In re Hoar Construction, L.L.C.

256 S.W.3d 790, 2008 Tex. App. LEXIS 4075
CourtCourt of Appeals of Texas
DecidedMay 29, 2008
DocketNo. 14-07-00666-CV
StatusPublished
Cited by7 cases

This text of 256 S.W.3d 790 (In re Hoar Construction, L.L.C.) 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
In re Hoar Construction, L.L.C., 256 S.W.3d 790, 2008 Tex. App. LEXIS 4075 (Tex. Ct. App. 2008).

Opinion

OPINION

WANDA McKEE FOWLER, Justice.

In this original proceeding, relators seek mandamus relief from an order disqualify[792]*792ing their counsel of record from representing them in the trial court. We conclude that the trial court did not abuse its discretion when it disqualified the lawyers pursuant to Rule 1.09(a)(2) of the Texas Disciplinary Rules of Professional Conduct because a reasonable probability exists that confidential information will be revealed. We also conclude that the real party in interest, First Victoria National Bank, did not waive its right to seek disqualification. For these reasons, we deny relators’ petition for writ of mandamus.

Underlying Facts and Procedural History

The underlying dispute arises out of the construction in downtown Houston, Texas of a hotel named the Inn at the Ballpark (“the Project”). When the dispute began, none of the parties to this mandamus proceeding were part of the suit. A materials vendor for the Project, Mason’s Mill & Lumber Co., sued a subcontractor on the Project, A & M Casework, Inc. Mason’s Mill sued A & M for payment due under their materials supply contract; Mason’s Mill also sued A & M’s owner, Lloyd Lewis (“the Construction Litigation”).

The current parties became involved in the Construction Litigation when A & M filed a third-party claim for breach of contract against Hoar Construction, L.L.C., the general contractor for the Project. A & M also sued Landry’s Management, L.P. and Landry’s Restaurants, Inc. (collectively “Landry’s”), owners of the Project, for quantum meruit and foreclosure of a mechanic’s lien. Hoar Construction’s longstanding litigation counsel, Cokinos, Bo-sien & Young, L.L.P. (“CBY”), appeared for the third-party defendants on December 14, 2004.

While the Construction Litigation was in this posture, A & M defaulted on a number of its obligations, including two promissory notes owned by First Victoria National Bank and guaranteed by A & M’s owner, Lewis. In May of 2005, First Victoria hired a CBY lawyer to assist in its collection efforts. First Victoria sued A & M and pursued an adversary proceeding in Lewis’s personal bankruptcy (“the Collection Litigation”). In the adversary proceeding, First Victoria alleged that Lewis’s guaranty indebtedness was nondischargeable because Lewis fraudulently (1) misrepresented his and A & M’s financial status to obtain the loans and (2) diverted a portion of the loaned funds to his personal use. In July 2006, as a result of CBY Collection Counsel’s efforts in the Collection Litigation, A & M assigned to First Victoria certain accounts receivable and rights to payment, including any payment accruing from its third party claims in the Construction Litigation. In exchange, First Victoria agreed to dismiss the adversary proceeding in the Lewis bankruptcy. CBY Collection Counsel’s last tasks for First Victoria in connection with the Collection Litigation were negotiating and documenting the assignment and terminating the adversary proceeding.

Six months later, in January of 2007, Hoar Construction and Landry’s (hereinafter collectively “the Hoar Parties”) counterclaimed against A & M and Mason’s Mill asserting breach of contract, breach of warranty, and fraud causes of action. In February, on behalf of the Hoar Parties, CBY Construction Litigation Counsel sent a settlement proposal to counsel for A & M and Mason’s Mill. In the proposal, CBY Construction Litigation Counsel declared his intention to substitute First Victoria National Bank for A & M as the true party in interest in the Construction Litigation, “so that [the Hoar Parties] may recover from the Bank at least their attorney’s fees, if not the entire claim.”

In response, First Victoria filed a motion in the Construction Litigation (to which it was not a party) to disqualify CBY as [793]*793counsel for the Hoar Parties. First Victoria argued disqualification was required because CBY’s continued representation of the Hoar Parties would violate Rule 1.09 of the Texas Disciplinary Rules of Professional Conduct.1 The trial court granted the motion and entered an order of disqualification. The Hoar Parties now seek relief from the order by writ of mandamus.2

STANDARD OP REVIEW

Mandamus is an extraordinary remedy to correct a trial court’s abuse of discretion that cannot be remedied through standard appellate channels. Walker v. Packer, 827 S.W.2d 883, 840-44 (Tex.1992) (orig. proceeding). Appeal is not an adequate remedy for a trial court’s erroneous disqualification of a party’s chosen counsel. In re Butler, 987 S.W.2d 221, 224 (Tex.App.-Houston [14th Dist.] 1999, orig. proceeding) (“appeal from an order granting a motion to disqualify is inadequate because such an order results in immediate and palpable harm that disrupts the trial proceeding and deprives a party of the right to have counsel of its choice”) (citing Schwartz v. Jefferson, 980 S.W.2d 957, 959 (Tex.App.-Houston [14th Dist.] 1996, orig. proceeding)). Thus, the sole issue to be resolved in this mandamus proceeding is whether the trial court abused its discretion in disqualifying the Hoar Parties’ counsel, CBY.

To show an abuse of discretion with respect to factual issues, the party requesting mandamus relief must establish that the trial court could have reached but one decision, given the facts existing and law applicable to the case. Johnson v. Fourth Court of Appeals, 700 S.W.2d 916, 917 (Tex.1985) (orig. proceeding). “Our question in the present case, therefore, is whether based on the present disciplinary rules of professional conduct and the facts of this case, the trial judge had only one choice, that is, to deny the motion for disqualification.” Clarke v. Ruffino, 819 S.W.2d 947, 949 (Tex.App.-Houston [14th Dist.] 1991, orig. proceeding). Even if the court of appeals disagrees with the trial court’s decision, that decision may be disturbed by mandamus only if it is shown to be arbitrary or unreasonable. Walker, 827 S.W.2d at 839; Butler, 987 S.W.2d at 226. As we explain below, we conclude the trial judge did not abuse his discretion.

Analysis

I. The Trial Court Did Not Abuse its Discretion by Disqualifying CBY from Representing the Hoar Parties in the Construction Litigation.

A. The trial court’s order of disqualification and Rules of Professional Conduct 1.09(a)(2) & (3) and 1.05(b)(3).

In its order of disqualification (“the Order”), the trial court stated the following findings and conclusions:

[T]he Court finds that [CBY] previously represented First Victoria in the same matter. That is, [CBY] has previously represented First Victoria in bankruptcy and collection-related issues involving A & M that are implicated in the instant attempts by A & M and [Mason’s Mill] to recover monies from [the Hoar Parties]. Both the prior and current representations by [CBY] de[794]*794pended and depend fundamentally upon a determination of the rights and liabilities of the parties to the instant litigation in relation to the installation by A & M of millwork at the Inn at the Ballpark in 2003.

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Bluebook (online)
256 S.W.3d 790, 2008 Tex. App. LEXIS 4075, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-hoar-construction-llc-texapp-2008.