Yaklin v. Glusing, Sharpe & Krueger

• Decision Date: 24 March 1994
• Docket Number: No. 13-92-531-CV,13-92-531-CV
• Citation: 875 S.W.2d 380
• Parties: Edward Lee YAKLIN, Appellant, v. GLUSING, SHARPE & KRUEGER a Partnership, et al., Appellees.
• Court: Texas Court of Appeals

Page 380

875 S.W.2d 380

Edward Lee YAKLIN, Appellant, v. GLUSING, SHARPE & KRUEGER a Partnership, et al., Appellees.

No. 13-92-531-CV.

Court of Appeals of Texas Corpus Christi.

March 24, 1994.

Robert N. Carnahan, Corpus Christi, for appellant.

Thomas F. Nye, David H. Crago, Brin & Brin, Gaston M. Broyles, Jr., Broyles & Pratt, Deborah R. Sundermann, Corpus Christi, for appellees.

Before KENNEDY, DORSEY and GILBERTO HINOJOSA, JJ.

OPINION

DORSEY, Justice.

This is an appeal from summary judgments granted in favor of the defendants, the Estate of Nelson Sharpe, deceased, ¹ and James Krueger, in a legal malpractice case. Edward Lee Yaklin sued Sharpe and Krueger, individually, and the firm of Glusing, Sharpe and Krueger for legal malpractice and violations of the Deceptive Trade Practices Act (DTPA). ² After summary judgments were granted for Sharpe and Krueger, Yaklin non-suited the law firm. Yaklin contests the propriety of those summary judgments by one point of error. We reverse the summary judgment in favor of Sharpe and affirm as to Krueger.

Yaklin's action against the defendants is based on Sharpe's alleged mishandling of the refinancing of Yaklin's business that resulted in changing his separate property into community property belonging to him and his wife, Cynthia. Krueger later represented Cynthia Yaklin in divorce proceedings against him. Yaklin contends that he was damaged in the divorce action because Sharpe's drafting of the refinancing documents altered the separate property character of his assets. Yaklin also claimed that Krueger, as Sharpe's partner in the law firm of Glusing, Sharpe, and Krueger, was disqualified from handling Cynthia's divorce action against him.

Both Sharpe and Krueger moved for summary judgment. Summary judgment was granted on Sharpe's motion January 9, 1992, and on Krueger's motion August 4, 1992. Thereafter, the partnership was non-suited and the orders became final and appealable.

Appellant had a used car business, Eddie's Used Cars in Kingsville, and he financed many of the cars sold there. In September 1988, he married Cynthia Yaklin, he changed banks handling the financing of his inventory to Kleberg First National Bank in February 1989, and authorized his wife to approve titles, accept drafts, and sign loan documents. The bank requested and received a promissory note, deed of trust and security interest from appellant and his wife on his business property. The lawyer preparing the various documents was Nelson Sharpe, who had been the bank's attorney for over 20 years.

Yaklin's action against each appellee is based on Sharpe's alleged negligence in preparing documents for him, changing separate property into community, to Yaklin's damage during his divorce. There are two bases for Krueger's liability: his partnership with Sharpe resulting in his liability for Sharpe's professional negligence, and his conflict of interest in representing Cynthia Yaklin in her divorce against appellant when Sharpe had represented Yaklin in his refinancing transaction.

Sharpe's Summary Judgment

Sharpe's motion for summary judgment attempted to negate the existence of an attorney client-relationship with Yaklin and the existence of a partnership with Krueger. Sharpe presented the following affidavits in support of his motion: Francis C. Sharpe, co-administrator of the estate of Nelson Sharpe, who denied the existence of a partnership with Krueger; Scott Dobbs, the President of First National Bank of Kingsville, who described the banking transaction and the relationship between Sharpe and the bank; and Carolyn Hoffman, the manager of the title company that handled the closing of Yaklin's refinancing with the bank, who described the procedure for refinancing, the nature of the transaction, and recited that it was customary for the borrower to pay the bank's attorney's fees.

Yaklin's response included his own affidavit and the affidavits of three attorneys from the Corpus Christi area. Yaklin's affidavit stated that he had been doing business selling used cars as Eddie's Used Cars for 14 years as a sole proprietor; than beginning in 1986, he used Mr. Nelson Sharpe as his personal attorney, retaining him for representation in a paternity action that had been filed against him. He married Cynthia in September 1988. In the latter part of 1988, he decided to move his banking business from another bank to Kleberg First National Bank. He wanted his wife to have the ability to accept drafts for him and approve titles. He went to Kleberg First National Bank, had his credit approved, and was asked by a banker, Mr. Lupe Alvarez, who he wanted to prepare the paperwork. Yaklin responded that Nelson Sharpe was his lawyer, and Alvarez said that Sharpe was fine because he also did work for the bank.

Yaklin then went to see Sharpe, who officed upstairs from the bank. Yaklin told Sharpe what needed to be done, and that he wanted Cynthia to be able to approve car titles. Yaklin was later notified the papers were ready, and he went to a title company and signed them on February 7, 1989. Yaklin states in his affidavit that Sharpe had represented him twice previously, in the paternity action and in giving him advice as to the repossession of a car. Yaklin states: "Most certainly in my mind he was my lawyer" and "[a]t no time did he hint or suggest in words or by actions that he was representing the interest of the bank, and not me."

The summary judgment granted Sharpe was explicitly premised on the holding that no attorney-client relationship existed. Our review of that judgment is limited to the basis relied on by the trial judge. State Farm Fire & Casualty Co. v. S.S. & G.W., 858 S.W.2d 374, 380 (Tex.1993).

The action asserted against Sharpe is legal malpractice, a tort. In order to establish liability, a claimant must establish a duty, a breach of that duty, and damages that result from the breach. The duty implicated is that which an attorney owes a client, and before any duty arises there must first be an attorney-client relationship. The attorney-client relationship is a contractual relationship, whereby the attorney agrees to render professional services for the client. See Parker v. Carnahan, 772 S.W.2d 151, 156 (Tex.App.--Texarkana 1989, writ denied). Such a contract may be either express or it may be implied from the actions of the parties. Perez v. Kirk & Carrigan, 822 S.W.2d 261, 265 (Tex.App.--Corpus Christi 1991, writ denied).

Once the attorney-client relationship is established, numerous duties are owed the client by the lawyer, which, among others, are to use utmost good faith in dealings with the client, to maintain the confidences of the client, and to use reasonable care in rendering professional services to the client. The duties flow from the relationship, and Yaklin, the plaintiff at trial, has the burden of proving the existence of the attorney-client relationship. However, when the defendant moves for a summary judgment because no attorney-client relationship exists, the defendant takes on the burden of proving the non-existence of the relationship as a matter of law.

In reviewing a summary judgment certain well established rules apply. A defendant is entitled to summary judgment if he can negate a single essential element of the plaintiff's cause of action. Gibbs v. General Motors Corp., 450 S.W.2d 827, 828 (Tex.1970). We review a summary judgment to determine whether the summary judgment proof establishes as a matter of law that there is no genuine issue of material fact as to one or more of the essential elements of the plaintiff's cause of action. Id. The movant has the burden to show that there is no genuine issue of material fact and that he is entitled to judgment as a matter of law. Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548-49 (Tex.1985). All evidence favorable to the non-movant will be taken as true and all reasonable inferences must be indulged in favor of the non-movant. Id.

In this summary judgment proceeding, the burden is on Sharpe, the movant, to negate the existence of...