Jackson Law Office v. Chappell

Decision Date31 May 2000
Citation37 S.W.3d 15
Parties(Tex.App.-Tyler 2000) JACKSON LAW OFFICE, P.C., ET AL., APPELLANTS v. VERNA KAY CHAPPELL, ET AL., APPELLEES NO. 12-98-00210-CV
CourtTexas Court of Appeals

Gary D. Jackson, Lindale, Ken W. Good, Tyler, for appellants.

Catherine Kennington, Brownsboro, Paul M. Boyd, Roger Anderson, Tyler, for Appellees.

Panel consisted of Ramey, Jr., C.J., Hadden, J., and Worthen, J.

TOM B. RAMEY, JR., Chief Justice.

In a fee dispute between Gary Jackson and Gloria Jackson, also known as The Jackson Law Offices, P.C., and their client Verna Chappell, the trial court awarded the Jacksons breach of contract damages, but awarded no damages to Chappell on her cross-actions. Both appeal. We will modify the trial court's judgment, affirm in part and reverse and remand in part.

BACKGROUND

Chappell retained the Jacksons to represent her in a divorce action. The dispute stems from Chappell's allegation that the Jacksons agreed to handle the divorce for a maximum of $ 3,000.00. The Jacksons, on the other hand, asserted that they were retained to handle the matter for $ 150.00 per hour. The Jacksons maintained that Chappell owed them over $ 60,000.00 in attorney's fees, that she was aware of this debt, and that she refused to pay. Furthermore, they contended that as a way of protecting her assets from the Jacksons, Chappell fraudulently transferred property to R.A. Moreau and Catherine Kennington to defraud the Jacksons.

Chappell answered denying that she owed any fees to the Jacksons. Chappell and Moreau countersued alleging violations of the Texas Deceptive Trade Practices Act, breaches of fiduciary duties and violations of the Texas Debt Collection Act. One of the major allegations of wrongdoing against the Jacksons was that they coerced Chappell into executing an assignment of the proceeds from several properties without disclosing the consequences of entering into such a transaction, and in violation of a court order in the Chappell's divorce proceeding.

Moreau and Kennington answered denying that any property was transferred to them fraudulently. The case proceeded to trial. The jury returned a mixed verdict. The jury found in favor of the Jacksons on their claim against Chappell alleging that she had breached her agreement to pay attorney's fees. The jury also found that certain properties transferred to Moreau and Kennington were transferred fraudulently. The jury awarded the Jacksons $ 43,000.00 for Chappell's breach of agreement to pay attorney's fees and $ 5,000.00 as damages for the fraudulent transfers. The jury also found in favor of Chappell and Moreau regarding their DTPA claims, violation of the Texas Debt Collection Act, and Chappell's breach of fiduciary duty claim. The jury awarded zero actual damages and $ 5,000.00 additional damages. The jury declined to award attorney's fees to the Jacksons on their breach of contract claim or to Chappell or Moreau on their DTPA and Debt Collection Act claims. The trial court entered judgment awarding $ 43,000.00 in damages to the Jacksons, less a $ 5,000.00 fee forfeiture for breaching their fiduciary duty to Chappell. The court did not award damages for the fraudulent transfers, nor did it set aside the transfers as requested by the Jacksons. No parties were awarded attorney's fees, and each were ordered to pay their own costs. The Jacksons and Chappell filed motions for new trial, which were overruled. This appeal followed.

THE JACKSONS' ISSUES

The Jacksons assert that the trial court erred when it denied both equitable and legal relief for Chappell's fraudulent transfers, when it denied court costs, and when it ordered a $ 5,000.00 fee forfeiture. They also complain that the evidence is neither legally nor factually sufficient to support the jury's finding that they breached their fiduciary duty and that their attorney's fees for prosecuting the case had a zero value. Because the Jacksons' issues four and six complain of the sufficiency of the evidence, we will address those first.

STANDARD OF REVIEW

In reviewing a no evidence point, an appellate court must consider only the evidence and inferences that tend to support the jury's verdict, disregarding all contrary evidence and inferences. Wal-Mart Stores, Inc. v. Gonzalez, 968 S.W.2d 934, 936 (Tex. 1998). We may only sustain a "no evidence" point when the record discloses one of the following: 1) a complete absence of evidence of a vital fact; 2) the court is barred by rules of law or evidence from giving weight to the only evidence offered to prove a vital fact; 3) the evidence offered to prove a vital fact is no more than a mere scintilla of evidence; or 4) the evidence establishes conclusively the opposite of a vital fact. Merrell Dow Pharmaceuticals, Inc. v. Havner, 953 S.W.2d 706, 711 (Tex. 1997). It is not within our power to second guess the factfinder unless only one inference can be drawn from the evidence. Havner v. E-Z Mart Stores, Inc., 825 S.W.2d 456, 461 (Tex. 1992). If there is more than a scintilla of evidence to support the finding, the evidence is legally sufficient. Browning-Ferris, Inc. v. Reyna, 865 S.W.2d 925, 928 (Tex. 1993).

When conducting a factual sufficiency review, this court must consider all of the evidence, including any evidence contrary to the verdict. Plas-Tex. Inc. v. U.S. Steel Corp., 772 S.W.2d 442, 445 (Tex. 1989). We must reverse on the basis of a factual insufficiency or great weight and preponderance point if the jury's finding is so against the great weight and preponderance as to be manifestly unjust, it shocks the conscience, or clearly demonstrates bias. Pool v. Ford Motor Co., 715 S.W.2d 629, 635 (Tex. 1986). If we sustain a factual insufficiency or great weight and preponderance point, we can only remand the case. "Our present Constitution empowers the courts of appeals to 'unfind' facts, even if they cannot 'find' them." Id. at 634. Findings of fact are the exclusive province of the jury. Bellefonte Underwriters Ins. Co. v. Brown, 704 S.W.2d 742, 744 (Tex. 1986). This court is not a fact finder and may not pass on the credibility of the witnesses or substitute its judgment for that of the trier of fact, even if a different answer could be reached on the evidence. See Herbert v. Herbert, 754 S.W.2d 141, 144 (Tex. 1988); Clancy v. Zale Corp., 705 S.W.2d 820, 826 (Tex. App. - Dallas 1986, writ ref'd n.r.e.).

BREACH OF FIDUCIARY DUTY AND FEE FORFEITURE

In their fourth issue, the Jacksons assert that Chappell's claim for breach of fiduciary duty is barred by the statute of limitations. They also claim that there is neither legally nor factually sufficient evidence to support a finding that they breached their fiduciary duty to Chappell. But they follow with the complaint that even if there is sufficient evidence, the trial court abused its discretion when it required the Jacksons to forfeit $ 5,000.00 of their fee in spite of the jury's finding that the breach of fiduciary duty did not cause Chappell any harm.

Statute of Limitations

In regards to the cause of action being barred by the statute of limitations, the Jacksons waived this complaint when they failed to affirmatively plead it. TEX. R. CIV. P. 94.

Breach of Fiduciary Duty

The relationship existing between attorney and client is characterized as "highly fiduciary", and requires proof of "perfect fairness" on the part of the attorney. Archer v. Griffith, 390 S.W.2d 735, 739 (Tex. 1965). The "fail safe" mechanism of the fiduciary relationship is the duty of full disclosure. A fiduciary has much more than the traditional obligation not to make any material misrepresentations; he has an affirmative duty to make a full and accurate confession of all his fiduciary activities, transactions, profits, and mistakes. See Montgomery v. Kennedy, 669 S.W.2d 309, 312-14 (Tex. 1984); Kinzbach Tool Co., Inc. v. Corbett-Wallace Corp., 138 Tex. 565, 160 S.W.2d 509, 513-14 (Tex. 1942). The breach of the duty of full disclosure by a fiduciary is tantamount to fraudulent concealment. Willis v. Maverick, 760 S.W.2d 642, 645 (Tex. 1988). And where "self-dealing" by the fiduciary is alleged, a "presumption of unfairness" automatically arises and the burden is placed on the fiduciary to prove (a) that the questioned transaction was made in good faith, (b) for a fair consideration, and (c) after full and complete disclosure of all material information to the principal. See Stephens County Museum, Inc. v. Swenson, 517 S.W.2d 257, 261 (Tex. 1974); Int'l. Bankers Life Ins. Co. v. Holloway, 368 S.W.2d 567, 576 (Tex. 1963).

The evidence shows that the Jacksons were vague about their fee arrangement, and did not reduce the fee agreement to writing. The Jacksons failed to maintain billing records, failed to record services rendered, and failed to provide billing statements to Chappell. During the second divorce proceeding, the Jacksons and Chappell represented to the court that there had been $ 18,000.00 in attorney's fees to that point. Later, when Chappell requested an itemized statement of those attorney's fees, the Jacksons refused to provide it to her unless she agreed to pay whatever the itemization showed, although it would be more than $ 18,000.00. There is some evidence that the Jacksons inflated the hours charged during the course of the representation. Furthermore, they charged Chappell for defending themselves against a grievance filed by her husband. Chappell testified that the Jacksons misrepresented to her that her husband would be responsible for her attorney's fees. As a prerequisite for continuing to represent her, the Jacksons required Chappell to execute an assignment of the proceeds from certain properties, and failed to make appropriate disclosures of the legal effect of the assignment....

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