Willow Tree Consulting Group, LLC, Liquidating Trustee of the TH Liquidating Trust v. Perkins Coie LLP and Perkins Coie LLC

CourtCourt of Appeals of Texas
DecidedFebruary 13, 2024
Docket05-23-00264-CV
StatusPublished

This text of Willow Tree Consulting Group, LLC, Liquidating Trustee of the TH Liquidating Trust v. Perkins Coie LLP and Perkins Coie LLC (Willow Tree Consulting Group, LLC, Liquidating Trustee of the TH Liquidating Trust v. Perkins Coie LLP and Perkins Coie LLC) 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.

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Willow Tree Consulting Group, LLC, Liquidating Trustee of the TH Liquidating Trust v. Perkins Coie LLP and Perkins Coie LLC, (Tex. Ct. App. 2024).

Opinion

Affirmed and Opinion Filed February 13, 2024

In the Court of Appeals Fifth District of Texas at Dallas No. 05-23-00264-CV

WILLOW TREE CONSULTING GROUP, LLC, LIQUIDATING TRUSTEE OF THE TH LIQUIDATING TRUST, Appellant V. PERKINS COIE LLP AND PERKINS COIE LLC, Appellee

On Appeal from the 192nd Judicial District Court Dallas County, Texas Trial Court Cause No. DC-21-09847

MEMORANDUM OPINION Before Justices Carlyle, Goldstein, and Breedlove Opinion by Justice Carlyle Willow Tree Consulting Group, LLC sued Perkins Coie LLC and Perkins

Coie LLP for breach of fiduciary duty, legal malpractice, fraudulent transfers, and

participatory liability. In a single issue on appeal, Willow Tree argues the trial court

reversibly erred when it granted Perkins Coie’s motions for summary judgment and

dismissed all its claims. We affirm in this memorandum opinion. See TEX. R. APP.

P. 47.4. Background

A former Perkins Coie partner, Michael Osterhoff, supplied legal counsel to

seven affiliated healthcare companies (collectively, “True Health”) from March

2015 through March 2017. During this time, True Health recapitalized via a series

of credit agreements, became insolvent, filed for relief under Chapter 11 of the

Bankruptcy Code, and became subject to a bankruptcy plan. Willow Tree, as trustee,

filed suit against Perkins Coie on July 28, 2021, alleging that its involvement in True

Health’s recapitalization tortiously caused over a hundred million dollars in losses.

Perkins Coie filed five traditional motions for summary judgment attacking Willow

Tree’s (1) standing to pursue select claims, (2) breach of fiduciary duty claim, (3)

legal malpractice claim, (4) participatory liability claims, and (5) fraudulent transfer

claims. The trial court granted all five motions and entered final judgment against

Willow Tree.

Standard of review and applicable law

We review a traditional summary judgment de novo. Trial v. Dragon, 593

S.W.3d 313, 316 (Tex. 2019). A traditional motion for summary judgment requires

the moving party to show that no genuine issue of material fact exists and it is

entitled to judgment as a matter of law. TEX. R. CIV. P. 166a(c); Lujan v. Navistar,

Inc., 555 S.W.3d 79, 84 (Tex. 2018). On appellate review, we take evidence

favorable to the nonmovant as true, we indulge every reasonable inference, and we

resolve every doubt in the nonmovant’s favor. Ortiz v. State Farm Lloyds, 589

–2– S.W.3d 127, 131 (Tex. 2019). If the movant satisfies its burden, the burden shifts to

the nonmovant to raise a genuine issue of material fact precluding summary

judgment. Lujan, 555 S.W.3d at 84. Where, as here, the trial court’s orders granting

summary judgment do not specify the grounds relied upon, we affirm if any of the

summary judgment grounds presented to the trial court are meritorious. Provident

Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 216 (Tex. 2003). A defendant

who conclusively negates at least one of the essential elements of a cause of action

is entitled to summary judgment as a matter of law. Frost Nat’l Bank v. Fernandez,

315 S.W.3d 494, 508 (Tex. 2010).

Analysis

(1) Standing

Perkins Coie’s first motion for summary judgment argued Willow Tree could

not prevail on its allegedly assigned negligent misrepresentation and fraudulent

transfer claims because it lacked standing to bring those claims at the time it filed

suit. “Standing is a component of subject matter jurisdiction.” Douglas v. Delp, 987

S.W.2d 879, 882 (Tex. 1999). “Without subject matter jurisdiction, courts may not

address the merits of a case.” Id. “Standing must exist at the time a plaintiff files

suit; if the plaintiff lacks standing at the time of filing, the case must be dismissed,

even if the plaintiff later acquires an interest sufficient to support standing.” Martin

v. Clinical Pathology Labs, Inc., 343 S.W.3d 885, 888 (Tex. App.—Dallas, 2011,

pet. denied). To prevail on its motion for summary judgment, Perkins Coie had the

–3– burden to prove that there was no genuine issue as to any material fact concerning

Willow Tree’s standing at the time it filed suit and that it was entitled to judgment

as a matter of law. See Park Place Hosp. v. Est. of Milo, 909 S.W.2d 508, 510 (Tex.

1995).

The record contains an assignment agreement from True Health’s creditors to

Willow Tree dated January 25, 2021; this was the only operative assignment of

claims at the time Willow Tree filed suit.1 This original assignment explicitly

prohibits Willow Tree from pursuing causes of action “against any Professional that

is an Exculpated Party or a Released Party” and incorporates definitions from the

bankruptcy plan. The plan defines (1) “Exculpated Parties” to include Perkins Coie

LLP and (2) “Professional” to include “any professional Person or Entity employed

in this Case by Court order pursuant to Bankruptcy Code sections 327, 328, 363, or

1103 or otherwise.” Although Willow Tree correctly argues that the bankruptcy plan

limits exculpation to post-petition conduct taken in connection with the plan, that

provision does not alter (1) the fact that the assignment in place at the time Willow

Tree filed suit unambiguously prohibited it from commencing or prosecuting any

cause of action against a professional that is an exculpated party or (2) our

1 While Willow Tree subsequently secured an amended assignment agreement from True Health’s creditors, it is irrelevant for the purposes of analyzing standing at the time it filed suit. See Martin, 343 S.W.3d at 888. –4– conclusion that Perkins Coie is a professional that is an exculpated party under the

plan.

Based on the record before us, Perkins Coie satisfied its burden to prove there

was no genuine issue of material fact concerning Willow Tree’s standing to sue

Perkins Coie for negligent misrepresentation and fraudulent transfer claims that had

not been assigned to Willow Tree at the time it filed suit. The burden then shifted to

Willow Tree to raise a genuine issue of material fact precluding summary judgment.

Lujan, 555 S.W.3d at 84. In its response, Willow Tree argued (1) it received a valid

assignment that was effective as of the effective date of the bankruptcy plan,

December 6, 2019, (2) the plan did not have a deadline for assignment of claims, (3)

Perkins Coie lacked standing to challenge the terms of the claim assignments, and

(4) it had authority under the plan to decide the terms of claim assignments. The trial

court’s order granting summary judgment does not specify the grounds on which it

was granted; therefore, we affirm if any of the summary judgment grounds presented

to the trial court are meritorious. Provident Life & Accident Ins. Co., 128 S.W.3d at

216.

Both the bankruptcy court’s order and the bankruptcy plan state that the

creditors’ claims “shall be assigned.” We conclude this was a directive to the

creditors as opposed to a judicial mandate assigning their claims. Cf. In re Mirant

Corp., No. 03-46590DML11, 2007 WL 1258932, at *11 (Bankr. N.D. Tex. Apr. 27,

2007) (claims “shall be assigned” and liquidation may proceed “upon such

–5– assignment”); In re Lack’s Stores, Inc., No. 10-60149, 2010 WL 8033320, at *3

(Bankr. S.D.

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