Gregory v. Porter & Hedges, LLP
398 S.W.3d 881
Tex. App.2013Background
- Workzone sued P & H for breach of fiduciary duty arising from P & H's representation in CTI/St. Paul litigation.
- CTI terminated Workzone and CTI later filed for bankruptcy; CTI’s estate included Workzone’s claim.
- P & H represented Workzone in 2004; invoices remained unpaid, leading to withdrawal from representation in April 2005.
- Workzone later retained P & H again in May 2005; CTI’s bankruptcy proceedings triggered an automatic stay.
- Trustee employed P & H as special litigation counsel; P & H did not disclose Workzone’s pending stay relief or conflict.
- Workzone argued P & H breached fiduciary duty by failing to disclose the conflict; trial court entered a take-nothing verdict for P & H
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether partial summary judgment on forfeiture was proper | Workzone | P & H | Yes; court affirmed ruling |
| Whether Workzone can recover fees paid by the trustee | Workzone | P & H | No; third-party fees not recoverable |
| Whether two distinct attorney-client relationships existed | Workzone | P & H | Yes; first representation distinct from second |
Key Cases Cited
- Burrow v. Arce, 997 S.W.2d 229 (Tex. 1999) (fee forfeiture as equitable remedy for clear breaches)
- Elizondo v. Krist, 338 S.W.3d 17 (Tex.App.-Houston [14th Dist.] 2010) (fees paid by third parties not recoverable)
- Liberty Mut. Ins. Co. v. Gardere & Wynne, L.L.P., 82 Fed.Appx. 116 (5th Cir. 2003) (forfeiture of another client’s fees improper)
- Swank v. Cunningham, 258 S.W.3d 647 (Tex.App.-Eastland 2008) (windfall avoidance; third-party fee recovery disfavored)
- Kinzbach v. Corbett-Wallace Corp., 160 S.W.2d 509 (Tex. 1942) (fiduciary breach principles from employee-employer context)