Court Opinion

ID: 9409164
Source: CourtListenerOpinion
Date Created: 2023-07-16 07:10:58.923411+00
Date Added: 2024-06-11T17:20:49.176784
License: Public Domain

Affirmed and Memorandum Opinion filed July 13, 2023

                                      In The

                    Fourteenth Court of Appeals

                              NO. 14-22-00410-CV

 WILLIAM SCOTT TAYLOR; WPEM, LLC; AND W2W, LLC, Appellants
                                        V.
 HUNTON ANDREWS KURTH, LLP, F/K/A ANDREWS & KURTH, LLP;
    DOUGLAS ROMMELMANN; AND BRETT COOKE, Appellees

                    On Appeal from the 334th District Court
                            Harris County, Texas
                      Trial Court Cause No. 2020-32364

                         MEMORANDUM OPINION

      This is a summary judgment case.         Appellants William Scott Taylor,
WPEM, LLC, and W2W, LLC, sued appellees Hunton Andrews Kurth, LLP, f/k/a
Andrews & Kurth, LLP (“Andrews Kurth”), Douglas Rommelmann, and Brett
Cooke, alleging that appellees were negligent and grossly negligent in the handling
of a patent application. Appellees initially moved for summary judgment on the
entities’ claims against them, which the trial court granted. Appellants then sought
a summary judgment on Taylor’s claims, which the trial court granted on Taylor’s
claims against Andrews Kurth and Cooke. The trial court then severed Taylor’s
claims against Rommelmann, making the interlocutory summary judgments final.
Because we conclude the trial court committed no error when it granted the two
summary judgment motions, we affirm.

                                  BACKGROUND

      Taylor is an inventor. Taylor, along with his business partner Tina Pantoja,
developed a software application called SafeCell. Pantoja had a preexisting entity,
W2W. Taylor and Pantoja each became fifty percent owners of W2W. Taylor and
Pantoja then assigned the rights to any patent derived from the SafeCell application
to W2W.

      W2W, through Taylor, approached Andrews Kurth partner Rommelmann to
obtain a patent on the SafeCell application. At that time, Cooke was an Andrews
Kurth associate who worked with Rommelmann on W2W’s patent application.
These discussions led to W2W engaging Andrews Kurth to patent the SafeCell
idea. The engagement letter provides, in pertinent part, the following:

             We appreciate the opportunity for [Andrews Kurth] to assist
      W2W LLC (the “Company”) in connection with general intellectual
      property matters, including preparation of a provisional patent
      application (the “Transaction”). This letter will confirm the nature
      and scope of our engagement, the agreement as to fees, and the role
      and responsibilities of [Andrews Kurth] and the client in connection
      with this engagement:
      Nature and Scope of Engagement
             The client for purposes of this engagement is W2W LLC. It is
      understood that this representation of W2W LLC does not create an
      attorney-client relationship with any related persons or entities, such
      as parents, subsidiaries, affiliates, employees, officers, directors,
      shareholders, or partners, unless specifically agreed otherwise in
      writing. It is also understood that this engagement is specifically
                                         2
      limited to the Transaction, unless expanded by written supplement to
      this letter, and will be terminated when we have completed the
      services specified in this letter and any written supplement. If W2W
      LLC later engages us to perform other services, the attorney-client
      relationship will be revived in accordance with the terms agreed upon
      at that time.
      ....
      Conclusion of Engagement
             Upon completion of our representation of you in the
      Transaction, whether upon completion of the Transaction or due to
      termination or withdrawal, we will have no further obligation to
      advise you with respect to the Transaction or with respect to changes
      in the law or regulations that could have an impact upon your future
      rights and liabilities relating to the Transaction.
      ....
      Entire Agreement
             This letter (a) constitutes the entire agreement between you and
      our Firm regarding your engagement of us to represent you with
      respect to the Transaction, (b) is subject to no oral agreements or
      understandings, and (c) can be modified or changed only by a further
      written agreement signed by you and our Firm. No obligation or
      undertaking not set forth expressly in this letter shall be implied on the
      part of either you or [Andrews Kurth].
            We are pleased to have this opportunity to be of service and to
      work with W2W LLC. We request that you sign, date in the space
      provided below and return one copy of this letter to reflect that the
      Company is aware of and agrees to the terms and conditions of this
      representation.
      ....
      AGREED TO and ACCEPTED
      W2W LLC
Pantoja signed the letter agreement as President of W2W and Taylor signed as
W2W’s Chief Information Officer on April 15, 2010.

      Once W2W had retained Andrews Kurth, Andrews Kurth attorneys began

                                          3
work to obtain a patent for the SafeCell application. Andrews Kurth, on April 23,
2010, filed a provisional patent application. 1

       Then, on April 21, 2011, Andrews Kurth filed a nonprovisional patent
application. 2 That same day, Taylor and Pantoja signed a disclaimer confirming
they agreed that Andrews Kurth and its lawyers did not represent them
individually. This disclaimer provides:

                 WE ARE NOT LAWYERS FOR INVENTORS
            WHO ASSIGN THEIR INVENTIONS AND PATENT RIGHTS
                       TO EMPLOYERS OR OTHERS

              We are patent lawyers for your employer or other entity to
       whom you have agreed to assign (transfer) your invention and patent
       rights for the invention. We work with you to develop a patent
       application with a description and claims to your invention, but the
       patent application and invention are to be assigned to your employer
       or other entity.
             We are not your lawyer. Please consult your own lawyer to
       protect your rights if you have any concern regarding ownership of
       your invention or the patent rights thereto.

Both Taylor and Pantoja signed the disclaimer on April 21, 2011, stating that they
had read and understood the document. The April 21, 2011 patent application was
rejected.

       1
          “A provisional patent application is defined as a U.S. national application for patent
filed in the [Patent Office] under 35 U.S.C. § 111(b). It allows filing without a formal patent
claim, oath or declaration, or any information disclosure (prior art) statement. It provides the
means to establish an early effective filing date in a nonprovisional patent application filed under
35 U.S.C. § 111(a) and automatically becomes abandoned after one year.” Larson Mfg. Co. of
SD, Inc. v. AluminArt Products Ltd., 513 F.Supp.2d 1102, 1105, n.1 (S.D., 2007) (internal
quotations omitted).
       2
           “A nonprovisional patent application is defined as an application for patent filed under
35 U.S.C. §111(a) that includes all patent applications (i.e., utility, design, plant and reissue)
except provisional applications. The nonprovisional application establishes the filing date and
initiates the examination process.” Id. at 1106, n.3 (internal quotations omitted).

                                                 4
       Andrews Kurth subsequently submitted a second patent application. This
application resulted in a patent being issued, Patent Number 9,148,762 (the “762
Patent”), for the SafeCell Application. W2W, however, did not pay Andrews
Kurth’s bill for legal services rendered. Those bills were still not paid when Taylor
and Pantoja formally terminated W2W as an entity on March 27, 2017. 3 Taylor
and Pantoja had previously assigned the 762 Patent to themselves individually.

       More than a year after terminating W2W, Taylor and Pantoja created a new
limited liability company, WPEM, LLC. They then assigned the 762 Patent to
WPEM so WPEM could pursue a patent infringement suit against SOTI, Inc.
WPEM’s patent infringement suit failed and the federal district court assessed the
defendant’s attorney’s fees against WPEM. See WPEM, LLC v. SOTI, Inc., 2020
WL 555545, at *4, *8 (E.D. Tex. Feb. 4, 2020).

       When the patent infringement suit failed, WPEM and Taylor, plus the
terminated entity, W2W, filed a legal malpractice suit against Andrews Kurth,
Rommelmann, and Cooke. Appellants alleged that Andrews Kurth, Rommelmann,
and Cooke were negligent and grossly negligent in their handling of the 762 Patent
application process which in turn caused appellants’ damages including lost
revenues and the loss of the patent infringement lawsuit. All of the alleged acts of
malpractice at issue in this lawsuit occurred in the 2012 to 2013 time period.
These include allegations that Andrews Kurth and its lawyers failed to prosecute
the 762 patent correctly, failed to take steps to ensure the 762 patent would have
priority over the similar software involved in the patent infringement suit, failed to
advise appellants on changes to patent law, and failed to advise appellants to not

       3
          See Tex. Bus. Orgs. Code § 11.102 (“Except as otherwise provided by this chapter, the
existence of a filing entity terminates on the filing of a certificate of termination with the filing
officer”).

                                                 5
allow an earlier patent application to be abandoned.

       Andrews Kurth and its attorneys moved for traditional summary judgment
on the entities’ claims against them. Andrews Kurth and its attorneys initially
argued they were entitled to judgment as a matter of law on W2W’s claims
because W2W had been terminated as an entity and the winding up period
provided by statute had expired before the lawsuit was filed. Andrews Kurth and
its attorneys next argued they were entitled to judgment as a matter of law on
WPEM’s claims because (1) WPEM was never their client, and (2) W2W’s
attorney-client relationship and legal malpractice claim could not be transferred to
WPEM. The trial court granted the motion, leaving Taylor as the sole remaining
plaintiff.

       Andrews Kurth and its attorneys then moved for traditional summary
judgment on Taylor’s claims against them. Here, they argued that (1) they were
never his attorneys, (2) Taylor had expressly disclaimed any reliance on them, and
(3) Taylor had personally suffered no damages. The trial court granted the motion
as to Andrews Kurth and Cooke, but denied it as to Rommelmann. This left
Taylor’s claims against Rommelmann before the trial court, which the trial court
severed to make the prior summary judgment orders final. This appeal followed.

                                    ANALYSIS

       Appellants challenge the trial court’s summary judgment orders in three
issues. We address them in order.

I.     Standard of Review

       We review de novo the trial court’s ruling on a motion for summary
judgment. Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d
844, 848 (Tex. 2009). In a traditional motion for summary judgment, the movant

                                         6
must establish that no genuine issue of material fact exists, and the movant is
entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c). When reviewing
a summary judgment, we take as true all evidence favorable to the nonmovant and
indulge every reasonable inference and resolve any doubts in the nonmovant’s
favor. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005);
Provident Life & Accid. Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). A
genuine issue of material fact exists if the nonmovant produces more than a
scintilla of probative evidence regarding the challenged element. See Ford Motor
Co. v. Ridgway, 135 S.W.3d 598, 600 (Tex. 2004). A defendant moving for
traditional summary judgment on an affirmative defense must conclusively
establish each element of that affirmative defense. Sci. Spectrum, Inc. v. Martinez,
941 S.W.2d 910, 911 (Tex. 1997). When the trial court does not specify the
grounds on which it relied in granting summary judgment, we will affirm the
summary judgment if any grounds presented in the motion are meritorious.
Olmstead v. Napoli, 383 S.W.3d 650, 652 (Tex. App.—Houston [14th Dist.] 2012,
no pet.).

II.   The trial court did not err when it granted appellees’ motion for
      summary judgment on W2W’s claims.
      In their first issue, appellants initially argue that the trial court erred when it
granted appellees’ motion for summary judgment on W2W’s claims because
appellees did not include lack of capacity to maintain a lawsuit in a verified denial
as required by Rule 93(2) of the Texas Rules of Civil Procedure. See Tex. R. Civ.
P. 93(2) (providing that an allegation “that the plaintiff is not entitled to recover in
the capacity in which he sues” must be included in a verified pleading). Appellees
respond, among other arguments, that they were not required to file a verified
denial because W2W lacked standing as a terminated entity. We agree with
appellees.
                                           7
      Standing, a component of subject-matter jurisdiction, is a constitutional
prerequisite to maintaining suit under Texas law. Tex. Ass’n. of Bus. v. Tex. Air
Control Bd., 852 S.W.2d 440, 444–45 (Tex. 1993); Concerned Cmty. Involved
Dev., Inc. v. City of Houston, 209 S.W.3d 666, 670 (Tex. App.—Houston [14th
Dist.] 2006, pet. denied). Standing requires that a real controversy exists between
the parties that will be determined by the judicial declaration sought. Sammons &
Berry, P.C. v. Nat’l Indem. Co., No. 14-13-00070-CV, 2014 WL 3400713, at *3
(Tex. App.—Houston [14th Dist.] July 10, 2014, no pet.) (mem. op.) (citing
Nootsie, Ltd. v. Williamson Cnty. Appraisal Dist., 925 S.W.2d 659, 662 (Tex.
1999)). Standing cannot be waived and can be raised for the first time on appeal.
Tex. Ass’n. of Bus., 852 S.W.2d at 444–45. Standing can also be raised in a
traditional motion for summary judgment. Bland Indep. Sch. Dist. v. Blue, 34
S.w.3d 547, 554 (Tex. 2000). When reviewing standing on appeal, we construe the
petition in favor of the plaintiff and, if necessary, review the entire record to
determine whether any evidence supports standing. Id. at 446. Whether a party
has standing to bring a claim is a question of law reviewed de novo. Mayhew v.
Town of Sunnyvale, 964 S.W.2d 922, 928 (Tex. 1998).

      “At common law, dissolution terminated the legal existence of a corporation.
Once dissolved, the corporation could neither sue nor be sued, and all legal
proceedings in which it was a party abated.” Hunter v. Fort Worth Capital Corp.,
620 S.W.2d 547, 549–50 (Tex. 1981). To alleviate this harsh result, the Texas
legislature enacted section 11.356(a) of the Texas Business Organizations Code,
which continued the terminated filing entity’s existence for three years for the
purpose of “prosecuting or defending in the terminated filing entity’s name an
action or proceeding brought by or against the terminated entity[.]” 4 See Tex. Bus.

      4
          The Texas Business Organizations Code defines “filing entity” as “a domestic entity
                                              8
Orgs. Code Ann. § 11.356(a)(1). This permitted “the survival of an existing claim
by or against the terminated filing entity.” See id. § 11.356(a)(2); Gomez v.
Pasadena Health Care Mgmt., Inc., 246 S.W.3d 306, 316 (Tex. App.—Houston
[14th Dist.] 2008, no pet.) (applying prior version of statute). Under the Texas
Business Organizations Code, the survival period is three years from the effective
date of termination. See Tex. Bus. Orgs. Code Ann. § 11.356(a).

       This statutory provision “is a survival statute, and not a statute of
limitations.” Gomez, 246 S.W.3d at 316. “The distinction between a statute of
limitations and a survival statute is that a statute of limitations affects the time that
a stale claim may be brought while a survival statute gives life for a limited time to
a right or claim that would have been destroyed entirely but for the statute.” Id.
(internal quotations omitted). “Thus, a survival statute creates a right or claim that
would not exist apart from the statute.” Id. Therefore, once the survival period
ends, a terminated company has no legal existence and can no longer bring a
lawsuit because it lacks standing. See Bailey v. Vanscot Concrete Co., 894 S.W.2d
757, 759 (Tex. 1995) (discussing non-surviving company in a merger); Cohen
Acquisition Corp. v. EEPB, P.C., No. 14-14-00330-CV, 2015 WL 240869, at *2
(Tex. App.—Houston [14th Dist.] May 19, 2015, pet. denied) (mem. op.) (citing
Tex. Bus. Orgs. Code Ann. § 11.359(a)); Armes v. Thompson, 222 S.W.3d 79, 83–
84 (Tex. App.—Eastland 2006, no pet.) (stating that when the decedent “passed
away, she no longer represented a legal entity for purposes of filing suit and,
therefore, did not have standing to assert a claim” because suits can only be
maintained by and against parties having an actual or legal existence).

that is a corporation, limited partnership, limited liability company, professional association,
cooperative, or real estate investment trust.” Tex. Bus. Orgs. Code Ann. § 1.002(22). It defines
a “terminated entity” as “a domestic entity the existence of which has been: (A) terminated in a
manner authorized or required by this code . . . .” Id. at § 11.001(4). Finally, it defines a
“terminated filing entity” as “a terminated entity that is a filing entity.” Id. at § 11.001(5).

                                               9
      It is undisputed that Taylor and Pantoja formally terminated W2W’s
existence as a filing entity on March 27, 2017. Therefore, W2W’s survival period
expired on March 27, 2020.        See Tex. Bus. Orgs. Code Ann. § 11.356(a).
Appellants did not file this lawsuit until May 29, 2020, which was after the
survival period ended. As a result, we conclude that W2W had ceased to exist for
all purposes and therefore did not have standing to file suit. Donica Grp., L.P. v.
Thomson Excavating, Inc., No. 05-19-00235-CV, 2020 WL 57340, at *3 (Tex.
App.—Dallas Jan. 6, 2020, no pet.) (mem. op.) (concluding Thomson Excavating
did not have standing because it did not bring suit within three years of its
termination date); Smith v. CDI Rental Equipment, Ltd., 310 S.W.3d 559, 567
(Tex. App.—Tyler 2010, no pet.) (“Appellee CDI Rental Equipment, Ltd. did not
exist at the time suit was filed against Smith. Therefore, it did not have standing to
assert a claim against him.”).

      W2W argues that the survival statute did not extinguish its malpractice
claims against appellees because the claims were not existing claims as defined in
the survival statute. W2W argues that the actual malpractice occurred before
W2W was terminated, but the claim did not accrue until after termination because
the patent infringement litigation was not resolved until that time. We conclude
this argument does not change the result because even if we accept W2W’s accrual
argument, W2W admits the claim accrued within the survival period and because
they did not file suit during that three-year period, the claim was extinguished.

       W2W admits that its claim against appellees accrued by October 2018, the
date the patent infringement litigation was lost. The Texas Business Organization
Code defines a “claim” as a right to payment, damages, or property, whether
liquidated or unliquidated, accrued or contingent, matured or unmatured.” See
Tex. Bus. Orgs. Code Ann. § 11.001(1). The Code also defines “existing claim” as

                                          10
(1) a claim that existed before an entity’s termination and is not barred by
limitations; and (2) a claim that exists after termination but before the third
anniversary of the date of the entity’s termination. See Tex. Bus. Orgs. Code Ann.
§ 11.001(3). Thus, even if we accept W2W’s accrual argument, W2W’s claims
against appellees were “existing claims” under the Code because they accrued
within the three-year survival period. It is undisputed that W2W did not file suit
within that time period and therefore W2W’s claims against appellees were
extinguished. See Tex. Bus. Orgs. Code Ann. § 11.359(a) (providing that “an
existing claim by or against a terminated filing entity is extinguished unless an
action or proceeding is brought on the claim not later than the third anniversary of
the date of termination of the entity.”); Cohen Acquisition Corp., 2015 WL
240869, at *2 (holding that terminated filing entities claims were extinguished
when suit was not filed within the three-year survival period).

      Finally, even if we accept W2W’s argument that its claims against appellees
do not fit within the Code’s definition of “existing claim,” the result would still be
the same.   As explained above, under the common law, a dissolved corporation
could neither sue nor be sued. Hunter, 620 S.W.2d at 549–50. To alleviate the
effect of this common law rule, the Texas legislature enacted section 11.356(a) of
the Texas Business Organizations Code, which continued the terminated filing
entity’s existence for three years for the purpose of “prosecuting or defending in
the terminated filing entity’s name an action or proceeding brought by or against
the terminated entity[.]” See Tex. Bus. Orgs. Code Ann. § 11.356(a)(1). This
permitted “the survival of an existing claim by or against the terminated filing
entity.” See id. § 11.356(a)(2); Gomez, 246 S.W.3d at 316. Therefore, if a claim
belonging to a terminated filing entity somehow does not fit within the definition
of an “existing claim,” it is extinguished immediately upon the filing entity’s

                                         11
termination. See Lord, Lewis & Coleman, LLC v. Bellaco, LLC, No. 12-18-00126-
CV, 2019 WL 1142451, at *3 (Tex. App.—Tyler March 12, 2019, pet. denied)
(mem. op.) (“Regardless of whether Lord Lewis’s claims were ‘existing claims,’
they were extinguished prior to Lord Lewis’s filing of this lawsuit.”). Because the
trial court did not err when it granted appellees’ motion for summary judgment on
W2W’s claims, we overrule appellants’ first issue on appeal.

III.   Summary judgment was proper on WPEM’s claims.

       In their second issue, appellants argue that the trial court erred when it
granted appellees’ motion for summary judgment on WPEM’s claims.             Here,
WPEM makes two arguments. First, it claims W2W and WPEM “effectively
merged” and therefore W2W’s malpractice claims transferred to WPEM. Second,
WPEM appeals to this Court to make an equitable exception to the longstanding
rule that a malpractice claim requires privity between the plaintiff and the
defendant attorneys.   Because Texas does not recognize an “effective merger
doctrine,” and there is binding precedent requiring that a plaintiff must be in
privity with the allegedly negligent attorney to assert a malpractice claim, we
overrule appellants’ second issue.

       Once again, the facts relevant to this issue are undisputed.      First and
foremost, WPEM was never a client of appellees. Additionally, W2W assigned the
762 Patent to Taylor and Pantoja on February 9, 2017. W2W terminated its
existence more than a month later, on March 27, 2017. Then, more than a year
after that, on April 4, 2018, Taylor and Pantoja formed WPEM. The 762 Patent
was then assigned to WPEM so it could pursue the patent infringement lawsuit
against SOTI. Finally, appellants concede there was no formal merger between
W2W and WPEM.

       We turn first to WPEM’s malpractice claim. The general rule in Texas is
                                        12
that persons who are not in privity with the attorney cannot sue the attorney for
malpractice. McCamish v. F.E. Appling Interests, 991 S.W.2d 787, 792 (Tex.
1999); Vinson & Elkins v. Moran, 946 S.W.2d 381, 401 (Tex. App.—Houston
[14th Dist.] 1997, writ dism’d) (“In other words, Texas law does not recognize a
cause of action for negligence against an attorney asserted by one not in privity
with that attorney.”). In addition, attorney malpractice claims cannot be assigned.
Vinson & Elkins, 946 S.W.2d at 399.

      WPEM seeks to avoid this result by arguing that WPEM acquired W2W’s
attorney-client relationship with appellees because, in WPEM’s view, it effectively
merged with W2W when the 762 Patent was transferred to WPEM. See Greene’s
Pressure Treating & Rentals, Inc. v. Fulbright & Jaworski, L.L.P., 178 S.W.3d 40,
44 (Tex. App.—Houston [1st Dist.] 2005, no pet.) (“An attorney-client relationship
will transfer when a merger of two corporations takes place.”). Texas, however,
does not recognize “effective mergers.”       Instead, a merger requires a formal
process and plan that complies with the Texas Business Organizations Code. See
Tex. Bus. Orgs. Code Ann. § 10.001(b) (“To effect a merger, each domestic entity
that is a party to the merger must act on and approve the plan of merger in the
manner prescribed by this code for the approval of mergers by the domestic
entity.”). Texas law is clear, a disposition of assets such as the transfer of the 762
Patent, even if it was a direct transfer from W2W to WPEM, is “not a merger
. . . for any purpose.”   See id. at § 10.254(a); Greene’s Pressure Treating &
Rentals, Inc., 178 S.W.3d at 44 (observing that a “mere transfer of assets” does not
transfer an attorney-client relationship). Further, the fact that Taylor and Pantoja
transferred the 762 Patent to WPEM did not also transfer or assign the attorney-
client relationship. See Telectronics Proprietary, Ltd. v. Medtronic, Inc., 836 F.2d
1332, 1336 (Fed. Cir. 1988) (“[T]he assignment of a patent does not transfer an

                                         13
attorney-client relationship”). We conclude that WPEM was not a client in privity
with appellees and could not sue appellees for legal malpractice.

       Appellants appeal to equity to “save WPEM’s claims.” Appellants do not,
however, cite any binding authority5 establishing an equitable exception to either
the privity requirement for general malpractice claims or the non-recognition of
“effective mergers.” Because Texas public policy on both the privity requirement
and the non-recognition of “effective mergers” is clear, we decline appellants’
invitation to blaze such a trail. See Kroger Co. v. Milanes, 474 S.W.3d 321, 336,
n.6 (Tex. App.—Houston [14th Dist.] 2015, no pet.) (declining party’s request to
change the law because that is not the function of an intermediate court of
appeals); Bren-Tex Tractor Co., Inc. v. Massey-Ferguson, Inc., 97 S.W.3d 155,
161 (Tex. App.—Houston [14th Dist.] 2002, no pet.) (stating that creation of a new
tort duty is beyond the province of an intermediate appellate court). Having
addressed and rejected appellants’ arguments raised in their second issue, we
conclude that the trial court did not err when it granted appellees’ motion for
summary judgment on WPEM’s malpractice claim.                    We overrule appellants’
second issue.

IV.    The trial court did not err when it granted summary judgment on
       Taylor’s claims against Andrews Kurth and Cooke.
       Finally, in their third issue, appellants argue that the trial court erred when it
granted summary judgment on Taylor’s individual claims against Andrews Kurth
and Cooke. Damages are an element of Taylor’s legal malpractice cause of action.
       5
          The Texas cases cited by appellants are distinguishable because they are limited to
estate-planning malpractice. In Belt v. Oppenheimer, Blend, Harrison & Tate, Inc., the Supreme
Court held that an executor was in privity with the decedent’s attorneys and could sue them for
estate-planning malpractice. 192 S.W.3d 780, 787 (Tex. 2006). In Smith v. O’Donnell, the
Supreme Court, relying on Belt, refused to “create a rule that would deprive an estate of any
remedy for wrongdoing that caused it harm by prohibiting the estate from pursuing survivable
claims the decedent could have brought during his lifetime.” 288 S.W.3d 417, 419 (Tex. 2009).

                                              14
See Rogers v. Zanetti, 518 S.W.3d 394, 400 (Tex. 2017). They are also an element
of a negligent misrepresentation claim. Wal-Mart Stores, Inc. v. Xerox State &
Local Solutions, Inc., 663 S.W.3d 569, 582, n.55 (Tex. 2023). Because Taylor,
individually, suffered no damages, we disagree that the trial court erred when it
granted Andrews Kurth and Cooke’s motion for summary judgment on Taylor’s
claims.

      Under the corporate injury rule, an owner of a company cannot sue to
recover damages personally for a wrong done to the company. See Pike v. Tex.
EMC Mgmt., LLC, 610 S.W.3d 763, 775 (Tex. 2020) (“A corporate stockholder
cannot recover damages personally for a wrong done solely to the corporation,
even though he may be injured by that wrong.”); Linegar v. DLA Piper, LLP (US),
495 S.W.3d 276, 279 (Tex. 2016) (same).         Texas courts also apply the rule
discussed in Pike to limited liability companies. See Sherman v. Boston, 486
S.W.3d 88, 94 (Tex. App.—Houston [14th Dist.] 2016, pet. denied) (“A member
of a limited liability company lacks standing to assert claims individually where
the cause of action belongs to the company.”) (internal quotations omitted).

      The record conclusively establishes that Taylor suffered no damages from
the alleged professional negligence or negligent misrepresentation because either
WPEM or W2W owned the patent at all times relevant to this appeal.             The
damages Taylor seeks are the amount of his share of purported revenues that the
companies would have received from enforcing the patent but for the alleged
negligence.   Taylor, however, cannot recover lost revenues of the companies
because of the corporate injury rule. See Sherman, 486 S.W.3d at 94.

      The cases Taylor relies upon do not change this result because they are
distinguishable. In Linegar, the Texas Supreme Court acknowledged the corporate
injury rule but nonetheless allowed the plaintiff, who was a shareholder in the

                                        15
corporation, to recover damages from the corporation’s law firm. Linegar, 495
S.W.3d at 280–81. But the unique facts present in Linegar do not exist here
because that plaintiff suffered individual losses apart from the corporation’s and
also had an attorney-client relationship with the law firm himself. Id. at 281.
Taylor had neither individual losses because he did not own the patent nor did he
have an attorney-client relationship with Andrews Kurth or Cooke. The same is
true in the other cases cited by Taylor. See Murphy v. Campbell, 964 S.W.2d 265,
268 (Tex. 1997) (corporate stockholders had standing to sue accounting firm for
breach of duty owed directly to them); Stephens v. Three Finger Black Shale
P’ship, 580 S.W.3d 687, 729 (Tex. App.—Eastland 2019, pet. denied) (court
sustained an award of damages against challenge under the corporate injury rule
because plaintiff sued for his own individual damages for breach of professional
duty owed to him individually); Aloysius v. Kislingbury, 2014 WL 4088145, *4
(Tex. App.—Houston [1st Dist.] Aug. 19, 2014, no pet.) (mem. op.) (plaintiff sued
co-owner of company alleging co-owner breached contract with plaintiff to share
revenues of company); Saden v. Smith, 415 S.W3d 450, 463 (Tex. App.—Houston
[1st Dist.] 2013, pet. denied) (plaintiff had standing because he alleged defendant
breached contract between them as well as fiduciary duty defendant owed
plaintiff); Faour v. Faour, 789 S.W.2d 620, 622 (Tex. App.—Texarkana 1990,
writ denied (“This principle is not an exception to the general rule, but is only a
recognition that a shareholder may sue for violation of his individual rights,
regardless of whether the corporation also has a cause of action.”).

      Taylor also filed “derivative claims seeking derivative damages.” Taylor
asserts that even if W2W is defunct, he still “has the legal right to assert the claims
derivatively as a member and beneficial owner.” This argument is also unavailing
because the expiration of the survival period does more than just terminate W2W’s

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existence for all purposes; it causes all claims to be extinguished. Tex. Bus. Orgs.
Code § 11.356(a)(1) (entity), § 11.359(a) (claims); see also Pellow v. Cade, 990
S.W.2d 307, 313 (Tex. App.—Texarkana 1999, no pet.) (“When a cause of action
is outside a limitation statute, it is only barred if the limitations issue is raised by
the defendant. But when a cause of action is outside a survival statute’s ambit, the
cause of action is extinguished and no longer exists.”).

      As a result, Taylor, as a former owner of W2W, cannot sue derivatively
because W2W’s claims are extinguished. See Tex. Bus. Orgs. Code § 11.359(a)
(“[A]n existing claim by or against a terminated filing entity is extinguished unless
an action or proceeding is brought on the claim not later than the third anniversary
of the date of termination of the entity.”); see also Regal Ware, Inc. v. CFJ Mfg.,
L.P., 2015 WL 1004380, at *3 (Tex. App.—Eastland Feb. 27, 2015, no pet.) (mem.
op.) (“If, on the other hand, an action seeks to redress a wrong done to the
corporation, or if the claim arose solely as a consequence of a corporate wrong, the
claim is derivative in nature and will not survive past the windup period.”); Carter
v. Harvey, 525 S.W.3d 420, 429 (Tex. App.—Fort Worth 2017, no pet.) (holding
that shareholder could not bring derivative claim after the expiration of the
statutory winding down period because the claims had been extinguished);
Alsheikh v. Altawil, 2015 WL 392220, at *4 (Tex. App.—Fort Worth Jan. 29,
2015, no pet.) (mem. op.) (“A shareholder does not have standing to bring a
derivative claim that the corporation can no longer bring.”).

      Finally, Taylor argues that he suffered a loss distinct from the loss the
owners of the patent suffered, namely the attorney’s fees awarded as a sanction in
the patent infringement litigation against SOTI.        SOTI moved to recover its
attorneys’ fees in the federal infringement litigation. The federal court agreed and
ordered WPEM, not Taylor, to pay SOTI attorney’s fees in an approximate amount

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of $180,000. See WPEM, LLC, 2020 WL 555545, at *8. WPEM appealed those
fees and lost the appeal. At the time of Taylor’s deposition, those fees had not
been paid by WPEM or anyone else. According to Taylor, he did not pay the fee
award because WPEM is a limited liability company and he is not individually
liable for the company’s debt. These alleged personal damages are speculative and
thus no damages. See Arnold & Itkin, L.L.P. v. Dominguez, 501 S.W.3d 214, 224
(Tex. App.—Houston [1st Dist.] 2016, no pet.) (“This alleged injury is
hypothetical and speculative because the clients have not further pursued their
claims in Mexico and thus have not—and may never—incur such expenses.”);
Peterson Group, Inc. v. PLTQ Lotus Group, L.P., 417 S.W.3d 46, 64 (Tex. App.—
Houston [1st Dist.] 2013, pet. denied) (speculative damages are not recoverable).

      The trial court did not err when it granted Andrews Kurth and Cooke’s
motion for summary judgment on Taylor’s individual claims.            We overrule
Taylor’s third issue.

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                                 CONCLUSION

      Having overruled appellants’ issues on appeal, we affirm the trial court’s
judgment.

                                     /s/    Jerry Zimmerer
                                            Justice

Panel consists of Justices Wise, Zimmerer, and Wilson.

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