One of the questions clients most frequently ask when they become involved in a lawsuit – suing or being sued – is, “Can I recover my attorney’s fees?” The short and quick answer is, “sometimes, but even then, almost always only when you win.” Fees are recoverable only “sometimes” because not all litigated claims include the right to recover attorney’s fees. The primary types of claims which include that right are (1) written contract claims when the recovery of attorneys fees is provided for in the contract, and (2) when a state statute provides for the recovery of fees. Both of such sources usually limit the recovery of fees to the party which “prevails,” with one significant exception. In a suit based on the most frequently used statutory right to recover fees, a party defending a debt claim is not entitled to have his/her fees reimbursed even if he or she wins.
The basic policy principle regarding the recovery of attorney’s fees in Texas is that each litigant pays his own fees unless otherwise provided by contract or statute. That means, of course, that contracting parties are free to agree as they may desire concerning fees in the event of litigation, but that if there is no written contract, the Texas Legislature decides who may recover fees. The most-used statute is found in the Civil Practice & Remedies Code, Chapter 38, where several categories of claims are listed:
(1) rendered services,
(2) performed labor,
(3) furnished materials,
(4) freight or express overcharges,
(5) lost or damaged freight or express,
(6) killed or injured stock,
(7) a sworn account, or
(8) an oral or written contract
The kinds of claims which are obviously missing from this list are personal injury and property damage claims. The Legislature has never seen fit to attach the right to recover attorney’s fees to those kinds of claims.
However, there is another statute which may be applicable in non-contract cases. That statute is in Chapter 37 of the Civil Practice & Remedies Code, dealing with declaratory judgment actions. This statute has limited availability for the recovery of attorney’s fees because, first, it deals with cases which seek to establish or clarify legal relationships such as those created under wills, trusts and conveyances, and, second, the right to recover attorneys fees is not absolute as it is under Chapter 38. Under Chapter 37, attorney’s fees may be awarded if the judge determines that such an award would be “equitable and just.” That means that the judge may award fees to either party, or neither party, as is “equitable and just” under the facts of the particular case.
Another circumstance in which a defendant may recover attorney’s fees, probably more common than declaratory judgment actions, is when the person named as a defendant counter-sues on a contract claim, thus becoming a plaintiff in asserting that claim. He/she thus becomes qualified under Chapter 38 of the Civil Practice & Remedies Code for the recovery of fees if he/she prevails. Any person considering the filing of a suit in which a contract claim may be asserted by a countersuit should be aware that if the initial suit is lost by the plaintiff and the countersuit is won by the defendant/counter-plaintiff, the original plaintiff may be responsible for the defendant’s attorney’s fees in the prosecution of the counter-claim.
Attorney’s fees may also be recovered in cases involving the Deceptive Trade Practices Act, which involves a laundry-list of acts and omissions which are regarded as deceptive trade practices, relating to such matters are misrepresenting the quality of goods or services, the source or sponsorship of goods or services, or the nature of rights which an agreement confers, to name but a few in the lengthy list of deceptive practices. On the other side of the coin in a deceptive trade practice case, a defendant may recover fees if the plaintiff’s case is found to be groundless or brought in bad faith or for the purpose of harassment.
By actual count, one author of legal treatises dealing with litigation in Texas [O’Connor’s CPRC Plus (2006-07)] lists 157 different statutory sources for the recovery of attorney’s fees. The list covers sources in the Business & Commerce Code, the Business Organizations Act, the Business Corporation Act, the Civil Practice & Remedies Code, the Code of Criminal Procedure, the Education Code, the Election Code, the Family Code, the Finance Code, the Government Code, the Health & Safety Code, the Human Resources Code, the Insurance Code, the Local Government Code, the Occupations Code, the Tax Code, the Transportation Code, Utilities Code and Water Code. Other codes are referred to, such as the Probate Code and Property Code, where special circumstances may justify the recovery of fees. The availability of the right to recover attorney’s fees thus exists across a broad spectrum of litigated issues, which necessarily requires a review to determine whether the kind of case being considered falls within the circumstances which the Legislature has determined will justify the recovery of fees.
Finally, another aspect of the usual questions clients ask regarding attorney’s fees is whether the expenses incurred by an attorney in prosecuting a qualified claim, in addition to his/her fees, may be recovered from the losing defendant. Under the most frequently used statute, Chapter 38 of the Civil Practice & Remedies Code, the answer is “no.” Only fees, and then only “reasonable” fees, may be recovered under that statute.