Court Opinion

ID: 3086288
Source: CourtListenerOpinion
Date Created: 2015-10-16 02:48:06.601083+00
Date Added: 2024-06-11T11:50:50.427394
License: Public Domain

Affirmed; Opinion Filed February 4, 2014

                                         S   In The
                                Court of Appeals
                         Fifth District of Texas at Dallas
                                      No. 05-11-01615-CV

                          STUART THOMAS, Appellant
                                    V.
                  CARNAHAN THOMAS, LLP, FREDERICK HOELKE,
                     ROY ROMO & WILLIAM PETERS, Appellees

                       On Appeal from the 68th Judicial District Court
                                   Dallas County, Texas
                           Trial Court Cause No. DC-09-11220-C

                             MEMORANDUM OPINION
                       Before Justices Moseley, Bridges, and Lang-Miers
                                   Opinion by Justice Bridges
       Appellant Stuart Thomas (“Thomas”) appeals from two summary judgments entered in

favor of appellees Carnahan Thomas, L.L.P., Frederick Hoelke, Roy Romo and William Peters

(collectively referred to as the “Attorneys”). In two issues, Thomas contends the trial court erred

in granting the Attorneys’ motions for summary judgment concerning: (1) his negligence claim

and (2) his claim for breach of fiduciary duty. We affirm.

                                          Background

Employment Agreements

       Thomas distributed and sold mushrooms produced by the Pia brothers and their

companies out of Pennsylvania (“the Pia Entities”). Thomas entered into a series of agreements
with the Pia Entities that formed and governed four separate distribution entities in Dallas,

Houston, New Orleans, and Atlanta.

           Thomas entered into distributor agreements and employment agreements with each of the

four distribution entities in 1998. In addition to his ownership in the distribution entities,

Thomas was the managing administrative member and a salaried employee. The employment

agreements provided that, from the date they were signed until two years after Thomas’s

employment with the entities ceased, Thomas would not participate in any other business

engaged in “the business of growing, packaging, distributing, marketing or selling fresh produce

products of any kind, including without limitation, mushrooms” within the specified city or the

100 miles surrounding it. The employment agreements were governed by Pennsylvania law.

Litigation Between Thomas & The Pia Entities

           The settlement of the first lawsuit1 between Thomas and the Pia Entities resulted in the

2003 modification agreement, which amended the original 1998 agreements. With respect to the

employment agreements, the parties agreed the Pia companies would be third-party beneficiaries

of the non-compete agreements and that the modification agreement would be governed by

Texas law. The parties did not amend the choice-of-law provision in the employment

agreements.

           The second litigation,2 filed by the Pia Entities in the 95th district court in Dallas, ended

with a settlement agreement that required an independent valuation of the distribution entities.

As part of the settlement process, Thomas’s employment with the four distribution entities was

     1
        In the first lawsuit, filed in the County Court at Law No. 4 of Dallas County, the Pia Entities sued Thomas alleging: (1) the distribution
entities breached the distributor agreements and (2) two of the distribution entities breached the partnership agreements and two breached the
LLC agreements. The Pia Entities also sought an injunction with regard to the importing, purchasing, packaging, marketing, distributing,
delivering, selling, supplying, and advertising of products and to prevent certain business dealings with third parties.
     2
        In the second lawsuit, the Pia Entities again alleged: (1) the distribution entities breached the distributor agreements and (2) two of the
distribution entities breached the partnership agreements and two breached the LLC agreements. The Pia Entities further alleged Thomas and the
distribution entities breached: (1) the modification agreement, (2) their duty of loyalty, (3) their duty of care, (4) the settlement agreement, and (5)
the employment contract. The Pia Entities also sought an accounting and requested injunctive relief to enforce the covenant not to compete.

                                                                         –2–
terminated on December 12, 2004. At that time, the non-compete agreements went into effect

and would terminate by their own terms on December 12, 2006. Thomas disagreed with the

results of the valuation and filed another lawsuit in March 2005 against the Pia Entities in the

134th district court that was transferred into and consolidated with the 95th district court case.

Thomas’s lawsuit challenged the validity of the settlement agreement on multiple grounds and

also sought a declaratory judgment that the four non-compete agreements were unenforceable.

The lawsuit failed to name the distribution entities as parties to the lawsuit.

Thomas Hires The Attorneys

          Thomas hired Hoelke and entered into a representation agreement with regard to his

“claim for the dissolving and or termination of the four separate non-compete agreements.”

Thomas also approved a fee-splitting arrangement when Hoelke brought in associate counsel,

Peters of Carnahan Thomas, L.L.P. (“Carnahan”) and Romo,3 to assist with the case.

          On June 24, 2005, the Attorneys filed a motion for partial summary judgment on behalf

of Thomas, seeking a declaration that the four non-compete agreements were unenforceable

under the laws of Texas, Louisiana, and Georgia.                                   The Pia Entities then filed suit in a

Pennsylvania court, seeking a declaration that the non-compete agreements were valid and

enforceable and also seeking an injunction against Thomas to prevent him from violating the

non-compete agreements. In the 95th district court, the Pia Entities defeated summary judgment

by arguing that the distribution entities were necessary parties to any declaration regarding the

employment agreements. On that same day, the parties agreed to a scheduling order stating that

no new parties could be added except on motion for leave showing good cause. The Attorneys

moved for leave to add the distribution entities, but the Pia Entities argued the Attorneys had

     3
         The record reflects Marc Levy was also hired as associate counsel, holding joint responsibility with Romo. Levy is not a party to the
litigation at issue here.

                                                                    –3–
failed to sue the distribution entities, giving the Pennsylvania court dominant jurisdiction. The

trial court then rejected the Attorneys’ motion for leave to add the distribution entities to the

case. The 95th district court case remained pending.

       Because they believed the non-competes to be governed by Texas law and unenforceable

as a matter of Texas law, in the summer of 2005, the Attorneys advised Thomas to start up his

business and to compete.       Thomas began operating a competing business called Thomas

Mushroom & Specialty Produce in Dallas in March 2006.

       On December 12, 2006, the non-compete agreements expired by their own terms.

Thomas had not been enjoined from competition up until the point of their natural expiration.

Several months later, Thomas agreed to a comprehensive settlement agreement (“CSA”) of all

his disputes with the Pia Entities. Although the non-compete agreements had already expired,

the CSA included two new non-compete agreements governing the Houston and Atlanta

markets. Thomas’s new covenants not to compete were described as “a material consideration

for their obligations and promises contained in this [CSA] and valuable to the Pia Parties.” In

exchange for that consideration, the Pia Entities released their claims against Thomas.             In

addition to the non-compete litigation, the CSA resolved other litigation between Thomas and

the Pia Entities that was still pending in various trial, appellate, and arbitration forums in at least

three states and two federal courts.

Litigation Between Thomas & The Attorneys

       Thomas filed this lawsuit on August 28, 2009, alleging that, through its former employee

Peters, Carnahan had committed malpractice in handling his non-compete case. Specifically,

Thomas alleged Peters, Hoelke, and Romo committed legal malpractice when they failed to “add

the produce distribution companies to the [95th district court case], failed to file the non-compete

                                                 –4–
claims in arbitration as required by the employment agreements, and failed to move to compel

arbitration in the Pennsylvania case.”

       Carnahan filed a general denial and, on January 28, 2010, filed a motion for leave to

designate responsible third parties, which included Hoelke and Romo. On May 3, 2010, Thomas

filed his first amended petition, adding Hoelke and Romo as defendants.

       On November 11, 2010, Carnahan and Peters filed their first amended traditional and no-

evidence motion for summary judgment. Four days later, Romo and Hoelke filed a virtually

identical traditional and no-evidence motion for summary judgment. Shortly thereafter, Thomas

filed a third amended petition, adding a cause of action for breach of fiduciary duty. The trial

court denied the Attorneys’ motions for summary judgment with respect to the statute of

limitations grounds, but granted the motions on all other grounds.

       On July 1, 2011, Carnahan and Peters filed a traditional motion for summary judgment,

arguing the breach of fiduciary duty claim was barred by the statute of limitations. On July 25,

2011, Hoelke and Romo also filed a traditional motion for summary judgment that the breach of

fiduciary claim was barred by the statute of limitations. Thomas filed his response and, on

August 15, 2011, the trial court granted the Attorneys’ motions, disposing of all of Thomas’s

claims against the Attorneys.

                                             Analysis

Standard of Review

       The standards for reviewing a traditional summary judgment are well established. The

party moving for summary judgment has the burden of showing no genuine issue of material fact

exists and that 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). In deciding whether a disputed

material fact issue exists, precluding summary judgment, evidence favorable to the non-movant

                                                –5–
will be taken as true. Nixon, 690 S.W.2d at 548–49. Further, every reasonable inference must be

indulged in favor of the non-movant and any doubts resolved in its favor. Id. A motion for

summary judgment must expressly present the grounds upon which it is made and must stand or

fall on those grounds alone. McConnell v. Southside Indep. Sch. Dist., 858 S.W.2d 337, 341

(Tex. 1993); Espalin v. Children's Med. Ctr. of Dallas, 27 S.W.3d 675, 688 (Tex. App.—Dallas

2000, no pet.).

       We review a no-evidence summary judgment under the same legal sufficiency standard

used to review a directed verdict. See TEX. R. CIV. P. 166a(i); Gen. Mills Rests., Inc. v. Tex.

Wings, Inc., 12 S.W.3d 827, 832–33 (Tex. App.—Dallas 2000, no pet.).             Thus, we must

determine whether the nonmovant produced more than a scintilla of probative evidence to raise a

fact issue on the material questions presented. Gen. Mills, 12 S.W.3d at 833. When analyzing

no-evidence summary judgments, we consider the evidence in the light most favorable to the

nonmovant. Id.

       When the motion for summary judgment presents both no-evidence and traditional

grounds, appellate courts usually review the no-evidence grounds first. Hall v. Douglas, 380
S.W.3d 860, 867 (Tex. App.—Dallas 2012, no pet.).

Negligence

       Thomas first complains the trial court erred in granting the Attorneys’ traditional and no-

evidence motions for summary judgment as to his claim for negligence (legal malpractice). As

we have already noted, the trial court denied those motions “only with respect to the statute-of-

limitations grounds,” but granted the motions on “all other grounds.” The other grounds raised

by the Attorneys in their traditional motion were:

       1. Thomas’s claims fail because he cannot prove that the Attorneys’ alleged
          conduct, even if true, was a proximate cause of Thomas’s alleged damages;

       2. Thomas’s claims fail because he cannot prove a “suit within a suit;”
                                               –6–
       3. Thomas’s claims fail because the Atlanta distribution entity was not subject to
          personal jurisdiction in Texas and, therefore, could not have been joined in the
          95th district court lawsuit irrespective of any alleged failure of the Attorneys
          to join the distribution entities as parties;

       4. Thomas cannot prove lost profits with that degree of certainty which the law
          demands; and

       5. Thomas lacks standing and/or capacity to recover for lost profits.

In their no-evidence motion, the Attorneys argued Thomas had no evidence of lost profits.

       When multiple grounds are raised in the summary judgment motion and the trial court

does not specify the ground or grounds relied upon for its ruling, we will affirm the summary

judgment if any of the grounds advanced in the motion are meritorious. McAfee, Inc. v. Agilysys,

Inc., 316 S.W.3d 820, 825 (Tex. App.—Dallas 2010, no pet.) (citing Carr v. Brasher, 776
S.W.2d 567, 569 (Tex.1989)). Because it is dispositive, we first turn to the Attorneys’ no-

evidence ground—lost profits. See id.; see also Hall, 380 S.W.3d at 867.

       To recover pursuant to his malpractice claim, Thomas must demonstrate that (1) the

Attorneys owed a duty to him; (2) the Attorneys breached that duty; (3) the breach proximately

caused Thomas’s injuries; and (4) damages occurred. Belt v. Oppenheimer, Blend, Harrison &

Tate, Inc., 192 S.W.3d 780, 783 (Tex. 2006). Here, Thomas’s claimed damages are lost profits.

Lost profits are damages for the loss of net income to a business and reflect income from lost

business activity, less expenses that would have been attributable to that activity. Bowen v.

Robinson, 227 S.W.3d 86, 96 (Tex. App.—Houston [1st Dist.] 2006, pet. denied) (citing Miga v.

Jensen, 96 S.W.3d 207, 213 (Tex. 2002)). In other words, lost profits must be based on net

profits, not gross revenues. Parkway Dental Assoc., P.A. v. Ho & Huang Prop., L.P., 391
S.W.3d 596, 609 (Tex. App.—Houston [14th Dist.] 2012, no pet.); see also Texaco, Inc. v. Phan,

137 S.W.3d 763, 771 (Tex. App.—Houston [1st Dist.] 2004, no pet.) (citing Holt Atherton

Indus., Inc. v. Heine, 835 S.W.2d 80, 83 n.1 (Tex. 1992)). “Net profits” are the difference
                                              –7–
between a business’s total receipts and all the expenses incurred in carrying on the business. Id.

(citing Turner v. PV Int’l Corp., 765 S.W.2d 455, 465 (Tex. App.—Dallas 1988, writ denied)).

       Recovery for lost profits does not require that the loss be susceptible of exact calculation.

Holt Atherton, 835 S.W.2d at 84. However, the injured party must do more than show they

suffered some lost profits. Id.; Parkway Dental, 391 S.W.3d at 608. The amount of the loss

must be shown by competent evidence with reasonable certainty. Texas Instruments, Inc. v.

Teletron Energy Mgmt., Inc., 877 S.W.2d 276, 279 (Tex. 1994); White v. Southwestern Bell Tel.

Co., 651 S.W.2d 260, 262 (Tex. 1983); Total Clean, L.L.C. v Cox Smith Matthews, Inc., 330
S.W.3d 657, 663 (Tex. App.—San Antonio 2010, pet. denied). What constitutes reasonably

certain evidence of lost profits is a fact intensive determination. Holt Atherton, 835 S.W.2d at

84. But, once a party has chosen a particular method for measuring their lost profits, they must

provide a complete calculation. Id. at 85; Parkway Dental, 391 S.W.3d at 608. At a minimum,

opinions or estimates of lost profits must be based on objective facts, figures, or data from which

the amount of lost profits can be ascertained. Holt Atherton, 835 S.W.2d at 85; Total Clean, 330
S.W.3d at 663.

        “Profits which are largely speculative, as from an activity dependent on uncertain or

changing market conditions, or on chancy business opportunities, or on promotion of untested

products or entry into unknown or unviable markets, or on the success of a new and unproven

enterprise, cannot be recovered.” Texas Instruments, 877 S.W.2d at 279; Total Clean, 330
S.W.3d at 663. Factors like these and others which make a business venture risky in prospect

preclude recovery of lost profits in retrospect. Id. When a review establishes the profits are not

reasonably certain, therefore, the injured party has failed to prove lost profits as a matter of law.

Parkway Dental, 391 S.W.3d at 608.

                                                –8–
            As we have already noted, the Attorneys argued in their no-evidence motion that Thomas

had “no evidence of any lost profits.” In response to the motion and on appeal, Thomas argued

he is entitled to $2,364,622.20 in lost profits,4 claiming the losses resulted from his inability to

compete in the Houston and Atlanta markets for a period of 33 months (December 12, 2006 to

September 2009)5 after signing the new non-competes in the 2007 CSA.                                                     In response, the

Attorneys argued that his summary judgment evidence does not raise a fact issue on whether he

sustained lost profits because the original non-competes terminated by their own terms on

December 12, 2006. Our review of the record shows the CSA, which contained the new non-

competes as to Houston and Atlanta went into effect on August 27, 2007. Thus, by their terms,

the new non-competes did not prevent Thomas from competing in Houston and Atlanta from

December 12, 2006 to August 27, 2007 and should not be included in any lost profit calculations

as a matter of law.6

            We next turn to Thomas’s use of his Dallas profits as an indicator of his lost profits in

Atlanta and Houston. According to his affidavit, Thomas averaged profits of $44,511.88 per

month in Dallas for the years 2007 and 2008.                              Yet, we note for the purposes of calculating his

alleged lost profits in Houston and Atlanta, Thomas adds his $200,000 salary for the Dallas

market back to the net, claiming it is not an expense, but part of his loss, since he is the one who

suffered the damages. However, Thomas did not provide any evidence due to his failure to

direct us to any tax returns or balance sheets, evidencing the salary as a loss. In addition, the

2009 Dallas net profits are less than half the net profits in 2008, yet Thomas excludes those from

     4
        Thomas fails to state the amount of lost profits sought in his brief before this Court, however, we have gleaned the amount sought from
the record. Specifically, Thomas states in his second amended disclosures that the lost profits for Houston and Atlanta are $2,364,622.20.
     5
        Again, Thomas does not specify the time period for which he is seeking lost profits in his brief. However, Thomas’s affidavit, attached to
his response to the Attorneys’ motions for summary judgment, states the 33 months begins on December 12, 2006 and ends at the beginning of
September 2009.
     6
         In fact, the record reflects Thomas started competing in Dallas in March 2006 even though the original non-competes had not yet expired.

                                                                       –9–
the average calculation.7 Thus, his average is not based on objective data upon which lost profits

may be ascertained. Holt Atherton, 835 S.W.2d at 84.

            After arriving at the averaged Dallas profits of $44,511.88 per month, Thomas then uses

the revenues from the Dallas, Houston and Atlanta operations for the years 2001-2004 to

calculate a ratio of profitability in comparison to his net profits in Dallas from 2007 to 2008.

However, as we have already stated, lost profits must be based on net profits, not gross revenues.

See Texaco, 137 S.W.3d at 771. Thomas’s use of past revenues as historical evidence in support

of his lost profits calculation is, therefore, improper. See id.; see also Turner v. PV Intern. Corp.,

765 S.W.2d 455, 465 (Tex. App–Dallas 1988, writ denied) (stating proper measure of damages

for lost profits is net profits).

            Further, the Attorneys argue the summary judgment record shows Houston and Atlanta

lost money from September 30, 2003 to September 30, 2004.8 Thus, they argue there were no

net profits for at least twelve months prior to the time Thomas stopped working for the

distribution entities in December 2004. In his November 14, 2005 deposition, attached to the

Attorney’s motion for summary judgment, Thomas admitted the distribution entities were “close

to economic death” for the period spanning January 2000 through October 6, 2004. In a later

deposition,9 he again admitted the distribution entities were not profitable. He went on to testify

that profits varied in each location based on the market and whether the supply was efficient.

With respect to Atlanta, Thomas stated it “was always a stepchild because there [were] too many

    7
        In his response to Carnahan’s interrogatories, Thomas provides the following net profits for Dallas:
            2007–$298,724.67
            2008–$369,559.70
            2009–$164,321.21
            2010 through May–$103, 125.98
    8
        The profit and loss statement for the year ending September 30, 2004 shows Atlanta lost $38,130.91 and that Houston lost $47,205.42.
    9
        This deposition is dated April 4, 2007.

                                                                      –10–
suppliers” and “[s]o it was a challenging city.” He also admitted Atlanta made less than the rest

of the distribution entities and sometimes lost money. Finally, Thomas stated “profits were

always based upon the competition in the market.” Thus, Thomas failed to provide reasonably

certain evidence that he would then make money in those markets if he had opened his own

distribution companies in Atlanta and Houston.

          Thomas also did not present summary judgment evidence that he could have actually

opened competing businesses in Atlanta and Houston in 2006. See, e.g., South Plains Switching,

Ltd. Co. v. BNSF Ry. Co., 255 S.W.3d 690, 705-06 (Tex. App.—Amarillo 2008, pet. denied)

(when there was no testimony about other necessary expenses of doing business such as

depreciation, payroll expenses, administrative expense, equipment expenses, and maintenance

expenses, the evidence fell short of showing lost profits with reasonable certainty); Paternostro

v. Pre-Paid Legal Services, Inc., No. 05-01-01208-CV, 2002 WL 987952 at *1-2 (Tex. App.—

Dallas 2002, May 15, 2002, pet. denied) (affirming grant of motion for summary judgment when

Paternostro failed to produce evidence he could expect to generate sales on same levels as Pre-

Paid associates). The Attorneys contend Thomas did not provide: (1) how much the expansion

and inventory would cost, (2) how he would finance the Houston and Atlanta operations, (3) a

basis for the profitability of the Atlanta and Houston markets, (4) total expenses for the Atlanta

and Houston markets, (5) evidence of a customer base in Houston and Atlanta, (6) cost of goods,

and (7) his ability to compete in the marketplace. Without this kind of evidence before us, we

conclude Thomas’s claim for lost profits is merely speculative, incapable of being calculated

with reasonable certainty. See Texas Instruments, 877 S.W.2d at 279; Total Clean, 330 S.W.3d

at 663.

          In sum, we conclude Thomas has failed to provide reasonably certain evidence in

response to the Attorneys’ no-evidence motion that he could have operated in Houston or Atlanta

                                              –11–
and what the profits would have been in those markets if he had operated. Thomas’s alleged lost

profits are not susceptible of being established by the degree of certainty which the law requires.

See id. Therefore, under the applicable standard of review, the summary judgment evidence

filed by Thomas in response to the Attorneys’ no-evidence motion did not raise a genuine issue

of fact as to whether he suffered any lost profits. See Parkway Dental, 391 S.W.3d at 609.

Because Thomas failed to produce any competent evidence that profits were reasonably certain,

there is no evidence to support his claim for lost profits. See Total Clean, 330 S.W.3d at 663.

The trial court properly granted the Attorneys’ no-evidence motion for summary judgment. See

id. We overrule appellant’s first issue.

Breach of Fiduciary Duty

          Thomas next complains the trial court erred in granting the Attorneys’ traditional

motions10 for summary judgment on statute of limitations grounds as to his claim for breach of

fiduciary duty. The Attorneys’ motions argued the filing of Thomas’s breach of fiduciary duty

claim did not relate back to prior petitions because, according to Thomas, the breach of fiduciary

duty claim was a new, distinct, and different transaction. In response to the motion and on

appeal, Thomas argued the trial court erred, because the Attorneys: (1) failed to show that the

breach of fiduciary duty did not relate back to the Bexar County District case;11 (2) did not

conclusively prove that the breach of fiduciary duty accrued in September 2006; and (3)

fraudulently concealed their breach of fiduciary duty.

          When a party moves for summary judgment on limitations grounds, that party has the

burden of conclusively establishing that defense. Jennings v. Burgess, 917 S.W.2d 790, 793

(Tex. 1996). Generally, a cause of action accrues and limitations begin to run when facts exist

   10
        Carnahan Thomas and Peters filed their motion on July 1, 2011. Hoelke and Romo filed a substantially similar motion on July 25, 2011.
   11
        The Bexar County malpractice claim was later transferred to Dallas County.

                                                                   –12–
that authorize a claimant to seek judicial relief. Schneider Nat. Carriers, Inc. v. Bates, 147
S.W.3d 264, 279 (Tex. 2004).

           Thomas filed his legal malpractice suit against the Attorneys on August 28, 2009.

Thomas first brought his claim for breach of fiduciary duty when he filed his third amended

petition on November 15, 2010. According to Thomas,12 his breach of fiduciary duty claim was

based on the facts that “the fee agreement provides for a contingent fee, that the [Attorneys] did

not satisfy the contingency. . . , that the [Attorneys] instructed Thomas to violate the [non-

competes] in order to demand unearned fees, and that Thomas paid them.”

           The record reflects that, in the summer of 2005, the Attorneys advised Thomas to start a

new mushroom distribution business.13 In his October 28, 2010 deposition and his subsequent

affidavit, Thomas testified he started competing in Dallas in March 2006. The fees that Thomas

claims the Attorneys demanded and that he paid, but were unearned, were paid, starting

September 10, 2006.                 The Attorneys, therefore, argued the breach of fiduciary duty claim

accrued no later than September 10, 2006. See Rodriguez v. Cromwell, 319 S.W.3d 751, 755

(Tex. App.—El Paso 2009, pet. denied); S.V. v. R.V., 933 S.W.2d 1, 4 (Tex. 1996) (a cause of

action accrues when a wrongful act causes an injury, regardless of when the plaintiff learns of

that injury or whether all resulting damages have yet to occur). Accordingly, they argued

Thomas was required to file his claim for breach of fiduciary duty no later than September 10,

2010. See TEX. CIV. PRAC. & REM. CODE ANN. §16.004(a)(5) (setting a four-year statute of

limitations period for breach of fiduciary duty claims). Because Thomas did not file his breach

     12
         Before filing their motions for summary judgment on limitations grounds, the Attorneys filed their initial motion for summary judgment
on the breach of fiduciary duty claim, asserting Thomas had adequate time for discovery and that he lacked evidence of one or more elements of
his claim. In his response to the Attorneys’ initial motion for summary judgment on breach of fiduciary duty, Thomas set out the “key facts”
regarding his breach of fiduciary duty claim. The trial court denied the Attorneys’ initial motion for summary judgment on the breach of
fiduciary duty claim.
     13
         The affidavit of Peters indicates he was the one to advise Thomas to start a new business in June of 2005. Thomas also testified in his
affidavit that Peters told him to start his business in Dallas even though it would violate the non-compete clause.

                                                                    –13–
of fiduciary duty claim until November 10, 2010, the Attorneys contended the claim was barred

by limitations as a matter of law.

Relation Back To The Bexar County Lawsuit

        To refute the contention that the claim was barred by limitations, Thomas argued that the

Attorneys failed to show the breach of fiduciary duty did not relate back to the Bexar County

District case that he filed on September 15, 2009. In that lawsuit, Thomas filed counterclaims

against Hoelke, Peters, and Romo, alleging claims for legal malpractice and money had and

received.   Thomas argues both claims are based on the facts payments were made to the

Attorneys, and the Attorneys had not earned the money because they had not satisfied the

contractual contingency. We disagree.

        Under Texas law, the test for determining whether a claim asserted in an amended

pleading filed after limitations has run relates back to an earlier, timely-filed claim focuses on

whether the cause of action alleged in the amended petition is wholly based upon and grows out

of a new, distinct, or different transaction or occurrence. Meisler v. Republic of Tex. Sav. Ass’n,

758 S.W.2d 878, 881 (Tex. App.—Houston [14th Dist.] 1988, no writ); see also TEX. CIV. PRAC.

& REM. CODE ANN. §16.068 (a cause of action is not subject to a plea of limitations unless the

amendment or supplement is wholly based on a new, distinct, or different transaction or

occurrence). A transaction is defined as a set of facts that gives rise to the cause of action

premised thereon. Walker v. Presidium Inc., 296 S.W.3d 687, 695 (Tex. App.—EI Paso 2009,

no pet.).

        In his response to the Attorneys’ initial motions for summary judgment regarding

Thomas’s claim for breach of fiduciary duty, Thomas made the following relevant statements:

        • The breach of fiduciary duty claim is grounded on different facts than is the
        malpractice claim;

                                              –14–
       • [The Attorneys’] argument fails because the crux of the malpractice claim is not
       the same as the crux of the breach of fiduciary duty claim, although they have
       overlapping facts;

       • There is a fundamental difference between Thomas’s malpractice claim, as
       pleaded, and the breach of fiduciary duty claim; and

       • The key facts regarding the breach of fiduciary duty claim are that the fee
       agreement provides for a contingent fee, that the [Attorneys] did not satisfy the
       contingency. . ., that the [Attorneys] instructed Thomas to violate the [non-
       competes] in order to demand unearned fees, and that Thomas paid them. It is
       simply not the same claim as the malpractice claim. The claims have some
       overlapping facts, but they are not the same claim and not based on the same key
       facts.

       The breach of fiduciary duty claim, as Thomas describes it, is that the Attorneys

instructed him to violate non-compete agreements, which they had failed to overturn, for the

purpose of insisting that Thomas pay them even though they had not achieved the fee

contingency defeating the non-competes. However, these facts and this claim were not alleged

until the third amended petition on November 15, 2010. Rather, the first three petitions were

focused on the following: (1) the alleged failure of the Attorneys to add the produce distribution

companies to the Dallas district court lawsuit; (2) the alleged failure to file the non-compete

claims in arbitration as required by the employment agreements; and (3) the alleged failure to

move to compel arbitration in the Pennsylvania case. Thus, on the face of the pleadings, the

breach of the fiduciary duty claim is wholly based upon and grows out of a new, distinct, or

different transaction or occurrence than the legal malpractice claim. See Meisler, 758 S.W.2d at

881. That, in combination with Thomas’s admission that the breach of fiduciary duty claim is

grounded in a different set of facts than the legal malpractice claim, leads us to conclude Thomas

failed to raise a genuine issue of material fact as to whether the breach of fiduciary duty

allegations relate back to the filing of any of the prior petitions. See Sanders v. Construction

Equity, Inc., 42 S.W.3d 364, 369 (Tex. App.—Beaumont 2001, pet. denied) (holding defects

asserted in second amended pleading do not relate back to the timely-filed initial pleading).
                                               –15–
Continuous Tort

        Thomas next argues the trial court erred because the Attorneys did not conclusively prove

the breach of fiduciary duty claim accrued in September 2006. Specifically, Thomas contends

that because the Attorneys made continuing demands on him for payment, his cause of action did

not accrue until the tortious conduct ended. See Krohn v. Marcus Cable Assoc., L.P., 201
S.W.3d 876, 880 (Tex. App.—Waco 2006, pet. denied). Thomas argues that the Attorneys’

breach of fiduciary duty was a continuous tort that lasted until the date of his last payment on

August 13, 2007, which is less than four years prior to his filing the claim on November 15,

2010.

        The Attorneys argue, however, that the continuing tort doctrine applies to delay the

accrual of a cause of action only when there is repeated injury proximately caused by repetitive

wrongful or tortious actions, but not when there is continuing injury arising from one wrongful

act. See id. (citing Rogers v. Ardella Veigel Inter Vivos Trust No. 2, 162 S.W.3d 281, 290 (Tex.

App.—Amarillo 2005, pet. denied). Here, the alleged wrongful advice to compete occurred in

the summer of 2005.

        Further, the Attorneys contend that the continuing tort doctrine is rooted in a plaintiff’s

inability to know ongoing conduct is causing his injury; thus, the rationale for the doctrine no

longer applies if the claimant has discovered his injury and its cause and the statute commences

to run upon discovery. Markwardt v. Texas Indus., Inc., 325 S.W.3d 876, 894 (Tex. App.—

Houston [14th Dist.] 2010, no pet.). The Attorneys argue, and we agree, the summary judgment

record shows Thomas knew the terms of his engagement agreement by March 30, 2005, was

aware of the terms of the non-competes prior to then, knew he was paying fees by September

2006, and these facts placed Thomas on notice of his alleged injury by September 2006 at the

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latest. Thus, we conclude Thomas did not raise a genuine issue of material fact regarding

whether the statute of limitations was deferred by the continuing tort doctrine. See id.

Fraudulent Concealment

       Finally, in an effort to raise a fact issue, Thomas argued the Attorneys fraudulently

concealed their breach of fiduciary duty and were estopped from relying on the statute of

limitations as an affirmative defense to his claim. In particular, Thomas contends the claim was

tolled because the Attorneys fraudulently concealed their breach by expressly telling him that the

fee agreement was not contingent as late as March 23, 2007.

       The elements of fraudulent concealment are: (1) existence of the underlying tort, (2) the

defendant’s knowledge of the tort, (3) the defendant’s use of deception to conceal the tort, and

(4) the plaintiff’s reasonable reliance on the deception. Vial v. Gas Solutions, Ltd., 187 S.W.3d
220, 229 (Tex. App.—Texarkana 2006, no pet.). Where a defendant is under a duty to make

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 reasonable

diligence.   Borderlon v. Peck, 661 S.W.2d 907, 908 (Tex. 1983).           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. at 909.

       Thomas has failed to raise a fact issue that the Attorneys concealed his cause of action.

Rather, the summary judgment evidence established that Thomas was aware of the terms of the

engagement letter on March 30, 2005, knew the terms of the non-compete agreements in 1998,

and was aware he was paying the Attorneys by September 10, 2006.

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         In sum, Thomas did not raise a genuine issue of material fact that the breach of fiduciary

duty claim he first asserted on November 15, 2010: (1) relates back to the prior petitions filed in

this case, (2) was a continuous tort, or (3) was fraudulently concealed. Thus, we conclude the

trial court did not err when it ruled that Thomas’s claim for breach of fiduciary duty is barred by

the four year statute of limitations. See TEX. CIV. PRAC. & REM. CODE ANN. §16.004(a)(5). The

Attorneys were entitled to summary judgment as a matter of law on Thomas’s claim for breach

of fiduciary duty. See Nixon, 690 S.W.2d at 548. We overrule appellant’s second issue.

                                            Conclusion

         Having overruled Thomas’s two issues on appeal, we affirm the judgment of the trial

court.

111615F.P05

                                                    /David L. Bridges/
                                                    DAVID L. BRIDGES
                                                    JUSTICE

                                               –18–
                                       S
                              Court of Appeals
                       Fifth District of Texas at Dallas
                                     JUDGMENT

STUART THOMAS, Appellant                           On Appeal from the 68th Judicial District
                                                   Court, Dallas County, Texas
No. 05-11-01615-CV        V.                       Trial Court Cause No. DC-09-11220-C.
                                                   Opinion delivered by Justice Bridges.
CARNAHAN THOMAS, LLP,                              Justices Moseley and Lang-Miers
FREDERICK HOELKE, ROY ROMO, &                      participating.
WILLIAM PETERS, Appellees

     In accordance with this Court’s opinion of this date, the judgment of the trial court is
AFFIRMED.
     It is ORDERED that appellees CARNAHAN THOMAS, LLP, FREDERICK HOELKE,
ROY ROMO, & WILLIAM PETERS recover their costs of this appeal from appellant STUART
THOMAS.

Judgment entered February 4, 2014

                                                 /David L. Bridges/
                                                 DAVID L. BRIDGES
                                                 JUSTICE

                                            –19–