Opinion issued September 22, 2015
In The
Court of Appeals
For The
First District of Texas
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NO. 01-15-00016-CV
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IN RE TEXAS TECHNICAL SERVICES, INC., Relator
Original Proceeding on Petition for Writ of Mandamus
OPINION
In this original proceeding, relator Texas Technical Services, Inc. (TTSI),
seeks mandamus review of the trial court’s October 6, 2014 order disqualifying the
law firm of Lambright & Associates (“Lambright”) from representing TTSI in the
underlying proceeding. 1 TTSI contends that Lambright should not have been
disqualified or, in the alternative, that the trial court abused its discretion in
disqualifying Lambright from acting as TTSI’s counsel even outside the presence
of the jury. We hold that the trial court abused its discretion in disqualifying
Lambright and, accordingly, we conditionally grant the writ of mandamus.
Background
The Employment Suit
In 2012, after Derek Frantz left employment with TTSI and went to work for
real party in interest, Parking Guidance Systems (PGS), TTSI sued PGS
contending Frantz was violating non-compete and non-disclosure obligations. The
trial judge granted TTSI injunctive relief, enjoining Frantz from working on certain
parking projects in Houston and surrounding counties. PGS, with Frantz’s
involvement, continued to pursue a sole source contract for parking systems with
Dallas-Fort Worth Airport (DFW).
Thereafter, Lambright attorneys sent multiple written communications to
DFW regarding the employment suit and Frantz’s alleged violations of the
injunction. For example, on November 22, 2013, a Lambright attorney wrote to
DFW:
1
The underlying proceeding is Parking Guidance Systems, LLC v. Texas Technical
Services, Inc., No. 2014-16785, in the 133rd District Court, Harris County, Texas,
the Honorable Jaclanel McFarland, presiding.
2
[W]e understand that Mr. Frantz has continuously worked on
the DFW parking improvement project from Fall 2012 to at least
Spring 2013, and that he is out there, once again, in direct violation of
Court orders. TTSI respectfully requests you to honor the Courts’
[sic] Orders and that you require your subcontractors to do the same.
TTSI will endeavor to minimize the impact these issues have on your
operations. Be advised, however, that should Mr. Frantz continue to
violate the Orders of the 129[t]h District Court (of which you now
have express knowledge), TTSI will proceed to enforce its judicially
recognized rights against him and any third parties that aid or assist
him.
Legal counsel for DFW responded to Lambright, expressing his view “that
the [injunction] (in the form provided to me) probably does not preclude Mr.
Frantz from participating in the [DFW] transaction.” A Lambright attorney
replied: “the two injunctions you have been sent clearly establish that DFW
parking jobs are off-limits for Frantz.” The attorney also told DFW’s counsel to
“deal with Mr. Frantz at your own risk.”
On February 4, 2014, the Operations Committee of DFW recommended that
the DFW Board of Directors award the DFW parking contract to PGS. Two days
later, a Lambright attorney wrote to DFW’s counsel:
We have learned that DFW intends to award the sole-source
Terminal D parking guidance contract to Parking Guidance Systems,
LLC-Derek Frantz’[s] (via his wife) company. Derek is heavily
involved in this company, and now they have been joined in our
lawsuit. I was under the impression from the below correspondence
and past telephone conversations that DFW would not be doing
business with Frantz. Given your explanation to me that the reason
behind the sole source contract was that they were the contracting
party on Terminal A, and that your concern was whether Derek Frantz
could be involved in our litigation, I find it extremely interesting that
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DFW decided to award it to PGS, who as an entity had no prior
history with DFW (given the fact it was set up by Derek’s wife and a
friend only last May). Maybe your client’s diligence as to the party
they were contracting with (PGS) wasn’t as thorough as it needed to
be.
Shortly thereafter, DFW informed PGS that it was no longer going to be awarded
the contract.
The Underlying Suit
PGS sued TTSI alleging tortious interference with a contractual and business
relationship between PGS and DFW. PGS alleges that Lambright “engaged in a
systematic and deliberate attempt to disrupt the business relationship between PGS
and DFW Airport and [to] cause DFW to withdraw the contract award [from]
PGS.”
TTSI moved for summary judgment on PGS’s tortious interference claim
and on its affirmative defenses, and set the hearing on the motion for October 6,
2014. On September 29, 2014, PGS filed its response to TTSI’s motion for
summary judgment and also filed a motion to continue the hearing on the motion
for summary judgment. On the same day, it filed its motion to disqualify
Lambright and set it for hearing one hour before the trial court was to hear TTSI’s
motion for summary judgment. The basis for PGS’s motion is that Lambright’s
attorneys’ testimony is essential to prove PGS’s interference claim, because it was
the attorneys’ communications with DFW that constituted the intentional act of
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interference that caused PGS to lose the DFW contract. Therefore, PGS argued,
Lambright was disqualified under the Texas Disciplinary Rules of Professional
Conduct because its attorneys cannot act as an advocate and witness. See TEX.
DISCIPLINARY RULES PROF’L CONDUCT R. 3.08(a), reprinted in TEX. GOV’T CODE
ANN., tit. 2, subtit. G, app. A (West 2013).
On October 6, 2014, the trial court held a hearing on PGS’s motion to
disqualify. The trial court granted the motion to disqualify and continued the
hearing on TTSI’s summary judgment motion. The order granting PGS’s motion
to disqualify states, “it is ORDERED that Lambright & Associates be disqualified
from representing Defendant in the above-referenced litigation.”
TTSI moved for reconsideration of the order, arguing that the Lambright
attorneys’ testimony was not essential and that disqualification was not warranted.
During the hearing on TTSI’s motion to reconsider the trial court stated “My ruling
stands. If y’all want to work on an order that says that you can work on a case but
not be—not represent them in court in front of a jury, I don’t really have a big
problem with that. But you’re still disqualified until y’all give me another order.
Your motion to reconsider is denied at this point.”
TTSI sought mandamus relief. It asks us to order the trial court to vacate the
order disqualifying Lambright from representing TTSI in the underlying
proceeding. In the alternative, TTSI requests that this Court “instruct Judge
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McFarland to revise her disqualification order to permit Lambright & Associates to
represent TTSI in all matters outside the presence of the jury.”
Standard of Review and Applicable Law
Mandamus is appropriate to correct an erroneous order disqualifying counsel
because there is no adequate remedy by appeal. In re Sanders, 153 S.W.3d 54, 56
(Tex. 2004). We review disqualification orders under an abuse of discretion
standard. Id.
Rule 3.08 of the Texas Disciplinary Rules of Professional Conduct states:
(a) A lawyer shall not accept or continue employment as an
advocate before a tribunal in a contemplated or pending adjudicatory
proceeding if the lawyer knows or believes that the lawyer is or may
be a witness necessary to establish an essential fact on behalf of the
lawyer’s client, unless:
(1) the testimony relates to an uncontested issue;
(2) the testimony will relate solely to a matter of
formality and there is no reason to believe that substantial
evidence will be offered in opposition to the testimony;
(3) the testimony relates to the nature and value of
legal services rendered in the case;
(4) the lawyer is a party to the action and is appearing
pro se; or
(5) the lawyer has promptly notified opposing counsel
that the lawyer expects to testify in the matter and
disqualification of the lawyer would work substantial
hardship on the client.
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TEX. DISCIPLINARY RULES PROF’L CONDUCT 3.08(a). Although Rule 3.08 was
“promulgated as a disciplinary standard rather than one of procedural
disqualification,” Texas courts “have recognized that the rule provides guidelines
relevant to a disqualification determination.” See Sanders, 153 S.W.3d at 56
(citing Anderson Prod. Inc. v. Koch Oil Co., 929 S.W.2d 416, 421 (Tex. 1996)).
The Texas Supreme Court has emphasized that “[d]isqualification is a severe
remedy.” Id. at 57 (quoting Spears v. Fourth Ct. of App., 797 S.W.2d 654, 656
(Tex. 1990)). It can “cause immediate harm by depriving a party of its chosen
counsel and disrupting court proceedings.” Id. Consequently, in considering a
motion to disqualify, the district court must strictly adhere to an exacting standard
to discourage a party from using the motion as a dilatory tactic. Spears, 797
S.W.2d at 656. “‘Mere allegations of unethical conduct or evidence showing a
remote possibility of a violation of the disciplinary rules will not suffice’ to merit
disqualification.” Id.
It is only appropriate to disqualify an attorney due to his status as a potential
witness if the attorney’s testimony is “necessary to establish an essential fact.”
Sanders, 153 S.W.3d at 57 (quoting TEX. DISCIPLINARY RULES PROF’L CONDUCT
R. 3.08(a)). The fact that an attorney serves, or may serve, as both a representative
and as a witness does not in itself compel disqualification. Id.; see also In re
Garza, 373 S.W.3d 115, 118 (Tex. App.—San Antonio, orig. proceeding) (stating
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disqualification under Rule 3.08 is not appropriate unless party seeking
disqualification establishes “a genuine need for the attorney’s testimony and that
the testimony goes to an essential fact”). Rather, the party requesting
disqualification must demonstrate that the opposing attorney’s dual roles as
attorney and witness will cause the party actual prejudice. Ayres v. Canales, 790
S.W.2d 554, 557–58 (Tex. 1990).
Analysis
PGS sought disqualification on the basis that the testimony of Lambright’s
attorneys was necessary to prove an act of willful and intentional interference,
which is an element of PGS’s tortious interference claim. TTSI argues that the
trial court abused its discretion in disqualifying Lambright because the testimony
of Lambright’s attorneys is not essential to prove TTSI’s alleged interference
inasmuch as TTSI has produced the written communications between Lambright
and DFW, and does not dispute their contents. TTSI asserts that the written
communications “are what they are” and that the central contested issue in the case
is causation, i.e., whether Lambright’s communications caused DFW to rescind its
award of the contract to PGS. This causation evidence, TTSI asserts, can only be
established through testimony of DFW employees.
The elements of tortious interference with an existing contract are (1) an
existing contract subject to interference, (2) a willful and intentional act of
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interference with the contract, (3) that proximately caused injury, and (4) actual
damages or loss. Prudential Ins. Co. of Am. v. Fin. Rev. Servs, Inc., 29 S.W.3d 74,
77 (Tex. 2000). To prevail on its tortious interference claim, PGS bears the burden
to prove that a contract existed between PGS and DFW, and that TTSI or its agent,
Lambright, willfully and intentionally interfered with that contract and proximately
caused DFW’s termination of the contract with PGS, damaging PGS.
TTSI does not dispute the existence or content of its attorneys’ written
communications with DFW’s counsel, but PGS nevertheless argues that it needs
the testimony of Lambright’s attorneys to establish that the alleged interference
was willful and intentional. PGS also argues that it requires the testimony of
Lambright because verbal communications occurred between Lambright and
DFW. PGS contends that the Lambright attorneys’ testimony is necessary because
all of the communications with DFW were made by Lambright. We disagree.
Although PGS repeatedly asserted in the trial court and in its response to the
mandamus petition that Lambright’s attorneys’ testimony is necessary to show that
the alleged interference was willful and intentional, PGS never explained what
essential facts it needs to prove through the testimony of the Lambright attorneys,
or why the written communications would not be sufficient to establish an
intentional act of interference. See In re VSDH Vaquero Venture, Ltd., No. 05-14-
00958-CV, 2014 WL 4262167, at *2–3 (Tex. App.—Dallas Aug. 28, 2014, orig.
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proceeding) (mem. op.) (disqualification movant must identify the essential facts
that attorney’s testimony would establish). Simply stating that Lambright’s
attorneys’ testimony is necessary to establish one of the elements of its interference
claim, without further explanation, is insufficient to meet PGS’s significant burden
to show that the testimony is necessary to establish an essential fact. See id.; In re
Hormachea, No. 04-04-00581-CV, 2004 WL 2597447, at *2 (Tex. App.—San
Antonio Nov. 17, 2004, orig. proceeding) (mem. op.) (mere fact that attorney
participated in allegedly defamatory press conference was not enough to prove that
his testimony was “necessary” or “essential” in defamation suit against his clients).
Moreover, the fact that Lambright attorneys verbally communicated with
DFW personnel, without more, does not demonstrate that the testimony of the
Lambright attorneys is necessary to establish an essential fact. To the contrary, if
PGS needs testimony about those verbal communications, PGS can elicit testimony
from DFW personnel regarding these communications. See Sanders, 153 S.W.3d
at 57 (trial court did not abuse discretion in denying motion to disqualify where
there was no evidence testimony was not available from another source); In re
Stone, No. 14-13-00311-CV, 2013 WL 1844267, at *2 (Tex. App.—Houston [14th
Dist.] Apr. 19, 2013, orig. proceeding) (mem. op.) (disqualification improper
where record shows that lawyer is not the only person who can testify regarding
particular facts). Because PGS can procure testimony regarding the content of
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these communications from another source, it has not met its burden to show that
the testimony from Lambright’s attorneys is necessary. See In re Stone, 2013 WL
1844267, at *2.
Thus, the record does not support the conclusion that testimony from
Lambright’s attorneys is “necessary to establish an essential fact” or that PGS
genuinely needs the attorneys’ testimony. TEX. DISCIPLINARY RULES PROF’L
CONDUCT R. 3.08(a); Sanders, 153 S.W.3d at 56 (fact that attorney serves, or may
serve, as both a representative and as a witness does not in itself compel
disqualification); see also In re Garza, 373 S.W.3d at 118 (disqualification is not
appropriate unless party seeking disqualification establishes “a genuine need for
the attorney’s testimony”). Because “[d]isqualification is a severe remedy,” and
the record does not show any essential fact that could be established only by
Lambright’s attorneys’ testimony, we hold that the trial court abused its discretion
in disqualifying Lambright. Sanders, 153 S.W.3d at 57 (quoting Spears, 797
S.W.2d at 656); see In re VSDH Vaquero Venture, Ltd., 2014 WL 4262167, at *2–
3 (trial court abused discretion in disqualifying attorney where record did not
identify essential fact that attorney’s testimony was needed to establish); cf. Mauze
v. Curry, 861 S.W.2d 869, 870 (Tex. 1993) (trial court abused discretion in failing
to grant motion to disqualify where attorney filed affidavit as expert witness which
was necessary to establish essential fact).
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Conclusion
We hold that the trial court abused its discretion by disqualifying Lambright
& Associates from serving as TTSI’s attorneys. Accordingly, we direct the trial
court to vacate its order disqualifying Lambright & Associates from representing
TTSI in the underlying proceeding and to enter an order denying the motion to
disqualify. Our writ of mandamus will issue only if the trial court does not
comply.
Rebeca Huddle
Justice
Panel consists of Justices Keyes, Huddle, and Lloyd.
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in Re Texas Technical Services, Inc.
Combined Opinion