Structural Metals, Inc. v. S&C Elec. Co.
| Decision Date | 19 July 2013 |
| Docket Number | Civil Action No. SA-09-CV-984-XR |
| Parties | STRUCTURAL METALS, INC., Plaintiff, v. S&C ELECTRIC COMPANY, Defendant. |
| Court | U.S. District Court — Western District of Texas |
On this date, the Court considered Plaintiff Structural Metals, Inc.'s Motion for Attorneys' Fees and Expenses (docket no. 153), S&C's Response in Opposition (docket no. 161), and the Reply (docket no. 164).
Plaintiff Structural Metals, Inc. ("SMI") sued Defendant S&C Electric Company ("S&C") in state court for breach of contract, breach of express warranty in the sale of goods, breach of implied warranty of merchantability, and breach of implied warranty of fitness for a particular purpose. S&C removed the case to this Court on the basis of diversity jurisdiction. This Court held a jury trial on Plaintiff's claims in November 2012. The jury found that: (1) S&C and SMI agreed that S&C would provide an AVC system, (2) S&C did not fail to comply with the agreement, (3) S&C made and breached an express warranty to SMI, (4) S&C breached an implied warranty of merchantability, and (5) S&C breached an implied warranty of fitness for a particular purpose. The jury also found that SMI did not justifiably revoke its acceptance of the AVC System, thereby precluding recovery on SMI's breach-of-contract claim. The jury awarded $306,500 in breach-of-warranty damages. The Court entered judgment in favor of SMI based on the jury's verdict. SMI seeks an award of $793,696.12 in attorneys' fees and $11,509.37 in expenses.
An award of attorneys fees is governed by the same law that determines the substantive issues of the case. Mathis v. Exxon Corp., 302 F.3d 448, 461 (5th Cir. 2002). Therefore, in this diversity case, Texas law controls both the award of and the reasonableness of the fees awarded. Id. Texas allows a prevailing party to recover attorneys' fees "only if permitted by statute or by contract." Med. City Dallas v. Carlisle Corp., 251 S.W.3d 55, 58 (Tex. 2008). Section 38.001 of the Texas Civil Practice and Remedies Code allows for recovery of attorneys' fees for breach-of-contract claims. TEX. CIV. PRAC. & REM. CODE § 38.001(8) (). The Texas Supreme Court has held that this provision applies to breach-of-express-warranty claims under the Uniform Commercial Code ("UCC"). Med. City Dallas, Ltd. v. Carlisle Corp., 251 S.W.3d 55, 63 (Tex. 2008) ().1 "Under Texas law, there is discretion to determine the amount of the attorneys' fee award, but an award of reasonable fees is mandatory if a party prevails . . . and there is proof of reasonable fees." DP Solutions, Inc. v. Rollins, Inc., 353 F.3d 421, 433 (5th Cir. 2003).
The computation of reasonable attorneys' fees involves a three-step process: (1) determine the nature and extent of the services provided by plaintiff's counsel; (2) set a value on those services according to the customary fee in the prevailing market and quality of the legal work; and (3) adjust the compensation on the basis of the other factors that may be of significance in the particular case. See Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974); Copper Liquor, Inc. v. Adolph Coors Co., 684 F.2d 1087, 1092 (5th Cir. 1982); El Apple I, Ltd. v. Olivas, 370 S.W.3d 757, 760 (Tex. 2012). Steps one and two result in a computation of the "lodestar" amount. Both the hours worked and the hourly rate must be reasonable, and the Court considers only the hours spent on the successful claims. See Hensley v. Eckerhart, 461 U.S. 424, 433-34 (1983). In the final step, the lodestar is adjusted on the basis of the other factors enumerated in Johnson and by the Texas Supreme Court in Arthur Andersen & Co. v. Perry Equipment Co., 945 S.W.2d 812, 818 (Tex. 1997).2 Rarely are all factors applicable, however, and a trial judge may give them different weights.
As noted, SMI pursued claims for breach of contract and breach of express and implied warranties, was successful on all of it warranty claims, and did not recover on its breach-of-contract claim under the UCC because the jury failed to find revocation of acceptance. For breach-of-warranty damages, the jury awarded $306,500, reflecting the difference, at the time and place of acceptance, between the value of the AVC system accepted and the value that the AVC system would have had if it had been as warranted.
In its motion for fees, SMI submitted an adjusted lodestar calculation of $793,696.12. SMI acknowledged that it did not prevail on its breach-of-contract claim, and removed time entries relating solely to its revocation of acceptance theory, totaling $7,011.20, plus an additional 2% deduction ($16,197.88) to account for time spent on that issue in other time entries, for a total reduction of $23,209.08. SMI contends that no further reduction is warranted because tasks performed were necessary for both the contract and warranty claims. SMI further reduced its fees by eliminating hours associated with S&C's motion for spoliation remedy, amounting to $19,384.40. Further, SMI notes that the lodestar amount of $793,696.12 reflects a blanket 20% reduction off each timekeeper's rate based on SMI's long-standing relationship with SMI's parent company, Commercial Metals Company.
S&C raises a number of challenges to SMI's fee request, including failure to plead and prove presentment, failure to segregate fees for unsuccessful claims, failure to remove fees related to removal and mediation, failure to remove fees for legal technology and trial media specialists, and failure to adjust the lodestar downward to reflect a more reasonable fee.
To recover attorney's fees under Chapter 38: (1) the claimant must be represented by an attorney; (2) the claimant must present the claim to the opposing party; and (3) payment for the just amount owed must not have been tendered before the expiration of the 30th day after the claim is presented. TEX. CIV. PRAC. & REM.CODE § 38.002. S&C contends that SMI failed to satisfy Chapter 38 because it did not present a demand to trigger an entitlement to fees, any demands that it did present were excessive and therefore ineffective, and it did not plead presentment.
The presentment requirement of Chapter 38 "is to enable the debtor to pay the claim withinthe thirty days and avoid liability for attorney's fees." Ashford Dev., Inc. v. USLife Real Estate Servs. Corp., 661 S.W.2d 933, 936 (Tex. 1983). The "burden of proof is on the claimant to plead and prove presentment and failure to tender performance." Panizo v. Young Men's Christian Ass'n of Greater Houston Area, 938 S.W.2d 163, 168 (Tex. App.—Houston [1st Dist.] 1996, no writ). However, no particular form or manner of presentment is required; it may be written or oral, and all that is necessary is that an assertion of a debt or claim and a request for compliance be made to the opposing party, and that the party failed to pay the claim. Id. The statute is to be liberally construed to promote its underlying purpose, but the act of filing suit is not by itself a demand within the statute. Id. Further, "[a] creditor who makes an excessive demand on a debtor is not entitled to attorney's fees for litigation required to recover the debt." Id. (citing Findlay v. Cave, 611 S.W.2d 57, 58 (Tex. 1981)).
SMI's motion for attorney fees asserts that it presented the claim because there is undisputed evidence that SMI made a request for its money back, and S&C did not comply. SMI points to evidence that in January 2008 Henry Camarillo informed S&C, through Mike Seehafer (who worked for S&C's sales agent Fred Oberlender & Associates3), that SMI wanted its money back. Docket no. 152 Ex. B, Ex. C. SMI argues that this oral request is alone sufficient to establish presentment. See Harrison v. Gemdrill Int'l, Inc., 981 S.W.2d 714, 719 (Tex. App.— Houston [1st Dist.] 1998, pet. denied) (); Criton Corp. v. Highlands Ins. Co., 809 S.W.2d 355, 358 (Tex. App.—Houston [14th Dist.] 1991, writ denied) ().
S&C argues that the evidence about Camarillo stating that SMI wanted its money back is not sufficient because Seehafer made the comment as part of a discussion about the fact that SMI was taking the position that S&C was responsible for all the damages resulting from the December 2006 fire, and "[t]hat email did not concern the AVC Warranty Claim." Docket no. 161 at 7. S&C notes that Camarillo did not participate in the email communication and the email did not indicate the amount of money that SMI was demanding to satisfy its claim. However, the fact that the email discussion submitted as evidence did not include Camarillo does not alter the fact that it is evidence that Camarillo informed S&C, through Seehafer, that SMI wanted its money back. No evidence suggests that Camarillo did not do so. SMI has therefore sufficiently proven that SMI asked for its money back.
SMI's request for its money back satisfies the purpose of the statute to give S&C an opportunity to pay the debt and avoid attorneys' fees. Presentment does not have to refer to a specific amount of damages or name a specific claim or cause of action, and does not have to be made by counsel. Partners Lending Auto Group, LLC v. Leedom Fin. Servs., 432 F. App'x 291, 296 (5th Cir. 2011) (); Sunbeam Envtl. Servs. v. Tex. Workers' Comp. Ins. Fac., 71 S.W.3d 846, 851 (Tex. App.—Austin 2002, no pet.) ("there is no requirement that the demand must be made by counsel" and sending is a...
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