Texas Causes of Action & Affirmative Defenses

Texas Causes of Action & Affirmative Defenses

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Monday, November 2, 2009

ATTORNEY'S FEES: The American Rule (and its exceptions)

The American Rule with Regard to Fees: Loser Pays? - No, but there are plenty of exceptions It has long been the rule in Texas that attorney’s fees paid to prosecute or defend a lawsuit cannot be recovered in that suit absent a statute or contract that allows for their recovery. See Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 310-11 (Tex. 2006) (“Absent a contract or statute, trial courts do not have inherent authority to require a losing party to pay the prevailing party’s fees.”); Wm. Cameron & Co. v. Am. Sur. Co. of N.Y., 55 S.W.2d 1032, 1035 (Tex. Comm’n App. 1932, judgm’t adopted) (“It is settled law in this state that, unless provided for by statute or by contract between the parties, attorneys’ fees incurred by a party to litigation are not recoverable against his adversary either in an action in tort or a suit upon a contract.”); Sherrick v. Wyland, 37 S.W. 345, 345 (Tex. Civ. App. 1896) (“It has often been ruled, in this state and elsewhere, that fees of counsel, incurred in prosecuting a suit for or defending against a wrong, are not ordinarily recoverable as actual damages, because they are not considered proximate results of such wrong.”). The rule is known as the American Rule. See Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep’t of Health and Human Res., 532 U.S. 598, 602 (2001) (“[P]arties are ordinarily required to bear their own attorney’s fees—the prevailing party is not entitled to collect from the loser.”); Fleischmann Distilling Corp. v. Maier Brewing Co., 386 U.S. 714, 718 (1967). SOURCE: Akin, Gump, Strauss, Hauer & Feld, LLP vs. National Development and Research Corp. No. 07-0818 (Tex. Oct. 30, 2009) (Opinion by Phil Johnson) (legal malpractice, attorney's caused by malpractice recoverable as damages despite the American Rule)