Allied Finance Co. v. Garza

• Decision Date: 30 November 1981
• Docket Number: No. 1738,1738
• Citation: Allied Finance Co. v. Garza, 626 S.W.2d 120 (Tex. App. 1981)
• Parties: ALLIED FINANCE COMPANY, Appellant, v. Roque GARZA and Alicia Garza, Appellees.
• Court: Texas Court of Appeals

Page 120

626 S.W.2d 120

ALLIED FINANCE COMPANY, Appellant, v.Roque GARZA and Alicia Garza, Appellees.

No. 1738.

Court of Appeals of Texas, Corpus Christi.

Nov. 30, 1981.

Supplemental Opinion on the Filing of Remittitur Dec. 30, 1981.

Rehearing Granted Nov. 30, 1981.

H. H. Rankin, Jr. and Sara Nell Langland, Rankin & Kern, McAllen, for appellant.

John Williamson, Texas Rural Legal Aid, Inc., Brownsville, Clyde Farrell, Texas Rural Legal Aid, Inc., Austin, for appellees.

Before NYE, C. J., and BISSETT and YOUNG, JJ.

OPINION ON SECOND MOTION FOR REHEARING

BISSETT, Justice.

Our opinion and judgment dated August 24, 1981, and our opinion on appellees' first motion for rehearing dated September 28, 1981, are withdrawn and set aside.

This is an appeal by Allied Finance Company from an award of attorney's fees by the Cameron County Court at Law.

The original suit was filed sometime prior to April 11, 1977, wherein Allied Finance Company(hereinafter "Allied Finance") sued Roque Garza and Alicia Garza(hereinafter "the Garzas") to recover $936.60, the balance due on a promissory note executed by the Garzas and payable in installments to Allied Finance, and to foreclose its lien on certain collateral.The Garzas filed a general denial and also presented two "affirmative defenses of offset," one under the Federal Truth in Lending Act, and the other under the Texas Consumer Credit Act; the Garzas prayed for a judgment awarding them an offset in the amount of $682.34 for alleged violations under each Act, plus costs and reasonable attorney's fees.Both parties filed motions for summary judgment.On April 11, 1977, the trial court granted Allied Finance's motion and denied the Garzas' motion.A final judgment was rendered which awarded Allied Finance $936.60, plus interest and costs, and foreclosed its security lien on the affected collateral.The Garzas appealed that judgment.This Court, in Garza v. Allied Finance Company, 566 S.W.2d 57(1978, no writ), hereinafter sometime referred to as the "first appeal," handed down its decision and rendered its judgment, wherein: 1) that portion of the trial court's judgment which awarded plaintiff a recovery of $936.60, being the balance due on the note plus interest and costs, was affirmed; 2) that portion of the trial court's judgment which denied the Garzas relief on their motion for summary judgment was reversed, and judgment was rendered in favor of the Garzas for a recoupment of $682.34, which was to be deducted from the amount of money recovered by Allied Finance in its action on the note; 3) that portion of the trial court's judgment which granted foreclosure of certain liens was reversed and judgment was rendered which excluded all references to foreclosure; and 4) that portion of the trial court's judgment relating to attorney's fees for prosecuting the Garzas' claims for damages under the Federal Truth in Lending Act was severed from the remainder of the case and was remanded to the trial court for the purpose of determining the amount which would constitute reasonable attorney's fees under the facts and circumstances of the case.That judgment is final.

On remand, to determine the amount of attorney fees, a verdict was rendered by the jury in favor of the Garzas on that issue.The jury made the following findings: 1) $8,268.00 for legal services "in the preparation and trials including this trial in this Court and the proceedings which have already taken place in the Court of Civil Appeals"; 2) $11,768.00 in the event the case is appealed to the Court of Civil Appeals and the Garzas prevail in that Court; 3) $13,268.00 in the event the Garzas prevail in the Court of Civil Appeals and an application for writ of error is filed by Allied Finance in the Supreme Court of Texas and is refused (for any reason) by the Supreme Court; and 4) $14,768.00 in the event the Supreme Court grants a writ of error and the Garzas prevail in that court.

The judgment decreed:

"It is therefore ordered, adjudged and decreed that Roque Garza and Alicia Garza, have and recover judgment from Allied Finance Company in the sum of $14,768.00 as attorney fees; and it is the further judgment of the Court that if Allied Finance Company does not appeal this cause, the said judgment should be credited with $6,500.00 as attorney fees, leaving as recovery for attorney fees herein the sum of $8,268.00.It is the further judgment of the Court that if Allied Finance Company appeals this cause to the Court of Civil Appeals and said cause is not carried by appeal or writ of error to the Supreme Court of Texas, that this judgment be credited with the sum of $3,000.00 as attorney fees, leaving as recovery for attorney fees herein the sum of $11,768.00.It is the further judgment of the Court that if Allied Finance Company carries this cause by appeal or writ of error to the Supreme Court of Texas, but the Supreme Court of Texas declines to review this cause, that this judgment be credited with the sum of $1,500.00 as attorney fees, leaving as recovery for attorney fees herein the sum of $13,268.00...."

Allied Finance in its first point of error complains:

"The Trial Court erred in entering a judgment for attorney's fees and cost in excess of the amount of APPELLANT'S judgment and cost that had not already been offset by APPELLEES' recoupment as the same allowed the APPELLEES an affirmative recovery for which this Court has held they were barred by limitations."

Neither of the parties has cited any Texas authority on this point, nor have we found any Texas cases thereon.However, a similar issue was presented for decision in Plant v. Blazer Financial Services, Inc. of Georgia, 598 F.2d 1357(5th Cir.1979).There, the issue was whether in a Federal Truth and Lending action an award of attorney's fees was subject to setoff against the debtor's outstanding debt to the creditor.Much like the present case, the debtor in Plant had partially offset a debt under a note by alleging and proving violations of the Truth in Lending Act.The Court said:

"No discretion is available to the trial court in this matter and the attorney is entitled to the fee that is awarded him regardless of any controversy regarding the underlying debt."

The court discussed purpose of the Truth in Lending Act and the importance of allowing a recovery of attorney's fees in its enforcement.It reasoned that since the allowance of a setoff would, in many cases, relegate the attorney to the resources of the debtor for collection of his fee, such result would hinder the statute's enforcement scheme and remedial objectives if attorney's fees were not allowed the debtor.

For the same reasons that a set off was not allowed in Plant, supra, we believe that the attorney's fees awarded in this case should not be limited to the difference between the amount recovered by Allied Finance on the promissory note balance and the amount recovered in recoupment by the Garzas.We have already held in the first appeal that Texas Rural Legal Aid is entitled to a full recovery for their work expended as attorney for the Garzas under the statutory provisions of the Federal Truth in Lending Act.This amount is to be recovered regardless of the amount in controversy in the underlying debt.Congress, in enacting the Truth in Lending Act, envisioned the creation of a system of "private attorney generals" who would be able to aid in the enforcement of the Act.Sosa v. Fite, 498 F.2d 114, 121(5th Cir.1974).If we were to agree with Allied Finance that attorney's fees in the recoupment action should be limited to the amount of the underlying judgment, then these small amounts in controversy would not be worth the attorney's time.It would effectively render useless our earlier decision in this case allowing a debtor to bring a Truth in Lending action as a defense to a creditor's suit on an underlying debt.Such defenses would not be properly pursued, since the legal fees recoverable would be infinitely small in relation to the work expended.The first point of error is overruled.

As its second point of error, Allied Finance claims the amount awarded as attorney's fees should be offset against the outstanding balance of its judgment not heretofore offset.This precise issue was raised, as detailed above, in Plant v. Blazer Financial Services, Inc. of Georgia, supra, and decided against the contention of Allied Finance.We agree with the Fifth Circuit's holding in that case, and disallow any offset of attorney's fees on the amount owed on the underlying judgment.The award of attorney's fees is the property of the Texas Rural Legal Aid and is not subject to the amount in controversy.The second point of error is overruled.

In its third point of error, Allied Finance asserts that the trial court, a County Court at Law of Cameron County, Texas, did not have jurisdiction to render a judgment for attorney's fees in excess of $5,000.00, since that is its maximum jurisdictional "amount in controversy."We disagree.The initial pleadings of the parties were well within the jurisdiction of the Cameron County Court at Law.The general rule, as stated in Flynt v. Garcia, 587 S.W.2d 109(Tex.1979) is "where jurisdiction is once lawfully and properly acquired, no subsequent fact or event in the particular case serves to defeat that jurisdiction."See alsoHaginas v. Malbis Memorial Foundation, 163 Tex. 274, 354 S.W.2d 368(1962);Isbell v. Kenyon-Warner Dredging Co., 113 Tex. 528, 261 S.W. 762(Tex. Comm'n. App.1924, opinion adopted).The award of attorney's fees in excess of $5,000.00, therefore, did not deprive the Cameron County Court at Law of its jurisdiction.The third point of error is overruled.

Allied Finance further contends in its fourth point of error that the expert testimony of Richard Arroyo should not have been allowed by the trial judge, since an interrogatory naming Arroyo as an expert witness was amended only three days before trial.The trial...