Lead Opinion
delivered the opinion of the Court,
The contingent fee contract that underlies this dispute allowed the plaintiffs’ law firm to charge an additional five percent fee in the event the case was “appealed to a higher court.” We must decide whether the law firm breached the contract by charging its client the additional fee when the defendant, to preserve its right to appeal, filed a cash deposit in lieu of a cost bond with the trial court shortly before settlement documents were signed. We hold that the case was “appealed to a higher court” when the defendant initiated the appellate prоcess by filing a cash deposit in lieu of a cost bond; therefore, the law firm did not breach the contract by charging the additional fee. This holding also disposes of the clients’ breach of fiduciary duty claim because that claim is based entirely upon the alleged contract breach. However, because the trial court’s judgment improperly disposed of the clients’ fraud, negligence, and DTPA claims, we remand them to the trial court for further proceedings.
I
Background
The Muñoz, Hockema & Reed (MHR) law firm represented the Lopez family in a wrongful-death suit against Westinghouse Electric Corporation. Their contingent fee contract assigned forty percent of any recovery to MHR, and forty-five percent if the case “is appealed to a higher court.”
By mid-October, Westinghouse had tentatively agreed to a settlement.
About three years later, MHR received a letter requesting that the firm refund the additional five percent fee to the Lopez family. When MHR refused, the Lopezes sued, alleging breach of contract, breach of fiduciary duty, fraud, negligence, and DTPA violations. The Lopezes sought forfeiture of the entire fee. The Lopezes moved for summary judgment on the breach of fiduciary duty and contract claims and moved to sever the other claims. MHR filed a cross-motion for summary judgment alleging that the doctrines of accord and satisfaction and “acceptance of benefits” defeated the Lo-pezes’ claims and that limitations barred their breach of fiduciary duty claim. MHR also claimed that the summary judgment evidence showed no contract breach as a matter of law.
The trial court denied the Lopezes’ summary judgment and severance motions, and granted MHR’s motion for summary judgment exсept as to limitations. The court of appeals reversed. See
The Lopezes petitioned this Court for review, arguing that the court of appeals should have ordered MHR to remit the entire fee and not just the five percent overcharge. MHR cross-petitioned arguing that, as a matter of law, it did not breach its contract with, or fiduciary duty to, the Lopezes.
II
Breach of Contract
We first consider the breach of contract claim. The Lopezes argue that the phrase “appealed to a higher court” is ambiguous and should be construed against its drafter, MHR. See Gonzalez v. Mission American Ins. Co.,
By filing a cash deposit in lieu of a cost bond, Westinghouse “perfected” an appeal under the appellate procedure rules in effect when the underlying case settled. Tex.R.App. P. 40(a)(1), 707 S.W.2d (Tex. Cases) LI (Tex.1986, amended 1997).
The Lopezes contend, and the court of appeals agreed, that “appealed to a higher court” means something more than initiating the appellate process. See
The appellate process involves many steps, such as transmitting the trial court record, preparing and responding to the briefs, and presenting oral argument. See Tex.R.App. P. 54(a), 74, 75, 707 S.W.2d (Tex.Cases) XVIII, LXXIV-LXXVIII (Tex.1986, amended 1997). The rules require the court of appeals to write an opinion addressing all issues raised and necessary to the appeal’s disposition. See Tex.R.App. P. 90(a), 707 S.W.2d (Tex.Cases) LXXXV (Tex.1986, amended 1997). After the opinion issues, the parties may file motions for rehearing, which the court must then consider and decide. See Tex. R.App. P. 100, 707 S.W.2d (Tex.Cases) LXXXVI-LXXXVII (Tex.1986, amended 1997). At what point “meaningful review” occurs during this ongoing process is not readily discernible. We believe the Lo-pezes’ interpretation of the contract language is too broad and therefore unworkable. That an appeal may encompass multiple and various stages does not mean that the contract language is ambiguous. Under our former appellate rules, an appeal was “taken” and the court of appeals’ jurisdiction invoked when a cash deposit in lieu of a cost bond was filed. Thus, when Westinghouse made its cash deposit, the case was “appealed to a higher court” under the contract’s terms.
Ill
Breach of Fiduciary Duty
The Lopezes’ breach of fiduciary duty claim, as presented in their pleadings and summary judgment motion, was grounded solely on the theory that MHR breached its contract. As the court of appeals noted, “the Lopez family tied its breach of fiduciary duty claim to its breach of contract claim.”
Texans for Reasonable Legal Fees (TRLF) has filed an amicus brief arguing that MHR’s fee is unreasonable despite the fee agreement and that MHR breaсhed its fiduciary duty by charging an excessive fee. Alternatively, TRLF contends MHR breached its fiduciary duty by failing to inform the Lopezes that the phrase “if the case is appealed to a higher court” might colorably be interpreted to mean something other than “if appeal is perfected.” Whether or not these theories have merit, they are not before us.
The Lopezes submitted no theory other than breach of contract to support their breach of fiduciary duty claim. They did not allege that the forty-five percent appeal rate was excessive when the contract was made, or that charging the additional five percent was a breach of fiduciary duty irrespеctive of the contract’s terms.
On an appeal from summary judgment, we cannot consider issues that the movant did not present to the trial court. See Cincinnati Life Ins. Co. v. Cates,
Other Claims/Affirmative Defenses
The Lopezes also pleaded negligence, DTPA violations, and fraud. The Lopezes did not move for summary judgment on these claims but rather moved to sever them. The motion to sever was combined with their motion for summary judgment on the breach of contract and breach of fiduciary duty claims. In response, MHR filed a cross-motion for summary judgment arguing that (1) the parties had reached an accord and satisfaction, (2) the Lopezes accepted the benefits of the settlement and were therefore estopped from contesting it, (3) the breach of fiduciary duty claim was barred by limitations, and (4) there was no breach of contract as a matter of law. The trial court denied the Lopezes’ severance and summary judgment motions, and rendered summary judgment for MHR on all of the Lopezes’ claims without specifying the grounds for its ruling. We have upheld the trial court’s summary judgment in MHR’s favor on the Lopezes’ breach of contract and breach of fiduciary duty claims. We must next decide whether the trial court properly granted summary judgment in MHR’s favor on the Lopezes’ remaining fraud, negligence, and DTPA claims.
The affirmative defenses asserted by MHR that could arguably defeat the Lo-pezes’ remaining claims are accord and satisfaction and acceptance of the benefits. MHR contends that the trial court properly granted summary judgment on these defenses, and therefore all of the Lopezes’ remaining claims are barred. The Lo-pezes, on the other hand, contend that MHR was not entitled to summary judgment on these affirmative defenses. We agree with the Lopezes, and consequently remand their fraud, negligence, and DTPA claims to the trial court.
The accord and satisfaction defense rests upon a contract, express or implied, in which the parties agree to the discharge of an existing obligation by means of a lesser payment tendered and accepted. See Jenkins v. Henry C. Beck Co.,
V
We reverse the court of appeals’ judgment on the Lopezes’ breach of contract and breach of fiduciary duty claims, render judgment that the Lopezes take nothing on those claims, and remand the Lopezes’ fraud, negligence, and DTPA claims to the trial court.
Notes
. The relevant portion of the Lopezes' contract with MHR reads as follows:
For services rendered, and to be rendered. I/we assign 40% of any monies or other property recovered. If the case is appealed to a higher court then 45% of any monies or other property recovered is herein assigned. If nothing is recovered, I/we owe said attorneys nothing.
. Although the court of appeals wrote that Westinghouse’s attorney "agreed to [settle],”
. Rule 25.1(a) of the Texas Rules of Appellate Procedure now provides that “[a]n appeal is perfected when a written notice of appeal is filed with the trial court clerk.” Tex.R.App. P. 25.1(a).
. According to the court of appeals, the evidence showed that the pаrties understood the case would not be appealed if it settled, and MHR breached its fiduciary duly because it knew the case would not be appealed when it charged the additional five percent. See
. We note that the court of appeals also concluded that the Lopezes' breach of fiduciary duty claim was predicated on their contract claim. See
. MHR claims that the Lopezes did not properly plead fraud or negligence, but concedes that the Lopezes pleaded DTPA violations. Nonetheless, both parties agree that whatever claims remain were disposed of improperly and should be remanded unless MHR established that it was entitled to summary judgment on its affirmative defenses.
Concurrence Opinion
filed an opinion concurring in part and dissenting in part, in which Chief Justice PHILLIPS joined.
Justice GONZALES, joined by Chief Justice PHILLIPS, concurring and dissenting.
I join Part IV of the Court’s opinion, that the Lopez family’s fraud, negligence, and DTPA claims should be remanded. I agree with the Court’s conclusion but not its reasoning in Part III that the Muñoz firm did not breach the fiduciary duty alleged by the Lopez family. However, I dissent from Part II of the Court’s opinion because, unlike the Court, I conclude that the contract is ambiguous and would remand for that reason. Accordingly, I only join the Court’s judgment in part. I write further to advance the proposition that attorneys owe a fiduciary duty to fully explain the ramifications of their employment contracts to their clients.
Here we must decide whether a contingent fee contract between a law firm, Mu-ñoz, Hockema & Reed, and its client, the Lopez family, entitles the firm to forty percent or forty-five percent of the Lo-pezes’ settlement recovery of fifteen million dollars from Westinghouse Electric Corporation. The settlement was finalized a few days after Westinghouse filed a cash deposit in lieu of cost bond to preserve its right to appeal. See Tex.R.App. P. 40(a)(1), 707 S.W.2d (Tex.Cases) LI (Tex.1986, amended 1997). The lawyers’ рortion of the fifteen million dollars depends on the contract language that provides a forty percent contingent fee for services rendered, but forty-five percent if the case is “appealed to a higher court.” The Court decides that the term “appealed to a higher court” plainly and unambiguously means the moment that one party files a cash deposit in lieu of a cost bond with the court, thereby preserving its right to an appeal. I respectfully disagree.
As the Court acknowledges, our standard rules of contract construction direct us to ascertain the true intentions of the parties as expressed in the terms of the instrument. See Coker v. Coker,
The Court says that it choоses the filing of a cash deposit in lieu of cost bond as the point in time a case is “appealed” because that event provides certainty.
Even if providing certainty were the goal in construing this contract, the Court does not explain why perfection of an appeal is any more certain than other stages of the appellate process. The Court concedes that the appellate process involves many steps, and I find nothing in the contract that specifies that the law firm is entitled to the additional fee for services rendered if the right to appeal is preserved — which is all that really happened here. The contract merely provides for thе additional fee if the case is “appealed.” Thus, it is the Court that expands the contract language by choosing the preparatory stage of the appellate process. And as for the certainty in contract desired by the Court, that can surely be achieved by choosing other equally determinable events in the appellate process.
When considering the plain meaning of the term “appealed to a higher court,” I believe there are multiple reasonable interpretations. First, this term reasonably could mean the first procedural or technical step taken to preserve the right to appeal — the interpretation adopted by the Court. Second, the term “appealed to a higher court” could mean when a party expresses his or her complaint to an appellate court and seeks redress. Under this view, the term “appealed” would correspond with the filing of the appellant’s brief in the court of appeals or the filing of a petition for review in this Court. Third, one could conclude that the term “appealed” contemplates a completed act. In that case, “appealed” could mean when the parties have fully expressed their arguments and have submitted the case to an appellate court for a decision. Each of these constructions is consistеnt with the plain language of the contract, and each would provide the certainty important to the Court. Because I conclude there are multiple reasonable meanings of the term “appealed to a higher court,” I would hold that this contract is ambiguous. See Coker v. Coker,
Generally, when the objective meaning of a contract term is ambiguous, the parties’ subjective meaning of the term becomes a fact question. See Columbia Gas Transmission Corp. v. New Ulm Gas,
The special relationship between a lawyer and client leads me to conclude that an ambiguous contract between them should generally be construed against the lawyer-drafter. The Restatement of Contracts suggests that construing contracts against the drafter is justified when the drafter is in a better position to know of uncertainties of meaning or when the drafting party has the stronger bargaining position. See Restatement (Second) of Contracts § 206 com. a (1981). The Restatement of the Law Governing Lawyers, which adopts a similar construction rule for lawyer-client contracts, adds the rationale that lawyers are more able than most clients to detect and repair omissions in lawyer-client agreements. See Restatement (Third) of Law Governing Lawyers § 29A com. h (Proposed Final Draft No. 1,1996). These reasons suggest that ambiguities in fee contracts should be construed against the lawyer-drafter. Usually a lawyer is in a better position to understand the terms of a contract drafted by the lawyer than a client. Clients, after all, are clients because they need legal advice and seek to hire lawyers with greater legal skill and experience. Additionally, a lawyer is usually in a stronger bargaining position and generally has more experience negotiating contracts, settlements, and fee arrangements. Finally, lawyers, because of their training and experience, are in a better position than most of their clients to discover and correct ambiguities in the contract.
For these reasons, I would generally construe ambiguous lawyer-client contracts against the lawyer-drafter. But even if the Court is unwilling to adopt such a rule of construction, it should at least remand because the objective meaning of the contract term “appealed to a higher court” is ambiguous.
The Lopez family also alleges that the Muñoz law firm breached its fiduciary duty by breaching their contract. In Texas, we hold attorneys to the highest standards of ethical conduct in their dealings with their clients. See Archer v. Griffith,
Clearly, a breach of fiduciary duty may arise if a lawyer accepts fees that the lawyer is not entitled to by contract. But not every breach of contract is necessarily a breach of fiduciary duty. If a lawyer acts in good faith under a colorable interpretation of a contract, the lawyer does not necessarily act against a client’s intеrest. See Restatement (Third) of Law Governing Lawyers § 28 (Proposed Final Draft No. 1, 1996) (limiting professional discipline to intentional failures to fulfill a valid contract). Here, the Muñoz law firm accepted the additional fee under one of several reasonable interpretations of the contract, and the Lopez family does not allege that the firm was acting in bad faith. Accordingly, even if the fact finder were to conclude that the term “appealed to a higher court” refers to a point in time after the right to appeal is preserved, I would hold that the Muñoz firm did not breach its fiduciary duty to the Lopez family by breaching its contract.
But there are two other ethical issues in this case, about which the Loрez family does not complain, that nonetheless deserve discussion. The first relates to a lawyers’s duty to fully and honestly inform his or her client of a fee arrangement. See Tex. Disciplinary R. PROF. Conduct 1.03(b), 1.04(d) (1989), reprinted in Tex. Gov’t Code Ann., tit. 2, subtit. G app. A (1998). The fiduciary relationship between attorney and client requires “absolute and perfect candor, openness and honesty, and the absence of any concealment or deception.” Perez v. Kirk & Carrigan,
Another ethical consideration that deserves mention is the lawyer’s fiduciary duty not to collect an unconscionable fee from his client. See Tex. Disciplinary R. Pkof. Conduct 1.04(a); Nolan v. Foreman,
The fee contract here compensated the lawyers for “services rendered.” There is evidence in the record that the firm did some work in connection with an appeal both before and'after the cash deposit in lieu of cost bond was filed. But the record also suggests that the Lopez family and Westinghouse had agreed in principle to a settlement, substantially lowering the risk to the law firm — a risk existing in all contingent fee contracts — -that it might not collect its fees. While a contract may entitle a lawyer to a substantial fee for little or no work, a lawyer may nonetheless be required by his or her fiduciary duty to decline the fee. Additionally, a law firm may breach its fiduciary duty if it provides little or no services, but still collects a substantial part of its clients recovery in the face of a pending settlement.
By all appearances, the law 'firm did a good job representing its client against Westinghouse. The firm obtained a twenty-five million dollar jury award and participated in negotiating a fifteen million dоllar settlement. The lawyers should be fully compensated for their work and the risks they assumed. I do not begrudge them for demanding compensation for services rendered according to their contract.
For these reasons, I concur in part and dissent in part.
. Many other courts, however, have adopted as a rule of construction that lawyer-client contracts will be strictly construed against the lawyer. See, e.g., Vans Agnew v. Fort Myers Drainage Dist., 69 F.2d 244, 246 (5th Cir.1934); Waugh v. Q. & C. Co.,
. I note that the law firm has indicated its willingness to repay the additional five percent by not appealing the court of appeals' judgment.
