Joe Ware v. United Fire Lloyds ( 2013 )

In The
Court of Appeals
Ninth District of Texas at Beaumont
____________________
NO. 09-12-00061-CV
____________________
JOE WARE, Appellant
V.
UNITED FIRE LLOYDS, Appellee
_______________________________________________________ ______________
On Appeal from the 260th District Court
Orange County, Texas
Trial Cause No. D-100048-C
________________________________________________________ _____________
MEMORANDUM OPINION
Joe Ware appeals from the trial court’s award of attorney fees and court
costs in a property insurance dispute. He argues the trial court erred in awarding
him only $3,133.20 in attorney fees. He claims he proved attorney fees of
$133,497.00, and asks this Court to render a judgment awarding him that amount.
He does not ask that the case be remanded. Ware also contends the award for court
costs failed to include all taxable costs. We conclude Ware is not entitled to the
judgment he requests on appeal.
1
IKE AND RITA
Ware owned two commercial properties in Orange County at the time of
Hurricane Rita in 2005 and Hurricane Ike in 2008. After Hurricane Rita, but before
Hurricane Ike, Ware filed a lawsuit on an insurance claim for damage to the
properties during Hurricane Rita. See In re Acceptance Indem. Ins. Co., No. 09-08-
033-CV, 2008 WL 659438 (Tex. App.—Beaumont Mar. 13, 2008, orig.
proceeding). He was paid $146,170.85. After Hurricane Ike, Ware filed a claim
with United Fire Lloyds, his new insurance carrier, for damage to the same
properties. Ware made a written pre-suit demand of $187,121.51. Lloyds paid
Ware $12,197.81 on the Ike claim.
Ware sued Lloyds for breach of contract, breach of the duty of good faith
and fair dealing, violations of Chapters 541 and 542 of the Texas Insurance Code,
and violations of the Deceptive Trade Practices Act. With the exception of the
breach of contract claim, the jury rejected his claims. The jury awarded Ware
$7,833.01 in damages for breach of contract. In addition to the damages found by
the jury, the trial judge awarded Ware $4,300.27 in statutory interest penalty under
the Texas Insurance Code and $713.56 for prejudgment interest. Neither party
challenges the jury’s verdict.
2
FINDINGS OF FACT
The parties agreed to submit the issue of attorney fees to the trial court. The
court awarded $3,133.20 for attorney fees, and $333.00 for court costs. In its
findings of fact and conclusions of law, the trial court found that Ware’s written
settlement demand for damages to both properties was $187,121.51, which
included attorney fees “calculated on the basis of a 40% contingent fee contract
with the [p]laintiff.” The findings reflect that the parties later submitted the case to
mediation. Ware’s settlement demand then was $251,559.64, subsequently reduced
to $245,000.00. Lloyds offered to settle the claims for $9,653.00. The offer was
rejected. The case proceeded to trial.
The trial court found that Ware and his attorneys “acted unreasonably and in
bad faith in claiming damages from [H]urricane Ike when those damages had been
caused by either flooding [excluded under the policy] or by [H]urricane Rita, and
such a claim constituted an excessive demand and was unreasonable.” The trial
court further found that “[p]laintiff stated under oath that his properties had
suffered no flood damages as a result of [H]urricane Ike.” “This statement was not
true, and it was undisputed that the property had been subjected to flooding of up
to 18 inches in one building and 24 inches in another building.” The court also
found that Ware’s attorneys “submitted a statement for attorney fees in an amount
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of $133,947.00 based on various hourly rates[,]” and that Ware’s “original demand
letter requested attorney fees based upon a 40% contingent fee contract with
[Ware].” The court found that the “excessive and unreasonable demands caused
unnecessary and excessive litigation costs, including attorney fees and court costs.”
Ware challenges the trial court’s finding -- that his damages claim was
unreasonable and in bad faith -- though he acknowledges that the settlement
demand included flood damages which were not recoverable under the policy with
Lloyds. Ware asserts that the inclusion of the flood damages in the settlement
demand was a mistake, and he states that Lloyds was made aware of the mistake
long before trial. There is evidence in the record, however, that Ware’s attorney
and his expert met “the week before trial” to remove flood damages from the
estimates, and that the expert did not remove each item that he considered to be
damages caused by flood waters until the middle of trial. Moreover, Ware had
stated under oath in a discovery response that his properties had suffered no flood
damages as a result of Hurricane Ike. He does not dispute the trial court’s finding
that this sworn statement was not true. The trial court also heard evidence that a
portion of the damages sought by Ware in his demand letter were the result of
Hurricane Rita or pre-existing leaks to the property.
4
ATTORNEY FEES
Ware argues that Lloyds stipulated at trial to Lloyds’ untimely payment of
the claim. He contends he is entitled to attorney fees as a matter of law under both
the breach of contract claim and the prompt payment provision of the Insurance
Code. See Tex. Ins. Code Ann. § 542.058 (West Supp. 2012), § 542.060 (West
2009); Tex. Civ. Prac. & Rem. Code Ann. § 38.001 (West 2008). Arguing that the
attorney fees sought by Ware are excessive, Lloyds raised the defense of
“excessive demand” with the trial court, and asserts that the fees sought by Ware
are unreasonable and, in part, unnecessary. See Oyster Creek Fin. Corp. v.
Richwood Invs. II, Inc., 176 S.W.3d 307, 318 (Tex. App.—Houston [1st Dist.]
2004, pet. denied) (excessive demand). Ware argues the excessive demand doctrine
does not apply.
Whether or not the excessive demand doctrine applies, the attorney fees
awarded must be reasonable and necessary. A party seeking to recover attorney
fees carries the burden of proof. See Smith v. Patrick W.Y. Tam Trust, 296 S.W.3d
545, 547 (Tex. 2009). Even when the testimony on fees is not contradicted by any
other witness, the fees sought may be unreasonable. See id. at 547-48. In Tam
Trust, the jury awarded $65,000 in damages, approximately one-third of the
damages sought by the plaintiff, but failed to award any attorney fees. Id. at 546.
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The trial court granted JNOV on the attorney fees and awarded $7,500 instead. Id.
at 546-47. The appeals court vacated the attorney fees award and rendered
judgment for $47,438.75 in attorney fees. Id. at 547. Relying on two earlier cases,
the Supreme Court found the fee awarded by the appeals court to be unreasonable
and stated that the factfinder had to consider, among other things, the amount of
money involved and the results obtained. Id. at 548 (citing Arthur Andersen & Co.
v. Perry Equip. Corp., 945 S.W.2d 812, 818 (Tex. 1997) and Ragsdale v.
Progressive Voters League, 801 S.W.2d 880, 881 (Tex. 1990)).
In this case, the jury awarded $7,833.01 in damages. Ware does not contest
the jury’s determination of the value of the claim. Ware asks for $133,947.00 in
attorney fees. While acknowledging he signed a contingency fee agreement with
his attorney, Ware nonetheless argues he is free to pursue an award of attorney fees
based either on the contingency fee agreement or on what he calls a “per diem”
basis.
In Tam Trust, the Texas Supreme Court cited Farrar v. Hobby, 506 U.S.
103, 114, 113 S. Ct. 566, 121 L. Ed. 2d 494 (1992), which held that “‘the degree of
the plaintiff’s overall success goes to the reasonableness’ of a fee award” and “‘the
most critical factor’ in determining the reasonableness of a fee award ‘is the degree
of success obtained.’” Tam Trust, 296 S.W.3d at 548 (quoting Farrar, 506 U.S. at
6
114 (citations omitted)). Although the amount of the fees requested by Ware was
reflected on time sheets and affidavits, the trial court determined the amount
requested was unnecessary in view of the circumstances of the case, and
unreasonable. See Tam Trust, 296 S.W.3d at 548.
An appellate court reviews a trial court’s award of attorney fees for abuse of
discretion. See Bocquet v. Herring, 972 S.W.2d 19, 20-21 (Tex. 1998). An
appellate court may conclude a trial court abuses its discretion if a trial court’s
decision is arbitrary, unreasonable, and without reference to guiding principles, or
if the court rules without supporting evidence. Unifund CCR Partners v. Villa, 299
S.W.3d 92, 97 (Tex. 2009). A trial court’s determination that claimed hours or fees
are excessive, duplicative, or unreasonable is given considerable deference. See
generally E1 Apple I, Ltd. v. Olivas, 370 S.W.3d 757, 758-64 (Tex. 2012).
The trial court heard the testimony along with the jury. When confronted
with conflicting evidence, a factfinder sometimes rationally may choose to believe
one witness and disbelieve another, may resolve inconsistencies in the testimony of
any witness, or may reject expert testimony. See City of Keller v. Wilson, 168
S.W.3d 802, 819-20 (Tex. 2005). The trial court in this case considered the
evidence and resolved the conflicts against Ware. The trial court found that Ware’s
claim for attorney fees was excessive and unreasonable, and largely unnecessary.
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Under the circumstances, we see no abuse of discretion by the trial court. We
cannot conclude on this record that Ware is entitled to the judgment he requests on
appeal.
COURT COSTS
Ware argues the court costs award fails to include additional necessary
items, including costs of deposition transcripts and mediation fees. Rule 131 of the
Texas Rules of Civil Procedure states, “The successful party to a suit shall recover
of his adversary all costs incurred therein, except where otherwise provided.” Tex.
R. Civ. P. 131. Rule 141 states, “The court may, for good cause, to be stated on the
record, adjudge the costs otherwise than as provided by law or these rules.” Tex. R.
Civ. P. 141.
The allocation of court costs under Rule 141 is a matter for the trial court’s
discretion and will not be overturned on appeal unless the trial court abused its
discretion. Rogers v. Walmart Stores, Inc., 686 S.W.2d 599, 601 (Tex. 1985).
Good cause is determined on a case-by-case basis. Id. When the prevailing party
unnecessarily prolongs the proceedings, unreasonably increases costs, or does
something that should be penalized, good cause may exist to “adjudge the costs
otherwise” under Rule 141. See Furr’s Supermarkets, Inc. v. Bethune, 53 S.W.3d
375, 377 (Tex. 2001). The trial court’s findings in this case demonstrate good
8
cause to adjudge court costs differently than that sought by Ware. We see no abuse
of discretion by the trial court. The trial court’s judgment is affirmed. 1
AFFIRMED.
________________________________
DAVID GAULTNEY
Justice
Submitted on December 13, 2012
Opinion Delivered May 9, 2013
Before McKeithen, C.J., Gaultney and Horton, JJ.
1
Because we affirm the judgment, we need not address the issues raised in
the conditional cross-appeal.
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