JEFF SHOOSHTARI AND THE WIRELESS INTERNET COMPANY v. RANCE G. SWEETEN, INDIVIDUALLY AND D/B/A RANCE G. SWEETEN, P.C. AND LONG, CHILTON, PAYTE & HARDIN, L.L.P.--Appeal from 92nd District Court of Hidalgo County

Shooshtari v. Sweeten NUMBER 13-01-00850-CV
COURT OF APPEALS
THIRTEENTH DISTRICT OF TEXAS
CORPUS CHRISTI - EDINBURG

JEFF SHOOSHTARI AND

THE WIRELESS INTER-NET, INC., Appellants,

 
v.

RANCE G. SWEETEN, INDIVIDUALLY AND

D/B/A RANCE G. SWEETEN, P.C., AND

LONG, CHILTON, PAYTE & HARDIN, L.L.P., Appellees.

On appeal from the 92nd District Court of Hidalgo County, Texas.
MEMORANDUM OPINION
Before Justices Hinojosa, Castillo, and Chavez (1)
Opinion by Justice Hinojosa

Appellants, Jeff Shooshtari and The Wireless Inter-Net, Inc. ("TWIN"), former clients of appellees, Rance G. Sweeten, individually and d/b/a Rance G. Sweeten, P.C., and Long, Chilton, Payte & Hardin, L.L.P. ("LCPH"), appeal from the trial court's order granting appellees' motion for summary judgment. In a single issue, appellants contend the trial court erred in granting appellees' traditional and "no evidence" motion for summary judgment. We affirm.

As this is a memorandum opinion and the parties are familiar with the facts, we will not recite them here. See Tex. R. App. P. 47.4.

A. Standard of Review

We review the granting of a traditional motion for summary judgment de novo. Natividad v. Alexsis, Inc., 875 S.W.2d 695, 699 (Tex. 1994); Branton v. Wood, 100 S.W.3d 645, 646 (Tex. App.-Corpus Christi 2003, no pet.). In a traditional motion for summary judgment, the movant has the burden of showing that there is no genuine issue of material fact and that he is entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c); Lear Siegler, Inc. v. Perez, 819 S.W.2d 470, 471 (Tex. 1991). In deciding whether there is a genuine issue of material fact, evidence favorable to the nonmovant will be taken as true, and all reasonable inferences made and all doubts resolved in the nonmovant's favor. Am. Tobacco Co. v. Grinnell, 951 S.W.2d 420, 425 (Tex. 1997). Summary judgment is proper if the movant disproves at least one element of each of the plaintiff's claims or affirmatively establishes each element of an affirmative defense to each claim. Id.

By contrast, a no-evidence motion for summary judgment presented under Texas Rule of Civil Procedure 166a(i) is equivalent to a pretrial directed verdict, and we apply the same legal sufficiency standard on review. Zapata v. The Children's Clinic, 997 S.W.2d 745, 747 (Tex. App.-Corpus Christi 1999, pet. denied). We review the evidence in the light most favorable to the nonmovant, disregarding all contrary evidence and inferences. KPMG Peat Marwick v. Harrison County Hous. Fin. Corp., 988 S.W.2d 746, 748 (Tex. 1999); Burroughs Wellcome Co. v. Crye, 907 S.W.2d 497, 499 (Tex. 1995).

When a motion for summary judgment is presented asserting there is no evidence of one or more essential elements of a claim or defense on which the nonmovant would have the burden of proof at trial, the movant does not bear the burden of establishing each element of its own claim or defense. Branton, 100 S.W.3d at 647; Gen. Mills Rests., Inc. v. Tex. Wings, Inc., 12 S.W.3d 827, 832 (Tex. App.-Dallas 2000, no pet.); see also Tex. R. Civ. P. 166a(i). Instead, the burden shifts entirely to the nonmovant to present enough evidence to be entitled to a trial: evidence that raises a genuine fact issue on the challenged elements. See Tex. R. Civ. P. 166a cmt.

When, as here, a trial court's order granting a motion for summary judgment does not specify the ground or grounds relied on for its ruling, the appellate court will affirm the summary judgment if any of the theories advanced in the motion are meritorious. Dow Chem. Co. v. Francis, 46 S.W.3d 237, 242 (Tex. 2001); Boren v. Bullen, 972 S.W.2d 863, 865 (Tex. App.-Corpus Christi 1998, no pet.).

B. Analysis

In their first amended petition, appellants alleged causes of action for breach of fiduciary duty, negligence, and violations of the Deceptive Trade Practices-Consumer Protection Act ("DTPA"), stemming from appellees' actions in competing in the wireless communications business after rendering business start-up advice to appellants. In their motion for summary judgment, appellees asserted that: (1) all causes of action alleged by appellant were barred by the applicable statutes of limitations; (2) there was no evidence of duty or breach of any duty; (3) the professional services rendered by appellees were exempted from liability by the DTPA; and (4) there was no evidence of unconscionable conduct.

1. Breach of Fiduciary Duty

We first examine whether there exists a fiduciary relationship between the parties and whether there was a breach of any fiduciary duty.

Whether a confidential or fiduciary relationship exists is normally a question of fact to be decided by a jury. Procom Energy, L.L.A. v. Roach, 16 S.W.3d 377, 382 (Tex. App.-Tyler 2000, pet. denied); Hoggett v. Brown, 971 S.W.2d 472, 488 (Tex. App.-Houston [14th Dist.] 1997, pet. denied); Farah v. Mafrige & Kormanik, P.C., 927 S.W.2d 663, 675 (Tex. App.-Houston [1st Dist.] 1996, no writ). When the issue is one of no evidence or conclusive evidence, the issue is a question of law. Farah, 927 S.W.2d at 675.

Fiduciary duties arise as a matter of law in certain formal relationships, including attorney-client, partnership, and trustee relationships. Ins. Co. of N. Am. v. Morris, 981 S.W.2d 667, 674 (Tex. 1998); see also Consol. Gas & Equip. Co. v. Thompson, 405 S.W.2d 333, 336-37 (Tex. 1966); Blue Bell, Inc. v. Peat, Marwick, Mitchell & Co., 715 S.W.2d 408, 416 (Tex. App.-Dallas 1986, writ ref'd n.r.e.). The accountant-client relationship, however, does not always involve a fiduciary duty. Squyres v. Christian, 253 S.W.2d 470, 471 (Tex. Civ. App.-Fort Worth 1952, writ ref'd n.r.e.).

If not a recognized formal fiduciary relationship, then the question of whether an informal fiduciary relationship exists is to be determined from the actualities of the relationship between the persons involved. See Thigpen v. Locke, 363 S.W.2d 247, 253 (Tex. 1962); Dominguez v. Brackey Enters., Inc., 756 S.W.2d 788, 791 (Tex. App.-El Paso 1988, writ denied); see also Crim Truck & Tractor Co. v. Navistar Int'l Transp. Corp., 823 S.W.2d 591, 594 (Tex. 1992) (fiduciary duty may arise from close and confidential relationship when one person trusts and relies on another, whether relationship is moral, social, domestic, or personal). A fiduciary relationship is an extraordinary one and will not be lightly created; the mere fact that one subjectively trusts another does not alone indicate that confidence is placed in another in the sense demanded by fiduciary relationships because something apart from the transaction between the parties is required. Hoggett, 971 S.W.2d at 488; Kline v. O'Quinn, 874 S.W.2d 776, 786 (Tex. App.-Houston [14th Dist.] 1994, writ denied); see also Morris, 981 S.W.2d at 674; Thigpen, 363 S.W.2d at 253; Farah, 927 S.W.2d at 676. A fiduciary relationship may arise outside the usual situations where the dealings between the parties have continued for such a period of time that a party is justified in relying on another to act in his best interest. Morris, 981 S.W.2d at 674; Blue Bell, Inc., 715 S.W.2d at 416. A person is justified in placing confidence in the belief that another party will act in his or her best interest only where he or she is accustomed to being guided by the judgment or advice of the other party, and there exists a long association in a business relationship as well as personal friendship. Hoggett, 971 S.W.2d at 488; Dominguez, 756 S.W.2d at 791-92. However, the fact that the relationship has been a cordial one and of long duration does not necessarily constitute a confidential relationship. Hoggett, 971 S.W.2d at 488; Farah, 927 S.W.2d at 675.

In the instant case, the record reflects that Sweeten is a certified public accountant with the LCPH accounting firm and that he prepared personal income tax returns for Shooshtari from 1994 to 1997. It is undisputed that Shooshtari is not complaining of any service related to the preparation of these tax returns.

The record also reflects that Sweeten rendered approximately seven hours of business set-up consulting services for TWIN during 1997-1998. This was the only service that appellees performed for TWIN. Shooshtari testified that appellees did not prepare any tax returns or financial statements for TWIN.

The only other relationship asserted is that appellees were customers of TWIN's internet services for a brief time. Although the record shows several years of business association between appellants and appellees, the relationship does not necessarily constitute a confidential one. See Hoggett, 971 S.W.2d at 488; Farah, 927 S.W.2d at 675. Appellants offered no evidence that they were accustomed to being guided by the judgment or advice of appellees or that the parties were longtime friends, so as to justify a belief that appellees would act in their best interest. See Hoggett, 971 S.W.2d at 488; Dominguez, 756 S.W.2d at 791-92.

Shooshtari testifed that he trusted appellees. However, this alone does not show the confidence demanded by fiduciary relationships. See Morris, 981 S.W.2d at 674; Hoggett, 971 S.W.2d at 488. Thus, we conclude that no fiduciary relationship existed between appellants and appellees. Because appellants have failed to present more than a scintilla of probative evidence to raise a genuine issue of material fact, we hold that the trial court did not err in granting appellees' motion for summary judgment on appellants' breach of fiduciary duty claim.

2. Negligence

We next examine whether the trial court erred in granting summary judgment on appellants' negligence claim.

The elements of a negligence cause of action are: (1) a duty; (2) a breach of that duty; and (3) damages proximately caused by the breach of duty. See Firestone Steel Prods. Co. v. Barajas, 927 S.W.2d 608, 613 (Tex. 1996). The plaintiff must establish both the existence of a duty and the violation of that duty to establish liability in tort. Greater Houston Transp. Co. v. Phillips, 801 S.W.2d 523, 525 (Tex. 1990). A prerequisite to tort liability is the existence of a legally cognizable duty. Graff v. Beard, 858 S.W.2d 918, 919 (Tex. 1993). Whether a duty exists is a question of law. Joseph E. Seagram & Sons, Inc. v. McGuire, 814 S.W.2d 385, 387 (Tex. 1991).

The question of legal duty is a multifaceted issue requiring us to balance a number of factors such as the risk and foreseeability of injury, the social utility of the actor's conduct, the consequences of imposing the burden on the actor, and any other relevant competing individual and social interests implicated by the facts of the case. Otis Eng'g Corp. v. Clark, 668 S.W.2d 307, 309 (Tex. 1983); see 1 J. Hadley Edgar, Jr. & James B. Sales, Texas Torts and Remedies 1.03[2][b] (2000). Although the formulation and emphasis varies with the facts of each case, the following three categories of factors have emerged: (1) the relationship between the parties; (2) the reasonable foreseeability of harm to the person injured; and (3) public policy considerations. See Graff, 858 S.W.2d at 920; Greater Houston Transp., 801 S.W.2d at 525.

Appellants argue that appellees, as accountants, breached their duty not to compete against a former client. They assert that a former employee cannot use confidential information or trade secrets acquired in his former employment to compete with his former employer. However, appellees were not in an employer-employee relationship with appellants. The only conduct that appellants complained of was the initial start-up consultations, and these consultations did not entail the disclosure to appellees of any trade secrets or confidential information. While appellees learned the fundamentals of wireless internet services and the possibilities of a new market for wireless communications, appellants presented no evidence of any confidential information or trade secret utilized by appellees to appellants' detriment.

Further, when Shooshtari dissolved his former partnership with Sergio Cesar, the two mutually agreed that Cesar would become a free agent - free to pursue his own wireless communications business and not be bound by a covenant not to compete.

Because there was no employer-employee relationship between the parties, we conclude that no duty not to compete existed between the parties. Because appellants have failed to present more than a scintilla of probative evidence to raise a genuine issue of material fact, we hold that the trial court did not err in granting appellees' motion for summary judgment on appellants' negligence claim.

3. Violations of DTPA

We now examine whether the trial court erred in granting summary judgment on appellants' claim that appellees violated the DTPA.

The DTPA excludes claims for damages based on the rendering of a professional service, such as the providing of advice, judgment, opinion, or similar professional skills. Tex. Bus. & Com. Code Ann. 17.49(c) (Vernon 2002). The Act, however, provides a few exceptions to this exclusion. Relevant here is the exception that one rendering professional services may be liable for unconscionable actions that cannot be characterized as advice, judgment, or opinion. Tex. Bus. & Com. Code Ann. 17.49(c)(3) (Vernon 2002).

The DTPA defines an "unconscionable action or course of action" as "an act or practice which, to a consumer's detriment, takes advantage of the lack of knowledge, ability, experience, or capacity of the consumer to a grossly unfair degree." Tex. Bus. & Com. Code Ann. 17.45(5) (Vernon 2002); Morris, 981 S.W.2d at 677. Unconscionability under the DTPA is an objective standard for which scienter is irrelevant. Morris, 981 S.W.2d at 677; Chastain v. Koonce, 700 S.W.2d 579, 583 (Tex. 1985). Taking advantage of a consumer's lack of knowledge to a grossly unfair degree requires a showing that the resulting unfairness was glaringly noticeable, flagrant, complete, and unmitigated. Morris, 981 S.W.2d at 677; Chastain, 700 S.W.2d at 584. Therefore, to survive the motion for summary judgment, appellants had to produce more than a scintilla of probative evidence to show that appellees took advantage of appellants' lack of knowledge and that the resulting unfairness was glaringly noticeable, flagrant, complete, and unmitigated.

After reviewing the record, we conclude there is no evidence to support appellants' contention that by virtue of having started their own wireless communications company, hiring Cesar, and actively competing against their former client, appellees engaged in unconscionable acts. We also find no evidence that appellees' actions resulted in unfairness that was glaringly noticeable, flagrant, complete, and unmitigated. Accordingly, we conclude there is no evidence of unconscionable conduct on the part of appellees. Because appellants have failed to present more than a scintilla of probative evidence to raise a genuine issue of material fact, we hold that the trial court did not err in granting appellees' motion for summary judgment on appellants' claim that appellees violated the DTPA.

Having concluded that the trial court did not err in granting summary judgment on appellants' claims for breach of fiduciary duty, negligence, and violations of the DTPA, we overrule appellants' sole issue.

We affirm the the trial court's order granting appellees' motion for summary judgment.

 

FEDERICO G. HINOJOSA

Justice

 

Opinion delivered and filed this the

21st day of August, 2003.

1. Retired Justice Melchor Chavez, assigned to this Court by the Chief Justice of the Supreme Court of Texas pursuant to Tex. Gov't Code Ann. 74.003 (Vernon 1998).