Opinion By Justice LANG.
This case involves a bill of review filed by Kaye Bassman International Corp. ("KBIC") to challenge a default judgment against KBIC in favor of John A. Broderick, Inc. d/b/a Worldbridge Partners ("Worldbridge"). The trial court granted summary judgment in favor of Worldbridge and awarded Worldbridge attorney's fees calculated based on a finding the parties had reached a valid rule 11 settlement. See TEX.R. CIV. P. 11. Both parties appeal the trial court's judgment.
In two issues, Worldbridge challenges the trial court's judgment on the alleged rule 11 agreement and its related rulings on attorney's fees. In its cross-appeal, KBIC argues the trial court applied the wrong standard in its summary judgment ruling on the bill of review proceeding because a different standard applies in "circumstances where service papers are misplaced." As an alternative, KBIC asserts the trial court properly enforced the parties' high-low rule 11 agreement, but erred in determining Worldbridge had proven reasonable and necessary attorney's fees of $36,538 as a matter of law as to pre-June 30, 2008 attorney's fees. KBIC also asserts the attorney's fees were unreasonable as a matter of law in light of the award of only $19,500 in damages.
We reverse the trial court's judgment as to the rule 11 agreement, render judgment as to the $36,538 attorney's fees finding, and remand for further proceedings as to post-June 30, 2008 attorney's fees.
Worldbridge and KBIC are both employee recruiting firms. On January 19, 2007, Worldbridge filed suit against KBIC seeking $19,500 in damages pursuant to an alleged breach of a referral agreement between the two parties. After KBIC failed to answer, the trial court rendered an "Order of Final Judgment by Default" (the "default judgment") awarding Worldbridge $23,760.23, which included $19,500 in contract damages and $3,500 in attorney's fees.
Both parties filed motions for traditional summary judgment, see TEX.R. CIV. P. 166a(c), yet each relied on a different standard
On April 25, 2008, following the summary judgment hearing before the associate judge, but prior to the judge's ruling, Worldbridge had filed a motion for attorney's fees supported by an affidavit of an associate attorney representing Worldbridge. Thereafter, on July 11, 2008, Worldbridge filed another affidavit by Worldbridge's lead attorney in which counsel testified the "reasonable and customary" fees for legal work through June 30, 2008 would be "at least $36,538.00." In addition, Worldbridge filed an August 8, 2008 supplemental affidavit in which counsel stated the July 11 affidavit "superceded and replaced" the April 25 affidavit.
On August 12, 2008, KBIC filed an objection to and motion to continue the hearing on Worldbridge's motion for attorney's fees. KBIC asserted, in relevant part, that Worldbridge's affidavits were facially inconsistent and showed a "gross disparity" in the number of hours billed by the associate attorney. Worldbridge's attorney's fees request was thereafter heard by the trial court on March 25, 2009, after the trial court affirmed the associate judge's decision granting summary judgment.
On the morning of April 29, 2008, after the associate judge had heard Worldbridge's summary judgment motion, but prior to any hearing on attorney's fees, counsel for the parties exchanged emails
Almost a year after the email exchange, at the March 2009 hearing on Worldbridge's request for attorney's fees, the trial court took judicial notice of the email exchange, which KBIC had filed several hours earlier and which was designated as "Exhibit Number 1." KBIC contended the email exchange constituted a "high/low" settlement agreement that was enforceable in accordance with rule 11 of the Texas Rules of Civil Procedure and had the effect of limiting KBIC's "exposure" to a maximum of $30,000. Worldbridge moved to strike the email exchange, arguing it was not "in good faith" and was not an enforceable rule 11 agreement. Following the parties' presentation of evidence, which they agree constituted a trial by consent, the trial court ruled the email exchange was unambiguous and constituted an enforceable rule 11 agreement.
As a result of its ruling on the rule 11 agreement, the trial court rendered judgment for Worldbridge, but refused Worldbridge's request to submit evidence of post-June 30 attorney's fees. The trial court then applied its interpretation of the rule 11 "high/low" agreement to the prior default judgment, as affirmed by its summary judgment ruling, and rendered a final judgment in favor of Worldbridge in the amount of $6,239.77.
Following the March 29, 2009 judgment, the trial court signed findings of fact and conclusions of law that included, in relevant part, the following:
(citations to reporter's record omitted). Both parties filed timely notices of appeal.
In its first cross-issue, KBIC challenges the trial court's rulings on the summary judgment motions, asserting the three-prong
A party moving for traditional summary judgment under rule of civil procedure 166a(c) is charged with the burden to establish that no genuine issue of material fact exists and that it is entitled to judgment as a matter of law. TEX.R. CIV. P. 166a(c); Ysasaga v. Nationwide Mut. Ins. Co., 279 S.W.3d 858, 864-65 (Tex.App.-Dallas 2009, pet. denied). If the movant discharges its burden, the burden shifts to the nonmovant to present to the trial court any issues that would preclude summary judgment. Hackberry Creek Country Club, Inc. v. Hackberry Creek Home Owners Ass'n, 205 S.W.3d 46, 50 (Tex.App.-Dallas 2006, pet. denied). "When, as here, both parties move for summary judgment, each party bears the burden of establishing that it is entitled to judgment as a matter of law; neither party can prevail because of the other's failure to discharge its burden." Id. We review a traditional summary judgment de novo to determine whether a party's right to prevail is established as a matter of law. Dallas Cnty. Tax Collector v. Andolina, 303 S.W.3d 926, 929 (Tex.App.-Dallas 2010, no pet.).
A bill of review is an independent action to set aside a judgment that is no longer appealable or subject to challenge by a motion for new trial. Wembley Inv. Co. v. Herrera, 11 S.W.3d 924, 926-27 (Tex.1999) (citing Caldwell v. Barnes, 975 S.W.2d 535, 537 (Tex.1998)); see also TEX.R. CIV. P. 329b(f) (on expiration of time within which trial court has plenary power, "a judgment cannot be set aside by the trial court except by bill of review for sufficient cause"). Although it is an equitable proceeding, the fact that an injustice has occurred is not sufficient to justify relief by bill of review. Wembley Inv. Co., 11 S.W.3d at 927 (citing Alexander, 226 S.W.2d at 998). Under the Alexander standard, before a litigant can successfully invoke a bill of review to set aside a final judgment, "he must allege and prove: (1) a meritorious defense to the cause of action alleged to support the judgment, (2) which he was prevented from making by the fraud, accident, or wrongful act of the opposite party, (3) unmixed with any fault or negligence of his own." Alexander, 226 S.W.2d at 998.
In Craddock, which involved a direct appeal of the trial court's order denying a defendant's timely motion for new trial, the supreme court stated the following rule: "A default judgment should be set aside and a new trial ordered in any case in which the failure of the defendant to answer before judgment was not intentional, or the result of conscious indifference on his part, but was due to a mistake or an accident; provided the motion for new trial sets up a meritorious defense and is filed at a time when the granting thereof will occasion no delay or otherwise work an injury to the plaintiff." Craddock, 133 S.W.2d at 126.
KBIC acknowledges in its brief on appeal that "Texas appellate courts have historically recited that bill of review plaintiffs must `ordinarily' prove three elements traceable to [Alexander]." However, KBIC contends the Texas Supreme Court's per curiam opinion in Fidelity changed that standard for cases "where service papers are lost or misplaced." We cannot agree.
Fidelity involved a suit on a surety bond in which the plaintiff, a subcontractor, obtained a default judgment against the surety for the general contractor. Fidelity, 186 S.W.3d at 573. The surety filed a motion for new trial in which it explained the service papers had been lost. Id. Rejecting the surety's challenge to omission of its correct name in the citation, the court noted the record for a direct attack of a default judgment is not limited to the face of the record and may include "affidavits, depositions, testimony, and exhibits to explain what happened." The court added the following language, on which KBIC relies here:
Id. at 574 (citations and footnote omitted). The court concluded that because the surety's failure to answer had nothing to do with the partial omission of its name in the suit papers, such omission provided no ground for setting aside the default judgment by motion for new trial. Id. Addressing the Craddock factor that "the default was the result of accident or mistake," the court focused on a number of cases where suit papers had been misplaced and no one knew precisely how. Id.
KBIC asserts its construction of Fidelity to apply to this appeal is further supported by Cary v. Alford, 203 S.W.3d 837 (Tex.2006), another per curiam opinion in which the supreme court, citing Fidelity, stated it "recently clarified the standard of review when service papers are lost." Worldbridge correctly notes that neither Craddock nor Fidelity was a bill of review case. Rather, each involved a direct appeal following a default judgment and denial of a motion for new trial. See Fidelity, 186 S.W.3d at 573; Craddock, 133 S.W.2d at 126. Further, while Cary did involve an underlying bill of review, that case was a "combined bill-of-review and medical-malpractice appeal" in which the issue was "whether the defendant's affidavit was sufficient to establish that his failure to answer was an accident rather than conscious indifference." Cary, 203 S.W.3d at 837. Nowhere in its three-paragraph opinion in Cary does the supreme court clarify how Fidelity applies. Id.
On remand in Cary, the Twelfth Court of Appeals repeated that Alexander remains the proper standard and concluded the Craddock standard should be applied there because, similar to the facts in
Under the Alexander standard, KBIC does not allege, and there is no evidence in the record to show, KBIC was prevented from making a meritorious defense to the underlying cause of action by the fraud, accident, or wrongful act of Worldbridge. Hence, the second element in Alexander has not been met. Further, in an uncontroverted affidavit, the KBIC employee on whom papers were served in this case stated, "In the midst of a busy day, and while attempting to adjust to temporary job functions that I do not ordinarily perform, I inadvertently neglected to forward the service of citation to KBIC's executives and attorneys." This evidence negates the third Alexander element that the default was without fault of KBIC. See Mackay v. Charles W. Sexton Co., 469 S.W.2d 441, 444-45 (Tex.Civ.App.-Dallas 1971, no writ) ("negligence or oversight" of employee of bill of review plaintiff precluded bill of review plaintiff from meeting third element of Alexander standard). Therefore, we conclude the trial court did not err by granting summary judgment in favor of Worldbridge or by denying KBIC's motion. We decide against KBIC on its first cross-issue.
Next, we address the parties' issues on Worldbridge's attorney's fees, which include the trial court's judgment enforcing the alleged rule 11 agreement. Both parties focus on the trial court's findings of fact and conclusions of law.
We review conclusions of law de novo. BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex.2002). Findings of fact in a case tried to a court are of the same force and dignity as a jury's verdict on jury questions. Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex.1994); Kahn v. Imperial Airport, L.P., 308 S.W.3d 432, 436-37 (Tex.App.-Dallas 2010, no pet). When, as here, we have a complete reporter's record, the trial court's fact findings are not conclusive and are subject to challenge on evidentiary sufficiency grounds. See BMC Software Belg., 83 S.W.3d at 795; Ahrens & DeAngeli, P.L.L.C v. Flinn, 318 S.W.3d 474, 479 (Tex.App.-Dallas 2010, no pet.). When an appellant attacks the legal sufficiency of an adverse finding for which it did not have the burden of proof, it must demonstrate there is no evidence to support the adverse finding. Croucher v. Croucher, 660 S.W.2d 55, 58 (Tex. 1983). Such a challenge fails if there is more than a scintilla of evidence to support the finding. Ahrens & DeAngeli, P.L.L.C., 318 S.W.3d at 479 (citing BMC Software Belg., 83 S.W.3d at 795). More than a scintilla of evidence exists when the evidence supporting the finding, as a whole, rises to a level that would enable reasonable and fair-minded people to differ in their conclusions. See, e.g., Merrell Dow Pharms., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex. 1997). When a party challenges the legal sufficiency of an adverse finding on an
We begin with the portion of Worldbridge's first issue in which it asserts the trial court erred "by factually and legally determining that the email exchange was an enforceable `high-low' settlement agreement under Rule 11, Texas Rules of Civil Procedure." Worldbridge contends it was KBIC's burden to prove the existence of an "enforceable written high-low agreement" and the essential elements are missing from the email exchange—there is no clear agreement to settle, no promise by KBIC to pay a minimum amount and no promise by Worldbridge to accept a maximum amount, and no mutual promise for the high-low amounts to apply regardless of the outcome of the trial. Worldbridge challenges, in relevant part, the trial court's finding of fact number three and conclusion of law number two.
KBIC argues in support of its second cross-issue that the trial court's finding was both legally and factually sufficient, the literal text states the parties' agreement to a range of $15,000 to $30,000, a broad interpretation of the language would include that range "under any circumstances, without or without trial," and it is "obvious and inescapable" KBIC is the one who pays and Worldbridge is the one to receive payment.
The email exchange stated, in relevant part, as follows:
Rule 11 of the Texas Rules of Civil Procedure states, "Unless otherwise provided in these rules, no agreement between attorneys or parties touching any suit pending will be enforced unless it be in writing, signed and filed with the papers as part of the record, or unless it be made in open court and entered of record." See TEX.R. CIV. P. 11. A settlement agreement must comply with rule 11 to be enforceable.
"A high-low agreement is defined as `[a] settlement in which a defendant agrees to pay the plaintiff a minimum recovery in return for the plaintiff's agreement to accept a maximum amount regardless of the outcome of the trial.'" Employers Reinsurance Corp. v. Gordon, 209 S.W.3d 913, 917 (Tex.App.-Texarkana 2006, no pet.) (quoting BLACK'S LAW DICTIONARY 746 (11th ed.2004)); accord Baylor Coll. of Med. v. Camberg, 247 S.W.3d 342, 344 n. 1 (Tex.App.-Houston [14th Dist.] 2008, pet. denied).
KBIC acknowledged in oral submission before this Court that, as the proponent of the agreement at issue, it had the burden to prove an enforceable rule 11 agreement.
The trial court's erroneous conclusion the parties reached an enforceable rule 11 agreement was the basis for the trial court's exclusion of Worldbridge's request for post-June 30, 2008 attorney's fees. As a result, we decide in favor of Worldbridge on subpart "(a)" of its first issue, in which it challenges the trial court's failure to allow the proffered attorney's fees evidence.
Worldbridge contends in subpart "(b)" of its first issue that because there was no enforceable agreement to limit recovery of its attorney's fees in this case, it is entitled to recover the amount of its reasonable and necessary fees "proved and found" at trial. According to Worldbridge, this Court should render judgment as to those fees as a matter of law. Worldbridge asserts that under section 18.001 of the Texas Civil Practice and Remedies Code, the July 11 affidavit of counsel was sufficient to support the trial court's "finding" that $36,538 was a reasonable attorney's fee for work performed prior to July 2008.
KBIC claims the trial court never made "fact findings" based on Worldbridge's affidavits. KBIC further asserts the trial court's finding number twenty-four that $6,239.77 is a reasonable and necessary attorney's fee was not challenged and is binding on the parties and the appellate court.
The parties do not dispute that a litigant who successfully defends a bill of review under the circumstances at issue is entitled to recover reasonable attorney's fees. See Bakali v. Bakali, 830 S.W.2d 251, 257 (Tex.App.-Dallas 1992, no writ) (party who successfully defends bill of review entitled to recover attorney's fees if such fees authorized for underlying case). Generally, a party seeking to recover attorney's fees carries the burden of proof to show reasonableness. Smith v. Patrick W.Y. Tam Trust, 296 S.W.3d 545, 547 (Tex.2009). Whether an attorney's fee award is reasonable is a question of fact. See Bocquet v. Herring, 972 S.W.2d 19, 20 (Tex.1998).
With regard to whether Worldbridge "challenged" finding of fact number twenty-four that $6,239.77 was a reasonable and necessary attorney's fee, Worldbridge argues "that its first issue as to pre-June 30, 2008 fees—and its conditioning within the same issue on the unenforceability of the alleged `high-low' agreement, which the trial court utilized to calculate the $6,239.77—fairly includes a challenge to the court's finding and award of only $6,239.77." We agree. See Shaw v. Cnty. of Dallas, 251 S.W.3d 165, 169 (Tex.App.-Dallas 2008, pet. denied) ("A challenge to an unidentified finding of fact may be sufficient if we can fairly determine from the argument the specific finding of fact which the appellant challenges.") (citing Tittizer v. Union Gas Corp., 171 S.W.3d 857, 863 (Tex.2005)); see also TEX.R.APP. P. 38.1(f) ("The statement of an issue or point will be
The trial court confirmed in its conclusions of law numbers five and six that the attorney's fee award of $6,239.77 was a mathematical calculation based on the rule 11 agreement. Based on our conclusion no enforceable rule 11 agreement existed, we conclude the evidence is legally insufficient to support the calculation underlying finding of fact number twenty-four. See Ahrens & DeAngeli, P.L.L.C., 318 S.W.3d at 479.
Additionally, we agree with Worldbridge that the trial court made a "finding" that $36,538.00 was a reasonable attorney's fee for work performed prior to June 30, 2008. The record shows counsel for Worldbridge argued at trial the amount of "$36,500" in pre-June 30, 2008 attorney's fees was "established as a matter of law" and then asked the trial court to "so rule." The trial judge stated, "Okay. I think it is," and asked to see a copy of the civil practice and remedies code. Then, the trial judge stated
The record shows Worldbridge proposed a written finding of fact to that effect. Yet, the trial court made no such written finding of fact.
KBIC also argues in its third cross-issue the amount of Worldbridge's requested attorney's fees is unreasonable as a matter of law because Worldbridge was awarded only $19,500 in damages. KBIC argues "Smith held that an almost one-to-one ratio of damages ($65,000) to attorney's fees ($62,438.75)—and with the amount of attorneys' fees being actually slightly less
However, the court in Smith did not focus solely on a ratio of damages to attorney's fees. Smith involved a lawsuit based on an alleged breach of contract in which the plaintiff sought $215,391.50 in damages and $47,438.75 in attorney's fees. Smith, 296 S.W.3d at 546. Uncontroverted legal bills of several attorneys were offered in support of the attorney's fees request. Id. The jury awarded the plaintiff $65,000 in damages, but no attorney's fees. Id. at 547. The trial court rendered judgment notwithstanding the verdict on attorney's fees and awarded $7,500 for fees incurred through trial and up to $15,000 in attorney's fees for appeals. Id. Both sides appealed. Id. This Court vacated the $7,500 attorney's fee award and rendered judgment for $47,438.75 instead, because the plaintiff presented "competent, uncontroverted evidence" of its right to attorney's fees and the defendants did not challenge the amount, nature, or necessity of such fees. Id. The Texas Supreme Court reversed and remanded. Id. The supreme court concluded in relevant part that the attorney's fee at issue, "though supported by uncontradicted testimony, was unreasonable in light of the amount involved and the results obtained, and in the absence of evidence such fees were warranted due to circumstances unique to this case." Id. at 548.
Here, counsel for Worldbridge testified in an affidavit as to the circumstances warranting the requested amount of $36,538 in pre-June 30, 2008 attorney's fees. Worldbridge asserts "KBIC points to no direct evidence to challenge the time spent, the necessity for the work performed, the rate of the fees, the skill of counsel, or even the uniqueness of the circumstances for [Worldbridge's] attorney's fees in this bill of review. It points only to the fees incurred in relation to the results obtained...." On this record, we cannot conclude the amount of $36,538 in pre-June 30, 2008 attorney's fees is unreasonable as a matter of law. See id. at 548-49 ("On retrial, the evidence may support a similar fee award, but that is a matter within the jury's purview.").
Based on the above analysis, we decide in favor of Worldbridge on the portion of subpart "(b)" of its first issue that it is entitled to pre-June 30, 2008 attorney's fees of $36,538 and against KBIC on its third cross-issue. We do not address the parties' remaining issues.
We conclude the trial court erred by determining the email exchange at issue was a valid and enforceable rule 11 agreement. Therefore, we reverse the trial court's judgment in that regard, including its award of $6,239.77 in attorney's fees. Further, we conclude the trial court's finding that the sum of $36,538 is a reasonable and customary attorney's fee is supported by the record and render judgment in that amount for Worldbridge's pre-June 30, 2008 fees. Finally, we conclude the trial court erred in denying Worldbridge the opportunity to present evidence supporting its claims for post-June 30, 2008 attorney's fees and remand this case to the trial court for a new trial as to those fees. Otherwise, we affirm the trial court's judgment.