Deborah Cunningham v. Hughes & Luce, LLP and Christopher L. Davis

Court of Appeals of Texas·Decided January 13, 2010·No. 08-07-00292-CV·Published

Opinion

COURT OF APPEALS

EIGHTH DISTRICT OF TEXAS

EL PASO, TEXAS

§

DEBORAH CUNNINGHAM, No. 08-07-00292-CV §

Appellant, Appeal from §

v. 68th District Court §

HUGHES & LUCE, L.L.P. and of Dallas County, Texas CHRISTOPHER L. DAVIS, § (TC # 04-04645-C)

Appellees. §

OPINION

This is an appeal from a “trial within a trial.” Deborah Cunningham filed a legal malpractice suit against Hughes & Luce L.L.P. and Christopher Davis, complaining of mistakes they made in handling consumer litigation against a car repair facility. The jury found for the attorneys on all of Cunningham’s claims. Finding no error, we affirm.

FACTUAL SUMMARY

The Classic Litigation

Cunningham took her 2000 Mazda Protege to Classic BMW for repairs after an automobile accident. A dispute arose concerning the length of time it took to repair the automobile and the quality of those repairs. Cunningham refused to pay for the repairs and left the shop with her car. Classic filed charges for theft of services. A warrant was issued for her arrest and she was advised to turn herself in. Cunningham retained Davis to represent her and signed a fee contract on February 21, 2001. Davis agreed to a reduced hourly rate of $155.00 plus: (1) 15% of any gross recovery from $1.00 to $5,000.00; and (2) 12.5% of any gross recovery exceeding $5,001.00. On February 23, Cunningham turned herself into the police and was released a few hours later. Three days later, Cunningham and Davis signed a new contract by which Davis would receive 33 1/3 % of any gross recovery before suit was filed, 40% of any gross recovery after suit was filed, and 50% of any gross recovery after appellate briefing. This second contract increased the attorney’s percentage recovery, but eliminated Cunningham’s obligation to pay him an hourly fee. Davis then hired Robert Rubarts, a partner in Hughes & Luce, L.L.P. , to assist him with Cunningham’s claims.

The attorneys filed suit against Classic for malicious prosecution, intentional infliction of emotional distress, defamation, unfair debt collection practices, breach of warranty, and violations of the Texas Deceptive Trade Practices/Consumer Protection Act (DTPA). In response to Classic’s disclosure requests, the attorneys designated Darrell Jordan as an expert witness on attorneys’ fees. The response provided Jordan’s name, address, telephone number, and curriculum vitae. It also indicated that Jordan would testify to the reasonable and necessary attorneys’ fees incurred by Cunningham in the course of her lawsuit.

On February 13, 2002, Classic offered to settle for $45,000, of which $25,000 was attributable to actual damages and $20,000 was attributable to attorneys’ fees, costs, and expenses. This offer was rejected. Classic then designated Marc Richman as its expert witness on attorneys’ fees.

Prior to trial, each party moved to exclude the testimony of the other’s expert. Davis and Rubarts submitted an affidavit in which Jordan opined that a reasonable and necessary fee would range from $300,000 to $500,000. The affidavit also detailed documents he reviewed in formulating his opinion, including Hughes & Luce’s billing records. These billing records had not been provided during discovery. The trial court, Judge Evans, ultimately excluded Jordan as an expert because the attorneys’ discovery responses failed to disclose Jordan’s opinions, the sources he relied upon, and the amount of fees sought. Unable to present expert testimony, Cunningham was not allowed to submit a jury question on attorney’s fees.

The jury found that Classic maliciously prosecuted Cunningham as a result of malice or fraud, that Classic defamed Cunningham with actual malice, and that Classic intentionally and knowingly engaged in false, misleading, or deceptive acts or practices. The jury awarded Cunningham actual damages of $588,744. The bifurcated trial then moved to Cunningham’s claim for exemplary damages and additional damages under the DTPA. At this phase, Rubarts was permitted to ask the jury to consider attorneys’ fees in its deliberations. The jury awarded Cunningham $1,000,000 in additional damages.

The Fee Dispute

Following trial, Appellees recommended that Cunningham settle her claims.1 Cunningham initially refused but eventually agreed to settle for $1,200,000. The paperwork was completed and Classic tendered payment to Appellees.2 From the $1,200,000, Appellees deducted expenses in the amount of $37,424.60 and attorney’s fees of $480,000, representing 40% of the total recovery. A check for $682,575.40 was hand-delivered to Cunningham on May 1, 2003.

Several months later, Cunningham began questioning Davis as to why she had not recovered her attorneys’ fees from Classic. On March 30, 2004, Cunningham sent a formal demand letter. Appellees filed suit on May 21, 2004, seeking a declaratory judgment that the fee contract was valid and enforceable. Cunningham filed counterclaims for professional negligence, breach of contract,

1 The record reflects Appellees’ concerns that the judgment would not stand up on appeal, that the $1.5 million in DTPA damages was “very suspect” and there was no “evidence in the record that Mrs. Cunningham had suffered that kind of injury because her car wasn’t repaired well.”

2 Classic originally identified Cunningham as one of the payees. At Rubart’s request, the check was redrafted excluding Cunningham as a payee. The second check was then deposited in Hughes & Luce’s trust account.

breach of fiduciary duty, fraud, conversion, and violations of the DPTA. Appellees countered with fraud claims of their own.

The Malpractice Litigation During the malpractice lawsuit, the trial court, Judge Stokes (presiding), granted a partial summary judgment, holding that Judge Evans did not abuse his discretion by excluding Jordan’s testimony. Immediately prior to voir dire, Appellees non-suited all of their claims against Cunningham, with the exception of their declaratory judgment and quantum meruit claims. The trial court then realigned the parties, with Cunningham becoming the plaintiff at trial. The jury rejected all of Cunningham’s claims and found in favor of Appellees on every issue:

• Appellees were not negligent and/or their negligence was not the proximate cause of the occurrence in question (Question No. 1);

• Appellees did not engage in an unconscionable action or course of action (Question No. 4);

• Appellees did not breach their fiduciary duties to Cunningham (Question No. 7);

• Appellees did not convert funds belonging to Cunningham (Question No. 9);

• Appellees did not commit fraud against Cunningham (Question No. 12);

• The engagement agreement between Appellees and Cunningham was fair and reasonable at the time of its inception (Question No. 16); and

• Appellees performed compensable work for Cunningham with a reasonable value of $289,298.23 and $228,126.37, respectively (Question Nos. 17 and 18).

The trial court rendered a take-nothing judgment and this appeal follows.

SUFFICIENCY OF THE EVIDENCE In her first two issues, Cunningham challenges the legal and factual sufficiency of the evidence to support the jury’s finding that Appellees were not negligent as a result of their failure to properly designate an expert witness on attorneys’ fees. Cunningham concedes that the legal sufficiency issue has not been preserved for review. We overrule Point of Error One and turn now to a factual sufficiency review.

Standard of Review

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Deborah Cunningham v. Hughes & Luce, LLP and Christopher L. Davis, (Tex. Ct. App. 2010).

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