Jeff and Courtney Blankinship,and Miracle Golf Concepts v. Timothy Brown, Gary W. Blanscet and Blanscet Sutherland, Hooper

AFFIRM; and Opinion Filed March 14, 2013.
In The
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No, O5-11-00649-CV
JEFF AND COURTNEY BLANKINSHIP, AND MIRACLE GOLF
CONCEPTS, Appellants
V.
TIMOTHY BROWN, GARY W. BLANSCET, AND BLANSCET
SUTHERLAND, lOOPER, & HALE, LLP, Appellees
On Appeal from the 14th Judicial District Court
Dallas County, Texas
Trial Court Cause No. 320570014
OPINION
Before Justices O’Neill, Francis, and Murphy
Opinion by Justice O’Neill
The trial court granted two motions for summary judgment in favor of appellees Timothy
Brown, Gary W. Blanscet, and Blanscet, Sutherland, looper, & Hale LLP. Appellants Jeff and
Courtney Blankinship and Miracle Golf Concepts appeal the trial court’s orders, In four issues,
they argue (1) the trial court erred by granting the October 27, 2010 summary judgment with
respect to their claims for common law fraud, fraud by nondisclosure, and negligent
misrepresentation; (2) the trial court abused its discretion by denying their motion to compel
discovery; (3) the trial court erred by granting the January 21, 2011 summary judgment with
respect to their claims for aiding and abetting common law fraud, fraud by nondisclosure, and
negligent misrepresentation; and (4) the trial court abused its discretion when it rendered the
May 6, 201 1 protective order regarding their post-judgment deposition of Brown. We affirm.
Factual Background
Appellee Brown was a golf professional, who formed a company called Miracle Golf
Concepts. In 2007, he and his wife sold Miracle Gold Concepts to Golf & Tennis Pro Shop, Inc.
(G&TPS), Brown worked for G&TPS from 2007 until December 31, 2008. During his
employment, he was bound by a non-compete agreement that prohibited him from rendering
services or being otherwise affiliated with another entity in the charity golf tournament industry.
The agreement was in force during his tenure and for two years thereafter.
In late 2008, a dispute over Brown’s wages ensued and G&TPS eventually terminated
him. The dispute was formally resolved with a Termination Agreement and Mutual Release
signed on March 17, 2010 with an effective date of December 31, 2008.
In April or May of 2009, Brown entered into a business relationship with the
Blankinships to pursue Miracle Golf Concepts on their own. In September 2009, an attorney for
the Blankinships drafted an independent contract agreement and presented it to Brown. Brown
gave the agreement to appellee Gary Blanscet, his attorney, to review. Blanscet advised Brown
he could not make certain representations because of his prior dealings with G&TPS. Blanscet
revised the agreement, and the Blankinships signed it on October 14, 2009.
On October 23, 2009, Brown discussed with the Blankinships his prior dealings with
G&TPS, including the noncompete agreement. The Blankinships terminated their contract with
Brown and filed suit against him for common law fraud, negligent misrepresentation, and breach
of contract. They brought causes of action against Blanscet and his law firm for common law
fraud, aiding and abetting common law fraud, negligent misrepresentation, and aiding and
abetting negligent misrepresentation. A later amended petition included causes of action for
fraud by nondisclosure and aiding and abetting fraud by nondisclosure,
On October 4, 2010, Blanscet and his firm filed a motion for summary judgment pursuant
to Texas Rule of Civil Procedure 166a asserting that all of appellants’ claims failed as a matter of
law. The trial court granted the motion on October 27, 2010 and dismissed with prejudice all of
appellants’ claims against them.
Appellants filed a motion to reconsider the October 27, 2010 order, and the trial court
granted it in part and reinstated their aiding and abetting claims. Blanscet and his firm later filed
a no evidence motion for summary judgment on the reinstated claims, which the trial court
granted on January 21, 2011.
Appellants proceeded to trial against Brown. The jury found in favor of appellants on
their claims for breach of contract, negligent misrepresentation, and fraud. Appellants now
appeal the trial court’s rulings in favor of l3lanscet and his law firm.
January 21, 2011 No Evidence Summary Judgment
In their third issue, appellants argue the trial court erred by granting appellees’ no
evidence motion for summary judgment with respect to their claims for aiding and abetting
common law fraud, fraud by nondisclosure, and negligent misrepresentation. Appellees respond
appellants violated Texas Rule of Appellate Procedure 38 and therefore have waived their
complaints. We agree with appellees.
After discussing the procedural history of the January 21, 2011 summary judgment order,
appellants state the following:
The Blankinships will refrain from regurgitating the arguments and
evidence proffered to rebut each of these nine criticisms, which are
set forth in full in the clerk’s record. [CR 70-251 1. Upon review
of the arguments, authorities and evidence proffered by the
Blankinships, the Blankinships submit that no doubt exists that
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they met their burden to present evidence creating factual issues
which should have been resolved at trial with respect to each oi the
elements challenged by the l3lanscet delcndants.
Texas Rule of Appellate Procedure 38. 1(0 states that a brief “must contain a clear and
concise argument for the contentions made, with appropriate citations to authorities and to the
record.” TEx. R. APP. P. 38.1(i). The above conclusory statement with citation to over 150
pages of the Clerk’s Record (toes not Comport with rule 38.1(i). See Taylor v. State, 293 S.W.3d
913, 916 (Tex. App.—Austin 2009. no pet) (concluding brief, conclusory statements.
unsupported by legal citations. are insufficient to sustain an appellant’s complaint). Although
appellate courts generally construe the briefing rules liberally, points of error unsupported by the
citation of authority present nothing for the court to review. See Arias v. Brookstone, L.P., 265
S.W.3d 459, 470 (Tex. App.—Houston list Dist.I 2007, pet. denied). Further, appellant’s
suggestion for disregarding nile 38. 1 negates appellate rule page limitations. Accordingly,
appellant’s third issue is overruled.
Having ovelTuled this issue, we need not address appellants’ second issue in which they
complain the trial court abused its discretion when it denied their motion to compel discovery
and continue the summary judgment hearing regarding the aiding and abetting claims. Because
they waived their aiding and abetting claims on appeal, any alleged error by the trial court in
denying discovery or a continuance based on these claims is moot. Thus, appellant’s second
issue is overruled.
October 27, 2010 Traditional Motion for Summary Judgment
In their first issue, appellants argue the trial court erred by granting appellees’ motion for
summary judgment with respect to their causes of action for common law fraud, fraud by
nondisclosure, and negligent misrepresentation. Appellees respond the trial court did not err in
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eranting their motion because no genuine issue of material [act exists indicating appellants
justifiably relied upon any alleged misrepresentations by Blanscet.
We review the trial court’s summary judgment de novo. Provjdeni Lik’ & ;lccident Ins.
Co. v. Knott. I 2i S.Vv 3d 211. 215 (Tex. 2003). When reviewing a summary judgment, we take
as true all evidence favorable to the nonmovant, and we indulge every reasonable inference and
resolve any doubts in the nonmovant’s favor. Id. Under Texas Rule of Civil Procedure 166a(c),
the party moving for summary judgment bears the burden to show that no genuine issue of
material fact exists and that it is entitled to judgment as a matter of law, Id.
To establish common law fraud, appellants must prove (I) a material misrepresentation
was made, (2) the representation was false, (3) when the representation was made, the speaker
knew it was false or made it recklessly without any knowledge of [lie truth and as a positive
assertion. (4) the speaker made the representation with the intent that the other party should act
upon it, (5) the party acted in reliance on the representation, and (6) the party thereby suffered
injury. Hall v. Douglas, 380 S.W.3d 860, 80 (Tex. App.—Dallas 2012, no pet.).
Fraud by nondisclosure is considered a subcategory of fraud. Schlurnberger Tech. Corp.
v. Swanson, 959 S .W.2d 171, 181 (Tex. 1997). To establish fraud by nondisclosure, appellants
must prove (1) the defendant failed to disclose facts to the plaintiff, (2) the defendant had a duty
to disclose those facts, (3) the facts were material, (4) the defendant knew the plaintiff was
ignorant of the facts and the plaintiff did not have an equal opportunity to discover the facts, (5)
the defendant was deliberately silent when it had a duty to speak, (6) by failing to disclose the
facts, the defendant intended to induce the plaintiff to take some action or refrain from acting, (7)
the plaintiff relied on the defendant’s nondisclosure, and (8) the plaintiff was injured as a result
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of acting without that knowledge. Hori:on Shipbuilding. Inc. i. fllvn II Hidin. LLC, 32$
S.W.3d 840, 850 (Tex, App.—Houston I 14th Dist.I 2010, no pci).
And lastly, to establish negligent misrepresentation, appellants must prove (1) the
representation was made by a defendant in the course of his business, or in a transaction in which
he had a pecuniary interest. (2) the delendant supplied “false information’ br the guidance of
others in their business. (3) the defendant did not exercise reasonable care or competence in
obtaining or communicating the information, and (4) the plaintiff suffered pecuniary loss by
justifiably relying on the representation. Henry Schein, Inc. v. Stromboe. 102 S.W.3d 675. 686
n.24 (Tex. 2002>.
Appellees’ motion for summary judgment challenged the reliance element of appellants’
causes of action, They contended appellants’ claims failed as a matter of law because the
uncontroverted evidence established appellees did not become aware of Brown’s involvement
with appellants until August 2009. which was approximately four months after Brown and
appellants began working together. Thus, appellees claimed appellants could not have possibly
relied on any representations or lack of disclosures by them when they signed the October 14,
2009 contract.
Both common law fraud and negligent misrepresentation require a showing of actual and
justifiable reliance. AKB Hendrick. LP r. Musgrave Enter., Inc., 380 S.W.3d 221, 238 (Tex.
App.—Dallas 2012, no pet.). Likewise, reliance is a necessary element of fraud by
nondisclosure. Schiumberger Tech. Co.. 959 S.W.2d at 181 (holding fraud by nondisclosure is a
subcategory of fraud and because reliance is an element of fraud, it is likewise an element of
fraud by nondisclosure). Appellants acknowledge that in order to substantiate their causes of
6
action against appellees they must establish they relied upon misrepresentations or
nondisclosures by appellees.
In response to appellees’ motion for summary judgment, appellants submitted the
affidavit of Jeff Blankinship. He stated they “actually relied on both the representations
contained within the Independent Contract Agreement as reviewed and redrafted by [appellees I
,“ and they “actually relied on the lappellees’ I nondisclosure of the existence of the Asset
Purchase Agreement and the Noncompetition Agreement” He further asserted they would not
have entered into the redrafted agreement had they been aware of the Asset Purchase Agreement
and the Noncompetition Agreement. Had they known of these agreements, “they would
immediately have ceased incurring any further expenditures or liabilities with respect to their
business relationship with Defendant Brown.” eased on this affidavit, appellants argue they
created a fact issue to overcome summary judgment.
Appellees first argue the affidavit does not create a fact issue because Jeff Blankinship’s
trial testimony proves he did not rely on any representations or nondisclosures by Blanscet, He
admitted at trial he did not read the contract before signing it nor did he submit it to his attorney
to review despite knowing appellees made revisions to it. However, this evidence was not before
the trial court at the time it considered summary judgment. Accordingly, we may not consider
the trial testimony in our summary judgment analysis. See Young v. Gunfory, 322 S.W.3d 731,
745 n.3 (Tex. App.—Dallas 2010, no pet.) (noting review was limited to evidence before the
court at the time of the first motion for partial summary judgment); Deerfield Land Joint Venture
v. S. Union Realty Co., 758 S.W.2d 608, 610 (Tex. App.—Dallas 1988, writ denied).
In reaching this conclusion, we are unpersuaded by appellees’ arguments that appellants
“opened the door” to our consideration of such evidence when they filed a motion for new trial
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with the trial transcript attacheci. Appellees have provided no authority to support this
proposition, and appellants have not challenged the denial ol their motion for new trial.
Accordingly, we will consider the affidavit to determine whether appellants created a fact issue
as to the element of reliance.
It is undisputed appellees did not have an attorney—client relationship with appellants.
However, appellants rely on Mc€’arnish, Martin, Brown & Loeffler v. F.E. Appling Investments,
991 S.W.2d 787 (Tex. 1999) to support their position that an attorney can be responsible to a
non-client for misrepresentations. Appellants argue Mccamish should apply because Blanscet
reviewed, modified, and redrafted the independent contractor agreement for Brown, who in turn
provided the contract with alleged fraudulent statements to them. They claim to have relied on
the representations in the contract, and their reliance “was justifiable, because a non-client has a
reasonable and justifiable expectation that his counterpartys attorney will comply with his
ethical and professional responsibilities” as provided by the Texas Disciplinary Rules of
Professional Conduct. As explained below, we conclude McCa,nish and the Texas Disciplinary
Rules of Professional Conduct do not apply under these facts,
The McCamish court decided whether the absence of an attorney-client relationship
precludes a third party from suing an attorney for negligent misrepresentation under section 552
of the Restatement (Second) of Torts. While it concluded the theory of negligent
misrepresentation permits plaintiffs who are not parties to a contract for professional services to
recover from the contracting professionals, the duty imposed on an attorney to a non-client is
limited. Id. at 793—94.; see also Kastner v. Jenkins & Gilchrist, P.C., 231 S.W.3d 571, 577 (Tex.
App.—Dallas 2007, no pet.). The duty arises only when (1) the attorney is aware of the non-
client and intends that the non-client rely on the representation; and (2) the non-client justifiably
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relics on the attorney’s representation of a material fact, Mcarnish, 991 S,W.2d at 794;
Kastner, 231 S,W.3d at 577.
To determine whether the nonclient justifiably relied on the representation, the
reviewing court must consider the nature of the relationship among the attorney, client, and non
client. McCamzsh, 991 S.W,2d at 794. The non-client cannot rely on an attorney’s
representations unless the attorney invites that reliance. Id. at 795. Further, courts have
generally acknowledged that a third partys reliance on an attorneys representation is not
justified when the representation takes place in an adversarial context. Id. at 794.
Here, Blanscet was aware he was reviewing a contract for Brown that would be given to
appellants. However, there is no evidence Blanscet intended appellants to rely on any
representations in the contract or that he invited any such reliance. In fact, appellants have not
presented any evidence that they had any dealings, discussions, or interactions with Blanscet
prior to signing the contract that would establish an invitation of reliance.
Further, courts have allowed an attorney to be held liable to a non-client in situations
such as when the attorney issues an opinion letter or some type of evaluation. See McCwnish,
991 S.W.2d at 793 (“A typical negligent misrepresentation case involves one party to a
transaction receiving and relying on an evaluation, such as an opinion letter, prepared by another
party’s attorney.”). Blanscet did not issue any type of opinion letter or evaluation. Rather, he
revised the contract on behalf of Brown because the initial contract “was not in the format of a
typically acceptable” independent contractor agreement. “Modifications were made to the
proffered format in order to assist Mr. Brown in his further discussions with jappellantsj.”
[Emphasis added.] Thus, Blanscet was clearly acting on behalf of his client’s interest.
Kasiner v. Jenkens & Gilchrist. P. C., a case out of this court that declined to extend
iWcCaniish, is instructive. In that case, non—clients sued an attorney and his firm afler a limited
partnership’s investment in a commercial real estate venture failed. Kasiner, 23 1 S.W.3d at 573.
The attorney prepared a partnership agreement on behalf of his clients based on information they
provided him. Id. at 574. It was later determined that the partnership did not have sufficient
funds to go through with certain transactions. Id. The Kastners filed suit for negligent
misrepresentation. and the trial court granted the attorney’s no-evidence motion for summary
judgment. Id. at 577.
We concluded McCamivh did not apply, and the reliance element was missing. Id. at
578, In reaching this conclusion, we noted “there was no reason for [aftorneyl to anticipate the
non-client recipient might attach any extraordinary significance to his transmission of the
partnership agreement or the accompanying colTespondence.” id. at 578. We further concluded:
[Tjhe mere transmission of a partnership agreement from an
attorney to a non-client cannot reasonably be construed as a legal
opinion on the validity of the agreement We similarly reject
the Kastners’ attempt to characterize the contents of the
partnership agreement as representations by [attorneyj. To do so
would effectively require attorneys to adopt as their own the terms
of—and representations made in—legal documents they prepare
tor their clients. Such an expansive interpretation far exceeds the
scope of Mccamish liability.
Id.
Appellants are again asking this Court to expand McC’a,nish to circumstances we have
already concluded far exceed the scope of such liability. Similar to the attorney in Kastner,
Blanscet revised the independent contract agreement based on information he received from
Brown. There is no evidence he had any communication with appellants other than providing
the revised independent contract agreement to Brown, who then provided it to appellants.
ID
Nothing within the agreement included any type of opinion or evaluation. We again refuse to
expand 4frCi,tiisIz to the point that an attorney can he held liable for alleged misrepresentations
when preparing legal docunienis, based on information provided by the client, that ended up in
the hands of nomelients. Accordingly, Jeff Blankinship’s affidavit does not raise a genuine fact
issue as to reliance. l3ecause appellees’ have conclusively negated this essential element of
appellants’ causes of action for common law fraud, negligent misrepresentation, and fraud by
nondisclosure, they were entitled to judgment as a matter of law.
In reaching this conclusion, we are not l)erstlade(l by appellants’ argument that the Texas
Disciplinary Rules of Professional Conduct create a duty on the part of Blanscet to disclose any
information regarding Brown’s prior dealings with G&TPS. See TEX. DISCIPLINARY R. PROF’L
CONDUCT 4.01, The Texas Disciplinary Rules of Professional Conduct expressly stale that a
violation of the Code of Professional Responsibility does not give rise to a private cause of
action. See Tix. DISCIPLINARY R. PR0F’L CONDUCT preamble ¶ 15 (“These rules do not
undertake to define standards of civil liability of lawyers for professional conduct. Violation of a
rule does not give rise to a private cause of action nor does it create any presumption that a legal
duty to a client has been breached.”); Jovner v. DeFriend, 255 S.W.3d 281, 283 (Tex. App—
Waco 2008, no pet.) (holding plaintiff could not support causes of action for fraud and civil
conspiracy based on a violation of rule 4.01). Accordingly, appellants’ first issue is overruled.
Post-Judgment Deposition Protective Order
In their final issue, appellants argue the trial court abused its discretion when it rendered
the May 16, 2011 protective order preventing them from deposing Brown post-judgment.
Texas Disciplinary Rule of Professional Conduct 4.01 provides that in the course of representing a client, a lawyer
shall not knowingly (a) make a false statement of material fact or law to a third person; or (b) fail to disclose a
material fact to a third person when disclosure is necessary to avoid making the lawyer a party to a criminal act or
knowingly assisting a fraudulent act perpetrated by a client. TEx. DISCIPLINARY R. PR0F’L CONDUCT 4.01.
Appellees respond the trial court did not abuse its discretion because appellants were essentially
trying to circumvent the court’s prior order denying their motion to reconsider and motion for
new trial.
After trial, appellants filed a Notice of Intent to Take Oral Deposition of Defendant
Timothy Brown.” Appellees filed their motion to quash and motion for protective order pursuant
to Texas Rule of Civil Procedure 192.6 and asked the trial court to strictly limit the scope of the
deposition to enforcement of the judgment. “Any inquiry beyond the scope of the enforcement
would be irrelevant, . .
The trial court held a hearing on the motion, and appellants admitted they planned to
inquire into issues beyond the enforcement of judgment. Appellants argued that after trial.
Brown’s counsel informed them that Brown disputed some of Blanscet’s trial testimony, and
Brown was willing to testify as to those matters. Appellants claimed Brown’s testimony could
“constitute new evidence warranting a re-examination of Mr. Blanscet’s and his law firm’s
potential culpability with respect to our prior causes of action.” Appcllees responded that all
issues regarding their liability had been fully and finally resolved in summary judgment motions.
The trial court granted a protective order and limited the deposition to issues surrounding
collection of the judgment.
Rule 621a allows a successful party after the rendition of judgment to initiate and
maintain discovery proceedings to aid in the enforcement of judgment. TEX. R. Civ. P. 621 a;
Zenner v. Lone Star Striping & Paving, L.L.C., 371 S.W.3d 311, 316 (Tex. App.—Houston [1st
Dist.j 2012, pet. denied). Relevance in the context of post-judgment discovery must be viewed
generally in the same manner as in ordinary pretrial discovery, which includes anything
reasonably calculated to lead to the discovery of material evidence. Collier Serv. Corp. v.
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Sat inns, 812 S.W.2d 372. 376 (Tex AppCorpus Christi 1991. no writ). Material evidence
includes any inftwmation that would aid in enforcement of the judgment. Id.
Texas Rule of Civil Procedure 192.6(b) authorizes a trial court to grant an order of
protectiOn, “to protect the moVant Irom undue hurden, unnecessary expense, harassment.
annoyance, or invasion of personal. constitutional, or property rights.” TEx. R. Civ. P. 192.6(b).
While a trial judge may exercise some discretion in the granting of protective orders, this
discretion is not without bounds, See Masinga v. Whittingron, 792 S.W.2d 940. 940 (Tex, 1990);
see also In re Collins, 286 S.W.3d 911, 919 (Tex. 2009) (orig. proceeding). A party seeking
protection must show facts of a particular. speci1c, and demonstrable injury sufficient to justify a
protective order. In re K.L&J. Ltd. Pship, 336 S.W.3d 286, 294 (Tex. App.—San Antonio
2010, orig. proceeding) (citing Masinga, 792 S.W.2d at 940)). It may not simply make
conclusory allegations that the requested discovery is unduly burdensome or unnecessarily
harassing. In re Alford Clievrolet-Geo. 997 S.W.2d 173, 181 (Tex. 1999) (orig. proceeding).
The party must produce some evidence supporting its request for a protective order when sought
on that basis. Id.
While we agree appellees’ motion for protective order does not specifically state why the
discovery sought was irrelevant, appellees clearly made their objections to the trial court during
the hearing. Appellees argued that appellants’ requests to inquire into information beyond
enforcement of the judgment was irrelevant. Further, appellees correctly argued that all causes
of action against them had been fully and finally resolved by the trial court in motions for
summary judgment. Therefore, any information Brown allegedly could have provided regarding
Blanscet’s trial testimony was irrelevant. Further, the trial court had previously overruled
appellants’ motion for reconsideration and motion for new trial in which they made the same
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arguments. 1 bus, appellees’ arguments were hot conclusory to the trial court but were supported
by the record. Accordingly, because the information appellants sought was irrelevant and would
not assist in enlorcement ol the judgment against Brown, the trial court did not abuse its
discretion in granting the protective order. We overrule appellants’ fouiih issue.
Conclusion
Having overruled appellants’ issues, we affirm the trial court’s judgment.
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Fif11i Jitrirt of IExai at Ja1tu
JUDGMENT
JEFF AND COURTNEY I3LANKINSIIIP, On Appeal from the 14th Judicial District
AND MIRACLE GOLF CONCEPTS, Court, Dallas County, Texas
Appellants Trial Court Cause No. 320570014.
Opinion delivered by Justice O’Neill,
No. 051 L-00649CV V. Justices Francis and Murphy participating.
TIMOTHY BROWN, GARY W.
BLANSCET, AND BLANSCET
SUTHERLAND, HOOPER & HALE LLP,
Appellees
In accordance with this Court’s opinion of this date, the judgment of the trial court is
AFFIRMED.
It is ORDERED that appellee TIMOTHY BROWN. GARY W. BLANSCET AND
BLANSCET SUTHERLAND, HOOPER & HALE LLP recover their costs of this appeal from
appellant JEFF AND COURTNEY BLANKINSHIP,AND MiRACLE GOLF CONCEPTS.
th
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Judgment entered this day of March, 2013.
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/4I1ARL JLL”
JUSTICE ,// /7