Opinion
NO. 01-19-00143-CV
09-17-2020
JUDY GAUTHIA, INDIVIDUALLY AND ON BEHALF OF LARRY GAUTHIA AND HIS ESTATE, LUCRETIA NICKERSON, GERMAINE GAUTHIA, AND YOLANDA GAUTHIA, Appellants v. ARNOLD & ITKIN, L.L.P., JASON A. ITKIN, CORY D. ITKIN, AND KURT B. ARNOLD, Appellees
On Appeal from the 295th District Court Harris County, Texas
Trial Court Case No. 2015-57459
MEMORANDUM OPINION
Judy Gauthia, Lucretia Nickerson, Germaine Gauthia, and Yolanda Gauthia (collectively, the "Gauthias") challenge a trial court's dismissal of their claims asserted against Arnold & Itkin, L.L.P., Jason A. Itkin, Cory D. Itkin, and Kurt B. Arnold (collectively, "A&I"). In four issues, the Gauthias contend that the trial court: (1) erred by granting summary judgment based on a limitations defense; (2) erred by granting A&I's motion for summary judgment when they raised a genuine issue of material fact on their claims; (3) abused its discretion by excluding portions of Judy Gauthia's declaration; and (4) abused its discretion by denying their motion for continuance to conduct discovery. We affirm.
Background
The Railroad Accident
On December 29, 2006, Larry Gauthia was killed by an Amtrak train at a railroad crossing in Louisiana that struck his vehicle. Mr. Gauthia was survived by his wife, Judy Gauthia, and his daughters, Lucretia Nickerson, Germaine Gauthia, and Yolanda Gauthia.
R. Fleisher was a private investigator who A&I hired to investigate several cases involving accidents that occurred at the same railroad crossing where Mr. Gauthia died. At the time of Mr. Gauthia's death, Fleisher was already in Louisiana investigating a case for A&I's client, D. Cezar. A&I believed the details of Mr. Gauthia's accident were relevant to Cezar's lawsuit to show that the railroad crossing was dangerous and had inadequate warnings. A&I instructed Fleisher to locate and meet the Gauthias.
The parties dispute the intended purpose of Fleisher's meeting. The Gauthias contend that Fleisher met the Gauthias to unlawfully and unethically solicit them to retain A&I to represent them against Amtrak. A&I contends that Fleisher met with the Gauthias to investigate Mr. Gauthia's accident to help gather key facts for Cezar's lawsuit.
The Alleged Solicitation
Days after the accident, in January 2007, Fleisher and Cezar met with Judy and her daughters at their home. According to Judy's deposition testimony, Fleisher told Judy that he was employed by A&I to investigate the accident. Cezar told Judy that he accompanied Fleisher to help him gather facts for his own lawsuit and that he was represented by A&I. During the meeting, Fleisher allegedly solicited Judy to hire A&I. Specifically, Fleisher told Judy that Jason Itkin of A&I was a "good lawyer" and that he would be "willing to represent" the Gauthias against the railroad company. Fleisher also told Judy that "A&I had represented other clients who had been injured or killed at the same railroad crossing."
Because some Appellants have the same last name, we will refer to them by their first names.
Judy "eventually asked to speak with" Itkin. Fleisher arranged a telephone call between Judy and Itkin. Judy and Itkin spoke about the accident and potential representation. Soon after the phone call, the Gauthias retained A&I to represent them and signed a contingency fee agreement.
The Gauthias' Lawsuit Against the Railroad Company
In January 2007, A&I sued the railroad company and others. In August 2009, A&I settled the case. The Gauthias received a "confidential lump sum." The Gauthias paid A&I attorneys' fees and expenses pursuant to the contingency fee agreement. In December 2009, A&I provided the Gauthias with an itemized list of expenses incurred throughout the representation. Three entries reflect expenses incurred for Fleisher's services. The Gauthias reimbursed A&I for the expenses, including its payments to Fleisher, through a deduction from the settlement proceeds. A&I closed the case and ended the representation. The Gauthias raised no complaints about the outcome of their case.
Fleisher's Lawsuit Against A&I
In June 2015, Fleisher sued A&I for breach of an oral contract. Fleisher alleged that in 2006, "Kurt Arnold asked [Fleisher] to send [A&I] some personal injury cases" and offered to pay him "10% of the gross settlement amount" of each referral. Fleisher also alleged that the parties amended their oral agreement two years later and agreed to pay Fleisher "12.5% of [A&I's attorneys'] fees without deducting taxes." He further alleged that he performed his duties between January 2006 through July 2011, but A&I failed to pay him $4 million for referring the Gauthias and many others. Fleisher's lawsuit was dismissed on summary judgment in December 2015.
The Gauthias' Lawsuit Against A&I
A month after Fleisher filed suit and eight years after the Gauthias retained A&I, Lance Christopher Kassab, the Gauthias' current counsel, sent a letter advertisement to A&I's clients named in the Fleisher lawsuit, informing them of a potential malpractice claim against A&I. In September 2015, the Gauthias retained Kassab and sued A&I for breach of fiduciary duty, fraud, fraud by non-disclosure, civil conspiracy, aiding and abetting, and commercial bribery. The Gauthias also alleged that A&I violated the Texas Government Code Section 82.065. Section 82.065(b) provides that any contingent fee contract for legal services "procured as a result of" violations of "the laws of this state or the Disciplinary Rules of the State Bar of Texas regarding barratry" is voidable by the client. TEX. GOV'T CODE § 82.065(b). In short, this statute allows a person who hires an attorney as a result of barratry to sue for rescission of the unlawful contract. See id. They sought to rescind the contingency fee agreement that they executed with A&I in 2007. The Gauthias anticipated a limitations defense and pleaded the discovery rule and fraudulent concealment as counter defenses. A&I filed a general denial.
The letter advertisement states, in part, that
Texas law prohibits a person from soliciting a client either in person or by telephone. Texas law also prohibits a lawyer from sharing in fees with a non-lawyer. If you were solicited in person or by telephone to hire Arnold & Itkin to represent you in your wrongful death/personal injury case[,] you may have a potential claim against Arnold & Itkin[,] which may entitle you to compensation.
Section 82.065, entitled Contingent Fee Contract for Legal Services, was enacted by the Texas Legislature in 1989. TEX. GOV'T CODE § 82.065, Act of June 14, 1989, 71st Leg., R.S., ch. 866, § 3, sec. 28.065. This statute was amended first in 2011 and again in 2013. Because the parties executed the contingency fee contract here before the effective date of the amendments, this case is governed by the statute as it existed before September 1, 2011.
At the time the Gauthias executed the contingent fee agreement, the only remedy available for a claim of barratry was recission under section 82.065, referred to here as the recission statute. The statute providing for damages and other relief for barratry was not enacted until 2011, after the Gauthias hired A&I. Compare TEX. GOV'T CODE § 82.065 with TEX. GOV'T CODE § 82.0651.
The parties engaged in significant discovery for several months. At the Gauthias' request, A&I provided thousands of pages of discovery to them. The Gauthias also received hundreds of pages of records from Fleisher pertaining to the Gauthias' case file during his employment with A&I. In addition to these records, Fleisher provided the Gauthias with a three-page affidavit detailing his alleged solicitation of the Gauthias on behalf of A&I.
A&I's First Motion for Summary Judgment
In May 2016, A&I filed a traditional motion for summary judgment, challenging the Gauthias' claims. A&I asserted that "(i) the statute of limitations barred the Gauthias' claims; (ii) the [recission] statute did not permit the Gauthias' claims; and (iii) the law does not permit rescission on a fully-performed contract." A&I attached summary-judgment evidence to its motion including, inter alia, an executed copy of the January 5, 2007 engagement agreement for the Gauthias and a February 2009 invoice from Fleisher Investigative Services for services rendered for the Gauthias' case.
The invoice reflects that Fleisher was paid by the hour.
The Gauthias responded to A&I's motion, arguing that the discovery rule precluded summary judgment based on the statute of limitations, the recission statute permitted a private right of action, and Texas law allows recission on a fully-performed contract. Among their responsive summary-judgment evidence, the Gauthias offered sworn statements from Fleisher and Judy, stating that Fleisher was hired to solicit the Gauthias without disclosing the solicitation arrangement to them. The Gauthias also offered Fleisher's February 2009 invoice and Fleisher's detailed worksheet as summary-judgment evidence. Before the court ruled on A&I's motion for summary judgment, the Gauthias amended their petition and added a new claim, asserting violations under the Texas Deceptive Trade Practices Act ("DTPA") and alleging that A&I failed to disclose the "deceptive barratry scheme" and that "the illegal obtainment and representation of [the Gauthias] constitutes an unconscionable action."
Judy provided a declaration that she was unaware that A&I paid Fleisher to solicit her and her family and that she was unaware that the solicitation was improper. She stated, in part, that
a man identifying himself as [R.] Fleisher appeared at my home in Vinton, Louisiana. Neither me nor anyone in my family had ever seen or spoke with Mr. Fleisher before this time. Mr. Fleisher stated that he was an investigator who was investigating the accident in which my husband was killed and asked to speak with me and my family about Larry and the incident. . . . [A]fter discussing the accident for some time, Mr. Fleisher advised us that we should get a good lawyer and that he knew of a lawyer named Jason Itkin who would be willing to represent us in a lawsuit against [the railroad company] and all those responsible for my husband's death. Mr. Fleisher told us that A&I had represented other clients who had been injured or killed at the same railroad crossing. Mr. Fleisher told us that he could arrange a conference for me with Mr. Itkin. . . . Because of what Mr. Fleisher told me about Mr. Itkin, I eventually asked to speak with Mr. Itkin at which point Mr. Fleisher arranged a telephone call.
Fleisher's worksheet documented his notes, mental impressions, and interactions. The January 3, 2007 entry provides details regarding the Gauthias:
6:32 Vinton - meeting with [D.] Cezar. We went over to Judy Gauthia, the wife of the deceased, Larry Gauthia who was killed at the same crossing as [P.] Cezar. We arrived about 7:00 P.M. A couple of the daughters were there[,] and I talked with them for about an hour until the mother arrived. I spent the rest of the evening with Derrick and took a lot of notes[.] [F]inally they asked to speak with Jason [Itkin]. We got a hold of Jason [Itkin] and Jason [Itkin] talked to Judy after I had already told him that she wanted to talk to him, etc. I'm going to be meeting with them tomorrow morning on day 3 to go [to] the Breaux's wrecker service yard to photograph and put a hold on the 2003 Toyota Corolla that was the accident automobile. I'm preparing to get photographs of that and the crossing and hopefully signup [sic] the wife and some of the children.
A&I filed an amended answer four days before the summary-judgment hearing and pleaded a limitations defense. A&I also filed a motion for leave to file its amended answer. The Gauthias did not respond to A&I's motion for leave. The record does not reflect whether the court granted leave to file the amended answer.
In April 2017, the trial court partially granted A&I's motion for summary judgment. In its order, the trial court granted summary judgment on the claims for violations of section 82.065, fraud, conspiracy, and commercial bribery. However, the trial court denied summary judgment on the breach-of-fiduciary-duty claim.
A&I's Second Motion for Summary Judgment
The parties continued discovery on the Gauthias' remaining claims: DTPA and breach of fiduciary duty. A&I deposed Judy. Judy stated she knew that Fleisher was working for and associated with A&I when the alleged solicitation occurred in January 2007. Judy did not mention this fact in her declaration.
Judy's deposition testimony contradicted her earlier declaration. In her declaration, Judy stated:
[A]t no time before July 2015 did me or my family know that (1) Mr. Fleisher was a hired investigator by A&I to conduct surveillance of our family and solicit the legal representation of us; . . . and (4) that Mr. Fleisher was associated or working for [A&I].
A&I filed its second motion for summary judgment, asserting a limitations defense based on Judy's deposition testimony. A&I argued that the discovery rule does not apply to DTPA and breach-of-fiduciary-duty claims and that, even if the discovery rule were to apply, Judy's deposition testimony supported that she was aware she had been solicited in 2007. A&I attached to its motion, among other things, Judy's declaration and deposition testimony. A&I also attached an itemized expense sheet reflecting services by Fleisher Investigative Services from February 2007 through March 2009. The Gauthias responded to A&I's motion, contending that the discovery rule applied to their claims and that Judy's conflicting sworn testimony could only be used to impeach her. Among their responsive summary-judgment evidence, the Gauthias attached Fleisher's affidavit, Judy's deposition testimony, and sworn statements from several people stating Fleisher solicited them to hire A&I. The Gauthias also requested a continuance to conduct additional discovery.
In December 2015, the trial court denied the Gauthias' motion for continuance, granted A&I's second motion for summary judgment, and dismissed the remaining claims against A&I with prejudice. The trial court's order granting A&I's first summary-judgment motion coupled with the trial court's order dismissing the DTPA and breach-of-fiduciary-duty claims disposed of all claims and parties and thus constitute a final and appealable judgment. See H. B. Zachry Co. v. Thibodeaux, 364 S.W.2d 192, 193 (Tex. 1963) (per curiam) (holding that prior interlocutory orders merge into subsequent order disposing of remaining parties and issues, creating a final and appealable judgment); Azbill v. Dallas Cnty. Child Protective Servs. Unit of the Tex. Dep't of Human & Regul. Servs., 860 S.W.2d 133, 137 (Tex. App.—Dallas 1993, no writ) ("[I]t is not necessary that all the dispositive rulings appear in one document before a judgment can become final."). The Gauthias appealed.
Summary Judgment
The Gauthias raise four issues on appeal. In their first two issues, the Gauthias challenge the trial court's summary judgment in favor of A&I.
A. Standard of review
We review summary judgments de novo. Godoy v. Wells Fargo Bank, N.A., 575 S.W.3d 531, 536 (Tex. 2019). Summary judgment is appropriate when no genuine issue of material fact exists, and the movant is entitled to judgment as a matter of law on the issues presented. TEX. R. CIV. P. 166a(c); Ortiz v. State Farm Lloyds, 589 S.W.3d 127, 131 (Tex. 2019). In reviewing the grounds for summary judgment, we take as true all evidence favorable to the nonmovant and indulge every reasonable inference and resolve any doubts in the nonmovant's favor. Dallas Morning News, Inc. v. Tatum, 554 S.W.3d 614, 624 (Tex. 2018).
B. A&I affirmatively pleaded statute of limitations
We first consider whether A&I affirmatively raised its affirmative defense of statute of limitations. A&I had the burden to establish its affirmative defense. See Keck, Mahin & Cate v. Nat'l Union Fire Ins. Co. of Pittsburgh, Pa., 20 S.W.3d 692, 699 (Tex. 2000). Rule 94 of the Texas Rules of Civil Procedure requires that "[i]n a pleading to a preceding pleading, a party shall set forth affirmatively" any matter "constituting an . . . affirmative defense." TEX. R. CIV. P. 94. An affirmative defense is "[a] defendant's assertion of facts and arguments that, if true, will defeat the plaintiff's or prosecution's claim, even if all the allegations in the complaint are true." Zorrilla v. Aypco Constr. II, LLC, 469 S.W.3d 143, 155-56 (Tex. 2015) (quoting affirmative defense, BLACK'S LAW DICTIONARY (10th ed. 2009)). "A statute of limitations is a procedural device operating as a defense to limit the remedy available from an existing cause of action." Dunmore v. Chi. Title Ins. Co., 400 S.W.3d 635, 640 (Tex. App.—Dallas 2013, no pet.).
The Gauthias contend that A&I waived the statute of limitations defense because it did not plead its affirmative defense in its answer and instead filed a general denial and later pleaded limitations in its first motion for summary judgment. Although they concede that "an unpled affirmative defense may be raised for the first time in a summary judgment motion," the Gauthias argue the trial court erred by granting summary judgment based on statute of limitations because they objected and notified the court of A&I's failure to raise its affirmative defense in its answer. The Gauthias also contend that the trial court could not consider the amended answer because it was filed less than seven days before the hearing and the trial court did not rule on A&I's motion for leave before granting summary judgment or include language in the order stating "all pleadings were considered."
Under Rule 166a(c), the trial court is required to consider the pleadings "on file at the time of the hearing, or filed thereafter and before judgment with permission of the court." TEX. R. CIV. P. 166a(c). But, Rule 63 requires a party to obtain leave of court to amend its pleading within seven days of trial or thereafter. TEX. R. CIV. P. 63. Leave must be granted unless it is shown that the filing will operate as a surprise to the opposing party. See id.; Hollander v. Capon, 853 S.W.2d 723, 724-25 (Tex. App.—Houston [1st Dist.] 1993, writ denied) (citing Greenhalgh v. Serv. Lloyds Ins. Co., 787 S.W.2d 938, 941 (Tex. 1990)) ("[W]ithout a showing of surprise[, the] trial court must grant leave for party to file amendments when requested within seven days of trial."). If the amended pleading is filed before a summary-judgment hearing but within the seven-day window, we will presume that the trial court granted leave for the amendment and that the trial court considered this pleading if (1) the record is silent of any basis to conclude that the trial court did not consider the amended pleading, and (2) the opposing party has not shown surprise or prejudice. Horie v. Law Offs. of Art Dula, 560 S.W.3d 425, 431 (Tex. App.—Houston [14th Dist.] 2018, no pet.) (citing Goswami, 751 S.W.2d at 490).
"A summary judgment proceeding is a trial within the meaning of Rule 63." Goswami v. Metro. Sav. & Loan Ass'n, 751 S.W.2d 487, 490 (Tex. 1988).
First, the record shows that the trial court considered the amended pleading. Indeed, the parties addressed the limitations defense at the summary-judgment hearing. Second, nothing in the record indicates that the trial court denied A&I's motion for leave. And the Gauthias did not file a motion to strike A&I's amended answer. Finally, the Gauthias did not show surprise or prejudice because they contemplated A&I's assertion of a limitations defense in their original petition and pleaded counter defenses of fraudulent concealment and the discovery rule.
Because the record lacks any basis to conclude that the amended petition was not considered by the trial court and because the Gauthias have not shown surprise or prejudice, leave of court is presumed. See Lee v. Key W. Towers, Inc., 783 S.W.2d 586, 588 (Tex. 1989); Spacek v. Charles, 928 S.W.2d 88, 92 n.1 (Tex. App.—Houston [14th Dist.] 1996, writ dism'd w.o.j.). We therefore conclude that A&I's limitations defense was properly before the trial court. Having determined A&I affirmatively pleaded statute of limitations, we now consider it.
C. Limitations and the discovery rule
A defendant moving for summary judgment on the affirmative defense of limitations bears the burden of conclusively establishing the elements of that defense. Schlumberger Tech. Corp. v. Pasko, 544 S.W.3d 830, 833 (Tex. 2018) (per curiam). To do so, the defendant must (1) conclusively prove when the cause of action accrued and (2) negate the discovery rule if it applies and has been pleaded or otherwise raised. KPMG Peat Marwick v. Harrison Cnty. Hous. Fin. Corp., 988 S.W.2d 746, 748 (Tex. 1999). If the defendant establishes that limitations bars the action, the summary-judgment burden shifts to the plaintiff, who must present summary-judgment evidence raising a fact issue with regard to the statute of limitations. Id.
A cause of action accrues when (1) "the allegedly tortious act was committed and caused an injury;" or (2) "facts come into existence that authorize a party to seek a judicial remedy." United Healthcare Servs., Inc. v. First St. Hosp. LP, 570 S.W.3d 323, 335 (Tex. App.—Houston [1st Dist.] 2018, pet. denied) (citing Pasko, 544 S.W.2d at 334). This is true even if all resulting damages have not yet occurred. Pasko, 544 S.W.3d at 834. Determining the accrual date is a question of law. Provident Life & Acc. Ins. Co. v. Knott, 128 S.W.3d 211, 221 (Tex. 2003).
The discovery rule is a limited exception to the statute of limitations. Comput. Assocs. Int'l Inc. v. Altai, Inc., 918 S.W.2d 453, 455 (Tex. 1996). The discovery rule defers accrual of a cause of action until the plaintiff knew or, exercising reasonable diligence, should have known of the facts giving rise to the cause of action. Cosgrove v. Cade, 468 S.W.3d 32, 36 n.12 (Tex. 2015); see ExxonMobil Corp. v. Lazy R Ranch, LP, 511 S.W.3d 538, 542-43 (Tex. 2017) ("[A] claim accrues when injury occurs, not afterward when the full extent of the injury is known."). A plaintiff need not know that she has a cause of action; rather, she must only know "the facts giving rise to the cause of action." Altai, Inc., 918 S.W.2d at 457. The discovery rule applies in limited circumstances where "the nature of the injury incurred is inherently undiscoverable and the evidence of the injury is objectively verifiable." Id. at 456.
1. A&I conclusively proves the Gauthias' claims accrued in 2007
All of the Gauthias' claims are based on the same alleged act and legal injury—Fleisher's alleged solicitation. The Gauthias assert that their claims accrued as early June 2015 when Fleisher filed a lawsuit against A&I. Alternatively, the Gauthias assert that their claims accrued in July 2015 when Kassab sent them notice of "the lawsuit filed by Fleisher" explaining "that the way they had been solicited to hire [A&I], if true, may have been wrongful and caused them a legal injury." A&I, on the other hand, contends that the Gauthias' claims accrued in January 2007 when Fleisher visited them at their home and allegedly solicited the Gauthias to retain A&I to represent them against the railroad company. We agree.
In January 2007, Fleisher met with the Gauthias to investigate the railroad accident shortly after Larry was killed. The Gauthias did not know Fleisher before he arrived. According to Judy's declaration, the Gauthias knew that Fleisher (1) was investigating the railroad accident that killed her husband, (2) suggested that the Gauthias hire a good lawyer, and (3) connected them with Itkin at her request. The Gauthias executed a contract of representation that provided that A&I would be paid a contingency fee. So, the Gauthias knew in 2007 that A&I intended to be paid.
Although the Gauthias argue that they learned of their legal injury in June or July 2015, this argument is flawed as a matter of law. "In most cases, a cause of action accrues when a wrongful act causes an injury, regardless of when the plaintiff learns of that injury or if all resulting damages have yet to occur." Childs v. Haussecker, 974 S.W.2d 31, 36 (Tex. 1998) (emphasis added). And, as alleged by the Gauthias, their claims accrued when Fleisher arrived at their home and arranged for A&I to represent them.
We hold that the accrual date for the Gauthias' claims commenced in January 2007. The parties agree that the statute of limitations on all of the Gauthias' claims is four years. Neese v. Lyon, 479 S.W.3d 368, 384 (Tex. App.—Dallas 2015, no pet.) (determining that the limitations period for a claim under original Government Code § 82.065(b) is four years). We now address whether a "judicially-crafted exception to the general rule of accrual, known as the discovery rule" applies to toll the accrual date. See Childs, 974 S.W.2d at 36-37.
2. A&I negates the discovery rule
The Gauthias contend that the discovery rule applies because their nature of their legal injuries was inherently undiscoverable and the evidence of their injuries was objectively verifiable. They argue that they could not have discovered their legal injuries because they did not know that the prohibited solicitation violated the law. "An injury is inherently undiscoverable if it is by nature unlikely to be discovered within the prescribed limitations period despite due diligence." S.V. v. R.V., 933 S.W.2d 1, 7 (Tex. 1996). An injury is objectively verifiable when the facts on which liability is predicated can be proven by "direct, physical evidence." Id. The term "legal injury" is defined as "an injury giving cause of action by reason of its being an invasion of a plaintiff's right." Murphy v. Campbell, 964 S.W.2d 265, 270 (Tex. 1997).
Relying on Willis v. Maverick, 760 S.W.2d 642 (Tex. 1988), the Gauthias analogize their recission statute claim to a legal-malpractice claim and argue that their discovery rule applies because their legal injuries were inherently undiscoverable. They allege that they had insufficient legal acumen to perceive their legal injuries arising from "faulty," "illegal," or "unethical" solicitation at the time it occurred. They further allege that Fleisher contacted them under "false pretenses," concealed "his true affiliation with [A&I]," and failed to disclose the referral fee arrangement for soliciting the Gauthias and others. A&I contends that Willis is inapplicable because legal acumen is not a prerequisite to perceive their claims.
The Gauthias' reliance on Willis is misplaced. Unlike Willis, the Gauthias did not bring a legal malpractice claim against A&I. In fact, they did not complain about the outcome of their case whatsoever. Moreover, the Gauthias did not need legal acumen to determine whether Fleisher had allegedly solicited them on behalf of A&I. Solicitation occurs at the moment the purported case runner communicates in person with a prospective client about legal representation for an existing legal problem. See Nguyen v. Watts, No. 01-18-00421-CV, - S.W.3d -, 2020 WL 2786841, at *15 (Tex. App.—Houston [1st Dist.] May 28, 2020, no pet.) (noting that a plaintiff is aware of "solicitous conduct" at the time it occurs). This principle is underscored by the Texas Disciplinary Rules of Professional Conduct:
A lawyer shall not by in-person contact, or by regulated telephone . . . seek professional employment concerning a matter arising out of a particular occurrence or event, or series of occurrences or events, from a prospective client or nonclient who has not sought the lawyer's advice regarding employment or with whom the lawyer has no family or past or present attorney-client relationship when a significant motive for the lawyer's doing so is the lawyer's pecuniary gain . . . .See TEX. DISCIPLINARY RULES PROF'L CONDUCT R. 7.03(a)—(b). The Gauthias did not need to know they could sue A&I; rather, they only needed to know the facts giving rise to their claims. See Altai, Inc., 918 S.W.2d at 457.
A lawyer shall not pay, give, or offer to pay or give anything of value to a person not licensed to practice law for soliciting prospective clients for, or referring clients or prospective clients to, any lawyer or firm . . . .
The Gauthias legal injuries were not inherently undiscoverable because they were aware of the facts giving rise to their claims based on the prohibited solicitation in January 2007. Fleisher, an unknown and uninvited visitor, arrived at their home to discuss Larry's railroad accident, facilitated a telephone meeting with A&I (an attorney who had no past or present relationship with the family), and then presented them with a contingent fee agreement to sign for A&I to represent them in a lawsuit. For these reasons, A&I has conclusively established that the discovery rule did not toll limitations on the Gauthias' claims because claims based upon solicitous conduct do not involve the type of injury that is inherently undiscoverable. "It is the plaintiff's knowledge of the conduct constituting a prohibited solicitation, and not his knowledge of the law, that triggers accrual of the claim." Nguyen, 2020 WL 2786841, at *16.
Although the Gauthias were fully on notice of their claims as early of 2007, they were on additional notice in 2009. A&I provided the Gauthias with an itemized bill after the case had settled. Three of the entries were for Fleisher's services. The Gauthias did not dispute these payments to Fleisher. Nor did they sue A&I to recover these payments or allege any legal or ethical violations. The Gauthias cannot rely on the discovery rule to toll the accrual date for their claims until 2015 when they learned of Fleisher's lawsuit. United Healthcare Servs, Inc., 570 S.W.3d at 336 (requiring party asserting discovery rule to "exercise reasonable diligence in discovering facts relating to its claims"). A&I has met its burden of establishing that the discovery rule does not apply.
Because the discovery rule does not apply, we therefore hold that the Gauthias' claims accrued in January 2007 and became time-barred in January 2011, about four years before the Gauthias filed suit against A&I. The trial court did not err by granting summary judgment in favor of A&I based on statute of limitations. We overrule the Gauthias' first two issues.
Evidentiary Ruling
In their third issue, the Gauthias argue that the trial court erred in excluding portions of Judy's declaration based on the sham-affidavit rule. According to the Gauthias, the trial court granted A&I's second summary-judgment motion without making an "explicit ruling on the admissibility of the declaration." In Judy's declaration, she stated that she "believed that Mr. Fleisher was . . . not associated with any law firm." Judy later stated in her deposition that she knew that Fleisher was working for A&I in January 2007. Thus, the Gauthias believe this contradiction invokes the sham-affidavit rule to their detriment and the trial court improperly disregarded portions of Judy's sworn statement by granting A&I's second motion for summary judgment. In response, A&I contends that no party moved to exclude the declaration, that the conflicts were not "genuine," and that the trial court could have disbelieved either the declaration or the deposition testimony, both, or neither.
A. Standard of Review
Although we generally review summary judgments de novo, we review a trial court's refusal to consider evidence under the sham-affidavit rule for an abuse of discretion. See Lujan v. Navistar, Inc., 555 S.W.3d 79, 84 (Tex. 2018). A trial court abuses its discretion if it acts in an arbitrary or unreasonable manner or without reference to guiding rules or principles. In re Thetford, 574 S.W.3d 362, 374 (Tex. 2019). We reverse a judgment based on error in the exclusion of evidence if the appellant shows the trial court did in fact commit error and the error probably resulted in an improper judgment. Interstate Northborough P'ship v. State, 66 S.W.3d 213, 220 (Tex. 2001) (citing TEX. R. APP. P. 61.1).
B. Applicable law
The sham-affidavit rule is a procedural tool that allows the trial court to disregard affidavits submitted in opposition to a motion for summary judgment if the affidavit conflicts with the affiant's prior sworn testimony and does not provide a sufficient explanation for the conflict. See Lujan, 555 S.W.3d at 85. The sham-affidavit rule may be applied when "(1) the affidavit is executed after the deposition and (2) there is a clear contradiction on (3) a material point (4) without explanation, the 'sham affidavit' doctrine may be applied . . . ." Id. (quoting Pando v. Sw. Convenience Stores, L.L.C., 242 S.W.3d 76, 79 (Tex. App.—Eastland 2007, no pet.)). "[A] court asked to disregard a conflicting affidavit must 'examine the nature and extent of the differences in the facts asserted in the documents to determine what effect a conflict should be given in a particular case.'" Id. (quoting Cantu v. Peacher, 53 S.W.3d 5, 7 (Tex. App.—San Antonio 2001, pet. denied)).
C. Analysis
The Gauthias have not demonstrated that the trial court applied the sham-affidavit rule and disregarded portions of Judy's declaration. In fact, the Gauthias acknowledge that "[t]he sham affidavit rule does not apply to this case," and A&I agrees. They have not demonstrated that a discrepancy about Judy's knowledge of Fleisher's relationship with A&I is material. "[E]very discrepancy contained in an affidavit does not justify a district court's refusal to give credence to such evidence." Lujan, 555 S.W.3d at 87 (quoting Kennett-Murray Corp. v. Bone, 622 F.2d 887, 893 (5th Cir. 1980)). As a result, Judy's inconsistent testimony on this point does not warrant application of the sham-affidavit rule. See id. at 88 (contradiction must be on a material point); Cnty. of El Paso v. Aguilar, 600 S.W.3d 62, 76 (Tex. App.—El Paso 2020, no pet.) (same).
The Gauthias argue that the sham-affidavit rule is inapplicable because only a declaration that comes after deposition testimony can be a sham. This argument is misguided. "It is the competency, rather than timing, of evidence with which the sham-affidavit rule is concerned." Hacienda Records, L.P. v. Ramos, 718 Fed. App'x 223, 235 (5th Cir. 2018). Our focus, however, is on the immateriality of the contradiction.
Moreover, there is no indication that A&I moved to strike Judy's inconsistent testimony. See Lujan, 555 S.W.3d at 85 (explaining that sham- affidavit rule applies when a court is "asked to disregard a conflicting affidavit"). There is also no indication that the trial court disregarded any evidence in this case. We conclude that the trial court did not apply the sham-affidavit rule. We further conclude that the trial court did not erroneously exclude portions of Judy's declaration. We overrule the Gauthias' third issue.
Motion for Continuance
Finally, we consider the Gauthias' fourth issue. The Gauthias contend that the trial court erred by denying their motion for continuance to depose A&I and Fleisher for the purpose of uncovering the "true association between Fleisher and [A&I] and whether the true association was concealed from [the Gauthias] or when it was revealed, if ever." A&I responds by arguing that the depositions were unnecessary and cumulative because the Gauthias already had the information they were seeking.
A. Standard of Review
We review a trial court's order denying a motion for continuance for an abuse of discretion. Joe v. Two Thirty Nine Joint Venture, 145 S.W.3d 150, 161 (Tex. 2004). The trial court may order a continuance of a summary-judgment hearing if it appears "from the affidavits of a party opposing the motion that he cannot for reasons stated present by affidavit facts essential to justify his opposition." TEX. R. CIV. P. 166a(g). When deciding whether a trial court abused its discretion in denying a motion for continuance seeking additional time to conduct discovery, we consider nonexclusive factors including, the materiality and purpose of the discovery sought and whether the party seeking the continuance has exercised due diligence to obtain the discovery sought. See Tenneco Inc. v. Enter. Prods. Co., 925 S.W.2d 640, 647 (Tex. 1996) (materiality and purpose); State v. Wood Oil Distrib., Inc., 751 S.W.2d 863, 865 (Tex. 1988) (due diligence).
B. Analysis
The record shows that the parties engaged in significant discovery before A&I filed its motions for summary judgment. A&I provided thousands of pages of discovery to the Gauthias. Although A&I and Fleisher, as a non-party to the litigation, objected to certain interrogatories and quashed subpoenas, the record reflects that Fleisher provided the Gauthias with a detailed affidavit, his worksheet, invoice to A&I, and a check he received from A&I, which the Gauthias submitted as responsive summary-judgment evidence. Thus, we cannot say that the trial court acted unreasonably or in an arbitrary manner, without reference to guiding rules or principles because it denied the Gauthias' motion for continuance to allow deposition testimony from A&I and Fleisher. Matter of Marriage of Harrison, 557 S.W.3d 99, 112 (Tex. App.—Houston [14th Dist.] 2018, pet. denied) (citing Butnaru v. Ford Motor Co., 84 S.W.3d 198, 211 (Tex. 2002)). The Gauthias received relevant evidence through Fleisher, who supplied them with the requested information about the relationship and alleged concealment between A&I and Fleisher. In addition, Judy declared that she knew that Fleisher was working for and associated with A&I. The trial court therefore did not abuse its discretion by denying the Gauthias' motion for continuance. We overrule the Gauthias' fourth issue.
Conclusion
We affirm the trial court's judgment.
Sarah Beth Landau
Justice Panel consists of Justices Goodman, Landau, and Countiss.