Skip to content

Menu

LexBlog, Inc. logo
NetworkSub-MenuBrowse by SubjectBrowse by PublisherBrowse by ChannelAbout the NetworkJoin the NetworkProductsSub-MenuProducts OverviewBlog ProBlog PlusBlog PremierMicrositeSyndication PortalsAbout UsContactSubscribeSupport
Book a Demo
Search
Close

The American Rule Stands? Appellate Court Remands for Prevailing Party to Segregate Between Recoverable and Non-Recoverable Fees

By John Mark Goodman & Bradley on May 22, 2023
Email this postTweet this postLike this postShare this post on LinkedIn
The American Rule Stands? Appellate Court Remands for Prevailing Party to Segregate Between Recoverable and Non-Recoverable Fees

Another week, another fee-shifting case. This ones involves a 28-unit condo project in the Houston Heights neighborhood of Houston (see 2017 Yale Development, LLC v. Steadfast Funding, LLC, 2023 WL 3184028 (Tex. App. May 2, 2023)). The project failed after the developer defaulted on its loans and several contractors filed liens on the property. Litigation ensued.  The developer asserted numerous claims including fraud and breach of contract against the lenders and others, and the lenders countersued for fraud and breach of contract. The trial court rendered summary judgment against the developer on its claims and in favor of the lenders on their breach of contract counterclaim. The case proceeded to a trial on the issue of the lenders’ breach of contract damages.  The trial court awarded the lenders a total of $8.3 million, including $765,000 in attorneys’ fees, which were recoverable under a fee-shifting provision in the promissory note.

On appeal, the developer raised 33 issues. The appellate court rejected all but one: the appropriateness of the fee award. On that issue, the appellate court held that the lenders had failed to properly segregate their attorneys’ fees between recoverable and non-recoverable claims as required under Texas law. For example, while the lenders could be entitled to attorneys’ fees on their breach of contract claim, they would not be entitled to recover fees incurred in pursuit of fraud claims. The court therefore remanded the case to the trial court to allow the lenders to properly prove up their recoverable attorneys’ fees. As to what proof would be required on remand, the court cited the following cases as guidance: Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 311, 314 (Tex. 2006) (noting that standard for segregation of attorney’s fees “does not require more precise proof for attorney’s fees than for any other claims or expenses” and stating that attorney’s opinion that a certain percentage “of their drafting time would have been necessary even if there had been no fraud claim” would have sufficed); Hillegeist Fam. Enters., LLP v. Hillegeist, 2022 WL 3162367, at *5 (Tex. App. Aug. 9, 2022) (stating that when segregation is required, attorneys do not have to keep separate time records for each claim).

The Yale Development case serves as another useful lesson on the recoverability of attorneys’ fees. Understanding the requirements and limits to fee awards in a specific state can be important. In this case, early recognition of the requirement to segregate fees incurred on different claims may have allowed lenders the ability to more easily prove up their attorneys’ fees claims at trial and on remand. If you have any questions about this post or attorney fee awards generally, please do not hesitate to contact John Mark Goodman.

Photo of John Mark Goodman John Mark Goodman

John Mark Goodman has been with Bradley his entire legal career as a member of Bradley’s Litigation and Construction practice groups. He has an engineering degree from Georgia Tech and a law degree from Virginia. John Mark has had the privilege of representing…

John Mark Goodman has been with Bradley his entire legal career as a member of Bradley’s Litigation and Construction practice groups. He has an engineering degree from Georgia Tech and a law degree from Virginia. John Mark has had the privilege of representing clients throughout the U.S. and abroad in a wide variety of litigation and arbitration matters, including construction disputes, products liability claims, tax appeals, breach of contract/warranty, patent disputes, trade secret theft, and general commercial litigation.

Read more about John Mark GoodmanEmail
Show more Show less
  • Posted in:
    Real Estate & Construction
  • Blog:
    BuildSmart
  • Organization:
    Bradley Arant Boult Cummings LLP
  • Article: View Original Source

LexBlog, Inc. logo
Facebook LinkedIn Twitter RSS
Real Lawyers
99 Park Row
  • About LexBlog
  • Careers
  • Press
  • Contact LexBlog
  • Privacy Policy
  • Editorial Policy
  • Disclaimer
  • Terms of Service
  • RSS Terms of Service
  • Products
  • Blog Pro
  • Blog Plus
  • Blog Premier
  • Microsite
  • Syndication Portals
  • LexBlog Community
  • Resource Center
  • 1-800-913-0988
  • Submit a Request
  • Support Center
  • System Status
  • Resource Center
  • Blogging 101

New to the Network

  • Tennessee Insurance Litigation Blog
  • Claims & Sustains
  • New Jersey Restraining Order Lawyers
  • New Jersey Gun Lawyers
  • Blog of Reason
Copyright © 2025, LexBlog, Inc. All Rights Reserved.
Law blog design & platform by LexBlog LexBlog Logo