When must attorney's fees be segregated?

FEE SEGREGATION REQUIREMENT

Where a party seeks attorney's fees in a case where some claims permit the recovery of fees and others do not, the party must segregate and exclude the fees for services related to the claims for which fees are not recoverable unless the discrete legal services advanced both the recoverable claim and the unrecoverable claim. See Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 313-14 (Tex. 2006).

GENERAL RULE AND EXCEPTION TO RULE

The general rule is that a party seeking to recover attorney's fees in a suit involving multiple claims or parties has a duty to segregate the fees owed. Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1, 10-11 (Tex. 1991). A recognized exception to the duty to segregate arises when the attorney's fees rendered are in connection with claims arising out of the same transaction and are so interrelated that their "prosecution or defense entails proof or denial of essentially the same facts." Id. at 11 (quoting Flint & Assocs. v. Intercont'l Pipe & Steel, Inc., 739 S.W.2d 622, 624-25 (Tex. App.-Dallas 1987, writ denied)). When the causes of action involved in the suit are dependent upon the same set of facts or circumstances and thus are intertwined to the point of being inseparable, the party suing for attorney's fees may recover the entire amount covering all claims. See id. at 11-12.

CASES:

Amerada Hess Corp. v. Wood Group Prod. Tech., 30 S.W.3d 5, 14 (Tex. App.-Houston [14th Dist.] 2000, pet. denied) (remanding where no evidence presented to support exception to duty to segregate)

Oadra v. Stegall, 871 S.W.2d 882, 888 (Tex. App.-Houston [14th Dist.] 1994, no writ) ("We have reviewed the entire record and after such review conclude that the attorney's fees in this case were not capable of segregation. The testimony in the record supports the finding that the issues and parties in this case were so intertwined that they were inseparable.").

SOURCE: FOURTEENTH COURT OF APPEALS - Nos. 14-13-00086-CV, 14-13-00088-CV - 5/15/2014

EXCEPTION WHEN SAME COUNSEL REPRESENTS PARTIES ON SAME ISSUES/CLAIMS 

"When a lawsuit involves multiple claims or parties, the proponent of attorney's fees must segregate recoverable fees from those incurred by parties or on claims for which fees are not recoverable." Clearview Props., L.P. v. Prop. Tex. SC One Corp., 287 S.W.3d 132, 143 (Tex. App.-Houston [14th Dist.] 2009, pet. denied) (citing Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 313 (Tex. 2006)). Attorney's fees that relate solely to a claim for which fees are unrecoverable must be segregated. Chapa, 212 S.W.3d at 313. The Supreme Court of Texas has held that attorney's fees are recoverable only as provided by contract or statute, and it "eliminated the exception for fees incurred solely on separate but arguably intertwined claims." Varner v. Cardenas, 218 S.W.3d 68, 69 (Tex. 2007) (citing Chapa, 212 S.W.3d at 313). But the Supreme Court did not require that all fees be segregated even when incurred by co-defendants jointly represented by the same counsel and when such fees are incurred as a result of the same discrete tasks and work.

SOURCE: HOUSTON COURT OF APPEALS - 01-13-00855-CV – 12/30/2014