Samuel G. Newton, III v. Clinton W. Delespine ( 2006 )

                                                NO. 12-05-00113-CV

IN THE COURT OF APPEALS

TWELFTH COURT OF APPEALS DISTRICT

TYLER, TEXAS

SAMUEL G. NEWTON, III,            §                      APPEAL FROM THE 349TH

APPELLANT

V.        §                      JUDICIAL DISTRICT COURT OF

CLINTON W. DELESPINE,

APPELLEE   §                      HOUSTON COUNTY, TEXAS

MEMORANDUM OPINION

            Samuel G. Newton, III appeals from the trial court’s order of dismissal of his breach of contract and fraud action against Clinton W. Delespine.  In three issues, Newton contends the trial court erred in granting Delespine’s motion for summary judgment and in not granting Newton’s motion for summary judgment. We affirm.

Background

            Newton and Delespine are both inmates in the Texas Department of Criminal Justice. Delespine believed he was entitled to the proceeds from the estates of his mother, Imogene Delespine, and his aunt, Margaret Applewhite, but needed help with the process.  Delespine asked Newton to help him with those two probate matters. Newton drafted a contract entitled “Agreement for the Professional Management of Contracted Legal Services” signed by the parties, together with a power of attorney, on February 10, 2000. In this document, Newton, calling himself “brocator,” agreed to provide “professional advice and management of legal services” in the two probate matters and litigation arising from those matters. The contract provides that Newton, “in the exercise of his professional and administrative judgement [sic] may employ counsel in representing [Delespine’s] interest.”  Delespine agreed to pay Newton no less than 25% and no more than 50% of the recovery, if any, from the two estates.  Newton contacted George Adams, an attorney he knew in San Antonio, whom Delespine hired to settle his mother’s estate. Delespine inherited nothing from his aunt’s estate, but he recovered approximately $192,000.00 from his mother’s estate. 

            In January 2001, Newton offered Delespine the opportunity to become a partner in a business based in Wyoming called the Aransas Cattle Company Syndicated Investment 2001 Ltd.  The partnership was to engage in the purchase, production, and sale of cattle.  Newton was named managing general partner and Delespine was to be a limited partner. Delespine was to provide $30,000.00 as capital for this partnership. 

            Delespine did not pay Newton for his services as brocator or to buy into the partnership.  In August 2002, Newton filed suit for damages for Delespine’s breach of contract and fraudulent misrepresentation, or alternatively, for specific performance of the “brocator’s” contract.  Newton claimed actual damages in the amount of $99,320.50 for his breach of contract cause of action, $99,240.50 for his fraudulent misrepresentation cause of action, $25,000.00 for mental anguish, and $25,000.00 in exemplary damages.

            Delespine filed a motion for summary judgment asserting that the contract is unenforceable for various reasons. Newton filed a “Plaintiff’s Counterclaim for Summary Judgment Against Defendant” asserting entitlement to judgment as a matter of law on his fraud and breach of contract claims.  The trial court granted Delespine’s motion and dismissed the case.

Summary Judgment

            In his first issue, Newton contends the trial court erred in granting Delespine’s motion for summary judgment.  He argues that Delespine failed to show there exists no genuine issue of material fact and the record is devoid of any proper summary judgment evidence in favor of Delespine.

Applicable Law

            To obtain a summary judgment, the movant has the burden of showing that there is no genuine issue of material fact and that he is entitled to judgment as a matter of law.  Tex. R. Civ. P. 166a(c). Summary judgment for a defendant is proper when the summary judgment evidence negates an essential element of the plaintiff’s cause of action as a matter of law or conclusively establishes all elements of an affirmative defense as a matter of law.  See Black v. Victoria Lloyds Ins. Co., 797 S.W.2d 20, 27 (Tex. 1990).  Once the defendant produces sufficient evidence to establish the right to summary judgment, the burden shifts to the nonmovant to produce controverting evidence raising a fact issue as to the elements negated.  Torres v. Western Cas. & Sur. Co., 457 S.W.2d 50, 52 (Tex. 1970); Owen Elec. Supply, Inc. v. Brite Day Constr. Inc., 821 S.W.2d 283, 286 (Tex. App–Houston [1st Dist.] 1991, writ denied).

            When both parties move for summary judgment, each party bears the burden of establishing that it is entitled to judgment as a matter of law, and neither party can prevail because of the other’s failure to discharge his burden.  Guynes v. Galveston County, 861 S.W.2d 861, 862 (Tex. 1993); State Farm Lloyds, Inc. v. Williams, 791 S.W.2d 542, 549-50 (Tex. App.–Dallas 1990, writ denied).  When reviewing competing motions for summary judgment, we consider all the evidence accompanying both motions.  Dallas County Appraisal Dist. v. Institute for Aerobics Research, 766 S.W.2d 318, 319 (Tex. App.–Dallas 1989, writ denied) (op. on reh’g).  We must indulge all reasonable inferences and resolve all doubts in favor of the losing party.  University of Tex. Health Sci. Ctr. v. Big Train Carpet of El Campo, Inc., 739 S.W.2d 792, 792 (Tex. 1987).  If the trial court grants one motion and denies the other, the appellate court should determine all questions presented and may render the judgment the trial court should have rendered.  Jones v. Strauss, 745 S.W.2d 898, 900 (Tex. 1988) (orig. proceeding).  When the order granting summary judgment does not specify the particular grounds the trial court sustained, an appellate court must uphold the summary judgment on any ground that is supported by the evidence and pleadings.  Carr v. Brasher, 776 S.W.2d 567, 569 (Tex. 1989).

            The essential elements of a breach of contract claim are that a valid contract existed, the plaintiff performed, the defendant breached, and the plaintiff suffered resulting damages.  Scott v. Sebree, 986 S.W.2d 364, 372 (Tex. App.–Austin 1999, pet. denied).  The elements of actionable fraud are that 1) a material representation was made, 2) the representation was false, 3) when the representation was made, the speaker knew it was false or made it recklessly without any knowledge of its truth and as a positive assertion, 4) the speaker made the representation with the intent that it should be acted upon by the party, 5) the party acted in reliance upon the representation, and 6) the party thereby suffered injury.  Eagle Props., Ltd. v. Scharbauer, 807 S.W.2d 714, 723 (Tex. 1990).  A fraudulent inducement claim will not survive in the absence of a binding agreement.  Haase v. Glazner, 62 S.W.3d 795, 798 (Tex. 2001).

Analysis

            In his motion for summary judgment, Delespine asserted, among other arguments, that the contract is unenforceable because it is a contract for legal services by a nonlawyer and any work done pursuant to that contract would constitute the unauthorized practice of law.  If true, both of Newton’s causes of action fail.

            In general, the practice of law embraces all advice to clients and all action taken for them in matters connected with the law.  Brown v. Unauthorized Practice of Law Comm., 742 S.W.2d 34, 41 (Tex. App.–Dallas 1987, writ denied); see also Tex. Gov’t Code Ann. § 81.101 (Vernon 2005) (Practice of law means preparation of documents incident to an action, management of the action on behalf of a client in court and as a service rendered out of court, including the giving of advice or rendering any service requiring the use of legal skill or knowledge, the legal effect of which under the facts and conclusions involved must be carefully determined.).  Courts have the inherent power to determine on a case by case basis whether activities constitute the unauthorized practice of law.  Unauthorized Practice Comm. v. Cortez, 692 S.W.2d 47, 51 (Tex. 1985).  In considering whether Newton’s actions constitute the unauthorized practice of law, we look to the entire record.  See Dallas County Appraisal Dist., 766 S.W.2d at 319.

            The initial contract between the parties is entitled “Agreement for the Professional Management of Contracted Legal Services.”  It provides that Newton, as “brocator,” will provide professional advice and management of legal services to Delespine, the client.  The word “brocator” is not defined in the document.  Newton claims the word simply means “broker.”  We have been unable to find it in any dictionary. The document states that all retainers and fees charged are in line with fees customarily charged in the area for similar “legal services.”  The contract also provides that Newton, “in the exercise of his professional and administrative judgement [sic] may employ counsel in representing [Delespine’s] interests.”  Any disagreement arising between Delespine and the retained attorney would be arbitrated by Newton and “professionally managed to conclusion.”  Regarding Newton’s pay, the contract states that “[a]ttorneys fees are contingent and percentage of recovery dependant [sic] on size of estate, in no case less than 25% and not to exceed 50%.”  Pursuant to the contract, Delespine empowered Newton “to advise and work with an attorney in [Delespine’s] behalf and for said attorney to file such legal actions as may be deemed advisable by S.G. Newton III, brocator, and said attorney.”  The contract specified that “[n]either client, brocator, nor attorney will make any type of settlement without the informed consent of all parties to this contract and agreement, i.e: the client, the brocator, the attorney.” Delespine also gave Newton a power of attorney “for the professional management of legal services.” 

            After they knew the value of Imogene Delespine’s estate, Newton and Delespine executed a document entitled “Order for Disbursements,” authorizing particular disbursements “per the Agreement for the Professional Management of Legal Services.”  This document specifies that, after debts are paid, Adams was to be paid one third of the proceeds of Imogene Delespine’s estate.  Newton was to receive 37.5% of the remainder of the net proceeds.  The remaining 62.5% was to be placed in trust for Delespine.  The document specifically provides that “[t]his authority for disbursement and payments as indicated herein does supercede [sic] and finalize the agreement for payments due under the Brocators Contract/Agreement for the professional Management of Legal Services, and releases the estate of Imogene Delespine from further liability under this agreement and the sole devisee, Clinton W. Delespine.”

            Attached to Newton’s response to Delespine’s motion for summary judgment and his own motion, is a document entitled “Synopcized [sic] Litigation Narrative” authored by Newton explaining the events at issue as follows.  Margaret Applewhite’s estate was pending in probate court.  Newton, acting on Delespine’s behalf, contested the filed will. Newton “allowed” Delespine to file all motions and briefs that Newton had prepared.  After conferring with George Adams, Newton advised Delespine “to not further contest Judge Spencers rulings in the Applewhite estate as he was vulnerable financially and could not produce a different will as he had advised [Newton]. [Newton] prepared an appeal of the courts decision and delivered it to [Delespine] advising him NOT TO FILE IT.”  Newton spent 68 hours conferencing with Delespine and drafting documents for that appeal.

            Newton also filed a separate document entitled “Listing of Work Efforts Expended and Services Provided by Measured Time in Regard to a Certain ‘Agreement for the Professional Management of Legal Services’ (Brocators Contract).”  Newton explained that he reviewed documents, questioned Delespine, and discussed the history of events in the two probate matters with Delespine.  He researched the probate code and applicable case law. He then conferred with Delespine about his belief that Delespine was “being compromised.”  He researched forms and drafted materials for Delespine to file, including motions, briefs, and interrogatories.  Newton even ordered and purchased “specialized law books” for use in these matters.  He wrote letters to George Adams informing him of the results of his research and his “fears in regard thereto.”  Further, Newton spent 335 hours investigating Delespine’s original conviction.  He researched and studied case law, reviewed the briefs and records, wrote letters, and conferred with various people. Thereafter, Newton advised Delespine to “drop” his appeals because they might be considered frivolous.

            The summary judgment evidence shows that, pursuant to the parties’ contract, Newton did legal research and prepared legal documents involving the use of legal skill and knowledge.  Newton unabashedly stated that he advised Delespine regarding a will contest in the Applewhite matter and regarding his original criminal conviction.  Under the contract, Delespine could not enter into “any type of settlement” without Newton’s “informed consent.”

            We acknowledge that inmates may provide legal assistance to other inmates.  See Shaw v. Murphy, 532 U.S. 223, 231, 121 S. Ct. 1475, 1480, 149 L. Ed. 2d 420 (2001) (Supervised inmate legal assistance programs may serve valuable ends.).  These “jailhouse lawyers” are not attorneys, but rather, laymen who have volunteered to assist others.  Peniman v. Cartwright, 550 F. Supp. 1302, 1304 (S.D. Iowa 1982).  The distinction between the licensed practice of law and the untrained assistance of a “jailhouse lawyer” must be maintained. Id.  The allowance of compensation for “legal fees” for jailhouse lawyering presents a probability of abuse.  Henderson v. Ricketts, 499 F. Supp. 1066, 1068 (D. Colo. 1980). Further, allowing such compensation would be tantamount to setting up nonlawyer inmates in the business of practicing law without a license.  Peniman, 550 F. Supp. at 1304; Henderson, 499 F. Supp. at 1069.

            The record shows that Newton contracted with Delespine to represent his interests in legal matters on a contingent fee basis and advised him of his rights and privileges under the law thus engaging in the unauthorized practice of law.  See Green v. Unauthorized Practice of Law Comm., 883 S.W.2d 293, 298-99 (Tex. App.–Dallas 1994, no writ).  Courts will not enforce or aid in the enforcement of a contract made for the illegal practice of law.  Montgomery v. Utilities Ins. Co., 117 S.W.2d 486, 491 (Tex. Civ. App.–Beaumont 1938), rev’d on other grounds, 134 Tex. 640, 138 S.W.2d 1062 (1940). Thus, the parties’ “Agreement for the Professional Management of Contracted Legal Services” that forms the basis of Newton’s breach of contract and fraud causes of action is not enforceable. In the absence of a valid contract, Newton’s breach of contract and fraud claims fail.  See Haase, 62 S.W.3d at 798; Scott, 986 S.W.2d at 372.  Therefore, Delespine established that he was entitled to summary judgment as a matter of law.  See Black, 797 S.W.2d at 27.

            We next determine whether Newton’s evidence raises a fact issue.  Newton relies on his affidavit in which he asserts that Delespine always knew he was not an attorney and the contract provides that he was acting as “brocator,” or broker, not as an attorney.  Even if true, these facts do not raise a fact question about whether Newton engaged in the unauthorized practice of law.  Newton further asserts that his actions were justified because he acted pursuant to a power of attorney which gave him authorization to act as Delespine’s attorney in fact. 

            A power of attorney designates another as the principal’s “attorney in fact” or agent.  Tex. Prob. Code Ann. § 482 (Vernon 2003). In general, an attorney in fact is a private or special attorney, appointed for some particular or definite purpose not connected with a proceeding at law.  Harkins v. Murphy & Bolanz, 51 Tex. Civ. App. 568, 570, 112 S.W. 136, 138 (Dallas 1908, writ dism’d).  An “attorney in fact” is “one who is designated to transact business for another; a legal agent.”  Black’s Law Dictionary 124 (7th ed. 1999); see also Tex. Prob. Code Ann. § 491 (Vernon 2003) (setting out powers of attorney in fact). Conversely, an attorney at law is one who practices law.  Black’s Law Dictionary at 124.  The authorization to act as an attorney in fact under a power of attorney is not an authorization to practice law.  See Harkins, 51 Tex. Civ. App. at 570, 112 S.W. at 138.  Therefore, the power of attorney does not raise any fact questions about whether Newton engaged in the unauthorized practice of law.

            In the remainder of his affidavit, Newton vents his anger at Delespine for allegedly perpetrating a fraud by promising to pay Newton for work done pursuant to their contract upon which Newton thereafter relied when he made financial commitments.  Newton did not raise a fact question regarding whether he engaged in the unauthorized practice of law.  Accordingly, the trial court did not err in granting Delespine’s motion for summary judgment.  We overrule Newton’s first issue.

Disposition

            Because issue one is dispositive of the appeal, we need not consider Newton’s second and third issues.  See Tex. R. App. P. 47.1.

            We affirm the trial court’s order.

                                                                                                    SAM GRIFFITH   

                                                                                                               Justice

Opinion delivered December 1, 2006.

Panel consisted of Worthen, C.J., Griffith, J., and Hoyle, J.

(PUBLISH)