Rule 131, Texas Rules of Civil Procedure (TRCP), provides that “the successful party to a suit shall recover of his adversary all costs incurred, therein, except where otherwise provided.” Rule 141 appears to provide otherwise, authorizing the court, “for good cause, to be stated on the record, adjudge the costs otherwise than as provided by law or these rules.” Rule 162 allows plaintiffs to non-suit at any time before they have introduced all of their evidence but does not “excuse the payment of all costs taxed by the clerk.” The rule goes on to provide that “[A]ny dismissal pursuant to this rule which terminates the case shall authorize the clerk to tax court costs against dismissing party unless otherwise ordered by the court.”
The embattled Dallas Court of Appeals recently had to deal with a case that turned on the interaction between and proper construction of these rules. The case, Elizabeth Jones Boyce v. Viki Livesay Eberstein and Karen Livesay Shuford (No. 05-20-00486-CV), arose from a dispute over the management of a trust. Eberstein and Shuford are daughters of Virginia Jones by her first husband. Boyce is Jones’ daughter by her second husband, who died in 2002. In 2003 Boyce convinced Jones to change her will, disinheriting Eberstein and Shuford. Three years later, Jones executed a trust for the benefit of Eberstein and Shuford, naming Jones and Boyce as co-trustees. When Jones became afflicted with primary memory loss in 2014, Boyce took advantage of the situation, borrowing money from Jones, refusing to pay interest as agreed, and selling trust property that secured the loans. Eberstein sued Boyce for breach of fiduciary duty and tortious interference with inheritance rights. Boyce answered and requested the appointment of a guardian ad litem for Jones.
The trial court appointed an attorney to serve as guardian ad litem. A day before trial was scheduled to commence, Eberstein non-suited her claims without prejudice. Thereafter, pursuant to Rule 173.6, TRCP, the guardian filed his final report and application for his fee of about $121,000. This rule sets out the procedure for compensating a guardian ad litem for reasonable and necessary expenses and a reasonable hourly fee for necessary services. It also permits the court to tax a guardian ad litem’s compensation as costs of court. Boyce moved to tax the ad litem’s fee against Eberstein under Rules 162 and 173.6. Eberstein likewise filed a motion to tax the fee against Boyce pursuant to the same rules. The trial court ordered that the fee be paid out of the trust, stating verbally in court that he thought Eberstein’s claims had some merit and the trust was in the best position to pay. Boyce appealed.
In a 2-1 split decision, the Dallas Court of Appeals upheld the trial court’s adjudgement of costs to the trust. This ruling required the court to evaluate “good cause” under Rule 141 for deviating from the default rule, Rule 131. The majority reviewed the relative paucity of cases construing the good cause exception. These cases stand for the following propositions:
- “Rule 141 good cause is typically found when the prevailing party has unnecessarily prolonged the proceedings, unreasonably increased costs, or otherwise done something that should be penalized.” Furr’s Supermarkets, Inc. v. Bethune, 53 S.W.3d 375, 377 (Tex. 2001);
- “A party’s inability to pay costs may be good cause if the costs in question are ad litem fees.” (citations omitted)
- Fairness “can be good cause, but the record must substantiate the connection.” Roberts v. Williamson, 111 S.W.3d 113, 124 (Tex. 2003). The court of appeals noted that in Roberts SCOTX reversed a trial court’s assessment of an ad litem’s fees to both parties on the theory that the ad litem benefited all parties, holding that the ad litem in question was appointed to benefit the child. Even so, SCOTX held open the possibility that an incidental benefit could constitute good cause.
- “Good cause to make both parties liable for a receiver’s fee as costs was shown where both sides benefited from the receiver’s work.” (citations omitted)
- “Good cause to order each party to bear its own costs was shown where (1) plaintiff prevailed on only one of two claims and (2) the trial court concluded that the claim the plaintiff prevailed on was de minimis.” (citations omitted)
- “A losing party’s emotional fragility is not good cause to depart from the default rules about costs.” (citing Furr’s Supermarkets)
- “A losing party’s inability to pay court costs is not good cause to depart from the default rules.” (citing Furr’s) “Nor is a prevailing party’s relatively superior ability to pay costs good cause.” (citations omitted)
- “In the case of a prevailing defendant and an outstanding guardian ad litem fee, good cause to shift the fee to the defendant is not satisfied by the incidental ‘benefit’ to the defendant that the judgment will not be subject to attack for lack of a guardian ad litem.” (citations omitted)
- “A trial court’s belief that all parties are entitled to their day in court is not good cause to tax costs contrary to Rule 131.” (citations omitted)
- “A plaintiff’s rejection of a settlement offer and subsequent recovery of a lower amount is not good cause to tax costs contrary to Rule 131.” (citations omitted)
The trial court ruled that good cause existed because Eberstein’s claims had “some merit” and the “trust was in the best position to pay.” A third potential ground, argued by Eberstein at the hearing but not adopted by the trial court, was that since the trust benefited from the appointment of the ad litem, there was good cause to assess the ad litem’s fee against it. The majority, again citing Furr’s Supermarkets, held that it could consider this argument as possible support for the trial court’s order. In doing so, the majority found that the ad litem’s appointment did indeed benefit the trust because the ad litem discovered that Boyce secured a loan from the trust by improperly pledging her primary residence as collateral, even though it was exempt from foreclosure. The court held this benefit enough to find good cause for assessing the ad litem’s fee to the trust, rather than to Eberstein.
Justice Schenk dissented. While he agreed with the majority that neither of the trial court’s stated reasons could support a finding of good cause, Justice Schenk saw a problem with the majority’s ruling that a ground not relied on by the trial court could nevertheless constitute good cause. Without a specific ruling by the trial court, Justice Schenk argued, it was impossible for the court of appeals to determine what the trial court might have assessed to the parties had it relied on the “benefit to the trust” reasoning. Justice Schenk would remand to the trial court for a determination of the extent of the benefit to the trust, if any, and the amount of the ad litem’s fee it would assess to the trust on that basis.
This case is worth notice because it pulls together and discusses, as Justice Schenk puts it, “the little law that exists regarding Texas Rule of Procedure 141 and the good cause that may support a trial court’s decision to adjudge costs other than as provided by Texas Rule of Civil Procedure 131.” While this case and much of this “little law” arose in the guardian ad litem or receivership realm, Rules 131 and 141 apply generally. Still, is the court’s discussion of “benefit” to a prevailing party otherwise entitled to costs limited to guardian ad litem fees or could it have broader application?