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Texas Supreme Court Issues Two Attorney Fee Rulings

April 19, 2016 | Posted in : Expenses / Costs, Fee Award Factors, Fee Entitlement / Recoverability, Fee Issues on Appeal, Fee Jurisprudence, Fee Reduction, Fee Request, Prevailing Party Issues, Quantum Meruit

A recent Texas Lawyer story, “Texas Supreme Court Issues Two Attorney Fee Rulings” reports that the Texas Supreme Court today issued two rulings that favored parties seeking attorney fees in a First Amendment case and a breach-of-contract case.

The state's law against strategic lawsuit against public participation, or SLAPP, suits require mandatory awards of reasonable attorney fees and does not allow a court to reduce the amount for equity and justice, the court ruled in one case.

In another case, the justices found that a city does not have governmental immunity from an attorney fee claim dealing with the activities of a city-owned public utility company.

First Amendment Fees

The Texas Citizens Participation Act, the anti-SLAPP law, allows a defendant to file a motion to dismiss.  If he wins he can collect attorney fees, court costs and other expenses from his opponent, the high court explained in Sullivan v. Abraham.

The Sullivan opinion by Justice John Devine explained that Salem Abraham sued Michael Quinn Sullivan for defamation.  Sullivan denied the allegations and moved to dismiss the lawsuit under the anti-SLAPP law.  The trial court granted dismissal.

Sullivan had asked for almost $67,300 in attorney fees, nearly $4,400 in costs and expenses.  But the trial court granted just $6,500 in fees, $1,500 in expenses and court costs.  On appeal, the intermediate appellate court upheld the trial court's award, determining the law required reasonable attorney fees but allowed the trial court the discretion to reduce fees if "justice and equity" required it.

On appeal, Sullivan argued that the intermediate appellate court used caselaw under the Declaratory Judgments Act—which allows considerations of justice and equity—which is different than the anti-SLAPP law—which simply calls on reasonable fees.

The high court's decision in the case would make a high school English teacher swoon.  Four pages of the 10-page decision exhaustively explained fine points of grammar—commas, modifiers, antecedents and more.  In the end, the high court ruled that the law's language and punctuation clearly required reasonable attorney fees—with no consideration of justice and equity—to the winner of a motion to dismiss.  The case now heads back to the trial court to determine what's a reasonable fee.

Fees Against City Utility

A previous 2016 case by the Supreme Court—Wasson Interests v. City of Jacksonville—also decided the April 15 opinion in Wheelabrator Air Pollution Control v. City of San Antonio.

The opinion by Justice Paul Green explained that Wheelabrator Air Pollution Control, Casey Industrial and a San Antonio city board contracted for the design and construction of a coal-fired power station owned and operated by CPS Energy, a city-owned public utility.  CPS Energy agreed to pay Wheelabrator $41.82 million and Wheelabrator completed the work in 2007.  But CPS Energy said it would withhold 10 percent because of a dispute between Casey Industrial and CPS Energy.

Wheelabrator sued CPS Energy in 2011 for breach of contract and quantum meruit, seeking attorney fees and more.

The case history is long, but relevant to the dispute before the Supreme Court, CPS Energy argued that the trial court didn’t have jurisdiction and must dismiss the claims for attorney fees because CPS Energy had governmental immunity.

Wheelabrator countered that CPS Energy didn't have governmental immunity because it was performing a proprietary function, among other things.  The trial court dismissed the attorney fee claims, and an intermediate appellate court affirmed the ruling.

Immunity would apply if the case arose from the city's governmental function, but not if it arose from the city's proprietary function, Green wrote.  Previously, the Supreme Court has held that when a city operates a public utility, that is a proprietary function.

"We conclude that CPS Energy is not shielded by governmental immunity," the opinion said.  "Wheelabrator's claim for attorney fees does not implicate immunity."

The Supreme Court didn't address whether the attorney fee claim has merit, but it did send the case back to the trial court for further proceedings.