Equis Equine, LLC v. Rose

UNITED STATES BANKRUPTCY COURT 09/30/2020

EASTERN DISTRICT OF TEXAS

SHERMAN DIVISION

IN RE: § CASE NO. 17-42053

§

CAROL ALISON RAMSAY ROSE, § CHAPTER 11

§

Debtor. §

____________________________________§

§

EQUIS EQUINE, LLC AND §

ELIZABETH WESTON, §

§

Plaintiffs, §

§

VS. § ADV. PROC. NO. 17-4131

§

CAROL ALISON RAMSAY ROSE, §

CAROL ROSE, INC., LORI AARON, §

PHILLIP AARON, AARON RANCH, §

AND AARON’S RANCH, INC., §

§

Defendants. §

MEMORANDUM OPINION AND ORDER

This case is before the Court on the Post-Trial Application for Attorneys’ Fees by Equis

Equine, LLC and Elizabeth Weston (collectively, “Weston”). Carol Rose (“Rose”) and Carol

Rose, Inc. (collectively, the “Rose Parties”) object to the allowance of the amount requested in

the application. The Court conducted an evidentiary hearing on May 16, 2019 and, at the end of

the hearing, took the application under advisement in order to prepare a detailed written ruling.1

1 In addition, at the time of the hearing, the parties had filed several motions for reconsideration with respect to

the memorandum opinion and order giving rise to the fee application.

I. BACKGROUND

A. State Court Litigation

The parties are familiar with the underlying dispute and the Court will not repeat all its

prior findings. In summary, and as relevant to Weston’s fee application, the underlying litigation

began when the Rose Parties sued Lori Aaron, Phillip Aaron and Aaron Ranch (collectively, the

“Aarons”) in Texas state court on October 3, 2013 (the “Aaron Ranch Lawsuit”). In various

iterations of their state court complaint, the Rose Parties sought between $2.6 million and $12.2 million

in damages arising out of the Aarons’ alleged breaches of contract as well as the Aarons’ alleged (1)

fraudulent inducement to enter into an agreement with respect to certain horses; (2) fraudulent

inducement to enter into a lease her horse ranch in Gainesville, Texas (the “Gainesville Ranch”); (3)

invasion of solitude; and (4) defamation. The Aarons filed counterclaims seeking between $5 million

and $20 million in damages for (1) statutory fraud, common law fraud, and fraudulent

misrepresentation; (2) breach of fiduciary duty; (3) invasion of privacy; (4) tortious interference with

contracts and prospective business relations; (5) business disparagement; (6) specific performance

and constructive trust; (7) trespass to real property; (8) breach of contract; (9) accounting; (10)

declaratory judgment; (11) civil conspiracy; (12) violations of the Texas Theft Liability Act (the

“TTLA”); and (13) equitable subrogation and constructive trust.

Two additional lawsuits were filed after the Aaron Ranch Lawsuit commenced. The first

was a lawsuit filed in state court on July 16, 2014 by Rose against her ex-horse trainer, Jay

McLaughlin, who was later employed by the Aarons (the “McLaughlin Lawsuit”). That action

was consolidated with the Aaron Ranch Lawsuit in state court on September 25, 2015. The second

lawsuit was filed in state court on August 7, 2015 by Weston against the Aarons, Rose, and others

(the “Weston Lawsuit”). Weston filed the lawsuit after unsuccessfully attempting to intervene in

the Aaron Ranch Lawsuit.2

In the Weston Lawsuit, Weston asserted claims against the Rose Parties for (1) violations

of Texas Business and Commerce Code § 2-328; (2) common law fraud, fraudulent inducement,

and fraud by nondisclosure; (3) negligence and negligent misrepresentation; (4) violations of the

TTLA, (5) violations of the Texas Deceptive Trade Practices Act (“TDTPA”); and (6) conspiracy,

aiding, and abetting. These are the same claims Weston asserted in her attempted intervention in

the Aaron Ranch Lawsuit. If Weston had succeeded on all her claims against the Rose Parties, her

actual money damages would have been approximately $450,000 plus exemplary damages and

attorneys’ fees.

Weston’s claims against the Rose Parties centered around a “complete dispersal sale”

conducted by Rose in August 2013. Weston contended that Rose had violated Texas law by using

the Aarons as “puff” bidders during the auction of her horses. Weston also contended that the

auction was tainted by Rose’s secret use of reserves. Weston raised various fraud claims with

respect to the dispersal sale catalogue, the misrepresentations of the auctioneers and announcers

during the auction, and the false bidding by the Aarons during the auction. Finally, Weston

contended that Rose violated the TTLA by inducing her to buy several horses and embryos at the

auction through deception, material omissions, and false representations. (Weston withdrew her

claim for violations of the TDPA prior to trial.)

The discovery process was contentious and went on for years in state court. Although

Weston agreed to be deposed several times, the other parties fought over depositions and the

production of documents. The eventual document production was massive, and the documents

2 Rose opposed Weston’s attempted intervention on the grounds that the Aaron Ranch Lawsuit was about to go

to trial.

produced to Weston required analysis by her attorneys. The litigation was novel inasmuch as

Weston’s claims relating to “puff” bidding and the dispersal sale are rarely litigated in Texas

courts. Weston also had to defend herself against a claim by the Aarons for tortious interference

with their relationship with Rose. Rose’s decision to file for bankruptcy prior to trial added more

complexity and necessitated Weston’s retention of counsel with bankruptcy experience.

Weston employed two law firms during the course of the Weston Lawsuit. Davis & Santos,

P.C. (“D&S”), a San Antonio-based law firm, represented Weston in connection with the state

court litigation prior to bankruptcy. Weston retained Baker Botts, LLP (“BB”), after the Rose

Parties filed for bankruptcy to represent her in bankruptcy matters and assist with the trial of her

claims in bankruptcy court. D&S and BB jointly represented Weston during the Rose Parties’

bankruptcies.

B. The Rose Parties File for Bankruptcy

The Rose Parties filed petitions for relief under chapter 11 of the Bankruptcy Code in

September 2017. The Rose Parties removed all the pending litigation to bankruptcy court on

October 25, 2017, which commenced several adversary proceedings. The Aarons and McLaughlin

moved to remand the Rose Parties’ lawsuits against them back to state court. Rose and Weston

objected, arguing that the parties’ claims against the Rose Parties were “core” claims against the

bankruptcy estate that this Court would necessarily decide as part of the claims allowance process.

The Court denied the motions to abstain following a hearing on February 13, 2018.

Prior to the hearing on the motion to abstain, in January 2018, the Aarons, McLaughlin and

Weston filed proof of their claims against the Rose Parties. They stated that the amounts of their

claims were unknown and attached materials relating to the state court litigation to their proofs of

claim. Weston’s complaint did not seek damages in a specific amount but asserted ten claims

against the Rose Parties, the Aarons, and certain other alleged co-conspirators for alleged fraud

relating to a pre-petition auction and other violations of Texas law. Weston also sought a

declaration that Carol Rose, individually, could not discharge her debt to Weston in bankruptcy.

The Court administratively consolidated the claim objections with the adversary

proceedings for purposes of trial. The parties agreed that this Court should try some, but not all,

of the state law claims between the parties.3 Despite the (relatively) limited nature of the trial, the

parties submitted a 92-page joint pre-trial order along with a 294-page exhibit list. The Rose

Parties included 368 exhibits on their original exhibit list, the Aarons included 762 exhibits, and

Weston included 592 exhibits.

The Court tried the parties’ claims and counterclaims over nine days in May and June 2018.

Much of the trial was focused on the Aaron Ranch Lawsuit. At the conclusion of trial, the Court

invited the parties to submit proposed findings and conclusions for the Court’s consideration as

well as written closing arguments. In addition, the Court scheduled a hearing on July 6, 2018, for

oral closing arguments. The parties filed closing briefs and proposed findings on or before

presenting their closing arguments on July 6, 2018.

For the reasons explained in the Court’s memorandum opinion entered on January 23, 2019

(and amended on September 27, 2019), this Court found in favor of Weston on the following

claims: (i) violations of TEX. BUS. & COM. CODE § 2-328 (prohibiting “puff” bidding); (ii)

violations of TEX. ADMIN. CODe § 67.70 (prohibiting false advertising of an auction); (iii) common

law fraud; (iv) fraudulent inducement; (v) fraud by non-disclosure; (vi) negligence; (vii) negligent

misrepresentation; (viii) violations of the Texas Theft Liability Act (“TTLA”); (ix) equitable

3 This Court did not try any claims by non-debtors against non-debtors, such as Weston’s claims against the

auctioneers. In addition, the Aarons withdrew their invasion of privacy claim as well as their business disparagement

claim prior to trial. Rose withdrew her invasion of solitude and defamation claims prior to trial, and Weston withdrew

her TDTPA claim prior to trial.

subrogation; and (x) as to Rose, individually, a determination of non-dischargeability under 11

U.S.C. § 523(a)(2)(A).4 The Court awarded Weston actual damages in the amount of $437,918.12,

plus pre-judgment interest in the amount of $68,807.13, as well as post-judgment interest and the

remedy of rescission with respect to her purchase of SHINERS LENA DOC at the auction. The

Court also awarded Weston her attorneys’ fees for prevailing on the TTLA claim and ordered

Weston to file an application for attorneys’ fees and court costs within thirty days.

C. Weston’s Application for an Award of her Attorneys’ Fees and Court Costs

Weston timely filed an application seeking an award of her attorneys’ fees in connection

with her claim for TTLA violations. See TEX. CIV. PRAC. & REM. CODE § 134.005. The supporting

records include hundreds of pages of detailed time entries from October 2014 through January

2019.5 As discussed below, the original application seeks an award of $1,332,718.99 in attorneys’

fees and $58,753.45 in recoverable court costs for a grand total of $1,391,472.44. In addition,

Weston filed a supplemental application for additional attorneys’ fees that she had not yet been

billed at that time of the original application and that she incurred responding to the Rose Parties’

objections to her fee application. The supplemental application increases the requested award to

$1,537,143.44.

In her original application, Weston seeks an award of attorneys’ fees and costs incurred by

D&S and BB. In the original application, Weston seeks an award for 3,690.6 hours billed by

timekeepers at D&S from October 7, 2014 through January 31, 2019 for a total charge of

$885,132.17; its blended rate was $240.6 Weston also seeks an award for 729.9 hours billed by

4 Weston withdrew her claim for violations of the TDTPA prior to trial.

5 Although the parties were engaged in litigation for years prior to Rose’s bankruptcy, the bulk of Weston’s

attorneys’ fees were incurred when the Rose Parties removed the litigation to bankruptcy court.

6 David Santos was the primary billing attorney at D&S. He testified at the hearing on May 16, 2019, that the

hourly rate he charged, $350, is a discounted rate that reflects his longstanding relationship with Weston as her attorney

in various matters over a decade. He further testified that his normal hourly rate would exceed $500 per hour.

timekeepers at BB for a total charge of $447,586.82; its blended rate was $613.7 Counsel states in

affidavits supporting the application that the legal serves rendered, and tasks performed, advanced

all of Weston’s claims, and segregation of their attorneys’ fees between the TTLA claim and her

other claims is not practicable or required by Texas law.

The Rose Parties object to the fee application, asserting that Weston has established, at

most, entitlement to $360,762.18 in fees and $362.23 in costs. The Rose Parties raised more than

1,900 specific objections to individual billing entries of Weston’s counsel. The Rose Parties object

to many of the entries on multiple grounds. The Rose Parties asserted objections to D&S’s pre-

petition fees, D&S’s post-petition fees, and BB’s fees. Their objections to specific entries by D&S

and BB fell within one or more of the following thirteen categories:8

(1) “completely unrecoverable” (D&S pre-petition $233,332.08; D&S post-petition

$30,360; BB post-petition $176,329.50), meaning that the Rose Parties believe the time

entry is not related to the TTLA claim;

(1a) “partially unrecoverable” (D&S pre-petition $336,189.08; D&S post-petition

$281,243.34; BB post-petition $272,565.50), meaning that the Rose Parties believe

some of the time entry is not related to the TTLA claim;

(2) “not segregated” (D&S pre-petition $317,040.08; D&S post-petition $284,363.34; BB

post-petition $302,798.50), meaning that the Rose Parties believe the time entry does

not segregate between recoverable and unrecoverable time;

(3) “vague” (D&S pre-petition $134.553.58; D&S post-petition $28,722; BB post-petition

$93,129.50), meaning that the Rose Parties believe the time entry is too vague to permit

a meaningful review;

(4) “block billed” (D&S pre-petition $134,553.58; D&S post-petition $198,986.67; BB

post-petition $250,022), meaning that the Rose Parties believe the time entry fails to

indicate the time spent on discrete tasks within the entry;

(5) “billing judgment” (D&S pre-petition $14,723.33; D&S post-petition $14,150; BB

post-petition $231,322.50), meaning that the Rose Parties believe the time entry is

excessive or duplicative of the entries of other timekeepers;

(6) “non-recoverable cost” (D&S pre-petition $0; D&S post-petition $0; BB post-petition

$0) meaning that the Rose Parties believe the time entry relates to a particular matter

that the parties agree was settled;

7 Omar Alaniz was the primary billing attorney at BB. He charged Weston $725 per hour initially, and later

increased his hourly rate to $850. At the hearing on May 16, 2019, Mr. Santos testified that these are discounted rates

Mr. Alaniz negotiated with Weston.

8 These categories mirror the categories the Rose Parties used in their objections to a separate fee application by

counsel for the Aarons in another adversary proceeding.

(7) “billing error” (D&S pre-petition $25; D&S post-petition $0; BB post-petition $0),

meaning that the Rose Parties believe the fee or cost is an exact duplicate of another;

(8) “travel expenses” (D&S pre-petition $44,825; D&S post-petition $60,695; BB post-

petition $11,856), meaning that the Rose Parties believe Weston is seeking attorneys’

fees for non-working travel time;

(9) “unrecoverable – bankruptcy fee” (D&S pre-petition $3,845; D&S post-petition

$23,757.50; BB post-petition $192,361), meaning that the Rose Parties believe the time

was spent on core bankruptcy matters and prosecuting non-dischargeability;

(10) “unrecoverable fees that relate to parties other than Rose” (D&S pre-petition

$345,064; D&S post-petition $6,740; BB post-petition $166,111.50), meaning that the

Rose Parties believe the time was spent prosecuting claims against parties other than

Rose or defending against claims asserted by parties other than Rose;

(11) “unrecoverable fees that pre-date lawsuit” (D&S pre-petition $96,943.15; D&S post-

petition $0; BB post-petition $0), meaning that the fees were incurred prior to Weston’s

lawsuit against the Rose Parties, including fees incurred in connection with Weston’s

unsuccessful attempt to intervene in the Aaron Ranch Lawsuit; and

(12) “internal conferences” (D&S pre-petition $69,755; D&S post-petition $37,081.67; BB

post-petition $135,603), meaning that the Rose Parties believes the fees requested

duplicate fees for internal conferences.

On May 13, 2019, on the eve of the hearing on Weston’s fee application, Weston filed a

supplemental brief and application for attorneys’ fees. In the supplemental application, Weston

seeks an award for $71,945 billed by timekeepers at D&S from February 1, 2019 through the date

of the application as well as estimated fees in the amount of $20,985 through the conclusion of the

hearing on the application. Weston also seeks an award of $52,053 for hours billed by timekeepers

at BB as well as estimated fees in the amount of $688 through the conclusion of the hearing on the

application.9 Thus, as supplemented, Weston requests a total award of $1,537,143.44 in reasonable

and necessary attorneys’ fees and costs.

In her supplemental brief, Weston responded to the Rose Parties’ objections to her fees and

costs. Weston contended that all the legal services reflected in the time entries advanced the TTLA

claim and are therefore recoverable. Nevertheless, in the event this Court determines that

9 At the hearing, Weston’s counsel explained that some of these fees had not yet been invoiced when Weston filed

her original application for attorneys’ fees.

segregation is necessary, Weston identified the total amount of fees for specific categories of time

entries that the Rose Parties contend are objectionable as follows:

(1) Fees relating to pre-suit efforts to obtain a temporary restraining order in the total amount

of $2,895 (Objections #s 1, 1a, 11);

(2) Fees relating exclusively to DTPA issues in the total amount of $20,320.50 (Objections

#s1, 1a, 11);

(3) Fees relating to “pure bankruptcy efforts” (e.g., prosecuting the non-dischargeability claim

against Rose) in the total amount of $59,771.45 (Objection #9);

(4) Fees relating to particular tasks, claims and strategies that were not pursued by Weston in

the total amount of $6,885 (Objection #s 1, 1a);

(5) Fees entered in error or as potential duplicates in the total amount of $1,232.50 (Objection

#7);

(6) Fees for time spent monitoring the efforts to obtain a mental health examination of Rose in

the Aaron lawsuit in the total amount of $2,770 (Objection #1, 1a); and

(7) Fees for time spent exclusively on the Aarons’ counterclaim in the total amount of

$3,932.50 (Objection #s 1, 1a, 10).

The time entries segregated by Weston’s counsel comprise approximately 5% of the total amount

of Weston’s requested attorneys’ fee award.

At the hearing on May 19, 2019, Mr. Santos testified about billing procedures at D&S and

BB. He testified that he and Mr. Alaniz reviewed raw invoices before they were sent to Weston.

If the invoices appeared to reflect an inefficient use of time, they would and did remove (or reduce)

the charges before sending the invoices to Weston. The invoices, therefore, do not show any

cancelled charges.

With respect to costs, Weston requests an award for those items that would be recoverable

as “costs” as that term is defined in Texas Civil Practice and Remedies Code § 31.007(b). The

Rose Parties object that most of these requested costs would not be recoverable under 28 U.S.C. §

1920. In her supplemental brief, Weston responds that 28 U.S.C. § 1920 would provide her with

a far greater award of costs by covering more categories of item than § 31.007(b); however, she is

requesting only what would be permissible under Texas law.

II. LEGAL STANDARD

Under the “American Rule,” parties to litigation bear their own costs, including their

attorneys’ fees. Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 247 (1975).

The prevailing party in litigation “is ordinarily not entitled to collect a reasonable attorneys’ fee

from the loser.” Id. The default rule can be overcome by contract or statute. See Travelers Cas.

And Sur. Co. of America v. Pacific Gas and Elec. Co., 549 U.S. 443, 449 (2007).

Here, Weston sought to liquidate her state law claims against the Rose Parties and to obtain

a declaration that Carol Rose, individually, could not discharge her obligations to Weston in

bankruptcy. Weston prevailed on several of her state law claims, including a claim against the

Rose Parties for violations of the TTLA. The TTLA provides in pertinent part that “[e]ach person

who prevails in a suit under this chapter shall be awarded costs and reasonable and necessary

attorney’s fees.” TEX. CIV. PRAC. REM. CODE § 134.005(b).

Attorneys’ fees and costs are related issues. However, each requires a different analysis.

The Court will address each in turn.

III. ATTORNEYS’ FEES

Because Weston prevailed on state law claims, Texas law applies in determining the

reasonableness of the requested attorneys’ fees. See, e.g., In re Kirk, 525 B.R. 325, 335 (Bankr.

W.D. Tex. 2015). Texas courts, like federal trial courts within the Fifth Circuit, apply the lodestar

method to calculate reasonable attorneys’ fees under statutes that involve fee-shifting provisions.10

10 The lodestar method is essentially a short-hand version of the factors set forth in Arthur Andersen & Co. v.

Perry Equip. Corp., 945 S.W.2d 812, 818 (Tex. 1997). In Arthur Anderson, the Texas Supreme Court outlined a

factor-based method to assess reasonable and necessary attorney’s fees. Those factors are: (1) the time and labor

required, the novelty and difficulty of the questions involved, and the skill required to perform the legal service

properly; (2) the likelihood ... that the acceptance of the particular employment will preclude other employment by

the lawyer; (3) the fee customarily charged in the locality for similar legal services; (4) the amount involved and the

results obtained; (5) the time limitations imposed by the client or by the circumstances; (6) the nature and length of

the professional relationship with the client; (7) the experience, reputation, and ability of the lawyer or lawyers

Rohrmoos Venture v. UTSW DVA Healthcare, LLP, 578 S.W.3d 469, 494 (Tex. 2019). The

lodestar first requires the trial court to determine the reasonable hours spent by counsel in the case

and a reasonable hourly rate for such work. Id. The court then multiplies the number of such

hours by the applicable rate, the product of which is the base fee or lodestar. Id. The court may

then adjust the base lodestar up or down (apply a multiplier), if relevant factors indicate an

adjustment is necessary to reach a reasonable fee in the case. Id. (citing El Apple I, Ltd. v. Olivas,

370 S.W.3d 757, 760 (Tex. 2012)).

General, conclusory testimony devoid of any real substance will not support a fee award.

Instead, a claimant seeking an award of attorneys’ fees must prove the attorneys’ reasonable hours

worked and reasonable rate by presenting sufficient evidence to support the fee award sought. Id.

at 501-502. “Sufficient evidence includes, at a minimum, evidence of (1) particular services

performed, (2) who performed those services, (3) approximately when the services were

performed, (4) the reasonable amount of time required to perform the services, and (5) the

reasonable hourly rate for each person performing such services.” Id. at 502. Although billing

records are not required, they are “strongly encouraged to prove the reasonableness and necessity

of requested fees when those elements are contested.” Id.

Here, counsel for Weston kept detailed, contemporaneous time records. They provided the

Rose Parties and the Court with copies of their invoices to Weston, which contain thousands of

entries by individual timekeepers. The records of D&S and BB contained minimal redactions.

The Rose Parties analyzed all the time records and raised thousands of objections to individual

entries and charges.

performing the services; and (8) whether the fee is fixed or contingent on results obtained or uncertainty of collection

before the legal services have been rendered. Id.

In determining a reasonable fee award, as set forth above, courts exclude all time that is

excessive, duplicative, or inadequately documented. Stewart Title Guar. Co. v. Sterling, 822

S.W.2d 1, 10–11 (Tex. 1991); El Apple I, Ltd. v. Olivas, 370 S.W.3d 757, 761 (Tex. 2012). Courts

that find hours are too high may make line-item cuts or “use ‘a simple across-the-board reduction

by a certain percentage as an alternative to line-by-line reductions, particularly when fee

documentation is voluminous.’ ” Tow v. Speer, 2015 WL 12765414, at *6 (S.D. Tex. Aug. 17,

2015) (quoting Compass Bank v. 288/59 GP LLC, 2011 WL 739341, at *2 (S.D. Tex. Feb. 23,

2011)). An hour-by-hour analysis contemplates that a judge can “feasibly and expeditiously

engage in such a precise review.” Loranger v. Stierheim, 10 F.3d 776, 783 (11th Cir. 1994). If

“fee documentation is voluminous,” an hour-by-hour review may be “impractical” and “a waste

of judicial resources.” Id. See also, e.g., Hopwood v. State of Tex., 236 F.3d 256, 279 (5th Cir.

2000) (Fifth Circuit concluded that district court did not abuse its discretion by ordering a flat,

twenty-five percent reduction to attorney’s hours because it was impractical for the court to wade

through hundreds of time entries). If reducing by a percentage, a court must articulate the reason

for selecting the percentage. Loranger, 10 F.3d at 783. Moreover, a court may not “double

discount” by, for example, reducing hours through an hour-by-hour analysis and then including

those hours in an across-the-board cut. Bivins v. Wrap it Up, 548 F.3d 1348, 1351-52 (11th Cir.

2008).

In this case, both the fee documentation and the objections are voluminous. The records

supporting the fee application include thousands of individual entries by timekeepers D&S and

BB totaling more than 4,800 professional hours. The Rose Parties object to many of these entries

on multiple grounds for a total of approximately 7,000 individual objections. It would be neither

an efficient use of judicial resources nor feasible for this Court to attempt to review every time

entry and to analyze the multiple objections to each entry. The Court conducted its own review of

the evidence presented at the May 16th fee application hearing, including the time records

submitted by Weston. The following factors inform the Court’s decision regarding the

reasonableness of the fees requested.

A. Billing Error

As a preliminary matter, the Rose Parties object that D&S’s original application for

attorneys’ fees includes an erroneous $25 duplicate charge. At the hearing on May 16th, counsel

for D&S agreed to remove that charge as well as an additional $1,207.50 for a total reduction of

$1,232.50.

B. Segregation of Recoverable and Non-Recoverable Fees

The Court now turns to the balance of the attorneys’ fees that Weston seeks to recover as

advancing her TTLA claim ($1,477,157.49, which is $1,478,389.99 less $1,232.50). A party

seeking to recover attorneys’ fees has the burden to show that the fees were reasonable and

necessary, which, among other things, requires the party to show the fees were incurred on a claim

that allows recovery of such fees. Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1, 10–11 (Tex.

1991). When legal services advance claims for which the recovery of fees is permitted as well as

claims for which the recovery of fees is not permitted, the party must segregate and exclude the

fees for services related to the claims for which fees are not recoverable unless “the discrete legal

services advance[d] both [the] recoverable claim and the unrecoverable claim.” Tony Gullo

Motors I, L.P. v. Chapa, 212 S.W.3d 299, 313–14 (Tex. 2006). See also Petras v. Criswell, 248

S.W.3d 471, 481 (Tex. App. – Dallas 2008, no pet.). The need to segregate fees is a question of

law, while the extent to which certain claims can or cannot be segregated is a mixed question of

law and fact. Tony Gullo, 212 S.W.3d at 312–13.

Segregation of fees does not require separate time records for each claim. Tony Gullo, 212

S.W.3d at 314. Instead, an opinion assigning a percentage to recoverable and unrecoverable fees

may be sufficient. Id. The parties in this case disagree about whether any of the time spent by

Weston’s counsel is unrecoverable. Weston contends that her counsel’s time should not be

reduced at all, because everything they did served to advance her TTLA claim and has been

necessary to recover an award of attorneys’ fees and costs. The Rose Parties contend that counsel

for Weston spent 75% of their time pre-petition, and 50% of their time post-petition, on matters

other than the TTLA claim, and the Rose Parties propose to reduce their fees by those percentages.

Counsel for Weston and Rose testified at the hearing in support of their respective positions

regarding whether or how much to reduce the requested fees based on an apportionment between

recoverable and non-recoverable time.

The Rose Parties’ objections fall into two categories. First, the Rose Parties object that

some of Weston’s attorneys’ fees are not recoverable at all because they did not advance Weston’s

TTLA claim. The Rose Parties object that fees relating to core bankruptcy matters, for example,

did not advance Weston’s TTLA claim. Second, the Rose Parties object that some of Weston’s

attorneys’ fees are only partially recoverable because they did not specifically advance Weston’s

TTLA claim. The Rose Parties object that some of the time Weston attributes to the TTLA claim

should be allocated to the other claims she was simultaneously pursuing. The Court will address

the bankruptcy fee issue first.

1. Attorneys’ Fees for Core Bankruptcy Matters

The Rose Parties contend that Weston may not recover her attorneys’ fees or costs incurred

in connection with core bankruptcy matters (such as preparing proofs of claim) or to litigate

dischargeability. The Rose Parties object to the total amount of $219,963.50 in attorneys’ fees as

unrecoverable bankruptcy fees, which includes $27,602.50 charged by D&S and $192,361 charged

by BB. In support of the objection to fees spent pursuing a judgment of non-dischargeability, the

Rose Parties cites in In re Kinkaid, 445 B.R. 731, 743 (Bankr. N.D. Tex. 2011), where Judge

Houser explained: “Generally, bankruptcy courts have refused to award attorney's fees in

dischargeability litigation because there is no specific provision of the Bankruptcy Code

authorizing such awards

Here, the Court tried Weston’s TTLA claim and her non-dischargeability action at the same

time. The post-petition fees relating to the non-dischargeability action appear to have been

necessary to establish her TTLA claim. Indeed, the non-dischargeability judgment was a

byproduct of Weston’s successful TTLA claim. As the Fifth Circuit has explained: “Logically,

the litigation necessary to prove non-dischargeability also proves the basis for and amount of the

debt.” See In re Morrison, 555 F.3d 473, 479 (5th Cir. 2009). Thus, attorneys’ fees can be

recovered in a non-dischargeability action if authorized by contract or a state statute such as the

TTLA. Cohen v. de la Cruz, 523 U.S. 213, 223 (1998); see also Travelers, 549 U.S. at 451–52

(prevailing party has a claim for attorneys’ fees if permitted by applicable state law, regardless of

fact that fees were incurred litigating issues of federal bankruptcy law).

On the other hand, some the time spent by Weston’s counsel, such as time spent on her

request for equitable subordination of the Rose Parties’ claims in bankruptcy to hers, related to

future collection efforts and were not necessary to establish the TTLA claim. Likewise, time spent

on “core” matters in the bankruptcy case, such as monitoring the Rose Parties’ attempts to confirm

a joint plan of reorganization, did not advance Weston’s TTLA claim. Some reduction to the

requested fees is warranted.

In her supplemental response to the Rose Parties’ objection to her requested fee award,

Weston identified $59,771.45 in fees relating to “ ‘pure bankruptcy efforts’ (e.g., prosecuting the

non-dischargeability claim against Rose)” Based on the Court’s knowledge of the underlying

bankruptcy case, its observations during trial, and its review of the billing records, the Court

believes this amount should be much higher. The billing records reflect that D&S focused on

establishing Weston’s claims and their non-dischargeability in bankruptcy. Only a small amount

of the time billed by D&S involved the main bankruptcy case, and some awareness of the main

bankruptcy case would have been strategically necessary in the adversary proceeding. In contrast,

the billing records of BB include a significant amount of time spent on matters unique to

bankruptcy.

In addition to extensive work on discovery and trial issues for this adversary proceeding,

BB’s charges prior to the entry of this Court’s original memorandum opinion and order include

time spent on Rose’s claimed exemptions, equitable subordination, applications to employ

attorneys, the Rose Parties’ bankruptcy schedules, withdrawal of the reference, insurance

payments, motions to extend exclusivity, and reviewing monthly operating reports. It appears to

the Court, based on its review of BB’s time entries, that approximately 30% of the time spent by

BB from the petition date through the entry of a memorandum opinion and order in this adversary

proceeding related to core bankruptcy matters. The Court, therefore, sustains the Rose Parties’

objection, in part, and reduces Weston’s request for BB’s fees in her original fee application by

30% or $134,276.05 (from $447,586.82 to $313,310.32) for non-recoverable bankruptcy-related

fees.11 This reduces the total attorneys’ fees (exclusive of costs) from $1,477,157.49 to

$1,342,881.44.

11 That is not to say that BB’s fees for bankruptcy-related work were unreasonable or not otherwise chargeable to

its client – only that such fees are not compensable by the Rose Parties.

The underlying bankruptcy case was nearing confirmation at the time this Court entered its

original memorandum opinion and order in this adversary proceeding. Following the entry of this

Court’s memorandum opinion, BB’s focus turned to the fee application. Weston submitted BB’s

time entries for this period with her supplemental application for fees. The Court, having reviewed

BB’s unredacted time entries from February 2019 through the end of April 2019 finds that, to the

extent the Rose Parties object to this time on the grounds that it relates to core bankruptcy matters,

the objection should be overruled.

2. Attorneys’ Fees that Advanced the TTLA Claim

At trial, Weston contended that Rose committed “theft” and was liable for damages under

§ 134.003(a) of the TTLA by inducing her to purchase horses and embryos at the dispersal sale

through deception, including “puff” bidding by the Aarons, the secret use of reserves, and

misrepresentations by the auctioneers and announcers. Under the TTLA, “‘[t]heft’ means

unlawfully appropriating property or unlawfully obtaining services” as described in several

provisions of the Texas Penal Code. The Court found Weston established that Rose violated the

TTLA and § 31.03 and awarded her actual damages as well as rescission with respect to her

purchase of SHINERS LENA DOC at the auction.

Mr. Davis and Mr. Alaniz state in their declarations in support of the fee application that

segregation of Weston’s attorneys’ fees among her state law claims was not required or possible.

They explain that all of Weston claims arose out of the same transaction and depended on the same

facts and use of the same documents and witnesses. Specifically, all of Weston’s claimed involved

the common element of fraud and/or deception. Rose’s false representations to Weston were one

of the elements of Weston’s successful TTLA claim, and the auctioneers and others associated

with Rose aided her in the deception. As such, Weston contends that the evidence necessary for

the TTLA claim necessarily overlapped with the evidence necessary for all the other state law

claims she asserted, including claims against non-debtors such as the auctioneers that this Court

did not try.

The overlap, however, was not complete. The Court disagrees, based on its review of the

evidence, on its experience, and on the Court’s knowledge of this case, with Weston’s assertion

that 100% of her counsel’s work on mixed issues would have been necessary even if she had only

asserted her TTLA claim. Weston’s assertion fails to account for the relatively narrow nature of

that claim or the other disputes involved in the litigation amongst the parties.

While some of the work by Weston’s counsel relating to the qualification of Rose’s

auctioneers, the advertisements of the complete dispersal sale, “puff bidding,” and the conduct of

the auction, just to state a few examples, would have been necessary to establish the deception

undergirding her TTLA claim, not every discrete legal action relating to these issues by her counsel

advanced the TTLA claim. Furthermore, Weston’s counsel spent time on other matters such as

defending Weston from a tortious interference claim asserted against her by the Aarons and

seeking to intervene in the Aaron Ranch Lawsuit. Weston asserted independent claims against the

auctioneers and an attorney, Lewis Stevens, who assisted Rose in connection with the auction and

dispersal sale. Weston’s counsel also monitored a dispute in the Aaron Ranch Lawsuit over Rose’s

mental capacity, among other things, and Weston ultimately abandoned her TDTPA claim. In

light of the foregoing, and based on the Court’s own review of the time records, as well as the

other issues addressed below, the Court finds that 80% of the time spent by counsel for Weston is

recoverable as relating to her TTLA claim.

C. Other Specific Objections

The Court now turns to the specific objections raised by the Rose Parties to individual time

entries. As previously discussed, the Rose Parties frequently object to specific time entries on

multiple grounds. The Rose Parties contend that these specific objections support her proposed

percentage reductions for non-recoverable fees inasmuch as the Court would arrive at

approximately the same fee award she proposes if the Court sustained all the Rose Parties’

objections. The Court agrees, as discussed below, that some of these factors support a reduction

of the requested fee award.

1. Attorney Billing Rates

A party seeking fees bears the burden to prove its attorneys’ fees are reasonable for the

market. SCA Promotions, Inc. v. Yahoo! Inc., 2016 WL 8223206, at *7 (N.D. Tex. Nov. 21, 2016),

report and recommendation adopted, 2017 WL 514545 (N.D. Tex. Feb. 8, 2017). See also, e.g.,

Yumilicious Franchise, LLC v. Barrie, 2015 WL 1373548, at *3, *6 (N.D. Tex. Aug. 21, 2015)

(reducing the hourly rates of BB partners and associates to reflect the Dallas legal market). To

meet this burden, a party must show that its attorneys’ rates are in line with those “prevailing in

the community for similar services by lawyers of reasonable comparable skill, experience, and

reputation.” Id. Here, the Rose Parties do not object to the rates charged by D&S, but they argue

that the billing rates charged by BB were unreasonable in the Dallas market and for this case.12

At the hearing, counsel for Weston explained that Weston retained BB after the Rose

Parties filed for bankruptcy. Weston recognized she needed a bankruptcy specialist to navigate

the new hurdles created by bankruptcy, and she chose the best she could get. There is no dispute

12 Mr. Alaniz charged $850 an hour, associates charged in excess of $500 an hour, and paralegals charged between

$275 and $305.

about the qualifications of the BB professionals or the quality of their work.13 Nonetheless, the

Court agrees that BB’s rates are excessive considering the relatively small amount of damages and

the complexity of the bankruptcy issues in this case. The blended rate of the D&S professionals

was $238.83 ($957,077.70 in total fees (including the supplemental fee request) divided by 4007.3

in total hours), according to the Court’s calculations, while the blended rate of the BB professionals

was $622.30 ($499,639.82 in total fees (including the supplemental fee request) divided by 802.8

in total hours). Mr. Gordon, the lead bankruptcy attorney who represented the Aarons, charged

$250 an hour. The lead bankruptcy attorney at BB charged $850 an hour.14 Based on the Court’s

review of the record and having presided at trial, it appears that Mr. Santos was the lead trial lawyer

and BB provided bankruptcy expertise and trial support as to the TTLA claim. The bankruptcy

issues in this case were straightforward. In short, Weston retained a Rolls Royce for a Ford pickup

case. While Weston is certainly entitled to the best counsel she can afford, she can only shift her

reasonable fees to the Rose Parties. A downward adjustment to the fees charged by BB is

warranted.

2. “Vague” and “Block Billed” Objections

The Rose Parties object to the use of “block billing” by counsel for Weston. Many of the

entries the Rose Parties object to as block billed they also object to as “vague” because they could

not precisely determine how much time was spent on particular tasks. The Rose Parties seek an

across-the board reduction of the requested fees based on block billing, citing to cases that reduced

fees by 10-40%. See, e.g., Fralick v. Plumbers and Pipefitters Nat. Pension Fund, 2011 WL

13 Indeed, this case involved many qualified attorneys and other professionals. Mr. Santos at D&S is a skilled

trial lawyer, and counsel for the Rose Parties, including Mr. Connor, just to name one, were thorough and well

prepared.

14 The Court has approved comparable rates for bankruptcy lawyers in other cases involving more complex issues

of bankruptcy law.

487754, at *3-4 (N.D. Tex. Feb. 11, 2011) (applying a 10% reduction where daily entries were

block-billed); Paris v. Dallas Airmotive, Inc., 2004 WL 2100227, at *9, 11 (N.D. Tex. Sept. 21,

2004) (applying 40% reduction for block billing where entries were month to month).

The term “block billing” refers to the “‘time-keeping method by which each lawyer and

legal assistant enters the total daily time spent working on a case, rather than itemizing the time

expended on specific tasks.’” Glass v. United States, 335 F.Supp.2d 736, 739 (N.D. Tex. 2004)

(citing Harolds Stores, Inc. v. Dillard Dep't Stores, Inc., 82 F.3d 1533, 1534 n. 15 (10th Cir.

1996)). The Aarons do not dispute that their counsel engaged in block billing; FBT, H&G and the

Ashmore law firm itemized their tasks, providing detail as to the various types of work performed

on a particular day, but they did not itemize time on a per-task basis. Because FBT, H&G and the

Ashmore law firm engaged in block billing, the Court must next decide whether this warrants a

percentage reduction in the fee applications.

Block billing is not per se improper under Texas law, so long as the entries provide

meaningful review and are detailed enough to provide some indication of the time spent on various

parts of the case. See State Farm Lloyds v. Hanson, 500 S.W.3d 84, 100 (Tex. App. — Houston

[14th Dist.] 2016, no pet.) (citing John Moore Servs., Inc. 2016 WL 3162206, at *6-7); FinServ

Casualty Corp. v. Transamerica Life Ins., 523 S.W.3d 129, 142 (Tex. App. — Houston [14th Dist.]

2016) (noting “monthly billing statements that included the type of service provided, the name of

the attorney providing the service, the date the service was performed, the hourly rate, and how

much time the work required… was sufficiently detailed to allow for meaningful review.”). A

“block-billing technique” is “distinguishable from El Apple, in which there was far less evidence

of attorney’s fees, and it was presented in a far more summary fashion”15 and “distinguishable

from the aggregate and conclusory time estimates provided in Montano”16 because entries

“describe the work that was done, specify the date the work was done, provide the total amount of

time spent accomplishing the tasks, and identify the person who did the work.” John Moore Servs.,

2016 WL 3162206, at *6. Therefore, before reducing the requested fees based on block billing,

the court must evaluate whether the applicant's evidence is adequate to enable it to determine the

reasonableness of the hours expended.

Here, the time entries of D&S and BB included details about the nature of the work, who

did it at what rate, what day the work was performed, and the time worked. See El Apple, 370

S.W.3d at 762. The entries were typically detailed enough to provide some indication of the time

spent on various parts of the case. For example, on January 26, 2017, Mr. Davis billed .8 hours

for “Correspondence with counsel for Aaron regarding deposition; review Scheduling Order for

amended version; review correspondence regarding phone records and subpoena.” The Rose

Parties object to this entry because it is block billed, but the Rose Parties make no effort to identify

what portion of the entry was vague. In many instances, including this one, the time entry, or

surrounding time-entries, provides some context but not necessarily enough to determine if all the

time advanced the TTLA claim. The Court finds that the time entries of D&S and BB are adequate

to enable a determination of the reasonableness of the hours expended in some instances but not

in many others. The Court, therefore, finds that this factor supports a downward adjustment.

3. Non-Working Travel Time

15 In El Apple, an affidavit in support of the application for attorney’s fees included the aggregate number of

hours worked by each of two attorneys, 700 hours and 190 hours, without any supporting evidence. El Apple, 370

S.W.3d at 759.

16 In Montano, the attorney estimated that he spent six hours per week for 226 weeks working on the case, for an

aggregate of 1,356 hours. Montano, 414 S.W.3d at 736.

The time records for Weston’s counsel include numerous charges for travel time. The Rose

Parties object to fees for non-working travel time and seek a reduction of at least 50% in

accordance with Fifth Circuit practice. See, e.g., Lewallen v. City of Beaumont, 2009 WL 2175637,

at *10 (E.D. Tex. Jul. 20, 2009) (“In the fee shifting context, compensating travel time at 50% of

actual time is common practice within the Fifth Circuit.”). Texas likewise permits the recovery of

travel time – sometimes with a reduction, and sometimes with no reduction – depending on the

reasonableness of the requested fee award. Wilkerson v. Atascosa Wildlife Supply, 307 S.W.3d

357, 359 (Tex. Civ. App. – San Antonio, 2009).

The Rose Parties seek to reduce numerous entries by 50%, for a total reduction of $117,376,

because the entries include travel time and, according to the Rose Parties, do not suggest that

counsel was simultaneously performing legal work. For example, a time entry by Mr. Davis on

May 21, 2018 for 9.5 hours, includes “travel to” a location among a list of other activities billed to

Weston that day. While it is certainly possible that counsel sometimes, often, or always worked

on the case while traveling, counsel did not specifically address the Rose Parties’ objections to

these entries in their briefing or at the hearing. The Court, therefore, finds that D&S and BB failed

to carry their burden to establish the reasonableness of the amount of these requested fees. This

factor supports a downward adjustment.

4. “Billing Judgment” and “Internal Conferences” Objections

A party seeking recovery of fees must show that its counsel exercised “billing judgment.”

El Apple I, Ltd. v. Olivas, 370 S.W.3d 757, 762 (Tex. 2012). “Billing judgment requires

documentation of the hours charged and of the hours written off as unproductive, excessive, or

redundant.” Saizan v. Delta Concrete Prods. Co., 448 F.3d 795, 799 (5th Cir. 2006). When a

party fails to supply such proof, the proper remedy is a “reduction of the award by a percentage

intended to substitute for the exercise of billing judgment.” Id. As the U.S. Supreme Court has

explained, “[h]ours that are not properly billed to one's client also are not properly billed to one’s

adversary pursuant to statutory authority.” Hensley v. Eckerhart, 461 U.S. 424, at 434, (quoting

Copeland v. Marshall, 641 F.2d 880, 891 (D.C. Cir. 1980) (en banc)).

In determining whether the time spent on a matter constitutes a reasonable number of hours,

a court pays attention to whether cases are overstaffed and whether the hours expended were

excessive, redundant, and unnecessary. See Binta B. ex rel. S.A. v. Gordon, 710 F.3d 608, 627

(6th Cir. 2013) (hours that are “excessive, redundant, or otherwise unnecessary” are hours that are

not “reasonably expended”). However, “trial courts need not, and indeed should not, become

green-eyeshade accountants.” Fox v. Vice, 563 U.S. 826, 838 (2011). “The essential goal in

shifting fees (to either party) is to do rough justice, not to achieve auditing perfection.” Id. “So

trial courts may take into account their overall sense of a suit, and may use estimates in calculating

and allocating an attorney’s time.” Id. Thus, “there is no requirement ... that district courts identify

and justify each disallowed hour.” Mares v. Credit Bureau of Raton, 801 F.2d 1197, 1202 (10th

Cir. 1986) (citation omitted). “Nor is there any requirement that district courts announce what

hours are permitted for each legal task.” Id.

Here, the Rose Parties object that the invoices do not show that counsel exercised billing

judgment by writing off hours as unproductive, excessive or redundant. At the hearing, however,

Mr. Santos explained that he (at D&S) and Mr. Alaniz (at BB) did, in fact, write off hours when

they determined time had not been spent efficiently. He explained that they made these changes

to the raw invoices and that the deleted entries do not appear in the invoices sent to Weston and

produced to the Rose Parties.

The Rose Parties also object to time spent by Weston’s attorneys conferencing with each

other. The Rose Parties identify numerous block billed entries that contain a reference to a

conference with another attorney. The Rose Parties identify $69,755 billed by D&S pre-petition

for time that included an internal conference; $37,081.67 billed by D&S post-petition for time that

included an internal conference; and $135,603 billed by BB for time that included an internal

conference.

There is no legal prohibition to litigating a case using a collaborative approach, and co-

counsel may be reasonably expected to confer for a certain number of hours. See Turner v. Oxford

Management Services, 552 F.Supp.2d 648 (S.D. Tex. 2008) (“work allocation between [the

attorneys] was appropriate … The Court also finds that most of Tomlinson’s contributions to this

litigation—performed as a highly compensated, experienced partner—were reasonable, valuable,

and necessary.”). The billing records reflect that D&S and BB did not over-staff this case and, in

fact, they attempted to minimize costs by using associates and paralegals where practicable. The

Rose Parties have not provided this Court with authority that would justify excluding recovery for

any entry that merely includes an internal conference.

The Rose Parties also object that many of the time entries by paralegals do not constitute

substantive legal work but instead fall more in the category of clerical work. The Rose Parties’

objection focuses on a paralegal at D&S who billed a total of 862.6 hours at $125 an hour for the

total amount of $107,814.58. These time entries include time spent organizing documents,

preparing notebooks, calendaring dates, converting documents into PDFs, and making copies.

Under Texas law, “[a] party may separately assess and include in the award of attorneys'

fees compensation for a legal assistant’s work, if that assistant performs work traditionally done

by an attorney.” Multi-Moto Corp. v. ITT Commercial Fin. Corp., 806 S.W.2d 560, 570 (Tex.

App. – Dallas, 1990, writ den.). When a party seeks payment for work completed by paralegals

or legal assistants, courts require information such as (1) the qualifications of the legal assistant to

perform substantive legal work, (2) that the legal assistant performed substantive legal work under

the direction and supervision of an attorney, (3) the nature of the legal work performed, (4) the

legal assistant’s hourly rate, and (5) the number of hours expended by the legal assistant. El Apple

I, 370 S.W.3d at 763 (quoting All Seasons Window & Door Mfg., Inc. v. Red Dot Corp., 181

S.W.3d 490, 504 (Tex. App.—Texarkana 2005, no pet.)). Fees for paralegals and legal assistants

“have been denied absent such proof.” Id. (citing Moody v. EMC Servs., Inc., 828 S.W.2d 237,

248 (Tex. App.—Houston [14th Dist.] 1992, writ denied)).

Here, Mr. Santos testified at the hearing that his paralegal is highly qualified, worked under

his direction, and her efforts streamlined his own legal work and trial presentation. This Court

does not doubt the qualifications of his paralegal or that her efforts were helpful to his presentation

at trial. Her hourly rate was reasonable, and the number of hours she expended was reasonable

under the circumstances of this case. However, the billing entries reflect that much of her work

was litigation support rather than substantive legal work, and a downward adjustment to the

requested award of her time is warranted.

5. “Results Obtained” Objection

In addition, the Rose Parties object that the fees Weston is seeking far exceed the damages

she was awarded. As the Fifth Circuit has recognized, the larger the ratio between the judgment

sought and recovered and the fees requested, the more unreasonable the fees. Migis v. Pearle

Vision, Inc., 135 F.3d 1041, 1048 (5th Cir. 1998). This accords with Texas law. In Texas, money

damages are not necessary to be a “prevailing party” entitled to attorneys’ fees and costs: “A

defendant can obtain actual and meaningful relief, materially altering the parties’ legal

relationship, by successfully defending against a claim and securing a take-nothing judgment on

the main issue or issues in the case.” Rohrmoos Venture v. UTSW DVA Healthcare, LLP, 578

S.W.3d 469, 486 (Tex. 2019). However, it is well settled that attorneys’ fees must “have some

reasonable relationship to the amount in controversy[.]” Giles v. Cardenas, 697 S.W.2d 422, 429

(Tex. App. — Austin 1985, writ ref’d n.r.e.). If a prevailing party unreasonably “overprepared”

(or overreached) in a case, the losing party “should not be held liable for attorney’s fees due to

overpreparing.” Id. at 430.

Here, D&S and BB expended more than 4,800 hours for total professional fees of

$1,456,717.52 pursuing Weston’s claims for violations of Texas Business and Commerce Code §

2-328, common law fraud, fraudulent inducement, fraud by nondisclosure, negligence, negligent

misrepresentation, violations of the TTLA, violations of the TDTPA, and conspiracy, aiding, and

abetting. Some of this time was spent pursing claims against the auctioneers and an attorney who

assisted Rose with her “complete dispersal sale” for conspiracy, aiding and abetting. In addition,

counsel for Weston spent time defending her from a tortious interference claim asserted by the

Aarons. Weston prevailed on all her substantive claims against the Rose Parties (except her

TDTPA claim, which she withdrew prior to trial). She obtained a damages award for her TTLA

claim, a judgment on non-dischargeability, as well as the equitable remedy of rescission.

However, Weston is only entitled to the fees and costs that advanced her TTLA claim.

Even though her potential actual damages award (exclusive of punitive damages) was

never more than $500,000, Weston spent nearly $1.5 million pursuing her claims – including

claims that did not accord her any right to her attorneys’ fees. The Court agrees that the total hours

spent and attorneys’ fees Weston is seeking are excessive in light of the results obtained. This

factor warrants a downward adjustment to the requested fees.

D. Conclusion Regarding Fee Request

The Court is also an expert on reasonableness of fees and may use its own experience in

deciding a fee award. C.M. Asfahl Agency v. Tensor, Inc., 135 S.W.3d 768, 802 (Tex. App. –

Houston [1st Dist.] 2004, no pet.); Aquila Sw. Pipeline, Inc. v. Harmony Expl., Inc., 48 S.W.3d

225, 241 (Tex. App. – San Antonio 2001, pet. denied); Matthiessen v. Schaefer, 897 S.W.2d 825,

827 (Tex. App. – San Antonio 1994), rev'd on other grounds, 915 S.W.2d 479 (Tex. 1995); see

also Mesa Petroleum Co. v. Coniglio, 629 F.2d 1022, 1030 (5th Cir. 1980) (citations omitted).

This Court conducted its own review of all the fee documentation and evidence presented. Based

on its review of the time records, its experience, and its knowledge of this case, the Court finds

and concludes that 80% of the work by Weston’s counsel was necessary and reasonable to advance

the TTLA claim and, as such, a 20% reduction is a reasonable and a proper allocation in this case,

which would reduce the requested fees to $1,074,305.19 ($1,342,881.49 multiplied by 80%). In

reaching this conclusion, the Court also took into account the nature and scope of the TTLA claim

upon which Weston prevailed, the other claims asserted by Weston, the claims asserted against

Weston by other parties, the lack of segregation, the billing rates, hours expended, the amount

involved, the results obtained, and the skill of Weston’s counsel, and the specific objections raised

by the Rose Parties. While some of these factors support a downward adjustment, as discussed

above, those adjustments are included in the 20% reduction for non-recoverable fees, and any

further reduction would be an impermissible double discount. See Bivins v. Wrap it Up, 548 F.3d

at 1351-52.

IV. Costs17

Weston is seeking to recover her costs through the date of this Court’s memorandum

opinion and order. The Rose Parties object to most of the $58,753.45 in costs and expenses Weston

is seeking to recover as falling outside of 28 U.S.C. § 1920 and, more generally, urges the Court

to exercise its discretion to require each party to bear its own costs. The Rose Parties also object

that Weston failed to segregate her costs among her various claims. Weston argues that taxable

costs are determined by Texas law and that no such segregation was possible.

Specifically, the Rose Parties object to (1) filing fees ($1,237); (2) private process server

fees ($957.50); and (3) transcript fees and related expenses ($56,558.52). The Rose Parties urge

the Court to deny these requested costs because they did not relate to Weston’s TTLA claim and

are not recoverable under 28 U.S.C. § 1920. However, 28 U.S.C. § 1920 is not the governing law

for determining Weston’s recoverable expenses.

The prevailing party in a suit under the TTLA is entitled to court costs and reasonable and

necessary attorneys’ fees. TEX. CIV. PRAC. & REM. CODE § 134.005(B). When bankruptcy courts

liquidate claims under the TTLA as part of a non-dischargeability action, state law governs the

recoverable court costs. See, e.g., In re Kakal, 2019 WL 2895980, at *3 (Bankr. S.D. Tex. Jul. 2,

2019) (awarding court costs recoverable under Texas law to a prevailing party under the TTLA in

a non-dichargeability action). In contrast, when bankruptcy courts merely declare a state court

judgment non-dischargeable, the allowance of costs is governed by Federal Rule of Bankruptcy

Procedure 7054(b) and 28 U.S.C. § 1920.18 See, e.g., In re Healey, 2018 WL 4808362 (Bankr.

17 Weston is not seeking to recover any costs she has incurred since the Court entered its original memorandum

opinion and order.

18 Bankruptcy Rule 7054(b)(1) provides that “[t]he court may allow costs to the prevailing party except when a

statute of the United States or these rules otherwise provides.” Section 1920 defines the “costs” as:

E.D. Tex. Oct. 2, 2018) (awarding costs recoverable under 28 U.S.C. § 1920 in an action seeking

a declaration that a state court judgment awarding damages and attorney’s fees under the TTLA

was non-dischargeable).

“Costs” is narrowly defined by Texas statutes as including the following:

(1) fees of the clerk and service fees due the county; (2) fees of the court reporter

for the original of stenographic transcripts necessarily obtained for use in the suit;

(3) masters, interpreters, and guardians ad litem appointed pursuant to these rules

and state statutes; and (4) such other costs and fees as may be permitted by these

rules and state statutes.

TEX. CIV. PRAC. & REM. CODE § 31.007. In general, Texas law restricts “costs” to the “fees and

charges required by law to be paid to the courts . . . for example, filing and service fees.” May v.

Ticor Title Ins., 422 S.W.3d 93, 106 (Tex. App.—Houston [14th Dist.] 2014, no pet.); see also

TEX. CIV. PRAC. & REM. CODE § 31.007(b). “The expense of taking depositions is an item of court

costs and properly chargeable as such.” Nolte v. Flournoy, 348 S.W.3d 262, 271 (Tex. App. –

Texarkana 2011) (quoting Wallace v. Briggs, 162 Tex. 485, 348 S.W.2d 523, 527 (Tex. 1961)).

Expenses related to expert witness fees are not recoverable costs. May, 422 S.W.3d at 106. See

also Bundren v. Holly Oaks Townhomes Ass’n, 347 S.W.3d 421, 440 (Tex. App.—Dallas 2011,

pet. denied) (“The general rule in Texas is that expert witness fees are not recoverable as costs of

litigation.”). Further, general litigation expenses such as the cost of copies are not to a prevailing

party under Texas law. In re Mud King Products, Inc., 525 B.R. 43, 61 (Bankr. S.D. Tex. 2015).

(1) Fees of the clerk and marshal; (2) Fees for printed or electronically recorded transcripts

necessarily obtained for use in the case; (3) Fees and disbursements for printing and witnesses; (4)

Fees for exemplification and the costs of making copies of any materials where the copies are

necessarily obtained for use in the case; (5) Docket fees under section 1923 of this title; (6)

Compensation of court appointed experts, compensation of interpreters, and salaries, fees, expenses,

and costs of special interpretation services under section 1828 of this title.

28 U.S.C. § 1920. Whether something was “necessarily obtained for use in the case is a factual determination to be

made by the district court.” Fogelman v. ARAMCO, 920 F.2d 278, 285 (5th Cir. 1991). Prevailing parties bear the

burden of establishing necessity. Id.

See also Gumpert v. ABF Freight Sys., Inc., 312 S.W.3d 237, 242 (Tex. App. – Dallas 2010) (the

costs of videotaping depositions and obtaining copies of deposition transcripts “are ordinary

expenses of prosecuting or defending a lawsuit for which there is no recovery authorized by statute

or rule.”)

Here, the Rose Parties object that Weston is seeking filing fees related to her failed attempt

to intervene in the Aaron Ranch Lawsuit as well as private process server fees related to her claims

against other defendants. The Court agrees that Weston’s TTLA claim was not advanced by

$879.13 in costs for filing fees for a plea in intervention and other vaguely described “E-file” and

“Court Fees.” The Court also agrees that $830 in services fees incurred to serve other defendants

did not advance Weston’s TTLA claim against the Rose Parties.

Finally, the Rose Parties object that Weston failed to segregate $56,558.82. in costs for

deposition- and hearing-related transcripts among her claims. The Rose Parties also question

whether all the depositions were necessarily obtained for use in connection with the TTLA claim.

The requested costs are clearly recoverable under Texas law. See, e.g., Nolte, 348 S.W.3d 262,

271. However, the Court finds that the costs should be reduced by 20% (from $56,558.82 to

$45,247.06) to segregate between time spent on recoverable and non-recoverable claims for the

same reasons the Court reduced the requested award of attorneys’ fees.

V. Weston’s Supplemental Fee Request

After filing her initial request for attorneys’ fees and court costs in February 2019, Weston

filed a “supplemental” application in May 2019 that includes amounts not yet invoiced at the time

of the original application19 as well as attorneys’ fees incurred in connection with her application

for fees. The Rose Parties object that the supplemental fee request is untimely. The Rose Parties

19 BB’s last charge in the original application was on January 29, 2019, and D&S’s last charge was on January

31, 2019.

argue that this Court’s memorandum opinion and order required Weston to file a request for her

attorneys’ fees and costs by a date certain. According to the Rose Parties, this Court’s order did

not contemplate supplemental requests or “fees for fees.”

Because Weston is seeking an award of her fees under Texas law for her TTLA claim,

Texas law governs her fee applications. Mathis v. Exxon Corp., 302 F.3d 448, 461 (5th Cir. 2002);

In re Pirani, 579 B.R. 396, 410 (Bankr. E.D. Tex. 2017). Texas courts permit a prevailing party

to recover for time spent in pursuit of attorney’s fees. See, e.g., Cessna Aircraft Co. v. Aircraft

Network, LLC, 345 S.W.3d 139, 146 (Tex. App. – Dallas 2011) (allowing fees incurred proving

attorney’s fees on remand as part of the prevailing party’s remedy); Santos v. Texas Enterprises,

Inc., 2010 WL 4054479, at *4 (Tex. App. – Austin, Oct. 15, 2010) (rejecting the argument that

fees incurred in the pursuit of fees are not reasonable under § 38.001); Doncaster v. Hernaiz, 161

S.W.3d 594, 606-07 (Tex. App. – San Antonio 2005, no pet.) (affirming reasonableness of

attorney's fee award under § 38.001, which included time spent for bench trial on attorney's fees);

City of Dallas v. Arnett, 762 S.W.2d 942, 946 (Tex. App. – Dallas 1988, writ denied) (affirming

$225,000.00 attorney’s fee award under § 38.001, which included time spent for trial on attorney's

fees). The pursuit in this case required Weston to respond to numerous global objections as well

as thousands of objections to individual entries. She is seeking $71,945 in additional fees billed

by D&S and $52,053 in additional fees billed by BB through the date of the hearing. She also

seeks fees in the amount of $20,985 estimated to be incurred by D&S and $688 estimated to be

incurred by BB through the conclusion of the hearing.

The Court, having considered the Rose Parties’ objections, finds that the inclusion of

uninvoiced time was harmless. The Court had not yet conducted a hearing on Weston’s fee

application when she filed her supplemental request. Furthermore, and Weston is entitled to

recover the reasonable time her counsel spent to recover an award of attorneys’ fees under Texas

law. The Court has already reduced her requested supplemental award 20% for the reasons

previously discussed. No further reduction is warranted under the circumstances of this case.

VI. CONCLUSION

For all these reasons, the Court concludes that Weston is not entitled to her attorneys’ fees

relating to purely bankruptcy matters or for admitted billing errors. With respect to the balance of

her requested attorneys’ fees, the Court concludes that only 80% of those fees were reasonable and

necessary and advanced her TTLA claim. Weston has established reasonable and necessary

attorneys’ fees in the amount of $1,074,305.19. In addition, Weston has established reasonable

and necessary court costs in the total amount of $45,247.06.

IT IS THEREFORE ORDERED that the Weston Parties’ Post-Trial Application for

Attorneys’ Fees [Doc. No. 172] is GRANTED IN PART.

IT IS THEREFORE ORDERED that Weston is awarded reasonable and necessary

attorneys’ fees in the amount of $1,074,305.19 plus reasonable and necessary court costs in the

total amount of $45,247.06 pursuant to Texas Civil Practices and Remedies Code § 134.005.

Signed on9/30/2020

‘Brada | Rhoades) MD

HONORABLE BRENDA T. RHOADES,

UNITED STATES BANKRUPTCY JUDGE

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