BEAUMONT – The Court of Appeals for the 9th District of Texas at Beaumont has remanded a case disputing an attorneys’ fees award back to the trial court.

In a decision filed Sept. 21 by Justice Charles Kreger, the appellate court determined that Chevron Phillips Chemical Co. (CP Chem) would still be responsible for the payment of attorneys’ fees incurred by appellee Kingwood Crossroads (KCR), but the amount owed should be reconsidered by the trial court.

According to the decision, the original lawsuit began with KCR filing a complaint against CP Chem, Exxon Land Development Inc. (ELDI) and two other companies with whom KCR settled before trial for various claims including breach of contract, tortious interference and fraud. CP Chem filed a counterclaim for breach of contract and ELDI filed one for a declaratory judgment. KCR prevailed and the jury awarded it $3 million in legal fees.

As per an agreement between the parties, KCR provided evidence of its segregated fees, and in a separate hearing the trial court reduced the award to $2.9 million. All three parties appealed to the 14th Court of Appeals.

According to Kreger’s opinion, “the 14th Court of Appeals made several modifications to the trial court’s judgment and remanded solely for KCR to segregate the fees its attorneys incurred in successfully defending against CP Chem’s contract counterclaim or to demonstrate the segregation was not required, and for the trial court to determine the amount of fees necessary for the defense of CP Chem’s contract counterclaim.”

Upon remand, the trial court held that all of the fees KCR incurred in its claims against CP Chem were also applicable to its defense of CP Chem’s counterclaim, and therefore the court did not segregate those fees, the decision states. In the end, the trial court ordered CP Chem to pay KCR’s attorneys’ fees in the amounts of $2.6 million for its defense of CP Chem’s contract counterclaim, and $195,000 for its appellate defense. 

CP Chem again appealed this decision, arguing in part that the trial court had not properly segregated the amount of attorneys’ fees, and that the appellate court should reverse the attorneys’ fees award. 

On the first matter, Kreger agrees that the work KCR’s attorneys had done on its affirmative actions would have assisted in its defensive actions, “however, we do question the extent to which such services would have been incurred on the recoverable claim alone,” he writes. “In other words, we question the trial court’s apparent ‘double duty’ standard of segregation, which would allow a party to recover all its attorneys’ fees incurred in asserting unsuccessful claims, just so long as it successfully defended a related counterclaim.”

The court did not, however, agree that the award should be reversed. It overruled that issue, asserting that KCR is entitled to provide evidence segregating its fees so that the court can determine the proper amount owed.

The court remanded the case to the trial court to segregate the fees and determine the amount that was used in defense of CP Chem’s breach-of-contract counterclaim. Justices Leanne Johnson and Hollis Horton concurred.

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