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. App. | Aug 10, 2015Background
- November 2009 car accident: George Fitts (driver) killed; Billy and William Fitts (passengers) injured. George had a $250,000 primary policy (Kemper/Trinity) and a $5 million RLI umbrella policy.
- Billy and Freida Fitts hired Gillam & Smith and co-counsel in Feb 2010 to pursue a products-liability suit against Toyota; family members including George's estate also retained Gillam & Smith.
- Billy consistently told counsel (and testified under oath) that a sudden unintended acceleration of the Lexus caused the wreck; he never told counsel he blamed George.
- Unbeknownst to their attorneys, Billy and Freida settled separately with Kemper on March 26, 2010 for $250,000 and signed a broad release discharging George, Mary Fitts, and Trinity from "all actions... growing out of" the accident; they did not disclose the release to their lawyers until months later.
- Plaintiffs later sued Gillam & Smith for legal malpractice, breach of fiduciary duty, and gross negligence, alleging counsel should have pursued claims against George and his umbrella insurer; defendants moved for summary judgment asserting the Kemper release bars recovery and that the fiduciary-duty claim merely repackages malpractice.
- Trial court granted Gillam & Smith's summary judgment; appellees argue on appeal that the release conclusively defeats causation and damages and that breach-of-fiduciary-duty claims cannot be fractured from malpractice absent allegations of dishonesty or improper benefit.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Kemper release bars plaintiffs' claims against George and RLI (thus negating causation/damages) | The release did not (or could be rescinded); plaintiffs could have pursued umbrella coverage | The release unambiguously released all claims against George, preventing any judgment establishing his legal liability and so RLI never triggered | Release is unambiguous and bars claims; plaintiffs cannot prove causation/damages as a matter of law |
| Whether extrinsic evidence (Kemper rep's email) can alter the release's plain terms | Email shows parties intended release to apply only to primary limits, not umbrella | Parol evidence and merger clause bar extrinsic evidence; release is integrated and unambiguous | Parol rule and integration clause bar extrinsic evidence; court enforces release as written |
| Whether plaintiffs preserved contract defenses (mutual mistake, fraudulent inducement) | Could rescind or sue Kemper for fraud—would avoid the bar of the release | These defenses were not raised below (waived); mistakes of law and opinions are not grounds for rescission; remedy lay against Kemper | Defenses waived on appeal and substantively unlikely to succeed—mistake of law and opinion not rescission grounds |
| Whether breach-of-fiduciary-duty claim survives separate from legal malpractice | Counsel's dual representation and failure to advise separate counsel created fiduciary breach | Texas law bars fracturing malpractice into fiduciary-duty claim absent deception/self-dealing or improper benefit | Court affirms summary judgment: fiduciary claim is mere malpractice recast; plaintiffs did not allege dishonesty or improper benefit |
Key Cases Cited
- Coker v. Coker, 650 S.W.2d 391 (Tex. 1983) (contracts: interpret unambiguous instruments as written)
- Italian Cowboy Partners, Ltd. v. Prudential Ins. Co. of Am., 341 S.W.3d 323 (Tex. 2011) (parol-evidence and contract interpretation principles)
- Ohio Cas. Ins. Co. v. Time Warner Entm’t Co., L.P., 244 S.W.3d 885 (Tex. App.—Dallas 2008) (umbrella policy indemnity requires insured be legally liable by judgment or settlement)
- Pool v. Durish, 848 S.W.2d 722 (Tex. App.—Austin 1992) (release of insured bars later recovery from insurer because insured must be liable before insurer owes duty)
- Dresser Industries, Inc. v. Page Petroleum, Inc., 853 S.W.2d 505 (Tex. 1993) (release as an absolute bar to claims covered thereby)
- Isaacs v. Schleier, 356 S.W.3d 548 (Tex. App.—Texarkana 2011) (legal malpractice vs. breach of fiduciary duty: only misconduct beyond negligence—self-dealing, deception, improper benefit—sustains separate fiduciary claim)