There was a recent case out of El Paso that raises an interesting question about attorneys fees.
The substantive dispute here is whether the City of El Paso properly gave a water utility (PSB) additional authority over a stormwater utility. The plaintiff sought a declaration under the Texas UDJA. The City argued that it, not the plaintiff, deserved to get attorneys fees for having to go through the bother of defending the action.
After the judge quickly tossed their claim, the plaintiffs voiced the idea that their case raised a legal question that could make it all the way to the Texas Supreme Court.
â€œI expected this decision; it is no surprise,â€ Gilbert said. â€œNow we take it to the court that deals with the law.â€
He said the decision will be appealed to El Pasoâ€™s Eighth Court of Appeals and will probably reach the Texas Supreme Court.
The district judge had other ideas, however. In a later ruling about attorneys fees, the judge ordered:
- No fees shifted for the trial proceedings (rejecting PSB’s demand for trial fees of $44,000);
- The plaintiffs would have to pay $25,000 if they appealed to the El Paso Court and lost; and
- The plaintiffs would have to pay an additional $15,000 if they appealed to the Texas Supreme Court and lost.
Setting aside the somewhat arbitrary amounts chosen here for the Texas Supreme Court portion of this appeal, (( The amount of fees that you can absorb in the Texas Supreme Court varies widely depending on which of the three stages of the case it reaches — a case that is decided at the petition stage can be this inexpensive, but a case that is fully briefed and argued cannot. If the trial bar sought (and trial courts issued) more precise and refined orders about appellate fees, that could greatly assist those clients whose cases do reach the Texas Supreme Court. )) the interesting thing is how this fee structure offers the plaintiff an incentive not to appeal.
Attorneys fees shifted under the Uniform Declaratory Judgment Act are famously hard to get reversed or adjusted on appeal. (( The surest way is to reverse the underlying declaration on the merits — but, in truth, that doesn’t require the fee award to be vacated. The Texas UDJA permits fees to be shifted even to the nonprevailing party if the trial court concludes that doing so would be equitable and just. For example, numerous school districts received attorneys fees for the most recent round of school finance litigation — even the districts whose claims had been rejected outright by the Texas Supreme Court. )) The question here would be whether this fee-shifting structure was “equitable and just,” which is a question on which trial courts have been given some latitude.
Does that mushy standard come down to the trial court’s motives? Perhaps.
If the appellate court concludes that this fee structure was motivated by fairness to PSB because (the appellate court presumably concludes) the claims are sufficiently frivolous that the claim should not have been brought, then the fee award seems defensible. It might even be generous to the plaintiff, the thinking could go, because the plaintiff is given a second chance to recognize the error because trial fees were not awarded. But if the appellate court believes that this fee structure was even in part based on a desire of the trial court to evade appellate review, it seems very difficult to justify.
Although the parties seem more concerned about the substantive question (as they should be), this case may ultimately offer some guidance about when or if trial courts can use fee shifting to prevent appellate review.
Source: “Who’s paying? PSB pays its own legal fees, but Gilbert et al will pay for failed appeals, judge decides (Newspaper Tree)
2 responses so far ↓
1 Roger Hughes // Aug 28, 2008 at 1:26 pm
Texas is the only state that adopted the Uniform DJ Act that allows recovery of attorneys fees in declaratory relief suits. The other states follow the UDJA which allows taxation only of costs. Not surprisingly, the issue of the limits of judicial discretion do not arise often in other states because costs in DJ often are not great. The Texas Supreme Court has ducked the issue of the limits of discretion for taxing legal fees in DJ suits and perhaps this might be a case. While I think taxing fees and costs against the losing party is appropriate in many cases, it may be hard to justify taxing only appellate fees as anything other than a deterrent to appeal. However, Plaintiff may wish to consider there are cases that allow Texas judges to tax fees against the prevailing party; I believe that is abuse of discretion, but the cases are there to make a person think twice about what is a “win.”
2 Big Steve // Aug 30, 2008 at 11:03 am
I know that these laws are out there, and I know why they were created, and I basically agree with the need to correct the problems that necessitated their creation, buuuuuuutttt, there is never a good reason to silence a voice with what amounts to a fine for speaking out. It is especially risky when such fines originate in the judicial arena, rather than the legislative. If I want my day in court, I should be allowed to argue my points. There isn’t an easy answer, but I can’t find myself supporting the best incorrect (albeit probably unconstitutional) solution. As an average citizen, I am concerned that money can be used to restrain me from exercising my rights. Had Sam and Stephen F. been given a voice under the then-present goverment, they might not have felt it necessary to protest so strongly. Texas had no voice, and now it does. Do not silence it again.