Valls v. Johanson & Fairless, L.L.P.

314 S.W.3d 624, 2010 Tex. App. LEXIS 4175, 2010 WL 2195446
CourtCourt of Appeals of Texas
DecidedJune 3, 2010
Docket14-08-00449-CV
StatusPublished
Cited by22 cases

This text of 314 S.W.3d 624 (Valls v. Johanson & Fairless, 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
Valls v. Johanson & Fairless, L.L.P., 314 S.W.3d 624, 2010 Tex. App. LEXIS 4175, 2010 WL 2195446 (Tex. Ct. App. 2010).

Opinion

OPINION

KENT C. SULLIVAN, Justice.

Appellant, Michael Vails, agreed to settle a business dispute with his former employer and business partner — appellees Prime Directional Systems, L.L.C. (“Prime”) and Ernie Parker, respectively — by accepting a contingent financial interest in their ongoing lawsuit against an unrelated entity. When that lawsuit settled, however, Vails was left out of the distribution of settlement proceeds. He sued Prime and Parker for breach of the settlement agreement and also sued his opponents’ attorneys, who had drafted the agreement, for professional negligence, breach of fiduciary duty, conspiracy to defraud, and negligent misrepresentation.

The trial court granted summary judgment on all of appellant’s claims, prompting this appeal. We hold Prime and Parker did not demonstrate their entitlement to judgment as a matter of law; therefore, we reverse the summary judgment as to them and remand Valls’s breach-of-contract claims for further proceedings. However, because Vails has not raised a valid cause of action permitting him to sue opposing counsel, we affirm that portion of the summary judgment.

I.

Background

Appellant Vails was a founding member of Prime Directional Systems, L.L.C., and also served as its president until his employment was terminated for reasons that *628 are unclear. He sought benefits under a severance package that allegedly was to pay him three years’ salary, and also asked Prime to repay a promissory note allegedly owed to him.

In response, Prime proposed a different agreement to settle his claims. At that time, Prime and Parker were embroiled in other litigation (hereafter, the “Tensor lawsuit”) against an unrelated entity, Tensor/Allied Signal, from whom they were seeking damages for fraud and misrepresentation. To compromise his employment claims, Vails accepted a contingent interest offered by Prime and Parker in any recovery obtained in their ongoing suit against Tensor.

The parties’ agreement (hereafter, the “Settlement Agreement”) consists of a three-page letter written by appellee Mike Johanson — one of the attorneys representing Prime and Parker — and addressed to Valls’s attorney, Steve Bryant. The letter recites a somewhat complicated arrangement for the division of any money recovered in the Tensor lawsuit. In summary, Vails was to receive the first $500,000— and an additional percentage of any amount in excess of $500,000 — of any “net recovery.” However, the parties dispute the manner in which “net recovery” should be calculated. Their disagreement stems from the fact that the Settlement Agreement proposes one formula for this calculation, but a contingent fee agreement (hereafter, the “CFA”) between Prime, Parker, and their attorneys recites a different method for determining “net recovery.” The difference between these two formulas is not inconsequential.

Specifically, two paragraphs at the end of the Settlement Agreement describe the calculation of “net recovery,” using hypothetical numbers representing possible verdicts and lawsuit expenses. In those sections, “net recovery” is said to be calculated by deducting lawsuit expenses first and attorney’s fees second. The remainder would then be split by Vails, Prime, and Parker according to the earlier terms of the Settlement Agreement. However, the CFA reverses the order of those deductions. Under that contract, “net recovery” was to be determined by withdrawing attorney’s fees first and lawsuit expenses second. 1

Under either document, attorney’s fees were listed at forty percent. However, the order in which attorney’s fees and lawsuit expenses were to be deducted is of some significance. Under the Settlement Agreement, the attorneys would effectively share the burden of forty percent of lawsuit expenses because those costs were to be paid before attorney’s fees; under the CFA, however, the attorneys would not participate in paying any expenses. In this case, because expenses ultimately exceeded $500,000, the seemingly minor difference in wording between these two contracts actually resulted in a dramatically different outcome for Vails.

The Tensor lawsuit settled for $1,600,000 and, according to appellees, lawsuit expenses totaled $571,037.44. Given these figures, Valls’s recovery, if calculated under the Settlement Agreement, would be $511,737.75. 2 However, he actually received no money because the lawsuit proceeds were instead distributed according *629 to the formula contained in the CFA. 3 After Vails questioned the manner in which the settlement proceeds were disbursed, the appellees — -Prime, Parker, and their attorneys 4 — filed a declaratory judgment action in district court. Vails counterclaimed against Prime and Parker for breach of contract, and also sued the Lawyers for negligence, conspiracy to defraud, breach of fiduciary duty, and negligent misrepresentation.

The trial court granted summary judgment on Valls’s counterclaims, which were then severed into a separate lawsuit. After that judgment became final, Vails timely filed this appeal. Raising two issues, Vails challenges summary judgment on his contract claims against Prime and Parker and his tort claims against the Lawyers.

II.

Standard of Review

We review the trial court’s summary-judgment order under well-established standards. See Seidner v. Citibank (S.D.) N.A., 201 S.W.3d 332, 334 (Tex.App.-Houston [14th Dist.] 2006, pet. denied). To prevail by summary judgment, a movant must prove its right 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). If the evidence demonstrates the movant’s entitlement to summary judgment, the burden then passes to the non-movant to raise a genuine issue of material fact to defeat the motion. See Va. Power Energy Mktg., Inc. v. Apache Corp., 297 S.W.3d 397, 402 (Tex.App.Houston [14th Dist.] 2009, pet. denied).

In this case, Vails did not respond to the appellees’ motion for summary judgment; as a result, he may challenge only the legal sufficiency of the summary-judgment grounds expressly raised in the motion: 5

The trial court may not grant a summary judgment by default for lack of an *630 answer or response to the motion by the non-movant when the movant’s summary judgment proof is legally insufficient. The movant still must establish his entitlement to a summary judgment on the issues expressly presented to the trial court by conclusively proving all essential elements of his cause of action or defense as a matter of law.

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Cite This Page — Counsel Stack

Bluebook (online)
314 S.W.3d 624, 2010 Tex. App. LEXIS 4175, 2010 WL 2195446, Counsel Stack Legal Research, https://law.counselstack.com/opinion/valls-v-johanson-fairless-llp-texapp-2010.