Richard Alan Haase v. Abraham, Watkins, Nichols, Sorrels, Agosto and Friend LLP

404 S.W.3d 75, 2013 WL 1908881, 2013 Tex. App. LEXIS 5717
Court of Appeals of Texas·Decided May 9, 2013·No. 14-11-01116-CV·Published·Cited by 33 cases

Opinions

OPINION

ADELE HEDGES, Chief Justice.

Richard Alan Haase pursued three claims of professional negligence against Abraham, Watkins, Nichols, Sorrels, Agos-to and Friend, LLP (“Abraham Watkins”), a law firm that had previously represented him. Abraham Watkins moved for summary judgment on the basis of limitations. The trial court granted the summary judgment, and Haase now appeals. We affirm in part, and reverse and remand in part.

BACKGROUND

This case arises from a federal patent litigation. In the underlying case, Haase and his company, Clear Value, Inc., asserted an action against Pearl River Polymers, Inc. and four other entities (collectively “Pearl River”) for alleged patent infringement and misappropriation of trade secrets. According to Haase, Pearl River manufactured chemicals for use in a water purification process, and certain of these products had a viscosity similar to a formula Haase had developed for the same purpose. Haase retained Gordon G. Wag-gett, a solo practitioner, as his patent attorney. On Waggett’s recommendation, Haase assembled a litigation team headed by the Houston-based law firm of Abraham Watkins. Abraham Watkins filed suit on behalf of Haase in January 2005, and remained as counsel of record until August 28, 2006, when it withdrew from the case due to irreconcilable differences.

More than a year before trial, Haase obtained samples of Pearl River’s products from a third party, and privately arranged for these products to be tested. The results showed that the samples’ viscosity [79] was far below that of Haase’s patented formula. The testing was conducted at a time when Abraham Watkins was still representing Haase; however, the parties dispute whether Abraham Watkins was ever apprised of the testing. What is undisputed is that Haase never produced the results to Pearl River during discovery. He shared the results instead with Waggett and his retained expert, in violation of the federal court’s order to provide such evidence to opposing counsel.

In March 2007, Haase’s case proceeded to trial under new counsel. Early during the proceedings, the district court was informed of Haase’s independent testing and his failure to provide the results of that testing to Pearl River. Haase told the court that although he had personally seen the test results, he was not involved with the tests themselves and he did not know when the tests were conducted. Haase stated his belief that such information was protected by the attorney-client privilege. The court subsequently heard from Haase’s testifying expert, who revealed that he too had seen the test results, thereby eliminating his claim of privilege. Haase then stated that he had not shared the test results with his litigation team because, in his opinion, the results were “irrelevant” to the case. The district court ordered Haase to locate the test results and produce them to opposing counsel. The court also informed the parties that it would consider “any motion for sanctions” the following morning.

Pearl River moved for sanctions the next day. During the hearing, Pearl River indicated that it had sought, by interrogatories and requests for production, any results of product testing in Haase’s possession. No test results were ever produced or listed on a privilege log. The district court was shown evidence of emails between Haase, Waggett, and Haase’s retained expert discussing the tests, which contradicted Haase’s previous representation that he had not shared the results with his litigation team. The court stated that it was confronted with “an extremely troubling matter” because the test results had been withheld for over a year and a half. The court determined that only the “ultimate sanction” was appropriate: it therefore struck Haase’s pleadings and entered judgment in Pearl River’s favor. The court also imposed monetary sanctions against Haase and Waggett in an amount exceeding $2.7 million. On June 28, 2007, the court issued its formal sanctions decision. See ClearValue, Inc. v. Pearl River Polymers, Inc., 242 F.R.D. 362 (E.D.Tex.2007).

On Haase’s appeal of the sanctions, the federal appellate court affirmed in part and reversed in part. The court agreed that Haase’s failure to disclose the results was performed willfully and in bad faith, and that this failure was supported by the record. However, the court also held that under governing precedent, Haase’s conduct did not warrant death-penalty sanctions. On March 24, 2009, the appellate court reversed the order striking Haase’s pleadings, reduced the monetary sanctions to $121,107.38, and remanded for an adjudication of Haase’s claims. See ClearValue, Inc. v. Pearl River Polymers, Inc., 560 F.3d 1291 (Fed.Cir.2009).

On remand, a jury found in Haase’s favor on his claims of misappropriation of trade secrets and indirect patent infringement. The damages for misappropriation were ultimately struck by the trial court. On November 2, 2010, the court entered judgment on the infringement claim, awarding damages to Haase in the amount of $2,172,617, together with prejudgment and postjudgment interest. The court then reduced the damages by an amount equaling the previously affirmed sanctions [80] against Haase. See ClearValue, Inc. v. Pearl River Polymers, Inc., 735 F.Supp.2d 560 (E.D.Tex.2010).

Both sides appealed the district court’s judgment. On February 17, 2012, the federal appellate court ruled in Pearl River’s favor, concluding that Pearl River had not misappropriated a trade secret and that Haase’s patent was invalid. See ClearValue, Inc. v. Pearl River Polymers, Inc., 668 F.3d 1340 (Fed.Cir.2012).

On March 23, 2011, during the pendency of his second federal appeal, Haase filed a pro se action in state court against Abraham Watkins, asserting three claims of professional negligence, or “legal malpractice,” as it is sometimes denominated. Haase alleged first that Abraham Watkins was responsible for coordinating the product testing and labeling the results as “attorney-client work product.” Haase contended that but for this labeling, he would not have been sanctioned by the district court. Haase’s second claim alleged that Abraham Watkins was negligent in failing to join additional tortfeasors in the federal complaint. In his third claim, Haase alleged that Abraham Watkins was negligent in failing to pursue a claim for fraud against one of the named Pearl River defendants. Haase contended that these latter two failures proximately caused his limited recovery. He also alleged two separate causes of action for negligent misrepresentation and breach of contract.

Abraham Watkins generally denied the allegations and filed a motion for summary judgment on traditional grounds. In its motion, Abraham Watkins claimed that it was completely unaware of the product testing and that there was no evidence to support a finding that it had knowledge of the testing. Abraham Watkins also argued that Haase’s claims for professional negligence were barred by the two-year statute of limitations, and that his claims for negligent misrepresentation and breach of contract were precluded by the rule against fracturing a claim for professional negligence into separate causes of action. On September 26, 2011, the trial court granted summary judgment in favor of Abraham Watkins. Haase now appeals from that judgment.

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Richard Alan Haase v. Abraham, Watkins, Nichols, Sorrels, Agosto and Friend LLP, 404 S.W.3d 75, 2013 WL 1908881, 2013 Tex. App. LEXIS 5717 (Tex. Ct. App. 2013).

404 S.W.3d 75 (Richard Alan Haase v. Abraham, Watkins, Nichols, Sorrels, Agosto and Friend LLP) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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