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In re Davenport

Supreme Court of Texas

June 16, 2017

In re Dean Davenport, et al., Relator

          Argued March 23, 2017

         On Petition for Writ of Mandamus

          Justice Willett delivered the opinion of the Court, in which Chief Justice Hecht, Justice Green, Justice Johnson, Justice Guzman, Justice Devine, and Justice Brown joined.

          DON R. WILLETT, JUSTICE

         This dispute arises from a contingency fee agreement for legal services. The trial court granted a new trial, in part, because the pertinent agreement "unambiguously" permitted the lawyers to recover an ownership interest as attorney fees. However, we conclude that the trial court's finding was an abuse of discretion because the agreement unambiguously states that the lawyers were only entitled to attorney fees from a monetary recovery. Accordingly, we conditionally grant Davenport's petition for writ of mandamus, directing the trial court to vacate its new trial orders from September 2, 2014, and March 25, 2015, and to render a final judgment consistent with this opinion.

         I. Background

         A. Factual and Procedural Framework

         In 1999, Dean Davenport, James Allen, and Mark Wynne formed Water Exploration Co., Lt. ("WECO") as a limited partnership to find, drill for, and produce commercial drinking water, with each partner having an equal interest in the company. A few years later, Davenport's partners claimed Davenport had forfeited his interest. Davenport and Dillon Water Resources ("Dillon"), a company owned by Davenport, hired Haynes and Boone, LLP, to sue Allen, Wynne, and their partnerships for a declaratory judgment that Davenport still had a 33% interest in WECO. The trial court granted partial summary judgment that Dillon "is now and always has been a partner in good standing in WECO."

         Two years later, Davenport hired new counsel, Tom Hall and Blake Dietzmann, because he felt no advancements were being made in other pieces of the lawsuit. The lawyers claimed they could win Davenport "a big monetary verdict." Davenport terminated his relationship with Haynes and Boone and hired Hall and Dietzmann. Davenport signed a contingency fee agreement (the "Agreement"). The Agreement states, "It is the purpose of this Agreement to successfully pursue Client's claim arising out of business dealings with WECO." It goes on to provide:

In consideration for the present agreement of [the Attorneys] to represent [the] Client and the promise to render legal services in the future in pursuit of this claim, [the] Client agrees to sell, transfer, assign and convey to [the Attorneys] an undivided interest in the above claim to be calculated as follows:
Forty percent (40%) of the gross amount recovered
Except that Attorneys will not take a fee out of the ownership of 5 D Water Resources and Dillon Water Services
. . . .
By "GROSS AMOUNT" is meant the total sums recovered.

         The Agreement also states that the lawyers would pay "all reasonably necessary expenses incurred in the prosecution of the case" and that such "sums shall be repaid by Client out of any monies recovered."

         Hall and Dietzmann won a $70 million jury verdict for Davenport for conversion of his partnership interest in WECO. However, because the lawyers harbored serious doubts about the strength of the verdict on appeal, they advised Davenport to settle. Davenport successfully settled his claim with Allen. Davenport and Dillon received $200, 000 and promptly paid the lawyers the appropriate share in contingency fees. Allen also transferred his 33% interest in WECO to Davenport. Hall negotiated and drafted the settlement agreement. The lawyers claim that they exchanged documents with Davenport to transfer part of his new 66% ownership interest to them, but this transfer never occurred.

         Then Wynne, the other WECO partner, appealed the judgment. In an effort to pressure Wynne to settle, Davenport's legal team filed an involuntary bankruptcy petition against Premier General Holdings, Wynne's limited partnership. Hall and Dietzmann litigated and successfully obtained an order from the trial court for a receiver to distribute WECO funds held in the court's registry to Dillon. Dillon paid the lawyers an additional $297, 813.30 in attorney fees as their continent share for these monies, which constituted "sums recovered" in a "claim arising out of business dealings with WECO." Eventually, Davenport and Wynne settled. Davenport bought out Wynne's interest with his own money, now owning 100% of WECO. Once again, Hall and Dietzmann drafted and signed the settlement agreement. The lawyers filed suit against Davenport requesting unpaid attorney fees, alleging they were entitled to an ownership interest in WECO and that Davenport failed to pay expenses of $226, 795.01 in the underlying suit.

         At trial, the lawyers sought a judgment that would include an ownership interest in WECO as compensation for unpaid attorney fees. The trial court determined that the Agreement was ambiguous and submitted the issue to the jury. The jury found that the lawyers were not entitled to an ownership interest in WECO because Davenport had not agreed in the Agreement that attorney fees could include an ownership interest in WECO.[1] The jury also found that the attorneys had waived any rights they had to an ownership interest and were estopped from seeking any such interest. But the jury did find for the attorneys on their claim for $226, 795.01 in unpaid expenses under the Agreement. The lawyers moved for judgment despite the jury's verdict, which was denied. On May 20, 2014, the trial court signed a final judgment for the unpaid expenses plus $1.3 million for attorney fees incurred in the litigation. The lawyers then moved for a new trial, arguing that the jury's conclusion that the contract was unambiguous must be disregarded as a legal finding and sufficient evidence did not support estoppel and waiver. The trial court signed an order granting the motion for a new trial.

         Later the court of appeals conditionally granted mandamus relief and directed the trial court to state its reasons for the new trial, to comply with In re Toyota Motor Sales, U.S.A., Incorporated.[2] The trial court replaced its original order, stating that the Agreement was unambiguous after all and that the evidence was legally and factually insufficient to support the jury's findings of estoppel and waiver. The court of appeals summarily denied Davenport's second petition for writ of mandamus.

         B. Summary of Issues and Our Disposition

         Davenport complains that the trial court improperly nullified a jury verdict in this case, substituting its judgment for that of a jury. Specifically, he argues that the trial court abused its discretion in ordering a new trial based on its finding that the Agreement "unambiguously" provides for the recovery of an ownership interest as attorney fees. We agree. Therefore, we need not reach Davenport's second issue, which claims the trial court abused its discretion in granting a new trial based on legally and factually insufficient evidence to support the jury's estoppel and waiver findings. These were Davenport's affirmative defenses and are no longer relevant because we have already found in his favor. Accordingly, we order the trial court to vacate both of its new trial orders and render a final judgment consistent with this opinion.

         II. Analysis

         A trial court has discretion to grant a new trial for "good cause, " however this discretion has limits.[3] An appellate court may by mandamus direct a trial court to vacate a new trial order in one of three ways: (1) when a merits-based review of the record establishes that the trial court abused its discretion, (2) when the trial court's order was void, or (3) when the trial court erroneously finds that the jury's answers to special issues are irreparably conflicting.[4] Because nothing suggests the trial court's order was void, nor that any irreconcilable conflict exists, we only address whether the trial court abused its discretion in granting a new trial. We hold that the trial court ...


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