Texas Workers’ Compensation

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Court of Appeals of Texas,

San Antonio.

DISCOVER PROPERTY & CASUALTY INSURANCE COMPANY, Appellant,

v.

Charles TATE, Appellee.

No. 04–08–00757–CV.

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June 24, 2009.

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Rehearing Overruled Aug. 26, 2009.

Attorneys & Firms

*251 Michael J. Donovan, Burns Anderson Jury & Brenner, L.L.P., Austin, TX, for Appellant.

Ruth B. Downes, Keeling & Downes, P.C., Houston, TX, for Appellee.

Sitting: SANDEE BRYAN MARION, Justice, PHYLIS J. SPEEDLIN, Justice.

OPINION

Opinion by: PHYLIS J. SPEEDLIN, Justice.

Discover Property & Casualty Insurance Company (“Discover”) appeals an award of attorney’s fees against it under section 408.221(c) of the Texas Workers’ Compensation Act. Because we hold the trial court erred in denying Discover’s right to a jury trial on the amount of reasonable and necessary attorney’s fees, we reverse and remand for a new trial on attorney’s fees.

FACTUAL AND PROCEDURAL BACKGROUND

Charles Tate, a maintenance mechanic, was injured during the course of his employment when he fell from a ladder. Tate sought workers’ compensation benefits from Discover, his employer’s insurance carrier. While Discover ultimately agreed that Tate’s injury was compensable, it rejected two of his applications for supplemental income benefits because it did not believe he was participating in a full-time vocational rehabilitation program. Tate initiated a contested case hearing in which he was successful. Discover appealed to an appeals panel of the Texas Department of Insurance, Division of Workers’ Compensation (“DWC”). The DWC panel affirmed the case hearing officer’s rulings that Tate was entitled to receive second and third quarter supplemental income benefits.

Discover then sought judicial review in the district court and requested a jury trial; it filed a motion to consolidate the two cases, which was granted. Tate filed a general denial, along with a counterclaim seeking to recover his attorney’s fees from Discover under TEX. LABOR CODE ANN. § 408.221(c) (Vernon 2006). After a two-day trial, the jury found that Tate was entitled to receive approximately $9,800 in second and third quarter supplemental income benefits.

Tate filed two post-trial motions—a motion to enter judgment on the jury’s verdict, and a motion for approval and award of his attorney’s fees by the court. Affidavits from three of his attorneys (Mike Doyle, John Davis, and Peter Kelly, appellate counsel) and itemized billing statements were attached to Tate’s motion for attorney’s fees, which requested total fees through trial of $105,676.96, plus $4,255 in fees for recovering his attorney’s fees and conditional appellate fees. Discover filed a response objecting to Tate’s request for attorney’s fees, arguing his claim for fees was waived because no evidence of fees *252 was submitted to the jury; it also disputed the amount and attached an affidavit from its attorney opining that the fees were excessive. Discover asserted in its response that because the “reasonable and necessary” amount of fees was disputed, it was a fact question for the jury to resolve. At the hearing on Tate’s motion for attorney’s fees, Discover argued waiver based on the lack of a jury finding on the amount of attorney’s fees, and objected to proceeding on the basis of affidavits alone. It reiterated its position that the amount of reasonable fees was a jury issue, and alternatively requested a plenary or evidentiary hearing on the issue. Both requests were denied by the trial court. At the conclusion of the hearing, the trial court entered judgment on the jury’s verdict and awarded Tate the following attorney’s fees: $105,676.96 in attorney’s fees through the end of trial; $1,000 (reduced) for attorney’s fees incurred in recovering his attorney’s fees; and $25,000 (reduced) in conditional appellate attorney’s fees. Discover appealed, challenging only the award of attorney’s fees.

In its first four issues on appeal, Discover argues the trial court erred in denying it a jury trial, or, at a minimum, a plenary hearing, on the amount of “reasonable and necessary” attorney’s fees; Discover also argues that Tate waived his claim for attorney’s fees, either by failing to submit a jury issue on the amount of reasonable and necessary fees or, alternatively, by failing to admit any evidence on the amount of reasonable and necessary fees at a plenary hearing. Discover also asserts that Tate is not entitled to recover attorney’s fees incurred “in pursuit of fees.” Finally, Discover challenges the award of attorney’s fees as excessive.

RECOVERY OF ATTORNEY’S FEES UNDER SECTION 408.221(C)

Id. § 408.221(c). The main issue presented in this appeal is whether a jury trial, or, alternatively, a plenary hearing,1 when requested, is permitted under subsection (c) on the issue of the amount of reasonable and necessary attorney’s fees.

1. Jury Trial on Amount of Attorney’s Fees under Subsection (c).

Discover argues it was entitled to a jury trial on Tate’s claim for attorney’s fees, particularly as to the amount of “reasonable and necessary” fees. It contends that section 408.221, even when the fee-shifting provisions of subsection (c) come into play.

We begin by noting that when the Texas Supreme Court has dealt with the issue of a “reasonable and necessary” amount of attorney’s fees recoverable under a statute, it has consistently held that it is a question of fact for a jury to resolve. See section 408.221’s provisions authorizing the recovery of a claimant’s attorney’s fees in view of this Supreme Court precedent recognizing the general right to a jury determination of the reasonable amount of attorney’s fees.

We conduct a de novo review and interpret Keng, 23 S.W.3d at 349 (provisions of the Texas Workers’ Compensation Act should be liberally construed in favor of the injured employee).

We begin by looking to the plain language of the statute. In relevant part, section 408.221 provides,

(a) An attorney’s fee, including a contingency fee, for representing a claimant before the division or court under this subtitle must be approved by the commissioner or court.

(b) Except as otherwise provided, an attorney’s fee under this section is based on the attorney’s time and expenses according to written evidence presented to the division or court. Except as provided by Subsection (c) …, the attorney’s fee shall be paid from the claimant’s recovery.

(c) An insurance carrier that seeks judicial review under Subchapter G, Chapter 410, of a final decision of the appeals panel regarding compensability or eligibility for, or the amount of, income or death benefits is liable for reasonable and necessary attorney’s fees as provided by Subsection (d) incurred by the claimant as a result of the insurance carrier’s appeal if the claimant prevails on an issue on which judicial review is sought by the insurance carrier … If the carrier appeals multiple issues and the claimant prevails on some, but not all, of the issues appealed, the court shall apportion and award fees to the claimant’s attorney only for the issues on which the claimant prevails. In making that apportionment, the court shall consider the factors prescribed by Subsection (d)….

(d) In approving an attorney’s fee under this section, the commissioner or court shall consider:

(1) the time and labor required;

(2) the novelty and difficulty of the questions involved;

(3) the skill required to perform the legal services properly;

(4) the fee customarily charged in the locality for similar legal services;

(5) the amount involved in the controversy;

(6) the benefits to the claimant that the attorney is responsible for securing; and

(7) the experience and ability of the attorney performing the services.

(i) Except as provided by Subsection (c) …, an attorney’s fee may not exceed 25 percent of the claimant’s recovery.

TEX. LABOR CODE ANN. § 408.221.

As stated, we are concerned with subsection (c) in this case, but must interpret it within the context of the statute as a whole. First, we note that subsection (c) does not give the trial court discretion as to “whether” to award attorney’s fees, but rather requires it by providing in affirmative language that the insurance carrier “is liable for” the claimant’s reasonable and necessary attorney’s fees. Id. § 408.221(d).

Reading subsection (c) in the context of the statute as a whole, particularly together with subsections (b) and (d), we conclude the Legislature intended the amount of “reasonable and necessary” fees under (c) to be calculated based on the Andersen factors set forth in (d), not merely on the “attorney’s time and expenses according to written evidence” as provided in (b). We read (b) as applying to the situation where a claimant’s attorney’s fees are to be paid out of the claimant’s recovery, which was the original application of Andersen, 945 S.W.2d at 818–19.

We recognize that one of our sister courts of appeal has recently decided this issue differently. See City of Garland line of cases by the Texas Supreme Court holding that the amount of attorney’s fees is generally a jury issue. We therefore find Crump distinguishable from the issue presented in this appeal.

Viewing the language of Britton, 406 S.W.2d at 907 (claim for attorney’s fees is severable).

Having determined that under applicable Supreme Court precedent Discover *257 was entitled to a jury determination of the amount of attorney’s fees recoverable by Tate under section 408.221(c), we need not address Discover’s argument that it also had the right to a jury trial under the Texas Constitution, or its alternative argument that it had the right to a plenary hearing on the issue of attorney’s fees. In addition, because we are reversing and remanding for a new trial on the amount of attorney’s fees, we do not reach Discover’s complaint that the fees awarded by the trial court are excessive.

2. Waiver of Claim for Attorney’s Fees.

Discover also argues on appeal that, because the reasonable amount of attorney’s fees is a jury issue, Tate waived his counterclaim for attorney’s fees by failing to submit a jury issue on fees during trial, or by failing to object to omission of such an issue from the jury charge. See Dean Foods Co. v. Anderson, 178 S.W.3d 449, 453 (Tex.App.-Amarillo 2005, pet. denied) (request for attorney’s fees in judicial review of worker’s compensation award is a claim for affirmative relief). Under the circumstances of this case, however, and in the interest of justice, we decline to find waiver.

First, as previously noted, Scott Bader, Inc. v. Sandstone Products, Inc., 248 S.W.3d 802, 822 (Tex.App.-Houston [1st Dist.] 2008, no pet.) (remand is appropriate when a case, for any reason, has not been fully developed).

3. Fees in Pursuit of Fees.

Because it is capable of being repeated by the trial court on remand, we must address Discover’s argument that Tate is not entitled to recover his attorney’s fees in pursuit of attorney’s fees. The trial court awarded Tate $1,000 in attorney’s fees incurred in attending the hearing on Tate’s motion for attorney’s fees under El Paso Natural Gas, 8 S.W.3d at 312. In interpreting the statutory language of subsection (c), we apply the same basic principles of statutory construction discussed above.

TEX. LABOR CODE ANN. § 408.221(c) (emphasis added). Two of our sister courts of appeal have interpreted this language in the context of an insurance carrier’s challenge to recovery of “fees in pursuit of fees,” and have reached conflicting results.

Discover relies on section 408.221 permitting an award of attorney’s fees incurred in pursuit of fees, and reversing the $5,126 fee award and rendering a take-nothing judgment on that claim).8

Tate characterizes Vega–Garcia’s construction of Tex. Mun. League Intergovernmental Risk Pool v. Burns, 209 S.W.3d 806, 819–20 (Tex.App.-Fort Worth 2006, no pet.) (affirming award of post-trial attorney’s fees incurred by claimant as a result of insurance carrier’s appeal of workers’ compensation award)).

The Crump opinion briefly distinguishes Vega–Garcia on the basis that the insurance carrier in that case had non-suited its judicial review proceeding. Pacific Employers Ins. Co. v. Torres, 174 S.W.3d 344, 346–47 (Tex.App.-El Paso 2005, no pet.) (same).

We agree with the reasoning in Vega–Garcia that the “as a result of” language used in section 408.221(c).

Conclusion.

Based on the foregoing analysis, we conclude the statute at issue, section 408.221(c) of the Texas Workers’ Compensation Act, entitles Discover to a jury trial on the “reasonable and necessary” amount of attorney’s fees recoverable by Tate. Accordingly, we remand to the trial court for further proceedings consistent with this opinion.

Concurring and dissenting opinion by: SANDEE BRYAN MARION, Justice.

SANDEE BRYAN MARION, Justice, concurring and dissenting.

I respectfully dissent from the majority’s holding because I believe the Legislature intended for the determination of whether to award attorney’s fees and the amount to be awarded under section 408.221 is entitled to one.

AWARD OF ATTORNEY’S FEES UNDER SECTION 408.221

Section 408.221 provides as follows:

*261 (a) An attorney’s fee, including a contingency fee, for representing a claimant before the division or court under this subtitle must be approved by the commissioner or court.

(b) Except as otherwise provided, an attorney’s fee under this section is based on the attorney’s time and expenses according to written evidence presented to the division or court. Except as provided by Subsection (c) …, the attorney’s fee shall be paid from the claimant’s recovery.

(c) An insurance carrier that seeks judicial review under Subchapter G, Chapter 410, of a final decision of the appeals panel regarding compensability or eligibility for, or the amount of, income or death benefits is liable for reasonable and necessary attorney’s fees as provided by Subsection (d) incurred by the claimant as a result of the insurance carrier’s appeal if the claimant prevails on an issue on which judicial review is sought by the insurance carrier … If the carrier appeals multiple issues and the claimant prevails on some, but not all, of the issues appealed, the court shall apportion and award fees to the claimant’s attorney only for the issues on which the claimant prevails. In making that apportionment, the court shall consider the factors prescribed by Subsection (d)….

(d) In approving an attorney’s fee under this section, the commissioner or court shall consider.

(1) the time and labor required;

(2) the novelty and difficulty of the questions involved;

(3) the skill required to perform the legal services properly;

(4) the fee customarily charged in the locality for similar legal services;

(5) the amount involved in the controversy;

(6) the benefits to the claimant that the attorney is responsible for securing; and

(7) the experience and ability of the attorney performing the services.

(i) Except as provided by Subsection (c) …, an attorney’s fee may not exceed 25 percent of the claimant’s recovery.

TEX. LABOR CODE ANN. § 408.221 (Vernon 2006) (emphasis added).

As the majority correctly notes, we must construe section 408.221, in its entirety, or in subsections (c) or (d), more specifically, indicates the Legislature intended the commissioner or trial court to determine attorney’s fees under subsection (a), but a jury to determine attorney’s fees under subsection (c).

The majority’s holding that a jury must determine the reasonableness and necessity of the fees is premised on its conclusion that provisions authorizing the recovery of a claimant’s attorney’s fees under City of Garland v. Dallas Morning News, 22 S.W.3d 351 (Tex.2000), the Texas Supreme Court considered whether the trial judge, and not a jury, determines the amount of attorney’s fees under the Texas Public Information Act, which provided at the time of the decision as follows:

(a) In an action brought under Section 552.321 [suit for writ of mandamus under the Act] …, the court may assess costs of litigation and reasonable attorney fees incurred by a plaintiff or defendant who substantially prevails.

(b) In exercising its discretion under this section, the court shall consider whether the conduct of the governmental body had a reasonable basis in law and whether the litigation was brought in good faith.

See Act of May 27, 1999, S.B. 1851 § 29, 76th Leg., R.S. (codified at TEX. GOV’T CODE ANN. § 552.323 (Vernon 2004)).

The Dallas Morning News argued that by including the “court” language and omitting any provision for a jury determination, the Legislature indicated its intent that Bocquet, 972 S.W.2d at 21).

In Bocquet, the issue before the Court was “what standard is … an award of attorney fees [under the Declaratory Judgment Act] to be reviewed on appeal.” Id. at 21 (citation omitted).

I believe the wording of the statutes considered by the Supreme Court in City *263 of Garland and Bocquet is the distinguishing factor. Neither the Texas Public Information Act nor the Declaratory Judgment Act state how to determine the amount of attorney’s fees. Bocquet, 972 S.W.2d at 21) (emphasis added).

For the reasons stated above, I would hold that the determination of whether to award attorney’s fees and the “reasonable and necessary” amount to be awarded under Dean Foods Co. v. Anderson, 178 S.W.3d 449, 455 (Tex.App.-Amarillo 2005, pet. denied) (“Attorney’s fees must be approved by TWCC or the trial court and must be based upon the attorney’s time and expense as evidenced by written documentation…. However, the manner and amount of the award of attorney’s fees is within the trial court’s discretion.”).

PLENARY HEARING1

The trial court awarded attorney’s fees based on opposing affidavits without hearing the testimony of any witness. On appeal, Discover Property & Casualty Insurance Company asserts it was entitled to a plenary hearing, i.e., a full evidentiary hearing, on the contested issue of the reasonableness and necessity of the fees awarded to Charles Tate. I agree.

TEX. LABOR CODE ANN. § 408.221(b) (emphasis added). I do not interpret this section as prohibiting a full evidentiary hearing, if requested, at which witnesses are subject to cross-examination.

General Motors Corp. v. Bloyed, 916 S.W.2d 949, 958 (Tex.1996) (remanding to trial court for plenary hearing on approving class action settlement).

Therefore, “[g]iven the heightened responsibility of the trial court in approving [the award of attorney’s fees under Marker v. Garcia, 185 S.W.3d 21, 27 n. 3 (Tex.App.-San Antonio 2005, no pet.) (holding that the “credibility of the Garcias is likely to be a dispositive factor in the resolution of the case; therefore, the affidavits would not support a summary judgment in favor of the Garcias because the affidavits would not conclusively establish that the property was to be used as the Garcias’ residence.”). Accordingly, I would remand for the trial court to conduct a full evidentiary hearing on the attorney’s fees issue. Because I would remand the cause to the trial court, I concur in the judgment.

Footnotes

1

A plenary hearing involves witnesses presenting testimony in court or by deposition, and thus subject to cross-examination, rather than by affidavit. Jack B. Anglin Co. v. Tipps, 842 S.W.2d 266, 269 (Tex.1992).

2

Arthur Andersen & Co. v. Perry Equipment Corp., 945 S.W.2d 812 (Tex.1997).

3

Indeed, we have previously interpreted Motley, 491 S.W.2d at 397.

4

Parties may certainly agree to submit the amount of reasonable and necessary attorney’s fees recoverable under section 408.221(c) to the trial court).

5

Transcontinental Ins. Co. v. Smith, 135 S.W.3d 831 (Tex.App.-San Antonio 2004, no pet.).

6

In his brief, Tate initially asserts that Discover failed to preserve this issue because it did not object to recovery of “fees in pursuit of fees” in its written response. However, at the hearing on attorney’s fees, Discover’s counsel argued that under Vega–Garcia Tate was not entitled to recover “fees on top of fees,” and objected to any such recovery. TEX.R.APP. P. 33.1.

7

TEX. LABOR CODE ANN. § 408.147(c) (Vernon 2006).

8

We note the insurance company in Vega–Garcia did not appeal the jury award of $18,540 in attorney’s fees incurred for preparation and trial concerning the award of supplemental income benefits, or the award of conditional appellate fees. Vega–Garcia, 223 S.W.3d at 765, 770 n. 2.

9

A petition for review in the Texas Supreme Court was filed in Crump on January 5, 2009.

1

As the majority notes, a plenary hearing involves witnesses presenting testimony in court or by deposition, and thus subject to cross-examination, rather than by affidavit. Jack B. Anglin Co. v. Tipps, 842 S.W.2d 266, 269 (Tex.1992).

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At a Glance:

Title:

Discover Property & Cas. Ins. Co. v. Tate

Court:

4th COA – San Antonio

Citation:

298 S.W.3d 249

Date:

August 26, 2009

Status:

Published Opinion
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