Wilson v. George Fleming & Fleming & Assocs., L.L.P.

REBECCA WILSON, ET AL., Appellants ^[1] v. GEORGE FLEMING AND FLEMING & ASSOCIATES, L.L.P., Appellees

No. 14-17-00223-CV

Court of Appeals of Texas, Fourteenth District

November 4, 2021

On Appeal from the 189th District Court Harris County, Texas Trial Court Cause No. 2010-25097

Panel consists of Justices Jewell, Zimmerer, and Poissant

MEMORANDUM OPINION

KEVIN JEWELL JUSTICE.

This case returns to us on remand from the Supreme Court of Texas. Appellants-approximately 4, 000 former clients of George Fleming and Fleming &Associates (collectively, "the Fleming Firm")-sued the Fleming Firm, claiming that it breached contractual and fiduciary duties. Based on a jury verdict favorable to the Fleming Firm in a related case ^[2] the Fleming Firm moved for traditional summary judgment in this case, asserting affirmative defenses of collateral estoppel, waiver, and release. The trial court granted the Fleming Firm's summary judgment motion without stating reasons. Appellants appealed to this court.

We held that the Fleming Firm failed to establish conclusively its right to judgment as a matter of law on each affirmative defense, and thus we reversed and remanded the case for further proceedings. As to the firm's collateral estoppel defense in particular, we stated that the reason the Fleming Firm failed to carry its summary judgment burden was because the firm's evidence, consisting of uncertified copies of a judgment and verdict in the related Harpst case was not properly authenticated. In so holding, we followed binding precedent from this court^[3] and persuasive authority from the First Court of Appeals.^[4]

The Fleming Firm appealed to the Supreme Court of Texas. The Fleming Firm challenged our holding regarding the collateral estoppel defense, but not release or waiver. The supreme court granted review and concluded that the trial court did not abuse its discretion by finding the documents authentic and competent as summary judgment evidence, reversed our judgment, and remanded the case to this court for consideration of the issue we previously did not reach- whether the Fleming Firm was entitled to judgment as a matter of law on collateral estoppel grounds.

Having now considered the parties' arguments regarding the Fleming Firm's collateral estoppel defense, we hold that the firm failed to conclusively establish its defense. Accordingly, we reverse the trial court's judgment and remand the case for further proceedings.

Background

A more extensive discussion of the facts underlying this appeal are set forth in prior opinions.^[5] We summarize only the relevant facts here.

Appellants all used the prescription diet drug fen-phen, ^[6] allegedly experienced heart problems as a result, and sought to hold the drug maker, Wyeth, legally responsible. Due to the high number of potential claimants, a federal court certified a nationwide class action but also set forth certain procedures and requirements for individual suits. Any claimant preferring to opt out of the nationwide class action and pursue an individual claim had to establish his or her eligibility to sue by undergoing an echocardiogram resulting in a "FDA-positive" reading.

To facilitate this opt-out process, the Fleming Firm established a nationwide echocardiogram program-at an alleged cost of at least $20 million. Appellants underwent echocardiograms, opted out of the certified class, and retained the Fleming Firm to assert their individual claims against Wyeth. Ultimately, appellants, along with approximately 4, 000 additional claimants, agreed to settle their claims against Wyeth for $339 million. Each of the firm's clients received a twenty-five page "settlement packet," which explained the nature of the settlement and included a statement showing that particular client's individual net settlement amount after deductions for attorney's fees and client expenses. One of these deducted expenses was for each client's pro rata share of the nationwide echocardiogram program-i.e., not just the cost of each client's own echocardiogram, but a portion of the aggregate cost to test tens of thousands of potential claimants, even those who ultimately did not receive a qualifying "FDApositive" reading.

Appellants later sued the Fleming Firm, alleging that the firm wrongfully deducted these expenses from appellants' settlements and misrepresented or concealed a number of material facts during the settlement process.^[7] Specifically, appellants alleged that the deduction for the echocardiogram program was impermissible under the terms of their fee agreements and, further, the Fleming Firm did not fairly and fully disclose to them the nature and extent of the deduction. Appellants asserted claims for (a) breach of fiduciary duty/constructive fraud/suit for accounting, (b) breach of contract, (c) statutory theft, (d) conversion, (e) common-law and constructive fraud, and (f) unjust enrichment/money had and received.

Following separate motions from both sides, the trial court selected a small group of plaintiffs to proceed to trial and severed the claims of those plaintiffs into a separate cause number. The six plaintiffs in the severed cause (the "Harpst plaintiffs") went to a jury trial on their contract and fiduciary duty claims. The jury found against the Harpst plaintiffs, finding that the firm complied with its fiduciary duty and did not fail to comply with the applicable fee agreements by deducting unreasonable expenses. See Harpst, 566 S.W.3d at 903. The trial court signed a take-nothing judgment in the Fleming Firm's favor.^[8]

Following the judgment in Harpst, the Fleming Firm moved for traditional summary judgment against appellants (the approximately 4, 000 non-severed plaintiffs), arguing that the Harpst jury findings and judgment collaterally estopped appellants' claims or, alternatively, that appellants waived or released their claims against the firm. To establish their collateral estoppel defense, the Fleming Firm attached uncertified copies of the jury verdict and final judgment from the Harpst case. Appellants objected to those exhibits on lack of authentication and hearsay grounds, while also responding to the firm's collateral estoppel defense on the merits. The trial court overruled appellants' objections, granted the Fleming Firm's motion without specifying a reason, and dismissed all of appellants' claims.

On appeal, we sustained all of appellants' dispositive issues. Specifically, we held that the uncertified jury verdict and uncertified judgment in Harpst were not authenticated and could not support summary judgment in the firm's favor on its collateral estoppel defense, see Wilson I, 566 S.W.3d at 416-18 (sustaining issue 1); and, further, we held that the firm failed to establish its entitlement to judgment as a matter of law on waiver or release, see id. at 419-27 (sustaining issues 3 and 4). Because of the former conclusion, we did not address appellants' second issue, in which they challenged the Fleming Firm's collateral estoppel defense on the merits.

The Fleming Firm sought review from the Supreme Court of Texas, challenging only the part of this court's opinion regarding authentication of the documents supporting collateral estoppel. The supreme court granted review and held that the trial court did not abuse its discretion by finding the documents authentic, also without reaching the merits of the collateral estoppel issue.^[9]Accordingly, the supreme court reversed and remanded the case to this court for us to consider the merits of the Fleming Firm's collateral estoppel defense.

Analysis

The sole issue we must address is whether the Fleming Firm proved as a matter of law that appellants' claims are barred by collateral estoppel.

A. Collateral Estoppel

The Fleming Firm contends that the Harpst judgment precludes appellants' claims. The preclusive effect of a judgment is determined by reference to claim preclusion and issue preclusion. See Taylor v. Sturgell, 553 U.S. 880, 892 (2008). While federal courts refer to these doctrines collectively as "res judicata," id., most Texas cases generally adhere to the term "collateral estoppel" when referencing and applying issue preclusion. The doctrine of collateral estoppel precludes relitigation of ultimate issues of fact actually litigated and essential to the judgment in a prior suit. Getty Oil Co. v. Ins. Co. of N. Am., 845 S.W.2d 794, 801 (Tex. 1992); Tarter v. Metro. Sav. &Loan Ass'n, 744 S.W.2d 926, 927 (Tex. 1988). "The term 'ultimate issue' does not refer to a cause of action or a claim." Tarter, 722 S.W.2d at 928; see also Haddock v. Gruber, No. 05-16-01113-CV, 2018 WL 1417453, at *8 (Tex. App.-Dallas Mar. 22, 2018, pet. denied) (mem. op.). Collateral estoppel applies when the party against whom the doctrine is asserted had a full and fair opportunity to litigate the issue in the prior suit and lost. See Quinney Elec., Inc. v. Kondos Entm't, Inc., 988 S.W.2d 212, 213 (Tex. 1999); Tarter, 744 S.W.2d at 927. Collateral estoppel is designed to promote judicial efficiency, protect parties from multiple lawsuits, and prevent inconsistent judgments by precluding relitigation of issues. Sysco Food Servs., Inc. v. Trapnell, 890 S.W.2d 796, 802 (Tex. 1994).

Collateral estoppel can be applied offensively or defensively. Mann v. Old Republic Nat'l Title Ins. Co., 975 S.W.2d 347, 351 n.5 (Tex. App.-Houston [14th Dist.] 1998, no pet.). Offensive collateral estoppel is used by a plaintiff "seeking to estop a defendant from relitigating an issue which the defendant previously litigated and lost in a suit involving another party." Fletcher v. Nat'l Bank of Commerce, 825 S.W.2d 176, 177 (Tex. App.-Amarillo 1992, no writ). Defensive use of collateral estoppel is the opposite-that is, the...