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Click here for the full text of this decision FACTS:The Varners sold a ranch to the Cardenases in December 1997 in return for cash and a promissory note. The note provided for 10 annual installments due each December. The Cardenases paid the first installment in December 1998 but no others. In response to the Varners’ suit on the note, they alleged the ranch was 180 acres less than represented. Both parties added claims against the title insurer and its agents, which the trial court severed from the suit on the note. After a bench trial, the trial court granted judgment for the Varners but reduced the balance on the note to reflect a shortfall in acreage. The 7th Court of Appeals reversed, granting the Varners the full balance, because the Cardenases never pleaded mistake or requested reformation of the deed. Neither party appealed that ruling. The trial court also awarded the Varners $40,500 in attorneys’ fees for trial. The 7th Court of Appeals reversed, because the Varners failed to segregate fees incurred in their suit on the note from fees incurred pursuing claims against the title insurer or defending against the Cardenases’ counterclaim. HOLDING:Affirmed as modified. In 2006′s Tony Gullo Motors I LP v. Chapa, the Texas Supreme Court re-established the rule that attorneys’ fees are recoverable only if necessary to recover on a contract or statutory claim allowing the award of fees; the court also eliminated the exception for fees incurred solely on separate but arguably intertwined claims. In this case, the court agreed with the 7th Court that the Varners cannot collect attorneys’ fees incurred pursuing the title insurer from the Cardenases, because suing third parties was not necessary for the Varners to collect on their note. But the court disagreed that the Varners must segregate fees that the Varners incurred defending against the Cardenases’ counterclaim. By asserting a shortfall in acreage as a defense and counterclaim, the Cardenases sought to reduce the amount collected on the note; to collect the full amount of the note, the Varners had to overcome this defense. As efforts by the Varners’ attorneys were necessary to recover on the full amount of the contract, the fees are recoverable and need not be segregated, the court stated. The Varners also asked the Texas Supreme Court to change Texas procedure to allow postjudgment fees to be determined after appeal by remand to the trial court. But the court declined the invitation to allow two trials on attorneys’ fees when one will do. The court also noted that the 7th Court reversed the trial court’s assessment of prejudgment interest on the entire note balance beginning Dec. 15, 1998. As the note did not waive notices regarding acceleration, interest ran on unpaid installments only until acceleration occurred. While the court found that the Varners made a persuasive case that acceleration itself was uncontested, they pointed to no pleading, evidence or stipulation as to when acceleration occurred. Thus, the court could not determine as a matter of law when interest began to run on the entire note rather than just on unpaid installments. Accordingly, without hearing oral argument, the court modified the court of appeals’ judgment to the extent it required segregation of fees the Varners incurred defending against the Cardenases’ counterclaim and as modified affirmed the judgment. OPINION:Per curiam.

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