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G.C. Development Corp. v. Zayas

United States District Court, S.D. Texas, Brownsville Division

March 15, 2017

G.C. DEVELOPMENT CORP., Plaintiff/Counter-Defendant,
v.
DR. JOE D. ZAYAS, Defendant/Counter-Plaintiff.

          REPORT AND RECOMMENDATION OF THE MAGISTRATE JUDGE

          Ronald G. Morgan United States Magistrate Judge.

         On February 16, 2016, Plaintiff/Counter-Defendant G.C. Development Corporation (“G.C. Development”) filed a motion for summary judgment and a motion for judgment on the pleadings. Dkt. No. 23. G.C. Development sought summary judgment in its favor for the claims that it brought - which related to the breach of a mediated settlement agreement - and judgment on the pleadings for the counterclaims made by Defendant/Counter-Plaintiff Dr. Joe D. Zayas (“Zayas”).

         On September 30, 2016, the District Judge granted both motions in favor of G.C. Development, expressly finding that Zayas “has breached” the settlement agreement. Dkt. No. 46.[1]

         On October 14, 2016, G.C. Development filed a motion for attorney's fees. Dkt. No. 49. Zayas has filed a response in opposition. Dkt. No. 50. G.C. Development filed a reply brief. Dkt. No. 51. The parties disagree as to the relevant identity of the “local legal community” and the hourly rate for attorney's fees in that community. Dkt. Nos. 53, 54.

         The motion has been referred to the undersigned pursuant to 28 U.S.C. § 636(b).

         The factual nature of the dispute between G.C. Development and Zayas is set out in the undersigned's previous report and recommendation on the motion for summary judgment and the Court will not rehash all of the facts. Dkt. No. 41. Stated briefly, G.C. Development and Zayas entered into a mediated settlement agreement regarding a construction dispute. As part of the agreement, Zayas agreed to pay G.C. Development $162, 000 by May 11, 2015. Zayas failed to make that payment and G.C. Development sued for breach of contract. Dkt. No. 1.

         At this point, there are four questions before the Court: (1) if G.C. Development is entitled to attorney's fees as a matter of law; (2) if they are entitled to attorney's fees, who is the proper finder of fact for this issue; (3) what is a proper and reasonable award of attorney's fees in this case; and (4) if G.C. Development is entitled to reimbursement of court costs from Zayas.

         After reviewing the record and the relevant case law, it is RECOMMENDED that the motion for attorneys fees and court costs be granted, but at the amounts identified below.

         I. Entitlement to Attorney's Fees

         An award of attorney fees “is governed by the same law that serves as the rule of decision for the substantive issues in the case.” Mathis v. Exxon Corp., 302 F.3d 448, 461 (5th Cir. 2002). Thus, in a diversity case, state law “controls both the award of and the reasonableness of fees awarded.” Id. Because Texas law controlled the substantive issues in this case, Texas law will also control the question of attorney's fees.

         Texas law expressly states that “[a] person may recover reasonable attorney's fees from an individual or corporation, in addition to the amount of a valid claim and costs, if the claim is for . . . an oral or written contract.” Tex. Civ. Prac. & Rem. Code § 38.001(8). Texas courts have consistently interpreted this statute to apply to claims for breach of contract. See Cytogenix, Inc. v. Waldroff, 213 S.W.3d 479, 489 (Tex. App. 2006) (“A party who prevails on a breach of contract claim may recover its reasonable attorney's fees pursuant to section 38.001(8) of the Texas Civil Practice and Remedies Code.”). In order to be awarded such fees, the prevailing party must be awarded damages for the breach of contract claim. Green Int'l, Inc. v. Solis, 951 S.W.2d 384, 390 (Tex.1997) (“To recover attorney's fees under Section 38.001, a party must (1) prevail on a cause of action for which attorney's fees are recoverable, and (2) recover damages.”).

         G.C. Development has met the standard for receiving an attorney fee award. It prevailed on a breach of contract claim - for which fees are recoverable under Section 38.001(8) - and it was awarded damages for that breach. The entitlement to attorney fees follows from the award of damages for the breach.[2]

         II. Proper Fact-Finder

         Zayas argues that the amount of attorneys fees must be determined by a jury; G.C. Development argues that it is a matter for the Court to decide. Based upon controlling precedent, Zayas is not entitled to a jury trial on the matter of attorney's fees.

         Zayas is generally correct that Texas courts are required to submit the issue of attorneys' fees to a jury. Bill Miller Bar-B-Q Enterprises, Ltd. v. Gonzales, No. 04-13-00704-CV, 2014 WL 5463951, at *5 (Tex. App. Oct. 29, 2014). That conclusion is limited, however, by the fact that, “the right to a trial by jury in federal courts is a matter of federal law.” Resolution Trust Corp. v. Marshall, 939 F.2d 274, 279 (5th Cir. 1991). Moreover, “[s]ince there is no common law right to recover attorneys fees, the Seventh Amendment does not guarantee a trial by jury to determine the amount of reasonable attorneys fees.” Id.

         Accordingly, the Court is the proper fact-finder for this motion. Zayas's request for a jury trial on this issue should be denied.

         III. Amount of Attorneys' Fees

         As to the attorney fees, the final issue for the Court to consider is the amount of attorneys fees that should be awarded to G.C. Development.

         In this case, G.C. Development is seeking attorney's fees for three attorneys: Bill Kroger (“Kroger”), Meghan Dawson McElvy (“McElvy”) and Caroline Carter (“Carter”). Kroger is a graduate of the University of Texas School of Law; is the co-chair of Baker Botts's energy litigation practice group; and has over 25 years of experience. Dkt. No. 53-1, p. 21. McElvy is a graduate of the University of Chicago School of Law; clerked for United States District Judge Andrew Hanen; has been recognized as a “Texas Super Lawyer-Rising Star;” and has 7 to 10 years of experience. Dkt. No. 53-1, p. 14. Carter is a graduate of the University of Texas School of Law; clerked for United States District Judge Ewing Werlein; and has 3 to 5 years of experience. Dkt. No. 53-1. Baker Botts also seeks fees for work done by paralegals that “was legal in nature and which an associate would have been required to handle at a higher billing rate if the paralegal had not assisted.” Dkt. No. 53, p. 6.[3]

         As to Kroger, G.C. Development seeks an hourly billing rate of $807.50 for work performed in 2015 and $831.25 for work performed in 2016. Dkt. No. 49-1, pp. 2-3. As to McElvy, G.C. Development seeks an hourly billing rate of $570.00 for work performed in 2015 and $593.75 for work performed in 2016. Id. As to Carter, G.C. Development seeks an hourly billing rate of $427.50 for work performed in 2015 and $522.50 for work performed in 2016. Id. As to its paralegals, G.C. Development seeks an hourly billing rate of $261.25 for work performed in 2015 and $270.75 for work performed in 2016. Id. As to its paralegal clerk, G.C. Development seeks an hourly billing rate of $156.75 for work performed in 2016. Id. In sum, G.C. Development seeks $133, 715.56 in attorney's fees.

         Zayas asserts that G.C. Development is entitled to, at most, $23, 864.50 in attorney's fees. Dkt. No. 54-5.

         As previously noted, the Court generally applies Texas law in determining attorney fee awards. Mathis, 302 F.3d at 461. In determining such fees, Texas utilizes the “lodestar” method. El Apple I, Ltd. v. Olivas, 370 S.W.3d 757, 760 (Tex. 2012). Thus, the Court must determine a reasonable hourly rate for counsel as well as the reasonable number of hours worked and multiply those figures to arrive at a total fee award. Id. “The lodestar figure may then be adjusted for factors known as multipliers, including the complexity of the case, the skill of the attorney, ...


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