                        COURT OF APPEALS
                         SECOND DISTRICT OF TEXAS
                              FORT WORTH


                              NO. 2-07-239-CV


AMX ENTERPRISES, L.L.P.,                                            APPELLANT
F/K/A AMX ENTERPRISES, INC.

                                        V.

MASTER REALTY CORP.                                                   APPELLEE

                                    ------------

        FROM THE 141ST DISTRICT COURT OF TARRANT COUNTY

                                    ------------

                        OPINION ON REHEARING

                                    ------------

      We grant Appellant AMX Enterprises, L.L.P.’s motion for rehearing in part,

deny it in part, withdraw our opinion and judgment of January 8, 2009, and

substitute the following. The only changes from our original opinion are the

additions of this paragraph and the last sentence of this opinion on rehearing.

      Among the issues in this case are three questions of first impression:

Whether a trial court may toll the accrual of statutory interest under the Prompt
Payment to Contractors Act 1 for periods of delay attributable to the claimant;

whether a contractor who prevails on a claim under the Act may recover both

18% prejudgment interest under the Act and common law prejudgment interest;

and whether attorney’s fees for in-house counsel should be calculated under the

“market rate” method or the “cost-plus” method. We answer “no” to the first

question, “no” to the second, and “market rate” to the third. We affirm the

trial court’s judgment in part, reverse and render in part, and remand for a new

trial on attorney’s fees.

                                  Background

      In April 2002, Appellee Master Realty Corp. (“MRC”) hired Appellant

AMX to remediate flood damage in a hotel owned by MRC for the contract

price of $469,834.     During its work on the project, AMX submitted three

invoices to MRC, as follows: An invoice for $46,983 dated October 14, 2002;

an invoice for $305,392.10 dated November 11, 2002; and an invoice for

$117,458.90 dated January 31, 2003. Together, the invoice amounts equal

the contract price of $469,834. MRC paid AMX $46,983 on November 4,

2002; $200,000 on February 19, 2003; and $175,951 on March 10, 2003,




      1
          … Tex. Prop. Code Ann. §§ 28.001–.010 (Vernon 2000).

                                       2
for a total payment of $422,934, leaving a balance on the contract price of

$46,900.

      On October 23, 2003, AMX sued MRC for breach of contract, violation

of the Prompt Payment to Contractors Act, judicial foreclosure of its

constitutional lien, and attorney’s fees. MRC filed a general denial.

      MRC sold the hotel to Composite Investments, Inc. in July 2004 and,

because of AMX’s lien on the property, placed $93,800 in an escrow account

to facilitate the sale. AMX joined Composite as a defendant, seeking judicial

foreclosure of the lien AMX had placed on the property, but AMX later agreed

to dismiss its lien with prejudice in exchange for Composite’s depositing

$93,800 into the trial court registry.

      AMX and MRC tried their dispute to a jury in September 2006. The

parties stipulated the facts related to AMX’s Prompt Payment to Contractors

Act claim, namely, the dates and amounts of AMX’s invoices and of MRC’s

payments. The jury rendered a verdict in favor of AMX for $46,900. The

parties agreed to submit the issue of attorney’s fees to the court.

      AMX moved for the entry of judgment on the verdict, seeking a judgment

of $46,900 in contract damages awarded by the jury; statutory interest under

the Prompt Payment to Contractors Act in the amount of $46,452.86; common

law prejudgment interest; attorney’s fees in an amount between $221,768.49

                                         3
and   $254,110.16,     of   which   an   amount   between       $194,049.99   and

$226,391.66 was attributable to work done by AMX’s in-house counsel; court

costs; and postjudgment interest.

      The trial court entered judgment on May 31, 2007.             The judgment

awarded AMX $46,900 in contract damages, $18,758.43 in statutory interest

under the Prompt Payment to Contractors Act, no common-law prejudgment

interest, and no attorney’s fees. Upon AMX’s request, the trial court made

findings of fact and conclusions of law. Among other things, the trial court

found that AMX had “caused significant periods of delay” in the litigation

totaling 745 days and that AMX had failed to prove that it had actually incurred

the attorney’s fees it claimed. AMX filed this appeal.

                                    Discussion

I.    Tolling of prejudgment interest under the Prompt Payment to Contractors
      Act

      In its first issue, AMX argues that the trial court erred by tolling the

accrual of prejudgment interest under the Prompt Payment to Contractors Act

for litigation delays that the trial court attributed to AMX.

      The Prompt Payment to Contractors Act provides that an owner of real

property who receives a written payment request from a contractor for an

amount that is allowed under a contract for properly performed work or suitably



                                         4
stored or specially fabricated materials must pay the amount, less any amount

withheld as authorized by statute, not later than the thirty-fifth day after the

date the owner receives the request.        Tex. Prop. Code Ann. § 28.002(a).

Section 28.004, captioned “Interest on Overdue Payment,” provides as follows:

      (a) An unpaid amount required under this chapter begins to accrue
      interest on the day after the date on which the payment becomes
      due.

      (b) An unpaid amount bears interest at the rate of 1 1/2 percent
      each month.

      (c) Interest on an unpaid amount stops accruing under this section
      on the earlier of:

            (1) the date of delivery;

            (2) the date of mailing, if payment is mailed and
            delivery occurs within three days; or

            (3) the date a judgment is entered in an action brought
            under this chapter.

Id. § 28.004. Significantly, the Act contains no provision for tolling the accrual

of interest during periods of litigation delay, and no court has held that a trial

court may toll interest accruing under the Act.

      MRC contends that the interest provided by the Act is simply prejudgment

interest and that a trial court has the equitable power to toll its accrual. In

support of its equitable-tolling argument, MRC cites Helena Chemical Company

v. Wilkins (“Wilkins I”), in which the San Antonio court held that a trial court

                                        5
may, in its discretion, issue orders tolling prejudgment interest during periods

of delay.   18 S.W.3d 744, 760 (Tex. App.—San Antonio 2000), aff’d, 47

S.W.3d 486 (Tex. 2001) (“Wilkins II”). Wilkins relied on former finance code

section 304.108(b), which specifically authorized prejudgment interest tolling

in wrongful death, personal injury, and property damage cases. Id.; see Act of

May 22, 1997, 75th Leg., R.S., ch. 1008, § 1, 1997 Tex. Gen. Laws 3091,

3436, repealed by Act of May 16, 2003, 78th Leg., R.S., ch. 204, § 6.03,

2003 Tex. Gen Laws 847, 862.        Although the legislature repealed section

304.108(b) in 2003, MRC argues that Wilkins is still good law because the

supreme court has not overruled its affirmance of the court of appeals’s

opinion. But the question of interest tolling was not appealed to the supreme

court. Wilkins II, 47 S.W.3d at 491. Thus, the supreme court’s affirmance

does not add precedential weight to the San Antonio court’s opinion in Wilkins

I, and the repeal of the statute on which Wilkins I relied destroys its value as

persuasive authority. On a more fundamental level, even if former finance code

section 304.108(b) were still in effect, it applied only to wrongful death,

personal injury, and property damage cases and thus would not justify tolling

in this contract case.

      Because no authority supports the tolling of prejudgment interest accruing

under the Act, we hold that the trial court erred by failing to award AMX the

                                       6
full amount of interest mandated by property code section 28.004. We must

now calculate the amount of interest the trial court should have awarded under

the Act on AMX’s three invoices.

      MRC paid AMX’s first invoice within thirty-five days, so no interest

accrued on that invoice. AMX’s second invoice, dated November 11, 2002,

was for $305,392.10.      Interest accrued on the full invoice amount from

December 17, 2002, until MRC made a partial payment of $200,000 on

February 19, 2003, a span of sixty-four days. Sixty-four times the statutory

interest rate (1.5% per month equals 18% per annum equals .05% per day)

times the invoice amount is $9,638.68.

      Interest continued to accrue on the $105,392.10 balance on the second

invoice from February 20 until MRC made its $175,951 payment on March 10,

2003, a total of eighteen days, for additional interest of $935.54.

      Interest began to accrue on AMX’s third invoice, for $117,458.90, on

March 8, 2003. When MRC made its $175,951 payment on March 10, 2003,

the total due on the third invoice had accrued $115.85 in interest.

      The $46,900 balance due on the third invoice continued to accrue

interest until the trial court entered judgment on May 31, 2007, 1,542 days

later, during which time an additional $35,664.56 in interest accrued.




                                      7
       Thus, the total prejudgment interest due to AMX under property code

section 28.004 is $9,638.68 plus $935.54 plus $115.85 plus $35,664.56 for

a total of $46,354.62. We sustain AMX’s first issue, reverse the trial court’s

award of $16,792.38 in statutory interest, and render judgment in favor of

AMX for statutory interest in the sum of $46,354.62.

II.    Common law prejudgment interest

       In its second issue, AMX argues that the trial court erred by failing to

award it common law prejudgment interest on the $46,900 in contract

damages awarded by the jury in addition to statutory interest under property

code section 28.004. AMX contends that interest under section 28.004 is

“penalty interest,” not “prejudgment interest,” and that a prevailing contractor

may therefore recover both forms of interest.

       Prejudgment interest serves two purposes.       First, it compensates a

claimant for lost use of the money due as damages during the lapse of time

between the accrual of the claim and the date of judgment.          Battaglia v.

Alexander, 177 S.W.3d 893, 907 (Tex. 2005); Johnson & Higgins of Tex., Inc.

v. Kenneco Energy, Inc., 962 S.W.2d 507, 528 (Tex. 1998); see also Tex. Fin.

Code    Ann.   §   301.002(a)(4)   (Vernon   2006)    (defining   “interest”   as

“compensation for the use, forbearance, or detention of money”). Second, it

encourages settlement and removes incentives for delay. Johnson & Higgins,

                                       8
962 S.W.2d at 529, 532 (citing Cavnar v. Quality Control Parking, Inc., 696

S.W.2d 549, 554–55 (Tex. 1985), abrogated on other grounds by Johnson &

Higgins, 962 S.W.2d at 535). Compensation other than for the lost use of

money is not “interest.” Battaglia, 177 S.W.3d at 907. “One could call such

compensation a windfall (from the claimant’s perspective) or a penalty or fine

(from the defendant’s perspective), but it is not ‘interest.’” Id. (noting that

nothing in former article 4590i or the applicable versions of civil practice and

remedies code sections 33.012 and 33.013 indicated that the legislature

intended for prejudgment interest to either under- or over-compensate

plaintiffs).

       Whether a contractor may recover both 18% interest under the Prompt

Payment to Contractors Act and common law prejudgment interest appears to

be a question of first impression.   Several courts have affirmed awards of

interest under the Act as “prejudgment interest,” apparently in lieu of common

law prejudgment interest; none has held that a contractor may recover both.

See, e.g., RAJ Partners, Ltd. v. Darco Constr. Corp., 217 S.W.3d 638, 646–47

(Tex. App.—Amarillo 2006, no pet.); All Seasons Window & Door Mfg., Inc. v.

Red Dot Corp., 181 S.W.3d 490, 497–99 (Tex. App.—Texarkana 2005, no

pet.) (holding that provision in contract that “all deferred payments shall bear

interest . . . at the maximum rate permitted by law” allowed contractor to

                                       9
recover 18% prejudgment interest under the Act rather than the maximum 6%

interest authorized by finance code section 302.002 in contracts that do not

specify an interest rate); Talley Const. Co. v. Rodriguez, No. 01-03-01147-CV,

2006 WL 908180, at *11 (Tex. App.—Houston [1st Dist.] Apr. 6, 2006, no

pet.) (mem. op. on reh’g) (analyzing contractor’s entitlement to prejudgment

interest under the Act according to rules governing award of common law

prejudgment interest); Henry Bldg., Inc. v. Milam, No. 05-99-01400-CV, 2001

WL 246882, at *3–4 (Tex. App.—Dallas Mar. 14, 2001, pet. denied) (holding

trial court erred by awarding contractor 6% prejudgment interest instead of

18% prejudgment interest under the Act and modifying judgment to include

18% interest).

      Regardless of whether we deem interest awarded under the Act to be a

“penalty,” as AMX contends we must, it is, literally, prejudgment interest;

section 28.004, captioned “Interest on Overdue Payment,” provides that an

unpaid amount bears “interest” until it is paid or until “the date a judgment is

entered.” Tex. Prop. Code Ann. § 28.004(b), (c). Further, interest under the

Act fulfills both of the purposes of prejudgment interest: It compensates a

claimant-contractor like AMX for the loss of use of the unpaid money, and it

encourages settlement and removes incentives for delay.        See Johnson &

Higgins, 962 S.W.2d at 529, 532.

                                      10
      The legislative history of the Act, which AMX cites extensively, shows

that the legislature’s goal in enacting chapter 28 was consistent with the dual

purposes of prejudgment interest. The Act’s sponsor, Representative Mark

Stiles, offered the testimony of Raymond Risk, who represented the American

Subcontractor’s Association of Texas. The Prompt Payment to Contractors

Act: Hearings on Tex. H.B. 1429 Before the House Comm. on Bus. & Indus.,

73rd Leg., R.S. 3–22 (March 23, 1993) (testimony of Raymond Risk). Risk

testified that “the inability to get paid in a timely manner for work performed

is the most serious problem facing subcontractors and suppliers today.” Id. at

3:15–17. He said that “[s]ubcontractors depend on cash flow generated by the

progress payments to meet their payrolls, to make loan payments, and to pay

their suppliers.” Id. at 4:6–8. To the extent that Risk’s testimony reflects the

legislature’s intent in passing the Act, interest under the Act encourages

payment, removes incentives for delay, and compensates contractors for the

lost use of money needed to meet payrolls, make loan payments, and pay

suppliers—the same goals served by common law prejudgment interest.

      The fact that prejudgment interest under the Act is more than double the

applicable rate of prejudgment interest gives contract debtors an additional

incentive to pay promptly that would not exist but for the Act. See Johnson

& Higgins, 962 S.W.2d at 532 (holding that the prejudgment interest rate in

                                      11
contract cases is the same as the postjudgment rate); Tex. Fin. Code Ann.

§ 304.003(c) (Vernon 2006) (setting postjudgment interest rate at the prime

rate on the date of computation as published by the Board of Governors of the

Federal   Reserve   System);    http://www.federalreserve.gov/releases/h15/

data/Daily/H15_PRIME_NA.txt (last accessed January 7, 2009) (listing the

prime rate on May 31, 2007—the date of the trial court’s judgment—as

8.25%). Moreover, the fact that the Act’s interest potentially accrues on sums

to which common law prejudgment interest would not apply—as in this case,

where common law prejudgment interest would accrue only on the $46,900

unpaid at the time of trial—is a further inducement to prompt payment. Thus,

allowing a contractor like AMX to recover 18% prejudgment interest under the

Act but not common law prejudgment interest compensates the contractor for

the loss of use of the unpaid money and provides an added incentive for prompt

payment that would not exist but for the Act. On the other hand, to allow a

contractor to collect both interest under the Act and common law prejudgment

interest would allow a double recovery of two kinds of interest designed to

promote the same two goals, namely, compensation for loss of use and the

prompt payment of debts.

      AMX cites three cases in which courts have allowed both recovery of

interest under other “prompt payment” statutes and common law prejudgment

                                     12
interest. Those cases are distinguishable. In Dunn v. Southern Farm Bureau

Casualty Insurance Co., the Tyler court held that a claimant under former

insurance code article 21.55 could recover both article 21.55’s 18% per annum

penalty on delayed insurance payments plus prejudgment interest on the

claimant’s personal injury damages (but not prejudgment interest on the 18%

penalty). 991 S.W.2d 467, 470–71, 478–79 (Tex. App.—Tyler 1999, pet.

denied); see also Teate v. Mut. Life Ins. Co., 965 F. Supp. 891, 893 (E.D. Tex.

1997) (also applying former article 21.55). But unlike property code section

28.004, former insurance code article 21.55 provided that the 18% penalty on

delayed insurance payment was “damages,” not interest: “[T]he insurer shall

pay damages . . . as provided for in Section 6 of this article. . . . [T]he insurer

shall be liable to pay . . . in addition to the amount of the claim, 18 per cent per

annum of the amount of the claim as damages.” Act of May 27, 1991, 72nd

Leg., R.S., ch. 242, § 11.03(a), 1991 Tex. Gen. Laws 939, 1045, repealed by

Act of May 20, 2003, 78th Leg., R.S., ch. 1274, § 26(a)(1), 2003 Tex. Gen.

Laws 4107, 4138 (emphasis added). Property code section 28.004, on the

other hand, specifically identifies the statutory interest as “interest.” Tex. Prop.

Code Ann. § 28.004.

      Likewise, the statute at issue in Marineau v. General American Life

Insurance Co., former insurance code article 3.62, provided that a life insurance

                                        13
company that failed to pay life insurance proceeds within thirty days of demand

“shall be liable to pay the holder of such policy, in addition to the amount of the

loss, twelve (12%) [percent] damages on the amount of such loss.”              898

S.W.2d 397, 404 (Tex. App.—Fort Worth 1995, writ denied); Act of June 7,

1951, 52nd Leg., R.S., ch. 491, § 3.62, 1951 Tex. Gen. Laws 868, 920,

repealed by Act of May 27, 1991, 72nd Leg., R.S., Ch. 242, § 12.01(2), 1991

Tex. Gen. Laws 939, 1133 (emphasis added). Because former insurance code

articles 3.62 and 21.55 provided for the award of penalties as “damages,” not

“interest,” Dunn, Teate, and Marineau are inapposite to the interpretation of

property code section 28.004’s provision for the award of interest.

       For the forgoing reasons, we hold that a contractor who is entitled to

collect 18% interest under the Act is not also entitled to common law

prejudgment interest, and we overrule AMX’s second issue.

III.   AMX’s attorney’s fees

       In its third issue, AMX argues that the trial court erred by failing to award

AMX any attorney’s fees because AMX prevailed on its breach of contract

claim and submitted uncontroverted evidence of its attorney’s fees.           MRC

responds that AMX failed to offer credible evidence to support the fees of its

in-house counsel or retained local counsel, failed to prove the “cost plus

overhead” of using in-house counsel, failed to prove that the services of local

                                        14
counsel were necessary, and failed to segregate its attorney’s fees attributable

to AMX’s breach of contract and Prompt Payment Act claims.

      A.    Evidence of AMX’s attorney’s fees

      The parties submitted the issue of attorney’s fees to the trial court after

the jury trial. AMX eventually filed five affidavits in support of its attorney’s

fees claim, three sworn by its in-house counsel, David Kallus, and two sworn

by its local counsel, Ed Cox. MRC did not file controverting affidavits.

      In his first, sixteen-page affidavit, filed on February 5, 2007, Kallus

recited his education and work histories. He stated that more than fifty percent

of his legal work was in Tarrant and Dallas Counties in the preceding five years

and that his “hourly rate of $200.00 per hour is considerably less than the

prevailing market rate in Tarrant County for attorneys with my experience,

qualifications, skill, and ability, and the time expended on this matter is

reasonable.”   He stated that in his opinion, all of the work performed was

necessary and reasonable under the circumstances of the case. Kallus averred

that it was reasonable and necessary to hire local counsel to assist in the

preparation and trial of the case. Thirteen pages of his affidavit recite a blow-

by-blow retelling—from Kallus’s perspective—of the discovery process and

pretrial motion practice. Kallus concluded that AMX had incurred reasonable

and necessary attorney’s fees of $157,085.15 through trial. Kallus attached

                                       15
to his affidavit sixteen pages of time entries reflecting work performed on the

case through the end of trial. The time sheet does not reflect dollar charges for

each entry, but it recites a total of 646.83 hours and an “amount to be billed”

of $129,366.67, which works out to $200.00 per hour.

      In his second, nine-page affidavit, filed on February 12, 2007, Kallus

described the claims, affirmative defenses, motions, and responses to motions

MRC filed during the litigation, averred that “the issues raised by [AMX’s]

claims for affirmative relief became inextricably intertwined with the issues

raised by [MRC’s] pleading,” and faulted MRC for delaying the trial and running

up the legal fees.

      In his third affidavit—a single page filed on February 22, 2007—Kallus

averred that he was in-house counsel for AMX and received an annual salary

(facts not disclosed in his prior affidavits). Kallus stated, “The fair market value

of legal services provided by an attorney in the Dallas/Fort Worth Metroplex

with my experience, qualifications, credentials, and skill is between $300.00

and $350.00 per hour.”

      Cox’s first affidavit was filed on February 7, 2008.        He averred that

Kallus retained his firm as local counsel to assist with discovery and trial. Cox

stated that “Kallus’s hourly rate of $200 per hour is reasonable and, in fact, is

below the market rate for an attorney of his experience, qualifications, and skills

                                        16
in the Metroplex.” He said that his own firm devoted 153.10 hours of work to

this case, worth $27,718.50, and that the services were necessary and the

fees “appropriate.”   Cox attached to his affidavit a time summary sheet

showing work performed by date and the time and charge for each task.

      In his second affidavit, dated February 22, 2007, Cox stated that if AMX

had hired outside counsel in the Metroplex with the same experience,

qualifications, and skills as Kallus, “AMX could reasonably be expected to have

been charged between $300 and $350 per hour.” He further opined that “a

reasonable attorney fee for the work performed by Mr. Kallus as reflected in his

time sheet . . . is between $194,049.99 and $226,391.66.” 2

      B.    The trial court’s findings and conclusions

      In its findings of facts and conclusions of law, the trial court made the

following findings and conclusions regarding AMX’s attorney’s fees:

                             FINDINGS OF FACT

            ....

      3.    [AMX] failed to prove by a preponderance of the credible
            evidence that attorney’s fees were actually incurred in this
            case.




      2
       … The record also shows that MRC’s counsel billed MRC at least
$120,000 in attorney’s fees between December 2003 and February 2007 at
the rate of $205.00 per hour.

                                      17
4.   [AMX] failed to prove by a preponderance of the credible
     evidence that there was any attorney’s fee agreement
     between [AMX] and its lead counsel.

5.   [AMX] failed to prove by a preponderance of the credible
     evidence that it was necessary or reasonable to incur
     attorney’s fees for local counsel.

6.   [AMX] failed to prove by a preponderance of the credible
     evidence that the fees requested by [AMX] were reasonable.

7.   [AMX] failed to prove by a preponderance of the credible
     evidence that fees requested by [AMX] were necessary.

8.   The fees requested by [AMX] were excessive.

9.   [AMX] failed to segregate the fees relating to the single claim
     upon which it prevailed from the fees relating to the
     numerous claims upon which it failed to prevail.

     ....

                    CONCLUSIONS OF LAW

     ....

5.   [AMX’s] claim for attorney’s fees is excessive, unreasonable
     and without sufficient evidentiary basis to support an award
     of attorney’s fees.

6.   [AMX’s] claim for attorney’s fees fails because [AMX] failed
     and refused to segregate attorney’s fees incurred in
     connection with claims upon which [AMX] prevailed from
     attorney’s fees incurred in connection with other claims.

7.   An award of attorney’s fees to [AMX] would not be equitable
     or just.

8.   [AMX] is not entitled to recover attorney’s fees.

                               18
      C.    Discussion

      As a general rule, attorney’s fees are not recoverable in Texas unless

allowed by contract or statute.   Brainard v. Trinity Universal Ins. Co., 216

S.W.3d 809, 817 (Tex. 2006). In this case, attorney’s fees are authorized by

the contract between AMX and MRC, which provides that “[i]n the event

payment is not made as outlined herein, [MRC] agrees to pay all costs of

collection and attorney’s fees incurred by [AMX]; by the Prompt Payment to

Contractors Act, Tex. Prop. Code Ann. § 28.005(b); and by civil practice and

remedies code section 38.001, which provides that “[a] person may recover

reasonable attorney’s fees . . . if the claim is for . . . an oral or written

contract.” Tex. Civ. Prac. & Rem. Code Ann. § 38.001 (Vernon 2008). We

will focus our analysis on attorney’s fees under section 38.001.

      An award of reasonable attorney’s fees is mandatory under section

38.001 if there is proof of the reasonableness of the fees.     World Help v.

Leisure Lifestyles, Inc., 977 S.W.2d 662, 683 (Tex. App.—Fort Worth 1998,

pet. denied). The amount of the award lies within the discretion of the court,

but it does not have the discretion to deny attorney’s fees if they are proper.

Hassell Constr. Co. v. Stature Commercial Co., 162 S.W.3d 664, 668 (Tex.

App.—Houston [14th Dist.] 2005, no pet.); see also Ulico Cas. Co. v. Allied

Pilots Assoc., 187 S.W.3d 91, 109–110 (Tex. App.—Fort Worth 2005, no

                                      19
pet.) (“A trial court has discretion in fixing the amount of attorney’s fees, but

it has no discretion to entirely deny attorney’s fees established under section

38.001.”), rev’d on other grounds, 262 S.W.3d 773 (Tex. 2008). When a

claim for attorney’s fees is based on chapter 38, it is presumed that the usual

and customary attorney’s fees are reasonable, although that presumption may

be rebutted. Tex. Civ. Prac. & Rem. Code Ann. § 38.003 (Vernon 2008).

      Factors the trier of fact should consider in determining the amount of

reasonable attorney’s fees include the following: (1) the time and labor required,

the novelty and difficulty of the questions involved, and the skill required to

perform the legal service properly; (2) the likelihood that the acceptance of the

particular employment will preclude other employment by the lawyer; (3) the

fee customarily charged in the locality for similar legal services; (4) the amount

involved and the results obtained; (5) the time limitations imposed by the client

or by the circumstances; (6) the nature and length of the professional

relationship with the client; (7) the experience, reputation, and ability of the

lawyer or lawyers performing the services; and (8) whether the fee is fixed or

contingent on results obtained or uncertainty of collection before the legal

services have been rendered. Arthur Andersen & Co. v. Perry Equip. Corp., 945

S.W.2d 812, 818 (Tex. 1997) (quoting Tex. Disciplinary R. Prof’l Conduct




                                       20
1.04, reprinted in Tex. Gov’t Code Ann., tit. 2, subtit. G app. A (Vernon 2005)

(Texas State Bar R. art. X, § 9)).

            1.    In-house counsel’s fees

                  a.     Market value versus cost-plus value

      AMX argues that in-house counsel’s fees should be calculated at the

market rate for outside counsel. MRC contends that in-house fees should be

calculated under a “cost-plus” method that determines the claimant’s actual

cost of employing in-house counsel. Texas courts have written surprisingly

little about the recovery of in-house attorney’s fees. The first district has held

that a successful claimant may recover attorney’s fees for the legal services of

in-house counsel. Tesoro Petroleum Corp. v. Coastal Ref. & Mktg., Inc., 754

S.W.2d 764, 766 (Tex. App.—Houston [1st Dist.] 1988, writ denied) (holding

claimant in contract dispute entitled to recover in-house attorney’s fees equal

to 10% of damages); see also Beckstrom v. Gilmore, 886 S.W.2d 845, 847

(Tex. App.—Eastland 1994, writ denied) (“Appellant cites no authority that

adds the requirement [to civil practice and remedies code section 38.002] that

the claimant must be represented by another person. We decline to add such

a requirement.”). But no Texas court has decided how to calculate in-house

counsel’s fees on an hourly basis.




                                       21
      The California supreme court considered the same question in PLCM

Group v. Drexler and held that in-house counsel’s fees should be calculated at

market value. 997 P.2d 511, 520 (Cal. 2000). PLCM, an administrator of legal

malpractice insurance policies, sued Drexler, an attorney, for reimbursement for

funds expended defending Drexler against a legal malpractice claim. Id. at 514.

PLCM was represented by in-house counsel employed by its parent company.

Id. The trial court found in favor of PLCM and awarded it attorney’s fees for

the service of in-house counsel calculated at the prevailing hourly market rate

for attorneys of comparable experience. Id.

      After holding that PLCM could recover its in-house attorney’s fees, the

California supreme court held that the trial court properly calculated the fees

based on their market value, and it specifically rejected Drexler’s argument that

the trial court erred “because it did not use a so-called cost-plus approach,

based on a precise calculation of the actual salary, costs, and overhead of

in-house counsel.” Id. at 517, 519. The court reasoned that the market-value

and cost-plus methods may reflect many of the same factors because

“prevailing market rates necessarily take into consideration such factors as

salaries, overhead, the costs of support personnel, and incidental expenses.”

Id. at 520. But it noted that the market value approach has the virtue of being

predictable for the parties and easy to administer, while the cost-plus approach,



                                       22
in addition to being cumbersome, intrusive, and costly to apply, may distort the

incentives for settlement and reward inefficiency. Id.

      Courts in other jurisdictions have likewise concluded that the market

value method is the appropriate method for calculating in-house counsel’s

attorney’s fees. See, e.g., Balkind v. Telluride Mountain Title Co., 8 P.3d 581,

588 (Colo. App. 2000) (“Salaried and public interest attorneys should be

awarded attorney fees based on the prevailing market rate rather than a

‘cost-plus’ approach focusing on the attorney’s salary.”); Cent. States, Se. &

Sw. Areas Pension Fund v. Cent. Cartage Co., 76 F.3d 114, 115–16 (7th Cir.

1996) (holding pension fund represented by in-house counsel entitled to recover

attorney’s fees at market value and rejecting argument that awarding market-

value fees to entity represented by in-house counsel promoted fee-splitting with

a nonlawyer because attorney’s fees awards always belong to the litigant, not

the lawyer, regardless of how the court calculates the fee); Cottman

Transmission Sys., Inc. v. Martino, Nos. CIV.A. 92-7245, CIV.A. 92-2131,

CIV.A. 92-2253, 1993 WL 541680, at *15 (E.D. Pa. Dec. 22, 1993) (“The

Third Circuit has indicated that there is nothing improper about a market rate

calculation for attorney fee awards for salaried in house counsel.”), vacated on

other grounds, 36 F.3d 291 (3rd Cir. 1994); Metro. Mortg. & Secs. Co., Inc.

v. Becker, 825 P.2d 360, 364 & n.3 (Wash. App. 1992) (noting other courts’



                                      23
concerns over applying the market value approach and identifying the cost-plus

method as an alternative, but holding that the starting point for making an

award of attorney’s fees is the lodestar method and that the burden of

justifying a deviation from the lodestar amount is on the party proposing the

deviation); Milgard Tempering, Inc. v. Selas Corp of Am., 761 F.2d 553, 558

(9th Cir. 1985) (instructing district court on remand to examine the “modern

trend” toward calculating fees based on the market rate to predict Washington

law); see also Blum v. Stenson, 465 U.S. 886, 892–94, 104 S. Ct. 1541,

1545–47 (1984) (holding nonprofit legal aid organization that represented

prevailing Civil Rights Act litigant was entitled to recover attorney’s fees

calculated under prevailing market rate rather than cost-related basis, even if

the fee so calculated exceeded the salaries and expenses of staff counsel);

Molano v. State, 262 S.W.3d 554, 557 & n.1 (Tex. App.—Corpus Christi

2008, no pet. h.) (affirming award of attorney’s fees calculated under market

value method to State under DTPA for legal work performed by assistant

attorney general).

      Other jurisdictions, on the other hand, have rejected the market value

method in favor of the cost-plus method.     See, e.g., Softsolutions, Inc. v.

Brigham Young Univ., 2000 UT 46, 1 P.3d 1095, 1107 (Utah 2000); PPG

Indus., Inc. v. Celanese Polymer Specialties Co., 840 F.2d 1565, 1570 (Fed.



                                      24
Cir. 1988) (noting in dicta that “in this circuit reasonable rates for in-house

counsel may be calculated on cost plus overhead”); Dana Corp. v. Nok, Inc.,

No. 86-CV-74903-DT, 1988 WL 156807, at *4 (E.D. Mich. 1988) (same); see

also In re Stewart, Nos. 00-00046, 02-10020, 2004 WL 3130573, at *16

(Bankr. D. D.C. Nov. 10, 2004) (holding contract provision awarding attorney’s

fees “incurred” by prevailing party precluded application of market value

method to calculate in-house counsel’s fees).

      In Softsolutions, Inc.—coincidentally handed down just eleven days after

the California supreme court’s PLCM opinion—the Utah supreme court held,

“We are convinced that a cost-plus rate is the more reasonable measure of

attorney fees to in-house counsel, and is consistent with the public policy that

the basic purpose of attorney fees is to indemnify the prevailing party and not

to punish the losing party by allowing the winner a windfall profit.” 1 P.3d at

1107.    But in another, earlier case, the California court rejected a similar

argument that the market value method creates a windfall for a prevailing

plaintiff and noted that calculating fees at less than market value creates a

windfall for the losing defendant. Serrano v. Unruh, 652 P.2d 985, 999 (Cal.

1982).

      We are persuaded by the logic of those jurisdictions that apply the market

value method to calculate in-house counsel’s attorney’s fees. The market value



                                      25
method has the virtue of being predictable for the parties and easy to

administer. See PLCM Group, Inc., 997 P.2d at 520. It prevents a losing

defendant from benefitting from the prevailing party’s decision to control its

own costs by employing in-house counsel. See Serrano, 652 P.2d at 999.

Moreover, the market value method is consistent with the factors Texas courts

consider when assessing attorney’s fees, including the fee customarily charged

in the locality for similar legal services.   See Arthur Andersen & Co., 945

S.W.2d at 818. We therefore hold that the appropriate method by which to

calculate in-house counsel’s attorney’s fees is the market value method.

                  b.     Evidence of in-house counsel’s fees

      Having determined that the market value method applies to the

calculation of AMX’s in-house counsel’s attorney’s fees, we now turn to the

record to determine whether, as AMX argues, the trial court’s findings of fact

are contrary to the great weight and preponderance of the evidence.

      Findings of fact entered in a case tried to the court have the same force

and dignity as a jury’s answers to jury questions. Andersen v. City of Seven

Points, 806 S.W.2d 791, 794 (Tex. 1991). The trial court’s findings of fact are

reviewable for legal and factual sufficiency of the evidence to support them by

the same standards that are applied in reviewing evidence supporting a jury’s

answer. Ortiz v. Jones, 917 S.W.2d 770, 772 (Tex. 1996); Catalina v. Blasdel,

881 S.W.2d 295, 297 (Tex. 1994). When reviewing an issue asserting that a


                                       26
finding is “against the great weight and preponderance” of the evidence, we

must consider and weigh all of the evidence and set aside the finding only if the

evidence is so weak or the finding is so contrary to the great weight and

preponderance of the evidence as to be clearly wrong and unjust. Dow Chem.

Co. v. Francis, 46 S.W.3d 237, 242 (Tex. 2001); In re King’s Estate, 150 Tex.

662, 244 S.W.2d 660, 661 (1951). A court of appeals cannot make original

findings of fact; it can only “unfind” facts. Tex. Nat’l Bank v. Karnes, 717

S.W.2d 901, 903 (Tex. 1986); Zeptner v. Zeptner, 111 S.W.3d 727, 734 (Tex.

App.—Fort Worth 2003, no pet.) (op. on reh’g). Conclusions of law may not

be challenged for factual sufficiency, but they may be reviewed to determine

their correctness based upon the facts. Citizens Nat’l Bank v. City of Rhome,

201 S.W.3d 254, 256 (Tex. App.—Fort Worth 2006, no pet.); Dominey v.

Unknown Heirs and Legal Representatives of Lokomski, 172 S.W.3d 67, 71

(Tex. App.—Fort Worth 2005, no pet.).

      Although the uncontroverted testimony of an interested witness generally

does nothing more than create a fact issue, such testimony is taken as true as

a matter of law if it is not contradicted by any other witness or by attendant

circumstances and is clear, direct and positive, and free from contradiction,

inaccuracies, and circumstances tending to cast suspicion on it. Ragsdale v.

Progressive Voters League, 801 S.W.2d 880, 882 (Tex. 1990) (holding

uncontroverted testimony of attorney’s fees conclusively established right to


                                       27
recover fees as a matter of law and that trial court abused its discretion by

awarding only $150 in fees). This exception to the interested witness rule is

especially true when the opposing party has the means and opportunity of

disproving the testimony if it is not true and fails to do so. Id. (quoting Anchor

Cas. Co. v. Bowers, 393 S.W.2d 168, 169–70 (Tex. 1965)).

      The only evidence before the trial court was Kallus’s and Cox’s affidavits.

With regard to the factors set out in Arthur Andersen, Kallus’s affidavits and

time records recited the time and labor required to represent AMX, the fee

customarily charged in the locality for similar legal services, the amounts

involved, Kallus’s experience and ability, and the reasonableness and necessity

of the fees. See Arthur Andersen & Co., 945 S.W.2d at 818. Cox’s affidavits

likewise identified the fees customarily charged by an attorney of Kallus’s

experience, qualifications, and skills in the Metroplex. Both Kallus and Cox

testified that the market value of Kallus’s time was $300 to $350 per hour.

This evidence was uncontroverted, and Kallus’s and Cox’s affidavit testimony

was clear, direct, positive, and free from inconsistency. See Ragsdale, 801

S.W.2d at 888. MRC had the opportunity and means to disprove or at least

controvert their testimony if the testimony was not true. See id. It failed to do

so. Thus, Kallus’s and Cox’s testimony established as a matter of law the

necessity of the legal work performed by Kallus, the market value range ($300




                                       28
to $350 per hour) of his services, and the reasonableness of fees requested by

AMX.

       We now examine the trial court’s findings of fact in light of the

uncontroverted evidence. The trial court found that AMX failed to prove that

its requested fees were reasonable and that its requested fees were excessive.

But Kallus’s uncontroverted testimony establishes that the fees were both

reasonable and necessary, and Kallus’s and Cox’s uncontroverted testimony

establish the market value of Kallus’s services.3 Therefore, these findings were

contrary to the great weight and preponderance of the evidence. Likewise, the

trial court’s conclusion of law that AMX’s claim for attorney’s fees is excessive,

unreasonable, and without sufficient evidentiary basis to support an award of

attorney’s fees is incorrect in light of the uncontroverted evidence.

       The trial court also found that AMX failed to prove the existence of an

attorney’s fee agreement between it and Kallus and that it actually incurred

attorney’s fees. The existence of a fee contract and proof of fees actually

incurred or paid are not prerequisites to the recovery of attorney’s fees in

Texas.     See, e.g., Beckstrom, 886 S.W.2d at 847 (holding an attorney

representing himself pro se may recover attorney’s fees under Chapter 38 of


       3
       … MRC argues that notwithstanding the evidence, AMX’s fees are
excessive because this was a simple case and the amount of actual damages
was never in dispute. The clerk’s record contradicts this contention; it appears
from the pleadings and motions MRC filed in the trial court that MRC vigorously
resisted liability and asserted multiple defenses and affirmative claims for relief.

                                        29
the civil practice and remedies code); Brown v. Comm’n for Lawyer Discipline,

980 S.W.2d 675, 683–84 (Tex. App.—San Antonio 1998, no writ) (holding

state bar represented by private lawyers on a pro bono basis may recover

reasonable   attorney’s   fees);   Tuberquia    v.   Jamison   &    Harris,   No.

A14-91-00055-CV, 1991 WL 260344, at *2 (Tex. App.—Houston [14th Dist]

Dec. 12, 1991, no writ) (not designated for publication) (holding law firm

represented by one of its own attorneys in suit to collect legal fees entitled to

recover attorney fees for the time and effort expended); see also Campbell,

Athey & Zukowski v. Thomasson, 863 F.2d 398, 400–01 (5th Cir. 1989)

(applying Texas law and holding law firm that sued client to collect unpaid legal

fees and that was represented by “an attorney who also happened to be a

salaried member of the firm” could recover attorney’s fees under Chapter 38,

just as a corporation may recover fees for in-house counsel); but see Simmons

v. Kuzmich, 166 S.W.3d 342, 350 (Tex. App.—Fort Worth 2005, no pet.)

(holding, without citing any authority, that admission of attorney who was

represented by his own law firm that neither he nor anyone from his office was

billing or incurring fees and that he only “lost some time from the office”

precluded award of attorney’s fees). Thus, the trial court’s findings that AMX

failed to prove the existence of a fee contract between itself and Kallus and the

actual incurrence of fees are irrelevant to AMX’s right to recover attorney’s

fees.


                                       30
                  c.     Segregation

      Lastly, the trial court found and concluded that AMX was not entitled to

recover its fees because it “failed to segregate the fees relating to the single

claim upon which it prevailed from the fees relating to the numerous claims

upon which it failed to prevail.”

      Parties seeking attorney’s fees under Texas law “have always been

required to segregate fees between claims for which they are recoverable and

claims for which they are not.”     Tony Gullo Motors I, L.P. v. Chapa, 212

S.W.3d 299, 311 (Tex. 2006). The supreme court recognized an exception to

this rule in Stewart Title Guaranty Co. v. Sterling: attorney’s fees need not be

segregated when “the fees rendered are in connection with claims arising out

of the same transaction and are so interrelated that their prosecution or defense

entails proof or denial of essentially the same facts.” 822 S.W.2d 1, 11–12

(Tex. 1991).    But in Chapa, the supreme court held that “[t]o the extent

Sterling suggested that a common set of underlying facts necessarily made all

claims arising therefrom ‘inseparable’ and all legal fees recoverable, it went too

far” and flooded the courts of appeals with claims that recoverable and

unrecoverable fees are inextricably intertwined.     212 S.W.3d at 312.       The

supreme court therefore held as follows:

      Accordingly, we reaffirm the rule that if any attorney’s fees relate
      solely to a claim for which such fees are unrecoverable, a claimant
      must segregate recoverable from unrecoverable fees. Intertwined


                                       31
      facts do not make tort fees recoverable; it is only when discrete
      legal services advance both a recoverable and unrecoverable claim
      that they are so intertwined that they need not be segregated. We
      modify Sterling to that extent.

Id. at 313–14 (emphasis added). It may often be impossible to state as a

matter of law the extent to which certain claims can or cannot be segregated;

the issue is more a mixed question of law and fact for the jury, but

      [t]here may, of course, be some disputes about fees that a trial or
      appellate court should decide as a matter of law. For example, to
      prevail on a contract claim a party must overcome any and all
      affirmative defenses (such as limitations, res judicata, or prior
      material breach), and the opposing party who raises them should
      not be allowed to suggest to the jury that overcoming those
      defenses was unnecessary.

Id. at 313, 314 (emphasis added). When segregation is required, a claimant’s

failure to segregate fees does not mean that the claimant cannot recover any

fees; unsegregated attorney’s fees for the entire case are some evidence of

what the segregated amount should be, and remand is required to calculate the

segregated award. Id. at 314.

      In this case, the threshold question is whether AMX was required to

segregate its fees.   AMX’s original, first amended, and second amended

petitions all claimed breach of contract, violation of the Prompt Payment to

Contractors Act, and foreclosure of AMX’s constitutional mechanic’s lien. As

we have already noted, attorney’s fees are recoverable in connection with

breach of contract and Prompt Payment to Contractors Act claims. To prevail



                                      32
on a claim to foreclose a constitutional mechanic’s lien, a lienholder must prove

the performance of the labor and the existence of the debt. San Antonio Credit

Union v. O’Connor, 115 S.W.3d 82, 107–08 (Tex. App.–San Antonio 2003,

pet. denied) (quoting Weimhold v. Hyde, 294 S.W. 899, 900 (Tex. Civ.

App.—Amarillo 1927, no writ)).        A claim for breach of a contract for

improvements also requires proof of performance of labor and the existence of

a debt. See Residential Dynamics, LLC v. Loveless, 186 S.W.3d 192, 198

(Tex. App.—Fort Worth 2006, no pet.) (listing elements). A claim under the

Prompt Payment to Contractors Act likewise requires proof of properly

performed work and a failure to pay promptly.           Tex. Prop. Code Ann.

§§ 28.002 –.005. Thus, the discrete legal services needed to advance and

prove AMX’s constitutional lien claim were the same services required to

advance and prove the breach of contract and Prompt Payment claims, and we

hold as a matter of law that the claims are so intertwined that they need not

be segregated. See Chapa, 212 S.W.3d at 313–14. Likewise, AMX was not

required to segregate its fees for overcoming MRC’s affirmative defenses to

these claims. See id. at 314.

      On the other hand, in its third amended petition, filed a week before trial,

AMX asserted several additional claims for common-law conversion, violation




                                       33
of the Texas Theft Liability Act,4 breach of fiduciary duty, misapplication of

trust funds, imposition of a constructive trust, foreclosure of its equitable lien,

and money had and received. The trial court did not submit these causes of

action to the jury. Therefore, AMX may not recover attorney’s fees with regard

to any of them. Because AMX did not segregate its fees, we cannot determine

from the record before us how much work Kallus performed to advance these

causes of action nor whether they are so intertwined with the breach of

contract and Prompt Payment Act claims that the fees need not be segregated.

See id.

      MRC argues that because AMX did not segregate its fees after MRC

objected to the failure to segregate in the trial court, AMX is not entitled to

recover any fees at all, relying on a statement in Green International, Inc. v.

Solis, 951 S.W.2d 384, 389 (Tex. 1997), that “[a] failure to segregate

attorney’s fees in a case containing multiple causes of action, only some of

which entitle the recovery of attorney’s fees, can result in the recovery of zero

attorney’s fees.” The court did not explain the circumstances under which the

failure to segregate would result in a recovery of zero fees, see id., and the

word “can” does not mean “will” or “must.” Moreover, Solis predates Chapa,

where the supreme court held that a claimant’s failure to segregate fees does



      4
      … See Tex. Civ. Prac. & Rem. Code Ann. § 134.005(a)(1), (b) (Vernon
2005).

                                        34
not mean that the claimant cannot recover any fees; unsegregated attorney’s

fees for the entire case are some evidence of what the segregated amount

should be, and remand is required to calculate the segregated award. Chapa,

212 S.W.3d at 314.        We therefore remand the issue of AMX’s in-house

attorney’s fees to the trial court for a new trial.

            2.     Local counsel’s fees

      Most of the foregoing discussion applies to AMX’s local counsel’s fees,

too. The trial court found, and MRC argues on appeal, that AMX failed to prove

that local counsel’s services were necessary because Kallus testified that he

had considerable experience litigating in Dallas and Tarrant Counties. But both

Kallus and Cox averred that local counsel’s services were necessary, and MRC

did not controvert his testimony. We therefore hold that the trial court’s finding

that AMX failed to prove “that it was necessary or reasonable to incur

attorney’s fees for local counsel” is against the great weight and preponderance

of the evidence. Because the same segregation issue that requires a remand

of Kallus’s fees to the trial court for a new trial also applies to local counsel’s

fees, we remand local counsel’s fees for a new trial.

      We sustain AMX’s third issue.




                                        35
IV.   Composite’s attorney’s fees

      In its fourth issue, AMX argues that the trial court erred by failing to

assess interpleader Composite Investments, Inc.’s attorney’s fees against MRC.

      When Composite purchased the hotel in 2004, MRC deposited

$93,800—twice the amount of AMX’s lien—into an escrow account for the

benefit of the title insurance company to facilitate the sale.        AMX joined

Composite as a defendant to enforce its lien, but later agreed to dismiss its lien

with prejudice in exchange for Composite’s depositing $93,800 into the trial

court registry. MRC alleges that Composite, which was not a party to the

escrow contract, somehow induced the title company to transfer the escrow

funds to the registry by making false representations (the nature of which MRC

does not detail) and that Composite had no right to interplead the escrow funds

into the court’s registry.

      After depositing the funds in the registry, Composite requested

$17,930.39 out of the funds for its attorney’s fees incurred in the interpleader

proceeding. The trial court carried the request until after trial. After trial, MRC

filed a brief in opposition to Composite’s request for attorney’s fees, arguing

that Composite had no right to the impleaded funds. AMX moved for an order

compelling MRC to pay Composite’s attorney’s fees directly rather than out of

the registry funds. In its final judgment, the trial court ordered that $17,930.39

be released from the registry to Composite for its attorney’s fees.


                                        36
      The Texas rule is that the innocent stakeholder in an interpleader is

entitled to attorney’s fees, to be paid out of the impleaded fund. State Farm

Life Ins. Co. v. Martinez, 216 S.W.3d 799, 803 (Tex. 2007); U.S. v. Ray

Thomas Gravel Co., 380 S.W.2d 576, 581 (Tex. 1964). AMX argues that the

trial court should have ordered MRC to pay Composite’s attorney’s fees

directly, quoting this court’s opinion in Foreman v. Graham for the proposition

that “the ultimate burden between rival claimants should fall on the party

whose unsuccessful claim rendered the interpleader necessary.” 693 S.W.2d

774, 778 (Tex. App.—Fort Worth 1985, writ ref’d n.r.e.). We note that AMX

omitted the first half of the quoted sentence, which states, “Although the

interpleader may be entitled to have his attorney’s fees deducted from the

implead[ed] fund, . . . .” Id. (emphasis added) (citing Gen. Am. Life Ins. Co. v.

Rodriguez, 641 S.W.2d 264, 268 (Tex. App.—Houston [14th Dist.] 1982, no

writ)).   Moreover, in Foreman, the impleaded funds were $5,000, and the

interpleader claimed $7,000 in attorney’s fees. Id. We held that “the trial

court properly taxed [the interpleader’s] attorney’s fees . . . against appellant,

the losing party, as costs rather than taking the entire sum of attorney’s fees

out of the fund and depleting it entirely.” Id. Depletion is not a factor in this

case because the impleaded funds far exceed the attorney’s fees awarded to

Composite. Further, as MRC points out, MRC will bear the ultimate burden of

Composite’s fees because the money in the court registry was MRC’s money


                                       37
to begin with. We therefore hold that the trial court did not err by awarding

attorney’s fees to Composite out of the impleaded funds, and we overrule

AMX’s fourth issue.

V.    Repayment of funds to registry by MRC’s attorneys

      In its fifth issue, AMX asks this court to order MRC’s attorneys to pay

back into the trial court’s registry $6,093.30 plus accrued interest that the trial

court ordered released to MRC’s attorney’s trust account.          The trial court

released the funds in response to MRC’s motion to release to it all of the funds

remaining in the registry after payment of Composite’s attorney’s fees. In its

order releasing $6,093.30 to MRC’s attorneys, the trial court also ordered that

the remaining $73,682.35 be retained in the court’s registry.           That sum

approximates the total judgment awarded to AMX plus interest as of the date

of the trial court’s order. MRC argues that it originally escrowed the funds for

the benefit of the title company, not AMX, and urges us to order the funds

released to MRC.5

      AMX cites Northshore Bank v. Commercial Credit Corp. for the

proposition that this court should order MRC’s counsel to repay the withdrawn

funds to the registry. 668 S.W.2d 787, 790 (Tex. App.—Houston [14th Dist.

1984, writ ref’d n.r.e.). In that case, the fourteenth court noted that funds



      5
      … MRC did not file a cross-appeal requesting this relief. See Tex. R.
App. P. 25.1(c).

                                        38
deposited in the registry of the trial court are subject to the control and orders

of the trial court and that the trial court in the exercise of its equitable powers

may make such orders that it deems necessary to protect said funds. Id. The

court held that upon reversal, the trial court could have ordered the withdrawn

funds returned to the registry or enter judgment that the funds be recovered

from the party wrongfully withholding them. Id. Thus, Northshore does not

stand for the proposition that a court of appeals may order a party to return

funds to the trial court’s registry, and we find no case so holding. Moreover,

Northshore relegates to the discretion of the trial court the decision of whether

to order the funds repaid to the registry or to enter judgment for the funds

against the party holding them. Id. In this case, the trial court retained in the

registry an amount of money sufficient to pay the judgment it had rendered in

favor of AMX at the time. We therefore hold that AMX has failed to show that

the trial court abused its discretion by releasing the excess funds to MRC’s

counsel, and we overrule AMX’s fifth issue.

VI.   Release of registry funds to AMX

      In its sixth issue, AMX urges this court to order the trial court to release

the registry funds to AMX. AMX’s argument on this issue consists of one short

paragraph with no citations to any legal authority. An issue unsupported by

citation to any legal authority presents nothing for the court to review. Strange

v. Cont’l Cas. Co., 126 S.W.3d 676, 678 (Tex. App.—Dallas 2004, pet.


                                        39
denied), cert. denied, 543 U.S. 1076 (2005); see also Tex. R. App. P. 38.1(i)

(providing that a brief must contain appropriate citations to authorities). We

therefore overrule AMX’s sixth issue.

                                   Conclusion

      Having sustained AMX’s first and third issues and overruled its second,

fourth, fifth, and sixth issues, we reverse those portions of the trial court’s

judgment awarding AMX tolled interest under the Prompt Payment to

Contractors Act and denying AMX its attorney’s fees; render judgment that

AMX recover from MRC $46,354.62 in interest under the Prompt Payment to

Contractors Act; and remand the issue of AMX’s reasonable and necessary

attorney’s fees to the trial court for a new trial. In response to AMX’s motion

for rehearing, we also remand for further proceedings the disposition of the

funds in the trial court’s registry; we deny all other relief AMX requested in its

motion for rehearing.




                                             ANNE GARDNER
                                             JUSTICE

PANEL: GARDNER and WALKER, JJ.

DELIVERED: April 9, 2009




                                        40
