opinion by Chief Justice Carolyn Wright (left), recently held that attorney's fees awarded in a judgment need not be superseded on appeal.  In an opinion last year also by Chief Justice Wright, the Dallas Court held that attorney's fees awarded in a breach of contract case were not "compensatory damages," and, therefore, were not required to be superseded on appeal.  Here, attorney's fees were awarded under Chapter 134 of the CPRC, otherwise known as the Texas Theft Liability Act.  The Court held that Chapter 38 (regarding breach of contract) and Chapter 134 of the CPRC were basically indistinguishable noting that attorney's fees were mandatory under  both provisions.  The Court refused to follow the rationale of the Houston (1st) Court of Appeals, which had previously held that attorney's fees constitute compensatory damages and must be superseded on appeal. Consequently, the Dallas Court denied the Appellee's request to increase the supersedeas bond to secure the award of attorney's fees.  This creates a spilt of authority between Dallas and Austin, both holding attorney's fees need not be superseded, and Houston (1st), holding attorney's fees must be superseded, making it ripe for review by the Texas Supreme Court.   The Court's opinion in Imagine Automotive Group, Inc. v. Boardwalk Motor Cars, LLC can be found here.  

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The Fifth Circuit Court of Appeals has held that when it becomes necessary to secure out-of-district counsel to adequately represent a civil rights plaintiff, the prevailing rates charged by that firm are the starting point for the lodestar calculation for an award of attorney's fees.  This ruling is an exception to the usual rule that attorney's fees will be judged by the prevailing rate in the jurisdiction where the court is located.

McClain v. Lufkin Industries Inc. is a Title VII class action employment discrimination case.  The Plaintiffs presented unrebutted evidence that it was necessary for them to retain counsel outside of the Eastern District of Texas--the location of the suit.  No other counsel was present in the location with the resources to handle the size and nature of the lawsuit; accordingly, local counsel for the plaintiffs retained a California law firm to help with the case.   The district court rejected consideration of the California firm's $650 hourly rate, which was the prevailing rate in the San Francisco Bay Area, and awarded $400 per hour for the partners at the California firm.

The Fifth Circuit noted the consistent precedent from that circuit that the "prevailing rate in the community" refers to the community where the district court is located.  The court also observd that other circuit courts have allowed out-of-district counsel to recover fees at rates in their home districts under limited circumstances.  Based upon the unrebutted evidence, the Fifth Circuit held that the district court "clearly erred" in finding that local attorneys were available to assist in the representation of the plaintiffs, and the court held that the attorneys could recover fees using the rates in their home district because they had proven that there was no counsel available locally to assist the plaintiffs.  The court's opinion may be found here. 

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The San Antonio Court of Appeals recently decided two cases dealing with recovery of attorney's fees for breach of contract.  The court first held that a party who brings an action to enforce a Mediated Settlement Agreement (MSA) is not entitled to attorney's fees under Chapter 38 of the Texas Civil Practice and Remedies Code unless the party also recovers damages.  More recently, the court confirmed that while a plaintiff that seeks attorney's fees as a "prevailing party" under a contract must also recover damages, a defendant may recover attorney's fees as a prevailing party by defeating the breach of contract claim.  These cases, relying on Texas Supreme Court precedent, confirm that parties seeking specific performance under a contract or MSA are not necessarily entitled to attorney's fees for merely obtaining enforcement of the agreement.  The court of appeals' opinion in Garza v. Villareal is here and the opinion in Fitzgerald v. Schroeder Ventures II is here.

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The Austin Court of Appeals recently held that a plaintiff's notice of non-suit precludes a defendant from recovering attorney's fees as prevailing party under a written agreement.  In this case, the plaintiffs bought a house from defendants under a standard-form sales contract promulgated by the Texas Real Estate Commission.   Plaintiffs brought suit against defendants for failing to disclose alleged defects to the house and sought attorney's fees.  Defendants also requested attorney's fees.  Section 17 of the contract provides that the prevailing party is entitled to attorney's fees.  Plaintiffs nonsuited their claims prior to trial leaving only the defendant's claim for attorney's fees unresolved.  The trial court entered a take nothing judgment against the plaintiffs (despite the nonsuit) and awarded the defendants attorney's fees.

The court of appeals reversed the take-nothing judgment against the plaintiffs because the trial court had no discretion but to dismiss the plaintiffs' claims without prejudice once the notice of nonsuit was filed.  More importantly, however, the court reversed the attorney's fees award and held that the defendants were not prevailing parties because they had not prevailed on the merits of any legal proceeding related to the contract.  The court of appeals stated:

Because the court did not adjudicate the [plaintiffs'] claims, and because the [defendants] brought no claim for relief on which they could prevail other than their request for attorney's fees, the [defendants] did not prevail on any claims that would entitled them to attorney's fees under the terms of contract.

The court of appeals also rejected defendants' argument that allowing parties to nonsuit at the last minute to avoid liability for attorney's fees was poor public policy.  The court distinguished a case in which a party sought statutory attorney's fees after a partial nonsuit.  The court's opinion in Fowler v. Epps can be found here.

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Supersedeas aficionados will want to take a look at the Austin Court of Appeals' opinion in Shook v. Walden.  The opinion gives a very thorough treatment of the parties' arguments and analysis of the law relating to elements of damages that must be superseded.  To summarize, the court of appeals makes the following holdings:

• Attorney's fees awarded under Civil Practice and Remedies Code Chapter 38 are not compensatory damages that must be superseded under Civil Practice and Remedies Code Section 52.006.  The court distinguishes the Houston Fourteenth Court of Appeals decision in Clearview Props., L.P. v. Property Tex. SC One Corp., 228 S.W.3d 262 (Tex. App.--Houston [14th Dist.] 2007, pet. denied)
• Prejudgment interest is a form of compensatory damages that must be superseded under Civil Practice and Remedies Code Section 52.006.
• The clerk's record for an appeal is not a cost awarded in the judgment and does not have to be superseded under Civil Practice and Remedies Code Section 52.006.
• Post-judgment interest, including the post-judgment interest awarded on prejudgment interest, trial and post-judgment attorney's fees, and costs must be superseded under Civil Practice and Remedies Code Section 52.006.
• Post-judgment interest for one year's estimated is adequate since the trial court has continuing jurisdiction to revisit the matter after a year has passed.

The court's opinion may be found here.  The court's opinion that post-judgment interest on post-judgment attorney's fees must be superseded is interesting in light of the Fourteenth Court's holding that post-judgment interest on post-judgment attorney's fees should not begin to run until the appeals court judgment is final.  Protechnics Int'l, Inc. v. True-Tag Sys., Inc., 843 S.W.2d 734, 736 (Tex. App.-- Houston [14th Dist.] 1992, no writ).

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Attorney's Fees for travel time are recoverable under Chapter 38 of the Texas Civil Practice and Remedies Code, according to the San Antonio Court of Appeals.   In Wilkerson v. Atascosa Wildlife Supply, Atascosa sought recovery of attorney's fees inclusive of $5,500 for travel time.  Atascosa offered evidence that the travel time was reasonable and necessary considering the distance traveled.  The evidence also showed that he billed only one-half of his rate for 36 hours of the travel time in which he was driving and not actively working on the case.  After the trial court granted Atascosa's attorney's fees, Wilkerson appealed.

The court of appeals observed that it could find no Texas case precluding an award of attorney's fees that includes travel time.  Based upon the evidence presented, the court concluded that there was nothing in the record showing the award of attorney's fee for travel time was unreasonable or arbitrary and the court affirmed the judgment.  The court's opinion may be found here.  Wilkerson has now been filed in the Texas Supreme Court.  The docketing information can be found here.

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The Texas Supreme Court recently narrowed the right to attorney's fees based on uncontroverted evidence.  The Court held that compentent, uncontroverted, unchallenged evidence of attorney's fees does not entitle a party to an award of attorney's fees as a matter of law.  Distinguishing its opinion in Ragsdale v. Progressive Voters League, the Court held that under the well-known factors set forth in Arthur Anderson & Co. v. Perry Equip. Corp., the factfinder (here a jury) was free to award a lesser amount of fees considering "the amount involved and the results obtained." 

In one bright spot for clients and counsel, the Court did note that the jury was not free to award zero attorney's fees stating:

Although it could have rationally concluded that, in light of the amount involved and results obtained, a reasonable fee award was less that the full amount sought, no evidence supported the jury's refusal to award any fees.

The Court remanded the case for a new trial on attorney's fees.  No word on how much is reasonable or whether a formula taking into account the amount invovled and amount incurred should be employed.   It is also unclear why a defendant found liable should benefit from requiring a plaintiff to incur high fees to recover a small amount.  From this opinion, we know that a court may not award attorney's as a matter of law and the jury cannot award zero attorney's fees.  Until further notice, it seems anything in between remains in play.  The Court's opinion in Smith v. Patrick W.Y. Tam Trust can be found here. 

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In probate proceedings it is not always clear when the court has rendered an appealable order.  Probate proceedings can produce multiple final, appealable orders.   The San Antonio Court of Appeals recently addressed one of those circumstances in In re Guardianship of Glasser. 

In Glasser, the Probate Court appointed litigation counsel to help an Attorney Ad Litem in a guardianship proceeding.  The court's appointment order approved employment of litigation counsel and ordered that costs associated with the representation would be paid by the estate after being presented to the court and approved.  The court subsequently signed two orders approving fees and a final order at the conclusion of the proceeding approving fees and discharging the attorney ad litem and the litigation counsel.  The temporary guardian appealed the fee orders and the ad litem and litigation counsel sought dismissal, contending that the appeal was untimely because the court's initial orders of appointment and approval of fees were final, appealable orders at the time they were signed. 

The Court of Appeals disagreed, noting that the order of appointment simply set the stage for what followed and did not resolve a particular phase of the case.  The parties and the court understood and intended that there would be interim fee awards and that all awards were subject to a final hearing.  Accordingly, the interim orders were not final and appealable. 

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