Latham v. Castillo

• Decision Date: 25 August 1998
• Docket Number: No. 96-0986,96-0986
• Citation: 972 S.W.2d 66
• Parties: B. Mills LATHAM, Law Offices of B. Mills Latham, P.C., and Latham and Moss, Petitioners, v. Ernest M. CASTILLO and Audona A. Castillo, individually and as representatives of the Estate of Kay Castillo, deceased, Respondents.
• Court: Texas Supreme Court

Page 66

972 S.W.2d 66

B. Mills LATHAM, Law Offices of B. Mills Latham, P.C., and Latham and Moss, Petitioners, v. Ernest M. CASTILLO and Audona A. Castillo, individually and as representatives of the Estate of Kay Castillo, deceased, Respondents.

No. 96-0986.

Supreme Court of Texas.

Argued April 23, 1997.

Decided June 23, 1998.

Rehearing Overruled Aug. 25, 1998.

Deborah R. Sunderman, Corpus Christi, Gaston M. Broyles, Jr., Dallas, for Petitioners.

John Gano, Stephen M. Gano, Houston, Errlinda M. Castillo, Corpus Christi, for Respondents.

SPECTOR, Justice, delivered the opinion of the Court, in which PHILLIPS, Chief Justice, Baker, Abbott and Hankinson, Justices, join.

In this case, we consider whether an attorney's affirmative misrepresentations to his clients that cause the clients to lose their day in court can constitute unconscionable action under the Deceptive Trade Practices-Consumer Protection Act. The court of appeals answered in the affirmative. We affirm the court of appeals' remand of the DTPA claim, and we reverse and render judgment that the Castillos take nothing on their remaining claims.

I.

On January 3, 1986, Audona Castillo prematurely gave birth to twin daughters, Kay and Sara, at Taft Hospital. Born with birth defects, the girls were immediately transferred to Driscoll Foundation Children's Hospital where both underwent surgery. Sara died approximately one week later. The Castillos then filed a medical malpractice suit against Driscoll Hospital on Sara's behalf and received a $6,000,000 default judgment. Later, their attorney, Rene Rodriguez, settled the case for $70,000.

Kay Castillo, the surviving twin, died on February 14, 1988. In December 1989, the Castillos hired B. Mills Latham to file a legal malpractice claim against Rodriguez for settling the default judgment and to pursue a medical malpractice claim against Driscoll Hospital for Kay's death. While Latham settled the legal malpractice claim against Rodriguez for $400,000, the statute of limitations ran on the Castillos' medical malpractice claim on February 14, 1990 without suit being filed. The Castillos then sued Latham for legal malpractice because Latham failed to file the medical malpractice action for Kay's death within the two-year statute of limitations. The Castillos also sued Latham for unconscionable action under the DTPA because Latham affirmatively represented to them that he had filed and was actively prosecuting the medical malpractice claim. Finally, the Castillos alleged that Latham wrongfully misrepresented himself, breached the contract of employment, and was negligent.

After the Castillos presented their case to a jury, the trial court granted a directed verdict for Latham that the Castillos take nothing. The court of appeals reversed and remanded, holding that the Castillos had presented some evidence to prevent a directed verdict on their DTPA claim. The court of appeals also remanded the "remaining theories of recovery"--fraudulent misrepresentation and breach of contract--without discussion. The court of appeals affirmed the directed verdict on the negligence claim, however, because the Castillos did not present evidence that but for Latham's negligence the medical malpractice suit would have been successful. ¹ .

The central question before us is whether the Castillos have presented some evidence to support each element of their DTPA cause of action. We hold that they have done so.

II.

The trial court granted a directed verdict against the Castillos on all claims. Accordingly, we must view the evidence in the light most favorable to them and indulge every reasonable inference in their favor. Harbin v. Seale, 461 S.W.2d 591, 592 (Tex.1970). If reasonable minds could differ on controlling facts, the trial court errs in refusing to submit the issues to the jury. Collora v. Navarro, 574 S.W.2d 65, 68 (Tex.1978). We consider the DTPA claim first. ²

A.

The Castillos alleged Latham's conduct constituted an "unconscionable action or course of action" that violated the DTPA. TEX. BUS. & COM.CODE § 17.50(a)(3). Under section 17.45, "unconscionable action or course of action" means "an act or practice which, to a person's detriment: (A) takes advantage of the lack of knowledge, ability, experience, or capacity of a person to a grossly unfair degree; or (B) results in a gross disparity between the value received and consideration paid, in a transaction involving transfer of consideration." Id. § 17.45(5). The Castillos have relied only on subsection (A) in asserting that Latham's actions were unconscionable. To be actionable under subsection (A), the resulting unfairness must be "glaringly noticeable, flagrant, complete and unmitigated." Chastain v. Koonce, 700 S.W.2d 579, 584 (Tex.1985).

The Legislature's stated public policy in enacting the DTPA is to "protect consumers against false, misleading, and deceptive business practices [and] unconscionable actions." TEX. BUS. & COM.CODE § 17.44. To achieve that goal, the Legislature has mandated that the Act shall be "liberally construed and applied." Id. Therefore, we must view Latham's actions with this legislative directive in mind.

Attorneys can be found to have engaged in unconscionable conduct by the way they represent their clients. See, e.g., DeBakey v. Staggs, 605 S.W.2d 631, 633 (Tex.Civ.App.--Houston [1st Dist.] 1980), writ ref'd n.r.e. per curiam, 612 S.W.2d 924 (Tex.1981) (finding an attorney unconscionably took advantage of a client to a grossly unfair degree when the attorney knowingly failed to obtain in a timely manner a name change for the client's minor child). The Castillos assert that Latham acted unconscionably in representing that he was actively prosecuting their medical malpractice claim for Kay's death when in fact he was not.

The Castillos depended on Latham to file suit against the hospital for Kay's death. As Mrs. Castillo testified, "You trust in a professional because they know more than you." The record reveals, and Latham's attorney conceded at oral argument before this Court, that there is some evidence that Latham told the Castillos he had filed the medical malpractice claim when in fact he had not. Although he affirmatively represented to them that he was actively pursuing the claim, Latham never did file the suit and limitations ran. As a result, the Castillos lost the opportunity to prosecute their claim against the hospital for Kay's death.

Viewing Latham's actions in the light we must, his actions are similar to the attorney's conduct in DeBakey. Latham took advantage of the trust the Castillos placed in him as an attorney. Therefore, the Castillos have presented some evidence that they were taken advantage of to a grossly unfair degree.

Latham argues, however, that the Castillos' DTPA claim is essentially a dressed-up legal malpractice claim. Therefore, he asserts, the Castillos must prove that they would have won the medical malpractice case for Kay's death in order to recover. Because they did not present any evidence on this, Latham argues, the Castillos cannot recover. We disagree.

The legislative intent in enacting the DTPA was to provide plaintiffs a remedy where the common law fails. See Woo v. Great Southwestern Acceptance Corp., 565 S.W.2d 290, 298 (Tex.Civ.App.--Waco 1978, writ ref'd n.r.e.). Section 17.43 states that the remedies provided by the Act "are in addition to any other procedures or remedies provided for in any other law." TEX. BUS. & COM.CODE § 17.43 (emphasis added). Moreover, the Legislature mandates that the DTPA is to be "liberally construed and applied to promote its underlying purposes." Id. § 17.44. Recasting the Castillos' DTPA claim as merely a legal malpractice claim would subvert the Legislature's clear purpose in enacting the DTPA--to deter deceptive business practices.

If the Castillos had only alleged that Latham negligently failed to timely file their claim, their claim would properly be one for legal malpractice. However, the Castillos alleged and presented some evidence that Latham affirmatively misrepresented to them that he had filed and was actively prosecuting their claim. It is the difference between negligent conduct and deceptive conduct. To recast this claim as one for legal malpractice is to ignore this distinction. The Legislature enacted the DTPA to curtail this type of deceptive conduct. Thus, the DTPA does not require and the Castillos need not prove the "suit within a suit" element when suing an attorney under the DTPA. The Castillos have presented some evidence of unconscionable action.

It is not enough that the Castillos merely prove an unconscionable action or course of action by Latham, however. Latham's unconscionable action must have been the producing cause of actual damages. TEX. BUS. & COM.CODE § 17.50(a). Latham argues that the Castillos cannot recover mental anguish damages under the DTPA without first proving an economic injury. We disagree.

Section 17.50(a) of the DTPA, as it appeared when this suit was filed, indicated that "[a] consumer may maintain an action where any of the following constitute a producing cause of actual damages. " TEX. BUS. & COM.CODE § 17.50(a) (emphasis added). ³ We have stated that the term "actual damages," as used in the DTPA, means those recoverable at common law. Brown v. American Transfer & Storage Co., 601 S.W.2d 931, 939 (Tex.1980). It is axiomatic that mental anguish damages are actual damages recoverable at common law for "some common law torts ..., and by analogy for knowing violations of certain statutes such as the Deceptive Trade Practices Act." City of Tyler v. Likes, 962 S.W.2d 489, 495 (Tex.1997) (citations omitted). Therefore, the Castillos do not have to first prove that they have suffered economic damages in order to recover mental anguish damages. The Castillos have satisfied their burden on the damages element of a DTPA cause of action if they have presented some evidence of mental anguish.

In...