Gibbons-Markey v. Texas Medical Liability Trust (In Re Gibbons-Markey) , 246 F. App'x 275 ( 2007 )

United States Court of Appeals
Fifth Circuit
F I L E D
UNITED STATES COURT OF APPEALS
August 30, 2007
FOR THE FIFTH CIRCUIT
Charles R. Fulbruge III
Clerk
No. 06-51632
Summary Calendar
In the Matter of: DONNA RAE GIBBONS-MARKEY
Debtor
DONNA RAE GIBBONS-MARKEY,
Appellee,
v.
TEXAS MEDICAL LIABILITY TRUST,
Appellant
Appeal from the United States District Court for the
Western District of Texas, San Antonio
No. 5:04-CV-231
Before WIENER, GARZA, and BENAVIDES, Circuit Judges.
PER CURIAM:*
Texas Medical Liability Trust (“TMLT”) challenges the district
court’s award of attorney’s fees to Donna Rae Gibbons-Markey. TMLT
argues that the district court erred in finding that TMLT waived
*
Pursuant to 5th Cir. R. 47.5, the Court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5th Cir. R. 47.5.4.
its argument under the Texas Insurance Code, and that the court
abused its discretion in awarding attorney’s fees. We affirm.1
Appellee Donna Rae Gibbons-Markey sued TMLT in state court for
a breach of its duty to defend her in a medical malpractice case.
The case was removed to bankruptcy court after Gibbons-Markey filed
Chapter 7 bankruptcy. After a bench trial, the bankruptcy court
entered a take-nothing judgment in favor of TMLT, which the
district court affirmed on appeal. This Court subsequently
reversed and remanded the case to the district court to determine
attorney’s fees. In November 2006, the district court entered an
order granting in part Gibbons-Markey’s motion to determine
attorney’s fees, awarding her $44,493 in damages and attorney’s
fees and costs expended in the medical malpractice case, subject to
8.25% prejudgment simple interest, accruing from September 30,
1999; $8,400 in attorney’s fees for the bankruptcy proceedings;
$28,500 in attorney’s fees for appealing the bankruptcy decision to
both the district court and Fifth Circuit; and $255 in filing fees.
TMLT appeals.
We review findings of fact for clear error and legal
conclusions de novo. Ivy v. Jones, 192 F.3d 514, 516 (5th Cir.
1999). We review a district court’s award of attorney’s fees for
1
Appellant also requests that we certify the question of
whether a trust may be subject to an award of attorney’s fees under
Tex. Civ. Prac. & Rem. Code § 38.001 to the Texas Supreme Court.
We DENY that request.
2
abuse of discretion. See Saizan v. Delta Concrete Prods. Co., 448
F.3d 795, 800 (5th Cir. 2006).
On remand to the district court, TMLT argued for the first
time that Tex. Civ. Prac. & Rem. Code § 38.001 and Tex. Ins. Code
Art. 21.49-4 preclude any award of attorney’s fees incurred during
the bankruptcy proceedings. Section 38.001 states: “A person may
recover reasonable attorney’s fees from an individual or
corporation . . . if the claim is for . . . an oral or written
contract.” TMLT argues that it is neither an individual nor
corporation, but instead a trust organized pursuant to Tex. Ins.
Code. Art. 21.49.4, which allows physicians to self-insure, and is
therefore immune from attorney’s fees pursuant to Section 38.001.
The district court found that TMLT had waived this argument by not
raising it earlier, and we agree.
TMLT argues that it was not required to plead or otherwise
argue the inapplicability of section 38.001 until the case was
remanded for an award of attorney’s fees because, as a matter of
law, the section does not provide for such an award. See Base-
Seal, Inc. v. Jefferson County, 901 S.W.2d 783, 787–88 (Tex.
App.–Beaumont 1995)(holding that the county is not liable for
attorney’s fees under § 38.001 despite the county’s failure to
plead the defense of sovereign immunity). At first blush, this
argument makes some sense: if the statute simply does not provide
for an award of attorney’s fees against a trust, as TMLT suggests,
then failing to raise that argument earlier does not now enable
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that statute to provide for such an award. This distinction,
however, is immaterial.
The Texas Supreme Court has noted, “[t]he general rule in
Texas (and elsewhere) has long been that suits against a trust must
be brought against its legal representative, the trustee.” Ray
Malooly Trust v. Juhl, 186 S.W.3d 568, 570 (Tex. 2006)(citations
omitted). As the district court noted, had that been done in this
case, then the action against the trustees of TMLT would constitute
an action against an individual. TMLT’s failure to assert this
argument during the bankruptcy trial potentially caused Gibbons-
Markey not to join any trustee in that proceeding. By failing to
do so, TMLT effectively waived the right to argue that the Trust is
now excluded from the award of attorney’s fees. Moreover, as the
district court noted, the Texas legislature clearly and
unequivocally exempted self-insured medical liability trusts from
other provisions of the insurance code, see Tex. Ins. Code Art.
21.49–4(e), and would have likely done so with regard to section
38.001 had that been its intent. Given that the Texas legislature
and Texas courts have not directly addressed whether attorney’s
fees can be awarded against a trust under section 38.001, this
Court will not further exempt TMLT from liability.2
2
Additionally, it has long been Texas law that an insuring
entity is liable for the attorney’s fees incurred by an insured in
a breach of contract action. See American Home Assur. Co. v.
United Space Alliance, LLC, 378 F.3d 482, 492–93 (5th Cir. 2004).
4
Turning to TMLT’s argument that the district court abused its
discretion in awarding attorney’s fees, we will not set aside the
district court’s findings when they are supported by substantial
evidence unless, after a review of the record as a whole, we are
left with the unyielding belief that a mistake has been made.
Adams v. Unione Mediterranea Di Sicurta, 220 F.3d 659, 670 (5th
Cir. 2000). TMLT argues that Gibbons-Markey failed to produce
substantial evidence supporting the fees, but we find otherwise.
In determining the amount of the award, the district court
considered various sources, including affidavits, and reduced the
amount of fees sought by Gibbons-Markey by more than fifty percent.
We conclude that the district court’s findings were supported by
substantial evidence and that it did not abuse its discretion in
determining the award.
For the foregoing reasons, we AFFIRM the district court.
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