Smith v. Patrick W. Y. Tam Trust, 296 S.W.3d 545 No. 07-0970 (Tex. Oct. 23, 2009)(Jefferson)
(reasonable attorneys fees)
LAURI SMITH AND HOWARD SMITH v. PATRICK W.Y. TAM TRUST; from Collin County;
5th district (05-06-00356-CV, 235 SW3d 819, 07-31-07)
The Court reverses in part the court of appeals' judgment and remands the case to the trial court.
Chief Justice Jefferson delivered the opinion of the Court.
View Electronic Briefs SMITH v. TRUST
SUBSEQUENT CASES:
Midland Western Building LLC v. First Service Air Conditioning Contractors, Inc., No. 08-0504 (Tex. Nov. 20,
2009)(per curiam) (zero attorney's fees awarded by jury not supported by the evidence, attorney fee testimony,
segregation of fees incurred against different parties)(new trial on attorney's fees ordered)
We recently decided Smith v. Patrick W.Y. Tam Trust, ___ S.W.3d ___ (Tex. 2009), in which we held that an appellate court’s award
of the full amount of fees requested, despite the jury’s rejection of a substantial portion of the damages sought, was improper
because the fee, even if supported by uncontradicted testimony, was “unreasonable in light of the amount involved and the results
obtained, and in the absence of evidence that such fees were warranted due to circumstances unique to this case.” Smith, ___ S.
W.3d at ___. Thus, “the evidence did no more than raise a fact issue to be decided by the jury.” Id. at ___. Such is the case here.
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Smith v. Patrick W. Y. Tam Trust, 296 S.W.3d 545 (Tex. 2009)(Jefferson)
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Argued August 29, 2008
Chief Justice Jefferson delivered the opinion of the Court.
546
Robert D. Ranen, Ranen & Netzer, LLP, Plano, TX, for Petitioner.
Scott E. Hayes, Michael Wayne Massiatte, Vincent/Moye, P.C., Dallas, TX, for Respondent.
Chief Justice JEFFERSON delivered the opinion of the Court.
The reasonableness of attorney's fees is generally an issue for the trier of fact. In Ragsdale v. Progressive
Voters League, however, we held that a court may award attorney's fees as a matter of law when the testimony
on fees "`is not contradicted by any other witness, or attendant circumstances, and the same is clear, direct and
positive, and free from contradiction, inaccuracies, and circumstances tending to cast suspicion thereon.'"
Ragsdale, 801 S.W.2d 880, 882 (Tex.1990) (quoting Cochran v. Wool Growers Cent. Storage Co., 140 Tex. 184,
166 S.W.2d 904, 908 (1942)). We must decide whether Ragsdale authorizes a court to award fees as a matter of
law when a jury awards roughly one-third of the damages sought and no attorney's fees. Because, under such
circumstances, a court's award of the full amount of fees sought is unreasonable, we reverse in part the court of
appeals' judgment and remand to the trial court for a new trial on attorney's fees.
I
Factual and Procedural Background
The Patrick W.Y. Tam Trust owns a shopping center in Collin County. The Trust leased space to Independent
Quality Wholesale, Inc. d/b/a Plano Pets & Grooming, with Lauri and Howard Smith as guarantors. When Plano
Pets stopped making payments, the Trust sued Plano Pets[1] and the Smiths, seeking $215,391.50 in damages
and $47,438.75 in attorney's fees.
At trial, Scott Hayes, the Trust's attorney, testified that a reasonable fee for the preparation and trial of the case
would be $47,438.75, plus $15,000 for appeals, for a total of $62,438.75. To support his testimony, Hayes
offered the legal bills of several other attorneys in his firm. The Smiths unsuccessfully objected that the bills were
hearsay but did not otherwise challenge the Trust's evidence.
The jury found the Smiths liable and awarded the Trust $65,000 in damages but no attorney's fees. The Trust
moved to enter judgment on the jury's liability and damages answers and to disregard the jury's refusal to award
attorney's fees. The trial court rendered judgment that the Trust receive the $65,000 the jury awarded, and
rendered judgment notwithstanding 547 the verdict on attorney's fees: $7,500 for fees incurred through trial and
up to $15,000 in attorney's fees for success at various stages of appeal. Both sides appealed.
The court of appeals vacated the $7,500 attorney's fee award and rendered judgment for $47,438.75 instead,
holding that "[b]ecause the Trust presented competent, uncontroverted evidence of its right to attorney's fees
and because the Smiths did not challenge the amount, nature, or necessity of these fees ... the trial judge
abused his discretion in awarding $7,500." 235 S.W.3d 819, 828 (citing Ragsdale, 801 S.W.2d at 881). The court
of appeals affirmed the remainder of the judgment. Id. at 829. We granted the Smiths' petition for review. 51 Tex.
Sup.Ct. J. 980, 987 (June 9, 2008).
II
Discussion
"A person may recover reasonable attorney's fees ... in addition to the amount of a valid claim and costs, if the
claim is for ... an oral or written contract." TEX. CIV. PRAC. & REM.CODE § 38.001(8). If attorney's fees are
proper under section 38.001(8), the trial court has no discretion to deny them. See Bocquet v. Herring, 972 S.W.
2d 19, 20 (Tex.1998) (holding that statutes providing that a party "may recover" attorney's fees are not
discretionary). Generally, the party seeking to recover attorney's fees carries the burden of proof. Stewart Title
Guar. Co. v. Sterling, 822 S.W.2d 1, 10 (Tex.1991).
The reasonableness of attorney's fees is ordinarily left to the factfinder, and a reviewing court may not substitute
its judgment for the jury's. Barker v. Eckman, 213 S.W.3d 306, 314 (Tex. 2006); Ragsdale, 801 S.W.2d at 881. In
Ragsdale, we held that "[i]n awarding attorney's fees the trial court, as the trier of fact, must take into account
various factors such as: the nature and complexity of the case; the nature of the services provided by counsel;
the time required for trial; the amount of money involved; the client's interest that is at stake; the responsibility
imposed upon counsel; and the skill and expertise required." Ragsdale, 801 S.W.2d at 881. We noted that
generally, "`the testimony of an interested witness, such as a party to the suit, though not contradicted, does no
more than raise a fact issue to be determined by the jury.'" Id. at 882 (quoting Cochran, 166 S.W.2d at 908). But
we recognized that there was "`an exception to this rule, which is that where the testimony of an interested
witness is not contradicted by any other witness, or attendant circumstances, and the same is clear, direct and
positive, and free from contradiction, inaccuracies, and circumstances tending to cast suspicion thereon, it is
taken as true, as a matter of law.'" Id. (quoting Cochran, 166 S.W.2d at 908). "The court, as a trier of fact, may
award attorneys' fees as a matter of law in such circumstances, especially when the opposing party has the
means and opportunity of disproving the testimony or evidence and fails to do so." Id. Because the attorney's
fees evidence met those requirements, we rendered judgment for $22,500 in attorney's fees and affirmed the
$40,000 damages award. Id.
Relying on Ragsdale, the court of appeals in this case rendered judgment as a matter of law, holding that the
Trust's attorney's fee evidence was competent, uncontroverted, and unchallenged. 235 S.W.3d at 828-29. But
Ragsdale recognized that its rule would not apply whenever attorney's fees testimony is undisputed:
[W]e do not mean to imply that in every case when uncontradicted testimony is offered it mandates an award of
the amount claimed. For example, even though the evidence might be uncontradicted, if it is unreasonable,
incredible, 548 or its belief is questionable, then such evidence would only raise a fact issue to be determined by
the trier of fact.
Ragsdale, 801 S.W.2d at 882. We also cautioned that the factfinder had to consider "the amount of money
involved." Id. at 881; see also Wayland v. City of Arlington, 711 S.W.2d 232, 233 (Tex.1986) ("One of the factors
in determining the reasonableness of attorney's fees is the amount of damages awarded."). Seven years later,
we added a corollary: the factfinder should consider "the amount involved and the results obtained," among
other things. Arthur Andersen & Co. v. Perry Equip. Corp., 945 S.W.2d 812, 818 (Tex.1997).
Here, the Trust sought over $200,000 in damages, but the jury awarded only $65,000. The Trust asked for a
maximum of $62,438.75 in attorney's fees; the jury awarded nothing. The court of appeals held that fees were
established as a matter of law. See Ragsdale, 801 S.W.2d at 882. But the fee, though supported by
uncontradicted testimony, was unreasonable in light of the amount involved and the results obtained, and in the
absence of evidence that such fees were warranted due circumstances unique to this case. Cf. Farrar v. Hobby,
506 U.S. 103, 114, 113 S.Ct. 566, 121 L.Ed.2d 494 (1992) (holding that "`the degree of the plaintiff's overall
success goes to the reasonableness' of a fee award" and "`the most critical factor' in determining the
reasonableness of a fee award `is the degree of success obtained.'") (quoting Tex. State Teachers Ass'n v.
Garland Indep. Sch. Dist., 489 U.S. 782, 793, 109 S.Ct. 1486, 103 L.Ed.2d 866 (1989); Hensley v. Eckerhart,
461 U.S. 424, 436, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983)). Although the Trust sought some $215,000 in
damages, the jury found that "the amount involved" was much lower— $65,000. The jury then decided that the
Trust was entitled to no fees (which must be reversed for reasons explained below).
The Trust complains that the Smiths' failure to request a jury instruction on the Arthur Andersen factors waives
their right to complain about the fee award. But the jury's fee award is not at issue here. The court of appeals
awarded the full amount requested, despite the jury's rejection of a substantial portion of the damages sought.
Those fees, even though supported by uncontradicted testimony, may not be awarded by a court as a matter of
law.
We have held that the Arthur Andersen factors apply to fee awards made by trial courts, not just juries. Young v.
Qualls, 223 S.W.3d 312, 314 (Tex. 2007). We see no reason why they would not apply—as the Ragsdale factors
do—to an appellate court's assessment of whether fees were established as a matter of law. Because the fee is
unreasonable in light of the amount involved and the results obtained, the evidence did no more than raise a fact
issue to be decided by the jury. See Ragsdale, 801 S.W.2d at 882.
The jury, however, awarded nothing. Although it could have rationally concluded that, in light of the amount
involved and the results obtained, a reasonable fee award was less than the full amount sought, no evidence
supported the jury's refusal to award any attorney's fees (as the court of appeals correctly noted). 235 S.W.3d at
829. The trial court could have directed the jury to reform its verdict, see TEX.R. CIV. P. 295, but the court was
not free to set a reasonable fee on its own. Accordingly, the Smiths are entitled to a new trial on attorney's fees.
On retrial, the evidence may support a similar fee award, but that is a matter within the jury's purview. See
Young, 223 S.W.3d at 315 ("It may be that, upon consideration of the correct results obtained, this evidence
would be factually sufficient to support a like fee award."). On this record, the Trust is not entitled to its fees 549
as a matter of law. Because the court of appeals concluded otherwise, we reverse its judgment as to attorney's
fees and remand that part of the case to the trial court for a new trial. TEX.R.APP. P. 60.2(d).
Wallace B. Jefferson
Chief Justice
Opinion Delivered: October 23, 2009
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[1] The Trust nonsuited Plano Pets after the company filed bankruptcy.