Fry v. Commission for Lawyer Discipline, 14-97-00485-CV

• Decision Date: 25 June 1998
• Docket Number: No. 14-97-00485-CV,14-97-00485-CV
• Citation: 979 S.W.2d 331
• Parties: Gerald FRY, Appellant, v. COMMISSION FOR LAWYER DISCIPLINE, Appellee. (14th Dist.)
• Court: Texas Court of Appeals

Page 331

979 S.W.2d 331

Gerald FRY, Appellant, v. COMMISSION FOR LAWYER DISCIPLINE, Appellee.

No. 14-97-00485-CV.

Court of Appeals of Texas,

Houston (14th Dist.).

June 25, 1998.

Rehearing Overruled Oct. 1, 1998.

Gerald Fry, Houston, for appellant.

Linda Acevedo, Austin, for appellee.

Before YATES, EDELMAN, and O'NEILL, JJ.

OPINION

YATES, Justice.

This is an attorney discipline matter. The trial court granted summary judgment in favor of the Commission for Lawyer Discipline ("the Commission") on the issue of professional misconduct by Gerald Fry. We affirm.

In January of 1994, Fry was contacted by Ervin McLeggan to discuss the possibility of McLeggan retaining Fry for the appeal of a federal court conviction in Pennsylvania. Fry claims that while he was not the attorney of record for McLeggan in the criminal case, he was hired "to advise him concerning his case, to be the attorney of record for the sentencing, the motion for new trial, and the appeal." In his affidavit, Fry claimed that McLeggan hired him with a $2,000.00 retainer, and secured Fry's attorney's fees with a Deed of Trust and a Real Estate Lien Note on McLeggan's house in Fort Bend County. According to Fry's affidavit, the deed and the note were for $40,000.00 "for attorney fees and expenses with a payout over 40 months at a rate of $1,000.00 per month." He stated that McLeggan agreed to the fee and signed the deed and the note himself. McLeggan stated in his deposition, however, that Fry did not represent him in the criminal matter; rather, he was represented by attorney Cheryl Sturm of Pennsylvania.

Though McLeggan claimed he never retained Fry to represent him in the federal criminal matter, he did hire Fry to assist him in selling his home in Fort Bend County, Texas. The house was sold in August of 1994, and Fry received a check in the amount of $21,487.60 on August 31, 1994. Fry's affidavit states that the money he received from the sale of the house "partially paid the attorney fee [sic] and expense lien I had on the house." Fry swore that he executed a full release of the lien when he received the check. Fry claimed there was no conflict over the ownership of the funds as of September 6, 1994. However, on September 4, 1994, McLeggan sent a letter to Fry instructing him to deliver "the full amount of the check which you have receive [sic] from the closing of my property to my wife." Fry, on the other hand, claims McLeggan asked if he could borrow $10,000.00 to give to his wife. Fry sent McLeggan's wife a check for $10,000.00 on September 6, 1994. The check was written on Fry's client trust account.

On September 27, 1994, McLeggan again wrote to Fry and instructed him to send an additional $10,000.00 to his wife by October 3, 1994, and to put the balance, plus $1,000.00 McLeggan's brother apparently gave Fry, into an escrow account in the event McLeggan needed Fry's services in the future. McLeggan sent another letter to the same effect on December 8, 1994, but Fry did not send the additional $10,000.00 to McLeggan's wife until December 20, 1994. This time, the check was written on Fry's operating account.

Fry claimed in his affidavit that he represented McLeggan throughout this time period. McLeggan's letters, however, clearly demonstrate that Fry was not representing McLeggan except as to the sale of the house, and the sale was completed in August. Fry stated in his affidavit that it was not until after McLeggan filed a grievance against him that he ceased his representation of McLeggan. Fry claims the second $10,000.00 that he sent to McLeggan's wife was money from his earned attorney's fees, and that it constituted a refund of attorney's fees.

Because a controversy existed as to the ownership of the proceeds from the sale of the house, the Commission alleged a violation of subsections (a) through (c) of rule 1.14 of the Texas Disciplinary Rules of Professional Conduct. Subsections (a) through (c) state, in pertinent part:

(a) A lawyer shall hold funds and other property belonging in whole or in part to clients or third persons that are in a lawyer's possession in connection with a representation separate from the lawyer's own property. Such funds shall be kept in a separate account, designated as a "trust" or "escrow" account, maintained in the state where the lawyer's office is situated.

(b) Upon receiving funds or other property in which a client or third person has an interest, a lawyer shall promptly notify the client or third person. Except as stated in this rule or otherwise permitted by law or by agreement with the client, a lawyer shall promptly deliver to the client or third person any funds ... that the client or third person is entitled to receive.

(c) When in the course of representation a lawyer is in possession of funds or other property in which both the lawyer and the other person claim interests, the property shall be kept separate by the lawyer until there is an accounting and severance of their interests. All funds in a trust or escrow account shall be disbursed only to those persons entitled to receive them by virtue of the representation or by law. If a dispute arises concerning their respective interests, the portion in dispute shall be kept separated by the lawyer until the dispute is resolved, and the undisputed portion shall be distributed appropriately.

TEX.DISCIPLINARY R.PROF.CONDUCT 1.14(a)-(c) (1989), reprinted in TEX.GOV'T CODE ANN., tit. 2, subtit. G app. A (Vernon Pamph.1997) (STATE BAR RULES art. X, § 9). In summary, rule 1.14 requires an attorney who receives funds, which belong in whole or in part to a client or third person, to deposit them into a trust account and promptly deliver the appropriate portion to the client or third person. See TEX.DISCIPLINARY R.PROF.CONDUCT 1.14(a)-(b) (1989). Moreover, and important to this case, is the requirement that if there is a dispute over the ownership of the funds, the attorney must keep the funds in the trust account until the dispute is resolved. See TEX.DISCIPLINARY R.PROF.CONDUCT 1.14(c) (1989).

The Commission filed a motion for summary judgment and a first amended motion for summary judgment. In its first amended motion, the Commission alleged there was no genuine issue of material fact and that it had proved each of the allegations against Fry as a matter of law. In support of its motion, the Commission submitted: (1) responses to requests for admissions; (2) responses to interrogatories; (3) three letters from McLeggan to Fry; (4) a letter from McLeggan to Nations Bank; (5) a copy of the docket in the federal criminal case against McLeggan; (6) a copy of the brief prepared, signed, and filed by Cheryl Sturm on behalf of McLeggan in the federal case; (7) excerpts from McLeggan's deposition of April 9, 1996; and (8) Fry's bank records relating to his trust account.

Fry filed a response and two supplemental responses to the Commission's motions claiming that a genuine issue of material fact existed as to at least one element of the claims against him. In support of his responses, Fry included: (1) his own affidavits; (2) the Deed of Trust and the Real Estate Lien Note; (3) the document showing his release of the lien; and (4) a copy of the September 27, 1994, letter from McLeggan to Fry. Fry argued the trial court could not conclude that a controversy over the funds existed before the release of the lien and the transfer of the funds, or that McLeggan "disavowed the existence of the attorney-client relationship." Fry claimed in his response that he represented McLeggan and that the evidence supported that belief, and that McLeggan agreed to pay him $40,000.00 for his services. Therefore, there was no violation of the disciplinary rules.

The trial court granted the Commission's first amended motion, finding that the Commission had proved as a matter of law that Fry violated rules 1.14(a)-(c) of the Texas Disciplinary Rules of Professional Conduct. After a hearing on the appropriate discipline to be assessed against Fry, the parties agreed to the imposition of a public reprimand. Fry perfected this appeal.

The standard for reviewing summary judgments is well established. Summary judgment is proper only when the movant establishes there are no genuine issues of material fact and proves he is entitled to judgment as a matter of law. See Nixon v. Mr. Property Management, Co., 690 S.W.2d 546, 548 (Tex.1985); Shannon v. Texas Gen. Indem. Co., 889 S.W.2d 662, 663 (Tex.App.--Houston [14th Dist.] 1994, no writ). Evidence favorable to the non-movant will be taken as true, every reasonable inference will be indulged in favor of the non-movant, and any doubts resolved in its favor. See Nixon, 690 S.W.2d at 548-49; Montgomery v. Kennedy, 669 S.W.2d 309, 310-11 (Tex.1984). A plaintiff who moves for summary judgment must prove he is entitled to judgment as a matter of law on each element of the cause of action. See MMP, Ltd. v. Jones, 710 S.W.2d 59, 60 (Tex.1986); Acme Brick v. Temple Assocs., Inc., 816 S.W.2d 440, 442 (Tex.App.--Waco 1991, writ denied); Harris County v. Walsweer, 930 S.W.2d 659, 663 (Tex.App.--Houston [1st Dist.] 1996, writ denied).

In his first point of error, Fry contends the judgment is void "because it was based in whole or part on the pleadings which are not competent summary judgment proof." In the order granting summary judgment, the trial court stated, in pertinent part:

The Court based upon all the pleadings and papers on filed in this case and the law applicable thereto, is of the opinion and so finds that the material allegations in Petitioner's Second Amended Disciplinary Petition are true regarding Respondent's violation of the ... Rules of the Texas Disciplinary Rules of Professional Conduct.

Rule 166a(c) provides that a summary judgment shall be rendered if the discovery documents, pleadings, admissions, affidavits, stipulations of the parties, and authenticated or certified public records, if any, on file at the...