Ford Motor Company v. Stewart, Cox, and Hatcher, P.C. and Turner & Associates, P.A. , 56 Tex. Sup. Ct. J. 240 ( 2013 )

IN THE SUPREME COURT OF TEXAS
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NO . 11-0818
444444444444
FORD MOTOR COMPANY, ET AL.,
PETITIONERS,
v.
STEWART, COX, AND HATCHER, P.C. AND
TURNER & ASSOCIATES, P.A.,
RESPONDENTS
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ON PETITION FOR REVIEW FROM THE
COURT OF APPEALS FOR THE NINTH DISTRICT OF TEXAS
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PER CURIAM
This appeal arises from a dispute over the trial court’s sua sponte appointment of a guardian
ad litem and subsequent fee award to the guardian ad litem in connection with a personal injury
settlement between a minor-plaintiff and Ford Motor Company. Because the trial court should have
removed the guardian ad litem after it became clear that the next friend did not have interests adverse
to the minor, the guardian ad litem’s services were no longer necessary under Rule 173 of the Texas
Rules of Civil Procedure. Therefore, the trial court abused its discretion when it awarded the
guardian ad litem compensation for the rendition of unnecessary, non-compensable services.
Accordingly, we reverse the court of appeals’ judgment in part, and remand the case to the trial court
for further proceedings consistent with this opinion.
In 1999, I.F. was severely injured after being ejected from a minivan during a one-car
rollover accident. I.F.’s father was killed in the accident. Theresa Richardson, I.F.’s mother, was
not involved in the accident.1 Richardson, as I.F.’s next friend, sued Ford and Bridgestone/Firestone
North American Tire, L.L.C. in district court in Orange County. A district judge sitting in
Montgomery County was assigned as the pretrial judge for this case and other similar cases.2 See
TEX . R. JUD . ADMIN . 11 (providing for the assignment of a pretrial judge in cases that involve
material questions of fact and law in common with another case pending in another court in another
county). In 2003, Firestone and I.F. reached a settlement and presented the proposed settlement to
the regular judge for approval. Upon approving the Firestone settlement, the regular judge found
that no guardian ad litem appointment was necessary because there was no conflict of interest
between Richardson and I.F. In late 2009, Ford reached a settlement with I.F. That settlement was
jointly presented to the pretrial judge for approval. Acting on his own initiative, the pretrial judge
appointed attorney John Milutin to represent I.F.’s interest in the settlement under Texas Rule of
Civil Procedure 173. See TEX . R. CIV . P. 173.3(a) (providing that the trial court “may appoint a
guardian ad litem on the motion of any party or on its own initiative”).
Richardson, as next friend of I.F., initially challenged Milutin’s appointment by filing an
“Agreed Motion to Reconsider Appointment of Guardian Ad Litem,” which included Richardson’s
1
Richardson was divorced from I.F.’s father at the time of the accident and was neither an heir nor a
representative of his estate.
2
The trial court judge sitting in Orange County, where the case was originally filed and remained pending, is
hereinafter referred to as the “regular judge.” See T EX . R. J UD . A D M IN . 11.2(b).
2
affidavit in opposition to that appointment.3 In the affidavit, Richardson testified that her interests
were not adverse to I.F.’s because she made no claims in the lawsuit and had no financial interest
in the settlement. Milutin responded to Richardson’s motion by stating, in sum, that he had
“inadequate information upon which to determine and advise the Court whether [Richardson] has
an interest adverse to [I.F.]” due to the plaintiff’s failure to provide him with information that he had
requested regarding the settlement. The pretrial judge denied Richardson’s motion to reconsider.
Richardson, as next friend of I.F., then unsuccessfully sought mandamus relief from the order
appointing Milutin as guardian ad litem. In re Richardson, No. 09-10-0032-CV, 2010 Tex. App.
LEXIS 1758, at *1 (Tex. App.—Beaumont Mar. 11, 2010, orig. proceeding) (mem. op.).
Ultimately, the pretrial judge rendered a judgment that (1) approved the Ford settlement, (2)
“reapproved” the 2003 Firestone settlement, subject to a reduction of attorney’s fees from the forty
percent previously approved in the Firestone Settlement to one-third, and (3) ordered Ford to pay
$40,000.00 to Milutin in guardian ad litem fees and expenses. A divided court of appeals affirmed
the pretrial judge’s appointment of Milutin as guardian ad litem, finding that Richardson’s obligation
to pay her daughter’s medical expenses coupled with her desire to pay the medical bills with
proceeds from the settlement constituted the conflict necessitating the appointment of Milutin as
3
The court of appeals stated that Ford “joined” Richardson’s motion to reconsider. 350 S.W .3d 369, 377. Ford
states in this Court, however, that it neither joined nor agreed to that motion, but simply told Richardson that it would
not oppose it.
3
guardian ad litem. 350 S.W.3d 369, 377–78. The court of appeals also affirmed the ad litem fee
award.4 Id. at 381.
Ford argues that the trial court abused its discretion under Texas Rule of Civil Procedure 173
by appointing a guardian ad litem when there was no apparent conflict of interest between I.F. and
Richardson. Ford also complains of the amount of the guardian ad litem’s fee award and the taxing
of the entire award against Ford.
We initially note that Ford preserved its issues surrounding the guardian ad litem fee award.
Richardson and Ford initially filed a joint motion requesting that the pretrial judge approve Ford’s
proposed settlement, in which both parties notified the pretrial judge that a guardian ad litem
appointment was unwarranted in this case. When Richardson challenged the guardian ad litem
appointment by mandamus review, Ford filed a letter in that proceeding, averring that the
appointment was “neither appropriate nor permitted.” 2010 Tex. App. LEXIS 1758, at *8. More
importantly, Ford objected to the fees at the settlement prove-up hearing, and the trial court overruled
Ford’s objections. See TEX . R. APP . P. 33.1(a); see also Jocson v. Crabb, 133 S.W.3d 268, 270 (Tex.
2004) (per curiam) (“The final fee hearing is an appropriate forum to assert any objections to the fee
request and obtain a ruling.”).
4
The court of appeals dealt with two separate appeals in this case. I.F.’s attorneys also appealed the trial court’s
reduction of their fees associated with the 2003 Firestone settlement. 350 S.W .3d at 373. The court of appeals reversed
the pretrial judge’s order on that issue, holding that the pretrial judge abused his discretion by disregarding the regular
judge’s 2003 order that approved the Firestone settlement and the attorney’s fees and expenses paid to I.F.’s attorneys
from that settlement. Id. at 381. Richardson, as I.F.’s next friend, petitioned this Court for review as to that portion of
the court of appeals’ judgment, but we deny her petition. Thus, we address only the guardian ad litem issue presented
by Ford’s petition.
4
Texas Rule of Civil Procedure 173 governs the procedure for appointing and compensating
a guardian ad litem. See TEX . R. CIV . P. 173. The trial court must appoint a guardian ad litem
pursuant to Rule 173 when there appears to be a conflict of interest between the minor and next
friend. TEX . R. CIV . P. 173.2. Once appointed, the guardian ad litem has a limited role in the
litigation and may be compensated only for certain types of activities. Ford Motor Co. v. Garcia,
363 S.W.3d 573, 579 (Tex. 2012). “The context of the appointment and duties assigned to the ad
litem determine the nature of the appointment and the duties of the ad litem.” Id. at 577. The
guardian ad litem’s initial role is to “determine and advise the court whether a party’s next friend
. . . has an interest adverse to the party.” TEX . R. CIV . P. 173.4(b). The trial court should remove the
guardian ad litem when the evidence presented fails to confirm that a conflict of interest exists. Cf.
Brownsville-Valley Reg’l Med. Ctr. v. Gamez, 894 S.W.2d 753, 755 (Tex. 1995) (“When the conflict
of interest no longer exists, the trial court should remove the guardian ad litem.”). Rule 173
authorizes the trial court to award an ad litem a reasonable fee for necessary services performed.
TEX . R. CIV . P. 173.6. The trial court has no discretion to award a guardian ad litem compensation
for services rendered after it has become clear that no conflict of interest exists, because such
services would no longer be necessary under Rule 173. See Garcia, 363 S.W.3d at 582 (“Only those
tasks directly and materially bearing on the conflict of interest between [the guardian] and [the ward]
regarding division of the settlement were necessary.”). We review the amount a guardian ad litem
is awarded as compensation for an abuse of discretion, which occurs when the trial court rules (1)
arbitrarily, unreasonably, or without regard to guiding legal principles, or (2) without supporting
evidence. Id. at 578.
5
In this case, Milutin was not specifically assigned any duties by the pretrial judge. The
context of his appointment, however, indicates that Milutin was appointed for the limited purpose
of determining and advising the pretrial judge as to whether there was a conflict of interest between
I.F. and Richardson, and if so, whether the Ford settlement was in I.F.’s best interest. As to the
initial conflict-of-interest determination, Richardson testified in her affidavit that she was not
involved in the accident, she was not asserting any claims in this lawsuit on her own behalf, she was
not an heir or representative of the estate of I.F.’s father, she had no financial interest in that estate’s
recovery, and she understood and agreed that she had no right to the proceeds of any settlement of
the litigation. In Milutin’s response, he primarily took issue with the regular judge’s prior approval
of the Firestone settlement in 2003 and the amount of attorney’s fees awarded pursuant to the
contingency fee agreement in that settlement. However, those issues have no bearing on the
guardian ad litem’s initial role in determining whether Richardson’s interests were adverse to I.F.’s
in the context of the Ford settlement. See TEX . R. CIV . P. 173 cmt. 3. Therefore, the pretrial judge
should have removed Milutin after considering Richardson’s affidavit, the circumstances
surrounding Richardson’s representation of I.F., and Milutin’s response because there was no
evidence that Richardson had an interest adverse to I.F. The court of appeals erred when it held
otherwise. See 350 S.W.3d at 377–78 (concluding that Richardson’s obligation as a parent to pay
I.F’s medical expenses presented a conflict of interest that required the appointment of a guardian
ad litem under Rule 173). We hold that a parent’s obligation to provide her child with medical care,
standing alone, does not create a conflict of interest within the confines of Rule 173.
6
Because the pretrial judge should have removed Milutin at the time he considered
Richardson’s motion to reconsider and Milutin’s response, we hold that any services rendered by
Milutin after that time were not necessary and thus not compensable under Rule 173. See TEX . R.
CIV . P. 173.6(a) (providing that a guardian ad litem may be compensated for necessary services
performed). Therefore, the pretrial judge abused his discretion when he awarded compensation for
Milutin’s non-necessary services, which included Milutin’s time spent defending his appointment
in the mandamus proceeding. See Garcia, 363 S.W.3d at 582 (holding that a trial court abuses its
discretion when it awards compensation for a guardian ad litem’s non-necessary activities). While
the evidence is legally insufficient to support the full amount awarded to Milutin, it is sufficient to
show that he necessarily spent some amount of time initially advising the pretrial judge as to whether
there was a conflict of interest between Richardson and I.F. Accordingly, we grant Ford’s petition
for review and, without hearing oral argument, reverse the court of appeals’ judgment in part and
remand the case to the pretrial judge to determine Milutin’s fee award, consistent with this opinion.
See TEX . R. APP . P. 59.1.
OPINION DELIVERED: January 25, 2013
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