Opinion

Opinion issued April 7, 2011

In The

Court of

Appeals

For The

First District

of Texas

————————————

NO. 01-09-00384-CV

———————————

Carl R. Pruett and National American Insurance Company , Appellants

V.

The Harris

County Bail Bond Board , Appellee

On Appeal from the 125th District Court

Harris County, Texas

Trial Court Case No. C-2002-09290A

O P I N I O N

This appeal involves a challenge to an

award of attorneys’ fees pursuant

to the Civil Rights Attorneys ’ Fees Award Act ( 42 U.S.C. § 1988 ) arising out of claims made against the Harris County Bail

Bond Board under Title 42, Section 1983 of the United States Code. Appellants,

Carl R. Pruett and National American Insurance Company (collectively, “Pruett”),

bring two issues challenging the adequacy of the trial court’s award. We also consider the trial court’s denial of

Pruett’s motion to recuse. We reverse

and remand.

BACKGROUND

The Board Enacts Rules Regarding Bond

Solicitation

In the 1990s, the Harris County Bail Bond Board (“the

Board”) began receiving complaints concerning bail bond solicitation practices

in the County. Specifically, there were

complaints about bondsmen (1) contacting defendants with unexecuted warrants

thereby “tipping off” the defendants about their impending arrests and

increasing risks of flight, destruction of evidence, and harm to crime victims

and police officers; and (2) soliciting business by telephone during

non-business hours.

In response, the Board passed two local rules governing the

solicitation of bail bond business in Harris County. Rule 24 prevented the solicitation of bond

business from a defendant with an outstanding warrant. Rule 25 placed time restrictions on the

solicitation of bond business by prohibiting solicitation of bond business (1)

within the first 24 hours after an arrest; and (2) during non-business

hours.

The State Court Trial Proceedings

Soon thereafter, the Board suspended the bonding license of

appellant, Carl Pruett, for violating Rules 24 and 25. Pruett and National American Insurance

Company, the insurance and surety company for which Pruett acted as an agent,

filed suit against the Board requesting declaratory and injunctive relief. The trial court granted a temporary

restraining order and then a temporary injunction to prevent the Board from

enforcing its rules.

The Interlocutory Appeal before this

Court

The Board filed an interlocutory appeal, which this Court

dismissed after the trial court granted Pruett a permanent injunction, thereby

mooting the interlocutory appeal. See Int’l Fid. & Ins. Co. v. Pruett ,

No. 01-02-00438-CV, 2002 WL 31839202 (Tex. App.—Houston [1st Dist.] Dec. 19,

2002, no pet.) (not designated for publication).

The 2nd Appeal before this Court

The Board then appealed the permanent

injunction to this Court. This Court

upheld the constitutionality of Rule 24 and the portion of Rule 25 that

prevented the solicitation of bond business during non-business hours. However, this Court concluded that the

portion of Rule 25 that prohibited bondsmen from soliciting businesses within

the first 24 hours after an arrest was an unconstitutional restraint on free

speech. See Harris Cnty. Bail Bond Bd. v. Pruett , 177 S.W.3d 260 (Tex.

App.—Houston [1st Dist.] 2005, aff’d in part, rev’d in part, 249 S.W.3d 447

(Tex. 2008).

The Appeal to the Texas Supreme Court

The Board then appealed to the supreme court, which

ultimately affirmed this Court’s holding as to the constitutionality of the “non-business

hours” portion of Rule 25 and the unconstitutionality of the portion of rule 25

that prohibited the solicitation of bond business within the first 24-hours

after arrest. However, the supreme court

reversed this Court’s judgment as to the Rule 24, holding that its prohibition

against the solicitation of bond business from defendants with open warrants

was also an unconstitutional restriction on free speech. See Pruett v. Harris Co. Bail Bond Bd. , 249 S.W.2d 447 , 460–61 (Tex. 2008). The

supreme court remanded the case to the trial court for further proceedings.

The Parallel Federal Court Proceeding

At the same time the present case was pending in the state

court, a parallel proceeding was transpiring in the federal courts. In the federal proceeding, Pruett and another

bondsman challenged the constitutionality of state statutes that had been

passed, which mirrored the Board rules that were the subject of the state court

case. See Pruett v. Harris Cnty. Bail Bond Bd., 499 F.3d 403 , 407 –08 (5th Cir. 2007). The

Fifth Circuit reached the same result as the Texas Supreme Court—it held that

the prohibitions against soliciting bond business when a warrant was

outstanding or within the first 24-hours after arrest were unconstitutional,

but that the prohibition against “after-hours” solicitation was valid. Id.

at 416 . The Fifth Circuit also reversed

the trial court’s award of “nominal” attorney’s fees after considering and

rejecting the Board’s argument that “special circumstances” should preclude or

reduce the plaintiffs’ recovery of attorneys’ fees. Id.

at 417 –18.

The attorneys’ fee issue was remanded to the federal trial

court, and after an evidentiary hearing, the federal trial court awarded Pruett

$588,462.83 in attorneys’ fees. Pruett v.

Harris Cnty. Bail Bond Bd ., 593 F. Supp2d 944, 948 (S.D. Tex. 2008). The Board did not appeal the attorneys’ fees

awarded in the federal case.

The Fee Hearing after Remand

After the Texas Supreme Court ruled

in his favor and remanded the state court case to the trial court, Pruett filed

his fee application. The parties

stipulated that Pruett was a prevailing parties under 42 U.S.C. § 1988 . By

affidavit, the Board’s expert, Jay Aldis, testified that if the plaintiffs were

entitled to recover attorneys’ fees, the appropriate amount would be

$326,327.52, which was to be calculated at a rate of $330 an hour for David

Furlow, lead counsel for Pruett. In

contrast, Furlow proffered two fee calculations: $674,625.54 (at a $450 hourly rate for

Furlow) and $782,195.93 (at a $510 hourly rate for Furlow). At the close of the fee hearing, the trial

court ruled as follows:

I

have considered all of the evidence in my file.

At this time I will take judicial notice of the evidence that’s in the

file. I have heard the arguments of

counsel, considering all of the orders that have come before this Court in this

case. I am now prepared to make a

decision as to the reasonable and necessary attorney’s fees in this case and

that fee is $35,000, $10,000 for the original lawsuit, $10,000 for one appeal,

the next appeal is $10,000, and $5,000 for the appeal to the Texas Supreme

Court. That’s the decision of the Court. Gentlemen, you are excused.

The

Trial Court’s Findings of Fact and Conclusions of Law

The trial court

subsequently made the following findings of fact:

1. From

February 2002 through December 3, 2008, Thompson & Knight, LLP billed the

Plaintiffs, on an agreed hourly rate basis, a total of $434,697.60 for work

performed on Cause No. 2002-09290 and Cause No. 2002-09290-A.

2. In their motion to recover attorney’s fees

the Plaintiffs requested an award of as much as $782,195.93 (almost 180 percent

of the billed amount).

3. The amount of fees requested by the

Plaintiffs for the work performed in this case is so clearly excessive that it

shocks the conscience of the Court.

4.

The Court finds that, in order to discourage the filing of fee applications as

outrageous as the application in the instant case, the Plaintiffs’ attorney’s

fee award should be drastically reduced.

5. The Court finds that, under the circumstances

present in this case, the sum of $35,000 should be awarded to the Plaintiffs as

reasonable attorney’s fees, i.e., $10,000 for the work performed in this Court,

$10,000 for the first appeal, $10,000 for the second appeal, and $5,000 for the

appeal to the Texas Supreme Court.

The Court also made the following conclusions of law:

1. Prevailing parties should

request only reasonable fees in civil rights cases.

2. The filing of outrageous

fee applications should not be condoned.

Scham v. District Courts Trying Criminal Cases , 148 F.3d 54 , 559

(5th Cir. 1998).

3. The Court concludes that it is appropriate in

the instant case, in the exercise of the Court’s discretion, to drastically

reduce the fee award in order to discourage the filing of excessive fee

applications.

PROPRIETY OF ATTORNEYS’ FEES

AWARD

In his first and second issues,

Pruett contends that the trial court abused its discretion in denying him

“almost all [attorneys’] fees in the absence of any special circumstances

warranting such punishment.” Pruett

points out that the trial court’s award was just 10% of what the Board’s own

expert testified would be a reasonable fee.

Applicable

Law and Standard of Review

The Civil Rights Attorneys’ Fees

Act provides that “[i]n any action or proceeding to enforce a provision of [42

U.S.C. § 1983], the court, in

its discretion, may allow the prevailing party . . . a reasonable attorney’s

fee as part of the costs.” 42 U.S.C. §

1988 . The purpose of § 1988 is to ensure

effective access to the judicial process for people with civil rights

grievances. Hensley v. Eckerhart , 461 U.S. 424, 429 , 103 S. Ct. 1933, 1937

(1983). When a statute provides for

an award of attorneys’ fees, an award should be given unless “special

circumstances” render the award unjust. Blanchard v. Bergeron , 489 U.S. 87 , 89

n.1, 109 S. Ct. 939, 942 (1989). Given

the strong policy behind § 1988 of

awarding fees to prevailing plaintiffs, defendants must make an “extremely

strong showing” of special circumstances to avoid paying attorneys’ fees, and

the trial court’s discretion to deny § 1988 fees is extremely narrow. Pruett ,

499 F.3d at 417 . “‘To avoid

the risk of remand the district court should explain with a reasonable degree

of specificity the findings and reasons’ upon which an award of attorneys’ fees — or the denial of such an award — is based.” Scham v. District Courts Trying Criminal

Cases , 148 F.3d 554, 559 (5th Cir. 1998) (quoting Von Clark v. Butler , 916 F.2d 255, 259 (5th Cir. 1990)). Determining a reasonable attorneys’ fee is a

matter committed to the sound discretion of the trial judge, but the judge’s

discretion is not unlimited. Perdue v. Kenny A., 130 S. Ct. 1662 ,

1676 (2010). It is essential that the

judge provide a reasonably specific explanation for all aspects of a fee

determination. Id. Unless such an

explanation is given, adequate appellate review is not feasible. Id.

The

Lodestar Method

We begin by noting that attorneys’

fees under § 1988 are usually

determined by applying the “lodestar” method, which is a two-step process. Rutherford

v. Harris Cnty., 197 F.3d 173, 192 (5th Cir. 1999). First, the court

calculates the “ lodestar, ”

which is equal to the number of hours reasonably expended multiplied by the

prevailing hourly rate in the community for similar work. Id. The court

should exclude all time that is excessive, duplicative, or inadequately

documented. Watkins v. Fordice, 7 F.3d 453, 457 (5th Cir. 1993). Once

the lodestar

amount is calculated, the court may adjust it upward or downward based on the

twelve factors set forth in Johnson v. Ga. Highway Express, Inc., 488

F.2d 714 , 717 – 19 (5th Cir. 1974). [1] The lodestar amount is presumed to be a

reasonable attorneys’ fee. Perdue , 130 S. Ct. at 1673.

However, the trial court did not apply

the lodestar method in this case.

Instead, the trial court concluded that the fees “shocked the

conscience” and should be “drastically reduced.”

Scham v. District

Courts Trying Criminal Cases

The Board argues that, because the

trial court could have denied attorneys’ fees entirely under the authority of Scham v. Dist. Courts Trying Criminal Cases ,

it could also “drastically reduce” the fee award without regard to the lodestar

amount. 148 F.3d 554 . We disagree in this case.

In Scham , the plaintiff successfully

challenged as ultra vires an order by

the Harris County administrative judge that prohibited the district clerk and

sheriff from disclosing the addresses and telephone numbers of criminal

defendants until an attorney was either hired or appointed. 148 F.3d at 556 . The case was pending for only one year and

discovery was limited. Id. at 558 . There were no meetings of the parties or

attorneys, no settlement negotiations, no mediation, no court appearances, and

no trial. Id. The facts were

stipulated, and the case was resolved by way of a motion for summary

judgment. Id. at 557, 558 .

Nevertheless, appellant’s counsel claimed in his fee request to have

worked on the case for 936 hours at $375 an hour, with an enhancement of the

lodestar to $750 an hour. Id. at 558 . There was evidence at the record that the

usual rate for a solo practitioner with less than two years experience was $100

per hour, and plaintiff’s own expert testified that counsel’s work was worth

$350. Id. at 558 n.18. Plaintiff’s

expert made no attempt to show the value of his services in relation to others

in the community in which he practiced. Id. at 558 . The Fifth Circuit held that

this request was so clearly excessive that it “shock[ed] the conscience” of the

Court. Id. at 558 –59. Accordingly, the

trial court did not abuse its discretion in denying an award of any attorneys’

fees at all under the special circumstances presented by the case. Id.

at 559 . To hold otherwise, the court believed, would be to “condone and

encourage such outrageous petitions.” Id.

Analysis

We begin by

noting that the trial court in this case did not deny all attorneys’ fees—instead,

it “drastically reduced” them. The Fifth

Circuit has questioned whether “special circumstances” can be used to justify

the reduction, rather than elimination, of attorneys’ fees. See

Pruett , 499 F.3d at 418 (“Even if defendants had made an extremely strong

showing that rose to the level of special circumstances, this circuit has never

held that such ‘special circumstances’ can serve to reduce, and not fully

eliminate, an award of fees.”).

Furthermore,

even if special circumstances can be used to justify the reduction rather than

elimination of an attorneys’ fee award, the Board has not presented an

“extremely strong showing” of such special circumstances in this case. Here, the trial court’s findings of fact and

conclusions of law indicate that the trial court found that the fee request

“shock[ed] the conscience” of the court because the amount requested in the fee

application was almost 180 percent of the amount plaintiffs’ counsel actually

billed his clients. The trial

court’s assumption seems to be that the amount an attorney charges the

plaintiff determines what is a “reasonable” fee under § 1988. Such is not the case.

The

Supreme Court addressed the effect of private fee arrangements in determining a

reasonable fee in the case of Blanchard

v. Bergeron , 489 U.S. 87 , 109 S. Ct. 939 (1989). In Blanchard ,

the trial court reduced the attorneys’ fees under the lodestar calculation

because it determined that a contingency fee agreement served as a cap on the

amount of attorneys’ fees to be awarded.

489 U.S. at 90 , 109 S Ct. at 942–43.

The Supreme Court reversed, holding that a private fee arrangement is

not a cap on what is a reasonable fee, but is merely one factor to be

considered in determining the reasonableness of the fee under the lodestar

method. 489 U.S. at 93 , 109 S. Ct.

944 . In so holding, the Court stated:

Should a fee

agreement provide less than a reasonable fee calculated [using the lodestar

method], the defendant should nevertheless be required to pay the higher

amount.

Thus it is that

a plaintiff’s recovery will not be reduced by what he must pay his

counsel. Plaintiffs who can afford to

hire their own lawyers, as well as impecunious litigants, may take advantage of

this provision. And where there are

lawyers or organizations that will take a plaintiff’s case without

compensation, that fact does not bar the award of a reasonable fee. All of this is consistent with and reflects

our decisions in cases involving court-awarded attorney’s fees.

489 U.S. at 93–94, 109 S. Ct. at

944–45. Blanchard makes it clear that private fee arrangements do not

determine whether a fee is reasonable, and that a private fee arrangement is

not a cap on the reasonable fee that may be awarded. That Pruett’s counsel billed them less than

they requested in their fee application does not mean that the fee requested is

unreasonable. It could be that counsel

had agreed to work for a lower hourly wage so that plaintiffs could afford to

proceed with the litigation with the hope of recovering more later. Indeed, the record shows that Furlow billed

Pruett at a discounted rate from that usually charged by his firm.

The

Board also argues that the fee request was also unreasonable because it asked

for attorneys’ fees at current rates, while counsel actually billed Pruett at

lower rates. The Board contends that

“[t]here simply was no reasonable justification in this case for the Plaintiffs

to seek to recover more than they paid their own counsel[.]”

And, as we have

already held, the private fee arrangement between counsel and plaintiff does

not determine the reasonableness of an attorneys’ fee. A private fee arrangement between the

plaintiff and his attorney is but one factor to consider in conducting a

lodestar analysis. See Blanchard , 489 U.S. at 93 , 109 S. Ct. at 944 . Similarly, compensation at current, rather

than historic rates may be available as an enhancement to the lodestar amounts

in cases that involved protracted litigation.

See Missouri v. Jenkins , 491

U.S. 274 , 283–84, 109 S. Ct. 2463, 2469 (1989).

Partial success is also a factor that may be used to reduce an

attorneys’ fee award under the lodestar method.

See Pruett , 499 F.3d at 418 .

However, neither the

existence of a private fee arrangement at less than that requested, nor a

request for fees at current rates, nor partial success is a “special

circumstance” justifying the abandonment of any lodestar analysis and the

effective denial of attorneys’ fees.

The trial court in

this case made no other findings of fact or conclusions of law that would

explain the “special circumstances” making the fee request so unreasonable such

that the conscience of the court was shocked.

The Supreme Court and the Fifth Circuit have both admonished trial

courts “to provide a

reasonably specific explanation for all aspects of a fee determination.” Perdue, 130 S Ct. at 1676. (2010). Unless

such an explanation is given, adequate appellate review is not feasible. Id. ; Scham , 148 F.3d at 559 (holding that to

avoid remand, district court should explain with “reasonable degree of

specificity” reasons for denial of attorneys’ fees). Because the only reason given by the trial

court to justify its award is a lodestar factor to be considered, but does not

determine the reasonableness of a fee request, we cannot conclude based on that

reason alone that the amount of fees requested is so clearly

excessive that it shocks the conscience.

Because the trial

court did not provide any other reason for its decision or conduct a lodestar

analysis, we are unable to adequately address on appeal the reasonableness of

the amount awarded.

Accordingly, we sustain Pruett’s first and second issues on

appeal.

DENIAL OF MOTION TO

RECUSE

After the fee hearing, but before a judgment was signed,

Pruett filed a motion to recuse the trial judge. The motion was referred to the presiding

judge of the administrative district [“the administrative judge”] who, after an

evidentiary hearing on the motion, denied it.

In their third issue on appeal, Pruett contends the administrative judge

erred in denying his motion to recuse.

Standard of Review and Applicable Law

Recusal is warranted when: (1) the

trial judge’s impartiality might reasonably be questioned, or (2) the judge has

a personal bias or prejudice concerning a party or the subject matter of the

case. Tex. R. Civ. P. 18b(2)(a) – (c). We review the denial of a motion to recuse for abuse of discretion . Vickery

v. Vickery, 999 S.W.2d 342, 349 (Tex. 1999); see also Tex. R. Civ. P. 18a(f) ( “If the motion [to recuse ] is

denied, it may be reviewed for abuse of discretion on appeal from the final judgment.”). The test for an abuse of discretion is

whether the trial court acted without reference to any guiding rules or

principles, or acted arbitrarily or unreasonably. Carmody

v. State Farm Lloyds , 184 S.W.3d 419 , 420–21 (Tex. App.—Dallas 2006, no

pet.); see Downer v. Aquamarine

Operators, Inc., 701 S.W.2d 238 , 241 –42 (Tex. 1985).

Facts Adduced at Recusal Hearing

Felix Michael Kubosh was a co-plaintiff

with Pruett in the parallel federal litigation and was represented by Pruett’s

counsel, David Furlow, and his firm Thompson & Knight in that

proceeding. Kubosh was in the audience

at the fee hearing in the present case, and after Judge Kyle Carter court

announced his ruling setting Pruett’s fees at $35,000, Kubosh saw a

white-haired gentlemen go over and shake the hand of the Board’s counsel, Mr.

Maher. Kubosh also saw “a lot of

congratulatory gestures,” but he did not testify that he overheard any

conversations. Kubosh identified the

white-haired gentleman as Judge Carter’s father, Eric Carter. Kubosh later described this exchange to

Furlow, who began looking into “why [Eric Carter] would have such an interest

in the case.”

Furlow soon learned about a case that

his firm had been involved in styled Essex

Crane Rental Corp. v James McPherson, Sr. , No. 2002-62464, in the 151 st

District Court of Harris County (“the Essex Litigation”), and that involved one

of his former law partners, Tom Sankey.

In the Essex Litigation, Sankey, a former Thompson & Knight partner,

sued Eric Carter, alleging that Carter engaged in sham transfers of assets to

perpetrate a fraud on Essex Crane Rental Corporation. The Essex Crane litigation was filed before

Sankey began working at Thompson & Knight in July 2006, and Sankey took the

case with him when he left the firm in February 2007.

Furlow also presented evidence of

Judge Carter’s participation in the Essex Litigation before taking the bench,

which he contended showed Judge Carter’s bias against Thompson &

Knight. Specifically, Furlow argued that

in September 2006, Judge Carter stated in a deposition that the Essex Litigation

was “completely frivolous” and that he defended his father “on [his] own

nickel.” In September 2006, Judge Carter

also requested sanctions against the plaintiff’s attorneys in the Essex

Litigation because the case was “filed in bad faith, [was] groundless, and

[was] brought for purposes of harassing Carter.” In February 2007, around the time Sankey left

Thompson & Knight, Judge Carter on behalf of his father, filed a

counter-claim in the Essex Litigation against Sankey, personally. And, in May

2008, after Sankey left Thompson & Knight, Judge Carter filed an appellees’

brief in this Court on behalf of his father.

In the appellee’s brief, Judge Carter argued that Sankey “invented a

vast conspiracy” and “attempted to manufacture circumstantial evidence to find

[Eric Carter and his co-defendant] guilty of conspiracy.”

Furlow presented evidence that he had

never worked with Sankey while he was at Thompson & Knight and that he had

no knowledge of the Essex Litigation or Judge Carter’s involvement with

it. Furlow also testified that one

associate, Kenny Corley, had done a minor amount of work on the bail bond case

and the Essex Litigation, but that his involvement in the bail bond case was

limited to proofreading some briefs and conducting limited research on First

Amendment issues. Furlow was concerned

that the animosity in the Essex Litigation between Judge Carter, on the one

side, and Sankey and Corley, on the other side, may have affected Judge Carter’s

ability to remain unbiased against Thompson & Knight in the present case.

Analysis

Pruett argues that (1) the extremely

low attorneys’ fee award, coupled with (2) the history between Judge Carter and

Thompson & Knight in the Essex Litigation “raises troubling issues of

extrajudicial bias.” The Board responds

that Sankey brought the Essex litigation with him when he joined Thompson &

Knight, took it with him when he left less than one year later, and that Judge

Carter never filed claims against Thompson & Knight, but solely against

Sankey, individually. The Board argues

that “it is not at all apparent why the rather brief involvement of this large

international law firm in the Essex Crane litigation would have engendered in

Judge Carter an extrajudicial bias against the entire firm and its other

clients.”

We agree. Even though there was acrimony between Judge

Carter and Sankey over the Essex Litigation, the administrative judge could

have reasonably concluded that there was insufficient evidence extending this

animosity to the firm that Sankey was a member of for less than a year. That Eric Carter “congratulated” the Board’s

attorneys after the fee hearing is also no evidence of Judge Carter’s bias—no

conversation regarding the hearing was overheard, merely “congratulatory

gestures.”

Having reviewed the recusal hearing

record, we do not conclude that the administrative judge acted arbitrarily or

unreasonably, or without any reference to guiding rules and principles, in denying Pruett’s motion to recuse.

Accordingly, we overrule point of

error three.

CONCLUSION

We reverse the

judgment of the trial court and remand for further proceedings.

Sherry

Radack

Chief

Justice

Panel

consists of Chief Justice Radack and Justices Alcala and Massengale.

[1] The Johnson factors consist of the following:

( 1) the time and labor

required for the litigation; (2) the novelty and difficulty of the questions

presented; (3) the skill required to perform the legal services properly; (4)

the preclusion of other employment by the attorney due to acceptance of the

case; (5) the customary fee; (6) whether the fee is fixed or contingent; (7)

time limitations imposed by the client or the circumstances; (8) the amount

involved and the result obtained; (9) the experience, reputation and ability of

the attorneys; (10) the “undesirability” of the case; (11) the nature and

length of the professional relationship with the client; and (12) awards in

similar cases. Johnson, 488 F.2d at 717–19. The court, however, should note that many of

these factors are usually subsumed within the initial calculation of hours

reasonably expended at a reasonable hourly rate. Hensley ,

461 U.S. at 434 n.9, 103 S. Ct. at 1940 .