WE CAN’T ALL BE WINNERS – OR PREVAILING PARTIES

Brinson Benefits, Inc. v. Hooper
Dallas Court of Appeals, No. 05-15-00123-CV (July 7, 2016)
Justices Evans, Schenck (Opinion), and Richter

Kelli Hinson

Contrary to what you may have learned in pee wee soccer, everyone can’t be a winner—or under the terms of the Texas Theft Liability Act, a “prevailing party.” After Linda Hooper resigned from her employment at Brinson Benefits, Brinson sued her for taking the company’s confidential information and obtained an injunction preventing her from using it to solicit the company’s customers or prospects. Brinson later learned Hooper had developed and serviced several clients “on the side” while she was still Brinson’s employee, improperly retaining all commissions and other payments for herself. Brinson’s claims against Hooper included a claim under the TTLA for theft of “confidential and proprietary information and property.”

After the close of evidence, the trial court granted directed verdict in Hooper’s favor as to any damages caused by her taking confidential information, but not with regard to the wrongfully-retained commissions. The case then went to the jury, and it found Hooper breached her fiduciary duties to Brinson and committed theft of Brinson’s property. Post-trial, the trial court ordered Hooper to pay Brinson the damages found by the jury, plus attorneys’ fees of around $100,000. But it also found Hooper had “prevailed” on the portion of the claim subject to the directed verdict, and so ordered Brinson to pay Hooper’s attorneys’ fees of more than $370,000. Brinson appealed, arguing that Hooper was not a “prevailing party” and was not entitled to attorneys’ fees under the TTLA.

The Dallas Court of Appeals agreed. Under the TTLA, “[e]ach person who prevails in a suit under this chapter shall be awarded court costs and reasonable and necessary attorney’s fees.” TEX. CIV. PRAC. & REM. CODE ANN. § 134.005(b). Hooper argued that, because the trial court granted a directed verdict as to the theft of confidential information, she was a “prevailing party” and was entitled to her attorneys’ fees, even though the jury awarded Brinson relief on its TTLA claim based on the theft of commissions. The Dallas Court noted that, to recover fees, a TTLA defendant must “prevail on the merits of the claim, which one court has interpreted to mean “establish [she] did not commit theft.” Brinson clearly prevailed on its claim that Hooper committed theft. The fact that it did not obtain all the relief it sought does not transform Hooper into a prevailing party under the TTLA. The trial court, therefore, abused its discretion in awarding Hooper her attorneys’ fees and that portion of the judgment was reversed.

The Court affirmed, however, a second portion of the judgment, which awarded attorneys’ fees under the TTLA to two other defendants who had prevailed on claims that they conspired with Hooper to commit theft and other torts.

** Carrington Coleman partner, Lyndon Bittle, represented Brinson Benefits on appeal.