First United Pentecostal Church of Beaumont v. Parker
514 S.W.3d 214
| Tex. | 2017Background
- First Pentecostal Church of Beaumont deposited $1,094,611.02 of settlement funds into The Lamb Law Firm’s trust account in April 2008 for safekeeping.
- Owner Kip Lamb transferred large portions of those funds (initially $750,000) to accounts he controlled and spent the money on personal and firm expenses; by Sept. 2009 ~ $1.2M was misapplied. Lamb later pleaded guilty to misapplication of fiduciary property and fraud and was disbarred.
- Leigh Parker was a contract attorney at the firm; he says he did not know of the misappropriation until summer 2010 and that he never controlled the church’s funds.
- Parker notified the church in Oct. 2011 that the funds were gone and admitted he breached a duty by failing to investigate/disclose earlier; he sought to make the church whole via a contemplated business transaction (the "Ghana deal").
- The church sued the firm, Lamb, and Parker for theft/embezzlement, breach of fiduciary duty, fraud, legal malpractice, conspiracy, joint venture, aiding and abetting and other claims. Trial court granted Parker summary judgment; court of appeals affirmed in part. The Supreme Court of Texas affirmed some holdings, reversed in part, and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of fiduciary duty — need for causation vs equitable relief | Church: where fiduciary breached loyalty, equitable remedies (forfeiture/disgorgement) may be awarded without proof of causation; actual-damages proof not required. | Parker: church failed to preserve equitable-remedy argument and, in any event, needed to show proximate causation for damages claim. | Court: Church did not waive equitable-remedy theory; causation is required for recovery of actual damages but not for equitable forfeiture/disgorgement. Reversed and remanded as to equitable relief. |
| Civil conspiracy (to steal or to cover up) | Church: Parker’s statements (e.g., “we,” possible receipt of funds, signing checks) create fact issues as to a conspiracy to steal or to cover up. | Parker: no evidence of a meeting of the minds or specific intent to misappropriate; any post-theft conduct (cover-up/attempt to replace funds) does not establish conspiracy causing the loss. | Court: Affirmed summary judgment for Parker; no evidence of an agreement to steal or of causation from any alleged cover-up. |
| Aiding and abetting (tort) | Church: Parker knowingly participated and substantially assisted Lamb. | Parker: claim not pleaded or fairly pleaded; no evidence he knew of or substantially assisted prior theft. | Court: Church failed to preserve an aiding-and-abetting claim; alternatively, record lacks evidence Parker knowingly assisted the theft — affirm. |
| Joint venture (to misappropriate funds) | Church: Parker’s statements describing the relationship as “joint venturers” and references to "we/our firm," plus possible payroll payments from misapplied funds, create fact issues. | Parker: those statements, in context, describe corporate/practice relationships, not an agreement to steal; no evidence of mutual control, profit-sharing, or agreement to misappropriate. | Court: Affirmed summary judgment; no evidence of a joint venture to steal funds. |
Key Cases Cited
- Kinzbach Tool Co. v. Corbett-Wallace Corp., 160 S.W.2d 509 (Tex. 1942) (equity may require forfeiture of secret agent gains without proof of damages)
- Burrow v. Arce, 997 S.W.2d 229 (Tex. 1999) (attorney-client context: forfeiture of fees may be required for breach of fiduciary duty even absent actual damages)
- Tri v. J.T.T., 162 S.W.3d 552 (Tex. 2005) (elements of civil conspiracy and requirement of specific intent/meeting of minds)
- Juhl v. Airington, 936 S.W.2d 640 (Tex. 1996) (discussion of aiding-and-abetting recognition and standards)
- Cantey Hanger, LLP v. Byrd, 467 S.W.3d 477 (Tex. 2015) (standard of review for summary judgment)