Texas's Excessive Demand Doctrine Impacts Recoveries in Litigation

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Texas's Excessive Demand Doctrine Impacts Recoveries in Litigation

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A party who makes a demand for money he is not entitled to, either because it is done in bad faith or done unreasonably, becomes subject to the excessive demand doctrine. The consequence of making such a demand is the denial of amounts in excess of the actual debt. Specifically, attorney’s fees accrued in prosecution of the excessive claim are disallowed. Because excessive demand is an affirmative defense, a defending party must allege its claim of excessive demand in its pleadings. A party must “plead it, prove it, and obtain findings of fact on its essential elements.” To obtain findings on the issue, both pleadings and evidence supporting that an excessive demand was made are required to put a question or instruction before the jury. Ensuring that the evidence is sufficient to justify the instruction or question is raised in order to obtain findings depends upon the trial court—whose judgment will only be overturned upon a showing of abuse of discretion.

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Stephanie M. Green

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St. Mary's Law Journal, St. Mary's University School of Law

Date

2016

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St. Mary's University School of Law

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Copyright to author Stephanie M. Green

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St. Mary's Law Journal

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RFC3778

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English

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Text

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GreenFINAL

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889
RECENT DEVELOPMENT
TEXAS’S EXCESSIVE DEMAND DOCTRINE
IMPACTS RECOVERIES IN LITIGATION
STEPHANIE M. GREEN

I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 890
II. Background and History: Excessive Demand Doctrine
Explained . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 892
III. Failure to Properly Assert Elements of Excessive Demand
Dooms Defense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 894
A. An Excessive Demand Is Unreasonable or One Made in
Bad Faith . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 894
B. An Excessive Demand Claim Requires Showing that a
Tender of the Amount Owed Was Refused or Would Be
Refused . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 896
IV. Excessive Demand Defense Precludes Recovery of Attorney’s
Fees, Costs and, notably, Prejudgment Interest . . . . . . . . . . . . . . 897
A. Strong Precedential Support for Denial of Prejudgment
Interest Along with Attorney’s Fees . . . . . . . . . . . . . . . . . . . 897
B. Settlements Are Encouraged—Delay Tactics
Are Discouraged . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 898
C. Implications of Excessive Demands on Adversarial
Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 898
V. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 900
 The author wishes to express enormous gratitude to the St. Mary’s Law Journal Editorial Board
for its collective efforts for the publication and its genuine commitment to the best possible product.
She is also incredibly grateful for the support of her husband, Joshua, and children, Aedan and
Finnegan, whose love and guidance make anything possible.
890 ST. MARY’S LAW JOURNAL [Vol. 47:889
I. INTRODUCTION
A party who makes a demand for money he is not entitled to, either
because it is done in bad faith or done unreasonably, becomes subject to
the excessive demand doctrine.1 The consequence of making such a
demand is the denial of amounts in excess of the actual debt. Specifically,
attorney’s fees accrued in prosecution of the excessive claim are
disallowed.2 Because excessive demand is an affirmative defense,3 a
defending party must allege its claim of excessive demand in its pleadings.
A party must “plead it, prove it, and obtain findings of fact on its essential
elements.”4 To obtain findings on the issue, both pleadings and evidence
supporting that an excessive demand was made are required to put a
question or instruction before the jury.5 Ensuring that the evidence is
sufficient to justify the instruction or question is raised in order to obtain
findings depends upon the trial court—whose judgment will only be
overturned upon a showing of abuse of discretion.6
Recognizing an excessive or unreasonable demand for payment (or
settlement) will produce unnecessary runaway costs of litigation,7 Texas’s
1. See Hernandez v. Lautensack, 201 S.W.3d 771, 777 (Tex. App.—Fort Worth 2006, pet.
denied) (indicating an excessive demand is made either unreasonably or is in bad faith). In a case
from the Third Court of Appeals in Austin, a party’s refusal to accept the actual amount due on a
debt, failure to credit amounts paid to an account, and continued demand for payment greater than
the amount owed by a debtor justified complete denial of attorney’s fees. See Wallace Roofing, Inc.
v. Benson, No. 03-11-00055-CV, 2013 WL 6459757, at *41 (Tex. App.—Austin, Nov. 27, 2013, pet.
denied) (mem. op.) (concluding no abuse of discretion occurred when the evidence of the party’s
“excessive demand for payment and its actions indicated an unwillingness to accept the actual
amount due on the account”).
2. E.g., Findlay v. Cave, 611 S.W.2d 57, 58 (Tex. 1981) (establishing excessive demand
precludes recovery of fees for subsequent litigation attempting to recover underlying debt).
3. If not affirmatively pled or tried by consent, a claim of excessive demand is waived. Kurtz v.
Kurtz, 158 S.W.3d 12, 19 (Tex. App.—Houston [14th Dist.] 2004, pet. denied); Pratt v. Trinity
Projects, Inc., 26 S.W.3d 767, 769 (Tex. App.—Beaumont 2000, pet. denied). The burden of proof
and persuasion rest upon the party asserting an affirmative defense. WILLIAM V. DORSANEO, III ET
AL., TEXAS CIVIL PROCEDURE: PRETRIAL LITIGATION § 6.06 (2014–2015 ed.).
4. Hameed Agencies (Pvt) Ltd. v. J.C. Penney Purchasing Corp., No. 11-05-00140-CV, 2007
WL 431339, at *7 (Tex. App.—Eastland Feb. 8, 2007, pet. denied) (mem. op.); see also Pratt, 26
S.W.3d at 769 (discussing the pleading party must request and obtain findings on elements).
5. Nat’l Lloyds Ins. Co. v. Lewis, No. 09-13-00413-CV, 2015 WL 690807, at *12 (Tex. App.—
Beaumont, Feb. 19, 2015, pet. filed) (mem. op.).
6. Compare id. (recognizing even if refusal to include an instruction or question was error, the
appellate court would not reverse as it was not shown the error led to an improper judgment), with
Ware v. United Fire Lloyds, No. 09-12-00061-CV, 2013 WL 1932812, at *3 (Tex. App.—Beaumont,
May 9, 2013, no pet.) (mem. op.) (contending deference was proper and no abuse of discretion by the
trial court in holding the attorney’s fees claimed were excessive and unnecessary).
7. See Todd Tippett, Texas Insurers: Don’t Forget ‘Excessive Demand Doctrine’, LAW 360 (May 1,
2015, 7:23 AM), http://www.law360.com/articles/649775/texas-insurers-don-t-forget-excessive2016]
RECENT DEVELOPMENT 891
excessive demand doctrine generally denies recovery of attorney’s fees
sought,8 as well as prejudgment interest.9 Recent cases have tested the
breadth and applicability of Texas’s excessive demand doctrine but have
done so without establishing new or additional authority to guide future
cases.10 One recent article urges insurance carriers to remember to assert
excessive demand against inordinate policyholder claims.11 Behind this
call is the idea that insurance litigation surges as storms and natural
disasters regularly besiege the Lone Star State, and the potential for
unreasonable or excessive demands against insurers will inevitably
increase.12 Those demands impede swift resolution of claims. While one
underlying purpose for awarding attorney’s fees is the promotion of
judicial efficiency, unreasonable demands undermine this end; the
excessive demand doctrine then counters this outcome.13
Insurance litigation is not the only situation when excessive demand
applies. Any time a demand is made in connection with a suit for money
beyond what is actually owed, the defense may apply. Cases indicate a
broad applicability of the doctrine. Excessive demand has been asserted in
a range of cases from insurance claims to cases arising under the DTPA,
contract, landlord tenant disputes, and even a child support modification
matter.14 The rationale behind prohibiting recovery of attorney’s fees is
demand-doctrine (“The purpose of the doctrine is judicial economy in that excessive and
unreasonable demands cause unnecessary and excessive litigation costs, including attorneys’ fees and
court costs.”).
8. See, e.g., Kurtz v. Kurtz, 158 S.W.3d 12, 21 (Tex. App.—Houston [14th Dist.] 2004, pet.
denied) (“A party must affirmatively assert excessive demand as a defense to a claim for attorney’s
fees.”).
9. Section IV explores when a successful excessive demand defense vitiates the recovery of
prejudgment interest.
10. See Nat’l Lloyds Ins. Co., 2015 WL 690807, at *12 (overruling issue on appeal that excessive
demand prevented attorney’s fees award because no bad faith or unreasonable demand
demonstrated); Ware, 2013 WL 1932812, at *3 (upholding the trial court’s determination that attorney
fees claimed were excessive and unreasonable but without deciding the applicability of excessive
demand doctrine).
11. See generally Tippett, supra note 7 (encouraging utilization of excessive demand against
unreasonable insurance claims).
12. Id.
13. Wayne v. A.V.A. Vending, Inc., 52 S.W.3d 412, 418 (Tex. App.—Corpus Christi 2001, pet.
denied).
14. See generally Wallace Roofing, Inc. v. Benson, No. 03-11-00055-CV, 2013 WL 6459757 (Tex.
App.—Austin, Nov. 27, 2013, pet. denied) (mem. op.) (applying the doctrine in case involving DTPA
and contract claims); Mossler v. Nouri, No. 03-08-00476, 2010 WL 2133940 (Tex. App.—Austin
May 27, 2010, pet. denied) (involving a landlord commercial tenant dispute); Kurtz v. Kurtz, 158
S.W.3d 12 (Tex. App.—Houston [14th Dist.] 2004, pet. denied) (examining the assertion of excessive
demand on an appeal in child support modification related action); Standard Constructors, Inc. v.
Chevron Chem. Co., 101 S.W.3d 619 (Tex. App.—Houston [1st Dist.] 2003, pet. denied) (regarding a
892 ST. MARY’S LAW JOURNAL [Vol. 47:889
especially appropriate when a contract includes payment of attorney’s
fees.15 A party resisting an excessive, unreasonable, or bad faith claim
should not have to countenance such litigation tactics and risk of exposure
to additional damages for failing to pay an excessive demand.16 However,
the excessive demand doctrine benefits only parties that properly avail
themselves to the defense. Issues will continue to arise under this
affirmative defense to recovery of fees and interest until courts develop a
more cohesive doctrine. An outline of the current state of jurisprudence is
appropriate. Not only are many potential claims waived,17 a review of the
Texas case law reveals that few parties assert excessive demand as against
the recovery of prejudgment interest.18 This is a significant issue worthy
of discussion as the last time the Texas Supreme Court specifically
discussed whether excessive demand precludes an award of prejudgment
interest was 1949.19 This was well before the era of tort reform and the
statutory regime regarding attorney fee award requirements.
II. BACKGROUND AND HISTORY: EXCESSIVE DEMAND DOCTRINE
EXPLAINED
The Texas Supreme Court has since clarified the doctrine of excessive
demand in Findlay v. Cave.20 The 1981 opinion provides the court’s most
recent binding authority on the defense. The court articulated the twopronged
requirements of excessive demand: a creditor must seek “more
than the liquidated sum actually due on the instruments involved” and
either refuse tender or make clear that tender of amounts due will be
refused.21 In essence, there must be a claim for an ascertainable debt,22 a
breach of contract claim).
15. See Wayne, 52 S.W.3d at 418 (calling application in such a case “inherently logical”).
16. See id. (citing Allstate Ins. Co. v. Lincoln, 976 S.W.2d 873, 878 (Tex. App.—Waco 1998, no
writ) (“If the claiming party makes an unreasonable demand, the other party should not be forced to
pay the demand or else risk suffering the opposing party’s attorney’s fees.”).
17. See, e.g., Kurtz, 158 S.W.3d at 20 (noting the failure to raise the affirmative defense is
deemed waived).
18. Section IV clarifies this assertion at length.
19. See generally Ingham v. Harrison, 224 S.W.2d 1019, 1022 (Tex. 1949) (providing the
reasoning for a denial of prejudgment interest as well as attorney’s fees in case of excessive demand).
20. Findlay v. Cave, 611 S.W.2d 57 (Tex. 1981).
21. Id. at 58.
22. E.g., Beauty Elite Grp., Inc. v. Palchick, No. 14-07-00058-CV, 2008 WL 706601, at *4 (Tex.
App.—Houston [14th Dist.] Mar. 18, 2008, no pet.) (mem. op.) (determining the limitation of
applicability to a claim for a liquidated sum). While not listed anywhere as a stand-alone element,
case law clearly requires a specified liquidated sum to raise the defense. Id. See also MICHOL
O’CONNOR, O’CONNOR’S TEXAS CAUSES OF ACTION 1439 (2015) (outlining case law explication of
excessive demand). When a claim is liquidated, the sum owed is ascertainable. See Liquidated,
2016] RECENT DEVELOPMENT 893
wrongful demand for an amount greater than owed, and a refusal of the
tender of amounts owed by the creditor.23 In Findlay, the court analyzed
two previous cases that form the longstanding basis of the doctrine,
Collingsworth v. King24 and Ingham v. Harrison.25 The court affirmed an
excessive demand on a liquidated claim discharges the debtor’s liability for
attorney’s fees sought in litigation to recover payment: “A creditor who
makes an excessive demand upon a debtor is not entitled to attorney’s fees
for subsequent litigation required to recover the debt.”26
Parties asserting or resisting the defense of excessive demand need to
thoroughly understand the doctrine in order to zealously serve their
clients. A creditor making an excessive demand is taking a serious gamble
with his chances of recovery. To preserve recovery of fees outlined under
a contract and the interest that accrues from prosecuting a non-paying
party, it is paramount to understand the potential defenses to recovery.
The stakes are considerably higher for the DTPA plaintiff who makes an
excessive demand. The nature of a dispute can impact the potential for
reversal on appeal.27 Reversal rates in insurance cases have revealed a
shift in favor of insurance carriers over policyholders.28 Plaintiffs in tort
and DTPA actions do disproportionately worse on appeal than defendants
who prevail at the trial court level.29 In an already increasingly perilous
litigation climate, ensuring a recovery will not be overturned on appeal is a
necessary consideration. As such, plaintiffs should be alert to the potential
impact the excessive demand defense poses on recovery.
Parties wishing to utilize the defense of excessive demand ought to
understand the lessons to be gleaned from current cases. Excessive
demand can function as a powerful defense to recovery, provided it is
properly raised and asserted at the trial level and the relevant factual
BLACK’S LAW DICTIONARY (10th ed. 2014) (“(Of an amount or debt) settled or determined, esp. by
agreement.”).
23. See Tuthill v. Sw. Pub. Serv. Co., 614 S.W.2d 205, 212 (Tex. App.—Amarillo 1981, writ
ref’d n.r.e.) (recognizing from precedent that an excessive demand exists where “(1) the creditor
wrongfully demands an amount in excess of that which he is due; and (2) the creditor either refuses,
or clearly indicates that he will refuse, tender of the amount actually due”).
24. Collingsworth v. King, 283 S.W.2d 30 (Tex. 1955).
25. Ingham v. Harrison, 224 S.W.2d 1019 (Tex. 1949).
26. Findlay, 611 S.W.2d at 58.
27. See Lynne Liberato & Kent Rutter, Reasons for Reversal in the Texas Courts of Appeals, 48 HOUS.
L. REV. 993, 1017 (2012) (“Dispositions on appeal were affected not only by the procedural posture
of the case, but also by the nature of the dispute.”).
28. See id. at 1021 (surveying trends of reversal rates in Texas courts of appeals in insurance
coverage cases).
29. See id. at 1017 (ascertaining plaintiffs do particularly poorly in Texas on appeal for DTPA
and tort claims).
894 ST. MARY’S LAW JOURNAL [Vol. 47:889
findings on the elements are made to support denial of attorney’s fees and
prejudgment interest.
III. FAILURE TO PROPERLY ASSERT ELEMENTS OF EXCESSIVE DEMAND
DOOMS DEFENSE
A stunning lack of development exists in the discourse on excessive
demand because numerous claims fail on appeal for being improperly
attempted at the appellate level.30 As a result, the same basic tenets of the
defense are repeated throughout the cases.31 What constitutes excessive
demand is a fact intensive inquiry.32 Deciding whether the evidence
sufficiently supports the amount claimed is unpredictable. As a
preliminary matter, there must be a wrongful demand for an amount in
excess of the actual amount due the creditor.33 This element depends on
the facts and circumstances of each case.
A. An Excessive Demand Is Unreasonable or One Made in Bad Faith
The amount in dispute is not what classifies a demand as excessive.
Rather than the amount of money claimed, the basis for the defense boils
down to reasonableness and whether the claim is a bad faith one. “In
considering whether a demand is excessive or not, the dollar amount is not
by itself indicative. The dispositive inquiry . . . is whether the claimant
acted unreasonably or in bad faith.”34 For example, an excessive demand
30. An affirmative defense is waived if not pled in the trial court or tried by consent of the
parties. See Beauty Elite Grp., Inc. v. Palchick, No. 14-07-00058-CV, 2008 WL 706601, at *6 (Tex.
App.—Houston [14th Dist.] Mar. 18, 2008, no pet.) (mem. op.) (recognizing a party’s failure to
preserve excessiveness by failing to assert the issue in live pleadings); Kurtz v. Kurtz, 158 S.W.3d 12,
21 (Tex. App.—Houston [14th Dist.] 2004, pet. denied) (determining excessive demand was neither
affirmatively plead in trial court nor tried by consent); Standard Constructors, Inc. v. Chevron Chem.
Co., 101 S.W.3d 619, 628 (Tex. App.—Houston [1st Dist.] 2003, pet. denied) (denying on appeal a
previously un-asserted claim for excessive demand); Pratt v. Trinity Projects, Inc., 26 S.W.3d 767, 769
(Tex. App.—Beaumont 2000, pet. denied) (noting precedent requires excessive demand to be
affirmatively raised and findings obtained on required elements); Tuthill v. Sw. Pub. Serv. Co., 614
S.W.2d 205, 212 (Tex. App.—Amarillo 1981, writ ref’d n.r.e.) (“In their live trial pleadings, the
appellees did not affirmatively assert excessive demand as a defense to the claim for attorney’s fees
and prejudgment interest.”).
31. See, e.g., Tuthill, 614 S.W.2d at 212 (describing the effect of a creditor’s excessive demand on
his claim for attorney’s fees accrued in litigating the action for payment).
32. For a case that demonstrates the fact-intensive nature of a trial court’s inquiry into whether
a demand is excessive, see generally Oyster Creek Financial Corp. v. Richwood Investments II Inc., 176
S.W.3d 307 (Tex. App.—Houston [1st Dist.] 2004, pet. denied), which explains in detail the evidence
and factors assessed by the jury.
33. Findlay v. Cave, 611 S.W.2d 57, 58 (Tex. 1981).
34. Wayne v. A.V.A. Vending, Inc., 52 S.W.3d 412, 418 (Tex. App.—Corpus Christi 2001, pet.
denied) (citing Findlay, 611 S.W.2d at 58).
2016] RECENT DEVELOPMENT 895
arises when a party seeks to collect on amounts not owed or seeks
appreciably more than the amount of money he is entitled.35 On the
other hand, a significant difference between the amount claimed and the
amount awarded by the jury may be construed as reasonable when
evidence supports a large portion of the sum demanded.36 Ultimately, a
jury award of an amount less than the amount sought by a claimant does
not mean a demand is excessive; in certain instances, it may merely provide
some evidence of excessive demand.37 The jury’s award is but one factor
to consider. A jury is entitled to credit or discredit the evidence as it sees
fit.38 While the critical factor is whether a party can demonstrate a claim is
unreasonable or made in bad faith, recognizing the difference can be
vexing.39 However, a party’s pursuit of sums he is not entitled to collect
generally supports a characterization of the demand as excessive or
unreasonable.40
35. See Mossler v. Nouri, No. 03-08-00476, 2010 WL 2133940, at *8 (Tex. App.—Austin May
27, 2010, pet. denied) (noting the demand was at least two times what was due); Wayne, 52 S.W.3d at
418 (determining charges that were already paid as well as “demanding double holdover rent when
that clause had been manifestly waived” constituted unreasonable and excessive demands).
36. In Bhamani v. Citizens Enterprises, the Eastland appellate court explained evidence supporting
$30,000 of a demand for approximately $54,000 meant no showing of an excessive demand had been
made. Bhamani v. Citizens Enters., No. 11-13-00041-CV, 2015 WL 1779055, at *8 (Tex. App.—
Eastland Apr. 16, 2015, no pet.) (mem. op.).
37. Findlay, 611 S.W.2d at 58; see also Alford v. Johnson, 224 S.W.3d 291, 299 (Tex. App.—El
Paso 2005, pet. denied) (admitting an implied finding when evidence supported the view that the
demand was not excessive, but a demand “appreciably greater” than a jury determines to be due can
support excessive demand, provided the amount of jury’s award is “not the sole criterion”).
38. See Oyster Creek Fin. Corp. v. Richwood Invs. II Inc., 176 S.W.3d 307, 319 (Tex. App.—
Houston 2004, pet. denied) (regarding as unpersuasive the argument that a $359,000 overcharge was
excessive and unreasonable because the “jury was free to disbelieve [the expert’s] opinion of
excessive demand”).
39. “[A]bsent some evidence of unreasonableness or bad faith, a demand is not excessive
merely because it is greater than that which is later determined at trial to be due.” See Pennington v.
Gurkoff, 899 S.W.2d 767, 772 (Tex. App.—Fort Worth 1995, writ denied); (explaining the trial
court’s reduction of expert’s fee implied that demand was unreasonable and excessive under
circumstances despite lack of demonstrated bad faith). see also Oyster Creek Fin. Corp., 176 S.W.3d at
319 n.3 (recognizing the demand might have been found excessive under other circumstances and
deferring to jury’s conclusion).
40. See, e.g., Wayne, 52 S.W.3d at 418 (Tex. App.—Corpus Christi 2001, pet. denied) (deciding a
demand for previously waived holdover rent and for attempting to collect on charges that had
already been paid was unreasonable and excessive). Similarly, an Austin appellate court upheld the
refusal of attorney’s fees when the claimant conceded during trial the demand was more than she was
entitled to collect. Mossler, 2010 WL 2133940, at *8; see also Wallace Roofing, Inc. v. Benson, No. 03-
11-00055-CV, 2013 WL 6459757, at *14 (Tex. App.—Austin, Nov. 27, 2013, pet. denied) (mem. op.)
(continuing to assert amounts not owed shows an excessive demand).
896 ST. MARY’S LAW JOURNAL [Vol. 47:889
B. An Excessive Demand Claim Requires Showing a Tender of the Amount Owed
Was Refused or Would Be Refused
The other essential element of excessive demand is a refusal by the
creditor to accept a tender of the amount owed. It is thus fundamental
that the party asserting excessive demand attempt to and be ready and
willing to tender the amount actually owed on a debt. However, formal
legal tender is not always required if the creditor would certainly refuse the
payment.41 “Application of this rule is limited to situations where the
creditor refuses a tender of the amount actually due or indicates clearly to
the debtor that such a tender would be refused.”42 Tender means to
provide an unconditional offer to pay the full amount due or owing on a
particular debt.43 To constitute “[a] valid and legal tender of money,” a
party must produce the actual funds required to pay the debt.44 In
determining whether a tender is effective, a court considers whether the
amount tendered consisted of the full debt to which the creditor was
entitled.45 Failure to properly plead and demonstrate the required tender
was made will also devastate a claim of excessive demand.46 Although, a
demonstrated unwillingness to accept the debtor’s payment satisfies this
requirement and allows for a successful application of the doctrine.47
41. Formal tender is not essential to a claim “where the creditor has clearly indicated the tender
of an amount would be rejected.” Essex Crane Rental Corp. v. Striland Const. Co., Inc., 753 S.W.2d
751, 757–58 (Tex. App.—Dallas 1988, writ denied) (citing Tuthill v. Sw. Pub. Serv. Co., 614 S.W.2d
205 (Tex. App.—Amarillo 1981, writ ref’d n.r.e.)).
42. Hernandez v. Lautensack, 201 S.W.3d 771, 777 (Tex. App.—Fort Worth 2006, pet. denied).
43. Oyster Creek Fin. Corp., 176 S.W.3d at 320.
44. Id.
45. Id.
46. See Hernandez, 201 S.W.3d at 777–78 (denying a claim on appeal because there was no
evidence of effective tender in the record, undermining the excessive demand defense); Oyster Creek
Fin. Corp., 176 S.W.3d at 320 (describing the failure of the appellant to “request a jury issue on his
defense of effective tender” caused it to be waived). But see Findlay v. Cave, 611 S.W.2d 57, 58 (Tex.
1981) (elaborating on precedent cases in which creditors were unwilling to accept payment of balance
actually due).
47. Cf. Wallace Roofing, Inc. v. Benson, No. 03-11-00055-CV, 2013 WL 6459757, at *14 (Tex.
App.—Austin, Nov. 27, 2013, pet. denied) (mem. op.) (upholding the trial court’s denial of attorney’s
fees in case when the party admitted excessive demand and refused tender of the amount due).
2016] RECENT DEVELOPMENT 897
IV. EXCESSIVE DEMAND DEFENSE PRECLUDES RECOVERY OF
ATTORNEY’S FEES, COSTS AND, NOTABLY, PREJUDGMENT INTEREST
A. Strong Precedential Support for Denial of Prejudgment Interest Along with
Attorney’s Fees
Texas cases uniformly recognize attorney’s fees and costs may be
prohibited on account of an excessive demand—when properly asserted
before the trial court.48 However, there is significant long-standing
precedent that also supports the denial of prejudgment interest under the
defense.49 This is not surprising as the same reasoning that justifies
withholding attorney’s fees from a creditor who prolongs litigation and
drives up costs by making an excessive demand underlies the rationale for
refusing prejudgment interest.50 Still, the fact the excessive demand
doctrine precludes recovery of prejudgment interest in addition to
attorney’s fees is significant. Depending on the length of time litigation
endures, “prejudgment interest can equal or even exceed the principal”
damages.51 For cases involving large dollar figure amounts, prejudgment
interest can accrue to staggering amounts even when litigation resolves
quickly.52
Texas law defines prejudgment interest as “compensation allowed by
law as additional damages 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.”53 This aspect of damages strives to provide the prevailing
plaintiff the ability to recoup the lost value of money owed during the time
the defendant had use of the funds which denied plaintiff the opportunity
to use or invest it.54 In essence, prejudgment interest reimburses the time
value of money lost to plaintiff—the assumption being that potential
investment value should be paid for the period between plaintiff’s injury
48. Accord Findlay, 611 S.W.2d at 58 (regarding the long-standing precedential basis for
doctrine); Tuthill v. Sw. Pub. Serv. Co., 614 S.W.2d 205, 212 (Tex. App.—Amarillo 1981, writ ref’d
n.r.e.) (commenting that a creditor’s excessive demand forecloses a claim for attorney’s fees litigating
the suit for payment).
49. See Ingham v. Harrison, 224 S.W.2d 1019, 1022 (Tex. 1949) (providing the basis for a denial
of a claim for prejudgment interest after an excessive demand).
50. Id.
51. Michael S. Knoll, A Primer on Prejudgment Interest, 75 TEX. L. REV. 293, 294 (1996).
52. Id. at 295.
53. Cavnar v. Quality-Control Parking, Inc., 696 S.W.2d 549, 552 (Tex. 1985).
54. See generally id. (explaining the purpose of prejudgment interest in terms of the lost time
value of money and inability of plaintiff to utilize that sum for investment or interest earning
purposes).
898 ST. MARY’S LAW JOURNAL [Vol. 47:889
and recovery, otherwise the defendant is unjustly enriched.55
B. Settlements Are Encouraged—Delay Tactics Are Discouraged
Prejudgment interest promotes judicial efficiency. The reason for this is
two-fold: (1) by creating incentives for settlement and (2) by deterring
delay during litigation.56 Because prejudgment interest compensates the
plaintiff’s loss of the time value of the money owed, the defendant’s desire
to hold on to the disputed sum is lost.57 As the defendant receives no
gain from retaining the sums, settlement is encouraged. In theory, plaintiff
is put back in the position she was in prior to injury.58 The theoretical
framework for prejudgment interest is fairness. This principle
consideration explains the generally accepted determination that plaintiff
should be compensated for present loss (through litigation) and defendant
should be penalized.59 Prejudgment interest is merely a component of
plaintiff’s entire loss.60 To this extent, prejudgment interest is an impetus
for efficient behavior inside and out of litigation.
C. Implications of Excessive Demands on Adversarial Process
Thus, generally, when the prevailing party is awarded prejudgment
interest as a component of damages, there is no motive to delay or stall the
legal process. These settlement-favoring objectives are upended when the
party pursuing an excessive demand thwarts the opposing party’s ability to
efficiently resolve the matter. In such a scenario, the purported injured
party is also the party benefitting from prolonged litigation—assuming that
results in a greater recovery than the underlying debt alone, which is the
case when the debt is supplemented by attorney’s fees and prejudgment
interest. Inclination to settle and the interplay of time and cost of
litigation factor into the decisions of parties to work toward settlement.
55. See Thomas R. Bender, Does the Right to Trial by Jury Place Constitutional Limits on Prejudgment
Interest?, 39 SUFFOLK U. L. REV. 935, 938 (2006) (expounding on the modern function of
prejudgment interest).
56. See Cavnar, 696 S.W.2d at 554 (recognizing prejudgment interest encourages settlement and
provides disincentive for stalling litigation); see also Bender, supra note 55, at 939 (discussing how
prejudgment interest is an impetus for settlement).
57. See Bender, supra note 55, at 939 (elaborating on settlement aim of prejudgment interest).
58. Id.
59. See Knoll, supra note 51, at 295–96 (recounting why fairness supports compensating
plaintiff and penalizing defendant).
60. See id. at 296 (commenting on the efficiency rationale that “compensation is incomplete
without prejudgment interest”). Prejudgment interest is considered a damage component—a type of
the oft stated “interest as damages” as opposed to “interest as interest” under Texas law.
DORSANEO, supra note 3, § 3.03 (describing “included and excluded elements of recovery”).
2016] RECENT DEVELOPMENT 899
However, this dynamic is founded upon a functional adversarial system.61
Excessive demand can be asserted to unwind this perverse result and
eliminate an improper motive for delaying litigation or settlement. In
Ingham v. Harrison, the Texas Supreme Court recognized an excessive
demand results in denial of attorney’s fees and prejudgment interest.62
The court noted the demands made were unjust, and the insistence of the
respondent on his unjust claims were to blame for failure of payment on
the debt.63 “We therefore conclude that interest should not have been
allowed to accrue before the date of judgment.”64 This reasoning is
consistent with the purposes of promoting efficient resolution of lawsuits
and ensuring fairness between parties.
There is a dearth of recent authority affirming whether excessive
demand precludes recovery of prejudgment interest because of the
abovementioned recurring issue of parties not properly putting the defense
before the trial court. Still, a number of cases demonstrate that some
parties are including a denial of prejudgment interest in conjunction with
excessive demand claims.65 Even more, the preclusive impact of an
excessive demand claim on prejudgment interest is recognized by at least
one appellate court in Texas.66 This view is not unusual considering the
running of interest on a claim is typically interrupted by a valid tender.67
61. DORSANEO, supra note 3, §12.01 (explaining interconnected aspects that drive parties
toward settlement and the considerations for doing so).
62. Ingham v. Harrison, 224 S.W.2d 1019, 1022 (Tex. 1949).
63. See id. at 1022 (contending that refusal of creditor to accept tender undermines claim for
prejudgment interest).
64. Id.
65. See Standard Constructors, Inc. v. Chevron Chem. Co., 101 S.W.3d 619, 627 (Tex. App.—
Houston [1st Dist.] 2003, pet. denied) (arguing for a denial of both attorney’s fees and prejudgment
interest). The predominant issue is whether the elements are met and not whether the denial of
prejudgment interest would be controversial. See Bhamani v. Citizens Enters., Inc., No. 11-13-00041-
CV, 2015 WL 1779055, at *8 (Tex. App.—Eastland Apr. 16, 2015, no pet.) (mem. op.) (overruling on
appeal an argument to deny recovery of prejudgment interest along with attorney’s fees because
excessive demand was not proved). Other cases reveal the issue of recoverability of prejudgment
interest could be reached had the defense of excessive demand been asserted before the trial court as
opposed to before the appellate court for the first time. See Tuthill v. Sw. Pub. Serv. Co., 614 S.W.2d
205, 212 (Tex. App.—Amarillo 1981, writ ref’d n.r.e.) (indicating excessive demand was not properly
claimed prior to appeal); Standard Constructors, Inc., 101 S.W.3d at 627 (Tex. App.—Houston [1st Dist.]
2003, pet. denied) (failing to allege excessive demand and obtain jury findings on elements at trial
court level).
66. E.g., Wayne v. A.V.A. Vending, Inc., 52 S.W.3d 412, 419 (Tex. App.—Corpus Christi 2001,
pet. denied) (accepting attorney’s fees and prejudgment interest recovery are linked). “[W]e have held
attorney’s fees are barred by the excessive demand doctrine . . . we also hold that an award of prejudgment
interest is barred.” Id.
67. See Staff Indus. Inc. v. Hallmark Contracting, Inc., 846 S.W.2d 542, 549 (Tex. App.—
Corpus Christi 2001, no writ) (explaining tender in context of attorney fee entitlement under Texas
900 ST. MARY’S LAW JOURNAL [Vol. 47:889
Furthermore, linking the recoverability of attorney’s fees and prejudgment
interest is reasonable based on the policy justifications for each.
V. CONCLUSION
Texas’s excessive demand defense can be a powerful defense against
recovery and potential deterrent to the proffering of inordinate demands
and costly stalling in litigation. The defense must be pleaded and
supported by evidence sufficient to put the question before a jury. The
recurring lessons yielded from the cases are that failure to raise the defense
and meet the elements ruins application of the defense. If a party makes
an unreasonable or bad faith demand for a sum the party is not entitled to
receive and further refuses or reveals its unwillingness to accept tender of
the amount actually owed, excessive demand can vitiate the recovery of
potentially substantial attorney’s fees and prejudgment interest associated
with the lawsuit attempting to recover the debt. Determining whether a
demand is excessive and unreasonable is a varied and fact-intensive
inquiry. Preventing excessive demands serves the purpose of resolving
disputes fairly and efficiently by eliminating improper motives to delay
settlement. Knowing the ins and outs of the doctrine enables litigants to
either preserve their recovery against diminution on one side or protect
against unjust exposure to mounting attorney’s fees and damages based on
unreasonable, bad faith demands on the other.
Civil Practice and Remedies Code and limits to recovery imposed by the excessive demand doctrine).

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Stephanie M. Green, “Texas's Excessive Demand Doctrine Impacts Recoveries in Litigation,” St. Mary's Law Digital Repository, accessed May 24, 2017, http://lawspace.stmarytx.edu/item/GreenFINAL.

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