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Webb v. Crawley

Court of Appeals of Texas, Ninth District, Beaumont

December 12, 2019


          Submitted on January 29, 2019

          On Appeal from the 418th District Court Montgomery County, Texas Trial Cause No. 16-05-05473-CV

          Before McKeithen, C.J., Kreger and Horton, JJ.



         This appeal arose following a trial that resulted in a take-nothing verdict on a lawyer's suit to collect a fee and the client's resulting counterclaims for malpractice and the alleged breaches of their fiduciary duties. Both parties appealed. The lawyer complains the evidence shows he had the right to recover on his claim for unpaid fees. The attorney's former client argues the trial court should have found she was entitled to recover on her counterclaims. We conclude the parties' issues lack merit, so we affirm.

         I. Background

         A. The Crawley Firm represents Jennifer Webb in her divorce

         In August 2012, Jennifer Webb retained C.L. Crawley, Jr. and his firm, C.L. Crawley, Jr., P.C. (the Crawley Firm) to represent her in a suit to divorce her husband, John Webb. Crawley, as Jennifer's attorney, sued John alleging Jennifer wanted a divorce.

         The evidence in the malpractice trial shows that Jennifer hired Crawley to represent her in her divorce. But, as the case proceeded, the firm used Jennifer Ray, an attorney who had an office at the firm, to do most of the legal work in the divorce. In large part, Jennifer's breach of fiduciary duty claims focus on her allegation that the firm never disclosed that Ray was not an employee of the Crawley Firm. Ray began working on Jennifer's divorce at Crawley's request.

         The testimony shows that Ray worked for the Crawley Firm's clients when requested to do so by the firm. When working for the firm's clients, Ray charged the firm an hourly rate of less than $100 per hour based on her agreement with the firm. The agreement allowed Ray to represent her own clients. On those matters, she set her own rate and billed her clients without any oversight from the firm.

         Jennifer's fiduciary duty claims allege she thought Ray was an associate of the Crawley Firm because no one told her otherwise. When the firm billed Jennifer for its work, it billed Ray's time at $200 to $250 per hour, a higher figure than the rate Jennifer claims she would have paid Ray had she hired her without going through the firm.

         Shortly after Jennifer hired Crawley, he asked Ray to help him with Jennifer's divorce. Ray progressively became more and more involved in Jennifer's case. At one point, Jennifer let Crawley know that she preferred dealing with Ray. In April 2014, Ray represented Jennifer in a mediation to resolve the disputes in the divorce. Several-but not all-disputes were resolved at mediation. For example, the parties settled how to divide the parties' marital estate. Jennifer gave John her community interest in their home. And Jennifer agreed to be responsible for paying the debt the couple owed the IRS for tax-years 2011 and 2013. Several other disputes-issues involving child support and visitation-could not be resolved and were decided at trial.

         Ray appeared as Jennifer's lawyer at a four-day trial of the divorce. When the trial ended, the court orally pronounced its verdict. Jennifer was unhappy about the results she achieved in mediation, at trial, and about the delays that occurred between the trial and the date the court issued the decree.

         In December 2014, Ray filed a motion for new trial in the divorce. The motion sought to set aside the judgment, mainly for two reasons. First, after the trial court signed the decree, the IRS informed Jennifer that she and John owed more for tax-year 2011 than the amount she relied on in the mediation when she had agreed to pay that debt. Second, Jennifer's motion alleges that after the trial court signed the decree, she learned John had agreed to sell the couple's home for a higher figure than the figure she relied on during mediation.

         In January 2015, the trial court started the clock on the parties' rights to appeal the decree by denying the last of the parties' motions for new trial. Neither party appealed from the judgment, so it became final.

         B. Post-divorce, the Crawley Firm defends Jennifer against John's motion to enforce the decree

         In May 2015, John filed a post-divorce motion to enforce the decree. In it, he alleged Jennifer had not complied with her obligations under the terms of the final decree. After Jennifer was served with John's motion, she contacted Ray and asked Ray to defend her in that matter. When Jennifer contacted Ray, she was still working for the Crawley Firm. So, Ray still considered Jennifer to be a client of the Crawley Firm. The firm, with Ray acting as Jennifer's lead lawyer, represented Jennifer at the hearing involving John's motion.

         In October 2015, John filed a second, post-divorce motion to enforce. By then, Ray was no longer working for the Crawley Firm. Jennifer hired Ray (not Crawley or his firm) to defend her against John's second motion.

         C. Jennifer refuses to pay the outstanding balance of the Crawley Firm's bills

         In 2015, the Crawley Firm sent Jennifer several invoices, billing her for $13, 656. When Jennifer failed to pay the invoices, Crawley sued Jennifer to collect the balance it alleged Jennifer owed the firm.[1] Crawley's suit, filed in February 2016, asserts three claims, one for breach of contract, a second alleging Jennifer breached a sworn account, and a third claiming Crawley was entitled to a quantum meruit recovery based on the unpaid fees.

         D. Jennifer files counterclaims

         In late February 2017, Jennifer filed counterclaims against Crawley and the Crawley Firm. In the counterclaims, Jennifer alleged Crawley and the Crawley Firm committed malpractice in the divorce case and breached their fiduciary duties to her while she was a client of the firm. Jennifer's malpractice theory centers on the manner the attorneys with the Crawley Firm handled her divorce. She claimed the attorneys committed malpractice by failing to advise her of the benefits she could have obtained had she pursued a family-violence finding against John. As to its fiduciary duty claims, Jennifer alleged the Crawley Firm overbilled her for its work and failed to disclose that Ray was not an associate of the firm while it compensated her under an agreement favoring the firm.

         In July 2017, Crawley and the Crawley Firm moved for partial summary judgment on Jennifer's claims. According to the motion, Jennifer's malpractice claim was barred by the two-year statute of limitations. And the motion argues Jennifer could not separate her fiduciary duty claims from her malpractice claim without violating the rule that prohibits fracturing claims.

         In response to the motion, Jennifer argued several tolling theories applied to her malpractice claim, and she suggests the doctrines extended the deadlines governing her claims.[2] And Jennifer argued the rule against fracturing claims did not apply to her fiduciary duty claims, which she suggests relied on separate and distinct facts than did her claim for malpractice.

         In mid-September 2017, the trial court denied Crawley and his firm's motion for partial summary judgment. A week later, the parties tried the claims and counterclaims to the bench. Seven witnesses, including Crawley, Jennifer, and Ray, testified in the trial. When the trial ended, the trial court ordered that each party take nothing on their claims. Both parties appealed.

         II. Standard of Review

         In their respective appeal and cross-appeal, both sides argue the evidence is legally and factually insufficient to support the trial court's take-nothing verdicts. We note the record on appeal includes no findings of fact or conclusions of law, nor does it show that any findings were requested.[3]

         When findings of fact and conclusions of law are not filed or requested, we imply all the necessary findings needed to support the trial court's judgment, and we will uphold the judgment on any legal theory supported by the evidence.[4] In cases tried to the bench, the trial court acts as the factfinder.[5] As the factfinder in the case, the trial court has the right to judge the credibility of the witnesses, weigh the testimony, and resolve any inconsistencies and conflicts in the evidence in reaching its verdict.[6] We review the trial court's implied findings of fact for legal and factual sufficiency, using the same standards applied in cases tried before juries.[7]

         Here, Crawley and his firm had the burden to prove the various claims and affirmative defenses they raised in the trial. Likewise, Jennifer had the burden of proof on her counterclaims. Because each party had the burden of proof on their respective claims either for affirmative relief or raising affirmative defenses, each side must establish the trial court's verdict on their respective claims was incorrect as a matter of law or show the verdict is against the greater weight and preponderance of the evidence in the trial.[8]

         In a legal sufficiency review, "the final test for legal sufficiency [is] whether the evidence at trial would enable reasonable and fair-minded people to reach the verdict under review."[9] In contrast, in a factual sufficiency review, we consider and weigh all the evidence and will set it aside only if the evidence supporting the factfinder's finding is so weak as to make the verdict clearly wrong and unjust.[10]Stated another way, we are not authorized to set aside the findings the parties are challenging in their appeals unless the implied findings supporting the verdict are so contrary to the overwhelming weight of the evidence that the finding being challenged is clearly wrong and unjust.[11]

         III. Crawley's Cross-Appeal

         A. Crawley's breach of contract claims

         Liberally construed, Crawley argues that-as a matter of law-the trial court was required by the evidence to find Jennifer breached her contract to pay fees. Crawley also raises a factual sufficiency argument, suggesting the take-nothing verdict on his claim for fees should be overturned because the verdict is contrary to the greater weight and preponderance of the evidence admitted in the trial.

         Jennifer disagrees with both of Crawley's arguments as they apply to his claim for unpaid fees. She contends the evidence shows Crawley violated the billing arrangement she had with the Crawley Firm. And she contends the evidence allowed the trial court to decide the amount she paid the firm for its work represents a more than reasonable fee. To support these arguments, Jennifer points to various errors in the firm's bills. Crawley agreed there are some errors in the bills at trial. But he does not agree the firm overbilled Jennifer for Ray's work by charging Jennifer more than it paid Ray.

         Under Texas law, "[a]n attorney may recover unpaid hourly fees for professional services rendered under the usual rules of contract law."[12] To prove a claim for attorney's fees, the attorney who sued must show (1) the attorney and the client had a valid agreement obligating the client to pay fees, (2) the attorney tendered performance, (3) the client breached the agreement by failing to pay a reasonable fee, and (4) damages resulted from the client's breach.[13]

         "A fee is unconscionable if a competent lawyer could not form a reasonable belief that the fee is reasonable."[14] Because attorneys are prohibited by the Disciplinary Rules from charging or collecting an unconscionable fee, an attorney's remedy against a client is "subject to the prohibition against charging or collecting an unconscionable fee."[15] Deciding whether an attorney's fee is reasonable is usually a question of fact, so it generally must be resolved by the factfinder in the trial.[16] To determine whether a fee was reasonable, the factfinder-in this case the trial court- can consider evidence relevant to the representation between the attorney and the attorney's client.[17] These factors include, but are not limited to, the eight factors outlined in Arthur Andersen & Co. v. Perry Equipment Corporation.[18]

         As to his claim for fees, Crawley's primary argument is that Jennifer failed to present any competent evidence contradicting his testimony that the fees his firm charged were reasonable. He argues his testimony was clear, direct, and uncontradicted. And he concludes his testimony, together with the firm's itemized bills, which were also in evidence, established the reasonableness of the firm's fees.

         To be sure, Crawley was an interested witness. And speaking generally, the uncontradicted testimony of an interested witness raises nothing more than an issue of fact that remains an issue to be decided by the finder of fact.[19] But Crawley points to caselaw explaining, under the facts in that case, how the testimony of an attorney on the reasonableness of attorney's fees can establish the fees charged were reasonable as a matter of law. That can occur if the testimony was "not contradicted by any other witness, or attendant circumstances, and the same is clear, direct and positive, and free from contradiction, inaccuracies, and circumstances tending to cast suspicion thereon."[20] This narrow exception applies "when the opposing party has the means and opportunity of disproving the testimony or evidence and fails to do so."[21] But even then, depending on the testimony in the trial, the testimony may remain unreasonable, incredible, or allow the factfinder to question whether the testimony can be believed.[22]

         In this case, the parties do not dispute that Jennifer signed a retainer agreement allowing Crawley's firm to represent Jennifer in her divorce. Nor do the parties dispute that the Crawley Firm defended Jennifer in the first (but not the second) of John's two post-divorce motions to enforce. And no dispute exists that Jennifer refused to pay the full amount of the firm's bills or that Jennifer paid the firm around $50, 600 in fees and expenses before she terminated her relationship with the firm.

         Under Jennifer's agreement with the Crawley Firm, Jennifer agreed to pay Crawley $350 per hour for his time, $250 per hour for the time of the firm's associates, and $100 for the work of the firm's paralegals on her case. Under the retainer agreement, Crawley had the right to adjust the firm's hourly rates annually.

         In 2012, the Crawley Firm billed for Crawley's services and a paralegal's services at the hourly rates listed in the agreement. That same year, the firm billed for Ray's services at $200 per hour. In late-January 2013, Crawley changed the rates, billing Jennifer $375 per hour for his services and $250 per hour for Ray's time. The firm continued to bill at the above rates until the firm's and Jennifer's relationship ended. Given the testimony about the manner the firm used Ray on Jennifer's case, as well as the fact the firm's agreement with Jennifer did not define associate, the trial court could have found Ray was an associate of the Crawley Firm for the work she performed on Jennifer's behalf.

         At trial, Crawley explained the firm sent Jennifer invoices about once a month. According to Crawley, Jennifer never informed the firm she was disputing the firm's invoices until he sued to collect the fees she did not pay. The firm's invoices are itemized: they show who performed the work, the time for each task, and the hourly rate the firm charged Jennifer for each person who billed her for working on the two matters she entrusted to the firm. In his testimony, Crawley acknowledged the firm's invoices contained several billing errors. He asserted, however, the errors total $295. According to Crawley, one of the errors occurred when the firm billed Ray's time at his hourly rate and billed a paralegal's time at an associate's rate. Crawley testified Jennifer owed the firm around $13, 400 in unpaid fees after reducing the firm's bills by the errors he acknowledged were in them. According to Crawley, the firm's fees were reasonable and necessary for the work the firm did on Jennifer's files.

         Crawley's testimony was not, however, undisputed. These are just some examples of the evidence that raised a fact issue about whether the fees were reasonable. First, the Crawley Firm billed Jennifer for Ray's time to draft a motion to enforce, a motion to compel a psychological evaluation, and to review an inventory and appraisal of the couple's marital estate. At trial, Ray testified she never drafted those documents. Second, Ray testified that four entries in the firm's February 2014 invoice showed the firm charged Jennifer for more time than she spent on those tasks. Third, given the Andersen factors and the evidence in this trial, the trial court had the discretion to reject Crawley's claim that his firm's entire fee was reasonable.

         We are not persuaded by Crawley's arguments that the evidence is either legally, or factually, insufficient to support the judgment.[23]

         B. Crawley's sworn account and quantum meruit claims

         To overturn the judgment denying Crawley's recovery on his sworn account and quantum meruit claims, Crawley argues the evidence is legally and factually insufficient to support the trial court's refusal to find in his favor on those claims. But these arguments, like his arguments on his breach of contract claim, fail to explain why the trial court could not find, as a reasonable factfinder, that Crawley failed to prove his claim for damages.

         To recover in a suit based on a sworn account, the plaintiff must show the customer failed to pay the sworn account and prove the reasonable damages that resulted from the customer's failure to pay the account.[24] Crawley's claim relies on the same evidence of damages we have already discussed. For the same reasons we have discussed when addressing Crawley's breach of contract claim, the trial court could have also rejected his claim that Jennifer breached a sworn account.

         The trial court could also find from the evidence that Crawley failed to prove his quantum meruit claim. "Quantum meruit is an equitable remedy which does not arise out of a contract, but is independent of it."[25] "Generally, a party may recover under quantum meruit only when there is no express contract covering the services or materials furnished."[26]

         In his brief, Crawley argues his quantum meruit claim is for the legal services Jennifer received on the motion for new trial filed in her divorce case and for the work the firm did defending Jennifer against the first of John's post-divorce motions to enforce. But here, the trial court could have reasonably found that $50, 600 was a reasonable fee for the firm's work including its work on these two matters. On that basis alone, the trial court could have refused to find in Crawley's favor on his quantum meruit theory of recovery. Stated another way, the trial court could ...

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