Michael Spradley v. Michael E. Orsak, L.P. ( 2020 )

Opinion issued December 15, 2020
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-19-00186-CV
———————————
MICHAEL SEAN SPRADLEY, Appellant
V.
MICHAEL E. ORSAK, LP, Appellee
On Appeal from the County Court at Law No. 5
Fort Bend County, Texas
Trial Court Case No. 17-CCV-059304
MEMORANDUM OPINION
Appellant, Michael Sean Spradley, challenges the trial court’s judgment,
entered after a jury trial, in favor of appellee, Michael E. Orsak, LP (“Orsak LP”),
in Orsak LP’s suit against Spradley to recover unpaid attorney’s fees. Spradley also
challenges the trial court’s summary judgments in favor of Orsak LP on Spradley’s
counterclaims for breach of fiduciary duty, legal malpractice, breach of contract,
violations of the Texas Deceptive Trade Practices Act,1 and fraud. In four issues,
Spradley challenges the legal sufficiency of the evidence supporting the jury’s award
of damages for unpaid fees, and he contends that the trial court erred in its charge to
the jury and erred in granting summary judgment dismissing his counterclaims.
We reverse and remand in part and affirm in part.
Background
In November 2015, Spradley’s former spouse brought a modification suit
against him, seeking conservatorship of their two children. In December 2015,
Spradley retained Orsak LP to represent him in defending against the suit. Pursuant
to a written “Employment Agreement” (“Agreement”), Orsak LP agreed to provide
legal representation to Spradley in the modification suit, and Spradley agreed to pay
Orsak LP a rate of $300.00 per hour for attorney work and $100.00 per hour for
legal-assistant work, agreed to pay a retainer of $12,000.00, and agreed to pay
expenses. The Agreement further provided:
While your concern for the cost involved is certainly appreciated, you
must understand that it is impossible to predict accurately all that will
be required to represent your legal interest in this matter, both present
and future. Thus it is impossible to predict accurately, the total amount
of the fee for professional services or the cost that may be involved in
representing your interest. In this regard, it is fair that you be cautioned
1
See TEX. BUS. & COM. CODE §§ 17.46, 17.50.
2
at the outset that sometimes (and not infrequently) complexities
develop in areas where they are not expected by a client. Sometimes
because of extreme bitterness and hurt feelings, or because of
substantial property interests, family law cases become unreasonably
time-consuming. This firm has made no express or implied
representations or guarantees concerning the outcome of your case or
how long your case will take to complete.
....
You hereby agree that, if you should, at any time become displeased or
dissatisfied with any aspect whatsoever of this firm’s legal
representation, or if you should at any time have any serious question
concerning that representation, you will immediately notify this firm of
that fact in writing by certified mail, return receipt requested.
Thereafter, Orsak LP provided Spradley with various legal services, including
conducting telephone conferences, reviewing and drafting correspondence and
pleadings, submitting filings, performing legal research, participating in discovery,
and preparing for and attending meetings, mediation, hearings, and a three-day
bench trial in November 2016. After trial in the modification suit, but prior to the
trial court’s ruling, Spradley and his former spouse settled, and Spradley retained
primary managing conservatorship of his children.
During the course of its year-long representation, Orsak LP billed Spradley a
total of $80,935.23 in fees and expenses. Although Spradley fell behind in his
payments, he paid Orsak LP a total of $34,500.00 and, according to Orsak LP,
continued to give assurances that he would pay the firm in full. After the completion
of the case, when Spradley failed or refused to pay Orsak LP the remaining
$46,435.23, Orsak LP brought a breach-of-contract claim against Spradley.
3
Spradley then brought counterclaims against Orsak LP, alleging that it,
through the attorney of the firm, Michael Orsak (“Orsak”), committed a breach of
fiduciary duty, legal malpractice, breach of contract, violations of the DTPA, and
fraud. With respect to all of his claims, Spradley alleged:
This case is about an attorney violating the trust and confidence placed
in him by his client. When [Spradley] faced the threat of losing custody
of his children to his ex-wife, he retained the law firm of [Orsak LP] to
represent him. [Orsak] used [Spradley’s] fear of losing his children to
engage in unethical billing practices such as billing more than is
reasonable and customary, billing for work that was not actually
performed, and billing for work he was expressly asked not to perform.
When [Spradley] confronted [Orsak] about his unethical billing
practices and threatened to fire [Orsak], [Orsak] intimated that he had
a relationship with the presiding judge and that firing him would result
in an adverse legal outcome for [Spradley]. Due to this threat and the
fear of losing his children, [Spradley] did not fire [Orsak] and continued
to be subjected to [Orsak’s] unethical billing practices.
Spradley alleged that Orsak LP owed Spradley a fiduciary duty based on the
parties’ attorney-client relationship and that Orsak LP breached its fiduciary duty by
failing to be “open and honest with Spradley as to its billing practices,” by
performing unnecessary work or work that Spradley instructed Orsak not to do, by
“sacrificing Spradley’s welfare to make a profit,” by failing to make reasonable use
of the confidence Spradley placed in Orsak LP, and by failing to act with the utmost
good faith. Spradley sought disgorgement of Orsak LP’s attorney’s fees.
Spradley also alleged that Orsak LP committed legal malpractice because it
breached its duty of care to Spradley “by billing in excess of what Spradley was
4
initially quoted, billing for unnecessary work, billing more time than it actually took
to perform work, billing for work that Orsak was expressly asked not to perform,
and billing for work not yet performed.” And, as a result, Spradley sustained
damages.
Spradley also alleged that Orsak LP breached the Agreement “by billing in
excess of what Spradley was initially quoted, billing for unnecessary work, billing
more time than it actually took to perform work, billing for work that Orsak was
expressly asked not to perform, and billing for work not yet performed.” And, as a
result, Spradley sustained damages.
Spradley further alleged that Orsak LP violated the provisions of the DTPA
because it “knowingly and intentionally made material representations regarding the
cost of the services” to induce Spradley into retaining Orsak LP and then engaged in
unconscionable billing practices, such as billing for unnecessary work, billing for
more time than it actually took to perform the work, billing for work that Orsak was
expressly asked not to perform, and billing for work not yet performed. And, Orsak
engaged in unconscionable conduct by “leveraging his relationship with the
presiding judge in Spradley’s case in order to dissuade Spradley from firing Orsak
and hiring a different attorney.” As a result, Spradley sustained damages. And,
Orsak LP committed fraud by representing that it could provide the necessary
services for $15,000.00, although knowing that the actual cost would far exceed this
5
price. And, Orsak made material misrepresentations and omissions regarding the
hours worked and the expenses incurred. As a result, Spradley sustained damages.
Orsak LP moved for a summary judgment on Spradley’s counterclaims,
asserting that, as discussed below, there was no evidence of certain elements of each
of his claims. Orsak LP also raised objections to Spradley’s summary-judgment
evidence. In his summary-judgment response, Spradley argued that he presented
more than a scintilla of probative evidence of each of the elements of each of his
counterclaims and thus Orsak LP was not entitled to summary judgment on any of
his claims. The trial court, without specifying its grounds, granted Orsak LP
summary judgment on each of Spradley’s counterclaims.
Orsak LP’s breach-of-contract claim against Spradley was then tried to a jury.
At trial, Michael Orsak testified that the firm’s fees were customary for Fort Bend
County and that his $300.00-per-hour rate was below that of a 40-plus-year trial
lawyer in the area. He testified that the firm performed the legal work necessary, as
agreed under the terms of the Agreement, to achieve the desired result and that
Spradley breached the Agreement by not paying as agreed after the work was
performed. He asserted that Spradley did not voice any issues with the invoices until
after the case was completed. In January 2017, Spradley sent Orsak an email,
detailing seventeen complaints about the fees. Orsak testified that, although he met
with Spradley to discuss the concerns, Spradley was not satisfied. Orsak LP’s legal
6
secretary, Joan Noto, testified regarding the invoices to Spradley and how they were
calculated. The trial court admitted the invoices into evidence, along with various
correspondence between the parties.
Spradley testified that he is a patent attorney and began practice in 2009. At
that time, he and his former spouse divorced, and he was awarded primary managing
conservatorship of their two children. When his former spouse filed the underlying
modification suit in November 2015, he sought representation from Orsak LP.
Spradley testified that, during the initial consultation, Michael Orsak stated that
defending the case would cost “around $15,000.00.” On December 2, 2015,
Spradley met with Orsak. Spradley testified that, during the meeting, Orsak
emphasized that the trial court judge to whom the modification suit had been
(originally) assigned was his former law partner and that he had had a “very long
relationship” with him and thought he would be successful. Spradley retained Orsak
LP that day, agreed to pay a retainer of $12,000.00, and executed the Agreement.
Spradley testified that Orsak LP’s first bill to him in February 2016 was for
$11,334.53. He believed that Orsak LP was “grossly overbilling for very simple
documents.” He testified that, when he inquired, Michael Orsak admitted that he
does not always bill by the time; rather, he bills by the “perceived value of the task.”
When Spradley characterized Orsak’s billing practices as unethical, Orsak became
angry, threatened to withdraw, and stated that he would “talk to” the trial court judge
7
over the case. Spradley demanded that he be billed in accordance with the fee
Agreement, which provided for work to be billed by the hour. Spradley testified
that, thereafter, however, Orsak LP continued to bill him for work that it did not do,
work not yet completed, and work that Spradley had directed Orsak not to perform.
Spradley testified regarding his concerns with each of the invoices. The modification
suit went to trial in November 2016. Before a final judgment was rendered, however,
Spradley and his former spouse settled. Of the $80,935.23 that Orsak LP billed him
over the course of the year, Spradley testified that he paid $34,500.00. He and Orsak
met in January 2017 to try to resolve their dispute but were unsuccessful.
During Spradley’s testimony, he raised the matter of Orsak LP’s fiduciary
duties. The trial court sustained Orsak LP’s objections on the grounds that Spradley
had not designated himself as an expert and that, the trial court having previously
granted Orsak LP summary judgment on Spradley’s breach-of-fiduciary-duty
counterclaim, there was no longer a live pleading in the matter.
At the charge conference, Spradley requested that the trial court instruct the
jury regarding factors applicable to determining “whether work by a legal secretary
is billable.” Spradley also requested that the trial court submit a question to the jury
regarding whether Orsak LP complied with its fiduciary duties. The trial court
denied Spradley’s requests.
8
The jury found that Spradley breached the Agreement and answered that
Orsak LP was entitled to damages in the amount of $31,450.23. In its final judgment,
the trial court awarded Orsak LP damages in the amount of $31,450.23 and awarded
it attorney’s fees of $27,038.35.
Legal Sufficiency
In his third issue, Spradley argues that that evidence at trial was legally
insufficient to support the award of damages to Orsak LP for unpaid attorney’s fees
because its invoices included sums for “work purported to be performed by a legal
assistant.” Spradley argues that, “[a]s a matter of law, legal assistant billings by
[Orsak LP] are not recoverable” because it failed to present evidence of certain
supporting factors.
Standard of Review
When a party challenges the legal sufficiency of the evidence to support an
adverse finding on which it did not have the burden of proof, it must demonstrate
that there is no evidence to support the adverse finding. See Exxon Corp. v. Emerald
Oil & Gas Co., L.C., 348 S.W.3d 194, 215 (Tex. 2011). We will sustain a
no-evidence challenge if the record shows: (1) a complete absence of evidence of a
vital fact, (2) that rules of law or evidence bar the court from giving weight to the
only evidence offered to prove a vital fact, (3) that the evidence offered to prove a
vital fact is no more than a scintilla, or (4) that the evidence establishes conclusively
9
the opposite of the vital fact. City of Keller v. Wilson, 168 S.W.3d 802, 810 (Tex.
2005). In conducting a legal-sufficiency review, a “court must consider evidence in
the light most favorable to the verdict and indulge every reasonable inference that
would support it.” Id. at 822. Jurors are the sole judges of the credibility of the
witnesses and the weight to give their testimony and may choose to believe one
witness and to disbelieve another. Id. at 819. “Courts reviewing all the evidence in
a light favorable to the verdict thus assume that jurors credited testimony favorable
to the verdict and disbelieved testimony contrary to it.” Id.
If more than a scintilla of evidence supports the challenged finding, we must
uphold it. Formosa Plastics Corp. USA v. Presidio Eng’rs & Contractors, Inc., 960
S.W.2d 41, 48 (Tex. 1998). “[W]hen the evidence offered to prove a vital fact is so
weak as to do no more than create a mere surmise or suspicion of its existence, the
evidence is no more than a scintilla and, in legal effect, is no evidence.” Ford Motor
Co. v. Ridgway, 135 S.W.3d 598, 601 (Tex. 2004) (internal quotations omitted). If
the evidence at trial would enable reasonable and fair-minded people to differ in
their conclusions, then factfinders must be allowed to do so. City of Keller, 168
S.W.3d at 822. “A reviewing court cannot substitute its judgment for that of the
trier-of-fact, so long as the evidence falls within this zone of reasonable
disagreement.” Id.
10
Attorney’s Fees as Contract Damages
An attorney may recover unpaid hourly fees for professional services rendered
under the usual rules of contract law. McRay v. Dow Golub Remels & Beverly, LLP,
554 S.W.3d 702, 705 (Tex. App.—Houston [1st Dist.] 2018, no pet.). To prevail on
its breach-of-contract claim for unpaid fees, Orsak LP was required to establish (1) a
valid contract with Spradley; (2) that it performed or tendered performance of its
obligations; (3) that Spradley breached the terms of the contract; and (4) the amount
of damages that Orsak LP sustained as a result of the breach. See id. Spradley does
not dispute that the Agreement constitutes a valid contract or that Orsak LP
performed its obligations under the Agreement. See id. And, Spradley does not
dispute that he did not pay all of Orsak LP’s invoices. See id. Rather, Spradley
challenges the jury’s finding that Orsak LP was entitled to damages of $31,450.23.
He complains that Orsak LP billed “substantial amounts” for work “purported to be
performed by a legal assistant,” generally citing 17 exhibits containing invoices. He
asserts that, as a matter of law, such sums are not recoverable because there is no
evidence of the required factors applicable to such recovery, citing El Apple I, Ltd.
v. Olivas, 370 S.W.3d 757, 763 (Tex. 2012).
With respect to suits for unpaid fees, this Court, in McRay, noted that the
Texas Supreme Court has observed that “[w]hen interpreting and enforcing attorney-
client fee agreements, it is not enough to simply say that a contract is a contract.
11
There are ethical considerations overlaying the contractual relationship.” 554
S.W.3d at 705 (quoting Hoover Slovacek LLP v. Walton, 206 S.W.3d 557, 560 (Tex.
2006)). An attorney’s contract remedy is subject to the prohibition against charging
or collecting an unconscionable fee. Id. (citing TEX. DISCIPLINARY RULES PROF’L
CONDUCT R. 1.04(a), reprinted in TEX. GOV’T CODE ANN., tit. 2, subtit. G, app. A
(TEX. STATE BAR R. art. X, § 9) (listing factors in determining reasonableness of fees
and prohibiting lawyers from charging or collecting unconscionable fees)). The
Supreme Court has “applied Rule 1.04 as a rule of decision in disputes concerning
attorney’s fees.” Id. (quoting Walton, 206 S.W.3d at 561 n.6).
In Olivas, the supreme court noted that, when obtaining payment for work
done by paralegals or legal assistants, Texas courts have required evidence of:
(1) the qualifications of the legal assistant to perform substantive legal work; (2) that
the legal assistant performed substantive legal work under the direction and
supervision of an attorney; (3) the nature of the legal work performed; (4) the legal
assistant’s hourly rate; and (5) the number of hours expended by the legal assistant.
370 S.W.3d at 763.
In Chevron Chemical Co. v. Southland Contracting, Chevron argued that the
evidence was legally insufficient to support the jury’s award of $300,000 in
attorney’s fees because the award improperly included fees for legal assistants. No.
05-96-00560-CV, 1998 WL 640987, at *3 (Tex. App.—Dallas Sept. 21, 1998, pet.
12
denied). The court of appeals observed that, to recover fees for a legal assistant as
part of an award of attorney’s fees, the evidence must establish the factors listed
above. Id. at *3 n.2. In Chevron, however, “[n]owhere in the charge [was] the jury
allowed to consider legal assistant services as a factor in its attorney’s fees finding.”
Id. at *4. Chevron argued that the jury must have included legal assistant fees as
part of its attorney’s fees finding because Southland included legal assistant time in
its evidence of attorney’s fees. Id. The court concluded, however, that the jury’s
award was fully supported by the evidence of attorney’s fees alone, without regard
to any of the fees billed for legal assistant services. Id. at *5. Thus, there was more
than a scintilla of evidence supporting the award. Id.
Here, Michael Orsak testified at trial that his fees are customary for Fort Bend
County and that his hourly rate is below that of a 40-plus-year trial lawyer in the
area. He further testified regarding the details of the work that he performed for
Spradley and that the hours expended and overall fees charged were reasonable and
necessary for the services rendered. See McRay, 554 S.W.3d at 705. The trial court
admitted into evidence Orsak LP’s detailed invoices and a spreadsheet summation
of its fees. The evidence shows that Orsak LP billed Spradley a total of $80,935.23.
Of this amount, Orsak LP billed fees of $79,735.00 and expenses of $1,200.23.
Orsak LP’s fees included $6,895.00 for legal-assistant work. It is undisputed that
Spradley paid Orsak $34,500.00, leaving a total balance owed on his account of
13
$46,435.23. In the trial court’s charge, the jury was asked “what sum of money, if
any, . . . would fairly and reasonably compensate [Orsak LP] for its damages,” and
the jury answered $31,450.23. Thus, the jury awarded $14,985.00 less than Orsak
LP requested. And, like in Chevron, the jury’s award is fully supported by evidence
of attorney’s fees alone, without regard to any of the $6,895.00 in fees billed for
legal assistant services. See Chevron, 1998 WL 640987, at *5.
Considering the evidence in the light most favorable to the verdict, we
conclude that there is more than a scintilla of evidence to support the jury’s award
to Orsak LP of $31,450.23 in unpaid fees. See Exxon Corp., 348 S.W.3d at 215;
City of Keller, 168 S.W.3d at 810. We hold that the evidence is legally sufficient to
support the jury’s finding. See Formosa Plastics Corp. USA, 960 S.W.2d at 48.
We overrule Spradley’s third issue.
Charge Error
In his fourth issue, Spradley argues that the trial court erred in refusing to
submit an instruction to the jury delineating the factors noted above in Olivas,
pertaining to the recovery of attorney’s fees for work performed by legal assistants.
In his second issue, Spradley argues that the trial court erred in refusing to submit a
question to the jury as to whether Orsak LP complied with its fiduciary duty.
A trial court has wide discretion in submitting jury instructions and questions.
Moss v. Waste Mgmt. of Tex., Inc., 305 S.W.3d 76, 81 (Tex. App.—Houston [1st
14
Dist.] 2009, pet. denied). We review a trial court’s decision to submit or refuse a
particular jury instruction or question for an abuse of discretion. Id. When a trial
court refuses to submit a requested instruction on an issue raised by the pleadings
and evidence, the question on appeal is whether the request was reasonably
necessary to enable the jury to render a proper verdict. See Shupe v. Lingafelter, 192
S.W.3d 577, 579 (Tex. 2006). Jury questions submitted must: (1) control the
disposition of the case; (2) be raised by the pleadings and the evidence; and
(3) properly submit the disputed issues for the jury’s determination. Ginn v. NCI
Bldg. Sys., Inc., 472 S.W.3d 802, 828 (Tex. App.—Houston [1st Dist.] 2015, no
pet.); see TEX. R. CIV. P. 277, 278. A trial court abuses its discretion if it acts in an
arbitrary or unreasonable manner, or acts without reference to guiding rules or
principles. Moss, 305 S.W.3d at 81. We will not reverse a trial court’s judgment for
charge error unless the error was harmful in that it probably caused the rendition of
an improper judgment or probably prevented the appellant from properly presenting
the case to the court of appeals. See TEX. R. APP. P. 44.1(a).
First, to complain of a trial court’s omission of a requested instruction, a party
must have submitted a “written request to the trial court for a substantially correct
instruction.” Jarrin v. Sam White Oldsmobile Co., 929 S.W.2d 21, 25 (Tex. App.—
Houston [1st Dist.] 1996, writ denied); see TEX. R. CIV. P. 278. Here, the record
reflects that, although Spradley orally requested at trial that the jury be instructed
15
regarding awarding fees for the work of legal assistants, the trial court then instructed
him to submit “specifically what instruction [he] would want and how [he] want[ed]
it.” Spradley’s written proposed charge to the trial court, however, does not include
an instruction on fees for legal assistants. Because Spradley does not direct us to
any point in the record in which he submitted a “written request to the trial court for
a substantially correct instruction” pertaining to such fees, we conclude that error, if
any, is not preserved. See Jarrin, 929 S.W.2d at 25.
Spradley next argues that the trial court erred in refusing to submit a question
to the jury as to whether Orsak LP complied with its fiduciary duties because the
issue is raised by the pleadings and evidence.
The record shows that when, during Spradley’s testimony, he attempted to
raise the issue of whether Orsak LP had complied with its fiduciary duties, the trial
court sustained Orsak LP’s objection, in part, on the ground that the trial court having
previously granted Orsak LP summary judgment on Spradley’s breach-of-fiduciary-
duty counterclaim, there was no longer a live pleading in the matter. See Ginn, 472
S.W.3d at 828 (holding trial court’s discretion is subject to requirement that
questions submitted: (1) control the disposition of the case, (2) be raised by the
pleadings and the evidence, and (3) properly submit the disputed issues for the jury’s
determination). The record supports the trial court’s ruling.
16
Spradley argues that his requested jury question was not related to his
breach-of-fiduciary-duty counterclaim and was instead integral to Orsak LP’s
breach-of-contract claim because a presumption of unfairness or invalidity attaches
to contracts between attorneys and their clients. We note, however, that a
presumption of unfairness or invalidity attaches to “[c]ontracts between attorneys
and their clients negotiated during the existence of the attorney-client relationship.”
Keck, Mahin & Cate v. Nat’l Union Fire Ins. Co., 20 S.W.3d 692, 699 (Tex. 2000)
(emphasis added). In Keck, the presumption applied because the release at issue was
negotiated during the law firm’s representation of the client. Id. at 699 n.3. The
court noted that, had there not been an existing attorney-client relationship at the
time the release was executed, the presumption would not have arisen. Id.
Here, because there was not an existing attorney-client relationship at the time
that Orsak and Spradley entered into the Agreement, a presumption of invalidity
does not apply to the Agreement. Cf. id. Rather, an attorney-client relationship
arises when the attorney agrees to render professional services to the client.
Greene’s Pressure Treating & Rentals, Inc. v. Fulbright & Jaworski, L.L.P., 178
S.W.3d 40, 43 (Tex. App.—Houston [1st Dist.] 2005, no pet.). Accordingly, the
trial court did not err in refusing to submit a question to the jury regarding whether
Orsak complied with his fiduciary duties.
We overrule Spradley’s second and fourth issues.
17
Summary Judgment
In his first issue, Spradley argues that the trial court erred in granting Orsak
LP’s motion for no-evidence summary judgment on Spradley’s counterclaims for
breach of fiduciary duty, legal malpractice, breach of contract, violations of the
DTPA, and fraud because Spradley presented more than a scintilla of evidence of
the challenged elements of his claims. See TEX. R. CIV. P. 166a(i).2
2
As discussed above, Spradley’s claims against Orsak LP for breach of fiduciary
duty, legal malpractice, breach of contract, violations of the DTPA, and fraud are
all based on alleged improper billing by Orsak LP. and present identical, or nearly
identical, allegations. Normally, as a threshold matter, before deciding whether the
trial court erred in granting summary judgment on Spradley’s counterclaims, we
must first determine the precise nature of Spradley’s claims. See Greathouse v.
McConnell, 982 S.W.2d 165, 171 (Tex. App.—Houston [1st Dist.] 1998, pet.
denied). The rule against dividing or fracturing a negligence claim prevents legal
malpractice plaintiffs from opportunistically transforming a claim that sounds only
in negligence into other claims. See id. at 172; Murphy v. Gruber, 241 S.W.3d 689,
692 (Tex. App.—Dallas 2007, pet. denied) (“Whether allegations against a lawyer,
labeled as breach of fiduciary duty, fraud, or some other cause of action, are actually
claims for professional negligence or something else is a question of law to be
determined by the court.”). For the rule to apply, however, the gravamen of the
client’s complaint must focus on the quality or adequacy of the attorney’s
representation. See Greathouse, 982 S.W.2d at 172 (noting that although client
alleged separate and distinct causes of action, crux of each claim was that attorney
did not provide adequate legal representation). As discussed here and below, the
gravamen of Spradley’s complaint does not focus on the adequacy of Orsak LP’s
representation, but on whether Orsak LP improperly benefited from its
representation of Spradley. See, e.g., Kennedy v. Gulf Coast Cancer & Diagnostic
Ctr. at Se., Inc., 326 S.W.3d 352, 360 (Tex. App.—Houston [1st Dist.] 2010, no
pet.) (“The essence of a claim for breach of fiduciary duty focuses on whether an
attorney obtained an improper benefit from representing the client.”). Thus, the rule
does not apply.
18
Standard of Review
We review a trial court’s summary judgment de novo. Valence Operating Co.
v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). We take as true all evidence favorable
to the non-movant and indulge every reasonable inference and resolve any doubts in
the non-movant’s favor. Id. If a trial court grants summary judgment without
specifying the ground, we must uphold the trial court’s judgment if any of the
asserted grounds are meritorious. Beverick v. Koch Power, Inc., 186 S.W.3d 145,
148 (Tex. App.—Houston [1st Dist.] 2005, pet. denied).
To prevail on a motion for no-evidence summary judgment, the movant must
establish that there is no evidence to support an essential element of the
non-movant’s claim. See TEX. R. CIV. P. 166a(i); Hahn v. Love, 321 S.W.3d 517,
523–24 (Tex. App.—Houston [1st Dist.] 2009, pet. denied). The burden then shifts
to the non-movant to present evidence raising a genuine issue of material fact as to
each of the elements challenged in the motion. Mack Trucks, Inc. v. Tamez, 206
S.W.3d 572, 582 (Tex. 2006). The motion may not be granted if the non-movant
brings forth more than a scintilla of evidence to raise a genuine issue of material fact
on the challenged elements. See Ridgway, 135 S.W.3d at 600. More than a scintilla
of evidence exists when the evidence “rises to a level that would enable reasonable
and fair-minded people to differ in their conclusions.” Merrell Dow Pharm., Inc. v.
Havner, 953 S.W.2d 706, 711 (Tex. 1997) (internal quotations omitted).
19
Breach of Fiduciary Duty
The elements of a claim for breach of fiduciary duty are: (1) a fiduciary
relationship between the plaintiff and defendant; (2) a breach of fiduciary duty by
the defendant; and (3) resulting injury to the plaintiff or a benefit to the defendant.
Jones v. Blume, 196 S.W.3d 440, 447 (Tex. App.—Dallas 2006, pet. denied). It is
undisputed that there existed an attorney-client relationship between Orsak and
Spradley. Thus, a fiduciary duty arose as a matter of law. See Meyer v. Cathey, 167
S.W.3d 327, 330 (Tex. 2005).
Orsak LP argued in its motion for summary judgment that it was entitled to
judgment on Spradley’s counterclaim for breach of fiduciary duty because there is
no evidence (1) that it breached its fiduciary duties to Spradley or (2) that such
breach resulted in injury to Spradley or a benefit to Orsak LP.
A breach of fiduciary duty occurs when an attorney benefits improperly from
the attorney-client relationship by, among other things, subordinating his client’s
interests to his own, retaining the client’s funds, engaging in self-dealing, improperly
using client confidences, failing to disclose conflicts of interest, or making
misrepresentations to achieve these ends. Kimleco Petroleum, Inc. v. Morrison &
Shelton, 91 S.W.3d 921, 923 (Tex. App.—Fort Worth 2002, pet. denied). The
essence of a breach of fiduciary duty claim involves the “integrity and fidelity” of
the attorney. Id.
20
 In Riverwalk CY Hotel Partners, Ltd. v. Akin Gump Strauss Hauer & Feld,
LLP, the plaintiff alleged that certain legal fees charged by, and paid to, a law firm
were almost double the hourly rates set forth in the parties’ written fee agreement
and were excessive and unreasonable. 391 S.W.3d 229, 238 (Tex. App.—San
Antonio 2012, no pet.). The plaintiff also alleged that the law firm “grossly
overworked” the file, charged excessive fees, billed for unnecessary work, and
provided legal services in a manner intended to unnecessarily increase the scope of
litigation to increase its billings. Id. The court of appeals concluded that such claims
constituted a breach-of-fiduciary-duty claim. Id. at 239.
Here, in his summary-judgment response, Spradley asserted that Orsak LP,
through its attorney Orsak, breached its fiduciary duty to “act with integrity of the
strictest kind,” to “be strictly honest about fee arrangements and to refrain from
inflating billing,” and to follow client instructions. Spradley asserted that Orsak
represented that he could complete the case for approximately $15,000.00, and
Spradley executed the Agreement and paid a retainer of $12,000.00. Just two
months after Orsak LP’s representation began, however, it sent him an invoice for
$11,334.53.53. Spradley asserted that Orsak LP billed “inordinately large amounts
of time to perform simple tasks” and billed for work that had not yet been performed
and for work that was never performed. Spradley asserted that when he confronted
Orsak, he admitted that he did not bill according to the time he actually spent
21
performing tasks, as represented to Spradley at the outset of representation and as
stated in their Agreement. Rather, Orsak admitted that he billed Spradley according
to his “perceived value” of the task. Spradley further asserted that, when he
challenged Orsak’s billing practices, Orsak threatened to withdraw (on what was the
eve of depositions) and intimated that he would take action to adversely affect
Spradley’s case (which involved potentially losing custody of his children).
In support of his assertions, Spradley presented his affidavit. After the trial
court sustained Orsak LP’s objections to portions of the affidavit, Spradley’s
remaining testimony was as follows, in pertinent part:
2. In November of 2015, I contacted [Orsak] for the purpose of
scheduling a consultation for legal representation in a child
custody modification suit. . . . When I met with [Michael Orsak
(“Mr. Orsak”)] for the consultation, we went over the facts of my
case, and I told him I was very sensitive to cost. . . . He told me,
based on the facts, he could complete the case for around
[$15,000.00]. He said he would require a [$12,000.00] retainer
paid up front. I left the meeting without engaging.
3. On a later day, I called Mr. Orsak to discuss the retainer. I
reiterated my sensitivity to cost. He stated I could pay the first
[$6,000.00] within a month of engaging and pay the remaining
[$6,000.00] monthly in [$1,000] increments. Mr. Orsak stated
before engagement and in his engagement agreement he would
bill [$300.00 per hour] for hours worked by Mr. Orsak on my
case, and he would bill [$100.00 per hour] for hours worked by
his assistant on my case. Based on his assurances and
representations, I engaged Mr. Orsak.
4. Early in my attorney-client relationship, it became known to me
by seeing objects in Mr. Orsak’s law office that Mr. Orsak was a
former law partner with Judge Ronald Pope, the presiding judge
on my child custody case. Mr. Orsak told me he still enjoyed a
22
close relationship with Judge Pope and would frequently have
coffee with Judge Pope while in chambers.
5. On February 28, 2016, I received an invoice from Mr. Orsak’s
firm[] for $10,245. I confronted Mr. Orsak . . . . For example,
Mr. Orsak billed 1-hour for drafting, not including filing, a
general denial and 1.25 hours for “Preparation of Certificate of
Written Discovery and Request for Disclosure.” Both documents
only required a few blanks to be filled in, including the case
number, court, and party information. . . . He billed 4.25 hours
for “Preparation of Response to Request for Admissions,
Response to Request for Production, Response to Request for
Disclosure, Answers to Interrogatories and Certificate of Written
Discovery.[”] However Mr. Orsak had actually performed little
to no work on those items. In reality, I prepared the responses,
and emailed them to his secretary for her to Bates stamp.
6. After receiving the February 28, 2016 invoice, [I] requested a
meeting with Mr. Orsak to go over the invoice, and I met with
Mr. Orsak to receive an explanation on why the bill was so high
and why individual tasks were taking so much time. Mr. Orsak
admitted that in reality, he only spent five minutes on the
Answer. Mr. Orsak told me that he did not actually bill by the
hour but instead charged me perceived value of the task. Mr.
Orsak further admitted that most tasks take significantly less time
than claimed on the invoice. I requested that he abide by the
[Agreement] I signed on December 2, 2015 and bill me
according to the time he actually spends performing work on my
case. In response, Mr. Orsak threatened to drop me as a client if
I questioned his billing practices any further. Such threat
happened just days before the first deposition. Further, Mr.
Orsak knew I had no money to hire a new attorney. In this
meeting, I was adamant Mr. Orsak bill only for hours actually
worked. Mr. Orsak further told me he would communicate his
withdraw[al] from the case directly to the presiding Judge, Judge
Ronald Pope, Mr. Orsak’s former law partner. On multiple prior
occasions, Mr. Orsak intimated he had and continued to have a
close relationship with Judge Pope. Based on Mr. Orsak’s
comments, I feared firing Mr. Orsak would adversely affect my
case, which was to be decided by Judge Pope. At the end of the
23
meeting, Mr. Orsak assured me his fees would not exceed
$25,000.
7. Mr. Orsak continued to bill for time he did not spend on my case.
On or about April 30, 2016, Mr. Orsak sent me an invoice that
included the 3.75 hours he allegedly spent attending mediation
on April 26, 2017. He did not spend 3.75 hours on
mediation . . . . I should not be charged for the time Mr. Orsak
spent on issues unrelated to my case.
8. On May 31, 2016, I received an invoice from Mr. Orsak that
stated that he spent 3.5 hours preparing a Motion for
Enforcement of Child Support. . . . On June 30, 2016, I received
another invoice from Mr. Orsak where he billed me an additional
1.5 hours, and his assistant billed 1.75 hours for continuing to
work on the Motion for Enforcement of Child Support. . . .
....
10. On August 31, 2016, Mr. Orsak sent me an invoice where he
billed me 0.75 hours for reviewing a motion to quash the
deposition of Daniel Barragan, as well as research. His assistant
billed 0.25 hours on the same task. In the same invoice, there was
another billing entry for the preparation on a response to the
Motion to Quash the Deposition plus research where he billed
me 4.5 hours, and his assistant billed me 2.5 hours. Despite the
fact he Mr. Orsak billed a total of 8.0 hours for this task, the
actual motion was only twenty-seven sentences and contained no
citations to case law. . . .
11. Mr. Orsak asked me many times if I wanted an amicus appointed
for the children. Each time, I was adamant that I did not want an
amicus and instructed him not to pursue it. Yet, Mr. Orsak on
August 31, 2016, billed [me] a total of 3.0 hours for the
preparation of a motion and order to appoint an amicus. He
charged me for work I expressly asked him not to perform.
....
13. In January 2017, I also discovered Mr. Orsak billed me [4] hours
for “preparation of final documents” on his invoice marked
Invoice #10, with no date. I know he did not perform this task
because I performed this task myself. In settling my case, I met
with my ex-wife to draft the final documents. Then I brought
24
them to his office where he told me what changes needed to be
made. He billed me separately for this meeting on invoice #11.
[He] then billed me 1.25 hours for him and 1.25 hours for his
assistant to put a cover sheet on the final documents.
Spradley also attached to his response documents referenced in his affidavit, Orsak’s
invoices, and excerpts of the deposition of Orsak.
Orsak LP’s obtaining its fees is not, standing alone, an improper benefit
sufficient to constitute a breach of fiduciary duty. See Ashton v. KoonsFuller, P.C.,
No. 05-16-00130-CV, 2017 WL 1908624, at *4 (Tex. App.—Dallas May 10, 2017,
no pet.) (mem. op.). However, a lawyer has a duty, at the outset of representation,
to inform a client of the basis or rate of the fees and the contract’s implications for
the client. Walton, 206 S.W.3d at 565. A lawyer has a duty to inform the client of
all material facts, and this duty requires that a lawyer’s fee agreement be clear.
Bennett v. Comm’n for Lawyer Discipline, 489 S.W.3d 58, 70 (Tex. App.—Houston
[14th Dist.] 2016, no pet.). The lawyer must conduct his business with his client
with inveterate honesty and loyalty and must always keep the client’s best interest
in mind. See Walton, 206 S.W.3d at 561. A breach of fiduciary duty occurs when
an attorney benefits improperly from the attorney-client relationship by, inter alia,
making material misrepresentations, subordinating his client’s interests to his own,
or taking advantage of the client’s trust. Kimleco Petroleum, 91 S.W.3d at 923; see
also Goffney v. Rabson, 56 S.W.3d 186, 193 (Tex. App.—Houston [14th Dist.] 2001,
pet. denied).
25
Here, Spradley presented evidence that Orsak represented in December 2015
that he could complete the case for approximately $15,000.00. In reliance, Spradley
hired Orsak LP and paid a retainer of $12,000.00. On February 26, 2016, just shortly
after Orsak LP’s representation began, Spradley received an invoice from Orsak LP
for $10,245.00, some two-thirds of the entire projected cost of representation in the
modification suit. Spradley testified that, when he inquired, Orsak “admitted that
most tasks take significantly less time than claimed on the invoice” and admitted
that Orsak LP did not bill Spradley based on the hourly time actually expended on a
task, as agreed at the outset of Orsak LP’s representation and as represented in the
Agreement, but billed according to Orsak’s “perceived value of the task.” Thus,
Spradley presented some evidence that Orsak LP misrepresented its billing practices
and benefited itself at Spradley’s expense. Taking as true all evidence favorable to
Spradley, as non-movant, and indulging every reasonable inference and resolve any
doubts in his favor, as we must, we conclude that Spradley presented more than a
scintilla of evidence that Orsak LP, through its attorney Orsak, breached its fiduciary
duties to Spradley. See Kimleco Petroleum, 91 S.W.3d at 923; see also Valence
Operating Co., 164 S.W.3d at 661.
With respect to Orsak LP’s assertion that Spradley could show no evidence
that a breach of its fiduciary duties caused him damages, Spradley’s petition reflects
that he sought “to have [Orsak] forfeit any and all fees collected by [Orsak] from
26
[Spradley] due to [Orsak’s] breach of fiduciary duty.” A client who sues his attorney
for breach of fiduciary duty seeking the equitable remedy of fee forfeiture need not
show evidence of causation or actual damages. First United Pentecostal Church of
Beaumont v. Parker, 514 S.W.3d 214, 221 (Tex. 2017) (“It is the agent’s disloyalty,
not any resulting harm, that violates the fiduciary relationship and thus impairs the
basis for compensation.”); Burrow v. Arce, 997 S.W.2d 229, 240 (Tex. 1999) (“[A]
client need not prove actual damages in order to obtain forfeiture of an attorney’s
fee for the attorney’s breach of fiduciary duty to the client.”); Hoover v. Larkin, 196
S.W.3d 227, 233 (Tex. App.—Houston [1st Dist.] 2006, pet. denied) (“Fee forfeiture
is an equitable remedy whose primary purpose is not to compensate the injured
client, but to protect the relationship of trust between attorney and client by
discouraging attorney disloyalty.”).
Because it is undisputed that Orsak LP had a fiduciary duty to Spradley, and
we have concluded that Spradley presented more than a scintilla of evidence of a
breach of that duty, and Spradley was not required to present evidence of causation
or damages, we conclude that Orsak LP did not establish its right to summary
judgment on Spradley’s claim for breach of fiduciary duty. See TEX. R. CIV. P.
166a(i); Hahn, 321 S.W.3d at 523–24. Accordingly, we hold that the trial court
erred in granting summary judgment for Orsak LP on Spradley’s claim for breach of
fiduciary duty.
27
Legal Malpractice
In a claim for legal malpractice, the former client must show (1) the existence
of a duty of care owed to the client, (2) that the duty was breached, and (3) that the
breach proximately caused damage to the client. Starwood Mgmt., LLC v. Swaim,
530 S.W.3d 673, 678–79 (Tex. 2017). Orsak LP, in its motion for summary
judgment, asserted that there is no evidence that it breached a duty of care and that
such breach caused Spradley injury.
A legal malpractice claim alleges professional negligence in failing to
exercise the degree of care, skill, and diligence as attorneys of ordinary skill and
knowledge commonly possess and exercise. Sullivan v. Bickel & Brewer, 943
S.W.2d 477, 481 (Tex. App.—Dallas 1995, writ denied). Generally, a breach of
duty can include giving an erroneous opinion or bad advice, delaying or failing to
handle a matter entrusted to the attorney’s care, or not using an attorney’s ordinary
care in preparing, managing, and prosecuting litigation. Greathouse v. McConnell,
982 S.W.2d 165, 172 (Tex. App.—Houston [1st Dist.] 1998, pet. denied); Murphy
v. Gruber, 241 S.W.3d 689, 693 (Tex. App.—Dallas 2007, pet. denied). The focus
of a legal malpractice claim is on whether the attorney represented the client with
the requisite level of skill. Beck v. Law Offices of Edwin J. (Ted) Terry, Jr., P.C.,
284 S.W.3d 416, 429 (Tex. App.—Austin 2009, no pet.). When a legal-malpractice
claim arises from prior litigation, the plaintiff-client must prove that he would have
28
obtained a more favorable result in the underlying litigation had the attorney
conformed to the proper standard of care. Rogers v. Zanetti, 518 S.W.3d 394, 401
(Tex. 2017).
Here, Spradley, in his summary-judgment response, alleged that Orsak LP
committed legal malpractice because it breached its duty of care by billing
“unreasonable amounts of time for simple tasks”; billing based on the perceived
value of the task and not on the actual time spent performing the task; and billing for
the time to prepare a motion and order to appoint an amicus attorney for the children,
despite Spradley’s instruction to the contrary. In support, Spradley points to his
affidavit testimony that Orsak told him that Orsak LP billed Spradley based on the
“perceived value” of the task, and not on the actual time spent performing the task,
and that Orsak billed for time to prepare a motion and order to appoint an amicus
attorney, contrary to Spradley’s instruction. Spradley also points to an invoice entry
showing that, on August 31, 2016, he was billed for the preparation of a motion and
order to appoint an amicus attorney.
Spradley does not allege, however, that Orsak failed to exercise the “degree
of care, skill, or diligence as attorneys of ordinary skill and knowledge commonly
possess” or that Orsak inadequately represented him. Deutsch v. Hoover, Bax &
Slovacek, L.L.P, 97 S.W.3d 179, 189 (Tex. App.—Houston [14th Dist.] 2002, no
pet.); see also Murphy, 241 S.W.3d at 692–93. And, his testimony and invoice entry
29
do not constitute evidence of inadequate legal representation. See Beck, 284 S.W.3d
at 429 (holding legal malpractice claim focuses on whether attorney represented
client with requisite level of skill); Greathouse, 982 S.W.2d at 172.
We conclude that Spradley did not present evidence of a breach by Orsak LP
of its duty to adequately represent him or to do so with the requisite level of skill.
See Beck, 284 S.W.3d at 429; Greathouse, 982 S.W.2d at 172. We hold that the trial
court did not err in granting summary judgment in favor of Orsak LP on Spradley’s
counterclaim for legal malpractice. See TEX. R. CIV. P. 166a(i); Mack Trucks, 206
S.W.3d at 584.
Breach of Contract
A claim for breach of contract requires proof of: (1) a valid contract;
(2) performance or tendered performance by the plaintiff; (3) that the defendant
breached the contract terms; and (4) damages sustained as a result of the breach.
McRay, 554 S.W.3d at 705. In its motion for summary judgment, Orsak LP asserted
that there is no evidence of Spradley’s performance of his obligations under the
Agreement, a breach by Orsak LP, or damages sustained as a result of the breach.
With respect to the second element, Spradley, in his summary-judgment
response, asserts that he performed or tendered performance of his own obligations
under the Agreement. In support, he points to the provision of the Agreement
requiring that he pay an initial retainer of $12,000.00 as follows: $4,000.00 at the
30
time of contract execution, $2,000.00 at the “end of December” 2015, and “[t]he
balance of the retainer [at] $1,000.00 per month on the first day of each month until
paid in full, beginning the 1st day of February 1, 2016.” Spradley asserted that the
invoices, which he attached to his response, show that he “exceeded his obligation
of paying $1,000.00 every month” throughout 2016. And, he notes, Orsak LP
“admits that [Spradley] ha[d] paid $34,000.00 as of February 17, 2017.”
To show that he performed or tendered performance of his own contractual
obligations, a plaintiff must demonstrate that he complied with the contract’s
provisions. M7 Capital LLC v. Miller, 312 S.W.3d 214, 222 (Tex. App.—Houston
[14th Dist.] 2010, pet. denied). Here, the cited provision of the Agreement
authorized Spradley to pay “[t]he balance of the retainer,” i.e., $12,000.00, in
increments of $1,000.00 per month on the first day of each month “until paid in full,
beginning the 1st day of February 1, 2016.” (Emphasis added.) Nothing in the
Agreement authorized Spradley to continue payments at that level throughout 2016
or throughout the representation. Further, Spradley asserts in his response, and it is
undisputed, that he stopped paying Orsak’s invoices in February 2017 and did not
pay in full the balance reflected on the invoices. Thus, the cited provision of the
Agreement and invoices do not constitute evidence that Spradley performed or
tendered performance of his own contractual obligations. See id.
31
 We conclude that Spradley did not present evidence to raise a genuine issue
of material fact with regard to his performance or tendered performance of his own
obligations under the Agreement. See Ridgway, 135 S.W.3d at 600; Havner, 953
S.W.2d at 711. Accordingly, we hold that the trial court did not err in granting
summary judgment in favor of Orsak LP on Spradley’s counterclaim for breach of
contract. See TEX. R. CIV. P. 166a(i); Mack Trucks, 206 S.W.3d at 584.
DTPA and Fraud
With respect to Spradley’s counterclaims for violations of the DTPA and for
fraud, we note that Spradley did not address these claims in his summary-judgment
response. Accordingly, because the trial court was then required to grant Orsak LP’s
motion for summary judgment on these claims, we hold that the trial court did not
err in so doing. See TEX. R. CIV. P. 166a(i) (“The court must grant the motion unless
the respondent produces summary judgment evidence raising a genuine issue of
material fact.”); see also TEX. R. CIV. P. 166a(c) (“Issues not expressly presented to
the trial court by written motion, answer or other response shall not be considered
on appeal as grounds for reversal.”).
In sum, we sustain the portion of Spradley’s first issue in which he asserts that
the trial court erred in granting summary judgment for Orsak LP on Spradley’s
counterclaim for breach of fiduciary duty. We overrule the remaining portions of
Spradley’s first issue.
32
Conclusion
We reverse the portion of the trial court’s judgment in which it grants
summary judgment in favor of Orsak LP on Spradley’s counterclaim for breach of
fiduciary duty and remand that claim for further proceedings.3 We affirm the trial
court’s judgment in all other respects.
Sherry Radack
Chief Justice
Panel consists of Chief Justice Radack and Justices Hightower and Adams.
3
See Burrow v. Arce, 997 S.W.2d 229, 240–46 (Tex. 1999); Gregory v. Porter &
Hedges, LLP, 398 S.W.3d 881, 885–86 (Tex. App.—Houston [14th Dist.] 2013, pet.
denied) (holding that attorney disgorges fees that client has actually paid and noting
that total fee forfeiture is not favored).
33