in Re Ricardo Reynoso ( 2012 )

NUMBER 13-11-00668-CV
COURT OF APPEALS
THIRTEENTH DISTRICT OF TEXAS
CORPUS CHRISTI - EDINBURG
IN RE RICARDO REYNOSO
On Petition for Writ of Mandamus.
OPINION
Before Justices Rodriguez, Vela, and Perkes
Opinion by Justice Perkes1
In this original proceeding, relator, Ricardo Reynoso, seeks to set aside an order
disqualifying his attorney of record, Jesus Ramirez.2 We deny the petition for writ of
mandamus.
I. BACKGROUND
1
See TEX. R. APP. P. 52.8(d) (―When granting relief, the court must hand down an opinion as in
any other case,‖ but when ―denying relief, the court may hand down an opinion but is not required to do
so.‖); TEX. R. APP. P. 47.4 (distinguishing opinions and memorandum opinions).
2
This original proceeding arises from trial court cause number CL-10-1900-A in County Court at
Law Number One of Hidalgo County, Texas. The respondent in this case is the Honorable Rudy
Gonzalez.
Armando Gamboa entered a commercial lease with an option to purchase real
estate from Reynoso. The property subject to the lease included a hotel. Gamboa
planned to utilize the property as both a nightclub and hotel and began making
modifications to the property. Reynoso terminated the lease and began eviction
proceedings on grounds Gamboa did not have the right to modify the premises. In
response, Gamboa filed a petition for declaratory judgment and an application for a
temporary restraining order against Reynoso asserting that the lease gave Gamboa the
right to make modifications. Gamboa‘s causes of action included fraud and requests for
specific performance of the lease with option to purchase. In these initial proceedings,
attorney Fabian Guerrero represented Gamboa and attorney Glenn W. Devino
represented Reynoso. At some point during these proceedings, the improvements on
the property suffered fire damage.
Lone Star National Bank (―Lone Star‖), represented by Ramirez, intervened in the
lawsuit. According to Lone Star‘s petition in intervention, the insurer for the realty had
issued a multi-party check for the fire damage drawn from J.P. Morgan Chase Bank to,
among others, Gamboa and Reynoso. Gamboa presented the insurance check to Lone
Star for payment, with the alleged endorsements of the payees, and Lone Star paid the
insurance check to Gamboa. J.P. Morgan Chase Bank thereafter alleged to Lone Star
that one or more of the endorsements on the check had been forged and demanded
repayment of the check amount from Lone Star. In terms of Lone Star‘s claims against
Gamboa and Reynoso, Lone Star sought recoupment of any amounts for which it might
be found liable to J.P. Morgan Chase Bank as a result of the allegedly forged
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instrument. Lone Star also sought the recovery of costs, attorney‘s fees, and pre- and
post-judgment interest.
During the course of these proceedings, Guerrero moved to withdraw as counsel
for Gamboa. Devino, the initial attorney for Reynoso, also moved to withdraw as
counsel. The trial court granted Devino‘s motion to withdraw on June 29, 2011. The
record before us reflects no ruling on Guerrero‘s motion to withdraw.
After resolution of the issues presented in its intervention, Lone Star filed a notice
of nonsuit on July 8, 2011, and the trial court granted the nonsuit by written order signed
on July 11, 2011.
On July 14, 2011, Ramirez again appeared in the lawsuit as an attorney of
record, although now he represented Reynoso rather than Lone Star. On this date,
Reynoso filed a third party petition and application for temporary restraining order,
temporary injunction, and permanent injunction against Gamboa. Reynoso alleged that
Gamboa took the insurance money but failed to repair the improvements on the
property. According to the petition, Reynoso suffered damages because the
improvements had not been repaired or rebuilt and this omission substantially lowered
the value of the property. On August 1, 2011, Reynoso sent discovery to Lone Star
requesting the production of essentially all of Lone Star‘s records pertaining to Gamboa.
Reynoso also sent a subpeona duces tecum to Gamboa requesting his financial
records.3
3
Gamboa filed a motion to quash the subpoena alleging, inter alia, that Ramirez ―will likely be a
witness to this matter and . . . JESUS RAMIREZ will use confidential information received by Movant to
Movant‘s detriment.‖
3
Gamboa4 filed a motion to disqualify Ramirez. The motion was neither verified
nor supported by affidavit. The motion to disqualify asserts that Ramirez should be
disqualified for these reasons: Ramirez would be called as a witness; because
Ramirez‘s representation of Reynoso created a risk that the confidential
communications of Gamboa and Gamboa Construction would be revealed; and that
Ramirez‘s representation of Reynoso would otherwise damage the interests of Gamboa
and Gamboa Construction. According to the motion, when Ramirez represented Lone
Star during the lawsuit, he conveyed to both Gamboa and Reynoso that he could help
resolve the issues between them without the need of other attorneys. The motion
asserts that Ramirez communicated this during a time when Gamboa and Gamboa
Construction were not represented by counsel. The motion asserts that, as a direct
result, Gamboa confided and trusted Ramirez with certain ―confidential and perhaps
privileged data.‖
On August 31, 2011, the trial court held an evidentiary hearing on the motion to
disqualify. Ramirez testified that he represented Lone Star in this case from March 24,
2011, when the petition in intervention was filed, until the trial court entered the order of
nonsuit on July 11, 2011. Ramirez testified that Reynoso hired him as his attorney
when Ramirez terminated the relationship with Lone Star in June or July of 2011.
Ramirez remembered speaking to ―somebody who identified himself as Gamboa‖
―about the matter.‖ Ramirez stated that he could not recall whether the conversation
involved issues pertaining to Lone Star‘s intervention or matters regarding the lease
4
The motion to disqualify was filed by Gamboa and Gamboa Construction. The pleadings by
which Gamboa Construction joined the underlying litigation are not part of the record before us.
Nevertheless, both Gamboa and Gamboa Construction are real parties in interest herein.
4
with option to purchase. Ramirez thought he made contact with Gamboa about the
allegedly forged check, although he may have spoken with Gamboa again after
speaking with him about the forged check. Ramirez testified that he did not recall
talking to Gamboa about settling the matter. Ramirez testified that, at some time, the
attorneys for both Reynoso and Gamboa withdrew and both of them authorized
Ramirez to talk to Reynoso and Gamboa directly. Reynoso showed Ramirez a contract
for deed and Ramirez suggested different documents—a promissory note and a deed of
trust with a vendor‘s lien. He sent the closing documents to Guerrero. ―At no time did
this gentleman confide in me in any manner, any fact, any privilege, any confidence and
any secrets that I can tell you he provided to me.‖
In contrast, Gamboa testified that Ramirez told him that he was ―solely
representing‖ Lone Star. Gamboa testified that he spoke with Ramirez about resolving
issues pertaining to the allegedly forged check, then spoke with him again in May
regarding the forged check and drafting papers for the property. Gamboa testified
expressly as follows:
What my understanding was basically he wanted to pull Lone Star out of
the lawsuit so that they are completely out and then help myself and Mr.
Reynoso come to an agreement to move forward the project. And he
even told me and told also Mr. Reynoso—a previous attorney was
charging us $3,000 to draw up all the documents. He had told us that he
would do it for free.
....
I confided that some of the information I was telling him as far as what my
plans were, how much I was willing to pay for the property and stuff like
that—I was under the impression, you know, he was kind of a referee in
the matter and not the coach for the opposing team basically . . . .
5
Additionally, Gamboa testified that he told Ramirez what he was willing to pay for the
building and what he was willing to do with the building. He entered an agreement with
Reynoso in May or June to move forward with the project, and Ramirez helped facilitate
that contract. Gamboa testified that Ramirez never told him he was representing
Reynoso.
After the hearing, Reynoso filed a reply to the motion to disqualify. The reply was
neither verified nor supported by affidavit. Reynoso alleged that Gamboa failed to carry
his burden to present evidence of actual prejudice and failed to show that Ramirez‘s
testimony was necessary to establish any ―essential‖ fact in the case.
On September 12, 2011, the trial court granted the motion to disqualify. This
original proceeding ensued. The Court requested and received a response to the
petition for writ of mandamus.
II. STANDARD OF REVIEW
To be entitled to the extraordinary relief of a writ of mandamus, relator must show
that the trial court abused its discretion and that there is no adequate remedy by appeal.
In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 135–36 (Tex. 2004) (orig.
proceeding). A trial court abuses its discretion if it reaches a decision so arbitrary and
unreasonable as to constitute a clear and prejudicial error of law or if it clearly fails to
correctly analyze or apply the law. In re Cerberus Capital Mgmt., LP, 164 S.W.3d 379,
382 (Tex. 2005) (per curiam) (orig. proceeding); Walker v. Packer, 827 S.W.2d 833, 839
(Tex. 1992) (orig. proceeding). ―To satisfy the clear abuse of discretion standard, the
relator must show ‗that the trial court could reasonably have reached only one
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decision.‘‖ Liberty Nat’l First Ins. Co. v. Akin, 927 S.W.2d 627, 630 (Tex. 1996) (orig.
proceeding) (quoting Walker, 827 S.W.2d at 840).
In determining whether appeal is an adequate remedy, we consider whether the
benefits outweigh the detriments of mandamus review. In re BP Prods. N. Am., Inc.,
244 S.W.3d 840, 845 (Tex. 2008) (orig. proceeding); In re Prudential Ins. Co., 148
S.W.3d 124, 135–36 (Tex. 2004) (orig. proceeding). Appeal is an inadequate remedy
when a trial court abuses its discretion in the disqualification of counsel. In re Guar. Ins.
Servs., 343 S.W.3d 130, 132 (Tex. 2011) (orig. proceeding); In re Cerberus Capital
Mgmt., L.P., 164 S.W.3d 379, 383 (Tex. 2005) (orig. proceeding); In re Sanders, 153
S.W.3d 54, 56 (Tex. 2004) (orig. proceeding) (per curiam); NCNB Tex. Nat'l Bank v.
Coker, 765 S.W.2d 398, 400 (Tex. 1989) (orig. proceeding). Consequently, the only
issue we must consider is whether the respondent abused his discretion by disqualifying
Ramirez. See In re Nitla S.A. de C.V., 92 S.W.3d 419, 423 (Tex. 2002) (orig.
proceeding).
Disqualification is a ―severe‖ remedy which can result in immediate and palpable
harm, disrupt trial court proceedings, and deprive a party of the right to have counsel of
choice. See id. ―In considering a motion to disqualify, the trial court must strictly adhere
to an exacting standard to discourage a party from using the motion as a dilatory trial
tactic.‖ Id. The party seeking disqualification bears the burden of establishing conduct
that warrants disqualification. Id. Mere allegations of unethical conduct or evidence
showing a remote possibility of a violation of the disciplinary rules will not suffice to merit
disqualification. See Spears v. Fourth Court of Appeals, 797 S.W.2d 654, 656 (Tex.
1990).
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III. ANALYSIS
Ramirez represented Lone Star against Gamboa in its cause of action for breach
of warranty for unauthorized endorsement of the check for insurance proceeds. After
Lone Star nonsuited its causes of action against Gamboa and others, Ramirez then, in
the same case, represented Reynosa in his claims against Gamboa for, inter alia, fraud
and negligent misrepresentation regarding Gamboa‘s actions pertaining to the check for
insurance proceeds and Gamboa‘s alleged failure to use the proceeds to repair the
property.
As an initial matter, we note that the trial court had before it conflicting evidence
regarding the communications between Ramirez and Gamboa. Where there are
disputed areas of fact, mandamus relief is not appropriate. In re Pirelli Tire, L.L.C., 247
S.W.3d 670, 676 (Tex. 2007) (orig. proceeding); In re Angelini, 186 S.W.3d 558, 560
(Tex. 2006) (orig. proceeding).
Although Ramirez testified that he did not recall talking to Gamboa about settling
the lawsuit, Gamboa testified that he spoke to Ramirez about ―drawing up papers for the
property‖ and that Ramirez told Gamboa he would prepare the papers without charge.
Gamboa testified that he spoke with Ramirez regarding Ramirez‘s plan and desire to
withdraw Lone Star from the lawsuit so that he could ―then help myself and Mr. Reynoso
come to an agreement to move forward the project.‖ Although Ramirez testified that
―[a]t no time did this gentleman confide in me in any manner, any fact, any privilege, any
confidence and any secrets that I can tell you he provided to me,‖ Gamboa provided
contrary testimony and stated that he told Ramirez his future plans for the disputed
property, including how much he was willing to pay Reynoso for the property and what
8
he was willing to do with the building on the subject property. These disputed issues of
fact are material to the legal issues presented for our review in this case and preclude
mandamus relief. See In re Pirelli Tire, L.L.C., 247 S.W.3d at 676.
Nevertheless, even if we were to review the substance of this original
proceeding, we would still conclude that the petition should be denied. The Supreme
Court of Texas has held that an attorney has an implicit duty to protect a nonclient's
confidences that is no less binding than a duty undertaken expressly in a joint defense
agreement. Nat’l Med. Enters. v. Godbey, 924 S.W.2d 123, 129–131 (Tex. 1996). In
such cases, disqualification of the attorney is based, not on the attorney's former
representation of an opposing party, but on the attorney's duty to the party to preserve
its confidences. See id. In reaching this conclusion, the supreme court examined
cases from the Fifth and Seventh Circuits:
When information is exchanged between various co-defendants
and their attorneys[,] this exchange is not made for the purpose of
allowing unlimited publication and use, but rather, the exchange is made
for the limited purpose of assisting in the common cause. In such a
situation, an attorney who is the recipient of such information breaches his
fiduciary duty if he later, in his representation of another client, is able to
use this information to the detriment of one of the co-defendants. Just as
an attorney would not be allowed to proceed against his former client in a
cause of action substantially related to the matters in which he previously
represented that client, an attorney should also not be allowed to proceed
against a co-defendant of a former client wherein the subject matter of the
present controversy is substantially related to the matters in which the
attorney was previously involved, and wherein confidential exchanges of
information took place between the various co-defendants in preparation
of a joint defense.
Id. (discussing Wilson P. Abraham Construction Corp. v. Armco Steel Corp., 559 F.2d
250 (5th Cir. 1977) (per curiam)). The supreme court concluded that the disqualification
analysis in Armco Steel was based on the duty to preserve confidences implied in the
9
circumstances of a joint defense. See id. The supreme court examined other cases in
the context of determining that where confidential information that is related to claims in
a lawsuit has been shared with an attorney by a non-client, the attorney has a fiduciary
obligation, or an implied professional relationship, with that non-client, which requires
disqualification. See id. (discussing Analytica, Inc. v. NPD Research, Inc., 708 F.2d
1263 (7th Cir. 1983); Westinghouse Electric Corp. v. Kerr-McGee Corp., 580 F.2d 1311
(7th Cir. 1978); Glueck v. Jonathan Logan, Inc., 653 F.2d 746, 750 (2d Cir. 1981)).
In this case, Gamboa testified that he furnished confidential information relating
to the subject matter of the lawsuit between Reynoso and Gamboa to Ramirez.
Although the confidences were not shared in the context of a joint defense between co-
defendants, the confidences were instead shared for the purpose of the ―common
cause‖ of resolving the claims of Lone Star against Gamboa and Reynoso and
attempting to resolve the legal matters in dispute between Gamboa and Reynoso. We
conclude that the trial court did not abuse its discretion in disqualifying Ramirez on the
grounds that Gamboa has the right not to see Ramirez on the opposite side of the
litigation to which the confidential information that Gamboa shared with Ramirez is
highly pertinent.
IV. CONCLUSION
The Court, having examined and fully considered the petition for writ of
mandamus and the response thereto under the applicable standard of review, is of the
opinion that relators have not shown themselves entitled to the relief sought.
Accordingly, the stay previously imposed by this Court is LIFTED. See TEX. R. APP. P.
52.10(b) (―Unless vacated or modified, an order granting temporary relief is effective
10
until the case is finally decided.‖). The petition for writ of mandamus is DENIED. See
TEX. R. APP. P. 52.8(a).
J. GREGORY T. PERKES
Delivered and filed the
12th day of January, 2012.
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