A lawyer expelled from a firm has lost her fight at the court of appeals.
The First Court of Appeals in Houston has affirmed a summary judgment in favor of Frye & Associates of Houston and two of its lawyers, Phyllis Frye and Salvador Benavidez. The decision came in a lawsuit that former partner Patricia Cantu filed after she was voted out of the firm after she used a firm debit card for personal expenses.
Cantu, now a Katy solo, had filed a civil theft, statutory and common-law fraud, common-law fraud, and conspiracy and aiding-and-abetting lawsuit against the firm, Frye and Benavidez after a financial dispute led to her expulsion.
In the underlying lawsuit, Cantu alleged that Frye & Associates, Frye and Benavidez defrauded her of her ownership interest in the firm when they voted her out without compensation after accusing her of breaching the firm’s bylaws. However, the defendants alleged in counterclaims that they expelled Cantu from the firm after she used the firm’s debit card for nearly $8,500 in personal expenses including music, ice cream and medicine.
In a June 12 memorandum opinion, the First Court affirmed a summary judgment granted by 189th District Judge Bill Burke in the lawsuit that Cantu filed after Frye and Benavidez voted her out of the partnership.
Cantu did not return two telephone messages seeking comment. Her appellate attorney, Houston solo Armando Lopez, did not immediately return a message.
Jeffrey Steidley, who represented the defendants in the appeal, said he was impressed that the court wrote a 30-page opinion and addressed each of the points of appeal.
“They could have easily affirmed the trial court on one of several grounds and let the rest of it go,” said Steidley, owner of The Steidley Law Firm of Houston.
Justice Michael Massengale wrote the opinion, joined by Justices Evelyn Keyes and Laura Carter Higley.
Here are the facts as related in the opinion, which the court notes it is taking in the light most favorable to the party against whom summary judgment was rendered:
Cantu joined Simoneaux and Frye as an associate. In 2008 Jerry Simoneaux decided to sell his 50 percent ownership interest and leave the firm. Cantu purchased a 30 percent interest in the firm from Simoneaux and became a partner, and Frye and Benavidez each bought a 10 percent ownership interest from Simoneaux.
After a partnership meeting in 2008, the firm name changed to Frye and Cantu, and the minutes of the meeting broke down the ownership interest among the partners as Frye with 60 percent; Cantu, 30 percent; and Benavidez, 10 percent.
Over the next year, Cantu used the firm debit card for numerous personal expenses totaling $8,468.63. In a deposition, Cantu said she had never discussed the personal use of the debit card with Frye or the office manager, but she testified that the firm had no policy prohibiting the use of the debit card for personal expenses as long as they were repaid on payday.
Cantu testified that her clients weren’t paying their bills, so her paycheck “continued to shrink,” and she did not repay personal use of the debit card each payday.
The opinion noted that, according to Cantu’s affidavit, Frye first learned of Cantu’s use of the debit card for personal expenses on Oct. 7, 2009, and “she sent Cantu an email accusing her of using ‘the firm’s debit card to bilk the firm in the amount of $8,468.63—in less than six months … for such things as music, ice cream, groceries, meals, clothing, medicine, cash and your health insurance premiums or copays.’”
Frye also alleged that she just then learned that Cantu had more than $33,000 in uncollected fees.
“Frye closed Cantu’s debit card, changed the office locks and instructed Cantu to resign from the firm and vacate her office within two days. She also told Cantu that her portion of the outstanding client fees would be credited toward what she owed the firm and that she had until the end of November 2009 to repay an unrelated personal loan,” Massengale wrote.
Frye gave Cantu until November 2009 to repay the money, and on Oct. 13, 2009, Frye and Benavidez voted to expel Cantu from the firm with “zero membership interest” pursuant to the firm’s company agreement.
Cantu repaid the money by Aug. 16, 2010, and she filed Patricia Cantu v. Frye & Associates two months later. In the petition, she brought these causes of action against Frye & Associates, Frye and Benavidez: civil theft, statutory and common-law fraud in connection with her stock purchase, common-law fraud in connection with her expulsion from the firm, and conspiracy and aiding and abetting, also in connection with her expulsion. The defendants counterclaimed against her for bringing a frivolous suit, breach of fiduciary duty and theft of property.
The trial judge granted summary judgment in favor of Frye & Associates, Frye and Benavides, and they nonsuited their counterclaims. Cantu appealed that ruling, and the appeals court affirmed the summary judgment.
The appeals court concluded that the summary judgment evidence “conclusively shows” that the defendants’ actions in voting Cantu out of the firm and forfeiting her financial interest were not unlawful. The appeals court held that the trial judge correctly granted the defendants’ motion for summary judgment. It also overruled Cantu’s motion that the trial court erred in not granting her no-evidence motion for summary judgment as to counterclaims. The court found that because Cantu did not obtain a ruling from the trial court on that motion, the issue was waived.
Frye & Associates is now Frye, Oaks & Benavidez.