OPINION
In this appeal of a legal-malpractice suit, we revisit — in light of the supreme court’s opinion in
Murphy v. Campbell
— whether the
Hughes
tolling rule applies to malpractice claims arising out of transactional work performed by attorneys that occurs before litigation commences.
Murphy,
Appellant The Vacek Group, Inc. f/k/a Vacek-Crawford, Inc. sued appellees Douglas C. Clark (Vacek’s former lawyer) and Benckenstein, Norvell & Nathan, L.L.P. (Vacek’s former law firm). After a bench trial, the district court rendered a take-nothing judgment. Vacek brings six issues on appeal, primarily challenging the sufficiency of the evidence. We affirm.
Facts
Vacek is a forensic engineering company. The original shareholders were Sam Vacek, Donna Vacek, and Jim Crawford. After an altercation between Donna Vacek and Crawford, the shareholders agreed to a “corporate divorce” in which Crawford would resign as a director and sell his shares to Sam and Donna. Vacek hired Clark and his law firm to carry out this corporate divorce.
Clark drafted an April 15, 1997 agreement in principle, which was described in the document as a “preliminary agreement.” According to the Agreement, Crawford was to transfer his shares of Vacek to Sam and Donna in exchange for Vacek’s funding Crawford’s simplified employee pension plan. Clark did not include language in the Agreement that released any potential claims by Crawford against Vacek. The Agreement was signed by Sam, Donna, and Crawford.
After disputes arose over compliance with the Agreement, Vacek sent Clark the following July 25,1997 letter:
Based on recent events and the demand letter sent by the attorney for Jim Crawford yesterday it is obvious we are headed for court. We have now hired litigation counsel to respond to this letter and make similar demands ón our behalf. You have not done this as our supposed corporate counsel.
Since it appears that the April agreement you wrote for both sides is at the center of this dispute, you should not have any more involvement in this issue. Therefore, you are instructed not to release any information or have any discussions regarding any business of our corporation to anyone. This includes Jim Crawford and counsel for Jim Crawford.
Should you wish to discuss this matter further you may contact our attorney. ...
Crawford later filed suit against Vacek, which Vacek settled for $24,000.
On July 27, 1999, Vacek sued Clark and his law firm for negligence, breach of fiduciary duty, breach of contract, and violation of the Deceptive Trade Practices-Consumer Protection Act.
See
Tex. Bus. & Com.Code Ann. §§ 17.41-63 (Vernon 1987
&
Supp.2002). Clark and the law firm answered and pleaded the affirmative defense of limitations.
See
Tex.R. Civ. P. 94. After a bench trial, the district court ren
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dered a take-nothing judgment and filed findings of fact and conclusions of law. In addition to holding against Vacek on the merits, the district court found that Va-cek’s claims against Clark and his law firm accrued before July 27,1997 and concluded that those claims were barred by the statute of limitations.
See generally
Tex. Civ. PRAC. & Rem.Code Ann. § 16.003 (Vernon Supp.2002) (two-year limitations period);
Willis v. Maverick,
Discussion
In issue one, Vacek challenges the factual sufficiency of the district court’s discovery-rule finding that Vacek’s malpractice claims against Clark and his law firm accrued before July 27,1997. We review a trial court’s findings of fact for factual sufficiency under the same standard as a jury verdict.
Anderson v. City of Seven Points,
Vacek argues that the statute of limitations does not apply for two reasons. 1
Tolling of limitations due to failure to disclose material fact
First, Vacek claims the statute of limitations was tolled because Clark performed work for Vacek after July 27, 1997, billed for that work, and failed to disclose a material fact — that execution of the Agreement would not protect Vacek from subsequent claims because the Agreement did not include a release.
McClung v. Johnson,
Even if we were to assume Clark and his law firm had a duty to include a release in a “preliminary agreement,” Vacek would still have had the burden of proof at trial regarding Clark’s and his law firm’s alleged failure to disclose. On appeal, Vacek does nothing more than make the conclu-sory statement that “Clark breached his duty to disclose facts material to his representation of the Corporation (that execution of the Agreement would not protect the Corporation from subsequent claims).” Without further argument or any citation to the record, Vacek has presented nothing for this Court to review.
See Harris County Mun. Util. Dist. No. 48 v. Mitchell,
Hughes tolling rule
Second, Vacek claims the statute of limitations was tolled because of the
Hughes
tolling rule.
See Hughes,
The supreme court has restated the
Hughes
tolling rule on numerous occasions, each time stating that the rule is invoked when the alleged malpractice is committed by an attorney during the prosecution or defense of a claim that results in litigation.
Underkofler v. Vanasek, 53
S.W.3d 343, 347 (Tex.2001);
Apex Towing Co. v. Tolin,
In 1997, the supreme court addressed the issue of whether the
Hughes
tolling rule applied to alleged accounting malpractice.
Murphy,
The court stated that Hughes does not toll limitations whenever a litigant might be forced to take inconsistent positions, because such a rule would create too broad an exception to limitations. Id. at 272. The court emphasized that it “expressly limited the rule in Hughes to attorney malpractice in the prosecution or defense of a claim that results in litigation.” Id. at 272. Although the court could have decided Murphy on the narrow ground that the Hughes tolling rule does not apply to accountants, it instead decided the case on the broader ground that the alleged underlying malpractice must occur “in the prosecution or defense of a claim that results in litigation.” Id. at 272. 4 It follows from the logic of Murphy that alleged attorney-malpractice claims based on transactional work will not be tolled under Hughes.
Some appellate courts have interpreted the
Murphy
decision as narrowing the scope of the
Hughes
tolling rule to apply to only those cases in which the client continues to be represented by the attorney who allegedly committed malpractice in the underlying suit.
Eiland v. Turpin, Smith, Dyer, Saxe & McDonald,
Additionally, in
Apex Towing Co.,
the supreme court created further ambiguity as to whether
Hughes
applies to alleged malpractice claims based on transactional work.
See id.
at 122. The court instructed lower courts to desist from re-examining whether the policy reasons behind
Hughes
apply in each legal-malpractice case presented and to “simply apply the
Hughes
tolling rule to the category of legal-malpractice cases encompassed within its definition.”
Id.
at 122. The court cited our withdrawn opinion in
Utica Insurance Co.
as one of four cases in this category, as well as our opinion in
Farah v. Mafrige & Kormanik, P.C.,
the Fourth Court’s opinion in
Burnap v. Linnartz,
and the Fifth Court’s opinion in
Hoover v. Gregory. Id.
at 122;
Farah,
In
Bumap,
the underlying claim arose from the drafting of a mutual release and indemnity agreement.
In
Hoover v. Gregory,
the underlying claim was based on faulty tax advice rendered before litigation commenced.
The rationale behind our withdrawn opinion in
Utica Insurance Co.
is inconsistent with
Bumap
and
Hoover. Compare Utica Ins. Co.,
Deñnitions of “Claim,” “Prosecution,” and “Defense”
The
Hughes
tolling rule applies in certain situations “when an attorney commits malpractice while providing legal services in the
prosecution
or
defense
of a
claim
which results in litigation.”
Hughes,
A “claim” is defined as “the assertion of an existing right; any right to payment or to an equitable remedy.” Black’s Law DictxonaRY 240 (7th ed. 1999). The Restatement (Second) of Judgments agrees with this definition, noting that the term “claim” and its older cognate “cause of action” are references to units of litigation. Restatement (Second) of Judgments ch. 3, topic 2, tit. D (1982). Further, the “transactional view of claim,” to which the Restatement subscribes, defines the claim extinguished by rules of bar or merger as including all of the plaintiff’s rights “to remedies against the defendant with respect to all or any part of the transaction, or series of connected transactions, out of which the action arose.” Restatement (Second) of Judgments § 24(1) & cmt. a (1982).
Based on these definitions, a distinction can be made, in the context of the
Hughes
tolling rule, between malpractice claims arising from the litigation of a client’s previously existing claim and a malpractice claim arising from an attorney’s negligence in executing a business transaction. In the first instance, when a malpractice claim is based on an attorney’s error in prosecuting or defending a client’s claim, that claim existed before and independent of the attorney’s involvement. This is the type of “underlying claim” that merits the protection afforded by
Hughes,
because “inconsistent litigation postures” must be taken to resolve both disputes.
See Hughes,
Independently, an examination of the words “prosecution” and “defense” lead to the same conclusion. To “prosecute” means to “commence and carry out a legal action.” Blaoks Law DICTIONARY at 1237. “Defense” is defined as “[a] defendant’s method and strategy in opposing the plaintiff or prosecution.” Id, at 430. Applying these definitions, actions taken by attorneys in conducting transactional work do not qualify as prosecution or defense of a claim.
Categories of Legal Malpractice
It is unclear what the supreme court meant by “that category of legal-malpractice cases encompassed within its
[Hughes’]
definition.”
Apex Towing Co.,
1. The client has an accrued claim and the attorneg allegedly commits malpractice either (a) before litigation commences or (b) in the course of prosecuting or defending the claim in a nonl-itigation setting.
With respect to the first category, the
Hughes
tolling rule applies to situations in which the client has an accrued claim and the attorney allegedly commits malpractice before litigation commences.
See Aduddell,
This category also includes situations in which the client has an accrued claim and the attorney allegedly commits malpractice in the course of prosecuting or defending the claim in a nonlitigation setting.
See Gulf Coast Inv. Corp.,
Finally, this category includes
Hughes
itself.
2. The client has an accrued claim and the attorney allegedly commits malpractice after litigation commences.
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With respect to the second category, there is abundant authority, from both the supreme court and the courts of appeals, holding that the
Hughes
tolling rule applies in such cases.
Vanasek,
3. The client does not have an accrued claim and the attorney allegedly commits malpractice after litigation commences.
We are unaware of any published opinions that address this category.
4. The client does not have an accrued claim and the attorney allegedly commits malpractice before litigation commences.
As to the fourth category of cases, the class in which
Utica Insurance Co., Burnap,
and
Hoover
fit, the supreme court has not yet definitively spoken. However, the reasoning of the supreme court in
Murphy
discredits the rationale of our withdrawn opinion in
Utica Insurance Co.,
if
Murphy
stands for something more than merely excluding alleged accounting malpractice from the
Hughes
tolling rule.
Murphy,
Finally, the unresolved conflict between the rationale in
Utica Insurance Co.
and the
Bumap
and
Hoover
opinions requires us to note the policy concerns raised in
Hughes,
notwithstanding the supreme court’s direction to simply apply the
Hughes
tolling rule.
Apex Towing Co.,
The rationale behind the
Hughes
tolling rule suggests that
Hughes
does not apply when an attorney allegedly commits malpractice by negligently drafting documents that are not connected with any existing litigation at the time of their creation.
See Hughes,
Accordingly, we conclude that the rationale behind the holding in our withdrawn Utica Insurance Co. opinion has been discredited by the supreme court’s opinions in Apex Towing Co. and Murphy. We hold the Hughes tolling rule does not apply to malpractice claims based on errors committed by attorneys in the course of conducting transactional work. Here, Clark’s alleged malpractice was in drafting the Agreement, which is transactional work. Clark did not draft the Agreement in the prosecution or defense of a claim that results in litigation. Following Apex Towing Co. and Murphy, we hold the Hughes tolling rule does not apply to Va-cek’s situation.
Factual sufficiency of trial court’s discovery-rule finding
Having disposed of Vacek’s two tolling arguments, we return to its factual-
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sufficiency challenge to the district court’s finding that Vacek’s malpractice claims against Clark and his law firm accrued before July 27, 1997. The district court was obligated to answer the discovery-rule issue: when did Vacek know, or exercising reasonable diligence, when should it have known of the facts giving rise to its causes of action against Clark and his law firm?
See HECI Exploration Co. v. Neel,
We overrule issue one.
Breach-of-contract claim
In issue two, Vacek argues in part that the district court incorrectly concluded that Vacek’s breach-of-contract claim is subsumed into a negligence claim and is barred by limitations, citing our opinion in Jampole v. Matthews, 857 S.W.2d 57 (Tex.App.-Houston [1st Dist.] 1993, writ denied). We do not agree that Jampole applies to this case.
In
Jampole,
we recognized a cause of action for breach of contract independent of a legal-malpractice claim.
Id.
at 62. That case, however, limited this distinction to actions against attorneys for excessive legal fees.
Id.; see Greathouse v. McConnell,
We overrule that portion of issue two which alleges that the district court incorrectly concluded that Vacek’s breach-of-contract claim is subsumed into a negligence claim and is barred by limitations.
In the remainder of issue two and in issues three, four, five, and six, Vacek claims the district court’s findings on the merits of the case are factually insufficient: breach-of-contract claim (remainder of two); DTPA claim (three); negligence claim (four); breaeh-of-fiduciary-duty claim (five); and proximate, producing, and legal cause findings (six). Because we hold that Vacek’s claims are barred by limitations, we need not reach these issues.
Conclusion
We affirm the district court’s judgment.
Notes
. We recognize the novelty of raising statute-of-limitations tolling issues in the context of a factual-sufficiency discussion, and we do not commend this practice to the bar.
. The two-year statute of limitations applies to legal-malpractice causes of action.
Willis,
. Normally we would neither cite nor discuss an opinion designated for publication that was later withdrawn from publication. See Tex.R.App. P. 47.7. Unfortunately, the Utica Insurance Co. opinion is printed in the South Western Reporter and there is no indication in either West's Texas Subsequent History Table or Shepard’s Texas Citations that the opinion has no precedential value. Finally, the supreme court, in Apex Towing Co., has cited Utica as if it were precedential. We, therefore, discuss the Utica opinion in this appeal in the context of analyzing the supreme court’s opinion in Apex.
. The Eighth and Fourteenth Courts of Appeals have discussed the stare decisis effect of the judicial dictum in
Murphy. Eiland v. Turpin, Smith, Dyer, Saxe & McDonald,
