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Cruz v. Kailer

Court of Appeals of Texas, Fifth District, Dallas

June 16, 2017

JOSE DE LA CRUZ, Appellant
v.
ALAN KAILER AND HUNTON & WILLIAMS LLP, Appellees

         On Appeal from the 192nd Judicial District Court Dallas County, Texas Trial Court Cause No. DC-15-14369

          Before Justices Lang-Miers, Evans, and Schenck

          OPINION

          DAVID J. SCHENCK, JUSTICE

         Appellant Jose De La Cruz appeals the trial court's judgment in favor of appellees Alan Kailer and Hunton & Williams, LLP (together "Attorneys"). De La Cruz argues in seven issues that the trial court erred in granting summary judgment in favor of Attorneys. We affirm the trial court's judgment.

         Factual Background

         De La Cruz worked as a landscaper and accumulated approximately $2, 000, 000, which he used to make down payments toward the purchase prices of eleven condominiums at The Ritz Carlton then under construction. A dispute arose between De La Cruz and The Ritz Carlton, leading De La Cruz to retain Alan Kailer and his law firm, Hunton & Williams, in February 2009. At the time, Hunton & Williams also represented Sherri Herman, who had been advising De La Cruz on financial matters. Pursuant to this retainer, De La Cruz signed a limited representation agreement that included a section titled "Conflicts of Interest, " in which he acknowledged (i) Attorneys' prior and continuing representation of Herman and Steel Hawk, LLC, a start-up company Herman had created; (ii) that Attorneys were not representing him in connection with his relationship with Herman and had not done so; and (iii) that Attorneys would not be able to represent him in any matter that was adverse to Herman. Three months later, De La Cruz replaced Attorneys with new counsel. Attorneys confirmed with De La Cruz in writing that their representation of him regarding The Ritz Carlton matter was now terminated. In March 2011, while represented by Martin & Martin Law, P.C. (the "Martin Firm"), De La Cruz negotiated a settlement agreement with The Ritz Carlton, in which he received title to two of the eleven condominiums on which he had made down payments.

         De La Cruz and Herman then agreed to enter into a contract exchanging his ownership interest in the two condominiums for 20 percent of the equity in Steel Hawk LLC, with Herman retaining 80 percent of the equity.[1] The arrangement explicitly required the use of De La Cruz's interest in the two condominiums as collateral for a loan to provide Steel Hawk's operating capital. Steel Hawk retained Kailer and Hunton & Williams to represent it in the transaction with De La Cruz. Kailer sent De La Cruz a letter confirming Attorneys' role in the transaction and requesting his consent to their representation of Steel Hawk, which De La Cruz granted by signing the letter. Kailer's letter also advised De La Cruz that he could not rely on Attorneys for any information concerning Steel Hawk and advised him to consult his own lawyer about the Steel Hawk transaction. De La Cruz retained the Martin Firm to represent him in the Steel Hawk transaction.

         At that time, De La Cruz owed the Martin Firm past-due legal fees related to The Ritz Carlton litigation and other matters. When the Martin Firm learned there would be insufficient funds from the Steel Hawk transaction to allow a cash distribution to De La Cruz that would allow him to repay his past-due legal fees, Peter Martin advised De La Cruz that the Martin Firm would no longer represent him. When, shortly thereafter, Kailer learned De La Cruz was no longer represented by counsel in the Steel Hawk transaction, he sent De La Cruz another letter, communicating his understanding that De La Cruz was no longer represented by a lawyer in the Steel Hawk transaction. The letter also sought De La Cruz's acknowledgment (i) that his potential investment in Steel Hawk was "an extremely high-risk activity, " (ii) that Attorneys' representation was limited to Steel Hawk, and (iii) that De La Cruz could not rely on Attorneys for his individual interests because their professional duties only ran to Steel Hawk. De La Cruz signed this letter, too, signifying his acknowledgement.

         De La Cruz proceeded with the Steel Hawk transaction without representation. The two condominiums were mortgaged for cash to use in Steel Hawk's operations. In less than six months, Steel Hawk spent all of its operating capital.

         Procedural Background

         De La Cruz filed suit against Herman and Attorneys, alleging they fraudulently induced him to invest in Steel Hawk. De La Cruz asserted the following causes of action against Herman and Attorneys: breach of fiduciary duty, common-law fraud, statutory fraud, and violations of the Texas Securities Act ("TSA"). On July 17, 2015, Attorneys moved for summary judgment on traditional and no-evidence grounds. On August 3, 2015, De La Cruz amended his petition to include additional claims for common-law fraud and to drop one of his TSA claims. On August 5, 2015, Attorneys filed a supplemental summary-judgment motion. De La Cruz filed a response to Attorneys' summary-judgment motion. The record reflects that between July 29 and August 21 of 2015, De La Cruz filed at least fifty documents titled "Notice of Filing" that included affidavits, deposition excerpts, and discovery responses. Less than a week before the summary- judgment hearing, Attorneys filed a reply to De La Cruz's response, and De La Cruz filed one document titled "Excerpts of Plaintiff's Summary Judgment Evidence" and two additional documents titled "Notice of Filing" that included as attachments an index to De La Cruz's summary-judgment-evidence excerpts and an index to his response to the motion for summary judgment. After conducting a hearing, the trial court granted summary judgment in favor of Attorneys in an order that did not specify the grounds on which it was granted. The trial court signed an order severing De La Cruz's claims against Herman, and De La Cruz filed this appeal. De La Cruz's claims against Herman are not before us.

         Discussion

         I. Standard of Review

         We review the granting of a motion for summary judgment de novo. Merriman v. XTO Energy, Inc., 407 S.W.3d 244, 248 (Tex. 2013). When, as here, the trial court does not specify the grounds for its ruling, a summary judgment must be ...


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