In May of 1996, the Texas Supreme Court confirmed earlier Courts of Appeals decisions and told us that non-clients -- even intended third-party beneficiaries of an attorney-client relationship -- cannot sue lawyers for legal malpractice. Barcelo v. Elliott, 923 S.W.2d 575, 578-79 (Tex. 1996). The Barcelo opinion was based, in part, on public policy. Id. The Supreme Court held that not allowing non-clients to sue lawyers for legal malpractice ". . . will ensure that attorneys may in all cases zealously represent their clients without the threat of suit from third parties compromising that representation." Id. The Supreme Court's reliance on this policy is sound. The policy is embodied in the Texas Disciplinary Rules of Professional Conduct, which establish the minimum standards for lawyer conduct. SUPREME COURT OF TEXAS, RULES GOVERNING THE STATE OF TEXAS Art. 10, § 9 (Rules of Professional Conduct) Rule 1.06 (comments 1 and 4) and Rule 5.04 (comments 4 and 5).
Notwithstanding Barcelo, can non-clients, particularly lawyers' adversaries in litigation, sue lawyers for reckless or intentional torts committed as part of the lawyers' representation of their clients? Over one hundred years ago, the Texas Supreme Court held that a lawyer who participates in fraudulent activities while acting for his client is not shielded form liability to a non-client just because the fraud was perpetrated while the lawyer was representing his client. Poole v. Houston & T.C. Ry., 58 Tex. 134, 137-38 (1882). In a more often cited case, in 1985 the First Court of Appeals held that a lawyer can be liable to his adversary for conduct by the lawyer while representing his client, if the lawyer ". . . knowingly commits a fraudulent act that injures a third person, or if he knowingly enters into a conspiracy to defraud a third person." Likover v. Sunflower Terrace II, Ltd., 696 S.W.2d 468, 472 (Tex. App. - Houston [1st Dist.] 1985, no writ). The principal issue in Likover was whether a lawyer acting for a client in settlement negotiations can be held liable for damages as a coconspirator. Id. at 469.
However, more recent opinions - including Barcelo - suggest that the holdings of Poole and Likover are no longer good law. In late 1994, the First Court of Appeals affirmed a summary judgment granted to various lawyer-defendants, holding that ". . . an attorney does not have a right of recovery, under any cause of action, against another attorney arising from conduct the second attorney engaged in as part of the discharge of his duties in representing a party in a lawsuit in which the first attorney also represented a party." Bradt v. West, 892 S.W.2d 56, 71-72 (Tex. App. - Houston [1st Dist.] 1994, writ denied) (emphasis added). The Court of Appeals in Bradt observed that an attorney's knowledge of potential exposure to suit by the other side's lawyer, for something done in the course of representing his own client, would favor tentative rather than zealous legal representation of the client. Id. at 72. The Court of Appeals then reasoned that it would conflict unacceptably with professional ideals and public expectations, and that such a policy ". . . would dilute the vigor with which Texas attorneys represent their clients, which would not be in the best interests of justice." Id.
Finally, the Court of Appeals stated that even meritless conduct is not actionable when it is in ". . . the discharge of [the lawyer's] duties in representing a party in a lawsuit." Id. The public policies that the First Court of Appeals relied on in Bradt are essentially the same as those that the Supreme Court relied on in Barcelo. Id.; Barcelo, 923 S.W.2d 575, 578-79. Significantly, in Bradt, the summary judgment was granted and affirmed, even though the plaintiff had also sued the lawyer-defendants for conspiracy. Bradt, 892 S.W.2d at 65.
In September of 1996, a federal district court in Dallas granted two lawyer-defendants' motions for summary judgment and held that a party has no right of recovery, "under any cause of action, " against its adversary's lawyer for conduct by the lawyer as part of the discharge of his duties in representing a client in a lawsuit. Taco Bell Corp. v. Cracken, 939 F. Supp. 528, 532-33 (N.D. Tex. 1996). In so holding, the court relied on the public policies discussed in Barcelo and Bradt. Id. The federal district court reasoned that, if a lawyer's opponent in a lawsuit could sue the lawyer, then the lawyer's fear of retaliation by his opponent could create an undesirable chilling effect on the way the lawyer represents his client. Id. at 532. In Taco Bell, the court granted the lawyer-defendants' motions for summary judgment, despite the plaintiff's claims of fraud and conspiracy. Id. at 531. The federal district court expressly rejected the plaintiff's argument that conduct alleged to be fraudulent or conspiratorial could not be classified as conduct occurring as part of a lawyer's discharge of his duties in representing a party in a lawsuit. Id. at 533.
In May of 1997, the Fort Worth Court of Appeals, relying on the same public policies discussed in Barcelo, Bradt, and Taco Bell, affirmed a summary judgment granted to several lawyers in a lawsuit in which the plaintiff, a non-client, alleged that the lawyers wrongfully garnished certain of her assets. Renfroe v. Jones & Associates, 947 S.W.2d 285, 287-88 (Tex. App. - Fort Worth 1997, no writ). The Court of Appeals stated that a lawyer ". . . may assert any of his client's rights without being personally liable for damages to the opposing party." Id. at 287.
In March of 1997, the Fourteenth Court of Appeals adopted and applied the same public policies relied on by other courts in their affirming the summary judgments in Barcelo, Bradt, Taco Bell, and Renfroe. Vinson & Elkins v. Moran, 946 S.W.2d 381, 401 (Tex. App. - Houston [14th Dist.] 1997, writ pending). Citing Barcelo, and holding that non-clients should not be able to sue lawyers while representing their clients, the Fourteenth Court of Appeals stated:
"Public policy concerns support a bright-line rule. Without the privity barrier, fear of liability would inject undesirable self-protective reservations into the attorney's counseling role. The preoccupation with the possibility of claims by anyone with whom the client might deal would prevent the attorney from devoting his entire energies to the client's interests. The result would be an unreasonable burden on the profession and a decline in the quality of legal services."
Id. But see F.E. Appling Interests v. McCamish, Martin, Brown & Loeffler, No. 06-96-00084-CV (Texarkana, August 12, 1997) [recognizing a cause of action by a non-client for negligent misrepresentation by opposing counsel in writing in a transactional matter (unpublished opinion as of press time -- Ed.)]
These recent opinions, however, do not mean that non-clients have no recourse against lawyers for reckless or intentional conduct that occurred while the lawyers were representing their clients. [The subject of malicious prosecution is not addressed in this article, as the elements of proof differ from the claims discussed here, and malicious prosecution is generally asserted after conclusion of litigation, not while it is pending. -- Ed.] In litigation, lawyers are subject to sanctions under Rules 13 and 215 of the Texas Rules of Civil Procedure, Chapters 9 and 10 of the Civil Practice and Remedies Code, and § 21.002 of the Texas Government Code.
Rule 13 prohibits lawyers from signing pleadings, motions, or other court papers that are groundless and brought in bad faith, or groundless and brought for the purpose of harassment. Under rule 13, "groundless" means without basis in law or fact, and not warranted by a good faith argument for the extension, modification, or reversal of existing law. A lawyer who signs a pleading, motion. or other court paper that is groundless and brought in bad faith, or groundless and brought for the purpose of harassment, may be held in contempt or, alternatively, ordered to pay costs and reasonable litigation expenses -- including attorneys' fees. TEX. R. CIV. PROC. 13; TEX. R. CIV. P. 215 (2)(b)(2), (6), & (8). Furthermore, under Rule 13, a lawyer "shall" be held guilty of contempt for (I) filing a fictitious pleading as an experiment to get an opinion from the court; or (ii) knowingly making groundless or false statements in a pleading for the purpose of delaying a trial.
Chapter 9 of the Texas Civil Practice and Remedies Code, enacted in 1987, is similar to Texas Rule of Civil Procedure 13, and prohibits an attorney from signing a pleading that is: (I) groundless and brought in bad faith; (ii) groundless and brought for the purpose of harassment; or (iii) groundless and interposed for any improper purpose, such as to use unnecessary delay or needless expense. TEX. CIV. PRAC. & REM. CODE § 9.011. A lawyer who violates Chapter 9 and refuses to withdraw or dismiss the offensive pleading within ninety days after the court makes a determination that Chapter 9 has been violated may be ordered to pay reasonable litigation expenses, including costs, attorneys' fees, witness fees, fees of experts, and deposition expenses. TEX. CIV. PRAC. & REM. CODE § 9.012 (c) & (e). Significantly, if a court imposes a sanction under Chapter 9 and finds that the lawyer consistently engaged in an activity that resulted in the sanction, then the court "shall" report its finding to the appropriate grievance committee. TEX. CIV. PRAC. & REM. CODE § 9.013(a).
Paraphrasing Chapter 10 of the Civil Practice and Remedies Code, enacted in 1995, a lawyer is prohibited from signing a pleading unless:
(i) the pleading is not presented for an improper purpose, including to harass or to cause unnecessary delay or needless expense;
(ii) the pleading is warranted by existing law or by a non-frivolous argument for the extension, modification, or reversal of existing law or the establishment of new law;
(iii) the factual allegations in the pleading have evidentiary support or are likely to have evidentiary support after further discovery; and
(iv) any denials in the pleading are warranted by the evidence or, for specifically identified denials, are based on a lack of information or belief. See, TEX. CIV. PRAC. & REM. CODE § 10.001.
Since 1995, a lawyer who signs a pleading in violation of these rules may be ordered to pay a penalty to the court and/or reasonable expenses and attorneys' fees. TEX. CIV. PRAC. & REM CODE § 10.004(c). Any sanction imposed under Chapter 10 must be limited to what is sufficient to deter repetition of the conduct or comparable conduct by other similarly situated. TEX. CIV. PRAC. & REM CODE § 10.004(b).
Finally, under Section 21.002 of the Texas Government Code, improper lawyer conduct may be sanctioned by way of contempt.
Although Rules 13 and 215 of the Texas Rules of Civil Procedure, Chapters 9 and 10 of the Texas Civil Practice and Remedies Code, and Section 21.002 of the Texas Government Code deal primarily with certain types of lawyer misconduct that occurs in the course of litigation, lawyers who have non-litigation practices are not immune from punishment assessed in proceedings initiated by non-clients. Whether a lawyer is involved in litigation or not, one is yet subject to sanctions, including suspension or disbarment, for violating the Texas Disciplinary Rule of Professional Conduct. See, e.g., TEX. R. DISC. PROC. 2.17.
According to the public policies adopted and applied in recent years by the Texas Supreme Court, various Courts of Appeals, and a federal district court in Dallas, a lawyer's adversary in litigation should not be able to sue the lawyer, "under any cause of action," for conduct by the lawyer while engaged in representing his client. A client deserves zealous representation unaffected by influences from third parties whether or not the client is involved in litigation. Therefore, these same public policies applied universally should preclude non-clients from suing lawyers, "under any cause of action," for conduct of the lawyer while representing a client in any type of matter. Lawyers are still subject to sanctions in litigation matters under Rules 13 and 215 of the Texas Rules of Civil Procedure, and the Civil Practice and Remedies Code and Government Code. In any type of matter, lawyers remain subject to disciplinary sanctions for violations of the Disciplinary Rules of Professional Conduct.
T.L.I.E. greatly appreciates this article contributed by George W. (Billy) Shepherd, III, a partner with the Houston firm of Cruse, Scott, Henderson & Allen, L.L.P. Mr. Shepherd specializes in the defense of legal malpractice claims. He briefed and argued the case for the attorney-respondents before the Texas Supreme Court, in Barcelo v. Elliott, 923 S.W.2d 575, 578-79 (Tex. 1996).
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