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No. 04-15-00688-CV
04-05-2017
IN THE ESTATE OF Carlos AGUILAR, Deceased
MEMORANDUM OPINION
From the County Court at Law No. 2, Webb County, Texas
Trial Court No. 2012-PB4-000048 L2
Honorable Jesus Garza, Judge Presiding Opinion by: Marialyn Barnard, Justice Sitting: Karen Angelini, Justice Marialyn Barnard, Justice Rebeca C. Martinez, Justice (dissent to follow) MOTION TO STRIKE DENIED; REVERSED AND REMANDED
This case arises out of an administration proceeding in Webb County in which appellants, Vanessa Arce and Eudelia Aguilar, co-administrators of the Estate of Carlos Aguilar, Deceased ("the Estate"), challenge the county court's order denying their motion to withdraw funds from the court registry for the payment of attorney's fees. On appeal, the co-administrators contend the county court erred in denying their motion because: (1) the county court had previously approved a contingency fee contract that provided for the payment of attorney's fees for litigation services rendered on behalf of the Estate, and (2) there was no evidence of improper attorney conduct. We reverse the county court's order denying the appellant's motion to withdraw funds and remand this cause for further proceedings consistent with this opinion.
BACKGROUND
Carlos Aguilar died in May 2012 as a result of a car accident. Carlos was the passenger in a truck, which was struck by a u-joint that broke off a tractor-trailer owned by Heckman Water Resources, Inc. At the time of the accident, Carlos was thirty-one-years old. He was survived by: (1) his parents, Jose Luis and Eudelia Aguilar; (2) his wife, Vanessa and; (3) seven minor children, two of which he had with Vanessa, and five of which he had with his former wife, Clarissa Aguilar.
Shortly after his death, Eudelia and Vanessa filed an application for letters of administration in Webb County Court at Law No. 2, seeking to be appointed co-administrators of Carlos's estate. According to the application, a necessity existed for the administration of the Estate because Carlos's assets needed to be distributed and "a wrongful death/survival claim need[ed] to be pursued against a responsible party." After the application was filed, the county court appointed two attorneys ad litem, Rosaura Tijerina and Jesus Dominguez, to represent the minor children in the administration proceeding. See TEX. PROB. CODE § 53(b) (current version at TEX. EST. CODE ANN. § 53.104 (West 2014)) (setting out when court may appoint attorney ad litem). Ms. Tijerina represented Carlos and Vanessa's two children, and Mr. Dominguez represented Carlos and Clarissa's five children. The county court subsequently held a hearing on August 15, 2012 on Eudelia and Vanessa's application. At the hearing, in addition to requesting appointment as co-administrators, Eudelia and Vanessa requested approval of a contingency fee contract regarding the wrongful death/survival action.
Wrongful death actions and survival actions are distinct causes of action. Cunningham v. Haroona, 382 S.W.3d 492, 508 (Tex. App.—Fort Worth 2012, pet. denied) (citing Gen. Chem. Corp. v. De La Lastra, 852 S.W.2d 916, 924 (Tex. 1993)). A survival action is a personal injury action that survives to and in favor of the heirs, legal representatives, and estate of the injured person. Id. at 507. (citing TEX. CIV. PRAC. & REM. CODE ANN. § 71.021(b) (2008)). "Any recovery flows to those who would have received it had the decedent obtained the recovery immediately prior to her death—that is, her heirs, legal representatives, and estate." Id. The damages recoverable include damages for physical pain and suffering, mental anguish, property damage, and related medical and funeral expenses. Id. On the other hand, a wrongful death action is a cause of action that seeks recovery for negligent conduct that causes a death. Id. at 508. The damages recoverable in a wrongful death claim are for the exclusive benefit of defined statutory beneficiaries of a deceased person to compensate them for personal loss. Id.
Effective January 1, 2014, the Texas Probate Code was repealed and recodified as the Texas Estates Code. See Act of May 26, 2009, 81st Leg., R.S. ch. 680 §§ 1-12 Tex. Gen. Laws 1512, 1512-1735. Because Carlos's death and some of the subsequent administration filings occurred before January 1, 2014, the Texas Probate Code — as opposed to the Texas Estates Code — applied to some aspects of the administration of Carlos's estate. Therefore, for any matter in the administration proceeding that took place prior to January 1, 2014, we will reference the Texas Probate Code, and for any matter that took place after January 1, 2014, we will reference the Texas Estates Code.
A copy of a contingency fee contract was neither produced nor admitted into evidence at the hearing. However, the clerk's record contains copies of documents entitled "Contingency Fee Contract" by and between Vanessa and the Law Office of Hernandez and Castillo, P.C. and by and between Eudelia and the Law Office of Jose L. Solis. The contracts authorized the law firms to handle all claims arising out of any dispute associated with Carlos's death. The contracts further provided the law firms were entitled to forty percent of any recovery achieved as the result of any lawsuit. The clerk's record also contains copies of documents entitled "Consent to Refer or Associate," which were signed by Vanessa and Eudelia. These documents authorized the law firms to refer any portion of the matter to another law firm — Hagood, Neumann, Huckeba, LLP — which would prosecute any claims regarding Carlos's death. The documents further provided that in the event of recovery, the law firms would equally divide the total fees recovered.
Before approving the contingency fee contract, the county court asked whether there was any objection. One of the attorneys ad litem, Mr. Dominguez, stated he had not seen the contract, but had spoken to Mr. Castillo who would provide him a copy shortly after the hearing. Mr. Dominguez further stated, "As soon as we see it and we sign off on it, if we sign off on it, we ask the court to approve the contract." The county court noted the requests and stated it "will approve that." The county court then appointed Vanessa and Eudelia as co-administrators of the Estate, granting them letters of administration. The order also provided:
Throughout the administration hearing, reference is made to a contingency fee contract, and it is unclear from the record which contingency fee contract is being referenced. Whether more than one contract was approved by the county court becomes a contested matter throughout the administration proceeding.
The court hereby approves and ratifies the contingency fee contract signed by the parties in pursuit of any wrongful death litigation on behalf of Decedent. The court FURTHER ORDERS AND AUTHORIZES Jesus "Chuy" Dominguez and Rosaura "Wawi" Tijerina Ad Litems for the Minor Children to approve, sign, ratify and/or enter into contingency fee contracts with Jose Luis Castillo and/or Gene Hagood on behalf of the minor children.
Only Mr. Castillo appeared on behalf of the co-administrators during the administration hearing. No reference is made to Mr. Solis.
The following year Vanessa and Eudelia, through Gene Hagood of Hagood, Neumann, Huckeba, LLP, filed a survival action on behalf of the Estate as well as wrongful death actions in their individual capacities against Heckman Water Resources, Inc. in Dimmit County District Court. Carlos's father, Elsa Quiones — as next of friend of Carlos and Vanessa's two children, and Clarissa — as next of friend of her and Carlos's five children, were also listed as plaintiffs in the wrongful death suit. In November 2013, the case proceeded to a jury trial, which ultimately returned a verdict in favor of all the plaintiffs. In June 2014, the case was mediated and a settlement agreement was entered; the settlement agreement awarded the plaintiffs $13.5 million to be paid to each plaintiff "in proportion to the awards set forth in the trial court's amended final judgment." The agreement also provided that the settlement of the Estate's claims was contingent upon approval by Webb County Court at Law No. 2, the court overseeing the administration of the Estate. Thereafter, the co-administrators filed a motion in Webb County Court at Law No. 2, seeking approval of the settlement agreement on behalf of the Estate. Clarissa, as next of friend of her and Carlos's five minor children, filed a motion opposing approval of the settlement agreement.
A copy of the petition is not included in the record; however, based on the co-administrators' motion to withdraw funds, the motion indicates Gene Hagood was trial counsel in the Dimmit County litigation.
The motions were set for an expedited hearing. At the hearing, Clarissa argued the disputed settlement agreement involving the Estate was an improper aggregate settlement agreement because the attorneys representing the co-administrators — specifically, Mr. Castillo and Mr. Solis — settled the Estate's survival claims and the co-administrators' individual wrongful death claims together in violation of Rule 1.08(f) of the Texas Rules of Professional Conduct ("the Texas Disciplinary Rules"). See TEX. DISCIPLINARY R. PROF'L CONDUCT 1.08(f), reprinted in TEX. GOV'T CODE ANN., tit. 2, subtit. G, app. A (West 2013) (prohibiting lawyer who represents two or more clients from entering into aggregate settlement agreement without client's consent). Clarissa also argued the co-administrators entered into the contingency fee agreement on behalf of the Estate without obtaining prior approval from Webb County Court at Law No. 2. See TEX. PROB. CODE § 233(c) (current version at TEX. EST. CODE. ANN. §351.152) (authorizing personal representative to enter into contingency fee contract that provides more than one-third recovery subject to court approval). Clarissa further alleged that because of the attorneys' actions, the attorneys should be prohibited from recovering any attorney's fees from the Estate's settlement proceeds and the Estate's settlement proceeds should be divided equally among Carlos's seven children.
In response, the co-administrators claimed the settlement agreement involving the Estate was not an aggregate settlement agreement for reasons they could not disclose on the record due to confidentiality concerns. The co-administrators also argued they did not enter into a contingency fee arrangement without prior court approval. After considering the parties' arguments, the county court ordered the co-administrators to provide an unredacted copy of the proposed settlement "terms that pertain to the [E]state" to Clarissa to review at that time. The county court then broke for a short recess to allow Clarissa time to review the settlement terms and to allow the parties time to resolve the matter. When the parties failed to resolve their issues, the county court approved the co-administrators' settlement of the Estate's claims and ordered the settlement proceeds to be paid into the court registry until further court order. The record reflects approximately $656,002.49 was deposited into the court registry, representing the Estate's share of the settlement proceeds. The county court then ordered the parties to appear for another hearing to discuss how the parties should divide the settlement proceeds, including the division of attorney's fees.
Over the course of the next couple of months, the parties filed multiple motions and additional hearings were held. Many of the hearings involved Clarissa's requests to obtain a full and unredacted copy of the settlement agreement involving the Estate, remove Mr. Dominguez as attorney ad litem, and order Gene Hagood of Hagood, Neumann, Huckeba, LLP to forfeit the contingency fees he was claiming. At each of the hearings, Clarissa reiterated her arguments that the settlement agreement was an improper aggregate settlement agreement and the county court never approved the contingency fee agreement involving the Estate's survival cause of action. As part of these arguments, Clarissa alleged an improper fee-splitting arrangement existed between the co-administrators' probate attorneys — Mr. Castillo and Mr. Solis, the co-administrators' litigation attorney — Mr. Hagood, and Raul Vasquez, who represented Carlos's parents and Vanessa in their individual wrongful death claims. The county court ultimately denied Clarissa's request to remove Mr. Dominguez as attorney ad litem. The county court ordered the co-administrators to provide an unredacted copy of the settlement agreement involving the Estate to Mr. Dominguez, but not to Clarissa. By the end of 2014, Mr. Dominguez had withdrawn as attorney ad litem, and the county court granted a motion for contempt and sanctions against Vanessa for failing to provide a copy of the unredacted settlement agreement to him.
In September 2015, the county court held a final hearing concerning a number of matters, including the matter at issue in this case, i.e., the co-administrators' "Motion For Withdrawal of Funds," seeking to withdraw funds from the court registry for the payment of attorney's fees incurred by Gene Hagood as trial counsel for the co-administrators in the Dimmit County lawsuit. Attached to their motion was a copy of the August 15, 2012 order, wherein the county court approved a contingency fee contract "signed by the parties in pursuit of any wrongful death litigation on behalf of Decedent." According to the co-administrators, this order approved a contingency fee agreement authorizing Mr. Hagood to receive forty percent of any recovery achieved on behalf of the Estate in the Dimmit County proceedings. Clarissa, however, argued the co-administrators did not receive court approval of any contingency fee agreement regarding the Estate's claim in the Dimmit County proceeding prior to the performance of any services on behalf of the co-administrators. Clarissa contended such approval was statutorily required. See TEX. PROB. CODE § 233(c) (current version at TEX. EST. CODE. ANN. § 351.152). Clarissa further argued any contingency fee agreements that may have been ratified by the county court pertained only to the parties' individual wrongful death claims — not the Estate's survival claim. Clarissa also reiterated her allegations regarding the existence of an improper fee-splitting agreement.
After hearing the parties' arguments, the county court took the matter under advisement, stating it would make a ruling in the next few days. Clarissa made one last request for the county court to have an in camera inspection of all the settlement agreements and fee-splitting agreements, if any; however, the record does not contain a copy of an order granting Clarissa's request. The county court later rendered an order, denying the co-administrators' motion to withdraw funds. The co-administrators then perfected this appeal.
ANALYSIS
In their sole issue on appeal, the co-administrators contend the county court erred in denying their motion to withdraw funds from the court registry to pay attorney's fees earned as a result of litigation services rendered on behalf of the Estate. According to the co-administrators, the county court erred because: (1) it previously rendered an order, approving and ratifying a contingency fee contract that provided for the disputed fees and that order was never challenged; (2) the settlement agreement was not part of an improper aggregate settlement agreement; and (3) no undisclosed fee-splitting agreement existed.
Clarissa's Motion to Strike Reply Brief
As a preliminary matter, we will address Clarissa's motion to strike the co-administrators' reply brief, which is currently pending in this court. On October 24, 2016, the day prior to oral argument, the co-administrators filed a reply brief, reiterating each of their arguments raised above in their original brief. In addition to these arguments, the co-administrators also raised a new issue for the first time on appeal, contending the county court erred in denying their motion to withdraw funds because Clarissa did not have standing to challenge the validity of the contingency fee agreements authorizing the payment of attorney's fees. In response, Clarissa filed a motion to strike the reply brief on the grounds that the reply brief was untimely and raises a new issue on appeal.
Rule 38.6 of the Texas Rules of Appellate Procedure provides that an appellant may file a reply brief addressing any matter in the appellee's brief within twenty days after the appellee's brief has been filed. TEX. R. APP. P. 38.6. The rule also authorizes an appellant to seek leave of the court in the event he wishes to file an untimely brief. Id. Here, Clarissa's brief was filed on July 20, 2016. Therefore, in absence of a request for an extension of time to file a reply brief, the co-administrators' reply brief would have been due August 9, 2016. See id. However, the co- administrators did not file a reply brief at that time, nor did they request an extension of time to file a reply brief. Accordingly, we agree with Clarissa that the co-administrators reply brief was untimely. See id.
In addition, the reply brief raises a new issue for the first time on appeal. Although we may permit a party to amend or supplement a brief "whenever justice requires," we do not ordinarily consider new or additional issues raised in a reply brief. See Black v. Shor, 443 S.W.3d 154, 161 (Tex. App.—Corpus Christi 2013, pet. denied); see also Gamboa v. Gamboa, 383 S.W.3d 263, 274 (Tex. App.—San Antonio 2012, no pet.) ("A reply brief may not be used to raise new issues."); Lopez v. Montemayor, 131 S.W.3d 54, 61 (Tex. App.—San Antonio 2003, pet. denied) ("A reply brief is not intended to allow an appellant to raise new issues."). However, standing is "implicit" in the concept of subject matter jurisdiction and is a "constitutional prerequisite" to bringing a lawsuit. Tex. Ass'n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 443-44 (Tex. 1993); Estate of Forister, 421 S.W.3d 175, 177 (Tex. App.—San Antonio 2013, pet. denied). Subject matter jurisdiction can be raised at any time, including for the first time on appeal. Tex. Ass'n of Bus., 852 S.W.2d at 443-44. Therefore, because the co-administrators' standing argument implicates subject matter jurisdiction, we must consider it and therefore deny Clarissa's motion to strike. See id.; Forister, 421 S.W.3d at 177.
Standing
According to the co-administrators, the trial court erred in denying their motion to withdraw attorney's fees because Clarissa did not have standing to challenge the validity of the contingency fee agreements authorizing the payment of attorney's fees. The co-administrators argue Clarissa did not have standing because she was not a party to the agreements. Rather, the agreements were by and between the co-administrators representing the Estate and their attorneys.
In a probate proceeding, a party whose standing has been challenged must prove she has an interest in the estate. TEX. EST. CODE ANN. § 55.001 ("A person interested in an estate may, at any time before the court decides an issue in a proceeding, file written opposition regarding the issue."); Forister, 421 S.W.3d at 177. A party is interested in an estate if she is an heir, devisee, spouse, creditor, or any other person with a property right in, or claim against, the estate. TEX. EST. CODE ANN. §§ 22.001, 22.018; Forister, 421 S.W.3d at 177. In this case, Clarissa, as next of friend of her children, represents the interests of her five children, who are undisputedly Carlos's heirs; thus, we conclude she is an interested party who had standing to challenge the agreements during the administration proceeding. See TEX. EST. CODE ANN. §§ 22.001, 22.018; Forister, 421 S.W.3d at 177. Having concluded Clarissa has standing, we now turn to the arguments raised in the co-administrators' original brief.
Standard of Review
The parties disagree over the proper standard of review to be applied in reviewing the county court's denial of the co-administrators' request to withdraw funds from the court registry to pay attorney's fees. According to the co-administrators, the central question in this case is whether a party — here, the Estate — is authorized to recover attorney's fees and the availability of an award of attorney's fees is a question of law subject to de novo review. Clarissa, however, argues the county court's decision to deny the co-administrators' motion to withdraw funds centers on resolving conflicting evidence and making factual determinations, and thus, must be reviewed for an abuse of discretion. To further support her argument, Clarissa points out the county court's authority to manage trial proceedings is purely discretionary.
It is well-settled that a party may not recover attorney's fees unless an award of attorney's fees is authorized by either statute or contract. Estate of Vrana, 335 S.W.3d 322, 327-28 (Tex. App.—San Antonio 2010, pet. denied) (citing Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 310 (Tex. 2006)). And although the co-administrators are correct in that the availability of attorney's fees under a particular statute or contract is a question of law subject to a de novo review, we do not agree with the co-administrators' characterization of the question presented. See Holland v. Wal-Mart Stores, Inc., 1 S.W.3d 91, 94 (Tex. 1999); see also Vrana, 335 S.W.3d at 328; Estate of Hawkins, 187 S.W.3d 182, 185 (Tex. App.—Fort Worth 2006, no pet.).
In this case, we must determine whether the county court erred in denying the co-administrators' motion to withdraw funds from the court registry to pay attorney's fees pursuant to a contingency contract. When questions arise regarding a trial court's order to withdraw funds from or return funds to the court registry for a particular purpose, including the payment of attorney's fees, appellate courts — including this court — consistently apply an abuse of discretion standard. See, e.g., George v. Compass Bank, No. 04-15-00676-CV, 2016 WL 4772364, at *6 (Tex. App.—San Antonio Sept. 14, 2016, no pet. h.) (mem. op.) (holding that trial court did not abuse its discretion when ordering party to retain attorney's fees from frozen funds before depositing balance into court registry); Clayton v. Mony Life Ins. Co. of Am., 284 S.W.3d 398, 405-06 (Tex. App.—Beaumont 2009, no pet.) (holding that award of attorney's fees to party from funds deposited into court registry is within trial court's sound discretion); Summers v. Conception, 20 S.W.3d 27, 36 (Tex. App.—Houston [14th Dist.] 2000, pet. denied) (holding that decision whether to order funds returned to court registry is discretionary). More specifically, appellate courts have applied an abuse of discretion standard in cases involving the recovery of attorney's fees from settlement proceeds based on a contingency fee contract. See, e.g., Ray v. T.D., No. 03-06-00242-CV, 2008 WL 341490, at *7 (Tex. App.—Austin Feb. 7, 2008, no pet.) (mem. op.) (citing EMC Mortg. Corp. v. Davis, 167 S.W.3d 406, 418 (Tex. App.—Austin 2005, pet. denied)); Cook v. Stallcup, 170 S.W.3d 916, 920 (Tex. App.—Dallas 2005, no pet.); Burns v. Bishop, 48 S.W.3d 459, 467 (Tex. App.—Houston [14th Dist.] 2001, no pet.). Funds on deposit in the court registry are subject to the control and order of the trial court and that court enjoys great latitude in dealing with the deposited funds. Broesche v. Jacobson, 218 S.W.3d 267, 278-79 (Tex. App.—Houston [14th Dist.] 2007, pet. denied); Cook, 170 S.W.3d at 920; Burns, 48 S.W.3d at 467.
Accordingly, we conclude the proper standard of review to be applied in this case is the abuse of discretion. See, e.g., Ray, 2008 WL 341490, at *7; Broesche, 218 S.W.3d at 278-79; Cook, 170 S.W.3d at 920; Burns, 48 S.W.3d at 467. Under an abuse of discretion standard, a trial court abuses its discretion if its decision is arbitrary, unreasonable, or made without reference to any guiding principles. Ray, 2008 WL 341490, at *7 (citing Cire v. Cummings, 134 S.W.3d 835, 839 (Tex. 2004)). When making this determination, we must view the evidence in the light most favorable to the trial court's ruling and indulge every presumption in its favor. Id. (citing Aquaduct, L.L.C. v. McElhenie, 116 S.W.3d 438, 444 (Tex. App.—Houston [14th Dist.] 2003, no pet.)).
Approval of Contingency Fee Contract
The co-administrators first contend the county court erred in denying their motion to withdraw funds from the court registry to pay attorney's fees because the evidence conclusively establishes it approved their contingency fee contract, which authorized the payment of attorney's fees. To support their argument, the co-administrators point to the county court's order rendered during the administration hearing in 2012, which provided that the county court "approves and ratifies the contingency fee contract signed by the parties in pursuit of any wrongful death litigation on behalf of Decedent." The co-administrators further contend Clarissa's challenges to the validity of the county court's order approving the contingency fee contract are barred because she failed to timely challenge the order by appeal or bill of review.
Clarissa, however, argues the county court did not err in denying the co-administrators' motion to withdraw funds for the payment of attorney's fees. According to Clarissa, the contingency fee contract authorizing the payment of attorney's fees with regard to the Estate's survival action is void because the co-administrators did not obtain court approval of the agreement. Clarissa first points out that during the administration hearing, the court was not provided with a copy of a contingency fee agreement, and therefore, the court could not approve an agreement it did not review. Moreover, the order referenced by the co-administrators approved a contingency fee agreement involving "any wrongful death litigation on behalf of the Decedent," not a survival action on behalf of the Estate. Therefore, according to Clarissa, the co-administrators failed to obtain any court approval of a contingency contract regarding the Estate's survival action, and as a result, an award of attorney's fees involving the Estate's survival action was never authorized.
Section 233 of the Probate Code specifically authorizes administrators to enter into contingent fee contracts of more than one-third subject to the probate court's approval. See TEX. PROB. CODE § 233(c). It is undisputed that during the administration proceeding, the co-administrators requested approval of a contingency fee contract entered by and between the co-administrators. The record also reflects that on August 15, 2012, the county court rendered an order appointing Vanessa and Eudelia as co-administrators of the Estate and approving and ratifying a "contingency fee contract signed by the parties in pursuit of any wrongful death litigation on behalf of Decedent." And although Clarissa disputes the validity of the county court's 2012 order, we agree with the co-administrators that at no point during the administration proceedings did Clarissa by appeal or bill of review challenge the county court's order approving that contingency fee agreement on these bases.
A party seeking to challenge a trial court's final order must file a timely notice of appeal. See TEX. R. APP. P. 25.1, 26.1. In probate proceedings, multiple final judgments may be rendered before an entire proceeding is concluded. Estate of Arizola, 401 S.W.3d 664, 669-70 (Tex. App.— San Antonio 2013, pet. denied). This court has specifically held orders appointing administrators end a phase of the probate proceeding, and therefore, are final appealable orders. Id. at 670. Moreover, in the event a party fails to timely file a notice of appeal, section 31 of the Texas Probate Code, now section 55.251 of the Texas Estates Code, provides that an interested party may challenge a probate court order by filing a bill of review in the court handling the probate proceeding within two years from the date of the challenged order. See TEX. PROB. CODE § 31 (current version at TEX. EST. CODE ANN. § 55.251); Buck v. Estate of Buck, 291 S.W.3d 46, 52-53 (Tex. App.—Corpus Christi 2009, no pet.).
Here, Clarissa did not challenge the order appointing the co-administrators and ultimately approving the contingency fee agreement by filing a notice of appeal within the required appellate timelines. See TEX. R. APP. P. 25.1, 26.1; Arizola, 401 S.W.3d at 670. Nor did she challenge the 2012 order within two years by a bill of review proceeding as provided under the Texas Probate Code, now the Texas Estates Code. See TEX. PROB. CODE § 31 (current version at TEX. EST. CODE ANN. § 55.251); Buck, 291 S.W.3d at 52-53. Accordingly, we agree with the co-administrators that any challenge to the validity of the 2012 order approving the contingency agreements is barred.
Aggregate Settlement Agreement and Fee-Splitting
The co-administrators also contend the county court abused its discretion in denying their motion to withdraw attorney's fees from the court registry because there is no evidence the Estate's settlement was part of an aggregate settlement agreement or that the attorneys engaged in any improper fee-splitting agreements. According to the co-administrators, separate counsel properly represented each plaintiff in the Dimmit County lawsuit and individual settlements were reached for each plaintiff. With respect to any improper fee-splitting allegations, the co-administrators argue the only agreement involving the Estate and attorney's fees were the contingency fee contracts signed by the co-administrators and approved by the county court in the August 15, 2012 order. No other fee sharing agreements existed, and Clarissa's allegation of undisclosed fee-sharing arrangements is based on mere speculation. The co-administrators therefore conclude that because of the lack of evidence, the attorneys representing the Estate should be paid pursuant to their approved contingency fee contract.
In response, Clarissa argues the county court did not err in denying the co-administrators' motion to withdraw funds to pay for attorney's fees because there was evidence establishing the co-administrators' attorneys entered into an aggregate settlement agreement and engaged in conduct that violated the Texas Disciplinary Rules. Specifically, Clarissa contends the co-administrators' attorneys represented the co-administrators in both their administrator and individual capacities during the Dimmit County proceeding. Clarissa further argues these attorneys, as well as Mr. Vasquez, agreed to share the forty percent contingency fee associated with the Estate's settlement proceeds without their client's consent or court approval. To support this contention, Clarissa points to a handwritten note entitled, "Split," which was signed by her attorney — Ronald Rodriguez — and Mr. Vasquez on behalf of the Estate.
Applicable Law
Rule 1.08(f) of the Texas Disciplinary Rules provides:
A lawyer who represents two or more clients shall not participate in making an aggregate settlement of the claims of or against the clients ... unless each client has consented after consultation, including existence and nature of all the claims or pleas involved and of the nature and extent of the participation of each person in the settlement.TEX. DISCIPLINARY R. PROF'L CONDUCT 1.08(f). When an attorney enters into an aggregate settlement agreement without the consent of his clients, that attorney breaches a fiduciary duty owed to those clients. Arce v. Burrows, 958 S.W.2d 239 (Tex. App.—Houston [14th Dist.] 1997), modified and rev'd in part on other grounds, Burrow v. Arce, 997 S.W.2d 229 (Tex. 1999). Such a breach of fiduciary duty may result in fee forfeiture even absent actual damages. Burrow, 997 S.W.3d at 240-41.
Rule 1.04(f) of the Texas Disciplinary Rules states:
A division or arrangement for division of a fee between lawyers who are not in the same firm may be made only if ... the client consents in writing to the terms of the arrangement prior to the time of the association or referral proposed, including ... whether fees will be divided based on the proportion of services performed or by lawyers agreeing to assume joint responsibility for the representation....TEX. DISCIPLINARY R. PROF'L CONDUCT 1.04(f). With regard to this rule, Texas courts have consistently held that an agreement violating this disciplinary rule is unenforceable and void as against public policy. See Garcia v. Garza, 311 S.W.3d 28, 43 (Tex. App.—San Antonio 2010, pet. denied) (recognizing several cases in which Texas courts have concluded agreements violating disciplinary rule requiring disclosure of fee sharing were unenforceable and void as against public policy); see, e.g., Johnson v. Brewer & Pritchard, P.C., 73 S.W.3d 193, 205 (Tex. 2002) ("A fee sharing agreement between lawyers who are not in the same firm violates public policy and is unenforceable unless the client is advised of and consents to the sharing arrangement."); Lemond v. Jamail, 763 S.W.2d 910, 914 (Tex. App.—Houston [1st Dist.] 1988, writ denied) (holding that referral agreement was void and unenforceable as against public policy because client was never informed of fee-splitting agreement); Quintero v. Jim Walter Homes, Inc., 709 S.W.2d 225, 229-30 (Tex. App.—Corpus Christi 1986, writ ref'd n.r.e.) (holding that settlement agreement was void and unenforceable because clients were not informed of nature and amounts of all claims involved in aggregate settlement as required by disciplinary rules); Fleming v. Campbell, 537 S.W.2d 118, 119 (Tex. Civ. App.—Houston [14th Dist.] 1976, writ ref'd n.r.e.) (holding that attorney's referral fee contract was void because it was against public policy as expressed in disciplinary rules).
Application
During the September 2015 hearing on the motion to withdraw attorney's fees, two documents were admitted into evidence — a handwritten note entitled "Split," and an affidavit by Mr. Vasquez. The handwritten note lists the following percentages by each of the plaintiffs involved in the Dimmit County lawsuit: "52% - Clarissa's 5 children; 1% - Estate; 47% - Mom, Dad, Twins and Vanessa." The document was signed by Mr. Rodriguez, who was Clarissa's attorney, and Mr. Vasquez. With regard to the affidavit, Mr. Vasquez stated he represented Carlos's parents and Vanessa in the proceedings in Dimmit County. He does not indicate in what capacity he represented Vanessa, and he did not attend the hearing to provide testimony with regard to that matter.
The court also heard testimony from Mr. Solis, Mr. Castillo, and Mr. Balmer with regard to whether undisclosed fee-sharing arrangements existed, and specifically whether Mr. Vasquez was involved in those arrangements. Mr. Solis testified he represented Eudelia in her capacity as dependent administratrix of the Estate. Mr. Solis testified he executed a contingency fee contract with Eudelia and a copy of that contract was provided to the court when the court ordered all documents regarding the Estate to be produced. When asked whether that contract was approved by the county court prior to the litigation action in Dimmit County, Mr. Solis testified he believed it was.
Mr. Solis further testified he did not believe any other contracts concerning the Estate and the distribution of attorney's fees existed beyond the contingency fee contracts signed by the co-administrators. Mr. Solis testified it was his understanding that Mr. Vasquez represented the co-administrators in their individual capacities — not their capacities as co-administrators — in the Dimmit County litigation, and he was not aware of any agreement that provided Mr. Vasquez with an interest in the Estate's recovery.
Mr. Castillo testified he represented Vanessa as co-administrator of the Estate and executed a contingency fee agreement, which was approved by the county court on August 15, 2012. Mr. Castillo also testified the order approved two documents — the "Contingency Fee Contract" and the "Consent to Refer" — because the documents make up a single document. Mr. Castillo further testified he did not have a split fee agreement with Mr. Vasquez. In that same regard, Mr. Balmer testified he was not aware of any contingency fee agreements involving the Estate and Mr. Vasquez. After hearing this testimony, the court took the matter under advisement, indicating it would review several agreements in camera, instructing the parties to submit proposed orders and stating it would make a ruling in the next few days. Clarissa's attorney then urged the court to review in camera any and all agreements regarding the settlement proceeds and distribution of attorney's fees; however, an order granting Clarissa's request was never rendered.
After reviewing this evidence, we conclude there is no evidence in the record showing that any of the attorneys representing the co-administrators in either the Dimmit County proceeding or administration proceeding entered into an aggregate settlement agreement. Although Clarissa repeatedly argues throughout the administration proceeding that the attorneys entered into an aggregate settlement agreement, mere speculation or conjecture does not constitute evidence of probative force and cannot support a trial court's findings. See U.S. Renal Care, Inc. v. Jaafar, 345 S.W.3d 600, 614 (Tex. App.—San Antonio 2011, pet. denied).
With regard to Clarissa's allegations of improper fee-splitting, we also conclude there is no evidence to support her contention. Again, beyond mere speculation and conjecture, there is nothing in the record to establish the attorneys were engaging in improper fee-splitting. And although Clarissa may have requested the court to review additional documents, arguing such documents evidenced fee-splitting, there is nothing in the record indicating the court rendered an order granting the request.
Absent evidence of improper conduct, the county court's only power at the hearing was to enforce its prior 2012 order approving the contingency contracts. See Cook, 170 S.W.3d at 920. At no point did the county court set aside or modify that order, and as explained above, Clarissa did not timely challenge that order on appeal or by bill of review. Therefore, we hold that by refusing to release the funds in the court registry for the payment of attorney's fees as authorized by the court-approved contingency fee contract, the trial court abused its discretion. See id. Accordingly, we reverse the order of the trial court denying the motion to withdraw funds and remand this cause for further proceedings consistent with this opinion.
CONCLUSION
Based on the foregoing, we deny Clarissa's motion to strike the co-administrators' reply brief. Additionally, because we conclude there is no evidence of an improper aggregate settlement agreement or fee-splitting, we reverse the order of the trial court denying the motion to withdraw funds for the payment of attorney's fees and remand this cause back to Webb County Court at Law No. 2 for further proceedings consistent with this opinion.
Marialyn Barnard, Justice