Opinion
05-20-00994-CV
07-25-2023
KENNETH HENRY, Appellant v. MARC A. NOTZON AND LAW OFFICE OF MARC A. NOTZON, P.C., Appellees
On Appeal from the 191st Judicial District Court Dallas County, Texas Trial Court Cause No. DC-19-13449.
Before Molberg, Pedersen, III, and Kennedy, Justices.
The Honorable Justice David J. Schenck was originally a member of this panel and participated in oral argument and our prior memorandum opinion but did not participate in the issuance of this memorandum opinion on rehearing. The Honorable Justice Nancy Kennedy succeeded Justice Schenck when his term expired December 31, 2022. Justice Kennedy has reviewed the briefs and the record.
MEMORANDUM OPINION ON REHEARING
KEN MOLBERG, JUSTICE.
In this summary judgment appeal, we grant appellant Kenneth Henry's motion for rehearing, withdraw our prior opinion, and vacate our December 22, 2022 judgment. This is now the opinion of the Court. We reverse and remand for further proceedings consistent with this opinion because, based on the pleadings and record before us, the trial court misapplied the collateral estoppel doctrine, and, in doing so, erroneously deprived Henry of a possible remedy for a claimed serious breach of a lawyer's duty of loyalty to his client.
I. Background
Henry sued appellees Marc A. Notzon and the Law Office of Marc A. Notzon, P.C. and alleges both breached their fiduciary duty to him in their representation of him in a prior lawsuit in which he was a defendant.
Throughout the opinion, we refer to both appellees collectively as "Notzon."
The prior lawsuit arose from a motor vehicle accident on May 29, 2015, when Henry, an insulin-dependent diabetic, experienced a low blood sugar event. At the time of the accident, Henry was driving a company truck and was in the course and scope of his employment with Time Warner Cable (TWC). According to Henry, on the date of-but before-the accident, he rode with a co-worker and an on-call supervisor for several hours due to disorientation caused by his low blood sugar. Henry alleges, "[d]espite caution to the contrary," he "was put back in a TWC company vehicle and was involved in an unfortunate accident."
A third party sued Henry and TWC after that accident. Notzon jointly represented Henry and TWC in that lawsuit and negotiated a settlement on behalf of them both. The dates of the settlement and Notzon's representation of Henry and TWC are not clear from the appellate record, but in terms of when their representation began, Henry alleges he and his supervisors met with Notzon at TWC's Dallas location "shortly after the collision" and also alleges he "met with the TWC supervisors, [human resources and] Notzon on at least two occasions in the month of June 2015 to discuss the accident."
According to Henry, TWC policy mandates that after an accident, an Accident Review Committee (ARC) will conduct its investigation and provide results within seven days after the accident. Henry alleges the ARC process occurred in June 2015.
Henry also alleges he was released to return to work without restrictions by the workers' compensation doctors on September 7, 2015, and "around September 10, 2015, TWC began high level conferences regarding Henry's employment." Henry alleges "Notzon participated in those conferences" but "did not inform Henry of those conferences, even though Notzon participated in the discussions."
Henry was terminated on October 2, 2015, more than four months after the accident, and less than a month after the "high level conferences" Notzon is alleged to have participated in began.
Henry sued TWC in federal court for disability discrimination and workers' compensation retaliation, alleging, in part, that TWC terminated him (1) because of his disability in violation of the Americans with Disabilities Act, as amended (ADAAA), see 42 U.S.C. §§ 12101-213, and (2) because he filed a workers' compensation claim in good faith, hired a lawyer to represent him in a workers' compensation claim, instituted or caused to be instituted a workers' compensation claim in good faith, and/or testified or was prepared to testify in a workers' compensation proceeding, in violation of Chapter 451 of the Texas Labor Code. See Tex. Labor Code §§ 451.001-.003. TWC moved for summary judgment on Henry's ADAAA and workers' compensation retaliation claims. The federal district court granted the motion, and the federal court of appeals affirmed.
In that lawsuit, Henry sued "Spectrum, L.L.C. and Charter Communications, L.L.C. f/d/b/a Time Warner Cable Texas, L.L.C." For clarity and brevity, we refer to the company simply as TWC.
See Henry v. Spectrum, L.L.C., No. 3:18-CV-01086-N, 2019 WL 1254954, *1-4 (N.D. Tex. Mar. 19, 2019), aff'd, 793 Fed.Appx. 273 (5th Cir. 2019) (per curiam).
In this lawsuit, Henry alleges Notzon breached the fiduciary duty owed to Henry by deceiving him and by failing to disclose a conflict of interest and "secret" discussions with TWC in the course of jointly representing Henry and TWC in the lawsuit filed against them after the accident. He alleges "Notzon's design was to conceal TWC's gross negligence when TWC permitted Henry to get behind the wheel of the company truck on May 29, 2015," and "to lay all of the blame for the collision on Henry even though TWC had been told by [one of Henry's co-workers] that Henry should not be permitted to drive" on that date.
Henry also alleges Notzon's breach caused him damages and that, unbeknownst to Henry, "Notzon was . . . working against Henry to garner favor with TWC and the money TWC and/or its insurers was paying to Notzon[,]" gains which Henry describes as "ill-gotten" and that should be forfeited. In terms of relief, Henry seeks, among other things, "[f]ee forfeiture and actual damages[,]" "[l]ost earnings and employee benefits in the past[,]" "[l]ost earnings and employee benefits that in reasonable probability will be lost in the future," and "[c]ompensatory damages, past and future[.]" The latter three types of damages are similar in nature to certain types of relief Henry sought from TWC in his federal lawsuit against TWC.
In his federal suit, Henry sought, among other relief, "back pay, front pay[,] . . . lost wages and benefits in the past and future, all actual monetary losses," and "compensatory damages" for the "emotional pain and suffering, mental anguish, and/or other nonpecuniary losses" caused by TWC's conduct.
Notzon's pleading includes a general denial and asserts various affirmative defenses, including collateral estoppel, and Notzon filed a traditional summary judgment motion based on that affirmative defense. The trial court granted Notzon's motion based solely on that defense and made certain evidentiary rulings. Henry then filed a combined motion for new trial and motion for reconsideration. The trial court did not rule on that combined motion, and it was overruled by operation of law.
Originally, Notzon moved for summary judgment on both traditional and no-evidence grounds, but ultimately, Notzon proceeded only on a traditional ground based on an affirmative defense of collateral estoppel. In the reply brief in support of summary judgment, Notzon withdrew "their traditional and no-evidence [motions for summary judgment] and evidentiary exhibits to the extent they address summary judgment on a basis other than collateral estoppel" and stated they were relying only on ten paragraphs in their summary judgment motion (specifically, paragraphs thirty-two to forty-one) and five exhibits (specifically, A, G, H, I, and J). Those five exhibits consist of certified copies of various items from Henry's federal litigation against TWC, including the federal district court's order granting summary judgment to TWC (exhibit A), Henry's amended complaint in federal court against TWC (exhibit G), TWC's brief and reply brief in support of its federal summary judgment motion (exhibits H and J, respectively), Henry's brief in opposition to TWC's federal summary judgment motion (exhibit I), and the opinion of the United States Court of Appeals for the Fifth Circuit, which affirmed summary judgment on Henry's ADAAA and workers' compensation retaliation claims (exhibit M).
Henry timely appealed. In our Court, the parties filed a written agreement stating that "if the grant of summary judgment on the basis of collateral estoppel is determined by this Court to have been granted in error, the matter should be remanded to the trial court, unless review by the Texas Supreme Court is granted." See Tex. R. App. P. 6.6.
II. Issues and Analysis
Henry raises two issues on appeal and argues the trial court erred in (1)granting summary judgment on the affirmative defense of collateral estoppel and (2)denying his motion to compel certain discovery. Notzon disputes both issues. As we explain, we agree with Henry on the first issue and need not reach the second.
A. Applicable Standards
1. Summary Judgment Standards
We review de novo the trial court's ruling on a motion for summary judgment. Ortiz v. State Farm Lloyds, 589 S.W.3d 127, 131 (Tex. 2019); Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). In conducting our review, "we take as true all evidence favorable to the nonmovant, and we indulge every reasonable inference and resolve any doubts in the nonmovant's favor." Ortiz, 589 S.W.3d at 131 (quoting Dorsett, 164 S.W.3d at 661).
A traditional motion for summary judgment requires the moving party to show that no genuine issue of material fact exists and that it is entitled to judgment as a matter of law. Tex.R.Civ.P. 166a(c); Ortiz, 589 S.W.3d at 131; Lujan v. Navistar, Inc., 555 S.W.3d 79, 84 (Tex. 2018). If the movant does so, the burden then shifts to the nonmovant to come forward with competent controverting evidence sufficient to raise a genuine issue of material fact on the challenged element. Lujan, 555 S.W.3d at 84. A genuine issue of material fact exists if the evidence regarding the challenged element "rises to a level that would enable reasonable and fair-minded people to differ in their conclusions." First United Pentecostal Church of Beaumont v. Parker, 514 S.W.3d 214, 220 (Tex. 2017) (quoting Merrell Dow Pharms., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex. 1997)).
Traditional "summary judgment for a defendant is proper only when the defendant negates at least one element of each of the plaintiff's theories of recovery . . . or pleads and conclusively establishes each element of an affirmative defense." Sci. Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 911 (1997) (citations omitted) (stating this prior to addition of rule 166a(i)). We include that standard here because only a traditional summary judgment is at issue in this case, as Notzon withdrew his no-evidence motion in his trial court reply brief, and the trial court's summary judgment order states the court was advised Notzon's no-evidence motion had been withdrawn. Moreover, a traditional motion is the only type of summary judgment motion available to a party moving for summary judgment on an affirmative defense on which the movant bears the burden of proof. Compare Tex. R. Civ. P. 166a(c) with Tex. R. Civ. P. 166a(i) (allowing a party to file a no-evidence summary judgment motion under subsection (i) "on the ground that there is no evidence of one or more essential elements of a claim or defense on which an adverse party would have the burden of proof at trial") (emphasis added); see Calabrian Corp. v. Alliance Specialty Chems., Inc., 418 S.W.3d 154, 157-58 (Tex. App.-Houston [14th Dist.] 2013, no pet.) (noting that res judicata, also known as claim preclusion, and collateral estoppel, also known as issue preclusion, are affirmative defenses, and the party asserting the defense has the burden of pleading and proving its elements); see also Teal Trading & Dev., LP v. Champee Springs Ranches Prop. Owners Ass'n, 593 S.W.3d 324, 333 (Tex. 2020) ("'The hallmark characteristic' of an affirmative defense 'is that the burden of proof is on the defendant to present sufficient evidence to establish the defense and obtain the requisite . . . findings.'") (quoting Zorrilla v. Aypco Constr. II, LLC, 469 S.W.3d 143, 156 (Tex. 2015)).
When, as here, a party has moved for traditional summary judgment on an affirmative defense, the movant has the initial burden of establishing entitlement to judgment as a matter of law by conclusively establishing each element of its affirmative defense. See Chau v. Riddle, 254 S.W.3d 453, 455 (Tex. 2008) (per curiam); see also Tex. R. Civ. P. 166a(b)-(c). A matter is conclusively established if reasonable people could not differ as to the conclusion to be drawn from the evidence. See City of Keller v. Wilson, 168 S.W.3d 802, 816 (Tex. 2005); see also Goodyear Tire & Rubber Co. v. Mayes, 236 S.W.3d 754, 755 (Tex. 2007) (per curiam) (stating, "An appellate court reviewing a summary judgment must consider whether reasonable and fair-minded jurors could differ in their conclusions in light of all of the evidence presented.").
If the movant meets its burden, the burden then shifts to the nonmovant to present evidence raising a genuine issue of material fact as to one or more elements of the affirmative defense, precluding summary judgment. See Centeq Realty, Inc. v. Siegler, 899 S.W.2d 195, 197 (Tex. 1995).
2. Collateral Estoppel
"The doctrine of collateral estoppel precludes re-litigation of ultimate issues of fact actually litigated and essential to the judgment in a prior suit." Getty Oil Co. v. Ins. Co. of N. Am., 845 S.W.2d 794, 801 (Tex. 1992); see Tarter v. Metro. Sav. & Loan Ass'n, 744 S.W.2d 926, 927 (Tex. 1988); Farmland Partners Inc. v. First Sabrepoint Cap. Mgmt., Inc., No. 05-22-00010-CV, 2023 WL 4286017, *5 (Tex. App.-Dallas June 30, 2023, no pet. h.) (mem. op.). "Ultimate issues are those factual determinations submitted to a jury that are necessary to form the basis of a judgment." Tarter, 744 S.W.2d at 928; Farmland Partners, 2023 WL 4286017, at *5. "The term 'ultimate issue' does not refer to a cause of action or a claim." Id.
"Collateral estoppel requires that the issue decided in the first action be identical to the issue in the pending action." Getty Oil, 845 S.W.2d at 802 (emphasis added); Farmland Partners, 2023 WL 4286017, at *5. "The doctrine applies when the party against whom the doctrine is asserted had a full and fair opportunity to litigate the issue in the prior suit[,]" Tarter, 744 S.W.2d at 927, and "when relitigation could result in an inconsistent determination of the same ultimate issue; it does not bar litigation merely because the outcomes of two suits may appear to be inconsistent." Id. at 928-29; Farmland Partners, 2023 WL 4286017, at *5.
The doctrine "is designed to promote judicial efficiency, protect parties from multiple lawsuits, and prevent inconsistent judgments by precluding the relitigation of issues." In re USAA Gen. Indem. Co., 629 S.W.3d 878, 883 (Tex. 2021) (orig. proceeding) (quoting Sysco Food Servs., Inc. v. Trapnell, 890 S.W.2d 796, 801 (Tex. 1994)).
Trapnell states, "Since collateral estoppel is an affirmative defense, [a defendant has] the burden of pointing out the issue [the defendant wishes] to be estopped." 890 S.W.2d at 802. Trapnell further explains the burden as follows:
A party seeking to assert the bar of collateral estoppel must establish that (1) the facts sought to be litigated in the second action were fully and fairly litigated in the first action; (2) those facts were essential to the judgment in the first action; and (3) the parties were cast as adversaries in the first action.Id. at 801 (emphasis added) (but noting strict mutuality of parties is no longer required); see also Van Dyke v. Boswell, O'Toole, Davis & Pickering, 697 S.W.2d 381, 384 (Tex. 1985) ("Collateral estoppel, or issue preclusion, is more narrow than res judicata in that it only precludes the relitigation of identical issues of facts or law that were actually litigated and essential to the judgment in a prior suit.") (emphasis added).
As Trapnell states, "[s]trict mutuality of parties is no longer required. . . . To satisfy the requirements of due process, it is only necessary that the party against whom the doctrine is asserted was a party or in privity with a party in the first action." 890 S.W.3d at 801 (citations omitted).
"To determine whether the facts were fully and fairly litigated in the first suit, we consider '(1) . . . whether the parties were fully heard, (2) whether . . . the court supported its decision with a reasoned opinion, and (3) whether the decision was subject to appeal or was in fact reviewed on appeal.'" BP Auto. LP v. RML Waxahachie Dodge, LLC, 517 S.W.3d 186, 200 (Tex. App.-Texarkana 2017, no pet.) (quoting Mower v. Boyer, 811 S.W.2d 560, 562 (Tex. 1991)). "To determine whether a fact issue is essential to the judgment, i.e. whether it is an 'ultimate issue,' we look to the factual determinations made by the trier of fact that are "'necessary to form the basis of a judgment.'" Id. (quoting Tarter, 744 S.W.2d at 928); Farmland Partners, 2023 WL 4286017, at *6.
We review collateral estoppel's application de novo because it is a question of law. Webb v. Diversegy, LLC, No. 05-17-01258-CV, 2019 WL 1146707, at *4 (Tex. App.-Dallas Mar. 13, 2019, pet. denied) (mem. op.); Farmland Partners, 2023 WL 4286017, at *6. As the movant on its collateral estoppel defense, Notzon had the "burden of pointing out the issue [Notzon wished] to be estopped." See Trapnell, 890 S.W.2d at 802.
B. Analysis
To determine whether the trial court erred in granting summary judgment based on collateral estoppel, as Henry argues in his first issue, we first summarize the nature of Henry's claim and Notzon's summary judgment motion, the latter of which included Notzon's characterization of the issue Notzon wished to be estopped.
1. Henry's Claim and Notzon's Summary Judgment Motion
Henry's only claim against Notzon is for breach of fiduciary duty, a tort claim that generally involves the following elements: "(1) the existence of a fiduciary duty, (2) breach of the duty, (3) causation, and (4) damages." See Parker, 514 S.W.3d at 220; see also Jones v. Blume, 196 S.W.3d 440, 447 (Tex. App.-Dallas 2006, pet. denied) (describing elements as requiring "(1) a fiduciary relationship between the plaintiff and defendant; (2) the defendant must have breached his fiduciary duty to the plaintiff; and (3) the defendant's breach must result in injury to the plaintiff or benefit to the defendant").
Notzon moved for, and obtained, a traditional summary judgment based solely on the affirmative defense of collateral estoppel. To do so, Notzon was required to conclusively establish all elements of that defense. Martinez, 941 S.W.2d at 911.
As grounds for Notzon's traditional summary judgment motion, Notzon's motion stated, in pertinent part:
As a matter of law, all of [Henry's] claims should be dismissed for failing to raise a material fact issue as to necessary elements for his claim.
. . . .
[Henry] cannot establish a material fact issue as to causation. [Henry] just finished asserting claims against his former employer [TWC] for [d]isability [d]iscrimination and Workers' Compensation Act [v]iolations. The Northern District of Texas determined in the previous litigation (hereafter referred to as the "TWC case") that [Henry's] employment was terminated because he caused a severe, avoidable accident that seriously damaged three innocent people. The Northern District found that [Henry's] diabetic condition was not a consideration in TWC's decision to terminate [Henry's] employment. Moreover, the Northern District determined that [Henry] could not show that the accident's avoidable and severe nature was a pretext for terminating his employment based on his diabetic condition.
. . . .
The [trial court] should grant summary judgment against Plaintiff in this case because . . . the reason for [Henry's] termination has not changed, and thus [Notzon was] not the cause of [Henry's] damages.
In the body of the motion, Notzon argued the trial court "should grant [his] motion for summary judgment because [Notzon's] alleged breach did not cause [Henry's] damages." Notzon then stated, "[Henry] is collaterally estopped from asserting that the reason for termination was not the severity and avoidable nature of the May 29, 2015 accident[,]" "[t]he issue of causation has already been litigated and the doctrine of collateral estoppel applies[,]" and "[Henry] is thus precluded from re-litigating causation[.]" Notzon then listed the elements of collateral estoppel and argued, (1) "The cause of [Henry's] termination from TWC was actually litigated in the TWC case[,]" (2) "was essential to the Northern District granting summary judgment for TWC," and (3) Henry, "the party against whom the doctrine is asserted, was a party to the TWC case." In his response to Notzon's motion, Henry disputed the first two arguments but not the third. The trial court granted Notzon's motion based solely on collateral estoppel but did not otherwise explain the basis for its ruling.
2. Parties' Positions on Appeal
In his first issue on appeal, Henry argues the trial court erred in granting summary judgment on the affirmative defense of collateral estoppel. Notzon disputes this and argues the trial court properly granted traditional summary judgment "based on the affirmative defense of collateral estoppel, thereby negating the essential element of causation of damages in Henry's claim for breach of fiduciary duty."
3. Trial Court Erred in Granting Summary Judgment
As we explain further below, we conclude the trial court erred in granting Notzon's traditional summary judgment based on collateral estoppel because, based on the record before us, Notzon failed to conclusively prove the facts sought to be litigated in this action were fully and fairly litigated in Henry's federal lawsuit against TWC and were essential to the federal court's judgment. See Trapnell, 890 S.W.2d at 801 (collateral estoppel elements); Martinez, 941 S.W.2d at 911 (explaining that in a traditional summary judgment based on an affirmative defense, movant must conclusively establish all elements of the defense).
Concluding that collateral estoppel applies here, as Notzon argues, and as the dissent concludes, fundamentally misinterprets at least three things: (1) the nature of "ultimate issues" for collateral estoppel purposes, (2) the federal district court's analysis, and (3) the nature of causation itself. We discuss each topic below.
First, as Tarter states, the term "ultimate issue" does not refer to a cause of action or a claim but instead refers to "those factual determinations submitted to a jury that are necessary to form the basis of a judgment." 744 S.W.2d at 928. Here, the parties did not litigate, and the federal court did not consider or conclude, the same ultimate issues Henry seeks to establish in this case-whether Notzon breached a fiduciary duty to Henry that injured Henry or benefited Notzon, and if so, the remedies available to him as a result of the breach. Instead, as exhibits A and M reflect, the federal court decided that: (1) Henry's proof consisted of circumstantial, not direct, evidence and did not create a reasonable inference that his disability was a factor in TWC's decision to terminate him, and (2) Henry did not create a reasonable inference he would not have been terminated but for his decision to file for workers' compensation. Thus, the two "ultimate issues" regarding
See, e.g., Comm. on Pattern Jury Charges, State Bar of Tex., Texas Pattern Jury Charges: Business, Consumer, Insurance, Employment PJC 104.1-.5 (2020) (questions and instructions regarding breach of fiduciary duty which reflect that in some cases, the fiduciary bears the burden, and in others, the burden is on the beneficiary). We need not, and do not, comment upon the proper questions and instructions that should be given here.
See, e.g., Comm. on Pattern Jury Charges, State Bar of Tex., Texas Pattern Jury Charges: Business, Consumer, Insurance, Employment PJC 115.15-.18 (2020) (remedies for breach of fiduciary duty (comment) and questions on profit disgorgement, fee forfeiture, actual damages). Again, we need not, and do not, comment upon the proper questions and instructions should be given in this or any other specific case.
Exhibit A is the federal district court's order granting summary judgment to TWC; exhibit M is the Fifth Circuit's opinion affirming that order.
Henry's termination that the federal district court decided, and the Fifth Circuit affirmed, were that, as a matter of law, (1) Henry did not prove TWC fired Henry because of his diabetes, and (2) TWC did not discharge Henry because he filed a workers' compensation claim in good faith, hired a lawyer to represent him in a workers' compensation claim, instituted or caused to be instituted a workers' compensation claim in good faith, or testified or was about to testify in a workers' compensation proceeding. To conclude the same ultimate issues in Henry's prior employment lawsuit and in this case are the same, one must pretend that in each case, the jury would be asked, "Why did TWC terminate Henry?" followed by a blank space for the jury to fill in. As the cited PJCs reflect, that is not how it works.
See Pattern Jury Instructions of the Dist. Judges Ass'n of the Fifth Circuit, Civil Cases ¶ 11.8 (2020), https://www.lb5.uscourts.gov/viewer/?/juryinstructions/fifth/2020civil.pdf (last visited July 14, 2023) (listing, as the primary pattern jury question, "Has Plaintiff [name] proved that Defendant [name] [specify adverse employment action] Plaintiff [name] because of [his/her] [[having a record of] [specify disability]] [[being regarded as having] [specify impairment]]?" In other words, considering that Henry's claim was based upon an actual disability (and thus not record-of, or regarded-as, disability), the ultimate issue that would have been posed to the jury on Henry's termination-related disability discrimination claim was this: "Has Plaintiff Henry proved that Defendant TWC fired Plaintiff Henry because of his diabetes?"
See Comm. on Pattern Jury Charges, State Bar of Tex., Texas Pattern Jury Charges: Business, Consumer, Insurance, Employment PJC 107.5 (2020) (question and instruction on retaliation for seeking workers' compensation benefits).
Second, concluding that collateral estoppel applies here fundamentally misinterprets the federal court's analysis. In analyzing Henry's ADAAA claim against TWC, the federal court employed the well-known McDonnell Douglas Corporation v. Green framework, a heuristic that assists courts in analyzing efforts to summarily dismiss certain discrimination cases that are based on circumstantial proof. As a part of that framework, if the employee has previously demonstrated a prima facie case of discrimination or retaliation, the employer must proffer a legitimate, non-discriminatory reason to justify adverse action against an employee. In doing so, the employer, like TWC, does not carry a burden of proof. It must only make its evidentiary proffer to dispel the presumption created by an employee's prima facie showing. See, e.g., Reeves v. Sanderson Plumbing Prod., Inc., 530 U.S. 133, 142-43 (2000) (stating that Reeves's establishment of prima facie case of discrimination shifted to his employer burden to "produc[e] evidence that the plaintiff was rejected, or someone else was preferred, for a legitimate, nondiscriminatory reason[,]" but that "[t]his burden is one of production, not persuasion [and] can involve no credibility assessment" and that "[t]he ultimate burden of persuading the trier of fact that the defendant intentionally discriminated against the plaintiff remains at all times with the plaintiff") (internal quotations omitted); see also Tex. Dep't of Cmty. Affairs v. Burdine, 450 U.S. 248, 256-58 (1981) ("[T]he defendant does not bear a formal burden of persuasion."). Furthermore, the McDonnell Douglas framework applies only at the summary judgment or directed verdict stage, not at trial, which makes Notzon's arguments even more tenuous as to both of the first two collateral estoppel elements. Put another way, the McDonnell Douglas framework is merely a three-tiered method of assessing circumstantial evidence of discrimination to determine whether a fact issue exists for purposes of summary judgment or directed verdict.
See 411 U.S. 792, 802-05 (1973).
See Walton v. Powell, 821 F.3d 1204, 1210 (10th Cir. 2016) (referring to McDonnell Douglas framework as a heuristic the trial court had used to guide its analysis on a particular claim); Stephen E. Sachs, Originalism: Standard and Procedure, 135 Harv. L. Rev. 777, 810 (2022) (noting "the Supreme Court didn't find the [McDonnell Douglas framework] squirreled away inside the Civil Rights Act of 1964" and referring to the McDonnell Douglas framework as one example of "[c]ourt-invented heuristics").
See Kanida v. Gulf Coast Med. Pers. LP, 363 F.3d 568, 575 (5th Cir. 2004) ("The McDonnell Douglas formula, however, is applicable only in a directed verdict or summary judgment situation," and "is not the proper vehicle for evaluating a case that has been fully tried on the merits.") (quoting Powell v. Rockwell Int'l Corp., 788279, 285 (5th Cir. 1986)).
Nevertheless, Notzon treats TWC's intermediate burden of production as if it were a burden of persuasion and resulted in a necessary finding that Henry's wreck was not only a cause, but the sole and only cause, of his termination when, in fact, such a determination was not made and was not essential to the ultimate issues of disability discrimination or workers' compensation retaliation-claims that do not require that discriminatory or retaliatory animus be the sole cause for a termination or other adverse event.
To prove the causation element in his disability discrimination claims against TWC, Henry needed only to show discrimination "actually play[ed] a role in [TWC's] decision making process and [had] a determinative influence on the outcome[,]" "not that discrimination was the sole cause for his termination." See Pinkerton v. Spellings, 529 F.3d 513, 519 (5th Cir. 2008); see also McNely v. Ocala Star-Banner Corp., 99 F.3d 1068, 1070 (11th Cir. 1996) (concluding a plaintiff suing for disability discrimination can recover for discrimination without showing his disability was the sole cause for the adverse employment action taken against him). To prove the causation element in his workers' compensation retaliation claims, Henry did not have to prove his termination was solely because of his protected activity under Chapter 451; instead, he needed only to show that his protected activity was "such that, without it, [TWC's] prohibited conduct would not have occurred when it did." Cont'l Coffee Prods. Co. v. Cazarez, 937 S.W.2d 444, 450 (Tex. 1996) (quoting Tex. Dep't of Hum. Servs. v. Hinds, 904 S.W.2d 629, 631 (Tex. 1995)). Hinds, which involved a government whistleblower claim, stated the protected activity "need not be the employer's sole motivation, but it must be such that without it, the discriminatory conduct would not have occurred when it did." 904 S.W.2d at 631.
Third, Notzon's position, and the trial court's and the dissent's apparent agreement with it, also misinterprets the nature of causation itself. Even if we were to agree the federal court decided, as a matter of ultimate fact, that TWC terminated Henry because of his wreck, such a finding would not be inconsistent with the ultimate fact to be decided here regarding the actual damages to Henry resulting from Notzon's alleged breach, as it is well-established that there can be more than one proximate cause for an event, and a finding of one cause does not necessarily preclude others. Thus, even if, as Notzon argues, the cause of Henry's termination from TWC was already decided, the trier of fact in this case could still find the termination resulted from other causes, such as Notzon's alleged breach.
See Del Lago Partners, Inc. v. Smith, 307 S.W.3d 762, 774 (Tex. 2010) ("There may be more than one proximate cause of an event."); Travis v. City of Mesquite, 830 S.W.2d 94, 98 (Tex. 1992) (stating, in an appeal of a negligence action, "There can be concurrent proximate causes of an accident. All persons whose negligent conduct contributes to the injury, proximately causing the injury, are liable.").
Even if the federal court concluded that Henry's wreck was the cause of his termination-a matter unsupported by this record-one important misstep in Notzon's logic is that he argues, in essence, that such a finding would mean that no other cause for termination could exist. This logical leap not only ignores our prior point that there may be more than one proximate cause of an event but is also somewhat similar to cases in which a party attempts to turn a would-be negative finding into an affirmative one. See, e.g. Phila. Indem. Ins. Co. v. White, 490 S.W.3d 468, 488 (Tex. 2016) ("Characterizing the jury's negative response to [a question regarding negligence] as an affirmative finding that [the party] did not cause the damage thus misinterprets the jury's finding.") (also discussing other cases); Tarter, 744 S.W.2d at 928 (rejecting movant's argument regarding implied negative finding when movant was not a party to the prior action and its conduct was not an issue in the prior trial). Such arguments misinterpret jury findings in cases where such findings have been made, and the misinterpretation is only heightened here, in the summary judgment context.
As one example of a similar conclusion in a case involving multiple claims regarding a termination of employment, see Leon v. N.Y.C. Dept. of Educ., 612 Fed.Appx. 632, 634-35 (2d Cir. 2015) (summary order) (on appeal of federal rule 12(b)(6) dismissal of a discriminatory firing claim, appellate court concluded claim was not barred by collateral estoppel despite a finding in an earlier administrative proceeding that the employer had just cause to fire the employee; court stated, "The [trial] court's error . . . stems from the faulty assumption that [the just cause finding] necessarily precludes the possibility of termination motivated by [the alleged unlawful animus]" alleged in the second proceeding).
Contrary to Notzon's argument and the trial court's and the dissent's apparent agreement with it, the federal district court did not decide, as an ultimate issue, any cause of Henry's termination at all. Instead, it simply established that Henry did not satisfy his summary judgment burden of proof under McDonnell Douglas. Cf. Grenwelge v. Shamrock Reconstructors, Inc., 705 S.W.2d 693, 694 (Tex. 1986) (holding jury's failure to find breach of contract meant the plaintiffs failed to carry their burden of proof, not that the defendant substantially performed the contract). Thus, based on the record before us, we conclude the trial court erred in granting summary judgment based on collateral estoppel because Notzon failed to conclusively establish that the facts Henry seeks to establish here were actually litigated and essential to the federal court's summary judgment ruling in Henry's federal lawsuit against TWC. See Trapnell, 890 S.W.2d at 801 (collateral estoppel elements); Martinez, 941 S.W.2d at 911 (summary judgment burden). Far from "fully and fairly litigated," the facts Henry seeks to establish here were never litigated in Henry's federal lawsuit against TWC and thus were not, and could not have been, essential to the federal court's judgment. See Getty Oil, 845 S.W.2d at 802 ("[C]ollateral estoppel only applies where the identical issue was litigated in the prior suit"); Tarter, 744 S.W.2d 928-29 ("The doctrine of collateral estoppel applies when relitigation could result in an inconsistent determination of the same ultimate issue; it does not bar litigation merely because the outcomes of two suits may appear to be inconsistent."); Farmland Partners, 2023 WL 4286017, at *10 (reversing summary judgment and remanding case for further proceedings when movant failed to establish collateral estoppel elements).
Additionally, precluding Henry from proceeding with his claim against Notzon does not serve the underlying purposes of the collateral estoppel doctrine, which "is designed to promote judicial efficiency, protect parties from multiple lawsuits, and prevent inconsistent judgments by precluding the relitigation of issues." In re USAA Gen. Indem. Co., 629 S.W.3d at 883 (quoting Trapnell, 890 S.W.2d at 801). Notzon has not been subjected to multiple lawsuits, and because the ultimate issues in Henry's prior case against TWC and this case are different, precluding him from proceeding with his case against Notzon does not prevent relitigation of issues or inconsistent judgments but instead simply deprives Henry of a possible remedy for a claimed breach of a lawyer's duty of loyalty to his client. See Farmland Partners, 2023 WL 4286017, at *10 (concluding collateral estoppel's underlying purposes were not served in that case).
Finally, even if we were to conclude Notzon met the traditional summary judgment burden because Henry requests TWC-employment-related damages from Notzon, summary judgment would still have been improper, at least as to Henry's claim for equitable relief, which does not require proof of causation. In Parker, the Texas Supreme Court stated:
[I]n Kinzbach evidence of causation was not necessary because the remedy sought was equitable forfeiture of an improper benefit received by the agent. 160 S.W.2d at 514. Likewise, in Burrow the remedy applied was equitable forfeiture of fees paid to attorneys who breached their fiduciary duties, not damages the clients suffered because of the attorneys' actions or omissions. Burrow, 997 S.W.2d at 239-40. In neither of those cases did we hold that a client need not prove that a breach of fiduciary duty caused actual damages if a client is claiming such damages. Plainly put, for the [nonmovant claimant] to have defeated a no-evidence motion for summary judgment as to a claim for actual damages, the [nonmovant claimant] must have provided evidence that [the movant defendant's] actions were causally related to the loss of its money. It did not do so. On the other hand, the [nonmovant claimant] was not required to show causation and actual damages as to any equitable remedies it sought.514 S.W.3d at 221 (emphasis added). Although Parker involved a no-evidence summary judgment context, its statement regarding a claimant's burden is plain, making it clear Henry is not required to show causation and actual damages as to any equitable relief he seeks.
See Kinzbach Tool Co. v. Corbett-Wallace Corp., 160 S.W.2d 509 (Tex. 1942).
See Burrow v. Arce, 997 S.W.2d 229 (Tex. 1999).
We sustain Henry's first issue. Under the circumstances, we do not reach Notzon's argument regarding Henry's alleged inability to seek fee forfeiture when he did not pay Notzon's fees and do not reach Henry's second issue regarding the trial court's discovery ruling, as such issues are not necessary to final disposition of the appeal. See Tex. R. App. P. 47.1 (stating we "must hand down a written opinion that is as brief as practicable but that addresses every issue raised and necessary to final disposition of the appeal"). Thus, we make no comment on, and reach no conclusion regarding, the merits of Henry's second issue, but we see no reason why the trial court could not reconsider the particular discovery dispute discussed therein upon remand. We also see no reason why Henry may not raise that issue again in the future, either upon remand or through any applicable appellate procedures, provided any necessary requirements are met.
On appeal, Notzon argues Henry is not entitled to equitable relief in the form of fee forfeiture because he did not personally pay Notzon's fees. Henry disputes this argument. We need not decide that question because it could not have formed the basis for the trial court's summary judgment, as Notzon did not include that as a ground for summary judgment and did not raise that argument in the trial court. See Tex. R. Civ. P. 166a(c) ("The motion for summary judgment shall state the specific grounds therefor" and "[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."); see also Nall v. Plunkett, 404 S.W.3d 552, 555 (Tex. 2013) (stating, "A trial court cannot grant summary judgment on grounds that were not presented" and "the court of appeals cannot 'read between the lines' or infer from the pleadings any grounds for granting the summary judgment other than those grounds expressly set forth before the trial court.") (citations omitted).
Henry's second issue is unnecessary to the disposition of the appeal both because our sustaining of his first issue requires reversal and remand and because the parties have at least implicitly suggested as much, through their rule 6.6 agreement. See Tex. R. App. P. 6.6.
In his second issue, Henry argues the trial court erred in denying Henry's motion to compel production of Notzon's file, "specifically all of the documents identified in Notzon's privilege log, the calendar used to refresh Notzon's recollection and in refusing to compel Notzon to answer all questions regarding his secret meetings with TWC."
III. Conclusion
We grant Henry's motion for rehearing, withdraw our prior opinion, vacate our December 22, 2022 judgment, and reverse and remand this case for further proceedings consistent with this opinion. /Ken Molberg/ KEN MOLBERG 200994f.p05 JUSTICE Pedersen, III, J., dissenting.
JUDGMENT
We WITHDRAW our opinion and VACATE our judgment of December 22, 2022. This is now the judgment of the Court.
In accordance with this Court's opinion of this date, the judgment of the trial court is REVERSED and this cause is REMANDED to the trial court for further proceedings consistent with this opinion.
It is ORDERED that appellant KENNETH HENRY recover his costs of this appeal from appellees MARC A. NOTZON AND LAW OFFICE OF MARC A. NOTZON, P.C.
DISSENTING OPINION ON REHEARING
BILL PEDERSEN, III JUSTICE.
Appellant Kenneth Henry sued appellees Marc A. Notzon and the Law Office of Marc A. Notzon, P.C. (together, Notzon) claiming a breach of fiduciary duty. Our original opinion in this case affirmed the trial court's judgment. On rehearing, the majority concludes that the trial court erroneously granted summary judgment in favor of Notzon on the ground of collateral estoppel and remands the case for further proceedings. I respectfully dissent.
Background
On May 29, 2015, Henry was driving a truck for his long-time employer, Time Warner Cable (TWC). As a Maintenance Technician, Henry was assigned a company truck to drive to commercial and residential locations to install and repair cable services. Henry ran a red light and hit another vehicle; Henry and the three people in the other vehicle were seriously injured, and both vehicles were totaled. That accident touched off a series of business and legal proceedings, culminating with this case now on appeal.
Henry's Termination
Well before the 2015 accident, TWC learned that Henry had been diagnosed with insulin-dependent diabetes mellitus. On the day of the accident, a co-worker raised a question about Henry's behavior, claiming Henry was acting "weird and combative." Concern was expressed about Henry's blood sugar, and a supervisor was notified. For part of the day, Henry rode in a truck with the supervisor. Eventually he "was put back in his company truck and told to go home." That was when the accident occurred. Henry's injuries included broken vertebrae.
Just days after the accident, Notzon undertook representation of both Henry and TWC in regard to the accident; Notzon had represented TWC for many years. Notzon called Henry, requesting a list of his medications. Henry took his medications to TWC, where he met with Notzon and a number of TWC employees. The group discussed Henry's diabetes, his medications, and the accident. Days after that meeting, according to Henry, an Accident Review Committee (ARC) conducted a review of the accident. Notzon and a number of TWC representatives attended the proceeding.
In the trial court's record, the acronym ARC is sometimes used to refer to the committee and sometimes used to refer to the committee's procedure for reviewing an accident.
Henry continued to be treated for his injuries. He filed a workers' compensation claim and was finally released to return to work on September 7, 2015. Shortly thereafter, according to TWC and Notzon, an ARC was held. (A TWC representative testified that these committees typically review an accident within seven days, but this one was delayed because of Henry's leave of absence.) Henry learned that Notzon had spoken with TWC representatives before and after that proceeding. Notzon contends he spoke with Henry then as well and advised him "to say very little to avoid criminal prosecution." Henry denies that Notzon spoke to him at all concerning the proceeding, and Henry denies attending the proceeding. Indeed, Henry questions whether a September ARC actually occurred. According to TWC, the ARC determined that Henry's accident had been avoidable.
On October 2, 2015, Henry's employment was terminated. TWC asserted that Henry was fired because he was responsible for a severe, avoidable accident.
The Ward Lawsuit
Both Henry and TWC were sued by the three people in the vehicle struck by Henry. Notzon represented both defendants throughout the suit, and he eventually negotiated settlements with all three plaintiffs. Documents indicate that Notzon's representation of Henry was paid for by ESIS, Inc., the entity that administered Henry's workers' compensation claim.
The lawsuit was styled Wanda Adaway and Anethra Ward, Individually and as Next Friend of Ladaysha Robinson, a Minor v. Time Warner Cable Texas, LLC and Kenneth Raynard Henry, and numbered DC-15-14690; it was filed in the same court as this suit, the 191st District Court of Dallas County.
Henry v. TWC
Henry sued TWC for wrongful termination in federal court. He claimed that TWC discriminated against him because of his disability, i.e., his diabetes. He also alleged that TWC fired him in retaliation for his filing a workers' compensation claim. In a summary judgment proceeding discussed in more detail below, the trial court concluded that Henry was unable to prove either of his claims because the summary judgment evidence established that TWC fired him for causing a severe, avoidable accident. Henry appealed the trial court's decision to the Fifth Circuit Court of Appeals; that court affirmed the judgment for TWC.
Henry v. Notzon
Henry filed this lawsuit against Notzon in August 2019. He contends that Notzon breached the fiduciary duty he owed Henry while representing him. Specifically, Henry charges that Notzon gave TWC information at the time of the September ARC that resulted in TWC's terminating Henry. Notzon did not disclose to Henry that he was meeting with TWC, and he refused to disclose anything he had told TWC about Henry. Henry complains further that Notzon has misrepresented facts surrounding his role in the termination, including the contention that there was an ARC on September 25, 2015, and that he warned Henry to say little to avoid criminal charges. Henry contends that Notzon was involved in the decision to fire Henry, to "orchestrate" the September ARC so that it would appear the accident was solely the fault of Henry, and to exculpate TWC for its own gross negligence in allowing Henry to drive. Henry pleaded that these violations of Notzon's duty caused TWC to terminate Henry's employment, and he alleges that he is entitled to recover not only a loss of employment-related benefits, but also actual and exemplary damages as a result.
Notzon filed a traditional motion for summary judgment, arguing that Henry was unable to prove that any breach of duty by Notzon was the cause of his termination and the damages that flowed from that termination. Notzon asserted that the cause of Henry's termination had been determined in the federal lawsuit: TWC fired him because he caused a severe, avoidable accident. Notzon argued that the doctrine of collateral estoppel, thus, barred relitigation of the causation issue. The trial court granted Notzon's motion.
As the case proceeded below, Henry pressed for discovery of a number of documents that Notzon contended were privileged based on his attorney-client relationship with TWC. The trial court denied Henry's motions to compel production of the documents.
Henry's appeal in this Court challenges the trial court's grant of summary judgment and its denial of his motions to compel.
Summary Judgment Based on Collateral Estoppel
The affirmative defense of collateral estoppel-sometimes called issue preclusion-bars the successive litigation of an issue of fact or of law that was actually litigated and resolved in a valid court determination essential to the prior judgment. Taylor v. Sturgell, 553 U.S. 880, 892 (2008). This defense is designed to "promote judicial efficiency, protect parties from multiple lawsuits, and prevent inconsistent judgments by precluding the relitigation of issues." Sysco Food Servs., Inc. v. Trapnell, 890 S.W.2d 796, 801 (Tex. 1994).
In his first appellate issue, Henry argued that the trial court erred by granting Notzon's motion for summary judgment based on collateral estoppel. The majority asserts that the federal courts did not actually litigate the issue of causation of Notzon's damages and that the issue of causation of those damages was not essential to their determinations. The majority goes on to conclude that application of collateral estoppel in this case "misinterprets both the federal district court's analysis and the nature of causation itself." I disagree and have attempted to set forth here a more thorough understanding of the proceedings leading to this appeal. Henry v. TWC: The First Motion for Summary Judgment
Although the parties initially briefed additional issues in the trial court, they have agreed that only the issue of collateral estoppel could support the trial court's summary judgment. The majority addresses this issue in its de novo review; it does not address any of Notzon's issues on rehearing. I agree that the Motion for Rehearing raises no new substantive issue.
Henry's federal court wrongful termination suit was predicated on two legal theories: discrimination based on his disability and retaliation for his filing a workers' compensation claim. TWC filed a motion for summary judgment seeking to show, inter alia, (1) that Henry could not prove either discrimination or retaliation, and (2) that the summary judgment evidence actually proved a different reason for Henry's termination, i.e., the fact that he had caused a severe, avoidable accident. The Honorable Judge David Godbey issued a memorandum opinion, granting TWC's motion. Henry v. Spectrum L.L.C., No. 3:18-CV-01086-N, 2019 WL 1254954, at *1 (N.D. Tex. March 19, 2019) (Henry I).
The court applied the burden-shifting test from McDonnell Douglas Corporation v. Green, 411 U.S. 792 (1973) in evaluating this claim. It concluded that even if all inferences were drawn in favor of Henry to conclude that he made a prima facie showing of discrimination, TWC had articulated a legitimate, nondiscriminatory reason to terminate Henry's employment, and Henry had failed to show that a reasonable jury could conclude that TWC's reasons for terminating Henry were mere pretext. Henry I, 2019 WL 1254954, at *3. Ultimately, the court concluded:
The majority appears to disparage this analysis as a "heuristic," citing a 10th Circuit case written by now-Justice Neil M. Gorsuch and a law review article titled Originalism: Standard and Procedure. The majority suggests that the Supreme Court's mandated analysis in McDonnell Douglas is merely a tool that assists courts in summarily dismissing discrimination cases based on circumstantial proof. I do not join this critique.
The opinion considered and rejected both of Henry's arguments concerning pretext: that TWC gave inconsistent explanations regarding his termination and that TWC departed from its disciplinary policy in terminating him. The court concluded that although Henry may have identified conflicting evidence about issues such as timing or personnel involved, there was no conflicting evidence about why he was fired. Id. And although Henry argued that company policy called for progressive punishment, the court pointed out that the policy provided that severity of an accident can accelerate punishment up to and including termination. Id.
In sum, Henry cannot show either direct or circumstantial evidence of disability discrimination. That the parties dispute whether Henry's diabetes was in fact the cause of the accident is irrelevant. Time Warner alleges that Henry's condition was never a factor in its decision, and Henry produces no evidence to create a reasonable inference that it was. The Court thus grants summary judgment to Time Warner as to Henry's ADA discrimination claim.Id.
The opinion goes on to assert that, if he was to survive summary judgment on his workers' compensation retaliation claim, "Henry must show that 'the employer's action would not have occurred when it did had the employee's protected conduct- filing a workers' compensation claim-not occurred.'" Id. (quoting Haggar Clothing Co. v. Hernandez, 164 S.W.3d 386, 388 (Tex. 2006)). But the court concluded: "In short, [Henry] has not given the Court any evidence suggesting that he would have been treated differently but for his decision to file for workers' compensation." Id. at *4.
Having concluded that TWC's stated reason for terminating Henry's employment was not a pretext and that Henry had provided no evidence that the termination would not have occurred when it did if he had not filed his workers' compensation claim, Judge Godbey granted TWC's summary judgment motion and dismissed Henry's suit for wrongful discharge. Id.
Henry appealed, and the Fifth Circuit affirmed. See Henry v. Spectrum, L.L.C., 793 Fed.Appx. 273, 274 (5th Cir. 2019) (per curiam) [Henry II]. As to Henry's claim for discharge based on his disability, the court stated:
To succeed, Henry needed to create a fact issue about Time Warner'[s motive in firing him. The company's safety policy explicitly allowed for immediate termination for severe accidents. The undisputed facts indicate that is what happened here.Id. at 276 (internal citation omitted). And when reviewing Henry's retaliation claim, the court agreed with the trial court that Henry failed to establish causation. It concluded that there was "nothing in the record" supporting a conclusion that Henry would have been treated differently but for his filing for workers' compensation. Id. at 277.
Thus, the Fifth Circuit affirmed that Henry was unable to establish that his termination was caused by discrimination or retaliation. Instead, the termination was caused by TWC's conclusion that Henry had caused a severe, avoidable accident.
Henry v. Notzon: The Second Summary Judgment Motion
In this lawsuit, Henry alleges a breach of Notzon's fiduciary duty, tied primarily to Notzon's undisclosed meetings and communications with TWC which, Henry contends, caused TWC to fire him. To prevail on a breach of fiduciary duty claim, a plaintiff must prove three elements: the existence of a fiduciary duty, a breach of the duty, and damages caused by the breach. Las Colinas Obstetrics-Gynecology-Infertility Ass'n, P.A. v. Villalba, 324 S.W.3d 634, 645 (Tex. App.- Dallas 2010, no pet.).
Notzon's traditional summary judgment motion raised the affirmative defense of collateral estoppel. He argued that the issue of causation of damages had been conclusively determined against Henry in the federal lawsuit. Judge Godbey's opinion, affirmed by the Fifth Circuit, determined that the actual (i.e., not pretextual) reason for Henry's termination was TWC's good faith belief that Henry had caused a severe, avoidable accident. Thus, Notzon argues, Henry is precluded in this lawsuit from arguing that it was Notzon's betrayal that caused the termination and damages that flowed from it. See, e.g., Johnson & Higgins of Tex., Inc. v. Kenneco Energy, Inc., 962 S.W.2d 507, 521 (Tex. 1998) ("If a cause of action in the second lawsuit involves an element already decided in the first lawsuit, that cause of action is barred.").
The trial court granted Notzon's motion, and Henry appeals that order. The application of collateral estoppel is a legal question that we review de novo. See In re J.A.C., No. 05-17-00768-CV, 2018 WL 2191604, at *3 (Tex. App.-Dallas May 14, 2018, no pet.) (mem. op.).
The Requirements of Collateral Estoppel
A party attempting to establish that a claim is barred by collateral estoppel must prove: (1) that the facts sought to be litigated in the second action were fully and fairly litigated in the first action; (2) that those facts were essential to the judgment in the first action; and (3) that the party against whom the doctrine is asserted was a party in the first action. See Trapnell, 890 S.W.2d at 801. In this case, it is undisputed that Henry was a party to his suit for wrongful discharge against TWC and that he is bound by its judgment; he challenges only the first two collateral estoppel requirements. The majority concludes that Notzon has failed to establish both of these essential elements of his affirmative defense. Again, I disagree.
(1) Relitigation of the same facts
Notzon's motion for summary judgment argued that the cause of Henry's termination from TWC was fully and fairly litigated in the TWC case. To determine whether facts were fully and fairly litigated in the first suit, we consider whether the parties were fully heard, whether the court supported its decision with a reasoned opinion, and whether the decision was subject to appeal or was in fact reviewed on appeal. Webb v. Diversegy, LLC, No. 05-17-01258-CV, 2019 WL 1146707, at *4 (Tex. App.-Dallas Mar. 13, 2019, pet. denied) (mem. op.).
A review of the summary judgment proceedings in federal court indicates that the parties were fully heard. TWC's summary judgment motion addressed both of Henry's claims. TWC established first that-even if Henry could establish a prima facie case of discrimination based on a disability-it had an articulable, non-discriminatory reason to terminate Henry's employment, namely Henry's causing a severe, avoidable accident. Henry responded to the motion, but he offered no evidence that the reason articulated by TWC was pretextual. Similarly, Henry was unable to offer any evidence that he would not have been terminated when he was if he had not filed a workers' compensation claim.
Judge Godbey addressed each of Henry's attempts to defeat TWC's motion, but he rejected the evidence offered by Henry as irrelevant or insubstantial. The opinion relies on the summary judgment record and settled law. Accordingly, I would conclude that the Henry I opinion is well reasoned. That conclusion is supported by the fact that the Fifth Circuit affirmed not only Judge Godbey's disposition of the case, but also his rationalization, stating:
To succeed, Henry needed to create a fact issue about Time Warner's motive in firing him. The company's safety policy explicitly allowed for immediate termination for severe accidents. The undisputed facts indicate that is what happened here.Henry II, 793 Fed.Appx. at 276.
The majority disputes that this case turns on facts litigated in the federal case. Henry has consistently argued that because Notzon's ethical breaches were hidden at the time of the federal proceeding, the breach of his fiduciary duty to Henry could not have been litigated then. But this argument appears to misunderstand the nature of collateral estoppel. To the extent Henry is focused on his tort claim for breach of fiduciary duty, the supreme court instructs that collateral estoppel does not operate to preclude claims; instead, it precludes relitigation of specific facts or issues. See Trapnell, 890 S.W.2d at 801. For that reason, collateral estoppel can apply in two cases based on different claims, so long as the issue determined in the first case appears in the second case as well. See Webb, 2019 WL 1146707, at *4 ("Collateral estoppel prevents relitigation of issues resolved in a prior suit, even if the issue recurs in the context of a different claim."). Here, Notzon contends that a specific factual issue-the cause of Henry's termination-has already been legally determined, and, therefore, its relitigation is precluded. Notzon's defense is not defeated because the cause of Henry's termination was determined in a lawsuit that urged different claims. The majority's argument on relitigation begins by echoing Henry's misunderstanding, stating: "The parties did not litigate, and the federal court did not consider or conclude, the facts Henry seeks to establish here-whether Notzon's alleged breach of a fiduciary duty to Henry injured Henry or benefited Notzon." Of course, Notzon's summary judgment argument acknowledges that Henry's fiduciary duty claim was not before the federal courts; nor did it need to be. The majority then proceeds to argue that the only matters actually litigated in federal court were that Henry failed to create a reasonable inference that (1) his disability was a factor in TWC's decision to terminate him, or that (2) he would not have been terminated but for his decision to file for workers' compensation benefits. I agree that Henry's burden in the federal proceeding was only to create such a reasonable inference as to the cause of his termination. And I agree further with the majority that TWC's burden was only to come forward with a non-discriminatory reason for the termination. But the record establishes that TWC did significantly more than meet its burden: it brought forward undisputed evidence that Henry was fired for a reason unconnected to his disability or his workers' compensation claim. According to the Fifth Circuit's opinion, TWC's proof established that "[t]he company's safety policy explicitly allowed for immediate termination for severe accidents. The undisputed facts indicate that is what happened here." Not only did Henry fail to carry his burden, TWC exceeded its burden. What was litigated in federal court is not defined by the parties' burdens, but by what the evidence and the law established.
I would conclude that the cause of Henry's termination was fully and fairly litigated in federal court. In that proceeding "the undisputed facts" established that he was fired by TWC because he caused the severe, avoidable accident that injured himself and others.
(2) Proof of causation was essential to the first judgment
To determine whether a finding is essential to the judgment, we look to the factual determinations that were necessary to form the basis of the first judgment. Tarter v. Metro. Sav. & Loan Ass'n, 744 S.W.2d 926, 928 (Tex. 1988). Henry's brief acknowledges that causation was an essential element of both bases of his wrongful discharge claim:
In the prior case, the essential elements Henry sought to prove under the Americans Disabilities Act were: (1) he has a disability or was
regarded as disabled; (2) he was qualified for the job; and (3) he was subject to an adverse employment decision because of his disability.Nall v. BNSF Ry. Co., 917 F.3d 335, 341 (5th Cir. 2019) (emphasis added).
With respect to the workers' compensation retaliation claim, Henry sought to prove: that (1) he, in good faith, filed a workers' compensation claim; (2) he suffered an adverse employment action; and (3) there is a causal link between the two, i.e., that the filing of the claim was a "determining factor" in his discharge.Continental Coffee Products Co. v. Cazares, 937 S.W.2d 444, 450 (Tex. 1996) (emphasis added).
Importantly, Henry has claimed the same injury in both lawsuits: termination of his employment. In addition, Henry has claimed the same damages flowing from that termination: past and future lost earnings and employee benefits; compensatory damages, including mental anguish and other nonpecuniary losses; and exemplary damages. In both lawsuits, thus, Henry was required to prove that the defendant's tortious conduct caused his termination and those damages. The question raised, then, is whether Henry can prove that Notzon's conduct caused TWC to fire Henry, because the federal courts have concluded that the cause of his termination was actually the severe, avoidable accident that he caused.
The single addition to Henry's demand in this action is the equitable remedy of fee forfeiture, which I address in the next section of this opinion.
The majority contends that only Henry's failure to raise a reasonable inference on the causation elements of his claims was essential to the federal court's determination of those claims against him. It notes that his discrimination and retaliation claims "do not require that discriminatory or retaliatory animus be the sole cause for a termination or other adverse event." This point appears to be a criticism of the federal courts' decisions, suggesting that those courts failed to consider the possibility that TWC's purported animus against Henry did not have to be the only cause of his termination; it could have been an additional cause of his termination. But Henry could not even identify a triable issue on his claims alleging animus. Far from being an additional cause of his termination, the courts determined that animus was no cause.
And so the majority proceeds to argue that:
Even if we were to agree the federal court decided, as a matter of ultimate fact, that TWC terminated Henry because of his wreck, such a finding would not be inconsistent with the ultimate fact to be decided here regarding the actual damages to Henry resulting from Notzon's alleged breach, as it is well-established that there can be more than one proximate cause for an event, and a finding of one cause does not necessarily preclude others.
Of course, the principle that there can be more than one proximate cause of an event, standing alone, is not sufficient to defeat a summary judgment motion based on causation: if it were, then a successful summary judgment negating causation would be simply impossible. We know that is not the case. See, e.g., Doe v. Boys Clubs of Greater Dall., Inc., 907 S.W.2d 472, 477 (Tex. 1995) (affirming summary judgment when defendant's conduct not cause in fact of injury); Lear Siegler, Inc. v. Perez, 819 S.W.2d 470 (Tex. 1991) (affirming summary judgment because evidence negated causation).
Well-settled summary judgment rules apply in causation cases as they do in all cases. The traditional-motion movant must establish its right to judgment as a matter of law based on evidence showing its conduct was not the cause of the plaintiff's injury. See Tex. R. Civ. P. 166a(c). The burden then shifts to the plaintiff to identify a genuine issue of material fact on that issue that would preclude summary judgment. See City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678 (Tex. 1979). "[A] lack of proximate cause may be established as a matter of law where the circumstances are such that reasonable minds cannot arrive at a different conclusion." First Assembly of God, Inc. v. Tex. Utils. Elec. Co., 52 S.W.3d 482, 493 (Tex. App.-Dallas 2001, no pet.) (citing Lear Siegler, 819 S.W.2d at 471-72).
In this case, Notzon's evidence established that the federal courts concluded that Henry was fired-in good faith and consistent with TWC policy-because he caused a severe, avoidable accident. If Henry's genuine issue of material fact was an additional proximate cause, then his burden below was to raise a fact issue on that additional cause that would defeat Notzon's collateral estoppel defense. See Haddock v. Gruber, No. 05-16-01113-CV, 2018 WL 1417453, at *11 (Tex. App.- Dallas Mar. 22, 2018, pet. denied) (mem. op.).
To evaluate whether Henry carried that burden, my reasoning would be similar to the Texas Supreme Court's reasoning in Lear Siegler v. Perez. In that case, a highway worker was pulling a sign with a flashing arrow to warn drivers of a sweeping operation ahead. The worker stopped his vehicle in the roadway.
Meanwhile, a driver approaching the sign had fallen asleep at the wheel. He struck the sign, which then struck the worker, who died of his injuries. 819 S.W.2d at 471. The worker's survivors sued Lear Siegler, the maker of the sign, alleging that the sign malfunctioned and caused the accident and the worker's injuries. Lear Siegler moved for summary judgment on the ground that causation was negated as a matter of law. Id. Early in its analysis, the court cited the proposition that Henry depends upon here: "There may be more than one proximate cause of an event." Id. However, the court concluded that-given the undisputed fact that the driver was asleep when he hit the sign-the question of whether the sign was or was not flashing at that time was too far removed from the driver's conduct to be a causative factor in the accident. Id. at 472.
In Henry's case, even if Notzon breached his duty by talking with TWC without informing Henry, such a breach could not have been the legal cause of the termination. Henry no longer challenges that the accident was severe and avoidable. Nor does he challenge that TWC's safety policy specifically allowed for termination of employment for causing such an accident. The Fifth Circuit concluded that TWC followed that policy in good faith when Henry was fired.
In essence, then, Henry's argument in this lawsuit would have to be that Notzon improperly advised TWC to follow its own policy. I would conclude that even if Notzon did advise TWC to fire Henry, a reasonable person could not conclude that the advice was an additional, independent cause of the termination that could support damages for Henry. Just as the sleeping driver's conduct was the necessary and direct link that caused the injuries in Lear Siegler, Henry's conduct was the necessary and direct causative link to application of the policy and his termination.
An attorney owes a fiduciary duty of loyalty to his client throughout the course of the representation. Gillis v. Provost & Umphrey Law Firm, LLP, No. 05-13-00892-CV, 2015 WL 170240, at *10 (Tex. App.-Dallas Jan. 14, 2015, no pet.). The existence of a joint representation does not somehow diminish that duty. But this is not a case in which we are charged with adjudging the sufficiency of a jury's findings concerning an attorney's violation of his duties. We can only determine the issue before us: whether the trial court erred in granting Notzon's motion for summary judgment on the ground that Henry is collaterally estopped from proving that Notzon's alleged breach was the cause of his termination.
Henry contends that collateral estoppel cannot apply because Notzon's duties and responsibilities to Henry were never decided in any fashion in the federal suit. In effect, Henry argues that because his attorney's disloyal conduct-the breach element of Henry's breach of fiduciary duty claim-was not an element of his prior claims against TWC, the factual issues litigated in the wrongful termination case can have no preclusive effect in this case. As discussed above, the claims in two lawsuits need not be identical for collateral estoppel to apply. See Webb, 2019 WL 1146707, at *4. It follows necessarily that all of the essential elements of the claims urged in the two actions need not be identical. It is sufficient to invoke the doctrine of collateral estoppel if one essential element, proven in the first action, is also necessary to the second. See State & Cnty. Mut. Fire Ins. Co. v. Miller, 52 S.W.3d 693, 696 (Tex. 2001) ("The issue decided in the prior action must be identical to the issue in the pending action."). If Henry's argument directed at proof of the element of breach is a challenge to the sufficiency of Notzon's summary judgment motion, I would reject it as well. A defendant may prevail on summary judgment if he establishes as a matter of law that the plaintiff-movant cannot establish one element of his cause of action. See Wilbert Fam. LP v. Dall. Area Rapid Transit, 371 S.W.3d 506, 510 (Tex. App.-Dallas 2012, pet. dism'd). Texas law does not require the defendant to disprove every element of the plaintiff's claim.
Causation is an essential element in a client's claim seeking actual damages as a remedy for breach of fiduciary duty. Rogers v. Zanetti, 517 S.W.3d 123, 136 (Tex. App.-Dallas 2015), aff'd, 518 S.W.3d 394 (Tex. 2017). It was also an essential element in Henry's wrongful termination claims. See Nall, 917 F.3d at 341; Cont'l Coffee Prods. Co., 937 S.W.2d at 450. And the injury allegedly caused in both cases is identical. Accordingly, I would conclude that the trial court appropriately applied the doctrine of collateral estoppel in this case. The Equitable Exception for Proof of Causation
Henry contends-and the majority agrees-that even if he cannot prove causation, his claim should survive. They rely upon the case of First United Pentecostal Church of Beaumont v. Parker, 514 S.W.3d 214 (Tex. 2017). In that case, the church alleged that one of its lawyers, Mr. Parker, had breached his fiduciary duty to inform the church when he learned that another lawyer had stolen over a million dollars of the church's money that was being held in the law firm's trust account. Id. at 217-18. The court of appeals had affirmed the trial court's summary judgment in favor of Parker, concluding that Parker's conduct had not caused the church's loss. Id. at 219. In the supreme court, the church argued-as Henry does here-that it did not have to prove causation in a breach of fiduciary case. Id. at 220. The supreme court reviewed its earlier decisions in Kinzbach Tool Co. v. Corbett-Wallace Corp., 160 S.W.2d 509, 514 (1942), in which a disloyal agent was forced to return his "secret commission," and Burrow v. Arce, 997 S.W.2d 229, 240 (Tex. 1999), in which attorneys who breached fiduciary duties to their clients were forced to return their fees to those clients. Parker, 514 S.W.3d at 220- 21. Then the supreme court delivered this succinct statement of the rule concerning when proof of causation is and is not required in a breach of fiduciary duty case:
In neither of those cases did we hold that a client need not prove that a breach of fiduciary duty caused actual damages if a client is claiming such damages. Plainly put, for the church to have defeated a no-evidence motion for summary judgment as to a claim for actual damages, the church must have provided evidence that Parker's actions were causally related to the loss of its money. It did not do so. On the other hand, the church was not required to show causation and actual damages as to any equitable remedies it sought.Id. at 221.
It is not entirely clear what Henry hopes to recover at this point in his lawsuit. As discussed above, he pleaded entitlement to actual and exemplary damages. At one point in his appellate brief, Henry states that he "only seeks equity," and he did request fee forfeiture in this case. But in his reply brief, Henry reasserted that he "is entitled to equity, compensatory damages, and potentially exemplary damages." Most recently, in his motion for rehearing, Henry addresses fee forfeiture but then ends his discussion with the equivocal assertion: "Moreover, Henry has other forms of damages that are recoverable as well as an equitable remedy."
Based upon the Parker rule quoted above, I would clarify that Henry is not entitled to actual damages if he has failed to prove that Notzon's conduct caused such damages. See id. Moreover, Texas law forbids recovery of exemplary damages in the absence of an award of actual damages. Tex. Civ. Prac. & Rem. Code Ann. § 41.004(a). The majority does not appear to quarrel with these conclusions.
In addition, the Parker rule allows a client to force his unfaithful lawyer to forfeit his fees, even in the absence of proof of causation. 514 S.W.3d at 221. The majority cites this rule, but then it stops its discussion without reaching the rule's necessary corollary: Texas law does not allow disgorgement of amounts not paid by the client. Liberty Mut. Ins. Co. v. Gardere & Wynne, L.L.P., 82 Fed.Appx. 116, 118 (5th Cir. 2003). It is undisputed that Henry did not pay Notzon's fees; TWC's workers' compensation administrator paid them. Henry asserted in his original briefing, without citation, that "whether Henry paid fees is irrelevant. His lawyer deceived him." That statement is simply contrary to Texas law.
The majority explains its refusal to address this corollary by saying that Notzon did not make it a ground of his summary judgment motion. The motion was based on Henry's inability to prove that Notzon caused him damages by breaching his fiduciary duty. In his response to the motion, Henry argued that he did not need to prove causation to recover fees paid to Notzon. In his reply, Notzon pointed out the reason that the Parker rule did not suffice to avoid summary judgment in Henry's case, i.e., Henry had not paid Notzon's fees. This fact was addressed at length in the summary judgment hearing. The majority contends that the Parker rule allows for remand even if Henry cannot prove causation. I would conclude that the exception to that rule means that Henry can have no recovery on remand, and I would conclude that this issue was clearly argued and before the trial court at summary judgment.
*** I would conclude that the trial court did not err by granting summary judgment in Notzon's favor, and I would overrule Henry's first issue.
I would conclude that-although the materials sought by Henry through his motions to compel may be relevant to the breach element of his breach of fiduciary duty claim-the summary judgment on causation would render his discovery issue moot. The majority does not reach this second issue either.
Conclusion
I would affirm the trial court's judgment. Because the majority does not, I respectfully dissent.