Court Opinion

ID: 4648766
Source: CourtListenerOpinion
Date Created: 2021-01-04 08:19:09.863862+00
Date Added: 2024-06-11T08:01:17.668362
License: Public Domain

Motion for Rehearing Granted in Part; Motion for En Banc Reconsideration
Denied as Moot; Memorandum Opinion of June 18, 2020, Withdrawn;
Reversed in Part, Affirmed in Part, and Substitute Majority and Dissenting
Opinions filed December 29, 2020

                                      In The

                     Fourteenth Court of Appeals

                               NO. 14-18-00216-CV

                      JOE ALFRED IZEN, JR., Appellant

                                         V.
             BRIAN LAINE AND KIMBERLY LAINE, Appellees

                    On Appeal from the 55th District Court
                            Harris County, Texas
                      Trial Court Cause No. 2013-28211

                CONCURRING AND DISSENTING OPINION

      I join the majority’s resolution of Izen’s issues on appeal except for the
majority’s decision to reverse the part of the trial court’s final judgment ordering
Izen to disgorge $70,126.13 in fees the Laines had previously paid Izen. Because I
believe that the trial court was authorized to order disgorgement of those fees
based on the Laines’ unconscionability affirmative defense, I respectfully dissent.
      The majority holds that the trial court was authorized to declare the fee
agreement unconscionable and a violation of public policy based on the Laines’
unconscionability affirmative defense with respect to the Big Inch Settlement. It
then affirms the trial court’s declaration. I agree with this conclusion. Indeed, Izen
himself conceded as much in his appellate briefing. My disagreement with the
majority arises out of what action the trial court was authorized to take once that
determination was made. I believe the majority improperly limits the trial court’s
equitable authority to order disgorgement of fees paid pursuant to an
unconscionable fee agreement because the only remaining basis to do so was
through application of the Laines’ affirmative defense.

      My disagreement begins with the majority treating this more like an ordinary
contract dispute rather than what it is: a dispute between an attorney who sued his
clients to collect fees pursuant to an unconscionable fee agreement. The Texas
Supreme Court has instructed that when interpreting and enforcing attorney-client
fee agreements, it is “not enough to simply say that a contract is a contract. There
are ethical considerations overlaying the contractual relationship.”          Hoover
Slovacek, LLP v. Walton, 206 S.W.3d 557, 560 (Tex. 2006) (internal quotation
marks omitted). In Texas, attorneys are held to the highest standards of ethical
conduct in their dealings with their clients. Id. As a result, attorneys must conduct
their business with their clients with inveterate honesty and loyalty and they must
always keep the client’s best interest in mind. Id. at 561. The question of Izen’s
fees must be viewed through that prism. See Burrow v. Arce, 997 S.W.2d 229, 246
(Tex. 1999) (stating that trial court must determine whether attorney’s conduct was
a clear and serious breach of duty to his client and whether any of the attorney’s
compensation should be forfeited and if so, what amount). Thus, when an attorney
sues a client for fees, the client raises unconscionability as an affirmative defense,

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and the trial court determines that the attorney fee agreement at issue is
unconscionable and violates public policy, the question of what, if any,
compensation the attorney is entitled to receive based on that unconscionable
agreement is squarely presented. See id. at 243-45 (recognizing that fee forfeiture
is not limited to situations where an attorney sues a client for payment of
compensation). In that circumstance, fee forfeiture “may be partial or complete,
depending on the circumstances presented.” Id. at 241.

       My next disagreement arises from the majority labeling the disgorgement of
fees an award of compensatory money damages and thereby limiting fee forfeiture
only to those cases where the client can also pursue claims for monetary damages
suffered as a result of the attorney’s conduct. Disgorgement is not an award of
damages, it is instead “an equitable forfeiture of benefits wrongfully obtained.” In
re Longview Energy Co., 464 S.W.3d 353, 361 (Tex. 2015). “Texas authorities
make clear that disgorgement of profit is an independent remedy from damages,
and the two are not assumed to be interchangeable.” Happy Endings Dog Rescue
v. Gregory, 501 S.W.3d 287, 293 (Tex. App.—Corpus Christi 2016, pet. denied).
Disgorgement “is properly measured by the defendant’s unjust gains, not the
plaintiff’s loss.” Id.

       The mismatch between disgorgement and damages is further
       illustrated by the distinct policies which support each remedy. The
       primary objective of awarding damages in civil actions has always
       been to compensate the injured plaintiff, rather than to punish the
       defendant. By comparison, disgorgement is distinct from an award of
       actual damages in that the disgorgement award serves a separate
       function of deterring fiduciaries from exploiting their positions of
       confidence and trust.
Id. at 293-94 (internal citations omitted).

       As the Texas Supreme Court recognized in Burrow, “an attorney’s

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compensation is for loyalty as well as services, and his failure to provide either
impairs his right to compensation.” 997 S.W.2d at 240 (emphasis added). The
court continued that “while a client’s motives may be opportunistic and his claims
meritless, the better protection is not a prerequisite of actual damages but the trial
court’s discretion to refuse to afford claimants who are seeking to take advantage
of their former attorneys the equitable remedy of forfeiture.” Id. If a client need
not have suffered any damages for a trial court to equitably impose total fee
forfeiture, the fact any affirmative claims for relief may be time-barred should not
remove that alternative from a trial court’s arsenal of equitable remedies available
to enforce public policy against unconscionable fee agreements. Because the
majority chooses to do so here, I respectfully dissent.

                                       /s/       Jerry Zimmerer
                                                 Justice

Panel consists of Justices Jewell, Bourliot, and Zimmerer (Jewell, J., majority).

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