Court Opinion

ID: 9733662
Source: CourtListenerOpinion
Date Created: 2023-08-26 17:13:19.890765+00
Date Added: 2024-06-11T18:26:43.322710
License: Public Domain

SCOTT BRISTER, Chief Justice,
concurring and dissenting.
The law firm of Hoover, Bax & Slova-cek, L.L.P. sued its former client, George Deutsch, for more than $60,000 in unpaid fees. Naturally, he responded with a counterclaim; indeed, it was a word-processor-created blizzard that included lists of fifteen identical acts, omissions, and conflicts of interest, each of which was alleged to constitute negligence and breach of contract and breach of fiduciary duty and negligent misrepresentation and (with slightly shorter but still identical lists) DTPA and fraud. Mercifully for the jury, the seasoned trial judge condensed these duplicative claims into two broad-form questions, one addressing negligence and the other breach of contract. The jury found against Deutsch on both; he challenges neither finding on appeal.
Nevertheless, the Court holds Deutsch is entitled to a second jury trial because, no matter how flimsy his fee forfeiture claim, it must be submitted to a jury if there is the least factual dispute. Given the highly discretionary nature of such claims, I do not believe the law requires this futile exercise. Thus, I respectfully dissent to parts III(B)(4)-(6) of the Court’s opinion, although I fully join in the remainder.

The Standard of Review?

Without any discussion, the Court applies the traditional standards for reviewing motions for directed verdict in jury trials. But fee forfeiture is not a traditional jury claim; it is “inherently equitable,” and thus largely in the discretion of the court. See Burrow v. Arce, 997 S.W.2d 229, 246 (Tex.1999). While the jury is to decide factual disputes, the decision whether there was a clear and serious breach of duty, and whether any fees should be forfeited, is left up to the discretion of the trial court. Id. The Court does not explain why the standard for reviewing a directed verdict of a jury claim (in which trial judges have no discretion) should apply to a fee forfeiture claim (in which they have quite a lot).
The supreme court has not spelled out the standard of review we should employ in fee forfeiture cases.1 But it has discussed in some detail the standard of review that applies to declaratory judgment fee actions, which involve a similar combination of jury questions (a reasonable and necessary fee) and equitable considerations (a just and equitable fee). There, the court prescribed a multi-faceted review: “the court of appeals must deter*201mine whether the trial court abused its discretion by awarding fees when there was insufficient evidence that the fees were reasonable and necessary, or when the award was inequitable or unjust.” Bocquet v. Herring, 972 S.W.2d 19, 21 (Tex.1998). Thus, while the amount awarded by the jury is reviewed for sufficiency of the evidence, the decision to grant or deny any fees at all is reviewed for an abuse of discretion. See Hunt v. Baldwin, 68 S.W.3d 117, 135 n. 8 (Tex.App.-Houston [14th Dist.] 2001, no pet.). As a result, it is often irrelevant whether there was some evidence to support a jury’s award; equitable considerations may require a reduced fee or no fee at all.2
Because the issues are so similar, we should follow a similar standard of review here. As the trial court did not submit to the jury factual questions regarding the alleged conflicts of interest, we should apply the traditional standards and resolve all conflicts in the evidence in Deutsch’s favor. See Szczepanik v. First S. Trust Co., 883 S.W.2d 648, 649 (Tex.1994). But assuming those to be the facts, we then should review the trial court’s judgment denying forfeiture for an abuse of discretion, setting the judgment aside only if it is clear from the record that the trial court had only one reasonable option. See In re Nitla S.A. de C.V., 45 Tex. Sup.Ct. J. 571, 2002 WL 534089 (April 11, 2002); Jackson Law Office, P.C. v. Chappell, 37 S.W.3d 15, 29 (Tex.App.-Tyler 2000, pet. denied) (holding appellate court may find fee forfeiture order an abuse of discretion only if facts and circumstances extinguished any discretion in the matter).
The Court reads Burrow to require a jury trial every time fee forfeiture is alleged and there is any factual dispute, no matter how slight. But the Burrow court said jury submission is required only if there are factual disputes that “must be decided by a jury before the court can determine whether ... forfeiture is appropriate.” Id. (emphasis added). Surely it is possible a trial judge may decide, after hearing the claimant’s case, that fee forfeiture is not appropriate even if a jury found all factual disputes in the claimant’s favor. We do the same in any number of other proceedings in which trial judges have a decision-making role.3
Thus, the trial judge’s failure to submit fact issues to the jury should not be per se reversible error. The proper question for us is whether, viewing the evidence in the light most favorable to Deutsch, denial of fee forfeiture was an abuse of discretion.

An Abuse of Discretion?

Deutsch bases his fee forfeiture claim on three conflicts of interest.4 Viewing the *202evidence in the light most favorable to him,5 those conflicts were:
The adversary proceeding. The bankruptcy trustee’s adversary proceeding was originally filed against both Deutsch and the law firm, claiming both violated the automatic bankruptcy stay. The trustee voluntarily dropped the claim against the firm nine days later, before it filed an answer. During those nine days, Deutsch alleges Waddell represented both his own firm and Deutsch, thus creating a conflict of interest. Deutsch’s expert admitted that nothing of consequence occurred in the litigation during those nine days.
The Dan 333 tax matter. Waddell admitted the conflicts check he ran within the law firm failed to include Dan 333, one of the partnerships in which Deutsch and the bankrupt parties were partners. A proper conflicts check would have disclosed that another member of the law firm was representing Dan 333 in an attempt to lower its property taxes. The bankruptcy trustee filed a motion to disqualify the law firm on this basis, at which time Waddell told Deutsch about the potential conflict, and Deutsch consented to continued representation by the firm. See Tex. Disci-plinaey R. PRof’l Condugt 1.06, reprinted in Tex. Gov’t Code, tit. 2, subtit. G app. A (Vernon Supp.1998) (Tex. State BaR R. art. X, § 9). The motion to disqualify was denied within fourteen days of filing. Deutsch’s expert could identify no damage from the conflict, or any effect upon Waddell’s representation.
The March 8, 199k hearing. At a hearing in the bankruptcy court, Waddell stated that Deutsch would buy a Houston building owned by one of the other partnerships (not Dan 333) on terms that Deutsch alleges he had not approved. When the sale failed because of these discrepancies, the building was sold to someone else at a lower price, and the trustee sought the difference from Deutsch. Deutsch claims Waddell was a material witness, and should have withdrawn from representation as a result. See Tex. Disciplinary R. Peof’l. Conduct 3.08(a) (requiring withdrawal if lawyer may be a witness necessary to establish an essential fact on behalf of client). When the issue was tried in Delaware, Waddell did not testify, and Deutsch was not held hable for the difference.
Deutsch first argues that every conflict of interest is serious and ought to justify fee forfeiture. But fee forfeiture is not automatic. See Burrow, 997 S.W.2d at 240-41. Trial courts must use discretion and consider a number of factors before deciding whether to forfeit any fees. Because we cannot substitute our judgment for the trial court’s, we consider only whether the trial court reasonably could have found those factors weigh against *203forfeiture in this case:6
• Gravity and timing of the violation. The trial court could have found the alleged conflicts were minor and of short duration. Indeed, the denial of the motion to disqualify, dismissal of the adversary proceedings against the firm, and final judgment in Deutsch’s favor could have suggested that each was the result of overreaching by opposing counsel rather than under-representation by Deutsch’s own.
• Wilfulness. During the trial, Deutsch admitted he did not believe the firm ever intended to do him any harm.
• Effect on value of the lawyer’s work. Deutsch’s expert admitted none of the conflicts appeared to have any adverse effect on the firm’s representation.
• Threatened or actual harm to the client. Deutsch presented no evidence that he suffered any harm from the conflicts, and the jury found no negligence by the firm caused him any harm.
• Adequacy of other remedies. Because the legal fees in Burrow had already been paid, the clients needed an equitable remedy to get them back. See Burrow, 997 S.W.2d at 232. Here, by contrast, Deutsch had not paid; he repeatedly urged the jury to lower his fees because of the conflicts. The trial court could have found this remedy adequate, even though ultimately unsuccessful.
• Public interest in maintaining the integrity of attorney-client relationships. Professional standards recognize that conflicts of interest are sometimes harmless or unavoidable. See Tex. DisciplinaRY R. PROf’l Conduct 1.06(b)-(d) & 3.08(a)-(b) (providing exceptions in which conflicts of interest are permissible). The trial court could have found that fee forfeiture was not needed to discourage inadvertent errors in running a conflicts check or an opponent’s disqualification motion that proves to be baseless.
Deutsch makes no argument that any of these conflicts were clear and serious other than the Dan 333 tax matter. It is true one member of the law firm was arguing for a low valuation of Dan 333’s property in the tax proceeding while Waddell argued for a high valuation in the bankruptcy proceeding. But the trial court could have found this was in everyone’s interest, as both Deutsch and Dan 333 stood to benefit from lower taxes and a higher sales price. Surely a trial court could find fee forfeiture is not required in every ease when an attorney is hired to keep taxes low but valuations for other purposes high.
It is not our role to condone or censure the law firm’s work in this case; as an appellate court, our job is not to decide the facts or whether fee forfeiture was appropriate. Our only role is to decide whether, viewing all the evidence in Deutsch’s favor, no reasonable trial judge could have denied fee forfeiture. Because that is not the case, I would hold the trial court did not abuse its discretion.

No Proper Objection?

The Court never disagrees with this analysis of the alleged conflicts; instead, it holds that the law firm never moved for directed verdict on this ground. But the record shows the contrary. At the close of all evidence and immediately before closing arguments, the law firm moved for directed verdict in an oral motion that (due to the plethora of Deutseh’s claims and the thoroughness of the law firm’s counsel) *204extends over more than forty pages. In the middle of that motion, the firm’s counsel stated:
Now, with regard to his fee forfeiture claim under the Arce case, admittedly he does not have to prove damages. What he has to prove is to get a jury finding as to breach of fiduciary duty and then it becomes a court determination. The Arce case sets forth certain criteria that the trial court judge and the trial court judge only can determine whether the trial fees should be forfeited in their entirety, in part, or not at all.
(emphasis added). Some time later, the trial court granted the motion as to all claims except negligence and breach of contract.
The Court says this does not count as a motion for directed verdict because the law firm’s attorney “requests no relief from the trial court,” and merely “states his view of the law in this case.” Ante at 198. Realistically, trial lawyers do not state abstract views of the law in the middle of a motion, with the charge prepared, and a jury waiting out in the hall for closing arguments. Read in its context — in the middle of a motion for directed verdict— the last sentence asks the trial judge not to submit anything to the jury regarding fee forfeiture, but to deny it based on the Burrow criteria alone.
Having said that, I do not think we can reverse even if the law firm’s motion was not specific enough. In equitable matters committed to a trial court’s discretion, the rule is that we must affirm if there is any basis in the record for doing so, whether or not the ground was expressly urged by the successful party. See, e.g., Newman v. Link, 866 S.W.2d 721, 726-26 (Tex.App.Houston [14th Dist.] 1993), writ denied, 889 S.W.2d 288 (Tex.1994) (per curiam) (affirming directed verdict imposing constructive trust even though movant stated no liability grounds as a basis).7
The Court reaches an opposite conclusion by way of two errors. First, the Court overstates the law governing motions for directed verdict generally. It is not true that a motion for directed verdict can only be affirmed on grounds stated in the motion:
Although Rule 268, Texas Rules of Civil Procedure, provides that a motion for instructed verdict shall state the specific grounds therefor, failure to so state is not always fatal, especially if there are no fact issues raised by the evidence.
Texas Employers Ins. Ass’n v. Page, 653 S.W.2d 98, 102 (Tex.1977) (emphasis added). The word “especially” indicates that the absence of fact issues is a special case in which grounds do not have to be stated, but by no means the only case. Indeed, a trial court may direct a verdict sua sponte — without a motion mentioning any grounds at all.8
Second, the Court again overlooks the equitable nature of fee forfeiture proceedings. If a matter is committed to the trial court’s discretion, it cannot be limited to *205the timing or reasons selected by either of the parties.
A directed verdict is not like a summary judgment; it comes only after the plaintiffs evidence is closed. Plaintiffs present their evidence as they wish; no one must give them notice of what they must prove. When they rest, omissions cannot be cured by further evidence — it is too late for that. If the case is lost, jurors do not have to sit through the rest of a trial simply because the defendant hasn’t noticed yet. I would hold we cannot avoid applying the proper standard of review simply because the law firm did not state it precisely enough.

No Ruling?

Finally, the Court says the trial judge never exercised his discretion to deny Deutsch’s fee forfeiture claim. It is true that neither his oral directed verdict nor the written final judgment explicitly mentioned the fee forfeiture claim. But there is a presumption that applies here: when a trial judge signs a judgment after a conventional trial on the merits, we must presume that he “intended to, and did, dispose of ... all issues made by the pleadings between the parties.” North East Indep. School Dist. v. Aldridge, 400 S.W.2d 893, 897-98 (Tex.1966). Without question, the trial judge could have initially ruled one way on the directed verdict, and then later reconsidered and ruled differently. See Conrey v. McGehee, 473 S.W.2d 617, 620 (Tex.App.-Houston [14th Dist.] 1971, writ ref d n.r.e.) (affirming directed verdict that was granted only after jury could not reach a verdict).
The Court holds the trial judge never exercised any discretion regarding fee forfeiture because he said he was granting a directed verdict on all fiduciary claims based on limitations. Of course, applying that reasoning, we would have to say the trial judge never granted a directed verdict based on the “fracturing” and “no damages” grounds either. The majority and I disagree whether the law firm’s motion was necessary or sufficient; we should not be disagreeing on whether the trial judge’s oral pronouncement is somehow binding in this appeal.

Conclusion

I agree with the Court that Deutsch is not entitled to avoid his legal bill by any remedy at law; my only disagreement is whether equity requires something more. Attorneys must exercise “the punctilio of an honor” toward clients. See Lopez, 22 S.W.3d at 866 (Gonzalez, J., concurring and dissenting) (quoting Justice Cardozo in Meinhard v. Salmon, 249 N.Y. 458, 164 N.E. 545, 546 (1928)). But even attorneys who do will sometimes have dissatisfied clients, lawsuits and legal fees being what they are. Adding a fee forfeiture claim to every legal malpractice or fee collection suit is the work of a moment. If the Court is correct that Burrow requires a jury trial over every scintilla of a punctilio, Texas judges and jurors will soon be occupied with little else.

. The court has stated only that a decision “whether to forfeit any or all of an attorney's fee is subject to review on appeal as any other legal issue.” Burrow, 997 S.W.2d at 246. The opinion does not indicate which legal issues the court had in mind.

. See Utley v. Marathon Oil Co., 31 S.W.3d 274, 281 (Tex.App.-Waco 2000, no pet.) (holding that even though some evidence supported jury’s fee award, trial court did not abuse its discretion in reducing jury’s award by 80%); Stephenson v. LeBoeuf, 16 S.W.3d 829, 843 (Tex.App.-Houston [14th Dist.] 2000, pet. denied) (holding that even though some evidence supported jury’s fee award, trial court abused its discretion in granting any fee award at all).

. See, e.g., Qantel Bus. Sys., Inc. v. Custom Controls Co., 761 S.W.2d 302, 304-05 (Tex. 1988) (holding trial judge in bench trial need not deny directed verdict and go through full trial merely because some evidence supports plaintiffs claim, if trial judge does not credit that evidence); Loomis Int’l, Inc. v. Rathburn, 698 S.W.2d 465, 469 (Tex.App.-Corpus Christi 1985, no writ) (same, with respect to temporary injunction hearing); see also Kline v. O’Quinn, 874 S.W.2d 776, 785-86 (Tex.App.Houston [14th Dist.] 1994, writ denied) (affirming directed verdict because, as defendants owed no duty to plaintiff, the parties’ factual disputes were immaterial).

.Deutsch alleges a fourth conflict — that the law firm represented the bankruptcy trustee during the adversary proceeding — but he points to no evidence to support that claim. *202The testimony and exhibits show that a Delaware firm represented the trustee in that proceeding. It appears from the record that what Deutsch actually is arguing is that, because the appellee law firm represented Dan 333 in the ad valorem tax matter, and because the bankruptcy trustee controlled the bankrupt partners’ rights in Dan 333, then the firm was representing the trustee. This is nothing more than a reiteration of the conflict relating to Dan 333.

. Because fee forfeiture presents a mix of factual and legal issues, it is unclear whether we should limit our consideration to the evidence in his favor and discard all contrary evidence, or consider all of the evidence in his favor only as much as the record allows. See S.V. v. R.V., 933 S.W.2d 1, 8 (Tex.1996). But in this case, the result is the same under either standard.

. Burrow, 997 S.W.2d at 243-44.

. See also In re Gamble, 71 S.W.3d 313, 325 (Tex.2002) (Baker, J., concurring) (arguing that court based its analysis in mandamus on ground petitioner did not allege in lower courts). Texas criminal and civil law appear to agree in this respect. See Hailey v. State, 87 S.W.3d 118, 2002 WL 31116654, *3 (Tex.Crim.App.2002) (holding appellate courts may affirm but cannot reverse trial court’s decision on legal theory not presented below).

. See Guerra v. Datapoint Corp., 956 S.W.2d 653, 657 (Tex.App.-San Antonio 1997, no writ); Valero Eastex Pipeline Co. v. Jarvis, 926 S.W.2d 789, 792 (Tex.App.-Tyler 1996, writ denied); see also Gonzales v. Willis, 995 S.W.2d 729, 740 (Tex.App.-San Antonio 1999, no pet.) (stating directed verdict must be affirmed on ground disclosed by record even though not embodied in motion).