Opinion
03-22-00513-CV
08-21-2024
Amber Carden and William Duncan McGee, Minton, Bassett, Flores & Carsey, P.C.; and John C. Carsey, Individually, Appellants//Cross-Appellants, v. Minton, Bassett, Flores & Carsey, P.C.; and John C. Carsey, Amber Carden and William Duncan McGee, Individually Appellees//Cross-Appellees
FROM THE 200TH DISTRICT COURT OF TRAVIS COUNTY NO. D-1-GN-22-000816, THE HONORABLE MARIA CANTÚ HEXSEL, JUDGE PRESIDING
Before Chief Justice Byrne, Justices Triana and Theofanis.
MEMORANDUM OPINION
DARLENE BYRNE, CHIEF JUSTICE.
Appellants Amber Carden and William Duncan McGee appeal the district court's orders (1) dismissing under Texas Rule of Civil Procedure 91a their claims of legal malpractice, gross negligence, breach of fiduciary duty, breach of contract, and fraud; (2) denying their motion for limited discovery under the Texas Citizens Participation Act (TCPA), see Tex. Civ. Prac. & Rem. Code §§ 27.001-.011; and (3) striking their supplemental authority filed after the TCPA hearing. Appellees Minton, Bassett, Flores & Carsey, P.C. and John C. Carsey, Individually (collectively MBFC), cross-appeal the district court's order denying their TCPA motion. For the reasons stated below, we will affirm the orders granting the Rule 91a motion, denying the limited-discovery motion, striking the supplemental authority, and denying the TCPA motion.
BACKGROUND
In 2022, Carden and her son McGee sued the MBFC law firm and Carsey, who were retained in 2014 as defense counsel for McGee's criminal prosecution. No written contract memorialized this retention of counsel. Carden, who paid the legal fees, and McGee each asserted that they had an attorney-client relationship with MBFC and Carsey. Building on that characterization, Carden and McGee alleged that MBFC made numerous false representations, failed to provide an accounting for the $300,000 paid to them, and failed to diligently and adequately represent Carden and McGee.
Our sister court of appeals affirmed McGee's 2016 convictions and concurrent sentences of forty-two years' imprisonment for aggravated assault with a deadly weapon and ten years' imprisonment for retaliation against the same victim. See McGee v. State, Nos. 13-16-00390-CR & 13-16-00395-CR, 2017 WL 2705466, at *1, *3, *4 (Tex. App.-Corpus Christi- Edinburg June 22, 2017, no pet.) (mem. op., not designated for publication) (rejecting McGee's contention that he was entitled to new trial because Carsey provided ineffective assistance). Over four years later, McGee and his mother filed the underlying civil suit against MBFC.
Carsey represented McGee in a previous criminal prosecution. See id. at *3.
McGee was the only defendant in the underlying criminal prosecution, not Carden.
According to their petition, Carsey informed Carden in September 2014 that a $60,000 retainer was required, fees would likely approach $100,000 or more, and a private investigator to be hired would cost $10,000. Carden paid $100,000. In June 2015, Carsey informed Carden that only $20,000 of the retainer remained, an extra $200,000 was necessary to prepare for the upcoming September trial, and this sum would cover costs for a couple of experts and the addition of another partner to the case. Carden again paid $100,000. In December, Carsey informed Carden that the trial had been moved to May 2, 2016, and a third payment of $100,000 was required to continue legal representation. Carden paid $100,000 a third time. Carden and McGee alleged that when MBFC made the case file available in February 2020, they learned that MBFC "did not pay any private investigator $10,000" and "did not timely add a partner" to the case.
These allegations are in the original and amended petitions.
The petition further alleged that Carsey failed to meet with McGee regularly, called only one witness to testify for McGee at the bond hearing, sought a personal-recognizance bond instead of the $300,000 bond he had been instructed to request, failed to discuss moving the trial date until after the fact, delayed communicating the prosecutor's renewed plea offer of 20 years' imprisonment to McGee until two days before trial, advised McGee to testify, failed to explain the risks of testifying, failed to prepare McGee to testify, did not call witnesses to testify for McGee during the punishment phase, delayed producing the case file after trial until three years after it was requested, and failed to provide an accounting of the $300,000 paid to MBFC.
These allegations are in the original and amended petitions.
Carden and McGee preferred a $300,000 bond to "avoid having to use a bondsman."
Based on these allegations, Carden and McGee's original petition pleaded causes of action against MBFC for negligence (legal malpractice), breach of fiduciary duty, negligent misrepresentation, breach of contract, and fraud.
MBFC moves for dismissal under TCPA and Rule 91a
MBFC moved to dismiss the lawsuit under the TCPA and Rule 91a. The Rule 91a motion contended that dismissal was warranted because Carden and McGee alleged only improperly fractured legal-malpractice claims, the claims were barred under the Peeler doctrine, Carden lacked standing to sue as a non-client, and the claims were barred by expiration of the applicable statutes of limitation that were not tolled under the discovery rule. The TCPA motion contended that dismissal was warranted on the same bases and that the attorney-immunity doctrine barred Carden's claims.
Our discussion of the parties' appellate issues will address the Peeler doctrine, set forth in Peeler v. Hughes & Luce, 909 S.W.2d 494, 498 (Tex. 1995) (plurality op.), prohibiting convicts from suing their criminal-defense attorneys for malpractice unless "they have been exonerated on direct appeal, through post-conviction relief, or otherwise."
Carden and McGee move for limited discovery and amend their petition
After MBFC filed the 91a and TCPA motions, Carden and McGee filed a motion for limited discovery. They sought a court order for a transcript of Carsey's sworn testimony at a December 29, 2021 investigatory hearing that the State Bar of Texas's Office of Chief Disciplinary Counsel (OCDC) conducted on Carden and McGee's grievance against the MBFC firm and Carsey. Carden and McGee also sought an extension of the TCPA hearing date until at least thirty days after the nonparty OCDC and/or the State Bar produced the requested transcript.
The day before the hearing on their limited-discovery motion, Carden and McGee filed an amended petition against MBFC. According to new details in the first amended petition, Carsey informed Carden in a December 14, 2015 email that the trial date had been reset- because of new discovery provided from the prosecutor and because Carsey was undergoing surgery at the end of December-and the third $100,000 payment was needed quickly because MBFC was "closing [its] books for the year on Friday [December 18]." But "no additional discovery had been produced that warranted moving the trial date," which "was moved so that [MBFC] could further elongate their representation of McGee to inflate [their] legal fees."
Additionally, the first amended petition recited that on March 31, 2015, Carsey informed Carden that McGee had been taken into custody for failing a drug test and that the prosecutor was seeking revocation of McGee's bond. The petition alleged that no one from MBFC met with McGee before his April 6, 2015 bond hearing. In February 2016, McGee was arrested in Houston and the prosecutor moved to increase McGee's bond to $2,000,000. Carsey purportedly advised Carden that he did not believe he could secure McGee's release from jail and that fighting the motion would be useless. Carsey also allegedly delayed until two days before trial to make a counteroffer to the prosecutor's 20-year plea offer.
Carden and McGee alleged that the battery on McGee's ankle monitor died.
Along with these allegations, the first amended petition added a cause of action for gross negligence, dropped the cause of action for negligent misrepresentation, and retained the earlier causes of action for negligence (legal malpractice), breach of fiduciary duty, breach of contract, and fraud.
District court's hearings and rulings
On June 14, 2022, the district court heard Carden and McGee's limited-discovery motion. After the parties and nonparty OCDC argued about the confidentiality of an OCDC investigatory hearing and any hearing transcripts, the district court took the matter under advisement. On June 16, 2022, the district court signed an order denying Carden and McGee's motion for limited discovery.
Because of the Travis County central-docket system, different district-court judges heard the motions below and signed the orders appealed here. See Travis Cty. Dist. Ct. Loc. R. 1.2, 1.3.
On June 21, 2022, the district court heard MBFC's TCPA and Rule 91a motions and took those matters under advisement. On June 22, 2022, Carden and McGee filed supplemental authority, including case and statutory citations that "were not previously cited in [their] Response" to the TCPA motion. The next day, MBFC filed a motion to strike the supplemental authority and alternatively, requested leave to file a reply addressing Carden and McGee's "untimely additional citations and arguments."
On July 18, 2022, the district court signed an order that (1) denied the TCPA motion; (2) granted the Rule 91a motion and dismissed all Carden and McGee's claims with prejudice but denied MBFC's application for attorney's fees; and (3) granted the motion to strike the supplemental authority Carden and McGee submitted to the court after the June 21 hearing. The order expressly denied any other relief requested by the parties and recited that it finally disposed of all parties and claims and was appealable.
Carden and McGee timely filed their notice of appeal as to the rulings on the Rule 91a motion, their limited-discovery motion, and their supplemental authority. Eleven days later, MBFC filed a notice of cross-appeal as to the ruling on the TCPA motion, contending that while the district court properly dismissed all claims under Rule 91a, MBFC was also entitled to dismissal of the claims under the TCPA and an award of appropriate and necessary attorney's fees.
DISCUSSION
I. Rule 91a dismissal
Carden and McGee contend that the district court erred by granting MBFC's Rule 91a motion to dismiss. "We review the merits of a Rule 91a motion de novo." Bethel v. Quilling, Selander, Lownds, Winslett & Moser, P.C., 595 S.W.3d 651, 654 (Tex. 2020). "[W]hether a defendant is entitled to dismissal under the facts alleged is a legal question." In re Farmers Tex. Cnty. Mut. Ins., 621 S.W.3d 261, 266 (Tex. 2021) (orig. proceeding).
Under Texas Rule of Civil Procedure 91a, a party may "move to dismiss a cause of action on the grounds that it has no basis in law or fact." Tex.R.Civ.P. 91a.1. As Rule 91a explains, "[a] cause of action has no basis in law if the allegations, taken as true, together with inferences reasonably drawn from them, do not entitle the claimant to the relief sought," and "[a] cause of action has no basis in fact if no reasonable person could believe the facts pleaded." Id.
"In ruling on a Rule 91a motion to dismiss, a court may not consider evidence but 'must decide the motion based solely on the pleading of the cause of action, together with any [permitted] pleading exhibits.'" In re Farmers, 621 S.W.3d at 266 (citing Tex.R.Civ.P. 91a.6). As clarified by the Texas Supreme Court, "Rule 91a limits a court's factual inquiry to the plaintiff's pleadings but does not so limit the court's legal inquiry." Bethel, 595 S.W.3d at 656. When conducting this inquiry, we construe the pleadings liberally in favor of the petitioner and accept as true the factual allegations, but we need not accept as true any of the petitioner's legal conclusions. See Stone v. Randolph-Brooks Fed. Credit Union, No. 03-21-00422-CV, 2023 WL 2394297, at *2 (Tex. App.-Austin Mar. 8, 2023, pet. denied) (mem. op.).
Here, the live pleading when the district court heard the Rule 91a motion was the first amended petition, which sought damages and fee forfeiture as to these causes of action:
• Negligence (legal malpractice)
Carden and McGee alleged that MBFC breached the applicable standard of care by giving false, misleading, or erroneous legal advice; exhibiting lack of competence; failing to provide diligent and adequate representation; and failing to properly account for funds paid. McGee further alleged that MBFC disobeyed his
lawful instructions, acted without his consent, and improperly handled, prepared, and managed his case.
• Gross negligence
McGee alleged that MBFC's acts or omissions involved an extreme degree of risk, considering the probability and magnitude of potential harm to him, facing forty-two years in prison. Carden alleged that MBFC's promotion of their economic self-interest involved an extreme degree of risk, considering the probability and magnitude of potential harm to her.
• Breach of fiduciary duty
Carden and McGee alleged that MBFC charged an excessive fee for the work performed; delayed the trial date to further charge an excessive fee/inflate legal fees; failed to account for or return Carden's funds; and delayed providing the case file after it was requested. McGee further alleged that MBFC did not timely inform him about a plea offer and did not timely communicate a counteroffer to the prosecutor, in the hope of increasing legal fees.
• Breach of oral contract
Carden and McGee alleged that MBFC breached their contract by charging an excessive fee for services rendered and failing to account for the $300,000.00 paid to them.
• Fraud
Carden and McGee alleged that Carsey fraudulently represented to them that McGee's trial date had been reset due to new discovery provided by the prosecutor and Carsey's surgery; the legal fees would cost approximately $100,000; and the retainer had been depleted and MBFC required a third $100,000 payment to continue legal representation.
A. Peeler doctrine bars McGee's claims
MBFC's Rule 91a motion contended that McGee is currently incarcerated, has not been exonerated for his crimes, and did not plead his exoneration for them; thus, under the Peeler doctrine, his claims against MBFC are baseless as a matter of law. See Peeler v. Hughes & Luce, 909 S.W.2d 494, 497-98 (Tex. 1995) (plurality op.). In Peeler, the Texas Supreme Court concluded that a convict could not sue her defense counsel for legal malpractice, breach of contract, breach of warranty, and DTPA violations for failing to tell her that the prosecutor offered immunity in exchange for testimony against the convict's colleagues. Id. at 496. Rather, "[f]actual allegations of this nature generally merit review by the State Bar." Id. at 500.
McGee acknowledges that this Court cannot overrule Peeler. He also acknowledges that his convictions were affirmed and that mandate issued on October 25, 2017. See McGee v. State, Nos. 13-16-00390-CR & 13-16-00395-CR, 2017 WL 2705466, at *1, *4 (Tex. App.-Corpus Christi-Edinburg June 22, 2017, no pet.) (mem. op., not designated for publication). But he argues that Peeler does not bar his "distinct" claims for breach of fiduciary duty, breach of contract, and fraud, which are based on allegations that MBFC charged an excessive fee for work performed, failed to account for or return funds paid, and made fraudulent communications to obtain funds. We disagree.
"Under the now so-called Peeler doctrine, convicts may not sue their criminal-defense attorneys for malpractice unless 'they have been exonerated on direct appeal, through post-conviction relief, or otherwise.'" Gray v. Skelton, 595 S.W.3d 633, 637 (Tex. 2020) (quoting Peeler, 909 S.W.2d at 498). "[E]xoneration under Peeler requires not only that the underlying criminal conviction be vacated but also proof of innocence." Id. at 639. Here, McGee's pleadings make no allegation of exoneration.
Moreover, like the allegations of inflated or excessive fees, failure to account, and failure to return funds underpinning McGee's claims of breach of fiduciary duty, breach of contract, and fraud, the Peeler doctrine has barred claims based on allegations that a convict's attorney (1) failed to provide accounts of how funds were expended; (2) overcharged and refused to refund fees paid; and (3) used fees paid for purposes other than he said he would. See Wooley v. Schaffer, 447 S.W.3d 71, 73-74 (Tex. App.-Houston [14th Dist.] 2014, pet. denied). McGee's allegations about the failure to return Carden's funds and seeking fee forfeiture are also like the "claim for refund of attorney's fees paid" barred by the Peeler doctrine in Johnson v. Odom. See 949 S.W.2d 392, 394-95 (Tex. App.-Houston [14th Dist.] 1997, pet. denied) (concluding that Peeler defense "defeated all of appellant's claims for damages"); see also Futch v. Baker Botts, LLP, 435 S.W.3d 383, 392 (Tex. App.-Houston [14th Dist.] 2014, no pet.) (noting that Peeler doctrine had been applied to fee-forfeiture request). We conclude that the Peeler doctrine similarly applies here and bars McGee's claims against MBFC as a matter of law.
B. Carden lacks standing
The Rule 91a motion also contended that Carden lacks standing to sue MBFC and that Carsey did not have an attorney-client relationship with her; thus, her claims against MBFC are baseless as a matter of law. Carden responded that as MBFC's "client," she has standing to bring this lawsuit against MBFC and Carsey. We disagree.
McGee, not Carden, was the only defendant in the underlying criminal prosecution. The arrests, bond issues, plea offer, trial, verdict of guilt, and sentences of confinement referenced in the pleadings are all his. MBFC represented McGee in the criminal prosecution against him.
Relying on a sentence in a disciplinary rule of professional conduct aimed at preventing commingling, Carden states that an attorney's fiduciary duty to hold funds in trust applies to clients and third parties: "A lawyer shall hold funds and other property belonging in whole or in part to clients or third persons that are in a lawyer's possession in connection with a representation separate from the lawyer's own property." Tex. Disciplinary Rules Prof'l Conduct R. 1.14(a), reprinted in Tex. Gov't Code, tit. 2, subtit. G, app. A (Tex. State Bar R. art. X, § 9). However, those rules expressly state that they "do not undertake to define standards of civil liability of lawyers for professional conduct"; "[v]iolation of a rule does not give rise to a private cause of action nor does it create any presumption that a legal duty to a client has been breached," and the rules "are not designed to be standards for procedural decisions." Id. Preamble ¶ 15. Thus, Disciplinary Rule 1.14(a) does not establish a fiduciary duty owed to Carden or give her standing to sue MBFC.
The pleadings contain no reference to a specific contract that might create privity between Carden and Carsey or MBFC, and Carden acknowledges that no written contract or agreement was executed in this matter. "Under Texas law, attorneys are not ordinarily liable for damages to a nonclient, because privity of contract is absent." American Centennial Ins. Co. v. Canal Ins., 843 S.W.2d 480, 484 (Tex. 1992); see Swank v. Cunningham, 258 S.W.3d 647, 666 (Tex. App.-Eastland 2008, pet. denied) ("Beck Redden and Smyser Kaplan did not represent AMPS and, therefore, were never in privity with AMPS. Texas does not recognize a cause of action for legal malpractice asserted by a party not in privity with the offending attorney."). Carden cites Span Enterprises v. Wood, 274 S.W.3d 854, 857-58 (Tex. App.- Houston [1st Dist.] 2008, no pet.), and references payments to and communication with Carsey to argue that she and MBFC had an attorney-client relationship by implication. This is an incorrect legal conclusion.
The attorney-client relationship is a contractual one that arises from a lawyer's agreement to render professional services to a client. Kiger v. Balestri, 376 S.W.3d 287, 290-91 (Tex. App.-Dallas 2012, pet. denied). "[W]hether the agreement is express or implied, there must be evidence that both parties intended to create an attorney-client relationship." Id. "[U]nstated, subjective beliefs do not give rise to an attorney-client relationship by implication." Span Enters., 274 S.W.3d at 858 (concluding that no attorney-client relationship arose by implication based on claimant's allegation that he had manifested his intent that law firm and its attorney "provide legal services on his behalf") (emphasis added).
Carden points to nothing in the first amended petition showing that Carsey intended to create an attorney-client relationship with her. All the communications she references concern the representation of McGee. Carden paid for Carsey's legal services, but it is undisputed that those legal services were rendered on behalf of McGee, not Carden. Any implied attorney-client relationship would necessarily require the provision of legal services to the person-the actual client-who is in an implied attorney-client relationship. See id.; see also Kiger, 376 S.W.3d at 295 (noting lawyer's attestation that he never represented claimant "as his personal attorney"). Thus, Carden failed to show that she had an implied attorney-client relationship with MBFC that would give her standing to sue. See Swank, 258 S.W.3d at 666 ("An attorney-client relationship did not exist between Beck Redden or Smyser Kaplan and AMPS. In the absence of an attorney-client relationship, Beck Redden and Smyser Kaplan did not owe fiduciary duties to AMPS, and AMPS could not recover on a breach of fiduciary duty claim against them.").
Lastly, citing Meyers v. JDC/Firethorne, Ltd., 548 S.W.3d 477, 484 (Tex. 2018), Carden summarily posits that apart from her "attorney-client relationship" with MBFC, she has standing to assert her claims for breach of fiduciary duty, breach of oral contract, and fraud against MBFC that resulted in her paying $300,000 to them and sustaining "a concrete injury." See id. ("In Texas, the standing doctrine requires a concrete injury to the plaintiff and a real controversy between the parties that will be resolved by the court.") (quoting Heckman v. Williamson County, 369 S.W.3d 137, 154 (Tex. 2012) (discussing standing to pursue class certification)). However, Meyers held only that a land developer lacked standing to pursue an injunction against a county commissioner in his official capacity. Id. at 486. Significantly, neither Meyers nor its quoted authority in Heckman involve any claims for breach of fiduciary duty, breach of oral contract, or fraud and neither discusses a nonclient's standing to bring those claims against an attorney or law firm. Meyers does not support Carden's assertion of standing.
Thus, Carden's and McGee's lack of a meritorious claim against MBFC can be reasonably drawn from the allegations in the first amended petition. See Tex. R. Civ. P. 91a.1. Because MBFC demonstrated that Carden's and McGee's causes of action as pleaded had no basis in law, the district court did not err by granting the Rule 91a motion to dismiss. See id.; Bethel, 595 S.W.3d at 654. We overrule Carden and McGee's first issue.
II. Limited-discovery denial
Next, Carden and McGee challenge the district court's denial of their motion for limited discovery under the TCPA. They contend that such discovery was relevant and necessary for them to meet their burden of providing "clear and specific evidence" of a prima facie case for each element of their claims and to rebut MBFC's affirmative defenses in response to the TCPA motion to dismiss. We review the order denying limited discovery under an abuse-of-discretion standard. Buzbee v. Clear Channel Outdoor, LLC, 616 S.W.3d 14, 30 (Tex. App.-Houston [14th Dist.] 2020, no pet.). A trial court abuses its discretion when it reaches a decision so arbitrary and unreasonable as to amount to a clear and prejudicial error of law. Ford Motor Co. v. Castillo, 279 S.W.3d 656, 661 (Tex. 2009); see Walker v. Schion, 420 S.W.3d 454, 458 (Tex. App.-Houston [14th Dist.] 2014, no pet.) (applying Ford's abuse-of-discretion standard to review of order denying limited discovery under Section 27.006(b) of TCPA).
After the filing of a TCPA motion to dismiss, discovery is suspended until the motion is decided, but the court may allow limited relevant discovery on a showing of good cause. Tex. Civ. Prac. & Rem. Code §§ 27.003(c), .006(b) ("On motion by a party or on the court's own motion and on a showing of good cause, the court may allow specified and limited discovery relevant to the motion."). Carden and McGee filed a motion for limited discovery, seeking a transcript of Carsey's sworn testimony at a December 29, 2021 investigatory hearing that the State Bar of Texas's Office of Chief Disciplinary Counsel conducted on Carden and McGee's grievance against the MBFC firm and Carsey. However, the information requested is confidential by law.
Provisions in the Texas Rules of Disciplinary Procedure and the Texas Government Code expressly protect that information from public disclosure. Under Section 81.033 of the Government Code, records pertaining to grievances that are confidential under the Texas Rules of Disciplinary Procedure are not subject to the Texas Public Information Act in Chapter 552. Tex. Gov't Code § 81.033. Subsection 81.0752(a) of the Government Code extends broad confidentiality protection to information presented to a panel of a grievance committee:
(a) All types of information, proceedings, hearing transcripts, and statements presented to a panel of a district grievance committee are confidential and may not be disclosed to any person other than the Chief Disciplinary Counsel unless: (1) disclosure is ordered by a court; or (2) the panel finds that professional misconduct occurred and a sanction other than a private reprimand is imposed against the respondent attorney.Id. § 81.0752(a). Relatedly, Texas Rule of Disciplinary Procedure 2.12(F) states, in relevant part, that "[a]n investigatory hearing is strictly confidential, and any record may be released only for use in a disciplinary matter." Tex. Rules Disciplinary P. R. 2.12(F), reprinted in Tex. Gov't Code, tit.2, subtit. G, app A-1. By making any record of an investigatory hearing confidential, the legislature has chosen to protect the information from public disclosure. Cf. In re Texas Dep't of State Health Servs., 278 S.W.3d 1, 4 (Tex. App.-Austin 2008, orig. proceeding) (discussing analogous confidentiality protection in Texas Health and Safety Code § 81.046 as to information gathered under Communicable Disease Prevention and Control Act). "Disciplinary Proceedings" are defined in the rules as "includ[ing] the processing of a Grievance, the investigation and processing of an Inquiry or Complaint, the proceeding before an Investigatory Panel, presentation of a Complaint before a Summary Disposition Panel, and the proceeding before an Evidentiary Panel." Tex. Rules Disciplinary P. R. 1.06(L). Carden and McGee's underlying civil suit against MBFC is not a "disciplinary matter."
Moreover, Texas Rule of Disciplinary Procedure 2.16(A) provides, in relevant part, "All members and staff of the Office of the Chief Disciplinary Counsel, Board of Disciplinary Appeals, Committees, and Commission shall maintain as confidential all Disciplinary Proceedings and associated records." Id. R. 2.16(A). Although Rule 2.16(A) contains certain exceptions to confidentiality, Carden and McGee do not allege that any such exceptions apply here. Notably, Carden and McGee's briefing omits any discussion of the confidentiality provisions in the Government Code and Disciplinary Rules.
We have previously determined that under Rule 2.16 of the Disciplinary Rules, a complainant was not entitled to confidential documents that were presented to a summary-disposition panel of a grievance committee. Doe v. Board of Dirs. of State Bar of Tex., No. 03-15-00007-CV, 2015 WL 6656216, at *1, *3-4 (Tex. App.-Austin Oct. 27, 2015, pet. denied) (mem. op.) (addressing claimant's request for disclosure of Chief Disciplinary Counsel's recommendation to summary-disposition panel concerning claimant's grievance against attorney). Similarly, the plain language of Rule 2.16(A) requires confidentiality as to the hearing transcript that Carden and McGee sought in their limited-discovery request. See Tex. Rules Disciplinary P. R. 2.16(A); Board of Dirs. of State Bar of Tex., 2015 WL 6656216, at *3; see also Hagan v. Pennington, No. 05-18-00010-CV, 2019 WL 2521719, at *18 (Tex. App-Dallas June 19, 2019, no pet.) (mem. op.) (concluding that claimant in legal-malpractice action could not compel production of documents related to other grievances filed against defendant attorney because Rule 2.16 required confidentiality for those records, and claimant did not contend that any confidentiality exceptions applied).
The express provisions in the Rules of Disciplinary Procedure and the Government Code protecting the confidentiality of "all Disciplinary Proceedings and associated records" encompass the requested transcript from an investigatory hearing before the State Bar of Texas's Office of Chief Disciplinary Counsel. See Tex. Gov't Code § 81.0752(a) (extending confidentiality to "hearing transcripts and statements presented to a panel of a district grievance committee"); Tex. Rules Disciplinary P. R. 2.16(A). Subsection 27.006(b) of the TCPA, which authorizes limited discovery, does not contain any exceptions as to the confidentiality of these disciplinary records. Cf. Tex. Civ. Prac. & Rem. Code § 27.006(b). Thus, we conclude that the district court's order denying Carden and McGee's request for limited discovery seeking production of the confidential transcript of Carsey's sworn testimony at an investigatory hearing before the State Bar of Texas's Office of Chief Disciplinary Counsel was not so arbitrary and unreasonable as to amount to a clear and prejudicial error of law. We overrule Carden and McGee's second issue.
III. Untimeliness of supplemental authority
In their final appellate issue, Carden and McGee challenge the district court's order granting MBFC's motion to strike the supplemental authority that Carden and McGee submitted to the court the day after the TCPA hearing. Carden and McGee acknowledge that their supplemental authority included case and statutory citations that "were not previously cited in [their] Response" to the TCPA motion. They contend that their post-hearing filing was appropriate to address arguments that MBFC made during the hearing; unlike the summary-judgment provisions in Texas Rule of Civil Procedure 166a, the TCPA does not provide that "[i]ssues not expressly presented to the trial court by written motion, answer or other response shall not be considered on appeal as grounds for reversal"; and there was no good cause shown for striking the supplemental authorities. We review the order striking the post-hearing filing under an abuse-of-discretion standard. Bass v. United Dev. Funding, L.P., No. 05-18-00752-CV, 2019 WL 3940976, at *27 (Tex. App.-Dallas Aug. 21, 2019, no pet.) (mem. op.) (applying abuse-of-discretion standard when reviewing court's ruling striking from record evidence that party attached to brief submitted after TCPA hearing).
Subsection 27.003(e) of the TCPA provides that "[a] party responding to the motion to dismiss shall file the response, if any, not later than seven days before the date of the hearing on the motion to dismiss unless otherwise provided by an agreement of the parties or an order of the court." Tex. Civ. Prac. & Rem. Code § 27.003(e). Carden and McGee timely filed a lengthy, written response to MBFC's TCPA motion to dismiss on June 14, 2022, seven days before the June 21, 2022 TCPA hearing. See id. In their "supplemental authority" filed the day after the hearing, Carden and McGee included citations to authority and presented new arguments not referenced in their written response.
The TCPA contains no provision for filing a sur-reply or another pleading post hearing. The district court did not request additional filing from either party, and Carden and McGee did not seek leave of court for their post-hearing filing. Cf. Griffith Truck & Equip., Inc. v. Flash Tank Servs., Inc., No. 14-21-00331-CV, 2022 WL 2920693, at *4 (Tex. App.-Houston [14th Dist.] July 26, 2022, no pet.) (mem. op.) (noting that party sought leave of court to file corrected document on or before noon on day following TCPA hearing); Keane Frac, LP v. SP Silica Sales, LLC, 608 S.W.3d 416, 424 (Tex. App.-Houston [1st Dist.] Aug. 11, 2020, no pet.) (mem. op.) (noting that during hearing on TCPA motion, trial court granted party leave to file post-hearing reply).
A trial court abuses its discretion when it reaches a decision so arbitrary and unreasonable as to amount to a clear and prejudicial error of law. Ford Motor Co., 279 S.W.3d at 661. Here, without rules or statutory provisions specifying when or under what circumstances a party may submit supplemental briefing after a hearing on a TCPA motion to dismiss, the district court acted within its inherent power to effectively perform its judicial function. See Eichelberger v. Eichelberger, 582 S.W.2d 395, 398 (Tex. 1979) (discussing court's inherent power, which "exists to enable our courts to effectively perform their judicial functions and to protect their dignity, independence and integrity"). Carden and McGee provide no argument about how the district court's ruling exceeded its inherent power so as to constitute an abuse of its discretion.
Carden and McGee's "supplemental authority" improperly presented new arguments in a post-hearing filing that the district court did not request and that Carden and McGee did not seek leave of court to present. We conclude that by granting MBFC's motion to strike that untimely supplemental authority, the district court did not reach a decision so arbitrary and unreasonable as to amount to a clear and prejudicial error of law. See Bass, 2019 WL 3940976, at *27. We overrule Carden and McGee's third and final issue.
IV. Timeliness of notice of cross-appeal
Before reaching MBFC's cross-appeal challenging the denial of their TCPA motion, we must address Carden and McGee's contention that MBFC's notice of cross-appeal was untimely. Carden and McGee note that the district court signed the order denying MBFC's TCPA motion on July 18, 2022, and argue that the twenty-day deadline for an accelerated appeal of that order was August 8, 2022. Alternatively, Carden and McGee argue that if the notice of cross-appeal had been filed no more than fifteen days late, the deadline could have been extended until August 23, 2022, but MBFC's August 26, 2022 notice of cross-appeal was untimely and failed to invoke this Court's jurisdiction. We disagree.
Because "a litigant may have no interest in appealing an alleged error in a judgment unless another party chooses to appeal and challenge the judgment," Texas Rule of Appellate Procedure 26.1(d) allows a party to file a notice of appeal fourteen days after another party has done so. Chen v. Razberi Techs., Inc., 645 S.W.3d 773, 782 n.60 (Tex. 2022). Under Rule 26.1(d), "if any party timely files a notice of appeal, another party may file a notice of appeal within [the time period for perfecting an appeal] or 14 days after the first filed notice of appeal, whichever is later." Tex.R.App.P. 26.1(d); Chen, 645 S.W.3d at 782 n.60. Here, MBFC timely filed a notice of cross-appeal eleven days after August 15, 2022, when Carden and McGee filed the first notice of appeal. See R. 26.1(d); Chen, 645 S.W.3d at 782.
Carden and McGee note that under Rule 28.1(b), an accelerated appeal must be perfected "within the time allowed by Rule 26.1(b)," not Rule 26.1(d). See Tex. R. App. P. 28.1(b); see also id. R. 26.1(b) ("The time for perfecting an accelerated appeal is twenty days after the court signs the order or judgment."). Relying on In re K.A.F., 160 S.W.3d 923, 927 (Tex. 2005), Carden and McGee also note that in an accelerated appeal-absent a motion for extension of time under Rule 26.3-the deadline for filing a notice of appeal is strictly set at twenty days after the judgment is signed, without exception. However, In re K.A.F. held only that when there has been no Rule 26.3 motion for extension of time, "filing a rule 26.1(a) motion for new trial, motion to modify the judgment, motion to reinstate, or request for findings of fact and conclusions of law will not extend that [twenty-day] deadline." Id. Significantly, In re K.A.F. did not involve a cross-appeal and said nothing about Rule 26.1(d). This authority does not dissuade us from concluding that MBFC's notice of cross-appeal, which complied with Rule 26.1(d), is timely and invoked our jurisdiction.
V. TCPA denial
In their cross-appeal, MBFC contends that the district court erred by denying their motion to dismiss under the TCPA. We review a trial court's ruling on a TCPA dismissal motion de novo. Rig Up, Inc. v. Sierra Hamilton, LLC, 613 S.W.3d 177, 182 (Tex. App.-Austin 2020, no pet.). MBFC asserts that while the district court properly dismissed all claims under Rule 91a, MBFC was also entitled to dismissal of the claims under the TCPA and an award of appropriate and necessary attorney's fees. See Tex. Civ. Prac. & Rem. Code § 27.009(a)(1) (providing that if court orders dismissal of legal action under TCPA, court "shall award" moving party court costs and reasonable attorney's fees incurred in defending against legal action).
A. TCPA Framework
The TCPA "protects citizens who [associate,] petition or speak on matters of public concern from retaliatory lawsuits that seek to intimidate or silence them." Youngkin v. Hines, 546 S.W.3d 675, 679 (Tex. 2018) (quoting In re Lipsky, 460 S.W.3d 579, 584 (Tex. 2015)); see also Tex. Civ. Prac. & Rem. Code § 27.002 (describing TCPA's purpose). "To effectuate this purpose, the TCPA allows a party to move for expedited dismissal of 'claims brought to intimidate or to silence a defendant's exercise of these First Amendment rights.'" RigUp, 613 S.W.3d at 181 (quoting Exxon Mobil Pipeline Co. v. Coleman, 512 S.W.3d 895, 898 (Tex. 2017) (per curiam)).
A court undertakes a three-step analysis when reviewing a TCPA motion to dismiss. Id. at 181-82. First, the movant bears the initial burden of demonstrating that the nonmovant's "legal action" is "based on or is in response to" the movant's exercise of the right of free speech, petition, or association. See Tex. Civ. Prac. & Rem. Code § 27.005(b). A "legal action" includes "a lawsuit, cause of action, petition, complaint, cross-claim, or counterclaims or any other judicial pleading or filing that request legal, declaratory, or equitable relief." Id. § 27.001(6). If the movant meets their burden of showing that the TCPA applies, then the burden shifts to the nonmovant to establish "by clear and specific evidence a prima facie case for each essential element of the claim in question." Id. § 27.005(c). If the nonmovant satisfies their burden of presenting a prima facie case, then the burden shifts back to the movant "to prove each essential element of a valid defense to the nonmovant's claim by a preponderance of the evidence." RigUp, 613 S.W.3d at 181-82 (citing Tex. Civ. Prac. & Rem. Code § 27.005(d)).
A nonmovant can avoid the burden-shifting requirements by showing that one of the TCPA's exemptions applies. Hanna v. Williams, 681 S.W.3d 416, 422 (Tex. App.-Austin 2023, pet. denied); see Tex. Civ. Prac. & Rem. Code § 27.010 (TCPA exemptions). A nonmovant has the burden of proving that a statutory exemption from application of the TCPA applies. Hanna, 681 S.W.3d at 422. We review de novo a trial court's determination as to the applicability of a TCPA exemption. Id.
The legislature amended this section of the TCPA in 2023, but we cite to the version in effect when Carden and McGee filed their lawsuit in 2022. See Act of May 27, 2021, 87th Leg., R.S., ch. 915, 2021 Tex. Gen. Laws 4 (amended 2023) (current version at Tex. Civ. Prac. & Rem. Code § 27.010(a)). The commercial-speech exemption in section 27.010(a)(2), which we will discuss here, has not changed since the filing of this lawsuit.
In contrast to a Rule 91a motion, when ruling on a TCPA motion the trial court must consider the pleadings, evidence that could be considered at summary judgment, and any supporting and opposing affidavits, in the light most favorable to the nonmovant. Tex. Civ. Prac. & Rem. Code § 27.006(a); see also RigUp, 613 S.W.3d at 182. If a legal action is dismissed under the TCPA, the trial court must award court costs and reasonable attorney's fees to the moving party and may award sanctions against the party bringing the legal action that the court determines are sufficient to deter the party from bringing similar actions. Tex. Civ. Prac. & Rem. Code § 27.009(a).
As the movants here, MBFC has the burden of demonstrating that the lawsuit brought against them is "based on or is in response to" their exercise of the right to petition. See id. §§ 27.003(a), .005(b)(1)(B). The "exercise of the right to petition" includes "a communication in or pertaining to . . . a judicial proceeding." Id. § 27.001(4)(A)(i). "Communication" is defined as "the making or submitting of a statement or document in any form or medium, including oral, visual, written, audiovisual, or electronic." Id. § 27.001(1).
MBFC contends that the TCPA applies because Carden and McGee filed their lawsuit "based on or in response to" communications "in or pertaining to" McGee's criminal trial, which was "a judicial proceeding." In their motion to dismiss, MBFC argued that the pleadings referenced several communications pertaining to McGee's criminal trial, including:
• the cost to represent McGee and intent to hire a private investigator;
• McGee's instructions to Carsey and Carsey's request to the court concerning the bond hearing;
• the cost to take the case to trial and the need to hire experts;
• Carsey's "untimely" communication of a plea offer;
• Carsey's alleged advice that McGee should take the witness stand in his own defense; and
• Carsey's notice that he was not going to call any witnesses to testify on McGee's behalf during the punishment phase of trial.
Review of the pleadings shows that Carden and McGee's lawsuit against MBFC is "based on or in response to" those communications, which pertained to McGee's criminal prosecution.
However, Carden and McGee contend, and we agree, that the district court properly denied the motion to dismiss because they established that the TCPA is inapplicable to their suit under the "commercial-speech exemption."
B. Commercial-speech exemption
The commercial-speech exemption of the TCPA expressly excludes legal actions "brought against a person primarily engaged in the business of selling . . . services, if the statement or conduct arises out of the sale . . . of . . . services, . . . or a commercial transaction in which the intended audience is an actual or potential buyer or customer." Id. § 27.010(a)(2). The commercial-speech exemption, in relevant part, applies when:
(1) the defendant was primarily engaged in the business of selling . . . services;
(2) the defendant made the statement or engaged in the conduct on which the claim is based in the defendant's capacity as a seller . . . of those . . . services,
(3) the statement or conduct at issue arose out of a commercial transaction involving the kind of . . . services the defendant provides, and
(4) the intended audience of the statement or conduct were actual or potential customers of the defendant for the kind of . . . services the defendant provides.Hanna, 681 S.W.3d at 426 (citing Castleman v. Internet Money Ltd., 546 S.W.3d 684, 688 (Tex. 2018)). We consider the pleadings and record evidence to determine whether a party has met its burden on the exemption's elements. Id. Factual allegations in a plaintiff's petition alone may be sufficient to meet the exemption's elements. Id.
As to the first commercial-speech element, MBFC does not dispute that they are primarily engaged in the business of selling legal services, and the pleadings and the evidence show that MBFC's business is a law firm comprised of attorneys, including Carsey, that sell legal services to the public. See, e.g., Kostura v. Judge, 627 S.W.3d 380, 387 (Tex. App.- Amarillo 2021, pet. denied) ("There is no evidence of any business conducted by the firm except representing clients in legal matters."); Miller Weisbrod, L.L.P. v. Llamas-Soforo, 511 S.W.3d 181, 191 (Tex. App.-El Paso 2014, no pet.) (concluding implicitly that Texas law firm and attorneys representing clients in ongoing litigation in Texas met first element of Castleman test). We conclude that the first commercial-speech element set forth in Castleman was met. See Castleman, 546 S.W.3d at 688.
As support for the remaining commercial-speech elements, Carden and McGee rely on their pleadings and two email exchanges between Carden and Carsey. On September 2, 2014, two days after being contacted to represent McGee in the criminal matter, Carsey sent this email to Carden discussing fees, expected defense expenses, and the court-appointed-attorney alternative:
I had my office obtain copies of the probable cause affidavits for two of the charges. They obviously do not read well. The charges are very serious and, quite frankly, are going to be very expensive to defend. Fees will likely approach $100,000 or more. I foresee a trial at this point as I am sure that the DA's office is going to want to send Duncan to the penitentiary. I want to be very blunt so that there are no misconceptions. These will be very complex cases. I will need a $60,000 retainer, $10k of which will be earmarked for an investigator to run down the prior complaints alluded to and get a comprehensive search of this girl's background. In the future, we will likely need to hire medical experts as well.
If the finances are not feasible for you, Duncan may have to get a court appointed attorney. Given the nature of the charges, any good attorney in town will cost at least the same amount. I will certainly go see Duncan tomorrow in any event, but I wanted to be up front about the situation.
On June 12, 2015, Carsey sent this email to Carden discussing the case status, possible expert assistance, and additional fees anticipated through trial:
We are beginning the full court press now to the trial date of September 14th. The DA has offered 20 years, which we have declined. As time goes on we can certainly make a counter-offer, but that will be dictated by our analysis of the case as trial prep proceeds. I have been reviewing, sorting and analyzing well over 5,000 discovery documents which include medical records, phone records, texts, etc. We are likely going to have to hire a couple of experts in several fields, perhaps phone forensics, a
doctor, etc. We won't know the extent until we get a better handle on all of the evidence and how the state intends to present its case. It is very time consuming. Duncan and I will begin at least [ ] weekly all day meetings to review evidence and prepare. I have put an associate on the case to work with me, and would like to enlist another partner here at the firm to prepare and try the case with me. I hate to bring it up, but we are going to need more funding. We are down to less than $20,000 balance and that will be used up in short order. With expert fees and additional lawyers, I anticipate that we will need as much as an additional $200,000 through the trial. Please let me know what the financial prospects are so I can adjust the plans according to what we have available.
As to the second commercial-speech element, the complained-of statements- presented in these emails and in the pleadings on which Carden and McGee's claims were based-involved the alleged false representations or poor advice from Carsey about the amount of fees, cost of hiring an investigator, hiring of experts, addition of a partner to the case, needing additional fees through trial, needing to reset McGee's trial date, and handling of the bond hearing. Carden and McGee's pleadings and the evidence show that Carsey made these statements as part of MBFC's legal representation of McGee in the underlying criminal prosecution and thus, as a seller of legal services. See Hanna, 681 S.W.3d at 427 (concluding that attorneys' alleged misrepresentations to claimant about their drafting and impending filing of summary-judgment motion and negligent advice to her about retaining expert witness and settling case were made "pursuant to her engagement of them to represent her and thus in their capacity as sellers of legal services"). We conclude that the second commercial-speech element was met. See Castleman, 546 S.W.3d at 688.
Likewise, as to the third element, we conclude that Carden and McGee's pleadings and evidence show that Carsey's statements arose out of a commercial transaction involving the kind of services (legal) that MBFC provides. See Castleman, 546 S.W.3d at 688. MBFC disagrees. They note that the commercial-speech exemption applies only to certain communications related to a service in the marketplace and made as commercial speech which "does no more than propose a commercial transaction." Id. at 690 (quoting Posadas de P.R. Assocs. v. Tourism Co. of P.R., 478 U.S. 328, 340 (1986)). They dispute that the claims against them are based on Carsey's statements or conduct regarding his and his firm's legal services to McGee when McGee retained them.
Focusing on this timing, MBFC contends that none of the pleaded complaints "arise from the[ir] initial retention" and that all alleged deficiencies in representation "post-date the commencement of the attorney-client relationship." MBFC further contends that Carden's additional payments were not made in response to commercial speech "proposing" a commercial transaction because "[t]he commercial transaction was completed at the time of retention," and "[t]hese additional payments were for continued and ongoing legal services" to McGee.
We have rejected such contentions because "there is nothing in the text of the exemption or in the Castleman elements that limits the exemption's applicability only to speech or conduct intended to secure future transactions." Hanna, 681 S.W.3d at 427 (quoting Molina Healthcare, Inc. v. State ex rel. Thurmond, No. 03-20-00077-CV, 2020 WL 7233609, at *3 (Tex. App.-Austin Dec. 9, 2020, pet. denied) (mem. op.)). As in Hanna, the challenged TCPA statements here arose out of a commercial transaction involving the very kind of services that the TCPA movants (MBFC) regularly provide in their profession. See id. Thus, we conclude that the third commercial-speech element was met. See Castleman, 546 S.W.3d at 688.
Finally, as to the fourth and last commercial-speech element, we conclude that Carden and McGee's pleadings and evidence show that they were the intended audience of Carsey's statements and actual or potential customers of MBFC for the kind of services that MBFC provides. See Castleman, 546 S.W.3d at 688. Carsey's statements included references to the cost for the effort and resources MBFC could offer and the alternative of court-appointed counsel. McGee was MBFC's client in the underlying criminal case and part of the intended audience of Carsey's communications. Carden paid MBFC for legal services to McGee and was a direct recipient of Carsey's communications. See Hanna, 681 S.W.3d at 427 (concluding that "customer" for commercial-speech exemption includes client and person who paid for at-issue legal services). All the Castleman elements were met.
Accordingly, we conclude that the TCPA's commercial-speech exemption applied to Carden and McGee's legal action against MBFC and that the district court did not err by denying MBFC's motion to dismiss under the TCPA. See Tex. Civ. Prac. & Rem. Code § 27.010(a)(2); Castleman, 546 S.W.3d at 688. We overrule MBFC's cross-issue.
CONCLUSION
We affirm the district court's orders granting MBFC's Motion to Dismiss Under Rule 91a of the Texas Rules of Civil Procedure, denying Carden and McGee's Motion for Limited Discovery, granting MBFC's Motion to Strike Carden and McGee's Supplemental Authority, and denying MBFC's Motion to Dismiss Under the Texas Citizens Participation Act.
Affirmed.