In re Nalle Plastics Family Ltd. Partnership
406 S.W.3d 168
| Tex. | 2013Background
- Porter, Rogers, Dahlman, & Gordon, P.C. sued Nalle Plastics Family Limited Partnership for breach of contract; jury awarded $132,661 in damages and $150,000 in reasonable attorney’s fees for collecting the judgment; trial court entered judgment including damages, fees, pre- and post-judgment interest, and costs; to stay enforcement, Nalle deposited cash covering damages, interest, and costs but not attorney’s fees; Porter argued that fees should be included in the supersedeas deposit; the court of appeals held fees must be included; this Court grants mandamus relief and reconsiders the statutory framework for 52.006(a).
- House Bill 4 (2003) amended Tex. Civ. Prac. & Rem. Code § 52.006(a) to require security equal to compensatory damages, interest, and costs, but capped by net-worth; obligation to secure does not expressly include attorney’s fees; the question is whether attorney’s fees are compensatory damages or costs for supersedeas purposes.
- There was judicial split among Texas Courts of Appeals on whether attorney’s fees should be treated as compensatory damages or as costs for § 52.006(a) purposes; some favored including fees as compensatory damages or as costs, while others rejected inclusion of fees.
- The Court holds that attorney’s fees incurred in prosecuting or defending a claim are not compensatory damages and are not costs for purposes of § 52.006(a); however, under certain conditions attorney’s fees that are part of the underlying damages for an underlying breach of contract can be compensatory damages.
- The decision clarifies that “costs” in § 52.006(a) refers to court costs, not attorney’s fees, and that fees may be recoverable under other statutes (e.g., § 38.001) only if the underlying claim supports such an award.],
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are attorney’s fees incurred in prosecuting/defending a claim compensatory damages? | Porter: fees are compensatory damages. | Nalle: fees are included as part of damages. | No; fees are not compensatory damages. |
| Are attorney’s fees costs for § 52.006(a) purposes? | Porter: fees are costs. | Nalle: fees are included as costs. | No; fees are not costs. |
| Can some attorney’s fees be compensatory damages when the underlying claim includes attorney’s fees? | If underlying breach seeks fees, those fees may be compensatory. | Fees incurred in prosecuting the fee claim are not compensatory. | Yes, fees tied to underlying damages may be compensatory; but not fees incurred to obtain those fees. |
| What is the meaning of 'costs awarded in the judgment' under § 52.006(a)? | Fees may be considered costs. | Costs means court costs; fees are separate. | Costs = court costs; attorney’s fees are not included. |
Key Cases Cited
- Fairways Offshore Exploration, Inc. v. Patterson Services, Inc., 355 S.W.3d 296 (Tex.App.-Houston [1st Dist.] 2011) (divides compensatory damages from attorney’s fees; 52.006 not defined as including fees; underlying damages differ from fees)
- Shook v. Walden, 304 S.W.3d 910 (Tex.App.-Austin 2010) (Legislature did not intend attorney’s fees to be included in supersedeas)
- PopCap Games, Inc. v. MumboJumbo, LLC, 317 S.W.3d 913 (Tex.App.-Dallas 2010) (HB4 does not require superseding of attorney’s fees)
- Clearview Properties, L.P. v. Property Texas SC One Corp., 228 S.W.3d 262 (Tex.App.-Houston [14th Dist.] 2007) (fees are in the nature of costs or damages; court allowed securing award)
- MBM Fin. Corp. v. Woodlands Operating Co., L.P., 292 S.W.3d 660 (Tex. 2009) (attorney’s fees recoverable as costs or under § 38.001; distinction between damages and fees)