Justice Blacklock delivered the opinion of the Court.
This opinion addresses two questions of Texas law certified from the United States Court of Appeals for the Fifth Circuit.
I. Factual, Legal, and Procedural Background
The disputed portion of the statute provides:
TEX. BUS. & COM. CODE § 54.004.
The Fifth Circuit sets out the following undisputed facts, which we supplement with undisputed facts provided by the parties and district court. Plaintiff JCB, Inc., d/b/a Conveying & Power Transmission Solutions ("JCB"), was a commissioned sales representative for Defendant Horsburgh & Scott Company ("Horsburgh"), a manufacturer of gears and gearboxes. Under a written agreement, JCB's commissions were due "on approximately the 10th of each month following the payment of a commissionable order by the customer to [Horsburgh]." The parties later terminated that agreement but separately agreed that Horsburgh would pay commissions on orders received up to May 24, 2015. JCB claims Horsburgh owed approximately $ 280,000 in commissions under these agreements. JCB claims all these commissions were paid late, while Horsburgh says only some were paid late.
In March 2016, Horsburgh told JCB it could either accept further delays in payment or accept reduced commissions. JCB rejected these options and sued Horsburgh for treble damages and attorney's fees under section 54.004. Prior to the suit, Horsburgh made some commission payments. When suit was filed, Horsburgh still owed commissions totaling $77,000-$90,000. The case was removed to federal court. While the case was pending, Horsburgh paid all remaining commissions plus approximately five percent interest. Horsburgh then moved for summary judgment.
The federal district court granted summary judgment for Horsburgh. The court's opinion briefly addressed the applicability of section 54.004. The court found persuasive Horsburgh's argument that "the Act does not apply because it only applies to unpaid commissions, and all of the commissions owed [to JCB] have been paid." JCB, Inc. v. Horsburgh & Scott Co., No. 6:16-CV-146-RP, 2017 WL 6805045, at *4 (W.D. Tex. Oct. 25, 2017).
The Fifth Circuit certified the following questions to this Court:
JCB, Inc. v. Horsburgh & Scott Co., 912 F.3d 238, 241 (5th Cir. 2018). Writing for the panel, Judge Ho authored an opinion certifying these questions. As that opinion explained the treble-damages question, there is no dispute that the parties had "a contract under Section 54.002 relating to payment of a commission" and that Horsburgh "fail[ed] to comply with a provision of [that] contract." TEX. BUS & COM. CODE § 54.004. The dispute is over the date as of which the "unpaid commission due" should be calculated. If the amount of "unpaid commission due" should be calculated as of the date the commissions were originally due under the contract, Horsburgh may face treble damages of three times the $280,000 it initially failed to pay. If the correct date is the date suit was filed, Horsburgh may face treble damages of three times the amount it still owed at the
In addition to the panel's opinion, Judges Duncan and Ho authored concurring opinions touching on the merits of the certified questions. Under Judge Duncan's reading of section 54.004, JCB can recover treble damages on the full amount it claims because the amount of "unpaid commission due" should be calculated as of the time the parties' contract made the commissions due. Id. at 244-46 (Duncan, J., concurring). According to Judge Duncan, section 54.004 incorporates section 54.003 when there is no written contract and section 54.002 when there is a written contract. Id. at 245. Section 54.003 provides a thirty-day deadline to pay the commission, and under section 54.002, the written contract provides the due date. In either case, in Judge Duncan's view, the amount of "unpaid commission due" for trebling purposes must be calculated as of the date the commission was initially due. Id. at 245-46. Under this reasoning, because Horsburgh and JCB had a written contract with a ten-day deadline, all commissions paid after that deadline are "unpaid commission due" under section 54.004 even though they have later been paid. Id. at 245.
Judge Duncan also addressed the second certified question. In his view, the correct answer is an easy "yes." "Section 54.004 contains no indication that it makes recovering attorney's fees dependent on recovering treble damages. Rather, the text makes recovering fees contingent only on the principal's breach of a contractual provision relating to commission payments under Section 54.002, or on the principal's failure to pay a commission as required by Section 54.003." Id. at 246 n.3.
Unlike Judge Duncan, Judge Ho found the statute unclear on the date to be used to calculate "unpaid commission due." Id. at 242 (Ho, J., concurring). Judge Ho observed that the statute could have specified, for example, treble damages for unpaid commission due "at the time the civil action is filed" or some other specified time, but the statute does not so specify. Id. Although he did not disagree with Judge Duncan's view of the statute, he noted its tension with the general common-law principle that contract damages are not set in stone at the time of breach but may be reduced or mitigated by the parties' later actions. Id. at 243. Judge Ho also noted the possible effect of TEX. CIV. PRAC. & REM. CODE § 41.004(a), which states that "exemplary damages may be awarded only if damages other than nominal damages are awarded." Id.
With these concurring opinions as helpful resources, we consider de novo the two statutory interpretation questions certified from the Fifth Circuit. See City of San Antonio v. City of Boerne, 111 S.W.3d 22, 25 (Tex. 2003) ("We review matters of statutory construction de novo.").
A. The Timing Standard for "Unpaid Commission Due"
The first certified question asks: "What timing standard should courts use to determine the existence and amount of any `unpaid commissions due' under the treble damages provision of TEX. BUS. & COM. CODE § 54.004(1)?"
JCB argues that section 54.004 provides the time for determining the "unpaid commission due" by referencing section 54.002.
According to Horsburgh, there can only be "unpaid commission due" if the commission remains both "unpaid" and "due" at the time of trial. "Late-paid" is not the same as "unpaid," and these commissions were only late-paid. Further, the statute makes the defendant "liable ... for ... three times the unpaid commission due." Id. § 54.004 (emphasis added). The usual time for calculating the amount of a defendant's liability is the time of trial, Horsburgh contends. And in order for there to be anything to treble at the time of trial, there must be unpaid commission at that time. If the "unpaid commission due" must be measured as of the time of trial, as Horsburgh contends, then the "unpaid commission due" is zero because Horsburgh has paid all allegedly owed commissions.
The Fifth Circuit understandably found it difficult to choose between these two plausible interpretations of section 54.004(1)'s text. The statute could be much clearer on the timing question. It could have specified, for example, that the defendant is liable for three times the unpaid commission due at the time of the contractual due date or "at the time the civil action is filed." JCB, Inc., 912 F.3d at 242 (Ho, J., concurring). But the statute does not specify the moment in time courts should look to when determining the existence and amount of "the unpaid commission due."
JCB argues that section 54.004 answers this timing question by referring to section 54.002, which contemplates a contractual due date for the commission. According to JCB, "If there is a Section 54.002 breach of a provision stating when commissions are to be paid, then it is the parties' agreement that determines when an `unpaid commission' is `due.'" Id. at 245-46 (Duncan, J., concurring). Certainly, the parties' agreement sets a due date for the commissions. No one disputes that all the commissions were "due" and "unpaid" on that date. But after Horsburgh paid the commissions with interest, they were neither unpaid nor due. Answering when the commissions first became unpaid and due does not tell us whether it matters, when a trial court is calculating damages, that the commissions are no longer either unpaid or due. All the disputed commissions were unpaid and due on the date of breach, some were unpaid and due when JCB filed suit, and none were unpaid and due at the time of summary judgment. To which of those three moments in time must courts look to determine the amount of "unpaid commission due" to be trebled? We find nothing in section 54.002 or section 54.003 answering that question. Section 54.002 provides requirements for the parties' written agreement, and section 54.003 provides a default rule in certain cases where no written agreement governs. Nothing in these provisions links the date of the breach to the calculation of treble damages.
As a general matter, it almost goes without saying that damages typically are calculated by the factfinder based on what is required to compensate the plaintiff at the time of verdict or judgment. The general pattern jury charge for breach of contract asks: "What sum of money, if any, if paid now in cash, would fairly and reasonably compensate [the plaintiff] for his damages...?" COMMITTEE ON PATTERN JURY CHARGES OF STATE BAR OF TEXAS, TEXAS PATTERN JURY CHARGES PJC 115.3 (2018) (emphasis added). The question for the factfinder is how much the defendant owes the plaintiff today. The question is typically not how much the defendant owed the plaintiff at some date in the past. Nor is it how much the defendant would have owed the plaintiff if the defendant had not already paid. The usual question for the factfinder is how much the defendant owes the plaintiff at the time the factfinder assesses liability. We find little in chapter 54 to suggest a departure from this default framework.
Under the common law and statutory law, damages for breach of contract are sometimes appropriately measured at the time of breach, but they can also increase or decrease after this point in time.
JCB points to no other cause of action in Texas law that operates the way it claims section 54.004 should operate. Of course, the legislature could enact such an unusual rule if it wanted to do so. But faced with statutory text that is amenable to two different temporal meanings, we will not adopt the one that is foreign to the way civil litigation normally operates.
We find no fault with the district court's common-sense approach. Section 54.004 required the district court to calculate "three times the unpaid commission due the sales representative." TEX. BUS. & COM. CODE
Absent legislative instruction to the contrary, a defendant who is "liable ... for... the unpaid commission due the sales representative" is liable for just that— unpaid commissions that are due. He is not liable for amounts he has already paid prior to the determination of liability.
JCB contends this construction deprives chapter 54 of any real effect, since a sales agent can always sue under the common law for his commissions and obtain attorney's fees in a breach-of-contract suit under TEX. CIV. PRAC. & REM. CODE § 38.001. Courts "do not lightly presume that the Legislature may have done a useless act." Liberty Mut. Ins. Co. v. Garrison Contractors, Inc., 966 S.W.2d 482, 485 (Tex. 1998). But chapter 54 is by no means useless under our construction. If the defendant fails to pay all or part of the commissions prior to a judicial determination of the "unpaid commission due," he must pay treble damages. The threat of such punitive
JCB and its amicus supporters suggest that Horsburgh's understanding of the statute gives sales representatives insufficient recourse against capricious withholding of payments by manufacturers. They contend that the legislature surely did not mean to allow Horsburgh to escape punishment for its breach merely by paying its contractual obligation to JCB plus interest. But that is the option all contract defendants have always had under the common law. E.g., Stewart v. Basey, 150 Tex. 666, 245 S.W.2d 484, 486 (1952) ("The universal rule for measuring damages for the breach of a contract is just compensation for the loss or damage actually sustained. By the operation of that rule a party generally should be awarded neither less nor more than his actual damages."). If such an option encourages abusive breaches and exploitative conduct, then JCB's complaint is not just with the district court's interpretation of section 54.004. It is with all of Anglo-American contract law.
The vast majority of contracting parties have only the option of filing a normal breach-of-contract action when the need arises. As we interpret it, chapter 54 gives sales representatives a valuable advantage few other litigants enjoy. The threat of treble damages down the road is a heavy stick for the sales representative to wield against the principal, even if the blow cannot be struck until judgment. That the threat of the blow only forces quicker payment of what the sales representative is actually owed—as opposed to a punitive multiplier—hardly makes this arrangement unfair to the sales representative, who can recover everything he is owed and, as we explain below, the reasonable attorney's fees he expends to recover it. If, on the other hand, treble-damages liability irrevocably attaches the moment a breach occurs, the proverbial stick looks more like heavy artillery. Under JCB's approach, even if full payment is only a day late, nothing the defendant can later do to satisfy its contractual obligation will prevent the award of treble damages on the entire amount. Such a construction would deter the parties from settling their dispute without litigation or settling the dispute after suit is filed. By contrast, the threat of treble damages and attorney's fees at final judgment encourages manufacturers to settle these claims prior to suit or before incurring the full expense of litigation, consistent with Texas law's strong preference for encouraging settlement of legal disputes.
We disagree with JCB's suggestion that chapter 54 must be given a punitive interpretation because the common-law rules of contract litigation are unsuited for manufacturers and sales representatives. The legislature can make such a judgment, and to some extent it has done so. It has given sales representatives the extraordinary threat of trebled breach-of-contract damages to hold over manufacturers who do not pay commissions as agreed. JCB infers from the legislature's decision to give sales representatives this special right that it must have also intended to go even further by giving them an absolute right to treble
The foregoing discussion of policy concerns does not bear directly on the statutory-interpretation question before the Court. "Our role here ... is not to second-guess the policy choices that inform our statutes or to weigh the effectiveness of their results...." McIntyre v. Ramirez, 109 S.W.3d 741, 748 (Tex. 2003). Our job is to apply the statutory text as written, not as we would have written it. BankDirect Capital Fin., LLC v. Plasma Fab, LLC, 519 S.W.3d 76, 86 (Tex. 2017) ("The text is the alpha and the omega of the interpretive process."). The parties, however, rely heavily on policy arguments, so we have addressed them in order to dispel the misperception that the interpretation of chapter 54 adopted herein and previously adopted by two federal district courts will unfairly rob sales representatives of their negotiating power, render chapter 54 a nullity, or lead to absurd results.
For these reasons, we answer the first certified question from the Fifth Circuit by holding that the time for determining the existence and amount of "unpaid commission due" under section 54.001(1) is the time the jury or trial court determines the liability of the defendant, whether at trial or through another dispositive trial-court process such as a summary judgment.
B. Attorney's Fees and Costs
The second certified question asks: "May a plaintiff recover reasonable attorney's fees and costs under TEX. BUS. & COM. CODE § 54.004(2), if the plaintiff does not receive a treble-damages award under TEX. BUS. & COM. CODE § 54.004(1), and under what conditions?"
JCB argues as follows. Under the plain language of section 54.004, a principal who "fails to comply with a provision of a contract under Section 54.002" is liable for the sales representative's reasonable attorney's fees. Horsburgh failed to comply with the parties' agreement when it did not pay nearly $280,000 in commissions when due. As a result, Horsburgh is liable for JCB's reasonable attorney's fees. That ends the inquiry. The statute does not require an award of trebled unpaid commissions before the plaintiff can recover its attorney's fees. The two recoveries are provided independently of one another by subsections 54.004(1) and 54.004(2). Horsburgh argues that, without an award of trebled unpaid commissions, JCB is not a "prevailing party" and therefore cannot recover attorney's fees. Properly construed, according to Horsburgh, section 54.004 requires actual damages as a prerequisite for attorney's fees. Further, fees must be "reasonable" under section 54.004(2), and awarding attorney's fees in the absence of actual damages is unreasonable.
JCB has the better interpretation of the attorney-fees provision. Under the plain language of section 54.004, JCB's entitlement to attorney's fees is triggered by Horsburgh's breach, not by JCB's success
Horsburgh argues that fees should be denied in their entirety because JCB's claim for treble damages failed, meaning that JCB was not the "prevailing party." Under the American Rule, attorney's fees are not awarded unless a statute or contract authorizes them. In re Nat'l Lloyds Ins. Co., 532 S.W.3d 794, 809 (Tex. 2017) (orig. proceeding). Any award of fees is limited by the wording of the statute or contract that creates an exception to the American Rule.
Reasonableness is nevertheless a very real limitation on chapter 54's otherwise unbounded grant of attorney's fees and costs to the sales representative. Horsburgh plausibly argues that, although the statute contains no prevailing-party requirement, awarding any fees to the losing party would always be unreasonable. But as we understand the record, even though the district court granted summary judgment for Horsburgh, it would be incomplete to call JCB the losing party without qualifying that statement. JCB lost in its bid to add treble damages to its fully paid
In any event, JCB is eligible for an award of reasonable attorney's fees and costs by virtue of Horsburgh's breach and the plain language of section 54.004. While the discussion above offers some analysis of the reasonableness of JCB's potential fee award, whether the fees JCB seeks are reasonable is ultimately a question to be resolved in the district court after consideration of all the relevant factors governing awards of attorney's fees.
We answer the second certified question as follows: a plaintiff may recover attorney's fees and costs under TEX. BUS. & COM. CODE § 54.004(2) even if the plaintiff does not receive treble damages, if the factfinder determines that the fees and costs were reasonably incurred under the circumstances. Finally, reasonable costs, like reasonable attorney's fees, are available under section 54.004(2), and their availability does not depend on an award of treble damages under section 54.004(1).