Full Opinion

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN NO. 03-25-00086-CV Joseph Thompson and Thompson Custom Properties, LLC, Appellants v. High Equity Investments, LLC, Appellee FROM THE 21ST DISTRICT COURT OF BASTROP COUNTY NO. 968-21, THE HONORABLE CARSON TALMADGE CAMPBELL, JUDGE PRESIDING CONCURRING AND DISSENTING OPINION The plaintiff’s remedy of attorneys’ fees opens the courthouse doors to people who could not afford the legal services needed to vindicate their rights. See Rohrmoos Venture v. UTSW DVA Healthcare, LLP, 578 S.W.3d 469, 487 (Tex. 2019); 28 Genevieve Hebert Fajardo & Ramona L. Lampley, Texas Practice Series: Consumer Rights and Remedies § 17:2 (3d ed. 2026). Whenever the courts add an unnecessary hurdle to full recovery of authorized attorneys’ fees, the doors to justice close just a bit more. I write separately today to underscore how the Court misap- plies the law of fee claims to take away the full amount of attorneys’ fees that Thompson showed himself entitled to, with potentially harsh consequences. The standards for reasonableness of fees are distinct from the standard that governs fee-segregation. Fee claimants thus can prove that their fees were reasonable while still failing to properly segregate their fees between claims. By the same token, fee claimants can properly segre- gate fees between claims yet still fail to show that the fees that they incurred were reasonable. Segregation and reasonableness ask different questions. The standard for segregation is that the claimant may not recover fees that relate solely to a claim for which fees are unrecoverable but may recover fees for discrete legal services that advanced a claim for which fees are recoverable, even if those fees also advanced a claim for which fees are unrecoverable. See Transcor Astra Grp. S.A. v. Petrobras Am. Inc., 650 S.W.3d 462, 482 (Tex. 2022); Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 313–14 (Tex. 2006). By contrast, the standards for reasonableness come from Rohrmoos Venture v. UTSW DVA Healthcare, LLP, 578 S.W.3d 469 (Tex. 2019), and “Rohrmoos says nothing about the segregation of attorney’s fees between claims as segregation was not an issue in that case,” Lederer v. Lederer, No. 14-21-00012-CV, 2022 WL 11551156, at *5 (Tex. App.—Houston [14th Dist.] Oct. 20, 2022, no pet.). I understand the Court’s opinion today to ground its rejection of Thompson’s arguments on segregation and not on Rohrmoos’s reasonableness standards.1 But although High Equity sought to challenge Thompson’s fee claim based on segregation, High Equity did not support that challenge with competent evidence, offering only evidence that is properly understood as a Rohrmoos challenge. Rohrmoos offers a host of considerations—often called the Arthur Andersen con- siderations—that may apply, across two discrete steps, when assessing fees’ reasonableness. One such consideration concerns the complexity of the case. See Rohrmoos Venture, 578 S.W.3d at 1 Which is just as well because Rohrmoos cannot here be grounds for upholding the trial court’s ruling. Because of how Rohrmoos structures its two steps and forbids use of considerations at step two that were subsumed within step one, the considerations on which High Equity based its opposition to Thompson’s fee claim cannot be grounds for the categorical-multiplier reduction that the trial court applied. See Rohrmoos Venture v. UTSW DVA Healthcare, LLP, 578 S.W.3d 469, 494–501 & n.12 (Tex. 2019). 2 476, 492, 493, 494, 499. Another Arthur Andersen consideration, applied in accordance with Rohrmoos, is whether the fees are excessive in light of the case. See id. at 498–99, 502 (citing cases that provide that excessiveness of fees is often evaluated under considerations present in Rohrmoos step one); Kleas v. BMC W. Corp., No. 03-05-00190-CV, 2008 WL 5264883, at *5 (Tex. App.—Austin Dec. 19, 2008, pet. denied) (mem. op.) (explaining that review of fee award for excessiveness is guided by Arthur Andersen considerations). But remember: Rohrmoos review for reasonableness is a distinct inquiry from reviewing for fee-segregation. High Equity’s evidence displays a confusion about that distinction.2 The key pas- sage from High Equity’s attorney’s declaration cloaks a Rohrmoos reasonableness challenge in the language of fee-segregation.3 And the passage offers no evidence for why a segregation analysis 2 Both Thompson and High Equity demonstrate by their briefing that they understand High Equity to have sought to make both a reasonableness challenge and a segregation challenge to Thompson’s fee claim. Yet the Court says, “The parties disagree only as to how the recoverable fees ought to be segregated from the unrecoverable fees to arrive at a reasonable attorney’s fee award.” Not so—High Equity’s trial-court response to Thompson’s fee claim expressly set out to challenge not only whether the requested fees were properly segregated but also whether they were reasonable. But whether High Equity put forward competent evidence to support that segregation challenge is another matter. 3 The Court insists that “Thompson has not challenged the sufficiency of Miller’s declara- tion on appeal.” Here are some of Thompson’s arguments from his appellant’s brief: [T]he district court abused its discretion in applying an 80% reduction to the attor- neys’ fees and costs Thompson properly segregated and supported with unrefuted evidence where HEI failed to support any different award (much less the one the court awarded) and the district court’s heavily-reduced award was arbitrary and entirely without factual or legal basis. .... Based on Mr. Terrazas’s unrebutted testimony, Thompson requested $327,617.30 in reasonable trial-related attorneys’ fees and costs in the amount of $11,894.24. . . . In support of [its] request [for the 80% reduction], HEI cited no controlling law, but asserted, because Thompson had only prevailed on one of five total claims, that he should only be awarded 20 percent of his total costs and fees. 3 In other words, without any regard to any of the actual tasks performed and how they related or did not relate to the claim for which Thompson prevailed, HEI requested that the district court simply take the total and reduce it to 20%. .... [T]he district court made it clear that it would reduce Thompson’s fees by whatever amount HEI told him might “hold[] up on appeal,” explicitly acknowledg[ing] that the decision was not based on any evidence, but rather, his own personal beliefs. .... Thompson’s proffer of reasonable and necessary attorneys’ fees was unrebutted. Indeed, at no point did HEI point to any time entry that it contended was not reason- able and necessary. .... Cale’s Clean Scene Carwash, Inc. v. Hubbard, 76 S.W.3d 784 (Tex. App.— Houston [14th Dist.] 2002, no pet.)[,] also is instructive. . . . As in this case, the opposing party “did not present any evidence that no attorney’s services were need- ed or that the services of [the prevailing party’s] counsel had no value.” .... According to the unrebutted testimony and evidence Thompson presented, he in- curred $327,617.30 in reasonable and necessary attorneys’ fees and $11,894.24 in reasonable and necessary costs in his pursuit of the breach-of-contract claim upon which the jury found in his favor. HEI’s only real challenge to this evidence was that the Tyler Properties “were a separate project” from the other projects in dispute in the case. But that is not sufficient to show that the legal services would not have been required had Thompson only advanced that single claim. (Citations omitted.) And in his appellate reply brief, Thompson added that his attorney’s declara- tion was “the only evidence either party presented as to Thompson’s fee request, making it un- founded, at best, for HEI to now assert that Thompson improperly ‘loaded up’ his request with unrecoverable fees.” He continued and in making an argument from a case from one of our sister courts argued that the method used in that case was “very different from simply reducing the en- tirety of the fees by a percentage”: “In the way described in Starry (the proper way) the reduction is based on a determination as to the fees that are recoverable versus those that are not. In contrast, here, the district court reduced all the fees without regard to segregation.” Elsewhere in the reply brief, Thompson concludes concerning his costs request that “the only basis for the court’s 80 per- cent reduction of Thompson’s costs was HEI’s ipse dixit assertion that Thompson should recover only 20 percent of his costs.” 4 should yield the amount that the trial court settled on when it made its award. Opponents of fee claims, whether on reasonableness grounds or segregation grounds, must support their request for a lower amount for the fee award with competent evidence. See Iola Barker v. Hurst, 632 S.W.3d 175, 192–93, 194–95 (Tex. App.—Houston [1st Dist.] 2021, no pet.) (concluding that trial court abused its discretion by making fee award in amount less than what claimant had sought because opponent’s evidence either “simply criticize[d] the fees sought by the movant as unreasonable without setting forth the basis for his opinion” or “offered no factual basis for his opinion that the fees appellants sought were unreasonable and ‘too high’ and that a reasonable fee ‘would be $9,000.00’”). I’ve put each sentence from the key passage into the following table, each alongside a statement of its evidentiary value, or lack thereof: Sentence from Key Passage of Declaration Evidentiary Value “In regard to the Terrazas Declaration’s discus- sion applying the law regarding segregating nonrecoverable fees, . . . I disagree that the This sentence announces the declarant’s disa- ‘majority of the actions were taken in further- greement with Thompson’s declarant, quoting ance of the breach of contract claim that al- the latter’s testimony, but supplies no evidence lowed for recovery of attorneys’ fees’ and, to support High Equity’s side of the disagree- even more so, I disagree with his opinion that ment and no evidence of what the lowered ‘the amount of the time spent related solely to amount for Thompson’s fee recovery should be. Plaintiffs’ other claims that did not involve the See id. breach of contract claim against HEI related to the Tyler properties was minimal leading up to and through trial.’” (Citations omitted.) There is no dispute about the fact that fees in- “The Tyler Properties legal work could have curred by Thompson for discrete legal services been segregated, as only certain aspects of the that did not advance the prevailing contract work or communications overlapped with the claim should be segregated from all other fees other claims at issue.” in the case. 5 Sentence from Key Passage of Declaration Evidentiary Value Crucially, this testimony is based on whether le- gal work was either “complex[]” or “simpl[e].” A suit’s complexity is a Rohrmoos considera- tion. See 578 S.W.3d at 476, 492, 493, 494, 499. So is the consideration of whether fees in- curred were excessive in light of the case. See id. at 498–99, 502; Kleas, 2008 WL 5264883, at *5. This sentence, then, is a Rohrmoos chal- lenge, notwithstanding the prior sentence’s ref- erence to segregation. “Considering the simplicity of the issues relat- Plus, the sentence says nothing about whether ed to this one claim versus the complexity of any discrete legal service, whether a complex the others, at most, and while I agree that a rea- one or a simple one, advanced or did not ad- sonable approach would be to reduce Plain- vance the prevailing contract claim. It gives no tiffs’ detailed attorneys’ fees tables by a per- basis for concluding that only 20% of the work centage instead of line by line, Plaintiffs should in the case advanced the contract claim, which at most be awarded 20% of the overall fees is a key omission in light of the instruction that billed or $115,299.41 (of total billed “many if not most legal fees” cannot be precise- $576,497.05, per Exhibit A to Terrazas Declar- ly allocated between claims but still must be in- ation).” curred no matter what claims are pleaded. See Tony Gullo Motors I, 212 S.W.3d at 313; see also id. (“Requests for standard disclosures, proof of background facts, depositions of the primary actors, discovery motions and hearings, voir dire of the jury, and a host of other services may be necessary whether a claim is filed alone or with others. To the extent such services would have been incurred on a recoverable claim alone, they are not disallowed simply be- cause they do double service.”). This sentence expressly concerns the purported “The mere reduction of ‘25% and even 50% excessiveness of the fees that Thompson in- depending on the task’ for certain select tasks curred. It thus invokes Rohrmoos. See 578 is wholly insufficient when those reductions S.W.3d at 498–99, 502; Kleas, 2008 WL still result in a request for $327,617.30 in attor- 5264883, at *5. It does not invoke segregation, neys’ fees, 57% of the total fees incurred over- omitting any mention of whether any discrete all, which is grossly excessive.” legal service advanced the prevailing contract claim or not. The key passage of High Equity’s attorney’s declaration gives no evidence about whether any of the discrete legal services that Thompson’s attorneys performed did or did not advance the contract 6 claim. Nor does it give any evidence about the proper amount of fees that the trial court should have awarded for the legal services that advanced the contract claim (even if those services might have advanced other claims as well). It gives no more than generalities on these matters.4 See KWA Constr., L.P. v. ADC W. Ridge, L.P., No. 05-24-00253-CV, 2026 WL 265251, at *11 (Tex. App.—Dallas Jan. 30, 2026, pet. filed) (“A suggested reduction in fees must be based on more than generalities, and ‘conclusory testimony devoid of substance will not support a fee award.’” (quoting Desio v. Del Bosque, No. 05-21-00022-CV, 2022 WL 500025, at *4 (Tex. App.—Dallas Feb. 18, 2022, no pet.))); cf. Centurion Logistics LLC v. Brenner, No. 05-23-00578-CV, 2024 WL 5244618, at *20 (Tex. App.—Dallas Dec. 30, 2024, pet. denied) (reasoning that witness’s testi- mony to support segregation sufficed because witness’s opinion about percentage of time was buttressed by “details supporting her segregation, including the tasks reflected on each invoice and the allocation of these tasks to the categories she identifies”). The Court defends its reliance on High Equity’s declaration by stating that the standard that governs fee-segregation is relaxed. But the Court’s application of that concept here 4 The Court otherwise mentions High Equity’s declarant’s examples of time entries that “could have and should have been segregated and removed from Plaintiffs’ calculations.” Assum- ing that these examples are a basis for the Court’s decision, I note that for each example, Thompson offered evidence that he had in fact reduced the fee request in accordance with reducing the number of reasonable hours claimed for the challenged line item, and High Equity put forward no evidence to show that any different kind of reduction for the line item would have been more appropriate. In other words, High Equity complained that the fee request attributable to certain time entries should have been reduced, Thompson put forward evidence that his attorney had in fact reduced them, and no evidence shows that the reduction that Thompson’s attorney had chosen was inappro- priate. Still further, for the line items that High Equity challenged, there is no evidence that if those challenges, or any combination of them, were successful, then the resulting fee award should be the $115,299.41 figure that the trial court chose. There is no evidence linking High Equity’s line-item-specific challenges to that award. But a decision made when no evidence supports it is an abuse of discretion. See Bahar v. Lyon Fin. Servs., Inc., 330 S.W.3d 379, 391 (Tex. App.— Austin 2010, pet. denied). The amount was instead arrived at by applying the categorical 80% reduction that High Equity asked for. 7 is anything but an example of a relaxed standard. The Court relies on statements made by the Fourteenth Court of Appeals about the relaxed standard, but in both instances that the Court here cites of the Fourteenth Court’s use of the phrase (and in other cases as well), the Fourteenth Court was describing what is necessary for fee claimants to support their requests for fees. See Lederer, 2022 WL 11551156, at *5; State Farm Lloyds v. Hanson, 500 S.W.3d 84, 104 (Tex. App.— Houston [14th Dist.] 2016, pet. denied); Citizens Nat’l Bank of Tex. v. NXS Constr., Inc., 387 S.W.3d 74, 88 (Tex. App.—Houston [14th Dist.] 2012, no pet.). The Court here is thus turning the relaxed standard on its head. Thompson’s evi- dence to support his fee claim is very nearly a model of the level of rigor and robustness that the Supreme Court of Texas called for in Rohrmoos and in Tony Gullo Motors I and its progeny. Cer- tainly our Court today is offering no criticisms of Thompson’s evidence. Even High Equity accept- ed that Thompson had met his Rohrmoos step-one burden—its declarant said, “Through the Terrazas Declaration, Thompson has produced evidence to meet this initial hurdle; however, for the reasons stated herein, the amount proposed is incorrect and should be revised or adjusted down- ward.” (Emphasis added.) So, what the Court is doing today will make the success of fee claims much more precarious than the law contemplates. When a claimant, like Thompson, has done everything right and put forward exemplary effort to support a fee claim with proper evidence, the fee opponent can now make a Rohrmoos challenge for a categorical-multiplier reduction, and the courts in our district might well be required to interpret and credit that evidence instead as a relaxed segregation challenge and therefore slash a properly supported fee claim. Testimony like “they should only get 10% because they made everything too complex” will be able to defeat an exem- plary fee request. This is no relaxed standard for fee claimants. 8 I respectfully dissent from the Court’s decision to affirm the amounts of fees and costs that the trial court awarded. I would instead reverse that portion of the trial court’s judgment and render judgment for Thompson for the amounts in fees and costs that he sought because his fee claim was not properly rebutted by competent evidence. I concur in only the portion of the Court’s judgment that affirms the trial court’s application of the settlement credit. __________________________________________ Chari L. Kelly, Justice Before Justices Triana, Kelly, and Theofanis Filed: November 6, 2026 9