Commercial Metals Company et al v. S&C Electric Company et al

Filing 174

ORDER GRANTING IN PART AND DENYING IN PART 153 Motion for Attorney Fees. SMI is awarded attorneys fees in the amount of $711,051.32 plus supplemental attorneys fees in the amount of $16,436.00, for a total of $727,487.32 and expenses in the amount of $11,910.77. Signed by Judge Xavier Rodriguez. (rg)

UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF TEXAS
SAN ANTONIO DIVISION
STRUCTURAL METALS, INC.,
Plaintiff,
v.
S&C ELECTRIC COMPANY,
Defendant.

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Civil Action No. SA-09-CV-984-XR

ORDER ON ATTORNEYS’ FEES
On this date, the Court considered Plaintiff Structural Metals, Inc.’s Motion for Attorneys’
Fees and Expenses (docket no. 153), S&C’s Response in Opposition (docket no. 161), and the Reply
(docket no. 164).
I. Background
Plaintiff Structural Metals, Inc. (“SMI”) sued Defendant S&C Electric Company (“S&C”) in
state court for breach of contract, breach of express warranty in the sale of goods, breach of implied
warranty of merchantability, and breach of implied warranty of fitness for a particular purpose. S&C
removed the case to this Court on the basis of diversity jurisdiction. This Court held a jury trial on
Plaintiff’s claims in November 2012. The jury found that: (1) S&C and SMI agreed that S&C would
provide an AVC system, (2) S&C did not fail to comply with the agreement, (3) S&C made and
breached an express warranty to SMI, (4) S&C breached an implied warranty of merchantability, and
(5) S&C breached an implied warranty of fitness for a particular purpose. The jury also found that
SMI did not justifiably revoke its acceptance of the AVC System, thereby precluding recovery on

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SMI’s breach-of-contract claim. The jury awarded $306,500 in breach-of-warranty damages. The
Court entered judgment in favor of SMI based on the jury’s verdict. SMI seeks an award of
$793,696.12 in attorneys’ fees and $11,509.37 in expenses.
II. Analysis
An award of attorneys fees is governed by the same law that determines the substantive issues
of the case. Mathis v. Exxon Corp., 302 F.3d 448, 461 (5th Cir. 2002). Therefore, in this diversity
case, Texas law controls both the award of and the reasonableness of the fees awarded. Id. Texas
allows a prevailing party to recover attorneys’ fees “only if permitted by statute or by contract.” Med.
City Dallas v. Carlisle Corp., 251 S.W.3d 55, 58 (Tex. 2008). Section 38.001 of the Texas Civil
Practice and Remedies Code allows for recovery of attorneys’ fees for breach-of-contract claims.
TEX. CIV. PRAC. & REM. CODE § 38.001(8) (“A person may recover reasonable attorney’s fees from
an individual or corporation, in addition to the amount of a valid claim and costs, if the claim is for
. . . an oral or written contract.”). The Texas Supreme Court has held that this provision applies to
breach-of-express-warranty claims under the Uniform Commercial Code (“UCC”). Med. City Dallas,
Ltd. v. Carlisle Corp., 251 S.W.3d 55, 63 (Tex. 2008) (holding that an express warranty claim is
contractual in nature such that attorneys’ fees may be awarded under § 38.001(8)).1 “Under Texas
law, there is discretion to determine the amount of the attorneys’ fee award, but an award of
reasonable fees is mandatory if a party prevails . . . and there is proof of reasonable fees.” DP
Solutions, Inc. v. Rollins, Inc., 353 F.3d 421, 433 (5th Cir. 2003).

1
The First Court of Appeals has held that attorneys’ fees are recoverable for breach of implied warranty of
merchantability claims based in contract. Howard Industr., Inc. v. Crown Cork & Seal Co., --- S.W.3d ---, 2013 WL
269137 at *5 (Tex. App.–Houston [1st Dist.] 2013, no pet.). The Texas Supreme Court has not addressed the
recoverability of fees for implied warranty claims.

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The computation of reasonable attorneys’ fees involves a three-step process: (1) determine
the nature and extent of the services provided by plaintiff’s counsel; (2) set a value on those services
according to the customary fee in the prevailing market and quality of the legal work; and (3) adjust
the compensation on the basis of the other factors that may be of significance in the particular case.
See Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974); Copper Liquor, Inc.
v. Adolph Coors Co., 684 F.2d 1087, 1092 (5th Cir. 1982); El Apple I, Ltd. v. Olivas, 370 S.W.3d
757, 760 (Tex. 2012). Steps one and two result in a computation of the “lodestar” amount. Both the
hours worked and the hourly rate must be reasonable, and the Court considers only the hours spent
on the successful claims. See Hensley v. Eckerhart, 461 U.S. 424, 433-34 (1983). In the final step,
the lodestar is adjusted on the basis of the other factors enumerated in Johnson and by the Texas
Supreme Court in Arthur Andersen & Co. v. Perry Equipment Co., 945 S.W.2d 812, 818 (Tex.
1997).2 Rarely are all factors applicable, however, and a trial judge may give them different weights.
As noted, SMI pursued claims for breach of contract and breach of express and implied
warranties, was successful on all of it warranty claims, and did not recover on its breach-of-contract
claim under the UCC because the jury failed to find revocation of acceptance. For breach-of-warranty
damages, the jury awarded $306,500, reflecting the difference, at the time and place of acceptance,
between the value of the AVC system accepted and the value that the AVC system would have had
if it had been as warranted.

2

The Texas factors are virtually identical to those examined by federal courts in awarding attorneys’ fees. The
Fifth Circuit recently stated in an unpublished opinion that “[t]he issue remains open whether the twelve factors
enumerated in Johnson apply in Texas diversity cases,” citing Mid-Continent Cas. Co. v. Chevron Pipe Line Co., 205
F.3d 222, 232 (5th Cir. 2000). Maverick Industr., Inc. v. Am. Teleconferencing Servs., Ltd., No. 12-10102, 2013 WL
1799960 (5th Cir. April 30, 2013). However, the Fifth Circuit resolved this issue in Mathis, finding that state law
controls both the award of and the reasonableness of fees where state law supplies the rule of decision. The Fifth Circuit
has also held that the factors articulated Johnson, to the extent adopted by the Texas Supreme Court in Arthur Andersen,
are relevant. Quanta Servs. Inc. v. Am. Admin. Group Inc., 384 F. App’x 291, 298 (5th Cir. 2008).

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In its motion for fees, SMI submitted an adjusted lodestar calculation of $793,696.12. SMI
acknowledged that it did not prevail on its breach-of-contract claim, and removed time entries relating
solely to its revocation of acceptance theory, totaling $7,011.20, plus an additional 2% deduction
($16,197.88) to account for time spent on that issue in other time entries, for a total reduction of
$23,209.08. SMI contends that no further reduction is warranted because tasks performed were
necessary for both the contract and warranty claims. SMI further reduced its fees by eliminating
hours associated with S&C’s motion for spoliation remedy, amounting to $19,384.40. Further, SMI
notes that the lodestar amount of $793,696.12 reflects a blanket 20% reduction off each timekeeper’s
rate based on SMI’s long-standing relationship with SMI’s parent company, Commercial Metals
Company.
S&C raises a number of challenges to SMI’s fee request, including failure to plead and prove
presentment, failure to segregate fees for unsuccessful claims, failure to remove fees related to
removal and mediation, failure to remove fees for legal technology and trial media specialists, and
failure to adjust the lodestar downward to reflect a more reasonable fee.
A. Presentment
To recover attorney’s fees under Chapter 38: (1) the claimant must be represented by an
attorney; (2) the claimant must present the claim to the opposing party; and (3) payment for the just
amount owed must not have been tendered before the expiration of the 30th day after the claim is
presented. TEX. CIV. PRAC. & REM.CODE § 38.002. S&C contends that SMI failed to satisfy Chapter
38 because it did not present a demand to trigger an entitlement to fees, any demands that it did
present were excessive and therefore ineffective, and it did not plead presentment.
The presentment requirement of Chapter 38 “is to enable the debtor to pay the claim within
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the thirty days and avoid liability for attorney’s fees.” Ashford Dev., Inc. v. USLife Real Estate Servs.
Corp., 661 S.W.2d 933, 936 (Tex. 1983). The “burden of proof is on the claimant to plead and prove
presentment and failure to tender performance.” Panizo v. Young Men’s Christian Ass’n of Greater
Houston Area, 938 S.W.2d 163, 168 (Tex. App.–Houston [1st Dist.] 1996, no writ). However, no
particular form or manner of presentment is required; it may be written or oral, and all that is
necessary is that an assertion of a debt or claim and a request for compliance be made to the opposing
party, and that the party failed to pay the claim. Id. The statute is to be liberally construed to promote
its underlying purpose, but the act of filing suit is not by itself a demand within the statute. Id.
Further, “[a] creditor who makes an excessive demand on a debtor is not entitled to attorney’s fees
for litigation required to recover the debt.” Id. (citing Findlay v. Cave, 611 S.W.2d 57, 58 (Tex.
1981)).
SMI’s motion for attorney fees asserts that it presented the claim because there is undisputed
evidence that SMI made a request for its money back, and S&C did not comply. SMI points to
evidence that in January 2008 Henry Camarillo informed S&C, through Mike Seehafer (who worked
for S&C’s sales agent Fred Oberlender & Associates3), that SMI wanted its money back. Docket no.
152 Ex. B, Ex. C. SMI argues that this oral request is alone sufficient to establish presentment. See
Harrison v. Gemdrill Int’l, Inc., 981 S.W.2d 714, 719 (Tex. App.– Houston [1st Dist.] 1998, pet.
denied) (plaintiff’s statement that he wanted to collect his pay without fail held sufficient); Criton
Corp. v. Highlands Ins. Co., 809 S.W.2d 355, 358 (Tex. App.–Houston [14th Dist.] 1991, writ
denied) (“oral request for performance” held sufficient).

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S&C has admitted that Fred Oberlender and Associates was its authorized agent with respect to the sale of the
AVC system. Docket no. 90 at 10.

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S&C argues that the evidence about Camarillo stating that SMI wanted its money back is not
sufficient because Seehafer made the comment as part of a discussion about the fact that SMI was
taking the position that S&C was responsible for all the damages resulting from the December 2006
fire, and “[t]hat email did not concern the AVC Warranty Claim.” Docket no. 161 at 7. S&C notes
that Camarillo did not participate in the email communication and the email did not indicate the
amount of money that SMI was demanding to satisfy its claim. However, the fact that the email
discussion submitted as evidence did not include Camarillo does not alter the fact that it is evidence
that Camarillo informed S&C, through Seehafer, that SMI wanted its money back. No evidence
suggests that Camarillo did not do so. SMI has therefore sufficiently proven that SMI asked for its
money back.
SMI’s request for its money back satisfies the purpose of the statute to give S&C an
opportunity to pay the debt and avoid attorneys’ fees. Presentment does not have to refer to a specific
amount of damages or name a specific claim or cause of action, and does not have to be made by
counsel. Partners Lending Auto Group, LLC v. Leedom Fin. Servs., 432 F. App’x 291, 296 (5th Cir.
2011) (“The presentment also does not have to include an amount owed.”); Sunbeam Envtl. Servs.
v. Tex. Workers’ Comp. Ins. Fac., 71 S.W.3d 846, 851 (Tex. App.–Austin 2002, no pet.) (“there is
no requirement that the demand must be made by counsel” and sending is a bill is sufficient
presentment). Cf. Standard Constructors, Inc. v. Chevron Chem. Co., Inc., 101 S.W.3d 619, 627
(Tex. App.–Houston [1st Dist.] 2003, pet. denied) (“A claimant is not required to make a presentment
for the exact amount it is entitled to recover at trial.”).
SMI also contends that its written offer of settlement is sufficient presentment. SMI sent a
written settlement offer asking for $772,071.27 to release all pending claims on March 19, 2010,
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which S&C rejected. S&C argues that the settlement demand is insufficient because it sought an
excessive amount and was “not a presentment of the AVC Warranty Claim, for which the maximum
SMI could recover would be $306,500, the price it paid to S&C.” S&C asserts that, “[i]n short, SMI
never made a demand on the AVC Warranty Claim.”4 S&C also argues that it is not liable for fees
because SMI’s demands were excessive.
However, a demand is not excessive simply because it is greater than that which a jury later
determines is actually due, especially where the amount due is unliquidated. Panizo, 938 S.W.2d at
169 (settlement demand of $125,000 not excessive even though jury awarded only $1,000). Although
the purchase price of the AVC units was liquidated, SMI was seeking damages for costs related to
purchasing the AVC units and the other parts of what it characterized as the AVC System. In that
regard, SMI asserted that it was entitled to recover its expenses related to the purchase of the other
components of the “AVC System” and damages related to the failure of the system to function and
the December 2006 fire. SMI was also seeking incidental and consequential damages at that time.
See Second Am. Compl. (docket no. 28) at 8 (listing incidental and consequential damages for breach
of contract and/or warranty in the amount of $465,571.27).5

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S&C also contends that SMI’s demands during mediation were unreasonable and excessive because SMI
sought close to $1 million and “[t]he AVC Warranty Claim could never have entitled SMI to $1 million.” S&C asserts
that, “when SMI indicated that it would not accept anything less than $1 million, SMI made it clear to S&C that it would
not have accepted $306,500, thereby excusing S&C from tendering that amount.” Docket no. 161 at 8. However, the
question is whether SMI presented its claim in 2008 or 2010 such that S&C had an opportunity to pay within 30 days
of that presentment. SMI’s conduct during mediation in 2011 is not relevant to the inquiry. In addition, S&C never
offered $306,500. See Interstate Highway Constr., Inc. v. Laco Turf & Seeding, Inc., Civ. A. No. 07-05-200, 2006
WL994782, at *4 (Tex. App.–Amarillo 2006, no pet.) (noting that defendant claiming that amount was excessive never
offered to pay amount actually due). And S&C has not shown that, had it tendered payment of the $306,500 purchase
price in 2008 when SMI asked for its money back, it would have been refused. See Denta Rama, Inc. v. Lavastone
Industr. of Central Tex., 597 S.W.2d 507, 509 (Tex. Civ. App.–Dallas 1980, no writ) (“Testimony that appellee was
insisting on payment of the entire amount is not equivalent to evidence that a tender of the correct amount due would
have been refused.”).
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The total amount of damages SMI sought for the contract or warranty claims was the same.

7

The dispositive inquiry for determining whether a demand is excessive is whether the claimant
acted unreasonably or in bad faith. Panizo, 938 S.W.2d at 169. There is no evidence that SMI’s
demands were made in bad faith. See Standard Constr. v. Chevron Chem., 101 S.W.3d 619, 627-28
(Tex. App.–Houston [1st Dist.] 2003, pet. denied) (“[W]e cannot conclude that Chevron’s conduct
in making its initial demand of $531,424 and subsequently proceeding to trial solely on its claim for
$97,784 constituted bad faith as a matter of law.”).
S&C also contends that SMI failed to plead presentment in its Complaint. As the Fifth Circuit
noted in Partners Lending, it has “previously found that even though a party failed to cite Chapter
38 in its amended complaint, it may still recover fees under that statute if it clearly presented a claim
for attorney’s fees.” Id. (citing Enserch Corp. v. Shand Morahan & Co., Inc., 952 F.2d 1485, 1501
(5th Cir. 1992)). Further, SMI adequately pled presentment by invoking Chapter 38, by alleging that
all conditions precedent to its right to recovery for breach of contract and/or breach of warranty have
been performed, and by alleging that all necessary notices required as a predicate to SMI’s recovery
of attorney’s fees had been given. See Shin-Con Dev. Corp. v. I.P. Inv., Ltd., 270 S.W.3d 759, 768
(Tex. App.–Dallas 2006, pet. denied) (“[W]hen a claimant avers in its petition that all conditions
precedent to recovery have occurred or have been performed, it is required to prove only those
conditions precedent that have specifically been denied by the opposing party.”). Therefore, the Court
concludes that SMI complied with 38.001 and adequately pled presentment.
B. Segregation of Fees between Successful and Unsuccessful Claims
S&C argues that SMI must reduce its fees for work spent on its unsuccessful “fire claim” and
“system claim.” S&C also contends that additional reductions are necessary for the spoliation and
revocation issues.
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1. “Fire Claim” and “System Claim” Fees
S&C argues that, rather than confining this case to a breach-of-warranty claim related to the
two AVC units, SMI expanded the litigation by asserting that S&C designed and warranted an entire
AVC System that included the transformers, building, and air conditioning units; caused the
December 2006 fire that destroyed the system; breached a contract and various warranties related to
the AVC system; and was liable for $772,071.27 instead of $306,500.
S&C contends that SMI transformed what could have been a simple case into an “an
exaggerated and complicated one” that “S&C had no choice but to spend more than three years of
contentious litigation disputing that its exposure was and could only be limited to the sale of the two
AVC units.” Docket no. 161 at 2. S&C argues that the jury “saw right through” SMI’s arguments
and concluded that S&C sold and warranted only the two AVC units and did not cause the fire.
Therefore, S&C argues, the fee award should be reduced by amounts spent on the unsuccessful “fire
claim” and “system claim.” Because S&C admitted to selling the two AVC units and admitted that
they experienced overheating and temperature issues, S&C argues that the only issue that needed to
be litigated was whether those facts amounted to a breach of warranty and, if so, how SMI was
damaged. Accordingly, S&C asserts, only legal work necessary to prosecute the limited “AVC
Warranty Claim” is recoverable.
“[I]f any attorney’s fees relate solely to a claim for which such fees are unrecoverable, a
claimant must segregate recoverable from unrecoverable fees.” Tony Gullo Motors, I, L.P. v. Chapa,
212 S.W.3d 299, 313 (Tex. 2006). “[I]t is only when discrete legal services advance both a
recoverable and unrecoverable claim that they are so intertwined that they need not be segregated.”
Id. at 313-14. This standard does not require more precise proof for attorney’s fees than for any other
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claims or expenses, and does not require separate time records for different claims. Id. at 314.
With regard to the “fire claim,” S&C argues that all work relating to SMI’s expert E.P.
Hamilton and S&C’s two experts, the causation section of S&C’s first motion for summary judgment,
and third party discovery relating to the insurance investigation, totaling $98,558.80, is not
recoverable because SMI lost on this issue. In response, SMI notes that S&C argued that it was SMI’s
faulty installation of the cables that caused the fire, and that all of SMI’s damages were a result of that
fire as opposed to any problem with the AVC units. The parties disputed the cause of the fire and
S&C’s responsibility for the fire before and during the litigation, and the cause of the fire was directly
relevant to SMI’s claim for damages. The jury was instructed that, to award damages for breach of
warranty, the damages had to be proximately caused by the breach. Docket no. 123. Had the jury
accepted S&C’s argument that the fire caused all of SMI’s damages and that only SMI was
responsible for the fire, it would not have awarded any damages for breach of warranty. Therefore,
SMI did not lose on the issue of the cause of the fire, and litigation of that issue was necessary for
SMI to recover its damages on its warranty claims.
S&C contends that fees expended in SMI’s pursuit of its claim that S&C sold and warranted
an “AVC System” that was greater than simply the two AVC units cannot be recovered. S&C asserts
that there are several tasks and categories of fees that relate only to the “system claim” – discovery
of the third parties who provided other parts of the system; SMI’s two experts who opined about air
conditioning (Goodwin and Grady); the breach-of-contract section of S&C’s first motion for summary
judgment; the motion for reconsideration on summary judgment entered for S&C; the third
amendment of the complaint; all discovery relating to the third amended complaint; and S&C’s
second motion for summary judgment. S&C argues that those tasks, which amount to $103,348.40
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of the claimed fees are not recoverable.
SMI argues that it asserted and won on its breach-of-warranty claims, and that segregation
based on separate theories of the same cause of action is not required. Solar Soccer Club v. Prince
of Peace Lutheran Church of Carrollton, 234 S.W.3d 814, 829 n.2 (Tex. App.–Dallas 2007, pet.
denied); Flagship Hotel, Ltd. v. City of Galveston, 117 F.W.3d 552, 565 & n.6 (Tex. App.–
Texarkana 2003, pet. denied) (“Courts examine segregation based on whether different causes of
action have similar elements and arise out of the same set of circumstances. They do not examine
whether the different theories of the same cause of action need to be segregated.”). SMI argues that
its claim was for breach of warranty, and the fact that it did not recover the full amount of damages
it requested for that claim is not a basis for segregation. SMI further contends that it is not clear that
the jury rejected SMI’s argument that S&C sold and warranted the entire “AVC System” because the
jury could have determined that, although S&C warranted the entire system, parts of the system
retained some value, and thus the appropriate sum of damages should be the purchase price of the
AVC units.
The Court agrees with SMI that it is entitled to fees with regard to legal services that advanced
its breach of warranty claim, even if it did not achieve full success on that claim, such that segregation
in this regard is not required. S&C’s arguments are more properly evaluated under the reasonableness
factors, specifically the degree of success obtained.
2. Spoliation and Revocation of Acceptance Fees
S&C contends that an additional $4,380 should be removed relating to the spoliation issue and
an additional $2,740.80 relating to the revocation issue.
With regard to spoliation, S&C challenges 10.2 hours billed by Cano, 1 hour by Jefferson, and
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1 hour by Graham. S&C does not specify which specific entries it finds objectionable, other than
citing to a monthly invoice, and the Court is unable to identify the entries or how they relate to
spoliation without more information. Therefore, the Court will not reduce fees beyond the 51.7 hours
that SMI has already reduced them.6 With regard to the 1 hour billed by Graham, SMI contends that
this time is recoverable because SMI opposed a bad faith instruction related to the loss of the cable,
and the Court did not include the instruction. The Court finds that Graham’s time is recoverable.
With regard to the revocation of acceptance issue, S&C asserts that the fee should be reduced
by 2.5 hours billed by Cano and 5.9 hours billed by Crozier. SMI responds that Ms. Crozier
researched issues related to contract formation that did not relate solely to SMI’s revocation of
acceptance theory. The time entries (at A2-000152) reflect that Ms. Crozier researched issues of
contract formation that supported both the recoverable warranty claim and the nonrecoverable
contract claim (and did not relate solely to revocation), such that these fees are recoverable.
As to Ms. Cano’s hours, SMI notes that S&C failed to specify which 2.5 hours of Ms. Cano’s
time it finds objectionable, and asserts that all of her billed time for that month is recoverable. S&C
cites only the bill for the month of November 2012, which included the trial of this case and has
numerous entries. Nevertheless, the Court has identified an entry for Ms. Cano on November 14 that
includes an unspecified amount of time for “review and revise bench brief re: revocation of
acceptance issues” and “attention to filing bench brief.” The total entry for November 14, a trial day,
is for 18 hours. S&C notes that SMI did not segregate its fees or bills (though it was not required to),
and that it was necessary to estimate the amount of time spent on various tasks in some instances.

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SMI’s Reply asserts that it reduced fees overall by 2% to address both the revocation and spoliation issues.
Docket no. 164 at 16. However, Jefferson’s affidavit states only that the 2% reduction was attributed to revocation of
acceptance.

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However, the bench brief on revocation is only three pages long and was filed at 8:12 a.m. on
November 14. Therefore the Court concludes that the 2.5 hour estimate is excessive. Moreover, SMI
has already reduced its fees by 2% of the total request to ensure that all time related to the revocation
issue was removed. The Court finds that this is sufficient, and no further reduction is warranted.
Tony Gullo Motors, I, L.P. v. Chapa, 212 S.W.3d 299, 314 (Tex. 2006) (stating that an opinion
regarding percent of time spent on nonrecoverable claim is sufficient for segregation).
C. Costs of Mediation
S&C argues that the attorneys’ fees related to mediation ($18,682) are not recoverable because
S&C opposed the mediation and SMI took an unreasonable position at the mediation by refusing to
accept anything less than $1 million to settle. SMI filed a motion for referral to mediation on July
21, 2011. S&C opposed, asserting that SMI was unwilling to settle for less than its entire demand,
and arguing that mediation would not be fruitful. The Court denied the motion. However, the Court
later reconsidered. On October 5, 2011, the Court noted that additional time was needed for complete
briefing of pending motions before the scheduled pretrial conference, and ordered a continuance of
the trial. In the interim, the parties were ordered to mediate no later than December 12, 2011. The
Court ordered that “[t]he costs of mediation are to be divided and borne equally by the parties.”
Docket no. 57.
The parties do not cite any helpful case law discussing the availability of fees incurring during
mediation, especially when mediation was opposed.7 In this case, SMI sought mediation over S&C’s
opposition, and although the Court’s order spoke only to the costs of mediation, its intent was that

7

SMI cites one case in which fees were apparently awarded, but the decision contains no analysis or discussion
of the issue. Edwards v. Aaron Rents, Inc., 482 F. Supp. 2d 803, 809 (W.D. Tex. 2006).

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each party would bear its own attorneys’ fees associated with the mediation. Accordingly, the Court
does not award fees ($18,682) incurred in the mediation.
D. Fees Associated with Removal
S&C argues that SMI’s fees associated with removal are not recoverable. S&C argues that
SMI initially filed suit in state court and fraudulently joined its parent company, Commercial Metals,
and S&C’s sales agent, Fred Oberlender & Associates, to destroy diversity jurisdiction. S&C
removed on the basis of diversity, asserting that Commercial Metals and Fred Oberlender were
improperly joined. After removal, S&C and Fred Oberlender filed a motion to dismiss Commercial
Metals as a plaintiff and Fred Oberlender as a defendant. SMI then filed an Amended Complaint that
dropped Commercial Metals as a plaintiff and Fred Oberlender as a defendant, and filed a response
to the motion so stating. S&C argues that $4,391.20 in fees attributable to the removal, the motion
to dismiss, and SMI’s first amended complaint are not recoverable.
There is no indication that SMI joined its parent company or Fred Oberlender in bad faith or
to preclude removal. After removal, SMI did not file a motion to remand, but instead investigated
its options and voluntarily amended its complaint to remove the non-diverse parties. There is no basis
for denying fees in relation to the removal.
E. Administrative/Legal Technology Specialist Fees
S&C argues that $63,962.80 in administrative fees relating to electronic discovery, database
maintenance, computer loading, and trial graphics are not recoverable because these are not
reasonably incurred attorneys’ fees.
The term “attorney’s fee” has historically included fees for paralegal services. Richlin Sec.
Serv. Co. v. Chertoff, 553 U.S. 571, 582 (2008). Under Texas law, compensation for a paralegal or
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legal assistant’s work may be included in the award for attorneys’ fees if the paralegal or legal
assistant performed work that has traditionally been done by an attorney and the assistant is qualified
through education, training, or work experience to perform substantive legal work. Gill Sav. Ass’n
v. Int’l Supply Co., 759 S.W.2d 697, 702 (Tex. App.–Dallas 1988, writ denied); see also Vela v. City
of Houston, 276 F.3d 659, 681 (5th Cir. 2001) (“Paralegal work can only be recovered as attorney’s
fees if the work is legal rather than clerical.”). Therefore, “[w]hen obtaining payment for work done
by paralegals or legal assistants, Texas courts have required [specific] information, such as: (1) [T]he
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, Ltd. v. Olivas, 370 S.W.3d 757, 763 (Tex. 2012).
Jefferson’s affidavit states that Haynes & Boone employed “highly skilled legal technology
specialists who assist[ed] with document production.” Docket no. 153-1 at 6. The team included:
DiAnna Gaeta ($172-$180), Elsa Gil ($92), Randal Girouard ($236), Wanda Johnson ($92), Kathleen
Miles ($172), Sandra Smith ($136-$144), and Shelley Watts ($180).8 Jefferson states that, “[m]uch
like traditional legal assistants, the individuals identified above performed substantive work under
my direction related to electronic production in this matter, a critical component of modern discovery
practices.” Id. at 7. In addition, SMI’s motion states that it seeks recovery for only those hours
during which support staff performed substantive legal work. However, reviewing the time entries,
it appears that much of this work was not of the type traditionally done by an attorney. Even

8

In its objections, S&C also identifies time entries from Kenny Truong, and Lam Phan. There is no information
regarding these individuals’ job titles or qualifications.

15

assuming the work performed by these individuals was substantive legal work, however, SMI has
failed to demonstrate their qualifications by training or experience to perform such substantive legal
work. All Seasons Window & Door Mfg., Inc. v. Red Dot Corp., 181 S.W.3d 490, 504 (Tex.
App.–Texarkana 2005, no pet.) (excluding legal assistant fees where there was no evidence other than
the hourly rate and hours expended); Clary Corp. v. Smith, 949 S.W.2d 452, 469 (Tex.App.–Fort
Worth 1997, pet. denied) (affirming trial court’s exclusion of legal assistant fees where there was no
evidence as to the assistant’s qualification through education, training, or work experience to perform
substantive legal work). Therefore, recovery of fees for work performed by these legal technology
specialists is not allowed.
S&C also contests SMI’s recovery of costs for 52.99 hours of services performed by Michael
Brockwell in April 2012 and 133.4 hours10 in November 2012. S&C argues that “the time for a

9

This includes time entries for 3.90 hours for “create digital video deposition database; synchronize depositions
of Seehafer, Suggs, Jones, Dyer, and Becker; create electronic exhibit database for use in trial”; 6.5 hours for “update
digital video database with deposition of Sember; troubleshoot vendor issues regarding Sember deposition; review of
trial exhibits”; 5.3 hours for “update digital video database with deposition of Tim Qualheim; review trial exhibits;
review Plaintiff’s Third Amended Complaint, Joint Pre-Trial Order and exhibit lists”; 6 hours for “review pleadings;
review and refine digital exhibit databases; review and compile designations for use in excerpt creation”; 7.1 hours for
“prepare digital video excerpts of designations for use in trial”; 5.3 hours for “prepare digital video excerpts for use in
trial; review and refine digital exhibit databases”; .8 hours for “consult with trial team regarding multimedia equipment
setup”; 1.2 hours for “consult with trial team regarding multimedia setup and trial logistics”; 6.4 hours for “create
deposition excerpts of Mr. Seehafer, Mr. Suggs, and Mr. Qualheim; consult with trial team regarding trail logistics”; 8.4
hours for “create video excerpts of Mr. Sember and Mr. Becker; create digital exhibit database of trial exhibits”; 2 hours
for “prepare multimedia equipment for use in trial; revise and refine digital trial exhibit database; create video excerpts
of Mr. Jones.”
10

This includes time entries for 10 hours for “prepare multimedia equipment for trial; create video deposition
excerpts for use in trial; refine digital exhibit database; consult with Ms. Cano regarding opening statements and trial
strategy”; 8.9 hours for “setup multimedia equipment in courtroom; create video deposition excerpts for use in trial;
refine digital exhibit database; graphic design of Opening Statements”; 7.7 hours for “review and refine video deposition
excerpts; refine digital exhibit database; graphic design of Opening Statement; consult with trial team regarding trial
strategy”; 8.1 hours for “consult with Ms. Cano regarding opening statements; refine digital exhibit database; prepare
for examination of Mr. Camarillo; prepare for Voir Dire; refine digital video deposition excerpts for use in trial”; 13.6
hours for “trial; consult with trial team regarding trial strategy; prepare deposition of Mr. Sember for use in court”; 12.2
hours for “trial; consult with trial team regarding trial strategy; prepare videotape depositions for use in trial”; 16.4 hours
for “trial; consult with trial team regarding trial strategy; prepare videotape depositions for use in trial”; 10 hours for
“trial; consult with trial team regarding trial strategy”; 13.2 hours for “trial; consult with trial team regarding trial

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person to assist with graphics at trial is not necessary to the litigation of the AVC Warranty Claim and
should not be recovered.” Jefferson states in his affidavit that Brockwell is a “trial services specialist
with 16 years of experience in multimedia presentation and litigation consulting” and he bills at $176
per hour. SMI argues that it is more economical to use a media specialist as opposed to an attorney
for these tasks. However, a review of the time entries indicates that much of Brockwell’s work was
not substantive legal work. Even if it was substantive legal work, SMI has not sufficiently
demonstrated that he was qualified to perform substantive legal work. The Court will disallow the
requested fees.
Accordingly, the Court will not award $63,962.80 in fees for work performed by SMI’s
technology and trial services specialists.
F. Adjusted Lodestar
1. Hourly Rates
To determine the adjusted lodestar amount, the Court must multiply the hours spent by
counsel and legal assistants on the case by a reasonable hourly rate for the work performed. El Apple,
370 S.W.3d at 759. “Hourly rates are to be computed according to the prevailing market rates in the
relevant legal market, not the rates that lions at the bar may command.” Hopwood v. Texas, 236 F.3d
256, 281 (5th Cir. 2000) (quotations and citation omitted); Blum v. Stenson, 465 U.S. 886, 895 (1984)
(the reasonable hourly rate is based on “the prevailing market rates in the relevant community”).
Further, “the burden is on the applicant to produce satisfactory evidence . . . that the requested rates
are in line with those prevailing in the community for similar services by lawyers of reasonably

strategy”; 8.5 hours for “consult with trial team regarding trial strategy; prepare for following trial day”; 14.4 hours for
“trial; consult with trail team regarding closing arguments; prepare closing arguments”; and 10.4 hours for “trial; closing
arguments; strike multimedia equipment from courtroom and prepare for transit.”

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comparable skill, experience and reputation.” Blum, 465 U.S. at 896 n.11.
Lamont Jefferson, a partner with almost thirty years of experience practicing as a litigator in
San Antonio, billed at an hourly rate of $432 in 2009 and $452 from 2010 to 2013. Emma Cano, who
graduated law school in 2002 and was at the time a senior associate, billed at an hourly rate of $344
in 2009 and $360 from 2010 to 2013. Polly Graham, who graduated law school in 2008 and is an
appellate associate, billed at an hourly rate of $256 to $280. Phillip Philbin, a partner, provided
“discrete case assessment services in this matter at a discounted hourly rate of $532.” Rode Moore,
a fourth or fifth year litigation associate, assisted with preliminary legal research at a discounted rate
of $296. Brenna Nava, a third or fourth year litigation associate, also assisted with preliminary legal
research at a discounted rate of $280. Christina Crozier, an appellate associate with over seven years
experience, provided services related to the jury charge at a discounted rate of $312. Jefferson attests
that their rates are within the range of usual and customary rates charged by other partners and
associates with similar experience in large law firms in San Antonio for similar work.
S&C does not object to the requested hourly rates. The Court takes judicial notice of the State
Bar of Texas, Department of Research & Analysis, 2011 Hourly Fact Sheet, which reflects median
hourly rates by category. The Fact Sheet reflects that an attorney with Jefferson’s experience charges
a median hourly rate of $268, that the median rate for business litigation is $247 ($241 in San
Antonio), and that the hourly rates for large firms are $392 to $418. Accordingly, the Court finds that
the attorney rates are a bit higher than the prevailing market rates for San Antonio and would adjust
the rates downward by 10%. However, Jefferson’s hourly rates have already been discounted by 20%

18

such that no further adjustment is necessary.11 With regard to the other attorneys, the Court similarly
finds that the hourly rates, already reduced by 20%, are reasonable.
With regard to litigation support staff, Theresa Grimmett ($160) is a paralegal with 23 years
of litigation experience; Jennifer Villarreal ($144) is a paralegal with 12 years of experience; and
Melissa Wilson ($60) is a legal assistant with 16 years of experience. Jefferson states that the hourly
rates charged for these individuals is within the range of usual and customary rates for legal support
personnel at large law firms in San Antonio. The Court takes judicial notice that the State Bar of
Texas Legal Assistant Division has surveyed its membership, and the median hourly rate for a
paralegal has been found to be $107. District courts in Texas have held that paralegal hourly rates
of $125 are reasonable. Richardson v. Tex-Tube Co., 843 F. Supp. 2d 699, 709 (S.D. Tex. 2012)
Gromer v. Mack, No. 3:11-CV-0682-D, 2012 U.S. Dist. LEXIS 847, at *3-5, 2012 WL 28835 (N.D.
Tex. Jan. 4, 2012); see also Chapman v. A.S.U.I. Healthcare & Dev. Ctr., Civ. A. No. H-11-3025,
2013 WL 487032, at *8 (S.D. Tex. Feb. 6, 2013) (finding a rate of $175 reasonable for a senior
paralegal in Houston). Therefore, the $60 rate for Wilson is reasonable. Because the paralegal’s
hourly rates have already been reduced by 20%, the Court finds that no further reduction of
Grimmett’s or Villarreal’s rate is warranted.
The Court therefore finds that the hourly attorney and paralegal rates are reasonable as billed.
2. Adjusted Lodestar
The Court has sustained S&C’s objections to fees incurred in the mediation ($18,682) and fees

11

As noted, Haynes & Boone gave SMI a blanket 20% reduction in fees. When listing hourly rates, Jefferson’s
affidavit gives discounted hourly rates for Philbin, Moore, Nava, and Crozier. It does not state that the hourly rates for
Jefferson, Cano, or Graham are discounted. Therefore, the Court has the understanding that the rates listed for these
attorneys (and the paralegals) are not discounted. If they are discounted, SMI should so inform the Court so that it may
consider whether adjustments are necessary.

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billed for work performed by legal technology and media specialists ($63,962.80). After deducting
these amounts, the adjusted lodestar is $711,051.32. The Court also finds that SMI’s attorneys
exercised billing judgment.
G. Reasonableness of Fees/ Additional Factors
The Court next considers the additional factors (to the extent they were not already considered
in the lodestar calculation) listed in Johnson and Arthur Andersen for determining the reasonableness
of a fee.
a. time, labor, and skill required and the novelty and difficulty of the questions involved
This case was litigated over roughly three years and included substantial discovery (including
24 depositions and 5 expert reports). The parties also filed several opposed motions, including a
motion for spoliation remedy, an opposed motion for leave to amend the answer, two motions for
summary judgment, a motion to reconsider order on summary judgment, and a motion to limit expert
testimony. This case was tried to a jury over a two-week period. Although not especially complex
or novel, the case did raise some difficult legal issues, including choice-of-law, application of the
UCC to mixed goods and services contracts, and the relationship between warranty and contract
claims. In addition, the case involved technical factual issues requiring expert testimony. Litigation
of this matter required skilled attorneys with experience in commercial litigation.
b. preclusion of other employment by the lawyer
SMI asserts that its attorneys and support staff spent a total of 2729 hours working on this case
to the exclusion of doing work for other clients.
c. the amount involved and the results obtained
SMI asserts that it prevailed on three different causes of action for breach of express and
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implied warranties, and the mere fact that its requested fees exceed the damages award should not be
decisive. SMI contends that this factor may be considered, but a low damages award alone should
not lead the district court to reduce the fee award. Hollowell v. Orleans Reg’l Hosp., 217 F.3d 379,
392 (5th Cir. 2000). SMI argues that Texas appellate courts routinely affirm the award of fees
exceeding damages. See Hoover v. Slovacek, LLP v. Walton, 206 S.W.3d 557, 563 n.8 (Tex. 2006)
(“it is not uncommon for courts to approve fee-shifting awards that exceed the damages recovered
by the client”). SMI also points to Meineke Discount Muffler v. Jaynes, 999 F.2d 120, 126 (5th Cir.
1993), in which the Fifth Circuit affirmed an award of $564,748 in fees with a damages award of
$10,420 because plaintiff had justified its hours with detailed time sheets and expense records and
the district court conducted the appropriate analysis.
S&C argues that this factor is the most important factor in determining reasonableness, that
the fee should be adjusted downward to be more in line with the results obtained, and that a
reasonable award would be approximately $200,000.
The Fifth Circuit discussed this issue in the diversity context in Quanta Services, Inc. v.
American Administrative Group, 384 F. App’x 291, at *5 (5th Cir. 2008):
While the amount of damages that a plaintiff recovers is certainly relevant to
the proper award of attorney’s fees, it “is only one of many factors that a court must
consider when calculating an award of attorneys’ fees.” Saizan v. Delta Concrete
Prods. Co., 448 F.3d 795, 803 n.42 (5th Cir. 2006) (citation omitted). But see
Northwinds Abatement, Inc. v. Employers Ins. of Wausau, 258 F.3d 345, 354 (5th Cir.
2001) (noting that the “degree of success obtained” by a prevailing plaintiff is the
“most critical factor” in determining an award of attorney’s fees). Under Texas law,
disproportion alone will not render an attorney fee award excessive. See Northwinds,
258 F.3d at 355 (citing Gorman v. Countrywood Prop. Owners Ass’n, 1 S.W.3d 915
(Tex. App.–Beaumont 1999, pet. denied)); Saizan, 448 F.3d at 803 (noting that “there
is no per se proportionality rule”). Indeed, Texas appellate courts have found awards
reasonable even in situations where the amount of attorney’s fees far surpasses the
amount of actual damages. See, e.g., Bencon Mgmt. & Gen. Contracting, Inc. v.
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Boyer, Inc., 178 S.W.3d 198, 209-10 (Tex. App.-Houston [14th Dist.] 2005, no pet.).
d. the nature and length of the professional relationship with the client
Haynes & Boone has represented SMI’s parent company, Commercial Metals Company, in
numerous matters of the course of nearly 30 years.
e. whether the fee is fixed or contingent on results obtained or uncertainty of collection before
the legal services have been rendered
This case was not a contingency case and did not involve a risk factor.
SMI contends that, based on all of these factors, the lodestar should not be adjusted any
further. The adjusted lodestar is $711,051.32. The Court finds that the lodestar amount is reasonable
and that none of the factors, including the degree of success obtained, requires further reduction of
the lodestar amount.
H. Supplemental Request for Fees
In its reply, SMI includes a supplemental request for fees incurred after its initial request was
submitted, and seeks $24,741.60 in additional fees. Docket no. 164 at 19. SMI includes its time
records and an affidavit by Jefferson attesting to their reasonableness. The Court has reviewed the
time entries and has: removed entries relating to an un-filed motion to reopen and expedite discovery
to obtain information on S&C’s attorneys’ fees (removing 7.6 hours billed by Graham, for a total of
$2,584); removed 1 hour in association with preparation of an estimate of future appellate fees
(removing 1 hour billed by Graham, for a total of $340); removed .5 hours billed by Grimmett to draft
a motion to substitute document (for a total of $94); removed fees related to the appeal (removing .9
hours billed by Cano; .8 hours billed by Graham, and .2 hours billed by Grimmett, for a total of
$687.60). The Court has further reduced Graham’s hourly rate for her remaining entries from $425
22

to $300 as a more reasonable fee for a fifth-year associate in the community (removing $4,600).
Accordingly, the Court awards additional fees in the amount of $16,436.00.
I. Conditional Fees for Appeal
SMI seeks conditional appellate fees. S&C asserts that this request should be denied and SMI
can apply for such appellate fees if and when they are incurred if SMI is successful on appeal. SMI
replies that, although it is entitled to a conditional award, it would not object if the court granted leave
to file a supplement motion for fees if and when it prevails on appeal. Accordingly, the Court will
not award conditional fees for appeal. See Edwards v. Aaron Rents, Inc., 482 F. Supp. 2d 803, 814
(W.D. Tex. 2006). In the interest of judicial economy, this Court will deny the request for conditional
appellate fees without prejudice to SMI requesting such fees at a later time.
J. Online Legal Research Expenses
SMI seeks $11,509.37 in “reasonable charges for computerized legal research” in its original
motion and an additional $401.40 in it supplemental request. Courts have held that, if such fees are
normally charged to the client, the court may award computer-assisted research costs as part of its
attorneys’ fees award. See, e.g., Arbor Hill Concerned Citizens v. County of Albany, 369 F.3d 91, 98
(2d Cir. 2004) (listing cases); Camargo v. Trammell Crow Interest Co., 318 F. Supp. 2d 448, 451
(E.D. Tex. 2004) (listing cases and awarded fees); In re Frazin, 413 B.R. 378, 436 (Bkr. N.D. Tex.
2009) (allowing cost of reasonable computerized legal research as attorneys’ fees under Chapter 38).
The rationale is that allowing such fees ultimately results in a lower fee award because the attorney
should be able to do the research more efficiently. Frazin, 413 B.R. at 436. S&C has not objected
to an award of these expenses as part of the fee, and the Court therefore awards them, for a total of
$11,910.77.
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Conclusion
SMI’s motion for attorneys’ fees (docket no. 153) is granted in part and denied in part. SMI
is awarded attorneys’ fees in the amount of $711,051.32 plus supplemental attorneys’ fees in the
amount of $16,436.00, for a total of $727,487.32 and expenses in the amount of $11,910.77.
It is so ORDERED.
SIGNED this 19th day of July, 2013.

_________________________________
XAVIER RODRIGUEZ
UNITED STATES DISTRICT JUDGE

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