Court Opinion

ID: 3128875
Source: CourtListenerOpinion
Date Created: 2015-10-16 16:12:02.058189+00
Date Added: 2024-06-11T11:53:39.642181
License: Public Domain

Opinion issued March 17, 2010.

In The
Court of
Appeals
For The
First District
of Texas
————————————
NO. 01-09-00910-CV
———————————
Commission for Lawyer Discipline, Appellant
V.
Jeffrey M.
Stern, Appellee

 

 
On Appeal from the 61st District Court
Harris County, Texas

Trial Court Case No. 2007-54956
 

 
O P I N I O N
          In
this lawyer discipline case, we examine the trial court’s jurisdiction to
consider allegations of misconduct against a lawyer added after the initial grievance,
but before the lawyer elected to have the trial court hear and determine their
merit.  The Texas Commission for Lawyer
Discipline (Commission) instituted this suit against attorney Jeffrey Stern
after the investigation of a grievance against him resulted in a determination
of just cause to believe that Stern had engaged in professional misconduct.  The Commission then added three additional allegations
of misconduct to the proceeding.  Stern
timely notified the Commission that he elected to proceed with the matter in
state court.  Stern then answered in the
trial court and filed a plea to the jurisdiction, contending that the trial
court lacked subject matter jurisdiction over the Commission’s suit.  The trial court granted the plea.
We hold that the trial court erred
in dismissing the disciplinary action because Stern properly invoked the
court’s jurisdiction, and the Commission’s amendment of the grievance against
Stern neither deprived the court of jurisdiction nor offended due process.  We therefore reverse the trial court’s
judgment and remand the case for further proceedings.
Background
In July 2004, the Chief
Disciplinary Counsel (CDC) of the State Bar of Texas received a letter from Jeremiah
Sprague, a Louisiana attorney, enclosing an original petition and motion to
remove.  Sprague sent these pleadings at
the behest of a federal district court in Louisiana.  The Louisiana petition alleged legal
malpractice action against Stern by his former client, James LaFleur.  In his letter, Sprague wrote that Stern improperly
had solicited LaFleur through the use of case runners in March 2002.  Sprague enclosed additional filings from a
case he had brought for another of Stern’s former clients, Roland Jones, alleging
the same conduct.  In closing his letter,
Sprague noted that he also had been contacted “by other persons who claim to
have knowledge of Jeffrey M. Stern and the use of case runners by Stern in
Louisiana.”  Sprague did not disclose any
specific information about these claims, invoking the attorney-client
privilege.  The CDC conducted an
investigation into the charges and dismissed the Sprague complaint in September
2005.
          About
nine months later, in June 2006, The CDC received another complaint concerning
Stern, this time from a Texas and Louisiana-licensed attorney, Frank Neuner, Jr.  In his correspondence, Neuner enclosed various
documents that “involve[d] allegations of running cases against Jeffrey Stern.”
Those documents related to the same LaFleur and Jones matters discussed in the
Sprague grievance.  But the Neuner letter
closes with the following:
Subsequent to our conversation, I spoke with Chuck Plattsmeier, who is
the Chief Disciplinary Counsel for [] Louisiana, and he would be happy to share
information that his office has developed regarding Jeffrey Stern.  Chuck’s number in Baton Rouge is
225-293-3900, and I have taken the liberty of copying Chuck on this
correspondence so he will be aware of the information that I have sent to
you.  
The Texas
CDC forwarded a copy of Neuner’s letter to Stern with a cover letter explaining
that Stern had thirty days to respond to the complaint.  See
Tex. R. Disciplinary P. 2.10, reprinted
in Tex.
Gov’t Code Ann., tit. 2, subtit.
G app. A-1 (West Supp. 2010) (“If the Grievance is determined to
constitute a Complaint, the Respondent shall be provided a copy of the
Complaint with notice to respond, in writing, to the allegations of the
Complaint.”)  
Stern responded.  He
reminded the CDC that it had considered the LaFleur and Jones matters when it dismissed
an allegation of professional misconduct in connection with the Sprague
complaint.  
This time, however, the CDC decided to proceed.  In correspondence dated November 13, 2006,
the CDC replied to Stern that it had investigated the Neuner grievance and determined

that there is Just Cause to believe that you have committed one or more
acts of Professional Misconduct as defined by the Texas Rules of Disciplinary
Procedure (TRDP).  In accordance with
TRDP 2.14D, a statement of your acts and/or omissions and the Texas
Disciplinary Rules of Professional Conduct that the Chief Disciplinary Counsel
contends are violated by the alleged acts and/or omissions will be sent to you
at a later date.
In April
2007, the CDC sent Stern a written statement detailing the bases for the misconduct
it alleged and specifying the rules it contends that Stern violated.  In the April letter, the CDC included three counts
of improper client solicitation arising out of Stern’s conduct in connection
with his former clients Corey Batiste, Jeremy White, and John Cobb.  Stern’s conduct with regard to these clients was
the subject of a Louisiana state bar investigation.  The Neuner grievance had alluded to a
Louisiana bar investigation, but it did not describe any of the alleged conduct
that formed the basis of that investigation or name these clients.
Enclosed with its statement, the CDC provided Stern with a
form to use to elect either to proceed before an evidentiary panel of the
district grievance committee or in the district court.  The CDC cautioned Stern to return his written
election within twenty days.  Stern completed
the form to reflect his election to have the Commission try the claims against
him in state court, and he timely returned it to the CDC.
The Commission then instituted these proceedings based on all
of the claims identified in the CDC’s April 2007 statement of misconduct.  Stern moved for partial summary judgment on
the claims arising out of the Lafleur and Jones matters based on the statute of
limitations.  See Tex. R. Disciplinary P.
15.06 (prohibiting discipline for “Professional Misconduct occurring more than
four years before the time when the allegation of Professional Misconduct is
brought to the attention of the Office of Chief Disciplinary Counsel,” except
where fraud or concealment is involved or misconduct makes disbarment or
suspension compulsory).  In response, the
Commission amended its petition to drop the claims arising out of the LaFleur
and Jones matters, leaving only the complaints against Stern arising out of the
Batiste, White, and Cobb matters.
Stern then filed a plea to the
jurisdiction in the trial court, contending that the CDC had failed to exhaust the
applicable administrative procedures, in violation of Stern’s right to due
process by including the Batiste, White, and Cobb matters in the April 2007
statement even though the Neuner grievance did not expressly refer to them.  Stern claimed the CDC did not provide him with
notice of those allegations and an opportunity to respond to them.  He argued that their inclusion in the initial
grievance was a precondition to the CDC’s proceeding in district court on these
claims.  The trial court granted Stern’s
motion and dismissed the case.
Discussion
I.       Plea
to the Jurisdiction
A.      Standard of review
If an agency has exclusive
jurisdiction to determine a matter, a litigant’s failure to exhaust all
administrative remedies before seeking judicial review of the administrative
body’s actions deprives the court of subject matter jurisdiction over claims
within the body’s exclusive jurisdiction, and the court must generally dismiss
such claims without prejudice.  Tex. Gov’t Code Ann. § 2001.171 (West
2000); Subaru of Am., Inc. v. David
McDavid Nissan, Inc., 84 S.W.3d 212, 221 (Tex. 2002); see Tex. Gov’t Code Ann.
§ 311.034 (West Supp. 2006) (providing that “Statutory prerequisites to
suit, including the provision of notice, are jurisdictional requirements in all
suits against a governmental entity.”).  Whether
an agency has exclusive jurisdiction is a question of law we review de novo.  Subaru
of Am., Inc., 84 S.W.3d at 222 (citing El
Paso Natural Gas Co. v. Minco Oil & Gas, Inc., 8 S.W.3d 309, 312 (Tex.
1999), and Mayhew v. Town of Sunnyvale,
964 S.W.2d 922, 928 (Tex.1998)). 
In reviewing a plea to the
jurisdiction, we look to the allegations in the pleadings, construe them in the
plaintiff’s favor, and consider the pleader’s intent.  See
County of Cameron v. Brown, 80 S.W.3d 549, 555 (Tex. 2002).  We consider the facts alleged in the petition,
and to the extent relevant to the jurisdictional issue, any evidence submitted
by the parties to the trial court.  See Bland Indep. Sch. Dist. v. Blue, 34
S.W.3d 547, 555 (Tex. 2000).  The
plaintiff bears the burden to allege facts affirmatively demonstrating the
trial court’s jurisdiction to hear a case.  See Tex.
Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 446 (Tex. 1993).  When, as here, the trial court granted grants
a motion to dismiss with prejudice without stating the grounds for the
dismissal, we may affirm it on any ground presented to the trial court.  See
Weiner v. Wasson, 900 S.W.2d 316, 317 n.2 (Tex. 1995).
When a plea to the jurisdiction
challenges the existence of jurisdictional facts, a court may consider evidence
in addressing the jurisdictional issues. Tex.
Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 227 (Tex. 2004).  If the evidence reveals a question of fact on
the jurisdictional issue, the trial court cannot grant the plea, and the issue
must be resolved by a factfinder.  Id. at 227–28.  If the evidence is undisputed or fails to
raise a question of fact, the court should rule on the plea as a matter of law.
 Id.
at 228.  After a defendant asserts, and
supports with evidence, that the court lacks subject matter jurisdiction, the
plaintiff must show the existence of a disputed fact issue in order to avoid
dismissal for want of jurisdiction.  Id.  The standard of review for such jurisdictional
disputes “generally mirrors that of a [traditional] summary judgment.”  Id.  On the other hand, if the relevant evidence
is undisputed or fails to raise a fact question on the jurisdictional issue,
the trial court rules on the plea to the jurisdiction as a matter of law.
B.      Procedure for lawyer discipline
The attorney disciplinary process
begins when the CDC receives a written statement, from whatever source, alleging
professional misconduct by a lawyer. 
Until the CDC determines whether the statement actually alleges
professional misconduct, it is classified as a grievance.  Tex.
R. Disciplinary P. 1.06(R).  Within
thirty days of receipt, the CDC must determine whether the grievance is merely an
inquiry—that is, an allegation of conduct that, even if true, does not amount
to professional misconduct—or a complaint. 
Tex. R. Disciplinary P.
1.05(S), 2.10.  “Complaint” means
those
written matters received by the Office of the Chief Disciplinary Counsel that, either
on the face thereof or upon screening or preliminary investigation, allege
Professional Misconduct or attorney Disability, or both, cognizable under these
rules or the Texas Disciplinary Rules of Professional Conduct.
Tex. R. Disciplinary P.
1.06(G).  If the CDC determines that the grievance
constitutes a complaint, it must provide the attorney who is the subject of the
complaint with a copy of complaint along with notice of the attorney’s right to
respond, in writing, to its allegations within thirty days after receipt.  Tex.
R. Disciplinary P. 2.10.  The CDC
must determine whether there is just cause to proceed within sixty days after
the date by which the attorney must file a written response to the complaint.  Tex.
R. Disciplinary P. 2.12.  If the
CDC determines that just cause does not exist, then it forwards the complaint to
a summary disposition panel, which then makes an independent determination on
the existence of just cause.  Tex. R. Disciplinary P. 2.13.  If either the CDC or the summary disposition
panel decides that just cause exists, the CDC notifies the attorney of the attorney’s
acts or omissions that it contends violate the disciplinary rules, and the
substance of those rules.  Tex. R. Disciplinary P. 2.13.  Within twenty days after the attorney
receives that written notice, he may elect to have the complaint heard in a
district court.  Tex. R. Disciplinary P. 2.15. 
Otherwise, the administrative proceeding continues before a specially
appointed evidentiary panel.  Tex. R. Disciplinary P. 2.17.  
Here, Stern elected to proceed in district
court, and so the CDC petitioned the Texas Supreme Court to appoint a district
court judge to preside over the disciplinary proceeding.  At this point, the case proceeds like other
civil cases, except where the Rules of Disciplinary Procedure vary from the
Rules of Civil Procedure.  Tex. R. Disciplinary P. 3.02, 3.03,
3.08B; see Tex. R. Disciplinary P. 3.16 (providing that district court’s
judgment in disciplinary proceeding can be appealed “as in civil cases
generally”).  
C.      Exhaustion of administrative remedies
In the trial court, Stern claimed
that the CDC failed to allow Stern to exhaust his administrative remedies
because it skipped the initial just cause determination in the Batiste, White,
and Cobb matters.  The CDC added these three
matters in connection with its April 2007 letter to Stern, in which it stated
the bases for its allegations of professional misconduct.  
If an agency has exclusive
jurisdiction, then a party generally must exhaust all administrative remedies
before seeking judicial review of the agency’s action. Subaru of Am., Inc., 84 S.W.3d at 221.  If the party fails to exhaust those remedies,
before instituting suit, the trial court lacks subject matter jurisdiction and
must dismiss the claims.  Id. 
The exhaustion of remedies requirement ensures a decision on the merits
by the agency designated to make it, and thereby prevents courts from acting on
a controversy subject to administrative review before the agency has been
allowed to complete its own decision and review process.  See
Univ. of Tex. Sw. Med. Ctr. v. Loutzenhiser, 140 S.W.3d 351, 361–62 (Tex. 2004);
United States v. Paternostro, 966
F.2d 907, 912 (5th Cir. 1992).  
Here, Stern exhausted the
administrative proceedings for all of the complaints when he elected to proceed
in the district court after he received notice of them, including the Batiste,
White, and Cobb matters not raised in the Neuner grievance.  A just cause determination is not a decision
on the merits and does not involve an adversarial testing of evidence; it is
simply a predicate for instituting a disciplinary action against an attorney.  See Izen v. Comm’n for Lawyer Discipline,
322 S.W.3d 308, 316–17 (Tex. App.—Houston [1st Dist.] 2010, pet. denied).  The lack of a separate initial determination
with respect to the Batiste, White, and Cobb claims does not create a hole in
the administrative process so as to deprive the trial court of jurisdiction,
given the contents of the April 2007 correspondence.  That correspondence to Stern contains the
CDC’s specific allegations about Stern’s conduct in the Batiste, White, and
Cobb matters and contends that the alleged conduct violates specific
disciplinary rules.  Fully informed of
the allegations against him, Stern opted to require the CDC to proceed against
him in district court.  He did not
object, nor did he seek to avoid trial court jurisdiction.  Rather, he expressly invoked it.  Because Stern chose the judicial proceeding
rather than the administrative one, no administrative action was left for the
CDC or the Commission to take.  We hold
that the trial court was not deprived of its jurisdiction due to any failure to
exhaust administrative remedies.
D.      Timeliness of just cause determination
Stern also sought dismissal on the ground
that the Batiste, White, and Cobb claims were untimely.  Stern characterizes a November 17, 2006 letter
from Louisiana CDC Plattsmeier to the Texas CDC—which postdates the CDC’s just cause determination—as “a separate
grievance” concerning the Batiste, White, and Cobb matters.  According to Stern, the CDC is barred from
including the Batiste, White, and Cobb matters in the underlying proceeding because
the CDC did not receive the Plattsmeier letter until after it made the just
cause determination in the Neuner grievance, and the CDC failed to issue a timely
just cause determination for the Plattsmeier letter.  The Plattsmeier letter, however, does not
appear in the record, and the evidence in the record of its existence, timing,
and general content does not support Stern’s characterization of the letter as
a separate grievance, particularly in light of the CDC’s correspondence to
Stern showing that it found just cause to proceed on the Batiste, White, and
Cobb matters in connection with its investigation into the Neuner
grievance.  Thus, the trial court could
not properly have held that the letter obligated the CDC to begin a different investigation
and issue a separate just cause determination rather than continuing with the
Neuner investigation.  Stern did not object
to the inclusion of these matters with the Neuner grievance at the time he
chose to proceed in a district court.
Stern’s timeliness argument with
respect to the Batiste, White, and Cobb matters also points to the absence of
the regional disciplinary counsel’s written approval of the just cause
determination or of a written report detailing findings from its investigation,
as well as the lack of documentation before November 13, 2006, that expressly
mentions Batiste, White, or Cobb in response to Stern’s request for production.  The disciplinary rules, however, do not
require the written approval or report proposed by Stern, or, for that matter,
any additional documentation confirming a determination date.  The CDC’s November 13, 2006 letter to Stern
recites that the office completed its initial investigation and determined on
that same date that there was just cause to believe that Stern committed “one
or more acts of Professional Misconduct.” The CDC’s April 26, 2007
correspondence to Stern again recites this date for its determination.  It details the factual allegations supporting
the claims of misconduct arising out of Stern’s contacts with Batiste, White
and Cobb.  Regardless of the timing, the
disciplinary rules allow a summary disposition panel to make a just cause
determination on some unspecified later date even if the CDC initially
determines that just cause does not exist. 
Thus, the timing of a just cause decision does not appear to be the
trigger for trial court jurisdiction. 
That trigger is instead the notice of the alleged violation, and the
attorney’s choice to elect a district court or an evidentiary panel is the
jurisdictional driver.  See Tex.
R. Disciplinary P. 2.13, 2.14D, 2.15. 
Stern timely received that notice. 
We hold that the undisputed evidence establishes that the CDC timely
pursued its action against Stern with respect to the Batiste, White, and Cobb
matters.[1]   The trial court could not have properly
dismissed the Commission’s claims against Stern for failure to exhaust or
timely comply with administrative remedies. 

II.      Due
process challenge
Stern further contends that we
should uphold the trial court’s dismissal on due process grounds, because Stern
had a constitutional right to proper notice of the allegations against him involving
former clients Batiste, White, and Cobb, conduct that was at issue before the
Louisiana state bar but not initially alleged in the Neuner grievance before
the Texas bar.  
Stern contends that the
Commission’s suit must be limited to the matters in the Neuner grievance.  The Commission responds that it gave Stern
actual notice of the Batiste, White, and Cobb matters.  Due process requires, at a minimum, notice
and an opportunity to be heard at a meaningful time and in a meaningful manner.
 Mathews
v. Eldridge, 424 U.S. 319, 333, 96 S. Ct. 893, 902 (1976); see Univ. of Tex. Med. Sch. at Houston v.
Than, 901 S.W.2d 926, 930 (Tex. 1995).  An attorney in a disciplinary proceeding is
entitled to procedural due process.  Weiss v. Comm’n for Lawyer Discipline,
981 S.W.2d 5, 14 (Tex. App.—San Antonio 1998, pet. denied).  Stern received due process.  The CDC’s April 2007 letter to Stern set
forth detailed allegations supporting its just cause findings arising out of
Stern’s conduct relating to the Batiste, White, and Cobb matters.  Stern had actual notice that the disciplinary
proceedings against him included the Batiste, White, and Cobb matters when he
made his election to proceed in district court.
The Commission’s April 2007 letter satisfies
due process concerns because it informed Stern of the complaints against him
before he made his choice of forum.  Due
process does not require any earlier notice. “[D]ue process . . .
is not implicated by a grievance committee investigation because it is not
accorded finality; the lawyer has a right to respond to charges either before
an evidentiary panel of the grievance committee or at trial in district court.”  Izen,
322 S.W.3d at 317; see State v. Sewell,
487 S.W.2d 716, 718 (Tex. 1972) (observing that state bar grievance committee’s
prior investigations and decision to take or forgo disciplinary action were comparable
to grand jury inquisitions, not decisions on merits) (citing Karlin v. Culkin, 248 N.Y. 465, 162 N.E.
487, 60 A.L.R. 851, 859 (1928) (Cardozo, J.)); Weiss, 981 S.W.2d at 14 (concluding that Commission’s petition may
include allegations that are part of original complaint as well as those that
appear during preliminary investigation of those matters). The disciplinary
rules themselves reinforce this conclusion. 
They first require the Commission to detail its factual allegations
against the attorney in its petition before the district court or the
evidentiary panel, depending on the attorney’s election.  See Tex. R. Disciplinary P. 2.17A, 3.01A
(providing that, after just cause determination, in either administrative or
judicial proceeding, Commission must file disciplinary petition containing “[a]
description of the acts and conduct that gave rise to the alleged Professional Misconduct
“in detail sufficient to give fair notice
to Respondent of the claims made . . . .” (emphasis
added)).  Stern received timely actual
notice of the all of the bases for the disciplinary action against him before
he made his election to proceed in court. 
We hold that Stern’s due process claim does not support the trial
court’s dismissal of the Commission’s suit against him.
III.    Res
judicata
          Finally,
Stern has urged the affirmative defense of res judicata as grounds for upholding
the dismissal.  Res judicata, if
successfully urged, bars a retrial of claims previously determined.  See Tex. R. Civ. P. 94; Coal. of Cities for Affordable Util. Rates
v. Pub. Util. Comm’n, 798 S.W.2d 560, 562–63 (Tex. 1990); Int’l Bank of Commerce v. City of Laredo,
608 S.W.2d 267, 269 (Tex. Civ. App.—San Antonio 1980, writ dism’d).  Stern observes that res judicata bars litigation
concerning the LaFleur and Jones matters because of the CDC’s prior dismissal
of the Sprague complaint.  The
Commission, however, has dropped these claims. 
Our holding that the Commission could properly include the Batiste,
White, and Cobb matters in its petition, given their inclusion in the April
2007 letter, means that the claims arising from those matters continue to be
viable.  Stern does not show that the
latter claims are barred by the earlier LaFleur and Jones proceeding.  In any event, res judicata is an affirmative
defense that Stern must prove in the trial court—it is not a basis for
dismissal for lack of subject matter jurisdiction.  See
Williams v. Fireman’s Relief & Ret. Fund, 121 S.W.3d 415, 437 n.21
(Tex. App.—Houston [1st Dist.] 2003, no pet.) 
Res judicata thus does not provide a basis for dismissal of the
Commission’s remaining claims against Stern.
Conclusion
          We
hold that the trial court erred in dismissing the Commission’s claims against
Stern for lack of jurisdiction.  We
therefore reverse the judgment dismissing the case and remand the case for
further proceedings.
 
 
                                                                   Jane
Bland
                                                                   Justice

 
Panel
consists of Chief Justice Radack and Justices Alcala and Bland.
 

[1]
          In addressing alleged misconduct
discovered during the course of an investigation, like the Batiste, White, and
Cobb matters in this case, the courts of appeals in  Weiss
v. Commission for Lawyer Discipline, 981 S.W.2d 8 (Tex. App.—San Antonio
1998, pet. denied), and Diaz v.
Commission for Lawyer Discipline, 953 S.W.2d 435 (Tex. App.—Austin 1997, no
writ), overruled the attorneys’ complaints of error in allowing the Commission
to proceed on claims that were not identified in the initial grievance or the
subject of a separate grievance, but identified during the CDC’s investigation.  Weiss,
981 S.W.2d at 15; Diaz, 953 S.W.2d at
437.  In Weiss, the attorney contended that the trial court erred in
allowing the Commission to go forward on pleadings in which it alleged, for the
first time, that Weiss had made false statements during the investigatory
hearings.  Weiss claimed violation of his
due process rights on the basis that he was deprived of the opportunity to
respond to those allegations at the administrative level.  The trial court, noting that the attorney had
several months to prepare for trial, held that he received due notice of the
charges against him.  981 S.W.2d at
14–15.  In Diaz, the Austin court of appeals did not reach the question of
whether the inclusion of charges arising from the attorney’s knowingly false
misrepresentations during the grievance proceeding that were not the subject of
a separate grievance amounted to error because their inclusion neither prevented
Diaz from making a proper presentation of his appeal nor caused rendition of an
improper judgment.  953 S.W.2d at 437
(citing Tex. R. App. P. 81(b)(1)).  These cases support our conclusion that the
addition of the Batiste, White, and Cobb matters did not cause Stern any
cognizable harm.