Case: 16-50305 Document: 00513902603 Page: 1 Date Filed: 03/08/2017
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
No. 16-50305 March 8, 2017
Lyle W. Cayce
Clerk
ERNESTO MARTINEZ, JR., The Law Offices of Ernesto Martinez, Jr.,
P.L.L.C.,
Plaintiff - Appellee
v.
HELLMICH LAW GROUP, P.C.,
Defendant - Appellant
Appeal from the United States District Court
for the Western District of Texas
USDC No. 5:14-CV-769
Before DAVIS, CLEMENT, and COSTA, Circuit Judges.
PER CURIAM:*
Defendant Hellmich Law Group, P.C., (“HLG”) appeals from the district
court’s denial of its motion to dismiss and motion for summary judgment, both
of which were brought on the ground that HLG’s communications are
absolutely privileged under Texas law because they were made in connection
with—and in anticipation of—a quasi-judicial proceeding. HLG argued that
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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the tort claims of Plaintiff, Ernesto Martinez, Jr., all arose out of allegedly false
and defamatory statements made to Martinez’s clients in an effort to get them
to hire HLG to bring an action against Martinez. The district court held that
HLG had not shown it was entitled to the privilege defense under either the
motion to dismiss standard or the summary judgment standard because HLG
did not show its statements were made in connection with a judicial
proceeding. 1 Because we find that the district court erred in its application of
Texas law and that HLG is entitled to summary judgment of Martinez’s claims,
we REVERSE and REMAND.
I.
Martinez filed this diversity action in August 2014, alleging that both
HLG and Martinez’s former client, Kennie Arriola, 2 contacted certain of
Martinez’s other clients “in an attempt to file a baseless and fraudulent claim
against” Martinez. Martinez alleged that HLG directed communication with
Martinez’s clients in an attempt to interfere with their representation.
Martinez attached an affidavit averring that he had received correspondence
from HLG on August 8, 15, and 16, 2014 which indicated that HLG had
contacted Martinez’s clients and had been retained to initiate “litigation and/or
arbitration” against Martinez. Martinez asserted that on August 11 he
received phone calls from two separate clients who said that HLG had made
attempts to solicit them into joining an action against Martinez, falsely stating
1 More precisely, the district court referred the motion to dismiss and motion for
summary judgment to the magistrate judge, who issued a report and recommendation in
favor of Martinez. Martinez v. Hellmich Law Gp., No. 5:14-CV-769 (W.D. Tex. July 8, 2015).
The district court entered two orders adopting the report and recommendation. Martinez v.
Hellmich Law Gp, No. 5:14-CV-769 (W.D. Tex. Aug. 6, 2015) (relating to another defendant);
Martinez v. Hellmich Law Gp, No. 5:14-CV-769 (W.D. Tex. Feb. 17, 2016) (relating to HLG).
Because the district court adopted the report and recommendation, we refer to it as the
district court’s reasoning.
2 Martinez also brought claims against Arriola, though these were dismissed by the
district court as subject to binding arbitration and are not at issue here.
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that ten of Martinez’s clients had ceased being represented by Martinez and
joined an action against him. Martinez also claimed that another client
reported being “hounded” by HLG. Martinez claimed that HLG’s actions were
tortious under Texas law, constituting interference with his contracts,
conspiracy to interfere with a business relationship, business disparagement,
and defamation.
HLG moved to dismiss and, in the alternative, for summary judgment,
arguing that HLG was entitled to an absolute privilege against Martinez’s
claims because the statements giving rise to each were made in connection
with the representation of existing clients and to prospective clients in
connection with anticipated arbitration. Specifically, HLG claimed this matter
arose out of its investigation of billing irregularities on behalf of two of
Martinez’s clients in a multi-party litigation called Halprin v. FDIC. In support
of its motion for summary judgment, HLG submitted an affidavit from Arriola,
who had been one of Martinez’s Halprin clients. Arriola averred that he and
Les Klingerman, another of Martinez’s Halprin clients, retained HLG to
investigate Martinez’s billing practices and, “if necessary, [to] bring an
arbitration action against [Martinez].”
Arriola stated that after HLG found irregularities in Martinez’s billing
records, Arriola and Klingerman communicated with many of Martinez’s other
Halprin clients, informing them that Klingerman and Arriola had retained
HLG in connection with the overbilling and giving them HLG’s contact
information. HLG averred that it never initiated contact with Martinez’s
Halprin clients and that it only communicated with those individuals after
they had contacted HLG or requested that HLG contact them, at which point
HLG informed them of the merits of the potential overbilling arbitration. HLG
argued that Martinez’s complaint was sufficient to demonstrate that HLG’s
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statements were absolutely privileged and, in any case, HLG had submitted
sufficient uncontroverted evidence to prove its entitlement to the privilege.
The district court denied HLG’s motion to dismiss and its motion for
summary judgment. The court reasoned that HLG’s entitlement to the
absolute privilege was not apparent from the face of the complaint because
HLG did not represent any person in connection with the Halprin litigation
and the statements at issue were made in connection with HLG’s attempts to
solicit new clients, and therefore could not have been “in furtherance of” the
representation of an existing client. The district court found, with respect to
Martinez’s claims of tortious interference and conspiracy to interfere with a
business relationship, that the court would have to determine whether HLG’s
statements were made in good faith anticipation that it would be filing a
nonfrivolous action before determining whether HLG was entitled to assert its
privilege defense and, thus, these claims could not be dismissed on the basis of
the pleadings. The district court also denied HLG’s motion for summary
judgment, finding that HLG’s proffered evidence did not show that its
communications were made in relation to a judicial proceeding in which it
participated as counsel. HLG timely appealed. 3
3 Although this court does not ordinarily have jurisdiction over appeals from non-final
orders, under the collateral order doctrine, we may exercise appellate jurisdiction over a
nonfinal order that “(1) conclusively determine[s] the disputed question, (2) resolve[s] an
important issue completely separate from the merits of the action, and (3) [would] be
effectively unreviewable on appeal from a final judgment.” Netsphere, Inc. v. Baron, 799 F.3d
327, 334-35 (5th Cir. 2015) (quoting Henry v. Lake Charles Am. Press, LLC, 566 F.3d 164,
171 (5th Cir. 2009)). This court has held that because “Texas law regards its privilege for
communications made in the context of judicial, quasi-judicial, or legislative proceedings as
a complete immunity from suit, not a mere defense to liability,” a defendant who asserts this
privilege may “appeal the district court’s rejection of its immunity claim as a collateral order
under 28 U.S.C. § 1291.” Shanks v. AlliedSignal, Inc., 169 F.3d 988, 992 (5th Cir. 1999).
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II.
We review a district court’s summary judgment decision de novo. 4
Summary judgment is appropriate if “there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter of law.” 5 When
reviewing a summary judgment, “[t]he evidence of the nonmovant is to be
believed, and all justifiable inferences are to be drawn in his favor.” 6
III.
Under Texas’s judicial proceedings privilege,
An attorney at law is absolutely privileged to publish defamatory
matter concerning another in communications preliminary to a
proposed judicial proceeding, or in the institution of, or during the
course and as a part of, a judicial proceeding in which he
participates as counsel, if it has some relation to the proceeding. 7
This privilege “applies to out-of-court communications if the
communication bears some relationship to the proceeding and is in furtherance
of the attorney’s representation.” 8 In determining whether a communication is
privileged, a “court must consider the entire communication in its context, and
4 Poole v. City of Shreveport, 691 F.3d 624, 627 (5th Cir. 2012).
5 FED. R. CIV. P. 56(a).
6 Tolan v. Cotton, 134 S. Ct. 1861, 1863 (2014) (per curiam) (quoting Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 255 (1986) (alteration in original)).
7 Russell v. Clark, 620 S.W.2d 865, 869 (Tex. Civ. App. 1981) (quoting RESTATEMENT
(SECOND) OF TORTS § 586 (AM. LAW INST. 1977)). While HLG insists that Russell was
overturned by the Supreme Court of Texas’s ruling in Shell Oil Co. v. Writt, 464 S.W.3d 650
(Tex. 2015), we do not find these cases to be in conflict with one another. Shell speaks to a
witness’s privilege against defamation suits, while Russell speaks to an attorney’s privilege.
The claim that Russell is “discredited” by its reliance on Restatement section 586, as opposed
to section 588, is also incorrect as the allegedly “more expansive” section 588 mirrors section
586, but speaks to a witness’s privilege. See RESTATEMENT (SECOND) OF TORTS § 588 (“A
witness is absolutely privileged to publish defamatory matter concerning another in
communications preliminary to a proposed judicial proceeding or as a part of a judicial
proceeding in which he is testifying, if it has some relation to the proceeding.”).
8 Dall. Indep. Sch. Dist. v. Finlan, 27 S.W.3d 220, 238 (Tex. App. 2000); see also
Helfand v. Coane, 12 S.W.3d 152, 157 (Tex. App. 2000); Hill v. Herald-Post Publ’g Co., 877
S.W.2d 774, 782-84 (Tex. App. 1994), rev’d in part on other grounds, 891 S.W.2d 638 (Tex.
1994).
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must extend the privilege to any statement that bears some relation to an
existing or proposed judicial proceeding. All doubt should be resolved in favor
of its relevancy.” 9 This privilege applies to prospective judicial or quasi-judicial
proceedings, so long as such proceeding was “a serious consideration at the
time the communication was made.” 10 Quasi-judicial proceedings include
private arbitration. 11
The Supreme Court of Texas has said that the judicial proceedings
privilege can bar claims other than defamation where a plaintiff’s damages
“are basically defamation damages.” 12 The “privilege is not limited to claims of
libel or slander, and it should be applied to claims arising out of
communications made in the course of judicial proceedings, regardless of the
label placed on the claim.” 13
In support of its motion for summary judgment, HLG submitted: (1) an
August 8, 2014 letter from HLG to Martinez; (2) an August 15, 2014 “Notice of
Intent to File Arbitration Action” from HLG to Martinez; (3) an August 16,
2014 cease-and-desist letter from HLG to Martinez; (4) an affidavit from its
principal, Christopher Hellmich; and (5) an affidavit from Arriola. Martinez
submitted a motion in opposition reiterating the claims in the affidavit
9 Russell, 620 S.W.2d at 870.
10 Shell, 464 S.W.3d at 655; see also, e.g., Crain v. Smith, 22 S.W.3d 58, 63 (Tex. App.
2000) (statements made in attorney’s pre-complaint letter to a prospective defendant were
absolutely privileged).
11 Henderson v. Wellmann, 43 S.W.3d 591, 600 (Tex. App. 2001).
12 Bird v. W.C.W., 868 S.W.2d 767, 772 (Tex. 1994) (absolute privilege applied to
negligence claim where plaintiff sought damages for injury to his reputation, public
contempt, ridicule, loss of relationships, and loss of self-esteem).
13 Crain v. Unauthorized Practice of Law Comm. of Supreme Ct. of Tex., 11 S.W.3d
328, 335 (Tex. App. 1999). See also Laub v. Pesikoff, 979 S.W.2d 686, 691 (Tex. App. 1998)
(“Bird makes it clear that, to avoid the circumvention of the policy behind the privilege, the
privilege should be extended beyond defamation when the essence of a claim is damages that
flow from communications made in the course of a judicial proceeding.”).
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attached to his complaint and attaching a verification page affirming that he
had personal knowledge of each and every statement contained in the motion.
HLG’s evidence, as well as Martinez’s own submissions, demonstrate
that the allegedly tortious statements at issue in this case were made in
relation to a proposed arbitration and are therefore absolutely privileged under
Texas law. Specifically, Hellmich’s affidavit establishes that allegedly tortious
speech concerned Martinez’s billing practices, a matter HLG was actively
investigating on behalf of Klingerman and Arriola. It also establishes that
HLG did not initiate contact with any of Martinez’s Halprin clients; rather,
those clients contacted HLG or requested that HLG contact them after
Klingerman and Arriola informed them of the proposed arbitration.
Furthermore, Hellmich’s affidavit establishes that all of Martinez’s Halprin
clients who spoke with HLG retained HLG to represent them in the arbitration
action against Martinez, although one of them ultimately decided against
pursuing the arbitration.
Arriola’s affidavit establishes that HLG actually filed the arbitration on
his behalf and on behalf of some of Martinez’s other Halprin clients on
November 29, 2014 and that the arbitration action resulted in a $250,000
award against Martinez. Martinez’s submissions in the lower court confirm
that the statements it alleges give rise to HLG’s liability were made in
connection with the proposed arbitration, as all the specific facts in Martinez’s
affidavit allege that HLG’s communications with Martinez’s Halprin clients
were intended to convince them to join in the proposed arbitration proceeding
against Martinez.
Martinez has not filed a brief in this court, and the summary judgment
record shows no genuine dispute as to any of the above material facts.
Accordingly, we conclude that the statements at issue are absolutely privileged
under Texas law. At the time HLG made the statements, it is undisputed that
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HLG already represented Klingerman and Arriola in connection with
investigating the overbilling issue, and HLG made the statements in
connection with the arbitration proceeding it contemplated filing on
Klingerman and Arriola’s behalf. HLG was privileged to discuss the merits of
a planned quasi-judicial proceeding with parties similarly situated to its
existing clients, the majority of whom later retained HLG and joined in the
arbitration. 14 The fact that the arbitration had not been commenced at the time
the allegedly tortious communications occurred is of no importance. 15 Thus,
HLG has established that it is entitled to assert the judicial proceedings
privilege as a full defense to Martinez’s defamation claims.
We conclude the district court erred by analyzing each statement made
by HLG to Martinez’s Halprin clients in a vacuum, disregarding the fact that
HLG already represented Klingerman and Arriola in connection with the
proposed arbitration proceeding. In doing so, the district court incorrectly
treated the statement as simply the solicitation of a new client, in which case
it would not be clear whether Texas would extend the privilege to the
communications. 16 Texas law requires us to view the statements at issue in
14 See Frazin v. Burleson, Pate & Gibson, No. 05-92-00121-CV, 1992 WL 333325, at *2
(Tex. App. Nov. 10, 1992) (attorney’s communications to agencies and local business
organizations concerned with real estate business practices bore some relation to planned
judicial proceeding and were in furtherance of representation where plaintiff was a realtor
and thus “[s]ending the letter to those entities could favorably affect the actions . . .
complained of for the benefit of [the] client or favorably affect settlement.”); Russell, 620
S.W.2d at 870 (“All doubt should be resolved in favor of [a statement’s] relevancy.”); see also
Watson v. Kaminski, 51 S.W.3d 825, 827-28 (Tex. App. 2001) (letter sent to third party
concerning planned litigation was related to judicial proceeding and in furtherance of client’s
representation); Hill, 877 S.W.2d at 783-84 (statement made by attorney to reporter
“affirming the allegations in his motion and brief and his belief that he could prove them”
bore a substantial relationship to judicial proceedings and was made in furtherance of his
representation of his client).
15 See, e.g., Shell, 464 S.W.3d at 655; Russell, 620 S.W.2d at 870.
16 See Rhodes Colleges, Inc. v. Johnson, No. 3:10-CV-0031-D, 2012 WL 627273, at *6-
7 (N.D. Tex. Feb. 27, 2012) (website soliciting new clients not “in furtherance” of existing
clients’ representation).
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context and resolve any doubt in favor of the privilege. 17 In light of HLG’s
representation of Klingerman and Arriola and the proposed arbitration
proceeding, we conclude that Texas law would apply the privilege in these
circumstances.
Similarly, the district court erred to the extent it held that HLG was not
entitled to the privilege because HLG did not represent any client in the
Halprin litigation. Again, the relevant legal proceeding here is the proposed
arbitration relating to Martinez’s billing practices, a quasi-judicial proceeding
sufficient to trigger the privilege under Texas law. 18
In sum, we conclude that the district court erred in refusing to extend
the privilege to HLG’s communications made to Martinez’s Halprin clients.
Consequently, we also conclude that the district court erred in its remaining
determinations. For instance, Martinez’s tortious interference claim is based
on HLG’s communications with Martinez’s Halprin clients urging them “to join
in [HLG’s] representation based on baseless and false claims,” and Martinez’s
conspiracy to interfere with a business relationship claim is based on HLG’s
conspiracy with Arriola “to have all clients join the claim against” Martinez.
Martinez does not allege any specific facts supporting these claims other than
HLG’s communications with his Halprin clients. These claims all arise out of
communications HLG was privileged to make and are therefore barred for the
same reasons as Martinez’s defamation claims. 19
Finally, the district court found, based on this court’s ruling in
International Shortstop, Inc. v. Rally’s, Inc., 939 F.2d 1257, 1269 (5th Cir.
1991), that HLG had to demonstrate it had acted in good faith in order to assert
17 Russell, 620 S.W.2d at 870
18 Henderson, 43 S.W.3d at 600.
19 See Unauthorized Practice of Law Comm., 11 S.W.3d at 335; Laub, 979 S.W.2d at
691.
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privilege with respect to Martinez’s tortious interference and conspiracy
claims. However, International Shortstop and the cases cited therein dealt with
the privilege to interfere with a contract of another in the bona fide furtherance
of one’s own rights, 20 a privilege not asserted by HLG. Moreover, the district
court only considered International Shortstop in the context of HLG’s motion
to dismiss and failed to consider evidence before it concerning this issue. In
any event, we find HLG presented undisputed evidence of good faith in support
of its motion for summary judgment, namely, evidence that HLG’s
communications concerned the merits of an arbitration action it had
investigated and was contemplating filing. HLG also submitted undisputed
evidence that it filed a meritorious arbitration action on behalf of some of
Martinez’s Halprin clients. Thus, to the extent International Shortstop
imposes a good faith requirement applicable in this case, HLG has
demonstrated that any threats to file an arbitration action were made in good
faith.
For the foregoing reasons, we REVERSE the district court’s order and
REMAND for the district court to grant HLG’s motion for summary judgment.
20 See 939 F.2d at 1269.
10