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Hightower, Russo & Capellan v. Ireson, Weizel & Hightower, P.C.

Court of Appeals of Texas, Fourteenth District, Houston

December 31, 2013


Page 316

On Appeal from the 80th District Court, Harris County, Texas. Trial Court Cause No. 2010-80230.


For APPELLEE: Lansford O. Ireson, HOUSTON, TX.

Panel consists of Chief Justice Frost and Justices Christopher and Donovan. (Frost, C.J., concurring) (Christopher, J., dissenting).


John Donovan, Judge

Page 317


Appellant, Hightower, Russo & Capellan (" the Hightower firm" ), appeals a judgment apportioning attorney's fees among that firm and appellee, Ireson, Weizel & Hightower, P.C. (" the Ireson firm" ) for their representation of a plaintiff in an underlying claim. The judgment is affirmed.

I. Background

Timothy Hightower was previously a partner, and Alexandra Mutchler was an associate, with the Ireson firm. During their employment, the Ireson firm began representing a plaintiff (" client" ) in a suit for personal injuries sustained in an automobile accident during the scope of his employment. The representation was pursuant to a contingency fee contract, under which attorney's fees and expenses would be paid from any recovery.

On August 22, 2011, Hightower resigned from the Ireson firm and created the Hightower firm. Mutchler became associated with the Hightower firm. On August 31, 2011, client signed a document stating as follows:

Re: TRANSFER OF CASE TO [THE HIGHTOWER FIRM] To whom it may concern:
I, [client], understand that Timothy R. Hightower, Ivan Capellan are leaving, or have left, the firm of [the Ireson firm], and starting, or joining another firm, [the Hightower firm] (incorporation status is pending and a new name or different

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name does not change this agreement, as long as Timothy R. Hightower is a partner). I hereby request that my case be transferred to [the Hightower firm] and/or Timothy R. Hightower and/or Ivan Capellan and that Timothy R. Hightower and/or Ivan Capellan is hereby authorized to act, and is appointed by me, as my sole legal counsel and representative. I request that all original file materials, in any form (computer stored, hard copied, etc.) be given to Timothy R. Hightower. I hereby terminate my attorney client relationship with [the Ireson firm].
I understand the terms of my contract shall continue with both the new firm and old the firm [sic], [the Ireson firm] and hereby authorize the new firm to justly, equitably and fairly apportion all legal fees received and expenses paid consistent with the State Bar Rules. However, I shall never be obligated to pay a greater attorney fee or expense other than what is in the original contract.

This document was not signed by the Hightower firm, and there was no separate contract between client and the Hightower firm regarding attorney's fees. Additionally, the document was not signed by the Ireson firm. The record does not otherwise contain any evidence demonstrating the Ireson firm agreed to the statement authorizing the Hightower firm " to justly, equitably and fairly apportion all legal fees received and expenses paid consistent with the State Bar Rules." The record contains no agreement, written or otherwise, between the Hightower firm and the Ireson firm regarding apportionment of fees earned on client's case.

There were originally three defendants in client's suit: (1) the other driver, who was insured under a liability policy[1]; (2) client's own uninsured/underinsured (" um" ) carrier; and (3) the um carrier for client's employer. The employer's worker's compensation carrier, who had paid benefits to client, also became involved in settlement negotiations because client wished to obtain the carrier's reduction of its lien on any settlement funds.

Shortly before client signed the above transfer request, the other driver's carrier and employer's um carrier tendered their policy limits of $25,080 and $100,000, respectively. These tenders were formally accepted shortly after the transfer. At mediation approximately two and a half months after the transfer, client's um carrier agreed to pay $43,500 of its $50,000 policy limits. Acceptance of this offer was contingent on resolution of the worker's compensation lien.

Before the transfer, the worker's compensation carrier offered to reduce its lien from $87,479.22 to $57,418.57, but the offer was not accepted at that time. After the mediation, client sued the worker's compensation carrier, alleging it committed fraud by breaching an agreement to appear at the mediation. In January 2012, the worker's compensation carrier agreed to reduce its lien (which had increased slightly due to interim additional medical bills) to $50,000--a further reduction of approximately $9,000 from the offer made before the transfer.

Client received his proceeds of the settlement, and the lien was paid and released. The attorney's fees due from the settlement totaled $56,928.15, and the expenses

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totaled $4,723.69.[2] The Ireson firm intervened in the suit, requesting its contingency fee interest in the settlement funds. The two firms agreed on apportionment of the expenses, leaving only a dispute over apportionment of the attorney's fees. Because of the dispute, the defendants to the underlying claim deposited a portion of the total fees and expenses into the registry of the court, and the Hightower firm held the remainder in its trust account.

The trial court conducted a bench trial. After hearing evidence, the trial court orally announced it would apportion the fees in the manner requested by the Ireson firm: $49,482 to the Ireson firm; and $7,446.15 to the Hightower firm. The Hightower firm filed a motion to reconsider, which the trial court denied by written order after a hearing. On July 19, 2012, the trial court signed an amended final judgment, apportioning the attorney's fees in amounts consistent with its oral announcement at the close of trial. Based on this allocation and the parties' agreement regarding apportionment of expenses, the trial court (1) awarded the Ireson firm $52,238.88 to be paid from the funds deposited into the registry of the court and a portion of the funds held in trust by the Hightower firm, and (2) awarded the Hightower firm $9,412.96, to be paid from the funds it held in trust.[3] The Hightower firm filed a motion for new trial, which was denied by written order. Additionally, the trial court issued written findings of fact and conclusions of law. The Hightower firm now appeals.

II. Analysis

In its two stated issues, the Hightower firm asserts the trial court (1) applied an illegal methodology to apportion the fees, and (2) erred by awarding " 89%" of the total fees to the Ireson firm when it performed, at most, 50% of the work.

A. Basis for the Trial Court's Ruling

Preliminarily, an issue must be addressed regarding the basis for the trial court's ruling.

After hearing evidence at the bench trial, the trial court orally remarked it would apply Texas Government Code section 82.065, which provides, " A contingent fee contract for legal services must be in writing and signed by the attorney and client." Tex. Gov't Code Ann. § 82.065(a) (West 2013). The trial court remarked the Hightower firm was not entitled to any portion of the fees because it had no valid contract with client but the court would award $7,446.15 to the Hightower firm because the Ireson firm consented. In its motion to reconsider, the Hightower firm argued that section 82.065 is inapplicable. After hearing arguments, the trial court orally ruled it was denying the motion and would render judgment in accordance with its previous oral announcement.

After the trial court signed its amended judgment, it issued a writing entitled " Findings of Fact and Conclusions of Law," containing eleven items. However, the trial court did not separate these items

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according to whether they were findings of fact or conclusions of law. We construe the items more as findings of fact than conclusions of law. Nos. 1 through 8 are factual recitations regarding the background of the dispute. Nos. 9, 10, and 11 are the ...

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