The Texas Supreme Court has agreed to review a case that raises significant issues, including limitations and extraterritorial application, of Texas’ civil barratry statute.
Michael A. Pohl, The Ammons Law Firm, and Robert Ammons, et al. v. Mark Kentrell Cheatham, Sr., Luella Miller, Mark Cheatham, Jr. and Intervenor Lacy Reese (23-0045; pet. granted May 31, 2024) arose from a civil barratry lawsuit filed by Arkansas and Louisiana residents against Texas lawyers and law firms who they allege established and coordinated a case-running operation out of Mississippi. The lawyers, through a business run by one of their wives, promised to pay funeral expenses for potential claimants whose family members had been killed in vehicle accidents if the claimants would retain the firms to file suit on their behalf. Plaintiffs did retain the firms, who filed and settled their claims in Arkansas and Louisiana courts. They then brought a civil barratry action in Harris County. Defendants moved for summary judgment on the basis that the civil barratry statute, § 82.0651, Government Code, does not have extraterritorial effect. The trial court granted the motion. Plaintiffs appealed.
In an opinion by Justice Landau, the court of appeals reversed. Texas has criminal and civil statutes proscribing barratry, as well as disciplinary rules that regulate attorney conduct. The civil statute, enacted in 2011 and amended in 2013, authorizes “improperly solicited clients and potential clients to bring a cause of action and recover fees due under a contract or representation as well as actual damages, penalties, and attorney’s fees. A violation of the Penal Code is a predicate to a statutory cause of action. Defendants argued that the alleged barratrous activity occurred outside Texas, so the statutes did not apply. The court saw no need to deal with the extraterritoriality issue because the alleged conduct of the attorneys in this case took place primarily in Texas. To the extent that there is an extraterritoriality issue in the case, it has to do with the case runners and whether they can be brought under § 38.12 and the Penal Code’s extraterritoriality provision, § 1.04. The trial court thus erred in granting summary judgment based on the extraterritorial application of § 82.0651.
The next issue involved limitations. Defendants asserted that § 82.0651 is governed by the two-year statute of limitations, so Plaintiffs’ claims were time-barred. The trial court denied summary judgment on this issue, determining that the four-year statute applied. The court of appeals agreed with the trial court, so it did not need to consider Defendants’ argument that the trial court’s judgment could be affirmed on the alternative basis of limitations even though the Defendants could not raise that issue themselves. Observing that the statute doesn’t specify the limitations period and SCOTX has yet to opine on the issue, the court began the analysis with the presumption that if a civil barratry action is a tort, then the default two-years statute of limitations applies (citations omitted). In 2020, the 1stCourt held that a civil barratry claim by a non-client under § 82.0651(c) is a tort claim covered by the two-year statute. But, the court went on, that subsection of the statute is limited to non-clients who had no established contractual relationship with the attorney. Here the clients, who sued under § 82.0651(a), did. The court further noted that a rescission claim under § 82.0651(b), as a contract-based claim, has been held to fall under the four-year statute. Similarly, the court held, an action under § 82.651(a) arises from an attorney-client contract and that the remedy is disgorgement of contractual fees, among other things. The court thus held that the four-year statute applies, affirming the trial court ruling.
Next, the Ammons defendants argued since that a Louisiana court already decided that they didn’t improperly solicit the Louisiana claimants, the trial court properly rendered summary judgment based on res judicata. The court of appeals rejected this argument as well. In a hearing in the Texas case before the Louisiana court issued any ruling in Ammons’s fee dispute with his Louisiana clients, Ammons “repeatedly assured the Texas trial court that the action Ammons pursued in Louisiana was ‘different’ from the barratry claim,” and that “the Louisiana matter was merely a fee dispute.” The trial court agreed that the Louisiana case was limited to “whether to release the attorney’s fees to Ammons,” not whether barratry had occurred in Louisiana or anywhere else. The court of appeals, consequently, held that Ammons was now estopped from raising the res judiciata defense. As to Plaintiff Cheatham, moreover, he withdrew his disgorgement claim from the Louisiana case, opting to bring the barratry action in Texas (Louisiana does not recognize a civil cause of action for barratry).
Finally, the court rules that there was some summary judgment evidence in Plaintiffs’ favor, including deposition testimony by one of the case runners (later contradicted by that same witness, who served time for a federal fraud conviction). As it’s not the court of appeals’ job to pick and choose among contradictory witness testimony for purposes of crediting (or discrediting) summary judgment evidence, the court didn’t feel impelled to make a call that belongs to the trial court. Additionally, Ammons did not produce the part of the record where he allegedly moved for the trial court to disregard the witness’s affidavit for summary judgment purposes, nor did the record indicate the trial court’s ruling on that motion. In any event, the court held that the status of the witness’s testimony is a fact question for the trial court, not a no-evidence point to be decided by the court of appeals. The trial court thus erred to the extent that it granted Ammons summary judgment on the basis of the disputed testimony.
SCOTX has not yet scheduled oral argument.
