M.B. \"Benny\" Daneshjou, Individually and as the Representative of Daneshjou Company, Inc. v. Robert H. Bateman and Bateman/Pugh, PLLC , 396 S.W.3d 112 ( 2013 )

Affirmed and Plurality and Concurring Opinions filed January 17, 2013.
In The
Fourteenth Court of Appeals
NO. 14-11-00804-CV
M.B. “BENNY” DANESHJOU, INDIVIDUALLY AND AS THE
REPRESENTATIVE OF DANESHJOU COMPANY, INC., Appellant
V.
ROBERT H. BATEMAN AND BATEMAN/PUGH, PLLC, Appellees
On Appeal from the 129th District Court
Harris County, Texas
Trial Court Cause No. 2009-49701
PLURALITY OPINION
In this legal-malpractice case, plaintiff M.B. “Benny” Daneshjou appeals the
take-nothing judgment entered by the trial court on the jury’s verdict. He contends
that the trial court misconstrued the jury’s findings and improperly applied a
settlement credit to eliminate any recovery. Finding no error, we affirm.
I. FACTUAL AND PROCEDURAL BACKGROUND
When a client sues his attorney for the lawyer’s allegedly negligent
representation of the client in prior litigation, the trial of the legal-malpractice
claim requires the parties to litigate “a suit within a suit,” because the attorney’s
performance in the first trial is the subject of the second trial. To maintain the
distinction between the facts, findings, and damages assessed in each trial, the two
proceedings are discussed separately in this opinion.
A. The Underlying Lawsuit: The Bullock Litigation
Appellants M.B. “Benny” Daneshjou and Daneshjou Company, Inc. build
custom homes in Austin, Texas. After a dispute arose over their performance of a
construction contract, the corporation sued clients Sandra Bullock and John
Bullock, trustee of the Band-Aid Trust (collectively, “the Bullocks”), for unpaid
fees. The Bullocks asserted a variety of counterclaims against the corporation and
against Benny Daneshjou individually (collectively, “Daneshjou”).1 Attorney
Robert H. Bateman of the law firm Bateman/Pugh, PLLC (collectively,
“Bateman”)2 defended Daneshjou against the Bullocks’ counterclaims.3 The
Bullocks obtained a judgment against Daneshjou for approximately $8.2 million.4
While the case’s appeal was pending, the parties reached a settlement in which
Daneshjou’s insurer paid the Bullocks $2 million, and Benny Daneshjou’s wife
1
In the subsequent legal-malpractice case, “Daneshjou” was defined in the jury charge to
mean “Benny Daneshjou, individually and as the representative of Daneshjou Company, Inc.”
The same convention is followed here.
2
Just as “Daneshjou” was defined in the jury charge to refer both to the individual and to
his company, “Bateman” was defined in the jury charge of the malpractice case to mean both
Robert Bateman and his law firm.
3
Bateman and Daneshjou refer to the Bullock litigation as though Daneshjou and the
Bullocks were the only parties, and again, the same convention is followed here.
4
This is the figure used by the parties. Daneshjou and Bateman have not explained how
they calculated the $8.2 million figure, and it is not clear what parts of the judgment in the
Bullock litigation the parties included in arriving at this figure.
2
purchased the judgment for an additional $2 million.
B. The Legal-Malpractice Case
Nearly four years after the settlement, Daneshjou sued Bateman for
mishandling his defense in the Bullock litigation. The jury found that Bateman’s
negligence in defending Daneshjou from the Bullocks’ counterclaims proximately
caused “the occurrence in question.” The portion of the associated damages
question relevant to this appeal, and the jury’s finding in response to that portion of
the question, were as follows:
What sum of money, if any, if paid now in cash, would fairly and
reasonably compensate Daneshjou, for the damages, if any, that were
proximately caused by such negligence?
In answering questions about damages, answer each question
separately. Do not increase or reduce the amount in one answer
because of your answer to any other question about damages. Do not
speculate about what any party’s ultimate recovery may or may not
be. Any recovery will be determined by the court when it applies the
law to your answers at the time of judgment. Do not add any amount
for interest on damages, if any.
...
I. Answer separately, in dollars and cents, for damages, if any,
that were sustained by Daneshjou in the PAST:
(a) The amount of damages, if any, assessed against Daneshjou in
the underlying lawsuit caused by the failure of Bateman to properly
defend the lawsuit.
Answer: $300,000
In other subparts of this question, the jury was asked to state the amount that would
reasonably compensate Daneshjou for past loss of earnings, future loss of earning
capacity, and past and future mental anguish, but the jury found that the amount of
each of these damages was zero.5
5
Because there was a question as to the scope of Bateman’s representation, the jury also
was asked if Bateman “ha[d] an attorney-client relationship with Daneshjou on its affirmative
3
After the verdict was received, Bateman filed a motion asking the trial court
to calculate Daneshjou’s recovery by applying the formula set out in Keck, Mahin
& Cate v. National Union Fire Insurance Co. of Pittsburgh, Pennsylvania, 20
S.W.3d 692, 703 (Tex. 2000) to the jury’s damage finding, resulting in a take-
nothing judgment. Daneshjou responded that Keck is inapplicable and asked the
trial court to render judgment against Bateman for $300,000. The trial court signed
the take-nothing judgment proposed by Bateman, adding, “The Court’s judgment
is entered consistent with the guidance found in Keck, 20 S.W.3d 692 (Tex. 2000).
The Court may supplement this judgment with its reasoning at a later date.”
The trial court denied Daneshjou’s motion in which he asked alternatively
for a new trial or for reconsideration of the judgment, and Daneshjou appealed.
II. ISSUES PRESENTED
Daneshjou presents the following two issues for review:
1. Did the trial court err in construing the jury’s verdict of
$300,000 to render a take-nothing judgment after application of a $4
million settlement credit?
2. If the jury’s verdict is ambiguous, must the Court remand the
case for a new trial, instead of trying to substitute the Court’s opinion
on the jury’s verdict in lieu of the jury’s intent?
III. STANDARD OF REVIEW
A trial court’s judgment “shall conform to the pleadings, the nature of the
case proved and the verdict, if any, and shall be so framed as to give the party all
the relief to which he may be entitled either in law or equity.” TEX. R. CIV. P. 301.
Questions nevertheless arise when a party contends that a jury’s verdict is
ambiguous or that the trial court misinterpreted an unambiguous verdict.
claim against the Bullocks.” The jury answered, “No.” The jury additionally found that
Bateman did not fail to comply with his fiduciary duty to Daneshjou, did not engage in
unconscionable action, and was not grossly negligent. Because the jury did not find that
Bateman was liable under any theory other than that of professional negligence, this suit is
treated solely as a legal-malpractice case.
4
When faced with competing interpretations of a jury’s verdict, the reviewing
court’s first task is to determine if the verdict reasonably can be interpreted in more
than one way. See Jackson v. U.S. Fid. & Guar. Co., 689 S.W.2d 408, 410 (Tex.
1985). To make this determination, one must read the charge “like jurors do—with
common sense.” See Nip v. Checkpoint Sys., Inc., 154 S.W.3d 767, 772 n.3 (Tex.
App.—Houston [14th Dist.] 2004, no pet.). If only one interpretation is
reasonable, then the verdict will be read in accordance with its plain meaning,
because the reviewing court must read an unambiguous verdict “according to the
ordinary import of the words used, in the light of the pleading upon which it is
based, and in light of the evidence that has been heard to support or overthrow it.”
Serv. Life Ins. Co. v. Miller, 271 S.W.2d 301, 304 (Tex. Civ. App.—Fort Worth
1954, writ ref’d n.r.e.).
If there are at least two ways in which the challenged finding or findings
reasonably can be interpreted, then the verdict is ambiguous. See Jackson, 689
S.W.2d at 410. “[I]f the jury findings are ambiguous or unclear, the appellate
courts must try to interpret the findings so as to uphold the judgment.” Id. at 412;
accord, St. Joseph Hosp. v. Wolff, 94 S.W.3d 513, 531 (Tex. 2002) (“If possible,
however, we must interpret the jury’s findings in a manner to uphold the
judgment.”). To do so, courts consider the charge, the pleadings, and the evidence.
Jackson, 689 S.W.2d at 413 (holding that if the appellant complaining of an
ambiguous verdict “has not brought forward the statement of facts on
appeal . . . [, then he] has not sustained his burden to show error in the trial court
judgment”).6 See also State v. Hale, 136 Tex. 29, 41, 146 S.W.2d 731, 739 (1941)
(“[W]hen the findings on special issues are ambiguous, in order to arrive at their
6
The “statement of facts” referred to in Jackson is now known as the “reporter’s record.”
See In re E.M.W., No. 14-10-00964-CV, 2011 WL 5314525, at *2 (Tex. App.—Houston [14th
Dist.] Nov. 3, 2011, no pet.) (mem. op.) (tracing the change in terminology).
5
proper interpretation the court may examine not only the issues submitted, but also
the pleadings and the evidence; and after an examination of such pleadings and
evidence the intention of the verdict can be ascertained.”).
IV. THE STATE OF THE RECORD
On appeal, “the reporter’s record consists of the court reporter’s
transcription of so much of the proceedings, and any of the exhibits, that the parties
to the appeal designate.” TEX. R. APP. P. 34.6(a)(1). Daneshjou requested a partial
reporter’s record consisting solely of the jury charge, opposing counsel’s closing
argument, transcripts of the post-verdict hearings, and Daneshjou’s trial exhibits.
The record does not include any of the testimony heard by the jury or any of
Bateman’s exhibits presented as evidence at trial.
Where, as here, the appellant has requested only a partial reporter’s record
for review by the appellate court, the presumptions that apply to the evidentiary
record are determined by the appellant’s actions in specifying the issues to be
presented on appeal. If an appellant requests a partial reporter’s record and
includes in the request a statement of the points or issues to be presented on appeal,
then he is limited to those points or issues, and the appellate court must presume
that the designated portion of the reporter’s record constitutes the entire record for
the purpose of reviewing those issues. TEX. R. APP. P. 34.6(c)(1), (4). If the
appellant entirely fails to file a statement of points or issues, then the reviewing
court must presume that the omitted portions of the record support the findings and
the judgment. See Bennett v. Cochran, 96 S.W.3d 227, 229 (Tex. 2002) (per
curiam).
Daneshjou never filed a statement of points or issues to be presented on
appeal, but as Bateman has pointed out to this court, many of the arguments that
Daneshjou raises are based on the facts of the case. Because we have an
incomplete record and no statement of issues, we will presume that the omitted
6
portions of the record support the judgment. Jackson, 689 S.W.2d at 412. To the
extent that the issue is purely a matter of law, the argument is reviewed without
that presumption.
V. PROPRIETY OF THE TAKE-NOTHING JUDGMENT
In his first issue, Daneshjou contends that, for a variety of reasons, the
verdict does not support the take-nothing judgment. To understand his arguments,
it is helpful to begin by reviewing the governing law and demonstrating how it was
applied in this case.
A. The Keck Formula
To prevail on a legal-malpractice claim, a plaintiff must establish by a
preponderance of the evidence “‘that (1) the attorney owed the plaintiff a duty,
(2) the attorney breached that duty, (3) the breach proximately caused the
plaintiff’s injuries, and (4) damages occurred.’” Alexander v. Turtur & Assocs.,
Inc., 146 S.W.3d 113, 117 (Tex. 2004) (quoting Peeler v. Hughes & Luce, 909
S.W.2d 494, 496 (Tex. 1995)). “Breach of the standard of care and causation are
separate inquiries,” and each must be proved. Id. at 119. If the legal-malpractice
claimant alleges that his attorney’s negligence “caused an adverse result in prior
litigation,” then the claimant must produce evidence from which a reasonable
factfinder could infer that the attorney’s conduct caused the damages alleged. Id.
at 117 (citing Haynes & Boone v. Bowser Bouldin, Ltd., 896 S.W.2d 179, 181
(Tex. 1995)). In such circumstances, the client—or one standing in the shoes of
the client7—is entitled to recover only to the extent that the attorney’s negligence
7
In Keck, the client’s excess insurer paid to settle a third party’s case against the insured,
then sued the insured’s defense attorney, alleging that, but for the attorney’s negligence, the case
could have been settled for a lower amount. Keck, 20 S.W.3d at 700. The court explained that
although the plaintiff in the malpractice case was the insurer rather than the attorney’s client, the
carrier was permitted “to stand in the shoes of its insured and assert the insured’s claims.” Id.
(citing Am. Centennial Ins. Co. v. Canal Ins. Co., 843 S.W.2d 480, 484 (Tex. 1992)).
7
caused the client to pay more to the third party than the client would have paid if
his attorney had not been negligent.8 Thus, to assess damages against an attorney
for providing a negligent defense in prior litigation, the client first must establish
the extent to which the attorney’s negligence increased the value of the case
against the client.9 See Keck, 20 S.W.3d at 703. If the case settles for less than its
“true value,” i.e., the value that the case would have had if it had been competently
defended, then the attorney’s malpractice caused the client no harm. Id.
To account for this effect, the Texas Supreme Court has specified the
formula to apply when a client, after settling a third party’s case against it, sues its
own attorney for allegedly driving up the case’s value—and thus, the cost to settle
the case—by providing a negligent defense. In such a case, the client’s recovery of
the increased settlement cost is equal to (1) the amount by which the attorney’s
“malpractice inflated [the underlying case’s] value . . . less (2) any amount saved
by the settlement.” Id. The first number, i.e., the number representing the extent
to which malpractice inflated the case’s value, is equal to the difference between
the case’s “true value”—that is, the case’s value with “a reasonably competent,
malpractice-free defense”—and the case’s “inflated value,” i.e., its value if the
defense is not “malpractice-free.” Id. at 703 & n.5. The second number—that is,
the number representing the “amount saved by the settlement”—is the difference
between the inflated value and the amount paid to settle the case. See id. at 703.
B. The Trial Court’s Application of Keck to Daneshjou’s Malpractice
Claim
Here, Daneshjou and Bateman agree that in the underlying suit, judgment on
the Bullocks’ claims was rendered against Daneshjou in the amount of $8.2
8
In light of the jury’s findings, the source of the payments in this case does not affect the
analysis; thus, all payments made on Daneshjou’s behalf are treated as though the payments were
made directly by Daneshjou.
9
Neither this case nor Keck concerned non-monetary judgments.
8
million. The jury in this case found that Bateman was negligent, and Bateman has
not challenged this finding; thus, the $8.2 million judgment in favor of the
Bullocks represents that case’s value as inflated by Bateman’s malpractice. In the
Keck formula, then, the “inflated value” of the underlying case is $8.2 million. It
also is undisputed that the amount paid to settle the Bullocks’ claims was
$4 million.
The jury in this case was asked to find “[t]he amount of damages, if any,
assessed against Daneshjou in the underlying lawsuit caused by the failure of
Bateman to properly defend the lawsuit.” In effect, the jury was asked, “Of the
$8.2 million of damages assessed against Daneshjou in the Bullock litigation, what
amount was caused by Bateman’s negligence?” The jury answered, “$300,000.”
Thus, of the $8.2 million assessed against Daneshjou in the Bullock litigation, the
jury found that only $300,000 was proximately caused by Bateman’s negligence.
The jury, by implication, determined that the true value of the case was $7.9
million ($8,200,000 minus $300,000). Bateman then asked the trial court to render
judgment on the verdict in accordance with Keck, because the parties to the
Bullock litigation had settled that case for an amount that was less than the case’s
true value.
C. Daneshjou’s First Issue
Daneshjou argues the following: (1) the trial court misconstrued the
language of the damages question actually submitted to and answered by the jury;
(2) the trial court improperly assumed that the jury made an additional finding that
it was not asked to make; (3) the trial court assumed that the jury calculated the
Bullock litigation’s true value, but such an assumption was invalid because the jury
was not asked to perform such a calculation; (4) the trial court committed an error
of law by failing to interpret the jury’s finding in light of defense counsel’s closing
argument; and (5) given the way in which this malpractice case was tried, it would
9
be inequitable or unreasonable to apply Keck to eliminate any recovery. For the
reasons described below, none of these arguments has merit.
1. Construction of the Language of the Jury Charge
In the charge, the jury was asked to determine “[t]he amount of
damages . . . assessed against Daneshjou in the underlying lawsuit” caused by
Bateman’s negligence.10 Although Daneshjou contends that the trial court
misconstrued the jury’s answer, the question is unambiguous. The language
italicized above clearly refers to the Bullock judgment. It is undisputed that the
“underlying lawsuit” is the Bullock litigation. The “damages . . . assessed against
Daneshjou” in that lawsuit are the $8.2 million damages assessed against
Daneshjou in the final judgment of the Bullock litigation. Of the damages assessed
against Daneshjou in that judgment, the damages “caused by” Bateman’s
negligence are those that would not have been assessed against Daneshjou “but
for” Bateman’s negligence. See Akin, Gump, Straus, Hauer & Feld, L.L.P. v. Nat’l
Dev. & Research Corp., 299 S.W.3d 106, 122 (Tex. 2009) (explaining that to
prove attorney negligence was the cause-in-fact of the harm at issue, the claimant
must prove that “but for” the negligence, the harm would not have occurred).
In treating the jury’s answer to this question as a finding of the amount by
which Bateman’s negligence inflated the true value of the Bullock litigation, the
trial court did not misconstrue the jury’s finding. “As the issue was clear and
unambiguous, so was the jury’s verdict. . . . There [was] nothing to construe.”
Branch v. Smith, 245 S.W. 799, 800 (Tex. Civ. App.—Beaumont 1922, no writ).
2. Absence of a Jury Finding on the True Value of the Bullock
Litigation
Daneshjou next asserts, “To get to the take-nothing judgment that was
rendered by the court, one must assume that the jury was asked to determine what
10
Emphasis added.
10
the judgment in the underlying case should have been,” i.e., what the true value of
the case would have been in the absence of Bateman’s negligence. He reasons that
because the jury was not asked to make that determination, the trial court should
have construed the jury’s finding to be a determination of the amount of
Daneshjou’s ultimate recovery. He also argues that because the trial court refused
Bateman’s request to include a question in the charge about the Bullock litigation’s
true value, the jury’s damage finding must not have included a true-value finding,
but instead must represent the amount that Daneshjou is to recover from Bateman.
The trial court refused Bateman’s request for a finding of the underlying
case’s true value after Daneshjou argued that this finding was unnecessary because
it was already in the damage question. This is correct. As discussed above, the
unambiguous language of the jury question shows that the jury was asked to find
the amount by which the damages assessed were increased as a result of Bateman’s
negligence. The underlying case’s true value is implied in that question.
If it were necessary for the jury to make a separate finding about the case’s
true value, then it would have been an omitted finding for which Daneshjou bore
the burden of proof. See Keck, 20 S.W.3d at 703. The trial court made no express
finding about the true value of the Bullock litigation; thus, any additional findings
necessary to support the judgment must be deemed found if supported by the
record. TEX. R. CIV. P. 279. Here, however, Daneshjou brought forward only a
partial record and did not specify the points or issues to be presented on appeal;
thus, it is presumed that the omitted portion of the record supports any necessary
deemed finding. See Heights Sav. Ass’n v. Cordes, 412 S.W.2d 372, 375 (Tex.
Civ. App.—Houston 1967, no writ).
In sum, this argument cannot support reversal of the judgment.
3. The Jury’s Decision-Making Process
Daneshjou also argues that the jury arrived at an answer that already
11
included the settlement because evidence about the settlement was admitted at
trial. Presumably, however, the jury followed the instructions in the charge.
Columbia Rio Grande Healthcare, L.P. v. Hawley, 284 S.W.3d 851, 862 (Tex.
2009).
To the extent that Daneshjou is complaining about the way in which the jury
arrived at its decision, we cannot consider his argument. The individual jurors’
mental processes “cannot change the legal effect of the jury’s finding.” M. R.
Champion, Inc. v. Mizell, 904 S.W.2d 617, 619 (Tex. 1995) (per curiam).
Daneshjou did not ask the trial court to instruct the jury to arrive at its finding by a
particular path; he does not complain of charge error; he does not contend that
there is insufficient evidence to support the jury’s finding—regardless of how the
jury arrived at its answer—and given the partial record before us, we must presume
that whatever calculations the jurors performed were supported by the evidence.
See Bennett, 96 S.W.3d at 229.
4. Failure to Construe the Jury Charge in Light of Defense Counsel’s
Closing Argument
Daneshjou additionally asserts that the trial court effectively applied a
settlement credit twice because during closing argument, Bateman’s counsel
purportedly urged the jury to take the settlement into account when assessing
damages. Daneshjou does not attempt to overcome the presumption that the jury
followed the instructions in the charge. See Columbia Rio Grande Healthcare, 284
S.W.3d at 862. He does not contend that the arguments were objectionable, much
less that they were so incurably prejudicial as to taint the jury’s answer to the
unambiguous question at issue in this appeal. See TEX. R. APP. P. 33.1. In the jury
question, the settlement is not mentioned at all, and a reviewing court is not free to
create an ambiguity in the jury’s verdict where none exists. See Sun Exploration &
12
Prod. Co. v. Jackson, 783 S.W.2d 202, 205 (Tex. 1989) (op. on reh’g).11
5. Evidentiary Arguments
Finally, Daneshjou relies on his own trial exhibits in arguing that his
malpractice case “involved damage claims regardless of any settlement of the
underlying judgment” and that “under the theories tried to the jury” or “given the
evidence in front of the jury,” it would be unreasonable or inequitable to apply
Keck and thereby eliminate any recovery. These assertions are not supported by
authority, and given the partial record, this court must presume that the omitted
portion of the record supports the judgment. See Bennett, 96 S.W.3d at 229; TEX.
R. APP. P. 38.1(i) (appellant’s argument must be supported by “appropriate
citations to authorities and to the record”).
In sum, there is no merit to any of Daneshjou’s arguments. His first issue
therefore is overruled.
D. Daneshjou’s Second Issue
In his second issue, Daneshjou argues that if the jury verdict is ambiguous,
the court should remand the case for a new trial. In support of this position,
Daneshjou argues as follows:
[T]rial judges are not to be permitted to interpret jurors’ intent.
Northern Texas Traction Co. v. Armour & Co., 116 Tex. 176, 288
S.W. 145 (1926). As was said in Moore v. Moore, 67 Tex. 293, 297,
3 S.W. 284, 286 (1887), “as to the true construction of such a verdict,
neither the lower court nor this court is permitted to speculate.”
To determine if a verdict is ambiguous, however, one must review the entire
factual record. Because Daneshjou neither brought forward the reporter’s record
nor filed a statement of points to be presented on appeal, it is presumed that the
omitted parts of the record support the interpretation of the verdict reflected in the
11
Affirmance would be required even if the verdict were ambiguous. See Jackson, 689
S.W.2d at 413.
13
judgment. Jackson, 689 S.W.2d at 412.
Daneshjou’s second issue is overruled.
VI. CONCLUSION
The jury provided a straightforward answer to an unambiguous question, and
in rendering judgment on the verdict, the trial court properly applied binding
precedent. Because no reversible error has been shown to exist, the trial court’s
judgment is affirmed.
/s/ Tracy Christopher
Justice
Panel consists of Justices Frost, Christopher, and Jamison (Frost J., and Jamison,
J., concurring).
14