Lawrence T. Flack v. Dan H. Hanke and the Hanke Group, P.C., F/K/A Hanke, Green and Stein, Cox Smith Matthews Incorporated, F/K/A Cox & Smith and F/K/A Matthews & Branscomb John D. Fisch Mary Potter Langley & Banack Incorporated A/K/A Langley & Banack, Inc.

CourtCourt of Appeals of Texas
DecidedMay 27, 2009
Docket04-08-00177-CV
StatusPublished

This text of Lawrence T. Flack v. Dan H. Hanke and the Hanke Group, P.C., F/K/A Hanke, Green and Stein, Cox Smith Matthews Incorporated, F/K/A Cox & Smith and F/K/A Matthews & Branscomb John D. Fisch Mary Potter Langley & Banack Incorporated A/K/A Langley & Banack, Inc. (Lawrence T. Flack v. Dan H. Hanke and the Hanke Group, P.C., F/K/A Hanke, Green and Stein, Cox Smith Matthews Incorporated, F/K/A Cox & Smith and F/K/A Matthews & Branscomb John D. Fisch Mary Potter Langley & Banack Incorporated A/K/A Langley & Banack, Inc.) 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.

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Lawrence T. Flack v. Dan H. Hanke and the Hanke Group, P.C., F/K/A Hanke, Green and Stein, Cox Smith Matthews Incorporated, F/K/A Cox & Smith and F/K/A Matthews & Branscomb John D. Fisch Mary Potter Langley & Banack Incorporated A/K/A Langley & Banack, Inc., (Tex. Ct. App. 2009).

Opinion

OPINION

No. 04-08-00177-CV

Lawrence T. FLACK, Appellant

v.

Dan H. HANKE and the Hanke Group, P.C., f/k/a Hanke, Green and Stein, Cox Smith Matthews Incorporated, f/k/a Cox & Smith and f/k/a Matthews & Branscomb; John D. Fisch; Mary Potter; Langley & Banack Incorporated a/k/a Langley & Banack, Inc.; Steven R. Brook; and David S. Gragg, Appellees

From the 166th Judicial District Court, Bexar County, Texas Trial Court No. 2005-CI-12037 Honorable Lori Massey, Judge Presiding

Opinion by: Rebecca Simmons, Justice

Sitting: Karen Angelini, Justice Rebecca Simmons, Justice Steven C. Hilbig, Justice

Delivered and Filed: May 27, 2009

REVERSED AND REMANDED

This appeal stems from a summary judgment in favor of, and an order striking the

designation of, Steven R. Brook, David S. Gragg, and Langley & Banack, Incorporated a/k/a

Langley & Banack, Inc. and Cox Smith Matthews Incorporated f/k/a Cox & Smith and f/k/a

Matthews & Branscomb, John D. Fisch and Mary M. Potter as responsible third parties. Appellant 04-08-00177-CV

Lawrence T. Flack asserts the trial court erred in granting: (1) summary judgment in favor of the

appellees, and (2) Langley & Banack’s motion to strike its designation as a responsible third party.

We reverse the judgment of the trial court and remand this matter for further proceedings

consistent with this opinion.

FACTUAL BACKGROUND

Appellant Flack hired Dan H. Hanke and the Hanke Group, P.C., f/k/a Hanke, Green, and

Stein (collectively Hanke) to create an employee stock ownership plan (ESOP) in Flack Interiors

and to sell Flack’s stock in the business to the ESOP. The stock plan subsequently purchased

Flack’s stock with loans from Frost National Bank, but Flack Interior’s poor financial performance

quickly caused Frost to demand that the loans be restructured. In April of 2000, Flack purchased

the restructured loans from Frost and became the business’s primary lender.

Upon the advice of Hanke, Flack then hired Langley & Banack, Incorporated, along with

attorneys Steven R. Brook and David S. Gragg, (collectively Langley & Banack) to represent

Flack in connection with Flack Interior’s 2004–2005 bankruptcy proceeding. On February 7,

2005, the bankruptcy court approved a settlement agreement resolving Flack’s claims regarding his

financial dealings with the ESOP. A few months later, Flack sued Hanke for negligent advice

regarding the creation of the ESOP and the restructuring of the loans. More than two years later,

Flack joined Langley & Banack in the suit. Flack asserts that he suffered a monetary loss due to

Langley & Banack’s failure to maximize collateral in the bankruptcy.

In June 2004, on Hanke’s advice, Flack hired Cox Smith Matthews Incorporated f/k/a Cox

& Smith and f/k/a Matthews & Branscomb, including attorneys John D. Fisch and Mary M. Potter

(collectively Cox Smith), for advice regarding Flack’s sale of the business, the stock plan, and the

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loans. More than two years following the initial suit against Hanke, Flack also joined Cox Smith

in the lawsuit.

PROCEDURAL HISTORY

Flack filed suit against Hanke on July 26, 2005, alleging breach of fiduciary duties,

negligence, and violation of the Texas Deceptive Trade Practices Act in connection with the sale

of his stock in Flack Interiors, Inc. and certain real property. In July 2007, Flack reached a

settlement agreement with Hanke which required Hanke to agree to a new trial setting and to

designate both Langley & Banack and Cox Smith (jointly Appellees) as responsible third parties

(RTPs). In short, through the settlement agreement, Flack and Hanke agreed: (1) to amend the

scheduling order because the deadline to add new parties had passed; (2) Hanke would file a

designation of RTPs and secure an agreed order granting the designation; (3) Flack would file a

motion to join the RTPs as defendants and secure an order granting the joinder; and (4) the parties

would file a motion to dismiss Hanke and secure an order of dismissal. Moreover, each step was

to be completed in accordance with a timeline provided in the settlement documents. Attached to

the agreement were the necessary pleadings to effectuate the settlement, signed by the parties, and

ready to be filed in keeping with the timetable.

In accordance with the settlement agreement, on July 27, 2007, Hanke filed Defendants’

Motion for Leave to Designate Responsible Third Parties pursuant to Texas Civil Practice and

Remedies Code section 33.004. See TEX. CIV. PRAC. & REM. CODE ANN. § 33.004 (Vernon 2008).

The trial court granted the motion and approved the designation pursuant to an agreed order.

Shortly thereafter, Flack and Hanke filed an Agreed Motion to Add Third Parties, also signed by

the trial court, joining each of the appellees as defendants. On August 1, 2007, the trial court

signed an agreed order dismissing Flack’s claims against Hanke pursuant to a previously executed

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compromise and settlement agreement between the parties. The following day, Flack filed

Plaintiff’s Second Amended Original Petition asserting claims of negligence and breaches of

fiduciary duty against the Appellees.

Each Appellee subsequently filed a general denial and affirmative defenses including a

limitations defense. Additionally, all of the Appellees filed traditional motions for partial

summary judgment based on limitations and Langley & Banack filed a motion to strike its

designation as a responsible third party. On February 21, 2008, the trial court considered and

granted summary judgment in favor of Appellees based on limitations and granted Langley &

Banack’s motion to strike. The court entered final judgment on February 22, 2008. To understand

Flack’s objections to the trial court’s judgment, a brief review of section 33.004 of the Civil

Practice and Remedies Code is necessary.

TEXAS CIVIL AND PRACTICE REMEDIES CODE CHAPTER 33

In 2003, the Texas Legislature revised the Texas Civil Practice and Remedies Code to

change from a joinder procedure to a designation procedure for inclusion of responsible third

parties in the apportionment of responsibility. See Act of June 2, 2003, 78th Leg., R.S., ch. 204,

§§ 4.02-.04, secs. 33.003-.004, 2003 Tex. Gen. Laws 847, 855-56 (codified at TEX. CIV. PRAC. &

REM. CODE ANN. §§ 33.003-.004) (Vernon 2008)). The 2003 amendments to section 33.004

significantly changed the procedures for apportioning responsibility to third parties. See TEX. CIV.

PRAC. & REM. CODE ANN. § 33.004(a), (h) (Vernon 2008).

After the 2003 amendments became effective, the defendant need only file a motion for

leave to designate an RTP sixty days prior to trial and, absent objection by another party, the trial

court must grant leave to designate the RTP. TEX. CIV. PRAC. & REM. CODE ANN. § 33.004(a), (f)

(Vernon 2008). The granting of leave to designate an RTP does not, absent joinder as a defendant,

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impose liability on the RTP and may not be used in other proceedings on the basis of res judicata

or collateral estoppel. Id. § 33.004(i). Additionally, the statute allows parties who could never

have been sued, as well as unknown parties, to be designated as RTPs. Id. § 33.004(i), (j), (k).

The statute further provides that joinder is not prohibited “even though such joinder would

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Lawrence T. Flack v. Dan H. Hanke and the Hanke Group, P.C., F/K/A Hanke, Green and Stein, Cox Smith Matthews Incorporated, F/K/A Cox & Smith and F/K/A Matthews & Branscomb John D. Fisch Mary Potter Langley & Banack Incorporated A/K/A Langley & Banack, Inc., Counsel Stack Legal Research, https://law.counselstack.com/opinion/lawrence-t-flack-v-dan-h-hanke-and-the-hanke-group-pc-fka-hanke-texapp-2009.