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## NO. 12

- 20

- 00172

- CV
IN THE COUR T OF APPEALS
TWELFTH COURT OF APPEALS DISTRICT TYLER, TEXAS

WINSTEAD PC AND JAMES RUIZ , APPELLANT S

V. USA LENDING GROUP, INC. , APPELLEE §

§

§ APPEAL FROM THE 281ST

JUDICIAL DISTRICT COURT

HARRIS COUNTY, TEXAS

MEMORANDUM OPINION This is an interlocu tory appeal b rought pursuant to the T e xas Citizens Participation Act (TCPA). 1 Winstead PC and James Ruiz (collectively Winstead) appeal the de nial of their motion to dismiss the l egal malpractice suit brought by USA Lend ing G roup, Inc. In their sole issu e, Winstead asserts the trial court erred in denying their motion to dismiss. Because USA Lending failed to establish its prima facie case, w e reverse and remand for further proceedings.

B ACKGROUND Winstead re presented U SA Le nding in litigat i on filed in federal district court ag ai n st its former em ployee, Mike Ahmar i , for breach of fiduciary duty

. USA Lending asked for actual and exemplary dama ges and a declar atory judgment with respect to the rights and inter e sts of the parties to certain domain names an d toll

- free numbe rs. Bec aus e Ahmari never responded to the la wsuit, Winstead , on USA Lending ’ s behalf, f iled a motion for entry of a default j u dgment. In that motion, Winstead requested a default judgment decl a r ing USA L ending the legal owner to all righ ts and interests in a spe cif ied domai n name and toll

- free numb er and that Ahmari be ordered to convey the property to USA Lending

. The court r endered a default judgm e nt i n favo r of USA Lending , finding t hat Ahm ari breache d his fiduciar y duties and that US A Le nding is the

1 See T EX

. C IV

. P RAC

. & R EM

. C ODE A NN

. §§ 27.001

- .011 (West 2020 & Supp. 2020 ).2 legal ow ner of all right , title, and interest in and to a specified domain name and toll

- free number

. Additionally, t he court ordered Ahmari to transfer all rights, title, and interests to the domain name and phone number to USA Lending. USA Lending sued Winstead fo r legal malpractice complaining th at Winstead ’ s errors and omissions caus ed USA Lending to lose “ in excess of $1,00 0,000

. 00 that would more likely than not been included in and ordere d by the ju dgment. ” Winstead answered and fi led a mo tion to d ismiss p urs uant to the TCPA contending that t he underlying li tigation is based on the constitutionally protected right to peti tion. They further argued that, because the cl aim is based

on commu nications i n connectio n with a judicial proce eding, t he suit m ust be d ism issed because USA Lending cannot p rovide clear and specific evidence demons tra ting a prima facie case for each esse ntial element of its claim. USA Lending argued that the malpractice allegation s are based on a failure to commun icate and the neg ligent legal advice is merely related to a judicial proceeding, therefore the TCPA does not apply

. It further argued that the commercial speec h

ex empti on appli es or, alternatively, USA Lending est ablished a pri ma faci e case of negligence against Winstead , either of which would lead to a ruling in its favor

. After a hearing, the t rial

c ourt denied the motion to dismiss.

TCPA In their sole issue, Wi nstead asserts the tr ial court erred in denying t heir moti on to di smi ss because the TCPA app lies to l eg al malpractice cases involving the quality an d substance of a la wyer ’ s communicatio ns wit h the court in an underlying litigation , an d USA Lending adduced no competent evidence that Winstead ’ s alle ged bre ach of t he stand ard of care caused any har m

. Standar d of Review We revie w de novo a trial court ’ s ruling on a TCPA motion to dismiss. Martin v. Walker , 606 S.W.3d 565, 567 (Tex. App.

― Waco 2020, pet. denied ). In reviewing a trial court ’ s ruling, we consider t he p leading s and af fid avits of the parties. T EX

. C IV

. P RAC

. & R EM

. C ODE A

NN

. § 27.006

. We review the facts in the light most favorable to the n onmovant. See Dolcefino v. Cypres s Creek EMS , 540 S.W.3d 194, 199 (Tex. App.

― Houston [1 st Dist .] 2017, no pet. ).3 Applic able Law U nder the TCPA , a defendant may mov e to dismiss a legal actio n that is based on or is in response to a party ’ s exercise of t he r ight of free speech, right to petition, or right of association. T EX

. C IV

. P RAC

. & R EM

. C ODE A NN

. § 27.003 (a)

. The T CPA defi nes “ exercise of the right to petitio n , ” in pertinent part , as a communicatio n made in or pertaining to a judicial proceeding

. Id

. § 27.001( 4 ) (A) ( i )

. The ter m “ com m unicatio n ” is defined as “ the making or submitting of a statement or do c um ent in an y form or medium, inclu ding oral, v isual, written, audiovisual, o r electronic

. ” Id

. § 27.001 ( 1 )

. The defendant

- movan t bea rs the initial burden of sh owing that the conduct that forms the basis of the claim against it is p rotected by the TCPA, t h at is, tha t the suit i s based on or is in

re sponse to the movant ’ s exercis e of its right to free speech, association, or p etitio n

. I d

. § 27.005(b) ; Castleman v. Internet Mone y Ltd. , 546 S.W.3d 684, 6 91 (Tex . 2018) (per curiam)

. If the defendant meets thi s burden, th en the b urd en s hifts to the plaintiff

- nonmova nt to establish by clear and s pecific evidence a pri ma faci e case for each essent ial elem ent of the claim in question

. T EX

. C IV

. P RAC

. & R EM

. C ODE A NN

. § 27.005(c) ; Castleman , 546 S.W.3d at 6 91

. If the nonmo va nt fails to satisfy its burden to present a p rima facie case, the trial cou rt m ust dismiss the action. T EX

. C IV

. P RAC

. & R EM

. C O DE A N N

. § 27.005(c) ; In re Lipsky , 460 S.W.3d 579, 584 (Tex. 2015) (orig. proceeding)

. However, if the nonmovant s atisfi es its bur den , the movant may still obtain a di smissal if it e stablishes each essential element of a valid defense to the
nonmovant ’ s cl aim. T EX

. C I V

. P RAC

. & R EM

. C ODE A NN

. § 27.005(d) ; Castleman , 546 S.W.2d at 691

. Intertwined with and overlying this m ul ti

- step dis missal proces s is the TCPA provisi on exempting certain actions f rom the TCPA ’ s application. See T EX

. C IV

. P RAC

. & R EM

. C OD E A

NN

. § 27.010 ; Morrison v. Prof anchik , 578 S.W.3d 676 , 6 80 (Tex. App.

― Austin 2019, no pet.)

. When invoked, the trial court must consider an exemption ’ s applica bil ity after a nd in the context of th e movant havi ng met its initial burden unde r t h e first step of the dismissal process

. Se e Castleman , 546 S. W.3d at 688 ; Morriso n , 578 S.W.3d at 680. The TCPA ’ s Applicability Winstead asserts that the TCPA applies becau se the communication USA Lending complai ns of constitutes the exercise of th e ri ght to petition. Specifically, Winstead argues that USA Lending ’ s claim is based on Winstead ’ s filing of an allegedly defective document, the4 motion for default judgment. We agree that the TCPA applies to claims ba sed on filings a lawyer makes on beh alf of a client in underlying litigation. A pleading filed in a l awsuit is a communic ation. See Brown Sims, P.C. v. L.W. Matteson, Inc. , 594 S.W.3d 573, 578 (Tex. App.

― San Antoni o 2019, no pet.). Further, s tatements m ade by a l awyer on behalf of his client are covered by the TCPA. See Youn gkin v. Hines , 546 S.W.3d 675, 681 (Tex. 2018). In its petition, USA Lending complain ed that Winstead dropped from the motion for default j ud gment any claim for monetary relief. US A Lending now contend s that i t s legal action was based solely on , and in response to , what Winstead failed to do or commun icate, and there fore the TCPA does not apply. USA Lending r elies heavily on Ray v. Fikes , No. 02

- 19

- 00232

- CV, 2019 WL 6606170 (Tex. A pp. ― Fort Worth December 5, 20 19, pet. denied) (mem. op.) . In that malpractice suit , the court determined that the TCPA did not apply. The Fort Worth court explained that Fikes alleg ed that his attorney, Ray , who did not timel y file Fikes ’ s suit , wholly fail ed to act before limit ati ons expired, a nd th at allegation did not implicate a communication at all. Id . at *3. Thus, Fikes complained of the failure to communicate and, further, did not attack statements made in a l a te

- fil ed petition. Here, i n contrast, USA Lending attacks t he mot ion , a c ommunication, not the absence of a motion. The fa ilure to include a specific request in a motion is not the same as failing to file the motion at a ll. There can be no doubt that the mot ion is a co mmunication in a jud i cial proc eeding. T he absence of a reque s t for damages in the motio n for default judgm ent communicated to the judge that the court need not consider t he question of damages. The basis of the mal practice lawsuit is the alleg ed defective communication. The fact that the defect involves an omission does not alter the motion ’ s character as a communication in a judicial proceeding

. See T EX

. C IV

. P RAC

. & R EM

. C ODE A NN

. § 27.001(1), (4)(A)(i); Brown Sims, P.C. , 594 S.W.3d at 579 (held that TCPA applie d to clien t ’ s malpractice claim w here defendant ’ s defective communication, the answer filed on behalf of client , did not include a specific affirmative defense ). USA Lending argues that Brown Sims, P.C. is inapplicable because it relied on the “ relates to ” language of Section 27.003(a) t hat has since been deleted from the statute. 2 While it may be that, as USA Lending asserts, the legislature int ended to narrow the scope of the TCPA ’ s reach by deleting the “ relates
t o ” language, a question we do not address, that d oes not lead to the conc lusion that the TCPA

2 See Ac t of May 18, 2011, 82 nd Leg., R.S., ch. 341, § 2, 2011 Tex . Gen. Laws 960, 962 (ame nd e d 2019) ( current version at T EX

. C IV

. P RAC

. & R EM

. C ODE A NN

. § 27.003(a)).5 does n ot apply in this case. USA Lending ’ s malpractice sui t is based on and is in response to Winstead ’ s exercise of the right to petition, the motion Winstead filed

. See T EX

. C IV

. P RAC

. & R EM

. C ODE A NN

. § 27. 003(a). We conclude tha t the mot ion for default judgment filed by Wi nstead on behalf of their client , USA Lending, is a communication made in a judicial proceeding. See id

. § 27.001(4)(A)(i). By filing the mot ion, Winstead was exercising its ri ght to pe t ition. See id

. § 27.00 3(a). Accordingly, t he TCPA applies to this la wsuit. Co mmercial Speech Exemption USA Lending asserts that, if the TCPA applies, the commercial speec h exemption also applies to exclude Winstea d ’ s communication from the TCPA ’ s protec t ions. T he commercial

s peech exemption prov ides that the TCP A does not apply to a legal action brought against a
person primarily engaged in the busin e ss o f selling or leas ing goods or services, if the statement or conduct arises out of the sale or lease o f goods, services, or a n insu ran ce product, insurance services, or a commercial transaction in which the intended audience is an actual or potential b u yer or customer. Id

. § 27.010(a) (2). The party asserting th e commer cia l speech exe mption bears the bur d e n of proving i ts appli cability by a preponderance of the evidence

. Hieber v. Per che ron H oldings, LLC , 591 S.W.3d 208, 211 (Tex. App.

― Houston [14 th Dist.] 2019, pet. denied)

. In deciding whether the

non movant has satisfied that burden, the scope of our review includes the pleadings and any supporti ng affidavits, both of which are taken as evidence in the TCPA context. See T EX

. C IV

. P R AC

. & R EM

. C ODE A NN

. § 27.006; Hersh v. Tatum , 526 S.W.3d 462, 467 (Tex. 2017); Hieber , 591 S.W.3d at 211. If an action falls under a TCPA e x emption, the TCPA does no t apply and may not be used to dismiss the action. See T EX

. C IV

. P RAC

. & R EM

. C ODE A NN

. § 27.010; Best v. Harper , 562 S.W.3d 1, 11 (Tex. 2018). Accordingly, a pplication of an exemption means the nonmovant need not make his prima facie case. See Round Ta bl e Physicians Group, PLLC v. Kilgore , 607 S.W.3d 878, 883 (Tex. App.

― Houston [14 th Dist.] 2020, pet. deni ed ). The supreme court has determined that this exemption applies w hen the nonmovant proves each of the following elements:

(1) The defendant was primari ly engaged in the business of s elling or leasing good s ;6 (2) The defendant made the stateme nt or engaged in the conduct on which the claim is based in the defendan t ’ s capacity as a seller or lessor of those goods or services; (3) The statement or conduct at i ssue aro se out of a commercial transaction involving the kind of goods or s e rvices the defendant provides; and (4) The intended audience of the statement or conduct were the actual or potential customers of the defendant for the kind of goods or service s the defendant provides.

Castleman , 546 S.W.3d at 688. We may r ely on the factu a l allegations in USA Lending ’ s petition, alone, to meet the elemen ts

. See Hawkins v. Fox Corp

. Housing, LLC , 606 S.W.3d 41, 46 (Tex. App.

― Houston [1 st Dist.] 2020, no pet. ). USA Lending a sserted th at Winstead is a law firm doing business in Harris Count y , Texas , Ruiz is a partner in the firm, and t hey represented USA Lending in litigation against its former employee. This satisfies the allegation that Winstead is primarily engaged in the business of selling legal services. USA Lendi ng further alleged t h at , in the cour se of that representation, Winstead filed the com plained

- of mot ion . That is, Winstead made the statement in its capacit y

as a seller of legal services

. This satisfies the s econd Castleman element. W e turn now t o the third ele me n t

. The co mmunications the commercial speech exemption applies to are those made as “ commer cial speech w hich does no more than propose a commercial transaction. ” Castleman , 546 S.W.3d at 690. A commercial transaction is generally a busine ss deal. See C ommercial T ransaction , B LACK ’ S L AW D ICTIONARY (10 th ed. 2014). Commercial speech is expression related solely to the economic interests of the speaker and its aud ience. See Marketshare Telecom, L.L.C. v. Ericsson, Inc. , 1 98 S.W.3d 908, 918 (Tex. App.

― Dallas 2006, no pet.). “ [T] he exemption is not established unless the challe nged
statement was ‘ about ’ the speaker ’ s particular goods or services, or the sp eaker ’ s business of selling them. ” Toth v . Sear s Home Improvement Pr ods., Inc. , 557 S.W.3d 142, 1 54 (T ex. App.

― Houston [1 4 th Dis t.] 201 8, no pet.). In contrast , the communication at issue here , the motion to enter a default judgment, did
not ar i se out of the sale or solicitation of Winstead ’ s legal services or a commercial transaction

. See S chimme l v. McGregor , 438 S.W .3d 847, 857

- 58 (Tex. App.

― Houston [ 1 st Dist.] 2014, pet. denied); Pena v. Perel , 417 S.W.3d 552, 555 (Tex. App.

― El Paso 2013, no pet.). We conclude that USA Lending failed to e stablis h the applicability of the commercial spee ch7 ex em p tion. 3 See Castleman , 546 S.W.3d at 688. Therefore, we turn to a discussion of whether U SA Lending proved i ts prima fac ie case which it must do to avoid dismissal of its suit. Prima Facie Case To defeat W i nstead ’ s TCPA motion to dismiss, the TCPA requir e s USA Lending t o est ablish by clear and specific evidence a prima facie cas e for e ach essenti al element of its legal malpractice claim. T EX

. C IV

. P RAC

. & R EM

. C OD E A NN

. § 27.005 (c)

. “ Clear ” means unambigu o us, sure or free from doubt, and “ specific ” mean s explicit or relatin g to a particular named thing. In re Lipsky , 460 S.W.3 d at 590

. A prima facie case is “ the minimum qu antum of evidence necessar y to support a rational inference that the allegation of f act is true. ” Id . It refers to evidence suffic i e nt as a matter of law to establish a given fact if it i s not reb utt ed or contradicted. Id

. T o meet t he “ clear and specific evidence ” requirement , a plaintiff must provide enough detail to show the fac tua l basis for its claim. Id

. at 591. The TCPA doe s not

r equire direct evidence of each essential element of the underl ying claim to avoid dismissal

. Id

. However, conjecture, guess, or speculation c annot survive “ clear and specific ” scrutiny under the TCP A

. S ee Va n der Lin den v. Khan , 535 S.W.3d 179, 1 9 5 (Tex. App.

― Fort Worth 2017, pet. denied ). To prevail on a legal malpractice claim , the plaintiff must prove the defendant owed the plaintiff a duty of care , the defendant b reached that duty, the breach pr o ximately caused the plaintiff ’ s injury, and t he plaintiff suf fered damages

. Akin, Gump, Strauss, Hauer & Feld, L.L.P. v. N at ’ l Devel

. a nd Res earch Corp. , 299 S.W.3d 106 , 112 (Tex. 20 09 ). The remedy for legal m alp ractice is com pensat ory damages, the goal of which is to put the plaintiff “ in a position

s ubstantially equivalent in a p ecuniary way to that whi ch he would have occup ied had no t ort been committed. ” Id

. at 122. Specifically , the plaintiff must prove th e amount of damag es that would have bee n r e coverable and collect a ble, if the other case had been properl y prosec uted. Id

. at 112. The time at which collectability is de termin e d is as of or after the time a judgment was first signed in the underlying case. Id . at 109. To prove collectability , t h e plaintiff may show the underlying defendant was solvent, or had curren t in come, profits, or access to fin ances that can be di verted to sa tisfy a judgment, or th e judgment would have been paid from another source such as insurance or a surety. Id . at 11 4

.

3 USA Lending has not provided and we ha ve found no cases where the Commercial Speech Exempt ion has been found to apply in a legal malpracti ce case.8 Accordingly, w hen the claim is that lawyers improperly r epr esen ted the plaintiff in another case , caus ing an adverse result , the p laintif f must produce evidence from which a jury may reasonably infer that the a ttorney ’ s conduct caused the damages alle ge d

. Alexander v. Turtur & Assocs., Inc. , 146 S.W.3d 113, 117 ( Tex. 2004). To prove causation, the client claiming attorneys ne gligen tly rep resented it in anoth er case must show that the c l ient would have achieved a more favorable result in the underlying s uit if the cli ent had been represented by

non - negligent attor neys

. Rogers v. Zanetti , 518 S.W.3d 394, 401 (Tex. 2017)

. Proximate cause has two e lements: cause in fact and fo reseeability. Akin, Gump , Strauss, Hauer & Feld, L.L.P. , 299 S.W.3d at 122. C a u se in fact must be established by pro o f that (1) the negligen t act or omission was a substantial fact or in bringing about the harm at issue, and (2) absent the negligent
act o r omission, t he harm would not have occurred. Id

. Causa tion must be proved, an d conj ecture, guess, or speculation wi l l not suffice as that p roof. Id

. Winstead does not argue that it did not owe a duty to act with ordinary care or that it did not breach t hat duty

. T hus, we need only discuss the elements of causation and dam a ges. F

orum and Decision Maker Before we addre ss whether USA Lending met its burden to prove a prima facie c ase, we must consider Winstead ’ s argu ment that the for um and the decision

- maker are central to the question of whether the alleged malpractice caused harm in the underlying case. Winstead asserts that t o succeed on its m alpract i ce claim, USA Lending must show that the specific judge presiding ov er the Ahmari case, Judge Sam Spa rks, would h ave a warded money damages had a request for them been included in th e motion for default judgment. We are unpersuaded by this
arg ume nt. To support this argument, Winst ead relies heavily on Rogers v. Z anetti

. Ther e, i n the
proces s of anal y z ing the sufficiency of the cl ient ’ s evidence on th e issue o f ca usation, where the complaint was that the attorney should have presented an addi tional exper t , the cou rt explained that a testifying expert referred to stateme nts mad e by a juror in the underlying case

. The court
commente d that it would not “ add ress wheth er a juror ’ s testi m ony about his or her mental processes could ever be com petent evidence in a subsequent malpractice case. ” Id . at 407 n.3. The court assumed witho ut deciding that “ the secondhand juror testimony is comp et e nt evidence , ” recognized that i t informed the exp e rt ’ s opinion , then wen t on to determine that it did not suppo rt an opinio n that a reasonable jury would have credited the testimony of a competing9 expert ha d it be en g iven the chance. Id

. at 408. The c ourt held that the affidavit was c onclusory and inco m petent summary judgment evidence. Id

. Rogers does not suppor t Winstead ’ s position. The Rogers court had to acknowledge that the expert relied on juror te stimony, but it in no way suggested t hat courts hear ing legal mal practice claims s hould consider the particular forum or dec ision maker involved in the underlying suit in rul ing on the m alpractice claims

. Winstead also relies on Brown Sim s, P.C. wh ere the court co nsidered whet her the TCPA applied to a mal practice suit brought by a former client against i t s attorneys. O ne of th e former client ’ s complaints revolved arou nd the a ttorneys ’ fail ure to file a specia l appearance based on minimum contacts w ith the jurisdic tion

. T he proffered expert affidavit disc ussed the importance of using procedural mechanism s to remove the ca se from the cou nty in which it was filed due to the like lihood that tr ying the case in a d ifferent jurisdiction would result in “ a lower settlemen t value. ” Brown Sims, P.C. , 594 S.W.3d at 581

- 82. Thus, the discu ssion of the forum of the underlying case was central to the specific malpract ice asser ted agains t the defendant . The Brown Sims, P.C. court did not state that t he specific forum and specific dec ision maker are always central to the question of causation. USA Lending respond s tha t the sufficiency of evid ence in a legal mal practice claim is bas ed on what an object ive reasona ble fac tfinder would decide. It relies in part on Alexand er
. There, the client brought a legal malpractice suit against the attorney who represented i t in ban krup tcy court

. T he client presented expert testi mony that ref erenced the bankruptcy j udge, stating “ the evidence that was offered and admi tted at trial c a used J udge Able to make the decision that he made. ” Alexander , 146 S.W

. 3d at 121. The j ury was aske d whether, in reasonable probab ility, a bankruptcy judge wo uld have decided the underlying adversary proceeding dif ferently if the attorney had personally tried the case o r if he or co

- counsel had introduced other evidence. The jury found in favor of the c lient, but the trial court granted the attorney ’ s m otion for judgment notwithst anding the verdict on the issue of causation

. T he
supreme court ’ s discuss ion of the bankr uptcy judge arose o ut of the expert ’ s testimony , in light of the wo rding of the jury c h arge , in t he normal course of reviewing the case

. See id . at 119. Whether any charge error existed was not an iss ue in the case. However, b oth the maj ority and the co ncur rence in dicated that it w ould be inappropriate for a judge to testify as to how he might have ruled. The majority noted that the bankruptcy jud ge was “ quite prop erly not asked to, and10 did not, testi fy as to how he might have ruled if t he case had been presented differently. ” Id

. The concurr ing justice stated th at he doubted whether a jury could be e xpe cted to determine, even with e xpert testimo ny, wh at a judge w ould have decided in hypothetical circumstances. Id

. at 122. (Hecht, J., concurring). T he court applied the standard of review re quired in that case to determine whether the t rial cou rt erred in determin ing that the jur y was co mpetent t o determine

caus ation without expert authority. Id . at 1 17

- 1 2 0

. Our review of the caselaw reinforces our determination that Winstead ’ s argument has no ba sis in law or practicality

. The argumen t implies that judges of different bac kgrounds or temper a ments , or with different j udicial philosophies, are free to allow their personal inclinations to influence their decisions. Judges are not at liberty to awar d damages based on their own arbitra ry s t a ndards . They all must fai thfully ap ply the law

. The sup reme court has not i ndicate d
t hat malpractice suits should highlight the particular forum or judge involved with the underl ying

case. Legal malpractice cases are decided and review ed using the law a pplicable to the case depending on the p rocedure by which it was disposed of in the tr ial court

. See Starwood Mg m t., LLC v. Swaim , 530 S.W.3d 673 ( Tex. 2017) (per curiam) ( review of summar y judgment rende red against client in legal malpractice suit) ; Rog e rs , 518 S.W.3d at 411

- 12 (same) ; Stallworth v. Ayers , 510 S.W .3d 187, 194 (Tex. App.

― Houston [1 st Dist.] 2016, no pet.) (r eview of Rule 91a dismissal of legal malpractice claim having n o basis in law) ; Vuong v . Luk , No. 01

- 11

- 00178, 2013 WL 6728992 (Tex . App.

― Houston [1 st Dist. ] December 17, 2013, pet

. d enied) (per curiam) (mem. op.) ( leg al and factual sufficiency review of bench trial where court fo und attorney committed legal malpractice ) ; Primis Corp. v. Milledge , No. 14

- 08

- 00753

- CV, 2010 WL 21039 36 (Tex. App.

― Houston [14 th Dist.] May 27, 2010 , no pet.) (mem. op.) (after bench tria l in legal malpractice suit , court rendered take

- nothing judgment because the attorney ’ s negligence was not the proximate cause of plai ntiff ’ s damages; affirmed on appeal because expert testimony was necessary on issu e of caus ation) ; Ballesteros v. Jo nes , 985 S .W.2d 485, 494 (Tex. App.

― San Antonio 1998, pet. denied ) (op. on reh ’ g) ( court reviewed sufficiency of the evidence supporting jury findin gs in legal malpractice suit where jury charge limited its defini tions to county where underlying suit was tried ) ; s ee also U.S. Bank Nat ’ l Ass ’ n v. Verizon Commc ’ n s , Inc. , 761 F. 3d 409, 431 (5 th Cir. 2014 ) ( explaining that a federal d istrict
court ’ s findings o n valuation are reviewed for clear error, and “ [a] finding is clearly erroneous when there is no evid ence to support it, or if the revie wi ng court, after assessing all of the11 e vidence, is left with the defini te and firm conviction that a mistake h as been committed ” )

. USA Lending was required to show that an objectively reasonable judge would have awarded damages had a request for them bee n included in the moti on for default j udgment. USA Lending was under no obligation to present evidence specifically referencing how Judge Sam Sparks would have ruled. Causation

- Damages Next , Winstead asserts th at USA Lending present ed no evidence that it wo uld have been

awa rded damages if the reques t had been included in the motion for default jud gment. It was USA Lending ’ s burden to produce evidence from whic h a jury may reasonably infer that, but for Winstead ’ s conduct, it would h ave achieved a more favor able result in the underlying suit, that is, it would have been awarded damages. See Alexander , 146 S.W.3d at 118

- 12 0. In the TCPA context, we must al so ap ply the “ clear and specific evidence ” requi r ement . This means that USA Le nding must provide enough detail to show the factual basis for its claim and provide enough evidence to support a rational inference that the al legation of fact is true. See Dallas Morning News, Inc. v. Hall , 579 S.W.3d 370, 377 (Tex. 2019). As asserted in the underlying federal suit, USA Lending hired Michael Ahmari as its chief marketing officer, r esponsible for the development of the com pany ’ s retail

– wholesale websites , the emp loyee intranet, and the social media for the company. On behalf of USA Lending, Ahmari was to acquir e all domain names and toll

- free n umbers utilizing , or similar to , its business name and slogan. Ahmari set up an offi ce in California, acquired certain dom ain names, arranged for website develo pment and marketing services, and acquired the rights to a
to ll

- free number. Ahmari then resigned and USA Lending learned that he had regist ered domain names and phone numbers in his own name or aliases, not in the na me of USA Lending. It is the expenses associated with Ahmari ’ s activities and paid for by USA Lend ing that USA Lending identifies as its damage s. To prove its damages, USA Lending presented affidavits of James N. Isaa cs, founder and CEO of USA Lending , af fidavi ts of experts, and numerous docu ments and r ecords

. Isaacs explain ed that its employee , Ahmar i, di verted the owne rship and use of USA Lendi ng ’ s registered name, websit e, and telephone number for his use and benef it. USA Lending alleged that Ahmari ’ s actions caused over a mil lion dolla rs in damages variously described as lost out of pocket costs, lost profits, lost business opportunities, and loss of use damages

. Isaacs provided12 documentation showing various expe n ses USA Lending committed to during i ts endeavor with Ahmari

. Win stead co mp lains that many of the records submitted by USA Lending to p rove its damages ar e records of a s eparate entity, USA Lend Cash, LLC. USA Le nding invites us to take judicial notice of the rel a tion s hip between USA Lendin g and USA Len d Cash, LLC. Be cause this question goe s to the merits of the dis pute, we decline to d o so

. See SEI Bus. Sy s., Inc . v. Bank One Tex., N.A. , 803 S.W.2d 838, 841 (Tex. App.

― Dallas 1991, no writ) ( holding th at

“ [a] s a general rule appellate courts take judicial notice of facts outside the record only to determine jurisdiction over an appeal or to resolve matters a ncillary t o decisions which are mandated by law ” ). We no t e that the evidence , including bank stat ements and billing invoices, show definit ively that the two companies, and James N. Isaacs, all share the same exact address

. For
our purposes, esp ecially in light of our rulin g on collectability, we need not consider the USA Lend Cash balance sheets and general ledgers. The remainder of the ev idence shows that USA Lending was bill ed for purchase of a doma in name, website development and marketing, charges

ass ociated with the toll

- free number, and payroll and other operat ing expense s

. A t least some of th ese expens es , as well as Ahmari ’ s salary , were paid out of USA Lending ’ s Frost Bank bu siness checking ac count. At this stage, USA Lending was not required to produce evidence supporting an amount or the constituent parts of its damages. See In re Lipsky , 460 S.W.3 d at 590

- 91 (pleadings and evid ence showing factual basis for claim is sufficient to meet TCPA burde n ) ; Deuell v. Tex. Right to Life Comm., Inc. , 508 S.W.3d 679, 689 (Tex. App.

― H ouston [1s t Dist.] 2016, pet. denied)

. Additiona lly, w hether USA Le nding ’ s e vidence is characterized as lost profits, out of pocket expenses, or otherwise, is insign ificant at th i s stage. USA Lending w as only required to adduce evidence supporting a ra tional inference as to the existence of its damages. See In re Lipsky , 460 S.W.3d at 59 0

. We conclude USA Len ding ’ s evidence satisfies this requirement

. Causation

- Collect a bility In its malpractice suit, USA Lending must prove both the existence of dam ages and that it would have be en able to collect those damages from Ah mari. See Akin, Gump, Strauss, Hauer & F eld , L.L.P. , 299 S.W.3d at 112. Therefore, collec t ability is an element of USA Lending ’ s claim which it must establish by clear and specific evi dence. See T EX

. C IV

. P RAC

. & R EM

. C ODE13 A

NN

. § 27.005 (c)

. Winstead a s serts U SA Lending presented no com petent evidence that, had dama ges been awarded , it could have collected any amou nt from Ahmari. According to USA Lending, a judgment against Ah m ari wou ld have been collect a b le from various fund sources, including Ahmari ’ s w ife ’ s income , investmen t s , and the significant line of credit issued to her
company

. To addre ss the issue of collect a bility , USA Len din g presented expert a ffidavits of Kevin Finck and Anthony Musgrave. A n expert may base an opinion on fac ts or data in the case that the expert has been made

aw a re of, review ed, or personally observed. T EX

. R. E VID

. 703

. Additionally, experts may rely on some assumptions provided by the party hiring t hem. See Hou ston Unlimited, Inc. Metal Proc essing v. Mel Acres Ranch , 443 S.W.3d 820, 832

- 33 (Tex. 2014)

. Courts m ust rigorously examine the validity of the facts and assumptions on which expert testimony is based. Id

. at 832 ; Whir lpool Corp. v. Camacho , 298 S.W.3d 631, 637 (Tex. 2009) . If the record c ontains no evidence supporting an expert ’ s material factual assumptions , or if such assumpt ions are contr ary to conclusively proven facts, opinion testimon y founded on those assumptions is not competent

ev idence. Mel Acres Ranch , 443 S.W.3d at 833 ; see also Williams v. I l l. , 567 U.S. 50, 81 , 132 S. Ct. 2221, 2 241 (2012) ( “ [I]f the prosecution cannot muster any independen t admissible evidence to prove the foundational facts that are ess ential to the relevan ce of the expert ’ s testimony, the n the expert ’ s testimony cannot be gi v en an y wei ght by the t rier of fact. ” )

. “ A contrary approach would allow parties w ith the bu rden of proof on a particula r fact (such as causation ) to avoid th e obligation to put fort h e vidence by simply instructing their expert to assume the fact i n formi n g t heir opinion s. ” Mel Acres Ranch , 443 S.W.3d at 833. F urther, f acts from which an inference may pr operly be draw n must be est ablished by direct evidence , not by other inferences. M erck & Co., Inc. v. Ernst , 296 S.W.3d 81, 99 (Tex. App.

― Houston [14 th D is t .] 2009, pet denied)

. Finck, a lawyer with substan t ial experience in the formation and operati o n of new businesses , provided “ an opinion concerning the collectability of a hypothetic al, fi nal and non

ap pealable judgme n t for out

- of

- pocket loss and expen s e t otaling between $1,200,000 and $1,500,000 rendered against Mike Ahmar i

. . . . ” Central to Finck ’ s opinions is a business cal led All Home Lending, I n c. , referred to as AHL

. He con cluded that it is “ reasonably likely that the hypotheti cal judgment co u ld be collected from available funds from the Ahmaris ’ community14 property inter est in AHL. ” We are charged with r igorously examining the validity of the facts

a nd assumptions on which this conclusion is based. See Mel Acres Ranch , 443 S.W.3d at 832. R e ly i ng on information given to him by USA Lending, Fin ck seem s to take as true that Ahmari was ma rried to someone named Ana. Although we did not find any evid ence in the record that Ahm ari was married to a woman named Ana, Winstead does not contest that f a ct

. Based on public records, Fin c k learned that Ana is AHL ’ s President, C FO, and Secretary. Fr om this, Fin ck deduced that “ it appears that Mrs. Ahmari c ontrols the entity. ” Also, Fin ck references a June 24, 2017 email from Ahmari to Isaacs in which Ahm a ri purpo r tedly solici ted an investment i n AHL from Isaacs and , Finck asserts, shows that Ahm ari has co ntrol over AHL. The email is not in our record. However, we note th a t the federal suit against Ah mari was pending on the d a te that ema il was allegedly s ent. 4 Fu r ther, Finck presumed Ana ’ s equity in AHL and compensation she receives would be available to satisfy t he judgment. He deduced that AHL ’ s ne t worth was between $500,000 and $1 ,000,000 and that it could be reached by a creditor of Ahmari ’ s. He i n f erred th a t the Ahmaris ’ income derived from AHL would b e substantial. He further opined that the proceeds from Ana ’ s ownership of AHL th a t were reinve sted in outside accounts and inve stments could also be reached by judgment creditors. Finck admittedly b ased his conclusion s on a series of assumptions. He as sumed that Ahmari was married to Ana at the time of the judgme nt, A na

owns all or substantially all of AHL , Ana purchased AH L wit h community property , there was
no pre - nuptial or post

- nuptial ag r e ement af f ecting ownership of AHL , and there was no transmutation of community prop erty into Ana ’ s separate prope rty , or if there was, it was fra udulent

. F inally, Finck as sumed that Ah mari oper ates and controls AHL. To satisfy its burden on collectabili t y, USA Lending was required to prove by clear and speci fic evidence the fair market value of Ahmari ’ s net assets that would have been subject to legal pro cess for satis faction of a judg ment for actual damages against him. See id

. at 114. Even if we acce pt ed Finck ’ s assumption that Ana owned shares of AHL by virtue of her rol e as an office holder of the corporation, there is no evidence before us as to the number of AHL shares

4 Even if the email support ed Finck ’s assumption that the solicitation to Issacs shows Ahmari ’s control of AHL, that evidence predates the federal cou rt judgment. Eviden ce a defendant in the underlying suit could have sati s fied a judgment at t imes prior to the time a judgment is si gned generally will not be relevant to or probative of the judgment ’s collectabil ity , unless it is shown that the defen dant ’ s ability to satisfy a judgment was not diminished by the passage o f time until judgment was signed. See Akin, Gump, Strauss, Hauer & Feld, L.L.P ., 299 S.W.3d at 113

- 14.15 Ana held , what percentage of t he shares she held, whether those shares were res tricted or whether some o f the shares she held, if any, were encumbered. These facts are necessary to establish whether any shares of stock held by Ana cou l d be reached by creditors and the net value of her sto ck ownership. USA Lending ha s presented no f acts to establish the net value of any asset owned by Ahmari or any facts of an alternative basis for Ahmari ’ s solvency

. See Webb v. Stockford , 331 S.W.3d 169, 177 ( Tex. App.

— Dallas 201 1, pe t. denied). Col lecta bility must be proved, no t presumed , an d whe n relying on expert opinion to prove collectability , the expert ’ s m aterial assumptions must be substantiated

. See Mel Acres Ranch , 443 S.W.3d at 833 ; Akin, Gump , Strauss, Hauer & Feld, L.L.P
. , 299 S.W.3d at 115. An opinion is conclusor y and cannot be con sidered probative e vi d ence if it lacks a factual basis. Sw. Energy Prod. Co. v. Berry

- Helfand , 491 S.W.3d 699, 717 (Tex. 2016). Finck ’ s ultimate conclusion, th at USA Lending could have coll ect ed a judgment against Ahmari , i s not based on demonstrable, re asonable facts. S ee Starwood Mg m t., LLC , 539 S.W.3d at 679. His explanation
as to why he reached this opin ion is not based on facts at all. Instead, he impermissib ly stacked several inference s on each other

. See Ernst , 296 S.W.3d at 99 ; Entex v. Gonzal ez , 94 S.W. 3d 1, 8 (Tex. App.

― Houston [14 th Dist.] 2002, pet. denied) (held that “ a vital fact may not be established by piling inference upon inference ” ) . There is no evidence proving the fu n damental facts that are essential to Finck ’ s ultimate conclusion , only assumptions

. See Wil liams , 567 U.S. at 81, 132 S. Ct. at 224 1

. Finck ’ s critical assumptio n that Ahmari con trols AHL and that he has access to AHL ’ s assets i s n ot c ompetent evidence

. 5 See Mel Acres Ran ch , 443 S.W.3d at 833

. USA Lending also offered the affidavit of Anthony M usgrav e who reviewed multiple documents regarding AHL. He stated that the documents establish the existence of quantifiable assets of at le ast $1,000, 000 in the possession of AHL f or the applicable time perio d

. Unfortunately , Musgrave ’ s testimony is in c o mpetent to prove collectability as it has no signi ficance apart from the unsubstantiated assumptions in Finck ’ s affidavit. See Mel Acr es Ranch , 443 S. W.3d at 833. We conclude that USA Lending failed to produce evidence that a judgment for damages
aga i n st Ahmari in the underlying suit would have bee n coll ectable. See Akin, Gump , Strauss,

5 Contrary to the facts i n t he cases cited by USA Lending, this case involves a default judgm ent where Ahmari chose not to answer and contest the lawsuit brought against him seeking monetary damages. From this actio n, one could infer that Ahmari was not concerned that any judgment against him for monetary dam ag es would be c ollectabl e.16 Hauer & Feld, L.L.P. , 299 S.W. 3d at 112

- 1 3 . As a result, there is no evidence that , but for Winstead ’ s negligence in the underlying suit, USA Lending wou ld have achi e v ed a more f avorable result against Ahmari. See id

. ; Alexander , 146 S.W.3d at 118

- 20. Accordingly, USA Lendin g did not establish by cl ear and specific evidence a prima facie cas e f or the causation element of its malpractice suit. See T EX

. C IV

. P RAC

. & R E M

. C ODE A NN

. § 27.005 (c) ; Alexander , 146 S.W.3d at 118

- 20

. W e sustain Winstead ’ s sole issue.

D ISPOSITION Because USA Lending did not meet its burden to present a prima facie ca se, the trial
court erred by deny ing Winstead ’ s motion to dismiss. Accordi n g ly, w e reverse the trial court ’ s order denying Winstead ’ s motion to dismiss. W e remand the case to the trial court to enter an order o f dismissal and for further proceedings cons is tent with this opinion. See T E X

. C IV

. P RAC

. & R EM

. C ODE A NN

. § 27.009(a)

.
G RE G N EELEY Justice Opinion delivered March 18 , 2021. Panel consisted of Worthen, C.J., Hoyle, J., and Nee ley, J.17 

## COURT OF A PPEALS

TWELFTH COU RT OF APPEA LS DISTRI CT OF TEXAS
JUDGMENT

MARCH 18 , 202 1

NO. 12

- 20

- 0 0 1 72

- CV

WINSTEAD PC AND JAMES RUIZ , Appellant s V. USA LENDING GROUP, INC. , Appellee

Ap peal from the 281st District Court of Harr is County, Texas (Tr .Ct.No. 2020

- 03028 )
THIS CAUSE came to b e heard on the oral arguments, appellate record, and briefs fil e d herein , and the same being considered, it is the opinion of this court that there was

error in the trial court ’ s order. It is ther efore OR DERED, ADJUDGED and DECRE ED that the order o f the

co urt below be reversed and the cause remanded to t he trial court f or further proceedings. It is FURTHER ORDERED that all costs of this appeal are hereby adjudged against the Appellee, USA LENDING GR OUP, INC
. , for which execution may issue, and that th is deci sion be certifi e d to the court bel ow for observance. Greg Nee ley , Justice

. P a nel consisted of Wor then, C.J., Hoyle, J., and Nee ley, J.