law-segregation-of-attorneys-fees | attorneys-fees | reasonable and necessary attorney's fees |
Segregation
“[I]f any attorney’s fees relate solely to a claim for which such fees are unrecoverable, a claimant
must segregate recoverable from unrecoverable fees.” Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.
3d 299, 313 (Tex. 2006).
Duty to Segregate Attorney's Fees
Whether the recovery of attorney's fees is permitted by statute or contract in a given instance is one of law.
See Holland v. Wal-Mart Stores, Inc., 1 S.W.3d 91, 94 (Tex. 1999). In a proceeding under the Uniform
Declaratory Judgment Act, the trial court may award costs and reasonable and necessary attorney's fees as
are equitable and just. Tex. Civ. Prac. & Rem. Code Ann. § 37.009 (Vernon 2008); Rapid Settlements v.
SSC Settlements, L.L.C., 251 S.W.3d 129, 145 (Tex. App.-Tyler 2008, orig. proceeding). The court's
discretion to award attorney's fees is subject to the limitation that the attorney's fees be reasonable and
necessary, which are matters of fact. Bocquet v. Herring, 972 S.W.2d 19, 21 (Tex. 1998). Trial courts do not
have the inherent authority to award attorney's fees. Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299,
311 (Tex. 2006). Thus, claimants must segregate fees between claims for which fees are recoverable and
claims for which they are not. Id. If any attorney's fees relate solely to a claim for which such fees are not
recoverable, the claimant must segregate the recoverable from the unrecoverable fees. Id. at 313. A
common set of underlying facts is not enough. Id. The intertwined facts exception applies only when discrete
legal services advance both a recoverable claim or claims and an unrecoverable claim or claims. Id. at 313-
14. Then, and only then, is it unnecessary to segregate attorney's fees. Id. at 314. If recoverable, the
amount of attorney's fees is for the trier of fact. Bocquet, 972 S.W.2d at 21.
A failure to segregate attorney's fees does not mean that the claimant can recover no attorney's fees.
Chapa, 212 S.W.3d at 314. The amount of unsegregated attorney's fees for the entire case is some
evidence of the amount of segregated attorney's fees. Id. Thus, if a claimant fails to segregate attorney's
fees, we reverse and remand for a new trial on attorney's fees, rather than reverse and render. Id.
The usual method of proof of the amount of reasonable attorney's fees is the opinion testimony of lawyers
testifying as expert witnesses. 2 William V. Dorsaneo, III, Texas Litigation Guide § 22.41 (2009). The opinion
testimony may come from a disinterested attorney, or from an attorney whose fees are in question in the
case. Id.
The general rule is that the testimony of an interested witness, such as the attorney whose fees are to be
determined, though not contradicted, does no more than raise a fact issue to be determined by the jury.
Ragsdale v. Progressive Voters League, 801 S.W.2d 880, 882 (Tex. 1990). There is, however, an exception
to the rule whereby the testimony of an interested witness may establish facts as a matter of law. Id. The
exception applies when the testimony from the interested witness is not contradicted by any other witness or
attendant circumstances, and it is clear, direct, and positive, and free from contradiction, inaccuracies, and
circumstances tending to cast suspicion on the evidence. Id. "The exception to [this] interested witness rule .
. . is especially true where the opposing party has the means and opportunity of disproving the testimony, if
it is not true, and fails to do so." Id.
Here, Edom Wash 'N Dry claimed entitlement to attorney's fees based on the Uniform Declaratory
Judgments Act. See Tex. Civ. Prac. & Rem. Code Ann. § 37.009. Edom Wash 'N Dry presented evidence of
its attorney's fees through the testimony of one of its attorneys, Jeffrey Hurt. Mr. Hurt testified that, through
trial, Edom Wash 'N Dry had incurred attorney's fees in the amount of $171,984.05 and expenses in the
amount of $11,848.10 for a total of $183,832.15. The jury awarded Edom Wash 'N Dry that amount for its
attorney's fees and expenses incurred through trial.
Edom Wash 'N Dry made no attempt, or at best an inadequate attempt, to segregate attorney's fees
incurred for recoverable claims from attorney's fees incurred for unrecoverable claims. Mr. Hurt testified that
Edom Wash 'N Dry was provided two credits related to attorney's fees:
Q. Did our billing allow for some credits in the billing?
A. Yes. We actually gave [Edom Wash 'N Dry] a credit of $20,000. . . . Let me be accurate. We gave two
credits; one in the amount of $5,641.25 and one in the amount of $20,000. We gave those credits in coming
up with the numbers that we are - that I am applying as reasonable in a case regarding this matter.
Thus, it appears that Edom Wash 'N Dry sought and recovered the full amount of attorney's fees that it paid
in this case.
The credit of $5,641.25 applied to research related to a motion to disqualify. Edom Wash 'N Dry's attorney
stated that he determined it was not reasonable to charge for that motion, and thus, those fees were not
recoverable. Therefore, Edom Wash 'N Dry correctly removed the $5,641.25 from its requested attorney's
fees. But we cannot determine from this record which entries were covered by the $20,000.00 credit. Edom
Wash 'N Dry presented testimony that the $20,000.00 credit was given because 1) Edom Wash 'N Dry
deemed it unreasonable to be charged for certain repetitive preparation caused by multiple trial settings, 2)
some time entries should have been charged to other ongoing litigation that Edom Wash 'N Dry was
involved in, and 3) Edom Wash 'N Dry had other theories of recovery in this case. Presumably, this third
reason references the unrecoverable claims. Edom Wash 'N Dry did not identify and separate the amount
credited because of the unrecoverable claims.
The attorney's fees incurred to obtain the declaratory judgment are the only attorney's fees charged for a
recoverable claim. A review of the invoices admitted into evidence indicates that Edom Wash 'N Dry should
have segregated more than $20,000.00 of its attorney's fees as unrecoverable. Edom Wash 'N Dry incurred
more than $20,000.00 that clearly related to its other claims such as preserving the status quo through a
temporary restraining order and a temporary injunction, prosecuting its claims regarding unreasonable
blocking of the easement, and seeking punitive damages. Edom Wash 'N Dry has offered no basis or
authority for recovery of attorney's fees related to these services, and we have found none. As such, Edom
Wash 'N Dry failed to adequately segregate its attorney's fees. See Chapa, 212 S.W.3d at 311. Thus, the
trial court erred in awarding Edom Wash 'N Dry the full amount of attorney's fees it paid.
We sustain The Shed and Malone's fifteenth issue. We do not reach The Shed and Malone's fifth or
eighteenth issues. See Tex. R. App. P. 47.1.
09-0349
THE SHED, LLC AND MARY ELLEN MALONE v. EDOM WASH 'N DRY, LLC; from Van Zandt County;12th
district (12-07-00431-CV, ___ SW3d ___, 03-18-09, pet. denied July 2009) 2 petitions (easement dispute,
injunction, exemplary damages reversed, attorneys fees must be segregated)
Also see:
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