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discussing meaning of "based on" or "in response to" under DTPA and concluding that because pleadings did not complain about content, substance, or communicative nature of court filings and discovery requests, but instead about their existence, claims were not based on or in response to exercise of right to petition
Summary of this case from Walker v. LunenbergOpinion
NO. 03-22-00254-CV
08-24-2023
Kirsten HANNA, Upside Up Properties, LLC, and Upside Up Ventures, Inc., Appellants v. M. Matthew WILLIAMS; David Howell; Law firm of M. Matthew Williams; Leighton, Williams, Adkinson, & Brown, PLLC; and Leighton, Michaux, Adkinson, & Brown, PLLC, Appellees
Natalie Tarnosky, Elizabeth Brabb, Michael B. Johnson, Austin, for Appellees Howell, David, Williams, M. Matthew, Law Firm of M. Matthew Williams. Lance Kassab, Kevin Dubose, Houston, Nicholas Pierce, David Eric Kassab, Houston, for Appellants. Michael B. Johnson, Austin, Natalie Tarnosky, Heidi J. Gumienny, Houston, Jared L. Byrd, Austin, for Appellees Leighton, Michaux, Adkinson, & Brown, PLLC, Leighton, Williams, Adkinson, & Brown, PLLC.
FROM THE 53RD DISTRICT COURT OF TRAVIS COUNTY, NO. D-1-GN-21-000957, THE HONORABLE KARIN CRUMP, JUDGE PRESIDING Natalie Tarnosky, Elizabeth Brabb, Michael B. Johnson, Austin, for Appellees Howell, David, Williams, M. Matthew, Law Firm of M. Matthew Williams.
Lance Kassab, Kevin Dubose, Houston, Nicholas Pierce, David Eric Kassab, Houston, for Appellants.
Michael B. Johnson, Austin, Natalie Tarnosky, Heidi J. Gumienny, Houston, Jared L. Byrd, Austin, for Appellees Leighton, Michaux, Adkinson, & Brown, PLLC, Leighton, Williams, Adkinson, & Brown, PLLC.
Before Chief Justice Byrne, Justices Baker and Kelly
ON MOTION FOR REHEARING
OPINION
Thomas J. Baker, Justice
We withdraw our previous opinion and judgment issued on December 7, 2022, and substitute the following opinion and judgment in their place.
Appellants Kirsten Hanna, Upside Properties, LLC, and Upside Up Ventures, Inc. (collectively Hanna), appeal from the trial court’s (1) two orders dismissing under the Texas Citizens Participation Act (TCPA) appellants’ professional-negligence and related claims against their former attorneys and (2) order denying appellants’ application for attorney’s fees. Appellees are M. Matthew Williams, David Howell, and the Law Firm of M. Matthew Williams (collectively the Williams Parties) and Leighton, Williams, Adkinson, & Brown, PLLC and Leighton, Michaux, Adkinson, & Brown, PLLC (collectively the Leighton Parties). For the following reasons, we will affirm the trial court’s order denying Hanna’s application for attorney’s fees, reverse the trial court’s orders granting appellees’ TCPA motions and dismissing appellants’ claims, and remand this cause for further proceedings.
BACKGROUND
In 2014, Kirsten Hanna formed Upside Up Properties, LLC and Upside Up Ventures, Inc., with the intent to "flip houses." Later that year she purchased a residential property in Austin, retained the services of professionals and subcontractors to renovate the home, and in early 2016 sold the renovated home to two buyers. About nine months later, the homebuyers sent a Texas Deceptive Trade Practices Act (DTPA) demand letter to Hanna alleging that she had made material misrepresentations about the property, which allegedly had serious defects, including that the older sections of the home had begun to separate and split from the newly constructed portions.
Hanna sought legal counsel to respond to the demand letter and in early 2017 hired Williams and his firm at the time, appellee Leighton, Williams, Adkinson, & Brown, PLLC (LWAB), to represent her interests. Hanna alleges that she informed Williams and LWAB that a "drawn-out lawsuit with exorbitant fees was not feasible and that she was looking for the most cost-effective way to be removed from any potential lawsuit." She informed Williams that she had provided the homebuyers with a seller’s disclosure, the homebuyers had had the ability and opportunity to conduct inspections of the property before purchase, and the homebuyers had purchased the property "as is" pursuant to the standardized resale contract promulgated by the Texas Real Estate Commission.
.The firm is now named Leighton, Michaux. Adkinson, & Brown, PLLC (LMAB).
About July 2017, Williams left LWAB and started his own firm, the Law Firm of M. Matthew Williams, PLLC (Williams Firm). Hanna alleges that although Williams and his former and new firms had the "ethical obligation to provide [her] with sufficient notice and information regarding Williams’[s] departure from LWAB for her to make an informed decision as to who would represent her moving forward," none of them provided her "any material information regarding [Williams’s] departure from LWAB." Instead, she alleges, Williams merely told Hanna that he had "started [his] own law firm" and did not ask Hanna to execute a contract with him or his new firm, although LWAB executed an assignment of the case to Williams.
Appellee David Howell is employed by the Williams Firm.
In November 2017, the homebuyers filed a lawsuit (the Homebuyers’ Lawsuit) against Hanna, alleging violations of the DTPA, fraud, and breach of express and implied warranties. Williams continued to represent Hanna in the Homebuyers' Lawsuit, which ensued for more than three years and culminated in April 2020 when Hanna settled the lawsuit on Williams’s advice. Hanna alleges that throughout the litigation, she "consistently expressed dismay about the costs of litigation and sought answers from Williams about having the lawsuit summarily dismissed." More than once she "instructed Williams" to "go to the judge" and ask him to "throw this lawsuit out" because of the seller’s disclosure and "as is" contract. Hanna alleges that on "numerous occasions" Williams represented to her that he would file a motion for summary judgment to have the case dismissed and that he had begun drafting such motion. Instead, Hanna alleges, Williams billed her for "years of costly and unnecessary work," including encouraging her to retain an expert at a cost of more than $15,000. Over the course of the "years of unnecessary litigation," Williams "milked Hanna for approximately $120,000 in attorney’s fees and expenses." Instead of the "simple" solution of following her instructions and filing a motion for summary judgment, as Williams had represented he would do, Hanna alleges that the defendants "put their interests ahead of’ hers by "churning fees on a case that was ripe for dismissal from the outset and could have been easily dismissed by way of a traditional motion for summary judgment," which they failed to file.
In March 2021, Hanna filed a lawsuit against the Williams Parties for negligence, gross negligence, breach of fiduciary duty, and DTPA violations and against the Leighton Parties for negligence and gross negligence. She supported her negligence and gross-negligence claims (raised against both the Williams Parties and the Leighton Parties) by alleging that appellees failed to (a) protect her interests and properly and diligently represent her, (b) obtain her informed consent before transferring the case to the Williams Parties, (c) follow her instructions, (d) file a motion for summary judgment, (e) communicate with her, and (f) render proper legal advice to her. To support her claims for breach of fiduciary duty (raised against only the Williams Parties), Hanna alleged that the Williams Parties put their interests ahead of hers by refusing to follow her instructions to file a motion, for summary judgment and by charging her excessive legal fees for unnecessary work. To support her DTPA claims against the Williams Parties, Hanna alleged that the Williams Parties "made express representations by informing [her] on numerous occasions that they would follow [her] instructions and file a motion for summary judgment in the underlying case when [the Williams Parties] knew that was not true" and that they "represented to [her] that they were draft- ing a motion for summary judgment … which was also untrue," These false representations and failures, she alleges, were made to "further their own interests" and bill her for unnecessary work and increase their billings, which proximately caused her damages in the amount of "attorney’s fees, costs, and settlement" that she "would have avoided paying … had [appellees] properly represented [her] interests and filed a motion for summary judgment at the earliest possible juncture." Hanna identifies the following "unnecessary work" the Williams Parties performed, which caused her damages: filing an answer with a full set of discovery, compelling mediation, adding eleven third-party defendants, and conducting discovery on those defendants.
After answering the lawsuit and asserting counterclaims, the Williams Parties and the Leighton Parties filed TCPA motions to dismiss. Both the Williams Parties and the Leighton Parties argued in their respective motions that the TCPA applied because Hanna’s suit arises "directly from the exercise of the right to petition asserted for the Hanna Plaintiffs by each of the Defendants." The trial court granted appellees’ respective motions, dismissed all of Hanna's claims against appellees, and ordered Hanna to pay attorney’s fees of $20,000 each to the Leighton Parties and the Williams Parties.
In their answer, the Williams Parties filed counterclaims against Hanna for quantum meruit and breach of contract, seeking reimbursement of the alleged discounts or "written-off fees" they had provided to Hanna, citing a provision in the engagement agreement between Hanna and LWAB.
The trial court also sustained most of the Leighton Parties’ objections to Hanna’s Declaration, which she attached to her response to appellees' motions to dismiss, and Hanna does not challenge those rulings on appeal.
Thereafter, the trial court—without stating its reasons—granted Hanna's motion for summary judgment on the Williams Parties’ counterclaims, in which she argued that the counterclaims had no merit because the Williams Parties were not parties to the engagement agreement between her and LWAB, that there was no proper assignment of that agreement to the Williams Parties, and that—in any event—the provision on which the Williams Parties relied was unconscionable and thus void. The trial court’s summary-judgment order dismissed the counterclaims; determined that "in accordance with" Section 38.001 of the Civil Practice and Remedies Code, Hanna was "entitled to reasonable and necessary attorney’s fees incurred in defending the counterclaims"; and ordered Hanna to file a motion for attorney’s fees supported by billing records within seven days "should [she] seek reasonable and necessary attorney’s fees as ordered above." Hanna timely filed an application for attorney’s fees, in which she argued that she was entitled to attorney’s fees under both Section 38.001 and the parties’ engagement agreement. The Williams Parties filed a response opposing Hanna’s application for attorney's fees. After a hearing on the issue, the trial court signed an order denying Hanna’s request for attorney’s fees, rendering that order a final judgment disposing of all issues and parties. Hanna perfected this appeal of the two orders granting appellees' respective TCPA motions and of the order denying her application for attorney’s fees.
DISCUSSION
In four issues, Hanna contends that the trial court abused its discretion by (1) granting appellees’ TCPA motions, (2) refusing to award her reasonable attorney’s fees because appellees’ TCPA motions were frivolous or brought solely to delay, (3) awarding appellees attorney’s fees, and (4) failing to award her attorney’s fees for successfully defending the Williams Parties’ breach-of-contract counterclaims.
Whether the trial court erred in granting appellees’ TCPA motions
The TCPA is designed to protect a defendant’s rights of speech, petition, and association and a claimant’s right to pursue valid legal claims for injuries caused by the defendant, Montelongo v. Abrea, 622 S.W.3d 290, 295 (Tex. 2021), and the legislature has instructed that the act shall be "construed liberally to effectuate its purpose and intent fully," Tex. Civ. Prac. & Rem. Code § 27.011(b). In furthering its purpose, the TCPA establishes a three-step, burden-shifting process to evaluate whether a legal action should be dismissed for improper infringement of protected rights. See Montelongo, 622 S.W.3d at 295-96.
[1] First, a party seeking dismissal bears the burden of showing by a preponderance of the evidence that the non-movant’s legal action is based on or is in response to a party’s exercise of the right of free speech, right to petition, or right of association. Tex. Civ. Prac. & Rem. Code §§ 27.003(a), .005(b); Montelongo, 622 S.W.3d at 296. As relevant to this case, the "exercise of the right to petition" includes "a communication in or pertaining to … a judicial proceeding," Tex. Civ. Prac. & Rem. Code § 27.001(4)(A), and a "communication" is "the making or submitting of a statement or document in any form or medium," id. § 27.001(1). If the movant meets that burden, the trial court must dismiss the action unless the non-movant establishes by clear and specific evidence a prima facie case for each element of its claim. Id. § 27.005(b), (c); In re Lipsky, 460 S.W.3d 579, 586 (Tex. 2015). The factual allegations in a plaintiff's petition may alone be sufficient to establish a prima facie case. See Serafine v. Blunt, 466 S.W.3d 352, 360 (Tex. App.—Austin 2015, no pet.). Finally, even if the non-movant satisfies its burden of establishing a prima facie case, the court "shall dismiss a legal action against the moving party if the moving party establishes by a preponderance of the evidence each essential element of a valid defense to the nonmovant’s claim." Tex. Civ. Prac. & Rem. Code § 27.005(d).
[2-4] In determining whether the TCPA applies and whether to dismiss the case, the trial court considers "the pleadings and supporting and opposing affidavits stating the facts on which the liability or defense is based." Id. § 27.006(a); In re Lipsky, 460 S.W.3d at 587. We review de novo whether a movant met their burden of showing the TCPA’s applicability. See Serafine, 466 S.W.3d at 357. Additionally, a non-movant can avoid the burden-shifting requirements by showing that one of the TCPA’s several exemptions applies. Molina Healthcare, Inc. v. State ex rel. Thurmond, No. 03-20-00077-CV, 2020 WL 7233609, at *2 (Tex. App.—Austin Dec. 9, 2020, pet. denied) (mem. op.) (citing State ex rel. Best v. Harper, 562 S.W.3d 1, 11 (Tex. 2018)). A non-movant has the burden to prove that a statutory exemption from application of the TCPA applies, Martin v. Walker, 606 S.W.3d 565, 569 (Tex. App.—Waco 2020, pet. denied), and we review de novo a trial court’s determination regarding the applicability of a TCPA exemption, Grant v. Pivot Tech. Sols., Ltd., 556 S.W.3d 865, 873 (Tex. App.—Austin 2018, pet. denied).
Hanna contends that appellees failed to meet their burden to demonstrate by a preponderance of the evidence that her lawsuit is "based on or is in response to" their exercise of the right to petition. See Tex. Civ. Prac. & Rem. Code §§ 27.005(b), 27.001(1), (4)(A). She first argues that appellees failed to identify any specific "communications" they made in or pertaining to a judicial proceeding and thus, by definition, appellees were not exercising their right to petition. See Wendt v. Weinman & Assocs., P.C., 595 S.W.3d 926, 930 (Tex. App.—Austin 2020, no pet.) ("Although the TCPA’s definition of the right to petition is ‘expansive,’ …. the burden nonetheless remains on the movant to identify the communication made by the movant that supports application of the TCPA." (citation omitted)). Secondly, Hanna contends that her claims are "not based on communications by [appellees], but are quite literally based on [their] failure to communicate and failure to act," which cannot constitute the exercise of the right to petition.
We recognize that in recent amendments to the TCPA, the legislature has expressly excluded from the TCPA "a legal malpractice claim brought by a client or former client." See Act of May 19, 2023, 88th Leg., R.S., H.B. 527 § 1 (to be codified as an amendment to Tex. Civ. Prac. & Rem. Code § 27.010(a)). Although such amendment does not become effective until September 1, 2023, see id., and therefore does not apply to this case, we note that the amendment bolsters our holding, see Rehabilitation Facility at Austin, Inc. v. Cooper, 962 S.W.2d 151, (Tex. App.—Austin 1998, no pet.) (noting that subsequent amendments may serve to "clarif[y] the legislature’s original intent in enacting the statute").
[5] We agree with Hanna on this latter point and conclude that, to the extent her claims are based on or in response to appellees’ failures to communicate or act, such failures do not implicate the TCPA. See Locke Lord LLP v. Retractable Techs., Inc., No. 05-20-00884-CV, 2021 WL 1540652, at *2-3 (Tex. App.—Dallas Apr. 20, 2021, no pet.) (mem. op.) (holding that client’s claim that law firm "failed to communicate conflicts of interest" or "failed to present witnesses" was not subject to TCPA because it did not allege any "communications"); White Nile Software, Inc. v. Carrington, Coleman, Sloman & Blumenthal, LLP, No. 05-19-00780-CV, 2020 WL 5104966, at *6 (Tex. App.—Dallas Aug. 31, 2020, pet. denied) (mem. op.) (holding that attorneys’ alleged failure to communicate on behalf of client was not "communication" under TCPA); Krasnicki v. Tactical Entm’t, LLC, 583 S.W.3d 279, 283-84 (Tex. App.—Dallas 2019, pet. denied) (holding that silence and withholding of statement or document is not "communication" under TCPA); Smith v. Crestview NuV, LLC, 565 S.W.3d 793, 798 (Tex. App.—Fort Worth 2018, pet. denied) (holding that TCPA definition of "communication" does not include non-communications or mere actions and rejecting contention that defendant’s actions taken in aid of another’s violation of Texas Securities Act "necessarily" involved communications, in absence of allegations of specific communications); see also Szymonek v. Guzman, 641 S.W.3d 553, (Tex. App.—Austin 2022, pet. denied) (recognizing that plaintiff's claims against attorney that were based on failure to file court documents did not implicate "communications" for TCPA purposes). In summary, to the extent that Hanna’s claims are based on or in response to appellees’ alleged failures—to diligently and properly represent her, obtain her consent to transfer her case to Williams’s new firm, communicate with her, draft and file a motion for summary judgment, and follow her instructions—the TCPA does not apply.
As to Hanna’s first argument, however, we conclude that appellees sufficiently identified in their respective motions the specific "communications" they contended implicated the TCPA because the motions incorporated by reference particular paragraphs of Hanna’s petition in which she alleged specific communications that appel- lees had allegedly made "in or pertaining to" the Homebuyers’ Lawsuit. See Tex. Civ. Prac. & Rem. Code § 27.001(1), (4)(A). Those alleged communications fall into two categories: (1) statements appellees made directly to Hanna, including about the drafting and filing of a motion for summary judgment, the retention of an expert witness, and settling the case (communications "pertaining to" a judicial proceeding); and (2) statements appellees made in the form of court filings and discovery requests (communications "in" a judicial proceeding). We thus consider whether, as to each category, Hanna’s claims against appellees were "based on or in response to" such communications, viewing Hanna’s pleadings in the light most favorable to her and favoring the conclusion that her claims "are not predicated on protected expression." See Sloat v. Rathbun, 513 S.W.3d 500, 504 (Tex. App.—Austin 2015, pet. dism'd).
[6] It is clear from Hanna’s petition that, as to the first category of alleged communications, her claims against appellees are both based on and in response to those communications, which appellees made directly to her and which pertained to the Homebuyers’ Lawsuit. In each of the sections of her petition asserting a cause of action—negligence, gross negligence, breach of fiduciary duty, and DTPA violations—Hanna contends that appellees’ false or negligent statements to her about the litigation caused her harm by increasing the litigation’s cost and length. Thus, her claims directly rest on the first category of communications.
However, viewing the pleadings in Hanna’s favor, we cannot conclude that her causes of action are "based on or in response to" the second category of alleged communications—the court filings and discovery requests. Those communications, themselves, cannot fairly be considered a factual predicate or impetus for Hanna’s claims. See Ernst & Young, LLP v. Ryan, LLC, No. 01-21-00603-CV, 2023 WL 4239350, at *8 (Tex. App.—Houston [1st Dist.] June 29, 2023, no pet. h.) (mem. op.) (concluding that "primary communication" on which tortious-interference cause of action rested was solicitation of business, not separate communication included in petition that was only tangentially related and on which unchallenged cause of action for misappropriation of trade secrets rested); Herczeg v. 5005 SSR, LLC, No. 03-19-00760-CV, 2021 WL 3868749, at *3 (Tex. App.—Austin Aug. 31, 2021, pet. denied) (mem. op.) (acknowledging that in determining whether TCPA movant met its initial burden, "[t]he movant’s activities ‘that are not a factual predicate’ for the nonmovant’s claims ‘are simply not pertinent to the inquiry’ " (quoting Sloat, 513 S.W.3d at 504)). Although those communications might operate as evidence of some of the alleged "unnecessary work," they are not, themselves, actionable according to the complaints Hanna has lodged against appellees.
[7] Hanna’s claims are not "based on" those communications because the communications are not a "main ingredient" or a "fundamental part" of Hanna’s causes of action; instead, her causes rest on the alleged performance of unnecessary or substandard work and the overbilling therefor, as well as on the alleged misrepresentations causing her to incur such expenses, not to mention alleged omissions and failures to communicate and act. See Ernst & Young, LLP, 2023 WL 4239350, at *8 (determining that "based on," for TCPA purposes, "denotes a legal action that has the relevant TCPA-protected activity ‘as a main ingredient' or ‘fundamental part’ of the challenged legal action" and that "in response to" "denotes some sort of answer or other act in return"). In other words, to the extent that Hanna is complaining about appellees’ court filings and discovery requests, she complains not about their content, substance, or communicative nature but merely about their existence and the time and expense involved therewith.
[8] We also cannot reasonably conclude that Hanna’s claims are "in answer to" (i.e., "in response to") appellees’ court filings and discovery requests. See id. (noting that "the tightening of the statutory language [in the 2019 amendments] forecloses appellants’ invocation of the TCPA" and that although deleted phrase "relates to" might encompass communications upon which challenged cause of action does not rest, the phrases "based on" and "in response to" are "not so sweeping"); Apache Corp. v. Apollo Expl., LLC, No. 11-21-00295-CV, 2023 WL 3511262, at *4-5 (Tex, App.—Eastland May 18, 2023, no pet.) (mem. op.) (determining that extensive references in plaintiff's pleading to press release "merely point to evidence in support of [plaintiff's] fraudulent transfer claim" but that "press release itself is not a part of the claim"); see also Clinical Pathology Labs., Inc. v. Polo, 632 S.W.3d 35, 46 (Tex. App.—El Paso 2020, pet. denied) (concluding that employer’s decision to terminate employee and its termination of him were "at the core of this lawsuit, as distinct from the several discussions and letters surrounding that decision" and that lawsuit was thus not factually predicated on TCPA communications). Hanna’s lawsuit was not filed in response to the court filings and discovery requests appellees made on her behalf but, rather, in response to appellees' alleged material misrepresentations to her, rendering of substandard legal advice, and performance of and billing for unnecessary work (including the court filings).
As one of our sister courts has observed, "almost every lawsuit at its core is based on some decision, followed by conduct, that is bracketed by communications in one form or another by or between the parties," but nonetheless there is a distinction between communications used as evidence to support a claim and claims that are based on or in response to (i.e., factually predicated upon) those communications. Polo, 632 S.W.3d at 45 (citing In re Intelli-Centrics, Inc., No. 02-18-00280-CV, 2018 WL 5289379, at *4 (Tex. App.—Fort Worth Oct. 25, 2018, orig. proceeding) (mem. op.)); cf. Winstead PC v. USA Lending Grp., Inc., 664 S.W.3d 384, 391-93 (Tex. App.—Tyler 2021) (mem. op.) (concluding that where basis of malpractice lawsuit was attorney’s filing of "defective" motion for default judgment that omitted crucial request for damages, TCPA applied because lawsuit was "based on" or "in response to" such communication), rev’d an other grounds, 669 S.W.3d 195 (Tex. 2023). Because Hanna's negligence, gross-negligence, breach-of-fiduciary-duty, and DTPA claims do not rest on the Williams Parties’ court filings and discovery requests, we hold that appellees did not meet their burden of proof as to those particular alleged communications.
Having determined that the TCPA applies to some of the alleged communications at issue, we would typically proceed to the next step in reviewing the trial court’s ruling on appellees' TCPA motions: whether Hanna established a prima facie case. However, because we find it dispositive, we proceed next to considering whether Hanna established that the commercial-speech exemption applies. See Tex. Civ. Prac. & Rem. Code § 27.010(a)(2); Tex. R. App. P. 47.1.
Whether the commercial-speech exemption applies
The commercial-speech exemption expressly provides that the TCPA does not apply to "a legal action brought against a person primarily engaged in the business of selling or leasing goods or services if the statement or conduct arises out of the sale or lease of goods, services, … or a commercial transaction in which the intended audience is an actual or potential buyer or customer." Tex. Civ. Prac. & Rem. Code § 27.010(a)(2). The Texas Supreme Court has construed the exemption to apply when:
(1) the defendant was primarily engaged in the business of selling or leasing goods [or services],
(2) the defendant made the statement or engaged in the conduct on which the claim is based in the defendant’s capacity as a seller or lessor of those goods or services,
(3) the statement or conduct at issue arose out of a commercial transaction involving the kind of goods or services the defendant provides, and
(4) the intended audience of the statement or conduct were actual or potential customers of the defendant for the kind of goods or services the defendant provides.
Castleman v. Internet Money Ltd., 546 S.W.3d 684, 688 (Tex. 2018).
[9-11] "The burden to establish the commercial-speech exemption is on the party relying on it." Grant, 556 S.W.3d at 887. We consider the pleadings and record evidence to determine whether a party has met its burden on the exemption’s elements. See Rose v. Scientific Mach. & Welding, Inc., No. 03-18-00721-CV, 2019 WL 2588512, at *4 (Tex. App.—Austin June 25, 2019, no pet.) (mem. op.). Factual allegations in a plaintiff's petition alone may be sufficient to meet the exemption’s elements. See id.; see also Dickens v. Jason C. Webster, P.C., No. 05-17-00423-CV, 2018 WL 6839568, at *6 (Tex. App.—Dallas Dec. 31, 2018, no pet.) (mem. op.) (analyzing plaintiff's allegations in petition to determine what statements or conduct were at issue and concluding that plaintiff failed to show that defendant’s alleged statements or conduct satisfied elements of commercial-speech exemption). Appellees concede that the first element is met (i.e., they were primarily engaged in the business of selling legal services at the relevant time). Thus, we consider whether Hanna established each of the other elements.
Regarding the second through fourth elements, we are guided by our opinion in Molina Healthcare. See 2020 WL 7233609, at *3-4. In that case, Molina contracted with the Texas Health and Human Services Commission (HHSC) to provide a defined set of health-care and long-term services to eligible members of STAR + PLUS, a Texas Medicaid program. Id. at *1. Molina’s contract with HHSC also required it to perform assessments of individuals seeking to establish eligibility for services and perform annual reassessments of those individuals. Id. Thurmond, a former Molina employee, filed a qui tam action on behalf of the State alleging, among other things, that Molina had failed to perform or fraudulently performed the required assessments. Id. Molina filed a TCPA motion, which the trial court denied, and this Court reviewed such ruling. Id. at *2.
[12] In its analysis of the second element, this Court in Molina identified the statements at issue and on which Thurmond’s claims were based—the allegedly false reports that Molina made to HHSC regarding whether members qualified for the Medicaid program—and concluded that the statements were made as part of Molina’s contract and thus "in its capacity" as a seller of health-care related services. See id. at *3 (citing Novosad v. LSG Vod- ka LLC, No. 03-18-00804-CV, 2020 WL 4726599, at *6 (Tex. App.—Austin July 31, 2020, no pet.) (mem. op.) (holding that defendant met second Castleman element because he engaged in challenged conduct at direction of person who engaged his services)). Similarly here, the statements at issue on which Hanna's claims are based and that fall under the TCPA—appellees’ alleged misrepresentations about their drafting and impending filing of a summary-judgment motion and negligent advice to Hanna about retaining an expert witness and settling the case—were made by appellees pursuant to her engagement of them to represent her and thus in their capacity as sellers of legal services. See id.; Novosad, 2020 WL 4726599, at *6. We thus conclude that Hanna established the second Castleman element. See Molina, 2020 WL 7233609, at *3; Novosad, 2020 WL 4726599, at *6; see also Gaskamp v. WSP USA, Inc., 596 S.W.3d 457, 481 (Tex. App.—Houston [1st Dist.] 2020, pet. dism’d) (concluding that because defendants’ challenged conduct of sending advertising brochures to plaintiff's clients occurred in context of furthering their employer’s business and securing sales, it met second Castleman requirement).
[13] As for the related third element, and in line with our analysis in Molina, we agree with Hanna that she also established through her allegations that appellees’ statements arose out of a commercial transaction involving the kind of services that appellees provide (i.e., legal services). See Molina, 2020 WL 7233609, at *3. In Molina, we rejected the appellants’ suggestion that the third Castleman element was not satisfied because the statements at issue were not made in the context of a "proposed commercial transaction." Id. In doing so, we explained, "there is nothing in the text of the exemption or in the Castleman elements that limits the exemption’s applicability only to speech or conduct intended to secure future transactions." Id. Like the claims made against Molina, which were based on Molina’s provision of health-care related services—specifically the making of eligibility determinations and the filing of corresponding reports— appellees’ challenged TCPA statements in this case arose out of a commercial transaction involving the very kind of services that appellees regularly provide in their profession. Thus, Hanna established the third element of the commercial-speech exemption.
[14] Finally, we conclude that Hanna established the fourth Castleman element because she was the intended audience of appellees’ allegedly false and negligent statements by virtue of her being both an actual customer (i.e., client) of theirs and the direct recipient of the communications, and the record establishes that she paid appellees for the at-issue legal services. See Molina, 2020 WL 7233609, at *4 (noting that "customer" for commercial-speech exemption means someone who buys goods or services and holding that HHSC was among intended audience of reports prepared pursuant to Molina’s contract with HHSC); Novosad, 2020 WL 4726599, at *6 (holding that movant was "undisputedly an ‘actual customer’ " and was among intended audience of plaintiff's website-related activities because it had hired plaintiff to perform activities). Because Hanna established all four Castleman elements, her claims are exempt from the TCPA, and the trial court erred in granting appellees’ respective TCPA motions and in awarding appellees attorney’s fees. See Tex. Civ. Prac. & Rem. Code § 27.009(a)(1) (providing that if legal action is dismissed under TCPA, court "shall award to the moving party court costs and reasonable attorney’s fees incurred in defending against the legal action"); Noble Anesthesia Partners, PLLC v. U.S. Anesthesia Partners, Inc., No. 05-18-00768-CV, 2019 WL 3212137, at *4 (Tex. App.—Dallas July 9, 2019, pet. denied) (mem. op.) (reversing award of attorney's fees under Section 27.009(a) when holding that TCPA motion was improperly granted). We sustain Hanna’s first and third Issues and remand this case for further proceedings.
Having determined that the commercial-speech exemption applies, we need not address Hanna’s assertion that another TCPA exemption applies (for actions brought under the DTPA), see Tex. Civ. Prac. & Rem. Code § 27.010(a)(7); Tex. R. App. P. 47.1.
Due to our disposition, we do not reach Hanna’s second issue, in which she contends that the trial court abused its discretion in failing to award her attorney's fees because appellees’ TCPA motions were frivolous or solely intended to delay. The record docs not reflect that Hanna sought such relief or requested findings front the trial court and, in any event, the trial court should be given the opportunity to consider such issue in the first instance. See Tex. Civ. Prac. & Rem. Code § 27.009(b); Noble Anesthesia Partners, PLLC v. U.S. Anesthesia Partners, Inc., No. 05-18-00768-CV, 2019 WL 3212137, at *5 (Tex. App.—Dallas July 9, 2019, pet. denied) (mem. op.) (after reversing trial court's improper grant of TCPA motions, remanding issue of whether TCPA motions were frivolous or solely intended to delay because trial court did not have opportunity to consider such issue in first instance).
Whether Hanna was entitled to attorney's fees because she "prevailed" on her counterclaims
[15] In her final issue, Hanna argues that the trial court abused its discretion in failing to award her attorney’s fees with respect to the Williams Parties’ breach-of-contract counterclaims because she was the "prevailing party" on those claims and the parties’ engagement agreement entitled her to reasonable fees therefor. She cites the following provisions in the engagement agreement:
Should either party pursue action to enforce any of the provisions hereof, or to recover damages for the breach of this legal services contract, the non-prevailing party in any final judgment agrees to pay the other party all reasonable costs, charges, and expenses, including attorney’s fees, expended or incurred in connection therewith. [The attorney’s-fees provision] In case of any billing dispute or fee dispute, you agree that we will be entitled to full reimbursement of all sums that have been previously "no charged" or discounted or written off, and for any accrued but uncharged interest. [The fee-dispute provision]
The trial court’s order denying Hanna attorney’s fees recites, "The Court … is of the opinion that … Plaintiffs are not entitled to recovery of attorney’s fees from the [Williams Parties] on a contractual basis based upon the doctrine of judicial estoppel." The Williams Parties had argued in their response opposing Hanna’s request for attorney’s fees that Hanna was judicially estopped from obtaining attorney’s fees under the attorney’s-fees provision because she had taken the position that the Williams Parties were not parties to the agreement (only LWAB was) and the agreement had not been properly as- signed to them. Thus, they argued, Hanna could not benefit from the attorney’s-fee provision (i.e., by enforcing it against the Williams Parties) while simultaneously benefiting from the opposite position that the Williams Parties were not parties to the agreement and had no standing to enforce it (i.e., by prevailing on her summary-judgment motion).
The trial court’s order also recited that Hanna was not entitled to attorney's fees under Chapter 38 of the Texas Civil Practice and Remedies Code, see Tex. Civ. Prac. & Rem. Code § 38.001, in contrast to its earlier order granting Hanna’s summary-judgment motion and determining that she was entitled to fees under that chapter, but Hanna does not challenge the trial court's denial of fees under that chapter.
While it does not appear in the clerk's record, the Williams Parties represent that in her verified answer to the counterclaim, Hanna averred that the Williams Parties "are not parties" to the agreement, that neither Upside Properties nor Upside Up Ventures were parties to it either, and that the Williams Parties could not enforce any purported "assignment" of the agreement to them. Hanna made the same arguments in her motion for summary judgment.
[16] While appearing to concede that those two positions are at odds, Hanna contends that judicial estoppel is inapplicable here because it "does not apply to contradictory positions taken in the same proceeding." See Pleasant Glade Assembly of God v. Schubert, 264 S.W.3d 1, 8 (Tex. 2008). Hanna correctly recites the context in which the doctrine of judicial estoppel ordinarily applies—in two different proceedings, not within the same one, see id.; Toll Dallas TX, LLC v. Dusing, No. 03-18-00099-CV, 2019 WL 2127885, at *8 (Tex. App.—Austin May 16, 2019, no pet.) (mem. op.)—but we conclude that the trial court nonetheless did not abuse its discretion in refusing to award her attorney’s fees because of its determination that the Williams Parties were not parties to the agreement and were not proper assignees of it.
[17] The trial court had previously granted Hanna’s motion for summary judgment. Among the grounds that Hanna asserted in that motion were that the Williams Parties were not parties to the engagement agreement and had not obtained a proper assignment thereof. Although the trial court's order granting Hanna summary judgment did not state the basis of its ruling, its later ruling on Hanna’s application for attorney’s fees—declaring that she was judicially estopped from obtaining attorney's fees under the agreement—effectively clarified that the court had determined there was merit to Hanna’s arguments about the Williams Parties not being parties to or assignees of the agreement. Hanna was entitled to summary judgment on this ground, as it is blackletter contract law that, absent exceptions not applicable here, only parties to an agreement may enforce it, and they may enforce it only against other parties to the agreement. See South Tex. Water Auth. v. Lomas, 223 S.W.3d 304, 306 (Tex. 2007); In re Merrill Lynch Trust Co. FSB, 235 S.W.3d 185, 194 & n.42 (Tex. 2007); see also Texas Workers’ Comp. Comm'n v. Patient Advocates, 136 S.W.3d 643, 648 (Tex. 2004) (noting that when trial court does not state basis on which it granted summary judgment, appellate court must affirm if any of movant’s theories has merit). Because the Williams Parties were not parties—either directly or through assignment—to the engagement agreement, there was no enforceable agreement between them and Hanna and, thus, she could not enforce the attorney’s-fees provision—or any provision of the agreement— against the Williams Parties. The trial court did not err in denying Hanna’s request for attorney’s fees as to the Williams Parties’ counterclaims, and we accordingly overrule her fourth issue.
The remaining ground Hanna asserted was that the fee-dispute provision, which the Williams Parties sought to enforce by way of their counterclaims, was unconscionable because it allegedly violates the Disciplinary Rules of Professional Conduct, rendering the provision void and unenforceable. However, the case she cited in support of that argument, Hoover Slovacek LLP v. Walton, 206 S.W.3d 557, 562 (Tex. 2006), turned on distinguishable facts involving a contingency-fee contract, does not stand for the proposition that any purported violation of the Disciplinary Rules equates with unconscionability, and specified that whether a fee agreement is unconscionable is a question of law. See id. We do not believe that the fee-dispute provision violates the two Rules she contends it violates, see Tex. Disc. R. Prof’l Cond. 1.04(a) (prohibiting attorneys from charging unconscionable-fees), 1.08(g) (prohibiting agreements limiting attorneys' liability to a client unless permitted by law and client is independently represented in making agreement), and thus she was not entitled to summary judgment on her asserted ground that the fee-dispute provision is unconscionable, see Pony Exp. Courier Corp. v. Morris, 921 S.W.2d 817, 821 (Tex. App.—San Antonio 1996, no writ) (noting that although unconscionability must be determined on case-by-case basis, it generally describes "a contract that is unfair because of its overall one-sidedness or the gross one-sidedness of one of its terms").
CONCLUSION
We affirm the trial court’s order denying Hanna’s application for attorney’s fees as to the Williams Parties’ counterclaims. We reverse the trial court’s two orders granting the respective TCPA motions of the Williams Parties and the Leighton Parties and the awards therein to those parties of attorney’s fees and remand this case for further proceedings in accordance with this opinion.