EXCO Operating Company, LP v. Mary K. McGee
12-15-00087-CV
| Tex. App. | Jul 28, 2015Background
- Landowner Mary K. McGee sued EXCO Operating Co., LP regarding an oil & gas lease and alleged damages from drilling and failure to restore a wellsite on a 93.9-acre tract; jury awarded McGee $4,108.25 in damages (no award for loss of property value).
- Before trial McGee made settlement demands of $90,000 on two occasions; at deposition she admitted she had not formulated an estimate of damages when making those demands.
- EXCO contends the Lease authorized drilling where EXCO drilled and that EXCO sold its interest in the well in December 2009; photographs McGee relied on were taken during drilling in 2006–2007, not in 2011.
- McGee recovered a small fraction of what she demanded; trial court awarded her $39,773.75 in attorney’s fees under Tex. Civ. Prac. & Rem. Code § 38.001.
- EXCO appeals, arguing (1) McGee’s pretrial $90,000 demands were excessive and made unreasonably—discharging liability for subsequent fees; (2) the fee award was unreasonable/disproportionate to recovery; (3) Arthur Andersen factors should guide fee-reasonableness analysis; and (4) recent authority (Fleming) precludes fee recovery against a limited partnership under § 38.001.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1) Are pretrial settlement demands excessive so as to bar recovery of post-demand attorney's fees? | McGee frames issue as whether fees may be denied simply because recovery is less than demand. | EXCO: demand of $90,000 was unreasonable (demanded amounts not authorized by Lease; no basis for amount; demand preceded any damage estimate); excessive demand doctrine applies even to unliquidated claims. | Trial court found McGee acted reasonably in making demands; EXCO seeks reversal (trial court had awarded fees to McGee). |
| 2) Were the attorney's fees awarded reasonable and necessary? | McGee defends fees and hourly rates as customary; warns against rigid Arthur Andersen application. | EXCO: fees ($39,773.75) are disproportionate to recovery ($4,108.25); hours/rates unreasonable for East Texas; rebutted presumption of reasonableness; apply Arthur Andersen factors. | Trial court awarded fees; EXCO argues award is excessive and factually insufficient. |
| 3) Does the excessiveness inquiry apply to unliquidated demands? | McGee contends unliquidated nature excuses demand disparity. | EXCO cites Findlay and Outdoor Systems to show unliquidated demands can be excessive and bar fees. | Existing precedent supports that unliquidated demands may be excessive; trial court nonetheless awarded fees. |
| 4) Can a prevailing party recover statutory attorney's fees from a limited partnership under § 38.001? | McGee implicitly assumes § 38.001 allows recovery against EXCO. | EXCO relies on Fleming (Fourteenth Court) holding § 38.001 permits recovery only from an individual or a corporation, not partnerships/LLPs/LLCs; requests modification to remove award. | Fleming refused review by Texas Supreme Court; EXCO urges this Court to follow Fleming and vacate fee award against LP. |
Key Cases Cited
- Findlay v. Cave, 611 S.W.2d 57 (Tex. 1981) (excessive pretrial demand may bar recovery of subsequently incurred attorney's fees; inquiry centers on claimant's reasonableness).
- Arthur Andersen & Co. v. Perry Equip. Corp., 945 S.W.2d 812 (Tex. 1997) (factors to assess reasonableness of attorney's fees derived from professional conduct standards).
- Outdoor Sys., Inc. v. BBE, LLC, 105 S.W.3d 66 (Tex. App.–Eastland 2003, pet. denied) (demand for unliquidated sums found excessive as matter of law where plaintiff demanded amounts and actions beyond contract obligations).
- Smith v. Patrick W.Y. Tam Trust, 296 S.W.3d 545 (Tex. 2009) (degree of success is the critical factor in assessing fee reasonableness; disproportional awards may be unreasonable as a matter of law).
- Fleming & Assocs. v. Barton, 425 S.W.3d 560 (Tex. App.–Houston [14th Dist.] 2014) (holding § 38.001 permits fee recovery only from an "individual or corporation," not from partnerships; trial-court fee award against LLP vacated).
- Wayne v. A.V.A. Vending, Inc., 52 S.W.3d 412 (Tex. App.–Corpus Christi 2001, pet. denied) (where claimant demands monies to which not entitled, demand is unreasonable and may bar fee recovery).
- Reeder v. Wood County Energy, L.L.C., 320 S.W.3d 433 (Tex. App.–Tyler 2010) (discusses standards for sufficiency review of fee awards).