Texas Court uses new legal theory to limit attorney fees.

HOUSTON, Dec. 6 /PRNewswire/ — The Texas Supreme Court has issued an important decision regarding recovery of attorneys’ fees, ruling for the first time that legal principles previously used to limit or overturn jury damage awards can also be used to rein in legal fees. The December 1 decision came in a case involving a dispute over the distribution of proceeds from the sale of bull semen by Brushy Creek Custom Sires in Taylor, Texas.
Attorney Brett Busby of Mayer, Brown, Rowe & Maw LLP in Houston argued successfully that because the original jury award of compensatory damages against his client was significantly reduced on appeal, a new trial on attorneys’ fees was required.

“We are pleased that the court realized that when damage awards are dramatically reduced on appeal, the sensible thing to do is give the jury an opportunity to reconsider the amount of attorneys’ fees in light of that reduction,” said Busby, who represented Emzy and Ava Barker, owners and operators of Brushy Creek Custom Sires, a business that boarded and provided other services for Brahman bulls.

Dr. Walter Eckman claimed that Brushy Creek had breached its agreement with him by failing to account for sales proceeds.

Houston’s First Court of Appeals reduced the jury’s original award of $112,000 in compensatory damages to $16,000 based on the statute of limitations. While the damage award was reduced, the $244,000 award of attorneys’ fees was not.

The court of appeals reviewed the amount of fees in light of the original damages and concluded that it was supported by sufficient evidence. The supreme court held, however, that the Barkers were entitled to a review of the fee evidence in light of the reduced damages. Because the court of appeals could not perform such a review without substituting its judgment for the jury, the supreme court ordered a new trial on attorneys’ fees.

This is the first time that the Texas Supreme Court has applied the “presumptive harm” rule of the Casteel line of cases to attorneys’ fees. It reasoned that reversal was required unless it could be reasonably certain that the jury’s fee award was not significantly influenced by the erroneous amount of damages it considered. Given the magnitude of the change in damages, the court held that the error was harmful.

The Court also applied the Saenz rule, which states a defendant is entitled to a meaningful evidentiary review of a jury’s determination, to attorneys’ fees. This use of Saenz, which involved non-economic damages, shows the Court’s willingness to put meaningful limits on attorneys’ fees.

“In recent years, windfall awards of damages have been scrutinized by lawmakers, courts, and community groups across the state. The supreme court has taken a significant step in extending this trend of reform to attorneys’ fee awards that are disproportionate to the results achieved in the case,” said Busby.

The Houston office of Mayer, Brown, Rowe and Maw has had another busy and successful year in the Texas appellate courts, including victories in Miga v. Jensen, Alpert v. Gerstner, and COC Services v. Grupo Carso. The appellate group is also handling an appeal of a $1 billion judgment to the Beaumont Court of Appeals. Busby argued his first case in the United States Supreme Court, Day v. McDonough, in February.

The depth of appellate experience in Mayer, Brown, Rowe & Maw’s Houston office is unmatched in Texas. The group boasts native Texans who served as former U.S. Supreme Court clerks, including Busby who clerked for Associate Justice Byron R. White (Ret.) and Associate Justice John Paul Stevens. Jeremy Gaston clerked for Associate Justice Sandra Day O’Connor, and new associate Jeff Oldham clerked for Chief Justice William H. Rehnquist. In addition, associate Lee Kovarsky clerked for Judge Jerry Smith of the U.S. Court of Appeals for the Fifth Circuit. Veteran appellate partner Claudia Frost, who heads the Houston appellate group, has specialized in Texas appeals and litigation for 24 years.

Mayer, Brown, Rowe & Maw LLP is among the largest law practices in the world, with more than 1,400 lawyers practicing in seven U.S. cities, six European cities and Hong Kong. It was named the fastest growing law firm in Texas according to the Houston Business Journal. Mayer, Brown, Rowe & Maw is listed in the 2006 Texas Lawyer annual survey as one of the top five highest-grossing firms in Texas with its largest offices outside of Texas. The Houston office’s Appellate group handles cases in the Texas courts of appeals, the Texas Supreme Court, the United States Supreme Court, and the federal courts of appeals, as well as in state appellate and supreme courts throughout the United States.

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