Parker v. Carnahan

• Decision Date: 11 April 1989
• Docket Number: No. 9681,9681
• Parties: Martha PARKER, Appellant, v. Michael CARNAHAN, The Law Firm of Smith, Schulman, Rawitscher & Carnahan, Robert E. Hopper, The Law Firm of Stanley C. Frank & Associates, and William Jackson, Appellees.
• Court: Texas Court of Appeals

Page 151

772 S.W.2d 151

Martha PARKER, Appellant, v. Michael CARNAHAN, The Law Firm of Smith, Schulman Rawitscher & Carnahan, Robert E. Hopper, The Law Firm of Stanley C. Frank & Associates and William Jackson, Appellees.

No. 9681.

Court of Appeals of Texas Texarkana.

April 11, 1989.

Rehearing Denied May 16, 1989.

Robert D. Topping, Chamberlain, Hrdlicka, White, Johnson, Houston, for Martha Parker.

Jack E. Urquhart, Holtzman & Urquhart, Houston, for Michael Carnahan.

William E. Matthews, Sewell & Riggs, Houston, for Robert E. Hopper.

Wilton F. Chalker, Lorance & Thompson, Houston, for William Jackson.

GRANT, Justice.

Martha Parker appeals from an adverse summary judgment granted to Robert Hopper and the law firm of Stanley C. Frank & Associates (hereafter referred to collectively as the Hopper law firm), Michael Carnahan and the law firm of Smith, Schulman, Rawitscher & Carnahan (hereafter referred to collectively as the Carnahan law firm), and accountant William Jackson. Martha Parker contends in her sole point of error that summary judgment was improperly granted to the appellees.

Martha Parker was married to Dr. John Parker, a dentist, for the second time between 1976 and 1985. Her husband had failed to file federal income tax returns between 1978 and 1983 inclusive. She had signed blank returns, had given him her withholding information, and had believed that he was filing the returns. Dr. Parker was indicted for failure to file. He went to his attorney, Robert Hopper, and explained the situation. Hopper told him that he did not handle this type of case and referred him to Carnahan, a criminal defense specialist. As part of his defensive strategy, Michael Carnahan hired William Jackson to prepare tax returns for the missing years. Jackson prepared joint returns, as had been filed by the Parkers in the previous years.

Dr. Parker brought his wife to Carnahan's office and Carnahan informed her of the charges pending against Dr. Parker. He also told her that because she was an innocent spouse there would probably be no criminal charges filed against her. She was told that the returns needed to be signed and filed. She did a rough recomputation of the total amounts shown owing by the returns and signed all the returns, which were then promptly filed.

When a tax return is filed "married filing jointly" (as in this case), the spouses are jointly and severally liable for all taxes and for any assessed penalties and interest. If the return had been prepared as "married filing separately," Martha Parker would have been liable for half of the tax owed by the community, i.e. based upon the community property income of both spouses, but she would not have been jointly and severally liable for penalties and interest incurred by her husband's nonpayment. As her salary had been withheld properly, her personal total liability would have been much lower as a married person filing separately. See 33 Am.Jur.2d Federal Taxation §§ 1390-1399 (1989).

The Parkers divorced for a second time in January of 1982. The divorce decree provided that Dr. Parker would pay all of the couple's income tax liabilities. Dr. Parker went into bankruptcy and did not pay the taxes, penalties and interest owing. Martha Parker's separate-property home was sold by the IRS in a forced sale. The amount from the sale would have extinguished the tax liability she would have incurred had she filed separately, but because of the joint return, she remained liable for over $100,000 after the sale.

Martha Parker filed this suit contending that the attorneys were negligent in failing to advise her of her potential liability under a joint return and its possible reduction by filing separately, because she was effectively their client; that alternatively, if she were not their client, they were negligent in failing to advise her to seek legal counsel. She further alleged that the attorneys had exerted undue influence on her or had behaved in a fraudulent fashion to obtain her signature on the returns. She also alleged the defendants had violated the Deceptive Trade Practices Act, Tex.Bus. & Com.Code Ann. §§ 17.41, et seq. (Vernon 1987), by their representations and omissions.

A summary judgment will be denied unless the movants clearly establish their right to it as a matter of law. The movants have the burden to show that there is no issue of material fact and that they are entitled to judgment as a matter of law. In deciding whether there is a disputed material fact issue, we take as true evidence favorable to the nonmovant. Every reasonable inference is indulged in favor of the nonmovant and all doubts are resolved in the nonmovant's favor. Wilcox v. St. Mary's University of San Antonio, 531 S.W.2d 589 (Tex.1975); Tex.R.Civ.P. 166a.

The appellees contend that the depositions of appellant's experts, Steele and Blask, along with the attachment to Parker's motion for a new trial, were untimely filed and thus cannot be considered by this Court in its review of the judgment. Texas Rule of Civil Procedure 166a(c) requires that such document be filed more than seven days prior to the day of hearing. The Steele and Blask depositions were filed after the hearing on the motion for summary judgment and after their attorney had been advised by the court that summary judgment had been granted. The depositions were undisputedly filed late under the rule. Late filing of a response is discretionary with the trial court. INA of Texas v. Bryant, 686 S.W.2d 614, 615 (Tex.1985). Before a late-filed response will be considered, the record must affirmatively indicate the trial court's acceptance of the late-filing. Goswami v. Metropolitan Savings and Loan, 751 S.W.2d 487 (Tex.1988). The record does not indicate that the trial court gave its permission to late-file these documents. Thus, they were not before the trial court and will not be considered by this Court in conducting its review.

The Hopper law firm filed the first motion for summary judgment. In support of its motion for summary judgment, the Hopper law firm attached excerpts from the deposition of Martha Parker, William Jackson, Michael Carnahan, Robert E. Hopper and Stanley C. Frank, Jr. William Matthews, the Hopper law firm's attorney, swears the excerpts are true and correct copies of portions of the depositions. A copy of the Parkers' 1986 divorce decree is also attached and sworn to be true and correct by the attorney. The Carnahan law firm and Jackson also filed summary judgment motions. They did not duplicate all of the excerpts from the depositions that had been filed by the Hopper firm. We have found no case requiring such duplication of summary judgment evidence which is already before the court. We therefore considered all of the summary judgment evidence which was appropriately before the trial judge at the time the summary judgment was granted.

We shall first look at the summary judgment proof to determine if there is a fact issue as to whether the attorneys and their respective law firms represented Martha Parker as a client. For the most part, the facts are not disputed. The following is all of the testimony from Martha Parker's deposition about the occurrences upon which she relies to create liability on the part of the appellees:

Q When was the first time that you realized that Dr. Parker had gotten into serious criminal trouble with the IRS in the failure to file returns?

A In June of 1984.

Q What was it that brought this to your attention?

A He asked me to go with him and meet with his attorneys. And I asked him what it was about. He said just some tax problems. And his attorneys told me at the meeting about his problems.

....

Q Where was this meeting?

A It was in Mr. Hopper's office.

Q Had you ever been in that office before?

A No.

Q Had you ever met Mr. Hopper or anyone else that you met that day?

A No.

Q Who was at the meeting?

A Mr. Carnahan, Mr. Hopper, my husband, and me.

Q What was Dr. Parker's explanation to you?

A He never gave me an explanation. His attorneys' explanation to me was that he was so concerned about the problems we were having with our son, that he just sort of overlooked filing them.

....

Q How long did this meeting last?

A I don't remember. Probably less than two hours.

....

Q Did he say how long he had been seeing his attorneys or how long they had been representing him in this criminal matter?

A No. His attorneys mentioned at the meeting when the indictment was handed down, but I don't remember.

....

Q Do you have a good memory of this meeting and what was said? Because I would like to ask you to recount to me all that you can recall at this time.

A Well, I'm sure I can't remember everything that was said. But when I first went in, they asked me if I knew why I was there. I said not really.

So, they told me about the indictment, told me that there was a very good chance that my husband would be sent to jail for this if we could not prevail on the sympathies of the Court, and that they were hoping to show that because of his mental state, he just neglected to file these.

That he was not trying to evade the taxes or get out of paying them or wasn't protesting the taxes, just that he had not filed the returns and that he would be of much more use to the community if he were out of jail and working than if he were in the penitentiary.

They told me that they were trying to work out a method of payment with the IRS, and I asked them how much money was involved. They said they didn't have an exact amount at that time. They knew the amount of the taxes, but they did not know the amount of the penalties and interest.

They said that the lawsuit that had been filed covered only three of those years and that they hoped, by getting the returns filed, they could avoid another lawsuit covering the remainder of the years.

Q So they wouldn't re-indict him for the other three years?

A Yes. That's the essence of the meeting.

Q How did the...