Krishna Financial Ltd. v. Elvis B Foster, P.C. ( 2020 )

Affirmed and Memorandum Opinion filed March 12, 2020.
In The
Fourteenth Court of Appeals
NO. 14-19-00038-CV
KRISHNA FINANCIAL LTD., Appellant
V.
ELVIS B. FOSTER, P.C., Appellee
On Appeal from the 269th District Court
Harris County, Texas
Trial Court Cause No. 2017-52984
MEMORANDUM OPINION
This is an appeal from an order denying a motion to dismiss under the Texas
Citizens Participation Act, otherwise known as the “TCPA.” Because we conclude
that the movant failed to satisfy its initial burden of showing the applicability of the
TCPA, we affirm the trial court’s order.
BACKGROUND
This appeal involves two separate lawsuits. In the first lawsuit, which we
identify as the “Hospital Lawsuit,” the plaintiffs were a doctor and Krishna Financial
Ltd., which was the doctor’s closely held limited partnership. These plaintiffs sued
a hospital and other related entities, alleging certain financial harms that arose out
of an investment.
During the course of the Hospital Lawsuit, the doctor (but not Krishna)
entered into a contract with a consulting firm, Elvis B. Foster, P.C. Under the terms
of that contract, Foster agreed to provide expert services in the Hospital Lawsuit,
and those services included reviewing the allegations and preparing an estimate of
damages, if any. In return for these services, the doctor agreed to pay Foster an
hourly fee, which was not contingent upon the outcome of the Hospital Lawsuit.
Foster performed under the contract and submitted an invoice to the doctor,
but the invoice was not very detailed and the doctor refused to pay it. That refusal
led to this second lawsuit, which we identify as the “Fee Lawsuit.”
In the original petition of the Fee Lawsuit, Foster sued the doctor (but not
Krishna), asserting causes of action for suit on a sworn account and breach of
contract. Both causes of action alleged the same operative set of facts—i.e., that the
doctor had agreed to pay a fee for services rendered, and the doctor had yet to pay
that fee. Foster later amended its petition and named Krishna as a co-defendant.
Foster alleged that both the doctor and Krishna were liable for fraud because the
doctor, individually and as an agent for Krishna, materially misrepresented that he
would pay Foster’s fee. Foster also pleaded in the alternative that Krishna was liable
as a third-party beneficiary of the doctor’s fraud.
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Krishna (but not the doctor) filed a TCPA motion to dismiss Foster’s fraud
allegations in the Fee Lawsuit. The trial court denied that motion, leading to this
interlocutory appeal.
ANALYSIS
Before a legal action may be dismissed under the TCPA, the movant must
satisfy its initial burden of demonstrating by a preponderance of the evidence that
the legal action is based on, relates to, or is in response to the movant’s exercise of
the right of free speech, the right to petition, or the right of association. See Tex. Civ.
Prac. & Rem. Code § 27.005(b).1 If the movant satisfies this initial burden, then the
burden shifts to the nonmovant to establish by clear and specific evidence a prima
facie case for each essential element of the claim in question. Id. § 27.005(c). If the
nonmovant satisfies that burden, then the burden shifts back to the movant to
establish by a preponderance of the evidence each essential element of a valid
defense. Id. § 27.005(D). Whether the parties have met these respective burdens is a
question of law that we review de novo. See Dallas Morning News, Inc. v. Hall, 579
S.W.3d 370, 377 (Tex. 2019).
In the trial court below, Krishna was the TCPA movant, and Krishna argued
that Foster’s cause of action for fraud was based on, related to, or was in response to
Krishna’s exercise of the right to petition. The “exercise of the right to petition” is
defined several ways under the TCPA, and Krishna invoked the following
definitions:
(A) a communication in or pertaining to . . . a judicial proceeding; . . .
1
There have been recent amendments to the TCPA, which became effective as of
September 1, 2019. In this opinion, all citations to the TCPA refer to the pre-amendment version
that was effective at the time that Foster filed its suit.
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(B) a communication in connection with an issue under consideration
or review by a . . . judicial . . . body; [or]
(C) a communication that is reasonably likely to encourage
consideration or review of an issue by a . . . judicial . . . body.
Id. § 27.001(4).
The only communication that Krishna identified in its TCPA motion was an
alleged misrepresentation that the doctor would pay Foster for services rendered.
Assuming for the sake of argument that this communication can be imputed to
Krishna, we conclude that Krishna has failed to show that the communication falls
within the statutory definition of the “exercise of the right to petition.”
Krishna produced no evidence that the communication occurred “in . . . a
judicial proceeding.” Id. § 27.001(4)(A)(i); cf. Youngkin v. Hines, 546 S.W.3d 675,
680 (Tex. 2018) (an attorney’s alleged liability stemmed from his dictation of a Rule
11 agreement into the court record during trial, which constituted a communication
in a judicial proceeding).
Krishna claims, however, that the communication is “pertaining to . . . a
judicial proceeding” because Foster agreed to render services in the Hospital
Lawsuit. But the focus of this analysis cannot be on Foster’s representations because
Foster was not the TCPA movant. Krishna was the movant, and the only
representation that can be attributed to Krishna is that the doctor would pay Foster’s
fee. That communication does not pertain to a judicial proceeding—under the terms
of the contract, the fee was not even contingent upon the outcome of a judicial
proceeding. Cf. Pierce v. Brock, No. 01-18-00954-CV, 2019 WL 3418511, at *4
(Tex. App.—Houston [1st Dist.] July 30, 2019, no pet.) (mem. op.) (one lawsuit
alleging that an administrator was liable for fraud and mismanagement was not
related to a separate lawsuit in which the administrator asserted claims of
employment discrimination, even though both lawsuits arose out of the
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administrator’s employment); Park v. Suk Baldwin Props., LLC, No. 03-18-00025-
CV, 2018 WL 4905717, at *3–4 (Tex. App.—Austin Oct. 10, 2018, no pet.) (mem.
op.) (defendants’ counterclaim for tortious interference and breach of contract was
not related to plaintiffs’ claim for fraud, even though all of the legal actions arose
out of the purchase of certain commercial property).
Nor can we determine how Krishna’s alleged misrepresentation that the
doctor would pay Foster’s fee is a “communication in connection with an issue under
consideration or review by a . . . judicial . . . body.” See Tex. Civ. Prac. & Rem.
Code § 27.001(4)(B). Foster’s fee was not an issue at all in the Hospital Lawsuit.
Likewise, Krishna has not explained how its alleged misrepresentation about the
doctor’s payment of that fee was “reasonably likely to encourage consideration or
review of an issue” in the Hospital Lawsuit. Id. § 27.001(4)(C).
Krishna argues that a contrary result is required under Dickens v. Jason C.
Webster, P.C., No. 05-17-00423-CV, 2018 WL 6839568 (Tex. App.—Dallas Dec.
31, 2018, no pet.) (mem. op.), which held that certain communications fell within
the TCPA’s definition of the exercise of the right to petition. But that case is
distinguishable on the facts. The communications there were statements that a client
should terminate her relationship with a lawyer because the lawyer was mishandling
the client’s case and because the lawyer’s contingency-fee agreement was “no
good.” Id. at *4. Those sorts of communications directly pertain to a judicial
proceeding. See Brown Sims, P.C. v. L.W. Matteson, Inc., — S.W.3d —, 2019 WL
4739439, at *3 (Tex. App.—San Antonio 2019, no pet.) (holding that a legal
malpractice claim related to the exercise of the right to petition). By contrast,
Krishna’s alleged communication had nothing to do with legal malpractice.
Krishna also relies on Mills v. Carlock, No. 05-16-01027-CV, 2017 WL
1532047 (Tex. App.—Dallas Apr. 26, 2017, pet. denied) (mem. op.). The plaintiff
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there sued the defendant for allegedly disclosing confidential information in a
divorce case. But as the pleadings themselves established, those alleged disclosures
were necessarily communications in a judicial proceeding. Id. at *3. Mills has no
application here because Krishna’s communication was not alleged to have occurred
in a judicial proceeding.
Krishna finally cites to Mustafa v. Pennington, No. 03-18-00081-CV, 2019
WL 1782993 (Tex. App.—Austin Apr. 24, 2019, no pet. ) (mem. op.), which is not
materially different from Mills. In Mustafa, the plaintiff sued the defendant, who
was a court-appointed amicus attorney, asserting causes of action based on the
defendant’s filings and oral statements in a suit affecting the parent-child
relationship. Just like in Mills, the defendant’s communications necessarily occurred
in and pertained to a judicial proceeding. Id. at *3. Krishna has not shown how
Mustafa applies here.
We conclude that Krishna has failed to satisfy its initial burden of showing by
a preponderance of the evidence that Foster’s fraud claim is based on, relates to, or
is in response to Krishna’s exercise of the right to petition. Because this conclusion
fully supports the trial court’s ruling, we need not consider whether Foster produced
clear and specific evidence to establish a prima facie case for each essential element
of its challenged cause of action. See Tex. R. App. P. 47.1.
CONCLUSION
The trial court’s order denying the motion to dismiss is affirmed.
/s/ Tracy Christopher
Justice
Panel consists of Justices Christopher, Wise, and Zimmerer.
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