Burnap v. Linnartz

• Decision Date: 31 August 1995
• Docket Number: No. 04-94-00303-CV,04-94-00303-CV
• Citation: 914 S.W.2d 142
• Parties: Willard BURNAP, Appellant, v. Lawrence R. LINNARTZ; Ingram Linnartz & Reynolds, P.C.; William R. Rork; and McCamish & Martin, P.C., Appellees.
• Court: Texas Court of Appeals

Page 142

914 S.W.2d 142

Willard BURNAP, Appellant, v. Lawrence R. LINNARTZ; Ingram Linnartz & Reynolds, P.C. William R. Rork; and McCamish & Martin, P.C., Appellees.

No. 04-94-00303-CV.

Court of Appeals of Texas San Antonio.

Aug. 31, 1995.

Rehearing Overruled Oct. 6, 1995.

Paul E. Knisely, Broadus A. Spivey, Thomas P. Prehoditch, Spivey, Grigg, Kelly & Knisely, Austin, for appellant.

James E. Ingram, James M. Parker, Jr., Butler & Binion, L.L.P., Damon Ball, Ryan G. Anderson, Ball & Weed, P.C., J. Patrick Deely, Bennett L. Stahl, McCamish & Martin, P.C., San Antonio, Joe W. Matthews, Smith & Moore, Dallas, Jonathan David Pauerstein, Lopez & Pauerstein, P.C., San Antonio, for appellees.

Before CHAPA, C.J., and STONE and GREEN, JJ.

OPINION

STONE, Justice.

This is an appeal from a summary judgment entered in favor of the defendant lawyers in a legal malpractice action. The appellant, Willard Burnap, contends numerous unresolved fact issues preclude summary judgment. We agree that material issues of fact remain regarding the existence of an attorney-client relationship, and that these issues must be submitted to a jury. We find, however, that Burnap's claims against appellees William Rork and McCamish & Martin, P.C. are barred by the statute of limitations. We therefore affirm in part and reverse and remand in part.

STANDARD OF REVIEW

We review the trial court's judgment under well-established summary judgment rules. The movant in a summary judgment proceeding has the burden of showing that no genuine issue of material fact exists, and that it is entitled to judgment as a matter of law. In deciding whether a disputed material fact issue precludes summary judgment, we must take as true all evidence favoring the non-movant. Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548-49 (Tex.1985). Every reasonable inference from the evidence will be indulged in favor of the non-movant, and any doubts will be resolved in its favor. Id.; Montgomery v. Kennedy, 669 S.W.2d 309, 310-11 (Tex.1984). In the instant case the trial court did not enumerate the grounds upon which summary judgment is based, thus the judgment will be affirmed if any of the theories advanced in appellees' motions are meritorious. See Rogers v. Ricane Enter., Inc., 772 S.W.2d 76, 79 (Tex.1989).

FACTUAL BACKGROUND

A review of the record in the light most favorable to appellant discloses the following facts: In 1984 Walter Burnap, Lester Kelly, Max Burleson, and Daniel Linnartz formed a general partnership, Kittie Partners 1984-1 ("KP 1984-1"). Walter Burnap, who held an 80% interest in the partnership, executed a $3.2 million note payable to First South Savings Association ("First South Savings"). Each of the partners signed a personal guarantee of the note, and the partnership itself ultimately became an obligor on the note. In 1985 Willard Burnap, father of Walter Burnap, became a partner retroactive to August 1984. Willard never signed a personal guarantee on the First South Savings note.

In 1986 Daniel Linnartz and Max Burleson decided to withdraw from KP 1984-1. Walter Burnap contacted Daniel Linnartz' brother, Lawrence Linnartz, and engaged his law firm to draft the necessary paperwork for the withdrawal. Because the transaction involved his brother, Linnartz asked an associate, William Rork, to perform the legal work. Rork prepared a Mutual Release and Indemnity Agreement ("the indemnity agreement") for all partners to sign. The indemnity agreement provided that KP 1984-1 through its remaining partners (Walter Burnap, Willard Burnap and Lester Kelly) would indemnify Daniel Linnartz and Burleson for any liability that the withdrawing partners may have undertaken to pay as guarantors on behalf of KP 1984-1. The indemnity agreement purported to comply with the partnership agreement, which provided for several alternatives in the event of partner withdrawal.

Rork and Lawrence Linnartz presented summary judgment evidence that the partners had agreed to all terms of the withdrawal, and that Rork was merely the "scrivener" who reduced the agreed terms to writing. Appellant Burnap presented summary judgment evidence that he and his son Walter relied on the legal expertise of Lawrence Linnartz and Rork in preparing the appropriate documents to effectuate the withdrawal of Daniel Linnartz and Burleson. Both Burnaps expected that Lawrence Linnartz and Rork would protect their individual interests or explain any conflicts as they related to and were affected by partnership matters. Appellant signed the indemnity agreement as a partner only, not individually. It is undisputed that neither Rork nor Lawrence Linnartz ever presented any partner of KP 1984-1 with a conflicts letter or memorandum outlining the possible conflicting positions that could arise upon execution of the indemnity agreement. Neither Rork nor Lawrence Linnartz could explain why such a conflicts letter was not prepared and presented to the partners. Rork did recall informally discussing possible conflicts with Walter Burnap. But he never had a similar conversation with Willard Burnap since Rork never saw, spoke with, or personally met Willard Burnap during the time he performed legal services relating to KP 1984-1.

On January 1, 1988, Willard Burnap sold his entire interest in KP 1984-1 to his son. Walter Burnap in turn dissolved the partnership and sold its assets to Kittie Petroleum, Inc. Again, Rork prepared the documentation, but this time he prepared a conflicts letter outlining to each Burnap the possible conflicts of interest that could arise from the transaction. There is no evidence that this conflicts letter was ever presented to the Burnaps.

Also in January 1988, First South Savings executed a release negotiated by William Rork, stating that it released from liability on the KP 1984-1 note all former partners, with the exception of Walter Burnap and any person who had signed a personal guarantee on the note. Willard Burnap was the only former partner who had not signed a personal guarantee on the note. Rork testified in his deposition that the intent of the release was to protect Willard Burnap from liability on the First South Savings note.

In 1989 Kittie Petroleum, Inc. filed for bankruptcy and defaulted on the First South Savings note. After foreclosing on collateral, a deficiency of $1.3 million remained. First South Savings itself then became insolvent and its successor, the FDIC and later the RTC, filed suit in federal court against KP 1984-1, and each of the individuals who had signed personal guarantees: Walter Burnap, Daniel Linnartz, Max Burleson, and Lester Kelly.

Lawrence Linnartz represented Daniel Linnartz and Max Burleson in negotiating a settlement with the RTC. Information regarding Willard Burnap, the 1986 indemnity agreement, and the history of the partnership was provided to the RTC, although at least some of this information was presented by Daniel, not Lawrence Linnartz. By the terms of the settlement agreement, Daniel Linnartz and Burleson agreed to assign to the RTC their rights under the indemnity agreement against KP 1984-1 and Walter Burnap, and granted an agreed judgment to the RTC for the full amount of the loan deficiency. The RTC in turn promised not to enforce the judgment against Daniel Linnartz and Burleson unless the RTC was wholly unsuccessful in its efforts to collect under the indemnity agreement assignment. In the event of such lack of success, Daniel Linnartz and Burnap agreed to pay the RTC a total sum of $25,000.

Following this settlement agreement, the RTC added Willard Burnap as a defendant in the federal suit. Walter Burnap and Lester Kelly filed for bankruptcy and were dismissed from the suit. Summary judgment for the full amount of the deficiency was entered against KP 1984-1 and Willard Burnap in favor of First South Savings, and that ruling was affirmed by the Fifth U.S. Circuit Court of Appeals. The case was remanded to the trial court for a review of the fairness of the underlying settlement. The district court ruled that the settlement entered into by the RTC, Daniel Linnartz and Burleson was fair, and this ruling was also affirmed by the Fifth Circuit.

The instant litigation was initiated by Willard Burnap against Lawrence Linnartz and William Rork, who were both attorneys in the firm of McCamish, Ingram, Martin & Brown, P.C. ("the McCamish firm") until 1988. The McCamish firm was named as a defendant, as was the new firm formed by Linnartz in 1988, Ingram, Linnartz & Reynolds, P.C. ("the Linnartz firm"). Appellant's trial pleading alleges several causes of action against appellees: professional negligence and legal malpractice; fraud and deceit; breach of fiduciary duties and constructive fraud; breach of contract; breach of the implied covenants of good faith and fair dealing; violations of the Deceptive Trade Practices Act and unconscionable course of conduct; and intentional infliction of emotional distress.

Appellees filed motions for summary judgment on numerous grounds. The trial court entered three separate general summary judgments in favor of Rork, the McCamish firm, and both Linnartz and the Linnartz firm respectively.

STATUTE OF LIMITATIONS

Appellees Rork and the McCamish firm sought summary judgment based in part on their claim that Burnap's suit was barred by limitations. Burnap was sued by the RTC in February 1990, and judgment was entered against him in October 1990. Burnap sent a demand letter to Lawrence Linnartz in November 1990, and initiated suit against Linnartz and the Linnartz firm a year later. Rork and the McCamish firm were not added as defendants until September 1993.

Rork and the McCamish firm contend that Burnap's suit is barred by the two year statute of limitations. As to his legal malpractice claim, Burnap contends the statute of limitations does not begin to run until completion of the underlying federal lawsuit brought against him by First South Savings,...