Affirmed; Opinion Filed February 4, 2014
S In The Court of Appeals Fifth District of Texas at Dallas No. 05-11-01615-CV
STUART THOMAS, Appellant V. CARNAHAN THOMAS, LLP, FREDERICK HOELKE, ROY ROMO & WILLIAM PETERS, Appellees
On Appeal from the 68th Judicial District Court Dallas County, Texas Trial Court Cause No. DC-09-11220-C
MEMORANDUM OPINION Before Justices Moseley, Bridges, and Lang-Miers Opinion by Justice Bridges Appellant Stuart Thomas (“Thomas”) appeals from two summary judgments entered in
favor of appellees Carnahan Thomas, L.L.P., Frederick Hoelke, Roy Romo and William Peters
(collectively referred to as the “Attorneys”). In two issues, Thomas contends the trial court erred
in granting the Attorneys’ motions for summary judgment concerning: (1) his negligence claim
and (2) his claim for breach of fiduciary duty. We affirm.
Background
Employment Agreements
Thomas distributed and sold mushrooms produced by the Pia brothers and their
companies out of Pennsylvania (“the Pia Entities”). Thomas entered into a series of agreements with the Pia Entities that formed and governed four separate distribution entities in Dallas,
Houston, New Orleans, and Atlanta.
Thomas entered into distributor agreements and employment agreements with each of the
four distribution entities in 1998. In addition to his ownership in the distribution entities,
Thomas was the managing administrative member and a salaried employee. The employment
agreements provided that, from the date they were signed until two years after Thomas’s
employment with the entities ceased, Thomas would not participate in any other business
engaged in “the business of growing, packaging, distributing, marketing or selling fresh produce
products of any kind, including without limitation, mushrooms” within the specified city or the
100 miles surrounding it. The employment agreements were governed by Pennsylvania law.
Litigation Between Thomas & The Pia Entities
The settlement of the first lawsuit1 between Thomas and the Pia Entities resulted in the
2003 modification agreement, which amended the original 1998 agreements. With respect to the
employment agreements, the parties agreed the Pia companies would be third-party beneficiaries
of the non-compete agreements and that the modification agreement would be governed by
Texas law. The parties did not amend the choice-of-law provision in the employment
agreements.
The second litigation,2 filed by the Pia Entities in the 95th district court in Dallas, ended
with a settlement agreement that required an independent valuation of the distribution entities.
As part of the settlement process, Thomas’s employment with the four distribution entities was
1 In the first lawsuit, filed in the County Court at Law No. 4 of Dallas County, the Pia Entities sued Thomas alleging: (1) the distribution entities breached the distributor agreements and (2) two of the distribution entities breached the partnership agreements and two breached the LLC agreements. The Pia Entities also sought an injunction with regard to the importing, purchasing, packaging, marketing, distributing, delivering, selling, supplying, and advertising of products and to prevent certain business dealings with third parties. 2 In the second lawsuit, the Pia Entities again alleged: (1) the distribution entities breached the distributor agreements and (2) two of the distribution entities breached the partnership agreements and two breached the LLC agreements. The Pia Entities further alleged Thomas and the distribution entities breached: (1) the modification agreement, (2) their duty of loyalty, (3) their duty of care, (4) the settlement agreement, and (5) the employment contract. The Pia Entities also sought an accounting and requested injunctive relief to enforce the covenant not to compete.
–2– terminated on December 12, 2004. At that time, the non-compete agreements went into effect
and would terminate by their own terms on December 12, 2006. Thomas disagreed with the
results of the valuation and filed another lawsuit in March 2005 against the Pia Entities in the
134th district court that was transferred into and consolidated with the 95th district court case.
Thomas’s lawsuit challenged the validity of the settlement agreement on multiple grounds and
also sought a declaratory judgment that the four non-compete agreements were unenforceable.
The lawsuit failed to name the distribution entities as parties to the lawsuit.
Thomas Hires The Attorneys
Thomas hired Hoelke and entered into a representation agreement with regard to his
“claim for the dissolving and or termination of the four separate non-compete agreements.”
Thomas also approved a fee-splitting arrangement when Hoelke brought in associate counsel,
Peters of Carnahan Thomas, L.L.P. (“Carnahan”) and Romo,3 to assist with the case.
On June 24, 2005, the Attorneys filed a motion for partial summary judgment on behalf
of Thomas, seeking a declaration that the four non-compete agreements were unenforceable
under the laws of Texas, Louisiana, and Georgia. The Pia Entities then filed suit in a
Pennsylvania court, seeking a declaration that the non-compete agreements were valid and
enforceable and also seeking an injunction against Thomas to prevent him from violating the
non-compete agreements. In the 95th district court, the Pia Entities defeated summary judgment
by arguing that the distribution entities were necessary parties to any declaration regarding the
employment agreements. On that same day, the parties agreed to a scheduling order stating that
no new parties could be added except on motion for leave showing good cause. The Attorneys
moved for leave to add the distribution entities, but the Pia Entities argued the Attorneys had
3 The record reflects Marc Levy was also hired as associate counsel, holding joint responsibility with Romo. Levy is not a party to the litigation at issue here.
–3– failed to sue the distribution entities, giving the Pennsylvania court dominant jurisdiction. The
trial court then rejected the Attorneys’ motion for leave to add the distribution entities to the
case. The 95th district court case remained pending.
Because they believed the non-competes to be governed by Texas law and unenforceable
as a matter of Texas law, in the summer of 2005, the Attorneys advised Thomas to start up his
business and to compete. Thomas began operating a competing business called Thomas
Mushroom & Specialty Produce in Dallas in March 2006.
On December 12, 2006, the non-compete agreements expired by their own terms.
Thomas had not been enjoined from competition up until the point of their natural expiration.
Several months later, Thomas agreed to a comprehensive settlement agreement (“CSA”) of all
his disputes with the Pia Entities. Although the non-compete agreements had already expired,
the CSA included two new non-compete agreements governing the Houston and Atlanta
markets. Thomas’s new covenants not to compete were described as “a material consideration
for their obligations and promises contained in this [CSA] and valuable to the Pia Parties.” In
exchange for that consideration, the Pia Entities released their claims against Thomas. In
addition to the non-compete litigation, the CSA resolved other litigation between Thomas and
the Pia Entities that was still pending in various trial, appellate, and arbitration forums in at least
three states and two federal courts.
Litigation Between Thomas & The Attorneys
Thomas filed this lawsuit on August 28, 2009, alleging that, through its former employee
Peters, Carnahan had committed malpractice in handling his non-compete case. Specifically,
Thomas alleged Peters, Hoelke, and Romo committed legal malpractice when they failed to “add
the produce distribution companies to the [95th district court case], failed to file the non-compete
–4– claims in arbitration as required by the employment agreements, and failed to move to compel
arbitration in the Pennsylvania case.”
Carnahan filed a general denial and, on January 28, 2010, filed a motion for leave to
designate responsible third parties, which included Hoelke and Romo. On May 3, 2010, Thomas
filed his first amended petition, adding Hoelke and Romo as defendants.
On November 11, 2010, Carnahan and Peters filed their first amended traditional and no-
evidence motion for summary judgment. Four days later, Romo and Hoelke filed a virtually
identical traditional and no-evidence motion for summary judgment. Shortly thereafter, Thomas
filed a third amended petition, adding a cause of action for breach of fiduciary duty. The trial
court denied the Attorneys’ motions for summary judgment with respect to the statute of
limitations grounds, but granted the motions on all other grounds.
On July 1, 2011, Carnahan and Peters filed a traditional motion for summary judgment,
arguing the breach of fiduciary duty claim was barred by the statute of limitations. On July 25,
2011, Hoelke and Romo also filed a traditional motion for summary judgment that the breach of
fiduciary claim was barred by the statute of limitations. Thomas filed his response and, on
August 15, 2011, the trial court granted the Attorneys’ motions, disposing of all of Thomas’s
claims against the Attorneys.
Analysis
Standard of Review
The standards for reviewing a traditional summary judgment are well established. The
party moving for summary judgment has the burden of showing no genuine issue of material fact
exists and that it is entitled to judgment as a matter of law. See TEX. R. CIV. P. 166a(c); Nixon v.
Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548 (Tex. 1985). In deciding whether a disputed
material fact issue exists, precluding summary judgment, evidence favorable to the non-movant
–5– will be taken as true. Nixon, 690 S.W.2d at 548–49. Further, every reasonable inference must be
indulged in favor of the non-movant and any doubts resolved in its favor. Id. A motion for
summary judgment must expressly present the grounds upon which it is made and must stand or
fall on those grounds alone. McConnell v. Southside Indep. Sch. Dist., 858 S.W.2d 337, 341
(Tex. 1993); Espalin v. Children's Med. Ctr. of Dallas, 27 S.W.3d 675, 688 (Tex. App.—Dallas
2000, no pet.).
We review a no-evidence summary judgment under the same legal sufficiency standard
used to review a directed verdict. See TEX. R. CIV. P. 166a(i); Gen. Mills Rests., Inc. v. Tex.
Wings, Inc., 12 S.W.3d 827, 832–33 (Tex. App.—Dallas 2000, no pet.). Thus, we must
determine whether the nonmovant produced more than a scintilla of probative evidence to raise a
fact issue on the material questions presented. Gen. Mills, 12 S.W.3d at 833. When analyzing
no-evidence summary judgments, we consider the evidence in the light most favorable to the
nonmovant. Id.
When the motion for summary judgment presents both no-evidence and traditional
grounds, appellate courts usually review the no-evidence grounds first. Hall v. Douglas, 380
S.W.3d 860, 867 (Tex. App.—Dallas 2012, no pet.).
Negligence
Thomas first complains the trial court erred in granting the Attorneys’ traditional and no-
evidence motions for summary judgment as to his claim for negligence (legal malpractice). As
we have already noted, the trial court denied those motions “only with respect to the statute-of-
limitations grounds,” but granted the motions on “all other grounds.” The other grounds raised
by the Attorneys in their traditional motion were:
1. Thomas’s claims fail because he cannot prove that the Attorneys’ alleged conduct, even if true, was a proximate cause of Thomas’s alleged damages;
2. Thomas’s claims fail because he cannot prove a “suit within a suit;” –6– 3. Thomas’s claims fail because the Atlanta distribution entity was not subject to personal jurisdiction in Texas and, therefore, could not have been joined in the 95th district court lawsuit irrespective of any alleged failure of the Attorneys to join the distribution entities as parties;
4. Thomas cannot prove lost profits with that degree of certainty which the law demands; and
5. Thomas lacks standing and/or capacity to recover for lost profits.
In their no-evidence motion, the Attorneys argued Thomas had no evidence of lost profits.
When multiple grounds are raised in the summary judgment motion and the trial court
does not specify the ground or grounds relied upon for its ruling, we will affirm the summary
judgment if any of the grounds advanced in the motion are meritorious. McAfee, Inc. v. Agilysys,
Inc., 316 S.W.3d 820, 825 (Tex. App.—Dallas 2010, no pet.) (citing Carr v. Brasher, 776
S.W.2d 567, 569 (Tex.1989)). Because it is dispositive, we first turn to the Attorneys’ no-
evidence ground—lost profits. See id.; see also Hall, 380 S.W.3d at 867.
To recover pursuant to his malpractice claim, Thomas must demonstrate that (1) the
Attorneys owed a duty to him; (2) the Attorneys breached that duty; (3) the breach proximately
caused Thomas’s injuries; and (4) damages occurred. Belt v. Oppenheimer, Blend, Harrison &
Tate, Inc., 192 S.W.3d 780, 783 (Tex. 2006). Here, Thomas’s claimed damages are lost profits.
Lost profits are damages for the loss of net income to a business and reflect income from lost
business activity, less expenses that would have been attributable to that activity. Bowen v.
Robinson, 227 S.W.3d 86, 96 (Tex. App.—Houston [1st Dist.] 2006, pet. denied) (citing Miga v.
Jensen, 96 S.W.3d 207, 213 (Tex. 2002)). In other words, lost profits must be based on net
profits, not gross revenues. Parkway Dental Assoc., P.A. v. Ho & Huang Prop., L.P., 391
S.W.3d 596, 609 (Tex. App.—Houston [14th Dist.] 2012, no pet.); see also Texaco, Inc. v. Phan,
137 S.W.3d 763, 771 (Tex. App.—Houston [1st Dist.] 2004, no pet.) (citing Holt Atherton
Indus., Inc. v. Heine, 835 S.W.2d 80, 83 n.1 (Tex. 1992)). “Net profits” are the difference –7– between a business’s total receipts and all the expenses incurred in carrying on the business. Id.
(citing Turner v. PV Int’l Corp., 765 S.W.2d 455, 465 (Tex. App.—Dallas 1988, writ denied)).
Recovery for lost profits does not require that the loss be susceptible of exact calculation.
Holt Atherton, 835 S.W.2d at 84. However, the injured party must do more than show they
suffered some lost profits. Id.; Parkway Dental, 391 S.W.3d at 608. The amount of the loss
must be shown by competent evidence with reasonable certainty. Texas Instruments, Inc. v.
Teletron Energy Mgmt., Inc., 877 S.W.2d 276, 279 (Tex. 1994); White v. Southwestern Bell Tel.
Co., 651 S.W.2d 260, 262 (Tex. 1983); Total Clean, L.L.C. v Cox Smith Matthews, Inc., 330
S.W.3d 657, 663 (Tex. App.—San Antonio 2010, pet. denied). What constitutes reasonably
certain evidence of lost profits is a fact intensive determination. Holt Atherton, 835 S.W.2d at
84. But, once a party has chosen a particular method for measuring their lost profits, they must
provide a complete calculation. Id. at 85; Parkway Dental, 391 S.W.3d at 608. At a minimum,
opinions or estimates of lost profits must be based on objective facts, figures, or data from which
the amount of lost profits can be ascertained. Holt Atherton, 835 S.W.2d at 85; Total Clean, 330
S.W.3d at 663.
“Profits which are largely speculative, as from an activity dependent on uncertain or
changing market conditions, or on chancy business opportunities, or on promotion of untested
products or entry into unknown or unviable markets, or on the success of a new and unproven
enterprise, cannot be recovered.” Texas Instruments, 877 S.W.2d at 279; Total Clean, 330
S.W.3d at 663. Factors like these and others which make a business venture risky in prospect
preclude recovery of lost profits in retrospect. Id. When a review establishes the profits are not
reasonably certain, therefore, the injured party has failed to prove lost profits as a matter of law.
Parkway Dental, 391 S.W.3d at 608.
–8– As we have already noted, the Attorneys argued in their no-evidence motion that Thomas
had “no evidence of any lost profits.” In response to the motion and on appeal, Thomas argued
he is entitled to $2,364,622.20 in lost profits,4 claiming the losses resulted from his inability to
compete in the Houston and Atlanta markets for a period of 33 months (December 12, 2006 to
September 2009)5 after signing the new non-competes in the 2007 CSA. In response, the
Attorneys argued that his summary judgment evidence does not raise a fact issue on whether he
sustained lost profits because the original non-competes terminated by their own terms on
December 12, 2006. Our review of the record shows the CSA, which contained the new non-
competes as to Houston and Atlanta went into effect on August 27, 2007. Thus, by their terms,
the new non-competes did not prevent Thomas from competing in Houston and Atlanta from
December 12, 2006 to August 27, 2007 and should not be included in any lost profit calculations
as a matter of law.6
We next turn to Thomas’s use of his Dallas profits as an indicator of his lost profits in
Atlanta and Houston. According to his affidavit, Thomas averaged profits of $44,511.88 per
month in Dallas for the years 2007 and 2008. Yet, we note for the purposes of calculating his
alleged lost profits in Houston and Atlanta, Thomas adds his $200,000 salary for the Dallas
market back to the net, claiming it is not an expense, but part of his loss, since he is the one who
suffered the damages. However, Thomas did not provide any evidence due to his failure to
direct us to any tax returns or balance sheets, evidencing the salary as a loss. In addition, the
2009 Dallas net profits are less than half the net profits in 2008, yet Thomas excludes those from
4 Thomas fails to state the amount of lost profits sought in his brief before this Court, however, we have gleaned the amount sought from the record. Specifically, Thomas states in his second amended disclosures that the lost profits for Houston and Atlanta are $2,364,622.20. 5 Again, Thomas does not specify the time period for which he is seeking lost profits in his brief. However, Thomas’s affidavit, attached to his response to the Attorneys’ motions for summary judgment, states the 33 months begins on December 12, 2006 and ends at the beginning of September 2009. 6 In fact, the record reflects Thomas started competing in Dallas in March 2006 even though the original non-competes had not yet expired.
–9– the average calculation.7 Thus, his average is not based on objective data upon which lost profits
may be ascertained. Holt Atherton, 835 S.W.2d at 84.
After arriving at the averaged Dallas profits of $44,511.88 per month, Thomas then uses
the revenues from the Dallas, Houston and Atlanta operations for the years 2001-2004 to
calculate a ratio of profitability in comparison to his net profits in Dallas from 2007 to 2008.
However, as we have already stated, lost profits must be based on net profits, not gross revenues.
See Texaco, 137 S.W.3d at 771. Thomas’s use of past revenues as historical evidence in support
of his lost profits calculation is, therefore, improper. See id.; see also Turner v. PV Intern. Corp.,
765 S.W.2d 455, 465 (Tex. App–Dallas 1988, writ denied) (stating proper measure of damages
for lost profits is net profits).
Further, the Attorneys argue the summary judgment record shows Houston and Atlanta
lost money from September 30, 2003 to September 30, 2004.8 Thus, they argue there were no
net profits for at least twelve months prior to the time Thomas stopped working for the
distribution entities in December 2004. In his November 14, 2005 deposition, attached to the
Attorney’s motion for summary judgment, Thomas admitted the distribution entities were “close
to economic death” for the period spanning January 2000 through October 6, 2004. In a later
deposition,9 he again admitted the distribution entities were not profitable. He went on to testify
that profits varied in each location based on the market and whether the supply was efficient.
With respect to Atlanta, Thomas stated it “was always a stepchild because there [were] too many
7 In his response to Carnahan’s interrogatories, Thomas provides the following net profits for Dallas: 2007–$298,724.67 2008–$369,559.70 2009–$164,321.21 2010 through May–$103, 125.98 8 The profit and loss statement for the year ending September 30, 2004 shows Atlanta lost $38,130.91 and that Houston lost $47,205.42. 9 This deposition is dated April 4, 2007.
–10– suppliers” and “[s]o it was a challenging city.” He also admitted Atlanta made less than the rest
of the distribution entities and sometimes lost money. Finally, Thomas stated “profits were
always based upon the competition in the market.” Thus, Thomas failed to provide reasonably
certain evidence that he would then make money in those markets if he had opened his own
distribution companies in Atlanta and Houston.
Thomas also did not present summary judgment evidence that he could have actually
opened competing businesses in Atlanta and Houston in 2006. See, e.g., South Plains Switching,
Ltd. Co. v. BNSF Ry. Co., 255 S.W.3d 690, 705-06 (Tex. App.—Amarillo 2008, pet. denied)
(when there was no testimony about other necessary expenses of doing business such as
depreciation, payroll expenses, administrative expense, equipment expenses, and maintenance
expenses, the evidence fell short of showing lost profits with reasonable certainty); Paternostro
v. Pre-Paid Legal Services, Inc., No. 05-01-01208-CV, 2002 WL 987952 at *1-2 (Tex. App.—
Dallas 2002, May 15, 2002, pet. denied) (affirming grant of motion for summary judgment when
Paternostro failed to produce evidence he could expect to generate sales on same levels as Pre-
Paid associates). The Attorneys contend Thomas did not provide: (1) how much the expansion
and inventory would cost, (2) how he would finance the Houston and Atlanta operations, (3) a
basis for the profitability of the Atlanta and Houston markets, (4) total expenses for the Atlanta
and Houston markets, (5) evidence of a customer base in Houston and Atlanta, (6) cost of goods,
and (7) his ability to compete in the marketplace. Without this kind of evidence before us, we
conclude Thomas’s claim for lost profits is merely speculative, incapable of being calculated
with reasonable certainty. See Texas Instruments, 877 S.W.2d at 279; Total Clean, 330 S.W.3d
at 663.
In sum, we conclude Thomas has failed to provide reasonably certain evidence in
response to the Attorneys’ no-evidence motion that he could have operated in Houston or Atlanta
–11– and what the profits would have been in those markets if he had operated. Thomas’s alleged lost
profits are not susceptible of being established by the degree of certainty which the law requires.
See id. Therefore, under the applicable standard of review, the summary judgment evidence
filed by Thomas in response to the Attorneys’ no-evidence motion did not raise a genuine issue
of fact as to whether he suffered any lost profits. See Parkway Dental, 391 S.W.3d at 609.
Because Thomas failed to produce any competent evidence that profits were reasonably certain,
there is no evidence to support his claim for lost profits. See Total Clean, 330 S.W.3d at 663.
The trial court properly granted the Attorneys’ no-evidence motion for summary judgment. See
id. We overrule appellant’s first issue.
Breach of Fiduciary Duty
Thomas next complains the trial court erred in granting the Attorneys’ traditional
motions10 for summary judgment on statute of limitations grounds as to his claim for breach of
fiduciary duty. The Attorneys’ motions argued the filing of Thomas’s breach of fiduciary duty
claim did not relate back to prior petitions because, according to Thomas, the breach of fiduciary
duty claim was a new, distinct, and different transaction. In response to the motion and on
appeal, Thomas argued the trial court erred, because the Attorneys: (1) failed to show that the
breach of fiduciary duty did not relate back to the Bexar County District case;11 (2) did not
conclusively prove that the breach of fiduciary duty accrued in September 2006; and (3)
fraudulently concealed their breach of fiduciary duty.
When a party moves for summary judgment on limitations grounds, that party has the
burden of conclusively establishing that defense. Jennings v. Burgess, 917 S.W.2d 790, 793
(Tex. 1996). Generally, a cause of action accrues and limitations begin to run when facts exist
10 Carnahan Thomas and Peters filed their motion on July 1, 2011. Hoelke and Romo filed a substantially similar motion on July 25, 2011. 11 The Bexar County malpractice claim was later transferred to Dallas County.
–12– that authorize a claimant to seek judicial relief. Schneider Nat. Carriers, Inc. v. Bates, 147
S.W.3d 264, 279 (Tex. 2004).
Thomas filed his legal malpractice suit against the Attorneys on August 28, 2009.
Thomas first brought his claim for breach of fiduciary duty when he filed his third amended
petition on November 15, 2010. According to Thomas,12 his breach of fiduciary duty claim was
based on the facts that “the fee agreement provides for a contingent fee, that the [Attorneys] did
not satisfy the contingency. . . , that the [Attorneys] instructed Thomas to violate the [non-
competes] in order to demand unearned fees, and that Thomas paid them.”
The record reflects that, in the summer of 2005, the Attorneys advised Thomas to start a
new mushroom distribution business.13 In his October 28, 2010 deposition and his subsequent
affidavit, Thomas testified he started competing in Dallas in March 2006. The fees that Thomas
claims the Attorneys demanded and that he paid, but were unearned, were paid, starting
September 10, 2006. The Attorneys, therefore, argued the breach of fiduciary duty claim
accrued no later than September 10, 2006. See Rodriguez v. Cromwell, 319 S.W.3d 751, 755
(Tex. App.—El Paso 2009, pet. denied); S.V. v. R.V., 933 S.W.2d 1, 4 (Tex. 1996) (a cause of
action accrues when a wrongful act causes an injury, regardless of when the plaintiff learns of
that injury or whether all resulting damages have yet to occur). Accordingly, they argued
Thomas was required to file his claim for breach of fiduciary duty no later than September 10,
2010. See TEX. CIV. PRAC. & REM. CODE ANN. §16.004(a)(5) (setting a four-year statute of
limitations period for breach of fiduciary duty claims). Because Thomas did not file his breach
12 Before filing their motions for summary judgment on limitations grounds, the Attorneys filed their initial motion for summary judgment on the breach of fiduciary duty claim, asserting Thomas had adequate time for discovery and that he lacked evidence of one or more elements of his claim. In his response to the Attorneys’ initial motion for summary judgment on breach of fiduciary duty, Thomas set out the “key facts” regarding his breach of fiduciary duty claim. The trial court denied the Attorneys’ initial motion for summary judgment on the breach of fiduciary duty claim. 13 The affidavit of Peters indicates he was the one to advise Thomas to start a new business in June of 2005. Thomas also testified in his affidavit that Peters told him to start his business in Dallas even though it would violate the non-compete clause.
–13– of fiduciary duty claim until November 10, 2010, the Attorneys contended the claim was barred
by limitations as a matter of law.
Relation Back To The Bexar County Lawsuit
To refute the contention that the claim was barred by limitations, Thomas argued that the
Attorneys failed to show the breach of fiduciary duty did not relate back to the Bexar County
District case that he filed on September 15, 2009. In that lawsuit, Thomas filed counterclaims
against Hoelke, Peters, and Romo, alleging claims for legal malpractice and money had and
received. Thomas argues both claims are based on the facts payments were made to the
Attorneys, and the Attorneys had not earned the money because they had not satisfied the
contractual contingency. We disagree.
Under Texas law, the test for determining whether a claim asserted in an amended
pleading filed after limitations has run relates back to an earlier, timely-filed claim focuses on
whether the cause of action alleged in the amended petition is wholly based upon and grows out
of a new, distinct, or different transaction or occurrence. Meisler v. Republic of Tex. Sav. Ass’n,
758 S.W.2d 878, 881 (Tex. App.—Houston [14th Dist.] 1988, no writ); see also TEX. CIV. PRAC.
& REM. CODE ANN. §16.068 (a cause of action is not subject to a plea of limitations unless the
amendment or supplement is wholly based on a new, distinct, or different transaction or
occurrence). A transaction is defined as a set of facts that gives rise to the cause of action
premised thereon. Walker v. Presidium Inc., 296 S.W.3d 687, 695 (Tex. App.—EI Paso 2009,
no pet.).
In his response to the Attorneys’ initial motions for summary judgment regarding
Thomas’s claim for breach of fiduciary duty, Thomas made the following relevant statements:
• The breach of fiduciary duty claim is grounded on different facts than is the malpractice claim;
–14– • [The Attorneys’] argument fails because the crux of the malpractice claim is not the same as the crux of the breach of fiduciary duty claim, although they have overlapping facts;
• There is a fundamental difference between Thomas’s malpractice claim, as pleaded, and the breach of fiduciary duty claim; and
• The key facts regarding the breach of fiduciary duty claim are that the fee agreement provides for a contingent fee, that the [Attorneys] did not satisfy the contingency. . ., that the [Attorneys] instructed Thomas to violate the [non- competes] in order to demand unearned fees, and that Thomas paid them. It is simply not the same claim as the malpractice claim. The claims have some overlapping facts, but they are not the same claim and not based on the same key facts.
The breach of fiduciary duty claim, as Thomas describes it, is that the Attorneys
instructed him to violate non-compete agreements, which they had failed to overturn, for the
purpose of insisting that Thomas pay them even though they had not achieved the fee
contingency defeating the non-competes. However, these facts and this claim were not alleged
until the third amended petition on November 15, 2010. Rather, the first three petitions were
focused on the following: (1) the alleged failure of the Attorneys to add the produce distribution
companies to the Dallas district court lawsuit; (2) the alleged failure to file the non-compete
claims in arbitration as required by the employment agreements; and (3) the alleged failure to
move to compel arbitration in the Pennsylvania case. Thus, on the face of the pleadings, the
breach of the fiduciary duty claim is wholly based upon and grows out of a new, distinct, or
different transaction or occurrence than the legal malpractice claim. See Meisler, 758 S.W.2d at
881. That, in combination with Thomas’s admission that the breach of fiduciary duty claim is
grounded in a different set of facts than the legal malpractice claim, leads us to conclude Thomas
failed to raise a genuine issue of material fact as to whether the breach of fiduciary duty
allegations relate back to the filing of any of the prior petitions. See Sanders v. Construction
Equity, Inc., 42 S.W.3d 364, 369 (Tex. App.—Beaumont 2001, pet. denied) (holding defects
asserted in second amended pleading do not relate back to the timely-filed initial pleading). –15– Continuous Tort
Thomas next argues the trial court erred because the Attorneys did not conclusively prove
the breach of fiduciary duty claim accrued in September 2006. Specifically, Thomas contends
that because the Attorneys made continuing demands on him for payment, his cause of action did
not accrue until the tortious conduct ended. See Krohn v. Marcus Cable Assoc., L.P., 201
S.W.3d 876, 880 (Tex. App.—Waco 2006, pet. denied). Thomas argues that the Attorneys’
breach of fiduciary duty was a continuous tort that lasted until the date of his last payment on
August 13, 2007, which is less than four years prior to his filing the claim on November 15,
2010.
The Attorneys argue, however, that the continuing tort doctrine applies to delay the
accrual of a cause of action only when there is repeated injury proximately caused by repetitive
wrongful or tortious actions, but not when there is continuing injury arising from one wrongful
act. See id. (citing Rogers v. Ardella Veigel Inter Vivos Trust No. 2, 162 S.W.3d 281, 290 (Tex.
App.—Amarillo 2005, pet. denied). Here, the alleged wrongful advice to compete occurred in
the summer of 2005.
Further, the Attorneys contend that the continuing tort doctrine is rooted in a plaintiff’s
inability to know ongoing conduct is causing his injury; thus, the rationale for the doctrine no
longer applies if the claimant has discovered his injury and its cause and the statute commences
to run upon discovery. Markwardt v. Texas Indus., Inc., 325 S.W.3d 876, 894 (Tex. App.—
Houston [14th Dist.] 2010, no pet.). The Attorneys argue, and we agree, the summary judgment
record shows Thomas knew the terms of his engagement agreement by March 30, 2005, was
aware of the terms of the non-competes prior to then, knew he was paying fees by September
2006, and these facts placed Thomas on notice of his alleged injury by September 2006 at the
–16– latest. Thus, we conclude Thomas did not raise a genuine issue of material fact regarding
whether the statute of limitations was deferred by the continuing tort doctrine. See id.
Fraudulent Concealment
Finally, in an effort to raise a fact issue, Thomas argued the Attorneys fraudulently
concealed their breach of fiduciary duty and were estopped from relying on the statute of
limitations as an affirmative defense to his claim. In particular, Thomas contends the claim was
tolled because the Attorneys fraudulently concealed their breach by expressly telling him that the
fee agreement was not contingent as late as March 23, 2007.
The elements of fraudulent concealment are: (1) existence of the underlying tort, (2) the
defendant’s knowledge of the tort, (3) the defendant’s use of deception to conceal the tort, and
(4) the plaintiff’s reasonable reliance on the deception. Vial v. Gas Solutions, Ltd., 187 S.W.3d
220, 229 (Tex. App.—Texarkana 2006, no pet.). Where a defendant is under a duty to make
disclosure but fraudulently conceals the existence of a cause of action from the party to whom it
belongs, the defendant is estopped from relying on the defense of limitations until the party
learns of the right of action or should have learned thereof through the exercise of reasonable
diligence. Borderlon v. Peck, 661 S.W.2d 907, 908 (Tex. 1983). The estoppel effect of
fraudulent concealment ends when a party learns of facts, conditions, or circumstances which
would cause a reasonably prudent person to make inquiry, which, if pursued, would lead to
discovery of the concealed cause of action. Id. at 909.
Thomas has failed to raise a fact issue that the Attorneys concealed his cause of action.
Rather, the summary judgment evidence established that Thomas was aware of the terms of the
engagement letter on March 30, 2005, knew the terms of the non-compete agreements in 1998,
and was aware he was paying the Attorneys by September 10, 2006.
–17– In sum, Thomas did not raise a genuine issue of material fact that the breach of fiduciary
duty claim he first asserted on November 15, 2010: (1) relates back to the prior petitions filed in
this case, (2) was a continuous tort, or (3) was fraudulently concealed. Thus, we conclude the
trial court did not err when it ruled that Thomas’s claim for breach of fiduciary duty is barred by
the four year statute of limitations. See TEX. CIV. PRAC. & REM. CODE ANN. §16.004(a)(5). The
Attorneys were entitled to summary judgment as a matter of law on Thomas’s claim for breach
of fiduciary duty. See Nixon, 690 S.W.2d at 548. We overrule appellant’s second issue.
Conclusion
Having overruled Thomas’s two issues on appeal, we affirm the judgment of the trial
court.
111615F.P05
/David L. Bridges/ DAVID L. BRIDGES JUSTICE
–18– S Court of Appeals Fifth District of Texas at Dallas JUDGMENT
STUART THOMAS, Appellant On Appeal from the 68th Judicial District Court, Dallas County, Texas No. 05-11-01615-CV V. Trial Court Cause No. DC-09-11220-C. Opinion delivered by Justice Bridges. CARNAHAN THOMAS, LLP, Justices Moseley and Lang-Miers FREDERICK HOELKE, ROY ROMO, & participating. WILLIAM PETERS, Appellees
In accordance with this Court’s opinion of this date, the judgment of the trial court is AFFIRMED. It is ORDERED that appellees CARNAHAN THOMAS, LLP, FREDERICK HOELKE, ROY ROMO, & WILLIAM PETERS recover their costs of this appeal from appellant STUART THOMAS.
Judgment entered February 4, 2014
–19–