Youval Zive v. Jeffrey R. Sandberg and Palmer & Manuel, P.L.L.C. F/K/A Palmer & Manuel, L.L.P.

CourtTexas Supreme Court
DecidedApril 22, 2022
Docket20-0922
StatusPublished

This text of Youval Zive v. Jeffrey R. Sandberg and Palmer & Manuel, P.L.L.C. F/K/A Palmer & Manuel, L.L.P. (Youval Zive v. Jeffrey R. Sandberg and Palmer & Manuel, P.L.L.C. F/K/A Palmer & Manuel, L.L.P.) is published on Counsel Stack Legal Research, covering Texas Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Youval Zive v. Jeffrey R. Sandberg and Palmer & Manuel, P.L.L.C. F/K/A Palmer & Manuel, L.L.P., (Tex. 2022).

Opinion

Supreme Court of Texas ══════════ No. 20-0922 ══════════

Youval Zive, Petitioner,

v.

Jeffrey R. Sandberg and Palmer & Manuel, P.L.L.C. f/k/a Palmer & Manuel, L.L.P., Respondents

═══════════════════════════════════════ On Petition for Review from the Court of Appeals for the Fifth District of Texas ═══════════════════════════════════════

Argued January 13, 2022

JUSTICE BUSBY delivered the opinion of the Court.

In Hughes v. Mahaney & Higgins, we held that “when an attorney commits malpractice in the prosecution or defense of a claim that results in litigation, the statute of limitations on the malpractice claim against the attorney is tolled until all appeals on the underlying claim are exhausted.” 821 S.W.2d 154, 157 (Tex. 1991). Thus, if both the malpractice plaintiff and a co-party appeal the judgment on the underlying claim, tolling includes the time that the appeal is pending. In this case, we must determine whether Hughes continues to toll the limitations period when a co-party pursues the appeal in a higher court but the malpractice plaintiff does not participate in that stage of the proceedings. We conclude that the answer is no. In multi-party cases, Hughes tolling includes only “all appeals” in which the malpractice plaintiff participates. This conclusion is consistent not only with Hughes and its progeny, but also with our precedent regarding relief for nonappealing parties and our goal of drawing clear lines that make it easier to calculate when the statute of limitations will expire. Under this approach, an appeal in Texas courts is “exhausted” and tolling ends when the court rules on the last action taken by the malpractice plaintiff. Applying these principles here, we conclude that Hughes tolling ended for petitioner’s legal malpractice claim on April 1, 2016, when this Court denied his petition for review of the underlying case. Although petitioner’s co-party sought further appellate review by filing a petition for writ of certiorari in the Supreme Court of the United States, petitioner did not participate in that proceeding. Because petitioner did not file this suit until October 1, 2018, his claim for legal malpractice is barred by the two-year statute of limitations. We agree with the court of appeals that the malpractice defendant conclusively established the limitations bar, and we therefore affirm.

BACKGROUND

In 2007, City Bank loaned Grapevine Diamond, LP, over six million dollars. Grapevine Diamond used the funds to purchase ten acres of undeveloped real estate in Grapevine, Texas, from Jonathan

2 Aflatouni. Grapevine Diamond secured the loan by executing a promissory note and first lien deed of trust covering the land. Petitioner Youval Zive, a real estate developer and president of Grapevine Diamond’s general partner, also guaranteed the loan personally.1 After Grapevine Diamond defaulted and filed for bankruptcy, City Bank initiated a trustee’s foreclosure sale of the land. According to Zive, irregularities in the sale resulted in the property being sold for substantially less than the loan balance. To recover the deficiency, City Bank sued Zive and another guarantor, Nasser Shafipour. Shafipour filed third-party claims against Aflatouni and Grapevine Diamond, both of whom asserted cross-claims against City Bank. In the underlying deficiency litigation, respondents Jeffrey R. Sandberg and Palmer & Manuel, P.L.L.C., (together, Sandberg) represented both Aflatouni and Zive. City Bank moved for summary judgment, and the trial court ordered the parties to participate in mediation. During mediation, City Bank offered to settle for a mutual “walkaway”: if Aflatouni and Zive agreed to dismiss their claims against City Bank, City Bank would dismiss its claims against them. City Bank’s settlement attempt failed, but Zive and Sandberg disagree about why that occurred. Although Zive “strongly urged”

1 Grapevine Diamond later borrowed additional funds from City Bank, and the parties executed loan-modification agreements in 2008 and 2009. Zive signed the 2009 loan-modification agreement as guarantor and as president of Grapevine Diamond’s general partner. Because neither the 2007 guaranty agreement nor the 2009 loan-modification agreement is part of the summary judgment record, it is unclear what type of guaranty Zive provided. See Ford v. Darwin, 767 S.W.2d 851, 854 (Tex. App.—Dallas 1989, writ denied) (distinguishing between guaranty of payment and guaranty of collection).

3 Sandberg to accept the settlement offer, Sandberg allegedly declined to do so on the ground that Aflatouni could obtain a large recovery on his affirmative claims. For his part, Sandberg asserts that he never counseled Zive against accepting the offer. He contends that City Bank offered to settle only if both Aflatouni and Zive agreed to do so, and therefore it was Aflatouni’s decision to forgo settling—not Sandberg’s failure to accept the settlement offer on Zive’s behalf—that doomed the settlement negotiations. Sandberg withdrew as Zive’s counsel, purportedly because “an unresolvable conflict had arisen between Aflatouni and Zive.” Subsequent court-ordered mediation efforts were futile. The trial court eventually granted summary judgment for City Bank in the deficiency suit. Zive, Aflatouni, and Grapevine Diamond appealed, and the court of appeals affirmed the trial court’s judgment. See Grapevine Diamond, L.P. v. City Bank, No. 05-14-00260-CV, 2015 WL 8013401, at *1 (Tex. App.—Dallas Dec. 7, 2015, pet. denied) (mem. op.). Aflatouni and Grapevine Diamond then filed a petition for review in this Court, and Zive filed his own separate petition. On April 1, 2016, we denied both petitions. Aflatouni and Grapevine Diamond filed a motion for rehearing, but Zive did not take any further action with respect to his petition. We denied rehearing of Aflatouni and Grapevine Diamond’s petition for review on May 20, and the court of appeals issued its mandate on May 25, 2016. A few months later, Aflatouni and Grapevine Diamond filed a petition for a writ of certiorari in the Supreme Court of the United States. Aflatouni and Grapevine Diamond’s petition identified Zive as

4 a party to the proceedings below. See Petition for Writ of Certiorari at iii, Grapevine Diamond, L.P. v. City Bank, 137 S. Ct. 250 (2016) (No. 16- 225), 2015 WL 8013401. Zive did not file a document or otherwise attempt to participate in the Supreme Court proceedings. The Supreme Court denied Aflatouni and Grapevine Diamond’s certiorari petition on October 3, 2016. On October 1, 2018, Zive filed this suit against Sandberg for legal malpractice.2 Sandberg moved for traditional summary judgment, arguing that Zive’s malpractice claim accrued on April 1, 2016, the date on which this Court denied his petition for review, and therefore limitations barred his claim. In response, Zive contended that Hughes tolled the running of limitations until October 3, 2016, when the U.S. Supreme Court denied Aflatouni and Grapevine Diamond’s petition for certiorari. The trial court granted Sandberg’s motion for summary judgment and rendered a take-nothing judgment. The court of appeals affirmed, holding that Hughes tolling ended on April 1, 2016, and therefore Sandberg conclusively established that Zive’s malpractice claim was barred by limitations. 610 S.W.3d 44, 51 (Tex. App.—Dallas 2020). Zive argued that Hughes tolling extended through the denial of the certiorari petition because, had the petition succeeded, it would have set aside the judgment that injured him. The

2 Zive also asserted a claim for breach of fiduciary duty, and the trial court granted Sandberg’s motion for summary judgment on that claim.

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Youval Zive v. Jeffrey R. Sandberg and Palmer & Manuel, P.L.L.C. F/K/A Palmer & Manuel, L.L.P., Counsel Stack Legal Research, https://law.counselstack.com/opinion/youval-zive-v-jeffrey-r-sandberg-and-palmer-manuel-pllc-fka-tex-2022.