Sullo v. Kubosh

616 S.W.3d 869

Gregory SULLO and Brian Zimmerman, Appellants

v.Felix Michael KUBOSH a/k/a Kubosh Bail Bonding, Paul Kubosh a/k/a Kubosh Law Office, Appellees/Cross-Appellants

v.William Carter, Sandra Arnaez, Jason Rocha, Eduwigis Suaste, Sara Padilla, Grant Hightower, Walter Lethermon, Jonathan Glenn, Kregg Gibson, Gerry Chaney, Juan Alvarez, Jaime Gaytko, Edward Carney, Paul Collins, Cirino Hernandez, Preston Bawa, Monica Wirz, Edrich Mack, Mercy Hayes, Jose Alamo, Ruby Sepulveda, Sean Simon, Kristal Orozco, Janet Ramirez-Herrera, Baltazar Martinez, Shelton Harris, Randall Stevison, Brian Arellano, Felipe Cavazos, Larry Richard, Jeffery Rhodes, Hector Cuevas, Cynthia Sanchez, Gina Torres, Roberto Lares, Leon Tousant, Linda Martin, Gregory Barnes, Elizabeth Guerrero, Aleicia Roberts, Ana Reyes, Derrick Rivers, Devin Barrios, Christina Villanueva, Priscilla Munoz, Jeanette Maya, Eric Ayala, Farid Abi-Saab, Joe Pecina, Andrew Ramirez, Mauricio Mendez-Barrera, Miguel Diaz, Patrick Washington, Earl Chilton, Dorothy Scott, Thomas Pittard, Juanita Marin, Julio Torres, Raymond Ford, Virginia Knauff, Cherry Ayo-Vaughn, Jose Campa, Onyekachi Ekezie, Riggo Dominguez, Marquis Williams, Ricardo Trevino, Jesus Castro, Eduardo Valdez, Bolivar Sierra, Eva Castillo, Gustavo Garcia, Settea Menedo, Michael Youngblood, and Brandon Nash, Cross-Appellees

NO. 01-18-00418-CV

Court of Appeals of Texas, Houston (1st Dist.).

Opinion issued December 31, 2020

Rehearing Denied December 31, 2020

Fields Alexander, BECK REDDEN, LLP, 1221 McKinney St., Ste. 4500, Houston, Texas 77010, Amanda Taylor, BUTLER SNOW, LLP, 515 Congress Ave., Ste. 1900, Austin, Texas 78749, Mark Trachtenberg, HAYNES & BOONE, LLP, 1221 McKinney, Ste. 2100, Houston, Texas 77010, Brian W. Zimmerman, Nicholas J. Reisch, C. Birk Hutchens, ZIMMERMAN, AXELRAD, MEYER, STERN & WISE, P.C., 3040 Post Oak Blvd., Ste. 1300, Houston, Texas 77056, for Appellants.

Ken Paxton, Attorney General of Texas, Michael R. Abrams, Office of the Attorney General, P.O. Box 12548, Austin, Texas 78711-2548, Joseph R. Larsen, Gregor | Cassidy, PLLC, 700 Louisiana, Ste. 3950, Houston, Texas 77002, Levi J. Benton, Levi Benton & Associates PLLC, 3417 Milam, Houston, Texas 77002, David M. Medina, Chamberlain, Hrdlicka, White, Williams & Aughtry, 1200 Smith St., Ste. 1400, Houston, Texas 77002-4130, for Appellees.

Panel consists of Justices Keyes, Kelly, and Landau.

OPINION ON REHEARING

Evelyn V. Keyes, Justice

Appellants, Gregory Sullo and Brian Zimmerman, filed motions for rehearing of our November 19, 2019 opinion. We deny appellants' motions for rehearing, but we withdraw our November 19, 2019 opinion and judgment and issue this opinion and judgment in their stead. Our disposition remains unchanged.

This interlocutory appeal arises out of three consolidated lawsuits filed by William Carter and seventy-three other plaintiffs (collectively, "the Carter parties") against Felix Michael Kubosh, Kubosh Bail Bonding, Paul Kubosh, and Kubosh Law Office (collectively, "the Kuboshes") for violation of a civil statute prohibiting barratry. During the course of this litigation, the Kuboshes filed suit against Brian Zimmerman, the Carter parties' counsel of record, and Gregory Sullo, an attorney at Sullo & Sullo, LLP, a law firm that had initially represented the Carter parties before engaging Zimmerman to file suit on their behalf. Sullo, Zimmerman, and the Kuboshes all filed motions to dismiss the claims against them under the Texas Citizens Participation Act ("TCPA" or "the Act"). The trial court denied all three motions to dismiss.

Sullo, Zimmerman, and the Kuboshes all appealed. Each of the appellants and cross-appellants argue that the trial court erred in denying their respective motions to dismiss under the TCPA.

We affirm the trial court's denial of all three TCPA motions to dismiss.

BACKGROUND

Andrew Sullo and his brother, Gregory Sullo, are attorneys and partners in the Houston law firm of Sullo & Sullo, LLP. Andrew Sullo and Sullo & Sullo are third-party defendants in the underlying proceedings, but they were not parties to the TCPA motions discussed in this opinion and are not parties to this interlocutory appeal. Attorneys at Sullo & Sullo practice in multiple areas of the law, including, relevant to this case, defense and bonding services for traffic tickets and warrants arising out of unpaid tickets. Their competitors include Kubosh Bail Bonding, which is owned and operated by Felix Michael Kubosh, and Kubosh Law Office, which is owned and operated by Paul Kubosh.

A. Civil and Criminal Statutes and Disciplinary Rule Prohibiting Barratry

In 2011, the Texas Legislature passed Texas Government Code section 82.0651, entitled "Civil Liability for Prohibited Barratry." This statute provides, in relevant part:

(c) A person who was solicited by conduct violating Section 38.12(a) or (b), Penal Code, or Rule 7.03 of the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas, regarding barratry by attorneys or other persons, but who did not enter into a contract as a result of that conduct, may file a civil action against any person who committed barratry.

(d) A person who prevails in an action under Subsection (c) shall recover from each person who engaged in barratry:

(1) a penalty in the amount of $10,000;

(2) actual damages caused by the prohibited conduct; and

(3) reasonable and necessary attorney's fees.

(e) This section shall be liberally construed and applied to promote its underlying purposes, which are to protect those in need of legal services against unethical, unlawful solicitation and to provide efficient and economical procedures to secure that protection.

TEX. GOV'T CODE ANN. § 82.0651(c) – (e). This statute became effective on September 1, 2011.

Penal Code section 38.12(a), entitled "Barratry and Solicitation of Professional Employment," provides that a person commits the criminal offense of barratry if, with intent to obtain an economic benefit, the person:

(1) knowingly institutes a suit or claim that the person has not been authorized to pursue;

(2) solicits employment, either in person or by telephone, for himself or for another;

(3) pays, gives, or advances or offers to pay, give, or advance to a prospective client money or anything of value to obtain employment as a professional from the prospective client; (4) pays or gives or offers to pay or give a person money or anything of value to solicit employment;

(5) pays or gives or offers to pay or give a family member of a prospective client money or anything of value to solicit employment; or

(6) accepts or agrees to accept money or anything of value to solicit employment.

TEX. PENAL CODE ANN. § 38.12(a).

Section 38.12(b) provides that a person commits an offense if the person:

(1) knowingly finances the commission of an offense under Subsection (a);

(2) invests funds the person knows or believes are intended to further the commission of an offense under Subsection (a); or

(3) is a professional who knowingly accepts employment within the scope of the person's license, registration, or certification that results from the solicitation of employment in violation of Subsection (a).

Id. § 38.12(b).

Penal Code section 38.12 dovetails with Rule 7.03(a) and (f) of the Texas Disciplinary Rules of Professional Conduct, which provides:

(a) A lawyer shall not by in-person contact, or by regulated telephone or other electronic contact as defined in paragraph (f) seek professional employment concerning a matter arising out of a particular occurrence or event, or series of occurrences or events, from a prospective client or nonclient who has not sought the lawyer's advice regarding employment or with whom the lawyer has no family or past or present attorney-client relationship when a significant motive for the lawyer's doing so is the lawyer's pecuniary gain....

....

(f) As used in paragraph (a), "regulated telephone or other electronic contact" means any electronic communication initiated by a lawyer or by any person acting on behalf of a lawyer or law firm that will result in the person contacted communicating in a live, interactive manner with any other person by telephone or other electronic means. For purposes of this Rule a website for a lawyer or law firm is not considered a communication initiated by or on behalf of that lawyer or firm.

TEX. DISCIPLINARY RULES PROF'L CONDUCT R. 7.03(a), (f), reprinted in TEX. GOV'T CODE ANN. , tit. 2, subtit. G, app. A (Tex. State Bar R. art. X, § 9).

B. Sullo's "Price Match Program" and Initial Contact with the Carter Parties

Almost immediately after the civil barratry statute, Government Code section 82.0651, became effective in September 2011, Andrew Sullo informed individuals who inquired about bonds and representation for traffic tickets that were in "warrant status" that his office had a "price match program." Under this program, the individual would call a competing bail bond company to receive a quote for the price of the bond, and Sullo promised that his office would beat the quoted price by ten dollars. Prior to the individual's making the phone call, Sullo and the individual would review a "Disclosure & Agreement" form that described the price match program. This form included a paragraph that stated:

II. Potential Legal Action — Attorney [Sullo] has reason to suspect that upon Client [the respective individual] making Client's Price Match phone call to the bond company, the Bond Company will transfer the call to a law firm without Client's request or consent. Attorney believes this action may give rise to a civil cause of action against the bond company or law firm under a new barratry statute or other law which, if successful, may result in money damages for Client. In some instances, the bond company may also quote on behalf of an attorney or law firm which may also give rise to a cause of action. Client agrees to make this phone call knowing that these potentially illegal or unethical actions may occur

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