Albert G. Hill, Jr. v. Shamoun & Norman, Llp
544 S.W.3d 724
| Tex. | 2018Background
- Albert G. Hill Jr. (Hill) faced a complex "web" of litigation (20+ suits, ~100 lawyers) culminating in a federal RICO trial set for May 2010. Shamoun & Norman, LLP (S&N) and Gregory Shamoun became involved in settlement negotiations in early 2010.
- Hill and Shamoun had four written limited-engagement (hourly) agreements covering discrete matters, but S&N alleges an oral contingent-fee "Performance Incentive Bonus" agreement (March 27, 2010) to pay Shamoun 50% of savings between $73M and settlement cash if a global settlement was reached before trial. Hill refused to sign a memorializing writing.
- S&N performed work negotiating a global settlement (May 4–5 mediation; formal settlement executed May 13). Hill later terminated S&N and paid other contractual fees but refused the contingent bonus; S&N demanded $11,250,000 and sued on multiple theories, ultimately proceeding at trial on quantum meruit.
- Trial: S&N conceded the oral contingent-fee was unenforceable under Tex. Gov’t Code §82.065(a). S&N’s damages expert (Sayles) based his valuation on the unenforceable contingent-fee formula; the jury awarded S&N $7,250,000 on quantum meruit. The trial court set aside the award and rendered a take-nothing judgment. The court of appeals reinstated the jury verdict; this Court granted review.
- Texas Supreme Court holdings: §82.065(a) (statute of frauds) does not bar a lawyer’s quantum-meruit claim for reasonable value of services performed under an unenforceable contingent agreement; there was legally sufficient evidence S&N performed compensable global-settlement services; but expert evidence that relies on an unenforceable contingent-fee is no evidence of reasonable value, so the $7,250,000 award lacked legal support. The case is remanded for a new trial on damages only.
Issues
| Issue | Plaintiff's Argument (S&N) | Defendant's Argument (Hill) | Held |
|---|---|---|---|
| Whether §82.065(a) (contingent-fee statute of frauds) precludes quantum-meruit recovery for services performed under an unenforceable oral contingent-fee agreement | §82.065(a) does not bar equitable recovery; quantum meruit prevents unjust enrichment and allows recovery of reasonable value | The statute of frauds forbids giving legal effect to an unenforceable contingent-fee; permitting recovery would circumvent §82.065(a) | §82.065(a) does not preclude a quantum-meruit claim for reasonable value of services rendered under an unenforceable agreement |
| Whether S&N proved it performed compensable global-settlement services outside the written limited-engagement agreements | Shamoun acted as the "one voice," conducted negotiations that produced the global settlement; testimony and recordings show Hill knew S&N expected payment | Hill: services were covered by the signed limited engagements or Shamoun did not perform/was not the primary negotiator | There was legally sufficient evidence that S&N performed compensable global-settlement services and Hill was aware S&N expected payment |
| Whether expert valuation based on the unenforceable contingent-fee may be considered to establish "reasonable value" | Sayles used Arthur Andersen factors and the contingent-fee formula to calculate reasonable value; his testimony supports the jury award | The expert’s opinion relies on an unenforceable agreement and thus violates Quigley—such evidence cannot be given legal weight | Under Quigley, evidence of the value of an agreement barred by the statute of frauds (including an oral contingent-fee) is no evidence; Sayles’s opinion cannot be considered |
| Standard of review and whether trial court abused discretion in setting aside jury award and rendering take-nothing judgment | Jury verdict supported by evidence should be reinstated; review should be sufficiency-based | Trial court has equitable discretion to weigh whether to award fees; review for abuse of discretion | Trial court did not abuse discretion in setting aside the $7,250,000 award (but erred in awarding nothing where some value was shown); remand for new trial on damages only |
Key Cases Cited
- In re Kellogg Brown & Root, Inc., 166 S.W.3d 732 (Tex. 2005) (quantum meruit described as equitable remedy to prevent unjust enrichment)
- Truly v. Austin, 744 S.W.2d 934 (Tex. 1988) (unjust enrichment and equitable recovery principles)
- Vortt Exploration Co. v. Chevron U.S.A., Inc., 787 S.W.2d 942 (Tex. 1990) (elements to recover in quantum meruit)
- Arthur Andersen & Co. v. Perry Equip. Corp., 945 S.W.2d 812 (Tex. 1997) (factors for determining reasonable attorney’s fees)
- Quigley v. Bennett, 227 S.W.3d 51 (Tex. 2007) (statute of frauds bars evidence of the value of an unenforceable bargain and such evidence cannot support damages)
- Sonnichsen v. Baylor Univ., 221 S.W.3d 632 (Tex. 2007) (statute of frauds bars benefit-of-the-bargain damages; restitution may remain available)
- Haase v. Glazner, 62 S.W.3d 795 (Tex. 2001) (statute of frauds limits damages recoverable on noncontract claims)
- Midland W. Bldg. L.L.C. v. First Serv. Air Conditioning Contractors, 300 S.W.3d 738 (Tex. 2009) (remand for new trial on attorney’s fees where some value shown but full award unsupported)
- Burrow v. Arce, 997 S.W.2d 229 (Tex. 1999) (distinguishing jury fact finding from trial court’s equitable authority to determine fee forfeiture)