Little by little, appellate practitioners are getting answers to the many questions emanating from the supersedeas statute and law that came about as part of tort reform in 2003. The Texas Supreme Court‘s opinion in In re Nalle Plastics Family Limited Partnership holds that attorney’s fees are not compensatory damages that must be superseded.
The law firm of Porter, Rogers, Dahlman & Gordon, P.C. sued Nalle Plastics for breach of contract to recover unpaid legal fees. After a jury trial, the law firm recovered $132,661 in damages and the jury awarded $150,000 for attorney’s fees in connection with the breach of contract action. Nalle Plastics superseded the $132,661 in damages, but not the attorney’s fees. The trial court concluded that Nalle Plastics was required to also supersede the attorney fee award. After the court of appeals held that attorney’s fees are compensatory damages that must be superseded, Nalle Plastics sought supreme court review by petition for mandamus.
After review of the legislative history, the plain meaning of compensatory damages, and the legislative scheme, the supreme court held that attorney’s fees are not compensatory damages. The court also held that attorney’s fees are not costs of court that must be superseded.
There is one caveat in the court’s opinion. The court refused to hold that attorney’s fees can never be considered compensatory. As an example, the court noted that the breach of contract cause of action against Nalle Plastics was to recover unpaid attorney’s fees as damages. The court held that these fees which were the damage element of the breach of contract claim and as such would constitute compensatory damages.
The court’s opinion may be found here.