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Crawford v. Nguyen & Chen LLP

Court of Appeals of Texas, First District

May 4, 2017

HARRY C. CRAWFORD III, DARRELL GARRETT, AND THEOPHILUS OPERATING COMPANY LLC, Appellants
v.
NGUYEN & CHEN LLP, Appellee

         On Appeal from the County Civil Court at Law Number Two Brazoria County, Texas Trial Court Case No. CI51781

          Panel consists of Chief Justice Radack and Justices Brown and Lloyd.

          MEMORANDUM OPINION

          Harvey Brown Justice.

         The law firm of Nguyen & Chen LLP (N&C) represented Harry C. Crawford III, Darrell Garrett, and Theophilus Operating Company LLC (collectively, the Theophilus defendants) in a lawsuit. When N&C was not paid over $15, 000 of its invoices, it brought this collection lawsuit against its former clients. N&C prevailed, and the trial court entered a judgment awarding N&C its actual damages-the fees it incurred in the underlying suit-as well as the attorney's fees it incurred in the collection lawsuit.

         The day after the posttrial judgment was entered, the trial court entered a second judgment imposing a $1, 200 sanction on Crawford and Theophilus, jointly and severally, because Crawford had improperly filed a pro se answer on behalf of the Theophilus LLC, N&C had filed a motion to strike the answer and, in doing so, incurred attorney's fees.

         The Theophilus defendants appeal both judgments. Regarding the first judgment, the Theophilus defendants argue that the trial court erred by overruling their objection to expert testimony on the amount of attorney's fees. Regarding the second judgment, the Theophilus defendants argue that the trial court did not have authority to impose the sanction.

         We affirm the first judgment and reverse and vacate the second judgment awarding sanctions.

         Background

         N&C sued the Theophilus defendants for breach of contract to recover unpaid attorney's fees earned while representing them in litigation. In connection with its breach-of-contract claim, N&C sought attorney's fees under Section 38.001 of the Civil Practice and Remedies Code. See Tex. Civ. Prac. & Rem. Code Ann. § 38.001(8). Crawford, the managing member of the Theophilus LLC, filed a pro se answer on behalf of all three defendants. N&C moved to strike the answer because Crawford, a non-attorney, could not answer on the entity's behalf. Although N&C did not specifically request an award of attorney's fees or sanctions in connection with its motion to strike, the trial court's order granting the motion provided that the Theophilus defendants would be "taxed with [N&C]'s attorney's fees and costs associated with this litigation."

         One year later, the Theophilus defendants still had not paid the fees taxed in connection with the motion to strike, and N&C filed a motion for contempt of court. N&C argued that the amount of attorney's fees due was $1, 482 and attached as evidence in support of that amount a written demand for payment.

         The Theophilus defendants responded by asserting several challenges to the sanction order. They argued that the order taxing them with attorney's fees and costs was not valid because (1) they did not receive notice of the hearing on the motion to strike their answer, (2) there is no legal basis for awarding attorney's fees on a motion to strike, and (3) the order did not include a date by which payment had to be made. The Theophilus defendants moved to vacate the sanction order.

         The trial court issued a "modified order" agreeing that its previous order lacked sufficient specificity to be enforced and stating that it had improperly included Garrett-who had not signed the pro se pleading-in the sanction order. The trial court's modified order imposed a $1, 200 sanction on Crawford and the Theophilus entity, jointly and severally, for filing the pro se answer. The next month, N&C filed a motion to enforce the court's "modified order, " seeking the $1, 200 awarded, plus additional attorney's fees and sanctions. While the motion to enforce was pending, the jury trial began on N&C's breach-of-contract claim for its unpaid fees incurred while representing the Theophilus defendants in the underlying lawsuit.

         At trial, an N&C attorney, Brian Nguyen, testified regarding the amount of fees incurred representing the Theophilus defendants in the underlying litigation. He testified that the Theophilus defendants had paid some of the initial attorney's fees invoiced but they failed to pay over $15, 000 in subsequently invoiced fees. The Theophilus defendants objected to Nguyen's testimony on the ground that N&C had not adequately disclosed his opinions, but they did not obtain a ruling on their objection.

         Another N&C attorney, Henna Ghafoor, testified regarding a different fee claim-the fees incurred in this collection suit. She testified about the amount of fees incurred by N&C as it litigated its breach-of-contract suit against its former clients, the Theophilus defendants, for failing to pay their fee bill. She did not submit her time reports as evidence; instead, she testified that she had reviewed her time sheets at her office and determined that she worked 75 hours on the case and billed an hourly rate of $195 per hour. She stated that the attorney's fees for prosecuting this second lawsuit-as opposed to the fees incurred representing the Theophilus defendants in the underlying suit-were $14, 625. The Theophilus defendants objected to her testimony, arguing that N&C had failed to properly disclose the general substance of her mental impressions and opinions, making her testimony inadmissible. See Tex. R. Civ. P. 194.2(f)(3). Their objection was overruled.

         The trial court entered a final judgment on the jury's verdict, awarding N&C $15, 498.21 in actual damages for legal services it provided in the underlying suit and $13, 200 in attorney's fees, as well as appellate attorney's fees, for work it performed in this collection lawsuit. The judgment stated that the court ...


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