In The
Court of Appeals Ninth District of Texas at Beaumont ____________________ NO. 09-17-00265-CV ____________________
MINDA LAO TOLEDO, Appellant
V.
KBMT OPERATING COMPANY, LLC, KBMT LICENSE COMPANY, LLC, BRIAN BURNS, JACKIE SIMIEN AND TRACY KENNICK, Appellees _______________________________________________________ ______________
On Appeal from the 128th District Court Orange County, Texas Trial Cause No. A130025-C ________________________________________________________ _____________
OPINION
In a remand following an appeal, 1 the trial court awarded KBMT Operating
Company, LLC, KBMT License Company, LLC, Brian Burns, Jackie Simien and
Tracy Kennick (collectively, “KBMT”) the sum of $256,689 2 in attorney’s fees and
1 KBMT Operating Co., LLC v. Toledo, 492 S.W.3d 710, 717 (Tex. 2016). 2 For simplicity, we have rounded all monetary figures to whole numbers.
1 $1,468 in costs of court against Minda Lao Toledo. The trial court awarded the
attorney’s fees, the subject of Toledo’s appeal, based on a provision in the Texas
Citizens Participation Act (TCPA) allowing a party defending litigation to recover
“court costs, reasonable attorney’s fees, and other expenses incurred in defending
against the legal action [subject to the Act] as justice and equity may require[.]” 3 In
a single issue, Toledo argues there is insufficient evidence in the record to support
the trial court’s award because KBMT’s attorneys filed only “[o]ne short, form
motion, two strikingly similar briefs and three court appearances result[ing] in
invoices in excess of $300,000” in the proceedings that resulted in the award. In a
cross-appeal, KBMT argues the trial court erred by declining its request for an award
of attorney’s fees for Toledo’s possible appeals conditioned on an outcome in its
favor.
Given the Texas Supreme Court’s recent clarification in Rohrmoos Venture v.
UTSW DVA Healthcare, LLP 4 of the standards that apply to a court’s evaluation of
a request for an award of attorney’s fees together with our conclusion that the
evidence is factually insufficient to support the $256,689 awarded in fees, we reverse
the judgment and remand the case to the trial court for another trial to determine an
3 Tex. Civ. Prac. & Rem. Code Ann. § 27.009(a)(1) (West 2015). 4 No. 16-0006, 2019 WL 1873428, at *11-23 (Tex. Apr. 26, 2019).
2 appropriate award to KBMT on its claim for fees.5 Since more proceedings are
required, we conclude we need not reach the arguments associated with KBMT’s
cross-appeal. 6
Background
In 2012, KBMT and several of its employees, reported in television newscasts
that the Texas Medical Board had punished Toledo after the “Board found she
engaged in sexual contact with a patient and became financially involved with a
patient in an inappropriate manner.” Toledo sued KBMT for defamation based on
the missing content of the reports. KBMT filed a timely motion to dismiss Toledo’s
claims under the TCPA. 7 The trial court denied the motion and KBMT appealed.
Ultimately, after losing the appeal in this Court, KBMT prevailed on its appeal in
the Texas Supreme Court. The Supreme Court held that the TCPA required Toledo’s
5 See Tex. Civ. Prac. & Rem. Code Ann. § 27.009(a)(1). 6 Tex. R. App. P. 47.1 (requiring opinions to address each issue that is necessary to resolving the appeal). 7 A more detailed history of Toledo’s suit is in KBMT, 492 S.W.3d at 711-13. Providing a fully detailed description in this appeal is unnecessary to our resolution of the appeal.
3 action to be dismissed. 8 It remanded the case for a trial on KBMT’s claims for
attorney’s fees, punitive damages and costs of court. 9
On remand, KBMT’s lead attorney, Michael McCabe, filed a “Motion for
Award of Attorneys’ Fees, Court Costs, and Sanctions.” In his motion, McCabe
asked that the trial court award KBMT $256,689 in attorney’s fees and $1,468 in
costs of court. The motion is supported by two affidavits. One is a business records
affidavit, which authenticates 177 pages of bills and supporting documents that
McCabe’s law firm sent to the London Broadcasting Company for the work it
performed in Toledo’s case. The other is an affidavit signed by McCabe, which
describes his professional experience, his role as lead counsel in the case, and
identifies the other attorneys who participated in defending KBMT from Toledo’s
claim together with each attorney’s and paralegal’s hourly rates. McCabe’s affidavit
describes the course of the litigation. He summarized the firm’s invoices by date and
the total attorney’s fees billed by date of invoice. In his affidavit, McCabe states the
fees charged to KBMT are the usual and customary fees for the work the attorneys
completed. He also stated the fees were reasonable and necessary for the case.
8 Id. at 717. 9 Id. 4 Before the trial, Toledo filed objections to KBMT’s evidence supporting its
request for fees. Toledo objected on many grounds, which included the attorneys
charging KBMT for (1) the attorneys’ travel time at their full rates, (2)
communicating with KBMT’s insurer, (3) conducting research on rules and
procedures, (4) researching a motion for rehearing that KBMT never filed, (5) filing
motions seeking extensions of time, (6) having local counsel perform unnecessary
work, (7) billing for clerical work done by a paralegal at the paralegal’s hourly rate,
(8) failing to adequately document tasks performed, redacting records, and
describing tasks using descriptions that are vague, (9) duplicating efforts by having
several attorneys perform the same tasks, (10) spending unreasonable amounts of
time to draft and edit documents and to prepare for oral argument, and (11) charging
KBMT for the time required to redact language from the invoices McCabe’s firm
sent to KBMT. Toledo also objected to McCabe’s affidavit on the basis that it failed
to establish what rates were reasonable for attorneys practicing in Orange and
Jefferson Counties.
In addition to filing written objections, and to support her objections claiming
KBMT was seeking an excessive award, Toledo filed an affidavit signed by Joe
House. House represented Toledo in the trial court and on appeal. KBMT
subsequently moved to strike House’s affidavit, claiming House’s affidavit was
5 conclusory and he lacked personal knowledge of the billing practices employed by
McCabe’s firm or the work the firm did to represent KBMT.
In early-April 2017, the trial court conducted a trial on KBMT’s request for
fees. McCabe is the only witness who testified during the trial. During the trial, the
trial court overruled Toledo’s objections to KBMT’s evidence and admitted
McCabe’s affidavit. The trial court also admitted an exhibit showing the court costs
that KBMT incurred in its appeal to the Texas Supreme Court and a business records
affidavit, which authenticated the invoices that McCabe’s firm sent to KBMT. After
the trial, McCabe filed a supplemental affidavit. In his supplemental affidavit,
McCabe stated that $50,000 in additional attorney’s fees would be reasonable in
addition to the amount KBMT requested at trial, with $25,000 of the additional
amount due if KMBT prevailed in the intermediate appellate court and $25,000 more
if it prevailed in the Texas Supreme Court. Two weeks after the trial court conducted
a bench trial on KBMT’s claims, the court granted KBMT’s request asking to strike
Joe House’s affidavit.10 On the same day, the trial court signed an order awarding
KBMT $256,689 in attorney’s fees. The award, however, does not include any
recovery for additional fees contingent on Toledo’s appeals.
10 We express no opinion over the correctness of this ruling, as it is unchallenged in this appeal. 6 Reasonable Attorney’s Fees
“[T]o secure an award of attorney’s fees from an opponent, the prevailing
party must prove that: (1) recovery of attorney’s fees is legally authorized, and (2)
the requested attorney’s fees are reasonable and necessary for the legal
representation, so that such an award will compensate the prevailing party generally
for its losses resulting from the litigation process.”11 The TCPA authorizes trial
courts to award reasonable attorney’s fees to a defendant who prevails on a motion
to dismiss.12 The Texas Supreme Court has explained that “[a] reasonable
[attorney’s] fee is one that is not excessive or extreme, but rather moderate or fair.”13
The mere fact that a party and a lawyer contracted for or incurred a particular amount
of attorney’s fees does not conclusively prove that a fee paid by the lawyer’s client
is reasonable.14 When a party seeks to shift fees from its client to the opposing party,
the party seeking fees must prove that the amount of the fees it is requesting is
11 Rohrmoos, 2019 WL 1873428, at *11. 12 Sullivan v. Abraham, 488 S.W.3d 294, 299 (Tex. 2016). 13 Garcia v. Gomez, 319 S.W.3d 638, 642 (Tex. 2010). 14 Rohrmoos, 2019 WL 1873428, at *11.
7 reasonable.15 That said, when awarding attorney’s fees, the factfinder should exclude
“[c]harges for duplicative, excessive, or inadequately documented work[.]” 16
During the hearing, KBMT agreed that it was asking the trial court to apply
the lodestar analysis to determine the amount it should recover on its claim for
attorney’s fees. In the first instance, calculating an attorney’s fee award using the
lodestar method required the trial court to determine “the reasonable hours worked
multiplied by a reasonable hourly rate[.]” 17 KBMT had the burden of proof on both
these elements of its claim. 18 To meet that burden, KBMT needed to introduce
evidence addressing the “(1) particular services performed, (2) who performed those
services, (3) approximately when the services were performed, (4) the reasonable
amount of time required to perform the services, and (5) the reasonable hourly rate
for each person performing such services.”19 We also note the attorney’s fees that
trial courts ultimately decide to assess do not depend solely on the terms found in
the contracts that exist between parties and their lawyers. 20 When the record includes
15 Tex. Civ. Prac. & Rem. Code Ann. § 27.009(a)(1). 16 El Apple I, Ltd. v. Olivas, 370 S.W.3d 757, 762 (Tex. 2012). 17 Rohrmoos, 2019 WL 1873428, at *20. 18 See id. at *20. 19 Id. at *22.
8 evidence that is adequate to address the five factors outlined above, trial courts may
presume the multiplication step of the analysis has produced a figure that reflects a
presumptively reasonable fee.21
After completing the multiplication step of the analysis, the factfinder must
then determine whether evidence of other considerations overcomes the presumption
of reasonableness and requires adjustment to determine a reasonable fee.22 The
nonexclusive factors that the factfinder may consider, which are identified by the
Texas Supreme Court in Arthur Andersen & Co. v. Perry Equipment Corporation,23
include (1) “the time and labor required,” (2) “the novelty and difficulty of the
questions involved,” (3) “the skill required to perform the legal service properly,”
(4) “the fee customarily charged in the locality for similar legal services,” (5) “the
amount involved,” (6) “the experience, reputation, and ability of the lawyer or
lawyers performing the services,” (7) “whether the fee is fixed or contingent on
results obtained,” (8) “the uncertainty of collection before the legal services have
20 Id. at *21. 21 Id. 22 Id. at *22. 23 945 S.W.2d 812, 818 (Tex. 1997). 9 been rendered,” and (9) “[the] results obtained.”24 Generally, we “accord
considerable deference to a trial court’s findings regarding whether prevailing
counsel’s claimed hours are excessive, redundant, or unreasonable.”25 While
considerations in the two steps overlap, the trial court must avoid duplicating the
adjustments called for in the steps.
We review a trial court’s award of attorney’s fees using an abuse-of-discretion
standard. 26 In applying that standard, an appellate court must determine whether the
trial court acted arbitrarily without reference to any guiding principles.27 In
conducting our review, we agree with the Fort Worth Court’s statement that “[i]n
the proper exercise of its discretion, a trial judge is obliged to do more than simply
act as a rubber-stamp, accepting carte blanche the amount appearing on the bill.”28
Here, KBMT’s evidence includes the billing records that the attorneys who
24 Rohrmoos, at * 21 (quoting Arthur Andersen & Co., 945 S.W.2d at 818). 25 El Apple I, 370 S.W.3d at 763-64. 26 Sullivan, 488 S.W.3d at 299. 27 McGibney v. Rauhauser, 549 S.W.3d 816, 820 (Tex. App.—Fort Worth 2018, pet. denied). 28 Id. at 821.
10 represented KBMT created around the time they performed the services at issue.29
While McCabe’s firm redacted the invoices that are in evidence to delete the lawyer-
client privileged information from them, 30 the invoices and McCabe’s testimony
about them are the evidentiary basis on which the trial court determined the award.
After taking the matter under advisement, the trial court awarded the full
amount KBMT requested.31 While an abuse of discretion does not occur if the trial
court based its award on conflicting evidence, an appellate court will nevertheless
find that an abuse of discretion occurred if the evidence that is in the record fails to
support the trial court’s award. 32 We note that when the trial court ruled on KBMT’s
request, it did not have the benefit of the Supreme Court’s recent opinion in
Rohrmoos.33 In Rohrmoos, the Supreme Court clarified how the lodestar method and
29 Rohrmoos, 2019 WL 1873428, at *23 (noting the value of invoices when they are in evidence). 30 See Tex. R. Evid. 503. 31 See Tex. Civ. Prac. & Rem. Code Ann. § 27.009(a)(1) (requiring trial courts, when granting motions to dismiss TCPA claims, to award the moving party “reasonable attorney’s fees, and other expenses incurred in defending against the legal action as justice and equity may require”). 32 McGibney, 549 S.W.3d at 821. 33 See Rohrmoos, 2019 WL 1873428, at *22. 11 Arthur Andersen factors are to be applied by the lower courts when evaluating a
party’s request to be awarded attorney’s fees.
In her appeal, Toledo complains that KBMT failed to meet its burden to prove
the amount the trial court awarded KBMT was reasonable. She contends the award
is excessive for eleven reasons: (1) the invoices reflect substantial duplication of
effort by the attorneys in McCabe’s firm; (2) the firm over-researched legal issues
by using many attorneys to perform essentially the same research; (3) in large part,
the firm billed for the time it would have taken to do the original research and writing
even though it recycled the same arguments and authorities it used in the motions
and briefs it filed with the trial court and the briefs it filed in each stage of KBMT’s
appeals; (4) the firm billed paralegal and attorney rates for tasks the firm should have
classified as clerical or ministerial work; (5) many tasks that are described in the
firm’s invoices use vague terms, which do not adequately describe the tasks
performed; (6) the firm billed for work that the court should have eliminated as non-
reimbursable; (7) the firm charged KBMT for work based on invoices from local
counsel whose work duplicated the same tasks performed by McCabe’s firm; (8)
KBMT’s attorneys charged time for attorneys who prepared for oral argument but
then did not participate in presenting KBMT’s arguments to the courts; (9) the firm
charged KBMT for time spent communicating with its insurance carrier and adjuster,
12 for researching court procedures and rules, for obtaining extensions of time when
these tasks were unrelated to KBMT’s motion to dismiss; (10) the firm presented a
bill that shows a lack of billing judgment, given the amount of the requested award;
and (11) the firm charged rates higher than those prevailing in the legal market where
Toledo sued. Toledo raised each of these arguments at trial.
We agree with Toledo’s argument that the trial court awarded KBMT an
excessive fee. Here, the record shows that the trial court accepted McCabe’s rather
conclusory testimony asserting the hours worked were reasonable based on his
evaluation of his firm’s bills using the relevant factors courts must use to establish a
reasonable fee. 34 We disagree with KBMT that McCabe’s conclusory testimony and
the invoices sent by McCabe’s firm to KBMT established that the amount it
recovered is reasonable. For instance, the invoices that are in evidence show many
attorneys working on the case, each billing many hours to prepare for what appear
from the descriptions to constitute work on the same documents and briefs. Yet when
McCabe testified, he failed to offer an adequate explanation about why the layers of
work reflected by the different lawyers working on the case were reasonable given
the limited scope of the issue central to each stage of the dispute, whether KBMT’s
broadcast was substantially true. Stated another way, McCabe failed to address in
34 Id. at *21. 13 the trial or in his affidavit why the attorneys who billed KBMT for working on the
case were not needlessly duplicating and revising each other’s work.
The evidence before the trial court also failed to establish the amount at stake
in the dispute. The evidence that is in the record shows that KBMT considered the
case to be serious. That evidence, without more, does not inform a court about an
important factor needed under the circumstances of Toledo’s case to reach an
informed decision on the award KBMT requested in the trial. Without knowing what
amount of money was at stake, a trial court may mistakenly award fees that are
disproportionate to the amount at stake.
As Toledo noted in her supplemental brief, the efforts of KBMT’s attorneys
revolved around a motion to dismiss and two appeals. There was no trial. The
invoices do not show that much discovery occurred. The record does not show
whether Toledo was suing KBMT for ten thousand dollars or one million dollars.
Generally, the amount at stake plays a significant role in a factfinder’s determination
about whether attorney’s fees are reasonable. When attorney’s fees are recoverable,
Texas law requires the recovery to “be reasonable under the particular circumstances
of the case and [for the recovery to] bear some reasonable relationship to the amount
in controversy.”35 On this record, the trial court could not reasonably determine if
35 Wuagneux Builders, Inc. v. Candlewood Builders, Inc., 651 S.W.2d 919, 923 (Tex. App.—Fort Worth 1983, no writ) (emphasis in original). 14 the award was grossly disproportionate to the amount at stake on Toledo’s
defamation claims.
In her petition, Toledo did not specify the amount of damages she sought from
KBMT. And KBMT did not file special exceptions to her petition. In the trial,
McCabe testified that he considered the amount in controversy when preparing his
opinion, but he never stated what that amount was. He also testified that KBMT took
the matter seriously, but the firm’s billing records reflect that McCabe’s firm
performed legal research on slander claims and on whether KBMT had a media
privilege. That work took less than an hour. The invoices then show that McCabe
had a conference with Toledo’s counsel, also less than an hour, and the firm’s efforts
then shifted to getting Toledo’s case dismissed based on KBMT’s claim that its
broadcasts were substantially true. We further note that KBMT’s original answer
alleges Toledo’s suit is frivolous.
In the trial, McCabe testified and argued that the fees KBMT sought were
reasonable because the case involved litigating a matter of first impression in the
Texas Supreme Court over whether that Court possessed jurisdiction to consider
KBMT’s appeal. But when Toledo sued, the TCPA had been in effect for almost two
years. Moreover, the defamation claim lies at the heart of the arguments KBMT
presented to the trial court and throughout its appeals. That claim did not present the
15 courts with a matter of first impression. While the application of existing well-settled
law to the facts of Toledo’s case produced differences of opinion among the justices
who reviewed KMBT’s appeals, the outcome of Toledo’s case proved to be
controlled by well-established precedent. 36 Questions over how well-settled
precedent applies to a given set of facts is a common problem leading to many
appeals, but the existence of a difference in opinion about how the law applies to a
given set of facts does not make the case one of first impression.
Under Texas law, a reasonable attorney’s fee calculation results in an award
that is “not excessive or extreme, but rather moderate or fair.” 37 When Toledo was
before the trial court, she identified many items in the firm’s invoices that reflected
duplicative, excessive, or inadequately documented work. Yet the trial court failed
to reduce or eliminate any of them in its award.38
36 KBMT, 492 S.W.3d at 714 (noting the legal test the court applied to the newscast at issue). In footnote eighteen of KBMT, the Texas Supreme Court cites various authorities for the test it applied to Toledo’s case. Id. at n. 18 (the authorities cited include Neely v. Wilson, 418 S.W.3d 52, 63 (Tex. 2013), Turner v. KTRK Television, Inc., 38 S.W.3d 103, 115 (Tex. 2000), McIlvain v. Jacobs, 794 S.W.2d 14, 16 (Tex. 1990), and Masson v. New Yorker Magazine, Inc., 501 U.S. 496, 516- 517 (1991)). KBMT cited each of these cases in its motion to dismiss, which it filed in early-April 2013. 37 See Sullivan, 488 S.W.3d at 299. 38 See El Apple I, 370 S.W.3d at 762. 16 Generally, the issues involved in a trial narrow as a case is appealed. In this
case, however, the invoices reflect little if any efficiencies expected in cases that
involve appeals. Instead, KBMT was billed more, not less, at each stage of the
proceedings. The increasing bills occurred despite a backdrop that reveals KBMT’s
attorneys identified the cases that controlled the outcome of Toledo’s case within
months of the date Toledo sued. 39
We conclude the trial court failed to apply the lodestar method properly and
that it abused its discretion by failing to apply the guiding rules and principles to
determine the reasonableness of the amount it awarded to KBMT. 40 For the reasons
explained above, we conclude the fees awarded KBMT are excessive and extreme.
On this record, it was neither reasonable, nor just, to require Toledo to pay the entire
amount of fees that are at issue in the appeal. Based on our conclusion the evidence
is factually insufficient to support the trial court’s award, we sustain the sole issue
Toledo raised in her appeal.
Attorney’s Fees for Appeal
In its cross-appeal, KBMT argues the trial court erred by failing to award
reasonable attorney’s fees to KBMT contingent on its prevailing in any of Toledo’s
39 See KBMT, 492 S.W.3d at 714 n.18. 40 See McGibney, 549 S.W.3d at 826.
17 appeals. Given that we granted Toledo’s request for a new trial, we conclude the
cross-appeal issue is moot. 41
Conclusion
We reverse the trial court’s award of $256,689 to Defendants, KBMT
Operating Company, LLC, KBMT License Company, LLC, Brian Burns, Jackie
Simien and Tracy Kennick. We remand the case to the trial court based on our
conclusion the parties are entitled to a new trial solely on the amount KBMT should
recover for reasonable attorney’s fees. The remainder of the trial court’s judgment
is affirmed.
AFFIRMED IN PART; REVERSED IN PART AND REMANDED.
________________________________ HOLLIS HORTON Justice
Submitted on July 24, 2018 Opinion Delivered June 13, 2019
Before Kreger, Horton and Johnson, JJ.
41 See Tex. R. App. P. 43.2(d) (authorizing the appellate court to reverse and remand a case following an appeal). 18