CELANESE CHEMICAL CO. INC. v. Burleson

COHEN, Justice,

dissenting.

I agree that an award of $100,000 in attorney ad litem fees was excessive, but I disagree with the majority concerning the amount of the excess and the standard of review. I believe the record shows there is no evidence to support an award of more than $90,000; thus, I would sustain appellant’s no evidence contention in point of error number two to that extent. Next, I would determine whether there was factually sufficient evidence to support an award of $90,000. Because the evidence is not so weak as to make a $90,000 award manifestly unjust, I would overrule the remainder of points of error one and two and hold that the trial court did not abuse its discretion in awarding a fee of $90,000.

The Standard of Review

I would apply the standard of review set out in Larson v. Cactus Utility Co., 730 S.W.2d 640, 642 (Tex.1987):

If a court of appeals holds that there is no evidence to support a damages verdict, it should render a take-nothing judgment as to that amount.

Legal Sufficiency — No Evidence Contentions

The attorney ad litem, James Patrick Smith, sought to justify his fee in part by claiming that he would have to maintain files, and to communicate with and on behalf of the minors, for the next 13 to 16 years, until they reached their majorities. In response to the trial court’s question concerning his responsibilities during this time, Mr. Smith testified he would “make sure that the (annuity) contract is performed.” When the trial court asked how much less the fee would be without such future services, Mr. Smith replied, “proba *263 bly about $10,000.” The majority holds that no future activity is required of an attorney ad litem, and Mr. Smith cites no authority to the contrary. Moreover, there is no evidence the annuity contracts will be breached. If they are, the beneficiaries, who will then be adults, may select any attorney they desire at that time; they are not required to retain Smith. Finally, any attorney the beneficiaries retain will be entitled to attorney’s fees upon winning a suit for breach of contract. Thus, I agree that, as a matter of law, Mr. Smith was not entitled to any fees today for enforcing the annuity contracts in the future. Under Larson v. Cactus Utility Co., I would render a take-nothing judgment as to that amount, $10,000.

Factual Sufficiency

The remaining issue is whether the evidence supporting a fee of $90,000 is so weak that the award is manifestly unjust.

There were two hearings on fees. At the settlement hearing on June 11, 1990, Mr. Smith and the attorney for the adult plaintiffs, Mr. Matthews, testified in support of a $100,000 award. Appellants asked no questions and presented no evidence. At the hearing on appellants’ motion for new trial on August 13, Smith and Matthews presented affidavits in support of the $100,-000 fee. Again, appellants presented no evidence. Appellants did not request findings of fact or conclusions of law. Consequently, we must uphold the trial court’s award (or any part of it) on any basis that is supported by evidence. Lemons v. EMW Mfg. Co., 747 S.W.2d 372, 373 (Tex.1988).

The record would support the following findings of fact: 1) Without the risk or the trauma of a trial, Mr. Smith convinced appellants to pay his clients almost $75,000 for a cause of action that did not exist under Texas law; 2) during the 34 months of litigation before Smith entered the case, appellants offered nothing; five months later, they paid $1.4 million; 3) Smith attained or could have attained more than $75,000 for the minors, but wisely bargained to attribute the excess to their parents, the adult plaintiffs Jimmy and Michelle Burleson, if he could influence them to forego cash and take a structured settlement. This was in the minors’ best interest because the family had no current wage earner and Mrs. Burleson had to provide permanent, full-time home care to the youngest child, who suffered from a disabling congenital heart defect; 4) but for Mr. Smith, the case would not have settled and the minors would have undergone the delay, risk, and agitation of a trial and possibly an appeal; 5) but for Mr. Smith, the minors would have received nothing, which was their due under existing case law; 6) but for Mr. Smith’s efforts pertaining to sanctions, the adult plaintiffs may have received nothing or much less from a trial or a settlement; 7) but for Mr. Smith, the adult plaintiffs would have taken their proceeds from trial or settlement not in a structured settlement, but in cash, even though they lacked the ability to preserve the money for the 13 to 16 years needed to support the minor children.

In short, the trial court could have concluded that Mr. Smith was entitled to an approximately 117% bonus over the amount on his internal invoice ($41,521) because he got $75,000 for clients who were legally entitled to nothing, and then forced the parents, over whom he had no direct control, to invest their money in a way that would avoid it being wasted and instead preserve it for many years into the future to provide for the minors’ support. 1

*264 The evidence related in the footnote supports the trial court’s award. We need not consider the contrary evidence because there is none.

There is no question that a fee of $90,000 is high. It amounts to $600 per hour, more than I would have awarded and more than double the highest figure the majority of this panel (comprised of two former trial judges) would have awarded. Moreover, the same trial judge was recently found to have abused his discretion by awarding excessive attorney ad litem fees in another case. Brown and Root U.S.A., Inc. v. Trevino, 802 S.W.2d 13, 15-16 (Tex.App.—El Paso 1990, no writ). Plainly, this system, like all others, can be abused.

*265 Despite these concerns, I would uphold $90,000 of this particular award for three reasons. First, the record shows evidence of outstanding lawyering by Mr. Smith that led to an exceptional result for his clients. Second, although attorneys ad litem do not risk their entire fee on the outcome of a case, as do plaintiffs attorneys, we must presume that lesser skill and a lesser result would have led to a lower fee because trial courts are required to consider the attorney’s skill and the result obtained in setting fees. Alford v. Whaley, 794 S.W.2d 920, 925 (Tex.App.—Houston [1st Dist.] 1990, no writ). Thus, Mr. Smith was entitled to at least some “risk premium” over his usual fee ($41,521) because when he accepted the case, he could not have known how much time it would take, what his fee would be, how the judge would evaluate his efforts, or what result he would attain. He could not even have been sure that the judge who appointed him would be the one to set his fee, given the uncertainties of elections, of life, and of the length of our cases. Finally, perhaps most important, trial judges sometimes appoint outstanding attorneys to represent minor plaintiffs in serious cases in order to help a less able attorney for the parents compete against highly skilled defense counsel. Such appointments make litigation more fair. They serve the public interest in keeping helpless minors from unnecessarily becoming public charges. The attorney ad litem is sometimes more responsible for obtaining a good result for all the plaintiffs than is the parents’ counsel, even though uninjured minors will, as in this case, always receive less than a physically injured adult plaintiff. Trial judges need discretion to compensate such counsel well in appropriate cases in order to induce them to serve. The trial judge, if asked, could have made conclusions of law in accordance with these observations. If he had, I believe we would be bound by existing standards of review to uphold this award, even though every judge on this panel would have awarded less.

I would reform the judgment by reducing it to $90,000 and affirm.

. This would be supported by the affidavit of Douglas Matthews, counsel for Jimmy and Michelle Burleson, who testified as follows:

The Burleson children received a settlement amount that was not directly recognized by an appellate decision prior to the time settlement was reached in the Burleson case. It. was unique that these minor children received a settlement for the loss of parental consortium due to the injuries suffered by their father which were non-fatal in nature.

In allocating the division of the settlement proceeds between the adult plaintiff (Jimmy Lee Burleson, Sr.) and the minor plaintiffs, it should be pointed out that the third child, Jimmy Lee Burleson, Jr., was bom after his father had received his debilitating, permanent injuries. This child was bom with a congenital heart defect which then required that Mrs. Burleson, who previously had been employed, to quit her job due to the necessity of having to provide daily care for this con *264 genitally impaired child. This child still requires such a level of care. It was the position of the Attorney Ad Litem that, even though a portion of the settlement amount was to be awarded to the Burleson minor children, the inability of both parents to work obviously required that a larger share than usual of the settlement proceeds should be distributed to Jimmy Lee Burleson Sr. in order to be able to feed, cloth and educate the children.

James Patrick Smith was instrumental in helping me to persuade the adult plaintiffs to place most of their settlement proceeds in a so-called structured settlement. Mr. Smith was able to use his influence with Jimmy Lee Burleson and his wife to convince them that he would not approve of them receiving Jimmy Lee Burleson Sr.’s portion of the settlement amount primarily in cash. He took this position because he believed both parents were unable to work. While he believed that the parents needed a large portion of the total recovery to pay the regular, on-going living expenses of the entire family, Mr. Smith wanted to make sure that a structured settlement was in place to allow them to receive regular monthly payments which could then pay the monthly living expenses of the entire family, including the Burleson children. These regular monthly payments would then provide for the children’s needs on a guaranteed basis. James Patrick Smith was instrumental in helping me to utilize the threat of sanctions against the Celanese Defendants in order to achieve what I felt was a fair, just and reasonable settlement for all of the plaintiffs. He and I cooperated in our approach to using the threat of sanctions against the Celanese Defendants to bring them to the bargaining table to discuss a meaningful settlement in this case. Prior to his appearance in this case, absolutely no meaningful settlement discussions had taken place.

It is my opinion that his reputation and standing in the legal community, along with his ability as a trial lawyer, were of significant benefit in causing the Celanese Defendants to participate in and ultimately conclude a successful settlement for the Plaintiffs.

James Patrick Smith and I consulted on this case on almost a daily basis during certain stages of the litigation and his availability, assistance, and efforts were of unmeasurable benefit in helping me to be able to successful-

ly conclude this case on behalf of the plaintiffs.

Further, Mr. Smith testified as follows:

[I]t was not easy to have Jimmy Burleson and his wife Michelle agree to take the structure because they like many people when faced with the alternative of receiving cash or monthly amount initially took the position that they wanted to receive what I felt under the circumstances and based upon their financial background and their educational history, I felt that that was not in their best interest not only of them but also the three children who they have a duty to support. So I used all of the influence that I could and finally told both of these parents that I would not approve any settlement in this case whatsoever even though we would agree that we would take the $75,000 and purchase the college annuities, I would not approve the settlement unless they agreed to the purchase of a structure and so that’s what we were finally able to do.

I’m convinced that that amount of money that goes into that household now each month is an amount that is sufficient to take care of the needs of each of these people but that is why the structure was made the way it was....

I would remind the court that on multiple Monday mornings we had this issue of whether or not sanctions should be taken against the Celanese defendants for this "loss of an investigatory file" by an investigator who had 15 years experience wherein Celanese claimed that this investigation done as a matter of hours after Jimmy Lee Burleson was injured had suddenly got lost. I participated insofar as the records that the Court has a great deed in that mattér. It was my belief that the issue of sanctions was an important one insofar as the rights of these three children to seek a recovery and as I pointed out in my response the fact that on June the 11th the Court entered a finding of no sanctions [in the final judgment] really was only done because we thought that we had reached a settlement on all issues that were presented to the Court that morning. But I would like for the record to show that in my opinion that the finding by the Court of no sanctions against the Celanese defendants in no way means that issue would not probably have been resolved on a different matter had we proceeded to trial in this case.