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Buck v. U.S. Fidelity Guaranty Co.

Court of Appeals of Texas, Thirteenth District, Corpus Christi
Dec 4, 2003
No. 13-02-232-CV (Tex. App. Dec. 4, 2003)

Opinion

No. 13-02-232-CV

December 4, 2003.

On appeal from the 214th District Court of Nueces County, Texas.

Before Chief Justice VALDEA and Justices HINOJOSA and RODRIGUEZ.


MEMORANDUM OPINION


This is an appeal of a summary judgment rendered against appellant, Oscar A. Buck, as Administrator of the Estate of Lillian M. Buck, Deceased, in a negligence and fraud case. Appellant brought suit against appellees, United States Fidelity and Guaranty Company (USFG), J. Michael Rhyne, Exxon Corporation, and James Lawrence, alleging negligence, and as to appellee Lawrence, also alleging fraud. The trial court granted summary judgment in favor of all four appellees, and this appeal ensued. By one issue appellant contends issues of fact remain as to his negligence and fraud claims, thereby precluding summary judgment as to all appellees. We affirm.

I. Facts

As this is a memorandum opinion and the parties are familiar with the facts, we will not recite them here except as necessary to advise the parties of the Court's decision and the basic reasons for it. See Tex.R.App.P. 47.4.

II. Standard of Review

Appellant's summary judgment motions were argued variously under both the traditional and no-evidence standards. See Richard v. Reynolds Metal Co., 108 S.W.3d 908, 909 (Tex. App.-Corpus Christi 2003, no pet.). We review the trial court's granting of a traditional motion for summary judgment de novo. See Natividad v. Alexsis, Inc., 875 S.W.2d 695, 699 (Tex. 1994); Branton v. Wood, 100 S.W.3d 645, 646 (Tex. App.-Corpus Christi 2003, no pet.). We must determine whether the summary judgment proof establishes as a matter of law that there is no genuine issue of material fact as to one or more of the essential elements of the plaintiff's cause of action or whether the defendant has conclusively established all elements of its affirmative defense. Velsicol Chem. Corp. v. Winograd, 956 S.W.2d 529, 530 (Tex. 1997); Walker v. Harris, 924 S.W.2d 375, 377 (Tex. 1996); Crain v. Smith, 22 S.W.3d 58, 59 (Tex. App.-Corpus Christi 2000, no pet.).

Appellee J. Michael Rhyne filed a traditional and no-evidence motion for summary judgment. Appellees USFG and Exxon filed a no-evidence motion which included summary judgment evidence and was apparently treated by the trial court as a traditional motion for summary judgment. Therefore, we will review it as such. Appellee James Lawrence filed a no-evidence motion for summary judgment.

A no-evidence summary judgment asserts there is no evidence of one or more essential elements of claims upon which the opposing party would have the burden of proof at trial. Tex. R. Civ. P. 166a(i). A no-evidence summary judgment is essentially a pretrial directed verdict, to which the appellate courts apply a legal sufficiency standard of review. Gen. Mills Rests., Inc. v. Tex. Wings, Inc., 12 S.W.3d 827, 832-33 (Tex. App.-Dallas 2000, no pet.); Jackson v. Fiesta Mart, Inc., 979 S.W.2d 68, 70 (Tex. App.-Austin 1998, no pet.).

In response to a no-evidence motion, the non-movant is only required to present evidence that raises a genuine fact issue on the challenged elements. McCombs v. Children's Med. Ctr., 1 S.W.3d 256, 258 (Tex. App.-Texarkana 1999, pet. denied). A no-evidence summary judgment is properly granted only if the non-movant fails to bring forth more than a scintilla of probative evidence to raise a genuine issue of material fact as to the challenged element of the claims. Tex. R. Civ. P. 166(a)(i); Jackson, 979 S.W.2d at 70-71.

In reviewing a summary judgment under either standard, "all evidence is to be construed in favor of the non-movant, to whom every reasonable inference is allowed and on whose behalf all doubts are resolved." Alvarez v. Anesthesiology Assocs., 967 S.W.2d 871, 874 (Tex. App.-Corpus Christi 1998, no pet.). When the trial court's order does not specify the grounds relied on for the ruling, the summary judgment will be affirmed if any of the theories advanced in the motion are meritorious. Rogers v. Ricane Enters., Inc., 772 S.W.2d 76, 79 (Tex. 1989).

III. AnalysisAppellant contends the trial court erred in granting summary judgment because issues of fact exist as to his claims of negligence and fraud. We will address the appellees individually in order to determine whether the granting of summary judgment was appropriate in each instance. A.J. Michael Rhyne

According to appellant, J. Michael Rhyne's negligence in submitting a lost securities bond application to USFG on behalf of Lillian Buck resulted in a loss to her of approximately $500,000. Appellant claims that as a matter of law, Rhyne, as attorney-in-fact and agent for USFG, owed a duty to Lillian to investigate whether it was her intent to apply for a lost securities bond, and to contact appellant for verification that the Exxon stock certificates were lost. Rhyne filed a traditional and no-evidence motion for summary judgment.

Appellant later contends USFG, through Rhyne, was negligent in failing to ascertain whether the signature on the application and bond was actually that of Lillian Buck. Therefore, our analysis here will also include this contention against Rhyne.

Liability in a negligence action requires: (1) a legal duty owed one person by another; (2) a breach of that duty; (3) that the breach was a proximate cause of the injury; and (4) actual injury. Bird v. W.C.W., 868 S.W.2d 767, 769 (Tex. 1994); Greater Houston Transp. Co. v. Phillips, 801 S.W.2d 523, 525 (Tex. 1990). The existence of a duty is a threshold question of law for the court to decide. Van Horn v. Chambers, 970 S.W.2d 542, 544 (Tex. 1998); Phillips, 801 S.W.2d at 525. The plaintiff must prove both the existence of a duty and a violation of that duty to establish liability in tort. Phillips, 801 S.W.2d at 525.

To assist the Court in deciding this case, appellant suggests we look to Board of Trs., Tarrant County Junior Coll. v. National Indem. Co., 484 S.W.2d 399 (Tex.Civ.App. — Fort Worth 1972, writ ref'd n.r.e.); Pure Oil Co. v. Fowler, 302 S.W.2d 461 (Tex.Civ.App. — Dallas 1957, writ ref'd n.r.e); Estate of McWhorter v. Wooten, 593 S.W.2d 366 (Tex.Civ.App. — Waco 1979), aff'd, 622 S.W.2d 844 (Tex. 1981); and Quealy v. Paine, Webber, Jackson Curtis, Inc., 475 So.2d 756 (La. 1985), for guidance. We decline to do so.

In National Indem. Co., Tarrant County Junior College (TCJC) brought a negligence claim against National Indemnity for its actions and the actions of its agent. National Indem. Co., 484 S.W.2d at 400. TCJC alleged National Indemnity's negligence enabled a third party to forge National Indemnity's seal and signature on a bond needed to secure a construction contract. Id. at 401. The appellate court concluded TCJC failed to prove a prima facie cause of action as there was no evidence of negligence on the part of National Indemnity or its agent. Id at 405. The court discussed the negligence of an agent who allows someone with a history of fraud and forgery to have access to the materials and records needed to accomplish the issuance of a bond. Id. at 402. However, National Indem. Co. did not address whether there is a duty on the part of an insurance agent, Rhyne in this case, to further investigate the representations of a person acting on behalf of a bond applicant. Likewise, Pure Oil Co., Estate of McWhorter, and Paine, Webber, are distinguishable. See Pure Oil Co., 302 S.W.2d at 464 (fraud case involving father who forged children's signatures on back of stock in order to facilitate transfer of ownership to grandfather); Estate of McWhorter, 593 S.W.2d at 370 (trespass to try title case in which court held appellee's forged signature on agreed judgment did not divest her of title to land); Quealy, 475 So.2d at 760 (case involving conversion action against Paine Webber and standard of care for notary).

Our review of the record reveals that in submitting the bond application, Rhyne acted on the assurances that the Exxon stock certificates were lost and that Lillian's grandson, Jeffrey Buck, was empowered to act for her. Jeffrey informed Rhyne he possessed an active power of attorney. This was confirmed by an Exxon representative. Moreover, although Lillian signed the bond application outside Rhyne's presence, her signature was witnessed and notarized.

Appellant does not cite any authority, and we find none, that supports a negligence cause of action under the specific facts of this case. Additionally, appellant fails to make any argument convincing this Court that a new common-law duty should be created. Therefore, because appellant cannot prove the existence of a duty, an essential element of this cause of action, the trial court was correct in granting either a traditional or no-evidence summary judgment on appellant's negligence claim against Rhyne.

B. United States Fidelity and Guaranty Company

Appellant claims USFG, the issuer of the lost securities bond, is liable for the alleged negligence of its agent and attorney-in-fact, Rhyne. Appellant argues that USFG, through Rhyne, had a duty to ascertain whether Lillian actually intended to apply for the lost security bond and whether she actually signed the application and bond. Because USFG's no-evidence motion included summary judgment evidence and was, as USFG notes, apparently treated by the trial court as a traditional motion for summary judgment, we too, will review it as a traditional motion for summary judgment.

As discussed above, appellant has failed to overcome the summary judgment entered in his negligence action against Rhyne. Since Rhyne's negligence has not been established, appellant cannot sustain the argument that USFG is liable. Thus, we conclude the trial court was correct in granting a traditional summary judgment on appellant's negligence claim against USFG.

C. Exxon Corporation

Appellant's negligence claim against Exxon Corporation is based on the contention that Exxon owed a duty to Lillian, as a shareholder, to refrain from issuing new stock certificates to her unless an investigation confirmed the original certificates were actually lost. Like USFG, Exxon's no-evidence motion will be reviewed as a traditional motion for summary judgment because it included summary judgment evidence and because it was apparently treated by the trial court as a traditional motion for summary judgment.

Appellant cites no authority, and we find none, imposing such a common-law investigative duty on Exxon. However, section 8.405(a) of the Texas Business and Commerce Code does provide that if an owner of a security claims the certificate has been lost, destroyed, or wrongfully taken, the issuer must issue a new certificate if the owner files a sufficient indemnity bond and satisfies other requirements imposed by the issuer. Tex. Bus. Com. Code Ann. § 8.405(a) (Vernon 2002). There is no other statutory duty and we find nothing in the record regarding other requirements, if any, imposed by Exxon. Since the business and commerce code does not impose any duty on Exxon to investigate a lost securities claim made by a stock owner, appellant has failed to prove a duty exists under the specific facts of this case. Therefore, we find the trial court was correct in granting a traditional summary judgment on appellant's negligence claim against Exxon.D. James Lawrence

Appellant brought a negligence claim against Lillian's attorney, James Lawrence, asserting Lawrence negligently represented the stock certificates were lost. He contends Lawrence was negligent because Lawrence never asked appellant if he was in possession of Lillian's Exxon stock certificates. Appellant also contends Lawrence had a duty to Lillian to take no action which might deprive her of the benefits of her Exxon stock. Lawrence filed a no-evidence motion for summary judgment.

The existence of an attorney-client relationship gives rise to corresponding duties on the attorney's part to use the utmost good faith in dealings with the client, to maintain the confidences of the client, and to use reasonable care in rendering professional services to the client. Byrd v. Woodruff, 891 S.W.2d 689, 700 (Tex. App.-Dallas 1994, writ denied). An attorney is held to the standard of care that would be exercised by a reasonably prudent attorney. Cosgrove v. Grimes, 774 S.W.2d 662, 664 (Tex. 1989). A plaintiff is required to present expert testimony to establish that standard of care. Ersek v. Davis Davis, P.C., 69 S.W.3d 268, 271 (Tex. App.-Austin 2002, pet. denied); Longaker v. Evans, 32 S.W.3d 725, 735 (Tex. App.-San Antonio 2000, pet. withdrawn). If an attorney makes a decision which a reasonably prudent attorney could make in the same or similar circumstances, there is no negligence even if an undesirable result occurs. Cosgrove, 774 S.W.2d at 665.

In determining whether Lawrence breached the duty of care owed to Lillian, we must determine whether Lawrence's conduct was that of a reasonably prudent attorney. Id. Appellant, however, offered no summary judgment evidence about what a reasonably prudent attorney would have done under the circumstances present in this case. See Ersek, 69 S.W.3d at 271. Without expert testimony to establish the standard of care ordinarily exercised by an attorney, appellant failed to bring forth more than a scintilla of probative evidence to raise a genuine issue of material fact as to breach of duty. See Tex. R. Civ. P. 166(a)(i); see also Jackson, 979 S.W.2d at 70-71; Longaker, 32 S.W.3d at 735. Therefore, because appellant cannot prove Lawrence breached the duty of care owed to Lillian, an essential element of this cause of action, we find the trial court was correct in granting a no-evidence summary judgment on appellant's negligence claim against Lawrence.

Appellant also brought a fraud claim alleging Lawrence made a false representation that the Exxon stock certificates were lost for the purpose of getting replacement certificates in the hands of his client Jeffrey Buck, Lillian's grandson. In order to prevail on a fraud claim, appellant must prove: "(1) that a material representation was made; (2) the representation was false; (3) when the representation was made, the speaker knew it was false or made it recklessly without any knowledge of the truth and as a positive assertion; (4) the speaker made the representation with the intent that the other party should act upon it; (5) the party acted in reliance on the representation; and (6) the party thereby suffered injury." Johnson v. Brewer Pritchard, P.C., 73 S.W.3d 193, 211 n. 45 (Tex. 2002) (quoting In re FirstMerit Bank, N.A., 52 S.W.3d 749, 758 (Tex. 2001)).

Appellant is arguing Lawrence made a material misrepresentation to Exxon, not Lillian. Appellant put forth no summary judgment evidence as to Lawrence's intent that Lillian act upon the misrepresentation allegedly made by him. Id. The record was also silent as to how Lillian relied to her detriment on this misrepresentation. Id. Therefore, because appellant failed to present more than a scintilla of probative evidence to raise a genuine issue of material fact as to essential elements of this cause of action, we find the trial court was correct in granting a no-evidence summary judgment on appellant's fraud claim against Lawrence. See Tex. R. Civ. P. 166(a)(i); see also Jackson, 979 S.W.2d at 70-71. In light of the above, we overrule appellant's sole point of error.

IV. Conclusion

Accordingly, we affirm the judgment of the trial court.


Summaries of

Buck v. U.S. Fidelity Guaranty Co.

Court of Appeals of Texas, Thirteenth District, Corpus Christi
Dec 4, 2003
No. 13-02-232-CV (Tex. App. Dec. 4, 2003)
Case details for

Buck v. U.S. Fidelity Guaranty Co.

Case Details

Full title:OSCAR A. BUCK, ADMINISTRATOR OF THE ESTATE OF LILLIAN M. BUCK, DECEASED…

Court:Court of Appeals of Texas, Thirteenth District, Corpus Christi

Date published: Dec 4, 2003

Citations

No. 13-02-232-CV (Tex. App. Dec. 4, 2003)