A divided panel of the Houston [14th] Court of Appeals has affirmed a trial court order granting a defendant attorney’s motion for summary judgment in a legal malpractice claim.
Paula Forshee, PMF Solutions, LLC, and Catalyst Solutions, LLC v. Cynthia R. Levis Moulton, Cynthia R. Levis Moulton, P.C., and Moulton, Wilson, and Arney, L.L.P. (No. 14-22-00781-CV; April 11, 2024) arose from a 2014 deal to merge real estate businesses. Forshee, owner and manager of a property management business, reached an agreement with Schur and Anderson, investor-owners of several apartment complexes, for the purpose of soliciting new investors to expand the business. Defendant Moulton, a Houston lawyer, was retained to help negotiate the deal and draft the necessary contracts. Forshee alleged that Moulton represented all three parties in the transaction. A year after the deal was done, it fell apart and Schur and Anderson terminated the contracts. Forshee sued Schur, Anderson, Moulton, and other entities, asserting contract and tort claims. Forshee settled with Schur and Anderson. Her negligence and breach of fiduciary claims against Moulton were severed. Forshee alleged that Moulton had someone else draft the contracts without telling her, that the contracts were negligently drafted to let Schur and Anderson out, and that Moulton had a financial interest in the apartment properties that were the subject of the transaction. Moulton moved for traditional and no-evidence summary judgment, which the trial court granted. Forshee appealed.
In an opinion by Justice Jewell, the court affirmed. The court first considered “whether Forshee’s claims against Moulton sound in negligence alone, or whether the allegations support distinct and independent claims for negligence as well as breach of fiduciary duty.” Applying the “anti-fracturing rule,” which bars a plaintiff from pleading “in the alternative to a professional negligence claim . . . if the crux of the alternative claim focuses on the quality or adequacy of the representation” (citations omitted). Consequently, legal malpractice claims ordinarily sound in negligence. The plaintiff, however, may assert an independently actionable fiduciary duty claim if the “claim focuses on ‘whether an attorney obtained an improper benefit from representing the client,’ while a negligence claim focuses on ‘whether an attorney represented a client with the requisite level of skill’” (citations omitted).
Turning to Forshee’s claims, the court held that they sounded in negligence, not fiduciary duty, and the trial court properly dismissed her claims for breach of fiduciary duty and fee forfeiture (a remedy in a breach of fiduciary case that is available even if plaintiff suffers no actual damages). Making the assumption that an attorney-client relationship existed between Forshee and Moulton (Moulton contested this), the court turned to Forshee’s claims that Moulton simultaenously represented all three parties, had someone else draft the contracts, represented Forshee without disclosing conflicts-of-interest. Noting that “[s]imultaneous representation, without more, does not constitute a breach of fiduciary duty” (citations omitted), the gravaman of Forshee’s allegations “involved the question of whether the attorney failed to exercise the degree of care, skill, or diligence in performing [her] duty to inform the [plaintiff] about issues that could arise during the representation” (citation omitted). The claim thus sounded in negligence and could not be “recast” as a breach of fiduciary duty claim. Further, Foreshee did not assert that Moulton obtained any improper benefit from the alleged conflict-of-interest, a necessary element of a breach of fiduciary duty claim. In short, Forshee was really complaining about Moulton’s alleged failure “to provide adequate legal representation by not properly informing, advising, or communicating with Forshee.”
Turning to Forshee’s negligence claim, the court honed in on whether Forshee presented more than a scintilla of evidence that raised a genuine issue of material fact on the causation element. The court held that she did not. Foreshee argued that, “but for the omission of certain language in the contracts, Schur and Anderson would have been required to include Forshee in deals going forward or pay damages for breaching the contracts.” She further alleged that because of Moulton’s negligence in drafting the contracts, she received a lower settlement amount from Schur and Anderson than she would have otherwise. The court rejected these arguments on the basis that “a legal malpractice plaintiff must show that the other party would have agreed to the additional or changed contractual terms, which [Forshee] did not do.” Absent such evidence, Forshee failed to raise a genuine issue of material act on the proximate cause element, and the trial court did not err in granting Moulton’s summary judgment motion and rendering a take-nothing judgment in her favor. Justice Spain dissented, stating that “[t]he majority’s opinion does not adequately address every issue raised and necessary to the final disposition of this appeal,” although he did not specify which issues were not so addressed.
