Heritage Resources, Inc. v. Hill

• Decision Date: 13 February 2003
• Docket Number: No. 08-01-00383-CV.,08-01-00383-CV.
• Citation: 104 S.W.3d 612
• Parties: HERITAGE RESOURCES, INC., Appellant, v. Margaret Hunt HILL, Individually, et al., Appellees.
• Court: Texas Court of Appeals

104 S.W.3d 612

HERITAGE RESOURCES, INC., Appellant, v. Margaret Hunt HILL, Individually, et al., Appellees.

No. 08-01-00383-CV.

Court of Appeals of Texas, El Paso.

February 13, 2003.

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Marcellene Malouf, Law Offices of Stephen F. Malouf, P.C., Dallas, for Appellant.

Thomas E. Kurth, Haynes and Boone, Ronald Holman, Holman, Robertson, Eldridge, Biddle & McCorkindale, Dallas, for Appellees.

Before Panel No. 4 BARAJAS, C.J., LARSEN, and McCLURE, JJ.

OPINION

ANN CRAWFORD McCLURE, Justice.

This is the second appeal in a dispute which has its genesis in the attempted removal of the operator of a Joint Operating Agreement. The factual basis of the underlying suit, aptly described as "marathon litigation," is thoroughly detailed in our original opinion and will not be repeated here. See Hill v. Heritage Resources, Inc., 964 S.W.2d 89, 107 (Tex. App.-El Paso 1997, pet. denied). Suffice it to say that our ultimate resolution of the damage award reduced Heritage's¹ recovery from some $83 million to slightly more than $8 million. We reversed and remanded the award of nearly $21 million in attorneys' fees because only the claim for declaratory judgment would support the award and the fees attributable to the declaratory judgment action had not been properly segregated. On remand, Heritage sought fees totaling $5,965,536.66 based on its 29.5 percent contingency contract with attorneys Stephen F. Malouf and Edward Wayne Malouf. This figure represents 29.5 percent of the original fee award. The trial court entered judgment awarding the Maloufs $25,000 in attorney's fees. This appeal follows.

FACTUAL SUMMARY

The litigation between the parties spans three separate lawsuits in Winkler and Dallas Counties. Heritage hired Gibson & Dunn to represent them in the initial proceedings in Winkler County in December 1987. The firm withdrew from representation in July 1990 after Heritage virtually became insolvent. Heritage was without representation from July 1990 until December 1991 because it did not have the financial resources available to retain counsel on a hourly basis. In December 1991, Stephen and Wayne Malouf were retained on a contingency fee basis.

Wayne Malouf offered to undertake this complex case for a retainer of $10,000 and he agreed to work at a reduced billing rate of $50 for the first 200 hours expended. He testified that he and his brother Stephen had spent approximately 4,150 hours through trial and that another 5,000 hours were expended post-trial and on appeal. They had reviewed 250 boxes of documents from Gibson & Dunn and received approximately 540 requests for production by the plaintiffs. Wayne further opined that "within a few percentage points," 80 percent of the work performed was related to the declaratory judgment action in the Winkler County case. Applying this percentage reduction to the fees due under the contingency contract, the fee award would have totaled $4,743,600. No time records were maintained by the attorneys, their legal assistants or staff for the 9,150 billable hours claimed. Wayne made no attempt to segregate the time spent on the declaratory judgment action vis-a-vis the fees related to the claims for breach of contract or fraud, nor did he distinguish between the three pending lawsuits.

Jack Tidwell testified as an expert witness for the Hunt/Hill parties concerning the usual and customary fees and practices in West Texas. As a seasoned litigator with forty-four years' experience, Tidwell expressed his belief that a time expenditure between 30 and 50 hours would be reasonable and necessary for pursuing the declaratory judgment action, that a reasonable hourly fee in Winkler County would be $150 to $200, and that anything in excess of 100 hours would be unreasonable. From his review of the record, there was nothing to document the fee request or to allocate the fees between the various lawsuits and theories of recovery.

The trial court filed the following findings of fact and conclusions of law:

I.

FINDINGS OF FACT

1. The attorneys representing Heritage are able and experienced lawyers.

2. From the commencement of their appearance in this litigation through the date of the original judgment in this case, Heritage's trial counsel maintained no records of the time they expended in connection with this action.

3. The amount of $25,000.00 is reasonable and necessary for attorney's fees for securing a declaration that Heritage owned a sufficient interest in Sections 21 and 22, Block C-23, PSL Survey, Winkler County, Texas, to serve as operator.

4. Heritage waived the claim seeking to recover attorney's fees incurred by the attorneys who represented Heritage in this action prior to the appearance of its trial counsel.

II.

CONCLUSIONS OF LAW

1. An award of fees to Heritage in the amount of $25,000.00 pursuant to TEX. CIV.PRAC. & REM.CODE § 37.009 is equitable and just.

2. Heritage is entitled to attorney's fees of $25,000.00 pursuant to TEX.CIV. PRAC. & REM.CODE § 37.009.

3. To the extent that any finding of fact may be more properly described as a conclusion of law and that any conclusion of law may be more properly described as a finding of fact, it is deemed to be so described.

Heritage brings two related issues for review. In Point of Error No. One, it contends that the trial court abused its discretion in awarding only $25,000 in attorneys' fees because the award is arbitrary and unreasonable and bears no relation to the total amount recovered. In Point of Error No. Two, it complains that the trial court abused its discretion in awarding only $25,000 in attorneys' fees because the award was arbitrary and unreasonable and the court acted without reference to guiding rules and principles. It suggests that "the absolute minimum" fee should have been $913,000 (4150 hours X 80% X $275 = $913,000). This calculation is based upon an hourly fee rather than the contingency contract.

Heritage does not specifically challenge the trial court's findings of fact, nor does it argue that the award is against the great weight and preponderance of the evidence. Consequently, we must first address whether error has been preserved.

STANDARD OF REVIEW

The Texas Uniform Declaratory Judgment Act provides that "[i]n any proceeding under this chapter, the court may award costs and reasonable and necessary attorney's fees as are equitable and just." TEX.CIV.PRAC. & REM.CODE ANN. § 37.009 (Vernon 1997). The Act does not require an award of attorney's fees to the prevailing party. Bocquet v. Herring, 972 S.W.2d 19, 20 (Tex.1998); Barshop v. Medina County Underground Water Conservation Dist., 925 S.W.2d 618, 637 (Tex.1996); Abraxas Petroleum Corp. v. Homburg, 20 S.W.3d 741, 762 (Tex.App.-El Paso 2000, no pet.). Instead, it affords the trial court a measure of discretion in deciding whether to award attorney's fees. Commissioners Court of Titus County v. Agan, 940 S.W.2d 77, 81 (Tex.1997). In reviewing a fee award under the Act, we must determine whether the trial court abused its discretion by awarding fees when there was insufficient evidence that the fees were reasonable and necessary, or when the award was inequitable or unjust. Bocquet, 972 S.W.2d at 21; Abraxas, 20 S.W.3d at 762-63. Simply stated, there are four limitations imposed on the court's discretion: the fees awarded must be reasonable and necessary, which are matters of fact, and they must be equitable and just, which are matters of law. Bocquet, 972 S.W.2d at 21; Abraxas, 20 S.W.3d at 762. The mere fact that a trial judge may decide a matter within his discretionary authority in a different manner than an appellate judge in a similar circumstance does not demonstrate that an abuse of discretion has occurred. Southwestern Bell Telephone Co. v. Johnson, 389 S.W.2d 645, 648 (Tex.1965); Jones v. Strayhorn, 159 Tex. 421, 321 S.W.2d 290, 295 (1959); Norris v. Norris, 56 S.W.3d 333, 337 (Tex. App.-El Paso 2001, no pet.). Because the grant or denial of attorney's fees is within the sound discretion of the trial court, its judgment will not be disturbed on appeal absent a clear showing that it abused its discretion. Oake v. Collin County, 692 S.W.2d 454, 455 (Tex.1985). A trial court abuses its discretion if its decision is arbitrary, unreasonable, or if the court acted without reference to guiding legal rules and principles. Goode v. Shoukfeh, 943 S.W.2d 441, 446 (Tex.1997); Worford v. Stamper, 801 S.W.2d 108, 109 (Tex.1990); Abraxas, 20 S.W.3d at 762.

We are aware of opinions from our sister courts holding that when the trial court's ruling on the merits is reviewed under an abuse of discretion standard, the normal sufficiency of the evidence review is part of the abuse of discretion review and not an independent ground for reversal. Crawford v. Hope, 898 S.W.2d 937, 940-41 (Tex.App.-Amarillo 1995, writ denied)(when standard of review is abuse of discretion, factual, and legal sufficiency are not independent grounds of error); accord, Thomas v. Thomas, 895 S.W.2d 895, 898 (Tex.App.-Waco 1995, writ denied); Matter of Marriage of Driver, 895 S.W.2d 875, 877 (Tex.App.-Texarkana 1995, no writ); Wood v. O'Donnell, 894 S.W.2d 555, 556 (Tex. App.-Fort Worth 1995, no writ); In the Interest of Pecht, 874 S.W.2d 797, 800 (Tex.App.-Texarkana 1994, no writ); but see Matthiessen v. Schaefer, 897 S.W.2d 825, 828 (Tex.App.-San Antonio 1994)(Duncan, J., dissenting)(appellate court should review award of attorney's fees by normal sufficiency of evidence standard, and not subsume sufficiency of evidence into abuse of discretion standard), rev'd on other grounds, 915 S.W.2d 479 (Tex.1995). We have disagreed with them and approached it differently. In Lindsey v. Lindsey, 965 S.W.2d 589 (Tex.App.-El Paso 1998, no pet.), we adopted a two pronged inquiry: (1) Did the trial court have sufficient information upon which to exercise its discretion; and (2) Did the trial court err in its application of...