Opinion ID: 26360
Heading Depth: 2
Heading Rank: 3

Heading: Award of Attorneys’ Fees and Exemplary Damages

Text: Focus next contends that the trial court erred by granting both attorneys’ fees and exemplary damages to CRA. Under Texas law, exemplary damages are not recoverable for a breach of contract claim absent an independent tort,7 and in fraud cases, attorneys’ fees are not recoverable separately from exemplary damages.8 Focus argues that by awarding CRA attorneys’ fees and exemplary damages, the trial court allowed CRA to reap the benefit of both its contract and tort claims even though both claims arose out of the same transaction or set of events. This, Focus asserts, is an impermissible double recovery, and CRA must choose the liability theory under which it can recover damages. Focus insists that, when this is done, CRA can only receive either exemplary damages or 7 Star Houston, Inc. v. Shevack, 886 S.W.2d 414, 422 (Tex. App. - Houston 1994, writ denied) (citing Texas Nat’l Bank v. Karnes, 717 S.W.2d 901, 903 (Tex. 1986)). 8 Id. (citing Kilgore Fed. Sav. And Loan Ass’n v. Donnelly, 624 S.W.2d 933, 938 (Tex. Civ. App. - Tyler 1981, writ ref’d n.r.e.)). 7 attorneys’ fees, depending on the chosen theory, but not both. We are unconvinced that the instant case falls into the category of those in which the prevailing party must elect between contract and tort remedies.9 Here, Focus breached its contract with CRA, but also committed the independent tort of fraudulently misrepresenting facts to CRA and inducing CRA to enter into an agreement. Thus, even without Focus’s eventual breach of contract, a cause of action sounding in tort accrued to CRA. Conversely, even if Focus had not misrepresented material facts to CRA before the signing of the contract, its egregious violation of the terms of the agreement gave rise to a contract claim. Therefore, Focus’s fraud in this case constitutes an independent tort, separate from its breach of contract. In response to a special interrogatory on the fraud claim, the jury found, by a showing of clear and convincing evidence, that Focus had acted with malice toward CRA. In such a situation, a Texas appellate court in Artripe v. Hughes allowed the recovery of both attorneys’ fees and exemplary damages: An award of attorneys’ fees for breach of contract does 9 See Star Houston, 886 S.W.2d at 423 (disallowing the award of attorneys’ fees, reasoning that a party seeking redress under multiple theories of recovery for a single wrong must, before judgment, elect the remedy under which the court will enter judgment). In the instant case, Focus committed multiple wrongs and hence the different theories of recovery apply to separate violations within the same general set of events. 8 not preclude an award of exemplary damages for egregious tortious conduct in the same action. ... Fraudulent misrepresentations used to induce the creation of a contract, coupled with damages caused by the misrepresentation, will support an award for exemplary damages. ... Artripe fraudulently induced Hughes to enter into a contract by misrepresenting the financial condition of the business. He then breached that contract by failing to comply with its terms. The trial court properly awarded both attorneys’ fees and exemplary damages to Hughes against Artripe.10 The facts of the instant case are more analogous to Artripe than to the facts of the cases cited by Focus to support the opposite position. Accordingly, we conclude that the district court did not abuse its discretion when it awarded both exemplary damages and attorneys’ fees.