The Vacek Group, Inc. v. Clark

• Decision Date: 14 November 2002
• Docket Number: No. 01-00-00890-CV.,01-00-00890-CV.
• Citation: 95 S.W.3d 439
• Parties: THE VACEK GROUP, INC. f/k/a Vacek-Crawford, Inc., Appellant, v. Douglas C. CLARK and Benckenstein, Norvell & Nathan, L.L.P., Appellees.
• Court: Texas Court of Appeals

95 S.W.3d 439

THE VACEK GROUP, INC. f/k/a Vacek-Crawford, Inc., Appellant, v. Douglas C. CLARK and Benckenstein, Norvell & Nathan, L.L.P., Appellees.

No. 01-00-00890-CV.

Court of Appeals of Texas, Houston (1st Dist.).

November 14, 2002.

Simon H. Hughes, Gilbert & Gilbert, Angleton, for Appellant.

Sam A. Houston, Cruse, Scott, Henderson & Allen, Houston, for Appellees.

Panel consists of Justices MIRABAL, NUCHIA, and RADACK.

OPINION

SHERRY J. RADACK, Justice.

In this appeal of a legal-malpractice suit, we revisit — in light of the supreme court's opinion in Murphy v. Campbell — whether the Hughes tolling rule applies to malpractice claims arising out of transactional work performed by attorneys that occurs before litigation commences. Murphy, 964 S.W.2d 265, 272 (Tex.1997); Hughes v. Mahaney & Higgins, 821 S.W.2d 154, 157 (Tex.1991). We conclude that Murphy dictates that the Hughes tolling rule does not apply in such situations.

Appellant The Vacek Group, Inc. f/k/a Vacek-Crawford, Inc. sued appellees Douglas C. Clark (Vacek's former lawyer) and Benckenstein, Norvell & Nathan, L.L.P. (Vacek's former law firm). After a bench trial, the district court rendered a take-nothing judgment. Vacek brings six issues on appeal, primarily challenging the sufficiency of the evidence. We affirm.

Facts

Vacek is a forensic engineering company. The original shareholders were Sam Vacek, Donna Vacek, and Jim Crawford. After an altercation between Donna Vacek and Crawford, the shareholders agreed to a "corporate divorce" in which Crawford would resign as a director and sell his shares to Sam and Donna. Vacek hired Clark and his law firm to carry out this corporate divorce.

Clark drafted an April 15, 1997 agreement in principle, which was described in the document as a "preliminary agreement." According to the Agreement, Crawford was to transfer his shares of Vacek to Sam and Donna in exchange for Vacek's funding Crawford's simplified employee pension plan. Clark did not include language in the Agreement that released any potential claims by Crawford against Vacek. The Agreement was signed by Sam, Donna, and Crawford.

After disputes arose over compliance with the Agreement, Vacek sent Clark the following July 25, 1997 letter:

Based on recent events and the demand letter sent by the attorney for Jim Crawford yesterday it is obvious we are headed for court. We have now hired litigation counsel to respond to this letter and make similar demands on our behalf. You have not done this as our supposed corporate counsel.

Since it appears that the April agreement you wrote for both sides is at the center of this dispute, you should not have any more involvement in this issue.

Therefore, you are instructed not to release any information or have any discussions regarding any business of our corporation to anyone. This includes Jim Crawford and counsel for Jim Crawford.

Should you wish to discuss this matter further you may contact our attorney....

Crawford later filed suit against Vacek, which Vacek settled for $24,000.

On July 27, 1999, Vacek sued Clark and his law firm for negligence, breach of fiduciary duty, breach of contract, and violation of the Deceptive Trade Practices-Consumer Protection Act. See TEX. BUS. & CON CODE ANN. §§ 17.41-.63 (Vernon 1987 & Supp.2002). Clark and the law firm answered and pleaded the affirmative defense of limitations. See TEX.R. CIV. P. 94. After a bench trial, the district court rendered a take-nothing judgment and filed findings of fact and conclusions of law. In addition to holding against Vacek on the merits, the district court found that Vacek's claims against Clark and his law firm accrued before July 27, 1997 and concluded that those claims were barred by the statute of limitations. See generally TEX. CIV. PRAC. & REM.CODE ANN. § 16.003 (Vernon Supp.2002) (two-year limitations period); Willis v. Maverick, 760 S.W.2d 642, 644 (Tex.1988).

Discussion

In issue one, Vacek challenges the factual sufficiency of the district court's discovery-rule finding that Vacek's malpractice claims against Clark and his law firm accrued before July 27, 1997. We review a trial court's findings of fact for factual sufficiency under the same standard as a jury verdict. Anderson v. City of Seven Points, 806 S.W.2d 791, 794 (Tex. 1991). Because Clark and his law firm had the burden at trial to prove limitations, we will set aside the findings if the supporting evidence is so weak as to be clearly wrong and manifestly unjust. See Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986).

Vacek argues that the statute of limitations does not apply for two reasons.¹

Tolling of limitations due to failure to disclose material fact

First, Vacek claims the statute of limitations was tolled because Clark performed work for Vacek after July 27, 1997, billed for that work, and failed to disclose a material fact — that execution of the Agreement would not protect Vacek from subsequent claims because the Agreement did not include a release. McClung v. Johnson, 620 S.W.2d 644, 647 (Tex.Civ. App.-Dallas 1981, writ ref'd n.r.e.) (holding limitations tolled until termination of attorney-client relationship when attorney fails to disclose material fact), disapproved on other grounds by Willis v. Maverick, 760 S.W.2d 642, 645 n. 2 (Tex.1988). Vacek argues that Clark's post-July 27, 1997 work included the preparation of a July 28, 1997 letter in which Clark identified himself as "the corporate attorney" and an August 22, 1997 letter regarding moving Crawford's furniture from Vacek's office and Vacek funding Crawford's pension plan.

Even if we were to assume Clark and his law firm had a duty to include a release in a "preliminary agreement," Vacek would still have had the burden of proof at trial regarding Clark's and his law firm's alleged failure to disclose. On appeal, Vacek does nothing more than make the conclusory statement that "Clark breached his duty to disclose facts material to his representation of the Corporation (that execution of the Agreement would not protect the Corporation from subsequent claims)." Without further argument or any citation to the record, Vacek has presented nothing for this Court to review. See Harris County Mun. Util. Dist. No. 48 v. Mitchell, 915 S.W.2d 859, 866 (Tex.App.-Houston [1st Dist.] 1995, writ denied); see also TEX.R.APP. P. 38.1(h) (appellate brief must contain clear and concise argument for contentions made, with appropriate citations to authorities and record).

Hughes tolling rule

Second, Vacek claims the statute of limitations was tolled because of the Hughes tolling rule. See Hughes, 821 S.W.2d at 157. In Hughes, the Texas Supreme Court observed that "when an attorney commits malpractice while providing legal services in the prosecution or defense of a claim which results in litigation, the legal injury and discovery rules can force the client into adopting inherently inconsistent litigation postures in the underlying case and in the malpractice case." Hughes, 821 S.W.2d at 156. The court held that such a position was untenable. Id. As a remedy, the court announced the Hughes tolling rule, stating that the statute of limitations for a malpractice claim against an attorney, committed in the prosecution or defense of a claim that results in litigation, is tolled until all appeals on the underlying claim are exhausted. Id. at 157.²

The supreme court has restated the Hughes tolling rule on numerous occasions, each time stating that the rule is invoked when the alleged malpractice is committed by an attorney during the prosecution or defense of a claim that results in litigation. Underkofler v. Vanasek, 53 S.W.3d 343, 347 (Tex.2001); Apex Towing Co. v. Tolin, 41 S.W.3d 118, 121 (Tex.2001); Murphy, 964 S.W.2d at 272; Sanchez v. Hastings, 898 S.W.2d 287, 288 (Tex.1995); Am. Centennial Ins. Co. v. Canal Ins. Co., 843 S.W.2d 480, 483-84 (Tex.1992); Gulf Coast Inv. Corp. v. Brown, 821 S.W.2d 159, 160 (Tex.1991); Aduddell v. Parkhill, 821 S.W.2d 158, 159 (Tex.1991), overruled on other grounds by Underkofler, 53 S.W.3d at 347. However, a 1991 supreme court decision and a 1995 decision from this Court have raised an issue whether the Hughes tolling rule applies only to legal-malpractice claims arising from litigation of an underlying claim, or whether it applies to those legal-malpractice claims arising from transactional work performed by an attorney as well. See Gulf Coast Inc. Corp., 821 S.W.2d at 160 (allowing application of Hughes tolling rule to attorney's alleged malpractice in conducting nonjudicial foreclosure action of real property that resulted in wrongful foreclosure action); see also Utica Ins. Co. v. Pruitt & Cowden, 902 S.W.2d 143, 147-48 (Tex.App.-Houston [1st Dist.] ) (applying Hughes tolling rule to allow suit against attorney for committing error in drafting loan modification agreement), remanded for rendition of agreed judgm't and opinion withdrawn from publication, No. 01-94-00457-CV (Tex.App.-Houston [1st Dist.] Aug. 3, 1995, no writ) (not designated for publication).³

In 1997, the supreme court addressed the issue of whether the Hughes tolling rule applied to alleged accounting malpractice. Murphy, 964 S.W.2d at 272. The court first determined that, even though the discovery rule applied, the cause of action accrued no later than the date the plaintiffs received a deficiency notice from the Internal Revenue Service in June 1987. Id. at 270-72. The plaintiffs filed their malpractice action in June 1991, more than two years after receiving the deficiency notice. Id. at 267. They argued that the Hughes tolling rule applied because they filed suit in United States Tax Court in September 1987 to protest the IRS ruling, and the suit was not resolved until November 1989. Id. at 267, 272. If the Hughes tolling rule applied, then the malpractice action was timely filed within two years.

The court stated that Hughes does not toll limitations whenever a litigant might be...