ATC Healthcare Services, Inc. v. New Century Financial, Inc. ( 2013 )

Opinion issued November 21, 2013.
In The
Court of Appeals
For The
First District of Texas
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NO. 01-12-01168-CV
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ATC HEALTHCARE SERVICES, INC., Appellant
V.
NEW CENTURY FINANCIAL, INC., Appellee
On Appeal from the 152nd Judicial District Court
Harris County, Texas
Trial Court Case No. 2007-38981
MEMORANDUM OPINION
After we remanded this case for resolution of the parties’ dispute as to the
reasonableness of attorney’s fees, the trial court heard additional evidence and
entered a second judgment, awarding fees to New Century Financial, Inc. In this
appeal, ATC Healthcare Services, Inc. contends that the trial court abused its
discretion in admitting New Century’s attorney’s fee invoices. Finding no error,
we affirm.
Background
This is the second appeal in a dispute between ATC Healthcare Services and
New Century Financial. In the first appeal, we affirmed an award for actual
damages in favor of New Century, but remanded the case to the trial court to
conduct a trial on attorney’s fees. At the hearing on remand, New Century
proffered attorney’s fees invoices which it had paid to its former counsel. ATC
Healthcare objected to the admission of the fee invoices as inadmissible hearsay;
the trial court, however, overruled the objection and admitted the invoices under
the business records exception.
Richard Judge, New Century’s current legal counsel, then testified about the
reasonableness and necessity of the legal fees that New Century had incurred and
about how the fees should be divided among New Century’s claims. The trial
court awarded New Century $80,000 in legal fees for the first trial, $5,439 in
connection with the proceedings on remand, and conditional appellate attorney’s
fees.
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Discussion
Standard of Review
ATC Healthcare challenges the trial court’s admission of the attorney’s fee
invoices, save those invoices prepared by Judge. We review the admission and
exclusion of evidence for abuse of discretion. City of Brownsville v. Alvarado, 897
S.W.2d 750, 753 (Tex. 1995). A trial court abuses its discretion if it acts without
regard to any guiding rules or principles. Downer v. Aquamarine Operators, Inc.,
701 S.W.2d 238, 241–42 (Tex. 1985). A party seeking reversal of a judgment
based on evidentiary error must prove that the error probably resulted in an
improper judgment. Alvarado, 897 S.W.2d at 753.
Analysis
ATC Healthcare contends that New Century’s witness failed to lay the
proper foundation to admit the fee invoices under the business records exception to
the hearsay rule. See TEX. R. EVID. 803(6). It emphasizes that New Century’s
witness is an employee of New Century, not an employee of the law firms that
prepared and sent the invoices to New Century. Thus, New Century’s employee
did not have personal knowledge of the manner in which the invoices were
prepared.
However, a document prepared by a third party may be admissible under the
business records exception if (1) it is incorporated and kept in the course of the
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testifying witness’s business; (2) that business typically relies upon the accuracy of
the contents of the document; and (3) the circumstances otherwise indicate the
trustworthiness of the document. Bell v. State, 176 S.W.3d 90, 92 (Tex. App.—
Houston [1st Dist.] 2004, pet. ref’d); see also Harris v. State, 846 S.W.2d 960,
963–64 (Tex. App.—Houston [1st Dist.] 1993, writ ref’d). New Century’s witness
testified that New Century kept the attorney’s fee invoices in the regular course of
its business. She testified that New Century paid the invoices in full. By paying
the invoices in full, New Century relied on the accuracy of the contents of the
invoices, and demonstrated personal knowledge of the amounts it had incurred. 1
Importantly, New Century proffered an attorney as an expert witness, who
testified without objection to the reasonableness and necessity of the fees charged
in the invoices and segregated out non–recoverable amounts. See TEX. R.
EVID. 703 (expert may base opinion on facts made known to expert at or before
hearing); see also Arthur J. Gallagher & Co. v. Dieterich, 270 S.W.3d 695, 706
(Tex. App.—Dallas 2008, no pet.) (holding that attorney can opine about
reasonableness of client’s former attorney’s fees); Brazos Elec. Power Coop., Inc.
v. Weber, 238 S.W.3d 582, 584 (Tex. App.—Dallas 2007, no pet.) (holding that
1
We note that the invoices may contain specific matters within them that do not
fall within the hearsay exception for business records. But trial counsel did
not ask for a limiting instruction in connection with the records’
admissibility or request that any particular part of the invoices be redacted.
See TEX. R. EVID. 105.
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attorney can opine about reasonableness of another attorney’s fees); Liptak v.
Pensabene, 736 S.W.2d 953, 957 (Tex. App.—Tyler 1987, no writ) (same). Given
these facts, we hold that the trial court did not abuse its discretion in concluding
that the records were trustworthy and in considering the fee invoices.
Conclusion
We hold that the trial court did not abuse its discretion in admitting the
attorney’s fee invoices. We therefore affirm the judgment of the trial court.
Jane Bland
Justice
Panel consists of Chief Justice Radack and Justices Bland and Huddle.
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