In Re Bradfield Heiser, on His Own Behalf and as Derivative on Behalf of Bradfield Ventures Property Group, LLC, and Bradfield Ventures, LLC, on Its Own Behalf and as Derivative on Behalf of Ellis BV Investors, LLC, Cirque Park SF Land Purchase GP LLC, and Bowen @ Cirque Land Purchase GP LLC v. the State of Texas

• Court: Court of Appeals of Texas
• Decided: April 18, 2025
• Docket: 03-25-00158-CV
• Status: Published

Opinion

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

NO. 03-25-00158-CV

In re Bradfield Heiser, on his own behalf and as derivative claimant on behalf of Bradfield Ventures Property Group, LLC, and Bradfield Ventures, LLC, on its own behalf and as derivative claimant on behalf of Ellis BV Investors, LLC, Cirque Park SF Land Purchase GP LLC, and Bowen @ Cirque Land Purchase GP LLC

ORIGINAL PROCEEDING FROM TRAVIS COUNTY

OPINION

Relators, Bradfield Heiser and Bradfield Ventures, LLC, petition us for a writ of

mandamus compelling the trial court to reverse and vacate its order disqualifying their counsel of

record, Kevin Terrazas, from representing them in the proceedings below. We conditionally

grant the writ.

The underlying dispute is between two business partners, Bradfield Heiser and

Cullen Loeffler, who jointly own several closely held limited liability companies in the

real-estate business. The suit began when Loeffler sued Heiser to recover commission fees for

various real-estate deals completed on behalf of one of the LLCs. Heiser then retained Terrazas,

who filed a pleading containing claims asserted directly by both Heiser and the LLCs, the latter

of whom the pleading designated as third-party plaintiffs. Loeffler moved to disqualify Terrazas,

arguing Terrazas’s representation of both Heiser and the LLCs violated the rule against dual

representation, characterizing Heiser’s and the LLCs’ interests as adverse to each other. Terrazas then filed an amended pleading that nonsuited the LLCs and replaced their claims with

substantively identical derivative claims asserted by Heiser, thereby extinguishing any perceived

conflict. See Tex. Bus. Orgs. Code § 101.463(c)(1) (permitting “a derivative proceeding brought

by a member of a closely held limited liability company [to] be treated by a court as a direct

action brought by the member for the member’s own benefit” when “justice requires”).

At a hearing on the disqualification motion, Loeffler conceded that Terrazas

would not have violated the rule against dual representation had he asserted the derivative claims

in the original pleading. But because of his initial pleading error, Loeffler insisted, there arose

an irrebuttable presumption that Terrazas had engaged in improper dual representation and had

to be disqualified.

We disagree. To determine whether a lawyer violates the rule against dual

representation in suits such as this one, we do not “labor over which party label applies to [the]

compan[ies]” but rather “look to whether the substance of the challenged representation requires

the lawyer to take conflicting positions or to take a position that risks harming one of his clients.”

In re Murrin Bros. 1885, Ltd., 603 S.W.3d 53, 58 (Tex. 2019) (orig. proceeding). By attributing

disqualifying force to a mere pleading error, Loeffler’s position inverts the analysis, elevating

labels over substance.

Because Loeffler failed to present the trial court with evidence that

simultaneously asserting Heiser’s direct and derivative claims requires Terrazas to take

conflicting positions or a position that is adverse to Heiser or the LLCs, we hold the trial court’s

disqualification order was a clear abuse of discretion for which there is no adequate remedy by

law. Therefore, we conditionally grant the writ.

2 BACKGROUND

In this original mandamus proceeding, the underlying dispute is between two

business partners, Bradfield Heiser and Cullen Loeffler. Heiser and Loeffler are both in the

real-estate business. Heiser is a real-estate broker and the manager of Bradfield Ventures, LLC

(collectively, “Heiser,” unless otherwise indicated). Loeffler is a real-estate agent and the

manager of Loeffler Realty, LLC (collectively “Loeffler,” unless otherwise indicated).

Heiser and Loeffler form various real-estate joint ventures

In 2019, Heiser and Loeffler formed a real-estate joint venture, Bradfield

Ventures Property Group, LLC (“the Bradfield JV”). Specifically, they formed the Bradfield JV

to acquire, develop, sell, and lease rural real estate for agricultural and commercial purposes.

Heiser and Loeffler each own a 50% membership interest in the Bradfield JV. The Bradfield JV

is governed by a company agreement, which Heiser and Loeffler both signed as managers.

In the years following the formation of the Bradfield JV, Heiser and Loeffler

formed three other real-estate joint ventures through their respective LLCs: (1) Ellis BV

Investors, LLC (“the Ellis JV”), (2) Bowen @ Cirque Land Purchase GP LLC (“the Bowen JV”),

and (3) Cirque Park SF Land Purchase GP LLC (“the Cirque Park JV”) (collectively, “the

Development JVs”). Heiser and Loeffler formed these JVs to develop several multi-family

residential real-estate projects. They each own an 11.4006% membership interest in the Ellis

JV, 1 a 50% membership interest in the Bowen JV, and a 50% membership interest in the Cirque

Park JV. Like the Bradfield JV, the Development JVs are governed by company agreements.

1 The Ellis JV has five other members, none of whom are involved in the underlying suit. 3 The Ellis JV company agreement lists both Heiser and Loeffler as managers, whereas the Bowen

JV and the Cirque Park JV company agreements list only Heiser.

Heiser and Loeffler’s relationship sours, and Loeffler leaves the joint ventures

The record indicates that, at some point, Heiser and Loeffler’s relationship soured.

In March 2024, Loeffler informed Heiser of his intent to withdraw from the various joint

ventures, and a dispute arose between the parties over the commission fees owed to Loeffler for

work performed on behalf of the Bradfield JV.

The Bradfield JV company agreement contains a provision establishing

a commission-fee structure for various categories of real estate. It provides that, for

farm-and-ranch commissions, “[a]ny amount over and above [Loeffler’s] Initial Commission Fee

shall be split evenly (50/50) between the Managers.” Whether this provision accurately reflects

the parties’ intent is a matter of dispute. It is undisputed, however, that over the course of the

venture, Loeffler received 80% of the amounts over and above his initial commission fee, not

50% as set forth in the provision.

Loeffler alleges that after he informed Heiser of his intent to withdraw, Heiser

accused him of having been overpaid commission fees, demanded a refund as part of a

compensation reconciliation, refused to pay him the remaining fees and proceeds he was owed,

and removed him from the Bradfield JV bank account.

Loeffler sues Heiser over his commission fees

In July 2024, Loeffler sued Heiser. In his petition, Loeffler sought declarations

that he is entitled to retain all commission fees he received over the course of the Bradfield JV

and that Heiser is estopped from asserting any rights under the company agreement’s

4 commission-fee-structure provision because he intentionally and consistently paid Loeffler in a

manner inconsistent with the provision. Loeffler also asserted a claim for breach of

contract, alleging that Heiser has wrongfully retained Loeffler’s fees and proceeds from various

real-estate deals.

Heiser retains Terrazas, who files claims on behalf of both Heiser and the JVs

Heiser retained Terrazas to represent him in the lawsuit against Loeffler. In

October 2024, Terrazas filed Heiser’s original pleading. The original pleading contained

Heiser’s general denial and affirmative defenses, declaratory-judgment action, and counterclaims

for breach of contract and breach of fiduciary duty. The original pleading also contained claims

asserted by the Bradfield JV and the Development JVs, which the pleading designated as

third-party plaintiffs. Specifically, the pleading contained a claim for common-law service-mark

infringement asserted by the Bradfield JV, which alleged that Loeffler had been using a service

mark similar to the one used by the JV. And the pleading contained claims for breach of

fiduciary duty asserted by the Development JVs, which alleged that Loeffler had breached his

fiduciary duties to them by failing to make capital contributions, sign subcontractors, or

generally participate in the projects.

Loeffler amends his pleading to accuse Heiser of breaching his fiduciary duty to the JVs and moves to disqualify Terrazas

Loeffler then filed an amended petition, which added claims for breach of

fiduciary duty. These new claims were asserted directly by Loeffler himself as well as

derivatively on behalf of the Bradfield JV and the Ellis JV. In the amended petition, Loeffler

alleged that Heiser breached his fiduciary duty to the Bradfield JV by transferring funds from the

company’s account to his personal account and by firing the company’s sales agents for the sole 5 purpose of devaluing the JV as a form of retaliation against Loeffler. Loeffler further alleged

that Heiser breached his fiduciary duty to the Ellis JV by making an unnecessary capital call for

the sole purpose of putting Loeffler in breach of the Ellis JV company agreement, as Heiser

knew Loeffler lacked the funds to answer the call.

Shortly after filing his amended petition, Loeffler filed a motion to disqualify

Terrazas as counsel for Heiser, the Bradfield JV, and the Development JVs. 2 Loeffler argued

that Terrazas had to be disqualified because his representation of Heiser, on the one hand, and

the JVs, on the other hand, violated the rule against dual representation, as evidenced by

Loeffler’s allegations that Heiser had breached his fiduciary duty to the Bradfield JV and to the

Ellis JV. Loeffler further argued that Terrazas lacked authority to represent the JVs because the

JVs’ members never voted to retain him as required by the JV company agreements. Loeffler

asserted that, as co-manager of the Bradfield JV and the Ellis JV, he did not authorize and did

not consent to Terrazas’s representation.

Terrazas nonsuits the JVs and converts their claims into derivative claims asserted by Heiser

After Loeffler filed his motion to disqualify, Terrazas filed an amended pleading,

which nonsuited the Development JVs and replaced their claims with substantively identical

derivative claims asserted by Heiser on their behalf. Terrazas then filed a response to the

disqualification motion, arguing that the amended pleading had mooted the issue, as Texas law

expressly permits the member of a closely held LLC to bring claims both individually and

2 Loeffler also filed a Rule 12 motion to show authority. See Tex. R. Civ. P. 12 (“A party in a suit or proceeding pending in a court of this state may, by sworn written motion stating that he believes the suit or proceeding is being prosecuted or defended without authority, cause the attorney to be cited to appear before the court and show his authority to act.”). The trial court did not rule on this motion, and we do not consider it here. 6 derivatively on the LLC’s behalf. In such derivative litigation, Terrazas explained, a lawyer may

represent the member without violating the rule against dual representation even though the other

members may ultimately prevail and thereby prove a conflict between the LLC and the member

the lawyer represents.

The trial court disqualifies Terrazas

The trial court held an evidentiary hearing on Loeffler’s motion to disqualify. At

the hearing, Heiser testified that he had paid Terrazas’s legal fees with his personal funds, not

funds from any of the JVs. He further testified that all information provided to Terrazas to

develop a legal strategy in this case had come from him and not from the JVs’ books and records.

At the close of the hearing, Loeffler’s attorneys conceded that the alleged conflict

would not exist had Terrazas simply filed derivative claims in the first place. But because he

initially filed direct claims, they argued, there arose an irrebuttable presumption that he had

improperly obtained confidential information and had to be disqualified. Terrazas responded

that, as a practical matter, applying an irrebuttable presumption under these circumstances made

no sense. Replacing the direct claims with derivative claims did not affect the substance of his

representation: In either case, the information received came from Heiser, and the allegations

made against Loeffler remained the same.

After the hearing, the trial court granted Loeffler’s motion and ordered that

Terrazas be disqualified from representing Heiser, the Bradfield JV, or the Development JVs.

Heiser then filed this original proceeding seeking relief from the order.

7 ATTORNEY DISQUALIFICATION

In his sole issue, Heiser contends the trial court’s disqualification order is a clear

abuse of discretion for which he has no adequate remedy on appeal.

Standard of review & applicable law

Mandamus is an extraordinary remedy. In re Murrin, 603 S.W.3d at 56. It will

issue to correct a clear abuse of discretion only when there is no adequate appellate remedy. Id.

There is no adequate appellate remedy for the erroneous disqualification of counsel.

In re Sanders, 153 S.W.3d 54, 56 (Tex. 2004) (orig. proceeding) (per curiam); In re Luecke,

569 S.W.3d 313, 317 (Tex. App.—Austin 2019, orig. proceeding). Thus, the pertinent inquiry

here is whether the trial court clearly abused its discretion in disqualifying Terrazas. In re Nitla

S.A. de C.V., 92 S.W.3d 419, 422 (Tex. 2002) (orig. proceeding) (per curiam). A trial court

abuses its discretion if it acts in an arbitrary or unreasonable manner, without reference to any

guiding rules or principles. Id.

“Disqualification of counsel is a severe remedy that can result in significant

expense to clients, disrupt the orderly progress of litigation, and deprive a party of the counsel of

its choice.” In re Murrin, 603 S.W.3d at 57. Thus, “courts must adhere to an exacting standard

when considering motions to disqualify . . . .” In re Luecke, 569 S.W.3d at 317 (quoting Spears

v. Fourth Ct. of Appeals, 797 S.W.2d 654, 656 (Tex. 1990) (orig. proceeding)). “Mere

allegations of unethical conduct or evidence showing a remote possibility of a violation of the

disciplinary rules will not suffice.” Id.

In deciding disqualification issues, our disciplinary rules “provide helpful

guidance” and “suggest the relevant considerations.” In re Murrin, 603 S.W.3d at 57 (quoting

8 National Med. Enters., Inc. v. Godbey, 924 S.W.2d 123, 132 (Tex. 1996) (orig. proceeding)).

But they are not dispositive. Ultimately, the court “must consider all the facts and circumstances

to determine whether the interests of justice require disqualification.” In re Murrin, 603 S.W.3d

at 57 (quoting In re Meador, 968 S.W.2d 346, 350 (Tex. 1998) (orig. proceeding)).

Analysis

Heiser contends that the issue presented in his mandamus petition is resolved by

the straightforward application of controlling Texas Supreme Court precedent, In re Murrin

Bros. 1885, Ltd., 603 S.W.3d 53 (Tex. 2019) (orig. proceeding). We agree.

Murrin addresses when a lawyer violates the rule against dual representation in

shareholder-derivative suits involving a closely held limited liability company. 3 Id. at 57–58. It

stands for a commonsense proposition: The lawyer does not violate the rule simply by

representing a shareholder who brings claims both directly on his own behalf and derivatively on

behalf of the company, even though the other side may ultimately prevail and thereby prove a

conflict between the respective interests of the shareholder and the company. See id. at 57–59.

This is because in such suits both sides will claim to be aligned with the company

and acting on its behalf, and the side with which the company is truly aligned can be determined

only through resolution of the merits of each side’s respective claims. See id. at 58–60. Because

both sides purport to sue on behalf of “the company,” the individual shareholders are not

opposing parties to the company creating a conflict of interest with their chosen counsel. See id.

3 The rule against dual representation, also known as the rule against conflicts of interest, prohibits a lawyer from taking on a representation that is adverse to a current or former client in the same or a substantially related matter. See In re Thetford, 574 S.W.3d 362, 373 (Tex. 2019) (orig. proceeding); see also Tex. Disciplinary Rules Prof’l Conduct R. 1.06, 1.09, reprinted in Tex. Gov’t Code, tit. 2, subtit. G, app. A (Tex. State Bar R. art. X, § 9). 9 Indeed, in such suits, the derivative claims can be more accurately treated as direct claims

brought for the shareholder’s own benefit, thereby extinguishing any perceived conflict

altogether. Id. at 60; see Tex. Bus. Orgs. Code § 101.463(c) (“[I]f justice requires: a derivative

proceeding brought by a member of a closely held limited liability company may be treated by a

court as a direct action brought by the member for the member’s own benefit.”).

Still, in such suits, a lawyer’s representation of a shareholder bringing individual

and derivative claims will be held to violate the rule against dual representation if the

shareholder and the company are truly adverse under the circumstances. Id. at 59. To make this

determination, a court should not “labor over which party label applies to [the] company” but

rather “look to whether the substance of the challenged representation requires the lawyer to take

conflicting positions or to take a position that risks harming one of his clients.” Id. at 58.

Applying these principles here, we start with the fact that Terrazas represents

Heiser, who has asserted claims both directly on his own behalf and derivatively on behalf the

JVs. Under Murrin, Terrazas’s representation does not, in and of itself, violate the rule against

dual representation. Instead, Terrazas’s representation violates the rule only if it requires him to

take conflicting positions or a position that is adverse to either Heiser or the JVs. But that is not

the case. Terrazas’s consistent position has been that Heiser acted in the JVs’ interests and that it

was Loeffler who breached his fiduciary and contractual duties to the JVs and to Heiser. If

Heiser ultimately prevails, his interests will be shown to be truly aligned with the JVs. And for

purposes of the disqualification motion, the trial court could have treated the derivative claims as

claims brought by Heiser for his own benefit.

Loeffler concedes that Heiser may assert claims individually and derivatively on

the JVs’ behalf. Loeffler nevertheless insists that Terrazas’s representation of Heiser violates the

10 rule against dual representation because the original pleading filed by Terrazas not only

contained claims brought by Heiser; it also contained claims brought directly by the JVs:

Loeffler does not dispute Heiser’s ability to assert derivative claims, and had Heiser, through Terrazas, brought derivative claims initially, this irreconcilable conflict would not have occurred. Because of his prior representation of the companies, Terrazas, cannot represent [Heiser] in derivative claims against one of the managing members without requisite authority. This conflict does not simply “vanish” just because Terrazas converted the direct claims to derivative claims.

In other words, it is Loeffler’s position that Murrin is distinguishable because of

the discrepancy between the original and amended pleadings filed by Terrazas and that the

difference between the labels of the claims in the two pleadings (direct claims brought by the JVs

versus derivative claims brought by Heiser on the JVs’ behalf) is material to determining

whether Terrazas violated the rule. We disagree.

To attribute disqualifying force to this pleading discrepancy would contravene the

Supreme Court’s instruction to examine the “substance” of Terrazas’s “challenged

representation.” Id. And substantively, there is no difference between the direct claims and the

derivative claims: both are made against the same parties and based on the same allegations.

The only difference is the procedural mechanism by which the claims were asserted.

Because Loeffler has failed to show that the substance of Terrazas’s challenged

representation requires Terrazas to take conflicting positions or a position adverse to either

Heiser or the JVs, we hold the trial court clearly abused its discretion in granting Loeffler’s

motion to disqualify Terrazas and that Heiser has no adequate remedy by appeal.

11 CONCLUSION

We conditionally grant mandamus relief and order the trial court to vacate the part

of the trial court’s order disqualifying Terrazas from representing Heiser. The writ will issue

only of the trial court fails to comply.

__________________________________________ Maggie Ellis, Justice

Before Chief Justice Byrne, Justices Kelly and Ellis

Filed: April 18, 2025