HOUSTON – An appeals court has conditionally granted a petition from the defendants in a breach of contract lawsuit to direct a lower court to vacate a disqualification order.
On Nov. 6, the 14th Court of Appeals granted relators Kyle Financial Group LLC, William Taylor and Brandi Taylor's request to vacate the decision of Judge Robert Schaffer of the 152nd District Court of Harris County that disqualified their counsel, Jack Hardin, and ordered him to withdraw.
The Appeals Court green-lighted the petition since the real-parties-in-interest already gave away their right to go for a disqualification when it waited too long to file the request.
“A party who does not move to disqualify opposing counsel in a timely manner waives the complaint,” the Appeals Court said, pointing out that unexplained delays of more than six months have the potential to lead to a party waiving their right to ask for a disqualification.
Texas Fourteenth Court of Appeals Justice Brett Busby
The case started after the real-parties-in-interest and plaintiffs K. Griff Investigations Inc. said Cronin, Riordan & Whitman Security Consultants LLC (CRW) contacted Griff about acquiring Griff. It signed a letter of intent to buy Griff, which detailed the conditions for the sale, such as CRW getting financing for the sale.
CRW’s counsel, Hardin, then contacted Griff and said the deal was off because the lender didn’t agree with the due-diligence process and the conditions in its letter of intent still had yet to be fulfilled. It later came out in deposition that Kyle Financial Group didn’t want to fund the purchase because CRW was allegedly spending money inappropriately.
Griff sued CRW and the relators listed above over allegations of breach of contract, promissory estoppel, tortious interference, fraud and civil conspiracy. Hardin responded on behalf of the relators.
Because Griff alleged Taylor’s testimony didn’t align with what the counsel said in his email concerning the reason the sale wouldn’t go through, Griff determined the counsel was a material witness and would need him to take the stand during trial.
After Kyle insisted the counsel would still be on the legal team, Griff filed a motion to disqualify Hardin using the Lawyer as Witness rule that says a lawyer can’t represent a party in a case they also serve as a witness for. While Kyle Financial said Griff waived its right to ask for a disqualification since it didn’t file their motion until 763 days after they filed the lawsuit, the trial court granted the disqualification.
In its reversal, the Appeals Court added that Griff was fully aware that Hardin would be a material witness who might need to testify as early as Feb. 1, 2017. Still, it didn’t file the motion to disqualify until March 19 of the following year.
“We conclude that as a matter of law the Griff parties waived their disqualification against Hardin through their more than 13-month unexplained delay in filing their motion to disqualify after they learned Hardin was a material witness,” the ruling states.
Chief Justice Kem Thompson Frost authored the opinion as Justices William J. Boyce and Brett Busby concurred.