White Nile Software, Inc. v. Carrington, Coleman, Sloman & Blumenthal, LLP
| Decision Date | 31 August 2020 |
| Docket Number | No. 05-19-00780-CV,05-19-00780-CV |
| Court | Texas Court of Appeals |
| Parties | WHITE NILE SOFTWARE, INC., Appellant v. CARRINGTON, COLEMAN, SLOMAN & BLUMENTHAL, LLP, Appellee |
On Appeal from the 14th Judicial District Court Dallas County, Texas
Before Justices Schenck, Osborne, and Reichek
Opinion by Justice Osborne
White Nile Software, Inc. appeals the trial court's final judgment dismissing with prejudice its claims against and awarding Carrington, Coleman, Sloman & Blumenthal, LLP its attorneys' fees. This appeal is part of a multi-year, multi-case saga that originated in 2006 stemming from Carrington Coleman's representation of White Nile and some of its directors in a lawsuit against Steven Thrasher. It involves claims and counterclaims in state and federal courts, as well as bankruptcy proceedings, including adversary proceedings.
In this appeal, White Nile raises six issues, arguing the trial court erred when it granted Carrington Coleman's motion to dismiss White Nile's claims under the Texas Citizens Participation Act (TCPA), TEX. CIV. PRAC. & REM. CODE ANN. §§ 17.001-.011, because: (1) White Nile's claims against Carrington Coleman are not related to or in response to Carrington Coleman's exercise of free speech, the right to association, or the right to petition under the TCPA; (2) the commercial speech exception applies to White Nile's claims; (3) White Nile presented clear and specific evidence supporting its breach of fiduciary duty claims; (4) it presented clear and specific evidence supporting its professional negligence claims; (5) it presented clear and specific evidence supporting its civil conspiracy and aiding and abetting breach of fiduciary duty claims; and (6) Carrington Coleman failed to establish by a preponderance of the evidence its defenses of (a) standing, capacity, and authority, (b) statute of limitations, and (c) attorney immunity.
We conclude the trial court erred when it granted Carrington Coleman's motion to dismiss under the TCPA. The trial court's final judgment is reversed and the case is remanded for further proceedings consistent with this opinion.
Initially, we note that the majority of facts alleged in the pleadings and on appeal do not pertain to this lawsuit or even to Carrington Coleman. However, given that this appeal is part of a long, involved series of events and legal proceedingsinvolving several corporations and individuals, we endeavor to provide a brief summary of the factual and procedural history that leads to the present appeal.
White Nile was formed in July 2005 by Thrasher and Edward Mandel to develop Thrasher's concept for a new kind of search engine. Eventually, others joined White Nile, including Paul Williams, Jason Coleman, and Skinner Layne. Layne's parents also became investors in White Nile. However, the relationship between Mandel and Thrasher deteriorated. On January 17, 2006, Mandel, Williams, and Layne incorporated NeXplore Technologies, Inc., which Thrasher claimed was for the purpose of using intellectual property they misappropriated from Thrasher and White Nile.
In 2006, Mandel, Williams, and Layne retained Jeffrey Travis of Calhoun & Travis, LLP to represent White Nile and Mandel, Williams, and Layne, individually. On April 6, 2006, White Nile filed suit against Thrasher. White Nile Software v. Thrasher, No. 06-03319 (14th Dist. Ct., Dallas County, Tex.) (Thrasher case). The Thrasher case was assigned to the 14th district court. On January 31, 2007, Thrasher filed his original counterclaims and third-party petition, which alleged claims against Mandel, Williams, Layne, and Layne's parents.
Carrington Coleman was retained by White Nile, Mandel, Williams, Layne, and Layne's parents to appear as lead counsel in the Thrasher case. After Carrington Coleman appeared in the case, Thrasher filed his second amended counterclaim andthird-party petition which asserted a derivative claim in his capacity as a shareholder of White Nile against Mandel, Williams, and Layne. He also filed a motion to disqualify Carrington Coleman. On May 15, 2007, the 14th district court signed an order authorizing Carrington Coleman to withdraw as counsel for White Nile. However, it remained as counsel for Mandel, Williams, Layne, and Layne's parents. Afterward, new counsel filed an appearance in the Thrasher case on behalf of White Nile. Then, on October 1, 2007, the 14th district court granted a motion to substitute new counsel for Mandel, Williams, Layne, and Layne's parents in place of Carrington Coleman.
On May 29, 2009, the 14th district court signed an order appointing a receiver for White Nile to:
See CIV. PRAC. & REM. §§ 64.001(a)(3) (), 64.031 (general powers and duties of receiver).
After the withdrawal of Carrington Coleman and the appointment of a receiver, proceedings continued in the Thrasher case.
On January 25, 2010, Mandel filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code.1 In re Mandel, No. 10-40219 (Bankr. E.D. Tex.) (Mandel Bankruptcy). On April 23, 2010, the Thrasher case was removed to the bankruptcy court as an adversary proceeding. White Nile Software, Inc. v. Thrasher (In re Mandel), No. 10-03089-bjh (Bankr. E.D. Tex.) (the adversary proceeding). There were numerous orders in and appeals of the bankruptcy and adversary proceedings.
On March 21, 2011, the receiver filed her third motion to abstain and remand the Thrasher case arguing in part that she had identified potential new causes of action against third parties in the Thrasher case that could be lost as a result of limitations on May 29, 2011. On May 6, 2011, the bankruptcy court severed and remanded all non-debtor claims in the Thrasher case back to the 14th district court.
On May 27, 2011, the receiver and Carrington Coleman signed an agreement tolling limitations with regard to claims related to the firm's representation of White Nile until July 27, 2011. Meanwhile, on June 3, 2011, the receiver filed a motion to clarify seeking permission to engage specialized professional malpractice counsel to investigate and, if appropriate, initiate third-party claims. However, on August 3,2011, the 14th district court signed an order that denied the receiver authority to engage specialized professional malpractice counsel to investigate and, if appropriate, initiate third-party actions against former White Nile professionals or any former White Nile counsel.
On November 12, 2018, approximately seven years after the 14th district court denied the receiver's request to investigate and initiate any third-party actions against White Nile's counsel, White Nile filed its first original petition2 against Carrington Coleman alleging claims for professional negligence, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, and conspiracy (Carrington Coleman case).3 The Carrington Coleman case was assigned to the 298th district court.
On April 9, 2019, Carrington Coleman filed an answer generally denying the allegations and asserting the affirmative defenses of, inter alia, statute of limitations and attorney immunity. Its answer also included a "verified denial of capacity, standing [or] authority of Plaintiff" alleging a receiver had been appointed for White Nile, the receiver had not been discharged, and it did not appear that the receiver had joined or authorized the filing of the Carington Coleman case.4 On the same day, it also filed a motion to dismiss pursuant to the TCPA arguing the claims brought against it implicated its right to petition and of association. In addition, Carrington Coleman claimed that White Nile could not meet its burden to establish by clear and specific evidence a prima facie case for each essential element of the claims. Further, Carrington Coleman maintained that (1) White Nile's claims were barred by the applicable statutes of limitation, (2) its claims for aiding and abetting breach of fiduciary duty and conspiracy were barred by the attorney immunity doctrine, and (3) White Nile lacked standing, capacity, or authority to assert the claims against Carrington Coleman.
On May 20, 2019, White Nile filed an amended motion to transfer the Carrington Coleman case from the 298th district court, arguing the 14th districtcourt had primary jurisdiction over the issues raised because White Nile's claims arose from the same transactions or occurrences at issue in the Thrasher case.
On May 21, 2019, White Nile filed its response to the motion to dismiss in the 298th district court. On May 22, 2019, White Nile filed a supplement to its response attaching the declaration of the receiver. However, in that declaration, the receiver did not state that she had initiated, authorized, or joined the Carrington Coleman case.
On May 30, 2019, an order was signed granting White Nile's motion to transfer the Carrington Coleman case to the 14th district court. However, on June 1, 2019, the 298th district court granted Carrington Coleman's motion to dismiss under the TCPA and set the matter for a hearing on attorneys' fees. On June 18, 2019, White Nile filed an amended motion for reconsideration and new trial in the 14th district court, which was denied. On June 19, 2019, after a hearing on attorneys' fees, the 14th district court signed a final judgment dismissing all of...
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