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Telfair v. Bridges2/10/2005
Opinion and Order of Contempt
This appeal arises from a fee dispute between a law firm and its former clients. Appellant, Oscar M. Telfair, III, P.C., represented appellees, Merita Bridges and Marvin Bridges, in a suit concerning a defect in the foundation of appellees' home. The law firm obtained a settlement on behalf of appellees in the amount of $86,000.00 to resolve the claim. The law firm alleged in the underlying action that it agreed to represent appellees in pursuing the defective foundation claim on the basis of an oral contingent fee contract.
The law firm obtained a recovery against appellees in the amount of $25,638.00 for its services in pursuing the defective foundation claim under the theory of quantum meruit. The law firm also obtained a recovery for its attorney's fees in the amount of $10,250.00 in prosecuting the underlying action to obtain the quantum meruit recovery.
Appellees asserted a counterclaim against the law firm regarding its representation of appellees in an unrelated personal injury claim. Appellees successfully alleged that the law firm misappropriated settlement funds obtained on their behalf in connection with the personal injury claim. See TEX. DISCIPLINARY R. PROF'L CONDUCT 1.14, reprinted in TEX. GOV'T CODE ANN., tit. 2, subtit. G app. A (Vernon 1998 & Supp. 2004 - 2005) (TEX. STATE BAR R. art. X, ยง 9); Brown v. Commission for Lawyer Discipline, 980 S.W.2d 675 (Tex.App. - San Antonio 1998, no pet'n). The jury awarded appellees $2,457.50 on their misappropriation claim. The jury also determined the amount of appellees' reasonable and necessary attorney's fees to be $10,250.00. The trial court awarded $10,250.00 to appellees for their attorney's fees based upon the jury's determination of the amount of attorney's fees.
On appeal, the law firm attacks the trial court's award of appellees' attorney's fees. The law firm contends in its first issue that no legal basis existed for appellees to recover their attorney's fees for either defending the law firm's quantum meruit claim or prosecuting their misappropriation claim. We agree with the law firm's contention in this regard. As set forth below, the judgment of the trial court is modified and, as modified, is affirmed.
As a general rule, attorney's fees are not recoverable in Texas unless allowed by contract or by statute. Dallas Central Appraisal District v. Seven Investment Company, 835 S.W.2d 75, 77 (Tex.1992). Appellees contend that they are entitled to recover their attorney's fees under an equitable exception to the general rule. They rely upon our opinion in Baja Energy, Inc. v. Ball, 669 S.W.2d 836 (Tex.App. - Eastland 1984, no writ), for this proposition. We recognized a recovery of attorney's fees in Baja Energy based upon equitable grounds when a claimant is required to prosecute or defend litigation involving a third party as a consequence of the wrongful act of the defendant. Baja Energy, Inc. v. Ball, supra at 838-39. As we stated:
The exception applies when the wrongful act or contractual violation involves the claimant in litigation with third parties and forces the claimant to incur expenses to protect his interests. Such costs and expenses, including attorney's fees, are treated as the legal consequence of the original wrongful act and are permitted to be recovered as damages.
Baja Energy, Inc. v. Ball, supra at 839.
The exception we recognized in Baja Energy is narrow. It only applies when a wrongful act requires the claimant to incur attorney's fees in prior litigation involving a third party. See Lesikar v. Rappeport, 33 S.W.3d 282, 306 (Tex.App. - Texarkana 2000, pet'n den'd)("attorney's fees incurre
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