Opinion
No. 13-05-383-CV
Memorandum Opinion Delivered and Filed May 11, 2006.
On Appeal from the County Court at Law No. 2 of Nueces County, Texas.
Before Chief Justice VALDEZ and Justices YAÑEZ and CASTILLO.
MEMORANDUM OPINION
Appellant, William H. Berry, Jr., brings this interlocutory appeal from an order of the trial court granting a plea to the jurisdiction filed by appellee, Nueces County. Because we conclude Berry lacked standing to pursue this claim, we vacate the trial court's order and dismiss the case for want of jurisdiction.
Background
Berry is an attorney practicing in Corpus Christi, Texas. Mary Thornton, a former Nueces County employee, hired Berry as her attorney in order to pursue wrongful termination claims against Nueces County. Berry and Thornton executed a contingency fee agreement that read in part:
That in consideration of such services rendered by said attorney, his associates or representatives, there is hereby transferred, assigned and conveyed to him a one-third (1/3) interest in said claim and cause of action, if same is compromised and settled prior to suit being filed; in the event that suit is filed, then the undersigned attorney shall be entitled [sic] forty percent (40%) of the entire amount of a judgment or settlement . . .
Two years after litigation was commenced, Thornton terminated Berry's representation and hired new counsel. Berry then filed a plea in intervention, asserting a "priority lien on any offer, payment, tender, of any settlement proceeds. . . ." The trial court granted his plea in order to allow Berry to intervene "as an interested person in the matter . . . for his claim for reasonable, necessary, customary, and contractual attorney fees and out of pocket expenses pursuant to his fee agreement with Mary Thornton."
Thornton's amicus curiae brief argues that Berry's termination was for good cause and describes his representation as "tumultuous and inadequate." Berry disputes this and argues that there was no good cause for his termination.
Thornton, through her new counsel, then settled her original claim with Nueces County amicably. Nueces County paid the agreed settlement amount to Thornton and her current attorney. Thornton's counsel paid its own fees out of the settlement and tendered the remainder to the court for distribution. Berry, who was informed about the settlement by Thornton's new counsel, filed a petition as intervenor, arguing that Nueces County is jointly and severally liable with Thornton to Berry for Berry's undivided interest in the settlement proceeds.
In the settlement agreement, Thornton warranted that she had not "assigned, authorized or transferred . . any claims . . . of any kind or character, which Plaintiff has or may have had against one or more Defendants, except to the extent of any agreement between Plaintiff and her current attorney(s)."
Nueces County then filed a plea to the jurisdiction in response to Berry's petition, alleging various defenses that would defeat the trial court's jurisdiction, including judicial immunity, quasi-judicial immunity, legislative immunity, laches, negligence, and governmental immunity, among others. The trial court granted the County's plea, which Berry now appeals to this Court.
Standing
We first address the matter of the trial court's jurisdiction to entertain this case. Subject matter jurisdiction is essential for a court to have authority to decide a case. Tex. Ass'n Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 443-44 (Tex. 1993). Subject matter jurisdiction is never presumed, and it cannot be waived. Id. at 443. An appellate court may address sua sponte the issue of subject matter jurisdiction. Id. at 445-46. Because subject matter jurisdiction is a question of law, our review is de novo. See Mayhew v. Sunnyvale, 964 S.W.2d 922, 928 (Tex. 1998).
Standing is a necessary element of subject matter jurisdiction. Douglas v. Delp, 987 S.W.2d 879, 882 (Tex. 1999). To establish standing, a party asserting a claim must show a justiciable interest by alleging an actual or imminent threat of injury peculiar to one's circumstances. Tex. Lottery Comm'n v. Sci. Games Int'l, 99 S.W.3d 376, 380 (Tex.App.-Austin 2003, pet. denied); Elizondo v. Tex. Natural Res. Conservation Comm'n, 974 S.W.2d 928, 932 (Tex.App.-Austin 1998, no pet.) (citing Warth v. Seldin, 422 U.S. 490, 498-99 (1975) (noting standard for determining whether plaintiff has standing is whether she has such personal stake in outcome of controversy as to warrant invocation of court's jurisdiction)). Thus, in order for Berry to have standing to assert his cause of action against Nueces County, he must demonstrate that he has a personal justiciable interest at stake.
In Texas, when an attorney is discharged by his client before the completion of the representation, the attorney may be able to treat his discharge as a breach of contract and sue for the amount of his compensation. See Mandell Wright v. Thomas, 441 S.W.2d 841, 847 (Tex. 1969); Rocha v. Ahmad, 676 S.W.2d 149, 156 (Tex.App.-San Antonio 1984, writ dism'd). However, the party against whom the attorney may assert standing to sue for this breach is his client, not the opposing party in the underlying litigation. See, e.g. Mandell Wright, 441 S.W.2d at 847 (allowing attorney to sue client after termination); Walton v. Hoover, Bax Slovacek, L.L.P., 149 S.W.3d 834, 836 (Tex.App.-El Paso 2004 pet. granted) (citing Mandell Wright); Law Offices of Windle Turley, P.C. v. Ghiasinejad, 109 S.W.3d 68, 70-71 (Tex.App.-Fort Worth 2003, no pet.) (citing Mandell Wright). This is because the attorney-client relationship is one of contract, and the attorney's rights are wholly derivative from those of his client. See Dow Chem. Co. v. Benton, 357 S.W.2d 565, 567 (Tex. 1962). Thus, once dismissed by his client, the attorney may sue that client, but no longer has a cause of action to assert against the opposing party, as explained by the Texas Supreme Court:
The question is, [after a plaintiff is no longer in the case], then may the attorneys press the plaintiff's suit (in which they have a contractual interest) in order that the attorneys may recover their percentage of whatever the plaintiff would have recovered. We think not.
Id. at 566.
As the supreme court pointed out in Dow Chem. Co., the effect of granting attorneys such as Berry standing to sue the opposing party would be that "an attorney is no longer merely the legal representative of his client." Id. at 568. Instead, in every case involving a contingent fee contract, the attorney "would be more akin to a co-plaintiff." Id. The supreme court explicitly refused to recognize attorneys' personal causes of action against the non-client party in these types of suits, describing the possibility of these suits as "just another difficulty encountered if we overindulge in the notion that the attorney with a contingent fee is litigating two distinct, independent interests at the same time." Id.; see Winston v. Masterson, 87 Tex. 200, 203-04 (Tex. 1894) (holding that an attorney with a contingent fee contract is not so directly interested in the subject matter of a lawsuit as to make him a "party" for purposes of disqualification).
Berry relies in part on the decision of the Houston court of appeals in Honeycutt v. Billingsley, 992 S.W.2d 570, 584 (Tex.App.-Houston [1st] 1999, pet. denied), in support of his claim that, in the case of contingency fees, if the defendant in the underlying suit has notice of the attorney's interest, the defendant is liable to the attorney for that interest, even if he has already paid the client. However, we find this case distinguishable; in Honeycutt, the first attorney was not terminated by his client but instead offered to refer the case to a second, more experienced attorney when the matter became complex. See id. at 574. The referral agreement explicitly reaffirmed that the plaintiff had assigned a contingency interest in the first attorney, and that the first attorney would retain that interest but share it with the second attorney. See id. Also, all parties involved, including the defendant, were apparently on notice of the referral and contingent free agreement. See id. at 574-75.
Here, Thornton unilaterally terminated Berry as her representative. Her new counsel had no agreement or relationship with Berry. Furthermore, Nueces County, as the defendant in the actual proceeding, did not have knowledge that Berry might assert a claim against it instead of Thornton. When Nueces County settled with Thornton and paid the agreed-upon amount, it only had notice that Berry's motion for intervention was granted for the purposes of Berry's collection of "reasonable, necessary, customary, and contractual" attorney's fees "pursuant to his fee agreement with Mary Thornton." There was no indication in the trial court's order that Berry could intervene in order to pursue fees from anyone other than his former client, and Berry's attempt to impose a lien against any possible future settlement agreement was not granted in the court's order.
This case does not present an issue of referral agreements between lawyers, and furthermore, does not present a case in which the parties themselves arrange a secret settlement in order to defraud their own attorneys. See Galveston H. S. Ry. Co. v. Ginther, 72 S.W. 166, 167 (Tex. 1903). Instead, we are simply presented with an attorney who may have a legitimate claim for reasonable fees against his former client, but who does not also have standing to assert a claim against a defendant who has fully paid out all settlement proceeds and is no longer liable to the former client.
Berry's rights to a portion of any damages award or settlement agreement were entirely derivative of Thornton's rights. See Dow Chem. Co., 357 S.W.2d at 567 (noting that attorney's and client's rights are "necessarily dependent upon and inseparably interwoven with the other."). Once the trial court granted Thornton's motion to dismiss with prejudice, and Nueces County fully paid the agreed-upon settlement amount, Berry's rights in the case in relation to Nueces County were extinguished. Thus, while he may potentially be able to pursue a claim for reasonable attorney's fees against Thornton as his former client, he lacks standing to pursue this claim against Nueces County. See Rapp v. Mandell Wright, P.C., 127 S.W.3d 888, 894 (Tex.App.-Corpus Christi 2004, pet. denied).
Conclusion
Because Berry lacked standing to bring any cause of action against Nueces County, the trial court lacked subject matter jurisdiction over this case. Douglas, 987 S.W.2d at 882. Therefore, we vacate the trial court's order on Nueces County's plea to the jurisdiction, and we dismiss the case for want of jurisdiction. We do not reach Berry's issues on appeal. See TEX. R. APP. P. 43.2(e); Juarez v. Tex. Ass'n of Sporting Officials El Paso Chapter, 172 S.W.3d 274, 281 (Tex.App.-El Paso 2005, no pet.).
DISSENTING MEMORANDUM OPINION
Appellant William H. Berry, Jr. filed a plea in intervention ostensibly to preserve and protect his claim to attorney fees and expenses under a written contract with a settling party who retained other counsel. The parties to the underlying suit settled. After the trial court granted the dismissal order, Berry expanded his intervention petition on grounds that, after actual and constructive notice of his contingent attorney fee claim, Nueces County wrongfully paid his attorney fee and expenses interest in the underlying suit to Berry's former client and her current counsel. The trial court granted Nueces County's plea to the jurisdiction and this appeal ensued.
The trial court entered an order granting the intervention "for his claim for reasonable, necessary, customary, and contractual, attorney fees and out of pocket expenses pursuant to his fee agreement."
In a civil case, we accept as true the facts stated unless another party contradicts them. See TEX. R. APP. P. 38.1(f).
Concluding that Berry does not have standing to assert a claim against Nueces County because, among others, it fully paid out all settlement proceeds and is no longer liable to Berry's former client, the majority (1) holds that the trial court lacked subject matter jurisdiction over Berry's claims against Nueces County, (2) vacates the trial court's order on the plea to the jurisdiction, and (3) dismisses the appeal for lack of jurisdiction. Respectfully, I disagree that Berry lacks standing. He asserted his claim to attorney fees and expenses, filed his pleading in intervention, and preserved that claim by securing the trial court's order to that effect. Because Berry's interest in the lawsuit was not recognized by the settlement between Nueces County, his former client and her retained counsel, Berry was entitled to prosecute his live intervention petition. See Honeycutt v. Billingsley, 992 S.W.2d 570, 584-85 (Tex.App.-Houston [1st] 1999, pet. denied) (authorizing, as a matter of law, recovery where settling defendant had actual knowledge of an attorney's interest in the lawsuit). In this case, by his intervention petition, Berry provided actual notice of his claim based on an enforceable attorney fee contract in place. To conclude, as the majority does, that Nueces County had no knowledge that Berry might assert a claim against it instead of Thornton, disregards the proceedings at the core of an intervention action, and, in the context of this case, the trial court's order permitting the claim. As a matter of law, Berry was authorized to prosecute his claim. See Billingsley, 992 S.W.2d at 584-85. By the authorized intervention action, Nueces County had actual knowledge of Berry's claim and circumvention of the claim was at its own peril. See id.
See note 1.
I turn to the question of our jurisdiction over this appeal and expressly limit my discussion to the effect of the majority's disposition. The majority vacates the trial court's order on the plea to the jurisdiction from which Berry appealed. The remaining order is the dismissal with prejudice. That order states:
Our initial inquiry is always whether we have jurisdiction over an appeal. Garcia v. Comm'rs Court of Cameron County, 101 S.W.3d 778, 779 (Tex.App.-Corpus Christi 2003, no pet.) (citing Tex. Ass'n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 443 (Tex. 1993)). We are obligated to determine, sua sponte, our own jurisdiction. Id. (citing N.Y. Underwriters Ins. Co. v. Sanchez, 799 S.W.2d 677, 678 (Tex. 1990) (per curiam)). In dismissing this appeal for want of jurisdiction, we must first analyze the claims brought by the parties. Id.
Order Granting Plaintiff's Agreed Motion to Dismiss with Prejudice
On this day the Court took Plaintiff's Agreed Motion to Dismiss with Prejudice under submission. By his signature below, Plaintiff Thornton's counsel authorized defense counsel to present this Order to the Court ex parte for the Court's consideration. Having considered the Motion to Dismiss, the Court determines that it is well-founded.
It is therefore ORDERED, ADJUDGED and DECREED that Plaintiff's Agreed Motion to Dismiss with Prejudice is GRANTED. It is further ORDERED, ADJUDGED and DECREED that all pending claims and counter-claims of any kind or character whatsoever are hereby DISMISSED WITH PREJUDICE.
Because the order does not affirmatively dispose of Berry's claim for attorney fees, the order is not final. See Parks v. Dewitt County Elec. Coop., 112 S.W.3d 157, 162 (Tex.App.-Corpus Christi 2003, no pet.). Accordingly, we would lack jurisdiction because the trial court's order left in effect by the majority's disposition is not final. See id. at 165. However, the question of Berry's attorney fee claim is not a perfunctory issue and we must remand for a trial of that live claim. Id.