Singh v. Duane Morris, L.L.P.
338 S.W.3d 176
Tex. App.2011Background
- This is a legal-malpractice case arising from a trademark dispute over the Testmasters name, where appellees represented Singh in Testmasters I.
- Singh operated Testmasters and obtained a federally registered trademark; TES challenged domain www.testmasters.com in Texas.
- Fifth Circuit reversed the injunctive/ownership rulings, vacated the district court, and remanded to determine invalidity of the mark; jurisdiction issues followed.
- Singh formed Singh Corporation (Subchapter S) and ceased the prior sole proprietorship on January 1, 2003, with all Testmasters revenue through Singh Corporation.
- Singh then sued appellees in state court for malpractice, seeking damages incurred after January 1, 2003, including lost profits and attorney’s fees.
- The trial court granted several summary judgments, including a no-damages ruling on damages incurred by Singh Corporation, leading to this appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to recover damages of Singh Corporation | Singh alone has standing for damages to the corporation’s business. | Corporation is separate; shareholder lacks standing to claim damages to the corporation. | Appellant lacked standing; damages to Singh Corporation could not be recovered personally. |
| Effect of Subchapter S status on damages | Subchapter S status allows treating Singh as owner-directly harmed. | Subchapter S does not change ownership of earnings; damages belong to the corporation. | Subchapter S status does not give Singh personal standing to recover corporation damages. |
| Impact of damages timing on viability of malpractice claim | Damages arose post-2003 and are cognizable against counsel for negligence. | Damages alleged were incurred by Singh Corporation and not recoverable by Singh individually; standing defeats claim. | Damages incurred by Singh Corporation cannot support a personal malpractice claim by Singh; summary judgment affirmed. |
Key Cases Cited
- Wingate v. Hajdik, 795 S.W.2d 717 (Tex. 1990) (shareholder cannot recover damages personally for harm to the corporation)
- Sparks v. Booth, 232 S.W.3d 853 (Tex.App.-Dallas 2007) (corporation separate from shareholders; ownership of earnings)
- Swank v. Cunningham, 258 S.W.3d 647 (Tex.App.-Eastland 2008) (shareholder cannot recover for injuries to a corporation)
- Kiepfer v. Beller, 944 F.2d 1213 (5th Cir. 1991) (damages to a professional association not transforming the award to personal damages; context of damages)