A few months ago, the Texas Supreme Court decided Epps v. Fowler, 54 Tex. Sup. Ct. J. 1759 (Tex. Aug. 26, 2011), in which it attempted to clarify if and when a defendant may recover its attorneys' fees as a "prevailing party" when a plaintiff voluntarily nonsuits its case. 1 In a Split decision, the Court held that... it depends.2

Under the following circumstances, a plaintiff's nonsuit will cause the defendant to be considered a "prevailing party," opening the door to a claim for attorneys' fees:

  • If the defendant can show that the nonsuit was taken "in order to avoid an unfavorable judgment."
  • If the nonsuit is with prejudice (since such a nonsuit is a judgment on the merits).

Under other circumstances—i.e., a nonsuit without prejudice which the defendant cannot show to have been taken "in order to avoid an unfavorable judgment"—a defendant will not be considered a "prevailing party" and will not be able to pursue attorneys' fees.

What does Epps mean for plaintiffs?

Many practitioners think of the Texas practice of "nonsuit" as allowing litigants to drop unwanted claims voluntarily, without penalty, at any time before resting its case at trial. But the framework set out in Epps suggests that if you wait until it is arguably obvious that a particular claim is a loser, you may not escape an attorney fee claim by nonsuiting. Plaintiffs may be best advised to think twice before pleading a potentially meritless claims, or to at least take a nonsuit before the "writing is on the wall."

What does Epps mean for defendants?

Defendants may be inclined to file a motion for an award of attorneys' fees any time a plaintiff nonsuits a claim. After all, if not to avoid an "unfavorable judgment," why else would a plaintiff take a nonsuit? Will plaintiffs now have to come up with some non-merits-related reason for a nonsuit in order to avoid the assessment of fees? As in any case in which attorneys' fees may be available, defendants should plead their request for fees from the beginning; waiting until after the plaintiff's nonsuit might be viewed as too late.

Footnotes

1.Of course, this analysis assumes that attorneys' fees are available in the case; litigants may recover attorneys' fees only if specifically provided for by statute or contract.

2.Justice Hecht authored a colorful dissent focusing on the meaning of the word "prevail." Hecht, joined by Justices Medina and Johnson, would have held that defendants always prevail when claims against them are nonsuited and accordingly should always be entitled to seek attorneys' fees.

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