Opinion
01-21-00162-CV
12-06-2022
ONEIDA JONES, Appellant v. ALLSTATE VEHICLE AND PROPERTY INSURANCE COMPANY, Appellee
On Appeal from the 281st District Court Harris County, Texas Trial Court Case No. 2017-57201
Panel consists of Justices Kelly, Goodman, and Guerra.
MEMORANDUM OPINION
Gordon Goodman Justice.
This appeal arises out of a suit brought by Oneida Jones for wrongful denial of coverage under a home insurance policy. After a jury trial, the trial court rendered a take-nothing judgment in favor of Allstate Vehicle and Property Insurance Company. Jones appeals, contending the trial court erred in denying her court costs and attorney's fees, even though she concedes the trial court correctly decided she was not entitled to any damages once certain offsets were applied. Having considered the record and the parties' arguments, the trial court is affirmed.
BACKGROUND
Jones sued Allstate. She alleged Allstate wrongfully denied in part a claim she made under her home insurance policy. Jones asserted multiple causes of action, including claims for breach of contract, violations of the Texas Insurance Code, and breach of the duty of good faith and fair dealing. Jones and Allstate tried these disputed claims to a jury.
The jury found Allstate failed to comply with the home insurance policy, engaged in unfair or deceptive acts or practices, and failed to comply with its duty of good faith and fair dealing. The jury further found that $6,935 would fairly and reasonably compensate Jones for Allstate's conduct. The jury found Jones incurred $27,000 in reasonable and necessary attorney's fees through trial and would incur certain additional sums on appeal.
The trial court accepted the jury's findings on liability and damages. Nonetheless, the trial court rendered a take-nothing judgment in Allstate's favor and awarded Allstate court costs. In doing so, the trial court noted that Allstate had already paid $4,670.67 on Jones's policy claim and Jones's deductible under the policy was $3,040. Because these amounts, when combined, exceeded the damages found by the jury, the trial court ordered, adjudged, and decreed that Jones was not entitled to recover any damages whatsoever. Nor did the trial court's judgment order any other type of relief in Jones's favor.
Jones appeals.
DISCUSSION
Jones contends the trial court erred in not awarding court costs and attorney's fees to her in the judgment because she is entitled to recover them under Section 541.152(a)(1) of the Texas Insurance Code. She does not challenge the jury charge, the legal or factual sufficiency of the evidence supporting the jury's findings, or the recitations of fact contained in the trial court's judgment as to the amount Allstate had already paid Jones on the claim or the amount of her policy deductible. Nor does she contend the trial court erred in failing to award her damages; she concedes the trial court correctly awarded no damages to her in the judgment due to Allstate's prior payment and her policy deductible. Instead, Jones argues that she remains entitled to an award of court costs and attorney's fees because the jury's findings show she prevailed at trial by proving Allstate violated the Insurance Code, even though the trial court correctly awarded her no damages in the judgment.
Standard of Review
Whether a litigant is a prevailing party for purposes of a statute or contract authorizing an award of attorney's fees to one who prevails in litigation is a question of law when no material facts are in dispute. Lyon v. Bldg. Galveston, No. 01-15-00664-CV, 2017 WL 4545831, at *11 n.11 (Tex. App.-Houston [1st Dist.] Oct. 12, 2017, pet. denied) (mem. op.); WWW.URBAN.INC v. Drummond, 508 S.W.3d 657, 665 n.3 (Tex. App.-Houston [1st Dist.] 2016, no pet.). Under these circumstances, an appellate court reviews an appellant's claim that she prevailed in the trial court de novo. Lyon, 2017 WL 4545831, at *11 n.11; Drummond, 508 S.W.3d is 665 n.3. To the extent an appellate court must decide whether a statute authorizes an award of attorney's fees, this too is a question of law subject to de novo review. Holland v. Wal-Mart Stores, 1 S.W.3d 91, 94 (Tex. 1999) (per curiam); Peterson Grp. v. PLTQ Lotus Grp., 417 S.W.3d 46, 60 (Tex. App.-Houston [1st Dist.] 2013, pet. denied).
Applicable Law
On appeal, Jones contends she is entitled to an award of costs and attorney's fees under Section 541.152(a)(1) of the Texas Insurance Code. It provides that a prevailing plaintiff may obtain "the amount of actual damages, plus costs and reasonable and necessary attorney's fees." TEX. INS. CODE § 541.152(a)(1). Jones maintains, and we assume without deciding, that Section 541.152(a)(1) mandates an award of fees to a plaintiff who prevails. See id. (stating prevailing plaintiff "may obtain" fees); In re Bent, 487 S.W.3d 170, 184 (Tex. 2016) (assuming Section 541.152(a)(1)'s language is mandatory); Bocquet v. Herring, 972 S.W.2d 19, 20 (Tex. 1998) (stating statutes providing party "may recover" fees are mandatory).
In the context of mandatory fee language, our Supreme Court has held a plaintiff must prove a compensable injury and secure an enforceable judgment for damages or equitable relief to qualify as a prevailing party. Intercontinental Grp. P'ship v. KB Home Lone Star, 295 S.W.3d 650, 652 (Tex. 2009). Favorable jury findings are not enough to make one a prevailing party. Id. at 655-57; see also Epps v. Fowler, 351 S.W.3d 862, 868 (Tex. 2011) (reiterating that favorable findings without judgment awarding damages are not enough and characterizing such outcome as illusory victory); Glattly v. Air Starter Components, 332 S.W.3d 620, 640-42 (Tex. App.-Houston [1st Dist.] 2010, pet. denied) (jury finding that defendant violated Texas Theft Liability Act did not make plaintiff prevailing party because jury awarded plaintiff no damages for violation of statute). The plaintiff must obtain a judgment in her favor awarding something, either monetary or equitable, to qualify as a prevailing party. Intercontinental Grp. P'ship, 295 S.W.3d at 652, 655-57.
In contrast, a defendant need not necessarily secure affirmative relief in the judgment to be a prevailing party. If the defendant secures a take-nothing judgment, the defendant is the prevailing party. Sunchase IV Homeowners Ass'n v. Atkinson, 643 S.W.3d 420, 424 (Tex. 2022) (per curiam); Rohrmoos Venture v. UTSW DVA Healthcare, 578 S.W.3d 469, 485-86 (Tex. 2019); see also Epps, 351 S.W.3d at 869 (holding that defendant prevails when plaintiff nonsuits case with prejudice).
In sum, as between a plaintiff and defendant who try their dispute to a jury, the prevailing party is the one vindicated by the trial court's judgment, not the jury's verdict. Intercontinental Grp. P'ship, 295 S.W.3d at 656-57; Bankcard Processing Int'l v. U. Bus. Servs., No. 01-10-01079-CV, 2012 WL 3776024, at *9 (Tex. App.- Houston [1st Dist.] Aug. 30, 2012, pet. denied) (mem. op.); see also Yeh v. MacDougall, No. 01-06-00509-CV, 2008 WL 183712, at *5-6 (Tex. App.- Houston [1st Dist.] Jan. 17, 2008, no pet.) (mem. op.) (plaintiff whose recovery on contract claim exceeded offsetting damages owed to defendant was prevailing party vindicated by judgment because judgment awarded net recovery to plaintiff).
Analysis
Dispute About the Applicable Standard of Review
As an initial matter, Allstate claims the correct standard of review is abuse of discretion because appellate courts evaluate a fee award this way. This is not so.
An appellate court reviews the amount of an award of attorney's fees for an abuse of discretion. E.g., Keith v. Keith, 221 S.W.3d 156, 169 (Tex. App.-Houston [1st Dist.] 2006, no pet.). But not all fee-related questions rest within the trial court's sound discretion. For example, whether a statute authorizes an award of attorney's fees under a given set of circumstances poses a question of law subject to de novo review. E.g., Holland, 1 S.W.3d at 94. Similarly, whether a litigant qualifies as a prevailing party under a fee-shifting statute is a question of law subject to de novo review when the facts material to prevailing-party status are undisputed. Lyon, 2017 WL 4545831, at *11 n.11; Drummond, 508 S.W.3d at 665 n.3.
The parties do not disagree about the material facts. Both sides accept the jury's findings as to liability and damages, the recitation of facts in the trial court's judgment as to the amount Allstate paid on Jones's claim and the amount of her deductible, and the trial court's ruling that Jones was not entitled to any damages because the damages found by the jury were exceeded by Allstate's payment and her deductible. The dispute before us is whether Jones qualifies as a prevailing party entitled to an award of fees under these undisputed circumstances. Because there are no disputed material facts, the trial court had no discretion to exercise in deciding whether Jones was a prevailing party, and we owe its implicit decision on this matter no deference. See Credit Suisse v. Claymore Holdings, 610 S.W.3d 808, 819 (Tex. 2020) (trial court has no discretion on questions of law or in applying law to facts).
On this record, Allstate's claim that the correct standard of review is abuse of discretion is mistaken. Whether Jones prevailed is subject to de novo review.
Effect of the Absence of a Reporter's Record
Allstate also initially claims Jones cannot secure reversal of the trial court's judgment as she did not obtain a reporter's record. Allstate asserts we must presume the absent record supports the trial court's judgment and affirm. This is not the case.
When a party does not obtain the reporter's record, an appellate court indulges every presumption in favor of the factfinder's findings. Curry v. Tex. Dep't of Pub. Safety, 472 S.W.3d 346, 350 (Tex. App.-Houston [1st Dist.] 2015, no pet.). Without the reporter's record, an appellate court treats all issues that are dependent on the evidence at trial as having been waived. See id.
But the dispositive issue on appeal is whether Jones is entitled to court costs and attorney's fees based on the jury's verdict and the trial court's judgment, both of which are in the record. This issue is not dependent on the evidence at trial.
Instead, as previously noted, the issue on appeal requires us to decide whether Jones qualifies as a prevailing party under a given set of undisputed facts. When, as here, a question amounts to a question of law, a reporter's record is not necessary. White Lion Holdings v. Insgroup, Inc., No. 01-18-00851-CV, 2019 WL 7341670, at *3 (Tex. App.-Houston [1st Dist.] Dec. 31, 2019, pet. denied) (mem. op.).
On this record, Allstate's claim that Jones waived appellate review or that the absence of a reporter's record otherwise disposes of her appeal is mistaken.
Prevailing-Party Status
Having disposed of preliminary matters, the question presented is: Does Jones qualify as a prevailing party who is entitled to an award of court costs and attorney's fees under Section 541.152(a)(1) of the Texas Insurance Code even though the trial court's judgment awards her no monetary or equitable relief? The answer is no.
Jones concedes the trial court's judgment is correct in not awarding her damages due to offsetting amounts that exceed the damages found by the jury. Jones argues she nonetheless prevailed because she obtained favorable jury findings. But our Supreme Court has rejected the proposition that favorable jury findings, standing alone, make a plaintiff a prevailing party entitled to attorney's fees. Intercontinental Grp. P'ship, 295 S.W.3d at 655-57. Favorable jury findings unaccompanied by an award of damages or other relief in the trial court's judgment are an illusory victory. Epps, 351 S.W.3d at 868. The trial court's judgment ordered that Jones take nothing. Thus, the judgment vindicates Allstate, making Allstate the prevailing party. Atkinson, 643 S.W.3d at 424; Rohrmoos Venture, 578 S.W.3d at 485-86.
Jones posits that the particular nature of one of the jury findings she secured requires a different result. Citing McKinley v. Drozd, she contends a finding that a defendant violated the Texas Insurance Code confers prevailing-party status on a plaintiff even when the plaintiff does not obtain a judgment for damages. See 685 S.W.2d 7 (Tex. 1985). Jones reasons that an award of attorney's fees is necessary under these circumstances to vindicate the Insurance Code's public-policy objective, which is to ensure that insurance companies deal fairly with those they insure.
McKinley was a Deceptive Trade Practices Act case, in which the Court held that a party need not obtain a net recovery to obtain an award of attorney's fees under the Act. Id. at 7-8. The plaintiff, a general contractor, brought suit to recover the balance due under a home-construction contract. Id. at 8. The defendants, the homeowners, counterclaimed for breach of contract, conversion, and DTPA violations. Id. Both sides sought to recover their attorney's fees. Id. Their respective claims were tried to a jury, which found the plaintiff owed the defendants $4,105.05 for breach of contract and another $7,500 for a DTPA violation. Id. But the jury also found the defendants owed $24,836.71 under the contract. Id. Applying the defendants' damages as offsets to the plaintiff's larger amount of damages, the trial court rendered a judgment that the plaintiff have a net recovery of $13,186.66. Id. The trial court also awarded both sides their attorney's fees. Id. The court of appeals, in turn, held the defendants were not entitled to their attorney's fees because they did not obtain a net recovery, deleted the fee award for the defendants, and affirmed the trial court's judgment as modified. Id. The Supreme Court then reversed, holding "that a consumer who is awarded actual damages under the DTPA should also be awarded attorney's fees, even though the damage award is entirely offset by an opposing claim and the DTPA consumer receives no net recovery." Id. at 10.
McKinley and the Court's more recent decisions limiting prevailing-party status to plaintiffs who obtain damages or other relief in the trial court's judgment are in tension with each other. Though the Court has not explained how McKinley fits within the current framework, the Court has not overruled McKinley or called it into doubt. But assuming McKinley remains good law, our court recognized in Alanis v. U.S. Bank National Association that McKinley is limited to situations in which a plaintiff and defendant both assert claims for relief, each side succeeds on some claims, and their respective damages offset so that only one recovers in the judgment. See 489 S.W.3d 485, 514-15 (Tex. App.-Houston [1st Dist.] 2015, pet. denied); see also Osborne v. Jauregui, Inc., 252 S.W.3d 70, 76 (Tex. App.-Austin 2008, pet. denied) (observing that "McKinley concerned only the question of whether a damages award offset by a defendant's counterclaim, a claim alleging different injuries and different theories of recovery, could support attorney's fees"); ITT Commercial Fin. Corp. v. Riehn, 796 S.W.2d 248, 254-56 (Tex. App.-Dallas 1990, no writ) (distinguishing McKinley on same basis-specifically, that McKinley only addressed fee recovery in context of offsetting claims for affirmative relief).
In Alanis, the plaintiff sued several defendants for fraud and violations of various statutes, including the Texas Fair Debt Collection Practices Act. 489 S.W.3d at 491. In addition to damages, she sought her attorney's fees under the FDCPA. See id. The jury found for her on the FDCPA claim and awarded her $20,000 in damages. Id. at 498. At issue on appeal was whether she could recover her attorney's fees under the FDCPA, given that she did not obtain a net recovery on this claim in the trial court's judgment due to an offset for a pretrial settlement with another party relating to this statutory violation. See id. at 514-15. Our court held that she could not recover her fees Id. In doing so, our court distinguished McKinley, observing that it is one thing to allow a fee award on a successful claim that is entirely offset by an opposing party's successful claim, but it is quite another to award fees on a claim that, though successful, was paid in full before trial. Id. at 515. As the plaintiff's FDCPA-related damages had already been paid before trial, she was not entitled to recover fees under the Act. Id.; see also Buccaneer Homes of Ala. v. Pelis, 43 S.W.3d 586, 590-91 (Tex. App.-Houston [1st Dist.] 2001, no pet.) (holding plaintiff was not entitled to attorney's fees under DTPA because damages jury awarded for DTPA violation were exceeded by pretrial settlement with another party that had to be credited against damage award and stating that McKinley does not apply when plaintiff has already settled with another party for amount greater than damages found by jury in trial against non-settling defendant); Hamra v. Gulden, 898 S.W.2d 16, 18-19 (Tex. App.-Dallas 1995, writ dism'd w.o.j.) (reasoning that McKinley does not apply when plaintiff has settled with another party for amount greater than damages found by factfinder in trial against non-settling defendant because plaintiff's claim has already been paid in full before trial).
Texas courts have concluded that pretrial insurance payments are materially indistinguishable from pretrial settlement payments in this context. See Imperial Lofts v. Imperial Woodworks, 245 S.W.3d 1, 7 (Tex. App.-Waco 2007, pet. denied) (stating McKinley's rule that net recovery is not required to obtain fees "does not apply when the damages awarded by the jury are offset by settlement credits or insurance payment credits" and holding plaintiff could not recover fees because settlement and insurance payment exceeded jury award); Blizzard v. Nationwide Mut. Fire Ins. Co., 756 S.W.2d 801, 806-07 (Tex. App.-Dallas 1988, no writ) (stating McKinley's "rule does not apply in a case like this one in which the damages found have already been paid" and holding plaintiff could not recover fees because pretrial insurance payments offset damages awarded by jury). And in Alanis, our court tacitly endorsed this conclusion. See 489 S.W.3d at 515 (citing Imperial Lofts and Blizzard with approval in appeal not involving insurance payments).
This lawsuit resembles Alanis more than McKinley. Unlike McKinley, this is not a case in which the plaintiff asserted a claim, the defendant asserted factually distinct counterclaims, and both prevailed, resulting in offsetting damage awards. Here, Jones successfully tried several claims to the jury. Consistent with the verdict form, the jury awarded a single sum for all the claims Jones had proved. Thus, the damages awarded by the jury encompass all of her claims, including any violation of the Texas Insurance Code. That award, in turn, was exceeded by the amount Allstate had already paid Jones under the policy, given the deductible. Hence, Allstate paid the full amount it owed Jones on her claims before trial, which means that Jones did not prevail and cannot recover attorney's fees. See Alanis, 489 S.W.3d at 514-15; Imperial Lofts, 245 S.W.3d at 7; Blizzard, 756 S.W.2d at 806-07.
Jones argues her suit materially differs from decisions like Alanis in that she sued not only for breach of the home insurance policy but also for violations of the Insurance Code and obtained favorable jury findings as to both. She explains that decisions like Alanis are inapt because Allstate's pretrial payment under the home insurance policy was unrelated to any Insurance Code violation. Jones maintains Allstate cannot avoid the consequences of such statutory violations-liability for costs and fees-by virtue of having already paid what it owed under the policy.
But the Supreme Court's decision in Allstate Insurance Company v. Bonner refutes the distinction Jones proposes. See 51 S.W.3d 289 (Tex. 2001). In Bonner, the plaintiff sued her insurer under an automobile policy. Id. at 290. The damages the jury awarded her were exceeded by her insurer's pretrial payment under the policy, so the trial court rendered a take-nothing judgment, declined to award her attorney's fees, and taxed court costs against her. Id. On appeal, the plaintiff asserted she was entitled to fees under the Texas Insurance Code because her insurer had stipulated it had violated an Insurance Code provision requiring insurers to promptly acknowledge receipt of claims. Id. at 290-91. The Supreme Court disagreed, holding the plaintiff could not recover fees under the Insurance Code because an insurer must first be liable on a policy claim before it can owe any fees for violating the Code with respect to that claim. Id. at 291-92. Because the insurer had already paid the plaintiff more than the jury found she was entitled to under the policy, the insurer was not liable under the policy and the plaintiff could not recover her attorney's fees under the Insurance Code. Id. In so holding, the Court distinguished McKinley on the ground that the insurer "did not simply gain the right to offset one valid claim against another" but defeated the plaintiff's claim altogether by having paid the plaintiff more under the policy before trial than the jury decided the plaintiff was due under the policy. Id. at 292.
Like the insurer in Bonner, Allstate defeated Jones's policy claim altogether when the jury found Jones was entitled to less in damages than Allstate had already paid. Allstate did not plead the affirmative defense of offset, but Jones appears to have allowed Allstate to try offset by consent in that she concedes the damages found by the jury were offset by the combined amount of the policy proceeds previously paid to her and the deductible. Because the jury charge included one damages question predicated on an affirmative answer to any one of multiple liability theories (breach of the policy, Texas Insurance Code violations, and bad faith), it is unknown whether the damages found by the jury were for breach of contract and/or extra-contractual claims. Under these circumstances, McKinley is inapposite because payment is a policy defense that defeats Jones's policy claim on the merits, not the mere offset of one successful claim against another successful claim. Id.
In conclusion, no matter which line of authority governs this lawsuit, Jones does not qualify as a prevailing party and therefore cannot recover her court costs or attorney's fees under Section 541.152(a)(1) of the Texas Insurance Code. The Supreme Court's most recent decisions on the subject of prevailing parties limit prevailing-party status to plaintiffs who obtain a judgment for damages or equitable relief. Epps, 351 S.W.3d at 868; Intercontinental Grp. P'ship, 295 S.W.3d at 652, 655-57. Because the trial court rendered a take-nothing judgment, Jones does not qualify as a prevailing party under these decisions. Assuming McKinley remains good law and states an exception to or otherwise qualifies the Supreme Court's most recent decisions, the Supreme Court, our court, and other courts of appeals have recognized that McKinley does not apply in suits like the one before us. Bonner, 51 S.W.3d at 291-92; Alanis, 489 S.W.3d at 514-15; Imperial Lofts, 245 S.W.3d at 7; Blizzard, 756 S.W.2d at 806-07. Therefore, Jones's sole issue on appeal lacks merit. See Elness Swenson Graham Architects v. RLJII-C Austin Air, 520 S.W.3d 145, 169-71 &n.9 (Tex. App.-Austin 2017, pet. denied) (en banc) (holding plaintiff who did not recover in judgment due to offsetting settlement credits did not qualify as prevailing party under Intercontinental Group Partnership and noting that plaintiff also would not qualify as prevailing party under earlier intermediate appellate decisions like Imperial Lofts, Buccaneer Homes, and Blizzard).
CONCLUSION
The trial court's judgment is affirmed.
Justice Kelly, concurring with opinion to follow.