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Fee Fight Leads to Nearly Tenfold Increase in Amount Attorney Owed
Texas Lawyer
August 28, 2007
Refusing to pay $28,000 in attorney fees a decade ago has turned into a more than $250,000 headache for Houston attorney Robert S. "Bob" Bennett.
In an Aug. 16 memorandum opinion in Bennett v. Coghlan, a three-justice panel of Houston's 1st Court of Appeals affirmed an award of tens of thousands of dollars in attorney fees that lawyer Kelly Coghlan says he had to run up trying to collect attorney fees Bennett owed him.
The 1st Court's opinion laid out the following: In 1996, Bennett and Coghlan represented parties in an antitrust suit, identified in a footnote as Piggly Wiggly Clarksville Inc., et al. v. Mrs. Baird's Bakeries/Johnny B. Tucker d/b/a/ H&M Grocery, et al. v. Mrs. Baird's Bakeries Inc. in the U.S. District Court for the Eastern District of Texas, Paris Division. After the litigation in Mrs. Baird's, Coghlan sent Bennett a bill for $28,000, which Bennett refused to pay.
Coghlan, principal in Houston's Coghlan & Associates, says he and Bennett had a verbal agreement that Bennett would pay Coghlan a percentage of the attorney fees for his work on the Mrs. Baird's litigation, a class action involving numerous plaintiffs and attorneys.
"I brought in Longview Independent School District as a party to the case," Coghlan says.
Coghlan says Bennett received about $250,000 of the approximately $9 million in attorneys' fees the federal court awarded after the Mrs. Baird's litigation settled in 1996, but Bennett refused to pay Coghlan's bill for $28,000 and instead sent him a check for $5,000 on April 3, 1997. But Coghlan says he returned Bennett's check.
"He sort of gave me a tip," Coghlan says. "I took umbrage at that."
Bennett, a member of the Bennett Law Firm, declines comment about the 1st Court's opinion and refers questions to Kevin Grillo, of counsel at Hilliard & Munoz in Corpus Christi. Grillo did not return telephone calls seeking comment before presstime on Aug. 23.
As noted in Coghlan's brief to the 1st Court, Coghlan sued Bennett in the 134th District Court in Gregg County in October 1998, alleging fraud and breach of contract due to Bennett's failure to pay the fees. According to Coghlan's brief, the Gregg County suit, Kelly Coghlan and Coghlan & Associates v. Robert Bennett, settled on the eve of trial in January 2001, and the 134th District Court entered an agreed final judgment of $86,625, plus $20,000 in attorney fees and costs, against Bennett. Bennett refused to pay any part of the judgment, claiming he had no nonexempt assets, Coghlan alleged in his brief.
In September 2001, Coghlan filed an application for turnover after judgment in Harris County Court-at-Law No. 2, where then-Judge Gary Block presided. Coghlan filed the turnover action pursuant to Texas Civil Practice & Remedies Code §31.002. Under §31.002(e) of the code, the judgment creditor in an application for turnover is entitled to recover reasonable attorney fees.
"On Jan. 28, 2003, collection of $100,019 was reached, thereby satisfying the underlying judgment, but not the attorney's fees that Coghlan claimed he was owed because of the necessity of filing the turnover litigation," according to the 1st Court's opinion.
Bennett alleged in his brief to the 1st Court that Coghlan "continued to churn the file" in the turnover litigation and sought "more and more fees."
But Coghlan alleged in his brief to the 1st Court that Bennett "continually thwarted and delayed" Coghlan's collection efforts and ran up Coghlan's attorney fees. Coghlan alleged that, over the course of the turnover litigation, Bennett "repeatedly failed to answer discovery; repeatedly failed to comply with court orders; failed to honor 'promises'; necessitated 12 hearings, initiated two recusal trials; pursued a mandamus and related appellate matters against Judge Block."
As noted in the 1st Court's opinion, written by Chief Justice Sherry Radack, Bennett requested a jury trial on the issue of the §31.002 attorney fees.
After a five-day trial, a Harris County Court-at-Law No. 2 jury awarded Coghlan $125,748 in fees and an additional $26,125 in the event of an appeal to a midlevel appellate court. The award is for attorney fees that Coghlan incurred while representing himself in the turnover litigation and, according to the 1st Court's opinion, is in addition to the more than $100,000 Coghlan had collected from Bennett in January 2003 to satisfy the 134th District Court's 2001 judgment against Bennett in the underlying suit.
Coghlan noted in his brief to the 1st Court that Block, the trial court judge for the turnover litigation, signed a judgment on the jury's verdict in November 2003.
Bennett filed an appeal with the 1st Court, raising five issues, but the 1st Court affirmed the court-at-law's judgment.
HOURLY RATE
Radack noted in the 1st Court's opinion that Coghlan filed a motion for partial summary judgment on the reasonable hourly rate on which the attorney fees should be calculated and based the motion on the doctrine of judicial estoppel. According to the opinion, Coghlan argued that, based on Bennett's representation to the federal district court in the Mrs. Baird's litigation that Coghlan's "historic hourly billing rate" was $325 an hour, Bennett could not argue in the turnover litigation that Coghlan's billing rate should be less.
However, Bennett argued that a reasonable rate for an antitrust suit is different from the reasonable rate for a collection suit, Radack wrote.
As noted in the opinion, Block granted Coghlan's motion for partial summary judgment. But Radack pointed out that when the case went to trial, the jury was asked to determine the reasonable hourly rate for Coghlan in the turnover litigation and how many hours Coghlan reasonably spent for preparation and trial of that action.
Radack wrote in the opinion that the jury determined that $325 was a reasonable hourly rate for Coghlan and that he worked 378 hours in preparing the case for trial.
According to the opinion, Bennett argued that the trial judge erred in granting Coghlan's partial summary judgment motion on the judicial estoppel issue, asserting that the reasonableness of attorney fees is inherently a fact question.
Radack noted in the opinion that the Texas Supreme Court held in 2005's Progressive County Mutual Insurance Co. v. Boyd that subsequent events in the trial court can render harmless the judge's erroneous decision to grant summary judgment.
"Assuming without deciding that the trial court's grant of partial judgment on the issue of a reasonable filing rate for Coghlan was error, such error was rendered harmless when the trial court submitted the same question to the jury," Radack wrote. Justices Elsa Alcala and Jane Bland joined Radack in the opinion.
Radack noted that Bennett also argued that Block's instruction to the jury that he had entered an order finding that $325 an hour was a reasonable amount was an improper comment on the weight of evidence. But, according to the opinion, Bennett and Coghlan were given an opportunity to fully litigate the issue of Coghlan's hourly rate, and the issue was submitted to the jury without objection.
Bennett's expert, Houston solo Craig Cavalier, presented evidence at the trial on the turnover litigation that a reasonable hourly rate in a collection case would be between $75 and $110 an hour, Radack wrote in the opinion.
Cavalier declines comment and says he does not remember much about the case.
According to the 1st Court's opinion, the trial court never clearly instructed the jury that $325 was, as a matter of law, the reasonable hourly rate for Coghlan. When Bennett objected to Block's comments about the summary judgment, Block responded "OK" and then indicated he would let Bennett address the hourly rate issue. Radack noted in the opinion that Bennett never requested a clarification of that ruling or asked the trial court to instruct the jury to disregard the statement about the summary judgment.
"In addition to failing to request an instruction to disregard, Bennett makes no attempt to show that the trial court's comment was such that it could not have been rendered harmless by a proper instruction to disregard. As such, Bennett fails to show that the trial court's action 'probably caused the rendition of an improper judgment,' " Radack wrote.
The 1st Court also rejected Bennett's argument that the evidence was legally and factually insufficient to support the jury's finding that $325 was a reasonable hourly rate for Coghlan or to support the amounts awarded.
Radack noted in the opinion that Bennett also argued that the evidence was legally and factually insufficient to support the amounts the jury awarded, because a substantial portion of the attorney's fees were incurred after Bennett had paid the underlying judgment and a receiver had been appointed. "Specifically, Bennett argues that the court "should not allow [Coghlan] attorney fees for collecting attorney's fees,'" Radack wrote.
But, as noted in the opinion, nothing in §31.002(e) indicates an attorney fees must cease when the amount of the judgment is recovered and a receiver is appointed.
MORE TIME
Radack wrote that Bennett also contended Block erred by denying his motion for continuance, because Bennett had a "vacation letter" on file with the court. According to the 1st Court's opinion, Bennett filed his vacation letter on Jan. 15, 2003, to cover the week of Aug. 4, 2003. But Bennett subsequently agreed to a preferential trial setting of Aug. 4, 2003, Radack pointed out in the opinion.
"We hold that, because Bennett acted in a manner inconsistent with his reliance on the vacation letter, the trial court did not err in denying his motion for continuance based on the vacation letter," Radack wrote.
Radack noted that Bennett further argued that the trial court should have granted his motion for continuance so that he could conduct discovery. Bennett contended that a stay order Block entered about eight months before the trial prevented him from conducting discovery.
According to the 1st Court's opinion, the Dec. 8, 2002, order did not prohibit Bennett from filing any further discovery. Radack noted that Bennett did not serve any further discovery requests or notice any depositions until he filed a motion on July 21, 2003, in which he stated that the stay order stayed only "written discovery." The discovery deadlines had passed by the time Bennett filed that motion, Radack wrote.
"It looks to me that Mr. Bennett has basically snatched defeat from the jaws of victory," says Bruce Campbell, a Dallas attorney who represents lawyers in legal malpractice and disciplinary actions, referring to the fact that Bennett and Coghlan were successful in the Mrs. Baird's litigation. Campbell, a shareholder in Campbell & LeBoeuf, reviewed the 1st Court's opinion in Bennett v. Coghlan but is not involved in the case.
Campbell says that an hourly rate of $325 for a collection matter does not surprise him. However, Campbell says it looks to him that the jury in the turnover case may have been influenced by the trial judge's comments that $325 was a reasonable rate.
Whether the jury wanted to delineate a new rate for Coghlan was up to the jury, which, according to the 1st Court's opinion, received instruction from the trial court on how to evaluate the rate, Campbell says.
"I think we have to assume the jury did its job and that it evaluated the fees," Campbell adds.
Thomas H. Watkins, an Austin lawyer who frequently defends lawyers in legal malpractice cases but who is not involved in Bennett v. Coghlan, says the thing that makes this case so unusual is Bennett's request for a jury trial on the attorney fees issue after Coghlan had won a judgment against him. Asking for a five-day jury trial on attorney fees put Bennett at risk of having to pay more, says Watkins, a partner in Brown McCarroll.
Notes Watkins: "It's one of those things that if you ask for it, you'd better win."
