Bohatch v. Butler & Binion
| Decision Date | 25 May 1995 |
| Docket Number | No. 14-93-00903-CV,14-93-00903-CV |
| Citation | 905 S.W.2d 597 |
| Parties | Colette BOHATCH, Appellant, v. BUTLER & BINION; Butler & Binion, L.L.P.; Michael W. Hilliard; Elizabeth M. Thompson; Ron Brown; Louis B. Paine, Jr.; Robert Hayden Burns; Marlon E. McDaniel; Everett A. Marley, Jr., P.C.; Joseph H. Peck, Jr., P.C.; Robert B. Reynolds, P.C.; Dan C. Cain, P.C.; Jack Lapin; Jack Lapin, P.C.; and John McDonald, Appellees. (14th Dist.) |
| Court | Texas Court of Appeals |
Eliot P. Tucker, H. Victor Thomas, Houston, for appellant.
Larry D. Knippa, Richard N. Countiss, David W. Holman, Houston, for appellees.
Before MURPHY, C.J., and YATES and FOWLER, JJ.
All parties appeal a jury verdict in favor of Colette Bohatch and against the law firm of Butler & Binion and individual members of its management committee for breach of a partnership agreement and breach of a fiduciary duty. 1 The jury awarded Bohatch $307,000.00 in actual damages against all defendants and also awarded $4 million in punitive damages against partners Louis B. Paine, Jr., R. Hayden Burns, and John K. McDonald, individually. 2 The final judgment reduced the punitive damages against the three partners to $237,141.00. In eleven points of error, Bohatch complains of certain trial court rulings. In twelve cross-points, Butler & Binion assails all of the jury's adverse findings. In a separate, limited appeal, Paine, Burns, and McDonald, raise four points of error complaining about punitive damages. See TEX.R.APP.P. 40(a)(4). Because we find the firm breached the partnership agreement but did not breach a fiduciary duty, we modify the trial court's judgment and affirm as modified.
1/86 Colette Bohatch joins the Washington D.C. office of Butler & Binion as an associate. John McDonald is the managing partner of the office and McDonald's client, Pennzoil, is virtually the office's only client.
2/90 Bohatch becomes a partner and starts receiving internal operating reports of the number of hours each attorney worked, billed, and collected. Based on those reports, she becomes concerned that the amount of work McDonald performs for Pennzoil does not match the hours he reports.
3/90 Bohatch discusses her concerns with the office's other partner, Richard Powers. He and Bohatch find McDonald's "daily diary," a record of his work time, and make copies of the entries for the previous two months. The diary entries increase Bohatch's suspicion.
7/13/90 Bohatch complains to McDonald that she is not receiving her mail and McDonald gives a "flippant" response. Bohatch decides to report her concerns about overbilling to Paine, the firm's managing partner in Houston. 7/15/90 While attending the firm's summer party in Houston, Bohatch tells Paine that McDonald is overbilling Pennzoil. Paine says he will investigate. Later that day, Bohatch tells Powers that she told Paine about the overbilling.
7/16/90 Back in the Washington office, Powers talks privately with McDonald. After their discussion, McDonald tells Bohatch for the first time that Pennzoil is not satisfied with her work and wants her work supervised. Subsequently, McDonald takes away all Pennzoil work from Bohatch.
7/17/90 Bohatch repeats her allegation over the phone to Paine and two other members of the firm's management committee, Burns and Marion E. McDaniel. Paine, Burns, and McDaniel then call McDonald, who tells them that Pennzoil has problems with Bohatch's work and that he told Bohatch of the dissatisfaction.
7/90-8/90 Paine and Burns conduct an investigation. After reviewing the Pennzoil bills and the computer print-outs for those bills, Paine and Burns conclude the bills are in order. They also talk to Pennzoil's in-house counsel, John Chapman, who is the firm's primary contact with Pennzoil. Chapman confirms that Pennzoil has problems with Bohatch's work and also says that Pennzoil is satisfied with the firm's bills.
Pennzoil's legal department also conducts its own review of the bills and concludes the bills are reasonable.
8/23/90 Paine meets with Bohatch in Washington and tells her that the firm conducted an investigation in which it found no basis for her allegations. Believing that Bohatch did not want to work with McDonald or for a client that wanted her work supervised, Paine tells Bohatch that it is "in her best interest" to look for other employment. Paine also tells Bohatch that the firm will support this by (1) giving her a recommendation; (2) continuing her monthly draw, (3) allowing her to continue using her office, and (4) providing her with insurance coverage. Thereafter, the firm does not assign any projects to Bohatch.
9/17/90 Bohatch hires an attorney.
1/91 The firm denies her a year-end distribution for 1990 and reduces her tentative distribution share for 1991 to zero.
6/3/91 After providing one month notice of its intent to terminate her monthly draw, the firm pays Bohatch her last monthly draw.
8/6/91 The firm gives Bohatch notice that she needs to vacate her office by November 1, 1991.
9/4/91 Bohatch accepts employment as a "contract partner" with the law firm of Duncan & Allen.
10/18/91 Bohatch files this suit alleging breach of contract, breach of fiduciary duty, breach of a duty of good faith and fair dealing and wrongful discharge.
10/21/91 The firm formally expels Bohatch.
Before trial, the firm moved for summary judgment on all of Bohatch's tort causes of action. The trial court granted summary judgment on (1) wrongful discharge; (2) breach of fiduciary duty for acts occurring on or after October 21, 1991; and (3) breach of the duty of good faith and fair dealing for acts occurring on or after October 21, 1991. The trial court denied summary judgment on the breach of fiduciary duty and breach of the duty of good faith and fair dealing claims for acts that occurred before October 21, 1991. The case was tried to a jury solely on the breach of contract and breach of fiduciary duty claims. After a four-day trial beginning on March 15, 1993, the jury answered in favor of Bohatch on both causes of action. The jury awarded Bohatch actual damages of $57,000.00 for lost earnings in the past and $250,000.00 for mental anguish sustained in the past. The jury also found that Paine, Burns, and McDonald breached a fiduciary duty "with an intent to gain additional benefit" and awarded Bohatch $4 million in punitive damages, which were assessed evenly among the three partners. The jury also awarded $175,000.00 in trial attorney's fees and $71,000.00 in conditional appellate attorney's fees.
After considering the parties' post-verdict motions, the trial court entered judgment. Ruling that Bohatch could only recover in tort, the court deleted the award of attorney's fees, but awarded Bohatch the actual damages found by the jury for lost earnings and mental anguish, plus pre- and post-judgment interest against all named defendants. In addition, the court awarded Bohatch the exemplary damages found by the jury against Paine, Burns, and McDonald.
However, in a letter to counsel explaining his rulings, the trial judge expressed concern about the amount of the punitive damages awarded and requested additional briefing on a remittitur. The parties complied and on August 30, 1993, the trial court suggested a remittitur of the punitive damages assessed against Paine, Burns, and McDonald. On September 24, 1993, Bohatch accepted the remittitur and the trial court entered a second judgment leaving the actual damages award intact, but reducing the punitive damages award against Paine, Burns, and McDonald from $4 million to $237,141.00. On December 21, 1993, after denying additional post-judgment motions, the trial court entered a third judgment identical to the second judgment, except that it specifies the period for accrual of pre-judgment interest. Each judgment entered by the court incorporated all of the jury's findings.
All parties perfected an appeal. Because the firm challenges all the jury's findings, we will address their contentions first.
The firm contends there is no evidence or insufficient evidence to support the jury's finding of breach of fiduciary duty. In particular, the firm contends that, as a matter of law, Bohatch is not entitled to recover for breach of fiduciary duty because their duty to her is a very limited one and Bohatch did not allege or prove conduct amounting to a breach of that limited duty.
Question 2A asked: "Was there a breach of fiduciary duty owed by Defendants to Colette Bohatch that proximately caused damages to Colette Bohatch?" "Breach of fiduciary duty" was defined as follows:
"Breach of fiduciary duty" means a failure to act fairly, honestly, in the utmost good faith, with undivided loyalty, or with full disclosure of all material information. Termination of a partner in accordance with the Partnership Agreement does not constitute a breach of fiduciary duty.
The jury answered this question in the affirmative. 3
Question 5 (concerning punitive damages) asked the jury whether Paine, Burns, and McDonald "acted with an intent to gain an additional benefit for [themselves]." The jury also answered "yes" to this question. The firm, as well as the three partners, Paine, Burns, and McDonald, challenge the sufficiency of the evidence to support the jury's affirmative answers to these two questions. 4
The firm contends that Bohatch did not allege conduct that constitutes a breach of fiduciary duty under the Texas common law or under the Texas Uniform Partnership Act (the Act), TEX.REV.CIV.STAT.ANN. art. 6132b (Vernon 1970). 5 Texas law undeniably recognizes that partners owe one another a fiduciary duty. Fitz-Gerald v. Hull, 150 Tex. 39, 237 S.W.2d 256, 264-65 (1951); Johnson v. Peckham, 132 Tex. 148, 120 S.W.2d 786, 787-88 (1938); Kunz v. Huddleston, 546 S.W.2d 685, 688 (Tex.App.--El Paso 1977, writ ref'd n.r.e.).
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