Maverick Industries, Inc. v. American Teleconferencing

Filing

UNPUBLISHED OPINION FILED. [12-10102 Affirmed ] Judge: EHJ , Judge: RHB , Judge: LHS Mandate pull date is 05/21/2013 [12-10102]

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Date Filed: 04/30/2013

IN THE UNITED STATES COURT OF APPEALS
United States Court of Appeals
FOR THE FIFTH CIRCUIT
Fifth Circuit

FILED
April 30, 2013

No. 12-10102

Lyle W. Cayce
Clerk

MAVERICK INDUSTRIES, INCORPORATED, doing business as National
Communication Services,
Plaintiff-Appellant
v.
AMERICAN TELECONFERENCING SERVICES, LIMITED, doing business as
Premiere Global Services, Incorporated,
Defendant-Appellee

Appeal from the United States District Court
for the Northern District of Texas
USDC No. 3:10-CV-0389-N

Before JONES, BARKSDALE, and SOUTHWICK, Circuit Judges.
PER CURIAM:*
Maverick Industries, Inc. brought suit against American Teleconferencing
Services, Ltd. for breach of contract. After a bench trial, the district court ruled
for Maverick, but it awarded less than 25% of the attorneys’ fees Maverick was
seeking. Maverick appeals, and we AFFIRM.
Maverick described itself in its complaint as a company that “brokers
telecommunications services for corporate clients.”

*

In September 2000, it

Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.

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entered into a commission agreement with American Teleconferencing.1 The
contract provided that whenever Maverick referred a customer to American
Teleconferencing, Maverick would receive a commission in the amount of 15%
of that customer’s teleconferencing bill for the initial and all later services. The
service Maverick provided under the contract apparently was only the initial
referral of a customer in need of teleconferencing services. Thereafter, Maverick
received ongoing commissions but provided no ongoing services.
In December 2008, American Teleconferencing breached the contract by
stopping commission payments on two accounts, those of Dean Foods and Bay
Valley Foods, asserting that those companies were not Maverick “customers” as
required by the contract. Maverick filed suit in March 2009. In August 2009,
American Teleconferencing offered to settle by paying all past due commissions
on these two accounts, without interest, to recognize the validity of the contract
in the future, and to pay $10,000 in attorneys’ fees. At the time, Maverick was
also investigating the validity of bringing tort claims.

It had spent

approximately $25,000 on attorneys’ fees. Maverick neither accepted the offer
nor made a counteroffer. In September 2009, American Teleconferencing began
to wire the disputed commissions into a Maverick bank account. By the date of
trial, American Teleconferencing had paid all disputed commissions, but it had
also filed a counterclaim in Maverick’s lawsuit to recover them.
After a bench trial, the district court awarded Maverick $1,481 in interest
for delayed commission payments and $24,285 in anticipated future payments.
The court rejected American Teleconferencing’s counterclaims for recovery of
$269,754 in commissions it had paid, in effect confirming that those funds
belonged to Maverick. The district court awarded no damages for commissions
beyond the end of 2011, finding those damages too speculative. Maverick sought

1

The parties use acronyms derived from the business names to refer to each other. For
clarity, we will use the corporate names.

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attorneys’ fees of $548,171; the district court awarded $125,000. Maverick’s
appeal concerns only the slimmed-down award of attorneys’ fees.
DISCUSSION
The underlying contract issues in this case were decided by applying Texas
law. Therefore, the fee award and reasonableness of that award is governed by
Texas law. DP Solutions, Inc. v. Rollins, Inc., 353 F.3d 421, 433 (5th Cir. 2003).
A “district court has broad discretion in determining the appropriateness of an
award of attorneys’ fees, and we review its award or denial thereof for an abuse
of that discretion.” Gibbs v. Gibbs, 210 F.3d 491, 500 (5th Cir. 2000). “The
district court abuses its discretion when its ruling is based on an erroneous view
of the law or a clearly erroneous assessment of the evidence.” Funk v. Stryker
Corp., 631 F.3d 777, 783 (5th Cir. 2011). At least in the context of awards under
civil rights statutes, we have said that consideration of “attorney’s fees should
not result in a second major litigation” and recognized the superior position of
the trial court to appreciate the complexity and scope of a given case. Hopwood
v. Texas, 236 F.3d 257, 277 (5th Cir. 2000).
Under Texas law, when a party is successful in a breach of contract action,
some attorneys’ fees must be awarded, though the “trial court has discretion to
fix the amount of attorney’s fees.” World Help v. Leisure Lifestyles, Inc., 977
S.W.2d 662, 683 (Tex. App.–Fort Worth 1998, pet. denied) (citing Tex. Civ. Prac.
& Rem. Code Ann. § 38.001(8)).
This circuit has set out numerous factors that a district court should
consider when awarding attorneys’ fees. See Johnson v. Georgia Highway
Express, Inc., 488 F.2d 714 (5th Cir. 1974).2 A district court should explain how
2

The Johnson factors are: (1) the time and labor required; (2) the novelty and difficulty
of the questions; (3) the skill requisite to perform the legal service 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 results 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.

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the factors were used to set a fee award; the amount of the award should
“reflect[] the considerations which led to it.” Id. at 720. We do not require “a
meaningless exercise in parroting and answering each of Johnson’s twelve
criteria, but some assurance that the court has arrived at a just compensation
based upon appropriate standards.” Davis v. Fletcher, 598 F.2d 469, 470-71 (5th
Cir. 1979). It will not always be necessary for a court to articulate reasoning
under each factor, as at times not all will be relevant. Id. at 471.
Texas courts have similar considerations.3 Texas law also requires some
explanation of fee awards. One court found an abuse of discretion when a fee
award was made “arbitrarily [with] no logical basis for these awards reflected
in the record.” Bates v. Randall Cnty., 297 S.W.3d 828, 838 (Tex. App.–Amarillo
2009, pet. denied). Conversely, an award should be approved if the appellate
court “cannot say the trial court arbitrarily applied the wrong standard or
followed no guiding principle.” City of Austin v. Janowski, 825 S.W.2d 786, 791
(Tex. App.–Austin 1992, no writ.)
The issue remains open whether the twelve factors enumerated in Johnson
apply in Texas diversity cases. Mid-Continent Cas. Co. v. Chevron Pipe Line Co.,
205 F.3d 222, 232 (5th Cir. 2000). We need not give an answer today, as the
district court’s fee award satisfies both the Johnson and the Texas standards.
The district court explained its award this way:

Johnson, 488 F.2d at 717-19.
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The Texas factors are: (1) the time and labor required, the novelty and difficulty of the
questions involved, and the skill requisite to perform the legal service properly; (2) the
likelihood [, if apparent to the client,] 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 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.
Arthur Andersen & Co. v. Perry Equip. Corp., 945 S.W.2d 812, 818 (Tex. 1997).

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[Maverick] has incurred attorneys’ fees and expenses in prosecution
of this action through trial in excess of $548,171.73. . . . In
addressing that question [of overall reasonableness of fees] the
Court must consider the amount [Maverick] will recover as damages
on that claim, as well as the fact that [American Teleconferencing’s]
August 11, 2009 settlement offer (Ex. 176) offered [Maverick] almost
complete recovery. The Court is mindful that [American
Teleconferencing] made that offer (and paid commissions in the
interim) only because [Maverick] was pursuing this litigation.
Taking all of those factors into consideration, including the factors
in Rule 1.04(b) of the Texas Disciplinary Rules of Professional
Conduct and Johnson v. Georgia Highway Express, Inc., 488 F.2d
714, 719 (5th Cir. 1974), the Court finds that a reasonable and
necessary attorneys’ fee in connection with [Maverick’s] breach of
contract claim is $125,000.
We start with the obvious, that the district court recognized Maverick’s
attorney expenses of $548,171.73. This figure was the product of Johnson’s first
guideline of time and labor required, and it is one component of the first
guideline of Texas Disciplinary Rule of Professional Conduct 1.04. The district
court found “it was reasonable to incur that magnitude of attorneys’ fees in the
context of the overall case.”
Second, the district court referred to the amount in controversy and the
results obtained, considered by both Johnson’s eighth factor and the fourth
factor of Texas Rule 1.04. The district court found that the deposits for past due
commissions were “made unilaterally” by American Teleconferencing, and
Maverick did not accept the payments as satisfying the claims and extinguishing
its rights against American Teleconferencing.
The district court held Maverick was entitled only to the commissions it
sought through the 2011 contract year. That temporal limitation meant that
Maverick received only $24,285 out of the $210,852 in future commissions it
requested. The difference arose from the finding, unchallenged on appeal, that
the commissions Maverick sought from 2012 through 2016 were too speculative.
Relatedly, the parties and the district court have treated the underlying contract
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as terminated. American Teleconferencing had offered in settlement to pay most
of the accrued commissions and to continue the contract. Thus continuing the
lawsuit and incurring the additional attorneys’ fees could be seen as
counterproductive, at least in part.
In conclusion, the district court held that considering “the factors in Rule
1.04(b) of the Texas Disciplinary Rules of Professional Conduct and Johnson,”
a reasonable attorneys’ fee would be $125,000.
Our review accepts the district court’s statement that it considered both
the Johnson and Texas factors. The court then adjusted the lodestar amount
after explaining the two factors it considered most relevant, that of the amount
involved in the lawsuit and the results obtained. The explanation could have
been more expansive, but it permits us to make a fair evaluation of the reasons
for the district court’s decision. The district court “sufficiently considered the
appropriate criteria.” Gagnon v. United Technisource, Inc., 607 F.3d 1036, 1044
(5th Cir. 2010). The explanation reveals a reasoned, if abbreviated, application
of the correct legal standard. See Bates, 297 S.W.3d at 838. There was no abuse
of discretion.
AFFIRMED.

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