Primis Corp., and Louis Carranza v. Samuel L. Milledge, and the Milledge Law Firm, PC

Affirmed and Memorandum Opinion filed May 27, 2010.

In The

Fourteenth Court of

Appeals

___________________

NO. 14-08-00753-CV

___________________

PRIMIS CORP. AND LOUIS CARRANZA ,

Appellants

V.

SAMUEL L. MILLEDGE AND THE MILLEDGE LAW FIRM,

P.C. , Appellees

On

Appeal from the 234th District Court

Harris County,

Texas

Trial Court Cause No. 2005-63583

M E M O R A N D U M O P I N I O N

A corporation and its principal

owner sued an attorney and his professional corporation alleging professional

negligence, breach of contract, and violations of the Texas Deceptive Trade

Practices Act. After a bench trial, the trial court rendered a take-nothing

judgment and found that, though the attorney was negligent, his negligence was

not the proximate cause of damage to the plaintiffs. On appeal, the plaintiffs

assert that the trial court erred by failing to find causation, by denying the

plaintiffs leave to file a trial amendment, and by excluding an exhibit from

evidence. We reject the challenge to the trial court’s finding regarding

causation and conclude that any error regarding the second and third issues was

harmless. Accordingly, we affirm the trial court’s judgment.

I.

Factual and Procedural Background

In

2003, appellants/plaintiffs

Primis Corporation and Louis Carranza (hereinafter collectively “Primis”) were

sued by Merrill Lynch Business Financial Services, Inc. On or about June 11,

2003, appellees/defendants Samuel L. Milledge and The Milledge Law Firm, P.C.

(collectively hereinafter “Milledge”) agreed to represent Primis in this

lawsuit, and Primis paid Milledge a $5,000 retainer. Milledge asserts that the

retainer was limited to work on the Merrill Lynch lawsuit; Primis asserts that

it was a general retainer.

On or about June 23, 2003, Primis was served with

citation in a lawsuit filed against Primis by AAR Incorporated. In this suit,

AAR sought confirmation of an arbitration award rendered against Primis

Corporation and in favor of AAR for more than $147,000. AAR also asserted a

claim against Louis Carranza for breach of fiduciary duty seeking the same

money judgment that it sought against Primis Corporation as well as punitive damages.

Carranza delivered the citation for the AAR lawsuit to Milledge’s office when

there was no attorney there. On July 11, 2003, Milledge sent Carranza a

letter, stating that for Milledge to represent Primis in the AAR suit, Primis

would need to pay a $5,000 retainer. Milledge noted that the deadline to file

an answer in the AAR suit was July 28, 2003, and Milledge requested that the

retainer be paid by July 16, 2003.

Primis did not pay the $5,000 retainer Milledge

requested in the July 11 letter, and no answer was filed on behalf of Primis in

the AAR suit. On August 22, 2003, the trial court in the AAR suit granted a

default judgment, awarding AAR $147,130, attorney’s fees, and prejudgment

interest against Primis Corporation and $135,655 in actual damages, plus

prejudgment interest and $271,310 in punitive damages against Carranza. Primis

asserts that shortly after learning of this default judgment, Primis paid

Milledge $2,000 on August 29, 2003, for legal services to attempt to have this

judgment set aside. At trial, Milledge denied receiving this payment from

Primis. Milledge testified that, at the urging of Primis’s accountant,

Milledge agreed to file a motion for new trial in an effort to get the trial

court to set aside the default judgment.

Milledge filed a motion for new trial in the AAR

suit, which the trial court denied. Milledge filed no further motions in that

suit other than a motion to withdraw as counsel. Primis did not appeal from

the default judgment in favor of AAR.

Primis filed suit against Milledge in the trial

court below asserting claims for negligence, breach of contract, and violations

of the Texas Deceptive Trade Practices Act. The case was tried to the bench. The

trial court rendered a take-nothing judgment against Primis. The trial court

filed findings of fact and conclusions of law, stating among other things the following:

·

Carranza left the AAR citation and petition at Milledge’s office

without meeting with Samuel Milledge.

·

Carranza was under the reasonable impression that Milledge would

file an answer in the AAR lawsuit on behalf of Primis.

·

If a Texas attorney fails to advise a non-client that the

attorney is not representing the non-client under circumstances that reasonably

would lead the non-client to believe that the attorney is representing the

non-client, then the attorney owes a negligence duty to the non-client. If an

attorney is aware or should have been aware that his conduct would lead a

reasonable person in the position of a non-client to believe that the attorney

was representing that person, then the attorney has a duty to advise the

non-client that the attorney is not representing the non-client.

·

Even though Milledge did not represent Primis prior to the due

date for Primis’s answer in the AAR lawsuit, Milledge owed Primis a duty to

clearly and unambiguously advise Primis that Milledge would not be filing an

answer for Primis. Milledge did not discharge this duty. The July 11, 2003

letter from Milledge was unclear given that only a month earlier Primis had

paid Milledge a $5,000 retainer. Milledge knew or should have known that

Carranza believed that Primis was represented and that an answer would be

filed.

·

Milledge committed multiple acts of malpractice, including

“failing to give advice, opinion, or relevant information when legally

obligated to do so; delaying or not handling a matter entrusted to his care;

improperly preparing and managing Primis [sic] and Carranza’s litigation;

failure to perform reasonable investigation of the litigation, the issues

presented, and the information available; and failure to act with the minimum

degree of skill, prudence or knowledge required of any Texas attorney.”

·

Milledge’s negligence was not the cause of any of Primis’s

alleged damages.

·

Milledge did not violate the Texas Deceptive Trade Practices Act.

·

Primis did not have a contract with Milledge regarding the AAR

lawsuit; therefore, Primis cannot recover for breach of contract.

Did the trial evidence conclusively

prove that Milledge’s negligence caused Primis’s alleged damages?

In the first

issue, Primis asserts that the trial court erred by failing to find that

Milledge’s negligence caused Primis’s alleged damages. We construe Primis’s

issue and argument to challenge the legal sufficiency of the trial court’s

finding that Milledge’s negligence was not the cause of any of Primis’s

damages. Because Primis had the burden of proof as to this issue, for Primis

to succeed in its legal-sufficiency challenge, we must conclude that Primis

conclusively proved that Milledge’s negligence was a proximate cause of Primis’s

alleged damages. See Dow Chem. Co. v. Francis , 46 S.W.3d 237, 241 (Tex.

2001); Green v. Alford , 274 S.W.3d 5 , 17–18 (Tex. App.—Houston [14th

Dist.] 2008, pet. denied) (en banc). In making this determination, we must

consider the evidence in the light most favorable to the challenged finding and

indulge every reasonable inference that would support it. See City of

Keller v. Wilson , 168 S.W.3d 802, 822 (Tex. 2005). We must credit

favorable evidence if a reasonable factfinder could and disregard contrary

evidence unless a reasonable factfinder could not. See id. at

827 . We must determine whether the evidence at trial would enable a reasonable

and fair-minded person to find the facts at issue. See id . The

factfinder is the sole judge of the credibility of the witnesses and the weight

to be given their testimony. See id. at 819 . Evidence is

conclusive only if reasonable people could not differ in their conclusions. See

id . Because findings of fact in a bench trial have the same force and

dignity as a jury verdict, we review them for legal sufficiency of the evidence

under the same standards we apply in reviewing a jury’s findings. See Anderson v. City of Seven Points ,

806 S.W.2d 791, 794 (Tex. 1991).

Primis did

not introduce, and the trial record does not contain, expert testimony

regarding causation. Therefore, we must consider whether expert testimony was

required. The record must provide an evidentiary basis establishing a causal

link between the attorney’s asserted negligence and the plaintiff’s asserted harm.

See Alexander v. Turtur & Associates, Inc ., 146 S.W.3d 113, 119 (Tex.

2004). A failure of proof can result if expert testimony is limited to whether

the defendant violated the standard of care. See id . Proof of

causation of injury often requires expert testimony concerning what a

reasonably prudent attorney would have done under the circumstances. See id .

When the causal link between the attorney’s negligence and the alleged damages

is beyond the trier of fact’s common understanding, expert testimony is

necessary. See id . at 119–20. In a legal malpractice case predicated

on professional negligence during litigation, expert testimony generally is

required to determine whether the result of the underlying litigation would

have been different but for the attorney’s alleged negligence. See id .

Primis agreed

that Primis Corporation owed AAR $78,031.25. Primis’s theory of recovery was

that, had a reasonably prudent attorney represented Primis in the AAR lawsuit,

the result would have been no liability for Carranza and liability for Primis

Corporation only for $78,031.25. To make this causation determination, the

trier of fact would have to assess whether, with reasonably prudent counsel, the

trial court would have vacated or modified the arbitration award against Primis

Corporation as well as whether Carranza would have successfully defended

himself against AAR’s claims. This causation inquiry was beyond the trier of

fact’s common understanding; therefore, expert testimony was necessary for

Primis to prove causation. [1] See id . (holding expert testimony necessary

for causation regarding outcome of underlying adversary proceeding); F.W.

Indus., Inc. v. McKeehan , 198 S.W.3d 217 , 221–22 (Tex. App.—Eastland 2005,

no pet.) (holding expert testimony necessary for causation regarding the effect

of a bankruptcy filing by client’s debtor upon client’s claims against debtor);

Arce v. Burrow , 958 S.W.2d 239, 252 (Tex. App.—Houston [14th Dist.]

1997) (holding expert testimony necessary for causation issue regarding

settlements of personal injury and wrongful death cases), aff’d in part,

rev’d in part on other grounds , 997 S.W.2d 229 (Tex. 1999). Primis did not

introduce, and the trial record does not contain, any expert testimony

regarding causation. [2] In the absence of this required expert testimony,

the trial court did not err in finding that Milledge’s negligence was not the

cause of any of Primis’s damages. Under the applicable standard of review, Primis

has not shown that Primis conclusively proved that Milledge’s negligence was a

proximate cause of any of Primis’s alleged damages. Accordingly, we overrule

the first issue.

Did the trial court reversibly err by

denying Primis leave to amend the petition?

In

the second issue, Primis asserts that the trial court erred in denying Primis

leave to file a trial amendment adding claims for gross negligence, fraud, and

breach of fiduciary duty. Primis also asserts that the trial court erred in

denying Primis’s post-trial motion to reconsider this ruling. In Primis’s oral

motions for leave to amend pleadings during trial and in Primis’s post-trial

written motion to reconsider, Primis never stated that Primis wished to amend the

petition to seek fee forfeiture. See Burrow v. Arce , 997 S.W.2d 229 ,

237–47 (Tex. 1999) (holding that a client may obtain fee forfeiture as remedy

under a breach-of-fiduciary-duty claim, even in absence of damages caused by

attorney’s negligence or breach of fiduciary duty). Primis sought to add only

claims for money damages, and proof of causation was required as to these

claims. However, as discussed above, there was no expert testimony at trial

regarding causation, and the trial court did not err in finding no causation.

On this record, even if we presume that the trial court erred in denying leave

to file a trial amendment, any such error did not probably cause the rendition

of an improper judgment. See Tex.

R. App. P. 44.1. Accordingly, we overrule the second issue.

Did the trial court reversibly err by

excluding from evidence a copy of a check?

In

the third issue, Primis asserts that the trial court erred by refusing to admit

into evidence a copy of a August 29, 2003 check for $2,000 from Primis to

Milledge. During his testimony, Milledge denied receiving such a check. Near

the end of the bench trial, Primis offered a copy of the check to impeach the

testimony of Milledge and another witness. On appeal, Primis also asserts that

this evidence was needed to show that a contract existed between Primis and

Milledge. Though the trial court did not admit this exhibit into evidence, the

trial court stated that another exhibit already had been admitted into evidence

that indicated Milledge cashed an August 29, 2003 check from Primis and that

the trial court did not find credible the testimony from Milledge and another

witness to the effect that Milledge did not cash such a check. As stated by

the trial judge, the trial court concluded that Milledge had cashed the check

in question based on other trial evidence. On this record, even if we presume

that the trial court erred in excluding a copy of the check from the trial

evidence, any such error did not probably cause the rendition of an improper

judgment. See Tex. R. App. P.

44.1. Accordingly, we overrule the third issue.

Having

overruled all of Primis’s issues, we affirm the trial court’s judgment.

/s/ Kem

Thompson Frost

Justice

Panel consists of Justices

Anderson, Frost, and Boyce.

[1]

The Supreme Court of Texas has held that findings of fact in a bench trial have

the same force and dignity as a jury’s verdict and that fact findings should be

reviewed for sufficiency of the evidence under the same standards, regardless

of whether the jury or the trial court was the fact finder. See Anderson v. City of Seven Points , 806 S.W.2d

791, 794 (Tex. 1991). This court has held that we review a trial court’s

finding of no causation in a bench trial in a legal malpractice case under the

same legal and factual sufficiency standards applied in reviewing a jury

verdict. See Simon v. D. Miller & Assocs ., 2009 WL 335068 , at *3–4

(Tex. App.—Houston [14th Dist.] Feb. 12, 2009, pet. denied) (mem. op.).

Therefore, we analyze the legal sufficiency of the evidence in this case in the

same way as we would in a case tried to the jury. More specifically, the same

legal sufficiency analysis applies to bench trials addressing causation in

legal malpractice cases predicated on professional negligence. See Abdelhak

v. Farney , No. 04-07-00121-CV, 2007 WL 4180133 , at *4-5 (Tex. App.—San

Antonio Nov. 28, 2007, no pet.) (mem. op.) ( Alexander ’s requirement of

expert testimony to establish causal link between professional negligence and

client’s injury applies in bench trials just as it does in jury trials; “We are

unable to conclude that Alexander is inapplicable to cases presented to

the trial court rather than a jury.”). This rule makes sense in a

legal-malpractice context; although a trial judge may be competent to evaluate

whether an attorney breached a duty to his client and whether this breach

caused damage, these are factual issues that must be established in the

evidence at trial and subjected to the adversary process. A trial judge’s

private thoughts regarding these issues are not evidence, and they are not

reflected in the record. Nor are they subjected to the adversarial process. See

Lentino v. Fringe Employee Plans , Inc., 611 F.2d 474, 481 (3d Cir. 1979)

(holding expert testimony is needed in legal-malpractice cases under

Pennsylvania law under certain circumstances regardless of whether the fact

finder is the jury or the trial judge); Bonhiver v. Rotenberg, Schwartzman

& Richards , 461 F.2d 925 , 928–29 (7th Cir. 1972) (same as Lentino under

Illinois law). Moreover, a conclusion that judges have “experience and legal

education superior to that of most jurors” does not justify changing the type

of causation proof required according to whether a professional negligence case

against a lawyer is tried to a jury or to the bench. See Abdelhak ,

2007 WL 4180133 , at * 5. “Inevitably, this premise would turn an objective

criterion — is it beyond the knowledge of most jurors — into a subjective

one.” Id .

[2]

The only expert witness Primis called was

Primis’s trial counsel. After providing expert testimony regarding Primis’s

attorney’s fees request, Primis’s trial counsel indicated that he wanted to

testify as an expert regarding “what a prudent attorney would or would not do.”

In response, the trial court suggested that trial counsel could speak to

whether Milledge’s actions met the standard of care during closing argument.

Primis’s counsel agreed that he would follow the trial court’s suggestion and

speak to these matters during closing argument. The closing argument of

Primis’s trial counsel, however, does not constitute expert testimony. The

trial court did not rule that Primis’s counsel would be prevented from

testifying as an expert regarding what a prudent attorney would have done, and

Primis did not object in the trial court or on appeal that Primis was prevented

from offering expert testimony. Though Primis’s counsel did make several

statements during his closing that addressed causation, these statements do not

constitute evidence. But even if counsel had made these statements on the

witness stand testifying as an expert, these statements were conclusory and

would not have raised a fact issue on causation . See Coastal Transport Co., Inc. v. Crown Cent. Petroleum Corp., 136 S.W.3d 227,

232 (Tex. 2004) (stating that conclusory expert testimony does not raise a

fact issue).