John Lewis Nowak v. Jeanne Pellis

Opinion issued November 15, 2007

In The

Court of Appeals

For The

First District of Texas

NO. 01-06-00044-CV

__________

JOHN LEWIS NOWAK, Appellant

V.

JEANNE PELLIS AND JOHN HEISLER, Appellee s

On Appeal from the 61st District Court

Harris County, Texas

Trial Court Cause No. 2004-09878

O P I N I O N

John Lewis Nowak, appellant, brought a legal malpractice action against Jeanne

Pellis and John Heisler (“the attorneys”), appellees, for their actions in representing

him in a medical malpractice suit. The attorneys filed a motion for summary

judgment, arguing that part of Nowak’s claim was barred by the statute of limitations

and that Nowak’s recovery is precluded by the “one satisfaction” rule based on his

previous settlement with an underlying defendant. The trial court granted the

attorneys’ motion for summary judgment. Nowak appeals, asserting that the court

erred in granting summary judgment because (1) the statute of limitations was tolled

under the Hughes

rule, and (2) the one satisfaction rule is inapplicable because the

attorneys failed to prove that Nowak received full satisfaction for his injuries from his

settlement with the underlying defendant. We reverse the trial court’s granting of the

attorneys’ motion for summary judgment and remand for a new trial.

Factual and Procedural History

On May 31, 1990, Nowak underwent surgery for a shoulder injury at Twelve

Oaks Hospital. Dr. Fernando Azevedo, a member of Greater Houston Anesthesia,

administered anesthesia to Nowak. Following the surgery, Nowak contracted a staph

infection in his shoulder. He hired Pellis to file a medical malpractice suit against Dr.

Azevedo, Twelve Oaks, and Greater Houston Anesthesia. Heisler later appeared as

Pellis’s co-counsel at a court-ordered mediation. The attorneys failed to timely serve

Azevedo, and Twelve Oaks and Greater Houston Anesthesia filed motions for

summary judgment based on Nowak’s lack of expert testimony establishing a breach

in the applicable standards of care regarding the treatment, diagnosis, and monitoring

of Nowak. Pellis then filed a motion to withdraw as Nowak’s counsel. The trial court

granted Pellis’s motion to withdraw, and Nowak eventually hired Joe Alfred Izen, Jr.

to represent him. Izen filed a motion to enlarge time to file a response to the motions

for summary judgment. The trial court denied the motion to enlarge time and granted

Twelve Oaks’s and Greater Houston Anesthesia’s motions for summary judgment.

Nowak attempted to appeal the denial of the motion to enlarge time, but the

court of appeals dismissed the appeal because the district clerk’s office failed to timely

file the clerk’s record. Nowak responded by filing a bill of review. The trial court

granted Greater Houston Anesthesia’s summary judgment on the bill of review . After

successfully arguing that he was never served and the time for so doing had expired,

Azevedo was also granted summary judgment . The Amarillo court of appeals reversed

the trial court’s granting of summary judgment on Nowak’s bill of review and

remanded the case for a new trial. At this point, Twelve Oaks settled with Nowak for

an undisclosed amount. Nowak also filed a motion to nonsuit Azevedo, which was

granted on April 4, 1995. This left Greater Houston Anesthesia as the last remaining

defendant from Nowak’s medical malpractice suit. Nowak’s bill of review against

Greater Houston Anesthesia was eventually dismissed, which ended the litigation

concerning Nowak’s medical malpractice suit.

On February 6, 2004, Nowak sued the attorneys for legal malpractice based on

their handling of his medical malpractice suit. Specifically, Nowak asserted that the

attorneys committed legal malpractice by failing to timely serve Azevedo, conduct

proper discovery, and obtain expert testimony on the defendants’ standards of care.

The attorneys filed a motion for summary judgment, arguing that the statute of

limitations barred all of Nowak’s legal malpractice claims, or, at least, his claim

relating to the attorneys’ failure to timely serve Azevedo, and that the one satisfaction

rule precluded Nowak from recovering anything further. The trial court granted the

attorneys’ motion for summary judgment, disposing of all issues. Nowak appeals.

Summary Judgment

In his sole issue on appeal, Nowak argues that the trial court erred in granting

the attorneys’ motion for summary judgment. Nowak asserts that the statute of

limitations on his legal malpractice claim was tolled under the Hughes rule, which

holds that a claim against an attorney for legal malpractice is tolled until appeals on

the underlying claim which is the basis of the malpractice have been exhausted.

Hughes , 821 S.W.2d at 157 . Nowak also contends that the trial court erred in granting

summary judgment based on the one satisfaction rule, because the attorneys never

alleged or proved that Nowak received full satisfaction for his injuries from his

settlement with Twelve Oaks.

Standard of Review

A party moving for traditional summary judgment has the burden of proving

that there is no genuine issue of material fact and that the movant is entitled to

judgment as a matter of law. Tex. R. Civ. P. 166a(c). When a defendant moves for

traditional summary judgment, he must either (1) disprove at least one element of the

plaintiff’s cause of action or (2) plead and conclusively establish each essential

element of its affirmative defense, thereby defeating the plaintiff’s cause of action.

Cathey v. Booth , 900 S.W.2d 339, 341 (Tex. 1995); Yazdchi v. Bank One , Tex., N.A. ,

177 S.W.3d 399, 404 (Tex. App.—Houston [1st Dist.] 2005, pet. denied). We review

the granting of summary judgment de novo. See Nelson v. Cheney , 193 S.W.3d 161,

165 (Tex. App.—Houston [1st Dist.] 2006, no pet.).

When reviewing a summary judgment, we take as true evidence favorable to the

nonmovant and indulge every reasonable inference and resolve any doubts in favor of

the nonmovant. See Nixon v. Mr. Prop. Mgmt. Co. , 690 S.W.2d 546 , 548–49 (Tex.

1985). When a summary judgment does not specify or state the grounds on which the

trial court relied, the nonmovant on appeal must negate any grounds on which the trial

court could have relied, and we will affirm the summary judgment on appeal if any of

the grounds presented in the motion is meritorious. See Harwell v. State Farm Mut.

Auto. Ins. Co. , 896 S.W.2d 170, 173 (Tex. 1995); Mellon Serv. Co. v. Touche Ross &

Co. , 17 S.W.3d 432, 435 (Tex. App.—Houston [1st Dist.] 2000, no pet.). A

nonmovant is required to show that each ground alleged in the motion for summary

judgment was insufficient to support summary judgment. Star-Telegram, Inc. v. Doe ,

915 S.W.2d 471, 473 (Tex. 1995).

The Hughes Rule

Novak first asserts that the trial court erred in granting the attorneys’ motion for

summary judgment because his legal malpractice cause of action against them was not

barred by the statute of limitations. Specifically, Novak argues that the Hughes rule

tolled the statute of limitations on his legal malpractice claims until all appeals were

exhausted in the underlying litigation made the subject of this suit. See Hughes , 821

S.W.2d at 157.

A two-year statute of limitations governs legal malpractice claims. Tex. Civ.

Prac. & Rem.Code Ann . § 16.003 (Vernon Supp. 2006); Willis v. Maverick , 760

S.W.2d 642, 644 (Tex. 1988). The statute of limitations begins to run when the claim

accrues. Tex. Civ. Prac. & Rem. Code Ann . § 16.003. A legal malpractice claim

accrues when the client sustains a legal injury or, in cases governed by the discovery

rule, when the client discovers or should have discovered through the exercise of

reasonable care and diligence the facts establishing the elements of the claim. Hughes ,

821 S.W.2d at 156; see also S.V. v. R.V. , 933 S.W.2d 1, 4 (Tex. 1996) (legal injury

rule); Willis , 760 S.W.2d at 646 (discovery rule).

However, in Hughes , the Texas Supreme Court established a n equitable tolling

rule for the statute of limitations in legal malpractice cases: “ [W]hen an attorney

commits malpractice in the prosecution or defense of a claim that results in litigation,

the statute of limitations on the malpractice claim against the attorney is tolled until

all appeals on the underlying claim are exhausted. ” 821 S.W.2d at 157 . The court

expressed two policy reasons for tolling the statute of limitations when an attorney

commits malpractice in the prosecution or defense of a claim that results in litigation.

Id. at 821 S.W.2d at 156–57. The court first pointed out that the legal injury rule and

the discovery rule can force a client into the untenable position of having to adopt

inherently inconsistent litigation postures in the underlying case and the malpractice

case. Id. at 156 (noting that party might be placed in a position of asserting that her

attorney committed malpractice, and, but for malpractice, her claim would have

succeeded, while at same time asserting in an underlying appeal that attorney’s actions

were correct, or at least not fatal to her claim). The court then explained that

limitations should be tolled for the malpractice claim because the viability of that

claim depends on the outcome of the underlying litigation. Id. at 157.

In their motion for summary judgment, the attorneys argue that equitable tolling

is inapplicable here because this case is legally and factually distinguishable from

Hughes . Their argument centers on Nowak’s nonsuit of Azevedo on April 4, 1995.

They assert that, because there were no longer any pending legal proceedings

concerning Azevedo, Nowak would not be asserting inconsistent positions by suing

the attorneys for their alleged legal malpractice in failing to serve Azevedo, while still

pursuing his claims against the defendants in the underlying suit. Therefore,

according to the attorneys , because nothing prevented Nowak from bringing his claim

against them for failing to serve Azevedo once Azevedo had been nonsuited in 1995,

the two-year limitations period had long since passed when Nowak filed this claim on

February 26, 2004. We disagree.

Since the Texas Supreme Court adopted the equitable tolling rule in Hughes, the

court has applied the rule to every legal malpractice case meeting the Hughes

parameters. See Underkofler v. Vanasek , 53 S.W.3d 343, 347 (Tex. 2001); Apex

Towing Co. v. Tolin , 41 S.W.3d 118 , 121–23 (Tex. 2001); Sanchez v. Hastings , 898

S.W.2d 287, 288 (Tex. 1995) ; Am. Centennial Ins. Co. v. Canal Ins. Co. , 843 S.W.2d

480 , 483–84 (Tex. 1992); Gulf Coast Inv. Corp. v. Brown , 821 S.W.2d 159, 160 (Tex.

1991); Aduddell v. Parkhill , 821 S.W.2d 158, 159 (Tex. 1991), overruled on other

grounds, Underkofler , 53 S.W.3d at 347 (holding that Hughes tolling rule does not

apply to Deceptive Trade Practices Act claims against attorney).

The supreme court reinforced the Hughes policy considerations in Sanchez ,

stating that, “ if the client must carefully scrutinize every stage of the case for possible

missteps it would erode the trust between client and lawyer necessary for the

successful prosecution of litigation. ” 898 S.W.2d at 288 . In Sanchez , the plaintiff’s

attorney failed to file suit against a viable defendant in a wrongful death action. Id.

at 287 . In determining that Hughes tolled limitations on the plaintiff’s legal

malpractice claim, the court held, “the statute of limitations for malpractice for failure

to sue a tortfeasor is tolled until litigation has concluded against oth er tortfeasors

liable for the same indivisible injury .” Id. at 288. We recently applied Sanchez in

holding that “we construe the phrase ‘claim that results in litigation’ to include all

claims for an indivisible injury that an attorney is hired to pursue on behalf of a

client.” Estate of Whitsett v. Junell , 218 S.W.3d 765, 771 (Tex. App.—Houston [1st

Dist.] 2007, no pet.).

In Apex Towing , the Texas Supreme Court instructed lower courts to desist from

re-examining whether the policy reasons behind Hughes apply in each legal

malpractice case presented and to “ simply apply the Hughes tolling rule to the

category of legal-malpractice cases encompassed within its definition. ” 41 S.W.3d at

122 . The court added, “ in the area of limitations, bright-line rules generally represent

the better approach . ” Id.

Following the supreme court’s holdings in Sanchez and Apex , we hold that,

because Nowak’s legal malpractice claims against the attorneys arose in the

prosecution of Nowak’s medical malpractice claims, the Hughes doctrine applies.

Even though Nowak had nonsuited Azevedo, his claims for the same indivisible injury

against Twelve Oaks and Greater Houston Anesthesia were still ongoing. The

underlying litigation ended when Nowak’s bill of review against Greater Houston

Anesthesia was dismissed. Nowak had two years from that point in which to bring his

legal malpractice claims, including those claims which involved Azevedo. We note

that the record does not indicate the date on which the bill of review against Greater

Houston Anesthesia was dismissed. The attorneys bore the burden of proving their

entitlement to summary judgment as a matter of law. See Cathey , 900 S.W.2d at 341 .

However, the attorneys asserted no evidence showing that Nowak’s legal malpractice

suit, filed on February 26, 2004, was barred by the limitations period. Therefore,

because the statute of limitations was tolled until all litigation ended on Nowak’s

underlying medical malpractice claim, we hold that the trial court erred in granting the

attorneys’ motion for summary judgment based on the statute of limitations.

The One Satisfaction Rule

Nowak also argues that his claims were not barred by the one satisfaction rule.

He contends that, because the attorneys failed to plead and conclusively establish each

element of the one satisfaction rule as a matter of law, the trial court erred in granting

summary judgment on this basis. We agree.

The one satisfaction rule prohibits a plaintiff from recovering twice for a single

injury. Crown Life Ins. Co. v. Casteel , 22 S.W.3d 378, 390 (Tex. 2000) . Under the

rule, the nonsettling defendant may only claim a credit based on the damages for

which all tortfeasors are jointly liable. Id. at 391 . The rule applies when defendants

commit the same acts as well as when defendants commit technically differing acts

that result in a single injury. Id. at 390. The fact that more than one defendant may

have caused the injury or that there may be more than one theory of liability does not

modify this rule. Stewart Title Guar. Co. v. Sterling , 822 S.W.2d 1, 8 (Tex. 1991).

Whether the rule applies is determined not by the cause of action, but by the injury.

Id. at 7–8. Moreover, the absence of tort liability does not preclude the application of

the one satisfaction rule. Oyster Creek Fin. Corp. v. Richwood Inv. II, Inc. , 176

S.W.3d 307, 327 (Tex. App.—Houston [1st Dist.] 2004, pet. denied).

The one satisfaction rule is a ground for summary judgment in cases in which

(1) the one satisfaction rule applies, (2) the settlement credit entirely sets-off the

maximum amount of liability claimed by the plaintiff, and (3) punitive damages are

not at issue. Cohen v. Arthur Andersen, L.L.P. , 106 S.W.3d 304 , 309–10 (Tex.

App.—Houston [1st Dist.] 2003, no pet.).

Nowak contends that the attorneys are, at most, entitled to a credit amount equal

to the amount of his settlement with Twelve Oaks. Nowak argues that summary

judgment was improper because nothing shows that the settlement amount entirely

sets-off the maximum amount of liability claimed by Nowak. We agree. The

attorneys produced no evidence showing that Nowak’s damages were covered in full

by the settlement he received from Twelve Oaks. Therefore, we hold that the trial

court erred in granting the attorneys ’ summary judgment based on the one satisfaction

rule. Having determined that the trial court erred in granting the attorneys ’ motion

for summary judgment, we sustain Nowak’s sole issue.

Conclusion

We reverse the trial court’s order granting summary judgment and remand to

the trial court for a new trial .

George C. Hanks, Jr.

Justice

Panel consists of Justices Taft, Hanks, and Higley.