Opinion issued February 20, 2014.
In The
Court of Appeals
For The
First District of Texas
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NO. 01-12-00979-CV, NO. 01-13-00563-CV
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JOEL D. MALLORY, JR., Appellant
V.
ARCTIC PIPE INSPECTION COMPANY, INC., Appellee;
JOEL D. MALLORY, JR., Appellant
V.
LOCKER & LEE, P.C., Appellee
On Appeal from the 129th District Court
Harris County, Texas
Trial Court Case Nos. 2004-06321-A, 2004-06321-B
MEMORANDUM OPINION
In two separate interlocutory appeals, Joel D. Mallory contends that the trial
court erred by granting summary judgment to Locker & Lee, P.C. and later to
Arctic Pipe Inspection Company, Inc. on claims related to their failure to protect
Mallory’s interest in a personal injury lawsuit settlement. In four issues, Mallory
complains that the trial court erred by (1) granting traditional and no-evidence
summary judgment to Locker, (2) granting adoptive summary judgment to Arctic,
(3) denying Mallory’s partial summary judgment motion against Arctic, and (4)
granting Arctic’s motion for severance. We affirm.
Background
Mallory, an attorney, collaborated with Barbara Hudson to work on a
personal injury lawsuit. Mallory filed these appeals against his client’s opponents,
their attorneys, and their insurance provider for failing to protect his contingency
fee interest in the lawsuit’s settlement. Specifically, Mallory alleges that Arctic and
Locker conspired to exclude him from obtaining his rightful share of the settlement
as stipulated in a joint venture agreement with Hudson.1
Over 12 years ago, John McKelvey was injured in the course of his duties as
an Arctic employee. McKelvey and his wife hired Hudson as their attorney to
pursue their claims against Arctic. They retained Hudson on a contingency fee
1
Mallory also named as defendants Barbara Jackson Hudson, Richard L. Howell, and
ACE American Insurance Company. On appeal, however, Mallory only challenges the
trial court’s order granting summary judgment to Locker and Arctic.
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basis, granting Hudson authority to pursue all claims and suits related to their
claims and to hire “[a]ttorneys to be paid . . . with no additional expenses to [the
McKelveys] by way of promise or guarantees as to the outcome or settlement of
this claim.” The McKelveys also conveyed and assigned Hudson a one-third
interest in their claims and the gross amount received in settlement if the matter
were settled without a suit. Alternatively, Hudson would receive 40 percent of the
judgment obtained or amount received for the case if a suit was filed.
Hudson partnered with Mallory on various legal matters. About one year
after the McKelveys retained Hudson, she informed them that Mallory would be
working on their case. Another year later, Hudson and Mallory confirmed this
agreement in a joint venture to handle the McKelvey case. In the agreement,
Hudson and Mallory divided the anticipated attorney’s fees as follows: Hudson
would take 60 percent and Mallory would take 40 percent of Hudson’s
contingency fee.
For two years, Mallory worked on the McKelvey case. Mallory propounded
discovery, responded to discovery, prepared pleadings and correspondence,
designated experts, conducted research, participated in depositions, and attended
meetings with the McKelveys, opposing counsel, and other interested parties. But
Mallory disappointed Hudson with his performance. According to Hudson,
Mallory’s work was marked by “sloppiness . . . incompleteness, [and] disappearing
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acts . . . .” Because of Mallory’s poor performance, Hudson terminated the joint-
venture agreement and referred the McKelvey case to Richard Howell. The
McKelveys executed a new fee agreement with Hudson. Thereafter, Hudson and
Howell jointly represented the McKelveys. Eight months later, the McKelvey
litigation settled.
A few weeks after the settlement, Mallory sent a letter to Arctic’s counsel,
Locker, claiming “a contractual interest in the outcome” of the McKelvey case and
asking to have his name included on any check issued in the case. Locker
requested that Mallory provide a copy of the contract that gave him an interest in
the McKelvey case. Mallory did not send a copy of his joint venture agreement
with Hudson or Hudson’s contingency fee agreement with McKelvey. Nor did he
provide any documentation supporting a fee interest in the McKelvey case. Locker
also asked Howell for documentation of his fee arrangement with McKelvey;
Howell assured Locker that Mallory had no fee interest in the case.
As a part of the settlement, Locker requested Hudson to indemnify Arctic
against any legal action that Mallory might initiate, and Hudson did so. Assured
that Mallory had no interest in the McKelvey case, the parties formally settled
without including Mallory on the settlement check. Hudson later notified Mallory
that a formal settlement had been reached and that he had no interest in the
settlement.
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Upon receiving notice that he was not included in the settlement, Mallory
filed a lawsuit against Locker and Arctic, alleging breach of contract, defamation,
tortious interference, and civil conspiracy. Mallory claimed that Arctic and Locker
wrongly disregarded his contractual interest in the McKelvey settlement.
Specifically, he alleged that Arctic and Locker knowingly interfered with his fee
interest, “intentionally participated in efforts to cut him out,” and engaged in a civil
conspiracy. The trial court granted Locker’s traditional and no-evidence summary
judgment motions against Mallory. Arctic later moved to adopt Locker’s
traditional summary judgment. The trial court granted summary judgment and
severed the claims against Arctic.
Mallory timely appealed both summary judgment orders.
Summary Judgment
In his first issue, Mallory contends that the trial court erred by granting
traditional and no-evidence summary judgment in Locker’s favor. He argues that
Locker’s motions did not meet the requirements of Texas Rule of Civil Procedure
166a(c) because they failed to “present . . . grounds in a specific manner as to
define the issue and to provide adequate information for its opposition.”
A. Standard of review
We review a trial court’s grant of summary judgment de novo. TEX. R. CIV.
P. 166a; Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844,
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848 (Tex. 2009). When a defendant challenges the propriety of both traditional and
no-evidence summary judgments, we typically review first the no-evidence
motion. See Parker v. Valerus Compression Services, LP, 365 S.W.3d 61 (Tex.
App.—Houston [1st Dist.] 2011, pet. denied). In this case, however, both appellees
were granted traditional summary judgment—Locker through its own motion and
Arctic by adopting Locker’s traditional summary judgment motion—therefore, we
consider the traditional summary judgment first because it presents the possibility
of resolving the appeal as to all parties.
To prevail on a motion for traditional summary judgment, the movant must
show that there is no genuine issue of material fact and that he is entitled to
judgment as a matter of law. Fielding, 289 S.W.3d at 848.
B. Traditional summary judgment
Mallory argues that Locker’s motion stated legally insufficient grounds for
relief on all of his claims and that the motion “was riddled with unsupported legal
and factual conclusions.” He argues that summary judgment was improper because
the evidence raised genuine questions of material facts.
Summary judgment is proper if, having viewed all of the pleadings as true
and all of the evidence in the light most favorable to the non-movant, there are no
genuine issues of material fact. Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 600
(Tex. 2004). In reviewing the evidence in a light most favorable to the non-
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movant, “[a] genuine issue of material fact exists if more than a scintilla of
evidence establishing the existence of the challenged element is produced.” Id. An
issue of material fact may be established by direct or circumstantial evidence. Id. at
601 (citing Lozano v. Lozano, 52 S.W.3d 141, 149 (Tex. 2001)). If evidence
transcends “mere suspicion,” it raises a genuine issue of material fact; but evidence
that is “so slight as to make any inference a guess is in legal effect no evidence.”
Id. When the order granting summary judgment does not specify the grounds on
which it was granted, we must affirm the summary judgment if any of the asserted
grounds are meritorious. FM Props. Operating Co. v. City of Austin, 22 S.W.3d
868, 872–73 (Tex. 2000).
In its motion for traditional summary judgment, Locker asserted four reasons
why Mallory’s claims failed as a matter of law: (1) Mallory did not have an
assignment of a property interest—he had a fee-sharing agreement with Hudson;
(2) it owed no duty to Mallory to protect his interest in the settlement because
Mallory had no property interest; (3) it committed no unlawful acts that would
constitute civil conspiracy; and (4) without any intentional conduct aimed at
harming Mallory, there was no basis for imposing exemplary damages against
Locker.
Whether Locker’s motion for summary judgment was properly granted turns
first upon whether there was more than a scintilla of evidence that Mallory had a
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property interest in the settlement. If Mallory had no property interest, Locker did
not have a corresponding duty to protect Mallory’s alleged interest in the
settlement.
1. Mallory had no property interest in the settlement
Mallory argues that his joint venture agreement with Hudson gave him a
contractual interest in the settlement itself. Mallory also argues he had an
“enforceable and protected equitable interest” that he could enforce against Locker
for the legal services he provided. Locker agrees Hudson and Mallory had a joint
venture agreement; it disagrees, however, that the joint venture agreement granted
Mallory a property right in the McKelvey settlement.
(a) Mallory had no contractual interest in the settlement
Mallory relies on Brown v. Cole, 291 S.W.2d 704, 709 (Tex. 1956), to argue
that his joint venture agreement with Hudson created a partnership and that he and
Hudson had a “shared community of interest.” In addition to the shared community
of interest, Mallory argues he also had an interest in the McKelvey settlement.
Mallory cites several cases to support his contention that his joint venture
agreement with Hudson gave him not only a claim against his “partner,” but also
against Locker for not protecting his contingent fee interest. The cases he cites
involve claims against either a lawyer who promised a portion of his fee to another
lawyer or a client who contracted to pay a contingency fee. See, e.g., Madeksho v.
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Abraham, Watkins, Nichols & Friend, 112 S.W.3d 679 (Tex. App.—Houston [14th
Dist.] 2003, pet. denied) (disputing attorneys challenge division of settlement fees);
Robert L. Crill, Inc. v. Bond, 76 S.W.3d 411 (Tex. App.—Dallas 2001, pet. denied)
(referring lawyer sued referred lawyer to recover settlement fees); Honeycutt v.
Billingsley, 992 S.W.2d 570 (Tex. App.—Houston [1st Dist.] 1999, pet. denied)
(claim by plaintiffs’ original attorney against client for portion of attorney’s fees
after attorney was discharged). In each case, the attorney bringing the suit had a
contingency fee agreement with a client—not another attorney—and filed suit
against the other attorney to recover his alleged share of the fees.
Mallory did not have a contingent fee agreement with the McKelveys.
Mallory also did not have a direct contract with the McKelveys conveying any
interest in fees. Rather, the joint venture agreement was between Mallory and
Hudson and gave Mallory a share of Hudson’s fees. Mallory presents no evidence
that the joint venture agreement gave him a contingent fee interest in the settlement
itself rather than a claim against Hudson for his share of the collected contingency
fee. 2
2
Mallory argues that Hudson’s repudiation of their joint venture agreement did not
disrupt his contractual interest and, therefore, under Honeycutt, his contractual
interest in the settlement persists. See Honeycutt v. Billingsley, 992 S.W.2d 570
(Tex. App.—Houston [1st Dist.] 1999, pet. denied) (upholding jury finding that
referral agreement did not expressly “extinguish” rights under original
contingency fee agreement.). Mallory, however, did not have a contingency fee
agreement with the McKelveys.
9
We conclude that Mallory did not have an interest in the McKelvey
settlement because Mallory did not have a contingent fee agreement with the
McKelveys and Hudson did not assign her contingent interest to Mallory. Cf.
Travelers Fire Ins. Co. v. Steinmann, 276 S.W.2d 849, 851 (Tex. Civ. App.—
Dallas 1955, writ ref’d) (“When a plaintiff assigns an interest in his cause of action
to his attorney and the defendant has notice of the assignment, the defendant must
include the attorney in any settlement; he may not settle with the plaintiff alone
without making himself liable to the attorney also.”).
(b) Mallory had no equitable interest in the settlement
Mallory argues that, even if the joint venture agreement did not grant him a
legal interest in the settlement, he had an equitable interest in it because he
“provided professional services by instigating the lawsuit and litigating it . . . .” He
also argues that he did not need a written contract with McKelvey to have an
equitable interest in the settlement because courts may enforce an “oral fee
sharing/joint venture agreement.”
Mallory relies on Madeksho v. Abraham, Watkins, Nichols & Friend, where
the court of appeals upheld an oral agreement between lawyers to divide
contingency fees. 112 S.W.3d at 681. The facts here are distinguishable. In
Madeksho, two lawyers who had partnered together for over 20 years disputed an
oral agreement between them to share contingency fees. Id. By contrast, the
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dispute here is between a plaintiff’s attorney, his client’s defendants, and the
defendants’ attorneys. Even assuming Mallory had an equitable interest in the
settlement, his remedy is to bring a claim against Hudson, not Locker. See
Madeksho, 112 S.W.3d at 681–82. Because Mallory presents no evidence that the
McKelveys granted him a contingent interest in the settlement, we conclude that
Mallory had no equitable interest in the McKelvey settlement that can be enforced
against those who funded the settlement.
2. Locker had no duty to protect Mallory’s alleged interest in the
settlement
Mallory next argues that Locker breached its duty to him by not protecting
his contractual interest when brokering the settlement. Specifically, Mallory
alleges that Locker tortiously interfered with his interest, engaged in a civil
conspiracy to exclude him from the settlement, and acted negligently in doing so.
When a defendant has notice of an attorney’s assigned interest in the
settlement proceeds and fails to protect that interest, the defendant remains liable to
the attorney for the amount of the assigned interest. See Honeycutt, 992 S.W.2d at
584–85; Steinmann, 276 S.W.2d at 851; and Trinity River Auth. of Tex. v. Badders,
453 S.W.2d 304, 308–09 (Tex. Civ. App.—Houston [14th Dist.] 1970, no writ) (all
involving defendants who ignored an attorney’s contingent fee contract with
plaintiff and were found liable for attorney’s share of fees). However, when an
attorney does not have a demonstrated property interest, a defendant does not have
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a duty to protect an alleged interest in a fee-sharing agreement between other
attorneys. See Madeksho, 112 S.W.3d at 689. We have already determined that
Mallory did not have a property interest in the settlement. Without a property
interest in the settlement, Locker had no duty to protect Mallory’s fee-sharing
agreement with Hudson.
Despite the absence of a property interest in the settlement, Mallory argues
that Locker owed him a duty not to tortiously interfere with his alleged interests.
See Prudential Ins. Co. of Am. v. Fin. Review Servs., Inc., 29 S.W.3d 74, 77–78
(Tex. 2000). Mallory, however, does not address how Locker’s actions constrained
his right to enforce his contractual interest in his fee-sharing agreement with
Hudson. Nor does Mallory offer any legal basis to demonstrate that Locker owed
him a duty to protect his contractual interests. Without a duty to protect his
interests, Mallory’s negligence claim fails as a matter of law. Honeycutt, 992
S.W.2d at 584; Trinity River Auth. of Tex., 453 S.W.2d at 308–09.
Locker did not owe Mallory a duty to protect his alleged interest in the
settlement, and Mallory has not demonstrated that Locker interfered with his
interest in the fee-sharing agreement with Hudson. Accordingly, we hold that the
trial court properly granted traditional summary judgment in Locker’s favor.
We overrule Mallory’s first issue.
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Adopted Summary Judgment
In his second issue, Mallory contends that the trial court improperly granted
Arctic’s motion to adopt the traditional summary judgment that it granted to
Locker. Mallory contends that there is an “irreconcilable conflict between Rule
166a(c) and Rule 58” and that rule 166a(c) should take precedence. Mallory insists
that the specificity requirement of rule 166a(c) precludes a co-party from adopting
another party’s summary judgment motion.
When a party attacks an opponent’s motion for summary judgment on
specificity grounds, a special exception is required. Franco v. Slavonic Mut. Fire
Ins. Ass’n, 154 S.W.3d 777, 784 (Tex. App.—Houston [14th Dist.] 2004, no pet.);
McConnell v. Southside Indep. Sch. Dist., 858 S.W.2d 337, 342 (Tex. 1993) (“An
exception is required should a non-movant wish to complain on appeal that the
grounds relied on by the movant were unclear or ambiguous.”). To preserve the
issue for appeal, the excepting party must obtain a ruling on the special exception.
McConnell, 858 S.W.2d at 343, n.7; Dolcefino v. Randolph, 19 S.W.3d 906, 925
(Tex. App.—Houston [14th Dist.] 2000, pet denied).
In his response to Arctic’s motion to adopt and join the summary judgment
granted to Locker, Mallory did not challenge the adoptive summary judgment
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procedure. Mallory, therefore, waived his right to challenge the appropriateness of
adoptive summary judgment.3 See Franco, 154 S.W.3d at 785.
We overrule Mallory’s second issue.
Mallory’s Partial Summary Judgment Motion
In his third issue, Mallory contends that the trial court improperly denied his
partial summary judgment motion against Arctic. He contends that he proved his
property interest in the settlement as a matter of law.
We have already concluded that Mallory did not have a property interest in
the McKelvey settlement. Mallory, therefore, did not establish his interest in the
settlement as a matter of law. We conclude the trial court properly denied
Mallory’s motion for partial summary judgment against Arctic.
We overrule Mallory’s third issue.
Severance
In his fourth issue, Mallory contends that the trial court abused its discretion
by granting Arctic’s severance motion. He contends that he did not receive timely
notice of the motion to sever and that his case “has too many interloping and
interwoven issues for a severance to be proper.”
3
Even assuming Mallory had preserved the issue, the process of adoptive summary
judgment is well-established. Under Texas Rule of Civil Procedure 58, a party
may adopt a co-party’s pleadings by reference. TEX. R. CIV. P. 58; see, e.g.,
Lockett v. HB Zachary Co., 285 S.W.3d 63, 73 (Tex. App.—Houston [1st Dist.]
2009, no pet.) (holding adoptive summary judgment was properly granted when
summary judgment grounds were same for both parties).
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A. Standard of review
Rule 41 of the Texas Rules of Civil Procedure states that “[a]ny claim
against a party may be severed and proceeded with separately.” TEX. R. CIV. P. 41.
We review a trial court’s ruling on a severance order for an abuse of discretion.
Guar. Fed. Sav. Bank v. Horseshoe Operating Co., 793 S.W.2d 652, 658 (Tex.
1990). A trial court abuses its discretion when it acts arbitrarily or unreasonably,
does not refer to guiding rules or principles, or clearly fails to analyze or correctly
apply the law. Runcie v. Foley, 274 S.W.3d 232, 233 (Tex. App.—Houston [1st
Dist.] 2008, no pet.).
B. Mallory waived his right to challenge the trial court’s ruling
Mallory fails to show that the severance harmed him. He has presented and
we have considered all of his legal arguments and evidence. Mallory did not
respond substantively to Arctic’s third motion for severance; Mallory complained
only that he did not receive timely notice of the motion. He did not challenge the
appropriateness of the motion nor did he argue any substantive grounds for
denying Arctic’s motion. Mallory, therefore, waived his right to challenge the
severance on appeal.
We overrule Mallory’s fourth issue.
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Conclusion
Having overruled all of Mallory’s issues, we affirm.
Harvey Brown
Justice
Panel consists of Justices Jennings, Sharp, and Brown.
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