D. Patrick Smitherman v. Commission for Lawyer Discipline , 463 S.W.3d 97 ( 2015 )

Opinion issued February 26, 2015
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-13-00635-CV
———————————
D. PATRICK SMITHERMAN, Appellant
V.
COMMISSION FOR LAWYER DISCIPLINE, Appellee
On Appeal from the 129th District Court
Harris County, Texas
Trial Court Case No. 2010-10256
OPINION
The Commission for Lawyer Discipline sued David Patrick Smitherman, an
attorney. It alleged that Smitherman failed to provide a client with an accounting
of funds received in settlement of the client’s claims and failed to distribute the
undisputed portion of those funds to the client, in violation of Rules 1.14(b) and
1.14(c) of the Texas Disciplinary Rules of Professional Conduct, respectively. See
TEX. DISCIPLINARY R. PROF’L CONDUCT 1.14(c), reprinted in TEX. GOV’T CODE
ANN. tit. 2, subtit. G, app’x A, art. 10, § 9, R. 1.14(c) (West 2013). After a jury
found in favor of Smitherman, the trial court granted the Commission’s motion for
judgment notwithstanding the verdict and entered a judgment of partially-probated
suspension of Smitherman’s license to practice law. Smitherman appeals, and we
affirm.
Background
A. Smitherman’s Representation of Brad Perry
The case before us arises out of Smitherman’s representation of three
clients—Brad Perry, John Ogren, and Chester Smitherman, Smitherman’s father—
in litigation against PetroSearch Energy Corporation, a company in which each of
the clients owned an interest. For Smitherman’s representation, he charged the
clients an hourly fee. Each client held an interest in the suit and bore costs and
attorney’s fees in proportion to his ownership of PetroSearch. Perry and Chester,
however, later acquired Ogren’s interest in the suit. As a result, Perry held a
66.675 percent stake in the litigation, while Chester held the remaining 33.325
percent.
During the course of the PetroSearch litigation, Perry offered to pay
Smitherman a bonus on top of his hourly fee, upon resolution of the litigation.
2
According to Smitherman, this discussion arose in the context of a discussion of
unpaid invoices that Smitherman had sent to Perry for his services. Perry and
Smitherman did not discuss any amount for the bonus when Perry first mentioned
the possibility of paying one.
The clients ultimately settled their dispute with PetroSearch for $550,000.
In early October 2008, PetroSearch’s insurer paid that amount to Perry and Chester
in the form of a check to Smitherman’s law firm. After Smitherman deducted his
fees and expenses related to the litigation from the settlement funds, Perry’s share
of the settlement came to approximately $271,000.
B. Smitherman and Perry’s Bonus Dispute
On October 4, 2008, Smitherman sent an email to Perry and Chester, in
which he complained that Perry owed a balance on his fees 1 and wrote:
Brad, you mentioned to me several months ago that when this
was all said and done you were going to pay me a bonus. Do you
recall that conversation on the phone? How much will you be paying
to me in the form of a bonus as you indicated to me. [sic] I obviously
relied upon this promise in doing all the hard work I did and foregoing
other jobs during the past several months.
That same day, in another email, Smitherman wrote,
Brad, please advise as to what bonus you propose to pay me.
Unless we reach an agreement (which I am sure we will), I might have
to withhold your funds until we can agree on an amount.
1
As discussed below, Perry acknowledged that he owed Smitherman a balance of
$2,738.47 for previously-invoiced fees and agreed to pay that amount. The parties
treated those fees as separate from any bonus that might be paid.
3
On October 6, 2008, Perry and Smitherman discussed the amount of the
bonus via telephone. The next day, Smitherman wrote in an email,
This e-mail is a follow-up to our conversation yesterday.
....
You mentioned a $5K bonus. I laughed and told you $20K.
Posturing, you said that was “staggering”. And yet in the same breath
you extoll how great my services were in this case. Thank you. But
you don’t get something for nothing.
. . . . In the end, perhaps sensing my displeasure with you, on
several occassions [sic] you said that you would work something out
with me to cover the thousands you failed and refused to pay me.
You then mentioned the bonus, which I said ok to. You never said
that you would only pay me a bonus if we got a multi-million dollar
settlement as you mentioned yesterday. That is revisionist history.
Your exact words were that you would pay me a bonus when “this
was all over”. You are now reneging on that promise.
....
You said you “would sleep on it”. I hoped [sic] you didn’t
sleep at all. $20K was not a request Brad. That is the very least of
what you owe me. You think I would forego thousands in fees, put
thousands more in expenses on my card, risk my professional
reputation, and endure great personal stress for a paltry $5K bonus?
That is a joke.
....
I will not be releasing your funds to you until this is resolved.
Of that I am not joking, rest assured.
In a subsequent exchange, Smitherman raised the amount of his demand:
I received the settlement sum today. It will take five business
days to clear. If we have not resolved this, I will not release your
funds to you. Rather, I will put them in escrow.
I now thing [sic] that I deserve at least a $30K bonus from you.
You should not attempt to barter with me. I have earned it.
Perry responded by sending Smitherman a letter on October 12, 2008, in
which he wrote,
4
With regard to my offer to give you a bonus at the end of the
case, I did make such an offer, but no amount was offered nor
discussed. It is my belief that such a bonus is completely
discretionary on my part, both as to whether one is paid and as to how
much, if paid, will be given. That being said, I will honor my verbal
offer of $5,000 which I made you on the telephone last week. At the
time I told you that I thought you deserved a bonus, I did and do
believe that you did a very good job on the law suit and I was proud of
your efforts.
....
I consider your demand first for $20,000 and then subsequently
$30,000 bonus to be at best, unprofessional, and [at] worst attempted
extortion.
....
[Y]ou are authorized by me to withhold, in addition to your
legitimate legal fees and documented expenses a total bonus of $5,000
plus $2,738.47 [for previously-invoiced fees] for a total of $7,738.47.
I believe this is a fair offer. I expect the balance of my portion of the
settlement funds and a corrected set of invoices with a settlement
sheet showing all disbursements not later than Wednesday, October
14, 2008 at 5:00 PM.
I will be happy to discuss any part of this letter, but it does not
change my demand for timely payment.
Smitherman responded later that day, accusing Perry of being “a fraudster”
and writing,
You are so full of bull.
I now believe the bonus should be $50K. I am very
disappointed in you Brad. We obviously have ourselves a dispute.
. . . . When we discussed your nonpayment of my invoices over
the last year, you brought up the bonus as a way of resolving your
failure to pay me. I agreed and allowed you to stay in the suit, with
the expectation of a real bonus.
Your bonus is not within your discretion as you say. I have
been working for you on a contingency basis, de facto.
....
5
I will not, repeat will not be releasing your funds to you until
this is resolved. John and dad will be receiving their checks next
week when the funds are released to me. You will obviously not.
Smitherman also wrote additional responses to the letter, which included the
following statements:
• Brad, this money will stay in escrow until you agree to my $50
bonus. You have not paid me any fees Brad, as you know.
Your take under the settlement of $550,000 would have been
approximately $363,000 (without accounting for my fees).
Assuming a 40% contingency fee, which is standard, I would
have taken $145,000 from your take. Again Brad, you
breached our agreement by not paying me. The hourly fee is
out the door. I am just using it now in an effort to settled. [sic]
• If you don’t settle on my terms (pay what you owe, plus $50K
bonus), and we take this to the next step, I will sue you for the
contingency fee bonus. I will file a declaratory judgment action
against you sir. You know I have filed these before. And I am
not bound by the confidentiality agreement.
• Seriously consider what I told you Brad. I am quite serious in
what I say.
• You could have accepted my $20K offer. You did not. Now it
is at $50K. Next I will be seeking my contingency fee.
On October 16, 2008, Smitherman disbursed Chester’s share of the
settlement proceeds. Although Ogren was no longer part of the suit, he had
advanced certain expenses of the litigation, so Smitherman also sent a check to him
to reimburse him for those amounts. That same day, Perry requested a “final
accounting showing the fees and expenses that will be deducted from the proceeds,
excluding any bonus,” as well as copies of the check from PetroSearch’s insurance
company. Smitherman responded,
6
I can prepare an accounting, but I will charge you for my time.
I don’t consider preparing an accounting for you to be a good use of
my time, so you alone will be charged for it as you alone are
requesting it. Please be advised that I can’t prepare an accounting
until all payments (except yours) are made. It may take some of the
checks I disbursed today a week to clear.
Smitherman reiterated,
As stated previously, I will not be releasing your funds to you
until we resolve our dispute. Please be advised that your letter of
engagement contains an arbitration provision. Any dispute is to
arbitrated. [sic] You will need to obtain your own counsel for that
should you choose that option. Should you choose any course of
action other than arbitration, you will be in breach of contract.
Perry retained another attorney, Richard Bergner, to assist him in recovering
his share of the PetroSearch settlement from Smitherman. Bergner sent a letter to
Smitherman on October 22, 2008, in which he authorized Smitherman to withhold
the amount of Smitherman’s outstanding invoices to Perry. He also wrote,
In addition, Mr. Perry is willing to place in escrow, subject to
his and your joint control, an additional sum of Fifty Thousand
Dollars ($50,000.00) from his portion of the settlement proceeds, to
be held in trust subject to a good faith negotiation to determine, if
possible, the amount of a bonus payment for you. . . .
The remainder of Mr. Perry’s funds must be remitted to him
immediately, together with a copy of the settlement check tendered to
you by the Defendant’s counsel in this case.
The letter also referred to Smitherman’s “unauthorized withholding of Mr. Perry’s
portion of the settlement funds, . . . a violation of your fiduciary duty to him,” and
threatened to bring a claim for breach of fiduciary duty and other, unspecified, tort
claims, should arbitration become necessary.
7
In response, Smitherman threatened to sue Perry for “fraud, breach of
contract, and quantum meruit, among other things.” Smitherman continued,
Your claim that I have violated any fiduciary duty is laughable.
A, I am no longer his lawyer. B, this is a fee dispute.
Should I seek fraud, [sic] I will seek to claim the entire amount
of what you refer to as Perry’s portion of the settlement.
....
I will release no funds to Perry until this is resolved.
Perry sued Smitherman in 2009. In the resulting settlement, Smitherman
received $51,000, and Perry received the remainder of his portion of the
PetroSearch settlement funds in late 2009. Until his settlement with Smitherman,
Perry did not receive any money from the PetroSearch settlement.
C. The Disciplinary Action
Perry filed a grievance with the Office of the Chief Disciplinary Counsel of
the State Bar of Texas in March 2009. The Commission then sued Smitherman,
alleging that he violated two rules of the Texas Disciplinary Rules of Professional
Conduct. The only rule relevant to this appeal, Rule 1.14(c), provides,
Rule 1.14 Safekeeping Property
....
(c) When in the course of representation a lawyer is in possession of
funds or other property in which both the lawyer and [an]other person
claim interests, the property shall be kept separate by the lawyer until
there is an accounting and severance of their interest. All funds in a
trust or escrow account shall be disbursed only to those persons
entitled to receive them by virtue of the representation or by law. If a
dispute arises concerning their respective interests, the portion in
dispute shall be kept separated by the lawyer until the dispute is
8
resolved, and the undisputed portion shall be distributed
appropriately.
TEX. DISCIPLINARY R. PROF’L CONDUCT 1.14(c) (emphasis added).
The case proceeded to trial,2 and the trial court submitted two questions to
the jury. First, it asked whether Smitherman failed to render promptly a full
accounting of the PetroSearch settlement funds, in violation of Rule 1.14(b). See
TEX. GOV’T CODE ANN. tit. 2, subtit. G, app’x A, art. 10, § 9, R. 1.14(b) (West
2013). The jury answered that he did not. The second question, addressing Rule
1.14(c), asked, “With regard to the $550,000.00 in settlement funds in which both
David Patrick Smitherman and R. Bradford Perry claimed interests, did Mr.
Smitherman fail to appropriately distribute the undisputed portion of the funds?”
Again, the jury answered, “No.”
The Commission moved for judgment notwithstanding the verdict, arguing
that the evidence raised no genuine issue of material fact as to whether Smitherman
violated Rule 1.14(c). Specifically, the Commission argued that the evidence
conclusively proved that Smitherman failed to distribute the PetroSearch
settlement funds appropriately. The Commission’s motion recited the factual
history of the bonus dispute between Perry and Smitherman and argued that
2
Smitherman sought mandamus review of the trial court’s denial of his motion to
dismiss the disciplinary action, which we denied. In re Smitherman, No. 01-13-
00203-CV, 2013 WL 1738224, at *1 (Tex. App.—Houston [1st Dist.] Apr. 19,
2013, orig. proceeding) (mem. op.).
9
Smitherman “had a choice as to what to do in regard to Perry” on October 16,
2008, the date on which Smitherman disbursed funds to his other PetroSearch
clients and reiterated his refusal to disburse funds to Perry. According to the
Commission, while as much as $50,000 of the settlement funds might have been in
dispute, the remainder was undisputed. It concluded,
By . . . not giving any settlement funds to Perry on the same day that
he gave funds to the other owner of the lawsuit, there is no genuine
issue of material fact regarding Respondent’s failure to appropriately
distribute the undisputed portion of the settlement funds. Therefore,
as a matter of law, Respondent violated Rule 1.14(c) on October 16,
2008.
The trial court granted the motion, entering an interlocutory judgment
notwithstanding the verdict that Smitherman violated Rule 1.14(c). 3 It entered a
final judgment suspending Smitherman’s license to practice law for three years,
two active and one suspended, and imposing additional continuing legal education
requirements.
3
It also found that, as a matter of law, Smitherman committed professional
misconduct as defined by the Texas Rules of Disciplinary Procedure, see TEX. R.
DISCIPLINARY P. 1.06(W), reprinted in TEX. GOV’T CODE ANN. tit. 2, subtit. G,
app’x A-1, R. 1.06(W) (West Supp. 2014), and violated Article Ten, Section 9, of
the State Bar Rules, reprinted in TEX. GOV’T CODE ANN. tit. 2, subtit. G, app’x A,
art. 10, § 9. The latter consists of the Disciplinary Rules of Professional Conduct.
Smitherman does not challenge the trial court’s findings with respect to these
rules. He did file an interlocutory appeal of the trial court’s order, which we
dismissed for want of jurisdiction. Smitherman v. Comm’n for Lawyer Discipline,
No. 01-13-00428-CV, 2013 WL 2948384, at *2 (Tex. App.—Houston [1st Dist.]
June 13, 2013, no pet.) (mem. op.). He also sought mandamus review of the
interlocutory judgment, which we denied. In re Smitherman, No. 01-13-00603-
CV, 2013 WL 3866670, at *1 (Tex. App.—Houston [1st Dist.] Jul. 19, 2013, orig.
proceeding) (mem. op.).
10
Judgment Notwithstanding the Verdict
Smitherman first argues that the trial court erred in entering its judgment
because sufficient evidence supported the jury’s verdict and because Smitherman
did not receive fair notice of the Commission’s claims.
A. Standard of Review
We review the grant or denial of a motion for judgment notwithstanding the
verdict under a legal-sufficiency standard, “credit[ing] evidence favoring the jury
verdict if reasonable jurors could, and disregard[ing] contrary evidence unless
reasonable jurors could not.” Tanner v. Nationwide Mut. Fire Ins. Co., 289
S.W.3d 828, 830 (Tex. 2009) (quoting Central Ready Mix Concrete Co., Inc. v.
Islas, 228 S.W.3d 649, 651 (Tex. 2007); citing City of Keller v. Wilson, 168
S.W.3d 802, 823 (Tex. 2005)); Williams v. Dardenne, 345 S.W.3d 118, 123 (Tex.
App.—Houston [1st Dist.] 2011, pet. denied).
B. Applicable Law
The Commission was entitled to judgment notwithstanding the verdict if the
record shows: (1) a complete lack of evidence of a vital fact; (2) the trial court is
barred by the rules of law and evidence from giving weight to the only evidence
offered to prove a vital fact; (3) the evidence offered to prove a vital fact is not
more than a scintilla; or (4) the evidence establishes conclusively the opposite of a
11
vital fact. Tanner, 289 S.W.3d at 830; City of Keller, 168 S.W.3d at 810; Williams,
345 S.W.3d at 123.
Rule 1.14(c) states, “If a dispute arises [in the course of representation]
concerning [the] respective interests [in property claimed by both a lawyer and
another person], the portion in dispute shall be kept separated by the lawyer until
the dispute is resolved, and the undisputed portion shall be distributed
appropriately.” TEX. DISCIPLINARY R. PROF’L CONDUCT 1.14(c) (emphasis
supplied). A comment to the Rule states, “[A] lawyer may not hold funds to
coerce a client into accepting the lawyer’s contention.” Id. at cmt. 2.
C. Sufficiency of the Evidence
Smitherman first argues that the trial court erred in granting judgment
notwithstanding the verdict because sufficient evidence supported the jury’s
verdict. He contends that the trial court based its judgment on evidence and
arguments never submitted to the jury. 4
The evidence at trial conclusively demonstrated that Smitherman and Perry
disputed Smitherman’s entitlement to any particular amount as a bonus, and the
4
Many of Smitherman’s arguments only explicitly address the interlocutory
judgment. The interlocutory order merged into the final judgment and can only be
challenged as such. See, e.g., Roccaforte v. Jefferson Cnty., 341 S.W.3d 919, 924
(Tex. 2011) (“The final judgment necessarily replaced the interlocutory order,
which merged into the judgment . . . .”). Smitherman’s brief treats the
interlocutory and final judgment interchangeably. We note that the interlocutory
and final judgments explicitly relied upon the same factual findings. For these
reasons, we consider Smitherman’s arguments as they apply to the final judgment.
12
most that Smitherman ever offered was $5,000. Smitherman demanded bonuses in
varying amounts over time, but nothing in the record suggests that Smitherman
ever believed that the amount of any bonus would exceed $50,000. 5 Rather,
Smitherman claimed that the entirety of Perry’s share of the settlement was in
dispute precisely because the parties disputed a portion thereof, not because
Smitherman actually claimed that he was entitled to all of it. The evidence also
conclusively demonstrated that Smitherman explicitly refused, on at least five
occasions, to release any funds to Perry until Perry paid him a bonus, and
Smitherman repeatedly and unilaterally increased the amount that he demanded.
The evidence further conclusively showed that Smitherman did not release any
PetroSearch settlement funds to Perry until approximately a year after Smitherman
received them, and then only to settle Perry’s lawsuit against him. Thus, the
evidence conclusively showed that Perry and Smitherman disputed only a portion
of Perry’s share of the PetroSearch settlement, but Smitherman failed to distribute
the undisputed portion appropriately, instead withholding funds in an attempt to
5
While he threatened to seek a contingency fee rather than his agreed hourly rate,
nothing in the record suggests that he was entitled to a contingency fee, much less
that such a fee would encompass Perry’s entire share of the settlement. And while
Smitherman threatened to sue Perry for fraud and seek Perry’s entire share of the
settlement, any such dispute would have been distinct from the bonus dispute and
would not give Smitherman the right to withhold the settlement proceeds. See
TEX. DISCIPLINARY R. PROF’L CONDUCT 1.14(c), cmt. 2.
13
coerce Perry into accepting Smitherman’s position. See TEX. DISCIPLINARY R.
PROF’L CONDUCT 1.14(c), cmt. 2.
Smitherman nevertheless raises numerous arguments challenging the
judgment notwithstanding the verdict, which we address in turn.
1. Timing of the Violation
First, Smitherman argues that the motion for judgment notwithstanding the
verdict turns entirely on the allegation that he violated Rule 1.14(c) on October 16,
2008, the date on which Smitherman distributed funds to his father and Ogren but
reiterated his refusal to release funds to Perry. According to Smitherman, the
motion fails to mention evidence at trial regarding later events, such as the October
22, 2008, demand letter from Bergner, the attorney Perry hired after Smitherman
refused to release Perry’s funds. Smitherman argues that his actions on October
16, 2008, formed “the entire basis for the [Commission’s] claim on Rule 1.14(c)”
in the motion, but that the Commission never alleged in its live petition that
Smitherman violated the rule on October 16, 2008. We disagree.
While the Commission’s petition mentions the Bergner letter, it also
mentions the events of October 16, 2008, and various other dates, concluding that
Smitherman violated Rule 1.14(c) “[b]y refusing to distribute any part of the
[PetroSearch] Settlement Funds to Perry in the fall of 2008.” Neither the petition
nor the evidence at trial focused on events on or after Bergner’s October 22
14
demand letter to the exclusion of events on prior dates. We also disagree that the
motion for judgment notwithstanding the verdict must be read so narrowly.
Although it alleges a violation of the rule on October 16, it does so in the context
of an argument that later events cannot excuse that conduct; it does not argue that
the only such violation occurred on that date.
Smitherman also argues that the evidence showed that his October 16, 2008
disbursements to Chester and Ogren and his refusal to disburse funds to Perry on
that date have no relevance to the alleged Rule 1.14(c) violation. He suggests six
theories in support of this argument, which fall into two categories. First, he
argues that he could not have violated Rule 1.14(c) if, as the Commission alleged,
he also failed to account for Perry’s funds correctly. Second, he insists that he
could not possibly have released any money to Perry until he received Bergner’s
letter or some other indication of the amount in dispute, but that Bergner’s letter
put all of the money in dispute. The evidence at trial, however, conclusively
established that the fee to which Smitherman claimed to be entitled never exceeded
40% of Perry’s recovery, the amount he threatened to seek as a contingency fee.
And a lawyer’s obligation to provide an accounting to a client who requests one is
independent of the obligation to deliver the client’s funds promptly. TEX.
DISCIPLINARY R. PROF’L CONDUCT 1.14(b). More to the point, nothing in Texas
law conditions a lawyer’s obligation to act ethically toward his client on whether
15
that client’s new counsel has explicitly suggested the proper course of action.
Smitherman’s obligation to distribute undisputed funds to Perry existed before and
independently of Bergner’s demand letter. Accordingly, we reject this set of
arguments.
2. Purported Admissions by the Commission
Smitherman next argues that the Commission admitted in closing argument
that he acted appropriately in not disbursing funds to Perry on October 16, 2008.
As support, Smitherman points to counsel’s argument that Smitherman should
have done what Bergner suggested in his October 22, 2008 demand letter: hold
$50,000 in escrow and release the remaining funds to Perry. According to
Smitherman, this constitutes an admission that his behavior on October 16, 2008,
was appropriate, and the Commission thereby conceded that no violation occurred
until at least October 22, 2008. We disagree. The argument contains no such
admission, but merely states the minimum level of disbursement that might have
been acceptable under Rule 1.14(c), which Smitherman could have made as easily
on October 16 as at a later point.
Smitherman also contends that the Commission judicially admitted that no
violation occurred on October 16, 2008. As support, he points to the
Commission’s petition, arguing that in it the Commission “acknowledges . . . that
16
[Smitherman] had until late November of 2008 to make [the required] distribution
to Perry.”
“A judicial admission must be a clear, deliberate, and unequivocal
statement.” Horizon/CMS Healthcare Corp. v. Auld, 34 S.W.3d 887, 905 (Tex.
2000) (quoting Regency Advantage Ltd. P’ship v. Bingo Idea–Watauga, Inc., 936
S.W.2d 275, 278 (Tex. 1996)). Such an admission “occurs when an assertion of
fact is conclusively established in live pleadings, making the introduction of other
pleadings or evidence unnecessary.” Id. (quoting Chilton Ins. Co. v. Pate & Pate
Enters., Inc., 930 S.W.2d 877, 884 (Tex. App.—San Antonio 1996, writ denied)).
Smitherman does not identify any particular language in the Commission’s
petition that he contends constitutes a judicial admission regarding the timing of
the violation. Based on our own review, the only relevant statement in the petition
is that Smitherman “should have given approximately $221,000.00 to Perry in late
October or early November of 2008.” This is a statement of alternative theories,
not a clear, deliberate, and unequivocal statement that no violation occurred on
October 16, 2008. It is also a statement of a legal theory, while a true judicial
admission must be “a formal waiver of proof” as to a fact. Mendoza v. Fid. &
Guar. Ins. Underwriters, Inc., 606 S.W.2d 692, 694 (Tex. 1980); see also Burns v.
Burns, 434 S.W.3d 223, 228 (Tex. App.—Houston [1st Dist.] 2014, no pet.) (“A
judicial admission is an assertion of fact, usually found in pleadings or stipulations
17
of the parties, that acts as a formal waiver of proof.”). We reject Smitherman’s
argument regarding judicial admissions.
Smitherman also argues that the Commission admitted during an August
2010 hearing on his motion for partial summary judgment that fact issues existed
regarding whether he violated Rule 1.14(c). According to Smitherman, this is an
admission that the Commission could not prove a violation of Rule 1.14(c). We
reject this argument; the demonstration of fact issues at the summary judgment
stage does not necessarily control what the evidence at trial may show. To hold
otherwise would mean that a litigant who shows that a genuine issue of material
fact exists before trial of a case could never obtain summary judgment, directed
verdict, or judgment notwithstanding the verdict. We therefore reject this
argument. See, e.g., TEX. R. CIV. P. 279 (parties may raise argument that evidence
is legally or factually insufficient to support submission of jury question for first
time after verdict, even if question was requested by complainant).
3. Incorrect Standard
Finally, Smitherman argues that the trial court applied an incorrect standard
in granting judgment notwithstanding the verdict because it made the statement,
“The evidence is clear, there were undisputed funds and that they were not timely
paid to Mr. Perry by Mr. Smitherman.” As a threshold matter, we note that
Smitherman does not provide any citation to the record where the trial court made
18
this statement, whether orally or in writing; it appears to exist only in his own
request for preparation of the reporter’s record. Because Smitherman requested a
partial reporter’s record, we must presume that the record relevant to this issue
“constitutes the entire record for purposes of reviewing the stated points or issues.”
TEX. R. APP. P. 34.6(c)(4). “This presumption applies even if the statement
includes a point or issue complaining of the legal or factual insufficiency of the
evidence to support a specific factual finding identified in that point or issue.” Id.
Smitherman has not shown that the trial court applied the wrong standard.
Further, we review the trial court’s application of the law to the facts de novo, and
we have found no error in the standard applied. See Marsh USA Inc. v. Cook, 354
S.W.3d 764, 768 (Tex. 2011); In re R.J.H., 79 S.W.3d 1, 6 (Tex. 2002); JSC
Neftegas-Impex v. Citibank, N.A., 365 S.W.3d 387, 396 (Tex. App.—Houston [1st
Dist.] 2011, pet. denied).
Smitherman also argues throughout his brief that Perry’s threat to sue
Smitherman in his personal capacity somehow excused or even compelled
Smitherman’s failure to comply with Rule 1.14(c). Smitherman cites no legal
authority in support of this argument. On the contrary, comments to Rule 1.14(c)
teach that a lawyer may not use funds as leverage in a dispute with a client. See
TEX. DISCIPLINARY R. PROF’L CONDUCT 1.14(c), cmt. 2. Smitherman had no claim
to Perry’s share of the PetroSearch settlement funds in excess of, at most, 40% of
19
Perry’s recovery plus the $2,738.47 in outstanding fees, regardless of any threat of
litigation between Perry and Smitherman. We reject Smitherman’s argument that
his violation of Rule 1.14(c) could be excused by the threat of a lawsuit over that
very violation.
The record demonstrates that the Commission was entitled to judgment
notwithstanding the verdict. The evidence in the record conclusively shows that
Smitherman not only failed but explicitly and repeatedly refused to comply with
his obligations to his client under Rule 1.14(c). Accordingly, we overrule
Smitherman’s evidentiary sufficiency arguments and hold that the trial court did
not err in granting judgment notwithstanding the verdict.
D. Date of Violation
Smitherman also argues, in a separate issue, that he did not receive fair
notice of the Commission’s claims. He argues that the Commission never alleged
until after trial that Smitherman violated Rule 1.14(c) on October 16, 2008.
Texas applies a “fair notice” pleading standard. In an attorney-discipline
proceeding, the petition must contain “[a] description of the acts and conduct that
gave rise to the alleged Professional Misconduct in detail sufficient to give fair
notice to the Respondent of the claims made.” TEX. R. DISCIPLINARY
P. 2.17(A)(4), reprinted in TEX. GOV’T CODE ANN. tit. 2, subtit. G, app’x A-1,
R. 2.17(A)(4) (West 2013); see also Low v. Henry, 221 S.W.3d 609, 612 (Tex.
20
2007); Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 230 (Tex.
2004).
As we have already discussed, the Commission’s petition discusses the
events of October 16, 2008, and is premised on Smitherman’s refusal “to distribute
any part of the [PetroSearch] Settlement Funds to Perry in the fall of 2008.” This
is sufficiently clear to put Smitherman on notice that all dates in the fall of 2008
after he first refused to distribute such funds were at issue. See TEX. R.
DISCIPLINARY P. 2.17(A)(4); Low, 221 S.W.3d at 612; Miranda, 133 S.W.3d at
230. The petition alleges that the first such refusal occurred no later than October
7, 2008. Thus, Smitherman had notice that the Commission’s claims pertained to
all dates on or after October 7, 2008, at the latest. Accordingly, we overrule this
issue.
Interlocutory Judgment
A. Whether the Judgment Was Void
Smitherman argues that the interlocutory and final judgments were void
because the trial court did not hold an oral hearing on the motion for judgment
notwithstanding the verdict and did not issue its interlocutory order in the correct
venue. According to Smitherman, Section 74.094(e) of the Texas Government
Code required the trial court to hold an oral hearing on the Commission’s motion
for judgment notwithstanding the verdict in Harris County and specifically in
21
Houston. Smitherman further contends that the trial court did not do so. His
arguments, however, lack support in the law or the record.
Section 74.094(e) provides that “[a] judge who has jurisdiction over a suit
pending in one county may, unless objected to by any party, conduct any of the
judicial proceedings except the trial on the merits in a different county.” TEX.
GOV’T CODE ANN. § 74.094(e) (West 2013). Smitherman reasons that the motion
for judgment notwithstanding the verdict was part of the trial on the merits and that
the trial court effectively conducted a bench trial in another county. We reject
these arguments for two reasons.
First, we note that at least one court has held that Section 74.094(e) does not
apply to attorney-discipline proceedings because, unlike in other proceedings,
original jurisdiction over attorney-discipline proceedings is lodged in the Supreme
Court of Texas. Acevedo v. Comm’n for Lawyer Discipline, 131 S.W.3d 99, 104
(Tex. App.—San Antonio 2004, pet. denied).
Second, even if we were to assume that Section 74.094(e) applied to the
Commission’s motion for judgment notwithstanding the verdict, the record does
not contain any evidence that the trial court conducted judicial proceedings related
to the motion while outside of Harris County. Smitherman points to an email in
which the trial court advised the parties, “I don’t need to hold a hearing of any type
or anywhere to decide the [Commission’s] Motion for Judgment Notwithstanding
22
the Verdict.” But as Smitherman concedes, this email is not in the record. We
therefore cannot consider it. Sowell v. Kroger Co., 263 S.W.3d 36, 38 (Tex.
App.—Houston [1st Dist.] 2006, no pet.); Till v. Thomas, 10 S.W.3d 730, 734
(Tex. App.—Houston [1st Dist.] 1999, no pet.). We reject Smitherman’s
contention that the trial court conducted judicial proceedings in the wrong county.
We likewise reject the argument that the trial court’s judgment is void
because it did not conduct an oral hearing on the motion for judgment
notwithstanding the verdict, because Smitherman was not entitled to an oral
hearing on the motion. See TEX. R. CIV. P. 301 (governing motions for judgment
notwithstanding the verdict); City of Port Lavaca v. Fisher, 355 S.W.2d 785, 787
(Tex. Civ. App.—San Antonio 1962, no writ) (“Rule 301 . . . does not require a
hearing.”); see also Sw. Title Ins. Co. v. Northland Bldg. Corp., 542 S.W.2d 436,
449 (Tex. Civ. App.—Fort Worth 1976), rev’d in part on other grounds, 552
S.W.2d 425, 430 (Tex. 1977).
B. Motion for Reconsideration
Smitherman also contends that the trial court erred in denying his motion for
reconsideration of the interlocutory order granting judgment notwithstanding the
verdict. Smitherman asserted only one basis for reconsideration in his motion:
newly-discovered information. But the “new” information to which he pointed
consisted of statements that the Commission’s counsel made at the hearing on
23
Smitherman’s motion for summary judgment—held more than two years before
the trial court granted judgment notwithstanding the verdict—and was therefore
not, in fact, new. As we have already held, the trial court properly granted the
judgment notwithstanding the verdict; it therefore did not err in refusing to
reconsider that judgment.
Sanctions
Finally, Smitherman argues that the sanctions imposed against him are too
severe for a one-day violation of one part of Rule 1.14(c). As a threshold matter,
we disagree with Smitherman’s characterization of the violation in question. The
evidence conclusively demonstrates that Smitherman violated Rule 1.14(c)
continuously and deliberately for approximately one year.
Moreover, Smitherman’s argument consists of nothing more than the bald
assertions that the Commission should “finally come to terms with the fact that it
lost at trial, and that Appellant won fair and squarely,” and “[b]oth parties have
perhaps learned their lessons, and should move forward.” We hold that
Smitherman has waived his arguments due to inadequate briefing. See TEX. R.
APP. P. 38.1(i).
24
Conclusion
We affirm the judgment of the trial court.
Rebeca Huddle
Justice
Panel consists of Justices Massengale, Brown, and Huddle.
25