After the trial court entered a divorce decree, one of the divorce litigants sued opposing counsel for fraud and other claims concerning the law firm’s preparation of documentation to transfer an airplane. Specifically, the litigant alleged that Cantey Hanger, who represented the opposing party in the litigation, prepared a document that contained misrepresentations and structured the transactions in a manner that shifted certain tax liabilities to the litigant in contravention of what the divorce decree held. Cantey Hanger moved for summary judgment arguing that it was immune from liability to a non-client for conduct within the scope of representation of its client in the divorce proceeding. Id. The trial court granted the summary judgment, but the court of appeals reversed and Cantey Hanger petitioned the Supreme Court of Texas for review. On June 26, 2015, the Supreme Court of Texas answered the question of what is the scope of an attorney’s immunity from civil liability to non-clients. Cantey Hanger, LLP. v. Byrd, ___ S.W.3d ____, 2015 Tex. LEXIS 619 (Tex. 2015).
In reversing the court of appeals and finding that attorney immunity barred the claims, the Supreme Court discussed in great detail the scope of attorney immunity to non-clients in civil matters in Texas. The Supreme Court restated that Texas common law is well settled that an attorney does not owe a professional duty of care to third parties who are damaged by the attorney’s negligent representation of a client. Cantey Hanger, LLP. v. Byrd, ___ S.W.3d ____, 2015 Tex. LEXIS 619 (Tex. 2015), citing, Barcelo v. Elliott, 923 S.W.2d 575, 577 (Tex. 1996). However, the Supreme Court noted that Texas courts have developed a “more comprehensive affirmative defense” that protects attorneys from liability to non-clients arising from the “broad declaration over a century ago that attorneys are authorized to practice their profession, to advise their clients and interpose any defense or supposed defense, without making themselves liable for damages.” Cantey Hanger, LLP. v. Byrd, ___ S.W.3d ____, 2015 Tex. LEXIS 619 (Tex. 2015), citing, Kruegel v. Murphy, 126 S.W. 343, 345 (Tex. Civ. App.-1910, writ ref’d). This affirmative defense is designed to ensure “loyal, faithful, and aggressive representation by attorneys employed as advocates.” Cantey Hanger, LLP. v. Byrd, ___ S.W.3d ____, 2015 Tex. LEXIS 619 (Tex. 2015), citing, Mitchell v. Chapman, 10 S.W.3d 810, 812 (Tex. App.-Dallas 2000, pet. denied).
In describing attorney immunity, the Supreme Court held that, as a general rule, attorneys are immune from civil liability to non-clients “for actions taken in connection with representing a client in litigation.” Cantey Hanger, LLP. v. Byrd, ___ S.W.3d ____, 2015 Tex. LEXIS 619 (Tex. 2015), citing, Alpert v. Cain, Caton & James, P.C., 178 S.W.3d 398, 405 (Tex. App.-Dallas 2003, no pet.). Even conduct that is wrongful in the context of the underlying suit is not actionable if it is part of the discharge of the lawyer’s duties in representing his or her client. Cantey Hanger, LLP. v. Byrd, ___ S.W.3d ____, 2015 Tex. LEXIS 619 (Tex. 2015), citing, Alpert, 178 S.w.3d at 406. However, this does not give the attorney free rein. As the Supreme Court held there are other mechanisms in place to discourage and remedy such conduct such as sanctions, contempt, and attorney disciplinary proceedings.
The Supreme Court further pointed out that attorneys are not protected from non-liability to non-clients for their actions when they do not qualify as the kind of conduct in which an attorney engages when discharging his duties to his client. Examples such as damages caused by participation in a fraudulent business scheme or knowingly assisting a client in evading a judgment through a fraudulent transfer. Acknowledging that there is a dispute as to the scope of the immunity, the Supreme Court took a narrower approach to the so called fraud exception holding that an attorney’s knowing commission of a fraudulent act “outside the scope of his legal representation of his client is actionable.” Cantey Hanger LLC., 2015 Tex. Lexi 619, *10, citing, Dixon Fin. Servs. Ltd. v. Greenberg, Peden, Siegmyer & Oshman P.C., 2008 Tex. App. LEXIS 2064, 2008 WL 76548, at *8.
While the Cantey Hanger opinion attempts to clear up the issue of the scope of attorney immunity to non-clients, it does broaden the immunity to post-litigation matters arising out of the underlying litigation. There was also a very strong dissent by Justice Green that was joined by Chief Justice Hecht and Justices Johnson and Willett which discusses the two closely related legal theories of the judicial or quasi-judicial immunity in a proceeding and litigation immunity.
The Cantey Hanger opinion is a must read if a claim is being brought by a non-client against an attorney. The opinions in this blog are solely the author’s and any comments or suggestions should be sent to John@jrjoneslaw.com.