240 S.W.3d 315

Michael ROSENBLATT, Appellant, v. FREEDOM LIFE INSURANCE COMPANY OF AMERICA, Appellee.

No. 01-05-01107-CV.

Court of Appeals of Texas, Houston (1st Dist.).

Aug. 2, 2007.

*316John M. O’Quinn, The O’Quinn Law Firm, Neil C. McCabe, O’Quinn, Laminack & Pirtle, Houston, TX, for Appellant.

Brock C. Akers, Evelyn Ailts Derring-ton, Neal David Kieval, Phillips & Akers, P.C., Houston, TX, for Appellee.

Panel consists of Chief Justice RADACK and Justices JENNINGS and BLAND.

OPINION

SHERRY RADACK, Chief Justice.

This is a single-issue appeal premised on a partial reporter’s record. See TexR.App. P. 34.6(c)(1). Appellant, Michael Rosen-blatt, challenges denial of his motion to set aside jury findings that resulted in no recovery on Rosenblatt’s request for an award of attorneys’ fees. Rosenblatt contends that an award of $500,000 in attorneys’ fees was proper, notwithstanding the jury’s verdict, and contends that we are compelled to render judgment in his favor as a matter of law, because (1) he was statutorily entitled to attorneys’ fees and (2) the evidence supporting his request for attorneys’ fees is uncontroverted. See *317Tex.R. Civ. P. 301 (authorizing judgment notwithstanding verdict). Because Rosen-blatt seeks only rendition, and not a remand for trial, we conclude there is no reversible error and affirm.

Background

Rosenblatt is a former agent for appel-lee, Freedom Life Insurance Company of America.1 After sustaining injuries in a July 1999 automobile accident, Rosenblatt asserted claims for healthcare benefits from Freedom Life. Rosenblatt sued Freedom Life, seeking damages for the company’s delays in investigating his claims and in paying him compensation.

Rosenblatt filed suit on September 1, 2001 and amended his pleadings six times to assert varied common-law theories and multiple claims under the Insurance Code and the Deceptive Trade and Consumer Practices Act. Freedom Life obtained a partial summary judgment that narrowed these claims before the seven-day trial began, and the disputed issues narrowed further during trial. The case was ultimately submitted to the jury on Rosenblatt’s common-law claim for bad faith and his claim that Freedom Life violated former article 21.21, section 4(10)(a)(v)(A) of the Insurance Code and committed an unfair settlement practice by failing to affirm or deny coverage within a reasonable time.2

The jury rejected Rosenblatt’s common-law claim, but found, in response to the Insurance Code question, that Freedom Life “fail[ed] to affirm or deny coverage of a claim within a reasonable time.” The jury awarded Rosenblatt $10,000 in damages for future physical impairment and $20,000 for conduct committed knowingly. The jury awarded no damages for past and future mental anguish, physical pain, medical bills, and past physical impairment. In addition, and as challenged here, the jury awarded no (“zero”) damages, in response to a three-pronged question concerning attorneys’ fees, for trial, appeal to this Court, and appeal to the Supreme Court of Texas.

After denying motions to disregard the jury’s findings filed by both parties, the trial court rendered judgment for Rosen-blatt for $10,000 for future damages and $20,000 in additional damages, plus interest and costs. Rosenblatt did not file a motion for new trial.

Legal Sufficiency Challenge to “Zero” Damages for Attorneys’ Fees

In his sole issue on appeal, Rosenblatt contends he is entitled to judgment as a matter of law because no evidence supports the jury’s failure to award any damages in response to the question concerning attorneys’ fees. Rosenblatt preserved this issue for appeal through his motion to disregard the jury’s failure to award any amount for attorneys’ fees at trial. In the motion, as here, Rosenblatt argued that the trial court was compelled to disregard*318ed the jury’s zero findings and to render judgment for statutorily authorized attorneys’ fees of $500,000.3

A. Standard of Review

A trial court may disregard a jury’s verdict and render judgment notwithstanding the verdict pursuant to rule 301 if no evidence supports the jury’s findings or if a directed verdict would have been proper. Tiller v. McLure, 121 S.W.3d 709, 713 (Tex.2003); Brown v. Bank of Galveston, N.A., 963 S.W.2d 511, 513 (Tex.1998); Williams v. Briscoe, 137 S.W.3d 120, 124 (Tex.App.-Houston [1st Dist.] 2004, no pet.). A challenge to a ruling on a judgment notwithstanding the verdict requires “no evidence,” i.e., legal-sufficiency review. See Wal-Mart Stores, Inc. v. Miller, 102 S.W.3d 706, 709 (Tex.2003); Williams, 137 S.W.3d at 124; see also City of Keller v. Wilson, 168 S.W.3d 802, 823 (Tex.2005) (“[T]he test for legal sufficiency should be the same for summary judgments, directed verdicts, judgments notwithstanding the verdict, and appellate no-evidence review.”).4

As the party seeking attorneys’ fees, who therefore carried the burden of proof, see Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1, 10 (Tex.1991), Rosen-blatt must demonstrate on appeal that the evidence conclusively established all vital facts in support of his claim as a matter of law. Sterner v. Marathon Oil Co., 767 S.W.2d 686, 690 (Tex.1989); accord Cale’s Clean Scene Carwash, Inc. v. Hubbard, 76 S.W.3d 784, 786 (Tex.App.-Houston [14th Dist.] 2002, no pet.) (“A trial court may disregard a jury’s negative finding and substitute its own affirmative finding only if the evidence conclusively establishes the affirmative finding.”). In reviewing a legal-sufficiency challenge by the party who *319had the burden of proof at trial, the dis-positive inquiry is whether the record establishes a proposition that contradicts the jury’s finding as a matter of law. See Sterner, 767 S.W.2d at 690. Only then may we sustain the legal-sufficiency challenge. See id. City of Keller confirms the four instances in which a legal sufficiency challenge must be sustained, as follows: (1) there is complete absence of a vital fact; (2) the rules of law or evidence preclude according weight to the only evidence offered to prove a vital fact; (3) the evidence offered to prove a vital fact is no more than a scintilla; and (4) the evidence conclusively establishes the opposite of a vital fact. 168 S.W.3d at 810 & n. 16 (Tex.2005) (citing, among other cases, King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 751 (Tex.2003)).

In applying the legal-sufficiency standard, we must credit evidence that supports the judgment if reasonable jurors could credit that evidence, and we must disregard contrary evidence unless reasonable jurors could not disregard that evidence. City of Keller, 168 S.W.3d at 827. Accordingly, we review the evidence in the light most favorable to the verdict, but disregard all contrary evidence that a reasonable jury could have disbelieved. Ysleta Indep. Sch. Dist. v. Monarrez, 177 S.W.3d 915, 917 (Tex.2005) (citing City of Keller, 168 S.W.3d at 812). If the evidence falls within the zone of reasonable disagreement, we may not invade the role of the fact-finder, who alone determines the credibility of the witnesses, the weight to give their testimony, and whether to accept or reject all or any part of that testimony. City of Keller, 168 S.W.3d at 822.

It is generally true that a fact finder is free to believe all, part, or none of the testimony of a witness, but a fact-finder’s “decisions regarding credibility must be reasonable.” Id. at 820. The fact finder “cannot ignore undisputed testimony that is clear, positive, direct, otherwise credible, free from contradictions and inconsistencies, and could have been readily controverted.” Id.

B. Former Article 21.21, § 16(b)(1) Mandates “Reasonable and Necessary” Fees Recovery for Party Who Prevails and Recovers Damages

1. Party Who Prevails and Recovers Damages is Entitled to Attorneys’ Fees

Well-settled law precludes awarding attorneys’ fees without statutory or contractual authority. Holland v. Wal-Mart Stores, Inc., 1 S.W.3d 91, 95 (Tex.1999). Rosenblatt contends he is statutorily entitled to attorneys’ fees as a matter of law because he prevailed and recovered damages on his claim that Freedom Life violated former article 21.21, section 4(10)(a)(v). Act of May 19, 1995, 74th Leg., R.S., ch. 414, § 11, 1995 Tex. Gen. Laws 2988, 2999 (repealed 2003); see former article 21.21, section 16(b)(1) (“In a suit filed under this section, any plaintiff who prevails may obtain .... the amount of actual damages plus court costs and reasonable and necessary attorneys’ fees.”) (emphasis added);5 State Farm Life Ins. Co. v. Beaston, 907 S.W.2d 430, 437 (Tex.1995) (construing statute and holding that party must prevail and recover damages to recover attorneys’ fees under statute’s “fee-shifting” provisions).

Despite the apparent discretion vested in the trial court by the word “may” *320in the statute, a trial court lacks discretion to determine whether to award fees under former article 21.21, section 16(b)(1)-when a party prevails and recovers damages on an article 21.21 claim. See Bocquet v. Herring, 972 S.W.2d 19, 20 (Tex.1998) (contrasting statutes providing that court “may” award attorneys’ fees, which vest trial courts with some discretion, with statutes providing that party “may recover” “shall he awarded,” or “is entitled to ” attorneys’ fees, which grant trial courts no discretion in deciding whether to award fees).

Because section 16(b)(1) of former article 21.21 provides that a party who prevails “may obtain,” in addition to actual damages, court costs “and reasonable and necessary attorneys’ fees,” we agree with Rosenblatt that the statute mandates recovery of attorneys’ fees to a party who prevails and recovers damages on a claim. See Bocquet, 972 S.W.2d at 20.

2. Proof of Reasonableness and Necessity Required

The express language of section 16(b)(1) of former article 21.21 further mandates, however, that the party seeking attorneys’ fees establish that the fees sought are both “reasonable and necessary.” See Act of May 19, 1995, 74th Leg., R.S., ch. 414, § 13, 1995 Tex. Gen. Laws 2988, 3000 (repealed 2003); see also Brown v. Bank of Galveston, N.A., 930 S.W.2d 140, 145 (Tex.App.-Houston [14th Dist.] 1996), aff'd, 963 S.W.2d 511 (Tex.1998) (stating general rule that fact finder determines reasonable value of attorney’s services); Bocquet, 972 S.W.2d at 21 (stating that both reasonableness and necessity of attorneys’ fees are questions for the trier of fact); Ragsdale v. Progressive Voters League, 801 S.W.2d 880, 881-82 (Tex.1990) (same).6

Because Rosenblatt has expressly declined a new trial, both in the trial court and on appeal, the dispositive question becomes whether Rosenblatt established, as a matter of law, that he is entitled to $500,000 as reasonable and necessary attorneys’ fees. Specifically, did Rosenblatt provide evidence to support his claim for attorneys’ fees that was “clear, positive, direct, otherwise credible, free from contradictions and inconsistencies, and could have been readily controverted”? See City of Keller, 168 S.W.3d at 822; Ragsdale, 801 S.W.2d at 881-82. We agree with the trial court that he did not.

C. Rosenblatt Did Not Conclusively Establish that the $500,000 in Attorneys’ Fees Was Reasonable and Necessary

Rosenblatt’s trial counsel, Tracy Con-well, referred several times during her testimony to the amount of $500,000, describing it as a “reasonable” amount of attorneys’ fees for the work she had done in this case. In addition to relying on that testimony, Rosenblatt argues that Freedom Life (1) did not controvert Conwell’s testimony and (2) conceded that the testimony was uncontroverted in responding to Rosenblatt’s motion to disregard the jury’s *321failure to award any attorneys’ fees. Relying on the Ragsdale decision, Rosenblatt argues that this concession precludes Freedom Life’s contending on appeal that the jury and the trial court properly rejected Conwell’s evidence in declining to award attorneys’ fees.

Rosenblatt misconstrues Ragsdale, which recognized an exception to the general rule that an interested witness “does no more than raise a fact issue to be determined by the jury.” See id. at 882. The exception arises when the testimony of an interested witness “is not contradicted by any other witness, or attendant circumstances, and the same is clear, direct and positive, and free from contradiction, inaccuracies, and circumstances tending to cast suspicion thereon.” Id. at 882; see Brown, 963 S.W.2d at 515-16 (citing Ragsdale, 801 S.W.2d at 882). Applying the exception in Ragsdale, the supreme court ruled that the trial court erred by not taking as true, “as a matter of law,” the testimony of the interested witness, an attorney who testified without objection that $22,500 was a reasonable amount for attorneys’ fees. Id. at 881-82. The exception is “especially true,” the court observed, and Rosenblatt emphasizes, when “the opposing party has the means and opportunity of disproving the testimony,” but did not object. Ragsdale, 801 S.W.2d at 882 (emphasis in original).

Ragsdale clarified, however, that failure to controvert is but one factor among others that the court considers in determining whether the testimony merely raises a fact issue or may be accepted as true as a matter of law. Id. Ragsdale and recent interpretations of Ragsdale demonstrate that the uncontroverted testimony of an interested witness will establish that attorneys’ fees sought are reasonable and necessary as a matter of law, thus authorizing rendition by an appellate court, but only if the following conditions exist: (1) the testimony could readily be contradicted if untrue; (2) the testimony is clear, direct, and positive; and (3) there are no circumstances that tend to discredit or impeach the testimony. Ragsdale, 801 S.W.2d at 882; McMillin v. State Farm Lloyds, 180 S.W.3d 183, 210 (Tex.App.Austin 2005, pet. denied) (citing Lofton v. Tex. Brine Corp., 777 S.W.2d 384, 386 (Tex.1989)); Hubbard, 76 S.W.3d at 786 (also citing Lofton, 777 S.W.2d at 386).

We examine Conwell’s testimony within these guidelines.

1. Uncontroverted or Controvertible?

We do not agree that Conwell’s testimony conclusively established that $500,000 was a reasonable amount for attorneys’ fees or that her testimony was uncontroverted, because Conwell controverted her own testimony. Despite testifying that $500,000 was a reasonable fee, Conwell also explained the terms of her contingency-fee contract, the total hours worked, and her hourly rate.7 She testified that a 40 percent fee, as described in her contract, was reasonable. Conwell did not perform a step-by-step calculation of a total amount from the terms and percentages stated in the contract, but invited the jury to make the calculation. As this Court recognized recently, if a party presents evidence of both a fixed amount as a reasonable attorneys’ fee and a contingency-fee contract that results in a lesser fee and claims that the contract was reasonable and that the jury could rely on either calculation, that party may not argue on appeal that the evidence attesting to the *322reasonableness of the higher amount is uncontroverted. Tex. Mut. Ins. Co. v. Ray Ferguson Interests, Inc., No. 01-02-00807-CV, 2006 WL 648834, at *11, 13-14 (Tex.App.-Houston [1st Dist.] Mar. 16, 2006, pet. denied) (mem. op.).

Conwell also provided other amounts for the jury. She not only testified that her evidence suggested an award for attorneys’ fees “in the neighborhood of $400,000, maybe $350,000,” but also acknowledged that her contingency-fee contract could be interpreted as resulting in the significantly lesser sum of 40 percent of Rosenblatt’s total recovery, or $12,000. In other testimony, Conwell estimated her personal total time at 997 hours at $250 per hour, which results in yet another calculation of approximately $250,000, to which was to be added her law clerks’ fees, which Conwell “guess[ed] a reaonable rate would be anywhere between [$]25 and $75 an hour,” though she also invited the jury to “figure out a reasonable rate.” Adding the law clerks’ fees to the $250,000 and calculating them in accordance with the range Conwell suggested results in yet another total, with an approximate high of $340,000 and a low of $287,000.

Conwell also testified that the $500,000 estimate included “over” $100,000 in expenses. But the trial court sustained Freedom Life’s objections to several items listed as expenses on the grounds that they were not recoverable.

Because Conwell’s own testimony provided alternatives to the $500,000 amount that she opined was a reasonable fee and because her proposed amounts included nonrecoverable costs, we cannot agree that her testimony on the $500,000 amount was uncontroverted. To the contrary, Con-well’s testimony that $500,000 was a reasonable award for attorneys’ fees was both controvertible and controverted — by Con-well.

2. Clear, Positive, Direct, and Free from Inconsistencies?

Conwell’s testimony as to the varying amounts and calculations, described above, conflicts with and contradicts the $500,000 ceiling amount and is thus inconsistent with a clearly demonstrated award of $500,000. Moreover, Conwell acknowledged that her figures were estimates and invited the jurors to “figure a reasonable fee,” stating that she “was not going to add it up” for them. Conwell also conceded under cross-examination that only “some” of the attorney time recorded in her entries had been entered contemporaneously. She had constructed the remainder from estimates. Conwell’s inconsistencies, estimates, and equivocation render her testimony less than clear, positive, and direct.

3. Free of Circumstances that Tend to Discredit or Impeach?

As shown above, Freedom Life successfully impeached Conwell’s testimony that $500,000 was a reasonable attorneys’ fee for this case, first by cross-examination of Conwell to emphasize that her calculations were estimates reconstructed from hindsight, and then by successfully objecting to recovery of certain costs and expenses.

We note as well that over the five years that Conwell spent preparing this case, the claims asserted against Freedom Life on Rosenblatt’s behalf reduced significantly, with but two theories ultimately submitted to the jury. According to Conwell, it was necessary for her to do as much work as she did because of the difficulty in ascertaining what Freedom Life did and how Freedom Life did it. She would “need to do it all,” she claimed, “whether suing for bad faith or 21.55 or 21.21 because those claims are so intertwined that [she could not] separate them.” See C.M. Asfahl Agency v. Tensor, Inc., 135 S.W.3d 768, *323801 (Tex.App.-Houston [1st Dist.] 2004, no pet.) (recognizing both duty to segregate between recoverable and nonrecoverable claims in seeking attorneys’ fees and exception to duty for intertwined claims arising out of same occurrence).

In addition to the “bad faith or 21.55 or 21.21” claims to which Conwell referred in explaining that her work was not severa-ble, however, Rosenblatt’s live pleadings include additional claims, none of which was submitted to the jury, though they had survived pretrial motions for summary judgment. These claims were for unfair settlement practices; deceptive trade practices, including claims for unconscionable conduct and for conspiracy to violate the deceptive trade statute; and statutory libel. In addition, Rosenblatt attempted to show at trial that Freedom Life was engaged in a common enterprise with the two additionally named defendants.8

To the extent that the jury may have heard testimony relating to these remaining claims, however, Conwell did not include them with those described as too “intertwined” to enable segregation and thus discredited her own testimony that $500,000 was a reasonable fee. It is rationally to be anticipated that a jury that examines a charge with only two liability questions and awards damages for only one of these would discredit evidence that attempted to recover an award for attorneys’ fees for claims that the jury was not asked to decide. See Cordova v. Sw. Bell Yellow Pages, Inc., 148 S.W.3d 441, 449 (Tex.App.-El Paso 2004, no pet.) (recognizing that party liable for attorneys’ fees “should not be held responsible for time spent in overpreparation”).

In presenting herself as a qualified witness to testify on the claim for attorneys’ fees, Conwell stated she was “familiar with law firms in this town” and knew “what people charge.” She did not, however, explain either her personal familiarity or experience with the type of claims that she pursued against Freedom Life on Rosen-blatt’s behalf. Moreover, in accordance with former article 21.21, section 16(b)(1), which requires that attorneys’ fees awarded be both reasonable and necessary, the jury was properly asked to determine “a reasonable fee for the necessary services of [Conwell].” See Act of May 19, 1995, 74th Leg., R.S., ch. 414, § 13, 1995 Tex. Gen. Laws 2988, 3000 (repealed 2003); Bocquet, 972 S.W.2d at 21. Though Con-well summarized her work for this case, evidence concerning the necessity of the work was lacking.

4. Consequences: Fact Issue Raised, but Resolved by Jury, and Relief by Rendition Neither Urged Nor Preserved.

City of Keller reaffirms that a fact is not proved “as a matter of law” when the rules of law or evidence preclude according effect to the only evidence offered to establish a vital fact. City of Keller, 168 S.W.3d at 810 & n. 16. Under the three-pronged Ragsdale analysis just presented, we cannot agree that Conwell’s testifying that $500,000 was a reasonable attorneys’ fee for this case, was “uncontroverted” as a matter of law and therefore conclude that a $500,000 fee was not established as a matter of law. See Ragsdale, 801 S.W.2d at 882; and compare McMillin, 180 S.W.3d at 210 (rejecting contention that testimony supporting attorneys’ fees was uncontroverted) with Brown, 963 S.W.2d at 515, and Hubbard, 76 S.W.3d at 787-88 (both holding that testimony supporting attorneys’ fees was uncontroverted).

*324Because Conwell’s testimony failed, therefore, to conclusively establish the $500,000 fee, as a matter law, her interested-witness testimony raised only a triable issue to be determined by trier of fact, in this case, the jury. See Ragsdale, 801 S.W.2d at 882; McMillin, 180 S.W.3d at 211 (remanding for determination whether entire amount of attorneys’ fees sought was reasonable and necessary, because issue not conclusively established).

The fact finder “cannot ignore undisputed testimony that is clear, positive, direct, otherwise credible, free from contradictions and inconsistencies, and could have been readily controverted.” City of Keller, 168 S.W.3d at 820; accord Ragsdale, 801 S.W.2d at 882 (employing identical test in concluding that issue established as matter of law). But Conwell did not provide undisputed testimony that was clear, positive, direct and otherwise credible; instead she contradicted and controverted her own testimony. Accordingly, the jury, was authorized to disregard her testimony that $500,000 was a reasonable attorneys’ fee, if the jury did disregard that testimony, when the jury answered the factual issue presented by the attorneys’ fee question in the court’s charge. See City of Keller, 168 S.W.3d at 819-20; Ragsdale, 801 S.W.2d at 882. By the same analysis, the trial court properly declined Rosenblatt’s limited challenge to the jury’s decision — his request that the trial court (1) disregard the jury’s “zero” damages response to the attorneys’ fee question and (2) render judgment notwithstanding that finding for $500,000. See City of Keller, 168 S.W.3d at 820; Ragsdale, 801 S.W.2d at 882.

Continuing his trial strategy on appeal, Rosenblatt seeks only rendition in the amount of $500,000, having affirmatively rejected relief by remand, both as preserved in the trial court and as presented here, not only through reliance on a partial reporter’s record, but also through the narrow issue asserted in his brief and during oral argument.

Because the evidence presented in support of Rosenblatt’s claim for attorneys’ fees is not conclusive as a matter of law and thus precludes that relief, we cannot render the judgment that Rosenblatt seeks. See McMillin, 180 S.W.3d at 211 (“We cannot render judgment ... because the evidence is not conclusive.”). Though our sister court reversed and ordered a remand in McMillin, the appellant there had alternatively requested that relief. See id. at 210-11 (stating that sustaining legal-sufficiency issue removed need to address factual sufficiency of evidence). That alternative is not presented here.

Accordingly, we overrule Rosenblatt’s sole issue.

Conclusion

We affirm the judgment of the trial court.

Rosenblatt v. Freedom Life Insurance Co. of America
240 S.W.3d 315

Case Details

Name
Rosenblatt v. Freedom Life Insurance Co. of America
Decision Date
Aug 2, 2007
Citations

240 S.W.3d 315

Jurisdiction
Texas

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