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.