Sunday, November 20, 2011

The American Rule (with respect to recovery of legal fees) given effect

Dallas Court of Appeals applies the American Rule in Trespass to Try Title Suit - rejects claim for recovery of legal fees under an equitable exception theory.   

The American Rule has been a part of Texas jurisprudence for over 100 years. See Akin, Gump, 299 S.W.3d at 120 (tracing the Rule's roots in Texas jurisprudence to 1896). Moreover, the supreme court has stated that “[a]bsent a contract or statute, trial courts do not have inherent authority to require a losing party to pay the prevailing party's fees.” Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 311 (Tex. 2006) (emphasis added). Texas's only equitable exception to the American Rule that we are aware of is the common-fund doctrine, see generally Allstate Ins. Co. v. Edminster, 224 S.W.3d 456, 457-58 (Tex. App.-Dallas 2007, no pet.) (applying common-fund doctrine), which Neumann acknowledges is not applicable to this case. Given the supreme court's faithful adherence to the American Rule, and its strong statement in Tony Gullo that trial courts lack the inherent authority to award attorney's fees contrary to the Rule, we decline to adopt a new equitable exception to the Rule. Cf. Martin v. Clinical Pathology Labs., Inc., 343 S.W.3d 885, 892 (Tex. App.-Dallas 2011, pet. filed) (stating that Texas Supreme Court rather than intermediate court of appeals was proper tribunal to consider exceptions to state's strong employment-at-will doctrine).
Texas has long followed the American Rule, under which 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. Akin, Gump, Strauss, Hauer & Feld, L.L.P. v. Nat'l Dev. & Research Corp., 299 S.W.3d 106, 120 (Tex. 2009). There is a statutory scheme in place to govern trespass-to-try-title claims, see generally Tex. Prop. Code Ann. §§ 22.001-.045 (West. 2000), but it contains no provision authorizing a party to recover attorney's fees from the opposing side. We have held that the plaintiff in a trespass-to-try-title suit cannot recover attorney's fees. McAnally v. Friends of WCC, Inc., 113 S.W.3d 875, 881 (Tex. App.-Dallas 2003, no pet.); see also Barfield v. Holland, 844 S.W.2d 759, 771 (Tex. App.-Tyler 1992, writ denied) (trespass-to-try-title plaintiff could not recover attorney's fees by characterizing claim as one under Declaratory Judgments Act).

SOURCE: DALLAS COURT OF APPEALS - 05-10-00445-CV – 11/6/11

Neumann argues that we should recognize an equitable exception
to the American Rule for the facts of this case. He points out that he
was in possession of the premises at issue until he was forcibly
dispossessed of it by Riner. But for Riner's wrongful act of self-help,
Neumann argues, Neumann would have remained in possession of the
premises and could have litigated the matter as a declaratory-judgment
action instead of a trespass-to-try-title action. And under the Uniform
Declaratory Judgments Act, Neumann would have been eligible to recover
his attorney's fees. See Tex. Civ. Prac. & Rem. Code Ann. § 37.009 (West
2008) (authorizing trial court to award fees “as are equitable and
just”). Thus, Neumann contends that we should recognize an equitable
right to recover attorney's fees on these egregious facts, or else Riner
will benefit from his wrongful act.
We reject Neumann's argument.

SOURCE: DALLAS COURT OF APPEALS - 05-10-00445-CV – 11/6/11

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