DLA Piper LLP (US) v. Chris Linegar
539 S.W.3d 512
| Tex. App. | 2017Background
- Chris Linegar, an Australian investor, loaned funds via his trustee Zaychan to IdentiPHI in 2008; a promissory note granted Zaychan a security interest but DLA Piper failed to timely file a UCC-1 financing statement.
- Linegar alleged he was assured by DLA Piper partner Michael Hutchings (who later represented the merged company) that his security interest would be perfected and that DLA Piper was looking out for his interests.
- Because the interest was unperfected, Linegar repaid his superannuation fund and later suffered loss when IdentiPHI filed bankruptcy; Key Ovation recovered only a portion of the loan in bankruptcy.
- Linegar sued DLA Piper (and initially Hutchings) for legal malpractice, negligent misrepresentation, breach of fiduciary duty, fraud by omission, and related claims; a jury found for Linegar and awarded damages; judgment entered for $1,164,245.40 plus interest.
- The Texas Supreme Court later held Linegar had standing and remanded for this court to resolve remaining issues; on remand the Eleventh Court of Appeals addressed evidentiary rulings, jury charge, sufficiency, responsible-third-party issues, and damages.
Issues
| Issue | Plaintiff's Argument (Linegar) | Defendant's Argument (DLA Piper) | Held |
|---|---|---|---|
| 1. Whether Zaychan/Key Ovation were responsible third parties | Zaychan’s trustee conduct and Key Ovation’s bankruptcy settlement contributed to the harm | They did not cause the untimely UCC filing or the perfection failure | Neither was a responsible third party; trial court rightly excluded responsibility questions |
| 2. Admissibility of Washington professional-conduct rule and related expert testimony | Rule shows standard of care for Hutchings (WA-licensed) and can be evidence of breach | Rule differs from Texas and is irrelevant/prejudicial | Admissible as evidence of standard of care; court did not abuse discretion |
| 3. Admission/exclusion of SEC-related emails and similar filings for other officers | Emails and filings are relevant to whether an attorney-client relationship existed | Post-drawdown filings and others’ beliefs are irrelevant and prejudicial | Court acted within discretion; some post-drawdown items relevant to relationship question; excluding others not reversible error |
| 4. Sufficiency of evidence & jury charge granularity (multiple drawdowns) | DLA Piper: claims/damages should be broken out by each drawdown; some liability findings lack support | Lumped submission obscures distinct transactions; key findings legally insufficient | Broad-form submission appropriate; error in date-range question not reversible; judgment can be upheld on "confusion" theory (negligent failure to advise) |
| 5. Excessiveness of damages | Linegar: timely perfection would have produced near-full recovery; jury’s model supported | Damages speculative; plaintiff failed to prove additional recovery amount in bankruptcy | Damages not excessive given evidence of likely priority and sale proceeds; verdict upheld |
Key Cases Cited
- Linegar v. DLA Piper LLP (US), 495 S.W.3d 276 (Tex. 2016) (Texas Supreme Court ruling that Linegar had standing to sue for malpractice)
- IHS Cedars Treatment Ctrs. of DeSoto, Tex., Inc. v. Mason, 143 S.W.3d 794 (Tex. 2004) (discussing attenuation of causal connection for liability)
- Two Thirty Nine Joint Venture v. Joe, 60 S.W.3d 896 (Tex. App.—Dallas 2001) (rules of professional conduct may be evidence of standard of care)
- E.I. du Pont de Nemours & Co. v. Robinson, 923 S.W.2d 549 (Tex. 1995) (trial-court evidentiary rulings reviewed for abuse of discretion)
- Thota v. Young, 366 S.W.3d 678 (Tex. 2012) (entire jury charge must be considered when assessing harm from charge error)
- Adams v. Petrade Int'l, Inc., 754 S.W.2d 696 (Tex. App.—Houston [1st Dist.] 1988) (court may affirm on any theory supported by the record)