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Hollingsworth v. Walaal Corp.

Court of Appeals of Texas, Fifth District, Dallas

July 2, 2019

KELLY D. HOLLINGSWORTH AND K. HOLLINGSWORTH & ASSOC., P.C., Appellants
v.
WALAAL CORPORATION D/B/A AMBASSADOR CAB, E.P.D.A., INC. D/B/A ALAMO CAB, AND D.E.C.D.A., INC. D/B/A STARCAB, Appellees

          On Appeal from the 134th Judicial District Court Dallas County, Texas Trial Court Cause No. DC-14-03638

          Before Justices Whitehill, Partida-Kipness, and Pedersen, III

          MEMORANDUM OPINION

          ROBBIE PARTIDA-KIPNESS JUSTICE.

         Appellants Kelly D. Hollingsworth and K. Hollingsworth & Associates, P.C. (collectively, "Hollingsworth") appeal from the trial court's final judgment entered in appellees' favor. We affirm in part and reverse and render in part. Because the issues are settled in law, we issue this memorandum opinion. See Tex. R. App. P. 47.4.

         BACKGROUND

         Hollingsworth represented the Association of Taxicab Operators, Inc. ("ATO"). He also represented appellees Walaal Corporation d/b/a Ambassador Cab ("Ambassador"), E.P.D.A., Inc. d/b/a Alamo Cab ("Alamo"), and D.E.C.D.A., Inc. d/b/a Starcab ("Star") (collectively, the "Cab Companies"). By letter agreement dated September 20, 2012, ATO and the Cab Companies jointly retained K. Hollingsworth & Associates, P.C. (the "Firm") regarding (1) the litigation surrounding DFW Airport and Love Field's preferential treatment of compressed natural gas cabs and (2) an antitrust lawsuit against Yellow Cab Company.[1]

         In May 2013, Alamo terminated Hollingsworth because of his lack of accountability regarding the retainer funds. Hollingsworth, United, Star, Ambassador and ATO, however, entered into another representation agreement dated June 25, 2013. Both the 2012 and the 2013 representation agreements required the clients to make monthly retainer payments to the Firm in amounts of $20, 000-$30, 000 regardless "of the previous month's billing, even if it result[ed] in a buildup of funds in retainer." As described in the agreements, Hollingsworth stated that he would "apply these funds against the Firm's fees, expenses and other charges as they are billed" and return any remaining balance at the end of the engagement to the clients.

         In December 2013, Hollingsworth produced a spreadsheet in response to the Cab Companies' request for a full accounting of funds. The Cab Companies began to question the figures in the spreadsheet and "balked at paying any more retainer payments." On April 4, 2014, Hollingsworth filed suit on behalf of ATO against the Cab Companies asserting various claims for fraud, civil theft, breach of fiduciary duty, civil conspiracy, tortious interference, libel, breach of contract in regard to the Cab Companies' alleged failure to collect dues to pay for Hollingworth's legal fees. In response, the Cab Companies filed a third-party petition against Hollingsworth asserting claims for breach of contract, legal malpractice, conversion, accounting, and attorney's fees. Following a jury trial, the trial court entered a final judgment dated January 26, 2016 which addressed the third-party claims as follows:

It is further ORDERED, ADJUDGED and DECREED that Third-Party Plaintiffs Walaal Corporation d/b/a Ambassador Cab, E.P.D.A., Inc. d/b/a Alamo Cab, and D.E.C.D.A., Inc. d/b/a Starcab recover the following from Third-Party Defendants Kelly Dean Hollingsworth and K. Hollingsworth and Associates, P.C.:
a. Equitable forfeiture and disgorgement for Third-Party Defendants Kelly Dean Hollingsworth and K. Hollingsworth and Associates, P.C.'s conversion of funds in the amount of $91, 028.34[.]
b. Equitable forfeiture and disgorgement for Third-Party Defendants Kelly Dean Hollingsworth and K. Hollingsworth and Associates, P.C.'s breach of fiduciary duty in the amount of $298, 896.95.
c. Reasonable and necessary attorneys' fees, pursuant to Chapter 38 of the Texas Civil Practice and Remedies Code, in the amount of $165, 000.00.
d. Pre-judgment interest in the amount of five percent (5%) per annum in simple interest, accruing from August 15, 2014 until the day before this judgment is entered.
e. Post-judgment interest on all of the above at the rate of five percent (5%) per annum, compounding annually, which shall accrue on the amount of the judgment. The post-judgment interest shall begin to accrue on the date following the date of this judgment and shall continue to accrue until this judgment is satisfied in full.

         Hollingsworth then filed this appeal of the final judgment.

         ANALYSIS

         In eight issues, Hollingsworth asserts that the trial court erred in entering the final judgment in favor of the Cab Companies.

         A. Award of Attorney's Fees

         In his first issue, Hollingsworth asserts that the trial court erred in awarding attorney's fees pursuant to chapter 38 of the Texas Civil Practice and Remedies Code when the Cab Companies failed to recover damages on their breach of contract claim. See Tex. Civ. Prac. & Rem. Code §§ 38.001-38.006. We agree. In order to recover attorney's fees, a party must prevail on a cause of action for which such fees are recoverable, and the party must recover damages. See Ashford Partners, Ltd. v. ECO Res., Inc., 401 S.W.3d 35, 40 (Tex. 2012) ("Indeed, we have said that to qualify for fees under the statute, a litigant must prevail on a breach of contract claim and recover damages."); Rodgers v. RAB Inv., Ltd.,816 S.W.2d 543, 551 (Tex. App.-Dallas 1991, no pet.) ("A party must satisfy two requirements to obtain an award of attorney's fees. First, a party must prevail on a cause of action for which attorney's fees are recoverable. Second, the party must recover damages.") (internal citations omitted). Here, the final judgment references an award for breach of fiduciary duty, not breach of contract. Although the Cab Companies asserted a breach of contract claim against Hollingsworth ...


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