Opinion
No. 01-01-00200-CV
Opinion issued September 7, 2006.
On Appeal from County Civil Court at Law No. 2, Harris County, Texas, Trial Court Cause No. 722,791.
Panel consists of Chief Justice RADACK and Justices KEYES and ALCALA.
OPINION
This appeal derives from a dispute over whether and how a client agreed to pay a law firm for legal services. The client, appellants, Charles M. Haden, Jr., individually (Haden), and Charles McIntyre Haden, Jr. Company d/b/a Haden Company (the company), challenge a series of summary judgments and an eventual judgment rendered in favor of appellee, David J. Sacks, P.C. (Sacks) d/b/a Sacks Associates (collectively referred to as the law firm). In three issues, the company contends that the law firm did not establish its entitlement to judgment as a matter of law (1) for breach of contract to pay $30,314.38 for legal services performed, (2) for $120,887.50 in attorney's fees awarded the law firm in connection with pursuing the breach of contract claim, or (3) on the company's counterclaims for violations of the Deceptive Trade Practices and Consumer Protection Act (DTPA), breach of fiduciary duty, breach of contract, and fraud. We affirm.
Tex. Bus. Com. Code Ann. § 17.41-.854 (Vernon 2002 Supp. 2005).
Factual Background
Haden and his predecessor company had an appeal pending to the United States Court of Appeals for the Fifth Federal Circuit (the Fifth Circuit) from an adverse judgment rendered in the United States District Court for the Southern District of Texas, Houston Division. That controversy involved a commercial landlord-tenant dispute and resulted in an adverse judgment that not only assessed liability, but also eliminated the company's counterclaims. Trial counsel who represented the company in the federal case had prepared a preliminary draft of an appellate brief when Sacks and Haden discussed the merits of hiring independent appellate counsel for the appeal instead of relying on trial counsel. As a result of the conversation, the company hired Sacks and his law firm for the appeal. Sacks is board certified in civil appellate law by the Texas Board of Legal Specialization.
The parties began their working relationship through a written engagement letter sent from the law firm and dated August 4, 1997. The letter, in its entirety, states as follows:
I am honored to represent you with regard to the above-referenced matter. At this point, you have requested that I assist with the writing of the Appellant's Brief and any reply. If oral arguments are granted by the Fifth Circuit, a decision will have to be made on who should argue the case.
My normal rate is $300.00 per hour, but my rate for this particular matter will be $200.00 per hour. The other lawyers in my firm range from $150.00 to $200.00 per hour, and paralegals range from $50.00 to $100.00 per hour. You are responsible for all costs and expenses in the case as incurred. These expenses include, but are not limited to, copies; binding; fax transmissions; travel; lodging; parking; etc.
Please submit a $10,000 retainer to be applied to fees and expenses.
Please sign in the space provided below and return the original to my office as soon as possible.
Thank you for your cooperation and attention.
Sacks's signature appears at the close of the letter. Below Sacks's signature is the statement, "Your signature below indicates acceptance of the terms of this fee agreement." The face of this letter shows that, on endorsing it, individually and as president of the company on August 21, 1997 and returning it to the law firm, Haden had altered the original $10,000 amount proposed by striking through that amount, superscripting the amount of $5,000 over the original typewritten numerals in handwriting, and adding his initials beside that change.
In addition to endorsing the law firm's letter, Haden, again individually and on behalf of the company, forwarded a check for the $5,000 retainer by an August 21, 1997 letter, which stated the following:
Pursuant to our telephone conversation, enclosed herewith is a check in the amount of five thousand dollars ($5,000) to be applied to fees and expenses in assisting with the writing of the Appellants' Brief and reply. Also enclosed is an executed copy of your August 4, 1997 letter indicating that I have acknowledged acceptance of your fee agreement on behalf of Haden Company and myself, except that the initial retainer amount has been reduced to $5,000 per our agreement. Thank you for your assistance in this matter. I look forward to reading your appellant [sic] brief.
The law firm filed the 48-page brief with the Fifth Circuit on September 10, 1997. The brief sought a remand on the merits and a new trial for Haden's and the company's counterclaims.
On September 15, 1997, the law firm finalized its invoice for work on the brief at a total due of $37,259.71. The invoice reflected 28 hours' work by Sacks, 161.75 hours' work by an associate, and 37 hours' work by a paralegal, as well as expenses and disbursements. On the same day, Sacks wrote to Haden concerning the brief and forwarded the invoice. Concerning the brief and the invoice, Sacks's letter states,
I hope you are happy with the Brief. There is an enormous amount of blood, sweat, and tears that went into it. I think it gives us the best possible chance of getting your case turned around.
In that regard, given the state of the record that we were eventually able to retrieve from the Court, putting together winning arguments took considerable [sic] more time than I anticipated after giving the cursory review of the initial documents. I have attached our bill for service rendered and expenses incurred through the completion of the Brief.
We are committed to excellence and will generally spend whatever time is necessary to develop a winning brief given the state of the record. Sometimes that gets a little more expensive than anticipated.
If you can take care of this bill within the next thirty (30) days, I will agree to do the work we have done so far for a flat fee of $30,000. With your $5,000, the balance due would be $25,000.
On November 24, 1997, an associate of the law firm sent a letter to Haden, along with a copy of the opponent's appellee's brief. The letter stated, as follows:
Please find enclosed for your review a copy of the Brief of Appellee. A reply brief must be filed no later than Tuesday, December 2, 1997. If you are interested in having our firm submit a reply brief, you must contact me as soon as possible; otherwise, I will presume you do not wish to submit a reply brief.
I look forward to hearing from you.
The law firm filed the reply brief on December 4, 1997.
On December 17, 1997, the law firm sent an invoice reflecting an outstanding debt of $32,259.71 for the initial brief. The total was the amount due after the $5,000 retainer was credited against the original debt of $37,259.71. That invoice also included an additional $3,045 fee for work done by the law firm to prepare the reply brief. The total outstanding balance shown due on that invoice was $35,304.71. The company paid $5,000 to the law firm by a check dated December 31, 1997, which the law firm deposited in its account on January 13, 1998. On March 17, 1998, when only the $5,000 retainer and the additional $5,000 had been paid, and the outstanding balance due was $30,314.38, Sacks sent a letter to Haden. The complete text of the letter follows:
Dear Charles:
In November you told me that you were going to start paying $5,000.00 a month. I did receive December's payment sometime in January, but I have received nothing for January, February, or March. A few weeks ago when we spoke, you reassured me that you were going to resume paying on this account. I had the impression that the first payment would be within a few days, but nothing has been received. I have tried to work with you over the last seven months or so, but it does not appear that any consistent effort is being made to pay this bill.
If you really do not intend to pay for my services, please let me know, and we can deal with that accordingly. Otherwise, I am interested in hearing your plan for payment. It needs to be some firm consistent schedule that pays this off in a reasonably short period of time. In any event, prior to oral arguments before the Fifth Circuit.
Please let me know how you wish to proceed.
On September 9, 1998, the Fifth Circuit issued an 18-page, unpublished opinion in Haden's and the predecessor company's appeal. The disposition affirmed the adverse judgment of $66,363.03 that had been rendered as a matter of law against Haden and the predecessor company and, in addition, granted them partial favorable relief by vacating dismissal of their promissory-estoppel counterclaim and remanding those claims for trial.
Eleven months later, on August 2, 1999, Sacks sent the following demand letter, by certified mail, return receipt requested, to Haden and the company:
Dear Charles:
As you are aware, your account with my firm is over nineteen (19) months past due, with a current outstanding balance of $30,314.38. Please send me, at the [letterhead] address, the full amount due and unpaid by cashier's check or money order. Your cashier's check or money order should be made payable to David J. Sacks, P.C.
If I have not received payment from you within thirty (30) days after your receipt of this letter, I will take all legal actions necessary to collect this debt. The lawsuit will seek court costs, legal interest and attorney's fees in addition to the amount of the debt.
Continuing correspondence between the parties proved unproductive in resolving their differences.
Procedural Background
The law firm's live pleadings asserted claims for (1) "suit on sworn account" by claiming that the company accepted the services and became bound to pay the law firm on an open account, see Tex. R. Civ. P. 185 (authorizing evidence of open account for "personal services rendered" (among other claims) to serve as "prima facie evidence of amount due, if supported by proper affidavit stating that claim is "just and true," due, and that "all just and lawful offsets, payments, and credits have been allowed."), (2) breach of contract, (3) quantum meruit, and (4) DTPA violations for counterclaims later filed against the law firm. The company answered the petition and asserted its own counterclaims against the law firm for fraud, DTPA violations, unconscionable course of action, breach of contract, and breach of fiduciary duty.
The law firm sought traditional and no-evidence summary judgment on the company's counterclaims. The company's response to the motion for summary judgment included a challenge to the affidavit by Sacks that had been attached to the law firm's motion. The company also offered Haden's affidavit and other evidentiary exhibits. In addition to responding on the merits, the law firm's reply included an amended, extensively detailed affidavit executed by Sacks.
On May 11, 2000, the trial court rendered a take-nothing summary judgment in favor of the law firm on the company's counterclaims for unconscionable action, fraud, and violations of the DTPA. On June 5, 2000, the trial court rendered a take-nothing summary judgment on the company's counterclaims for breach of fiduciary duty and breach of contract.
Haden and the company then sought to recuse the trial court, but did not succeed. This ruling has not been challenged on appeal.
The law firm also sought traditional and no-evidence summary judgment for its breach of contract claim by asserting its right to judgment as a matter of law for unpaid attorney's fees amounting to $30,314.38, pursuant to section 38.001 of the Civil Practice and Remedies Code. See Tex. Civ. Prac. Rem. Code Ann. § 38.001-.006 (Vernon 1997). The law firm's motion asserted that its contract with the company was valid as a matter of law, that the law firm had performed under the contract, that the company had breached the contract, and that the law firm suffered damages as a result of the breach. The contract, according to the law firm, was that "Haden agreed to pay the Lawfirm [sic] on an hourly basis for services rendered" and that "Haden was responsible for all costs and expenses in the case as incurred."
The law firm attached the following exhibits to this motion for summary judgment: correspondence dated August 4, 1997, August 20, 1997, November 24, 1997, March 17, 1998, and August 2, 1999, as described more fully above; Sacks's affidavit; copies of checks from Haden, for $5,000, dated August 21, 1997, and for $5,000, dated December 31, 1997; a copy of the appellant's brief and reply brief prepared by the law firm for the company's appeal to the Fifth Circuit, with that court's resulting order; and invoices for the billing by the law firm. The summary judgment motion pertained only to the law firm's breach of contract claim and did not assert any contentions regarding the law firm's alternative claims for "suit on sworn account," quantum meruit, or alleged DTPA violations for bringing DTPA counterclaims against the law firm.
Haden's and the company's response to the law firm's motion for summary judgment disputed that any agreement existed for the law firm to prepare a brief for the appeal to the Fifth Circuit because, according to Haden, his trial counsel had already prepared a brief, and Haden had hired the law firm merely to review trial counsel's draft. The response also asserted that Haden had agreed only to a flat, maximum fee of up to $10,000 for the law firm's services and also asserted several affirmative defenses.
The company's response included the following attachments: (1) Haden's affidavit, in which he stated that he had hired Sacks to "put an edge on my trial lawyer's brief" and therefore "assist in the preparation" of the brief for a fee that "could be as high as $10,000"; (2) an excerpt from Sacks's oral deposition testimony, showing that Sacks stated that the parties had not agreed to a "specified number" for the work done by the law firm and that Sacks had given Haden a range of from $15,000 to $50,000 as a possible fee; (3) a letter from Haden to Sacks dated August 27, 1999; (4) a letter from Sacks to Haden dated September 1, 1999; and (5) an affidavit disputing the reasonableness of the attorney's fees sought by the law firm for the breach of contract claim.
The law firm replied to the company's response to its motion for summary judgment by stating that the agreement was not, as a matter of law, ambiguous and, therefore, that Haden's affidavit testimony concerning an agreement to a flat fee that was capped at $10,000 was inadmissible parol evidence. The law firm also asserted that all of the company's affirmative defenses to the law firm's breach of contract claim necessarily failed because the company retained and accepted the benefits of the contract and had also ratified the contract. According to the law firm, after Haden received all of the invoices relating to the services performed by the law firm, which showed the type of legal services and the amount billed for the legal services by the law firm, Haden requested that the law firm prepare a reply brief and made a $5,000 payment. The law firm contends, therefore, that Haden ratified the contract by making a single payment on the final invoice and by requesting that a reply brief be prepared by the law firm after receiving the invoice for the work performed on the initial appellant's brief.
The trial court rendered an interlocutory summary judgment in favor of the law firm on its breach-of-contract claims for $30,314.38, plus interest. The trial court also ruled that the law firm was entitled to attorney's fees expended in pursuing the contract claim, but reserved ruling on the amount of reasonable attorney's fees.
Two months later, the law firm sought a traditional summary judgment against the company on the reasonableness of the attorney's fees incurred in seeking the summary judgment on its breach-of-contract claim. The trial court then rendered a final judgment incorporating its earlier ruling on the contract and awarded the law firm an additional $75,887.50 for attorney's fees incurred in pursuing the contract claim, with contingent fees totaling $45,000 for appeals to an intermediate appellate court and for seeking a petition for review in the supreme court. The first paragraph of the judgment recites that Haden and the company filed no response to the law firm's motion concerning the attorney's fees for pursuit of the contract claim. Haden and the company challenge this judgment in Cause No. 01-01-00200-CV, which also includes the trial court's orders granting summary judgment in favor of the law firm on the company's counterclaims.
Haden and the company did not supersede the judgment challenged in Cause No. 01-01-00200-CV, which prompted postjudgment collection and enforcement procedures. These culminated in the law firm's obtaining turnover relief, for which the firm sought attorney's fees pursuant to section 31.002(e) of the Civil Practice and Remedies Code. Tex. Civ. Prac. Rem. Code Ann. § 31.002(e) (Vernon Supp. 2005). The law firm again prevailed and recovered a judgment for $90,000 in attorney's fees. Haden and the company challenge that judgment in Cause No. 01-03-00025-CV.
Standard of Review
We review summary judgments de novo, Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005), and follow the usual standards that apply when a summary judgment order grants relief without specifying grounds. See Dow Chem. Co. v. Francis, 46 S.W.3d 237, 242 (Tex. 2001); Stephens v. Dolcefino, 126 S.W.3d 120, 125-26 (Tex.App.-Houston [1st Dist.] 2003, pet. denied). We consider all summary judgment grounds on which the trial court rules and that the appealing party preserves for appellate review and are necessary for final disposition of the appeal. See Cincinnati Life Ins. Co. v. Cates, 927 S.W.2d 623, 626 (Tex. 1996). The law firm moved for summary judgment under two authorizing rules, rule 166a(c) ("traditional" summary judgment) and 166a(i) ("no-evidence" summary judgment). See Tex. R. Civ. P. 166a(c), (i). For its breach of contract claims, the law firm moved for traditional summary judgment under rule 166a(c). For Haden's and the company's counterclaims, the law firm sought both a traditional summary judgment and a no-evidence summary judgment under rule 166a(i). We apply the standard of review appropriate for each type of summary judgment. See Flameout Design Fabrication, Inc. v. Pennzoil Caspian Corp., 994 S.W.2d 830, 834 (Tex.App.-Houston [1st Dist.] 1999, no pet.) (166a(i) no evidence standard); Science Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 911 (Tex. 1997) (166a(c) traditional standard).
Breach of Contract
Haden's and the company's second issue challenges the traditional summary judgment rendered in favor of the law firm on its claim that the company breached its contract with the law firm. The law firm defends the trial court's ruling by claiming that it established its right to prevail as a matter of law for unpaid legal fees and expenses in the amount of $30,314.38, and that the company offered no properly admissible summary judgment evidence to dispute that right. We agree.
The law firm moved for summary judgment based on its August 4, 1997 engagement letter and on Haden's and the company's having endorsed the letter and supplied the $5,000 retainer required by that letter. The law firm argued that these documents established that Haden and the company had agreed to pay the law firm on an hourly basis for services rendered in connection with the Fifth Circuit appeal and that (1) the law firm had a valid contract with the company, (2) the law firm had performed under the contract, and (3) the company breached the contract, which resulted in damages. The law firm provided documentary evidence showing that the firm was paid an agreed $5,000 retainer, completed the work, sent an invoice, filed a reply brief, sent another invoice, received another $5,000 toward the unpaid balance, formally demanded the outstanding balance of $30,314.38, and filed suit when the balance remained unpaid.
Haden and the company challenged the law firm's right to summary judgment based in part on an affidavit by Haden. In the affidavit, Haden stated that, in entering into the agreement by endorsing the law firm's August 4, 1997 engagement letter on August 21, 1997 and paying the $5,000 retainer fee, he relied on Sacks's "representation that the work would cost as much as $10,000." The law firm rejected that assertion as untenable, in part by emphasizing that Haden and the company had already received the firm's initial invoice for $37,259.71 before authorizing the law firm to file a reply brief in the Fifth Circuit case.
In response, Haden averred that he had never agreed to pay more than $10,000 for the law firm's work. In addition, Haden and the company offered evidentiary exhibits that included the correspondence by which the law firm forwarded its initial, $37,259.71 invoice for the work on Haden's and the predecessor company's principal brief. In that correspondence, Sacks acknowledged that the work on the brief was "a little more expensive than anticipated" because "putting together winning arguments took considerable [sic] more time than I anticipated after giving the cursory review of the initial documents." In the same letter, Sacks offered to reduce the outstanding balance by approximately $5,000 if the invoice were paid in full within 30 days.
The law firm responded by contending that Haden's and the company's summary judgment evidence, in particular, Haden's affidavit, contravened the parol evidence rule and was therefore inadmissible to vary the terms of the August 4, 1997 written contract, which had been accepted in full on August 21, 1997, on payment of the $5,000 retainer fee. The law firm brings the same challenge in response to Haden's and the company's second issue on appeal.
A. Whether the Parties' Minds Met
Parties form a binding contract when the following elements are present: (1) an offer, (2) an acceptance in strict compliance with the terms of the offer, (3) a meeting of the minds, (4) each party's consent to the terms, and (5) execution and delivery of the contract with the intent that it be mutual and binding. Am. Nat'l Ins. Co. v. Warnock, 114 S.W.2d 1161, 1164 (Tex. 1938); Prime Prods., Inc. v. S.S.I. Plastics, Inc., 97 S.W.3d 631, 636 (Tex.App.-Houston [1st Dist.] 2002, pet. denied).
To be enforceable, the contract must be sufficiently certain to enable a court to determine the rights and responsibilities of the respective parties. T.O. Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex. 1992); America's Favorite Chicken v. Samaras, 929 S.W.2d 617, 622 (Tex.App.-San Antonio 1996, writ denied). Under settled principles of contract interpretation, we construe a contract as a matter of law to determine whether it can be enforced as written without resorting to parol evidence. J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex. 2003). Our primary concern is to ascertain the intent of the parties, as expressed in the contract instrument. Id. (citing R.P. Enters. v. LaGuarta, Gavrel Kirk, Inc., 596 S.W.2d 517, 518 (Tex. 1980)).
B. The Law of Parol Evidence
The law firm contends that Haden and the company could not assert their flat, or maximum $10,000 fee theory because that theory altered the acknowledged terms of the law firm's engagement-letter contract, in violation of the parol evidence rule.
The parol evidence rule is a rule of substantive law. Hubacek v. Ennis State Bank, 317 S.W.2d 30, 31 (Tex. 1958); Gonzalez v. United Bd. of Carpenters Joiners, 93 S.W.3d 208, 211 (Tex.App.-Houston [14th Dist.] 2002, no pet.); Piper, Stiles Ladd v. Fid. Dep. Co., 435 S.W.2d 934, 940 (Tex.Civ.App.-Houston [1st Dist.] 1968, writ ref'd n.r.e.). When parties reduce an agreement to writing, the law of parol evidence presumes, in the absence of fraud, accident, or mistake, that any prior or contemporaneous oral or written agreements merged into the written agreement and, therefore, that any provisions not set out in the writing were either abandoned before execution of the agreement or, alternatively, were never made and are thus excluded from consideration in interpreting the written agreement. See Hubacek, 817 S.W.2d at 31; Smith v. Smith, 794 S.W.2d 823, 827 (Tex.App.-Dallas 1990, no writ); Muhm v. Davies, 580 S.W.2d 98, 101 (Tex.Civ.App.-Houston [1st Dist.] 1979, writ ref'd n.r.e.).
We review parol evidence questions de novo, as questions of law. City of Pasadena v. Gennedy, 125 S.W.3d 687, 691 (Tex.App.-Houston [1st Dist.] 2003, pet. denied). Evidence that violates the parol evidence rule has no legal effect and "merely constitutes proof of facts that are immaterial and inoperative." Piper, Stiles Ladd, 435 S.W.2d at 940. Because all prior negotiations and agreements are presumed merged into the final agreement, parol evidence is not admissible to vary, alter, or supplement the terms of an otherwise unambiguous contract except to show (1) that the contract was induced by fraud, accident, or mistake, (2) that an agreement was to become effective only upon certain contingencies, or (3) in the case of ambiguity, that the parties' true intentions differ from those expressed in the agreement. See Messer v. Johnson, 422 S.W.2d 908, 912 (Tex. 1968); Gonzalez, 93 S.W.3d at 211; Litton v. Hanley, 823 S.W.2d 428, 430 (Tex.App.-Houston [1st Dist.] 1993, no writ).
Parol evidence may also be admissible, under an additional exception, to show collateral, contemporaneous agreements that are consistent with the underlying agreement to be construed. See Hubacek, 317 S.W.2d at 31; see also Transit Enter., Inc. v. Addicks Tire Auto Supply, Inc., 725 S.W.2d 459, 461 (Tex.App.-Houston [1st Dist.] 1987, no writ) (applying exception for collateral, consistent, contemporaneous agreements); Sherrod v. Bailey, 580 S.W.2d 24, 29 (Tex.Civ.App.-Houston [1st Dist.] 1979, writ ref'd n.r.e.) (same). But, this latter exception, on which Haden and the company rely in this appeal, does not permit parol evidence that varies or contradicts either the express terms or the implied terms of the written agreement. Hubacek, 317 S.W.2d at 31; Loe v. Murphy, 611 S.W.2d 449, 451-52 (Tex.Civ.App.-Dallas 1980, writ ref'd n.r.e.); NHA, Inc. v. Jones, 500 S.W.2d 940, 944-45 (Tex.Civ.App.-Fort Worth 1973, writ ref'd n.r.e.) (both citing Hubacek).
Haden and the company rely on the "collateral, consistent terms" exception to argue that Haden's affidavit, which describes a separate, unwritten agreement with the law firm for a flat, maximum fee of $10,000, is admissible because Haden refers to "conditions . . . [that] are collateral to the terms of the engagement letter signed by the parties."
The terms of the August 4, 1997 engagement-letter, which Haden endorsed on August 21, 1997, both personally and on behalf of the company, show that the parties agreed to the following: (1) the law firm would represent Haden and the company in the appeal to the Fifth Circuit, (2) Haden, individually and for the company, acknowledged the law firm's hourly rates, as well as responsibility for all disbursed expenses, and (3) Haden would pay a retainer fee of $5,000, rather than $10,000. The latter change was added by Haden's striking through the $10,000 retainer fee proposed in the law firm's letter, replacing that amount with a handwritten "5,000" directly above the stricken-through numbers, and initialing the change. Haden and the company proposed no further changes to the agreement.
These terms, as endorsed by Haden, thus contemplate payment of legal fees at specified hourly rates, depending on whether Sacks, "other lawyers," or paralegals did the work on the Fifth Circuit brief. By expressly reciting hourly rates, the engagement letter contemplates hourly billing. The terms set no budget or maximum fee amount. Although the law firm initially proposed an initial payment of $10,000, that amount was to serve as a retainer fee (later changed, by agreement, to $5,000) and not the flat, maximum $10,000 fee to which Haden refers in his affidavit.
In endorsing the engagement letter, moreover, both individually and on behalf of the company, Haden proposed no limitations or changes except to reduce the proposed $10,000 retainer fee to $5,000. Similarly, Haden's and the company's August 21, 1997 correspondence forwarding the $5,000 retainer fee and endorsing the engagement letter proposed no additional limitations or terms.
On September 15, 1997, the law firm forwarded a letter and accompanying invoice in the amount of $37,259.71 for the work on the Fifth Circuit brief. In this letter, the law firm proposed a change in the fee agreement, specifically, to reduce the $37,259.71 owed for the brief, based on hourly fee calculations plus expenses, as contemplated by the initial fee agreement, to "a flat fee of $30,000" if Haden were to pay $25,000 ($30,000 reduced by the previously paid $5,000 retainer) within 30 days. Yet, the law firm's offer to alter the hourly billing to a flat, maximum fee of $30,000 produced no response by Haden and the company. That offer having thus been rejected, the terms of the initial engagement letter, as endorsed by Haden, remained unchanged.
The summary judgment record thus reflects an undisputed showing of an unaltered fee agreement contemplating hourly-based fees, despite two failed opportunities to object to or alter the hourly-billing terms of that agreement. Haden and the company nonetheless claimed, in response to the law firm's motion for summary judgment, and now contend on appeal, that the flat, or maximum, $10,000 fee agreement described in Haden's affidavit was "collateral to" and "not inconsistent with" the initial fee agreement and, therefore, does "not vary or contradict" the terms of the initial agreement.
To the contrary, Haden's affidavit testimony changes a basic premise of the fee agreement that he endorsed. An agreement to pay a maximum, flat fee of $10,000 differs materially from an agreement to pay fees billed on an hourly basis with no stated maximum and is, therefore, not consistent with the initial fee agreement. Rather, Haden's postagreement assertion that he and the law firm agreed to a flat, maximum fee of $10,000 is inconsistent with the initial fee agreement because the assertion adds material limitations that were not present in that agreement. Because Haden's affidavit assertion adds material terms that vary the hourly billed fees contemplated by the fee agreement that he endorsed, we hold that his affidavit testimony is inadmissible because it violates the parol evidence rule and, therefore, did not defeat the law firm's right to interlocutory summary judgment as a matter of law on its claim for breach of contract.
We overrule Haden's and the company's second issue.
Challenge to Section 38.001(8) Attorney's Fees
Haden's and the company's first issue challenges the final summary judgment rendered in this cause, which awarded the law firm $120,887.50 for attorney's fees and costs and includes $75,887.50 awarded in connection with pursuing the law firm's claim for breach of contract. Haden and the company challenge the fees awarded to the law firm in pursuing the firm's claim for breach of contract, on the grounds that (1) the law firm's motion did not segregate between recoverable and nonrecoverable grounds, (2) Sacks's affidavit in support of the fee recovery is conclusory and lacks supporting evidence, and (3) the "attendant circumstances" of awarding attorney's fees in an amount that is four times the amount in controversy creates a fact issue per se, despite Haden's and the company's failure to respond to the motion for summary judgment.
Haden's and the company's issue does not directly challenge the $45,000 in fees awarded contingently in the event of an appeal.
Having prevailed and recovered damages on its claim for breach of contract by the interlocutory summary judgment rendered in its favor, the law firm was entitled to recover reasonable attorney's fees and costs pursuant to chapter 38 of the Civil Practice and Remedies Code. See Tex. Civ. Prac. Rem. Code Ann. § 38.001(8); Green Int'l, Inc. v. Solis, 951 S.W.2d 384, 390 (Tex. 1997) (holding that party must prevail and recover damages to be entitled to attorney's fees under section 38.001(8)).
The law firm offered the following affidavit by Sacks, its principal, in support of its motion for traditional summary judgment for attorney's fees, as authorized by section 38.001(8) of chapter 38:
My name is David J. Sacks, I am over the age of twenty-one (21) years, and am of sound mind and fully competent to make this affidavit. I am the President of David J. Sacks, P.C., d/b/a Sacks Associates ("the Lawfirm"), I am also the custodian of records for David J. Sacks, P.C., d/b/a Sacks Associates, and I have personal knowledge of all matters stated herein whose facts are true and correct.
1.I am an attorney licensed to practice law in the State of Texas and have been since 1985. I handle both the trial and appellate aspects of civil litigation type cases. I am Board Certified in Civil Appellate law by the Texas Board of Legal Specialization. I am familiar with the fees charged for cases of this type, in Houston, Harris County, Texas. Based upon:
a. the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;
b. the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;
c. the fee customarily charged in Houston, Harris County, Texas for similar legal services;
d. the amount involved and the results obtained;
e. the time limitations imposed by the client or by the circumstances;
f. the nature and length of the professional relationship with the client; and
g. the experience, reputation, and ability of the lawyers performing the services, the attorneys' fees and expenses of $75,887.50 incurred in this case are reasonable and necessary for cases of this type in Houston, Harris County, Texas. The reasonable and necessary fees in this case include filing the original and amended petitions, conducting discovery, attending depositions, filing three motions for summary judgment and replies in support thereof, preparing for hearing on three motions for summary judgment, responding and replying to a motion to recuse, and preparing for and attending an evidentiary proceeding on the motion to recuse.
2. In the event of an appeal to the court of appeals, a further sum of $25,000 would be reasonable and necessary attorneys' fees. In the event of a further appeal to the Supreme Court, a further sum of $15,000 would be reasonable and necessary attorneys' fee. In the event of oral arguments to the Supreme Court, a further sum of $5,000 would be reasonable and necessary attorneys' fees.
Further affiant sayeth not.
Haden and the company did not respond or offer any controverting evidence in opposition to the law firm's motion for summary judgment.
A. Ramifications of Lack of Response to Sacks's Motion
Although Haden and the company failed to respond to the law firm's motion for traditional summary judgment seeking attorney's fees, that failure does not preclude a challenge to the trial court's summary judgment ruling or a challenge on the grounds that conclusory statements lacked evidentiary support. The failure to respond to the law firm's motion for traditional summary judgment seeking attorney's fees, however, has consequences concerning the recovery of fees under Tex. Civ. Prac. Rem. Code Ann. §§ 38.001(8).
1. Challenges That May Be Asserted Despite Failure to Respond
a. In General
Because the party moving for traditional summary judgment, here the law firm, carries the burden to establish that no material fact issue exists and that it is entitled to judgment as a matter of law, "the nonmovant has no burden to respond to a summary judgment motion unless the movant conclusively establishes its cause of action or defense." M.D. Anderson Hosp. Tumor Inst. v. Willrich, 28 S.W.3d 22, 23 (Tex. 2000); see also Rhône-Poulenc, Inc. v. Steel, 997 S.W.2d 217, 223 (Tex. 1999) ("The trial court may not grant summary judgment by default" for failure to file a response to a motion for summary judgment "when movant's summary judgment proof is legally insufficient."); Rizkallah v. Conner, 952 S.W.2d 580, 582-83 (Tex.App.-Houston [1st Dist.] 1997, no pet.) (holding that lack of response by nonmovant "does not supply by default the summary judgment proof necessary to establish the movant's right to summary judgment" and that nonmovant "is limited to arguing the legal sufficiency of the grounds presented by movant") (citing McConnell v. Southside Sch. Dist., 858 S.W.2d 337, 343 (Tex. 1993)); Jones v. Legal Copy, Inc., 846 S.W.2d 922, 924 (Tex.App.-Houston [1st Dist.] 1993, no writ) (holding that party who filed no response to motion for summary judgment limited to legal sufficiency challenge). Because a motion for summary judgment must stand on its own merits, the nonmovant may argue on appeal that the movant's summary judgment proof is insufficient as a matter of law, even if the nonmovant filed no response to the motion. See Willrich, 28 S.W.3d at 23.
Haden and the company may properly assert in this appeal, therefore, that the law firm's motion for summary judgment is legally insufficient as a matter of law to warrant summary judgment, despite their failure to respond to the law firm's motion seeking attorney's fees. But, because "issues not expressly presented to the trial court by written motion, answer, or other response" may not "be considered on appeal as grounds for reversal," Tex. R. Civ. P. 166a(c), Haden's and the company's challenges are necessarily limited to challenges to the legal sufficiency of the law firm's motion for traditional summary judgment to support judgment as a matter of law. See Jones, 846 S.W.2d at 924 (citing City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 676 (Tex. 1979)).
b. "Legal Conclusion" Challenge
Haden and the company challenge the attorney's fee award by asserting that Sacks's affidavit is conclusory and lacks supporting evidence. A conclusory statement is objectionable because it lacks supporting, underlying facts. Anderson v. Snider, 808 S.W.2d 54, 55 (Tex. 1991); Rizkallah, 952 S.W.2d at 587. Statements that are nothing more than legal conclusions are not sufficient to support a summary judgment as a matter of law because they "reduce to a legal issue a matter that should be resolved by relying on facts," id., and thus constitute "merely a sworn denial" of the nonmovant's claim. Rizkallah, 952 S.W.2d at 587 (citing Anderson v. Snider, 808 S.W.2d at 55); see also Burrow v. Arce, 997 S.W.2d 229, 235-36 (Tex. 1999) (rejecting affidavit by counsel as "nothing more than a sworn denial of plaintiff's claims" that "could not support summary judgment"; further stating that an attorney "cannot simply say, "Take my word for it; I know[.]").
Haden's and the company's contention is reviewable, despite their lack of response to the law firm's motion for traditional summary judgment, because their contention, that Sacks's affidavit testimony is conclusory and lacks supporting evidence, raises a defect of substance that they did not waive by not responding to Sacks's motion. See Rizkallah, 952 S.W.2d at 587.
For these reasons, we may review Haden's and the company's challenge to Sacks's affidavit on the grounds that it comprises mere legal conclusions.
2. Consequences of Failure to Respond to Requested Fees
Consequences follow from Haden's and the company's lack of response to Sacks's motion for traditional summary judgment seeking attorney's fees pursuant to chapter 38 of the Civil Practice and Remedies Code. To warrant recovery under section 38.001 of the Civil Practice and Remedies Code, attorney's fees must be "reasonable." See Tex. Civ. Prac. Rem. Code Ann. § 38.001. The reasonableness of an attorney's fee award generally presents a question of fact. See Ragsdale v. Progressive Voters League, 801 S.W.2d 880, 881-82 (Tex. 1990); Great Am. Reserve Ins. Co. v. Britton, 406 S.W.2d 901, 907 (Tex. 1966); Tesoro Petroleum Corp. v. Coastal Ref. Marketing, Inc., 754 S.W.2d 764, 767 (Tex.App.-Houston [1st Dist.] 1988, writ denied). An award of attorney's fees must be supported by evidence that the fees were both reasonable and necessary. See Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1, 10 (Tex. 1991). A trial court determines the reasonableness of an attorney's fee award by considering the factors enumerated in Arthur Andersen Co. v. Perry Equip. Corp., 945 S.W.2d 812, 818 (Tex. 1997) (quoting Tex. Disciplinary R. Prof. Conduct 1.04(b), reprinted in Tex. Gov't Code Ann. tit. 2, subtit. G app. (State Bar Rules, art. X, § 9) (listing "factors that may be considered in determining the reasonableness" of a fee, but without excluding other relevant factors)). See C.M. Asfahl Agency v. Tensor, Inc., 135 S.W.3d 768, 801-02 (Tex.App.-Houston [1st Dist.] 2004, no pet.) (quoting Andersen factors).
Section 33.003 of the Civil Practice and Remedies Code creates a statutory presumption that the "usual and customary attorney's fees" are reasonable for a chapter 38 claim. See Tex. Civ. Prac. Rem. Code Ann. § 38.003. Although the presumption, once triggered, is rebuttable, see id., it remains unrebutted when, as here, there has been no challenge to the proof provided by the summary judgment movant. See Gen. Elec. Supply Co. v. Gulf Electroquip, Inc., 857 S.W.2d 591, 601-02 (Tex.App.-Houston [1st Dist.] 1993, no writ) (noting that section 38.003 presumption does not apply unless reasonableness of fees uncontroverted; further holding that controverting affidavit created fact issue on reasonableness of fees, which precluded summary judgment). It is undisputed that the trial court granted the law firm's request for attorney's fees pursuant to Chapter 38. Accordingly, Haden's and the company's challenges to the award must be reviewed within the statutory framework of chapter 38, specifically, its presumption of reasonableness. Tex. Civ. Prac. Rem. Code Ann. §§ 38.003 (Vernon 1997).
Well-settled law recognizes that the affidavit of the attorney representing a claimant constitutes expert testimony that will support an award of attorney's fees in a summary judgment proceeding. See Tesoro Petroleum Corp., 754 S.W.2d at 767. Although Sacks is an interested party in this lawsuit, that status does not defeat his affidavit. See Tex. R. Civ. P. 166a(c) ("A summary judgment may be based on uncontroverted testimonial evidence of an interested witness, or of an expert witness . . . if the evidence is clear, positive, direct, otherwise credible and free from contradictions and inconsistencies, and could have been readily controverted.") (emphasis added); see Burrow, 997 S.W.2d at 235.
Within the framework of these principles, we turn to Haden's and the company's challenges to the trial court's rendering summary judgment in favor of the law firm for $120,887.50 in attorney's fees and costs.
B. Legal Sufficiency of Sacks's Affidavit to Support Fee Recovery
As outlined above, we may properly address Haden's and the company's challenges to the sufficiency of Sacks's affidavit to support the attorney's fees awarded to the law firm, including the contention that the affidavit comprises mere legal conclusions, within the substantive parameters of sections 38.003 and 38.005 of the Civil Practice and Remedies Code. See Tex. Civ. Prac. Rem. Code Ann. §§ 38.003, 38.005.
1. Contents of Affidavit
The affidavit demonstrates, on its face, Sacks's competency to swear to the facts stated in the affidavit and his capacity to state that he had personal knowledge of those facts. In addition to his role as president and custodian of the records of the law firm and as counsel in this litigation, Sacks described his qualifications as counsel, which included his board certification in civil appellate law by the Texas Board of Legal Specialization. We hold that these recitals establish compliance with the requirements of rule 166a(f). See Tex. R. Civ. P. 166a(f) (stating formal requirements for summary judgment affidavits).
In the affidavit, Sacks described the work encompassed by the fees sought, which included drafting original and amended pleadings, conducting discovery, filing motions, responding to motions, and preparing for and appearing in court. These facts are not "generalities," as Haden and the company contend, but "clear, positive, and direct, otherwise credible" and are neither internally inconsistent nor contain contradictions. See Tex. R. Civ. P. 166a(c). Although Haden and the company did not controvert the affidavit, all facts stated in it "could have been readily controverted." See id. As such, Sacks's affidavit meets the standards for summary judgment evidence stated in rule 166a(c). See Tex. R. Civ. P. 166a(c).
In addition, Sacks's affidavit specifies the factors that determined the basis for his statement that $75,887.50 was a "reasonable and necessary" amount for fees and expenses. Sacks tracked seven of the eight recognized, non-exclusive factors that courts properly consider in determining whether a fee is reasonable. See Arthur Andersen Co., 945 S.W.2d at 818 (quoting Tex. Disciplinary R. Prof. Conduct 1.04(b), reprinted in Tex. Gov't Code Ann. tit. 2, subtit. G app. (State Bar Rules, art. X, § 9) (listing "factors that may be considered in determining the reasonableness of a fee include, but not to the exclusion of other relevant factors")) (referred to hereinafter as the Andersen v. Perry factors of rule 1.04(b) of the State Bar Rules); see also Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1, 10 (Tex. 1991) (stating that other factors may properly be considered in awarding attorney's fees provided factors demonstrate that fees are "reasonable and necessary"); C.M. Asfahl Agency, 135 S.W.3d at 802 (quoting Arthur Andersen Co., 945 S.W.2d at 818).
Rule 1.04(a) prohibits illegal or unconscionable fees and states that a fee is unconscionable if "a competent lawyer could not form a reasonable belief that the fee is reasonable." Tex. Disciplinary R. Prof. Conduct 1.04(a), reprinted in Tex. Gov't Code Ann. tit. 2, subtit. G app. (State Bar Rules, art. X, § 9). The list of non-exclusive suggested factors in rule 1.04(b) includes:
(1) the time and labor required, the novelty and difficulty of the questions involved, and the skill required to perform the legal service properly;
(2) the likelihood . . . that the acceptance of the particular employment will preclude other employment by the lawyer;
(3) the fee customarily charged in the locality for similar legal services;
(4) the amount involved and the results obtained;
(5) the time limitations imposed by the client or by the circumstances;
(6) the nature and length of the professional relationship with the client;
(7) the experience, reputation, and ability of the lawyer or lawyers performing the services; and
(8) whether the fee is fixed or contingent on results obtained or uncertainty of collection before the legal services have been rendered.
Arthur Andersen Co. v. Perry Equip. Corp., 945 S.W.2d 812, 818 (Tex. 1997) (quoting Tex. Disciplinary R. Prof. Conduct 1.04, reprinted in Tex. Gov't Code Ann. tit. 2, subtit. G app. (State Bar Rules, art. X, § 9)).
Based on the facts stated in Sacks's affidavit, which complied with the evidentiary requirements of rule 166a(c) and which could have been readily controverted, but were not, and his reference to the well-settled factors on which he properly relied to demonstrate the reasonableness of the fees requested, we conclude that the affidavit constitutes legally competent evidence that the $75,887.50 sought by the law firm as attorney's fees was both reasonable and necessary. Because Haden and the company did not controvert Sacks's affidavit or otherwise dispute the law firm's evidence, the law firm was further entitled to the statutory presumption that the requested amount was both reasonable and necessary. See Tex. Civ. Prac. Rem. Code Ann. § 38.003; Gen. Elec. Supply Co., 857 S.W.2d at 601.
Haden and the company rely on Burrow and Anderson v. Snider to support their contention that Sacks's affidavit is incompetent summary judgment proof because it is conclusory and lacks evidentiary support. The specificity of Sacks's affidavit contrasts markedly with the affidavits offered by defense counsel in support of summary judgments in Burrow and Anderson, which the supreme court dismissed as mere sworn denials of the plaintiffs' legal-malpractice petitions and, for that reason, as incompetent legal conclusions. See Burrow, 997 S.W.2d at 235-36; Anderson, 808 S.W.2d at 55; see also Rizkallah, 952 S.W.2d at 587 (rejecting portions of summary judgment affidavit as legal conclusions). Moreover, neither Burrow nor Anderson construes provisions of chapter 38 or challenges an affidavit offered in support of a motion for summary judgment seeking attorney's fees pursuant to chapter 38. See Burrow, 997 S.W.2d at 234-38; Anderson, 808 S.W.2d at 55. Accordingly, the summary judgment evidence reviewed in those cases did not encompass, as the evidence here necessarily does, the statutory presumption of reasonableness. See Burrow, 997 S.W.2d at 234-38; Anderson, 808 S.W.2d at 55; Tex. Civ. Prac. Rem. Code Ann. § 38.003. 2. Challenge to Lack of Supporting Documentation
We also distinguish Rasmusson v. LBC PetrUnited, Inc., 124 S.W.3d 283 (Tex.App.-Houston [14th Dist.] 2003, pet. denied), on which Haden and the company relied in postsubmission briefing, and in which our sister court initially reversed a judgment that awarded a specific amount of costs on the grounds that the affidavit provided by counsel stated only conclusorily that "reasonable costs of $403.71 have been incurred . . .," but provided no other supporting evidence. Id. at 288; see also id. at 289 (affirming judgment upon voluntary remittitur of costs). In the case before us, the law firm did not request a specific award of costs in seeking summary judgment, Sacks's affidavit does not specify an amount of costs, and the final judgment does not award a specific amount of costs. Moreover, Rasmusson was not decided pursuant to chapter 38 of the Civil Practice and Remedies Code.
Haden and the company also challenge the sufficiency of Sacks's affidavit to warrant summary judgment, on the grounds that the law firm did not also provide supporting records such as billing records, depositions, interrogatories, admissions, affidavits of neutral, third-party attorneys, or other documentary evidentiary support. Haden and the company rely on Bakery Equip. Serv. Co. v. Aztec Equip. Co., 582 S.W.2d 870, 873 (Tex.Civ.App.-San Antonio 1979, no writ); Lindley v. Smith, 524 S.W.2d 520, 524 (Tex.Civ.App.-Corpus Christi 1975, no writ); and Stafford v. Brennan, 498 S.W.2d 703, 706 (Tex.Civ.App.-Corpus Christi 1973, no writ). We distinguish these cases because they predate the Andersen v. Perry factors of rule 1.04 of the State Bar Rules. Moreover, none of these cases considers chapter 38's presumption of reasonableness for unrebutted proof of reasonable fees. See Tex. Civ. Prac. Rem. Code Ann. § 38.003. Considering section 38.003 with the lack of response or controverting proof by Haden and the company, lack of additional, supporting documentation did not preclude the trial court from considering and relying on Sacks's affidavit as competent summary judgment evidence.
3. Excessiveness Challenge
Haden and the company contend that this Court "need consider nothing more than the amount sought" to conclude that the amount requested "creates, at best, a fact issue." As addressed above, Sacks's affidavit constitutes competent summary judgment evidence that could have been readily controverted, but was not. Having failed to controvert the law firm's evidence, Haden and the company cannot overcome the presumption of reasonableness of section 38.003. See Tex. Civ. Prac. Rem. Code Ann. § 38.003.
4. Failure to Segregate Fees
Despite their lack of response to the law firm's motion seeking traditional summary judgment for attorney's fees, and despite the statutory presumption of reasonableness stated in section 38.003, see id., Haden and the company challenge the summary judgment on the grounds that the law firm did not segregate between recoverable and nonrecoverable fees and that this alleged error mandates reversal. Haden and the company base their contention on references to proceedings and motions in Sacks's affidavit that they contend are not related to the law firm's claims for breach of contract, which eliminates any attorney's fee compensation under chapter 38.
Because attorney's fees are recoverable only for authorized claims, a party seeking attorney's fees must offer proof that segregates between recoverable and nonrecoverable claims. Solis, 951 S.W.2d at 389; Hruska v. First State Bank, 747 S.W.2d 783, 785 (Tex. 1988); C.M. Asfahl Agency, 135 S.W.3d at 801. Failure to segregate reasonably recoverable fees from nonrecoverable fees can result in rendition of a judgment that vacates attorney's fees or severance of the fee dispute and remanding that issue for trial. Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1, 11 (Tex. 1991).
Settled law, however, holds that a party waives any error arising from possibly awarding nonrecoverable fees when the complaining party does not object to failure to segregate between legal services for which fees are properly recoverable and those for which no recovery of fees is authorized. Solis, 951 S.W.2d at 389-90; Hruska, 747 S.W.2d at 785; Aero Energy, Inc. v. Circle C Drilling Co., 699 S.W.2d 821, 823 (Tex. 1985); Matthews v. Candlewood Builders, Inc., 685 S.W.2d 649, 650 (Tex. 1985); C.M. Asfahl Agency, 135 S.W.3d at 801. By not responding to the law firm's motion for summary judgment, therefore, Haden and the company waived any complaint premised on failure to segregate nonrecoverable fees. For this reason and also because rule 166a(c) precludes our addressing issues not presented to the trial court, except the legal sufficiency of the motion and properly assertable defects of substance, as addressed above, we reject Haden's and the law firm's contention that the lack of segregation mandates reversal. See Tex. R. Civ. P. 166a(c); McConnell, 858 S.W.2d at 343; Jones, 846 S.W.2d at 924.
We overrule Haden's and the company's first issue.
Counterclaims for Breach of Fiduciary Duty, Fraud, and DTPA Violations
In their third issue, Haden and the company contend that the trial court erred by rendering a take-nothing summary judgment for the law firm on Haden's and the company's counterclaims to the law firm's suit to collect its unpaid fee invoices. The trial court rendered this summary judgment before rendering the summary judgment on the unpaid fees, which we addressed above. Haden's and the company's counterclaims allege that the law firm (1) breached its fiduciary duty to Haden and the company, (2) committed fraud, (3) violated the DTPA, and (4) breached the contract with Haden and the company. The grounds asserted in the law firm's no-evidence motion for summary judgment on the counterclaims included the law firm's contention that it was entitled to judgment as a matter of law because Haden and the company had not incurred any damages on any of their counterclaims. See Tex. R. Civ. P. 166a(i).
Because the trial court rendered the summary judgment on the counterclaims early in the case, the judgment was interlocutory until it became merged with the final judgment from which Haden and the company appeal. See City of Houston v. Socony Mobil Oil Co., 421 S.W.2d 427, 430 (Tex.Civ.App.-Houston [1st Dist.] 1967, writ ref'd n.r.e.).
The law firm's motion also included a traditional motion for summary judgment on Haden and the company's counterclaims. See Tex. R. Civ. P. 166a(c).
A. No-Evidence Motion for Summary Judgment
A no-evidence motion for summary judgment is essentially a directed verdict granted before trial, which we review for legal sufficiency. See King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 750-51 (Tex. 2003); Mathis v. RKL Design/Build, 189 S.W.3d 839, 844 (Tex.App.-Houston [1 Dist.] 2006, no pet.). As the party seeking the no-evidence summary judgment in this case, the law firm was required to assert that no evidence existed as to one or more of the essential elements of Haden's and the company's counterclaims, on which they would have the burden of proof at trial, and also to state specifically the element or elements as to which there was no evidence. See Johnson v. Brewer and Pritchard, P.C., 73 S.W.3d 193, 207 (Tex. 2002); Mathis, 189 S.W.3d at 844; Flameout Design Fabrication, Inc., 994 S.W.2d at 834.
In moving for no-evidence summary judgment, the law firm enumerated each of Haden's and the company's counterclaims, listed the elements of each counterclaim, and asserted that Haden and the company had not incurred any damages, a required element of each of their counterclaims. This showing by the law firm satisfied the movant's initial burden, as stated in rule 166a(i). See Johnson, 73 S.W.3d at 207; Mathis, 189 S.W.3d at 844; Flameout Design Fabrication Inc., 994 S.W.2d at 834. Accordingly, the burden shifted to Haden and the company to provide some evidence, more than a scintilla, that raised a fact issue concerning whether they had incurred damages for the counterclaims they had asserted against the law firm. See Tex. R. Civ. P. 166a(i); Rueda v. Paschal, 178 S.W.3d 107, 109 (Tex.App.-Houston [1st Dist.] 2005, no pet.); Mathis, 189 S.W.3d at 844. The burden having shifted to Haden and the company, the trial court had a mandatory duty, pursuant to rule 166a(i), to grant the law firm's no-evidence motion for summary judgment unless Haden and the company responded to that motion by producing more than a scintilla of evidence that raised a genuine issue of material fact on the challenged damages elements. See Tex. R. Civ. P. 166a(i); Sw. Elec. Power Co. v. Grant, 73 S.W.3d 211, 215 (Tex. 2002); Rueda v. Paschal, 178 S.W.3d at 109.
We will affirm a no-evidence summary judgment when (1) there is a complete absence of evidence of a vital fact, (2) the court is barred by rules of law or of evidence from giving weight to the only evidence offered to prove a vital fact, (3) the evidence offered to prove a vital fact is no more than a scintilla, or (4) the evidence conclusively establishes the opposite of a vital fact. King Ranch, 118 S.W.3d at 751; Mathis, 189 S.W.3d at 844. We review any evidence presented by Haden and the company, as nonmovants, in the light that favors them, as nonmovants. See Johnson, 73 S.W.3d at 208; Rueda, 178 S.W.3d at 109. If the summary judgment record shows that Haden and the company presented more than a scintilla of probative evidence that raised a genuine issue of material fact on the challenged element, then the trial court erred by rendering the no-evidence summary judgment and we must reverse. See Rueda, 178 S.W.3d at 109.
B. Challenge to Damages Element for Each of the Counterclaims
The counterclaims that Haden and the Company asserted against Sacks are DTPA, fraud, breach of fiduciary duty, and breach of contract. Sacks filed a no-evidence Motion for Summary Judgment, which asserted that there was no evidence of damages for each of the four counterclaims.
Haden and the Company responded to the motion for summary judgment that was filed by Sacks by asserting that they were damaged in two ways. First, Haden and the Company contend that they were damaged by the charge of excessive fees that exceeded the amount that they had agreed to pay in the contract with Sacks because Sacks allowed his associates to perform the work rather than doing it himself. Second, Haden and the Company contend that they suffered damages because they incurred legal fees to defend against the lawsuit filed by Sacks for the unpaid fee invoices. The summary judgment evidence provided by Haden and the Company includes Haden's affidavit, the correspondence between Sacks and Haden that formed the written agreement here, and copies of invoices showing that Sacks worked 28 hours at $5,600, another attorney worked 37 hours at $6,475, and another attorney worked 161.75 hours at $24,262.50.
Haden and the Company stated, as follows:
HADEN has been damaged. HADEN has been sued under a contract which he did not make, has been forced to hire an attorney to defend him in that lawsuit, and may have to pay excess fees incurred when SACKS did not do the work but shuffled it off to an inexperienced, unprepared associate with less than three months experience who spent an inordinate amount of time on the project. As a result, the fees over which this lawsuit was filed are higher than the amount of money provided in the contract between the parties. It is difficult to imagine that such a project would require the same amount of time by an attorney with twelve years['] experience as it would with three months['] experience.
(Emphasis added; uppercase letters emphasized in original).
The affidavit by Haden states, as follows:
. . . Based on Mr. Sacks representative [sic] as an appellate expert, I hired Mr. Sacks to put an edge on my trial lawyer's brief. At the outset of the engagement, I indicated that all I could pay was $5,000 for the work he proposed[,] and he said it could be as high as $10,000. Believing I was obtaining the services of an experienced appellate expert, I agreed to have Mr. Sacks do the work.
Initially, Mr. Sacks asked me to pay $10,000 to him and he who [sic] would bill his charges against the deposit. After discussing why all I was willing to pay him was $5,000, Mr. Sacks and I agreed that I could give him $5,000 to assist in the writing of the brief. At no time, or under any circumstances, did I agree to pay Mr. Sacks more than $10,000 for the work he proposed to do for me.
On or about September 15, 1997, I received a statement from Mr. Sacks which indicated an outstanding balance of more than $37,000. Mr. Sacks never contacted me prior to my receiving the bill to say that the project was going to be more expensive than we originally believed or to indicate that he would be unable to do a substantial portion of the work on the brief himself. When I reviewed the bill I was surprised to discover that the vast majority of the work on the brief had been done, not by Mr. Sacks, but by two other attorneys in his firm. I subsequently learned that they were young associates with fewer than two years['] experience between them.
Further perusal of the bill revealed that one of the attorneys had billed 161.75 hours to my case and Sacks had only billed 28 hours. I learned that Kathleen Peterson nee'[sic] Hoekstra had only been practicing three months when working on my appeal. It was clear to me that the size of the bill was directly related to the inexperience of the attorney doing most of the work.
Sacks replied to the summary judgment response filed by Haden and the company, asserting that "Haden improperly attempts to label his possible legal fees in defending this suit on a sworn account as 'damages.'" Sacks also stated that Haden had suffered no damages because Haden acknowledges that he agreed to pay the $10,000 he paid and, therefore, Haden had not been damaged merely because he was billed for more than he felt he should have been billed.
C. Analysis
We conclude that Haden and the company failed to produce more than a scintilla of evidence of damages for any of their counterclaims.
1. DTPA Violations, Fraud, and Breach of Fiduciary Duty
To establish a claim for violations of the DTPA, a plaintiff must show that he sustained damages. See Tex. Bus. Com. Code Ann. § 17.50(a) (Vernon 2002) (requiring that defendant's act constitute producing cause of economic or mental anguish); Latham v. Castillo, 972 S.W.2d 66, 69 (Tex. 1998) (stating elements of claim for unconscionable conduct recovery under DTPA, including damages pursuant to section 17.50(a)(3)). In a DTPA claim, "[w]ithout an actual-damages recovery, a party is not entitled to an attorney's fee recovery." Gulf States Util. v. Low, 79 S.W.3d 561, 567 (Tex. 2002).
To establish a claim for fraud, the proof must establish "a material misrepresentation, which was false, and which was either known to be false when made or was asserted without knowledge of the truth, which was intended to be acted upon, which was relied upon, and which caused injury." DeSantis v. Wackenhut Corp., 793 S.W.2d 670, 688 (Tex. 1990). "Attorney's fees are not recoverable as actual damages in fraud cases." Hennigan v. Harris County, 593 S.W.2d 380, 385 (Tex.App.-Waco 1979, writ ref'd n.r.e.); see Kilgore Fed. Sav. Loan Ass'n v. Donnelly, 624 S.W.2d 933, 938 (Tex.App.-Tyler 1981, writ ref'd n.r.e.); Kneip v. UnitedBank-Victoria, 774 S.W.2d 757, 759 (Tex.App.-Corpus Christi 1989, no writ); Town East Ford Sales, Inc. v. Gray, 730 S.W.2d 796, 812 (Tex.App.-Dallas 1987, no writ).
To recover for breach of fiduciary duty, the evidence must prove "the existence of a fiduciary duty, breach of the duty, causation, and damages." Abetter Trucking Co. v. Arizpe, 113 S.W.3d 503, 508 (Tex.App.-Houston [1st Dist.] 2003, no pet.) However, when a client sues his attorney for breach of fiduciary duty, "a client need not prove actual damages in order to obtain forfeiture of an attorney's fees for the attorney's breach of fiduciary duty to the client." Burrow v. Arce, 997 S.W.2d 229, 240 (Tex. 1999). Although a client may seek, as damages for an attorney's breach of his fiduciary duty, forfeiture of fees paid to the attorney, Haden and the company did not assert this type of damages in their pleadings or in their response to the motion for summary judgment. See id. at 240.
For the first time on appeal, Haden and the company assert fee forfeiture as a ground for damages on the breach of fiduciary duty claim. We may not address this contention because it was never presented to the trial court. See Tex. R. Civ. P. 166a(c).
Haden and the company's counterclaims are premised on the following alleged conduct:
• Sacks induced Haden to hire the law firm by telling Haden that he must have an experienced, board-certified appellate lawyer like Sacks and represented that he would personally write the appellate brief instead of an associate,
• Sacks turned the file over to inexperienced attorneys, who performed the vast majority of the legal services,
• Sacks misrepresented the cost involved in assisting with the writing of the brief with the intent to charge more than four times the amount originally represented,
• Sacks understood that Haden could not afford to pay more than $5,000 and would not pay more than $10,000,
• Sacks failed to warn that the fees he was incurring to prepare the appellate brief were exceeding the agreed to amounts,
• Sacks misrepresented the services he would render by agreeing to put "an edge" on the brief when instead he completely rewrote it.
It is undisputed that Haden and the company formed an agreement with Sacks for legal services and that Haden agreed to pay and did pay $10,000 for the legal services. Additionally, in their response to the motion for summary judgment, Haden and the company expressly stated that they were not complaining of "legal malpractice" or "the quality of the work." The dispute here centers on whether Haden and the company were damaged by the law firm's charging more for legal services than Haden and the company believe they were obligated to pay under the agreement. Haden and the company do not dispute that they agreed to pay $10,000 for the legal services and that they paid $10,000 under that agreement. Even if we assume that Haden and the company were billed more than they agreed to pay, Haden and the company paid only $10,000, and have not asserted a claim for reimbursement of the $10,000 already paid to the law firm. Haden and the company have not shown, therefore, how they were damaged by the mere creation of invoices that charged in excess of the $10,000 that they acknowledge was due to the law firm.
Haden and the company state, for the first time on appeal, that if Sacks had performed the work himself rather than giving the work to associates, the odds of obtaining a reversal and retrial would have significantly increased. Haden and the company did not assert that argument to the trial court and presented no summary judgment evidence to support that statement.
Haden and the company assert that they are damaged because Sacks said that he would perform the legal services himself, but instead had associates perform most of the work. They contend that Sacks's misrepresentation that he would perform the work himself caused damages because it took the inexperienced associates more time to perform the work than it would have taken Sacks, had he performed the work himself, and the bill was therefore higher than it should have been. In his affidavit, Haden stated, "It was clear to me that the size of the bill was directly related to the inexperience of the attorney doing most of the work." Haden did not explain his statement, however, and provided no evidence to support his perception.
It is undisputed that the associates' time was billed at a lower rate than Sacks. Even if we assume that Haden is correct that it took more time for the inexperienced attorney to perform the task that Sacks had taken, Haden and the Company have not shown how they were damaged because no evidence shows how long it would take an experienced attorney to perform the task in comparison to the time that an associate would take. A more experienced attorney could perform the task more quickly, perhaps, but, because the experienced attorney billed at a higher rate, the bill could be higher than a bill from an associate who took more time to complete the task, but charged a lower rate. The evidence therefore fails to show any damages caused by Sacks's failure to perform the work himself.
The damages claimed by Haden and the company, therefore, are limited to legal fees that they incurred in defending against the lawsuit filed by Sacks for the unpaid fee invoices. As a general rule, attorney's fees incurred to defend against a lawsuit filed by another are not recoverable. See Tana Oil Gas Corp. v. McCall, 104 S.W.3d 80, 82 (Tex. 2003) (rejecting damages described solely in terms of "value of time spent" and "costs incurred" in defending lawsuit as nonrecoverable, even if party seeking such damages could have proven all other elements of claim for tortious interference).
We conclude that Haden and the Company are not entitled to attorney's fees recovery for their claims of DTPA violations and fraud because there is no showing of an actual-damages recovery. See Gulf States Util., 79 S.W.3d at 567 (DTPA); Hennigan, 593 S.W.2d at 385 (fraud); Town East Ford Sales, Inc., 730 S.W.2d at 812 (fraud). We further conclude that Haden and the company are not entitled to attorney's fees recovery in their claim for breach of fiduciary duty because they did not seek forfeiture of the attorney's fees paid to the law firm as damages or establish any other type of compensable damages for that claim. See Burrow, 997 S.W.2d at 240.
We therefore hold that Haden and the Company offered no evidence that they sustained damages and, therefore, that the trial court properly rendered the no-evidence summary judgment in favor of the law firm on the claims for DTPA violations, fraud, and breach of fiduciary duty counterclaims asserted by Haden and the company.
2. Breach of Contract
"The elements of a breach of contract claim are: (1) the existence of a valid contract; (2) performance or tendered performance by the plaintiff; (3) breach of the contract by the defendant; and (4) damages to the plaintiff resulting from that breach. Wright v. Christian Smith, 950 S.W.2d 411, 412 (Tex.App.-Houston [1st Dist.] 1997, no writ). Parties may contract for recovery of attorney's fees, but the agreement here does not include this provision. See New Amsterdam Cas. Co. v. Tex. Indus., Inc., 414 S.W.2d 914, 915 (Tex. 1967). A party may recover attorney's fees in a breach of contract claim without a written agreement providing for them if the party claiming the fees (1) prevails on its breach of contract claim and (2) recovers damages. See Tex. Civ. Prac. Rem. Code Ann. § 38.001(8); Solis, 951 S.W.2d at 390. Haden and the company, however, have not provided any evidence to show that they could recover the damages they have asserted for breach of contract.
As we determined in the preceding analysis, Haden and the Company were not the prevailing party. However, at the time that the trial court rendered summary judgment here, the trial court had not yet determined who the prevailing party was, and, thus, it could not have rendered summary judgment on the ground that Haden and the Company were not the prevailing party.
Haden asserted that:
. . . it is undisputed that David Sacks performed some services for HADEN. However, HADEN agreed to hire a board certified, appellate specialist with 12 years['] experience to handle his appeal — not inexperienced associates with fewer than 2 years of experience between them. HADEN would never have hired SACKS to represent him had he known that nearly 90% of the work on this appeal would be done by lawyers whose inexperience would result in their requiring nearly 200 hours to complete the work. HADEN did not agree to pay a fee which would support this many hours of work nor did he agree to provide an opportunity for new appellate lawyers to learn their trade. HADEN believed he was hiring David J. Sacks, Board Certified Appellate Specialist to do most, if not all, of the work on his appeal for a certain fee.
(Emphasis in original, which also emphasizes names in uppercase letters.)
The law firm contends that, because the agreement plainly provides that different lawyers in the law firm would provide legal services to Haden and the company, no breach of contract occurred. The law firm further contends that Haden's affidavit "constitutes no evidence and cannot be considered" because "Haden cannot introduce this parol evidence to vary the terms of the contract between the Law Firm and Haden." For the reasons stated in the preceding analysis concerning the motion for summary judgment rendered in favor of law firm in its breach-of-contract claims for the unpaid fee invoices, we reject Haden's affidavit, on the grounds that parol evidence cannot be introduced to vary the terms of the written agreement. See Messer, 422 S.W.2d at 912; Gonzalez, 93 S.W.3d at 211; Litton, 823 S.W.2d at 430. This agreement provides that Sacks and his associates would work on the appellate brief for Haden and the company at specifically designated monetary rates. We conclude that Haden and the company have not produced any evidence that they were damaged by the fees charged by the law firm, which comported with the terms of the written agreement.
We hold that the only evidence that Haden and the company offered in response to the law firm's motion for no-evidence summary judgment negated any recovery for their counterclaims and was, therefore, no evidence that they incurred any damages on their counterclaims. See King Ranch, 118 S.W.3d at 751; Mathis, 189 S.W.3d at 844. The trial court thus properly granted the law firm's motion for summary judgment pursuant to rule 166a(i). Because the trial court properly rendered the no-evidence summary judgment on Haden's and the company's counterclaims, we overrule issue three.
Conclusion
We affirm the judgment of the trial court.