Appeals court hears malpractice case against John Morgan

David Yates May 28, 2009, 10:41am


Following an hour's worth of oral arguments, Beaumont justices now must decide if a legal malpractice case against John Morgan and his firm should be booted back to the lower courts to be tried by a jury.

On May 28 the Texas Ninth District Court of Appeals heard arguments in the case of Kevin Walker vs. John Morgan et al. As the Record reported two weeks ago, if justices rule in plaintiff Kevin Walker's favor, a lawsuit he filed against Morgan, his partner Mike Lindsay and the Lindsay & Morgan law firm, could be reinstated.

Walker filed the legal malpractice suit against Morgan in 2006, alleging the attorney settled a lawsuit without Walker's permission by signing a Rule 11 settlement agreement.

"Mr. Walker was totally taken aback that his attorneys settled the case without consulting him," said Walker's attorney, Gregg Schellhammer, during oral arguments. "Morgan had a fiduciary duty to consult Walker."

Conversely, Morgan's team of attorneys argue that he was empowered by a power of attorney to settle Walker's suit and did in fact consult walker a few weeks before the settlement was reached.

Morgan was Walker's attorney in a 2005 suit against 1st Capital Reserve, Universal Coin & Bullion and Mike Fuljenz for wrongfully firing him.

In his suit, Walker asserted he was promised various levels of commission and bonuses for his coin sales. But instead of rewarding him for his performance, he claims the defendants fired him when he sought his supplemental income.

Court papers say Walker gave Morgan and his firm a power of attorney on Feb. 12, 2005. One year later, Morgan hammered out a $950,000 settlement on Feb. 22, 2006.

In his response to Walker's suit, Morgan says Walker and his wife were going through a divorce at the time of the settlement, and that Walker's divorce attorney "for strategic reasons of her own did not want the lawsuit settled," allegedly instructing Walker not to sign the Rule 11 settlement agreement.

According to court documents, Walker refused to sign the agreement and as a consequence he was counter-sued by the suit's defendants for breach of contract.

On April 20, 2006, Judge Milton Shuffield, 136th Judicial District, conducted a trial on the breach of contract action. Five months later, the judge signed a final judgment order, ruling that the settlement agreement was enforceable.

Schellhammer argues that a jury, not a judge, should have decided if Morgan violated his fiduciary duty to consult Walker.

After Judge Shuffield's ruling, Walker filed suit against Morgan and his firm in a separate litigation that also did not end favorably for him.

On May 9, 2008, Judge Donald Floyd, 172nd Judicial District, granted Morgan's and his partner's no-evidence motion for summary judgment, dismissing Walker's case with prejudice.

The ruling led Walker to submit his appeal on Aug. 22, 2008.

In his appeal, Walker argues that "a genuine issue of material fact exists as to whether the Lindsay & Morgan law firm had authority to enter into the Rule 11 agreement," saying that he implicitly instructed Morgan not to settle the case.

"The trial court's summary judgment in favor of the defendant, Lindsay & Morgan, was erroneous," Walker's appeals brief states.

Walker is asking justices to reverse the ruling.

The Lindsay & Morgan law firm are represented in party by attorneys Kirsten A. Davenport, John Wesley Raley and Diana L. Faust.

Trial case Nos. D174-316 and E177-428
Appeals case No. 09-08-00362-CV

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