A recent Law 360 story by Michelle Casady, “Texas High Court Nixes New Trial in $42M Attys’ Fee Row,” reports that the Texas Supreme Court sided with the owner of a water supply company who argued a trial court wrongly stripped away a jury verdict in his favor and awarded his former attorneys a new trial in a contingency fee dispute in which the lawyers argued they were entitled to $42 million in damages.
 
Dean Davenport was granted state high court review in February after arguing it was an abuse of the trial court's discretion to order a new trial 105 days after the jury returned its verdict in his favor, finding that solo practitioners Thomas C. Hall and F. Blake Dietzmann were not entitled to a stake in his company.  In October 2013 the jury rejected the attorneys' claims they were entitled to the damages stemming from an underlying suit in which Davenport won full ownership of the water supply company.

In its opinion, the court concluded that the agreement is unambiguous in stating the lawyers are only entitled to fees from a monetary recovery, and it directed the trial court to vacate its new trial order and render final judgment in favor of Davenport.  The court wrote that it did not believe the new trial order was “issued for valid reasons.”

“After examining the agreement’s language, we find no support for the lawyers’ assertion.  The contract unambiguously allows for Hall and Dietzmann to only recover money in exchange for their legal services,” the court held. “ ... The court must read contractual provisions so none of the terms of the agreement are rendered meaningless or superfluous.  But the lawyers request that we infer a positive from a clear negative.”

In a concurring opinion, Justice Jeffrey Boyd wrote that he concludes the agreement is ambiguous because it can “reasonably support” the position of both parties, explaining the trial court erred by deciding the agreement unambiguously entitles the attorneys to a stake in the company and that the Texas Supreme Court erred by holding it unambiguously does not.

“Instead, the agreement’s meaning presents a jury issue.  The trial court was initially correct to submit it to the jury, and the jury found that the agreement does not require the client to give the attorneys the [Water Exploration Co.] interests,” the concurring opinion reads.  “I join the court’s judgment ordering the trial court to vacate its new-trial order and enter judgment for the client, but I would order the trial court to enter the judgment based on the jury’s verdict, not because the agreement unambiguously favors the client as a matter of law.”

Hall and Dietzmann filed suit in February 2012, claiming that after the settlements in the underlying suit, because Davenport was “paid” through his former partners' ownership interests in Water Exploration Co. Ltd., they were owed a percentage of the company instead of the approximately $400,000 Davenport paid them in December 2009.  They sought about $24.6 million in damages, equivalent to what they said would be the current value of their alleged ownership interest in WECO, plus $18 million in punitive damages.

But the jury found that Davenport's contingency fee agreement with the two attorneys did not include a potential ownership stake in WECO, and found the attorneys had waived their rights to seek ownership of WECO and were each estopped from trying to claim a stake in the company.  Jurors also found both attorneys complied with their fiduciary duties to Davenport.

When an appellate court in March 2015 directed the trial court to provide reasoning for vacating the jury's verdict, Judge Peter Sakai responded that the parties' agreement unambiguously provided the fees would be paid out of the ownership in any business recovered, and that the jury's verdict wasn't supported by evidence.

The case is In re: Dean Davenport et al., case number 15-0882, in the Texas Supreme Court.