Cokinos, Bosien & Young v. Shelia D. Moore, as Independent of the Estate of Eugene H. Moore ( 2020 )

Reverse and Render; Opinion Filed February 4, 2020
In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-18-01340-CV
COKINOS, BOSIEN & YOUNG, Appellant
V.
SHELIA D. MOORE, AS INDEPENDENT EXECUTOR OF THE ESTATE OF EUGENE
H. MOORE, Appellee
On Appeal from the 192nd Judicial District Court
Dallas County, Texas
Trial Court Cause No. DC-16-03317
MEMORANDUM OPINION
Before Justices Myers, Osborne, and Nowell
Opinion by Justice Myers
This case concerns a suit to enforce an agreement to share a contingent attorney’s fee
between lawyers. The law firm Cokinos, Bosien & Young appeals the summary judgment
rendered in favor of Sheila D. Moore as independent executor of the estate of Eugene H. Moore
on her suit for breach of contract. CB&Y brings four issues on appeal contending (1) the trial
court erred by granting appellee’s motion for summary judgment and denying CB&Y’s motion for
summary judgment because the fee-sharing agreement between Eugene Moore and CB&Y is void
as against public policy; (2) the trial court erred by granting appellee’s motion for summary
judgment because the fee-sharing agreement lacked consideration; (3) the trial court erred by
awarding appellee twenty percent of the fee CB&Y earned; and (4) the trial court’s award of
attorney’s fees should be reversed or remanded. We conclude the agreement violated public
policy, we reverse the trial court’s judgment, and we render judgment that appellee take nothing.
BACKGROUND
Moore was the general counsel for Ruhrpumpen, Inc. In 2001, Ruhrpumpen was involved
in patent litigation with Flowserve Corp., and they entered into a settlement agreement. In 2010,
Ruhrpumpen suspected Flowserve was violating the settlement agreement. In July 2010,
Ruhrpumpen contacted CB&Y to represent it in litigation with Flowserve. Ruhrpumpen and
CB&Y signed a fee agreement providing a forty percent contingency fee to CB&Y if the case was
resolved without an appeal and a fifty percent contingency fee if it was appealed. CB&Y filed
Ruhrpumpen’s suit against Flowserve in November 2010.
On January 25, 2011, Moore sent an e-mail to Gregory Cokinos, one of the lawyers at
CB&Y, asking that CB&Y share its contingent fee with him. Cokinos testified in his deposition
he told Moore that he would “consider doing that.” On February 14, 2011, Moore e-mailed
Cokinos stating they needed to resolve the fee-sharing arrangement. In the e-mail, Moore
suggested “that a 20% reserve to me would be fair and reasonable (i.e., 8% of the 40% current
contingent fee if settled before appeal, or 10% of the 50% contingent fee if tried and appealed).”
A month later, on March 11, 2011, Cokinos responded, stating, “We are ok with this
arrange[ment], understanding that our cost/expenses will be deducted before we calculate your %
recovery. [A]ssuming that’s ok. I will confirm by letter. Let me know . . . .” However, Cokinos
did not send a letter to Moore setting out the fee-sharing agreement. Eight months later, on
November 11, 2013, Moore e-mailed Cokinos and asked Cokinos to prepare what would be
necessary for a fee-sharing agreement. However, no written agreement was prepared and no other
papers concerning fee sharing were signed.
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Moore died in April 2014. On May 15, 2014, the probate lawyer for Moore’s estate sent
an e-mail to CB&Y asking that the firm honor the fee-sharing agreement with Moore.
The lawsuit between Ruhrpumpen and Flowserve settled in late 2014 or early 2015, and
Flowserve paid the settlement amount, $41 million, into CB&Y’s trust account. On March 6,
2015, CB&Y and Ruhrpumpen agreed that CB&Y would receive $7,999,200, as its contingent
attorney’s fee.1
Cokinos testified that Ruhrpumpen learned about the fee-sharing agreement in November
2014, seven months after Moore had died. Cokinos testified, “Ruhrpumpen absolutely objected
to that and almost fired me over it.” On March 9, 2015, Marcelo Elizondo wrote to CB&Y stating
Ruhrpumpen did not consent to CB&Y sharing its fee with Moore.
About a year later, on March 24, 2016, appellee brought this suit against CB&Y alleging
CB&Y breached a contract to share its fee with Moore and seeking to recover twenty percent of
the fee CB&Y received. Both sides moved for summary judgment. The trial court granted
appellee’s motion for summary judgment and denied CB&Y’s. The trial court awarded appellee
damages of $1,599,840, which was twenty percent of the fee CB&Y received, and attorney’s fees
of $125,250 plus additional fees in case of appeal.
PUBLIC POLICY IN ATTORNEY FEE-SHARING AGREEMENTS
In its first issue, CB&Y contends the trial court erred by granting appellee’s motion for
summary judgment and denying CB&Y’s motion for summary judgment. CB&Y argues that the
alleged fee-sharing agreement was not enforceable because it did not comply with Texas
Disciplinary Rule of Professional Conduct 1.04(f). See TEX. DISCIPLINARY RULES PROF’L
1
The settlement between Flowserve and Ruhrpumpen included Flowserve paying compensation for the trademark and patent violations and
Flowserve purchasing assets from Ruhrpumpen. The $41 million settlement payment included both the compensation and the funds for the
purchases. The record does not show how much of the $41 million was for compensation and how much was for the purchase of the assets. Cokinos
testified that in discussing CB&Y’s fee with Ruhrpumpen, he did not include the money for the asset purchases.
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CONDUCT 1.04(f), reprinted in TEX. GOV’T CODE ANN., tit. 2, subtit. G, app. A (Tex. State Bar R.
art. X, § 9).
The standard for reviewing a traditional summary judgment is well established. See
McAfee, Inc. v. Agilysys, Inc., 316 S.W.3d 820, 825 (Tex. App.—Dallas 2010, no pet.). The
movant has the burden of showing that no genuine issue of material fact exists and that it is entitled
to judgment as a matter of law. TEX. R. CIV. P. 166a(c). The summary judgment record considered
by the trial court and reviewed by the appellate court consists of (1) the discovery materials
referenced or set forth in the motion for summary judgment or the response, and (2) “the pleadings,
admissions, affidavits, stipulations of the parties, and authenticated or certified public records, if
any, on file at the time of the hearing, or filed thereafter and before judgment with permission of
the court.”2 Id. In deciding whether a disputed material fact issue exists precluding summary
judgment, evidence favorable to the nonmovant will be taken as true. In re Estate of Berry, 280
S.W.3d 478, 480 (Tex. App.—Dallas 2009, no pet.). Every reasonable inference must be indulged
in favor of the nonmovant and any doubts resolved in its favor. City of Keller v. Wilson, 168
S.W.3d 802, 824 (Tex. 2005). We review a summary judgment de novo to determine whether a
party’s right to prevail is established as a matter of law. Dickey v. Club Corp., 12 S.W.3d 172,
175 (Tex. App.—Dallas 2000, pet. denied).
When, as here, both parties move for summary judgment, each party bears the burden of
establishing that it is entitled to judgment as a matter of law. Guynes v. Galveston Cty., 861 S.W.2d
861, 862 (Tex. 1993); Howard v. INA Cty. Mut. Ins. Co., 933 S.W.2d 212, 216 (Tex. App.—Dallas
1996, writ denied). Neither party can prevail because of the other’s failure to discharge its burden.
Guynes, 861 S.W.2d at 862; Howard, 933 S.W.2d at 216. When both parties move for summary
2
Both sides have cited in their briefs to the deposition of Marcelo Elizondo. That deposition was attached to appellee’s amended motion to
strike and exclude CB&Y’s expert witness. The deposition was not attached to or referenced in the motions for summary judgment or the responses.
Therefore, it is not part of the summary judgment record, and we do not consider it in determining whether the trial court erred by granting and
denying the motions for summary judgment.
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judgment, we consider all the evidence accompanying both motions in determining all questions
presented. FM Props. Operating Co. v. City of Austin, 22 S.W.3d 868, 872 (Tex. 2000). The
reviewing court should render the judgment that the trial court should have rendered. Id. When a
trial court’s order granting summary judgment does not specify the grounds relied upon, the
reviewing court must affirm the summary judgment if any of the summary judgment grounds are
meritorious. Id.
Rule 1.04(f)
Texas Disciplinary Rule of Professional Conduct 1.04(f) sets out the requirements for
agreements for dividing fees between lawyers who are not in the same firm:
A division or arrangement for division of a fee between lawyers who are not in the
same firm may be made only if:
(1) the division is:
(i) in proportion to the professional services performed by each
lawyer; or
(ii) made between lawyers who assume joint responsibility for the
representation; and
(2) the client consents in writing to the terms of the arrangement prior to the
time of the association or referral proposed, including:
(i) the identity of all lawyers or law firms who will participate in the
fee-sharing agreement, and
(ii) whether fees will be divided based on the proportion of services
performed or by lawyers agreeing to assume joint responsibility for
the representation, and
(iii) the share of the fee that each lawyer or law firm will receive or,
if the division is based on the proportion of services performed, the
basis on which the division will be made; and
(3) the aggregate fee does not violate paragraph (a).
PROF’L CONDUCT 1.04(f). Rule 1.04(g) states, as relevant to this case,
(g) Every agreement that allows a lawyer or law firm to associate other counsel in
the representation of a person . . . and that results in such an association with . . . a
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different law firm or a lawyer in such a different firm, shall be confirmed by an
arrangement conforming to paragraph (f). Consent by a client or a prospective
client without knowledge of the information specified in subparagraph (f)(2) does
not constitute a confirmation within the meaning of this rule. No attorney shall
collect or seek to collect fees or expenses in connection with any such agreement
that is not confirmed in that way, except for
(1) the reasonable value of legal services provided to that person; and
(2) the reasonable and necessary expenses actually incurred on behalf of
that person.
Id. 1.04(g) (emphasis added).
“A fee sharing agreement between lawyers who are not in the same firm violates public
policy and is unenforceable unless the client is advised of and consents to the sharing
arrangement.” Johnson v. Brewer & Pritchard, P.C., 73 S.W.3d 193, 205 (Tex. 2002); see Dickens
v. Jason C. Webster, P.C., No. 05-17-00423-CV, 2018 WL 6839568, at *12 (Tex. App.—Dallas
Dec. 31, 2018, no pet.) (mem. op.) (quoting Johnson). CB&Y argues the agreement in this case
violates public policy because the client, Ruhrpumpen, did not have notice of the agreement until
after Moore had died, and when it did learn of the agreement, it did not consent to it. CB&Y
presented evidence of Ruhrpumpen’s lack of consent through Cokinos’s testimony that
Ruhrpumpen did not consent to the fee sharing when Cokinos mentioned it in 2014, and through
the letter from Ruhrpumpen’s vice president, Marcelo Elizondo, stating that Ruhrpumpen did not
agree to CB&Y sharing its contingent fee with Moore.
Appellee argues that Moore, as Ruhrpumpen’s general counsel, was Ruhrpumpen’s agent
and therefore had authority to consent to the fee-sharing agreement on Ruhrpumpen’s behalf. We
disagree. If Moore was Ruhrpumpen’s agent, as appellee asserts, then he was its fiduciary.
Johnson, 73 S.W.3d at 200. “Unless otherwise agreed, an agent is subject to a duty to his principal
to act solely for the benefit of the principal in all matters connected with his agency.” Id. (quoting
RESTATEMENT (SECOND) OF AGENCY § 387 (1958)). “Among the agent’s fiduciary duties to the
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principal is the duty to account for profits arising out of the employment . . . .” Id. (quoting
RESTATEMENT (SECOND) OF AGENCY § 13, cmt. a (1958)). In Johnson, the supreme court had “no
difficulty in concluding that under common-law agency principles, [a law firm] associate owes a
fiduciary duty not to accept a fee or other compensation for referring a matter to a lawyer or law
firm other than the associate’s employer without the employer’s consent.” Id. at 202. Applying
Johnson to this situation, we conclude that a company’s general counsel owes the company a
fiduciary duty not to accept compensation from anyone other than the company for working on a
case for the company or for referring the case to a law firm without disclosing that compensation
to the company and getting the company’s consent. In this case, Moore did not have authority to
consent on Ruhrpumpen’s behalf to the fee-sharing agreement unless he had disclosed the
agreement to the management of Ruhrpumpen other than himself. The record establishes that
Moore did not disclose the fee-sharing agreement to Ruhrpumpen’s managers. Therefore, Moore
did not have authority to consent to the fee-sharing agreement on Ruhrpumpen’s behalf. We
conclude the fee-sharing agreement violates Disciplinary Rule 1.04(f)(2) because Ruhrpumpen did
not “consent[] in writing to the terms of the arrangement prior to the time of the association or
referral proposed.” TEX. DISCIPLINARY RULES PROF’L CONDUCT 1.04(f)(2). The record shows
Ruhrpumpen never consented at any time, either in writing or by other means, to the fee-sharing.
Appellee argues that even if the fee-sharing agreement violates Rule 1.04(f), the trial court
did not err by enforcing the contract because the agreement was not void and unenforceable. We
disagree.
Appellee asserts Enochs v. Brown, 872 S.W.2d 312 (Tex. App.—Austin 1994, no pet.),
disapproved on other grounds by Roberts v. Williamson, 111 S.W.3d 113 (Tex. 2003), supports
enforcement of the fee agreement. In that case, a child was injured by a driver, and the child’s
mother retained an attorney to bring suit against the driver. Id. at 315. The mother signed a
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contingent-fee contract, but the attorney did not sign it. The attorney recovered millions of dollars
for the child, and the attorney received one-third as his fee. Id. at 316. Subsequently, the child’s
father and the guardian ad litem argued that the attorney’s contingent-fee contract with the mother
should be declared void because the attorney did not sign it as required by section 82.065 of the
Government Code. See TEX. GOV’T CODE ANN. § 82.065(a). The trial court found in favor of the
attorney, and the court of appeals affirmed. The court of appeals treated section 82.065 as a statute
of frauds, observing, “When one party fully performs a contract, the statute of frauds is unavailable
to the other who knowingly accepts the benefits and partly performs.” Enochs, 872 S.W.2d at 319.
The court of appeals also observed that “no one is claiming that Brown [the mother], who entered
into the contract on Justin’s [the child’s] behalf did not understand or agree to the contingent fee
arrangement that Whitehurst [the attorney] attempts to enforce.” Id. at 318. Enochs is
distinguishable. In Enochs, there was no issue of fee sharing, and the client was fully aware of the
contingent-fee agreement and consented to the contingent fee. In this case, it is not merely the
lack of Ruhrpumpen’s signature on a fee-sharing agreement that makes the agreement void, it is
that Ruhrpumpen did not know of the agreement until after Moore died and that Ruhrpumpen
never consented to the fee-sharing even after it learned about the agreement.
Appellee also relies on Gillespie v. Hernden, 516 S.W.3d 541 (Tex. App.—San Antonio
2016, pet. denied). In that case, the clients signed a contingent-fee agreement with one lawyer,
Hernden, agreeing to pay the lawyer fifty percent of any recovery. Id. at 544. Hernden brought
in a second lawyer, Zlotucha. Id. The clients did not have a written contingent-fee agreement
with Zlotucha, and the lawyers did not disclose to the clients that the lawyers intended to share
their fees. Nor did the lawyers seek the clients’ consent to the fee sharing before Zlotucha began
representing them. Id. at 552. However, the evidence showed the clients knew and agreed to
Zlotucha’s representing them, and they knew that Hernden intended to share his fee with Zlotucha.
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Id. at 551, 552. When the litigation concluded, the clients and the attorneys signed a disbursement
agreement stating that Hernden shared his fifty-percent contingency fee equally with Zlotucha. Id.
at 544. The clients then sued both lawyers, alleging, amongst other things, that Zlotucha was not
entitled to share in Hernden’s fee because the lawyers did not comply with Rule 1.04(f). The court
of appeals concluded the fee sharing was permissible despite the lawyers’ failure to comply with
the letter of Rule 1.04(f):
It is undisputed that the clients did not consent in writing to a fee-sharing agreement
concerning Zlotucha before Zlotucha began representing the clients. But the
undisputed evidence, including the clients’ own depositions, proves the clients
knew that Zlotucha would represent them, that Hernden would share his fee with
Zlotucha, and the clients agreed to the fee sharing. At a minimum, the summary
judgment evidence establishes that both attorneys maintained responsibility for the
representation, the clients knew the identity of all the lawyers who participated in
the fee-sharing agreement, and the clients knew, not later than when they signed
the settlement disbursement agreement, what share of the fee each lawyer received.
Having reviewed the summary judgment evidence, we conclude the clients
received the protections Rule 1.04(f) seeks to provide.
Id. at 552 (emphasis added). Appellee argues the fee sharing agreement in this case should be
enforced because Ruhpumpen, like the clients in Gillespie, received the protections of Rule 1.04(f).
Ruhrpumpen, however, did not “receive[] the protections Rule 1.04(f) seeks to provide.” Id. One
of those protections is that the client gets to decide what lawyers will share in the fee. The right
to consent is also the right not to consent. See Miller ex rel. Miller v. HCA, Inc., 118 S.W.3d 758,
766 (Tex. 2003). This right allows the client to protect itself from potential conflicts of interest
and corruption about which it might otherwise have no knowledge. In Gillespie, the clients agreed
to the fee sharing. Id. In this case, Ruhrpumpen chose not to consent to the fee sharing, as was its
right. We conclude Gillespie is not applicable.3
3
Whether or not a fee–sharing agreement would have been enforceable if Ruhrpumpen had been timely notified of its existence and had
consented orally to the fee sharing is not before us and we do not address it.
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CB&Y cites Dickens v. Jason S. Webster, P.C., No. 05-17-00423-CV, 2018 WL 6839568
(Tex. App.—Dallas Dec. 31, 2018, no pet.) (mem. op.), in support of its argument that the trial
court erred by granting appellee’s motion for summary judgment and denying CB&Y’s. In
Dickens, a lawyer, Dickens, had an oral contingent-fee agreement with her client in a wrongful
death case. Dickens alleged that she and another lawyer, Webster, had an oral agreement that
Webster would assume all work on the case and Dickens would split the contingent fee with
Webster. Dickens told her client Webster would be taking over the case and that Dickens would
be sharing her fee with Webster. The client orally consented. Id. at *2. However, the client never
consented in writing to the fee sharing, and Dickens and Webster never executed a written fee-
sharing agreement. Id. at *13. We concluded the fee-sharing agreement “fails to comply with the
requirement that the client consent in writing before the association or referral and after being
advised of the information required by Rule 1.04(f)(2). Therefore, the oral fee sharing agreement
violates public policy and is unenforceable.” Id. In this case, as in Dickens, the client did not
consent in writing to any fee-sharing agreement. Moreover, in this case, the client never consented
orally to fee sharing.
Appellee argues that declaring the fee-sharing agreement unenforceable unjustly enriches
CB&Y. She also argues it would encourage attorneys to agree to a fee-sharing agreement that
does not comply with Rule 1.04(f) and then refuse to comply with the agreement when the case
settles. That was also the situation in Dickens, yet this Court concluded the agreement was
unenforceable.
The Texas Disciplinary Rules of Professional Conduct are not traps for the unwary. All
lawyers practicing in Texas are presumed to be aware of the Rules. PROF’L CONDUCT 8.04, cmt.
1 (“There are four principal sources of professional obligations for lawyers in Texas: these rules
. . . . All lawyers are presumed to know the requirements of these sources.”). “A lawyer shall not
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. . . violate these rules . . . .” Id. 8.04(a)(1). The requirements in Rule 1.04(f) are clear, as is the
requirement in Rule 1.04(g) that “no attorney shall collect or seek to collect fees or expenses in
connection with any such agreement” to which the client did not consent in accordance with the
requirements of Rules 1.04(f) and (g). Although the courts in Enochs and Gillespie concluded that
fee-sharing agreements may be enforceable even when they do not fully comply with Rule 1.04(f),
the courts found the clients had consented to the fee sharing in those cases. The supreme court has
made clear that “[a] fee sharing agreement between lawyers who are not in the same firm violates
public policy and is unenforceable unless the client is advised of and consents to the sharing
arrangement.” Johnson, 73 S.W.3d at 205. Appellee has not cited any authority providing that a
fee-sharing agreement may be enforced when the client refuses to consent to the agreement.
Following Johnson and Dickens, we conclude that any fee sharing-agreement between
CB&Y and Moore “violates public policy and is unenforceable.” Id.; Dickens, 2018 WL 6839568,
at *12. The trial court erred by granting appellee’s motion for summary judgment and denying
CB&Y’s. We sustain CB&Y’s first issue. Having sustained its first issue, we do not address the
other issues.
CONCLUSION
We reverse the trial court’s judgment, and we render judgment that appellee take nothing
on her claims against CB&Y.
/Lana Myers/
LANA MYERS
JUSTICE
181340F.P05
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Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
COKINOS, BOSIEN & YOUNG, On Appeal from the 192nd Judicial District
Appellant Court, Dallas County, Texas
Trial Court Cause No. DC-16-03317.
No. 05-18-01340-CV V. Opinion delivered by Justice Myers.
Justices Osborne and Nowell participating.
SHELIA D. MOORE, AS INDEPENDENT
EXECUTOR OF THE ESTATE OF
EUGENE H. MOORE, Appellee
In accordance with this Court’s opinion of this date, the judgment of the trial court is
REVERSED and judgment is RENDERED that appellee SHELIA D. MOORE, AS
INDEPENDENT EXECUTOR OF THE ESTATE OF EUGENE H. MOORE, take nothing on
her claims against appellant COKINOS, BOSIEN & YOUNG.
It is ORDERED that appellant COKINOS, BOSIEN & YOUNG recover its costs of this
appeal from appellee SHELIA D. MOORE, AS INDEPENDENT EXECUTOR OF THE
ESTATE OF EUGENE H. MOORE.
Judgment entered this 4th day of February, 2020.
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