Supreme Court of Texas Clarifies Proof Required for Attorney's Fees

 

In an opinion delivered on October 25, 2013, City of Laredo v. Montano,the Supreme Court of Texas clarified an issue that is of importance across this State to clients and attorneys -- the proof required to support an award of attorney’s fees. Although attorney’s fees are not always awarded in family law cases, they are often requested especially in highly litigated cases. This opinion is something with which the family law community should be aware.

Here, the Court found that an attorney’s trial calculation of a “barebones minimum” estimate of 6 hours per week for 226 weeks as time worked on a case was not enough to support the $339,000 fee awarded. The Court noted that some weeks were surely more, and some were surely less. Because the record did not further explain that “6 hour” figure, it could not satisfy the standard required for an award of attorney’s fees. The Court also noted its “puzzlement” that the attorney made no records of time, prepared no bills, and “does not appear to have known how much he was owed … until the calculations at trial.”

While this case dealt with a fee-shifting statute under the Texas Property Code, it is instructive to attorneys and clients in family law cases. Attorneys should keep detailed billing statements of the work performed on each client’s case and use those statements when seeking fees in court. Clients, you should expect to receive monthly billing statements from your attorneys showing the work done on your case. If you can’t tell what was going on, you are likely going to have a hard time getting a judge to order the opposing side to foot the bill.

To read the City of Laredo v. Montano Opinion, click here: http://www.supreme.courts.state.tx.us/historical/2013/oct/120274.pdf

For more information on attorney’s fees awards in family law cases, read these related blog posts:  

http://www.dallastxdivorce.com/2013/07/articles/family-law-appellate-issues/texas-legislature-clarifies-ability-of-trial-court-to-award-attorneys-fees-in-a-divorce-in-response-to-tedder-v-gardner-aldrich-llp/;

http://www.dallastxdivorce.com/2013/02/articles/family-law-appellate-issues/oneil-attorneys-prevail-on-appeal-award-of-attorneys-fees-must-have-proper-legal-basis/;

http://www.dallastxdivorce.com/2012/09/articles/divorce/attorneys-fees-who-gets-them-and-when-part-1/

http://www.dallastxdivorce.com/2012/09/articles/hiring-a-lawyer/attorneys-fees-who-gets-them-and-when-part-2/

http://www.dallastxdivorce.com/2012/10/articles/divorce/attorneys-fees-who-gets-them-and-when-part-3/

http://www.dallastxdivorce.com/2012/10/articles/divorce/attorney-fees-who-gets-them-and-when-part-4/

 

Tedder v. Gardner Aldrich, LLP: Texas Supreme Court Holds Attorney Fees In Divorce Are Not Necessaries Under Spousal Support Statute

This ground breaking case out of the Texas Supreme Court could forever change the way attorney fees are requested, awarded, and recovered by law firms in Texas divorce proceedings by holding that legal fees incurred by a spouse in a divorce proceeding are not “necessaries” (food, clothing, essential medical care, habitation, etc.). This means that legal fees cannot be ordered as spousal support and the non-incurring spouse cannot be required to pay the other party’s attorney’s fees from their separate property.

In the underlying Fort Worth divorce, Husband sued Wife for divorce and custody of their children. Wife hired Law Firm to represent her in the proceedings. After the jury verdict, Law Firm sued both Wife and Husband for its fees. After a hearing, Husband and Wife agreed that the final decree would award Law Firm attorney fees against Wife only and would not award Wife attorney fees against Husband. The trial court rendered judgment in accordance with their agreement. Wife subsequently sought the protection of bankruptcy and was discharged. The trial court determined that Law Firm was not entitled to payment of fees from Husband. Law Firm appealed.

The court of appeals rendered judgment for Law Firm against Husband and Wife jointly and severally, holding that Husband was liable for Wife's Legal fees because the obligation was a "community debt," and the legal fees were "necessaries" for which Husband was liable to the firm.

The Supreme Court reversed, holding Wife’s legal fees were not a “community debt” for necessaries under the spousal support statue, thus Husband was not liable to pay Law Firm for legal services rendered to Wife. The Texas Supreme Court dispelled the long-standing notion of legal services in a divorce proceeding as necessaries for which the other spouse is statutorily liable to pay the attorney and clarified the often confused concept of “community debt”. Also, for attorneys trying to recover your fees from a nonpaying client, this case indicates that intervention in the divorce action is probably not the proper way to do it.

This is an important case for both family lawyers and their divorcing clients. It will receive a lot of attention in months to come and will be cited throughout court houses across this state.
 

O'Neil & Attorneys Prevail on Appeal: Award of Attorney's Fees Must Have Proper Legal Basis

Last week the Dallas Court of Appeals issued its opinion in Shilling v. Gough, holding that the trial court erred by awarding attorney’s fees without a proper legal basis. Michelle May O’Neil and I represented Shilling in his successful appeal. 

In the underlying post-divorce proceedings, Shilling brought a suit to enforce an injunction contained in the parties’ divorce decree that prohibited his ex-wife, Gough, from disclosing his private information to third parties.  Gough filed an answer requesting attorney’s fees that failed to specify the statutory authority under which she sought recovery.   

The Dallas Court of Appeals reversed the trial court’s erroneous award of fees to Gough and rendered judgment in favor of Shilling.  The opinion reiterates the well-settled rule that -- absent a statute or contract -- Texas courts do not have the inherent authority to require the losing party to pay the prevailing party’s fees.  While Gough argued that she was entitled to fees under Chapter 9 of the Texas Family Code (which allows a party to enforce a property division contained in a divorce decree) and as sanctions, the Dallas Court of Appeals found (1) Chapter 9 is inapplicable because this was not an action to enforce a property division, and (2) an award of sanctions against Shilling under the circumstances of this case would  be improper and would violate his constitutional right to due process. With no appropriate contractual or statutory basis, the trial court’s judgment was improper. 

This opinion is important to vast area of post-divorce enforcement actions that we encounter as Texas divorce attorneys.  The Dallas Court of Appeals has clarified the power of a trial court to award attorney’s fees under Chapter 9 of the Texas Family Code and the requisite procedure for an award of attorneys fees as sanctions.

Read the Opinion by clicking here.

 

 

Texas divorce FAQ: Who will pay my legal fees?

In Texas, usually the community property assets can be utilized to pay both sides’ legal fees. If one spouse doesn’t have access to community assets to pay legal fees, then he or she can file a motion to get access to property to pay fees. If there are insufficient cash assets to pay fees, then a party can file a motion to sell assets to pay for fees.

Texas divorce FAQ: How much will my case cost?

It is difficult to determine in advance how much the case will cost. The total fees will depend on the difficulty of the issues and the time involved. It is impossible to know in advance what issues the other side will raise, what motions they may file that will require hearings, or what other difficulties may come up. Your lawyer may be able to give you estimates for particular aspects of the case as you go along. An exhaustive “leave no stone unturned” approach can be very costly and mostly unwarranted.

Texas divorce FAQ: What can I do to keep legal costs down?

The better your organizational skills, the more you can help your attorney and keep your costs down. Check with your lawyer to make sure your efforts will be an efficient way to help. Gathering and organizing documents, such as bank statements or other financial records, can be very helpful. One of the least efficient uses of your lawyer’s time is to call frequently. Make a list of topics and questions to ask all at once, to cut down on the number of calls made. A single organized call to address three questions will be more efficient and less costly than three separate calls. Also, when you need to vent your feelings and frustrations about the other spouse, talk to a therapist and not your lawyer or staff.

Texas divorce FAQ: Does my lawyer have to keep working for me when I don't have any money to pay the bill?

Generally speaking, lawyers work in exchange for payment of a fee. If a client lacks the means to continue to pay the lawyer, then the lawyer will seek permission of the court to withdraw from the representation. The ethical rules for lawyers require that a lawyer withdraw from representation in a way that does not damage the client’s case.

Texas divorce FAQ: Does the loser have to pay attorneys fees?

So called “loser pays” statutes don’t apply in family law because it is very difficult to identify a “winner” and a “loser”. Often, some aspects of the decision will favor one party, and other aspects the other. If a party makes an argument that is “frivolous” or “groundless” as provided by the relevant statutes, then that party can be made to pay attorneys fees as punishment. This happens very rarely. Where one party violates a court order, for example to pay child support, the law may require payment of attorneys fees.

Attorney Fees - Who Gets Them and When: Part 4

 

Divorce is personal and it is easy to feel attacked or wronged by your spouse or even their attorney. Clients take it personally when the other side files inflammatory or seemingly unsupported pleadings, refuses to respond to discovery, or otherwise seems to delay or interfere with the litigation process. In certain situations the court can punish the opposing party (and sometimes even their attorney) for these bad acts and/or misconduct by order them to pay the innocent party’s attorney fees.         

Under Texas law, a court may impose sanctions on the offending party, their attorney, or both for improper conduct including abusing the discovery process, making false statements to the court, filing frivolous or groundless pleadings, and failing to properly serve or deliver pleadings or motions, and for failing to comply with a court order.   These sanctions can include attorney fees. A court can impose sanctions (including attorney fees) at the request of a party or, in some cases, on the court’s own initiative.             

In deciding whether to award attorney fees as sanctions, the court can consider all matters that have occurred in the litigation -- not just the specific violation(s) alleged. Also, the court is justified in refusing to impose sanctions if both sides are equally guilty of poor conduct or bad acts.             

I hope this series has helped to shed light on the different ways a court can award attorney fees in a Texas divorce or other family law proceeding. Keep in mind in most of these situations the decision on whether or not to award fees is discretionary – meaning that even if the court has the statutory ability to award attorney’s fees, the judge might decide not to at the end of the day.

Attorney's Fees - Who Gets Them and When: Part 2

 

As I said in my post last week, virtually every party in a divorce asks for attorney’s fees at one point or another. The truth is that in Texas (a community property state) both parties to a divorce are likely getting their fees from the community estate – or on community credit via loans or credit cards – unless you are in a situation where one spouse has complete control of the vast majority of marital assets.

Attorney’s fees owed and/or incurred by both sides can impact the court’s division of the community estate in a divorce. Texas case law recognizes this reality, providing that attorney fees are one of the factors that the court may consider in making a “just and right” division of the community estate under Section 7.001 of the Texas Family Code. Keep in mind that the court has discretion to consider attorney’s fees and what is in fact a “just and right” division of property is subjective, based on a number of factors, and the consideration afforded attorney’s fees by the court might not necessarily be dollar-for-dollar.

Also, at the temporary orders stage of a case the Texas Family Code specifically provides that the court can award attorney’s fees while the case is pending “for preservation of property” and/or for protection of the parties. Requests for “interim attorney’s fees” are common at temporary orders hearings – especially in situations where the parties do not have equal access to financial resources from which to pay their attorneys.

Once a divorce is granted and if an appeal is filed, the trial court has the authority to award attorney’s fees to one side or another under the authority the Texas Family Code provides for temporary orders pending appeal. This situation is far less common than attorney’s fees awarded as temporary orders while a case is pending.

In addition attorney’s fees in a divorce, the court also has authority under Texas law to award attorney’s fees to one side or the other in suits affecting the parent-child relationship (SAPCRs). Stay tuned to part 3 of my blog next week for this discussion.