Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca5-03-10630/USCOURTS-ca5-03-10630-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 

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* Pursuant to 5TH CIR. R. 47.5, the court has determined that

this opinion should not be published and is not precedent except

under the limited circumstances set forth in 5TH CIR. R. 47.5.4.

United States Court of Appeals

Fifth Circuit

F I L E D

January 21, 2004

Charles R. Fulbruge III

Clerk

UNITED STATES COURT OF APPEALS

FIFTH CIRCUIT

No. 03-10630

Summary Calendar

GODWIN WHITE & GRUBER PC,

Plaintiff-Appellee,

versus

BRIAN C. DEUSCHLE; ET AL

Defendants,

BRIAN C. DEUSCHLE, Chartered; DEUSCHLE & ASSOCIATES PA,

Defendants-Appellants.

Appeal from the United States District Court

for the Northern District of Texas

(3:00-CV-17-L)

Before BARKSDALE, EMILIO M. GARZA, and DENNIS, Circuit Judges

PER CURIAM:*

Defendants Deuschle, Chartered and Deuschle & Associates

(Deuschle) appeal the denial of their Rule 59(e) motion to amend

the damage award for plaintiff in the bench trial final judgment.

Plaintiff Godwin White & Gruber’s (Godwin) predecessor law

firm agreed to serve as a consultant to Deuschle in a class action

in return for a portion of Deuschle’s contingency fee. In June

1995, Deuschle and that predecessor firm signed a Consulting

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Agreement whereby Deuschle agreed to share with Godwin “the

contingent fee in this matter to the extent of one-third (1/3rd)

thereof”. This Consulting Agreement referred to a proposed letter

of engagement (Fee Agreement) with the class action plaintiffs;

that letter was attached to the agreement signed by Godwin. 

That attached letter was a memorandum of the Fee Agreement

between the class action plaintiffs and Deuschle. It stated that

Deuschle would receive “[f]orty percent (40%) of gross recovery

regardless of amount and regardless of whether secured by

settlement or collection of final judgment”. The Fee Agreement

noted further that Godwin’s predecessor firm had been retained as

a consultant in exchange for “one third (1/3rd) of any contingency

fee received by [Deuschle]”. 

Subsequently, however, Deuschle amended several times the Fee

Agreement with the class action plaintiffs, without notice to

Godwin. Essentially, these changes deducted costs from the

calculation of Deuschle’s fee, thereby substantially reducing the

total amount of the fee; and Deuschle agreed eventually to accept

a flat fee. 

The class action settled in November 1999 for $1.75 million.

Godwin claims it is owed $233,333.33 (1/3 of 40% of $1.75 million);

Deuschle, that, pursuant to the Consulting Agreement, it owes

Godwin only 1/3 of the $268,000 fee it received (1/3 is

$89,333.33). The district court awarded Godwin $233,333.33, based

on its conclusion that the Fee Agreement provided that Godwin

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receive 1/3 of 40% of the gross recovery and it had been

incorporated by reference into the Consulting Agreement.

We generally review decisions to alter or amend judgment under

Rule 59(e) for abuse of discretion. Midland West Corp. v. FDIC,

911 F.2d 1141, 1145 (5th Cir. 1990). To the extent that the ruling

was a reconsideration on a question of law, however, review is de

novo. Tyler v. Union Oil Co., 304 F.3d 379, 405 (5th Cir. 2002).

The district court’s refusal to alter or amend the judgment rests

in part on its conclusion that the Fee Agreement was incorporated

by reference into the Consulting Agreement; therefore, our review

is arguably de novo. In any event, the result is the same under

either standard. Jurisdiction is based on diversity, and the

district court’s decision that Texas law governs has not been

challenged. Therefore, we look to Texas contract law. 

Deuschle contends: our primary concern should be to give

effect to the intent of the parties; and the clear intent of the

Consulting Agreement was for Godwin to receive 1/3 of the fee

Deuschle received. While this may be true of the Consulting

Agreement alone, it referred to the Fee Agreement; both agreements

were attached and submitted together for Godwin’s approval. For

incorporation by reference under Texas law, “[t]he language used is

not important provided the document signed by defendant plainly

refers to another writing”. Owen v. Hendricks, 433 S.W.2d 164, 166

(Tex. 1968). The Consulting Agreement stated: “Consistent with

our conversation, you will find enclosed a copy of the proposed

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letter of engagement by the Plaintiffs....” Therefore, the

Consulting Agreement incorporated the Fee Agreement by reference;

these two documents must be read together to ascertain the parties’

intent. Wolfe v. Speed Fab-Crete Corp. Int’l, 507 S.W.2d 276, 278

(Tex.Civ.App. - Fort Worth 1974, no writ). 

The Fee Agreement provides that Deuschle would receive

“[f]orty percent (40%) of gross recovery” and that “one-third

(1/3rd) of any contingency fee received by [Deuschle]” would go to

Godwin. Specific provisions control over general ones, Forbau v.

Aetna Life Ins., 876 S.W.2d 132, 133 (Tex. 1994); and “40% of gross

recovery” is more specific than “1/3 of any contingency fee”.

Therefore, the intent of the parties was for Godwin to receive 1/3

of 40% of the amount recovered in the class action. Godwin was not

notified of the subsequent changes to the Fee Agreement; therefore

those changes are irrelevant. Safeway Managing Gen. Agency for

State and County Mut. Fire Ins. Co. v. Cooper, 952 S.W.2d 861, 867

(Tex. Ap. - Amarillo 1997, no pet.) (holding that a party cannot

make unilateral modifications to a contract). 

Deuschle further asserts that the district court erred in

considering parol evidence to support its conclusion. Based on the

foregoing, both the holding of incorporation by reference and the

damage award to Godwin are correct, irrespective of the parol

evidence. Therefore, we do not reach this contention. 

AFFIRMED 

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