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The Texas Supreme Court, in opinions issued on Feb. 1, held that a “Mother Hubbard” clause in an order for summary judgment no longer necessarily indicates finality and ruled against a lawyer in a contingent-fee dispute. The Supreme Court reversed judgments by Houston’s 14th Court of Appeals in Lehmann v. Har-Con Corp. and Harris v. Harbour Title Co. The two cases were consolidated on appeal. At issue in both cases is a rule established in Mafrige v. Ross in 1993, when the court held that a summary judgment is final when it contains language that purports to dispose of all claims and parties. In Mafrige, the court gave as one example of language that would meet the test the so-called “Mother Hubbard” clause, which states that all relief not expressly granted is denied. That’s not working, according to the court in an 8-0 decision. In an opinion written by Justice Nathan Hecht, the court held that in cases in which only one final appealable judgment can be rendered, a summary judgment is final for purposes of appeal if, and only if, it either disposes of all claims and parties then before the court — regardless of its language — or it states with unmistakable clarity that it is a final judgment as to all claims and all parties. But Justice James Baker said in a concurring opinion that the court is not solving the problems created by Mafrige. Baker, joined by Justices Craig Enoch and Deborah Hankinson, suggested that the court overrule Mafrige and seek a recommendation on a new procedure from its rules advisory committee. The debate over the Mother Hubbard clause had held up an appeal by Douglas and Virginia Lehmann, who were seeking monetary damages for their minor son to compensate him for the loss of his father’s companionship after the father was injured in a construction accident. Hecht’s opinion said the Lehmanns had settled with Har-Con for an undisclosed amount after agreeing in part to indemnify the corporation from other claims, but the mother then filed the suit on her son’s behalf. Har-Con filed a counterclaim to enforce the indemnity provision, and Judge Patrick Mizell of the 129th District Court in Houston granted the corporation’s motion for a summary judgment. Mizell granted the Lehmanns’ motion to sever the summary judgment order from Har-Con’s claim, and the couple attempted to appeal the judgment. But the Houston appeals court said the Lehmanns were too late in filing their appeal. The 14th Court held that the summary judgment order was final because it contained the Mother Hubbard clause and that the deadline for the appeal was 30 days after the order was signed. Howard King, who represents the Lehmanns, says the Supreme Court’s ruling allows him to go back to the appeals court to fight the merits of the appeal. King, a partner in Hill, Angel & King in Houston, says it has taken his clients almost three years to get to this point. “I think the opinion makes it more unlikely that what happened in this case will happen again,” he says. But John H. Thomisee Jr., one of Har-Con’s lawyers and a shareholder in Bair & Welscher in Houston, says he may seek a rehearing to question whether the new rule should apply in this case. “They essentially changed the law,” he says. Thomisee says he doesn’t believe the court’s ruling will solve the problem. “Whatever language the court suggests, lawyers will start throwing that language in orders, and we’ll have the same problem,” he says. The court should leave Mafrige in place and leave it up to judges and lawyers to make sure that an order is final if it includes a Mother Hubbard clause, Thomisee says. CONTINGENT FEES Also on Feb. 1, in a 6-2 ruling, the court held in Levine v. Bayne, Snell & Krause that a contingent-fee agreement between homeowners suing for a defective foundation and the firm representing them should be construed against the lawyers who drafted the contract. The majority opinion, written by Enoch, noted that Ron and Serena Levine agreed to pay Bayne, Snell one-third of “any amount received by settlement or recovery” from their suit against Donald and Pat Smith over foundation problems in the San Antonio home that they purchased from the Smiths. The Levines won a $243,644 damage award for the foundation defects, along with interest and attorneys’ fees, but that was offset by the Smiths’ recovery of $161,851 because the Levines stopped paying their mortgage. After San Antonio’s 4th Court of Appeals affirmed the judgment, the Smiths paid the Levines $104,110, but Bayne, Snell billed them for $155,866, the opinion said. The firm claimed it was owed one-third of the Levines’ award before the offset, pre-judgment and post-judgment interest, and the court-awarded attorneys’ fees. Although the Levines signed over the Smiths’ check for $104,110 to the firm, Bayne, Snell sued for $51,756, the balance of the amount the lawyers claimed they were owed. Judge Patrick Boone of the 57th District Court in San Antonio ruled in the firm’s favor without a trial, and the 4th Court upheld his judgment. But the supreme court majority reversed the judgment and interpreted “any amount received” to mean net recovery. The court said that lawyers are more able than most of their clients to detect and clarify omissions in fee contracts. “Our holding is not novel; rather, it simply emphasizes one facet of a lawyer’s duty to the client, i.e., to inform a client of the basis or rate of the fee at the outset of the matter,” Enoch wrote. Hecht dissented, joined by Justice Greg Abbott, and said that the only justification for the majority’s decision is that the contract in question is a contingent-fee agreement between a lawyer and client. “Contract law in Texas should not be contorted to try to reach what a few judges regard as a fair result in a single case,” Hecht wrote. Dana Allison, the Levines’ lawyer, says her reaction to the majority’s ruling was one of “extreme glee” because of the long emotional and expensive battle her clients have had to fight. “When we got the news that they won at the Texas Supreme Court, the hair on my neck stood up,” says Allison, a partner in The Allison Law Firm in Brownsville, Tex. Her only surprise, Allison says, is Abbott’s decision to join Hecht in the dissent. A transcript of the arguments before the court on April 12, 2000, shows Abbott said: “From a policy standpoint and from a perception standpoint, isn’t this case a poster child of why the public has a high disregard for lawyers in the legal profession?” Allison blames Barry Snell, who represented the Levines in the suit over the foundation, for what happened in the case because he allegedly told the couple to stop making the mortgage payments. “He, in essence, created the counterclaim,” she says. Snell says he advised the Levines to stop paying the mortgage after they had stopped paying the taxes. “The court apparently believed that I told the Levines to stop making their [mortgage] payments and that caused the note to accelerate. That simply isn’t so,” he says. The note on the house was accelerated, Snell says, because the Levines were unable to pay their taxes, as he had advised them to do. Snell says he plans to ask the supreme court for a rehearing. Regardless of whether the supreme court agrees to a rehearing, this legal fight is far from over. Allison says the Levines have sued Snell and the firm for, among other allegations, breach of fiduciary duty. That suit, Ron and Serena Levine v. Barry Snell, individually, and Bayne, Snell & Krause, is pending in the 357th District Court in Cameron County, Tex. “I regard it as a frivolous suit,” Snell says. “I’m eager to go to trial to vindicate myself.”

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