The Texas Supreme Court has held that that the civil barratry statute does not have extraterritorial effect, reversing the Houston [1st] Court of Appeals.
Michael A. Pohl v. Mark Kentrell Cheatham, Sr. (23-0045; May 9, 2025) 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.
In an opinion by Justice Huddle, a divided SCOTX reversed and ruled that § 82.0651(a) “does not extend to the nonresident clients’ claims because the conduct that is the statute’s focus—the solicitation of a legal-services contract through illegal barratry—occurred outside Texas. The starting point for the majority’s analysis was the longstanding rule that “Texas statutes are presumed not to have extraterritorial effect” (citations omitted). As recently as 2016, SCOTUS explained that the “presumption’s real world import is significant: it allows courts and litigants to avoid the uncertainty and discord that can result if, without prior notice, Texas law is determined to govern conduct in other states or, worse, the law of a foreign state is haphazardly determined to govern conduct that occurs in Texas” (citing RJR Nabisco, Inc. v. European Community, 579 U.S. 325, 335-36 (2016). Unless the Legislature expressly provides for extraterritorial effect in the statute itself, courts will presume that it doesn’t.
Here the attorneys argued that the private right of action and remedies of § 82.0651 cannot be extended to conduct that occurred outside of Texas. First, the statute has no express language “affirmative and unmistakenly” expressing the Legislature’s intent to apply the statute extraterritorially. The court of appeals erred, the Court explained, when it interpreted § 82.0651 to incorporate § 1.04, Penal Code, which authorizes prosecution in Texas for a criminal offense if “either the [defendant’s] conduct or a result that is an element of the offense occurs inside this state.” Sec. 82.0651, however, does not expressly incorporate this section, so the Court “must regard this omission as intentional and meaningful, particularly in the face of the presumption against extraterritoriality.”
Turning to the question of whether the clients overcame the presumption, the Court again explained that the court of appeals made a mistake by applying “the wrong standard” (whether an element of the offense occurred in Texas). The correct standard is whether the “focus” of the statute, that is, the conduct the Legislature sought to address, occurred in Texas. Applying that standard, the Court concluded that the specific conduct addressed by § 82.0651 was the solicitation of legal services contracts. In this case, those solicitations occurred in Louisiana and Arkansas. The Court, however, threw the clients a bone by reversing summary judgment on their breach of fiduciary duty claims, which don’t hinge on the statute. The Court further rejected the attorneys’ limitations argument because they did not challenge the trial court’s ruling that the client’s claims were brought within the applicable four-year statute.
Justice Busby, joined by Justices Lehrmann and Boyd, dissented. They argued that the majority “rewrote” the statute by applying the “focus” test too narrowly. As Justice Busby wrote, “a statute may have more than one focus, and different parts of a statute may have different focuses.” Indeed, according to Justice Busby, the “focus of legislative concern” test is really too vague to produce consistent results. In any event, he continued, he would have held that the Legislature did expressly state its focus in the statute, which is “to protect those in need of legal services from unethical, unlawful solicition and to provide efficient and economical procedures to secure that protection.” § 82.0651.
In creating a cause of action to void a contract “that was procured as a result of conduct violating [Penal Code] Section 38.12(a) or (b),” the statute covers the alleged misconduct of the attorneys who “allegedly ‘offer[ed] to pay or give a person money or anything of value to solicit employment’ in violation of Section 38.12(a)(4) and ‘knowingly finance[d] the commission of [such] offense’ in violation of Section 38.12(b)(1).” And that conduct “occurred at the attorneys’ Texas offices.” The majority, consequently erred by focusing solely on the in-person acts of solicitation rather than reading § 82.0651 and the Penal Code sections “in concert.” Justice Busby wrote further than § 38.12(a) and (b) contain a whole laundry list of prohibited actions constituting barratry, not just soliciting employment as provided by § 38.12(a)(2). “Rather than making value judgments about a statute’s core focus, we should stick to using traditional tools of statutory construction to determine that focus, as we have done for decades in deciding disputes about statutes’ territorial scope” (citations omitted). Finally, he called on the Legislature to amend the statute to make its extraterritorial application explicit.
