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MBM Financial Corp. v. Woodlands Operating Co., L.P.

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In MBM Financial Corporation v. The Woodlands Operating Co., No. 08-0390 (Tex. Aug. 28, 2009) the Texas Supreme Court reversed a plaintiff’s judgment for $1,000 in damages and almost $150,000 in attorney’s fees. Video of Oral Argument is available from St. Mary’s Law School. (Oral Argument Transcript) Justice Brister’s opinion begins:

Since Jarndyce v. Jarndyce, there have been charges that some cases benefit the lawyers more than the clients. But suits cannot be maintained solely for the attorney’s fees; a client must gain something before attorney’s fees can be awarded. While making losing parties bear their own attorney’s fees may add injury to insult, the American Rule has long been that each party pays its own lawyers.

In this case, the plaintiff obtained a judgment for $1,000 in damages and almost $150,000 in attorney’s fees. But there was no evidence to support the amount of the $1,000 award, and it is too large to constitute nominal damages. As the award to the client must be set aside, the attorney’s fee award must also. Accordingly, we reverse and render a take-nothing judgment.

MBM Financial Corporation v. The Woodlands Operating Co., No. 08-0390 (Tex. Aug. 28, 2009), appealed from Montgomery County and the Ninth District Court of Appeals, Beaumont. Jennifer Bruch Hogan, (Houston) argued for petitioner. Karen D. Smith (Woodlands) argued for respondent/cross-petitioner.

My favorite exchange comes at 26:55.

Smith: They rely upon the Gulfstates case, I think, out of this court to attempt to say that this court has made a determination that a finding of whether or not a finding of zero or nominal damages does not allow recovery of attorney’s fees.

Justice (???): What distinguishes that case is the DTPA.

Smith: Not only that your honor, but the other thing I would do with all due respect, I know Justice Jefferson you authored that opinion and Justice Hecht joined in it, but I think there’s a problem with the Gulfstates case.

Justice (???): What?!?!?

With greatest respect I say that and I’ve read it several times to be sure that couldn’t be the case…

As soon as you hear “with all due respect…” you know something good is coming.

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