Agnew v. Killion

Court of Appeals of Texas, Amarillo.

Ronnie AGNEW and Agnew & Reed, P.L.L.C., Appellants,

v.

James L. KILLION, Appellee.

No. 07-98-0291-CV.

|

July 27, 1999.

FROM THE 72ND DISTRICT COURT OF LUBBOCK COUNTY; NO. 95-551,810; HONORABLE J. BLAIR CHERRY, JR., JUDGE.

Before REAVIS, J. and REYNOLDS, SJ.^*

Opinion

JOHN T. BOYD, Chief Justice.

*1 In this appeal, appellants Ronnie L. Agnew and Agnew & Reed, P.L.L.C. (Agnew) challenge the apportionment of attorney’s fees between Agnew and appellee James L. Killion (Killion). The underlying suit which generated the attorney’s fees arose out of serious injuries sustained by Bennett Wells when he was struck by a car in the course of his employment by the City of Lubbock (the City). For reasons we later recount, we affirm the judgment of the trial court.

In the early morning hours of February 4, 1994, Wells was working to repair a water main in Lubbock. As he was doing so, Tara Watson, 18 years old, had been illegally drinking alcohol at Stubbs Barbeque in Lubbock. On her way home, Watson drove through several barricades at Wells’s work site and struck Wells, leaving him permanently paralyzed. She was driving a car owned by her mother, Teresa Rowlett.

As a self-insurer under the workers compensation system, the City paid benefits to Wells of approximately one million dollars and, in April 1994, retained Killion to assert its subrogation interest against any parties who might be liable to Wells. The agreement provided that Killion would be paid one-third of the amount recovered plus any expenses he incurred. Although he discussed settlements with potential defendants, he did not file suit against Watson, Stubbs, or Rowlett. Killion does not dispute that he discouraged other attorneys from representing Wells by asserting that the City’s subrogation interest was greater than the resources of the potential defendants.

Bennett Wells and his wife, Jewel (the Wells) retained Agnew to represent them in an action against parties who were potentially liable to the Wells. In connection with this dispute, Agnew asserts that Killion never obtained consent from the City to file suit against Stubbs because of a relationship between the owner of Stubbs and the City. Specifically, Agnew asserts that Stubbs’ owner was involved in a downtown revitalization project promoted by the City. Killion does not directly challenge this assertion but takes the position that he had not yet filed suit because he had doubts about Stubbs’ liability and Watson’s only resource was $20,000 in insurance.

On June 5, 1995, on the Wells’ behalf, Agnew filed suit against Watson, Stubbs, Rowlett, and Watson’s employer, the Office Depot. The Office Depot was later granted summary judgment. Admittedly frustrated by the slow pace of the litigation, the Wells ceased communicating with Agnew. As a result, on November 26, 1996, Agnew filed a motion to withdraw as the Wells’ attorney. That motion was granted on the same day it was filed. However, in January 1997, Agnew filed a petition in intervention seeking to recover attorney’s fees for the work he had done.

In March 1997, the City filed a motion seeking summary judgment in which it sought a judgment “enforcing [its] subrogation interest in the amount of at least $2,737,015.20” and that it was entitled to any money tendered into the registry of the court in settlement of the suit. Agnew filed a response to the motion contending he was entitled to attorney’s fees for the work done because the City had not filed suit, that his work on the case included a video of a “day in the life of” Wells which was of material benefit, and that Jewel Wells had an independent cause of action not subject to the City’s subrogation claim. He also asserted that Killion had entered into negotiations with Stubbs for the purpose of defeating any recovery by the Wells. Parenthetically, Agnew’s last assertion is somewhat supported by testimony of Killion that at the time the Wells were not represented by counsel, they also refused to communicate with him. As a result, he sent them requests for admissions knowing that they were not represented and probably would not respond, allowing the admission to be deemed true. The result of these deemed admissions would be to defeat the Wells’ recovery.

*2 In April 1997, attorney Jeff Nicholson filed an appearance on behalf of the Wells. Soon thereafter, the parties reached two settlement agreements whereby Stubbs and Watson tendered their insurance policy limits totaling $1,020,000 in exchange for a release by the Wells and the City. The first agreement was between Watson, Rowlett, the Wells, the City, and Agnew. In that instrument, Watson and Rowlett paid the sum of $20,000 for the release of all claims against them. It is undisputed that $6,666.66 of this amount is part of the attorney’s fees in dispute in this appeal and is held in the registry of the court. The second agreement was between Stubbs, the Wells, the City, and Agnew. It allocated a $1,000,000 payment for release of all claims as follows: $120,000 to the Wells and Nicholson; $30,000 to the Wells, Nicholson and Agnew; $566,666.67 to the City; and $283,333.33 to the district clerk as attorney’s fees.

It is undisputed that the result of these agreements was that the Wells recovered $150,000 and the City recovered $870,000 on its subrogation claim. Also, as a result of these agreements, the total of $290,000, or one-third of the City’s recovery, was held in the registry of the court for the payment of attorney’s fees. In June 1997, the City filed its motion seeking summary judgment on Agnew’s petition awarding it the entire $290,000 as attorney fees, which, of course, would have the effect of denying any recovery to Agnew for attorney’s fees. Agnew responded to the motion and sought an apportionment of the fees. On January 22, 1998, the trial court denied the City’s summary judgment motion for attorney fees, which prompted Killion to file his own petition in intervention asserting he was entitled to the attorney’s fees. On May 19, 1998, after a March hearing, the trial court rendered its judgment awarding Agnew $20,000 attorney’s fees, plus $709.70 in interest, or about 7 percent of the total attorney’s fees. It awarded the remaining 93 percent, or some $270,000, to Killion. Both Agnew and Killion appeal this decision.

In his appeal, Agnew presents a single issue asking if the trial court abused its discretion in making its apportionment of the attorney’s fees. In his appeal, Killion presents two issues inquiring whether Agnew is entitled to any attorney’s fees because of his withdrawal from the underlying case before the settlement was reached. Because they present the threshold question of Agnew’s right to recover anything, we address Killion’s issues first.

Killion initially argues that by his action, Agnew has waived, or is estopped to assert, any right to recover attorney fees. In support of that proposition, he cites authority defining waiver as the intentional relinquishment of a known right or conduct inconsistent with claiming that right. See Royden v. Ardoin, 160 Tex. 338, 331 S.W.2d 206 (1960), as standing for the specific proposition that an attorney’s withdrawal without good cause precludes his recovery for attorney’s fees. However, although Royden did reiterate that basic principle, the representation by the attorney in that case ended abruptly when he was suspended from the practice of law. Id. at 209. In arriving at the conclusion that Royden was not entitled to recover attorney’s fees, the court reasoned that Royden’s “disbarment or suspension is considered tantamount to and to have the same effect as a voluntary abandonment, for the attorney by knowingly and willfully practicing such a course of conduct that would lead to the termination of his right to practice, renders it impossible to complete the work he engaged to perform.” Id.

*3 The facts in this case, however, are different. Agnew withdrew because he was constructively discharged by his client. His motion to withdraw merely evidenced this state of affairs in the record. See Tex.R. Disp. Conduct 1.15(a)(3); Heard v. Liberty Mut. Fire Ins. Co., 828 S.W.2d 457, 459 (Tex.App.-El Paso 1992, writ denied) (rules mandate withdrawal when discharged by client).

With the exception of factual situations such as that before the Royden court, Texas cases support the recovery of attorney’s fees earned prior to withdrawal. See, e.g., Mandell at 847; Tex.R. Civ. P. 94. We overrule Killion’s first issue.

Killion next argues that Agnew’s withdrawal disqualifies him from recovery of attorney fees under the governing statute which, he says, is § 417.003(c) of the Texas Labor Code. That statute addresses the recovery of fees by attorneys representing insurers in asserting subrogation claims and provides:

If an attorney actively representing the insurance carrier’s interest actively participates in obtaining a recovery, the court shall award and apportion between the claimant’s and the insurance carrier’s attorneys a fee payable out of the insurance carrier’s subrogation recovery. In apportioning the award, the court shall consider the benefit accruing to the insurance carrier as a result of each attorney’s service. The total attorney’s fees may not exceed one third of the insurance carrier’s recovery.

Tex. Lab.Code Ann. § 417.003(c) (Vernon 1996). It is undisputed that as a self-insurer, within the purview of this statute, the City is “the insurance carrier.”

Killion argues that when Agnew intervened in the case to recover attorney’s fees, he was only representing himself, not the City. Therefore, he reasons, because Agnew was not then actively representing the City’s interests, he was not eligible for a recovery under the statute. The thrust of this argument is that recovery under the statute is limited to an attorney who is actively representing the carrier’s interest at the time of a settlement. We do not agree.

*4 If we accepted Killion’s argument, the practical effect would be to add to the language of the statute so that it would read, “[i]f an attorney actively representing the insurance company’s interest at the time of any recovery actively participates in obtaining the recovery....” However, we must interpret statutes as they are written, Insurance Company of North America v. Stuebing, 594 S.W.2d 565, 567 (Tex.Civ.App.-Fort Worth 1980, writ ref’d n.r.e.) (discussion of an amendment to progenitor statute). The interpretation urged by Killion would lead to results inconsistent with the statute’s purpose of encouraging attorneys to accept cases in which a carrier had a subrogation claim.

Indeed, to accept Killion’s interpretation would prevent an attorney from being compensated for his or her work actually performed in situations in which their nonparticipation in the final resolution of a claim was for reasons beyond the attorney’s control. The plain application of the statute leads us to hold that its requirement of active participation is not restricted to the time of a settlement or judgment. Killion’s second point is overruled.

We now consider Agnew’s contention that the trial court failed to properly assess the benefits that accrued to the City by virtue of his efforts as contrasted to those of Killion. Killion initially responds by asserting Agnew has waived his complaint by failing to point to specific evidence that the trial court abused its discretion and merely seeks to have this court sit as a second factfinder and reweigh the evidence. We do not agree. Agnew does not dispute that the applicable standard is whether the trial court abused its discretion. See City of Austin v. Janowski, 825 S.W.2d 786, 788 (Tex.App.-Austin 1992, no writ). The evidence to which Agnew refers is the testimony concerning the work he and Killion performed on the case, as compared to the amounts awarded each of them by the trial court. Whether this evidence is sufficient to show an abuse of discretion on the part of the trial court is the classic, and required, function of an appellate court.

Application of an abuse of discretion standard requires the reviewing court to determine whether the actions being reviewed were arbitrary or unreasonable. Sourignavong v. Methodist Healthcare Syst. of San Antonio, 977 S.W.2d 382, 385 (Tex.App.-Amarillo 1998, pet. denied).

*5 Although Killion testified that Agnew’s conduct provided no benefit to the City, the evidence showed that Agnew was the one who filed the underlying suit when the City and Killion were reluctant to do so; that he investigated the Wells’ claims and prepared for trial by preparing exhibits, including the video a “day in the life”; that he engaged in discovery; that he obtained expert witnesses; and that he participated in some settlement negotiations. The evidence considered by the trial court was sufficient to reasonably justify a conclusion that Agnew’s initiative in pursuing the claim materially advanced the City’s subrogation interest. Such a conclusion is particularly justifiable in view of Killion’s testimony that he initially had not filed suit because in his opinion, the claim against Stubbs was very weak and Stubbs could have “very easily” prevailed on a motion for summary judgment.

However, the evidence also showed that after the Office Depot was dismissed from the suit, there would not be adequate funds available to satisfy both the City’s subrogation claims and the claims of the Wells. Agnew’s conduct in seeking to substantially reduce the City’s subrogation claim, even seeking up to 45 percent of the insurance proceeds, weighs against a finding of benefits provided to the City. We do not agree with Agnew’s argument that the record shows Killion “did little more than file Lubbock’s petition in intervention.” Indeed, the record shows that Killion conducted investigations, engaged in discovery, and participated extensively in settlement negotiations, both with and without the Wells’ involvement.

Inasmuch as the evidence was conflicting as to the relative contribution of Agnew and Killion, it was within the trial court’s peculiar province to view the witnesses, assess their credibility, and determine the weight to be given their testimony. After reviewing the record, we cannot say that the trial court’s resolution of the conflicting evidence and its resulting apportionment of fees was so arbitrary and unreasonable as to amount to an abuse of discretion. We overrule Agnew’s sole issue.

Because we find no error in the trial court’s judgment, we must, and do, affirm its judgment.