Opinion issued November 2, 2017
In The
Court of Appeals For The
First District of Texas ———————————— NO. 01-16-00292-CV ——————————— WILLIAM J. GONYEA, JR., Appellant V. ORIAN SCOTT, Appellee
On Appeal from the 152nd District Court Harris County, Texas Trial Court Case No. 2014-51066
OPINION
This case tests the bounds of the rule established in Peeler v. Hughes &
Luce, 909 S.W.2d 494 (Tex. 1995) (plurality opinion), which limits the ability of
plaintiffs who have been convicted of criminal offenses to obtain legal malpractice damages against their criminal-defense attorneys based on claims of poor
performance of legal representation.
Orion Scott—who had been convicted of several criminal offenses—hired
attorney William Gonyea to file an application for writ of habeas corpus on his
behalf. Under the terms of the contract for legal representation, Scott paid Gonyea
a $25,000 fee and then, due to confusion over bank authorizations, paid him
$15,000 more in overpayments.1 Scott instructed Gonyea to return the $15,000
overpayment; he did not.
When three years had passed and Gonyea had neither filed the writ nor
returned the overpayment, Scott sued him, asserting two causes of action. His first
cause of action was for breach of contract. He sought $25,000 in restitution
damages, which was the full amount of the fee paid under the terms of the contract.
His second cause of action was for theft and sought $15,000 in damages, which
was the amount of overpayment that Gonyea never returned.
After answering the lawsuit, Gonyea moved for summary judgment, arguing
that both of Scott’s claims fail as a matter of law. The trial court ruled against him
and, after a bench trial, entered judgment in Scott’s favor on both claims for the
damages sought, plus reasonable and necessary attorney’s fees. Gonyea appeals,
asserting that both claims fail as a matter of law.
1 Originally, the overpayment was $25,000, but $10,000 of that was applied to additional representation, leaving the amount of overpayment at $15,000. 2 We affirm the judgment as to the breach-of-contract claim, holding that the
public policies underlying the Peeler doctrine do not support extending the
doctrine to restitution of monies paid for post-conviction legal services that were
never performed. We reverse and render judgment in Gonyea’s favor on the theft
claim, holding that the claim accrued more than two years before it was asserted
and that Scott failed to meet his burden to prove that the discovery rule applied.
Background
In January 2010, Orion Scott hired a criminal-defense attorney, William
Gonyea, Jr., to conduct a legal investigation and file a petition for writ of habeas
corpus on Scott’s behalf to challenge six convictions that the Texas Court of
Criminal Appeals had affirmed three years earlier. Gonyea and Scott entered into a
written contract for legal representation, and Scott paid Gonyea $25,000 in legal
fees for the work detailed in the contract. Gonyea deposited the $25,000 into his
operating account.
Due to confusion over whether the bank would authorize a payment from an
inmate, Scott’s sister—who held Scott’s power of attorney—caused a second
payment of $25,000 to be paid to Gonyea for the habeas representation. Gonyea
wrote to Scott in March 2010 informing him that he had received two $25,000
payments and stating, “I will wait for you to advise me on what to do with the
[second] $25,000 check.”
3 Later that month, Gonyea agreed to assist Scott on another legal matter. He
wrote to Scott that he agreed to “conduct an investigation to determine the status of
[Scott’s] parole and assist [Scott] in obtaining parole” and that his fee for the
additional representation would be $10,000. In the same letter, Gonyea stated that
he still had Scott’s sister’s check for $25,000 (the overpayment for the habeas
representation) and offered to deposit the check into his “client trust account” and
then return the remaining $15,000 to Scott, either by sending Scott a check or
depositing the money directly into Scott’s bank account.
After several communications, in late-August 2010, Scott instructed Gonyea
to “deduct” the $10,000 parole-work fee from the overpayment and deposit the
remainder into Scott’s bank account. Scott provided Gonyea with his bank
information, including his account number.
Nevertheless, within days of receiving Scott’s letter, Gonyea deposited the
full $25,000 he received from Scott’s sister into his operating account—not his
trust account.2 He did not deposit any money into Scott’s account or send him a
refund check for the overpayment.
2 None of the $50,000 was deposited into a client trust account. All of it was deposited into Gonyea’s operating account.
4 Three years later, Gonyea still had not prepared the habeas writ or returned
the $15,000 overpayment.3 Scott replaced Gonyea with new counsel and filed suit
against him, asserting claims for breach of contract to recover the $25,000 fee
payment and for theft to recover the $15,000 overpayment.
Gonyea moved for summary judgment on both of Scott’s claims, arguing
that the Peeler doctrine prohibited Scott’s breach-of-contract claim and that the
theft statute of limitations barred Scott’s theft claim. See Peeler, 909 S.W.2d 494;
see also TEX. CIV. PRAC. & REM. CODE § 134.001–.005 (theft statute); id.
§ 16.003(a) (two-year statute of limitations for theft claims). The trial court denied
the motion, and both claims proceeded to bench trial.
During opening statement, Gonyea again urged that the Peeler doctrine
applied to Scott’s breach-of-contract claim, which he described as Scott
“essentially” contending that he was “not happy with the way the lawyer
performed under the contract.” According to Gonyea, Scott was “claiming that he
was dissatisfied with the time that it took and the manner in which [Gonyea]
conducted the Habeas investigation and the time that it took for [Gonyea] to file a
Habeas Petition.” And, further, that Scott simply was “dissatisfied with the amount
of correspondence that he received during the course of the representation.”
3 Gonyea testified that his failure to return the $15,000 was the result of an “accounting error,” which he discovered after Scott sued him. Even after discovering the error, Gonyea failed to return the money.
5 During his opening statement, Scott disputed Gonyea’s characterization of
his claim. His complaint was not that Gonyea performed poorly, but that he failed
to perform at all. The contract specifically stated that Gonyea would conduct an
investigation, file an application for writ of habeas corpus, and represent Scott in
court. Scott argued that Gonyea did none of these things.
Gonyea testified that he was Scott’s counsel for three years before being
replaced with new counsel. He agreed that Scott retained him to investigate an
application for a habeas writ and then prepare and file the application. Gonyea
testified that he met with Scott once, read the legal opinion affirming Scott’s
conviction, and performed initial legal research. When questioned about his legal
research, Gonyea conceded he had no contemporaneous time records showing that
he researched the case. But he did reference legal-research memoranda that were in
his client file when he forwarded it to Scott’s new counsel. When questioned about
those memos, Gonyea testified that he could not specifically recall much about
them.
On further cross-examination, Gonyea admitted that, during the three years
he represented Scott, he never interviewed Scott’s trial counsel, never interviewed
Scott’s appellate counsel, never attempted to contact the police officers who
investigated or testified about the underlying offenses, never interviewed any
witness who testified at the criminal prosecution, never prepared any drafts of an
6 application for habeas relief, and never even identified what issues should be
pursued. He also never filed an application for the habeas writ, never requested an
evidentiary hearing, and never represented Scott in court. Gonyea also
acknowledged that he had promised to send Scott a comprehensive status update
over a year after he was hired, but he never did that either.
After the one-day trial, Scott moved to reopen the evidence. The trial court
granted the motion and received additional evidence regarding the legal-research
memoranda discussed previously. The four research memos were admitted into
evidence. All of the memos had headers stating that they were prepared by a law
clerk for Gonyea for the Scott file. One of the law-clerk authors testified that he
did not prepare any legal-research memos for Gonyea or for the Scott file. He
recognized the memos in evidence and testified that he had prepared them for
another law firm.
Gonyea testified that, for a time, he had shared office space with the other
law firm. He conceded that the four legal memoranda were addressed to him and
referenced the Scott client file only because he had accessed the other law firm’s
computer server, replaced the other law firm attorney’s name and client name in
the header of the memos with his name and Scott’s client name, printed the
memos, and added them to the Scott client file before forwarding that file to
7 Scott’s new attorney.4 Gonyea denied that he did this to create the appearance that
legal work had been performed on Scott’s behalf during his representation when it
had not.
The lawyer with whom Gonyea shared office space also testified. He
testified that he did not give Gonyea permission to use the memos as his own. Nor
did he give Gonyea permission to present his firm’s legal work as Gonyea’s own:
I did not give you permission to go into my server and pull documents off of other cases, whether to use for your own purposes or to pad a file to make it look like you did work you didn’t do to justify a fee you didn’t earn. I didn’t give you that permission, you didn’t ask. And if you had access to those documents and took them without my permission, shame on you.
The trial court entered findings of fact and conclusions of law, including that
Scott paid Gonyea $25,000 in legal fees under a contract for legal representation;
Scott hired Gonyea to investigate and file a writ of habeas corpus on Scott’s
behalf; Gonyea “did not conduct the investigation,” “did not file a writ of habeas
corpus,” and “did not perform the services promised in the written contract”;
Scott’s family inadvertently paid Gonyea $25,000 more for that same work; Scott
and Gonyea agreed that $10,000 of the $25,000 double-payment would be applied
4 Gonyea agreed that Scott’s new counsel requested the client file in December 2012 but that he did not send it to her with these memos inside until March 2013. Gonyea further agreed that it was not until January 2015—after he had been sued for breach of contract and theft—that he forwarded to Scott’s new counsel a few pages of handwritten notes that discussed Scott’s case and listed a few case citations. 8 toward additional representation; and Gonyea did not return the remaining $15,000
of the overpayment. The trial court found that Gonyea breached the contract for
legal representation and violated the Texas Theft Liability Act, and the court
awarded Scott the full $25,000 fee for legal representation, $15,000 in theft
damages, and $76,800 in reasonable and necessary attorney’s fees.
Gonyea appealed.
Standards of Review
Gonyea sought summary judgment on his affirmative defenses of the Peeler
doctrine and statute of limitations. The applicability of the Peeler doctrine to
negate causation presents a question of law that we review de novo. See In re
Humphreys, 880 S.W.2d 402, 404 (Tex. 1994) (stating that “questions of law are
always subject to de novo review”).
A defendant moving for summary judgment on the affirmative defense of
limitations has the burden to conclusively establish that defense. KPMG Peat
Marwick v. Harrison Cty. Housing Fin. Corp., 988 S.W.2d 746, 748 (Tex. 1999).
The defendant must conclusively prove when the cause of action accrued and
negate the discovery rule, if it applies and has been pleaded or otherwise raised, by
proving as a matter of law that there is no genuine issue of material fact about
when the plaintiff discovered, or in the exercise of reasonable diligence, should
have discovered the nature of its injury. Id.
9 Findings of fact in a bench trial have the same force and dignity as a jury’s
verdict. Leax v. Leax, 305 S.W.3d 22, 28 (Tex. App.—Houston [1st Dist.] 2009,
pet. denied). “When the appellate record includes the reporter’s record, the trial
court’s factual findings, whether express or implied, are not conclusive and may be
challenged for legal and factual sufficiency of the evidence supporting them.”
Hertz Equip. Rental Corp. v. Barousse, 365 S.W.3d 46, 53 (Tex. App.—Houston
[1st Dist.] 2011, pet. denied). We review the trial court’s findings of fact for legal
and factual sufficiency using the same standards we apply in reviewing the
evidentiary sufficiency of the jury findings. Vannerson v. Vannerson, 857 S.W.2d
659, 667 (Tex. App.—Houston [1st Dist.] 1993, writ denied). We review a trial
court’s conclusions of law de novo. BMC Software Belgium, N.V. v. Marchand, 83
S.W.3d 789, 794 (Tex. 2002).
When the trial court acts as factfinder, it determines the credibility of the
witnesses and the weight to be given their testimony. HTS Servs., Inc. v. Hallwood
Realty Ptrs., L.P., 190 S.W.3d 108, 111 (Tex. App.—Houston [1st Dist.] 2005, no
pet.).
Peeler Doctrine
In his first issue, Gonyea argues that Scott’s breach-of-contract claim fails as
a matter of law under the Peeler doctrine.
10 A. Peeler and its progeny
Public policy requires that a person convicted of a criminal offense not be
permitted to profit from his criminal conduct by obtaining a money damages award
against his criminal-defense lawyer for legal malpractice that allegedly contributed
to the client’s incarceration. Peeler, 909 S.W.2d at 498. This is achieved through a
rule of law—the Peeler doctrine—that provides that the sole proximate and
producing cause of the indictment and conviction on a criminal defendant is, as a
matter of law, the individual’s own criminal conduct, unless the criminal defendant
has been exonerated on direct appeal, through post-conviction relief, or otherwise.5
Id. at 497–98; see Douglas v. Delp, 987 S.W.2d 879, 884 n.1 (Tex. 1999) (citing
Peeler for statement of law that “plaintiffs convicted of a crime may maintain legal
malpractice claims in connection with that conviction ‘only if they have been
exonerated on direct appeal, through post-conviction relief, or otherwise.’”).
5 The plaintiff in Peeler sued her attorney for failing to inform her, before she pleaded guilty to a crime, that the prosecutors had offered her full transactional immunity. Peeler v. Hughes & Luce, 909 S.W.2d 494, 496 (Tex. 1995). She asserted several causes of action but, on appeal, the issues were narrowed to two: legal malpractice and DTPA violations. Her attorney moved for summary judgment, arguing that Peeler’s own criminal conduct was the sole proximate or producing cause of her damages. Id. The trial court granted the motion, the intermediate appellate court affirmed, and the Texas Supreme Court again affirmed. Id. at 500. The Court explicitly stated that it resolved the issue based on public-policy considerations. Id. at 495, 497, 498, 500. Its ruling that her criminal conduct was the sole cause of her injury as a matter of law prevented Peeler, who had not been exonerated, from establishing causation on her negligence and DTPA actions against her former attorney. Id. at 498. 11 There are four public policies furthered by this rule, according to the Court
in Peeler:
prohibiting a convict from profiting financially from illegal conduct;
preventing a convict from obtaining a monetary recovery that would impermissibly shift responsibility for the crime away from the convict to a third party;
preventing the diminishment of consequences of criminal conduct for the convict; and
preventing the pursuit of legal remedies that would undermine the criminal justice system.
Id. at 497–98. The Texas Supreme Court balanced these public policies against the
interest in “holding defense attorneys responsible for their professional negligence”
and held that, on balance, public policy supported the rule announced. Id. at 500.
Since Peeler, the doctrine has been applied in numerous legal malpractice
suits. See, e.g., McLendon v. Detoto, No. 14-06-00658-CV, 2007 WL 1892312, at
*1 (Tex. App.—Houston [14th Dist.] July 3, 2007, pet. denied) (mem. op.)
(applying Peeler to claims for negligent performance of legal services); Golden v.
McNeal, 78 S.W.3d 488, 494 (Tex. App.—Houston [14th Dist.] 2002, pet. denied)
(same); Larson v. Hunt, No. 01-00-01196-CV, 2002 WL 992410, at *3 (Tex.
App.—Houston [1st Dist.] May 16, 2002, no pet.) (not designated for publication)
(same); Johnson v. Odom, 949 S.W.2d 392, 394 (Tex. App.—Houston [14th Dist.]
1997, pet. denied) (same).
12 The Texas Supreme Court has not expanded the rule beyond the malpractice
context. See Futch v. Baker Botts, LLP, 435 S.W.3d 383, 391 (Tex. App.—
Houston [14th Dist.] 2014, no pet.) (noting lack of subsequent analysis of doctrine
by Texas Supreme Court in nearly 20 years since Peeler decision). But
intermediate appellate courts have.
The Fourteenth Court of Appeals is the intermediate appellate court that has
written most extensively on Peeler and has noted its own history of “expansive
interpretation” of the doctrine. See Futch, 435 S.W.3d at 391. It has expanded
Peeler to claims of poor-quality legal representation cast as causes of action other
than legal malpractice.6 Id. (discussing expansion); see, e.g., id. at 392 (applying
Peeler to claim for fee forfeiture based on inadequate representation); Wooley v.
Schaffer, 447 S.W.3d 71, 74, 76–78 (Tex. App.—Houston [14th Dist.] 2014, pet.
denied) (applying Peeler to claims of legal malpractice, breach of contract, and
DTPA violations based on attorney filing application for writ of habeas corpus that
included arguments different than those client believed to be most meritorious);
Meullion v. Gladden, No. 14-10-01143-CV, 2011 WL 5926676, at *4–5 (Tex.
6 The Fourteenth Court of Appeals has also extended Peeler to apply to assertions of poor-quality legal representation at the pre- and post-trial stages of representation. See McLendon v. Detoto, No. 14-06-00658-CV, 2007 WL 1892312, at *1–2 (Tex. App.–Houston [14th Dist.] July 3, 2007, pet. denied) (mem. op.) (pre-trial representation); Meullion v. Gladden, No. 14-10-01143-CV, 2011 WL 5926676, at *3–4 (Tex. App.–Houston [14th Dist.] Nov. 29, 2011, no pet.) (mem. op.) (post-conviction representation). 13 App.—Houston [14th Dist.] 2011, no pet.) (mem. op.) (applying Peeler to claims
of fraud, breach of fiduciary duty, breach of contract, and DTPA violations based
on “the quality of legal counsel” after concluding that all were, in effect, claims of
professional negligence concerning the application for writ of habeas corpus filed
by attorney on client’s behalf);
This Court has expanded Peeler similarly, applying it to claims of poor-
quality legal representation cast as other causes of action. See Stallworth v. Ayers,
510 S.W.3d 187, 191 (Tex. App.—Houston [1st Dist.] 2016, no pet.) (holding that
client complaining about quality of representation is in essence asserting legal
malpractice claim to which Peeler applies, even if claims are cast as other causes
of action); Van Polen v. Wisch, 23 S.W.3d 510, 515 (Tex. App.—Houston [1st
Dist.] 2000, pet. denied) (applying Peeler to breach-of-contract claim based on
attorney’s representation through portion of proceeding but not all of it).
Thus, Peeler and its progeny prohibit a criminal defendant who is asserting
claims based on poor-quality legal representation from establishing the causation
necessary to recover money damages from his attorney. Peeler, 909 S.W.2d at
497–98; Futch, 435 S.W.3d at 391.
B. The parties’ arguments on whether Peeler applies
Gonyea argues that the Peeler doctrine applies here because Scott’s breach-
of-contract claim is “based upon his assertion that [Gonyea] failed to adequately
14 represent him and discharge his legal duties.” In other words, he argues that the
breach-of-contract claim is merely a recast legal malpractice claim that Peeler
prohibits.
Scott responds that his complaint is not that the legal services he received
fell below a subjective or objective standard of care or contributed to his
conviction, but that, instead, he received no representation. He argues that Gonyea
did nothing in furtherance of his habeas writ. And he argues that public policy
cannot support foreclosing a client’s suit against his attorney who entered into a
contract for legal representation, accepted a fee to perform specific legal work, and
then did nothing that advanced the legal representation.
C. Sufficient evidence supports finding that Gonyea “did not perform the services promised in the written contract”
Gonyea argues that this case does not concern an attorney who performed no
work for his client. According to Gonyea, after being paid a flat fee, he engaged in
the initial case-familiarity steps common to habeas representation: he interviewed
his client once, read the underlying opinion affirming conviction and briefs, and
performed some initial legal research. But there was no corroborating evidence that
Gonyea interviewed Scott or read any case materials. And Scott presented
evidence calling into question the veracity of Gonyea’s testimony that he had done
any of this work. Gonyea ultimately admitted that the legal research memos he
forwarded to replacement counsel as part of his client file had been altered—by
15 him—in a manner that suggested they were prepared at his instruction and for
Scott’s benefit when they were already-written research memos prepared for
another law firm representing another client.
In a bench trial, the trial court, as factfinder, is the sole judge of the
credibility of the witnesses; therefore, it was within the trial court’s sole province
to evaluate conflicting evidence and make credibility determinations. See HTS
Servs., Inc., 190 S.W.3d at 111; Olanipekun v. Omokaro, No. 01-13-00888-CV,
2014 WL 5410058, *4 (Tex. App.—Houston [1st Dist.] Oct. 23, 2014, no pet.).
The only evidence suggesting that Gonyea performed any legal work in
furtherance of his representation of Scott—during his representation of Scott—was
Gonyea’s testimony. The revelation that Gonyea altered legal research memos in
his client file in a way that would buttress his assertion that he added value to
Scott’s case was directly relevant to Gonyea’s credibility as a witness. His inability
to provide time records to support his contention that he performed legal research
during the representation7 or otherwise developed the case further affected his
credibility.
7 Gonyea’s handwritten notes were not produced until January 2015, after Gonyea had been sued for breach of contract and theft. The only evidence that the notes were prepared during the representation was Gonyea’s testimony. 16 The evidence is sufficient to support the trial court’s finding that Gonyea
“did not conduct the investigation,” “did not file a writ of habeas corpus,” and “did
not perform the services promised in the written contract.”
D. Peeler does not extend to these facts
The trial court found that Gonyea did not perform any services specified in
the contract for legal representation. Instead, there was affirmative evidence
indicating that Gonyea falsified memos in a manner to suggest legal analysis had
been performed for Scott’s benefit when it had not. The trial court’s findings and
trial evidence distinguish this case from earlier cases in which the Peeler doctrine
was applied to disallow damages claims by convicts against their defense counsel.
Gonyea argues that the Dallas Court of Appeals applied Peeler even when
an attorney has done nothing, citing Shepherd v. Mitchell, No. 05-14-01235-CV,
2016 WL 2753914 (Tex. App.—Dallas May 10, 2016, no pet.) (mem. op.), but that
case did not involve claims for restitution. There, an attorney was hired to prepare
an application for writ of habeas corpus. He neither prepared the application nor
returned the fee. But the client received a refund of the fee as a result of a
restitution order from the State Bar of Texas. Id. at *1. He also had sued the
attorney for legal malpractice. Id. The attorney moved for summary judgment on
the Peeler doctrine, and the trial court granted the motion. The appellate court
affirmed, holding that the doctrine applied to the legal malpractice claim. Id. at *3.
17 Shepherd is distinguishable. First, the client’s suit was for professional
negligence, not breach of contract. Second, the client was not suing for contract
damages or fee recovery: he had already received restitution. Id. Here, Scott is
suing for breach of contract and seeking recovery of the legal fees he paid Gonyea
for services never performed.
None of the public policies identified in Peeler support extending the
doctrine to foreclose a paying client’s ability to sue for recovery of restitution
damages when he contracts with a criminal-defense attorney to perform specific
work and the attorney fails to provide that representation. Such a suit would not
result in financial profit to the client. It would not shift responsibility for the crime
away from the client or diminish the consequences of the client’s acts. Nor would
it undermine our criminal-justice system. If anything, requiring some evidence of
active representation to invoke Peeler defensively recognizes that the
constitutional right to assistance of counsel is foundational to our criminal-justice
system. See U.S. CONST. amend. VI (right to counsel); cf. Strickland v.
Washington, 466 U.S. 668, 685 (1984) (“The Sixth Amendment . . . envisions
counsel’s playing a role that is critical to the ability of the adversarial system to
produce just results. An accused is entitled to be assisted by an attorney . . . who
plays the role necessary to ensure that the trial is fair.”).
18 Permitting a criminal-defense attorney to charge a criminal defendant a legal
fee to provide contractually detailed legal representation, do none of those acts of
representation or any other underlying act that involves applying legal analysis to
the client’s case, yet keep the fee does not further the public policies identified in
Peeler. To hold otherwise might create a disincentive to diligent representation of
criminal defendants. We conclude that the Peeler doctrine does not extend to these
facts.
We overrule Gonyea’s first issue.
Statute of Limitations on Theft Claim
In his second issue, Gonyea contends that the statute of limitations ran on
Scott’s theft claim and that Scott could not invoke the discovery rule because he
presented no evidence to support applying it.
We first review the timeline of events:
February 5, 2010 Scott notes in a letter that his sister will send payment on his behalf
March 8, 2010 Gonyea deposits Scott’s check into his operating account
March 10–12, 2010 Scott states in letter to Gonyea that he confirmed that his bank did send fee from his checking account, even though no one thought the bank would follow his instructions. Gonyea states in letter that he received the fee payment from Scott and a second fee payment from Scott’s sister and asks Scott what to do with second check from sister
19 March 26, 2010 Gonyea writes to Scott offering to deposit $25,000 check from sister into “client trust account” and send from that account a check for $15,000 to Scott or deposit that amount directly into Scott’s account
August 24, 2010 Gonyea asks Scott again whether to deposit the $25,000 check from sister into trust account and refund difference Late-August 2010 Scott replies to Gonyea (on Gonyea’s August 24 letter) with instructions for Gonyea to deduct his $10,000 parole-related fee from the sister’s double- payment and return the $15,000 balance
August 30, 2010 Gonyea deposits the $25,000 check from the sister into his operating account — two and one-half years pass— January 16, 2013 Scott terminates the representation
August 28, 2014 Scott’s new counsel sends Gonyea a letter requesting an accounting; Gonyea does not respond
September 8, 2014 Scott files suit against Gonyea October 21, 2014 Scott adds theft claim to petition
The Texas Theft Liability Act permits a civil claim for damages against a
party who commits theft, which is “unlawfully appropriating property or
unlawfully obtaining services” in violation of various named sections of Chapter
31 of the Penal Code. See TEX. CIV. PRAC. & REM. CODE § 134.001–.005; Cluck v.
Mecom, 401 S.W.3d 110, 117 (Tex. App.—Houston [14th Dist.] 2011, pet.
denied). A two-year statute of limitations applies. See TEX. CIV. PRAC. & REM.
CODE § 16.003(a). The defendant has the burden to plead, prove, and secure
20 findings to sustain the limitations affirmative defense. See Woods v. William M.
Mercer, Inc., 769 S.W.2d 515, 517 (Tex. 1988); see also TEX. R. CIV. P. 94 (statute
of limitations is affirmative defense). In response, a plaintiff may raise the
discovery rule and, if it applies to the claim asserted, may seek to have his failure
to file suit within the normal limitations period excused. Woods, 769 S.W.2d at
517. A plaintiff seeking to benefit from the discovery rule bears the burden to
plead, prove, and secure favorable findings to establish the excuse. See id. at 518.
Gonyea pleaded statute of limitations on Scott’s theft claim. Scott pleaded
the discovery rule.
The trial evidence included Gonyea’s testimony that he realized, upon
receipt, that the second check for $25,000 was an erroneous overpayment. He
reached an agreement with Scott to perform additional work for a $10,000 flat fee
and was aware that the remaining $15,000 belonged to Scott and should be
returned. He testified that his intent was to deposit the entire $25,000 of the second
check into a trust account and, from that account, return $15,000 to Scott. As he
explained,
The reason why I—at that time—thought it would be proper to deposit into my trust account is because the additional $15,000 did not belong to me. And, so, I didn’t think it would be proper to deposit the entire thing into my operating account where there were funds that didn’t belong to me. So, I would have deposited the entire $25,000 into my trust account, deducted my fee and then sent it him back.
21 The information Gonyea conveyed to Scott at the time was that the full
amount of the check would be deposited into Gonyea’s trust account and $15,000
would be forwarded to him from the trust account. Gonyea wrote to Scott, “I still
have the check for $25,000, if you would like to hire me [for the additional
representation at $10,000], I can deposit it in my client trust account and send a
check to you, or your bank for deposit into your account, for $15,000.” Scott
responded with a letter in late-August 2010 with instructions for Gonyea to deduct
his fee and deposit the balance into Scott’s bank account. There is no evidence that
Scott ever followed up with Gonyea regarding his August 2010 request for Gonyea
to return the money.
Rule 1.14 of the Disciplinary Rules of Professional Conduct require an
attorney to “hold funds and other property belonging in whole or in part to clients
or third persons that are in a lawyer’s possession in connection with a
representation separate from the lawyer's own property.” TEX. DISCIPLINARY R.
PROF. CONDUCT 1.14(a), reprinted in TEX. GOV’T CODE, tit. 2, subtit. G, app. A–1.
The lawyer must maintain such funds “in a separate account, designated as a ‘trust’
or ‘escrow’ account . . . .” Id. Despite Gonyea’s representation in the letter that the
$25,000 would be deposited into his trust account, Gonyea deposited the money
into his operating account on August 30, 2010.
22 The August 30, 2010 date of deposit marked the date that the theft claim
accrued. See Agar Corp. v. Electro Circuits Int’l, LLC, No. 14-15-00134-CV, 2016
WL 7436811, at *5 (Tex. App.—Houston [14th Dist.] Dec. 22, 2016, no pet. h.)
(“A claim generally accrues when a wrongful act causes injury.”). Scott did not
assert his theft cause of action within two years of that date. Accordingly, the claim
expired unless the discovery rule applies. See Computer Assocs. Int’l, Inc. v. Altai,
Inc., 918 S.W.2d 453, 455 (Tex. 1996) (“The discovery rule exception defers
accrual of a cause of action until the plaintiff knew or, exercising reasonable
diligence, should have known of the facts giving rise to the cause of action.”).
The discovery rule provides a “very limited exception to statutes of
limitations.” Id. Generally, the rule has been applied in cases in which “the nature
of the injury incurred is inherently undiscoverable” and “the evidence of injury is
objectively verifiable.” Id. at 456. This limits application to circumstances in
which “it is difficult for the injured party to learn of the negligent act or omission.”
Id. (quoting Willis v. Maverick, 760 S.W.2d 642, 645 (Tex. 1988)).
Scott argues that the discovery rule applies. According to Scott, Gonyea’s
letter stated that the double-payment would be placed into a trust account, and
Scott could not have known that Gonyea actually placed the money in an
unauthorized operating account. Scott argues that the discovery rule should prevent
the claim from expiring until Scott discovered that the funds were wrongly
23 deposited into Gonyea’s operating account instead of a trust account, where they
should have been deposited for his benefit under the rules governing attorneys. See
TEX. DISCIPLINARY R. PROF. CONDUCT 1.14(a); cf. Cluck v. Comm’n for Lawyer
Discipline, 214 S.W.3d 736, 739–40 (Tex. App.—Austin 2007, no pet.) (holding
that attorney violated Rule 1.14 by depositing legal fee in operating account
instead of trust account because payment was prepayment for services to be
rendered, not retainer to secure lawyer’s availability and compensate for lost
opportunities and, thus, had to be held in separate trust account).
Even assuming the discovery rule applies, Scott did not meet his burden to
establish that he did not or could not have discovered that Gonyea failed to return
his money. See Computer Assocs. Int’l, 918 S.W.2d at 455 (“The discovery rule
exception defers accrual . . . until the plaintiff knew or, exercising reasonable
diligence, should have known of the facts giving rise to the cause of action.”).
First, Scott instructed Gonyea to return $15,000 to him more than two years before
he filed suit for theft of the money. Second, Scott did not testify at trial; therefore,
he offered no evidence concerning what he knew about the handling of the fee and
when he knew it. Third, the evidence establishes that Scott was able to
communicate effectively from jail with his bank to have the initial $25,000 fee
paid to Gonyea. Scott thus could communicate with his bank to stay informed of
the status of his account to determine whether the refund was received. Without
24 any testimony from Scott explaining why he was unable to determine that the
money had not been returned as he instructed, we conclude that Scott failed to
meet his burden to avail himself of the discovery rule. See Woods, 769 S.W.2d at
518 (“The party seeking to benefit from the discovery rule must also bear the
burden of proving and securing favorable findings thereon . . . [because that party]
will generally have greater access to the facts necessary to establish that it falls
within the rule.”).
We sustain Gonyea’s second issue.
Conclusion
We affirm the portion of the judgment awarding Scott damages on the
breach-of-contract claim, reverse the portion of the judgment finding Gonyea liable
for theft damages, render judgment in Gonyea’s favor on the theft claim, and
affirm the remainder of the judgment.
Harvey Brown Justice
Panel consists of Justices Jennings, Bland, and Brown.