Texas lawyers Michael Pohl and Robert Ammons were hired by out-of-state clients, the Cheathams of Louisiana after a tire-tread accident that killed LaDonna Cheatham and three passengers, and Lacy Reese of Arkansas after her husband died in a tire-tread rollover in north Texas. The clients allege that case runners for a marketing company approached them at home, touted Pohl and Ammons and offered money routed through a company run by Pohl's wife, part of a barratry scheme the lawyers directed and paid for from Texas.¹

After the underlying personal-injury cases settled in Louisiana and Arkansas, the clients sued in Texas for civil barratry under § 82.0651(a), civil conspiracy, aiding and abetting, and breach of fiduciary duty, the last based on the lawyers' failure to disclose information when asking for new agreements after the alleged scheme surfaced. The trial court granted the lawyers summary judgment on all claims; the First Court of Appeals reversed in part, holding application of the statute was not impermissibly extraterritorial because some conduct occurred in Texas (690 S.W.3d 322). The Court heard argument October 2, 2024.¹

Three petitions for review from the First Court of Appeals in an appeal from summary judgment; argued October 2, 2024.²

Whether § 82.0651(a)'s private right of action applies when the solicitation and procurement of the legal-services contracts occurred outside Texas, and whether the lawyers otherwise showed entitlement to summary judgment on the fiduciary-duty claims.¹

Summary judgment is reviewed de novo, taking the nonmovants' allegations as true; Texas statutes are presumed not to apply outside Texas unless the Legislature's intent is clear.¹

Pohl and Ammons (Petitioners): the statute does not apply to solicitations in other states, and alternatively res judicata (Ammons), limitations and improper intervention (Pohl) bar the claims.

Cheathams and Reese (Respondents): the statute reaches Texas lawyers' financing of barratry from Texas and protects clients wherever located.¹

Not applicable to the Court's decision; the opinion does not recite the petition's cert-worthiness arguments.

• Texas lawyer, out-of-state conduct. Asked whether the statute reaches a Texas lawyer whose conduct happened wholly in Florida, the clients' counsel said yes, because Rules 7.03 and 8.05 make it misconduct in Texas. (Oral Argument, 0:29:46; 0:30:17)
• Disciplinary parallel. Asked whether the analysis is the same if the lawyer-discipline commission pursued a Texas lawyer for out-of-state conduct, the clients' counsel said yes, citing Rule 8.05. (Oral Argument, 0:42:51; 0:43:55)
• Presumption needs text. Pressed that the presumption against extraterritoriality usually calls for more than purpose, the clients' counsel relied on Citizens Insurance v. Daccach, which applied a securities statute to out-of-state sales. (Oral Argument, 0:35:43)
• Penal code reach. Asked whether a lawyer acting wholly outside Texas violated the Texas penal code, the clients' counsel said no, but Rule 7.03 would still apply. (Oral Argument, 0:36:44; 0:37:52)
• Federalism. Asked whether a constitutional problem would double the concern if the conduct was lawful where it occurred, the clients' counsel said Citizens Insurance rejected a similar federalism argument. (Oral Argument, 0:39:06)
• Texans visiting elsewhere. Asked whether the argument changes if the clients were Texans visiting Louisiana or Arkansas, the lawyers' counsel said it would be a closer case, but Texas contacts are slight. (Oral Argument, 0:11:09)
• Harder case. Asked what is wrong with Texas regulating its lawyers' conduct anywhere, the lawyers' counsel said that would be a much harder case raising constitutional issues; this statute does not. (Oral Argument, 0:14:22; 0:15:24)
• Tort or contract. Asked whether the Court must put the claim in the tort box or the contract box for limitations, the lawyers' second counsel said yes. (Oral Argument, 0:21:55)
• Rebuttal on Citizens Insurance. In rebuttal the lawyers' counsel distinguished Citizens Insurance: its focus was registration under a uniform model act, while Texas is the only state with a civil barratry action. (Oral Argument, 0:56:16; 0:56:49)

None noted

Holding

Section 82.0651(a) cannot be applied to these clients' claims without impermissible extraterritorial effect, so the barratry, conspiracy and aiding-and-abetting claims fail, but the fiduciary-duty claims survive.¹

Reasoning

Applying the two-step framework from Abitron and RJR Nabisco, the Court found no clear extraterritorial intent in § 82.0651: the Legislature incorporated Penal Code § 38.12(a) and (b) but not § 1.04's jurisdictional provision, § 82.0651(e)'s purpose statement does not overcome the presumption, and an incongruous result is no basis to imply extraterritoriality. Step two looks to the statute's focus, which the Court identified from § 82.0651(e) as remedying contracts solicited and procured through barratry; that conduct occurred outside Texas, and the clients conceded they alleged only financing and directing, not the solicitation itself, in Texas. Civil conspiracy and aiding and abetting are derivative torts that fail with the statutory claim. The fiduciary-duty claims do not depend on § 82.0651(a); Ammons conceded res judicata reached only the barratry claim, Pohl did not challenge the finding that the four-year period was met, and joinder of Reese under Rule 40(a) was within the trial court's discretion.²

Disposition

Court of appeals' judgment reversed in part, with judgment rendered that the clients take nothing on their § 82.0651(a) claims, affirmed as to the fiduciary-duty claims, and remanded to the trial court.³

Vote Breakdown

Opinion of the Court by Justice Huddle, joined by Chief Justice Blacklock and Justices Bland, Young and Sullivan; Justice Devine did not participate. Justice Busby dissented, joined by Justices Lehrmann and Boyd, arguing that under the focus test the statute's focus includes the financing and paying of solicitors that the incorporated Penal Code provisions cover, that conduct occurred in Texas offices, so this is a permissible domestic application.⁴