Cantu v. Comm'n for Lawyer Discipline, NUMBER 13-16-00332-CV

CourtCourt of Appeals of Texas
Writing for the CourtMemorandum Opinion on Remand by Justice Benavides
Decision Date03 December 2020
Docket NumberNUMBER 13-16-00332-CV

MARK A. CANTU III, Appellant,

NUMBER 13-16-00332-CV


December 3, 2020

On appeal from the 398th District Court of Hidalgo County, Texas


Before Justices Benavides, Longoria, and Tijerina
Memorandum Opinion on Remand by Justice Benavides

Mark A. Cantu III appeals his judgment of disbarment. On original submission to this Court, a divided panel reversed and remanded the case after concluding that the admission of testimony by the federal bankruptcy judge who oversaw Cantu's adversary bankruptcy proceedings constituted error. See Cantu v. Comm'n for Lawyer Discipline, 595 S.W.3d 235, 238 (Tex. App.—Corpus Christi-Edinburg 2018), rev'd, 587 S.W.3d 779

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(Tex. 2019). The Texas Supreme Court reversed the majority's decision, concluding that neither the admission of the judge's testimony nor the admission into evidence of the judge's memorandum opinion constituted reversible error. Comm'n for Lawyer Discipline v. Cantu, 587 S.W.3d 779, 780 (Tex. 2019) (per curiam). The supreme court remanded the case to this Court to consider Cantu's remaining issues. See id.

In this appeal, we address Cantu's remaining issues pertaining to the admission of expert testimony, charge error, jury deliberations, the legal and factual sufficiency of the evidence, the propriety of sanctions based on actions taken by Cantu in his individual rather than professional capacity, the trial court's findings of fact and conclusions of law, and the award of attorney's fees. We affirm Cantu's judgment of disbarment.


The Commission for Lawyer Discipline (Commission) brought a disciplinary action against Cantu alleging that he committed professional misconduct during a bankruptcy proceeding involving Cantu, his wife Roxanne Cantu, and a company that they owned and controlled, Mar-Rox, Inc. (Mar-Rox). In its "First Amended Original Disciplinary Petition," the Commission alleged:

Respondent Mark A. Cantu, his wife, and a company they controlled, Mar-Rox, Inc., filed voluntary proceedings in bankruptcy [on] May 6, 2008. The bankruptcy was converted to a chapter seven liquidation proceeding and a Trustee [was] appointed to administer the estate [on] June 24, 2009. At the time of the voluntary bankruptcy filing, the Cantus owned University Inn [M]otel, Palm Plaza Motel and RV Park, La Vista Mobile Home Park, and Dominion Apartments. They owned Mar-Rox, Inc., through which they owned The Atrium, an office building in McAllen, four restaurants, and several other commercial properties for real estate holdings valued at about $24 million. The personal property which the Cantus admit[ed] owning in their bankruptcy schedules was valued [at] about $3.9 million. Mr. Cantu owned a successful law practice. At the time of the voluntary bankruptcy filing, the Cantus had more than $37 million in secured debt and more than

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$10 million in unsecured debt. Their company, Mar-Rox Inc., had more than $20 million in debt.

The bankruptcy schedules and statements of financial affairs made by Cantu under penalties of perjury[] failed to include significant assets and transactions. Respondent failed to disclose Respondent's interests in two contingency fee cases, failed to disclose jewelry sales of more than $100,000.00 and failed to schedule two life-sized bronze horses worth about $20,000.00. The horses were placed on property belonging to Respondent Cantu's sister in an apparent attempt to conceal them.

Respondent Cantu also failed to disclose a transfer of $50,000.00 to a friend, Baldemar Perez. The money was part of a $150,000 settlement as part of a claim in the bankruptcy court. Cantu was not honest with the Court regarding how that money was spent. Respondent failed to provide records of his use of estate funds and failed to provide records of cash withdrawals from the estates, including cash withdrawals from the businesses University Inn and La Vista. This use of cash violated orders of the bankruptcy court regarding the use of cash collateral.

Cantu interfered with the sale of estate assets and failed to turn over assets belonging to the estate. He [interfered] with the sale of the Atrium building, he interfered with the turnover of valuable artwork from his offices, [and] he attempted to hide the horse statues.

Respondent Cantu made material false oaths regarding the existence of water damage cases in which Mar-Rox had an interest, the existence of contingency fee interests, jewelry sales, and the transfer of $50,000.00 to his friend.

Throughout the bankruptcy proceeding, Respondent Cantu disregarded the requirements of the bankruptcy code and demonstrated a pattern of omission, obfuscation and non-compliance in violation of his obligations to the court. This pattern of behavior obstructed the administration of the bankruptcy estate and the [c]ourt, increased the expense and inconvenience for the trustee, the estate and the court and otherwise interfered and complicated the bankruptcy case . . . and its administration.

Thus, in sum, the Commission alleged that Cantu failed to disclose significant assets in his bankruptcy filings, failed to turn over assets belonging to the bankruptcy estate, interfered with the sale of estate assets, made "material false oaths," and "demonstrated a pattern of omission, obfuscation and non-compliance in violation of his obligations to

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the [bankruptcy] court." The Commission alleged that these actions constituted multiple violations of the Texas Disciplinary Rules of Professional Conduct (Rules). See TEX. DISCIPLINARY RULES PROF'L CONDUCT R. 3.02, 3.03(a)(1),(5), 3.04(d), 8.04(a)(1),(3), reprinted in TEX. GOV'T CODE ANN. tit. 2, subtit. G, app. A.1

By his "First Amended Original Answer," Cantu made a general denial, specifically denied that he violated the Texas Disciplinary Rules of Professional Conduct, and alleged that any alleged violation of Rule 3.04(d) "was based upon his understanding that no valid obligation existed, or that the client was willing to accept any sanctions arising from such disobedience."

After discovery and further proceedings, the Commission's case against Cantu for professional misconduct was submitted to a jury over the span of four days. The Commission presented testimony from: (1) Michael Schmidt (Schmidt), the bankruptcy trustee for Cantu's Chapter 7 bankruptcy proceedings; (2) Judge Marvin Isgur, who presided over the adversarial proceedings in Cantu's bankruptcy, and (3) Cantu. Cantu presented testimony from: (1) Stephen Sather, a bankruptcy expert, (2) Katherine Driscoll Julia, an attorney who represented Cantu in a medical malpractice case and a legal malpractice case against one of Cantu's bankruptcy attorneys; and (3) Bill Piatt, an ethics expert. The parties also submitted various exhibits in support of their cases. The Commission offered into evidence, inter alia, Judge Isgur's memorandum opinion, some of Cantu's bankruptcy filings, and many of the orders issued in the bankruptcy proceedings. Cantu offered Piatt's resume.

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After the parties rested and closed, the trial court submitted six questions to the jury regarding whether Cantu had committed different violations of the Rules, and the jury responded affirmatively to each question. The jury found that Cantu had: "taken a position that unreasonably increased the costs or other burdens of the case"; "knowingly made a false statement of material fact to a tribunal"; "knowingly offered or used evidence that he knew to be false"; "knowingly disobeyed an obligation under the standing rules of or a ruling by a tribunal" and that conduct was "an open refusal based either on an assertion that no valid obligation [exists]" or on Cantu's "willingness to accept any sanctions arising from such disobedience"; and that Cantu "engaged in conduct involving dishonesty, fraud, deceit, or misrepresentation." The following summary comprises the evidence and argument presented to the jury.

The bankruptcy proceedings were instituted on May 6, 2008, when Cantu filed voluntary bankruptcy petitions seeking reorganization personally and on behalf of Mar-Rox. At the time, the International Bank of Commerce (IBC) was getting ready to foreclose on some of Cantu's properties, so Cantu acted quickly to file bankruptcy and prevent the foreclosures. A friend who practiced bankruptcy law filed the voluntary bankruptcy petitions for Cantu, but shortly thereafter, Cantu hired a bankruptcy specialist, Ellen Stone, who represented him until July 13, 2009 when she withdrew from the case. Judge Richard Schmidt (Judge Schmidt)2 presided over Cantu's bankruptcy proceedings, and Judge Isgur presided over all the adversary proceedings, or lawsuits, that arose during and from Cantu's bankruptcy. There were between sixteen and twenty adversary proceedings filed during the course of Cantu's bankruptcy.

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On December 9, 2009, Schmidt and some of Cantu's creditors filed an adversary proceeding asking the bankruptcy court to deny Cantu a bankruptcy discharge. Judge Isgur presided over this adversary proceeding and held a two-day trial, considering testimony from Cantu and other witnesses, and ultimately denied Cantu's bankruptcy discharge with a seventy-two-page memorandum opinion detailing his reasons for the denial. Judge Isgur provided a copy of this opinion to the State Bar of Texas and to the Chief Judge of the District Court of the Southern District of Texas. The course of the bankruptcy proceedings, as detailed in Judge Isgur's memorandum opinion, formed the basis of the Commission's complaint against Cantu.

As discussed at trial and as shown in the record, Cantu signed the bankruptcy petitions, which included descriptions of the debtors' assets and liabilities in the bankruptcy schedules and the statement of financial affairs, and his signature included the statement that he was declaring under penalty...

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