in Re Texas Technical Services, Inc. , 2015 Tex. App. LEXIS 9831 ( 2015 )


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  • Opinion issued September 22, 2015
    In The
    Court of Appeals
    For The
    First District of Texas
    ————————————
    NO. 01-15-00016-CV
    ———————————
    IN RE TEXAS TECHNICAL SERVICES, INC., Relator
    Original Proceeding on Petition for Writ of Mandamus
    OPINION
    In this original proceeding, relator Texas Technical Services, Inc. (TTSI),
    seeks mandamus review of the trial court’s October 6, 2014 order disqualifying the
    law firm of Lambright & Associates (“Lambright”) from representing TTSI in the
    underlying proceeding. 1 TTSI contends that Lambright should not have been
    disqualified or, in the alternative, that the trial court abused its discretion in
    disqualifying Lambright from acting as TTSI’s counsel even outside the presence
    of the jury. We hold that the trial court abused its discretion in disqualifying
    Lambright and, accordingly, we conditionally grant the writ of mandamus.
    Background
    The Employment Suit
    In 2012, after Derek Frantz left employment with TTSI and went to work for
    real party in interest, Parking Guidance Systems (PGS), TTSI sued PGS
    contending Frantz was violating non-compete and non-disclosure obligations. The
    trial judge granted TTSI injunctive relief, enjoining Frantz from working on certain
    parking projects in Houston and surrounding counties.             PGS, with Frantz’s
    involvement, continued to pursue a sole source contract for parking systems with
    Dallas-Fort Worth Airport (DFW).
    Thereafter, Lambright attorneys sent multiple written communications to
    DFW regarding the employment suit and Frantz’s alleged violations of the
    injunction. For example, on November 22, 2013, a Lambright attorney wrote to
    DFW:
    1
    The underlying proceeding is Parking Guidance Systems, LLC v. Texas Technical
    Services, Inc., No. 2014-16785, in the 133rd District Court, Harris County, Texas,
    the Honorable Jaclanel McFarland, presiding.
    2
    [W]e understand that Mr. Frantz has continuously worked on
    the DFW parking improvement project from Fall 2012 to at least
    Spring 2013, and that he is out there, once again, in direct violation of
    Court orders. TTSI respectfully requests you to honor the Courts’
    [sic] Orders and that you require your subcontractors to do the same.
    TTSI will endeavor to minimize the impact these issues have on your
    operations. Be advised, however, that should Mr. Frantz continue to
    violate the Orders of the 129[t]h District Court (of which you now
    have express knowledge), TTSI will proceed to enforce its judicially
    recognized rights against him and any third parties that aid or assist
    him.
    Legal counsel for DFW responded to Lambright, expressing his view “that
    the [injunction] (in the form provided to me) probably does not preclude Mr.
    Frantz from participating in the [DFW] transaction.”         A Lambright attorney
    replied: “the two injunctions you have been sent clearly establish that DFW
    parking jobs are off-limits for Frantz.” The attorney also told DFW’s counsel to
    “deal with Mr. Frantz at your own risk.”
    On February 4, 2014, the Operations Committee of DFW recommended that
    the DFW Board of Directors award the DFW parking contract to PGS. Two days
    later, a Lambright attorney wrote to DFW’s counsel:
    We have learned that DFW intends to award the sole-source
    Terminal D parking guidance contract to Parking Guidance Systems,
    LLC-Derek Frantz’[s] (via his wife) company. Derek is heavily
    involved in this company, and now they have been joined in our
    lawsuit. I was under the impression from the below correspondence
    and past telephone conversations that DFW would not be doing
    business with Frantz. Given your explanation to me that the reason
    behind the sole source contract was that they were the contracting
    party on Terminal A, and that your concern was whether Derek Frantz
    could be involved in our litigation, I find it extremely interesting that
    3
    DFW decided to award it to PGS, who as an entity had no prior
    history with DFW (given the fact it was set up by Derek’s wife and a
    friend only last May). Maybe your client’s diligence as to the party
    they were contracting with (PGS) wasn’t as thorough as it needed to
    be.
    Shortly thereafter, DFW informed PGS that it was no longer going to be awarded
    the contract.
    The Underlying Suit
    PGS sued TTSI alleging tortious interference with a contractual and business
    relationship between PGS and DFW. PGS alleges that Lambright “engaged in a
    systematic and deliberate attempt to disrupt the business relationship between PGS
    and DFW Airport and [to] cause DFW to withdraw the contract award [from]
    PGS.”
    TTSI moved for summary judgment on PGS’s tortious interference claim
    and on its affirmative defenses, and set the hearing on the motion for October 6,
    2014. On September 29, 2014, PGS filed its response to TTSI’s motion for
    summary judgment and also filed a motion to continue the hearing on the motion
    for summary judgment.        On the same day, it filed its motion to disqualify
    Lambright and set it for hearing one hour before the trial court was to hear TTSI’s
    motion for summary judgment. The basis for PGS’s motion is that Lambright’s
    attorneys’ testimony is essential to prove PGS’s interference claim, because it was
    the attorneys’ communications with DFW that constituted the intentional act of
    4
    interference that caused PGS to lose the DFW contract. Therefore, PGS argued,
    Lambright was disqualified under the Texas Disciplinary Rules of Professional
    Conduct because its attorneys cannot act as an advocate and witness. See TEX.
    DISCIPLINARY RULES PROF’L CONDUCT R. 3.08(a), reprinted in TEX. GOV’T CODE
    ANN., tit. 2, subtit. G, app. A (West 2013).
    On October 6, 2014, the trial court held a hearing on PGS’s motion to
    disqualify. The trial court granted the motion to disqualify and continued the
    hearing on TTSI’s summary judgment motion. The order granting PGS’s motion
    to disqualify states, “it is ORDERED that Lambright & Associates be disqualified
    from representing Defendant in the above-referenced litigation.”
    TTSI moved for reconsideration of the order, arguing that the Lambright
    attorneys’ testimony was not essential and that disqualification was not warranted.
    During the hearing on TTSI’s motion to reconsider the trial court stated “My ruling
    stands. If y’all want to work on an order that says that you can work on a case but
    not be—not represent them in court in front of a jury, I don’t really have a big
    problem with that. But you’re still disqualified until y’all give me another order.
    Your motion to reconsider is denied at this point.”
    TTSI sought mandamus relief. It asks us to order the trial court to vacate the
    order disqualifying Lambright from representing TTSI in the underlying
    proceeding.   In the alternative, TTSI requests that this Court “instruct Judge
    5
    McFarland to revise her disqualification order to permit Lambright & Associates to
    represent TTSI in all matters outside the presence of the jury.”
    Standard of Review and Applicable Law
    Mandamus is appropriate to correct an erroneous order disqualifying counsel
    because there is no adequate remedy by appeal. In re Sanders, 
    153 S.W.3d 54
    , 56
    (Tex. 2004).    We review disqualification orders under an abuse of discretion
    standard. 
    Id. Rule 3.08
    of the Texas Disciplinary Rules of Professional Conduct states:
    (a) A lawyer shall not accept or continue employment as an
    advocate before a tribunal in a contemplated or pending adjudicatory
    proceeding if the lawyer knows or believes that the lawyer is or may
    be a witness necessary to establish an essential fact on behalf of the
    lawyer’s client, unless:
    (1)   the testimony relates to an uncontested issue;
    (2) the testimony will relate solely to a matter of
    formality and there is no reason to believe that substantial
    evidence will be offered in opposition to the testimony;
    (3) the testimony relates to the nature and value of
    legal services rendered in the case;
    (4) the lawyer is a party to the action and is appearing
    pro se; or
    (5) the lawyer has promptly notified opposing counsel
    that the lawyer expects to testify in the matter and
    disqualification of the lawyer would work substantial
    hardship on the client.
    6
    TEX. DISCIPLINARY RULES PROF’L CONDUCT 3.08(a). Although Rule 3.08 was
    “promulgated as a disciplinary standard rather than one of procedural
    disqualification,” Texas courts “have recognized that the rule provides guidelines
    relevant to a disqualification determination.” See 
    Sanders, 153 S.W.3d at 56
    (citing Anderson Prod. Inc. v. Koch Oil Co., 
    929 S.W.2d 416
    , 421 (Tex. 1996)).
    The Texas Supreme Court has emphasized that “[d]isqualification is a severe
    remedy.” 
    Id. at 57
    (quoting Spears v. Fourth Ct. of App., 
    797 S.W.2d 654
    , 656
    (Tex. 1990)). It can “cause immediate harm by depriving a party of its chosen
    counsel and disrupting court proceedings.” 
    Id. Consequently, in
    considering a
    motion to disqualify, the district court must strictly adhere to an exacting standard
    to discourage a party from using the motion as a dilatory tactic. 
    Spears, 797 S.W.2d at 656
    . “‘Mere allegations of unethical conduct or evidence showing a
    remote possibility of a violation of the disciplinary rules will not suffice’ to merit
    disqualification.” 
    Id. It is
    only appropriate to disqualify an attorney due to his status as a potential
    witness if the attorney’s testimony is “necessary to establish an essential fact.”
    
    Sanders, 153 S.W.3d at 57
    (quoting TEX. DISCIPLINARY RULES PROF’L CONDUCT
    R. 3.08(a)). The fact that an attorney serves, or may serve, as both a representative
    and as a witness does not in itself compel disqualification. Id.; see also In re
    Garza, 
    373 S.W.3d 115
    , 118 (Tex. App.—San Antonio, orig. proceeding) (stating
    7
    disqualification under Rule 3.08 is not appropriate unless party seeking
    disqualification establishes “a genuine need for the attorney’s testimony and that
    the testimony goes to an essential fact”).         Rather, the party requesting
    disqualification must demonstrate that the opposing attorney’s dual roles as
    attorney and witness will cause the party actual prejudice. Ayres v. Canales, 
    790 S.W.2d 554
    , 557–58 (Tex. 1990).
    Analysis
    PGS sought disqualification on the basis that the testimony of Lambright’s
    attorneys was necessary to prove an act of willful and intentional interference,
    which is an element of PGS’s tortious interference claim. TTSI argues that the
    trial court abused its discretion in disqualifying Lambright because the testimony
    of Lambright’s attorneys is not essential to prove TTSI’s alleged interference
    inasmuch as TTSI has produced the written communications between Lambright
    and DFW, and does not dispute their contents.       TTSI asserts that the written
    communications “are what they are” and that the central contested issue in the case
    is causation, i.e., whether Lambright’s communications caused DFW to rescind its
    award of the contract to PGS. This causation evidence, TTSI asserts, can only be
    established through testimony of DFW employees.
    The elements of tortious interference with an existing contract are (1) an
    existing contract subject to interference, (2) a willful and intentional act of
    8
    interference with the contract, (3) that proximately caused injury, and (4) actual
    damages or loss. Prudential Ins. Co. of Am. v. Fin. Rev. Servs, Inc., 
    29 S.W.3d 74
    ,
    77 (Tex. 2000). To prevail on its tortious interference claim, PGS bears the burden
    to prove that a contract existed between PGS and DFW, and that TTSI or its agent,
    Lambright, willfully and intentionally interfered with that contract and proximately
    caused DFW’s termination of the contract with PGS, damaging PGS.
    TTSI does not dispute the existence or content of its attorneys’ written
    communications with DFW’s counsel, but PGS nevertheless argues that it needs
    the testimony of Lambright’s attorneys to establish that the alleged interference
    was willful and intentional. PGS also argues that it requires the testimony of
    Lambright because verbal communications occurred between Lambright and
    DFW. PGS contends that the Lambright attorneys’ testimony is necessary because
    all of the communications with DFW were made by Lambright. We disagree.
    Although PGS repeatedly asserted in the trial court and in its response to the
    mandamus petition that Lambright’s attorneys’ testimony is necessary to show that
    the alleged interference was willful and intentional, PGS never explained what
    essential facts it needs to prove through the testimony of the Lambright attorneys,
    or why the written communications would not be sufficient to establish an
    intentional act of interference. See In re VSDH Vaquero Venture, Ltd., No. 05-14-
    00958-CV, 
    2014 WL 4262167
    , at *2–3 (Tex. App.—Dallas Aug. 28, 2014, orig.
    9
    proceeding) (mem. op.) (disqualification movant must identify the essential facts
    that attorney’s testimony would establish).       Simply stating that Lambright’s
    attorneys’ testimony is necessary to establish one of the elements of its interference
    claim, without further explanation, is insufficient to meet PGS’s significant burden
    to show that the testimony is necessary to establish an essential fact. See id.; In re
    Hormachea, No. 04-04-00581-CV, 
    2004 WL 2597447
    , at *2 (Tex. App.—San
    Antonio Nov. 17, 2004, orig. proceeding) (mem. op.) (mere fact that attorney
    participated in allegedly defamatory press conference was not enough to prove that
    his testimony was “necessary” or “essential” in defamation suit against his clients).
    Moreover, the fact that Lambright attorneys verbally communicated with
    DFW personnel, without more, does not demonstrate that the testimony of the
    Lambright attorneys is necessary to establish an essential fact. To the contrary, if
    PGS needs testimony about those verbal communications, PGS can elicit testimony
    from DFW personnel regarding these communications. See 
    Sanders, 153 S.W.3d at 57
    (trial court did not abuse discretion in denying motion to disqualify where
    there was no evidence testimony was not available from another source); In re
    Stone, No. 14-13-00311-CV, 
    2013 WL 1844267
    , at *2 (Tex. App.—Houston [14th
    Dist.] Apr. 19, 2013, orig. proceeding) (mem. op.) (disqualification improper
    where record shows that lawyer is not the only person who can testify regarding
    particular facts). Because PGS can procure testimony regarding the content of
    10
    these communications from another source, it has not met its burden to show that
    the testimony from Lambright’s attorneys is necessary. See In re Stone, 
    2013 WL 1844267
    , at *2.
    Thus, the record does not support the conclusion that testimony from
    Lambright’s attorneys is “necessary to establish an essential fact” or that PGS
    genuinely needs the attorneys’ testimony.       TEX. DISCIPLINARY RULES PROF’L
    CONDUCT R. 3.08(a); 
    Sanders, 153 S.W.3d at 56
    (fact that attorney serves, or may
    serve, as both a representative and as a witness does not in itself compel
    disqualification); see also In re 
    Garza, 373 S.W.3d at 118
    (disqualification is not
    appropriate unless party seeking disqualification establishes “a genuine need for
    the attorney’s testimony”). Because “[d]isqualification is a severe remedy,” and
    the record does not show any essential fact that could be established only by
    Lambright’s attorneys’ testimony, we hold that the trial court abused its discretion
    in disqualifying Lambright. 
    Sanders, 153 S.W.3d at 57
    (quoting 
    Spears, 797 S.W.2d at 656
    ); see In re VSDH Vaquero Venture, Ltd., 
    2014 WL 4262167
    , at *2–
    3 (trial court abused discretion in disqualifying attorney where record did not
    identify essential fact that attorney’s testimony was needed to establish); cf. Mauze
    v. Curry, 
    861 S.W.2d 869
    , 870 (Tex. 1993) (trial court abused discretion in failing
    to grant motion to disqualify where attorney filed affidavit as expert witness which
    was necessary to establish essential fact).
    11
    Conclusion
    We hold that the trial court abused its discretion by disqualifying Lambright
    & Associates from serving as TTSI’s attorneys. Accordingly, we direct the trial
    court to vacate its order disqualifying Lambright & Associates from representing
    TTSI in the underlying proceeding and to enter an order denying the motion to
    disqualify. Our writ of mandamus will issue only if the trial court does not
    comply.
    Rebeca Huddle
    Justice
    Panel consists of Justices Keyes, Huddle, and Lloyd.
    12
    

Document Info

Docket Number: NO. 01-15-00016-CV

Citation Numbers: 476 S.W.3d 747, 2015 Tex. App. LEXIS 9831, 2015 WL 5577234

Judges: Keyes, Huddle, Lloyd

Filed Date: 9/22/2015

Precedential Status: Precedential

Modified Date: 11/14/2024