Rahul K. Nath, M.D. v. Texas Children's Hospital and Baylor College of Medicine

IN THE SUPREME COURT OF TEXAS
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NO. 17-0110
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RAHUL K. NATH, M.D., PETITIONER,
v.

TEXAS CHILDREN’S HOSPITAL AND BAYLOR COLLEGE OF MEDICINE,
RESPONDENTS
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ON PETITION FOR REVIEW FROM THE
COURT OF APPEALS FOR THE FOURTEENTH DISTRICT OF TEXAS
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PER CURIAM

JUSTICE GUZMAN did not participate in this decision.

This is the second appeal of a $1.4 million sanction, levied to compensate the prevailing

parties, Texas Children’s Hospital and Baylor College of Medicine, for their attorney’s fees in

defending against a frivolous suit. In the first appeal, the Hospital and Baylor moved for attorney’s

fees as a compensatory sanction based on Nath’s frivolous claims that the trial court described as

frivolous ab initio. Nath v. Tex. Children’s Hosp. (Nath I), 446 S.W.3d 355, 364–65, 372 (Tex.

2014); see also TEX. CIV. PRAC. & REM. CODE § 10.004(c)(3); TEX. R. CIV. P. 13. We agreed that

Nath’s pleadings were groundless and sanctionable. Nath I, 446 S.W.3d at 371–72. We remanded,

however, because the parties had litigated merits issues for nearly a half-decade before the Hospital

and Baylor moved for summary judgment, noting that “the degree to which the Hospital and Baylor
caused their attorney’s fees is a relevant inquiry.” Id. at 372. While acknowledging that placing the

entire cost of litigation on Nath might be proper, we noted further that a party “cannot arbitrarily

shift the entirety of its costs on its adversary simply because it ultimately prevails on a motion for

sanctions.” Id. We remanded for the trial court to reassess its award of attorney’s fees.

On remand, the prevailing parties’ attorneys submitted affidavits, asserting they did nothing

to prolong the suit or unnecessarily increase their fees. The affidavits stated total amounts billed to

their clients in defending against Nath’s frivolous suit. The trial court found the evidence sufficient

and reassessed the same $1.4 million sanction for attorney’s fees “pursuant to Chapter 10 of the

Texas Civil Practice and Remedies Code and/or Texas Rule of Civil Procedure 13.”

Nath argues that the Hospital and Baylor’s affidavits are insufficient to prove that the $1.4

million sanction is a reasonable and necessary attorney’s fee. See In re Nat’l Lloyds Ins. Co., 532

S.W.3d 794, 809 (Tex. 2017) (observing that the party seeking attorney’s fees “bears the burden of

establishing the fees are reasonable and necessary”). The Hospital and Baylor, however, argue that

a different standard of proof applies for attorney’s fees awarded as sanctions because the purpose

of sanctions is to punish violators and deter misconduct. Because sanctions are intended to punish,

the Hospital and Baylor argue they should not be held to the same evidentiary burden as in other fee-

shifting cases. Cf. Rohrmoos Venture v. UTSW DVA Healthcare, LLP, ___ S.W.3d ___ (Tex. 2019)

(clarifying the evidentiary standards for shifting attorney’s fees). Indeed, some courts of appeal

have not required proof of necessity or reasonableness when assessing attorney’s fees as sanctions.

See, e.g., Quick Change Artist, LLC v. Accessories, No. 05–14–01562–CV, 2017 WL 563340, at *6

(Tex. App.—Dallas Feb. 13, 2017, no pet.) (mem. op.); Pressley v. Casar, 567 S.W.3d 28, 61 (Tex.

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App.—Austin 2016), rev’d per curiam, 567 S.W.3d 327 (Tex. 2019); Prize Energy Res., L.P. v. Cliff

Hoskins, Inc., 345 S.W.3d 537, 575–76 (Tex. App.—San Antonio 2011, no pet.); Scott Bader, Inc.

v. Sandstone Prods., Inc., 248 S.W.3d 802, 816–17 (Tex. App.—Houston [1st Dist.] 2008, pet.

denied); Olibas v. Gomez, 242 S.W.3d 527, 535 (Tex. App.—El Paso 2007, pet. denied); Glass v.

Glass, 826 S.W.2d 683, 688 (Tex. App.—Texarkana 1992, writ denied); Allied Assocs., Inc. v. INA

Cty. Mut. Ins. Cos., 803 S.W.2d 799, 799 (Tex. App.—Houston [14th Dist.] 1991, no writ).

This line of authority is premised on a misunderstanding of a per curiam opinion from this

Court. In Brantley v. Etter, we refused the writ, no reversible error, observing in a brief opinion that

a party complaining about an award of attorney’s fees as a sanction does not have the right to a jury

trial on the amount of the sanction. 677 S.W.2d 503, 504 (Tex. 1984) (per curiam). Rather, we said

the amount awarded by the trial court was solely within the court’s sound discretion, subject only

to its abuse. Id. Several years later, an intermediate appellate court cited Brantley to support its

“belief that proof of attorney’s fees expended or the reasonableness thereof is not required when

such fees are assessed as sanctions.” Allied Assocs., 803 S.W.2d at 799. The line of authority thus

developed from this initial misunderstanding regarding the proof necessary to invoke the trial court’s

discretion.

Before a court may exercise its discretion to shift attorney’s fees as a sanction, there must

be some evidence of reasonableness because without such proof a trial court cannot determine that

the sanction is “no more severe than necessary” to fairly compensate the prevailing party. PR Invs.

& Speciality Retailers, Inc. v. State, 251 S.W.3d 472, 480 (Tex. 2008) (quoting TransAmerican Nat.

Gas Corp. v. Powell, 811 S.W.2d 913, 917 (Tex. 1991)); see also Low v. Henry, 221 S.W.3d 609,

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620 (Tex. 2007) (“[A] sanction cannot be excessive nor should it be assessed without appropriate

guidelines.”). “Consequently, when a party seeks attorney’s fees as sanctions, the burden is on that

party to put forth some affirmative evidence of attorney’s fees incurred and how those fees resulted

from or were caused by the sanctionable conduct.” CHRISTUS Health Gulf Coast v. Carswell, 505

S.W.3d 528, 540 (Tex. 2016).

Chapter 10 of the Civil Practice and Remedies Code authorizes a court to award sanctions

for groundless allegations and other pleadings presented for an improper purpose. TEX. CIV. PRAC.

& REM. CODE §§ 10.001-.006. The sanction may include a “directive” from the court, the payment

of a “penalty into court,” and a payment to the opposing party of “the amount of the reasonable

expenses incurred by the other party . . . including reasonable attorney’s fees.” Id. § 10.004(c)(1)-

(3). We have recently clarified the legal and evidentiary requirements to establish a reasonable

attorney’s fee in a fee-shifting situation. See Rohrmoos, __ S.W.3d at __. Although this case deals

with attorney’s fees awarded through a sanctions order, the distinction is immaterial because all fee-

shifting situations require reasonableness.

On remand, the Hospital and Baylor attempted to prove the reasonableness of the awarded

fees by submitting two additional conclusory affidavits. Although we expressed confidence in Nath

I that the reasonableness of the sanction might be resolved on the existing record or through

additional affidavits, 446 S.W.3d at 372 n.30, the subsequent affidavits here merely reference the

fees without substantiating either the reasonable hours worked or the reasonable hourly rate. See

Rohrmoos S.W.3d at ___ (explaining the applicability of the lodestar analysis for fee-shifting

awards). Rohrmoos explains the necessity of presenting either billing records or other supporting

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evidence when seeking to shift attorney’s fees to the losing party. Id. Conclusory affidavits

containing mere generalities about the fees for working on Nath’s frivolous claims are legally

insufficient to justify the sanction awarded here. See Long v. Griffin, 442 S.W.3d 253, 255 (Tex.

2014) (per curiam) (overturning an attorney’s fee award when the affidavit supporting the fees “only

offer[ed] generalities” and “no evidence accompanied the affidavit”); El Apple I, Ltd. v. Olivas, 370

S.W.3d 757, 763–64 (Tex. 2012) (discussing the insufficiency of attorney’s fee evidence that “based

[its] time estimates on generalities”).

The trial court’s judgment awards the Hospital attorney’s fees of $726,000 and Baylor

attorney’s fees of $644,500.16 for their respective defenses to Nath’s groundless claims and recites

that this amount “fairly compensates [them] with regard to defending against the claims that serve

as the basis for this award.” The court has thus used its authority under Chapter 10 to shift

responsibility for the defendant’s reasonable attorney’s fees to the plaintiff, Nath, as a penalty for

his pursuit of groundless claims. Because the standard for fee-shifting awards in Rohrmoos likewise

applies to fee-shifting sanctions, we reverse the court of appeals’ judgment affirming the sanctions

award and, without hearing oral argument, remand the case to the trial court for further proceedings

in light of Rohrmoos. See TEX. R. APP. P. 59.1.

Opinion Delivered: June 21, 2019

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