Gamboa v. Shaw

• Decision Date: 22 October 1997
• Docket Number: No. 04-96-01002-CV,04-96-01002-CV
• Citation: 956 S.W.2d 662
• Parties: Dr. Jose GAMBOA, Individually and as Trustee for the Jose Gamboa, M.D., P.A. Profit Sharing Plan and Trust, and Carl Gamboa, Appellants, v. Ronald J. SHAW, Appellee.
• Court: Texas Court of Appeals

Page 662

956 S.W.2d 662

Dr. Jose GAMBOA, Individually and as Trustee for the Jose

Gamboa, M.D., P.A. Profit Sharing Plan and Trust, and Carl Gamboa, Appellants, v. Ronald J. SHAW, Appellee.

No. 04-96-01002-CV.

Court of Appeals of Texas,

San Antonio.

Oct. 22, 1997.

James S. Wilkins, Jacobs, Willis & Wilkins, L.L.P., San Antonio, for Appellant.

Glenn J. Deadman, Glenn J. Deadman, P.C., San Antonio, for Appellee.

Before STONE, GREEN and ANGELINI, JJ.

OPINION

ANGELINI, Justice.

Appellants, Dr. Jose Gamboa, Individually and as Trustee for the Jose Gamboa, M.D., P.A. Profit Sharing Plan and Trust, and Carl Gamboa, ¹ appeal the granting of summary judgment in favor of appellee, Ronald J. Shaw, in this legal malpractice case. In two points of error, Gamboa contends that the trial court erred in granting Shaw's motion for summary judgment and in holding that his cause of action for civil conspiracy was barred by the statute of limitations. We affirm the judgment of the trial court.

FACTUAL AND PROCEDURAL BACKGROUND

In 1988, Gamboa began investing in Home Advantage, Inc. (HAI), a corporation engaged in the business of originating real estate improvement notes. When Gamboa became involved with HAI, fifty percent of HAI's stock was owned by Kenneth Saks and 50 percent was owned by Carl Saks. The Sakses acted as the company's sole officers and directors. Gamboa continued his business dealings with HAI through the latter part of 1989. Gamboa contends that, during the course of these dealings, he became and remained a shareholder of HAI. The Sakses deny that Gamboa was ever a shareholder.

In August of 1990, Gamboa individually sued HAI and the Sakses, for breach of contract, fraud, breach of fiduciary duty, and civil conspiracy, alleging that, among other things, the Sakses had misappropriated company assets for their own benefit. In his capacity as an alleged shareholder, Gamboa also sued Kenneth Saks for breach of fiduciary duty owed to HAI and its shareholders. Kenneth Saks and HAI hired appellee, Ronald Shaw, to represent them in the lawsuit (first lawsuit).

In 1992, the district court granted Gamboa's second motion to disqualify Shaw from representing both Kenneth Saks and HAI in the first lawsuit, finding that there was a potential conflict of interest between Saks and HAI. Also, during the course of the first lawsuit, HAI filed bankruptcy. Shaw's law firm filed a proof of claim in the bankruptcy proceedings, seeking attorney's fees for services rendered in the first lawsuit. Pursuant to federal law, the bankruptcy court denied the proof of claim, finding that there was a conflict of interest in the firm's representation of both HAI and Saks in the first lawsuit. In 1994, the first lawsuit was dismissed for want of prosecution.

In the present case, Gamboa sued Shaw for breach of fiduciary duty/conflict of interest and civil conspiracy, alleging that Shaw's representation of both Kenneth Saks and HAI in the first lawsuit damaged HAI, and, as a result, damaged Gamboa as a shareholder, creditor, or beneficiary of HAI. Shaw filed a motion for summary judgment, arguing that Gamboa had no standing to bring a civil conspiracy claim against Shaw, that the civil conspiracy cause of action was barred by the statute of limitations, and that Gamboa had no standing to assert any legal malpractice cause of action against Shaw. The trial court granted summary judgment as to Gamboa's breach of fiduciary duty/conflict of interest claim and as to any violation of the Texas State Disciplinary Rules. The trial court denied summary judgment as to Gamboa's civil conspiracy claim. However, Shaw later filed an amended motion for summary judgment, reasserting his defenses to Gamboa's civil conspiracy cause of action. The trial court eventually granted summary judgment on the civil conspiracy cause of action, resulting in a dismissal of all of Gamboa's causes of action.

ARGUMENT AND AUTHORITY

A. Standard of Review

In order to prevail on a motion for summary judgment, a defendant must either prove that no genuine issue of material fact exists, affirmatively disprove at least one element of the plaintiff's cause of action, or prove an affirmative defense as a matter of law. Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548 (Tex.1985); Ross v. Arkwright Mut. Ins. Co., 892 S.W.2d 119, 127 (Tex.App.--Houston [14th Dist.] 1994, no writ). In any case, the movant bears the burden of proving that he is entitled to judgment as a matter of law. TEX. R. CIV. P. 166a(c). On review, the appellate court must take as true all evidence favoring the non-movant and indulge every reasonable inference in his favor. Park Place Hosp. v. Milo, 909 S.W.2d 508, 510 (Tex.1995); Montgomery v. Kennedy, 669 S.W.2d 309, 311 (Tex.1984).

B. Privity Requirement in Legal Malpractice Actions

In his first point of error, Gamboa contends that the trial court erred in granting Shaw's motion for summary judgment as to Gamboa's causes of action founded in either breach of fiduciary duty, breach of the Texas State Disciplinary Rules, or conflict of interest. In making his argument, Gamboa asks us to carve out an exception to established Texas law based upon his interpretation of public policy. Gamboa's causes of action are premised on the allegation that Shaw's representation of both Kenneth Saks and HAI in the first lawsuit damaged HAI and, therefore, damaged Gamboa as an alleged shareholder of HAI. It is undisputed that Shaw did not represent Gamboa at any time during the first lawsuit. However, Gamboa argues that Shaw owed him a duty of care because he was a beneficiary of Shaw's client, HAI. Specifically, Gamboa contends that an attorney's liability for failing to fulfill his duties to a corporate client should extend to beneficiaries of the corporation, including alleged shareholders and creditors.

It is well-established that Texas does not recognize a cause of action for legal malpractice asserted by a party not in privity with the offending attorney. Barcelo v. Elliott, 923 S.W.2d 575, 577-78 (Tex.1996); Thompson v. Vinson & Elkins, 859 S.W.2d 617, 621 (Tex.App.--Houston [1st Dist.] 1993, writ denied); Thomas v. Pryor, 847 S.W.2d 303, 304 (Tex.App.--Dallas 1992), judgm't vacated by agr., 863 S.W.2d 462 (Tex.1993). The Texas Supreme Court recently revisited this issue and found no reason for an exception to the privity requirement, holding that an attorney owes no duty to third parties who are not his clients, even if the third party is damaged by the attorney's negligent representation of the client. Barcelo, 923 S.W.2d at 577. Gamboa acknowledges a lack of privity between himself and Shaw. Nevertheless, relying on the dissent in Barcelo, he invites us to deviate from existing Texas law and create an exception to the privity requirement in cases such as this.

We decline Gamboa's invitation and follow the Texas privity requirement, as many Texas courts, including this one, have done with similar requests. See Berry v. Dodson, Nunley & Taylor, P.C., 717 S.W.2d 716, 718 (Tex.App.--San Antonio 1986), judgm't vacated by agr., 729 S.W.2d 690 (Tex.1987); see also Thompson, 859 S.W.2d at 622; Thomas, 847 S.W.2d at 305; Dickey v. Jansen, 731 S.W.2d 581, 582 (Tex.App.--Houston [1st Dist.] 1987, writ ref'd n.r.e.); Bell v. Manning, 613 S.W.2d 335, 339 (Tex.Civ.App.--Tyler 1981, writ ref'd n.r.e.). We note that most of the Texas cases discussing the privity requirement do so in the context of a will or trust dispute. These cases typically involve intended beneficiaries of an allegedly negligently drafted will or trust instrument seeking to recover from the attorney who drafted the document. The rationale behind the privity rule in those cases is that such a requirement "ensures that attorneys may in all cases zealously represent their clients without the threat of suit from third parties compromising that representation." Barcelo, 923 S.W.2d at 578-79. The privity requirement serves to mitigate the problem of disappointed heirs attempting to prove that the drafting attorney failed to properly record the deceased's intentions. Id.

The purpose behind the privity...