Opinion
No. 01-03-00025-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
Appellants, Charles M. Haden, Jr., individually (Haden), and Charles McIntyre Haden Company d/b/a Haden Company (the company), challenge an award of $90,000 for attorney's fees and costs to appellee, David J. Sacks, P.C. d/b/a Sacks Associates (the law firm), incident to turnover and other relief obtained by the law firm 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 turnover statute). The law firm sought relief under the turnover statute to enforce the final judgment previously rendered on the law firm's motions for summary judgment for breach of contract and for attorney's fees, which Haden and the company challenged in Cause No. 01-01-00200-CV and which we have affirmed in an opinion issued concurrently with this opinion. See Tex. Civ. Prac. Rem. Code Ann. § 31.002 (Vernon Supp. 2005); see generally Tex. Civ. Prac. Rem. Code Ann. § 31.002-.008 (Vernon 1997 Supp. 2005) (governing judgments and their enforcement).
In an opinion issued concurrently with this opinion, this Court affirmed the judgment in Cause No. 01-01-00200-CV. Charles McIntyre Haden, Jr., individually and Charles McIntyre Haden, Jr. Company d/b/a Haden Company v. David J. Sacks, P.C., d/b/a Sacks Associates, No. 01-01-00200-CV (Tex.App.-Houston [1st Dist.] Sept. 7, 2006, no pet. h.).
Haden and the company present two major issues on appeal. Their first issue, however, is conditioned on our having reversed the underlying judgment in Cause No. 01-01-00200-CV. Having affirmed the judgment in that cause, we overrule this first issue. Their second issue presents three sub-issues that challenge the award of $90,000 in attorney's fees to the law firm in connection with its collection procedures initiated pursuant to the turnover statute, Tex. Civ. Prac. Rem. Code Ann. § 31.002(e) (Vernon Supp. 2005). In these issues, Haden and the company contend that the attorney's fee award must be reversed because (1) the law firm cannot recover under the turnover statute for work done in federal bankruptcy court, (2) the evidence is factually insufficient to support the attorney's fees award, and (3) the fees awarded were not reasonable, necessary, or customary.
This Court's Jurisdiction
The trial court signed the judgment challenged in this appeal on February 19, 2002, and Haden and the company filed their notice of appeal on March 14, 2002. Although the law firm sought recovery of attorney's fees and costs incurred in pursuing turnover relief against both Haden and the company, the trial court's judgment granted relief only against Haden and did not dispose of the law firm's request for costs and attorney's fees against the company. We notified the parties sua sponte that the judgment did not appear to be final, but interlocutory, and that we would therefore be required to dismiss the appeal unless the appellate record were supplemented to establish that the judgment was final as to all issues and parties. See Lehmann v. Har-Con Corp., 39 S.W.3d 191, 195 (Tex. 2001) (defining judgment that is final for purposes of appeal as one that disposes of all pending parties and claims in record, except as necessary to carry out decree); see also Fisher v. P.M. Clinton Int'l Investigations, 81 S.W.3d 484, 486 (Tex.App.-Houston [1st Dist.] 2002, no pet.) (holding that postjudgment discovery order did not resolve all issues and parties and was therefore not appealable).
In response to our order, Haden and the company filed a supplemental clerk's record. As supplemented, the record on appeal includes an "Order for Judgment Nunc pro Tunc," which the trial court signed on May 6, 2006. This order refers to "Defendants' Unopposed Motion for Judgment Nunc Pro Tunc," and includes the following:
Defendants' Motion for Judgment Nunc Pro Tunc is hereby GRANTED; and, the Court will enter a Judgment Nunc Pro Tunc which will add CHARLES McINTYRE HADEN COMPANY d/b/a HADEN COMPANY, to the Judgment entered by this Court on February 19, 2002, so as to correct the clerical error omitting the Defendant from the Judgment.
The supplemental clerk's record also contains a "Final Judgment Nunc Pro Tunc," which the trial court signed on May 1, 2006.
In contrast to the original judgment signed on February 19, 2002, the trial court's May 1, 2006 judgment awards the law firm relief and costs not only against Haden, individually, but also against the company. We have concluded, from the supplemental clerk's record, that the judgment is now final as to all issues and parties and that we therefore have jurisdiction to address the merits of the appeal. See Schultz v. Fifth Jud. Dist. Court of Appeals, 810 S.W.2d 738, 740 (Tex. 1991) (orig. proceeding) (upholding appealability of section 31.002 orders).
Factual and Procedural Background
In Cause No. 01-01-00200-CV, we affirmed the trial court's summary judgments in favor of the law firm on its claims for breach of contract and attorney's fees. Charles McIntyre Haden, Jr., individually and Charles McIntyre Haden, Jr. Company d/b/a Haden Company v. David J. Sacks, P.C., d/b/a Sacks Associates, No. 01-01-00200-CV (Tex.App.-Houston [1st Dist.] Sept. 7, 2006, no pet. h.). When Haden and the company did not supersede that judgment pending the appeal of Cause No. 01-01-00200-CV, the law firm began extensive proceedings to discover nonexempt assets and sought to execute on the judgment by requesting the following relief from the trial court, as authorized by section 31.002: a turnover order, appointment of a receiver, and injunctive relief to prevent postjudgment transfer of assets. After eventually obtaining service on Haden and the company by court-authorized substituted service, the law firm prevailed on each of these requests, and the trial court required turnover of property to the receiver. The receiver succeeded in seizing $6,715 from a bank account, which the court ordered disbursed to satisfy part of the judgment and expenses incurred by the receiver.
The law firm also filed an application for writ of garnishment, which was dismissed without prejudice by the trial court, in response to the law firm's motion to nonsuit the application.
Before the receiver was able to secure any other property to satisfy the judgment, however, Haden filed a petition, as an individual, in the United States District Court for the Southern District of Texas at Houston, seeking protection from creditors under chapter 13 of the United States Bankruptcy Code. This filing arrested all action by the court-appointed receiver on behalf of the law firm against Haden. See 11 U.S.C. § 362 (2000) (providing for automatic stay against bankruptcy debtor). Haden later converted his individual petition to a request for chapter 11 protection. After appearing in Haden's individual bankruptcy case and reviewing documents that he had filed, the law firm asserted its rights as creditor and challenged Haden's declaration of bankruptcy. On December 11, 2001, the bankruptcy court dismissed Haden's bankruptcy filing with prejudice.
Two days after Haden's individual bankruptcy was dismissed, Sacks filed an emergency motion for immediate turnover of non-exempt property. Sacks asserted that Haden was in contempt of the trial court's temporary restraining order because Haden made certain disbursements that were disallowed by the trial court's order. With the end of the bankruptcy proceedings, the court-appointed receiver was able to achieve control of non-exempt assets on the law firm's behalf. Having thus prevailed on its turnover efforts in the trial court, the law firm sought to recover its reasonable costs and 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).
The law firm requested fees and costs that totaled $90,000, representing 372.25 hours' work. During the hearings conducted on the issue, the trial court admitted into evidence records kept by the law firm to support the attorney's fees and costs requested and considered testimony by the following individuals: the collection attorney for the law firm, who pursued the postjudgment turnover and who worked with independent bankruptcy counsel; independent bankruptcy counsel, who appeared on behalf of the law firm in bankruptcy court; Haden's and the company's trial counsel; and another attorney employed with trial counsel's firm. The trial court ruled that section 31.002 entitled the law firm to attorney's fees incurred in collection of the judgment, and that the law firm was entitled to the $90,000 it had requested as reasonable costs and attorney's fees.
The record reflects that Haden and the company had hired new counsel at this point in the proceedings.
Attorney's Fees Incurred in Seeking Turnover Relief
In their first challenge to the fee award, Haden and the company contend that section 31.002(e) does not authorize recovery of attorney's fees incurred in federal bankruptcy court for seeking to dismiss Haden's individual bankruptcy filing and, therefore, that the judgment of the trial court must be vacated to the extent of the $44,900 in attorney's fees incurred by collection counsel for the law firm and the $8,461 in attorney's fees incurred by independent bankruptcy counsel hired by the law firm.
A. The Turnover Statute
The turnover statute states, in part, as follows:
Section 31.002. Collection of Judgment Through Court Proceeding
(a) A judgment creditor is entitled to aid from a court of appropriate jurisdiction through injunction or other means in order to reach property to obtain satisfaction on the judgment if the judgment debtor owns property, including present or future rights to property, that:
(1) cannot readily be attached or levied on by ordinary legal process; and
(2) is not exempt from attachment, execution, or seizure for the satisfaction of liabilities.
(b) The court may:
(1) order the judgment debtor to turn over nonexempt property that is in the debtor's possession or is subject to the debtor's control, together with all documents or records related to the property, to a designated sheriff or constable for execution;
(2) otherwise apply the property to the satisfaction of the judgment; or
(3) appoint a receiver with the authority to take possession of the nonexempt property, sell it, and pay the proceeds to the judgment creditor to the extent required to satisfy the judgment.
(c) The court may enforce the order by contempt proceedings or by other appropriate means in the event of refusal or disobedience.
(d) The judgment creditor may move for the court's assistance under this section in the same proceeding in which the judgment is rendered or in an independent proceeding.
(e) The judgment creditor is entitled to recover reasonable costs, including attorney's fees.
. . .
Tex. Civ. Prac. Rem. Code Ann. § 31.002 (Vernon Supp. 2005).
The turnover statute aids collection of final money judgments by empowering trial courts to issue various orders aimed at requiring a judgment debtor to turn over to a judgment creditor nonexempt property that the debtor owns and controls. See Schultz, 810 S.W.2d at 739 n. 3; Bay City Plastics, Inc. v. McEntire, 106 S.W.3d 321, 325 (Tex.App.-Houston [1st Dist] 2003, pet. denied). In addition, section 31.002(e) empowers trial courts to award "reasonable costs, including attorney's fees" incurred in seeking postjudgment execution relief under section 32.001. Tex. Civ. Prac. Rem. Code Ann. § 31.002(e). As a judgment creditor who obtained turnover relief in this case, the law firm was "entitled" to recover its reasonable costs, including attorney's fees. See id; compare Great Global Assurance Co. v. Keltex Props., Inc., 904 S.W.2d 771, 776 (Tex.App.-Corpus Christi 1995, no writ) (holding recovery of reasonable costs and attorney's fees mandatory for judgment creditor who obtains turnover relief under section 31.002) and Ross v. 3D Tower Ltd., 824 S.W.2d 270, 273 (Tex.App.-Houston [14th Dist.] 1992, writ denied) (noting that turnover statute expressly provides for reasonable costs and attorney's fees to party obtaining turnover relief); with Bay City Plastics, Inc., 106 S.W.3d at 326 (holding that erroneously issued turnover order precluded award of attorney's fees under section 31.002(e)).
B. Recovery of Costs and Attorney's Fees for Bankruptcy-Court Proceedings
We review section 31.002 orders for abuse of discretion. Beaumont Bank, N.A. v. Buller, 806 S.W.2d 223, 226 (Tex. 1991); Boudreaux Civic Ass'n v. Cox, 882 S.W.2d 543, 548 (Tex.App.-Houston [1st Dist.] 1994, no writ). However, we review de novo Haden's and the company's challenge to the trial court's implicit determination that section 31.002(e) does not preclude awarding the law firm reasonable costs and attorney's fees for work accomplished in bankruptcy court, because a trial court has no discretion when determining what the law is, which law governs, or how to apply the law. See In re R.J.H., 79 S.W.3d 1, 6 (Tex. 2002); Walker v. Packer, 827 S.W.2d 833, 839-40 (Tex. 1992); Furst v. Smith, 176 S.W.3d 864, 869 (Tex.App.-Houston [1st Dist.] 2005, no pet.).
When we construe a statute, our objective is to determine and give effect to the legislature's intent. See City of San Antonio v. City of Boerne, 111 S.W.3d 22, 25 (Tex. 2003). If the language of the statute is clear and unambiguous, we must seek the legislature's intent from the plain meaning of the words of the statute. See Monsanto Co. v. Cornerstones Mun. Util. Dist., 865 S.W.2d 937, 939 (Tex. 1993).
Haden and the company contend that the law firm may not collect its attorney's fees for work done in relation to Haden's petition for bankruptcy because the statute does not specifically refer to bankruptcy proceedings. The statute, however, states broadly that a judgment creditor, the law firm here, is "entitled" to "aid from a court of appropriate jurisdiction . . . to obtain satisfaction on the judgment." Tex. Civ. Prac. Rem. Code Ann. § 31.002 (a) (Vernon Supp. 2005). The "court of appropriate jurisdiction" here was initially the trial court. See id. § (d). But, when Haden filed his petition for bankruptcy, the automatic-stay provisions of 11 U.S.C. § 362 arrested all action by the receiver to execute on the underlying judgment. The only court in which the law firm could pursue relief in order to obtain satisfaction of the judgment thus became the bankruptcy court. Because Haden decided to seek relief from the United States Bankruptcy Court for the Southern District of Texas, which automatically triggered the stay of any other court proceedings that arose from that decision pursuant to 11 U.S.C. § 362, the bankruptcy court became the only possible "court of appropriate jurisdiction" in which the law firm could pursue its execution efforts. See Tex. Civ. Prac. Rem. Code Ann. § 31.002(a).
We note further that the turnover statute does not require that the judgment creditor appear before a court in a single proceeding, but provides that the judgment creditor "may move for the court's assistance under this section in the same proceeding in which the judgment is rendered or in an independent proceeding." Tex. Civ. Prac. Rem. Code Ann. § 31.002 (a) (Vernon Supp. 2005). Although the bankruptcy proceeding was independent from the trial court's proceeding, the turnover statute expressly allows separate proceedings for satisfaction of judgments. See id. § (d).
Haden and the company rely on New Amsterdam Cas. Co. v. Texas Indus., Inc., 414 S.W.2d 914 (Tex. 1967), to support their contention that the law firm may not recover attorney's fees and costs, pursuant to section 31.002(e), for work done in bankruptcy court. New Amsterdam Casualty held that statutory provisions that authorize attorney's fees must be strictly construed because they are "in derogation of the common law" and "penal in nature." See id. at 915 (citing Van Zandt v. Fort Worth Press, 359 S.W.2d 893, 895 (Tex. 1962)).
Section 31.002 is a procedural statute, however, that was adopted to facilitate and aid collection of a judgment. See Ex parte Swate, 922 S.W.2d 122, 125 (Tex. 1996) (Gonzalez, J., concurring); Lesikar v. Rappeport, 104 S.W.3d 313, 310 (Tex.App.-Texarkana 2003, no pet.); Cross, Kieschnick Co. v. Johnston, 892 S.W.2d 435, 438 (Tex.App.-San Antonio 1994, no writ); United Bank Metro v. Plains Overseas Group, Inc., 670 S.W.2d 281, 284 (Tex.App.-Houston [1st Dist.] 1983, no writ); see also Buller, 806 S.W.2d at 227 (noting impropriety of determining substantive rights in turnover proceedings). Because the statute is procedural, and thus remedial in nature, we must adopt a construction that, in the absence of an express legislative provision to the contrary, will enable collection against the judgment debtor, here Haden and the company. Stephenson v. Stephenson, 22 S.W. 150, 151 (Tex. 1893); Daniel v. Daniel, 779 S.W.2d 110, 114 (Tex.App.-Houston [1st Dist.] 1989, no writ). As the record here reflects, by virtue of Haden's bankruptcy petition, the law firm would not have been able to collect its judgment unless it pursued Haden in bankruptcy court.
Even applying the strict construction analysis that Haden and the company propose, we conclude that section 31.002(e) plainly provides that the law firm is "entitled" to costs and attorney's fees for its efforts to collect the judgment. See Tex. Civ. Prac. Rem. Code Ann. § 31.002(e).
The record shows that, as a result of the law firm's investigation of Haden's sworn filings in support of his bankruptcy petition, the law firm was also able to determine that Haden had violated the trial court's section 31.002 orders, for example, by paying $54,000 to American Express and by obtaining certified checks in the total amount of $40,000, $10,000 of which was made payable to Haden himself. In addition, the law firm learned that Haden had reported income of $376,000 between March 14, 2001, when he filed his bankruptcy petition, and July 13, 2001.
The attorney who represented the law firm in the bankruptcy proceedings testified that his role was to seek dismissal of the bankruptcy case if he determined that the declaration of bankruptcy was unsubstantiated, or to represent Sacks' interests in the bankruptcy proceeding if he determined that the declaration of bankruptcy was legitimate. According to the law firm's collection attorney, the law firm's activity in the bankruptcy court resulted in the placement of "all the non-exempt assets of Mr. Haden Jr. back under the control of the receiver once the bankruptcy was dismissed."
By seeking the assistance of the bankruptcy court through bankruptcy counsel, the law firm facilitated the release of nonexempt property to the court-appointed receiver, whose "authority to take possession of" that property had been previously stayed by Haden's bankruptcy petition. See Tex. Civ. Prac. Rem. Code Ann § 31.002(b)(3). The law firm's actions in bankruptcy court thus enabled payment to the judgment-creditor law firm, "to satisfy the judgment" previously rendered by the trial court. See id. § 31.002(b)(2). As confirmed by the bankruptcy counsel's and collection counsel's testimony, once the bankruptcy was dismissed, the receiver was able to take control of all nonexempt assets and to perform his appointed role under section 31.002(b)(3). See id.
In support of their challenge to the trial court's authority to award the law firm its costs and fees incurred in seeking to set aside Haden's bankruptcy petition, Haden and the company rely on Martin v. Harris Cty. Appraisal Dist., 44 S.W.3d 190 (Tex.App.-Houston [14th Dist.] 2001, pet. denied), and Intertex, Inc. v. Walton, 698 S.W.2d 707 (Tex.App.-Houston [14th Dist.] 1985, writ ref'd n.r.e.). We conclude that neither case applies.
Intertex arose under the predecessor turnover statute, former article 3827a(e) of the Revised Civil Statutes. Act effective June 13, 1979, 66th Leg., R.S., ch. 671, 1979 Tex. Gen. Laws 1555, repealed by Act effective Sept. 1, 1985, 69th Leg., R.S., ch. 959, § 9(1), 1985 Tex. Gen. Laws 3242, 3322. In the same manner as the current statute, section 31.002, former article 3827a(e) provided "a means whereby a judgment creditor may receive the aid of the court in satisfying his judgment from a judgment debtor who owns property [that] cannot be attached readily or levied on by ordinary process." See Intertex, Inc., 698 S.W.2d at 710. Intertex had purchased property at a foreclosure sale that was later set aside as invalid because of lack of proper notice to obligors who had defaulted on their promissory note indebtedness to their creditor. Id. at 708-09. Relying on its status as a purchaser at the subsequently invalidated foreclosure sale, Intertex argued that it was subrogated to the rights of the creditor and, based on that status, was entitled to recover, pursuant to former article 3827a(e), attorney's fees and costs expended in removing the encumbrances on the property. See Intertex, Inc., 698 S.W.2d at 710-11.
Our sister court rejected this argument and upheld the trial court's denial of fees and costs to Intertex, on the grounds that the statute did not expressly provide for subrogation of the rights of the judgment creditor. Id. at 711. Intertex thus stands for the proposition that the rights to recover attorney's fees and costs, as conveyed by former article 3827a(e) and its successor, current section 31.002(e), apply solely to a judgment creditor who seeks the aid of the court in collecting a judgment and not to a party who seeks subrogation to the rights of the judgment creditor. See id. at 711. It is undisputed that the law firm in this case is a judgment creditor. Moreover, Haden and the company do not dispute that the law firm sought and obtained turnover relief from the trial court to enforce the judgment previously rendered on the law firm's claims for breach of contract and attorney's fees. The law firm is thus a proper party to obtain relief under section 31.002(e). See, e.g., Great Global Assurance Co., 904 S.W.2d at 776 (holding that section 31.002(e) mandates recovery of attorney's fees and costs to judgment creditor who succeeds in obtaining turnover relief). Intertex does not support Haden's and the company's arguments.
We also reject Haden's and the company's reliance on Martin v. Harris County Appraisal District, which interpreted a provision of the Tax Code that authorized recovery of reasonable attorney's fees to a "taxpayer who prevails in an appeal to the court under Section 42.25 or Section 42.26 of [the Tax Code]." 44 S.W.3d at 195 (quoting Tex. Tax Code Ann. § 42.29 (Vernon Supp. 2000)). In concluding that the taxpayer was not entitled to attorney's fees under the statute, the court construed the applicable section of the Tax Code, section 42.25, and concluded that the statute applied only if the court made a "value determination" that culminated in a reduction in appraised value. See Martin, 44 S.W.3d at 195-96. Because the trial court had not made that determination, and, therefore, section 42.25 of the Tax Code did not apply, the taxpayer could not invoke the provisions of section 42.29 that authorize attorney's fees. See Martin, 44 S.W.3d at 196. There is no contention here that a related statute renders section 31.002(e) of the Civil Practice and Remedies Code inapplicable. Martin does not apply, and its reasoning does not support Haden's and the company's contentions.
We hold that the plain language of section 31.002(e) authorizes the award of reasonable costs and attorney's fees incurred by the law firm, both in its efforts to secure turnover relief from the trial court and in its seeking and obtaining dismissal of Haden's personal bankruptcy petition by the bankruptcy court. We therefore conclude that the trial court did not abuse its discretion by interpreting section 31.002(e) as authorizing recovery of reasonable costs and attorney's fees, as requested by the law firm pursuant to the statute.
We overrule Haden's and the company's first sub-issue challenging the trial court's exercise of its discretion in awarding costs and attorney's fees to the law firm pursuant to section 31.002(e).
C. Costs and Attorney's Fees Were Reasonable, Necessary, and Customary
In their second and third sub-issues, Haden and the company contend that the evidence is factually insufficient to support the award and that the law firm did not show that its costs and attorney's fees were reasonable, necessary, or customary. We address these issues together.
Section 31.002(e) authorizes recovery of "reasonable costs, including attorney's fees" and thus imposes a requirement that any fees awarded pursuant to the statute be "reasonable." See Tex. Civ. Prac. Rem. Code Ann. § 31.002(e); Thomas v. Thomas, 917 S.W.2d 425, 436 (Tex.App.-Waco 1996, no writ). 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); Thomas, 917 S.W.2d at 437. 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 may determine 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 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)) (referred to hereinafter as the Andersen v. Perry factors of rule 1.04(b) of the State Bar Rules); see also Stewart, 822 S.W.2d at 10 (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 v. Tensor, Inc., 135 S.W.3d 768, 801-02 (Tex.App.-Houston [1st Dist.] 2004, no pet.) (quoting Arthur Andersen, 945 S.W.2d at 818). The rule 1.04(a) factors authorize the court to consider whether the fee sought corresponds to the fees "customarily charged" in the same locality for similar legal services. See Tex. Disciplinary R. Prof. Conduct 1.04(a) (3). Accordingly, whether the fees sought are "customary" is not a determining factor, like reasonableness and necessity, but a factor that a trial court may consider in determining those factors. See id.; Andersen, 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 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 tit. 2, subtit. G app. (State Bar Rules, art. X, § 9)).
Under the well-settled abuse-of-discretion standard of review for section 31.002 orders, e.g., Buller, 806 S.W.2d at 226, a trial court abuses its discretion when it acts arbitrarily or unreasonably and thus without reference to any guiding rules or principles. See Walker, 827 S.W.2d at 839; Buller, 806 S.W.2d at 226; Furst, 176 S.W.3d at 869. The sufficiency of the evidence to support the trial court's section 31.002 order is not, however, an independently assertable ground for error, but a relevant factor in determining whether the trial court abused its discretion. See Buller, 806 S.W.2d at 226; Thomas, 917 S.W.2d at 436.
When we apply the abuse-of-discretion standard to determinations by the trial court that depend on its having resolved conflicting facts or assessed the weight of evidence, the credibility of witnesses, or both, we must defer to the factual resolutions that form the basis of the trial court's ruling. See In re R.J.H., 79 S.W.3d 1, 6 (Tex. 2002); Walker, 827 S.W.2d at 839-40. Moreover, in deciding whether sufficient evidence supports the trial court's judgment, we may infer all facts necessary to support the judgment, because findings of facts and conclusions of law were neither requested nor filed, provided the implied findings are supported by evidence in the record. See Worford v. Stamper, 801 S.W.2d 108, 109 (Tex. 1990); Zac Smith Co. v. Otis Elevator Co., 734 S.W.2d 662, 666 (Tex. 1987); In re W.E.R., 669 S.W.2d 716, 717 (Tex. 1984). If, on viewing the record in the light that most favors the implied findings, there is evidence that supports them, we must uphold the judgment on any theory of law that applies to the case. See Worford, 801 S.W.2d at 109; Point Lookout West, Inc. v. Whorton, 742 S.W.2d 277, 278 (Tex. 1987); Renfro Drug Co. v. Lewis, 235 S.W.2d 609, 613 (Tex. 1950).
We note that the trial court expressed its willingness to assist in the anticipated appeal process by filing findings of fact and conclusions of law in support of its bench ruling.
1. Implied Findings: Reasonable, Necessary, and Customary
Under the state of the record, the scope and standard of review, and the principles that govern an award of attorney's fees under section 31.002(e) stated immediately above, we may infer several implied findings from the judgment awarding the law firm $90,000 pursuant to section 31.002(e). The trial court, as factfinder, resolved the parties' competing versions of what constituted a "reasonable, necessary, and customary" amount for costs and fees by crediting the testimony presented by law firm's witnesses and the detailed timekeeping records, with their detailed descriptions of tasks, time allocations and enumerated costs. Based on that evidence the trial court found that the law firm had adequately demonstrated that the $90,000 amount requested as costs and attorney's fees was not only "reasonable," as required by section 31.002(e), but also necessary, customary, and related to the law firm's "efforts in trying to collect [the underlying] judgment," in accordance with the express terms of both section 31.002(a) and the Anderson v. Perry and rule 1.04(a) factors, among others. See Tex. Disciplinary R. Prof. Conduct. 104(b); Anderson, 945 S.W.2d at 818; Stewart, 822 S.W.2d at 10 (all noting factors that court may consider in awarding attorney's fees). Based on those findings, the trial court concluded, as a matter of law, that section 31.002(e) "entitled" the law firm to $90,000 as its reasonable costs and attorney's fees. See Tex. Civ. Prac. Rem. Code Ann. § 31.002(e).
The trial court conducted two section 31.002(e) hearings on the law firm's request for attorney's fees and costs. After concluding the first hearing by ruling that the law firm was entitled to a section 31.002(e) recovery, the trial court announced that it would reset the hearing for consideration of the timekeeping records that the law firm's collection counsel had continuously maintained in support of the request for costs and attorney's fees. The trial court announced its concern, "especially considering the amount of money" requested, that Haden and the company "have everything available to them." At the close of the second hearing, the trial court announced,
THE COURT: . . . I'm going to rule in favor of the judgment creditor. I'm going to award $90,000 in attorney's fees and expenses as set out. And specifically, just so I can make a specific finding for y'all — and I know that I'm rounding out $90,000. But $29,750 for work involved in obtaining the receivership order, turnover order in my court; 44,900 [sic] for bankruptcy work; and 7611 [sic] in expenses; 8461 [sic] in fees for Mr. Johnson. And I think that should equal up to the amount pled.
The record shows that the focus and primary inquiry in both section 31.002(e) hearings in the trial court was on ascertaining whether the $90,000 in costs and attorney's fees requested by the law firm was "reasonable," as required by section 31.002(e), and "reasonable" and "necessary" in accordance with the Anderson v. Perry factors. See Anderson, 945 S.W.2d at 818 (quoting Tex. Disciplinary R. Prof. Conduct 1.04(b)).
Haden's and the company's first challenge, which attacks perceived evidentiary gaps on the issues of the reasonableness, necessity, and customary nature of the law firm's efforts and costs incurred in pursuing Haden and the company to collect the judgment, disregards and conflicts with the standards and the scope of review that control our disposition. They contend that collection counsel "never stated that her work in state court was reasonable, necessary, and customary"; that bankruptcy counsel did not state that his work in bankruptcy court was reasonable, necessary, or customary, notwithstanding his testimony that collection counsel's work in that court met those requirements; and that no evidence whatsoever demonstrates that the total of $7,611.91 for costs and expenses was reasonable, necessary, and customary. The core of these challenges is premised on a perceived failure of the law firm's attorney-witnesses to recite the words "reasonable," or "necessary," or "customary" in certain instances.
Haden's and the company's emphasis on perceived omissions disregards that the entire second hearing focused solely on determining the reasonableness, necessity, and customary nature of the attorney's fees and costs the law firm requested pursuant to section 31.002, and that all evidence at the hearing, both testimonial and documentary, pertains to that inquiry. Furthermore, because the record contains no findings of fact and conclusions of law by the trial court, we may not only infer that, by granting the law firm's requested relief, the trial court impliedly found that all costs and attorney's fees requested were reasonable, necessary, and customary, e.g., Worford, 801 S.W.2d at 109, but must, in addition, view the record in the light that supports the implied findings in determining whether evidence supports those findings. See id. 2. The Record Supports the Implied Findings
The collection attorney testified that the amount of attorney's fees requested included work related to "at least three postjudgment hearings" that resulted in multiple orders issued by the trial court. The law firm's requested fees, however, specifically excluded any work connected with the summary judgments addressed in Cause No. 01-01-00200-CV. The collection attorney's testimony further clarified that 14.5 hours' compensation initially included in her request and supporting records should be deleted from any total awarded, because that work related to responding to Haden's and the company's motion for new trial and related hearings relating to the summary judgments we addressed in Cause No. 01-01-00200-CV and were thus not section 31.002 matters. Collection attorney's testimony also clarified that the law firm's request for attorney's fees and costs did not include any fees attributed to time spent by the law firm's principal, David J. Sacks, who conferred with the law firm's collection attorney repeatedly during the collection process, and that the request excluded any fees or costs for the independently retained attorney who represented the law firm at the section 31.002 hearings.
The law firm's records supporting the requested attorney's fees and costs, which were introduced into evidence at the second hearing, reflect day-by-day, annotated entries, arranged in timekeeping and expenses format and broken down by amount of time, rate, description of work and the attorney who performed the work, concerning all requested costs and expenses. These records support the entire $90,000 requested for section 31.002(e) attorney's fees and costs, and the trial court properly relied on these records, which were admitted into evidence for all purposes, in assessing the reasonableness, necessity, and customary nature of the $90,000 requested. Concerning these records, although Haden and the company introduced them into evidence during the testimony of the law firm's collection counsel, whom they called as an adverse witness, they did not question her concerning the reasonableness, necessity, or customary nature of any of the specific time entries or expense entries reflected in these records.
The evidence by Haden and the company at the hearing consisted of testimony by their recently retained counsel, who represented them at the 2002 section 31.002(e) hearings on the law firm's request for attorney's fees, and an attorney with the same firm, whose practice focused on collection work.
a. Necessity
The $90,000 amount requested as attorney's fees and costs encompassed attorney's fees incurred in assisting the receiver by responding to his inquiries and thus facilitating recovery of the judgment. When cross-examined about why the law firm "need[ed] to do anything" related to turnover after the trial court appointed a receiver, the law firm's collection attorney explained,
Significant efforts had been put forth to obtain information on Mr. Haden's assets. Mr. Haden was not forthcoming with that information to the [r]eceiver. And the [r]eceiver requested our assistance as well. We worked with the [r]eceiver, assisting him in [collecting] our judgment.
Viewed in the light that most supports the judgment, this testimony supports the trial court's implied finding that the attorney's fees incurred by the law firm were necessary and resulted from Haden's dilatory compliance with the receiver.
Similarly, just as the record demonstrates that law firm would not have prevailed in obtaining turnover relief without the assistance of bankruptcy counsel, as discussed, the record further demonstrates that the law firm would not have incurred the additional attorney's fees and costs incurred in bankruptcy court, but for Haden's having sought the relief, in that court, that arrested the receiver's enforcement actions, pursuant to 11 U.S.C. § 362.
The testimony of bankruptcy counsel and the law firm's collection counsel, as supported by the latter's detailed timekeeping records, further supports and demonstrates the necessity of investigating and pursuing the law firm's options after Haden's bankruptcy filing, to ensure that the law firm did not violate 11 U.S.C. § 362's automatic stay. Moreover, the law firm's collection counsel clarified that the requested fees pertained only to Haden's individual bankruptcy case; no fees were requested relating to the bankruptcy sought on behalf of the company.
We hold that the record supports the trial court's implied finding that the attorney's fees and costs incurred by the law firm were necessary.
b. Reasonableness
Through the testimony of the attorney who represented them at the section 31.002 hearing and an additional attorney who did collection work for the same firm, Haden and the company took the following positions: any amount of attorney's time over ten hours was unreasonable as a matter of law; incurring fees for the 102.5 hours of work attested to by the law firm was unreasonable as a matter of law; and, finally, any amount of fees over $1,500 was unreasonable as a matter of law. Aside from these contentions and their question to collection counsel concerning the necessity of assisting the receiver, excerpted above, Haden and the company did not controvert or attempt to impeach the law firm's timekeeping records. Likewise, they did not provide the trial court, and have not provided this Court, with any authority to support their positions.
The testimony and arguments by Haden's and the company's counsel tended generally to demonstrate that the attorney's fees incurred by the law firm were not "customary" and, therefore, not reasonable. Yet, both counsel acknowledged that evasive tactics by judgment debtors, as demonstrated by the record here, frequently demand extensive work aimed at discovering and executing on nonexempt assets. As well, both attorneys who testified on behalf of Haden and the company conceded that they had not reviewed the "foot and-a-half thick" stack of documents that constituted the less-than typical record filed with the trial court in support of the law firm's pursuit of execution and turnover under section 31.002, which the law firm pursued after recovering the underlying judgment and up to the date that the trial court appointed the receiver.
Having considered the evidence submitted by both the law firm and Haden and the company and, given the absence of express findings by the trial court, having viewed the evidence in the light that most favors the trial court's judgment and its implied finding that the award of $90,000 was reasonable, we cannot say that the trial court disregarded the Andersen v. Perry and rule 1.04(a) factors by making that implied determination.
The record reflects that the second section 31.002(e) hearing was expressly conducted for the following purposes: (1) to require the law firm to substantiate fully both the reasonableness and necessity of $90,000 in attorney's fees and costs in its request, (2) to afford Haden and the company full opportunity to consider and respond to any evidence the law firm might offer and (3) to afford the trial court, as finder of fact at the bench trial, further evaluation of the reasonableness and necessity of the amount of attorney's fees and costs requested, given the circumstances of this case.
Under the record presented, we conclude there is no basis on which to conclude that the trial court abused its discretion by impliedly finding that $90,000 was a necessary and reasonable award of attorney's fees and costs.
We overrule Haden's and the company's first, second, and third sub-issues concerning the trial court's exercise of its discretion in awarding costs and attorney's fees to the law firm pursuant to section 31.002(e) of the turnover statute.
Conclusion
We affirm the judgment of the trial court.