Intercontinental Group Partnership v. KB Home Lone Star L.P.
Intercontinental Group Partnership v. KB Home Lone Star L.P.
Dissenting Opinion
joined by Justice O’NEILL, Justice WAINWRIGHT and Justice MEDINA, dissenting.
You would hardly know it from the Court’s opinion, but the only question in this case is what the parties intended in a contract providing attorney’s fees for “the prevailing party.” In the rush to find a simple answer, the Court grabs the nearest tool at hand: federal and state laws using the same words. But legislative intent (which forms the basis of the companion case decided today
The judgment here granted the plaintiff KB Home no damages, but, as the Court admits, “nothing in the contract expressly requires that a party receive any amount of damages” before recovering its fees.
KB Home’s victory in the trial court was not Pyrrhic — that is, a victory “won at
I agree with the court of appeals that under this contract, “liability, not damages, is the appropriate indicator of which party has prevailed in litigation.”
I. “To Declare Rights Hereunder”
Texas follows “the American Rule” prohibiting recovery of attorney’s fees unless provided by contract or statute.
Attorney’s Fees. If either party named herein brings an action to enforce the terms of this Contract or to declare rights hereunder, the prevailing party in any such action, on trial or appeal, shall be entitled to his reasonable attorney’s fees to be paid by [the] losing party as fixed by the court.
Even if “prevailing party” status usually requires an award of money damages (which, as shown below, it does not), this contract precludes such an interpretation for three reasons. First, the contract provides fees for a prevailing defendant as well as a prevailing plaintiff. A defendant with no counterclaim could never recover money damages, yet under this contract would be entitled to recover its attorney’s fees anyway.
Second, the contract provides for fees in actions “to declare rights hereunder.” An action to “declare rights” is not an action for money damages; a declaratory judgment may be rendered on liability alone without any reference to damages.
Third, a party with no damages can still bring an action “to enforce the terms” of a contract. Since its earliest days, Texas law has provided that a party who has suffered no damages may still obtain nominal damages for breach of contract.
The Court says “[a] stand-alone finding on breach confers no benefit whatsoever.”
The Court avoids the parties’ contract by looking entirely to federal and state statutory law, but those laws are drafted differently. In Texas, statutory attorney’s fees for breach of contract require a monetary recovery because the statute provides for fees only when recovered “in addition to the amount of a valid claim.”
I agree that if a statute of limitations or some other affirmative defense barred KB Home’s contract claim, it could not be the prevailing party. But the judgment in such a case would declare that KB Home had no contractual rights due to that affirmative defense. By contrast, the absence of damages does not preclude a declaration
II. “Prevailing Party”
There is a another reason KB Home is entitled to attorney’s fees under this contract and this judgment: it was the “prevailing party” as that term is understood in Texas law. The contractual context here shows-the parties did not intend “prevailing party” to require damages, but the term itself would require the same conclusion regardless of context.
When looking for common and ordinary meanings of legal terms, we routinely refer to Black’s Law Dictionary,
Earlier editions of Black’s from the 1960s until the 1990s included an additional qualifier — that “prevailing party” should focus on the “main issue” in the litigation:
Prevailing party. The party to a suit who successfully prosecutes the action or successfully defends against it, prevailing on the main issue, even though not necessarily to the extent of his original contention.17
This “main issue” qualification has been adopted by 11 of the 14 courts of appeals in Texas.
The Court rejects main-issue analysis (although adopted by virtually every other Texas court) because Intercontinental’s counterclaim was not “an action to enforce the terms of this Contract.”
Oddly, the Court’s opinion today means Intercontinental was the prevailing party, even though it was the only party that breached. The Court avoids awarding Intercontinental attorney’s fees on the ground that it failed to preserve error. But future contract breakers may not make the same mistake. It is hard to see the justice in reading this common contract provision to provide attorney’s fees for the party that committed the breach.
The Court’s rule also ignores the reality that everybody incurs costs when a contract fails. Breach of contract damages include lost profits (expectancy), out-of-pocket expenses (reliance), and restitution;
The Court’s no-damages/no-fees rule is certainly easy to apply, but making life easy for judges is not a rule of contract construction.
The contract here called for attorney’s fees to be “fixed by the court,” and the trial judge awarded them to KB Home.
III. Conclusion
I agree there is little reason to encourage suits by those who have suffered no damages solely so an attorney can recover a large fee. But that is not the way litigation usually works, or what occurred here. Lost profits from a venture that failed are always hard to assess, so litigants often believe they have been damaged until a jury tells them they have not. I would not punish such litigants for failing to prove damages unless that is what their contract requires.
Markets, especially in real estate, can rise or fall substantially in a very short time. Under the Court’s interpretation, the “prevailing party” entitled to attorney’s fees may depend precisely upon those swings, not upon who was in the wrong. That may be a reasonable way to draft a statute, but that is not what the parties contracted for here. Accordingly, I would affirm the judgment of the trial court and court of appeals.
.See MBM Fin. Corp. v. Woodlands Operating Co., 292 S.W.3d 660 (Tex. 2009).
. See Feldman v. Marks, 960 S.W.2d 613, 614 (Tex. 1996) (per curiam) ("If an appellant fails to present a complete statement of facts on appeal, the appellate court must presume that the omitted portions are relevant and support the trial court’s iudgment.”); Tex.R.App. P. 34.6(c)(1).
. 295 S.W.3d at 653 (quotation marks omitted).
. Webster’s Third New International Dictionary 1855 (2002).
. 295 S.W.3d at 669.
. Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 310-11 (Tex. 2006).
. CU Lloyd’s of Tex. v. Feldman, 977 S.W.2d 568, 569 (Tex. 1998) (per curiam) ("When the relief sought is a declaratory judgment, an appellate court may properly render judgment on liability alone.”).
. See, e.g., Lubbock Mfg. Co. v. Sames, 598 S.W.2d 234, 237 (Tex. 1980); Malakoff Gin Co. v. Riddlesperger, 108 Tex. 273, 192 S.W. 530, 532 (1917); Porter v. Kruegel, 106 Tex. 29, 155 S.W. 174, 175 (1913); Raymond v. Yarrington, 96 Tex. 443, 73 S.W. 800, 804 (1903); Davis v. Tex. & P. Ry., 91 Tex. 505, 44 S.W. 822, 823 (1898); Seibert v. Bergman, 91 Tex. 411, 44 S.W. 63, 64 (1898); East Line & Red River R.R. v. Scott, 72 Tex. 70, 10 S.W. 99, 102 (1888); Stuart v. W. Union Tel. Co., 66 Tex. 580, 18 S.W. 351, 352 (1885); Moore v. Anderson, 30 Tex. 224, 231 (1867); Hope v. Alley, 9 Tex. 394, 395 (1853); McGuire v. Osage Oil Corp., 55 S.W.2d 535, 537 (Tex.Comm’n App.1932, holdings approved); see also Note, Pleading — Necessity of Damage to Cause of Action, 9 Tex. L.Rev. 111, 112 (1930) (citing cases).
. See, e.g., DiGiuseppe v. Lawler, 269 S.W.3d 588, 594 (Tex. 2008) (specific performance); Country Cupboard, Inc. v. Texstar Corp., 570 S.W.2d 70, 73-74 (Tex.Civ.App.-Dallas 1978, writ ref’d n.r.e.) (rescission).
. 295 S.W.3d at 655.
. See Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep’t of Health & Human Res., 532 U.S. 598, 605, 121 S.Ct. 1835, 149 L.Ed.2d 855 (2001); id. at 615, 121 S.Ct. 1835 (Scalia, J., concurring) (stating that "prevailing party” has "traditionally” and "invariably” meant "the party that wins die suit or obtains a finding (or an admission) of liability”).
. Tex. Civ. Prac. a Rem.Code § 38.001 (emphasis added); see MBM Fin. Corp. v. Woodlands Operating Co., 292 S.W.3d 660, 666 (Tex. 2009); Mustang Pipeline Co. v. Driver Pipeline Co., 134 S.W.3d 195, 201 (Tex. 2004) (per curiam); Green Int’l, Inc. v. Solis, 951 S.W.2d 384, 390 (Tex. 1997); State Farm Life Ins. Co. v. Beaston, 907 S.W.2d 430, 437 (Tex. 1995).
. See AG Acceptance Corp. v. Veigel, 564 F.3d 695, 701 (5th Cir. 2009) (noting the federal Declaratory Judgment Act, 28 U.S.C. §§ 2201-2202, authorizes attorney’s fees only if state substantive law provides for them); see also Camacho v. Tex. Workforce Comm’n, 445 F.3d 407, 409-12 (5th Cir. 2006) (holding Texas Declaratory Judgment Act does not represent "state substantive law”).
. See County of Dallas v. Wiland, 216 S.W.3d 344, 358 n. 61 (Tex. 2007) (addressing attorney's fees provided by 42 U.S.C. § 1988); Sw. Bell Mobile Sys., Inc. v. Franco, 971 S.W.2d 52, 55-56 (Tex. 1998) (per curiam) (addressing attorney’s fees provided by Texas Labor Code § 21.259, a statute intended to effectuate Title VII of the federal Civil Rights Act, see id. § 21.001); Grounds v. Tolar Indep. Sch. Dist., 856 S.W.2d 417, 423 (Tex. 1993) (Gonzalez, J„ concurring) (addressing attorney’s fees provided by 42 U.S.C. § 1988).
. See, e.g., Ingram v. Deere, 288 S.W.3d 886, 899 (Tex. 2009); Entergy Gulf States, Inc. v. Summers, 282 S.W.3d 433, 437-38, 441 (Tex. 2009); Guitar Holding Co. v. Hudspeth County Underground Water Conservation Dist. No. 1, 263 S.W.3d 910, 916 n. 6 (Tex. 2008); Hyundai Motor Co. v. Vasquez, 189 S.W.3d 743, 751 n. 33 (Tex. 2006); Am. Mfrs. Mut. Ins. Co. v. Schaefer, 124 S.W.3d 154, 158-59 (Tex. 2003).
. Black's Law Dictionary 1154 (8th ed. 2004) (emphasis added).
. Black's Law Dictionary 1188 (6th ed. 1990) (emphasis added); see also Black's Law Dictionary 1069 (5th ed. 1979); Black's Law Dictionary 1352 (4th ed. 1968).
. 1st: Indian Beach Prop. Owners’ Ass’n v. Linden, 222 S.W.3d 682, 696-97 (Tex.App.-Houston [1st Dist.] 2007, no pet.); Weng Enters., Inc. v. Embassy World Travel, Inc., 837 S.W.2d 217, 222-23 (Tex.App.-Houston [1st Dist.] 1992, no writ).
2nd: Taylor Elec. Servs., Inc. v. Armstrong Elec. Supply Co., 167 S.W.3d 522, 532-33 (Tex.App.-Fort Worth 2005, no pet.); Head v. U.S. Inspect DFW, Inc., 159 S.W.3d 731, 749 (Tex.App.-Fort Worth 2005, no pet.).
3rd: Lay v. Whelan, No. 03-03-00115-CV, 2004 WL 1469246, at *6 (Tex.App.-Austin July 1, 2004, pet. denied); Cysco Enters., Inc. v. Hardeman Family Joint Venture, Ltd., No. 03-02-00230-CV, 2002 WL 31833724, at *6 (Tex.App.-Austin Dec. 19, 2002, no pet.).
4th: City of Laredo v. Almazan, 115 S.W.3d 74, 78 (Tex.App.-San Antonio 2003, no pet.).
5th: Blockbuster, Inc. v. C-Span Enter., Inc., 276 S.W.3d 482, 491 (Tex.App.-Dallas 2008, pet. granted); In re M.A.N.M., 231 S.W.3d 562, 566 (Tex.App.-Dallas 2007, no pet.); Probus Props, v. Kirby, 200 S.W.3d 258, 265 (Tex.App.-Dallas 2006, pet. denied).
6th: Moore v. Jet Stream Invs., Ltd., 261 S.W.3d 412, 431 n. 15 (Tex.App.-Texarkana 2008, pet. denied); In re Estate of Bean, 206 S.W.3d 749, 764 (Tex.App.-Texarkana 2006, pet. denied).
7th: Brent v. Field, 275 S.W.3d 611, 622 (Tex.App.-Amarillo 2008, no pet.); Dean Foods Co. v. Anderson, 178 S.W.3d 449, 454 (Tex.App.-Amarillo 2005, pet. denied).
8th: Guitar Holding Co. v. Hudspeth County Underground Water Conservation Dist. No. 1, 209 S.W.3d 146, 168 (Tex.App.-El Paso 2006), rev'd on other grounds, 263 S.W.3d 910 (Tex. 2008).
12th: Robbins v. Capozzi, 100 S.W.3d 18, 27 (Tex.App.-Tyler 2002, no pet.).
13th: Pegasus Energy Group, Inc. v. Cheyenne Petroleum Co., 3 S.W.3d 112, 128 (Tex.App.-Corpus Christi 1999, pet. denied); Norrell v. Aransas County Navig. Dist. No. 1, 1 S.W.3d 296, 303 (Tex.App.-Corpus Christi 1999, pet. dism’d).
. See Cysco Enters., 2002 WL 31833724, at *6 (holding defendant was prevailing party on main issue even though jury awarded it no damages on its counterclaim).
. 295 S.W.3d at 652.
. See 218 S.W.3d 68, 69 (Tex. 2007) (per curiam).
. Restatement (Second) of Contracts § 344 (1981); see Quigley v. Bennett, 227 S.W.3d 51, 56 (Tex. 2007) (Brister, J., concurring in part and dissenting in part); Lon L. Fuller & William R. Perdue, The Reliance Interest in Contract Damages, 46 Yale LJ. 52, 56 (1936).
. I do not know what the Court means when it says the Supreme Court’s opinion in Buck-hannon “basically held 'no money judgment, no fees."’ 295 S.W.3d at 656 n. 27. The question in Buckhannon was not money judgments but collateral consequences' — whether legislative action apart from any judgment could make a litigant the prevailing party.
Opinion of the Court
delivered the opinion of the Court,
This breach-of-contract case poses a straightforward question: What does “prevailing party” mean? We have construed this phrase in a discretionary fee-
I. Background
KB Home Lone Star L.P. (KB Home), a national homebuilder, contracted with Intercontinental Group Partnership (Intercontinental), a real estate developer, to develop lots in a McAllen subdivision known as Santa Clara and sell them to KB Home. The contract provided:
Attorney’s fees. If either party named herein brings an action to enforce the terms of this Contract or to declare rights hereunder, the prevailing party in any such action, on trial or appeal, shall be entitled to his reasonable attorney’s fees to be paid by losing party as fixed by the court.
“Prevailing party” was not defined.
Intercontinental began selling Santa Clara lots to other buyers, and KB Home sued for breach of contract (among other theories) and sought specific performance, damages, injunctive relief, and attorney’s fees.
The jury found that Intercontinental breached the written contract but answered “0” on damages, though it did award KB Home $66,000 in attorney’s fees.
II. Is KB Home the Prevailing Party?
Under the American Rule, litigants’ attorney’s fees are recoverable only if authorized by statute or by a contract between the parties.
A. Applicability of Chapter 38 to KB Home’s Breach Claim
We first address the applicability of the discretionary attorney’s-fees provision in Chapter 38 of the Civil Practice and Remedies Code.
The Contract
If either party named herein brings an action to enforce the terms of this Contract or to declare rights hereunder, the prevailing party ... shall be entitled to his reasonable attorney’s fees to be paid by losing party as fixed by the court.
Chapter 38
A person may recover reasonable attorney’s fees from an individual or eor-poration, in addition to the amount of a valid claim and costs, if the claim is for ... an oral or written contract,
We held in Green International, Inc. v. Solis that before a party is entitled to fees under section 38.001, that “party must (1) prevail on a cause of action for which attorney’s fees are recoverable, and (2) recover damages.”
Parties are free to contract for a fee-recovery standard either looser or stricter than Chapter 38’s, and they have done so here. As KB Home points out, Chapter 38 permits recovery of attorney’s fees “in addition to the amount of a valid claim,” while nothing in the contract expressly requires that a party receive any “amount” of damages. The triggering event under the contract is that a party prevail in an action “to enforce the terms of this Contract or to declare rights here-under_” True enough, but the question remains: what does “prevailing party” mean under the contract?
B. Attorney’s Fees Under the Contract
.The contract leaves “prevailing party” undefined, so we presume the parties intended the term’s ordinary meaning.
[T]o qualify as a prevailing party, a ... plaintiff must obtain at least some relief on the merits of his claim. The plaintiff must obtain an enforceable judgment against the defendant from whom fees are sought, or comparable relief through a consent decree or settlement. Whatever relief the plaintiff secures must directly benefit him at the time of the judgment or settlement. Otherwise the judgment or settlement cannot be said to “affect the behavior of the defendant toward the plaintiff.” Only under these circumstances can civil rights litigation effect “the material alteration of the legal relationship of the parties” and thereby transform the plaintiff into a prevailing party. In short, a plaintiff “prevails” when actual relief on the merits of his claim materially alters the legal relationship between the parties by modifying the defendant’s behavior in a way that directly benefits the plaintiff.19
The Court concluded that the plaintiff “prevailed” in Farrar because he was awarded one dollar in damages: “A judgment for damages in any amount, whether compensatory or nominal, modifies the defendant’s behavior for the plaintiff’s benefit by forcing the defendant to pay an amount of money he otherwise would not pay.”
The trial-court judgment in today’s case recited the jury’s finding that “[t]he sum of zero dollars would fairly and reasonably compensate KB” for its damages, if any, resulting from Intercontinental’s breach, and that “[t]he sum of sixty-six thousand dollars and zero cents” constituted a reasonable fee for the necessary services of KB Home’s attorneys. The judgment continued, however:
It appearing to the Court that, based upon the verdict of the jury, KB Home Lone Star should recover its damages against the International Group Part*655 nership as found by the jury, and the Court so finds.
IT IS ACCORDINGLY ORDERED, ADJUDGED AND DECREED that KB Home Lone Star have and recover from the International Group Partnership judgment for the sum of sixty-six thousand dollars and zero cents ($66,-000.00).21
The court erred in making that award. The jury answered “0” on damages, and KB Home sought no other type of relief, so the trial court should have rendered a take-nothing judgment against KB Home on its contract claim.
It seems beyond serious dispute that KB Home achieved no genuine success on its contract claim. Whether a party prevails turns on whether the party prevails upon the court to award it something, either monetary or equitable. KB Home got nothing except a jury finding that Intercontinental violated the contract. It recovered no damages; it secured no declaratory or injunctive relief; it obtained no consent decree or settlement in its favor; it received nothing of value of any kind, certainly none of the relief sought in its petition.
As judgment should have been rendered in Intercontinental’s favor, it is untenable to say that KB Home prevailed and should recover attorney’s fees. A stand-alone finding on breach confers no benefit whatsoever.
C. Declaration of Rights?
KB Home argues that it should nonetheless recover attorney’s fees because it sued to “declare rights” under the contract and prevailed by obtaining a jury verdict that Intercontinental breached the contract. We disagree. In Southwestern Bell Mobile Systems v. Franco we noted that “[i]t is the judgment, not the verdict, that we must consider in determining whether attorney’s fees are proper.”
If KB Home had brought its breach-of-contract case and obtained favorable answers on the same “failure to comply” questions, but the jury also found that an affirmative defense barred KB Home’s claim, a take-nothing judgment in favor of Intercontinental would have been rendered. There would be no dispute that KB Home had not prevailed, despite jury findings that Intercontinental breached. No rational distinction exists between that scenario and the one before us. In both, the end result is a take-nothing judgment with no meaningful judicial relief for KB Home. Its only “relief’ in either case is the gratification that comes with persuading a jury that Intercontinental behaved badly. But vindication is not always victory. However satisfying as a matter of principle, “purely technical or de minimis ” success affords no actual relief on the merits that would materially alter KB Home’s
III. Is Intercontinental the Prevailing Party?
If KB Home “lost” by receiving no damages does that mean Intercontinental “won” by remitting no damages? We cannot reach this question if it is not properly presented, and it is not. On the record before us,
Intercontinental contends that the phrase “fixed by the court” in the contract means the trial judge, not the jury, decides the proper measure of attorney’s fees after trial ends, thus “there was no need for Defendant to have submitted a question on attorneys fees.” Reading “fixed by the court” to mean “fixed by the judge” is a straightforward construction.
In this ease, KB Home submitted the attorney’s-fees issue, like other fact issues, to the jury, not to the court, and the record contains no indication that Intercontinental objected.
Both KB Home as plaintiff on its written-contract claim and Intercontinental as counter-plaintiff on its oral-contract claim submitted an attorney’s fees question on their affirmative claims, apparently because they understood that the jury would hear evidence and decide what fee award, if any, was proper. Thus, the parties, given how they and the trial court actually tried the case, interpreted “fixed by the court” to mean that fees in this case would be determined by a court proceeding (for example, a court judgment effectuating the jury’s verdict). This reading is not unreasonable. The contract does not reserve fees specifically to the trial judge, but to the court, and both parties submitted all fact questions to the jury. In short, any reading of “fixed by the court” must be informed by the record and by how the parties chose to present fees to the jury on their respective claims.
In any case, even assuming the written contract reserved attorney’s fees exclusive
Given that both parties tried questions of breach and attorney’s fees to the jury, Intercontinental cannot be excused for failing to submit a jury question on attorney’s fees incurred in defending KB Home’s lawsuit on the written contract, or otherwise preserving the issue for appellate review.
IV. Response to the Dissent
The dissent accuses the Court of ignoring the contract’s language in order to reach an easy-to-apply answer. Nothing could be further from the truth. Since the contract leaves “prevailing party” undefined, we must do our best to effectuate the parties’ intent. We believe the most sensible interpretation is that a plaintiff prevails by receiving tangible relief on the merits.
Despite what the dissent contends, the Court is not saying a plaintiff must recover a money judgment in every breach-of-contract action. Quite the opposite. The dissent cites a variety of situations where we agree the plaintiff would “prevail”: when the plaintiff obtains rescission of the contract, specific performance, an injunction, or a declaratory judgment. Today’s decision is not grounded on the fact that KB Home received no money damages, but rather on the fact that KB Home received nothing at all.
The jury’s verdict delivered KB Home a stand-alone finding on breach, but a breach-of-contract plaintiff who seeks nothing beyond economic damages cannot receive a judgment based on breach alone.
When the relief sought is a declaratory judgment, an appellate court may properly render judgment on liability alone. In this case, however, Feldman sought no declaratory relief and no evidence of damages was submitted or considered .... Thus, the court of appeals erred in rendering judgment for Feld-man.48
Feldman was a summary-judgment case (where the plaintiff submitted no evidence of damages), and today’s case arises in a jury-verdict context (where the plaintiff submitted evidence of damages that the jury rejected), but the common thread is plain: Absent tangible relief, either monetary or equitable, a judgment on liability alone is improper. Where a party seeks only damages, as here, damages are a precondition to “prevailing.”
It is unconvincing to construe KB Home’s suit as one seeking declaratory relief. The DJA, like the contract, covers an action “to declare rights,”
The dissent contends the judgment declares the parties’ rights, but the part of the judgment the dissent quotes from merely incorporates the jury verdict. KB Home’s petition sought jury findings on breach, damages and attorney’s fees. Taken at face value, the lawsuit asks the jury to “enforce the terms of this Contract”; it does not ask the court to declare rights. Intercontinental’s attorney noted as much at a post-trial hearing, stating that “an action to enforce a contractual provision” is “exactly what we’re dealing with here.” There are cases where parties who disagree over a contract’s meaning have asked the courts to declare their respective rights,
In this insurance case, we consider whether a court of appeals may properly render judgment on a party’s liability for breach of contract without evidence of damages and when no declaratory judgment has been sought. We conclude that it cannot... ,54
Finally, the dissent resurrects an old version of Black’s Law Dictionary to define “prevailing party” as the one who prevails on the “main issue” of the case. The dissent then states there was “no doubt the main issue was defendant Intercontinental’s counterclaim,” and because the jury found for KB Home on that counterclaim, KB Home must be the prevailing party. But this analysis does precisely what the dissent accuses the Court of doing: It disregards the language of the contract.
The attorney’s-fees provision makes clear that the prevailing party is judged by “an action to enforce the terms of this Contract or to declare rights hereunder.”
Displacing the parties’ agreed-to language with the dissent’s “main issue” analysis would yield an anomalous result: Plaintiff sues for $1 million-plus, winds up empty-handed, but nonetheless “prevails.” That cannot be right. Focusing on what
Y. Conclusion
Whether seeking attorney’s fees under Chapter 38 (which impliedly requires a claimant to first recover damages)
. Green Int’l, Inc. v. Solis, 951 S.W.2d 384, 390 (Tex. 1997).
. Farrar v. Hobby, 506 U.S. 103, 111-12, 113 S.Ct. 566, 121 L.Ed.2d 494 (1992).
. MBM Fin. Corp. v. Woodlands Operating Co., 292 S.W.3d 660, 666 (Tex. 2009) (construing the attorney’s fees provision in section 38.001 of the Texas Civil Practice & Remedies Code, which specifies that attorney's fees must be "in addition to the amount of a valid claim and costs”).
. Intercontinental had sold a majority of the Santa Clara lots to other developers, so KB Home dropped its specific performance and injunctive relief claims before trial and sought only lost profits.
.Specifically, the jury was asked: "Did Intercontinental Group Partnership fail to comply with the Santa Clara Lot Contract?” and separately "What sum of money, if any, if paid now in cash, would fairly and reasonably compensate KB Home Lone Star, L.P. for its damages, if any, that resulted from such failure to comply with the Santa Clara Lot Contract?”
. MBM Fin. Corp. v. Woodlands Operating Co., 292 S.W.3d 660, 669 (“Texas has long followed the 'American Rule' prohibiting fee awards unless specifically provided by contract or statute.” (citing Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 310-11 (Tex. 2006) ("Absent a contract or statute, trial courts do not have inherent authority to require a losing party to pay the prevailing party's fees.”))).
. Tex. Civ. Prac. & Rem.Code § 38.001.
. 951 S.W.2d 384, 390 (Tex. 1997).
. See Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 662 (Tex. 2005).
. See, e.g., Dallas v. Wiland, 216 S.W.3d 344, 358 n. 61 (Tex. 2007); Sw. Bell Mobile Sys., Inc. v. Franco, 971 S.W.2d 52, 55-56 (Tex. 1998); Grounds v. Tolar Indep. Sch. Dist., 856 S.W.2d 417, 423 (Tex. 1993).
. 482 U.S. 755, 757, 107 S.Ct. 2672, 96 L.Ed.2d 654 (1987).
. Id.
. Id.
. 506 U.S. 103, 111-12, 113 S.Ct. 566, 121 L.Ed.2d 494 (1992) (reviewing attorney's fees awarded pursuant to 42 U.S.C. § 1988) (citations omitted).
. Id. at 113-14, 113 S.Ct. 566 (noting that "the prevailing party inquiry does not turn on the magnitude of the relief obtained").
. (Emphasis added).
. Cf. State Farm Life Ins. Co. v. Beaston, 907 S.W.2d 430, 437-38 (Tex. 1995) (rendering take-nothing judgment against party who recovered no damages on claim alleging violation of Insurance Code article 21.21, even assuming arguendo the party prevailed on the article 21.21 claim).
. See Helms, 482 U.S. at 760, 107 S.Ct. 2672.
. Id.
. See Farrar, 506 U.S. at 111-12, 113 S.Ct. 566.
. See id. at 111, 113 S.Ct. 566 (to be a prevailing party, “[wjhatever relief the plaintiff secures must directly benefit him_”). It is difficult to conclude a breach-of-contract plaintiff has prevailed when the jury says the plaintiff was wholly uninjured and denies all requested relief. As the dissent recognizes, money damages are essential in contract claims seeking money damages (though not for contract claims seeking something else). 295 S.W.3d 650, 664. Every single court of appeals has likewise held that one of the required elements in a breach-of-contract suit seeking money damages is that the plaintiff was in fact damaged by the breach. Wright v. Christian & Smith, 950 S.W.2d 411, 412 (Tex.App.-Houston [1st Dist.] 1997, no pet.); Fieldtech Avionics & Instruments, Inc. v. Component Control.Com, Inc., 262 S.W.3d 813, 825 (Tex.App.-Fort Worth 2008, no pet.); Roundville Partners, L.L.C. v. Jones, 118 S.W.3d 73, 82 (Tex.App.-Austin 2003, pet. denied); Killeen v. Lighthouse Elec. Contractors, L.P., 248 S.W.3d 343, 349 (Tex.App.-San Antonio 2007, pet. denied); Reynolds v. Nagely, 262 S.W.3d 521, 527 (Tex.App.-Dallas 2008, pet. denied); West v. Brenntag Sw., Inc., 168 S.W.3d 327, 337 (Tex.App.-Texarkana 2005, pet. denied); Domingo v. Mitchell, 257 S.W.3d 34, 39 (Tex.App.-Amarillo 2008, pet. denied); Hovorka v. Cmty. Health Sys., Inc., 262 S.W.3d 503, 508-09 (Tex.App.-El Paso 2008, no pet.); Sullivan v. Smith, 110 S.W.3d 545, 546 (Tex.App.Beaumont 2003, no pet.); Bank of Am., N.A. v. Hubler, 211 S.W.3d 859, 864 (Tex.App.-
.We said in a 1998 decision discussing Far-rar that two plaintiffs who proved retaliatory discharge under Texas law "prevailed” even though the jury awarded no money damages. Sw. Bell Mobile Sys. v. Franco, 971 S.W.2d 52, 56 (Tex. 1998) (per curiam). Unlike today's case, however, one of the plaintiffs in Franco received equitable relief: reinstatement. As to that plaintiff, Franco correctly decided that he was a prevailing party. However, like KB Home in this case, the other Franco plaintiff received no relief whatsoever. As we noted in Franco, under the United States Supreme Court’s reasoning in Farrar, " 'the only reasonable fee’ ” when a plaintiff fails to prove damages is usually " ‘no fee at all.’ ” Id. at 55-56 (quoting Fairar, 506 U.S. at 115, 113 S.Ct. 566). Also, our 1998 Franco decision predated the United States Supreme Court’s 2001 decision in Buckhannon Board & Care Home, Inc. v. West Virginia Department of Health & Human Resources, 532 U.S. 598, 603, 121 S.Ct. 1835, 149 L.Ed.2d 855 (2001), which refined its earlier analysis and basically held: "no money judgment, no fees.” Accordingly, we disagree with Franco that a plaintiff who recovers no money and receives no equitable relief can be a prevailing party. Instead, a plaintiff must receive affirmative judicial relief to be considered a prevailing party.
. Buckhannon, 532 U.S. at 603-04, 121 S.Ct. 1835.
. See Tex. State Teachers Ass’n v. Garland Indep. Sch. Dist., 489 U.S. 782, 792, 109 S.Ct. 1486, 103 L.Ed.2d 866 (1989) (“Where the plaintiff's success on a legal claim can be characterized as purely technical or de min-imis, a district court would be justified in concluding that” attorney's fees should be denied.).
. Abraham Lincoln, Notes for Law Lecture (July 1, 1850), reprinted in 2 Collected Works of Abraham Lincoln 142 (John G. Nicolay & John Hay eds. 1894) (“Discourage litigation. Persuade your neighbors to compromise whenever you can. Point out to them how the nominal winner is often a real loser — in fees, expenses, and waste of time.”).
. But see Zapata Hermanos Sucesores, S.A. v. Hearthside Baking Co., 313 F.3d 385, 389 (7th Cir. 2002) (Posner, J.) ("[A] breach of contract is not considered wrongful activity in the sense that a tort or a crime is wrongful. When we delve for reasons, we encounter Holmes’s argument that practically speaking the duty created by a contract is just to perform or pay damages....”) (citing Oliver Wendell Holmes, Jr., The Common Law 300-02 (1881) and Oliver W. Holmes, The Path of the Law, 10 Harv. L.Rev 457, 462 (1897)).
. See Goland v. Cent. Intelligence Agency, 607 F.2d 339, 356 (D.C.Cir. 1978) (declining to define "substantially prevail” in the Freedom of Information Act but doubting "that plaintiffs could be said to have ‘substantially prevailed' if they, like Pyrrhus, have won a battle but lost the war.”). See also Farrar v. Hobby, 506 U.S. 103, 117, 119, 113 S.Ct. 566, 121 L.Ed.2d 494 (1992) (O’Connor, J., concurring) (noting that a plaintiff who achieves a purely technical victory, something Justice O'Connor labels "[c]himerical accomplishments,” has in reality “failed to achieve victoly at all, or has obtained only a pyrrhic victory for which the reasonable fee is zero.”).
. In this Court, both the clerk's and reporter’s records are partial.
. As its briefing makes clear, the only evidence Intercontinental introduced on attorney’s fees, and the only jury question it submitted on attorney’s fees, concerned "its separate counterclaim for breach of an oral agreement by Plaintiff” (emphasis in original), not its defense of KB Home's breach-of-contract claim. Intercontinental concedes that since it lost on that affirmative claim, “the jury rightfully denied Defendant’s request for attorneys fees on that claim, and Defendant does not complain about that finding.”
. See Bocquet v. Herring, 972 S.W.2d 19, 21 (Tex. 1998) (noting that reasonableness and necessity of fees are "question[s] of fact for the jury's determination”) (quoting Trevino v. Am. Nat’l Ins. Co., 140 Tex. 500, 168 S.W.2d 656, 660 (1943)).
. Somewhat analogous to this contract provision is the attorney's-fees provision in the Texas Declaratory Judgment Act (DJA): "[T]he court may award costs and reasonable
. In Texas courts, the reasonableness of attorney’s fees is normally “a fact issue for the jury.” Scott A. Brister, Proof of Attorney’s Fees in Texas, 24 St. Mary's L.J. 313, 349 (1993) (“Texas law treats attorney’s fees as a fact issue for the jury rather than as a collateral matter usually determined by the court after the trial has been concluded and the loser determined.”). Obviously, parties can contract otherwise if they wish.
. Tex. Civ. Prac & Rem.Code § 38.004 ("The court may take judicial notice of the usual and customary attorney's fees and of the contents of the case file without receiving further evidence in: (1) a proceeding before the court; or (2) a jury case in which the amount of attorney’s fees is submitted to the court by agreement.”).
. Tex.R. Civ. P. 301 (providing that the court's judgment shall conform to the pleadings).
. Tex.R. Civ. P. 279 ("Upon appeal all independent grounds of recovery or of defense not conclusively established under the evidence and no element of which is submitted or requested are waived."); cf. Wilz v. Flournoy, 228 S.W.3d 674, 676-77 (Tex. 2007) (per curiam); Hunt Constr. Co. v. Cavazos, 689 S.W.2d 211, 212 (Tex. 1985) (per curiam).
. Some might argue that not every lawsuit produces a winner (even cases that go to verdict); the parties could battle to what amounts to a draw, pay their own fees and expenses, and go home. Here, a jury finds there was breach but not injurious breach; the wronged plaintiff gets nothing and the wrongdoing defendant gives nothing. If “receiving no damages” means the plaintiff did not prevail, does “remitting no damages” necessarily mean the breaching defendant prevailed? When defining litigation success, some might argue that while relief is required for plaintiffs to prevail, a finding of “no breach” is required for defendants — that is, a desired finding on breach is insufficient for plaintiffs but indispensable for defendants.
.Citing cases from 1917 and earlier, the dissent also argues that KB is the prevailing party because it is entitled to nominal dam
.To this end, the dissent is mistaken in saying we are requiring parties to wait until they are damaged in order to seek a declaration of their respective rights.
. See CU Lloyd's of Tex. v. Feldman, 977 S.W.2d 568, 568 (Tex. 1998) (per curiam).
. Id. at 569.
. Id. (internal citations omitted).
. Tex. Civ. Prac. & Rem.Code § 37.003.
. See Bonham State Bank v. Beadle, 907 S.W.2d 465, 467 (Tex. 1995) ("A declaratory judgment is appropriate only if a justiciable controversy exists as to the rights and status of the parties and the controversy will be resolved by the declaration sought.”).
. CU Lloyd’s of Tex. v. Feldman, 977 S.W.2d 568, 569 (Tex. 1998) (“When the relief sought is a declaratory judgment, an appellate court may properly render judgment on liability alone.”).
. See Tex. Civ. Prac. & Rem.Code § 37.004; Allstate Ins. Co. v. Hallman, 159 S.W.3d 640, 641 (Tex. 2005); Brooks v. Northglen Ass’n, 141 S.W.3d 158, 161 (Tex. 2004); CU Lloyd’s of Tex. v. Feldman, 977 S.W.2d 568, 569 (Tex. 1998) (per curiam); Firemen’s Ins. Co. of Newark, N.J. v. Burch, 442 S.W.2d 331, 332 (Tex. 1968); Hoover v. Gen. Crude Oil Co., 147 Tex. 89, 90, 212 S.W.2d 140, 141 (1948).
. (Emphasis added).
. MBM Financial Corp. v. Woodlands Operating Co., 292 S.W.3d 660 (Tex. 2009).
. See id. at 663 (“a client must gain something before attorney's fees can be awarded.”).
. Id. at 671.
Reference
- Full Case Name
- INTERCONTINENTAL GROUP PARTNERSHIP, Petitioner, v. KB HOME LONE STAR L.P., Respondent
- Cited By
- 324 cases
- Status
- Published