Opinion ID: 2831499
Heading Depth: 1
Heading Rank: 3

Heading: Attorney’s Fees for This Appeal

Text: Finally, we turn to the issue of conditional appellate attorney’s fees. Johnson requested and was awarded attorney’s fees under Texas Civil Practice and Remedies Code section 38.001 as the prevailing party on a breach-of-contract claim. She also requested, but was denied, conditional appellate attorney’s fees in the event of an appeal. This case presents an unusual situation because 14 Texas common-law principles governing prejudgment interest align with the Texas Finance Code. See Johnson & Higgins, 962 S.W .2d at 528. 16 Johnson, the prevailing party in the trial court, is seeking appellate attorney’s fees for pursuing rather than defending this appeal. Both parties presented evidence in the trial court on prospective appellate fees. We must determine whether, under the circumstances presented here, the trial court erred in denying Johnson’s request for appellate attorney’s fees. Ventling argues that Johnson cannot recover appellate fees for prosecuting the appeal, as appellate attorney’s fees are available only upon the prevailing party’s successful defense of a judgment. He further contends that, even if Johnson may seek attorney’s fees incurred in appealing a favorable trial court judgment, she did not prevail on her appeal because the court of appeals overruled her challenges to the trial court’s rulings with respect to past attorney’s fees, court costs, and prejudgment interest.15 He argues that if we reverse the court of appeals’ judgment with respect to the accrual of postjudgment interest, as we indeed are doing, Johnson will not have prevailed in any aspect of her appeal.16 To recover attorney’s fees under section 38.001, a party must prevail on the underlying claim and recover damages. Intercontinental Grp. P’ship v. KB Home Lone Star L.P., 295 S.W.3d 650, 653 (Tex. 2009). “Whether a party prevails turns on whether the party prevails upon the court to 15 This characterization of the court of appeals’ opinion is not entirely accurate. As noted above, the court of appeals did not overrule Johnson’s challenge to the trial court’s denial of additional prejudgment interest. Rather, it sustained Johnson’s challenge to the award of postjudgment interest and noted that, regardless of when postjudgment interest began accruing, she was entitled to prejudgment interest until that date. ___ S.W .3d at ___. 16 Ventling also claims that our decision in Varner v. Cardenas bars an appellate court from initiating an award of appellate attorney’s fees when the trial court did not award such fees because that would in effect constitute two trials on attorney’s fees. See 218 S.W .3d 68, 69–70 (Tex. 2007). Varner does not stand for that proposition. Rather, in Varner we refused to allow a “second trial” on the issue of attorney’s fees on appeal because Varner had introduced no evidence of such fees in the trial court. Id. Ventling does not dispute that Johnson presented evidence of conditional appellate attorney’s fees to the trial court, and Varner does not bar us from reviewing the trial court’s decision based on the evidence before it. 17 award it something, either monetary or equitable.” Id. at 655; see also Farrar v. Hobby, 506 U.S. 103, 111 (1992) (“In short, a plaintiff ‘prevails’ when actual relief on the merits of his claim materially alters the legal relationship between the parties by modifying the defendant’s behavior in a way that directly benefits the plaintiff.”). Under section 38.001, the trial court has no discretion to deny attorney’s fees when presented with evidence of the same. Bocquet v. Herring, 972 S.W.2d 19, 20 (Tex. 1998); see also, e.g., Brent v. Field, 275 S.W.3d 611, 622 (Tex. App.—Amarillo 2008, no pet.) (“Under section 38.001, an award of reasonable attorney’s fees is mandatory if there is proof of the reasonableness of the fees. A Court possesses discretion to determine the amount of attorney’s fees, but it lacks discretion to deny attorney’s fees if they are proper under section 38.001.”). If trial attorney’s fees are mandatory under section 38.001, then appellate attorney’s fees are also mandatory when proof of reasonable fees is presented. See Gill Sav. Ass’n v. Chair King, Inc., 797 S.W.2d 31, 32 (Tex. 1990) (per curiam) (remanding for retrial on appellate attorney’s fees under section 38.001 when there was some evidence to support an award); see also, e.g., DaimlerChrysler Motors Co. v. Manuel, 362 S.W.3d 160, 198–99 (Tex. App.—Fort Worth 2012, no pet.) (holding that if an award of trial attorney’s fees is mandatory under section 38.001, then an award of appellate attorney’s fees is likewise mandatory). Turning to Ventling’s arguments, we first consider whether a prevailing party in the trial court may be entitled to appellate attorney’s fees as a successful appellant. To support his argument that such a party may not recover appellate fees, Ventling cites cases holding merely that appellate attorney’s fees must be conditioned upon a successful appeal, as a party may not be penalized for 18 successfully appealing error occurring in a lower court’s judgment.17 These cases do not support Ventling’s position. Further, we note that chapter 38 “shall be liberally construed to promote its underlying purpose.” TEX . CIV . PRAC. & REM . CODE § 38.005. We have explained that this purpose is to “encourage contracting parties to pay their just debts and discourage . . . vexatious, time-consuming and unnecessary litigation.” Gates v. City of Dallas, 704 S.W.2d 737, 740 (Tex. 1986) (construing chapter 38’s predecessor); see also 1/2 Price Checks Cashed v. United Auto Ins. Co., 344 S.W.3d 378, 388 (Tex. 2011) (“Applying section 38.001 here would [promote its underlying purpose]—it would allow a plaintiff with a small but valid contract claim to recoup its full amount of damages, . . . so that the aggrieved party may be put in as good a position as if the other party had fully performed.” (internal quotation marks and citation omitted)). Thus, although the case law has developed in the context of the much more common scenario in which a prevailing trial court party seeks appellate fees for successfully defending an appeal, no precedent conditions an award of appellate attorney’s fees upon these circumstances. Rather, chapter 38’s underlying purposes—to avoid penalizing a party for prosecuting a meritorious appeal and to discourage “vexatious, time-consuming and unnecessary litigation”—support the conclusion that Johnson should not be precluded from recovering attorney’s fees for this appeal. As we held above, the trial court had no discretion to deny Johnson any form of interest for fourteen years, and it also erred in not awarding her postjudgment interest on the alimony award between 2009 and 2012. It 17 See Solomon v. Steitler, 312 S.W .3d 46, 59 (Tex. App.— Texarkana 2010, no pet.); Hoefker v. Elgohary, 248 S.W .3d 326, 332 (Tex. App.— Houston [1st Dist.] 2007, no pet.); Spiller v. Spiller, 901 S.W .2d 553, 560 (Tex. App.— San Antonio 1995, writ denied); Rittgers v. Rittgers, 802 S.W .2d 109, 115 (Tex. App.— Corpus Christi 1990, writ denied). 19 would directly contradict the purposes we just outlined to hold that she may not recover attorney’s fees incurred in successfully appealing the trial court’s error. We recognize that Johnson has not fully prevailed on appeal, most notably with respect to her challenge to the amount of past attorney’s fees awarded and her assertion that postjudgment interest began accruing in 1998. However, she successfully argued that she is entitled to a significant amount of prejudgment interest—as well as additional postjudgment interest—that the trial court failed to award her and therefore at least partially prevailed on her appeal. See KB Home Lone Star, 295 S.W.3d at 653; see also Farrar, 506 U.S. at 111–12. And both parties presented evidence in the trial court on the proper amount of attorney’s fees for this appeal. Therefore, while the trial court has discretion as to the amount of reasonable and necessary appellate attorney’s fees, it had no discretion to award Johnson no fees, and we affirm the court of appeals’ judgment with respect to this issue.18 However, we partially disagree with the court of appeals with respect to its award of postjudgment interest on Johnson’s conditional appellate fees. The court of appeals awarded Johnson postjudgment interest accruing from the date Johnson perfected her appeal. Johnson III, ___ S.W.3d at ___. In doing so, it relied on Republic National Life Insurance Co. v. Beard, 400 S.W.2d 853, 859–60 (Tex. Civ. App.—San Antonio 1966, writ ref’d n.r.e.) (holding that postjudgment interest on an award of conditional appellate fees did not begin to run until the appeal 18 W e note that Ventling chose to take the position that Johnson was not entitled to any interest for a period of more than fourteen years. W e also note that Johnson focused her appeal on arguing that she was entitled to postjudgment interest from 1998, with only two pages of her brief in the court of appeals and one page in her brief to this Court devoted to the interest gap. W e leave to the trial court’s discretion the proper amount of reasonable appellate fees under the circumstances and evidence presented. 20 was perfected), and Southwestern Bell Telephone Co. v. Vollmer, 805 S.W.2d 825, 834 (Tex. App.—Corpus Christi 1991, writ denied) (holding that the trial court erred in awarding postjudgment interest on appellate attorney’s fees from the date of the trial court’s judgment), disapproved on other grounds by Hous. Lighting & Power Co. v. Auchan USA, Inc., 995 S.W.2d 668 (Tex. 1999).19 As discussed below, we decline to adopt the rule utilized in these two opinions. An award of conditional appellate attorney’s fees to a party is essentially an award of fees that have not yet been incurred and that the party is not entitled to recover unless and until the appeal is resolved in that party’s favor. In line with the nature of these fees, the Fourteenth Court of Appeals has held that “because an award of appellate attorney’s fees depends on the outcome of the appeal, it is not a final award until the appeal is concluded and the appellate court issues its final judgment.” Watts v. Oliver, 396 S.W.3d 124, 134–35 (Tex. App.—Houston [14th Dist.] 2013, no pet.); accord Protechnics Int’l, Inc. v. Tru-Tag Sys., Inc., 843 S.W.2d 734, 736 (Tex. App.—Houston [14th Dist.] 1992, no writ). We agree with and adopt this reasoning, which presents a limited exception to the general rule that the “judgment” for postjudgment interest purposes is the trial court’s judgment. Long, 426 S.W.3d at 78. Accordingly, we hold that an award for conditional appellate attorney’s fees accrues postjudgment interest from the date the award is made final by the appropriate appellate court’s judgment. See TEX . FIN . CODE § 304.005(a) (“[P]ostjudgment interest on a money judgment of a court in this state accrues during the period beginning on the date the 19 At least one other court of appeals has adopted this rule. See D.R. v. J.A.R., 894 S.W .2d 91, 97 (Tex. App.— Fort W orth 1995, writ denied). 21 judgment is rendered and ending on the date the judgment is satisfied.”); Long, 426 S.W.3d at 78 (noting that “[a] judgment that accrues postjudgment interest must necessarily be a final judgment”). In sum, then, Johnson presented evidence of conditional appellate attorney’s fees in the trial court—both for an appeal to the court of appeals and an appeal to this Court. Accordingly, the trial court erred in failing to award such fees. Further, in the event that the trial court takes no additional evidence on this issue, Johnson is entitled to (1) postjudgment interest on the award of fees incurred in the court of appeals beginning on December 19, 2013, the date of the court of appeals’ final judgment in Johnson III, and (2) postjudgment interest on the award of fees incurred in this Court from the date of this opinion and judgment.