Court Opinion

ID: 4177296
Source: CourtListenerOpinion
Date Created: 2017-06-14 10:15:49.767266+00
Date Added: 2024-06-11T14:39:04.086440
License: Public Domain

IN THE SUPREME COURT OF TEXAS
                                         444444444444
                                           NO . 15-0591
                                         444444444444

             IN RE NATIONAL LLOYDS INSURANCE COMPANY,
    WARDLAW CLAIMS SERVICE, INC. AND IDEAL ADJUSTING, INC., RELATORS

           4444444444444444444444444444444444444444444444444444
                             ON PETITION FOR WRIT OF MANDAMUS
           4444444444444444444444444444444444444444444444444444

       JUSTICE JOHNSON , joined by JUSTICE LEHRMANN and JUSTICE BOYD , dissenting.

       Relators (collectively, National Lloyds or the company) designated Scot Doyen, an attorney

representing them in these lawsuits, to testify regarding attorney’s fees the homeowner–plaintiffs

seek to recover. The question posed by the parties and ruled on by the trial court is whether

information about his fees, expenses, and billing information, as well as that of other attorneys

representing National Lloyds in the suits is discoverable. National Lloyds maintained in the trial

court and now maintains in this Court that the information is both irrelevant and privileged, either

as attorney-client communications or attorney work product. It has done so despite not making a

record by producing any documents for examination. The trial court disagreed as to relevance, but

wisely authorized—and directed—National Lloyds to respond to the discovery requests after

redacting privileged information from any documents produced.

       This Court, addressing an issue not raised by the parties, says the homeowners used improper

discovery methods by using interrogatories and requests for production of documents. It follows that
up by saying that the methods would not have mattered anyway because the information is not

relevant. The first reason the information is irrelevant, says the Court, is because National Lloyds

has disavowed any intent to use its attorney’s fees as a measure for challenging the plaintiffs’ claims.

The second reason is because whatever relevance the information might have is slight when

compared to competing concerns such as undue prejudice, confusion of the issues, and abusive

discovery practices. Thus, the Court agrees with National Lloyds and determines that the trial court

abused its discretion by directing even the limited discovery it ordered.

        I disagree and would deny relief.

                                       I. Standard of Review

        Generally, parties may obtain discovery “regarding any matter that is not privileged and is

relevant to the subject matter of the pending action, whether it relates to the claim or defense of the

party seeking discovery or the claim or defense of any other party.” TEX . R. CIV . P. 192.3(a); Ford

Motor Co. v. Castillo, 279 S.W.3d 656, 664 (Tex. 2009). Trial courts are afforded broad discretion

in determining and controlling the scope of discovery. See In re Am. Optical Corp., 988 S.W.2d
711, 713 (Tex. 1998). Trial court rulings regarding discovery are reviewed for abuse of discretion.

In re Nat’l Lloyds Ins. Co., 449 S.W.3d 486, 488 (Tex. 2014). There is no presumption that

documents are privileged, and the party resisting the discovery bears the burden of pleading and

proving an applicable privilege. In re E.I. DuPont de Nemours & Co., 136 S.W.3d 218, 223, 225

(Tex. 2004). Denial of discovery is proper only if there is “no possible relevant, discoverable”

material to support, or lead to evidence that would support, claims or defenses of a party. Ford

Motor Co., 279 S.W.3d at 664.

                                                   2
                                           II. Discussion

                                     A. Methods of Discovery

       National Lloyds designated Doyen, whose firm is one of those representing it in the pending

cases, as an expert witness on attorney’s fees. After Doyen testified in a similar-type case and gave

opinion testimony as to the plaintiff’s attorney’s fee request, based in part on his personal knowledge

from representing a defendant in the case, the homeowners sought permission to serve interrogatories

and requests for production regarding, as to each case, the time Doyen and his firm spent on the case

and the firm’s fees and expenses billed to and paid by National Lloyds. They sought the same

information regarding all the lawyers representing National Lloyds in the cases. National Lloyds

objected that the requested discovery was “overly broad and seeks information that is both irrelevant

and protected by the attorney-client and work-product privileges.” Ante at ___. A special master

heard the dispute. National Lloyds neither offered testimony nor produced any documents for

examination by the special master or trial court. The special master recommended, and the trial court

ordered, that National Lloyds respond to the discovery requests as modified by the court, except it

specified in its order that “specific records may be redacted for content protected by an appropriate

privilege.”

       National Lloyds did not assert in the trial court that the homeowners improperly requested

discovery by using interrogatories and requests for production. It did not assert in the court of

appeals that the trial court abused its discretion by authorizing discovery by means of interrogatories

and requests for production instead of requests for disclosure, depositions, and reports as permitted

by Rule 195. See TEX . R. CIV . P. 195 (entitled “Discovery Regarding Testifying Expert Witnesses”).

                                                  3
Nor has it made that argument here. The issue of whether the homeowners used proper discovery

methods when National Lloyds did not make that challenge is not an issue the trial court had a duty

to raise and rule on sua sponte. Compare, e.g., Rusk State Hosp. v. Black, 392 S.W.3d 88, 103 (Tex.

2012) (“Subject matter jurisdiction cannot be waived or conferred by agreement, can be raised at any

time, and must be considered by a court sua sponte.”). We do not have a duty to sua sponte raise the

issue, either. Id. To the contrary, under this record we should do as the trial court did and limit

ourselves to ruling on the issues presented by the parties.

       In my view, the trial court did not abuse its discretion by addressing only the issues presented

by the parties and not granting relief on grounds National Lloyds did not urge. See McKinney v.

Nat’l Union Fire Ins. Co., 772 S.W.2d 72, 75 (Tex. 1989) (“[T]he objecting party must assume the

burden of establishing its privilege, immunity or other objection to the discovery request.” (emphasis

added)). Moreover, interrogatories and requests for production of documents are appropriate for

discovering information related to Doyen as a person with knowledge of relevant facts regarding

attorney’s fees in cases in which he has participated in trial preparation, as is discussed more fully

below. National Lloyds should not get to convert a witness from one with knowledge of relevant

facts into solely an expert witness simply by designating the witness as an expert. And the trial court

would not have abused its discretion by considering Doyen as a fact witness as well as an expert for

discovery purposes—even if National Lloyds had argued he was not a fact witness, which it has not.

       In light of the foregoing, I disagree with the Court’s conclusion that “[b]ecause the

homeowners chose not to use Rule 195’s permissible discovery methods to request insurer’s expert

                                                  4
information, the trial court erred insofar as it relied on Rule 192.3(e) in determining the scope of

discovery.” See ante at ___.

                                          B. Relevance

       Going beyond the issue of methods of discovery, the Court concludes that the trial court

abused its discretion by ordering National Lloyds to respond to the following discovery requests

because they did not seek relevant information:

       Interrogatories:

               (1) State the hourly rate of any and all attorneys who have provided legal
               services to this Defendant in this case;
               (2) State the total amount billed by each law firm providing legal services to
               this Defendant in this case up to and including the time of trial; and
               (3) State the total amount of reimbursable expenses incurred by any law firm
               providing legal services to this Defendant in this case up to and including the
               time of trial.

       Requests for Production:

               (1) Produce all billing invoices received by Defendant and/or any of the firms
               the named attorneys are affiliated with or employed by, in connection with
               this case;
               (2) Produce all payment logs, ledgers, or payment summaries showing all
               payments paid to Defendants’ attorneys and/or any of the firms that the
               named attorneys are affiliated with or employed by, in connection with this
               case;
               ...
               (4) Please produce all documents that show the flat rate, if any, being paid to
               Defense Counsel and/or any of the firms that the named attorneys are
               affiliated with or employed by, in connection with their services on this case;
               and
               (5) Please produce all documents related to audits of the billing and/or
               invoices of Defense Counsel and/or any of the firms that the named attorneys
               are affiliated with or employed by, which were performed on behalf of
               Defendant in regards to the attorney services received by Defendant.

                                                  5
(emphasis added). The record clarifies that Request for Production number five is limited to

documents in the particular case in which discovery is sought.

       The amount of reasonable and necessary attorneys’ fees to which the plaintiffs are entitled,

if any, will be answered by the factfinder—in these cases, presumably a jury, as jury demands have

been made. Transcontinental Ins. Co. v. Crump, 330 S.W.3d 211, 230 (Tex. 2010) (“In general, the

reasonableness of statutory attorney’s fees is a jury question.” (quoting City of Garland v. Dall.

Morning News, 22 S.W.3d 351, 367 (Tex. 2000))). The discovery was sought only after Doyen had

both been designated to testify in these cases and had testified in another case in opposition to a

plaintiff’s attorney’s fee request. And there can be no doubt that if Doyen testifies, his testimony

will be in opposition to the fees requested by the homeowners: trial lawyers do not call witnesses to

testify in support of the opposing party’s position.

       During the discovery hearing the homeowners’ attorneys explained that Doyen’s testimony

in the prior, similar-type case prompted the discovery requests here. In that case he gave opinion

testimony based in part on personal knowledge from his own participation in the case. The

homeowners’ desire for information is understandable, given that when Doyen was cross-examined

in the earlier case about the amount of time and fees he and his firm billed for handling the case, he

could not recall details of those matters. Given that previous experience, the homeowners’ lawyers

reacted rationally: they sought specific information and records with which to arm themselves to test

Doyen’s testimony and opinions should his recollection again falter, or his memory as to the firm

billings be incomplete. Moreover, just in case there were other firms involved in representing

National Lloyds in any of these matters, the plaintiffs’ discovery requests inquired about those firms,

                                                  6
also. For if litigation tasks in a case are split among several firms, a true picture of the amount of

time spent and fees billed by attorneys representing National Lloyds can only be presented by

disclosure of the time and billings on the case from all the firms performing services.

        When a witness testifies based on personal knowledge, even in part, matters within that

witness’s personal knowledge, subject to other exclusionary rules of evidence, become relevant and

fall within the scope of cross examination. TEX . R. EVID . 602, 611(b); see also Reid Rd. Mun. Util.

Dist. No. 2 v. Speedy Stop, 337 S.W.3d 846, 850–52 (Tex. 2011). There is no dispute Doyen has

personal knowledge of his own firm’s billing rates and at least part of the activities and time spent

in litigating the cases by both his firm and the plaintiffs’ lawyers. That surely includes personal

knowledge of, or familiarity with, the complexity of the issues and the time various activities took

or reasonably should have taken; the attorney experience level appropriate to litigate the case; the

amount of time necessary to prepare for the various activities such as hearings, discovery requests

and responses; and very likely other facts and factors affecting the reasonableness and necessity of

the attorney’s fees sought. See Arthur Andersen & Co. v. Perry Equip. Corp., 945 S.W.2d 812,

818–19 (Tex. 1997) (setting out a non-exhaustive list of factors to be considered when determining

whether an attorney’s fees request is reasonable). His designation as an expert witness does not

preclude his also being a fact witness and being examined as such with respect to the attorney’s fees

question. See Reid Rd., 337 S.W.3d at 850–52. If a witness with knowledge of relevant facts about

a contested matter such as the attorney’s fee issue is called to testify, even as an expert, it is not

subject to debate that the witness is subject to cross examination, including cross examination to test

his credibility, biases (if any), and the bases for his testimony. See TEX . R. EVID . 611(b) (“A witness

                                                   7
may be cross-examined on any relevant matter, including credibility.”); Davidson v. Great Nat’l Life

Ins. Co., 737 S.W.2d 312, 314 (Tex. 1987); Goldberg v. Kelly, 397 U.S. 254, 269 (1970). Those are

all matters the jury will be entitled to consider in weighing Doyen’s testimony if the cases are tried

and he testifies; certainly information reflecting on them is discoverable.

        The Court says that

        [U]nder [these] circumstances, (1) compelling en masse production of a party’s
        billing records invades the attorney work-product privilege; (2) the privilege is not
        waived merely because the party resisting discovery has challenged the opponent’s
        attorney-fee request; and (3) such information is ordinarily not discoverable.

Ante at ___ (citing TEX . R. CIV . P. 192.5(b)). But the quoted language does not apply. Here, the trial

court did not order National Lloyds to produce its billing records en masse, nor does anyone assert

that a privilege has been waived by the company’s challenging the plaintiffs’ attorney’s fees request.

To the contrary, the special master recommended, and the trial court specifically ordered, that

privileged information did not have to be disclosed—National Lloyds was to redact such information

before producing its records. Further, no one claims the information is ordinarily discoverable. But

it is no ordinary situation for a party’s trial attorney to be designated as a testifying expert to dispute

the opposing party’s attorney’s fee request—at least, it has not been. Things may well change after

this case issues.

        Following its determination that some of the requested information is protected by the

work-product privilege, a determination with which I do not disagree, the Court turns to whether the

requests for hourly rates, total amounts billed, and total reimbursable expenses seek discoverable

information. The Court notes that this question relates to the scope of discovery and that the proper

                                                    8
scope “extends to any unprivileged information that is ‘relevant to the subject matter’ of the pending

action, even if inadmissible at trial, so long as the information sought ‘appears reasonably calculated

to lead to the discovery of admissible evidence.’” Ante at ___ (quoting TEX . R. CIV . P. 192.3(a)).

But the Court then says:

       To the extent factual information about hourly rates and aggregate attorney fees is not
       privileged, that information is generally irrelevant and nondiscoverable because it
       does not establish or tend to establish the reasonableness or necessity of the attorney
       fees an opposing party has incurred.

Ante at ___ (citing TEX . R. EVID . 401; TEX . R. CIV . P. 192.3). I disagree. First of all, the

information clearly tends to establish the reasonableness and necessity of attorney’s fees National

Lloyds has incurred in each case. And the information sought, at a minimum, might be relevant to

both the reasonableness and necessity of the plaintiffs’ attorney’s fees in each case to which the

defendant’s fees apply.

       While there are certainly times when counsel’s experience, the roles undertaken by counsel,

and varying motivations make a direct comparison of time spent on a case and fees charged for it

inapt, there are just as certainly times when circumstances in particular cases might make a

comparison highly appropriate. See El Apple I, Ltd. v. Olivas, 370 S.W.3d 757, 766 (Tex. 2012)

(Hecht, J., concurring). When a party designates the attorney representing it in a case to testify and

dispute another party’s fee request, the designation implies that the attorney will rely on his own

experience in trying and billing cases comparable to the one in which he is designated to testify. If

the attorney testifies and mitigating factors make a fee comparison between the parties inapplicable,

then objections can be lodged based on the status of the evidence at the time the attorney testifies.

                                                  9
See TEX . R. EVID . 611(b) (providing that “[a] witness may be cross-examined on any relevant matter,

including credibility.”); TEX . R. EVID . 401 (defining “relevant evidence” as evidence having any

tendency to make the existence of any fact that is of consequence to the determination of the action

more probable or less probable). In any event, the attorney will have an opportunity to address the

subject and make any necessary clarifications during re-direct examination. And what better

exemplar could there be of comparing apples to apples than comparing attorney activities in the very

case in which the fees are sought? See El Apple I, 370 S.W.3d at 766. The trial court apparently

decided that this might be such a case. In my view the trial court did not abuse its discretion by that

decision and by allowing the limited discovery it ordered.

       Further, the trial court could have, in its discretion, considered the information sought as

being relevant for cross examination of lawyer Doyen regarding the credibility of his opinions and

testimony. Witness credibility is important regarding contested issues, and attorney’s fees are no

different. See Howsley & Jacobs v. Kendall, 376 S.W.2d 562, 565 (Tex. 1964). The Texas Rules

of Evidence expressly recognize that witnesses may be cross examined on their credibility. TEX . R.

EVID . 611(b). Thus, information used to impeach the credibility of a witness, even an attorney

testifying about another party’s fees, is relevant, as the plaintiffs argued to the special master:

       We believe that we’re entitled to know how much the Defendants spend on attorneys’
       fees and the number of hours that they billed for, in order to counter the arguments
       and testimony that we heard [from Doyen in the previous trial].

       The Court gives several reasons for concluding that the requested information is not relevant.

First, it says that an opposing party may freely choose to spend more or less than would be

“reasonable” in comparison to the requesting party. Ante at ___. But deciding what is a reasonable

                                                  10
fee for a case is a jury question. Certainly, a party has the right to spend whatever it chooses on a

case. But attorneys for both sides are professionally obligated to charge reasonable fees. TEX .

DISCIPLINARY RULES PROF’L CONDUCT 1.04(a). Beyond that, that party’s billing choices should not

preclude the party whose attorney’s fees it is contesting from discovering information about the time

spent and fees charged on a case by a testifying witness who has been part-and-parcel of representing

the contesting party in the suit. This holds especially true when, as happened with Doyen, the

designated witness has already demonstrated in previous trial testimony in a similar case that he

could not recall specifics regarding his firm’s time, activities, and billings for the case.

        Second, the Court says that comparisons between attorney’s fees of plaintiffs and defendants

are inapt because differing motivations of the parties impact the time spent, rate charged, and skill

required. Ante at ___. That may be true to some extent, but the fact remains that all the lawyers are

representing clients in the same lawsuit and doing much of the same work, such as filing pleadings,

attending the same depositions and hearings, doing pretrial orders and briefing, preparing to examine

and cross examine the same pool of witnesses, working on the same jury charge, and preparing to

argue the same case to the same jury. There is necessarily symmetry in a great deal of the activity

undertaken by attorneys representing clients in the same lawsuit, even though they represent

opposing parties. That symmetry is relevant for cross-examination purposes if Doyen testifies

regarding such activities and is critical of the homeowners’ attorney’s fees request as to those

activities.

        Third, the Court says that the tasks and roles of counsel on opposite sides of a case vary

fundamentally, so even in the same case, the legal services rendered to opposing parties are not

                                                  11
“fairly characterized” as similar. Ante at ___. I disagree. There are some differences in the typical

activities undertaken by counsel for opposing parties in a lawsuit, but most of the activities are of

the same general nature. And if they are not, the testifying witness will have an opportunity to

explain the differences. In any particular case the issues generally become apparent early on. From

that point, preparation for the parties generally entails similar types of activities—even though likely

not exactly the same activities—as set out above, and others such as researching points of law that

might arise, conferring with and corresponding with the client regularly, interviewing witnesses,

attending mediation, and preparing witnesses for trial. Any differences go to the weight of the

evidence, not to whether there is some relevancy between the level and types of activities and time

spent by the attorneys for each side. At the least, there is enough similarity and relevance for the trial

court to have determined that the limited discovery it ordered was warranted.

        Finally, the Court says that a single law firm’s fees and rates do not determine the

“customary” range of fees in a general locality for similar services. See Arthur Andersen & Co., 945
S.W.2d at 818 (noting that the fee customarily charged in the locality is a factor to be considered in

determining the reasonableness and necessity of attorney’s fees). True. But saying that a single

firm’s fees and rates do not determine a customary or reasonable fee is not the same as saying that

firm’s fees and rates are not relevant to the question. To the extent that “customary” fees are in

issue, an opposing party’s fees and rates are certainly some evidence of the customary fees and rates

in that locality. As such, they are at least relevant to what a customary or reasonable fee would be.

        In sum, it is one thing to say that evidence of National Lloyds’ attorneys’ time and fees in a

particular case is inadmissible in that case when an opposing party is seeking attorney’s fees in the

                                                   12
case. Admissibility will depend on the evidence and what has transpired at trial before such

evidence is offered, and the purpose for which it is offered. Cf. In re E.N.C., 384 S.W.3d 796, 805

(Tex. 2012); see also TEX . R. EVID . 401 (requiring that the evidence be of a “fact . . . of consequence

in determining the action”). But it is quite another thing to say that the trial court abused its

discretion by determining evidence of the time and fees of National Lloyds’ attorneys is discoverable

to the limited extent it ordered here.

                                         C. And Further . . .

        The Court asserts that production of any part of an attorney’s file, even redacted billing

information, would conflict with our holding in National Union Fire Insurance Co. v. Valdez, in

which we decided that requests for en masse production of an attorney’s entire litigation file was

improper because it called for disclosure of privileged, work-product materials. Ante at ___ (citing

Nat’l Union Fire Ins. Co. v. Valdez, 863 S.W.2d 458, 460 (Tex. 1993)). Not so. The requests for

discovery in this case are not even close to the requests we considered in Valdez. An attorney’s

entire file includes notes about attorney-client conferences, reports to clients, trial strategies and

preparation, and case evaluation; just to mention a few areas and matters that are undisputedly

privileged. No one doubts that those materials “necessarily [reveal] the attorney’s thought processes

concerning the prosecution or defense of the case.” See Valdez, 863 S.W.2d at 460.

        The requested billing information in this case is a narrow sliver of the entire file, and in

Valdez we were careful to note that the decision “does not prevent a party from requesting specific

documents . . . relevant to issues in a pending case, even though some or all of the documents may

be contained in an attorney’s file.” Id. The information and documents sought here are limited,

                                                   13
specific, and unquestionably relevant to an issue in this case. The trial court’s authorizing National

Lloyds—by a very general and nonspecific order—to redact privileged information before producing

documents, was fully adequate to protect privileged information absent National Lloyds

demonstrating otherwise.

        To the extent the Court implies that the homeowners seek to use the requested discovery to

independently support their claim for attorney’s fees, National Lloyds does not claim that they do.

As the homeowners argued to the special master, the discovery was sought only after Doyen’s

designation as a witness regarding the homeowners’ attorney’s fees claim, and after he testified in

opposition to the fee request of a homeowner in a different trial. As discussed, the homeowners say

they only seek the information to prepare for cross examining Doyen. So, any discussion about using

the fees National Lloyds’ lawyers charged as proof of the homeowners’ attorney’s fees is misplaced.

        Moreover, the discovery requests can hardly be excessively burdensome or a great expansion

of the trial that will take place. First, National Lloyds did not claim that they are. Second, it is

common knowledge among civil trial lawyers that insurance companies require regular, detailed

billing invoices from their attorneys. Invoices generally set out, at the very least, the date, amount

of time taken, and description of activity for which the company is being billed. That information

is most likely either computer generated or transmitted to the company via paperless billing methods.

Either way, or even in the event that the billing invoices are paper instead of electronic, the invoices

and payments made in response will be readily and efficiently available on demand. It is also

common knowledge in the industry that insurance companies may have the fee invoices of their

attorneys audited, frequently by independent companies whose business it is to review attorney’s fee

                                                  14
bills and report unusual or out-of-line time or activities to the auditing company’s clients—indeed,

the phrase “customary fee” comes to mind regarding such audits. See Arthur Andersen & Co., 945
S.W.2d at 818. Assuming National Lloyds follows industry norms, the responses to discovery

ordered by the trial court should take a nominal amount of time and effort, even including the time

to redact privileged information as authorized by the trial court. And if National Lloyds does not

follow industry norms, it did not mention it in the trial court, nor did it assert or offer evidence that

producing the requested information and redacted documents would take an unusual or excessive

amount of time, effort, or expense. In any event, if any such problems arise, they can be presented

to the trial court for resolution.

        As the Court explains, this situation has been brought about by National Lloyds’own

litigation choice to designate its trial attorney to testify as an expert. Ante at ___ n.54 (noting that

parties concerned about disclosing fees and expenses paid to trial counsel can designate another

expert witness or withdraw the designation of trial counsel as a witness). What National Lloyds

should not be able to do is have it both ways by using one of its trial attorneys to critique the time,

fees, and other details of the homeowners’ attorney’s fees request, while screening from view its own

attorneys’ time and fees in the same case for the same or similar activities. The materials the trial

court ordered discovered, at the very least, may lead to admissible evidence that many, if not most,

jurors would consider relevant in weighing the testimony of a witness such as Doyen—how much

time did the insurance company’s lawyers spend on the case in regard to the items those lawyers

criticize as to the homeowners’ attorneys, and what did they and their insurance clients consider a

reasonable fee for those efforts?

                                                   15
                                          III. Conclusion

       The trial court’s reasonably cautious approach as to what interrogatories must be answered

and what discovery must be produced does not demonstrate an abuse of discretion. There is, at a

minimum, possible relevance of the discovery sought to an element of the pending case. See Ford

Motor Co., 279 S.W.3d at 664. There simply has been no showing that National Lloyds’ complying

with the trial court’s discovery order would result in undue prejudice or abusive discovery practices.

It most certainly would not result in confusion of the issues—it is a discovery order, not a ruling on

the admissibility of the information or documents sought.

       I would deny mandamus relief. Because the Court does otherwise, I respectfully dissent.

                                               ________________________________________
                                               Phil Johnson
                                               Justice

OPINION DELIVERED: June 9, 2017

                                                 16