A recent Law 360 story by Michelle Casady, “Texas Justices Clarify Evidence Needed for Atty Fees,” reports that the Texas Supreme Court clarified what evidence lawyers must present to support their claims for attorney fees and costs, saying an $800,000 fee request in a dialysis center lease dispute was "too general." A private dialysis center affiliated with the University of Texas Southwestern Medical School, UTSW DVA Healthcare LP, didn’t present specific-enough evidence to support its attorney fee request after the clinic won a lease dispute with landlord Rohrmoos Venture, the court said.
The court also remanded a second fee dispute case, Barnett v. Schiro, to a lower court for reconsideration under its Rohrmoos ruling. In the decision, the court sought to dispel what it said was confusion on the part of lawyers and courts about two methods of calculating fees — the “Arthur Andersen method” and the lodestar method. It said the lodestar method of calculating attorney fees was “never intended to be a separate test or method” from eight factors the court set forth in its 1997 ruling in Arthur Andersen & Co. v. Perry Equip. Corp.
Instead, lodestar was developed as a shorthand version of the Andersen factors, the court explained. The starting point for calculating fees is determining the reasonable hours worked, multiplied by a reasonable hourly rate, and it's the burden of the party seeking those fees to prove up the request, the court said. The lodestar method arrives at the fee amount by multiplying the number of hours spent working on the case by a reasonable hourly rate. The Arthur Andersen method requires a court to consider eight factors in awarding fees, including time and labor, how difficult a case is, what a customary rate is, the results obtained and the skill of the attorney.
In the Rohrmoos case, UTSW attorney Wade Howard of Liskow & Lewis, sought about $800,000 in fees, plus conditional fees for any appeal. Howard testified that his hourly rate is $430, and that the number of hours spent on this case was between 750 and 1,000. While that would mean his fees were between $300,000 and $400,000, he said his fees were closer to or exceeded $800,000 in this case because the discovery and deposition process was so intensive.
The Texas Supreme Court wrote it understood Howard's argument that the actions of opposing counsel caused the cost of litigation to increase. “However true this may be, Howard’s justification for why his fees should be $800,000 — searching through 'millions' of emails and reviewing 'hundreds of thousands' of papers in discovery, more than forty depositions taken, and a forty-page motion for summary judgment — is too general to establish that the requested fees were reasonable and necessary,” the high court wrote. “Without detail about the work done, how much time was spent on the tasks, and how he arrived at the $800,000 sum, Howard’s testimony lacks the substance required to uphold a fee award.”
Howard told Law360 that during oral arguments before the court he tried to stress that putting hundreds of pages of detailed billing records before the jury would “do nothing” to help them determine what costs are reasonable and necessary. But he said the ruling was “about as painless as possible” because he kept detailed, contemporaneous billing records and now will just have to present those — which were already produced in discovery to the other side — to the trial court. “The reality is this is a conservative court and they don't like the award of attorneys fees with limited proof,” he said. “We had a strong suspicion that the court was going to start requiring more than the Arthur Andersen factors ... but for anyone who keeps billing records, it's not an issue.”
Citing the Rohrmoos ruling, the court also decided another case. In that dispute, attorney Richard Schiro represented Daniel Barnett in a lawsuit brought by Kirtland Realty Group in 2011 that ended in a settlement agreement. Schiro then sued to recover from Barnett $183,673 in unpaid legal fees, which the jury awarded him. Schiro also sought “reasonable attorneys' fees and costs” in the suit, and the jury awarded him $131,786.
Barnett appealed, arguing there was insufficient evidence to support that award of fees and costs, and the lower appellate court affirmed the ruling. But the Texas Supreme Court reversed that ruling and sent the case back to the trial court to redetermine what fees should be awarded in light of its holding in Rohrmoos. Charles W. McGarry of Law Office of Charles McGarry, who represents Barnett, told Law360 he'll likely ask the Texas Supreme Court for rehearing because part of his argument was that the court should have rendered judgment in his favor rather than send it back to the trial court.
According to court documents, in the lease dispute between Rohrmoos and UTSW a jury found both parties breached the lease, but that Rohrmoos had breached first. As the prevailing party, a jury awarded UTSW $800,000 in fees, and a conditional $150,000 for representation in the court of appeals, and $75,000 for representation in the Texas Supreme Court, totaling a little more than $1 million. On appeal, Rohrmoos argued the evidence wasn't enough to support that total, but the lower appellate court disagreed and upheld the award. On appeal to the Texas Supreme Court Rohrmoos again challenged the sufficiency of the evidence and argued that UTSW wasn't actually a prevailing party since the jury found both parties breached the lease, and therefore wasn't entitled to fees.
In its opinion, the Texas Supreme Court held that UTSW was a prevailing party in the lawsuit because it successfully defended against a counterclaim from Rohrmoos seeking $250,000 in unpaid rent. The cases are Rohrmoos Venture et al. v. UTSW DVA Healthcare LLP, case number 16-0006, and Daniel S. Barnett et al. v. Richard B. Schiro, case number 18-0278, in the Supreme Court of Texas.