Opinion
No. 05-20-00050-CV
08-20-2021
WINSTEAD PC, Appellant v. Dewey M. MOORE, Jr., Appellee
Paul M. Koning, Eve L. Henson, Dallas, for Appellant. Stephen A. Kennedy, Dallas, for Appellee.
Paul M. Koning, Eve L. Henson, Dallas, for Appellant.
Stephen A. Kennedy, Dallas, for Appellee.
Before Justices Schenck, Smith, and Garcia
OPINION
Opinion by Justice Garcia
In this accelerated interlocutory appeal, Winstead PC appeals the trial court's order denying its motion to dismiss appellee Dewey M. Moore, Jr.’s claims pursuant to the Texas Citizens Participation Act (TCPA). See TEX. CIV. PRAC. & REM. CODE §§ 27.001 –.011. In three issues, Winstead argues that (i) the trial court erred by ruling that the TCPA does not apply to Moore's claims, (ii) Moore failed to establish a prima facie case for each element of his causes of action, and (iii) Winstead established the affirmative defense of attorney immunity.
We reverse the trial court's order in part and affirm in part, holding that the TCPA applies to Moore's legal-malpractice and equitable-indemnification claims but does not apply to Moore's negligent-misrepresentation claim. Because the trial court did not reach steps two and three of the TCPA analysis regarding the first two claims, we remand so that the trial court may do so in the first instance.
I. Background
A. Factual Allegations
We draw the following factual allegations and quotations from Moore's live pleading, his second amended petition.
Moore is the former Chairman, CEO, and President of the Institute for Wealth Holdings, Inc. (IWH) and the former President and Chief Compliance Officer for two IWH subsidiaries (IWA and IWC). In general, IWH, its subsidiaries, and their employees provide investment advisory services.
Winstead was engaged to prepare two sets of securities offering statements for IWH. In October 2017, Winstead completed preparation of a Private Placement Memorandum (PPM) for Series D Convertible Preferred Stock for IWH pursuant to Regulation D of the Securities Act of 1933 (2017 Reg D Offering). In January 2018, Christopher D. Williams of Winstead issued an Opinion Letter to IWH that included a statement "consent[ing] to the use of this opinion as an exhibit to the Offering Statement." In February 2018, Winstead completed the Offering Circular for the Series D Convertible Preferred Stock and Common Stock pursuant to Regulation A of the Securities Act (2018 Reg A Offering).
In August 2018, the SEC issued an Examination Letter in which the SEC found, under the heading "Participation in Fraudulent Private Offerings," that the 2017 Reg D Offering Memorandum and the 2018 Reg A Offering Memorandum "contained material misstatements with respect to IWH, the Advisers [IWM, IWA, and IWC], and their leadership, including exaggerated, inaccurate, and misleading statements to the potential investors to whom these materials were provided."
As a direct result of Winstead's "various failures and malpractice," Moore was required to resign his employment positions and as a director of IWH. He obtained employment with a different company but later lost that position because IWA filed "an Amended U5" based on the SEC Examination Letter and the Amended U5 contained negative statements about Moore.
B. Procedural History
On September 27, 2019, Moore sued Winstead. In his live pleading, he alleges that Winstead failed to competently perform the due diligence and other legal work necessary to ensure the 2017 Reg D Offering, the 2018 Reg A Offering, and the Opinion Letter were in compliance with applicable laws and regulations. He asserts claims for legal malpractice, negligent misrepresentation, and equitable indemnification.
Winstead answered and later moved to dismiss Moore's claims under the TCPA, asserting that Moore's claims were based on or in response to Winstead's exercise of the right to petition.
After a hearing, the trial judge signed an order denying Winstead's motion to dismiss because "the alleged failure to perform due diligence is not a protected communication under the TCPA." The order further stated, "As the Court has ruled on the applicability of the TCPA, it does not reach ... the second step of the TCPA analysis." Winstead moved for reconsideration, and the trial court denied that motion after a second hearing.
Winstead perfected this interlocutory appeal. See CIV. PRAC. & REM. CODE § 51.014(a)(12).
II. Applicable Law and Standard of Review
The TCPA authorizes a defendant in a civil case to move to dismiss an opponent's "legal action" under certain circumstances. See id. § 27.003(a). That motion triggers a three-step process. See id. § 27.005(b), (c), (d).
At step one, the movant must demonstrate that the legal action is based on or in response to the movant's exercise of a statutorily defined right or certain other statutorily defined conduct. Id. § 27.005(b). The plaintiff's petition is the best and all-sufficient evidence of the nature of the action. Hersh v. Tatum , 526 S.W.3d 462, 467 (Tex. 2017). "When it is clear from the plaintiff's pleadings that the action is covered by the Act, the defendant need show no more." Id. Step one requires a claim-by-claim analysis. See Better Bus. Bureau of Metro. Dallas, Inc. v. Ward , 401 S.W.3d 440, 443 (Tex. App.—Dallas 2013, pet. denied) ("The definition of ‘legal action’ in the statute is broad and evidences a legislative intent to treat any claim by any party on an individual and separate basis.").
If the movant carries its initial burden, the burden shifts to the claimant to establish by clear and specific evidence a prima facie case for each essential element of the claim in question. CIV. PRAC. & REM. CODE § 27.005(c). If the claimant does not carry its burden, the trial court dismisses the claim. See id. § 27.005(b), (c). And even if the claimant carries its step-two burden, the trial court must dismiss the legal action at step three if the movant establishes an affirmative defense as a matter of law. Id. § 27.005(d).
We review a trial court's ruling on a TCPA motion de novo. Vaughn-Riley v. Patterson , No. 05-20-00236-CV, 2020 WL 7053651, at *2 (Tex. App.—Dallas Dec. 2, 2020, no pet.) (mem. op.) (applying de novo standard to ruling on TCPA motion governed by the 2019 amendments).
III. Analysis
A. Issue One: Whether Winstead carried its step-one burden under the TCPA.
Winstead argues that the trial court erred by concluding that Winstead did not carry its step-one burden under the TCPA. Specifically, Winstead argues that Moore's claims are based on Winstead's exercise of its TCPA right to petition as that right is defined in § 27.001(4)(B) and (C). As discussed below, we agree with the trial court as to Moore's negligent-misrepresentation claim, but not as to Moore's legal-malpractice and equitable-indemnification claims.
1. Negligent-Misrepresentation Claim
On appeal, Winstead argues that all of Moore's claims are based on the three securities documents that Winstead prepared and that those documents were exercises of Winstead's right to petition because they were (i) communications "in connection with an issue under consideration or review by a ... governmental body" and (ii) communications that were "reasonably likely to encourage consideration or review of an issue by a ... governmental body." CIV. PRAC. & REM. CODE § 27.001(4)(B), (C). We conclude that Winstead's argument fails as to Moore's negligent-misrepresentation claim because that claim is not based on the three securities documents—it is based on alleged misrepresentations that Winstead made to Moore about the quality of its work on those documents.
In his negligent-misrepresentation claim, Moore alleges that Winstead misrepresented to him that Winstead "had met its legal standard of care in preparing" the three securities documents at issue in this case, namely the 2017 Reg D Offering, the 2018 Reg A Offering, and the Opinion Letter. He adds that those representations "supplied false information" for his guidance in business transactions and that Winstead's negligent misrepresentations caused him damages.
In our view, Winstead's alleged statements to Moore that it "had met its legal standard of care in preparing" the securities documents are too remote from the SEC's review of those documents to constitute "communication[s] in connection with an issue under consideration or review by a ... governmental body." See id. § 27.001(4)(B). Although the alleged misrepresentations were about the quality of Winstead's work that went into the securities documents, we cannot say that they were made, in any meaningful sense, "in connection with" the issue under consideration by the SEC. Nothing in the record suggests that Winstead's representations to Moore were ever forwarded to the SEC, became part of the SEC proceedings, or were received by anyone except Moore. Winstead's legal standard of care was not under consideration or review by the SEC. Reading "in connection with" so broadly as to cover Winstead's comments to Moore about the quality of its work on the securities documents—and treating such comments as an "exercise of the right to petition"—would be adding to the types of communications subject to TCPA protection under § 27.001(4)(B). A court may not amend a statute by adding words that are not contained in the language of the statute as written. Lippincott v. Whisenhunt , 462 S.W.3d 507, 508 (Tex. 2015) (per curiam).
Nor does anything in the record show that Winstead's alleged misrepresentations to Moore about the quality of Winstead's legal work were reasonably likely to encourage SEC consideration or review of an issue. See CIV. PRAC. & REM. CODE § 27.001(4)(C).
We conclude that Winstead failed to demonstrate that Moore's negligent-misrepresentation claim is based on Winstead's exercise of its right to petition. Accordingly, we overrule issue one with respect to Moore's negligent-misrepresentation claim.
2. Legal-Malpractice Claim
Next we consider Winstead's argument that Moore's legal-malpractice claim is based on the three securities documents that Winstead prepared and that those documents are communications "in connection with an issue under consideration or review by a ... governmental body" or communications that were "reasonably likely to encourage consideration or review of an issue by a ... governmental body." Id. § 27.001(4)(B), (C).
a. "Communication"
The TCPA defines "communication" very broadly as including "the making or submitting of a statement or document in any form or medium." Id. § 27.001(1). Thus, under the TCPA, the three securities documents that Winstead prepared were "communications." See id. And they were Winstead's communications, because a lawyer's statements on behalf of a client are the lawyer's communications for TCPA purposes. See Youngkin v. Hines , 546 S.W.3d 675, 680–81 (Tex. 2018) (involving lawyer's dictation of settlement agreement into the record during trial); Brenner v. Centurion Logistics LLC , No. 05-20-00308-CV, 2020 WL 7332847, at *5–7 (Tex. App.—Dallas Dec. 14, 2020, no pet. h.) (mem. op.) (lawyer allegedly represented client's adversaries in litigation); see also Winstead PC v. USA Lending Grp., Inc. , No. 12-20-00172-CV, 2021 WL 1047208, at *3 (Tex. App.—Tyler Mar. 18, 2021, no pet. h.) (mem. op.) (motion for default judgment); Jetall Cos., Inc. v. Johanson , No. 01-19-00305-CV, 2020 WL 6435778, at *4 (Tex. App.—Houston [1st Dist.] Nov. 3, 2020, no pet.) (mem. op.) (settlement communications during pending lawsuit); Brown Sims, P.C. v. L.W. Matteson, Inc. , 594 S.W.3d 573, 578–79 (Tex. App.—San Antonio 2019, no pet.) (answer filed in a lawsuit); Johnson-Todd v. Morgan , 480 S.W.3d 605, 609 (Tex. App.—Beaumont 2015, pet. denied) (disclosures that lawyer made during court proceedings). But cf. Snell v. Ellis , No. 05-20-00642-CV, 2021 WL 1248276, at *7 & nn.18–19 (Tex. App.—Dallas Apr. 5, 2021, no pet.) (mem. op.) (suggesting in dicta that a lawyer's communications on behalf of a client are not the lawyer's communications if the client sues the lawyer based on the communications).
We also conclude that those communications were exercises of the right to petition because they were made in connection with an issue under consideration or review by the SEC, a governmental body, or were reasonably likely to encourage such consideration. See CIV. PRAC. & REM. CODE § 27.001(4)(B), (C) ; see also 15 U.S.C.A. § 78d (establishing the Securities and Exchange Commission).
Moore argues that the communications were not exercises of the right to petition because there was no "issue" under consideration by the SEC. He cites Black's Law Dictionary for the proposition that an "issue" is "a point in dispute between two or more parties" and contends that the SEC was reviewing documents, not an "issue." But "issue" can also mean simply "something involving judgments or decisions." Issue , WEBSTER'S THIRD NEW INTERNATIONAL DICTIONARY OF THE ENGLISH LANGUAGE UNABRIDGED (1981). This broader meaning better fits the context of § 27.001(4)(B) and (C), which refer to an issue under consideration or review "by a legislative, executive, judicial, or other governmental body." Although judicial bodies may typically address points in dispute between parties, legislative and executive bodies can address "issues" of public concern that do not involve discrete points in dispute between parties. We conclude that the IWF securities documents submitted to the SEC presented an "issue" for the SEC's consideration within the meaning of § 27.001(4)(B) and (C).
Moore also asserts that the record raises a question whether Winstead actually transmitted all of the securities documents. But the securities documents (and Winstead's alleged negligence in preparing them) could not have caused the SEC Examination Letter and Moore's alleged damages unless the documents were transmitted. So we reject Moore's argument.
Finally, Moore argues that Winstead's January 2018 Opinion Letter indicates that IWF, not Winstead, issued the Reg A Offering. But under the TCPA's definition, the Reg A Offering was a "communication" as soon as Winstead prepared it. See CIV. PRAC. & REM. CODE § 27.001(1). Even if Winstead itself did not submit the document to the SEC, Moore does not dispute that such a submission was intended and that the document was reasonably likely to encourage SEC review. See id. § 27.001(4)(C).
Moore actually references the Reg D Offering in this argument, but this must be a mistake because the Opinion Letter refers to Regulation A, not D.
b. "Based on"
Next, we turn to Moore's live pleading to see whether his legal-malpractice claim is based on the three securities documents Winstead prepared. See id. § 27.005(b) ; Hersh , 526 S.W.3d at 467 (the petition is the best evidence of the nature of the plaintiff's action). We conclude that it is. Moore's legal-malpractice claim alleges the following:
34. Defendant Winstead breached its duty of care to Plaintiff by failing to exercise due diligence and provide the appropriate standard of care in preparing the 2017 Reg D Offering and the 2018 Reg A Offering Memoranda and the Opinion Letter.
35. Defendant's breach of its duty of care was a cause-in-fact of the August 28, 2018 SEC Examination Letter and [of] the subsequent filing of the Amended U-5 regarding Plaintiff by IWA on June 20, 2019 (the "Amended U-5").
36. The August 28, 2018 SEC Examination Letter and the Amended U-5 were a cause-in-fact of Plaintiff's loss of employment at Commerce Street Capital.
37. As a result of Defendant's breach of its duty of care to Plaintiff, Plaintiff has incurred lost wages, lost benefits, loss of reputation, loss of future earning capacity, and other actual and consequential damages.
(Emphasis added.)
Thus, Moore alleges that Winstead negligently prepared three securities documents submitted to the SEC, which caused the SEC to issue the Examination Letter, which in turn caused financial injury to him. This suffices to demonstrate that Moore's legal-malpractice claim is based on the three securities documents and thus on Winstead's exercise of its right to petition.
Although Winstead's alleged negligence may also involve some failures to act or communicate, as the trial court's order says, paragraph 34 of Moore's petition plainly says that Winstead's actionable negligence included negligence in preparing the three securities documents. We cannot see how Moore could prove his legal-malpractice claim as pleaded without proving up Winstead's preparation of the documents that allegedly triggered the SEC Examination Letter and caused Moore's damages.
We sustain Winstead's first issue with respect to Moore's legal-malpractice claim.
3. Equitable-Indemnification Claim
This claim reads, in its entirety, as follows:
45. In the event that Plaintiff is sued in his role as an Officer and/or Director of IWH in relation to the 2017 Reg D Offering or the 2018 Reg A Offering, Plaintiff seeks equitable indemnification from Winstead for any losses he may incur from future lawsuits as a result of Winstead's breach of its duty to Plaintiff.
Moore does not allege that any such losses have occurred, so we construe this claim as seeking a declaratory judgment that Winstead is obliged to indemnify him if he incurs such losses in the future. A claim for declaratory relief is a "legal action" within the meaning of the TCPA. CIV. PRAC. & REM. CODE § 27.001(6).
Moore seeks this relief in the event he is ever sued "in his role as an Officer and/or Director of IWH in relation to the 2017 Reg D Offering or the 2018 Reg A Offering. " (Emphasis added.) Thus, he seeks a declaration that Winstead must indemnify him if he is ever sued because of the two mentioned securities documents that Winstead prepared. Thus, the equitable-indemnification claim is based on two communications that we have already held constituted Winstead's exercise of the right to petition.
We sustain Winstead's first issue with respect to Moore's equitable-indemnification claim.
B. Issues Two and Three: Steps two and three of the TCPA analysis.
Winstead argues that we should address steps two and three of the TCPA analysis even though the trial court did not reach those steps.
In this case we conclude that it would be inappropriate to address steps two and three for the first time on appeal. The questions presented are not straightforward and should be addressed by the trial court first. See Dorfman v. Proactive Inventory, Inc. , No. 05-16-01286-CV, 2017 WL 2953058, at *2 (Tex. App.—Dallas July 11, 2017, no pet.) (mem. op.) (remanding because trial court erroneously denied TCPA motion without reaching the merits); see also Reeves v. Harbor Am. Cent., Inc. , No. 14-18-00594-CV, 631 S.W.3d 299, 309–11 (Tex. App.—Houston [14th Dist.] Apr. 28, 2020, pet. denied) (remanding because trial court erroneously denied TCPA motion based on step one); McManus v. Richey , No. 10-16-00061-CV, 2016 WL 4703877, at *6 (Tex. App.—Waco Sept. 7, 2016, no pet.) (mem. op.) (same as Reeves ).
Thus, we do not address Winstead's second and third issues, leaving them for the trial court to address on remand. IV. Disposition
We affirm the trial court's Order Denying Winstead PC's Motion to Dismiss to the extent it concerns Moore's negligent-misrepresentation claim, and we reverse the order concerning Moore's legal-malpractice and equitable-indemnification claims. We remand the case for further proceedings consistent with this opinion.
Schenck, J., dissenting
Molberg, J., dissenting from denial of request for en banc consideration, joined by JJ., Osborne, Partida-Kipness, Nowell
Schenck, J., concurring in denial of request for en banc consideration
DISSENTING OPINION
Opinion by Justice Schenck
While I agree with the majority that the TCPA applies to Moore's legal-malpractice and equitable-indemnification claims, I do not agree with the majority's conclusion that the TCPA does not apply to Moore's negligent-misrepresentation claim, and I do not agree with the majority's decision to remand the remaining claims to the trial court for a legal determination we would review de novo. For the following reasons, I dissent.
I. Moore's Negligent-Misrepresentation Claim Alleges Communications "in Connection with" an Issue Under Consideration or Review by a Governmental Body.
As a Chapter 27 movant, Winstead had the initial burden of showing by a preponderance of the evidence that the legal action is based on or is in response to the party'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). I begin with the TCPA's definition of the "[e]xercise of the right to petition" and whether Winstead showed the statements alleged in Moore's petition met that definition, as that definition appears to be the sole dispositive point of disagreement in addressing Winstead's first issue. See id. § 27.001(4).
The TCPA defines the "[e]xercise of the right to petition" as including "a communication in connection with an issue under consideration or review by a legislative, executive, judicial, or other governmental body or in another governmental or official proceeding" or as "a communication that is reasonably likely to encourage consideration or review of an issue by a legislative, executive, judicial, or other governmental body or in another governmental or official proceeding." See id. § 27.001(4)(B),(C) (emphasis added). Winstead argues both definitions apply to Moore's claims for negligent misrepresentation. I agree at least as far as sub-paragraph (B) and thus will pretermit discussion of sub-paragraph (C).
As noted by the majority and according to Moore's petition, Moore's negligent-misrepresentation claim alleges numerous misrepresentations by Winstead, including "representations to Plaintiff ... that it had met its legal standard of care" and representations that "supplied false information for the guidance of [Plaintiff] in his business transactions." The majority does not appear to contest that those alleged statements are "communications" as required for application of the TCPA. Because I find that conclusion to be implied by its reasoning and, in all events, obvious, I will move on to address my first point of contention, which is the majority's conclusion that Winstead's statements to Moore were "too remote" from the SEC's review of the documents prepared by Winstead to constitute exercises of its right to petition under the TCPA.
In order for a movant to invoke the TCPA, there must first be a communication. See Civ. Prac. & Rem. § 27.001(2) –(4) (the rights of association, of free speech, and to petition are defined in the TCPA to include a communication). The TCPA defines "communication" to include "the making or submitting of a statement or document in any form or medium, including oral, visual, written audiovisual, or electronic." See id. § 27.001(1). Moore's negligent-misrepresentation claim alleges affirmative misrepresentations to Moore, and, as such, the claim falls within the TCPA's broad definition of "communication." See Adams v. Starside Custom Builders, LLC , 547 S.W.3d 890, 894 (Tex. 2018) ("Almost every imaginable form of communication, in any medium, is covered.").
See Steward Health v. Saidara , No. 05-19-00274-CV, 633 S.W.3d 120 (Tex. App.—Dallas Aug. 20, 2021, no pet. h.) (Schenck, J., concurring).
"TCPA" refers to the Texas Citizens Participation Act, which is embodied in Chapter 27 of the Texas Civil Practice and Remedies Code. See Tex. Civ. Prac. & Rem. Code §§ 27.001 –.011. The legislature amended the TCPA effective September 1, 2019 for actions filed on or after that date, as Moore's action was. See Act of May 17, 2019, 86th Leg., R.S., ch. 378, § 11, 2019 Tex. Sess. Law Serv. 684, 687. All citations to the TCPA are to the current version unless otherwise indicated.
This Court has previously held the exercise of the right to petition merely requires a communication that "pertains to" governmental or public proceedings. See BusPatrol Am., LLC v. Am. Traffic Sols., Inc. , No. 05-18-00920-CV, 2020 WL 1430357, at *8 (Tex. App.—Dallas Mar. 24, 2020, pet. denied) (mem. op.) (citing Gaskamp v. WSP USA, Inc. , 596 S.W.3d 457, 474 (Tex. App.—Houston [1st Dist.] 2020, pet. dism'd) (en banc)). No one questions that the securities documents at issue were to be reviewed by a governmental body, the SEC. But, what did this review entail? According to the letter from the SEC that Moore himself attached to his amended petition, the SEC "conducted examinations ... which evaluated compliance with certain provisions of the federal securities laws or other applicable rules and regulations."
The majority concludes Winstead's representations to Moore regarding its legal standard of care in assisting its client with the preparation of these same documents for the SEC to review for "compliance" with applicable law are "too remote" to be "in connection with" the issues under consideration and review by the SEC. See CIV. PRAC. & REM. § 27.001(4)(B). The majority does not explain why or offer its understanding of what "in connection with" would mean. I cannot see how the majority reaches this conclusion and have not found any relevant authority to support it.
Indeed, the majority states that these facts do not meet the statutory language of "in connection with" but does not otherwise provide any guidance of what that phrase means. Cf. Tex. R. App. P. 47.1.
I believe words have meaning. And, where they are used in a statute and form the basis for our decision, we should explain what that meaning is. I understand the phrase "in connection with" to be one of "intentional breadth" that does not imply any material or significant connection although context may indicate otherwise. Titan Transp., LP v. Combs , 433 S.W.3d 625, 637 (Tex. App.—Austin 2014, pet. denied) ; see also Tarrant Cty. v. Bonner , 574 S.W.3d 893, 898 (Tex. 2019) (noting "phrase ‘in connection with’ does not imply a material or significant connection ... [and is] error to construe the phrase as requiring more than a tangential, tenuous, or remote relationship") (citing ExxonMobil Pipeline Co. v. Coleman , 512 S.W.3d 895, 900–01 (Tex. 2017) ). Indeed, one authority has referred to the phrase as "a vague, loose connective." BRYAN A. GARNER , GARNER'S DICTIONARY OF LEGAL USAGE 287 (1st ed. 1987). Thus, as I see it, the phrase "in connection with" as used in the Texas Citizens Participation Act is an effective synonym of "relates to." In all events, I believe it would be error to construe the phrase as requiring something more than a tangential, tenuous, or remote relationship between the connected items, as the majority does. See Bonner , 574 S.W.3d at 898.
I find further support for my view for how to interpret "in connection with" in the TCPA from a sister court of appeals and federal courts. In Enterprise Crude GP LLC v. Sealy Partners, LLC , 614 S.W.3d 283, 295 (Tex. App.—Houston [14th Dist.] 2020, no pet.), the court considered the appellant's alleged false representations and promises regarding research of the applicable requirements to obtain a permit that were made in the course of the permit–application process. The court concluded these alleged representations and promises were made "in connection with an issue under consideration or review by a ... governmental body." See id.
Meanwhile, the Fifth Circuit and other federal courts, in the context of multiple statutes, have defined the phrase "in connection with" to mean "related to." See, e.g., Conn. Bank of Commerce v. Republic of Congo , 309 F.3d 240, 255 (5th Cir. 2002) ; In re Newton , 292 B.R. 563, 568 n.7 (Bankr. E.D. Tex. 2003). Similarly, here, I would conclude Winstead's statements regarding whether it had met its legal standard of care in preparing the same securities documents it forwarded to the SEC would be material to the SEC's review of those same securities documents for legal compliance. Otherwise, the submission would have been pointless.
In any event, I would conclude Moore's claims allege that Winstead made communications "in connection with" issues under consideration and review by a governmental body and thus the alleged statements meet the definition of exercise of right to petition. See CIV. PRAC. & REM. § 27.001(4)(B).
Having concluded Winstead showed Moore's claims allege communications that constitute an exercise of Winstead's right to petition, I now address whether Winstead met the rest of its burden under the first step of the TCPA to show that Moore's legal action is "based on or is in response to" Winstead's exercise of the right of petition. See id. §§ 27.003(a), 27.005(b).
Moore himself alleges that because of representations Winstead made, the SEC found the PPM and Offering Circular contained material misstatements. And, as I noted above, the SEC's letter documenting those findings stated its review of the submitted securities documents was for compliance with applicable laws and regulations. Indeed, Moore's alleged damages trace directly to the alleged inadequacy of the securities documents submitted for SEC review. Therefore, the alleged communications proximately caused Moore's damages, and thus I would conclude his claims are "based on" these miscommunications. See Safeco Ins. Co. of Am. v. Burr , 551 U.S. 47, 49, 127 S.Ct. 2201, 167 L.Ed.2d 1045 (2007) ("In common talk, ‘based on’ indicates a but-for causal relationship and thus a necessary logical condition.").
Attached to Moore's petition was a copy of the SEC's letter containing its examination findings and the statement: "The examination disclosed that the Offering Memoranda contained material misstatements...."
I cannot help but question the effect of the majority's conclusion that these alleged communications are "too remote" from the SEC's review of the securities documents. For instance, would the trial court then be justified in granting a motion in limine to exclude those same securities documents from consideration of Moore's damages if they are not connected with Moore's claim for damages?
For the reasons stated above, I dissent from the majority's decision to overrule Winstead's first issue as to Moore's negligent-misrepresentation claim and would instead conclude Winstead met its initial burden to show all of Moore's claims were based on Winstead's exercise of its right to petition.
II. The Second Step of the TCPA Analysis Requires a Legal Conclusion that We May Reach Without Remanding to the Trial Court.
In its second issue, Winstead argues Moore failed to meet his burden to establish by clear and specific evidence a prima-facie case for each essential element of his causes of action. Moore responds, "[T]he record demonstrates that Moore presented clear and specific evidence for each element of [his] claims." The majority relies on a prior panel opinion of this Court to conclude remand is appropriate. I would conclude otherwise relying on the authority cited herein.
The trial court's order denying Winstead's motion to dismiss expressly stated, "As the Court has ruled on the applicability of the TCPA, it does not reach ... the second step of the TCPA analysis." Rule 43.3 directs this Court to render the judgment the trial court should have entered unless remand for further consideration is "necessary." See TEX. R. APP. P. 43.3. Whether an appellate court remands to the trial court for further proceedings depends on the facts and issues presented in each specific case. Thus, in some cases, typically those involving legal issues we would review de novo in any subsequent appeal, this Court has rendered the decision we concluded the trial court should have entered. Therefore, in several TCPA cases, we have resolved the prima-facie case question notwithstanding that the trial court had not addressed the second step of the TCPA analysis. See, e.g., Better Bus. Bureau of Metro. Dallas, Inc. v. BH DFW, Inc. , 402 S.W.3d 299, 304, 309 (Tex. App.—Dallas 2013, pet. denied). In other cases, we have remanded. See, e.g., Dorfman v. Proactive Inventory, Inc. , No. 05-16-01286-CV, 2017 WL 2953058, at *2 (Tex. App.—Dallas July 11, 2017, no pet.) (mem. op.). Here, I cannot see any facts or issues requiring further consideration by the trial court such that remand would be "necessary." See Brenner v. Centurion Logistics LLC ex rel. Centurion Pecos Terminal LLC , No. 05-20-00308-CV, 2020 WL 7332847, at *3 (Tex. App.—Dallas Dec. 14, 2020, no pet. h.) (mem. op.) (de novo appellate standard of review); see also, e.g., Coleman , 512 S.W.3d at 902 (reversing and remanding to this Court—not the trial court—for consideration of step two where trial court denied motion to dismiss "indicating it did not believe chapter 27 applied"). Accordingly, I would reach Winstead's second issue and address it as follows.
To the extent the majority might argue any inconsistency between our prior panel decisions exists, the former panel opinion controls under the rule of orderliness. See MobileVision Imaging Servs., L.L.C. v. LifeCare Hosps. of N. Tex., L.P. , 260 S.W.3d 561, 566 (Tex. App.—Dallas 2008, no pet.) ("We may not overrule a prior panel decision of this Court absent an intervening change in the law by the legislature, a higher court, or this Court sitting en banc."). And, of course, I have no doubt the Texas Supreme Court has the power to take up this case to resolve any inconsistencies among this Court's opinions or failures to adhere to the supreme court's prior holdings. See, e.g., Bonner , 574 S.W.3d at 898 ; Coleman , 512 S.W.3d at 900–01.
III. Moore Failed to Establish a Prima-Facie Case for His Claims.
Once a TCPA movant satisfies step one, 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. CIV. PRAC. & REM. § 27.005(c). "Clear" means unambiguous, sure, or free from doubt. S&S Emergency Training Sols., Inc. v. Elliott , 564 S.W.3d 843, 847 (Tex. 2018). "Specific" means explicit or relating to a particular named thing. Id. A prima-facie case is the minimum amount of evidence necessary to support a rational inference that a fact is true. Id.
Bare, baseless opinions do not meet the clear and specific evidence requirement. In re Lipsky , 460 S.W.3d 579, 592 (Tex. 2015) (orig. proceeding). Similarly, conclusory statements are not probative and will not suffice to establish a primafacie case. Dobrott v. Jevin, Inc. , No. 05-17-01472-CV, 2018 WL 6273411, at *6 (Tex. App.—Dallas Nov. 30, 2018, no pet.) (mem. op.).
Moore's petition alleges claims against Winstead for legal malpractice, negligent misrepresentation, and equitable indemnification. Moore alleges he retained Winstead to represent both IWH and himself personally for the securities offerings and that Winstead owed a duty of care to him "due to their 20-year ongoing attorney–client relationship" and that he justifiably relied on Winstead's representations.
A legal-malpractice claim requires evidence the defendant owes a duty to the plaintiff. See Alexander v. Turtur & Assocs., Inc. , 146 S.W.3d 113, 117 (Tex. 2004) (elements of legal-malpractice claim include plaintiff's showing "the attorney owed the plaintiff a duty"). The attorney–client relationship is a principally contractual one that arises from a lawyer's agreement to render professional services to a client. See Kiger v. Balestri , 376 S.W.3d 287, 290–91 (Tex. App.—Dallas 2012, pet. denied). We have held there must be evidence both parties intended to create an attorney–client relationship and that one party's subjective belief is insufficient to raise a question of fact. See id. at 291. Moreover, representation of a corporation does not by itself create privity—or representation—between the attorney and the corporation's officers, directors, or shareholders. See Pennington v. Fields , No. 05-17-00321-CV, 2018 WL 3989537, at *5 (Tex. App.—Dallas Aug. 21, 2018, no pet.) (mem. op.).
In the context of determining whether communications are privileged, communications with counsel made in the course of preliminary discussions with a view to employing the lawyer are privileged. See Tex. R. Evid. 503(a)(1) (evidentiary rule titled "Lawyer–Client Privilege" defining "client" as "a person ... who consults with a lawyer with a view to obtaining professional legal services from that lawyer.").
The engagement letter was addressed to Moore as "Dear Rusty" and was signed by Moore without indicating any representative capacity. However, the subject–line of the letter reads:
Engagement of Winstead PC (the "Firm") by Institute for Wealth Holdings, Inc. ("You" or "you")
The first sentence of the letter defines "Matter" to be the Firm's representation of "you in connection with (a) a private placement of a to-be-created class of preferred securities to accredited investors, and (b) a Tier II Regulation A+ offering of preferred securities." The letter also provides, "The person or party whom we represent in the Matter is limited to the person or party specifically identified above and does not include an affiliates or other persons or parties." The letter further limits the scope of Winstead's representation to the "Matter" but allows for amendment via written request and response. See Barrow-Shaver Res. Co. v. Carrizo Oil & Gas, Inc. , 590 S.W.3d 471, 483 (Tex. 2019) (parol-evidence rule bars consideration of evidence contradicting, varying, or adding to terms of unambiguous written agreement). Therefore, I would conclude the letter does not provide clear and specific evidence of an attorney–client relationship between Winstead and Moore individually and personally. See Elliott , 564 S.W.3d at 847.
Although the engagement letter allows for amendment via written request and response, no such written request or response exists in the record. Instead, Moore attempts to rely on an exchange of emails, which he attached to his affidavit and which he argues demonstrate clear and specific evidence of Winstead's personal representation of him. However, none of these emails proposes—much less requests and responds with acceptance of—a representation of Moore in his personal capacity. Instead, these emails simply discuss the role Moore has with IWH's placement agent and what actions Moore would be permitted to take in the securities offerings. Again, Moore's attempts to create a fact question to the contrary would be barred by the parol-evidence rule. See Barrow-Shaver Res. Co. , 590 S.W.3d at 483 ; see also TEX. R. EVID. 1002 (best evidence rule requires original writing to prove content).
For example, in an email dated February 13, 2018, Williams stated that "we will need to remove the paragraph re Rusty being a registered representative...." In an email dated February 14, 2018, the placement agent's CEO stated that it's "[c]lear [FINRA] do[es]n't know precisely what Rusty can or cannot do." Williams responded, "[W]hat we really need to focus on is what would [Moore] be permitted to do or not do." Williams later asked the placement agent's CEO questions about Moore's association with the placement agent in order to advise whether Moore would be permitted to be involved in selling securities in the offerings.
Moore relies on his affidavit in which he describes the twenty years of earlier representations Winstead provided to him both personally and professionally before and during the events at issue here. In that affidavit, Moore states, "No one at Winstead ever told me that I could not rely on Winstead to protect my personal legal interests in the legal work they were performing" for IWH or its related entities, and he never had separate legal representation to protect his personal interests. Additionally, Moore opines, "Because the majority of my personal net worth and life savings were invested in IWH, Winstead, and Christopher Williams knew or should have known my personal and financial interest were almost completely aligned with IWH as it related to their representation." However, I would conclude these statements amount to no more than Moore's subjective belief that Winstead owed him a professional duty and represented him personally in the 2017 and 2018 Offerings and are by no means clear and specific evidence of an attorney–client relationship between Winstead and Moore individually and personally in connection with the firm's work in this matter, particularly when viewed in light of the controlling, written terms of the engagement. See Elliott , 564 S.W.3d at 847 ; Kiger , 376 S.W.3d at 290–91.
Moore lists the following examples of personal representations:
In 2007, Winstead represented me personally in my Form A hearing in Austin before the Texas Insurance Department related to my approval as a Director of a life insurance company. Winstead also represented me personally in various arbitrations and mediations, as well as in my negotiations related to my employment agreement and individual stock options and grants with Puritan Financial Group. Other Winstead attorneys who performed legal services for me over that 20-year period, in addition to Talmage Boston, included Lori T. Oliphant, Ben Allen, Bruce Cheatham, Henry "Bud" Ehrlich, Alex Gonzales, David Knoll, Jay Madrid, Christopher J. Volkmer, and Christopher Williams, who each in their areas of specialty represented me in various capacities, both individually and with my former companies. In all these years, no one at Winstead ever told me that I needed separate representation for issues that related to me personally. Therefore, I relied on Winstead over these past 20 years to have both my personal and my companies’ best interests in mind in their provision of legal services to me.
It is also significant that none of the damages Moore alleges in his petition are related to his personal liability for noncompliance with SEC or FINRA regulations. Instead, he alleges Winstead's legal representation led to the material misstatements the SEC found in the PPM and that because of those Moore was required to resign his employment positions. Accordingly, I cannot conclude these emails support the element of legal malpractice that Winstead owes a duty to Moore personally and individually. See Alexander , 146 S.W.3d at 117.
As for Moore's claim of negligent misrepresentation, he argues in the alternative that, even if he was not a client of Winstead, Winstead nevertheless owed him a duty of care and he justifiably relied on false information Winstead provided. See Kastner v. Jenkens & Gilchrist, P.C. , 231 S.W.3d 571, 577 (Tex. App.—Dallas 2007, no pet.) (elements of negligent misrepresentation include proof plaintiff justifiably relied on false information supplied by defendant). Of course, the "false information" Moore alleges is that Winstead "had met its legal standard of care in preparing said Memoranda and Opinion Letter." Moore contends that an email from Williams stating he did not have a copy of the final PPM demonstrated Winstead failed to review the final version of the PPM before it was sent to the SEC. However, what that email actually states is, "if someone can send us a final copy of the PPM which is going to be sent to the SEC , we would appreciate it." (Emphasis added). Thus, that email is neither "clear" nor "specific" evidence that Winstead failed to meet its legal standard of care to anyone, much less Moore. Nor does the remaining record contain any clear and specific evidence that Winstead did not meet its legal standard of care. Accordingly, I would sustain Winstead's second issue.
Moore's equitable-indemnification claim is derivative of his other two claims, seeking "equitable indemnification from Winstead for any losses he may incur from future lawsuits as a result of Winstead's breach of its duty to Plaintiff." See Equitable Recovery, L.P. v. Heath Ins. Brokers of Tex., L.P. , 235 S.W.3d 376, 387 (Tex. App.—Dallas 2007, pet. dism'd) ; cf. Gunn v. McCoy , 554 S.W.3d 645, 677–78 (Tex. 2018). Thus his failure to satisfy his burden as to those two claims necessarily means he cannot meet his burden as to his claim for equitable indemnification. See Equitable Recovery , 235 S.W.3d at 387.
Because I would conclude Moore did not meet his burden to produce clear and specific evidence sufficient to establish a prima-facie case regarding his legal-malpractice and negligent-misrepresentation claims, I do not address Winstead's third issue in which it argues it established the affirmative defense of attorney immunity. See TEX. R. APP. P. 47.1.
CONCLUSION
Because I cannot join the majority's judgment affirming the trial court's judgment as to Moore's negligent-misrepresentation claim and remanding his legal-malpractice and equitable-indemnification claims to the trial court for further consideration of a legal conclusion we would review de novo on appeal, I dissent.
CONCURRING OPINION TO DENIAL OF EN BANC CONSIDERATION
Opinion by Justice Schenck
I concur in the Court's decision to deny en banc consideration of this case. I write separately not to address the merits but to address the procedures surrounding this case. Specifically, and once again, I am compelled to write because the delay in the parties’ hearing from the Court and of the attempted change in the result between the parties at the panel reflects knowing and persistent departure from the governing rules and gives rise to a palpable due process problem. The panel opinion was prepared some months ago. As I have detailed elsewhere,1 the rules of appellate procedure require cases to be assigned to panels for decision and judgment to be handed down "promptly after submission," except in those extraordinarily rare circumstances where the Court has determined to convene for en banc consideration at the outset. See TEX. R. APP. P. 41.1, 43.1. However, despite rule 41.1 and despite this Court's internal operating procedures, several justices who were not on the panel recorded votes to delay release of the opinion to the parties as the opinion circulated to the full Court in late March. As no immediate timing urgency appeared to present itself and the issue of whether any such vote could ever be appropriate was already a vigorous point of controversy in another pending en banc proceeding, the panel majority conferred and elected to hold the panel opinion in order to avoid further inflaming the procedural controversy and in recognition of the non-panel members’ two-week study votes.
Where a case is assigned to the panel for decision, the Court "must render a judgment in accordance with the panel's opinion," id. , and the opinion should be made known to the parties and be available to the public. Tex. R. App. P. 47.3. The supreme court affirmed the right of any nonpanel justice to write a dissent from the full court's decision not to consider the case en banc —and the obligation of the appellate court to release that dissenting opinion—but made no suggestion contrary to the plain language of rule 41.1 that a single justice or justices of the Court could belay release of the panel opinion to the parties or the public. See O'Connor v. First Court of Appeals , 837 S.W.2d 94, 96 (Tex. 1992).
Amy Bresnen, Lisa Kaufman & Steve Bresnen, Targeting the Texas Citizen Participation Act: The 2019 Texas Legislature's Amendments to a Most Consequential Law , 52 St. Mary's L.J. 53, 55 (2020).
No rule (or internal operating procedure of this Court) could provide otherwise under the plain language of rule 41.1 ’s mandate that "except as otherwise provided in these rules (i.e., the appellate rules themselves), the "court must render a judgment in accordance with the panel opinion." See also Tex. R. App. P. 1.2 (permitting local rules only where consistent with rules of appellate procedure and pre-approved by supreme court).
We raised this question in Snell v. Ellis , No. 05-20-00642-CV, 2021 WL 1248276, at *6–7 (Tex. App.—Dallas Apr. 5, 2021, no pet.) (mem. op.) but did not decide it because the parties had not addressed it. See id. at *6. We also restated the question in another way: "[F]or section 27.005(b) purposes, to whom are we to attribute a communication made by an agent on behalf of a principal, when the agent (as TCPA movant) seeks to dismiss the principal's claims against [the agent]?" See id. at *6 n.15. Here, we restate the question in a third, and simpler way: For section 27.005(b) purposes, to whom does a communication belong when made in a representative capacity? Unlike in Snell , the parties have directly addressed the latter question in their briefing. The panel opinion purportedly answers the question—stating the communications here were Winstead's "because a lawyer's statements on behalf of a client are the lawyer's communications for TCPA purposes"—but the opinion lacks any analysis for this and instead includes only a string cite of cases that, in most instances, do not address the question at all.
What the panel members did not know, and what one of the delaying non-panel justices did not share, was that he was separately authoring and would, on April 5, 2021, release without prior circulation to the full Court or this panel, a memorandum opinion in another case, involving the same statute but not the same legal arguments. The opinion in the other case was released with dicta coinciding with the issues actually raised in this case and so conspicuous in its presence as to cause neutral observers of the Court to comment on its presence. As civil memorandum opinions are controlling precedent, TEX. R. APP. P. 47.7(b), the author of that opinion (one of the justices interceding to delay release of the opinion in this case) then asserted that the result between the parties in this case should be changed in accordance with his later unpublished decision as ostensibly a "prior" panel holding.
See 600Commerce.com, Publicity Agent? , April 20, 2021.
See Snell , 2021 WL 1248276, at *7 n.18.
To be sure, every member of the Court has the right to request reconsideration en banc of any panel decision and to write any opinion he or she deems appropriate in connection with that process. TEX. R. APP. P. 49. However, nothing in the Texas Rules of Appellate Procedure—or, for that matter, this Court's internal operating procedures regarding civil cases—purports to authorize a justice outside the panel to delay the release of a panel decision pending his assent and efforts to secure reconsideration, much less to create the very circumstances purporting to require the reconsideration and a resulting change in outcome between the litigants in that other case.
Departing from the rules and our internal procedures deprives the litigants of their right to a decision and judgment in accordance with them, and hence, literally due process. Much worse, however, than the delay that such a process entails, is the obvious constitutional concerns it creates, particularly where the delay can be seen as an effort to force a change in the result of the panel on which the Justice was not assigned. Such efforts to obstruct the precedential effect of a panel decision, regardless of whether the Court as a whole would even agree to convene en banc , much less agree to the new result, may also be seen as an attempt to benefit a subsequent litigant or litigants, whether intended or not. If the votes for a change in the Court's precedent exist among the en banc court, then its decision will eventually provide and so control as between the litigants before us and in the future.
As I have detailed elsewhere, the parties are entitled to be heard in accordance with the law, including the rules of appellate procedure and our internal operating procedures as authorized by law. See In re Yates , 960 S.W.2d 652 (Tex. 1997) ; Steward Health v. Saidara, 633 S.W.3d at ––––, 2021 WL 3707995 (Schenck, J., concurring).
In Moore's response to Winstead's TCPA motion, Moore noted, "The amended statute ... deletes the phrase ‘relates to,’ which previously appeared in § 27.005(b)." At the hearing on Winstead's TCPA motion, Winstead's counsel stated, "[The TCPA] used to say ‘based on, related to, or in response to" or words to that effect. And now [the legislature has] taken out the ‘related to’ which makes it a little bit narrower."
This is an accelerated appeal. The notice of appeal was filed January 9, 2020. While this case suffers from a less extensive delay and fewer obstructive irregularities than those involved in Steward Health , both give rise to the appearance that the results between parties are not the subject of impartial application of the rule of law.
As TCPA proceedings go, the pertinent record is not voluminous. Winstead's TCPA evidence totals thirteen pages and consists of a five-page declaration by the lawyer in charge of Winstead's representation on this matter, along with two exhibits: an engagement letter with attachments, and the Opinion Letter referred to herein. Moore's TCPA evidence includes two affidavits and eleven exhibits; in addition to other items, each affidavit also attached U-5 forms and the SEC Examination Letter, both of which are mentioned in the panel opinion, and the latter of which is discussed herein.
Withholding release of the panel opinion in the interim deprives the parties of their right to a timely decision (despite TEX. R. APP. P. 12.6, 47.3 ) in all and especially accelerated appeals such as this and creates more ominous prospects of potentially manipulating the result at the panel despite the lack of support from a majority of the Court. Moreover, delaying release of the panel opinion deprives the parties, our constituents, and the public of knowing what the correct rule of law is going forward. See TEX. R. APP. P. 47.3.
This case now presents a question that should never have to be asked: whether a decided, circulated, and unreleased panel decision is not a prior panel precedent under the rule of orderliness. See MobileVision Imaging Servs., L.L.C. v. LifeCare Hosps. of N. Tex., L.P. , 260 S.W.3d 561, 566 (Tex. App.—Dallas 2008, no pet.). While the answer will presumably have to await the next case to confront that question, I will note a negative answer would strain the notion of what a "prior" decision might mean and would incentivize mischief. The more obvious problem is why (and especially how) such a question would ever arise in a tribunal that is impartial as between the contestants and the subject matter. See Caperton v. A.T. Massey Coal , 556 U.S. 868, 129 S.Ct. 2252, 173 L.Ed.2d 1208 (2009) ; Rymer v. Lewis , 206 S.W.3d 732, 736 (Tex. App.—Dallas 2006, no pet.). As Texas judges are subject to a self-directed, mandatory obligation not even to sit in cases where they cannot resist actions favoring a particular outcome relative to either the parties or the subject matter, one would think the issue would not arise. TEX. R. CIV. P. 18b(2). That this issue arises in this case after and, indeed, in the midst of another en banc controversy surrounding similar delay and panel obstruction is disheartening. While the Court's majority declined to join in this particular effort to reverse the outcome of the panel, we are still left with the question of whether the interceding, memorandum opinion dicta will be said to speak for the Court despite the circumstances. My writing here is not a matter of preference or even choice. As detailed elsewhere, the Court has confronted, and continues to confront, persistent challenges in its processes that permeate the results of its proceedings here and in other cases, requiring appropriate action. Changes to our governing procedures are overdue, as is the need to take appropriate action where we deviate from those rules more generally. These actions and changes are necessary to uphold and enforce the due process rights of every party appearing before us, "so that no doubts or suspicions exist as to the fairness or the integrity of the court." See Rymer , 206 S.W.3d at 736.
DISSENTING OPINION FROM DENIAL OF EN BANC CONSIDERATION
Opinion by Justice Molberg
I. INTRODUCTION
This is an ordinary legal malpractice case—the type you see in countless courthouses across Texas on any given day. It becomes distinctive here, however, because the panel's opinion (1) disregards in wholesale fashion long-settled rules and conventions of construction that inform and govern our interpretation of the TCPA,1 and (2) reaches the wrong result when answering the critical question of when an attorney-agent may move for dismissal under the TCPA based on communications made on behalf of the client-principal when the client sues the lawyer for professional negligence.
At a higher level, the consequences of the panel opinion are broad and apparent. First, the opinion effectively circumvents, if not eviscerates, significant parts of the legislature's 2019 amendments to the TCPA, which had the avowed purpose of narrowing the Act's "seemingly boundless application."2 Second, the opinion provides a wide avenue for lawyers to use the TCPA against their clients in any typical legal negligence case where a lawyer's communications (including non-communications, apparently) and actions (including inactions, apparently) on behalf of the client are committed to a writing that is later filed with a court or other agency of government. The opinion answers "yes" to the question whether the attorney-agent may move for dismissal under the TCPA based on communications made on behalf of the client-principal.3 In doing so, it eschews analysis of the unsettling tension this creates with long-standing legal principles that say "no" in other contexts.4
I requested en banc consideration of this case for many of the reasons discussed herein, but a majority of the Court voted to deny my request. Because the panel opinion conflicts with our prior expressions by disregarding long-standing legal principles and rules of construction relating to the TCPA, and avoids meaningful analysis of, and provides the wrong answer to, the fundamental question regarding communications made in a representative capacity, I dissent from the Court's refusal to consider this case en banc.
II. BACKGROUND
Winstead PC filed a TCPA motion to dismiss Dewey M. Moore, Jr.’s negligent misrepresentation, legal malpractice, and equitable indemnification claims on the grounds that Moore's claims "relate to" and are "based on" Winstead's exercise of its right to petition as defined in the TCPA. Despite Winstead's use of the term "relate to" in its motion, Winstead later agreed the 2019 amendments removed that phrase as a consideration for, and narrowed, TCPA coverage,5 but disagreed about whether the TCPA nevertheless applied to Moore's claims because they were based on Winstead's right to petition. Appropriately, the trial court found that Moore's claims were not based on Winstead's right to petition and denied the TCPA motion.
Winstead appealed and raises three issues, the first of which involves TCPA coverage, the only issue reached by the panel. While the parties have never drawn any distinctions between Moore's three claims in their arguments on TCPA coverage, the panel has done so, affirming the trial court's order as to Moore's negligent misrepresentation claim, reversing it as to Moore's legal malpractice and equitable indemnification claims, and remanding the case to the trial court.
Winstead is a law firm that, according to Moore, has represented him in an ongoing attorney–client relationship in various legal matters, both personal and corporate, for nearly twenty years. As the panel opinion notes, in this case, Winstead was hired to assist with various corporate securities matters. Specifically, Winstead was hired "in connection with (a) a private placement of a to-be-created class of preferred securities to accredited investors, and (b) a Tier II Regulation A+ offering of preferred securities."
Certain other information from the record is also worth noting, some of which is not evident from the panel opinion.6 First, and most importantly, the gravamen of Moore's entire lawsuit is Winstead's failure to act or communicate, namely its failure to perform due diligence before it completed and filed the documents with the SEC. Moore alleges this failure harmed him, and he seeks damages and equitable relief as a result. Moore claims "Winstead failed to competently perform the due diligence and other legal work necessary to ensure that the 2017 Reg D Offering, the 2018 Reg A Offering, and the Opinion Letter were in full compliance with applicable SEC and other laws and regulations."
Within his individual claims, Moore generally alleges the following: Winstead "breached its duty of care to [Moore] by failing to exercise due diligence and provide the appropriate standard of care in preparing the 2017 Reg D Offering and the 2018 Reg A Offering Memoranda and Opinion Letter" (legal malpractice claim); Winstead made misrepresentations to him that the firm had met its legal standard of care in preparing that information (alternative negligent misrepresentation claim); and because Winstead's breach of its duty of care in the preparation of that information may subject him to future liability, Moore seeks equitable indemnification from Winstead for losses he may incur from future lawsuits as a result of Winstead's breach, if he is sued in his corporate capacities (equitable indemnification claim).
Second, two of those three documents, the 2017 Reg D Offering and the 2018 Reg A Offering, are not in the record, leaving us to guess as to their specific contents.
Third, the SEC Examination Letter is a fifty-page document that, by all accounts, appears to be one of the most important documents in the case. Moore attached the SEC Examination Letter to his pleading and to the affidavits submitted in connection with his TCPA response, and the parties appear to agree that it is the source from which all of Moore's damages flow. The letter concerns more than simply the 2017 Reg D Offering, 2018 Reg A Offering, or Opinion Letter, though that is difficult to tell from the panel opinion.
According to Moore's affidavit, the SEC Examination Letter evidences deficiencies that "are a direct result of Winstead's failure to fulfill its duty of care and to perform due diligence in connection with its legal representation."
This is reflected in even the single paragraph from which the panel quotes. That paragraph states:
The three capital-raising rounds for IWH securities were presented through an Investor Presentation, dated August 2016 ... (the ‘2016 Notes Offering’) ... (the ‘2017 Reg. D Offering’); and an Offering Circular, dated February 28, 2018, for ... the ‘2018 Reg. A Offering’) (collectively, the ‘Offering Memoranda’). The examination disclosed that the Offering Memoranda contained material misstatements with respect to IWH, the Advisers, and their leadership, including exaggerated, inaccurate, and misleading statements to the potential investors to whom materials were provided.
Fourth, although the panel opinion ignores this, in the trial court, Winstead repeatedly identified the SEC Examination Letter as the single most important item upon which Moore's claims are based. To use Winstead's characterization of and emphasis regarding Moore's claims to the trial court:
[A]ll of [Moore's] claims of liability and cause-in-fact are directly ‘based on or in response to’ the SEC Exam Report—specifically the SEC's criticisms of IWH's offering statements contained in that Report.... The vast majority of the SEC's offering statement criticisms are leveled against the Reg A offering statement.... All of [Moore's] claims are therefore ‘based on or in response to’ TCPA-covered communications in connection with the Reg A offering memoranda.
If this were not enough, in its motion for reconsideration in the trial court, Winstead also stated, "All of [Moore's] alleged injuries flow from the SEC Exam Report." In the same filing, Winstead characterized the "cornerstone" of Moore's complaint as follows:
In short, the cornerstone of [Moore's] complaint is the SEC Exam Report and, specifically, the SEC's complaints about ‘material misstatements’ in the Offering Statements.
Significantly here, the SEC Examination Letter is neither Winstead's nor Moore's communication. It is the SEC's communication.
Fifth, on appeal, Winstead—apparently recognizing that it had inadvertently and fatally based its TCPA challenge on communications that were the SEC's and not Winstead's—appears to have shifted its position, arguing in its latest reply brief in this Court that "Moore's claim is ‘based on’ the Offering Statements." Notably, in the trial court, Winstead characterized the Offering Statements as communications by IWH, not Winstead. Winstead also now claims, without citation or apparent support in the record, that "Moore contends that the Offering Statements are a cause-in-fact of his alleged damages" and his "legal action is therefore ‘based on’ Winstead's communications ‘in connection with an issue under consideration or review by a ... governmental body.’ "
In the declaration accompanying its TCPA motion, Winstead's lawyer in charge of the IWH representation stated, "The alleged offering statement misstatements cited in the Exam Report pertain to information provided entirely by IWH or by affiliates [and] relate to factual and financial matters that were exclusively within IWH's knowledge." Remarkably, on the same day it filed its TCPA motion, Winstead filed a rule 91a motion to dismiss Moore's claims, characterizing the offering statements as follows:
The Reg D and Reg A Offering Statements were not representations by Winstead, but were issued by IWH (if at all). Other than the Opinion Letter ... the Offering Statements do not contain any opinion or evaluation by Winstead. Any representations made in the Offering Statements were (a) made by IWH, not Winstead , and (b) were based on information supplied by IWH, not Winstead. [Moore] cannot blame Winstead for inaccurate representations in the Offering Statements when IWH, by and through its officers like [Moore], was the source of that information. [Emphasis added.]
In a mere few sentences, the panel adopts, then agrees with Winstead's new argument, re-characterizes Moore's claims, inherently admits that Winstead's filing of documents with the SEC is at best only "related to" Moore's claims, and, despite this, concludes, in ipse dixit fashion, as follows:
Thus, Moore alleges that Winstead negligently prepared three securities documents submitted to the SEC, which caused the SEC to issue the Examination Letter, which in turn caused financial injury to him. This suffices to demonstrate that Moore's legal malpractice claim is based on the three securities documents and thus on Winstead's exercise of its right to petition.
Although Winstead's alleged negligence may also involve some failures to act or communicate, ... Moore's petition plainly says that Winstead's actionable negligence included negligence in preparing the three securities documents. We cannot see how Moore could prove his legal-malpractice claim as pleaded without proving up Winstead's preparation of the documents that allegedly triggered the SEC Examination Letter and caused Moore's damages.
III. APPLICABLE STANDARDS
As an anti-SLAPP statute, the TCPA "protects citizens who petition or speak on matters of public concern from retaliatory lawsuits that seek to intimidate or silence them." In re Lipsky , 460 S.W.3d 579, 584 (Tex. 2015) (orig. proceeding). The TCPA has a dual purpose: "to encourage and safeguard the constitutional rights of persons to petition, speak freely, associate freely, and otherwise participate in government to the maximum extent permitted by law and, at the same time, protect the rights of a person to file meritorious lawsuits for demonstrable injury." TEX. CIV. PRAC. & REM. CODE § 27.002 ; see Youngkin v. Hines , 546 S.W.3d 675, 680 (Tex. 2018) (TCPA is intended to safeguard the constitutional rights of speech, petition, and association "without foreclosing the ability to bring meritorious lawsuits").
The TCPA is an anti-SLAPP statute. "SLAPP" is an acronym for "Strategic Lawsuits Against Public Participation." Krasnicki v. Tactical Entm't, LLC , 583 S.W.3d 279, 282 (Tex. App.—Dallas 2019, pet. denied).
We must construe a statute's individual words and provisions in the context of the statute as a whole. Youngkin , 546 S.W.3d at 680 (citing El Paso Healthcare Sys. v. Murphy , 518 S.W.3d 412, 418 (Tex. 2017) ; Black v. Am. Bankers Ins. Co. , 478 S.W.2d 434, 437 (Tex. 1972) ; Lufkin v. City of Galveston , 63 Tex. 437, 439 (1885) ).
As a matter of statutory construction, we review de novo a trial court's ruling on a TCPA motion to dismiss. Creative Oil & Gas, LLC v. Lona Hills Ranch, LLC , 591 S.W.3d 127, 132 (Tex. 2019) ; Goldberg v. EMR (USA Holdings) Inc. , 594 S.W.3d 818, 827 (Tex. App.—Dallas 2020, pet. denied) (op. on reh'g) (citing Youngkin , 546 S.W.3d at 680 ).
Our review of a TCPA ruling generally involves three steps. At step one, the TCPA movant has the burden to demonstrate the legal action is based on or is in response to the party's exercise of the right of association, right of free speech, or the right to petition. See TEX. CIV. PRAC. & REM. CODE §§ 27.003(a), 27.005(b) ; Creative Oil , 591 S.W.3d at 132 (citing prior version of section 27.005(b) ). Here, Winstead relies solely on the right of petition to sustain its motion.
Section 27.003(a) states: "If a legal action is based on or is in response to a party's exercise of the right of free speech, right to petition, or right of association or arises from any act of that party in furtherance of the party's communication or conduct described by Section 27.010(b), that party may file a motion to dismiss the legal action. A party under this section does not include a government entity, agency, or an official or employee acting in an official capacity." See Tex. Civ. Prac. & Rem. Code § 27.003(a).
Section 27.005(b) states: "Except as provided by Subsection (c), on the motion of a party under Section 27.003, a court shall dismiss a legal action against the moving party if the moving party demonstrates that the legal action is based on or is in response to: (1) the party's exercise of (A) the right of free speech; (B) the right to petition; or (C) the right of association; or (2) the act of a party described by Section 27.010(b)." Tex. Civ. Prac. & Rem. Code § 27.005(b).
The 2019 amendments to the TCPA require the movant to show a "communication" is involved when the motion is based on the right of freedom of speech or the right to petition. See Tex. Civ. Prac. & Rem. Code § 27.001(3), (4). While this is not expressly true with the right of association, the 2019 amendment re-defining "right of association" nevertheless narrowed the scope of associational rights subject to TCPA coverage. See Bresnen, et al., 52 St. Mary's L.J. at 66–71 ; Tex. Civ. Prac. & Rem. Code § 27.001(2).
If the movant meets this burden, the analysis proceeds to step two, where the burden of proof shifts to the nonmovant to establish by clear and specific evidence a prima facie case for each essential element of the claim. See TEX. CIV. PRAC. & REM. CODE § 27.005(c) ; Creative Oil , 591 S.W.3d at 132 (citing prior version of section 27.005(c) ). If the nonmovant satisfies its burden at step two, the analysis proceeds to step three, where the burden of proof shifts back to the movant to establish an affirmative defense or other grounds on which the moving party is entitled to judgment as a matter of law, resulting in dismissal if the movant does so. See TEX. CIV. PRAC. & REM. CODE § 27.005(d) ; Creative Oil , 591 S.W.3d at 132 (citing prior version of section 27.005(d) ).
A "prima face case" is " ‘the minimum quantum of evidence necessary to support a rational inference that the allegation of fact is true.’ " Lipsky , 460 S.W.3d at 590 (quoting In re E.I. DuPont de Nemours & Co. , 136 S.W.3d 218, 223 (Tex. 2004) (per curiam) ). Lipsky notes that "clear" and "specific" in the TCPA context "have been interpreted respectively to mean, for the former, ‘unambiguous,’ ‘sure,’ or ‘free from doubt’ and, for the latter, ‘explicit’ or ‘relating to a particular named thing.’ " Id. (quoting KTRK Television v. Robinson , 409 S.W.3d 682, 689 (Tex. App.—Houston [1st Dist.] 2013, pet. denied) ). Thus, the term "clear and specific" pertains to the quality of evidence required to establish a prima facie case, and the term "prima facie case" pertains to the amount of evidence necessary for a plaintiff to carry his minimal factual burden to support a rational inference establishing each essential element of a claim. Grant v. Pivot Tech. Sols., Ltd. , 556 S.W.3d 865, 882 (Tex. App.—Austin 2018, pet. denied).
Following the 2019 amendments to the Act, a legal action that "relates to" the exercise of a movant's right of free speech, right to petition, or right of association is insufficient to establish TCPA coverage. Instead, the legal action must be "based on" or "in response to" the exercise of such a right. TEX. CIV. PRAC. & REM. CODE § 27.005(b). In other words, a direct and substantial relationship is required. Thus, we must look to the gravamen of the dispute in determining TCPA applicability. See Locke Lord LLP v. Retractable Tech., Inc. , No. 05-20-00884-CV, 2021 WL 1540652, at *4 (Tex. App.—Dallas Apr. 20, 2021, no pet.) (mem. op.) ("Here, although there may be speech related to a matter of political, social, or other interest to the community or a subject of concern to the public, none has to do with the gravamen of the dispute."); Jordan v. JP Bent Tree LP , No. 05-19-01263-CV, 2020 WL 6128230, at *6 (Tex. App.—Dallas Oct. 19, 2020, pet. denied) ("[A] nonmovant's reference to a judicial proceeding in a petition does not necessarily establish that a movant has engaged in any communication constituting an exercise of a right to petition under section 27.001(4) or that the nonmovant's claims are based on such communication.")
In conducting our review, we treat the nonmovant's pleadings as generally "the best and all-sufficient evidence of the nature of the action." Hersh v. Tatum , 526 S.W.3d 462, 467 (Tex. 2017) ; see Locke Lord , 2021 WL 1540652, at *4 (citing Hersh , 526 S.W.3d at 467 ); Reed v. Centurion Terminals, LLC , No. 05-18-01171-CV, 2019 WL 2865281, at *3 (Tex. App.—Dallas July 3, 2019, pet. denied) (mem. op.) (same). We consider, in the light most favorable to the nonmovant, the pleadings, evidence a court could consider under civil procedure rule 166a, and any supporting and opposing affidavits stating the facts on which the liability or defense is based. See TEX. CIV. PRAC. & REM. CODE § 27.006(a) ; Reed , 2019 WL 2865281, at *3–4 (citation omitted); Riggs & Ray, P.C. v. State Fair of Tex. , No. 05-17-00973-CV, 2019 WL 4200009, at *4 (Tex. App.—Dallas Sept. 5, 2019, pet. denied) (mem. op.); Dyer v. Medoc Health Servs., LLC , 573 S.W.3d 418, 424 (Tex. App.—Dallas 2019, pet. denied) (citing, in part, the prior version of § 27.006(a) ) (other citation omitted). We also favor the conclusion that the nonmovant's claims are not predicated on protected expression. Damonte v. Hallmark Fin. Servs., Inc. , No. 05-18-00874-CV, 2019 WL 3059884, at *5 (Tex. App.—Dallas July 12, 2019, no pet.) (mem. op.); Reed , 2019 WL 2865281, at *4 (citing Sloat v. Rathbun , 513 S.W.3d 500, 504 (Tex. App.—Austin 2015, pet. dism'd) ). In other words, "[w]e cannot ‘blindly accept’ attempts by the movant to characterize the claims as implicating protected expression." Damonte , 2019 WL 3059884, at *5 (citing Sloat , 513 S.W.3d at 504 ).
See Tex. R. Civ. P. 166a.
We have previously concluded that the TCPA does not apply to a failure to communicate or to inactions or omissions by the movant. See Snell , 2021 WL 1248276, at *6 ; White Nile Software, Inc. v. Carrington, Coleman, Sloman & Blumenthal, LLP , No. 05-19-00780-CV, 2020 WL 5104966, at *5 (Tex. App.—Dallas Aug. 31, 2020, pet. denied) (mem. op.); Krasnicki , 583 S.W.3d at 284.
Relatedly, but importantly, we have concluded that a TCPA movant generally may not rely on communications of another when claiming TCPA coverage. Shields v. Shields , No. 05-18-01539-CV, 2019 WL 4071997, at *4–5 (Tex. App.—Dallas Aug. 29, 2019, pet. denied) (mem. op.).
We have also determined that "when the pleadings, evidence, and parties’ arguments are based on a mix of protected and unprotected activity, and they do not distinguish between the two, a defendant–movant's motion to dismiss under the TCPA should be denied." White Nile Software , 2020 WL 5104966, at *5 (rejecting right-of-petition and association-based TCPA claim in case involving legal malpractice and other causes of action); accord Weller v. MonoCoque Diversified Interests, LLC , No. 03-19-00127-CV, 2020 WL 3582885, at *4 (Tex. App.—Austin July 1, 2020, no pet.) (mem. op.); Beving v. Beadles , 563 S.W.3d 399, 409 (Tex. App.—Fort Worth 2018, pet. denied).
We ascertain and give effect to the legislature's intent as expressed in the language of the statute, considering the specific statutory language at issue and the TCPA as a whole, and we construe the statute's words "according to their plain and common meaning, unless a contrary intention is apparent from the context or unless such a construction leads to absurd results." Youngkin , 546 S.W.3d at 680 (quoting City of Rockwall v. Hughes , 246 S.W.3d 621, 625–26 (Tex. 2008) ); see Dyer , 573 S.W.3d at 424–25.
We may not "judicially amend the TCPA by adding words that are not contained in the language of the statute" because "the statute's text is the alpha and omega of the interpretive process." In re Panchakarla , 602 S.W.3d 536, 540–41 (Tex. 2020) (cleaned up).
See Jack Metzler, Cleaning Up Quotations , 18 J. App. Prac. & Process 143 (2017), available at https://lawrepository.ualr.edu/appellatepracticeprocess/vol18/iss2/3 (discussing and explaining the "cleaned up" parenthetical, a way to shorten unnecessarily lengthy citations).
IV. DISCUSSION
(A)
Despite paying reflexive homage to few accepted rules of construction that govern our analysis in any TCPA applicability dispute, the panel readily jettisons those rules in reaching its conclusion with respect to Moore's negligence and equitable indemnification claims.
Even though Winstead has always treated Moore's claims as being unified, the panel reaches two different conclusions on Moore's claims in its step-one analysis, deciding that Winstead demonstrated that Moore's legal malpractice and equitable indemnification claims are based on Winstead's exercise of its right to petition but failed to demonstrate that Moore's negligent misrepresentation claims are so based. A fair reading of Moore's pleading, however, shows little light, if any, between the facts alleged to support all three claims. That the parties considered this to be the case is evident in the briefing that did not parse the facts on a claim-by-claim basis. In such a circumstance, the motion was properly denied in its entirety by the trial court. See White Nile Software , 2020 WL 5104966, at *5 ; Weller , 2020 WL 3582885, at *4 ; Beving , 563 S.W.3d at 409.
Next, the panel opinion concludes that Moore's legal malpractice and equitable indemnification claims are based on Winstead's right to petition, even though the gravamen of Moore's complaint is Winstead's failure to act or communicate, namely, its failure to perform due diligence in the time leading up to the filing with the SEC. The panel's conclusion contravenes our prior cases and contradicts our prior expressions that the TCPA does not apply to a failure to communicate or to inactions or omissions by the movant. See Snell , 2021 WL 1248276, at *6 ; White Nile Software , 2020 WL 5104966, at *5 ; Krasnicki , 583 S.W.3d at 284.
At the same time, the panel opinion disregards the admonition that we must look to the non-movant's pleadings as the best indicator of the basis of the movant's claims, see Locke Lord LLP , 2021 WL 1540652, at *4 ; Reed , 2019 WL 2865281, at *3 ; Hersh , 526 S.W.3d at 467, and improperly characterizes those claims in contravention of our holdings in various cases, including Thomas v. BioTE Med. LLC , No. 05-19-00163-CV, 2020 WL 948087, at *3 (Tex. App.—Dallas Feb. 26, 2020, no pet.) (mem. op.), Damonte , 2019 WL 3059884, at *5, and others. Here, Moore's pleadings demonstrate that he is complaining of omissions and failures by Winstead that occurred and were complete before anything was ever filed with the SEC, and as such, Moore's claims are not based on or in response to any exercise of a right to petition but instead on conduct that preceded it. In other words, the panel's conclusion contradicts our prior expression in Locke Lord LLP , 2021 WL 1540652, at *2–3, where we rejected a movant's TCPA right-to-petition argument in a legal malpractice and breach of fiduciary duty case in part because "the complained-of statements ... were made prior to the filing."
The panel's error is compounded by its failure to acknowledge Winstead's concession in the trial court that "all of [Moore's] claims ... are directly ‘based on or in response to’ the SEC Exam Report," which constitutes an admission that Winstead's motion to dismiss Moore's claims is not based upon its own communications, but those of the SEC. As a result, the panel necessarily disregards our precedent that communications of a non-movant, like the SEC, may not form the basis of a movant's TCPA motion to dismiss. See Shields , 2019 WL 4071997, at *4–5 ; Encore Enters., Inc. v. Shetty , No. 05-18-00511-CV, 2019 WL 1894316, at *3 (Tex. App.—Dallas Apr. 29, 2019, pet denied) (mem. op.).
At best, Moore's claims merely "relate to" Winstead's claimed right of petition. Under the amended TCPA, that is not good enough.
Only by ignoring and mischaracterizing Moore's pleaded claims and ignoring countless rules of interpretation is the panel able to reach its erroneous result, and only then by implicitly resurrecting the legislatively discarded "relates to" language of a now-dead provision of the prior Act. (B)
See Tex. Civ. Prac. & Rem. Code §§ 27.003(a), 27.005(b). As a result of the amendments that became effective September 1, 2019, those sections require a movant to show a nonmovant's legal action is "based on or in response to" certain TCPA-protected activity, while the earlier versions of those sections required a movant to show a nonmovant's a legal action is "based on, relates to, or is in response to" certain TCPA-protected activity. See Act of May 17, 2019, 86th Leg., R.S., ch. 378, §§ 2–3, 2019 Tex. Sess. Law Serv. 684, 685 (noting changes in those sections); see also Black v. Woodrick , 2021 WL 1113149, at *2 (Tex. App.—Amarillo Mar. 23, 2021, no pet.) (mem. op.) ("The TCPA was amended effective September 1, 2019, to narrow its application."); Smith v. Arrington , No. 07-19-00393-CV, 2021 WL 476339, at *3 (Tex. App.—Amarillo Feb. 9, 2021, no pet.) (mem. op.) ("the TCPA was amended ... to narrow its application").
Finally, the panel opinion avoids any analysis of the fundamental question raised in Snell —a question that can be expressed in any number of ways, as discussed earlier in this opinion. In Snell , one way we expressed the question was: When a principal brings claims against an agent, may the agent move for dismissal under the TCPA based on communications the agent made on behalf of the principal?
In their briefing, the parties addressed the question of whether the three securities documents are to be attributed to Winstead or others. Although two of those three documents are not even in the record (thus leaving us guessing as to their contents), the panel concludes that they are communications as defined in the TCPA and that the communications are Winstead's. The panel opinion states:
Obviously, as noted above, the SEC Examination Letter is the SEC's communication, not Winstead's or Moore's.
The TCPA defines "communication" as including "the making or submitting of a statement or document in any form or medium, including oral, visual, written, audiovisual, or electronic." Id. § 27.001(1).
Thus, under the TCPA, the three securities documents that Winstead prepared were "communications." See id. And they were Winstead's communications, because a lawyer's statements on behalf of a client are the lawyer's communications for TCPA purposes. See Youngkin v. Hines , 546 S.W.3d 675, 680–81 (Tex. 2018)[ ] (involving lawyer's dictation of settlement agreement into the record during trial); Brenner v. Centurion Logistics LLC , No. 05-20-00308-CV, 2020 WL 7332847, at *5–7 (Tex. App.—Dallas Dec. 14, 2020, no pet. h.) (mem. op.)[ ] (lawyer allegedly represented client's adversaries in litigation); see also Winstead PC v. USA Lending Grp., Inc. , No. 12-20-00172-CV, 2021 WL 1047208, at *3 (Tex. App.—Tyler Mar. 18, 2021, no pet. h.) (mem. op.) (motion for default judgment); Jetall Cos., Inc. v. Johanson , No. 01-19-00305-CV, 2020 WL 6435778, at *4 (Tex. App.—Houston [1st Dist.] Nov. 3, 2020, no pet.) (mem. op.) (settlement communications during pending lawsuit); Brown Sims, P.C. v. L.W. Matteson, Inc. , 594 S.W.3d 573, 578–79 (Tex. App.—San Antonio 2019, no pet.)[ ]
We rejected this interpretation of Youngkin in Snell , noting Youngkin "involve[d] tort claims brought by a nonclient against an attorney, based in part on statements the attorney made in open court on behalf of his clients." Snell , 2021 WL 1248276, at *8 (quoting Youngkin , 546 S.W.3d at 679 ).
Brenner was a fiduciary duty case with doubtful application here, as the lawyer's communications at issue were not made on behalf of the client but on behalf of another and against the client's interests. See Brenner , 2020 WL 7332847, at *5–7. No petition for review has been filed.
Winstead and the panel's reliance on Brown Sims, P.C. v. L.W. Matteson, Inc. , 594 S.W.3d 573, 578–79 (Tex. App.—San Antonio 2019, no pet.) is misplaced. That case appears to have turned on the "related to" language under the old TCPA. That term was omitted from the new version of the Act.
(answer filed in a lawsuit); Johnson-Todd v. Morgan , 480 S.W.3d 605, 609 (Tex. App.—Beaumont 2015, pet. denied) (disclosures that lawyer made during court proceedings). But cf. Snell v. Ellis , No. 05-20-00642-CV, 2021 WL 1248276, at *7 & nn.18–19 (Tex. App.—Dallas Apr. 5, 2021, no pet. h.) (mem. op.) (suggesting in dicta that a lawyer's communications on behalf of a client are not the lawyer's communications if the client sues the lawyer based on the communications).
This perfunctory conclusion contains no analysis; the string cite is of little utility in this case. None of the cases involve the TCPA provisions at issue here or address the specific question raised in this case or in Snell , and many, including Youngkin , involved claims by nonclients, actions on behalf of a claimant's adversaries, not a client, or the TCPA's "relates to" provision that existed prior to the 2019 amendments.
Winstead relies on sections 27.001(4)(B) and 27.001(4)(C) in arguing it exercised a right to petition. Section 27.001(4)(B) defines the exercise of the right to petition as "a communication in connection with an issue under consideration or review by a legislative, executive, judicial, or other governmental body or in another governmental or official proceeding." Tex. Civ. Prac. & Rem. Code § 27.001(4)(B). Section 27.001(4)(C) defines exercise of the right to petition as "a communication that is reasonably likely to encourage consideration or review of an issue by a legislative, executive, judicial, or other governmental body or in another governmental or official proceeding." Id. § 27.001(4)(C). In contrast, all of the cases cited by the panel involve section 27.001(4)(A)(i) (defining exercise of a right to petition as "a communication in or pertaining to ... a judicial proceeding").
See Youngkin , 546 S.W.3d at 678 (claim by nonclient and applied TCPA before 2019 amendments that removed the "related to" provision from the Act); Brenner , 2020 WL 7332847, at *3 (action taken on behalf of parties adverse to non-movant); Jetall Cos. , 2020 WL 6435778, at *1 n.1 (claim by nonclient and applied TCPA before 2019 amendments); Brown Sims, P.C. v. L.W. Matteson, Inc. , 594 S.W.3d at 577 n.1 (applied TCPA before 2019 amendments); Johnson-Todd , 480 S.W.3d at 606 (claim by nonclient and applied TCPA before 2019 amendments).
The panel's sweeping conclusion is unsupported in law. To the extent this case turns on communications at all, rather than Winstead's failure to perform due diligence before it completed and filed documents with the SEC, practically speaking, the panel opinion has determined that a lawyer (as agent) may appropriate the communications made on behalf of the client in the usual course of representing that client (the principal) as the lawyer's own communications and then later use those communications against the client to secure TCPA protection when the agent is sued. This turns precedent on its head. Put another way, any right to petition in this case was, by law, Moore's right, not Winstead's. In Snell , we suggested that the view taken by the panel here is improper based on "[t]he plain text of [TCPA] section 27.005(b), long-standing rules regarding agency, and our decisions in other contexts." Snell , 2021 WL 1248276, at *7, nn. 17-19. We said the following in footnote 18:
In Gavenda v. Strata Energy, Inc. , 705 S.W.2d 690, 693 (Tex. 1986), the court stated, in part: ‘The attorney-client relationship is an agency relationship. The attorney's acts and omissions within the scope of his or her employment are regarded as the client's acts; the attorney's negligence is attributed to the client.’ (citing Texas Emp'rs Ins. Ass'n v. Wermske , 349 S.W.2d 90, 93 (Tex. 1961) ). In Wermske , the court stated, in part: ‘The general rule is that the relationship of attorney and
client is one of agency. Under this rule, the omissions, as well as the commissions, of an attorney are to be regarded as the acts of the client whom he represents; and his neglect is equivalent to the neglect of the client himself.’ 349 S.W.2d at 93. Finally, in Celanese Corp. v. Sahagun , we noted, "[C]lients typically have, but do not necessarily exercise, control over the manner and means of their lawyer's performance. But that a client may defer to its lawyer's expertise in executing certain tasks does not render the lawyer any less the client's agent." No. 05-16-00868-CV, 2017 WL 3405186, at *4 (Tex. App.—Dallas Aug. 9, 2017, no pet.) (mem. op.) (citing Gracey v. West , 422 S.W.2d 913,916 (Tex. 1968) (attorney-client relationship is also an agency relationship)). Although none of these cases involve the TCPA, we mention them simply to note that it seems inharmonious to attribute an attorney's actions to a client in several contexts but attribute the attorney's communications to the attorney, not the client, in the TCPA context. Put another way, whatever communications [the lawyer] made while purportedly representing [the client's] interests arguably are not [the lawyer's] communications, but [the client's], in the factual context here. They implicate [the client's] right to petition, not [the lawyer's].
Snell , 2021 WL 1248276, at *7 n.18.
Then, in footnote 19, we said:
In other cases, when movants have failed to demonstrate their own exercise of, or have relied on another party's exercise of a TCPA-protected right, we have concluded the TCPA does not apply. See Shields v. Shields , No. 05-18-01539-CV, 2019 WL 4071997, at *4–5 (Tex. App.—Dallas Aug. 29, 2019, pet. denied) (mem. op.) (affirming denial of TCPA motion sought by two entities who failed to demonstrate any exercise of the right to petition); Encore Enters., Inc. v. Shetty , No. 05-18-00511-CV, 2019 WL 1894316, at *3 (Tex. App.—Dallas Apr. 29, 2019, pet. denied) (mem. op.) (concluding TCPA movant failed to satisfy its section 27.005(b) burden and stating, "the TCPA applies only if the plaintiff's lawsuit is based on, relates to, or is in response to the defendant's ... exercise of one of the protected rights"). In Encore Enterprises , we made it clear that TCPA movants could not rely on communications made by the nonmovant for purposes of satisfying their section 27.005(b) burden. See Encore Enters., Inc. , 2019 WL 1894316, at *3. Although we do not decide the issue, in light of these authorities, we question whether a TCPA movant could rely on communications made for a nonmovant, for section 27.005(b) purposes, particularly when the movant is an agent for the principal at the time of the communication.
Snell , 2021 WL 1248276, at *7 n.19.
Our sister courts have reached a similar conclusion in comparable contexts. See, e.g. Sussman v. Old Heidelburg, Inc. , No. 14-06-00116-CV, 2006 WL 3072092, at *3 (Tex. App.—Houston [14th Dist.] Oct. 31, 2006, no pet.) (mem. op.) (determining lawyer's actions performed for client were "not attributable to him personally") (citing Ross F. Meriwether & Assocs., Inc. v. Aulbach , 686 S.W.2d 730, 731 (Tex. App.—San Antonio 1985, no writ) ).
Similar to our observations in Snell, Youngkin does not involve or discuss the specific circumstances before us. Additionally, while the court in Youngkin perceived no conflict between the statute's express purposes and the TCPA's application in a case involving a nonclient's claims, see 546 S.W.3d at 680–81, in this case, with claims by a client, a direct conflict exists with one of the statute's express purposes, as it would frustrate, rather than protect, the rights of a person to file meritorious lawsuits for demonstrable injury. See TEX. CIV. PRAC. & REM. CODE § 27.002. The practical result will be a flood of TCPA interlocutory appeals arising out of routine legal malpractice claims—surely an absurd result. See Dyer , 573 S.W.3d at 424–25.
This should not be construed as a comment upon the merits or strength of Moore's claims, which I do not address.
V. CONCLUSION
For the reasons discussed above, I dissent from the refusal to consider this case en banc. At bottom, the panel opinion serves as an extreme departure from our Court's prior cases and threatens to turn every pedestrian legal malpractice action involving an agency or court filing into a TCPA interlocutory appeal.
Joined by: Osborne, Partida-Kipness and Nowell, JJ.