McKinley v. Drozd
1985 Tex. LEXIS 733, 685 S.W.2d 7, 28 Tex. Sup. Ct. J. 190 (1985)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
A party who successfully prosecutes a claim under the Texas Deceptive Trade Practices Act (DTPA) or Article 2226 is entitled to recover attorney's fees, even if the damages awarded for that claim are entirely offset by a larger counterclaim, resulting in no net recovery for that party.
Facts:
- Drozd, a general contractor, entered into a contract with Dr. and Mrs. McKinley to build their new home.
- A dispute arose over the final balance Drozd claimed the McKinleys owed him under the construction contract.
- The McKinleys alleged that Drozd breached the contract by failing to deliver two rugs.
- The McKinleys also asserted that Drozd had engaged in deceptive trade practices related to the construction of the home.
Procedural Posture:
- Drozd (plaintiff) sued the McKinleys (defendants) in a Texas trial court to recover the balance due on a construction contract.
- The McKinleys filed a counterclaim against Drozd for breach of contract and violations of the Texas Deceptive Trade Practices Act (DTPA).
- A jury found for Drozd on his contract claim and for the McKinleys on their breach of contract and DTPA counterclaims.
- The trial court offset the awards, resulting in a net monetary recovery for Drozd, but awarded attorney's fees to both parties.
- Drozd appealed to the Texas Court of Appeals (intermediate appellate court) regarding the award of attorney's fees to the McKinleys.
- The court of appeals, with the McKinleys as appellees, reversed the trial court's award of attorney's fees to the McKinleys, holding that a net recovery was required.
- The McKinleys (now petitioners) appealed the issue of attorney's fees to the Supreme Court of Texas (highest court).
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a party who prevails on a claim under the Texas Deceptive Trade Practices Act (DTPA) or Article 2226 need to obtain a net monetary recovery in the overall lawsuit to be awarded statutory attorney's fees?
Opinions:
Majority - Spears, Justice
No. A party who successfully proves a claim under the Texas Deceptive Trade Practices Act (DTPA) or Article 2226 does not need to obtain a net monetary recovery in the overall lawsuit to be awarded attorney's fees. For the DTPA, the legislative mandate to liberally construe the act to protect consumers means that "prevails" refers to succeeding on the DTPA claim itself, not on the final judgment of the entire case. To hold otherwise would undermine the statute's purpose of providing an economical remedy, particularly in construction cases where large counterclaims are common. For Article 2226, the court overruled a line of appellate cases that required a net recovery, noting those decisions were based on prior statutory language requiring a party to "finally obtain judgment." The current version of the statute only requires that a "just amount owing" was not tendered, and its plain language no longer supports a net recovery requirement.
Analysis:
This decision significantly clarifies the requirements for recovering attorney's fees under two key Texas fee-shifting statutes. By decoupling the right to attorney's fees from the final net judgment, the court strengthened the remedial purpose of the DTPA, ensuring consumers can afford to bring valid claims even when facing substantial counterclaims. The ruling also harmonized the interpretation of Article 2226 with its amended, more liberal statutory language, overruling a line of cases that had imposed a stricter 'net recovery' rule. This precedent makes litigation more predictable and economically viable for claimants who have valid, but smaller, claims against parties who may have larger offsetting claims.
