By: Troy Hornsby, Miller, James, Miller & Hornsby, L.L.P., Texarkana

Under the “American Rule”, each party to litigation is responsible for their own attorney’s fees. See Turner v. Turner, 385 S.W.2d 230, 233 (Tex. 1964). However, in Texas, under some statutes and situations a party can recover their attorney’s fees, see Knebel v. CaptialNat’l Bank, 518 S.W.2d 795, 804 (Tex. 1974), which may include appellate attorney’s fees. Mid City Rental v. Miner-Dederick, 583 S.W.2d 428, 433 (Tex. Civ. App.-Beaumont 1979), rev’d on other grounds, 603 S.W.2d 193 (Tex. 1980).

In some jurisdictions, the decision of awarding such attorney’s fees for trial rests with the trial court, and the decision of awarding appellate attorney’s fees is made by the appellate court. Int’l Sec. Life Ins. v. Spray, 468 S.W.2d 347, 349 (Tex. 1971). However, a Texas appellate court may not initiate such an award, since this would be the exercise of original rather than appellate jurisdiction. Id. Rather, in Texas, the determination of appellate attorney’s fees is made by the trial court prior to the appeal. Bocquet v. Herring,972 S.W.2d 19, 21 (Tex. 1998); see also Spray, 468 S.W.2d at 349. Such a decision necessarily involves two issues: whether to award the fees and the reasonableness (amount) of those fees.

THE TRIAL COURT’S DECISION To AWARD APPELLATE ATTORNEY’S FEES

The decision of whether to award appellate attorney’s fees authorized by statute is generally at the discretion of the trial court. Trevino v. Am. Nat’l Ins. Co., 168 S.W.2d 656, 660 (Tex. 1943). Even when the trial court submits the question of the reasonableness (amount) of attorney’s fees to a jury, the trial court retains the right to determine whether or not to award attorney’s fees. Hansen v. Academy Corp., 961 S.W.2d 329, 334-334 (Tex. App.-Houston [1st Dist.] 1997, pet. denied).

The determination of the reasonableness (amount) of reasonable attorney’s fees is a question for the trier of fact. Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1, 12 (Tex. 1991). If the jury is the fact finder, there must be competent evidence in the record to support an award of appellate attorney’s fees. Great Am. Reserve Ins. Co. v. Britton, 406 S.W.2d 901, 907 (Tex. 1966). Likewise, if the trial court is the fact finder, the general rule is that the record must contain competent evidence of appellate attorney’s fees and a trial court does not have authority to adjudicate the reasonableness of attorney’s fees on judicial knowledge without the benefit of evidence. Id. However, when the attorney’s fee claim is pursuant to Texas Civil Practice and Remedies chapter 38, “the court may take judicial notice of the usual and customary attorney’s fees in a proceeding before the court or in a jury case in which the amount of attorney’s fees is submitted to the court by agreement.” TEX. CIV. PRAC. & REM CODE § 38.004(1).

The fee should be only that which would be reasonable for a litigant himself to pay his own attorney. Argonaut Ins. Co. v. ABC Steel Prods. Co., 582 S.W.2d 883, 889 (Tex. Civ. App. Texarkana 1979, writ ref d n.r.e.). More specifically, the attorney’s fee amount must be reasonable under the particular circumstances of the case and must bear some reasonable relationship to the amount in controversy. Id. However, it is permissible for the attorney’s fee award to exceed the amount in controversy. See, e.g., Republic Bankers Life Ins. Co. v. Morrison, 487 S.W.2d 373, 377 (Tex. Civ. App. Texarkana 1979, no writ); Union Nat’l Life Ins. Co. v. Reese, 476 S.W.2d 928, 929 (Tex. Civ. App.-Houston [14th Dist.] 1972, writ ref d n.r.e.). In fact, a net recovery is not a prerequisite to an attorney’s fee award. See McKinley v. Drozd,685 S.W.2d 7, 10-11 (Tex. 1985); see also Building Concepts, Inc. v. Duncan, 667 S.W.2d 897, 905 (Tex. Civ. App.-Houston [14th Dist.] 1984, writ ref d n.r.e.). Specific factors to be considered by the fact finder in determining the amount of reasonable attorney’s fees include: (1) the time and labor required, novelty and difficulty of the question presented, and the skill required to properly perform the legal service; (2) the likelihood that the acceptance of employment precluded other employment by the lawyer; (3) the fee customarily charged in the locality for similar services; (4) the amount involved and the results obtained; (5) the time limitations imposed by the client or by the circumstances; (6) the nature and length of the professional relationship with the client; (7) the experience, reputation, and ability of the lawyer performing the services; and (8) whether the fee is fixed or contingent. Arthur Anderson & Co. v. Perry Equip. Corp., 945 S.W.2d 812, 818 (Tex. 1997). While these factors may be considered, the court is not required to receive evidence on all of them. Hagedorn v. Tisdale, 73 S.W.3d 341, 353 (Tex. App.- Amarillo 2002, no pet.). The trial court is also free to look at the entire record, the evidence presented on reasonableness, the amount in controversy, the common knowledge of the participants as lawyers and judges, and the relative success of the parties. Chilton Ins. Co. v. Pate & Pate Enters., Inc., 930 S.W.2d 877, 896 (Tex. App.-San Antonio 1996, writ denied); ArgonautIns. Co., 582 S.W.2d at 889.

EVIDENCE OF APPELLATE ATTORNEY’S FEES

Evidence of a contingency fee agreement alone is insufficient to support award of an attorney’s fee. Arthur Anderson & Co., 945 S.W.2d at 818. However, evidence by an expert witness that such a contingent fee arrangement was entered and was usual and customary for the type of litigation involved is sufficient to support a judgment.
Liberty Mut. Ins. Co. v. Allen, 669 S.W.2d 750 (Tex. App.-Houston [lIst Dist] 1983, writ refd n.r.e.); see also, Texas Farmers Ins. Co. v.
Hernandez, 649 S.W.2d 121 (Tex. App.- Amarillo 1983, writ ref d n.r.e.).

Finally, if attorney’s fees are authorized for some, but not all, of a party’s claims, that party generally has the duty to segregate recoverable attorney’s fees from unrecoverable attorney’s fees. Stewart Title Guar. Co., 822 S.W.2d at 11. If, however, no objection is made to the failure to segregate attorney’s fees, either at the time evidence of attorney’s fees is presented or at the time of the charge, the error is waived. Hruska v. First State Bank of Deanville, 747 S.W.2d 783, 785 (Tex. 1988).

Expert testimony is generally required to support an award of attorney’s fees. Gulf Paving Co. v. Lofstedt, 144 Tex. 17, 188 S.W.2d 155, 161 (1945). However, the fact finder is not bound by expert testimony on attorney’s fees and may award a lesser amount. State Farm Fire & Cas. Co. v. Gandy, 880 S.W.2d 129, 139 (Tex. App. Texarkana 1994), rev’d on other grounds, 925 S.W.2d 696 (Tex. 1996). In fact, a court can disregard even uncontested expert testimony of attorney’s fees if it is unreasonable, incredible, or its belief is questionable. Ragsdale v. Progressive Voters League, 801 S.W.2d 880, 882 (Tex. 1990).

An attorney testifying as to appellate attorney’s fees should establish himself as an expert. Lesikar v. Rappeport, 33 S.W.3d 282, 307-08 (Tex. App.-Texarkana 2000, pet. denied). Then the attorney should address the Arthur Anderson factors in testifying as to the reasonableness of the attorney’s fees involved. See Arthur Anderson & Co., 945 S.W.2d at 818. Additionally, the attorney should segregate fees for each step of the appellate process such as appeal, petition for review to the Supreme Court, and briefing on merits before the Supreme Court. See, e.g., Chrys-Ply Cty. v. Guerrero,620 S.W.2d 700, 707 (Tex. Civ. App.-San Antonio 1981, no writ). Finally, the attorney should segregate recoverable attorney’s fees from unrecoverable attorney’s fees. Stewart Title Guar.Co., 822 S.W.2d at 11.

In some situations, expert testimony at trial can be avoided. Expert testimony of attorney’s fees may be by affidavit in a default judgment. Westcliffe v. Bear Creek Constr., 105 S.W.3d 286, 294 (Tex. App.-Dallas 2003, no pet.) (citing Texas Commerce v. New, 3 S.W.3d 515, 517-18 (Tex. 1999). Additionally, affidavit testimony can support an award of attorney’s fees in a summary judgment. Texas Commerce v. New, 3 S.W.3d 515, 517-18 (Tex. 1999). Finally, an award of attorney’s fees as a sanction can be based upon an affidavit. See, e.g., Smith v. MarshallB. Brown, P.C., 51 S.W.3d 376, 382 (Tex. App.-Houston [list Dist.] 2001, pet. denied); Mid-ContinentCas. v. Safe Tire Disposal Corp., 2 S.W.3d 393, 397 (Tex. App.-San Antonio 1999, no pet.).

Such an attorney’s fee affidavit must set forth the expert’s qualifications, his opinion regarding reasonable attorney’s fees, the basis for his opinion, and not be controverted. Basin Credit Consultants, Inc. v. Obregon, 2 S.W.3d 372, 373 (Tex. App.-San Antonio 1999, pet. denied). When an attorney’s affidavit contains this necessary information, it constitutes “expert opinion testimony” and can sufficiently establish reasonable attorney’s fees when it meets the requirements of the summary judgment rule. Enell Corp. v. Longoria, 834 S.W.2d 132, 135 (Tex. App.-San Antonio 1992, no writ); Owen Elec. Supply, Inc. v. Brite Day Constr., Inc., 821 S.W.2d 283, 288 (Tex. App.-Houston [1st Dist.] 1992, no writ). To create a fact issue, the non-movant’s attorney must file an affidavit contesting the reasonableness of the movant’s attorney’s fee affidavit. See Tesoro Petroleum Corp. v. Coastal Refining & Mktg., Inc., 754 S.W.2d 764, 767 (Tex. App.-Houston [1st Dist.] 1986, no writ).

The parties can bypass the need for fact finding as to the amount of attorney’s fees by stipulating to the reasonableness of such attorney’s fees. A stipulation serves as proof on an issue that otherwise would be tried. Hansen v. Academy Corp., 961 S.W.2d 329, 335 (Tex. App.- Houston [list Dist.] 1997, pet. denied). It is conclusive on the issue addressed, and the parties are estopped from claiming to the contrary. Shepherd v. Ledford, 962 S.W.2d 28, 33 (Tex. 1998). More specifically, parties can stipulate to the reasonableness of appellate attorney’s fees. See, e.g., Adjusters & Loss Consultants Group v. Johnson Int’l, No. 13-01-874-CV, 2004 WL2535399, at *5 (Tex App.-Corpus Christi Nov. 10, 2004, no pet.) (mem.).

TRIAL COURT’S ORDER GRANTING APPELLATE ATTORNEY’S FEES

The trial court may not grant a party an unconditional award of appellate attorney’s fees. Texas FarmersIns. Co. v. Cameron, 24 S.W.3d 386, 400 (Tex. App.-Dallas 2000, pet. denied); Humble Nat’l Bank v. DCV, Inc., 933 S.W.2d 224, 236 (Tex. App.-Houston [14th Dist.] 1996, writ denied). Doing so could penalize a party for pursuing a meritorious appeal. Cameron, 24 S.W.3d at 400; Humble Nat’l Bank, 933 S.W.2d at 236. A party may not be penalized for successfully appealing error occurring in a lower court’s judgment. King Optical v. Automatic Data Processing,Inc., 542 S.W.2d 213, 218 (Tex. Civ. App.-Waco 1976, writ ref d n.r.e.). However, some appellate courts have found it implicit in a trial court’s judgment that the award of appellate attorney’s fees is conditioned on a successful appeal. Spiller v. Spiller, 901 S.W.2d 553 (Tex. App.-San Antonio 1995, writ denied); Robinwood Bldg & Dev. Co. v. Pettigrew, 737 S.W.2d 110, 112 (Tex. App.-Tyler 1987, no writ). Additionally, several Texas courts have held that an unconditional award of appellate attorney’s fees under Texas Family Code sections 11.18 and 14.082, regardless of whether an appeal is successful, is not error. D.R. v. J.A.R., 894 S.W.2d 91, 96-97 (Tex. App.-Fort Worth 1995, writ denied); Von Behren v. Von Behren, 800 S.W.2d 919, 924 (Tex. App-San Antonio 1990, writ denied); Abrams v. Abrams, 713 S.W.2d 195, 197-98 (Tex. App.-Corpus Christi 1986, no
writ).

Appellate attorney’s fees can be conditioned in two ways. The judgment can award a certain amount of attorney’s fees for the trial of the case and an additional certain amount of appellate attorney’s fees in the event of an appeal to a court of appeals or the Supreme Court. Seureau v. Mudd, 515 S.W.2d 746, 749 (Tex. Civ. App. Houston [14 Dist.] 1974, writ ref d n.r.e.). 1 Alternatively, the court can award a certain amount of attorney’s fees for the trial and appeal of the case with remittitur provisions against the total attorney’s fees in the event that the other party does not appeal. See Spray, 468 S.W.2d at 349-50. Suggested conditional language for the award of attorney’s fees for a judgment using the first option is as follows:

IT IS ORDERED, ADJUDGED, and DECREED that Plaintiffs recover from Defendant attorney fees in the sum of $30,000.00 for services rendered through the trial of this case. Additionally, if Defendant files an appeal (or cross-appeal) which is ultimately unsuccessful, Plaintiffs will be further entitled to $20,000.00 as a reasonable attorney fee. Additionally, if Defendant files a petition for review (or cross-petition) in the Supreme Court of Texas which is ultimately denied, Plaintiffs will be further entitled to $6,000.00 as a reasonable attorney fee. Additionally and finally, if such a petition for review (or cross-petition) is granted, but relief is not ultimately granted to Defendant, Plaintiffs will be entitled to an additional $20,000.00.

APPELLATE ATTORNEY’S FEES ON APPEAL

If an appeal is only partially successful, then the party is only entitled to that portion of the appellate attorney’s fee award attributable to the portion of the appeal the party prevailed in. Smith v. Smith, 757 S.W.2d 422, 426 (Tex. App.- Dallas 1988, writ denied). In such a situation, the appellate court should reverse the award of all appellate attorney’s fees and remand the issue to the trial court for a determination of the reasonable amount of appellate attorney’s fees to be awarded to appellee in view of the fact that appellant was partially successful on the appeal. Id.; see also Southwestern Bell Tel. v. Vollmer, 805 S.W.2d 825, 834 (Tex. App.-Corpus Christi 1991, writ denied), overruled on other grounds, Houston Lighting & Power Co. v. Auchan USA, Inc., 995 S.W.2d 668 (Tex. 1999).

A party must be careful not to waive a claim for appellate attorney’s fees at trial. A prevailing party making a claim for attorney’s fees must present evidence of appellate attorney’s fees at trial and secure a finding thereon in order to be entitled to them; a failure to present such evidence will waive the claim. Loomis Constr. Co. v. Matijevich, 425 S.W.2d 39, 44 (Tex. Civ. App. Houston [List Dist.] 1968, no writ). However, a non-prevailing party does not waive a claim for attorney’s fees by failing to present such evidence. See e.g. State Farm Lloyds v. Borum, 53 S.W.3d 877, 894-95 (Tex. App.-Dallas 2001, pet. denied); Alden Prop. v. EMC Mortgage Corp., No. 05-03-01748-CV, 2005 WL 164581, at *3 (Tex. App.-Dallas Jan. 26, 2005, no pet.) (mem.); Haugen v. Olson, No. 05-03-00501-CV, 2003 WL 22939738, at *4 (Tex. App.-Dallas 2003, no pet.) (mem.); State Farm Lloyds v. Borum, 53 S.W.3d 877, 894-95 (Tex. App. Dallas 2001, pet. denied). If the issue of appellate attorney’s fees is properly preserved at trial, it can be addressed by the appellate court.

The court of appeals may not initiate an appellate attorney’s fee award itself, since this would be the exercise of original rather than appellate jurisdiction. Spray, 468 S.W.2d at 349. Rather, the trial court’s determination of whether attorney’s fees are available under a particular statute is a question of law reviewed de novo. PacesetterPools, Inc. v. Pierce Homes, Inc., 86 S.W.3d 827, 833 (Tex. App.-Austin 2002, no pet.) (citing Holland v. Wal-Mart Stores, Inc., 1 S.W.3d 91, 94 (Tex. 1999)). The trial court’s determination of whether or not to award attorney’s fees is reviewed by the appellate court for abuse of discretion. Bocquet, 972 S.W.2d at 21; Ragsdale v. Progressive Voters League, 801 S.W.2d 880, 881 (Tex. 1990) (per curiam). Additionally, the reasonableness of an attorney’s fees award may be reviewed by the appellate court for excessiveness under a sufficiency of the evidence standard. Stewart Title Guar. Co., 822 S.W.2d at 12.

When factually insufficient evidence supports the award, the appellate court may order a remittitur of excess fees as a condition of affirming the judgment of the trial court, but it may not increase the allowance of fees. Reinstma v. GreaterAustin Apt. Maint., 549 S.W.2d 434, 437 (Tex. Civ. App.-Austin 1977, writ dism’d). More specifically, a jury finding that reasonable attorney’s fees was zero is often against the great weight and preponderance of the evidence where evidence was presented of attorney’s fees. See, e.g., Elizabeth-Perkins,Inc. v. Morgan Exp., Inc., 554 S.W.2d 216, 219 (Tex. Civ. App-1977, no writ). An attorney’s fee award can also be indirectly affected by an appellate court’s actions though the attorney’s fee award itself is not under review.

If the appellate court modifies an award of damages, it should remand the issue of attorney’s fees to the trial court because the amount a party recovers is one factor for the trial court to consider in assessing reasonable attorney’s fees. Burns v. Miller, Hiersche, Martens & Hayward, P.C., 948 S.W.2d 317, 327 (Tex. App.-Dallas 1997, pet. denied); see also Arthur Andersen & Co., 945 S.W.2d at 818. If an appellate court reverses the judgment of the trial court, it can restore a prior jury finding on appellate attorney’s fees. See Lee v. Universal Life Ins. Co., 420 S.W.2d 222, 226 (Tex. Civ. App.-Houston [14th Dist.] 1967, writ. ref., n.r.e.). Alternatively, upon reversal, the appellate court can sever the issue of attorney’s fees and remand it alone to the trial court. See Espinoza v. Victoria Bank & Trust, 572 S.W.2d 816, 829 (Tex. Civ. App.-Corpus Christi 1978, writ refd n.r.e.). Finally, upon modification when an appellant was awarded attorney’s fees for trial, but not for appeal, the court of appeals should remand the issue of the amount of the appellate attorney’s fees to the trial court. Hennessey v. Skinner, 698 S.W.2d 382, 386 (Tex. App.-Houston [14th Dist.] 1985, no writ).

‘This was the system specifically disapproved of by
the Supreme Court in Cooksey v. Jordan,143 S.W.141 (Tex. 1912). However, that case was specifically overruled by Security Life Ins. Co. v. Spray, 468 S.W.2d 347 (Tex. 1971).