Court Opinion

ID: 9690548
Source: CourtListenerOpinion
Date Created: 2023-08-24 19:22:26.058037+00
Date Added: 2024-06-11T18:18:59.210224
License: Public Domain

MIRABAL Justice,
concurring and dissenting.
I respectfully suggest that the majority opinion has utilized a broad brush on this case, when a fine brush is called for. Throughout its response to the motion for summary judgment, as well as in its brief on appeal, appellant has provided specific record references to summary judgment evidence that raised genuine issues of material fact. Yet, the majority opinion concludes the response was insufficient to prevent the granting of a no-evidence summary judgment as to four causes of action because appellant did not repeat, as to each of its pled causes of action, the same evidence that raised a fact issue as to all of the causes of action. I disagree.
Appellant’s claims in this case are based on the allegations that an associate worked on a case on firm time, using firm resources; as a result, the associate received a fee; the associate lied to the firm about the fee, hiding the fact of the fee from the firm; and the associate’s cohort/attorney-friend joined in a scheme to make it appear that the associate was not going to receive any portion of the fee. B & P sued the associate for breach of fiduciary duty; further, B & P sued both the associate and his cohort/attorney-friend for conspiracy, conversion, actual and constructive fraud, and negligence.
As will be set out in detail in this opinion, the central basis for appellees’ no-evidence motion for summary judgment was that there was no evidence that the associate received, or would receive, a fee, and therefore the associate did not owe a fiduciary duty with regard to a non-existent fee, and thus there was no conspiracy, conversion, fraud or negligence with regard to the non-existent fee. In its response to the no-evidence motion for summary judgment, appellant specifically pointed out evidence that raised a fact issue about whether the associate received, or would receive a fee, and asserted that such evidence supported appellant’s claim for breach of fiduciary duty, and all of its *871other claims (conspiracy, conversion, actual fraud, constructive fraud, and negligence) that were centered around the claim that the associate breached his fiduciary duty. In my opinion, appellant’s response was sufficient to prevent summary judgment. The majority, on the other hand, finds the response fatally defective with regard to certain causes of action because appellant “lumped” its argument to cover all the causes of action, rather than addressing each cause of action separately. I do not believe Rule 166a requires a respondent to repeat, in separate paragraphs addressing separate causes of action, the same evidence that raises a fact issue as to all of the causes of action.
A no-evidence summary judgment is improperly granted if the non-movant brings forth more than a scintilla of evidence to raise a genuine issue of material fact. Macias v. Fiesta Mart, Inc., 988 S.W.2d 316, 317 (Tex.App. — Houston [1st Dist.] 1999, no pet.); Tex.R. Civ. P. 166a(i). Appellant met its burden under rule 166a(i) to “produce summary judgment evidence raising a genuine issue of material fact” as to each of its causes of action. Further, appellees failed to meet their burden under rule 166a(e) to prove they were entitled to judgment as a matter of law. Accordingly, summary judgment was improperly granted.
THE PLEADINGS
I will reproduce portions of the relevant pleadings practically verbatim.1
Plaintiffs First Amended Original Petition
1. James Chang, directly or through an intermediary, was engaged by Flower Mound, helicopter crash victims while emploged by Brewer & Pritchard.
2. Chang combined and conspired with Nick Johnson ... to refer, without the consent or knowledge of (Brewer & Pritchard) the subject litigation to Jamail & Kolius.
3. Chang had a duty of loyalty to Brewer & Pritchard at all times during his employment by that firm.... Chang breached his fiduciary duties to Brewer <& Pitch-ard in order to seize for himself what he correctly perceived to be a lucrative business opportunity.
4. The fact that Brewer & Pritchard was not included in the fee agreement (with Jamah & Kolius) was brought about by the fraudulent action of Chang and Johnson. Specifically, Johnson acted as Chang’s intermediary in obtaining the Jamail & Kolius referral fee. As a consequence of .their unlawful conspiracy, Chang and Johnson are jointly and severally liable for all damages incurred by Brewer & Pritchard.
5. The activities of Chang and Johnson also give rise to a cause of action for conversion. Defendants combined and conspired to convert for themselves the Jamail & Kolius referral fee.
6. Chang and Johnson fraudulently concealed and intentionally failed to disclose material facts to Brewer & Pritchard. Chang additionally made false representations of material fact to Brewer & Pritch-ard.
Defendants’ Motion for Summary Judgment2
1. Because Chang did not represent any of the plaintiffs, [in the plane crash litigation], Chang received no share of the referral fee ; nor did he receive any remuneration for the support and guidance he provided Henry King and his family. In fact, he told Henry *872King specifically that he was not interested in representing him and “did not want any fee.”
2.Chang helped a close friend and his family retain competent counsel who obtained an outstanding result. He did this for free. Chang received no part of Johnson’s fee and has no agreement or expectancg to receive anything from Johnson as a result of that ease. Likewise, Henry King does not intend to pay Chang a fee.
Plaintiffs Response to Defendants’ Motion for Summary Judgment3
1. James Chang was an associate at Brewer & Pritchard. At no time during Chang’s association with B & P were associates of B & P permitted to conduct or perform outside legal work for their own account.... Chang, however, was in the naughty habit of trying to make moneg on the side, without the knowledge of his employer; he referred matters to his pal, Nick Johnson, who would pay him a referral fee when the matter was concluded — even though the two had no express “agreement.” Of course, Chang never told anyone at B & P that he was referring cases to Nick Johnson.
2. Chang and King were on a skiing vacation together in New Mexico on the weekend of the crash. After the accident, Chang and King quite naturally discussed the legal actions available to King’s family.... They ultimately decided to do so in a way which would create a personal windfall to Chang at the expense of his law firm, B & P.
3. Later, on inquiry by Mr. Gaas [a B & P shareholder], Chang lied, saying he lost the case. Gaas asked him what had happened, what had gone wrong. Chang lied again, this time telling him that Mr. Joe Jamail had signed up the plaintiffs.... Chang disclaimed any knowledge as to how Mr. Ja-mail procured the engagement .... [concealing] that he himself had facilitated Mr. Jamail’s involvement in the case to B & P’s exclusion. Nor did B & P have any idea that Chang was actually helping King shop the case to some of the best-known lawyers in town, the identity of most of which was given to Chang by Mr. Gaas_ Barely two months later, Chang quit his job at B & P, inexplicably.
4. It was Chang who first brought King to Mr. Joe Jamail, without Johnson. Mr. King then met with defendants Johnson and Chang, and Johnson told King that he would immediately “flip” the case, i.e., refer it to Mr. Joe Jamail. King, knowing that Johnson would do nothing but “flip” the case to Mr. Jamail, decided to “hire” Johnson.
5. Chang claims that he was only “helping” King out as a friend, and would therefore receive no benefit from the lawsuit. This clearly is false, as demonstrated by incoming and outgoing faxes, messenger receipts, and telephone messages, all charged by Chang’s own hand, to B & P’s “business development” account. In addition, although Johnson incredibly claims that he did not know that Chang was an associate at B & P (and thus presumably could not conspire with Chang to breach his fiduciary duty), B & P’s telephone records show multiple telephone calls from Johnson to Chang, both *873prior to and the weeks immediately following the accident. At all times, Johnson and King knew that Chang was not a solo practitioner; they knew that Chang worked at a law firm. That Mends as good as these two defendants knew where each other worked, and for whom, is obvious from the fact that these defendants are personal Mends, not to mention that they had also been law school chums and are now partners in their own law firm. That Johnson would claim to not know Chang was a B & P associate is so lacking in credibility and believability, it impeaches a great deal of his testimony.
6. Chang himself continued to have some involvement in the aircraft case. Not only did he exchange correspondence with Mr. Jamail after telling Mr. Gaas he had lost the representation to Jamail, but he also appeared in court before the Honorable Nancy Atlas, U.S. District Judge. In fact, when news of the settlement reached B & P in October 1996 and of Chang’s role in it, Chang was off to China at Judge Atlas’ instructions, to close the settlement with the Chinese plaintiffs.
7. Johnson received a referral fee of $3,000,000 (three million dollars) (less expenses, for a total of $2,944,884.83). He got this money on October 17, 1996. On December 16, 1996, Johnson gave Lasco Oü & Gas, Inc. $1,490,000.00. Two weeks later, on the last day of the tax year, Johnson gave Las-co another $650,000.00. Remarkably, Johnson claims that immediately after giving the money to Lasco, i.e., 2 weeks after the first transfer and the same day as the second transfer, the investment was bad and he had lost the money. Johnson claimed a $1,651,115 loss for investment in oil and gas exploration and production, right after he paid the money to Lasco. About a year later, Chang left the firm where he associated after he left B & P and joined a partnership with none other than Nick Johnson, after a brief office sharing arrangement. Conveniently, Lasco turns out to be a client of Chang and Johnson’s firm, according to Chang at his August 1998 deposition. When asked about Lasco at his deposition, Chang used the attorney-client privilege as a sword, and refused to answer any questions relating to Lasco. These facts clearly evidence a sloppy but, thus far, effective scheme to funnel half of the referral fee funds through Johnson and Lasco and then, back to Chang.
8.B & P conducted an independent investigation into possible links between Lasco and the defendants. The results of this investigation, attached as exhibit C-l to Patrick Gaas’ affidavit, confirm and support the illicit scheme. These records reveal a connection between Larry A. Seligmann, whose initials form the first three letters of “Lasco,” and Johnson, as well as various relatives of Johnson. For instance, one entity related to Lasco and Seligmann is Towne Lake Properties, Inc., to which Johnson paid $250,000.00 during the same period that he gave Lasco over two million dollars. Nick Johnson, several of his relatives, as well as Mr. Seligman and the various Lasco entities, all have common connections to addresses at 4615 Southwest Freeway and 9 E. Greenway Plaza, Suite 2424, both in Houston, Texas. In addition, these records also reveal that Johnson’s oum brother, Chad, is involved with Lasco. Lasco is more than just a *874client, it is an intrinsic part of a fraudulent scheme, and defendants should not be allowed to hide behind the attorney-client privilege to prevent plaintiff from investigating its claims and revealing the extent of defendants’ wrongful actions, especially given the information sought is not privileged in any event. As more discovery is conducted into these issues, the scheme will continue to unravel, and Chang, Johnson, and the details of their unseemly conspiracy will be exposed more fully. For now, however, numerous reasonable inferences support plaintiffs conclusions.
9. B & P’s claims of conspiracy, conversion, actual and constructive fraud, and negligence, are all based on Chang’s breach of his fiduciary duty to B & P. Contrary to defendants’ assertion, Texas courts have held that associates do owe a fiduciary duty to their law firm. If Chang is eor- . rect, which he clearly is not, every associate would be able to act in his or her own self-interest, and through self-dealing, run cases on the side while pretending to work “full time” for the law firm which employed them. This is obviously not the law, and again, it is such a strained argument that it impeaches the credibility of the defendants’ entire position.
10. Chang clearly self-dealt while employed at B & P, to the substantial detriment of his employer. In fact, self-dealing is a gross understatement. Chang is guilty of nothing short of defalcation. He shopped the case to other law firms while employed at B & P. He told the partners that he was in control of the case, and asked how he could sign up the client. He told Thomas Pritchard and Patrick Gaas that he was excited about the contribution such a case would make to B & P. He charged expenses related to the Bell Helicopter case to business development. He told B & P attorney Rebecca Maquette, then a law student and summer associate, that he would soon receive enough money that he could retire. He lied to B & P when he said that he had no idea how Mr.. Jamail got the case. He told that lie because he knew it was wrong to self-deal. He knew his employer would not consent to his miscreant behavior. With complete and utter disregard for his duty of loyalty as a fiduciary of B & P, Chang seized the opportunity to cash in at his employer’s expense.
11. The evil of an associate absconding with a referral fee while employed at a law firm is appreciated by Chang’s former supervisor at Adams & Reese, Mark Coffin. In October 1996, Coffin testified that he had heard over the last couple of years that Chang had been involved in a case that had settled, and that Chang had a referral interest. Coffin expressed concern that if this were true, Chang might leave the firm. Coffin further stated that any referral interest would belong to Adams & Reese, not B & P, and that if B & P were to prevail, he would recommend asserting a claim for Adams & Reese. Chang, however, claims he owes no fiduciary duty to his law firm. After the settlement of the Bell Helicopter case, Coffin’s concerns were confirmed, and Chang left Adams & Reese at the end of 1997, and is now a partner with Johnson.
12. In this case, there is no way that B & P could have, or should have, known of Chang’s breach *875of fiduciary duty; nor do defendants assert that B & P should have known. In addition, the fraudulent concealment doctrine applies in this case, because defendants actively concealed their wrongful conduct by nondisclosure and by lying.
(Emphases added.)
ANALYSIS
In their second motion for summary judgment, Chang and Johnson asserted the following grounds for summary judgment:
Ground one: The King family never at any time agreed, authorized, or consented to pay B & P a referral fee or any other remuneration.
This ground misses the point of B & P’s allegations. B & P asserts rights arising out of Chang’s relationship with B & P; i.e., because Chang was an associate of B & P at the time he worked on the case and reached the agreement regarding a referral fee, B & P has an interest in any fee Chang receives. The first ground asserted does not address B & P’s theory of recovery, and therefore does not support the summary judgment.
Ground two: Chang, as an associate with B & P, did not owe the law firm or any of its principals any fiduciary obligation.
As set out in the majority opinion, case law is against Chang. The second ground does not support the summary judgment.
Ground Three: The summary judgment proof shows that the underlying conduct was legal: there is nothing illegal about referring a case without a referral fee. Thus, there was no evidence of a conspiracy to accomplish an unlawful purpose or to engage in unlawful means.
Ground three is centered around the argument that Chang did not get a referral fee, and does not expect to get one. However, even though Chang and Johnson have denied that Chang has received, or will receive, any portion of the referral fee, there is also summary judgment evidence indicating Chang bragged about the referral fee he would get upon settlement, as well as evidence indicating the referral fee received directly by Johnson may have been funneled to his then-partner Chang, indirectly. The summary judgment record does not establish, as a matter of law, that Chang did not receive a portion of the involved referral fee; rather, a fact issue has been raised by the evidence. Accordingly, ground three does not support the summary judgment.
Ground four: There is no evidence of conversion because Chang did not receive any portion of the referral fee, and the King family did not otherwise agree to B & P representing them or having any right to a referral fee.
As already discussed, the summary judgment evidence raises a fact issue regarding whether Chang has received a portion of the referral fee. Therefore, ground four does not support the summary judgment.
Ground five: B & P’s fraud claim fails because there is no evidence that Chang or Johnson made any false representation to B & P with the intent that B & P act upon such representation, and no evidence that B & P acted in reliance upon any such representation. Further, B & P’s constructive fraud claim fails for the additional reason that Chang did not owe B & P a fiduciary duty.
Again, a fact issue has been raised about whether Chang has received a referral fee, with the assistance of Johnson, and therefore whether they made material misrepresentations to B & P when they denied any such fee existed. Further, Chang did owe a fiduciary duty to B & P. Therefore, ground five does not support the summary judgment.
Ground six: The negligence and gross negligence claims fail because there is no evidence of duty, breach, proximate cause, or damages (because Chang did not receive a referral fee).
*876Again, due to the existence of a fact issue regarding whether Chang received a referral fee, there exist fact issues regarding the negligence causes of action. Ground six does not support the summary judgment.
Ground seven: Limitations.
I agree with the majority opinion’s treatment of ground seven, and I likewise conclude it does not support the summary judgment.
CONCLUSION
Chang and Johnson did not move for summary judgment on the basis that, even if Chang did receive a portion of the King case referral fee, Chang still would owe no portion of it to B & P. Thus, we do not have before us the issue of whether Chang would have a fiduciary duty to pay over all or a portion of the fee received by him to B & P just because he was employed as an at-will associate at the firm, and he used the firm’s resources, when he arranged for the referral of the case to Jamail & Kolius.
We are restricted to reviewing the propriety of the granting of the summary judgment on the basis of the grounds actually asserted in the motion for summary judgment. See Cincinnati Life Ins. Co. v. Cates, 927 S.W.2d 623, 626 (Tex.1996); Home Indem. Co. v. Pate, 814 S.W.2d 497, 500 (Tex.App. — Houston [1st Dist.] 1991, writ denied). The grounds asserted do not support the summary judgment under Tex.R. Crv. P. 166a (c) or (i). Accordingly, I would sustain issue two, reverse the summary judgment in toto, and remand the case to the trial court.

. Appellant is referred to, interchangeably, as “B & P” or Brewer & Pritchard.

. This was defendants’ second motion for summary judgment.

. Throughout B & P's response to the motion for summary judgment, B & P refers to summary judgment evidence including deposition testimony, affidavits and documents.