NationsBank of Texas, N.A. v. Akin, Gump, Strauss, Hauer & Feld, L.L.P.

979 S.W.2d 385, 1998 Tex. App. LEXIS 6301, 1998 WL 743666
CourtCourt of Appeals of Texas
DecidedOctober 8, 1998
Docket13-96-303-CV
StatusPublished
Cited by25 cases

This text of 979 S.W.2d 385 (NationsBank of Texas, N.A. v. Akin, Gump, Strauss, Hauer & Feld, L.L.P.) 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
NationsBank of Texas, N.A. v. Akin, Gump, Strauss, Hauer & Feld, L.L.P., 979 S.W.2d 385, 1998 Tex. App. LEXIS 6301, 1998 WL 743666 (Tex. Ct. App. 1998).

Opinion

OPINION ON MOTION FOR REHEARING

RODRIGUEZ, Justice.

We grant appellant’s motion for rehearing, withdraw our opinion dated July 9, 1998, and substitute the following opinion in its place.

This is a legal malpractice case arising out of Akin, Gump, Hauer, & Feld, L.L.P.’s (“Akin Gump”) representation of Noble C. Ginther (“Ginther”). Ginther employed Akin Gump to represent him in various capacities: individually; as operator of the Sarco Creek Field (“Ginther/Operator”); and as trustee of a trust (the “Ginther Trust”) created by Noble Ginther and Minnie Ginther (“Gin-ther/Trustee”). Appellant, NationsBank of Texas, N.A. (“NationsBank”), as executor of Ginther’s estate and as trustee of the Gin-ther Trust, brings twenty points of error *389 relating to (1) the trial court’s granting summary judgment to Akin Gump on Nations-Bank’s causes of action for violations of the Texas Deceptive Trade Practices — Consumer Protection Act 1 (“DTPA”), fraud and misrepresentation; (2) the court’s striking Nati-onsBank’s second amended supplemental petition, which asserted claims against Akin Gump for its representation of Ginther/Oper-ator; (3) the court’s dismissal of a declaratory judgment action; and (4) the court’s defining Ginther in the charge as operator of the Sarco Creek Field and rendering judgment against Ginther/Operator after having dismissed Ginther/Operator’s claims. Nations-Bank also complains about the sufficiency of the evidence to support the jury’s award of attorney’s and expert witness fees to Akin Gump and the trial court’s failure to grant a new trial based on Akin Gump’s alleged improper jury argument.

Facts

Noble Ginther, a Texas oilman, was operator and part owner 2 of the Sarco Creek Field, a lucrative oil and gas reserve in south Texas. The Sarco Creek Field became the subject of a farmout agreement with CPX Petroleum, Inc. “(CPX)”. The agreement provided that CPX could produce 1,000 acres of the Sarco Creek Field, but only from gas bearing formations that were not already under production. Based on its review of Texas Railroad Commission records, CPX believed a potentially rich gas bearing zone in the Sarco Creek Field had not been perforated. Unbeknownst to CPX at the time, however, Ginther was producing from the zones CPX had targeted.

CPX drilled test wells, found gas at the 4050’ level, and filed an application with the Railroad Commission requesting permission to complete wells in a number of zones, including the 4050’ zone. Ginther informed CPX, per the terms of the farmout agreement, that CPX could not produce from the 4050’ zone because that zone was already being produced from other wells. CPX pointed to the Railroad Commission records, which reflected Ginther was not producing from the 4050’ zone, 3 and claimed the right to produce from that zone. A dispute arose between Ginther and CPX which centered on whether CPX could rely on Railroad Commission records which reflected no production activity in the contested zone.

As a result of this dispute, Ginther hired Akin Gump to represent his interests, both as operator of the Sarco Creek Field and as trustee of the Ginther Trust. To answer the question regarding Ginther’s liability for fraud to parties relying on Railroad Commission records, oil and gas specialist David Nelson, Akin Gump’s senior counsel for Gin-ther, assigned a law clerk the task of preparing a memo on the issue. The “Bray Memo,” named for its first-year law student author, Michelle Bray, concluded Ginther had no such liability. The correctness of the memo was the subject of some debate both before and during trial. In any event, Nelson showed Ginther the Bray Memo and counseled him according to its conclusion. Later, another Akin Gump attorney, Greg Jordan, wrote a memo disputing the conclusions of the Bray Memo. Ginther never saw Jordan’s memo and was never informed there was any debate over Bray’s conclusions.

In April 1989, CPX met with Ginther and the working interest owners to resolve the dispute. Ginther offered to settle for $65,000 (CPX’s sunk costs). CPX countered with a demand for $4 million, claiming Ginther was guilty of fraud for failure to disclose production of the 4050’ zone by proper filings with the Railroad Commission. No settlement agreement was reached. Shortly thereafter, CPX filed suit against Ginther and the other working interest owners, demanding $25 mil *390 lion in actual damages and $8.3 million in attorney’s fees.

Conoco 4 and all the working interest owners except Ginther settled their portions of the lawsuit prior to trial in October 1992 for approximately $2 million cash, plus their working interests in the Sarco Creek Field. Ginther went to trial represented by attorney Jack McConn (hired by NationsBank 5 ) and appellee. Following six days of trial, Ginther settled with CPX for $1.5 million cash, plus Ginther’s interest in the Sarco Creek Field.

Two groups of former working interest owners filed separate suits in Harris County against Ginther/Estate for contribution and indemnity resulting from their losses in the CPX litigation. 6 This exposure to further liability prompted NationsBank to file the underlying lawsuit against Akin Gump.

Fundamentally, NationsBank claimed that, had Akin Gump rendered proper legal advice to Ginther and his successors-in-interest, Ginther would have appreciated the magnitude of the risks created by his failure to properly file with the Railroad Commission and settled with CPX much earlier in the litigation process when settlement would have been far less expensive to Ginther’s interests and those of the working interest owners.

The Summary Judgment

In points of error 1,1-A through 1-D, and 1-H, NationsBank complains the trial court erred in granting Akin Gump’s motion for partial summary judgment on NationsBank’s DTPA causes of action because there was no conclusive evidence negating each element of the causes of action asserted. Before addressing the merits of these points of error, however, we must first resolve what appears to be an issue of first impression.

By points of error 1-E, 1-F, and 1-G, NationsBank claims the trial court erred in holding it was not a “consumer” under the DTPA. Akin Gump alleged in its motion for summary judgment that because Nations-Bank has assets greater than $25 million, it could not qualify as a consumer, and thus the asserted DTPA causes of action must fail. NationsBank asserted it brought the DTPA claims in its representative capacity on behalf of the Ginther Trust and the Ginther Estate, and thus, the amount of its assets are irrelevant in determining consumer status.

We must therefore determine whose assets a trial court considers in ascertaining consumer status.

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979 S.W.2d 385, 1998 Tex. App. LEXIS 6301, 1998 WL 743666, Counsel Stack Legal Research, https://law.counselstack.com/opinion/nationsbank-of-texas-na-v-akin-gump-strauss-hauer-feld-llp-texapp-1998.