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SANTOS VARGAS AND LANDON HANKINS | Litigation Attorney’s Fees Under Chapter 38:
Not All Defendants are Created Equal
Does your client have a pending claim against a partnership or an LLC? Do you think Chapter 38 of the Texas Civil Practice & Remedies Code pro-
vides an avenue for your client to recover attorney’s fees? If you do, think again!
Whether attorney’s fees are recoverable under Chapter 38 depends, in part, on the type of entity that has been sued. Section 38.001 provides that a “person” may recover attorney’s fees from an “individual or corporation” in con- nection with certain enumerated claims. Tex. Civ. Prac. & Rem. Code § 38.001 (emphasis added). While the term “person” is broadly de ned, there is no applicable statuto- ry de nition for the terms “individual” or “corporation.” Tex. Gov’t Code § 311.005(2); see Fleming & Associates, L.L.P. v. Barton, 425 S.W.3d 560, 575 (Tex. App.—Hous- ton [14th Dist.] 2014, pet. denied).
Courts have construed the term “individual” to mean a natural person. See Base-Seal, Inc. v. Je erson County, 901 S.W.2d 783, 786-88 (Tex. App.—Beaumont 1995, writ denied) (holding the term “individual” means a natural person and that a county, as a political subdivision, is nei- ther an “individual” nor a “corporation”). However, the meaning of the term “corporation” has been contested in appellate courts throughout the state over the past several years, as litigants have argued over whether the term “cor- poration” includes other business entities, such as part- nerships and LLCs.
In 2014, the Houston 14th Court of Appeals held that a plainti may not recover attorney’s fees against a part- nership under § 38.001. See Fleming & Associates, 425 S.W.3d at 576. In 2016, the Houston First Court of Ap-
peals similarly held that § 38.001 does not provide for attorney’s fees against limited partnerships, noting that courts have interpreted the word “corporation” to mean a corporation speci cally, not a generic term for any type of business. See
Choice! Power, L.P. v. Feeley, 501 S.W.3d 199, 213-14 (Tex. App.—Houston [1st Dist.] 2016, no pet.).
e question of whether the term “corporation” en- compasses limited liability companies (LLCs), however, is a “closer call,” considering that legal dictionaries some- times treat “corporation” and “company” as synonyms. See Alta Mesa Holdings, L.P. v. Ives, 488 S.W.3d 438, 453 (Tex. App.—Houston [14th Dist.] 2016, pet. denied). Nonethe- less, appellate courts in San Antonio, Houston, Dallas, and Corpus Christi-Edinburg have held that § 38.001 does not provide for recovery of attorney’s fees against LLCs. See First Cash, Ltd. v. JQ-Parkdale, LLC, 538 S.W.3d 189, 198 n.4, 200 (Tex. App.—Corpus Christi 2018, no pet.); 8305 Broadway Inc. v. J & J Martindale Ventures, LLC, No. 04-16- 00447-CV, 2017 WL 2791322, at *5 (Tex. App.—San An- tonio June 28, 2017, no pet.) (mem. op.); CBIF Ltd. P’ship v. TGI Friday’s Inc., 05-15-00157-CV, 2017 WL 1455407,
Santos Vargas is an equity partner at Davis & Santos P.C. and represents individuals, nancial institutions, business entities, trusts, and estates in a variety of complex business litigation, nancial institution litigation, duciary litiga- tion, trust litigation, and estate litigation matters. Santos is currently president of the San Antonio Bar Association and previously served as president of the San Antonio Young Lawyers Association. Santos has repeatedly been listed as a Texas Super Lawyers Rising Star. For more information, visit www.dslawpc.com or call Santos at (210) 853-5882.
ATTORNEY AT LAW MAGAZINE · SAN ANTONIO · VOL. 1 NO. 1 6