Peter G. Milne, P.C., Peter G. Milne, Individually, and Healy, Milne & Associates, P.C. v. Val Ryan and Joy Ryan
2015 Tex. App. LEXIS 10573
| Tex. App. | 2015Background
- Richard Hicks, a non‑lawyer, operated Medicaid planning services and was permanently enjoined in 2001 from performing specified legal services (the "enjoined services").
- Hicks entered an oral business arrangement with attorney Peter Milne and his firms: Hicks marketed and performed Medicaid‑planning work; Milne handled legal services and client checks were routed through Milne; fee splits varied by who generated the client.
- Val and Joy Ryan retained Hicks (believing an affiliation with Milne) for Medicaid/estate planning, paid fees, received documents and investment advice; they later discovered Hicks recommended a Ponzi scheme (National Note) and that Milne had not reviewed documents Hicks prepared.
- The Ryans sued Hicks, Milne, and others asserting causes including breach of fiduciary duty, DTPA unconscionability, civil conspiracy/agency theories, and sought class certification for persons who paid Hicks for enjoined services since 2005.
- The trial court certified: (1) a Rule 42(b)(3) class (predominance) against Hicks for breach of fiduciary duty and unconscionability; (2) a Rule 42(b)(3) class against Milne for joint‑enterprise/conspiracy claims (not appealed); and (3) a Rule 42(b)(2) mandatory class (declaratory relief/disgorgement) against all defendants.
- On accelerated appeal, the Sixth Court of Appeals affirmed class certification for breach of fiduciary duty against Hicks, reversed certification for the DTPA unconscionability claim (predominance/commonality failures), and reversed the Rule 42(b)(2) declaratory/disgorgement class.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Class definition ascertainability / fail‑safe class | Class is objectively defined as persons who paid fees for services listed in the 2001 injunction since 2005 | Definition is fail‑safe because membership requires resolution of merits (whether services fall within injunction) | Class definition upheld: membership is ascertainable by objective criteria (payments for enumerated enjoined services) |
| Typicality for breach of fiduciary duty (Rule 42(a)) | Ryans' claims arise from same course of conduct (Hicks' unauthorized practice) and seek same remedy (fee forfeiture) | Ryans were atypical (no contract; facts differ from acknowledged clients) | Typicality satisfied; trial court did not abuse discretion |
| Commonality / predominance for DTPA unconscionability (Rule 42(b)(3)) | Violation of injunction / unauthorized practice is unconscionable as a matter of law and common across class | Unconscionability requires inquiry into each consumer's detriment, knowledge, capacity and whether they would have acted differently — individual issues will predominate | Reversed: unconscionability claim fails commonality/predominance because detriment and causation are person‑specific and require individualized inquiries |
| Appropriateness of Rule 42(b)(2) mandatory class for declaratory relief/disgorgement | A class declaration that Hicks violated the injunction would automatically entitle members to disgorgement of fees | Declaratory relief here would primarily produce individualized monetary relief; declaratory action duplicates pending damages causes; 42(b)(2) inappropriate when monetary relief predominates | Reversed: Rule 42(b)(2) certification improper because the sought declaratory/disgorgement relief predominates in damages and merely duplicates mature claims; plaintiffs did not seek clarification of an ambiguous instrument |
Key Cases Cited
- Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (U.S. 1997) (distinguishes class types and explains when (b)(3) certification is appropriate)
- Wal‑Mart Stores, Inc. v. Dukes, 564 U.S. 338 (U.S. 2011) (commonality requires classwide questions capable of common answers)
- Beeson v. Intratex Gas Co., 22 S.W.3d 398 (Tex. 2000) (class definitions must be presently ascertainable and not depend on merits)
- Bernal v. Southwestern Refining Co., 22 S.W.3d 425 (Tex. 2000) (Rule 42 prerequisites and need for rigorous class certification analysis)
- Allison v. Citgo Petroleum Corp., 151 F.3d 402 (5th Cir. 1998) (Rule 23(b)(2) not suitable where monetary relief predominates; monetary relief must be incidental to injunctive relief)