AUSTIN - The reach of a barratry provision doesn’t extend to out-of-state clients who signed with Texas lawyers, according to the state’s highest court.
Last week, the Texas Supreme Court found that “a civil statute does not have extraterritorial effect unless the Legislature makes clear that such effect is intended.”
Texas Government Code Section 82.0651 creates a private right of action allowing clients to void a contract for legal services that was procured through barratry.
Texas attorneys Michael Pohl and Robert Ammons were hired to represent plaintiffs in two separate lawsuits outside Texas that arose from automobile collisions, court records show.
After the cases settled, the clients sued the lawyers and their firms in Texas, contending Section 82.065 entitles them to void the legal-services contracts and to recover fees and penalties.
The lawyers moved for summary judgment, arguing that Section 82.0651 does not apply because the alleged solicitations and procurement of the legal-services contracts occurred outside Texas.
The trial court dismissed all claims, but a court of appeals reversed, court records show.
“Applying Texas’s presumption that its statutes do not apply extraterritorially, we conclude that Section 82.0651(a) does not extend to the nonresident clients’ claims because the conduct that is the statute’s focus – the solicitation of a legal-services contract through illegal barratry – occurred outside Texas,” the opinion states. “Accordingly, we reverse the court of appeals’ judgment… and render judgment that they take nothing on those claims.”
The high court did, however, agree with the court of appeals that the lawyers were not entitled to summary judgment on the claims for breach of fiduciary duty, affirming that ruling and remanding to the trial court for further proceedings.
“Because the Legislature has not clearly indicated its intent that this statute apply extraterritorially, the trial court correctly granted summary judgment and dismissed the clients’ claims based on the statute,” the opinion states. “But Pohl and Ammons have not shown they are entitled to summary judgment on the clients’ separate claims for breach of fiduciary duty.”
Justice Brett Busby, along with two other justices, dissented, opining that the high court “rewrites the barratry statute” by reaching the conclusion that it did.
“The attorneys’ alleged conduct, if proven, is a criminal offense that can be prosecuted in Texas,” Justice Busby writes. “Yet today, the Court holds that Texas law has nothing to say about whether these Texas attorneys can still profit from their allegedly criminal and unprofessional conduct—even though the Legislature unanimously passed a civil barratry statute in 2011…
“Because the Legislature spoke clearly and should not have to expend its limited time and resources to act again, I respectfully dissent.”
Case No. 23-0045