United States District Court, W.D. Texas, Austin Division
PROFESSIONAL LIABILITY INSURANCE SERVICES, INC.
U.S. RISK, INC. and CRYSTAL JACOBS
HONORABLE SAM SPARKS UNITED STATES DISTRICT JUDGE
REPORT AND RECOMMENDATION OF THE UNITED STATES
W. AUSTIN UNITED STATES MAGISTRATE JUDGE.
the Court are Plaintiff's Motion and Affidavit for
Attorney's Fees and Costs (Dkt. No.131), Defendants'
Response (Dkt. No. 140), and Plaintiff's Reply (Dkt. No.
144); and Defendants' Motion for Attorney's Fees
(Dkt. No. 133), and Plaintiff's Response (Dkt. No. 135).
The district judge referred these Motions to the undersigned
Magistrate Judge for report and recommendation.
Liability Insurance Services, Inc. (PLIS) brought this suit
against U.S. Risk, Inc. and Crystal Jacobs (collectively U.S.
Risk) for federal trademark infringement and unfair
competition, common law trademark infringement and unfair
competition, Texas statutory trademark dilution, breach of
contract, and tortious interference with contract. After
nearly two years of litigation and shortly before the case
was set to go to trial, the parties reached a settlement on
all claims. The parties moved to cancel the trial setting,
which was granted, but have not yet moved to dismiss the
seeks attorney's fees as the prevailing party for its
claims under the Lanham Act and for breach of contract. U.S.
Risk objects to this request arguing that because the parties
reached a private settlement, neither party is the prevailing
party entitled to attorney's fees. Alternatively, U.S.
Risk contends that PLIS has not met the requirements to
recover attorney's fees under either of its claims. In
turn, U.S. Risk seeks attorney's fees from PLIS as
sanctions for PLIS's alleged bad faith conduct during the
PLIS's Motion for Attorney's Fees
and U.S. Risk reached a confidential settlement, informed the
Court of this fact, and requested that the Court cancel the
trial setting. In the agreement, the parties agreed to submit
“whether either Party is entitled to attorney's
fees” to the Court, and further agreed that the parties
would move to dismiss the case after the attorney's fees
issue had been resolved. Dkt. No. 126 at 6. PLIS thereafter
filed the present motion seeking its fees as the prevailing
party. U.S. Risk, however, contends that the settlement
agreement does not provide the judicial imprimatur
necessary to confer prevailing party status on PLIS, and that
neither party is entitled to attorney's fees.
are ordinarily required to bear their own attorneys' fees
and the winner is not entitled to collect from the loser,
absent explicit statutory authority.” Salazar v.
Maimon, 750 F.3d 514, 521 (5th Cir. 2014) (citing
Buckhannon Bd. & Care Home, Inc. v. W.V. Dep't of
Health & Human Res., 532 U.S. 598, 602 (2001)).
Here, PLIS has requested attorney's fees as the
prevailing party under two statutes: (1) Tex. Civ. Practice
& Rem. Code § 38.001 (for breach of contract); and
(2) the Lanham Act, 15 U.S.C. § 1117(a), for its
trademark claims. The Supreme Court has held that a
prevailing party is “one who has been awarded some
relief by a court.” Salazar, 750 F.3d at 521
(quoting Buckhannon, 532 U.S. at 604). Thus, to be
awarded attorney's fees, the party must “(1) obtain
actual relief, such as an enforceable judgment or a consent
decree; (2) that materially alters the legal relationship
between the parties; and (3) modifies the defendant's
behavior in a way that directly benefits the plaintiff at the
time of the judgment or settlement.” Id.
(quoting Walker v. City of Mesquite, Tex.,
313 F.3d 246, 249 (5th Cir. 2002) (internal quotations
omitted) (emphasis omitted). “Actual relief” as
used in Salazar includes not only a judgment on the
merits, but also “settlement agreements enforced
through a consent decree.” Id. On the other
hand, “private settlements that do not entail the
judicial approval and oversight involved in consent
decrees” will not have the requisite “judicial
imprimatur” to entitle a party to
attorney's fees. Id.
contends that the settlement agreement in this case is
sufficient to confer prevailing party status, due to the
parties' agreement to submit attorney's fees to the
Court. Dkt. No. 144 at 1. However, in Salazar-on
which both parties rely-the “district court entered a
settlement order memorializing the terms of their
agreement.” Salazar, 750 F.3d at 516. It was
this settlement order that then conferred the judicial
imprimatur necessary to award attorney's fees,
because in the settlement agreement in that case, “the
parties chose to invoke the injunctive powers of a federal
court.” Id. at 521-22. Salazar's
“consent decree [did] more than merely validate a
compromise between the parties”-it was “a
judicial act.” Id. (internal quotations
omitted). Nothing of that sort occurred here. Instead, the
parties simply agreed to submit the attorney's fees
question to the Court for resolution. The Court has not
issued a consent decree or settlement order memorializing the
terms of the agreement. In fact, there has been no final
judicial action at all. Moreover, the Settlement Agreement
merely states that “the Parties will dismiss the
lawsuit with prejudice” following the Court's
resolution of the attorney's fees issue. Dkt. No. 126 at
6. Nothing in this agreement indicates any intent for the
Court to retain jurisdiction to enforce the agreement, or to
otherwise enter an order that includes any of the terms of
the Settlement Agreement. In fact, the agreement states the
This Settlement Agreement is not and shall not in any way be
construed as an admission of liability by any Party for any
wrongful or unlawful acts. This Settlement Agreement is the
compromise of disputed claims and will be entered into to
avoid the time and expense of contested litigation. This
Settlement Agreement will not and does not constitute a
finding on the merits of any of the Parties' allegations.
No judge or jury has made a determination as to any of the
Parties' claims or defenses.
Id. Thus, the settlement agreement is plainly
insufficient to meet the judicial imprimatur
required by the case law to establish either PLIS or U.S.
Risk as the “prevailing party.”
further argues that it is “unreasonable” for U.S.
Risk to now challenge whether the Settlement Agreement
conferred prevailing party status, as it had previously
agreed to submit the question of attorney's fees to the
Court. In the Agreement, the parties agreed “to submit
the issue of whether either Party is entitled to
attorney's fees to the sound discretion of the Court . .
. in which this dispute is pending.” Id.
(emphasis added). PLIS argues that by challenging PLIS's
standing to even request fees, U.S. Risk is breaching its
obligation under the settlement agreement to
“reasonably cooperate in court filings and to take
other necessary actions to effectuate the purposes” of
the attorney's fees clause. Dkt. No. 144 at 2 (quoting
¶ 12.b of Settlement Agreement, which is redacted from
Dkt. No. 126). This is a specious argument. The Settlement
Agreement does not state that the parties agree that
the Court will award attorney's fees, and the parties
plainly reserved the right to object to an award of fees to
their opponent. In fact, the agreement specifically states
that “[t]he Parties agree and understand that the Court
may deny either party or both parties any request for
attorney's fees.” Dkt. No. 126 at 6. Thus, U.S.
Risk was ...