in Re Howard Shulman ( 2017 )

Petition for Writ of Mandamus Conditionally Granted in Part and Denied in
Part and Opinion filed December 12, 2017.
In The
Fourteenth Court of Appeals
NO. 14-17-00508-CV
IN RE HOWARD SHULMAN, Relator
ORIGINAL PROCEEDING
WRIT OF MANDAMUS
234th District Court
Harris County, Texas
Trial Court Cause No. 2016-03005
OPINION
In this original proceeding, relator Howard Shulman seeks mandamus relief
from orders abating the underlying case and compelling certain discovery. See Tex.
Gov’t Code Ann. § 22.221 (West 2004); see also Tex. R. App. P. 52.
Real party in interest Georgia Foulard engaged attorney Shulman to provide
tax planning advice regarding certain property transfers benefitting Georgia as a
result of a divorce settlement with her husband, Michael Foulard. Georgia later sued
Shulman alleging negligence, breach of fiduciary duty, and other claims. Though
she seeks several types of damages, Georgia claims principally that Shulman’s
alleged wrongful conduct exposed her to approximately $1.6 million in potential
federal tax liability. After Shulman moved for summary judgment, Georgia filed a
motion to abate all of her claims until potentially August 2021, when she contends
the limitations period for the Internal Revenue Service (the “IRS”) to assess taxes
will expire.
The trial court, Honorable Wesley R. Ward, presiding judge of the 234th
District Court of Harris County, abated the case “until August 15, 2021 or until the
IRS assesses the tax liability at issue in the lawsuit, whichever is sooner.” Before
abating the case, the trial court signed a separate order compelling Shulman to
produce documents Shulman contends are subject to the attorney-client privilege.
Shulman requests mandamus relief as to both orders.
Regarding the abatement order, we hold that, under the present circumstances,
abating the case for the time period at issue is an abuse of discretion and effectively
vitiates Shulman’s ability to present a claim or defense. Because relator lacks an
adequate remedy by ordinary appeal, we conditionally grant the petition for writ of
mandamus as to the abatement order. We deny the petition for writ of mandamus
as to the order to produce documents because the trial court has not finally refused
Shulman’s motion to reconsider and request to review the documents in camera.
2
FACTUAL AND PROCEDURAL BACKGROUND
To resolve a divorce proceeding, Georgia and Michael signed a binding
Mediated Settlement Agreement (“MSA”). Under the MSA, an offshore company
known as Gulfstream Overseas (Bahamas) Ltd. (“GOB”), owned jointly by Georgia
and Michael, was to transfer a house and $1.645 million cash to a Bahamian entity
established by Georgia. The MSA did not detail the means or method of the transfer,
but provided that, “Mike shall cause GOB to convey the assets to [Georgia’s]
Bahamian entity and account by any method he shall elect which is calculated to
allow a transfer that does not create a taxable event for Georgia or the Bahamian
entity except that Georgia shall pay any ‘repat’ tax on the assets awarded to her
herein if Georgia takes any action which creates a taxable ‘repat’ tax event for these
assets awarded to her herein.” The MSA further stated that “should the US or
Bahamian tax authorities deem the receipt of these assets a taxable event, Georgia
shall be responsible for 100% of same and shall indemnify, defend and hold Mike
and GOB and his/its property harmless from any liability thereon.” The MSA
divided marital property. Any disputes regarding the MSA’s interpretation were to
be resolved by arbitration. Georgia and Michael signed the MSA on October 30,
2013.
After signing the MSA, Georgia hired Shulman on November 19, 2013 to
provide tax planning advice in connection with the property transfer from GOB. In
January 2014, Shulman concluded that of multiple methods to effect the transfer, a
stock redemption transaction “seemed the most logical” way to characterize the
transfer for federal income tax purposes. Shulman believed that Georgia may be
3
forced to recognize a significant amount of taxable income as a result of signing the
MSA, unless the MSA was amended.
Georgia, however, understood the MSA to contemplate the property transfer
by means that would not result in a taxable event to her. Georgia did not accept or
follow Shulman’s advice or recommendations. Georgia hired new tax counsel, Marc
Grossberg, who advised Georgia that to avoid creating a taxable event for her, GOB
should transfer the property to Michael and then Michael should transfer the property
to Georgia.
In February 2014, the trial court signed an Agreed Final Decree of Divorce,
which incorporated the MSA. Subsequently, both Georgia and Michael filed
counter-proceedings for enforcement of the MSA. Michael moved to refer the
matter to arbitration, which the trial court granted. The principal issue at arbitration
concerned the means by which the house and cash would be transferred. According
to Georgia, Shulman appeared at the arbitration as part of Michael’s legal team.
Georgia also contends that Shulman, acting for GOB, hired a tax expert, who
testified adversely to Georgia on the issue for which Georgia had engaged Shulman.
The arbitrator ruled that Georgia was to sign a stock redemption agreement to
transfer the property from GOB to Georgia’s Bahamian entity.
The trial court signed findings of fact and conclusions of law based on the
arbitrator’s award and ordered Georgia to sign the stock redemption agreement,
which she did under protest on January 7, 2015. Georgia filed an income tax return
for the 2014 tax year, in which she took the position that she does not owe any tax
on the property transfer under the MSA. As of the date of this opinion, the IRS has
4
not assessed any tax or sent a deficiency notice to Georgia related to the property
transfer.
In 2016, Georgia filed the present lawsuit against Shulman, asserting claims
for negligence (legal malpractice), breach of fiduciary duty, common law fraud,
statutory fraud, and tortious interference with contract. All causes of action are
based on Georgia’s allegations that Shulman (1) provided negligent tax planning
advice, and (2) acted against Georgia’s interest by advising Michael and GOB on
ways to mitigate Michael’s and GOB’s tax liability from the property transfer, thus
“undo[ing]” the tax benefit to which Georgia believed the MSA entitled her.
As a result of Shulman’s conduct, Georgia maintains, she is potentially
exposed to federal tax liability of approximately $1.6 million. Georgia also seeks
legal, professional, and expert fees and expenses in excess of $200,000,
disgorgement of attorney’s fees, exemplary damages, costs, and interest.
Georgia served Shulman with requests for production of documents related to
Shulman’s previous representation of Michael, GOB, and other entities. In response,
Shulman asserted the attorney-client privilege. Georgia filed a motion to compel
production.
In the meantime, Shulman filed a traditional and no-evidence motion for
summary judgment, seeking judgment as a matter of law based on collateral
estoppel, the absence of damages, the absence of causation, and other reasons. Two
days later, Georgia moved to abate her lawsuit until either the IRS had assessed taxes
5
on the property transfer or until limitations barred it from doing so on August 15,
2021.1
The trial court heard the motion to abate and the motion to compel, and signed
an order compelling Shulman to produce responsive documents within seven days.
Shulman filed an Emergency Motion for Reconsideration of the Court’s Order
Compelling Production and Alternative Request for In Camera Inspection. At a
hearing on the motion for reconsideration, Shulman tendered the documents in
question for in camera review. The trial court declined to review the documents at
that time because Shulman had not shown that Michael wanted to invoke his
attorney-client privilege. The trial court instructed Shulman’s counsel to determine
whether Michael wanted to invoke the privilege. The trial court also signed an order
abating the case “until August 15, 2021 or until the IRS assesses the tax liability at
issue in the lawsuit, whichever is sooner.” When the trial court signed the abatement
order, Shulman’s summary judgment motion remained pending.
MANDAMUS STANDARD
To obtain mandamus relief, a relator generally must show both that the trial
court clearly abused its discretion and that relator has no adequate remedy by appeal.
In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 135–36 (Tex. 2004) (orig.
proceeding). A trial court clearly abuses its discretion if it reaches a decision so
1
According to Georgia, August 15, 2021, is the date on which limitations will expire for
the IRS to assess taxes on the property transfer at issue. See 26 U.S.C. § 6501(a), (e)(1)(A).
Resolving the present mandamus proceeding does not require us to decide when limitations will
expire, and we express no opinion on the issue.
6
arbitrary and unreasonable as to amount to a clear and prejudicial error of law or if
it clearly fails to analyze the law correctly or apply the law correctly to the facts. In
re Cerberus Capital Mgmt. L.P., 164 S.W.3d 379, 382 (Tex. 2005) (orig.
proceeding) (per curiam). A trial court does not have the discretion to make an
erroneous legal conclusion even in an unsettled area of law. See Huie v. DeShazo,
922 S.W.2d 920, 927–28 (Tex. 1996). We review the trial court’s application of the
law de novo. See Walker v. Packer, 827 S.W.2d 833, 840 (Tex. 1992) (orig.
proceeding).
An abatement order may be reviewed on mandamus when the abatement is
indefinite in duration2 or it effectively vitiates a party’s ability to present a claim or
defense.3
Whether an appellate remedy is adequate so as to preclude mandamus review
depends heavily on the circumstances presented. Prudential, 148 S.W.3d at 137.
2
See In re Gore, 251 S.W.3d 696, 699 (Tex. App.—San Antonio 2007, orig. proceeding);
Tex. Mut. Ins. Co. v. Sonic Sys. Int’l, Inc., 214 S.W.3d 469, 471 (Tex. App.—Houston [14th Dist.]
2006, pet. denied); In re Sims, 88 S.W.3d 297, 306 (Tex. App.—San Antonio 2002, orig.
proceeding); Gebhardt v. Gallardo, 891 S.W.2d 327, 332 (Tex. App.—San Antonio 1995, orig.
proceeding); see also In re Immobiliere Jeuness Establissement, 422 S.W.3d 909, 914 (Tex.
App.—Houston [14th Dist.] 2014, orig. proceeding).
3
See In re Messervey Trust, No. 04-00-00700-CV, 2001 WL 55642, at *4 (Tex. App.—
San Antonio Jan. 24, 2001, orig. proceeding) (mem. op., not designated for publication); In re
R.R., 26 S.W.3d 569, 573–74 (Tex. App.—Dallas 2000, orig. proceeding); Underwood v.
Bridewell, 931 S.W.2d 645, 646–47 (Tex. App.—Waco 1996, orig. proceeding); Gebhardt v.
Gallardo, 891 S.W.2d 327, 332–33 (Tex. App.—San Antonio 1995, orig. proceeding); see also In
re Colonial Pipeline Co., 968 S.W.2d 938, 941 (Tex. 1998) (orig. proceeding) (mandamus
available to correct orders that severely compromise party’s ability to present a viable claim or
effectively deny the ability to develop the merits of one’s case).
7
Mandamus review of interlocutory rulings may be “essential to preserve important
substantive and procedural rights . . . , [and] allow the appellate courts to give needed
and helpful direction to the law that would otherwise prove elusive in appeals from
final judgments.” Id. at 136. “When a trial court erroneously sustains a plea in
abatement, mandamus is appropriate if the plaintiff is ‘effectively denied any other
method of challenging the court’s action for an indefinite period of time during
which the cause of action remains in a suspended state.’” In re Adan, No. 14-11-
00382-CV, 2011 WL 3208009, at *4 (Tex. App.—Houston [14th Dist.] July 28,
2011, orig. proceeding) (mem. op.) (concluding that relator had no adequate remedy
by appeal for erroneous abatement); In re Discovery Operating, Inc., 216 S.W.3d
898, 904 (Tex. App.—Eastland 2007, orig. proceeding). When an abatement order
vitiates another party’s ability to prosecute and present a viable claim or defense,
ordinary appeal may not provide an adequate remedy for an abuse of the trial court’s
discretion. See Gebhardt, 891 S.W.2d at 332.
With respect to discovery orders, “[m]andamus is proper when the trial court
erroneously orders the disclosure of privileged information because the trial court’s
error cannot be corrected on appeal.” In re E.I. DuPont de Nemours & Co., 136
S.W.3d 218, 223 (Tex. 2004) (orig. proceeding) (per curiam).
8
ANALYSIS
Abatement order
A. The abatement order constitutes an abuse of discretion for which
Shulman lacks an adequate remedy by ordinary appeal.
A motion to abate sets forth facts and reasons outside the petition why a case
should not proceed or should be dismissed.4 See In re Gen. Agents Ins. Co. of Am.,
254 S.W.3d 670, 676 (Tex. App.—Houston [14th Dist.] 2008, orig. proceeding).
Typically, abatement procedure is invoked by defendants rather than plaintiffs but
that is not always so. Here, the plaintiff moved to abate the entire case after engaging
in substantial discovery and after the defendant filed dispositive motions.
In her motion to abate, Georgia argued that abatement was necessary because
proceeding with her lawsuit against Shulman forces her to take inconsistent
positions, thus prejudicing her. On the one hand, to succeed on her tax damage
claims against Shulman, Georgia must prove that she has incurred tax liability. On
the other hand, the IRS has not assessed tax liability relating to the property transfer,
Georgia has not paid any taxes arising from the property transfer, and Georgia has
told the IRS she does not owe any taxes relating to the property transfer. Relying on
Murphy v. Campbell, 964 S.W.2d 265 (Tex. 1997), Georgia argued that in cases like
4
Generally, a motion to abate or plea in abatement based on facts outside of the record
must be verified. See In re Gen. Agents Ins. Co. of Am., Inc., 254 S.W.3d 670, 676 (Tex. App.—
Houston [14th Dist.] 2008, no pet.); Sparks v. Bolton, 335 S.W.2d 780, 785 (Tex. Civ. App.—
Dallas 1960, no writ). Georgia’s motion to abate was not verified. Shulman has not complained
about the lack of verification, so we consider any objection regarding the verification requirement
waived. See Sparks, 335 S.W.2d at 785.
9
the present one, when the claims have accrued and a plaintiff must file suit to avoid
limitations, a trial court “should abate the malpractice case pending final resolution
of the tax suit.” Id. at 272. Georgia asserted that her tax liability, if any, may not be
known until August 15, 2021.
Shulman contends the abatement order is a clear abuse of discretion for two
reasons. First, Shulman disputes that Murphy’s reasoning applies. Second, Shulman
argues that abating the case until August 2021 is tantamount to an “indefinite” delay
and deprives him of his right to resolution of claims and defenses within a reasonable
time.
We begin with Shulman’s first argument. Murphy was an accounting
malpractice lawsuit in which the plaintiffs alleged faulty tax advice. Id. at 267–68.
The IRS sent the taxpayers a deficiency notice, which resulted in a tax court action.
Id. at 267. The taxpayers eventually settled the tax court suit by paying additional
taxes plus interest. Id. The taxpayers then sued their accountants in state court for
negligent tax advice. Id. The trial court granted summary judgment on limitations
grounds. Id. The question the Supreme Court of Texas considered was whether
limitations had expired, which turned on application of the discovery rule. Id. at
269–70. Under the circumstances there presented, the court held that the latest date
by which the taxpayers should have known that the accountant’s advice was flawed
was when the taxpayers received the IRS deficiency notice and, based on those facts,
limitations had expired. Id. at 272.
Arguing alternatively, the Murphy plaintiffs contended their suit was filed
timely notwithstanding the discovery rule because the limitations period was tolled,
10
relying on Hughes v. Mahaney & Higgins, 821 S.W.2d 154 (Tex. 1991). Under
Hughes, “when an attorney commits malpractice in the prosecution or defense of a
claim that results in litigation, the statute of limitations on the malpractice claim is
tolled until all appeals on the underlying claim are exhausted.” Id. at 157. The
Hughes tolling rule avoids requiring a client to “file a malpractice claim against the
lawyer representing him in another case” because mandating such a suit “would
necessarily make it virtually impossible for the lawyer to continue his
representation.” Murphy, 964 S.W.2d at 272. Citing Hughes, the Murphy plaintiffs
argued that limitations was tolled during the pendency of the tax court litigation
because requiring them to file a malpractice suit against their accountants during the
tax court proceeding would compel “inconsistent positions.” Id. The supreme court
rejected their argument, reasoning that (1) the narrow Hughes rule did not support
tolling in every instance a litigant may be forced to take inconsistent positions, and
(2) the Murphy plaintiffs “would not have suffered the prejudice the Hughes
plaintiffs would have suffered by either suing the lawyer who was still representing
them and thereby losing his services or allowing limitations to run against their
malpractice claim.” Id. In discussing its result, the Murphy court mentioned that
the plaintiffs could have avoided taking inconsistent positions “by requesting the
court to abate the malpractice case pending resolution of the tax suit,” in which
instance a court “should abate the malpractice case pending final resolution of the
tax suit.” Id.
11
Laying this last quote as the cornerstone of her motion to abate, Georgia
argues that abating her malpractice claims was necessary to avoid taking inconsistent
positions as to her tax liability.
In relying on Murphy to abate Georgia’s claims, we conclude the trial court
did not apply the law correctly to the facts. See Cerberus Capital, 164 S.W.3d at
382. First, the quoted statement presupposes the existence of a pending tax suit,
which does not exist here. Second, the Murphy quote on which Georgia relies was
stated in the context of the Hughes tolling rule. Unlike Murphy, the present
mandamus proceeding, in its current posture, does not involve Hughes tolling, nor
the discovery rule, nor limitations.5 Murphy did not say that abatement is appropriate
every time a litigant may be forced to take inconsistent positions; Murphy did not
address that issue. Finally, because the tax court litigation was the first action filed
in Murphy, any abatement of the malpractice suit in that case would have been for a
much shorter duration than the abatement period ordered here, which may last more
than four years. Murphy does not support the trial court’s abatement order.
As to Shulman’s second argument, we agree that the abatement period ordered
here is unreasonably long so as to severely compromise Shulman’s ability to obtain
a ruling on viable claims or defenses that have been timely presented to the court.
Parties in a civil case are entitled to full discovery, to develop their claims and
defenses, and to have the case tried, all within a reasonable time. See Colonial
5
We express no opinion whether the Hughes tolling rule may apply to this dispute in the
future.
12
Pipeline, 968 S.W.2d at 941–42 (holding that order abating discovery from all but
small group of plaintiffs until that group’s claims were resolved unreasonably
interfered with defendants’ ability to prepare a defense and was abuse of discretion);
In re R.R., 26 S.W.3d at 574 (holding blanket order staying discovery on main issue
because of related criminal proceeding was abuse of discretion because it vitiated
defendant’s ability to prepare defense in civil case). Absent authority to the contrary,
Shulman has the same right as any other civil litigant to, within a reasonable time,
develop his defenses and proceed to trial or resolution. See Gore, 251 S.W.3d at
699–700.
According to the record, Georgia and Shulman have completed substantial
discovery and Shulman has filed a traditional and no-evidence motion for summary
judgment. The trial court did not rule on those motions before signing the abatement
order. Generally, a trial court is required to consider and rule upon a motion within
a reasonable time. In re Martinez Ramirez, 994 S.W.2d 682, 683 (Tex. App.—San
Antonio 1998, no pet.) (citing Barnes v. State, 832 S.W.2d 424, 426 (Tex. App.—
Houston [1st Dist.] 1992, orig. proceeding)). “When a motion is properly filed and
pending before a trial court, the act of giving consideration to and ruling upon that
motion is a ministerial act, and mandamus may issue to compel the trial judge to
act.” Safety-Kleen Corp. v. Garcia, 945 S.W.2d 268, 269 (Tex. App.—San Antonio
1997, orig. proceeding); see also Eli Lilly and Co. v. Marshall, 829 S.W.2d 157, 158
(Tex. 1992) (holding trial court abused its discretion by refusing to render a decision
on relator’s motion).
13
The order abated the case “until August 15, 2021 or until the IRS assesses the
tax liability at issue in the lawsuit, whichever is sooner.” Though the order is not by
its technical terms indefinite, the abatement’s years-long duration and its uncertain
termination date cause us to conclude that it was an abuse of discretion. In Colonial
Pipeline, for example, the fact that the stayed discovery would not be available “for
many months or even years” was a significant factor in granting mandamus relief as
to an abatement order. Colonial Pipeline, 968 S.W.2d at 941–42. In Messervey, the
court granted mandamus relief regarding an order that abated a civil case for a period
of “six months or until the criminal case was concluded, whichever occurred earlier.”
Messervey, 2001 WL 55642, at *2. Recognizing that the abatement was not
indefinite, the Messervey court nevertheless conditionally granted mandamus to
vacate an overbroad abatement order that completely curtailed prosecution of an
entire case. Id. at *4.
A four-year abatement is an extraordinary length of time to require a party to
await resolution of claims and defenses that have been substantially discovered and
presented to the court by summary judgment motion. Shulman raised several
arguments that he contends entitle him to judgment regardless whether Georgia owes
taxes on the property transfer. Shulman has a right to attempt to prove his
entitlement to judgment without waiting years for Georgia’s tax liability to
materialize when the fact of that liability may be irrelevant to the success or failure
of Shulman’s claims and defenses. Postponing a ruling on Shulman’s potentially
dispositive motions for as long as four years severely compromises Shulman’s right
to reach potential resolution within a reasonable time.
14
Moreover, the abatement of Georgia’s lawsuit is by no means certain to end
on August 15, 2021. For example, if the IRS sends a deficiency notice or institutes
a tax suit in July 2021, it is foreseeable the abatement could continue given the
rationale underlying Georgia’s request for abatement would not have changed. And
Georgia would have the right to litigate any tax court proceeding to final judgment
and through the appellate process, which could take additional years. In Gebhardt,
the court held that given the evidence there before the court, it was impossible to
determine when the abatement would end and thus indefinitely denied plaintiff the
ability to develop her case and a forum for trial. See Gebhardt, 891 S.W.2d at 329.
Even when an abatement is not “indefinite,” if it completely curtails the
prosecution of an entire case and denies another party the right to proceed with full
discovery or to resolution within in a reasonable time, the aggrieved party has no
adequate remedy by appeal and mandamus may issue. See In re Baldridge, No. 04-
16-00011-CV, 2016 WL 1128236, at *4 (Tex. App.—San Antonio Mar. 23, 2016,
orig. proceeding) (mem. op.); Gore, 251 S.W.3d at 699–700; see also Adan, 2011
WL 3208009, at *4 (no adequate remedy by appeal when party “effectively denied
any other method of challenging the court’s action for an indefinite period of time
during which the cause of action remains in a suspended state”); Discovery, 216
S.W.3d at 905. By its nature, abatement of an action not only precludes the trial
court from going forward on a case, it prohibits the parties from proceeding in any
manner until the case has been reinstated. See Immobiliere, 422 S.W.3d at 916–17;
In re Kimball Hill Homes Tex., Inc., 969 S.W.2d 522, 527 (Tex. App.—Houston
[14th Dist.] 1998, orig. proceeding).
15
Georgia also cites Philips v. Giles, 620 S.W.2d 750 (Tex. App.—Dallas 1981,
no writ), as support for the trial court’s abatement order. In Philips, the plaintiff
alleged that her attorney negligently advised her that a divorce settlement agreement
would have no tax consequences. Id. at 750. Later, an accountant informed the
plaintiff that the agreement in fact had tax implications. Id. The plaintiff declared
the disputed income on her tax returns and paid the anticipated tax. Id. She then
sued her attorney, seeking damages for the taxes she believed she owed, though the
IRS had not determined whether she owed the taxes. Id. The attorney filed a plea
in abatement, which the trial court granted. Id. at 751. The plaintiff sought
mandamus relief. The court of appeals denied the writ, holding that abatement was
appropriate because it was unknown whether the plaintiff owed the tax and,
consequently, whether her claim had accrued.
We disagree that Philips—a case Georgia did not cite to the trial court and
whose vitality is at least questionable following Murphy—supports abatement in the
present case. In Philips, there was no summary judgment motion pending and the
defendant chose to request abatement. Here, Shulman did not request abatement,
but filed a summary judgment motion following substantial discovery. Shulman
asserts rights and raises issues not presented in Philips.
Georgia raises the reasonable concern that if the case is allowed to proceed,
Shulman may very well receive a “windfall” if he obtains a favorable merits
judgment now and the IRS subsequently assesses tax liability against Georgia. That
result, however, will not follow inexorably from conditionally granting mandamus
16
relief. If Shulman’s defensive arguments entitle him to summary judgment even
assuming Georgia already owes the taxes, then he is receiving no windfall by having
those issues determined sooner rather than later. Once the trial court rules on the
dispositive motions, the parties and the court may reassess whether a temporary
abatement or other relief may be appropriate at that time to protect the interests of
both parties.
For these reasons, we conclude that the abatement order constitutes an abuse
of discretion and Shulman lacks adequate remedy by ordinary appeal.
B. Subject matter jurisdiction—ripeness of Georgia’s claims and damages
Georgia’s motion to abate presupposed that all of her claims and damages
have accrued and are ripe. We question that assumption.
Ripeness is a threshold issue that implicates subject matter jurisdiction. Waco
Indep. Sch. Dist. v. Gibson, 22 S.W.3d 849, 851 (Tex. 2000). As a component of
subject matter jurisdiction, the ripeness doctrine “emphasizes the need for a concrete
injury for a justiciable claim to be presented.” Id. Ripeness focuses on when an
action may be brought so as to avoid the constitutional prohibitions against advisory
opinions. See id. at 851–52. Under the ripeness doctrine, courts consider whether,
at the time a lawsuit is filed, the facts are sufficiently developed “so that an injury
has occurred or is likely to occur, rather than being contingent or remote.” Id. at
852. Thus the ripeness analysis inquires whether the case involves “uncertain or
contingent future events that may not occur as anticipated or may not occur at all.”
Id. at 852. A case is not ripe when determining whether the plaintiff has a concrete
17
injury depends on contingent or hypothetical facts, or upon events that have not yet
occurred. Id.
Generally, a tort cause of action must have accrued to give rise to a justiciable
controversy. See Ghidoni v. Skeins, 510 S.W.3d 707, 713 (Tex. App.—San Antonio
2016, no pet.) (legal malpractice claim not ripe because it had not accrued); Lane v.
Baxter Healthcare Corp., 905 S.W.2d 39, 41 (Tex. App.—Houston [1st Dist.] 1995,
no writ); Laborers’ Int’l Union of N. Am. v. Blackwell, 482 S.W.2d 327, 329 (Tex.
Civ. App.—Amarillo 1972, no writ) (“A controversy is justiciable when there are
interested parties asserting adverse claims upon a state of facts which must have
accrued wherein a legal decision is sought or demanded.”); see also Arnold & Itkin,
L.L.P. v. Dominguez, 501 S.W3d 214, 221 (Tex. App.—Houston [1st Dist.] 2016,
orig. proceeding) (cause of action not ripe if no legal injury has occurred and claim
has not accrued). In Texas, accrual of a claim requires a party sustain a “legal
injury,” that is, an invasion of the plaintiff’s legally protected interest such that she
may obtain remedy in court. See Atkins v. Crosland, 417 S.W.2d 150, 153 (Tex.
1967); Zidell v. Bird, 692 S.W.2d 550, 555 (Tex. App.—Austin 1985, no writ). In
most cases, a cause of action accrues when a wrongful act causes a legal injury,
regardless of when the plaintiff learns of that injury or if all resulting damages have
yet to occur. See S.V. v. R.V., 933 S.W.2d 1, 4 (Tex. 1996); Haase v. Abraham,
Watkins, Nichols, Sorrels, Agosto, & Friend, LLP, 404 S.W.3d 75, 89–90 (Tex.
App.—Houston [14th Dist.] 2013, no pet.); Hues v. Warren Petroleum Co., 814
S.W.2d 526, 529 (Tex. App.—Houston [14th Dist.] 1991, writ denied).
18
Subject matter jurisdiction is never presumed to exist. See Texas Ass’n of Bus.
v. Texas Air Control Bd., 852 S.W.2d 440, 443–46 (Tex. 1993). In the trial court,
Shulman did not raise ripeness arguments in so many words, though he argued
extensively that Georgia’s alleged damages had not occurred and are too speculative.
Shulman did not request dismissal of Georgia’s claims for want of subject matter
jurisdiction in the trial court, nor did he brief ripeness issues in our court. However,
Georgia’s causes of action and alleged damages raise ripeness questions, which
implicate subject matter jurisdiction. See Waco, 22 S.W.3d at 851. Until such time
as Georgia sustains a legal injury, her causes of action have not accrued. Murphy,
964 S.W.2d at 270; Atkins, 417 S.W.2d at 153. For example, insofar as Georgia’s
negligent tax advice allegations are concerned, whether she has sustained a legal
injury as a result of Shulman’s alleged faulty tax advice is an open question, given
that Georgia did not hire Shulman until after she signed the MSA and she did not
take his advice after hiring him. A person suffers legal injury from faulty
professional advice when the advice is taken. See Murphy, 964 S.W.2d at 270;
Hughes v. Bay Area Montessori House, Inc., No. 14-09-00410-CV, 2010 WL
862861, at *2 (Tex. App.—Houston [14th Dist.] Mar. 11, 2010, no pet.) (mem. op.).
Mindful of our obligation to address subject matter jurisdiction even if the
parties do not raise it,6 we set the case for argument and asked the parties to address
whether Georgia’s alleged causes of action and damages are ripe. The parties
6
See Univ. of Tex. Sw. Med. Ctr. v. Loutzenhiser, 140 S.W.3d 351, 358 (Tex. 2004) (courts
must raise subject matter jurisdiction sua sponte); Mayhew v. Town of Sunnyvale, 964 S.W.2d 922,
928 (Tex. 1998).
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disagreed on the answer. The present record, however, is not sufficiently developed
to permit an answer to those questions at this stage, particularly given that the parties
did not explore the issue in the trial court. The parties should have the opportunity
to fully address ripeness questions now that we have ordered the abatement lifted,
and the trial court should have the opportunity to rule on them. To the extent some
or all claims or damages are ripe and subject matter jurisdiction exists, then Shulman
has the right to a prompt ruling on his pending summary judgment motions, as
discussed. The trial court will have the discretion to address any remaining
discovery issues.
Discovery order
Shulman asserts that the document requests at issue in Georgia’s Motion to
Compel, request numbers 8, 9, 23, and 24, seek documents protected by the attorney-
client privilege. For example, request numbers 8 and 9 seek documents that define
or describe “[Shulman’s] scope [of] engagement” for legal services to other
clients—GOB and Michael. Similarly, request numbers 23 and 24 seek
communications between Shulman and these other clients. Shulman argues that he
made a prima facie case by affidavit that the documents in question are privileged
under Texas Rule of Evidence 503, which protects “communications made to
facilitate the rendition of professional legal services to the client.” Tex. R. Evid.
503. Shulman’s affidavit states that the documents in questions are comprised of
legal invoices to GOB and/or Michael and draft agreements for Gulfstream Trading,
Ltd., that these documents were part of the client files for those persons or entities,
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and that he has never received consent to waive the attorney-client privilege as to
these documents.
If the party asserting the privilege establishes a prima facie case for the
privilege and “tenders documents to the trial court, the trial court must conduct an
in camera inspection of those documents before deciding to compel production.” In
re Christus Santa Rosa Health Sys., 492 S.W.3d 276, 279 (Tex. 2016). “A trial court
abuses its discretion when it fails to conduct an adequate in camera inspection of
documents when such review is critical to evaluation of a privilege claim.” In re
Living Ctrs. of Tex., Inc., 175 S.W.3d 253, 261 (Tex. 2005) (orig. proceeding).
At the hearing on the motion to reconsider, Shulman tendered the documents
in question for in camera review. The trial court declined to review the documents
at that time not because Shulman failed to establish a prima facie case of privilege,
but because Shulman did not prove that Shulman’s client, Michael, wanted to invoke
the attorney-client privilege. The trial court instructed Shulman’s counsel to
determine whether Michael wanted to invoke the privilege. The trial court did not
decline to conduct an in camera review if later presented with evidence that Michael
desired to assert his privilege.
“A party’s right to mandamus relief generally requires a predicate request for
some action and a refusal of that request.” In re Perritt, 992 S.W.2d 444, 446 (Tex.
1999) (orig. proceeding); In re Le, 335 S.W.3d 808, 814–15 (Tex. App.—Houston
[14th Dist.] 2011, orig. proceeding). Shulman is not entitled to mandamus relief as
to the order to produce documents and his request for in camera review because the
trial court has not finally refused that request, but indicated a willingness to review
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the documents if Shulman presents evidence that Michael wants to invoke his
privilege.
CONCLUSION
For the above reasons, we conditionally grant the petition for writ of
mandamus, in part, as to the abatement order and direct the trial court to vacate that
order. We deny the petition, in part, as to the order that Shulman produce documents.
We are confident the trial court will act in accordance with this opinion. The writ of
mandamus shall issue only if the trial court fails to do so.
/s/ Kevin Jewell
Justice
Panel consists of Justices Boyce, Donovan, and Jewell.
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