Goldstein v. Commission for Lawyer Discipline

109 S.W.3d 810, 2003 WL 21463778

• Court: Court of Appeals of Texas
• Decided: July 29, 2003
• Docket: 05-02-00833-CV
• Status: Published

Opinions

OPINION

Opinion by

Justice O’NEILL.

Appellant Robert N. Goldstein appeals the trial court’s judgment of disbarment. In ten issues, Goldstein generally contends: (1) the trial court erred in granting a partial summary judgment that he was collaterally estopped from challenging pri- or findings in a legal malpractice case, (2) the trial court erred in concluding he committed a violation of the Disciplinary Rules, (3) disbarment was not an appropriate sanction in this ease, and (4) the trial court erred in ordering him to pay attorney fees. For the following reasons, we affirm the trial court’s judgment.

In January 1997, Lynne Ryan Ginsburg retained Goldstein to represent her in her divorce. Ginsburg and Goldstein entered into a fee contract establishing an hourly rate of $225, with a possible increase to $300 per hour if Goldstein devoted all of his time to the case. Ginsburg and her husband subsequently reached a settlement agreement in which she would receive property valued at approximately $50 million from a marital estate estimated to be worth about $200 million. Goldstein represented to the family court his fee was $300,000. Later that year, Ginsburg delivered 100,000 shares of stock to Goldstein valued at $4.8 million. Goldstein accepted the stock and recorded the payment on his records as a “gift.” Ginsburg later sued Goldstein alleging the stock was delivered to Goldstein to satisfy their prior oral agreement that she pay him a contingency fee. Ginsburg alleged the agreement violated the Texas Disciplinary Rules of Professional Conduct and was thus voidable. Ginsburg also alleged that Goldstein failed to conduct adequate discovery, did not adequately represent her, violated his fiduciary duties, and converted the $4.8 million in stock. Ginsburg sought as damages return of the $4.8 million fee as well as actual and exemplary damages.

Numerous witnesses testified and hundreds of exhibits were introduced during a one-month jury trial. After the trial, the trial court directed a verdict in favor of Ginsburg that the $4.8 million payment was an unconscionable contingency fee that was not in writing. However, the trial court also allowed Goldstein to submit the issue to the jury of whether the $4.8 million was a fair gift or bonus and made its directed verdict subject to the jury’s finding that the payment was not such a fair gift or bonus.¹ Because of the jury’s failure to find the $4.8 million was a fair gift or bonus, and because of the directed verdict, the trial court ordered Goldstein to repay the stock to Ginsburg.

The Commission for Lawyer Discipline (the Commission) subsequently brought this disciplinary proceeding against Gold-stein based in part on his receiving $4.8 million from Ginsburg. The Commission filed a motion for partial summary judgment asserting Goldstein was collaterally estopped from relitigating whether the $4.8 million payment (1) was a fair gift or bonus, (2) was a contingency fee, (3) was not in writing, and (4) was unconscionable. The trial court granted the Commission’s motion for partial summary judgment.

At trial, the Commission presented evidence of other ethical violations. In its findings of fact and conclusions of law, the trial court stated that it had granted a partial summary judgment that Goldstein was collaterally estopped from relitigating whether the $4.8 million payment was a contingency fee. In doing so, the court noted contingency fees in divorce cases raise per se ethical concerns and recited the following portion of comment 9 to rule 1.04:

Contingent and percentage fees in family law matters may tend to promote divorce and may be inconsistent with a lawyer’s obligation to encourage reconciliation. Such fee arrangements also may tend to create a conflict of interest between lawyer and client regarding the appraisal of assets obtained for the client.... Because of the human relationships involved and the unique character of the proceedings, contingent fee arrangements in domestic relations cases are rarely justified,

The trial court further found that Gold-stein’s use of' the contingency fee in the divorce case was not justified and that its receipt violated rule 1.04(a) of the Disciplinary Rules of Professional Conduct prohibiting an attorney from charging an unconscionable fee. See Tex. DisciplinaRY R. PROf’l Conduct 1.04(a), reprinted in Tex. Gov’t Code Ann., tit. 2, subtit. G app. A (Vernon 1998) (Tex. State Bar, R. art. X, § 9). The trial court also found Goldstein committed numerous other ethical violations and concluded Goldstein should be disbarred. This appeal followed.

COLLATERAL ESTOPPEL

In his first, fifth, seventh, and eighth issues, Goldstein contends the trial court erred in granting the Commission’s motion for partial summary judgment based on collateral estoppel. In seeking to invoke the doctrine of collateral estoppel, a party must establish three elements: (1) the facts sought to be litigated in the second action were fully and fairly litigated, (2) those facts were essential to the judgment in the prior action, (3) the issue is identical to an issue in the prior action. Tex. Dep’t of Pub. Safety v. Petta, 44 S.W.3d 575, 579 (Tex.2001). When collateral estoppel is being used offensively, as here, the plaintiff uses the doctrine to es-top a defendant from relitigating an issue that the defendant litigated and lost in prior litigation with another party. Yarbrough’s Dirt Pit, Inc. v. Turner, 65 S.W.3d 210, 216 (Tex.App.-Beaumont 2001, no pet.).

A trial court has broad discretion in determining whether to allow a plaintiff to use collateral estoppel offensively. Parklane Hosiery Co. v. Shore, 439 U.S. , 99 S.Ct. 645, 58 L.Ed.2d 552 (1979); see also Scurloek Oil Co. v. Smithwick, 724 S.W.2d 1, 7 (Tex.1986) (citing Parklane Hosiery with approval). A trial court abuses its discretion only when its action is arbitrary and unreasonable, without reference to guiding rules or principles. Beaumont Bank, N.A. v. Butter, 806 S.W.2d 223, 226 (Tex.1991).

In determining whether to apply collateral estoppel offensively, the trial court must consider the Parklane Hosiery factors. See Parklane Hosiery Co., 439 U.S. at 329-30, 99 S.Ct. 645; Yarbrough’s Dirt Pit, 65 S.W.3d at 216. The first factor is whether application of the doctrine will tend to increase litigation by allowing a plaintiff to “wait and see” before filing suit instead of joining in the prior litigation. See Parklane Hosiery, 439 U.S. at 329-330, 99 S.Ct. 645; see also Avila v. St. Luke’s Lutheran Hosp., 948 S.W.2d 841, 858 (Tex.App.-San Antonio 1997, pet. denied). Second, the offensive use of collateral estoppel may be unfair under the circumstances of a particular case. Under this factor, we consider the defendant’s incentive in the first action to vigorously defend the suit, the foreseeability of future suits, and the availability of procedural safeguards in the second suit that were not available in the first suit. See Parklane Hosiery, 439 U.S. at 330, 99 S.Ct. 645.

Applying the Parklane Hosiery factors to this case, we cannot conclude the trial court abused its discretion by giving collateral estoppel effect to findings in the prior malpractice suit. With respect to the first factor, the Commission could not have sought Goldstein’s disbarment in the malpractice action. Therefore, application of the doctrine did not tend to increase litigation. See Parklane Hosiery, 439 U.S. at 332, 99 S.Ct. 645 (holding plaintiffs probable inability to intervene in action brought by the Securities and Exchange Commission did not justify refusal to apply collateral estoppel offensively). With respect to the other fairness factors, in the prior malpractice action, Goldstein stood to lose $4.8 million if Ginsburg showed it constituted an unconscionable contingency fee that was not in writing. The trial court in the instant action could clearly conclude $4.8 million was more than adequate incentive for Goldstein to vigorously defend the action. Moreover, we conclude it was foreseeable that Goldstein would be subject to a future suit by the Commission based upon the allegations in Ginsburg’s suit. Finally, Goldstein has not directed us to any procedural safeguards that he was deprived of in the malpractice action that he would have been entitled to in the disciplinary action. We conclude, considering all of the Parklane Hosiery factors, the trial court did not abuse its discretion in allowing the Commission to use collateral estoppel offensively in this ease.

In reaching this conclusion, we reject Goldstein’s reliance on Neely v. Commission for Lawyer Discipline, 976 S.W.2d 824, 827-29 (Tex.App.-Houston [1st Dist.] 1998, no pet.). In that case, the Commission brought a disciplinary action against an attorney who had been sanctioned under Texas Rule of Civil Procedure 13 for filing groundless pleadings in prior litigation. The Houston First Court of Appeals concluded that applying collateral estoppel to findings that were made following the hearing was not justified. The court relied on the differences in (1) the nature of the proceeding, (2) the issues to be considered by the two courts, and (3) the different consequences involved. Id. at 827. The court also noted that an attorney in a rule 13 sanctions hearing does not have a right to a trial by jury. Id. at 827-28. Finally, the court concluded collateral estoppel should not be applied because the trial courts in the two actions consider different factors in determining appropriate sanctions.

After reviewing the facts of this case, we conclude Neely is distinguishable. The findings that resulted from the prior malpractice action were not the result of a mere hearing following a motion. To the contrary, Goldstein had a full , and lengthy trial with all the safeguards associated with such and had more than an adequate opportunity to litigate whether he violated the disciplinary rules. Additionally, unlike the attorney in the Neely case who faced a $64,600 sanction, Goldstein faced a $4.8 million judgment if Ginsburg proved her allegations. Finally, Goldstein had the benefit of a jury trial in the malpractice case. Consequently, Neely is distinguishable.

In reaching this conclusion, we recognize that, in declining to give preclusive effect to findings from the rule 18 sanctions hearing, the Neely court placed great emphasis on the fact that a trial court in a rule 18 sanctions case considers different factors in determining appropriate sanctions than a trial court in a disciplinary action. However, applying collateral es-toppel to a finding made in prior litigation that a disciplinary violation occurred does not limit a trial court in a subsequent disciplinary proceeding from then considering the appropriate factors when considering what sanction to impose based on that violation. The Neely court also placed emphasis on the fact that an attorney in a rule 13 sanctions case does not face suspension or disbarment. However, the possible consequences a lawyer may face is relevant only to the extent it suggests a lack of incentive to defend. And as noted above, because Goldstein had a more than adequate incentive to defend the malpractice case, we cannot conclude the trial court abused its discretion in applying the doctrine even if the possible consequences to an attorney are not identical.

Goldstein also asserts collateral estoppel was improperly used in this case because the factual determinations made in the malpractice ease were not the same as those presented in the disbarment case. Goldstein’s argument under this point presumes the trial court in the malpractice suit found the fee was an unconscionable contingency fee based solely on the jury’s failure to find the payment was not a “fair gift or bonus.” According to Goldstein, this was improper because in the malpractice suit, he was given the burden to prove the payment was a fair gift or bonus. He asserts the jury’s failure to find in his favor on this issue cannot be converted into an affirmative finding that the fee was a contingency fee, was not in writing, and was unconscionable. While we do not disagree with Goldstein’s premise, we do disagree with his interpretation of the findings in this case. Specifically, Goldstein ignores the trial court’s independent findings regarding the fee. In those findings, the trial court expressly stated that it withdrew from the jury the issue of whether the fee was a contingency and directed a verdict that the fee was a contingency fee, that it was not in writing, and that it was unconscionable. The trial court ordered Goldstein to repay Ginsburg over $4.8 million based specifically on its own affirmative finding, not merely because of the jury’s failure to find the payment was a fair gift or bonus. Therefore, Goldstein’s argument is without merit.

Goldstein also contends the trial court, in both the malpractice case and the instant case, erred in concluding the fee was unconscionable based solely on the fact he received a contingency fee in a divorce case. With respect to the malpractice case, appellant is attempting to relitigate the finding of uneonseionability, which is precisely what the doctrine of collateral estoppel precludes him from doing. Moreover, appellant has not directed us to any evidence showing the trial court in the malpractice ease found the fee was unconscionable based solely on the fact he received the contingency fee in a divorce case. Goldstein also complains the trial court in the instant action found the fee unconscionable only because he received the fee in a divorce case. To support his contention, Goldstein relies on the trial court’s reference to comment 9 to rule 1.04 in its findings of fact and conclusions of law. Goldstein has at most shown the trial court considered the concerns outlined in the comments to the rules in determining whether he violated the rules. Goldstein has not directed this Court to any authority for the proposition that the trial court erred in doing so. In any event, the finding of unconscionability was fully and fairly litigated in the prior proceeding and is now final.

Goldstein next asserts that the trial court erred in giving collateral estoppel effect to the prior judgment because after judgment, he and Ginsburg entered into a settlement agreement that rendered the prior judgment moot. However, Goldstein has directed us to no evidence the prior judgment was ever set aside. Therefore, he has not shown the trial court erred in applying collateral estoppel for this reason. We resolve the first, fifth, seventh, and eighth issues against Goldstein.

In his second issue, Goldstein contends he was deprived of a fair trial by the Commission’s failure to produce the sworn and inconsistent statement made by its primary and, indeed, only witness. In his third issue, Goldstein contends he did not knowingly waive his right to a jury trial. In his sixth issue, Goldstein contends he was not required to withdraw from representing Ginsburg when Ginsburg refused to follow his advice. Goldstein provides no meaningful argument and cites no authority to support his contentions under these issues. Consequently, they are inadequately briefed and present nothing to review. See Tex.R.App. P. 33.1(h); Dolenz v. The State Bar of Tex., 72 S.W.3d 385, 388 (Tex.App.-Dallas 2001, no pet.). We resolve the second, third, and sixth issues against Goldstein. •

ExpeRt Testimony

In his fourth issue, Goldstein contends expert testimony was necessary to establish violations of the disciplinary rules. We agree with the El Paso Court of Appeals that interpretation of the disciplinary rules is a question of law for the trial court, and therefore expert testimony is not required. See Hawkins v. Com’n for Lawyer Discipline, 988 S.W.2d 927, 936 (Tex.App.-El Paso 1999, pet. denied). We resolve the fourth issue against Gold-stein.

Attorney Fees

In the tenth issue, Goldstein contends the trial court erred in awarding attorney fees to the Commission. According to Goldstein, a trial court is not permitted to award attorney fees as a sanction if it also orders disbarment as a sanction. We disagree. Rule 1.06(T) of the Texas Rules of Disciplinary Procedure specifically provides that attorney fees may be included as part of “sanctions.” See Tex.R. Disciplinary P. 1.06(T), reprinted in Tex. Gov’t Code Ann., tit. 2, subtit. G app. A-l (Vernon 1998). We resolve the tenth issue against Goldstein.

Our resolution of this appeal makes it unnecessary for us to consider Goldstein’s ninth issue in which he contends we should remand to the trial court in the event we determine he committed some, but not all, of the violations. Therefore, we resolve the ninth issue against Goldstein.

We affirm the trial court’s judgment.

JAMES, J., dissenting.

Dissenting Opinion by

1 . It is unclear upon what theory of law this issue was submitted to the jury.