Texas Supreme Court Weighs in On Commercial/Landlord Tenant Dispute with Over One Million in Attorneys’ Fees on the Line.

The Texas Supreme Court released Rohrmoos Venture v. UTSW DVA Healthcare, No. 16-006 (Tex. Apr. 26, 2019), which involved a commercial landlord (Rohrmoos Venture) and tenant  (UTSW DVA Healthcare, LLP) dispute where the tenant moved out early, defeated the landlord’s breach of lease claim, and obtained a jury award for attorneys’ fees totaling $1,025,000.00.

Because of water issues in its building, after years of complaint the tenant abandoned the premises.  Tenant sued first and landlord counterclaimed.   At trial, the jury determined that landlord breached the contract first, excusing tenant’s abandonment and non-payment.  Because a prevailing party provision existed in the contract, the jury awarded $1,025,000.00 for effectively defending against the landlord’s breach claims. 

This decision is significant for commercial lease disputes because a tenant can terminate a lease for a “prior material breach,” which, in this instance, was the building’s unsuitability because of water issues.

The decision is significant with regard to prevailing party provisions in contracts because it (a) confirms that a party defending against claim can recover attorneys’ fees even if they get no economic recovery; and (b) it moves Texas state courts closer to the standards followed by federal courts when conducting an attorneys’ fees recovery analysis.  For example, best practices for recovering attorneys’ fees will include submitting actual invoices (or detailed descriptions of work performed, time spent, and rates charged) to establish the “lodestar” calculation. Because the evidence used to prove reasonable attorney’s fees was legally insufficient under the Texas Supreme Court’s analysis, it reversed the court of appeals’ judgment as to the fee award and remanded the case to the trial court for a reassessment of the fee consistent with its opinion.

By: Alex Adewunmi

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