Austex Tree Service, Inc. v. Unifirst Holdings, Inc. ( 2019 )

Opinion issued June 27, 2019
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-18-00050-CV
———————————
AUSTEX TREE SERVICE, INC., Appellant
V.
UNIFIRST HOLDINGS, INC., Appellee
On Appeal from the County Court at Law No 1
Travis County, Texas1
Trial Court Case No. C-1-CV-16-009675
MEMORANDUM OPINION
Appellant, Austex Tree Service, Inc. (“Austex”), challenges the trial court’s
judgment, entered after a bench trial, in favor of appellee, UniFirst Holdings, Inc.
1
Pursuant to its docket equalization authority, the Supreme Court of Texas
transferred this appeal to this Court. See Misc. Docket No. 18–9010 (Tex. Jan. 12,
2018); see also TEX. GOV’T CODE ANN. § 73.001 (authorizing transfer of cases).
(“UniFirst”), in UniFirst’s suit on a sworn account against Austex. In four issues,
Austex contends that the trial court erred in awarding UniFirst liquidated damages,
pre-judgment interest, reasonable trial attorney’s fees, and unconditional appellate
attorney’s fees.
We modify the trial court’s judgment and affirm as modified.
Background
UniFirst sued Austex on a sworn account. In its amended petition, UniFirst
alleged that it sold Austex “one or more items of goods, wares, merchandise, or
services” under an agreement between the parties. UniFirst also alleged that
Austex defaulted in making its required payments to UniFirst and brought suit
against Austex for breach of contract, unjust enrichment, and fraud. UniFirst
sought damages of $21,214.39, the principal balance owed on the account. This
amount included liquidated damages of $13,873.83, as provided under the parties’
agreement. Unifirst also requested an award of pre-judgment interest, reasonable
attorney’s fees, costs of court, and post-judgment interest.
UniFirst originally obtained a default judgment against Austex. But the
parties entered into an agreed order to set aside the default judgment and reinstate
the case after Austex filed a bill of review.
2
Austex then filed a general denial, asserting various affirmative defenses,
including that the liquidated-damages provision in the parties’ agreement
constituted an unlawful penalty.
At trial, Michael Ron Ferguson, the general manager for UniFirst in Austin,
Texas, testified that UniFirst provides uniform rental services for its clients and
weekly laundering services for those uniforms. Ferguson also testified that
UniFirst entered into a customer service agreement to perform uniform rental and
laundering services for Austex. Their agreement was entered into evidence
without objection and included, among other provisions, a sixty-month term, and
the following liquidated-damages provision:
If Customer breaches or terminates this Agreement before the
expiration date for any reason (other than for UniFirst’s failure under
the performance guarantees described above), Customer will pay
UniFirst, as liquidated damages and not as a penalty (the parties
acknowledging that actual damages would be difficult to calculate
with reasonable certainty) an amount equal to 50 percent of the
average weekly amounts invoiced in the preceding 26 weeks,
multiplied by the number of weeks remaining in the current term.
These damages will be in addition to all other obligations or amounts
owed by Customer to UniFirst, including the return of Standard
Merchandise or payment of replacement charges, and the purchase of
any Non-Standard Merchandise items as set forth herein.
Ferguson testified that UniFirst used this formula to determine that Austex owed it
$13,873.83 in liquidated damages—except that UniFirst only had invoices from
twenty weeks, instead of twenty-six weeks, to use for its average due to Austex’s
premature termination of the parties’ agreement. Ferguson also testified that
3
UniFirst sought damages for unreturned uniforms in the amount of $4,233.77 and
for “past due receivables” for services rendered that were never paid in the amount
of $3,106.79.
Regarding the liquidated-damages provision, Ferguson testified that if he
had to calculate UniFirst’s actual damages, the amount would easily be “equal to
or more” than the amount resulting from the liquidated-damages calculation
acknowledged by the parties under the agreement. He explained that an account
becomes more profitable later in its term due to the expenses associated with
starting up a new account, such as buying new uniforms and other start-up
expenses, which are “front-loaded.”
Regarding UniFirst’s record-keeping of invoiced amounts and uniform
inventory, Ferguson testified that UniFirst keeps accurate records tracking how
many uniforms are retained at any given time by its customers. So, if a client fails
to pay or cancels service, Ferguson would be able to ascertain the amount owed
and the replacement cost for any unreturned uniforms from his records.
Bill Malone, Jr., UniFirst’s attorney, testified that the following attorney’s
fees in this case were reasonable and necessary: $7,071.46 for work performed
leading up to the trial court’s judgment, an additional $8,000.00 if an appeal was
taken to an intermediary court of appeals, an additional $4,000.00 if there was a
petition for review filed in the Texas Supreme Court, and an additional $4,000.00
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if a petition for review was granted in the Texas Supreme Court. In support of
these proposed fees, Malone testified that he (1) had been licensed to practice law
in Texas since 1981, primarily practicing in Travis County and surrounding areas;
(2) was familiar with the usual and customary attorney’s fees charged by attorneys
for work of this nature of “collection-type” of litigation; (3) provided the following
legal services: evaluating the claims, drafting the petition, obtaining a default
judgment, pursuing post-default-judgment collection procedures, negotiating
reinstatement of the case after Austex filed a bill of review, obtaining discovery,
preparing for trial, and trial of the case; (4) spent “a minimum of seven hours” on
the case, “not includ[ing] the post-judgment procedures that were taken,” for
litigation, trial preparation, and conducting the trial; and (5) he typically charges
$300.00 hour for his time, although he had a contingency-fee arrangement for
“one-third of what [was] collected” in this case.
The trial court took the case under advisement and ultimately entered a
judgment in favor of UniFirst on August 31, 2017, as follows:
The Court, after considering the pleadings, evidence, and argument of
counsel, finds that Defendant Austex . . . is indebted to [UniFirst] in
the sum of $21,214.39, plus legal interest of $10,064.34, and that
[UniFirst] should recover a reasonable attorney’s fee, which the Court
finds to be $7,071.46.
....
It is further ORDERED that [UniFirst] recover from [Austex]
$8,000.00 if an appeal to the Court of Appeals is made, $4,000.00 if a
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petition for review to the Texas Supreme Court is made, and
$4,000.00 if a petition for review is granted by the Texas Supreme
Court.
Austex filed a motion for new trial, which was denied by operation of law.
Standard of Review
Where findings of fact and conclusions of law are not requested or filed after
a non-jury trial, we imply that the trial court made all findings necessary to support
its judgment. BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 795
(Tex. 2002). But when the record includes the reporter’s and clerk’s records, these
implied findings are not conclusive and may be challenged for legal and factual
sufficiency. Id.; Roberson v. Robinson, 768 S.W.2d 280, 281 (Tex. 1989). We
apply the same standard of review as that applied in the review of jury findings.
Robinson, 768 S.W.2d at 281. The judgment must be affirmed if it can be upheld
on any legal theory that finds support in the evidence. See Worford v. Stamper,
801 S.W.2d 108, 109 (Tex. 1990).
We will sustain a legal sufficiency or “no-evidence” challenge if
the record shows one of the following: (1) a complete absence of evidence of a
vital fact, (2) rules of law or evidence bar the court from giving weight to the only
evidence offered to prove a vital fact, (3) the evidence offered to prove a vital fact
is no more than a scintilla, or (4) the evidence establishes conclusively the opposite
of the vital fact. City of Keller v. Wilson, 168 S.W.3d 802, 810 (Tex. 2005). In
6
conducting a legal sufficiency review, a “court must consider evidence in the light
most favorable to the verdict[] and indulge every reasonable inference that
would support it.” Id. at 822. If there is more than a scintilla of evidence
to support the challenged finding, we must uphold it. Formosa Plastics Corp. USA
v. Presidio Eng’rs & Contractors, Inc., 960 S.W.2d 41, 48 (Tex. 1998). If the
evidence at trial would enable reasonable and fair-minded people to differ in their
conclusions, then the trier of fact must be allowed to do so. City of Keller, 168
S.W.3d at 822; see also King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 751 (Tex.
2003). “A reviewing court cannot substitute its judgment for that of the trier-of-
fact, so long as the evidence falls within this zone of reasonable disagreement.”
City of Keller, 168 S.W.3d at 822.
In conducting a factual-sufficiency review, we must consider, weigh, and
examine all of the evidence that supports or contradicts the trier-of-fact’s
determination. Plas-Tex, Inc. v. U.S. Steel Corp., 772 S.W.2d 442, 445 (Tex.
1989); London v. London, 192 S.W.3d 6, 14–15 (Tex. App.—Houston [14th Dist.]
2005, pet. denied). We may set aside the judgment only if the evidence
that supports the finding is so contrary to the overwhelming weight of the evidence
as to be clearly wrong or unjust. Cain v. Bain, 709 S.W.2d 175, 175 (Tex. 1986).
“In a bench trial, the trial court is the sole judge of the credibility of the witnesses,
assigns the weight to be given their testimony, may accept or reject all or any part
7
of their testimony, and resolves any conflicts or inconsistencies in the testimony.”
Rich v. Olah, 274 S.W.3d 878, 884 (Tex. App.—Dallas 2008, no pet.). An
appellate court “may not pass upon the credibility of the witnesses or substitute
our judgment for that of the trier of fact, even if a different answer could be
reached upon review of the evidence.” Id.
Liquidated Damages
In its first issue, Austex argues that the trial court erred in awarding UniFirst
liquidated damages because “the liquidated[-]damages clause of [the parties’]
Customer Service Agreement” acts as an “unenforceable penalty.”
Although a court may have to resolve certain factual issues at the outset, the
ultimate issue of enforceability of a liquidated-damages provision is a question of
law for the court to decide. FPL Energy, LLC v. TXU Portfolio Mgmnt. Co., 426
S.W.3d 59, 70 (Tex. 2014). “The basic principle underlying contract damages is
compensation for losses sustained and no more; thus, we will not enforce punitive
contractual damages provisions.” Id. As such, a court must make the following
two “indispensable” findings to enforce a contractual-damages provision: (1) “the
harm caused by the breach is incapable or difficult of estimation” and (2) “the
amount of liquidated damages called for is a reasonable forecast of just
compensation.” Phillips v. Phillips, 820 S.W.2d 785, 788 (Tex. 1991). Both
prongs of this test are evaluated “from the perspective of the parties at the time of
8
contracting.” FLP Energy, 426 S.W.3d at 69–70. The party asserting that a
liquidated-damages provision is unenforceable bears the burden of proof. Triton
88, L.P. v. Star Elec., L.L.C., 411 S.W.3d 42, 62 (Tex. App.—Houston [1st Dist.]
2013, no pet.).
The liquidated-damages provision in this case provides:
If Customer breaches or terminates this Agreement before the
expiration date for any reason (other than for UniFirst’s failure under
the performance guarantees described above), Customer will pay
UniFirst, as liquidated damages and not as a penalty (the parties
acknowledging that actual damages would be difficult to calculate
with reasonable certainty) an amount equal to 50 percent of the
average weekly amounts invoiced in the preceding 26 weeks,
multiplied by the number of weeks remaining in the current term.
These damages will be in addition to all other obligations or amounts
owed by Customer to UniFirst, including the return of Standard
Merchandise or payment of replacement charges, and the purchase of
any Non-Standard Merchandise items as set forth herein.
A. Harm incapable or difficult of estimation
In a portion of its first issue, Austex asserts that UniFirst’s damages in the
event of a breach “were not incapable or difficult of estimation” since Ferguson,
UniFirst’s general manager, testified at trial that UniFirst would “know exactly
what its actual damages were if one of its clients cancelled or failed to pay under
its services contract.” This is a mischaracterization of Ferguson’s testimony.
Instead, at trial, Austex asked Ferguson the following question:
And if you - - if a client were to not pay you or to cancel service,
would you be able to indicate in your records how much that client
owes you and how much the replacement cost would be for the
9
uniforms that they still have in their possession that they have not
returned?
Ferguson responded, “Yes, sir.” Ferguson’s testimony immediately preceding this
exchange concerned the quality of UniFirst’s record-keeping with respect to
invoiced amounts and uniform inventory. No rational interpretation of Ferguson’s
testimony could lead to the conclusion that Ferguson, or anyone else at UniFirst,
could predict the amounts that would have been invoiced to Austex in the future
had Austex not prematurely terminated its contract with UniFirst. Invoices are
issued weekly, and the amount invoiced varied each week based on the number of
uniforms requiring servicing.
To the contrary, Ferguson separately explained how he calculated liquidated
damages in the amount of $13,873.83 using the formula provided in the
liquidated-damages provision in the parties’ agreement. When asked what the
actual damages would be in lieu of the liquidated damages provided for in the
agreement and “in the event [he was] obligated to go and try to calculate the actual
damages,” Ferguson explained that UniFirst’s actual damages for the remaining
weeks in the contractual term would be “equal to or more than 50 percent easily
because the loss of revenue for the remainder of the agreement would have been
100 percent, not just 50 percent.” The fifty percent reduction accounts for “certain
costs in servicing the account” such as paying “route salesmen,” washing the
uniforms, and processing the uniforms each week. He further explained that the
10
profit stream on any given account fluctuates over time in that many account
expenses are “front-loaded” due to the purchase of new uniforms and other
expenses necessary to begin servicing an account. As such, UniFirst’s profits tend
to increase further into a contract’s term, which is why Ferguson testified that its
actual damages probably exceed the liquidated damages provided for in the parties’
agreement.
Austex has not established that the liquidated-damages provision in this case
fails to satisfy the requirement that the damages resulting from a breach, at the time
of contracting, were uncertain and difficult to determine. In this case, to forecast
the actual damages to UniFirst as a result of Austex’s termination of its
sixty-month contract, twenty-months into its term, “would be fraught with
uncertainty.” Murphy v. Cintas Corp., 923 S.W.2d 663, 666 (Tex. App.—Tyler
1996, writ denied). Accordingly, we concluded that there is sufficient evidence in
the record to support an implied finding from the trial court that the harm caused
by the breach, at the time of contracting, was incapable or difficult of estimation.
See BMC Software, 83 S.W.3d at 795 (explaining where no findings of fact or
conclusions of law we imply that trial court made all findings necessary to support
its judgment).
B. Amount reasonable forecast of just compensation
In the remaining portion of its first issue, Austex argues that the
11
liquidated-damages provision is an unenforceable penalty because it “was not a
reasonable forecast of just compensation.”
When a defendant makes such an assertion, it may be required to prove the
amount of actual damages before a court can classify such a provision as an
unenforceable penalty. See, e.g., FPL Energy, 426 S.W.3d at 70 (citing Phillips,
820 S.W.2d at 788). Here, Austex offered no evidence of, or otherwise attempted
to prove, UniFirst’s actual damages at trial. Instead, it argues that the
liquidated-damages provision is a penalty because it does not attempt to “forecast
actual damages,” but impermissibly “calls for them to be determined and then
multiplied.” This assertion is contrary to a plain reading of the liquidated-damages
provision at issue in the instant case, which instead averages past invoiced
amounts, reduces that averaged amount by fifty percent, and then multiples that
reduced averaged amount by the number of weeks remaining in the contract’s
term. Cf. Phillips, 820 S.W.2d at 789 (“A contractual provision like the one here
by which one party agrees to pay the other some multiple of actual damages for
breach of the agreement does not meet either part of the legal test for an
enforceable liquidated[-]damages provision” because it does not attempt to
forecast, but multiply actual damages). It does not require “one party [to] agree[]
to pay the other some multiple of actual damages for breach of the agreement,”
which would be an unenforceable penalty on the face of the agreement. See id.
12
Austex further asserts that the liquidated-damages provision is not a
reasonable forecast of damages because it is “disproportionate to actual damages”
and was awarded in addition to actual damages. Austex is correct in that liquidated
damages cannot be enforced if they are disproportionate to actual damages or
awarded in addition to actual damages. See Garden Ridge, L.P. v. Advance Int’l,
Inc., 403 S.W.3d 432, 438 (Tex. App.—Houston [14th Dist.] 2013, no pet.)
(“[L]iquidated damages must not be disproportionate to actual damages. If the
liquidated damages are shown to be disproportionate to the actual damages then
the liquidated damages can be declared a penalty.”). But Austex’s argument
incorrectly assumes that UniFirst’s actual damages in this case are limited to
“replacement costs for its unreturned uniforms in the amount of $4,344.77” and
“‘past due receivables’ for services rendered in the amount of $3,106.79, for a total
of $7,340.56.” Austex seems to assert that UniFirst may either receive those or
liquidated damages, but not both.
Instead, an injured party in a breach-of-contract action may recover damages
for its expectation interests in a contract, i.e., the “benefit of the bargain” had the
contract been performed. See Sacks v. Hall, 481 S.W.3d 238, 246 (Tex. App.—
Houston [1st Dist.] 2015, pet. denied) (“The purpose of the benefit-of-the-bargain
measure of damages is to restore the injured party to the economic position it
would have been in had the contract been fully performed.”); see also Bowen v.
13
Robinson, 227 S.W.3d 86, 96 (Tex. App.—Houston [1st Dist.] 2006, pet. denied)
(“With respect to damages in breach-of-contract cases, the general rule is that the
complaining party is entitled to recover the amount necessary to put him in as good
a position as if the contract had been performed.” (internal quotations omitted)).
Austex terminated the parties’ agreement only twenty months into the sixty-month
term. So, the amounts awarded for past-due receivables and unreturned uniforms,
without also compensating UniFirst for Austex’s failure to perform the remaining
weeks in the term of the agreement, would not restore UniFirst to the same
economic position it would have been in had the contract been fully performed.
See Sacks, 481 S.W.3d at 246. The liquidated-damages provision in this case is a
means for compensating UniFirst for the lost benefit of Austex performing its
obligations during the remaining weeks of the term of the parties’ agreement. Id.
On appeal, Austex does not assert that it was excused from performance of
its obligations under the agreement. And, as previously mentioned, Austex did not
prove the amount it contends was UniFirst’s actual damages to support its
contention that the liquidated damages are not an approximation of the stipulated
sum. See Phillips, 820 S.W.2d at 788 (explaining one way party can “show that a
liquidated[-]damages provision is unreasonable” is by showing that “the actual
damages incurred were less than the amount contracted for,” which requires that
party “to prove what those actual damages were”). Moreover, Ferguson testified
14
that the liquidated damages were, in all probability, less than UniFirst’s actual
damages resulting from Austex’s breach. And the liquidated-damages provision
specifically provides that “[t]hese damages will be in addition to all other
obligations or amounts owed by Customer to UniFirst, including the return of
Standard Merchandise or payment of replacement charges, and the purchase of any
Non-Standard Merchandise items as set forth herein.”
For these reasons, we conclude that Austex has failed to prove that the
liquidated-damages provision does not provide a reasonable estimate of the harm
that would be incurred and that there is sufficient evidence in the record to support
an implied finding from the trial court that the liquidated-damages provision in this
case is a “reasonable forecast of just compensation.” Phillips, 820 S.W.2d at 788;
see also BMC Software, 83 S.W.3d at 795 (explaining we imply that trial court
made all findings necessary to support its judgment where no findings of fact or
conclusions of law).
Because there is sufficient evidence to support implied findings from the
trial court that the liquidated-damages provision addressed damages incapable or
difficult of estimation and that the amount of liquidated damages called for is a
reasonable forecast of just compensation, we hold that the trial court did not err in
awarding UniFirst liquidated damages pursuant to the liquidated-damage provision
in the parties’ agreement. Our holding in this case is consistent with those from
15
other courts which have evaluated similar liquidated-damages provisions. See
Atrium Med. Ctr., LP v. Hous. Red C LLC, 546 S.W.3d 305, 315–316 (Tex.
App.—Houston [14th Dist.] 2017, pet. denied) (upholding liquidated-damages
provision for forty percent of current invoice multiplied by number of weeks
remaining in term); see also Murphy v. Cintas Corp., 923 S.W.2d 663, 666 (Tex.
App.—Tyler 1996, writ denied) (upholding liquidated-damages provision for fifty
percent of weekly fees for remainder of sixty–month term, noting “[t]o forecast the
actual damages to Cintas as a result of Murphy’s termination of the contract sixty
months in advance would be fraught with uncertainty”); Oetting v. Flake Uniform
& Linen Serv., Inc., 553 S.W.2d 793, 797–98 (Tex. Civ. App.—Fort Worth 1977,
no writ) (focusing on anticipated profit margin, court held eighty-five percent
cancellation charge reasonable).
We overrule Austex’s first issue.
Pre-Judgment Interest
In its second issue, Austex argues that the trial court erred in awarding
UniFirst pre-judgment interest because “it did not request [it] and made no effort to
prove [it] up at trial.”
“Pre[-]judgment interest is compensation allowed by law as additional
damages for lost use of the money due as damages during the lapse of time
between the accrual of the claim and the date of judgment.” Ventling v. Johnson,
16
466 S.W.3d 143, 153 (Tex. 2015). There are two enabling statutes in the Texas
Finance Code relevant to pre-judgment interest, that are not applicable here. One
applies to claims for wrongful death, personal injury, or property damage. See
TEX. FIN. CODE ANN. § 304.101. And the other applies to condemnation cases.
See id. § 304.201. When no statute governs an award of pre-judgment interest, as
in this case, pre-judgment interest may be awarded under general principles of
equity. Johnson & Higgins of Tex., Inc. v. Kenneco Energy, Inc., 962 S.W.2d 507,
528 (Tex. 1998); Trevino v. City of Pearland, 531 S.W.3d 290, 297 (Tex. App.—
Houston [14th Dist.] 2017, no pet.) (explaining pre-judgment interest in
breach-of-contract case governed by equitable principles because no applicable
statute). When general principles of equity govern an award of pre-judgment
interest, we review the trial court’s decision concerning pre-judgment interest for
an abuse of discretion. Hand & Wrist Ctr. of Houston, P.A. v. Republic Servs.,
Inc., 401 S.W.3d 712, 717 (Tex. App.—Houston [14th Dist.] 2013, no pet.).
Generally, a plaintiff must plead for pre-judgment interest sought in equity
as an element of damages. DeGroot v. DeGroot, 369 S.W.3d 918, 926 (Tex.
App.—Dallas 2012, no pet.). But entitlement to pre-judgment interest does not
require any specific and independent evidentiary proof at trial, unless there is a fact
issue regarding the date of accrual. See Benavidez v. Isles Constr. Co., 726 S.W.2d
23, 26 (Tex. 1987) (holding trial court erred in denying post-verdict amendment to
17
plead pre-judgment interest because it requires no evidentiary proof at trial and
cannot surprise or prejudice opposing party); I-10 Colony, Inc. v. Chao Kuan Lee,
393 S.W.3d 467, 479 (Tex. App.—Houston [14th Dist.] 2012, pet. denied) (“In
Texas, pre[-]judgment interest accrues beginning either on the 180th day after the
defendant received written notice of the claim or on the date the suit was filed,
whichever occurs first.”). And once a trial court determines that a plaintiff is
entitled to pre-judgment interest, it has no discretion in determining the amount of
pre-judgment interest to award, which is dictated by statute. See Acco
Constructors, Inc. v. Nat’l Steel Prods. Co., 733 S.W.2d 368, 371 (Tex. App.—
Houston [14th Dist.] 1987, no writ.) (explaining trial court errs in awarding
pre-judgment interest at rate that varies from statutory amount).
Here, UniFirst’s live pleading at the time of trial specifically requested
pre-judgment interest. UniFirst was not required to satisfy any sort of evidentiary
burden at trial to establish its entitlement to receive an award of pre-judgment
interest. See, e.g., Benavidez, 726 S.W.2d at 26 (holding trial court erred in
denying post-verdict amendment to plead pre-judgment interest because it requires
no evidentiary proof at trial and cannot surprise or prejudice opposing party). And
Austex does not provide argument as to how the amount of pre-judgment interest
awarded by the trial court was incorrect. To the extent that its statements that “it
remains a mystery to Appellant as to how this interest was calculated” and that the
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pre-judgment interest award could have “possibly” accrued on the award of
attorney’s fees, could be construed as a challenge to the trial court’s calculation of
pre-judgment interest, that argument is insufficiently briefed for our consideration.
See TEX. R. APP. P. 38.1(i); Bolling v. Farmers Branch Indep. Sch. Dist., 315
S.W.3d 893, 895 (Tex. App.—Dallas 2010, no pet.) (explaining were we to
identify possible trial court error, search record for facts favorable to party’s
position, or perform legal research that might support party’s contentions “we
would be abandoning our role as judges and become an advocate for that party”).
Accordingly, we hold that the trial court did not err in awarding UniFirst
pre-judgment interest.
We overrule Austex’s second issue.
Attorney’s Fees
In its third issue, Austex argues that the trial court erred in awarding
UniFirst attorney’s fees because the evidence was insufficient to support the trial
court’s award of attorney’s fees through trial in the amount of $7,071.46. Austex
asserts that the contingency-fee agreement between UniFirst and its attorney “does
not mean that the fee arrangement is in and of itself reasonable for purposes of
shifting the fee to the defendant.”
We review a trial court’s award of attorney’s fees for an abuse of discretion.
El Apple I, Ltd. v. Olivas, 370 S.W.3d 757, 761 (Tex. 2012). Evidentiary
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sufficiency issues are not independent grounds under this standard but are relevant
factors in assessing whether the trial court abused its discretion. Beaumont Bank,
N.A. v. Buller, 806 S.W.2d 223, 226 (Tex. 1991); Halsey v. Halter, 486 S.W.3d
184, 187 (Tex. App.—Dallas 2016, no pet.). This hybrid analysis involves a
two-pronged inquiry: (1) whether the trial court had sufficient evidence upon
which to exercise its discretion, and (2) if so, whether the trial court erred in its
application of that discretion. City of Hous. v. Kallinen, 516 S.W.3d 617, 626
(Tex. App.—Houston [1st Dist.] 2017, no pet.).
An attorney’s fees award must be supported by evidence that the fees are
reasonable and necessary. Dernick Res., Inc. v. Wilstein, 471 S.W.3d 468, 490
(Tex. App.—Houston [1st Dist.] 2007, pet. denied). Whether attorney’s fees are
reasonable is ordinarily a decision left to the fact finder. Smith v. Patrick W.Y.
Tam Trust, 296 S.W.3d 545, 547 (Tex. 2009). A trial court determines
the reasonableness of an attorney’s fee award by considering the following eight
non-exclusive factors enumerated by the Texas Supreme Court: (1) the time and
labor required, the novelty and difficulty of the questions involved, and the skill
required to perform the legal service properly; (2) the likelihood that the
acceptance of the particular employment will preclude other employment by the
attorney; (3) the fee customarily charged in the locality for similar legal services;
(4) the amount involved and the results obtained; (5) the time limitations imposed
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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
attorney or attorneys performing the services; and (8) whether the fee is fixed
or contingent on results obtained or uncertainty of collection before the legal
services have been rendered. Arthur Andersen & Co. v. Perry Equip. Corp., 945
S.W.2d 812 (Tex. 1997); see Haden v. David J. Sacks, P.C., 332 S.W.3d 503, 512–
13 (Tex. App.—Houston [1st Dist.] 2009, pet. denied).
Arthur Anderson also directs that a plaintiff may not shift an “entire
contingent fee to the defendant without consideration of the factors required by the
[Texas] Rules of Professional Conduct.” 945 S.W.2d at 818. Thus, a contingency-
fee agreement should be considered by the fact finder, but the fact finder “must
decide the question of attorney’s fees specifically in light of the work performed in
the very case for which the fee is sought.” Id. at 819. Even so, a trial court is not
required to receive evidence on each Arthur Anderson factor. See Jarvis v.
Rocanville Corp., 298 S.W.3d 305, 318 (Tex. App.—Dallas 2009, pet. denied).
The trial court can also examine the “entire record and . . . view the matter in light
of the amount in controversy, the nature of the case, and his or her personal
experience as a lawyer or judge.” Cole Chem. & Distrib., Inc. v. Gowing, 228
S.W.3d 684, 689–90 (Tex. App.—Houston [14th Dist.] 2005, no pet.); see also
Jarvis, 289 S.W.3d at 318.
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In this case, the trial court’s award of attorney’s fees is not supported solely
by evidence of the one-third contingency-fee agreement. In addition to testifying
to the contingency-fee arrangement with UniFirst, Malone testified that he had
been practicing law in and around Travis County, Texas since 1981, that he was
familiar with the usual and customary attorney’s fees charged by attorneys for
work in this collection-type of litigation, and that the amount of $7,071.46 in
attorney’s fees for representation through judgment in this case was reasonable and
customary. See Metroplex Mailing Servs., LLC v. RR Donnelley & Sons Co., 410
S.W.3d 889, 900 (Tex. App.—Dallas 2013, no pet.) (“It has consistently been held
that an attorney’s testimony about his experience, the total amount of fees, and the
reasonableness of the fees charged is sufficient to support an award.”).
Austex argues that the actual attorney’s fees “proven up” by UniFirst at trial
“amounted to only about $2,100.00.” Austex does not explain how it reached this
amount, but it is presumably based on Malone’s testimony that he “spent a
minimum of seven hours” on the case and typically charges $300.00 per hour when
he is not engaged under a contingency-fee arrangement. But Malone did not
testify that he only spent seven hours on the case. Instead, his testimony was that
these seven hours did not include the default judgment and post-judgment
procedures that were taken before the case was reinstated and proceeded to trial.
He also testified more specifically regarding the type of work that he performed in
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the case by providing the following legal services: evaluating the claims, drafting
the petition, obtaining a default judgment, pursuing post-default-judgment
collection procedures, negotiating reinstatement of the case after Austex filed a bill
of review, obtaining discovery, preparing for trial, and trial of the case.
Accordingly, we hold that the trial court had enough competent evidence
upon which to exercise its discretion and did not err in awarding UniFirst
attorney’s fees through trial in this case in the amount of $7,071.46.
We overrule Austex’s third issue.
“Punitive Fees” for Appeal
In its fourth issue, Austex argues that the trial court erred in awarding
UniFirst appellate attorney’s fees because the award was “not conditioned on the
lack of success of [Austex’s] appeal, but [was] rather punitive in nature.” Austex
requests that we modify the trial court’s judgment. UniFirst agrees that the
judgment contains error in this regard and that it should be reformed to condition
the award of appellate attorney’s fees on an unsuccessful appeal by Austex.
A trial court may not penalize a party for taking a successful appeal. Keith
v. Keith, 221 S.W.3d 156, 171 (Tex. App.—Houston [1st Dist.] 2006, no pet.);
Sipco Servs. Marine v. Wyatt Field Serv. Co., 857 S.W.2d 602, 607 (Tex. App.—
Houston [1st Dist.] 1993, no writ). As such, an unconditional award of appellate
attorney’s fees is improper, and the trial court must condition any award of
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appellate attorney’s fees on a party’s unsuccessful appeal. Ansell Healthcare
Prods., Inc. v. United Med., 355 S.W.3d 736, 745 (Tex. App.—Houston [1st Dist.]
2011, pet. denied); Hoefker v. Elgohary, 248 S.W.3d 326, 322 (Tex. App.—
Houston [1st Dist.] 2007, no pet.).
The judgment in this case awards UniFirst “$8,000.00 if an appeal to the
Court of Appeals is made, $4,000.00 if a petition for review to the Texas Supreme
Court is made, and $4,000.00 if a petition for review is granted by the Texas
Supreme Court.” It is not conditioned upon a successful appeal and is, therefore,
improper. See, e.g., Keith, 221 S.W.3d at 171. Since an unconditional award of
appellate attorney’s fees does not require reversal, we may modify a trial court’s
judgment to make the award of appellate attorney’s fees contingent upon the
receiving party’s success on appeal. Ansell, 355 S.W.3d at 745; Hoefker, 248
S.W.3d at 322.
Accordingly, we hold that the trial court erred in awarding UniFirst
unconditional appellate attorney’s fees and we modify the trial court’s judgment as
follows:
$8,000.00 if an appeal to the Court of Appeals is made unless
Austex prevails in the court of appeals and petition for review is not
granted by the Texas Supreme Court or unless Austex prevails in the
Texas Supreme Court;
$4,000.00 if a petition for review to the Texas Supreme Court is
made unless Austex prevails in the Texas Supreme Court;
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$4,000.00 if a petition for review is granted by the Texas
Supreme Court unless Austex prevails in the Texas Supreme Court.
(Emphasis added.)
We sustain Austex’s fourth issue.
Conclusion
We affirm the judgment of the trial court as modified.
Julie Countiss
Justice
Panel consists of Chief Justice Radack and Justices Goodman and Countiss.
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