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Part of Legal Malpractice Verdict Against Lawyers and Firm Reversed

Take care in structuring a case against a lawyer for legal malpractice as the case will be tried in a very technical manner and it must hold up to intense scrutiny.

The Fourth Court of Appeals reduced a legal malpractice judgment against San Antonio lawyer Oscar Gonzalez and his firm, Law Office of Oscar C. Gonzalez Inc, holding that some claims were based on an "improperly fractured professional negligence claim."

In an Aug. 29 opinion in Law Office of Oscar C. Gonzalez v. Sloan, a three-judge panel of the San Antonio appeals court reversed the judgment based on Isabel Sloan's Texas Deceptive Trade Practices Act (DTPA) cause of action, and rendered judgment against Gonzalez and the firm based on the jury's finding of professional negligence. The court also affirmed the trial judge's imposition of a construction trust on certain assets held by Gonzalez and the firm.


"We conclude the DTPA claim and the other nonnegligence claims raised by Sloan are components of an improperly fractured professional negligence claim. We further conclude the evidence is sufficient to support the jury's finding that Gonzalez and the law office were negligent in their failure to safeguard Sloan's settlement proceeds," the court held in an opinion written by Justice Rebeca Martinez.


Chief Justice Catherine Stone and Justice Sandee Bryan Marion also sat on the panel.


Dan Pozza, a San Antonio solo who represents Gonzalez and his firm, said he is pleased with the Fourth Court's opinion because it's one Gonzalez, who is nearing retirement, can live with.


"From our standpoint, it was what motivated the appeal," Pozza said. "What was galling was the fact that this judgment—even if we were responsible somehow for the other person's theft … we should not be held to this fractured legal malpractice lawyer theory," Pozza said.


In the opinion, the appeals court rendered judgment for Sloan in the form of $77,500 in actual damages with prejudgment interest at 5 percent, court costs of $7,831, and postjudgment interest at 5 percent.


Carl Kolb, a San Antonio solo who represents the plaintiff, did not immediately return two telephone messages.


As described in the opinion, Sloan hired Gonzalez's firm and Eric Turton, then a solo in San Antonio, in 2004 to represent her in a probate matter. Turton settled the probate matter in 2008, and he deposited a $100,000 settlement check in his Interest on Lawyers Trust Account (IOLTA). He paid Sloan $25,000, but "misapplied the remaining $75,000 of Sloan's settlement proceeds by using funds from his IOLTA account to pay his personal and business expenses," including rent and overhead expenses to Gonzalez and/or his firm.


"Turton subsequently admitted his liability for misapplying the settlement funds owed to Sloan, and was disbarred," Martinez wrote.


Turton, who died in January, did not appeal.


Sloan sued Turton, Gonzalez and the firm, and in October 2012 a Bexar County jury returned a verdict finding that Gonzalez and Turton defrauded client Sloan and wrongfully took her money. The jury found that Gonzalez, his firm and Turton had committed fraud and Gonzalez and Turton had committed gross negligence.


In January 2013, 408th District Judge Larry Noll signed a judgment finding Gonzalez, the firm and Turton jointly and severally liable for $77,500 in economic damages plus $64,125 in interest, and also awarded Sloan treble damages of $425,875 based on the jury's finding of "knowing" and "intentional" deceptive conduct and $238,366 in attorney fees.


In the opinion, the court found that Sloan failed to allege facts "sufficient to independently support" a nonnegligence claim against Gonzalez and his firm, such as DTPA, breach of fiduciary duty and conversion claims.


"The gist of all of Sloan's claims is that Gonzalez/the law office, as her attorneys, breached their duty of ordinary care by failing to manage and safeguard Sloan's settlement funds, thereby causing her injury. Her claim ultimately goes to the quality of legal service and therefore constitutes a professional negligence claim which may not be fractured," the court held.


The court also found that Turton's "misappropriation of client funds" was a "foreseeable result of Gonzalez's own failure to use ordinary care to protect Sloan's settlement" funds, so "Gonzalez's negligence is not excused by Turton's criminal conduct."


Thank you to Brenda Jeffries for her original post that appeared on the Texas Lawyer.

Ball and Bonholtzer legal malpractice lawyers Los Angeles, Pasadena and California.

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