Shankles v. J. Don Gordon, Hynds & Gordon P.C.
| Decision Date | 27 August 2018 |
| Docket Number | No. 05-16-00863-CV,05-16-00863-CV |
| Parties | MARY HARP SHANKLES, Appellant v. J. DON GORDON, HYNDS & GORDON P.C., AND DAVID N. MCNEES D/B/A LAW OFFICES OF DAVID N. MCNEES, Appellees |
| Court | Texas Court of Appeals |
On Appeal from the County Court at Law No. 5 Dallas County, Texas
Before Justices Lang, Evans, and Schenck
Opinion by Justice Lang
This case involves a complicated web of claims, counterclaims, cross-claims, intervening claims, and bankruptcy proceedings, including adversary proceedings, that commenced in 2004.1 All proceedings arose from the probate of Douglas Lee Shankles's (the decedent) will, disputes involving his widow, Mary Harp Shankles (Shankles), and claims Shankles made against her former legal counsel. The litigation worked its way through the various proceedings culminating in the county court's final judgment.2 We address those proceedings since the county court's decision is largely based upon what transpired in the other proceedings.
On appeal from the county court's judgment, Shankles raises four issues, arguing the county court erred when it: (1) dismissed her claims for breach of fiduciary duty under section 27.005 of the Texas Civil Practice and Remedies Code, which is referred to as the Texas Citizens Participation Act;3 (2) dismissed her claims for breach of fiduciary duty under section 27.005 of the Texas Citizens Participation Act because she established a prima facie case for each essential element of her causes of action; (3) granted summary judgment dismissing her claims for professional negligence because there were genuine issues of material fact precluding summary judgment; and (4) awarded J. Don Gordon, Hynds & Gordon P.C., and David N. McNees d/b/a Law Offices of David N. McNees their attorneys' fees pursuant to section 27.009(a)(1) of the Texas Citizens Participation Act because it dismissed her claims for breach of fiduciary duty and breach of the implied duty of good faith and fair dealing.4 In their responses, Gordon and Hynds & Gordon, and McNees challenge Shankles's standing to bring her professional negligence, breach of fiduciary duty, and breach of the implied covenant of good faith and fair dealing claims against them in the county court.5
We conclude Shankles does not have standing to bring her claims for breach of fiduciary duty, breach of the implied covenant of good faith and fair dealing, and professional negligence. The county court's order dismissing Shankles's claims for breach of fiduciary duty and breach of the implied covenant of good faith and fair dealing under the Texas Citizens Participation Act is vacated. Also, the county court's order granting Gordon and Hynds & Gordon's, and McNees's motions for summary judgment on Shankles's claims for professional negligence is vacated. The cause is dismissed for want of subject-matter jurisdiction.
Below, we describe separately the factual and procedural histories in the various courts in which proceedings involving this matter have taken place. For the most part, we describe the factual and procedural histories in chronological order. However, we note that the record on appeal contains only partial records of the proceedings that occurred in the probate court, district court, bankruptcy court, and county court, so we describe what transpired to the extent shown by the limited record.
The facts common to all proceedings show that in 1977 and 1978, the decedent acquired a total of 187 acres of real property located at 7782 Plainview Road, Sherman, Grayson County, Texas (187 acres). Shankles married the decedent in 1992. They did not have any children together, but the decedent had five children from a previous marriage. Although the decedent and Shankles lived on the 187 acres during their marriage, it was at all times the decedent's separate property. In 2003, the decedent was diagnosed with cancer. He died on January 14, 2004.
On January 23, 2004, Shankles retained McNees to probate the decedent's will. Then, on February 4, 2004, McNees filed an application to probate the decedent's will. In December 2006, Shankles retained Gordon and his law firm, Hynds & Gordon, in addition to McNees, to represent her in the probate matter. The probate case of that will was contested by the decedent's children until October 10, 2008, when the parties announced to the probate court that they reached a settlement. On October 13, 2008, the probate court signed an order memorializing the parties' agreement pursuant to Rule 11.6 Meanwhile, the parties worked to prepare a detailed, written settlement agreement. On December 12, 2008, the probate court issued an order admitting to probate a 1993 will.7 Shankles obtained separate counsel, David Stagner, to review the terms of the proposed written settlement agreement. After his review, Shankles decided to go forward with the settlement agreement. Finally, on August 14, 2009, Shankles and the decedent's children signed a written settlement agreement (2009 settlement agreement), which specified, in part, that it was retroactively effective as of October 9, 2008. Also, in the 2009 settlement agreement, the parties agreed to the admission of the 1993 will for probate with certain agreed revisions to its terms, including that Shankles would receive ownership of the 187 acres effective as of January 14, 2004, which was the day of the decedent's death.8 On August 21, 2009, in accordance with the 2009 settlement agreement, the 187 acres was conveyed by the executrix of the estate to Shankles through a "distribution deed" (2009 distribution deed) that was also made effective retroactively to January 14, 2004. Shankles would later claim all of this 187 acres as her "homestead" as of January 14, 2004.
Gordon, Hynds & Gordon, and McNees originally represented Shankles in the will contest action on a contingency fee basis. However, Shankles did not have any liquid assets with which to pay her attorneys. As a result, Gordon, Hynds & Gordon, and McNees requested that Shankles execute promissory notes secured by 879 of the 187 acres for repayment of their fees. On August 14, 2009, Shankles executed two separate promissory notes (2009 promissory notes). Under the terms of the 2009 promissory notes, the principal amount Shankles agreed to pay to Hynds & Gordon was $221,910.68 (the first promissory note) and the amount payable to McNees was $212,204.62 (the second promissory note). According to the terms of the 2009 promissory notes, the principal amount was due on the earlier date of either the sale of the 87 acres securing the note or August 14, 2010. Also, Shankles executed an affidavit, disclaiming a homestead interest in the 87 acres and stating that property was used as pasture.
In 2011, Hynds & Gordon filed suit against Shankles to recover on the first promissory note. The suit alleged Shankles was in default on the first promissory note and owed it the full principal of the note, $221,910.68. Also, it sought "foreclosure of [Hynds & Gordon's] security interest in the collateral." On July 1, 2011, McNees filed a petition for intervention, alleging Shankles was in default of the second promissory note and she owed him the full principal of $212,204.62. McNees also sought foreclosure of his security interest in the 87 acres specified in the deed of trust securing Shankles's promissory note. On July 2, 2011, Shankles filed her first amended counterclaims against Hynds & Gordon and third-party petition against Gordon and Tohnie E. Hynds, alleging breach of fiduciary duty, violations of the Texas Deceptive Trade Practices Act, and professional negligence. On September 21, 2011, Shankles filed a counterclaim against McNees, alleging claims for breach of fiduciary duty and professional negligence. As to the counterclaims and third-party claims for breach of fiduciary duty and professional negligence, Shankles alleged: (1) when they "caused and instructed" her to waive her homestead rights, they breached their fiduciary duties "by placing [their] own financial interest above that of [their] client[, Shankles]"; and (2) Gordon, Hynds & Gordon, and McNees "drafted or accepted a Deed on property distributed to [Shankles] which does not convey marketable title to her" and "[f]urther litigation [would] likely be required to cure the title defect created by [their] [professional] negligence."
On October 5, 2011, Shankles filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code.10 On December 7, 2011, the district court case was removed to the bankruptcy court as an adversary proceeding. On February 15, 2012, Hynds & Gordon and McNees filed separate proofs of claim in the bankruptcy case for the sums due on the 2009 promissory notes. On January 24, 2012, Hynds & Gordon filed its amended objections to Shankles's real property exemption and on January 25, 2012, McNees filed its amended objections on the same basis in the adversary proceeding.11 Both Hynds & Gordon and McNees objected to Shankles's real property exemption on the following bases: (1) Shankles, as a single person, was entitled to exempt only 100 acres as a homestead under Texas law; (2) Shankles was bound by her representation in her affidavit that 87 acres of the 187 acres were not her homestead; and (3) under section 522(p)(1) of the bankruptcy code Shankles's homestead exemption was "capped" at $146,450.12 On February 29, 2012, based on the trustee's motion, the bankruptcy court signed an order converting Shankles's bankruptcy to a proceeding under Chapter 7.13 The trustee's motion was agreed to by Shankles, Hynds & Gordon, McNees and other creditors. Also, in the adversary proceeding, the trustee objected to Shankles's claimed homestead exemption on the grounds that it was "capped" under section 522(p)(1) of...
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