Segregation of Attorney's Fees: Successful vs. unsuccessful claims

SEGREGATION OF LEGAL FEES INCURRED FOR MULTIPLE CLAIMS

When does amount claimed in attorney’s fee have to be segregated? 

If attorney's fees are authorized for some, but not all, of a party's claims, that party generally has the duty to segregate the recoverable from the non-recoverable attorney's fees. See Tony Gullo Motors, I., L.P. v. Chapa, 212 S.W.3d 299, 313-14 (Tex. 2006); A & L Eng'g & Consulting, Inc. v. Shiloh Apollo Plaza, Inc., 315 S.W.3d 928, 931 (Tex. App.-Dallas 2010, no pet.).

But a party is not required to segregate attorney's fees if “discrete legal services advance both a recoverable and unrecoverable claim,” thus causing the fees to become “so intertwined that they need not be segregated.” Tony Gullo Motors, 212 S.W.3d 313-14. This standard does not require attorneys to keep separate time records. Id. at 314. Rather, the amount of recoverable attorney's fees is sufficiently segregated if, for example, the attorney testifies that a given percentage of time would have been necessary if there had been no unrecoverable claim. Id.

The question of whether segregation is required in a particular case is a legal inquiry, subject to de novo review. Id. at 312; see also CA Partners v. Spears, 274 S.W.3d 51, 81 (Tex. App.-Houston [14th Dist.] 2008, pet. denied). Segregation is not required, for example, to “overcome any and all affirmative defenses” to a breach of contract claim. Tony Gullo Motors, 212 S.W.3d at 314. The “opposing party who raises [affirmative defenses to a contract claim] should not be allowed to suggest to the [fact finder] that overcoming those defenses was unnecessary.” Id. Similarly, “when a defendant asserts a counterclaim that the plaintiff must overcome in order to fully recover on its contract claim, the attorneys' fees necessary to defeat that counterclaim are likewise recoverable.” 7979 Airport Garage, L.L.C. v. Dollar Rent A Car Sys., Inc., 245 S.W.3d 488, 507 (Tex. App.-Houston [14th Dist.] 2007, pet. denied) (citing Varner v. Cardenas, 218 S.W.3d 68, 69-70 (Tex. 2007) (per curiam)).

 SOURCE: Dallas Court of Appeals - 05-09-00884-CV - 4/20/11