Flack v. Hanke

334 S.W.3d 251, 2010 WL 3993941
CourtCourt of Appeals of Texas
DecidedOctober 13, 2010
Docket04-08-00177-CV
StatusPublished
Cited by25 cases

This text of 334 S.W.3d 251 (Flack v. Hanke) 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
Flack v. Hanke, 334 S.W.3d 251, 2010 WL 3993941 (Tex. Ct. App. 2010).

Opinion

OPINION

Opinion by:

REBECCA SIMMONS, Justice.

The following motions are denied: (1) Appellees John D. Fisch and Mary M. Potter’s Motion for Rehearing; (2) Appel-lees John D. Fisch and Mary M. Potter’s Motion for En Banc Reconsideration; (3) Langley & Banack, Incorporated a/k/a Langley & Banack, Inc., Steven R. Brook and David S. Gragg’s Motion for Rehearing; (4) Langley & Banack, Incorporated a/k/a Langley & Banack, Inc., Steven R. Brook and David S. Gragg’s Motion for Rehearing En Banc; and (5) Motion for Rehearing of Cox Smith Matthews Incorporated. This court’s opinion and judgment dated May 27, 2009, are withdrawn, and this opinion and judgment are substituted. We substitute this opinion to clarify our analysis and to address the argument relating to the alleged retroactive application of the 2003 amendments to section 33.004(e).

This appeal stems from a summary judgment in favor of, and an order striking the designation of, Steven R. Brook, David S. Gragg, and Langley & Banack, Incorporated a/k/a Langley & Banack, Inc. and Cox Smith Matthews Incorporated f/k/a Cox & Smith and f/k/a Matthews & Bran-scomb, John D. Fisch and Mary M. Potter as responsible third parties. Appellant Lawrence T. Flack asserts the trial court erred in granting: (1) summary judgment in favor of the appellees, and (2) Langley & Banack’s motion to strike its designation as a responsible third party. We reverse the judgment of the trial court and remand this matter for further proceedings consistent with this opinion.

Factual BackgROund

Appellant Flack hired Dan H. Hanke and the Hanke Group, P.C., f/k/a Hanke, Green, and Stein (collectively Hanke) to create an employee stock ownership plan (ESOP) in Flack Interiors and to sell Flack’s stock in the business to the ESOP. The stock plan subsequently purchased Flack’s stock with loans from Frost National Bank, but Flack Interior’s poor financial performance quickly caused Frost to demand that the loans be restructured. In April of 2000, Flack purchased the restructured loans from Frost and became the business’s primary lender.

Upon the advice of Hanke, Flack then hired Langley & Banack, Incorporated, along with attorneys Steven R. Brook and David S. Gragg, (collectively Langley & Banack) to represent Flack in connection with Flack Interior’s 2004-2005 bankruptcy proceeding. On February 7, 2005, the bankruptcy court approved a settlement agreement resolving Flack’s claims regarding his financial dealings with the ESOP. A few months later, Flack sued Hanke for negligent advice regarding the creation of the ESOP and the restructuring of the loans. More than two years later, Flack joined Langley & Banack in the suit. Flack asserted that he suffered a monetary loss due to Langley & Banack’s failure to maximize collateral in the bankruptcy.

*255 In June 2004, on Hanke’s advice, Flack hired Cox Smith Matthews Incorporated f/k/a Cox & Smith and i/k/a Matthews & Branscomb, including attorneys John D. Fisch and Mary M. Potter, (collectively Cox Smith) for advice regarding Flack’s sale of the business, the ESOP, and the loans. More than two years following the initial suit against Hanke, Flack also joined Cox Smith in the lawsuit.

PROCEDURAL HISTORY

Flack filed suit against Hanke on July 26, 2005, alleging breach of fiduciary duties, negligence, and violation of the Texas Deceptive Trade Practices Act in connection with the sale of his stock in Flack Interiors, Inc. and certain real property. In July 2007, Flack reached a settlement agreement with Hanke which required Hanke to agree to a new trial setting and to designate both Langley & Banack and Cox Smith (jointly Appellees) as responsible third parties (RTPs). In short, through the settlement agreement, Flack and Hanke agreed: (1) to amend the scheduling order because the deadline to add new parties had passed; (2) Hanke would file a designation of RTPs and secure an agreed order granting the designation; (3) Flack would file a motion to join the RTPs as defendants and secure an order granting the joinder; and (4) the parties would file a motion to dismiss Hanke and secure an order of dismissal. Moreover, each step was to be completed in accordance with a timeline provided in the settlement documents. Attached to the agreement were the necessary pleadings to effectuate the settlement, signed by the parties, and ready to be filed in keeping with the timetable.

In accordance with the settlement agreement, on July 27, 2007, Hanke filed Defendants’ Motion for Leave to Designate Responsible Third Parties pursuant to Texas Civil Practice and Remedies Code section 33.004. See Tex. Civ. Prac. & Rem. Code Ann. § 33.004 (West 2008). The trial court granted the motion and approved the designation pursuant to an agreed order. Shortly thereafter, Flack and Hanke filed an Agreed Motion to Add Third Parties, also signed by the trial court, joining each of the Appellees as defendants. On August 1, 2007, the trial court signed an agreed order dismissing Flack’s claims against Hanke pursuant to a previously executed compromise and settlement agreement between the parties. The following day, Flack filed Plaintiffs Second Amended Original Petition asserting claims of negligence and breaches of fiduciary duty against the Appellees.

Each of the Appellees subsequently filed a general denial and affirmative defenses including a limitations defense. Additionally, all of the Appellees filed traditional motions for partial summary judgment based on limitations, and Langley & Ba-nack filed a motion to strike its designation as a responsible third party. On February 21, 2008, the trial court considered and granted summary judgment in favor of Appellees based on limitations and granted Langley & Banack’s motion to strike. The trial court entered final judgment on February 22, 2008. To understand Flack’s objections to the trial court’s judgment, a brief review of section 33.004 of the Civil Practice and Remedies Code is necessary.

Texas Civil and Practice Remedies Code Chapter 33

In 2003, the Texas Legislature revised the Texas Civil Practice and Remedies Code to change from a joinder procedure to a designation procedure for inclusion of responsible third parties in the apportionment of responsibility. See Act of June 2, 2003, 78th Leg., R.S., ch. 204, §§ 4.02-.04, secs. 33.003-004, 2003 Tex. Gen. Laws *256 847,-855-56 (codified at Tex. Civ. Prac. & Rem.Code Ann. §§ 33.003-.004) (West 2008). The 2003 amendments to section 33.004 significantly changed the procedures for apportioning responsibility to third parties. See Tex. Civ. Prac. & Rem. Code Ann. § 33.004(a), (h) (West 2008).

After the 2003 amendments became effective, the defendant need only file a motion for leave to designate an RTP sixty days prior to trial and, absent objection by another party, the trial court must grant leave to designate the RTP. Tex. Civ. Prac. & Rem.Code Ann. § 33.004(a), (f) (West 2008). The granting of leave to designate an RTP does not, absent joinder as a defendant, impose liability on the RTP and may not be used in other proceedings on the basis of res judicata or collateral estoppel. Id. § 33.004(i).

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334 S.W.3d 251, 2010 WL 3993941, Counsel Stack Legal Research, https://law.counselstack.com/opinion/flack-v-hanke-texapp-2010.