Joe v. Two Thirty Nine Joint Venture
| Decision Date | 03 September 2004 |
| Docket Number | No. 02-0218.,02-0218. |
| Citation | 145 S.W.3d 150 |
| Parties | Harry J. JOE and Jenkens & Gilchrist, A Professional Corporation, Petitioners, v. TWO THIRTY NINE JOINT VENTURE, Respondent. |
| Court | Texas Supreme Court |
Appeal from the 14th Judicial District Court, Dallas County, John Marshall, J Jeff Archer, Austin, for Amicus Curiae J.E. "Buster" Brown.
Roger Townsend, Alexander Dubose Jones & Townsend LLP, Houston, for Amicus Curiae Greenberg Traurig of New York.
Reagan W. Simpson, King & Spalding LLP, Houston, for Amicus pro se.
N. Bennett Sandlin, Austin, for Amicus Curiae Texas Municipal Leaguetexas Municipal League.
Amy Warr, Office of Attorney Gen., Austin, for Amicus Curiae The State of Texas.
Boyd Aaron Mouse, Kane Russell Coleman & Logan, David L. Patterson, Godwin & Gruber, L.L.P., Dallas, for other interested parties.
Russell James DePalma, Michael P. Lynn, John T Cox, Lynn Tillotson & Pinker, LLP, Robert E. Goodfriend, McKool Smith, P.C., B. Prater Monning III, Monning & Wynne, L.L.P., Dallas, for Petitioners.
Donald E. Godwin, David L. Patterson, Chad Michael Ruback, Godwin & Gruber, L.L.P., Dallas, for Respondent.
We consider the applicability of legislative and official immunity to legislators, who are also practicing attorneys, when their public and private professional responsibilities conflict. Our legal system has long recognized the vital role of the fiduciary duties that attorneys owe their clients. Our system of government charges legislators with fidelity to the public trust in the discharge of their official duties. We affirm the vitality of both obligations. However, when these obligations conflict, we hold that legislative immunity shields lawyer-legislators from civil liability for activities within their legislative capacities.
A shareholder in a law firm, who also served as a legislator on a city council, voted in favor of an ordinance that adversely affected a firm client. The client sued the shareholder and his firm for malpractice for (1) negligently failing to inform the client in advance of the city council meeting at which the ordinance was passed and (2) breach of fiduciary duty arising from a failure to avoid or disclose a conflict of interest created by the shareholder's support of the ordinance and his vote. We conclude, based on undisputed summary judgment evidence, that notifying the client of the council meeting was outside the agreed scope of the representation, and therefore, there was no duty to inform the client of the meeting. We also conclude that the lawyer-legislator is immune from liability for any conflict of interest arising from his support of, preparation for, and vote on the ordinance. Because the client's claims against the firm derive from the actions of the shareholder, the firm is not liable for failing to disclose a conflict of interest arising from the shareholder's legislative and official actions. We reverse the court of appeals and render judgment in favor of the lawyer-legislator and the law firm.
In 1992 William Thau, an attorney and shareholder with the law firm of Jenkens & Gilchrist, P.C. (Jenkens), began his representation of Two Thirty Nine Joint Venture (239 JV). He provided legal services for 239 JV's formation and its acquisition, development, and sale of 239 acres of land in Irving, Texas. By the summer of 1994, 239 JV had sold all but 11 of the 239 acres. At the request of 239 JV, Thau reviewed a contract for the sale of the remaining 11 acres as an apartment tract and drafted an amendment to the contract. The contract provided the potential buyer with a review period and a right to reject the contract before September 17, 1994.
On Sunday, September 4, 1994, the Irving City Council posted a 72-hour notice of a meeting to consider, among other items, an ordinance that would place a 120-day moratorium on apartment construction in Irving. At the September 7, 1994 Council meeting at which the ordinance was discussed, Councilperson Harry Joe, also a shareholder at Jenkens, moved to impose the moratorium. The ordinance imposing the moratorium passed unanimously. As a result, the potential buyer of 239 JV's 11 acres cancelled the contract. Joe had not told anyone at Jenkens or 239 JV about the meeting, its agenda, or his position on the moratorium.
On November 9, 1994, Arthur Hewett and Jerry Ragsdale, principals of 239 JV, met with Joe to discuss the impact of the moratorium on 239 JV's property. Hewett and Ragsdale explained that they felt Joe should "be working to support [239 JV's] interest," stop providing leadership to those in favor of the moratorium, "stop voting against [239 JV] and stop influencing the votes of others against [239 JV]." In a memorandum to Joe, Thau later described Joe's actions as "le[a]d[ing] the charge to impose and continue the moratorium against the building of any apartment projects" in certain Irving neighborhoods. The parties acknowledge that Joe did not agree to stop supporting the moratorium at this meeting. On December 15, 1994, after the moratorium's initial 120-day period expired, the City Council voted to extend the moratorium until May 26, 1995. Joe voted in favor of the extension.
After the extension passed, 239 JV began the process of seeking a waiver from the moratorium and discussed its options with Thau and Joe. Joe indicated to 239 JV representatives that he believed the 11-acre tract would be eligible for a waiver but that to secure a waiver of the moratorium, 239 JV would need citizen support. Both Hewett and Ragsdale testified that after these conversations, they considered Joe, as well as Thau, to be 239 JV's lawyer. There is no dispute that at this time no Jenkens attorney represented 239 JV on matters before the City Council.
In anticipation of a May 18, 1995 City Council meeting at which another extension of the moratorium would be discussed, Joe used the Jenkens library to research the legality of extending the moratorium. Although the City of Irving later reimbursed Jenkens for copying and paralegal expenses, as was customary, there is no evidence that the City paid Jenkens or Joe for any legal advice. Also in anticipation of the May 18 Council meeting, Joe sent two firm-wide voice mails advising his fellow shareholders of the subject of the upcoming vote and asking if any clients would be affected. Joe also asked the Irving city attorney to provide a written opinion regarding Joe's potential conflict of interest. The city attorney's May 16, 1995 opinion concluded that no conflict existed, but it was expressly predicated on Joe's representation that at that time Jenkens was not representing any clients who had an interest in property that would be impacted by the moratorium. Two days later, the City Council voted to extend the moratorium by another unanimous vote, including Joe's.
In June 1995, 239 JV sought a waiver of the moratorium for the remaining 11-acre tract. The application for the waiver was denied by city officials, and 239 JV appealed to the City Council. On June 22, 1995, the Council voted to table the appeal. Joe attended this meeting but abstained from the Council vote. On July 6, 1995, the city attorney issued a second opinion at Joe's request concerning Joe's potential conflict of interest. Based on Joe's representation that Jenkens "had no active file nor active work for Two Thirty Nine Joint Venture in May and June, 1995," the opinion concluded that no conflict existed. However, Jenkens's billing records show that Bill Thau performed legal work for 239 JV during that period. After the Council tabled 239 JV's appeal, representatives from 239 JV met with members of Jenkens's executive committee. At this meeting, Jenkens shareholders promised to represent 239 JV in obtaining a waiver at no charge and asked 239 JV not to pursue legal action until Jenkens had an opportunity to try to secure the waiver. Jenkens was unable to secure the waiver for 239 JV, but the tract eventually sold in 1997 for an amount near the 1994 contract price.
On April 18, 1997, 239 JV filed this lawsuit. The live pleadings included claims that Joe and Jenkens owed 239 JV "a duty of ordinary care and a fiduciary duty and one of loyalty" and that the actions of Jenkens and Joe constituted a breach of those duties. The pleadings also included a section entitled "estoppel/quasi estoppel."1 239 JV described the basis of its claims as Joe's and Jenkens's failure to disclose the alleged conflict of interest created by Joe's involvement with the moratorium while Jenkens represented 239 JV in ongoing efforts to sell a tract of land for an apartment building and failure to disclose matters that were material to Jenkens's representation of 239 JV (including the Council's September 1994 meeting). 239 JV claims that timely disclosure of the meeting would have allowed it to grandfather its property before the moratorium passed.
On June 12, 1997, Joe moved for summary judgment based on official immunity. 239 JV requested a continuance to conduct discovery, which the trial court denied. The trial court granted Joe's motion for summary judgment on July 11, 1997. Over a year later, after Jenkens and 239 JV conducted discovery, Jenkens filed an amended motion for summary judgment on six grounds: (1) Joe was entitled to legislative and official immunity, and Jenkens was entitled to assert any defenses that Joe could have raised since he was responsible for all of the allegedly tortious conduct, (2) chapter 171 of the Local Government Code provides 239 JV's exclusive remedy, (3) Jenkens had no duty to influence or control Joe's actions as a public servant, (4) 239 JV cannot establish proximate cause as a matter of law because the moratorium and extensions may have passed without Joe's support, (5) 239 JV waived any conflict or claim for malpractice when it consented to representation by...
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