Monday, November 2, 2009

Does Promissory Estoppel Claim Support Attorney Fee Award?

Are attorney's fees available on a successful promissory estoppel claim? The answer is not so clear as the courts of appeals are divided on the issue. Worse, the two Houston Courts of Appeals are on opposite sides of the divide, thus putting the courts below in the quandry of which authority to follow. Rather than resolving the issue - or calling upon the Supreme Court to do so for the benefit of all Texas courts and appellate jurisdictions - the First Court of Appeals here affirms attorney's fees on more conventional grounds sanctioned by statute: breach of contract.

Attorney’s fees challenge

Basis for fee award

Prince contends that the trial court erred in awarding QAI its attorney’s fees because Texas law does not allow an award of attorney’s fees based on a claim of promissory estoppel. Prince recognizes that Texas courts currently are split on this issue. Compare Doctors Hosp. 1997, L.P. v. Sambuca Houston, L.P., 154 S.W.3d 634, 635–38 (Tex. App.—Houston [14th Dist.] 2004, pet. abated) (holding that attorney’s fees are not recoverable under Tex. Civ. Prac. & Rem. Code § 38.001(8) for promissory estoppel claim because such claims presuppose no “oral or written contract”) (quoting Subaru of Am., Inc. v. David McDavid Nissan, Inc., 84 S.W.3d 212, 226 (Tex. 2002) (“promissory estoppel doctrine presumes no contract exists”)) with Preload Tech., Inc. v. A.B. & J. Constr. Co., 696 F.2d 1080, 1094–95 (5th Cir. 1983) (upholding attorney’s fees awarded under Texas law for promissory estoppel claim); Traco, Inc. v. Arrow Glass Co., 814 S.W.2d 186, 194–95 (Tex. App.—San Antonio 1991, writ denied); Safe Env’t v. Pelzel & Assocs., Inc., No. 3-09-00721-CV, 1999 WL 815819, at *31999 Tex. App. LEXIS 7628 (Tex. App.—Austin 1999, no pet.) (mem. op.).

Our precedent on this issue is contrary to the Fourteenth Court of Appeals’ decision in Sambuca. See Adams v. Petrade Int’l, 754 S.W.2d 696, 720 (Tex. App.—Houston [1st Dist.] 1988, writ denied). Nevertheless, we need not reconsider our position, because the trial court’s judgment does not specify the theory under which fees were awarded, and the trial court’s findings of fact and conclusions of law provide a contractual basis for the attorney’s fee award. Specifically, the trial court found that [...]

In its counterclaim, QAI sought its attorney’s fees as relief. The trial court’s findings of fact and conclusions of law support an award of attorney’s fees under the Civil Practice and Remedies Code. See Tex. Civ. Prac. & Rem. Code Ann. § 38.001(8) (Vernon 2008) (allowing for recovery of reasonable attorney’s fees on claim for oral or written contract). The findings identify an agreement among the parties; Prince’s breach of that agreement; and damages incurred by QAI resulting from that breach. The issue of whether the cash flow statement was a settlement agreement, the breach of which would support an award of attorney’s fees, was tried by consent. See Tex. R. Civ. P. 67. Prince does not challenge any of the trial court’s findings of fact and conclusions of law.

We conclude that the fee award does not rest on a promissory estoppel theory. We hold that the applicable statutory authority and the evidence support the trial court’s award of attorney’s fees.

Lee-Way Prince Enterprises, LLC v. Qai Assurance, Inc.
(Tex.App.- Houston [1st Dist.] Oct. 29, 2009)(Bland)(award of attorney’s fees on contract breach attorney's fees for promissory estoppel claim, breach of ontract, breach of settlement agreement, common-law fraud)
Justice Bland
Before Chief Justice Radack, Justices Bland and Massengale
01-07-01004-CV Lee-Way Prince Enterprises, LLC v. Qai Assurance, Inc. and Arthur Kwok
Appeal from 269th District Court of Harris County
Trial Court Judge:
Hon. John T. Wooldridge

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