Court Opinion

ID: 3085541
Source: CourtListenerOpinion
Date Created: 2015-10-16 02:42:22.308263+00
Date Added: 2024-06-11T11:41:37.178541
License: Public Domain

In The
                      Court of Appeals
        Sixth Appellate District of Texas at Texarkana
                ______________________________

                      No. 06-11-00050-CV
                ______________________________

   JOHN LEEMAN ISAACS AND SUSAN GAIL ISAACS, Appellants

                                  V.

ROBERT G. SCHLEIER, JR., AND SCHLEIER & BROWN, P.C., Appellees

           On Appeal from the 124th Judicial District Court
                        Gregg County, Texas
                   Trial Court No. 2005-2176-B

             Before Morriss, C.J., Carter and Moseley, JJ.
                     Opinion by Justice Carter
                                           OPINION

       John Leeman Isaacs and Susan Gail Isaacs appeal from a final take-nothing summary

judgment entered in favor of their former attorney Robert G. Schleier, Jr., and his firm Schleier &

Brown, P.C. We affirm the trial court‘s summary judgment because we conclude that the statute

of limitations barred the Isaacses‘ claims, and no tolling provisions apply.

I.     Factual and Procedural History

       The claims involved in this lawsuit stem from actions which resulted in a prior lawsuit filed

by Charles Bishop against the Isaacses and Schleier and Schleier & Brown, which we decided in

our opinion Isaacs v. Bishop, 249 S.W.3d 100 (Tex. App.—Texarkana 2008, pet. denied), referred

to by the parties as the Harrison County litigation. The events giving rise to the prior lawsuit are

imperative to the understanding of the claims and arguments in this case.

       A.      The Sale of the Racetrack to Bishop and Alleged Default

       The Isaacses purchased the Hallsville Dragway (the racetrack) from Ken Hall in 1998.

Schleier prepared the documents for the sale, including the promissory note and deed of trust

between the Isaacses and Hall. In 2002, the Isaacses wished to sell the track to Bishop. They

enlisted Schleier to prepare the documents for the sale in the same manner as in the Hall

transaction.   After meeting with John and Bishop in March 2002, Schleier prepared the

documents, charging both parties a fee. The ―Deed of Trust, Security Agreement and Financing

Statement‖ (deed of trust) listed Schleier as the trustee, and the version signed by Bishop contained

                                                 2
an ―insecurity clause,‖ which could have allowed the Isaacses to deem themselves insecure

concerning the prospects for Bishop‘s repayment of the indebtedness, an occasion included—by

definition in paragraph 3.01, subparagraph M, of the deed of trust—as an ―Event of Default,‖

giving the Isaacses the ability, in such a circumstance, to accelerate the debt and declare it wholly

due.

       This provision was not included in the deed of trust signed by the Isaacses, and was also

absent from the 1998 deed of trust from the Isaacses in favor of Hall.

       A few months after the sale was completed, a physical rumble at the racetrack erupted in

September 2002. In our prior opinion, Isaacs, we wrote:

       Six months after the sale, the Isaacs family--including father, mother, son, and
       daughter on this occasion--visited the track and were involved in a brawl with a
       handicapped track worker and his wife. The evidence shows that Bishop got
       involved in the melee in attempting to break it up. Bishop called the police, who
       arrested John Isaacs. When released from jail the next morning, John Isaacs
       reportedly called Bishop and attempted to get Bishop to change his version of
       events to shift blame away from John Isaacs. That attempt was, reportedly,
       accompanied by threats of physical violence and fiscal destruction to Bishop; the
       jury found threats did indeed occur. There was also evidence that Isaacs paid two
       fight witnesses to testify ―appropriately‖ and that, when one began to waver, Isaacs
       threatened that witness with physical violence.
249 S.W.3d at 104 (footnote omitted).        The Isaacses stated that ―[f]ollowing the physical

altercation, hard feelings developed between John Isaacs and Buyer Bishop,‖ which prompted

―investigation into the circumstances of the operations of the [racetrack].‖

                                                 3
       This investigation led to the conclusion that Bishop was in violation of terms of the

security agreement and deed of trust for failure to deliver ―full insurance policies naming the

Isaacs[es] as additional insured[s].‖ As a result, Schleier issued a notice of default on the

Isaacses‘ behalf on September 25, 2002, stating ―the Isaacs[es] have instructed me to begin

foreclosure proceedings against the Property.‖ On September 30, 2002, Bishop‘s attorney Bruce

A. Craig responded to the notice of default in the following manner:

       My understanding of the transaction is that your firm represented both sides to the
       deal. Under those circumstances, my client objects to your representation in this
       matter of the Isaacs[es] and demands your immediate withdrawal as counsel. In as
       much as you have represented my client in this the [sic] same matter through the
       closing of the sale, a clear conflict exists which require[s] you to withdraw from
       further representation of the Isaacs[es] in this matter under the Texas Rules of
       Disciplinary Conduct.

Schleier responded by denying that he had represented Bishop when drafting the sale purchase

documents and reissuing notice of default.

       B.      Claims in the Harrison County Suit

       Thus, Bishop filed suit against the Isaacses, Schleier, his firm (and other parties) in October

2002 in Harrison County, Texas. Bishop‘s petition asserted the following claims against the

Isaacses: (1) assault and battery against John in connection with the brawl that led to the Isaacs

family‘s arrest; (2) common law and statutory real estate fraud for ―failing to disclose that the

Schleier Defendants . . . had been counsel for the Isaacs Defendants for at least the past four years,‖

falsely promising that the Schleier Defendants would represent both parties to the transaction,

                                                  4
falsely denying that the Isaacses had not authorized the sale of a Ford tractor, falsely representing

the quantity of land conveyed in the transaction, 1 falsely describing the terms of the lease

arrangement with the customers of the track (Ashmore Defendants), and falsely representing the

status of title and failing to disclose known defects in the title to be acquired; (3) tortious

interference with business and/or contractual relations between Bishop and the Ashmore

Defendants; (4) intentional infliction of emotional distress; and (5) civil conspiracy.

         These causes of action were also asserted against Schleier and the firm: (1) the common

law and statutory real estate fraud claims;2 (2) professional negligence/breach of fiduciary duty in

failing to: disclose that he had represented the Isaacses in the past; advise that no consideration

could exchange hands until the documents were prepared and signed; timely prepare the

documentation for the transaction; draft terms that were agreed upon; disclose how the terms in the

documents presented for execution varied from those discussed; draft terms fair to both parties,

including the on-demand feature; disclose and fully explain the significance of the conflicts of

interest that existed when representing the parties on both sides; properly transfer title to a mobile

home and in securing a release of lien from Hall; (3) intentional infliction of emotional distress;

and (4) civil conspiracy. Also, the ―Isaacs[es] sued Bishop to accelerate the maturity of the note

1
 Results of a survey indicated ―substantially more of the Hallsville Race Track was on the [adjacent owner‘s] property
than John Isaacs had previously represented to Bishop.‖
2
 Bishop alleged Schleier knew of title defects, failed to disclose them, and failed to explain the importance of the title
defects or need for title insurance.

                                                            5
and foreclose on the track, seeking a judgment on the note balance. In response, Bishop sought to

rescind the track purchase.‖ Id.

       C.      Claims in This Gregg County Suit

       Throughout the litigation, Schleier denied any attorney-client relationship with

Bishop—until he testified on the stand in 2005. As a result of this admission on the stand, the

Isaacses instituted this suit against Schleier and the firm in Gregg County on September 26, 2005.

The Isaacses‘ claims in this suit are based on the contention that ―[t]he Isaacs[es] and their counsel

in the Harrison County Litigation also relied . . . on the repeated factual denials by Attorney

Schleier of any dual attorney-client relationship.‖ The Isaacses‘ petition recited,

       [t]he claims of Buyer Bishop in the Harrison County Litigation also named
       Attorney Schleier and Schleier P.C. as defendants, asserting numerous tort
       claims . . . each theory based on the factual premise and claim that Attorney
       Schleier had, during the negotiation and documentation process culminating in the
       sale of the Race Track, agreed to serve as and, in fact, was also the fiduciary
       attorney and agent for Buyer Bishop as well.

When Schleier testified, the Isaacses argued,

       [t]his untimely disclosure by Attorney Schleier of the previously-concealed and/or
       previously-misrepresented existence of his dual attorney-client role with Buyer
       Bishop in the sale of the Race Track suddenly, and without warning to the
       Isaacs[es] or their trial attorneys, dramatically compromised and substantially
       impaired the ability of the Isaacs[es] to defend the allegations against them of fraud
       and non-disclosure by Buyer Bishop, . . . causing, in part, the jury to return a large
       adverse verdict against John Isaacs for fraud in the inducement and non-disclosure
       in the sale of the Race Track . . . .

                                                  6
        Therefore, the Isaacses asserted the following causes of action against Schleier and the

firm: (1) ―Breach of the Agency Contract (i.e. the Agent‘s/Attorney‘s strict duty of loyalty to the

Principal/Client to follow clear and lawful instructions)‖ in including the on-demand feature into

the deed of trust; (2) negligence in not following instructions regarding terms to be included in

promissory note, placing the on-demand clause in the note, undertaking to represent the naturally

conflicting interests of both parties, failing to obtain informed consent of the Isaacses before

undertaking any adverse representation, failing to timely inform them that he represented both in

the Harrison County Litigation, and failing to secure something in writing from Bishop saying

Schleier was only acting as attorney for the Isaacses; and (3) ―Breach of Fiduciary Duty and

Constructive Fraud‖ based on the same conduct.

        D.      Outcome of the Harrison County Litigation

        The Harrison jury charge and judgment sheds light upon the Isaacses‘ claims in this

litigation.   Following a trial, the jury found that an attorney-client relationship had been

established between Bishop and Schleier and that Schleier and the firm were negligent since ―‗but

for‘ [their] alleged negligence, Bishop would have prevailed on his claim against the Isaacs

Defendants for rescission or reformation before the trial court July 2003.‖ They also found that

Schleier failed to comply with his fiduciary duty to Bishop and that $171,000.00 would

compensate Bishop for Schleier‘s tortious actions. After the jury‘s verdict, Schleier settled with

Bishop.

                                                7
        With respect to the Isaacses, the jury found, in a general submission, that the Isaacses

committed fraud, awarded Bishop $171,000.00 in actual damages, $400,000.00 in special

damages, and $200,000.00 in attorney‘s fees for preparation and trial. The jury also found the

Isaacses intentionally inflicted emotional distress upon Bishop with malice. They awarded

$50,000.00 for this claim. The amount owed by the Isaacses to Bishop were offset against the

sums Bishop owed to the Isaacses under a replacement note.3 The trial court‘s final judgment

incorporating the jury‘s answers awarded Bishop $419,700.00 for actual damages and attorney‘s

fees, and pre-judgment interest in the amount of $22,130.74.

        Although the claims in this case in Gregg County stem from the Harrison County litigation,

and the Isaacses argue they were harmed because the tort offsets to Bishop were based on

Schleier‘s and the firm‘s conduct in ―the untimely disclosure of the dual attorney-client

relationship,‖ we stated in our prior opinion, and reiterate today, that:

        Although related, the actions Bishop brought against Schleier were not the same
        ones brought against the Isaacs[es]. [The] Isaacs[es] [do] not argue now, and did
        not argue then, that either [the] Isaacs[es] or Schleier would be liable for the
        damages caused by the other in those alternative causes of action. The trial court
        carefully separated the damages to avoid overlap, and each defendant was found
        liable for damages for the particular causes of action asserted against that party.

3
 ―During the course of the litigation, because Bishop could not get alternative financing, Bishop created the
corporation Hallsville Dragway, Inc. (hereinafter HDI), and transferred the track into it. HDI later filed for
bankruptcy protection, and the bankruptcy court ordered the original note to be replaced with a ‗Replacement Note‘
containing less severe terms.‖ Isaacs, 249 S.W.3d at 104.

                                                        8
Id. at 109.       We also note that Schleier was not part of the percentage of responsibility

determination made by the jury as to Bishop‘s claims against the Isaacses. Id.4

         Additionally, we stated with respect to the fraud finding against the Isaacses:

                 The record reveals evidence of fraud. There was evidence that [the]
         Isaacs[es] and Bishop met with Schleier to discuss documenting the purchase of the
         track, that they jointly planned to use the same terms and documents as had been
         used when the Isaacses had purchased the track four years earlier, intending to draft
         the promissory note to include notice and cure rights and to exclude a demand
         feature. Isaacs agreed to all of this, but there is evidence that, two days before the
         documents were to be mailed, Isaacs contacted Schleier and directed him to change
         the terms to include the demand feature in the note. Isaacs admitted that he so
         instructed the attorney. Because this is some evidence that Isaacs perpetrated a
         fraud on Bishop, the evidence is sufficient. . . .

                   ....

                 . . . . There is evidence that Isaacs made a representation to Bishop about the
         note‘s content, but then, unilaterally and without notice to Bishop, directed that the
         document be changed to remove that portion and to add another section that
         completely changed the note‘s original content.5

Isaacs, 249 S.W.3d at 114.

         E.        Procedural History of This Case

         With this background in mind, we turn to the procedural history in this case. The Isaacses

filed a motion for partial summary judgment on the breach of contract liability, contending that

Schleier ―while acting in the trusted fiduciary role of Agent/Attorney for these prior Clients, (i.e.

4
  Schleier and the firm argue that to the extent this is a suit for contribution, it is barred. The Isaacses say that this is
not a claim for contribution.
5
  In Schleier‘s March 3, 2005, trial testimony, he denied that the demand feature was specifically put in. Instead, he
claimed that the feature was added because ―my forms had changed since the time of the Ken Hall transaction, and,
and my commercial note forms have automatically a demand feature in them.‖

                                                             9
John Leeman Isaacs and Susan Gail Isaacs), violated his common-law agency contract duty to

follow clear and lawful instructions given him by those prior Clients,‖ by including the on-demand

provision and failing to make the transaction the same as the Hall sale. Schleier and the firm filed

a motion for summary judgment arguing that the Isaacses‘ claims were actually claims of

malpractice, that malpractice claims are barred by a two-year statute of limitations, and, therefore,

that the Isaacses‘ claims are barred. Schleier also asserted the claims were barred by res judicata

and that they were claims of contribution which should have been raised in the Harrison County

litigation. The Isaacses responded by filing a no-evidence motion for summary judgment on

these affirmative defenses. They argued that these are not malpractice claims and that they did

not discover that any cause of action existed until Schleier‘s testimony on the stand in the spring of

2005 admitting dual representation.

       The trial court granted a final, take-nothing summary judgment in favor of Schleier and the

firm after a hearing. The Isaacses appeal the summary judgment on the following grounds:

(1) the two-year statute of limitations applicable to the Isaacses‘ claims for professional

negligence is subject to the tolling devise of fraudulent concealment based on misrepresentations

and/or nondisclosures preventing the Isaacses from discovering the dual representation, (2) the

statute of limitations is tolled by the discovery rule, (3) the statute of limitations is tolled by

Hughes v. Mahaney, which tolls the commencement of limitations until the underlying litigation

involving a client is resolved, (4) their claims are not malpractice claims, and (5) this is not an

                                                 10
action for contribution. The Isaacses also argue that the trial court erred in failing to grant their

partial motion for summary judgment, failing to grant their ―no-evidence motion‖ on the

affirmative defense of res judicata, and failing to strike Schleier‘s testimony as unreliable expert

testimony. 6 We find the statute of limitations and lack of application of tolling provisions

dispositive of this appeal.

II.      Standard of Review

         The standards for reviewing summary judgments are well established.                                   We review

de novo the trial court‘s decision to grant summary judgment. Tex. Mun. Power Agency v. Pub.

Util. Comm’n of Tex., 253 S.W.3d 184, 192 (Tex. 2007). The party moving for summary

judgment has the burden of showing no genuine issue of material fact exists and it is entitled to

judgment as a matter of law. See TEX. R. CIV. P. 166a(c); Nixon v. Mr. Prop. Mgmt. Co., 690
S.W.2d 546, 548 (Tex. 1985).

         When both sides move for summary judgment, as they did here with respect to the breach

of contract claim and Schleier and the firm‘s affirmative defenses, ―and the trial court grants one

motion and denies the other, reviewing courts consider both sides‘ summary-judgment evidence,

determine all questions presented, and render the judgment the trial court should have rendered.‖

Sonat Exploration Co. v. Cudd Pressure Control, Inc., 340 S.W.3d 570, 574 (Tex.

App.—Texarkana 2011, no pet.) (quoting Gilbert Tex. Constr., L.P. v. Underwriters at Lloyd’s

6
 The Isaacses also argued as a separate point of error that the trial court erred in failing to strike Schleier‘s affidavit as
an improper expert opinion because it was unreliable with regard to the conclusion that ―events occurring in
September of 2002 could be evidence of an alleged fraud-in-the-inducement which was completed in May of 2002.‖

                                                             11
London, 327 S.W.3d 118, 124 (Tex. 2010)). Each party bears the burden of establishing that it is

entitled to judgment as a matter of law. Employers Reinsurance Corp. v. Gordon, 209 S.W.3d
913, 917 (Tex. App.—Texarkana 2006, no pet.) (citing Guynes v. Galveston County, 861 S.W.2d
861, 862 (Tex. 1993); Ranger Ins. Co. v. Ward, 107 S.W.3d 820, 824 (Tex. App.—Texarkana

2003, pet. denied)). If neither movant is entitled to summary judgment, we must remand the case

to the trial court. Id. (citing Ward, 107 S.W.3d at 824).

       With respect to the remaining negligence, breach of fiduciary duty, and fraud claims,

―[w]hen, as here, a defendant moves for summary judgment based on the affirmative defense of

limitations, the defendant assumes the burden of showing as a matter of law that the suit is barred

by limitations.‖   Murphy v. Mullin, Hoard & Brown, L.L.P., 168 S.W.3d 288, 291 (Tex.

App.—Dallas 2005, no pet.) (citing Rogers v. Ricane Enters., Inc., 772 S.W.2d 76, 80–81 (Tex.

1989)). ―The defendant must (1) conclusively prove when the cause of action accrued, and (2) if

raised, negate the discovery rule, by proving there is no genuine issue of material fact about when

the plaintiff discovered, or in the exercise of reasonable diligence, should have discovered the

nature of its injury.‖ Id. (citing Burns v. Thomas, 786 S.W.2d 266, 267 (Tex. 1990)). ―In

deciding whether there is a disputed material fact issue precluding summary judgment, evidence

favorable to the non-movant will be taken as true‖ and ―[e]very reasonable inference must be

indulged in favor of the non-movant and any doubts resolved in its favor.‖ Nixon, 690 S.W.2d at

548–49.

                                                12
III.   The Isaacses’ Claims Are Malpractice Claims

       ―Legal malpractice is not the only cause of action under which a client can recover from

[their] attorney.‖ Goffney v. Rabson, 56 S.W.3d 186, 190 (Tex. App.—Houston [14th Dist.]

2001, pet. denied) (citing Kahlig v. Boyd, 980 S.W.2d 685, 688 (Tex. App.—San Antonio 1998,

pet. denied)). ―When the facts of a case support claims against a lawyer for something other than

professional negligence,‖ the claims may be allowed. Murphy v. Gruber, 241 S.W.3d 689, 695

(Tex. App.––Dallas 2007, pet. denied) (citing Latham v. Castillo, 972 S.W.2d 66, 68, 71 (Tex.

1998) (allowing pursuit of Deceptive Trade Practices Act (DTPA) cause of action for attorney‘s

allegedly unconscionable action in representing he was actively prosecuting client medical

malpractice claim when he was not)).            But see Brescia v. Slack & Davis, L.L.P.,

No. 03-08-00042-CV, 2010 WL 4670322, at *7 (Tex. App.—Austin Nov. 19, 2010, pet. denied)

(mem. op.) (attorneys may not be sued under DTPA unless misrepresentation cannot be

characterized as advice, judgment, or opinion) (citing TEX. BUS. & COM. CODE ANN. § 17.49(c)(1)

(West Supp. 2011)).

       ―Texas law, however, does not permit a plaintiff to divide or fracture her legal malpractice

claims into additional causes of action.‖ Goffney, 56 S.W.3d at 190 (citing Greathouse v.

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

Boyd, 980 S.W.2d 685, 688–91 (Tex. App.—San Antonio 1998, pet. denied); Smith v. Heard, 980
S.W.2d 693, 697 (Tex. App.—San Antonio 1998, pet. denied); Rodriguez v. Klein, 960 S.W.2d
13
179, 184 (Tex. App.—Corpus Christi 1997, no pet.); Am. Med. Elecs., Inc. v. Korn, 819 S.W.2d
573, 576 (Tex. App.—Dallas 1991, writ denied); Judwin Props., Inc. v. Griggs & Harrison, 911
S.W.2d 498, 506 (Tex. App.—Houston [1st Dist.] 1995, no writ); Bray v. Jordan, 796 S.W.2d 296,

298 (Tex. App.—El Paso 1990, no writ)). Therefore, in general, courts do not allow a case arising

out of an attorney‘s alleged bad legal advice or improper representation to be split out into separate

claims for negligence, breach of contract, or fraud, because the ―real issue remains one of whether

the professional exercised that degree of care, skill, and diligence that professionals of ordinary

skill and knowledge commonly possess and exercise.‖ Kimleco Petroleum, Inc. v. Morrison &

Shelton, 91 S.W.3d 921, 924 (Tex. App.––Fort Worth 2003, pet. denied) (citing Averitt v.

PriceWaterhouseCoopers L.L.P., 89 S.W.3d 330, 333 (Tex. App.—Fort Worth 2002, no pet.);

Sledge v. Alsup, 759 S.W.2d 1, 2 (Tex. App.—El Paso 1988, no writ) (―Nothing is to be gained by

fracturing a cause of action arising out of bad legal advice or improper representation into claims

for negligence, breach of contract, fraud or some other name. If a lawyer‘s error or mistake is

actionable, it should give rise to a cause of action for legal malpractice with one set of issues which

inquire if the conduct or omission occurred, if that conduct or omission was malpractice and if so,

subsequent issues on causation and damages.‖)).

       Schleier and the firm contend that the Issacses‘ claims are malpractice claims that are

barred by a two-year statute of limitations. See TEX. CIV. PRAC. & REM. CODE ANN. § 16.003(a)

(West Supp. 2011). ―When the basis for summary judgment is the statute of limitations, the

                                                  14
movant has the burden to show from the record that the suit is barred by limitations. Kimleco, 91
S.W.3d at 923 (Tex. App.—Fort Worth 2003, pet. denied) (citing Delgado v. Burns, 656 S.W.2d
428, 429 (Tex. 1983); Wright v. Fowler, 991 S.W.2d 343, 349 (Tex. App.—Fort Worth 1999, no

pet.)). ―Whether allegations against a lawyer, labeled as breach of fiduciary duty, fraud, or some

other cause of action, are actually claims for professional negligence or something else is a

question of law to be determined by the court.‖ Duerr v. Brown, 262 S.W.3d 63, 70 (Tex.

App.—Houston [14th Dist.] 2008, no pet.) (quoting Murphy, 241 S.W.3d at 692).

            We address each cause of action in the Isaacses‘ complaint. The Isaacses sued Schleier

and the firm for breach of contract, negligence, breach of fiduciary duty, and constructive fraud.

The breach of contract action was based upon an alleged failure to follow the Isaacses‘ instructions

to draft the documents in the same manner as in the Hall transaction. Claims of negligence arose

from not following such instructions by placing the on-demand clause7 in the note, undertaking

dual representation without disclosure of the nature of the representation, and in failing to timely

inform the Isaacses of the dual representation. The same actions gave rise to the breach of

fiduciary duty and constructive fraud causes of action.8

            ―[T]he plaintiff must do more than merely reassert the same claim for legal malpractice

under an alternative label. The plaintiff must present a claim that goes beyond what traditionally

7
    The Isaacses admitted that the on-demand feature of the note was never exercised.
8
    We note that the Isaacses‘ brief describes the (entire) litigation as a legal malpractice action.

                                                               15
has been characterized as legal malpractice.‖ Duerr, 262 S.W.3d at 70. Each cause of action is

taken in turn to see whether this has been accomplished.

       A.      The Breach of Contract Claim Is a Malpractice Claim

       ―Regardless 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.‖ Kimleco, 91 S.W.3d at 924 (citing Greathouse, 982 S.W.2d at 172; Averitt, 89
S.W.3d at 333 (cause of action based on attorney‘s alleged failure to perform professional service

is tort rather than breach of contract, regardless of whether written contract providing for

professional services exists between attorney and client); Goffney, 56 S.W.3d at 191 (finding

claims of attorney who failed to prepare for trial and abandoned client on day of trial to be claims

for malpractice instead of breach of contract)).

       The breach of contract claim in the Isaacses‘ petition involves Schleier‘s alleged failure to

follow ―clear and lawful instructions.‖      Disobeying a client‘s lawful instruction has been

routinely recited to be a malpractice claim. McInnis v. Mallia, No. 14-09-00931-CV, 2011
WL 782229, at *7 (Tex. App.—Houston [14th Dist.] Mar. 8, 2011, pet. denied) (mem. op.); 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.); Kimleco, 91 S.W.3d at 923; Zidell v. Bird, 692
S.W.2d 550, 553 (Tex. App.—Austin 1985, no writ). We conclude that the breach of contract

claim was improper fracturing of legal malpractice and was subject to the two-year statute of

                                                   16
limitations. See Haas v. George, 71 S.W.3d 904, 910 (Tex. App.—Texarkana 2002, no pet.)

(emphasizing that breach of contract action arose out of same facts as legal malpractice claim);

Cuyler v. Minns, 60 S.W.3d 209, 216 (Tex. App.—Houston [14th Dist.] 2001, pet. denied)

(concluding breach of contract claim that was an impermissible fracturing of a legal malpractice

claim); Mullin, 168 S.W.3d at 290 n.1 (claim was actually a claim for professional negligence

where focus of clients‘ allegations was negligent drafting or review of documents and failure to

timely inform clients of defects in documents).

       B.      The Negligence Claims Are Malpractice Claims

       The Isaacses‘ negligence claims complain of failure to follow instruction in drafting the

sale documents, representing the ―naturally conflicting interests of‖ the Isaacses and Bishop,

failing to obtain informed consent regarding the dual representation, failing to timely inform the

Isaacses of the dual representation, and failing to secure written acknowledgement that Schleier

was only acting as attorney for the Isaacses. Again, failure to follow client instruction in this case

is a malpractice claim. The remaining negligence claims involve conflict of interest.

       As stated in Murphy, ―[c]ourts in this state have reached different results in deciding

whether a conflict-of-interest allegation against a lawyer gives rise to a claim for professional

negligence or some other cause of action.‖ Murphy, 241 S.W.3d at 698 (finding the Brocks‘

allegations of conflict of interest were claims of professional negligence: (1) where attorneys

continued to represent co-plaintiff after co-plaintiff was sued by way of counterclaim without

                                                  17
written waiver by the Brocks; (2) where lawyers failed to inform the Brocks of all material facts

when conflicts of interest arose; and (3) where lawyers had the Brocks sign settlement agreement

without advising them of effect of such release) (citing Deutsch v. Hoover, Bax & Slovacek,

L.L.P., 97 S.W.3d 179, 187, 190 (Tex. App.—Houston [14th Dist.] 2002, no pet.); Spera v.

Fleming, Hovenkamp & Grayson, P.C., 25 S.W.3d 863, 873 (Tex. App.—Houston [14th Dist.]

2000, no pet.); Archer v. Med. Protective Co., 197 S.W.3d 422, 427–28 (Tex. App.—Amarillo

2006, pet. denied)).

       Generally, where an attorney has gained some improper benefit from the conflict or

improperly failed to disclose his or her own conflict of interest, other causes of action may

proceed.   Id. at 696. But, ―characterizing conduct as a ‗misrepresentation‘ or ‗conflict of

interest‘ does not alone transform what is really a professional negligence claim into either a fraud

or a breach-of-fiduciary-duty claim.‖ Id. at 697 (citing Aiken, 115 S.W.3d at 29; Kimleco, 91
S.W.3d at 924; Ersek, 69 S.W.3d at 270, 274; Goffney, 56 S.W.3d at 193–94; Greathouse, 982
S.W.2d at 172–75; Klein, 923 S.W.2d at 49). ―Instead, to determine what statute of limitations

applies to the claims, we must discern the real substance of the claims.‖ Id. ―[C]ourts have held

the claim is a professional negligence claim if the claim is really that the lawyer‘s conflict of

interest prevented him from adequately representing the client.‖ Id. at 696.

       We find that because the Isaacses‘ negligence claims regarding conflicts raise the issue of

whether Schleier ―exercised that degree of care, skill, and diligence that [lawyers] of ordinary skill

                                                 18
and knowledge commonly possess and exercise,‖ the claim is one for legal malpractice. 9

Kimleco, 91 S.W.3d at 924; see Pham10 v. Nguyen, 763 S.W.2d 467 (Tex. App.—Houston [14th

Dist.] 1988, writ denied).

            C.      Breach of Fiduciary Duty and Fraud Claims Are Malpractice Claims

            As to the breach of fiduciary duty cause of action (which are related to the alleged conflict

in the dual representation), the Isaacses cite to McMahan v. Greenwood, 108 S.W.3d 467, 495–96

(Tex. App.—Houston [14th Dist.] 2003, pet. denied). The allegation in McMahan was that an

attorney gave false information to a client regarding his stock ownership in a company, which

resulted in the client‘s continued transfer of assets into the company and acquiescence to a

settlement agreement in favor of a partner who was represented by the attorney. The court found

some evidence that the attorney had actual knowledge of alleged wrongful acts. Id. at 493. In

this breach of fiduciary duty case, McMahan reiterated the concept that an attorney can be liable if

there are allegations of self-dealing, deception, or misrepresentations that go beyond the mere

negligence allegations in a malpractice action, which we find are not present here. Id. at 495.

            In helping to decide the true nature of the Isaacses‘ claims, our sister court in Kimleco

explained:

9
 Also of concern are the elements of proximate cause and damages. This Court is puzzled as to how Schleier‘s dual
representation, and alleged late disclosure of the dual representation is a proximate cause of any damage to the
Isaacses.
10
     This case is misnamed. It should be Tinh v. Nguyen.

                                                           19
       The focus of breach of fiduciary duty is whether an attorney obtained an improper
       benefit from representing a client, while the focus of a legal malpractice claim is
       whether an attorney adequately represented a client. See Goffney v. Rabson, 56
S.W.3d 186, 193 (Tex. App.—Houston [14th Dist.] 2001, pet. denied) (giving
       examples of when a breach of fiduciary duty has occurred); Greathouse v.
       McConnell, 982 S.W.2d 165, 172 (Tex. App.—Houston [1st Dist.] 1998, pet.
       denied).

               The essence of a breach of fiduciary duty involves the ―integrity and
       fidelity‖ of an attorney. Goffney, 56 S.W.3d at 193. A breach of fiduciary duty
       occurs when an attorney benefits improperly from the attorney-client relationship
       by, among other things, subordinating his client‘s interests to his own, retaining the
       client‘s funds, using the client‘s confidences improperly, taking advantage of the
       client‘s trust, engaging in self-dealing, or making misrepresentations. Id.

                Unlike a claim for breach of fiduciary duty, legal malpractice is based on
       negligence, because such claims arise from an attorney‘s alleged failure to exercise
       ordinary care. Cosgrove v. Grimes, 774 S.W.2d 662, 665 (Tex. 1989) (op. on
       reh‘g). A cause of action for legal malpractice arises from an attorney giving a
       client bad legal advice or otherwise improperly representing the client.
       Greathouse, 982 S.W.2d at 172. For example, an attorney can commit legal
       malpractice by giving an erroneous legal opinion or erroneous advice, by failing to
       give any advice or opinion when legally obliged to do so, by disobeying a client‘s
       lawful instruction, by taking an action when not instructed by the client to do so, by
       delaying or failing to handle a matter entrusted to the attorney‘s care by the client,
       or by not using an attorney‘s ordinary care in preparing, managing, and presenting
       litigation that affects the client‘s interests. Zidell v. Bird, 692 S.W.2d 550, 553
       (Tex. App.—Austin 1985, no writ).

Kimleco, 91 S.W.3d at 923–24 (finding breach of fiduciary duty claims alleging attorney

negligently failed to timely designate qualified expert and negligently misled plaintiffs that

another lawsuit was ready for trial, were really malpractice claims and were barred by the statute of

limitations); see Murphy, 241 S.W.3d at 692–93. Also, the elements of actionable fraud are: (1) a

material representation, (2) that is false, (3) that the speaker knew was false when made, (4) that he

                                                 20
made with the intention that it be acted upon by the other party; (5) that the party acted in reliance

on it, and (6) damages. T.O. Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218, 222 (Tex.

1992).

         The Isaacses‘ complaints regarding breach of fiduciary duty and constructive fraud

concern the conflict of interest, failure to disclose the dual nature of the representation and possible

consequences, and failing to obtain informed consent and waiver of any conflicts of interest.

These claims do not, ―without more, allege the type of dishonesty or intentional deception that will

support a breach-of-fiduciary-duty claim,‖ or demonstrate the element culpability required to meet

the elements of fraud. Murphy, 241 S.W.3d at 699. There is no allegation or evidence presented

that Schleier was anything other than mistaken in his belief that he was only representing the

Isaacses in the transaction.11

         As in Kimleco, we find that the Isaacses‘ claims ―can . . . be characterized as legal

malpractice‖ claims. 91 S.W.3d at 924; Won Pak v. Harris, 313 S.W.3d 454, 456–58 (Tex.

App.—Dallas 2010, pet. denied) (finding breach of fiduciary duty, misrepresentations, and aiding

and abetting fraud were all malpractice claims against attorney who drafted formation of entity

11
  While the ―Texas courts do not allow plaintiffs to convert what are really negligence claims into claims for fraud,‖
they ―have allowed clients to assert fraud claims against lawyers when the specific allegations of fraud centered on the
fees charged for the lawyers‘ services.‖ Murphy, 241 S.W.3d at 693 (claim that lawyers gave material false and
misleading information inducing plaintiff‘s settlement of claims due to defendant‘s counterclaim against co-plaintiff
was a negligence claim) (citing T.O. Stanley Boot Co., 847 S.W.2d at 222; Sullivan v. Bickel & Brewer, 943 S.W.2d
477, 481 (Tex. App.—Dallas 1995, writ denied)). There is no such complaint here.

                                                          21
documents for six clients because claims centered upon conflicts of interest and failure to disclose

conflicts focused on quality or adequacy of representation).

        The Isaacses‘ points of error complaining that their claims are not malpractice claims are

overruled. The two-year statute of limitations applies.

IV.     Tolling Provisions Asserted Do Not Apply

        A.       Discovery Rule and Fraudulent Concealment

        A plaintiff suffers legal injury when facts come into play which would authorize seeking a

judicial remedy. Apex Towing Co. v. Tolin, 41 S.W.3d 118, 120 (Tex. 2001). Because Texas

applies the discovery rule to legal malpractice claims, a cause of action for legal malpractice

accrues when the nature of the injury is discovered or should have been discovered in the exercise

of reasonable care and diligence.12 Willis v. Maverick, 760 S.W.2d 642, 647 (Tex. 1988).

        The discovery rule applies in cases of fraud, fraudulent concealment, and in other cases

where the nature of the injury is inherently undiscoverable. Murphy v. Campbell, 964 S.W.2d
265, 270 (Tex. 1997). The doctrine of fraudulent concealment provides that where a defendant is

under a duty to make a disclosure, but fraudulently conceals the existence of a cause of action from

the party to whom it belongs, the defendant is estopped from relying on the defense of limitations

until the party learns of the right of action or should have learned thereof through the exercise of

12
 Although we previously explained that the Harrison County claims were separately asserted against the Isaacses and
Schleier, and it has not been shown how the admission of dual representation harmed the Isaacses considering
Bishop‘s claims and the jury charge in the Harrison County case, we assume that some injury occurred for the
purposes of this exercise.

                                                        22
reasonable diligence. Trousdale v. Henry, 261 S.W.3d 221, 234 (Tex. App.—Houston [14th

Dist.] 2008, pet. denied). The Isaacses argue that their claims were fraudulently concealed by

Schleier and should not have been discovered until his testimony agreeing to the dual

representation.

       However, the estoppel effect of fraudulent concealment ends when a party learns of facts,

conditions, or circumstances which would cause a reasonably prudent person to make inquiry,

which, if pursued, would lead to discovery of the concealed cause of action. Id. Schleier and the

firm claim that the Isaacses knew of the allegations of the dual representation in 2002. Because

Schleier and the firm moved for summary judgment on the affirmative defense of limitations and

the Isaacses assert the discovery rule, the Isaacses must also negate the application of the discovery

rule. Rhone–Poulenc, Inc. v. Steel, 997 S.W.2d 217, 223 (Tex. 1999).

       In John Isaacs‘ June 15, 2004, deposition, he acknowledged that Schleier represented both

parties in the transaction. While Schleier sought to represent the Isaacses in initiating foreclosure

proceedings, a letter was sent from Bishop‘s attorney to Schleier on September 30, 2002, pointing

out the dual representation and asking for Schleier‘s withdrawal. With respect to this letter, John

Isaacs testified to the following on September 3, 2009:

              Q.      And part of that letter says that, Mr. Schleier, you shouldn‘t be
       handling this for Mr. Isaacs because you were handling this transaction for both of
       them, Mr. Bishop and Mr. Isaacs, you‘ve got a conflict of interest. Do you
       remember that part of the letter?

                  A.   Oh, yes.

                                                 23
               Q.      Okay. So you knew that as of the time of that letter, Bishop‘s
        claiming, wait a minute, Rob Schleier, you did something wrong, you‘re
        representing both of us?

                 A.       Well, I didn‘t -- I didn‘t think he done anything wrong.

                 Q.       Yes, sir, but --

                 A.       I don‘t think he really -- whatever, you know.

               Q.      Right, but you knew that Mr. Craig was making that claim on behalf
        of Mr. Bishop, that Mr. Schleier had done something wrong in representing both of
        you and he shouldn‘t now be representing just you?

                 A.       Yes, sir.

The evidence that John Isaacs knew of the allegation of dual representation around September 30,

2002, was corroborated later in this deposition, and in Schleier‘s written response to the allegation,

which copied the Isaacses on October 2, 2002. By the time Bishop filed suit shortly thereafter, the

Isaacses had hired Clifton ―Scrappy‖ Holmes to represent them. Schleier and the firm argue that

the Isaacses, through reasonable diligence, should have known of the nature of the dual

representation by this time.13

13
  In an amended affidavit, John expounded his answer in the 2004 deposition that he knew Schleier was also
representing Bishop. He says,

        Only at the time of the final arguments, when the Judge was reading the Trial Court‘s Charge to the
        jury prior to their deliberations, did by [sic] wife and I discover that the sudden and abrupt change in
        the testimony by Attorney Schleier set forth herein (admitting, for the very first time, that the
        dividing of the legal fees alone was sufficient evidence to establish an attorney-client relationship
        between himself and Bishop, while he was also acting as our attorney in the real estate transaction)
        would result in a substantial, sudden, and certainly adverse ―duty to disclose‖ instruction to the jury

                                                          24
       The Isaacses argue that this evidence does not establish, as a matter of law, that their cause

of action accrued in 2002. They point out that even as of August 5, 2004, Schleier testified ―my

client was Johnny Isaacs. It was not Chuck Bishop‘s [sic].‖ Schleier‘s belief stemmed from

Bishop‘s representation that he had another attorney who would review the sale documents.

Schleier continued to claim, even as of this date, that he was only representing the Isaacses in the

transaction. Because Schleier continued to deny the nature of the dual representation until his

trial testimony, the Isaacses contend that a fact question exists as to when the cause of action

accrued.

       Again, Schleier and the firm must prove ―as a matter of law that there is no genuine issue of

fact about when the plaintiff discovered or should have discovered the nature of the injury.‖

Sullivan v. Bickel & Brewer, 943 S.W.2d 477, 481 (Tex. App.—Dallas 1995, writ denied) (citing

Am. Med. Elecs., Inc. v. Korn, 819 S.W.2d 573, 576 (Tex. App.—Dallas 1991, writ denied)). If

they ―cannot do so, a fact question exists about when the limitations period began to accrue.‖ Id.

(citing Clade v. Larsen, 838 S.W.2d 277, 282 (Tex. App.—Dallas 1992, writ denied)).

       Here, we find that Schleier has met that burden. ―Discovery occurs when a plaintiff has

knowledge of such facts, conditions, or circumstances as would cause a reasonably prudent person

to make an inquiry that would lead to discovery of the cause of action.‖ Trousdale, 261 S.W.3d at

234. At a minimum, the Isaacses knew of the facts and the complaint of dual representation in

       which, in my opinion at the time and in the opinion of my trial counsel, dramatically altered the
       exposure my wife and I had to the claims of ―fraud-in-the-inducement.‖

                                                      25
October 2002 when it was asserted by Bishop in his petition. Knowledge of these facts should

have prompted inquiry, and the Isaacses should have known through reasonable diligence (i.e.,

asking their attorney to research the issue), that the allegations made in the Bishop petition, if true,

would give rise to legal injury. Consequently, we do not find that the discovery rule or fraudulent

concealment applies.

         B.     The Hughes Tolling Provision Is Inapplicable

         The Hughes tolling provision provides that in certain types of legal malpractice actions, the

statute of limitations may be tolled until the malpractice litigation is final. Mullin, 168 S.W.3d at

291 (citing Apex Towing Co. v. Tolin, 41 S.W.3d 118, 119 (Tex. 2001)). Hughes decided the

―proper application of the statute of limitations in a legal malpractice case when the attorney

allegedly commits malpractice while providing legal services in the prosecution or defense of a

claim which results in litigation.‖ Hughes v. Mahaney & Higgins, 821 S.W.2d 154, 155 (Tex.

1991).    Because the attorney‘s malpractice during litigation could force his client to take

inconsistent postures, the court allowed for a tolling of the statute of limitations on the malpractice

action until all appeals in the underlying claim were exhausted. Id. at 156–57. The reasoning for

the tolling is that the outcome of the malpractice suit depends on the outcome of the first litigation,

since injury or damage is an element of the claim for legal malpractice. Id at 157. As with the

discovery rule, the defendant moving for summary judgment bears the burden of showing that the

Hughes rule has not tolled limitations. Mullin, 168 S.W.3d at 291 (citing Nunez v. Caldarola, 56

                                                  26
S.W.3d 812, 815 (Tex. App.—Corpus Christi 2001, no pet.)). The Isaacses argue that because the

first Isaacs case was not resolved by this Court until after the filing of their petition, the statute of

limitations should be tolled. We disagree.

        Several cases have held that the Hughes tolling provision does not apply to attorney

malpractice claims based on transactional work. Mullin, 168 S.W.3d 288, 292–93 (―Because the

negligent drafting and/or review of the agreements . . . , if any, is not attorney malpractice

committed during ‗the prosecution or defense of a claim that results in litigation,‘ the alleged

malpractice in this case is not within a category of legal malpractice cases encompassed within the

Hughes definition, and, thus, the Hughes rule does not apply.‖). Yet, the Isaacses argue that the

malpractice was the misrepresentation of the dual representation, and that because the

misrepresentation was revealed at trial, the Hughes tolling provision applies. They rely heavily

on Gulf Coast Investment Corp. v. Brown, 821 S.W.2d 159, 160 (Tex. 1991). In that case, an

attorney‘s notice of foreclosure was not properly drafted. Plaintiff asserted wrongful foreclosure

against the Company who hired the attorney, and won. Thereafter, the Company sued the

attorney for malpractice arising from the deficient draft. The court in Gulf held that malpractice

occurring outside of litigation can toll the statute of limitations where it resulted ―not in an appeal

on the underlying claim, but in a wrongful foreclosure action by a third-party against the client.‖

The rationale in Hughes was expanded because the Company‘s position in the first suit in

                                                   27
defending against wrongful foreclosure would be inconsistent with the malpractice claim alleging

that the notice was deficient.

       Again, Hughes requires that the attorney allegedly commits malpractice while providing

legal services in the prosecution or defense of a claim which results in litigation. Hughes assumes

the attorney at trial is representing the client in litigation at the time that the malpractice is

committed. Here, Schleier and the firm no longer represented the Isaacses at trial. Further, the

malpractice must be committed in the prosecution or defense of the claim which results in

litigation. The misguided advice that there was no dual representation was committed prior to

litigation as evidenced by the September 2002 letter to Bishop‘s attorney.

       Distinguishing Gulf, it is unclear how Schleier‘s admission would require the Isaacses to

take inconsistent positions. In order for Bishop to be successful against the Isaacses on this claim

of fraud, he would have to prove that the Isaacses knew Schleier‘s denial of dual representation

was false. The Isaacses were not attorneys and were not charged with the knowledge of the rules

of conduct for lawyers; instead, they admittedly relied on Schleier to make such a determination.

Even when Schleier belatedly announced that he represented both parties, the Isaacses could have

continued to maintain that they had no knowledge of that and could not be charged with such

knowledge when Schleier had consistently denied such dual representation. The Isaacses allege

that by their ignorance of Schleier‘s attorney-client relationship with both parties, they were

harmed. That fact alone did not cause injury to the Isaacses. A finding of an attorney-client

                                                28
relationship between Bishop and Schleier was important to Bishop because he could not have

recovered for legal malpractice otherwise; for the same reason, it was important to Schleier. The

Isaacses were not required to take any position on that issue in the trial with Bishop, and such a

finding in itself did not have a bearing on the Isaacses‘ liability to Bishop. We do not believe the

Isaacses were forced into taking inconsistent positions, and the Hughes tolling provision does not

apply. This last dispositive point of error is overruled.

       We find that the Isaacses‘ claims were subject to the two-year malpractice statute of

limitations, which began to accrue in October 2002 with the filing of Bishop‘s petition alleging

dual representation. Because the Isaacses did not file suit in this case until 2005, and no tolling

provisions asserted applied, we conclude that the Isaacses‘ claims were barred. Therefore, the

trial court properly granted the take-nothing summary judgment.

V.     Conclusion

       We affirm the trial court‘s judgment.

                                               Jack Carter
                                               Justice

Date Submitted:        October 19, 2011
Date Decided:          December 7, 2011

                                                 29