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Dyke v. Hall

Court of Appeals of Texas, Third District, Austin

October 17, 2019

Thomas A. Dyke, Appellant
v.
David Reed Hall, Individually and in his capacity as Trustee of the David Reed Hall Trust No. 1, Appellee

          FROM THE 345TH DISTRICT COURT OF TRAVIS COUNTY NO. D-1-GN-18-000830, THE HONORABLE KARIN CRUMP, JUDGE PRESIDING

          Before Justices Goodwin, Baker, and Triana

          MEMORANDUM OPINION

          Thomas J. Baker, Justice.

         This is an appeal from the denial of relief under the Texas Citizens Participation Act (the "TCPA"). See Tex. Civ. Prac. & Rem. Code §§ 27.001-.011.[1] David Reed Hall sought declaratory relief regarding an agreement that he entered into with Thomas A. Dyke. In response, Dyke filed various counterclaims against Hall. Hall then filed an amended petition adding new requests for declaratory relief and a claim for breach of fiduciary duty. Dyke filed a motion to dismiss Hall's new claims under the TCPA. The district court denied the motion to dismiss. Dyke appeals the district court's ruling. See id. § 51.014(a)(12). We will affirm the district court's order denying Dyke's motion to dismiss.

         BACKGROUND[2]

         Dyke and Hall have had a business relationship for years. When Hall's mother died, oil and gas interests that she owned were transferred into the David Reed Hall Trust No. 1 (the "Trust") per the terms of her will, and Hall was named as the sole beneficiary and trustee. After Hall became the beneficiary of the Trust, Dyke drafted an agreement entitled Management Agreement (the "Agreement") pertaining to the property in the Trust, and Hall signed the Agreement. Under the terms of the Agreement, Dyke would "manage all of the Trust's and Hall's Mineral Interests and Property" for fifteen years "unless [the Agreement was] extended or terminated by written agreement executed by all of the Parties," and Dyke would be paid eight percent "of all income and payments of any kind received by the Trust and/or Hall for the leasing of Mineral Interests and all other Property including, but not limited to, lease bonus payments, royalties, proceeds of sale, [and] dispute resolutions." Further, the Agreement stated that Dyke's duties included "the screening and selection of appropriate legal counsel whenever needed as well as the management of said legal counsel," that some of Hall's family members were contesting royalty payments being made to Hall, and that Dyke had "arranged for appropriate legal counsel for Hall and the Trust to use in potential litigation with the Family Members."

         A few years after the parties entered into the Agreement, Hall settled a property dispute with members of his family. Under the terms of the settlement agreement, the Trust was given, among other things, a payment of $1, 175, 000. After the settlement agreement was reached, Hall offered to pay Dyke $51, 832.53. When deciding what amount was owed to Dyke under the Agreement, Hall reasoned that Dyke was entitled to eight percent of the net settlement amount. Dyke disagreed and contended that he was entitled to eight percent of the gross settlement amount. While the parties were disagreeing over the amount owed, Hall communicated to Dyke that he wanted to terminate the Agreement, but Dyke indicated that he wanted the Agreement to continue.

         Following this exchange, Hall filed a declaratory-judgment action seeking clarification as to what payments Dyke is entitled under the Agreement, what types of payments "require a remittance of eight percent," and whether the eight percent is "calculated against the gross amount received by the Trust or the net amount." Further, Hall sought declarations that Dyke is not entitled to any payment under the Agreement unless Dyke is actively managing and leasing the property, that the Agreement is "terminable by any party," that Hall is entitled to "a return" of royalty payments made to Dyke because Dyke "did nothing to manage" the property interests, and that Hall is not in breach of the Agreement.

         In response, Dyke brought several counterclaims against Hall for breach of contract and fraud. In addition, Dyke filed a motion for summary judgment arguing that the Agreement unambiguously specifies that he is entitled to any and all income received by the Trust or Hall. Dyke attached to his motion a sworn "declaration" setting out his recollection of the events and negotiations that led up to the execution of the Agreement; discussing actions that he took for the Trust, including his involvement in legal matters; specifying that he met with Hall and several attorneys regarding the Trust and pending legal matters; and stating that he provided advice to Hall. More specifically, Dyke stated as follows:

4. . . . [Hall] began discussions with me about a contract to have me manage [Hall's] mineral interests as well as legal issues that Hall and the trust were facing.
. . .
5.[The scope of my role under the Agreement included] screening, selecting and managing legal counsel employed to protect Hall's ownership and inheritance interests, . . . reviewing all documents produced by all sides, be[ing] notified and/or copied on all information exchanges, be[ing] consulted on all tactical considerations, contribut[ing] to all decisions and consult[ing] with Hall on demand.
8.. . . I helped manage[] Hall's litigation and other legal issues and managed the mineral interests for the trust. In return, Hall paid me 8% of all income and payments made to the trust for several years.
9. In addition, I remained heavily involved in the development of the legal matters, including exchanging drafts of agreements, researching legal causes of action and possible recovery as well as mineral interests, and counseling on the interpretation of documents and agreements. . . . I also frequently met with Hall and exchanged emails and text messages to discuss the legal issues.
10. During this period, Hall and I continued to meet two, three, and often many more time[s] per month, sometimes with attorneys, to discuss Hall's legal issues and/or the trusts mineral interests. Throughout this time, I continued to counsel and advise Hall related to these actions and perform other actions in accordance with the Contract.

         Dyke incorporated similar statements into his motion for summary judgment and original answer.

         After Dyke filed his motion for summary judgment, Hall filed an amended petition in which he described his relationship with Dyke as an attorney-client relationship that existed before they entered into the Agreement and further characterized the Agreement as "a fee agreement between an attorney, Dyke, and his client," Hall. As support for this characterization, Hall referred to portions of Dyke's declaration discussing his involvement in and management of legal issues pertaining to the Trust. Further, Hall argued that the amount of money paid to Dyke for the work that Dyke performed "is unconscionable" and "is not fair and reasonable to the client." Additionally, Hall contended that he has the right to terminate the Agreement at any time because the Agreement is "an attorney-client agreement." Moreover, Hall requested declarations similar to the ones listed in his first petition and sought the following additional declarations: c.The termination provision of the Management Agreement is unconscionable.[3]

d. The Management Agreement is an agreement between an attorney, Dyke, and his client and the client may terminate the agreement at any time with or without cause;
e. The Management Agreement is a contingent fee agreement between an attorney and his client;
f. The Management Agreement is a contingent fee agreement that fails to meet the requirements for a contingent fee agreement;
. . .
j. The Management Agreement is a prohibited transaction under the Disciplinary Rules and is therefore voidable; [and]
k. Attorney Dyke should be disgorged of any fee deemed to be unconscionable, or otherwise not fair and equitable to the client[.]

         Additionally, Hall added new claims for breach of fiduciary duty based on Dyke's status as an attorney. In particular, Hall asserted as follows:

50. Attorney Dyke breached his fiduciary duty by creating a one-sided unconscionable contract, by creating a contract with his client that purportedly could not be terminated, by creating a contract that compensated him for no services, and by failing to disclose that the contract was not fair and equitable to Plaintiff.
51. Attorney Dyke also failed to advise his client that the agreement between Plaintiff and attorney Dyke could be terminated by Plaintiff at any time with or without cause.
52. Attorney Dyke failed to advise Plaintiff that the interest being acquired by attorney Dyke was not fair and reasonable and fully disclosed in a manner that could ...

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