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McRay v. Dow Golub Remels & Beverly, LLP

Court of Appeals of Texas, First District

April 26, 2018

LAURIE ANN MCRAY, INFINITY CAPITAL, LLC AND MCRAY MONEY MANAGEMENT, LLC, Appellants
v.
DOW GOLUB REMELS & BEVERLY, LLP, Appellee

          On Appeal from the 333rd District Court Harris County, Texas Trial Court Case No. 2015-47112

          Panel consists of Chief Justice Radack and Justices Higley and Bland.

          OPINION

          Jane Bland, Justice

         This is a law firm's suit against its former clients for unpaid attorney's fees. The trial court granted summary judgment to the law firm for the fees, plus the additional fees that the law firm incurred in collecting its contract damages. The clients appeal, contending that the law firm did not conclusively establish liability for the amount of fees owed, nor for the fees incurred in collecting the debt. The clients further contend that the trial court erred in striking one of their late-designated expert witnesses. Because the summary-judgment evidence does not conclusively establish the amounts owed, we reverse and remand.

         BACKGROUND

         Dow Golub Remels & Beverly, LLP, represented Laurie Ann McRay; Infinity Capital, LLC; and McRay Money Management, LLC (collectively, McRay) in two lawsuits. In the first, Dow Golub defended Infinity Capital against claims arising out of mold in a rental property and pursued a counterclaim against Infinity Capital's tenants, who allegedly had damaged the property. In the second, Dow Golub defended Laurie Ann McRay, McRay Money Management, and Infinity Capital against claims brought by investors in McRay's entities for breach of fiduciary duty, professional malpractice, and violations of the Texas Securities Act.

         In engagement agreements for the two lawsuits, McRay agreed to pay Dow Golub fees for its professional services. McRay had the right to terminate the representation at any time by written notice, at which time she would owe the charges incurred to that point, plus post-termination fees associated with transfer of the files. The engagement agreements say: "It is difficult to predict exactly how much time will be required to complete our legal work. The Firm will devote, however, the time which we deem necessary to carry out the representation."

         The engagement agreements also entitle Dow Golub to seek the fees that it might incur in pursuing payment of its unpaid invoices: "[Dow Golub] is entitled to reasonable attorney's fees and costs if collection activities are necessary for the failure of [McRay] to pay any indebtedness to the Firm."

         In February 2015, McRay terminated Dow Golub's representation. At the time, McRay did not pay amounts charged in certain of Dow Golub's invoices. Dow Golub later issued two invoices for additional legal work, in July 2015 and in August 2015, which McRay also did not pay. Dow Golub sued McRay and her entities to recover its unpaid fees, alleging causes of action for breach of contract and quantum meruit. McRay answered, denying the amount owed, and she asserted a counterclaim for professional negligence.

         After the time for designating expert witnesses had passed, Dow Golub moved for a traditional summary judgment on its breach of contract claim for unpaid fees. It attached an affidavit from Sanford Dow, to which he attached the unpaid invoices, noting that they reflected the legal fees and expenses incurred by McRay.

         McRay responded to the motion by stating that "the attorneys' fees for which Dow Golub seeks to be paid were excessive as are the fees for which they seek to be compensated to recover those fees." She noted that some entries in the invoices were heavily redacted, so that "it is not possible to tell what legal services were performed."

         McRay also moved in the trial court to allow a late designation of expert witnesses. With the motion, McRay proffered affidavits from two experts, John P. Venzke, on the reasonableness of the fees, and Eugene B. Wilshire, on the standard of care. Dow Golub moved to strike the late-designated experts. The trial court struck Wilshire, but it allowed Venzke.

         Venzke is a practicing lawyer who has "handled and submitted invoices for legal services for thousands of files, " and he has "audited invoices for legal services." He stated that he is "familiar with reasonable billing rates and time entries in Harris County, Texas." Venzke averred that he had reviewed the entire file, including "the billing records submitted by [Dow Golub]." He opined that "the fees sought are not reasonable and necessary for the services performed."

         McRay nonsuited her professional-negligence counterclaim, but she filed an amended answer adding affirmative defenses of "credit and/or setoff" and ...


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