Two Thirty Nine Joint Venture v. Joe

• Decision Date: 20 November 2001
• Docket Number: No. 05-98-01775-CV,05-98-01775-CV
• Citation: 60 S.W.3d 896
• Parties: (Tex.App.-Dallas 2001) TWO THIRTY NINE JOINT VENTURE, Appellant v. HARRY J. JOE, INDIVIDUALLY, AND JENKENS & GILCHRIST, A PROFESSIONAL CORPORATION, Appellees
• Court: Texas Court of Appeals

Page 896

60 S.W.3d 896 (Tex.App.-Dallas 2001)

TWO THIRTY NINE JOINT VENTURE, Appellant v. HARRY J. JOE, INDIVIDUALLY, AND JENKENS & GILCHRIST, A PROFESSIONAL CORPORATION, Appellees

No. 05-98-01775-CV

Court of Appeals of Texas, Dallas

November 20, 2001

On Appeal from the 14th Judicial District Court Dallas County, Texas Trial Court Cause No. 97-03538-A

[Copyrighted Material Omitted]

[Copyrighted Material Omitted]

[Copyrighted Material Omitted] Before Justices FitzGerald, Richter, and Rosenberg ¹

OPINION

Barbara Rosenberg, Justice.

Two Thirty Nine Joint Venture (239 JV) brought suit for malpractice and breach of fiduciary duty and duty of loyalty against Harry J. Joe, individually, and his law firm, Jenkens & Gilchrist, P.C. (J&G). The basis of the suit was that Joe and J&G breached their duty of loyalty to 239 JV when neither Joe nor the law firm disclosed that Joe, as a member of the Irving City Council, would or could take positions that would affect the real estate transactions in which J&G represented 239 JV. Joe filed a motion for summary judgment based on official immunity, which the trial court granted. Then, J&G filed a motion for summary judgment based on Joe's immunity, whether 239 JV had produced evidence to support each element of a malpractice claim, and other grounds. The trial court granted J&G's motion. In three points of error, 239 JV challenges the summary judgments, asserting (1) the trial court abused its discretion in failing to grant a motion for continuance when that motion was filed and heard within three months of the suit's filing; (2) Joe's summary judgment was improper because fact issues exist as to Joe's official immunity; and (3) J&G's summary judgment was erroneously granted. Because we conclude that the trial court abused its discretion in failing to grant a motion for continuance on Joe's motion for summary judgment, we reverse and remand the cause of action against Joe. Because we conclude that an attorney's duty of care includes disclosure of any conflict of interest that may affect the attorney's representation of that client's interest and that neither legislative nor official immunity protects an attorney from that private duty, we reverse and remand the summary judgment in favor of J&G.

FACTUAL AND PROCEDURAL BACKGROUND

Beginning in 1992, J&G attorneys represented 239 JV in its formation and business activities of acquiring, developing, and selling 239 acres located in Valley Ranch, a master-planned community located in Irving, Texas. By August 1994, 239 JV had sold all but an eleven-acre apartment tract. On August 18, 1994, 239 JV entered into a contract for the sale of that acreage. The contract was reviewed by William Thau, a J&G shareholder, and he provided legal advice to 239 JV on the sale of this acreage. The contract provided a review period ending September 17, 1994.

On September 4, 1994, the Sunday before Labor Day, the Irving City Council posted a three- day notice of a special meeting at which the council would consider an ordinance that would place a moratorium on apartment development. On September 7, at the special council meeting, Joe, a member of the Irving City Council and a partner in J&G, made the motion to adopt the moratorium, and the council passed the ordinance unanimously. On or about that same date, because of the City of Irving's moratorium on the building of apartments, the purchasers rejected the contract for sale of the eleven-acre apartment tract.

After learning that Joe was a member of J&G, members of 239 JV met with Joe. Joe was told of J&G's representation of 239 JV for the sale of the apartment property. The 239 JV members urged Joe to support the interests of the venture, and, if he could not, they asked him to declare a conflict of interest and withdraw from any further leadership role, discussion, or vote on the moratorium. Subsequently, on December 15, 1994 and May 18, 1995, Joe voted twice to extend the moratorium. On June 22, 1995, when 239 JV requested a waiver of the moratorium, Joe abstained from the council vote.

On April 18, 1997, 239 JV filed suit against Joe and J&G. On May 12, 1997, they answered. On June 12, 1997, Joe filed his motion for summary judgment based on immunity. 239 JV filed a motion for continuance for time to obtain discovery for purposes of the summary judgment issues. The trial court denied the motion for continuance and granted Joe's motion for summary judgment.

After discovery, J&G filed a motion for summary judgment on six independent grounds. The trial court granted J&G's motion without stating the grounds. This appeal followed.

THE MOTION FOR CONTINUANCE

In 239 JV's first point of error, it complains that the trial court abused its discretion in denying 239 JV's first motion for continuance of Joe's summary judgment. Joe responds that no discovery is necessary to determine the official immunity defense that is the basis of his motion for summary judgment.²

When a party contends that it has not had an adequate opportunity for discovery before a summary judgment hearing, it must file either an affidavit explaining the need for further discovery or a verified motion for continuance. Tenneco Inc. v. Enter. Prods. Co., 925 S.W.2d 640, 647 (Tex. 1996); see Tex. Rs. Civ. P. 166a(g), 251, 252. It is within a trial court's discretion to grant a continuance until the requested discovery is completed. Levinthal v. Kelsey-Seybold Clinic, P.A., 902 S.W.2d 508, 510 (Tex. App.-Houston [1st Dist.] 1994, no writ). We will not disturb the trial court's denial of a motion for continuance except for a clear abuse of discretion. Villegas v. Carter, 711 S.W.2d 624, 626 (Tex. 1986); Verkin v. Southwest Ctr. One, Ltd., 784 S.W.2d 92, 94 (Tex. App.-Houston [1st Dist.] 1989, writ denied).

In deciding whether the trial court abused its discretion in denying a rule 166a(g) motion for continuance, we consider the length of time the case had been on file, the materiality of the discovery sought, whether the party seeking the continuance had exercised due diligence in attempting to obtain the discovery sought, and what the party expects to prove. Laughlin v. Bergman, 962 S.W.2d 64, 65- 66 (Tex. App.-Houston [1st Dist.] 1997, pet. denied); McAx Sign Co. v. Royal Coach, Inc., 547 S.W.2d 368, 370 (Tex. Civ. App.-Dallas 1977, no writ); see Tex. R. Civ. P. 252.

239 JV filed its petition April 18, 1997; Joe and J&G filed answers on May 12; Joe filed his motion for summary judgment on June 12; and the trial court granted Joe's motion on July 11. Thus, the suit had been on file three months before summary judgment was granted. Trial courts have abused their discretion in denying continuances when cases have been on file for three, Levinthal, 902 S.W.2d at 501, six, Verkin, 784 S.W.2d at 94-95, and eleven months, Laughlin, 962 S.W.2d at 66, when due diligence and materiality of discovery are established.

To establish due diligence, 239 JV's counsel filed a motion for continuance with an affidavit stating he had not had an adequate opportunity for discovery before a summary judgment hearing. The motion stated that counsel needed additional time to conduct discovery regarding whether Joe acted as a councilman and J&G's representation of 239 JV. In his affidavit, lead counsel stated that, while the suit had been on file two months, lead counsel was in an out-of-town trial from the time of Joe's answer to the suit until June 10. Joe's motion for summary judgment was served June 12 and was set for July 11. Correspondence between 239 JV's counsel and appellees' counsel shows that on June 17, 239 JV's counsel attempted to depose Joe and others. However, appellees' counsel refused, stating, "[W]e will take the position that you are entitled to no discovery until after the Court has determined the issue of immunity." Thus, counsel's attempts to procure testimony within three months of filing suit showed due diligence in attempting to obtain discovery. See id. at 66.

Because due diligence is only part of the test, counsel must show that the testimony is relevant to the immunity defense. Official immunity only shields persons from suits complaining of official acts. Bonham v. Flach, 744 S.W.2d 690, 692-93 (Tex. App.-San Antonio 1988, no writ); Bagg v. Univ. of Tex. Med. Branch at Galveston, 726 S.W.2d 582, 586 (Tex. App.-Houston [14th Dist.] 1987, writ ref'd n.r.e.). In its motion for continuance, 239 JV questioned whether all Joe's actions were as a council member and in good faith, in that he had done legal research and turned it over to an advocacy group, and was acting as counsel for the city in conflict with 239 JV's interest. These issues could controvert Joe's allegations that all his actions and advocacy were performed in his discretionary duties as an Irving City Council member, in good faith, and within his authority as a council member.

Joe, however, argues that Mayhew v. Town of Sunnyvale, 774 S.W.2d 284 (Tex. App.-Dallas 1989, writ denied), mandates that no depositions are proper. Mayhew involved judicial review of legislation. This Court held that individual legislators may not be questioned to determine the evidence upon which they relied or their reasons for a particular vote. Id. at 298. Unlike the authority cited by Joe that involve a dispute about the validity or legality of city council actions, see id.; Sosa v. City of Corpus Christi, 739 S.W.2d 397, 404-05 (Tex. App.-Corpus Christi 1987, no writ), this suit questions Joe's acts as a lawyer. When a claimant brings an action against an officeholder in an individual capacity, discovery, including the deposition of the officeholder, is appropriate. See State v. Sims, 871 S.W.2d 259, 263 (Tex. App.-Amarillo 1994, orig. proceeding). Here, 239 JV is not trying to determine the reasons for the zoning restriction; rather, it is attempting to determine all Joe's individual acts concerning the moratorium. Any such acts he took in his individual capacity would not be...