Tom Alexander, Individually, and Alexander & McEvily v. Turtur & Associates, Inc., Mario Turtur, Steve Turtur, and Turtur & Associates

IN THE SUPREME COURT OF TEXAS

IN THE SUPREME COURT OF TEXAS

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No. 02-1009

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Tom Alexander, Individually, and

Alexander & McEvily,

Petitioners

v.

Turtur & Associates, Inc.,

Mario Turtur, Steve Turtur,

and the Turtur Family

Partnership, Respondents

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On Petition for Review from the

Court of Appeals for the First District of Texas

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Argued on December 3, 2003

Chief Justice Phillips delivered the

opinion of the Court.

Justice Hecht filed a concurring

opinion in which Justice Wainwright joined.

Justice Owen and Justice Schneider did not participate in the decision.

The

principal issue in this legal malpractice case is whether the jury needed

expert testimony to determine whether the client would have prevailed in an

underlying trial but for its attorneys =

alleged negligence in preparing and trying the case. The trial court concluded that the jury

needed such guidance to determine causation.

There being none, the court disregarded the jury = s

findings on causation and rendered judgment that the client take nothing. Concluding that expert testimony was not

needed because the connection between the attorneys =

negligence and the client = s

loss was obvious, the court of appeals reversed and remanded. 86 S.W.3d 646, 662 . We disagree that the causal connection was

either obvious or a matter within the common understanding of lay persons.

Because we conclude that there is no competent evidence to connect the client = s damages to its attorneys = negligence, we reverse the court of

appeals = judgment

and render judgment that the client take nothing.

I

Mario

Turtur and his two sons, Steve and Chris, are brokers

with Turtur & Associates, Inc. ( A Turtur Inc. @ ), a securities firm. Dr. Lee McKellar

owns and operates McKellar Ranch, Inc., a cattle

business. In 1982, Turtur

Inc. agreed with McKellar Ranch to be the exclusive

marketer of two cattle-related investments: (1) donor cow interests and (2)

cattle A embryo

transplants. @ [1] Although the parties had disagreements about

the investment program, Turtur Inc. continued to

market it through 1984.

In

1985, Turtur Inc. sued McKellar

Ranch and Dr. McKellar , alleging fraud and breach of

contract in state court and claiming damages of about $500,000. McKellar Ranch

counterclaimed for fraud, misrepresentation, and breach of fiduciary duty. McKellar Ranch

thereafter sought bankruptcy protection in the United States Bankruptcy Court

for the Eastern District of Texas, staying the state court proceeding. Turtur Inc. = s claims against McKellar

Ranch were severed and made a part of an adversary proceeding in the bankruptcy

court. [2] The claims against Dr. McKellar

remained in state court.

Joe

Reynolds, a Houston attorney, and

John Hardy, a Tyler bankruptcy

attorney, initially represented Turtur Inc. in the

bankruptcy court. After obtaining a

continuance, Reynolds withdrew as counsel, compelling Turtur

Inc. to look for a new lead trial attorney.

About two months before the rescheduled adversary proceeding was to

begin trial in Tyler, Turtur Inc. hired the Houston

law firm of Alexander & McEvily to represent it,

paying a retainer of $10,000 with the understanding that name partner Tom

Alexander would be lead counsel. Judy Mingledorff , a

new associate at the firm, was assigned to help prepare the case. Hardy continued to serve as local counsel.

On

June 15, 1987,

two days before the adversary proceeding was to begin, Alexander appeared for a

docket call in Harris County

state district court and announced ready for trial. The district judge set this case to begin

trial the next day. On June 17, Mingledorff filed a motion for continuance in the

bankruptcy court based on Alexander = s

assignment for trial in state court. McKellar Ranch opposed the motion, and the judge denied the

continuance. The case proceeded to trial

with Mingledorff and Hardy representing Turtur Inc.

By

order, the court limited the trial of the adversary proceeding to two

days. Despite the short trial, the court

considered the matter for over two years before rendering its decision on July 20, 1989. By this time, Alexander no longer represented

Turtur Inc., primarily because of a dispute over

whether Alexander was entitled to keep the $10,000 retainer since he had been

unable to try the adversary proceeding himself.

In

its judgment, the bankruptcy court concluded that both Turtur

Inc. and McKellar Ranch had breached certain parts of

their agreements and that Turtur Inc. had committed

fraud as well. McKellar

Ranch predominantly prevailed and was awarded net damages of $105,718.80. In a subsequent settlement, Turtur Inc. paid McKellar $37,500

and dropped its state court claim against Dr. McKellar

individually to set this judgment aside.

Three

months later, Turtur Inc. brought this suit against

Alexander and his firm for malpractice, claiming that their negligence

proximately caused its loss in the bankruptcy court trial. Turtur Inc. also

alleged breach of fiduciary duty and breach of contract and asserted that it

was entitled to damages of not less than $500,000 and to recoup $45,000 in

attorneys = fees

paid to the defendants. Thereafter, Turtur Inc. amended its pleadings to claim violations of

several provisions of the Deceptive Trade Practices Act. See Tex . Bus. & Comm . Code ' '

17.41‑.63. The amended pleadings

also added Mario, Chris, and Steve Turtur as

plaintiffs but did not otherwise identify any claim distinct from those

asserted by Turtur Inc. The trial court granted special exceptions to

the amended petition and ordered the plaintiff to replead

A to drop [the Turturs ],

Individually, from this lawsuit, @

and A to

specify the maximum amount of damages being claimed in this lawsuit. @

In

response to these special exceptions, Turtur Inc.

filed its Second Amended Petition alleging that the defendants = negligence and statutory violations

caused it $650,000 in damages. Plaintiffs =

Second Amended Petition also dropped Chris Turtur as

a plaintiff, but left Mario and Steve Turtur as

plaintiffs, asserting for the first time a claim specific to them. The amended pleading identified Mario and

Steve Turtur as A successors

in interest, d/b/a The Turtur Family Partnership with

respect to their interests in donor cow interests and certain cattle in the

possession of McKellar Ranch, Inc. in the summer of

1987. @ The Turturs alleged

that Alexander and his firm had cost the partnership $3.9 million in lost

profits by negligently authorizing the sale of these cattle in 1987. Concluding that the partnership = s claim was barred by limitations, the

trial court granted defendants =

motion for partial summary judgment, leaving only Turtur

Inc. = s legal

malpractice and DTPA claims for trial.

At

trial, the jury found in favor of Turtur Inc. on both

theories, awarding over $3 million in damages.

The trial court denied Turtur Inc. = s motion to amend its petition to

conform to the award, but it granted Alexander and his firm = s motion for judgment notwithstanding

the verdict on the grounds that plaintiff had presented no evidence of

causation or damages. Turtur Inc., along with Mario and Steve Turtur ,

appealed the trial court = s

take-nothing judgment.

The

court of appeals affirmed the summary judgment against the Turturs

on the partnership claim, but it reversed the take-nothing judgment for

Alexander and his firm on the legal malpractice and DTPA claims, remanding to

the trial court with instructions to conform the jury award of damages to Turtur Inc. = s

pleadings. 86 S.W.3d at 662 . Both Alexander and his firm and the Turturs petitioned this Court for review.

II

To

prevail on a legal malpractice claim, a plaintiff must show A that (1) the attorney owed the

plaintiff a duty, (2) the attorney breached that duty, (3) the breach

proximately caused the plaintiff's injuries, and (4) damages occurred. @

Peeler v. Hughes & Luce , 909 S.W.2d 494, 496 (Tex.

1995). When the plaintiff = s allegation is that some failure on

the attorney = s part

caused an adverse result in prior litigation, the plaintiff must produce

evidence from which a jury may reasonably infer that the attorney = s conduct caused the damages

alleged. Haynes & Boone v. Bowser

Bouldin , Ltd. , 896 S.W.2d 179, 181 (Tex.

1995). To prevail on a claim under the

DTPA, a plaintiff must prove that a violation of the statute was a producing

cause of the injury. Tex . Bus. & Comm . Code '

17.50(a). While different, both

producing cause and proximate cause require proof of causation in fact. Union Pump Co. v. Allbritton ,

898 S.W.2d 773, 775 (Tex.

1995). In this Court, Alexander and his firm contest only the jury = s findings of causation and damages.

The

court of appeals held that the evidence of causation was legally sufficient,

parsing through these facts to establish that, but for the negligence of

Alexander and his firm, the result in the adversary proceeding would have been

more favorable to Turtur Inc.:

! Alexander, an experienced civil trial

lawyer, agreed to personally try and oversee the preparation of the Turturs =

case but did not follow through with his agreement.

! Mingledorff ,

a new associate and former assistant district attorney with no civil trial or

bankruptcy court experience, instead acted as lead trial attorney.

! At the adversary proceeding, Mingledorf called only two witnesses, Mario and Chris Turtur . Mingledorff did not adequately prepare Mario for his

testimony. She did not call Steve Turtur , although he was available and was the Turtur most knowledgeable about the dealings with McKellar .

! Mingledorff = s direct examination of Mario Turtur covers only 16 pages in the reporter = s record whereas his testimony at the

malpractice trial runs 1318 pages. Steve

Turtur = s

testimony at the malpractice trial covers 505 pages.

! Mingledorff did

not review some documents produced by McKellar prior

to trial, which the Turturs =

expert testified was negligence. The

expert also testified that Alexander was negligent in turning over a complex

bankruptcy matter in a civil case to Mingledorff , who

had been prosecuting criminal cases for the past several years.

! Mingledorff

did not depose or call as witnesses at the adversary proceeding at least 10

other witnesses who could have given relevant, favorable testimony for the Turturs . The Turturs = expert agreed that this was negligence

to the extent that these witnesses had relevant information that may have been

critical to proving the Turturs = claims.

! Mingledorff

did not know how to cross-examine a deposition and as a result may have failed to

read into evidence relevant testimony from a deposition.

! Mingledorff

was not prepared to try the adversary proceeding because she never expected to

try the case.

86 S.W.3d at

654-59 . Based on this evidence, the

court of appeals remanded the case for the trial court to render judgment for Turtur Inc. Id .

at 662 & n.11. The court

subsequently overruled Alexander and his firm = s

motion for rehearing en banc, with two justices dissenting. Id .

at 662 (Taft & Radack, JJ. dissenting).

Alexander

and his firm argue here that the facts recited by the court of appeals are not

evidence that they caused Turtur Inc. to lose in the

adversary proceeding. They note that the

jury was asked to decide a complicated and very subjective causation

issue: whether, in reasonable

probability, a bankruptcy judge would have decided the underlying adversary

proceeding differently if Alexander had personally tried the case or if he or Mingledorff had introduced other evidence. To understand whether any of the omitted

evidence would have made a difference, Alexander and his firm submit, the jury

required some guidance about how the omitted evidence was different from, and

more compelling than, the evidence and testimony presented at the adversary

proceeding. Moreover, since the

bankruptcy judge allotted only two days for trial, both sides had to make

difficult choices about what evidence to offer; lay jurors might not appreciate

the legal considerations in making these selections. Given these circumstances, Alexander and his firm

assert that the jury was not competent to decide, without resort to expert

testimony, whether the result of the underlying adversary proceeding would have

been different but for the alleged malpractice.

Turtur Inc. responds that the jury did not need any expert

help because causation was obvious.

While the underlying commercial case was complex, that was precisely why

Turtur Inc. hired Alexander. Instead of an experienced and successful

litigator, it ended up with a new associate with no civil litigation experience

who, through a lack of supervision and her own inexperience, made a series of

mistakes in the preparation and trial of its case. Turtur Inc.

concludes that the sheer number of errors made by counsel in the preparation

and trial of the underlying adversary proceeding make causation obvious here.

Breach

of the standard of care and causation are separate inquiries, however, and an

abundance of evidence as to one cannot substitute for a deficiency of evidence

as to the other. Thus, even when negligence

is admitted, causation is not presumed. Haynes

& Boone, 896 S.W.2d at 181-82 .

Moreover, the trier of fact must have some

basis for understanding the causal link between the attorney = s negligence and the client = s harm.

Id. , 896

S.W.2d at 181 ; see also 5 Ronald

E. Mallen & Jeffrey M. Smith , Legal

Malpractice ' 33.16 at

116 (5th ed. 2000). In some cases the

client = s

testimony may provide this link, but in others the connection may be beyond the

jury = s common

understanding and require expert testimony.

See Tex . R. Evid . 702 (Testimony by

Experts). As one authority observes:

A

failure of proof can result if expert testimony is limited to whether the

defendant violated the standard of care.

Proof of causation of injury often requires expert testimony concerning

what the attorney should have done under the circumstances. The expert testimony must be tied to the

specific conduct that is in issue.

5 Mallen & Smith ' 33.17 at 138-39.

The

court of appeals cited two cases, Delp v.

Douglas , 948 S.W.2d 483, 495 (Tex. App. B Fort

Worth 1997), rev'd on other grounds ,

987 S.W.2d 879 (Tex. 1999), and Streber v.

Hunter , 221 F.3d 701, 726 (5th Cir. 2000), as examples of malpractice

actions that did not require expert testimony on causation. 86 S.W.3d at 652 . Neither case, however, involved trial

malpractice. In both cases the clients

themselves were the key decisionmakers , relying upon

their attorney = s advice

with unfortunate consequences. Under

these circumstances, the courts in Delp and Streber found sufficient the clients = testimony that, because of their

lawyers = bad

advice, they made the decisions and took the actions that resulted in their

injuries. See Delp ,

948 S.W.2d at 495-96 ; Streber , 221 F.3d at

726-27 . In contrast, the decisionmaker here was the bankruptcy judge, who quite

properly was not asked to, and did not, testify as to how he might have ruled

if the case had been presented differently.

Without expert testimony, the jury had no direct evidence explaining the

legal significance of the omitted evidence.

Legal

malpractice may include an attorney's failure to exercise ordinary care in

preparing, managing, and presenting litigation.

See Zidell v. Bird , 692 S.W.2d 550, 553

(Tex. App. B Austin

1985, no writ). But A [d] ecisions

of which witnesses to call, what testimony to obtain or when to cross-examine

almost invariably are matters of judgment. @ 4

Mallen & Smith '

30.39 at 561. As such, the wisdom and

consequences of these kinds of tactical choices made during litigation are

generally matters beyond the ken of most jurors. And when the causal link is beyond the jury = s common understanding, expert

testimony is necessary. See Arce v. Burrow , 958 S.W.2d 239, 252 (Tex. App. B Houston [14 th Dist.] 1997), aff = d

in part, rev = d in part

on other grounds , 997 S.W.2d 229 (Tex. 1999); Delp ,

948 S.W.2d at 495 ; see also Kranis v. Scott ,

178 F. Supp.2d 330, 334 (E.D.N.Y. 2002) (expert testimony on causation required

unless connection within factfinder = s ordinary experience); Samuel v. Hepworth , Nungester & Lezamiz , Inc ., 996 P.2d 303, 308 (Idaho 2000) (expert

testimony on proximate cause is required when the issue is not one that lay

persons are competent to make); Dean v. Tucker , 517 N.W.2d 835, 837

(Mich. Ct. App. 1994) (expert witness usually required to establish causation);

Sommers v. McKinney , 670 A.2d 99, 104

(N.J. Super. Ct. App. Div. 1996) (expert testimony usually required when

adequacy of an investigation or soundness of an opinion at issue); Sanders

v. Smith , 496 P.2d 1102, 1105 (N.M. Ct. App. 1972) (expert needed when

inquiry involves A complexities

of trial practice @ ); Meyer

v. Mulligan , 889 P.2d 509, 516 (Wyo. 1995) (expert testimony on proximate

cause is required when the issue is not one that lay persons are competent to

make); but see Whitley v. Chamouris , 574

S.E.2d 251, 252-53 (Va. 2003) (expert testimony not needed when malpractice

action involves A case

within a case @ ).

In

another case involving allegations of trial malpractice and omitted evidence,

the Oregon Supreme Court observed:

Since plaintiff, to

prevail in this [malpractice] case, had to convince the trier

of fact [in the malpractice suit] . . . that the result in the earlier trial

would have been favorable to her had [her lawyer] introduced the two documents

in question, we know of no other way in which the jury could have been guided

in determining the [causation] issue than the presentation of opinion by

properly qualified experts.

Shields v. Campbell ,

559 P.2d 1275, 1280 (Or. 1977). And the

Supreme Court of Maine has stated that without competent expert testimony in a

trial malpractice case demonstrating that the result of the underlying

proceeding would have been different but for the alleged negligence, A the factfinder

would be compelled to speculate as to proximate causation. @

Corey v. Norman ,

Hanson & DeTroy , 742 A.2d 933, 940 (Me.

1999). Likewise, we conclude on this

record that the errors allegedly made by Mingledorff

in the preparation and trial of the admittedly complex, yet truncated,

underlying proceeding were not so obviously tied to the adverse result as to

obviate the need for expert testimony.

We therefore conclude that the court of appeals erred in holding that

the jury was competent to determine causation in either negligence or violation

of the DTPA without expert guidance in this case.

III

Turtur Inc. argues, in the alternative, that it submitted

expert testimony on causation through Steve Peterson, an attorney who testified

on the standard of care and gave his opinion about the negligence of Alexander

and Mingledorff .

Peterson testified that Alexander was negligent in failing to

participate in the case and supervise Mingledorff and

that he and his firm were negligent in turning the complex bankruptcy

proceeding over to Mingledorff . Peterson also testified that Alexander should

have advised the Turturs and Mingledorff

as soon as he knew that he had conflicting trial settings and that Mingledorff would likely have to try the case. Peterson testified that Mingledorff

was negligent in failing to review certain documents produced by McKellar before the start of trial, was negligent in

failing to object to hearsay during trial, and was negligent in preparing the

pretrial order and in listing only those witnesses listed by McKellar . Peterson

further testified that if other witnesses had relevant information critical to

proving Turtur Inc. = s

claim, they should have been listed and called.

Near the end of his testimony on direct, Peterson was asked if he could

comment A as to

whether or not the failure to present this evidence caused Judge Abel [the

bankruptcy judge] to make his findings? @

The

court of appeals quoted this part of Peterson = s

answer in its opinion:

I can comment that,

in my opinion, the evidence that was offered and admitted at trial caused Judge

Able to make the decision that he made.

86 S.W.3d at

659 . The court of appeals did not

explain what it believed the significance of this testimony to be. All we glean from it is that Peterson

believed the bankruptcy judge decided the case on the evidence before him,

praiseworthy in a judge but hardly probative on the issue of attorney

malpractice. Moreover, the court of

appeals failed to quote a second sentence in which Peterson disclaimed

knowledge of any other evidence that might have changed the judge = s decision. Peterson = s

full response to the question was:

I can comment that,

in my opinion, the evidence that was offered and admitted at trial caused Judge

Able to make the decision that he made. I

can = t tell you

what other evidence might have been out there that might have resulted in a

different decision.

(emphasis

added). Clearly, Peterson = s testimony does not support the

inference that, had omitted evidence been presented, there would have been a

different result in the underlying trial.

IV

In

their own petition, the Turturs contend that the

court of appeals erred in affirming the summary judgment barring the Turtur Family Partnership = s

claim against Alexander and his firm.

They assert that Alexander wrongfully induced their partnership to sell

34 head of genetically enhanced cattle at A fire-sale

prices @ by

representing that any losses from the sale would be resolved in the state court

action pending against Dr. McKellar . The sale was authorized on October 5, 1987, and the

partnership = s claim

was added in Plaintiffs =

Second Amended Petition filed on August 16, 1991.

The trial court granted summary judgment on limitations, and the court

of appeals affirmed, but the Turturs argue that the

claim should relate back to the filing date of the original petition because

that petition broadly A complained

of the defendants =

mishandling of the adversarial proceeding, which covered the wrongful sale of

the cattle. @

An

original pleading tolls the limitation period for claims asserted in

subsequent, amended pleadings as long as the amended pleading does not allege a

wholly new, distinct, or different transaction.

See Tex . Civ . Prac . & Rem. Code ' 16.068. Turtur Inc. = s Original Petition sought the recovery

of damages caused by Alexander and his firm = s

negligent handling of its adversary proceeding in the bankruptcy court, styled McKellar Ranch, Inc. v. Turtur

& Associates, Inc. The first

mention of the partnership = s

claim, these cattle or the adversary proceeding involving them appears in the

Second Amended Petition, which valued the partnership = s

loss at approximately eight times that of the malpractice claim asserted by Turtur Inc. in the Original Petition. Ordinarily, an amended pleading adding a new

party does not relate back to the original pleading. See Koch Oil Co. v. Wilber , 895 S.W.2d

854, 863 (Tex. App. B Beaumont

1995, writ denied); Davis v. Outdoor Equip. Co. , 551 S.W.2d 72, 73 (Tex.

Civ . App. B Houston

[1st Dist.] 1977, no writ). Moreover, when

the amended petition sets up a distinct and different claim from that asserted

in the previous petitions, the new claim does not relate back. See Dearing v. Lawrence , 156 S.W.2d

1019, 1020-21 (Tex. Civ . App. B Texarkana

1941, writ ref'd ).

We therefore agree with the court of appeals that Turtur

Inc. = s claim

against Alexander and his firm for mishandling its adversary proceeding in

bankruptcy court alleges a transaction which is distinct and different from the

Turtur Family Partnership = s

subsequent complaint in the Second Amended Petition that Alexander negligently

induced it to sell its cattle at A fire

sale prices. @

The

Turturs on behalf of the partnership also argue that

the court of appeals erred in affirming the summary judgment because the

four-year statute of limitations applicable to fraud claims should have been

applied. The Turturs ,

however, did not make this argument in the court of appeals. Accordingly, it has been waived. See Fort Bend County Drainage Dist. v. Sbrusch , 818 S.W.2d 392, 395 (Tex.

1991); Gray‑Taylor, Inc. v. Tennessee ,

587 S.W.2d 668, 671 (Tex. 1979).

* * * * *

We

affirm that part of the court of appeals =

judgment upholding the summary judgment against the Turturs

on their partnership = s

claim. We reverse that part of the court = s judgment remanding the malpractice

claim for rendition of judgment and render judgment that Turtur

Inc. take nothing against Alexander and his firm.

____________________________________

Thomas R.

Phillips

Chief Justice

Opinion delivered: August 27, 2004

[1] The purchaser of a A donor cow interest @ bought a half interest in a female

Red Brahman donor cow which was periodically super-ovulated to produce multiple

eggs; the eggs were then washed from the donor cow = s uterus, fertilized, and transferred

to a A recipient cow. @

The investor in this program was entitled to half the calves produced

from the donor cow. The purchaser of an A embryo @ interest bought a A unit @ of ten implanted embryos, paying for

transplant work to the recipient cows.

The investment worked as a tax shelter because the investor could

immediately claim a deduction for these transplant expenses.

[2] Turtur Inc. filed a

proof of claim in the bankruptcy case for $479,631.20, the amount sought in the

state court action, against McKellar Ranch. McKellar Ranch

filed an objection to the allowance of Turtur Inc. = s claim and asserted counterclaims

tracking those asserted by McKellar Ranch in state

court. At that point the dispute between

Turtur Inc. and McKellar

Ranch became an adversary proceeding in the McKellar

Ranch bankruptcy case.