- 1 -

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

KIMBERLY-CLARK CORPORATION, §

§

Plaintiff, §

§

V. § CIVIL ACTION NO. 3: 05-CV- 2097-B

§ ECF

FACTORY MUTUAL INSURANCE §

COMPANY, §

§

Defendant. §

MEMORANDUM ORDER

Having considered Plaintiff Kimberly-Clark Corporation’s (“Kimberly-Clark”) Claims for

Attorneys’ Fees and Costs (doc #108), the evidence submitted concurrently, all supplementary

evidence and argument, and Defendant Factory Mutual Insurance Company’s (“Factory Mutual”)

evidence and Responses to Plaintiff’s submissions, the Court awards attorneys’ fees in the amount

of $235,440.80, in addition to the $16,688.63 in costs already taxed by the clerk of the Court, for

the reasons stated herein. 

I. BACKGROUND

On September 21, 2007, the Court granted summary judgment for Plaintiff on its breach of

contract claim against Defendant and awarded Plaintiff its attorneys’ fees and costs (doc # 105).

The Court denied Plaintiff’s claims for violation of the Texas Insurance Code and granted summary

judgment for Defendant Factory Mutual on those claims. Plaintiff filed a Claim for attorneys’ fees

and costs on October 24, 2007 and Defendant filed a Response thereto (docs # 108 and 113).

Plaintiff’s submission included highly redacted copies of hours billed and costs incurred by Plaintiff’s
The contingency fee agreement defines “net recovery” as “the amount Kimberly-Clark receives from 1

or on behalf of a defendant in the subject litigation ... minus amounts equal to all costs and expenses

[Kimberly-Clark has] paid or owing to Morgan Lewis or third party contractors ... at the request of Morgan

Lewis.” (Malaret Decl., ¶ 2) Plaintiff arrived at its total requested fees and costs ($1,096,031.55) by

subtracting costs of $37,014.82 from the Court’s award of $3,062,776.90, taking 35 percent of that number

and then adding back in the $37,014.82 of requested fees.

- 2 -

counsel Morgan Lewis. Defendant argued, inter alia, that Plaintiff should be required to segregate

the fees and costs incurred in prosecuting its successful breach of contract claim–the basis for the

award of attorneys’ fees and costs–from work done to support Plaintiff’s other claims and defenses.

The Court agreed, in accordance with Tony Gullo Motors I LP v. Chapa, 212 S.W.3d 299, 310-314

(Tex. 2006), and ordered Plaintiff to supplement its original submission by providing unredacted

copies of its bills and segregating its time by claim. See Memorandum Order dated March 19, 2008.

Although the Court already set forth the parties’ arguments and provided its overall view of

the relevant law in Texas on determining attorneys’ fees in its March 19 Order, the Court will

reiterate various points from that Order as necessary to fully explain its reasoning for the specific

award provided herein.

Plaintiff asserts that the Court should calculate reasonable attorneys’ fees by reference to its

35% contingency fee arrangement with its client–which it originally argued would result in an award

of $1,059,016.73 plus costs of $37,014.82. Plaintiff argues that its request for a 35% contingency

1

fee is customary and reasonable, and indeed is presumptively so, and discusses its view of the

application of the factors considered in determining the reasonableness of an award of attorneys’ fees

under Texas state law. See Arthur Andersen & Co. v. Perry Equipment Corp., 945 S.W.2d 812, 818

(Tex. 1997). In support of its Claim, Plaintiff submits a declaration of its counsel Mr. Charles
- 3 -

Malaret, which discusses counsel Morgan Lewis’ qualifications and work done on this matter along

with Plaintiff’s fee arrangement and contingency fee agreements generally. 

In response to the Court’s March 19 Order, Plaintiff submitted a Supplemental Declaration

from Mr. Malaret including counsel’s opinion on the proper segregation of fees and costs incurred

in prosecuting Plaintiff’s breach of contract claim and increasing the attorneys’ fees and costs Plaintiff

seeks to $1,357,806.15 (fees) and $38,976.47 (costs). The increase in fees is based on the Court’s

award of pre-judgment interest to Plaintiff, which increased the base award to Plaintiff used by

counsel to calculate its 35% contingency fee. The increase in costs is apparently due to work

performed in association with Plaintiff’s submissions for pre-judgment interest and attorneys’ fees.

In response, Defendant argues that Plaintiff’s requested award of a fee based on its

contingency agreement is excessive and unreasonable and does not comport with Andersen and its

progeny (doc #113). Defendant also objects to the amount of costs that Plaintiff requests in

association with its attorneys’ fees as unrecoverable under 28 U.S.C. §1920. In support of its

response, Defendant submitted a declaration from its counsel Mr. Cook in which Mr. Cook discusses

his practice, the relative complexity and time involved in addressing this matter, the rates charged

by Morgan Lewis, and the standard hourly rates in Texas for similar legal services. Defendant also

objects to the increase in the amount Plaintiff seeks in its supplemental submissions for its fees based

on the award of pre-judgment interest.

II. ANALYSIS

Standard for Awarding Attorneys’ Fees

An award of attorneys’ fees “is governed by the same law that serves as the rule of decision

for the substantive issues in the case.” Mathis v. Exxon Corp., 302 F.3d 448, 461 (5th Cir. 2002).
- 4 -

Texas law provided the rule of decision in this case and also authorizes the award of attorneys’ fees.

Attorneys’ fees in this matter are being awarded pursuant to Texas Civil Practice and Remedies Code

section 38.001, which provides that a prevailing party “may recover reasonable attorney's fees from

an individual or corporation, in addition to the amount of a valid claim and costs, if the claim is

for...an oral or written contract.” TEX. CIV. PRAC. & REM. CODE § 38.001 (Vernon 2007). 

The burden of proving the reasonableness of attorneys’ fees is on the party seeking them.

Stewart Title Guaranty Co. v. Sterling, 822 S.W.2d 1, 10 (Tex. 1991). Texas law presumes “that the

usual and customary attorney's fees for a claim of the type described in Section 38.001 are

reasonable.” TEX. CIV. PRAC. & REM. CODE § 38.003 (Vernon 2007). However, the presumption

of reasonableness may be rebutted. Id. In addition to hearing testimony and receiving other

evidence, the court may take judicial notice of reasonable and customary fees along with the

contents of the case file in evaluating a request for attorneys’ fees. See TEX. CIV. PRAC. & REM.

CODE § 38.004 (Vernon 2007); Gill Savings Ass'n v. Chair King, Inc., 797 S.W.2d 31, 32 (Tex. 1990).

Cf. City of Fort Worth v. Groves, 746 S.W.2d 907, 918 (Tex. App.–Fort Worth 1988, no writ)

(observing that the court can draw on its own experience as a lawyer and a judge and must look at

the entire record to determine a reasonable fee). 

The Texas Supreme Court has established several factors to be used in considering the

reasonableness of a requested fee amount:

(1) the time and labor required, the novelty and difficulty of the questions involved,

and the skill required to perform the legal services 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;
- 5 -

(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). While it should

be considered, a contingency fee arrangement is only one of several factors to be assessed. 

“A contingent fee may indeed be a reasonable fee from the standpoint of the parties to the

contract. But, we cannot agree that the mere fact that a party and a lawyer have agreed to a

contingent fee means that the fee arrangement is in and of itself reasonable for purposes of shifting

that fee to the defendant.” Andersen, 945 S.W.2d at 818; see also Rauscher Pierce Refsnes, Inc. v.

Koenig, 794 S.W.2d 514, 516 (Tex. App.–Corpus Christi 1990, writ denied) (noting that counsel’s

contingency fee arrangement was not determinative of the amount of fees he could recover).

Under Texas law, compensation for a paralegal or legal assistant's work may be included in

the award for attorneys' fees if the paralegal or legal assistant performed work that has traditionally

been done by any attorney. Gill Sav. Ass'n v. Int'l Supply Co., 759 S.W.2d 697, 702 (Tex. App.-Dallas

1988, writ denied). To recover such amounts, however, evidence must be presented of the following:

(1)the legal assistant is qualified through education, training or work experience to perform

substantive legal work; 

(2) substantive legal work was performed under the direction and supervision of an attorney;

(3) the nature of the legal work which was performed; 
- 6 -

(4) the hourly rate being charged for the legal assistant; and 

(5) the number of hours expended by the legal assistant. 

Gill, 759 S.W.2d at 702. The party seeking to recover attorneys’ fees for work done by paralegals and

legal assistants bears the burden of producing evidence on these elements. All Seasons Window &

Door Mfg., Inc. v. Red Dot Corp., 181 S.W.3d 490, 504 (Tex. App.–Texarkana 2005, no

pet.)(excluding legal assistant fees where there was no evidence other than the hourly rate and hours

expended); Clary Corp. v. Smith, 949 S.W.2d 452, 469 (Tex. App.–Fort Worth 1997, pet. denied)

(affirming trial court exclusion of legal assistant fees where there was no evidence as to the assistant’s

qualifications); Moody v. EMC Servs., Inc., 828 S.W.2d 237, 248 (Tex. App.–Hous. [14th Dist.]

1992, writ denied)(denying attorneys’ fees for paralegal work when evidence did not establish

qualifications, work performed, hourly rate, and hours worked by paralegal).

Application of the Andersen factors

The parties have submitted evidence concerning most of the Andersen factors and the

reasonableness of Plaintiff’s request for attorneys’ fees, which the Court considers in turn. 

Both parties submitted evidence concerning the first Andersen factor: the time and labor

required, the novelty and difficulty of the questions involved, and the skill required to perform the

legal services properly. The time and labor required is evidenced in Plaintiff’s monthly billing,

submitted in redacted form with the Malaret Declaration and in unredacted form (to the Court) with

the Supplemental Malaret Declaration. Plaintiff submitted monthly invoices for services rendered

by counsel from case inception through February 15, 2008. The total hours billed by all time keepers,

which included attorneys, paralegals, document clerks, librarians, and bi-weekly employees, are

1000.50. (Supp. Malaret Decl. Ex. A). 
The Court notes that although both parties refer to the live pleading containing Plaintiff’s 2

allegations as the “Complaint,” that document was originally filed in state court before the case was

removed to federal court. Thus, the operative original pleading was a Petition. However, for ease of

reference and consistent with the parties, the Court will refer to the document as the Complaint.

Mr. Malaret’s testimony is internally inconsistent, as his discussion in the section of his

3

Declaration labeled “Pre-Complaint Investigation and Filing of Complaint” states that he believes that

10% of the work done during this phase of the case is attributable to non-contract claims, but the date he

uses for the filing of the Complaint is December 14, 2005. (Supp. Malaret Decl. ¶ 7). The Complaint

was filed on September 30, 2005. The line items Mr. Malaret attributes to non-contract claims prior to

September 30 actually represent about 30% of the time billed pre-filing. 

- 7 -

Time and Labor: Fee Segregation

Plaintiff has attempted to segregate its fees by claim as ordered by the Court and has

subtracted certain line entries from the invoices submitted, which Mr. Malaret describes as the work

attributable solely to the non-contract claims. (Supp. Malaret Decl. ¶6 and Ex. B). Mr. Malaret

testifies, based on his knowledge of this matter and his supervision of the work performed, that no

additional time prior to the filing of the Complaint is attributable to any claims other than breach 2

of contract. (Supp. Malaret Decl. ¶7). Mr. Malaret further testifies that, in addition to the amounts

3

subtracted as line items, there was other work performed that should be solely attributed to noncontract claims. (Id.). Mr. Malaret attests that a total of approximately 15% of the work done from

the time theComplaint was filed through the grant of summary judgment should be attributed to the

non-contract claims. (Id.).

Defendant, who has not had the benefit of reviewing unredacted copies of Plaintiff’s billing,

presents several arguments that the non-contract claims constituted more than 10-15% of the total

time billed. Defendant argues that, in addition to breach of contract, Plaintiff originally brought

claims based on at least five other legal theories, all of which Plaintiff pursued throughout discovery

and at least until October 5, 2006 when a Stipulation of Partial Dismissal was submitted. Discovery
The Court accepts all of the line item segregations that Mr. Malaret identifies as work performed 4

exclusively on non-contract claims. (Supp. Malaret Decl. Ex. B). The Court also identifies three time

entries for Mr. Malaret dated October 3, 4, and 5, 2006, one entry for Mr. Salisian dated January 8, 2007,

and part of one entry for Ms. Bernstein dated January 17, 2007 as related solely to non-contract claims. 

See Supp. Malaret Decl. Ex. E at Invoice Nos. 1032997 and 1068065. The Court will subtract these

entries totaling $3493 (2.2 hours of time valued at $1300 plus 2.2 hours valued at $693 plus 2.5 hours

valued at $1500), along with those summarized in Exhibit B, before awarding fees.

- 8 -

was directed to facts to support each of those claims (fraud, negligent misrepresentation, unjust

enrichment, and violations of the Texas Insurance and Business & Commerce Codes), all of which

require proof of different elements than breach of contract. Defendant also asserts that breach of

contract was largely a legal claim and that Plaintiff had most of the information it needed to

prosecute that claim when it filed the Complaint. Thus, Defendant argues that Plaintiff’s claim that

85% of its time was attributable to the breach of contract claim is not supported by the actual activity

in this matter. Defendant suggests that attributing 60-65% of the time to the contract claim is more

appropriate in this case.

The Court has reviewed the unredacted monthly invoices submitted by Plaintiff in their

entirety. The Court notes that, with the exception of some of the line items identified by Mr.

Malaret, in general the descriptions of tasks entered as line items in Plaintiff’s bills are so generic 4

that it is virtually impossible to determine whether part or all of the time for any given entry was in

support of Plaintiff’s successful breach of contract claim or solely in support of one of its other noncontract claims. For example, there are very few instances in which any time entry refers to a specific

claim. Most entries follow the same form as several entries on the first invoice submitted, such as

“Research legal issues for complaint; draft the same, Provide instruction on research and drafting of
The Court observes that while Plaintiff originally produced its invoices in a highly redacted form 5

claiming privilege, there is virtually nothing in the invoices to support such a claim given the genericness

of the entries.

The Court recognizes that the referenced invoices are not actually attached to the Supplemental 6

Malaret Declaration, as they were produced for in camera review only. However, the Supplemental

Malaret Declaration does contain a summary of the invoices and for ease of reference, the Court has

matched the actual invoices to the corresponding relevant particular paragraphs and exhibits to the

Supplemental Malaret Declaration and therefore cites the appropriate paragraphs/exhibit as though the

invoices were actually attached thereto.

- 9 -

complaint, and Research legal issues for complaint; draft the same”. (Supp. Malaret Decl. Ex. D, 5

Invoice No. 905695 at p. 1). Thus, given the generic nature of the time entries, the Court relies on 6

Mr. Malaret’s testimony as partner in charge of this matter, as well as the other evidence on file and

the record in this matter in determining the appropriate amount of time to allocate to the successful

breach of contract claim. TEX. CIV. PRAC. &REM. CODE §38.004.

The Texas Supreme Court commented in Chapa that many standard services performed

during a representation would be performed even if unrecoverable claims had not been asserted.

Chapa, 212 S.W.3d at 313. Thus, if “the services would have been incurred on a recoverable claim

alone, they are not disallowed simply because they do double service.” Id. (citing examples of

services like requests for disclosures, depositions, discovery motions and hearings). However, as the

Court noted in Varner, “[i]n Chapa, we reestablished the rule that attorney’s fees are recoverable only

if necessary to recover on a contract or statutory claim allowing them, and eliminated the exception

for fees incurred solely on separate but arguably intertwined claims.” Varner v. Cardenas, 218 S.W.3d

68, 69 (Tex. 2007). Thus, while the Court recognizes that a considerable amount of the work done

by Plaintiff would have been necessary even if it was only prosecuting a breach of contract claim, the
- 10 -

Court finds that the amount of time that should be allocated to that claim to be less than the time

allocated by Mr. Malaret.

The Court does consider Mr. Malaret’s testimony that 15% of the time spent from the filing

of the suit through summary judgment should be allocated to non-contract claims as evidence of the

proper segregation of fees between recoverable and non-recoverable claims. See Chapa, 212 S.W.3d

at 314 (noting that opinion testimony that 95% of the time spent drafting a petition was for

recoverable claims would be sufficient proof to support claim for attorneys’ fees). However, the

Court notes that Mr. Malaret has allocated 30% of the time spent prior to the filing of the lawsuit

to non-contract claims, yet only allocates 15% of the time spent prosecuting the suit to non-contract

claims. For several reasons, theCourtfinds that the record supports using 30% as a more appropriate

measure for segregating fees for line item billing entries that are otherwise too generic on their face

to allocate between the contract and non-contract claims. See Hartis v. Century Furniture Indus., Inc.,

230 S.W.2d 722, 737-738 (Tex. App.–Hous. [14th Dist.], no pet.) (adjusting attorneys’ fees

stipulation by the parties noting that the “court is not bound by stipulation or uncontroverted

evidence regarding attorneys’ fees”). 

First, there is no evidence that the relative percentage of time spent prosecuting non-contract

claims was less than the relative percentage of time spent preparing for filing non-contract claims.

Plaintiff filed five non-contract claims and prosecuted all of them through discovery. The Court

notes that the parties did not argue that the contract was ambiguous. As is apparent from the

parties’ briefing on summary judgment, the contract claim was largely a legal issue, such that it is

unlikely that substantial time was or should have been dedicated to it during discovery. Thus,

although some of the discovery pursued surely supported the contract claim as well as other claims,
- 11 -

it is likely that a large percentage of the discovery pursued was used solely to discover and support

non-contract claims. Considering that Mr. Malaret testified that 30% of the time spent pre-suit was

dedicated to non-contract claims and none of those claims were dropped until after discovery was

complete, using a similar percentage to segregate post-filing time is supported by the record and the

Court’s experience. 

Second, after the parties entered a stipulation of dismissal, Plaintiff then filed summary

judgment on the remaining contract claim and the claims for unjust enrichment and violations of

certain aspects of the Texas Insurance Code. Plaintiff also had to defend against the summary

judgment motion filed by Defendant on all claims, including the non-contract claims. The Court

takes notice that about 25% of Plaintiff’s briefs in support of its own summary judgment and opposing

Defendant’s summary judgment concerned non-contract claims. Although the pages devoted in a

brief to certain claims may not entirely accurately reflect the time devoted to considering, compiling

research, evidence, and writing the argument for those claims, it is some evidence to support the

proper segregation of time between contract and non-contract claims. See Gill Savings Ass’n v. Chair

King, Inc., 797 S.W.2d 31, 32 (Tex. 1990) (holding that court’s ability to take judicial notice of the

record of the trial court proceedings reflecting the complexity of the case was some evidence to

support fee award). 

Third, Mr. Malaret’s testimony indicates that he believes it appropriate to segregate the same

amount for work performed on non-contract claims during discovery as during the preparation of the

summary judgment motion and response. (Supp. Malaret Decl. ¶ 7). Thus, the Court finds no

reason to reduce the percentage of time segregated for summary judgment related work compared

to earlier work in this matter. Considering the case file and the evidence of segregation submitted,
- 12 -

the Court finds that 30% of the time billed by Plaintiff’s counsel is properly attributable to noncontract claims. 

Time and Labor: Non-Attorney Time

As discussed above, time billed and work performed by non-attorneys can only be

compensated as part of an award of attorneys’ fees if, inter alia, the work is substantive legal work that

has traditionally been done by any attorney. Gill, 759 S.W.2d at 702. Further, there must also be

evidence of the hours billed, hourly billing rate, nature of the work, and the qualifications of the nonattorney to perform such work. Plaintiff’s bills show 101.40 hours billed by non-attorneys, the hourly

billing rate of each person, and the nature of the work (at least to the extent that the generic

description allows). However, there is no evidence of the qualifications of any non-attorney, and in

particularly of any paralegal, to perform the work billed. Moreover, even if there was evidence of the

qualifications of the non-attorneys, much of the work billed appears clerical–not legal–in nature.

The Court considers the following tasks to be clerical or non-legal: calendaring, organizing

documents, reviewing correspondence, updating files and binders, copying documents, loading and

organizing computer databases (such as Summation/Ringtail/Concordance), and mailing or

delivering documents. Examples of tasks that the Court considers to be “substantive legal work” are:

contacting state agencies to request information, drafting deposition notices or trial subpoenas, and

drafting most documents that will be filed with the Court. While these lists are by no means

exclusive, they should give the parties an idea of the distinction the Court draws between clerical

work and legal work. With that in mind, the Court turns to the work performed by the nonattorneys for Plaintiff.
- 13 -

Plaintiff’s bills list the following individuals as non-attorneys: M.I. Dupuis (Devey)

(paralegal), D. Godfrey (paralegal), V.V. Loudon (document clerk), A. Atenor (document clerk),

V.S. Aguilar (document clerk), V.G. Brusca (librarian), W.E. Flanagan (biweekly employee), and

J.E. Ayoub (biweekly employee). The Court has reviewed the time entries for each of these

individuals and finds that none of the time entered by Loudon, Atenor, Aguilar, Brusca, Flanagan,

and Ayoub is compensable as attorneys’ fees. Plaintiff has submitted no evidence that any of those

individuals have the skills necessary to perform substantive legal work, nor are such skills implied by

their titles. Further, all of the time entries for Loudon, Atenor, Aguilar, Brusca, Flanagan, and

Ayoub show either that their work was clerical in nature or its true nature was indiscernible. See

Supp. Malaret Decl. ¶7, Ex. D (associated Invoice Nos. 936397, 975024, 991501, 1014241, and

1023330 (listing tasks like delivering subpoenas, assisting with organizing documents, and indexing

documents)) and Ex. E (associated Invoice No. 1068065 ((listing tasks like “review brief” and

“obtain copies of cases”)). Plaintiff has not met its burden to show that these fees submitted are

recoverable as attorneys’ fees. All Seasons, 181 S.W.3d at 504. 

Upon consideration of paralegal time billed by Godfrey and Dupius (formerly Devey), the

Court finds the following entries compensable as attorneys’ fees, as the work appears legal in nature.

Where appropriate, the Court has reduced the amount considered as hours billed for the purpose of

computing attorneys’ fees, as the substantive legal work was block-billed with clerical work in a

manner that made it impossible for the Court to determine exactly how much time was spent on the

legal tasks versus the non-legal tasks. Although no evidence was submitted by Plaintiff as to the

qualifications of its paralegals to perform substantive legal work, in its discretion, the Court takes
- 14 -

judicial notice of the training and experience oftypical paralegals in large law firms in addition to the

fact that counsel obviously trusted the paralegals to perform the legal work.

Date Name Description Hours

Billed

Hourly

Rate

12/13/05 Devey Prepare redacted documents for production;

prepare privilege log/redaction log

1.0 (out of

2.10 billed)

180.00

03/29/06 Devey Prepare final version of redacted documents;

review and revise privilege log; prepare email

to C. Malaret regarding same

1.0 (out of

1.5 billed)

240.00

03/31/06 Devey Review and revise final version of redacted

document; review and revise privilege log;

review and revise correspondence to

opposing counsel

.2 (out of .5

billed)

240.00

04/07/06 Godfrey Telephone conference with C. Malaret

regarding case and upcoming document

review at Kimberly Clark; email

correspondence with V. Worrell regarding

documents needed for review; review

complaint and Factory Mutual's discovery

requests to Kimberly Clark

3.5 195.00

04/10/06 Devey Review protective order; prepare email to D.

Godfrey regarding production of documents

.3 240.00

04/10/06 Godfrey Review draft discovery responses; prepare for

and attend document review at Kimberly

Clark; email to and telephone conference

with M. Devey regarding Bates numbering;

telephone conference with vendor regarding

production; email to C. Malaret regarding

same

4.5 195.00

04/18/06 Godfrey Telephone conference with N. Salisian

regarding review of Factory Mutual

documents; email to M. Devey regarding

Kimberly Clark's interrogatories and request

for production to Factory Mutual and review

of same

.8 195.00
- 15 -

04/20/06 Godfrey Preparation for review of Factory Mutual

documents, including review of Kimberly

Clark's discovery requests to Factory Mutual

1.5 195.00

04/21/06 Godfrey Prepare with N. Salisian for review of Factory

Mutual documents; to offices of T. Cook for

document review

4.3 195.00

06/06/06 Devey Review privilege documents and prepare

privilege/redaction log for J. Raskin; prepare

email regarding same

2.0 240.00

08/01/06 Devey Review and compile documents references in

letter from defence [sic] counsel regarding

productions; prepare letter to client

forwarding same; review and revise redaction

log

1.0 (out of

3.0 billed)

240.00

08/23/06 Devey Conference with C. Malaret regarding hot

docs

.5 240.00

08/29/06 Devey Review correspondence from defense

counsel; compile documents and privilege log

.5 240.00

10/26/06 Devey Review and organize documents to

stipulation of facts; prepare index of

documents to stipulation for C. Malaret

3.0 240.00

10/31/06 Devey Review and finalize documents to stipulation

of facts for C. Malaret

1.0 240.00

11/06/06 Devey Review and compile documents to defense

counsel's joint stipulation of facts

2.0 240.00

11/07/06 Devey Review productions by defense counsel;

review and compile documents to joint

stipulation of facts

2.0 240.00

11/09/06 Devey Review and compile final set of exhibits to

joint stipulation of facts; prepare same for C.

Malaret and N. Salisian

2.5 240.00

11/13/06 Devey Review FM's production for evidence of

profitability for C. Malaret; review and revise

exhibit list

3.5 240.00
- 16 -

Thus, of the 77.20 hours of work performed by paralegals included by Plaintiff in its monthly

invoices, the Court finds that 35.1 of the hours qualify as attorneys’ fees under Texas law. The fees

generated by those hours total $7707.00.

Novelty and Difficulty of the Question/Skills Required to Perform:

Plaintiff submitted evidence that this case presented complex issues of insurance coverage

but also states that counsel is highly skilled in insurance recovery litigation and business disputes.

(Malaret Decl. ¶¶ 4 and 9). While the case may have been complex, there is evidence that the

parties addressed the matters in a streamlined fashion–taking only written discovery with no

depositions or hearings, agreeing on joint stipulations of facts and exhibits to be submitted to the

Court, as well as agreeing to dismissal of certain claims without briefing them. (Cook Decl. ¶ 6).

The Court finds that the hours billed by Plaintiff, as reflected on the invoices submitted in camera

and as segregated by Plaintiff and the Court, accurately account for the novelty and difficulty of the

issues related to the breach of contract claim. 

The Court similarly finds that the skill of the attorneys handling this matter is accurately

reflected in Plaintiff’s billing with one exception. The Court notes that although a junior associate

(Mr. Salisian) handled the legal research related to all claims from inception of the case through

summary judgment, during summary judgment a senior attorney (Ms. Bernstein) began performing

legal research in conjunction with drafting the summary judgment briefing and responding to

Defendant’s summary judgment briefing. While the Court recognizes that it may have been

reasonable to add an attorney to the matter at that point and therefore gives Plaintiff the benefit of

the doubt as to the reasonableness of fees incurred to get Ms. Bernstein up to speed on the case, the

Court does not find it reasonable for someone with Ms. Bernstein’s seniority, and presumably with
- 17 -

commensurate skills, to perform legal research. Based on the Court’s knowledge of attorneys’ fees

in the Dallas area, it is not reasonable, usual, or customary for any attorney to charge $600/hour to

do legalresearch. Plaintiff has submitted no evidence to the contrary. Thus, because Ms. Bernstein’s

time is block billed such that the Court cannot accurately assess how much time in any one entry

was dedicated to legal research, the Court will reduce the rate billed by Ms. Bernstein to the

equivalent rate for junior associate Mr. Salisian ($265 and $315) for half of the time in all entries in

which legal research is part of the block billing. (Supp. Malaret Decl. Ex. E at Invoice 105041

(December 8, 11, 18, 19, 21, 28, and 29, 2006 entries) and Invoice 1068065 (January 2, 3, 4, 5, 23,

24, and 25, 2007 entries)).

Other Andersen Factors:

In considering the remaining Andersen factors, the Court finds that most of the factors are

addressed by the billing rate and hours billed as reflected in Plaintiff’s invoices, with the caveats

above. The Court assumes that the rates commonly charged by Plaintiff in an hourly billing case take

into account the fact that accepting employment on any particular matter will necessarily limit the

attorneys’ ability to accept other cases, or as many other cases as they might be offered or would

ideally like to pursue. The hourly rates reflected in Plaintiff’s monthly bills are high, but not out of

line with the rates charged by other firms for similar services in the Dallas area. (Cook Decl. ¶ 4).

The amount in dispute in this matter was relatively small, and Plaintiff achieved success on one of

its claims and agreed to dismiss several others. These facts appear to be accurately reflected in the

number of hours billed on various phases of this case. However, the ratio of the recovery in this

matter ($3.9 million) to the requested attorneys’ fees ($1.37 million) is high, particularly considering

only 901 hours were billed to the matter through summary judgment for all claims. The resulting
- 18 -

average hourly rate if the Court were to award the requested amount of fees for the hours billed by

attorneys only on contract claims (approx. 70% ofthe 901 hours) is exorbitant($2,174/hour). There

is no evidence that there was any particular time or client pressure in this matter to warrant an

upward or downward departure from the hourly rates. There is evidence of a long-standing client

relationship between Plaintiff and its counsel. (Malaret Decl. ¶ 8). This relationship does not bear

either way on the reasonableness of the requested amount of fees, as it is arguable that counsel is

willing to take the risk of a contingency fee arrangement, because it knows that more work/cases will

likely follow to allow it to make up for any potential loss on any given case. It is equally arguable that

counsel is willing to take on the risk because it has been successful on previous contingency cases for

Plaintiff and has been paid fees far in excess of its hourly billable hour rate on those cases (as it now

requests the Court to award). Plaintiff’s historical relationship with its counsel and their fee

agreements does not imply that the fee request is reasonable as applied to having a third party pay

it. Except as discussed above, there is no evidence that the experience and abilities of the attorneys

working on the matter is not accurately reflected by their billing rates and the number of hours billed.

Existence of a Contingency Fee Agreement

Fundamentally, Plaintiff seeks an award of fees pursuant to its contingency fee agreement

with its counsel, which essentially provides that counsel will be paid 35% of any recovery, net of costs

and expenses, but including pre and post-judgment interest. (Malaret Decl. ¶ 2). Plaintiff argues

that the existence of its contingency fee agreement, along with its counsel’s testimony that a

contingency fee agreement of 35-40% is typical for insurance recovery matters of this nature, means

that a recovery of $ 1,371,447.90 ($3,918,422.60 times 35%) is presumptively usual and customary

under Texas Civil Practice and Remedies Code section 38.003. (Malaret Decl. ¶ 6). Even assuming
- 19 -

that counsel’s self-serving testimony is sufficient to demonstrate that a 35% contingency is “usual and

customary” under section 38.003, the Court finds that, upon consideration of the Andersen factors

discussed above, the presumption has been rebutted under the facts of this case. 

The other Andersen factors show that this matter was tried in a straight-forward way, with

cooperation and joint stipulations of both parties, by counsel who are experienced in this area of the

law, however complex it may be. Further, Plaintiff’s counsel kept track oftime billed by the hour and

sent such bills to Plaintiff on a monthly basis, which, under the parties’ contingency fee agreement,

were agreed to create a presumption between counsel and Plaintiff that the fees and expenses set

forth therein were reasonable and necessary. See agreement submitted in camera for court review.

Not only does the Court independently find that the hours billed at the hourly rates shown on the

monthly invoices are reasonable and customary in the Dallas area and appropriate based on the

amount in controversy and novelty of the issues, the parties’ own agreement reinforces that finding.

The Court does not find that the fact that a contingency fee agreement exists overrides the other

Andersen factors, particularly in this case where an award of attorneys’ fees in the amount requested

would result in a windfall to Plaintiff’s counsel. Defendant cannot be, and is not, expected to pay

for the private risks allocated between Plaintiff and its counsel in entering into a contingency fee

arrangement where the resulting fee is unreasonable in light of the circumstances of the case.

Calculation of the Attorneys’ Fees Award

Based on the invoices submitted by Plaintiff, modified as discussed above, the Court

calculates the attorneys’ fees awarded to Plaintiff as follows. The Court notes that although Plaintiff

has submitted invoices for time billed through February 2008, summary judgment on its contract

claim was granted on September 21, 2007. The Court finds no basis in section 38.001 of the Texas
Includes adjustments only counting paralegal time billed that the Court found equivalent to 7

attorney time under Texas law and discounting M. Bernstein billing rate for time spent performing legal

research, as explained above.

- 20 -

Practice and Remedies Code–the statutory basis for its award of reasonable attorneys’ fees–to support

an award of fees incurred after that date.

Time billed on all claims (case inception through summary judgment):7

Time Keeper Hours Rate Billed ($$) Total ($$)

C.J. Malaret 29.2 605 17,666

140.4 650 91,260

48.3 695 33,568.5

J.R. Selinger 2.3 620 1,426

1.4 700 980

T.K. Brown 39.1 245 9,579.5

N. Salisian 40.8 245 9,996

181.4 265 48,071

2.4 315 756

T.G. Ackermann 2 415 830

2.5 435 1,087.5

L.M. Campisi 9.6 540 5,184

M. Bernstein 96 (of 111.5) 600 57,600

15.5 265 4,107.5

59.9 (of 89.7) 620 37,138

29.8 315 9,387

D. Godfrey 14.6 195 2,847

M. Devey 1 180 180

19.5 240 4,680
- 21 -

Total Fees for all

claims:

$ 336,344.00

As discussed above, the Court will award 70% of the total attorneys’ fees billed as reasonable

attorneys’ fees under Texas Civil Practice and Remedies Code section 38.001 et seq. in order to

segregate fees attributable only to non-contract claims out of the award. The Court subtracts the

line items identified by Mr. Malaret in Exhibit B to his Supplemental Declaration ($23,563.50)as well

as line items it independently identified as non-contract related ($3,493)(see fn. 4) and an additional

amount ($73,846.70) for a total amount subtracted of $100,903.20 (30% of $336,344 ). Thus the

Court awards Plaintiff $235,440.80 as reasonable attorneys’ fees.

Costs

Plaintiff originally requested that the Court award costs of $37,014.82. Of the costs

requested, $16,688.63 has now been taxed via Plaintiff’s Bill of Costs submitted to the clerk of the

Court on April 18, 2008 (docs #123-124). Thus, the Court decides only whether the remaining

“costs” of $20,326.19, that cannot be taxed under 28 U.S.C. §1980, should also be awarded. The

Court finds that Texas law does not support the award of non-taxable costs under Texas Civil

Practice and Remedies Code section 38.001. Flint & Assocs. v. Intercont’l Pipe & Steel, 739 S.W.2d

622, 626-627 (Tex. App–Dallas 1987, writ denied) (holding that section 38.001 does not allow

award of non-taxable costs unless such fees are included as part of reasonable legal fees (i.e.,

accounted for by the hourly rate billed)); see also Sparks v. Baxter, 854 F.2d 110 (5 Cir. 1988) (citing

th

Id.). Thus, the non-taxable costs requested by Plaintiff will not be awarded.
- 22 -

III. CONCLUSION

For the reasons discussed above, the Court awards $235,440.80 as reasonable attorneys’ fees

for its successful breach of contract claim under Texas Civil Practice and Remedies Code section

38.001 and $16,688.63 of costs already taxed by the clerk of the Court.

SO ORDERED.

SIGNED April 30 2008. th

_________________________________

JANE J. BOYLE

UNITED STATES DISTRICT JUDGE