In Re Electric Transmission Texas, LLC v. the State of Texas

• Court: Court of Appeals of Texas
• Decided: June 28, 2024
• Docket: 13-24-00187-CV
• Status: Published

Opinion

NUMBER 13-24-00187-CV

COURT OF APPEALS

THIRTEENTH DISTRICT OF TEXAS

CORPUS CHRISTI – EDINBURG

IN RE ELECTRIC TRANSMISSION TEXAS, LLC

ON PETITION FOR WRIT OF MANDAMUS

MEMORANDUM OPINION

Before Chief Justice Contreras and Justices Longoria and Peña Memorandum Opinion by Justice Peña1

By petition for writ of mandamus, relator Electric Transmission Texas, LLC

contends that the trial court 2 abused its discretion by disqualifying its counsel of record,

1 See TEX. R. APP. P. 52.8(d) (“When denying relief, the court may hand down an opinion but is not

required to do so. When granting relief, the court must hand down an opinion as in any other case.”); id. R. 47.4 (distinguishing opinions and memorandum opinions). 2 This original proceeding arises from trial court cause number CCD-0543-F in the County Court

at Law No. 6 of Hidalgo County, Texas, and the respondent is the Honorable Albert Garcia. See id. R. 52.2. Matthew L. Jones, Gregory P. Kerr, and Jones, Galligan, Key & Lozano, L.L.P. (the law

firm). Given the severity of disqualification of counsel, and applying an exacting standard,

as we must, we conditionally grant the petition for writ of mandamus.

I. BACKGROUND

On May 21, 2020, relator filed a petition in condemnation against real party in

interest MRT Management, LLC (MRT) regarding a 1,770-acre tract of land in Hidalgo

County, Texas. Relator sought to condemn this property in order to obtain an easement

and right of way to install and operate an electric transmission line. On August 24, 2023,

more than three years later, MRT filed a motion to disqualify relator’s attorneys Kerr and

the law firm, and filed an updated motion to disqualify them later that day. MRT’s updated

motion to disqualify was premised on the concept that the lawyers at the law firm were

witnesses and would potentially be testifying at trial. See TEX. DISCIPLINARY R. PROF’L

CONDUCT 3.08(a) (generally providing that “[a] lawyer shall not accept or continue

employment as an advocate before a tribunal in a contemplated or pending adjudicatory

proceeding if the lawyer knows or believes that the lawyer is or may be a witness

necessary to establish an essential fact on behalf of the lawyer’s client”); In re Sanders,

153 S.W.3d 54, 57 (Tex. 2004) (orig. proceeding) (per curiam). According to MRT, the

law firm participated in manipulating and controlling the condemnation process for its land

to reduce the money that MRT would be paid:

Unlike most invocations of the power of eminent domain, [relator and a separate party] used their attorneys to handle, control, and effectuate all aspects of the acquisition process. This includes pre-condemnation negotiations, obtaining access to and use of the Property, and interference with and frustration of the continuation of the Development and sale of interests in the Property. [The law firm’s] participation was voluntary, and it

2 came with the attendant consequences of their participation in the process of the Condemnation (that participation went so far as to include their being signatories to the contract that underpins both the valuation and other issues in the Condemnation and separate litigation resulting from their conduct). They thus have only themselves to blame for their now being necessary participants in the evidentiary components of the case.

On December 7, 2023, relator filed a response to MRT’s updated motion to

disqualify addressing the merits of the motion. On March 8, 2024, MRT filed a

supplemental motion to disqualify Jones, Kerr, and JGKL. On March 14, 2024, relator

filed a supplement to its response to MRT’s motion to disqualify, specifically arguing that

MRT had waived its motion for disqualification through delay. On April 4, 2024, the trial

court held a non-evidentiary hearing on MRT’s motion to disqualify. On April 5, 2024,

relator filed a letter brief in support of its position. On April 8, 2024, the trial court signed

an order granting MRT’s motion for disqualification. On April 9, 2024, relator filed an

emergency motion for rehearing. The trial court set relator’s emergency motion for

rehearing to be considered on April 22, 2024, at which time trial on the merits was also

scheduled to commence.

On April 15, 2024, relator filed this petition for writ of mandamus. Relator contends

by three issues that the trial court abused its discretion by: (1) failing to find that MRT

waived its motion to disqualify; (2) granting the motion to disqualify when MRT offered no

evidence to support its allegations that the lawyers would be necessary witnesses in the

case; and (3) disqualifying the entire law firm. Relator also filed a motion for emergency

relief to stay the trial court proceedings, including the April 22, 2024 scheduled trial of the

case. This Court granted relator’s motion for emergency relief, ordered the trial court

proceedings to be stayed, and requested MRT, or any others whose interest might be

3 affected by the relief sought, to file a response to the petition for writ of mandamus. MRT

filed a response, and relator filed a reply thereto.

II. MANDAMUS

Mandamus is an extraordinary and discretionary remedy. See In re Allstate Indem.

Co., 622 S.W.3d 870, 883 (Tex. 2021) (orig. proceeding); In re Garza, 544 S.W.3d 836,

840 (Tex. 2018) (orig. proceeding) (per curiam); In re Prudential Ins. Co. of Am., 148

S.W.3d 124, 138 (Tex. 2004) (orig. proceeding). The relator must show that: (1) the trial

court abused its discretion, and (2) the relator lacks an adequate remedy on appeal. In re

USAA Gen. Indem. Co., 624 S.W.3d 782, 787 (Tex. 2021) (orig. proceeding); In re

Prudential Ins. Co. of Am., 148 S.W.3d at 135–36; Walker v. Packer, 827 S.W.2d 833,

839–40 (Tex. 1992) (orig. proceeding).

When a trial court abuses its discretion by granting a motion to disqualify counsel,

appeal is an inadequate remedy. In re Murrin Bros. 1885, Ltd., 603 S.W.3d 53, 57 (Tex.

2019) (orig. proceeding); In re Turner, 542 S.W.3d 553, 555 (Tex. 2017) (orig.

proceeding) (per curiam); In re Guar. Ins. Servs., Inc., 343 S.W.3d 130, 132 (Tex. 2011)

(orig. proceeding) (per curiam); In re Cerberus Cap. Mgmt., L.P., 164 S.W.3d 379, 383

(Tex. 2005) (orig. proceeding) (per curiam); In re Sanders, 153 S.W.3d 54, 56 (Tex. 2004)

(orig. proceeding) (per curiam); NCNB Tex. Nat’l Bank v. Coker, 765 S.W.2d 398, 400

(Tex. 1989) (orig. proceeding). Consequently, the “pertinent inquiry” is whether the trial

court abused its discretion by disqualifying the law firm. See In re Nitla S.A. de C.V., 92

S.W.3d 419, 422 (Tex. 2002) (orig. proceeding) (per curiam).

4 III. DISQUALIFICATION

“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 Bros. 1885, Ltd., 603 S.W.3d at 57; see In re Cerberus

Cap. Mgmt., L.P., 164 S.W.3d at 382; In re Nitla S.A. de C.V., 92 S.W.3d at 422; In re

Tex. Windstorm Ins. Ass’n, 417 S.W.3d 119, 129 (Tex. App.—Houston [1st Dist.] 2013,

orig. proceeding). “Disqualification can delay proceedings in the trial court, require the

client to engage a successor attorney, and, in appropriate cases, deprive the client of

work product done on his behalf by the disqualified attorney.” In re Tex. Windstorm Ins.

Ass’n, 417 S.W.3d at 129. “To prevent the abusive filing of such a motion for tactical

reasons, the court must carefully evaluate the motion and record to determine if

disqualification is warranted.” Id.; see In re Nitla S.A. de C.V., 92 S.W.3d at 422. Courts

thus must apply an exacting standard in ruling on disqualification motions. In re Murrin

Bros. 1885, Ltd., 603 S.W.3d at 57; Coker, 765 S.W.2d at 399; see Spears v. Fourth Ct.

of Apps., 797 S.W.2d 654, 656 (Tex. 1990) (orig. proceeding).

The Texas Disciplinary Rules of Professional Conduct do not set the standard for

disqualification; however, they “provide helpful guidance” and “suggest the relevant

considerations.” In re Murrin Bros. 1885, Ltd., 603 S.W.3d at 57 (quoting Nat’l Med.

Enters., Inc. v. Godbey, 924 S.W.2d 123, 132 (Tex. 1996) (orig. proceeding)); see In re

Cerberus Cap. Mgmt., L.P., 164 S.W.3d at 382; In re Tex. Windstorm Ins. Ass’n, 417

S.W.3d at 129. We consider all of the facts and the circumstances of the case in

determining whether disqualification is warranted. In re Murrin Bros. 1885, Ltd., 603

5 S.W.3d at 57. The movant bears the burden of proof on a disqualification motion. In re

EPIC Holdings, Inc., 985 S.W.2d 41, 60 (Tex. 1998) (orig. proceeding). The movant must

also show that it will suffer actual prejudice if counsel is not disqualified. In re Murrin Bros.

1885, Ltd., 603 S.W.3d at 57; In re Nitla S.A. de C.V., 92 S.W.3d at 422. In our review,

we also consider the extent to which the non-movant will suffer prejudice if counsel is

disqualified. See id.

IV. WAIVER

In its first issue, relator contends that the trial court abused its discretion by

determining that MRT did not waive its motion to disqualify. According to relator, the

record indicates that MRT used its motion to disqualify as a dilatory tactic and that MRT

waived disqualification insofar as its motion to disqualify is based, in part, on a meeting

that occurred on January 6, 2020. In contrast, MRT asserts that it “did not lack diligence

in its efforts to disqualify the attorneys”; that “it worked (and is still working) exhaustively

over a period of months and years to discover information, obtain relief, and enforce

rulings related to their conduct”; and that the “attorneys should not be allowed to

manufacture the circumstances and delays with which they now attempt to construct a

waiver argument.”

A party who fails to file a motion to disqualify counsel in a timely manner waives

its complaint. In re RSR Corp., 568 S.W.3d 663, 666 (Tex. 2019) (orig. proceeding) (per

curiam); In re George, 28 S.W.3d 511, 513 (Tex. 2000) (orig. proceeding); In re EPIC

Holdings, Inc., 985 S.W.2d at 52; Vaughan v. Walther, 875 S.W.2d 690, 690 (Tex. 1994)

(orig. proceeding) (per curiam). “Waiver is the intentional relinquishment of a right actually

6 known, or intentional conduct inconsistent with claiming that right.” In re RSR Corp., 568

S.W.3d at 666 (quoting Ulico Cas. Co. v. Allied Pilots Ass’n, 262 S.W.3d 773, 778 (Tex.

2008)). The concept of waiver in this context thus requires us to consider both timeliness

and the movant’s conduct. See id. (“This case lies at the intersection of dilatoriness and

waiver.”); see also In re State, No. 07-21-00315-CV, 2022 WL 1462275, at *4 (Tex.

App.—Amarillo May 9, 2022, orig. proceeding) (mem. op.).

In determining whether disqualification has been waived, we consider the length

of time between when the conflict became apparent to the movant and when the movant

filed its motion for disqualification. Spears, 797 S.W.2d at 656; In re Kyle Fin. Grp., LLC,

562 S.W.3d 795, 798 (Tex. App.—Houston [14th Dist.] 2018, orig. proceeding); BP Am.

Prod. Co. v. Zaffirini, 419 S.W.3d 485, 514 (Tex. App.—San Antonio 2013, pet. denied);

In re La. Tex. Healthcare Mgmt., L.L.C., 349 S.W.3d 688, 689 (Tex. App.—Houston [14th

Dist.] 2011, orig. proceeding). And “[i]n cases of waiver by litigation conduct, the precise

question is not so much when waiver occurs as when a party can no longer take it back.”

In re Nationwide Ins. Co. of Am., 494 S.W.3d 708, 714 (Tex. 2016) (orig. proceeding)

(quoting Perry Homes v. Cull, 258 S.W.3d 580, 595 (Tex. 2008)). We also examine any

evidence that indicates the movant is filing the motion for disqualification as a dilatory trial

tactic rather than to address any concern regarding the divulgence of attorney-client

confidences. Spears, 797 S.W.2d at 658; In re Kyle Fin. Grp., LLC, 562 S.W.3d at 798;

In re La. Tex. Healthcare Mgmt., L.L.C., 349 S.W.3d at 690. We consider whether the

movant has a satisfactory explanation for the delay and whether the delay has prejudiced

the opposing party. In re EPIC Holdings, Inc., 985 S.W.2d at 52–53.

7 We first examine the length of time between when the alleged grounds for

disqualification became apparent to MRT and when it filed its motion for disqualification.

See Spears, 797 S.W.2d at 656; In re Kyle Fin. Grp., LLC, 562 S.W.3d at 798. In its

updated motion for disqualification, MRT explained that it had been in the process of

creating a major warehouse project on its property, yet relator, “primarily through” Jones,

Kerr, and the law firm, “worked to slow and eventually halt” the warehouse project in order

to expedite relator’s acquisition of MRT’s property at a reduced price. MRT alleged that

Jones, Kerr, and the law firm “had numerous discussions with and made a variety of

representations” to MRT, which “culminated in a meeting that took place on January 6,

2020” at the law firm’s offices attended by Terry McGovern Jr., MRT’s owner. Specifically,

MRT alleged that the law firm promised MRT a “big offer” if it stopped developing the

warehouse project, and that Jones and Kerr put this promise in writing and signed it. MRT

further alleged that the law firm threatened retribution if MRT failed to stop development.

In accordance with the agreements reached at that meeting, MRT stopped development

and signed a possession and use agreement allowing relator to begin using the property;

however, MRT never received the “agreed-upon payments,” and instead, the law firm

used the cessation of work as (1) the basis for refusing to compensate MRT, and (2) a

tool to reduce the valuation of the property so that relator would be able to acquire the

property more cheaply. When MRT failed to receive the payments, it attempted to

recommence development of the warehouse project, but relator, through the law firm,

“had taken control of, prejudiced, and prevented completion of the development process,”

and Jones and Kerr “pressured and utilized other firm clients and persons and entities

8 they represent or control to stop, when possible, and delay, when not, the completion” of

the warehouse project. MRT specifically alleged that “[a]s a result of the acts of [the law

firm], Jones, and Kerr, the [warehouse project] has yet to be completed and MRT has lost

all the sales it had garnered for portions of the [p]roperty,” and as “a direct and proximate

result of their conduct and MRT’s reliance thereon, MRT has been unable to complete

the [warehouse project], has lost millions of dollars in sales it otherwise would have

consummated,” and has incurred substantial costs attempting to address the foregoing

events. MRT argued that Jones, Kerr, and “possibly” other members of the law firm would

testify as a “certitude” regarding “the facts and essential issues underlying the

[c]ondemnation” because they “handle[d], control[led], and effectuate[d] all aspects of the

acquisition process,” including “pre-condemnation negotiations, obtaining access to and

use of the Property, and interference with and frustration of the continuation of the

Development and sale of interests in the Property.” 3

Based on the foregoing, MRT was aware of the alleged grounds for disqualification

as early as January 6, 2020, even before the law firm filed relator’s lawsuit to condemn

MRT’s property on May 21, 2020. MRT did not file its updated motion for disqualification

3 The lawyer-witness rule of professional conduct prohibits a lawyer from serving as an advocate

if the lawyer may be a witness that is “necessary to establish an essential fact.” TEX. DISCIPLINARY R. PROF’L CONDUCT 3.08(a) (emphasis added); see In re Sanders, 153 S.W.3d 54, 57 (Tex. 2004) (orig. proceeding) (per curiam). A movant for disqualification has the “significant burden” to explain why the lawyer’s testimony is necessary to establish an essential fact and to demonstrate that the movant has a genuine need for the lawyer’s testimony. In re Tex. Tech. Servs., Inc., 476 S.W.3d 747, 751, 752 (Tex. App.—Houston [1st Dist.] 2015, orig. proceeding); see In re Garza, 373 S.W.3d 115, 118 (Tex. App.—San Antonio 2012, orig. proceeding). Further, the party moving for disqualification must establish that the attorney engaging in the dual roles of attorney and witness will cause the moving party actual prejudice. In re Sanders, 153 S.W.3d at 57; In re Tex. Tech. Servs., Inc., 476 S.W.3d at 751. MRT’s updated motion for disqualification does not address why testimony from the law firm witnesses would be necessary to establish any essential facts and does not explain how it would suffer actual prejudice if the law firm was not disqualified.

9 until August 24, 2023, three years and three months later. MRT then waited until March

8, 2024, more than six months later, to file a supplemental motion to disqualify. A three-

year delay far exceeds periods that have been held to support waiver. See e.g., Buck v.

Palmer, 381 S.W.3d 525, 528 (Tex. 2012) (concluding that an unexplained delay of seven

months amounted to waiver); Vaughan, 875 S.W.2d at 691 (finding that a delay of six and

one-half months constituted waiver).

We next examine the record for any evidence that indicates that MRT filed its

motion for disqualification as a dilatory trial tactic rather than to address any concern

regarding the divulgence of attorney-client confidences. See Spears, 797 S.W.2d at 658;

In re Kyle Fin. Grp., LLC, 562 S.W.3d at 798; In re La. Tex. Healthcare Mgmt., L.L.C.,

349 S.W.3d at 690. This case has been set for trial on at least four separate occasions,

and MRT filed its motion to disqualify on August 24, 2023, after the first trial setting and

immediately before the second trial setting. Its motion for disqualification was filed within

days of filing a motion to continue the second trial date. MRT then filed its supplemental

motion to disqualify on March 8, 2024, a little more than a month before the fourth trial

date of April 22, 2024. MRT did not secure a hearing on its motion to disqualify until April

4, 2024, more than seven months after its motion was initially filed, even though the record

indicates that MRT secured hearings on other pending motions in that interval of time.

Under the foregoing authority, we conclude that this sequence of events presents some

indication that the disqualification motion was utilized as a dilatory tactic. See, e.g.,

Vaughan, 875 S.W.2d at 690–91 (holding that the movant waived her right to disqualify

counsel where she waited to file the motion to disqualify until the day of the final hearing

10 in a child custody case when she had been aware of the possible conflict of interest nearly

seven months earlier).

Finally, we consider whether MRT has a satisfactory explanation for the delay and

whether the delay has prejudiced relator. See In re EPIC Holdings, Inc., 985 S.W.2d at

52–53. MRT denies that it lacked diligence in filing its motion to disqualify and explains

that it has worked exhaustively to discover information regarding the conflict and obtain

relief. While the record indicates that MRT’s counsel has made extensive efforts to

investigate the role of relator’s counsel with regard to the lawsuit at issue, MRT offers no

details regarding why such a lengthy period was required or necessary, and otherwise

offers no explanation for the delay. In terms of prejudice to relator, the trial court

disqualified its counsel on April 8, 2024, two weeks before the fourth scheduled trial date,

and almost four years after the inception of suit. Relator has been represented by the law

firm during the entire pendency of its lawsuit and being required to obtain new counsel on

the eve of a fourth scheduled trial, after abundant discovery has taken place, is inherently

prejudicial.

Based on controlling supreme court precedent, and given the exacting standard

required for disqualification, we are constrained to conclude that MRT waived its right to

disqualify the law firm. See In re RSR Corp., 568 S.W.3d at 666; In re George, 28 S.W.3d

at 513; In re EPIC Holdings, Inc., 985 S.W.2d at 52; Vaughan, 875 S.W.2d at 690. We

sustain relator’s first issue, and having done so, need not address its remaining two

issues. See TEX. R. APP. P. 47.1; 52.8(d).

11 V. CONCLUSION

The Court, having examined and fully considered the petition for writ of mandamus,

the response, the reply, and the applicable law, is of the opinion that relator has met its

burden to obtain relief. Accordingly, we lift the stay previously imposed in this case. See

id. R. 52.10(b) (“Unless vacated or modified, an order granting temporary relief is effective

until the case is finally decided.”). We conditionally grant the petition for writ of mandamus,

and we direct the trial court to vacate its order granting the motion for disqualification and

to enter an appropriate order denying such motion. Our writ will issue only if the trial court

fails to promptly comply.

L. ARON PEÑA JR. Justice

Delivered and filed on the 28th day of June, 2024.