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applying Pegasus in a case involving dispute between several attorneys to contingency fees earned in a mass tort litigation where attorney seeking funds had requested funds be deposited in registry
Summary of this case from Arete Partners v. GunnermanOpinion
No. 13-01-503-CV
Opinion delivered and Filed May 27, 2004.
On appeal from the 156th District Court of San Patricio County, Texas.
Before Chief Justice VALDEZ and Justices RODRIGUEZ and DORSEY.
Retired Justice Bonner J. Dorsey, who had been assigned to this Court by the Supreme Court of Texas pursuant to section 74.003 of the government code, and whose assignment expired in January 2004, did not participate in this decision. See Tex. Gov't Code Ann. § 74.003 (Vernon Supp. 2004).
MEMORANDUM OPINION
Attorneys Jerry Guerra and Patrick Beam intervened in the underlying mass toxic tort lawsuit seeking attorney's fees for their performance as local counsel for the law firm of Hoeffner, Bilek Eidman, L.L.P. ("HBE"). Following a bench trial, the trial court awarded attorney's fees to Guerra and awarded none to Beam. All parties appeal the trial court's judgment. We modify the the judgment of the trial court in part, and as modified, affirm.
I. Background
As this is a memorandum opinion and the parties are familiar with the underlying facts, we will only address them herein as necessary to advise the parties of our decision and the basic reasons for our decision. See Tex.R.App.P. 47.4.
Guerra originally learned of the facts giving rise to the underlying mass toxic tort case and associated HBE into the case as lead counsel for plaintiffs. Guerra did not consider himself a referring attorney, but performed work on the matter under an agreement with HBE for a five percent interest in the case as local counsel. As the litigation proceeded, Guerra changed law firms and became associated with the law firm of Burkett Beam as a contract attorney. Guerra and Beam approached Thomas Bilek and Todd Hoeffner, partners of HBE, to discuss a new local counsel arrangement. Although the testimony is in some dispute, it appears that Guerra and Beam offered HBE the services of all attorneys and staff at the firm in exchange for new employment agreements. HBE agreed, and the parties entered letter employment agreements.
The employment agreement between HBE and Guerra and the employment agreement between HBE and Beam are almost identical. Both provide that:
As per our agreement in reference to the above-mentioned case, it is agreed that you have retained me as local counsel. You hereby assign, convey and quitclaim a 1/6 interest in any attorney's fees recovered by contingent fee, court award, statute, settlement or otherwise to me from the above litigation as my fee as being retained as local counsel.
This interest is conveyed regardless of whether the matter proceeds to trial or settles and/or whether or not services are rendered since I am hereby placed by you on standby to aid in any and all needs involved in all phases of case development, prelitigation, litigation and postlitigation and/or settlement.
Beam's agreement further provided that: "This agreement can only be revoked and/or altered in writing signed by both of us," and Guerra's agreement also provided that: "This agreement shall supersede any and all agreements, either written or oral that we have entered into and can only be revoked and/or altered in writing signed by both of us."
Guerra played a very active role in assisting HBE: he worked with clients, he appeared at hearings, he presented clients for depositions. Beam did little to no work on the matter, although the staff of Burkett Beam did provide litigation support, and Beam supervised those staff members who worked on the case.
As the litigation progressed, Burkett Beam fired Guerra, admittedly in part because of the large amount of time that Guerra spent working on the case. HBE gave Guerra advances on his fee, and Guerra continued working on the case, as did some of the staff at Burkett Beam. As mediation approached, HBE determined that it would be advantageous to the case to retain Williams Bailey L.L.P., for trial. In conjunction with its effort to retain the law firm of Williams Bailey, a dispute arose between HBE, Guerra, and Beam regarding the reduction of Beam and Guerra's fees under the agreements. The parties failed to reach an agreement regarding the amount of fees owed to Guerra and Beam, and ultimately, Guerra and Beam intervened in the underlying lawsuit to collect their attorney's fees.
After a jury trial and settlements by certain defendants, the trial court severed their interventions and held a non-jury trial. The trial court entered judgment in favor of Guerra and against Beam. These appeals ensued.
II. Standard of Review
Findings of fact in a case tried to the court have the same force and effect as a jury verdict. Anderson v. City of Seven Points, 806 S.W.2d 791, 794 (Tex. 1991); Guerra v. Garza, 865 S.W.2d 573, 575 (Tex. App.-Corpus Christi 1993, writ dism'd w.o.j.). However, the trial court's findings of fact are not conclusive when there is a complete reporter's record, as is the case here. Tucker v. Tucker, 908 S.W.2d 530, 532 (Tex. 1995). In that case, we are not bound by the trial court's findings but can review the findings for legal and factual sufficiency of the evidence by the same standards used to review the evidence supporting a jury verdict. Id.
When reviewing a legal insufficiency point of error, we consider only the evidence and inferences, when viewed in their most favorable light, that tend to support the finding, and disregard any evidence and inferences to the contrary. Sherman v. First Nat'l Bank, 760 S.W.2d 240, 242 (Tex. 1988). If there is more than a scintilla of evidence that supports the finding, we must overrule the issue and uphold the finding. Id.
When reviewing a factual sufficiency point, we examine all of the evidence, both the evidence that supports the finding and the evidence that controverts the finding. Lofton v. Tex. Brine Corp., 720 S.W.2d 804, 805 (Tex. 1986). We can set aside the finding only if it is so contrary to the overwhelming weight of the evidence as to be clearly wrong and unjust. Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986). In a bench trial, the trial court, as fact-finder, is the sole judge of the credibility of the witnesses. Southwestern Bell Media, Inc. v. Lyles, 825 S.W.2d 488, 493 (Tex. App.-Houston [1st Dist.] 1992, writ denied). The judge may take into consideration all the facts and surrounding circumstances in connection with the testimony of each witness, and accept or reject all or any part of that testimony. Id.
The legal conclusions of the trial court are not binding on an appellate court; instead, we are free to draw our own legal conclusions. See Pegasus Energy Group, Inc. v. Cheyenne Petroleum Co., 3 S.W.3d 112, 121 (Tex. App.-Corpus Christi 1999, pet. denied); Austin Hardwoods, Inc. v. Vanden Berghe, 917 S.W.2d 320, 322 (Tex. App.-El Paso 1995, writ denied).
III. Hoeffner, Bilek Eidman's Appeal
HBE appeals the award of fees entered against it in four issues, contending that the trial court erred in: (1) awarding Guerra contingent attorney's fees which accrued after he breached his fiduciary duties to his clients and also materially breached his service agreement; (2) holding that Guerra's breach of fiduciary duties to his clients, which action also constituted a breach of his agreement with HBE, was excused by HBE's alleged unjustified anticipatory repudiation of that same agreement; (3) finding that there was sufficient evidence that HBE unjustifiably anticipatorily repudiated its service agreement with Guerra; and (4) ordering declaratory relief in favor of Guerra, as (a) he was legally barred from suing on the service agreement and could only sue for monetary damages; and (b) he offered no evidence of monetary damages.
HBE's second and third issues attack the trial court's findings that Guerra's breach of fiduciary duty and breach of contract were excused by HBE's unjustified anticipatory repudiation of the agreement. HBE specifically contends that there is insufficient proof of a positive, unequivocal, and unconditional repudiation. HBE further argues that the evidence shows merely that it was attempting to induce Guerra to accept a new and separate agreement "so that the best interests of their mutual clients could be served." See Cooper v. Wildman, 528 S.W.2d 80, 86 (Tex.Civ.App.-Corpus Christi 1975, no writ) (offering a new and separate agreement does not constitute repudiation).
Repudiation or anticipatory breach is a positive and unconditional refusal to perform the contract in the future, expressed either before performance is due or after partial performance. Van Polen v. Wisch, 23 S.W.3d 510, 516 (Tex. App.-Houston [1st Dist.] 2000, pet. denied). It is conduct that shows a fixed intention to abandon, renounce, and refuse to perform the contract. In re Braddock, 64 S.W.3d 581, 585 (Tex. App.-Texarkana 2001, no pet.); Hauglum v. Durst, 769 S.W.2d 646, 651 (Tex. App.-Corpus Christi 1989, no writ). Repudiation may be proven by words or actions. Braddock, 64 S.W.3d at 585.
In the instant case, Bilek testified that he attempted to renegotiate the fee arrangement with Guerra, but admitted that he told Guerra that the firm would "stand on our rights." However, Guerra testified that, following an unsuccessful mediation in the case, Bilek told him that if they could not reach an agreement to reduce Guerra's fees, he was going to give the case back to Guerra and let him "deal with it." Bilek told him that if he refused to agree to an adjustment of the fees, "he had me over a barrel." Bilek outlined his entire case against Guerra if Guerra were to contest the reduction of his fees, and told Guerra he would lose. Bilek told Guerra "that he felt that he had me over a barrel and I had to take it, take it or basically he would — he would — well, 'F' me is what he said, so. . . ."
Bilek made it clear he was not going to pay Guerra under the contract in March of 1999 and stopped advancing fees to Guerra. Guerra continued to work with Bilek to reach an agreement, until Bilek finally told him he would no longer "deal" with him. Guerra then retained an attorney who contacted HBE regarding the dispute without response. Guerra's attorney contacted HBE a second time, advising HBE that Guerra would be forced to "pursue his legal remedies" if the dispute were not resolved. HBE again failed to respond, and Guerra then intervened in the underlying lawsuit. Based on the foregoing evidence, the trial court could have concluded that Bilek was not merely offering Guerra a new and separate agreement, but was rather refusing to perform the contract as drafted. This testimony indicates a fixed intention to abandon, renounce, and refuse to perform the contract. Braddock, 64 S.W.3d at 585; Hauglum, 769 S.W.2d at 651.
HBE further argues that even if HBE anticipatorily repudiated the service agreement, which it disputes, its acts were justified. In order to constitute a repudiation or anticipatory breach, the party to the contract must have absolutely repudiated the contract without just excuse. Van Polen, 23 S.W.3d at 516; Poe v. Hutchins, 737 S.W.2d 574, 578 (Tex. App.-Dallas 1987, writ ref'd n.r.e.). HBE points to evidence in the record that Guerra supported the efforts to engage the Williams Bailey law firm, that it was in the best interests of the plaintiffs, and that the case would be in a better position if Williams Bailey were involved. This evidence does not excuse or justify HBE's refusal to honor its agreement with Guerra.
HBE also argues that Guerra's intervention constituted a superseding cause that excused the firm from complying with the agreement. Under Texas law, an anticipatory repudiation gives the nonrepudiating party the option to treat the repudiation as a breach, or ignore it and await the agreed upon time of performance. Ingersoll-Rand Co. v. Valero Energy Corp., 997 S.W.2d 203, 211 (Tex. 1999); Bumb v. Intercomp Tech., L.L.C., 64 S.W.3d 123, 125 (Tex. App.-Houston [14th Dist.] 2001, no pet.). The nonrepudiating party must do one or the other; it cannot do both. Bumb, 64 S.W.3d at 125 (citing Griffith v. Porter, 817 S.W.2d 131, 135 (Tex. App.-Tyler 1991, no writ)). By choosing to sue after the time for performance of the contract, the nonrepudiating party elects to ignore the anticipatory repudiation. Bumb, 64 S.W.3d at 125. Under this option, the nonrepudiating party must continue to comply with the contract and enable the other party "not only to complete the contract, if so advised, notwithstanding his previous repudiation of it, but also to take advantage of any supervening circumstances which would justify him in declining to complete it." Id. (quoting Pollack v. Pollack, 39 S.W.2d 853, 857 (Tex. Comm'n App. 1931, holding approved)). HBE's reliance on Bumb is misplaced.
In Bumb, the court found that where an employer anticipatorily breached its employment agreement with an employee, the employee's subsequent tortious acts constituted a superceding cause excusing the employer from payment under the agreement. Bumb, 64 S.W.3d at 125. In the instant case, the record indicates that Guerra was ready and willing to perform under the contract and did not file the intervention until it became readily apparent that HBE was not going to honor the agreement. Guerra's intervention did not constitute a superceding act which would excuse HBE from payment. We overrule HBE's second and third issues.
In its first issue, HBE argues that the trial court erred when it awarded Guerra contingent attorney's fees, which accrued after Guerra breached his fiduciary duty to his clients and also materially breached his service agreement with HBE. In its findings of fact, the trial court found that HBE anticipatorily breached the agreement without good cause by indicating that it would not honor the agreement and that Guerra generally complied with his fiduciary duties to the plaintiffs in the underlying action, although his plea in intervention "did constitute a breach of duty to the Plaintiffs."
According to HBE, Guerra breached his fiduciary duties and breached his employment contract by intervening in the underlying lawsuit for his attorney's fees. HBE characterizes this as Guerra suing his own clients. HBE does not argue that Guerra committed any other actions constituting either a breach of fiduciary duty or a breach of contract.
HBE does not cite any authority for the proposition that Guerra's intervention constituted a breach of his fiduciary duty to the plaintiffs.
Contrary to HBE's argument, Texas law is replete with cases in which attorneys have intervened in lawsuits to protect their fees. Schaeffer v. O'Brien, 39 S.W.3d 719, 720 (Tex. App.-Eastland 2001, pet. denied) (discharged attorney filed plea in intervention to protect fee); Sommers v. Concepcion, 20 S.W.3d 27, 31 (Tex. App.-Houston [14th Dist.] 2000, pet. denied) (various attorneys intervened in underlying proceeding to protect fees); Cantu v. Butron, 921 S.W.2d 344, 347 (Tex. App.-Corpus Christi 1996, writ denied) (discharged attorney filed plea in intervention to protect fee); Schwartz v. Taheny, 846 S.W.2d 621, 622-23 (Tex. App.-Houston [14th Dist.] 1993, writ denied) (trial court severed intervention seekingn contingent attorney's fees); Rocha v. Ahmad, 676 S.W.2d 49, 152 (Tex. App.-San Antonio 1984, writ dism'd w.o.j.) (discharged attorney sued former clients for attorney's fees by intervening in underlying suit); Birge v. Conwell, 105 S.W.2d 407, 409 (Tex. Civ. App.-Amarillo 1937, writ ref'd) ("perfectly legitimate" for attorneys to intervene). Moreover, while we could envision a case wherein an intervention seeking attorney's fees could constitute a breach of fiduciary duty, the evidence in this case fails to support such a conclusion.
As an initial matter, we find it salient that the plaintiffs in the underlying proceeding have neither urged that Guerra committed a breach of fiduciary duty nor have they sought fee disgorgement against Guerra. Rather, HBE is avoiding payment to Guerra and Beam for the monies due to them under the agreements by asserting that Guerra and Beam breached their fiduciary duties to their clients.
Further, the pleadings do not support HBE's argument. In the original plea in intervention, Guerra stated that:
Intervenor has a justiciable interest in this litigation in that he has a legal and equitable interest in any settlement proceeds received by Plaintiffs and/or Plaintiffs' attorneys, by virtue of an assignment of one-sixth (1/6th) of the total attorney's fees which may in the future be recovered in this cause of action. See Exhibit A.
WHEREFORE, PREMISES CONSIDERED, Intervenor requests that the parties take notice of the filing of this Plea in Intervention, and that on final hearing and judgment, Intervenor's lien as to attorney's fees be affirmed and he be awarded one-sixth (1/6th) of the total attorney's fees recovered [on] behalf of Plaintiffs by current counsel of record and/or their assigns or successors. . . .
The language in Guerra's live pleading at the time of trial is similar. Under the pleadings, Guerra asserts no cause of action against plaintiffs, but merely asserts his interest in the attorney's fees.
Moreover, the testimonial evidence regarding whether the intervention caused harm to the plaintiffs was confusing and contradictory. An expert witness for Guerra testified that the intervention was "absolutely" not a breach of fiduciary duty and that an intervention, rather than a separate lawsuit, was the only way to adequately protect Guerra's interest in his fees.
Bilek initially testified by deposition that the intervention did not cause the plaintiffs any harm, but later testified that he believed that the intervention was harmful because it looked like the plaintiffs' attorneys were in disarray, and following the intervention, the plaintiffs did not receive any other offers of settlement until after trial. Based on the record before us, we conclude that Guerra's intervention did not constitute a breach of fiduciary duty, and we disapprove of the court's findings of fact and conclusions of law to the extent that they say otherwise. Accordingly, we overrule HBE's first issue.
In its fourth issue, HBE argues that the trial court erred in ordering declaratory relief in favor of Guerra because Guerra could only sue for monetary damages, and Guerra offered no evidence of monetary damages. HBE's argument is contradicted by the plain language of the Declaratory Judgment Act. See Tex. Civ. Prac. Rem. Code Ann. § 37.004(b) (Vernon 1997) (allowing construction of contract either before or after breach). Further, at trial, the parties expressly stipulated that the total amount of attorney's fees at issue was $3,796,071.18. We overrule HBE's fourth issue.
Having overruled each of HBE's issues, we affirm the trial court's judgment as against HBE.
V. Beam's Appeal
Beam, local counsel who received no fees, raises ten issues on appeal. In issues one, two, three, four, six, seven, nine, and ten, Beam contends that there is legally and factually insufficient evidence to support findings of fact (1) five and six, that Beam provided no legal services in connection with the Beam/HBE Agreement and was not available to provide legal services to HBE, and, therefore, breached the agreement; (2) seven and ten, that Beam shut down his practice of law and terminated Guerra and, therefore, breached said agreement; (3) eight, that Beam abandoned his interest under the agreement; (4) twelve, that there was a failure of consideration with respect to the agreement; (5) eleven and thirteen, that HBE reasonably relied upon acts and omissions on the part of Beam which estopped Beam from asserting any of his rights under the agreement, and HBE's failure to honor the agreement is, therefore, excused and justified; (6) four, that HBE had no agreement to pay Beam any attorney's fees in the Candelaria litigation; and (7) fourteen, that it is reasonable and just to divide the costs of court as 85%, 15%, and 0% among HBE, Beam, and Guerra respectively in the Aguirre litigation, and that Beam is to bear all costs of court in the Candelaria litigation. In his fifth issue, Beam asserts that the trial court erred as a matter of law in finding of fact nine that Beam breached his fiduciary duties to the plaintiffs in the Aguirre litigation by filing the plea in intervention. In his eighth issue, Beam argues that the trial court erred in not finding that HBE repudiated the agreement and by not awarding Beam his contractual attorney's fees of one-sixth in both the Aguirre and Candelaria cases. As it pertains to Beam, we affirm the trial court's judgment.
In issues one, two, and three, Beam asserts, in part, that there is legally and factually insufficient evidence to support the trial court's findings that Beam was not available to provide legal services to HBE, that Beam shut down his practice of law, and that Beam abandoned his interest under the agreement. Under Texas law, an attorney who abandons a case without just cause before completing the task for which his client hired him breaches his contract of employment and forfeits all right to compensation. Staples v. McKnight, 763 S.W.2d 914, 916 (Tex. App.-Dallas 1988, writ denied); see Royden v. Ardoin, 331 S.W.2d 206, 209 (Tex. 1960).
Bilek testified that he had a conversation with Beam in December of 1997 wherein Beam told him that he was not willing to work on the case, that "nothing was provided," and that Guerra had been fired. Beam told him that he was quitting the practice of law. According to Bilek, "Mr. Beam clearly just abandoned at this point. I mean, he didn't want to do it."
Guerra testified that Steve Burkett fired him on December 31, 1997. Burkett told Guerra that he and Mr. Beam were "winding things down," that they were going to close the office, and that both Beam and Burkett were going to retire. Guerra conveyed this information to Bilek and Hoeffner. Guerra testified that he never saw Beam perform any work on the case other than supervising his employees and did not see Beam involved in the case at all during 1998. Nevertheless, Guerra testified that he did not think that Beam breached the agreement.
Hoeffner testified that he saw Beam in January and told Beam that he could not "believe you made all these promises and assurances to me, and when it came down to nut cutting you ran for cover." According to Hoeffner, Beam replied that "I'm getting out of the practice of law."
Beam admitted that, although his staff worked on the case, he performed very little work on the matter. Beam suffered severe health problems in 1997 and divorced in 1998. As a result, Beam decided to "cut back" on the practice of law. Beam admitted that he was no longer practicing law by February or March of 1999 and that his firm dissolved in 1999. However, Beam testified that he was not planning to retire in 1997 and denied ever telling Bilek that was his plan. Beam denied abandoning the agreement. According to Beam, he and his staff were "on standby" to work on the case, and his staff continued working on the case during 1998. Interestingly, Beam also testified that, according to his interpretation of the agreement, the law firm of Burkett and Beam was not on standby, and he was the only attorney at the firm that was subject to the agreement.
Given the foregoing testimony, more than a scintilla of evidence supports the trial court's findings that Beam was not available to provide legal services and that Beam abandoned the contract. Sherman, 760 S.W.2d at 242. Moreover, the findings are not so contrary to the overwhelming weight of the evidence as to be clearly wrong and unjust. Cain, 709 S.W.2d at 176. Although there was conflicting testimony, the trial court was the sole judge of the credibility of the witnesses. Southwestern Bell Media, Inc., 825 S.W.2d at 493. The judge may take into consideration all the facts and surrounding circumstances in connection with the testimony of each witness and accept or reject all or any part of that testimony. Id. We conclude that the trial court did not err in concluding that Beam abandoned the contract without just cause prior to the end of the litigation, and therefore forfeited all right to compensation. Staples, 763 S.W.2d at 916; see Royden, 331 S.W.2d at 209. Accordingly, we overrule issues one, two, and three. Given our disposition of these issues, we need not address issues four, five, six, and eight. See Tex.R.App.P. 47.1.
In his seventh issue, Beam alleges that there is legally and factually insufficient evidence to support the trial court's finding that HBE had no agreement to pay Beam attorney's fees in the Candelaria litigation. Guerra and Beam intervened not only in the underlying lawsuit, Aguirre v. Browning-Ferris Indus., Inc., Cause No. S-96-5539-CV-B-7 in the 156th District Court of San Patricio County, but also intervened in a separate but related cause, Candelaria v. Browning-Ferris Indus., Inc., Cause No. S-97-5853-CV-A, pending in the 36th Judicial District Court of San Patricio County. The interventions were tried together, and the trial court issued one set of findings of facts and conclusions of law applicable to both cases. However, the trial court entered separate judgments in each cause. Beam failed to appeal the judgment entered in Candelaria, and may not seek to collaterally attack that judgment in this cause. See Tex.R.App.P. 25. We overrule this issue.
In his ninth issue, Beam asserts that the trial court's finding that it was equitable and just to award him no attorney's fees was supported by legally and factually insufficient evidence. According to Beam, he was entitled to attorney's fees under either the Declaratory Judgment Act or the attorney's fees provisions of chapter thirty-eight of the civil practice and remedies code. See Tex. Civ. Prac. Rem. Code Ann. § 37.009 (Vernon 1997) (providing for attorney's fees in declaratory judgment actions); Tex. Civ. Prac. Rem. Code Ann. § 38.001 (Vernon 1997) (providing for attorney's fees in specified actions).
Under the Declaratory Judgment Act, an award of attorney's fees rests within the trial court's discretion, subject to the requirements that any fees awarded be reasonable, necessary, equitable, and just. Bocquet v. Herring, 972 S.W.2d 19, 21 (Tex. 1998). Whether the attorney's fees are reasonable and necessary are fact questions; whether the fees are equitable and just are matters of law, which come within the trial court's discretion. Id. In reviewing a trial court's decision not to award fees, we examine whether the complaining party established that the fees sought were equitable and just. Heritage Res., Inc. v. Hill, 104 S.W.3d 612, 617-18 (Tex. App.-El Paso 2003, no pet.). On this record, we cannot conclude that the trial court abused its discretion in failing to award Beam his attorney's fees under the Declaratory Judgment Act.
Moreover, we further conclude that Beam was not entitled to attorney's fees under chapter thirty-eight of the civil practice and remedies code. To recover attorney's fees under section 38.001 of the civil practice and remedies code, a party must both prevail on a claim for which attorney's fees are recoverable and recover damages. Green Int'l v. Solis, 951 S.W.2d 384, 390 (Tex. 1997); Ed Rachal Found. v. Unger, 117 S.W.3d 348, 357 (Tex. App.-Corpus Christi 2003, pet. filed); see Tex. Civ. Prac. Rem. Code Ann. § 38.001. As previously determined, Beam neither prevailed on a claim for which attorney's fees are recoverable nor recovered damages, and thus Beam's claim was not "valid" within the meaning of the code. See World Help v. Leisure Lifestyles, Inc., 977 S.W.2d 662, 683 (Tex. App.-Fort Worth 1998, pet. denied). We overrule Beam's ninth issue.
In his tenth issue, Beam alleges that the evidence is legally and factually insufficient to support the trial court's finding that it "is reasonable and just to divide the costs of court in the following proportions among HBE, Beam and Guerra in the intervention in the Aguirre litigation: 85%, 15% and 0% respectively. Beam is to bear all costs of court in the Candelaria litigation." Beam's only argument in favor of this issue is that:
If Beam is entitled to his contractual portion of the HBE's attorney's fees in the Aguirre or Candelaria Litigation as requested hereinabove, as the successful party, he is also entitled to recover from HBE all of his costs incurred in the interventions. . . .
We have determined herein that Beam is not entitled to attorney's fees in Aguirre and that he may not collaterally attack the trial court's judgment in Candelaria. Beam is not a prevailing party herein. See Tex. R. Civ. P. 131. We overrule this issue.
The trial court's judgment insofar as it pertains to Beam is affirmed in its entirety.
VI. Guerra's Appeal
Guerra, who received some, but not all, of the attorney's fees he sought, raises five issues: (1) did Guerra breach his fiduciary duties to the plaintiffs when he filed his plea in intervention; (2) did the trial court err in concluding that the legal prejudgment and postjudgment interest rate was the rate earned by any funds in the registry of the court; (3) did the trial court err in refusing to render judgment against lead counsel individually; (4) did the trial court abuse its discretion in failing to award attorney's fees and is such finding against the great weight and preponderance of the evidence; and (5) is the trial court's finding that Guerra was not entitled to attorney's fees for Candelaria supported by the evidence. With regard to Guerra's appeal, we modify the judgment in part, and as modified, affirm.
We have already addressed Guerra's first issue in conjunction with the appeal brought by HBE, and need not further address it herein. Guerra's first issue is sustained.
In Guerra's second issue, he argues that the trial court erred in concluding that the rate of prejudgment and postjudgment interest was the "rate earned by any funds placed in the registry of the court." The trial court awarded prejudgment interest at the rate earned by funds placed in the registry of the court from the date the "fees were or are delivered . . . into the registry of the Court . . . up to the date of judgment," and postjudgment interest at the same rate "from the date of rendition until paid."
According to Guerra, prejudgment and postjudgment interest rates are established by law and do not depend on the discretion of the trial court. See Tex. Fin. Code Ann. § 30.002 (Vernon Supp. 2004) (breach of contract cases earn prejudgment interest at the default interest rate of six percent per year); Act of April 23, 1999, 76th Leg., R.S., ch. 62, § 7.18(a), 1999 Tex. Gen. Laws 127, 232; see now Tex. Fin. Code Ann. § 304.003(c) (Vernon Supp. 2004) (postjudgment interest rate modified from minimum of ten percent to prime rate, but in no case less than five percent or more than fifteen percent). Guerra thus requests that this Court reform the judgment to provide for prejudgment interest at six percent and postjudgment interest at ten percent.
With regard to prejudgment interest, HBE argues that Guerra waived the issue because Guerra essentially agreed to the rate of prejudgment interest when he requested that the funds be placed in the registry of the court. An appellate court reviews the award of prejudgment interest under an abuse of discretion standard of review. Volkswagen of Am., Inc. v. Ramirez, 79 S.W.3d 113, 126 (Tex. App.-Corpus Christi 2002, pet. granted); J.C. Penney Life Ins. Co. v. Heinrich, 32 S.W.3d 280, 289 (Tex. App.-San Antonio 2000, pet. denied). A trial court abuses its discretion if it acts in an arbitrary or unreasonable manner without reference to any guiding rules or principles. Walker v. Gutierrez, 111 S.W.3d 56, 63 (Tex. 2003) (citing Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241-42 (Tex. 1985)).
There are two sources for an award of prejudgment interest: (1) general principles of equity, and (2) an enabling statute. Johnson Higgins, Inc. v. Kenneco Energy, 962 S.W.2d 507, 530 (Tex. 1998).
Based on the facts of this case, we cannot conclude that the trial court abused its discretion in awarding prejudgment interest at the rate earned by funds in the registry of the court. As a general rule, prejudgment interest should not be assessed on funds that were deposited into the registry of the court. See Pegasus Energy Group, Inc. v. Cheyenne Petroleum Co., 3 S.W.3d 112, 125 (Tex. App.-Corpus Christi 1999, pet. denied); Edwin M. Jones Oil Co. v. Pend Oreille Oil Gas Co., 794 S.W.2d 442, 450 (Tex. App.-Corpus Christi 1990, writ denied). Accordingly, the trial court acted within its discretion in awarding only the interest that was earned by the funds in the registry of the court. See Pegasus, 3 S.W.3d at 125.
With regard to the trial court's award of postjudgment interest, however, we agree with Guerra that the trial court should have awarded postjudgment interest at ten percent. The version of the Texas Finance Code in effect at the time the judgment was signed and subject to appeal specifically provided that judgments earn postjudgment interest at ten percent. See Act of April 23, 1999, 76th Leg., R.S., ch. 62, § 7.18(a), 1999 Tex. Gen. Laws 127, 232; see now Tex. Fin. Code Ann. § 304.003(c) (Vernon Supp. 2004) (postjudgment interest rate modified to prime rate, but in no case less than five percent or more than fifteen percent). We have found no authority allowing the imposition of postjudgment interest at the rate earned by funds in the registry of the court, and accordingly, conclude that the trial court abused its discretion in awarding postjudgment interest at that rate. See Walker, 111 S.W.3d at 63. We reverse the trial court's judgment insofar as it awards postjudgment interest at the rate earned by funds held in the registry of the court and modify the judgment to include an award of postjudgment interest at the rate of ten percent. Guerra's second issue is sustained in part and overruled in part.
Because the judgment in this case was both signed and subject to appeal before September 1, 2003, the amended statute setting post-judgment interest rates does not apply. See Bennett v. Cochran, 2004 Tex. App. LEXIS 3545, *26-27 (Houston [14th Dist.] Apr. 22, 2004, no pet. h.); Columbia Med. Ctr. v. Hogue, 2004 Tex. App. LEXIS 3299, *37-38 (Dallas Apr. 13, 2004, no pet. h.); Columbia Med. Ctr. v. Bush, 122 S.W.3d 835, 864-66 (Tex. App.-Fort Worth 2003, pet. denied).
In his third issue, Guerra contends that the trial court erred in refusing to render judgment against Hoeffner and Bilek individually. Guerra argues that Hoeffner and Bilek were specifically named in the intervention and actively participated in trial; thus, the judgment should be reformed to reflect that they are individually liable. In contrast, HBE argues that Guerra never served Hoeffner nor Bilek individually, nor did they accept service on behalf of the law firm.
A petition against a partnership should allege that a partnership exists, state the name of the partnership, list all the partners, and state that the partners are sued as members of the partnership. Ben Fitzgerald Realty Co. v. Muller, 846 S.W.2d 110, 115 (Tex. App.-Tyler 1993, writ denied). Citation served on one member of a partnership authorizes a judgment against the partnership and the partner actually served. Tex. Civ. Prac. Rem. Code Ann. § 17.022 (Vernon 1997); Fincher v. BD Air Conditioning Heating Co., 816 S.W.2d 509, 512 (Tex. App.-Houston [1st Dist.] 1991, writ denied); see also Tex. Rev. Civ. Stat. Ann. art. 6132b-3.04 (Vernon Supp. 2004) (partners in a general partnership are jointly and severally liable for all partnership debts). If a suit is against several partners and citation has been served on one, but not all of the partners, the court may render judgment against the partnership and against the partners who were actually served, but may not award a personal judgment or execution against any partner who was not served. Tex. Civ. Prac. Rem. Code Ann. § 31.003 (Vernon 1997).
In the instant case, neither Bilek nor Hoeffner were served; therefore, judgment may not be entered against them in their individual capacities. See id. We overrule Guerra's third issue.
In his fourth issue, Guerra argues that the trial court abused its discretion in failing to award attorney's fees, and that the trial court's finding of zero attorney's fees is against the great weight and preponderance of the evidence. According to Guerra, an award of attorney's fees was mandatory under section 38.001 of the civil practice and remedies code. See Tex. Civ. Prac. Rem. Code Ann. § 38.001 (Vernon 1997).
In its findings of fact, the trial court found that it had authority under the Declaratory Judgment Act to award attorney's fees, but found that the "equitable and just award of reasonable and necessary attorney's fees is to award Guerra no such attorney's fees." The trial court concluded as a matter of law that Guerra was not entitled to fees under either chapter 37 or chapter 38 of the Texas Civil Practice and Remedies Code. Compare Tex. Civ. Prac. Rem. Code Ann. § 37.001 — § 37.011 (Vernon 1997 Supp. 2004) (Declaratory Judgments Act) with Tex. Civ. Prac. Rem. Code Ann. § 38.001 (Vernon 1997) (recovery of attorney's fees).
The availability of attorney's fees under a particular statute is a question of law for the court. Holland v. Wal-Mart Stores, Inc., 1 S.W.3d 91, 94 (Tex. 1999). We apply a de novo review to questions of law. Tex. Dep't of Transp. v. Needham, 82 S.W.3d 314, 318 (Tex. 2002).
Section 38.001 of the civil practice and remedies code provides that "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 Ann. § 38.001(8) (Vernon 1997). For a claimant to recover attorney's fees under this section: (1) he must be represented by an attorney; (2) he must present the claim to the opposing party or to an authorized agent of the opposing party; and (3) the opposing party must not tender payment for the amount owed before the expiration of thirty days after presentment. See id. § 38.002 (Vernon 1997). When a party proves these three elements and prevails on a valid claim founded on a written or oral contract, an award of reasonable attorney's fees is mandatory, not discretionary. See Welch v. Hrabar, 110 S.W.3d 601, 610 (Tex. App.-Houston [14th Dist.] 2003, pet. denied); Jackson Law Office, P.C. v. Chappell, 37 S.W.3d 15, 23 (Tex. App.-Tyler 2000, pet. denied); see also Sadoskas v. Sadoskas, No. 13-02-216-CV, 2003 Tex. App. LEXIS 6211, *8 (Tex. App.-Corpus Christi July 17, 2003, no pet.) (memorandum opinion). A trial court has the discretion to set the amount of attorney's fees, but it does not have the discretion to completely deny attorney's fees if they are proper under section 38.001. See Jackson Law Office, P.C., 37 S.W.3d at 23; Essex Crane Rental Corp. v. Striland Constr. Co., 753 S.W.2d 751, 758 (Tex. App.-Dallas 1988, writ denied).
We conclude that the trial court erred in failing to award Guerra his attorney's fees under chapter 38 of the civil practice and remedies code. Guerra satisfied all requisites for the award. The trial court expressly found that HBE entered into a written agreement for professional services and that HBE breached the agreement. We sustain Guerra's issue regarding attorney's fees.
Generally, what constitutes reasonable attorney's fees is a question of fact. See Int'l Sec. Life Ins. Co. v. Spray, 468 S.W.2d 347, 349 (Tex. 1971); Grace v. Duke, 54 S.W.3d 338, 344 (Tex. App.-Austin 2001, pet. denied). However, when an attorney's testimony regarding fees is uncontroverted, clear, direct, and positive, and not contradicted by any other witness or attendant circumstances, and there is nothing to indicate otherwise, we may render judgment for attorney's fees. See Welch, 110 S.W.3d at 610; Grace, 54 S.W.3d at 344.
In this case, appellant's trial counsel testified, without any contradicting testimony or other evidence, that his reasonable and necessary attorney's fees were $58,555, and that reasonable and necessary fees for an appeal to the court of appeals was $25,000, $10,000 to bring or defend a petition for review in the supreme court, and $5,000 if a petition for review were to be granted. Thus, we reverse the trial court's judgment insofar as it denied Guerra attorney's fees, and modify the judgment to include an award of the aforementioned fees to Guerra. See Welch, 110 S.W.3d at 610; Grace, 54 S.W.3d at 344.
In his fifth issue, Guerra attacks the trial court's finding that he was not entitled to fees in the Candelaria litigation. Guerra failed to file a notice of appeal regarding the judgment entered against him in Candelaria, but has, subsequent to filing his brief, moved to amend his notice of appeal in this case to encompass an appeal of the Candelaria litigation. See Tex.R.App.P. 25.1(f) (after the appellant's brief is filed, as in this case, the notice may be amended only on leave of the appellate court and on such terms as the court may prescribe). We conclude, as we did with Beam, that Guerra may not collaterally attack that judgment in this cause. See Tex.R.App.P. 25. We overrule Guerra's fifth issue.
We modify the trial court's judgment insofar as it awarded postjudgment interest to Guerra at the rate earned by funds deposited in the registry of the court and failed to award Guerra attorney's fees, and modify the judgment to award Guerra ten percent postjudgment interest and attorney's fees. As modified, the judgment of the trial court is affirmed.
J. Bonner Dorsey not participating.