Wednesday, September 4, 2013

The American Rule applies in Texas courts (regarding award of attorney's fees in a lawsuit)


Texas follows the American Rule, meaning that attorney’s fees can only be awarded as part of the judgment if a contract or statute provides for them

Whether a party may recover reasonable attorney's fees is a question of law for the trial court which we review de novo. Brent v. Field, 275 S.W.3d 611, 621 (Tex. App.-Amarillo 2008, no pet.) (citing Holland v. Wal-Mart Stores, Inc., 1 S.W.3d 91, 94, 95 (Tex. 1999)). 
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, 14 Tex. Civ. App. 299, 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, 121 S. Ct. 1835, 149 L. Ed. 2d 855 (2001) ("[P]arties are ordinarily required to bear their own attorney's fees—the prevailing party is not entitled to collect from the loser.").

SOURCE:  WACO COURT OF APPEALS - 10-12-00241-CV – 8/8/2013  Pharia, LLC v Childers (Trial court erred in awarding attorney's fees; court of appeals reverses portion of the judgment that awarded the attorney's fees and renders a take-nothing judgment on that claim, but otherwise affirms). 


Texas has long followed the "American Rule," which prohibits an award of attorney's fees unless specifically provided by contract or statute. MBM Fin. Corp. v. The Woodlands Operating Co., 292 S.W.3d 660, 6693d (Tex. 2009).

Here, there is no contract between the parties, and Sherman does not seek attorney's fees under any statutory provision. Rather, he contends that because Wein filed a fraudulent lawsuit against him, causing him to expend money in attorney's fees and expenses, he is entitled to recover those fees and expenses as actual damages.

Attorney's fees, however, are ordinarily not recoverable as actual damages in and of themselves. See Tana Oil & Gas Corp. v. McCall, 104 S.W.3d 80, 81-82, 83 (Tex. 2003) (attorney plaintiffs who sought to recover damages based solely on value of time and costs incurred in defending claims had not suffered actual damages and were not entitled to only damages they claimed; plaintiffs should have pursued attorney's fees as sanctions under Rule 13 or Chapter 10); Worldwide Asset Purchasing, L.L.C. v. Rent-a-Center East, Inc., 290 S.W.3d 554, 570 (Tex. App.-Dallas 2009, no pet.) (attorney's fees not recoverable as actual damages); Haden v. David J. Sacks, P.C., 222 S.W.3d 580, 597 (Tex. App.-Houston [1st. Dist.] 2007) (same), rev'd on other grounds, 266 S.W.3d 447 (Tex. 2008); Quest Commc'ns Int'l, Inc. v. AT&T Corp., 114 S.W.3d 15, 35-36 (Tex. App.-Austin 2003) (damages measured by plaintiff's attorney's fees recoverable only under certain exceptions not implicated here), rev'd in part on other grounds, 167 S.W.324 (Tex. 2005) (per curiam).

Because Sherman neither sought nor proved any damages other than attorney's fees, there is no evidence to support the actual damage element of any of his asserted claims, and the district court did not err in granting summary judgment in Wein's favor. We overrule Sherman's cross-issue.

SOURCE: AUSTIN COURT OF APPEALS - 03-10-00499-CV – 8/23/2013