X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Click here for the full text of this decision FACTS:James Chang and Henry King were on a ski vacation together in April 1995 when King’s father and a delegation of people from China were severely injured in a helicopter crash near Flower Mound. One member was killed. At the time, Chang worked for Brewer & Pritchard, a law firm, so two days after the crash, Chang met with Patrick Gaas, a B&P partner, to discuss representing the crash victims. They talked about how to structure the contingent fee arrangement, including within that structuring what kind of referral fee would be appropriate should the firm refer the case to another firm. Chang arranged for King to meet with several attorneys from B&P, including Nick Johnson. Chang sent faxes and made calls to King’s fathers, all of which he billed to the B&P file on the case. Only five days after the crash, King signed a contingent fee agreement with Johnson. Chang was present at the meeting, and Johnson told King he would be referring the case to Jamail & Kolius. The case was referred to Jamail & Kolius for 50 percent of the net fee. Approximately two months after the crash, Chang left B&P to work at another firm. The crash suit was settled in October 1996, and Johnson received a $3 million fee. Chang left his new firm a year later and formed a partnership with Johnson and Riley Burnett. B&P sued Johnson and Chang when the first suit settled, saying, among other things, that Chang had breached a fiduciary duty owed to B&P, and that Johnson knowingly assisted Chang in committing the breach. B&P also raised a conspiracy cause of action. B&P nonsuited its original suit then filed an identical second suit to which Johnson and Change filed motions for summary judgment. The trial court granted those motions. B&P appealed to Houston’s 1st Court of Appeals. Reversing the trial court’s judgment in part, the appellate court ruled that a fact question remained over whether Johnson knowingly assisted Chang. The Texas Supreme Court affirmed for different reasons. The Supreme Court developed the contours of the duty a law firm associate owes to his law firm. The high court found that Chang and Johnson had not addressed the issues of whether there was a fiduciary duty or constructive fraud in their motion for summary judgment. The Supreme Court thus reversed and remanded. On remand, Chang filed a no-evidence motion for summary judgment, contending there was no evidence to support a claim for breach of fiduciary duty, and a traditional motion for summary judgment, contending the summary judgment evidence negated an essential element of the firm’s claim. B&P moved for a continuance on the ground that it had not had an opportunity to conduct discovery on the new theory espoused by the high court. B&P said it wanted to serve additional interrogatories and requests for production on Johnson on Chang. It also wanted to get the depositions of two additional parties. Chang and Johnson sought a motion to quash. The trial court granted the motion to quash and denied the motion for continuance. B&P sought a writ of mandamus on the grant of the motion to quash, and the 1st Court of Appeals denied the writ. B&P appealed to the Supreme Court, and the high court requested briefing, but before that court could rule, the trial court granted Chang’s and Johnson’s’ motions for summary judgment. The Supreme Court thus dismissed the petitions as moot. HOLDING:Dismissed in part; reversed and remanded in part. The court first explains that the Supreme Court’s opinion does not provide any special instructions to the trial court upon remand; therefore, the case was remanded for a new trial on all issues of fact related to the remanded causes of action and the case was re-opened in its entirety. The court rejects Chang’s and Johnson’s argument that the 1st Court of Appeals’ ruling on the writ of mandamus petition is the law of the case for the case at hand. The court points out that the 1st Court of Appeals was not the court of last resort in that case. Because B&P attempted to avail itself of a decision from the court of last resort, but the court was unable to reach a decision, in this case, the 1st Court of Appeals denial of petition for writ of mandamus was not a decision from a court of last resort. Accordingly, the “law of the case” doctrine does not apply. The court also points out that neither Chang nor Johnson explained why the depositions of the two other parties B&P asked about would be duplicative of previous discovery. The court then considers the no-evidence summary judgment motion, and assesses whether the trial court permitted an adequate time for discovery. The court notes that one of the depositions was needed to determine if Chang received a portion of the referral fee and “parked” the fee into a sham corporation. The court also notes that the trial court did not set a docket control order or set discovery deadlines after remand. Furthermore, the depositions of the two other parties had not been taken before the Supreme Court’s remand. The court thus concludes that B&P was entitled to further discovery, and the trial court abused its discretion in not granting B&P’s motion for continuance. On the traditional motion for summary judgment, the court points out that the actual remand to the trial court did not begin until some time after the court’s opinion issued. The trial court denied discovery six months later, and denied the motion for continuance three months after that. The type of information sought by B&P would not be readily available by any means other than the discovery process, the court continues, and the record further reflects that B&P exercised due diligence in attempting to secure discovery. “This case was on remand for no more than nine months; Brewer & Pritchard filed discovery requests that were material to proving its cause of action, and exercised due diligence in attempting to obtain the needed discovery. The requested depositions of [the two other parties] are not duplicative of discovery obtained prior to remand. Under the facts of this case, we hold the trial court abused its discretion in denying discovery and in refusing to continue the motion for summary judgment hearing. Brewer & Pritchard’s second issue is sustained.” OPINION:Seymore, J.; Edelman, Seymore and Guzman, JJ.

Want to continue reading?
Become a Free ALM Digital Reader.

Benefits of a Digital Membership:

  • Free access to 3 articles* every 30 days
  • Access to the entire ALM network of websites
  • Unlimited access to the ALM suite of newsletters
  • Build custom alerts on any search topic of your choosing
  • Search by a wide range of topics

*May exclude premium content
Already have an account?

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.