Cruse v. O'QUINN

273 S.W.3d 766, 2008 WL 5086001
CourtCourt of Appeals of Texas
DecidedDecember 30, 2008
Docket14-08-00103-CV
StatusPublished
Cited by37 cases

This text of 273 S.W.3d 766 (Cruse v. O'QUINN) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Cruse v. O'QUINN, 273 S.W.3d 766, 2008 WL 5086001 (Tex. Ct. App. 2008).

Opinion

OPINION

BROWN, Justice.

In this accelerated, interlocutory appeal, appellants Leonard A. Cruse and Cruse and Associates, P.C. (collectively, “Cruse”), appeal the trial court’s grant of appellees’ motion for partial summary judgment as to Cruse’s claims arising out of a fee-sharing agreement (“FSA”). In their motion, ap-pellees, John M. O’Quinn and John M. O’Quinn & Associates, L.L.P. (collectively, “O’Quinn”) asserted the affirmative defense that the FSA was illegal and void because Cruse was prohibited by Texas law from recovering fees under the FSA on cases that were not settled or otherwise finally resolved before Leonard Cruse was suspended from the practice of law and, ultimately, disbarred. Cruse contends that (1) O’Quinn failed to satisfy its summary-judgment burden to prove its affirmative defense, (2) Cruse presented evidence raising a genuine issue of material fact precluding summary judgment, and (3) the trial court misapplied the summary-judgment rules and standards. We affirm.

Factual and Procedural Background

On April 9, 2004, attorney Leonard Cruse and his law firm, Cruse and Associates, P.C. (the “Cruse law firm”), entered into the FSA with the law firm of John M. O’Quinn & Associates, L.L.P. (the “O’Quinn law firm”). Under the FSA, the parties agreed to provide joint representation and to share legal fees earned on certain of Cruse’s cases pending on the effective date of the FSA, as well as on cases Cruse later acquired that he referred to the O’Quinn law firm and that met certain specifications. 1 Each case was to be classified based on the amount in controversy, the venue, and the origin of the case. The duties of each party and the division of fees were determined by a case’s classification.

The FSA provided that “the parties intend at all times to comply with Rule 1.04 of the Texas Disciplinary Rules of Professional Conduct (hereinafter ‘DR 1.04’).” Further, regardless of a case’s classification or the duties assigned based on that *769 classification, each party expressly agreed to assume joint responsibility for the representation “as provided in DR 1.04.”

The FSA also provided that it would terminate upon the occurrence of any one of several events, including “the disability or inability of Cruse to legally practice law in the State of Texas.” It further provided that, in the event of termination, pending cases would continue to be subject to the FSA until they were concluded and all fees and expenses were paid, although Cruse would receive a lesser percentage in some cases:

B. Once the Agreement terminates all future cases thereafter introduced to and acquired by Cruse shall not be subject to this Agreement; provided however, that notwithstanding anything to the contrary contained herein the Cases that were subject to the Agreement as of the effective date of termination shall continue to be subject to the Agreement until the Cases are concluded and all fees and expenses are accounted for and paid.
C. If the Agreement is terminated because of the death or disability of Cruse or the inability of Cruse to legally practice law, all of the Cases filed in Galveston County (ie. the “G” type Cases) shall be treated for the purposes of the division of fees as though they were “NG” type Cases.... 2

Just over a year after executing the FSA, on May 19, 2005, Leonard Cruse was suspended from the practice of law. On June 10, 2005, Mr. Cruse was disbarred.

In 2006, Leonard Cruse filed suit against John O’Quinn individually, seeking an accounting of referral fees and expenses allegedly due under the FSA, and alleging claims for breach of contract, fraudulent inducement, unjust enrichment, and negligence. Mr. Cruse later amended his petition to add the O’Quinn law firm as a defendant. In a second amended petition, the Cruse law firm was added as a plaintiff, and the plaintiffs added an allegation of alter ego and a claim for punitive damages to the claims previously asserted. O’Quinn answered, asserting general denials and numerous affirmative defenses, including a claim that Cruse’s claims under the FSA were barred by the doctrine of illegality and were void as against the public policy of Texas. 3

In 2007, O’Quinn filed a motion for partial summary judgment as to Cruse’s claims under the FSA. Several months later, O’Quinn also filed a motion to abate the proceedings as to the Cruse law firm on the grounds that its corporate existence had been forfeited for failure to pay franchise taxes. 4 The trial court heard oral argument on O’Quinn’s motions, and on January 4, 2008, signed an order granting O’Quinn’s motion to abate, ordering that *770 the case be abated as to the Cruse law firm until April 14, 2008, at which time the Cruse law firm’s pleadings would be dismissed if the firm was not in good standing. The trial court also signed a separate order granting O’Quinn’s motion for partial summary judgment on Cruse’s claims under the FSA. The court further ordered that this order met the requirements for an appealable, interlocutory order pursuant to Texas Civil Practice and Remedies Code section 51.014(d). See Tex. Civ. Prac. & Rem.Code Ann. § 51.014(d) (Vernon 2008). This appeal followed.

Analysis of Cruse’s Summary Judgment Issues

Cruse contends generally that the trial court erred in granting summary judgment, and specifically argues that (1) O’Quinn failed to satisfy its summary-judgment burden to prove its affirmative defense that the FSA was illegal and void as against Texas public policy, (2) Cruse presented evidence raising a genuine issue of material fact precluding summary judgment, and (8) the trial court misapplied the summary-judgment rules and standards. However, before we reach Cruse’s issues, we address O’Quinn’s contention in its appellate brief that the Cruse law firm is not a Texas corporation in good standing and is therefore not entitled to seek appellate relief.

1. Is the Cruse law firm barred from appealing the trial court’s judgment?

As a threshold matter, O’Quinn contends that the forfeiture of the Cruse law firm’s corporate charter has stripped it of its right to bring this appeal. See Tex. Tax.Code Ann. § 171.252 (Vernon 2008) (providing that if the corporate privileges of a corporation are forfeited under this subchapter, “the corporation shall be denied the right to sue or defend in a court of this state.”). Cruse does not respond to this contention, and nothing in the record reflects that the Cruse law firm’s charter has been revived. And, given that Leonard Cruse is the sole owner of the law firm and he has been disbarred, it is unlikely that the corporation could be revived or its corporate privileges reinstated during the pendency of this appeal.

However, in Vanscot Concrete Co. v. Bailey, the Texas Supreme Court held that a corporation that had ceased to exist could nevertheless appeal a trial court’s judgment against it. See 853 S.W.2d 525, 526-27 (Tex.1993) (per curiam).

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Bluebook (online)
273 S.W.3d 766, 2008 WL 5086001, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cruse-v-oquinn-texapp-2008.