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Click here for the full text of this decision FACTS:In August 1995, Watson and Sovereign Homes Corp. (Sovereign) entered into an agreement for the sale and purchase of several lots. Neither Employers Mutual Casualty Co. (EMC) nor Highlands Insurance Co. (Highlands) was a party to the lot purchase agreement. The contract provided that Nathan A. Watson Co. (Watson) would develop a property in Arlington. The contract further provided that Sovereign would have the right to purchase a number of lots in each phase as the phases were completed and build homes on these lots. Watson was responsible under the contract for the development of the raw land, but did not play a role in the design of the homes, their foundations or the construction of those homes. Sometime later, several homes in the development began experiencing foundation problems. Sovereign, using insurance monies from its insurers Highlands and EMC, either repurchased those homes from the homeowners or made repairs. Hence, Highlands and EMC held subrogation rights regarding these monies. Sovereign, through Strauss, Highlands and EMC, filed suit against Watson and others. According to Watson, Sovereign’s uninsured claims were settled, but EMC’s and Highlands’ subrogation claims proceeded to trial. The pertinent part of paragraph 20.H. of Sovereign’s agreement with Watson requiring the nonprevailing party in a suit to enforce the contract to reimburse the prevailing party for its attorneys’ fees and costs. At trial, EMC and Highlands stipulated to the amount, reasonableness and necessity of Watson’s attorneys’ fees. At the conclusion of trial, the court submitted questions of fact to the jury. The jury responded on Sept. 1, 2005, by finding for Watson on all counts. Neither party received damages. On Nov. 18, 2005, the trial court signed the final judgment in the underlying action. In the judgment, the trial court formalized the verdict of the jury and denied Watson’s request for its attorneys’ fees and costs to be paid by EMC and Highlands, the nonprevailing parties. On Jan. 6, 2006, Watson filed a verified motion to extend the postjudgment deadlines in the trial court seeking additional time to file its notice of appeal. After a hearing, the trial court entered an order extending the deadline for Watson to file notices of appeal or other postjudgment motions until Jan. 11, 2006. Watson filed its notice of appeal on Jan. 9, 2006 involving the question of what, if anything, EMC and Highlands owed Watson under paragraph 20.H. of the lot purchase agreement. EMC and Highlands then filed their notice of cross-appeal on Feb. 28, 2006, claiming the trial court erred by extending the postjudgment deadlines. On appeal, EMC and Highlands argued that the trial court correctly denied Watson’s request for attorneys’ fees, because neither EMC nor Highlands was a party to the agreement; EMC and Highlands were subrogated to the rights of Sovereign but not its liabilities, Watson did not recover damages, which is a prerequisite for attorneys’ fees; and Watson presented no evidence of expert fees as costs. HOLDING:The court reversed and remanded on the issue of attorneys’ fees, but affirmed the trial court on the issue of postjudgment deadlines. Subrogation, the court stated, is the principle under which an insurer that has paid a loss under an insurance policy is entitled to all the rights and remedies belonging to the insured against a third party with respect to any loss covered by the policy. Citing public policy, the court held that when an insurer sues in subrogation under a contract, it is entitled to all of the rights of its subrogee and likewise exposed to all of its liabilities. An insurer/subrogee paying for a loss, the court stated, has the right to pursue its insured’s rights and remedies against the third party causing the loss. The court stated its belief that its holding would not discourage insurance companies from pursuing their subrogation rights. If the risk of being liable to pay attorney fees to the opposing side discourages a subrogee from pursuing a weak subrogation claim, the court posited, then a valid social policy has been advanced by the court’s holding. Applying its holding to the case, the court held that Watson was entitled to the $583,000 in attorneys’ fees stipulated to by the parties. The court also held that legally and factually sufficient evidence supported findings that Watson met the burdens of Texas Rules of Civil Procedure 306a(4) and (5) and that neither Watson nor its counsel received notice or actual knowledge of the judgment before Dec. 12, 2005. Accordingly, the court held that the trial court properly granted Watson’s verified motion to extend the postjudgment deadlines. OPINION:McCoy, J.; Livingston, Gardner and McCoy, J.J.

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