Discover Property & Cas. Ins. Co. v. Tate

• Decision Date: 24 June 2009
• Docket Number: No. 04-08-00757-CV.,04-08-00757-CV.
• Citation: 298 S.W.3d 249
• Parties: DISCOVER PROPERTY & CASUALTY INSURANCE COMPANY, Appellant, v. Charles TATE, Appellee.
• Court: Texas Court of Appeals

298 S.W.3d 249

DISCOVER PROPERTY & CASUALTY INSURANCE COMPANY, Appellant, v. Charles TATE, Appellee.

No. 04-08-00757-CV.

Court of Appeals of Texas, San Antonio.

June 24, 2009.

Rehearing Overruled August 26, 2009.

David L. Brenner, Michael J. Donovan, Burns Anderson Jury & Brenner, L.L.P., Austin, TX, for Appellant.

Michael P. Doyle, Kim Goodling, Quentin Haag, Doyle Raizner, L.L.P., Byron C. Keeling, Ruth B. Downes, Keeling & Downes, P.C., Houston, TX, for Appellee.

Sitting: KAREN ANGELINI, Justice, SANDEE BRYAN MARION, Justice, PHYLIS J. SPEEDLIN, Justice.

OPINION

Opinion by: PHYLIS J. SPEEDLIN, Justice.

Discover Property & Casualty Insurance Company ("Discover") appeals an award of attorney's fees against it under section 408.221(c) of the Texas Workers' Compensation Act. Because we hold the trial court erred in denying Discover's right to a jury trial on the amount of reasonable and necessary attorney's fees, we reverse and remand for a new trial on attorney's fees.

FACTUAL AND PROCEDURAL BACKGROUND

Charles Tate, a maintenance mechanic, was injured during the course of his employment when he fell from a ladder. Tate sought workers' compensation benefits from Discover, his employer's insurance carrier. While Discover ultimately agreed that Tate's injury was compensable, it rejected two of his applications for supplemental income benefits because it did not believe he was participating in a full-time vocational rehabilitation program. Tate initiated a contested case hearing in which he was successful. Discover appealed to an appeals panel of the Texas Department of Insurance, Division of Workers' Compensation ("DWC"). The DWC panel affirmed the case hearing officer's rulings that Tate was entitled to receive second and third quarter supplemental income benefits.

Discover then sought judicial review in the district court and requested a jury trial; it filed a motion to consolidate the two cases, which was granted. Tate filed a general denial, along with a counterclaim seeking to recover his attorney's fees from Discover under section 408.221(c) of the Texas Workers' Compensation Act (the "Act") in the event Discover did not prevail on judicial review. TEX. LABOR CODE ANN. § 408.221(c) (Vernon 2006). After a two-day trial, the jury found that Tate was entitled to receive approximately $9,800 in second and third quarter supplemental income benefits.

Tate filed two post-trial motions — a motion to enter judgment on the jury's verdict, and a motion for approval and award of his attorney's fees by the court. Affidavits from three of his attorneys (Mike Doyle, John Davis, and Peter Kelly, appellate counsel) and itemized billing statements were attached to Tate's motion for attorney's fees, which requested total fees through trial of $105,676.96, plus $4,255 in fees for recovering his attorney's fees and conditional appellate fees. Discover filed a response objecting to Tate's request for attorney's fees, arguing his claim for fees was waived because no evidence of fees was submitted to the jury; it also disputed the amount and attached an affidavit from its attorney opining that the fees were excessive. Discover asserted in its response that because the "reasonable and necessary" amount of fees was disputed, it was a fact question for the jury to resolve. At the hearing on Tate's motion for attorney's fees, Discover argued waiver based on the lack of a jury finding on the amount of attorney's fees, and objected to proceeding on the basis of affidavits alone. It reiterated its position that the amount of reasonable fees was a jury issue, and alternatively requested a plenary or evidentiary hearing on the issue. Both requests were denied by the trial court. At the conclusion of the hearing, the trial court entered judgment on the jury's verdict and awarded Tate the following attorney's fees: $105,676.96 in attorney's fees through the end of trial; $1,000 (reduced) for attorney's fees incurred in recovering his attorney's fees; and $25,000 (reduced) in conditional appellate attorney's fees. Discover appealed, challenging only the award of attorney's fees.

In its first four issues on appeal, Discover argues the trial court erred in denying it a jury trial, or, at a minimum, a plenary hearing, on the amount of "reasonable and necessary" attorney's fees; Discover also argues that Tate waived his claim for attorney's fees, either by failing to submit a jury issue on the amount of reasonable and necessary fees or, alternatively, by failing to admit any evidence on the amount of reasonable and necessary fees at a plenary hearing. Discover also asserts that Tate is not entitled to recover attorney's fees incurred "in pursuit of fees." Finally, Discover challenges the award of attorney's fees as excessive.

RECOVERY OF ATTORNEY'S FEES UNDER SECTION 408.221(c)

Section 408.221 of the Act authorizes the recovery of attorney's fees by a workers' compensation claimant. TEX. LABOR CODE ANN. § 408.221 (Vernon 2006). Prior to a 2001 amendment, section 408.221 provided that a claimant's attorney's fees were to be paid out of the claimant's recovery, subject to a 25% cap. With the 2001 amendment, the legislature created an exception by adding subsection (c), which shifts liability for a claimant's attorney's fees to the insurance carrier when the carrier seeks judicial review of a workers' compensation award and fails to prevail on one or more issues. Id. § 408.221(c). The main issue presented in this appeal is whether a jury trial, or, alternatively, a plenary hearing,¹ when requested, is permitted under subsection (c) on the issue of the amount of reasonable and necessary attorney's fees.

1. Jury Trial on Amount of Attorney's Fees under Subsection (c).

Discover argues it was entitled to a jury trial on Tate's claim for attorney's fees, particularly as to the amount of "reasonable and necessary" fees. It contends that section 408.221 should not be interpreted as "denying the right to a jury trial," as guaranteed by Texas Supreme Court precedent and the Texas Constitution, when liability for the claimant's attorney's fees is shifted to the insurance carrier under subsection (c). Tate responds that the plain language of section 408.221 makes the trial judge the fact-finder as to the reasonable amount of attorney's fees, noting that subsection (b) states that an attorney's fee must be based on "written evidence" submitted to the court. Tate contends there is never a right to a jury trial, or a plenary hearing, on the amount of attorney's fees recoverable under section 408.221, even when the fee-shifting provisions of subsection (c) come into play.

We begin by noting that when the Texas Supreme Court has dealt with the issue of a "reasonable and necessary" amount of attorney's fees recoverable under a statute, it has consistently held that it is a question of fact for a jury to resolve. See City of Garland v. Dallas Morning News, 22 S.W.3d 351, 367-68 (Tex.2000) (holding that the amount of attorney's fees recoverable under a provision of the Public Information Act stating that "the court may assess" reasonable attorney's fees is a fact question for a jury); Bocquet v. Herring, 972 S.W.2d 19, 21 (Tex.1998) (interpreting a similarly-worded provision of the Declaratory Judgment Act to allow a jury to determine the amount of "reasonable and necessary" attorney's fees); see also Stewart Title Guar. Co. v. Aiello, 941 S.W.2d 68, 73 (Tex.1997) (award of appellate attorney's fees is a question of fact for the jury); Great Am. Reserve Ins. Co. v. Britton, 406 S.W.2d 901, 907 (Tex.1966) (reasonableness of attorney's fees is a fact question that may be submitted to a jury). The Supreme Court in City of Garland rejected the same type of reasoning voiced by Tate — that the plain language of the statute authorizing "the court" to assess "reasonable attorney's fees," and the omission of an express provision permitting a jury determination as to the amount, showed the Legislature intended the trial judge to be the fact-finder and to determine the amount of reasonable attorney's fees. See City of Garland, 22 S.W.3d at 367. In City of Garland, the Supreme Court interpreted the statutory language "the court may assess ... reasonable attorney fees" as requiring the trial court to decide whether to award attorney's fees, but noted that the statute did not dictate how to determine a "reasonable" amount of fees. Id. The Court noted that generally the reasonableness of statutory attorney's fees is a jury question. Id. (internal citations omitted). Similarly, in Bocquet, the Court held that the statutory language of the Declaratory Judgment Act required the trial judge to determine whether to award attorney's fees, but allowed the jury to determine the amount of reasonable attorney's fees. Bocquet, 972 S.W.2d at 21; see Holland v. Wal-Mart Stores, Inc., 1 S.W.3d 91, 94 (Tex.1999) (stating that the availability of attorney's fees under a particular statute is a question of law for the court, and the jury's finding as to the amount of reasonable attorney's fees is immaterial to the legal issue of whether fees are recoverable as a matter of law). We must therefore interpret section 408.221's provisions authorizing the recovery of a claimant's attorney's fees in view of this Supreme Court precedent recognizing the general right to a jury determination of the reasonable amount of attorney's fees.

We conduct a de novo review and interpret section 408.221(c), the particular subsection at issue, according to the basic principles of statutory construction. Holland, 1 S.W.3d at 94 (a party's ability to recover attorney's fees under a certain statute is a question of law which we review de novo); El Paso Natural Gas Co. v. Minco Oil & Gas, Inc., 8 S.W.3d 309, 312 (Tex.1999). Our overriding goal is to determine and give effect to the legislative intent expressed in the statute. Tex. Gov't Code Ann. § 311.011 (Vernon 2005). We begin by looking to the...