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In re Schmidt

Court of Appeals of Texas, Fourth District, San Antonio

May 9, 2018

IN RE WALKER SCHMIDT and Awesome Services, LLC, d/b/a South Texas Investments

          Original Mandamus Proceeding [1]

          Sitting: Sandee Bryan Marion, Chief Justice, Marialyn Barnard, Justice Patricia O. Alvarez, Justice

          MEMORANDUM OPINION

          MARIALYN BARNARD, JUSTICE

         The relators, Walker Schmidt, individually, and Awesome Services, LLC d/b/a South Texas Investments ("Awesome Services"), are defendants in the underlying litigation. Walker Schmidt owns Awesome Services. Attorney Glenn Deadman represented the relators in the underlying lawsuit. The real parties in interest, Los Robles, LLC and Megan Ruth Nors are also defendants below. Los Robles and Nors filed a motion to disqualify Deadman from acting as relators' legal counsel. After the trial court granted the motion, relators filed a petition for writ of mandamus complaining about the trial court's order. The real parties in interest responded, and relators replied. Because we conclude the real parties in interest waived their ability to seek disqualification, we conditionally grant the petition for writ of mandamus.

         BACKGROUND

         The underlying lawsuit involves statutory and constitutional liens filed by plaintiffs on a ranch owned, at the time, by Awesome Services. Plaintiffs' original petition names only relators as defendants.[2] In their lawsuit, plaintiffs alleged relators did not pay for plaintiffs' labor, services, materials, equipment, and/or supplies provided for improvements to the ranch. Plaintiffs requested foreclosure on their lien.

         Los Robles, LLC was originally owned by Walker Schmidt and Megan Ruth Nors. Walker Schmidt later transferred his interest in Los Robles, LLC to Nors. Awesome Services transferred its interest in the ranch to Los Robles, LLC and Nors. At least one other lien appears to have been filed on the ranch, this one by Cosmed, LLP. Cosmed later foreclosed on the ranch and conveyed the ranch to itself. Cosmed then transferred the ranch to RM Ranches LLC. Marshall Trust is the sole member of RM Ranches. With each of the above transfers, the plaintiffs amended their petition to add additional defendants, including Los Robles, LLC and Nors.

         On January 21, 2016, Deadman filed an answer on behalf of Los Robles and Nors. Deadman also appeared at three depositions on their behalf, [3] and served responses to written discovery directed to them. In early 2017, other attorneys retained by Los Robles and Nors notified Deadman that he did not represent Los Robles and Nors. In late March 2017, fifteen months after Deadman filed an answer on behalf of Los Robles and Nors, they filed a motion to show authority alleging Deadman acted without authority in purporting to represent them. Deadman opposed the motion, alleging he represented Los Robles and Nors based on a signed Legal Services Agreement between himself and Nors. He also alleged Nors was aware of the lawsuit and she answered the discovery requests. Although no hearing was held on the motion to show authority, the trial court granted the motion in an order that states the following:

On this day came on to be heard the Motion to Show Authority filed by Megan Ruth Nors and Los Robles, LLC. Without admission of any liability and while [Deadman] does not agree with the assertions in the Motion to Show Authority, he does not contest to the entry of an Order granting the Motion to Show Authority making the Motion to Withdraw MOOT.

         In November 2017, Los Robles and Nors filed a motion for disqualification, alleging Deadman violated Texas Rules of Disciplinary Conduct 1.09 and 3.08. They asked that Deadman be disqualified from representing defendants Walker Schmidt and Awesome Services in the lawsuit. Los Robles and Nors alleged Deadman represented them in the same litigation and took positions adverse to them, both as an attorney advocate and as an active participant both during and after his representation of them in the same litigation. They also alleged Deadman so intertwined himself personally with material issues that he has become a fact witness. Deadman opposed the motion on several grounds.

         In its order granting the disqualification, the trial court drew a line through this sentence: "The Court Finds that [Deadman] has violated Texas Rules of Disciplinary Conduct 1.09(a)(3) and 3.08(a)." Without stating its grounds, the court merely ordered and decreed that Deadman "is disqualified from representing Walker Schmidt or Awesome Services in all further proceedings in this litigation." The trial court ordered Walker Schmidt and Awesome Services to retain alternative counsel. This mandamus proceeding ensued.

         STANDARD OF REVIEW

         Mandamus will issue only to correct a clear abuse of discretion when there is no other adequate remedy by appeal. See In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 135-36 (Tex. 2004) (orig. proceeding); Walker v. Packer, 827 S.W.2d 833, 839 (Tex. 1992) (orig. proceeding). To satisfy the clear abuse of discretion standard, the relator must show "that the trial court could reasonably have reached only one decision." Liberty Nat'l Fire Ins. Co. v. Akin, 927 S.W.2d 627, 630 (Tex. 1996) (orig. proceeding) (quoting Walker, 827 S.W.2d at 840). Mandamus is appropriate to correct an erroneous order disqualifying counsel because there is no adequate remedy by ...


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