Court Opinion

ID: 9942473
Source: CourtListenerOpinion
Date Created: 2024-02-21 07:11:44.223892+00
Date Added: 2024-06-11T13:48:08.099572
License: Public Domain

Affirmed and Opinion Filed February 13, 2024

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

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

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

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

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

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

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

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

P. 47.4.
Background

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

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

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

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

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

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

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

Perkins Coie filed five traditional motions for summary judgment attacking Willow

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

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

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

Willow Tree.

Standard of review and applicable law

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Analysis

      (1) Standing

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

not prevail on its allegedly assigned negligent misrepresentation and fraudulent

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

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

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

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

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

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

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

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

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

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

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

1995).

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

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

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

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

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

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

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

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

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

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

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

Tree filed suit unambiguously prohibited it from commencing or prosecuting any

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

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

plan.

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

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

Perkins Coie for negligent misrepresentation and fraudulent transfer claims that had

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

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

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

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

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

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

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

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

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

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

216.

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

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

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

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

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

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

(Bankr. S.D. Tex. Nov. 16, 2010) (“[O]n the Effective Date, the Lease and

Personalty shall be assigned by the Debtors . . .”). Thus, even when we take evidence

favorable to Willow Tree as true, indulge every reasonable inference, and resolve

every doubt in its favor, the absence of a deadline for the creditors to assign their

claims is inapposite.

      Willow Tree also argues that Perkins Coie lacked standing to challenge the

assignment’s allocation of litigation recoveries because Perkins Coie did not identify

any “injury” or “personal stake” therein. The Third Circuit has addressed parties’

“bankruptcy standing” to “object to the confirmation of a reorganization plan in

bankruptcy court.” See In re Global Technologies, Inc., 645 F.3d 201, 210 (3d Cir.

2011). Neither we nor the trial court are a bankruptcy court; as such, neither is tasked

with addressing the merits of True Health’s bankruptcy. See 28 U.S.C. § 1334 (a) &

(e) (establishing original and exclusive jurisdiction for bankruptcy proceedings).

Thus, we reject Willow Tree’s challenge to Perkins Coie’s standing to challenge

Willow Tree’s standing because bankruptcy standing is not implicated.

      Finally, Willow Tree argues the bankruptcy plan provided the trustee with the

authority to agree to terms of claim assignments. Even when we take evidence

favorable to Willow Tree as true, indulge every reasonable inference, and resolve

every doubt in its favor, the trustee’s authority cannot confer standing at the time

Willow Tree filed suit because the original assignment expressly precluded it.

                                          –6–
      Thus, the trial court did not reversibly err when it granted Perkins Coie’s first

motion for summary judgment based on the absence of standing because it was

entitled to judgment concerning the allegedly assigned causes of action as a matter

of law. See KPMG Peat Marwick v. Harrison County Housing Fin. Corp., 988

S.W.2d 746, 748 (Tex. 1999).

      (2) Breach of fiduciary duty

      Perkins Coie’s second motion for summary judgment addressed Willow

Tree’s breach of fiduciary duty claim. “[B]reach of fiduciary duty by a lawyer

involves the integrity and fidelity of an attorney and focuses on whether an attorney

obtained an improper benefit from representing the client.” Murphy v. Gruber, 241

S.W.3d 689, 693 (Tex. App.—Dallas 2007, pet. denied) (cleaned up). In its live

pleading, Willow Tree alleged Perkins Coie “reap[ed] financial rewards to which it

was not entitled given the fraudulent nature of the transaction and True Health’s

insolvency” and that True Health is “entitled to the disgorgement of the fees it paid

to Perkins Coie.” In its motion for summary judgment, Perkins Coie correctly argued

that a law firm obtaining its fees “is not, standing alone, an improper benefit

sufficient to constitute a breach of fiduciary duty.” Ashton v. KoonsFuller, P.C., No.

05-16-00130-CV, 2017 WL 1908624, at *4 (Tex. App.—Dallas May 10, 2017, no

pet.) (mem. op.). Even when we indulge every reasonable inference and resolve

every doubt in Willow Tree’s favor, Perkins Coie satisfied its burden to show that

no genuine issue of material fact existed as to whether it received an improper benefit

                                         –7–
when it collected fees for its legal work and that it was entitled to judgment on

Willow Tree’s breach of fiduciary duty claim as a matter of law. TEX. R. CIV. P.

166a(c); Lujan, 555 S.W.3d at 84.

      The burden then shifted to Willow Tree to raise a genuine issue of material

fact precluding summary judgment. Id. Willow Tree’s response to Perkins Coie’s

motion for summary judgment did not argue that Perkins Coie received an improper

benefit and failed to attach any evidence raising a genuine issue of material fact

thereon. Instead, Willow Tree’s response focused on Osterhoff and specifically

argued (1) its breach of fiduciary duty claim seeks recovery of three million dollars

in improper benefits Osterhoff obtained from True Health; (2) the crux of its claim

is that Osterhoff “obtained an improper benefit from representing True Health”; and

(3) its claim “focuses on whether a Perkins Coie partner obtained an improper benefit

from his representation of True Health.” Each of these allegations focuses on an

alleged improper benefit to an individual rather than to Perkins Coie as a law firm.

Thus, Perkins Coie conclusively negated at least one of the essential elements of

Willow Tree’s breach of fiduciary duty claim and was entitled to summary judgment

as a matter of law. Frost Nat’l Bank, 315 S.W.3d at 508.

      (3) Legal malpractice

      In its third motion for summary judgment, Perkins Coie argued Willow Tree

could not prevail on its legal malpractice claim because it was filed outside of the

two-year statute of limitations. See Erikson v. Renda, 590 S.W.3d 557, 563 (Tex.

                                        –8–
2019). Willow Tree argued, both to the trial court and on appeal, that (1) its injury

was inherently undiscoverable and that its claim remained viable under the discovery

rule and (2) the statute of limitations was tolled because True Health was adversely

dominated by wrongdoers. See S.V. v. R.V., 933 S.W.2d 1, 8 (Tex. 1996) (inherently

undiscoverable); Resol. Tr. Corp. v. Bright, 872 F. Supp. 1551, 1561 (N.D. Tex.

1995) (adverse domination). Beginning with the discovery rule, Perkins Coie had

the burden to prove there was no genuine issue of material fact as to when Willow

Tree knew, or in the exercise of reasonable diligence should have known, of the facts

giving rise to its legal malpractice claim. See Marcus & Millichap Real Est. Inv.

Servs. of Nevada, Inc. v. Triex Texas Holdings, LLC, 659 S.W.3d 456, 461 (Tex.

2023).

      The discovery rule applies when a plaintiff’s injury is by its nature inherently

undiscoverable. Agar Corp. v. Electro Cirs. Int’l, LLC, 580 S.W.3d 136, 139 (Tex.

2019). “An injury is inherently undiscoverable if it is by nature unlikely to be

discovered within the prescribed limitations period despite due diligence.” Berry v.

Berry, 646 S.W.3d 516, 525–26 (Tex. 2022). In the fiduciary context, the nature of

an injury is presumed to be inherently undiscoverable because “[f]iduciaries are

presumed to possess superior knowledge.” Comput. Assocs. Int’l, Inc. v. Altai, Inc.,

918 S.W.2d 453, 456 (Tex. 1996). Thus, we presume the nature of True Health’s

injury was inherently undiscoverable. This presumption shifts the burden of

producing evidence to Perkins Coie. Gen. Motors Corp. v. Saenz on Behalf of Saenz,

                                        –9–
873 S.W.2d 353, 359 (Tex. 1993). “Once that burden is discharged and evidence

contradicting the presumption has been offered, the presumption disappears and is

not to be weighed or treated as evidence.” Id. (cleaned up).

      The record before us conclusively rebuts the presumption that the nature of

True Health’s injury was inherently undiscoverable. Specifically, Willow Tree’s live

petition alleged that: (1) the United States Department of Justice served a Civil

Investigative Demand on True Health on March 2, 2017; (2) this demand “broadly

require[d] the production of information regarding True Health’s inappropriate

business practices and activities”; (3) the Department of Justice “solicited

information related to an ongoing [False Claims Act] investigation that involved

allegations of medically unnecessary laboratory testing, improper billing for

laboratory testing, and illegal remuneration provided by True Health in violation of

[42 U.S.C. section 1320b-7b and the Ethics in Patient Referral Act]”; (4) True Health

received a notice of suspension of Medicare payments based on “credible allegations

of fraud” on May 26, 2017; and (5) True Health’s response to this suspension notice

asserted that it “would bring about financial ruin for True Health and impair its

ability to continue providing services.”

      The record before the trial court at the time also showed that (1) True Health

received an on-site records request from a Medicare Zone Program Integrity

Contractor as early as May of 2016 that notified it of potential aberrancies in its

billing and that it was under investigation for “potential fraud, waste, and abuse” and

                                           –10–
(2) after receiving this records request, True Health’s Chief Compliance Officer sent

an email to Osterhoff and True Health’s CEO that stated, (a) “This is not a routine

site visit or audit, and needs to be handled with the utmost care” because such

investigations “often work in conjunction with law enforcement” and (b) “[T]he fact

that they showed up on site today tells me that either they may have already sent a

letter requesting data . . . or they believe they have found a pattern in their data

analysis that warranted an actual site visit with a demand for additional claims

documentation.” In its verified response to interrogatories, Willow Tree identified

its Chief Compliance Officer as an “innocent insider.” See In re Fair Fin. Co., 834

F.3d 651, 677 (6th Cir. 2016) (collecting authorities on the “innocent insider

exception” to the sole actor rule).

      Even when we indulge every reasonable inference and resolve every relevant

doubt in Willow Tree’s favor, the record conclusively demonstrates that True

Health’s Chief Compliance Officer was both a corporate agent and an innocent

insider who had actual notice of misconduct that could no longer be ignored more

than two years before the lawsuit was filed on July 28, 2021. See Marcus &

Millichap Real Est. Inv. Servs. of Nevada, Inc., 659 S.W.3d at 462. The record also

shows that True Health’s Chief Compliance Officer had sufficient notice of facts

that made her duty-bound to her principal to investigate further and that her notice

of this need to investigate further was imputed to her principal. See Preston Farm &

Ranch Supply, Inc. v. Bio-Zyme Enterprises, 625 S.W.2d 295, 300 (Tex. 1981) (“We

                                        –11–
regard it as well settled that if an agent’s acts are within the scope of his authority,

then notice to the agent of matters over which the agent has authority is deemed

notice to the principal.”).

       Thus, the Chief Compliance Officer’s notice put True Health on notice that it

needed to exercise reasonable diligence with respect to its legal malpractice claim

more than two years before it filed suit on July 28, 2021. Marcus & Millichap Real

Est. Inv. Servs. of Nevada, Inc., 659 S.W.3d at 462–63; see also Williams v.

Jennings, 755 S.W.2d 874, 883 (Tex. App.—Houston [14th Dist.] 1988, writ denied)

(“In this connection, it is immaterial that the principal has not actually been informed

of the particular facts under consideration, and a principal may be deemed to be

bound by knowledge that his agent, by the use of ordinary care, could have acquired,

especially where the agent has information sufficient to instigate an inquiry.”). When

True Health’s Chief Compliance Officer received the Civil Investigative Demand, it

“knew or should have known that something was amiss.” Berry, 646 S.W.3d at 525.

Thus, True Health needed to conduct a reasonable inquiry if it wanted to preserve

its claim. Id.

       Perkins Coie therefore satisfied its burden and proved there was no genuine

issue of material fact as to when True Health knew, or in the exercise of reasonable

diligence should have known, of the facts giving rise to its legal malpractice claim.

The burden then shifted to Willow Tree to raise a genuine issue of material fact

precluding summary judgment. Lujan, 555 S.W.3d at 84. In its response to Perkins

                                         –12–
Coie’s motion for summary judgment, Willow Tree acknowledged that even when

all its arguments were accepted as true, Perkins Coie had the burden to show that the

statute of limitations began to run before July 30, 2017. Willow Tree’s live petition

nonetheless clearly, deliberately, and unequivocally asserted that it received notice

of potential wrongdoing through its Chief Compliance Officer (an “innocent

insider”) on May 11, 2016, and March 2, 2017; these assertions are judicial

admissions proving that True Health knew or should have known that something

was amiss before July 30, 2017. See In re M.T-G., No. 05-21-00763-CV, 2022 WL

178688, at *3 (Tex. App.—Dallas Jan. 20, 2022, no pet.) (mem. op.); see also

Houston First Am. Sav. v. Musick, 650 S.W.2d 764, 767 (Tex. 1983). Thus, its injury

was not inherently undiscoverable and the discovery rule did not apply.

      Willow Tree also argues the statute of limitations on its legal malpractice

claim was tolled because it pleaded True Health was adversely dominated by

wrongdoers and that this pleading shifted the burden to Perkins Coie to negate the

adverse domination doctrine in its motion for summary judgment. White Nile

Software, Inc. v. Travis, No. 05-20-00354-CV, 2022 WL 3714497, at *4 (Tex.

App.—Dallas Aug. 29, 2022, pet. filed). There, Perkins Coie argued that the adverse

domination doctrine is inapplicable as a matter of law because it only applies to

claims against those who dominated the corporation. See FDIC v. Henderson, 61

F.3d 421, 428 (5th Cir. 1995) (“Texas follows the ‘majority test’ . . . [I]f a majority

of the board of directors are culpably involved in the alleged wrongdoing, then we

                                        –13–
assume that the corporation was adversely dominated and was thus unable to pursue

a direct action against the wrongdoing directors.”) (emphasis added); see also FDIC

v. Shrader & York, 991 F.2d 216, 227 (5th Cir. 1993). In response, Willow Tree

acknowledged that True Health was adversely dominated by its own officers and

directors as opposed to Perkins Coie.

      On appeal, however, Willow Tree counters by arguing Perkins Coie is not an

outsider because Osterhoff was an insider and “Osterhoff is Perkins.” We decline to

equate the partner of a law firm with a law firm for three reasons. First, Willow Tree

did not make this argument to the trial court and cannot make it for the first time on

appeal. City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678 (Tex.

1979). Second, Willow Tree cites to no authority for this novel proposition of law.

TEX. R. APP. P. 38.1(i). Third, limited liability companies and partnerships are

legally distinct from their members. Rieder v. Woods, 603 S.W.3d 86, 98 (Tex. 2020)

(limited liability companies); Am. Star Energy & Mins. Corp. v. Stowers, 457

S.W.3d 427, 429 (Tex. 2015) (citing Tex. Bus. Orgs. Code § 152.056) (partnerships).

      While we acknowledge Willow Tree’s argument that the adverse domination

doctrine has been expanded by some courts to include outsiders,2 we also recognize

that despite the passage of more than 30 years, Willow Tree has cited no decision

2
      See Askanase v. Fatjo, 828 F. Supp. 465, 471–72 (S.D. Tex. 1993) (collecting authorities).

                                            –14–
expanding this doctrine under Texas law, and we have found none. TEX. R. APP. P.

38.1(i). Under the circumstances, we conclude that Perkins Coie met its burden to

negate the application of the adverse domination doctrine because True Health was

dominated by its own officers and directors and Texas’ application of the doctrine

has not been expanded beyond insiders. Therefore, the trial court did not reversibly

err when it followed Texas precedent concerning the adverse domination doctrine.

      Thus, Willow Tree did not raise a genuine issue of material fact precluding

summary judgment against its legal malpractice claim and the trial court did not

reversibly err when it granted summary judgment thereon.

      (4) Participatory liability

      Perkins Coie’s fourth motion for summary judgment argued that Willow Tree

could not prevail on its claims for conspiracy and aiding and abetting because (1)

the trial court had already granted its motion for summary judgment on Willow

Tree’s breach of fiduciary duty claim and (2) it could not be vicariously liable “for

any supposedly unlawful acts by Michael Osterhoff.” We agree, albeit for reasons

unaddressed by either party.

      “The harmless error rule states that before reversing a judgment because of an

error of law, the reviewing court must find that the error amounted to such a denial

of the appellant’s rights as was reasonably calculated to cause and probably did cause

‘the rendition of an improper judgment,’ or that the error ‘probably prevented the

appellant from properly presenting the case [on appeal].’” G & H Towing Co. v.

                                        –15–
Magee, 347 S.W.3d 293, 297 (Tex. 2011) (quoting TEX. R. APP. P. 44.1(a)). “The

rule applies to all errors.” Id. Here, the trial court’s granting of summary judgment

on Willow Tree’s participatory liability claims was harmless based on other grounds

already raised in the case. Cf. id. at 298 (summary judgment on a cause of action

unaddressed in a motion therefor “is harmless when the omitted cause of action is

precluded as a matter of law by other grounds raised in the case.”).

      It is well established that “civil conspiracy is a theory of derivative liability.”

Agar Corp., 580 S.W.3d at 144. Similarly, knowing participation and aiding and

abetting are theories of liability as opposed to independent causes of action. See

Kastner v. Jenkens & Gilchrist, P.C., 231 S.W.3d 571, 580 (Tex. App.—Dallas

2007, no pet.) (knowing participation); John Roberts Austin I, LP v. Netaji, No. 03-

21-00540-CV, 2023 WL 3010941, at *2–3 (Tex. App.—Austin Apr. 20, 2023, pet.

denied) (mem. op.) (aiding and abetting). Thus, Willow Tree’s theories of

participatory liability are dependent upon its breach of fiduciary duty claim, a claim

on which the trial court previously granted non-reversible summary judgment. See

supra. Without an underlying tort, there can be no participatory liability for civil

conspiracy or aiding and abetting as a matter of law. Agar Corp., Inc., 580 S.W.3d

at 141 (civil conspiracy); Grant Thornton LLP v. Prospect High Income Fund, 314

S.W.3d 913, 930–31 (Tex. 2010) (aiding and abetting); cf. G & H Towing Co., 347

S.W.3d at 297 (quoting TIMOTHY PATTON, SUMMARY JUDGMENTS IN TEXAS:

PRACTICE, PROCEDURE AND REVIEW § 3.06[3] at 3–20 (3d ed. 2010) (“If . . . the

                                         –16–
unaddressed causes of action are derivative of the addressed cause of action, the

summary judgment may be affirmed.”)). Thus, there was no genuine issue of

material fact as to Perkins Coie’s liability for participatory liability and the trial court

did not reversibly err when it granted Perkins Coie’s fourth motion for summary

judgment.

       (5) Fraudulent transfers

       In its fifth motion for summary judgment, Perkins Coie argued Willow Tree

could not prevail on its claims under the Texas Uniform Fraudulent Transfer Act

(“TUFTA”) because those claims are precluded by the anti-fracturing rule. Under

TUFTA, “an asset transferred with actual intent to hinder, delay, or defraud a

creditor may be reclaimed for the benefit of the transferor’s creditors unless the

transferee took [the asset] in good faith and for a reasonably equivalent value.”

Janvey v. Golf Channel, Inc., 487 S.W.3d 560, 562 (Tex. 2016) (cleaned up). In its

live pleading, Willow Tree alleged that (1) True Health paid Perkins Coie “for legal

advice that was inadequate and incorrect”; (2) these payments “represented transfers

of an interest of True Health in property”; and (3) these transfers were fraudulent

under Texas law. Perkins Coie’s fifth motion for summary judgment argued that

these allegations “run headlong into the anti-fracturing rule.”

       “The anti-fracturing rule prevents plaintiffs from converting what are actually

professional negligence claims against an attorney into other claims such as fraud,

breach of contract, breach of fiduciary duty, or DTPA violations.” Won Pak v.

                                           –17–
Harris, 313 S.W.3d 454, 457 (Tex. App.—Dallas 2010, pet. denied). “The rule

prevents legal malpractice plaintiffs from opportunistically transforming a claim that

sounds only in negligence into other claims to avail themselves of longer limitations

periods, less onerous proof requirements, or other tactical advantages.” Parsons v.

Queenan, No. 05-15-01375-CV, 2017 WL 360673, at *2 (Tex. App.—Dallas Jan.

23, 2017, no pet.) (mem. op.) (cleaned up). “[R]egardless of the theory a plaintiff

pleads, as long as the crux of the complaint is that the plaintiff’s attorney did not

provide adequate legal representation, the claim is one for legal malpractice.” Beck

v. Looper, Reed & McGraw, P.C., No. 05-05-00724-CV, 2006 WL 1452108, at *2

(Tex. App.—Dallas May 26, 2006, no pet.) (mem. op.); accord Kimleco Petroleum,

Inc. v. Morrison & Shelton, 91 S.W.3d 921, 924 (Tex. App.—Fort Worth 2002, pet.

denied). Whether allegations of fraud against an attorney are properly characterized

as claims for professional negligence is a question of law. Won Pak, 313 S.W.3d at

457.

       Perkins Coie’s motion for summary judgment included verified interrogatory

responses from Willow Tree evidencing (1) its position that Perkins Coie “received

compensation in excess of both industry standards and beyond that which would

constitute reasonably equivalent value in exchange for the compensation given that

defendants’ advice and representation was grossly flawed and resulted in the

bankruptcy of True Health” and (2) Willow Tree’s attempt to recover fees paid by

True Health to Perkins Coie “for legal services related to general business advice

                                        –18–
and/or compliance or regulatory matters.” Perkins Coie’s motion also cited to this

Court’s precedent for the proposition that “claims regarding the quality of the

lawyer’s representation of the client are professional negligence claims[.]” Murphy,

241 S.W.3d at 696–97. Therefore, Perkins Coie satisfied its burden and showed that

it was entitled to judgment as a matter of law because (1) there was no genuine issue

of material fact as to whether the crux of Willow Tree’s allegation was that True

Health paid Perkins Coie for legal advice that was inadequate and incorrect; (2) the

crux of Willow Tree’s allegation was that True Health’s counsel did not provide

adequate legal representation; and (3) Willow Tree’s claim is therefore one for legal

malpractice. See Beck, 2006 WL 1452108, at *2. The burden then shifted to Willow

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

555 S.W.3d at 84.

      In its response, Willow Tree argued that the gravamen of its TUFTA claim

focused on True Health’s conduct and its intent to make cash unavailable to its

creditors as evidenced by five “badges of fraud.” See Qui Phuoc Ho v. MacArthur

Ranch, LLC, 395 S.W.3d 325, 328 (Tex. App.—Dallas 2013, pet. denied). These

badges of fraud include the alleged facts that (1) transfers were made at a time that

True Health incurred substantial liabilities and debts, (2) transfers were contractually

concealed, (3) True Health knew it was likely to be sued, (4) “the value of the

consideration received by True Health was not reasonably equivalent to the value of

the Perkins Coie [p]ayments,” and (5) True Health was insolvent at the time of the

                                         –19–
transfers or became insolvent shortly thereafter. See TEX. BUS. & COM. CODE §

24.005(b).

      Even taking evidence favorable to Willow Tree as true, indulging every

reasonable inference, and resolving every doubt in its favor, Willow Tree’s response

to Perkins Coie’s motion for summary judgment clarifies that among the foci of its

TUFTA claims is “the benefit [True Health] received in exchange for the various

distributions.” Despite characterizing its claim as an attempt to recover overpayment

for legal services compared to the perceived benefit, the crux of Willow Tree’s claim

remains an attack on Perkins Coie’s inadequate legal representation. See Greathouse

v. McConnell, 982 S.W.2d 165, 172 (Tex. App.—Houston [1st Dist.] 1998, pet.

denied) (DTPA claim alleging “a gross disparity between the value of legal services

received and the consideration paid” was properly characterized as a legal

malpractice claim).

      Thus, Willow Tree failed to raise a genuine issue of material fact precluding

summary judgment and the trial court did not reversibly err when it granted summary

judgment against Willow Tree’s TUFTA claims.

                            *            *            *

                                       –20–
       Having overruled Willow Tree’s sole issue on appeal, we affirm the judgment

of the trial court.

                                          /Cory L. Carlyle//
230264f.p05                               CORY L. CARLYLE
                                          JUSTICE

                                      –21–
                            Court of Appeals
                     Fifth District of Texas at Dallas
                                   JUDGMENT

WILLOW TREE CONSULTING                         On Appeal from the 192nd Judicial
GROUP, LLC, LIQUIDATING                        District Court, Dallas County, Texas
TRUSTEE OF THE TH                              Trial Court Cause No. DC-21-09847.
LIQUIDATING TRUST, Appellant                   Opinion delivered by Justice Carlyle.
                                               Justices Goldstein and Breedlove
No. 05-23-00264-CV           V.                participating.

PERKINS COIE LLP AND
PERKINS COIE LLC, Appellees

       In accordance with this Court’s opinion of this date, the judgment of the trial
court is AFFIRMED.

     It is ORDERED that appellees PERKINS COIE LLP AND PERKINS
COIE LLC recover their costs of this appeal from appellant WILLOW TREE
CONSULTING GROUP, LLC, LIQUIDATING TRUSTEE OF THE TH
LIQUIDATING TRUST.

Judgment entered this 13th day of February, 2024.

                                        –22–