United States Court of Appeals,

Fifth Circuit.

No. 91-1848.

PALMCO CORPORATION, Plaintiff-Appellee Cross-Appellant,

v.

AMERICAN AIRLINES, INC., Defendant-Appellant Cross-Appellee.

Feb. 22, 1993.

Appeals from the United States District Court for the Northern District of Texas.

Before GOLDBERG, SMITH, and EMILIO M. GARZA, Circuit Judges.

EMILIO M. GARZA, Circuit Judge:

In this case involving a breach of contract for knives, spoons, and forks("flatware"), Palmco

Corporation claimed that American Airlines did not pay for delivered flatware. American

counterclaimed, asserting that Palmco breached the contract by failing to deliver the flatware timely,

by failing to make cert ain deliveries, and by refusing to deliver certain flatware orders unless

American agreed to a price increase. The magistrate judge awarded $112,410 in cover damages to

American, but held that Palmco was entitled to an offset of $62,870 against these damages for

unpaid-for, delivered flatware. The magistrate judge also limited attorneys' fees to 60% of the

amount each party recovered as damages. Palmco and American appeal the magistrate judge's

assessment of damages and attorneys' fees. We affirm in part, and reverse in part.

I

Palmco contracted to supplyAmericanwith flatware for itsinflight mealservice for the period

between September 1, 1987 and August 31, 1988. The contract set the prices for the flatware, and

also contained a liquidated damages clause in case Palmco made untimely deliveries. Palmco's

deliveries were late during the duration of the contract. In addition, Palmco failed to deliver certain

orders. American repeatedly explained to Palmco that the late deliveries were causing an inventory

shortage. Also, because of Palmco's non-deliveries, American had to place spot orders with other
 

1A spot order is an order for a specified quantity of goods to be provided at a specific time at a

specific price, whereas an annual contract involves multiple purchases over the life of the contract. 

See Record on Appeal, vol. 2, at 272. 

 

2Palmco claims that it did not deliver the 30,000 dozen knives because American failed to

provide adequate assurance of payment. See Brief for Palmco at 27. Palmco therefore claims

that equitable principles require that American purchase the knives built to American's

specifications. See id. at 29-32. 

 

3Palmco is a corporation organized under the laws of the state of California, with its principal

place of business in California. See Record on Appeal, vol. 2, at 271. American is a Delaware

flatware suppliers to ensure an adequate flatware inventory for the summer months.1 The price

American paid for flatware under these spot orders was substantially higher than the contract price

with Palmco.

In April 1988, Palmco refused to deliver the remaining flatware orders unless American

agreed to an approximately25% price increase. American attempted to purchase flatware from other

suppliers, but determined that none could meet American's demand at the time Palmco's deliveries

were due. American therefore agreed to the price increase for the remaining flatware orders.

In July 1988, American notified Palmco that it was setting off its damages for Palmco's late

and non-deliveries against its outstanding account balance, pursuant to Tex.Bus. & Com.Code §

2.717 (Tex.U.C.C.) (Vernon 1968). In response, Palmco refused to deliver American's remaining

orders—30,000 dozen knives.

Palmco filed suit against American for its failure to pay for the flatware American had

received, as well as the 30,000 dozen knives Palmco did not deliver to American.2 Palmco also

sought damages for fraud. American counterclaimed, asserting that Palmco had breached the

contract. American sought damages for late and non-deliveries, duress damages for the 25% price

increase, and recovery for fraud. By consent of the parties, the case was transferred to a magistrate

judge for hearing and determination, pursuant to 28 U.S.C. § 636(c)(1) (1988).

In his findings of fact and conclusions of law, the magistrate judge found the parties' fraud

claimsto be without merit. The magistrate judge awarded American $112,410 in cover damages, but

declined to award liquidated damages, based upon the conclusion that Texas law prohibits the

recovery of both cover and liquidated damages.3 As for Palmco, the magistrate judge awarded
corporation doing business in the state of Texas. See id. A choice of law provision in the

contract requires that we construe the contract under Texas law. See American's Record Excerpt

12, Condition 24; Eastern Air Lines, Inc. v. McDonnell Douglas Corp., 532 F.2d 957, 968 (5th

Cir.1976) (construing contract under California law, pursuant to choice of law provision in

contract). 

Palmco $62,870—as an offset against American's damage award—for unpaid-for, delivered flatware.

However, the magistrate judge determined that American was not obligated to pay Palmco for the

30,000 dozen knivesstillin Palmco's possessionwhenAmerican allegedlycancelled the contract. The

magistrate judge also found that the agreement to purchase flatware at the 25% price increase was

made under duress, and wastherefore void. As for attorneys' fees, the magistrate judge awarded each

party 60% of the amount each party recovered in damages.

American appeals the magistrate judge's assessment of damages and attorneys' fees,

contending that: (1) it is entitled to recover both its cover and liquidated damages; (2) it is entitled

to receive additional duress damages resulting from the 25% price increase; (3) it is entitled to

additional attorneys' fees based on any additional recovery; and (4) the magistrate judge erred in

awarding attorneys' fees to Palmco.

Palmco cross-appeals, claiming that: (1) American was barred from recovery on its contract

claims because of its failure to give notice of Palmco's breach; (2) the magistrate judge erred in not

requiring American to purchase the 30,000 dozen knivesretained by Palmco; and (3) the magistrate

judge erred in not awarding Palmco additional attorneys' fees based upon American's post-suit but

pre-trial payment of $42,134 for unpaid-for, delivered flatware.

II

A

Palmco argues that American failed to give proper notice of Palmco's breach of contract for

untimely deliveries. Under Texas law, a buyer, upon accepting tender, must notify the seller of any

breach "within a reasonable time after he discovers any breach ... or be barred from any remedy."

Tex.Bus. & Com.Code Ann. § 2.607(c) (Tex.U.C.C.) (Vernon 1968); see also City of Marshall,

Texas v. Bryant AirConditioning, 650 F.2d 724, 727 (5thCir.1981)("Texaslaw requires notification

by the buyer to the seller that a breach ... has occurred, so that the seller has an opportunity to cure
 

4Where a trial court has made a determination of proper notice under § 2.607(c), that

determination is generally given great weight by a reviewing court. T.J. Stevenson & Co., Inc. v.

81,193 Bags of Flour, 629 F.2d 338, 361 (5th Cir.1980). 

 

5The magistrate failed to cite any authority supporting his apparent conclusion that a buyer

need not give notice of breach where the underlying contract contains a liquidated damages

clause. See Record on Appeal, vol. 2, at 479. The parties do not dispute that American had to

give notice of Palmco's breach of contract for untimely deliveries. See Brief for Palmco at 12-14; 

Reply Brief for American at 3-4. 

 

6The magistrate did make some findings concerning whether American had informed Palmco

that it would seek to enforce the liquidated damages clause of the contract. See Record on

Appeal, vol. 2, at 281. However, these findings were apparently made to determine the validity of

Palmco's fraud claim, see id. at 285, and not to determine if American had given proper notice

under § 2.607(c) an altogether different analysis. 

the breach."). In Eastern Air Lines, Inc. v. McDonnell Douglas Corp., 532 F.2d 957 (5thCir.1976),

we outlined a framework for determining whether proper notice has been given under § 2.607.

The magistrate judge did not make a finding whether American gave Palmco proper notice

under § 2.607.4 Rather, the magistrate judge opined that our decision in Eastern Air Lines was

"inapposite [to the case before it] ... [because] in [Eastern Air Lines] that case the contract at issue

was silent as to liquidated damages." Record on Appeal, vol. 2, at 479. Thus, we must determine

initiallywhether the magistrate judge erred, as a matter oflaw, in not applying the notice requirement

under § 2.607. We review questions of law de novo. Zimmerman v. H.E. Butt Grocery Co., 932

F.2d 469, 471 (5thCir.), cert. denied, --- U.S. ----, 112 S.Ct. 591, 116 L.Ed.2d 615 (1991). Because

no Texas decision holdsthat the notice requirement under § 2.607 does not apply where the contract

contains a liquidated damages clause,5 the magistrate judge clearly erred in not applying the notice

requirement under § 2.607.6

We decide, rather than remand, the issue ofwhether American gave proper notice to Palmco,

because the issue is a matter of law based upo n the undisputed facts of this case. See Carroll

Instrument Co. v. B.W.B. Controls, 677 S.W.2d 654, 657 (Tex.App.—Houston [1st Dist.] 1984, no

writ) (providing notice may become a question of law, "where there is no room for ordinary minds

to differ as to the proper conclusions to be drawn from the evidence"). Palmco argues that
 

7Under § 2.607, "[t]he buyer's conduct ... taken as a whole, must constitute timely notification

that the transaction is claimed to involve a breach." Eastern Air Lines, 532 F.2d at 978. 

 

8Palmco maintains that American did not provide notice under § 2.607 in good faith. Palmco

specifically alleges that American's actions misled Palmco into believing that its performance

under the contract was satisfactory. A merchant is required to exercise good faith in providing

notice of breach, which is measured by reasonable commercial standards of fair dealing in the

trade. See Eastern Air Lines, 532 F.2d at 977. After reviewing the record, we cannot find any

acts by American which would have led Palmco to believe that its performance under the contract

was satisfactory. In fact, the record indicates that American repeatedly gave Palmco oral and

written expressions of dissatisfaction over Palmco's performance under the contract. See Record

on Appeal, vol. 2, at 280-81. Therefore, American exercised good faith in providing adequate

and timely notice to Palmco. 

American's notice of Palmco's breach of contract for late deliveries was inadequate.7 The first

breach—for late deliveries—about which American complained occurred on February 3, 1988. Six

weeks later, American wrote a letter to Palmco, stating that its performance under the contract was

unacceptable, and that American intended to hold Palmco to the terms of the contract. See Palmco's

Record Excerpt 6. Palmco does not dispute that this letter—dated April 11, 1988—was timely.

Rather, Palmco claims that the letter was inadequate because it did not inform Palmco that its late

deliveries constituted a breach of contract. The last paragraph of the letter states:

For at least the past five months you have consistently failed to meet your delivery date

obligations. As we have made clear this is totally unacceptable to American Airlines. We

insist that you fulfill all of your contractual obligations.

Record Excerpts for Palmco at tab. 6. This language, though not explicit, nevertheless sufficed to

inform Palmco that its late deliveries constituted a breach of contract. Consequently, we find that

American gave timely and adequate notice of breach.8

B

Palmco next argues that the magistrate judge erred in concluding, as a matter of law, that

American was not obligated to pay for the 30,000 dozen knives in Palmco's possession when

American allegedly cancelled the contract. We review questions of law de novo. See H.E. Butt, 932

F.2d at 471.

Paragraph VIII of the contract obligated American to buy any "inventory in transit and in

process" at the time of American's cancellation ofthe contract. Record Excerpts for American at tab.

12. The parties do not dispute that the 30,000 dozen knives were in transit when the contract was
 

9Palmco also raises an equitable claim that American should be compelled to purchase the

30,000 dozen knives built to American's specifications and displaying the "AA" logo, which

cannot be sold to anyone else for anything but salvage value. See Brief for Palmco at 29-32. 

Texas courts have refused to grant equitable relief where a party has an adequate remedy at law. 

See, e.g., Raine v. Searles, 302 S.W.2d 486, 487 (Tex.Civ.App.—El Paso 1957, no writ). 

Palmco had an adequate remedy at law—a breach of contract claim against American for the price

of the undelivered 30,000 dozen knives—which it pursued. Palmco's failure to succeed on this

cancelled. See Brief for Palmco at 26; Reply Brief for American at 20-22. American, however,

contendsthat it is not obligated to pay for the knives, because Palmco initially breached the contract

by failing to deliver the knives. If Palmco breached the contract by failing to deliver the knives, then

American had the statutory right to cancel the contract and pursue cover damages. See Tex.Bus. &

Com.Code Ann. § 2.711(a)(1) (Tex.U.C.C.) (Vernon 1968).

Palmco does not deny that it failed to deliver the knives. Nevertheless, Palmco maintains that

it did not breach the contract by failing to deliver the knives. Palmco argues that it rightfully withheld

delivery ofthe knives because American failed to respond to Palmco'srequest for adequate assurance

of payment of outstanding invoices. "When reasonable grounds for insecurity arise with respect to

the performance of either party the other may in writing demand adequate assurance of due

performance and until he receives such assurance may if commercially reasonable suspend any

performance for which he has not already received the agreed return." Tex.Bus. & Com.Code Ann.

§ 2.609(a) (Tex.U.C.C.) (Vernon 1968). Palmco contends that American's letter of July 18,

1988—stating that it was going to offset its damages for late and non-deliveries against future

invoices, pursuant to Tex.Bus. & Com.Code § 2.717—gave it reasonable groundsfor insecurity. See

Record Excerpts for Palmco at tab. 8. We disagree.

Thisletter—constituting a notice of offset—precludes Palmco fromclaiming that American's

intention of withholding payment provided reasonable grounds for insecurity. See Tex.Bus. &

Com.Code § 2.717, comment 2 ("The buyer, however, must give notice of his intention to withhold

all or part of the price if he wishes to avoid a default within the meaning of the section on insecurity

and right to assurances [§ 2.609(a) ]."). Because Palmco had no reasonable grounds for insecurity,

Palmco breached the contract when it failed to deliver the knives. Accordingly, the magistrate judge

properly concluded that American was not obligated to pay for the knives.9
claim does not mean that it was without a legal remedy. Therefore, Palmco is not entitled to

equitable relief. 

C

(i)

American claims that the magistrate judge erred in concluding, as a matter of law, that

American was not entitled to recover both liquidated and cover damages. We review questions of

law de novo. See H.E. Butt, 932 F.2d at 471.

The magistrate judge found that American incurred liquidated damages in the amount of

$81,584, based upon Palmco's late deliveries of flatware under the contract. See Record on Appeal,

vol. 2, at 453. He also found that American incurred cover damages in the amount of $112,410,

because of Palmco's non-deliveries of flatware under the contract. See id. at 282. Citing Texas law,

the magistrate judge co ncluded that American was entitled to recover either liquidated or cover

damages, but not both. See id. at 454-55. Consequently, the magistrate judge awarded only the

higher amount of $112,410 in cover damages. See id.

Texas law prevents a party from recovering both liquidated and cover damages where both

measures compensate a party for the same injury. See Marcus, Stowell & Beye v. Jefferson Inv.

Corp., 797 F.2d 227, 233 (5th Cir.1986) ("Under the Texas one satisfaction rule, "an injured party

is entitled to but one satisfaction for a single injury....' " (quoting Gill v. United States, 429 F.2d

1072, 1079 (5th Cir.1970))); Eberts v. Businesspeople Personnel Services, Inc., 620 S.W.2d 861,

864 (Tex.Civ.App.—Dallas 1981, no writ) (providing that where damagesremedies are duplicative,

liquidated damages cannot be recovered in addition to actual damages (citing Robert G. Beneke &

Co. v. Cole, 550 S.W.2d 321, 322 (Tex.Civ.App.—Dallas 1977, no writ))). American argues that

its liquidated and cover damages compensated for distinct injuries resulting from Palmco's late and

non-deliveries. Consequently, American argues that the magistrate judge erred in awarding only one

measure of damages.

The magistrate judge'sfindings of fact support the conclusion that American suffered distinct

injuries from Palmco's late and non-deliveries. The magistrate judge found that Palmco's late
deliveries reduced American's flatware inventory stock to a near zero level, resulting in American

having to curtail meal service. See Record on Appeal at 274-75. The magistrate judge expressly

found that the reduction in meal service adversely affected the image and reputation of American.

See id. at 275. In addition, the magistrate judge found that shortages in flatware at one location

created logisticalproblemsin substituting meals. See id. The magistrate judge found that the damage

to American's reputation, and the additional costs due to shuffling of meals, were clear, though not

readily ascertainable. See id. Based upon these findings, the magistrate judge concluded that

"American had proved up liquidated damages under the contract ... in the sum of $81,584." Id. at

453.

In contrast to the damage American incurred because of Palmco's late deliveries, Palmco's

non-deliveries caused American readily ascertainable damage in the formofincreased flatware costs.

The magistrate judge expresslyfound that "American ... incurred additionalexpensesfor knives, forks

and spoons purchased under the spot orders to "cover' the supplies not provided by Palmco under

the contract...." See id. at 282 (emphasis added). Palmco claims that the spot orders were used to

cover the late deliveries. However, the magistrate judge expressly found that the spot orders were

used to cover for non-deliveries of flatware. See id. Thus, American incurred distinct injuries from

Palmco's separate breaches of the contract. Because American's liquidated and cover damages

redressed different injuries, and thus were not duplicative, the magistrate judge erred in concluding

that American was not entitled to receive both damage remedies. See Louis Lyster General

Contractor v. City of Las Vegas, 83 N.M. 138, 489 P.2d 646, 654 (1971) (awarding both liquidated

and cover damages where no duplication of damages occurred).

(ii)

American next claims that the magistrate judge erred in calculating the amount of damages

to which it was entitled due to Palmco's 25% price increase. We review a factual finding as to the

amount of damages for clear error. See Albany Ins. Co. v. Bengal Marine, Inc., 857 F.2d 250, 253

(5th Cir.1988) ("Damages need not be proven with an exact degree ofspecificity, and we review the

award under the clearly erroneous standard."). " "[A] factual finding may be set aside under the
 

10The magistrate found that American was overcharged the amount of $16,100 for the two

open purchase orders. See Record on Appeal, vol. 2, at 455-56 n. 1. Since American still owed

Palmco under the open invoices, the magistrate simply deducted $16,100 from the amount

Palmco was entitled to receive as damages, for unpaid-for, delivered flatware. See id. 

 

11Palmco does not argue that the price increases applied to other purchase orders, or dispute

the amount of the overcharge on those purchase orders. Rather, Palmco argues that the

magistrate, in not awarding additional duress damages for the purchase orders fully paid for by

American, must have implicitly adopted its arguments of waiver, ratification, and estoppel. See

Brief for Palmco at 43-45. The sole basis for Palmco's claim is that American made full payments

to Palmco on certain purchase orders that contained the price increases. However, this fact is not

determinative, because the magistrate found that the underlying agreement to pay for the purchase

orders was made under duress. 

clearly erroneous rule only if we are left, on review of the evidence, with the firm and definite

conviction that a mistake had been committed.' " McDaniel v. Temple Indep. School Dist., 770 F.2d

1340, 1347 (5th Cir.1985) (quoting Oil, Chemical and Atomic Workers Int'l Union v. Ethyl Corp.,

703 F.2d 933, 935 (5th Cir.1983)).

On April 4, 1988, Palmco requested price increases of approximately 25%, on the per unit

prices to be charged for the remaining flatware to be delivered under the contract. See Record on

Appeal, vol. 2, at 283. American reluctantly agreed to the price increases, but only after it had

determined that no othersupplier could fulfill itsflatware requirements. See id. The magistrate judge

found that the price increases were made under duress, and therefore void. See id. at 287. In

fashioning a remedy, the magistrate judge only awarded American the amount it was overcharged on

its two open purchase orders—those with an outstanding account balance.10 American claims that

the magistrate judge clearly erred in concluding that it was not also entitled to the amount it was

overcharged for its other purchase orders—those delivered by Palmco, and paid-for in full by

American. We agree.

The magistrate judge expressly found that the agreement to the price increases was void. The

agreement included eight separate purchase orders, and was not limited to American's two open

purchase orders. See Record Excerptsfor Palmco at tab. 6. Thus, the magistrate judge clearly erred

in not awarding American additional duress damagesfor the amount—$52,631—it was overcharged

on those other purchase orders.11

D
 

12The magistrate concluded that American was entitled to receive $112,410 in cover damages,

more than offsetting Palmco's award of $62,870. See Record on Appeal, vol. 2, at 454. 

The remaining issues before us concern the magistrate judge's assessment of attorneys' fees.

We review an award of attorneys' fees for abuse of discretion. Gulf Union Indus. Inc. v. Formation

Sec., Inc., 842 F.2d 762, 766 (5th Cir.1988).

American argues that it is entitled to additional attorneys' fees, based upon the additional

damages it is entitled to recover. The magistrate judge determined that each party should receive

attorneys' fees in the amount of 60% of the amount each party recovered as damages. See Record

on Appeal, vol. 2, at 450. The parties do not dispute the reasonableness of the magistrate judge's

calculation of attorneys' fees. Rather, Palmco merely argues that American is not entitled to

additional attorneys' fees because American has no legal entitlement to further damages. See Brief

for Palmco at 45. Since we have determined that American is entitled to additional liquidated and

duress damages, American is also entitled to 60% of this amount as additional attorneys' fees.

American next argues that the magistrate judge abused his discretion in awarding attorneys'

fees to Palmco. Texas law permits recovery of attorneys' fees "in addition to the amount of a valid

claim and costs, if a claim is for ... an oral or written contract." Tex.Civ.Prac. & Rem.Code Ann. §

38.001 (Vernon 1986). A party has a valid contract claim under § 38.001 when it demonstrates that

it is entitled to recover on the claim. See ITT Commercial Finance Corp. v. Riehn, 796 S.W.2d 248,

256 (Tex.App.—Dallas 1990, no writ) ("[T]he holder[ofthe claim] must have possessed a claimsuch

that he could have prosecuted it to a judgment for money or value, even if his opponent had never

filed his competing claim."). The magistrate judge expressly found that "Palmco is entitled to an

offset of $62,870 against the damages to be awarded to American Airlines for flatware products

delivered to American Airlines for which American Airlines has not previously paid." Record on

Appeal, vol. 2, at 455. American argues that because Palmco failed to gain a net recovery in

damages,12 it was not entitled to attorneys' fees. We disagree.

That American's damages award more than offset Palmco's recovery does not mean that

Palmco did not possess a valid contract claim for damages. A party need not have a net recovery in
 

13American maintains that its § 2.717 price reduction remedy defeated Palmco's contract claim

against American for the unpaid-for, delivered flatware. See Reply Brief for American at 41-42

(citing Created Gemstones, Inc. v. Union Carbide Corp., 47 N.Y.2d 250, 255, 391 N.E.2d 987,

989, 417 N.Y.S.2d 905, 907 (1979)) ("[A] buyer may defeat or diminish a seller's substantive

action for goods sold and delivered by interposing a valid counterclaim for breach of the

underlying sales agreement."). The Gemstones decision does not bind this Court, as no Texas

decision has held that a buyer's valid counterclaim for breach of the underlying sales agreement

invalidates a seller's claim for unpaid-for, delivered goods, particularly as applied to attorneys'

fees. 

 

14The magistrate apparently relied upon the testimony of Nancy Willis, the senior purchasing

agent for American responsible for administering the contract, who testified that against her

specific orders, checks were sent to Palmco for delivered flatware. See Record on Appeal, vol. 4,

at 89. 

 

15See McDaniel, 770 F.2d at 1347. 

order to obtain an attorney's fee award. See ITT Commercial, 796 S.W.2d at 256 ("[T]he fact that

the valid claim of one party may be exceeded by the opponent's claim does not defeat the right to

attorney'sfees." (citing McKinley v. Drozd, 685 S.W.2d 7, 10-11 (Tex.1985)). Had American failed

to pursue its counter-claims and thereby gained no award, Palmco would still have had a valid claim

against American for the unpaid-for, delivered flatware. Thus, Palmco had a valid claim for contract

damages. See ITT Commercial, 796 S.W.2d at 256. Accordingly, the magistrate judge did not abuse

his discretion in awarding attorneys' fees to Palmco.13

Lastly, Palmco claimsthat the magistrate judge abused his discretion in concluding that it was

not entitled to additional attorneys' fees for the amount—$42,134—Palmco recovered from American

after suit, but before trial. The magistrate judge entered a separate order for attorneys' fees, limiting

the feesto 60% of the monetary amount on which each party prevailed. See Record on Appeal, vol.

2, at 450. The magistrate judge specifically excluded from that calculation the amount which Palmco

recovered from American after suit, but before trial, finding that the payments were "inadvertently

made," and were not the result of Palmco's then-pending lawsuit against American.14 Id. at 451 n.

3. Palmco argues that the magistrate judge abused his discretion in excluding these payments from

the calculation of attorneys' fees. We disagree. Because the magistrate judge found that American's

post-suit, pre-trial payments were "inadvertently made"—a factual finding we cannot reverse unless

clearly erroneous15—excluding these paymentsfroma calculation of attorneys' fees was not an abuse
 

16The magistrate determined that each party should receive as attorneys' fees, 60% of any

amount it received as damages. See Record on Appeal, vol. 2, at 450. Thus, American is entitled

to receive an additional $80,529.00 in attorneys' fees for its additional recovery of liquidated and

duress damages ($81,584.00 + $52,631.00 = $134,215.00 × 60% : $80,529.00). 

of discretion.

III

For the foregoing reasons, we hold that American gave proper notice of breach to Palmco.

We also AFFIRM the magistrate judge's judgment which holds that:

(1) American is not obligated to buy the 30,000 dozen knives in Palmco's possession when

American cancelled the contract;

(2) Palmco is entitled to attorneys' fees for the amount it recovered as an offset against

American's damage award; and

(3) Palmco is not entitled to additional attorneys' fees for the post-suit, pre-trial payments it

recovered from American.

However, we REVERSE the magistrate judge's judgment and render judgment that:

(1) American is entitled to recover, in addition to its cover damages, $81,584.00 in liquidated

damages;

(2) American is entitled to recover $52,631.00 in additional duress damages; and

(3) American is entitled to receive $80,529.0016 in additional attorneys' feesfor its additional

recoveries.