ATTORNEY'S FEE CONTRACT | PAROL EVIDENCE RULE PRECLUDES CONSIDERATION OF EVIDENCE IN
SUPPORT OF DEFENSE THAT WRITTEN FEE AGREEMENT WAS VERBALLY MODIFIED TO ADD CAP ON
FEES WHERE WRITTEN CONTRACT DID NOT CONTAIN SUCH A CAP AND LETTER AGREEMENT ON FEES
WAS NOT AMBIGUOUS
David J. Sacks, PC v. Charles McIntre Haden (Tex. 2008) (superseded per curiam
See subsequent Substituted Opinion in David J. Sacks PC v. Haden (Tex. Sep. 26,
No. 07-0472 (Tex. July 11, 2008)(per curiam) ("The contract was explicit as to the services to be rendered and
the manner that would be used in determining the price, and was therefore sufficiently clear to demonstrate a
meeting of the minds between the parties as to all essential terms of the contract.")
OPEN-ENDED FEE AGREEMENT ENFORCEABLE WHERE HOURLY FEE WAS STATED
Texas Supreme Court says that Houston court of appeals erred in holding that there
was no meeting of the minds necessary to form a binding contract governing appellate
attorney's fees, and further erred in holding that the parol evidence rule did not bar the
client’s evidence of an oral agreement with the law firm to cap fees. The evidence
offered by Haden would alter the written fee agreement, and is therefore not admissible
under the collateral and consistent exception to the parol evidence rule. The high court,
in a per curiam opinion, grants the defendant law firm's petition for review, reverses the
First Court of Appeals, and reinstates the trial court’s judgment.
DAVID J. SACKS, P.C. D/B/A SACKS & ASSOCIATES v. CHARLES MCINTYRE HADEN, JR., INDIVIDUALLY,
AND CHARLES MCINTYRE HADEN, JR. & COMPANY D/B/A HADEN & COMPANY; from Harris County; 1st
(01-01-00200-CV, 222 SW3d 580, 03-08-07)
Pursuant to Texas Rule of Appellate Procedure 59.1, after granting the petition for review and without hearing
oral argument, the Court reverses the court of appeals' judgment and reinstates the trial court's judgment.
(Retrieve Per Curiam Opinion in pdf)
Haden v. Sacks, No. 01-03-00025-CV (Tex.App.- Houston [1st Dist.] Mar 8, 2007, pet. granted)(Opinion by
Justice Sherry Radack) (breach of contract, attorney fees agreement dispute, ambiguous or unambiguous
contract) (parol evidence rule does not bar evidence of agreement to cap fees) Justice Elsa Alcala dissented in
Haden v. Sacks
Trial Court: County Civil Court at Law No 2 Trial Court Judge: Hon. Gary Michael Block
TERMS: attorney's fee collection suit)(hourly fee contract, meeting of the minds element in contract formation,
essential terms of a contract, alleged amendment of terms of contract, parol [not parole] evidence rule,
exceptions to parole evidence rule, ambiguous vs. unambiguous written contract, parol evidence of collateral
and contemporaneous agreement
CASE NOTES, COMMENTARY AND NEWS COVERAGE OF THIS CASE:
Hourly Rate Engagement Letter Held Not Ambiguous by Hon. Craig Estlinbaum, Guest Blogger on Adjunct Law
The Seven-Year War: Former Clients to Continue Fighting Firm Over Legal Fees by Mary Alice Robbins Texas
September 19, 2006
ALSO SEE Companion Case to Sacks v. Hade (involving appeal from turnover order)
Texas Supreme Court Decisions involving attorney's fees issues | Attorney fee cases from the Houston Courts
Other Texas Supreme Court Opinions Released 2008 | Per Curiam Opinions | Texas Opinions Homepage
Sacks v. Haden No. 07-0472 (Tex. 2008)
The question in this case is whether a written attorney’s fee agreement that specifies only hourly fee rates may
be modified by evidence of an oral capping agreement. We hold that it may not because parol evidence cannot
modify a written agreement absent ambiguity. Accordingly, we reverse the court of appeals’ judgment and
reinstate the trial court’s judgment.
Haden & Company and its owner, Charles Haden, were involved in a lawsuit that was appealed to the federal
circuit court of appeals. Haden hired David Sacks as his appellate counsel. The parties signed a written
engagement letter prepared by Sacks.
The letter stated the following:
I am honored to represent you with regard to the above-referenced matter. At this point, you have requested
that I assist with the writing of the Appellants’ Brief and any reply. If oral arguments are granted by the Fifth
Circuit, a decision will have to be made on who should argue the case.
My normal rate is $300.00 per hour, but my rate for this particular matter will be $200.00 per hour. The other
lawyers in my firm range from $150.00 to $200.00 per hour, and paralegals range from $50.00 to $100.00 per
hour. You are responsible for all costs and expenses in the case as incurred. These expenses include, but are
not limited to, copies; binding; fax transmissions; travel; lodging; parking; etc.
Please submit a $10,000 retainer to be applied to fees and expenses.
Sacks’s signature appears at the close of the letter. Below Sacks’s signature is the statement, “Your signature
below indicates acceptance of the terms of this fee agreement.” The parties later agreed to change the amount
of the retainer, and the face of the engagement letter shows that Haden signed the agreement, making that
change by striking through the original $10,000 amount and superscripting the amount of $5,000 above the
original typewritten numerals in handwriting, adding his initials beside that change. Haden forwarded a check
for the $5,000 retainer with a letter, which stated:
Pursuant to our telephone conversation, enclosed herewith is a check in the amount of five thousand dollars
($5,000) to be applied to fees and expenses in assisting with the writing of the Appellants’ Brief and reply. Also
enclosed is an executed copy of your August 4, 1997 letter indicating that I have acknowledged acceptance of
the terms of your fee agreement on behalf of Haden & Company and myself, except that the initial retainer
amount has been reduced to $5,000 per our agreement.
Sacks then filed a brief on behalf of Haden and his company seeking relief from the trial court’s judgment.
Sacks sent Haden an invoice for his legal services in the amount of $37,259.71, along with a letter stating that,
“given the state of the record as we were eventually able to retrieve from the Court, putting together winning
arguments took considerabl[y] more time than I anticipated after giving the cursory review of the initial
documents.” The letter also said, “We are committed to excellence and will generally spend whatever time is
necessary to develop a winning brief given the state of the record. Sometimes that gets a little more expensive
After Haden’s opponent’s responsive brief was received, Sacks prepared and filed Haden’s reply brief. Sacks
later sent Haden another invoice showing $40,304.71 in total charges for both the appellant’s brief and the
reply brief, crediting Haden $5,000 for the retainer, and requesting payment of the outstanding balance of
$35,304.71. Haden paid Sacks only an additional $5,000.
Over the next two years, Sacks continued to request payment of the remaining amount but Haden contested
the fees owed, stating that Sacks was only to review the brief already drafted by his trial counsel and
maintaining that Haden had “made it clear” that $5,000 was all he could afford to spend.
Sacks disputed Haden’s assertions and filed this lawsuit.
The trial court rendered a partial summary judgment in favor of Sacks on his breach of contract claims,
awarding Sacks the fees accrued preparing the briefs for Haden plus interest. The trial court also ruled that
Sacks was entitled to attorney’s fees incurred in pursuing the contract claim, but reserved ruling on the amount
of reasonable attorney’s fees. In addition, the trial court rendered a preliminary take-nothing summary judgment
in favor of Sacks on Haden’s counterclaims for unconscionable action, fraud, violations of the Deceptive Trade
Practices Act, breach of fiduciary duty, and breach of contract.
Sacks next sought summary judgment on the reasonableness of the attorney’s fees he incurred in seeking
summary judgment on his breach of contract claim. The trial court then rendered a final judgment, which
incorporated the earlier ruling on the contract claim, and awarded Sacks an additional $75,887.50 for attorney’
s fees incurred in pursuing his claim on the original fee agreement, with contingent fees totaling $45,000 for
appeals to an intermediate appellate court and for filing a petition for review in this Court.
Reviewing the trial court’s grant of summary judgment, the court of appeals initially unanimously affirmed. On
rehearing, the court reversed the trial court in a 2-1 decision, holding that a fact question existed with respect
to whether there was a meeting of the minds between the parties when they entered into the fee agreement.
[Haden v. Sacks] 222 S.W.3d 580, 590–91 (Tex. App.—Houston [1st Dist.] 2007). Because the agreement did
not explicitly state whether the parties had agreed to an open account or a flat, maximum fee, the court of
appeals concluded that Haden’s evidence of an oral agreement to cap the attorney’s fees at $10,000 was
admissible as a defense to Sacks’s claim under the collateral and consistent exception to the parol evidence
rule. Id. at 592–93.
The court of appeals raised meeting of the minds sua sponte, concluding that in the absence of a clear
statement identifying the fee agreement as an open account, a question of fact was raised as to whether “the
minds of the parties ‘met’ on the crucial obligation.” Id. at 591. A meeting of the minds is necessary to form a
binding contract. E.g., Hathaway v. General Mills, Inc., 711 S.W.2d 227, 228 (Tex. 1986). However, the absence
of a fixed total price for services does not indicate a failure of the parties to reach a meeting of the minds with
regard to the essential terms of the contract. See Haws & Garrett Gen. Contractors, Inc. v. Gorbett Bros.
Welding Co., 480 S.W.2d 607, 609 (Tex. 1972); Buxani v. Nussbaum, 940 S.W.2d 350, 352–53 (Tex. App.—
San Antonio 1997, no pet.). “Where the parties have done everything else necessary to make a binding
agreement for the sale of goods or services, their failure to specify the price does not leave the contract so
incomplete that it cannot be enforced. In such a case it will be presumed that a reasonable price was intended.”
Bendalin v. Delgado, 406 S.W.2d 897, 900 (Tex. 1966); see also Burnside Air Conditioning & Heating, Inc. v. T.
S. Young Corp., 113 S.W.3d 889, 894–95 (Tex. App.—Dallas 2003, no pet.); Buxani, 940 S.W.2d at 353;
Pennington v. Gurkoff, 899 S.W.2d 767, 770 (Tex. App.—Fort Worth 1995, writ denied). Though Sacks did not
specify an exact total price for his services, the specified hourly rates confirm that the parties agreed that Sacks
would charge and Haden would pay a reasonable price. The contract was explicit as to the services to be
rendered and the manner that would be used in determining the price, and was therefore sufficiently clear to
demonstrate a meeting of the minds between the parties as to all essential terms of the contract.
An unambiguous contract will be enforced as written, and parol evidence will not be received for the purpose of
creating an ambiguity or to give the contract a meaning different from that which its language imports. Universal
C.I.T. Credit Corp. v. Daniel, 243 S.W.2d 154, 157 (Tex. 1951). Only where a contract is ambiguous may a
court consider the parties’ interpretation and “admit extraneous evidence to determine the true meaning of the
instrument.” Nat’l Union Fire Ins. Co. of Pittsburgh, Penn. v. CBI Indus., Inc., 907 S.W.2d 517, 520 (Tex. 1995)
(per curiam). “Whether a contract is ambiguous is a question of law that must be decided by examining the
contract as a whole in light of the circumstances present when the contract was entered.” Columbia Gas
Transmission Corp. v. New Ulm Gas, Ltd., 940 S.W.2d 587, 589 (Tex. 1996).
The plain language of the engagement letter demonstrates that Haden agreed to pay Sacks an hourly fee, and
that no cap on fees was set. Haden argues that a fee agreement must specifically state that hourly fees will
accrue without limit in order for the agreement to be unambiguous and enforceable. But the lack of such explicit
language is irrelevant if the agreement can be reasonably interpreted only one way. See id. at 591. We have
never held that an open-ended hourly fee agreement will be enforced only if it expressly states there is no cap
on fees, and we decline to do so now. If a contract is unambiguous, the parol evidence rule precludes
consideration of evidence of prior or contemporaneous agreements unless an exception to the parol evidence
rule applies. See Hubacek v. Ennis State Bank, 317 S.W.2d 30, 31 (Tex. 1958).
Haden argues that the collateral and consistent exception applies. Under the exception, parol evidence can be
used to demonstrate a prior or contemporaneous agreement that is both collateral to and consistent with a
binding agreement, and that does not vary or contradict the agreement’s express or implied terms or
obligations. Id. But “[a] previous or simultaneous agreement to alter the fee agreed upon in a written contract is
in conflict with the written contract and not merely collateral to it.” Lakeway Co. v. Leon Howard, Inc., 585 S.W.
2d 660, 662 (Tex. 1979) (per curiam); see also Rincones v. Windberg, 705 S.W.2d 846, 849 (Tex. App.—
Austin 1986, no writ) (“It is a fair conclusion, we think, that the parol evidence rule prohibits the admission of
oral evidence which alters the payment terms of a written contract.”). The evidence offered by Haden would
alter the written fee agreement, and is therefore not admissible under the collateral and consistent exception to
the parol evidence rule.
The court of appeals erred in holding that there was no meeting of the minds necessary to form a binding
contract, and erred in holding that the parol evidence rule did not bar Haden’s evidence of an oral agreement
to cap fees. Accordingly, we grant Sacks petition for review and, without hearing oral argument, reverse the
court of appeals and reinstate the trial court’s judgment. See Tex. R. App. P. 59.1.
OPINION DELIVERED: July 11, 2008
DAVID J. SACKS, P.C. v. HADEN, No. 07-0487 (Tex. July 11, 2008)
(companion case) (turnover order appeal)
This is an appeal of a trial court’s turnover order awarding fees a law firm incurred in its efforts to recover
damages awarded for a client’s breach of their fee agreement. David J. Sacks, P.C. obtained partial summary
judgment on its breach of contract claim against former client Charles Haden and his company, and the trial
court awarded Sacks $30,314.38 plus interest. When Haden did not supersede that judgment pending his
appeal of the case, Sacks undertook considerable expense under section 31.002 of the Texas Civil Practice
and Remedies Code to secure a turnover order, have a receiver appointed, prevent postjudgment transfer of
assets, and seek dismissal of Haden’s eventual bankruptcy filings. The trial court ruled that Section 31.002(e)
entitled Sacks to attorney’s fees incurred in collection of the judgment, and awarded Sacks $90,000 as
reasonable costs and attorney’s fees.
Haden appealed the underlying breach of contract judgment as well as the turnover order. Initially, the court of
appeals unanimously affirmed both the trial court’s judgment and the turnover order. On rehearing, the court of
appeals reversed the trial court’s judgment on Sacks’s underlying breach of contract claim, holding that the
issue of whether there was a meeting of the minds between the parties was a question of fact that a jury must
decide. 222 S.W.3d 580, 590–91 (Tex. App.—Houston [1st Dist.] 2007). Because the court of appeals reversed
the underlying judgment, it also reversed the subsequent turnover order. Id. at 598.
We reversed the court of appeals’ judgment with respect to the breach of contract claim, holding that the fee
agreement was unambiguous and that the parol evidence rule bars consideration of evidence of an oral
agreement to cap the fees. Sacks v. Haden, ___ S.W.3d ___, ___ (Tex. 2008) (per curiam). Accordingly,
without hearing oral argument, we reverse the court of appeals’ judgment as to the turnover order and remand
this case to the court of appeals for consideration of whether the turnover order was proper under Section
31.002(e). See Tex. R. App. P. 59.1.
OPINION DELIVERED: July 11, 2008