William H. Berry, Jr. v. Nueces County ( 2006 )

                                    NUMBER 13-05-383-CV

                                 COURT OF APPEALS

                     THIRTEENTH DISTRICT OF TEXAS

                         CORPUS CHRISTI B EDINBURG

WILLIAM H. BERRY, JR.,                                                                 Appellant,

                                                             v.

NUECES COUNTY,                                                                            Appellee.

                       On appeal from the County Court at Law No. 2

                                        of Nueces County, Texas.

                                         MEMORANDUM OPINION

Before Chief Justice Valdez and Justices Yañez and Castillo

Memorandum Opinion by Chief Justice Valdez  

Appellant, William H. Berry, Jr., brings this interlocutory appeal from an order of the trial court granting a plea to the jurisdiction filed by appellee, Nueces County.  Because we conclude Berry lacked standing to pursue this claim, we vacate the trial court's order and dismiss the case for want of jurisdiction.

Background

Berry is an attorney practicing in Corpus Christi, Texas. Mary Thornton, a former Nueces County employee, hired Berry as her attorney in order to pursue wrongful termination claims against Nueces County.  Berry and Thornton executed a contingency fee agreement that read in part:

That in consideration of such services rendered by said attorney, his associates or representatives, there is hereby transferred, assigned and conveyed to him a one-third (1/3) interest in said claim and cause of action, if same is compromised and settled prior to suit being filed; in the event that suit is filed, then the undersigned attorney shall be entitled [sic] forty percent (40%) of the entire amount of a judgment or settlement . . . .

Two years after litigation was commenced, Thornton terminated Berry=s representation and hired new counsel.^[1]  Berry then filed a plea in intervention, asserting a Apriority lien on any offer, payment, tender, of any settlement proceeds . . . .@  The trial court granted his plea in order to allow Berry to intervene Aas an interested person in the matter . . . for his claim for reasonable, necessary, customary, and contractual attorney fees and out of pocket expenses pursuant to his fee agreement with Mary Thornton.@ 

Thornton, through her new counsel, then settled her original claim with Nueces County amicably.^[2]  Nueces County paid the agreed settlement amount to Thornton and her current attorney. Thornton=s counsel paid its own fees out of the settlement and tendered the remainder to the court for distribution.  Berry, who was informed about the settlement by Thornton=s new counsel, filed a petition as intervenor, arguing that Nueces County is jointly and severally liable with Thornton to Berry for Berry=s undivided interest in the settlement proceeds. 

Nueces County then filed a plea to the jurisdiction in response to Berry=s petition, alleging various defenses that would defeat the trial court=s jurisdiction, including judicial immunity, quasi-judicial immunity, legislative immunity, laches, negligence, and governmental immunity, among others.  The trial court granted the County=s plea, which Berry now appeals to this Court. 

Standing

We first address the matter of the trial court=s jurisdiction to entertain this case.  Subject matter jurisdiction is essential for a court to have authority to decide a case.  Tex. Ass'n Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 443‑44 (Tex. 1993). Subject matter jurisdiction is never presumed, and it cannot be waived.  Id. at 443.  An appellate court may address sua sponte the issue of subject matter jurisdiction.  Id. at 445‑46.  Because subject matter jurisdiction is a question of law, our review is de novo.  See Mayhew v. Sunnyvale, 964 S.W.2d 922, 928 (Tex. 1998).

Standing is a necessary element of subject matter jurisdiction.  Douglas v. Delp, 987 S.W.2d 879, 882 (Tex. 1999).  To establish standing, a party asserting a claim must show a justiciable interest by alleging an actual or imminent threat of injury peculiar to one=s circumstances.  Tex. Lottery Comm'n v. Sci. Games Int'l, 99 S.W.3d 376, 380 (Tex. App.BAustin 2003, pet. denied); Elizondo v. Tex. Natural Res. Conservation Comm'n, 974 S.W.2d 928, 932 (Tex. App.BAustin 1998, no pet.) (citing Warth v. Seldin, 422 U.S. 490, 498‑99 (1975) (noting standard for determining whether plaintiff has standing is whether she has such personal stake in outcome of controversy as to warrant invocation of court's jurisdiction)).  Thus, in order for Berry to have standing to assert his cause of action against Nueces County, he must demonstrate that he has a personal justiciable interest at stake.

 In Texas, when an attorney is discharged by his client before the completion of the representation, the attorney may be able to treat his discharge as a breach of contract and sue for the amount of his compensation.  See Mandell & Wright v. Thomas, 441 S.W.2d 841, 847 (Tex. 1969); Rocha v. Ahmad, 676 S.W.2d 149, 156 (Tex. App.BSan Antonio 1984, writ dism'd).  However, the party against whom the attorney may assert standing to sue for this breach is his client, not the opposing party in the underlying litigation.  See, e.g. Mandell & Wright, 441 S.W.2d at 847 (allowing attorney to sue client after termination); Walton v. Hoover, Bax & Slovacek, L.L.P., 149 S.W.3d 834, 836 (Tex. App.BEl Paso 2004 pet. granted) (citing Mandell & Wright); Law Offices of Windle Turley, P.C. v. Ghiasinejad, 109 S.W.3d 68, 70-71 (Tex. App.BFort Worth 2003, no pet.) (citing Mandell & Wright).   This is because the attorney-client relationship is one of contract, and the attorney=s rights are wholly derivative from those of his client.  See Dow Chem. Co. v. Benton, 357 S.W.2d 565, 567 (Tex. 1962).  Thus, once dismissed by his client, the attorney may sue that client, but no longer has a cause of action to assert against the opposing party, as explained by the Texas Supreme Court:

The question is, [after a plaintiff is no longer in the case], then may the attorneys press the plaintiff's suit (in which they have a contractual interest) in order that the attorneys may recover their percentage of whatever the plaintiff would have recovered.  We think not.

Id. at 566. 

As the supreme court pointed out in Dow Chem. Co., the effect of granting attorneys such as Berry standing to sue the opposing party would be that Aan attorney is no longer merely the legal representative of his client.@  Id. at 568.  Instead, in every case involving a contingent fee contract, the attorney Awould be more akin to a co‑plaintiff.@  Id.  The supreme court explicitly refused to recognize attorneys= personal causes of action against the non-client party in these types of suits, describing the possibility of these suits as Ajust another difficulty encountered if we overindulge in the notion that the attorney with a contingent fee is litigating two distinct, independent interests at the same time.@  Id.; see Winston v. Masterson, 87 Tex. 200, 203-04 (Tex. 1894) (holding that an attorney with a contingent fee contract is not so directly interested in the subject matter of a lawsuit as to make him a "party" for purposes of disqualification).

Berry relies in part on the decision of the Houston court of appeals in Honeycutt v. Billingsley, 992 S.W.2d 570, 584 (Tex. App.BHouston [1st Dist.] 1999, pet. denied), in support of his claim that, in the case of contingency fees, if the defendant in the underlying suit has notice of the attorney=s interest, the defendant is liable to the attorney for that interest, even if he has already paid the client.  However, we find this case distinguishable; in Honeycutt, the first attorney was not terminated by his client but instead offered to refer the case to a second, more experienced attorney when the matter became complex.  See id. at 574.  The referral agreement explicitly reaffirmed that the plaintiff had assigned a contingency interest in the first attorney, and that the first attorney would retain that interest but share it with the second attorney.  See id.  Also, all parties involved, including the defendant, were apparently on notice of the referral and contingent free agreement.  See id. at 574-75.

Here, Thornton unilaterally terminated Berry as her representative.  Her new counsel had no agreement or relationship with Berry.  Furthermore, Nueces County, as the defendant in the actual proceeding, did not have knowledge that Berry might assert a claim against it instead of Thornton.  When Nueces County settled with Thornton and paid the agreed-upon amount, it only had notice that Berry=s motion for intervention was granted for the purposes of Berry=s collection of Areasonable, necessary, customary, and contractual@ attorney=s fees Apursuant to his fee agreement with Mary Thornton.@  There was no indication in the trial court=s order that Berry could intervene in order to pursue fees from anyone other than his former client, and Berry=s attempt to impose a lien against any possible future settlement agreement was not granted in the court=s order.

This case does not present an issue of referral agreements between lawyers, and furthermore, does not present a case in which the parties themselves arrange a secret settlement in order to defraud their own attorneys.  See Galveston H. & S. Ry. Co. v. Ginther, 72 S.W. 166, 167 (Tex. 1903). Instead, we are simply presented with an attorney who may have a legitimate claim for reasonable fees against his former client, but who does not also have standing to assert a claim against a defendant who has fully paid out all settlement proceeds and is no longer liable to the former client. 

Berry=s rights to a portion of any damages award or settlement agreement were entirely derivative of Thornton=s rights.  See Dow Chem. Co., 357 S.W.2d at 567 (noting that attorney=s and client=s rights are Anecessarily dependent upon and inseparably interwoven with the other.@).  Once the trial court granted Thornton=s motion to dismiss with prejudice, and Nueces County fully paid the agreed-upon settlement amount, Berry=s rights in the case in relation to Nueces County were extinguished.  Thus, while he may potentially be able to pursue a claim for reasonable attorney=s fees against Thornton as his former client, he lacks standing to pursue this claim against Nueces County.  See Rapp v. Mandell & Wright, P.C., 127 S.W.3d 888, 894 (Tex. App.BCorpus Christi 2004, pet. denied).

Conclusion

Because Berry lacked standing to bring any cause of action against Nueces County, the trial court lacked subject matter jurisdiction over this case.  Douglas, 987 S.W.2d at 882. Therefore, we vacate the trial court's order on Nueces County=s plea to the jurisdiction, and we dismiss the case for want of jurisdiction.  We do not reach Berry=s issues on appeal. See  Tex. R. App. P. 43.2(e); Juarez v. Tex. Ass'n of Sporting Officials El Paso Chapter, 172 S.W.3d 274, 281 (Tex. App.BEl Paso 2005, no pet.).

ROGELIO VALDEZ

Chief Justice

Dissenting Memorandum Opinion

by Justice Castillo.

Memorandum Opinion delivered and

filed this 11th day of May, 2006.

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^[1] Thornton=s amicus curiae brief argues that Berry=s termination was for good cause and describes his representation as Atumultuous and inadequate.@ Berry disputes this and argues that there was no good cause for his termination.

^[2] In the settlement agreement, Thornton warranted that she had not Aassigned, authorized or transferred . . . any claims . . . of any kind or character, which Plaintiff has or may have had against one or more Defendants, except to the extent of any agreement between Plaintiff and her current attorney(s).@