James V. Mazuca v. Walter Schumann--Appeal from 73rd Judicial District Court of Bexar County

No. 04-00-00228-CV
James V. MAZUCA and Associates,
Appellant
v.
Walter SCHUMANN,
Appellee
From the 73rd Judicial District Court, Bexar County, Texas
Trial Court No. 98-CI-05590
Honorable Andy Mireles, Judge Presiding

Opinion by: Karen Angelini, Justice

Dissenting opinion by: Phil Hardberger, Chief Justice

Sitting: Phil Hardberger, Chief Justice

Paul W. Green, Justice

Karen Angelini, Justice

Delivered and Filed: May 16, 2001

REVERSED AND RENDERED

We grant James Mazuca's motion for rehearing and withdraw our opinion and judgment of January 24, 2001, issuing this opinion and judgment in their place.

This is a legal malpractice case, in which James Mazuca, a San Antonio attorney, was sued by his client, Walter Schumann. The jury found Mazuca liable for both professional negligence and violations of the Texas Deceptive Trade Practices Act. The jury awarded Schumann $80,000 in negligence damages, $90,000 in DTPA damages, and attorney's fees of $25,000.

On appeal Mazuca presents the following issues: (1) whether Schumann's DTPA claim is really a claim for legal malpractice; (2) whether Mazuca's mistaken interpretation of the Arizona statute is sufficient to support the jury's finding that Mazuca knowingly engaged in deceptive conduct; (3) whether the evidence is legally and factually sufficient to support the jury's finding that Schumann would have recovered and collected the $80,000 from Nuzum had the original suit against Nuzum gone forward; and (4) whether the evidence is legally and factually sufficient to support the jury's finding that Mazuca was negligent in his representation of Schumann.

Factual and Procedural Background

This case is based on an automobile accident occurring in Arizona on April 19, 1994, involving Schumann, a San Antonio resident, and James Nuzum, an Arizona resident. Schumann was injured in the accident and hired Mazuca to represent him in his claim against Nuzum. Mazuca originally filed suit against Nuzum and Farmers Insurance in Webb County, Texas. Mazuca sued Farmers Insurance because he believed Farmers Insurance provided Schumann with uninsured/underinsured motorist coverage. Schumann's coverage, however, was with State Farm Mutual Automobile Insurance Company. Mazuca then amended the suit, dropping Farmers Insurance and naming State Farm as a proper defendant. At trial, Mazuca testified that State Farm wanted to remove the case to federal court, but that Mazuca avoided removal by agreeing to transfer the case to Bexar County. Mazuca was never able to serve the defendant, Nuzum.

On January 5, 1996, Mazuca filed notice of nonsuit in Webb County. The nonsuit was taken without prejudice to re-file and contained boilerplate language stating "Plaintiff does not desire to prosecute this matter further against Defendant(s) James E. Nuzum." Mazuca testified that Schumann agreed to such a strategy in exchange for a settlement conference; however, Mazuca admitted that the term "nonsuit" may not have been used in their discussions. Schumann denied ever authorizing Nuzum's nonsuit or even being aware of Mazuca's actions in dropping the case.

The parties' negotiations were unsuccessful. Meanwhile, the statute of limitations on Schumann's claims against Nuzum ran. Mazuca then contacted local counsel in Arizona who filed suit in Arizona against Nuzum on Schumann's behalf. Mazuca hoped to take advantage of an Arizona savings provision that, under limited circumstances, permits the filing of a suit beyond the two-year statue of limitations. The Arizona trial court, however, ultimately dismissed the suit as outside the state's savings provision because Schumann's previous Texas case had been voluntarily dismissed, rendering the Arizona claim untimely filed.

Three years after the accident, on April 27, 1997, Mazuca filed a motion to nonsuit Schumann's claim against State Farm, Schumann's uninsured/underinsured carrier. Schumann subsequently hired new counsel and, on March 3, 1998, Mazuca wrote to Schumann to remind him that the statute of limitations was a little over a month away if Schumann wished to re-file his claim against State Farm. Schumann did not re-file against State Farm and the statute of limitations ran. Thus, Schumann was left with no remedy against Nuzum or State Farm.

Schumann then sued Mazuca for violations of the DTPA, breach of warranty, negligence, and gross negligence, maintaining that he was prevented from pursuing his personal injury claims because the statute of limitations had run. The jury found for Schumann on his negligence claim, assessing actual damages of $80,000. They also found for Schumann on his DTPA claim, finding that Mazuca had knowingly engaged in deceptive conduct and assessed $90,000 in additional damages. The jury also awarded Schumann $25, 000 in attorney's fees. Schumann elected to recover under the DTPA, and the trial court entered a final judgment accordingly.

Standard of Review

When considering a legal sufficiency complaint, we consider only the evidence and those inferences that tend to support the finding, disregarding all evidence and inferences to the contrary. Lewelling v. Lewelling, 796 S.W.2d 164, 166 (Tex. 1990); Davis v. City of San Antonio, 752 S.W.2d 518, 522 (Tex. 1988). If more than a scintilla of evidence exists to support the finding, the no evidence challenge must fail. Stafford v. Stafford, 726 S.W.2d 14, 16 (Tex. 1987), overruled on other grounds, Price v. Price, 732 S.W.2d 316 (Tex. 1987). If, however, "the evidence offered to prove a vital fact is so weak as to do no more than create a mere surmise or suspicion of its existence, the evidence is no more than a scintilla and, in legal effect, is no evidence" at all. Kindred v. Con/Chem, Inc., 650 S.W.2d 61, 63 (Tex. 1983).

A factual insufficiency point requires the reviewing court to assess all of the evidence and reverse the lower court's judgment only if its finding is so against the great weight of the evidence as to be clearly wrong and manifestly unjust. Pool v. Ford Motor Co., 715 S.W.2d 629, 635 (Tex. 1986). A jury's verdict may not be disturbed simply because an appellate court would reach a result different than that reached by the jury. Jaffe Aircraft Corp. v. Carr, 867 S.W.2d 27, 28 (Tex. 1993).

Discussion

A. DTPA v. Legal Malpractice

The seminal Texas case addressing DTPA actions in the context of attorney conduct is Latham v. Castillo. In Latham, an attorney represented to his clients that he was actively prosecuting their medical malpractice claim when he was not. Latham v. Castillo, 972 S.W.2d 66, 68 (Tex. 1998). Latham argued, as Mazuca does here, that the DTPA claim was, in reality, a legal malpractice claim. Id. at 69. The Supreme Court found, however, that to recast a "DTPA claim as merely a legal malpractice claim would subvert the Legislature's clear purpose in enacting the DTPA-to deter deceptive business practices." Id. The court drew a distinction between negligently failing to file a claim and affirmatively representing a claim had been filed when it had not. Id. The Court held that because Latham engaged in an unconscionable action through his active misrepresentations to the family, he could be held liable under the DTPA. Id.

We now turn to the issue of whether Mazuca acted unconscionably under the facts proven at trial. "Unconscionable" is defined under the DTPA to mean an act or practice that:

(A) takes advantage of the lack of knowledge, ability, experience, or capacity of a person to a grossly unfair degree; or

(B) results in a gross disparity between the value received and consideration paid, in a transaction involving transfer of consideration.

Tex. Bus. & Com. Code Ann. 17.45(5) (Vernon 1987). The 1995 amendments to the DTPA allow an attorney to be held liable for an unconscionable action or course of action that cannot be characterized as advice, judgment, or opinion. Id. 17.49(c)(3). It further requires a showing that the resulting unfairness was "glaringly noticeable, flagrant, complete, and unmitigated." Chastain v. Koonce, 700 S.W.2d 579, 584 (Tex. 1985). In contrast, "[a] claim based upon the failure to exercise that degree of care, skill and diligence that a lawyer of ordinary skill and knowledge commonly possesses and exercises, despite its labeling, is a malpractice claim." Kahlig v. Boyd, 980 S.W.2d 685, 689 (Tex. App.-San Antonio 1998, pet. denied).

Filing a motion for nonsuit of a claim against Nuzum with sufficient time remaining under the statute of limitations to re-file the case in a more appropriate venue does not fit the Chastain definition of "unconscionable." There was time to re-file and, in this case, Mazuca was actively attempting to reach a settlement with Nuzum. His mistake was in not re-filing the suit in an appropriate venue before the statute ran. Even after it ran, Mazuca testified that he believed in good faith, based on consultations with local counsel in Arizona, that Arizona's savings provision would allow Schumann to bring suit against Nuzum after the customary two-year statute of limitations had expired. Mazuca's actions do not amount to deceptive conduct required under Latham. Latham, 972 S.W.2d at 69; see also Ballesteros v. Jones, 985 S.W.2d 485, 498 (Tex. App.-San Antonio 1998, pet. denied) (finding attorney's failure to file a claim was negligent but not unconscionable conduct). There is no evidence that Mazuca made an affirmative misrepresentation to his client. Latham, 972 S.W.2d at 69.

Schumann argues, however, that Mazuca's representation to the court that his client "does not desire to prosecute this matter further..." was sufficient to support a DTPA claim. This assertion fails for a number of reasons. First of all, the statement to the court is not an actionable misrepresentation because under the DTPA, a misrepresentation must be one of material fact. Church &. Dwight Co. v. Huey, 961 S.W.2d 560, 567 (Tex. App.-San Antonio 1997, pet. denied). Mazuca's written motion to the court was not a misrepresentation of material fact because it had no legal effect. The suit could have been filed again the next day. Secondly, it was not a misrepresentation to Schumann. Schumann was neither aware of the motion, nor did he take or refrain from taking any action based on it.

A DTPA plaintiff must demonstrate that an actionable misrepresentation was the producing cause of his damages. Doe v. Boys Clubs of Greater Dallas, Inc., 907 S.W.2d 472, 479 (Tex. 1995). There must be an "unbroken causal connection" between the actionable misrepresentation and the injury. Id. at 481; Cianfichi v. White House Motor Hotel, 921 S.W.2d 441, 443 (Tex. App.-Houston [1st Dist.] 1996, writ denied). While a plaintiff is not required to prove reliance as an element of recovery, reliance may be a factor in determining whether a misrepresentation was a producing cause of damages. Weitzel v. Barnes, 691 S.W.2d 598, 600 (Tex. 1985); Cianfichi, 921 S.W.2d at 443.

It is apparent from Schumann's own testimony that he in no way relied on Mazuca's statement to the court regarding the nonsuit. Schumann testified that he was not even aware of the statement until his own lawyer showed it to him at trial. Schumann's argument that the statement was a producing cause of harm because it led the Arizona court to dismiss the case against Nuzum is unfounded. The language employed by Mazuca to secure the nonsuit was not the pivotal factor in the Arizona court's decision-it was the nonsuit itself, a voluntary dismissal, that caused the court to rule as it did. Mazuca's filing of the nonsuit, at most, demonstrated the "failure to exercise that degree of care, skill, and diligence that a lawyer of ordinary skill and knowledge commonly possesses and exercises," giving rise to a malpractice or negligence claim. Kahlig, 980 S.W.2d at 689.

With regard to the filing of the nonsuit of State Farm, Mazuca testified that he filed it because there did not appear to be any way to pursue a claim against Nuzum. And, as with the nonsuit of Nuzum, this nonsuit was also done without Schumann's knowledge or consent. Thus, Mazuca made no misrepresentations with regard to the nonsuit of State Farm that could be actionable under the DTPA.

Therefore, we sustain issues one and two of Mazuca's appeal and reverse the judgment awarding Schumann damages based on his DTPA claim, and render judgment that Schumann take nothing on his DTPA claims, and the attorney's fees.

B. Collectability of Judgment Against Nuzum

In his third issue, Mazuca contends that the evidence is legally and factually insufficient to support the jury's finding that Schumann would have recovered and collected $80,000 from Nuzum had the original suit gone forward. (1) In an attorney malpractice action, based on negligence, the plaintiff must show that "but for" the attorney's negligence, he or she would be entitled to judgment. Rodriguez v. Sciano, 18 S.W.3d 725, 727 (Tex. App.-San Antonio 2000, no pet.). Furthermore, the proper damages inquiry relates to the amount of damages recoverable and collectible from the defendant in the underlying action had the suit been properly prosecuted. See Cosgrove v. Grimes, 774 S.W.2d 662, 666 (Tex. 1989); Ballesteros, 985 S.W.2d at 489. These requirements in proving a legal malpractice case are commonly known as the "suit within a suit." See Latham, 972 S.W.2d at 69; Ballesteros, 985 S.W.2d at 489.

Reviewing the evidence in this case, we find Schumann did not sustain his burden of proving a judgment against Nuzum was collectible. Schumann offered no evidence of Nuzum's solvency. And, although Mazuca testified that he believed Nuzum was insured for $100,000, he was never able to determine the accuracy of this belief. This amounts to no evidence.

Although Schumann may have been able to collect on a claim against his uninsured/underinsured carrier, State Farm, a question as to State Farm was not submitted to the jury. The jury question only inquired what amount "Schumann would have recovered and collected from James Nuzum as a result of the April 19, 1994 collision had the suit been properly prosecuted." Further, the evidence is undisputed that, although Mazuca nonsuited State Farm, he did so before the statute of limitations ran. And, after Schumann had engaged a new lawyer, Mazuca reminded him that he needed to re-file against State Farm before the statute of limitations ran if he wanted to preserve his claim against State Farm. Schumann, however, did not re-file against State Farm. Thus, there is no evidence in the record upon which the jury could have based a negligence finding against Mazuca as to State Farm and such an issue, if submitted to the jury, would have been improper. In any event, the jury was only asked the collectability question as to Nuzum and not State Farm. We, therefore, sustain Mazuca's third issue.

C. Mazuca's Negligence

In his fourth issue, Mazuca contends that the evidence is legally and factually insufficient to support the jury's finding that Mazuca's negligence was the proximate cause of Schumann's damages. Mazuca's primary argument is that Schumann failed to establish the proper standard of care for an attorney.

An attorney is required to exercise reasonable and ordinary care and diligence in applying his skill and knowledge to his client's cause. Kahlig, 980 S.W.2d at 689. An attorney is held to the standard of care that would be exercised by a reasonably prudent attorney. Longaker v. Evans, 32 S.W.3d 725, 735 (Tex. App.-San Antonio 2000, pet. filed). Expert testimony of an attorney is required to establish the standard of care. Hall v. Rutherford, 911 S.W.2d 422, 424 (Tex. App.-San Antonio 1995, writ denied). Larry Bruner was Schumann's expert. After testifying to his qualifications as an attorney who practices personal injury law, Bruner testified as follows:

Q. Now, based on your review of the file in this case, do you have an opinion, based on your experience, your training and a reasonable degree of legal probability, that Mr. Mazuca's actions or nonactions proximately caused damage to Mr. Schumann?

A. Yes, I do.

Q. And what is that opinion?

A. Well, my opinion is that -- that his actions or inactions proximately caused the damages to Mr. Schumann.

Q. Do you have an opinion as to whether Mr. Mazuca failed to meet the standard of care for an attorney in the 1994-1996 time frame in representing a client in a personal injury action in Bexar or Webb County, Texas?

A. You asked me if I had an opinion?

Q. Right.

A. And the answer is yes.

Q. And what is your opinion?

A. And my opinion is that he breached the standard of care.

In his testimony, Bruner failed to properly articulate the standard of care. He merely concluded that Mazuca breached the standard of care without stating what the standard of care is. This amounts to no evidence that Mazuca breached the standard of care. Mazuca preserved this "no evidence" issue in his motion for directed verdict and motion for judgment n.o.v.

Schumann claims that he proved Mazuca's negligence by introducing a letter Mazuca wrote to Schumann in which Mazuca admitted to negligence. In his letter to Schumann, Mazuca states: "It was my responsibility to present your case in a timely manner and I will accept responsibility for any delay or damage to your case because of this error." Although Mazuca expressed his feelings of responsibility, he did not admit to legal liability. A conciliatory letter from a defendant attorney in a legal malpractice case does not relieve the plaintiff of his burden to properly prove a breach of the applicable standard of care. Because we find Schumann failed to carry his burden of proving Mazuca's actions fell below the standard of care, we sustain Mazuca's fourth issue.

Conclusion

We find that Mazuca's actions in representing Schumann did not reach the level of unconscionable and deceptive acts required for liability under the DTPA. Further, we find no evidence as to collectability of the underlying judgement nor do we find evidence as to whether Mazuca breached the standard of care. Therefore, we sustain all four of Mazuca's issues and reverse and render judgment that Schumann take nothing as to both his DTPA and negligence causes of action.

Karen Angelini, Justice

PUBLISH

1. The jury charge on this issue read as follows:

What sum of money if paid now in cash, would fairly and reasonably compensate Walter Schumann for his injuries, if any, that resulted from the April 19, 1994 collision in question?...You are instructed to award the sum, if any, that Walter Schumann would have recovered and collected from James Nuzum as a result of the April 19, 1994 collision had the suit been properly prosecuted.