Plaintiffs’ Response to Gunn, Lee Defendants’ Motion to Dismiss

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IN THE UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF TEXAS

JONATHAN VILLAREAL, 

individually and derivatively on behalf 

of ZROBLACK, LLC. 

Plaintiffs, 

v. 

JOHN SAENZ, MIGUEL

VILLARREAL, JR., and GUNN, LEE, 

& CAVE, P.C.

Defendants

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CIVIL ACTION NO. 5:20-cv-00571-OLG

PLAINTIFFS’ RESPONSE TO DEFENDANTS GUNN, LEE& CAVE, P.C.’S AND

MIGUEL VILLRREAL, JR.’S RULE 12(b)(6) MOTION TO DISMISS

____________________________________________________________________________

TO THE HON. ORLANDO GARCIA, UNITED STATES CHIEF DISTRICT JUDGE:

Plaintiff, JONATHAN VILLAREAL, individually and derivatively on behalf of

ZROBLACK, LLC, (collectively the “Plaintiffs”), by and through their undersigned counsel, file 

this Response to Defendants Gunn, Lee & Cave, P.C.’s and Miguel Villarreal, Jr.’s Rule 12(b)(6) 

Motion to Dismiss (Doc. 11). 

I. SUMMARY

1. Defendants Gunn, Lee & Cave, P.C.’s and Miguel Villarreal, Jr.’s Motion should 

be denied because Defendants’ arguments touch on factual disputes that are not appropriate subject 

matter for a Rule 12(b)(6) Motion to Dismiss, Plaintiffs have stated a claim for breach of fiduciary 

duty that falls within the exceptions to the rule against fracturing malpractice claims, and Plaintiffs’ 

have alleged facts on each of their causes of action showing they are entitled to relief.

II. RULE 12(B)(6) STANDARD

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2. Federal Rule of Civil Procedure 12(b)(6) authorizes dismissal of a complaint “for 

failure to state a claim upon which relief can be granted.” FED. R. CIV. P. 12(b)(6). Motions to 

Dismiss are disfavored and will only be appropriate in rare circumstances. Sosa v. Coleman, 646 

F.2d 991, 993 (5th Cir. 1981). A Rule 12(b)(6) motion “is not a procedure for resolving contests 

about the facts or the merits of a case.” Askanase v. Fatjo, 828 F. Supp. 465, 469 (S.D. Tex. 1993); 

Mahone v. Addicks Util. Dist. of Harris Cty., 836 F.2d 921, 926 (5th Cir. 1988).

3. “To survive a 12(b)(6) motion to dismiss, the plaintiff must plead ‘enough facts to 

state a claim to relief that is plausible on its face.’” In re Katrina Canal Breaches Litigation, 495 

F.3d 191, 205 (5th Cir. 2007) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007), 

(cert. denied, 552 U.S. 1182 (2008))). “A claim has facial plausibility when the plaintiff pleads 

factual content that allows the court to draw the reasonable inference that the defendant is liable 

for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 

868 (2009). Although a plaintiff's factual allegations need not establish that the defendant is 

probably liable, they must establish more than a “sheer possibility” that a defendant has acted 

unlawfully. Id. Determining plausibility is a “context-specific task,” and must be performed in 

light of a court's “judicial experience and common sense.” Id. at 679.

4. The court must construe the complaint in favor of the plaintiff, taking all facts 

pleaded as true, no matter how improbable. In re Katrina Canal, 495 F.3d at 205. “A complaint 

should not be dismissed for failure to state a claim unless it appears beyond a doubt that the plaintiff

can prove no set of facts in support of his claim which would entitle him to relief.” See Vander 

Zee v. Reno, 73 F. 3d 1365, 1368 (5th Cir. 1996); Conley v. Gibson, 355 U.S. 41, 45-46 (1957).

Even where a court finds the pleadings insufficient, leave to re-file under Rule 15(a) is preferred, 

unless it is clear the defects are incurable. See Great Plains Trust Co. v. Morgan Stanley Dean 

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Witter & Co., 313 F.3d 305, 329 (5th Cir. 2002). Therefore, to the extent this Court may find that 

any claim is not sufficiently pled under the Federal Rules of Civil Procedure, Plaintiffs respectfully 

request leave to amend their Complaint.

III. ARGUMENT & AUTHORITY

A. Plaintiffs have stated a plausible claim for attorney negligence against Defendants.

Defendants contend that Plaintiffs cannot establish a plausible claim for attorney negligence 

based on the facts pleaded because the Complaint does not contain sufficient allegations to 

support the necessary finding of causation. This argument is premised on three theories. First, 

that Plaintiffs do not allege that, had Gunn, Lee acted differently, Defendant Saenz would have 

returned any of the property about which Plaintiffs complain. Mtn to Dismiss (Doc 11), p. 8-9, 

¶¶ 24-25. Second, that Saenz’s acts are a superseding cause of ZroBlack’s injury, precluding 

negligence. Mtn. to Dismiss (Doc. 11), p. 10, ¶¶ 28-29. Third, that Jonathan Villarreal never 

insisted that provisions requiring the return of property be included in the Release. Mtn. to 

Dismiss, p. 12-14, ¶¶ 35-39. These are ultimately foreseeability arguments and shall be addressed 

in turn.

5. Foreseeability is a component of proximate cause. Western Invs. v. Urena, 162 

S.W.3d 547, 551 (Tx. 2005). The question of proximate cause is an issue of fact. Millhouse v. 

Wiesenthal, 775 S.W.2d 626, 627 (Tex. 1989). This rule also applies to legal malpractice claims.

Id. Because Defendants’ argument essentially disputes alleged facts, the motion should be denied.

B. Whether Saenz would have agreed to the return of money and equipment is a fact issue to 

be determined by the jury and is therefore not an appropriate subject of Rule 12(b)(6) relief.

6. Plaintiffs pleaded that Defendants did not include carve-out provisions for 

ZroBlack’s personal and intellectual property in the Release, and that as a proximate cause of that 

failure, ZroBlack was damaged. Compl. (Doc. 1), p. 25-25, ¶¶ 85, 86. Plaintiff also alleged that 

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after signing the Release, Saenz refused to return ZroBlack’s personal and intellectual property. 

Compl. (Doc. 1), p. 11-12, ¶¶ 39-40. These facts, taken as true, support an inference Defendants’ 

failure to include carve-out provisions in the Release left ZroBlack no way to recapture its personal 

and intellectual property. 

7. Defendants’ argument that Plaintiffs’ Complaint does not sufficiently allege facts 

establishing that had they done anything different, Saenz would have agreed to return the personal 

and intellectual property (Mtn. to Dismiss (Doc. 11), p. 9, ¶ 25) relies upon facts which Defendants 

have inferred e.g. that because Saenz refused on other occasions to return ZroBlack’s property, he 

would not have agreed to do so as part of the Release and because Saenz had spent most of the 

$740,000 and was requesting that it be treated as a gift for tax purposes, Saenz would not have 

agreed to return the money or any portion of it. Further, Defendants’ inference leaves out multiple 

steps in the ‘what if’ chain of events. Had the Gunn, Lee Defendants not negligently failed to 

include carve outs for return of Plaintiffs’ property in the Release and thereafter Saenz refused to 

agree to those terms, the parties would have kept negotiating or filed suit, but Plaintiffs would not 

have compromised their position without securing the return of their property. Id. As a premise, 

Defendants’ inferences are flawed, but more importantly, these are questions of fact (actually 

worse, questions of hypothetical fact) that will eventually have to be decided by a jury. Therefore, 

it is not appropriate subject matter for a Rule 12(b)(6) motion. Mahone v. Addicks Util. Dist. of 

Harris Cty., 836 F.2d 921, 926 (5th Cir. 1988); Askanase v. Fatjo, 828 F. Supp. 465, 469 (S.D. 

Tex. 1993).Defendants are countering Plaintiffs’ alleged facts with alleged facts of their own to

dispute the allegations in the Complaint. Such fact-based inquiries are only appropriate at the 

summary judgment or trial stage. Baker v. Putnel, 75 F.3d 190, 197 (5th Cir. 1996) (plaintiffs’ 

allegation in excessive force lawsuit that deceased did not point pistol at defendant officer and 

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defendant officer’s allegation that he did was factual dispute not ripe for consideration at Rule 

12(b)(6) stage, reversing grant of summary judgment on Rule 12(b)(6) motion); see also In re 

Seitel, Inc. Securities Litigation, 447 F. Supp. 2d 693, 713 (S.D. Tex. 2006) (court concluded 

defendants’ disputes of facts alleged in complaint regarding necessary element of scienter were 

fact based and not subject matter for a Rule 12(b)(6) motion).

8. Defendants’ reliance on Akin, Gump, Strauss, Hauer & Feld, L.L.P. v. Nat’l Dev. 

7 Research Corp., 299 S.W.3d 106 (Tex. 2009) for the proposition that a plaintiff must “prove and 

obtain findings as to the amount of damages that would have been recoverable and collectible if 

the other case had been properly prosecuted,” Id. at 112, is misplaced. Akin, Gump addressed 

whether a jury’s findings were sufficient to support its award against against the Akin, Gump law 

firm. Akin, Gump is not about pleading standards or whether a plaintiff pleaded enough facts to 

state a plausible claim. Nor does it stand for the proposition that a plaintiff must plead that it can 

recover damages if the underlying claim had been properly prosecuted.

9. Even if Akin, Gump did stand for the proposition Defendants allege, Plaintiffs

pleaded sufficient facts to support recovery (or “collection” of, if you will) of ZroBlack’s property. 

Plaintiffs pleaded that Saenz refused to return the laptop after the Release was signed, refused to 

return the trade secrets after the Release was signed, refused to release the domain name to 

ZroBlack after the Release was signed, and that he deleted ZroBlack’s webpage and email after

the Release was signed. Because Plaintiffs alleged these things happened after the Release was 

executed and as a result of the failure to include provisions for the return of property, it is 

reasonable to infer they would not have happened had those provisions been included in the 

Release. Furthermore, if Plaintiffs were required to specifically plead that Saenz would have 

returned these things had Defendants included the carve-out provisions in the Release, then that is 

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a simple matter of amending the Complaint. This Honorable Court should not allow Defendants 

to confuse what Plaintiff must plead with what they must ultimately prove at trial.

10. Defendants make essentially the same argument regarding the return of the 

$740,000, to wit, because Plaintiffs alleged Saenz has spent the money, Plaintiffs cannot not prove 

the $740,000 could be collected from Saenz. However, what the Complaint alleged is that on 

information and belief Saenz invested about $305,000 in the stock market and $423,850 in 

property renovations. Compl. (Doc. 1), p. 8, ¶ 27. The Complaint does not allege Plaintiff could 

not recover those sums. If the money is invested in the stock market or real estate, it might easily 

be recoverable.1 Additionally, here again, Defendants are conflating what must be ultimately 

proved at trial with what must be alleged.

C. Saenz’s alleged superseding acts are not relevant to causation because Defendants should 

have foreseen the risk of proprietary data being misused or destroyed.

11. The Gunn, Lee Defendants argument here is (a) Saenz’s intentional acts were a 

superseding cause of ZroBlack’s injury and (b) Saenz’s independent statutorily tortious conduct 

was a superseding cause of ZroBlack’s injury. It is well-established in Texas law that third-party 

conduct is a superseding cause of damages arising from a defendant's negligence unless the thirdparty conduct is a foreseeable result of the defendant's negligence. See e.g. See Phan Son Van v. 

Pena, 990 S.W.2d 751, 754 (Tex.1999); see also Timberwalk Apartments, Partners, Inc. v. Cain, 

972 S.W.2d 749 (Tex. 1998) (one who controls premises has a duty to use ordinary care to protect 

invitees from criminal acts of third parties if he knows or has reason to know of an unreasonable 

and foreseeable risk of harm to the invitee.”); El Chico Corp. v. Poole, 732 S.W.2d 306, 314

1 Defendant might argue that recovering against the real property is unlikely because such 

property may be exempt, especially if the property involved is homestead property. But the 

Complaint does not allege the property was homestead or otherwise exempt. Absent such an 

allegation, the Court should not consider that possibility because it has not been raised.

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(Tex.1987) (tortfeasor's negligence is not superseded when the criminal conduct is a foreseeable 

result of the negligence); Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 550 (Tex.1985) (same). 

The arguments raised by Defendants here are foreseeability arguments; thus dismissal is not 

appropriate because whether Gunn, Lee should have foreseen the possibility Saenz would have 

misused or destroyed ZroBlack’s proprietary data is a question of fact to be decided by the jury. 

Numerous online blogs and articles discuss the importance of re-capturing a firm’s intellectual 

property when employment is severed. Gunn, Lee, which touts itself as an intellectual property 

firm, should have foreseen the possibility that Saenz possessed intellectual property, counseled 

ZroBlack to recapture that property, and provided carve-out provisions in the Release.2

12. Moreover, The Gunn, Lee Defendants’ arguments do not link the various 

interpretations of the superseding cause doctrine they cite to their conclusory statement suggesting 

the above black-letter law is in “favor of finding Saenz’s intentional conduct to be a superseding 

cause of the injury asserted by [Jonathan]. Gunn, Lee Mtn. to Dismiss (Doc. 11) p. 11, ¶ 27-29. 

The Court should therefore give this argument no weight in deciding the motion to dismiss.

13. The Phan Son factors cited by Defendants actually favor Plaintiffs. Phan Son Van 

v. Peña, 900 S.W.2d 751 (Tex. 1999). In Phan Son, the Texas Supreme Court identified factors 

from ¶ 448 of the Restatement (Second) of Torts to consider in determining whether an intervening 

force rises to the level of a superseding cause. Id. at 754 (Tex. 1999). Those factors are:

(a) the fact that the intervening force brings about harm different in kind from 

that which would otherwise have resulted from the actor's negligence;

2

https://www.natlawreview.com/article/protecting-intellectual-property-and-data-ifemployee-separation-anticipated; https://ogletree.com/insights/departing-employeesensuring-protection-of-trade-secrets-and-intellectual-property/; 

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(b) the fact that the intervening force's operation or the consequences thereof 

appear after the event to be extraordinary rather than normal in view of the 

circumstances existing at the time of the force's operation;

(c) the fact that the intervening force is operating independently of any 

situation created by the actor's negligence, or, on the other hand, is or is 

not a normal result of such a situation;

(d) the fact that the operation of the intervening force is due to a third person's 

act or to his failure to act;

(e) the fact that the intervening force is due to an act of a third person which is 

wrongful toward the other and as such subjects the third person to liability 

to him;

(f) the degree of culpability of a wrongful act of a third person which sets the 

intervening force in motion.

Id. Defendants claim that several of those factors weigh in favor of their argument. As will be 

explained, Plaintiffs respectfully disagree.

a. Whether the interfering acts operated independently of any situation created by the 

Gunn, Lee Defendants is not relevant to the standard of legal or professional care 

the Gunn, Lee Defendants should have exercised.

14. Defendants first contend they did not create the situation that makes it impossible 

for Saenz to comply with the obligation to return property. First, they argue, the Complaint alleges 

that Saenz took the money before Gunn, Lee became involved and had already spent it by the time 

the Release was signed. Second, they contend, it is a reasonable inference from the pleadings that 

Saenz refused to return the laptop, proprietary code, and domain name for the webpage and email 

server because Jonathan Villarreal refused to characterize the $740,000 as a gift. These are 

circumstances they argue their alleged negligence did not create.3

3 Additionally, Defendants’ argument suggesting that Plaintiffs’ theory of liability is exclusive 

to the factual understanding that the release required Saenz to return all property to ZroBlack 

and Jonathan is a misunderstanding of the Complaint on a fundamental level. Specifically, 

Plaintiffs’ allege an alternate set of facts in their claims against the Gunn, Lee Law firm, 

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15. Starting with the return of the laptop, proprietary code, and domain name, 

intellectual property theft by high-level officers and employees is a well-known and documented 

risk facing businesses, especially those that specialize in the creation of intellectual property (such 

as computer code). As shown above, articles and online blogs discuss the drafting of releases when 

the relationship between companies and such officers and employees ends. It is a reasonable 

inference from the pleadings that Defendants, who bill themselves as an intellectual property firm, 

were aware of such risks. Yet here, they utterly failed to account for those risks in the Release.

16. Moreover, their argument that Saenz was motivated by Jonathan’s refusal to 

characterize the $740,000 as a “gift” for tax purposes rings hollow. The Release should have 

provided for the return of the $740,000 as well as the property. Faced with language in the Release 

requiring that he return those things would have totally reframed the negotiation. The notion that

Gunn Lee did not create the situation that made it impossible for Saenz to comply with the Release 

is backwards—their failure to include language requiring the return of the laptop, code, and 

domain created the environment where Saenz felt he did not have to return those things.

b. Whether the Complaint alleges independent statutory bases for Saenz’s liability to 

Plaintiff and not simply breach of contract is not relevant to the standard of legal 

of professional care the Gunn, Lee Defendants should have exercised.

claiming that the release is deficient and should have included specific language requiring 

Saenz to return any ZroBlack property in his possession. Comp. (Doc. 1) p. 24-25, ¶ 83-87. 

The Rules of Federal Procedure specifically allow for pleading alternative theories of facts or 

claims. FED. R. CIV. P. 8(d). Vasquez v. Bridgestone/Firestone, Inc., 325 F.3d 665, 674 (5th 

Cir. 2003) (“Plaintiffs are permitted to plead in the alternative.”); see also Southwestern Bell 

Telephone Co. v. Fitch, 643 F.Supp.2d 902, 908-909 (S.D. Tex. 2009) (citing FED. R. CIV. P.

8) (holding that dismissal of inconsistent theories is unwarranted at the 12(b)(6) stage of 

proceedings). Thus, the Gunn, Lee Defendants’ arguments are not ripe for consideration.

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17. The Gunn, Lee Defendants argue here that there is no well-pleaded factual 

allegation or reasonable inference that the Gun, Lee Defendants could have anticipated Saenz’s 

alleged intentional conduct. This is but a variation of the argument above.

18. Given the sensitive nature of ZroBlack and Jonathan’s business in computer code

and Saenz’s high position in ZroBlack, it was very likely that Saenz would continue to possess and 

use ZroBlack’s property if a release made no provision for its return. The Gunn, Lee Defendants, 

because of their expertise in IP law, should have foreseen the risk of Saenz’s actions here, and, 

because they were also representing Plaintiffs while drafting and executing the release, should 

have protected Plaintiffs’ property interest. Based on the facts alleged, it is clear they did not do 

so and failed to meet the standard of care of a reasonably prudent intellectual property law firm.

D. Whether Plaintiffs’ Complaint sufficiently alleges facts establishing that Plaintiffs insisted 

upon the return of ZroBlack’s property or that Plaintiff deemed these issues important 

enough to raise them prior to or at the time the Release was executed is likewise irrelevant

to the issue of the standard of care the Gunn, Lee Defendants should have exercised.

19. Part of an attorney’s job is counseling and providing legal advice. An attorney and 

law firm drafting a release related to the departure of one of two members of a limited liability 

company whose primary assets were trade secrets and proprietary property, and having an online 

presence, should have foreseen the risks of the departing member keeping possession of 

proprietary company property. An attorney in that position should have advised of the need for 

language in a release carving out confidentiality requirements and addressing the return of property 

and access to online accounts. Yet, inexplicably, Defendants did not provide that advice or make 

provision in the Release to protect ZroBlack’s proprietary property.

20. Gunn, Lee, as an IP firm, should have known to include language in the release that 

specifically required Saenz to return the laptop, code, domain name, webpage, email server, and 

any other ZroBlack property in his possession given the proprietary and sensitive nature of 

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ZroBlack’s property. Instead, the Gunn, Lee Defendants failed to do so and enabled Saenz to keep 

and use trade secrets and property rightfully belonging to ZroBlack and Jonathan.

E. Plaintiffs have stated a plausible claim for breach of fiduciary duty because their factual 

allegations show the claim falls outside the Rule against fracturing legal malpractice claims.

21. Defendants argue that Plaintiffs have pleaded no facts that would support an 

independent breach of fiduciary duty claim. While Defendants are correct that the fracturing of a 

malpractice claim is generally disfavored, exceptions do exist, such as when a claim against an 

attorney focuses on the attorney obtaining an improper benefit, as opposed to the attorney failing 

to adequately represent the claim. Riverwalk CY Hotels Partners, Ltd. v. Akin Gump Strauss Hauer 

& Feld., LLP, 391 S.W.3d 229, 236 (Tex. App.—San Antonio 2012, no pet.). Breaches of fiduciary 

duty fall within that exception. Id. “A breach of fiduciary duty occurs when an attorney, among 

other things, subordinates his client's interest to his own, retains the client's funds, engages in selfdealing, improperly uses client confidences, fails to disclose conflicts of interest, or makes 

misrepresentations to achieve these ends.” Id. “...the types of conflicts of interest which could 

give rise to a breach of fiduciary duty are those in which the lawyer has a direct pecuniary interest 

in the litigation that is adverse to the client, and the attorney pursues his own interest to the client's 

detriment.” Id.; see also Trousdale v. Henry, 261 S.W.3d 221, 229 (Tex. App. — Houston [14th

Dist.], 2008) (noting that a “breach of fiduciary duty by an attorney often involves the attorney’s 

failure to disclose conflicts of interest...improper use of client confidences, taking advantage of the 

client’s trust...and making misrepresentations.”); Vara v. Williams, 2013 WL 1315035, at *3 (Tex. 

App. — Austin, 2013) (opining that the Texas “fracturing” rule does not preclude clients from 

asserting causes of action other than negligence if supported by the facts) (emphasis added).

22. Plaintiffs alleged that Attorney Villarreal and co-Defendant Saenz had a preexisting relationship, which Defendants did not disclose to Jonathan Villarreal. Compl. (Doc. 1), 

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p. 14, ¶ 47. Plaintiff also alleged that Defendants were cutting Saenz a discount on fees – a discount 

they did not give Plaintiffs. It is a reasonable inference from this that Defendants subordinated 

representation of Plaintiffs to their own self-interest—preserving their relationship with Saenz.

23. Also, as made plain by Riverwalk Cy Hotel Partners, fraud with respect to billing 

practices will support a breach of fiduciary duty claim. In Riverwalk Cy Hotel Partners, the court 

found that an allegation regarding excessive fees, challenging the integrity of the defendant’s 

billing practices is a sufficient allegation for a separate breach of fiduciary duty claim. Riverwalk 

CY Hotel Partners, 291 S.W.3d at 238-39; See also Sullivan v. Bickel & Brewer, 943 S.W.2d 477 

(Tex. App. — Dallas, 1995) (holding that an allegation of fraudulent billing practices is sufficient 

to allege a breach of fiduciary duty claim). Here, Miguel Villareal had a conflict of interest that 

should have been disclosed as material to the representation of Jonathan. Miguel specifically chose 

to charge Jonathan more for his representation compared to that of Saenz. Moreover, Miguel also 

chose to pressure Jonathan to resolve the dispute “for the sake of the family,” as Jonathan and

Saenz were related. Compl. (Doc. 1) p. 14, ¶ 47. This conflict of interest specifically invokes the 

“quality of the billing practices” idea opined in Akin Gump, as Plaintiffs are alleging that Mike had 

a conflict of interest in charging Jonathan more for fees than he did for Saenz, and by pressuring 

Jonathan to settle the case, while the average attorney in Miguel’s case could and would diagnose 

the conflict of interest here and either disclose it and obtain a waiver, or disclose it and withdraw 

from representation. Miguel did neither. In fact, the omission of a requirement that Saenz return 

the $740,000 to ZroBlack is evidence that Mike and the law firm deliberately chose to favor Saenz 

over Jonathan. As a result, Plaintiffs’ Complaint states a claim for breach of fiduciary duty.

24. Another case also sheds light on the difference between a legal malpractice claim 

and a breach of fiduciary duty claim. In O’Donnell v. Smith, the court reasoned that the difference 

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between each claim is that “the focus of a breach of fiduciary duty claim is whether an attorney 

obtained an improper benefit from representing a client, while a legal malpractice claim asks 

whether an attorney adequately represented a client.” O’Donnell v. Smith, 234 S.W.3d 135, 146 

(Tex. App. — San Antonio, 2007). The court further suggested that facts regarding an “attorney’s 

failure to disclose conflicts of interest, failure to deliver client funds, improper use of client 

confidences, or engaging in self-dealing" also constitute a breach of a fiduciary duty to a client. Id. 

(citing Cosgrove v. Grimes, 774 S.W.2d 662, 665 (Tex. 1989).

25. Here, Plaintiffs’ Complaint alleges that the Gunn, Lee Defendants engaged in 

slanted billing practices by charging more for services rendered to Jonathan than to Saenz. (Doc. 

1) p. 14, ¶ 47. Additionally, the Gunn, Lee Defendants’ use of pressure to force Jonathan to settle 

the case with Saenz “for the sake of the family” based on Jonathan’s anxiety and other mental 

health concerns. Id.; (Doc. 1) p. 12-13, ¶ 42. Defendants’ “improper use of client confidences” 

likely shifted the equity of Jonathan and Saenz’ relationship with Mike in favor of Saenz. Even 

more so, Miguel failed to disclose the extent of his prior relationship with Saenz, possibly alluding 

to the fact that Mike would hold Saenz’s client relationship in higher regard than that of Jonathan. 

Id. at p. 14, ¶ 47. Because of the above allegations, Plaintiffs have sufficiently pled enough facts 

to survive the Gunn, Lee Defendants’ motion to dismiss for failure to state a claim.

a. Fraud for failing to disclose prior relationship and conflict of interest.

26. Plaintiffs also state a valid and separate breach of fiduciary duty claim by alleging 

that Mike failed to disclose the extent of his relationship with Saenz prior to joint representation. 

In Deutsch v. Hoover, Bax & Slovacek, L.L.P., the court held that the defendant’s failure to disclose 

to plaintiff their conflict of interest constituted a breach of fiduciary duty claim. Deutsch v. Hoover, 

Bax & Slovacek, L.L.P., 97 S.W.3d 179, 190 (Tex. App. — Houston [14th Dist.], 2002). Attorneys 

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in the course of representation, the court reasoned, “owe their clients utmost good faith in their 

dealings with them, that attorneys owe their clients a duty to affirmatively disclose all material 

facts that would affect their relationship as well as the legal consequences of those facts, and that 

breach of this duty states a claim for constructive fraud.” Id. (citing Goffney v. Rabson, 56 S.W.3d 

186, 193-94 (Tex. App. — Houston [14th Dist.], 2001) (stating in dicta that failing to disclose 

conflicts of interest states a separate claim for breach of fiduciary duty from legal malpractice).

27. Here, the same can be said regarding Miguel’s relationship with Saenz prior to joint 

representation. Plaintiffs’ Complaint alleges that Miguel failed to disclose the extent of his prior 

relationship with Saenz before he agreed to joint representation. Compl. (Doc. 1) p. 14, ¶ 47. This 

allegation on its face constitutes a plausible claim of breach of fiduciary duty, as Miguel “failed to 

disclose all material facts that would affect [his] relationship” with his clients. Deutsch, 97 S.W.3d 

at 190. Therefore, because Plaintiffs allege facts that constitute a distinct and separate claim for 

breach of fiduciary duty, Plaintiffs should survive the Gunn, Lee Defendants’ motion to dismiss.

b. The Gunn, Lee Defendants did not conform to DR 1.07.

28. First Criteria: that the defendants advised and received written consent from 

Jonathan and ZroBlack of the issues of joint representation. Here, Defendants suggest the conflict 

waiver signed by Jonathan established that the Gunn, Lee Defendants advised Jonathan and 

ZroBlack of the disadvantages of joint representation under Rule 1.07(a). The waiver, however, 

did not mention the prior relationship between Saenz and Mike, which affected representation.

29. Second Criteria: “The lawyer reasonably believes that the matter can be resolved 

without the necessity of contested litigation on terms compatible with the client's best interests, 

that each client will be able to make adequately informed decisions in the matter and that there is 

little risk of material prejudice to the interests of any of the clients if the contemplated resolution 

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is unsuccessful.” From the waiver’s language and the facts of Mike/Gunn, Lee’s representation of 

Jonathan and ZroBlack, there is ample evidence of material prejudice to Plaintiffs’ interests, given 

that Mike showed deliberate indifference to their interests in the course of drafting the release, and 

in the representation thereafter. It is clear that based on the language of the release that the Gunn, 

Lee Defendants failed aid Jonathan and ZroBlack to make informed decisions regarding the 

release. Thus, the Gunn, Lee Defendants failed to meet the standard required under Rule 1.07(b).

30. The commentary on Rule 1.07 also suggest that lawyers may only act as an 

intermediary to adjust a relationship between clients on an “amicable and mutually advantageous 

basis.” TEX. R. PROF. CONDUCT, Rule 1.07, Comment 1. Based on the situation presented to the 

Gunn, Lee Defendants before representation, and the outcome of said representation, it is clear 

that Plaintiffs were not held in a “mutual and advantageous” position. Saenz wanted to keep the 

$740,000 while refusing to do any such work for ZroBlack for the money.

31. Moreover, after Saenz and Jonathan’s relationship deteriorated to the point of 

needing to assign Saenz’s share in ZroBlack and obtain a release, there was not an amicable 

relationship between the parties. The parties were clearly in a position where dual representation 

was not possible. Saenz had possession of $740,000 he did not earn as well as ZroBlack property; 

most notably the laptop that contained the proprietary code responsible for ZroBlack’s early 

economic success, and would continue to fuel ZroBlack’s business for many years. Because of the 

sheer difference and animosity between Jonathan and Saenz leading up to joint representation and 

the stakes for ZroBlack, no reasonable lawyer could have adequately represented the disparate 

interests of Jonathan, Saenz, and ZroBlack. Thus, the Gunn, Lee Defendants violated Rule 1.07(2).

32. Third: the lawyer reasonably believes that the common representation can be 

undertaken impartially and without improper effect on other responsibilities the lawyer has to any 

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Plaintiffs’ Response to Gunn, Lee Defendants’ Motion to Dismiss

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of the clients. There is no possible way that, based upon the wording in the release, that Mike and 

Gunn, Lee could have carried out common representation impartially and without an improper 

effect on the responsibilities that Mike and the firm had to Jonathan and ZroBlack. Based on 

consequences of the signed release, and on the Gunn, Lee Defendants’ arguments regarding the 

interpretation of the release, there is no feasible way the Gunn, Lee Defendants could have carried 

out common representation in an impartial and proper manner.

33. As reiterated above, the sheer difference in priorities and desires of both Jonathan 

and Saenz suggests that a lawyer could not maintain impartiality during joint representation. Tex. 

R. Prof. Conduct, 1.07, Comment 7. Saenz wanted to keep the $740,000 he paid himself, while 

Jonathan wanted the very opposite. Jonathan also wanted the return of the computer code 

responsible for ZroBlack’s existence. Without it, Jonathan could not continue his operation of 

ZroBlack. Based on the parties’ difference in priorities, no lawyer could have reasonably believed 

that common representation could have been undertaken impartially. As a result, the Gunn, Lee 

Defendants are in violation of Rule 1.07(3).

c. The Gunn, Lee Defendants’ arguments regarding Rule 1.07 are irrelevant, because 

it is not the legal standard by which attorney malpractice claims are judged

34. Attorney malpractice claims in Texas are based on Negligence. Cosgrove v. 

Grimes, 774 S.W.2d 662, 664 (Tex. 1989). See also Acevedo v. Commission For Lawyer 

Discipline, 131 S.W.3d 99, 107 (Tex. App. — San Antonio, 2004) (“An attorney disciplinary 

action is ‘not an attorney malpractice case where the standard of care is at issue. Rather, [it] is a 

disciplinary proceeding where the appropriate interpretation of the Rules of Conduct and a factual 

determination of whether the [attorney’s] conduct met or violated the Rules at issue.’” (internal 

citations omitted).

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Plaintiffs’ Response to Gunn, Lee Defendants’ Motion to Dismiss

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35. Additionally, violations of the Texas Disciplinary Rules do not give rise to a claim 

of attorney malpractice under the theory of negligence per se, as the rules do not authorize a private 

cause of action. See Cuyler v. Minns, 60 S.W.3d 209, 214 (Tex. App. — Houston [14th Dist.] 

2001) (citing Tex. Disciplinary Rules of Professional Conduct, V.T.C.A. Govt. Code T.2, Subt. G. 

App. A, Art. 10 § 9, Preamble: Scope. Simply put, the Rules of Professional Conduct are not the 

medium in which Plaintiffs bring their claims. Plaintiffs raised their claims against the Gunn, Lee 

Defendants under the theory of attorney malpractice, which Texas courts examine as a traditional 

negligence claim. Grimes, 774 S.W.2d at 664. Thus, Defendants’ arguments are irrelevant and fail.

d. Plaintiffs’ claims against the Gunn, Lee Defendants do not suggest violation of Rule 

1.07, but instead show a violation of the general conflict of interest rule, Rule 1.06.

36. Plaintiffs have also alleged a violation of Texas Rule of Professional Conduct 1.06.

Paragraphs 110-116 relay the facts regarding Gunn, Lee Defendants’ violation of Rule 1.06. 

Specifically, that “no attorney could reasonably believe under these facts that [the Gunn, Lee 

Defendants’] representation of both clients would not have been material affected” as a result of 

dual representation. Compl. (Doc. 1), p. 32, ¶ 113. Because Plaintiffs allege the facts necessary to 

constitute a claim of attorney malpractice based on allegations of a violation of Rule 1.06, this 

claim should survive Defendant’s motion for dismissal. Id.

37. Rule 1.06 provides that a lawyer shall not represent a person if representation of 

the person: (1) involves a substantially related matter in which that person’s interests are materially 

and directly adverse to the interest of another client...; or (2) reasonably appears to be or become 

adversely limited by the lawyer’s or law firm’s responsibility to another client...”

38. Plaintiffs’ Complaint alleges that Jonathan, ZroBlack, and Saenz’s interests were 

adverse under the definition of Rule 1.06. Compl. (Doc. 1) p. 32 ¶ 113. Plaintiffs specifically allege 

that Jonathan wanted the exact opposite of Saenz when negotiating the release. That is, the return 

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Plaintiffs’ Response to Gunn, Lee Defendants’ Motion to Dismiss

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of the $740,000, the laptop, and the proprietary computer code. Saenz, on the other hand, wanted 

to keep the $740,000 and the laptop. Under Plaintiffs’ allegations, the Gunn, Lee Defendants had 

waded into a conflict of client interests so directly adverse to each other, no reasonable lawyer 

could have represented Saenz, Jonathan, and ZroBlack in the way the Gunn, Lee Defendants 

attempted. Therefore, based on the allegations in Plaintiffs’ Complaint, Plaintiffs’ claims that the 

Gunn, Lee Defendants committed malpractice should not be dismissed.

39. Plaintiffs’ Complaint further alleges that the Gunn, Lee Defendants were in position 

to profit from the release at issue, because the firm would “act as the escrow agent for funds paid 

by ZroBlack’s customer under the PSA.” Compl. (Doc. 1) p. 32 ¶ 114. This circumstance puts the 

Gunn, Lee Defendants directly at the center of the deal between the parties, further entangling their 

involvement of ZroBlack, Jonathan, and Saenz The allegations above clearly suggest that the 

Gunn, Lee Defendants’ had interests that were “materially and directly adverse” to the interests of 

ZroBlack and Jonathan. Because of these allegations, Plaintiffs have sufficient pled a claim that 

the Gunn, Lee Defendants have violated Texas Rule of Professional Conduct. 1.06.

F. Amendment of the Complaint Would Not Be Futile.

40. In the alternative, if the Court were to determine that Plaintiffs’ Complaint were 

defective, Plaintiffs could amend the Complaint to sufficiently state a claim for relief. Plaintiff is 

prepared to amend its pleading and allege that:

a. Saenz would have agreed to return the property if Defendants had acted differently. 

The factual issue brought up by the Defendants may be amended and would give rise 

to a reasonable inference that Saenz would have agreed to return the company’s 

property back to it if Defendants had presented it to him.

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Plaintiffs’ Response to Gunn, Lee Defendants’ Motion to Dismiss

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b. Defendants knew or should have known to include a return of company property as 

part of the Release, and knew or should have known that failure to include provisions 

in the release for the return of the laptop, proprietary code, domain access to ZroBlack’s 

webpage and email server, could lead to Saenz’s use or misuse of that property.

c. Defendants failed to represent the individuals concurrently but rather drafted a Release 

strongly favoring Saenz and taking advantage of Plaintiffs.

d. It was unreasonable for Defendants to believe that the disputes between Plaintiffs and 

Saenz could be resolved without litigation in a manner compatible with the parties’ best 

interests as Defendants knew the subject matter of the representation was inherently 

confrontational as both parties wanted a “business divorce”.

e. The Defendants failed to represent Plaintiffs in a manner that conformed with Texas 

Rule of Professional Conduct 1.07. Specifically, that: (1) Defendants failed to inform 

Plaintiffs of the implications concerning common representation; Tex. R. Prof. 

Conduct 1.07(a); (2) Defendants could not have reasonably believed Plaintiffs could 

have made adequately informed decisions in the matter that there is little risk of 

material prejudice to the their own interests; Tex. R. Prof. Conduct 1.07(b); and (3) 

Defendants could not have reasonably believed that common representation could have 

been undertaken without improper effect on other responsibilities the lawyer has to any 

of the clients, specifically, Defendants’ responsibilities to ZroBlack and Jonathan.

41. Here, Plaintiffs, if requiring leave to amend their complaint, would meet the 

standard set forth above in Rule 12(b)(6). Likewise, the case law and Federal Rule of Civil 

Procedure 15(a) generally requires the trial court to allow amendment, and “the language of this 

rule evidences a bias in favor of granting leave to amend.” Legate v. Livingston, 822 F.3d 207, 211 

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Plaintiffs’ Response to Gunn, Lee Defendants’ Motion to Dismiss

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(5th Cir. 2016) (internal quotations omitted). Therefore, Plaintiffs request that even if the Court 

finds that Plaintiffs’ Complaint is deficient under Rule 12(b)(6), the Court should grant Plaintiffs 

leave to amend the Complaint in accordance with Rule 15(a).

IV. CONCLUSION AND PRAYER

42. Based on the foregoing, Plaintiffs respectfully pray the Court denies Defendants

Gunn, Lee & Cave, P.C.’s and Miguel Villarreal’s Motion in its entirety, that if the Court concludes

any of Defendants’ arguments have merit, that Plaintiffs’ be granted leave to amend, and finally, 

for all other relief to which they may show themselves justly entitled at law or in equity.

Respectfully submitted,

THE VETHAN LAW FIRM, PC

By: /s/ Joseph L. Lanza

Charles M. R. Vethan 

Attorney-in-Charge

Texas Bar No. 00791852

Steven A. Costello

Texas Bar No. 24062677

VETHAN LAW FIRM - HOUSTON

Two Memorial City Plaza

820 Gessner, Suite 1510

Houston, Texas 77024

Tel: (713) 526-2222

Fax: (713) 526-2230

Email: edocs@vwtexlaw.com

Joseph L. Lanza

Texas bar No. 00784447

VETHAN LAW FIRM – SAN ANTONIO

11459 Huebner, Suite 101

San Antonio, Texas 78230

Tel: (210) 824-2220

Fax: (713) 526-2230

Email: edocs@vwtexlaw.com

Attorneys for Plaintiffs

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Plaintiffs’ Response to Gunn, Lee Defendants’ Motion to Dismiss

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CERTIFICATE OF SERVICE

I hereby certify that a copy of the foregoing was electronically filed with the Court 

on the 3

rd day of August 2020, and electronically served on the date reflected in the 

ECF system upon all parties registered to receive notice pursuant to the Court’s 

CM/ECF system.

David A. Vanderhinder

State bar No. 24070787

DVanderhinder@dykema.com

Ryan J. Sullivan

State Bar No. 24102548

RSullivan@dykema.com

DYKEMA GOSSETT PLLC

112 East Pecan St., Suite 1800

San Antonio, Texas 78205

Attorney for Defendant John Saenz

George R. Spencer, Jr.

State Bar. No. 18921001

gspencer@langleybanack.com

Natalie F. Wilson

State Bar. No. 24067769

nwilson@langleybanack.com

Attorneys for Defendants Gunn, Lee & Cave, P.C.

And Miguel Villarreal, Jr.

/s/ Joseph L. Lanza

 Joseph L. Lanza

Case 5:20-cv-00571-OLG Document 15 Filed 08/03/20 Page 21 of 21