12.12. Reading: Perez v. Kirk & Carrigan, 822 S.W.2d 261 (TX. COA 1991)

Reading Guide

Preparing for the Reading:
This issue arises all the time in the corporate client/employee context (although usually not in such a dramatic manner). As you read this case it is important that you put yourself in the shoes of Kirk & Carrigan. Take a look at Rule 1.13(a)(defining the client in the corporate context).

Issues:
– Who/what was Kirk & Carrigan’s client at the time they went to the hospital?
– What did the lawyers do wrong? What should they have done?
– What ethical rules were implicated by their action?
– What is the consequence of the court’s holding?

Perez v. Kirk & Carrigan

Texas Court of Appeals, 1991
822 S.W.2d 261

Before NYE, C.J., and DORSEY and GILBERTO HINOJOSA, JJ.

OPINION

DORSEY, Justice.

Ruben Perez appeals a summary judgment rendered against him on his causes of action against the law firm of Kirk & Carrigan, and against Dana Kirk and Steve Carrigan individually (henceforth all three will be collectively referred to as “Kirk & Carrigan”). We reverse the summary judgment and remand this case for trial.

The Accident

The present suit arises from a school bus accident on September 21, 1989, in Alton, Texas. Ruben Perez was employed by Valley Coca–Cola Bottling Company as a truck driver. On the morning of the accident, Perez attempted to stop his truck at a stop sign along his route, but the truck’s brakes failed to stop the truck, which collided with the school bus. The loaded bus was knocked into a pond and 21 children died. Perez suffered injuries from the collision and was taken to a local hospital to be treated.

Lawyers enter the scene

The day after the accident, Kirk & Carrigan, lawyers who had been hired to represent Valley Coca–Cola Bottling Company, visited Perez in the hospital for the purpose of taking his statement. Perez claims that the lawyers told him that they were his lawyers too and that anything he told them would be kept confidential.[1] With this understanding, Perez gave them a sworn statement concerning the accident.[2] However, after taking Perez’ statement, Kirk & Carrigan had no further contact with him. Instead, Kirk & Carrigan made arrangements for criminal defense attorney Joseph Connors to represent Perez. Connors was paid by National Union Fire Insurance Company which covered both Valley Coca–Cola and Perez for liability in connection with the accident.

Kirk & Carrigan Turn Over Perez’ Statement to Police

Sometime after Connors began representing Perez, Kirk & Carrigan, without telling either Perez or Connors, turned Perez’ statement over to the Hidalgo County District Attorney’s Office. Kirk & Carrigan contend that Perez’ statement was provided in a good faith attempt to fully comply with a request of the district attorney’s office and under threat of subpoena if they did not voluntarily comply. Partly on the basis of this statement, the district attorney was able to obtain a grand jury indictment of Perez for involuntary manslaughter for his actions in connection with the accident.

Perez sued Kirk & Carrigan …. Perez asserted numerous causes of action against Kirk & Carrigan for breach of fiduciary duty, negligent and intentional infliction of emotional distress, violation of the Texas Deceptive Trade Practices–Consumer Protection Act, …, and conspiracy to violate article 21.21 of the Texas Insurance Code (Vernon Supp.1991). Perez complained generally by his petition that Kirk & Carrigan had caused him to suffer public humiliation and emotional distress by turning over his supposedly confidential statement to the district attorney. In addition to the turnover of this statement, Perez alleged generally that Kirk & Carrigan, Valley Coca–Cola, and National Union engaged in an overall plan to shift the blame for the accident away from them and onto Perez, by concealing information tending to show that Valley Coca–Cola’s faulty maintenance of the brakes on the truck was the real cause of the accident.

Kirk & Carrigan moved for summary judgment on all of the claims made against them by Perez, on the grounds that no attorney-client or other fiduciary relationship existed, that even if a fiduciary relationship did exist no damages resulted from the asserted breach, that all of Perez’ claims basically allege groundless prosecution and therefore constitute an invalid claim for malicious prosecution, that Perez was not a consumer under the DTPA, and that Perez failed to state a cause of action for conspiracy to violate the Texas Insurance Code.

After hearing the motion for summary judgment, the trial court rendered judgment that Perez take nothing on his claims against Kirk & Carrigan. … Perez presently appeals.

By his sole point of error, Perez complains simply that the trial court erred in granting Kirk & Carrigan’s motion for summary judgment. …

Breach of Fiduciary Duty

With regard to Perez’ cause of action for breach of the fiduciary duty of good faith and fair dealing, Kirk and Carrigan contend that no attorney-client relationship existed and no fiduciary duty arose, because Perez never sought legal advice from them.

An agreement to form an attorney-client relationship may be implied from the conduct of the parties. Moreover, the relationship does not depend upon the payment of a fee, but may exist as a result of rendering services gratuitously.[3]

In the present case, viewing the summary judgment evidence in the light most favorable to Perez, Kirk & Carrigan told him that, in addition to representing Valley Coca Cola, they were also Perez’ lawyers and that they were going to help him. Perez did not challenge this assertion, and he cooperated with the lawyers in giving his statement to them, even though he did not offer, nor was he asked, to pay the lawyers’ fees. We hold that this was sufficient to imply the creation of an attorney-client relationship at the time Perez gave his statement to Kirk & Carrigan.

[T]he relationship between attorney and client has been described as one of uberrima fides, which means, “most abundant good faith,” requiring absolute and perfect candor, openness and honesty, and the absence of any concealment or deception. In addition, because of the openness and candor within this relationship, certain communications between attorney and client are privileged from disclosure in either civil or criminal proceedings under the provisions of Tex. R. Civ. Evid. 503 and Tex. R. Crim. Evid. 503, respectively.[4]

There is evidence that Kirk & Carrigan represented to Perez that his statement would be kept confidential. Later, however, without telling either Perez or his subsequently-retained criminal defense attorney, Kirk & Carrigan voluntarily disclosed Perez’ statement to the district attorney. Perez asserts in the present suit that this course of conduct amounted, among other things, to a breach of fiduciary duty.

Kirk & Carrigan seek to avoid this claim of breach, on the ground that the attorney-client privilege did not apply to the present statement, because unnecessary third parties were present at the time it was given. However, whether or not the Rule 503 attorney-client privilege extended to Perez’ statement, Kirk & Carrigan initially obtained the statement from Perez on the understanding that it would be kept confidential. Thus, regardless of whether from an evidentiary standpoint the privilege attached, Kirk & Carrigan breached their fiduciary duty to Perez either by wrongfully disclosing a privileged statement or by wrongfully representing that an unprivileged statement would be kept confidential. Either characterization shows a clear lack of honesty toward, and a deception of, Perez by his own attorneys regarding the degree of confidentiality with which they intended to treat the statement.

This type of deceitful and fraudulent conduct within the attorney-client relationship has been treated as a tortious breach of duty in other contexts. ….

Similarly, in the present case, the attorneys were at least under a fiduciary duty not to misrepresent to Perez that his conversations with them were confidential. Kirk & Carrigan should not now be able to assert the lack of attorney-client privilege … to excuse the harm caused by their own misrepresentation to Perez. We hold that it was error for the trial court to grant summary judgment on the ground that Kirk & Carrigan did not owe or breach a fiduciary duty to Perez.

In addition, however, even assuming a breach of fiduciary duty, Kirk & Carrigan also contend that summary judgment may be sustained on the ground that Perez could show no damages resulting from the breach. Kirk & Carrigan contend that their dissemination of Perez’ statement could not have caused him any damages in the way of emotional distress, because the statement merely revealed Perez’ own version of what happened. We do not agree. Mental anguish consists of the emotional response of the plaintiff caused by the tortfeasor’s conduct. It includes, among other things, the mental sensation of pain resulting from public humiliation.

Regardless of the fact that Perez himself made the present statement, he did not necessarily intend it to be a public response as Kirk & Carrigan contend, but only a private and confidential discussion with his attorneys. Perez alleged that the publicity caused by his indictment, resulting from the revelation of the statement to the district attorney in breach of that confidentiality, caused him to suffer emotional distress and mental anguish. We hold that Perez has made a valid claim for such damages.

****

In conclusion, for the reasons stated above, we sustain Perez’ point of error. We REVERSE the summary judgment rendered against Perez and REMAND this case for trial.

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[1] The summary judgment affidavits offered by Perez show the following with regard to Kirk & Carrigan’s representations to him at the time they took Perez’ statement:

Ruben Perez—”Kirk told me that they were lawyers hired by Valley Coca Cola, that they were my lawyers too, and that whatever I told them would be kept confidential. I trusted what these lawyers told me and I answered their questions.”

Israel Perez (Ruben’s father)—”Before beginning the questions, Kirk told Ruben that they were his lawyers, that they were going to help him, and that what they, they lawyers, learned from Ruben would be kept a secret.”

Joe Perez (Ruben’s uncle)—”Before Ruben gave his statement to Kirk, Kirk told Ruben that they (the lawyers) represented Valley Coca Cola, that they were Ruben’s lawyers too, and that they did not want anyone else to come in the room and to talk to Ruben. Kirk then told Ruben ‘I know you are in pain, but we need to ask you these questions. Your mind would be fresh to tell us what happened. This will be kept confidential. We will get you a copy of it tomorrow. We will not give anyone a copy. It is between you and us.’ Kirk and Carrigan did not say that they represented only Valley Coca Cola.”

[2] Among other things, Perez generally stated that he had a previous accident while driving a Coke truck in 1987 for which he was given a citation, that he had a speeding violation in 1988, that he had not filled out a daily checklist to show that he had checked the brakes on the morning of the accident, that he had never before experienced problems with the brakes on his truck and that they were working just before the accident, that he tried to apply the brakes to stop the truck, but that the brakes for the trailer were not working at all to stop the truck (the truck had two sets of brakes: the ones for the cab worked; the ones for the trailer did not and the greater weight of the trailer had the effect of pushing the entire truck, even though the cab brakes were working), that Perez did not have enough time to apply the emergency brakes, and that there was nothing the managers or supervisors at Valley Coca–Cola could have done to prevent the accident.

[3] An attorney’s fiduciary responsibilities may arise even during preliminary consultations regarding the attorney’s possible retention if the attorney enters into discussion of the client’s legal problems with a view toward undertaking representation.

[4] Disclosure of confidential communications by an attorney, whether privileged or not under the rules of evidence, is generally prohibited by the disciplinary rules governing attorneys’ conduct in Texas….