Kevin Walker v. John Morgan, Mike Lindsay and Lindsay & Morgan, PLLC

• Court: Court of Appeals of Texas
• Decided: November 12, 2009
• Docket: 09-08-00362-CV
• Status: Published

Opinion

In The

Court of Appeals

Ninth District of Texas at Beaumont

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NO. 09-08-00362-CV

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KEVIN WALKER, Appellant

V.

JOHN MORGAN, MIKE LINDSAY AND

LINDSAY & MORGAN, PLLC, Appellees

On Appeal from the 172nd District Court

Jefferson County, Texas

Trial Cause No. E-177,428

MEMORANDUM OPINION

This is an appeal from a summary judgment in a lawsuit by a client against his attorneys. In his response to the motion for summary judgment on his professional negligence claim, appellant failed to raise a material fact issue concerning causation or damages. He is not entitled to any recovery under his other claims. We affirm the trial court's judgment.

Kevin Walker and Angela Walker contracted with the law firm of Lindsay & Morgan, PLLC, to represent them in Kevin Walker's lawsuit ⁽¹⁾ against various individuals and companies, including certain coin companies. Walker allegedly held an ownership interest in the coin companies. ⁽²⁾ He sued the companies for breach of an employment contract, for an accounting, and for appointment of a receiver.

On Walker's behalf, attorney John Morgan settled with the defendants in the coin company lawsuit for $950,000. The settlement agreement had other terms, including a non-compete agreement and yearly payments. The settlement was memorialized in a Rule 11 agreement. After the attorneys entered into the Rule 11 agreement, Walker's attorneys asked him to sign settlement documents. He refused.

The defendants in the coin company lawsuit filed a counter-claim against Walker for breach of contract. Following a bench trial, the trial judge signed a final judgment and ordered that the Rule 11 agreement be enforced based on the attorney's "apparent authority."

The judgment ordered Walker to sign all of the closing documents and to pay attorneys' fees. Pending a determination of issues in the Walkers' divorce proceeding, the judgment ordered an interpleader of the settlement proceeds. Walker did not appeal that judgment.

Walker sued his attorneys. He claimed he did not approve the settlement offer, did not agree to its terms, and was not informed of the terms until a few days after the Rule 11 agreement. Walker maintains he had previously instructed his attorney not to settle the coin company lawsuit until after the Walkers' divorce proceeding was settled.

Attorneys Morgan and Lindsay and their law firm claim they had authority from the Walkers to settle the matter. The attorneys maintain that Kevin Walker instructed them to settle the coin company lawsuit.

In his lawsuit against the attorneys, Walker alleged breach of contract, breach of fiduciary duty, negligence, gross negligence, negligent misrepresentation, and respondeat superior. The attorneys filed a traditional motion for summary judgment and a no-evidence motion for summary judgment. Without specifying the grounds for its decision, the trial court granted summary judgment in favor of appellees. Walker appealed.

In their traditional motion, appellees asserted they had actual authority to settle the coin company lawsuit, and argued all of Walker's causes of action arose out of a legal malpractice (professional negligence) claim. In the no-evidence motion, appellees contended there was no evidence to support each element of Walker's six alleged causes of action.

Walker responded that summary judgment was precluded by a genuine issue of material fact "concerning whether the defendants had the authority to settle the case on the terms and conditions to which the defendants bound the plaintiff." The summary judgment evidence is in large part from the trial of the coin company lawsuit.

A party filing a traditional motion for summary judgment must show that no genuine issue of material fact exists, and that the movant is entitled to judgment as a matter of law. Sw. Elec. Power Co. v. Grant, 73 S.W.3d 211, 215 (Tex. 2002); Tex. R. Civ. P. 166a(c). If a movant conclusively negates at least one essential element of a cause of action, the movant is entitled to summary judgment on that claim. Sw. Elec. Power Co., 73 S.W.3d at 215. In deciding whether a disputed material fact issue exists precluding summary judgment, an appellate court takes as true evidence favorable to the non-movant and indulges every reasonable inference and resolves any doubts in the non-movant's favor. Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548-49 (Tex.1985).

When filing a no-evidence motion for summary judgment, a movant must allege there is no evidence of an essential element of the opposing party's claim. Tex. R. Civ. P. 166a(i). Although not required to marshal his proof, the non-moving party must then present evidence that raises a genuine fact issue on each of the challenged elements. Sw. Elec. Power Co., 73 S.W.3d at 215 (citing Tex. R. Civ. P. 166a, notes, and cmts.).

Appellees argue procedural waiver. They contend Walker briefed only the breach of fiduciary duty claim, and therefore has waived his other claims. Further, appellees argue that all of Walker's claims are actually allegations of professional negligence, and that he has waived the professional negligence cause of action because he has briefed only the breach of fiduciary duty claim.

Briefs are meant to acquaint the court with the issues in a case and to present argument that will enable the court to decide the case. Tex. R. App. P. 38.9. An appellate court is not required to address other possible arguments when only one is made. See Tex. R. App. P. 38.1(h), (i). We conclude, nevertheless, that in this case Walker has not waived the professional negligence claim or the breach of fiduciary duty claim. However, although Walker mentions breach of contract in his brief, he does not present argument as to the breach of contract. Walker does not specifically challenge the misrepresentation, gross negligence, and respondeat superior allegations in his argument on appeal. We therefore need not address them separately. Id.; see also San Jacinto River Auth. v. Duke, 783 S.W.2d 209 (Tex. 1990).

Walker's brief primarily focuses on the breach of fiduciary duty claim. The relationship between attorney and client is a fiduciary one. Goffney v. Rabson, 56 S.W.3d 186, 193 (Tex. App.--Houston [14th Dist.] 2001, pet. denied). Generally the term "fiduciary" "applies to any person who occupies a position of peculiar confidence towards another." Kinzbach Tool Co. v. Corbett-Wallace Corp., 138 Tex. 565, 160 S.W.2d 509, 512 (1942). "[Fiduciary] refers to integrity and fidelity[,]" and "contemplates fair dealing and good faith, rather than legal obligation, as the basis of the transaction." Id. The attorney-client relationship is one of good faith, requiring candor, openness and honesty, and the absence of concealment or deception. See Goffney, 56 S.W.3d at 193.

A breach of fiduciary duty claim arises when an attorney improperly benefits from representation of a client by, for example, subordinating the client's interest to the attorney's interest, retaining the client's funds, engaging in self-dealing, improperly using client confidences, failing to disclose conflicts of interest, or making misrepresentations to achieve those ends. Gibson v. Ellis, 126 S.W.3d 324, 330 (Tex. App.--Dallas 2004, no pet.). If the court finds that the attorney's conduct was a "clear and serious breach of duty," and fee forfeiture is "necessary to satisfy the public's interest in protecting the attorney-client relationship," the client may obtain the equitable remedy of fee forfeiture without proof of damages. Burrow v. Arce, 997 S.W.2d 229, 240, 246 (Tex. 1999).

Walker alleges appellees did not adequately inform him of the terms of the Rule 11 agreement and he did not give his consent. That allegation is at the center of all his alleged causes of action and, in particular, his breach of fiduciary duty claim. Walker relies on rules of professional conduct. ⁽³⁾ Under rule 1.02, an attorney has a duty to "abide by a client's decisions: . . . whether to accept an offer of settlement of a matter, except as otherwise authorized by law[.]" Tex. Disciplinary R. Prof'l Conduct, Rule 1.02(a)(2), reprinted in Tex. Gov't Code Ann., tit. 2, subtit. G app. A (Vernon 2005) (Tex. State Bar R. art. X, § 9). Comment 5 to rule 1.02 states that the "client may not be asked to . . . surrender the right to . . . settle or continue litigation that the lawyer might wish to handle differently." Id. Rule 1.02 cmt. 5. Further, rule 1.03 provides that "[a] lawyer shall keep a client reasonably informed about the status of a matter and promptly comply with reasonable requests for information[,]" and "shall explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation." Tex. Disciplinary R. Prof'l Conduct, Rule 1.03, reprinted in Tex. Gov't Code Ann., tit. 2, subtit. G app. A (Vernon 2005) (Tex. State Bar R. art. X, § 9). Comment 1 to rule 1.03 states that "[a] lawyer who receives from opposing counsel . . . an offer of settlement in a civil controversy . . . should promptly inform the client of its substance unless prior discussions with the client have left it clear that the proposal will be unacceptable." Id. Rule 1.03 cmt. 1.

In their traditional summary judgment motion, appellees assert that Walker's pleadings improperly fracture a legal malpractice (professional negligence) claim into multiple causes of action, including claims of breach of fiduciary duty and breach of contract. Appellees maintain that all of Walker's causes of action are in reality legal malpractice claims.

Texas courts have criticized litigants' efforts to re-label a professional negligence claim as other types of causes of action merely to avoid proof requirements. O'Donnell v. Smith, 234 S.W.3d 135, 146 (Tex. App.--San Antonio 2007), aff'd, Smith v. O'Donnell, 288 S.W.3d 417 (Tex. 2009). One court has explained that "[t]he rule against dividing or fracturing a negligence claim prevents legal-malpractice plaintiffs from opportunistically transforming a claim that sounds only in negligence into other claims." Deutsch v. Hoover, Bax & Slovacek, L.L.P., 97 S.W.3d 179, 189 (Tex. App.--Houston [14th Dist.] 2002, no pet). "If the gist of a client's complaint is that the attorney did not exercise that degree of care, skill, or diligence as attorneys of ordinary skill and knowledge commonly possess, then that complaint should be pursued as a negligence claim, rather than some other claim." Id. at 189-90.

In determining whether a breach of fiduciary duty claim exists independently from a negligence claim, one Texas court has indicated that a breach of fiduciary duty claim considers whether an attorney obtained an improper benefit from representing the client, while a negligence claim focuses on whether the lawyer represented a client with the requisite level of skill. Duerr v. Brown, 262 S.W.3d 63, 71 (Tex. App.--Houston [14th Dist.] 2008, no pet.). Walker's claim is not that Morgan negotiated without any authority, or that Morgan committed fraud or intentionally settled a claim against his client's wishes. In his petition, Walker does not allege conflict of interest, fraud, self-dealing, improper benefit, placing the attorney's interest above the client's interest, or other similar allegations. His complaint ultimately lies with appellees' handling of his case and his dissatisfaction with their work and results. See Murphy v. Gruber, 241 S.W.3d 689, 698-99 (Tex. App.--Dallas 2007, pet. denied) (failure to properly advise, inform, and communicate with clients constituted legal malpractice rather than breach of fiduciary duty). Walker's claims have to do with the alleged failure to use the standard of care required of an attorney in resolving litigation on behalf of his client. His concern is partially related to the timing of the signing of the settlement documents while the divorce proceedings were still pending. The claim is essentially that his attorneys were negligent in their communication of some of the terms of the settlement and were mistaken in concluding he consented. The gist of Walker's complaint is professional negligence rather than breach of fiduciary duty. See Deutsch, 97 S.W.3d at 189.

Also, the court's determination of the propriety and necessity of the equitable remedy of fee forfeiture in the fiduciary duty context must be based on the equity of the circumstances. Burrow, 997 S.W.2d at 245. The court considers many factors, including the adequacy of the other remedies. There is no evidence the attorneys engaged in self-dealing. Appellant did not appeal the judgment in the underlying lawsuit enforcing the settlement agreement. Appellees assert Walker accepted the benefits of the settlement by withdrawing his funds from the registry of the court. A damage remedy might be available under circumstances where the communication of settlement terms is negligent. Fee forfeiture, however, would be inequitable under the circumstances of this case.

The question remains whether the trial court properly granted the no-evidence summary judgment on the professional negligence claim. In a professional negligence claim, the plaintiff must demonstrate "'that (1) the attorney owed the plaintiff a duty, (2) the attorney breached that duty, (3) the breach proximately caused the plaintiff's injuries, and (4) damages occurred.'" Belt v.Oppenheimer, Blend, Harrison & Tate, Inc., 192 S.W.3d 780, 783 (Tex. 2006) (quoting Peeler v. Hughes & Luce, 909 S.W.2d 494, 496 (Tex. 1995)). In their Rule 166a(i) motion, appellees asserted that there was no evidence of any of the elements of negligence, including proximate cause of injury. Walker then had the burden of presenting evidence raising a genuine issue of material fact on those elements. See Sw. Elec. Power Co, 73 S.W.3d at 215.

When the alleged professional negligence involves the results of prior litigation, the plaintiff bears the burden of proving that, but for the attorney's breach of duty, the plaintiff would have prevailed in the underlying cause of action and would have been entitled to judgment. Greathouse v. McConnell, 982 S.W.2d 165, 172 (Tex. App.--Houston [1st Dist.] 1998, pet. denied). This has been referred to as the "suit within a suit" requirement. Id. at 173. When the causal link in the professional negligence suit "is beyond the jury's common understanding, expert testimony is necessary." Alexander v. Turtur & Assocs., Inc., 146 S.W.3d 113, 119-20 (Tex. 2004). The question of the viability of a case, the likelihood of settlement, an appropriate amount for settlement, and the timing of settlement depend on an analysis of the law and the facts of the case.

In this case, as in general, the determination of the viability, value, and strength of a claim involve legal analysis and evaluation -- subjects to be evaluated and explained by an attorney with knowledge of the applicable law and facts. There is no expert evidence showing the value of Walker's claims in the coin company lawsuit, and no evaluation of whether his claims would somehow have entitled him to greater recovery than that afforded by the settlement. Walker's response to the no-evidence summary judgment motion does not raise a material issue of fact on whether he would have prevailed in the coin company lawsuit, or could have obtained a different, more beneficial recovery but for the conduct of his attorneys. Appellant has not produced more than a scintilla of evidence on the elements of proximate cause or damages in his professional negligence claim. See Tex.R. Civ. P. 166a(i); Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 600 (Tex. 2004). We overrule appellant's issues and affirm the judgment of the trial court.

AFFIRMED.

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DAVID GAULTNEY

Justice

Submitted on May 28, 2009

Opinion Delivered November 12, 2009

Before McKeithen, C.J., Gaultney and Kreger, JJ.

1. Although Angela (Angie) and Kevin Walker both signed the attorney-client agreement, Kevin Walker alone sued appellees.

2. In this opinion, we refer to Walker's suit against various coin companies and individuals as the "coin company" lawsuit.

3. The violation of a rule of professional conduct "does not give rise to a private cause of action nor does it create any presumption that a legal duty to a client has been breached." Tex. Disciplinary R. Prof'l Conduct, Preamble: Scope no. 15, reprinted in Tex. Gov't Code Ann., tit. 2, subtit. G app. A (Vernon 2005) (Tex. State Bar R. art. X, § 9); see Cuyler v. Minns, 60 S.W.3d 209, 214 (Tex. App.--Houston [14th Dist.] 2001, pet. denied).