      TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN


                                      NO. 03-04-00750-CV



                           Capital City Church of Christ, Appellant

                                                v.

   Ralph Martin Novak, Jr.; Robert E. Reetz, Jr. and Hilgers & Watkins P.C., Appellees


     FROM THE DISTRICT COURT OF TRAVIS COUNTY, 98TH JUDICIAL DISTRICT
         NO. GN303974, HONORABLE PETER M. LOWRY, JUDGE PRESIDING



                            MEMORANDUM OPINION


               This is an appeal from a summary judgment granted on claims asserted by the Capital

City Church of Christ (the church),1 against appellees Hilgers & Watkins, P.C. (the firm), and two

of its partners, Ralph Martin Novak, Jr., and Robert E. Reetz, Jr.2 (the defendants). We affirm.

               The church sued the defendants for breach of fiduciary duty based on the defendants’

representation of Sam Chen, Inc. (Chen) in a 2003 dispute with the church. The church and Chen

had been co-owners of a six-story building at 804 Congress Avenue in Austin (the building) since

October 1996. Their relationship was governed by a Co-Ownership Agreement that, to summarize,

contemplated that they would rent office space in the building to third parties, made the church

       1
          In the record, appellant is also termed the “Church of Christ, Capital City Congregation,
Inc.” or “CCCCC.” However, appellant’s briefing uses “Capital City Church of Christ,” and we will
do the same.
       2
          The firm has since merged with Brown McCarroll, L.L.P., and Reetz and Novak are both
partners in that entity.
responsible for the building’s physical facilities, and made Chen responsible for finances and

accounting under the arrangement. Over time, the relationship between the church (particularly, the

church’s contact, Jim Colley3) and Chen deteriorated, with Colley accusing Chen of self-dealing or

other malfeasance and Chen accusing Colley of mismanaging the building. In late 2002, the church

and Chen agreed to work toward implementing a condominium regime under which each would own

separate floors of the building. Originally, the law firm of Armbrust & Brown represented the co-

owners jointly but, as negotiations deteriorated and conflicts arose, Chen hired Hilgers & Watkins

as its separate counsel.

                Upon learning of the firm’s representation of Chen, the church and Colley raised

concerns that the firm had a conflict of interest based on its prior representation of the church.4 We

will discuss this prior representation in detail below, but to summarize, it is undisputed that the

firm’s legal work for the church took place between 1996 and early 1998 and principally involved




       3
           Colley identified himself as the church’s “Pulpit Minister.”
       4
          In response to this concern, Reetz sent Colley a letter in which he explained that the firm’s
“representation was over six years ago and involved lease issues with tenants of the building.” Reetz
further explained:

       Our code of ethics requires us to either withdraw or obtain a waiver if there is a
       conflict of interest wherein the matter is “substantially related” to the prior
       representation of the adverse party. I have provided copies of the work that Hilgers
       & Watkins did on behalf of Capital City Congregational Church of Christ in 1997 to
       Tom Watkins, our senior partner who reviews all ethics questions on behalf of the
       firm. It is his opinion that the nature of the prior representation does not meet the
       threshold test of “substantially related” matter. . . . Therefore, we maintain that we
       may continue representing Sam Chen, Inc. with regards to the co-ownership
       agreement.


                                                  2
disputes with tenants in the building. It is also undisputed that the church was represented by other

counsel when executing the 1996 Co-Ownership Agreement and a subsequent 2002 amendment.

               The church filed the underlying lawsuit in October 2003. Defendants withdrew from

representing Chen shortly thereafter. Chen and the church ultimately resolved their dispute

through arbitration.

               The sole claim that the church asserts is that the firm, Novak, and Reetz breached

their fiduciary duties to the church as a former firm client by misusing confidential information

obtained through that relationship to further their representation of Chen. The elements of a breach-

of-fiduciary-duty claim are: (1) a fiduciary relationship between the plaintiff and defendant; (2) a

breach by the defendant of his fiduciary duty to the plaintiff; (3) which must result in injury to the

plaintiff or benefit to the defendant. Jones v. Blume, 196 S.W.3d 440, 447 (Tex. App.—Dallas 2006,

pet. denied). In the context of an attorney-client relationship, “[a]n attorney breaches his fiduciary

duty when he benefits improperly from the attorney-client relationship by, among other things . . .

improperly using client confidences.” Gibson v. Ellis, 126 S.W.3d 324, 330 (Tex. App.—Dallas

2004, no pet.) (citing Goffney v. Rabson, 56 S.W.3d 186, 193 (Tex. App.— Houston [14th Dist.]

2001, pet. denied)); see also Aiken v. Hancock, 115 S.W.3d 26, 28 (Tex. App.—San Antonio 2003,

pet. denied) (distinguishing between breach-of-fiduciary-duty claims against lawyers and malpractice

claims).

               The defendants do not dispute that their prior attorney-client relationship with the

church gave rise to a fiduciary relationship. See Meyer v. Cathey, 167 S.W.3d 327, 330-31

(Tex. 2005). Their focus has instead been the remaining elements, existence of a breach and injury



                                                  3
or damages. The defendants sought traditional and no-evidence summary judgment that, as a matter

of law, (1) there was no “substantial relationship” between the facts and issues of their former

representation of the church and their subsequent relationship of Chen; (2) no confidential

information of the church was used or disclosed in their subsequent representation of Chen; and (3)

no injury and no damages were caused by their representation of Chen. The district court granted

the motion explicitly on each ground. The first two summary judgment grounds both relate to the

breach element of the church’s breach-of-fiduciary-duty claim. The church appeals from this

ruling—disputing all three summary judgment grounds—and from a discovery ruling that we

will discuss later.

                We review the district court’s summary judgment de novo. Valence Operating Co.

v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005); Provident Life & Accident Ins. Co. v. Knott, 128

S.W.3d 211, 215 (Tex. 2003). When reviewing a summary judgment, we take as true all evidence

favorable to the nonmovant, and we indulge every reasonable inference and resolve any doubts in

the nonmovant’s favor. Valence Operating Co., 164 S.W.3d at 661; Knott, 128 S.W.3d at 215.

Summary judgment is proper when there are no disputed issues of material fact and the movant is

entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c); Shell Oil Co. v. Khan, 138 S.W.3d

288, 291 n.4 (Tex. 2004) (citing Knott, 128 S.W.3d at 215-16). Furthermore, “[a] defendant who

conclusively negates at least one of the essential elements of the plaintiff’s cause of action is entitled




                                                    4
to summary judgment.” Little v. Texas Dep’t of Crim. Justice, 148 S.W.3d 374, 381 (Tex. 2004)

(citing Randall’s Food Mkts., Inc. v. Johnson, 891 S.W.2d 640, 644 (Tex. 1995)).5


Evidence of breach

                 Defendants have presented undisputed summary judgment evidence that they have

not actually used or divulged to Chen the church’s confidential information. Further, while making

some vague and conclusory allusions that it discussed information regarding “purchase,”

“operation,” or “leasing” of the building with defendants, the church has not identified any specific

confidential information that it conveyed to the defendants during their prior representation. To the

contrary, the summary judgment evidence reflects that the prior representation involved

communications with tenants or other third parties6 and issues principally concerning matters known

to third parties, such as the terms of their lease agreements or the physical features of the building.7

The church instead seeks to rely on a series of presumptions (or, the church suggests, at least the

rationale underlying them) that operate when a former client seeks to disqualify a former attorney

from subsequently representing an adverse party.

                 A former client may seek to disqualify a former attorney from representing a

subsequent adversary based on the threat that the attorney will intentionally or inadvertently reveal


        5
         The church objects to our consideration of an exhibit the firm filed with its appellate brief
that purports to demonstrate a timeline of relevant events in this case. We have relied only on the
evidence in the record.
        6
          Novak, who represented the church in the prior matters, testified that he knew of no
information given to him by the church in the course of that representation that the church asked him
not to share with the third parties involved.
        7
            E.g., leaks in the roof, elevator carpeting.

                                                     5
the former client’s confidences during the later representation. The former client must establish a

preponderance of the facts demonstrating a “substantial relationship” between the two

representations by proving “the existence of a prior attorney-client relationship in which the factual

matters involved were so related to the facts in the pending litigation that it creates a genuine threat

that confidences revealed to his former counsel will be divulged to his present adversary.” NCNB

Tex. Nat’l Bank v. Coker, 765 S.W.2d 398, 400 (Tex. 1989). Sustaining this burden requires

“evidence of specific similarities capable of being recited in the disqualification order.” Id. If the

former client can meet this burden, it is conclusively presumed that the former client revealed

confidences and secrets to the attorney that would be at risk of disclosure in the current

representation. Id. “In this manner, the movant is not required to reveal the very confidences he

wishes to protect.”     Id.   Further, by proving the substantial relationship between the two

representations, the movant also establishes as a matter of law that “an appearance of impropriety

exists.” Id. As such, “[a]lthough the former attorney will not be presumed to have revealed the

confidences to his present client, the trial court should perform its role in the internal regulation of

the legal profession and disqualify counsel from further representation in the pending litigation.” Id.

               The church asserts that there is a “substantial relationship” between the defendants’

prior and subsequent representation and that the presumptions that arise in the disqualification

context should serve as a substitute for the traditional proof requirements on its breach-of-fiduciary-

duty claim. To date, there is no reported Texas authority to support our applying the “substantial

relationship” analysis in this manner. In the sole reported case presenting that question, the Dallas

Court of Appeals refused to “substitute a conclusive presumption, which exists for disqualification



                                                   6
purposes, for real evidence” in a former client’s breach-of-fiduciary-duty claim against a law firm,

and held that the presumption “cannot raise a fact issue on disclosure of confidences.” City of

Garland v. Booth, 895 S.W.2d 766, 773 (Tex. App.—Dallas 1995, writ denied). Relying on proof

similar to that which defendants present here, the court affirmed summary judgment in favor of the

firm. Id. at 772-73.

                The church counters that an unpublished opinion from the Amarillo Court of Appeals

creates “a split . . . as to whether the presumption of disclosure found in attorney disqualification

cases is applicable to actions for breach of fiduciary duty.” See Reppert v. Hooks,

No. 07-97-0302-CV, 1998 Tex. App. LEXIS 5552 (Tex. App.—Amarillo Aug. 28, 1998, pet.

denied).   In fact, Reppert follows similar logic as Booth in observing that while “[i]n the

disqualification mode, the applicable test is whether there is a genuine threat of disclosure, rather

than an actual disclosure,” a breach-of-fiduciary-duty claim requires the plaintiff “to show an actual

disclosure to recover.” 1998 Tex. App. LEXIS 5552, at *28. The Amarillo court found that the

evidence raised a fact issue regarding actual disclosure and, as the church emphasizes, its analysis

appears to give some weight to the “difficulty of showing the revelation of confidences by a former

attorney.” However, the court relied upon actual evidence that the former client had conveyed

specific confidential information to the attorney in connection with the client’s purchase of a note

that later was the basis for the very claims that the attorney filed against the former client. Id. at *28-

29.

                We conclude that the presumptions that arise from a “substantial relationship”

between prior and subsequent representations in the attorney disqualification context cannot



                                                    7
substitute for the traditional requirement that the church support its breach-of-fiduciary-duty claim

with evidence. Booth, 895 S.W.2d at 772-73. That is not the purpose or effect of the presumption.

Establishing a “substantial relationship” between the prior and subsequent representation for

disqualification purposes does not give rise to a presumption that confidences obtained in the prior

representation have actually been disclosed to the present adversary. To the contrary, “the former

attorney will not be presumed to have revealed the confidences to his present client.”          Coker,

765 S.W.2d at 400 (emphasis added). A “substantial relationship” instead gives rise to an

“appearance of impropriety”—a basis for disqualification, not an element of a tort claim—that

derives from the perceived risk that confidential information will be disclosed. Id.

               We conclude, as did the Booth court, that a “substantial relationship” between prior

and subsequent representations, standing alone, “cannot raise a fact issue on disclosure of

confidences,” 895 S.W.2d at 773, and that the district court properly granted summary judgment on

the ground that, as a matter of law, no confidential information of the church was used or disclosed

in the defendants’ subsequent representation of Chen.



Substantial relationship

               Alternatively, we agree with the district court that the church failed to raise a fact

issue regarding a “substantial relationship” between the defendants’ prior representation of the

church and their subsequent representation of Chen. The “substantial relationship” standard requires

the former client to prove specific factual similarities, liability issues, or strategies from the prior

representation that are so closely related to those of the subsequent representation as to “create[] a



                                                   8
genuine threat that confidences revealed to his former counsel will be divulged to his present

adversary.” Texaco, Inc. v. Garcia, 891 S.W.2d 253, 256-57 (Tex. 1995); Coker, 765 S.W.2d at

399-400; see Spears v. Fourth Court of Appeals, 797 S.W.2d 654, 656 (Tex. 1990) (“[M]ere

allegations of unethical conduct or evidence showing a remote possibility of a violation of the

disciplinary rules will not suffice.”). Conclusory statements about similarities in the representations

are not sufficient; instead, the standard requires sufficiently specific delineation of subject matter,

issues, and causes of action presented to enable the trial court to engage in a “painstaking analysis

of the facts.” J.K. & Susie L. Wadley Research Inst. & Blood Bank v. Morris, 776 S.W.2d 271, 278

(Tex. App.—Dallas 1989, no writ). Likewise, “[a] superficial resemblance between issues is not

enough to constitute a substantial relationship.” Id.; see In re Drake, 195 S.W.3d 232, 236-37 (Tex.

App.—San Antonio 2006, no pet.) (mere fact that lawyer had long represented county tax appraisal

district in suits over valuation of property, involving similar defenses and strategies, did not establish

“substantial relationship” with subsequent valuation dispute in which counsel represented property

owner). Nor does an attorney’s mere generalized knowledge of a client’s “inner workings” in regard

to selecting experts or fact witnesses, “preparing and responding to discovery requests, formulating

defense strategies, trial preparation, and attending settlement conferences” constitute the required

“specific factual similarities” between prior and subsequent representations. In re Drake, 195

S.W.3d at 236-37. Further, a “substantial relationship” cannot be predicated upon the perceived risk

of disclosure of facts that are common knowledge, within the public domain, or that have already

been provided to the present adversary. Metropolitan Life Ins. Co. v. Syntek Fin. Corp., 881 S.W.2d

319, 321 (Tex. 1994); Wadley, 776 S.W.2d at 278.



                                                    9
               We begin by comparing the summary judgment evidence regarding defendants’ prior

representation of the church and their subsequent representation of Chen.


       The church vs. Chen dispute

               In 1996, the church purchased the building. In October of that year, the church sold

a 2/3 undivided interest in the building to Chen, retaining an undivided 1/3 share. Also in 1996, the

two entities executed a Co-Ownership Agreement for the purposes of jointly maintaining, renting,

or selling the building as a commercial office building and sharing in revenue and expenses.

Attorney John F. Campbell represented the church in these transactions, while Anthony Goodall of

Goodall & Davison represented Chen.

               In its original form, the Co-Ownership Agreement specified that the church and Chen

each would have the right to occupy or sublease certain assigned floors of the building,8 with no

obligation to pay those rents and charges to the co-ownership, and to jointly lease the remaining

floors. The agreement further provided that the church would manage all physical assets of the Co-

Ownership and be responsible for repairs and maintenance of all assets, while Chen would manage

all financial matters and be responsible for collecting and accounting for revenues and payment of

expenses and debt service.

               By August 2002, disputes had begun to arise between the church and Chen. There

is evidence suggesting that these conflicts were attributable to some extent to financial strains on the

co-ownership caused by a loss of tenants and difficult market conditions. On or about August 2002,


        8
        The church had the right to occupy or sublet the second floor of the six-story building, and
Chen the fifth and sixth floors.

                                                  10
Comerica Bank, a major tenant of the building, gave notice of its intent to terminate its lease later

that year. Correspondence reflects that counsel Bob Burton of Armbrust & Brown had negotiated

a lease agreement between the church and Comerica in 1996 for tenancy of the first and third floors

of the building, and that, in 2001, Comerica had negotiated a renewal of its lease and a right to

terminate upon six-months’ notice. The church proposed to Chen that the co-ownership again retain

Burton “to handle matters regarding the Comerica lease,” as he “has represented the Co-ownership’s

interests regarding this particular tenant over the past six years.”        Chen instead engaged

Goodall—the attorney who had represented Chen in purchasing its interest and negotiating the Co-

Ownership Agreement—to “draft a letter . . . advising the bank of its obligations regarding the

termination of the lease,” including payment of “escalation rents (pass through expenses).” Colley

insisted that Burton should serve as the co-ownership’s counsel in connection with the matter,

expressing concern that “the Church and Sam Chen may have conflicting interests with respect to

Comerica Bank’s tenancy and/or lease termination.” Chen also began the process of hiring a broker,

presumably to assist in re-leasing the Comerica space. Subsequently, Burton, representing the co-

owners, communicated to Comerica a willingness to “explore any and all options which would

enable [Comerica] to remain in the Building.” The record reflects that Comerica vacated the

building in November 2002, although it paid rent through mid-December.

               Also in November, the church and Chen executed a First Amendment to their Co-

Ownership Agreement. Among other changes, the parties expanded their respective rights of

occupancy (and corresponding exclusive rights to rent revenues), dividing all remaining floors of the




                                                 11
building between them.9 They also agreed to negotiate in good faith to replace, within six months,

their tenancy-in-common with a condominium regime under which each would independently own

their respective floors. Burton began work on the necessary instruments and, in February 2003,

transmitted to each co-owner a binder of proposed documents for the “Hogg-Gregory Office

Condominiums.” Burton noted that “the co-owners will need to reach agreement on the common

interest allocation for each unit,” which “specify the percentage interest in the general common

elements attributable to each unit and determine the percentage of the annual budget of the

Association paid by each unit owner.” Burton also requested that the co-owners review the proposed

declarations, articles, and bylaws “with respect to the number of directors and the percentage vote

required for certain actions by the Association.”

                On March 28, 2003, Chen wrote Burton advising that “[a]fter reviewing your

proposed condominium documents for the Hogg-Gregory Office Condominiums, Sam Chen, Inc.

. . . must completely oppose your proposal.” Chen accused Burton of “grossly neglect[ing] Chen’s

interest” and that “[i]n order to safeguard the assets of Chen, I must terminate your legal services to

Chen.” On March 31, Burton wrote Colley and Chen requesting a conflict waiver to enable him to

continue representing the church. On the same day, Chen met with Reetz, and Hilgers & Watkins

began to provide legal services to Chen.

                In the months that followed, Reetz, Novak, and other firm attorneys billed time to

Chen related to the condominium conversion, including research concerning “condominium statutes”


        9
           In addition to its pre-existing rights to the fifth and sixth floors, Chen was given rights to
the first and fourth floors. The church, which previously had rights to the second floor, also received
rights to the third floor.

                                                   12
and rules, zoning issues, and the property tax status of nonprofit or tax-exempt organizations. On

June 2, billing records reflect that Reetz began working on a letter “in response to Colley letter.”

Colley’s letter is not in the summary judgment record, but the record does include a June 17 letter

from Sam Chen to Colley responding to “your letter dated June 2, 2003.” Chen appears to take great

offense to whatever Colley’s letter said, alluding to “twelve pages and twenty-five exhibits” of

“machinations and delusional lies,” urging Colley to “consult a psychiatric counselor,” and accusing

him of “childish behavior” and “language inappropriate coming from a minister.” Other comments

in Chen’s letter suggest that Colley’s letter may have been prompted by financial demands that Chen

had made on the church to fund the co-ownership amid dwindling revenues.

               Much of Chen’s letter concerns Colley’s apparent personal attacks of Chen, but

several issues are raised concerning various aspects of Property management and the parties’ rights

under the Co-Ownership Agreement:


       !       A dispute over Colley’s “questionable” use of petty cash to purchase items
               for uses that Chen viewed as unrelated to running an office building or that
               were unnecessary in light of building occupancy or existing janitorial service
               contracts.

       !       Disputes over the parties’ respective efforts to locate tenants for the building.
               Chen argued that the building had over 80% occupancy between 1999-2002
               and that, after a tenant, BAM!, had vacated fourth-floor space, Chen had
               immediately hired a broker on a six-month contract to find a tenant. Chen
               attributed the loss of Compass Bank to Colley’s “harsh to non-existent
               negotiations and unwillingness to compromise to make a deal.”

       !       Allegations that Chen “stopped” a $6 million sale of the building. Chen
               argued that he was never given a copy of the proposed sale contract; that the
               sale was contingent upon persuading an existing third-floor tenant,
               FrogDesign, to lease the fourth floor, a “difficult task”; and that Colley had



                                              13
    confided that he did not want to sell because it would reduce his “sphere of
    influence.”

!   Other issues that appear to have arisen in the aftermath of Comerica’s
    departure from the building. Chen alludes to a refinancing proposal subject
    to a requirement that “the cash [be] put into a security fund until the bank’s
    successful releasing and after their one-year escape clause had passed.” Chen
    accused Colley of having “made it abundantly clear you would not keep the
    cash in reserve in case the bank left the building and recalled the loan amount
    in full and that you would immediately spend the cash on business or pleasure
    elsewhere.”

!   Reference is also made to loan payments owed to Comerica Bank and the
    difficulties in making the payments when “4 of our 6 floors have no tenants.”
    Chen also notes that “[c]urrently, the Co-ownership has no monthly income
    and relies entirely on cash calls to cover its expenses.” Chen urges that “[i]f
    you have a problem paying these cash calls, we must meet to discuss this
    problem as soon as possible and work together to resolve any setbacks the
    Church may be experiencing instead of writing venomous and disparaging
    correspondence.”

!   Chen recounted that he had proposed several possible brokers to Colley,
    which Colley had refused or not acted upon. “We had been waiting for your
    decision on this matter until November 28, 2002 when we divided the co-
    owned floors.”

!   The church’s “illegal” occupation of the fourth-floor space previously
    occupied by BAM! (after the broker’s six-month contract expired without
    finding a tenant) and failing to pay rentals.

!   An abortive effort to subdivide the fourth floor.

!   “Numerous complaints” regarding Colley’s “performance as the physical
    plant manager.” Chen accused Colley of “gross mismanagement” and
    “fail[ing] to do the job . . . to any degree of adequacy,” noting that “the roof
    has been leaking for 7 years despite numerous and repeated complaints from
    tenants” and that “[t]he lobby ceiling has endured 7 years without a single
    cleaning.”

!   A “fiasco” related to Colley’s relocation of air conditioning units within the
    building.



                                  14
       !       Colley’s depositing of revenue allegedly owed to Chen into the co-ownership
               account.

       !       Responding to Colley’s “roaringly proclaiming” having expended $7,500 in
               legal expenses in preparing his letter, Chen contends that he had expended
               over $32,000 on “various legal firms” “directly related to Mr. Colley’s
               temper tantrums.” Chen complains that while Colley’s letters are “totally of
               his own accord,” Chen “is held hostage, required to respond to each and
               every dispatch Mr. Colley sees fit to assault us with.”


Chen further denied that he was trying to “starve” the church out of its percentage interest in the

building, urging that “[i]t is common knowledge that the worldwide economy took a major

hit after 9/11/2001.”

               Chen’s letter concludes that “I have no choice other than to call a meeting of the co-

owners,” and that “[b]ecause of the serious nature of this situation, we will have legal counsel

present. I believe it would be beneficial for the Church to have legal counsel at this meeting as

well.” Enclosed was a notice of a meeting of the co-ownership, pursuant to the amended Co-

Ownership Agreement, for June 26, 2003, for purposes including “[r]esponding to and discussing

the allegations made to Mr. Sam Chen and Sam Chen, Inc. by Mr. Jim Colley,” “discuss[ing]

building operations and the future of the co-ownership of the building,” and “[a]ny necessary

amendments to the Co-Ownership Agreement.” The notice indicated that the meeting would be held

at Hilgers & Watkin’s downtown Austin office.

               Between June 2 and 17, the firm undertook research regarding the “General

Partnership Act,” the notice provision of the co-ownership agreement, and “remedies for dissolution

of tenancy in common,” “methods to sever tenancy in common,” and “partition.”




                                                15
               On July 3, Reetz wrote attorney John F. Campbell, who was assisting the church,

conveying that Chen had been “disappointed” that the church had not sent a representative to the co-

owners’ meeting and requesting that Campbell “let us know why Mr. Colley has persisted in sending

letters with such outlandish and unfounded accusations that have produced an intolerable situation

between the Co-owners.” It concluded that Chen was interested in selling the building if necessary

to terminate the co-ownership, and invited proposals from the church to either purchase Chen’s

interest or sell the church’s interest to Chen.

               Later that month, Reetz wrote Campbell and referenced Chen’s receipt of “the

Agreement of Sale and Purchase of Hogg-Gregory Office Condominiums Units 2 and 3,” and

transmitted “our proposal” for the declarations, articles of incorporation, and bylaws “that can be

forwarded on to the buyer.”

               In September, Reetz, on behalf of Chen, wrote Colley, copying the church trustees,

regarding “numerous items that remain unresolved” and requesting that “you attend to these matters

as soon as possible.” These items included (1) the church’s response to a term sheet regarding a

refinancing offer on the building; (2) the church’s failure to get bids from two roofing companies to

fix a leak on the sixth floor as, Reetz stated, it had earlier promised10; (3) and “since we have not

heard any response to the condominium documents nor on the proposed sale of the interest owned

by the church, we will consider each one of these issues dead and no longer subject to negotiations.”

The letter concluded by requesting that the church


       10
          Reetz added that Chen would proceed with a roofer it had procured “since you have been
unresponsive to the needs of the building and this directly impacts the ability of Chen to receive rent
on the sixth floor.”

                                                  16
       remove you as the Physical Building Manager contact person immediately. Someone
       else needs to work on building maintenance and represent the Church on building
       matters because you do not cooperate with Sam Chen, Inc. and do not demonstrate
       the courtesy and respect to the tenants that Sam Chen, Inc. needs. You have
       continued to be unresponsive to our needs as co-owner of the building along with
       being rude to the tenants, which directly impacts Sam Chen, Inc.’s ability to earn rent
       on its portion of the building.


               The firm continued to bill time on work for Chen into September. As noted,

defendants withdrew from representation after the church filed the underlying lawsuit in October.

The parties represent that the church and Chen (with different counsel) ultimately resolved their

dispute through arbitration in 2004.


       Prior representation

               The church asserts that the defendants’ prior representation of it involved the same

“issues, defenses, and strategies” as its later dispute with Chen. The summary judgment evidence

reflects that defendants provided legal services to the church in connection with four matters between

1996 and February 1998. It is undisputed that defendants’ representation ended over five years

before they began providing services to Chen in March 2003.


               The 1996 representation

               Novak averred that between July 2-12, 1996, he and other firm attorneys advised the

church concerning a possible sale of the building to a third party, but this sale was never

consummated. Firm time sheets reflect that, in fact, Novak and other firm attorneys billed time to

the church in regard to matters including “real estate purchase” and “purchase of real estate and

potential resale or lease to third party” between July 2-12, 1996. Novak added that “[a]fter July

                                                 17
1996, I, and to my knowledge no other attorney of Hilgers & Watkins, never provided any further

legal services to [the church] in connection with the attempted sale of the Building.”

               Colley’s testimony is essentially consistent with Novak’s, although he maintained that

Novak and the firm also advised the church concerning its purchase of the building and more

generally explored with the church resale, leasing, or other “options for being able to support the

expense of the building.” Colley represents that certain of these discussions were between him and

Jack Hightower, then affiliated with the firm. Colley claims to have had a preexisting social

relationship with Hightower that persuaded him to hire the firm in 1996, and asserts that he

“regularly consulted with Judge Hightower” in both professional and social settings “about legal

matters relating to the Church’s ownership of the Building, and other matters involving ownership,

seeking investors, management, leasing, and possible sale of the Building, which conversations and

legal advice did not always result in invoices submitted to the Church.”11

               The church urges that this evidence demonstrates that the defendants’ 1996

representation of the church involved “the SAME issues, defenses, and strategies” as their 2003

representation of Chen. We disagree. The church emphasizes that the matters involved the same

building and the general subjects of the church’s ownership, management, financing, or sale of it.

Such general resemblances in subject matter are not sufficient. See Wadley, 776 S.W.2d at 278

(general discussion of blood bank’s potential AIDS-related liability during prior representation did

not demonstrate substantial relationship with specific facts of subsequent AIDS-related lawsuit).




       11
          Although ultimately not material, we note that Hightower testified that “[a]fter introducing
Jim Colley to the attorneys who would perform the legal services on behalf of the Church in July
1996, I had no involvement” with the firm’s subsequent representation of the church.

                                                 18
Nor is the mere fact that defendants may have represented the church in its 1996 purchase of the

building and later represented Chen in negotiating the possible termination or buyout of the co-

ownership (a transaction that would involve the parties’ respective interests under the intervening

Co-Ownership Agreement, among other distinctions). See Drake, 195 S.W.3d at 236-37 (lawyer’s

prior work representing appraisal district in property valuation cases was not substantially related

to particular facts and issues in subsequent valuation case in which he represented property owner

against district). The church points to no specific close relationship between the particular facts,

issues, or legal theories involved in defendants’ prior and subsequent representations as to “create[]

a genuine threat that confidences revealed to [its] former counsel will be divulged to [its] present

adversary.” Garcia, 891 S.W.2d at 256-57; Coker, 765 S.W.2d at 399-400.


               1997-98 tenant disputes

               Following its purchase of the building and the abortive July 1996 third-party

purchase, it is undisputed that John F. Campbell, not the firm, represented the church in its October

1996 sale of a 2/3 interest in the building to Chen and execution of the Co-Ownership Agreement.

Chen was represented by Goodall & Davison. However, in February 1997, Novak assisted Colley

in resolving a dispute with the Jaffe Companies, a tenant. Shortly after moving into the building,

Jaffe had complained about a leaking roof, the condition of certain carpet, electrical service,

construction in the building, and Comerica’s signage. Jaffe asserted the right to withhold its monthly

rent until its complaints were addressed. Novak prepared and transmitted two letters to Jaffe, one

giving notice of default for nonpayment of rent and disputing Jaffe’s position that it could withhold

rent under the circumstances, and one addressing the issues Jaffe had raised. A meeting with Jaffe



                                                 19
and Colley soon followed, and Jaffe afterward paid the rent. Around this time, Novak also

researched the validity of a renewal clause in the church’s lease with Jaffe, determined that the

provision was unenforceable, but advised the church to “wait and see” if the tenant would renew.

               In July 1997, the church retained Novak to respond to complaints from another tenant,

FrogDesign. FrogDesign’s complaints included work crews in the building, the use of certain areas

in the building for civic and social functions, and the condition of the elevators and main entrance

doors.     FrogDesign apparently also complained of “unsatisfactory management” or

“unanswered complaints.”

               In February 1998, Novak represented the church in a lease dispute with Compass

Bank. Billing records reflect a “problem with bank finishout.” Novak explored with Colley

“strategy for obtaining early move out,” which Colley testified referred to an effort to persuade the

Jaffe Companies to vacate early so as to enable Compass Bank to occupy the fourth floor.

Subsequent billing records reflect “tenant decision not to move.”

               It is undisputed that this representation, completed in February 1998, was defendants’

last work for the church. The work was billed and collected within the succeeding two months.

               The church makes essentially two arguments in an attempt to establish a substantial

relationship between defendants’ work on landlord-tenant issues and their 2003 representation of

Chen. First, it contends that the representations involved closely-related issues involving building

“management” or “tenant issues.” This argument fails for the same reason as the church’s arguments

regarding defendants’ 1996 representation. We also note that the requisite substantial relationship

cannot be predicated on the perceived risk of disclosure of facts that are common knowledge or




                                                 20
within the public domain, such as facts concerning the physical features of the building. Syntek,

881 S.W.2d at 321; Wadley, 776 S.W.2d at 278.

               Second, the church argues that defendants’ prior representation involved issues

implicating its rights under the Co-Ownership Agreement, a primary subject of the 2003 dispute.

However, as previously noted, it is undisputed that other counsel represented the church and Chen

in their negotiation of the 1996 transaction and Co-Ownership Agreement. Novak further testified

that the firm was never asked, and did not advise the church, regarding the church’s rights under the

Co-Ownership Agreement, and that the firm’s work did not involve any issues regarding the

relationships between the church and Chen. The church does not controvert this evidence other than

to attempt to establish that defendants were representing not only the church in the 1997-98 landlord-

tenant matters, but also the co-ownership. Even assuming that the summary judgment evidence

presented a fact issue on that point, there is no evidence that defendants ever provided advice

regarding the church’s and Chen’s respective rights under the Co-Ownership Agreement or the

specific matters in dispute in 2003.12

               We conclude that the district court did not err in granting summary judgment on the

ground that, as a matter of law, there was no “substantial relationship” between defendants’ prior and

subsequent representations. Because we affirm the district court’s summary judgment based on the

two alternative grounds regarding the breach element of the church’s claim, we need not reach the




       12
           The basis for the church’s claim, again, is defendants’ alleged misuse of the church’s client
confidences in their subsequent representation of Chen, not that they have violated a duty of loyalty
to joint clients.

                                                  21
church’s complaint concerning the element of injury or damages. See Knott, 128 S.W.3d at 216;

Tex. R. Civ. P. 166a(c).


Discovery ruling

               Finally, we overrule the church’s complaint regarding the district court’s discovery

ruling. The church served requests for production on defendants that sought documents from the

firm’s 2003 representation of Chen. Defendants objected on the basis of relevance and asserted

attorney-client privilege and work product. The church moved to compel and requested an in

camera inspection of the documents in question. The district court held that the documents were

protected by the attorney-client privilege and that the church had failed to make a prima facie

showing that the discovery sought was “relevant to an issue of breach of duty by a lawyer to a client”

so as to be excepted from the privilege. See Tex. R. Evid. 503(d)(3). The court stated:


       [N]owhere is [it] alleged or shown that the previous representation by Defendant
       (primarily disputes between owners and their tenants) was substantially related to the
       present dispute (a dispute among the owners concerning ownership and management
       of the property). The Court notes that the present dispute between the owners does
       not involve any issues, defenses or strategies that were in common with the previous
       landlord-tenant disputes . . . nor is there any showing that the Defendant’s present
       representation would present a possibility of misuse of confidential information. In
       short, there appears to be no threat that the facts of the present dispute are so related
       to the previous landlord tenant disputes, that a genuine threat exists that confidences
       revealed to former counsel will be revealed to the present adversary. As such, there
       is no prima facie proof or allegation of a breach of fiduciary duty by a lawyer;
       therefore, the exception (d)(3) does not apply.


               On appeal, the church complains only that the district court abused its discretion by

applying an incorrect legal standard in adjudicating its discovery issue. Specifically, the church

contends that the district court conflated the requirement that the church’s sought-after discovery be

                                                  22
relevant to the issue of whether defendants breached their duties, see Tex. R. Evid. 503(d)(3), with

what it views as “the ultimate issue in the case,” the existence of a substantial relationship between

the two representations. We disagree. First, because the church has failed to raise a fact issue as to

whether it had actually disclosed specific confidential information to defendants, any error regarding

the church’s discovery of information regarding defendants’ representation of Chen would be

harmless. See Booth, 895 S.W.2d at 772-73. Second, the scope of discovery relevant to breach of

duty would necessarily reflect the substantive standard of proof—which, under the church’s theory

of the case, is that breach can be proven merely by establishing a substantial relationship between

the defendants’ prior and subsequent representations. We conclude that the district court did not

abuse its discretion in its discovery ruling.


                                          CONCLUSION

                We affirm the judgment of the district court.



                                                      ____________________________________

                                                      Bob Pemberton, Justice

Before Justices Patterson, Pemberton and Henson

Affirmed

Filed: May 23, 2007




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