Billy Fitts and Freida Fitts v. Melissa Richards-Smith, the Law Firm of Gillam & Smith, LLP, E. Todd Tracy, and the Tracy Law Firm
06-15-00017-CV
Tex. Crim. App.Jun 8, 2015Background
- Texas appellate case addressing conflicts of interest in multi-client representation and effect of primary vs umbrella insurance releases on malpractice claims.
- Appellants Billy and Freida Fitts sued two law firms and attorneys for legal malpractice and breach of fiduciary duty stemming from representing multiple family members after a fatal 2009 car wreck.
- Kemper issued a $250,000 primary policy; RLI provided a $5 million umbrella policy that would pay once primary limits exhausted.
- Kemper tendered its policy limits and the Fitts executed a release with Kemper; Kemper advised the release did not bar claims under the RLI umbrella.
- Defendants knew of the umbrella policy and the release but did not discuss conflicts or possible effects on RLI claims with the Fitts family, continuing joint representation.
- Toyota litigation proceeded with minimal recovery for the Fitts across parties, and RLI claims were not pursued within statute limitations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Kemper Release extinguishes RLI Umbrella claims | Fitts: release does not bar RLI claims | Defendants: release extinguishes all claims | No; Kemper Release does not bar RLI claims |
| Whether Appellants could rescind the Kemper Release | Mutual mistake or fraudulent inducement could void release | Release is final and unrescinded | Triable issue on mutual mistake/fraud; not barred as a matter of law |
| Whether Kemper Release negates causation in malpractice claim | Kemper release does not negate causation to pursue RLI | Release bars related claims | Error to grant summary judgment on causation |
| Whether Kemper Release negates damages in fiduciary duty claim | Damages intact under RLI; breach caused damages | Damages negated by release | Summary judgment improper; damages remain actionable |
| Whether the conflict of interest was impermissible and fractured claims properly | Dual representation violated Rule 1.06; independent fiduciary duty exists | Consent under Rule 1.06(c) could justify concurrent representation | Conflict existed; fracture allowed; summary judgment improper |
Key Cases Cited
- Barker v. Roelke, 105 S.W.3d 75 (Tex. App.—Eastland 2003) (umbrella policy issues and separate releases distinguishable)
- Baty v. ProTech Ins. Agency, 63 S.W.3d 841 (Tex.App.-Houston [14th Dist.] 2001) (limitations on rewriting releases; scope of release controls)
- Duncan v. Cessna Aircraft Co., 665 S.W.2d 414 (Tex. 1984) (contract release scope and interpretation standards)
- Goffney v. Rabson, 56 S.W.3d 186 (Tex.App.-Houston [14th Dist.] 2001) (fiduciary-duty claims require misrepresentation/self-dealing beyond malpractice)
- Nixon v. Mr. Property Management Co., 690 S.W.2d 546 (Tex. 1985) (traditional summary judgment standards)
- Johnson v. Brewer & Pritchard, P.C., 73 S.W.3d 193 (Tex. 2002) (duty to disclose conflicts; fiduciary duties in attorney- client relation)