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Greb v. Madole

Court of Appeals of Texas, Fifth District, Dallas

July 3, 2019

LARRY GREB, Appellant
v.
BRET MADOLE AND CARRINGTON, COLEMAN, SLOMAN & BLUMENTHAL, LLP, Appellees

          On Appeal from the 134th Judicial District Court Dallas County, Texas, Trial Court Cause No. DC-16-12734

          Before Justices Myers, Molberg, and Carlyle.

          MEMORANDUM OPINION

          KEN MOLBERG JUSTICE.

         Larry Greb appeals the trial court's take-nothing summary judgment in favor of his former attorneys, Bret Madole and Carrington, Coleman, Sloman & Blumenthal, LLP (Carrington Coleman) (collectively, Attorneys), on his claims for negligence, gross negligence, and breach of fiduciary duty in a lawsuit stemming from Attorneys' alleged non-disclosure of a conflict of interest between Greb, Greb's then-business partner, and their jointly-owned business. In three issues, Greb contends the trial court erred by granting summary judgment and by dismissing his claims with prejudice, because the summary judgment evidence raised a genuine issue of material fact as to: (1) whether Attorneys' negligence was the proximate cause of Greb's damages, (2) whether Greb suffered damages as a result of Attorneys' negligence, and (3) whether Carrington Coleman breached its fiduciary duty to Greb.

         The principal question before this Court is whether Greb raised a genuine issue of material fact on the causation element of his claims. We conclude he did not. Accordingly, we affirm the trial court's judgment.

         Background

         We recount the complicated history of the dispute subject of this appeal only as necessary to resolve the question of whether the trial court properly granted summary judgment on Greb's claims for legal malpractice and breach of fiduciary duty.

         Over fifteen years ago, Greb and Rick Johnson became co-owners of a conglomeration of business enterprises and entities (collectively, J&G).[1] To secure loans from Citizens National Bank of Waxahachie (CNB) on behalf of J&G (CNB Notes), Greb and Johnson granted liens on J&G's assets. Greb and Johnson also executed personal guaranties for J&G's debt, and Greb pledged his personal assets-two ranches and an apartment complex-as collateral for the loans.

         J&G defaulted on the CNB Notes, and in April 2014, Johnson engaged Carrington Coleman and Bret Madole[2] to represent J&G, Greb, and Johnson in a lawsuit against CNB, who was seeking to foreclose on J&G's assets as well as Greb's personal assets. Attorneys filed suit against CNB (CNB lawsuit), seeking a temporary restraining order (TRO) to enjoin the foreclosure while Greb and Johnson attempted to sell J&G or secure re-financing of their debt to CNB. After the trial court granted the TRO, the parties entered into a "stand-still" agreement, under which CNB agreed to stay action on the foreclosure. The stand-still agreement was extended by a series of rule 11 agreements, which, in toto, gave Greb and Johnson fifteen months to sell J&G or obtain re-financing.

         Greb and Johnson attempted to sell J&G to several companies. In June 2014, Greb and Johnson signed a letter of intent to sell J&G to AuSable Capital Partners (AuSable) for $20 million. The AuSable deal fell through when AuSable lowered the purchase price to $15 million, which Greb believed to be "significantly" less than J&G's value.

         In 2013, 2014, and 2015, Greb contacted Hanson Building Products (Hanson)-which later changed its name to Forterra-to discuss a sale of J&G.[3] The summary judgment evidence reflects that Forterra and Greb were unable to agree on a purchase price because of a "huge" gap in their respective assessments of J&G's value. E-mails indicate that in September 2015, Forterra was willing to pay approximately $20 million for J&G, and Greb was asking $35 million.[4] Greb told Forterra that a purchase price "in the $20 million range" would not "work for him." Forterra did not make a formal offer or enter into a letter of intent to purchase J&G, and ultimately, Forterra "[took] a pass" on purchasing J&G.

         In May 2015, Greb and Johnson signed a letter of intent to sell J&G to Baymark Partners (Baymark) for approximately $15 million. James Patterson of the law firm Hierche, Hayward, Drakely & Urbach (HHDU) represented Greb on the Baymark transaction.[5] On July 30, 2015, Baymark provided a draft Asset Purchase Agreement (Baymark APA) to Madole, who forwarded it to Patterson and Greb. Patterson reviewed and made substantive changes to the Baymark APA on behalf of Greb. The summary judgment evidence shows Patterson also communicated extensively with Madole regarding Greb's revisions. As it relates to Greb, the Baymark APA provided Greb would receive $2, 350, 000 in cash at closing; Baymark would assume the indebtedness owed to CNB, which totaled approximately $11 million; and CNB would release Greb from his personal guaranty and the liens on his personal assets.

         Baymark planned to obtain loans from Comerica and Texas Capital Bank to finance its purchase of J&G. After signing the Baymark APA, Greb contacted Comerica and Texas Capital Bank and informed them he "did not know who Baymark was," and he had not entered into a letter of intent to sell J&G to Baymark.[6] After a conversation with Comerica, Baymark understood Greb made these misrepresentations in an attempt to obtain re-financing. When CNB learned of Greb's false representations to Comerica and Texas Capital Bank, it filed an application for a TRO seeking, among other things, to enjoin Greb from making false statements to third parties regarding the purchase of J&G. Greb opposed CNB's application for the TRO, and Johnson did not oppose it, creating a conflict of interest between Greb and Johnson. As a result, on August 20, 2015, Attorneys informed Greb, Johnson, and Patterson they did not "represent any of the Principals in their individual capacities" in the CNB lawsuit or in the Baymark transaction. Attorneys also requested to withdraw as counsel for all parties in the CNB lawsuit, including J&G, after the August 21, 2015 hearing on CNB's application for a TRO against Greb. HHDU entered an appearance in the CNB lawsuit on August 21, 2015, and HHDU represented Greb at the hearing. At the conclusion of the hearing, the trial court granted the TRO against Greb, and granted Attorneys' motion to withdraw as counsel from the CNB lawsuit. The TRO prohibited Greb from seeking re-financing or seeking a buyer for J&G without the express authorization of the Board of Directors.

         On August 22, 2015, Patterson e-mailed Madole a "Term Sheet detailing [Greb's] agreement for moving forward with the Baymark transaction." Greb and Johnson executed the Term Sheet on August 25 and 26, 2015, respectively. Baymark, Greb, and Johnson signed the Baymark APA on August 28, 2015, and the sale closed at the end of September 2015.

         The summary judgment evidence included the expert report, affidavit, and excerpts from the deposition transcript of Randal Johnston, Greb's expert witness. At his deposition, Johnston agreed the rule 11 agreements negotiated by Attorneys "gave Mr. Greb a significant amount of time" to "either sell the assets, sell the companies, or get refinancing." According to Johnston, "the effect of these Rule 11 agreements [was] to in effect have an injunction [preventing foreclosure] for 15 months to allow [Greb] to work this out," which "[u]nquestionably" was "to Mr. Greb's benefit." Greb, however, was unable to secure re-financing, and Johnston was not "aware of any offers to buy the company that Mr. Greb was willing to accept other than" the AuSable and Baymark offers.

         Johnston opined, "[Attorneys] violated the standard of care by not early on disclosing potential conflicts of interest so that the clients could make an informed decision of joint representation. I see evidence that persuades me that they surrendered to those conflicts of interest and gave a preference to Mr. Johnson." According to Johnston, "the harm or the danger [that] was caused by this so-called conflict of interest, if it occurred and they surrendered and so forth, is that Mr. Greb was deprived of having his own lawyer to advise him." However, Johnston conceded that determining whether Greb had independent counsel "only makes a difference if having an independent counsel would have resulted in a different outcome."

         With respect to the Baymark transaction, Johnston confirmed that to establish damages, Greb would "have to show that there was a buyer willing to pay more than [Baymark paid]." According to Johnston, "if there is harm caused to Mr. Greb, then it is in my opinion I'll say solely, and that's an awfully broad statement . . . he would have received more than he got under [the Baymark] APA and these agreed terms." With respect to the CNB lawsuit, Johnston attested that he would not "rende[r] an opinion on the outcome of that trial if it had gone forward." While Johnston "opin[ed] as an expert witness" that the claims asserted by Greb, Johnson, and J&G in the CNB lawsuit "more likely than not" had "a real chance of success," he declined to conclude they would have prevailed, declaring, "I'm not gonna testify that they would have won. I haven't gone that far." Johnston further equivocated on the issue of proximate cause, predicating, "we are not in disagreement over the fact that unless [Greb] can demonstrate that independent counsel would have resulted [in] him having a more favorable result, he's going to be unable to satisfy his proximate cause component and . . . that's something I can't opine on."

         While Johnston's expert report concluded Attorneys' "breach of the standard of care and their breach of fiduciary duty were a proximate cause of financial damages to Mr. Greb," Johnston confirmed he had "no firsthand knowledge of the damages." Johnston limited his opinion to his belief that the "nature and character of the damages alleged by Mr. Greb are of the type that would be proximately caused by the acts of negligence and malfeasance he describes in the First Amended Petition."

         Procedural History

         Greb sued Attorneys in 2015 and he filed a second amended petition on March 16, 2018. Greb alleged that Attorneys owed conflicting duties to Greb, Johnson, and J&G; they failed to disclose the conflict of interest; they continued to represent Greb and Johnson to collect legal fees; and they protected Johnson's interests over Greb's interest, to Greb's detriment, in the CNB lawsuit and in the Baymark transaction. Greb further alleged that after Attorneys withdrew as counsel in the CNB litigation, they continued to represent Johnson in the Baymark transaction, "effecting and completing the deal that squeezed Larry Greb out of his company while retaining for Rick Johnson his full interest in the company." Greb asserted claims against Attorneys for negligence, gross negligence, and breach of fiduciary duty. As remedies, Greb sought actual damages, punitive damages, disgorgement of fees paid to Carrington Coleman, and Greb's legal fees resulting from Attorneys' breach of fiduciary duty.

         Attorneys filed a no-evidence motion for summary judgment on all of Greb's claims, arguing: (1) Greb was represented by independent counsel at all relevant times, (2) there was no evidence that any alleged breach was the proximate cause of Greb's alleged harm, (3) there was no evidence Greb sustained damages, and (4) Greb's breach of fiduciary duty claim was an impermissible attempt to fracture his negligence claim. The trial court granted Attorneys' summary judgment motion without specifying the grounds upon which it was granted, ordered that Greb take nothing on his claims against Attorneys, and dismissed Greb's claims against Attorneys with prejudice. This appeal followed.

         Standard of Review

         We review a trial court's grant of summary judgment de novo. Travelers Ins. Co. v. Joachim, 315 S.W.3d 860, 862 (Tex. 2010). In a no-evidence motion for summary judgment, the movant must state the elements of each attacked claim for which there is no evidence. See Tex. R. Civ. P. 166a(i). The burden then shifts to the non-movant to adduce evidence raising a genuine issue of material fact supporting the challenged elements of the plaintiff's claims. Id.; see also King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 750-51 (Tex. 2003). We review the summary judgment evidence in the light most favorable to the non-movant, crediting evidence favorable to the non-movant if reasonable jurors could, and disregarding contrary evidence unless reasonable jurors could not. Mack Trucks, Inc. v. Tamez, 206 S.W.3d 572, 582 (Tex. 2006).

         A no-evidence motion for summary judgment must be granted if: (1) the movant asserts there is no evidence of one or more specified elements of a claim or defense on which the adverse party would have the burden of proof at trial, and (2) the non-movant produces no summary judgment evidence raising a genuine issue of material fact on those elements. See Tex. R. Civ. P. 166a(i). If the non-movant provides more than a scintilla of probative evidence raising a genuine issue of material fact on each challenged element, a no-evidence summary judgment is improper. Smith v. O'Donnell, 288 S.W.3d 417, 424 (Tex. 2009). Evidence that fails to constitute more than a mere scintilla is, in legal effect, no evidence at all. Lozano v. Lozano, 52 S.W.3d 141, 145 (Tex. 2001). When, as here, the trial ...


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