NUMBER 13-24-00525-CV
COURT OF APPEALS
THIRTEENTH DISTRICT OF TEXAS
CORPUS CHRISTI – EDINBURG
NICHOLAS JOHNSON, Appellant,
v.
ENGINEERED PERFORMANCE RACING,
A DOMESTIC FOR-PROFIT COMPANY,
AND MITCHELL WILSON, Appellees.
ON APPEAL FROM THE 413TH DISTRICT COURT
OF JOHNSON COUNTY, TEXAS
MEMORANDUM OPINION
Before Justices Silva, Peña, and Cron
Memorandum Opinion by Justice Peña
Appellant Nicholas Johnson appeals the trial court’s judgment awarding him
$33,508 in damages and no attorney’s fees and costs. By a single issue, Johnson argues that the trial court erred in refusing to award him attorney’s fees and costs. 1 We reverse
in part, remand in part, and affirm in part.
I. BACKGROUND
Johnson hired appellees Engineered Performance Racing (EPR) and Mitchell
Wilson, the owner of EPR, to build a performance racing engine for his “1995 Nissan
300zx.” The engine was built and delivered to Johnson but failed to perform upon
installation. The engine was subsequently returned and appellees made attempts to
correct the issues. However, upon re-delivery and re-installation, the engine once again
failed mechanically. A third party who manufactured parts that were used in the engine
ran tests and determined that the failures were due to “the reconditioning of the engine
block/ or improper assembly of the block (engine rebuilder).” Johnson also reviewed the
specifications sheet that was provided when the engine was delivered and noticed that
the specifications for the engine were incorrect. When he contacted appellees for repairs
under the warranty, appellees claimed the specifications were correct but the specification
sheet contained “clerical error.” Finally, appellees disclaimed responsibility for the engine
failure and alleged that “other issues” caused the engine to fail.
On February 14, 2023, Johnson filed his original petition against appellees alleging
claims for breach of contract and breach of express warranty under Texas common law
and the Texas Deceptive Trade Practices Act for their refusal to repair the engine. See
TEX. BUS. & COM. CODE ch. 17. A jury trial commenced on June 3, 2024. Following a
1 This case is before the Court on transfer from the Tenth Court of Appeals pursuant to a docketequalization order issued by the Supreme Court of Texas. See TEX. GOV’T CODE §§ 22.220(a) (delineating the jurisdiction of appellate courts), 73.001 (granting the supreme court the authority to transfer cases from one court of appeals to another at any time that there is “good cause” for the transfer). We are bound by the precedent of the transferring court to the extent that it differs from our own. See TEX. R. APP. P. 41.3.
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verdict in favor of Johnson, he was subsequently awarded $23,508 for past damages and
$10,000 for future damages.
Before trial, the parties agreed to submit the issue of attorney’s fees and costs to
the trial court. On June 14, 2024, Johnson filed his combined motion for assessment of
attorney’s fees, expenses, and entry of judgment. The following exhibits were attached to
his motion: (A) the demand letter Johnson initially sent to appellees offering to resolve the
matter for “$27,650.28 as compensation and $3,051.00 in attorney fees” which appellees
refused; (B) appellees response to the demand letter stating that “EPR is not convinced
that it did anything that le[]d to the alleged failure of the Engine”; (C) Johnson’s reply to
the rejection of the demand “address[ing] [appellees’] concerns and provid[ing]
[appellees] with some of the relevant evidence” in hopes of “avoiding unnecessary and
costly litigation”; (D) an affidavit from Johnson’s trial counsel discussing”; (E) the charge
of the court; (F) an affidavit from Keelin Code with attached invoices of Johnson’s incurred
attorney’s fees; and (G) invoices of Johnson’s incurred costs. Johnson explained that
exhibits (F) and (G) were his trial counsel’s “usual business records” and they were
recorded contemporaneously as services were provided. Johnson argued in his motion
that his assessment of attorney’s fees and costs complied with the factors set out in Arthur
Andersen & Co. v. Perry Equipment Corp., 945 S.W.2d 812, 818 (Tex. 1997).
Appellees filed a response, arguing that Johnson “failed to satisfy his evidentiary
burden to justify an award of fees and, at a minimum, seeks fees that are not reasonable
and necessary under the circumstances.”
An evidentiary hearing was held regarding Johnson’s motion on August 30, 2024.
He specifically argued that an award of attorney’s fees under Section 38.001 was proper
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because Section 38.005 “calls for a liberal construction of the rules to promote the
purposes of trying to encourage contracting parties to pay their just debts.” See TEX. CIV.
PRAC. & REM. CODE §§ 38.001, 38.005. During the hearing, Johnson’s counsel, Alyson
Oliver, testified to the “novelty and difficulty” of proving the claims alleged because
Johnson’s claims required trial counsel “to pretty much learn the interworking of a racing
engine.” Oliver further testified that the skill required to perform the legal services properly
was high and that the jury returned a “verdict essentially giving [Johnson] the money that
he spent on this racing engine that never worked.” Oliver also testified that taking on this
case restricted the firm to the effect that “[the firm’s attorneys] couldn’t pursue other cases
during that time period” and that the hourly rates were $600 per hour—for the firm partner
who supervised the trial attorney—and $300 an hour for the attorney who “tried the
majority of the case.”
Johnson pointed the trial court to exhibits F and G attached to his combined motion
which documented that he incurred attorney’s fees in the amount of $101,073 and costs
in the amount of $18,094.54 and argued that the reasonableness of his fees were in
compliance with Arthur Andersen, see 945 S.W.2d at 818, and Rohrmoos Venture v.
UTSW, DVA Healthcare, LLP, 578 S.W.3d 469, 491 (Tex. 2019). Exhibit K, the
Economics of Law Survey, and the invoices, exhibits F, and G, reflect: (1) the particular
services performed, (2) who performed those services, (3) when the services were
performed, (4) the amount of time required to perform the services, (5) the actual billable
rate for each person performing the services at the time the services were performed and
(6) how the firm established the attorney hourly rates. Finally, Olliver testified that the time
management system the firm uses to keep track of the time spent and expenses spent
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on the case are kept “contemporaneously with the work performed.”
Appellees did not deny that recovery of attorney’s fees under Section 38.001 was
proper. Instead, appellees focused their argument on (1) whether the hourly rates
Johnson claimed as attorney’s fees were reasonable in light of the fact that Johnson
produced no evidence of customary fees in Johnson County (appellees claimed that the
trial court could consider “either increasing or decreasing the fee” based on “the fee
customarily charged in the locality for similar legal services”); (2) whether Oliver was
qualified to testify about “reasonable fees” in Texas because “[a]ll of the appointments
that she references are not in the State of Texas” and thus she did not meet the Rohrmoos
standard because “you have to specifically [and] actually analyze these different factors
and specifically tie it to your fee request . . . [and s]he didn’t do that”2 and (3) ultimately
the affidavit submitted by Johnson’s counsel is tantamount to a statement such that, “’I
find these fees to be reasonable and necessary.’” Appellees argued that because the
requested amount of attorney’s fees was “not properly proven,” no attorney’s fees should
be awarded.
The trial court took the matter under advisement and on September 5, 2024, it
entered a final judgment awarding zero attorney’s fees. The trial court made no findings
of fact and conclusions of law and none were requested by the parties.
II. DISCUSSION
On appeal, Johnson argues that in his brief to the trial court and during the hearing,
he “laboriously worked through the lodestar analysis and Arthur Anders[e]n factors,
2 Appellant testified that she has “been appointed by courts to complex litigation from California to
Maine, from Mississippi to Michigan” and “serve [on] the time and expense committee on multi-district litigation matters . . . .reviewing attorney fees and costs from attorneys across the nation, including here in Texas.”
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supplying evidence as to each and every factor.” See Arthur Andersen, 945 S.W.2d at
818; Rohrmoos, 578 S.W.3d at 491. Appellees contend that (1) “[t]he trial court’s ruling
on attorney’s fees properly rests on its implied findings that [Johnson] failed to present
legally competent evidence to support an award of attorney’s fees,” and (2) Johnson failed
to meet his burden of proof; thus, the award of attorney’s fees under Chapter 38 is not
mandatory.
A. Applicable Law
Texas Civil Practice and Remedies Code Section 38.001 provides that “[a] person
may recover reasonable attorney’s fees . . . in addition to the amount of a valid claim and
costs, if the claim is for . . . an oral or written contract.” TEX. CIV. PRAC. & REM. CODE
§ 38.001(b)(8). The Supreme Court of Texas has held that a breach of warranty claim
falls within the meaning of Section 38.001(b)(8). Med City Dallas, Ltd. v. Carlisle Corp.,
251 S.W.3d 55, 62–63 (Tex. 2008). “If attorney’s fees are proper under section 38.001(8),
the trial court has no discretion to deny them.” Smith v. Patrick W.Y. Tam Trust, 296
S.W.3d 545, 547 (Tex. 2009) (citing former version of Section 38.001 of the Texas Civil
Practice and Remedies Code); see Bocquet v. Herring, 972 S.W.2d 19, 20 (Tex. 1998)
(holding that statutes providing that a party “may recover” attorney’s fees are not
discretionary). Additionally, the Texas Civil Practice and Remedies Code Section 38.003
states that “attorney’s fees for a claim of the type described in [Section] 38.001 are
reasonable” but “[that] presumption may be rebutted.” TEX. CIV. PRAC. & REM CODE
§ 38.003.
In Arthur Andersen, the Supreme Court of Texas set out the “[f]actors that a
factfinder should consider when determining the reasonableness of a fee” as follows:
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(1) the time and labor required, the novelty and difficulty of the questions
involved, and the skill required to perform the legal service properly;
(2) the likelihood . . . that the acceptance of the particular employment will
preclude other employment by the lawyer;
(3) the fee customarily charged in the locality for similar legal services;
(4) the amount involved and the results obtained;
(5) the time limitations imposed by the client or by the circumstances;
(6) the nature and length of the professional relationship with the client;
(7) the experience, reputation, and ability of the lawyer or lawyers
performing the services; and
(8) whether the fee is fixed or contingent on results obtained or uncertainty
of collection before the legal services have been rendered.
945 S.W.2d at 818.
The Supreme Court of Texas in Rohrmoos explained that “[t]he lodestar
method . . . is a focused and objective analysis of whether the fees sought are reasonable
and necessary yielding a base figure that reflects most Arthur Andersen factors and is
thus presumptively reasonable. But that figure is subject to adjustment if the presumption
is overcome by other factors.” 578 S.W.3d at 496. In describing the lodestar method, the
Rohrmoos court stated that:
Under the lodestar method, the determination of what constitutes a
reasonable attorney’s fee involves two steps. First, the [fact finder] must
determine the reasonable hours spent by counsel in the case and a
reasonable hourly rate for such work. The [fact finder] then multiplies the
number of such hours by the applicable rate, the product of which is the
base fee or lodestar. The [fact finder] may then adjust the base lodestar up
or down (apply a multiplier), if relevant factors indicate an adjustment is
necessary to reach a reasonable fee in the case.
Id. at 494 (quoting El Apple I, Ltd. v. Olivas, 370 S.W.3d 757, 760 (Tex. 2012)).
B. Standard of Review
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A trial court’s decision to either grant or deny attorney’s fees is reviewed under an
abuse of discretion standard, and the amount awarded is reviewed under a legal
sufficiency standard. EMC Mortg. Corp. v. Davis, 167 S.W.3d 406, 418 (Tex. App.—
Austin 2005, pet. denied) (citing Allison v. Fire Ins. Exch., 98 S.W.3d 227, 262 (Tex.
App.—Austin 2002, pet. granted, judgm’t vacated w.r.m.by agr.)). “A trial court abuses its
discretion when it acts without reference to any guiding rules or principles.” Carpenter v.
Cimarron Hydrocarbons Corp., 98 S.W.3d 682, 687 (Tex. 2002) (citing Downer v.
Aquamarine Operators, Inc., 701 S.W.2d 238, 241–42 (Tex. 1985)). “When a trial court
does not issue findings of fact or conclusions of law, as in this case, ‘all facts necessary
to support the judgment and supported by the evidence are implied.’” Gray, Ritter &
Graham, PC v. Goldman Phipps PLLC, 511 S.W.3d 639, 653 (Tex. App.—Corpus Christi–
Edinburg 2015, pet. denied) (quoting BMC Software Belgium, N.V., 83 S.W.3d at 795);
see also Sprute v. Levey, No. 04-14-00358-CV, 2015 WL 4638298, at *7 (Tex. App.—
San Antonio July 15, 2015, no pet.) (mem. op.) (holding that where the trial court did not
expressly state its reason for a reduced fee, “we must infer that the trial court found ‘some
of the claimed fees to be unreasonable, unwarranted, or some other circumstances which
[made] an award of the uncontroverted claim wrong’” (quoting Ragsdale v. Progressive
Voters League, 801 S.W.2d 880, 882 (Tex. 1990) (per curiam))). “When reviewing matters
reserved for the trial court’s discretion, a court of appeals may not substitute its own
judgment for that of the trial court.” Garrod Invs., Inc. v. Schlegel, 139 S.W.3d 759, 767
(Tex. App.—Corpus Christi–Edinburg 2004, no pet.) (citing Flores v. Fourth Ct. of
Appeals, 777 S.W.2d 38, 41 (Tex. 1989)).
C. Analysis
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Johnson provided, through briefing and live testimony, evidence as to each of the
Arthur Andersen factors in developing his lodestar analysis. He established that his
determination of his hourly rate for the attorneys on the case was based on surveys “from
reviewing billing records for attorneys across the nation, including Texas” and provided
the trial court itemized billing records for work done on the case by each individual
“compiled contemporaneously with the work and the costs expended.” We conclude
Johnson produced sufficient evidence to satisfy the Arthur Andersen factors.
“It is presumed that the usual and customary attorney’s fees for a claim of the type
described in Section 38.001 are reasonable.” TEX. CIV. PRAC. & REM. CODE § 38.003.
Appellees did not contest whether attorney’s fees were appropriate under the statute,
instead, appellees argued that the fees were improperly calculated because none of the
fees included in the survey included customary fees from Johnson County. Appellees also
questioned the legitimacy of the rate of each attorney in the case and some of the work
provided and billed by non-attorneys.
The “locality argument” wherein appellees contend that Johnson’s attorney’s fees
are improper because the survey of customary attorney’s fees did not include fees
specific to Johnson County was addressed in Brazos Cnty. Water Control & Improvement
Dist. No. 1 v. Salvaggio, 698 S.W.2d 173, 178 (Tex. App.—Houston [1st Dist.] 1985 writ
ref’d n.r.e.). The First Court of Appeals held that “the trier of fact should consider the
amount charged by other attorneys in the general locality or area doing similar work.” Id.
The court rejected the argument that the locality inquiry was limited to a “specific county,”
finding that such a requirement “would be unduly restrictive.” Id.; see also Lola Barker v.
Hurst, 632 S.W.3d 175, 190 n.10 (Tex. App.—Houston [1st Dist.] 2021, no pet.) (rejecting
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the argument that “the trier of fact should consider the amount charged by other attorneys
in the locality doing similar work”).
Because the trial court awarded zero attorney’s fees and zero costs and made no
findings of fact and conclusions of law, we apply the implied findings doctrine. BMC
Software Belgium, N.V., 83 S.W.3d at 795. Consequently, all fact findings necessary to
support the trial court’s judgment are implied. Id. However, when the appellate record
includes a reporter’s record, those implied findings “are not conclusive and may be
challenged for legal and factual sufficiency.” Id. Thus, the appellate court will uphold the
zero-fee ruling on any basis supported by the evidence, but the appellant may challenge
the sufficiency of the evidence underlying those implied findings.
In Midland Western Building. L.L.C. v. First Serv. Air Conditioning Contractors,
Inc., 300 S.W.3d 738 (Tex. 2009) (per curiam), the Supreme Court of Texas held that “an
award of no fees was improper in the absence of evidence affirmatively showing that no
attorney’s services were needed or that any services provided were of no value.” Id. at
739 (first citing Smith, 296 S.W.3d 548; and then citing Cale’s Clean Scene Carwash, Inc.
v. Hubbard, 76 S.W.3d 784, 787 (Tex. App.—Houston [14th Dist.] 2002, no pet.)).
This principle was elaborated in State v. Buchanan, 572 S.W.3d 746 (Tex. App—
Austin 2019, no pet.), where a jury verdict of zero dollars on mandatory attorney’s fees
was held to be “against the great weight and preponderance of the evidence” when the
opposing party’s only challenge was that too many hours were spent—without
affirmatively proving that no services were needed or were valueless. Id. at 751. The
Buchanan court held that “a zero award for attorney’s fees is proper only if the evidence
(1) failed to prove (a) that any attorney services were provided, or (b) the value of the
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services provided; or (2) affirmatively showed that no attorney’s services were needed or
that any services provided were of no value.” Id. In this case, Johnson produced evidence
to the trial court demonstrating attorney services were provided as well as the purported
value of said services. See id.
In Lola Barker, the court of appeals found that an award representing only
seventeen percent of a proven lodestar was “arbitrary, unreasonable, and without
reference to guiding principles, because it bears no relationship to the uncontroverted
evidence of attorney’s fees incurred.” 632 S.W.3d at 194. Here, Johnson produced
evidence purporting to show that he incurred $101,073.00 in attorney’s fees as well as
evidence demonstrating $18,094 in costs. See Rohrmoos, 578 S.W.3d at 491.
Accordingly, the trial court’s award of zero fees and zero costs bears no relationship to
the uncontroverted evidence of the attorney’s fees incurred by Johnson. See id. We hold
that the trial court’s award of zero attorney’s fees and zero costs was without reference
to any guiding principles. See Carpenter, 98 S.W.3d at 687. We sustain Johnson’s sole
issue.
III. CONCLUSION
We reverse the portions of the trial court’s judgment awarding no attorney’s fees
and costs and remand for a new trial on those issues. The judgment is affirmed in all other
respects.
L. ARON PEÑA JR.
Justice
Delivered and filed on the
9th day of July, 2026.
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