January 2012 Archives

Breach of Contract: Are Attorney's Fees Recoverable?

Clients who have been damaged by a breach of contract want to be made whole.  However, if a client has to pay a lawyer to recover contract amounts that should have been paid without legal action, then the cleint is left less than whole.  But, what if the party who breaches a contract has to pay not only the owed money on the contract, but attorney's fees, as well?  Certain statutes provide for just such a result. The general rule in Texas is that each party pays its own attorney's fees.  Turner v. Turner, 385 S.W.2d 230, 233 (Tex. 1964).  However, attorney's fees are recoverable under Tex. Civ. Prac. & Rem. Code § 38.001 in lawsuits for (1) rendered services; performed labor; (3) furnished material; (4) freight or express overcharges; (5) lost or damaged freight or express; (6) killed or injured stock; (7) a sworn account; or (8) an oral or written contract.  The most common lawsuits where this section is invoked by litigators are suits on sworn accounts, oral or written contracts and lawsuits for rendered services or performed labor. This statute can be a useful avenue to obtain attorney's fees from your opponent because it is not a discretionary statute.  In other words, the judge (provided that proof and pleading and other requirements are met) does not have discretion in awarding fees to the prevailing party.  D. F. W. Christian Television, Inc. v. Thorton, 933 S.W.2d 488, 490 (Tex. 1996).  Attorney's fees are recoverable for work before and during trial.  Further, the general rule is that a trial court's award of attorney's fees may include appellate attorney's fees.  Neal v. SMC Corp., 99 S.W.3d 813, 818 (Tex. App. -- Dallas, 2003, no pet).  Attorney's fees can also be recovered in cases where the attorney is working on a contingent fee (e.g. 33% of the recovery).  As a litigator I often try to invoke § 38.001  in breach of contract lawsuits, where applicable, to create a path for the recovery of attorney's fees and the opportunity to make my client whole.  

What a Breach of Contract Attorney Must Prove

To prevail on a breach a contract claim, a plaintiff (the damaged party) must prove (1) a valid contract existed between the plaintiff and the defendant (the party who breaches the contract), (2) the plaintiff tendered performance or was excused from doing so, (3) the defendant breached the terms of the contract, and (4) the plaintiff sustained damages as a result of the defendant's breach.  West v. Triple B Servs., LLP, 264 S.W.3d 440, 446 (Tex. App.—Houston [14th Dist.] 2008, no pet.).  But, what if the breaching party claims they never actually read the contract and, therefore, cannot be held liable for breaching it?  Such an argument will provide no defense whatsoever to a breach of contract claim.  By signing a contract, a party is presumed to have read and understood its contents.  See In re Prudential Co. of Am., 148 S.W.3d 124, 134 (Tex. 2004).  Cantella & Co., Inc. v. Goodwin, 924 S.W.2d 943, 944 (Tex. 1996) (Texas law presumes a party who signs a contract has read it and knows of its contents).

Copyright Infringement: A Strict Liability Cause of Action

Copyright infringement is essentially a strict liability cause of action.  In other words, the mental state of the copier generally does not matter on the issue of whether an illegal infringement has occurred.  Under the Copyright Act, the threshold question is whether a copyright defendant has made copies, distributed copies, prepared derivative works, publicly performed, or publicly displayed the work at issue.  Anyone who "violates any of the exclusive rights of the copyright owner . . . is an infringer of the copyright," regardless of mental state.  Unless the fair use doctrine is raised by the defendant, or the defendant is accused of contributory infringement and charged with knowledge of another's direct infringement, the Copyright Act makes no inquiry into the purpose of the copying or the mental state of the copier in determining liability.  Defendant's  willfulness, or lack thereof, in committing the infringement may enhance or limit the remedies for copyright infringement, but such a mental state will generally not matter on the question of whether an actionable copyright infringement has occurrred in the first place.

Navigating the World of Professional Legal Negligence/Legal Malpractice and the Disciplinary Rules

In rendering their legal services to clients, lawyers must comply with professional standards and disciplinary rules. What happens when a lawyer fails to fulfill his responsibilities to a client with respect to documenting a deal, handling litigation, meeting deadlines, meeting the statute of limitations for a claim, disclosing confidential client information, failing to file paperwork required in litigation, trademark applications or patent applications, among others? When any of the foregoing happens, the lawyer may be subject to a malpractice and professional liability lawsuit. Most claims against lawyers are for professional malpractice, which is based in negligence and consists of the standard elements of any negligence action: duty, breach of the duty, proximate cause and damages. Cosgrove v. Grimes, 774 S.W.2d 662 (Tex. 1989). As a malpractice litigator, I am often retained by clients to investigate and bring such a claim in litigation if the evidence exists to establish a breach of the professional standard of care. Lawyers also have specific, professional rules that govern their practice. For Texas lawyers, the Texas Rules of Professional Disciplinary Conduct are the governing authority. Other states have similar rules. While Texas lawyers will know these rules, not many non-lawyers are aware that their lawyer's conduct is governed by these very specific rules. What do these rules say? The rules prescribe proper conduct for lawyers in a variety of situations. For example, there are disciplinary rules on the confidentiality of information, conflicts of interest, communications with clients when you are representing an organization, candor toward the tribunal, dealing with unrepresented persons, and professional independence, among others. How do these disciplinary rules come into play in a professional negligence lawsuit? How does a professional negligence litigator use these disciplinary rules? As a professional negligence litigator, I often try to offer into evidence testimony and written documentation of the lawyers/law firms violations of the disciplinary rules. The disciplinary rules, and any violation of them, bececome powerful evidence in any legal malpractice action.

Patent Infringement Attorneys Proving Damages

In patent infringement litigation, the issue of product marking can be critical. Patent owners who do not mark their products are prevented by 35 U.S.C. § 287 from recovering any damages for any of the infringement occurring prior to serving an actual notice of infringement, or bringing suit. As an exception, products that only use a patented process need not be marked under § 287. On the question of when a sales-based damage model starts, a threshold question is whether marking was required and, if so, when marking occurred. Patent owners with claims of infringement to assert are urged to discuss with a patent infringement attorney whether any marking required to trigger the damage period has been satisfied.

Trademark Infringement Remedies

Trademark infringement attorneys frequently must evaluate whether a client whose trademark has been infringed has a claim only for injunctive relief or also a worthwhile case for monetary damages. First, everyone has seen the typical trademark symbols of "TM, SM, and ®." These symbols appear quite often in marketing and advertising documents for products and services. Through use of these notices, a company is informing the public of a risk of litigation in the event of unauthorized third party use that is likely to cause confusion or infringe on trademark service mark rights. What happens when another company uses your mark or one similar to yours? Depending on the facts of the case, that company may have a cause of action for use of a mark likely to cause confusion, mistake, or deception with a registered mark. See 15 U.S.C. § 1114(1). This is commonly called a trademark infringement lawsuit. A trademark infringement attorney will investigate the two marks and the likelihood that the compelling mark will cause confusion, mistake or deception, the promotion and advertising of your mark, and the valuable goodwill associated with your mark. A trademark infringement litigator will often review registration documentation; photographs showing both parties' marks applied to their products; and other material that demonstrates the similarity in the marks. What are the potential remedies for trademark infringement? In some cases, the trademark or service mark owner may collect damages from the infringer and/or may enjoin the infringer through court order to stop infringing on your companies trademark or service mark. Another possible remedy is a court order the destruction of the infringing products. See 15 U.S.C. § 1118. A company's trademarks and service marks embody the reputation of its products and/or services. It is important for a company to be able to protect its reputation and keep its customers through the proper use of trademark and service marks. If a business took the time to obtain and properly use a mark, it is likely an asset worth protecting.

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