{"id":901208,"date":"2023-05-24T16:14:33","date_gmt":"2023-05-24T22:14:33","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=901208"},"modified":"2023-05-24T16:31:26","modified_gmt":"2023-05-24T22:31:26","slug":"the-american-rule-stands-appellate-court-remands-for-prevailing-party-to-segregate-between-recoverable-and-non-recoverable-fees","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/the-american-rule-stands-appellate-court-remands-for-prevailing-party-to-segregate-between-recoverable-and-non-recoverable-fees\/","title":{"rendered":"The American Rule Stands?\u00a0Appellate Court Remands for Prevailing Party to Segregate Between Recoverable and Non-Recoverable Fees"},"content":{"rendered":"\n<p>John Mark Goodman | <a href=\"https:\/\/www.buildsmartbradley.com\/2023\/05\/the-american-rule-stands-appellate-court-remands-for-prevailing-party-to-segregate-between-recoverable-and-non-recoverable-fees\/?utm_source=Bradley+Arant+Boult+Cummings+LLP+-+BuildSmart&amp;utm_campaign=705faa8b58-RSS_EMAIL_CAMPAIGN&amp;utm_medium=email&amp;utm_term=0_b504caf31b-705faa8b58-78863422\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">BuildSmart<\/a><\/p>\n\n\n\n<p>Another week, another <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/indemnity-clause-attorney-fees-rejects-shifting\/\" target=\"_blank\" rel=\"noreferrer noopener\">fee-shifting case<\/a>. This ones involves a&nbsp;28-unit condo project&nbsp;in the Houston Heights neighborhood of Houston (see&nbsp;<em>2017 Yale Development, LLC v. Steadfast Funding, LLC<\/em>, 2023 WL 3184028&nbsp;(Tex. App. May 2, 2023)).&nbsp;The project failed after the developer defaulted on its loans and several contractors filed liens on the property.&nbsp;Litigation ensued.&nbsp; The developer asserted numerous claims including fraud and breach of contract against the lenders and others, and the lenders countersued for fraud and breach of contract.&nbsp;The trial court rendered summary judgment against the developer on its claims and in favor of the lenders on their breach of contract counterclaim.&nbsp;The case proceeded to a trial on the issue of the lenders\u2019 breach of contract damages.&nbsp; The trial court awarded the lenders a total of $8.3 million, including $765,000 in attorneys\u2019 fees, which were recoverable under a fee-shifting provision in the promissory note.<\/p>\n\n\n\n<p>On appeal, the developer raised 33 issues. The appellate court rejected all but one: the appropriateness of the fee award.&nbsp;On that issue, the appellate court held that the lenders had failed to properly segregate their attorneys\u2019 fees between recoverable and non-recoverable claims as required under Texas law. For example, while the lenders could be entitled to attorneys\u2019 fees on their breach of contract claim, they would not be entitled to recover fees incurred in pursuit of fraud claims. The court therefore remanded the case to the trial court to allow the lenders to properly prove up their recoverable attorneys\u2019 fees. As to what proof would be required on remand, the court cited the following cases as guidance:&nbsp;<em>Tony Gullo Motors I, L.P. v. Chapa<\/em>, 212 S.W.3d 299, 311, 314 (Tex. 2006) (noting that standard for segregation of attorney\u2019s fees \u201cdoes not require more precise proof for attorney\u2019s fees than for any other claims or expenses\u201d and stating that attorney\u2019s opinion that a certain percentage \u201cof their drafting time would have been necessary even if there had been no fraud claim\u201d would have sufficed);&nbsp;<em>Hillegeist Fam. Enters., LLP v. Hillegeist<\/em>, 2022 WL 3162367, at *5 (Tex. App. Aug. 9, 2022) (stating that when segregation is required, attorneys do not have to keep separate time records for each claim).<\/p>\n\n\n\n<p>The&nbsp;<em>Yale Development<\/em>&nbsp;case serves as another useful lesson on the recoverability of attorneys\u2019 fees. Understanding the requirements and limits to fee awards in a specific state can be important. In this case, early recognition of the requirement to segregate fees incurred on different claims may have allowed lenders the ability to more easily prove up their attorneys\u2019 fees claims at trial and on remand.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p><strong>When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes &#8211; please call Advise &amp; Consult, Inc. at 888.684.8305, or email <a href=\"mailto:experts@adviseandconsult.net\" target=\"_blank\" rel=\"noreferrer noopener\">experts@adviseandconsult.net<\/a>.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>John Mark Goodman | BuildSmart Another week, another fee-shifting case. This ones involves a&nbsp;28-unit condo project&nbsp;in the Houston Heights neighborhood of Houston (see&nbsp;2017 Yale Development, LLC v. Steadfast Funding, LLC, 2023 WL 3184028&nbsp;(Tex. App. May 2, 2023)).&nbsp;The project failed after the developer defaulted on its loans and several contractors filed liens on the property.&nbsp;Litigation ensued.&nbsp;&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/the-american-rule-stands-appellate-court-remands-for-prevailing-party-to-segregate-between-recoverable-and-non-recoverable-fees\/\">Continue reading <span class=\"screen-reader-text\">The American Rule Stands?\u00a0Appellate Court Remands for Prevailing Party to Segregate Between Recoverable and Non-Recoverable Fees<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[10885],"tags":[9895,142,23],"class_list":["post-901208","post","type-post","status-publish","format-standard","hentry","category-property-insurance-claims","tag-advise-consult","tag-attorneys-fees","tag-insurance-coverage","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>The American Rule Stands?\u00a0Appellate Court Remands for Prevailing Party to Segregate Between Recoverable and Non-Recoverable Fees - Advise &amp; 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