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Douglas-Peters v. Cho, Choe & Holen, P.C.

Court of Appeals of Texas, Fifth District, Dallas

March 3, 2017

JOSEPHINE DOUGLAS-PETERS, Appellant
v.
CHO, CHOE & HOLEN, P.C., Appellee

         On Appeal from the 116th Judicial District Court Dallas County, Texas Trial Court Cause No. DC-14-01027

          Before Justices Lang, Myers, and Evans

          MEMORANDUM OPINION

          DOUGLAS S. LANG JUSTICE

         Josephine Douglas-Peters[1] appeals the trial court's final judgment in favor of Forest Law, P.C. d/b/a Cho, Choe & Holen, P.C., [2] as assignee of Choe, Holen, Yoo & Burchfiel, P.C., [3] on its claim against Douglas-Peters for breach of a legal representation retainer agreement and awarding it $90, 453.21 in damages. Douglas-Peters raises four issues on appeal, arguing: (1) the evidence is legally and factually insufficient to support the trial court's finding of fact and conclusion of law on her affirmative defense of limitations; (2) the trial court erred when it concluded that (a) Forest Law had standing, (b) Forest Law had capacity, and (c) there was no defect of parties;[4] (3) the trial court erred when it concluded the contingent-fee provision of the retainer agreement was enforceable; and (4) (a) the trial court erred when it denied her motion for summary judgment on her counterclaims for unjust enrichment and conversion and (b) the evidence is legally and factually insufficient to support the trial court's finding of fact that the $80, 000 Texas Kore Law retrieved from the registry of the court should be credited against Forest Law's actual damages. We conclude the trial court did not err in its holdings as to standing, capacity, defect of parties, or enforceability of the contingent-fee provision of the retainer agreement, the evidence is legally and factually sufficient to support the trial court's judgment, and Douglas-Peters may not appeal the trial court's denial of her pro se motion for summary judgment. The trial court's final judgment is affirmed.

         I. FACTUAL AND PROCEDURAL CONTEXT

         On April 18, 2008, Texas Kore Law, P.C., filed an assumed name certificate with the Dallas County Clerk, stating that it intended to conduct business under the name "Choe, Holen, Yoo & Burchfiel, P.C."

         In August 2008, Douglas-Peters filed her original pro se petition against C.F. & H. Corporation d/b/a South Dallas Nursing Home, Dr. Leona Hawkins, Juliette Wesley, and Charles W. Smith for retaliatory discharge under section 242.133 of the Texas Health and Safety Code. On September 12, 2008, Douglas-Peters signed a retainer agreement with Michael Burchfiel and the law firm of "Choe, Holen, Yoo & Burchfield" to represent her in the underlying case against her former employer. "[Texas Kore Law's] rights under the [retainer agreement] were not conditioned upon Burchfiel's continued involvement in the case."[5] The retainer agreement contained a contingent-fee provision, stating, in part, that "[t]hirty days before this case is first set for trial, whether or not the case actually goes to trial on that date or is reset, [Douglas-Peters] agrees to pay [Texas Kore Law and Burchfiel] forty percent (40.00%) of the total recovery."

         On June 2, 2009, Texas Kore Law filed a motion for partial summary judgment on Douglas-Peters' behalf. The trial court granted that motion.

         After Yoo and Burchfiel stopped working with the firm, Texas Kore Law filed an assumed name certificate with the Dallas County Clerk on June 10, 2009, stating that it intended to conduct business under the name "Choe Holen, P.C." Also, on June 12, 2009, Texas Kore Law filed an assumed name certificate with the Texas Secretary of State, stating that the assumed name under which the business or professional service is to be conducted or rendered is "Choe Holen, P.C."

         On October 19, 2009, there was a bench trial on the remaining issue of damages. At the trial, Douglas-Peters appeared in person and through her attorney, but South Dallas Nursing Home, Hawkins, Wesley, and Smith did not appear. On October 27, 2009, the trial court signed a final judgment awarding Douglas-Peters $197, 714 for economic damages, $50, 000 for mental anguish damages, $75, 000 for exemplary damages, and that South Dallas Nursing Home, Hawkins, Wesley, and Smith pay $80, 000 for attorneys' fees Douglas-Peters incurred through trial, plus post-judgment interest. Afterward, Douglas-Peters, through her attorneys, began efforts to collect on the final judgment, including having certain real property belonging to the judgment debtors sold at auction.

         On January 1, 2010, Douglas-Peters sent Texas Kore Law a letter asking that it withdraw from representing her and, requesting that in lieu of the contingent fee, it accept, according to the letter, "reasonable payment from the recovery for hours actually worked on the case . . . along [with] any other fees and cost[s] paid." On January 19, 2010, Texas Kore Law sent Douglas-Peters a letter advising that it had filed a motion to withdraw based on her termination of the attorney-client relationship and, according to that letter, was "treating [her] . . . request to reduce fees as a dispute of the attorneys['] fees and expenses due under the retainer agreement." On January 29, 2010, the trial court granted Texas Kore Law's motion to withdraw as attorney of record.

         "[O]n February 2, 2010, [the] [a]ssistant [d]eputy [c]onstable [] conducted an auction and sold [South Dallas Nursing Home, Hawkins, Wesley, and Smith's] property for $412, 000 to satisfy the judgment with interest of $411, 872.19."[6] Andrew Holen attended the auction. After the sale was completed, at the site of the auction, Holen approached Douglas-Peters and requested that she tender the contingent fee plus expenses. Douglas-Peters refused. "The portion of the judgment awarded to [Douglas-Peters] as attorneys' fees, [i.e., $80, 000, ] was [deposited] into the Court's registry due to the dispute between [Texas Kore Law] and Douglas-Peters over contractual attorneys' fees."[7] Also, as a result of Douglas-Peters' refusal to pay the contingent fee, that same day, Texas Kore Law filed its original petition in intervention in the underlying suit, seeking to enforce the retainer agreement and recover attorneys' fees of "approximately $164, 000" plus expenses of $6, 000. Then, Texas Kore Law filed a motion for summary judgment on its petition in intervention, which the trial court granted on May 5, 2010. Shortly afterward, the trial court ordered the $80, 000 held in the registry of the court to be released to Texas Kore Law as partial satisfaction of the judgment. Douglas-Peters' appealed the trial court's decision. On appeal, this Court vacated the trial court's May 5, 2010 final summary judgment because the petition in intervention was filed after the trial court's plenary power had expired and dismissed the appeal. See Douglas-Peters v. Choe, Holen, Yoo & Burchfiel, P.C., No. 05-10-00208-CV, 2010 WL 4946612, at *1 (Tex. App.-Dallas Dec. 7, 2010, no pet.) (mem. op.).

         On October 15, 2012, Texas Kore Law, P.C. d/b/a Choe Holen, P.C., executed an asset purchase agreement with Forest Law, P.C. d/b/a Cho, Choe & Holen. The asset purchase agreement stated it included an assignment of "[a]ll of [Texas Kore Law's] right, title and interest to any claims it may have against [Texas Kore Law's] former client, [] Douglas-Peters, including claims for attorneys['] fees and costs associated with [] Douglas-Peters in that case entitled Josephine Douglas-Peters v. C.F. & H. Corp. et al., Cause No. 0809621."

         On February 3, 2014, Forest Law, as assignee of Texas Kore Law's claims, filed its original petition against Douglas-Peters, asserting a claim for breach of contract. Forest Law claimed that pursuant to the retainer agreement it was owed $164, 800, 40% of the amount recovered pursuant to the final judgment in favor of Douglas-Peters on her claims against South Dallas Nursing Home, Hawkins, Wesley, and Smith. In her first amended original answer, Douglas-Peters generally denied the claim and asserted the affirmative defenses of collateral estoppel, res judicata, and that the suit was barred by the statute of limitations.[8] Douglas-Peters also stated she was filing a "verified denial" on the basis that the mediation requirement contained in the retainer agreement had not been satisfied and the consideration for the retainer agreement had failed. See Tex. R. Civ. P. 93(9). However, Douglas-Peters' first amended original answer was not verified by affidavit.[9] See Tex. R. Civ. P. 93. Additionally, Douglas-Peters filed a counterclaim against Forest Law for conversion and sought attorneys' fees. Forest Law answered, generally denying the claim, and asserted the affirmative defense that the claim was barred by the statute of limitations.

         Then, on March 20, 2014, Douglas-Peters filed third-party claims against Choe, individually, Holen, individually, and Burchfiel, individually, for breach of contract, negligence, conversion, and malicious prosecution, and sought attorneys' fees. Choe and Holen filed their original answer to the third-party claims, generally denying the allegations, and asserted the affirmative defense that all of the third-party claims against them were barred by the statute of limitations. Burchfiel also filed an answer to the third-party claims, generally denying the allegations, and asserted several affirmative defenses.

         On October 15, 2014, Douglas-Peters filed a motion for summary judgment seeking traditional summary judgment on her affirmative defense that Forest Law's breach of contract claim was barred by the statute of limitations.

         On October 29, 2014, Forest Law, Holen, and Choe filed a motion for traditional and no-evidence summary judgment on Forest Law's claim for breach of contract, and Douglas-Peters' conversion counterclaim against Forest Law and third-party claims against Holen and Choe for conversion.

         In addition to the motion for summary judgment filed by her attorney, on December 12, 2014, Douglas-Peters filed a pro se motion for summary judgment. Based on the argument in the body of her pro se motion for summary judgment, we liberally construe Douglas-Peters to have: (1) challenged Forest Law's standing; (2) challenged Forest Law's capacity as assignee of Texas Kore Law's claims against her; (3) claimed there was a defect of parties; (4) sought summary judgment on Texas Kore Law's breach-of-contract claim; (5) sought summary judgment on her conversion counterclaim against Forest Law; (6) sought summary judgment on her pleaded affirmative defenses to Forest Law's breach-of-contract claim and on the basis that the contingent-fee provision in the retainer agreement was unenforceable because it was unconscionable; and (7) sought summary judgment on her third-party claims against Holen and Choe for breach of contract, negligence, conversion, and malicious prosecution. On December 22, 2014, the trial court denied Douglas-Peters' motion for summary judgment.[10]

         Also, on December 22, 2014, through her attorney, Douglas-Peters filed her first amended third-party petition against Holen, individually, and Choe, individually, adding third-party claims for money had and received, and unjust enrichment. She dropped her third-party claims against Burchfiel. On January 6, 2015, Forest Law filed its second motion for traditional and no-evidence summary judgment, addressing, in part, Douglas-Peters' additional claims of money had and received, and unjust enrichment. Douglas-Peters responded. On February 5, 2015, the trial court granted Forest Law's second motion for traditional and no-evidence summary judgment, ordering that Douglas-Peters take nothing on her (1) third-party claims against Holen and Choe for money had and received, and unjust enrichment, and (2) conversion counterclaim against Forest Law.

         On August 25, 2015, the case was tried to the court. Douglas-Peters appeared pro se at trial. On September 8, 2015, the trial court signed its written findings of fact and conclusions of law. Then, on September 27, 2015, the trial court signed its final judgment awarding Forest Law $90, 453.21 in damages on its claim for breach of contract and attorneys' fees. On October 21, 2015, Douglas-Peters, through a newly retained attorney, filed a motion for new trial and an amended motion for new trial on October 22, 2015. Douglas-Peters' amended motion for new trial was overruled by operation of law. See Tex. R. Civ. P. 329b(c); Tex.R.App.P. 21.8(c).

          II. STANDING, CAPACITY, AND DEFECT OF PARTIES

         In issue two, Douglas-Peters argues the trial court erred when it concluded that: (1) Forest Law had standing; (2) Forest Law had capacity; and (3) there was no defect of parties.[11]We note that Douglas-Peters and the trial court's findings of fact and conclusions of law do not distinguish the separate, but similar, doctrines of standing, capacity, and defect of parties. We will determine the substance of the parties' arguments as to standing, capacity, and defect of parties, and address them accordingly. See Fitness Evolution, L.P. v. Headhunter Fitness, L.L.C., No. 05-13-00506-CV, 2015 WL 6750047, at *12 (Tex. App.-Dallas Nov. 4, 2015, no pet.) (mem. op.).

         A. Standard of Review

         The question of standing is a legal question regarding subject-matter jurisdiction, so an appellate court conducts a de novo review of a trial court's ruling. Mayhew v. Town of Sunnyvale, 964 S.W.2d 922, 928 (Tex. 1998); Fitness Evolution, 2015 WL 6750047, at *12; Mazon Assocs., Inc. v. Comerica Bank, 195 S.W.3d 800, 803 (Tex. App.-Dallas 2006, no pet.); Nauslar v. Coors Brewing Co., 170 S.W.3d 242, 256 (Tex. App.-Dallas 2005, no pet.). Likewise, issues of capacity to sue, a similar, but distinct doctrine that does not implicate a court's subject-matter jurisdiction, are also questions of law, which are reviewed de novo. See Fitness Evolution, 2015 WL 6750047, at *12; see generally, Byrd v. Estate of Nelms, 154 S.W.3d 149, 160-61 (Tex. App.-Waco 2004, pet denied) (citing Mayhew, 964 S.W.2d at 928- 29). Conversely, an appellate court reviews a trial court's ruling based on a defect of parties for an abuse of discretion. See Valdez v. Robertson, No. 01-14-00563-CV, 2016 WL 1644550, at *4 (Tex. App.-Houston [1st Dist.] Apr. 26, 2016, no pet.) (mem. op.) (review trial court's dismissal based on defect of parties for abuse of discretion); Longoria v. Exxon Mobil Corp., 255 S.W.3d 174, 179 (Tex. App.-San Antonio 2008, pet. denied); Truong v. City of Houston, 99 S.W.3d 204, 216 (Tex. App.-Houston [1st Dist.] 2002, no pet.) (appellants failed to preserve error because no basis to determine whether trial court abused its discretion).

         B. Applicable Law

         To bring suit and recover on a cause of action, a plaintiff must have both standing and capacity. See Austin Nursing Ctr., Inc. v. Lovato, 171 S.W.3d 845, 848 (Tex. 2005); Fitness Evolution, 2015 WL 6750047, at *12; Flagstar Bank, FSB v. Walker, 451 S.W.3d 490, 497 (Tex. App.-Dallas 2014, no pet.); John C. Flood of DC, Inc. v. SuperMedia, L.L.C., 408 S.W.3d 645, 650 (Tex. App.-Dallas 2013, pet. denied); Nauslar, 170 S.W.3d at 256. Texas courts have had considerable difficulty in defining the relationship between the similar, but distinct, doctrines of capacity and standing. See Austin Nursing Ctr., 171 S.W.3d at 848 n.1; Fitness Evolution, 2015 WL 6750047, at *12; John C. Flood, 408 S.W.3d at 650. Likewise, there has been an effort to distinguish capacity from defect of parties. See generally, CHCA E. Houston, L.P. v. Henderson, 99 S.W.3d 630, 632-33 (Tex. App.-Houston [14th Dist.] 2003, no pet.) (defining capacity and defect of parties).

         C. Standing

         In the first part of issue two, Douglas-Peters argues the trial court erred when it concluded Forest Law had standing to bring this lawsuit against her. Douglas-Peters generally argues that "[the trial court] erred in [concluding] that [Forest Law] had standing to pursue claims against [her]." She also maintains that "[she] challenges the factual and legal sufficiency that [Forest Law] had standing to sue [her]." Forest Law does not respond to Douglas-Peters' standing arguments.

         1. Applicable Law-Standing

         Standing is a component of a court's subject-matter jurisdiction. See Tex. Air Control Bd., 852 S.W.2d 440, 446 (Tex. 1993); Fitness Evolution, 2015 WL 6750047, at *12; Nauslar, 170 S.W.3d at 248. Standing to sue can be predicated upon either statutory or common-law authority. See Williams v. Lara, 52 S.W.3d 171, 178-79 (Tex. 2001); Fitness Evolution, 2015 WL 6750047, at *12; Nauslar, 170 S.W.3d at 252. The general rules of standing apply unless statutory authority for standing exists. See Williams, 52 S.W.3d at 178; Fitness Evolution, 2015 WL 6750047, at *12; Nauslar, 170 S.W.3d at 252. As a necessary component of a court's subject-matter jurisdiction, standing cannot be waived and can be raised for the first time on appeal. See Tex. Air Control Bd., 852 S.W.2d at 445-46; Fitness Evolution, 2015 WL 6750047, at *12; Mazon, 195 S.W.3d at 803.

         To have standing, the pleader bears the burden of alleging facts that affirmatively demonstrate the court's jurisdiction to hear the case. See Tex. Air Control Bd., 852 S.W.2d at 446; Fitness Evolution, 2015 WL 6750047, at *13; Mazon, 195 S.W.3d at 803. When the issue of standing is unchallenged, a trial court looks solely at the plaintiff's pleadings. See Fitness Evolution, 2015 WL 6750047, at *13. However, when standing is challenged, the burden of proof is on the person whose interest is challenged to present sufficient evidence to prove that he is an interested person. See Fitness Evolution, 2015 WL 6750047, at *13.

         Standing pertains to a person's justiciable interest in a suit. See Tex. Air Control Bd., 852 S.W.2d at 445-46; Fitness Evolution, 2015 WL 6750047, at *13; Nauslar, 170 S.W.3d at 255. The issue of standing focuses on whether a party has a sufficient relationship with the lawsuit so as to have a justiciable interest in its outcome. See Austin Nursing Ctr., 171 S.W.3d at 849; Fitness Evolution, 2015 WL 6750047, at *13; John C. Flood, 408 S.W.3d at 650. Under Texas law, the standing inquiry requires examination of the following: (1) the plaintiff must be personally injured-he must plead facts demonstrating that he (rather than a third party) suffered the injury-and the injury must be concrete and particularized, actual or imminent, not hypothetical; (2) the plaintiff's alleged injury is fairly traceable to the defendant's conduct; and (3) the plaintiff's alleged injury is likely to be redressed by each form of requested relief. See Heckman v. Williamson County, 369 S.W.3d 137, 155 (Tex. 2012); Fitness Evolution, 2015 WL 6750047, at *13; see also Nauslar, 170 S.W.3d at 249 (dividing the standing inquiry into five elements); Precision Sheet Metal Mfg. Co., Inc. v. Yates, 794 S.W.2d 545, 552 (Tex. App.- Dallas 1990, writ denied). A plaintiff has standing when he is personally aggrieved, regardless of whether he has the legal authority to act. See Austin Nursing Ctr., 171 S.W.3d at 849; Fitness Evolution, 2015 WL 6750047, at *13; John C. Flood, 408 S.W.3d at 650.

         Whether considering the standing of one plaintiff or many, with the notable exception of class actions, the court must analyze the standing of each individual plaintiff to bring each individual claim he alleges. See Heckman, 369 S.W.3d at 152; Fitness Evolution, 2015 WL 6750047, at *13. This principle flows from two sources. See Heckman, 369 S.W.3d at 152; Fitness Evolution, 2015 WL 6750047, at *13. First, a plaintiff must demonstrate that the court has jurisdiction over and the plaintiff has standing to bring each of his claims. See Heckman, 369 S.W.3d at 152-53; Fitness Evolution, 2015 WL 6750047, at *13. The court must dismiss only those claims over which it lacks jurisdiction. See Heckman, 369 S.W.3d at 153; Fitness Evolution, 2015 WL 6750047, at *13. Second, a plaintiff must demonstrate that he, himself, has standing to present his claims. See Heckman, 369 S.W.3d at 153; Fitness Evolution, 2015 WL 6750047, at *13. This means the court must assess standing plaintiff-by-plaintiff, claim-by-claim. See Heckman, 369 S.W.3d at 153; Fitness Evolution, 2015 WL 6750047, at *13.

         A plaintiff with no legally cognizable interest in the outcome of the case lacks standing to sue on its own behalf, but may be authorized to sue on behalf of another. See Flagstar, 451 S.W.3d at 497. It is well settled that when a claim is assigned, the assignee "steps into the shoes of the [assignor] and is considered under the law to have suffered the same injury as the assignors and have the same ability to pursue the claims." See Sw. Bell Tel. Co. v. Mktg. on Hold, Inc., 308 S.W.3d 909, 916 (Tex. 2010); Forex Capital Mkts., L.L.C. v. Crawford, No. 05-14-00341-CV, 2014 WL 7498051, at *3 (Tex. App.-Dallas Dec. 31, 2014, pet. denied) (mem. op.); Flagstar, 451 S.W.3d at 497. As a result, an assignee may assert those rights that the assignor could assert, including bringing suit. See Forex, 2014 WL 7498051, at *2; Flagstar, 451 S.W.3d at 497. Accordingly, an assignee of a claim has standing to assert the injury suffered by the assignor. See Forex, 2014 WL 7498051, at *3 (citing Vt. Agency of Nat. Resources v. U.S. ex rel. Stevens, 529 U.S. 765, 773 (2000)); Flagstar, 451 S.W.3d at 497.

         A party's lack of standing deprives the court of subject-matter jurisdiction and renders any trial court action void. See Fitness Evolution, 2015 WL 6750047, at *14; see also In re Russell, 321 S.W.3d 846, 856 (Tex. App.-Fort Worth 2010, orig. proceeding [mand. denied]). The denial of a claim on the merits is different from the dismissal of a claim for want of jurisdiction. See DaimlerChrysler Corp. v. Inman, 252 S.W.3d 299, 307 (Tex. 2008); Fitness Evolution, 2015 WL 6750047, at *11. A court does not render judgment that a plaintiff takes nothing, as it would if the plaintiff's claims failed on the merits. See DaimlerChrysler, 252 S.W.3d at 307; Fitness Evolution, 2015 WL 6750047, at *14. Instead, courts dismiss for want of jurisdiction. See DaimlerChrysler, 252 S.W.3d at 307; Fitness Evolution, 2015 WL 6750047, at *14.

          2. Application of the Law to the Facts

         In the trial court, Douglas-Peters challenged Forest Law's standing in her pro se motion for summary judgment and in her amended motion for new trial. On appeal, Douglas-Peters expressly challenges the following conclusion of law relating to standing, which was included within a finding of fact and labeled as such by the trial court:

         14. . . . . [Forest Law] . . . has standing to pursue such claim. Further, Douglas-Peters' standing argument impliedly challenges the following conclusion of law:

         17. The trial court has jurisdiction of the parties and subject matter in this cause.

         We must address standing first because it is a component of a court's subject-matter jurisdiction. See Gibson, 22 S.W.3d at 851; Tex. Air Control Bd., 852 S.W.2d at 446; Fitness Evolution, 2015 WL 6750047, at *12.

         The record shows that Forest Law filed suit as assignee of Texas Kore Law. As a result, we must determine whether Texas Kore Law had a sufficient relationship with the lawsuit to have a justiciable interest in the outcome. On appeal, Douglas-Peters does not challenge the following findings of fact that support the trial court's conclusion regarding standing:

1. On September 12, 2008, attorney [] Burchfiel and the law firm of [Texas Kore Law, P.C., d/b/a] Choe, Holen, Yoo & Burchfiel, P.C. [] entered into a Retainer Agreement [] with Douglas-Peters to prosecute her claims against C.F. & H[.] Corporation d/b/a South Dallas Nursing Home, its affiliates, former employee, and principal for damages resulting from or relating to her employment and termination [].

. . . .

5. [Texas Kore Law] represented Douglas-Peters in the underlying suit (after Burchfiel was no longer involved with the case). The case did not settle, and was tried in or about October 2009. [Texas Kore Law] performed its obligations under the [retainer agreement] by representing Douglas-Peters in the underlying suit which resulted in a judgment favorable to Douglas-Peters. . . .

6. [Texas Kore Law's] rights under the [retainer agreement] were not conditioned upon Burchfiel's continued involvement in the case. In any event, Douglas-Peters accepted [Texas Kore Law's] continued representation of her (including some post-judgment collection efforts against the judgment-debtor) until 2010. In January 2010[, ] she requested that [Texas Kore Law] withdraw from representing her and, in lieu of its contractual contingency fee, accept "reasonable payment from the recovery for hours actually worked on the case . . . along [with] any other fees and cost[s] paid."

         We note Douglas-Peters does not argue that Texas Kore Law does not have standing. In fact, she directs this Court to her third-party petition against the principals of Texas Kore Law. Also, in her "motion for summary judgment breach of contract, " Douglas-Peters acknowledged the retainer agreement, arguing:

[Texas Kore Law] and Burchfiel, failed to represent [Douglas-Peters] pursuant to the [retainer agreement]. In April 2010, Burchfiel admits to abandoning [Douglas-Peters] and having not spoken with her since May 2009. . . .
It is an undisputed fact that [Texas Kore Law and Burchfiel's] abandonment is a breach of contract. The law is clear that [Texas Kore Law] is not entitled to be paid for services rendered in violation of [its] duty to a client, or for services needed to alleviate the consequences of [] Burchfiel's abandonment.
. . . .
[Texas Kore Law] neglected their lawful obligation and duty to withdraw Burchfiel after he abandoned [Douglas-Peters]. A new attorney of record was not designated. And, there is no evidence that a new [retainer agreement] with the consent of all parties was signed to replace the original [retainer agreement].
. . . .
The Agreement specifies attorney's fees in terms of settlement and trial. But, it is ambiguous regarding the payment in the event: (1) the attorney abandoned the client but fails to withdraw and (2) pre-trial summary judgment is awarded.

         In addition, in Douglas-Peters' first amended third-party petition, she alleged that she "hired [Texas Kore Law] to provide legal representation to her in ongoing litigation which had been initiated by [] Douglas-Peters." She attached a copy of her retainer agreement with Texas Kore Law and alleged third-party claims against Holen and Choe for breach of that retainer agreement. The retainer agreement was attached to some of the pleadings and admitted into evidence during the trial. It states, in part:

[] Douglas-Peters [] hires the law firm of [Texas Kore Law] and Michael Burchfiel [] to represent [Douglas-Peters] in [her] claim against C.F. & H. Corporation d/b/a "South Dallas Nursing Home, " and its subsidiaries and related entities, and Dr. Leona Hawkins, Juliette Wesley and Charles W. Smith and any other current or former employees [].

         We conclude that Texas Kore Law had a sufficient relationship with the lawsuit so as to have a justiciable interest in the outcome. As a result, Forest Law, as assignee of Texas Kore Law's claims against Douglas-Peters, had standing to assert the injury suffered by Texas Kore Law. The first part of issue two is decided against Douglas-Peters. Accordingly, we address Douglas-Peters' argument that Forest Law did not have the capacity to bring suit against her.

         D. Capacity

         In the second part of issue two, Douglas-Peters argues the trial court erred when it concluded Forest Law had the capacity to bring this lawsuit against her. She argues there was no evidence that the original retainer agreement was sold or assigned to Forest Law. Also, she claims that the assignment of claims by attorneys against their clients should be considered void because they are against public policy, similar to the prohibition of the assignment of legal malpractice claims. In response, Forest Law contends that Douglas-Peters did not raise this issue before or during trial, she conceded in her pleadings that Texas Kore Law assigned its claims against her to Forest Law, and her claim is based on a typographical error.

         1. Applicable Law-Capacity

         Capacity is a party's legal authority to go into court to prosecute or defend a suit. See Fitness Evolution, 2015 WL 6750047, at *14; Nauslar, 170 S.W.3d at 255. A party has capacity to sue when it has legal authority to act, regardless of whether it has a justiciable interest in the controversy. See Austin Nursing Ctr., 171 S.W.3d at 849; Nootsie Ltd. v. Williamson County Appraisal Dist., 925 S.W.2d 659, 661 (Tex. 1996); Fitness Evolution, 2015 WL 6750047, at *14; John C. Flood, 408 S.W.3d at 650; Nauslar, 170 S.W.3d at 255. Capacity is conceived of as a procedural issue dealing with the personal qualifications of a party to proceed with litigation. See Austin Nursing Ctr., 171 S.W.3d at 849; Fitness Evolution, 2015 WL 6750047, at *14; John C. Flood, 408 S.W.3d at 650. The defense of capacity must be raised by verified objection pursuant to Texas Rule of Civil Procedure 93. See Tex. R. Civ. P. 93(1)-(2). The defense of capacity is a dilatory plea. See Develo-cepts, Inc. v. City of Galveston, 668 S.W.2d 790, 793 (Tex. App.-Houston [14th Dist.] 1984, no writ) (challenge to capacity referred to as dilatory plea); Bluebonnet Farms, Inc. v. Gibralter Sav. Ass'n, 618 S.W.2d 81, 83 (Tex. App.-Houston [1st Dist.] 1980, writ ref'd n.r.e.) (capacity is dilatory matter); Kriegel v. Scott, 439 S.W.2d 445, 446 (Tex. App.-Houston [14th Dist.] 1969, writ ref'd n.r.e.) (referring to challenge to capacity and defect of parties as dilatory pleas); see also Dilatory Plea, Black's Law Dictionary (10th ed. 2014). Unlike standing, which is jurisdictional, a challenge to a party's capacity to participate in a suit can be waived. See Nootsie, 925 S.W.2d at 662 (citing Tex.R.Civ.P. 93); Fitness Evolution, 2015 WL 6750047, at *14; Highland Credit Opportunities CDO, L.P. v. UBS AG, 451 S.W.3d 508, 516 (Tex. App.-Dallas 2014, no pet.); John C. Flood, 408 S.W.3d at 650. However, an issue subject to pleading requirements, such as the issue of capacity, may be tried by consent. See Highland Credit, 451 S.W.3d at 516.

         The word "assignment" has a comprehensive meaning and in its most general sense means the transfer or setting over of property, or some right or interest. See Johnson v. Structured Asset Servs., LLC, 148 S.W.3d 711, 721 (Tex. App.-Dallas 2004, no pet.). An assignment is a contract between the assignor and assignee, and operates by way of agreement or contract. See Johnson, 148 S.W.3d at 721. Texas law is clear that a challenge to a party's privity of contract is a challenge to capacity, not standing. E.g., Fitness Evolution, 2015 WL 6750047, at *14; Highland Credit, 451 S.W.3d at 515-16; Transcon. Realty Investors, Inc. v. Wicks, 442 S.W.3d 676, 679 (Tex. App.-Dallas 2014, pet. denied); Nat'l Health Res. Corp. v. TBF Fin., LLC, 429 S.W.3d 125, 129 (Tex. App.-Dallas 2014, no pet.); John C. Flood, 408 S.W.3d at 651; Landry's Seafood House-Addison, Inc. v. Snadon, 233 S.W.3d 430, 433 (Tex. App.-Dallas 2007, pet. denied); King-Mays v. Nationwide Mut. Ins., 194 S.W.3d 143, 145 (Tex. App.-Dallas 2006, pet. denied). While the question of whether a party is entitled to sue on a contract is often informally referred to as a question of "standing, " it is not truly a standing issue because it does not affect jurisdiction. See Fitness Evolution, 2015 WL 6750047, at *14; Transcon. Realty, 442 S.W.3d at 679; Nat'l Health Res., 429 S.W.3d at 129.

         Absent specific circumstances, causes of action in Texas are freely assignable. See State Farm Fire & Cas. Co., v. Gandy, 925 S.W.2d 696, 705-07 (Tex. 1996); Fitness Evolution, 2015 WL 6750047, at *14; see also PPG Indus., Inc. v. JMB/Houston Ctrs. Partners Ltd. P'ship, 146 S.W.3d 79, 92 (Tex. 2004) (recognizing a few exceptions to this general rule). When a cause of action is assigned or transferred, the assignee becomes the real party in interest with the authority to prosecute the suit to judgment. See Tex. Mach. & Equip. Co. v. Gordon Knox Oil & Exploration Co., 442 S.W.2d 315, 317 (Tex. 1969); Fitness Evolution, 2015 WL 6750047, at *14; Hunter v. B.E. Porter, Inc., 81 S.W.2d 774, 774 (Tex. Civ. App.-Dallas 1935, no writ).

         To recover on an assigned cause of action, an assignee must prove: (1) a cause of action existed; (2) the claim was capable of assignment; and (3) the cause was in fact assigned to the party seeking recovery. See Fitness Evolution, 2015 WL 6750047, at *15. An assignee may file suit and recover either in his own name or in the name of the assignor. See Kerlin v. Sauceda, 263 S.W.3d 920, 932 (Tex. 2008); Gordon Knox, 442 S.W.2d at 317; Fitness Evolution, 2015 WL 6750047, at *15; see also Flagstar, 451 S.W.3d at 497. Accordingly, the assignee being the real party in interest and in control of the lawsuit, he is also in privity with the nominal party such that the judgment therein will bind him as a party. See HECI Exploration Co. v. Neel, 982 S.W.2d 881, 890 (Tex. 1998); Amstadt v. U.S. Brass Corp., 919 S.W.2d 644, 653 (Tex. 1996) ("People can be in privity in three ways: (1) they can control an action even if they are not parties to the action; (2) their interests can be represented by a party to the action; and (3) they can be successors in interest, deriving their claims through a party to the prior action."); Fitness Evolution, 2015 WL 6750047, at *15.

         However, an assignment may be invalidated by the courts because it is found to offend public policy. See Sw. Bell Tel. Co. v. Mktg. on Hold, Inc., 308 S.W.3d 909, 916 (Tex. 2010); Johnson, 148 S.W.3d at 727. The Texas Supreme Court has held that certain types of assignments are invalid because they violate public policy: (1) an assignment of a cause of action that works to collude against an insurance carrier; (2) an assignment of a legal malpractice claim; (3) an assignment that creates a Mary Carter agreement; (4) an assignment of the plaintiff's cause of action to a joint tortfeasor of the defendant; and (5) an assignment of interests in an estate that distorts the true positions of the beneficiaries. See PPG Indus., 146 S.W.3d at 87 n.31; Johnson, 148 S.W.3d at 727-28. In addition, the Texas Supreme Court has invalidated assignments that: (1) tend to increase or prolong litigations unnecessarily; (2) tend to distort the litigation process; and (3) are otherwise inconsistent with the purpose of a statutory cause of action. See Sw. Bell Tel., 308 S.W.3d at 916.

         Contracts are subject to the public policy of the State. See Johnson, 148 S.W.3d at 726. In examining an agreement to determine if it is contrary to public policy, courts look to whether the agreement has a tendency to injure the public good. See Johnson, 148 S.W.3d at 727. A state's public policy is reflected in its statutes. See, e.g., Royston, Rayzor, Vickery & Williams, L.L.P. v. Lopez, 467 S.W.3d 494, 504 (Tex. 2015); Fortis Benefits v. Cantu, 234 S.W.3d 642, 649 (Tex. 2007); Tex. Commerce Bank, N.A. v. Grizzle, 96 S.W.3d 240, 250 (Tex. 2003); see also Johnson, 148 S.W.3d 726-27. Review of a claim that a contract is against public policy should be applied with caution. See Johnson, 148 S.W.3d at 726. The rule that public policy precludes the enforcement of an otherwise valid contract should be applied cautiously and only in cases involving dominant public interests. See Johnson, 148 S.W.3d at 726.

         2. Application of ...


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