Schlager v. Clements

• Decision Date: 05 September 1996
• Docket Number: No. 14-94-00746-CV,14-94-00746-CV
• Parties: Rita D. SCHLAGER and Ronald J. Schlager, Appellants v. Robert CLEMENTS, Jr., Roy E. Brown, Alton C. Todd and Brown, Todd, Hagood & Davenport, Appellees. (14th Dist.)
• Court: Texas Court of Appeals

Page 183

939 S.W.2d 183

Rita D. SCHLAGER and Ronald J. Schlager, Appellants v. Robert CLEMENTS, Jr., Roy E. Brown, Alton C. Todd and Brown, Todd, Hagood & Davenport, Appellees.

No. 14-94-00746-CV.

Court of Appeals of Texas,

Houston (14th Dist.).

Sept. 5, 1996.

Rehearing Overruled Oct. 10, 1996.

Kathleen Hopkins Alsina, C. Vance Christopher, Houston, for appellants.

George W. Vie, III, Bill Griffey, Carl J. Wilkerson, Galveston, Kenneth Tekell, Houston, David M. Gunn, Bellaire, for appellees.

Before LEE, HUDSON and EDELMAN, JJ.

OPINION

LEE, Justice.

Appellants, Rita and Ronald Schlager, appeal a summary judgment in favor of appellees, Robert Clements, Jr., Roy E. Brown, Alton C. Todd and Brown, Todd, Hagood & Davenport, and judgment awarding appellees' attorney's fees. The Schlagers filed this legal malpractice action alleging negligence, violations of the Texas Deceptive Trade Practices Act (DTPA), breach of contract and gross negligence. Appellees counterclaimed under the DTPA alleging that the action was groundless and brought in bad faith or for the purpose of harassment. Appellees moved for and received a summary judgment in their favor. The trial court held a bench trial on appellees' counterclaim and awarded $50,000 in attorney's fees. In four points of error, the Schlagers appeal both the summary judgment and the judgment awarding appellees attorney's fees. We affirm.

The Schlagers owned and successfully operated two emergency medical clinics in Brazoria County. Despite the fact that the medical clinics were not being offered for sale, TDR Management, Inc. (TDR) approached the couple and offered to purchase the clinics. The parties eventually agreed on a purchase price of $465,000 for the clinics. TDR paid $65,000 in cash and the Schlagers received notes for the remaining $400,000. TDR took over the operation of the clinics and, soon thereafter, defaulted on the notes forcing the Schlagers to pursue foreclosure proceedings. TDR brought suit against the Schlagers alleging fraud in the sale of the clinics and contending that the Schlagers were interfering with the operation of the clinics. To assist in defending the matter, the Schlagers hired Robert Clements of Brown, Todd, Hagood & Davenport. Clements filed a counterclaim on behalf of the Schlagers seeking to recover on the unpaid notes.

TDR was also a general partner of Consolidated Medical Clinic Emergency Centers, Ltd., (Consolidated) which owned and operated five medical clinics in Houston. While Consolidated had a bankruptcy reorganization pending, the Sisters of Charity to the Incarnate Word entered into negotiations with TDR and Consolidated for the purchase of all seven clinics. During this same time, TDR attempted to settle with the Schlagers so that the sale to the Sisters of Charity could be completed. The Schlagers alleged that they instructed Clements to find out where TDR was getting the money for the proposed settlement, but TDR refused to provide the requested information. Eventually, the parties agreed on a settlement of $300,000, less attorney's and broker's fees of $30,000. The Schlagers presented some evidence that they requested assurances that TDR was not negotiating with a third-party for a sale of the clinics for more than $300,000. The Schlagers contend that despite this request, the settlement was expressly contingent on TDR's sale of the clinics for no more than $300,000. The parties ultimately discovered that the seven clinics were sold for $1.3 million of which $300,000 was allocated to the two Brazoria clinics previously owed by the Schlagers. The Schlagers eventually became dissatisfied with Clements' representation of them and brought this legal malpractice action.

In their first point of error, the Schlagers contend that the trial court improperly granted appellees a summary judgment. The standard of review to be followed in a summary judgment is well-established. The movant has the burden of showing that there is no genuine issue of material fact and that he is entitled to judgment as a matter of law. In deciding whether or not there is a disputed material fact issue precluding summary judgment, evidence favorable to the non-movant will be taken as true. Every reasonable inference must be indulged in favor of the non-movant and any doubts are resolved in his favor. Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548-49 (Tex.1985); Montgomery v. Kennedy, 669 S.W.2d 309, 310-11 (Tex.1984); Karl v. Oaks Minor Emergency Clinic, 826 S.W.2d 791, 794 (Tex.App.--Houston [14th Dist.] 1992, writ denied).

Summary judgment for the defendant is proper when the proof shows that no genuine issue of material fact exists on one or more of the essential elements of the plaintiff's cause of action, or when the defendant establishes each element of an affirmative defense as a matter of law. Black v. Victoria Lloyds Ins. Co., 797 S.W.2d 20, 27 (Tex.1990). A defendant who moves for summary judgment has the burden of showing as a matter of law that no material issue of fact exists on the plaintiff's cause of action. Arnold v. National County Mut. Fire Ins. Co., 725 S.W.2d 165, 166-67 (Tex.1987).

The function of a summary judgment is not to deprive a litigant of its right to a full hearing on the merits of any real issue of fact but to eliminate patently unmeritorious claims and untenable defenses. Dallas Cent. Appraisal Dist. v. G.T.E. Directories Corp., 905 S.W.2d 318, 319 (Tex.App.--Dallas 1995, writ denied). The purpose of the summary judgment rule is not to provide either a trial by deposition or a trial by affidavit, but to provide a method of summarily terminating a case when it clearly appears that only a question of law is involved and that no genuine issue of material fact remains. Id. at 320.

In a legal malpractice case, the plaintiff must prove a duty owed to him by the defendant, a breach of that duty, injury proximately caused by the breach and damages. Peeler v. Hughes & Luce, 909 S.W.2d 494, 496 (Tex.1995). A lawyer in Texas is held to the standard of care which would be exercised by a reasonably prudent attorney, based on the information the attorney has at the time of the alleged act of negligence. Dyer v. Shafer, Gilliland, Davis, McCollum & Ashley, Inc., 779 S.W.2d 474, 477 (Tex.App.--El Paso 1989, writ denied) (citing Cosgrove v. Grimes, 774 S.W.2d 662 (Tex.1989)); Cook v. Irion, 409 S.W.2d 475, 477 (Tex.Civ.App.--San Antonio 1966, no writ). To prevail in a legal malpractice action, a plaintiff must prove "a suit within a suit" by demonstrating that he would have prevailed in the underlying action but for his attorney's negligence. Mackie v. McKenzie, 900 S.W.2d 445, 449 (Tex.App.--Texarkana 1995, writ denied). Although proximate cause in a legal malpractice action is usually a question of fact, it may be determined as a matter of law if the circumstances are such that reasonable minds could not arrive at a different conclusion. Id. If the attorney demonstrates that his failure to act was not the cause of any damages to the client, a summary judgment may be proper. See id. (affirming summary judgment because replacement counsel negotiated a settlement under which the client collected more than she would have received had the will been set aside in a will contest suit; the client suffered no damages as the result of the attorney's conduct resulting in a failure of the client's will contest); MND Drilling Corp. v. Lloyd, 866 S.W.2d 29 (Tex.App.--Houston [14th Dist.] 1987, no writ) (attorney entitled to summary judgment in legal malpractice case because plaintiff could not show that it would have prevailed if attorney had filed a response to a motion for summary judgment in the underlying action).

Appellees moved for summary judgment contending that Clements' activities did not cause the Schlagers any injury. Appellees' motion states that it was entitled to summary judgment because:

1. Had the Schlagers learned of the $1.3 million purchase price for all seven clinics, they would not have settled the TDR lawsuit.

2. If the Schlagers had not settled the TDR lawsuit, TDR would have filed for bankruptcy relief and the Sisters' of Charity purchase of the clinics would not have occurred.

3. If TDR had filed for bankruptcy, the Schlagers would not have received more than $270,000.

In support of its motion, appellees' presented the deposition testimony of Rita Schlager, Craig Cavalier and Susan Peters. Rita Schlager testified that if she and Ronald had known about the Sisters' of Charity pending sale and purchase price, they would not have settled with TDR for $300,000. Cavalier, a bankruptcy and commercial litigation attorney, testified in his deposition that if he was representing TDR and the Schlagers refused to settle, he would have recommended that TDR file bankruptcy. He also testified that Clements did a "good job" of getting as much as he could for the Schlagers because if TDR had filed for bankruptcy, the purchase price of the two Brazoria County clinics would have been adversely affected. The Sisters of Charity had allocated $300,000 of the total purchase price of $1.3 million to the two clinics previously owned by the Schlagers. Cavalier testified that this allocation was done internally by the Sisters of Charity so that it could establish a purchase price for the five Houston clinics. He opined that if less than $1 million had been allocated to the five Houston clinics, the settlement probably would not have been completed because the creditors of Consolidated would not have agreed to the confirmation of Consolidated's bankruptcy plan. Cavalier stated, "there w[ere] no excess funds that would have gone back to the general and limited partners which could have been reallocated to the purchase price of the two clinics." Cavalier concluded his deposition by testifying that the pleadings available to Clements at the time of the settlement and closing on the sale of the clinics,

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