Attorney rightfully accepted $1M settlement for client, appeals court rules

David Yates Nov. 16, 2009, 8:18am


Appellate justices recently found no fault in local attorney John Morgan's decision to settle his client's lawsuit for nearly $1 million.

As the Record previously reported, on May 28 the Texas Ninth District Court of Appeals heard arguments in the case of Kevin Walker vs. John Morgan et al. Walker filed a legal malpractice suit against Morgan in 2006, alleging the attorney settled a lawsuit without his permission.

If justices had ruled in Walker's favor, the lawsuit he filed against Morgan and his former partner, Mike Lindsay, would have been reinstated and booted back to the lower courts for a trial by jury.

However, on Nov. 12 justices affirmed local Judge Donald Floyd's May 9, 2008, ruling, which granted Morgan's no-evidence motion for summary judgment and dismissed Walker's case with prejudice.

"This is an appeal from a summary judgment in a lawsuit by a client against his attorneys," states the appeals court's opinion, authored by Justice David Gaultney.

"In his response to the motion for summary judgment on his professional negligence claim, appellant failed to raise a material fact issue concerning causation or damages. He is not entitled to any recovery under his other claims. We affirm the trial court's judgment."

Morgan was originally Walker's attorney in a 2005 suit against 1st Capital Reserve, Universal Coin & Bullion and Mike Fuljenz, which alleged the defendants wrongfully fired 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 power of attorney on Feb. 12, 2005. One year later, Morgan hammered out a $950,000 settlement on Feb. 22, 2006.

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

But Morgan's team of attorneys argued that he was authorized to settle since Walker had given Morgan power of attorney. And Morgan claims he did consult with is client a few weeks before the settlement was reached.

According to court documents, Walker refused to sign the settlement agreement and as a consequence 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 in his favor.

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.

Nonetheless, justices found that there was no expert evidence showing the value of Walker's claims in the coin company lawsuit, and no evaluation of whether his claims would somehow have entitled him to greater recovery than that afforded by the lofty settlement.

"Walker's response to the no-evidence summary judgment motion does not raise a material issue of fact on whether he would have prevailed in the coin company lawsuit, or could have obtained a different, more beneficial recovery but for the conduct of his attorneys," the opinion states.

"Appellant has not produced more than a scintilla of evidence on the elements of proximate cause or damages in his professional negligence claim. We overrule appellant's issues and affirm the judgment of the trial court."

The Lindsay & Morgan law firm were 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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