A Dallas businessman has filed a legal malpractice lawsuit against a Houston law firm, claiming the attorneys’ negligence cost him almost $2 million.
Thomas P. Muse filed suit against the law firm Arnold & Itkin LLP and attorneys Kurt B. Arnold and Jason A. Itkin on Jan. 22 in Harris County 269th District Court.
Muse claims that Arnold & Itkin advised him to sue an energy company over a business deal, even though he had already signed an agreement not to sue.
In November 2004, Muse and his partners, David Nelson and Jeffery Weiss, as MNW Partners LLC, hired the firm to prosecute claims against Prospect Energy Corp. on behalf of Dallas Gas Partners, an entity owned and controlled by them.
In addition, Muse and his partners wanted Arnold & Itkin to make sure that if DGP did sue Prospect, there wouldn’t be any claims that could be brought against them individually.
According to Muse’s suit, A&I conducted an investigation and issued a formal legal opinion to the effect that "there could be no legal backlash against Muse, Nelson and/or Weiss arising from their causing DGP to sue Prospect.”
The litigation all started when Muse, Nelson and Weiss sold MNW Partners LLC to Prospect for $3,295,000.
The purchase agreement stated in Section 9 that each of the signatories agree “not to institute, maintain or prosecute any action, claim, suit proceeding or cause of action” relating to the agreement.
On Nov. 30, 2004, A&I filed suit in Dallas Gas Partners’ name against Prospect, seeking actual damages in excess of $100 million plus exemplary damages.
Prospect filed a third-party complaint against Muse, Nelson and Weiss on May 17, 2006, alleging breach of the contract not to sue.
“Arnold & Itkin totally missed or ignored the blatantly obvious release and the incorporated promises not to sue, which Muse, Nelson and Weiss had personally and individually given to Prospect,” the suit alleges.
While the cases were proceeding, Muse states that in August 2008 A&I substituted John Black as attorney of record for his case without his knowledge.
Muse claims he was unaware that Black was his new attorney until a meeting in 2010, and when it started to look like the case was proceeding in Prospect’s favor, Muse decided to get an attorney of his own choosing, Richard Legarde.
The trial court determined that the not-to-sue agreement was valid and ordered Muse and his partners to pay Prospect $1,959,998 for the costs of defending themselves in the suit, including attorneys' fees. Court papers say that paying the judgment fell on Muse, due to the "adverse financial condition" of his partners.
Later the Fifth Circuit Court of Appeals found that Arnold & Itkin, “erred in not reading the addendum that effected the release.”
In addition, the suit claims that A&I saw that the case was going badly and prematurely appealed to the Fifth Circuit and then filed a “duplicative second suit” against Prospect in U.S. District Court for the Eastern District of Texas, which Muse’s suit calls “a bad faith attempt at forum shopping”
All of this led to increased costs on all sides, Muse claims.
Muse wants to show that A&I breached the duty of care and state that the lawyers were negligent by failing to notify Muse that they were not representing him.
He is seeking to recover the actual damages, attorneys’ fees, exemplary damages, interest, costs and other relief.
Muse is being represented by Richard Bufkin of Dallas.
Harris Co. Case No. 2014-02724