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[11] |
The dispute in this case arose out of the attorney-client relationship between appellee Hoover, Bax & Slovacek, L.L.P. and its former client, appellant George Deutsch. The client challenges the trial court's judgment awarding attorney's fees to the law firm based on unpaid legal bills and ordering that he take nothing on his counterclaims against the law firm and the individual attorney who handled his file. We conclude the trial court erred in granting a directed verdict against the client as to his claim for fee forfeiture based on alleged breaches of fiduciary duty relating to the law firm's conflicts of interest. Accordingly, we reverse and remand this case to the trial court for a jury trial on the disputed fact issues regarding this claim and for further proceedings consistent with this opinion.
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[12] |
I. Factual and Procedural Background |
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[13] |
Deutsch, a New York real estate investor, had an interest in several partnerships owning property in the Houston area, including Dan-333 Associates ("Dan-333") and Kirkwood Atrium Associates. Several of Deutsch's partners filed for bankruptcy in Delaware in 1993, and Deutsch represented himself for over a year in those proceedings. In 1994, in an effort to buy a Houston building being sold by one of the partnerships, Deutsch retained the law firm of Hoover, Bax & Slovacek, L.L.P. (the "Law Firm") to help him "get the attention" of the bankruptcy trustee. At Deutsch's request, the Law Firm sought an injunction in state district court in Houston to prevent the sale of the building. As part of that injunction proceeding, Deutsch, represented by the Law Firm, claimed the bankruptcy trustee had no authority to sell the building because the bankruptcy estate included only partnership interests rather than the building itself. The bankruptcy trustee responded with an adversary proceeding against Deutsch and the Law Firm in the Delaware bankruptcy case. All issues in Delaware were tried in 1994, but the bankruptcy court did not issue a final order until January 1998. In that final order, the bankruptcy court assessed $75,000 against Deutsch for embezzlement, awarded him $300,000 in commissions, confirmed some of his partnership interests, and absolved him of any personal liability on a purported breach of promise to purchase the Houston building.
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[14] |
Meanwhile, in August 1997, the Law Firm sued Deutsch for unpaid legal bills of more than $67,000. In November 1998, Deutsch filed a counterclaim against the Law Firm, and in the same proceeding, also asserted claims against David Waddell, the Law Firm attorney who had handled his file. Deutsch alleged negligence, breach of contract, breach of fiduciary duty, negligent misrepresentation, violations of the Deceptive Trade Practices Act ("DTPA"), and fraud.
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[15] |
After the close of all the evidence at trial, the Law Firm moved for a directed verdict on various grounds, including statute of limitations. Because the Law Firm had not asserted limitations as an affirmative defense in its pleadings, the Law Firm also sought leave to amend its answer to assert the statute-of-limitations defense. The trial court granted the Law Firm's motion for leave and also granted its motion for directed verdict.*fn1 The trial court indicated that the statute of limitations barred all of Deutsch's claims except for his negligence claim.*fn2 The trial court then submitted the case to the jury in two broad-form questions, asking: (1) What fees (if any) Deutsch owed the law firm? and (2) Whose negligence (if any) proximately caused injury to Deutsch? The jury found Deutsch's own negligence caused his injuries, and awarded the Law Firm $61,055.95 for unpaid bills, plus attorney's fees incurred in bringing the collection suit. Deutsch appeals from this judgment as to the Law Firm only.
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[16] |
II. Issues Presented
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[17] |
Challenging the judgment in favor of the Law Firm, Deutsch raises the following issues: |
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[18] |
• Did the trial court err in granting the Law Firm leave to file a supplemental answer asserting a statute-of-limitations defense? (second issue)
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[19] |
• Did the trial court err in granting the Law Firm's motion for directed verdict as to Deutsch's breach-of-fiduciary-duty claim, including Deutsch's claim for fee forfeiture? (first and seventh issues)
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[20] |
• Did the trial court err in refusing Deutsch's requested jury questions regarding the alleged defenses of misrepresentation, legal excuse for breach of contract, and breach of fiduciary duty? (third, fourth, and fifth issues)
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[21] |
• Did the trial court err in granting the Law Firm's motion for directed verdict as to Deutsch's claim for exemplary damages? (sixth issue)
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[22] |
• Did the trial court err in granting the Law Firm's motion for directed verdict as to Deutsch's claims for breach of contract and attorney's fees? (eighth, ninth, and tenth issues)
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[23] |
III. Analysis
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[24] |
A. Did Deutsch waive his right to a new trial and did the trial court err by allowing the Law Firm to plead limitations during trial? |
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[25] |
As an initial matter, the Law Firm argues that all of Deutsch's omitted jury issues are barred by a limitations ruling to which he has waived any appeal. After all parties rested at the end of four days of evidence, the Law Firm moved for directed verdict on various grounds, one of which was limitations. When Deutsch objected that the Law Firm had not pleaded limitations, the trial court granted the Law Firm leave to amend, and granted Deutsch's ensuing motion to amend to plead the discovery rule. On its own motion, the trial court also offered to declare a mistrial; Deutsch declined this offer because of the expense involved in retrying the case.
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[26] |
On appeal, the Law Firm argues Deutsch's refusal to accept a mistrial constitutes waiver C that he cannot take a peek at the verdict and then ask for the new trial that he earlier refused. Neither party has identified any case directly on point. Texas Rule of Civil Procedure 66, governing trial amendments, suggests a postponement may cure any prejudice from a trial amendment. See Tex. R. Civ. P. 66 (stating court may grant a postponement to enable the objecting party to meet trial amendment). But there is nothing in the rule to suggest an offer of a mistrial does so, especially when the trial is virtually completed. A party seeking leave to amend its pleadings after the trial has commenced should not be rewarded by forcing the judge, jury, and opposing party to either acquiesce in the tardy amendment or start over. In this case, the mistrial was the trial court's suggestion; the Law Firm never agreed to it, and certainly never offered to pay Deutsch's expenses to try the case a second time. Deutsch's decision to refuse the trial court's offer of a mistrial did not amount to a relinquishment of his objection. Accordingly, we hold Deutsch did not waive his complaint concerning the trial amendment.
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[27] |
In addressing the merits of Deutsch's complaint that the trial court erred in granting the Law Firm leave to file a trial amendment, we begin by making two critical observations: (1) this issue involved questions of surprise and prejudice, and (2) Deutsch objected. Under these circumstances, we review the trial court's ruling for an abuse of discretion. See Tex. R. Civ. P. 63, 66; Hardin v. Hardin, 597 S.W.2d 347, 350B51 (Tex. 1980). In making this determination, we focus on the nature of the amendment and the prejudice, if any, that would result from allowing an amendment. An amended pleading asserting a new defense is not prejudicial as a matter of law; the amendment must be evaluated in the context of the entire case. Stephenson v. LeBoeuf, 16 S.W.3d 829, 839 (Tex. AppCHouston [14th Dist.] 2000, pet. denied). To prevail, Deutsch must show the Law Firm's amended answer (1) reshaped the nature of the trial; (2) could not have been anticipated; and (3) prejudiced his presentation of the case. See id.
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[28] |
In each part of his pleading for affirmative relief, Deutsch made the same claims against the Law Firm and Waddell. The Law Firm did not assert a limitations defense, but Waddell did. Consequently, Deutsch had notice of the issues likely to arise with respect to this defense. For this reason, it would be difficult to characterize the limitations defense as one that reasonably could not have been anticipated. Although Deutsch's counsel claimed both surprise and prejudice in general terms, he did not indicate how the trial was unexpectedly changed when the Law Firm merely sought to add a defense already raised by the individual attorney. We find Deutsch could not have been surprised or prejudiced by the trial amendment. See id.; Greenhalgh v. Service Lloyds Ins. Co., 787 S.W.2d 938, 939 (Tex. 1990) (requiring party opposing amendment to present evidence of surprise or prejudice). Accordingly, we hold the trial court did not err in granting the trial amendment, and we overrule Deutsch's second issue.
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[29] |
B. Did the trial court err in granting the Law Firm's motion for directed verdict as to Deutsch's breach-of-fiduciary-duty claim, including Deutsch's claim for fee forfeiture? |
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[30] |
In his first and seventh issues, Deutsch asserts the trial court erred in directing a verdict against him as to his breach-of-fiduciary-duty claim, including his claim for fee forfeiture. On appeal, the Law Firm no longer presses limitations, perhaps because there was conflicting evidence as to when Deutsch discovered these claims or because of the
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